Monday, 

September 28, 2009 

Part II 

Environmental 

Protection Agency 

40 CFR Parts 86 and 600 

Department of 

Transportation 

National Highway Traffic Safety 

Administration 

49 CFR Parts 531, 533, 537, et al. 

Proposed Rulemaking To Establish LightDuty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel 

Economy Standards; Proposed Rule 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

49454 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

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 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 86 and 600 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Parts 531, 533, 537, and 538 

[EPA–HQ–OAR–2009–0472; FRL–8959–4; 

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 

AGENCY: 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, and represent a harmonized and 

consistent National Program. Under the 

National Program, automobile 

manufacturers 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. 

FOR FURTHER INFORMATION CONTACT: 

Comments: Comments must be received 

on or before November 27, 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 October 28, 2009. 

See the SUPPLEMENTARY INFORMATION

section on ‘‘Public Participation’’ for 

more information about written 

comments. 

Hearings: NHTSA and EPA will 

jointly hold three public hearings on the 

following dates: October 21, 2009 in 

Detroit, Michigan; October 23, 2009 in 

New York, New York; and October 27, 

2009 in Los Angeles, California. EPA 

and NHTSA will announce the 

addresses for each hearing location in a 

supplemental Federal Register Notice. 

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– 

OAR–2009–0472 and/or NHTSA–2009– 

0059, by one of the following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• E-mail: a-and-r-Docket@epa.gov. 

• Fax: EPA: (202) 566–1741; NHTSA: 

(202) 493–2251. 

• Mail: 

Æ 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–OAR–2009– 

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. 

Æ 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: 

Æ EPA: Docket Center, (EPA/DC) EPA 

West, Room B102, 1301 Constitution 

Ave., NW., Washington, DC, Attention 

Docket ID No. EPA–HQ–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. 

Æ 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–2009–0059. See 

the SUPPLEMENTARY INFORMATION section 

on ‘‘Public Participation’’ for more 

information about submitting written 

comments. 

Public Hearing: NHTSA and EPA will 

jointly hold three public hearings on the 

following dates: October 21, 2009 in 

Detroit, Michigan; October 23, 2009 in 

New York, New York; and October 27, 

2009 in Los Angeles, California. EPA 

and NHTSA will announce the 

addresses for each hearing location in a 

supplemental Federal Register Notice. 

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; e-mail 

address: wysor.tad@epa.gov, or 

Assessment and Standards Division 

Hotline; telephone number (734) 214– 

4636; e-mail address asdinfo@epa.gov. 

NHTSA: Rebecca Yoon, Office of Chief 

Counsel, National Highway Traffic 

Safety Administration, 1200 New Jersey 

Avenue, SE., Washington, DC 20590. 

Telephone: (202) 366–2992. 

SUPPLEMENTARY INFORMATION: 

A. Does This Action Apply to Me? 

This action affects companies that 

manufacture or sell new light-duty 

vehicles, light-duty trucks, and 

medium-duty passenger vehicles, as 

defined under EPA’s CAA regulations,1

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49455 

vehicle’’ means a passenger car, the term ‘‘lightduty 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. 

2 ‘‘Passenger car’’ and ‘‘light truck’’ are defined in 

49 CFR part 523. 

3See 49 CFR 553.21. 

4Optical 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. 

and passenger automobiles (passenger 

cars) and non-passenger automobiles 

(light trucks) as defined under NHTSA’s 

CAFE regulations.2 Regulated categories 

and entities include: 

Category NAICS 

codes A Examples of potentially regulated entities 

Industry ...................................................................... 336111 Motor vehicle manufacturers. 

336112 

Industry ...................................................................... 811112 Commercial Importers of Vehicles and Vehicle Components. 

811198 

541514 

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 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 e-mail 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 NHTSA–2009–0059 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. 

• 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. 

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49456 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

5See 49 CFR part 512. 

• 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 http://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

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 

three 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 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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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49457 

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? 

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 NonGHG 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. Conceptual Framework for Evaluating 

Consumer Impacts 

2. Costs Associated With the Vehicle 

Program 

3. Cost per Ton of Emissions Reduced 

4. Reduction in Fuel Consumption and Its 

Impacts 

5. Impacts on U.S. Vehicle Sales and 

Payback Period 

6. Benefits of Reducing GHG Emissions 

7. Non-Greenhouse Gas Health and 

Environmental Impacts 

8. Energy Security Impacts 

9. Other Impacts 

10. Summary of Costs and Benefits 

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) 

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? 

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49458 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

6President Obama Announces National Fuel 

Efficiency Policy, The White House, May 19, 2009. 

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

the_press_office/President-Obama-AnnouncesNational-Fuel-Efficiency-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-thePresident-on-national-fuel-efficiency-standards/ 

(Last accessed August 18, 2009). 

7 74 FR 24007 (May 22, 2009). 

8Available at: http://www.whitehouse.gov/

the_press_office/Presidential_Memorandum_

Fuel_Economy/ (last accessed on August 18, 2009). 

9Panel 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. 

10EPCA does not require the use of 1975 test 

procedures for light trucks. 

11This is the method that EPA uses to determine 

compliance with NHTSA’s CAFE standards. 

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 Consumer Welfare Impacts 

of These Proposed Standards? 

7. What Are the Estimated Safety Impacts 

of These Proposed Standards? 

8. 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. Regulatory Notices and Analyses 

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 mediumduty passenger vehicles (hereafter lightduty 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 lightduty 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 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 issued 

by DOT and EPA on May 19 7 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. 

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 fuel 11 is then used to 

calculate the amount of fuel that had to 

be consumed per mile in order to 

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12 549 U.S. 497 (2007). 

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

14 549 U.S. at 531–32. 

15For 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 74 FR 18886 (Apr. 24, 2009). 

17 74 FR 32744 (July 8, 2009). 

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

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 lightduty vehicle market, have adopted 

California’s standards. These standards 

apply to model years 2009 through 2016 

and require CO2 emissions for passenger 

cars and the smallest light trucks of 323 

g/mi in 2009 and 205 g/mi in 2016, and 

for the remaining light trucks of 439 g/ 

mi in 2009 and 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. GHG since 1990. Lightduty 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 

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49460 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

18These letters are available at http:// 

www.epa.gov/otaq/climate/regulations.htm. 

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 mediumduty 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 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 benefits of the 

proposed National Program would total 

about $250 billion at a 3% discount rate, 

or $195 billion at a 7% discount rate. In 

the discussion that follows in Sections 

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. 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 emit 16 fewer metric tons 

of CO2 emissions during 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 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 lightduty 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 

NHTSA establishes CAFE standards 

for passenger cars and light trucks for 

each model year under EPCA, as 

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19See 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.’’) 

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

21CEI–I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 

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). 

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 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 attributebased 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 

‘‘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 years 23 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 

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24 42 FR 63184, 63188 (1977). 

25The ‘‘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. 

26Center 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). 

28For 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). 

31See, 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). 

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 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 effect 25

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 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 attributebased standards, there is still risk that 

manufacturers will rely on 

downweighting to improve their fuel 

economy (for a given vehicle at a given 

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

footprint target) in ways that may 

reduce safety. 

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’’). 

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 fleetwide 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. 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 

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33EPCA does not provide authority for seeking to 

enjoin violations of the CAFE standards. 

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

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

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 particular equipment 

or feature or meet a particular level of 

fuel economy. It does require that the 

manufacturer’s fleet, as a whole, 

comply. Further, although under the 

attribute-based approach to setting 

CAFE standards fuel economy targets 

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. 

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 technology-based 

standards, EPA has the discretion to 

consider different standards for 

appropriate groupings of vehicles 

(‘‘class or classes of new motor 

vehicles’’), or a single standard for a 

larger grouping of motor vehicles 

(NRDC, 655 F.2d at 338). 

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 

cost-benefit 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). 

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 

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36 70 FR 69664, 69676, November 17, 2005. 

37See 49 U.S.C. 32904(c). 

38See 41 FR 38674 (Sept. 10, 1976), which is 

codified at 40 CFR part 600. 

39See 49 U.S.C. 32904(c). 40 74 FR 24009 (May 22, 2009). 

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 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 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 

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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 nonGHGs); the impacts of their standards on 

oil conservation; the impacts of their 

standards on fuel savings by consumers; 

the impacts of their standards on the 

auto industry; as well as other relevant 

factors such as impacts on safety. 

Conceptually, therefore, each agency is 

considering and balancing many of the 

same 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). 

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 nonGHGs); 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 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 

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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 preproduction 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. 

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 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. 

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 attribute-based 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. Nonpublic (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 

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41There is no such statutory limitation with 

respect to light trucks. 

42The 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 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. 

43See 49 CFR 523.2 for the exact definition of 

‘‘footprint.’’ 

44Because 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. 

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 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 mpg 42 if the automotive industry 

were to meet this CO2 level all 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 salesweighted harmonic average of the 

targets applicable to each of the 

manufacturer’s passenger cars and light 

trucks. Under these proposed footprintbased 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, fleetwide 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 

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45NHTSA’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. 

48These 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. 

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 

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 credit transfer and the increase 

in emissions due to program flexibilities 

including flex fueled vehicle credits and 

the temporary leadtime allowance 

alternative standards. The use of 

optional air conditioning credits is 

considered both in this analysis of 

achieved levels and of the projected 

levels described above.. 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 

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49The 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 

50 71 FR 17566 (Apr. 6, 2006). 

51 74 FR 14196 (Mar. 30, 2009). 

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 

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 startstop 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 lightduty 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 

proposing to change those test 

procedures 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 realworld 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 

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52 74 FR 14407–14409 (Mar. 30, 2009). 

53Production for sale in the United States. 

54The equations are equivalent but are specified 

differently due to differences in the agencies’ 

respective models. 

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 models produced by that 

manufacturer. A manufacturer would 

have separate footprint-based 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-weighed 53 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 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. 

BILLING CODE 4910–59–P 

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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. 


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55 49 CFR part 523. 

BILLING CODE 4910–59–C 

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 


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56NHTSA’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. 

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 truck .......................................... Chevy Silverado ............................................. 67 358 24.7 

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. 

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-byyear 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. 

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57We 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 corresponds 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. 

58The $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%. 

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; starting in 

MY 2016, EPA proposes to allow FFV 

credits only based on a manfucturers’s 

demonstration that the alternative fuel 

is actually being used in the vehicles 

and the actual GHG performance for the 

vehicle run on that 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. 

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. 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 

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: 

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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 

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 

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.1–5a—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 

TABLE I.E.1–5b—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS (WITH FFV CREDITS, 

USING A 7 PERCENT DISCOUNT RATE) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 6.2 12.7 18.0 23.0 29.8 89.6 

Light Trucks ..................................................................................................................... 4.7 7.9 12.4 17.3 20.6 63.0 

Combined ......................................................................................................................... 10.9 20.6 20.4 40.3 50.4 152.5 

NHTSA attributes most of these 

benefits—about $158 billion (at a 3% 

discount rate and excluding 

consideration of FFV credits), 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 

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this proposed rule presents a detailed analysis of specific benefits of the 

proposed rule. 

TABLE I.E.1–6—SUMMARY OF BENEFITS FUEL SAVINGS AND CO2 EMISSIONS REDUCTION DUE TO THE PROPOSED RULE

(BEFORE FFV CREDITS) 

Amount 

Monetized value (discounted) 

3% Discount rate 7% Discount rate 

Fuel savings ................................... 61.6 billion gallons ........................ $158.0 billion ................................ $125.3 billion. 

CO2 emissions reductions ............. 656 million metric tons (mmt) ....... $16.4 billion .................................. $12.8 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.1–7—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) 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 

NHTSA estimates that use of FFV 

credits could significantly reduce these 

outlays: 

TABLE I.E.1–8—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) 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 

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 $476 per 

vehicle in MY 2012 to $1,091 per 

vehicle in MY 2016: 

TABLE I.E.1–9—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE 

STANDARDS (BEFORE FFV CREDITS) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 591 735 877 979 1,127 

Light Trucks ..................................................................................................................................... 283 460 678 882 1,020 

Combined ......................................................................................................................................... 476 635 806 945 1,091 

NHTSA estimates that use of FFV 

credits could significantly reduce these 

costs, especially in earlier model years: 

TABLE I.E.1–10—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 

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TABLE I.E.1–10—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE 

STANDARDS (WITH FFV CREDITS)—Continued 

2012 2013 2014 2015 2016 

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 

transfer 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. 

TABLE I.E.2–1—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME FUEL SAVED AND 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 

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 

presents the five marginal values used 

to estimate monetized benefits of GHG 

reductions and Section III.H 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 VALUE a

[$Billions of 2007 dollars] 

Discount rate 

Model year 

2012 2013 2014 2015 2016 Total 

3% .................................................................................................................................... $20.4 $31.7 $44.9 $63.7 $87.2 $248 

7 ....................................................................................................................................... 15.8 24.7 34.9 49.3 67.7 193 

aThe 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. 

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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 

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, 

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59 49 U.S.C. 32903(a)(2). 

60 49 U.S.C. 32903(g)(4). 

61 49 U.S.C. 32903(f)(2). 

62EPCA 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. 

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. 

After satisfying any need to offset preexisting 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 purposes 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 

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 costeffective 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 

approach 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 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 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 

dual-fueled 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 E–85 

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. 

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. 

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64EPCA 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. 

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 leadtime 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 vehicles sold in the 50 

States. EPA is also proposing early 

credits based on over-compliance 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 off-cycle 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 CAFE 

requirements. Manufacturers would 

demonstrate compliance on a fleetaverage basis at the end of each model 

year, allowing model-level testing to 

continue throughout the year as is the 

current practice for CAFE 

determinations. The 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 vehiclespecific 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 

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65The CSM data made public includes only the 

higher level volume projections by market segment 

and manufacturer. The projections by nameplate 

and model are strictly the agencies’ estimates based 

on these higher level CSM segment and 

manufacturer distribution. 

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 lightduty 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. 

II. Joint Technical Work Completed for 

This Proposal 

A. Introduction 

In this section NHTSA and EPA 

discuss several aspects of the joint 

technical analyses the two agencies 

collaborated on which are common to 

the development of each agency’s 

proposed standards. Specifically we 

discuss: The development of the 

baseline vehicle market forecast used by 

each agency, the development of the 

proposed attribute-based standard curve 

shapes, how the relative stringency 

between the car and truck fleet 

standards for this proposal was 

determined, which technologies the 

agencies evaluated and their costs and 

effectiveness, and which economic 

assumptions the agencies included in 

their analyses. The joint Technical 

Support Document (TSD) discusses the 

agencies’ joint technical work in more 

detail. 

B. How Did NHTSA and EPA Develop 

the Baseline Market Forecast? 

1. Why Do the Agencies Establish a 

Baseline Vehicle Fleet? 

In order to calculate the impacts of 

the EPA and NHTSA proposed 

regulations, it is necessary to estimate 

the composition of the future vehicle 

fleet absent these proposed regulations 

in order to conduct comparisons. EPA 

and NHTSA have developed a 

comparison fleet in two parts. The first 

step was to develop a baseline fleet 

based on model year 2008 data. The 

second step was to project that fleet into 

2011–2016. This is called the reference 

fleet. The third step was to modify that 

2011–2016 reference fleet such that it 

had sufficient technologies to meet the 

2011 CAFE standards. This final 

‘‘reference fleet’’ is the light duty fleet 

estimated to exist in 2012–2016 if these 

proposed rules are not adopted. Each 

agency developed a final reference fleet 

to use in its modeling. All of the 

agencies’ estimates of emission 

reductions, fuel economy 

improvements, costs, and societal 

impacts are developed in relation to the 

respective reference fleets. 

2. How Do the Agencies Develop the 

Baseline Vehicle Fleet? 

EPA and NHTSA have based the 

projection of total car and total light 

truck sales on recent projections made 

by the Energy Information 

Administration (EIA). EIA publishes a 

long-term projection of national energy 

use annually called the Annual Energy 

Outlook. This projection utilizes a 

number of technical and econometric 

models which are designed to reflect 

both economic and regulatory 

conditions expected to exist in the 

future. In support of its projection of 

fuel use by light-duty vehicles, EIA 

projects sales of new cars and light 

trucks. Due to the state of flux of both 

energy prices and the economy, EIA 

published three versions of its 2009 

Annual Energy Outlook. The 

Preliminary 2009 report was published 

early (in November 2008) in order to 

reflect the dramatic increase in fuel 

prices which occurred during 2008 and 

which occurred after the development 

of the 2008 Annual Energy Outlook. The 

official 2009 report was published in 

March of 2009. A third 2009 report was 

published a month later which reflected 

the economic stimulus package passed 

by Congress earlier this year. We use the 

sales projections of this latest report, 

referred to as the updated 2009 Annual 

Energy Outlook, here. 

In their updated 2009 report, EIA 

projects that total light-duty vehicle 

sales will gradually recover from their 

currently depressed levels by roughly 

2013. In 2016, car and light truck sales 

are projected to be 9.5 and 7.1 million 

units, respectively. While the total level 

of sales of 16.6 million units is similar 

to pre-2008 levels, the fraction of car 

sales is higher than that existing in the 

2000–2007 timeframe. This presumably 

reflects the impact of higher fuel prices 

and that fact that cars tend to have 

higher levels of fuel economy than 

trucks. We note that EIA’s definition of 

cars and trucks follows that used by 

NHTSA prior to the MY 2011 CAFE 

final rule published earlier this year. 

That recent CAFE rule, which 

established the MY 2011 standards, 

reclassified a number of 2-wheel drive 

sport utility vehicles from the truck fleet 

to the car fleet. This has the impact of 

shifting a considerable number of 

previously defined trucks into the car 

category. Sales projections of cars and 

trucks for all future model years can be 

found in the draft Joint TSD for this 

proposal. 

In addition to a shift towards more car 

sales, sales of segments within both the 

car and truck markets have also been 

changing and are expected to continue 

to change in the future. Manufacturers 

are introducing more crossover models 

which offer much of the utility of SUVs 

but using more car-like designs. In order 

to reflect these changes in fleet makeup, 

EPA and NHTSA considered several 

available forecasts. After review EPA 

purchased and shared with NHTSA 

forecasts from two well-known industry 

analysts, CSM–Worldwide (CSM), and 

J.D. Powers. NHTSA and EPA decided 

to use the forecast from CSM, for several 

reasons. One, CSM agreed to allow us to 

publish the data, on which our forecast 

is based, in the public domain.65 Two, 

it covered nearly all the timeframe of 

greatest relevance to this proposed rule 

(2012–2015 model years). Three, it 

provided projections of vehicle sales 

both by manufacturer and by market 

segment. Four, it utilized market 

segments similar to those used in the 

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66 ‘‘CSM North America Sales Forecast 

Comparison 2Q09 3Q09 For Docket.’’ 2nd and 3rd 

quarter forecasting results from CSM World Wide 

(Docket EPA–HQ–OAR–2009–0472). 

EPA emission certification program and 

fuel economy guide. As discussed 

further below, this allowed the CSM 

forecast to be combined with other data 

obtained by NHTSA and EPA. We also 

assumed that the breakdowns of car and 

truck sales by manufacturer and by 

market segment for 2016 model year and 

beyond were the same as CSM’s forecast 

for 2015 calendar year. The changes 

between company market share and 

industry market segments were most 

significant from 2011–2014, while for 

2014–2015 the changes were relatively 

small. Therefore, we assumed 2016 

market share and market segments to be 

the same as for 2015. To the extent that 

the agencies have received CSM 

forecasts for 2016, we will consider 

using them for the final rule. 

We then projected the CSM forecasts 

for relative sales of cars and trucks by 

manufacturer and by market segment on 

to the total sales estimates of the 

updated 2009 Annual Energy Outlook. 

Tables II.B.1–1 and II.B.1–2 show the 

resulting projections for the 2016 model 

year and compare these to actual sales 

which occurred in 2008 model year. 

Both tables show sales using the 

traditional or classic definition of cars 

and light trucks. Determining which 

classic trucks will be defined as cars 

using the revised definition established 

by NHTSA earlier this year and 

included in this proposed rule requires 

more detailed information about each 

vehicle model which is developed next. 

TABLE II.B.2–1—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MANUFACTURER IN 2008 AND ESTIMATED FOR 2016 

Cars Light trucks Total 

2008 MY 2016 MY 2008 MY 2016 MY 2008 MY 2016 MY 

BMW .................................................................... 291,796 380,804 61,324 134,805 353,120 515,609 

Chrysler ................................................................ 537,808 110,438 1,119,397 133,454 1,657,205 243,891 

Daimler ................................................................. 208,052 235,205 79,135 109,917 287,187 345,122 

Ford ...................................................................... 641,281 990,700 1,227,107 1,713,376 1,868,388 2,704,075 

General Motors .................................................... 1,370,280 1,562,791 1,749,227 1,571,037 3,119,507 3,133,827 

Honda ................................................................... 899,498 1,429,262 612,281 812,325 1,511,779 2,241,586 

Hyundai ................................................................ 270,293 437,329 120,734 287,694 391,027 725,024 

Kia ........................................................................ 145,863 255,954 135,589 162,515 281,452 418,469 

Mazda .................................................................. 191,326 290,010 111,220 112,837 302,546 402,847 

Mitsubishi ............................................................. 76,701 49,697 24,028 10,872 100,729 60,569 

Porsche ................................................................ 18,909 37,064 18,797 17,175 37,706 54,240 

Nissan .................................................................. 653,121 985,668 370,294 571,748 1,023,415 1,557,416 

Subaru .................................................................. 149,370 128,885 49,211 75,841 198,581 204,726 

Suzuki .................................................................. 68,720 69,452 45,938 34,307 114,658 103,759 

Tata ...................................................................... 9,596 41,584 55,584 47,105 65,180 88,689 

Toyota .................................................................. 1,143,696 1,986,824 1,067,804 1,218,223 2,211,500 3,205,048 

Volkswagen .......................................................... 290,385 476,699 26,999 99,459 317,384 576,158 

Total .............................................................. 6,966,695 9,468,365 6,874,669 7,112,689 13,841,364 16,581,055 

TABLE II.B.2–2—ANNUAL SALES OF LIGHT-DUTY VEHICLES BY MARKET SEGMENT IN 2008 AND ESTIMATED FOR 2016 

Cars Light trucks 

2008 MY 2016 MY 2008 MY 2016 MY 

Full-Size Car ......................................... 730,355 466,616 Full-Size Pickup ................................... 1,195,073 1,475,881 

Mid-Size Car ......................................... 1,970,494 2,641,739 Mid-Size Pickup ................................... 598,197 510,580 

Small/Compact Car ............................... 1,850,522 2,444,479 Full-Size Van ........................................ 33,384 284,110 

Mid-Size Van ........................................ 719,529 615,349 

Subcompact/Mini Car ............................ 599,643 1,459,138 Mid-Size MAV * .................................... 191,448 158,930 

Small MAV ........................................... 235,524 289,880 

Luxury Car ............................................ 1,057,875 1,432,162 Full-Size SUV* ..................................... 530,748 90,636 

Specialty Car ......................................... 754,547 1,003,078 Mid-Size SUV ....................................... 347,026 110,155 

Others ................................................... 3,259 21,153 Small SUV ............................................ 377,262 124,397 

Full-Size CUV * ..................................... 406,554 319,201 

Mid-Size CUV ....................................... 798,335 1,306,770 

Small CUV ............................................ 1,441,589 1,866,580 

Total Sales ..................................... 6,966,695 9,468,365 ............................................................... 6,874,669 7,152,470 

* MAV—Multi-Activity Vehicle, SUV—Sport Utility Vehicle, CUV—Crossover Utility Vehicle. 

The agencies recognize that CSM 

forecasts a very significant reduction in 

market share for Chrysler. This may be 

a result of the extreme uncertainty 

surrounding Chrysler in early 2009. The 

forecast from CSM used in this proposal 

is CSM’s forecast from the 2nd quarter 

of 2009. CSM also provided to the 

agencies an updated forecast in the 3rd 

quarter of 2009, which we were unable 

to use for this proposal due to time 

constraints. However, we have placed a 

copy of the 3rd Quarter CSM forecast in 

the public docket for this rulemaking, 

and we will consider its use, and any 

further updates from CSM or other data 

received during the comment period 

when developing the analysis for the 

final rule.66 CSM’s forecast for Chrysler 

for the 3rd quarter of 2009 was 

significantly increased compared to the 

2nd quarter, by nearly a factor of two 

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49486 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

67 J.D. Power and Associates, Press Release, May 

16, 2007. ‘‘Rising Gas Prices Begin to Sway NewVehicle Owners Toward Smaller Versions of Trucks 

and Utility Vehicles.’’ 

increase in projected sales over the 

2012–2015 time frame. 

The forecasts obtained from CSM 

provided estimates of car and trucks 

sales by segment and by manufacturer, 

but not by manufacturer for each market 

segment. Therefore, we needed other 

information on which to base these 

more detailed market splits. For this 

task, we used as a starting point each 

manufacturer’s sales by market segment 

from model year 2008. Because of the 

larger number of segments in the truck 

market, we used slightly different 

methodologies for cars and trucks. 

The first step for both cars and trucks 

was to break down each manufacturer’s 

2008 sales according to the market 

segment definitions used by CSM. For 

example, we found that Ford’s car sales 

in 2008 were broken down as shown in 

Table II.B.2–3: 

TABLE II.B.2–3—BREAKDOWN OF

FORD’S 2008 CAR SALES

Full-size cars ................. 76,762 units. 

Mid-size cars ................. 170,399 units. 

Small/Compact cars ...... 180,249 units. 

Subcompact/Mini cars ... None. 

Luxury cars ................... 100,065 units. 

Specialty cars ................ 110,805 units. 

We then adjusted each manufacturer’s 

sales of each of its car segments (and 

truck segments, separately) so that the 

manufacturer’s total sales of cars (and 

trucks) matched the total estimated for 

each future model year based on EIA 

and CSM forecasts. For example, as 

indicated in Table II.B.2–1, Ford’s total 

car sales in 2008 were 641,281 units, 

while we project that they will increase 

to 990,700 units by 2016. This 

represents an increase of 54.5 percent. 

Thus, we increased the 2008 sales of 

each Ford car segment by 54.5 percent. 

This produced estimates of future sales 

which matched total car and truck sales 

per EIA and the manufacturer 

breakdowns per CSM (and exemplified 

for 2016 in Table II.B.1–1). However, the 

sales splits by market segment would 

not necessarily match those of CSM 

(and exemplified for 2016 in Table 

II.B.2–2). 

In order to adjust the market segment 

mix for cars, we first adjusted sales of 

luxury, specialty and other cars. Since 

the total sales of cars for each 

manufacturer were already set, any 

changes in the sales of one car segment 

had to be compensated by the opposite 

change in another segment. For the 

luxury, specialty and other car 

segments, it is not clear how changes in 

sales would be compensated. For 

example, if luxury car sales decreased, 

would sales of full-size cars increase, 

mid-size cars, etc.? Thus, any changes in 

the sales of cars within these three 

segments were assumed to be 

compensated for by proportional 

changes in the sales of the other four car 

segments. For example, for 2016, the 

figures in Table II.B.2–2 indicate that 

luxury car sales in 2016 are 1,432,162 

units. Luxury car sales are 1,057,875 

units in 2008. However, after adjusting 

2008 car sales by the change in total car 

sales for 2016 projected by EIA and a 

change in manufacturer market share 

per CSM, luxury car sales increased to 

1,521,892 units. Thus, overall for 2016, 

luxury car sales had to decrease by 

89,730 units or 6 percent. We decreased 

the luxury car sales by each 

manufacturer by this percentage. The 

absolute decrease in luxury car sales 

was spread across sales of full-size, midsize, compact and subcompact cars in 

proportion to each manufacturer’s sales 

in these segments in 2008. The same 

adjustment process was used for 

specialty cars and the ‘‘other cars’’ 

segment defined by CSM. 

A slightly different approach was 

used to adjust for changing sales of the 

remaining four car segments. Starting 

with full-size cars, we again determined 

the overall percentage change that 

needed to occur in future year full-size 

cars sales after (1) adjusting for total 

sales per EIA, (2) manufacturer sales 

mix per CSM and (3) adjustments in the 

luxury, specialty and other car 

segments, in order to meet the segment 

sales mix per CSM. Sales of each 

manufacturer’s large cars were adjusted 

by this percentage. However, instead of 

spreading this change over the 

remaining three segments, we assigned 

the entire change to mid-size vehicles. 

We did so because, as shown in 2008, 

higher fuel prices tend to cause car 

purchasers to purchase smaller vehicles. 

We are using AEO 2009 for this 

analysis, which assumes fuel prices 

similar in magnitude to actual high fuel 

prices seen in the summer of 2008.67

However, if a consumer had previously 

purchased a full-size car, we thought it 

unlikely that they would jump all the 

way to a subcompact. It seemed more 

reasonable to project that they would 

drop one vehicle size category smaller. 

Thus, the change in each manufacturer’s 

sales of full-size cars was matched by an 

opposite change (in absolute units sold) 

in mid-size cars. 

The same process was then applied to 

mid-size cars, with the change in midsize car sales being matched by an 

opposite change in compact car sales. 

This process was repeated one more 

time for compact car sales, with changes 

in sales in this segment being matched 

by the opposite change in the sales of 

subcompacts. The overall result was a 

projection of car sales for 2012–2016 

which matched the total sales 

projections of EIA and the manufacturer 

and segment splits of CSM. These sales 

splits can be found in Chapter 1 of the 

draft Joint Technical Support Document 

for this proposal. 

As mentioned above, a slightly 

different process was applied to truck 

sales. The reason for this was we could 

not confidently project how the change 

in sales from one segment preferentially 

went to or came from another particular 

segment. Some trend from larger 

vehicles to smaller vehicles would have 

been possible. However, the CSM 

forecasts indicated large changes in total 

sport utility vehicle, multi-activity 

vehicle and cross-over sales which 

could not be connected. Thus, we 

applied an iterative, but straightforward 

process for adjusting 2008 truck sales to 

match the EIA and CSM forecasts. 

The first three steps were exactly the 

same as for cars. We broke down each 

manufacturer’s truck sales into the truck 

segments as defined by CSM. We then 

adjusted all manufacturers’ truck 

segment sales by the same factor so that 

total truck sales in each model year 

matched EIA projections for truck sales 

by model year. We then adjusted each 

manufacturer’s truck sales by segment 

proportionally so that each 

manufacturer’s percentage of total truck 

sales matched that forecast by CSM. 

This again left the need to adjust truck 

sales by segment to match the CSM 

forecast for each model year. 

In the fourth step, we adjusted the 

sales of each truck segment by a 

common factor so that total sales for that 

segment matched the combination of the 

EIA and CSM forecasts. For example, 

sales of large pickups across all 

manufacturers were 1,144,166 units in 

2016 after adjusting total sales to match 

EIA’s forecast and adjusting each 

manufacturer’s truck sales to match 

CSM’s forecast for the breakdown of 

sales by manufacturer. Applying CSM’s 

forecast of the large pickup segment of 

truck sales to EIA’s total sales forecast 

indicated total large pickup sales of 

1,475,881 units. Thus, we increased 

each manufacturer’s sales of large 

pickups by 29 percent. The same type 

of adjustment was applied to all the 

other truck segments at the same time. 

The result was a set of sales projections 

which matched EIA’s total truck sales 

projection and CSM’s market segment 

forecast. However, after this step, sales 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49487 

68Note that WardsAuto.com is a fee-based 

service, but all information is public to subscribers. 

69Motortrend.com and Edmunds.com are free, 

no-fee Internet sites. 70See 49 CFR part 512. 

by manufacturer no longer met CSM’s 

forecast. Thus, we repeated step three 

and adjusted each manufacturer’s truck 

sales so that they met CSM’s forecast. 

The sales of each truck segment (by 

manufacturer) were adjusted by the 

same factor. The resulting sales 

projection matched EIA’s total truck 

sales projection and CSM’s 

manufacturer forecast, but sales by 

market segment no longer met CSM’s 

forecast. However, the difference 

between the sales projections after this 

fifth step was closer to CSM’s market 

segment forecast than it was after step 

three. In other words, the sales 

projection was converging. We repeated 

these adjustments, matching 

manufacturer sales mix in one step and 

then market segment in the next for a 

total of 19 times. At this point, we were 

able to match the market segment splits 

exactly and the manufacturer splits 

were within 0.1% of our goal, which is 

well within the needs of this analysis. 

The next step in developing the 

baseline fleet was to characterize the 

vehicles within each manufacturersegment combination. In large part, this 

was based on the characterization of the 

specific vehicle models sold in 2008. 

EPA and NHTSA chose to base our 

estimates of detailed vehicle 

characteristics on 2008 sales for several 

reasons. One, these vehicle 

characteristics are not confidential and 

can thus be published here for careful 

review and comment by interested 

parties. Two, being actual sales data, 

this vehicle fleet represents the 

distribution of consumer demand for 

utility, performance, safety, etc. 

We gathered most of the information 

about the 2008 vehicle fleet from EPA’s 

emission certification and fuel economy 

database. The data obtained from this 

source included vehicle production 

volume, fuel economy, engine size, 

number of engine cylinders, 

transmission type, fuel type, etc. EPA’s 

certification database does not include a 

detailed description of the types of fuel 

economy-improving/CO2-reducing 

technologies considered in this 

proposal. Thus, we augmented this 

description with publicly available data 

which includes more complete 

technology descriptions from Ward’s 

Automotive Group.68 In a few instances 

when required vehicle information was 

not available from these two sources 

(such as vehicle footprint), we obtained 

this information from publicly 

accessible Internet sites such as 

Motortrend.com and Edmunds.com.69

The projections of future car and 

truck sales described above apply to 

each manufacturer’s sales by market 

segment. The EPA emissions 

certification sales data are available at a 

much finer level of detail, essentially 

vehicle configuration. As mentioned 

above, we placed each vehicle in the 

EPA certification database into one of 

the CSM market segments. We then 

totaled the sales by each manufacturer 

for each market segment. If the 

combination of EIA and CSM forecasts 

indicated an increase in a given 

manufacturer’s sales of a particular 

market segment, then the sales of all the 

individual vehicle configurations were 

adjusted by the same factor. For 

example, if the Prius represented 30% 

of Toyota’s sales of compact cars in 

2008 and Toyota’s sales of compact cars 

in 2016 was projected to double by 

2016, then the sales of the Prius were 

doubled, and the Prius sales in 2016 

remained 30% of Toyota’s compact car 

sales. 

NHTSA and EPA request comment on 

the methodology and data sources used 

for developing the baseline vehicle fleet 

for this proposal and the reasonableness 

of the results. 

3. How Is the Development of the 

Baseline Fleet for This Proposal 

Different From NHTSA’s Historical 

Approach, and Why Is This Approach 

Preferable? 

NHTSA has historically based its 

analysis of potential new CAFE 

standards on detailed product plans the 

agency has requested from 

manufacturers planning to produce light 

vehicles for sale in the United States. 

Although the agency has not attempted 

to compel manufacturers to submit such 

information, most major manufacturers 

and some smaller manufacturers have 

voluntarily provided it when requested. 

As in this and other prior 

rulemakings, NHTSA has requested 

extensive and detailed information 

regarding the models that manufacturers 

plan to offer, as well as manufacturers’ 

estimates of the volume of each model 

they expect to produce for sale in the 

U.S. NHTSA’s recent requests have 

sought information regarding a range of 

engineering and planning characteristics 

for each vehicle model (e.g., fuel 

economy, engine, transmission, physical 

dimensions, weights and capacities, 

redesign schedules), each engine (e.g., 

fuel type, fuel delivery, aspiration, 

valvetrain configuration, valve timing, 

valve lift, power and torque ratings), 

and each transmission (e.g., type, 

number of gears, logic). 

The information that manufacturers 

have provided in response to these 

requests has varied in completeness and 

detail. Some manufacturers have 

submitted nearly all of the information 

NHTSA has requested, have done so for 

most or all of the model years covered 

by NHTSA’s requests, and have closely 

followed NHTSA’s guidance regarding 

the structure of the information. Other 

manufacturers have submitted partial 

information, information for only a few 

model years, and/or information in a 

structure less amenable to analysis. Still 

other manufacturers have not responded 

to NHTSA’s requests or have responded 

on occasion, usually with partial 

information. 

In recent rulemakings, NHTSA has 

integrated this information and 

estimated missing information based on 

a range of public and commercial 

sources (such as those used to develop 

today’s market forecast). For 

unresponsive manufacturers, NHTSA 

has estimated fleet composition based 

on the latest-available CAFE compliance 

data (the same data used as part of the 

foundation for today’s market forecast). 

NHTSA has then adjusted the size of the 

fleet based on AEO’s forecast of the light 

vehicle market and normalized 

manufacturers’ market shares based on 

the latest-available CAFE compliance 

data. 

Compared to this approach, the 

market forecast the agencies have 

developed for this analysis has both 

advantages and disadvantages. 

Most importantly, today’s market 

forecast is much more transparent. The 

information sources used to develop 

today’s market forecast are all either in 

the public domain or available 

commercially. Therefore, NHTSA and 

EPA are able to make public the market 

inputs actually used in the agencies’ 

respective modeling systems, such that 

any reviewer may independently repeat 

and review the agencies’ analyses. 

Previously, although NHTSA provided 

this type of information to 

manufacturers upon request (e.g., GM 

requested and received outputs specific 

to GM), NHTSA was otherwise unable 

to release market inputs and the most 

detailed model outputs (i.e., the outputs 

containing information regarding 

specific vehicle models) because doing 

so would violate requirements 

protecting manufacturers’ confidential 

business information from disclosure.70

Therefore, this approach provides much 

greater opportunity for the public to 

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71However, as discussed below, an alternative 

approach that NHTSA is exploring would be to use 

only manufacturers’ near-term product plans, e.g., 

from MY 2010 or MY 2011. NHTSA believes 

manufacturers’ near-term plans should be less 

subject to this concern about missing costs and 

benefits already included in the baseline. NHTSA 

is also hopeful that in connection with the agencies’ 

rulemaking efforts, manufacturers will be willing to 

make their near-term plans available to the public. 

72We note that market share forecasts like CSM’s 

could, of course, be applied to any data used to 

create the baseline market forecast. If, as mentioned 

above, manufacturers do consent to make public 

MY 2010 or 2011 product plan data for the final 

rule, the agencies could consider applying market 

share forecast to that data as well. 

review every aspect of the agencies’ 

analyses and comment accordingly. 

Another significant advantage of 

today’s market forecast is the agencies’ 

ability to assess more fully the 

incremental costs and benefits of the 

proposed standards. In the past two 

years, NHTSA has requested and 

received three sets of future product 

plan submissions from the automotive 

companies, most recently this past 

spring. These submissions are intended 

to be the actual future product plans for 

the companies. In the most recent 

submission it is clear that many of the 

firms have been and are clearly 

planning for future CAFE standard 

increases for model years 2012 and 

later. The results for the product plans 

for many firms are a significant increase 

in their projected future application of 

fuel economy improvement technology. 

However, for the purposes of assessing 

the costs of the model year 2012–2016 

standards the use of the product plans 

presents a difficulty, namely, how to 

assess the increased costs of the 

proposed future standards if the 

companies have already anticipated the 

future standards and the costs are 

therefore now part of the agencies’ 

baseline. This is a real concern with the 

most recent product plans received from 

the companies, and is one of the reasons 

the agencies have decided not to use the 

recent product plans to define the 

baseline market data for assessing our 

proposed standards. The approach used 

for this proposal does not raise this 

concern, as the underlying data comes 

from model year 2008 production.71

In addition, by developing a baseline 

fleet from common sources, the agencies 

have been able to avoid some errors— 

perhaps related to interpretation of 

requests—that have been observed in 

past responses to NHTSA’s requests. For 

example, while reviewing information 

submitted to support the most recent 

CAFE rulemaking, NHTSA staff 

discovered that one manufacturer had 

misinterpreted instructions regarding 

the specification of vehicle track width, 

leading to important errors in estimates 

of vehicle footprints. Although the 

manufacturer resubmitted the 

information with corrections, with this 

approach, the agencies are able to 

reduce the potential for such errors and 

inconsistencies by utilizing common 

data sources and procedures. 

An additional advantage of the 

approach used for this proposal is a 

consistent projection of the change in 

fuel economy and CO2 emissions across 

the various vehicles from the 

application of new technology. In the 

past, company product plans would 

include the application of new fuel 

economy improvement technology for a 

new or improved vehicle model with 

the resultant estimate from the company 

of the fuel economy levels for the 

vehicle. However, companies did not 

always provide to NHTSA the detailed 

analysis which showed how they 

forecasted what the fuel economy 

performance of the new vehicle was— 

that is, whether it came from actual test 

data, from vehicle simulation modeling, 

from best engineering judgment or some 

other methodology. Thus, it was not 

possible for NHTSA to review the 

methodology used by the manufacturer, 

nor was it possible to review what 

approach the different manufacturers 

utilized from a consistency perspective. 

With the approach used for this 

proposal, the baseline market data 

comes from actual vehicles which have 

actual fuel economy test data—so there 

is no question what is the basis for the 

fuel economy or CO2 performance of the 

baseline market data as it is actual 

measured data. 

Another advantage of today’s 

approach is that future market shares 

are based on a forecast of what will 

occur in the future, rather than a static 

value. In the past, NHTSA has utilized 

a constant market share for each model 

year, based on the most recent year 

available, for example from the CAFE 

compliance data, that is, a forecast of 

the 2011–2015 time frame where 

company market shares do not change. 

In the approach used today, we have 

utilized the forecasts from CSM of how 

future market shares among the 

companies may change over time.72

The approach the agencies have taken 

in developing today’s market forecast 

does, however, have some 

disadvantages. Most importantly, it 

produces a market forecast that does not 

represent some important changes likely 

to occur in the future. 

Some of the changes not captured by 

today’s approach are specific. For 

example, the agencies’ current market 

forecast includes some vehicles for 

which manufacturers have announced 

plans for elimination or drastic 

production cuts such as the Chevrolet 

Trailblazer, the Chrysler PT Cruiser, the 

Chrysler Pacifica, the Dodge Magnum, 

the Ford Crown Victoria, the Hummer 

H2, the Mercury Sable, the Pontiac 

Grand Prix, and the Pontiac G5. These 

vehicle models appear explicitly in 

market inputs to NHTSA’s analysis, and 

are among those vehicle models 

included in the aggregated vehicle types 

appearing in market inputs to EPA’s 

analysis. 

Conversely, the agencies’ market 

forecast does not include some 

forthcoming vehicle models, such as the 

Chevrolet Volt, the Chevrolet Camaro, 

the Ford Fiesta and several publicly 

announced electric vehicles, including 

the announcements from Nissan. Nor 

does it include several MY 2009 or 2010 

vehicles, such as the Honda Insight, the 

Hyundai Genesis and the Toyota Venza, 

as our starting point for vehicle 

definitions was Model Year 2008. 

Additionally, the market forecast does 

not account for publicly announced 

technology introductions, such as Ford’s 

EcoBoost system, whose product plans 

specify which vehicles and how many 

are planned to have this technology. 

Were the agencies to rely on 

manufacturers’ product plans (that were 

submitted), the market forecast would 

account for not only these specific 

examples, but also for similar examples 

that have not yet been announced 

publicly. 

The agencies anticipate that including 

vehicles after MY 2008 would not 

significantly impact our estimates of the 

technology required to comply with the 

proposed standards. If they were 

included, these vehicles could make the 

standards appear to cost less relative to 

the reference case. First, the projections 

of sales by vehicle segment and 

manufacturer include these expected 

new vehicle models. Thus, to the extent 

that these new vehicles are expected to 

change consumer demand, they should 

be reflected in our reference case. While 

we are projecting the characteristics of 

the new vehicles with MY 2008 

vehicles, the primary difference 

between the new vehicles and 2008 

vehicles in the same vehicle segment is 

the use of additional CO2-reducing and 

fuel-saving technology. Both the 

NHTSA and EPA models add such 

technology to facilitate compliance with 

the proposed standards. Thus, our 

future projections of the vehicle fleet 

generally shift vehicle designs towards 

those of these newer vehicles. The 

advantage of our approach is that it 

helps clarify the costs of this proposal, 

as the cost of all fuel economy 

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73A full-size pickup might be offered with 

various combinations of cab style (e.g., regular, 

extended, crew) and box length (e.g., 51⁄2′, 61⁄2′, 8′) 

and, therefore, multiple footprint sizes. CAFE 

compliance data for MY 2008 data does not contain 

footprint information, and does not contain 

information that can be used to reliably identify 

which pickup entries correspond to footprint values 

estimable from public or commercial sources. 

Therefore, the agencies have used the known 

production levels of average values to represent all 

variants of a given pickup line (e.g., all variants of 

the F–150 and the Sierra/Silverado) in order to 

calculate the sales-weighted average footprint value 

for each pickup family. Again, this has no impact 

on the results of our modeling effort, although it 

would require re-estimation if we were to examine 

light truck standards of a different shape. In the 

extreme, one single footprint value could be used 

for every vehicle sold by a single manufacturer as 

long as the fuel economy standard associated with 

this footprint value represented the sales-weighted, 

harmonic average of the fuel economy standards 

associated with each vehicle’s footprint values. 74 74 FR 9185 (Mar. 3, 2009) 

improvements beyond those required by 

the MY 2011 CAFE standards are being 

assigned to the proposal. In some cases, 

the new vehicles being introduced by 

manufacturers are actually in response 

to their anticipation of this rulemaking. 

Our approach prevents some of these 

technological improvements and their 

associated cost from being assumed in 

the baseline. Thus, the added 

technology will not be considered to be 

free for the purposes of this rule. 

We note that, as a result of these 

issues, the market file may show sales 

volumes for certain vehicles during MYs 

2012–2016 even though they will be 

discontinued before that time frame. 

Although the agencies recognize that 

these specific vehicles will be 

discontinued, we continue to include 

them in the market forecast because 

they are useful for representing 

successor vehicles that may appear in 

the rulemaking time frame to replace the 

discontinued vehicles in that market 

segment. 

Other market changes not captured by 

today’s approach are broader. For 

example, Chrysler Group LLC has 

announced plans to offer small- and 

medium-sized cars using Fiat 

powertrains. The product plan 

submitted by Chrysler includes vehicles 

that appear to reflect these plans. 

However, none of these specific vehicle 

models are included in the market 

forecast the agencies have developed 

starting with MY 2008 CAFE 

compliance data. The product plan 

submitted by Chrysler is also more 

optimistic with regard to Chrysler’s 

market share during MYs 2012–2016 

than the market forecast projected by 

CSM and used by the agencies for this 

proposal. Similarly, the agencies’ 

market forecast does not reflect Nissan’s 

plans regarding electric vehicles. 

Additionally, some technical 

information that manufacturers have 

provided in product plans regarding 

specific vehicle models is, at least 

insofar as NHTSA and EPA have been 

able to determine, not available from 

public or commercial sources. While 

such gaps do not bear significantly on 

the agencies’ analysis, the diversity of 

pickup configurations necessitated 

utilizing a sales-weighted average 

footprint value 73 for many 

manufacturers’ pickups. Since our 

modeling only utilizes footprint in order 

to estimate each manufacturer’s CO2 or 

fuel economy standard and all the other 

vehicle characteristics are available for 

each pickup configuration, this 

approximation has no practical impact 

on the projected technology or cost 

associated with compliance with the 

various standards evaluated. The only 

impact which could arise would be if 

the relative sales of the various pickup 

configurations changed, or if the 

agencies were to explore standards with 

a different shape. This would 

necessitate recalculating the average 

footprint value in order to maintain 

accuracy. 

The agencies have carefully 

considered these advantages and 

disadvantages of using a market forecast 

derived from public and commercial 

sources rather than from manufacturers’ 

product plans, and we believe that the 

advantages outweigh the disadvantages 

for the purpose of proposing standards 

for model years 2012–2016. NHTSA’s 

inability to release confidential market 

inputs and corresponding detailed 

outputs from the CAFE model has raised 

serious concerns among many observers 

regarding the transparency of NHTSA’s 

analysis, as well as related concerns that 

the lack of transparency might enable 

manufacturers to provide unrealistic 

information to try to influence NHTSA’s 

determination of the maximum feasible 

standards. Although NHTSA does not 

agree with some observers’ assertions 

that some manufacturers have 

deliberately provided inaccurate or 

otherwise misleading information, 

today’s market forecast is fully open and 

transparent, and is therefore not subject 

to such concerns. 

With respect to the disadvantages, the 

agencies are hopeful that manufacturers 

will, in the future, agree to make public 

their plans regarding model years that 

are very near, such as MY 2010 or 

perhaps MY 2011, so that this 

information can be considered for 

purposes of the final rule analysis and 

be available for the public. In any event, 

because NHTSA and EPA are releasing 

market inputs used in the agencies’ 

respective analyses, manufacturers, 

suppliers, and other automobile 

industry observers and participant can 

submit comments on how these inputs 

should be improved, as can all other 

reviewers. 

4. How Does Manufacturer Product Plan 

Data Factor into the Baseline Used in 

This Proposal? 

In the Spring of 2009, many 

manufacturers submitted product plans 

in response to NHTSA’s request that 

they do so.74 NHTSA and EPA both 

have access to these plans, and both 

agencies have reviewed them in detail. 

A small amount of product plan data 

was used in the development of the 

baseline. The specific pieces of data are: 

• Wheelbase; 

• Track Width Front; 

• Track Width Rear; 

• EPS (Electric Power Steering); 

• ROLL (Reduced Rolling Resistance); 

• LUB (Advance Lubrication i.e., low 

weight oil); 

• IACC (Improved Electrical 

Accessories); 

• Curb Weight; 

• GVWR (Gross Vehicle Weight 

Rating) 

The track widths, wheelbase, curb 

weight, and GVWR could have been 

looked up on the Internet (159 were), 

but were taken from the product plans 

when available for convenience. To 

ensure accuracy, a sample from each 

product plan was used as a check 

against the numbers available from 

Motortrend.com. These numbers will be 

published in the baseline file since they 

can be easily looked up on the Internet. 

On the other hand, EPS, ROLL, LUB, 

and IACC are difficult to determine 

without using manufacturer’s product 

plans. These items will not be published 

in the baseline file, but the data has 

been aggregated into the EPA baseline in 

the technology effectiveness and cost 

effectiveness for each vehicle in a way 

that allows the baseline for the model to 

be published without revealing the 

manufacturers’ data. 

Considering both the publiclyavailable baseline used in this proposal 

and the product plans provided recently 

by manufacturers, however, it is 

possible that the latter could potentially 

be used to develop a more realistic 

forecast of product mix and vehicle 

characteristics of the near-future lightduty fleet. At the core of concerns about 

using company product plans are two 

concerns about doing so: (a) Uncertainty 

and possible inaccuracy in 

manufacturers’ forecasts and (b) the 

transparency of using product plan data. 

With respect to the first concern, the 

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75 49 U.S.C. 32902(a)(3)(A). 

76Production for sale in the United States. 

77The equations are equivalent but are specified 

differently due to differences in the agencies’ 

respective models. 

78This function is linear in fuel consumption but 

not in fuel economy. 

agencies note that manufacturers’ nearterm forecasts (i.e., for model years two 

or three years into the future) should be 

less uncertain and more amenable to 

eventual retrospective analysis (i.e., 

comparison to actual sales) than 

manufacturers’ longer-term forecasts 

(i.e., for model years more than five 

years into the future). With respect to 

the second concern, NHTSA has 

consulted with most manufacturers and 

believes that although few, if any, 

manufacturers would be willing to make 

public their longer-term plans, many 

responding manufacturers may be 

willing to make public their short-term 

plans. In a companion notice, NHTSA is 

seeking product plan information from 

manufacturers for MYs 2008 to 2020, 

and the agencies will also continue to 

consult with manufacturers regarding 

the possibility of releasing plans for MY 

2010 and/or MY 2011 for purposes of 

developing and analyzing the final GHG 

and CAFE standards for MYs 2012– 

2016. The agencies are hopeful that 

manufacturers will agree to do so, and 

that NHTSA and EPA would therefore 

be able to use product plans in ways 

that might aid in increasing the 

accuracy of the baseline market forecast. 

C. Development of Attribute-Based 

Curve Shapes 

NHTSA and EPA are setting attributebased CAFE and CO2 standards that are 

defined by a mathematical function for 

MYs 2012–2016 passenger cars and light 

trucks. EPCA, as amended by EISA, 

expressly requires that CAFE standards 

for passenger cars and light trucks be 

based on one or more vehicle attributes 

related to fuel economy, and be 

expressed in the form of a mathematical 

function.75 The CAA has no such 

requirement, though in past rules, EPA 

has relied on both universal and 

attribute-based standards (e.g., for 

nonroad engines, EPA uses the attribute 

of horsepower). However, given the 

advantages of using attribute-based 

standards and given the goal of 

coordinating and harmonizing CO2

standards promulgated under the CAA 

and CAFE standards promulgated under 

EPCA, as expressed in the joint NOI, 

EPA is also proposing to issue standards 

that are attribute-based and defined by 

mathematical functions. 

Under an attribute-based standard, 

every vehicle model has a performance 

target (fuel economy and GHG 

emissions for CAFE and GHG emissions 

standards, respectively), the level of 

which depends on the vehicle’s 

attribute (for this proposal, footprint). 

The manufacturers’ fleet average 

performance is determined by the 

production-weighed 76 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.77 As a possible option for 

future rulemakings, the constrained 

linear form was introduced by NHTSA 

in the 2007 NPRM proposing CAFE 

standards for MY 2011–2015. Described 

mathematically, the proposed 

constrained linear function is defined 

according to the following formula: 78

Where: 

TARGET = the fuel economy target (in mpg) 

applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), 

a = the function’s upper limit (in mpg), 

b = the function’s lower limit (in mpg), 

c = the slope (in gpm per square foot) of the 

sloped portion of the function, 

d = the intercept (in gpm) of the sloped 

portion of the function (that is, the value 

the sloped portion would take if 

extended to a footprint of 0 square feet, 

and the MIN and MAX functions take the 

minimum and maximum, respectively, 

of the included values; for example, 

MIN(1,2) = 1, MAX(1,2) = 2, and 

MIN[MAX(1,2),3)] = 2. 

TARGET

MIN MAX c FOOTPRINT d

a b

=

× + ⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢ ⎤

⎦

⎥

1

1 1

, ,

Because the format is linear on a 

gallons-per-mile basis, not on a milesper-gallon basis, it is plotted as fuel 

consumption below. Graphically, the constrained linear form appears as 

shown in Figure II.C.1–1. 

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The specific form and stringency for 

each fleet (passenger cars and light 

trucks) and model year are defined 

through specific values for the four 

coefficients shown above. 

EPA is proposing the equivalent 

equation below for assigning CO2 targets 

to an individual vehicle’s footprint 

value. 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 seen in the 

tables above. Described mathematically, 

EPA’s proposed piecewise linear 

function is as follows: 

Target = a, if x ≤ l 

Target = cx + d, if l < x ≤ h 

Target = b, if x > h 


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In the constrained linear form applied 

by NHTSA, this equation takes the 

simplified form: 

Target = MIN [MAX (c * x + d, a), b] 

Where: 

Target = the CO2 target value for a given 

footprint (in g/mi) 

a = the minimum target value (in g/mi CO2) 

b = the maximum target value (in g/mi CO2) 

c = the slope of the linear function (in g/mi 

per sq ft CO2) 

d = is the intercept or zero-offset for the line 

(in g/mi CO2) 

x = footprint of the vehicle model (in square 

feet, rounded to the nearest tenth) 

l & h are the lower and higher footprint limits 

or constraints or (‘‘kinks’’) or the 

boundary between the flat regions and 

the intermediate sloped line (in sq ft) 

Graphically, piecewise linear form, 

like the constrained linear form, appears 

as shown in Figure II.C.1–2. 


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79The agencies excluded diesel engines and 

strong hybrid vehicle technologies from this 

exercise (and only this exercise) because the 

agencies expect that manufacturers would not need 

to rely heavily on these technologies in order to 

comply with the proposed standards. NHTSA and 

EPA did include diesel engines and strong hybrid 

vehicle technologies in all other portions of their 

analyses. 80 49 U.S.C. 32902(b)(4). 

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As for the constrained linear form, the 

specific form and stringency for each 

fleet (passenger car and light trucks) and 

model year are defined through specific 

values for the four coefficients shown 

above. 

For purposes of this rule, NHTSA and 

EPA developed the basic curve shapes 

using methods similar to those applied 

by NHTSA in fitting the curves defining 

the MY 2011 standards. The first step is 

defining the reference market inputs (in 

the form used by NHTSA’s CAFE 

model) described in Section II.B of this 

preamble and in Chapter 1 of the joint 

TSD. However, because the baseline 

fleet is technologically heterogeneous, 

NHTSA used the CAFE model to 

develop a fleet to which nearly all the 

technologies discussed in Chapter 3 of 

the joint TSD 79 were applied, by taking 

the following steps: (1) Treating all 

manufacturers as unwilling to pay civil 

penalties rather than applying 

technology, (2) applying any technology 

at any time, irrespective of scheduled 

vehicle redesigns or freshening, and (3) 

ignoring ‘‘phase-in caps’’ that constrain 

the overall amount of technology that 

can be applied by the model to a given 

manufacturer’s fleet. These steps helped 

to increase technological parity among 

vehicle models, thereby providing a 

better basis (than the baseline or 

reference fleets) for estimating the 

statistical relationship between vehicle 

size and fuel economy. 

In fitting the curves, NHTSA also 

continued to apply constraints to limit 

the function’s value for both the 

smallest and largest vehicles. Without a 

limit at the smallest footprints, the 

function—whether logistic or linear— 

can reach values that would be unfairly 

burdensome for a manufacturer that 

elects to focus on the market for small 

vehicles; depending on the underlying 

data, an unconstrained form could 

apply to the smallest vehicles targets 

that are simply unachievable. Limiting 

the function’s value for the smallest 

vehicles ensures that the function 

remains technologically achievable at 

small footprints, and that it does not 

unduly burden manufacturers focusing 

on small vehicles. On the other side of 

the function, without a limit at the 

largest footprints, the function may 

provide no floor on required fuel 

economy. Also, the safety 

considerations that support the 

provision of a disincentive for 

downsizing as a compliance strategy 

apply weakly—if at all—to the very 

largest vehicles. Limiting the function’s 

value for the largest vehicles leads to a 

function with an inherent absolute 

minimum level of performance, while 

remaining consistent with safety 

considerations. 

Before fitting the sloped portion of the 

constrained linear form, NHTSA 

selected footprints above and below 

which to apply constraints (i.e., 

minimum and maximum values) on the 

function. For passenger cars, the agency 

noted that several manufacturers offer 

small and, in some cases, sporty coupes 

below 41 square feet, examples 

including the BMW Z4 and Mini, Saturn 

Sky, Honda Fit and S2000, Hyundai 

Tiburon, Mazda MX–5 Miata, Suzuki 

SX4, Toyota Yaris, and Volkswagen 

New Beetle. Because such vehicles 

represent a small portion (less than 10 

percent) of the passenger car market, yet 

often have characteristics that could 

make it infeasible to achieve the very 

challenging targets that could apply in 

the absence of a constraint, NHTSA is 

proposing to ‘‘cut off’’ the linear portion 

of the passenger car function at 41 

square feet. For consistency, the agency 

is proposing to do the same for the light 

truck function, although no light trucks 

are currently offered below 41 square 

feet. The agency further noted that 

above 56 square feet, the only passenger 

car model present in the MY 2008 fleet 

were four luxury vehicles with 

extremely low sales volumes—the 

Bentley Arnage and three versions of the 

Rolls Royce Phantom. NHTSA is 

therefore proposing to ‘‘cut off’’ the 

linear portion of the passenger car 

function at 56 square feet. Finally, the 

agency noted that although public 

information is limited regarding the 

sales volumes of the many different 

configurations (cab designs and bed 

sizes) of pickup trucks, most of the 

largest pickups (e.g., the Ford F–150, 

GM Sierra/Silverado, Nissan Titan, and 

Toyota Tundra) appear to fall just above 

66 square feet in footprint. NHTSA is 

therefore proposing to ‘‘cut off’’ the 

linear portion of the light truck function 

at 66 square feet. 

NHTSA and EPA seek comment on 

this approach to fitting the curves. We 

note that final decisions on this issue 

will play an important role in 

determining the form and stringency of 

the final CAFE and CO2 standards, the 

incentives those standards will provide 

(e.g., with respect to downsizing small 

vehicles), and the relative compliance 

burden faced by each manufacturer. 

For purposes of the CAFE and CO2

standards proposed in this NPRM, 

NHTSA and EPA recognize that there is 

some possibility that low fuel prices 

during the years in which MY 2012– 

2016 vehicles are in service might lead 

to less than currently anticipated fuel 

savings and emissions reductions. One 

way to assure that emission reductions 

are achieved in fact is through the use 

of explicit backstops, fleet average 

standards established at an absolute 

level. For purposes of the CAFE 

program, EISA requires a backstop for 

domestically-manufactured passenger 

cars—a universal minimum, nonattribute-based standard of either ‘‘27.5 

mpg or 92 percent of the average fuel 

economy projected by the Secretary of 

Transportation for the combined 

domestic and non-domestic passenger 

automobile fleets manufactured for sale 

in the United States by all 

manufacturers in the model year 

* * *,’’ whichever is greater.80 In the 

MY 2011 final rule, the first rule setting 

standards since EISA added the 

backstop provision to EPCA, NHTSA 

considered whether the statute 

permitted the agency to set backstop 

standards for the other regulated fleets 

of imported passenger cars and light 

trucks. Although commenters expressed 

support both for and against a more 

permissive reading of EISA, NHTSA 

concluded in that rulemaking that its 

authority was likely limited to setting 

only the backstop standard that 

Congress expressly provided, i.e., the 

one for domestic passenger cars. A 

backstop, however, could be adopted 

under section 202(a) of the CAA 

assuming it could be justified under the 

relevant statutory criteria. EPA and 

NHTSA also note that the flattened 

portion of the car curve directionally 

addresses the issue of a backstop (i.e., a 

flat curve is itself a backstop). The 

agencies seek comment on whether 

backstop standards, or any other method 

within the agencies’ statutory authority, 

should and can be implemented in 

order to guarantee a level of CO2

emissions reductions and fuel savings 

under the attribute-based standards. 

Having developed a set of baseline 

data to which to fit the mathematical 

fuel consumption function, the initial 

values for parameters c and d were 

determined for cars and trucks 

separately. c and d were initially set at 

the values for which the average 

(equivalently, sum) of the absolute 

values of the differences was minimized 

between the ‘‘maximum technology’’ 

fleet fuel consumption (within the 

footprints between the upper and lower 

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limits) and the straight line the function 

defined above at the same 

corresponding vehicle footprints. That 

is, c and d were determined by 

minimizing the average absolute 

residual, commonly known as the MAD 

(Mean Absolute Deviation) approach, of 

the corresponding straight line. 

Finally, NHTSA calculated the values 

of the upper and lower values (a and b) 

based on the corresponding footprints 

discussed above (41 and 56 square feet 

for passenger cars, and 41 and 66 square 

feet for light trucks). 

The result of this methodology is 

shown below in Figures II.A.2–2 and 

II.A.2–3 for passenger cars and light 

trucks, respectively. The fitted curves 

are shown with the underlying 

‘‘maximum technology’’ passenger car 

and light truck fleets. For passenger 

cars, the mean absolute deviation of the 

sloped portion of the function was 14 

percent. For trucks, the corresponding 

MAD was 10 percent. 

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The agencies used these functional 

forms as a starting point to develop 

mathematical functions defining the 

actual proposed standards as discussed 

above. The agencies then transposed 

these functions vertically (i.e., on a gpm 

or CO2 basis, uniformly downward) to 

produce the relative car and light truck 

standards described in the next section. 

D. Relative Car-Truck Stringency 

The agencies have determined, under 

their respective statutory authorities, 

that it is appropriate to propose 

fleetwide standards with the projected 

levels of stringency of 34.1 mpg or 250 

g/mi (as well as the corresponding 

intermediate year fleetwide standards) 

for NHTSA and EPA respectively. To 

determine the relative stringency of 

passenger car and light truck standards, 

the agencies are concerned that 

increasing the difference between the 

car and truck standards (either by 


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81For example, since many 2WD SUVs are 

classified as passenger cars, manufacturers have 

already warned that high car standards relative to 

truck standards could create an incentive for them 

to drop the 2WD version and sell only the 4WD 

version. 

raising the car standards or lowering the 

truck standards) could encourage 

manufacturers to build fewer cars and 

more trucks, likely to the detriment of 

fuel economy and CO2 reductions.81 In 

order to maintain consistent car/truck 

standards, the agencies applied a 

constant ratio between the estimated 

average required performance under the 

passenger car and light truck standards, 

in order to maintain a stable set of 

incentives regarding vehicle 

classification. 

To calculate relative car-truck 

stringency in this proposal, the agencies 

explored a number of possible 

alternatives. In the interest of 

harmonization, the agencies agree to use 

the Volpe model in order to estimate 

stringencies at which net benefits would 

be maximized. Further details of the 

development of this scenario approach 

can be found in Section IV of this 

preamble as well as in NHTSA’s PRIA 

and DEIS. NHTSA examined passenger 

car and light truck standards that would 

produce the proposed combined average 

fuel economy levels from Table I.B.2–2 

above. NHTSA did so by shifting 

downward the curves that maximize net 

benefits, holding the relative stringency 

of passenger car and light truck 

standards constant at the level 

determined by maximizing net benefits, 

such that the average fuel economy 

required of passenger cars remains 34 

percent higher than the average fuel 

economy required of light trucks. This 

methodology resulted in the average 

fuel economy levels for passenger cars 

and light trucks during MYs 2012–2016 

as shown in Table I.D.2–1. The 

following chart illustrates this 

methodology of shifting the standards 

from the levels maximizing net benefits 

to the levels consistent with the 

combined fuel economy standards in 

this rule. 

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After this analysis was completed, 

EPA examined two alternative 

approaches to determine whether they 

would lead to significantly different 

outcomes. First, EPA analyzed the 

relative stringencies using a 10-year 

payback analysis (with the OMEGA 

model). This analysis sets the relative 

stringencies if increased technology cost 

is to be paid back out of fuel savings 

over a 10-year period (assuming a 3% 

discount rate). Second, EPA also 

conducted a technology maximized 

analysis, which sets the relative 

stringencies if all technologies (with the 

exception of strong hybrids and diesels) 

are assumed to be utilized in the fleet. 

(This is the same methodology that was 

used to determine the curve shape as 

explained in the section above and in 

Chapter 2 of the joint TSD section). 


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Compared to NHTSA’s approach based 

on stringencies estimated to maximize 

net benefits, EPA staff found that these 

two other approaches produced very 

similar results to NHTSA’s, i.e., similar 

ratios of car-truck relative stringency 

(the ratio being within a range of 1.34 

to 1.37 relative stringency of the car to 

the truck fuel economy standard). EPA 

believes that this similarity supports the 

proposed relative stringency of the two 

standards. 

The car and truck standards for EPA 

(Table I.D. 2–4 above) were 

subsequently determined by first 

converting the average required fuel 

economy levels to average required CO2

emission rates, and then applying the 

expected air conditioning credits for 

2012–2016. These A/C credits are 

shown in the following table. Further 

details of the derivation of these factors 

can be found in Section III of this 

preamble or in the EPA RIA. 

TABLE II.D.1–1 EXPECTED FLEET A/C CREDITS (IN CO2 EQUIVALENT G/MI) FROM 2012–2016 

Average technology 

penetration 

(percent) 

Average 

credit 

for cars 

Average 

credit for 

trucks 

Average 

credit for 

combined 

fleet 

2012 ............................................................................................................. 25 3.0 3.4 3.1

2013 ............................................................................................................. 40 4.8 5.4 5.0

2014 ............................................................................................................. 55 7.2 8.1 7.5

2015 ............................................................................................................. 75 9.6 10.8 10.0 

2016 ............................................................................................................. 85 10.2 11.5 10.6 

The agencies seek comment on the 

use of this methodology for 

apportioning the fleet stringencies to 

relative car and truck standards for 

2012–2016. 

E. Joint Vehicle Technology 

Assumptions 

Vehicle technology assumptions, i.e., 

assumptions about their cost, 

effectiveness, and the rate at which they 

can be incorporated into new vehicles, 

are often very controversial as they have 

a significant impact on the levels of the 

standards. Agencies must, therefore, 

take great care in developing and 

justifying these assumptions. In 

developing technology inputs for MY 

2012–2016 standards, the agencies 

reviewed the technology assumptions 

that NHTSA used in setting the MY 

2011 standards and the comments that 

NHTSA received in response to its May 

2008 Notice of Proposed Rulemaking. 

This review is consistent with the 

request by President Obama in his 

January 26 memorandum to DOT. In 

addition, the agencies reviewed the 

technology input estimates identified in 

EPA’s July 2008 Advanced Notice of 

Proposed Rulemaking. The review of 

these documents was supplemented 

with updated information from more 

current literature, new product plans 

and from EPA certification testing. 

As a general matter, the best way to 

derive technology cost estimates is to 

conduct real-world tear down studies. 

These studies break down each 

technology into its respective 

components, evaluate the costs of each 

component, and build up the costs of 

the entire technology based on the 

contribution of each component. As 

such, tear down studies require a 

significant amount of time and are very 

costly. EPA has begun conducting tear 

down studies to assess the costs of 4– 

5 technologies under a contract with 

FEV. To date, only two technologies 

(stoichiometeric gasoline direct 

injection and turbo charging with 

engine downsizing for a 4 cylinder 

engine to a 4 cylinder engine) have been 

evaluated. The agencies relied on the 

findings of FEV for estimating the cost 

of these technologies in this 

rulemaking—directly for the 4 cylinder 

engines, and extrapolated for the 6 and 

8 cylinder engines. The agencies request 

comment on the use of these estimated 

costs from the FEV study. For the other 

technologies, because tear down studies 

were not yet available, the agencies 

decided to pursue, to the extent 

possible, the Bill of Materials (BOM) 

approach as outlined in NHTSA’s MY 

2011 final rule. A similar approach was 

used by EPA in the EPA 2008 Staff 

Technical Report. This approach was 

recommended to NHTSA by Ricardo, an 

international engineering consulting 

firm retained by NHTSA to aid in the 

analysis of public comments on its 

proposed standards for MYs 2011–2015 

because of its expertise in the area of 

fuel economy technologies. A BOM 

approach is one element of the process 

used in tear down studies. The 

difference is that under a BOM 

approach, the build up of cost estimates 

is conducted based on a review of cost 

and effectiveness estimates for each 

component from available literature, 

while under a tear down study, the cost 

estimates which go into the BOM come 

from the tear down study itself. To the 

extent that the agencies departed from 

the MY 2011 CAFE final rule estimates, 

the agencies explained the reasons and 

provided supporting analyses. As tear 

down studies are concluded by FEV 

during the rulemaking process, the 

agencies will make them available in the 

joint rulemaking docket of this 

rulemaking. The agencies will consider 

these studies and any comments 

received on them, as practicable and 

appropriate, as well as any other new 

information pertinent to the rulemaking 

of which the agencies become aware, in 

developing technology cost assumptions 

for the final rule. 

Similarly, the agencies followed a 

BOM approach for developing its 

effectiveness estimates, insofar as the 

BOM developed for the cost estimates 

helped to inform the appropriate 

effectiveness values derived from the 

literature review. The agencies 

supplemented the information with 

results from available simulation work 

and real world EPA certification testing. 

The agencies would also like to note 

that per the Energy Independence and 

Security Act (EISA), the National 

Academies of Sciences is conducting an 

updated study to update Chapter 3 of 

the 2002 NAS Report, which outlines 

technology estimates. The update will 

take a fresh look at that list of 

technologies and their associated cost 

and effectiveness values. 

The report is expected to be available 

on September 30, 2009. As soon as the 

update to the NAS Report is received, it 

will be placed in the joint rulemaking 

docket for the public’s review and 

comment. Because this will occur 

during the comment period, the public 

is encouraged to check the docket 

regularly and provide comments on the 

updated NAS Report by the closing of 

the comment period of this notice. 

NHTSA and EPA will consider the 

updated NAS Report and any comments 

received, as practicable and appropriate, 

on it when considering revisions to the 

technology cost and effectiveness 

estimates for the final rule. 

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49500 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Consideration of this report is consistent 

with the request by President Obama in 

his January 26 memorandum to DOT. 

1. What Technologies Do the Agencies 

Consider? 

The agencies considered over 35 

vehicle technologies that manufacturers 

could use to improve the fuel economy 

and reduce CO2 emissions of their 

vehicles during MYs 2012–2016. The 

majority of the technologies described 

in this section are readily available, well 

known, and could be incorporated into 

vehicles once production decisions are 

made. Other technologies considered 

may not currently be in production, but 

are beyond the research phase and 

under development, and are expected to 

be in production in the next few years. 

These are technologies which can, for 

the most part, be applied both to cars 

and trucks, and which are capable of 

achieving significant improvements in 

fuel economy and reductions in CO2

emissions, at reasonable costs. The 

agencies did not consider technologies 

in the research stage because the 

leadtime available for this rule is not 

sufficient to move such technologies 

from research to production. 

The technologies considered in the 

agencies’ analysis are briefly described 

below. They fall into five broad 

categories: engine technologies, 

transmission technologies, vehicle 

technologies, electrification/accessory 

technologies, and hybrid technologies. 

For a more detailed description of each 

technology and their costs and 

effectiveness, we refer the reader to 

Chapter 3 of the joint TSD, Chapter III 

of NHTSA’s PRIA, and Chapter 1 of 

EPA’s DRIA. Technologies to reduce 

CO2 and HFC emissions from air 

conditioning systems are discussed in 

Section III of this preamble and in EPA’s 

DRIA. 

Types of engine technologies that 

improve fuel economy and reduce CO2

emissions include the following: 

• Low-friction lubricants—low 

viscosity and advanced low friction 

lubricants oils are now available with 

improved performance and better 

lubrication. If manufacturers choose to 

make use of these lubricants, they 

would need to make engine changes and 

possibly conduct durability testing to 

accommodate the low-friction 

lubricants. 

• Reduction of engine friction 

losses—can be achieved through lowtension piston rings, roller cam 

followers, improved material coatings, 

more optimal thermal management, 

piston surface treatments, and other 

improvements in the design of engine 

components and subsystems that 

improve engine operation. 

• Conversion to dual overhead cam 

with dual cam phasing—as applied to 

overhead valves designed to increase 

the air flow with more than two valves 

per cylinder and reduce pumping 

losses. 

• Cylinder deactivation—deactivates 

the intake and exhaust valves and 

prevents fuel injection into some 

cylinders during light-load operation. 

The engine runs temporarily as though 

it were a smaller engine which 

substantially reduces pumping losses. 

• Variable valve timing—alters the 

timing of the intake valve, exhaust 

valve, or both, primarily to reduce 

pumping losses, increase specific 

power, and control residual gases. 

• Discrete variable valve lift— 

increases efficiency by optimizing air 

flow over a broader range of engine 

operation which reduces pumping 

losses. Accomplished by controlled 

switching between two or more cam 

profile lobe heights. 

• Continuous variable valve lift—is 

an electromechanically controlled 

system in which valve timing is 

changed as lift height is controlled. This 

yields a wide range of performance 

optimization and volumetric efficiency, 

including enabling the engine to be 

valve throttled. 

• Stoichiometric gasoline directinjection technology—injects fuel at 

high pressure directly into the 

combustion chamber to improve cooling 

of the air/fuel charge within the 

cylinder, which allows for higher 

compression ratios and increased 

thermodynamic efficiency. 

• Combustion restart—can be used in 

conjunction with gasoline directinjection systems to enable idle-off or 

start-stop functionality. Similar to other 

start-stop technologies, additional 

enablers, such as electric power 

steering, accessory drive components, 

and auxiliary oil pump, might be 

required. 

• Turbocharging and downsizing— 

increases the available airflow and 

specific power level, allowing a reduced 

engine size while maintaining 

performance. This reduces pumping 

losses at lighter loads in comparison to 

a larger engine. 

• Exhaust-gas recirculation boost— 

increases the exhaust-gas recirculation 

used in the combustion process to 

increase thermal efficiency and reduce 

pumping losses. 

• Diesel engines—have several 

characteristics that give superior fuel 

efficiency, including reduced pumping 

losses due to lack of (or greatly reduced) 

throttling, and a combustion cycle that 

operates at a higher compression ratio, 

with a very lean air/fuel mixture, 

relative to an equivalent-performance 

gasoline engine. This technology 

requires additional enablers, such as 

NOx trap catalyst after-treatment or 

selective catalytic reduction NOx aftertreatment. The cost and effectiveness 

estimates for the diesel engine and 

aftertreatment system utilized in this 

proposal have been revised from the 

NHTSA MY 2011 CAFE final rule, and 

the agencies request comment on these 

diesel cost estimates. 

Types of transmission technologies 

considered include: 

• Improved automatic transmission 

controls—optimizes shift schedule to 

maximize fuel efficiency under wide 

ranging conditions, and minimizes 

losses associated with torque converter 

slip through lock-up or modulation. 

• Six-, seven-, and eight-speed 

automatic transmissions—the gear ratio 

spacing and transmission ratio are 

optimized for a broader range of engine 

operating conditions. 

• Dual clutch or automated shift 

manual transmissions—are similar to 

manual transmissions, but the vehicle 

controls shifting and launch functions. 

A dual-clutch automated shift manual 

transmission uses separate clutches for 

even-numbered and odd-numbered 

gears, so the next expected gear is preselected, which allows for faster and 

smoother shifting. 

• Continuously variable 

transmission—commonly uses Vshaped pulleys connected by a metal 

belt rather than gears to provide ratios 

for operation. Unlike manual and 

automatic transmissions with fixed 

transmission ratios, continuously 

variable transmissions can provide fully 

variable transmission ratios with an 

infinite number of gears, enabling finer 

optimization of transmission torque 

multiplication under different operating 

conditions so that the engine can 

operate at higher efficiency. 

• Manual 6-speed transmission— 

offers an additional gear ratio, often 

with a higher overdrive gear ratio, than 

a 5-speed manual transmission. 

Types of vehicle technologies 

considered include: 

• Low-rolling-resistance tires—have 

characteristics that reduce frictional 

losses associated with the energy 

dissipated in the deformation of the 

tires under load, therefore improving 

fuel economy and reducing CO2

emissions. 

• Low-drag brakes—reduce the 

sliding friction of disc brake pads on 

rotors when the brakes are not engaged 

because the brake pads are pulled away 

from the rotors. 

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82EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-Duty Vehicle Carbon Dioxide 

Emissions. EPA420–R–08–008, March 2008. 

• Front or secondary axle disconnect 

for four-wheel drive systems—provides 

a torque distribution disconnect 

between front and rear axles when 

torque is not required for the nondriving axle. This results in the 

reduction of associated parasitic energy 

losses. 

• Aerodynamic drag reduction—is 

achieved by changing vehicle shape or 

reducing frontal area, including skirts, 

air dams, underbody covers, and more 

aerodynamic side view mirrors. 

• Mass reduction and material 

substitution—Mass reduction 

encompasses a variety of techniques 

ranging from improved design and 

better component integration to 

application of lighter and higherstrength materials. Mass reduction is 

further compounded by reductions in 

engine power and ancillary systems 

(transmission, steering, brakes, 

suspension, etc.). The agencies 

recognize there is a range of diversity 

and complexity for mass reduction and 

material substitution technologies and 

there are many techniques that 

automotive suppliers and manufacturers 

are using to achieve the levels of this 

technology that the agencies have 

modeled in our analysis for this 

proposal. The agencies seek comments 

on the methods, costs, and effectiveness 

estimates associated with mass 

reduction and material substitution 

techniques that manufacturers intend to 

employ for reducing fuel consumption 

and CO2 emissions during the 

rulemaking time frame. 

Types of electrification/accessory and 

hybrid technologies considered include: 

• Electric power steering (EPS)—is an 

electrically-assisted steering system that 

has advantages over traditional 

hydraulic power steering because it 

replaces a continuously operated 

hydraulic pump, thereby reducing 

parasitic losses from the accessory 

drive. 

• Improved accessories (IACC)—may 

include high efficiency alternators, 

electrically driven (i.e., on-demand) 

water pumps and cooling fans. This 

excludes other electrical accessories 

such as electric oil pumps and 

electrically driven air conditioner 

compressors. 

• Air Conditioner Systems—These 

technologies include improved hoses, 

connectors and seals for leakage control. 

They also include improved 

compressors, expansion valves, heat 

exchangers and the control of these 

components for the purposes of 

improving tailpipe CO2 emissions as a 

result of A/C use. These technologies 

are covered separately in the EPA RIA. 

• 12-volt micro-hybrid (MHEV)—also 

known as idle-stop or start stop and 

commonly implemented as a 12-volt 

belt-driven integrated starter-generator, 

this is the most basic hybrid system that 

facilitates idle-stop capability. Along 

with other enablers, this system replaces 

a common alternator with a belt-driven 

enhanced power starter-alternator, and a 

revised accessory drive system. 

• Higher Voltage Stop-Start/Belt 

Integrated Starter Generator (BISG)— 

provides idle-stop capability and uses a 

high voltage battery with increased 

energy capacity over typical automotive 

batteries. The higher system voltage 

allows the use of a smaller, more 

powerful electric motor. This system 

replaces a standard alternator with an 

enhanced power, higher voltage, higher 

efficiency starter-alternator, that is belt 

driven and that can recover braking 

energy while the vehicle slows down 

(regenerative braking). 

• Integrated Motor Assist (IMA)/ 

Crank integrated starter generator 

(CISG)—provides idle-stop capability 

and uses a high voltage battery with 

increased energy capacity over typical 

automotive batteries. The higher system 

voltage allows the use of a smaller, more 

powerful electric motor and reduces the 

weight of the wiring harness. This 

system replaces a standard alternator 

with an enhanced power, higher 

voltage, higher efficiency starteralternator that is crankshaft mounted 

and can recover braking energy while 

the vehicle slows down (regenerative 

braking). 

• 2-mode hybrid (2MHEV)—is a 

hybrid electric drive system that uses an 

adaptation of a conventional steppedratio automatic transmission by 

replacing some of the transmission 

clutches with two electric motors that 

control the ratio of engine speed to 

vehicle speed, while clutches allow the 

motors to be bypassed. This improves 

both the transmission torque capacity 

for heavy-duty applications and reduces 

fuel consumption and CO2 emissions at 

highway speeds relative to other types 

of hybrid electric drive systems. 

• Power-split hybrid (PSHEV)—a 

hybrid electric drive system that 

replaces the traditional transmission 

with a single planetary gearset and a 

motor/generator. This motor/generator 

uses the engine to either charge the 

battery or supply additional power to 

the drive motor. A second, more 

powerful motor/generator is 

permanently connected to the vehicle’s 

final drive and always turns with the 

wheels. The planetary gear splits engine 

power between the first motor/generator 

and the drive motor to either charge the 

battery or supply power to the wheels. 

• Plug-in hybrid electric vehicles 

(PHEV)—are hybrid electric vehicles 

with the means to charge their battery 

packs from an outside source of 

electricity (usually the electric grid). 

These vehicles have larger battery packs 

with more energy storage and a greater 

capability to be discharged. They also 

use a control system that allows the 

battery pack to be substantially depleted 

under electric-only or blended 

mechanical/electric operation. 

• Electric vehicles (EV)—are vehicles 

with all-electric drive and with vehicle 

systems powered by energy-optimized 

batteries charged primarily from grid 

electricity. 

The cost estimates for the various 

hybrid systems have been revised from 

the estimates used in the MY 2011 

CAFE final rule, in particular with 

respect to estimated battery costs. The 

agencies request comment on the hybrid 

cost estimates detailed in the draft Joint 

Technical Support Document. 

2. How Did the Agencies Determine the 

Costs and Effectiveness of Each of These 

Technologies? 

Building on NHTSA’s estimates 

developed for the MY 2011 CAFE final 

rule and EPA’s Advanced Notice of 

Proposed Rulemaking, which relied on 

the 2008 Staff Technical Report,82 the 

agencies took a fresh look at technology 

cost and effectiveness values for 

purposes of the joint proposal under the 

National Program. For costs, the 

agencies reconsidered both the direct or 

‘‘piece’’ costs and indirect costs of 

individual components of technologies. 

For the direct costs, the agencies 

followed a bill of materials (BOM) 

approach employed by NHTSA in 

NHTSA’s MY 2011 final rule based on 

recommendation from Ricardo, Inc. EPA 

used a similar approach in the 2008 

EPA Staff Technical Report. A bill of 

materials, in a general sense, is a list of 

components or sub-systems that make 

up a system—in this case, an item of 

fuel economy-improving technology. In 

order to determine what a system costs, 

one of the first steps is to determine its 

components and what they cost. 

NHTSA and EPA estimated these 

components and their costs based on a 

number of sources for cost-related 

information. The objective was to use 

those sources of information considered 

to be most credible for projecting the 

costs of individual vehicle technologies. 

For example, while NHTSA and Ricardo 

engineers had relied considerably in the 

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49502 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

83National Research Council, ‘‘Effectiveness and 

Impact of Corporate Average Fuel Economy (CAFE) 

Standards,’’ National Academy Press, Washington, 

DC (2002) (the ‘‘2002 NAS Report’’), available at 

http://www.nap.edu/

openbook.php?isbn=0309076013 (last accessed 

August 7, 2009). 

84Northeast States Center for a Clean Air Future 

(NESCCAF), ‘‘Reducing Greenhouse Gas Emissions 

from Light-Duty Motor Vehicles,’’ 2004 (the ‘‘2004 

NESCCAF Report’’), available at http://www.

nesccaf.org/documents/rpt040923ghglightduty.pdf 

(last accessed August 7, 2009). 

85 ‘‘Staff Report: Initial Statement of Reasons for 

Proposed Rulemaking, Public Hearing to Consider 

Adoption of Regulations to Control Greenhouse Gas 

Emissions from Motor Vehicles,’’ California 

Environmental Protection Agency, Air Resources 

Board, August 6, 2004. 

86Energy and Environmental Analysis, Inc., 

‘‘Technology to Improve the Fuel Economy of Light 

Duty Trucks to 2015,’’ 2006 (the ‘‘2006 EEA 

Report’’), Docket EPA–HQ–OAR–2009–0472. 

87Martec, ‘‘Variable Costs of Fuel Economy 

Technologies,’’ June 1, 2008, (the ‘‘2008 Martec 

Report’’) available at Docket No. NHTSA–2008– 

0089–0169.1 

88 Vehicle fuel economy certification data. 

89Confidential data submitted by manufacturers 

in response to the March 2009 and other requests 

for product plans. 

90U.S. Environmental Protection Agency, ‘‘Draft 

Report—Light-Duty Technology Cost Analysis Pilot 

Study,’’ Contract No. EP–C–07–069, Work 

Assignment 1–3, September 3, 2009. 

91NHTSA examined the use of the CPI multiplier 

instead of GDP for adjusting these dollar values, but 

found the difference to be exceedingly small—only 

$0.14 over $100. 

MY 2011 final rule on the 2008 Martec 

Report for costing contents of some 

technologies, upon further joint review 

and for purposes of the MY 2012–2016 

standards, the agencies decided that 

some of the costing information in that 

report was no longer accurate due to 

downward trends in commodity prices 

since the publication of that report. The 

agencies reviewed, then revalidated or 

updated cost estimates for individual 

components based on new information. 

Thus, while NHTSA and EPA found 

that much of the cost information used 

in NHTSA’s MY 2011 final rule and 

EPA’s staff report was consistent to a 

great extent, the agencies, in 

reconsidering information from many 

sources,83,84,85,86,87,88,89 revised several 

component costs of several major 

technologies: turbocharging with engine 

downsizing, mild and strong hybrids, 

diesels, stoichiometric gasoline direct 

injection fuel systems, and valve train 

lift technologies. These are discussed at 

length in the joint TSD and in NHTSA’s 

PRIA. 

For two technologies (stoichiometric 

gasoline direct injection and 

turbocharging with engine downsizing), 

the agencies relied, to the extent 

possible, on the tear down data 

available and scaling methodologies 

used in EPA’s ongoing study with FEV. 

This study consists of complete system 

tear-down to evaluate technologies 

down to the nuts and bolts to arrive at 

very detailed estimates of the costs 

associated with manufacturing them.90

The confidential information provided 

by manufacturers as part of their 

product plan submissions to the 

agencies or discussed in meetings 

between the agencies and the 

manufacturers and suppliers served 

largely as a check on publicly-available 

data. 

For the other technologies, 

considering all sources of information 

and using the BOM approach, the 

agencies worked together intensively 

during the summer of 2009 to determine 

component costs for each of the 

technologies and build up the costs 

accordingly. Where estimates differ 

between sources, we have used 

engineering judgment to arrive at what 

we believe to be the best cost estimate 

available today, and explained the basis 

for that exercise of judgment. 

Once costs were determined, they 

were adjusted to ensure that they were 

all expressed in 2007 dollars using a 

ratio of GDP values for the associated 

calendar years,91 and indirect costs were 

accounted for using the new approach 

developed by EPA and explained in 

Chapter 3 of the draft joint TSD, rather 

than using the traditional Retail Price 

Equivalent (RPE) multiplier approach. A 

report explaining how EPA developed 

this approach can be found in the 

docket for this notice. NHTSA and EPA 

also reconsidered how costs should be 

adjusted by modifying or scaling 

content assumptions to account for 

differences across the range of vehicle 

sizes and functional requirements, and 

adjusted the associated material cost 

impacts to account for the revised 

content, although some of these 

adjustments may be different for each 

agency due to the different vehicle 

subclasses used in their respective 

models. In previous rulemakings, 

NHTSA has used the Producer Price 

Index (PPI) to adjust vehicle technology 

costs to consistent price levels, since the 

PPI measures the effects of cost changes 

that are specific to the vehicle 

manufacturing industry. For purposes of 

this NPRM, NHTSA and EPA chose to 

use the GDP deflator, which accounts 

for the effect of economy-wide price 

inflation on technology cost estimates, 

in order to express those estimates in 

comparable terms with forecasts of fuel 

prices and other economic values used 

in the analysis of costs and benefits 

from the proposed standards. Because it 

is specific to the automotive sector, the 

PPI tends to be highly volatile from year 

to year, reflecting rapidly changing 

balances between supply and demand 

for specific components, rather than 

longer-term trends in the real cost of 

producing a broad range of powertrain 

components. NHTSA and EPA seek 

comment on whether the agencies 

should use a GDP deflator or a PPI 

inflator for purposes of developing 

technology cost estimates for the final 

rule. 

Regarding estimates for technology 

effectiveness, NHTSA and EPA also 

reexamined the estimates from 

NHTSA’s MY 2011 final rule and EPA’s 

ANPRM and 2008 Staff Technical 

Report, which were largely consistent 

with NHTSA’s 2008 NPRM estimates. 

The agencies also reconsidered other 

sources such as the 2002 NAS Report, 

the 2004 NESCCAF report, recent CAFE 

compliance data (by comparing similar 

vehicles with different technologies 

against each other in fuel economy 

testing, such as a Honda Civic Hybrid 

versus a directly comparable Honda 

Civic conventional drive), and 

confidential manufacturer estimates of 

technology effectiveness. NHTSA and 

EPA engineers reviewed effectiveness 

information from the multiple sources 

for each technology and ensured that 

such effectiveness estimates were based 

on technology hardware consistent with 

the BOM components used to estimate 

costs. Together, they compared the 

multiple estimates and assessed their 

validity, taking care to ensure that 

common BOM definitions and other 

vehicle attributes such as performance, 

refinement, and drivability were taken 

into account. However, because the 

agencies’ respective models employ 

different numbers of vehicle subclasses 

and use different modeling techniques 

to arrive at the standards, direct 

comparison of BOMs was somewhat 

more complicated. To address this and 

to confirm that the outputs from the 

different modeling techniques produced 

the same result, NHTSA and EPA 

developed mapping techniques, 

devising technology packages and 

mapping them to corresponding 

incremental technology estimates. This 

approach helped compare the outputs 

from the incremental modeling 

technique to those produced by the 

technology packaging approach to 

ensure results that are consistent and 

could be translated into the respective 

models of the agencies. 

In general, most effectiveness 

estimates used in both the MY 2011 

final rule and the 2008 EPA staff report 

were determined to be accurate and 

were carried forward without significant 

change into this proposal. When 

NHTSA and EPA’s estimates for 

effectiveness diverged slightly due to 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49503 

differences in how agencies apply 

technologies to vehicles in their 

respective models, we report the ranges 

for the effectiveness values used in each 

model. While the agencies believe that 

the ideal estimates for the final rule 

would be based on tear down studies or 

BOM approach and subjected to a 

transparent peer-reviewed process, 

NHTSA and EPA are confident that the 

thorough review conducted, led to the 

best available conclusion regarding 

technology costs and effectiveness 

estimates for the current rulemaking and 

resulted in excellent consistency 

between the agencies’ respective 

analyses for developing the CAFE and 

CO2 standards. 

The agencies note that the 

effectiveness values estimated for the 

technologies considered in the modeling 

analyses may represent average values, 

and do not reflect the potentiallylimitless spectrum of possible values 

that could result from adding the 

technology to different vehicles. For 

example, while the agencies have 

estimated an effectiveness of 0.5 percent 

for low friction lubricants, each vehicle 

could have a unique effectiveness 

estimate depending on the baseline 

vehicle’s oil viscosity rating. Similarly, 

the reduction in rolling resistance (and 

thus the improvement in fuel economy 

and the reduction in CO2 emissions) due 

to the application of low rolling 

resistance tires depends not only on the 

unique characteristics of the tires 

originally on the vehicle, but on the 

unique characteristics of the tires being 

applied, characteristics which must be 

balanced between fuel efficiency, safety, 

and performance. Aerodynamic drag 

reduction is much the same—it can 

improve fuel economy and reduce CO2

emissions, but it is also highly 

dependent on vehicle-specific 

functional objectives. For purposes of 

this NPRM, NHTSA and EPA believe 

that employing average values for 

technology effectiveness estimates, as 

adjusted depending on vehicle subclass, 

is an appropriate way of recognizing the 

potential variation in the specific 

benefits that individual manufacturers 

(and individual vehicles) might obtain 

from adding a fuel-saving technology. 

However, the agencies seek comment on 

whether additional levels of specificity 

beyond that already provided would 

improve the analysis for the final rule, 

and if so, how those levels of specificity 

should be analyzed. 

Chapter 3 of the draft Joint Technical 

Support Document contains a detailed 

description of our assessment of vehicle 

technology cost and effectiveness 

estimates. The agencies note that the 

technology costs included in this NPRM 

take into account only those associated 

with the initial build of the vehicle. The 

agencies seek comment on the 

additional lifetime costs, if any, 

associated with the implementation of 

advanced technologies including 

warranty costs, and maintenance and 

replacement costs such as replacement 

costs for low rolling resistance tires, low 

friction lubricants, and hybrid batteries, 

and maintenance on diesel 

aftertreatment components. 

F. Joint Economic Assumptions 

The agencies’ preliminary analysis of 

alternative CAFE and GHG standards for 

the model years covered by this 

proposed rulemaking rely on a range of 

forecast information, economic 

estimates, and input parameters. This 

section briefly describes the agencies’ 

preliminary choices of specific 

parameter values. These proposed 

economic values play a significant role 

in determining the benefits of both 

CAFE and GHG standards. 

In reviewing these variables and the 

agency’s estimates of their values for 

purposes of this NPRM, NHTSA and 

EPA reconsidered previous comments 

that NHTSA had received and reviewed 

newly available literature. As a 

consequence, the agencies elected to 

revise some economic assumptions and 

parameter estimates, while retaining 

others. Some of the most important 

changes, which are discussed in greater 

detail in the agencies’ respective 

sections below, as well as in Chapter 4 

of the joint TSD and in Chapter VIII of 

NHTSA’s PRIA and Chapter 8 of EPA’s 

DRIA, include significant revisions to 

the markup factors for technology costs; 

reducing the rebound effect from 15 to 

10 percent; and revising the value of 

reducing CO2 emissions based on recent 

interagency efforts to develop estimates 

of this value for government-wide use. 

The agencies seek comment on the 

economic assumptions described below. 

• Costs of fuel economy-improving 

technologies—These estimates are 

presented in summary form above and 

in more detail in the agencies’ 

respective sections of this preamble, in 

Chapter 3 of the joint TSD, and in the 

agencies’ respective RIAs. The 

technology cost estimates used in this 

analysis are intended to represent 

manufacturers’ direct costs for highvolume production of vehicles with 

these technologies and sufficient 

experience with their application so that 

all cost reductions due to ‘‘learning 

curve’’ effects have been fully realized. 

Costs are then modified by applying 

near-term indirect cost multipliers 

ranging from 1.11 to 1.64 to the 

estimates of vehicle manufacturers’ 

direct costs for producing or acquiring 

each technology to improve fuel 

economy, depending on the complexity 

of the technology and the time frame 

over which costs are estimated. 

• Potential opportunity costs of 

improved fuel economy—This estimate 

addresses the possibility that achieving 

the fuel economy improvements 

required by alternative CAFE or GHG 

standards would require manufacturers 

to compromise the performance, 

carrying capacity, safety, or comfort of 

their vehicle models. If it did so, the 

resulting sacrifice in the value of these 

attributes to consumers would represent 

an additional cost of achieving the 

required improvements, and thus of 

manufacturers’ compliance with stricter 

standards. Currently the agencies 

assume that these vehicle attributes do 

not change, and include the cost of 

maintaining these attributes as part of 

the cost estimates for technologies. 

However, it is possible that the 

technology cost estimates do not 

include adequate allowance for the 

necessary efforts by manufacturers to 

maintain vehicle performance, carrying 

capacity, and utility while improving 

fuel economy and reducing GHG 

emissions. While, in principle, 

consumer vehicle demand models can 

measure these effects, these models do 

not appear to be robust across 

specifications, since authors derive a 

wide range of willingness-to-pay values 

for fuel economy from these models, 

and there is not clear guidance from the 

literature on whether one specification 

is clearly preferred over another. Thus, 

the agencies seek comment on how to 

estimate explicitly the changes in 

vehicle buyers’ welfare from the 

combination of higher prices for new 

vehicle models, increases in their fuel 

economy, and any accompanying 

changes in vehicle attributes such as 

performance, passenger- and cargocarrying capacity, or other dimensions 

of utility. 

• The on-road fuel economy ‘‘gap’’— 

Actual fuel economy levels achieved by 

light-duty vehicles in on-road driving 

fall somewhat short of their levels 

measured under the laboratory-like test 

conditions used by NHTSA and EPA to 

establish compliance with the proposed 

CAFE and GHG standards. The agencies 

use an on-road fuel economy gap for 

light-duty vehicles of 20 percent lower 

than published fuel economy levels. For 

example, if the measured CAFE fuel 

economy value of a light truck is 20 

mpg, the on-road fuel economy actually 

achieved by a typical driver of that 

vehicle is expected to be 16 mpg 

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92U.S. Environmental Protection Agency, Final 

Technical Support Document, Fuel Economy 

Labeling of Motor Vehicle Revisions to Improve 

Calculation of Fuel Economy Estimates, EPA420–R– 

06–017, December 2006. 

93Energy Information Administration, Annual 

Energy Outlook 2009, Revised Updated Reference 

Case (April 2009), Table 12. Available at http://

www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/

aeostimtab_12.xls (last accessed July 26, 2009). 

94Energy Information Administration, Annual 

Energy Outlook 2008, Revised Early Release (June 

2008), Table 12. Available at http:// 

www.eia.doe.gov/oiaf/archive/aeo08/excel/

aeotab_12.xls (last accessed September 12, 2009). 

95 Vehicles are defined to be of age 1 during the 

calendar year corresponding to the model year in 

which they are produced; thus for example, model 

year 2000 vehicles are considered to be of age 1 

during calendar year 2000, age 2 during calendar 

year 2001, and to reach their maximum age of 26 

years during calendar year 2025. NHTSA considers 

the maximum lifetime of vehicles to be the age after 

which less than 2 percent of the vehicles originally 

produced during a model year remain in service. 

Applying these conventions to vehicle registration 

data indicates that passenger cars have a maximum 

age of 26 years, while light trucks have a maximum 

lifetime of 36 years. See Lu, S., NHTSA, Regulatory 

Analysis and Evaluation Division, ‘‘Vehicle 

Survivability and Travel Mileage Schedules,’’ DOT 

HS 809 952, 8–11 (January 2006). Available at 

http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf 

(last accessed July 27, 2009). 

96For a description of the Survey, see http:// 

nhts.ornl.gov/quickStart.shtml (last accessed July 

27, 2009). 97 It was not possible to estimate separate growth 

rates in average annual use for cars and light trucks, 

because of the significant reclassification of light 

truck models as passenger cars discussed 

previously. 98While the adjustment for future fuel prices 

reduces average mileage at each age from the values 

derived from the 2001 NHTS, the adjustment for 

expected future growth in average vehicle use 

increases it. The net effect of these two adjustments 

is to increase expected lifetime mileage by about 18 

percent for passenger cars and about 16 percent for 

light trucks. 

(20*.80).92 NHTSA previously used this 

estimate in its MY 2011 final rule, and 

the agencies confirmed it based on 

independent analysis for use in this 

NPRM. 

• Fuel prices and the value of saving 

fuel—Projected future fuel prices are a 

critical input into the preliminary 

economic analysis of alternative 

standards, because they determine the 

value of fuel savings both to new 

vehicle buyers and to society. The 

agencies relied on the most recent fuel 

price projections from the U.S. Energy 

Information Administration’s (EIA) 

Annual Energy Outlook (AEO) for this 

analysis. Specifically, the agencies used 

the AEO 2009 (April 2009 release) 

Reference Case forecasts of inflationadjusted (constant-dollar) retail gasoline 

and diesel fuel prices, which represent 

the EIA’s most up-to-date estimate of the 

most likely course of future prices for 

petroleum products.93

EIA’s Updated Reference Case reflects 

the effects of the American 

Reinvestment and Recovery Act of 2009, 

as well as the most recent revisions to 

the U.S. and global economic outlook. 

In addition, it also reflects the 

provisions of the Energy Independence 

and Security Act of 2007 (EISA), 

including the requirement that the 

combined mpg level of U.S. cars and 

light trucks reach 35 miles per gallon by 

model year 2020. Because this provision 

would be expected to reduce future U.S. 

demand for gasoline and other fuels, 

there is some concern about whether the 

AEO 2009 forecast of fuel prices already 

partly reflects the increases in CAFE 

standards considered in this rule, and 

thus whether it is suitable for valuing 

the projected reductions in fuel use. In 

response to this concern, the agencies 

note that EIA issued a revised version of 

AEO 2008 in June 2008, which modified 

its previous December 2007 Early 

Release of AEO 2008 to reflect the 

effects of the recently-passed EISA 

legislation.94 The fuel price forecasts 

reported in EIA’s Revised Release of 

AEO 2008 differed by less than one cent 

per gallon over the entire forecast period 

(2008–230) from those previously issued 

as part of its initial release of AEO 2008. 

Thus, the agencies are reasonably 

confident that the fuel price forecasts 

presented in AEO 2009 and used to 

analyze the value of fuel savings 

projected to result from this rule are not 

unduly affected by the CAFE provisions 

of EISA, and therefore do not cause a 

baseline problem. Nevertheless, the 

agencies request comment on the use of 

the AEO 2009 fuel price forecasts, and 

particularly on the potential impact of 

the EISA-mandated CAFE 

improvements on these projections. 

• Consumer valuation of fuel 

economy and payback period—In 

estimating the value of fuel economy 

improvements that would result from 

alternative CAFE and GHG standards to 

potential vehicle buyers, the agencies 

assume that buyers value the resulting 

fuel savings over only part of the 

expected lifetime of the vehicles they 

purchase. Specifically, we assume that 

buyers value fuel savings over the first 

five years of a new vehicle’s lifetime, 

and that buyers discount the value of 

these future fuel savings using rates of 

3% and 7%. The five-year figure 

represents the current average term of 

consumer loans to finance the purchase 

of new vehicles. 

• Vehicle sales assumptions—The 

first step in estimating lifetime fuel 

consumption by vehicles produced 

during a model year is to calculate the 

number that are expected to be 

produced and sold.95 The agencies 

relied on the AEO 2009 Reference Case 

for forecasts of total vehicle sales, while 

the baseline market forecast developed 

by the agencies (see Section II.B) 

divided total projected sales into sales 

of cars and light trucks. 

• Vehicle survival assumptions—We 

then applied updated values of agespecific survival rates for cars and light 

trucks to these adjusted forecasts of 

passenger car and light truck sales to 

determine the number of these vehicles 

remaining in use during each year of 

their expected lifetimes. 

• Total vehicle use—We then 

calculated the total number of miles that 

cars and light trucks produced in each 

model year will be driven during each 

year of their lifetimes using estimates of 

annual vehicle use by age tabulated 

from the Federal Highway 

Administration’s 2001 National 

Household Transportation Survey 

(NHTS),96 adjusted to account for the 

effect on vehicle use of subsequent 

increases in fuel prices. In order to 

insure that the resulting mileage 

schedules imply reasonable estimates of 

future growth in total car and light truck 

use, we calculated the rate of growth in 

annual car and light truck mileage at 

each age that is necessary for total car 

and light truck travel to increase at the 

rates forecast in the AEO 2009 Reference 

Case. The growth rate in average annual 

car and light truck use produced by this 

calculation is approximately 1.1 percent 

per year.97 This rate was applied to the 

mileage figures derived from the 2001 

NHTS to estimate annual mileage 

during each year of the expected 

lifetimes of MY 2012–2016 cars and 

light trucks.98

• Accounting for the rebound effect of 

higher fuel economy—The rebound 

effect refers to the fraction of fuel 

savings expected to result from an 

increase in vehicle fuel economy— 

particularly an increase required by the 

adoption of higher CAFE and GHG 

standards—that is offset by additional 

vehicle use. The increase in vehicle use 

occurs because higher fuel economy 

reduces the fuel cost of driving, 

typically the largest single component of 

the monetary cost of operating a vehicle, 

and vehicle owners respond to this 

reduction in operating costs by driving 

slightly more. For purposes of this 

NPRM, the agencies have elected to use 

a 10 percent rebound effect in their 

analyses of fuel savings and other 

benefits from higher standards. 

• Benefits from increased vehicle 

use—The increase in vehicle use from 

the rebound effect provides additional 

benefits to their owners, who may make 

more frequent trips or travel farther to 

reach more desirable destinations. This 

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99 Department of Transportation, Guidance 

Memorandum, ‘‘The Value of Saving Travel Time: 

Departmental Guidance for Conducting Economic 

Evaluations,’’ Apr. 9, 1997. http://ostpxweb.dot.gov/ 

policy/Data/VOT97guid.pdf (last accessed October 

20, 2007); update available at http://ostpxweb.dot.

gov/policy/Data/VOTrevision1_2-11-03.pdf (last 

accessed October 20, 2007). 

100These estimates were developed by FHWA for 

use in its 1997 Federal Highway Cost Allocation 

Study; http://www.fhwa.dot.gov/policy/hcas/final/ 

index.htm (last accessed July 29, 2009). 101See, e.g., Bohi, Douglas R. and W. David 

Montgomery (1982). Oil Prices, Energy Security, 

and Import Policy Washington, DC: Resources for 

the Future, Johns Hopkins University Press; Bohi, 

D. R., and M. A. Toman (1993). ‘‘Energy and 

Security: Externalities and Policies,’’ Energy Policy 

21:1093–1109; and Toman, M. A. (1993). ‘‘The 

Economics of Energy Security: Theory, Evidence, 

Policy,’’ in A. V. Kneese and J. L. Sweeney, eds. 

(1993). Handbook of Natural Resource and Energy 

Economics, Vol. III. Amsterdam: North-Holland, pp. 

1167–1218. 

102Each gallon of fuel saved is assumed to reduce 

imports of refined fuel by 0.5 gallons, and the 

volume of fuel refined domestically by 0.5 gallons. 

Domestic fuel refining is assumed to utilize 90% 

imported crude petroleum and 10% domesticallyproduced crude petroleum as feedstocks. Together, 

these assumptions imply that each gallon of fuel 

saved will reduce imports of refined fuel and crude 

petroleum by 0.50 gallons + 0.50 gallons*90% = 

0.50 gallons + 0.45 gallons = 0.95 gallons. 

additional travel provides benefits to 

drivers and their passengers by 

improving their access to social and 

economic opportunities away from 

home. The benefits from increased 

vehicle use include both the fuel 

expenses associated with this additional 

travel, and the consumer surplus it 

provides. We estimate the economic 

value of the consumer surplus provided 

by added driving using the conventional 

approximation, which is one half of the 

product of the decline in vehicle 

operating costs per vehicle-mile and the 

resulting increase in the annual number 

of miles driven. Because it depends on 

the extent of improvement in fuel 

economy, the value of benefits from 

increased vehicle use changes by model 

year and varies among alternative 

standards. 

• The value of increased driving 

range—By reducing the frequency with 

which drivers typically refuel their 

vehicles, and by extending the upper 

limit of the range they can travel before 

requiring refueling, improving fuel 

economy and reducing GHG emissions 

thus provides some additional benefits 

to their owners. No direct estimates of 

the value of extended vehicle range are 

readily available, so the agencies’ 

analysis calculates the reduction in the 

annual number of required refueling 

cycles that results from improved fuel 

economy, and applies DOTrecommended values of travel time 

savings to convert the resulting time 

savings to their economic value.99 The 

agencies invite comment on the 

assumptions used in this analysis. 

Please see the Chapter 4 of the draft 

Joint TSD for details. 

• Added costs from congestion, 

crashes and noise—Although it 

provides some benefits to drivers, 

increased vehicle use associated with 

the rebound effect also contributes to 

increased traffic congestion, motor 

vehicle accidents, and highway noise. 

Depending on how the additional travel 

is distributed over the day and on where 

it takes place, additional vehicle use can 

contribute to traffic congestion and 

delays by increasing traffic volumes on 

facilities that are already heavily 

traveled during peak periods. These 

added delays impose higher costs on 

drivers and other vehicle occupants in 

the form of increased travel time and 

operating expenses, increased costs 

associated with traffic accidents, and 

increased traffic noise. The agencies rely 

on estimates of congestion, accident, 

and noise costs caused by automobiles 

and light trucks developed by the 

Federal Highway Administration to 

estimate the increased external costs 

caused by added driving due to the 

rebound effect.100

• Petroleum consumption and import 

externalities—U.S. consumption and 

imports of petroleum products also 

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. In economics 

literature on this subject, these costs 

include (1) higher prices for petroleum 

products resulting from the effect of 

U.S. oil import demand on the world oil 

price (‘‘monopsony costs’’); (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 cushion against 

resulting price increases.101 Reducing 

U.S. imports of crude petroleum or 

refined fuels can reduce the magnitude 

of these external costs. Any reduction in 

their total value that results from lower 

fuel consumption and petroleum 

imports represents an economic benefit 

of setting more stringent standards over 

and above the dollar value of fuel 

savings itself. The agencies do not 

include a value for monopsony costs in 

order to be consistent with their use of 

a global value for the social cost of 

carbon. Based on a recently-updated 

ORNL study, we estimate that each 

gallon of fuel saved that results in a 

reduction in U.S. petroleum imports 

(either crude petroleum or refined fuel) 

will reduce the expected costs of oil 

supply disruptions to the U.S. economy 

by $0.169 (2007$). The agencies do not 

include savings in budgetary outlays to 

support U.S. military activities among 

the benefits of higher fuel economy and 

the resulting fuel savings. Each gallon of 

fuel saved as a consequence of higher 

standards is anticipated to reduce total 

U.S. imports of crude petroleum or 

refined fuel by 0.95 gallons.102

• Air pollutant emissions 

Æ Impacts on criteria air pollutant 

emissions—While reductions in 

domestic fuel refining and distribution 

that result from lower fuel consumption 

will reduce U.S. emissions of criteria 

pollutants, additional vehicle use 

associated with the rebound effect will 

increase emissions of these pollutants. 

Thus the net effect of stricter standards 

on emissions of each criteria pollutant 

depends on the relative magnitudes of 

reduced emissions from fuel refining 

and distribution, and increases in 

emissions resulting from added vehicle 

use. Criteria air pollutants emitted by 

vehicles and during fuel production 

include carbon monoxide (CO), 

hydrocarbon compounds (usually 

referred to as ‘‘volatile organic 

compounds,’’ or VOC), nitrogen oxides 

(NOX), fine particulate matter (PM2.5), 

and sulfur oxides (SOX). It is assumed 

that the emission rates (per mile) stay 

constant for future year vehicles. 

Æ EPA and NHTSA estimate the 

economic value of the human health 

benefits associated with reducing 

exposure to PM2.5 using a ‘‘benefit-perton’’ method. These PM2.5-related 

benefit-per-ton estimates provide the 

total monetized benefits to human 

health (the sum of reductions in 

premature mortality and premature 

morbidity) that result from eliminating 

one ton of directly emitted PM2.5, or one 

ton of a pollutant that contributes to 

secondarily-formed PM2.5 (such as NOX, 

SOX, and VOCs), from a specified 

source. Chapter 4.2.9 of the Technical 

Support Document that accompanies 

this proposal includes a description of 

these values. 

Reductions in GHG emissions— 

Emissions of carbon dioxide and other 

greenhouse gases (GHGs) occur 

throughout the process of producing 

and distributing transportation fuels, as 

well as from fuel combustion itself. By 

reducing the volume of fuel consumed 

by passenger cars and light trucks, 

higher standards will thus reduce GHG 

emissions generated by fuel use, as well 

as throughout the fuel supply cycle. The 

agencies estimated the increases of 

GHGs other than CO2, including 

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49506 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

103The MOVES model assumes that the per-mile 

rates at which cars and light trucks emit these GHGs 

are determined by the efficiency of fuel combustion 

during engine operation and chemical reactions that 

occur during catalytic after-treatment of engine 

exhaust, and are thus independent of vehicles’ fuel 

consumption rates. Thus MOVES’ emission factors 

for these GHGs, which are expressed per mile of 

vehicle travel, are assumed to be unaffected by 

changes in fuel economy. 

methane and nitrous oxide, from 

additional vehicle use by multiplying 

the increase in total miles driven by cars 

and light trucks of each model year and 

age by emission rates per vehicle-mile 

for these GHGs. These emission rates, 

which differ between cars and light 

trucks as well as between gasoline and 

diesel vehicles, were estimated by EPA 

using its recently-developed Motor 

Vehicle Emission Simulator (Draft 

MOVES 2009).103 Increases in emissions 

of non-CO2 GHGs are converted to 

equivalent increases in CO2 emissions 

using estimates of the Global Warming 

Potential (GWP) of methane and nitrous 

oxide. 

Æ Economic value of reductions in 

CO2 emissions—EPA and NHTSA 

assigned a dollar value to reductions in 

CO2 emissions using the marginal dollar 

value (i.e., cost) of climate-related 

damages resulting from carbon 

emissions, also referred to as ‘‘social 

cost of carbon’’ (SCC). The SCC is 

intended to measure the monetary value 

society places on impacts resulting from 

increased GHGs, such as property 

damage from sea level rise, forced 

migration due to dry land loss, and 

mortality changes associated with 

vector-borne diseases. Published 

estimates of the SCC vary widely as a 

result of uncertainties about future 

economic growth, climate sensitivity to 

GHG emissions, procedures used to 

model the economic impacts of climate 

change, and the choice of discount rates. 

EPA and NHTSA’s coordinated 

proposals present a set of interim SCC 

values reflecting a Federal interagency 

group’s interpretation of the relevant 

climate economics literature. Sections 

III.H and IV.C.3 provide more detail 

about SCC. 

• Discounting future benefits and 

costs—Discounting future fuel savings 

and other benefits is intended to 

account for the reduction in their value 

to society when they are deferred until 

some future date, rather than received 

immediately. The discount rate 

expresses the percent decline in the 

value of these benefits—as viewed from 

today’s perspective—for each year they 

are deferred into the future. In 

evaluating the non-climate related 

benefits of the proposed standards, the 

agencies have employed discount rates 

of both 3 percent and 7 percent. 

For the reader’s reference, Table 

II.F.1–1 below summarizes the values 

used to calculate the impacts of each 

proposed standard. The values 

presented in this table are summaries of 

the inputs used for the models; specific 

values used in the agencies’ respective 

analyses may be aggregated, expanded, 

or have other relevant adjustments. See 

the respective RIAs for details. The 

agencies seek comment on the economic 

assumptions presented in the table and 

discussed below. 

In addition, the agencies have 

conducted a range of sensitivities and 

present them in their respective RIAs. 

For example, NHTSA has conducted a 

sensitivity analysis on several 

assumptions including (1) forecasts of 

future fuel prices, (2) the discount rate 

applied to future benefits and costs, (3) 

the magnitude of the rebound effect, (4) 

the value to the U.S. economy of 

reducing carbon dioxide emissions, (5) 

the monopsony effect, and (6) the 

reduction in external economic costs 

resulting from lower U.S. oil imports. 

This information is provided in 

NHTSA’s PRIA. The agencies will 

consider additional sensitivities for the 

final rule as appropriate, including 

sensitivities on the markup factors 

applied to direct manufacturing costs to 

account for indirect costs (i.e., the 

Indirect Cost Markups (ICMs) which are 

discussed in Sections III and IV), and 

the learning curve estimates used in this 

analysis. 

TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$) 

Fuel Economy Rebound Effect ............................................................................................................................................................ 10% 

‘‘Gap’’ between test and on-road MPG ............................................................................................................................................... 20% 

Value of refueling time per ($ per vehicle-hour) ................................................................................................................................. 24.64 

Annual growth in average vehicle use ................................................................................................................................................ 1.1% 

Fuel Prices (2012–50 average, $/gallon): 

Retail gasoline price ..................................................................................................................................................................... 3.77 

Pre-tax gasoline price ................................................................................................................................................................... 3.40 

Economic Benefits from Reducing Oil Imports ($/gallon): 

‘‘Monopsony’’ Component ............................................................................................................................................................ 0.00 

Price Shock Component ............................................................................................................................................................... 0.17 

Military Security Component ........................................................................................................................................................ 0.00 

Total Economic Costs ($/gallon) .................................................................................................................................................. 0.17 

Emission Damage Costs (2020, $/ton or $/metric ton): 

Carbon monoxide ......................................................................................................................................................................... 0 

Volatile organic compounds (VOC) .............................................................................................................................................. 1,283 

Nitrogen oxides (NOX)—vehicle use ............................................................................................................................................ 5,116 

Nitrogen oxides (NOX)—fuel production and distribution ............................................................................................................ 5,339 

Particulate matter (PM2.5)—vehicle use ....................................................................................................................................... 238,432 

Particulate matter (PM2.5)—fuel production and distribution ........................................................................................................ 292,180 

Sulfur dioxide (SO2) ...................................................................................................................................................................... 30,896 

5 

10 

20 

34 

Carbon dioxide (CO2) ................................................................................................................................................................... 56 

Annual Increase in CO2 Damage Cost ........................................................................................................................................ 3% 

External Costs from Additional Automobile Use ($/vehicle-mile): 

Congestion .................................................................................................................................................................................... 0.054 

Accidents ...................................................................................................................................................................................... 0.023 

Noise ............................................................................................................................................................................................. 0.001 

Total External Costs ..................................................................................................................................................................... 0.078 

External Costs from Additional Light Truck Use ($/vehicle-mile): ........................

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104 549 U.S. 497 (2007). 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. 

105 74 FR 18886, April 24, 2009. 

TABLE II.F.1–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS (2007$)—Continued 

Congestion .................................................................................................................................................................................... 0.048 

Accidents ...................................................................................................................................................................................... 0.026 

Noise ............................................................................................................................................................................................. 0.001 

Total External Costs ..................................................................................................................................................................... 0.075 

Discount Rates Applied to Future Benefits ......................................................................................................................................... 3%, 7% 

III. EPA Proposal for Greenhouse Gas 

Vehicle Standards 

A. Executive Overview of EPA Proposal 

1. Introduction 

The Environmental Protection Agency 

(EPA) is proposing to establish 

greenhouse gas emissions standards for 

the largest sources of transportation 

greenhouse gases—light-duty vehicles, 

light-duty trucks, and medium-duty 

passenger vehicles (hereafter light 

vehicles). These vehicle categories, 

which include cars, sport utility 

vehicles, minivans, and pickup trucks 

used for personal transportation, are 

responsible for almost 60% of all U.S. 

transportation related greenhouse gas 

emissions. This action represents the 

first-ever proposal by EPA to regulate 

vehicle greenhouse gas emissions under 

the Clean Air Act (CAA) and would 

establish standards for model years 2012 

and later light vehicles sold in the U.S. 

EPA is proposing three separate 

standards. The first and most important 

is a set of fleet-wide average carbon 

dioxide (CO2) emission standards for 

cars and trucks. These standards are 

based on CO2 emissions-footprint 

curves, where each vehicle has a 

different CO2 emissions compliance 

target depending on its footprint value. 

Vehicle CO2 emissions would be 

measured over the EPA city and 

highway tests. The proposed standard 

allows for credits based on 

demonstrated improvements in vehicle 

air conditioner systems, including both 

efficiency and refrigerant leakage 

improvement, which are not captured 

by the EPA tests. The EPA projects that 

the average light vehicle tailpipe CO2

level in model year 2011 will be 326 

grams per mile while the average 

vehicle tailpipe CO2 emissions 

compliance level for the proposed 

model year 2016 standard will be 250 

grams per mile, an average reduction of 

23 percent from today’s CO2 levels. 

EPA is also proposing standards that 

will cap tailpipe nitrous oxide (N2O) 

and methane (CH4) emissions at 0.010 

and 0.030 grams per mile, respectively. 

Even after adjusting for the higher 

relative global warming potencies of 

these two compounds, nitrous oxide 

and methane emissions represent less 

than one percent of overall vehicle 

greenhouse gas emissions from new 

vehicles. Accordingly, the goal of these 

two proposed standards is to limit any 

potential increases in the future and not 

to force reductions relative to today’s 

low levels. 

This proposal represents the secondphase of EPA’s response to the Supreme 

Court’s 2007 decision in Massachusetts 

v. EPA 104 which found that greenhouse 

gases were air pollutants for purposes of 

the Clean Air Act. The Court 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 make 

these decisions, the EPA Administrator 

is required to follow the language of 

section 202(a) of the CAA. The Court 

remanded the case back to the Agency 

for reconsideration in light of its 

finding. 

The Administrator responded to the 

Court’s remand by issuing two proposed 

findings under section 202(a) of the 

Clean Air Act.105 First, the 

Administrator proposed to find that the 

science supports a positive 

endangerment finding that a mix of 

certain greenhouse gases in the 

atmosphere endangers the public health 

and welfare of current and future 

generations. This is referred to as the 

endangerment finding. Second, the 

Administrator proposed to find that the 

emissions of four of these gases—carbon 

dioxide, methane, nitrous oxide, and 

hydrofluorocarbons—from new motor 

vehicles and new motor vehicle engines 

contribute to the atmospheric 

concentrations of these key greenhouse 

gases and hence to the threat of climate 

change. This is referred to as the cause 

and contribute finding. Finalizing this 

proposed light vehicle regulations is 

contingent upon EPA finalizing both the 

endangerment finding and cause or 

contribute finding. Sections III.B.1 

through III.B.4 below provide more 

details on the legal and scientific bases 

for this proposal. 

As discussed in Section I, this GHG 

proposal is part of a joint National 

Program such that a large majority of the 

projected benefits are achieved jointly 

with NHTSA’s proposed CAFE rule 

which is described in detail in Section 

IV of this preamble. EPA’s proposal 

projects total carbon dioxide emissions 

savings of nearly 950 million metric 

tons, and oil savings of 1.8 billion 

barrels over the lifetimes of the vehicles 

sold in model years 2012–2016. EPA 

projects net societal benefits of $192 

billion at a 3 percent discount rate for 

these same vehicles, or $136 billion at 

a 7 percent discount rate (both values 

assume a $20/ton SCC value). 

Accordingly, these proposed light 

vehicle greenhouse gas emissions 

standards would make an important 

‘‘first step’’ contribution as part of the 

National Program toward meeting longterm greenhouse gas emissions and 

import oil reduction goals, while 

providing important economic benefits 

as well. 

2. Why is EPA Proposing this Rule? 

This proposal addresses only light 

vehicles. EPA is addressing light 

vehicles as a first step in control of 

greenhouse gas emissions under the 

Clean Air Act for four reasons. First, 

light vehicles are responsible for almost 

60% of all mobile source greenhouse gas 

emissions, a share three times larger 

than any other mobile source subsector, 

and represent about one-sixth of all U.S. 

greenhouse gas emissions. Second, 

technology exists that can be readily 

and cost-effectively applied to these 

vehicles to reduce greenhouse gas 

emissions in the near term. Third, EPA 

already has an existing testing and 

compliance program for these vehicles, 

refined since the mid-1970s for 

emissions certification and fuel 

economy compliance, which would 

require only minor modifications to 

accommodate greenhouse gas emissions 

regulations. Finally, this proposal is an 

important first step in responding to the 

Supreme Court’s ruling in 

Massachusetts vs. EPA. In addition, 

EPA is currently evaluating controls for 

motor vehicles other than those covered 

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49508 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

106According to Intergovernmental Panel on 

Climate Change (IPCC) terminology, ‘‘very likely’’ 

conveys a 90 to 99 percent probability of 

occurrence. ‘‘Virtually certain’’ conveys a greater 

than 99 percent probability, ‘‘likely’’ conveys a 66 

to 90 percent probability, and ‘‘about as likely as 

not’’ conveys a 33 to 66 percent probability. 

107 74 FR18886, April 24, 2009. Both the Federal 

Register Notice and the Technical Support 

Document for this rulemaking are found in the 

public docket for this rulemaking. Docket is EPA– 

OAR–2009–0171. 

108 Inventory of U.S. Greenhouse Gases and Sinks: 

1990–2006. 

109Mobile source carbon dioxide emissions in 

2006 equaled 26 percent of total U.S. CO2

emissions. 

110 In 2006, methane emissions equaled 0.32 

percent of total U.S. methane emissions Nitrous 

oxide is a product of the reaction that occurs 

between nitrogen and oxygen during fuel 

combustion. 

111 In 2006, nitrous oxide emissions for these 

sources accounted for 8 percent of total U.S. nitrous 

oxide emissions. 

112 In 2006 HFC from these source categories 

equaled 56 percent of total U.S. HFC emissions, 

making it the single largest source category of U.S. 

HFC emissions. 

113 74 FR18886, April 24, 2009. 

by this proposal, and is reviewing seven 

petitions submitted by various States 

and organizations requesting that EPA 

use its Clean Air Act authorities to take 

action to reduce greenhouse gas 

emissions from aircraft (under 

§ 231(a)(2)), ocean-going vessels (under 

§ 213(a)(4)), and other nonroad engines 

and vehicle sources (also under 

§ 213(a)(4)). 

a. Light Vehicle Emissions Contribute to 

Greenhouse Gases and the Threat of 

Climate Change 

Greenhouse gases are gases in the 

atmosphere that effectively trap some of 

the Earth’s heat that would otherwise 

escape to space. Greenhouse gases are 

both naturally occurring and 

anthropogenic. The primary greenhouse 

gases of concern are directly emitted by 

human activities and include carbon 

dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. 

These gases, once emitted, remain in 

the atmosphere for decades to centuries. 

Thus, they become well mixed globally 

in the atmosphere and their 

concentrations accumulate when 

emissions exceed the rate at which 

natural processes remove greenhouse 

gases from the atmosphere. The heating 

effect caused by the human-induced 

buildup of greenhouse gases in the 

atmosphere is very likely106 the cause of 

most of the observed global warming 

over the last 50 years. The key effects of 

climate change observed to date and 

projected to occur in the future include, 

but are not limited to, more frequent 

and intense heat waves, more severe 

wildfires, degraded air quality, heavier 

and more frequent downpours and 

flooding, increased drought, greater sea 

level rise, more intense storms, harm to 

water resources, continued ocean 

acidification, harm to agriculture, and 

harm to wildlife and ecosystems. A 

detailed explanation of observed and 

projected changes in greenhouse gases 

and climate change and its impact on 

health, society, and the environment is 

included in EPA’s technical support 

document for the recently released 

Proposed Endangerment and Cause or 

Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean 

Air Act.107

Transportation sources represent a 

large and growing share of United States 

greenhouse gases and include 

automobiles, highway heavy duty 

trucks, airplanes, railroads, marine 

vessels and a variety of other sources. In 

2006, all transportation sources emitted 

31.5% of all U.S. greenhouse gases, and 

were the fastest-growing source of 

greenhouse gases in the U.S., accounting 

for 47% of the net increase in total U.S. 

greenhouse gas emissions from 1990– 

2006.108 The only sector with larger 

greenhouse gas emissions was 

electricity generation which emitted 

33.7% of all U.S. greenhouse gases. 

Light vehicles emit four greenhouse 

gases: carbon dioxide, methane, nitrous 

oxide and hydrofluorocarbons. Carbon 

dioxide (CO2) is the end product of 

fossil fuel combustion. During 

combustion, the carbon stored in the 

fuels is oxidized and emitted as CO2 and 

smaller amounts of other carbon 

compounds.109 Methane (CH4) 

emissions are a function of the methane 

content of the motor fuel, the amount of 

hydrocarbons passing uncombusted 

through the engine, and any postcombustion control of hydrocarbon 

emissions (such as catalytic 

converters).110 Nitrous oxide (N2O) (and 

nitrogen oxide (NOX)) emissions from 

vehicles and their engines are closely 

related to air-fuel ratios, combustion 

temperatures, and the use of pollution 

control equipment. For example, some 

types of catalytic converters installed to 

reduce motor vehicle NOX, carbon 

monoxide (CO) and hydrocarbon 

emissions can promote the formation of 

N2O.111 Hydrofluorocarbons (HFC) 

emissions are progressively replacing 

chlorofluorocarbons (CFC) and 

hydrochlorofluorocarbons (HCFC) in 

these vehicles’ cooling and refrigeration 

systems as CFCs and HCFCs are being 

phased out under the Montreal Protocol 

and Title VI of the CAA. There are 

multiple emissions pathways for HFCs 

with emissions occurring during 

charging of cooling and refrigeration 

systems, during operations, and during 

decommissioning and disposal.112

b. Basis for Action Under Clean Air Act 

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.’’ As noted above, the 

Administrator has proposed to find that 

the air pollution of elevated levels of 

greenhouse gas concentrations may 

reasonably be anticipated to endanger 

public health and welfare.113 The 

Administrator has proposed to define 

the air pollution to be the elevated 

concentrations of the mix of six GHGs: 

carbon dioxide (CO2), methane (CH4), 

nitrous oxide (N2O), hydrofluorocarbons 

(HFCs), perfluorocarbons (PFCs), and 

sulfur hexafluoride (SF6). The 

Administrator has further proposed to 

find under CAA section 202(a) that CO2,

methane, N2O and HFC emissions from 

new motor vehicles and engines 

contribute to this air pollution. This 

preamble describes proposed standards 

that would control emissions of CO2, 

HFCs, nitrous oxide, and methane. 

Standards for these GHGs would only be 

finalized if EPA determines that the 

criteria have been met for endangerment 

by the air pollution, and that emissions 

of GHGs from new motor vehicles or 

engines ‘‘cause or contribute’’ to that air 

pollution. In that case, section 202(a) 

would authorize EPA to issue standards 

applicable to emissions of those 

pollutants. For further discussion of 

EPA’s authority under section 202(a), 

see Section I.C.2 of the proposal. 

There are a variety of other CAA Title 

II provisions that are relevant to 

standards established under section 

202(a). As noted above, the standards 

are applicable to motor vehicles for their 

useful life. EPA has the discretion in 

determining what standard applies over 

the useful life. For example, EPA may 

set a single standard that applies both 

when the vehicles are new and 

throughout the useful life, or where 

appropriate may set a standard that 

varies during the term of useful life, 

such as a standard that is more stringent 

in the early years of the useful life and 

less stringent in the later years. 

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114 74 FR 18886 (April 24, 2009). 115The U.S. Climate Change Science Program 

(CCSP) is now called the U.S. Global Change 

Research Program (GCRP). 

116This figure includes the greenhouse gas 

contributions of light vehicles, heavy duty vehicles, 

and remaining on-highway mobile sources. 

The standards established under CAA 

section 202(a) are implemented and 

enforced through various mechanisms. 

Manufacturers are required to obtain an 

EPA certificate of conformity with the 

section 202 regulations before they may 

sell or introduce their new motor 

vehicle into commerce, according to 

CAA section 206(a). The introduction 

into commerce of vehicles without a 

certificate of conformity is a prohibited 

act under CAA section 203 that may 

subject a manufacturer to civil penalties 

and injunctive actions (see CAA 

sections 204 and 205). Under CAA 

section 206(b), EPA may conduct testing 

of new production vehicles to determine 

compliance with the standards. For inuse vehicles, if EPA determines that a 

substantial number of vehicles do not 

conform to the applicable regulations 

then the manufacturer must submit and 

implement a remedial plan to address 

the problem (see CAA section 207(c)). 

There are also emissions-based 

warranties that the manufacturer must 

implement under CAA section 207(a). 

c. EPA’s Greenhouse Gas Proposal 

Under Section 202(a) Concerning 

Endangerment and Cause or Contribute 

Findings 

EPA’s Administrator recently signed a 

proposed action with two distinct 

findings regarding greenhouse gases 

under section 202(a) of the Clean Air 

Act. This action is called the Proposed 

Endangerment and Cause or Contribute 

Findings for Greenhouse Gases under 

the Clean Air Act (Endangerment 

Proposal).114 The Administrator 

proposed an affirmative endangerment 

finding that the current and projected 

concentrations of a mix of six key 

greenhouse gases—carbon dioxide 

(CO2), methane (CH4), nitrous oxide 

(N2O), hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), and sulfur 

hexafluoride(SF6)—in the atmosphere 

threaten the public health and welfare 

of current and future generations. She 

also proposed to find that the combined 

emissions of four of the gases—carbon 

dioxide, methane, nitrous oxide and 

hydrofluorocarbons from new motor 

vehicles and motor vehicle engines— 

contribute to the atmospheric 

concentrations of these greenhouse 

gases and therefore to the climate 

change problem. 

Specifically, the Administrator 

proposed, after a thorough examination 

of the scientific evidence on the causes 

and impact of current and future climate 

change, to find that the science 

compellingly supports a positive finding 

that atmospheric concentrations of these 

greenhouse gases result in air pollution 

which may reasonably be anticipated to 

endanger both public health and 

welfare. In her proposed finding, the 

Administrator relied heavily upon the 

major findings and conclusions from the 

recent assessments of the U.S. Climate 

Change Science Program and the U.N. 

Intergovernmental Panel on Climate 

Change.115 The Administrator proposed 

a positive endangerment finding after 

considering both observed and projected 

future effects of climate change, key 

uncertainties, and the full range of risks 

and impacts to public health and 

welfare occurring within the United 

States. In addition, the proposed finding 

noted that the evidence concerning risks 

and impacts occurring outside the U.S. 

provided further support for the 

proposed finding. 

The key scientific findings supporting 

the proposed endangerment finding are 

that: 

—Concentrations of greenhouse gases 

are at unprecedented levels compared 

to recent and distant past. These high 

concentrations are the unambiguous 

result of anthropogenic emissions and 

are very likely the cause of the 

observed increase in average 

temperatures and other climatic 

changes. 

—The effects of climate change 

observed to date and projected to 

occur in the future include more 

frequent and intense heat waves, more 

severe wildfires, degraded air quality, 

heavier downpours and flooding, 

increasing drought, greater sea level 

rise, more intense storms, harm to 

water resources, harm to agriculture, 

and harm to wildlife and ecosystems. 

These impacts are effects on public 

health and welfare within the 

meaning of the Clean Air Act. 

With regard to new motor vehicles 

and engines, the Administrator also 

proposed a finding that the combined 

emissions of four greenhouse gases— 

carbon dioxide, methane, nitrous oxide 

and hydrofluorocarbons—from new 

motor vehicles and engines contributes 

to this air pollution, i.e., the 

atmospheric concentrations of the mix 

of six greenhouse gases which create the 

threat of climate change and its impacts. 

Key facts supporting the proposed cause 

and contribute finding for on-highway 

vehicles regulated under section 202(a) 

of the Clean Air Act are that these 

sources are responsible for 24% of total 

U.S. greenhouse gas emissions, and 

more than 4% of total global greenhouse 

gas emissions.116 The Administrator 

also considered whether emissions of 

each greenhouse gas individually, as a 

separate air pollutant, would contribute 

to this air pollution. 

If the Administrator makes affirmative 

findings under section 202(a) on both 

endangerment and cause or contribute, 

then EPA is to issue standards 

‘‘applicable to emission’’ of the air 

pollutant or pollutants that EPA finds 

causes or contributes to the air pollution 

that endangers public health and 

welfare. The Endangerment Proposal 

invited public comment on whether the 

air pollutant should be considered the 

group of GHGs, or whether each GHG 

should be treated as a separate air 

pollutant. Either way, the emissions 

standards proposed today would satisfy 

the requirements of section 202(a) as the 

Administrator has significant discretion 

in how to structure the standards that 

apply to the emission of the air 

pollutant or air pollutants at issue. For 

example, under either approach EPA 

would have the discretion under section 

202(a) to adopt separate standards for 

each GHG, a single composite standard 

covering various gases, or any 

combination of these. In this rulemaking 

EPA is proposing separate standards for 

nitrous oxide and methane, and a CO2

standard that provides for credits based 

on reductions of HFCs, as the 

appropriate way to issue standards 

applicable to emissions of these GHGs. 

3. What is EPA Proposing? 

a. Proposed Light-Duty Vehicle, LightDuty Truck, and Medium-Duty 

Passenger Vehicle Greenhouse Gas 

Emission Standards and Projected 

Compliance Levels 

The CO2 emissions standards are by 

far the most important of the three 

standards and are the primary focus of 

this summary. EPA is proposing an 

attribute-based approach for the CO2

fleet-wide standard (one for cars and 

one for trucks), based on vehicle 

footprint as the attribute. These curves 

establish different CO2 emissions targets 

for each unique car and truck footprint. 

Generally, the larger the vehicle 

footprint, the higher the corresponding 

vehicle CO2 emissions target. Table 

III.A.3–1 shows the greenhouse gas 

standards for light vehicles that EPA is 

proposing for model years (MY) 2012 

and later: 

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117While over 99 percent of the carbon in 

automotive fuels is converted to CO2 in a properly 

functioning engine, compliance with the CO2

standard will also account for the very small levels 

of carbon associated with vehicle tailpipe 

hydrocarbon (HC) and carbon monoxide (CO) 

emissions, converted to CO2 on a mass basis, as 

discussed further in section x. 

118CO2-e refers to CO2-equivalent, and is a metric 

that allows non-CO2 greenhouse gases (such as 

hydrofluorocarbons used as automotive air 

conditioning refrigerants) to be expressed as an 

equivalent mass (i.e., corrected for relative global 

warming potency) of CO2 emissions. 119FTP is the Federal Test Procedure which uses 

what is commonly referred to as the ‘‘city’’ driving 

schedule, and HFET is the Highway Fuel Economy 

Test which uses the ‘‘highway’’ driving schedule. 

Compliance with the CO2 standard will be based on 

the same 2-cycle values that are currently used for 

CAFE standards compliance; EPA projects that 

fleet-wide in-use or real world CO2 emissions are 

approximately 25 percent higher, on average, than 

2-cycle CO2 values. 

120 74 FR 14196. 

TABLE III.A.3–1—PROPOSED INDUSTRY-WIDE GREENHOUSE GAS EMISSIONS STANDARDS

Standard/covered 

pollutants 

Form of 

standard 

Level of 

standard Credits Test cycles 

CO2 Standard 117: Tailpipe CO2 ................ Fleetwide average 

footprint CO2-curves 

for cars and trucks.

See footprint—CO2

curves in Figure I.C– 

1 for cars and Figure 

I.C–2 for trucks.

CO2-e credits 118 ......... EPA 2-cycle (FTP and 

HFET test cycles), 

with separate mechanisms for A/C credits.119

N2O Standard: Tailpipe N2O ..................... Cap per vehicle ........... 0.010 g/mi ................... None ........................... EPA FTP test. 

CH4 Standard: Tailpipe CH4 ...................... Cap per vehicle ........... 0.030 g/mi ................... None ........................... EPA FTP test. 

One important flexibility associated 

with the proposed CO2 standard is the 

proposed option for manufacturers to 

obtain credits associated with 

improvements in their air conditioning 

systems. As will be discussed in greater 

detail in later sections, EPA is 

establishing test procedures and design 

criteria by which manufacturers can 

demonstrate improvements in both air 

conditioner efficiency (which reduces 

vehicle tailpipe CO2 by reducing the 

load on the engine) and air conditioner 

refrigerants (using lower global warming 

potency refrigerants and/or improving 

system design to reduce GHG emissions 

associated with leaks). Neither of these 

strategies to reduce GHG emissions from 

air conditioners would be reflected in 

the EPA FTP or HFET tests. These 

improvements would be translated to a 

g/mi CO2-equivalent credit that can be 

subtracted from the manufacturer’s 

tailpipe CO2 compliance value. EPA 

expects a high percentage of 

manufacturers to take advantage of this 

flexibility to earn air conditioningrelated credits for MY2012–2016 

vehicles such that the average credit 

earned is about 11 grams per mile CO2– 

equivalent in 2016. 

A second flexibility being proposed is 

CO2 credits for flexible and dual fuel 

vehicles, similar to the CAFE credits for 

such vehicles which allow 

manufacturers to gain up to 1.2 mpg in 

their overall CAFE ratings. The Energy 

Independence and Security Act of 2007 

(EISA) mandated a phase-out of these 

flexible fuel vehicle CAFE credits 

beginning in 2015, and ending after 

2019. EPA is proposing to allow 

comparable CO2 credits for flexible fuel 

vehicles through MY 2015, but for MY 

2016 and beyond, EPA is proposing to 

treat flexible and dual fuel vehicles on 

a CO2-performance basis, calculating the 

overall CO2 emissions for flexible and 

dual fuel vehicles based on a fuel useweighted average of the CO2 levels on 

gasoline and on a manufacturer’s 

demonstrated actual usage of the 

alternative fuel in its vehicle fleet. 

Table III.A.3–2 summarizes EPA 

projections of industry-wide 2-cycle 

CO2 emissions and fuel economy levels 

that would be achieved by manufacturer 

compliance with the proposed GHG 

standards for MY2012–2016. 

For MY2011, Table III.A.3–2 uses the 

projected NHTSA compliance values for 

its MY2011 CAFE standards of 30.2 mpg 

for cars and 24.1 mpg for trucks, 

converted to an equivalent combined 

car and truck CO2 level of 325 grams per 

mile.120 EPA believes this is a 

reasonable estimate with which to 

compare the proposed MY2012–2016 

CO2 emission standards. Identifying the 

proper MY2011 estimate is complicated 

for many reasons, among them being the 

turmoil in the current automotive 

market for consumers and 

manufacturers, uncertain and volatile 

oil and gasoline prices, the ability of 

manufacturers to use flexible fuel 

vehicle credits to meet MY2011 CAFE 

standards, and the fact that most 

manufacturers have been surpassing 

CAFE standards (particularly the car 

standard) in recent years. Taking all of 

these considerations into account, EPA 

believes that the MY2011 projected 

CAFE compliance values, converted to 

CO2 emissions levels, represent a 

reasonable estimate. 

Table III.A.3–2 shows projected 

industry-wide average CO2 emissions 

values. The Projected CO2 Emissions for 

the Footprint-Based Standard column 

shows the CO2 g/mi level corresponding 

with the footprint standard that must be 

met. It is based on the proposed CO2- 

footprint curves and projected footprint 

values, and will decrease each year to 

250 grams per mile (g/mi) in MY2016. 

For MY2012–2015, the emissions 

impact of the projected utilization of 

flexible fuel vehicle (FFV) credits and 

the temporary lead-time allowance 

alternative standard (TLAAS, discussed 

below) are shown in the next two 

columns. Neither of these programs is 

proposed to be available in MY2016. 

The Projected CO2 Emissions column 

gives the CO2 emissions levels projected 

to be achieved given use of the flexible 

fuel credits and temporary lead-time 

allowance program. This column shows 

that, relative to the MY 2011 estimate, 

EPA projects that MY2016 CO2

emissions will be reduced by 23 percent 

over five years. The Projected A/C 

Credit column represents the industry 

wide average air conditioner credit 

manufacturers are expected to earn on 

an equivalent CO2 gram per mile basis 

in a given model year. In MY2016, the 

projected A/C credit of 10.6 g/mi 

represents 14 percent of the 75 g/mi CO2

emissions reductions associated with 

the proposed standards. The Projected 

2-cycle CO2 Emissions column shows 

the projected CO2 emissions as 

measured over the EPA 2-cycle tests, 

which would allow compliance with the 

standard assuming utilization of the 

projected FFV, TLAAS, and A/C credits. 

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TABLE III.A.3–2—PROJECTED FLEETWIDE CO2 EMISSIONS VALUES (GRAMS PER MILE) 

Model year 

Projected 

CO2 emissions for the 

footprintbased 

standard 

Projected 

FFV credit 

Projected 

TLAAS 

credit 

Projected 

CO2 emissions 

Projected 

A/C credit 

Projected 

2-cycle CO2

emissions 

2011 ................................................................................. .................... .................... .................... (325) .................... (325) 

2012 ................................................................................. 295 6 0.3 302 3.1 305 

2013 ................................................................................. 286 5.7 0.2 291 5.0 296 

2014 ................................................................................. 276 5.4 0.2 281 7.5 289 

2015 ................................................................................. 263 4.1 0.1 267 10.0 277 

2016 ................................................................................. 250 0 0 250 10.6 261 

EPA is also proposing a series of 

flexibilities for compliance with the CO2

standard which are not expected to 

significantly affect the projected 

compliance and achieved values shown 

above, but which should significantly 

reduce the costs of achieving those 

reductions. These flexibilities include 

the ability to earn: annual credits for a 

manufacturer’s over-compliance with its 

unique fleet-wide average standard, 

early credits from MY2009–2011, 

credits for early introduction of 

advanced technology vehicles, credit for 

‘‘off-cycle’’ CO2 reductions not reflected 

in CO2/fuel economy tests, as well as 

the carry-forward and carry-backward of 

credits, the ability to transfer credits 

between a manufacturer’s car and truck 

fleets, and a temporary lead-time 

allowance alternative standard 

(included in the tables above) that will 

permit manufacturers with less than 

400,000 vehicles produced in MY 2009 

to designate a fraction of their vehicles 

to meet a 25% higher CO2 standard for 

MY 2012–2015. All of these proposed 

flexibilities are discussed in greater 

detail in later sections. 

EPA is also proposing caps on the 

tailpipe emissions of nitrous oxide 

(N2O) and methane (CH4)—0.010 g/mi 

for N2O and 0.030 g/mi for CH4—over 

the EPA FTP test. While N2O and CH4

can be potent greenhouse gases on a 

relative mass basis, their emission levels 

from modern vehicle designs are 

extremely low and represent only about 

1% of total light vehicle GHG emissions. 

These cap standards are designed to 

ensure that N2O and CH4 emissions 

levels do not rise in the future, rather 

than to force reductions in the already 

low emissions levels. Accordingly, these 

standards are not designed to require 

automakers to make any changes in 

current vehicle designs, and thus EPA is 

not projecting any environmental or 

economic impacts associated with these 

proposed standards. 

EPA has attempted to build on 

existing practice wherever possible in 

designing a compliance program for the 

proposed GHG standards. In particular, 

the program structure proposed will 

streamline the compliance process for 

both manufacturers and EPA by 

enabling manufacturers to use a single 

data set to satisfy both the new GHG and 

CAFE testing and reporting 

requirements. Timing of certification, 

model-level testing, and other 

compliance activities also follow 

current practices established under the 

Tier 2 and CAFE programs. 

b. Environmental and Economic 

Benefits and Costs of EPA’s Proposed 

Standards 

In Table III.A.3–3 EPA presents 

estimated annual net benefits for the 

indicated calendar years. The table also 

shows the net present values of those 

benefits for the calendar years 2012– 

2050 using both a 3% and a 7% 

discount rate. As discussed previously, 

EPA recognizes that much of these same 

costs and benefits are also attributed to 

the proposed CAFE standard contained 

in this joint proposal. 

TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD

[(In million 2007 $s) [Note: B = unquantified benefits] 

2020 2030 2040 2050 NPV, 3% NPV, 7% 

Quantified Annual Costs a ........................ ¥$25,100 ¥$72,500 ¥$105,700 ¥$146,100 ¥$1,287,600 ¥$529,500 

Benefits from Reduced GHG Emissions at each assumed SCC value: 

SCC 5% ............................................ 1,200 3,300 5,700 9,500 69,200 28,600 

SCC 5% Newell-Pizer ....................... 2,500 6,600 11,000 19,000 138,400 57,100 

SCC from 3% and 5% ...................... 4,700 12,000 22,000 36,000 263,000 108,500 

SCC 3% ............................................ 8,200 22,000 38,000 63,000 456,900 188,500 

SCC 3% Newell-Pizer ....................... 14,000 36,000 63,000 100,000 761,400 314,200 

Other Quantified Externalities 

PM2.5 Related Benefits bcd ...................... 1,400 3,000 4,600 6,700 59,800 26,300 

Energy Security Impacts (price shock) .... 2,300 4,800 6,200 7,800 85,800 38,800 

Reduced Refueling .................................. 2,500 4,900 6,400 8,000 89,600 41,000 

Value of Increased Driving e .................... 4,900 10,000 13,600 18,000 184,700 82,700 

Accidents, Noise, Congestion .................. ¥2,400 ¥4,900 ¥6,300 ¥7,900 ¥88,200 ¥40,200 

Quantified Net Benefits at each assumed SCC value: 

SCC 5% ............................................ 35,000 93,600 135,900 188,200 1,688,500 706,700 

SCC 5% Newell-Pizer ....................... 36,300 96,900 141,200 197,700 1,757,700 735,200 

SCC from 3% and 5% ...................... 38,500 102,300 152,200 214,700 1,882,300 786,600 

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TABLE III.A.3–3—PROJECTED QUANTIFIABLE BENEFITS AND COSTS FOR PROPOSED CO2 STANDARD—Continued 

[(In million 2007 $s) [Note: B = unquantified benefits] 

2020 2030 2040 2050 NPV, 3% NPV, 7% 

SCC 3% ............................................ 42,000 112,300 168,200 241,700 2,076,200 866,600 

SCC 3% Newell-Pizer ....................... 47,800 126,300 193,200 278,700 2,380,700 992,300 

aQuantified annual costs are negative because fuel savings are included as negative costs (i.e., positive savings). Since the fuel savings outweigh the vehicle technology costs, the costs of as presented here are actually negative (i.e., they represent savings). b Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. EPA does intend to more fully capture the co-pollutant benefits for the 

analysis of the final standards. cThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values 

would be approximately 145% (nearly two-and-a-half times) larger. dThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 

9% lower. e Calculated using pre-tax fuel prices. 

4. Basis for the Proposed GHG 

Standards Under Section 202(a) 

EPA statutory authority under section 

202(a)(1) of the Clean Air Act (CAA) is 

discussed in more detail in Section 

I.C.2. The following is a summary of the 

basis for the proposed standards under 

section 202(a), which is discussed in 

more detail in the following portions of 

Section III. 

With respect to CO2 and HFCs, EPA 

is proposing attribute-based light-duty 

car and truck standards that achieve 

large and important emissions 

reductions of GHGs. EPA has evaluated 

the technological feasibility of the 

proposed standards, and the 

information and analysis performed by 

EPA indicates that these standards are 

feasible in the lead time provided. EPA 

and NHTSA have carefully evaluated 

the effectiveness of individual 

technologies as well as the interactions 

when technologies are combined. EPA’s 

projection of the technology that would 

be used to comply with the proposed 

standards indicates that manufacturers 

will be able to meet the proposed 

standards by employing a wide variety 

of technology that is already 

commercially available and can be 

incorporated into their vehicle at the 

time of redesign. In addition to the use 

of the manufacturers’ redesign cycle, 

EPA’s analysis also takes into account 

certain flexibilities that will facilitate 

compliance especially in the early years 

of the program when potential lead time 

constraints are most challenging. These 

flexibilities include averaging, banking, 

and trading of various types of credits. 

For the industry as a whole, EPA’s 

projections indicate that the proposed 

standards can be met using technology 

that will be available in the lead-time 

provided. 

To account for additional lead-time 

concerns for various manufacturers of 

typically higher performance vehicles, 

EPA is proposing a Temporary Leadtime Allowance that will further 

facilitate compliance for limited 

volumes of such vehicles in the 

program’s initial years. For a few very 

small volume manufacturers, EPA 

projects that manufacturers will likely 

comply using a combination of credits 

and technology. 

EPA has also carefully considered the 

cost to manufacturers of meeting the 

standards, estimating piece costs for all 

candidate technologies, direct 

manufacturing costs, cost markups to 

account for manufacturers’ indirect 

costs, and manufacturer cost reductions 

attributable to learning. In estimating 

manufacturer costs, EPA took into 

account manufacturers’ own standard 

practices such as making major changes 

to model technology packages during a 

planned redesign cycle. EPA then 

projected the average cost across the 

industry to employ this technology, as 

well as manufacturer-by-manufacturer 

costs. EPA considers the per vehicle 

costs estimated from this analysis to be 

well within a reasonable range in light 

of the emissions reductions and benefits 

received. EPA projects, for example, that 

the fuel savings over the life of the 

vehicles will more than offset the 

increase in cost associated with the 

technology used to meet the standards. 

EPA has also evaluated the impacts of 

these standards with respect to 

reductions in GHGs and reductions in 

oil usage. For the lifetime of the model 

year 2012–2016 vehicles we estimate 

GHG reductions of approximately 950 

million metric tons CO2 eq. and fuel 

reductions of 1.8 billion barrels of oil. 

These are important and significant 

reductions that would be achieved by 

the proposed standards. EPA has also 

analyzed a variety of other impacts of 

the standards, ranging from the 

standards’ effects on emissions of nonGHG pollutants, impacts on noise, 

energy, safety and congestion. EPA has 

also quantified the cost and benefits of 

the proposed standards, to the extent 

practicable. Our analysis to date 

indicates that the overall quantified 

benefits of the proposed standards far 

outweigh the projected costs. Utilizing a 

3% discount rate and a $20 per ton 

social cost of carbon we estimate the 

total net social benefits over the life of 

the model year 2012–2016 vehicles is 

$192 billion, and the net present value 

of the net social benefits of the 

standards through the year 2050 is $1.9 

trillion dollars. These values are 

estimated at $136 billion and $787 

billion, respectively, using a 7% 

discount rate and the $20 per ton SCC 

value. 

Under section 202(a) EPA is called 

upon to set standards that provide 

adequate lead-time for the development 

and application of technology to meet 

the standards. EPA’s proposed 

standards satisfy this requirement, as 

discussed above. In setting the 

standards, EPA is called upon to weigh 

and balance various factors, and to 

exercise judgment in setting standards 

that are a reasonable balance of the 

relevant factors. In this case, EPA has 

considered many factors, such as cost, 

impacts on emissions (both GHG and 

non-GHG), impacts on oil conservation, 

impacts on noise, energy, safety, and 

other factors, and has where practicable 

quantified the costs and benefits of the 

rule. In summary, given the technical 

feasibility of the standard, the moderate 

cost per vehicle in light of the savings 

in fuel costs over the life time of the 

vehicle, the very significant reductions 

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121As described in Section III.B.2., EPA is 

proposing for purposes of GHG emissions standards 

to use the same vehicle category definitions as are 

used in the CAFE program. 

in emissions and in oil usage, and the 

significantly greater quantified benefits 

compared to quantified costs, EPA is 

confident that the proposed standards 

are an appropriate and reasonable 

balance of the factors to consider under 

section 202(a). 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). 

EPA recognizes that the vast majority 

of technology which we are considering 

for purposes of setting standards under 

section 202(a) is commercially available 

and already being utilized to a limited 

extent across the fleet. The vast majority 

of the emission reductions which would 

result from this proposed rule would 

result from the increased use of these 

technologies. EPA also recognizes that 

this proposed rule would enhance the 

development and limited use of more 

advanced technologies, such as PHEVs 

and EVs. In this technological context, 

there is no clear cut line that indicates 

that only one projection of technology 

penetration could potentially be 

considered feasible for purposes of 

section 202(a), or only one standard that 

could potentially be considered a 

reasonable balancing of the factors 

relevant under section 202(a). EPA has 

therefore evaluated two sets of 

alternative standards, one more 

stringent than the proposed standards 

and one less stringent. 

The alternatives are 4% per year 

increase in standards which would be 

less stringent than our proposal and a 

6% per year increase in the standards 

which would be more stringent than our 

proposal. EPA is not proposing either of 

these. As discussed in Section III.D.7, 

the 4% per year compared to the 

proposal forgoes CO2 reductions which 

can be achieved at reasonable costs and 

are achievable by the industry within 

the rule’s timeframe. The 6% per year 

alternative requires a significant 

increase in the projected required 

technology which may not be 

achievable in this timeframe due to the 

limited available lead time and the 

current difficult financial condition of 

the automotive industry. (See Section 

III.D.7 for a detailed discussion of why 

EPA is not proposing either of the 

alternatives.) EPA thus believes that it is 

appropriate to propose the CO2

standards discussed above. EPA invites 

comment on all aspects of this 

judgment, as well as comment on the 

alternative standards. 

EPA is also proposing standards for 

N2O and CH4. EPA has designed these 

standards to act as emission rate (i.e., 

gram per mile) caps and to avoid future 

increases in light duty vehicle 

emissions. As discussed in Section 

III.B.6, N2O and CH4 emissions are 

already generally well controlled by 

current emissions standards, and EPA 

has not identified clear technological 

steps available to manufacturers today 

that would significantly reduce current 

emission levels for the vast majority of 

vehicles manufactured today (i.e., 

stoichiometric gasoline vehicles). 

However, for both N2O and CH4, some 

vehicle technologies (and, for CH4, use 

of natural gas fuel) could potentially 

increase emissions of these GHGs in the 

future, and EPA believes it is important 

that this be avoided. EPA expects that, 

almost universally across current car 

and truck designs, manufacturers will 

be able to meet the ‘‘cap’’ standards 

with little if any technological 

improvements or cost. EPA has 

designed the level of the N2O and CH4

standards with the intent that 

manufacturers would be able to meet 

them without the need for technological 

improvement; in other words, these 

emission standards are designed to be 

‘‘anti-backsliding’’ standards. 

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

Medium-Duty Passenger Vehicles 

EPA is proposing new emission 

standards to control greenhouse gases 

(GHGs) from light-duty vehicles. First, 

EPA is proposing emission standards for 

carbon dioxide (CO2) on a gram per mile 

(g/mile) basis that would apply to a 

manufacturer’s fleet of cars, and a 

separate standard that would apply to a 

manufacturer’s fleet of trucks. CO2 is the 

primary pollutant resulting from the 

combustion of vehicular fuels, and the 

amount of CO2 emitted is directly 

correlated to the amount of fuel 

consumed. Second, EPA is providing 

auto manufacturers with the 

opportunity to earn credits toward the 

fleet-wide average CO2 standards for 

improvements to air conditioning 

systems, including both 

hydrofluorocarbon (HFC) refrigerant 

losses (i.e., system leakage) and indirect 

CO2 emissions related to the increased 

load on the engine. Third, EPA is 

proposing separate emissions standards 

for two other GHG pollutants: Methane 

(CH4) and nitrous oxide (N2O). CH4 and 

N2O emissions relate closely to the 

design and efficient use of emission 

control hardware (i.e., catalytic 

converters). The standards for CH4 and 

N2O would be set as a cap that would 

limit emissions increases and prevent 

backsliding from current emission 

levels. The proposed standards 

described below would apply to 

passenger cars, light-duty trucks, and 

medium-duty passenger vehicles 

(MDPVs). As an overall group, they are 

referred to in this preamble as light 

vehicles or simply as vehicles. In this 

preamble section passenger cars may be 

referred to simply as ‘‘cars’’, and lightduty trucks and MDPVs as ‘‘light 

trucks’’ or ‘‘trucks.’’ 121

EPA is establishing a system of 

averaging, banking, and trading of 

credits integral to the fleet averaging 

approach, based on manufacturer fleet 

average CO2 performance, as discussed 

in Section III.B.4. This approach is 

similar to averaging, banking, and 

trading (ABT) programs EPA has 

established in other programs and is 

also similar to provisions in the CAFE 

program. In addition to traditional ABT 

credits based on the fleet emissions 

average, EPA is also proposing to 

include A/C credits as an aspect of the 

standards, as mentioned above. EPA is 

also proposing several additional credit 

provisions that apply only in the initial 

model years of the program. These 

include flex fuel vehicle credits, credits 

based on the use of advanced 

technologies, and generation of credits 

prior to model year 2012. The proposed 

A/C credits and additional credit 

opportunities are described in Section 

III.C. These credit programs would 

provide flexibility to manufacturers, 

which may be especially important 

during the early transition years of the 

program. EPA is also proposing to allow 

a manufacturer to carry a deficit into the 

future for a limited number of model 

years. A parallel provision, referred to 

as credit carry-back, is proposed as part 

of the CAFE program. 

1. What Fleet-Wide Emissions Levels 

Correspond to the CO2 Standards? 

The proposed attribute-based CO2

standards, if made final, are projected to 

achieve a national fleet-wide average, 

covering both light cars and trucks, of 

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122See CAA section 202(a)(2). 123These 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. 

250 grams/mile of CO2 in model year 

(MY) 2016. This includes CO2- 

equivalent emission reductions from 

A/C improvements, reflected as credits 

in the standard. The standards would 

begin with MY 2012, with a generally 

linear increase in stringency from MY 

2012 through MY 2016. EPA is 

proposing separate standards for cars 

and light trucks. The tables in this 

section below provide overall fleet 

average levels that are projected for both 

cars and light trucks over the phase-in 

period which is estimated to correspond 

with the proposed standards. The actual 

fleet-wide average g/mi level that will 

be achieved in any year for cars and 

trucks will depend on the actual 

production for that year, as well as the 

use of the various credit and averaging, 

banking, and trading provisions. For 

example, in any year, manufacturers 

may generate credits from cars and use 

them for compliance with the truck 

standard. Such transfer of credits 

between cars and trucks is not reflected 

in the table below. In Section III.F, the 

year-by-year estimate of emissions 

reductions that are projected to be 

achieved by the proposed standards are 

discussed. 

In general, the proposed schedule of 

standards acts as a phase-in to the MY 

2016 standards, and reflects 

consideration of the appropriate leadtime for each manufacturer to 

implement the requisite emission 

reductions technology across its product 

line.122 Note that 2016 is the final model 

year in which standards become more 

stringent. The 2016 CO2 standards 

would remain in place for 2017 and 

later model years, until revised by EPA 

in a future rulemaking. 

EPA estimates that, on a combined 

fleet-wide national basis, the proposed 

2016 MY standards would achieve a 

level of 250 g/mile CO2, including CO2- 

equivalent credits from A/C related 

reductions. The derivation of the 250 g/ 

mile estimate is described in Section 

III.B.2. 

EPA has estimated the overall fleetwide CO2-equivalent emission levels 

that correspond with the proposed 

attribute-based standards, based on the 

projections of the composition of each 

manufacturer’s fleet in each year of the 

program. Tables III.B.1–1 and III.B.1–2 

provide these estimates for each 

manufacturer.123

TABLE III.B.1–1—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR

CARS

Manufacturer 

Model year 

2012 2013 2014 2015 2016 

BMW .......................................................................................................................................................... 265 257 249 238 227 

Chrysler ...................................................................................................................................................... 266 259 251 242 231 

Daimler ....................................................................................................................................................... 270 263 257 245 234 

Ford ............................................................................................................................................................ 266 259 251 239 228 

General Motors .......................................................................................................................................... 266 258 250 239 228 

Honda ........................................................................................................................................................ 259 251 244 232 221 

Hyundai ...................................................................................................................................................... 260 252 244 233 221 

Kia .............................................................................................................................................................. 262 253 246 235 223 

Mazda ........................................................................................................................................................ 258 250 243 231 220 

Mitsubishi ................................................................................................................................................... 255 247 240 228 217 

Nissan ........................................................................................................................................................ 263 255 247 236 225 

Porsche ...................................................................................................................................................... 242 234 227 215 204 

Subaru ....................................................................................................................................................... 252 244 237 225 214 

Suzuki ........................................................................................................................................................ 244 236 229 217 206 

Tata ............................................................................................................................................................ 286 278 271 259 248 

Toyota ........................................................................................................................................................ 257 250 242 231 220 

Volkswagen ................................................................................................................................................ 254 246 239 228 217 

TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR

LIGHT TRUCKS

Manufacturer 

Model year 

2012 2013 2014 2015 2016 

BMW .......................................................................................................................................................... 334 324 313 298 283 

Chrysler ...................................................................................................................................................... 349 339 329 315 300 

Daimler ....................................................................................................................................................... 346 334 323 308 293 

Ford ............................................................................................................................................................ 363 352 343 329 314 

General Motors .......................................................................................................................................... 372 361 351 337 322 

Honda ........................................................................................................................................................ 333 322 311 295 280 

Hyundai ...................................................................................................................................................... 330 320 308 293 278 

Kia .............................................................................................................................................................. 341 330 319 303 288 

Mazda ........................................................................................................................................................ 321 311 300 286 271 

Mitsubishi ................................................................................................................................................... 320 310 299 284 269 

Nissan ........................................................................................................................................................ 352 341 332 318 303 

Porsche ...................................................................................................................................................... 338 327 316 301 286 

Subaru ....................................................................................................................................................... 319 308 297 282 267 

Suzuki ........................................................................................................................................................ 324 313 301 286 271 

Tata ............................................................................................................................................................ 326 316 305 289 275 

Toyota ........................................................................................................................................................ 342 332 320 305 291 

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124 Due to rounding during calculations, the 

estimated fleet-wide CO2-equivalent levels may 

vary by plus or minus 1 gram. 125See 65 FR 6698 (February 10, 2000). 

TABLE III.B.1–2—ESTIMATED FLEET CO2-EQUIVALENT LEVELS CORRESPONDING TO THE PROPOSED STANDARDS FOR

LIGHT TRUCKS—Continued 

Manufacturer 

Model year 

2012 2013 2014 2015 2016 

Volkswagen ................................................................................................................................................ 344 333 322 307 292 

These estimates were aggregated 

based on projected production volumes 

into the fleet-wide averages for cars and 

trucks (Table III.B.1–3).124

TABLE III.B.1–3—ESTIMATED FLEETWIDE CO2-EQUIVALENT LEVELS

CORRESPONDING TO THE PROPOSED

STANDARDS

Cars Trucks 

Model year CO2 (g/mi) CO2 (g/mi) 

2012 .......... 261 352 

2013 .......... 254 341 

2014 .......... 245 331 

2015 .......... 234 317 

2016 and 

later ....... 224 303 

As shown in Table III.B.1–3, fleetwide CO2-equivalent emission levels for 

cars under the proposed approach are 

projected to decrease from 261 to 224 

grams per mile between MY 2012 and 

MY 2016. Similarly, fleet-wide CO2- 

equivalent emission levels for trucks are 

projected to decrease from 352 to 303 

grams per mile. These numbers do not 

include the effects of other flexibilities 

and credits in the program. The 

estimated achieved values can be found 

in Chapter 5 of the Draft Regulatory 

Impact Analysis (DRIA). 

EPA has also estimated the average 

fleet-wide levels for the combined car 

and truck fleets. These levels are 

provided in Table III.B.1–4. As shown, 

the overall fleet average CO2 level is 

expected to be 250 g/mile in 2016. 

TABLE III.B.1–4—ESTIMATED FLEETWIDE COMBINED CO2-EQUIVALENT

LEVELS CORRESPONDING TO THE

PROPOSED STANDARDS

Combined car 

and truck 

Model year CO2 (g/mi) 

2012 ...................................... 295 

2013 ...................................... 286 

2014 ...................................... 276 

2015 ...................................... 263 

2016 ...................................... 250 

As noted above, EPA is proposing 

standards that would result in 

increasingly stringent levels of CO2

control from MY 2012 though MY 

2016—applying the CO2 footprint 

curves applicable in each model year to 

the vehicles expected to be sold in each 

model year produces fleet-wide annual 

reductions in CO2 emissions. As 

explained in Section III.D below and the 

relevant support documents, EPA 

believes that the proposed level of 

improvement achieves important CO2

emissions reductions through the 

application of feasible control 

technology at reasonable cost, 

considering the needed lead time for 

this program. EPA further believes that 

the proposed averaging, banking and 

trading provisions, as well as other 

credit-generating mechanisms, allow 

manufacturers further flexibilities 

which reduce the cost of the proposed 

CO2 standards and help to provide 

adequate lead time. EPA believes this 

approach is justified under section 

202(a) of the Clean Air Act. 

EPA has analyzed the feasibility 

under the CAA of achieving the 

proposed CO2 standards, based on 

projections of what actions 

manufacturers are expected to take to 

reduce emissions. The results of the 

analysis are discussed in detail in 

Section III.D below and in the DRIA. 

EPA also presents the estimated costs 

and benefits of the proposed car and 

truck CO2 standards in Section III.H. In 

developing the proposal, EPA has 

evaluated the kinds of technologies that 

could be utilized by the automobile 

industry, as well as the associated costs 

for the industry and fuel savings for the 

consumer, the magnitude of the GHG 

reductions that may be achieved, and 

other factors relevant under the CAA. 

With respect to the lead time and cost 

of incorporating technology 

improvements that reduce GHG 

emissions, EPA and NHTSA place 

important weight on the fact that during 

MYs 2012–2016 manufacturers are 

expected to redesign and upgrade their 

light-duty vehicle products (and in 

some cases introduce entirely new 

vehicles not on the market today). 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. The 

time-frame and levels for the proposed 

standards, as well as the ability to 

average, bank and trade credits and 

carry a deficit forward for a limited 

time, are expected to provide 

manufacturers the time needed to 

incorporate technology that will achieve 

GHG reductions, and to do this as part 

of the normal vehicle redesign process. 

This is an important aspect of the 

proposal, as it would avoid the much 

higher costs that would occur if 

manufacturers needed to add or change 

technology at times other than these 

scheduled redesigns. This time period 

would also provide manufacturers the 

opportunity to plan for compliance 

using a multi-year time frame, again in 

accord with their normal business 

practice. 

Consistent with the requirement of 

CAA section 202(a)(1) that standards be 

applicable to vehicles ‘‘for their useful 

life,’’ EPA is proposing CO2 vehicle 

standards that would apply for the 

useful life of the vehicle. Under section 

202(i) of the Act, which authorized the 

Tier 2 standards, EPA established a 

useful life period of 10 years or 120,000 

miles, whichever first occurs, for all 

Tier 2 light-duty vehicles and light-duty 

trucks.125 Tier 2 refers to EPA’s 

standards for criteria pollutants such as 

NOX, HC, and CO. EPA is proposing 

new CO2 standards for the same group 

of vehicles, and therefore the Tier 2 

useful life would apply for CO2

standards as well. The in-use emission 

standard will be 10% higher than the 

certification standard, to address issues 

of production variability and test-to-test 

variability. The in-use standard is 

discussed in Section III.E. 

EPA is proposing to measure CO2 for 

certification and compliance purposes 

using the same test procedures currently 

used by EPA for measuring fuel 

economy. These procedures are the 

Federal Test Procedure (FTP or ‘‘city’’ 

test) and the Highway Fuel Economy 

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126EPA 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.126 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. 

127See 71 FR 77872, December 27, 2006. 

128See 49 CFR part 523. 

Test (HFET or ‘‘highway’’ test).126 This 

corresponds with the data used to 

develop the footprint-based CO2

standards, since the data on control 

technology efficiency was also 

developed in reference to these test 

procedures. Although EPA recently 

updated the test procedures used for 

fuel economy labeling, to better reflect 

the actual in-use fuel economy achieved 

by vehicles, EPA is not proposing to use 

these test procedures for the CO2

standards proposed here, given the lack 

of data on control technology 

effectiveness under these procedures.127

As stated in Section I, EPA and NHTSA 

invite comments on potential 

amendments to the CAFE and GHG test 

procedures, including but not limited to 

air conditioner-related emissions, that 

could be implemented beginning in MY 

2017. 

EPA proposes to include 

hydrocarbons (HC) and carbon 

monoxide (CO) in its CO2 emissions 

calculations on a CO2-equivalent basis. 

It is well accepted that HC and CO are 

typically oxidized to CO2 in the 

atmosphere in a relatively short period 

of time and so are effectively part of the 

CO2 emitted by a vehicle. In terms of 

standard stringency, accounting for the 

carbon content of tailpipe HC and CO 

emissions and expressing it as CO2- 

equivalent emissions would add less 

than one percent to the overall CO2- 

equivalent emissions level. This will 

also ensure consistency with CAFE 

calculations since HC and CO are 

included in the ‘‘carbon balance’’ 

methodology that EPA uses to 

determine fuel usage as part of 

calculating vehicle fuel economy levels. 

2. What Are the CO2 Attribute-Based 

Standards? 

EPA proposes to use the same vehicle 

category definitions that are used in the 

CAFE program for the 2011 model year 

standards.128 The CAFE vehicle 

category definitions differ slightly from 

the EPA definitions for cars and light 

trucks used for the Tier 2 program, as 

well as other EPA vehicle programs. 

Specifically, NHTSA’s reconsideration 

of the CAFE program statutory language 

has resulted in many two-wheel drive 

SUVs under 6000 pounds gross vehicle 

weight being reclassified as cars under 

the CAFE program. The proposed 

approach of using CAFE definitions 

allows EPA’s proposed CO2 standards 

and the proposed CAFE standards to be 

harmonized across all vehicles. In other 

words, vehicles would be subject to 

either car standards or truck standards 

under both programs, and not car 

standards under one program and trucks 

standards under the other. 

EPA is proposing separate car and 

truck standards, that is, vehicles defined 

as cars have one set of footprint-based 

curves for MY 2012–2016 and vehicles 

defined as trucks have a different set for 

MY 2012–2016. In general, for a given 

footprint the CO2 g/mi target for trucks 

is less stringent then for a car with the 

same footprint. 

EPA is not proposing a single fleet 

standard where all cars and trucks are 

measured against the same footprint 

curve for several reasons. First, some 

vehicles classified as trucks (such as 

pick-up trucks) have certain attributes 

not common on cars which attributes 

contribute to higher CO2 emissions— 

notably high load carrying capability 

and/or high towing capability. Due to 

these differences, it is reasonable to 

separate the light-duty vehicle fleet into 

two groups. Second, EPA would like to 

harmonize key program design elements 

of the GHG standards with NHTSA’s 

CAFE program where it is reasonable to 

do so. NHTSA is required by statute to 

set separate standards for passenger cars 

and for non-passenger cars. 

Finally, most of the advantages of a 

single standard for all light duty 

vehicles are also present in the two-fleet 

standards proposed here. Because EPA 

is proposing to allow unlimited credit 

transfer between a manufacturer’s car 

and truck fleets, the two fleets can 

essentially be viewed as a single fleet 

when manufacturers consider 

compliance strategies. Manufacturers 

can thus choose on which vehicles 

within their fleet to focus GHG reducing 

technology and then use credit transfers 

as needed to demonstrate compliance, 

just as they would if there was a single 

fleet standard. The one benefit of a 

single light-duty fleet not captured by a 

two-fleet approach is that a single fleet 

prevents potential ‘‘gaming’’ of the car 

and truck definitions to try and design 

vehicles which are more similar to 

passenger cars but which may meet the 

regulatory definition of trucks. Although 

this is of concern to EPA, we do not 

believe at this time that concern is 

sufficient to outweigh the other reasons 

for proposing separate car and truck 

fleet standards. EPA requests comment 

on this approach. 

For model years 2012 and later, EPA 

is proposing a series of CO2 standards 

that are described mathematically by a 

family of piecewise linear functions 

(with respect to vehicle footprint). The 

form of the function is as follows: 

CO2 = a, if x ≤ l 

CO2 = cx + d, if l < x ≤ h 

CO2 = b, if x > h 

Where: 

CO2 = the CO2 target value for a given 

footprint (in g/mi) 

a = the minimum CO2 target value (in g/mi) 

b = the maximum CO2 target value (in g/mi) 

c = the slope of the linear function (in g/mi 

per sq ft) 

d = is the zero-offset for the line (in g/mi CO2) 

x = footprint of the vehicle model (in square 

feet, rounded to the nearest tenth) 

l & h are the lower and higher footprint 

limits, constraints, or the boundary 

(‘‘kinks’’) between the flat regions and 

the intermediate sloped line. 

EPA’s proposed parameter values that 

define the family of functions for the 

proposed CO2 fleetwide average car and 

truck standards are as follows: 

TABLE III.B.2–1—PARAMETER VALUES FOR CARS

[For CO2 gram per mile targets] 

Model year a b c d Lower 

constraint 

Upper 

constraint 

2012 ......................................................... 242 313 4.72 48.8 41 56 

2013 ......................................................... 234 305 4.72 40.8 41 56 

2014 ......................................................... 227 297 4.72 33.2 41 56 

2015 ......................................................... 215 286 4.72 22.0 41 56 

2016 and later .......................................... 204 275 4.72 10.9 41 56 

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TABLE III.B.2–2—PARAMETER VALUES FOR TRUCKS

[For CO2 gram per mile targets] 

Model year a b c d Lower 

constraint 

Upper 

constraint 

2012 ......................................................... 298 399 4.04 132.6 41 66 

2013 ......................................................... 287 388 4.04 121.6 41 66 

2014 ......................................................... 276 377 4.04 110.3 41 66 

2015 ......................................................... 261 362 4.04 95.2 41 66 

2016 and later .......................................... 246 347 4.04 80.4 41 66 

The equations can be shown 

graphically for each vehicle category, as 

shown in Figures III.B.2–1 and III.B.2– 

2. These standards (or functions) 

decrease from 2012–2016 with a vertical 

shift. A more detailed description of the 

development of the attribute based 

standard can be found in Chapter 2 of 

the Draft Joint TSD. More background 

discussion on other alternative 

attributes and curves EPA explored can 

be found in the EPA DRIA. EPA 

recognizes that the CAA does not 

mandate that EPA use an attribute based 

standard, as compared to NHTSA’s 

obligations under EPCA. The EPA 

believes that proposing a footprintbased program will harmonize EPA’s 

proposed program and the proposed 

CAFE program as a single national 

program, resulting in reduced 

compliance complexity for 

manufacturers. EPA’s reasons for 

proposing to use an attribute based 

standard are discussed in more detail in 

the Joint TSD. Comments are requested 

on this proposal to use the attributebased approach for regulating tailpipe 

CO2 emissions. 

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BILLING CODE 4910–59–C 

3. Overview of How EPA’s Proposed 

CO2 Standards Would Be Implemented 

for Individual Manufacturers 

This section provides a brief overview 

of how EPA proposes to implement the 

CO2 standards. Section III.E explains 

EPA’s proposed approach for 

certification and compliance in detail. 

EPA is proposing two kinds of 

standards—fleet average standards 

determined by a manufacturer’s fleet 

profile of various models, and in-use 

standards that would apply to the 

various models that make up the 

manufacturer’s fleet. Although this is 

similar in concept to the current lightduty vehicle Tier 2 program, there are 


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129The final in-use vehicle standards for each 

model would also be based on the model-level fuel 

economy testing. As discussed in Section III.E.4, an 

in-use adjustment factor would be applied to the 

model level results to determine the in-use standard 

that would apply during the useful life of the 

vehicle. 

130For example, see the Tier 2 light-duty vehicle 

emission standards program (65 FR 6698, February 

10, 2000), the 2010 and later model year motorcycle 

emissions program (69 FR 2398, January 15, 2004), 

and the 2007 and later model year heavy-duty 

engine and vehicle standards program (66 FR 5001, 

January 18, 2001). 

important differences. In explaining 

EPA’s proposal for the CO2 standards, it 

is useful to summarize how the Tier 2 

program works. 

Under Tier 2, manufacturers select a 

test vehicle prior to certification and test 

the vehicle and/or its emissions 

hardware to determine both its 

emissions performance when new and 

the emissions performance expected at 

the end of its useful life. Based on this 

testing, the vehicle is assigned to one of 

several specified bins of emissions 

levels, identified in the Tier 2 rule, and 

this bin level becomes the emissions 

standard for the test group the test 

vehicle represents. All of the vehicles in 

the group must meet the emissions level 

for that bin throughout their useful life. 

The emissions level assigned to the bin 

is also used in calculating the 

manufacturer’s fleet average emissions 

performance. 

Since compliance with the Tier 2 fleet 

average depends on actual test group 

sales volumes and bin levels, it is not 

possible to determine compliance at the 

time the manufacturer applies for and 

receives a certificate of conformity for a 

test group. Instead, at certification, the 

manufacturer demonstrates that the 

vehicles in the test group are expected 

to comply throughout their useful life 

with the emissions bin assigned to that 

test group, and makes a good faith 

demonstration that its fleet is expected 

to comply with the Tier 2 average when 

the model year is over. EPA issues a 

certificate for the vehicles covered by 

the test group based on this 

demonstration, and includes a condition 

in the certificate that if the manufacturer 

does not comply with the fleet average 

then production vehicles from that test 

group will be treated as not covered by 

the certificate to the extent needed to 

bring the manufacturer’s fleet average 

into compliance with Tier 2. 

EPA proposes to retain the Tier 2 

approach of requiring manufacturers to 

demonstrate in good faith at the time of 

certification that models in a test group 

will meet applicable standards 

throughout useful life. EPA also 

proposes to retain the practice of 

conditioning certificates upon 

attainment of the fleet average standard. 

However, there are several important 

differences between a Tier 2 type of 

program and the CO2 standards program 

EPA is proposing. These differences and 

resulting modifications to certification 

are summarized below and are 

described in detail in Section III.E. 

EPA is proposing to certify test groups 

as it does for Tier 2, with the CO2

emission results for the test vehicle as 

the initial or default standard for all of 

the models in the test group. However, 

manufacturers would later substitute 

test data for individual models in that 

test group, based on the model level fuel 

economy testing that typically occurs 

through the course of the model year. 

This model level data would then be 

used to assign a distinct certification 

level for that model, instead of the 

initial test group level. These model 

level results would then be used to 

calculate the fleet average after the end 

of production.129 The option to 

substitute model level test data for the 

test group data is at the manufacturer’s 

discretion, except they are required as 

under the CAFE test protocols to test, at 

a minimum, enough models to represent 

90 percent of their production. The test 

group level would continue to apply for 

any model that is not covered by model 

level testing. A related difference is that 

the fleet average calculation for Tier 2 

is based on test group bin levels and test 

group sales whereas under this proposal 

the CO2 fleet level would be based on 

a combination of test group and modellevel emissions and model-level 

production. For the new CO2 standards, 

EPA is proposing to use production 

rather than sales in calculating the fleet 

average in order to more closely 

conform with CAFE, which is a 

production-based program. EPA does 

not expect any significant 

environmental effect because there is 

little difference between production and 

sales, and this will reduce the 

complexity of the program for 

manufacturers. 

4. Averaging, Banking, and Trading 

Provisions for CO2 Standards 

As explained above, a fleet average 

CO2 program for passenger cars and 

light trucks is proposed. EPA has 

implemented similar averaging 

programs for a range of motor vehicle 

types and pollutants, from the Tier 2 

fleet average for NOX to motorcycle 

hydrocarbon (HC) plus oxides of 

nitrogen (NOX) emissions to NOX and 

particulate matter (PM) emissions from 

heavy-duty engines.130 The proposed 

program would operate much like EPA’s 

existing averaging programs in that 

manufacturers would calculate 

production-weighted fleet average 

emissions at the end of the model year 

and compare their fleet average with a 

fleet average standard to determine 

compliance. As in other EPA averaging 

programs, the Agency is also proposing 

a comprehensive program for averaging, 

banking, and trading of credits which 

together will help manufacturers in 

planning and implementing the orderly 

phase-in of emissions control 

technology in their production, using 

their typical redesign schedules. 

Averaging, Banking, and Trading 

(ABT) of emissions credits has been an 

important part of many mobile source 

programs under CAA Title II, both for 

fuels programs as well as for engine and 

vehicle programs. ABT is important 

because it can help to address many 

issues of technological feasibility and 

lead-time, as well as considerations of 

cost. ABT is an integral part of the 

standard setting itself, and is not just an 

add-on to help reduce costs. In many 

cases, ABT resolves issues of lead-time 

or technical feasibility, allowing EPA to 

set a standard that is either numerically 

more stringent or goes into effect earlier 

than could have been justified 

otherwise. This provides important 

environmental benefits at the same time 

it increases flexibility and reduces costs 

for the regulated industry. 

This section discusses generation of 

credits by achieving a fleet average CO2

level that is lower than the 

manufacturer’s CO2 fleet average 

standard. EPA is proposing a variety of 

additional ways credits may be 

generated by manufacturers. Section 

III.C describes these additional 

opportunities to generate credits in 

detail. EPA is proposing that credits 

could be earned through A/C system 

improvements beyond a specified 

baseline. Credits can also be generated 

by producing alternative fuel vehicles, 

by producing advanced technology 

vehicles including electric vehicles, 

plug-in hybrids, and fuel cell vehicles, 

and by using technologies that improve 

off-cycle emissions. In addition, EPA is 

proposing that early credits could be 

generated prior to the proposed 

program’s MY 2012 start date. The 

credits would be used in calculating the 

fleet averages at the end of the model 

year, with the exception of early credits 

which would be tracked separately. 

These proposed credit generating 

opportunities are described below in 

Section III.C. 

As explained earlier, manufacturers 

would determine the fleet average 

standard that would apply to their car 

fleet and the standard for their truck 

fleet from the applicable attribute-based 

curve. A manufacturer’s credit or debit 

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balance would be determined by 

comparing their fleet average with the 

manufacturer’s CO2 standard for that 

model year. The standard would be 

calculated from footprint values on the 

attribute curve and actual production 

levels of vehicles at each footprint. A 

manufacturer would generate credits if 

its car or truck fleet achieves a fleet 

average CO2 level lower than its 

standard and would generate debits if 

its fleet average CO2 level is above that 

standard. At the end of the model year, 

each manufacturer would calculate a 

production-weighted fleet average for 

each averaging set, cars and trucks. A 

manufacturer’s car or truck fleet that 

achieves a fleet average CO2 level lower 

than its standard would generate 

credits, and if its fleet average CO2 level 

is above that standard its fleet would 

generate debits. 

EPA is proposing to account for the 

difference in expected lifetime vehicle 

miles traveled (VMT) between cars and 

trucks in order to preserve CO2

reductions when credits are transferred 

between cars and trucks. As directed by 

EISA, NHTSA accomplishes this in the 

CAFE program by using an adjustment 

factor that is applied to credits when 

they are transferred between car and 

truck compliance categories. The CAFE 

adjustment factor accounts for two 

different influences that can cause the 

transfer of car and truck credits 

(expressed in tenths of a mpg), if left 

unadjusted, to potentially negate fuel 

reductions. First, mpg is not linear with 

fuel consumption, i.e., a 1 mpg 

improvement above a standard will 

imply a different amount of actual fuel 

consumed depending on the level of the 

standard. Second, NHTSA’s conversion 

corrects for the fact that the typical 

lifetime miles for cars is less than that 

for trucks, meaning that credits earned 

for cars and trucks are not necessarily 

equal. NHTSA’s adjustment factor 

essentially converts credits into vehicle 

lifetime gallons to ensure preservation 

of fuel savings and the transfer credits 

on an equal basis, and then converts 

back to the statutorily required credit 

units of tenths of a mile per gallon. To 

convert to gallons NHTSA’s conversion 

must take into account the expected 

lifetime mileage for cars and trucks. 

Because EPA is proposing standards 

that are expressed on a CO2 gram per 

mile basis, which is linear with fuel 

consumption, EPA’s credit calculations 

do not need to account for the first issue 

noted above. However, EPA is 

proposing to account for the second 

issue by expressing credits when they 

are generated in total lifetime 

megagrams (metric tons), rather than 

through the use of conversion factors 

that would apply at certain times. In 

this way credits could be freely 

exchanged between car and truck 

compliance categories without 

adjustment. Additional detail regarding 

this approach, including a discussion of 

the vehicle lifetime mileage estimates 

for cars and trucks can be found in 

Section III.E.5. A discussion of the 

estimated vehicle lifetime miles traveled 

can be found in Chapter 4 of the draft 

Joint Technical Support Document. EPA 

requests comment on the proposed 

approach. 

A manufacturer that generates credits 

in a given year and vehicle category 

could use those credits in essentially 

four ways, although with some 

limitations. These provisions are very 

similar to those of other EPA averaging, 

banking, and trading programs. These 

provisions have the potential to reduce 

costs and compliance burden, and 

support the feasibility of the standards 

being proposed in terms of lead time 

and orderly redesign by a manufacturer, 

thus promoting and not reducing the 

environmental benefits of the program. 

First, the manufacturer would have to 

offset any deficit that had accrued in 

that averaging set in a prior model year 

and had been carried over to the current 

model year. In such a case, the 

manufacturer would be obligated to use 

any current model year credits to offset 

that deficit. This is referred to in the 

CAFE program as credit carry-back. 

EPA’s proposed deficit carry-forward, or 

credit carry-back provisions are 

described further, below. 

Second, after satisfying any needs to 

offset pre-existing deficits within a 

vehicle category, remaining credits 

could be banked, or saved for use in 

future years. EPA is proposing that 

credits generated in this program be 

available to the manufacturer for use in 

any of the five years after the year in 

which they were generated, consistent 

with the CAFE program under EISA. 

This is also referred to as a credit carryforward provision. For other new 

emission control programs, EPA has 

sometimes initially restricted credit life 

to allow time for the Agency to assess 

whether the credit program is 

functioning as intended. When EPA first 

offered averaging and banking 

provisions in its light-duty emissions 

control program (the National Low 

Emission Vehicle Program), credit life 

was restricted to three years. The same 

is true of EPA’s early averaging and 

banking program for heavy-duty 

engines. As these programs matured and 

were subsequently revised, EPA became 

confident that the programs were 

functioning as intended and that the 

standards were sufficiently stringent to 

remove the restrictions on credit life. 

EPA is therefore acting consistently 

with our past practice in proposing to 

reasonably restrict credit life in this new 

program. The Agency believes, subject 

to consideration of public comment, 

that a credit life of five years represents 

an appropriate balance between 

promoting orderly redesign and upgrade 

of the emissions control technology in 

the manufacturer’s fleet and the policy 

goal of preventing large numbers of 

credits accumulated early in the 

program from interfering with the 

incentive to develop and transition to 

other more advanced emissions control 

technologies. As discussed below in 

Section III.C, EPA is proposing that any 

early credits generated by a 

manufacturer, beginning as soon as MY 

2009, would also be subject to the fiveyear credit carry-forward restriction 

based on the year in which they are 

generated. This would limit the effect of 

the early credits on the long-term 

emissions reductions anticipated to 

result from the proposed new standards. 

Third, EPA is proposing to allow 

manufacturers to transfer credits 

between the two averaging sets, 

passenger cars and trucks, within a 

manufacturer. For example, credits 

accrued by over-compliance with a 

manufacturer’s car fleet average 

standard could be used to offset debits 

accrued due to that manufacturer’s not 

meeting the truck fleet average standard 

in a given year. EPA believes that such 

cross-category use of credits by a 

manufacturer would provide important 

additional flexibility in the transition to 

emissions control technology without 

affecting overall emission reductions. 

Finally, accumulated credits could be 

traded to another vehicle manufacturer. 

As with intra-company credit use, such 

inter-company credit trading would 

provide flexibility in the transition to 

emissions control technology without 

affecting overall emission reductions. 

Trading credits to another vehicle 

manufacturer would be a 

straightforward process between the two 

manufacturers, but could also involve 

third parties that could serve as credit 

brokers. Brokers would not own the 

credits at any time. These sorts of 

exchanges are typically allowed under 

EPA’s current emission credit programs, 

e.g., the Tier 2 light-duty vehicle NOX

fleet average standard and the heavyduty engine NOX fleet average 

standards, although manufacturers have 

seldom made such exchanges. EPA 

seeks comment on enhanced reporting 

requirements or other methods that 

could help EPA assess validity of 

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131See 65 FR 6745 (February 10, 2000). 

132See 71 FR 8427 (February 26, 2007). 

credits, especially those obtained from 

third-party credit brokers 

If a manufacturer had a deficit at the 

end of a model year—that is, its fleet 

average level failed to meet the required 

fleet average standard—EPA proposes 

that the manufacturer could carry that 

deficit forward (also referred to credit 

carry-back) for a total of three model 

years after the model year in which that 

deficit was generated. As noted above, 

such a deficit carry-forward could only 

occur after the manufacturer applied 

any banked credits or credits from 

another averaging set. If a deficit still 

remained after the manufacturer had 

applied all available credits, and the 

manufacturer did not obtain credits 

elsewhere, the deficit could be carried 

over for up to three model years. No 

deficit could be carried into the fourth 

model year after the model year in 

which the deficit occurred. Any deficit 

from the first model year that remained 

after the third model year would thus 

constitute a violation of the condition 

on the certificate, which would 

constitute a violation of the Clean Air 

Act and would be subject to 

enforcement action. 

In the Tier 2 rulemaking proposal, 

EPA proposed to allow deficits to be 

carried forward for one year. In their 

comments on that proposal, 

manufacturers argued persuasively that 

by the time they can tabulate their 

average emissions for a particular model 

year, the next model year is likely to be 

well underway and it is too late to make 

calibration, marketing, or production 

mix changes to adjust that year’s credit 

generation. Based on those comments, 

in the Tier 2 final rule EPA finalized 

provisions that allowed the deficit to be 

carried forward for a total of three years. 

EPA continues to believe that three 

years is an appropriate amount of time 

that gives the manufacturers adequate 

time to respond to a deficit situation but 

does not create a lengthy period of 

prolonged non-compliance with the 

fleet average standards.131 Subsequent 

EPA emission control programs that 

incorporate ABT provisions (e.g., the 

Mobile Source Air Toxics rule) have 

provided this three-year deficit carryforward provision for this reason.132

The proposed averaging, banking, and 

trading provisions are generally 

consistent with those included in the 

CAFE program, with a few notable 

exceptions. As with EPA’s proposed 

approach, CAFE allows five year carryforward of credits and three year carryback. Transfers of credits across a 

manufacturer’s car and truck averaging 

sets are also allowed, but with limits 

established by EISA on the use of 

transferred credits. The amount of 

transferred credits that can be used in a 

year is limited, and transferred credits 

may not be used to meet the CAFE 

minimum domestic passenger car 

standard. CAFE allows credit trading, 

but again, traded credits cannot be used 

to meet the minimum domestic 

passenger car standard. EPA is not 

proposing these constraints on the use 

of transferred credits. 

Additional details regarding the 

averaging, banking, and trading 

provisions and how EPA proposes to 

implement these provisions can be 

found in Section III.E. 

5. CO2 Optional Temporary Lead-time 

Allowance Alternative Standards 

EPA is proposing a limited and 

narrowly prescribed option, called the 

Temporary Lead-time Allowance 

Alternative Standards (TLAAS), to 

provide additional lead time for a 

certain subset of manufacturers. This 

option is designed to address two 

different situations where we project 

that more lead time is needed, based on 

the level of emissions control 

technology and emissions control 

performance currently exhibited by 

certain vehicles. One situation involves 

manufacturers who have traditionally 

paid CAFE fines instead of complying 

with the CAFE fleet average, and as a 

result at least part of their vehicle 

production currently has significantly 

higher CO2 and lower fuel economy 

levels than the industry average. More 

lead time is needed in the program’s 

initial years to upgrade these vehicles to 

meet the aggressive CO2 emissions 

performance levels required by the 

proposal. The other situation involves 

manufacturers who have a limited line 

of vehicles and are unable to take 

advantage of averaging of emissions 

performance across a full line of 

production. 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 also pay 

fines under the CAFE program rather 

than meeting the applicable CAFE 

standard. Because voluntary noncompliance is impermissible for the 

GHG standards proposed under the 

CAA, both of these types of 

manufacturers need additional lead time 

to upgrade vehicles and meet the 

proposed standards. EPA is proposing 

an optional, temporary alternative 

standard, which is only slightly less 

stringent, and limited to the first four 

model years (2012—2015) of the 

National Program, so that these 

manufacturers can have sufficient lead 

time to meet the tougher MY 2016 GHG 

standards, while preserving consumer 

choice of vehicles during this time. 

In MY 2016, the TLAAS option ends, 

and all manufacturers, regardless of 

size, and domestic sales volume, must 

comply with the same CO2 standards, 

while under the CAFE program 

companies would continue to be 

allowed to pay civil penalties in lieu of 

complying with the CAFE standards. 

However, because companies must meet 

both the CAFE standards and the EPA 

CO2 standards, the National Program 

will have the practical impact of 

providing a level playing field for all 

companies beginning in MY 2016—a 

situation which has never existed under 

the CAFE program. This option thereby 

results in more fuel savings and CO2

reductions than would be the case 

under the CAFE program. 

EPA projects that the environmental 

impact of the proposed TLAAS program 

will be very small. If all companies 

eligible to use the TLAAS use it to the 

maximum extent allowed, total GHG 

emissions from the proposal will 

increase by less than 0.4% over the 

lifetime of the MY 2012–2016 vehicles. 

EPA believes the impact will be even 

smaller, as we do not expect all of the 

eligible companies to use this option, 

and we do not expect all companies 

who do use the program will use it to 

the maximum extent allowed, as we 

have included provisions which 

discourage companies from using the 

TLAAS any longer than it is needed. 

EPA has structured the TLAAS option 

to provide more lead time in these kinds 

of situations, but to limit the program so 

that it would only be used in situations 

where these kinds of lead time concerns 

arise. Based on historic data on sales, 

EPA is using a specific historic U.S. 

sales volume as the best way to identify 

the subset of production that falls into 

this situation. Under the TLAAS, these 

manufacturers would be allowed to 

produce up to but no more than 100,000 

vehicles that would be subject to a 

somewhat less stringent CO2 standard. 

This 100,000 volume is not an annual 

limit, but is an absolute limit for the 

total number of vehicles which can use 

the TLAAS program over the model 

years 2012–2015. Any additional 

production would be subject to the same 

standards as any other manufacturer. In 

addition, EPA is imposing a variety of 

restrictions on the use of the TLAAS 

program, discussed in more detail 

below, to ensure that only 

manufacturers who need more lead-time 

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for the kinds of reasons noted above are 

likely to use the program. Finally, the 

program is temporary and expires at the 

end of MY 2015. A more complete 

discussion of the program is provided 

below. EPA believes the proposed 

program reasonably addresses a real 

world lead time constraint, and does it 

in a way that balances the need for more 

lead time with the need to minimize any 

resulting loss in potential emissions 

reductions. EPA invites comment as to 

whether its proposal is the best way to 

balance these concerns. 

EPA proposes to establish a TLAAS 

for a specified subset of manufacturers. 

There are two types of companies who 

would make use of TLAAS—those 

manufacturers who have paid CAFE 

fines in recent years, and who need 

additional lead-time to incorporate the 

needed technology; and those 

companies who are not full-line 

manufacturers, who have a smaller 

range of models and vehicle types, who 

may need additional lead-time as well. 

This alternative standard would apply 

to manufacturers with total U.S. sales of 

less than 400,000 vehicles per year, 

using 2009 model year final sales 

numbers to determine eligibility for 

these alternative standards. EPA 

reviewed the sales volumes of 

manufacturers over the last few years, 

and determined that manufacturers 

below this level typically fit the 

characteristics discussed above, and 

manufacturers above this level did not. 

Thus, EPA chose this level because it 

functionally identifies the group of 

manufacturers described above, 

recognizing that there is nothing 

intrinsic in the sales volume itself that 

warrants this allowance. EPA was not 

able to identify any other objective 

criteria that would more appropriately 

identify the manufacturers and vehicle 

fleets described above. 

EPA is proposing that manufacturers 

qualifying for TLAAS would be allowed 

to meet slightly less stringent standards 

for a limited number of vehicles for 

model years 2012–2015. Specifically, an 

eligible manufacturer could have a total 

of up to 100,000 units of cars and trucks 

combined over model years 2012–2015, 

and during those model years those 

vehicles would be subject to a standard 

1.25 times the standard that would 

otherwise apply to those vehicles under 

the primary program. In other words, 

the footprint curves upon which the 

individual manufacturer standards for 

the TLAAS fleets are based would be 

less stringent by a factor of 1.25 for up 

to 100,000 of an eligible manufacturer’s 

vehicles for model years 2012–2015. As 

noted, this approach seeks to balance 

the need to provide additional lead-time 

without reducing the environmental 

benefits of the proposed program. EPA 

believes that 100,000 units over four 

model years achieves an appropriate 

balance as the emissions impact is quite 

small, but does provide companies with 

some flexibility during MY 2012–2015. 

For example, for a manufacturer 

producing 400,000 vehicles per year, 

this would be a total of up to 100,000 

vehicles out of a total production of up 

to 1.6 million vehicles over the four year 

period, or about 6 percent of total 

production. 

Manufacturers with no U.S. sales in 

model year 2009 would not qualify for 

the TLAAS program. Manufacturers 

meeting the cut-point of 400,000 for MY 

2009 but with U.S. directed production 

above 400,000 in any subsequent model 

years would remain eligible for the 

TLAAS program. Also, the total sales 

number applies at the corporate level, so 

if a corporation owns several vehicle 

brands the aggregate sales for the 

corporation would be used. These 

provisions would help prevent gaming 

of the provisions through corporate 

restructuring. Corporate ownership or 

control relationships would be based on 

determinations made under CAFE for 

model year 2009. In other words, 

corporations grouped together for 

purposes of meeting CAFE standards, 

would be grouped together for 

determining whether or not they are 

eligible under the 400,000 vehicle cut 

point. 

EPA derived the 100,000 maximum 

unit set aside number based on a 

gradual phase-out schedule shown in 

Table III.B.5–1, below. However, 

individual manufacturers’ situations 

will vary significantly and so EPA 

believes a flexible approach that allows 

manufacturers to use the allowance as 

they see fit during these model years 

would be most appropriate. As another 

example, an eligible manufacturer could 

also choose to apply the TLAAS 

program to an average of 25,000 vehicles 

per year, over the four-year period. 

Therefore, EPA is proposing that a total 

of 100,000 vehicles of an eligible 

manufacturer, with any combination of 

cars or trucks, could be subject to the 

alternative standard over the four year 

period without restrictions. 

TABLE III.B.5–1—TLAAS EXAMPLE VEHICLE PRODUCTION VOLUMES

Model year 2012 2013 2014 2015 

Sales Volume ........................................................................... 40,000 30,000 20,000 10,000 

The TLAAS vehicles would be 

separate car and truck fleets for that 

model year and would be subject to the 

less stringent footprint-based standards 

of 1.25 times the primary fleet average 

that would otherwise apply. The 

manufacturer would determine what 

vehicles are assigned to these separate 

averaging sets for each model year. EPA 

is proposing that credits from the 

primary fleet average program can be 

transferred and used in the TLAAS 

program. Credits within the TLAAS 

program may also be transferred 

between the TLAAS car and truck 

averaging sets for use through 2015 

when the TLAAS would end. However, 

credits generated under TLAAS would 

not be allowed to be transferred or 

traded to the primary program. 

Therefore, any unused credits under 

TLAAS would expire after model year 

2015. EPA believes that this is necessary 

to limit the program to situations where 

it is needed and to prevent the 

allowance from being inappropriately 

transferred to the long-term primary 

program. 

EPA is concerned that some 

manufacturers would be able to place 

relatively clean vehicles in the TLAAS 

to maximize TLAAS credits if credit use 

was unrestricted. However, any credits 

generated from the primary program 

that are not needed for compliance in 

the primary program, should be used to 

offset the TLAAS vehicles. EPA is thus 

proposing to restrict the use of banking 

and trading between companies of 

credits in the primary program in years 

in which the TLAAS is being used. For 

example, manufacturers using the 

TLAAS in MY 2012 could not bank 

credits in the primary program during 

MY 2012 for use in MY 2013 and later. 

No such restriction would be in place 

for years when the TLAAS is not being 

used. EPA also believes this provision is 

necessary to prevent credits from being 

earned simply by removing some highemitting vehicles from the primary fleet. 

Absent this restriction, manufacturers 

would be able to choose to use the 

TLAAS for these vehicles and also be 

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133California Environmental Protection Agency 

Air Resources Board, Staff Report: Initial Statement 

of Reasons for Proposed Rulemaking Public Hearing 

To Consider Adoption Of Regulations To Control 

Greenhouse Gas Emissions From Motor Vehicles, 

August 6, 2004. 

134N2O has a GWP of 310 according to the IPCC 

Second Assessment Report (SAR). 

able to earn credits under the primary 

program that could be banked or traded 

under the primary program without 

restriction. EPA is proposing two 

additional restrictions regarding the use 

of the TLAAS by requiring that for any 

of the 2012–2015 model years for which 

an eligible manufacturer would like to 

use the TLAAS, the manufacturer must 

use two of the available flexibilities in 

the GHG program first in order to try 

and show compliance with the primary 

standard before accessing the TLAAS. 

Specifically, before using the TLAAS 

the manufacturer must: (1) use any 

banked emission credits from a previous 

model year; and, (2) use any available 

credits from the companies’ car or truck 

fleet for the specific model year (i.e., use 

credit transfer from cars to trucks or 

from trucks to cars, that is, before using 

the TLAAS for either the car fleet or the 

truck fleet, make use of any available 

credit transfers first). EPA is requesting 

comments on all aspects of the proposed 

TLAAS program including comments 

on other provisions that might be 

needed to ensure that the TLAAS 

program is being used as intended and 

to ensure no gaming occurs. 

Finally, EPA recognizes that there 

will be a wide range of companies 

within the eligible manufacturers with 

sales less than 400,000 vehicles in 

model year 2009. Some of these 

companies, while having relatively 

small U.S. sales volumes, are large 

global automotive firms, including 

companies such as Mercedes and 

Volkswagen. Other companies are 

significantly smaller niche firms, with 

sales volumes closer to 10,000 vehicles 

per year worldwide; an example of this 

type of firm is Aston Martin. EPA 

anticipates that there are a small 

number of such smaller volume 

manufacturers, which have claimed that 

they may face greater challenges in 

meeting the proposed standards due to 

their limited product lines across which 

to average. EPA requests comment on 

whether the proposed TLAAS program, 

as described above, provides sufficient 

lead-time for these smaller firms to 

incorporate the technology needed to 

comply with the proposed GHG 

standards. 

6. Proposed Nitrous Oxide and Methane 

Standards 

In addition to fleet-average CO2

standards, EPA is proposing separate 

per-vehicle standards for nitrous oxide 

(N2O) and methane (CH4) emissions. 

Standards are being proposed that 

would cap vehicle N2O and CH4

emissions at current levels. Our 

intention is to set emissions standards 

that act to cap emissions to ensure that 

future vehicles do not increase their 

N2O and CH4 emissions above levels 

that would be allowed under the 

proposal. 

EPA considered an approach of 

expressing each of these standards in 

common terms of CO2-equivalent 

emissions and combining them into a 

single standard along with CO2 and HFC 

emissions. California’s ‘‘Pavley’’ 

program adopted such a CO2-equivalent 

emissions standards approach to GHG 

emissions in their program.133 However, 

these pollutants are largely independent 

of one another in terms of how they are 

generated by the vehicle and how they 

are tested for during implementation. 

Potential control technologies and 

strategies for each pollutant also differ. 

Moreover, an approach that provided for 

averaging of these pollutants could 

undermine the stringency of the CO2

standards, as at this time we are 

proposing standards which ‘‘cap’’ N2O 

and CH4 emissions, rather then 

proposing a level which is either at the 

industry fleet-wide average or which 

would result in reductions from these 

pollutants. It is possible that once EPA 

begins to receive more detailed 

information on the N2O and CH4

performance of the new vehicle fleet as 

a result of this proposed rule (if it were 

to be finalized as proposed) that for a 

future action for model years 2017 and 

later EPA could consider a CO2- 

equivalent standard which would not 

result in any increases in GHG 

emissions due to the current lack of 

detailed data on N2O and CH4 emissions 

performance. In addition, EPA seeks 

comment on whether a CO2-equivalent 

emissions standard should be 

considered for model years 2012 

through 2016, and whether there are 

advantages or disadvantages to such an 

approach, including potential impacts 

on harmonization with CAFE standards. 

Almost universally across current car 

and truck designs, both gasoline- and 

diesel-fueled, these emissions are 

relatively low, and our intent is to not 

require manufacturers to make 

technological improvements in order to 

reduce N2O and CH4 at this time. 

However, it is important that future 

vehicle technologies or fuels do not 

result in increases in these emissions, 

and this is the intent of the proposed 

‘‘cap’’ standards. 

EPA requests comments on our 

approach to regulating N2O and CH4

emissions including the appropriateness 

of ‘‘cap’’ standards as opposed to 

‘‘technology-forcing’’ standards, the 

technical bases for the proposed N2O 

and CH4 standards, the proposed test 

procedures, and timing. Specifically, 

EPA seeks comment on the 

appropriateness of the proposed levels 

of the N2O and CH4 standards to 

accomplish our stated intent. In 

addition, EPA seeks comment on any 

additional emissions data on N2O and 

CH4 from current technology vehicles. 

a. Nitrous Oxide (N2O) Exhaust 

Emission Standard 

N2O is a global warming gas with a 

high global warming potential.134 It 

accounts for about 2.7% of the current 

greenhouse gas emissions from cars and 

light trucks. EPA is proposing a pervehicle N2O emission standard of 0.010 

g/mi, measured over the traditional FTP 

vehicle laboratory test cycles. The 

standard would become effective in 

model year 2012 for all light-duty cars 

and trucks. Averaging between vehicles 

would not be allowed. The standard is 

designed to prevent increases in N2O 

emissions from current levels, i.e. a nobacksliding standard. 

N2O is emitted from gasoline and 

diesel vehicles mainly during specific 

catalyst temperature conditions 

conducive to N2O formation. 

Specifically, N2O can be generated 

during periods of emission hardware 

warm-up when rising catalyst 

temperatures pass through the 

temperature window when N2O 

formation potential is possible. For 

current Tier 2 compatible gasoline 

engines with conventional three-way 

catalyst technology, N2O is not generally 

produced in significant amounts 

because the time the catalyst spends at 

the critical temperatures during warmup is short. This is largely due to the 

need to quickly reach the higher 

temperatures necessary for high catalyst 

efficiency to achieve emission 

compliance of criteria pollutants. N2O is 

a more significant concern with diesel 

vehicles, and potentially future gasoline 

lean-burn engines, equipped with 

advanced catalytic NOX emissions 

control systems. These systems can but 

need not be designed in a way that 

emphasizes efficient NOX control while 

allowing the formation of significant 

quantities of N2O. Excess oxygen 

present in the exhaust during lean-burn 

conditions in diesel or lean-burn 

gasoline engines equipped with these 

advanced systems can favor N2O 

formation if catalyst temperatures are 

not carefully controlled. Without 

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135Memo to docket ‘‘Deriving the standard from 

EPA’s MOVES model emission factors, ’’ December 

2007. 

136CH4 has a GWP of 21 according to the IPCC 

Second Assessment Report (SAR). 

137But see Ford Motor Co. v. EPA, 604 F. 2d 685 

(D.C. Cir. 1979) (permissible for EPA to regulate 

CH4 under CAA section 202 (b)). 138Memo to docket ‘‘Deriving the standard from 

EPA’s MOVES model emission factors, ’’ December 

2007. 

specific attention to controlling N2O 

emissions in the development of such 

new NOX control systems, vehicles 

could have N2O emissions many times 

greater than are emitted by current 

gasoline vehicles. 

EPA is proposing an N2O emission 

standard that EPA believes would be 

met by current-technology gasoline 

vehicles at essentially no cost. As noted, 

N2O formation in current catalyst 

systems occurs, but the emission levels 

are low, because the time the catalyst 

spends at the critical temperatures 

during warm-up when N2O can form is 

short. At the same time, EPA believes 

that the proposed standard would 

ensure that the design of advanced NOX

control systems, especially for future 

diesel and lean-burn gasoline vehicles, 

would control N2O emission levels. 

While current NOX control approaches 

used on current Tier 2 diesel vehicles 

do not tend to form N2O emissions, EPA 

believes that the proposed standards 

would discourage any new emission 

control designs that achieve criteria 

emissions compliance at the cost of 

increased N2O emissions. Thus, the 

proposed standard would cap N2O 

emission levels, with the expectation 

that current gasoline and diesel vehicle 

control approaches that comply with the 

Tier 2 vehicle emission standards for 

NOX would not increase their emission 

levels, and that the cap would ensure 

that future vehicle designs would 

appropriately control their emissions of 

N2O. The proposed N2O level is 

approximately two times the average 

N2O level of current gasoline passenger 

cars and light-duty trucks that meet the 

Tier 2 NOX standards.135 Manufacturers 

typically use design targets for NOX

emission levels of about 50% of the 

standard, to account for in-use 

emissions deterioration and normal 

testing and production variability, and 

manufacturers are expected to utilize a 

similar approach for N2O emission 

compliance. EPA is not proposing a 

more stringent standard for current 

gasoline and diesel vehicles because the 

stringent Tier 2 program and the 

associated NOX fleet average 

requirement already result in significant 

N2O control, and does not expect 

current N2O levels to rise for these 

vehicles. EPA requests comment on this 

technical assessment of current and 

potential future N2O formation in cars 

and trucks. 

While EPA believes that 

manufacturers will likely be able to 

acquire and install N2O analytical 

equipment, the agency also recognizes 

that some companies may face 

challenges. Given the short lead-time for 

this rule, EPA proposes that 

manufacturers be able to apply for a 

certificate of conformity with the N2O 

standard for model year 2012 based on 

a compliance statement based on good 

engineering judgment. For 2013 and 

later model years, manufacturers would 

need to submit measurements of N2O for 

compliance purposes. 

Diesel cars and light trucks with 

advanced emission control technology 

are in the early stages of development 

and commercialization. As this segment 

of the vehicle market develops, the 

proposed N2O standard would require 

manufacturers to incorporate control 

strategies that minimize N2O formation. 

Available approaches include using 

electronic controls to limit catalyst 

conditions that might favor N2O 

formation and consider different 

catalyst formulations. While some of 

these approaches may have modest 

associated costs, EPA believes that they 

will be small compared to the overall 

costs of the advanced NOX control 

technologies already required to meet 

Tier 2 standards. 

Vehicle emissions regulations do not 

currently require testing for N2O, and 

most test facilities do not have 

equipment for its measurement. 

Manufacturers without this capability 

would need to acquire and install 

appropriate measurement equipment. 

However, EPA is proposing four N2O 

measurement methods, all of which are 

commercially available today. EPA 

expects that most manufacturers would 

use photo-acoustic measurement 

equipment, which the Agency estimates 

would result in a one-time cost of about 

$50,000–$60,000 for each test cell that 

would need to be upgraded. 

Overall, EPA believes that 

manufacturers of cars and light trucks, 

both gasoline and diesel, would meet 

the proposed standard without 

implementing any significantly new 

technologies, and there are not expected 

to be any significant costs associated 

with this proposed standard. 

b. Methane (CH4) Exhaust Emission 

Standard 

CH4 (or methane) is greenhouse gas 

with a high global warming potential.136

It accounts for about 0.2% of the 

greenhouse gases from cars and light 

trucks. 

EPA is proposing a CH4 emission 

standard of 0.030 g/mi as measured on 

the FTP, to apply beginning with model 

year 2012 for both cars and trucks. EPA 

believes that this level for the standard 

would be met by current gasoline and 

diesel vehicles, and would prevent large 

increases in future CH4 emissions in the 

event that alternative fueled vehicles 

with high methane emissions, like some 

past dedicated compressed natural gas 

(CNG) vehicles, become a significant 

part of the vehicle fleet. Currently EPA 

does not have separate CH4 standards 

because unlike other hydrocarbons it 

does not contribute significantly to 

ozone formation,137 However CH4

emissions levels in the gasoline and 

diesel car and light truck fleet have 

nevertheless generally been controlled 

by the Tier 2 non-methane organic gases 

(NMOG) emission standards. However, 

without an emission standard for CH4, 

future emission levels of CH4 cannot be 

guaranteed to remain at current levels as 

vehicle technologies and fuels evolve. 

The proposed standard would cap 

CH4 emission levels, with the 

expectation that current gasoline 

vehicles meeting the Tier 2 emission 

standards would not increase their 

levels, and that it would ensure that 

emissions would be addressed if in the 

future there are increases in the use of 

natural gas or any other alternative fuel. 

The level of the standard would 

generally be achievable through normal 

emission control methods already 

required to meet Tier 2 program 

emission standards for NMOG and EPA 

is therefore not attributing any cost to 

this part of this proposal. Since CH4 is 

produced in gasoline and diesel engines 

similar to other hydrocarbon 

components, controls targeted at 

reducing overall NMOG levels generally 

also work at reducing CH4 emissions. 

Therefore, for gasoline and diesel 

vehicles, the Tier 2 NMOG standards 

will generally prevent increases in CH4

emissions levels from today. CH4 from 

Tier 2 light-duty vehicles is relatively 

low compared to other GHGs largely 

due to the high effectiveness of previous 

National Low Emission Vehicle (NLEV) 

and current Tier 2 programs in 

controlling overall HC emissions. 

The level of the proposed standard is 

approximately two times the average 

Tier 2 gasoline passenger cars and lightduty trucks level.138 As with N2O, this 

proposed level recognizes that 

manufacturers typically set emission 

design targets at about 50% of the 

standard. Thus, EPA believes the 

proposed standard would be met by 

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49526 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

current gasoline vehicles. Similarly, 

since current diesel vehicles generally 

have even lower CH4 emissions than 

gasoline vehicles, EPA believes that 

diesels would also meet the proposed 

standard. However, EPA also believes 

that to set a CH4 emission standard more 

stringent than the proposed standard 

could effectively make the Tier 2 NMOG 

standard more stringent. 

In recent model years, a small number 

of cars and light trucks were sold that 

were designed for dedicated use of 

compressed natural gas (CNG) that met 

Tier 2 emission standards. While 

emission control designs on these recent 

dedicated CNG-fueled vehicles 

demonstrate CH4 control as effective as 

gasoline or diesel equivalent vehicles, 

CNG-fueled vehicles have historically 

produced significantly higher CH4

emissions than gasoline or diesel 

vehicles. This is because their CNG fuel 

is essentially methane and any 

unburned fuel that escapes combustion 

and not oxidized by the catalyst is 

emitted as methane. However, even if 

these vehicles meet the Tier 2 NMOG 

standard and appear to have effective 

CH4 control by nature of the NMOG 

controls, Tier 2 standards do not require 

CH4 control. While the proposed CH4

cap standard should not require any 

different emission control designs 

beyond what is already required to meet 

Tier 2 NMOG standards on a dedicated 

CNG vehicle, the cap will ensure that 

systems maintain the current level of 

CH4 control. EPA is not proposing more 

stringent CH4 standards because the 

same controls that are used to meet Tier 

2 NMOG standards should result in 

effective CH4 control. Increased CH4

stringency beyond proposed levels 

could inadvertently result in increased 

Tier 2 NMOG stringency absent an 

emission control technology unique to 

CH4. Since CH4 is already measured 

under the current Tier 2 regulations (so 

that it may be subtracted to calculate 

non-methane hydrocarbons), the 

proposed standard would not result in 

additional testing costs. EPA requests 

comment on whether the proposed cap 

standard would result in any significant 

technological challenges for makers of 

CNG vehicles. 

7. Small Entity Deferment 

EPA is proposing to defer setting GHG 

emissions standards for small entities 

meeting the Small Business 

Administration (SBA) criteria of a small 

business as described in 13 CFR 

121.201. EPA would instead consider 

appropriate GHG standards for these 

entities as part of a future regulatory 

action. This includes small entities in 

three distinct categories of businesses 

for light-duty vehicles: small volume 

manufacturers, independent commercial 

importers (ICIs), and alternative fuel 

vehicle converters. EPA has identified 

about 13 entities that fit the Small 

Business Administration (SBA) criterion 

of a small business. EPA estimates there 

are 2 small volume manufacturers, 8 

ICIs, and 3 alternative fuel vehicle 

converters currently in the light-duty 

vehicle market. EPA estimates that these 

small entities comprise less than 0.1 

percent of the total light-duty vehicle 

sales in the U.S., and therefore the 

proposed deferment will have a 

negligible impact on the GHG emissions 

reductions from the proposed standards. 

Further detail is provided in Section 

III.I.3, below. 

To ensure that EPA is aware of which 

companies would be deferred, EPA is 

proposing that such entities submit a 

declaration to EPA containing a detailed 

written description of how that 

manufacturer qualifies as a small entity 

under the provisions of 13 CFR 121.201. 

Because such entities are not 

automatically exempted from other EPA 

regulations for light-duty vehicles and 

light-duty trucks, absent such a 

declaration, EPA would assume that the 

entity was subject to the greenhouse gas 

control requirements in this GHG 

proposal. The declaration would need to 

be submitted at time of vehicle 

emissions certification under the EPA 

Tier 2 program. Small entities are 

currently covered by a number of EPA 

motor vehicle emission regulations, and 

they routinely submit information and 

data on an annual basis as part of their 

compliance responsibilities. EPA 

expects that the additional paperwork 

burden associated with completing and 

submitting a small entity declaration to 

gain deferral from the proposed GHG 

standards would be negligible and 

easily done in the context of other 

routine submittals to EPA. However, 

EPA has accounted for this cost with a 

nominal estimate included in the 

Information Collection Request 

completed under the Paperwork 

Reduction Act. Additional information 

can be found in the Paperwork 

Reduction Act discussion in Section 

III.I.2. 

C. Additional Credit Opportunities for 

CO2 Fleet Average Program 

The standards being proposed 

represent a significant multi-year 

challenge for manufacturers, especially 

in the early years of the program. 

Section III.B.4 described EPA proposals 

for how manufacturers could generate 

credits by achieving fleet average CO2

emissions below the fleet average 

standard, and also how manufacturers 

could use credits to comply with 

standards. As described in Section 

III.B.4, credits could be carried forward 

five years, carried back three years, 

transferred between vehicle categories, 

and traded between manufacturers. The 

credits provisions proposed below 

would provide manufacturers with 

additional ways to earn credits starting 

in MY 2012. EPA is also proposing early 

credits provisions for the 2009–2011 

model years, as described below in 

Section III.C.5. 

The provisions proposed below 

would provide additional flexibility, 

especially in the early years of the 

program. This flexibility helps to 

address issues of lead-time or technical 

feasibility for various manufacturers and 

in several cases provides an incentive 

for promotion of technology pathways 

that warrant further development, 

whether or not they are an important or 

central technology on which critical 

features of this program are premised. 

EPA is proposing a variety of credit 

opportunities because manufacturers are 

not likely to be in a position to use 

every credit provision. EPA expects that 

manufacturers are likely to select the 

credit opportunities that best fit their 

future plans. EPA believes it is critical 

that manufacturers have options to ease 

the transition to the final MY 2016 

standards. At the same time, EPA 

believes these credit programs must be 

designed in a way to ensure that they 

achieve emission reductions that 

achieve real-world reductions over the 

full useful life of the vehicle (or, in the 

case of FFV credits and Advanced 

Technology credits, to incentivize the 

introduction of those vehicle 

technologies) and are verifiable. In 

addition, EPA wants to ensure these 

credit programs do not provide an 

opportunity for manufacturers to earn 

‘‘windfall’’ credits. EPA seeks comments 

on how to best ensure these objectives 

are achieved in the design of the credit 

programs. EPA requests comment on all 

aspects of these proposed credits 

provisions. 

1. Air Conditioning Related Credits 

EPA proposes that manufacturers be 

able to generate and use credits for 

improved air conditioner (A/C) systems 

in complying with the CO2 fleetwide 

average standards described above. EPA 

expects that most manufacturers will 

choose to utilize the A/C provisions as 

part of its compliance demonstration 

(and for this reason cost of compliance 

with A/C related emission reductions 

are assumed in the cost analysis). The 

A/C provisions are structured as credits, 

unlike the CO2 standards for which 

manufacturers will demonstrate 

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139See Chapter 2, section 2.2.1.2 of the DRIA. 

140The global warming potentials (GWP) used in 

the NPRM analysis are consistent with 

Intergovernmental Panel on Climate Change (IPCC) 

Fourth Assessment Report (AR4). At this time, the 

IPCC Second Assessment Report (SAR) global 

warming potential values have been agreed upon as 

the official U.S. framework for addressing climate 

change. The IPCC SAR GWP values are used in the 

official U.S. greenhouse gas inventory submission 

to the climate change framework. When inventories 

are recalculated for the final rule, changes in GWP 

used may lead to adjustments. 141Refrigerant emissions during maintenance and 

at the end of the vehicle’s life (as well as emissions 

during the initial charging of the system with 

refrigerant) are also addressed by the CAA Title VI 

stratospheric ozone program, as described below. 142We will not be addressing changes to the 

weight of the A/C system, since the issue of CO2

emissions from the fuel consumption of normal 

(non-A/C) operation, including basic vehicle 

weight, is inherently addressed with the primary 

CO2 standards (See III.B above). 

compliance using 2-cycle tests (see 

Sections III.B and III.E.). Those tests do 

not measure either A/C leakage or 

tailpipe CO2 emissions attributable to 

A/C load (see Section III.C.1.b below 

describing proposed alternative test 

procedures for assessing tailpipe CO2

emission attributable to 

A/C engine load). Thus, it is a 

manufacturer’s option to include A/C 

GHG emission reductions as an aspect 

of its compliance demonstration. Since 

this is an elective alternative, EPA is 

referring to the A/C part of the proposal 

as a credit. 

EPA estimates that direct A/C GHG 

emissions—emissions due to the leakage 

of the hydrofluorocarbon refrigerant in 

common use today—account for 4.3% of 

CO2-equivalent GHGs from light-duty 

cars and trucks. This includes the direct 

leakage of refrigerant as well as the 

subsequent leakage associated with 

maintenance and servicing, and with 

disposal at the end of the vehicle’s life. 

The emissions that are impacted by 

leakage reductions are the direct leakage 

and the maintenance and servicing. 

Together these are equivalent to CO2

emissions of approximately 13.6 g/mi 

per vehicle (this is 14.9 g/mi if end of 

life emissions are also included). EPA 

also estimates that indirect GHG 

emissions (additional CO2 emitted due 

to the load of the A/C system on the 

engine) account for another 3.9% of 

light-duty GHGs.139 This is equivalent 

to CO2 emissions of approximately 14.2 

g/mi per vehicle. The derivation of these 

figures can be found in the EPA DRIA. 

EPA believes that it is important to 

address A/C direct and indirect 

emissions because the technologies that 

manufacturers will employ to reduce 

vehicle exhaust CO2 will have little or 

no impact on A/C related emissions. 

Without addressing A/C-related 

emissions, as vehicles become more 

efficient, the A/C related contribution 

will become a much larger portion of 

the overall vehicle GHG emissions. 

Over 95% of the new cars and light 

trucks in the United States are equipped 

with A/C systems and, as noted, there 

are two mechanisms by which A/C 

systems contribute to the emissions of 

greenhouse gases: through leakage of 

refrigerant into the atmosphere and 

through the consumption of fuel to 

provide power to the A/C system. With 

leakage, it is the high global warming 

potential (GWP) of the current 

automotive refrigerant—R134a, with a 

GWP of 1430—that results in the CO2- 

equivalent impact of 13.6 g/mi.140 Due 

to the high GWP of this HFC, a small 

leakage of the refrigerant has a much 

greater global warming impact than a 

similar amount of emissions of CO2 or 

other mobile source GHGs. 

Manufacturers can choose to reduce 

A/C leakage emissions by using leaktight components. Also, manufacturers 

can largely eliminate the global 

warming impact of leakage emissions by 

adopting systems that use an alternative, 

low-GWP refrigerant.141 The A/C system 

also contributes to increased CO2

emissions through the additional work 

required to operate the compressor, 

fans, and blowers. This additional work 

typically is provided through the 

engine’s crankshaft, and delivered via 

belt drive to the alternator (which 

provides electric energy for powering 

the fans and blowers) and A/C 

compressor (which pressurizes the 

refrigerant during A/C operation). The 

additional fuel used to supply the 

power through the crankshaft necessary 

to operate the A/C system is converted 

into CO2 by the engine during 

combustion. This incremental CO2

produced from A/C operation can thus 

be reduced by increasing the overall 

efficiency of the vehicle’s A/C system, 

which in turn will reduce the additional 

load on the engine from A/C 

operation.142

Manufacturers can make very feasible 

improvements to their 

A/C systems to address A/C system 

leakage and efficiency. EPA proposes 

two separate credit approaches to 

address leakage reductions and 

efficiency improvements independently. 

A proposed leakage reduction credit 

would take into account the various 

technologies that could be used to 

reduce the GHG impact of refrigerant 

leakage, including the use of an 

alternative refrigerant with a lower 

GWP. A proposed efficiency 

improvement credit would account for 

the various types of hardware and 

control of that hardware available to 

increase the A/C system efficiency. 

Manufacturers would be required to 

attest the durability of the leakage 

reduction and the efficiency 

improvement technologies over the full 

useful life of the vehicle. 

EPA believes that both reducing A/C 

system leakage and increasing efficiency 

are highly cost-effective and 

technologically feasible. EPA expects 

most manufacturers will choose to use 

these A/C credit provisions, although 

some may not find it necessary to do so. 

a. A/C Leakage Credits 

The refrigerant used in vehicle A/C 

systems can get into the atmosphere by 

many different means. These refrigerant 

emissions occur from the slow leakage 

over time that all closed high pressure 

systems will experience. Refrigerant loss 

occurs from permeation through hoses 

and leakage at connectors and other 

parts where the containment of the 

system is compromised. The rate of 

leakage can increase due to 

deterioration of parts and connections 

as well. In addition, there are emissions 

that occur during accidents and 

maintenance and servicing events. 

Finally, there are end-of-life emissions 

if, at the time of vehicle scrappage, 

refrigerant is not fully recovered. 

Because the process of refrigerant 

leakage has similar root causes as those 

that cause fuel evaporative emissions 

from the fuel system, some of the 

control technologies are similar 

(including hose materials and 

connections). There are however, some 

fundamental differences between the 

systems that require a different 

approach. The most notable difference 

is that A/C systems are completely 

closed systems, whereas the fuel system 

is not. Fuel systems are meant to be 

refilled as liquid fuel is consumed by 

the engine, while the A/C system ideally 

should never require ‘‘recharging’’ of the 

contained refrigerant. Thus it is critical 

that the A/C system leakages be kept to 

an absolute minimum. These emissions 

are typically too low to accurately 

measure in most current SHED 

chambers designed for fuel evaporative 

emissions measurement, especially for 

systems that are new or early in life. 

Therefore, if leakage emissions were to 

be measured directly, new measurement 

facilities would need to be built by the 

OEM manufacturers and very accurate 

new test procedures would need to be 

developed. Especially because there are 

indications that much of the industry is 

moving toward alternative refrigerants 

(post-2016 for most manufacturers), EPA 

is not proposing such a direct 

measurement approach to addressing 

refrigerant leakage. 

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143Team 1–Refrigerant Leakage Reduction: Final 

Report to Sponsors, SAE, 2007. 

144Although see 71 FR 55140 (Sept. 21, 2006) 

(proposal pursuant to section 612 of the CAA 

finding CO2 and HFC 152a as acceptable refrigerant 

substitutes as replacements for CFC–12 in motor 

vehicle air conditioning systems, and stating (at 

55142) that ‘‘data ... indicate that use of CO2 and 

HFC 152a with risk mitigation technologies does 

not pose greater risks compared to other 

substitutes’’). 

145For example, the GWP for R152a is 120, the 

GWP of HFO–1234yf is 4, and the GWP of CO2 as 

a refrigerant is 1. 

Instead, EPA proposes that 

manufacturers demonstrate 

improvements in their A/C system 

designs and components through a 

design-based method. Manufacturers 

implementing systems expected to 

result in reduced refrigerant leakage 

would be eligible for credits that could 

then be used to meet their CO2 emission 

compliance requirements. The proposed 

‘‘A/C Leakage Credit’’ provisions would 

generally assign larger credits to system 

designs that are expected to result in 

greater leakage reduction. In addition, 

EPA proposes that proportionately 

larger A/C Leakage Credits be available 

to manufacturers that substitute a lowerGWP refrigerant for the current R134a 

refrigerant. 

Our proposed method for calculating 

A/C Leakage Credits is based closely on 

an industry-consensus leakage scoring 

method, described below. This leakage 

scoring method is correlated to 

experimentally-measured leakage rates 

from a number of vehicles using the 

different available A/C components. 

Under the proposed approach, 

manufacturers would choose from a 

menu of A/C equipment and 

components used in their vehicles in 

order to establish leakage scores which 

would characterize their A/C system 

leakage performance. The leakage score 

can be compared to expected fleetwide 

leakage rates in order to quantify 

improvements for a given A/C system. 

Credits would be generated from leakage 

reduction improvements that exceeded 

average fleetwide leakage rates. 

EPA believes that the design-based 

approach would result in estimates of 

likely leakage emissions reductions that 

would be comparable to those that 

would eventually result from 

performance-based testing. At the same 

time, comments are encouraged on all 

developments that may lead to a robust, 

practical, performance-based test for 

measuring A/C refrigerant leakage 

emissions. 

The cooperative industry and 

government Improved Mobile Air 

Conditioning (IMAC) program 143 has 

demonstrated that new-vehicle leakage 

emissions can be reduced by 50%. This 

program has shown that this level of 

improvement can be accomplished by 

reducing the number and improving the 

quality of the components, fittings, 

seals, and hoses of the A/C system. All 

of these technologies are already in 

commercial use and exist on some of 

today’s systems. 

EPA is proposing that a manufacturer 

wishing to earn A/C Leakage Credits 

would compare the components of its 

A/C system with a set of leakagereduction technologies and actions that 

is based closely on that being developed 

through IMAC and the Society of 

Automotive Engineers (as SAE Surface 

Vehicle Standard J2727, August 2008 

version). The J2727 approach is 

developed from laboratory testing of a 

variety of A/C related components, and 

EPA believes that the J2727 leakage 

scoring system generally represents a 

reasonable correlation with average realworld leakage in new vehicles. Like the 

IMAC approach, our proposed credit 

approach would associate each 

component with a specific leakage rate 

in grams per year identical to the values 

in J2727. A manufacturer choosing to 

claim Leakage Credits would sum the 

leakage values for an A/C system for a 

total A/C leakage score. EPA is 

proposing a formula for converting the 

grams-per-year leakage score to a gramsper-mile CO2eq value, taking vehicle 

miles traveled (VMT) and the GWP of 

the refrigerant into account. This 

formula is: 

Credit = (MaxCredit) * [1 ¥ (LeakScore/ 

AvgImpact) * (GWPRefrigerant/ 

1430)] 

Where: 

MaxCredit is 12.6 and 15.7 g/mi CO2eq for 

cars and trucks respectively. These 

become 13.8 and 17.2 for cars and trucks 

if alternative refrigerants are used since 

they get additional credits for end-of-life 

emissions reductions. 

LeakScore is the leakage score of the A/C 

system as measured according to 

methods similar to the J2727 procedure 

in units of g/yr. The minimum score 

which is deemed feasible is fixed at 8.3 

and 10.4 g/yr for cars and trucks 

respectively. 

AvgImpact is the average impact of A/C 

leakage, which is 16.6 and 20.7 g/yr for 

cars and trucks respectively. 

GWPRefrigerant is the global warming 

potential for direct radiative forcing of 

the refrigerant as defined by EPA (or 

IPCC). 

All of the parameters and limits of the 

equation are derived in the EPA DRIA. 

For systems using the current 

refrigerant, EPA proposes that these 

emission rates could at most be feasibly 

reduced by half, based on the 

conclusions of the IMAC study, and 

consideration of emission over the full 

life of the vehicle. (This latter point is 

discussed further in the DRIA.) 

As discussed above, EPA recognizes 

that substituting an alternative 

refrigerant (one with a significantly 

lower global warming potential, GWP), 

would potentially be a very effective 

way to reduce the impact of all forms of 

refrigerant emissions, including 

maintenance, accidents, and vehicle 

scrappage. To address future GHG 

regulations in Europe and California, 

systems using alternative refrigerants— 

including HFO1234yf, with a GWP of 

4—are under serious development and 

have been demonstrated in prototypes 

by A/C component suppliers. These 

alternative refrigerants have remaining 

cost, safety and feasibility hurdles for 

commercial applications.144 However, 

the European Union has enacted 

regulations phasing in alternative 

refrigerants with GWP less than 150 

starting in 2010, and the State of 

California proposed providing credits 

for alternative refrigerant use in its GHG 

rule. 

Within the timeframe of 2012–2016, 

EPA is not expecting the use of lowGWP refrigerants to be widespread. 

However, EPA believes that these 

developments are promising, and have 

included in our proposed A/C Leakage 

Credit system provisions to account for 

the effective refrigerant reductions that 

could be expected from refrigerant 

substitution. The quantity of A/C 

Leakage Credits that would be available 

would be a function of the GWP of the 

alternative refrigerant, with the largest 

credits being available for refrigerants 

approaching a GWP of zero.145 For a 

hypothetical alternative refrigerant with 

a GWP of 1, effectively eliminating 

leakage as a GHG concern, our proposed 

credit calculation method could result 

in maximum credits equal total average 

emissions, or credits of 13.4 and 17.8 

g/mi CO2eq for cars and trucks, 

respectively. This option is also 

captured in the equation above. 

It is possible that alternative 

refrigerants could, without 

compensating action by the 

manufacturer, reduce the efficiency of 

the A/C system (see discussion of the A/ 

C Efficiency Credit below.) However, 

EPA believes that manufacturers will 

have substantial incentives to design 

their systems to maintain the efficiency 

of the A/C system, therefore EPA is not 

accounting for any potential efficiency 

degradation. 

EPA requests comment on all aspects 

of our proposed A/C Leakage Credit 

system. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49529 

b. A/C Efficiency Credits 

EPA is proposing that manufacturers 

that make improvements in their A/C 

systems to increase efficiency and thus 

reduce CO2 emissions due to A/C 

system operation be eligible for A/C 

Efficiency Credits. As with A/C Leakage 

Credits, manufacturers could apply A/C 

Efficiency Credits toward compliance 

with their overall CO2 standards. 

As mentioned above, EPA estimates 

that the CO2 emissions due to A/C 

related loads on the engine account for 

approximately 3.9% of total greenhouse 

gas emissions from passenger vehicles 

in the United States. Usage of A/C 

systems is inherently higher in hotter 

and more humid months and climates; 

however, vehicle owners may use their 

A/C systems all year round in all parts 

of the nation. For example, people 

commonly use A/C systems to cool and 

dehumidify the cabin air for passenger 

comfort on hot humid days, but they 

also use the systems to de-humidify 

cabin air to assist in defogging/de-icing 

the front windshield and side glass in 

cooler weather conditions for improved 

visibility. A more detailed discussion of 

seasonal and geographical A/C usage 

rates can be found in the DRIA. 

Most of the additional load on the 

engine from A/C system operation 

comes from the compressor, which 

pumps the refrigerant around the system 

loop. Significant additional load on the 

engine may also come from electric or 

hydraulic fans, which are used to move 

air across the condenser, and from the 

electric blower, which is used to move 

air across the evaporator and into the 

cabin. Manufacturers have several 

currently-existing technology options 

for improving efficiency, including 

more efficient compressors, fans, and 

motors, and systems controls that avoid 

over-chilling the air (and subsequently 

re-heating it to provide the desired air 

temperature with an associated loss of 

efficiency). For vehicles equipped with 

automatic climate-control systems, realtime adjustment of several aspects of the 

overall system (such as engaging the full 

capacity of the cooling system only 

when it is needed, and maximizing the 

use of recirculated air) can result in 

improved efficiency. Table III.C.1–1 

below lists some of these technologies 

and their respective efficiency 

improvements. 

As with the A/C Leakage Credit 

program, EPA is interested in 

performance-based standards (or 

credits) based on measurement 

procedures whenever possible. While 

design-based assessments of expected 

emissions can be a reasonably robust 

way of quantifying emission 

improvements, these approaches have 

inherent shortcomings, as discussed for 

the case of A/C leakage above. Designbased approaches depend on the quality 

of the data from which they are 

calibrated, and it is possible that 

apparently proper equipment may 

function less effectively than expected. 

Therefore, while the proposal uses a 

design-based menu approach to quantify 

improvements in A/C efficiency, it is 

also proposed to begin requiring 

manufacturers to confirm that 

technologies applying for Efficiency 

Credits are measurably improving 

system efficiency. 

EPA believes that there is a more 

critical need for a test procedure to 

quantify A/C Efficiency Credits than for 

Leakage Credits, for two reasons. First, 

the efficiency gains for various 

technologies are more difficult to 

quantify using a design-based program 

(like the SAEJ2727-based procedure 

used to generate Leakage Credits). 

Second, while leakage may disappear as 

a significant source of GHG emissions if 

a shift toward alternate refrigerants 

develops, no parallel factor exists in the 

case of efficiency improvements. EPA is 

thus proposing to phase-in a 

performance-based test procedure over 

time beginning in 2014, as discussed 

below. In the interim, EPA proposes a 

design-based ‘‘menu’’ approach for 

estimating efficiency improvements 

and, thus, quantifying A/C Efficiency 

Credits. 

For model years 2012 and 2013, EPA 

proposes that a manufacturer wishing to 

generate A/C Efficiency Credits for a 

group of its vehicles with similar A/C 

systems would compare several of its 

vehicle A/C-related components and 

systems with a ‘‘menu’’ of efficiencyrelated technology improvements (see 

Table III.C.1–1 below). Based on the 

technologies the manufacturer chooses, 

an A/C Efficiency Credit value would be 

established. This design-based approach 

would recognize the relationships and 

synergies among efficiency-related 

technologies. Manufacturers could 

receive credit based on the technologies 

they chose to incorporate in their A/C 

systems and the associated credit value 

for each technology. The total A/C 

Efficiency Credit would be the total of 

these values, up to a maximum feasible 

credit of 5.7 g/mi CO2eq. This would be 

the maximum improvement from 

current average efficiencies for A/C 

systems (see the DRIA for a full 

discussion of our derivation of the 

proposed reductions and credit values 

for individual technologies and for the 

maximum total credit available). 

Although the total of the individual 

technology credit values may exceed 5.7 

g/mi CO2eq, synergies among the 

technologies mean that the values are 

not additive, and thus A/C Efficiency 

credit could not exceed 5.7 g/mi CO2eq. 

The EPA requests comment on 

adjusting the A/C efficiency credit to 

account for potential decreases (or 

increases) in efficiency when using an 

alternative refrigerant by using the 

change in the coefficient of 

performance. The effects may include 

the impact of a secondary loop system 

(including the incremental effect on 

tailpipe CO2 emissions that the added 

weight of such a system would incur). 

TABLE III.C.1–1 EFFICIENCY-IMPROVING A/C TECHNOLOGIES AND CREDITS

Technology description 

Estimated reduction in A/C CO2

emissions 

(percent) 

A/C Efficiency 

credit 

(g/mi CO2) 

Reduced reheat, with externally-controlled, variable-displacement compressor ........................................ 30 1.7 

Reduced reheat, with externally-controlled, fixed-displacement or pneumatic variable-displacement 

compressor ............................................................................................................................................... 20 1.1 

Default to recirculated air whenever ambient temperature is greater than 75 °F ...................................... 30 1.7 

Blower motor and cooling fan controls which limit waste energy (e.g. pulse width modulated power 

controller) ................................................................................................................................................. 15 0.9 

Electronic expansion valve .......................................................................................................................... 20 1.1 

Improved evaporators and condensers (with system analysis on each component indicating a COP improvement greater than 10%, when compared to previous design) ....................................................... 20 1.1 

Oil Separator ................................................................................................................................................ 10 0.6 

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49530 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

For model years 2014 and later, EPA 

proposes that manufacturers seeking to 

generate A/C Efficiency Credits would 

need to use a specific performance test 

to confirm that the design changes were 

also improving A/C efficiency. 

Manufacturers would need to perform 

an A/C CO2 Idle Test for each A/C 

system (family) for which it desired to 

generate Efficiency Credits. 

Manufacturers would need to 

demonstrate at least a 30% 

improvement over current average 

efficiency levels to qualify for credits. 

Upon qualifying on the Idle Test, the 

manufacturer would be eligible to use 

the menu approach above to quantify 

the credits it would earn. 

The proposed A/C CO2 Idle Test 

procedure, which EPA has designed 

specifically to measure A/C CO2

emissions, would be performed while 

the vehicle engine is at idle. This 

proposed laboratory idle test would be 

similar to the idle carbon monoxide 

(CO) test that was once a part of EPA 

vehicle certification. The test would 

determine the additional CO2 generated 

at idle when the A/C system is operated. 

The A/C CO2 Idle Test would be run 

with and without the A/C system 

cooling the interior cabin while the 

vehicle’s engine is operating at idle and 

with the system under complete control 

of the engine and climate control system 

The proposed A/C CO2 Idle Test is 

similar to that proposed in April 2009 

for the Mandatory GHG Reporting Rule, 

with several improvements. These 

improvements include tighter 

restrictions on test cell temperatures 

and humidity levels in order to more 

closely control the loads from operation 

of the A/C system. EPA also made 

additional refinements to the required 

in-vehicle blower fan settings for 

manually controlled systems to more 

closely represent ‘‘real world’’ usage 

patterns. These details can be found in 

the DRIA and the regulations. 

The design of the A/C CO2 Idle Test 

represents a balancing of the need for 

performance tests whenever possible to 

ensure the most accurate quantification 

of efficiency improvements, with 

practical concerns for testing burden 

and facility requirements. EPA believes 

that the proposed Idle Test adds to the 

robust quantification of A/C credits that 

will result in real-world efficiency 

improvements and reductions in A/Crelated CO2 emissions. EPA is proposing 

that the Idle Test be required in order 

to qualify for A/C Efficiency Credits 

beginning in 2014 to allow sufficient 

time for manufacturers to make the 

necessary facilities improvements and 

to establish a comfort level with the test. 

EPA also considered a more 

comprehensive testing approach to 

quantifying A/C CO2 emissions that 

could be somewhat more technically 

robust, but would require more test time 

and test facility improvements for many 

manufacturers. This approach would be 

to adapt an existing test procedure, the 

Supplemental Federal Test Procedure 

(SFTP) for A/C operation, called the 

SC03, in specific ways for it to function 

as a tool to evaluate A/C CO2 emissions. 

The potential test method is described 

in some detail here, and EPA 

encourages comment on how this type 

of test might or might not accomplish 

the goals of robust performance-based 

testing and reasonable test burdens. 

EPA designed the SC03 test to 

measure criteria pollutants under severe 

air conditioning conditions not 

represented in the FTP and Highway 

Fuel Economy Tests. EPA did not 

specifically design the SC03 to measure 

incremental reductions in CO2

emissions from more efficient A/C 

technologies. For example, due to the 

severity of the SC03 test environmental 

conditions and the relatively short 

duration of the SC03 cycle, it is difficult 

for the A/C system to achieve a 

stabilized interior cabin condition that 

reflects incremental improvements. 

Many potential efficiency improvements 

in the A/C components and controls 

(i.e., automatic recirculation and heat 

exchanger fan control) are specifically 

measured only during stabilized 

conditions, and therefore become 

difficult or impossible to measure and 

quantify during this test. In addition, 

SC03 testing is also somewhat 

constrained and costly due to limited 

number of test facilities currently 

capable of performing testing under the 

required environmental conditions. 

One value of using the SC03 as the 

basis for a new test to quantify A/Crelated efficiency improvements would 

be the significant degree of control of 

test cell ambient conditions. The load 

placed on an A/C system, and thus the 

incremental CO2 emissions, are highly 

dependent on the ambient conditions in 

the test cell, especially temperature and 

humidity, as well as simulated solar 

load. Thus, as with the proposed Idle 

Test, a new SC03-based test would need 

to accurately and reliably control these 

conditions. (This contrasts with FTP 

testing for criteria pollutants, which 

does not require precise control of cell 

conditions because test results are 

generally much less sensitive to changes 

in cell temperature or humidity). 

However, for the purpose of 

quantifying A/C system efficiency 

improvements, EPA believes a test cell 

temperature less severe than the 95°F 

required by the SC03 would be 

appropriate. A cell temperature of 85°F 

would better align the initial cooling 

phase (‘‘pull-down’’) as well as the 

stabilized phase of A/C operation with 

real-world driving conditions. 

Another value of an SC03-based test 

would be the opportunity to create 

operating conditions for vehicle A/C 

systems that in some ways would better 

simulate ‘‘real world’’ operation than 

either the proposed Idle Test or the 

current SC03. The SC03 test cycle, 

roughly 10 minutes in length, has a 

similar average speed, maximum speed, 

and percentage of time at idle as the 

FTP. However, since the SC03 test cycle 

was designed principally to measure 

criteria pollutants under maximum A/C 

load conditions, it is not long enough to 

allow temperatures in the passenger 

cabin to consistently stabilize. EPA 

believes that once the pull-down phase 

has occurred and cabin temperatures 

have dropped dramatically to a suitable 

interior comfort level, additional test 

cycle time would be needed to measure 

how efficiently the A/C system operates 

under stabilized conditions. 

To capture the A/C operation during 

stabilized operation, EPA would 

consider adding two phases to the SC03 

test of roughly 10 minutes each. Each 

additional phase would simply be 

repeats of the SC03 drive cycle, with 

two exceptions. During the second 

phase, the A/C system would now be 

operating at cabin temperature at or 

approaching a stabilized condition. 

During the third phase, the A/C system 

would be turned off. The purpose of the 

third phase would be to establish the 

base CO2 emissions with no A/C loads 

on the engine, which would provide a 

baseline for the incremental CO2 due to 

A/C use. EPA would likely weight the 

CO2 g/mi results for the first and second 

phases of the test as follows: 50% for 

phase 1, and 50% for phase 2. From this 

average CO2 the methodology would 

subtract the CO2 result from phase 3, 

yielding an incremental CO2 (in g/mi) 

due to A/C use. 

EPA expects to continue working with 

industry, the California Air Resources 

Board, and other stakeholders to move 

toward increasingly robust performance 

tests for A/C and may include such 

changes in this final rule. EPA requests 

comment on all aspects of our proposed 

A/C Efficiency Credits program. 

c. Interaction With Title VI Refrigerant 

Regulations 

Title VI of the Clean Air Act deals 

with the protection of stratospheric 

ozone. Section 608 establishes a 

comprehensive program to limit 

emissions of certain ozone-depleting 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49531 

146 49 U.S.C 32905. 

147See 49 U.S.C 32906. The mechanism by which 

EPCA provides an incentive for production of FFVs 

is 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. 49 U.S.C. section 32905(b). This is typically 

referred to as an FFV credit. 

148 49 U.S.C 32906. 149 49 U.S.C 32905 (b). 

substances (ODS). The rules 

promulgated under section 608 regulate 

the use and disposal of such substances 

during the service, repair or disposal of 

appliances and industrial process 

refrigeration. In addition, section 608 

and the regulations promulgated under 

it, prohibit knowingly venting or 

releasing ODS during the course of 

maintaining, servicing, repairing or 

disposing of an appliance or industrial 

process refrigeration equipment. Section 

609 governs the servicing of motor 

vehicle air conditioners (MVACs). The 

regulations promulgated under section 

609 (40 CFR part 82, subpart B) 

establish standards and requirements 

regarding the servicing of MVACs. 

These regulations include establishing 

standards for equipment that recovers 

and recycles or only recovers refrigerant 

(CFC–12, HFC 134a, and for blends only 

recovers) from MVACs; requiring 

technician training and certification by 

an EPA-approved organization; 

establishing recordkeeping 

requirements; imposing sales 

restrictions; and prohibiting the venting 

of refrigerants. Section 612 requires EPA 

to review substitutes for class I and class 

II ozone depleting substances and to 

consider whether such substitutes will 

cause an adverse effect to human health 

or the environment as compared with 

other substitutes that are currently or 

potentially available. EPA promulgated 

regulations for this program in 1992 and 

those regulations are located at 40 CFR 

part 82, subpart G. When reviewing 

substitutes, in addition to finding them 

acceptable or unacceptable, EPA may 

also find them acceptable so long as the 

user meets certain use conditions. For 

example, all motor vehicle air 

conditioning system must have unique 

fittings and a uniquely colored label for 

the refrigerant being used in the system. 

EPA views this proposed rule as 

complementing these Title VI programs, 

and not conflicting with them. To the 

extent that manufacturers choose to 

reduce refrigerant leakage in order to 

earn A/C Leakage Credits, this would 

dovetail with the Title VI section 609 

standards which apply to maintenance 

events, and to end-of-vehicle life 

disposal. In fact, as noted, a benefit of 

the proposed A/C credit provisions is 

that there should be fewer and less 

impactive maintenance events for 

MVACs, since there will be less leakage. 

In addition, the credit provisions would 

not conflict (or overlap) with the Title 

VI section 609 standards. EPA also 

believes the menu of leak control 

technologies proposed today would 

complement the section 612 

requirements, because these control 

technologies would help ensure that 

R134a (or other refrigerants) would be 

used in a manner that further minimizes 

potential adverse effects on human 

health and the environment. 

2. Flex Fuel and Alternative Fuel 

Vehicle Credits 

As described in this section, EPA is 

proposing credits for flexible-fuel 

vehicles (FFVs) and alternative fuel 

vehicles starting in the 2012 model year. 

FFVs are vehicles that can run both on 

an alternative fuel and conventional 

fuel. Most FFVs are E–85 vehicles, 

which can run on a mixture of up to 85 

percent ethanol and gasoline. Dedicated 

alternative fuel vehicles are vehicles 

that run exclusively on an alternative 

fuel (e.g., compressed natural gas). 

EPCA includes an incentive under the 

CAFE program for production of dualfueled vehicles or FFVs, and dedicated 

alternative fuel vehicles.146 EPCA’s 

provisions were amended by the EISA 

to extend the period of availability of 

the FFV credits, but to begin phasing 

them out by annually reducing the 

amount of FFV credits that can be used 

in demonstrating compliance with the 

CAFE standards.147 EPCA does not 

premise the availability of the FFV 

credits on actual use of alternative fuel. 

Under EPCA, after MY 2019 no FFV 

credits will be available for CAFE 

compliance.148 Under EPCA, for 

dedicated alternative fuel vehicles, there 

are no limits or phase-out. EPA is 

proposing that FFV and Alternative Fuel 

Vehicle Credits be calculated as a part 

of the calculation of a manufacturer’s 

overall fleet average fuel economy and 

fleet average carbon-related exhaust 

emissions (§ 600.510–12). 

EPA is not proposing to include 

electric vehicles (EVs) or plug-in hybrid 

electric vehicles (PHEVs) in these flex 

fuel and alternative fuel provisions. 

These vehicles would be covered by the 

proposed advanced technology vehicle 

credits provisions described in Section 

III.C.3, so including them here would 

lead to a double counting of credits. 

a. Model Year 2012—2015 Credits 

i. FFVs 

For the GHG program, EPA is 

proposing to allow FFV credits 

corresponding to the amounts allowed 

by the amended EPCA only during the 

period from MYs 2012 to 2015. (As 

discussed below in Section III.E., EPA is 

proposing that CAFE-based FFV credits 

would not be permitted as part of the 

early credits program.) Several 

manufacturers have already taken the 

availability of FFV credits into account 

in their near-term future planning for 

CAFE and this reliance indicates that 

these credits need to be considered in 

considering adequacy of lead time for 

the CO2 standards. EPA thus believes 

that allowing these credits, in the near 

term, would help provide adequate lead 

time for manufacturers to implement the 

new multi-year standards, but that for 

the longer term there is adequate lead 

time without the use of such credits. 

This will also tend to harmonize the 

GHG and the CAFE program during 

these interim years. As discussed below, 

EPA is proposing for MY 2016 and later 

that manufacturers would not receive 

FFV credits unless they reliably 

estimate the extent the alternative fuel 

is actually being used by vehicles in 

order to count the alternative fuel use in 

the vehicle’s CO2 emissions level 

determination. 

As with the CAFE program, EPA 

proposes to base credits on the 

assumption that the vehicles would 

operate 50% of the time on the 

alternative fuel and 50% of the time on 

conventional fuel, resulting in CO2

emissions that are based on an 

arithmetic average of alternative fuel 

and conventional fuel CO2 emissions.149

The measured CO2 emissions on the 

alternative fuel would be multiplied by 

a 0.15 volumetric conversion factor 

which is included in the CAFE 

calculation as provided by EPCA. 

Through this mechanism a gallon of 

alternative fuel is deemed to contain 

0.15 gallons of fuel. EPA is proposing to 

take the same approach for 2012–2015 

model years. For example, for a flexiblefuel vehicle that emitted 330 g/mi CO2

operating on E–85 and 350 g/mi CO2

operating on gasoline, the resulting CO2

level to be used in the manufacturer’s 

fleet average calculation would be: 

CO g mi 2

330 0 15 350

2 = 199 8

⎡( ) × + ⎣ ⎤

⎦ = . . /

EPA understands that by using the 

CAFE approach—including the 0.15 

factor—the CO2 emissions value for the 

vehicle is calculated to be significantly 

lower than it actually would be 

otherwise, even if the vehicle were 

assumed to operate on the alternative 

fuel at all times. This represents a 

‘‘credit’’ being provided to FFVs. 


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49532 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

150 49 U.S.C 32905 (c). 151 49 U.S.C 32905 (d). 152 49 U.S.C section 32905 (c). 153 49 U.S.C section 32906 (a). 

EPA notes also that the above 

equation and example are based on an 

FFV that is an E–85 vehicle. EPCA, as 

amended by EISA, also establishes the 

use of this approach, including the 0.15 

factor, for all alternative fuels, not just 

E–85.150 The 0.15 factor is used for B– 

20 (20 percent biofuel and 80 percent 

diesel) FFVs. EPCA also establishes this 

approach, including the 0.15 factor, for 

gaseous-fueled FFVs such as a vehicle 

able to operate on gasoline and CNG.151

(For natural gas FFVs, EPCA establishes 

a factor of 0.823 gallons of fuel for every 

100 cubic feet a natural gas used to 

calculate a gallons equivalent.) 152 The 

EISA statute’s use of the 0.15 factor in 

this way provides a similar regulatory 

treatment across the various types of 

alternative fuel vehicles. EPA also 

proposes to use the 0.15 factor for all 

FFVs in keeping with the goal of not 

disrupting manufacturers’ near-term 

compliance planning. EPA, in any case, 

expects the vast majority of FFVs to be 

E–85 vehicles, as is the case today. 

The FFV credit limits for CAFE are 

1.2 mpg for model years 2012–2014 and 

1.0 mpg for model year 2015.153 In CO2

terms, these CAFE limits translate to 

declining CO2 credit limits over the four 

model years, as the CAFE standards 

increase in stringency (as the CAFE 

standard increases numerically, the 

limit becomes a smaller fraction of the 

standard). EPA proposes credit limits 

shown in Table III.C.2–1 based on the 

proposed average CO2 standards for cars 

and trucks. These have been calculated 

by comparing the average proposed 

CAFE standards with and without the 

FFV credits, converted to CO2. EPA 

requests comments on this proposed 

approach. 

TABLE III.C.2–1—FFV CO2 STANDARD

CREDIT LIMITS (G/MILE) 

Model year Cars Trucks 

2012 .......................... 9.8 17.9 

2013 .......................... 9.3 17.1 

2014 .......................... 8.9 16.3 

2015 .......................... 6.9 12.6 

EPA also requests comments on 

basing the calculated CO2 credit limit on 

the individual manufacturer standards 

calculated from the footprint curves. For 

example, if a manufacturer’s 2012 car 

standard was 260 g/mile, the credit limit 

in CO2 terms would be 9.5 g/mile and 

if it were 270 g/mile the limit would be 

10.2 g/mile. This approach would be 

somewhat more complex and would 

mean that the FFV CO2 credit limits 

would vary by manufacturer as their 

footprint based standards vary. 

However, it would more closely track 

CAFE FFV credit limits. 

ii. Dedicated Alternative Fuel 

Vehicles 

EPA proposes to calculate CO2

emissions from dedicated alternative 

fuel vehicles for MY 2012—2015 by 

measuring the CO2 emissions over the 

test procedure and multiplying the 

results by the 0.15 conversion factor 

described above. For example, for a 

dedicated alternative fuel vehicle that 

would achieve 330 g/mi CO2 while 

operating on alcohol (ethanol or 

methanol), the effective CO2 emissions 

of the vehicle for use in determining the 

vehicle’s CO2) emissions would be 

calculated as follows: 

CO2 = 330 × 0.15 = 49.5 g/mi 

b. Model Years 2016 and Later 

i. FFVs 

For 2016 and later model years, EPA 

proposes to treat FFVs similarly to 

conventional fueled vehicles in that 

FFV emissions would be based on 

actual CO2 results from emission testing 

on the alternative fuel. The 

manufacturer would also be required to 

demonstrate that the alternative fuel is 

actually being used in the vehicles. The 

manufacturer would need to establish 

the ratio of operation that is on the 

alternative fuel compared to the 

conventional fuel. The ratio would be 

used to weight the CO2 emissions 

performance over the 2-cycle test on the 

two fuels. The 0.15 conversion factor 

would no longer be included in the CO2

emissions calculation. For example, for 

a flexible-fuel vehicle that emitted 300 

g/mi CO2 operating on E–85 ten percent 

of the time and 350 g/mi CO2 operating 

on gasoline ninety percent of the time, 

the CO2 emissions for the vehicles to be 

used in the manufacturer’s fleet average 

would be calculated as follows: 

CO2 = (300 × 0.10) + (350 × 0.90)= 345 

g/mi 

The most complex part of this 

approach is to establish what data are 

needed for a manufacturer to accurately 

demonstrate use of the alternative fuel. 

One option EPA is considering is 

establishing a rebuttable presumption 

using a ‘‘top-down’’ approach based on 

national E–85 fuel use to assign credits 

to FFVs sold by manufacturers under 

this program. For example, national E– 

85 volumes and national FFV sales 

could be used to prorate E–85 use by 

manufacturer sales volumes and FFVs 

already in-use. EPA would conduct an 

analysis of vehicle miles travelled 

(VMT) by year for all FFVs using its 

emissions inventory MOVES model. 

Using the VMT ratios and the overall E– 

85 sales, E–85 usage could be assigned 

to each vehicle. This method would 

account for the VMT of new FFVs and 

FFVs already in the existing fleet using 

VMT data in the model. The model 

could then be used to determine the 

ratio of E–85 and gasoline for new 

vehicles being sold. Fluctuations in E– 

85 sales and FFV sales would be taken 

into account to adjust the credits 

annually. EPA believes this is a 

reasonable way to apportion E–85 use 

across the fleet. 

If manufacturers decided not to use 

EPA’s assigned credits based on the topdown analysis, they would have a 

second option of presenting their own 

data for consideration as the basis for 

credits. Manufacturers have suggested 

demonstrations using vehicle on-board 

data gathering through the use of onboard sensors and computers. 

California’s program allows FFV credits 

based on FFV use and envisioned 

manufacturers collecting fuel use data 

from vehicles in fleets with on-site 

refueling. Any approach must 

reasonably ensure that no CO2

emissions reductions anticipated under 

the program are lost. 

EPA proposes that manufacturers 

would need to present a statistical 

analysis of alternative fuel usage data 

collected on actual vehicle operation. 

EPA is not attempting to specify how 

the data is collected or the amount of 

data needed. However, the analysis 

must be based on sound statistical 

methodology. Uncertainty in the 

analysis must be accounted for in a way 

that provides reasonable certainty that 

the program does not result in loss of 

emissions reductions. EPA requests 

comment on how this demonstration 

could reasonably be made. 

EPA recognizes that under EPCA FFV 

credits are entirely phased-out of the 

CAFE program by MY 2020, and apply 

in the prior years with certain 

limitations, but without a requirement 

that the manufacturers demonstrate 

actual use of the alternative fuel. Under 

this proposal EPA would treat FFV 

credits the same as under EPCA for 

model years 2012–2015, but would 

apply a different approach starting with 

model year 2016. Unlike EPCA, CAA 

section 202(a) does not mandate that 

EPA treat FFVs in a specific way. 

Instead EPA is required to exercise its 

own judgment and determine an 

appropriate approach that best promotes 

the goals of this CAA section. Under 

these circumstances, EPA proposes to 

treat FFVs for model years 2012–2015 

the same as under EPCA, for the lead 

time reasons described above. Starting 

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154See 65 FR 6746, February 10, 2000. 

with model year 2016, EPA believes the 

appropriate approach is to ensure that 

emissions reduction credits are based 

upon a demonstration that emissions 

reductions have been achieved, to 

ensure the credits are for real reductions 

instead of reductions that have not 

likely occurred. This will promote the 

environmental goals of this proposal. At 

the same time, the ability to generate 

credits upon a demonstration of usage of 

the alternative fuel will provide an 

actual incentive to see that such fuels 

are used. Under the EPCA credit 

provision, there is an incentive to 

produce FFVs but no actual incentive to 

ensure that the alternative fuels are 

used. GHG and energy security benefits 

are only achieved if the alternative fuel 

is actually used, and EPA’s approach 

will now provide such an incentive. 

This approach will promote greater use 

of renewable fuels, as compared to a 

situation where there is a credit but no 

usage requirement. This is also 

consistent with the agency’s overall 

commitment to the expanded use of 

renewable fuels. Therefore EPA is not 

proposing to phase-out the FFV program 

for MYs 2016 and later but instead to 

base the program on real-world 

reductions (i.e., actual vehicle CO2

emissions levels based on actual use of 

the two fuels, without the 0.15 

conversion factor specified under EISA). 

Based on existing certification data, E– 

85 FFV CO2 emissions are typically 

about 5 percent lower on E–85 than CO2

emissions on 100 percent gasoline. 

However, currently there is little 

incentive to optimize CO2 performance 

for vehicles when running on E–85. EPA 

believes the above approach would 

provide such an incentive to 

manufacturers and that E–85 vehicles 

could be optimized through engine 

redesign and calibration to provide 

additional CO2 reductions. EPA requests 

comments on the above. 

ii. Dedicated Alternative Fuel 

Vehicles 

EPA proposes that for model years 

2016 and later dedicated alternative fuel 

vehicles, CO2 would be measured over 

the 2-cycle test in order to be included 

in a manufacturer’s fleet average CO2

calculations. As noted above, this is 

different than CAFE methodology which 

provides a methodology for calculating 

a petroleum-based mpg equivalent for 

alternative fuel vehicles so they can be 

included in CAFE. However, because 

CO2 can be measured directly from 

alternative fuel vehicles over the test 

procedure, EPA believes this is the 

simplest and best approach since it is 

consistent with all other vehicle testing 

under the proposed CO2 program. 

3. Advanced Technology Vehicle 

Credits for Electric Vehicles, Plug-in 

Hybrids, and Fuel Cells 

EPA is proposing additional credit 

opportunities to encourage the early 

commercialization of advanced vehicle 

powertrains, including electric vehicles 

(EVs), plug-in hybrid electric vehicles 

(PHEVs), and fuel cell vehicles. These 

technologies have the potential for more 

significant reductions of GHG emissions 

than any technology currently in 

commercial use, and EPA believes that 

encouraging early introduction of such 

technologies will help to enable their 

wider use in the future, promoting the 

technology-based emission reduction 

goals of section 202(a)(1) of the Clean 

Air Act. 

EPA proposes that these advanced 

technology credits would take the form 

of a multiplier that would be applied to 

the number of vehicles sold such that 

they would count as more than one 

vehicle in the manufacturer’s fleet 

average. These advanced technology 

vehicles would then count more heavily 

when calculating fleet average CO2

levels. The multiplier would not be 

applied when calculating the 

manufacturer’s foot-print-based 

standard, only when calculating the 

manufacturer’s fleet average levels. EPA 

proposes to use a multiplier in the range 

of 1.2 to 2.0 for all EVs, PHEVs, and fuel 

cell vehicles produced from MY 2012 

through MY 2016. EPA proposes that 

starting in MY 2017, the multiplier 

would no longer be used. As described 

in Section III.C.5, EPA is also proposing 

to allow early advanced technology 

vehicle credits to be generated for model 

years 2009–2011. EPA requests 

comment on the level of the multiplier 

and whether it should be the same value 

for each of these three technologies. 

Further, if EPA determines that a 

multiplier of 2.0, or another level near 

the higher end of this range, is 

appropriate for the final rule, EPA 

requests comment on whether the 

multiplier should be phased down over 

time, such as: 2.0 for MY 2009 through 

MY 2012, 1.8 in MY 2013, 1.6 in MY 

2014, 1.4 in MY 2015, and 1.2 in MY 

2016 (i.e., the multiplier could phasedown by 0.2 per year). In addition, EPA 

requests comment on whether or not it 

would be appropriate to differentiate 

between EVs and PHEVs for advanced 

technology credits. Under such an 

approach, PHEVs could be provided a 

lesser multiplier compare to EVs. Also, 

the PHEV multiplier could be prorated 

based on the equivalent electric range 

(i.e., the extent to which the PHEV 

operates on average as an EV) of the 

vehicle in order to incentivize battery 

technology development. This approach 

would give more credits to ‘‘stronger’’ 

PHEV technology. 

EPA has provided this type of credit 

previously, in the Tier 2 program. This 

approach provides an incentive for 

manufacturers to prove out ultra-clean 

technology during the early years of the 

program. In Tier 2, early credits for Tier 

2 vehicles certified to the very cleanest 

bins (equivalent to California’s 

standards for super ultra low emissions 

vehicles (SULEVs) and zero emissions 

vehicles (ZEVs)) had a multiplier of 1.5 

or 2.0.154 The multiplier range of 1.2 to 

2.0 being proposed for GHGs is 

consistent with the Tier 2 approach. 

EPA believes it is appropriate to provide 

incentives to manufacturers to produce 

vehicles with very low emissions levels 

and that these incentives may help pave 

the way for greater and/or more cost 

effective emission reductions from 

future vehicles. EPA would like to 

finalize an approach which 

appropriately balances the benefits of 

encouraging advanced technologies 

with the overall environmental 

reductions of the proposed standards as 

a whole. 

As with other vehicles, CO2 for these 

vehicles would be determined as part of 

vehicle certification, based on emissions 

over the 2-cycle test procedures, to be 

included in the fleet average CO2 levels. 

For electric vehicles, EPA proposes 

that manufacturers would include them 

in the average with CO2 emissions of 

zero grams/mile both for early credits, 

and for the MY 2012–2016 time frame. 

Similarly, EPA proposes to include as 

zero grams/mile of CO2 the electric 

portion of PHEVs (i.e., when PHEVs are 

operating as electric vehicles) and fuel 

cell vehicles. EPA recognizes that for 

each EV that is sold, in reality the total 

emissions off-set relative to the typical 

gasoline or diesel powered vehicle is 

not zero, as there is a corresponding 

increase in upstream CO2 emissions due 

to an increase in the requirements for 

electric utility generation. However, for 

the time frame of this proposed rule, 

EPA is also interested in promoting very 

advanced technologies such as EVs 

which offer the future promise of 

significant reductions in GHG 

emissions, in particular when coupled 

with a broader context which would 

include reductions from the electricity 

generation. For the California Paley 1 

program, California assigned EVs a CO2

performance value of 130 g/mile, which 

was intended to represent the average 

CO2 emissions required to charge an EV 

using representative CO2 values for the 

California electric utility grid. For this 

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49534 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

155Fuel Economy Labeling of Motor Vehicles: 

Revisions to Improve Calculation of Fuel Economy 

Estimates; Final Rule (71 FR 77872, December 27, 

2006). 

proposal, EPA is assigning an EV a 

value of zero g/mile, which should be 

viewed as an interim solution for how 

to account for the emission reduction 

potential of this type of vehicle, and 

may not be the appropriate long-term 

approach. EPA requests comment on 

this proposal and whether alternative 

approaches to address EV emissions 

should be considered, including 

approaches for considering the lifecycle 

emissions from such advanced vehicle 

technologies. 

The criteria and definitions for what 

vehicles qualify for the multiplier are 

provided in Section III.E. As described 

in Section III.E, EPA is proposing 

definitions for EVs, PHEVs, and fuel cell 

vehicles to ensure that only credible 

advanced technology vehicles are 

provided credits. 

EPA requests comments on the 

proposed approach for advanced 

technology vehicle credits. 

4. Off-Cycle Technology Credits 

EPA is proposing an optional credit 

opportunity intended to apply to new 

and innovative technologies that reduce 

vehicle CO2 emissions, but for which 

the CO2 reduction benefits are not 

captured over the 2-cycle test procedure 

used to determine compliance with the 

fleet average standards (i.e., ‘‘off-cycle’’). 

Eligible innovative technologies would 

be those that are relatively newly 

introduced in one or more vehicle 

models, but that are not yet 

implemented in widespread use in the 

light-duty fleet. EPA will not approve 

credits for technologies that are not 

innovative or novel approaches to 

reducing greenhouse gas emissions. 

Further, any credits for these off-cycle 

technologies must be based on realworld GHG reductions not captured on 

the current 2-cycle tests and verifiable 

test methods, and represent average U.S. 

driving conditions. 

Similar to the technologies used to 

reduce A/C system indirect CO2

emissions such as compressor efficiency 

improvements, eligible technologies 

would not be active during the 2-cycle 

test and therefore the associated 

improvements in CO2 emissions would 

not be captured. EPA will not consider 

technologies to be eligible for these 

credits if the technology has a 

significant impact on CO2 emissions 

over the FTP and HFET tests. Because 

these technologies are not nearly so well 

developed and understood, EPA is not 

prepared to require their utilization to 

meet the CO2 standards. However, EPA 

is aware of some emerging and 

innovative technologies and concepts in 

various stages of development with CO2

reduction potential that might not be 

adequately captured on the FTP or 

HFET, and that some of these 

technologies might merit some 

additional CO2 credit for the 

manufacturer. Examples include solar 

panels on hybrids or electric vehicles, 

adaptive cruise control, and active 

aerodynamics. EPA believes it would be 

appropriate to provide an incentive to 

encourage the introduction of these 

types of technologies and that a credit 

mechanism is an effective way to do 

this. This optional credit opportunity 

would be available through the 2016 

model year. 

EPA is proposing that manufacturers 

quantify CO2 reductions associated with 

the use of the off-cycle technologies 

such that the credits could be applied 

on a g/mile equivalent basis, as is 

proposed for A/C system improvements. 

Credits would have to be based on real 

additional reductions of CO2 emissions 

and would need to be quantifiable and 

verifiable with a repeatable 

methodology. Such submissions of data 

should be submitted to EPA subject to 

public scrutiny. EPA proposes that the 

technologies upon which the credits are 

based would be subject to full useful life 

compliance provisions, as with other 

emissions controls. Unless the 

manufacturer can demonstrate that the 

technology would not be subject to inuse deterioration over the useful life of 

the vehicle, the manufacturer would 

have to account for deterioration in the 

estimation of the credits in order to 

ensure that the credits are based on real 

in-use emissions reductions over the life 

of the vehicle. 

As discussed below, EPA is proposing 

a two-tiered process for demonstrating 

the CO2 reductions of an innovative and 

novel technology with benefits not 

captured by the FTP and HFET test 

procedures. First, a manufacturer would 

determine whether the benefit of the 

technology could be captured using the 

5-cycle methodology currently used to 

determine fuel economy label values. 

EPA established the 5-cycle test 

methods to better represent real-world 

factors impacting fuel economy, 

including higher speeds and more 

aggressive driving, colder temperature 

operation, and the use of air 

conditioning. If this determination is 

affirmative, the manufacturer would 

follow the protocol laid out below and 

in the proposed regulations. If the 

manufacturer finds that the technology 

is such that the benefit is not adequately 

captured using the 5-cycle approach, 

then the manufacturer would have to 

develop a robust methodology, subject 

to EPA approval, to demonstrate the 

benefit and determine the appropriate 

CO2 gram per mile credit. 

a. Technology Demonstration Using 

EPA 5-Cycle Methodology 

As noted above, the CO2 reduction 

benefit of some innovative technologies 

could be demonstrated using the 5-cycle 

approach currently used for EPA’s fuel 

economy labeling program. The 5-cycle 

methodology was finalized in EPA’s 

2006 fuel economy labeling rule,155

which provides a more accurate fuel 

economy label estimate to consumers 

starting with 2008 model year vehicles. 

In addition to the FTP and HFET test 

procedures, the 5-cycle approach folds 

in the test results from three additional 

test procedures to determine fuel 

economy. The additional test cycles 

include cold temperature operation, 

high temperature, high humidity and 

solar loading, and aggressive and highspeed driving; thus these tests could be 

used to demonstrate the benefit of a 

technology that reduces CO2 over these 

types of driving and environmental 

conditions. Using the test results from 

these additional test cycles collectively 

with the 2-cycle data provides a more 

precise estimate of the average fuel 

economy and CO2 emissions of a vehicle 

for both the city and highway 

independently. A significant benefit of 

using the 5-cycle methodology to 

measure and quantify the CO2

reductions is that the test cycles are 

properly weighted for the expected 

average U.S. operation, meaning that the 

test results could be used without 

further adjustments. 

The use of these supplemental cycles 

may provide a method by which 

technologies not demonstrated on the 

baseline 2-cycles can be quantified. The 

cold temperature FTP can capture new 

technologies that improve the CO2

performance of vehicles during colder 

weather operation. These improvements 

may be related to warm-up of the engine 

or other operation during the colder 

temperature. An example of such a new, 

innovative technology is a waste heat 

capture device that provides heat to the 

cabin interior, enabling additional 

engine-off operation during colder 

weather not previously enabled due to 

heating and defrosting requirements. 

The additional engine-off time would 

result in additional CO2 reductions that 

otherwise would not have been realized 

without the heat capture technology. 

While A/C credits for efficiency 

improvements will largely be captured 

in the A/C credits proposal through the 

credit menu of known efficiency 

improving components and controls, 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49535 

certain new technologies may be able to 

use the high temperatures, humidity, 

and solar load of the SC03 test cycle to 

accurately measure their impact. An 

example of a new technology may be a 

refrigerant storage device that 

accumulates pressurized refrigerant 

during driving operation or uses 

recovered vehicle kinetic energy during 

deceleration to pressurize the 

refrigerant. Much like the waste heat 

capture device used in cold weather, 

this device would also allow additional 

engine-off operation while maintaining 

appropriate vehicle interior occupant 

comfort levels. SC03 test data measuring 

the relative impact of innovative A/Crelated technologies could be applied to 

the 5-cycle equation to quantify the CO2

reductions of the technology. Another 

example is glazed windows. This 

reflects sunlight away from the cabin so 

that the energy required to stabilize the 

cabin air to a comfortable level is 

decreased. The impact of these windows 

may be measureable on an SC03 test 

(with and without the window option). 

The US06 cycle may be used to 

capture innovative technologies 

designed to reduce CO2 emissions 

during higher speed and more 

aggressive acceleration conditions, but 

not reflected on the 2-cycle tests. An 

example of this is an active 

aerodynamic technology. This 

technology recognizes the benefits of 

reduced aerodynamic drag at higher 

speeds and makes changes to the 

vehicle at those speeds. The changes 

may include active front or grill air 

deflection devices designed to redirect 

frontal airflow. Certain active 

suspension devices designed primarily 

to reduce aerodynamic drag by lowering 

the vehicle at higher speeds may also be 

measured on the US06 cycle. To 

properly measure these technologies on 

the US06, the vehicle would require 

unique load coefficients with and 

without the technologies. The different 

load coefficient (properly weighted for 

the US06 cycle) could effectively result 

in reduced vehicle loads at the higher 

speeds when the technologies are active. 

Similar to the previously discussed 

cycles, the results from the US06 test 

with and without the technology could 

then use the 5-cycle methodology to 

quantify CO2 reductions. 

If the 5-cycle procedures can be used 

to demonstrate the innovative 

technology, then the process would be 

relatively simple. The manufacturer 

would simply test vehicles with and 

without the technology installed or 

operating and compare results. All 

5-cycles would be tested with the 

technology enabled and disabled, and 

the test results would be used to 

calculate a combined city/highway CO2

value with the technology and without 

the technology. These values would be 

compared to determine the amount of 

the credit; the combined city/highway 

CO2 value with the technology operating 

would be subtracted from the combined 

city/highway CO2 value without the 

technology operating to determine the 

gram per mile CO2 credit. It is likely that 

multiple tests of each of the five test 

procedures would need to be performed 

in order to achieve the necessary strong 

degree of statistical significance of the 

credit determination results. This would 

have to be done for each model type for 

which a credit was being sought, unless 

the manufacturer could demonstrate 

that the impact of the technology was 

independent of the vehicle 

configuration on which it was installed. 

In this case, EPA may consider allowing 

the test to be performed on an engine 

family basis or other grouping. At the 

end of the model year, the manufacturer 

would determine the number of vehicles 

produced subject to each credit amount 

and report that to EPA in the final 

model year report. The gram per mile 

credit value determined with the 5-cycle 

comparison testing would be multiplied 

by the total production of vehicles 

subject to that value to determine the 

total number of credits. 

b. Alternative Off-Cycle Credit 

Methodologies 

In cases where the benefit of a 

technological approach to reducing CO2

emissions can not be adequately 

represented using existing test cycles, 

EPA will work with and advise 

manufacturers in developing test 

procedures and analytical approaches to 

estimate the effectiveness of the 

technology for the purpose of generating 

credits. Clearly the first step should be 

a thorough assessment of whether the 5- 

cycle approach can be used, but if the 

manufacturer finds that the 5-cycle 

process is fundamentally inadequate for 

the specific technology being 

considered by the manufacturer, then an 

alternative approach may be developed 

and submitted to EPA for approval. The 

demonstration program should be 

robust, verifiable, and capable of 

demonstrating the real-world emissions 

benefit of the technology with strong 

statistical significance. 

The CO2 benefit of some technologies 

may be able to be demonstrated with a 

modeling approach, using engineering 

principles. An example would be where 

a roof solar panel is used to charge the 

on-board vehicle battery. The amount of 

potential electrical power that the panel 

could supply could be modeled for 

average U.S. conditions and the units of 

electrical power translated to equivalent 

fuel energy or annualized CO2 emission 

rate reduction from the captured solar 

energy. The CO2 reductions from other 

technologies may be more challenging 

to quantify, especially if they are 

interactive with the driver, geographic 

location, environmental condition, or 

other aspect related to operation on 

actual roads. In these cases, 

manufacturers might have to design 

extensive on-road test programs. Any 

such on-road testing programs would 

need to be statistically robust and based 

on average U.S. driving conditions, 

factoring in differences in geography, 

climate, and driving behavior across the 

U.S. 

Whether the approach involves onroad testing, modeling, or some other 

analytical approach, the manufacturer 

would be required to present a proposed 

methodology to EPA. EPA would 

approve the methodology and credits 

only if certain criteria were met. 

Baseline emissions and control 

emissions would need to be clearly 

demonstrated over a wide range of real 

world driving conditions and over a 

sufficient number of vehicles to address 

issues of uncertainty with the data. Data 

would need to be on a vehicle modelspecific basis unless a manufacturer 

demonstrated model specific data was 

not necessary. Approval of the approach 

to determining a CO2 benefit would not 

imply approval of the results of the 

program or methodology; when the 

testing, modeling, or analyses are 

complete the results would likewise be 

subject to EPA review and approval. 

EPA believes that manufacturers could 

work together to develop testing, 

modeling, or analytical methods for 

certain technologies, similar to the SAE 

approach used for A/C refrigerant 

leakage credits. 

EPA requests comments on the 

proposed approach for off-cycle 

emissions credits, including comments 

on how best to structure the program. 

EPA particularly requests comments on 

how the case-by-case approach to 

assessing off-cycle innovative 

technology credits could best be 

designed, including ways to ensure the 

verification of real-world emissions 

benefits and to ensure transparency in 

the process of reviewing manufacturer’s 

proposed test methods. 

5. Early Credit Options 

EPA is proposing to allow 

manufacturers to generate early credits 

in model years 2009–2011. As described 

below, credits could be generated 

through early additional fleet average 

CO2 reductions, early A/C system 

improvements, early advanced 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

49536 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

156CAA 177 States refers to States that have 

adopted the California GHG standards. At present, 

there are thirteen CAA 177 States including New 

York, Massachusetts, Maryland, Vermont, Maine, 

Connecticut, Arizona, New Jersey, New Mexico, 

Oregon, Pennsylvania, Rhode Island, Washington, 

and Washington, DC. 

technology vehicle credits, and early 

off-cycle credits. As with other credits, 

early credits would be subject to a five 

year carry-forward limit based on the 

model year in which they are generated. 

Early credits could also be transferred 

between vehicle categories (e.g., 

between the car and truck fleet) or 

traded among manufacturers without 

limits. The agencies note that CAFE 

credits earned in MYs prior to MY 2011 

will still be available to manufacturers 

for use in the CAFE program in 

accordance with applicable regulations. 

EPA is not proposing certification, 

compliance, or in-use requirements for 

vehicles generating early credits. MY 

2009 would be complete and MY 2010 

would be well underway by the time the 

rule is promulgated. This would make 

certification, compliance, and in-use 

requirements unworkable. As discussed 

below, manufacturers would be required 

to submit an early credits report to EPA 

for approval no later than the time they 

submit their final CAFE report for MY 

2011. This report would need to include 

details on all early credits the 

manufacturer generates, why the credits 

are bona fide, how they are quantified, 

and how they can be verified. 

As a general principle, EPA believes 

these early credit programs must be 

designed in a way to ensure that they 

are capturing real-world reductions. In 

addition, EPA wants to ensure these 

credit programs do not provide an 

opportunity for manufacturers to earn 

‘‘windfall’’ credits that do not result in 

actual, surplus CO2 emission 

reductions. EPA seeks comments on 

how to best ensure these objectives are 

achieved in the design of the early 

credit program options. 

a. Credits Based on Early Fleet Average 

CO2 Reductions 

EPA is proposing opportunities for 

early credit generation in MYs 2009– 

2011 through over-compliance with a 

fleet average CO2 baseline established 

by EPA. EPA is proposing four 

pathways for doing so. Manufacturers 

would select one of the four paths for 

credit generation for the entire three 

year period and could not switch 

between pathways for different model 

years. For two pathways, the baseline 

would be set by EPA to be equivalent to 

the California standards for the relevant 

model year. Generally, manufacturers 

that over-comply with those CARB 

standards would earn credits. Two 

additional pathways, described below, 

would include credits based on overcompliance with CAFE standards in 

States that have not adopted the 

California standards. 

Pathway 1 would be to earn credits by 

over-complying with the California 

equivalent baseline over the 

manufacturer’s fleet of vehicles sold 

nationwide. Pathway 2 would be for 

manufacturers to generate credits 

against the baseline only for the fleet of 

vehicles sold in California and the CAA 

section 177 States.156 This approach 

would include any CAA 177 States as of 

the date of promulgation of the Final 

Rule in this proceeding. Manufacturers 

would be required to include both cars 

and trucks in the program. Under 

Pathways 1 and 2, EPA proposes that 

manufacturers would be required to 

cover any deficits incurred against the 

baseline levels established by EPA 

during the three year period 2009–2011 

before credits could be carried forward 

into the 2012 model year. For example, 

a deficit in 2011 would have to be 

subtracted from the sum of credits 

earned in 2009 and 2010 before any 

credits could be applied to 2012 (or 

later) model year fleets. EPA is 

proposing this provision to help ensure 

the early credits generated under this 

program are consistent with the credits 

available under the California program 

during these model years. 

Table III.C.5–1 provides the California 

equivalent baselines EPA proposes to 

use as the basis for CO2 credit 

generation under the California-based 

pathways. These are the California GHG 

standards for the model years shown, 

with a 2.0 g/mile adjustment to account 

for the exclusion of N2O and CH4, which 

are included in the California GHG 

standards, but not included in the 

credits program. Manufacturers would 

generate CO2 credits by achieving fleet 

average CO2 levels below these 

baselines. As shown in the table, the 

California-based early credit pathways 

are based on the California vehicle 

categories. Also, the California-based 

baseline levels are not footprint-based, 

but universal levels that all 

manufacturers would use. 

Manufacturers would need to achieve 

fleet levels below those shown in the 

table in order to earn credits. 

TABLE III.C.5–1—CALIFORNIA EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION

Model year 

Passenger cars and light 

trucks with an LVW of 

0–3,750 lbs 

Light trucks with a LVW 

of 3,751 or more and a 

GVWR of up to 8,500 

lbs plus medium-duty 

passenger vehicles 

2009 ......................................................................................................................................... 321 437 

2010 ......................................................................................................................................... 299 418 

2011 ......................................................................................................................................... 265 388 

EPA proposes that manufacturers 

using Pathways 1 or 2 above would use 

year end car and truck sales in each 

category. Although production data is 

used for the program starting in 2012, 

EPA is proposing to use sales data for 

the early credits program in order to 

apportion vehicles by State. This is 

described further below. Manufacturers 

would calculate actual fleet average 

emissions over the appropriate vehicle 

fleet, either for vehicles sold nationwide 

for Pathway 1, or California plus 177 

States sales for Pathway 2. Early CO2

credits would be based on the difference 

between the baseline shown in the table 

above and the actual fleet average 

emissions level achieved. Any early 

A/C credits generated by the 

manufacturer, described below in 

Section III.C.5.b, would be included in 

the fleet average level determination. In 

model year 2009, the California CO2

standards for cars (321 g/mi CO2) are 

only slightly more stringent than the 

2009 CAFE car standard of 27.5 mpg, 

which is approximately equivalent to 

323 g/mi CO2, and the California lighttruck standard (437 g/mi CO2) is less 

stringent than the equivalent CAFE 

standard, recognizing that there are 

some differences between the way the 

California program and the CAFE 

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157See Section 6.6.E, California Environmental 

Protection Agency Air Resources Board, Staff 

Report: Initial Statement of Reasons For Proposed 

Rulemaking, Public Hearing to Consider Adoption 

of Regulations to Control Greenhouse Gas 

Emissions From Motor Vehicles, August 6, 2004. 

158 74 FR 14196, March 30, 2009. 

159 62 FR 31211, June 6, 1997. 

160 62 FR 31212, June 6, 1997. 

program categorize vehicles. Under the 

proposed option, manufacturers would 

have to show that they over comply over 

the entire three model year time period, 

not just the 2009 model year, to generate 

early credits under either Pathways 1, 2 

or 3. A manufacturer cannot use credits 

generated in model year 2009 unless 

they offset any debits from model years 

2010 and 2011. EPA expects that the 

requirement to over comply over the 

entire time period covering these three 

model years should mean that the 

credits that are generated are real and 

are in excess of what would have 

otherwise occurred. However, because 

of the circumstances involving the 2009 

model year, in particular for companies 

with significant truck sales, there is 

some concern that under Pathways 1, 2, 

and 3, there is a potential for a large 

number of credits generated in 2009 

against the California standard, in 

particular for a number of companies 

who have significantly over-achieved on 

CAFE in recent model years. EPA wants 

to avoid a situation where, contrary to 

expectation, some part of the early 

credits generated by a manufacturer are 

in fact not excess, where companies 

could trade such credits to other 

manufacturers, risking a delay in the 

addition of new technology across the 

industry from the 2012 and later EPA 

CO2 standards. For this reason, EPA 

requests comment on the merits of 

prohibiting the trading of model year 

2009 generated early credits between 

firms. 

In addition, for Pathways 1 and 2, 

EPA proposes that manufacturers may 

also include alternative compliance 

credits earned per the California 

alternative compliance program.157

These alternative compliance credits are 

based on the demonstrated use of 

alternative fuels in flex fuel vehicles. As 

with the California program, the credits 

would be available beginning in MY 

2010. Therefore, these early alternative 

compliance credits would be available 

under EPA’s program for the 2010 and 

2011 model years. FFVs would 

otherwise be included in the early credit 

fleet average based on their emissions 

on the conventional fuel. This would 

not apply to EVs and PHEVs. The 

emissions of EVs and PHEVs would be 

determined as described in Section III.E. 

Manufacturers could choose to either 

include their EVs and PHEVs in one of 

the four pathways described in this 

section or under the early advanced 

technology emissions credits described 

below, but not both due to issues of 

credit double counting. 

EPA is also proposing two additional 

early credit pathways manufacturers 

could select. Pathways 3 and 4 

incorporate credits based on overcompliance with CAFE standards for 

vehicles sold outside of California and 

CAA 177 States in MY 2009–2011. 

Pathway 3 would allow manufacturers 

to earn credits as under Pathway 2, plus 

earn CAFE-based credits in other States. 

Credits would not be generated for cars 

sold in California and CAA 177 States 

unless vehicle fleets in those States are 

performing better than the standards 

which otherwise would apply in those 

States, i.e. the baselines shown in Table 

III.C.5–1 above. 

Pathway 4 would be for 

manufacturers choosing to forego 

California-based early credits entirely 

and earn only CAFE-based credits 

outside of California and CAA 177 

States. EPA proposes that manufacturers 

would not be able to include FFV 

credits under the CAFE-based early 

credit pathways since those credits do 

not automatically reflect actual 

reductions in CO2 emissions. 

The proposed baselines for CAFEbased early pathways are provided in 

Table III.C.5–2 below. They are based on 

the CAFE standards for the 2009–2011 

model years. For CAFE standards in 

2009–2011 model years that are 

footprint-based, the baseline would vary 

by manufacturer. Footprint-based 

standards are in effect for the 2011 

model year CAFE standards.158

Additionally, for Reform CAFE truck 

standards, footprint standards are 

optional for the 2009–2010 model years. 

Where CAFE footprint-based standards 

are in effect, manufacturers would 

calculate a baseline using the footprints 

and sales of vehicles outside of 

California and CAA 177 States. The 

actual fleet CO2 performance calculation 

would also only include the vehicles 

sold outside of California and CAA 177 

States, and as mentioned above, may not 

include FFV credits. 

TABLE III.C.5–2—CAFE EQUIVALENT BASELINES CO2 EMISSIONS LEVELS FOR EARLY CREDIT GENERATION

Model year Cars Trucks 

2009 ................................................................... 323 ................................................................... 381.* 

2010 ................................................................... 323 ................................................................... 376.* 

2011 ................................................................... Footprint-based standard ................................. Footprint-based standard. 

* Would be footprint-based standard for manufacturers selecting footprint option under CAFE. 

For the CAFE-based pathways, EPA 

proposes to use the NHTSA car and 

truck definitions that are in place for the 

model year in which credits are being 

generated. EPA understands that the 

NHTSA definitions change starting in 

the 2011 model year, and would 

therefore change part way through the 

early credits program. EPA further 

recognizes that MDPVs are not part of 

the CAFE program until the 2011 model 

year, and therefore would not be part of 

the early credits calculations for 2009– 

2010 under the CAFE-based pathways. 

Pathways 2 through 4 involve 

splitting the vehicle fleet into two 

groups, vehicles sold in California and 

CAA 177 States and vehicles sold 

outside of these States. This approach 

would require a clear accounting of 

location of vehicle sales by the 

manufacturer. EPA believes it will be 

reasonable for manufacturers to 

accurately track sales by State, based on 

its experience with the National Low 

Emissions Vehicle (NLEV) Program. 

NLEV required manufacturers to meet 

separate fleet average standards for 

vehicles sold in two different regions of 

the country.159 As with NLEV, the 

determination would be based on where 

the completed vehicles are delivered as 

a point of first sale, which in most cases 

would be the dealer.160

As noted above, EPA proposes that 

manufacturers choosing to generate 

early credits would select one of the 

four pathways for the entire early 

credits program and would not be able 

to switch among them. EPA proposes 

that manufacturers would submit their 

early credits report when they submit 

their final CAFE report for MY 2011 

(which is required to be submitted no 

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later than 90 days after the end of the 

model year). Manufacturers would have 

until then to decide which pathway to 

select. This would give manufacturers 

enough time to determine which 

pathway works best for them. This 

timing may be necessary in cases where 

manufacturers earn credits in MY 2011 

and need time to assess data and 

prepare an early credits submittal for 

final EPA approval. 

The table below provides a summary 

of the four fleet average-based CO2 early 

credit pathways EPA is proposing. As 

noted above, EPA is concerned with 

potential ‘‘windfall’’ credits and is 

seeking comments on how to best 

ensure the objective of achieving 

surplus, real-world reductions is 

achieved in the design of the credit 

programs. In addition, EPA requests 

comments on the merits of each of these 

pathways. Specifically, EPA requests 

comment on whether or not any of the 

pathways could be eliminated to 

simplify the program without 

diminishing its overall flexibility. For 

example, Pathway 2 may not be 

particularly useful to manufacturers if 

the California/177 State and overall 

national fleets are projected to be 

similar during these model years. EPA 

also requests comment on proposed 

program implementation structure and 

provisions. 

TABLE III.C.5–3—SUMMARY OF PROPOSED EARLY FLEET AVERAGE CO2 CREDIT PATHWAYS

Common Elements ............................................................. —Manufacturers would select a pathway. Once selected, may not switch among 

pathways. 

—All credits subject to 5 year carry-forward restrictions. 

—For Pathways 2–4, vehicles apportioned by State based on point of first sale. 

Pathway 1: California-based Credits for National Fleet. ... —Manufacturers earn credits based on fleet average emissions compared with California equivalent baseline set by EPA. 

—Based on nationwide CO2 sales-weighted fleet average. 

—Based on use of California vehicle categories. 

—FFV alternative compliance credits per California program may be included. 

—Once in the program, manufacturers must make up any deficits that are incurred 

prior to 2012 in order to carry credits forward to 2012 and later. 

Pathway 2: California-based Credits for vehicles sold in 

California plus CAA 177 States.

—Same as Pathway 1, but manufacturers only includes vehicles sold in California 

and CAA 177 States in the fleet average calculation. 

Pathway 3: Pathway 2 plus CAFE-based Credits outside 

of California plus CAA 177 States.

—Manufacturer earns credits as provided by Pathway 2: California-based credits for 

vehicles sold in California plus CAA 177 States, plus: 

—CAFE-based credits allowed for vehicles sold outside of California and CAA 177 

States. 

—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA. 

—CAFE-based credits based on NHTSA car and truck definitions. 

—FFV credits not allowed to be included for CAFE-based credits. 

Pathway 4: Only CAFE-based Credits outside of California plus CAA 177 States.—Manufacturer elects to only earn CAFE-based credits for vehicles sold outside of 

California and CAA 177 States. Earns no California and 177 State credits. 

—For CAFE-based credits, manufacturers earn credits based on fleet average emissions compared with baseline set by EPA. 

—CAFE-based credits based on NHTSA car and truck definitions. 

—FFV credits not allowed to be included for CAFE-based credits. 

b. Early A/C Credits 

EPA proposes that manufacturers 

could earn early A/C credits in MYs 

2009–2011 using the same A/C system 

design-based EPA provisions being 

proposed for MYs commencing in 2012, 

as described in Section III.C.1, above. 

Manufacturers would be able to earn 

early A/C CO2-equivalent credits by 

demonstrating improved A/C system 

performance, for both direct and 

indirect emissions. To earn credits for 

vehicles sold in California and CAA 177 

States, the vehicles would need to be 

included in one of the California-based 

early credit pathways described above 

in III.C.5.a. EPA is proposing this 

constraint in order to avoid credit 

double counting with the California 

program in place in those States, which 

also allows A/C system credits in this 

time frame. Manufacturers would fold 

the A/C credits into the fleet average 

CO2 calculations under the Californiabased pathway. For example, the MY 

2009 California-based program car 

baseline would be 321 g/mile (see Table 

III.C.5–1). If a manufacturer under 

Pathway 1 had a MY 2009 car fleet 

average CO2 level of 320 g/mile and 

then earned an additional 9 g/mile 

CO2-equivalent A/C credit, the 

manufacturers would earn a total of 10 

g/mile of credit. Vehicles sold outside of 

California and 177 States would be 

eligible for the early A/C credits 

whether or not the manufacturers 

participate in other aspects of the early 

credits program. 

c. Early Advanced Technology Vehicle 

Credits 

EPA is proposing to allow early 

advanced technology vehicle credits for 

sales of EVs, PHEVs, and fuel cell 

vehicles. To avoid double-counting, 

manufacturers would not be allowed to 

generate advanced technology credits 

for vehicles they choose to include in 

Pathways 1 through 4 described in 

III.C.5.a, above. EPA proposes to use a 

similar methodology to that proposed 

for MYs 2012 and later, as described in 

Section III.C.3, above. EPA proposes to 

use a multiplier in the range of 1.2 to 

2.0 for all eligible vehicles (i.e., EVs, 

PHEVs, and fuel cells). Manufacturers, 

however, would track the number of 

these vehicles sold in the model years 

2009—2011, and the emissions level of 

the vehicles, rather than a CO2 credit. 

When a manufacturer chooses to use the 

vehicle credits to comply with 2012 or 

later standards, the vehicle counts 

including the multiplier would be 

folded into the CO2 fleet average. For 

example, if a manufacturer sells 1,000 

EVs in MY 2011, and if the final 

multiplier level were 2.0, the 

manufacturer would apply the 

multiplier of 2.0 and then be able to 

include 2,000 vehicles at 0 g/mile in 

their MY 2012 fleet to decrease the fleet 

average for that model year. As with 

other early credits, these early advanced 

technology vehicle credits would be 

tracked by model year (2009, 2010, or 

2011) and would be subject to 5 year 

carry-forward restrictions. Again, 

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manufacturers would not be allowed to 

include the EVs, PHEVs, or fuel cell 

vehicles in the early credit pathways 

discussed above in Section III.C.5.a, 

otherwise the vehicles would be double 

counted. As discussed in Section III.C.3, 

EPA is requesting comment on a 

multiplier in the range of 1.2 to 2.0, 

including a potential phase-down in the 

multiplier by model year 2016, if a 

multiplier near the higher end of this 

range is determined for the final rule. 

This request for comment also extends 

to the potential for early advance 

technology vehicle credits. EPA is also 

requesting comment on the appropriate 

gram/mile metric for EVs and fuel 

cellvehicles, as well as for the EV-only 

contribution for a PHEV. 

d. Early Off-Cycle Credits 

EPA’s proposed off-cycle innovative 

technology credit provisions are 

provided in Section III.C.4. EPA 

requests comment on beginning these 

credits in the 2009–2011 time frame, 

provided manufacturers are able to 

make the necessary demonstrations 

outlined in Section III.C.4, above. 

D. Feasibility of the Proposed CO2

Standards 

This proposal is based on the need to 

obtain significant GHG emissions 

reductions from the transportation 

sector, and the recognition that there are 

cost-effective technologies to achieve 

such reductions in the 2012–2016 time 

frame. As in many prior mobile source 

rulemakings, the decision on what 

standard to set is largely based on the 

effectiveness of the emissions control 

technology, the cost and other impacts 

of implementing the technology, and the 

lead time needed for manufacturers to 

employ the control technology. The 

standards derived from assessing these 

issues are also evaluated in terms of the 

need for reductions of greenhouse gases, 

the degree of reductions achieved by the 

standards, and the impacts of the 

standards in terms of costs, quantified 

benefits, and other impacts of the 

standards. The availability of 

technology to achieve reductions and 

the cost and other aspects of this 

technology are therefore a central focus 

of this rulemaking. 

EPA is taking the same basic approach 

in this rulemaking, although the 

technological problems and solutions 

involved in this rulemaking differ in 

some ways from prior mobile source 

rulemakings. Here, the focus of the 

emissions control technology is on 

reducing CO2 and other greenhouse 

gases. Vehicles combust fuel to perform 

two basic functions: (1) Transport the 

vehicle, its passengers and its contents, 

and (2) operate various accessories 

during the operation of the vehicle such 

as the air conditioner. Technology can 

reduce CO2 emissions by either making 

more efficient use of the energy that is 

produced through combustion of the 

fuel or reducing the energy needed to 

perform either of these functions. 

This focus on efficiency calls for 

looking at the vehicle as an entire 

system. In addition to fuel delivery, 

combustion, and aftertreatment 

technology, any aspect of the vehicle 

that affects the need to produce energy 

must also be considered. For example, 

the efficiency of the transmission 

system, which takes the energy 

produced by the engine and transmits it 

to the wheels, and the resistance of the 

tires to rolling both have major impacts 

on the amount of fuel that is combusted 

while operating the vehicle. The braking 

system, the aerodynamics of the vehicle, 

and the efficiency of accessories, such 

as the air conditioner, all affect how 

much fuel is combusted. 

In evaluating vehicle efficiency, we 

have excluded fundamental changes in 

vehicles’ size and utility. For example, 

we did not evaluate converting 

minivans and SUVs to station wagons, 

converting vehicles with four wheel 

drive to two wheel drive, or reducing 

headroom in order to lower the roofline 

and reduce aerodynamic drag. We have 

limited our assessment of technical 

feasibility and resultant vehicle cost to 

technologies which maintain vehicle 

utility as much as possible. 

Manufacturers may decide to alter the 

utility of the vehicles which they sell in 

response to this rule. Assessing the 

societal cost of such changes is very 

difficult as it involves assessing 

consumer preference for a wide range of 

vehicle features. 

This need to focus on the efficient use 

of energy by the vehicle as a system 

leads to a broad focus on a wide variety 

of technologies that affect almost all the 

systems in the design of a vehicle. As 

discussed below, there are many 

technologies that are currently available 

which can reduce vehicle energy 

consumption. These technologies are 

already being commercially utilized to a 

limited degree in the current light-duty 

fleet. These technologies include hybrid 

technologies that use higher efficiency 

electric motors as the power source in 

combination with or instead of internal 

combustion engines. While already 

commercialized, hybrid technology 

continues to be developed and offers the 

potential for even greater efficiency 

improvements. Finally, there are other 

advanced technologies under 

development, such as lean burn gasoline 

engines, which offer the potential of 

improved energy generation through 

improvements in the basic combustion 

process. In addition, the available 

technologies are not limited to 

powertrain improvements but also 

include mass reduction, electrical 

system efficiencies, and aerodynamic 

improvements. 

The large number of possible 

technologies to consider and the breadth 

of vehicle systems that are affected 

mean that consideration of the 

manufacturer’s design and production 

process plays a major role in developing 

the proposed standards. Vehicle 

manufacturers typically develop many 

different models by basing them on a 

limited number of vehicle platforms. 

The platform typically consists of a 

common vehicle architecture and 

structural components. This allows for 

efficient use of design and 

manufacturing resources. Given the very 

large investment put into designing and 

producing each vehicle model, 

manufacturers typically plan on a major 

redesign for the models approximately 

every 5 years. At the redesign stage, the 

manufacturer will upgrade or add all of 

the technology and make most other 

changes supporting the manufacturer’s 

plans for the next several years, 

including plans related to emissions, 

fuel economy, and safety regulations. 

This redesign often involves a 

package of changes designed to work 

together to meet the various 

requirements and plans for the model 

for several model years after the 

redesign. This often involves significant 

engineering, development, 

manufacturing, and marketing resources 

to create a new product with multiple 

new features. In order to leverage this 

significant upfront investment, 

manufacturers plan vehicle redesigns 

with several model years of production 

in mind. Vehicle models are not 

completely static between redesigns as 

limited changes are often incorporated 

for each model year. This interim 

process is called a refresh of the vehicle 

and generally does not allow for major 

technology changes although more 

minor ones can be done (e.g., small 

aerodynamic improvements, valve 

timing improvements, etc). More major 

technology upgrades that affect multiple 

systems of the vehicle thus occur at the 

vehicle redesign stage and not in the 

time period between redesigns. 

As discussed below, there are a wide 

variety of CO2 reducing technologies 

involving several different systems in 

the vehicle that are available for 

consideration. Many can involve major 

changes to the vehicle, such as changes 

to the engine block and cylinder heads, 

redesign of the transmission and its 

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packaging in the vehicle, changes in 

vehicle shape to improve aerodynamic 

efficiency and the application of 

aluminum in body panels to reduce 

mass. Logically, the incorporation of 

emissions control technologies would 

be during the periodic redesign process. 

This approach would allow 

manufacturers to develop appropriate 

packages of technology upgrades that 

combine technologies in ways that work 

together and fit with the overall goals of 

the redesign. It also allows the 

manufacturer to fit the process of 

upgrading emissions control technology 

into its multi-year planning process, and 

it avoids the large increase in resources 

and costs that would occur if technology 

had to be added outside of the redesign 

process. 

This proposed rule affects five years 

of vehicle production, model years 

2012–2016. Given the now-typical five 

year redesign cycle, nearly all of a 

manufacturer’s vehicles will be 

redesigned over this period. However, 

this assumes that a manufacturer has 

sufficient lead time to redesign the first 

model year affected by this proposed 

rule with the requirements of this 

proposed rule in mind. In fact, the lead 

time available for model year 2012 is 

relatively short. The time between a 

likely final rule and the start of 2013 

model year production is likely to be 

just over two years. At the same time, 

manufacturer product plans indicate 

that they are planning on introducing 

many of the technologies EPA projects 

could be used to show compliance with 

the proposed CO2 standards in both 

2012 and 2013. In order to account for 

the relatively short lead time available 

prior to the 2012 and 2013 model years, 

albeit mitigated by their existing plans, 

EPA has factored this reality into how 

the availability is modeled for much of 

the technology being considered for 

model years 2012–2016 as a whole. If 

the technology to control greenhouse 

gas emissions is efficiently folded into 

this redesign process, then EPA projects 

that 85 percent of each manufacturer’s 

sales will be able to be redesigned with 

many of the CO2 emission reducing 

technologies by the 2016 model year, 

and as discussed below, to reduce 

emissions of HFCs from the air 

conditioner. 

In determining the level of this first 

ever GHG emissions standard under the 

CAA for light-duty vehicles, EPA 

proposes to use an approach that 

accounts for and builds on this redesign 

process. This provides the opportunity 

for several control technologies to be 

incorporated into the vehicle during 

redesign, achieving significant 

emissions reductions from the model at 

one time. This is in contrast to what 

would be a much more costly approach 

of trying to achieve small increments of 

reductions over multiple years by 

adding technology to the vehicle piece 

by piece outside of the redesign process. 

As described below, the vast majority 

of technology required by this proposal 

is commercially available and already 

being employed to a limited extent 

across the fleet. The vast majority of the 

emission reductions which would result 

from this proposed rule would result 

from the increased use of these 

technologies. EPA also believes that this 

proposed rule would encourage the 

development and limited use of more 

advanced technologies, such as PHEVs 

and EVs. 

In developing the proposed standard, 

EPA built on the technical work 

performed by the State of California 

during its development of its statewide 

GHG program. EPA began by evaluating 

a nationwide CAA standard for MY 

2016 that would require the levels of 

technology upgrade, across the country, 

which California standards would 

require for the subset of vehicles sold in 

California under Pavley 1. In essence, 

EPA evaluated the stringency of the 

California Pavley 1 program but for a 

national standard. As mentioned above, 

and as described in detail in Section II.C 

of this preamble and Chapter 3 of the 

Joint TSD, one of the important 

technical documents included in EPA 

and NHTSA’s assessment of vehicle 

technology effectiveness and costs was 

the 2004 NESCCAF report which was 

the technical foundation for California’s 

Pavley 1 standard. However, in order to 

evaluate the impact of standards with 

similar stringency on a national basis to 

the California program EPA chose not to 

evaluate the specific California 

standards for several reasons. First, 

California’s standards are universal 

standards (one for cars and one for 

trucks), while EPA is proposing 

attribute-based standards using vehicle 

footprint. Second, California’s 

definitions of what vehicles are 

classified as cars and which are 

classified as trucks are different from 

those used by NHTSA for CAFE 

purposes and different from EPA’s 

proposed classifications in this notice 

(which harmonizes with the CAFE 

definitions). In addition, there has been 

progress in the refinement of the 

estimation of the effectiveness and cost 

estimation for technologies which can 

be applied to cars and trucks since the 

California analysis in 2004 which could 

lead to different relative stringencies 

between cars and trucks than what 

California determined for its Pavley 1 

program. There have also been 

improvements in the fuel economy and 

CO2 performance of the actual new 

vehicle fleet since California’s 2004 

analysis which EPA wanted to reflect in 

our current assessment. For these 

reasons, EPA developed an assessment 

of an equivalent national new vehicle 

fleet-wide CO2 performance standards 

for model year 2016 which would result 

in the new vehicle fleet in the State of 

California having CO2 performance 

equal to the performance from the 

California Pavley 1 standards. This 

assessment is documented in Chapter 

3.1 of the DRIA. The results of this 

assessment predicts that a national 

light-duty vehicle fleet which adopts 

technology that achieves performance of 

250 g/mile CO2 for model year 2016 

would result in vehicles sold in 

California that would achieve the CO2

performance equivalent to the Pavley 1 

standards. 

EPA then analyzed a level of 250 

g/mi CO2 in 2016 using the OMEGA 

model, and the car and truck footprint 

curves relative stringency discussed in 

Section II to determine what technology 

would be needed to achieve a fleet wide 

average of 250 g/mi CO2. As discussed 

later in this section we believe this level 

of technology application to the lightduty vehicle fleet can be achieved in 

this time frame, that such standards will 

produce significant reductions in GHG 

emissions, and that the costs for both 

the industry and the costs to the 

consumer are reasonable. EPA also 

developed standards for the model years 

2012 through 2015 that lead up to the 

2016 level. 

EPA’s independent technical 

assessment of the technical feasibility of 

the proposed MY2012–2016 standards 

is described below. EPA has also 

evaluated a set of alternative standards 

for these model years, one that is more 

stringent than the proposed standards 

and one that is less stringent. The 

technical feasibility of these alternative 

standards is discussed at the end of this 

section. 

Evaluating the feasibility of these 

standards primarily includes identifying 

available technologies and assessing 

their effectiveness, cost, and impact on 

relevant aspects of vehicle performance 

and utility. The wide number of 

technologies which are available and 

likely to be used in combination 

requires a more sophisticated 

assessment of their combined cost and 

effectiveness. An important factor is 

also the degree that these technologies 

are already being used in the current 

vehicle fleet and thus, unavailable for 

use to improve energy efficiency beyond 

current levels. Finally, the challenge for 

manufacturers to design the technology 

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into their products, and the appropriate 

lead time needed to employ the 

technology over the product line of the 

industry must be considered. 

Applying these technologies 

efficiently to the wide range of vehicles 

produced by various manufacturers is a 

challenging task. In order to assist in 

this task, EPA has developed a 

computerized model called the 

Optimization Model for reducing 

Emissions of Greenhouse gases from 

Automobiles (OMEGA) model. Broadly, 

the model starts with a description of 

the future vehicle fleet, including 

manufacturer, sales, base CO2

emissions, footprint and the extent to 

which emission control technologies are 

already employed. For the purpose of 

this analysis, over 200 vehicle platforms 

were used to capture the important 

differences in vehicle and engine design 

and utility of future vehicle sales of 

roughly 16 million units in the 2016 

timeframe. The model is then provided 

with a list of technologies which are 

applicable to various types of vehicles, 

along with their cost and effectiveness 

and the percentage of vehicle sales 

which can receive each technology 

during the redesign cycle of interest. 

The model combines this information 

with economic parameters, such as fuel 

prices and a discount rate, to project 

how various manufacturers would apply 

the available technology in order to 

meet various levels of emission control. 

The result is a description of which 

technologies are added to each vehicle 

platform, along with the resulting cost. 

While OMEGA can apply technologies 

which reduce CO2 emissions and HFC 

refrigerant emissions associated with air 

conditioner use, this task is currently 

handled outside of the OMEGA model. 

The model can be set to account for 

various types of compliance flexibilities, 

such as FFV credits. 

EPA invites comment on all aspects of 

this feasibility assessment. Both the 

OMEGA model and its inputs have been 

placed in the docket to this proposed 

rule and available for review. 

The remainder of this section 

describes the technical feasibility 

analysis in greater detail. Section III.D.1 

describes the development of our 

projection of the MY 2012–2016 fleet in 

the absence of this proposed rule. 

Section III.D.2 describes our estimates of 

the effectiveness and cost of the control 

technologies available for application in 

the 2012–2016 timeframe. Section 

III.D.3 combines these technologies into 

packages likely to be applied at the 

same time by a manufacturer. In this 

section, the overall effectiveness of the 

technology packages vis-a`-vis their 

effectiveness when combined 

individually is described. Section III.D.4 

describes the process which 

manufacturers typically use to apply 

new technology to their vehicles. 

Section III.D.5 describes EPA’s OMEGA 

model and its approach to estimating 

how manufacturers would add 

technology to their vehicles in order to 

comply with CO2 emission standards. 

Section III.D.6 presents the results of the 

OMEGA modeling, namely the level of 

technology added to manufacturers’ 

vehicles and its cost. Section III.D.7 

discusses the feasibility of the 

alternative 4-percent-per-year and 6- 

percent-per-year standards. Further 

detail on all of these issues can be found 

in EPA and NHTSA’s draft Joint 

Technical Support Document as well as 

EPA’s draft Regulatory Impact Analysis. 

1. How Did EPA Develop a Reference 

Vehicle Fleet for Evaluating Further CO2

Reductions? 

In order to calculate the impacts of 

this proposed regulation, it is necessary 

to project the GHG emissions 

characteristics of the future vehicle fleet 

absent this proposed regulation. This is 

called the ‘‘reference’’ fleet. EPA 

developed this reference fleet by 

determining the characteristics of a 

specific model year (in this case, 2008) 

of vehicles, called the baseline fleet, and 

then projecting what changes if any 

would be made to these vehicles to 

comply with the MY2011 CAFE 

standards. Thus, the MY 2008 fleet is 

our ‘‘baseline fleet,’’ and the projection 

of the baseline to MY 2011–2016 is 

called the ‘‘reference fleet.’’ 

EPA used 2008 model year vehicles as 

the basis for its baseline fleet. 2008 

model year is the most recent model 

year for which data is publicly 

available. Sources of data for the 

baseline include the EPA vehicle 

certification data, Ward’s Automotive 

Group data, Motortrend.com, 

Edmunds.com, manufacturer product 

plans, and other sources to a lesser 

extent (such as articles about specific 

vehicles) revealed from Internet search 

engine research. EPA then projects this 

fleet out to the 2016 MY, taking into 

account factors such as changes in 

overall sales volume. Section II.B 

describes the development of the EPA 

reference fleet, and further details can 

be found in Section II.B of this preamble 

and Chapter 1 of the Draft Joint TSD. 

The light-duty vehicle market is 

currently in a state of flux due to the 

volatility in fuel prices over the past 

several years and the current economic 

downturn. These factors have changed 

the relative sales of the various types of 

light-duty vehicles marketed, as well as 

total sales volumes. EPA and NHTSA 

desire to account for these changes to 

the degree possible in our forecast of the 

make-up of the future vehicle fleet. EPA 

wants to include improvements in fuel 

economy associated with the existing 

CAFE program. It is possible that 

manufacturers could increase fuel 

economy beyond the level of the 2011 

MY CAFE standards for marketing 

purposes. However, it is difficult to 

separate fuel economy improvements in 

those years for marketing purposes from 

those designed to facilitate compliance 

with anticipated CAFE or CO2 emission 

standards. Thus, EPA limits fuel 

economy improvements in the reference 

fleet to those projected to result from the 

existing CAFE standards. The addition 

of technology to the baseline fleet so 

that it complies with the MY 2011 CAFE 

standards is described later in Section 

III.D.4, as this uses the same 

methodology used to project compliance 

with the proposed CO2 emission 

standards. In summary, the reference 

fleet represents vehicle characteristics 

and sales in the 2012 and later model 

years absent this proposed rule. 

Technology is then added to these 

vehicles in order to reduce CO2

emissions to achieve compliance with 

the proposed CO2 standards. EPA did 

not factor in any changes to vehicle 

characteristics or sales in projecting 

manufacturers’ compliance with this 

proposal. 

After the reference fleet is created, the 

next step aggregates vehicle sales by a 

combination of manufacturer, vehicle 

platform, and engine design. As 

discussed in Section III.D.4 below, 

manufacturers implement major design 

changes at vehicle redesign and tend to 

implement these changes across a 

vehicle platform. Because the cost of 

modifying the engine depends on the 

valve train design (such as SOHC, 

DOHC, etc.), the number of cylinders 

and in some cases head design, the 

vehicle sales are broken down beyond 

the platform level to reflect relevant 

engine differences. The vehicle 

groupings are shown in Table III.D.1–1. 

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TABLE III.D.1–1—VEHICLE GROUPINGS a

Vehicle description Vehicle 

type Vehicle description Vehicle type 

Large SUV (Car) V8+ OHV .................................................. 13 Subcompact Auto I4 ............................................................. 1 

Large SUV (Car) V6 4v ........................................................ 16 Large Pickup V8+ DOHC ..................................................... 19 

Large SUV (Car) V6 OHV .................................................... 12 Large Pickup V8+ SOHC 3v ................................................ 14 

Large SUV (Car) V6 2v SOHC ............................................. 9 Large Pickup V8+ OHV ........................................................ 13 

Large SUV (Car) I4 and I5 ................................................... 7 Large Pickup V8+ SOHC ..................................................... 10 

Midsize SUV (Car) V6 2v SOHC .......................................... 8 Large Pickup V6 DOHC ....................................................... 18 

Midsize SUV (Car) V6 S/DOHC 4v ...................................... 5 Large Pickup V6 OHV .......................................................... 12 

Midsize SUV (Car) I4 ............................................................ 7 Large Pickup V6 SOHC 2v .................................................. 11 

Small SUV (Car) V6 OHV ..................................................... 12 Large Pickup I4 S/DOHC ..................................................... 7 

Small SUV (Car) V6 S/DOHC .............................................. 4 Small Pickup V6 OHV .......................................................... 12 

Small SUV (Car) I4 ............................................................... 3 Small Pickup V6 2v SOHC .................................................. 8 

Large Auto V8+ OHV ............................................................ 13 Small Pickup I4 .................................................................... 7 

Large Auto V8+ SOHC ......................................................... 10 Large SUV V8+ DOHC ........................................................ 17 

Large Auto V8+ DOHC, 4v SOHC ....................................... 6 Large SUV V8+ SOHC 3v ................................................... 14 

Large Auto V6 OHV .............................................................. 12 Large SUV V8+ OHV ........................................................... 13 

Large Auto V6 SOHC 2/3v ................................................... 5 Large SUV V8+ SOHC ........................................................ 10 

Midsize Auto V8+ OHV ......................................................... 13 Large SUV V6 S/DOHC 4v .................................................. 16 

Midsize Auto V8+ SOHC ...................................................... 10 Large SUV V6 OHV ............................................................. 12 

Midsize Auto V7+ DOHC, 4v SOHC .................................... 6 Large SUV V6 SOHC 2v ..................................................... 9 

Midsize Auto V6 OHV ........................................................... 12 Large SUV I4/ ...................................................................... 7 

Midsize Auto V6 2v SOHC ................................................... 8 Midsize SUV V6 OHV .......................................................... 12 

Midsize Auto V6 S/DOHC 4v ................................................ 5 Midsize SUV V6 2v SOHC .................................................. 8 

Midsize Auto I4 ..................................................................... 3 Midsize SUV V6 S/DOHC 4v ............................................... 5 

Compact Auto V7+ S/DOHC ................................................ 6 Midsize SUV I4 S/DOHC ..................................................... 7 

Compact Auto V6 OHV ......................................................... 12 Small SUV V6 OHV ............................................................. 12 

Compact Auto V6 S/DOHC 4v ............................................. 4 Minivan V6 S/DOHC ............................................................ 16 

Compact Auto I5 ................................................................... 7 Minivan V6 OHV .................................................................. 12 

Compact Auto I4 ................................................................... 2 Minivan I4 ............................................................................. 7 

Subcompact Auto V8+ OHV ................................................. 13 Cargo Van V8+ OHV ........................................................... 13 

Subcompact Auto V8+ S/DOHC ........................................... 6 Cargo Van V8+ SOHC ......................................................... 10 

Subcompact Auto V6 2v SOHC ........................................... 8 Cargo Van V6 OHV ............................................................. 12 

Subcompact Auto I5/V6 S/DOHC 4v .................................... 4 ............................................................................................... ................

a I4 = 4 cylinder engine, I5 = 5 cylinder engine, V6, V7, and V8 = 6, 7, and 8 cylinder engines, respectively, DOHC = Double overhead cam, 

SOHC = Single overhead cam, OHV = Overhead valve, v = number of valves per cylinder, ‘‘/’’ = and, ‘‘+’’ = or larger. 

As mentioned above, the second 

factor which needs to be considered in 

developing a reference fleet against 

which to evaluate the impacts of this 

proposed rule is the impact of the 2011 

MY CAFE standards, which were 

published earlier this year. Since the 

vehicles which comprise the above 

reference fleet are those sold in the 2008 

MY, when coupled with our sales 

projections, they do not necessarily 

meet the 2011 MY CAFE standards. 

The levels of the 2011 MY CAFE 

standards are straightforward to apply to 

future sales fleets, as is the potential 

fine-paying flexibility afforded by the 

CAFE program (i.e., $55 per mpg of 

shortfall). However, projecting some of 

the compliance flexibilities afforded by 

EISA and the CAFE program are less 

clear. Two of these compliance 

flexibilities are relevant to EPA’s 

analysis: (1) The credit for FFVs, and (2) 

the limit on the transferring of credits 

between car and truck fleets. The FFV 

credit is limited to 1.2 mpg in 2011 and 

EISA gradually reduces this credit, to 

1.0 mpg in 2015 and eventually to zero 

in 2020. In contrast, the limit on car 

truck transfer is limited to 1.0 mpg in 

2011, and EISA increases this to 1.5 

mpg beginning in 2015 and then to 2.0 

mpg beginning in 2020. The question 

here is whether to hold the 2011 MY 

CAFE provisions constant in the future 

or incorporate the changes in the FFV 

credit and car-truck credit trading limits 

contained in EISA. 

EPA decided to hold the 2011 MY 

limits on FFV credit and car-truck credit 

trading constant in projecting the fuel 

economy and CO2 emission levels of 

vehicles in our reference case. This 

approach treats the changes in the FFV 

credit and car-truck credit trading 

provisions consistently with the other 

EISA-mandated changes in the CAFE 

standards themselves. All EISA 

provisions relevant to 2011 MY vehicles 

are reflected in our reference case fleet, 

while all post-2011 MY provisions are 

not. Practically, relative to the 

alternative, this increases both the cost 

and benefit of the proposed standards. 

In our analysis of this proposed rule, 

any quantified benefits from the 

presence of FFVs in the fleet are not 

considered. Thus, the only impact of the 

FFV credit is to reduce onroad fuel 

economy. By assuming that the FFV 

credit stays at 1.2 mpg in the future 

absent this rule, the assumed level of 

onroad fuel economy that would occur 

absent this proposal is reduced. As this 

proposal eliminates the FFV credit 

starting in 2016, the net result is to 

increase the projected level of fuel 

savings from our proposed standards. 

Similarly, the higher level of FFV credit 

reduces projected compliance cost for 

manufacturers to meet the 2011 MY 

standards in our reference case. This 

increases the projected cost of meeting 

the proposed 2012 and later standards. 

As just implied, EPA needs to project 

the technology (and resultant costs) 

required for the 2008 MY vehicles to 

comply with the 2011 MY CAFE 

standards in those cases where they do 

not automatically do so. The technology 

and costs are projected using the same 

methodology that projects compliance 

with the proposed 2012 and later CO2

standards. The description of this 

process is described in the following 

four sections. 

A more detailed description of the 

methodology used to develop these 

sales projections can be found in the 

Draft Joint TSD. Detailed sales 

projections by model year and 

manufacturer can also be found in the 

TSD. EPA requests comments on both 

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161This represents 50% improvement in leakage 

and thus 50% of the A/C leakage impact potential 

compared to a maximum of 15 g/mi credit that can 

be achieved through the incorporation of a low very 

GWP refrigerant. 

the methodology used to develop the 

reference fleet, as well as the 

characteristics of the reference fleet. 

2. What Are the Effectiveness and Costs 

of CO2-Reducing Technologies? 

EPA and NHTSA worked together to 

jointly develop information on the 

effectiveness and cost of the CO2- 

reducing technologies, and fuel 

economy-improving technologies, other 

than A/C related control technologies. 

This joint work is reflected in Chapter 

3 of the Draft Joint TSD and in Section 

II of this preamble. A summary of the 

effectiveness and cost of A/C related 

technology is contained here. For more 

detailed information on the 

effectiveness and cost of A/C related 

technology, please refer to Section III.C 

of this preamble and Chapter 2 of EPA’s 

DRIA. 

A/C improvements are an integral part 

of EPA’s technology analysis and have 

been included in this section along with 

the other technology options. While 

discussed in Section III.C as a credit 

opportunity, air conditioning-related 

improvements are included in Table 

III.D.2–1.because A/C improvements are 

a very cost-effective technology at 

reducing CO2 (or CO2-equivalent) 

emissions. EPA expects most 

manufacturers will choose to use AC 

improvement credit opportunities as a 

strategy for meeting compliance with 

the CO2 standards. Note that the costs 

shown in Table III.D.2–1 do not include 

maintenance savings that would be 

expected from the new AC systems. 

Further, EPA does not include ACrelated maintenance savings in our cost 

and benefit analysis presented in 

Section III.H. EPA discusses the likely 

maintenance savings in Chapter 2 of the 

DRIA and requests comment on that 

discussion because we may include 

maintenance savings in the final rule 

and would like to have the best 

information available in order to do so. 

The EPA approximates that the level of 

the credits earned will increase from 

2012 to 2016 as more vehicles in the 

fleet are redesigned. The penetrations 

and average levels of credit are 

summarized in Table III.D.2–2, though 

the derivation of these numbers (and the 

breakdown of car vs. truck credits) is 

described in the DRIA. As demonstrated 

in the IMAC study (and described in 

Section III.C as well as the DRIA), these 

levels are feasible and achievable with 

technologies that are available and costeffective today. 

These improvements are categorized 

as either leakage reduction, including 

use of alternative refrigerants, or system 

efficiency improvements. Unlike the 

majority of the technologies described 

in this section, A/C improvements will 

not be demonstrated in the test cycles 

used to quantify CO2 reductions in this 

proposal. As described earlier, for this 

analysis A/C-related CO2 reductions are 

handled outside of OMEGA model and 

therefore their CO2 reduction potential 

is expressed in grams per mile rather 

than a percentage used by the OMEGA 

model. See Section III.C for the method 

by which potential reductions are 

calculated or measured. Further 

discussion of the technological basis for 

these improvements is included in 

Chapter 2 of the DRIA. 

TABLE III.D.2–1—TOTAL CO2 REDUCTION POTENTIAL AND 2016 COST FOR A/C RELATED TECHNOLOGIES

FOR ALL VEHICLE CLASSES

[Costs in 2007 dollars] 

CO2 reduction 

potential 

Incremental 

compliance costs 

A/C refrigerant leakage reduction ................................................................................................................... 7.5 g/mi 161 ....... $17 

A/C efficiency improvements .......................................................................................................................... 5.7 g/mi ............. 53 

TABLE III.D.2–2 A/C RELATED TECHNOLOGY PENETRATION AND CREDIT

LEVELS EXPECTED TO BE EARNED

Technology 

penetration 

(Percent) 

Average 

credit 

over 

entire 

fleet 

2012 .......... 25 3.1 

2013 .......... 40 5.0 

2014 .......... 60 7.5 

2015 .......... 80 10.0 

2016 .......... 85 10.6 

3. How Can Technologies Be Combined 

into ‘‘Packages’’ and What Is the Cost 

and Effectiveness of Packages? 

Individual technologies can be used 

by manufacturers to achieve 

incremental CO2 reductions. However, 

as mentioned in Section III.D.1, EPA 

believes that manufacturers are more 

likely to bundle technologies into 

‘‘packages’’ to capture synergistic 

aspects and reflect progressively larger 

CO2 reductions with additions or 

changes to any given package. In 

addition, manufacturers would typically 

apply new technologies in packages 

during model redesigns—which occur 

once roughly every five years—rather 

than adding new technologies one at a 

time on an annual or biennial basis. 

This way, manufacturers can more 

efficiently make use of their redesign 

resources and more effectively plan for 

changes necessary to meet future 

standards. 

Therefore, the approach taken here is 

to group technologies into packages of 

increasing cost and effectiveness. EPA 

determined that 19 different vehicle 

types provided adequate representation 

to accurately model the entire fleet. This 

was the result of analyzing the existing 

light duty fleet with respect to vehicle 

size and powertrain configurations. All 

vehicles, including cars and trucks, 

were first distributed based on their 

relative size, starting from compact cars 

and working upward to large trucks. 

Next, each vehicle was evaluated for 

powertrain, specifically the engine size, 

I4, V6, and V8, and finally by the 

number of valves per cylinder. Note that 

each of these 19 vehicle types was 

mapped into one of the five classes of 

vehicles mentioned in Section III.D.2. 

While the five classes provide adequate 

representation for the cost basis 

associated with most technology 

application, they do not adequately 

account for all existing vehicle 

attributes such as base vehicle 

powertrain configuration and mass 

reduction. As an example, costs and 

effectiveness estimates for engine 

friction reduction for the small car class 

were used to represent cost and 

effectiveness for three vehicle types: 

Subcompact cars, compact cars, and 

small multi-purpose vehicles (MPV) 

equipped with a 4-cylinder engine, 

however the mass reduction associated 

for each of these vehicle types was 

based on the vehicle type salesweighted average. In another example, a 

vehicle type for V8 single overhead cam 

3-valve engines was created to properly 

account for the incremental cost in 

moving to a dual overhead cam 4-valve 

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49544 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

162When making reference to low friction 

lubricants, the technology being referred to is the 

engine changes and possible durability testing that would be done to accommodate the low friction 

lubricants, not the lubricants themselves. 

configuration. Note also that these 19 

vehicle types span the range of vehicle 

footprints—smaller footprints for 

smaller vehicles and larger footprints for 

larger vehicles—which serve as the 

basis for the standards proposed in this 

rule. A complete list of vehicles and 

their associated vehicle types is shown 

above in Table III.D.1–1. 

Within each of the 19 vehicle types 

multiple technology packages were 

created in increasing technology content 

and, hence, increasing effectiveness. 

Important to note is that the effort in 

creating the packages attempted to 

maintain a constant utility for each 

package as compared to the baseline 

package. As such, each package is meant 

to provide equivalent driver-perceived 

performance to the baseline package. 

The initial packages represent what a 

manufacturer will most likely 

implement on all vehicles, including 

low rolling resistance tires, low friction 

lubricants, engine friction reduction, 

aggressive shift logic, early torque 

converter lock-up, improved electrical 

accessories, and low drag brakes.162

Subsequent packages include advanced 

gasoline engine and transmission 

technologies such as turbo/downsizing, 

GDI, and dual-clutch transmission. The 

most technologically advanced packages 

within a segment included HEV, PHEV 

and EV designs. The end result being a 

list of several packages for each of 19 

different vehicle types from which a 

manufacturer could choose in order to 

modify its fleet such that compliance 

could be achieved. 

Before using these technology 

packages as inputs to the OMEGA 

model, the cost and effectiveness for the 

package was calculated. The first step— 

mentioned briefly above—was to apply 

the scaling class for each technology 

package and vehicle type combination. 

The scaling class establishes the cost 

and effectiveness for each technology 

with respect to the vehicle size or type. 

The Large Car class was provided as an 

example in Section III.D.2. Additional 

classes include Small Car, Minivan, 

Small Truck, and Large Truck and each 

of the 19 vehicle types was mapped into 

one of those five classes. In the next 

step, the cost for a particular technology 

package, was determined as the sum of 

the costs of the applied technologies. 

The final step, determination of 

effectiveness, requires greater care due 

to the synergistic effects mentioned in 

Section III.D.2. This step is described 

immediately below. 

Usually, the benefits of the engine and 

transmission technologies can be 

combined multiplicatively. For 

example, if an engine technology 

reduces CO2 emissions by five percent 

and a transmission technology reduces 

CO2 emissions by four percent, the 

benefit of applying both technologies is 

8.8 percent (100%¥(100%¥4%) * 

(100%¥5%)). In some cases, however, 

the benefit of the transmission-related 

technologies overlaps with many of the 

engine technologies. This occurs 

because the primary goal of most of the 

transmission technologies is to shift 

operation of the engine to more efficient 

locations on the engine map. Some of 

the engine technologies have the same 

goal, such as cylinder deactivation. In 

order to account for this overlap and 

avoid over-estimating emissions 

reduction effectiveness, EPA has 

developed a set of adjustment factors 

associated with specific pairs of engine 

and transmission technologies. 

The various transmission technologies 

are generally mutually exclusive. As 

such, the effectiveness of each 

transmission technology generally 

supersedes each other. For example, the 

9.5–14.5 percent reduction in CO2

emissions associated with the 

automated manual transmission 

includes the 4.5–6.5 percent benefit of 

a 6-speed automatic transmission. 

Exceptions are aggressive shift logic and 

early torque converter lock-up. The 

former can be applied to any vehicle 

and the latter can be applied to any 

vehicle with an automatic transmission. 

EPA has chosen to use an engineering 

approach known as the lumpedparameter technique to determine these 

adjustment factors. The results from this 

approach were then applied directly to 

the vehicle packages. The lumpedparameter technique is well 

documented in the literature, and the 

specific approach developed by EPA is 

detailed in Chapter 3 of the Draft Joint 

TSD. 

Table III.D.3–1 presents several 

examples of the reduction in the 

effectiveness of technology pairs. A 

complete list and detailed discussion of 

these synergies is presented in Chapter 

3 of the Draft Joint TSD. 

TABLE III.D.3–1—REDUCTION IN EFFECTIVENESS FOR SELECTED TECHNOLOGY PAIRS

Engine technology Transmission technology 

Reduction in 

combined 

effectiveness 

(percent) 

Intake cam phasing .................................................................. 5 speed automatic ................................................................... 0.5 

Coupled cam phasing .............................................................. 5 speed automatic ................................................................... 0.5 

Coupled cam phasing .............................................................. Aggressive shift logic .............................................................. 0.5 

Cylinder deactivation ................................................................ 5 speed automatic ................................................................... 1.0 

Cylinder deactivation ................................................................ Aggressive shift logic .............................................................. 0.5 

Table III.D.3–2 presents several 

examples of the CO2-reducing 

technology vehicle packages used in the 

OMEGA model for the large car class. 

Similar packages were generated for 

each of the 19 vehicle types and the 

costs and effectiveness estimates for 

each of those packages are discussed in 

detail in Chapter 3 of the Draft Joint 

TSD. 

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TABLE III.D.3–2—CO2 REDUCING TECHNOLOGY VEHICLE PACKAGES FOR A LARGE CAR EFFECTIVENESS AND COSTS IN

2016 

[Costs in 2007 dollars] 

Engine 

technology 

Transmission 

technology 

Additional 

technology 

CO2

reduction 

Package 

cost 

3.3L V6 .............................................. 4 speed automatic ............................ None ................................................. Baseline 

3.0L V6 + GDI + CCP ....................... 6 speed automatic ............................ 3% Mass Reduction ......................... 17.9% $1,022 

3.0L V6 + GDI + CCP + Deac .......... 6 speed automatic ............................ 5% Mass Reduction ......................... 20.6 1,280 

3.0L V6 + GDI + CCP + Deac .......... 6 speed DCT .................................... 10% Mass Reduction Start-Stop ...... 34.2 2,108 

2.2L I4 + GDI + Turbo + DCP .......... 6 speed DCT .................................... 10% Mass Reduction Start-Stop ...... 34.3 2,245 

4. Manufacturers’ Application of 

Technology 

Vehicle manufacturers often 

introduce major product changes 

together, as a package. In this manner 

the manufacturers can optimize their 

available resources, including 

engineering, development, 

manufacturing and marketing activities 

to create a product with multiple new 

features. In addition, manufacturers 

recognize that a vehicle will need to 

remain competitive over its intended 

life, meet future regulatory 

requirements, and contribute to a 

manufacturer’s CAFE requirements. 

Furthermore, automotive manufacturers 

are largely focused on creating vehicle 

platforms to limit the development of 

entirely new vehicles and to realize 

economies of scale with regard to 

variable cost. In very limited cases, 

manufacturers may implement an 

individual technology outside of a 

vehicle’s redesign cycle. In following 

with these industry practices, EPA has 

created a set of vehicle technology 

packages that represent the entire light 

duty fleet. 

EPA has historically allowed 

manufacturers of new vehicles or 

nonroad equipment to phase in 

available emission control technology 

over a number of years. Examples of this 

are EPA’s Tier 2 program for cars and 

light trucks and its 2007 and later PM 

and NOX emission standards for heavyduty vehicles. In both of these rules, the 

major modifications expected from the 

rules were the addition of exhaust 

aftertreatment control technologies. 

Some changes to the engine were 

expected as well, but these were not 

expected to affect engine size, packaging 

or performance. The CO2 reduction 

technologies described above 

potentially involve much more 

significant changes to car and light truck 

designs. Many of the engine 

technologies involve changes to the 

engine block and heads. The 

transmission technologies could change 

the size and shape of the transmission 

and thus, packaging. Improvements to 

aerodynamic drag could involve body 

design and therefore, the dies used to 

produce body panels. Changes of this 

sort potentially involve new capital 

investment and the obsolescence of 

existing investment. 

At the same time, vehicle designs are 

not static, but change in major ways 

periodically. The manufacturers’ 

product plans indicate that vehicles are 

usually redesigned every 5 years on 

average. Vehicles also tend to receive a 

more modest ‘‘refresh’’ between major 

redesigns, as discussed above. Because 

manufacturers are already changing 

their tooling, equipment and designs at 

these times, further changes to vehicle 

design at these times involve a 

minimum of stranded capital 

equipment. Thus, the timing of any 

major technological changes is projected 

to coincide with changes that 

manufacturers would already tend to be 

making to their vehicles. This approach 

effectively avoids the need to quantify 

any costs associated with discarding 

equipment, tooling, emission and safety 

certification, etc. when CO2-reducing 

equipment is incorporated into a 

vehicle. 

This proposed rule affects five years 

of vehicle production, model years 

2012–2016. Given the now-typical fiveyear redesign cycle, nearly all of a 

manufacturer’s vehicles will be 

redesigned over this period. However, 

this assumes that a manufacturer has 

sufficient lead time to redesign the first 

model year affected by this proposed 

rule with the requirements of this 

proposed rule in mind. In fact, the lead 

time available for model year 2012 is 

relatively short. The time between a 

likely final rule and the start of 2013 

model year production is likely to be 

just over two years. At the same time, 

the manufacturer product plans indicate 

that they are planning on introducing 

many of the technologies projected to be 

required by this proposed rule in both 

2012 and 2013. In order to account for 

the relatively short lead time available 

prior to the 2012 and 2013 model years, 

albeit mitigated by their existing plans, 

EPA projects that only 85 percent of 

each manufacturer’s sales will be able to 

be redesigned with major CO2 emissionreducing technologies by the 2016 

model year. Less intrusive technologies 

can be introduced into essentially all a 

manufacturer’s sales. This resulted in 

three levels of technology penetration 

caps, by manufacturer. Common 

technologies (e.g., low friction lubes, 

aerodynamic improvements) had a 

penetration cap of 100%. More 

advanced powertrain technologies (e.g., 

stoichiometric GDI, turbocharging) had 

a penetration cap of 85%. The most 

advanced technologies considered in 

this analysis (e.g., diesel engines, as 

well as IMA, powersplit and 2-mode 

hybrids) had a 15% penetration cap. 

5. How Is EPA Projecting That a 

Manufacturer Would Decide Between 

Options To Improve CO2 Performance 

To Meet a Fleet Average Standard? 

There are many ways for a 

manufacturer to reduce CO2-emissions 

from its vehicles. A manufacturer can 

choose from a myriad of CO2 reducing 

technologies and can apply one or more 

of these technologies to some or all of 

its vehicles. Thus, for a variety of levels 

of CO2 emission control, there are an 

almost infinite number of technology 

combinations which produce the 

desired CO2 reduction. EPA has created 

a new vehicle model, the Optimization 

Model for Emissions of Greenhouse 

gases from Automobiles (OMEGA) in 

order to make a reasonable estimate of 

how manufacturers will add 

technologies to vehicles in order to meet 

a fleet-wide CO2 emissions level. EPA 

has described OMEGA’s specific 

methodologies and algorithms in a 

memo to the docket for this rulemaking 

(Docket EPA–HQ–OAR–2009–0472). 

The OMEGA model utilizes four basic 

sets of input data. The first is a 

description of the vehicle fleet. The key 

pieces of data required for each vehicle 

are its manufacturer, CO2 emission 

level, fuel type, projected sales and 

footprint. The model also requires that 

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each vehicle be assigned to one of the 

19 vehicle types, which tells the model 

which set of technologies can be applied 

to that vehicle. (For a description of 

how the 19 vehicle types were created, 

reference Section III.D.3.) In addition, 

the degree to which each vehicle 

already reflects the effectiveness and 

cost of each available technology must 

also be input. This avoids the situation, 

for example, where the model might try 

to add a basic engine improvement to a 

current hybrid vehicle. Except for this 

type of information, the development of 

the required data regarding the reference 

fleet was described in Section III.D.1 

above and in Chapter 1 of the Draft Joint 

TSD. 

The second type of input data used by 

the model is a description of the 

technologies available to manufacturers, 

primarily their cost and effectiveness. 

Note that the five vehicle classes are not 

explicitly used by the model, rather the 

costs and effectiveness associated with 

each vehicle package is based on the 

associated class. This information was 

described in Sections III.D.2 and III.D.3 

above as well as Chapter 3 of the Draft 

Joint TSD. In all cases, the order of the 

technologies or technology packages for 

a particular vehicle type is determined 

by the model user prior to running the 

model. Several criteria can be used to 

develop a reasonable ordering of 

technologies or packages. These are 

described in the Draft Joint TSD. 

The third type of input data describes 

vehicle operational data, such as annual 

scrap rates and mileage accumulation 

rates, and economic data, such as fuel 

prices and discount rates. These 

estimates are described in Section II.F 

above, Section III.H below and Chapter 

4 of the Draft Joint TSD. 

The fourth type of data describes the 

CO2 emission standards being modeled. 

These include the CO2 emission 

equivalents of the 2011 MY CAFE 

standards and the proposed CO2

standards for 2016. As described in 

more detail below, the application of 

A/C technology is evaluated in a 

separate analysis from those 

technologies which impact CO2

emissions over the 2-cycle test 

procedure. Thus, for the percent of 

vehicles that are projected to achieve 

A/C related reductions, the CO2 credit 

associated with the projected use of 

improved A/C systems is used to adjust 

the proposed CO2 standard which 

would be applicable to each 

manufacturer to develop a target for CO2

emissions over the 2-cycle test which is 

assessed in our OMEGA modeling. 

As mentioned above for the market 

data input file utilized by OMEGA, 

which characterizes the vehicle fleet, 

our modeling must and does account for 

the fact that many 2008 MY vehicles are 

already equipped with one or more of 

the technologies discussed in Section 

III.D.2 above. Because of the choice to 

apply technologies in packages, and 

2008 vehicles are equipped with 

individual technologies in a wide 

variety of combinations, accounting for 

the presence of specific technologies in 

terms of their proportion of package cost 

and CO2 effectiveness requires careful, 

detailed analysis. The first step in this 

analysis is to develop a list of individual 

technologies which are either contained 

in each technology package, or would 

supplant the addition of the relevant 

portion of each technology package. An 

example would be a 2008 MY vehicle 

equipped with variable valve timing and 

a 6-speed automatic transmission. The 

cost and effectiveness of variable valve 

timing would be considered to be 

already present for any technology 

packages which included the addition 

of variable valve timing or technologies 

which went beyond this technology in 

terms of engine related CO2 control 

efficiency. An example of a technology 

which supplants several technologies 

would be a 2008 MY vehicle which was 

equipped with a diesel engine. The 

effectiveness of this technology would 

be considered to be present for 

technology packages which included 

improvements to a gasoline engine, 

since the resultant gasoline engines 

have a lower CO2 control efficiency than 

the diesel engine. However, if these 

packages which included improvements 

also included improvements unrelated 

to the engine, like transmission 

improvements, only the engine related 

portion of the package already present 

on the vehicle would be considered. 

The transmission related portion of the 

package’s cost and effectiveness would 

be allowed to be applied in order to 

comply with future CO2 emission 

standards. 

The second step in this process is to 

determine the total cost and CO2

effectiveness of the technologies already 

present and relevant to each available 

package. Determining the total cost 

usually simply involves adding up the 

costs of the individual technologies 

present. In order to determine the total 

effectiveness of the technologies already 

present on each vehicle, the lumped 

parameter model described above is 

used. Because the specific technologies 

present on each 2008 vehicle are 

known, the applicable synergies and 

dis-synergies can be fully accounted for. 

The third step in this process is to 

divide the total cost and CO2

effectiveness values determined in step 

2 by the total cost and CO2 effectiveness 

of the relevant technology packages. 

These fractions are capped at a value of 

1.0 or less, since a value of 1.0 causes 

the OMEGA model to not change either 

the cost or CO2 emissions of a vehicle 

when that technology package is added. 

As described in Section III.D.3 above, 

technology packages are applied to 

groups of vehicles which generally 

represent a single vehicle platform and 

which are equipped with a single engine 

size (e.g., compact cars with four 

cylinder engine produced by Ford). 

These groupings are described in Table 

III.D.1–1. Thus, the fourth step is to 

combine the fractions of the cost and 

effectiveness of each technology 

package already present on the 

individual 2008 vehicles models for 

each vehicle grouping. For cost, 

percentages of each package already 

present are combined using a simple 

sales-weighting procedure, since the 

cost of each package is the same for each 

vehicle in a grouping. For effectiveness, 

the individual percentages are 

combined by weighting them by both 

sales and base CO2 emission level. This 

appropriately weights vehicle models 

with either higher sales or CO2

emissions within a grouping. Once 

again, this process prevents the model 

from adding technology which is 

already present on vehicles, and thus 

ensures that the model does not double 

count technology effectiveness and cost 

associated with complying with the 

2011 MY CAFE standards and the 

proposed CO2 standards. 

Conceptually, the OMEGA model 

begins by determining the specific CO2

emission standard applicable for each 

manufacturer and its vehicle class (i.e., 

car or truck). Since the proposed rule 

allows for averaging across a 

manufacturer’s cars and trucks, the 

model determines the CO2 emission 

standard applicable to each 

manufacturer’s car and truck sales from 

the two sets of coefficients describing 

the piecewise linear standard functions 

for cars and trucks in the inputs, and 

creates a combined car-truck standard. 

This combined standard considers the 

difference in lifetime VMT of cars and 

trucks, as indicated in the proposed 

regulations which would govern credit 

trading between these two vehicle 

classes. For both the 2011 CAFE and 

2016 CO2 standards, these standards are 

a function of each manufacturer’s sales 

of cars and trucks and their footprint 

values. When evaluating the 2011 MY 

CAFE standards, the car-truck trading 

was limited to 1.2 mpg. When 

evaluating the proposed CO2 standards, 

the OMEGA model was run only for MY 

2016. OMEGA is designed to evaluate 

technology addition over a complete 

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redesign cycle and 2016 represents the 

final year of a redesign cycle starting 

with the first year of the proposed CO2

standards, 2012. Estimates of the 

technology and cost for the interim 

model years are developed from the 

model projections made for 2016. This 

process is discussed in Chapter 6 of 

EPA’s DRIA to this proposed rule. When 

evaluating the 2016 standards using the 

OMEGA model, the proposed CO2

standard which manufacturers would 

otherwise have to meet to account for 

the anticipated level of A/C credits 

generated was adjusted. On an industry 

wide basis, the projection shows that 

manufacturers would generate 11 g/mi 

of A/C credit in 2016. Thus, the 2016 

CO2 target for the fleet evaluated using 

OMEGA was 261 g/mi instead of 250 

g/mi. 

The cost of the improved A/C systems 

required to generate the 11 g/mi credit 

was estimated separately. This is 

consistent with our proposed A/C credit 

procedures, which would grant 

manufacturers A/C credits based on 

their total use of improved A/C systems, 

and not on the increased use of such 

systems relative to some base model 

year fleet. Some manufacturers may 

already be using improved A/C 

technology. However, this represents a 

small fraction of current vehicle sales. 

To the degree that such systems are 

already being used, EPA is overestimating both the cost and benefit of 

the addition of improved A/C 

technology relative to the true reference 

fleet to a small degree. 

The model then works with one 

manufacturer at a time to add 

technologies until that manufacturer 

meets its applicable standard. The 

OMEGA model can utilize several 

approaches to determining the order in 

which vehicles receive technologies. For 

this analysis, EPA used a 

‘‘manufacturer-based net costeffectiveness factor’’ to rank the 

technology packages in the order in 

which a manufacturer would likely 

apply them. Conceptually, this 

approach estimates the cost of adding 

the technology from the manufacturer’s 

perspective and divides it by the mass 

of CO2 the technology will reduce. One 

component of the cost of adding a 

technology is its production cost, as 

discussed above. However, it is 

expected that new vehicle purchasers 

value improved fuel economy since it 

reduces the cost of operating the 

vehicle. Typical vehicle purchasers are 

assumed to value the fuel savings 

accrued over the period of time which 

they will own the vehicle, which is 

estimated to be roughly five years. It is 

also assumed that consumers discount 

these savings at the same rate as that 

used in the rest of the analysis (3 or 7 

percent). Any residual value of the 

additional technology which might 

remain when the vehicle is sold is not 

considered. The CO2 emission reduction 

is the change in CO2 emissions 

multiplied by the percentage of vehicles 

surviving after each year of use 

multiplied by the annual miles travelled 

by age, again discounted to the year of 

vehicle purchase. 

Given this definition, the higher 

priority technologies are those with the 

lowest manufacturer-based net costeffectiveness value (relatively low 

technology cost or high fuel savings 

leads to lower values). Because the 

order of technology application is set for 

each vehicle, the model uses the 

manufacturer-based net costeffectiveness primarily to decide which 

vehicle receives the next technology 

addition. Initially, technology package 

#1 is the only one available to any 

particular vehicle. However, as soon as 

a vehicle receives technology package 

#1, the model considers the 

manufacturer-based net costeffectiveness of technology package #2 

for that vehicle and so on. In general 

terms, the equation describing the 

calculation of manufacturer-based cost 

effectiveness is as follows: 

ManufCostEff

TechCost dFS VMT

Gap

dCO VMT

i i

i

PP

=

− × [ ]×

( ) −

[ ]×

=

∑ 1

1

2

1

i

i

i

Gap

⎡

⎣ ⎤⎦ × −

+

∑ 1

1

35

( )

Where: 

ManufCostEff = Manufacturer-Based Cost 

Effectiveness (in dollars per kilogram 

CO2), 

TechCost = Marked up cost of the technology 

(dollars), 

PP = Payback period, or the number of years 

of vehicle use over which consumers 

value fuel savings when evaluating the 

value of a new vehicle at time of 

purchase, 

dFSi = Difference in fuel consumption due to 

the addition of technology times fuel 

price in year i, 

dCO2 = Difference in CO2 emissions due to 

the addition of technology 

VMTi = product of annual VMT for a vehicle 

of age i and the percentage of vehicles of 

age i still on the road, 

1- Gap = Ratio of onroad fuel economy to 

two-cycle (FTP/HFET) fuel economy 

EPA describes the technology ranking 

methodology and manufacturer-based 

cost effectiveness metric in greater 

detail in a technical memo to the Docket 

for this proposed rule (Docket EPA–HQ– 

OAR–2009–0472). 

When calculating the fuel savings, the 

full retail price of fuel, including taxes 

is used. While taxes are not generally 

included when calculating the cost or 

benefits of a regulation, the net cost 

component of the manufacturer-based 

net cost-effectiveness equation is not a 

measure of the social cost of this 

proposal, but a measure of the private 

cost, (i.e., a measure of the vehicle 

purchaser’s willingness to pay more for 

a vehicle with higher fuel efficiency). 

Since vehicle operators pay the full 

price of fuel, including taxes, they value 

fuel costs or savings at this level, and 

the manufacturers will consider this 

when choosing among the technology 

options. 

This definition of manufacturer-based 

net cost-effectiveness ignores any 

change in the residual value of the 

vehicle due to the additional technology 

when the vehicle is five years old. As 

discussed in Chapter 1of the DRIA, 

based on historic used car pricing, 

applicable sales taxes, and insurance, 

vehicles are worth roughly 23% of their 

original cost after five years, discounted 

to year of vehicle purchase at 7% per 

annum. It is reasonable to estimate that 

the added technology to improve CO2

level and fuel economy would retain 

this same percentage of value when the 

vehicle is five years old. However, it is 

less clear whether first purchasers, and 

thus, manufacturers would consider this 

residual value when ranking 

technologies and making vehicle 

purchases, respectively. For this 

proposal, this factor was not included in 

our determination of manufacturerbased net cost-effectiveness in the 

analyses performed in support of this 

proposed rule. Comments are requested 

on the benefit of including an increase 


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in the vehicle’s residual value after five 

years in the calculation of effective cost. 

The values of manufacturer-based net 

cost-effectiveness for specific 

technologies will vary from vehicle to 

vehicle, often substantially. This occurs 

for three reasons. First, both the cost 

and fuel-saving component cost, 

ownership fuel-savings, and lifetime 

CO2 effectiveness of a specific 

technology all vary by the type of 

vehicle or engine to which it is being 

applied (e.g., small car versus large 

truck, or 4-cylinder versus 8-cylinder 

engine). Second, the effectiveness of a 

specific technology often depends on 

the presence of other technologies 

already being used on the vehicle (i.e., 

the dis-synergies. Third, the absolute 

fuel savings and CO2 reduction of a 

percentage an incremental reduction in 

fuel consumption depends on the CO2

level of the vehicle prior to adding the 

technology. Chapter 1 of the DRIA of 

this proposed rule contains further 

detail on the values of manufacturerbased net cost-effectiveness for the 

various technology packages. 

EPA requests comment on the use of 

manufacturer-based net costeffectiveness to rank CO2 emission 

reduction technologies in the context of 

evaluating alternative fleet average 

standards for this rule. EPA believes this 

manufacturer-based net costeffectiveness metric is appropriate for 

ranking technology in this proposed 

program because it considers 

effectiveness values that may vary 

widely among technology packages 

when determining the order of 

technology addition. Comments are 

requested on this option and on any 

others thought to be appropriate. 

6. Why Are the Proposed CO2 Standards 

Feasible? 

The finding that the proposed 

standards would be technically feasible 

is based primarily on two factors. One 

is the level of technology needed to 

meet the proposed standards. The other 

is the cost of this technology. The focus 

is on the proposed standards for 2016, 

as this is the most stringent standard 

and requires the most extensive use of 

technology. 

With respect to the level of 

technology required to meet the 

standards, EPA established technology 

penetration caps. As described in 

Section III.D.4, EPA used two 

constraints to limit the model’s 

application of technology by 

manufacturer. The first was the 

application of common fuel economy 

enablers such as low rolling resistance 

tires and transmission logic changes. 

These were allowed to be used on all 

vehicles and hence had no penetration 

cap. The second constraint was applied 

to most other technologies and limited 

their application to 85% with the 

exception of the most advanced 

technologies (e.g., powersplit and 2- 

mode hybrids) whose application was 

limited to 15%. 

EPA used the OMEGA model to 

project the technology (and resultant 

cost) required for manufacturers to meet 

the current 2011 MY CAFE standards 

and the proposed 2016 MY CO2

emission standards. Both sets of 

standards were evaluated using the 

OMEGA model. The 2011 MY CAFE 

standards were applied to cars and 

trucks separately with the transfer of 

credits from one category to the other 

allowed up to an increase in fuel 

economy of 1.0 mpg. Chrysler, Ford and 

General Motors are assumed to utilize 

FFV credits up to the maximum of 1.2 

mpg for both their car and truck sales. 

Nissan is assumed to utilize FFV credits 

up to the maximum of 1.2 mpg for only 

their truck sales. The use of any banked 

credits from previous model years was 

not considered. The modification of the 

reference fleet to comply with the 2011 

CAFE standards through the application 

of technology by the OMEGA model is 

the final step in creating the final 

reference fleet. This final reference fleet 

forms the basis for comparison for the 

model year 2016 standards. 

Table III.D.6–1 shows the usage level 

of selected technologies in the 2008 

vehicles coupled with 2016 sales prior 

to projecting their compliance with the 

2011 MY CAFE standards. These 

technologies include converting port 

fuel-injected gasoline engines to direct 

injection (GDI), adding the ability to 

deactivate certain engine cylinders 

during low load operation (Deac), 

adding a turbocharger and downsizing 

the engine (Turbo), increasing the 

number of transmission speeds to 6 or, 

converting automatic transmissions to 

dual-clutch automated manual 

transmissions (Dual-Clutch Trans), 

adding 42 volt start-stop capability 

(Start-Stop), and converting a vehicle to 

a intermediate or strong hybrid design. 

This last category includes three current 

hybrid designs: integrated motor assist 

(IMA), power-split (PS) and 2-mode 

hybrids. 

TABLE III.D.6–1—PENETRATION OF TECHNOLOGY IN 2008 VEHICLES WITH 2016 SALES: CARS AND TRUCKS

[Percent of sales] 

GDI GDI+ deac GDI+ turbo Diesel 6 Speed or 

CV trans 

Dual clutch 

trans Start-stop Hybrid 

BMW ................................ 6.7 0.0 0.0 0.0 98.8 0.8 0.0 0.1 

Chrysler ............................ 0.0 0.0 0.0 0.0 27.9 0.0 0.0 0.0 

Daimler ............................. 6.2 0.0 0.0 6.2 74.7 11.4 0.0 0.0 

Ford .................................. 0.6 0.0 0.0 0.0 28.1 0.0 0.0 0.0 

General Motors ................ 3.3 0.0 0.0 0.0 13.7 0.0 0.1 0.1 

Honda ............................... 1.2 0.0 0.0 0.0 4.2 0.0 0.0 2.1 

Hyundai ............................ 0.0 0.0 0.0 0.0 4.9 0.0 0.0 0.0 

Kia .................................... 0.0 0.0 0.0 0.0 0.9 0.0 0.0 0.0 

Mazda .............................. 11.8 0.0 0.0 0.0 37.1 0.0 0.0 0.0 

Mitsubishi ......................... 0.0 0.0 0.0 0.0 76.1 0.0 0.0 0.1 

Nissan .............................. 17.7 0.0 0.0 0.0 33.3 0.0 0.0 0.0 

Porsche ............................ 0.0 0.0 0.0 0.0 3.9 0.0 0.0 0.0 

Subaru .............................. 0.0 0.0 0.0 0.0 29.0 0.0 0.0 0.0 

Suzuki .............................. 0.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 

Tata .................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Toyota .............................. 7.5 0.0 0.0 0.0 30.6 0.0 0.0 12.8 

Volkswagen ...................... 52.2 0.0 0.0 0.1 82.8 10.9 0.0 0.0 

Overall .............................. 6.4 0.0 0.0 0.1 27.1 0.6 0.0 2.8 

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As can be seen, all of these 

technologies except for the direct 

injection gasoline engines with either 

cylinder deactivation or turbocharging 

and downsizing, were already being 

used on some 2008 MY vehicles. High 

speed transmissions were the most 

prevalent, with some manufacturers 

(e.g., BMW, Suzuki) using them on 

essentially all of their vehicles. Both 

Daimler and VW equip many of their 

vehicles with automated manual 

transmissions, while VW makes 

extensive use of direct injection gasoline 

engine technology. Toyota has 

converted a significant percentage of its 

2008 vehicles to strong hybrid design. 

Table III.D.6–2 shows the usage level 

of the same technologies in the 

reference case fleet after projecting their 

compliance with the 2011 MY CAFE 

standards. Except for mass reduction, 

the figures shown represent the 

percentages of each manufacturer’s sales 

which are projected to be equipped with 

the indicated technology. For mass 

reduction, the overall mass reduction 

projected for that manufacturer’s sales is 

shown. The last row in Table III.D.6–2 

shows the increase in projected 

technology penetration due to 

compliance with the 2011 MY CAFE 

standards. The results of DOT’s Volpe 

Modeling were used to project that all 

manufacturers would comply with the 

2011 MY standards in 2016 without the 

need to pay fines, with one exception. 

This exception was Porsche in the case 

of their car fleet. When projecting 

Porsche’s compliance with the 2011 MY 

CAFE standard for cars, the car fleet was 

assumed to achieve a CO2 emission 

level of 293.2 g/mi instead of the 

required 285.2 g/mi level (30.3 mpg 

instead of 31.2 mpg). 

TABLE III.D.6–2—PENETRATION OF TECHNOLOGY UNDER 2011 MY CAFE STANDARDS IN 2016 SALES: CARS AND

TRUCKS

[Percent of sales] 

GDI GDI+ deac GDI+ turbo 6 Speed or 

CV trans 

Dual clutch 

trans Start-stop Hybrid 

Mass 

reduction 

(percent) 

BMW ................................ 7.3 11.1 0.0 86.3 11.1 11.1 0.1 0.5 

Chrysler ............................ 0.0 0.0 0.0 27.9 0.0 0.0 0.0 0.0 

Daimler ............................. 16.4 10.3 14.3 45.8 36.0 24.6 0.0 0.9 

Ford .................................. 0.6 0.0 0.0 28.1 0.0 0.0 0.0 0.0 

General Motors ................ 3.3 0.0 0.0 13.7 0.0 0.1 0.1 0.0 

Honda ............................... 1.2 0.0 0.0 4.2 0.0 0.0 2.1 0.0 

Hyundai ............................ 0.0 0.0 0.0 4.9 0.0 0.0 0.0 0.0 

Kia .................................... 0.0 0.0 0.0 0.9 0.0 0.0 0.0 0.0 

Mazda .............................. 11.8 0.0 0.0 37.1 0.0 0.0 0.0 0.0 

Mitsubishi ......................... 0.0 2.2 0.0 76.0 2.2 2.2 0.1 0.0 

Nissan .............................. 17.7 0.0 0.0 33.3 0.0 0.0 0.0 0.0 

Porsche ............................ 0.0 25.0 23.2 0.0 48.2 37.1 0.0 1.2 

Subaru .............................. 0.0 0.0 0.0 29.0 0.0 0.0 0.0 0.0 

Suzuki .............................. 4.5 0.0 0.0 100.0 0.0 0.0 0.0 0.0 

Tata .................................. 14.5 60.9 0.0 14.5 60.9 60.9 0.0 2.6 

Toyota .............................. 7.5 0.0 0.0 30.6 0.0 0.0 12.8 0.0 

Volkswagen ...................... 51.2 6.9 11.8 60.8 29.6 18.7 0.0 0.3 

Overall .............................. 6.7 1.2 0.8 25.4 2.6 2.0 2.8 0.1 

Increase over 2008 MY ... 0.3 1.2 0.8 ¥1.7 2.0 2.0 0.0 0.0 

As can be seen, the 2011 MY CAFE 

standards, when evaluated on an 

industry wide basis, require only a 

modest increase in the use of these 

technologies. Higher speed automatic 

transmission use actually decreases due 

to conversion of these units to more 

efficient designs such as automated 

manual transmissions and hybrids. 

However, the impact of the 2011 MY 

CAFE standards is much greater on 

selected manufacturers, particularly 

BMW, Daimler, Porsche, Tata (Jaguar/ 

Land Rover) and VW. All of these 

manufacturers are projected to increase 

their use of advanced direct injection 

gasoline engine technology, advanced 

transmission technology, and start-stop 

technology. It should be noted that these 

manufacturers have traditionally paid 

fines under the CAFE program. 

However, with higher fuel prices and 

the lead-time available by 2016, these 

manufacturers would likely find it in 

their best interest to improve their fuel 

economy levels instead of continuing to 

pay fines (again with the exception of 

Porsche cars). While not shown, no 

gasoline engines were projected to be 

converted to diesel technology. 

This 2008 baseline fleet, modified to 

meet 2011 standards, becomes our 

‘‘reference’’ case. This is the fleet by 

which the control program (or 2016 

rule) will be compared. Thus, it is also 

the fleet that would be assumed to exist 

in the absence of this rule. No air 

conditioning improvements are 

assumed for model year 2011 vehicles. 

The average CO2 emission levels of this 

reference fleet vary slightly from 2012– 

2016 due to small changes in the vehicle 

sales by market segments and 

manufacturer. CO2 emissions from cars 

range from 282–284 g/mi, while those 

from trucks range from 382–384 g/mi. 

CO2 emissions from the combined fleet 

range from 316–320. These estimates are 

described in greater detail in Section 

5.3.2.2 of the DRIA. 

Conceptually, both EPA and NHTSA 

perform the same projection in order to 

develop their respective reference fleets. 

However, because the two agencies use 

two different models to modify the 

baseline fleet to meet the 2011 CAFE 

standards, the technology added will be 

slightly different. The differences, 

however, are small since most 

manufacturers do not require a lot of 

additional technology to meet the 2011 

standards. 

EPA then used the OMEGA model 

once again to project the level of 

technology needed to meet the proposed 

2016 CO2 emission standards. Using the 

results of the OMEGA model, every 

manufacturer was projected to be able to 

meet the proposed 2016 standards with 

the technology described above except 

for four: BMW, VW, Porsche and Tata 

due to the OMEGA cap on technology 

penetration by manufacturer. For these 

manufacturers, the results presented 

below are those with the fully allowable 

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application of technology and not for 

the technology projected to enable 

compliance with the proposed 

standards. Described below are a 

number of potential feasible solutions 

for how these companies can achieve 

compliance. The overall level of 

technology needed to meet the proposed 

2016 standards is shown in Table 

III.D.6–3. As discussed above, all 

manufacturers are projected to improve 

the air conditioning systems on 85% of 

their 2016 sales. 

TABLE III.D.6–3—PENETRATION OF TECHNOLOGY FOR PROPOSED 2016 CO2 STANDARDS: CARS AND TRUCKS

[Percent of sales] 

GDI GDI+ deac GDI+ turbo 6 Speed 

auto trans 

Dual clutch 

trans Start-stop Hybrid Mass reduction 

BMW ................................ 4 35 47 15 71 71 14 5 

Chrysler ............................ 51 28 3 37 51 51 0 6 

Daimler ............................. 3 44 39 11 73 72 13 5 

Ford .................................. 29 39 13 19 67 67 0 6 

General Motors ................ 34 26 7 13 55 55 0 5 

Honda ............................... 24 1 2 10 22 22 2 2 

Hyundai ............................ 28 3 14 3 43 43 0 3 

Kia .................................... 37 0 5 7 35 35 0 3 

Mazda .............................. 54 2 16 31 43 43 0 4 

Mitsubishi ......................... 65 2 7 22 66 66 0 6 

Nissan .............................. 29 26 5 34 57 56 1 5 

Porsche ............................ 7 36 49 10 70 70 15 4 

Subaru .............................. 46 4 14 0 64 51 0 4 

Suzuki .............................. 66 5 8 9 69 69 0 4 

Tata .................................. 4 81 0 14 70 70 15 6 

Toyota .............................. 37 2 0 30 33 16 13 2 

Volkswagen ...................... 9 26 58 12 72 70 15 4 

Overall .............................. 30 18 10 19 49 45 4 4 

Increase over 2011 CAFE 24 17 9 ¥7 46 43 1 4 

As can be seen, the overall average 

reduction in vehicle weight is projected 

to be 4%. This reduction varies across 

the two vehicle classes and vehicle base 

weight. For cars below 2,950 pounds 

curb weight, the average reduction is 

2.3% (62 pounds), while the average 

was 4.4% (154 pounds) for cars above 

2,950 curb weight. For trucks below 

3,850 pounds curb weight, the average 

reduction is 3.5% (119 pounds), while 

it was 4.5% (215 pounds) for trucks 

above 3,850 curb weight. Splitting 

trucks at a higher weight, for trucks 

below 5,000 pounds curb weight, the 

average reduction is 3.3% (140 pounds), 

while it was 6.7% (352 pounds) for 

trucks above 5,000 curb weight. 

The levels of requisite technologies 

differ significantly across the various 

manufacturers. Therefore, several 

analyses were performed to ascertain 

the cause. Because the baseline case 

fleet consists of 2008 MY vehicle 

designs, these analyses were focused on 

these vehicles, their technology and 

their CO2 emission levels. 

Comparing CO2 emissions across 

manufacturers is not a simple task. In 

addition to widely varying vehicle 

styles, designs, and sizes, manufacturers 

have implemented fuel efficient 

technologies to varying degrees, as 

indicated in Table III.D.6–1. The 

projected levels of requisite technology 

to enable compliance with the proposed 

2016 standards shown in Table III.D.6– 

3 account for two of the major factors 

which can affect CO2 emissions: (1) 

Level of technology already being 

utilized and (2) vehicle size, as 

represented by footprint. 

For example, the fuel economy of a 

manufacturer’s 2008 vehicles may be 

relatively high because of the use of 

advanced technology. This is the case 

with Toyota’s high sales of their Prius 

hybrid. However, the presence of this 

technology in a 2008 vehicle eliminates 

the ability to significantly reduce CO2

further through the use of this 

technology. In the extreme, if a 

manufacturer were to hybridize a high 

level of its sales in 2016, it doesn’t 

matter whether this technology was 

present in 2008 or whether it would be 

added in order to comply with the 

standards. The final level of hybrid 

technology would be the same. Thus, 

the level at which technology is present 

in 2008 vehicles does not explain the 

difference in requisite technology levels 

shown in Table III.D.6–3. 

Similarly, the proposed CO2 emission 

standards adjust the required CO2 level 

according to a vehicle’s footprint, 

requiring lower absolute emission levels 

from smaller vehicles. Thus, just 

because a manufacturer produces larger 

vehicles than another manufacturer 

does not explain the differences seen in 

Table III.D.6–3. 

In order to remove these two factors 

from our comparison, the EPA lumped 

parameter model described above was 

used to estimate the degree to which 

technology present on each 2008 MY 

vehicle in our reference fleet was 

improving fuel efficiency. The effect of 

this technology was removed and each 

vehicle’s CO2 emissions were estimated 

as if it utilized no additional fuel 

efficiency technology beyond the 

baseline. The differences in vehicle size 

were accounted for by determining the 

difference between the sales-weighted 

average of each manufacturer’s ‘‘no 

technology’’ CO2 levels to their required 

CO2 emission level under the proposed 

2016 standards. The industry-wide 

difference was subtracted from each 

manufacturer’s value to highlight which 

manufacturers had lower and higher 

than average ‘‘no technology’’ 

emissions. The results are shown in 

Figure III.D.6–1. 

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As can be seen in Table III.D.6–3 the 

manufacturers projected to require the 

greatest levels of technology also show 

the highest offsets relative to the 

industry. The greatest offset shown in 

Figure III.D.6–1 is for Tata’s trucks 

(Land Rover). These vehicles are 

estimated to have 100 g/mi greater CO2

emissions than the average 2008 MY 

truck after accounting for differences in 

the use of fuel saving technology and 

footprint. The lowest adjustment is for 

Subaru’s trucks, which have 50 g/mi 

CO2 lower emissions than the average 

truck. 

While this comparison confirms the 

differences in the technology 

penetrations shown in Table III.D.6–3, it 

does not yet explain why these 

differences exist. Two well known 

factors affecting vehicle fuel efficiency 

are vehicle weight and performance. 

The footprint-based form of the 

proposed CO2 standard accounts for 

most of the difference in vehicle weight 

seen in the 2008 MY fleet. However, 

even at the same footprint, vehicles can 

have varying weights. Higher 

performing vehicles also tend to have 

higher CO2 emissions over the two-cycle 

test procedure. So manufacturers with 

higher average performance levels will 

tend to have higher average CO2

emissions for any given footprint. 

The impact of these two factors on 

each manufacturer’s ‘‘no technology’’ 

CO2 emissions was estimated. First, the 

‘‘no technology’’ CO2 emissions levels 

were statistically analyzed to determine 

the average impact of weight and the 

ratio of horsepower to weight on CO2

emissions. Both factors were found to be 

statistically significant at the 95 percent 

confidence level. Together, they 

explained over 80 percent of the 

variability in vehicles’ CO2 emissions 

for cars and over 70 percent for trucks. 

These relationships were then used to 

adjust each vehicle’s ‘‘no technology’’ 

CO2 emissions to the average weight for 

its footprint value and to the average 

horsepower to weight ratio of either the 

car or truck fleet. The comparison was 

repeated as shown in Figure III.D.6–1. 

The results are shown in Figure 

III.D.6–2. 

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First, note that the scale in Figure 

III.D.6–2 is much smaller by a factor of 

3 than that in Figure III.D.6–1. In other 

words, accounting for differences in 

vehicle weight (at constant footprint) 

and performance dramatically reduces 

the differences in various 

manufacturers’ CO2 emissions. Most of 

the manufacturers with high offsets in 

Figure III.D.6–1 now show low or 

negative offsets. For example, BMW’s 

and VW’s trucks show very low CO2

emissions. Tata’s emissions are very 

close to the industry average. Daimler’s 

vehicles are no more than 10 g/mi above 

the average for the industry. This 

analysis indicates that the primary 

reasons for the differences in technology 

penetrations shown for the various 

manufacturers in Table III.D.6–3 are 

weight and performance. EPA has not 

determined why some manufacturers’ 

vehicle weight is relatively high for its 

footprint value, or whether this weight 

provides additional utility for the 

consumer. Performance is more 


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straightforward. Some consumers desire 

high performance and some 

manufacturers orient their sales towards 

these consumers. However, the cost in 

terms of CO2 emissions is clear. 

Producing relatively heavy or high 

performance vehicles increases CO2

emissions and will require greater levels 

of technology in order to meet the 

proposed CO2 standards. 

As can be seen from Table III.D.6–3 

above, widespread use of several 

technologies is projected due to the 

proposed standards. The vast majority 

of engines are projected to be converted 

to direct injection, with some of these 

engines including cylinder deactivation 

or turbocharging and downsizing. More 

than 60 percent of all transmissions are 

projected to be either high speed 

automatic transmissions or dual-clutch 

automated manual transmissions. More 

than one third of the fleet is projected 

to be equipped with 42 volt start-stop 

capability. This technology was not 

utilized in 2008 vehicles, but as 

discussed above, promises significant 

fuel efficiency improvement at a 

moderate cost. 

EPA foresees no significant technical 

or engineering issues with the projected 

deployment of these technologies across 

the fleet, with their incorporation being 

folded into the vehicle redesign process. 

All of these technologies are 

commercially available now. The 

automotive industry has already begun 

to convert its port fuel-injected gasoline 

engines to direct injection. Cylinder 

deactivation and turbocharging 

technologies are already commercially 

available. As indicated in Table III.D.6– 

1, high speed transmissions are already 

widely used. However, while more 

common in Europe, automated manual 

transmissions are not currently used 

extensively in the U.S. Widespread use 

of this technology would require 

significant capital investment but does 

not present any significant technical or 

engineering issues. Start-stop systems 

also represent a significant challenge 

because of the complications involved 

in a changeover to a higher voltage 

electrical architecture. However, with 

appropriate capital investments (which 

are captured in the costs), these 

technology penetration rates are 

achievable within the timeframe of this 

rule. While most manufacturers have 

some plans for these systems, our 

projections indicate that their use may 

exceed 35 percent of sales, with some 

manufacturers requiring higher levels. 

Most manufacturers would not have 

to hybridize any vehicles due to the 

proposed standards. The hybrids shown 

for Toyota are projected to be sold even 

in the absence of the proposed 

standards. However the relatively high 

hybrid penetrations (15%) projected for 

BMW, Daimler, Porsche, Tata and 

Volkswagen deserve further discussion. 

These manufacturers are all projected by 

the OMEGA model to utilize the 

maximum application of full hybrids 

allowed by our model in this time 

frame, which is 15 percent. 

As discussed in the EPA DRIA, a 2016 

technology penetration rate of 85% is 

projected for the vast majority of 

available technologies, however, for full 

hybrid systems the projection shows 

that given the available lead-time full 

hybrids can only be applied to 

approximately 15% of a manufacturer’s 

fleet. This number of course can vary by 

manufacturer. 

While the hybridization levels of 

BMW, Daimler, Porsche, Tata and 

Volkswagen are relatively high, the sales 

levels of these five manufacturers are 

relatively low. Thus, industry-wide, 

hybridization reaches only 8 percent, 

compared with 3 percent in the 

reference case. This 8 percent level is 

believed to be well within the capability 

of the hybrid component industry by 

2016. Thus, the primary challenge for 

these five companies would be at the 

manufacturer level, redesigning a 

relatively large percentage of sales to 

include hybrid technology. The 

proposed TLAAS provisions will 

provide significant aid to these 

manufacturers in pre-2016 compliance, 

since all qualified companies are 

expected to be able to take advantage of 

these provisions. By 2016, it is likely 

that these manufacturers would also be 

able to change vehicle characteristics 

which currently cause their vehicles to 

emit much more CO2 than similar sized 

vehicles produced by other 

manufacturers. These factors may 

include changes in model mix, further 

lightweighting, downpowering, electric 

and/or plug-in hybrid vehicles, or 

downsizing (our current baseline fleet 

assumes very little change in footprint 

from 2012–2016), as well as 

technologies that may not be included 

in our packages. Also, companies may 

have technology penetration rates of less 

costly technologies (listed in the above 

tables) greater than 85%, and they may 

also be able to apply hybrid technology 

to more than 15 percent of their fleet (as 

the 15% for hybrid technology is an 

industry average). For example, a switch 

to a low GWP alternative refrigerant in 

a large fraction of a fleet can replace 

many other much more costly 

technologies, but this option is not 

captured in the modeling. In addition, 

these manufacturers can also take 

advantage of flexibilities, such as early 

credits for air conditioning and trading 

with other manufacturers. The EPA 

expects that there will be certain high 

volume manufacturers that will earn a 

significant amount of early GHG credits 

starting in 2009 and 2010 that will 

expire 5 years later, by 2014 and 2015, 

unused. The EPA believes that these 

manufacturers will be willing to sell 

these expiring credits to manufacturers 

with whom there is no direct 

competition. Furthermore, some of these 

manufacturers have also stated either 

publicly or in confidential discussions 

with EPA that they will be able to 

comply with 2016 standards. Because of 

the confidential nature of this 

information sharing, EPA is unable to 

capture these packages specifically in 

our modeling. The following companies 

have all submitted letters in support of 

the national program, including the 

2016 MY levels discussed above: BMW, 

Chrysler, Daimler, Ford, GM, Honda, 

Mazda, Toyota, and Volkswagen. This 

supports the view that the emissions 

reductions needed to achieve the 

standards are technically and 

economically feasible for all these 

companies, and that EPA’s projection of 

non-compliance for four of the 

companies is based on an inability of 

our model to fully account for the full 

flexibilities of the EPA program as well 

as the potentially unique technology 

approaches or new product offerings 

which these manufactures are likely to 

employ. 

In addition, manufacturers do not 

need to apply technology exactly 

according to our projections. Our 

projections simply indicate one path 

which would achieve compliance. 

Those manufacturers whose vehicles are 

heavier and higher performing than 

average in particular have additional 

options to facilitate compliance and 

reduce their technological burden closer 

to the industry average. These options 

include decreasing the mass of the 

vehicles and/or decreasing the power 

output of the engines. Finally, EPA 

allows compliance to be shown through 

the use of emission credits obtained 

from other manufacturers. Especially for 

the lower volume sales of some 

manufacturers that could be one 

component of an effective compliance 

strategy, reducing the technology that 

needs to be employed on their vehicles. 

For the vast majority of light-duty cars 

and trucks, manufacturers have 

available to them a range of technologies 

that are currently commercially 

available and can feasibly be employed 

in their vehicles by MY 2016. Our 

modeling projects widespread use of 

these technologies as a technologically 

feasible approach to complying with the 

proposed standards. 

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163Note that the actual cost of the A/C technology 

is estimated at $78 per vehicle as shown in Table 

III.D.2–3. However, we expect only 85 percent of 

the fleet to add that technology. Therefore, the cost 

of the technology when spread across the entire 

fleet is $66 per vehicle ($78×85%=$66). 

In sum, EPA believes that the 

emissions reductions called for by the 

proposed standards are technologically 

feasible, based on projections of 

widespread use of commercially 

available technology, as well as use by 

some manufacturers of other technology 

approaches and compliance flexibilities 

not fully reflected in our modeling. 

EPA also projected the cost associated 

with these projections of technology 

penetration. Table III.D.6–4 shows the 

cost of technology in order for 

manufacturers to comply with the 2011 

MY CAFE standards, as well as those 

associated with the proposed 2016 CO2

emission standards. The latter costs are 

incremental to those associated with the 

2011 MY standards and also include 

$60 per vehicle, on average, for the cost 

of projected use of improved airconditioning systems.163

TABLE III.D.6–4—COST OF TECHNOLOGY PER VEHICLE IN 2016 ($2007) 

2011 MY CAFE standards Proposed 2016 CO2 standards 

Cars Trucks All Cars Trucks All 

BMW ................................................................................ $319 $479 $361 $1,701 $1,665 $1,691 

Chrysler ............................................................................ 7 125 59 1,331 1,505 1,408 

Daimler ............................................................................. 431 632 495 1,631 1,357 1,543 

Ford .................................................................................. 28 211 109 1,435 1,485 1,457 

General Motors ................................................................ 28 136 73 969 1,782 1,311 

Honda ............................................................................... 0 0 0 606 695 633 

Hyundai ............................................................................ 0 76 14 739 1,680 907 

Kia .................................................................................... 0 48 8 741 1,177 812 

Mazda .............................................................................. 0 0 0 946 1,030 958 

Mitsubishi ......................................................................... 96 322 123 1,067 1,263 1,090 

Nissan .............................................................................. 0 19 6 1,013 1,194 1,064 

Porsche ............................................................................ 535 1,074 706 1,549 666 1,268 

Subaru .............................................................................. 64 100 77 903 1,329 1,057 

Suzuki .............................................................................. 99 231 133 1,093 1,263 1,137 

Tata .................................................................................. 691 1,574 1,161 1,270 674 952 

Toyota .............................................................................. 0 0 0 600 436 546 

Volkswagen ...................................................................... 269 758 354 1,626 949 1,509 

Overall .............................................................................. 47 141 78 968 1,214 1,051 

As can be seen, the industry average 

cost of complying with the 2011 MY 

CAFE standards is quite low, $78 per 

vehicle. The range of costs across 

manufacturers is quite large, however. 

Honda, Mazda and Toyota are projected 

to face no cost, while Daimler, Porsche 

and Tata face costs of at least $495 per 

vehicle. As described above, these last 

three manufacturers face such high costs 

to meet even the 2011 MY CAFE 

standards due to both their vehicles’ 

weight per unit footprint and 

performance. Also, these cost estimates 

apply to sales in the 2016 MY. These 

three manufacturers, as well as others 

like Volkswagen, may choose to pay 

CAFE fines prior to this or even in 2016. 

As shown in the last row of Table 

III.D.6–4, the average cost of technology 

to meet the proposed 2016 standards for 

cars and trucks combined relative to the 

2011 MY CAFE standards is $1051 per 

vehicle. The projection shows that the 

average cost for cars would be slightly 

lower than that for trucks. Toyota and 

Honda show projected costs 

significantly below the average, while 

BMW, Porsche, Tata and Volkswagen 

show significantly higher costs. On 

average, the $1051 per vehicle cost is 

significant, representing roughly 5% of 

the total cost of a new vehicle. However, 

as discussed below, the fuel savings 

associated with the proposed standards 

exceeds this cost significantly. 

While the CO2 emission compliance 

modeling using the OMEGA model 

focused on the proposed 2016 MY 

standards, EPA believes that the 

proposed standards for 2012–2015 

would also be feasible. As discussed 

above, EPA believes that manufacturers 

develop their vehicle designs with 

several model years in view. Generally, 

the technology estimated above for 2016 

MY vehicles represents the technology 

which would be added to those vehicles 

which are being redesigned in 2012– 

2015. The proposed CO2 standards for 

2012–2016 reduce CO2 emissions at a 

fairly steady rate. Thus, manufacturers 

which redesign their vehicles at a fairly 

steady rate will automatically comply 

with the interim standard as they plan 

for compliance in 2016. 

Manufacturers which redesign much 

fewer than 20% of their sales in the 

early years of the proposed program 

would face a more difficult challenge, as 

simply implementing the ‘‘2016 MY’’ 

technology as vehicles are redesigned 

may not enable compliance in the early 

years. However, even in this case, 

manufacturers would have several 

options to enable compliance. One, they 

could utilize the proposed debit carryforward provisions described above. 

This may be sufficient alone to enable 

compliance through the 2012–2016 MY 

time period, if their redesign schedule 

exceeds 20% per year prior to 2016. If 

not, at some point, the manufacturer 

might need to increase their use of 

technology beyond that projected above 

in order to generate the credits 

necessary to balance the accrued debits. 

For most manufacturers representing the 

vast majority of U.S. sales, this would 

simply mean extending the same 

technology to a greater percentage of 

sales. The added cost of this in the later 

years of the program would be balanced 

by lower costs in the earlier years. Two, 

the manufacturer could buy credits from 

another manufacturer. As indicated 

above, several manufacturers are 

projected to require less stringent 

technology than the average. These 

manufacturers would be in a position to 

provide credits at a reasonable 

technology cost. Thus, EPA believes the 

proposed standards for 2012–2016 

would be feasible. 

7. What Other Fleet-Wide CO2 Levels 

Were Considered? 

Two alternative sets of CO2 standards 

were considered. One set would reduce 

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CO2 emissions at a rate of 4 percent per 

year. The second set would reduce CO2

emissions at a rate of 6 percent per year. 

The analysis of these standards followed 

the exact same process as described 

above for the proposed standards. The 

only difference was the level of CO2

emission standards. The footprint-based 

standard coefficients of the car and 

truck curves for these two alternative 

control scenarios were discussed above. 

The resultant CO2 standards in 2016 for 

each manufacturer under these two 

alternative scenarios and under the 

proposal are shown in Table III.D.7–1. 

TABLE III.D.7–1—OVERALL AVERAGE CO2 EMISSION STANDARDS BY MANUFACTURER IN 2016 

4% per 

year Proposed 6% per year 

BMW .................................................................................................................................................................... 245 241 222 

Chrysler ................................................................................................................................................................ 266 262 241 

Daimler ................................................................................................................................................................. 257 253 233 

Ford ...................................................................................................................................................................... 270 266 245 

General Motors .................................................................................................................................................... 272 268 247 

Honda .................................................................................................................................................................. 243 239 219 

Hyundai ................................................................................................................................................................ 235 231 212 

Kia ........................................................................................................................................................................ 237 234 215 

Mazda .................................................................................................................................................................. 231 227 208 

Mitsubishi ............................................................................................................................................................. 226 223 204 

Nissan .................................................................................................................................................................. 251 247 227 

Porsche ................................................................................................................................................................ 234 230 210 

Subaru ................................................................................................................................................................. 237 233 213 

Suzuki .................................................................................................................................................................. 227 223 203 

Tata ...................................................................................................................................................................... 267 263 241 

Toyota .................................................................................................................................................................. 247 243 223 

Volkswagen .......................................................................................................................................................... 233 230 211 

Overall .................................................................................................................................................................. 254 250 230 

Tables III.D.7–2 and III.D.7–3 show 

the technology penetration levels for the 

4 percent per year and 6 percent per 

year standards in 2016. 

TABLE III.D.7–2—TECHNOLOGY PENETRATION—4% PER YEAR CO2 STANDARDS IN 2016: CARS AND TRUCKS COMBINED

GDI GDI+ deac GDI+ turbo 6 Speed 

auto trans 

Dual clutch 

trans Start-stop Hybrid Mass reduction (%) 

BMW ................................ 4% 35% 47% 15% 71% 71% 14% 5 

Chrysler ............................ 47 25 3 33 48 48 0 5 

Daimler ............................. 3 44 39 11 73 72 13 5 

Ford .................................. 33 32 13 23 61 61 0 5 

General Motors ................ 33 25 7 19 48 48 0 5 

Honda ............................... 20 1 0 6 19 19 2 2 

Hyundai ............................ 27 2 12 2 39 39 0 3 

Kia .................................... 31 0 4 1 34 34 0 2 

Mazda .............................. 34 2 16 10 43 43 0 3 

Mitsubishi ......................... 65 2 7 28 60 60 0 6 

Nissan .............................. 34 22 2 40 51 51 1 5 

Porsche ............................ 7 36 49 10 70 70 15 4 

Subaru .............................. 46 4 14 10 54 46 0 3 

Suzuki .............................. 72 5 2 15 63 63 0 4 

Tata .................................. 4 81 0 14 70 70 15 6 

Toyota .............................. 25 2 0 30 33 5 13 1 

Volkswagen ...................... 9 26 58 12 72 70 15 4 

Overall .............................. 28 17 9 20 45 40 4 4 

Increase over 2011 CAFE 21 15 9 ¥5 42 38 1 4 

TABLE III.D.7–3—TECHNOLOGY PENETRATION—6% PER YEAR ALTERNATIVE STANDARDS IN 2016: CARS AND TRUCKS

COMBINED

GDI GDI+ deac GDI+ turbo 6 Speed 

auto trans 

Dual clutch 

trans Start-stop Hybrid Weight reduction (%) 

BMW ................................ 4% 35% 47% 15% 71% 71% 14% 5 

Chrysler ............................ 29 50 6 4 85 85 0 8 

Daimler ............................. 3 44 39 11 73 72 13 5 

Ford .................................. 8 37 40 4 74 74 11 7 

General Motors ................ 24 54 8 6 81 81 0 8 

Honda ............................... 38 1 15 8 50 50 2 4 

Hyundai ............................ 36 9 28 7 66 66 0 5 

Kia .................................... 48 0 25 18 55 55 0 4 

Mazda .............................. 65 2 16 4 81 76 0 6 

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TABLE III.D.7–3—TECHNOLOGY PENETRATION—6% PER YEAR ALTERNATIVE STANDARDS IN 2016: CARS AND TRUCKS

COMBINED—Continued 

GDI GDI+ deac GDI+ turbo 6 Speed 

auto trans 

Dual clutch 

trans Start-stop Hybrid Weight reduction (%) 

Mitsubishi ......................... 59 7 19 7 80 80 5 8 

Nissan .............................. 34 17 35 9 76 76 10 7 

Porsche ............................ 7 36 49 10 70 70 15 4 

Subaru .............................. 66 4 14 0 85 80 0 6 

Suzuki .............................. 2 12 71 0 80 80 5 7 

Tata .................................. 4 81 0 14 70 70 15 6 

Toyota .............................. 40 7 11 25 50 50 13 3 

Volkswagen ...................... 9 26 58 12 72 70 15 4 

Overall .............................. 28 24 23 11 67 67 7 6 

Increase over 2011 CAFE 22 23 22 ¥15 65 65 4 6 

With respect to the 4 percent per year 

standards, the levels of requisite control 

technology decreased relative to those 

under the proposed standards, as would 

be expected. Industry-wide, the largest 

decrease was a 2 percent decrease in the 

application of start-stop technology. On 

a manufacturer specific basis, the most 

significant decreases were a 6 percent 

decrease in hybrid penetration for BMW 

and a 2 percent drop for Daimler. These 

are relatively small changes and are due 

to the fact that the 4 percent per year 

standards only require 4 g/mi CO2 less 

control than the proposed standards in 

2016. Porsche, Tata and Volkswagen 

continue to be unable to comply with 

the CO2 standards in 2016. 

With respect to the 6 percent per year 

standards, the levels of requisite control 

technology increased relative to those 

under the proposed standards, as again 

would be expected. Industry-wide, the 

largest increase was an 8 percent 

increase in the application of start-stop 

technology. On a manufacturer specific 

basis, the most significant increases 

were a 42 percent increase in hybrid 

penetration for BMW and a 38 percent 

increase for Daimler. These are more 

significant changes and are due to the 

fact that the 6 percent per year 

standards require 20 g/mi CO2 more 

control than the proposed standards in 

2016. Porsche, Tata and Volkswagen 

continue to be unable to comply with 

the CO2 standards in 2016. However, 

BMW joins this list, as well, though just 

by 1 g/mi. Most manufacturers 

experience the increase in start-stop 

technology application, with the 

increase ranging from 5 to 17 percent. 

Table III.D.7–4 shows the projected 

cost of the two alternative sets of 

standards. 

TABLE III.D.7–4—TECHNOLOGY COST PER VEHICLE IN 2016—ALTERNATIVE STANDARDS ($2007) 

4 Percent per year standards 6 Percent per year standards 

Cars Trucks All Cars Trucks All 

BMW ................................................................................ $1,701 $1,665 $1,691 $1,701 $1,665 $1,691 

Chrysler ............................................................................ 1,340 1,211 1,283 1,642 2,211 1,893 

Daimler ............................................................................. 1,631 1,357 1,543 1,631 1,357 1,543 

Ford .................................................................................. 1,429 1,305 1,374 2,175 2,396 2,273 

General Motors ................................................................ 969 1,567 1,221 1,722 2,154 1,904 

Honda ............................................................................... 633 402 564 777 1,580 1,016 

Hyundai ............................................................................ 685 1,505 832 1,275 1,680 1,347 

Kia .................................................................................... 741 738 741 1,104 1,772 1,213 

Mazda .............................................................................. 851 914 860 1,369 1,030 1,320 

Mitsubishi ......................................................................... 1,132 247 1,028 1,495 2,065 1,563 

Nissan .............................................................................. 910 1,194 991 1,654 2,274 1,830 

Porsche ............................................................................ 1,549 666 1,268 1,549 666 1,268 

Subaru .............................................................................. 903 1,131 985 1,440 1,615 1,503 

Suzuki .............................................................................. 1,093 1,026 1,076 1,718 2,219 1,846 

Tata .................................................................................. 1,270 674 952 1,270 674 952 

Toyota .............................................................................. 518 366 468 762 1,165 895 

Volkswagen ...................................................................... 1,626 949 1,509 1,626 949 1,509 

Overall .............................................................................. 940 1,054 978 1,385 1,859 1,544 

As can be seen, the average cost of the 

4 percent per year standards is only $73 

per vehicle less than that for the 

proposed standards. In contrast, the 

average cost of the 6 percent per year 

standards is nearly $500 per vehicle 

more than that for the proposed 

standards. Compliance costs are 

entering the region of non-linearity. The 

$73 cost savings of the 4 percent per 

year standards relative to the proposal 

represents $18 per g/mi CO2 increase. 

The $493 cost increase of the 6 percent 

per year standards relative to the 

proposal represents $25 per g/mi CO2

increase. 

EPA does not believe the 4% per year 

alternative is an appropriate standard 

for the MY2012–2016 time frame. As 

discussed above, the 250 g/mi proposal 

is technologically feasible in this time 

frame at reasonable costs, and provides 

higher GHG emission reductions at a 

modest cost increase over the 4% per 

year alternative (less than $100 per 

vehicle). In addition, the 4% per year 

alternative does not result in a 

harmonized National Program for the 

country. Based on California’s letter of 

May 18, 2009, the emission standards 

under this alternative would not result 

in the State of California revising its 

regulations such that compliance with 

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EPA’s GHG standards would be deemed 

to be in compliance with California’s 

GHG standards for these model years. 

Thus, the consequence of promulgating 

a 4% per year standard would be to 

require manufacturers to produce two 

vehicle fleets: a fleet meeting the 4% per 

year Federal standard, and a separate 

fleet meeting the more stringent 

California standard for sale in California 

and the section 177 States. This further 

increases the costs of the 4% per year 

standard and could lead to additional 

difficulties for the already stressed 

automotive industry. 

EPA also does not believe the 6% per 

year alternative is an appropriate 

standard for the MY 2012–2016 time 

frame. As shown in Tables III.D.7–3 and 

III.D.7–4, the 6% per year alternative 

represents a significant increase in both 

the technology required and the overall 

costs compared to the proposed 

standards. In absolute percent increases 

in the technology penetration, compared 

to the proposed standards the 6% per 

year alternative requires for the industry 

as a whole: an 18% increase in GDI fuel 

systems, an 11% increase in turbodownsize systems, a 6% increase in 

dual-clutch automated manual 

transmissions (DCT), and a 9% increase 

in start-stop systems. For a number of 

manufacturers the expected increase in 

technology is greater: for GM, a 15% 

increase in both DCTs and start-stop 

systems, for Nissan a 9% increase in full 

hybrid systems, for Ford an 11% 

increase in full hybrid systems, for 

Chrysler a 34% increase in both DCT 

and start-stop systems and for Hyundai 

a 23% increase in the overall 

penetration of DCT and start-stop 

systems. For the industry as a whole, 

the per-vehicle cost increase for the 6% 

per year alternative is nearly $500. On 

average this is a 50% increase in costs 

compared to the proposed standards. At 

the same time, CO2 emissions would be 

reduced by about 8%, compared to the 

250 g/mi target level. 

These technology and cost increases 

are significant, given the amount of 

lead-time between now and model years 

2012–2016. In order to achieve the 

levels of technology penetration for the 

proposed standards, the industry needs 

to invest significant capital and product 

development resources right away, in 

particular for the 2012 and 2013 model 

year, which is only 2–3 years from now. 

For the 2014–2016 time frame, 

significant product development and 

capital investments will need to occur 

over the next 2–3 year in order to be 

ready for launching these new products 

for those model years. Thus a major part 

of the required capital and resource 

investment will need to occur in the 

next few years, under the proposed 

standards. EPA believes that the 

proposal (a target of 250 gram/mile in 

2016) already requires significant 

investment and product development 

costs for the industry, focused on the 

next few years. 

It is important to note, and as 

discussed later in this preamble, as well 

as in the draft Joint Technical Support 

Document and the draft EPA Regulatory 

Impact Analysis document, the average 

model year 2016 per-vehicle cost 

increase of nearly $500 includes an 

estimate of both the increase in capital 

investments by the auto companies and 

the suppliers as well as the increase in 

product development costs. These costs 

can be significant, especially as they 

must occur over the next 2–3 years. 

Both the domestic and transplant auto 

firms, as well as the domestic and 

world-wide automotive supplier base, is 

experiencing one of the most difficult 

markets in the U.S. and internationally 

that has been seen in the past 30 years. 

One major impact of the global 

downturn in the automotive industry 

and certainly in the U.S. is the 

significant reductions in product 

development engineers and staffs, as 

well as a tightening of the credit markets 

which allow auto firms and suppliers to 

make the near-term capital investments 

necessary to bring new technology into 

production. EPA is concerned that the 

significantly increased pressure on 

capital and other resources from the 6% 

per year alternative may be too stringent 

for this time frame, given both the 

relatively limited amount of lead-time 

between now and model years 2012– 

2016, the need for much of these 

resources over the next few years, as 

well the current financial and related 

circumstances of the automotive 

industry. EPA is not concluding that the 

6% per year alternative standards are 

technologically infeasible, but EPA 

believes such standards for this time 

frame would be overly stringent given 

the significant strain it would place on 

the resources of the industry under 

current conditions. EPA believes this 

degree of stringency is not warranted at 

this time. Therefore EPA does not 

believe the 6% per year alternative 

would be an appropriate balance of 

various relevant factors for model years 

2012–1016. 

These alternative standards represent 

two possibilities out of many. The EPA 

believes that the current proposed 

standards represent an appropriate 

balance of the factors relevant under 

section 202(a). For further discussion of 

this issue, see Chapter 4 of the DRIA. 

E. Certification, Compliance, and 

Enforcement 

1. Compliance Program Overview 

This section of the preamble describes 

EPA’s proposal for a comprehensive 

program to ensure compliance with 

EPA’s proposed emission standards for 

carbon dioxide (CO2), nitrous oxide 

(N2O), and methane (CH4), as described 

in Section III.B. An effective compliance 

program is essential to achieving the 

environmental and public health 

benefits promised by these mobile 

source GHG standards. EPA’s proposal 

for a GHG compliance program is 

designed around two overarching 

priorities: (1) To address Clean Air Act 

(CAA) requirements and policy 

objectives; and (2) to streamline the 

compliance process for both 

manufacturers and EPA by building on 

existing practice wherever possible, and 

by structuring the program such that 

manufacturers can use a single data set 

to satisfy both the new GHG and 

Corporate Average Fuel Economy 

(CAFE) testing and reporting 

requirements. The program proposed by 

EPA and NHTSA 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. 

Vehicle emission standards 

established under the CAA apply 

throughout a vehicle’s full useful life. In 

this case EPA is proposing fleet average 

standards where compliance with the 

fleet average is determined based on the 

testing performed at time of production, 

as with the current CAFE fleet average. 

EPA is also proposing in-use standards 

that apply throughout a vehicle’s useful 

life, with the standard determined by 

adding a 10% adjustment factor to the 

model-level emission results used to 

calculate the fleet average. Therefore, 

EPA’s proposed program must not only 

assess compliance with the fleet average 

standards described in Section III.B, but 

must also assess compliance with the 

in-use standards. As it does now, EPA 

would use a variety of compliance 

mechanisms to conduct these 

assessments, including pre-production 

certification and post-production, in-use 

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164 2007 Progress Report Vehicle and Engine 

Compliance Activities; EPA–420–R–08–011; 

October 2008. This document is available 

electronically at http://www.epa.gov/otaq/about/ 

420r08011.pdf. 

165Light-Duty Automotive Technology and FuelEconomy Trends: 1975 Through 2008; EPA–420–S– 

08–003; September 2008. This document is 

available electronically at http://www.epa.gov/otaq/ 

fetrends.htm. 

166See 40 CFR 600.010–08(d). 

167 40 CFR 600.006–08(e). 

monitoring once vehicles enter 

customer service. Specifically, EPA is 

proposing a compliance program for the 

fleet average that utilizes CAFE program 

protocols with respect to testing, a 

certification procedure that operates in 

conjunction with the existing CAA Tier 

2 certification procedures, and 

assessment of compliance with the inuse standards concurrent with existing 

EPA and manufacturer Tier 2 emission 

compliance testing programs. Under the 

proposed compliance program 

manufacturers would also be afforded 

numerous flexibilities to help achieve 

compliance, both stemming from the 

program design itself in the form of a 

manufacturer-specific CO2 fleet average 

standard, as well as in various credit 

banking and trading opportunities, as 

described in Section III.C. EPA’s 

proposed compliance program is 

outlined in further detail below. EPA 

requests comment on all aspects of the 

compliance program design including 

comments about whether differences 

between the proposed compliance 

scheme for GHG and the existing 

compliance scheme for other regulated 

pollutants are appropriate. 

2. Compliance With Fleet-Average CO2

Standards 

Fleet average emission levels can only 

be determined when a complete fleet 

profile becomes available at the close of 

the model year. Therefore, EPA is 

proposing to determine compliance 

with the fleet average CO2 standards 

when the model year closes out, as is 

currently the protocol under EPA’s Tier 

2 program as well as under the current 

CAFE program. The compliance 

determination would be based on actual 

production figures for each model and 

on model-level emissions data collected 

through testing over the course of the 

model year. Manufacturers would 

submit this information to EPA in an 

end-of-year report which is discussed in 

detail in Section III.E.5.h below. 

Manufacturers currently conduct their 

CAFE testing over an entire model year 

to maximize efficient use of testing and 

engineering resources. Manufacturers 

submit their CAFE test results to EPA 

and EPA conducts confirmatory fuel 

economy testing at its laboratory on a 

subset of these vehicles under EPA’s 

Part 600 regulations. EPA is proposing 

that manufacturers continue to perform 

the model level testing currently 

required for CAFE fuel economy 

performance and measure and report the 

CO2 values for all tests conducted. Thus, 

manufacturers will submit one data set 

in satisfaction of both CAFE and GHG 

requirements such that EPA’s proposed 

program would not impose additional 

timing or testing requirements on 

manufacturers beyond that required by 

the CAFE program. For example, 

manufacturers currently submit fuel 

economy test results at the 

subconfiguration and configuration 

levels to satisfy CAFE requirements. 

Under this proposal manufacturers 

would also submit CO2 values for the 

same vehicles. Section III.E.3 discusses 

how this will be implemented in the 

certification process. 

a. Compliance Determinations 

As described in Section III.B above, 

the fleet average standards would be 

determined on a manufacturer by 

manufacturer basis, separately for cars 

and trucks, using the proposed footprint 

attribute curves. Under this proposal, 

EPA would calculate the fleet average 

emission level using actual production 

figures and, for each model type, CO2

emission test values generated at the 

time of a manufacturer’s CAFE testing. 

EPA would then compare the actual 

fleet average to the manufacturer’s 

footprint standard to determine 

compliance, taking into consideration 

use of averaging and/or other types of 

credits. 

Final determination of compliance 

with fleet average CO2 standards may 

not occur until several years after the 

close of the model year due to the 

flexibilities of carry-forward and carryback credits and the remediation of 

deficits (see Section III.C). A failure to 

meet the fleet average standard after 

credit opportunities have been 

exhausted could ultimately result in 

penalties and injunctive orders under 

the CAA as described in Section III.E.6 

below. 

EPA periodically provides mobile 

source emissions and fuel economy 

information to the public, for example 

through the annual Compliance 

Report 164 and Fuel Economy Trends 

Report.165 EPA plans to expand these 

reports to include GHG performance 

and compliance trends information, 

such as annual status of credit balances 

or debits, use of various credit 

programs, attained versus projected fleet 

average emission levels, and final 

compliance status for a model year after 

credit reconciliation occurs. We seek 

comment on all aspects of public 

dissemination of GHG compliance 

information 

b. Required Minimum Testing for Fleet 

Average CO2

As noted, EPA is proposing that the 

same test data required for determining 

a manufacturer’s compliance with the 

CAFE standard also be used to 

determine the manufacturer’s 

compliance with the fleet average CO2

emissions standard. CAFE requires 

manufacturers to submit test data 

representing at least 90% of the 

manufacturer’s model year production, 

by configuration.166 The CAFE testing 

covers the vast majority of models in a 

manufacturer’s fleet. Manufacturers 

industry-wide currently test more than 

1,000 vehicles each year to meet this 

requirement. EPA believes this 

minimum testing requirement is 

necessary and applicable for calculating 

accurate CO2 fleet average emissions. 

Manufacturers may test additional 

vehicles, at their option. As described 

above, EPA would use the emissions 

results from the model-level testing to 

calculate a manufacturer’s fleet average 

CO2 emissions and to determine 

compliance with the CO2 standard. 

EPA is proposing to continue to allow 

certain testing flexibilities that exist 

under the CAFE program. EPA has 

always permitted manufacturers some 

ability to reduce their test burden in 

tradeoff for lower fuel economy 

numbers. Specifically the practice of 

‘‘data substitution’’ enables 

manufacturers to apply fuel economy 

test values from a ‘‘worst case’’ 

configuration to other configurations in 

lieu of testing them. The substituted 

values may only be applied to 

configurations that would be expected 

to have better fuel economy and for 

which no actual test data exist. 

Substituted data would only be 

accepted for the GHG program if it is 

also used for CAFE purposes. 

EPA’s regulations for CAFE fuel 

economy testing permit the use of 

analytically derived fuel economy data 

in lieu of an actual fuel economy test in 

certain situations.167 Analytically 

derived data is generated 

mathematically using expressions 

determined by EPA and is allowed on 

a limited basis when a manufacturer has 

not tested a specific vehicle 

configuration. This has been done as a 

means to reduce some of the testing 

burden on manufacturers without 

sacrificing accuracy in fuel economy 

measurement. EPA has issued guidance 

that provides details on analytically 

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168CAA section 206(a)(1). 

169The specific test group criteria are described 

in 40 CFR 86.1827–01, car lines and model types 

have the meaning given in 40 CFR 86.1803–01. 

170 Initially in-use standards were different from 

the bin level determined at certification as the 

useful life level. The current in-use standards, 

however, are the same as the bin levels. In all cases, 

the bin level, reflecting useful life levels, has been 

used for determining compliance with the fleet 

average. 

171 40 CFR 86.1827–01. 172EPA provides for other groupings in certain 

circumstances, and can establish its own test groups 

in cases where the criteria do not apply. 40 CFR 

86.1827–01(b), (c) and (d). 

derived data and that specifies the 

conditions when analytically derived 

fuel economy may be used. EPA would 

also apply the same guidance to the 

GHG program and would allow any 

analytically derived data used for CAFE 

to also satisfy the GHG data reporting 

requirements. EPA would, however, 

need to revise the terms in the current 

equations for analytically derived fuel 

economy to specify them in terms of 

CO2. Analytically derived CO2 data 

would not be permitted for the Emission 

Data Vehicle representing a test group 

for pre-production certification, only for 

the determination of the model level test 

results used to determine actual fleetaverage CO2 levels. 

EPA is retaining the definitions 

needed to determine CO2 levels of each 

model type (such as ‘‘subconfiguration,’’ 

‘‘configuration,’’ ‘‘base level,’’ etc.) as 

they are currently defined in EPA’s fuel 

economy regulations. 

3. Vehicle Certification 

CAA section 203(a)(1) prohibits 

manufacturers from introducing a new 

motor vehicle into commerce unless the 

vehicle is covered by an EPA-issued 

certificate of conformity. Section 

206(a)(1) of the CAA describes the 

requirements for EPA issuance of a 

certificate of conformity, based on a 

demonstration of compliance with the 

emission standards established by EPA 

under section 202 of the Act. The 

certification demonstration requires 

emission testing, and must be done for 

each model year.168

Under Tier 2 and other EPA emission 

standard programs, vehicle 

manufacturers certify a group of 

vehicles called a test group. A test group 

typically includes multiple vehicle car 

lines and model types that share critical 

emissions-related features.169 The 

manufacturer generally selects and tests 

one vehicle to represent the entire test 

group for certification purposes. The 

test vehicle is the one expected to be the 

worst case for the emission standard at 

issue. Emission results from the test 

vehicle are used to assign the test group 

to one of several specified bins of 

emissions levels, identified in the Tier 

2 rule, and this bin level becomes the 

in-use emissions standard for that test 

group.170

Since compliance with the Tier 2 fleet 

average depends on actual test group 

sales volumes and bin levels, it is not 

possible to determine compliance at the 

time the manufacturer applies for and 

receives a certificate of conformity for a 

test group. Instead, EPA requires the 

manufacturer to make a good faith 

demonstration in the certification 

application that vehicles in the test 

group will both (1) comply throughout 

their useful life with the emissions bin 

assigned, and (2) contribute to fleetwide 

compliance with the Tier 2 average 

when the year is over. EPA issues a 

certificate for the vehicles included in 

the test group based on this 

demonstration, and includes a condition 

in the certificate that if the manufacturer 

does not comply with the fleet average, 

then production vehicles from that test 

group will be treated as not covered by 

the certificate to the extent needed to 

bring the manufacturer’s fleet average 

into compliance with Tier 2. 

The certification process often occurs 

several months prior to production and 

manufacturer testing may occur months 

before the certificate is issued. The 

certification process for the Tier 2 

program is an efficient way for 

manufacturers to conduct the needed 

testing well in advance of certification, 

and to receive the needed certificates in 

a time frame which allows for the 

orderly production of vehicles. The use 

of a condition on the certificate has been 

an effective way to ensure compliance 

with the Tier 2 fleet average. 

EPA is proposing to similarly 

condition each certificate of conformity 

for the GHG program upon a 

manufacturer’s good faith 

demonstration of compliance with the 

manufacturer’s fleetwide average CO2

standard. The following discussion 

explains how EPA proposes to integrate 

the proposed vehicle certification 

program into the existing certification 

program. 

a. Compliance Plans 

EPA is proposing that manufacturers 

submit a compliance plan to EPA prior 

to the beginning of the model year and 

prior to the certification of any test 

group. This plan would include the 

manufacturer’s estimate of its footprintbased standard (Section III.B), along 

with a demonstration of compliance 

with the standard based on projected 

model-level CO2 emissions, and 

production estimates. Manufacturers 

would submit the same information to 

NHTSA in the pre-model year report 

required for CAFE compliance. 

However, the GHG compliance plan 

could also include additional 

information relevant only to the EPA 

program. For example, manufacturers 

seeking to take advantage of air 

conditioning or other credit flexibilities 

(Section III.C) would include these in 

their compliance demonstration. 

Similarly, the compliance 

demonstration would need to include a 

credible plan for addressing deficits 

accrued in prior model years. EPA 

would review the compliance plan for 

technical viability and conduct a 

certification preview discussion with 

the manufacturer. EPA would view the 

compliance plan as part of the 

manufacturer’s good faith 

demonstration, but understands that 

initial projections can vary considerably 

from the reality of final production and 

emission results. EPA requests comment 

on the proposal to evaluate 

manufacturer compliance plans prior to 

the beginning of model year 

certification. EPA also requests 

comment on what criteria the agency 

should use to evaluate the sufficiency of 

the plan and on what steps EPA should 

take if it determines that a plan is 

unlikely to offset a deficit. 

b. Certification Test Groups and Test 

Vehicle Selection 

Manufacturers currently divide their 

fleet into ‘‘test groups’’ for certification 

purposes. The test group is EPA’s unit 

of certification; one certificate is issued 

per test group. These groupings cover 

vehicles with similar emission control 

system designs expected to have similar 

emissions performance.171 The factors 

considered for determining test groups 

include combustion cycle, engine type, 

engine displacement, number of 

cylinders and cylinder arrangement, 

fuel type, fuel metering system, catalyst 

construction and precious metal 

composition, among others. Vehicles 

having these features in common are 

generally placed in the same test 

group.172 Cars and trucks may be 

included in the same test group as long 

as they have similar emissions 

performance (manufacturers frequently 

produce cars and trucks that have 

identical engine designs and emission 

controls). 

EPA is proposing to retain the current 

Tier 2 test group structure for cars and 

light trucks in the certification 

requirements for CO2. At the time of 

certification, manufacturers would use 

the CO2 emission level from the Tier 2 

Emission Data Vehicle as a surrogate to 

represent all of the models in the test 

group. However, following certification 

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173EPA noted this potential lack of connection 

between fuel economy testing and testing for 

emissions standard purposes when it first adopted 

fuel economy test procedures. See 41 FR at 38677 

(Sept. 10, 1976). 

further testing would generally be 

required for compliance with the fleet 

average CO2 standard as described 

below. EPA’s issuance of a certificate 

would be conditioned upon the 

manufacturer’s subsequent model level 

testing and attainment of the actual fleet 

average. Further discussion of these 

requirements is presented in Section 

III.E.6. 

EPA recognizes that the Tier 2 test 

group criteria do not necessarily relate 

to CO2 emission levels. For instance, 

while some of the criteria, such as 

combustion cycle, engine type and 

displacement, and fuel metering, may 

have a relationship to CO2 emissions, 

others, such as those pertaining to the 

catalyst, may not. In fact, there are many 

vehicle design factors that impact CO2

generation and emission but are not 

included in EPA’s test group criteria.173

Most important among these may be 

vehicle weight, horsepower, 

aerodynamics, vehicle size, and 

performance features. 

EPA considered, but is not proposing, 

a requirement for separate CO2 test 

groups established around criteria more 

directly related to CO2 emissions. 

Although CO2-specific test groups might 

more consistently predict CO2 emissions 

of all vehicles in the test group, the 

addition of a CO2 test group requirement 

would greatly increase the preproduction certification burden for both 

manufacturers and EPA. For example, a 

current Tier 2 test group would need to 

be split into two groups if automatic and 

manual transmissions models had been 

included in the same group. Two- and 

four-wheel drive vehicles in a current 

test group would similarly require 

separation, as would weight differences 

among vehicles. This would at least 

triple the number of test groups. EPA 

believes that the added burden of 

creating separate CO2 test groups is not 

warranted or necessary to maintain an 

appropriately rigorous certification 

program because the test group data are 

later replaced by model specific data 

which are used as the basis for 

determining compliance with a 

manufacturer’s fleet average standard. 

EPA believes that the current test 

group concept is appropriate for N2O 

and CH4 because the technologies that 

would be employed to control N2O and 

CH4 emissions would generally be the 

same as those used to control the 

criteria pollutants. 

As just discussed, the ‘‘worst case’’ 

vehicle a manufacturer selects as the 

Emissions Data Vehicle to represent a 

test group under Tier 2 (40 CFR 

86.1828–01) may not have the highest 

levels of CO2 in that group. For instance, 

there may be a heavier, more powerful 

configuration that would have higher 

CO2, but may, due to the way the 

catalytic converter has been matched to 

the engine, actually have lower NOX, 

CO, PM or HC. 

Therefore, in lieu of a separate CO2- 

specific test group, EPA considered 

requiring manufacturers to select a CO2

test vehicle from within the Tier 2 test 

group that would be expected, based on 

good engineering judgment, to have the 

highest CO2 emissions within that test 

group. The CO2 emissions results from 

this vehicle would be used to establish 

an in-use CO2 emission standard for the 

test group. The requirement for a 

separate, worst case CO2 vehicle would 

provide EPA with some assurance that 

all vehicles within the test group would 

have CO2 emission levels at or below 

those of the selected vehicle, even if 

there is some variation in the CO2

control strategies within the test group 

(such as different transmission types). 

Under this approach, the test vehicle 

might or might not be the same one that 

would be selected as worst case for 

criteria pollutants. Thus, manufacturers 

might be required to test two vehicles in 

each test group, rather than a single 

vehicle. This would represent an added 

timing burden to manufacturers because 

they might need to build additional test 

vehicles at the time of certification that 

previously weren’t required to be tested. 

Instead, EPA is proposing to require a 

single Emission Data Vehicle that would 

represent the test group for both Tier 2 

and CO2 certification. The manufacturer 

would be allowed to initially apply the 

Emission Data Vehicle’s CO2 emissions 

value to all models in the test group, 

even if other models in the test group 

are expected to have higher CO2

emissions. However, as a condition of 

the certificate, this surrogate CO2

emissions value would generally be 

replaced with actual, model-level CO2

values based on results from CAFE 

testing that occurs later in the model 

year. This model level data would 

become the official certification test 

results (as per the conditioned 

certificate) and would be used to 

determine compliance with the fleet 

average. Only if the test vehicle is in fact 

the worst case CO2 vehicle for the test 

group could the manufacturer elect to 

apply the Emission Data Vehicle 

emission levels to all models in the test 

group for purposes of calculating fleet 

average emissions. Manufacturers 

would be unlikely to make this choice, 

because doing so would ignore the 

emissions performance of vehicle 

models in their fleet with lower CO2

emissions and would unnecessarily 

inflate their CO2 fleet average. Testing at 

the model level already occurs and data 

are already being submitted to EPA for 

CAFE and labeling purposes, so it 

would be an unusual situation that 

would cause a manufacturer to ignore 

these data and choose to accept a higher 

CO2 fleet average. 

EPA requests comment regarding 

whether the Tier 2 test group can 

adequately represent CO2 emissions for 

certification purposes, and whether the 

Emission Data Vehicle’s CO2 emission 

level is an appropriate surrogate for all 

vehicles in a test group at the time of 

certification, given that the certificate 

would be conditioned upon additional 

model level testing occurring during the 

year (see Section III.E.6) and that the 

surrogate CO2 emission values would be 

replaced with model-level emissions 

data from those tests. Comments should 

also address EPA’s desire to minimize 

the up-front pre-production testing 

burden and whether the proposed 

efficiencies would be balanced by the 

requirement to test all model types in 

the fleet by the conclusion of the model 

year in order to establish the fleet 

average CO2 levels. 

There are two standards that the 

manufacturer would be subject to, the 

fleet average standard and the in-use 

standard for the useful life of the 

vehicle. Compliance with the fleet 

average standard is based on 

production-weighted averaging of the 

test data that applies for each model. 

For each model, the in-use standard is 

set at 10% higher than the level used for 

that model in calculating the fleet 

average. The certificate would cover 

both of these standards, and the 

manufacturer would have to 

demonstrate compliance with both of 

these standards for purposes of 

receiving a certificate of conformity. The 

certification process for the in-use 

standard is discussed below in Section 

III.E.4. 

c. Certification Testing Protocols and 

Procedures 

To be consistent with CAFE, EPA 

proposes to combine the CO2 emissions 

results from the FTP and HFET tests 

using the same calculation method used 

to determine fuel economy for CAFE 

purposes. This approach is appropriate 

for CO2 because CO2 and fuel economy 

are so closely related. Other than the 

fact that fuel economy is calculated 

using a harmonic average and CO2

emissions can be calculated using a 

conventional average, the calculation 

methods are very similar. The FTP CO2

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data will be weighted at 55%, and the 

highway CO2 data at 45%, and then 

averaged to determine the combined 

number. See Section III.B.1 for more 

detailed information on CO2 test 

procedures, Section III.C.1 on Air 

Conditioning Emissions, and Section 

III.B.6 for N2O and CH4 test procedures. 

For the purposes of compliance with 

the fleet average and in-use standards, 

the emissions measured from each test 

vehicle will include hydrocarbons (HC) 

and carbon monoxide (CO), in addition 

to CO2. All three of these exhaust 

constituents are currently measured and 

used to determine the amount of fuel 

burned over a given test cycle using a 

‘‘carbon balance equation’’ defined in 

the regulations, and thus measurement 

of these is an integral part of current 

fuel economy testing. As explained in 

Section III.C, it is important to account 

for the total carbon content of the fuel. 

Therefore the carbon-related 

combustion products HC and CO must 

be included in the calculations along 

with CO2. CO emissions are adjusted by 

a coefficient that reflects the carbon 

weight fraction (CWF) of the CO 

molecule, and HC emissions are 

adjusted by a coefficient that reflects the 

CWF of the fuel being burned (the 

molecular weight approach doesn’t 

work since there are many different 

hydrocarbons being accounted for). 

Thus, EPA is proposing that the carbonrelated exhaust emissions of each test 

vehicle be calculated according to the 

following formula, where HC, CO, and 

CO2 are in units of grams per mile: 

Carbon-related exhaust emissions 

(grams/mile) = CWF*HC + 

1.571*CO + CO2

As part of the current CAFE and Tier 

2 compliance programs, EPA selects a 

subset of vehicles for confirmatory 

testing at its National Vehicle and Fuel 

Emissions Laboratory. The purpose of 

confirmatory testing is to validate the 

manufacturer’s emissions and/or fuel 

economy data. Under this proposal, EPA 

would add CO2, N2O, and CH4 to the 

emissions measured in the course of 

Tier 2 and CAFE confirmatory testing. 

The emission values measured at the 

EPA laboratory would continue to stand 

as official, as under existing regulatory 

programs. 

As is the current practice with fuel 

economy testing, if during EPA’s 

confirmatory testing the EPA CO2 value 

differs from the manufacturer’s value by 

more than 3%, manufacturers could 

request a re-test. Also as with current 

practice, the results of the re-test would 

stand as official, even if they differ from 

the manufacturer value by more than 

3%. EPA is proposing to allow a re-test 

request based on a 3% or greater 

disparity since a manufacturer’s fleet 

average emissions level would be 

established on the basis of model level 

testing only (unlike Tier 2 for which a 

fixed bin standard structure provides 

the opportunity for a compliance 

buffer). EPA requests comment on 

whether the 3% value currently used 

during CAFE confirmatory testing is 

appropriate and should be retained 

under the proposed GHG program. 

4. Useful Life Compliance 

Section 202(a)(1) of the CAA requires 

emission standards to apply to vehicles 

throughout their statutory useful life, as 

further described in Section III.A. For 

emission programs that have fleet 

average standards, such as Tier 2 and 

the proposed CO2 standards, the useful 

life requirement applies to individual 

vehicles rather than to the fleet average 

standard. For example, in Tier 2 the 

useful life requirements apply to the 

individual emission standard levels or 

‘‘bins’’ that the vehicles are certified to, 

not the fleet average standard. For Tier 

2, the useful life requirement is 10 years 

or 120,000 miles with an optional 15 

year or 150,000 mile provision. For each 

model, the proposed CO2 standards inuse are the model specific levels used in 

calculating the fleet average, adjusted to 

be 10% higher. EPA is proposing the 

10% adjustment factor to provide some 

margin for production and test-to-test 

variability that could result in 

differences between initial model-level 

emission results used in calculating the 

fleet average and any subsequent in-use 

testing. EPA requests comment on 

whether a separate in-use standard is an 

appropriate means of addressing issues 

of variability and whether 10% is an 

appropriate adjustment. 

This in-use standard would apply for 

the same useful life period as in Tier 2. 

Section 202(i)(3)(D) of the CAA allows 

EPA to adopt useful life periods for 

light-duty vehicles and light-duty trucks 

which differ from those in section 

202(d). Similar to Tier 2, the useful life 

requirements would be applicable to the 

model-level CO2 certification values 

(similar to the Tier 2 bins), not to the 

fleet average standard. 

EPA believes that the useful life 

period established for criteria pollutants 

under Tier 2 is also appropriate for CO2. 

Data from EPA’s current in-use 

compliance test program indicate that 

CO2 emissions from current technology 

vehicles increase very little with age 

and in some cases may actually improve 

slightly. The stable CO2 levels are 

expected because unlike criteria 

pollutants, CO2 emissions in current 

technology vehicles are not controlled 

by after treatment systems that may fail 

with age. Rather, vehicle CO2 emission 

levels depend primarily on fundamental 

vehicle design characteristics that do 

not change over time. Therefore, 

vehicles designed for a given CO2

emissions level would be expected to 

sustain the same emissions profile over 

their full useful life. 

The CAA requires emission standards 

to be applicable for the vehicle’s full 

useful life. Under Tier 2 and other 

vehicle emission standard programs, 

EPA requires manufacturers to 

demonstrate at the time of certification 

that the new vehicles being certified 

will continue to meet emission 

standards throughout their useful life. 

EPA allows manufacturers several 

options for predicting in-use 

deterioration, including full vehicle 

testing, bench-aging specific 

components, and application of a 

deterioration factor based on data and/ 

or engineering judgment. 

In the specific case of CO2, EPA does 

not currently anticipate notable 

deterioration and is therefore proposing 

that an assigned deterioration factor be 

applied at the time of certification. EPA 

is further proposing an additive 

assigned deterioration factor of zero, or 

a multiplicative factor of one. EPA 

anticipates that the deterioration factor 

would be updated from time to time, as 

new data regarding emissions 

deterioration for CO2 are obtained and 

analyzed. Additionally, EPA may 

consider technology-specific 

deterioration factors, should data 

indicate that certain CO2 control 

technologies deteriorate differently than 

others. 

During compliance plan discussions 

prior to the beginning of the 

certification process, EPA would 

explore with each manufacturer any 

new technologies that could warrant use 

of a different deterioration factor. 

Manufacturers would not be allowed to 

use the assigned deterioration factor but 

rather would be required to establish an 

appropriate factor for any vehicle model 

determined likely to experience 

increases in CO2 emissions over the 

vehicle’s useful life. If such an instance 

were to occur, EPA is also proposing to 

allow manufacturers to use the wholevehicle mileage accumulation method 

currently offered in EPA’s regulations. 

EPA requests comments on the 

proposal to allow manufacturers to use 

an EPA-assigned deterioration factor for 

CO2 useful life compliance, and to set 

that factor at zero (additive) or one 

(multiplicative). Particularly helpful 

would be data from in-use vehicles that 

demonstrate the rate of change in CO2

emissions over a vehicle’s useful life, 

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174 64 FR 23906, May 4, 1999. 

separated according to vehicle 

technology. 

N2O and CH4 emissions are directly 

affected by vehicle emission control 

systems. Any of the durability options 

offered under EPA’s current compliance 

program can be used to determine how 

emissions of N2O and CH4 change over 

time. 

a. Ensuring Useful Life Compliance 

The CAA requires a vehicle to comply 

with emission standards over its 

regulatory useful life and affords EPA 

broad authority for the implementation 

of this requirement. As such, EPA has 

authority to require a manufacturer to 

remedy any noncompliance issues. The 

remedy can range from the voluntary or 

mandatory recall of any noncompliant 

vehicles to the recalculation of a 

manufacturers fleet average emissions 

level. This provides manufacturers with 

a strong incentive to design and build 

complying vehicles. 

Currently, EPA regulations require 

manufacturers to conduct in-use testing 

as a condition of certification. 

Specifically, manufacturers must 

commit to later procure and test 

privately-owned vehicles that have been 

normally used and maintained. The 

vehicles are tested to determine the inuse levels of criteria pollutants when 

they are in their first and third years of 

service. This testing is referred to as the 

In-Use Verification Program (IUVP) 

testing, which was first implemented as 

part of EPA’s CAP 2000 certification 

program.174 The emissions data 

collected from IUVP serves several 

purposes. It provides EPA with annual 

real-world in-use data representing the 

majority of certified vehicles. EPA uses 

IUVP data to identify in-use problems, 

validate the accuracy of the certification 

program, verify the manufacturer’s 

durability processes, and support 

emission modeling efforts. 

Manufacturers are required to test low 

mileage and high mileage vehicles over 

the FTP and US06 test cycles. They are 

also required to provide evaporative 

emissions and on-board diagnostics 

(OBD) data. 

Manufacturers are required to provide 

data for all regulated criteria pollutants. 

Some manufacturers voluntarily submit 

CO2 data as part of IUVP. EPA is 

proposing that for IUVP testing, all 

manufacturers will provide emission 

data for CO2 and also for N2O and CH4. 

EPA is also proposing that 

manufacturers perform the highway test 

cycle as part of IUVP. Since the 

proposed CO2 standard reflects a 

combined value of FTP and highway 

results, it is necessary to include the 

highway emission test in IUVP to enable 

EPA to compare an in-use CO2 level 

with a vehicle’s in-use standard. EPA 

requests comments on adding the 

highway test cycle as part of the IUVP 

requirements. 

Another component of the CAP 2000 

certification program is the In-Use 

Confirmatory Program (IUCP). This is a 

manufacturer-conducted recall quality 

in-use test program that can be used as 

the basis for EPA to order an emission 

recall. In order to qualify for IUCP, there 

is a threshold of 1.30 times the 

certification emission standard and an 

additional requirement that at least 50% 

of the test vehicles for the test group fail 

for the same pollutant. EPA is proposing 

to exclude IUVP data for CO2, N2O, and 

CH4 emissions from the IUCP 

thresholds. At this time, EPA does not 

have sufficient data to determine if the 

existing thresholds are appropriate or 

even applicable to those emissions. 

Once EPA can gather more data from the 

IUVP program and from EPA’s internal 

surveillance program described below, 

EPA will reassess the need to exclude 

IUCP thresholds, and if warranted, 

propose a separate rulemaking 

establishing IUCP threshold criteria 

which may include CO2, N2O, and CH4

emissions. EPA requests comment on 

the proposal to exclude CO2, N2O, and 

CH4 from the IUCP threshold. 

EPA has also administered its own inuse testing program for light-duty 

vehicles under authority of section 

207(c) of the CAA for more than 30 

years. In this program, EPA procures 

and tests representative privately owned 

vehicles to determine whether they are 

complying with emission standards. 

When testing indicates noncompliance, 

EPA works with the manufacturer to 

determine the cause of the problem and 

to conduct appropriate additional 

testing to determine its extent or the 

effectiveness of identified remedies. 

This program operates in conjunction 

with the IUVP program and other 

sources of information to provide a 

comprehensive picture of the 

compliance profile for the entire fleet 

and address compliance problems that 

are identified. EPA proposes to add CO2, 

N2O, and CH4 to the emissions 

measurements it collects during 

surveillance testing. 

b. In-Use Compliance Standard 

For Tier 2, the in-use standard and the 

certification standard are the same. Inuse compliance for an individual 

vehicle is determined by comparing the 

vehicle’s in-use emission results with 

the emission standard levels or ‘‘bin’’ to 

which the vehicle is certified rather 

than to the Tier 2 fleet average standard 

for the manufacturer. This is because as 

part of a fleet average standard, 

individual vehicles can be certified to 

various emission standard levels, which 

could be higher or lower than the fleet 

average standard. Thus, comparing an 

individual vehicle to the fleet average, 

where that vehicle was certified to an 

emission level that could be different 

than the fleet average level, would be 

inappropriate. 

This would also be true for the 

proposed CO2 fleet average standard. 

Therefore, to ensure that an individual 

vehicle complies with the proposed CO2

standards in-use, it is necessary to 

compare the vehicle’s in-use CO2

emission result with the appropriate 

model-level certification CO2 level used 

in determining the manufacturer’s fleet 

average result. 

There is a fundamental difference 

between the proposed CO2 standards 

and Tier 2 standards. For Tier 2, the 

certification standard is one of eight 

different emission levels, or ‘‘bins,’’ 

whereas for the proposed CO2 fleet 

average standard, the certification 

standard is the model-level certification 

CO2 result. The Tier 2 fleet average 

standard is calculated using the ‘‘bin’’ 

emission level or standard, not the 

actual certification emission level of the 

certification test vehicle. So no matter 

how low a manufacturer’s actual 

certification emission results are, the 

fleet average is still calculated based on 

the ‘‘bin’’ level rather than the lower 

certification result. In contrast, EPA is 

proposing that the CO2 fleet average 

standard would be calculated using the 

actual vehicle model-level CO2 values 

from the certification test vehicles. With 

a known certification emission 

standard, such as the Tier 2 ‘‘bins,’’ 

manufacturers typically attempt to overcomply with the standard to give 

themselves some cushion for potentially 

higher in-use testing results due to 

emissions performance deterioration 

and/or variability that could result in 

higher emission levels during 

subsequent in-use testing. For our 

proposed CO2 standards, the 

certification standard is the actual 

certification vehicle test result, thus 

manufacturers cannot over comply since 

the certification test vehicle result will 

always be the value used in determining 

the CO2 fleet average. If the 

manufacturer attempted to design the 

vehicle to achieve a lower CO2 value, 

similar to Tier 2 for in-use purposes, the 

new lower CO2 value would simply 

become the new certification standard. 

The CO2 fleet average standard is 

based on the performance of preproduction technology that is 

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175See pages 39–41 of EPA’s Vehicle and Engine 

Compliance Activities 2007 Progress Report (EPA– 

420–R–08–011) published in October 2008. This 

document is available electronically at http:// 

epa.gov/otaq/about/420r08011.pdf. 

representative of the point of 

production, and while there is expected 

to be limited if any deterioration in 

effectiveness for any vehicle during the 

useful life, the fleet average standard 

does not take into account the test to 

test variability or production variability 

that can affect in-use levels. Therefore, 

EPA believes that unlike Tier 2, it is 

necessary to have a different in-use 

standard for CO2 to account for these 

variabilities. EPA is proposing to set the 

in-use standard at 10% higher than the 

appropriate model-level certification 

CO2 level used in determining the 

manufacturer’s fleet average result. 

As described above, manufacturers 

typically design their vehicles to emit at 

emission levels considerably below the 

standards. This intentional difference 

between the actual emission level and 

the emission standard is referred to as 

‘‘certification margin,’’ since it is 

typically the difference between the 

certification emission level and the 

emission standard. The certification 

margin can provide manufacturers with 

some protection from exceeding 

emission standards in-use, since the inuse standards are typically the same as 

the certification standards. For Tier 2, 

the certification margin is the delta 

between the specific emission standard 

level, or ‘‘bin,’’ to which the vehicle is 

certified, and the vehicle’s certification 

emission level. 

Since the level of the fleet average 

standard does not reflect this kind of 

variability, EPA believes it is 

appropriate to set an in-use standard 

that provides manufacturers with an inuse compliance factor of 10% that will 

act as a surrogate for a certification 

margin. The factor would only be 

applicable to CO2 emissions, and would 

be applied to the model-level test results 

that are used to establish the modellevel in-use standard. 

If the in-use emission result for the 

vehicle exceeds the model-level CO2

certification result multiplied by the inuse compliance factor of 10%, then the 

vehicle would have exceeded the in-use 

emission standard. The in-use 

compliance factor would apply to all inuse compliance testing including IUVP, 

selective enforcement audits, and EPA’s 

internal test program. 

The intent of the separate in-use 

standard, based on a 10% compliance 

factor adjustment, is to provide a 

reasonable margin such that vehicles are 

not automatically deemed as exceeding 

standards simply because of normal 

variability in test results. EPA has some 

concerns however that this in-use 

compliance factor could be perceived as 

providing manufacturers with the 

ability to design their fleets to generate 

CO2 emissions up to 10% higher than 

the actual values they use to certify and 

to calculate the year end fleet average 

value that determines compliance with 

the fleet average standard. This concern 

provides additional rationale for 

requiring FTP and HFET IUVP data for 

CO2 emissions to ensure that in-use 

values are not regularly 10% higher 

than the values used in the fleet average 

calculation. If in the course of reviewing 

a manufacturer’s IUVP data it becomes 

apparent that a manufacturer’s CO2

results are consistently higher than the 

values used for certification, EPA would 

discuss the matter with the 

manufacturer and consider possible 

resolutions such as changes to ensure 

that the emissions test data more 

accurately reflects the emissions level of 

vehicles at the time of production, 

increased EPA confirmatory testing, and 

other similar measures. 

EPA selected a value of 10% for the 

in-use standard based on a review of 

EPA’s fuel economy labeling and CAFE 

confirmatory test results for the past 

several vehicle model years. The EPA 

data indicate that it is common for test 

variability to range between three to six 

percent and only on rare occasions to 

exceed 10%. EPA believes that a value 

of 10% should be sufficient to account 

for testing variability and any 

production variability that a 

manufacturer may encounter. EPA 

considered both higher and lower 

values. The Tier 2 fleet as a whole, for 

example, has a certification margin 

approaching 50%.175 However, there are 

some fundamental differences between 

CO2 emissions and other criteria 

pollutants in the magnitude of the 

pollutants. Tier 2 NMOG and NOX

emission standards are hundredths of a 

gram per mile (e.g., 0.07 g/mi NOX & 

0.09 g/mi NMOG), whereas the CO2

standards are four orders of magnitude 

greater (e.g., 250 g/mi). Thus EPA does 

not believe it is appropriate to consider 

a value on the order of 50 percent. In 

addition, little deterioration in 

emissions control is expected in-use. 

The adjustment factor addresses only 

one element of what is usually built into 

a compliance margin. 

EPA requests comments regarding a 

proposed in-use standard that uses an 

in-use compliance factor. Specifically, is 

a factor the best way to address the 

technical and other feasibility of the inuse standard; is 10% the appropriate 

factor; can EPA expect variability to 

decrease as manufacturing experience 

increases, in which case would it be 

appropriate for the in-use compliance 

factor of 10% to decrease over time? 

EPA especially requests any data to 

support such comments. 

5. Credit Program Implementation 

As described in Section III.E.2 above, 

for each manufacturer’s model year 

production, EPA is proposing that the 

manufacturer would average the CO2

emissions within each of the two 

averaging sets (passenger cars and 

trucks) and compare that with its 

respective fleet average CO2 standards 

(which in turn would have been 

determined from the appropriate 

footprint curve applicable to that model 

year). In addition to this withincompany averaging, EPA is proposing 

that when a manufacturer’s fleet average 

CO2 emissions of vehicles produced in 

an averaging set over-complies 

compared to the applicable fleet average 

standard, the manufacturer could 

generate credits that it could save for 

later use (banking) or could transfer to 

another manufacturer (trading). Section 

III.C discusses opportunities that EPA is 

proposing for manufacturers to earn 

additional credits, beyond those simply 

calculated by ‘‘over-achieving’’ their 

applicable standard. Implementation of 

the credit program generally involves 

two steps: calculation of the credit 

amount and reporting the amount and 

the associated data and calculations to 

EPA. 

Of the various credit programs being 

proposed by EPA, there are two broad 

types. One type of credit directly lowers 

a manufacturer’s actual fleet average by 

virtue of being applied to the 

methodology for calculating the fleet 

average emissions. Examples of this 

type of credit include the credits 

available for alternative fuel vehicles 

and for advanced technology vehicles. 

The second type of credit is 

independent of the calculation of a 

manufacturer’s fleet average. Rather 

than giving credit by lowering a 

manufacturer’s fleet average via a credit 

mechanism, these credits (in 

megagrams) are calculated separately 

and are simply added to the 

manufacturer’s overall ‘‘bank’’ of credits 

(or debits). Using a fictional example, 

the remainder of this section will step 

through the different types of credits 

and show where and how they are 

calculated and how they impact a 

manufacturer’s available credits. 

a. Basic Credits for a Fleet With Average 

CO2 Emissions Below the Standard 

Basic credits are earned by doing 

better than the applicable standard. 

Manufacturers calculate their standards 

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(separate standards are calculated for 

cars and trucks) using the footprintbased equations described in Section 

III.B. A manufacturer’s actual end-ofyear fleet average CO2 is calculated 

similarly to the way in which CAFE 

values are currently calculated; in fact, 

the regulations are essentially identical. 

The current CAFE calculation methods 

are in 40 CFR Part 600. EPA is 

proposing to amend key subparts and 

sections of Part 600 to require that fleet 

average CO2 be calculated in a manner 

parallel to the way CAFE values are 

calculated. First manufacturers would 

determine a CO2-equivalent value for 

each model type. The CO2-equivalent 

value is a summation of the carboncontaining constituents of the exhaust 

emissions, with each weighted by a 

coefficient that reflects the carbon 

weight fraction of that constituent. For 

gasoline and diesel vehicles this simply 

involves measurement of total 

hydrocarbons and carbon monoxide in 

addition to CO2, but becomes somewhat 

more complex for alternative fuel 

vehicles due to the different nature of 

their exhaust emissions. For example, 

for ethanol-fueled vehicles, the emission 

tests must measure ethanol, methanol, 

formaldehyde, and acetaldehyde in 

addition to CO2. However, all these 

measurements are necessary to 

determine fuel economy and thus no 

new testing or data collection would be 

required. Second, manufacturers would 

calculate a fleet average by weighting 

the CO2-equivalent value for each model 

type by the production of that model 

type, as they currently do for the CAFE 

program. Again, this would be done 

separately for cars and trucks. Finally, 

the manufacturer would compare the 

calculated standard with the average 

that is actually achieved to determine 

the credits (or debits). Both the 

determination of the applicable 

standard and the actual fleet average 

would be done after the model year is 

complete and using final model year 

production data. 

Consider a basic example where 

Manufacturer ‘‘A’’ has calculated a car 

standard of 300 grams/mile and a fleet 

average of 290 grams/mile (Figure 

III.E.5–1). Further assume that the 

manufacturer produced 500,000 cars. 

The credit is calculated by taking the 

difference between the standard and the 

fleet average (300–290=10) and 

multiplying it by the production of 

500,000. This result is then multiplied 

by the lifetime vehicle miles travelled 

(for cars this is 190,971 miles), then 

finally divided by 1,000,000 to convert 

from grams to total megagrams. The 

result is the number of CO2 megagrams 

of credit (or deficit, if the manufacturer 

was not able to comply with the fleet 

average standard) generated by the 

manufacturer’s car fleet. In this 

example, the result is 954,855 

megagrams. 

BILLING CODE 4910–59–P 

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b. Advanced Technology Credits 

Advanced technology credits directly 

impact a manufacturer’s fleet average, 

thus increasing the amount of credits 

they earn (or reducing the amount of 

debits that would otherwise accrue). To 

earn these credits, manufacturers that 

produce electric vehicles, plug-in 

hybrid electric vehicles, or fuel cell 

electric vehicles would include these 

vehicles in the fleet average calculation 

with their model type emission values 

(0 g/m for electric vehicles and fuel cell 

electric vehicles, and a measured CO2

value for plug-in hybrid electric 

vehicles), but would apply the proposed 

multiplier of 2.0 to the production 

volume of each of these vehicles. This 

approach would thus enhance the 

impact that each of these low-CO2

advanced technology vehicles has on 

the manufacturer’s fleet average. 

EPA is proposing to limit availability 

of advanced technology credits to the 

technologies noted above, with the 

additional limitation that the vehicles 

must be certified to Tier 2 Bin 5 

emission standards or cleaner (this 

obviously applies primarily to plug-in 

hybrid electric vehicles). EPA is 

proposing to use the following 

definitions to determine which vehicles 


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are eligible for the advanced technology 

credits: 

• Electric vehicle means a motor 

vehicle that is powered solely by an 

electric motor drawing current from a 

rechargeable energy storage system, 

such as from storage batteries or other 

portable electrical energy storage 

devices, including hydrogen fuel cells, 

provided that: 

Æ (1) Recharge energy must be drawn 

from a source off the vehicle, such as 

residential electric service; and 

Æ (2) The vehicle must be certified to 

the emission standards of Bin #1 of 

Table S04–1 in paragraph (c)(6) of 

§ 86.1811. 

• Fuel cell electric vehicle means a 

motor vehicle propelled solely by an 

electric motor where energy for the 

motor is supplied by a fuel cell. 

• Fuel cell means an electrochemical 

cell that produces electricity via the 

reaction of a consumable fuel on the 

anode with an oxidant on the cathode 

in the presence of an electrolyte. 

• Plug-in hybrid electric vehicle 

(PHEV) means a hybrid electric vehicle 

that: (1) Has the capability to charge the 

battery from an off-vehicle electric 

source, such that the off-vehicle source 

cannot be connected to the vehicle 

while the vehicle is in motion, and (2) 

has an equivalent all-electric range of no 

less than 10 miles. 

With some simplifying assumptions, 

assume that 25,000 of Manufacturer A’s 

fleet are now plug-in hybrid electric 

vehicles with CO2 emissions of 100 

g/mi, and the remaining 475,000 are 

conventional technology vehicles with 

average CO2 emissions of 290 grams/ 

mile. By applying the factor of 2.0 to the 

electric vehicle production numbers in 

the appropriate places in the fleet 

average calculation formula 

Manufacturer A now has more than 2.6 

million credits (Figure III.E.5–2). 

Without the use of the multiplier 

Manufacturer A’s fleet average would be 

281 instead of 272, which would 

generate about 1.8 million credits. 

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c. Flexible-Fuel Vehicle Credits 

As noted in Section III.C, treatment of 

flexible-fuel vehicle (FFV) credits differs 

between 2012 to 2015 and 2016 and 

later. For the 2012 through 2015 model 

years the FFV credits will be calculated 

as they are in the CAFE program for the 

same model years, except that formulae 

in the regulations would be modified as 

needed to do the calculations in terms 

of grams per mile of CO2 rather than 

miles per gallon. Like the advanced 

technology vehicle credits, these credits 

are integral to the fleet average 

calculation, but rather than crediting the 

vehicles with an artificially inflated 

quantity as in the advanced technology 

credit program described above, the FFV 

credit program allows the vehicles to be 

represented by artificially reduced 

emissions. To use this credit program, 

the CO2 emissions of FFVs will be 

represented by the average of two 

things: the CO2 emissions while 

operating on gasoline, and the CO2

emissions operating on the alternative 

fuel multiplied by 0.15. 

For example, Manufacturer A now 

makes 30,000 FFVs with CO2 emissions 

of 280 g/mi using gasoline and 260 

g/mi using ethanol. The CO2 emissions 

that would represent the FFVs in the 

fleet average calculation would be 

calculated as follows: 

FFV emissions = (280 + 260×0.15) ÷ 2 

= 160 g/mi 


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Including these FFVs with the 

applicable credit in Manufacturer A’s 

fleet average, as shown below in Figure 

III.E.5–3, further reduces the fleet 

average to 256 grams/mile and increases 

the manufacturer’s credits to about 4.2 

million megagrams. 

In the 2016 and later model years the 

calculation of FFV emissions would be 

much the same except that the 

determination of the CO2 value to 

represent an FFV model type would be 

based upon the actual use of the 

alternative fuel and on actual CO2

emissions while operating on that fuel. 

EPA’s default assumption in the 

regulations is that the alternative fuel is 

used negligibly, and the CO2 value that 

would apply to an FFV by default 

would be the value determined for 

operation on conventional fuel. 

However, if the manufacturer believes 


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that the alternative fuel is used in realworld driving and that accounting for 

this use could improve the fleet average, 

the manufacturer would have two 

options. First, the regulations would 

allow a manufacturer to request that 

EPA determine an appropriate 

weighting value for an alternative fuel to 

reflect the degree of use of that fuel in 

FFVs relative to real-world use of the 

conventional fuel. Section III.C 

describes how EPA might make this 

determination. Any value determined 

by EPA would be published via 

guidance letter to manufacturers, and 

that weighting value would be available 

for all manufacturers to use for that fuel. 

A second option proposed in the 

regulations would allow a manufacturer 

to determine the degree of alternative 

fuel use for their own vehicle(s), using 

a variety of potential methods. Both the 

method and the use of the final results 

would have to be approved by EPA 

before their use would be allowed. In 

either case, whether EPA supplies the 

weighting factors or the manufacturer 

determines them, the CO2 emissions of 

an FFV in 2016 and later would be as 

follows (assuming non-zero use of the 

alternative fuel): 

(W1×CO2conv)+(W2×CO2alt), 

Where, 

W1 and W2 are the proportion of miles 

driven using conventional fuel and 

alternative fuel, respectively, CO2conv is the 

CO2 value while using conventional fuel, and 

CO2alt is the CO2 value while using the 

alternative fuel. 

d. Dedicated Alternative Fuel Vehicle 

Credits 

Like the FFV credit program 

described above, these credits would be 

treated differently in the first years of 

the program than in the 2016 and later 

model years. In fact, these credits are 

essentially identical to the FFV credits 

except for two things: (1) There is no 

need to average CO2 values for gasoline 

and alternative fuel, and (2) in 2016 and 

later there is no demonstration needed 

to get a benefit from the alternative fuel. 

The CO2 values are essentially 

determined the same way they are for 

FFVs operating on the alternative fuel. 

For the 2012 through 2015 model years 

the CO2 test results are multiplied by 

the credit adjustment factor of 0.15, and 

the result is production-weighted in the 

fleet average calculation. For example, 

assume that Manufacturer A now 

produces 20,000 dedicated CNG 

vehicles with CO2 emissions of 220 

grams/mile, in addition to the FFVs and 

PHEVs already included in their fleet 

(Figure III.E.5–4). Prior to the 2016 

model year the CO2 emissions 

representing these CNG vehicles would 

be 33 grams/mile (220 × 0.15). 

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BILLING CODE 4910–59–C 

The calculation for 2016 and later 

would be exactly the same except the 

0.15 credit adjustment factor would be 

removed from the equation, and the 

CNG vehicles would simply be 

production-weighted in the equation 

using their actual emissions value of 

220 grams/mile instead of the 

‘‘credited’’ value of 33 grams/mile. 

e. Air Conditioning Leakage Credits 

Unlike the credit programs described 

above, air conditioning-related credits 

do not affect the overall calculation of 

the fleet average. Whether a 

manufacturer generates zero air 

conditioning credits or many, the 

calculated fleet average remains the 

same. Air conditioning credits are 

calculated and added to any credits (or 

deficit) that results from the fleet 

average calculation. Thus, these credits 

can increase a manufacturer’s credit 

balance or offset a deficit, but their 

calculation is external to the fleet 

average calculation. As noted in Section 

III.C, manufacturers could generate 

credits for reducing the leakage of 

refrigerant from their air conditioning 

systems. To do this the manufacturer 

would identify an air conditioning 

system improvement, indicate that they 


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intend to use the improvement to 

generate credits, and then calculate an 

annual leakage rate (grams/year) for that 

system based on the method defined by 

the proposed regulations. Air 

conditioning credits would be 

determined separately for cars and 

trucks using the car and truck-specific 

equations described in Section III.C. 

In order to put these credits on the 

same basis as the basic and other credits 

describe above, the air conditioning 

leakage credits would need to be 

calculated separately for cars and 

trucks. Thus, the resulting grams per 

mile credit determined from the 

appropriate car or truck equation would 

be multiplied by the lifetime VMT 

(190,971 for cars; 221,199 for trucks), 

and then divided by 1,000,000 to get the 

total megagrams of CO2 credits 

generated by the improved air 

conditioning system. Although the 

calculations are done separately for cars 

and trucks, the total megagrams would 

be summed and then added to the 

overall credit balance maintained by the 

manufacturer. 

For example, assume that 

Manufacturer A has improved an air 

conditioning system that is installed in 

250,000 cars and that the calculated 

leakage rate is 12 grams/year. Assume 

that the manufacturer has also 

implemented a new refrigerant with a 

Global Warming Potential of 850. In this 

case the credit per air conditioning unit, 

rounded to the nearest gram per mile 

would be: 

[13.8 × [1—(12/16.6 × 850/1430)] = 7.9 

g/mi. 

Total megagrams of credits would 

then be: 

[ 7.9 × 250,000 × 190971 ] ÷ 1,000,000 

= 377,168 Mg. 

These credits would be added directly 

to a manufacturer’s total balance; thus 

in this example Manufacturer A would 

now have, after consideration of all the 

above credits, a total of 5,437,900 

Megagrams of credits. 

f. Air Conditioning Efficiency Credits 

As noted in Section III.C.1.b, 

manufacturers could earn credits for 

improvements in air conditioning 

efficiency that reduce the impact of the 

air conditioning system on fuel 

consumption. These credits are similar 

to the air conditioning leakage credits 

described above, in that these credits are 

determined independently from the 

manufacturer’s fleet average calculation, 

and the resulting credits are added to 

the manufacturer’s overall balance for 

the respective model year. Like the air 

conditioning leakage credits, these 

credits can increase a manufacturer’s 

credit balance or offset a deficit, but 

their calculation is external to the fleet 

average calculation. 

In order to put these credits on the 

same basis as the basic and other credits 

describe above, the air conditioning 

leakage credits would need to be 

calculated separately for cars and 

trucks. Thus, the resulting grams per 

mile credit determined in the above 

equation would be multiplied by the 

lifetime VMT (190,971 for cars; 221,199 

for trucks), and then divided by 

1,000,000 to get the total megagrams of 

CO2 credits generated by the improved 

air conditioning system. Although the 

calculations are done separately for cars 

and trucks, the total megagrams can be 

summed and then added to the overall 

credit balance maintained by the 

manufacturer. 

As described in Section III.C, 

manufacturers would determine their 

credit based on selections from a menu 

of technologies, each of which provides 

a gram per mile credit amount. The 

credits would be summed for all the 

technologies implemented by the 

manufacturer, but could not exceed 5.7 

grams per mile. Once this is done, the 

calculation is a straightforward 

translation of a gram per mile credit to 

total car or truck megagrams, using the 

same methodology described above. For 

example, if Manufacturer A implements 

enough technologies to get the 

maximum 5.7 grams per mile for an air 

conditioning system that sells 250,000 

units in cars, the calculation of total 

credits would be as follows: 

[5.7 × 250,000 × 190971] ÷ 1,000,000 = 

272,134 Mg. 

These credits would be added directly 

to a manufacturer’s total balance; thus 

in this example Manufacturer A would 

now have, after consideration of all the 

above credits, a total of 5,710,034 

Megagrams of credits. 

g. Off-Cycle Technology Credits 

As described in Section III.C, these 

credits would be available for certain 

technologies that achieve real-world 

CO2 reductions that aren’t adequately 

captured on the city or highway test 

cycles used to determine compliance 

with the fleet average standards. Like 

the air conditioning credits, these 

credits are independent of the fleet 

average calculation. Section III.C.4 

describes two options for generating 

these credits: either using EPA’s 5-cycle 

fuel economy labeling methodology, or 

if that method fails to capture the CO2- 

reducing impact of the technology, the 

manufacturer could propose and use, 

with EPA approval, a different 

analytical approach to determining the 

credit amount. Like the air conditioning 

credits above, these credits would have 

to be determined separately for cars and 

trucks because of the differing lifetime 

mileage assumptions between cars and 

trucks. 

Using the 5-cycle approach would be 

relatively straightforward, and because 

the 5-cycle formulae account for 

nationwide variations in driving 

conditions, no additional adjustments to 

the test results would be necessary. The 

manufacturer would simply calculate a 

5-cycle CO2 value with the technology 

installed and operating and compare it 

with a 5-cycle CO2 value determined 

without the technology installed and/or 

operating. Existing regulations describe 

how to calculate 5-cycle fuel economy 

values, and the proposed regulations 

contain provisions that describe how to 

calculate 5-cycle CO2 values. The 

manufacturer would have to design a 

test program that accounts for vehicle 

differences if the technology is installed 

in different vehicle types, and enough 

data would have to be collected to 

address data uncertainty issues. A 

description of such a test program and 

the results would be submitted to EPA 

for approval. 

As noted in Section III.C.4, a 

manufacturer-developed testing, data 

collection and analysis program would 

require some additional EPA approval 

and oversight. Once the demonstration 

of the CO2 reduction of an off-cycle 

technology is complete, however, and 

the resulting value accounts for 

variations in driving, climate and other 

conditions across the country, the two 

approaches are treated fundamentally 

the same way and in a way that parallels 

the approach for determining the air 

conditioning credits described above. 

Once a gram per mile value is approved 

by the EPA, the manufacturer would 

determine the total credit value by 

multiplying the gram per mile per 

vehicle credit by the volume of vehicles 

with that technology and approved for 

use of the credit. This would then be 

multiplied by the lifetime vehicle miles 

for cars or trucks, whichever applies, 

and divided by 1,000,000 to obtain total 

Megagrams of CO2 credits. These credits 

would then be added to the 

manufacturer’s total balance for the 

given model year. Just like the above air 

conditioning case, an off-cycle 

technology that is demonstrated to 

achieve an average CO2 reduction of 4 

grams/mile and that is installed in 

175,000 cars would generate credits as 

follows: 

[4 × 175,000 × 190971] ÷ 1,000,000 = 

133,680 Mg. 

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176 42 U.S.C. 7524(a), Civil Monetary Penalty 

Inflation Adjustment, 69 FR 7121 (Feb. 13, 2004) 

Continued 

h. End-of-Year Reporting 

In general, implementation of the 

averaging, banking, and trading (ABT) 

program, including the calculation of 

credits and deficits, would be 

accomplished via existing reporting 

mechanisms. EPA’s existing regulations 

define how manufacturers calculate 

fleet average miles per gallon for CAFE 

compliance purposes, and EPA is 

proposing to modify these regulations to 

also require the parallel calculation of 

fleet average CO2 levels for car and light 

truck compliance categories. These 

regulations already require an end-ofyear report for each model year, 

submitted to EPA, which details the test 

results and calculations that determine 

each manufacturer’s CAFE levels. EPA 

is proposing to require that this report 

also include fleet average CO2 levels. In 

addition to requiring reporting of the 

actual fleet average achieved, this endof-year report would also contain the 

calculations and data determining the 

manufacturer’s applicable fleet average 

standard for that model year. As under 

the existing Tier 2 program, the report 

would be required to contain the fleet 

average standard, all values required to 

calculate the fleet average standard, the 

actual fleet average CO2 that was 

achieved, all values required to 

calculate the actual fleet average, the 

number of credits generated or debits 

incurred, all the values required to 

calculate the credits or debits, and the 

resulting balance of credits or debits. 

Because of the multitude of credit 

programs that are available, the end-ofyear report will be required to have 

more data and a more defined and 

specific structure than the CAFE end– 

of-year report does today. Although 

requiring ‘‘all the data required’’ to 

calculate a given value should be 

inclusive, the proposed report would 

contain some requirements specific to 

certain types of credits. 

For advanced technology credits that 

apply to vehicles like electric vehicles 

and plug-in hybrid electric vehicles, 

manufacturers would be required to 

identify the number and type of these 

vehicles and the effect of these credits 

on their fleet average. The same would 

be true for credits due to flexible-fuel 

and alternative-fuel vehicles, although 

for 2016 and later flexible-fuel credits 

manufacturers would also have to 

provide a demonstration of the actual 

use of the alternative fuel in-use and the 

resulting calculations of CO2 values for 

such vehicles. For air conditioning 

leakage credits manufacturers would 

have to include a summary of their use 

of such credits that would include 

which air conditioning systems were 

subject to such credits, information 

regarding the vehicle models which 

were equipped with credit-earning air 

conditioning systems, the production 

volume of these air conditioning 

systems, the leakage score of each air 

conditioning system generating credits, 

and the resulting calculation of leakage 

credits. Air conditioning efficiency 

reporting will be somewhat more 

complicated given the phase-in of the 

efficiency test, and reporting would 

have to detail compliance with the 

phase-in as well as the test results and 

the resulting efficiency credits 

generated. Similar reporting 

requirements would also apply to the 

variety of possible off-cycle credit 

options, where manufacturers would 

have to report the applicable 

technology, the amount of credit per 

unit, the production volume of the 

technology, and the total credits from 

that technology. 

Although it is the final end-of-year 

report, when final production numbers 

are known, that will determine the 

degree of compliance and the actual 

values of any credits being generated by 

manufacturers, EPA is also proposing 

that manufacturers be prepared to 

discuss their compliance approach and 

their potential use of the variety of 

credit options in pre-certification 

meetings that EPA routinely has with 

manufacturers. In addition, and in 

conjunction with a pre-model year 

report required under the CAFE 

program, the manufacturer would be 

required to submit projections of all of 

the elements described above. 

Finally, to the extent that there are 

any credit transactions, the 

manufacturer would have to detail in 

the end-of-year report documentation on 

all credit transactions that the 

manufacturer has engaged in. 

Information for each transaction would 

include: The name of the credit 

provider, the name of the credit 

recipient, the date the transfer occurred, 

the quantity of credits transferred, and 

the model year in which the credits 

were earned. Failure by the 

manufacturer to submit the annual 

report in the specified time period 

would be considered to be a violation of 

section 203(a)(1) of the Clean Air Act. 

6. Enforcement 

As discussed above in Section III.E.5 

under the proposed program, 

manufacturers would report to EPA 

their fleet average standard for a given 

model year (reporting separately for 

each of the car and truck averaging sets), 

the credits or deficits generated in the 

current year, the balance of credit 

balances or deficits (taking into account 

banked credits, deficit carry-forward, 

etc. see Section III.E.5), and whether 

they were in compliance with the fleet 

average standard under the terms of the 

regulations. EPA would review the 

annual reports, figures, and calculations 

submitted by the manufacturer to 

determine any nonconformance. EPA 

requests comments on the above 

approach for monitoring and 

enforcement of the fleet average 

standard. 

Each certificate, required prior to 

introduction into commerce, would be 

conditioned upon the manufacturer 

attaining the CO2 fleet average standard. 

If a manufacturer failed to meet this 

condition and had not generated or 

purchased enough credits to cover the 

fleet average exceedance following the 

three year deficit carry-forward (Section 

III.B.4, then EPA would review the 

manufacturer’s sales for the most recent 

model year and designate which 

vehicles caused the fleet average 

standard to be exceeded. EPA would 

designate as nonconforming those 

vehicles with the highest emission 

values first, continuing until a number 

of vehicles equal to the calculated 

number of non-complying vehicles as 

determined above is reached and those 

vehicles would be considered to be not 

covered by the certificates of conformity 

covering those model types. In a test 

group where only a portion of vehicles 

would be deemed nonconforming, EPA 

would determine the actual 

nonconforming vehicles by counting 

backwards from the last vehicle sold in 

that model type. A manufacturer would 

be subject to penalties and injunctive 

orders on an individual vehicle basis for 

sale of vehicles not covered by a 

certificate. This is the same general 

mechanism used for the National LEV 

and Tier 2 corporate average standards, 

except that these programs operate 

slightly differently in that the noncompliant vehicles would be designated 

not in the most recent model year, but 

in the model year in which the deficit 

originated. EPA requests comment on 

which approach is most appropriate; the 

Tier 2 approach of penalizing vehicles 

from the year in which the deficit was 

generated, or the proposed approach 

that would penalize vehicles from the 

year in which the manufacturer failed to 

make up the deficit as required. 

Section 205 of the CAA authorizes 

EPA to assess penalties of up to $37,500 

per vehicle for violations of the 

requirements or prohibitions of this 

proposed rule.176 This section of the 

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and Civil Monetary Penalty Inflation Adjustment 

Rule, 73 FR 75340 (Dec. 11, 2008). 

177 In re Spang & Co., 6 E.A.D. 226, 249 (EAB 

1995). 

178B.J. Carney Industries, 7 E.A.D. 171, 232, n. 82 

(EAB 1997). 179 40 CFR 86.1806–04. 

CAA provides that the agency shall take 

the following penalty factors into 

consideration in determining the 

appropriate penalty for any specific 

case: The gravity of the violation, the 

economic benefit or savings (if any) 

resulting from the violation, the size of 

the violator’s business, the violator’s 

history of compliance with this title, 

action taken to remedy the violation, the 

effect of the penalty on the violator’s 

ability to continue in business, and such 

other matters as justice may require. 

EPA recognizes that it may be 

appropriate, should a manufacturer fail 

to comply with the NHTSA fuel 

economy standards as well as the CO2

standard proposed today in a case 

arising out of the same facts and 

circumstances, to take into account the 

civil penalties that NHTSA has assessed 

for violations of the CAFE standards 

when determining the appropriate 

penalty amount for violations of the CO2

emissions standards. This approach is 

consistent with EPA’s broad discretion 

to consider ‘‘such other matters as 

justice may require,’’ and will allow 

EPA to exercise its discretion to prevent 

injustice and ensure that penalties for 

violations of the CO2 rule are assessed 

in a fair and reasonable manner. 

The statutory penalty factor that 

allows EPA to consider ‘‘such other 

matters as justice may require’’ vests 

EPA with broad discretion to reduce the 

penalty when other adjustment factors 

prove insufficient or inappropriate to 

achieve justice.177 The underlying 

principle of this penalty factor is to 

operate as a safety mechanism when 

necessary to prevent injustice.178

In other environmental statutes, 

Congress has specifically required EPA 

to consider penalties assessed by other 

government agencies where violations 

arise from the same set of facts. For 

instance, section 311(b)(8) of the Clean 

Water Act, 33 U.S.C. 1321(b)(8) 

authorizes EPA to consider any other 

penalty for the same incident when 

determining the appropriate Clean 

Water Act penalty. Likewise, section 

113(e) of the CAA authorizes EPA to 

consider ‘‘payment by the violator of 

penalties previously assessed for the 

same violation’’ when assessing 

penalties for certain violations of Title 

I of the Act. 

7. Prohibited Acts in the CAA 

Section 203 of the Clean Air Act 

describes acts that are prohibited by 

law. This section and associated 

regulations apply equally to the 

greenhouse standards proposed today as 

to any other regulated pollutant. 

8. Other Certification Issues 

a. Carryover/Carry Across Certification 

Test Data 

EPA’s certification program for 

vehicles allows manufacturers to carry 

certification test data over and across 

certification testing from one model year 

to the next, when no significant changes 

to models are made. EPA expects that 

this policy could also apply to CO2, N2O 

and CH4 certification test data. A 

manufacturer may also be eligible to use 

carryover and carry across data to 

demonstrate CO2 fleet average 

compliance if they had done so for 

CAFE purposes. 

b. Compliance Fees 

The CAA allows EPA to collect fees 

to cover the costs of issuing certificates 

of conformity for the classes of vehicles 

and engines covered by this proposal. 

On May 11, 2004, EPA updated its fees 

regulation based on a study of the costs 

associated with its motor vehicle and 

engine compliance program (69 FR 

51402). At the time that cost study was 

conducted the current rulemaking was 

not considered. 

At this time the extent of any added 

costs to EPA as a result of this proposal 

is not known. EPA will assess its 

compliance testing and other activities 

associated with the proposed rule and 

may amend its fees regulations in the 

future to include any warranted new 

costs. 

c. Small Entity Deferment 

EPA is proposing to defer CO2

standards for certain small entities, and 

these entities (necessarily) would not be 

subject to the certification requirements 

of this proposal. 

As discussed in Section III.B.7, 

businesses meeting the Small Business 

Administration (SBA) criterion of a 

small business as described in 13 CFR 

121.201 would not be subject to the 

proposed GHG requirements, pending 

future regulatory action. EPA is 

proposing that such entities submit a 

declaration to EPA containing a detailed 

written description of how that 

manufacturer qualifies as a small entity 

under the provisions of 13 CFR 121.201 

in order to ensure EPA is aware of the 

deferred companies. This declaration 

would have to be signed by a chief 

officer of the company, and would have 

to be made at least 30 days prior to the 

introduction into commerce of any 

vehicles for each model year for which 

the small entity status is requested, but 

not later than December of the calendar 

year prior to the model year for which 

deferral is requested. For example, if a 

manufacturer will be introducing model 

year 2012 vehicles in October of 2011, 

then the small entity declaration would 

be due in September of 2011. If 2012 

model year vehicles are not planned for 

introduction until March of 2012, then 

the declaration would have to be 

submitted in December of 2011. Such 

entities are not automatically exempted 

from other EPA regulations for lightduty vehicles and light-duty trucks; 

therefore, absent this annual declaration 

EPA would assume that each entity was 

not deferred from compliance with the 

proposed greenhouse gas standards. 

d. Onboard Diagnostics (OBD) and CO2

Regulations 

The light-duty on-board diagnostics 

(OBD) regulations require manufacturers 

to detect and identify malfunctions in 

all monitored emission-related 

powertrain systems or components.179

Specifically, the OBD system is required 

to monitor catalysts, oxygen sensors, 

engine misfire, evaporative system 

leaks, and any other emission control 

systems directly intended to control 

emissions, such as exhaust gas 

recirculation (EGR), secondary air, and 

fuel control systems. The monitoring 

threshold for all of these systems or 

components is 1.5 times the applicable 

standards, which typically include 

NMHC, CO, NOX, and PM. EPA is 

confident that many of the emissionrelated systems and components 

currently monitored would effectively 

catch any malfunctions related to CO2

emissions. For example, malfunctions 

resulting from engine misfire, oxygen 

sensors, the EGR system, the secondary 

air system, and the fuel control system 

would all have an impact on CO2

emissions. Thus, repairs made to any of 

these systems or components should 

also result in an improvement in CO2

emissions. In addition, EPA does not 

have data on the feasibility or 

effectiveness of monitoring various 

emission systems and components for 

CO2 emissions and does not believe it 

would be prudent to include CO2

emissions without such information. 

Therefore, at this time, EPA does not 

plan to require CO2 emissions as one of 

the applicable standards required for the 

OBD monitoring threshold. EPA plans 

to evaluate OBD monitoring technology, 

with regard to monitoring CO2

emissions-related systems and 

components, and may choose to propose 

to include CO2 emissions as part of the 

OBD requirements in a future regulatory 

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180See CAA 206(f). 181 45 FR 49256, July 24, 1980. 

action. EPA requests comment as to 

whether this is appropriate at this time, 

and specifically requests any data that 

would support the need for CO2-related 

components that could or should be 

monitored via an OBD system. 

e. Applicability of Current High 

Altitude Provisions to Greenhouse 

Gases 

EPA is proposing that vehicles 

covered by this proposal meet the CO2, 

N2O and CH4 standard at altitude. The 

CAA requires emission standards under 

section 202 to apply at all altitudes.180

EPA does not expect vehicle CO2, CH4, 

or N2O emissions to be significantly 

different at high altitudes based on 

vehicle calibrations commonly used at 

all altitudes. Therefore, EPA is 

proposing to retain its current high 

altitude regulations so manufacturers 

would not normally be required to 

submit vehicle CO2 test data for high 

altitude. Instead, they would submit an 

engineering evaluation indicating that 

common calibration approaches will be 

utilized at high altitude. Any deviation 

in emission control practices employed 

only at altitude would need to be 

included in the auxiliary emission 

control device (AECD) descriptions 

submitted by manufacturers at 

certification. In addition, any AECD 

specific to high altitude would be 

required to include emissions data to 

allow EPA evaluate and quantify any 

emission impact and validity of the 

AECD. EPA requests comment on this 

approach, and specifically requests data 

on impact of altitude on FTP and HFET 

CO2 emissions. 

f. Applicability of Standards to 

Aftermarket Conversions 

With the exception of the small entity 

deferment option EPA is proposing, 

EPA’s emission standards, including the 

proposed greenhouse gas standards, 

would continue to apply as stated in the 

applicability sections of the relevant 

regulations. The proposed greenhouse 

gas standards are being incorporated 

into 40 CFR part 86, subpart S, the 

provisions of which include exhaust 

and evaporative emission standards for 

criteria pollutants. Subpart S includes 

requirements for new light-duty 

vehicles, light-duty trucks, mediumduty passenger vehicles, Otto-cycle 

complete heavy-duty vehicles, and some 

incomplete light-duty trucks. Subpart S 

is currently specifically applicable to 

aftermarket conversion systems, 

aftermarket conversion installers, and 

aftermarket conversion certifiers, as 

those terms are defined in 40 CFR 

85.502. EPA expects that some 

aftermarket conversion companies 

would qualify for and seek the small 

entity deferment, but those that do not 

qualify would be required to meet the 

applicable emission standards, 

including the proposed greenhouse gas 

standards. 

9. Miscellaneous Revisions to Existing 

Regulations 

a. Revisions and Additions to 

Definitions 

EPA is proposing to amend its 

definitions of ‘‘engine code,’’ 

‘‘transmission class,’’ and ‘‘transmission 

configuration’’ in its vehicle 

certification regulations (Part 86) to 

conform with the definitions for those 

terms in its fuel economy regulations 

(Part 600). The exact terms in Part 86 are 

used for reporting purposes and are not 

used for any compliance purpose (e.g., 

an engine code would not determine 

which vehicle was selected for emission 

testing). However, the terms are used for 

this purpose in Part 600 (e.g., engine 

codes, transmission class, and 

transmission configurations are all 

criteria used to determine which 

vehicles are to be tested for the purposes 

of establishing corporate average fuel 

economy). Here, EPA is proposing that 

the same vehicles tested to determine 

corporate average fuel economy also be 

tested to determine fleet average CO2, so 

the same definitions should apply. Thus 

EPA is proposing to amend its Part 86 

definitions of the above terms to 

conform to the definitions in Part 600. 

To bring EPA’s fuel economy 

regulations in Part 600 into conformity 

with this proposal for fleet average CO2

and NHTSA’s reform truck regulations 

two amendments are proposed. First, 

the definition of ‘‘footprint’’ that is 

proposed in this rule is also being 

proposed for addition to EPA’s Part 86 

and 600 regulations. This definition is 

based on the definition promulgated by 

NHTSA at 49 CFR 523.2. Second, EPA 

is proposing to amend its model year 

CAFE reporting regulations to include 

the footprint information necessary for 

EPA to determine the reformed truck 

standards and the corporate average fuel 

economy. This same information is 

proposed to be included in this proposal 

for fleet average CO2 and fuel economy 

compliance. 

b. Addition of Ethanol Fuel Economy 

Calculation Procedures 

EPA is proposing to add calculation 

procedures to part 600 for determining 

the carbon-related exhaust emissions 

and calculating the fuel economy of 

vehicles operating on ethanol fuel. 

Manufacturers have been using these 

procedures as needed, but the regulatory 

language—which specifies how to 

determine the fuel economy of gasoline, 

diesel, compressed natural gas, and 

methanol fueled vehicles—has not 

previously been brought up-to-date to 

provide procedures for vehicles 

operating on ethanol. Thus EPA is 

proposing a carbon balance approach 

similar to other fuels for the 

determination of carbon-related exhaust 

emissions for the purpose of 

determining fuel economy and for 

compliance with the proposed fleet 

average CO2 standards. The carbon 

balance formula is similar to that for 

methanol, except that ethanol-fueled 

vehicles must also measure the 

emissions of ethanol and acetaldehyde. 

The proposed carbon balance equation 

for determining fuel economy is as 

follows, where CWF is the carbon 

weight fraction of the fuel and CWFexHC

is the carbon weight fraction of the 

exhaust hydrocarbons: 

mpg = (CWF × SG × 3781.8)/((CWFexHC× HC) 

+ (0.429 × CO) + (0.273 × CO2) + (0.375 

× CH3OH) + (0.400 × HCHO) + (0.521 × 

C2H5OH) + (0.545 × C2H4O)) 

The proposed equation for 

determining the total carbon-related 

exhaust emissions for compliance with 

the CO2 fleet average standards is the 

following, where CWFexHC is the carbon 

weight fraction of the exhaust 

hydrocarbons: 

CO2-eq = (CWFexHC× HC) + (0.429 × CO) + 

(0.375 × CH3OH) + (0.400 × HCHO) + 

(0.521 × C2H5OH) + (0.545 × C2H4O) + 

CO2. 

EPA requests comment on the use of 

these formulae to determine fuel 

economy and carbon emissions. 

c. Revision of Electric Vehicle 

Applicability Provisions 

In 1980 EPA issued a rule that 

provided for the inclusion of electric 

vehicles in the CAFE program.181 EPA 

now believes that certain provisions of 

the regulations should be updated to 

reflect the current state of motor vehicle 

emission and fuel economy regulations. 

In particular, EPA believes that the 

exemption of electric vehicles in certain 

cases from fuel economy labeling and 

CAFE requirements should be 

reevaluated and revised. 

The rule created an exemption for 

electric vehicles from fuel economy 

labeling in the following cases: (1) If the 

electric vehicles are produced by a 

company that produces only electric 

vehicles; and (2) if the electric vehicles 

are produced by a company that 

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49576 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

182 40 CFR 85.2102(14). 

183 ‘‘Fuel economy’’ per the statute is miles per 

gallon of gasoline (or equivalent amount of other 

fuel). 

produces fewer than 10,000 vehicles of 

all kinds worldwide. EPA believes that 

this exemption language is no longer 

appropriate and proposes to delete it 

from the affected regulations. First, 

since 1980 many regulatory provisions 

have been put in place to address the 

concerns of small manufacturers and 

enable them to comply with fuel 

economy and emission programs with 

reduced burden. EPA believes that all 

small volume manufacturers should 

compete on a fair and level regulatory 

playing field and that there is no longer 

a need to treat small volume electric 

vehicles any differently than small 

volume manufacturers of other types of 

vehicles. Current regulations contain 

streamlined certification procedures for 

small companies, and because electric 

vehicles emit no direct pollution there 

is effectively no certification emission 

testing burden. For example, the 

proposed greenhouse gas regulations 

contain a provision allowing the 

exemption of certain small entities. 

Meeting the requirements for fuel 

economy labeling and CAFE will entail 

a testing, reporting, and labeling burden, 

but these burdens are not extraordinary 

and should be applied equally to all 

small volume manufacturers, regardless 

of the fuel that moves their vehicles. 

EPA has been working with existing 

electric vehicle manufacturers on fuel 

economy labeling, and EPA believes it 

is important for the consumer to have 

impartial, accurate, and useful label 

information regarding the energy 

consumption of these vehicles. Second, 

EPCA does not provide for an 

exemption of electric vehicles from 

NHTSA’s CAFE program, and NHTSA 

regulations regarding the applicability 

of the CAFE program do not provide an 

exemption for electric vehicles. Third, 

the blanket exemption for any 

manufacturer of only electric vehicles 

assumed at the time that these 

companies would all be small, but the 

exemption language inappropriately did 

not account for size and would allow 

large manufacturers to be exempt as 

well. Finally, because of growth 

expected in the electric vehicle market 

in the future, EPA believes that the 

labeling and CAFE regulations need to 

be designed to more specifically 

accommodate electric vehicles and to 

require that consumers be provided 

with appropriate information regarding 

these vehicles. For these reasons EPA is 

proposing revisions to 40 CFR Part 600 

applicability regulations such that these 

electric vehicle exemptions are deleted 

starting with the 2012 model year. 

d. Miscellaneous Conforming 

Regulatory Amendments 

Throughout the regulations EPA has 

made a number of minor amendments to 

update the regulations as needed or to 

conform with amendments discussed in 

this preamble. For example, for 

consistency with the ethanol fuel 

economy calculation procedures 

discussed above, EPA has amended 

regulations where necessary to require 

the collection of emissions of ethanol 

and acetaldehyde. Other changes are 

made to applicability sections to remove 

obsolete regulatory requirements such 

as phase-ins related to EPA’s Tier 2 

emission standards program, and still 

other changes are made to better 

accommodate electric vehicles in EPA 

emission control regulations. Not all of 

these minor amendments are noted in 

this preamble, thus the reader should 

carefully evaluate the proposed 

regulatory text to ensure a complete 

understanding of the regulatory changes 

being proposed by EPA. 

10. Warranty, Defect Reporting, and 

Other Emission-Related Components 

Provisions 

Under section 207(a) of the CAA, 

manufacturers must warrant that a 

vehicle is designed to comply with the 

standards and will be free from defects 

that may cause it to not comply over the 

specified period which is 2 years/24,000 

miles (whichever is first) or, for major 

emission control components, 8 years/ 

80,000 miles. Under certain conditions, 

manufacturers may be liable to replace 

failed emission components at no 

expense to the owner. EPA regulations 

define ‘‘emission related parts’’ for the 

purpose of warranty. This definition 

includes parts which must function 

properly to assure continued 

compliance with the emission 

standards.182

The air conditioning system and its 

components have not previously been 

covered under the CAA warranty 

provisions. However, the proposed A/C 

leakage and A/C-related CO2 emission 

standards are dependent upon the 

proper functioning of a number of 

components on the A/C system, such as 

rings, fittings, compressors, and hoses. 

Therefore, EPA is proposing that these 

components be included under the CAA 

section 207(a) emission warranty 

provisions, with a warranty of 2 years/ 

24,000 miles. 

EPA requests comment as to whether 

any other parts or components should 

be designated as ‘‘emission related 

parts’’ subject to warranty and defect 

reporting provisions under this 

proposal. 

11. Light Duty Vehicles and Fuel 

Economy Labeling 

American consumers need accurate 

and meaningful information about the 

environmental and fuel economy 

performance of new light vehicles. EPA 

believes it is important that the fueleconomy label affixed to the new 

vehicles provide consumers with the 

critical information they need to make 

smart purchase decisions. This is a 

special challenge in light of the 

expected increase in market share of 

electric and other advanced technology 

vehicles. Consumers may need new and 

different information than today’s 

vehicle labels provide in order to help 

them understand the energy use and 

associated cost of owning these electric 

and advanced technology vehicles. As 

discussed below, these two issues are 

key to determining whether the current 

MPG-based fuel-economy label is 

adequate. 

Therefore, as part of this action, EPA 

seeks comments on issues surrounding 

consumer vehicle labeling in general, 

and labeling of advanced technology 

vehicles in particular. EPA also plans to 

initiate a separate rulemaking to explore 

in detail the information displayed on 

the fuel economy label and the 

methodology for deriving that 

information. The purposes of this new 

rulemaking would be to ensure that 

American consumers continue to have 

the most accurate, meaningful, and 

useful information available to them 

when purchasing new vehicles, and that 

the information is presented to them in 

clear and understandable terms. 

a. Background 

EPA has considerable experience in 

providing vehicle information to 

consumers through its fuel-economy 

labeling activities and related web-based 

programs. Under 49 U.S.C. 32908(b) 

EPA is responsible for developing the 

fuel economy labels that are posted on 

window stickers of all new light duty 

cars and trucks sold in the U.S. and, 

beginning with the 2011 model year, on 

all new medium-duty passenger 

vehicles (a category that includes large 

sport-utility vehicles and passenger 

vans). The statutory requirements 

established by EPCA require that the 

label contain the following: 

• The fuel economy of the vehicle; 183

• The estimated annual fuel cost of 

operating the vehicle; 

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184EPA and DOE jointly publish the annual Fuel 

Economy Guide and distribute it to dealers. 

185 49 U.S.C. 32904 and 10 CFR 474.3. 

186 49 U.S.C. 32905. 

187 71 FR 77872 (December 27, 2006). Fuel 

Economy Labeling of Motor Vehicles: Revisions to 

Improve Calculations of Fuel Economy Estimates. 

U.S. EPA. 

• The range of fuel economy of 

comparable vehicles among all 

manufacturers; 

• A statement that a fuel economy 

booklet is available from the dealer; 184

and 

• The amount of the ‘‘gas guzzler’’ tax 

imposed on the vehicle by the Internal 

Revenue Service. 

• Other information required or 

authorized by EPA that is related to the 

information required above. 

Fuel economy is defined as the 

number of miles traveled by an 

automobile for each gallon of gasoline 

(or equivalent amount of other fuel). It 

is relatively easy to determine the miles 

per gallon (MPG) for vehicles that use 

liquid fuels (e.g., gasoline or diesel), but 

an expression that uses gallons— 

whether miles per gallon or gallons per 

mile—may not be a useful metric for 

vehicles that have limited to no 

operation on liquid fuel such as electric 

or compressed natural gas vehicles. The 

mpg metric is the one generally used 

today to provide comparative fuel 

economy information to consumers. 

As part of its vehicle certification, 

CAFE, and fuel economy labeling 

authorities, EPA works with 

stakeholders on the testing and other 

regulatory requirements necessary to 

bring advanced technology vehicles to 

market. With increasing numbers of 

advanced technology vehicles beginning 

to be sold, EPA believes it is now 

appropriate to address potential 

regulatory and certification issues 

associated with these technologies 

including how best to provide relevant 

consumer information about their 

environmental impact, energy 

consumption, and cost. 

b. Test Procedures 

As discussed in this notice, there are 

explicit and very long-standing test 

procedures and calculation 

methodologies associated with CAFE 

that EPA uses to test conventionallyfueled vehicles and to calculate their 

fuel economy. These test procedures 

and calculations also generally apply to 

advanced technology vehicles (e.g., an 

electric (EV) or plug-in hybrid vehicle 

(PHEV)). 

The basic test procedure for an 

electric vehicle follows a standardized 

practice—an EV is fully charged and 

then driven over the city cycle (Urban 

Dynamometer Drive Schedule) until the 

vehicle can no longer maintain the 

required drive cycle vehicle speed. For 

some vehicles, this could require 

operation over multiple drive cycles. 

The EV is then fully recharged and the 

AC energy to the charger is recorded. 

To derive the CAFE value for electric 

vehicles, the amount of AC energy 

needed to recharge the battery is 

divided by the range the vehicle reached 

in the repeated city drive cycle. This 

calculation provides a raw CAFE energy 

consumption value expressed in 

kilowatt hours per 100 miles. The raw 

CAFE number is then converted to miles 

per gallon of equivalent gasoline using 

a Department of Energy (DOE) 

conversion factor of 82,700 Kwhr/gallon 

of gasoline.185 The DOE conversion 

factor combines several adjustments 

including: an adjustment similar to the 

statutory 6.67 multiplier credit 186 used 

in deriving the final CAFE value for 

alternative fueled vehicles; a factor 

representing the gasoline-equivalent 

energy content of electricity; and 

various adjustments to account for the 

relative efficiency of producing and 

transporting the electricity. The 

resulting value after the DOE conversion 

factor is applied becomes the final 

CAFE city value. 

The label value calculation for an EV 

uses a different conversion factor than 

the CAFE value calculation. To come up 

with the final city fuel economy label 

value for an EV, a conversion factor of 

33,705 Kwhr/gallon of gasoline 

equivalent is applied to the raw 

consumption number instead of the 

82,700 Kwhr/gallon used for CAFE. The 

conversion factor used for labeling 

purposes represents only the gasolineequivalent energy content of electricity, 

without the multiplier credit and other 

adjustments used in the CAFE 

calculation. The consumption, now 

expressed as a fuel economy in miles 

per gallon equivalent, is then applied to 

the derived 5-cycle equation required 

under EPA’s fuel economy labeling 

regulations. The above process is then 

repeated for the EV highway fuel 

economy label number. Finally, the 

combined city/highway numbers for the 

EV use the same 55/45 weighting as 

conventional vehicles to determine the 

final fuel economy label values. CAFE 

numbers end up being significantly 

higher for EVs than the associated fuel 

economy label values, both because a 

higher adjustment factor applies under 

CAFE regulations and also because 

other real-world adjustments such as the 

5-cycle test are not applied to the CAFE 

values. 

For PHEVs, a similar process would 

be followed, except that PHEVs require 

testing in both charge sustain (CS) and 

charge depleting (CD) modes to capture 

how these vehicles operate. For charge 

sustain modes, PHEVs essentially 

operate as conventional Hybrid Electric 

Vehicles (HEVs). PHEVs therefore test in 

all 5-cycles (for further information on 

these test cycles, see Section III.C.4) just 

as HEVs do for CS fuel economy. For CD 

fuel economy, PHEVs are only required 

to test on the Urban Dynamometer Drive 

Schedule and Highway Fuel Economy 

cycles just like other alternative fueled 

vehicles—the 5-cycle fuel economy 

testing is optional in the CD mode. 

There are additional processes that 

address different PHEV modes, such as 

for PHEVs that operate solely on 

electricity throughout the CD mode. 

As this discussion shows, the CAFE 

and fuel economy labeling test 

procedures and calculations for 

advanced technology vehicles such as 

EVs and PHEVs can be very 

complicated. EPA is interested in 

comments on these processes, including 

views on the appropriate use of 

adjustment factors. Currently in 

guidance, EPA references SAE J1634 for 

EV range and consumption test 

procedures. EPA currently includes the 

‘‘California Exhaust Emission Standards 

and Test Procedures for 2003 and 

Subsequent Model Zero-Emission 

Vehicles, in the Passenger Car, Light 

Truck, and Medium-duty Vehicle 

Classes’’ by reference in 40 CFR 86.1. As 

California requirements and SAE test 

procedures are updated these may be 

included by reference in the future. 

c. Current Fuel Economy Label 

In 2006 EPA redesigned the window 

stickers to make them more informative 

for consumers. More particular, the 

redesigned stickers more prominently 

feature annual fuel cost information, to 

provide contemporary and easy-to-use 

graphics for comparing the fuel 

economy of different vehicles, to use 

clearer text, and to include a Web site 

reference to www.fueleconomy.gov 

which provides additional information. 

In addition, EPA updated how the city 

and highway fuel economy values were 

calculated, to reflect typical real-world 

driving patterns.187 This rulemaking 

involved significant stakeholder 

outreach in determining how best to 

calculate and display this new 

information. The feedback EPA has 

received to date on the new label design 

and values has been generally very 

positive. 

During the 2006 label rulemaking 

process EPA requested comments on 

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49578 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

how a fuel consumption metric (such as 

gallons per 100 miles) could be used 

and represented to the public, including 

presentation in the annual Fuel 

Economy Guide. EPA received a number 

of comments from both vehicle 

manufacturers and consumer 

organizations, suggesting that the MPG 

measures can be misleading and that a 

fuel consumption metric might be more 

meaningful to consumers than the 

established MPG metric found on fuel 

economy labels. The reason is that fuel 

consumption metric, directly measures 

the amount of fuel used and is thus 

directly related to cost that consumers 

incur when filling up. 

The problem with the MPG metric is 

that it is inversely related to fuel 

consumption and cost. As higher MPG 

values are reached, the relative impact 

of these higher values on fuel 

consumption and fuel costs decreases. 

For example, a 25 percent increase in 

gallons per 100 miles will always lead 

to a 25 percent increase in the fuel cost, 

but a similar 25 percent increase in 

MPG will have varying impacts on 

actual fuel cost depending on whether 

the percent increase occurs to a low or 

high MPG value. Many consumers do 

not understand this nonlinear 

relationship between MPG and fuel 

costs. Evidence suggest that people tend 

to see the MPG as being linear with fuel 

cost, which will lead to erroneous 

decisions regarding vehicle purchases. 

Figure III.E.11–1 below illustrates the 

issue; one can see that changes in MPG 

at low MPG levels can result in large 

changes in the fuel cost, while changes 

in MPG values at high MPG levels result 

in small changes in the fuel cost. For 

example, a change from 10 to 15 MPG 

will reduce the 10-mile fuel cost from 

$2.50 to $1.60, but a similar increase in 

MPG from 20 to 25 MPG will only 

reduce the 10-mile fuel cost by less than 

$0.30. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49579 

Because of the potential for 

consumers to misunderstand this MPG/ 

cost relationship, commenters on the 

2006 labeling rule universally agreed 

that any change to the label metric 

should involve a significant public 

education campaign directed toward 

both dealers and consumers. 

In 2006, EPA did not include a 

consumption-based metric on the 

redesigned fuel economy label in 2006. 

It was concerned about potential 

confusion associated with introducing a 

second metric on the label (MPG is a 

required element, as noted above). EPA 

has developed an interactive feature on 

www.fueleconomy.gov which allows 

consumers, while viewing data on a 

specific vehicle, to switch units between 

the MPG and gallons per 100 miles 

metrics. The tool also displays the cost 

and the amount of fuel needed to drive 

25 miles. As indicated above, however, 

EPA is alert to the problems with the 

MPG measure and the importance of 

providing consumers with a clear sense 


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49580 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

188 49 U.S.C. 3290(b)(F). 

of the consequences of their purchasing 

decisions; a gallon-per mile measure 

would have significant advantages. EPA 

plans to seek comment and engage in 

extensive public debate about fuel 

consumption and other appropriate 

consumer information metrics as part of 

a new labeling rule initiative. EPA also 

welcomes comments on this topic in 

response to this GHG proposal. 

d. Labeling for Advanced Technology 

Vehicles 

Even though a fuel consumption 

metric may more directly represent 

likely fuel costs than a fuel economy 

metric, any expression that uses 

gallons—whether miles per gallon or 

gallons per mile—is not a useful metric 

for vehicles that have limited to no 

operation on liquid fuel (e.g., electricity 

or compressed natural gas). For 

example, PHEVs and extended range 

electric vehicles (EREVs) can use two 

types of energy sources: (1) An onboard 

battery, charged by plugging the vehicle 

into the electrical grid via a 

conventional wall outlet, to power an 

electric motor, as well as (2) a gas or 

diesel-powered engine to propel the 

vehicle or power a generator used to 

provide electricity to the electric motor. 

Depending on how these vehicles are 

operated, they can use electricity 

exclusively, never use electricity and 

operate like a conventional hybrid, or 

operate in some combination of these 

two modes. The use of a MPG figure 

alone would not account for the 

electricity used to propel the vehicle. 

EPA has worked closely with 

numerous stakeholders including 

vehicle manufacturers, the Society of 

Automotive Engineers (SAE), the State 

of California, the Department of Energy 

(DOE) and others to develop possible 

approaches for both estimating fuel 

economy and labeling vehicles that can 

operate using more than one energy 

source. At the present time, EPA 

believes the appropriate method for 

estimating fuel economy of PHEVs and 

EREVs would be a weighted average of 

fuel economy for the two modes of 

operation. A methodology developed by 

SAE and DOE to predict the fractions of 

total distance driven in each mode of 

operation (electricity and gas) uses a 

term known as a utility factor (UF). By 

using a utility factor, it is possible to 

determine a weighted average for fuel 

economy of the electric and gasoline 

modes. For example, a UF of 0.8 would 

indicate that a PHEV or EREV operates 

in an all electric mode 80% of the time 

and uses the gasoline engine the other 

20% of the time. In this example, the 

weighted average fuel economy value 

would be influenced more by the 

electrical operation than the gasoline 

operation. 

Under this approach, a UF could be 

assigned to each successive fuel 

economy test until the battery charge 

was depleted and the PHEV or EREV 

needed power from the gasoline engine 

to propel the vehicle or to recharge the 

battery. One minus the sum of all the 

utility factors would then represent the 

fraction of driving performed in this 

‘‘gasoline mode.’’ Fuel economy could 

then be expressed as: 

FE

UF

FE

UF

FE

MPG

i

i

i

gasoline

=

+ −∑ ∑

1

1

Likewise, the electrical consumption 

would be expressed by adding the fuel 

consumption from each mode. Since 

there is no electrical consumption in 

hybrid mode, the equation for electricity 

consumption would be as follows: 

Utility factors could be cycle specific 

not only due to different battery ranges 

on different test cycles but also due to 

the fact that ‘‘highway’’ type driving 

may imply longer trips than urban 

driving. That is to say that the average 

city trip could be shorter than the 

average highway trip. 

e. Request for Comments 

EPA is interested in comments on 

both topics raised in this section. For 

the methodology, we are interested in 

comments addressing how the utility 

factor is calculated and which data 

should be used in establishing the UF. 

Additionally, commenters should 

address: The appropriateness of this 

approach for estimating fuel economy 

for PHEVs and EREVs, including the 

concept of using a UF to determine the 

fuel economy for vehicles operated in 

multiple modes; the appropriate form 

and value of the factor, including the 

type of data that would be necessary to 

confidently develop it accurately; and 

availability of other potential 

methodologies for determining fuel 

economy for vehicles that can operate in 

multiple modes, such as ‘‘all electric’’ 

and ‘‘hybrid,’’ including the use of fuel 

consumption, cost, GHG emissions, or 

other metrics in addition to miles per 

gallon. 

EPA is also requesting comment on 

how the agency can satisfy statutory 

labeling requirements while providing 

relevant information to consumers. For 

example, the statute indicates that EPA 

may provide other related items on the 

label beyond those that are required.188

EPA is interested in receiving comments 

on the potential approaches and 

supporting data we might consider for 

adding additional information regarding 

fuel economics while maintaining our 

statutory obligation to report MPG on 

the label. 

There are a number of different 

metrics that are available that could be 

useful in this regard. Two possible 

options would be to show consumption 

in fuel use per distance (e.g., gallons/ 

100 miles) or in cost per distance (e.g., 

$/100 miles). As discussed above, these 

two metrics have benefits over a straight 

mpg value in showing a more direct 

relationship between fuel consumption 

and cost. The cost/distance metric has 

an added potential benefit of providing 

a common basis for comparing 

differently fueled or powered vehicles, 

for example being able to show the cost 

of gasoline used over a specified 

distance or time for a conventional 

gasoline-powered vehicle in comparison 

to the gasoline and electricity used over 

the same period for a plug-in hybrid 

vehicle. Another approach would be to 

use a metric that provides information 

about a vehicle’s greenhouse gas 

emissions per unit of travel, such as 

carbon dioxide equivalent grams per 

mile (g CO2e/mi). This type of metric 

would allow consumers to directly 

compare among vehicles on the basis of 

their overall greenhouse gas impact. A 

total annual energy cost would be 

another way to look at this information, 

and is currently used on the fuel 

economy label. As is currently done, 

EPA would need to determine and show 

a common set of fuel costs used to 

calculate such values, recognizing that 

energy costs vary across the country. 

The Agency is also interested in 

comments on the usefulness of adding 

other types of information, such as an 

estimated driving range for electric 

vehicles. The label design is also an 

important issue to consider and any 

changes to the existing label would need 

to show information in a technologically 

accurate, meaningful and 

understandable manner, while ensuring 

that the label does not become 

overcrowded and difficult for 

consumers to comprehend. EPA is also 

interested in what and how other 

information paths, such as web-based 

programs, could be used to enhance the 

consumer education process. 


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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49581 

189U.S. EPA (2009). ‘‘EPA Analysis of the 

American Clean Energy and Security Act of 2009: 

H.R. 2454 in the 111th Congress.’’ U.S. 

Environmental Protection Agency, Washington, DC, 

USA. (www.epa.gov/climatechange/economics/ 

economicanalyses.html) 

190This analysis does not include the EISA 

requirement for 35 MPG through 2020 or 

California’s Pavley 1 GHG standards. The proposed 

standards are intended to supersede these 

requirements, and the baseline case for comparison 

is the emissions that would result without further 

action above the currently promulgated fuel 

economy standards. 

F. How Would This Proposal Reduce 

GHG Emissions and Their Associated 

Effects? 

This action is an important step 

towards curbing steady growth of GHG 

emissions from cars and light trucks. In 

the absence of control, GHG emissions 

worldwide and in the U.S. are projected 

to continue steady growth; Table 

III.F–1 shows emissions of CO2, 

methane, nitrous oxide and air 

conditioning refrigerants on a CO2- 

equivalent basis for calendar years 2010, 

2020, 2030, 2040 and 2050. U.S. GHGs 

are estimated to make up roughly 15 

percent of total worldwide emissions, 

and the contribution of direct emissions 

from cars and light trucks to this U.S. 

share is growing over time, reaching an 

estimated 20 percent of U.S. emissions 

by 2030 in the absence of control. As 

discussed later in this section, this 

steady rise in GHG emissions is 

associated with numerous adverse 

impacts on human health, food and 

agriculture, air quality, and water and 

forestry resources. 

TABLE III.F–1—REFERENCE CASE GHG EMISSIONS BY CALENDAR YEAR

[MMTCO2 Eq] 

2010 2020 2030 2040 2050 

All Sectors (Worldwide) a ............................................................................................. 41,016 48,059 52,870 56,940 60,209

All Sectors (U.S. Only) a ............................................................................................... 7,118 7,390 7,765 8,101 8,379 

U.S. Cars/Light Truck Only b ........................................................................................ 1,359 1,332 1,516 1,828 2,261 

aADAGE model projections, U.S. EPA.189

b MOVES (2010), OMEGA Model (2020–50) U.S. EPA. See DRIA Chapter 5.3 for modeling details. 

EPA’s proposed GHG rule, if 

finalized, will result in significant 

reductions as newer, cleaner vehicles 

come into the fleet, and the rule is 

estimated to have a measurable impact 

on world global temperatures. As 

discussed in Section I, this GHG 

proposal is part of a joint National 

Program such that a large majority of the 

projected benefits would be achieved 

jointly with NHTSA’s proposed CAFE 

standards which are described in detail 

in Section IV of this preamble. EPA 

estimates the reductions attributable to 

the GHG program over time assuming 

the proposed 2016 standards continue 

indefinitely post-2016,190 compared to a 

baseline scenario in which the 2011 

model year fuel economy standards 

continue beyond 2011. 

Using this approach, EPA estimates 

these standards would cut annual 

fleetwide car and light truck tailpipe 

CO2 emissions 21 percent by 2030, 

when 90 percent of car and light truck 

miles will be travelled by vehicles 

meeting the new standards. Roughly 20 

percent of these reductions are due to 

emission reductions from gasoline 

extraction, production and distribution 

processes as a result of reduced gasoline 

demand associated with this proposal. 

Some of the overall emission reductions 

also come from projected improvements 

in the efficiency of vehicle air 

conditioning systems, which will 

substantially reduce direct emissions of 

HFCs, one of the most potent 

greenhouse gases, as well as indirect 

emissions of tailpipe CO2 emissions 

attributable to reduced engine load from 

air conditioning. In total, EPA estimates 

that compared to a baseline of indefinite 

2011 model year standards, net GHG 

emission reductions from the proposed 

program would be 325 million metric 

tons CO2-equivalent (MMTCO2eq) 

annually by 2030, which represents a 

reduction of 4 percent of total U.S. GHG 

emissions and 0.6 percent of total 

worldwide GHG emissions projected in 

that year. This estimate accounts for all 

upstream fuel production and 

distribution emission reductions, 

vehicle tailpipe emission reductions 

including air conditioning benefits, as 

well as increased vehicle miles travelled 

(VMT) due to the ‘‘rebound’’ effect 

discussed in Section III.H. EPA 

estimates this would be the equivalent 

of removing nearly 60 million cars and 

light trucks from the road in this 

timeframe. 

EPA projects the total reduction of the 

program over the full life of model year 

2012–2016 vehicles is about 950 

MMTCO2eq, with fuel savings of 76 

billion gallons (1.8 billion barrels) of 

gasoline over the life of these vehicles, 

assuming that some manufacturers take 

advantage of low-cost HFC reduction 

strategies to help meet these proposed 

standards. 

These reductions are projected to 

reduce global mean temperature by 

approximately 0.007–0.016°C by 2100, 

and global mean sea level rise is 

projected to be reduced by 

approximately 0.06–0.15 cm by 2100. 

1. Impact on GHG Emissions 

a. Calendar Year Reductions Due to 

GHG Standards 

This action, if finalized, will reduce 

GHG emissions emitted directly from 

vehicles due to reduced fuel use and 

more efficient air conditioning systems. 

In addition to these ‘‘downstream’’ 

emissions, reducing CO2 emissions 

translates directly to reductions in the 

emissions associated with the processes 

involved in getting petroleum to the 

pump, including the extraction and 

transportation of crude oil, and the 

production and distribution of finished 

gasoline (termed ‘‘upstream’’ 

emissions). Reductions from tailpipe 

GHG standards grow over time as the 

fleet turns over to vehicles affected by 

the standards, meaning the benefit of 

the program will continue as long as the 

oldest vehicles in the fleet are replaced 

by newer, lower CO2 emitting vehicles. 

EPA is not projecting any reductions 

in tailpipe CH4 or N2O emissions as a 

result of these proposed emission caps, 

which are meant to prevent emission 

backsliding and to bring diesel vehicles 

equipped with advanced technology 

aftertreatment into alignment with 

current gasoline vehicle emissions. 

As detailed in the DRIA, EPA 

estimated calendar year tailpipe CO2

reductions based on pre- and postcontrol CO2 gram per mile levels from 

EPA’s OMEGA model and assumed to 

continue indefinitely into the future, 

coupled with VMT projections from 

AEO2009. These estimates reflect the 

real-world CO2 emissions reductions 

projected for the entire U.S. vehicle fleet 

in a specified calendar year, including 

the projected effect of air conditioning 

credits, TLAASP credits and FFV 

credits. EPA also estimated full lifetime 

reductions for model years 2012–2016 

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191As detailed in the DRIA, for this analysis the 

full life of the vehicle is represented by average 

lifetime mileages for cars (190,000 miles) and trucks 

(221,000 miles) averaged over calendar years 2012 

through 2030, a function of how far vehicles drive 

per year and scrappage rates. 

using pre- and post-control CO2 levels 

projected by the OMEGA model, 

coupled with projected vehicle sales 

and lifetime mileage estimates. These 

estimates reflect the real-world CO2

emissions reductions projected for 

model years 2012 through 2016 vehicles 

over their entire life. 

This proposal would allow 

manufacturers to earn credits for 

improved vehicle air conditioning 

efficiency. Since these improvements 

are relatively low cost, EPA projects that 

manufacturers will take advantage of 

this flexibility, leading to reductions 

from emissions associated with vehicle 

air conditioning systems. As explained 

above, these reductions will come from 

both direct emissions of air conditioning 

refrigerant over the life of the vehicle 

and tailpipe CO2 emissions produced by 

the increased load of the A/C system on 

the engine. In particular, EPA estimates 

that direct emissions of HFCs, one of the 

most potent greenhouse gases, would be 

reduced 40 percent from light-duty 

vehicles when the fleet has turned over 

to more efficient vehicles. The fuel 

savings derived from lower tailpipe CO2

would also lead to reductions in 

upstream emissions. Our estimated 

reductions from the A/C credits program 

are based on our analysis of how 

manufacturers are expected to take 

advantage of this credit opportunity in 

complying with the CO2 fleetwide 

average tailpipe standards. 

Upstream emission reductions 

associated with the production and 

distribution of fuel were estimated using 

emission factors from DOE’s GREET1.8 

model, with some modifications as 

detailed in the DRIA. These estimates 

include both international and domestic 

emission reductions, since reductions in 

foreign exports of finished gasoline and/ 

or crude would make up a significant 

share of the fuel savings resulting from 

the proposed GHG standards. Thus, 

significant portions of the upstream 

GHG emission reductions will occur 

outside of the U.S.; a breakdown of 

projected international versus domestic 

reductions is included in the DRIA. 

Table III.F.1–1 shows reductions 

estimated from these proposed GHG 

standards assuming a pre-control case of 

2011 MY standards continuing 

indefinitely beyond 2011, and a postcontrol case in which 2016 MY 

standards continue indefinitely beyond 

2016. These reductions are broken down 

by upstream and downstream 

components, including air conditioning 

improvements, and also account for the 

offset from a 10 percent VMT ‘‘rebound’’ 

effect as discussed in Section III.H. 

Including the reductions from upstream 

emissions, total reductions are 

estimated to reach 325 MMTCO2eq 

annually by 2030 (a 21 percent 

reduction in U.S. car and light truck 

emissions), and grow to over 500 

MMTCO2eq in 2050 as cleaner vehicles 

continue to come into the fleet (a 23 

percent reduction in U.S. car and light 

truck emissions). 

TABLE III.F.1–1—PROJECTED NET GHG REDUCTIONS

[MMTCO2 Eq per year] 

Calendar year 

2020 2030 2040 2050 

Net Reduction Due to Tailpipe Standards * ..................................................... 165.2 324.6 417.5 518.5 

Tailpipe Standards ........................................................................................... 107.7 211.4 274.1 344.0 

A/C—indirect CO2 ............................................................................................ 11.0 21.1 27.3 34.2 

A/C—direct HFCs ............................................................................................ 13.5 27.2 32.1 34.9 

Upstream ......................................................................................................... 33.1 64.9 84.1 105.5 

Percent reduction relative to U.S. reference (cars + light trucks) ................... 12.4% 21.4% 22.8% 22.9% 

Percent reduction relative to U.S. reference (all sectors) ............................... 2.2% 4.2% 5.2% 6.2% 

Percent reduction relative to worldwide reference .......................................... 0.3% 0.6% 0.7% 0.9% 

* Includes impacts of 10% VMT rebound rate presented in Table III.F.1–3. 

b. Lifetime Reductions for 2012–2016 

Model Years 

EPA also analyzed the emission 

reductions over the full life of the 2012– 

2016 model year cars and trucks 

affected by this proposal.191 These 

results, including both upstream and 

downstream GHG contributions, are 

presented in Table III.F.1–2, showing 

lifetime reductions of nearly 950 

MMTCO2eq, with fuel savings of 76 

billion gallons (1.8 billion barrels) of 

gasoline. 

TABLE III.F.1–2—PROJECTED NET GHG REDUCTIONS

[MMTCO2 Eq per year] 

Model year 

Lifetime GHG 

reduction 

(MMT CO2 EQ) 

Lifetime fuel 

savings 

(billion gallons) 

2012 ................................................................................................................................................................. 81.4 6.6 

2013 ................................................................................................................................................................. 125.0 10.0 

2014 ................................................................................................................................................................. 174.1 13.9 

2015 ................................................................................................................................................................. 243.2 19.5 

2016 ................................................................................................................................................................. 323.6 26.3 

Total Program Benefit .............................................................................................................................. 947.4 76.2 

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c. Impacts of VMT Rebound Effect 

As noted above and discussed more 

fully in Section III.H., the effect of fuel 

cost on VMT (‘‘rebound’’) was 

accounted for in our assessment of 

economic and environmental impacts of 

this proposed rule. A 10 percent 

rebound case was used for this analysis, 

meaning that VMT for affected model 

years is modeled as increasing by 10 

percent as much as the increase in fuel 

economy; i.e., a 10 percent increase in 

fuel economy would yield a 1.0 percent 

increase in VMT. Results are shown in 

Table III.F.1–3; using the 10 percent 

rebound rate results in an overall 

emission increase of 26.4 MMTCO2eq 

annually in 2030 (this increase is 

accounted for in the reductions 

presented in Tables III.F.1–1 and III.F.1– 

2). Our estimated changes in CH4 or N2O 

emissions as a result of these proposed 

vehicle GHG standards are attributed 

solely to this rebound effect. 

As discussed in Section III.H, EPA 

will be reassessing the appropriate rate 

of VMT rebound for the final rule. 

Although EPA has not directly 

quantified the GHG emissions effect of 

using a lower rebound rate for this 

analysis, lowering the rebound rate 

would reduce the emission increases in 

Tables III.F.1–1 and III.F.1–2 in 

proportion (i.e., zero rebound equals 

zero emissions effect), and, thus, would 

increase our estimates of emission 

reductions due to these proposed 

standards. 

TABLE III.F.1–3—GHG IMPACT OF 10% VMT REBOUND a

[MMTCO2 Eq per year] 

2020 2030 2040 2050 

Total GHG Increase ................................................................................. 13 .6 26 .4 34 .2 42 .9 

Tailpipe & Indirect A/C CO2 ..................................................................... 10 .6 20 .6 26 .6 33 .4 

Upstream GHGs b .................................................................................... 2 .95 5 .74 7 .43 9 .32 

Tailpipe N2O ............................................................................................ 0 .040 0 .085 0 .113 0 .142 

Tailpipe CH4 ............................................................................................. 0 .008 0 .016 0 .021 0 .027 

aThese impacts are included in the reductions shown in Table III.F.1–1 and III.F.1–2. 

b Upstream rebound impact calculated as upstream total CO2 effect times ratio of downstream tailpipe rebound CO2 effect to downstream tailpipe total CO2 effect. 

d. Analysis of Alternatives 

EPA analyzed two alternative 

scenarios, including 4% and 6% annual 

increases in 2 cycle (CAFE) fuel 

economy. In addition to this annual 

increase, EPA assumed that 

manufacturers would use air 

conditioning improvements in identical 

penetrations as in the primary scenario. 

Under these assumptions, EPA expects 

achieved fleetwide average emission 

levels of 254 g/mile CO2 EQ (4%), and 

230 g/mile CO2 EQ (6%) in 2016. 

As in the primary scenario, EPA 

assumed that the fleet complied with 

the standards. For full details on 

modeling assumptions, please refer to 

DRIA Chapter 5. 

TABLE III.F.1–4—CALENDAR YEAR IMPACTS OF ALTERNATIVE SCENARIOS

Calendar year 

Scenario CY 2020 CY 2030 CY 2040 CY 2050 

Total GHG Reductions (MMT CO2EQ) ........................... Primary ............................... 165.2 324.6 417.5 518.5 

4% ...................................... 152.8 305.9 394.1 489.3 

6% ...................................... 215.2 426.2 549.3 683.9 

Fuel Savings (Billion Gallons Gasoline Equivalent) ....... Primary ............................... 13.4 26.2 33.9 42.6 

4% ...................................... 12.2 24.5 31.8 39.9 

6% ...................................... 17.8 35.1 45.5 57.1 

TABLE III.F.1–5—MODEL YEAR IMPACTS OF ALTERNATIVE SCENARIOS

Model year lifetime 

Scenario MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Total GHG Reductions (MMT 

CO2EQ).

Primary ............... 81.4 125.0 174.1 243.2 323.6 947.4 

4% ...................... 41.8 93.5 160.8 231.0 305.2 832.3 

6% ...................... 60.2 146.4 239.9 333.3 424.9 1,204.7 

Fuel Savings (Billion Gallons Gasoline Equivalent).Primary ............... 6.6 10.0 13.9 19.5 26.3 76.2 

4% ...................... 3.1 7.2 12.7 18.4 24.7 66.1 

6% ...................... 4.7 11.9 19.7 27.4 35.2 99.0 

2. Overview of Climate Change Impacts 

From GHG Emissions 

Once emitted, greenhouse gases 

(GHG) that are the subject of this 

regulation can remain in the atmosphere 

for decades to centuries, meaning that 

(1) their concentrations become wellmixed throughout the global atmosphere 

regardless of emission origin, and (2) 

their effects on climate are long lasting. 

Greenhouse gas emissions come mainly 

from the combustion of fossil fuels 

(coal, oil, and gas), with additional 

contributions from the clearing of 

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192U.S. EPA (2008) Inventory of U.S. Greenhouse 

Gas Emissions and Sinks: 1990–2006. EPA–430–R– 

08–005, Washington, DC. http://www.epa.gov/

climatechange/emissions/usgginv_archive.html. 

193 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.). Cambridge University 

Press, 2009. http://www.globalchange.gov/ 

publications/reports/scientific-assessments/usimpacts. 

194See Federal Register/Vol. 74, No. 78/Friday, 

April 24, 2009/Proposed Rules; also Docket Number 

EPA–HQ–OAR–2009–0171; FRL–8895–5. 

195U.S. EPA (2008) Inventory of U.S. Greenhouse 

Gas Emissions and Sinks: 1990–2006. EPA–430–R– 

08–005, Washington, DC. 

196Cooling refers to refrigerants/air conditioning 

from all transportation sources and is related to 

HFCs. 

197U.S. EPA (2008) Inventory of U.S. Greenhouse 

Gas Emissions and Sinks: 1990–2006. EPA–430–R– 

08–005, Washington, DC. http://www.epa.gov/

climatechange/emissions/usgginv_archive.html. 

198Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change [Solomon, S., D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, 

M.Tignor and H.L. Miller (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

199Surface temperature is calculated by 

processing data from thousands of world-wide 

observation sites on land and sea. 

200 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.) Cambridge University 

Press, 2009. 

forests and agricultural activities. The 

transportation sector accounts for a 

portion, 28%, of US GHG emissions.192

This section provides a broad 

overview of some of the impacts of GHG 

emissions. The best sources of 

information include the major 

assessment reports of both the 

Intergovernmental Panel on Climate 

Change (IPCC) and the U.S. Global 

Change Research Program (USGCRP, 

formerly referred to as the U.S. Climate 

Change Science Program). The IPCC and 

USGCRP assessments base their findings 

on the large body of individual, peerreviewed studies in the literature, and 

then the IPCC and USGCRP assessments 

themselves go through a transparent 

peer-reviewed process. The USGCRP 

reports, where possible, are specific to 

impacts in the U.S. and therefore 

represent the best available syntheses of 

relevant impacts. 

Most recently, the USGCRP released a 

report entitled ‘‘Global Climate Change 

Impacts in the United States’’.193 The 

report summarizes the science and the 

impacts of climate change on the United 

States, now and in the future. It focuses 

on climate change impacts in different 

regions of the U.S. and on various 

aspects of society and the economy such 

as energy, water, agriculture, and 

human health. It’s also a report written 

in plain language, with the goal of better 

informing public and private decision 

making at all levels. The foundation of 

this report is a set of 21 Synthesis and 

Assessment Products (SAPs), which 

were designed to address key policyrelevant issues in climate science. The 

report was extensively reviewed and 

revised based on comments from 

experts and the public. The report was 

approved by its lead USGCRP Agency, 

the National Oceanic and Atmospheric 

Administration, the other USGCRP 

agencies, and the Committee on the 

Environment and Natural Resources on 

behalf of the National Science and 

Technology Council. This report meets 

all Federal requirements associated with 

the Information Quality Act, including 

those pertaining to public comment and 

transparency. Readers are encouraged to 

review this report. 

The source document for the section 

below is the draft endangerment 

Technical Support Document (TSD). In 

EPA’s Proposed Endangerment and 

Cause or Contribute Findings Under the 

Clean Air Act,194 EPA provides a 

summary of the USGCRP and IPCC 

reports in a draft TSD. The draft TSD 

reviews observed and projected changes 

in climate based on current and 

projected atmospheric GHG 

concentrations and emissions, as well as 

the related impacts and risks from 

climate change that are projected in the 

absence of GHG mitigation actions, 

including this proposal and other U.S. 

and global actions. The TSD serves as an 

important support document to EPA’s 

proposed Endangerment Finding; 

however, the document is a draft and is 

still undergoing comment and review as 

part of EPA’s rulemaking process, and is 

subject to change based upon comments 

to the final endangerment finding. 

a. Changes in Atmospheric 

Concentrations of GHGs From Global 

and U.S. Emissions 

Concentrations of six key GHGs 

(carbon dioxide, methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons 

and sulfur hexafluoride) are at 

unprecedented levels compared to the 

recent and distant past. The global 

atmospheric CO2 concentration has 

increased about 38% from pre-industrial 

levels to 2009, and almost all of the 

increase is due to anthropogenic 

emissions. 

Based on data from the most recent 

Inventory of U.S. Greenhouse Gas 

Emissions and Sinks (2008),195 total 

U.S. GHG emissions increased by 905.9 

teragrams of CO2-equivalent (Tg CO2

Eq), or 14.7%, between 1990 and 2006. 

U.S. transportation sources subject to 

control under section 202(a) of the 

Clean Air Act (passenger cars, light duty 

trucks, other trucks and buses, 

motorcycles, and cooling 196) emitted 

1665 Tg CO2 Eq in 2006, representing 

almost 24% of the total U.S. GHG 

emissions. Total global emissions, 

calculated by summing emissions of the 

six greenhouse gases by country, for 

2005 was 38,725.9 Tg CO2 Eq. This 

represents an increase of 26% from the 

1990 level. See the EPA report 

‘‘Inventory of U.S. Greenhouse Gas 

Emissions and Sinks: 1990–2006’’,197

Section 2 of the proposed Endangerment 

TSD, and IPCC’s Working Group I (WGI) 

Fourth Assessment Report (AR4) 198 for 

a more complete discussion of GHG 

emissions and concentrations. 

b. Observed Changes in Climate 

i. Temperature 

The warming of the climate system is 

unequivocal, as is now evident from 

observations of increases in global air 

and ocean temperatures, widespread 

melting of snow and ice, and rising 

global average sea level. The global 

average net effect of the increase in 

atmospheric GHG concentrations, plus 

other human activities (e.g., land use 

change and aerosol emissions), on the 

global energy balance since 1750 has 

been one of warming. The global mean 

surface temperature 199 over the last 100 

years (1906–2005) has risen by about 

0.74 °C (1.5 °F) +/¥ 0.18 °C, and climate 

model simulations suggest that natural 

variation alone (e.g., changes in solar 

irradiance) cannot explain the observed 

warming. The rate of warming over the 

last 50 years is almost double that over 

the last 100 years. Most of the observed 

increase in global mean surface 

temperature since the mid-20th century 

is very likely due to the observed 

increase in anthropogenic GHG 

concentrations. 

It can be stated with confidence that 

global mean surface temperature was 

higher during the last few decades of the 

20th century than during any 

comparable period during the preceding 

four centuries. Like global mean surface 

temperatures, U.S. surface temperatures 

also warmed during the 20th and into 

the 21st century. U.S. average annual 

temperatures are now approximately 

0.69°C (1.25°F) warmer than at the start 

of the 20th century, with an increased 

rate of warming over the past 30 years. 

Temperatures in winter have risen more 

than any other season, with winters in 

the Midwest and northern Great Plains 

increasing more than 7 °F.200 Some of 

these changes have been faster than 

previous assessments had suggested. 

For additional information, please see 

Section 4 of the proposed Endangerment 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49585 

201Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change [Solomon, S., D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, 

M.Tignor and H.L. Miller (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

202 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.). Cambridge University 

Press, 2009. http://www.globalchange.gov/

publications/reports/scientific-assessments/usimpacts. 

203Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change [Solomon, S., D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, 

M.Tignor and H.L. Miller (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

204 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.). Cambridge University 

Press, 2009. http://www.globalchange.gov/

publications/reports/scientific-assessments/usimpacts. 

205Weather and Climate Extremes in a Changing 

Climate. Regions of Focus: North America, Hawaii, 

Caribbean, and U.S. Pacific Islands. A Report by 

the U.S. Climate Change Science Program and the 

Subcommittee on Global Change Research. [Thomas 

R. Karl, Gerald A. Meehl, Christopher D. Miller, 

Susan J. Hassol, Anne M. Waple, and William L. 

Murray (eds.)]. Department of Commerce, NOAA’s 

National Climatic Data Center, Washington, D.C., 

USA, 164 pp. 

206Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change [Solomon, S., D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, 

M.Tignor and H.L. Miller (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

207 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.). Cambridge University 

Press, 2009. http://www.globalchange.gov/

publications/reports/scientific-assessments/usimpacts. 

208Net primary productivity is the rate at which 

an ecosystem accumulates energy or biomass, 

excluding the energy it uses for the process of 

respiration. 

TSD, IPCC WGI AR4,201 and the report 

‘‘Global Climate Change Impacts in the 

United States’’.202

ii. Precipitation 

Observations show that changes are 

occurring in the amount, intensity, 

frequency and type of precipitation. 

Global, long-term trends from 1900 to 

2005 have been observed in the amount 

of precipitation over many large regions. 

Patterns in precipitation change are 

more spatially and seasonally variable 

than temperature change, but where 

significant precipitation changes do 

occur they are consistent with measured 

changes in stream flow. Significantly 

increased precipitation has been 

observed in eastern parts of North and 

South America, northern Europe and 

northern and central Asia.200 More 

intense and longer droughts have been 

observed over wider areas since the 

1970s, particularly in the tropics and 

subtropics. It is likely there has been an 

increase in heavy precipitation events 

(e.g., 95th percentile) within many land 

regions, even in those where there has 

been a reduction in total precipitation 

amount, consistent with a warming 

climate and observed significant 

increasing amounts of water vapor in 

the atmosphere. Rising temperatures 

have generally resulted in rain rather 

than snow in locations and seasons such 

as in northern and mountainous regions 

where the average (1961–1990) 

temperatures were close to 0 °C. Over 

the contiguous U.S., total annual 

precipitation increased at an average 

rate of 6.5% from 1901–2006, with the 

greatest increases in precipitation in the 

East and North Central climate regions 

(11.2% per century). 

For additional information, please see 

Section 4 of the proposed Endangerment 

TSD, IPCC WGI AR4,203 and the 

USGCRP report ‘‘Global Climate Change 

Impacts in the United States’’.204

iii. Extreme Events 

Changes in climate extremes have 

been observed related to temperature, 

precipitation, tropical cyclones, and sea 

level. In the last 50 years, there have 

been widespread changes in extreme 

temperatures observed across the globe. 

For example, cold days, cold nights, and 

frost have become less frequent, while 

hot days, hot nights, and heat waves 

have become more frequent. Globally, a 

reduction in the number of daily cold 

extremes has been observed in 70 to 

75% of the land regions where data is 

available. Cold nights (lowest or coldest 

10% of nights, based on the period 

1961–1990) have become rarer over the 

last 50 years. 

Observational evidence indicates an 

increase in intense tropical cyclone (i.e., 

tropical storms and/or hurricanes) 

activity in the North Atlantic. Since 

about 1970, increases in cyclone 

developments that affect the U.S. East 

and Gulf Coasts have been correlated 

with increases of tropical sea surface 

temperatures In the contiguous U.S., 

studies find statistically significant 

increases in heavy precipitation (the 

heaviest 5%) and very heavy 

precipitation (the heaviest 1%) of 14 

and 20%, respectively. Much of this 

increase occurred during the last three 

decades of the 20th century and is most 

apparent over the eastern parts of the 

country. Trends in drought also have 

strong regional variations. In much of 

the Southeast and large parts of the 

western U.S., the frequency of drought 

has increased coincident with rising 

temperatures over the past 50 years. 

Although there has been an overall 

increase in precipitation and no clear 

trend in drought for the nation as a 

whole, increasing temperatures have 

made droughts more severe and 

widespread than they would have 

otherwise been. 

For additional information, please see 

Section 4 of the proposed Endangerment 

TSD, the CCSP report ‘‘Weather and 

Climate Extremes in a Changing 

Climate. Regions of Focus: North 

America, Hawaii, Caribbean, and U.S. 

Pacific Islands’’,205 IPCC WGI AR4,206

and the report ‘‘Global Climate Change 

Impacts in the United States’’.207

iv. Physical and Biological Changes 

Observations show that climate 

change is currently affecting U.S. 

physical and biological systems in 

significant ways. Observations of the 

cryosphere (the ‘‘frozen’’ component of 

the climate system) have revealed 

changes in sea ice, glaciers and snow 

cover, freezing and thawing, and 

permafrost. Satellite data since 1978 

show that annual average Arctic sea ice 

extent has shrunk by 2.7% (+/¥ 0.6%) 

per decade, with larger decreases in 

summer. Subtropical and tropical corals 

in shallow waters have already suffered 

major bleaching events that are 

primarily driven by increases in sea 

surface temperatures. Heat stress from 

warmer ocean water can cause corals to 

expel the microscopic algae that live 

inside them which are essential to their 

survival. Another stressor on coral 

populations is ocean acidification 

which occurs as CO2 is absorbed from 

the atmosphere by the oceans. About 

one-third of the carbon dioxide emitted 

by human activities has been absorbed 

by the ocean, resulting in a decrease in 

the ocean’s pH. A lower pH affects the 

ability of living things to create and 

maintain shells or skeletons of calcium 

carbonate. Other documented biophysical impacts include a significant 

lengthening of the growing season and 

increase in net primary productivity 208

in higher latitudes of North America. 

Over the last 19 years, global satellite 

data indicate an earlier onset of spring 

across the temperate latitudes by 10 to 

14 days. 

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49586 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

209 IPCC (2007a) Climate Change 2007: The 

Physical Science Basis. Contribution of Working 

Group I to the Fourth Assessment Report of the 

Intergovernmental Panel on Climate Change 

[Solomon, S., D. Qin, M. Manning, Z. Chen, M. 

Marquis, K.B. Averyt, M. Tignor and H.L. Miller 

(eds.)]. Cambridge University Press, Cambridge, 

United Kingdom and New York, NY, USA. 

210Radiative forcing is a measure of the change 

that a factor causes in altering the balance of 

incoming (solar) and outgoing (infrared and 

reflected shortwave) energy in the Earth-atmosphere 

system and thus shows the relative importance of 

different factors in terms of their contribution to 

climate change. 

211Climate Change 2007: The Physical Science 

Basis. Contribution of Working Group I to the 

Fourth Assessment Report of the Intergovernmental 

Panel on Climate Change [Solomon, S., D. Qin, M. 

Manning, Z. Chen, M. Marquis, K.B. Averyt, 

M.Tignor and H.L. Miller (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

212 Global Climate Change Impacts in the United 

States, Thomas R. Karl, Jerry M. Melillo, and 

Thomas C. Peterson, (eds.). Cambridge University 

Press, 2009. http://www.globalchange.gov/ 

publications/reports/scientific-assessments/usimpacts. 

213Weather and Climate Extremes in a Changing 

Climate. Regions of Focus: North America, Hawaii, 

Caribbean, and U.S. Pacific Islands. A Report by 

the U.S. Climate Change Science Program and the 

Subcommittee on Global Change Research. [Thomas 

R. Karl, Gerald A. Meehl, Christopher D. Miller, 

Susan J. Hassol, Anne M. Waple, and William L. 

Murray (eds.)]. Department of Commerce, NOAA’s 

National Climatic Data Center, Washington, DC, 

USA, 164 pp. 

For additional information, please see 

Section 4 of the proposed Endangerment 

TSD and IPCC WGI AR4.209

c. Projected Changes in Climate 

Most future scenarios that assume no 

explicit GHG mitigation actions (beyond 

those already enacted) project 

increasing global GHG emissions over 

the century, with corresponding 

climbing GHG concentrations. Carbon 

dioxide is expected to remain the 

dominant anthropogenic GHG over the 

course of the 21st century. The radiative 

forcing 210 associated with the non-CO2

GHGs is still significant and increasing 

over time. As a result, warming over this 

century is projected to be considerably 

greater than over the last century and 

climate related changes are expected to 

continue while new ones develop. 

Described below are projected changes 

in climate for the U.S. 

See Section 6 of the proposed 

Endangerment TSD, IPCC WGI AR4,211

the USGCRP report ‘‘Global Climate 

Change Impacts in the United 

States’’,212 and the CCSP report 

‘‘Weather and Climate Extremes in a 

Changing Climate, Regions of Focus: 

North America, Hawaii, Caribbean, and 

U.S. Pacific Islands’’ 213 for a more 

complete discussion of projected 

changes in climate. 

i. Temperature 

Future warming over the course of the 

21st century, even under scenarios of 

low emissions growth, is very likely to 

be greater than observed warming over 

the past century. The range of IPCC 

SRES scenarios provides a global 

warming range of 1.8 °C to 4.0 °C (3.2 

°F to 7.2 °F) with an uncertainty range 

of 1.1 °C to 6.4 °C (2.0 °F to 11.5 °F). 

All of the U.S. is very likely to warm 

during this century, and most areas of 

the U.S. are expected to warm by more 

than the global average. The average 

warming in the U.S. through 2100 is 

projected by nearly all the models used 

in the IPCC assessment to exceed 2 °C 

(3.6 °F) for all scenarios, with 5 out of 

21 models projecting average warming 

in excess of 4 °C (7.2 °F) for the midrange emissions scenario. The number 

of days with high temperatures above 90 

°F is projected to increase throughout 

the U.S. Temperature increases in the 

next couple of decades will be primarily 

determined by past emissions of heattrapping gases. As a result, there is less 

difference in projected temperature 

scenarios in the near-term (around 2020) 

than in the middle (2050) and end of the 

century, which will be determined more 

by future emissions. 

ii. Precipitation 

Increases in the amount of 

precipitation are very likely in higher 

latitudes, while decreases are likely in 

most subtropical latitudes and the 

southwestern U.S., continuing observed 

patterns. The mid-continental area is 

expected to experience drying during 

the summer, indicating a greater risk of 

drought. Climate models project 

continued increases in the heaviest 

downpours during this century, while 

the lightest precipitation is projected to 

decrease. With more intense 

precipitation expected to increase, the 

risk of flooding and greater runoff and 

erosion will also increase. In contrast, 

droughts are likely to become more 

frequent and severe in some regions. 

The Southwest, in particular, is 

expected to experience increasing 

drought as changes in atmospheric 

circulation patterns cause the dry zone 

just outside the tropics to expand farther 

northward into the United States. 

iii. Extreme Events 

It is likely that hurricanes will 

become more intense, especially along 

the Gulf and Atlantic coasts, with 

stronger peak winds and more heavy 

precipitation associated with ongoing 

increases of tropical sea surface 

temperatures. Heavy rainfall events are 

expected to increase, increasing the risk 

of flooding, greater runoff and erosion, 

and thus the potential for adverse water 

quality effects. These projected trends 

can increase the number of people at 

risk from suffering disease and injury 

due to floods, storms, droughts, and 

fires. Severe heat waves are projected to 

intensify, which can increase heatrelated mortality and sickness. 

iv. Physical and Biological Changes 

IPCC projects a six-inch to two-foot 

rise in sea level during the 21st century 

from processes such as thermal 

expansion of sea water and the melting 

of land-based polar ice sheets. Ocean 

acidification is projected to continue, 

resulting in the reduced biological 

production of marine calcifiers, 

including corals. In addition to ocean 

acidification, coastal waters are very 

likely to continue to warm by as much 

as 4 to 8 °F in this century, both in 

summer and winter. This will result in 

a northward shift in the geographic 

distribution of marine life along the 

coasts. Warmer ocean temperatures will 

also contribute to increased coral 

bleaching. 

d. Key Climate Change Impacts and 

Risks 

The effects of climate changes 

observed to date and/or projected to 

occur in the future include: More 

frequent and intense heat waves, more 

wildfires, degraded air quality, more 

heavy downpours and flooding, 

increased drought, greater sea level rise, 

more intense storms, water quantity and 

quality problems, and negative impacts 

to human health, water supply, 

agriculture, forestry, coastal areas, 

wildlife and ecosystems, and many 

other aspects of society and the natural 

environment. 

i. Human Health 

Warm temperatures and extreme 

weather already cause and contribute to 

adverse human health outcomes 

through heat-related mortality and 

morbidity, storm-related fatalities and 

injuries, and disease. In the absence of 

effective adaptation, these effects are 

likely to increase with climate change. 

Health effects related to climate change 

include increased deaths, injuries, 

infectious diseases, and stress-related 

disorders and other adverse effects 

associated with social disruption and 

migration from more frequent extreme 

weather. Severe heat waves are 

projected to intensify in magnitude and 

duration over the portions of the U.S. 

where these events already occur, with 

potential increases in mortality and 

morbidity, especially among the elderly, 

young and other sensitive populations. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49587 

214Analyses of the effects of global change on 

human health and welfare and human systems. A 

Report by the U.S. Climate Change Science Program 

and the Subcommittee on Global Change Research. 

[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J. 

Wilbanks, (Authors)]. U.S. Environmental 

Protection Agency, Washington, DC, USA. 215Climate Change 2007: Impacts, Adaptation 

and Vulnerability. Contribution of Working Group 

II to the Fourth Assessment Report of the 

Intergovernmental Panel on Climate Change [M.L. 

Parry, O.F. Canziani, J.P. Palutikof, P.J. van der 

Linden and C.E. Hanson (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

216EPA (2009) Assessment of the Impacts of 

Global Change on Regional U.S. Air Quality: A 

Synthesis of Climate Change Impacts on GroundLevel Ozone. An Interim Report of the U.S. EPA 

Global Change Research Program. U.S. 

Environmental Protection Agency, Washington, DC, 

EPA/600/R–07/094. 

217Analyses of the effects of global change on 

human health and welfare and human systems. A 

Report by the U.S. Climate Change Science Program 

and the Subcommittee on Global Change Research. 

[Gamble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J. 

Wilbanks, (Authors)]. U.S. Environmental 

Protection Agency, Washington, DC, USA. 

218Climate Change 2007: Impacts, Adaptation 

and Vulnerability. Contribution of Working Group 

II to the Fourth Assessment Report of the 

Intergovernmental Panel on Climate Change [M.L. 

Parry, O.F. Canziani, J.P. Palutikof, P.J. van der 

Linden and C.E. Hanson (eds.)]. Cambridge 

University Press, Cambridge, United Kingdom and 

New York, NY, USA. 

However, reduced human mortality 

from cold exposure is projected through 

2100. It is not clear whether reduced 

mortality from cold will be greater or 

less than increased heat-related 

mortality, especially among the elderly, 

young and frail. Public health effects 

from climate change will likely 

disproportionately impact the health of 

certain segments of the population, such 

as the poor, the very young, the elderly, 

those already in poor health, the 

disabled, those living alone and/or 

indigenous populations dependent on 

one or a few resources. Increases are 

expected in potential ranges and 

exposure of certain diseases affected by 

temperature and precipitation changes, 

including vector and waterborne 

diseases (i.e., malaria, dengue fever, 

West Nile virus). See the CCSP Report 

‘‘Analyses of the effects of global change 

on human health and welfare and 

human systems’’,214 IPCC’s Working 

Group II (WG2) AR4,215 and Section 7 

of the proposed Endangerment TSD for 

a more complete discussion regarding 

climate change and impacts on human 

health. 

ii. Air Quality 

Climate change can be expected to 

influence the concentration and 

distribution of air pollutants through a 

variety of direct and indirect processes, 

including the modification of biogenic 

emissions, the change of chemical 

reaction rates, wash-out of pollutants by 

precipitation, and modification of 

weather patterns that influence 

pollutant build-up. Higher temperatures 

and weaker circulation patterns 

associated with climate change are 

expected to worsen regional ozone 

pollution in the U.S., with associated 

risks in respiratory infection, 

aggravation of asthma, and premature 

death. In addition to human health 

effects, elevated levels of tropospheric 

ozone have significant adverse effects 

on crop yields, pasture and forest 

growth, and species composition. See 

Section 8 of the proposed Endangerment 

TSD, EPA’s report ‘‘Assessment of the 

Impacts of Global Change on Regional 

U.S. Air Quality: A Synthesis of Climate 

Change Impacts on Ground-Level 

Ozone’’, 216 the CCSP report ‘‘Analyses 

of the effects of global change on human 

health and welfare and human 

systems’’ 217 and IPCC WGII AR4 218 for 

a more complete discussion regarding 

human health impacts resulting from 

climate change effects on air quality. 

iii. Food and Agriculture 

The CCSP concluded that, with 

increased CO2 and temperature, the life 

cycle of grain and oilseed crops will 

likely progress more rapidly. But, as 

temperature rises, these crops will 

increasingly begin to experience failure, 

especially if climate variability 

increases and precipitation lessens or 

becomes more variable. Furthermore, 

the marketable yield of many 

horticultural crops (e.g., tomatoes, 

onions, fruits) is very likely to be more 

sensitive to climate change than grain 

and oilseed crops. Higher temperatures 

will very likely reduce livestock 

production during the summer season, 

but these losses will very likely be 

partially offset by warmer temperatures 

during the winter season. Cold water 

fisheries will likely be negatively 

affected; warm-water fisheries will 

generally benefit; and the results for 

cool-water fisheries will be mixed, with 

gains in the northern and losses in the 

southern portions of ranges. See Section 

9 of the proposed Endangerment TSD, 

the CCSP report ‘‘The Effects of Climate 

Change on Agriculture, Land Resources, 

Water Resources, and Biodiversity in 

the United States’’, and the USGCRP 

report ‘‘Global Climate Change Impacts 

in the United States’’ for a more 

complete discussion regarding climate 

science and impacts to food production 

and agriculture. 

iv. Forestry 

Climate change has very likely 

increased the size and number of forest 

fires, insect outbreaks, and tree 

mortality in the interior west, the 

Southwest, and Alaska, and will 

continue to do so. Disturbances like 

wildfire and insect outbreaks are 

increasing and are likely to intensify in 

a warmer future with drier soils and 

longer growing seasons. Although recent 

climate trends have increased vegetation 

growth, continuing increases in 

disturbances are likely to limit carbon 

storage, facilitate invasive species, and 

disrupt ecosystem services. Overall 

forest growth for North America as a 

whole will likely increase modestly (10– 

20%) as a result of extended growing 

seasons and elevated CO2 over the next 

century, but with important spatial and 

temporal variation. Forest growth is 

slowing in areas subject to drought and 

has been subject to significant loss due 

insect infestations such as the spruce 

bark beetle in Alaska. See Section 10 of 

the proposed Endangerment TSD, the 

CCSP report ‘‘The Effects of Climate 

Change on Agriculture, Land Resources, 

Water Resources, and Biodiversity in 

the United States’’, IPCC WGII, and the 

USGCRP report ‘‘Global Climate Change 

Impacts in the United States’’ for a more 

complete discussion regarding climate 

science and impacts to forestry. 

v. Water Resources 

The vulnerability of freshwater 

resources in the United States to climate 

change varies from region to region. 

Climate change will likely further 

constrain already over-allocated water 

resources in some sections of the U.S., 

increasing competition among 

agricultural, municipal, industrial, and 

ecological uses. Although water 

management practices in the U.S. are 

generally advanced, particularly in the 

western U.S climate change may 

increasingly create conditions well 

outside of historic observations 

impacting managed water systems. 

Rising temperatures will diminish 

snowpack and increase evaporation, 

affecting seasonal availability of water. 

Groundwater systems generally respond 

more slowly to climate change than 

surface water systems. In semi-arid and 

arid areas, groundwater resources are 

particularly vulnerable because of 

precipitation and stream flow are 

concentrated over a few months, yearto-year variability is high, and deep 

groundwater wells or reservoirs 

generally do not exist. Availability of 

groundwater is likely to be influenced 

by changes in withdrawals (reflecting 

development, demand, and availability 

of other sources). 

In the Great Lakes and major river 

systems, lower levels are likely to 

exacerbate challenges relating to water 

quality, navigation, recreation, 

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49588 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

219CCSP (2009) Coastal Sensitivity to Sea-Level 

Rise: A Focus on the Mid-Atlantic Region. A report 

by the U.S. Climate Change Science Program and 

the Subcommittee on Global Change Research. 

[James G. Titus (Coordinating Lead Author), K. Eric 

Anderson, Donald R. Cahoon, Dean B. Gesch, 

Stephen K. Gill, Benjamin T. Gutierrez, E. Robert 

Thieler, and S. Jeffress Williams (Lead Authors)], 

U.S. Environmental Protection Agency, Washington 

DC, USA, 320 pp. 

220CCSP (2007): Effects of Climate Change on 

Energy Production and Use in the United States. A 

Report by the U.S. Climate Change Science Program 

and the subcommittee on Global Change Research. 

Thomas J. Wilbanks, Vatsal Bhatt, Daniel E. Bilello, 

Stanley R. Bull, James Ekmann, William C. Horak, 

Y. Joe Huang, Mark D. Levine, Michael J. Sale, 

David K. Schmalzer, and Michael J. Scott). 

Department of Energy, Office of Biological & 

Environmental Research, Washington, DC, USA, 

160 pp. 

221CCSP (2008) Impacts of Climate Change and 

Variability on Transportation Systems and 

Infrastructure: Gulf Coast Study, Phase I. A Report 

by the U.S. Climate Change Science Program and 

the Subcommittee on Global Change Research 

[Savonis, M.J., V.R. Burkett, and J.R. Potter (eds.)]. 

Department of Transportation, Washington, DC, 

USA, 445 pp. 

hydropower generation, water transfers, 

and bi-national relationships. Decreased 

water supply and lower water levels are 

likely to exacerbate challenges relating 

to aquatic navigation. Higher water 

temperatures, increased precipitation 

intensity, and longer periods of low 

flows will exacerbate many forms of 

water pollution, potentially making 

attainment of water quality goals more 

difficult. As waters become warmer, the 

aquatic life they now support will be 

replaced by other species better adapted 

to warmer water. In the long-term, 

warmer water and changing flow may 

result in deterioration of aquatic 

ecosystems. See Section 11 of the 

proposed Endangerment TSD, the CCSP 

report ‘‘The Effects of Climate Change 

on Agriculture, Land Resources, Water 

Resources, and Biodiversity in the 

United States’’, IPCC WGII, and the 

USGCRP report ‘‘Global Change Impacts 

in the United States’’ for a more 

complete discussion regarding climate 

science and impacts to water resources. 

vi. Sea Level Rise and Coastal Areas 

Warmer temperatures raise sea level 

by expanding ocean water, melting 

glaciers, and possibly increasing the rate 

at which ice sheets discharge ice and 

water into the oceans. Rising sea level 

and the potential for stronger storms 

pose an increasing threat to coastal 

cities, residential communities, 

infrastructure, beaches, wetlands, and 

ecosystems. Coastal communities and 

habitats will be increasingly stressed by 

climate change effects interacting with 

development and pollution. Sea level is 

rising along much of the U.S. coast, and 

the rate of change will increase in the 

future, exacerbating the impacts of 

progressive inundation, storm-surge 

flooding, and shoreline erosion. Studies 

find 75% of the shoreline removed from 

the influence of spits, tidal inlets and 

engineering structures is eroding along 

the U.S. East Coast probably due to sea 

level rise. Storm impacts are likely to be 

more severe, especially along the Gulf 

and Atlantic coasts. Salt marshes, 

estuaries, other coastal habitats, and 

dependent species will be further 

threatened by sea level rise. The 

interaction with coastal zone 

development and climate change effects 

such as sea level rise will further stress 

coastal communities and habitats. 

Population growth and rising value of 

infrastructure in coastal areas increases 

vulnerability and risk of climate 

variability and future climate change. 

Sea level rise and high rates of water 

withdrawal promote the intrusion of 

saline water in to groundwater supplies, 

which adversely affects water quality. 

See Section 12 of the proposed 

Endangerment TSD, the CCSP report 

‘‘Coastal Sensitivity to Sea Level Rise: A 

Focus on the Mid-Atlantic Region’’,219

the USGCRP report ‘‘Global Change 

Impacts in the United States’’, and IPCC 

WGII for a more complete discussion 

regarding climate science and impacts 

to sea level rise and coastal areas. 

vii. Energy, Infrastructure and 

Settlements 

Most of the effects of climate change 

on the U.S. energy sector will be related 

to energy use and production. The 

research evidence is relatively clear that 

climate warming will mean reductions 

in total U.S. heating requirements and 

increases in total cooling requirements 

for building. These changes will vary by 

region and by season and will affect 

household and business energy costs. 

Studies project that temperature 

increases due to global warming are 

very likely to increase peak demand for 

electricity in most regions of the country 

as rising temperatures are expected to 

increase energy requirements for cooling 

residential and commercial buildings. 

An increase in peak demand for 

electricity can lead to a disproportionate 

increase in energy infrastructure 

investment. Extreme weather events can 

threaten coastal energy infrastructures 

and electricity transmission and 

distribution in the U.S. Increases in 

hurricane intensity are likely to cause 

further disruptions to oil and gas 

operations in the Gulf, like those 

experienced in 2005 with Hurricane 

Katrina. Climate change is likely to 

affect some renewable energy sources 

across the nation, such as hydropower 

production in regions subject to 

changing patterns of precipitation or 

snowmelt. The U.S. energy sector, 

which relies heavily on water for both 

hydropower and cooling capacity, may 

be adversely impacted by changes to 

water supply and quality in reservoirs 

and other water bodies. 

Water infrastructure, including 

drinking water and wastewater 

treatment plants, and sewer and storm 

water management systems, will be at 

greater risk of flooding, sea level rise 

and storm surge, low flows, and other 

factors that could impair performance. 

In addition, as water supply is 

constrained and demand increases it 

will become more likely that water will 

have to be transported and moved 

which will require additional energy 

capacity. See Section 13 of the proposed 

Endangerment TSD, the CCSP reports 

‘‘the Effects of Climate Change on 

Energy Production in the United 

States’’ 220 and ‘‘Impacts of Climate 

Change and Variability on 

Transportation Systems and 

Infrastructure’’,221 and the USGCRP 

report ‘‘Global Change Impacts in the 

United States’’ for a more complete 

discussion regarding climate science 

and impacts to energy, infrastructure 

and settlements. 

viii. Ecosystems and Wildlife 

Disturbances such as wildfires and 

insect outbreaks are increasing in the 

U.S. and are likely to intensify in a 

warmer future with drier soils and 

longer growing seasons. Although recent 

climate trends have increased vegetation 

growth, continuing increases in 

disturbances are likely to limit carbon 

storage, facilitate invasive species, and 

disrupt ecosystem services. Over the 

21st century, changes in climate will 

cause species to shift north and to 

higher elevations and fundamentally 

rearrange U.S. ecosystems. Differential 

capacities for range shifts are 

constrained by development, habitat 

fragmentation, invasive species, and 

broken ecological connections. IPCC 

consequently predicts significant 

disruption of ecosystem structure, 

function, and services. See Section 14 of 

the proposed Endangerment TSD, IPCC 

WGII, the CCSP report ‘‘The Effects of 

Climate Change on Agriculture, Land 

Resources, Water Resources, and 

Biodiversity in the United States’’, and 

the USGCRP report ‘‘Global Change 

Impacts in the United States’’ for a more 

complete discussion regarding climate 

science and impacts to ecosystems and 

wildlife. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49589 

222Using the Model for the Assessment of 

Greenhouse Gas Induced Climate Change (MAGICC, 

http://www.cgd.ucar.edu/cas/wigley/magicc/), EPA 

estimated the effects of this action’s greenhouse gas 

emissions reductions on global mean temperature 

and sea level. Please refer to Chapter 7.4 of the 

DRIA for additional information. 

223 In IPCC reports, equilibrium climate 

sensitivity refers to the equilibrium change in the 

annual mean global surface temperature following 

a doubling of the atmospheric equivalent carbon 

dioxide concentration. The IPCC states that climate 

sensitivity is ‘‘likely’’ to be in the range of 2 °C to 

4.5 °C, ‘‘very unlikely’’ to be less than 1.5 °C, and 

‘‘values substantially higher than 4.5 °C cannot be 

excluded.’’ IPCC WGI, 2007, Climate Change 

2007—The Physical Science Basis, Contribution of 

Working Group I to the Fourth Assessment Report 

of the IPCC, http://www.ipcc.ch/. 

224As the footprint attribute is defined as 

wheelbase times track width, the footprint target 

curves do not discourage manufacturers from 

reducing vehicle size by reducing front, rear, or side 

overhang, which can impact safety by resulting in 

less crush space. 225This neutrality with respect to footprint does 

not extend to the smallest and largest vehicles, 

because the function is limited, or flattened, in 

these footprint ranges. 

3. Changes in Global Mean Temperature 

and Sea Level Rise Associated With the 

Proposal’s GHG Emissions Reductions 

EPA examined 222 the reductions in 

CO2 and other GHGs associated with the 

proposal and analyzed the projected 

effects on global mean surface 

temperature and sea level, two common 

indicators of climate change. The 

analysis projects that the proposal will 

reduce climate warming and sea level 

rise. Although the projected reductions 

are small in overall magnitude by 

themselves, they are quantifiable and 

would contribute to reducing climate 

change risks. 

a. Estimated Projected Reductions in 

Global Mean Surface Temperatures and 

Sea Level Rise 

EPA estimated changes in the 

atmospheric CO2 concentration, global 

mean surface temperature and sea level 

to 2100 resulting from the emissions 

reductions in this proposal using the 

Model for the Assessment of 

Greenhouse Gas Induced Climate 

Change (MAGICC, version 5.3). This 

widely used, peer reviewed modeling 

tool was also used to project 

temperature and sea level rise under 

different emissions scenarios in the 

Third and Fourth Assessments of the 

Intergovernmental Panel on Climate 

Change (IPCC). 

GHG emissions reductions from 

Section III.F.1a were applied as net 

reductions to a peer reviewed global 

reference case (or baseline) emissions 

scenario to generate an emissions 

scenario specific to this proposal. For 

the proposal scenario, all emissions 

reductions were assumed to begin in 

2012, with zero emissions change in 

2011 (from the reference case) followed 

by emissions linearly increasing to 

equal the value supplied in Section 

III.F.1.a for 2020 and then continuing to 

2100. Details about the reference case 

scenario and how the emissions 

reductions were applied to generate the 

proposal scenario can be found in the 

DRIA Chapter 7. 

The atmospheric CO2 concentration, 

temperature, and sea-level increases for 

both the reference case and the proposal 

emissions scenarios were computed 

using MAGICC. To compute the 

reductions in the atmospheric CO2

concentrations as well as in temperature 

and sea level resulting from the 

proposal, the output from the proposal 

scenario was subtracted from an existing 

MiniCAM emission scenario. To capture 

some key uncertainties in the climate 

system with the MAGICC model, 

changes in temperature and sea-level 

rise were projected across the most 

current IPCC range for climate 

sensitivities which ranges from 1.5 °C to 

6.0 °C (representing the 90% confidence 

interval).223 This wide range reflects the 

uncertainty in this measure of how 

much the global mean temperature 

would rise if the concentration of 

carbon dioxide in the atmosphere were 

to double. Details about this modeling 

analysis can be found in the DRIA 

Chapter 7.4. 

The results of this modeling show 

small, but quantifiable, reductions in 

the atmospheric CO2 concentration, the 

projected global mean surface 

temperature and sea level resulting from 

this proposal (assuming it is finalized), 

across all climate sensitivities. As a 

result of this proposal’s emission 

reductions, the atmospheric CO2

concentration is projected to be reduced 

by approximately 2.9 to 3.2 parts per 

million (ppm), the global mean 

temperature is projected to be reduced 

by approximately 0.007–0.016 °C by 

2100, and global mean sea level rise is 

projected to be reduced by 

approximately 0.06–0.15cm by 2100. 

The reductions are small relative to the 

IPCC’s 2100 ‘‘best estimates’’ for global 

mean temperature increases (1.8–4.0 °C) 

and sea level rise (0.20–0.59m) for all 

global GHG emissions sources for a 

range of emissions scenarios. EPA used 

a peer reviewed model, the MAGICC 

model, to do this analysis. This analysis 

is specific to the proposed rule and 

therefore cannot come from some 

previously published work. The Agency 

welcomes comment on the use of the 

MAGICC model for these purposes. 

Further discussion of EPA’s modeling 

analysis is found in Chapter 7 of the 

Draft RIA. 

As a substantial portion of CO2

emitted into the atmosphere is not 

removed by natural processes for 

millennia, each unit of CO2 not emitted 

into the atmosphere avoids essentially 

permanent climate change on centennial 

time scales. Though the magnitude of 

the avoided climate change projected 

here is small, these reductions would 

represent a reduction in the adverse 

risks associated with climate change 

(though these risks were not formally 

estimated for this proposal) across all 

climate sensitivities. 

4. Weight Reduction and Potential 

Safety Impacts 

In this section, EPA will discuss 

potential safety impacts of the proposed 

standards. In the joint technology 

analysis, EPA and NHTSA agree that 

automakers could reduce weight as one 

part of the industry’s strategy for 

meeting the proposed standards. As 

shown in table III.D.6–3, of this 

Preamble, EPA’s modeling projects that 

vehicle manufacturers will reduce the 

weight of their vehicles by 4% on 

average between 2011 and 2016 

although individual vehicles may have 

greater or smaller weight reduction 

(NHTSA’s results are similar using the 

Volpe model). The penetration and 

magnitude of these modeled changes are 

consistent with the public 

announcements made by many 

manufacturers since early 2008 and are 

consistent with meetings that EPA has 

had with senior engineers and technical 

leadership at many of the automotive 

companies during 2008 and 2009. 

EPA also projects that automakers 

will not reduce footprint in order to 

meet the proposed CO2 standards in our 

modeling analysis. NHTSA and EPA 

have taken two measures to help ensure 

that the proposed rules provide no 

incentive for mass reduction to be 

accompanied by a corresponding 

decrease in the footprint of the vehicle 

(with its concomitant decrease in crush 

and crumple zones). The first design 

feature of the proposed rule is that the 

CO2 or fuel economy targets are based 

on the attribute of footprint (which is a 

surrogate for vehicle size).224 The 

second design feature is that the shape 

of the footprint curve (or function) has 

been carefully chosen such that it 

neither encourages manufacturers to 

increase, nor decrease the footprint of 

their fleet. Thus, the standard curves are 

designed to be approximately ‘‘footprint 

neutral’’ within the sloped portion of 

the function.225 For further discussion 

on this, refer to Section II.C of the 

preamble, or Chapter 2 of the joint TSD. 

Thus the agencies are assuming in their 

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226See Chapter 1 of the joint TSD for a 

description of potential footprint changes in the 

2016 reference fleet. 

227We note that since these MY 2009 F150s have 

only begun to enter the fleet, there is little realworld crash data available to evaluate the safety 

impacts of this new design. 

228 ‘‘Supplemental Results on the Independent 

Effects of Curb Weight, Wheelbase and Track on 

Fatality Risk’’, Dynamic Research, Inc., DRI–TR– 

05–01, May 2005. 

229 ‘‘An Assessment of the Effects of Vehicle 

Weight and Size on Fatality Risk in 1985 to 1998 

Model Year Passenger Cars and 1985 to 1997 Model 

Year’’, M. Van Auken and J. Zellner, Dynamic 

Research Inc., Society of Automotive Engineers 

Technical Paper 2005–01–1354. 

modeling analysis that the 

manufacturers could reduce vehicle 

mass without reducing vehicle footprint 

as one way to respond to the proposed 

rule.226

In Section IV of this preamble, 

NHTSA presents a safety analysis of the 

proposed CAFE standards based on the 

2003 Kahane analysis. As discussed in 

Section IV, NHTSA has developed a 

worse case estimate of the impact of 

weight reductions on fatalities. The 

underlying data used for that analysis 

does not allow NHTSA to analyze the 

specific impact of weight reduction at 

constant footprint because historically 

there have not been a large number of 

vehicles produced that relied 

substantially on material substitution. 

Rather, the data set includes vehicles 

that were either smaller and lighter or 

larger and heavier. The numbers in the 

NHTSA analysis predict the safetyrelated fatality consequences that would 

occur in the unlikely event that weight 

reduction for model years 2012–2016 is 

accomplished by reducing mass and 

reducing footprint. EPA concurs with 

NHTSA that the safety analysis 

conducted by NHTSA and presented in 

Section IV is a worst case analysis for 

fatalities, and that the actual impacts on 

vehicle safety could be much less. 

However, EPA and NHTSA are not able 

to quantify the lower-bound potential 

impacts at this time. 

The agencies believe that reducing 

vehicle mass without reducing the size 

of the vehicle or the structural integrity 

is technically feasible in the rulemaking 

time frame. Many of the technical 

options for doing so are outlined in 

Chapter 3 of the joint TSD and in EPA’s 

DRIA. Weight reduction can be 

accomplished by the proven methods 

described below. Every manufacturer 

will employ these methodologies to 

some degree, the magnitude to which 

each will be used will depend on 

opportunities within individual vehicle 

design. 

• Material Substitution: Substitution 

of lower density and/or higher strength 

materials in a manner that preserves or 

improves the function of the 

component. This includes substitution 

of high-strength steels, aluminum, 

magnesium or composite materials for 

components currently fabricated from 

mild steel (e.g., the magnesium-alloy 

front structure used on the 2009 Ford 

F150 pickups).227 Light-weight 

materials with acceptable energy 

absorption properties can maintain 

structural integrity and absorption of 

crash energy relative to previous designs 

while providing a net decrease in 

component weight. 

• Smart Design: Computer aided 

engineering (CAE) tools can be used to 

better optimize load paths within 

structures by reducing stresses and 

bending moments without adversely 

affecting structural integrity. This 

allows better optimization of the 

sectional thicknesses of structural 

components to reduce mass while 

maintaining or improving the function 

of the component. Smart designs also 

integrate separate parts in a manner that 

reduces mass by combining functions or 

the reduced use of separate fasteners. In 

addition, some ‘‘body on frame’’ 

vehicles are redesigned with a lighter 

‘‘unibody’’ construction with little 

compromise in vehicle functionality. 

• Reduced Powertrain Requirements: 

Reducing vehicle weight sufficiently 

can allow for the use of a smaller, 

lighter and more efficient engine while 

maintaining or even increasing 

performance. Approximately half of the 

reduction is due to these reduced 

powertrain output requirements from 

reduced engine power output and/or 

displacement, lighter weight 

transmission and final drive gear ratios. 

The subsequent reduced rotating mass 

(e.g. transmission, driveshafts/ 

halfshafts, wheels and tires) via weight 

and/or size reduction of components are 

made possible by reduced torque output 

requirements. 

• Mass Compounding: Following 

from the point above, the compounded 

weight reductions of the body, engine 

and drivetrain can reduce stresses on 

the suspension components, steering 

components, brakes, and thus allow 

further reductions in the weight of these 

subsystems. The reductions in weight 

for unsprung masses such as brakes, 

control arms, wheels and tires can 

further reduce stresses in the 

suspension mounting points which can 

allow still further reductions in weight. 

For example, lightweighting can allow 

for the reduction in the size of the 

vehicle brake system, while maintaining 

the same stopping distance. 

Therefore, EPA believes it is both 

technically feasible to reduce weight 

without reducing vehicle size, footprint 

or structural strength and manufacturers 

have indicated to the agencies that they 

will use these approaches to accomplish 

these tasks. We request written 

comment on this assessment and this 

projection, including up-to-date plans 

regarding the extent of use by each 

manufacturer of each of the 

methodologies described above. 

For this proposed rule, as noted 

earlier, EPA’s modeling analysis 

projects that weight reduction by model 

year 2016 on the order of 4% on average 

for the fleet will occur (see Section 

III.D.6 for details on our estimated mass 

reduction). EPA believes that such 

modeled changes in the fleet could 

result in much smaller fatality impacts 

than those in the worst case scenario 

presented in Section IV by NHTSA, 

since manufacturers have many safer 

options for reducing vehicle weight than 

doing so by simultaneously reducing 

footprint. The NHTSA analysis, based 

solely on 4-door vehicles, does not 

independently differentiate between 

weight reduction which comes from 

vehicle downsizing (a physically 

smaller vehicle) and vehicle weight 

reduction solely through design and 

material changes (i.e., making a vehicle 

weigh less without changing the size of 

the vehicle or reducing structural 

integrity). 

Dynamic Research Incorporated (DRI) 

has assessed the independent effects of 

vehicle weight and size on safety in 

order to determine if there are tradeoffs 

between improving vehicle safety and 

fuel consumption. In their 2005 

studies 228 229 one of which was 

published as a Society of Automotive 

Engineers Technical Paper and received 

peer review through that body, DRI 

presented results that indicate that 

vehicle weight reduction tends to 

decrease fatalities, but vehicle 

wheelbase and track reduction tends to 

increase fatalities. The DRI work 

focused on four major points, with #1 

and #4 being discussed with additional 

detail below: 

1. 2–Door vehicles represented a 

significant portion of the light duty fleet 

and should not be ignored. 

2. Directional control and therefore 

crash avoidance improves with a 

reduction in curb weight. 

3. The occupants of the impacted 

vehicle, or ‘‘collision partner’’ benefit 

from being impacted by a lighter 

vehicle. 

4. Rollover fatalities are reduced by a 

reduction in curb weight due to lower 

centers of gravity and lower loads on the 

roof structures. 

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230 ‘‘Supplemental Results on the Independent 

Effects of Curb Weight, Wheelbase and Track on 

Fatality Risk’’, Dynamic Research, Inc., DRI–TR– 

05–01, May 2005. 

231 ‘‘An Assessment of the Effects of Vehicle 

Weight and Size on Fatality Risk in 1985 to 1998 

Model Year Passenger Cars and 1985 to 1997 Model 

Year’’, M. Van Auken and J. Zellner, Dynamic 

Research Inc., Society of Automotive Engineers 

Technical Paper 2005–01–1354. 

232FR Vol. 74, No. 59, beginning on pg. 14402. 

The data used for the DRI analysis 

was similar to NHTSA’s 2003 Kahane 

study, using Fatality Analysis Reporting 

System (FARS) data for vehicle model 

years 1985 through 1998 for cars, and 

1985 through 1997 trucks. This data 

overlaps Kahane’s FARS data on model 

year 1991 to 1999 vehicles. However, 

DRI included 2-door passenger cars, 

whereas the Kahane study excluded all 

2-door vehicles. The 2003 Kahane study 

excluded 2-door passenger cars because 

it found that for MY 1991–1999 

vehicles, sports and muscle cars 

constituted a significant proportion of 

those vehicles. These vehicles have 

relatively high weight relative to their 

wheelbase, and are also 

disproportionately involved in crashes. 

Thus, Kahane concluded that including 

these vehicles in the analysis 

excessively skewed the regression 

results. However, as of July 1, 1999, 2- 

door passenger cars represented 29% of 

the registered cars in the United States. 

DRI’s position was that this is a 

significant portion of the light duty 

fleet, too large to be ignored, and 

conclusions regarding the effects of 

weight and safety should be based on 

data for all cars, not just 4-doors. DRI 

did state in their conclusions that the 

results are sensitive to removing data for 

2-doors and wagons, and that the results 

for 4-door cars with respect to the 

effects of wheelbase and track width 

were no longer statistically significant 

when 2-door cars were removed. EPA 

and NHTSA recognize that it is 

important to properly account for 2-door 

cars in a regression analysis evaluating 

the impacts of vehicle weight on safety. 

Thus, the agencies seek comment on 

how to ensure that any analysis 

supporting the final rule accounts as 

fully as possible for the range of safety 

impacts due to weight reduction on the 

variety of vehicles regulated under these 

proposed standards. 

The DRI and Kahane studies also 

differ with respect to the impact of 

vehicle weight on rollover fatalities. The 

Kahane study treated curb weight as a 

surrogate for size and weight and 

analyzed them as a single variable. 

Using this method, the 2003 Kahane 

analysis indicates that curb weight 

reductions would increase fatalities due 

to rollovers. The DRI study differed by 

analyzing curb weight, wheelbase, and 

track as multiple variables and 

concluded that curb weight reduction 

would decrease rollover fatalities, and 

wheelbase and track reduction would 

increase rollover fatalities. DRI offers 

two potential root causes for higher curb 

weight resulting in higher rollover 

fatalities. The first is that a taller vehicle 

tends to be heavier than a shorter 

vehicle; therefore heavier vehicles may 

be more likely to rollover because the 

vehicle height and weight are correlated 

with vehicle center of gravity height. 

The second is that FMVSS 216 for roof 

crush strength requirements for 

passenger cars of model years 1995 

through 1999 were proportional to the 

unloaded vehicle weight if the weight is 

less than 3,333 lbs, however they were 

a constant if the weight is greater than 

3,333 lbs. Therefore heavier vehicles 

may have had relatively less rollover 

crashworthiness. 

NHTSA has rejected the DRI analysis, 

and has not relied on it for its 

evaluation of safety impact changes in 

CAFE standards. See Section IV.G.6 of 

this Notice, as well as NHTSA’s March 

2009 Final Rulemaking for MY2011 

CAFE standards (see 74 FR at 14402– 

05). 

The DRI and Kahane analyses of the 

FARS data appear similar in one respect 

because the results are reproducible 

between the two studies when using 

aggregated vehicle attributes for 4-door 

cars.230 231 232 However, when DRI and 

NHTSA separately analyzed individual 

vehicle attributes of mass, wheelbase 

and track width, DRI and NHTSA 

obtained different results for passenger 

cars. NHTSA has raised this as a 

concern with the DRI study. When 2- 

door vehicles are removed from the data 

set EPA is concerned that the results 

may no longer be statistically significant 

with respect to independent vehicle 

attributes due to the small remaining 

data set, as DRI stated in the 2005 study. 

The DRI analysis concluded that there 

would be a small reduction in fatalities 

for cars and for trucks for a 100 pound 

reduction in curb weight without 

accompanied vehicle footprint or size 

changes. EPA notes that if DRI’s results 

were to be applied using the curb 

weight reductions predicted by the 

OMEGA model, an overall reduction in 

fatalities would be predicted. EPA 

invites comment on all aspects of the 

issue of the impact of this kind of 

weight reduction on safety, including 

the usefulness of the DRI study in 

evaluating this issue. 

The agencies are committed to 

continuing to analyze vehicle safety 

issues so a more informed evaluation 

can be made. We request comment on 

this issue. These comments should 

include not only further discussion and 

analysis of the relevant studies but data 

and analysis which can allow the 

agencies to more accurately quantify 

any potential safety issues with the 

proposed standards. 

G. How Would the Proposal Impact 

Non-GHG Emissions and Their 

Associated Effects? 

In addition to reducing the emissions 

of greenhouse gases, this proposal 

would influence the emissions of 

‘‘criteria’’ air pollutants and air toxics 

(i.e., hazardous air pollutants). The 

criteria air pollutants include carbon 

monoxide (CO), fine particulate matter 

(PM2.5), sulfur dioxide (SOX) and the 

ozone precursors hydrocarbons (VOC) 

and oxides of nitrogen (NOX); the air 

toxics include benzene, 1,3-butadiene, 

formaldehyde, acetaldehyde, and 

acrolein. Our estimates of these nonGHG emission impacts from the 

proposed program are shown by 

pollutant in Table III.G–1 and Table 

III.G–2 in total, and broken down by the 

two drivers of these changes: (a) 

‘‘Upstream’’ emission reductions due to 

decreased extraction, production and 

distribution of motor gasoline; and (b) 

‘‘downstream’’ emission increases, 

reflecting the effects of VMT rebound 

(discussed in Sections III.F and III.H). 

Total program impacts on criteria and 

toxics emissions are discussed below, 

followed by individual discussions of 

the upstream and downstream impacts. 

Those are followed by discussions of the 

effects on air quality, health, and other 

environmental concerns. 

As discussed in Chapter 5 of the 

DRIA, the impacts presented here are 

only from petroleum (i.e., EPA assumes 

that total volumes of ethanol and other 

renewable fuels will remain unchanged 

due to this program). Ethanol use was 

modeled at the volumes projected in 

AEO2007 for the reference and control 

case; thus no changes are projected in 

upstream emissions related to ethanol 

production and distribution. However, 

due to the decreased gasoline volume 

associated with this proposal, a greater 

market share of E10 is expected relative 

to E0, which would be expected to have 

some effect on fleetwide average nonGHG emission rates. This effect, which 

is likely small relative to the other 

effects considered here, has not been 

accounted for in the downstream 

emission modeling conducted for this 

proposal, but EPA does plan to address 

it in the final rule air quality analysis, 

for which localized impacts could be 

more significant. A more comprehensive 

analysis of the impacts of different 

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49592 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

233 74 FR 24904. See also Docket EPA–HQ–OAR– 

2005–0161. 

ethanol and gasoline volume scenarios 

is being prepared as part of EPA’s RFS2 

rulemaking package.233

As shown in Table III.G–1, EPA 

estimates that this program would result 

in reductions of NOX, VOC, PM and 

SOX, but would increase CO emissions. 

For NOX, VOC, PM and SOX, we 

estimate net reductions in criteria 

pollutant emissions because the 

emissions reductions from upstream 

sources are larger than the emission 

increases due to additional driving (i.e., 

the ‘‘rebound effect’’). In the case of CO, 

we estimate slight emission increases, 

because there are relatively small 

reductions in upstream emissions, and 

thus the projected emission increases 

due to additional driving are greater 

than the projected emission decreases 

due to reduced fuel production. EPA 

estimates that the proposed program 

would result in small changes for toxic 

emissions compared to total U.S. 

inventories across all sectors. For all 

pollutants the overall impact of the 

program would be relatively small 

compared to total U.S. inventories 

across all sectors. In 2030 EPA estimates 

the proposed program would reduce 

these total NOX, PM and SOX

inventories by 0.2 to 0.3 percent and 

reduce the VOC inventory by 1.2 

percent, while increasing the total 

national CO inventory by 0.4 percent. 

As shown in Table III.G–2, EPA 

estimates that the proposed program 

would result in small changes for toxic 

emissions compared to total U.S. 

inventories across all sectors. In 2030 

EPA estimates the program would 

reduce total benzene and formaldehyde 

by 0.04 percent. Total acrolein, 

acetaldehyde, and 1,3-butadiene would 

increase by 0.03 to 0.2 percent. 

Other factors which may impact nonGHG emissions, but are not estimated in 

this analysis, include: 

• Vehicle technologies used to reduce 

tailpipe CO2 emissions; because the 

regulatory standards for non-GHG 

emissions are the primary driver for 

these emissions, EPA expects the impact 

of this program to be negligible on nonGHG emission rates per mile. 

• The potential for increased market 

penetration of diesel vehicles; because 

these vehicles would be held to the 

same certification and in-use standards 

for criteria pollutants as their gasoline 

counterparts, EPA expects their impact 

to be negligible on criteria pollutants 

and other non-GHG emissions. 

• Early introduction of electric 

vehicles and plug-in hybrid electric 

vehicles, which would reduce criteria 

emissions in cases where they are able 

to certify to lower certification 

standards. It would also likely reduce 

gaseous air toxics. 

• Reduced refueling emissions due to 

less frequent refueling events and 

reduced annual refueling volumes 

resulting from the GHG standards. 

• Increased hot soak evaporative 

emissions due to the likely increase in 

number of trips associated with VMT 

rebound modeled in this proposal. 

• Increased market share of E10 

relative to E0 due to the decreased 

overall gasoline consumption of this 

proposal combined with an unchanged 

fuel ethanol volume. 

EPA invites comments on the possible 

contribution of these factors to non-GHG 

emissions. 

BILLING CODE 4910–59–P 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49593 

234 Greenhouse Gas, Regulated Emissions, and 

Energy Use in Transportation model (GREET), U.S. 

Department of Energy, Argonne National 

Laboratory, http://www.transportation.anl.gov/ 

modeling_simulation/GREET/. 

235EPA. 2002 National Emissions Inventory (NEI) 

Data and Documentation, http://www.epa.gov/ttn/

chief/net/2002inventory.html. 

BILLING CODE 4910–59–C 

1. Upstream Impacts of Program 

Reducing tailpipe CO2 emissions from 

light-duty cars and trucks through 

tailpipe standards and improved A/C 

efficiency will result in reduced fuel 

demand and reductions in the emissions 

associated with all of the processes 

involved in getting petroleum to the 

pump. These upstream emission 

impacts on criteria pollutants are 

summarized in Table III.G–1. The 

upstream reductions grow over time as 

the fleet turns over to cleaner CO2

vehicles, so that by 2030 VOC would 

decrease by 148,000 tons, NOX by 

43,000 tons, and PM2.5 by 6,000 tons. 

Table III.G–2 shows the corresponding 

impacts on upstream air toxic emissions 

in 2030. Formaldehyde decreases by 112 

tons, benzene by 320 tons, acetaldehyde 

by 15 tons, acrolein by 2 tons, and 1,3- 

butadiene by 3 tons. 

To determine these impacts, EPA 

estimated the impact of reduced 

petroleum volumes on the extraction 

and transportation of crude oil as well 

as the production and distribution of 

finished gasoline. For the purpose of 

assessing domestic-only emission 

reductions it was necessary to estimate 

the fraction of fuel savings attributable 

to domestic finished gasoline, and of 

this gasoline what fraction is produced 

from domestic crude. For this analysis 

EPA estimated that 50 percent of fuel 

savings is attributable to domestic 

finished gasoline and that 90 percent of 

this gasoline originated from imported 

crude. Emission factors for most 

upstream emission sources are based on 

the GREET1.8 model, developed by 

DOE’s Argonne National Laboratory,234

but in some cases the GREET values 

were modified or updated by EPA to be 

consistent with the National Emission 

Inventory (NEI).235 The primary updates 

for this analysis were to incorporate 

newer information on gasoline 

distribution emissions for VOC from the 

NEI, which were significantly higher 

than GREET estimates; and the 

incorporation of upstream emission 

factors for the air toxics estimated in 

this analysis: benzene, 1,3-butadiene, 

acetaldehyde, acrolein, and 


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49594 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

236U.S. EPA (2004). Air Quality Criteria for 

Particulate Matter. Volume I EPA600/P–99/002aF 

and Volume II EPA600/P–99/002bF. Retrieved on 

March 19, 2009 from Docket EPA–HQ–OAR–2003– 

0190 at http://www.regulations.gov/. 

237U.S. EPA. (2005). Review of the National 

Ambient Air Quality Standard for Particulate 

Matter: Policy Assessment of Scientific and 

Technical Information, OAQPS Staff Paper. EPA– 

452/R–05–005a. Retrieved March 19, 2009 from 

http://www.epa.gov/ttn/naaqs/standards/pm/data/

pmstaffpaper_20051221.pdf. 

238The PM NAAQS is currently under review and 

the EPA is considering all available science on PM 

health effects, including information which has 

been published since 2004, in the development of 

the upcoming PM Integrated Science Assessment 

Document (ISA). A second draft of the PM ISA was 

completed in July 2009 and was submitted for 

review by the Clean Air Scientific Advisory 

Committee (CASAC) of EPA’s Science Advisory 

Board. Comments from the general public have also 

been requested. For more information, see http:// 

cfpub.epa.gov/ncea/cfm/

recordisplay.cfm?deid=210586. 

239U.S. EPA. (2006). National Ambient Air 

Quality Standards for Particulate Matter; Proposed 

Rule. 71 FR 2620, January 17, 2006. 

240 Ku ̈nzli, N., Jerrett, M., Mack, W.J., et al. 

(2004). Ambient air pollution and atherosclerosis in 

Los Angeles. Environ Health Perspect., 113, 201– 

206. 

241This study is included in the 2006 Provisional 

Assessment of Recent Studies on Health Effects of 

Particulate Matter Exposure. The provisional 

assessment did not and could not (given a very 

short timeframe) undergo the extensive critical 

review by CASAC and the public, as did the PM 

AQCD. The provisional assessment found that the 

‘‘new’’ studies expand the scientific information 

and provide important insights on the relationship 

between PM exposure and health effects of PM. The 

provisional assessment also found that ‘‘new’’ 

studies generally strengthen the evidence that acute 

and chronic exposure to fine particles and acute 

exposure to thoracic coarse particles are associated 

with health effects. Further, the provisional science 

assessment found that the results reported in the 

studies did not dramatically diverge from previous 

findings, and taken in context with the findings of 

the AQCD, the new information and findings did 

not materially change any of the broad scientific 

conclusions regarding the health effects of PM 

exposure made in the AQCD. However, it is 

important to note that this assessment was limited 

to screening, surveying, and preparing a provisional 

assessment of these studies. For reasons outlined in 

Section I.C of the preamble for the final PM NAAQS 

rulemaking in 2006 (see 71 FR 61148–49, October 

17, 2006), EPA based its NAAQS decision on the 

science presented in the 2004 AQCD. 

formaldehyde. The development of 

these emission factors is detailed in 

DRIA Chapter 5. 

2. Downstream Impacts of Program 

As discussed in more detail in Section 

III.H, the effect of fuel cost on VMT 

(‘‘rebound’’) was accounted for in our 

assessment of economic and 

environmental impacts of this proposed 

rule. A 10 percent rebound case was 

used for this analysis, meaning that 

VMT for affected model years is 

modeled as increasing by 10 percent as 

much as the increase in fuel economy; 

i.e., a 10 percent increase in fuel 

economy would yield a 1.0 percent 

increase in VMT. 

Downstream emission impacts of the 

rebound effect are summarized in Table 

III.G–1 for criteria pollutants and 

precursors and Table III.G–2 for air 

toxics. The emission increases from the 

rebound effect grow over time as the 

fleet turns over to cleaner CO2 vehicles, 

so that by 2030 VOC would increase by 

5,500 tons, NOX by 16,000 tons, and 

PM2.5 by 570 tons. Table III.G–2 shows 

the corresponding impacts on air toxic 

emissions. The most noteworthy of 

these impacts in 2030 are 40 additional 

tons of 1,3-butadiene, 75 tons of 

acetaldehyde, 240 tons of benzene, 96 

tons of formaldehyde, and 4 tons of 

acrolein. 

For this analysis the reference case 

non-GHG emissions for light duty 

vehicles and trucks were derived using 

EPA’s MOtor Vehicle Emission 

Simulator (MOVES) model for VOC, CO, 

NOX, PM and air toxics. PM2.5 emission 

estimates include additional 

adjustments for low temperatures, 

discussed in detail in the DRIA. Because 

this modeling was based on calendar 

year estimates, estimating the rebound 

effect required a fleet-weighted rebound 

factor to be calculated for calendar years 

2020 and 2030; these factors are 

presented in DRIA Chapter 5. 

As discussed in Section III.H, EPA 

will be taking comment on the 

appropriate level of rebound rate for this 

analysis. The sensitivity of the 

downstream emission increases shown 

in Tables III.G–1 and III.G–2 to the level 

of rebound would be in direct 

proportion to the rebound rate itself; 

since zero rebound would result in zero 

emission increase, the downstream 

results presented in Table III.G–1 and 

Table III.G–2 can be directly scaled to 

estimate the effect of lower rebound 

rates. 

3. Health Effects of Non-GHG Pollutants 

a. Particulate Matter 

i. Background 

Particulate matter is a generic term for 

a broad class of chemically and 

physically diverse substances. It can be 

principally characterized as discrete 

particles that exist in the condensed 

(liquid or solid) phase spanning several 

orders of magnitude in size. Since 1987, 

EPA has delineated that subset of 

inhalable particles small enough to 

penetrate to the thoracic region 

(including the tracheobronchial and 

alveolar regions) of the respiratory tract 

(referred to as thoracic particles). 

Current NAAQS use PM2.5 as the 

indicator for fine particles (with PM2.5

referring to particles with a nominal 

mean aerodynamic diameter less than or 

equal to 2.5 μm), and use PM10 as the 

indicator for purposes of regulating the 

coarse fraction of PM10 (referred to as 

thoracic coarse particles or coarsefraction particles; generally including 

particles with a nominal mean 

aerodynamic diameter greater than 2.5 

μm and less than or equal to 10 μm, or 

PM10–2.5). Ultrafine particles are a subset 

of fine particles, generally less than 100 

nanometers (0.1 μm) in aerodynamic 

diameter. 

Fine particles are produced primarily 

by combustion processes and by 

transformations of gaseous emissions 

(e.g., SOX, NOX and VOC) in the 

atmosphere. The chemical and physical 

properties of PM2.5 may vary greatly 

with time, region, meteorology, and 

source category. Thus, PM2.5 may 

include a complex mixture of different 

pollutants including sulfates, nitrates, 

organic compounds, elemental carbon 

and metal compounds. These particles 

can remain in the atmosphere for days 

to weeks and travel hundreds to 

thousands of kilometers. 

ii. Health Effects of PM 

Scientific studies show ambient PM is 

associated with a series of adverse 

health effects. These health effects are 

discussed in detail in EPA’s 2004 

Particulate Matter Air Quality Criteria 

Document (PM AQCD) and the 2005 PM 

Staff Paper. 236 237 238 Further discussion 

of health effects associated with PM can 

also be found in the DRIA for this rule. 

Health effects associated with shortterm exposures (hours to days) to 

ambient PM include premature 

mortality, aggravation of cardiovascular 

and lung disease (as indicated by 

increased hospital admissions and 

emergency department visits), increased 

respiratory symptoms including cough 

and difficulty breathing, decrements in 

lung function, altered heart rate rhythm, 

and other more subtle changes in blood 

markers related to cardiovascular 

health.239 Long-term exposure to PM2.5

and sulfates has also been associated 

with mortality from cardiopulmonary 

disease and lung cancer, and effects on 

the respiratory system such as reduced 

lung function growth or development of 

respiratory disease. A new analysis 

shows an association between long-term 

PM2.5 exposure and a measure of 

atherosclerosis development.240 241

Studies examining populations 

exposed over the long term (one or more 

years) to different levels of air pollution, 

including the Harvard Six Cities Study 

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242 Dockery, D.W., Pope, C.A. III, Xu, X, et al. 

(1993). An association between air pollution and 

mortality in six U.S. cities. N Engl J Med, 329, 

1753–1759. Retrieved on March 19, 2009 from 

http://content.nejm.org/cgi/content/full/329/24/ 

1753. 

243Pope, C.A., III, Thun, M.J., Namboodiri, M.M., 

Dockery, D.W., Evans, J.S., Speizer, F.E., and Heath, 

C.W., Jr. (1995). Particulate air pollution as a 

predictor of mortality in a prospective study of U.S. 

adults. Am. J. Respir. Crit. Care Med, 151, 669–674. 

244 Krewski, D., Burnett, R.T., Goldberg, M.S., et 

al. (2000). Reanalysis of the Harvard Six Cities 

study and the American Cancer Society study of 

particulate air pollution and mortality. A special 

report of the Institute’s Particle Epidemiology 

Reanalysis Project. Cambridge, MA: Health Effects 

Institute. Retrieved on March 19, 2009 from 

http://es.epa.gov/ncer/science/pm/hei/ReanExecSumm.pdf. 

245Pope, C.A., III, Burnett, R.T., Thun, M. J., 

Calle, E.E., Krewski, D., Ito, K., Thurston, G.D., 

(2002). Lung cancer, cardiopulmonary mortality, 

and long-term exposure to fine particulate air 

pollution. J. Am. Med. Assoc., 287, 1132–1141. 

246U.S. EPA. (2006). Air Quality Criteria for 

Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R–05/004aF-cF. Washington, DC: U.S. 

EPA. Retrieved on March 19, 2009 from Docket 

EPA–HQ–OAR–2003–0190 at http:// 

www.regulations.gov/. 

247U.S. EPA. (2006). Air Quality Criteria for 

Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R–05/004aF–cF. Washington, DC: U.S. 

EPA. Retrieved on March 19, 2009 from Docket 

EPA–HQ–OAR–2003–0190 at http:// 

www.regulations.gov/. 

248U.S. EPA. (2007). Review of the National 

Ambient Air Quality Standards for Ozone: Policy 

Assessment of Scientific and Technical 

Information, OAQPS Staff Paper. EPA–452/R–07– 

003. Washington, DC. U.S. EPA. Retrieved on 

March 19, 2009 from Docket EPA–HQ–OAR–2003– 

0190 at http://www.regulations.gov/. 

249National Research Council (NRC), 2008. 

Estimating Mortality Risk Reduction and Economic 

Benefits from Controlling Ozone Air Pollution. The 

National Academies Press: Washington, DC. 

250U.S. EPA (2008). Integrated Science 

Assessment for Oxides of Nitrogen—Health Criteria 

(Final Report). EPA/600/R–08/071. Washington, 

DC: U.S. EPA. Retrieved on March 19, 2009 from 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?

deid=194645. 

and the American Cancer Society Study, 

show associations between long-term 

exposure to ambient PM2.5 and both 

total and cardiopulmonary premature 

mortality.242 243 244 In addition, an 

extension of the American Cancer 

Society Study shows an association 

between PM2.5 and sulfate 

concentrations and lung cancer 

mortality.245

b. Ozone 

i. Background 

Ground-level ozone pollution is 

typically formed by the reaction of VOC 

and NOX in the lower atmosphere in the 

presence of heat and sunlight. These 

pollutants, often referred to as ozone 

precursors, are emitted by many types of 

pollution sources, such as highway and 

nonroad motor vehicles and engines, 

power plants, chemical plants, 

refineries, makers of consumer and 

commercial products, industrial 

facilities, and smaller area sources. 

The science of ozone formation, 

transport, and accumulation is 

complex.246 Ground-level ozone is 

produced and destroyed in a cyclical set 

of chemical reactions, many of which 

are sensitive to temperature and 

sunlight. When ambient temperatures 

and sunlight levels remain high for 

several days and the air is relatively 

stagnant, ozone and its precursors can 

build up and result in more ozone than 

typically occurs on a single hightemperature day. Ozone can be 

transported hundreds of miles 

downwind of precursor emissions, 

resulting in elevated ozone levels even 

in areas with low local VOC or NOX

emissions. 

ii. Health Effects of Ozone 

The health and welfare effects of 

ozone are well documented and are 

assessed in EPA’s 2006 Air Quality 

Criteria Document (ozone AQCD) and 

2007 Staff Paper.247 248 Ozone can 

irritate the respiratory system, causing 

coughing, throat irritation, and/or 

uncomfortable sensation in the chest. 

Ozone can reduce lung function and 

make it more difficult to breathe deeply; 

breathing may also become more rapid 

and shallow than normal, thereby 

limiting a person’s activity. Ozone can 

also aggravate asthma, leading to more 

asthma attacks that require medical 

attention and/or the use of additional 

medication. In addition, there is 

suggestive evidence of a contribution of 

ozone to cardiovascular-related 

morbidity and highly suggestive 

evidence that short-term ozone exposure 

directly or indirectly contributes to nonaccidental and cardiopulmonary-related 

mortality, but additional research is 

needed to clarify the underlying 

mechanisms causing these effects. In a 

recent report on the estimation of ozonerelated premature mortality published 

by the National Research Council (NRC), 

a panel of experts and reviewers 

concluded that short-term exposure to 

ambient ozone is likely to contribute to 

premature deaths and that ozone-related 

mortality should be included in 

estimates of the health benefits of 

reducing ozone exposure.249 Animal 

toxicological evidence indicates that 

with repeated exposure, ozone can 

inflame and damage the lining of the 

lungs, which may lead to permanent 

changes in lung tissue and irreversible 

reductions in lung function. People who 

are more susceptible to effects 

associated with exposure to ozone can 

include children, the elderly, and 

individuals with respiratory disease 

such as asthma. Those with greater 

exposures to ozone, for instance due to 

time spent outdoors (e.g., children and 

outdoor workers), are of particular 

concern. 

The 2006 ozone AQCD also examined 

relevant new scientific information that 

has emerged in the past decade, 

including the impact of ozone exposure 

on such health effects as changes in 

lung structure and biochemistry, 

inflammation of the lungs, exacerbation 

and causation of asthma, respiratory 

illness-related school absence, hospital 

admissions and premature mortality. 

Animal toxicological studies have 

suggested potential interactions between 

ozone and PM with increased responses 

observed to mixtures of the two 

pollutants compared to either ozone or 

PM alone. The respiratory morbidity 

observed in animal studies along with 

the evidence from epidemiologic studies 

supports a causal relationship between 

acute ambient ozone exposures and 

increased respiratory-related emergency 

room visits and hospitalizations in the 

warm season. In addition, there is 

suggestive evidence of a contribution of 

ozone to cardiovascular-related 

morbidity and non-accidental and 

cardiopulmonary mortality. 

c. NOX and SOX

i. Background 

Nitrogen dioxide (NO2) is a member of 

the NOX family of gases. Most NO2 is 

formed in the air through the oxidation 

of nitric oxide (NO) emitted when fuel 

is burned at a high temperature. SO2, a 

member of the sulfur oxide (SOX) family 

of gases, is formed from burning fuels 

containing sulfur (e.g., coal or oil 

derived), extracting gasoline from oil, or 

extracting metals from ore. 

SO2 and NO2 can dissolve in water 

vapor and further oxidize to form 

sulfuric and nitric acid which react with 

ammonia to form sulfates and nitrates, 

both of which are important 

components of ambient PM. The health 

effects of ambient PM are discussed in 

Section III.G.3.a of this preamble. NOX

along with non-methane hydrocarbon 

(NMHC) are the two major precursors of 

ozone. The health effects of ozone are 

covered in Section III.G.3.b. 

ii. Health Effects of NO2

Information on the health effects of 

NO2 can be found in the U.S. 

Environmental Protection Agency 

Integrated Science Assessment (ISA) for 

Nitrogen Oxides.250 The U.S. EPA has 

concluded that the findings of 

epidemiologic, controlled human 

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251U.S. EPA. (2008). Integrated Science 

Assessment (ISA) for Sulfur Oxides—Health 

Criteria (Final Report). EPA/600/R–08/047F. 

Washington, DC: U.S. Environmental Protection 

Agency. Retrieved on March 18, 2009 from http:// 

cfpub.epa.gov/ncea/cfm/recordisplay.

cfm?deid=198843. 

252U.S. EPA (2000). Air Quality Criteria for 

Carbon Monoxide, EPA/600/P–99/001F. This 

document is available in Docket EPA–HQ–OAR– 

2004–0008. 

253U.S. EPA (2000). Air Quality Criteria for 

Carbon Monoxide, EPA/600/P–99/001F. This 

document is available in Docket EPA–HQ–OAR– 

2004–0008. 

254The CO NAAQS is currently under review and 

the EPA is considering all available science on CO 

health effects, including information which has 

been published since 2000, in the development of 

the upcoming CO Integrated Science Assessment 

Document (ISA). A first draft of the CO ISA was 

completed in March 2009 and was submitted for 

review by the Clean Air Scientific Advisory 

Committee (CASAC) of EPA’s Science Advisory 

Board. For more information, see http:// 

cfpub.epa.gov/ncea/cfm/ 

recordisplay.cfm?deid=203935. 

255U. S. EPA. 2002 National-Scale Air Toxics 

Assessment. http://www.epa.gov/ttn/atw/ 

nata12002/risksum.html. 

256U.S. EPA. 2009. National-Scale Air Toxics 

Assessment for 2002. http://www.epa.gov/ttn/atw/ 

nata2002/. 

257U.S. EPA. 2000. Integrated Risk Information 

System File for Benzene. This material is available 

electronically at http://www.epa.gov/iris/subst/ 

0276.htm. 

258 International Agency for Research on Cancer 

(IARC). 1982. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 

29. Some industrial chemicals and dyestuffs, World 

Health Organization, Lyon, France, p. 345–389. 

259 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; 

Henry, V.A. 1992. Synergistic action of the benzene 

metabolite hydroquinone on myelopoietic 

stimulating activity of granulocyte/macrophage 

colony-stimulating factor in vitro, Proc. Natl. Acad. 

Sci. 89:3691–3695. 

260 International Agency for Research on Cancer 

(IARC). 1987. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 

29. Supplement 7, Some industrial chemicals and 

dyestuffs, World Health Organization, Lyon, France. 

261U.S. Department of Health and Human 

Services National Toxicology Program 11th Report 

on Carcinogens available at http:// 

www.ntp.niehs.nih.gov/go/16183. 

exposure, and animal toxicological 

studies provide evidence that is 

sufficient to infer a likely causal 

relationship between respiratory effects 

and short-term NO2 exposure. The ISA 

concludes that the strongest evidence 

for such a relationship comes from 

epidemiologic studies of respiratory 

effects including symptoms, emergency 

department visits, and hospital 

admissions. The ISA also draws two 

broad conclusions regarding airway 

responsiveness following NO2 exposure. 

First, the ISA concludes that NO2

exposure may enhance the sensitivity to 

allergen-induced decrements in lung 

function and increase the allergeninduced airway inflammatory response 

at exposures as low as 0.26 ppm NO2 for 

30 minutes. Second, exposure to NO2

has been found to enhance the inherent 

responsiveness of the airway to 

subsequent nonspecific challenges in 

controlled human exposure studies of 

asthmatic subjects. Enhanced airway 

responsiveness could have important 

clinical implications for asthmatics 

since transient increases in airway 

responsiveness following NO2 exposure 

have the potential to increase symptoms 

and worsen asthma control. Together, 

the epidemiologic and experimental 

data sets form a plausible, consistent, 

and coherent description of a 

relationship between NO2 exposures 

and an array of adverse health effects 

that range from the onset of respiratory 

symptoms to hospital admission. 

Although the weight of evidence 

supporting a causal relationship is 

somewhat less certain than that 

associated with respiratory morbidity, 

NO2 has also been linked to other health 

endpoints. These include all-cause 

(nonaccidental) mortality, hospital 

admissions or emergency department 

visits for cardiovascular disease, and 

decrements in lung function growth 

associated with chronic exposure. 

iii. Health Effects of SO2

Information on the health effects of 

SO2 can be found in the U.S. 

Environmental Protection Agency 

Integrated Science Assessment for 

Sulfur Oxides.251 SO2 has long been 

known to cause adverse respiratory 

health effects, particularly among 

individuals with asthma. Other 

potentially sensitive groups include 

children and the elderly. During periods 

of elevated ventilation, asthmatics may 

experience symptomatic 

bronchoconstriction within minutes of 

exposure. Following an extensive 

evaluation of health evidence from 

epidemiologic and laboratory studies, 

the EPA has concluded that there is a 

causal relationship between respiratory 

health effects and short-term exposure 

to SO2. Separately, based on an 

evaluation of the epidemiologic 

evidence of associations between shortterm exposure to SO2 and mortality, the 

EPA has concluded that the overall 

evidence is suggestive of a causal 

relationship between short-term 

exposure to SO2 and mortality. 

d. Carbon Monoxide 

Carbon monoxide (CO) forms as a 

result of incomplete fuel combustion. 

CO enters the bloodstream through the 

lungs, forming carboxyhemoglobin and 

reducing the delivery of oxygen to the 

body’s organs and tissues. The health 

threat from CO is most serious for those 

who suffer from cardiovascular disease, 

particularly those with angina or 

peripheral vascular disease. Healthy 

individuals also are affected, but only at 

higher CO levels. Exposure to elevated 

CO levels is associated with impairment 

of visual perception, work capacity, 

manual dexterity, learning ability and 

performance of complex tasks. Carbon 

monoxide also contributes to ozone 

nonattainment since carbon monoxide 

reacts photochemically in the 

atmosphere to form ozone.252

Additional information on CO related 

health effects can be found in the 

Carbon Monoxide Air Quality Criteria 

Document (CO AQCD).253 254

e. Air Toxics 

Motor vehicle emissions contribute to 

ambient levels of air toxics known or 

suspected as human or animal 

carcinogens, or that have noncancer 

health effects. The population 

experiences an elevated risk of cancer 

and other noncancer health effects from 

exposure to air toxics. 255 These 

compounds include, but are not limited 

to, benzene, 1,3-butadiene, 

formaldehyde, acetaldehyde, acrolein, 

polycyclic organic matter (POM), and 

naphthalene. These compounds, except 

acetaldehyde, were identified as 

national or regional risk drivers in the 

2002 National-scale Air Toxics 

Assessment (NATA) and have 

significant inventory contributions from 

mobile sources.256 Emissions and 

ambient concentrations of compounds 

are discussed in the DRIA chapter on 

emission inventories and air quality 

(Chapters 5 and 7, respectively). 

i. Benzene 

The EPA’s IRIS database lists benzene 

as a known human carcinogen (causing 

leukemia) by all routes of exposure, and 

concludes that exposure is associated 

with additional health effects, including 

genetic changes in both humans and 

animals and increased proliferation of 

bone marrow cells in mice.257 258 259 EPA 

states in its IRIS database that data 

indicate a causal relationship between 

benzene exposure and acute 

lymphocytic leukemia and suggest a 

relationship between benzene exposure 

and chronic non-lymphocytic leukemia 

and chronic lymphocytic leukemia. The 

International Agency for Research on 

Carcinogens (IARC) has determined that 

benzene is a human carcinogen and the 

U.S. Department of Health and Human 

Services (DHHS) has characterized 

benzene as a known human 

carcinogen.260 261

A number of adverse noncancer 

health effects including blood disorders, 

such as preleukemia and aplastic 

anemia, have also been associated with 

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262Aksoy, M. (1989). Hematotoxicity and 

carcinogenicity of benzene. Environ. Health 

Perspect. 82: 193–197. 263 Goldstein, B.D. (1988). Benzene toxicity. 

Occupational medicine. State of the Art Reviews. 3: 

541–554. 264Rothman, N., G.L. Li, M. Dosemeci, W.E. 

Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, 

W. Lu, M.T. Smith, N. Titenko-Holland, L.P. Zhang, 

W. Blot, S.N. Yin, and R.B. Hayes (1996) 

Hematotoxicity among Chinese workers heavily 

exposed to benzene. Am. J. Ind. Med. 29: 236–246. 265U.S. EPA (2002) Toxicological Review of 

Benzene (Noncancer Effects). Environmental 

Protection Agency, Integrated Risk Information 

System (IRIS), Research and Development, National 

Center for Environmental Assessment, Washington 

DC. This material is available electronically at 

http://www.epa.gov/iris/subst/0276.htm. 266Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; 

Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, 

S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.; 

Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; 

Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 

115, Validation & Evaluation of Biomarkers in 

Workers Exposed to Benzene in China. 267Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. 

Cohen, et al. (2002) Hematological changes among 

Chinese workers with a broad range of benzene 

exposures. Am. J. Industr. Med. 42: 275–285. 268Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et 

al. (2004) Hematotoxically in Workers Exposed to 

Low Levels of Benzene. Science 306: 1774–1776. 269Turtletaub, K.W. and Mani, C. (2003) Benzene 

metabolism in rodents at doses relevant to human 

exposure from Urban Air. Research Reports Health 

Effect Inst. Report No.113. 270U.S. EPA (2002) Health Assessment of 1,3– 

Butadiene. Office of Research and Development, 

National Center for Environmental Assessment, 

Washington Office, Washington, DC. Report No. 

EPA600–P–98–001F. This document is available 

electronically at http://www.epa.gov/iris/supdocs/ 

buta-sup.pdf. 271U.S. EPA (2002) Full IRIS Summary for 1,3- 

butadiene (CASRN 106–99–0). Environmental 

Protection Agency, Integrated Risk Information 

System (IRIS), Research and Development, National 

Center for Environmental Assessment, Washington, 

DC http://www.epa.gov/iris/subst/0139.htm. 

272 International Agency for Research on Cancer 

(IARC) (1999) Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 

71, Re-evaluation of some organic chemicals, 

hydrazine and hydrogen peroxide and Volume 97 

(in preparation), World Health Organization, Lyon, 

France. 

273U.S. Department of Health and Human 

Services (2005) National Toxicology Program 11th 

Report on Carcinogens available at: 

ntp.niehs.nih.gov/index.cfm?objectid=32BA9724- 

F1F6-975E-7FCE50709CB4C932. 

274Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. 

(1996) Subchronic toxicity of 4-vinylcyclohexene in 

rats and mice by inhalation. Fundam. Appl. 

Toxicol. 32:1–10. 

275U.S. EPA (1987) Assessment of Health Risks 

to Garment Workers and Certain Home Residents 

from Exposure to Formaldehyde, Office of 

Pesticides and Toxic Substances, April 1987. 

276Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; 

Hayes, R. B.; Blair, A. 2003. Mortality from 

lymphohematopeotic malignancies among workers 

in formaldehyde industries. Journal of the National 

Cancer Institute 95: 1615–1623. 

277Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; 

Hayes, R. B.; Blair, A. 2004. Mortality from solid 

cancers among workers in formaldehyde industries. 

American Journal of Epidemiology 159: 1117–1130. 

278Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; 

Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; 

Hauptmann, M. 2009. Mortality from 

lymphohematopoietic malignancies among workers 

in formaldehyde industries: The National Cancer 

Institute cohort. J. National Cancer Inst. 101: 751– 

761. 

279Pinkerton, L. E. 2004. Mortality among a 

cohort of garment workers exposed to 

formaldehyde: an update. Occup. Environ. Med. 61: 

193–200. 

280Coggon, D, EC Harris, J Poole, KT Palmer. 

2003. Extended follow-up of a cohort of British 

chemical workers exposed to formaldehyde. J 

National Cancer Inst. 95:1608–1615. 

281 International Agency for Research on Cancer 

(IARC). 2006. Formaldehyde, 2–Butoxyethanol and 

1-tert-Butoxypropan-2-ol. Volume 88. (in 

preparation), World Health Organization, Lyon, 

France. 

282Agency for Toxic Substances and Disease 

Registry (ATSDR). 1999. Toxicological profile for 

Formaldehyde. Atlanta, GA: U.S. Department of 

Health and Human Services, Public Health Service. 

http://www.atsdr.cdc.gov/toxprofiles/tp111.html. 

283WHO (2002) Concise International Chemical 

Assessment Document 40: Formaldehyde. 

Published under the joint sponsorship of the United 

Nations Environment Programme, the International 

Labour Organization, and the World Health 

Organization, and produced within the framework 

of the Inter-Organization Programme for the Sound 

Management of Chemicals. Geneva. 

284U.S. EPA. 1991. Integrated Risk Information 

System File of Acetaldehyde. Research and 

Development, National Center for Environmental 

Assessment, Washington, DC. This material is 

available electronically at http://www.epa.gov/iris/

subst/0290.htm. 

long-term exposure to benzene.262 263

The most sensitive noncancer effect 

observed in humans, based on current 

data, is the depression of the absolute 

lymphocyte count in blood.264 265 In 

addition, recent work, including studies 

sponsored by the Health Effects Institute 

(HEI), provides evidence that 

biochemical responses are occurring at 

lower levels of benzene exposure than 

previously know 266 267 268 269 EPA’s IRIS 

program has not yet evaluated these 

new data. 

ii. 1,3-Butadiene 

EPA has characterized 1,3-butadiene 

as carcinogenic to humans by 

inhalation.270 271 The IARC has 

determined that 1,3-butadiene is a 

human carcinogen and the U.S. DHHS 

has characterized 1,3-butadiene as a 

known human carcinogen.272 273 There 

are numerous studies consistently 

demonstrating that 1,3-butadiene is 

metabolized into genotoxic metabolites 

by experimental animals and humans. 

The specific mechanisms of 1,3- 

butadiene-induced carcinogenesis are 

unknown; however, the scientific 

evidence strongly suggests that the 

carcinogenic effects are mediated by 

genotoxic metabolites. Animal data 

suggest that females may be more 

sensitive than males for cancer effects 

associated with 1,3-butadiene exposure; 

there are insufficient data in humans 

from which to draw conclusions about 

sensitive subpopulations. 1,3-butadiene 

also causes a variety of reproductive and 

developmental effects in mice; no 

human data on these effects are 

available. The most sensitive effect was 

ovarian atrophy observed in a lifetime 

bioassay of female mice.274

iii. Formaldehyde 

Since 1987, EPA has classified 

formaldehyde as a probable human 

carcinogen based on evidence in 

humans and in rats, mice, hamsters, and 

monkeys.275 EPA is currently reviewing 

recently published epidemiological 

data. For instance, research conducted 

by the National Cancer Institute (NCI) 

found an increased risk of 

nasopharyngeal cancer and 

lymphohematopoietic malignancies 

such as leukemia among workers 

exposed to formaldehyde.276 277 In an 

analysis of the lymphohematopoietic 

cancer mortality from an extended 

follow-up of these workers, NCI 

confirmed an association between 

lymphohematopoietic cancer risk and 

peak exposures.278 A recent National 

Institute of Occupational Safety and 

Health (NIOSH) study of garment 

workers also found increased risk of 

death due to leukemia among workers 

exposed to formaldehyde.279 Extended 

follow-up of a cohort of British chemical 

workers did not find evidence of an 

increase in nasopharyngeal or 

lymphohematopoietic cancers, but a 

continuing statistically significant 

excess in lung cancers was reported.280

Recently, the IARC re-classified 

formaldehyde as a human carcinogen 

(Group 1).281

Formaldehyde exposure also causes a 

range of noncancer health effects, 

including irritation of the eyes (burning 

and watering of the eyes), nose and 

throat. Effects from repeated exposure in 

humans include respiratory tract 

irritation, chronic bronchitis and nasal 

epithelial lesions such as metaplasia 

and loss of cilia. Animal studies suggest 

that formaldehyde may also cause 

airway inflammation—including 

eosinophil infiltration into the airways. 

There are several studies that suggest 

that formaldehyde may increase the risk 

of asthma—particularly in the 

young.282 283

iv. Acetaldehyde 

Acetaldehyde is classified in EPA’s 

IRIS database as a probable human 

carcinogen, based on nasal tumors in 

rats, and is considered toxic by the 

inhalation, oral, and intravenous 

routes.284 Acetaldehyde is reasonably 

anticipated to be a human carcinogen by 

the U.S. DHHS in the 11th Report on 

Carcinogens and is classified as possibly 

carcinogenic to humans (Group 2B) by 

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285U.S. Department of Health and Human 

Services National Toxicology Program 11th Report 

on Carcinogens available at: ntp.niehs.nih.gov/ 

index.cfm?objectid=32BA9724-F1F6-975E7FCE50709CB4C932. 

286 International Agency for Research on Cancer 

(IARC). 1999. Re-evaluation of some organic 

chemicals, hydrazine, and hydrogen peroxide. IARC 

Monographs on the Evaluation of Carcinogenic Risk 

of Chemical to Humans, Vol. 71. Lyon, France. 

287U.S. EPA. 1991. Integrated Risk Information 

System File of Acetaldehyde. This material is 

available electronically at http://www.epa.gov/iris/ 

subst/0290.htm. 

288Appleman, L. M., R. A. Woutersen, V. J. Feron, 

R. N. Hooftman, and W. R. F. Notten. 1986. Effects 

of the variable versus fixed exposure levels on the 

toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6: 

331–336. 

289Appleman, L.M., R.A. Woutersen, and V.J. 

Feron. 1982. Inhalation toxicity of acetaldehyde in 

rats. I. Acute and subacute studies. Toxicology. 23: 

293–297. 

290Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; 

and Matsuda, T. 1993. Aerosolized acetaldehyde 

induces histamine-mediated bronchoconstriction in 

asthmatics. Am. Rev. Respir. Dis.148(4 Pt 1): 940– 

3. 

291Weber-Tschopp, A; Fischer, T; Gierer, R; et al. 

(1977) Experimentelle reizwirkungen von Acrolein 

auf den Menschen. Int Arch Occup Environ Hlth 

40(2):117–130. In German 

292Sim, VM; Pattle, RE. (1957) Effect of possible 

smog irritants on human subjects. J Am Med Assoc 

165(15):1908–1913. 

293Morris JB, Symanowicz PT, Olsen JE, et al. 

2003. Immediate sensory nerve-mediated 

respiratory responses to irritants in healthy and 

allergic airway-diseased mice. J Appl Physiol 

94(4):1563–1571. 

294Sim VM, Pattle RE. Effect of possible smog 

irritants on human subjects JAMA165: 1980–2010, 

1957. 

295U.S. EPA. 2003. Integrated Risk Information 

System File of Acrolein. Research and 

Development, National Center for Environmental 

Assessment, Washington, DC. This material is 

available at http://www.epa.gov/iris/subst/ 

0364.htm. 

296 International Agency for Research on Cancer 

(IARC). 1995. Monographs on the evaluation of 

carcinogenic risk of chemicals to humans, Volume 

63, Dry cleaning, some chlorinated solvents and 

other industrial chemicals, World Health 

Organization, Lyon, France. 

297Perera, F.P.; Rauh, V.; Tsai, W–Y.; et al. (2002) 

Effect of transplacental exposure to environmental 

pollutants on birth outcomes in a multiethnic 

population. Environ Health Perspect. 111: 201–205. 

298Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, 

W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, 

Y.H.; Camann, D.; Kinney, P. (2006) Effect of 

prenatal exposure to airborne polycyclic aromatic 

hydrocarbons on neurodevelopment in the first 3 

years of life among inner-city children. Environ 

Health Perspect 114: 1287–1292. 

299U. S. EPA. 2004. Toxicological Review of 

Naphthalene (Reassessment of the Inhalation 

Cancer Risk), Environmental Protection Agency, 

Integrated Risk Information System, Research and 

Development, National Center for Environmental 

Assessment, Washington, DC. This material is 

available electronically at http://www.epa.gov/iris/ 

subst/0436.htm. 

300Oak Ridge Institute for Science and Education. 

(2004). External Peer Review for the IRIS 

Reassessment of the Inhalation Carcinogenicity of 

Naphthalene. August 2004. http://cfpub.epa.gov/ 

ncea/cfm/recordisplay.cfm?deid=84403. 

301National Toxicology Program (NTP). (2004). 

11th Report on Carcinogens. Public Health Service, 

U.S. Department of Health and Human Services, 

Research Triangle Park, NC. Available from: 

http://ntp-server.niehs.nih.gov. 

302 International Agency for Research on Cancer 

(IARC). (2002). Monographs on the Evaluation of 

the Carcinogenic Risk of Chemicals for Humans. 

Vol. 82. Lyon, France. 

the IARC.285 286 EPA is currently 

conducting a reassessment of cancer risk 

from inhalation exposure to 

acetaldehyde. The primary noncancer 

effects of exposure to acetaldehyde 

vapors include irritation of the eyes, 

skin, and respiratory tract.287 In shortterm (4 week) rat studies, degeneration 

of olfactory epithelium was observed at 

various concentration levels of 

acetaldehyde exposure.288 289 Data from 

these studies were used by EPA to 

develop an inhalation reference 

concentration. Some asthmatics have 

been shown to be a sensitive 

subpopulation to decrements in 

functional expiratory volume (FEV1 

test) and bronchoconstriction upon 

acetaldehyde inhalation.290 The agency 

is currently conducting a reassessment 

of the health hazards from inhalation 

exposure to acetaldehyde. 

v. Acrolein 

Acrolein is extremely acrid and 

irritating to humans when inhaled, with 

acute exposure resulting in upper 

respiratory tract irritation, mucus 

hypersecretion and congestion. Levels 

considerably lower than 1 ppm (2.3 mg/ 

m3) elicit subjective complaints of eye 

and nasal irritation and a decrease in 

the respiratory rate.291 292 Lesions to the 

lungs and upper respiratory tract of rats, 

rabbits, and hamsters have been 

observed after subchronic exposure to 

acrolein. Based on animal data, 

individuals with compromised 

respiratory function (e.g., emphysema, 

asthma) are expected to be at increased 

risk of developing adverse responses to 

strong respiratory irritants such as 

acrolein. This was demonstrated in mice 

with allergic airway-disease by 

comparison to non-diseased mice in a 

study of the acute respiratory irritant 

effects of acrolein.293 The intense 

irritancy of this carbonyl has been 

demonstrated during controlled tests in 

human subjects, who suffer intolerable 

eye and nasal mucosal sensory reactions 

within minutes of exposure.294

EPA determined in 2003 that the 

human carcinogenic potential of 

acrolein could not be determined 

because the available data were 

inadequate. No information was 

available on the carcinogenic effects of 

acrolein in humans and the animal data 

provided inadequate evidence of 

carcinogenicity.295 The IARC 

determined in 1995 that acrolein was 

not classifiable as to its carcinogenicity 

in humans.296

vi. Polycyclic Organic Matter (POM) 

POM is generally defined as a large 

class of organic compounds which have 

multiple benzene rings and a boiling 

point greater than 100 degrees Celsius. 

Many of the compounds included in the 

class of compounds known as POM are 

classified by EPA as probable human 

carcinogens based on animal data. One 

of these compounds, naphthalene, is 

discussed separately below. Polycyclic 

aromatic hydrocarbons (PAHs) are a 

subset of POM that contain only 

hydrogen and carbon atoms. A number 

of PAHs are known or suspected 

carcinogens. Recent studies have found 

that maternal exposures to PAHs (a 

subclass of POM) in a population of 

pregnant women were associated with 

several adverse birth outcomes, 

including low birth weight and reduced 

length at birth, as well as impaired 

cognitive development at age 

three.297 298 EPA has not yet evaluated 

these recent studies. 

vii. Naphthalene 

Naphthalene is found in small 

quantities in gasoline and diesel fuels. 

Naphthalene emissions have been 

measured in larger quantities in both 

gasoline and diesel exhaust compared 

with evaporative emissions from mobile 

sources, indicating it is primarily a 

product of combustion. EPA released an 

external review draft of a reassessment 

of the inhalation carcinogenicity of 

naphthalene based on a number of 

recent animal carcinogenicity 

studies.299 The draft reassessment 

completed external peer review.300

Based on external peer review 

comments received, additional analyses 

are being undertaken. This external 

review draft does not represent official 

agency opinion and was released solely 

for the purposes of external peer review 

and public comment. Once EPA 

evaluates public and peer reviewer 

comments, the document will be 

revised. The National Toxicology 

Program listed naphthalene as 

‘‘reasonably anticipated to be a human 

carcinogen’’ in 2004 on the basis of 

bioassays reporting clear evidence of 

carcinogenicity in rats and some 

evidence of carcinogenicity in mice.301

California EPA has released a new risk 

assessment for naphthalene, and the 

IARC has reevaluated naphthalene and 

re-classified it as Group 2B: possibly 

carcinogenic to humans.302 Naphthalene 

also causes a number of chronic noncancer effects in animals, including 

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303U. S. EPA. 1998. Toxicological Review of 

Naphthalene, Environmental Protection Agency, 

Integrated Risk Information System, Research and 

Development, National Center for Environmental 

Assessment, Washington, DC. This material is 

available electronically at http://www.epa.gov/iris/ 

subst/0436.htm. 

304U.S. EPA Integrated Risk Information System 

(IRIS) database is available at: www.epa.gov/iris. 

305U.S. EPA. (2004). Air Quality Criteria for 

Particulate Matter (AQCD). Volume I Document No. 

EPA600/P–99/002aF and Volume II Document No. 

EPA600/P–99/002bF. Washington, DC: U.S. 

Environmental Protection Agency. Retrieved on 

March 18, 2009 from http://cfpub.epa.gov/ncea/

cfm/recordisplay.cfm?deid=87903. 

306U.S. EPA. (2005). Review of the National 

Ambient Air Quality Standard for Particulate 

Matter: Policy Assessment of Scientific and 

Technical Information, OAQPS Staff Paper. EPA– 

452/R–05–005. Washington, DC: U.S. 

Environmental Protection Agency. 

307These areas are defined in section 162 of the 

Act as those national parks exceeding 6,000 acres, 

wilderness areas and memorial parks exceeding 

5,000 acres, and all international parks which were 

in existence on August 7, 1977. 

308U.S. EPA (2000) Deposition of Air Pollutants 

to the Great Waters: Third Report to Congress. 

Office of Air Quality Planning and Standards. EPA– 

453/R–00–0005. This document is available in 

Docket EPA–HQ–OAR–2003–0190. 

309U.S. EPA (2004) National Coastal Condition 

Report II. Office of Research and Development/ 

Office of Water. EPA–620/R–03/002. This document 

is available in Docket EPA–HQ–OAR–2003–0190. 

310 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. 

Characterization of atmospheric trace elements on 

PM2.5 particulate matter over the New York-New 

Jersey harbor estuary. Atmos. Environ. 36: 1077– 

1086. 

311 Kim, G., N. Hussain, J.R. Scudlark, and T.M. 

Church. 2000. Factors influencing the atmospheric 

Continued 

abnormal cell changes and growth in 

respiratory and nasal tissues.303

viii. Other Air Toxics 

In addition to the compounds 

described above, other compounds in 

gaseous hydrocarbon and PM emissions 

from vehicles will be affected by this 

proposed action. Mobile source air toxic 

compounds that would potentially be 

impacted include ethylbenzene, 

polycyclic organic matter, 

propionaldehyde, toluene, and xylene. 

Information regarding the health effects 

of these compounds can be found in 

EPA’s IRIS database.304

4. Environmental Effects of Non-GHG 

Pollutants 

a. Visibility 

Visibility can be defined as the degree 

to which the atmosphere is transparent 

to visible light. Airborne particles 

degrade visibility by scattering and 

absorbing light. Visibility is important 

because it has direct significance to 

people’s enjoyment of daily activities in 

all parts of the country. Individuals 

value good visibility for the well-being 

it provides them directly, where they 

live and work and in places where they 

enjoy recreational opportunities. 

Visibility is also highly valued in 

significant natural areas such as 

national parks and wilderness areas and 

special emphasis is given to protecting 

visibility in these areas. For more 

information on visibility, see the final 

2004 PM AQCD as well as the 2005 PM 

Staff Paper.305 306

EPA is pursuing a two-part strategy to 

address visibility. First, to address the 

welfare effects of PM on visibility, EPA 

has set secondary PM2.5 standards 

which act in conjunction with the 

establishment of a regional haze 

program. In setting this secondary 

standard, EPA has concluded that PM2.5

causes adverse effects on visibility in 

various locations, depending on PM 

concentrations and factors such as 

chemical composition and average 

relative humidity. Second, section 169 

of the Clean Air Act provides additional 

authority to address existing visibility 

impairment and prevent future visibility 

impairment in the 156 national parks, 

forests and wilderness areas categorized 

as mandatory class I Federal areas (62 

FR 38680–81, July 18, 1997).307 In July 

1999, the regional haze rule (64 FR 

35714) was put in place to protect the 

visibility in mandatory class I Federal 

areas. Visibility can be said to be 

impaired in both PM2.5 nonattainment 

areas and mandatory class I Federal 

areas. 

b. Plant and Ecosystem Effects of Ozone 

Elevated ozone levels contribute to 

environmental effects, with impacts to 

plants and ecosystems being of most 

concern. Ozone can produce both acute 

and chronic injury in sensitive species 

depending on the concentration level 

and the duration of the exposure. Ozone 

effects also tend to accumulate over the 

growing season of the plant, so that even 

low concentrations experienced for a 

longer duration have the potential to 

create chronic stress on vegetation. 

Ozone damage to plants includes visible 

injury to leaves and impaired 

photosynthesis, both of which can lead 

to reduced plant growth and 

reproduction, resulting in reduced crop 

yields, forestry production, and use of 

sensitive ornamentals in landscaping. In 

addition, the impairment of 

photosynthesis, the process by which 

the plant makes carbohydrates (its 

source of energy and food), can lead to 

a subsequent reduction in root growth 

and carbohydrate storage below ground, 

resulting in other, more subtle plant and 

ecosystems impacts. 

These latter impacts include 

increased susceptibility of plants to 

insect attack, disease, harsh weather, 

interspecies competition and overall 

decreased plant vigor. The adverse 

effects of ozone on forest and other 

natural vegetation can potentially lead 

to species shifts and loss from the 

affected ecosystems, resulting in a loss 

or reduction in associated ecosystem 

goods and services. Lastly, visible ozone 

injury to leaves can result in a loss of 

aesthetic value in areas of special scenic 

significance like national parks and 

wilderness areas. The final 2006 ozone 

AQCD presents more detailed 

information on ozone effects on 

vegetation and ecosystems. 

c. Atmospheric Deposition 

Wet and dry deposition of ambient 

particulate matter delivers a complex 

mixture of metals (e.g., mercury, zinc, 

lead, nickel, aluminum, cadmium), 

organic compounds (e.g., POM, dioxins, 

furans) and inorganic compounds (e.g., 

nitrate, sulfate) to terrestrial and aquatic 

ecosystems. The chemical form of the 

compounds deposited depends on a 

variety of factors including ambient 

conditions (e.g., temperature, humidity, 

oxidant levels) and the sources of the 

material. Chemical and physical 

transformations of the compounds occur 

in the atmosphere as well as the media 

onto which they deposit. These 

transformations in turn influence the 

fate, bioavailability and potential 

toxicity of these compounds. 

Atmospheric deposition has been 

identified as a key component of the 

environmental and human health 

hazard posed by several pollutants 

including mercury, dioxin and PCBs.308

Adverse impacts on water quality can 

occur when atmospheric contaminants 

deposit to the water surface or when 

material deposited on the land enters a 

water body through runoff. Potential 

impacts of atmospheric deposition to 

water bodies include those related to 

both nutrient and toxic inputs. Adverse 

effects to human health and welfare can 

occur from the addition of excess 

nitrogen via atmospheric deposition. 

The nitrogen-nutrient enrichment 

contributes to toxic algae blooms and 

zones of depleted oxygen, which can 

lead to fish kills, frequently in coastal 

waters. Deposition of heavy metals or 

other toxins may lead to the human 

ingestion of contaminated fish, human 

ingestion of contaminated water, 

damage to the marine ecology, and 

limits to recreational uses. Several 

studies have been conducted in U.S. 

coastal waters and in the Great Lakes 

Region in which the role of ambient PM 

deposition and runoff is 

investigated.309 310 311 312 313

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depositional fluxes of stable Pb, 210Pb, and 7Be 

into Chesapeake Bay. J. Atmos. Chem. 36: 65–79. 

312Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. 

Dry deposition of airborne trace metals on the Los 

Angeles Basin and adjacent coastal waters. J. 

Geophys. Res. 108(D2, 4074): AAC 11–1 to 11–24. 

313Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 

2002. Surficial sediment contamination in Lakes 

Erie and Ontario: A comparative analysis. J. Great 

Lakes Res. 28(3): 437–450. 

314U.S. EPA. 1991. Effects of organic chemicals 

in the atmosphere on terrestrial plants. EPA/600/3– 

91/001. 

315Cape JN, ID Leith, J Binnie, J Content, M 

Donkin, M Skewes, DN Price AR Brown, AD 

Sharpe. 2003. Effects of VOCs on herbaceous plants 

in an open-top chamber experiment. Environ. 

Pollut. 124:341–343. 

316Cape JN, ID Leith, J Binnie, J Content, M 

Donkin, M Skewes, DN Price AR Brown, AD 

Sharpe. 2003. Effects of VOCs on herbaceous plants 

in an open-top chamber experiment. Environ. 

Pollut. 124:341–343. 

317 Viskari E-L. 2000. Epicuticular wax of Norway 

spruce needles as indicator of traffic pollutant 

deposition. Water, Air, and Soil Pollut. 121:327– 

337. 

318Ugrekhelidze D, F Korte, G Kvesitadze. 1997. 

Uptake and transformation of benzene and toluene 

by plant leaves. Ecotox. Environ. Safety 37:24–29. 

319 Kammerbauer H, H Selinger, R Rommelt, A 

Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic 

components of motor vehicle emissions for the 

spruce Pciea abies. Environ. Pollut. 48:235–243. 

320U.S. EPA (2008) National Air Quality Status 

and Trends through 2007. Office of Air Quality 

Planning and Standards, Research Triangle Park, 

NC. Publication No. EPA 454/R–08–006. http:// 

epa.gov/airtrends/2008/index.html. 

321U.S. EPA (2007) Final Regulatory Impact 

Analysis: Control of Hazardous Air Pollutants from 

Mobile Sources, Office of Transportation and Air 

Quality, Ann Arbor, MI, Publication No. EPA420– 

R–07–002. http://www.epa.gov/otaq/toxics.htm. 

Atmospheric deposition of nitrogen 

and sulfur contributes to acidification, 

altering biogeochemistry and affecting 

animal and plant life in terrestrial and 

aquatic ecosystems across the U.S. The 

sensitivity of terrestrial and aquatic 

ecosystems to acidification from 

nitrogen and sulfur deposition is 

predominantly governed by geology. 

Prolonged exposure to excess nitrogen 

and sulfur deposition in sensitive areas 

acidifies lakes, rivers and soils. 

Increased acidity in surface waters 

creates inhospitable conditions for biota 

and affects the abundance and 

nutritional value of preferred prey 

species, threatening biodiversity and 

ecosystem function. Over time, 

acidifying deposition also removes 

essential nutrients from forest soils, 

depleting the capacity of soils to 

neutralize future acid loadings and 

negatively affecting forest sustainability. 

Major effects include a decline in 

sensitive forest tree species, such as red 

spruce (Picea rubens) and sugar maple 

(Acer saccharum), and a loss of 

biodiversity of fishes, zooplankton, and 

macro invertebrates. 

In addition to the role nitrogen 

deposition plays in acidification, 

nitrogen deposition also causes 

ecosystem nutrient enrichment leading 

to eutrophication that alters 

biogeochemical cycles. Excess nitrogen 

also leads to the loss of nitrogen 

sensitive lichen species as they are 

outcompeted by invasive grasses as well 

as altering the biodiversity of terrestrial 

ecosystems, such as grasslands and 

meadows. For a broader explanation of 

the topics treated here, refer to the 

description in Chapter 7 of the DRIA. 

Adverse impacts on soil chemistry 

and plant life have been observed for 

areas heavily influenced by atmospheric 

deposition of nutrients, metals and acid 

species, resulting in species shifts, loss 

of biodiversity, forest decline and 

damage to forest productivity. Potential 

impacts also include adverse effects to 

human health through ingestion of 

contaminated vegetation or livestock (as 

in the case for dioxin deposition), 

reduction in crop yield, and limited use 

of land due to contamination. 

Atmospheric deposition of pollutants 

can reduce the aesthetic appeal of 

buildings and culturally important 

articles through soiling, and can 

contribute directly (or in conjunction 

with other pollutants) to structural 

damage by means of corrosion or 

erosion. Atmospheric deposition may 

affect materials principally by 

promoting and accelerating the 

corrosion of metals, by degrading paints, 

and by deteriorating building materials 

such as concrete and limestone. 

Particles contribute to these effects 

because of their electrolytic, 

hygroscopic, and acidic properties, and 

their ability to adsorb corrosive gases 

(principally sulfur dioxide). The rate of 

metal corrosion depends on a number of 

factors, including the deposition rate 

and nature of the pollutant; the 

influence of the metal protective 

corrosion film; the amount of moisture 

present; variability in the 

electrochemical reactions; the presence 

and concentration of other surface 

electrolytes; and the orientation of the 

metal surface. 

d. Environmental Effects of Air Toxics 

Fuel combustion emissions contribute 

to ambient levels of pollutants that 

contribute to adverse effects on 

vegetation. Volatile organic compounds 

(VOCs), some of which are considered 

air toxics, have long been suspected to 

play a role in vegetation damage.314 In 

laboratory experiments, a wide range of 

tolerance to VOCs has been observed.315

Decreases in harvested seed pod weight 

have been reported for the more 

sensitive plants, and some studies have 

reported effects on seed germination, 

flowering and fruit ripening. Effects of 

individual VOCs or their role in 

conjunction with other stressors (e.g., 

acidification, drought, temperature 

extremes) have not been well studied. In 

a recent study of a mixture of VOCs 

including ethanol and toluene on 

herbaceous plants, significant effects on 

seed production, leaf water content and 

photosynthetic efficiency were reported 

for some plant species.316

Research suggests an adverse impact 

of vehicle exhaust on plants, which has 

in some cases been attributed to 

aromatic compounds and in other cases 

to nitrogen oxides.317 318 319 The impacts 

of VOCs on plant reproduction may 

have long-term implications for 

biodiversity and survival of native 

species near major roadways. Most of 

the studies of the impacts of VOCs on 

vegetation have focused on short-term 

exposure and few studies have focused 

on long-term effects of VOCs on 

vegetation and the potential for 

metabolites of these compounds to 

affect herbivores or insects. 

5. Air Quality Impacts of Non-GHG 

Pollutants 

a. Current Levels of PM2.5, Ozone, CO 

and Air Toxics 

This proposal may have impacts on 

levels of PM2.5, ozone, CO and air toxics. 

Nationally, levels of PM2.5, ozone, CO 

and air toxics are declining.320 321

However, in 2005 EPA designated 39 

nonattainment areas for the 1997 PM2.5

National Ambient Air Quality Standard 

(NAAQS) (70 FR 943, January 5, 2005). 

These areas are composed of 208 full or 

partial counties with a total population 

exceeding 88 million. The 1997 PM2.5

NAAQS was recently revised and the 

2006 24-hour PM2.5 NAAQS became 

effective on December 18, 2006. The 

numbers above likely underestimate the 

number of counties that are not meeting 

the PM2.5 NAAQS because the 

nonattainment areas associated with the 

more stringent 2006 24-hour PM2.5

NAAQS have not yet been designated. 

Area designations for the 2006 24-hour 

PM2.5 NAAQS are expected to be 

promulgated in 2009 and become 

effective 90 days after publication in the 

Federal Register. 

In addition, the U.S. EPA has recently 

amended the ozone NAAQS (73 FR 

16436, March 27, 2008). That final 2008 

ozone NAAQS rule set forth revisions to 

the previous 1997 NAAQS for ozone to 

provide increased protection of public 

health and welfare. As of June 5, 2009, 

there are 55 areas designated as 

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322Carbon Monoxide Nonattainment Area 

Summary: http://www.epa.gov/air/oaqps/greenbk/ 

cnsum.html. 

323U.S. Environmental Protection Agency (2007). 

Control of Hazardous Air Pollutants from Mobile 

Sources; Final Rule. 72 FR 8434, February 26, 2007. 

324U.S. Environmental Protection Agency (2007). 

Control of Hazardous Air Pollutants from Mobile 

Sources; Final Rule. 72 FR 8434, February 26, 2007. 

325U.S. Environmental Protection Agency, Byun, 

D.W., and Ching, J.K.S., Eds, 1999. Science 

algorithms of EPA Models-3 Community Multiscale 

Air Quality (CMAQ modeling system, EPA/600/R– 

99/030, Office of Research and Development). 

326Byun, D.W., and Schere, K.L., 2006. Review of 

the Governing Equations, Computational 

Algorithms, and Other Components of the Models3 Community Multiscale Air Quality (CMAQ) 

Modeling System, J. Applied Mechanics Reviews, 

59 (2), 51–77. 

327 Dennis, R.L., Byun, D.W., Novak, J.H., 

Galluppi, K.J., Coats, C.J., and Vouk, M.A., 1996. 

The next generation of integrated air quality 

modeling: EPA’s Models-3, Atmospheric 

Environment, 30, 1925–1938. 

328U.S. EPA (2007). Regulatory Impact Analysis 

of the Proposed Revisions to the National Ambient 

Air Quality Standards for Ground-Level Ozone. 

EPA document number 442/R–07–008, July 2007. 

329Aiyyer, A., Cohan, D., Russell, A., Stockwell, 

W., Tanrikulu, S., Vizuete, W., Wilczak, J., 2007. 

Final Report: Third Peer Review of the CMAQ 

Model. p. 23. 

nonattainment for the 1997 8-hour 

ozone NAAQS, comprising 290 full or 

partial counties with a total population 

of approximately 132 million people. 

These numbers do not include the 

people living in areas where there is a 

future risk of failing to maintain or 

attain the 1997 8-hour ozone NAAQS. 

The numbers above likely 

underestimate the number of counties 

that are not meeting the ozone NAAQS 

because the nonattainment areas 

associated with the more stringent 2008 

8-hour ozone NAAQS have not yet been 

designated. 

The proposed vehicle standards may 

also impact levels of ambient CO, a 

criteria pollutant (see Table III.G–1 

above for co-pollutant emission 

impacts). As of June 5, 2009 there are 

approximately 479,000 people living in 

a portion of Clark Co., NV which is 

currently the only area in the country 

that is designated as nonattainment for 

CO.322

Further, the majority of Americans 

continue to be exposed to ambient 

concentrations of air toxics at levels 

which have the potential to cause 

adverse health effects.323 The levels of 

air toxics to which people are exposed 

vary depending on where people live 

and work and the kinds of activities in 

which they engage, as discussed in 

detail in U.S. EPA’s recent mobile 

source air toxics rule.324

b. Impacts of Proposed Standards on 

Future Ambient PM2.5, Ozone, CO and 

Air Toxics 

Full-scale photochemical air quality 

modeling is necessary to accurately 

project levels of PM2.5, ozone, CO and 

air toxics. For the final rule, a nationalscale air quality modeling analysis will 

be performed to analyze the impacts of 

the vehicle standards on PM2.5, ozone, 

and selected air toxics (i.e., benzene, 

formaldehyde, acetaldehyde, acrolein 

and 1,3-butadiene). The length of time 

needed to prepare the necessary 

emissions inventories, in addition to the 

processing time associated with the 

modeling itself, has precluded us from 

performing air quality modeling for this 

proposal. 

Section III.G.1 of the preamble 

presents projections of the changes in 

criteria pollutant and air toxics 

emissions due to the proposed vehicle 

standards; the basis for those estimates 

is set out in Chapter 5 of the DRIA. The 

atmospheric chemistry related to 

ambient concentrations of PM2.5, ozone 

and air toxics is very complex, and 

making predictions based solely on 

emissions changes is extremely difficult. 

However, based on the magnitude of the 

emissions changes predicted to result 

from the proposed vehicle standards, 

EPA expects that there will be an 

improvement in ambient air quality, 

pending a more comprehensive analysis 

for the final rule. 

For the final rule, EPA intends to use 

a 2005-based Community Multi-scale 

Air Quality (CMAQ) modeling platform 

as the tool for the air quality modeling. 

The CMAQ modeling system is a 

comprehensive three-dimensional gridbased Eulerian air quality model 

designed to estimate the formation and 

fate of oxidant precursors, primary and 

secondary PM concentrations and 

deposition, and air toxics, over regional 

and urban spatial scales (e.g. over the 

contiguous U.S.).325 326 327 The CMAQ 

model is a well-known and wellestablished tool and is commonly used 

by EPA for regulatory analyses, for 

instance the recent ozone NAAQS 

proposal, and by States in developing 

attainment demonstrations for their 

State Implementation Plans.328 The 

CMAQ model (version 4.6) was peerreviewed in February of 2007 for EPA as 

reported in ‘‘Third Peer Review of 

CMAQ Model,’’ and the EPA Office of 

Research and Development (ORD) peer 

review report which includes version 

4.7 is currently being finalized.329

CMAQ includes many science 

modules that simulate the emission, 

production, decay, deposition and 

transport of organic and inorganic gasphase and particle-phase pollutants in 

the atmosphere. EPA intends to use the 

most recent CMAQ version (version 

4.7), which was officially released by 

EPA’s Office of Research and 

Development (ORD) in December 2008 

and reflects updates to earlier versions 

in a number of areas to improve the 

underlying science. These include (1) 

enhanced secondary organic aerosol 

(SOA) mechanism to include chemistry 

of isoprene, sesquiterpene, and aged incloud biogenic SOA in addition to 

terpene; (2) improved vertical 

convective mixing; (3) improved 

heterogeneous reaction involving nitrate 

formation; and (4) an updated gas-phase 

chemistry mechanism, Carbon Bond 05 

(CB05), with extensions to model 

explicit concentrations of air toxic 

species as well as chlorine and mercury. 

This mechanism, CB05-toxics, also 

computes concentrations of species that 

are involved in aqueous chemistry and 

that are precursors to aerosols. 

H. What Are the Estimated Cost, 

Economic, and Other Impacts of the 

Proposal? 

In this section, EPA presents the costs 

and impacts of EPA’s proposed GHG 

program. 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 agencies’ 

standards comprise the National 

Program, and this discussion of costs 

and benefits of EPA’s GHG standard 

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. 

This section outlines the basis for 

assessing the benefits and costs of these 

standards and provides estimates of 

these costs and benefits. Some of these 

effects are private, meaning that they 

affect consumers and producers directly 

in their sales, purchases, and use of 

vehicles. These private effects include 

the costs of the technology, fuel savings, 

and the benefits of additional driving 

and reduced refueling. Other costs and 

benefits affect people outside the 

markets for vehicles and their use; these 

effects are termed external costs, 

because they affect people external to 

the market. The external effects include 

the climate impacts, the effects on nonGHG pollutants, and the effects on 

traffic, accidents, and noise due to 

additional driving. The sum of the 

private and external benefits and costs 

is the net social benefits of the program. 

There is some debate about the role of 

private benefits in assessing the benefits 

and costs of the program: If consumers 

have full information and perfect 

foresight in their vehicle purchase 

decisions, it is possible that they have 

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330See Memorandum to Docket, ‘‘Economy-Wide 

Impacts of Proposed Greenhouse Gas Tailpipe 

Standards,’’ September 14, 2009 (Docket EPA–HQ– 

OAR–2009–0472). 

331 Jaffe, A.B., & Stavins, R.N. (1994). The Energy 

Paradox and the Diffusion of Conservation 

Technology. Resource and Energy Economics, 16(2), 

91–122. 

332For an overview, see id. 

333 Id.; Thaler, Richard. Quasi-Rational 

Economics. New York: Russell Sage, 1993. 

334For example, it might be maintained that at 

the time of purchase, consumers take full account 

of the time potentially saved by fuel-efficient cars, 

but it might also be questioned whether they have 

adequate information to do so, or whether that 

factor is sufficiently salient to play the proper role 

in purchasing decisions. 

335Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’ 

Markets, Market Imperfections, and Energy 

Efficiency.’’ Energy Policy 22(10): 811–818; Larrick, 

R.P., and J.B. Soll (2008). ‘‘The MPG illusion.’’ 

Science 320: 1593–1594. 

already considered these benefits in 

their vehicle purchase decisions. If so, 

then the inclusion of private benefits in 

the net benefits calculation may be 

inappropriate. If these conditions do not 

hold, then the private benefits may be 

a part of the net benefits. Section III.H.1 

discusses this issue more fully. 

EPA’s proposed program costs consist 

of the vehicle program costs (costs of 

complying with the vehicle CO2

standards, taking into account FFV 

credits through 2015, the temporary 

lead-time alternative allowance 

standard program (TLAASP), full car/ 

truck trading, and the A/C credit 

program), along with the fuel savings 

associated with reduced fuel usage 

resulting from the proposed program. 

These proposed program costs also 

include external costs associated with 

noise, congestion, accidents, time spent 

refueling vehicles, and energy security 

impacts. EPA also presents the costeffectiveness of the proposed standards 

and our analysis of the expected 

economy-wide impacts. The projected 

monetized benefits of reducing GHG 

emissions and co-pollutant health and 

environmental impacts are also 

presented. EPA also presents our 

estimates of the impact on vehicle miles 

traveled and the impacts associated 

with those miles as well as other 

societal impacts of the proposed 

program, including energy security 

impacts. 

The total monetized benefits 

(excluding fuel savings) under the 

proposed program are projected to be 

$21 to $54 billion in 2030, assuming a 

3 percent discount rate and depending 

on the value used for the social cost of 

carbon. The costs of the proposed 

program in 2030 are estimated to be 

approximately $18 billion for new 

vehicle technology less $90 billion in 

savings realized by consumers through 

fewer fuel expenditures (calculated 

using pre-tax fuel prices). 

EPA has undertaken an analysis of the 

economy-wide impacts of the proposed 

GHG tailpipe standards as an 

exploratory exercise that EPA believes 

could provide additional insights into 

the potential impacts of the proposal.330

These results were not a factor regarding 

the appropriateness of the proposed 

GHG tailpipe standards. It is important 

to note that the results of this modeling 

exercise are dependent on the 

assumptions associated with how 

consumers will respond to increases in 

higher vehicle costs and improved 

vehicle fuel economy as a result of the 

proposal. Section III.H.1 discusses the 

underlying distinctions and 

implications of the role of consumer 

response in economic impacts. 

Further information on these and 

other aspects of the economic impacts of 

our proposed rule are summarized in 

the following sections and are presented 

in more detail in the DRIA for this 

rulemaking. EPA requests comment on 

all aspects of the cost, savings, and 

benefits analysis presented here and in 

the DRIA. EPA also requests comment 

on the inputs used in these analyses as 

described in the Draft Joint TSD. 

1. Conceptual Framework for Evaluating 

Consumer Impacts 

For this proposed rule, EPA projects 

significant private gains to consumers in 

three major areas: (1) Reductions in 

spending on fuel, (2) time saved due to 

less refueling, and (3) welfare gains from 

additional driving that results from the 

rebound effect. In combination, these 

private savings, mostly from fuel 

savings, appear to outweigh by a large 

margin the costs of the program, even 

without accounting for externalities. 

Admittedly, these findings pose a 

conundrum. On the one hand, 

consumers are expected to gain 

significantly from the proposed rules, as 

the increased cost of fuel efficient cars 

appears to be far smaller than the fuel 

savings (assuming modest discount 

rates). Yet fuel efficient cars are 

currently offered for sale, and 

consumers’ purchasing decisions may 

suggest a preference for lower fuel 

economy than the proposed rule 

mandates. Assuming full information 

and perfect foresight, standard 

economic theory suggests that the 

private gains to consumers, large as they 

are, must therefore be accompanied by 

a consumer welfare loss. This 

calculation assumes that consumers 

accurately predict all the benefits they 

will get from a new vehicle, even if they 

underestimated fuel savings at the time 

of purchase. Even if there is some such 

loss, EPA believes that under realistic 

assumptions, the private gains from the 

proposed rule, together with the social 

gains (in the form of reduction of 

externalities), significantly outweigh the 

costs. But EPA seeks comments on the 

underlying issue. 

The central conundrum has been 

referred to as the Energy Paradox in this 

setting (and in several others).331 In 

short, the problem is that consumers 

appear not to purchase products that are 

in their economic self-interest. There are 

strong theoretical reasons why this 

might be so.332 Consumers might be 

myopic and hence undervalue the longterm; they might lack information or a 

full appreciation of information even 

when it is presented; they might be 

especially averse to the short-term 

losses associated with energy efficient 

products (the behavioral phenomenon 

of ‘‘loss aversion’’); even if consumers 

have relevant knowledge, the benefits of 

energy efficient vehicles might not be 

sufficiently salient to them at the time 

of purchase. A great deal of work in 

behavioral economics identifies factors 

of this sort, which help account for the 

Energy Paradox.333 This point holds in 

the context of fuel savings (the main 

focus here), but it applies equally to the 

other private benefits, including 

reductions in refueling time and 

additional driving.334

Considerable research suggests that 

the Energy Paradox is real and 

significant due to consumers’ inability 

to value future fuel savings 

appropriately. For example, Sanstad and 

Howarth (1994) argue that consumers 

optimize behavior without full 

information by resorting to imprecise 

but convenient rules of thumb. Larrick 

and Soll (2008) find evidence that 

consumers do not understand how to 

translate changes in miles-per-gallon 

into fuel savings (a concern that EPA is 

continuing to attempt to address).335 If 

these arguments are valid, then there 

will be significant gains to consumers of 

the government mandating additional 

fuel economy. 

The evidence from consumer vehicle 

choice models indicates a huge range of 

estimates for consumers’ willingness to 

pay for additional fuel economy. 

Because consumer surplus estimates 

from consumer vehicle choice models 

depend critically on this value, EPA 

would consider any consumer surplus 

estimates of the effect of our rule from 

such models to be unreliable. In 

addition, the predictive ability of 

consumer vehicle choice models may be 

limited. While vehicle choice models 

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336E.g., Kleit, Andrew N. (2004). ‘‘Impacts of 

Long-Range Increases in the Fuel Economy (CAFE) 

Standard.’’ Economic Inquiry 42(2): 279–294 

(Docket EPA–HQ–OAR–2009–0472); Austin, David, 

and Terry Dinan (2005). ‘‘Clearing the Air: The 

Costs and Consequences of Higher CAFE Standards 

and Increased Gasoline Taxes.’’ Journal of 

Environmental Economics and Management 50: 

562–582 (Docket EPA–HQ–OAR–2009–0472); Klier, 

Thomas, and Joshua Linn (2008). ‘‘New Vehicle 

Characteristics and the Cost of the Corporate 

Average Fuel Economy Standard,’’ working paper. 

http://www.chicagofed.org/publications/ 

workingpapers/wp2008_13.pdf (Docket EPA–HQ– 

OAR–2009–0472); Jacobsen, Mark. ‘‘Evaluating U.S. 

Fuel Economy Standards In a Model with Producer 

and Household Heterogeneity,’’ http:// 

www.econ.ucsd.edu/∼m3jacobs/Jacobsen_

CAFE.pdf, accessed 5/11/09 (Docket EPA–HQ– 

OAR–2009–0472). 

337E.g., Gramlich, Jacob (2008). ‘‘Gas Prices and 

Endogenous Product Selection in the U.S. 

Automobile Industry,’’ http://www.econ.yale.edu/ 

seminars/apmicro/am08/gramlich-081216.pdf, 

accessed 5/11/09 (Docket EPA–HQ–OAR–2009– 

0472); McManus, Walter M. (2007). ‘‘The Impact of 

Attribute-Based Corporate Average Fuel Economy 

(CAFE) Standards: Preliminary Findings.’’ 

University of Michigan Transportation Research 

Institute paper UMTRI–2007–31 (Docket EPA–HQ– 

OAR–2009–0472); McManus, W. and R. Kleinbaum 

(2009). ‘‘Fixing Detroit: How Far, How Fast, How 

Fuel Efficient.’’ Working Paper, Transportation 

Research Institute, University of Michigan (Docket 

EPA–HQ–OAR–2009–0472). 

338 Greene, David L., and Jin-Tan Liu (1988). 

‘‘Automotive Fuel Economy Improvements and 

Consumers’ Surplus.’’ Transportation Research Part 

A 22A(3): 203–218 (Docket EPA–HQ–OAR–2009– 

0472). The study actually calculated the willingness 

to pay for reduced vehicle operating costs, of which 

vehicle fuel economy is a major component. 

339Espey, Molly, and Santosh Nair (2005). 

‘‘Automobile Fuel Economy: What is it Worth?’’ 

Contemporary Economic Policy 23(3): 317–323 

(Docket EPA–HQ–OAR–2009–0472); McManus, 

Walter M. (2006). ‘‘Can Proactive Fuel Economy 

Strategies Help Automakers Mitigate Fuel-Price 

Risks?’’ University of Michigan Transportation 

Research Institute (Docket EPA–HQ–OAR–2009– 

0472). 

340 Gramlich, Jacob (2008). ‘‘Gas Prices and 

Endogenous Product Selection in the U.S. 

Automobile Industry,’’ http://www.econ.yale.edu/

seminars/apmicro/am08/gramlich-081216.pdf, 

accessed 5/11/09 (Docket EPA–HQ–OAR–2009– 

0472). 

are based on sales of existing vehicles, 

vehicle models are likely to change, 

both independently and in response to 

this proposed rule; the models may not 

predict well in response to these 

changes. Instead, EPA compares the 

value of the fuel savings associated with 

this rule with the increase in technology 

costs. EPA will continue its efforts to 

review the literature, but, given the 

known difficulties, EPA has not 

conducted an analysis using these 

models for this proposal. 

Consumer vehicle choice models 

(referred to as ‘‘market shift’’ models by 

NHTSA in Section IV.C.4.c) are a tool 

that attempts to estimate how 

consumers decide what vehicles they 

buy. The models typically take into 

consideration both household 

characteristics (such as income, family 

size, and age) and vehicle characteristics 

(including a vehicle’s power, price, and 

fuel economy). These models are often 

used to examine how a consumer’s 

vehicle purchase decision is affected by 

a change in vehicle or personal 

characteristics. Although these models 

focus on the consumer, some have also 

linked consumer choice models with 

information on vehicle technologies and 

costs, to estimate an integrated system 

of consumer and auto maker response. 

The outputs from consumer vehicle 

choice models typically include the 

market shares of each category of 

vehicle in the model. In addition, 

consumer vehicle choice models are 

often used to estimate the effect of 

market or regulatory changes on 

consumer surplus. Consumer surplus is 

the benefit that a consumer gets over 

and above the market price paid for the 

good. For instance, if a consumer is 

willing to pay up to $30,000 for a car 

but is able to negotiate a price of 

$25,000, the $5,000 difference is 

consumer surplus. Information on 

consumer surplus can be used in 

benefit-cost analysis to measure whether 

consumers are likely to consider 

themselves better or worse off due to the 

changes. 

Consumer vehicle choice modeling 

has not previously been applied in 

Federal regulatory analysis of fuel 

economy, and EPA has not used a 

consumer vehicle choice model in its 

analysis of the effects of this proposed 

rule. EPA has not done so, to this point, 

due to concern over the wide variation 

in the methods and results of existing 

models, as well as some of the 

limitations of existing applications of 

consumer choice modeling. Our 

preliminary review of the literature 

indicates that these models vary in a 

number of dimensions, including data 

sources used, modeling methods, 

vehicle characteristics included in the 

analysis, and the research questions for 

which they were designed. These 

dimensions are likely to affect the 

models’ results and their interpretation. 

In addition, their ability to incorporate 

major changes in the vehicle fleet 

appears unproven. 

One problem for this rule is the 

variation in the value that consumers 

place on fuel economy in their vehicle 

purchase decisions. A number of 

consumer vehicle choice models make 

the assumption that auto producers 

provide as much fuel economy in their 

vehicles as consumers are willing to 

purchase, and consumers are satisfied 

with the current combinations of 

vehicle fuel economy and price in the 

marketplace.336 If this assumption is 

true, then consumers will not benefit 

from required improvements in fuel 

economy, even if the fuel savings that 

they receive exceed the additional costs 

from the fuel-saving technology. Other 

vehicle choice models, in contrast, find 

that consumers are willing to pay more 

for additional fuel economy than the 

costs to auto producers of installing that 

technology.337 If this result is true, then 

both consumers and producers would 

benefit from increased fuel economy. 

This result leaves open the question 

why auto producers do not follow the 

market incentive to provide more fuel 

economy, and why consumers do not 

seek out more fuel-efficient vehicles. 

Whether consumers and producers 

will benefit from improved fuel 

economy depends on the value of 

improved fuel economy to consumers. 

There may be a difference between the 

fuel savings that consumers would 

receive from improved fuel economy, 

and the amount that consumers would 

be willing to spend on a vehicle to get 

improved fuel economy. A 1988 review 

of consumers’ willingness to pay for 

improved fuel economy found estimates 

that varied by more than an order of 

magnitude: for a $1 per year reduction 

in vehicle operating costs, consumers 

would be willing to spend between 

$0.74 and $25.97 in increased vehicle 

price.338 For comparison, the present 

value of saving $1 per year on fuel for 

15 years at a 3% discount rate is $11.94, 

while a 7% discount rate produces a 

present value of $8.78. Thus, this study 

finds that consumers may be willing to 

pay either far too much or far too little 

for the fuel savings they will receive. 

Although EPA has not found an 

updated survey of these values, a few 

examples suggest that the existing 

consumer vehicle choice models still 

demonstrate wide variation in estimates 

of how much people are willing to pay 

for fuel savings. For instance, Espey and 

Nair (2005) and McManus (2006) find 

that consumers are willing to pay 

around $600 for one additional mile per 

gallon.339 In contrast, Gramlich (2008) 

finds that consumers’ willingness to pay 

for an increase from 25 mpg to 30 mpg 

varies between $4,100 (for luxury cars 

when gasoline costs $2/gallon) to 

$20,560 (for SUVs when gasoline costs 

$3.50/gallon).340

As noted, lack of information is one 

possible reason for the variation. 

Consumers face difficulty in predicting 

the fuel savings that they are likely to 

get from a vehicle, for a number of 

reasons. For instance, the calculation of 

fuel savings is complex, and consumers 

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49604 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

341Turrentine, T. and K. Kurani (2007). ‘‘Car 

Buyers and Fuel Economy?’’ Energy Policy 35: 

1213–1223 (Docket EPA–HQ–OAR–2009–0472); 

Larrick, R.P., and J.B. Soll (2008). ‘‘The MPG 

illusion.’’ Science 320: 1593–1594 (Docket EPA– 

HQ–OAR–2009–0472). 

342Busse, Meghan R., Christopher R. Knittel, and 

Florian Zettelmeyer (2009). ‘‘Pain at the Pump: How 

Gasoline Prices Affect Automobile Purchasing in 

New and Used Markets,’’ Working paper (accessed 

6/30/09), available at http://www.econ.ucdavis.edu/ 

faculty/knittel/papers/gaspaper_latest.pdf (Docket 

EPA–HQ–OAR–2009–0472). 

343Energy Information Administration, U.S. 

Department of Energy (1996). Issues in Midterm 

Analysis and Forecasting 1996, DOE/EIA–0607(96), 

Washington, DC., http://www.osti.gov/bridge/

purl.cover.jsp?purl=/366567-BvCFp0/webviewable/, 

accessed 7/7/09. 

344 Kubik, M. (2006). Consumer Views on 

Transportation and Energy. Second Edition. 

Technical Report: National Renewable Energy 

Laboratory. 

345Berry, Steven, James Levinsohn, and Ariel 

Pakes (July 1995). ‘‘Automobile Prices in Market 

Equilibrium,’’ Econometrica 63(4): 841–940 (Docket 

EPA–HQ–OAR–2009–0472). 

may not make it correctly.341 In 

addition, future fuel price (a major 

component of fuel savings) is highly 

uncertain. Consumer fuel savings also 

vary across individuals, who travel 

different amounts and have different 

driving styles. Studies regularly show 

that fuel economy plays a role in 

consumers’ vehicle purchases, but 

modeling that role may still be in 

development.342

If there is a difference between fuel 

savings and consumers’ willingness to 

pay for fuel savings, the next question 

is, which is the appropriate measure of 

consumer benefit? Fuel savings measure 

the actual monetary value that 

consumers will receive after purchasing 

a vehicle; the willingness to pay for fuel 

economy measures the value that, before 

a purchase, consumers place on 

additional fuel economy. As noted, 

there are a number of reasons that 

consumers may incorrectly estimate the 

benefits that they get from improved 

fuel economy, including risk or loss 

aversion, poor ability to estimate 

savings, and a lack of salience of fuel 

economy savings. 

Considerable evidence suggests that 

consumers discount future benefits 

more than the government when 

evaluating energy efficiency gains. The 

Energy Information Agency (1996) has 

used discount rates as high as 111 

percent for water heaters and 120 

percent for electric clothes dryers.343 In 

the transportation sector, evidence also 

points to high private discount rates: 

Kubik (2006) conducts a representative 

survey that finds consumers are 

impatient or myopic (e.g., use a high 

discount rate) with regard to vehicle 

fuel savings.344 On average, consumers 

indicated that fuel savings would have 

to pay back the additional cost in only 

2.9 years to persuade them to buy a 

higher fuel-economy vehicle. EPA also 

incorporate a relatively short ‘‘payback 

period’’ into OMEGA to evaluate and 

order technologies that can be used to 

increase fuel economy, assuming that 

buyers value the resulting fuel savings 

over the first five years of a new 

vehicle’s lifetime. This assumption is 

based on the current average term of 

consumer loans to finance the purchase 

of new vehicles. That said, there is no 

consensus in the literature on what the 

private discount rate is or should be in 

this context. 

One possibility is that the discounting 

framework may not be a good model for 

consumer decision-making and for 

determining consumer welfare regarding 

fuel economy. Buying a vehicle involves 

trading off among dozens of vehicle 

characteristics, including price, vehicle 

class, safety, performance, and even 

audio systems and cupholders. Fuel 

economy is only one of these attributes, 

and its role in consumer vehicle 

purchase decisions is not well 

understood (see DRIA Section 8.1.2 for 

further discussion). As noted above, if 

consumers do not fully consider fuel 

economy at the time of vehicle 

purchase, then the fuel savings from this 

rule provide a realized benefit to 

consumers after purchase. There are two 

distinct ideas at work here: one is that 

efficiency improvements change the 

nature of the cost of the car, requiring 

higher up-front vehicle costs while 

enabling lower long-run fuel costs; the 

other is that while consumers may 

benefit from the lower long-run fuel 

costs, they may also experience some 

loss in welfare on account of the 

possible change in vehicle mix. 

A second problem with use of 

consumer vehicle choice models, as 

they now stand, is that they are even 

less reliable in the face of significant 

changes otherwise occurring in fleet 

composition. One attempt to analyze the 

effect of the oil shock of 1973 on 

consumer vehicle choice found that, 

after two years, the particular model did 

not predict well due to changes in the 

vehicle fleet.345 It is likely that, in the 

next few years, many of the vehicles 

that will be offered for sale will change. 

In coming years, new vehicles will be 

developed, and existing vehicles will be 

redesigned. For instance, over the next 

few years, new vehicles that have both 

high fuel economy and high safety 

factors, in combinations that consumers 

have not previously been offered, are 

likely to appear in the market. Models 

based on the existing vehicle fleet may 

not do well in predicting consumers’ 

choices among the new vehicles offered. 

Given that consumer vehicle choice 

models appear to be less effective in 

predicting vehicle choices when the 

vehicles are likely to change, EPA is 

reluctant to use the models for this 

proposed rulemaking. 

In sum, the estimates of consumer 

surplus from consumer vehicle choice 

models depend heavily on the value to 

consumers of improved fuel economy, a 

value for which estimates are highly 

varied. In addition, the predictive 

ability of consumer vehicle choice 

models may be limited as consumers 

face new vehicle choices that they 

previously did not have. 

Nonetheless, because there are 

potential advantages to using consumer 

vehicle choice models if these 

difficulties can be addressed, EPA plans 

to continue our investigation and 

evaluation of consumer vehicle choice 

models. This effort includes further 

review of existing consumer vehicle 

choice models and the estimates of 

consumers’ willingness to pay for 

increased fuel economy. In addition, 

EPA is developing capacity to examine 

the factors that may affect the results of 

consumer vehicle choice models, and to 

explore their impact on analysis of 

regulatory scenarios. 

A detailed discussion of the state of 

the art of consumer choice modeling is 

provided in the DRIA. For this 

rulemaking, EPA is not able to estimate 

the consumer welfare loss which may 

accompany the actual fuel savings from 

the proposal, and so any such loss must 

remain unquantified. EPA seeks 

comments on how to assess these 

difficult questions in the future. 

2. Costs Associated With the Vehicle 

Program 

In this section EPA presents our 

estimate of the costs associated with the 

proposed vehicle program. The 

presentation here summarizes the costs 

associated with the new vehicle 

technology expected to be added to 

meet the proposed GHG standards, 

including hardware costs to comply 

with the proposed A/C credit program. 

The analysis summarized here provides 

our estimate of incremental costs on a 

per vehicle basis and on an annual total 

basis. 

The presentation here summarizes the 

outputs of the OMEGA model that was 

discussed in some detail in Section III.D 

of this preamble. For details behind the 

analysis such as the OMEGA model 

inputs and the estimates of costs 

associated with individual technologies, 

the reader is directed to Chapters 1 and 

2 of the DRIA, and Chapter 3 of the Draft 

Joint TSD. For more detail on the 

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346 ‘‘EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-duty Vehicle Carbon Dioxide 

Emissions,’’ EPA 420–R–08–008; NHTSA 2011 

CAFE FRM is at 74 FR 14196; both documents are 

contained in Docket EPA–HQ–OAR–2009–0472. 

347Note that the assumption made here is that the 

standards proposed would continue to apply for 

years beyond 2016 so that new vehicles sold in 

model years 2017 and later would continue to incur 

costs as a result of this rule. Those costs are 

estimated to get lower in 2022 because some of the 

indirect costs attributable to this proposal in the 

years prior to 2022 would be eliminated in 2022 

and later. 

348Alex Rogozhin et al., Automobile Industry 

Retail Price Equivalent and Indirect Cost 

Multipliers. Prepared for EPA by RTI International 

and Transportation Research Institute, University of 

Michigan. EPA–420–R–09–003, February 2009 

(Docket EPA–HQ–OAR–2009–0472). 

349 Gloria Helfand and Todd Sherwood, 

‘‘Documentation of the Development of Indirect 

Cost Multipliers for Three Automotive 

Technologies,’’ Office of Transportation and Air 

Quality, USEPA, August 2009 (Docket EPA–HQ– 

OAR–2009–0472). 

outputs of the OMEGA model and the 

overall vehicle program costs 

summarized here, the reader is directed 

to Chapters 4 and 7 of the DRIA. 

With respect to the cost estimates for 

vehicle technologies, EPA notes that, 

because these estimates relate to 

technologies which are in most cases 

already available, these cost estimates 

are technically robust. EPA notes further 

that, in all instances, its estimates are 

within the range of estimates in the 

most widely-utilized sources and 

studies. In that way, EPA believes that 

we have been conservative in estimating 

the vehicle hardware costs associated 

with this proposal. 

With respect to the aggregate cost 

estimations presented in Section 

III.H.2.b, EPA notes that there are a 

number of areas where the results of our 

analysis may be conservative and, in 

general, EPA believes we have 

directionally overestimated the costs of 

compliance with these proposed 

standards, especially in not accounting 

for the full range of credit opportunities 

available to manufacturers. For 

example, some cost saving programs are 

considered in our analysis, such as full 

car/truck trading, while others are not, 

such as cross-manufacturer trading and 

advanced technology credits. 

a. Vehicle Compliance Costs Associated 

With the Proposed CO2 Standards 

For the technology and vehicle 

package costs associated with adding 

new CO2-reducing technology to 

vehicles, EPA began with EPA’s 2008 

Staff Report and NHTSA’s 2011 CAFE 

FRM both of which presented costs 

generated using existing literature, 

meetings with manufacturers and parts 

suppliers, and meetings with other 

experts in the field of automotive cost 

estimation.346 EPA has updated some of 

those technology costs with new 

information from our contract with FEV, 

through further discussion with 

NHTSA, and by converting from 2006 

dollars to 2007 dollars using the GDP 

price deflator. The estimated costs 

presented here represent the 

incremental costs associated with this 

proposal relative to what the future 

vehicle fleet would be expected to look 

like absent this proposed rule. A more 

detailed description of the factors 

considered in our reference case is 

presented in Section III.D. 

The estimates of vehicle compliance 

costs cover the years of implementation 

of the program—2012 through 2016. 

EPA has also estimated compliance 

costs for the years following 

implementation so that we can shed 

light on the long term—2022 and later— 

cost impacts of the proposal.347 EPA 

used the year 2022 here because our 

short-term and long-term markup factors 

described shortly below are applied in 

five year increments with the 2012 

through 2016 implementation span and 

the 2017 through 2021 span both 

representing the short-term. Some of the 

individual technology cost estimates are 

presented in brief in Section III.D, and 

account for both the direct and indirect 

costs incurred in the automobile 

manufacturing and dealer industries (for 

a complete presentation of technology 

costs, please refer to Chapter 3 of the 

Draft Joint TSD). To account for the 

indirect costs, EPA has applied an 

indirect cost markup (ICM) factor to all 

of our direct costs to arrive at the 

estimated technology cost.348 The ICM 

factors used range from 1.11 to 1.64 in 

the short-term (2012 through 2021), 

depending on the complexity of the 

given technology, to account for 

differences in the levels of R&D, tooling, 

and other indirect costs that would be 

incurred. Once the program has been 

fully implemented, some of the indirect 

costs would no longer be attributable to 

these proposed standards and, as such, 

a lower ICM factor is applied to direct 

costs in years following full 

implementation. The ICM factors used 

range from 1.07 to 1.39 in the long-term 

(2022 and later) depending on the 

complexity of the given technology.349

Note that the short-term ICMs are used 

in the 2012 through 2016 years of 

implementation and continue through 

2021. EPA does this since the proposed 

standards are still being implemented 

during the 2012 through 2016 model 

years. Therefore, EPA considers the five 

year period following full 

implementation also to be short-term. 

The argument has been made that the 

ICM approach may be more appropriate 

for regulatory cost estimation than the 

more traditional retail price equivalent, 

or RPE, markup. The RPE is based on 

the historical relationship between 

direct costs and consumer prices; it is 

intended to reflect the average markup 

over time required to sustain the 

industry as a viable operation. Unlike 

the RPE approach, the ICM focuses more 

narrowly on the changes that are 

required in direct response to 

regulation-induced vehicle design 

changes which may not directly 

influence all of the indirect costs that 

are incurred in the normal course of 

business. For example, an RPE markup 

captures all indirect costs including 

costs such as the retirement benefits of 

retired employees. However, the 

retirement benefits for retired 

employees are not expected to change as 

a result of a new GHG regulation and, 

therefore, those indirect costs should 

not increase in relation to newly added 

hardware in response to a regulation. 

So, under the ICM approach, if a newly 

added piece of technology has an 

incremental direct cost of $1, its direct 

plus indirect costs should not be $1 

multiplied by an RPE markup of say 1.5, 

or $1.50, but rather something less since 

the manufacturer is not paying more for 

retired-employee retirement benefits as 

a direct result of adding the new piece 

of technology. Further, as noted above, 

the indirect cost multiplier can be 

adjusted for different levels of 

technological complexity. For example, 

a move to low rolling resistance tires is 

less complex than converting a gasoline 

vehicle to a plug-in hybrid. Therefore, 

the incremental indirect costs for the 

tires should be lower in magnitude than 

those for the plug-in hybrid. For the 

analysis underlying these proposed 

standards, the agencies have based our 

estimates on the ICM approach, but EPA 

notes that discussion continues about 

the use of the RPE approach and the 

ICM approach for safety and 

environmental regulations. We discuss 

our ICM factors and the complexity 

levels used in our analysis in more 

detail in Chapter 3 of the Draft Joint 

TSD and EPA requests comment on the 

approach described there as well as the 

general concepts of both the ICM and 

RPE approaches. 

EPA has also considered the impacts 

of manufacturer learning on the 

technology cost estimates. Consistent 

with past EPA rulemakings, EPA has 

estimated that some costs would decline 

by 20 percent with each of the first two 

doublings of production beginning with 

the first year of implementation. These 

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volume-based cost declines—which 

EPA calls ‘‘volume’’ based learning— 

take place after manufacturers have had 

the opportunity to find ways to improve 

upon their manufacturing processes or 

otherwise manufacture these 

technologies in a more efficient way. 

After two 20 percent cost reduction 

steps, the cost reduction learning curve 

flattens out considerably as only minor 

improvements in manufacturing 

techniques and efficiencies remain to be 

had. By then, costs decline roughly 

three percent per year as manufacturers 

and suppliers continually strive to 

reduce costs. These time-based cost 

declines—which EPA calls ‘‘time’’ 

based learning—take place at a rate of 

three percent per year. EPA has 

considered learning impacts on most 

but not all of the technologies expected 

to be used because some of the expected 

technologies are already used rather 

widely in the industry and, presumably, 

learning impacts have already occurred. 

EPA has considered volume-based 

learning for only a handful of 

technologies that EPA considers to be 

new or emerging technologies such as 

the hybrids and electric vehicles. For 

most technologies, EPA has considered 

them to be more established given their 

current use in the fleet and, hence, we 

have applied the lower time based 

learning. We have more discussion of 

our learning approach and the 

technologies to which we have applied 

which type of learning in the Draft Joint 

TSD. 

The technology cost estimates 

discussed in Section III.D and detailed 

in Chapter 3 of the Draft Joint TSD are 

used to build up package cost estimates 

which are then used as inputs to the 

OMEGA model. EPA discusses our 

packages and package costs in Chapter 

1 of the DRIA. The model determines 

what level of CO2 improvement is 

required considering the reference case 

for each manufacturer’s fleet. The 

vehicle compliance costs are the outputs 

of the model and take into account FFV 

credits through 2015, TLAASP, full car/ 

truck trading, and the A/C credit 

program. Table III.H.2–1 presents the 

fleet average incremental vehicle 

compliance costs for this proposal. As 

the table indicates, 2012–2016 costs 

increase every year as the standards 

become more stringent. Costs per car 

and per truck then remain stable 

through 2021 while cost per vehicle 

(car/truck combined) decline slightly as 

the fleet mix trends slowly to increasing 

car sales. In 2022, costs per car and per 

truck decline as the long-term ICM kicks 

in because some indirect costs are no 

longer considered attributable to the 

proposed program. Costs per car and per 

truck remain constant thereafter while 

the cost per vehicle declines slightly as 

the fleet continues to trend toward cars. 

By 2030, projections of fleet mix 

changes become static and the cost per 

vehicle remains constant. EPA has a 

more detailed presentation of vehicle 

compliance costs on a manufacturer by 

manufacturer basis in the DRIA. 

TABLE III.H.2–1—INDUSTRY AVERAGE VEHICLE COMPLIANCE COSTS ASSOCIATED WITH THE PROPOSED TAILPIPE CO2

STANDARDS

[$/vehicle in 2007 dollars] 

Calendar year $/car $/truck 

$/vehicle 

(car & truck 

combined) 

2012 ............................................................................................................................................. 374 358 368 

2013 ............................................................................................................................................. 531 539 534 

2014 ............................................................................................................................................. 663 682 670 

2015 ............................................................................................................................................. 813 886 838 

2016 ............................................................................................................................................. 968 1,213 1,050 

2017 ............................................................................................................................................. 968 1,213 1,047 

2018 ............................................................................................................................................. 968 1,213 1,044 

2019 ............................................................................................................................................. 968 1,213 1,042 

2020 ............................................................................................................................................. 968 1,213 1,040 

2021 ............................................................................................................................................. 968 1,213 1,039 

2022 ............................................................................................................................................. 890 1,116 955 

2030 ............................................................................................................................................. 890 1,116 953 

2040 ............................................................................................................................................. 890 1,116 953 

2050 ............................................................................................................................................. 890 1,116 953 

b. Annual Costs of the Proposed Vehicle 

Program 

The costs presented here represent the 

incremental costs for newly added 

technology to comply with the proposed 

program. Together with the projected 

increases in car and light-truck sales, 

the increases in per-vehicle average 

costs shown in Table III.H.2–1 above 

result in the total annual costs reported 

in Table III.H.2–2 below. Note that the 

costs presented in Table III.H.2–2 do not 

include the savings that would occur as 

a result of the improvements to fuel 

consumption. Those impacts are 

presented in Section III.H.4. 

TABLE III.H.2–2—QUANTIFIED ANNUAL

COSTS ASSOCIATED WITH THE PROPOSED VEHICLE PROGRAM

[$Millions of 2007 dollars] 

Year Quantified 

annual costs 

2012 ...................................... $5,400 

2013 ...................................... $8,400 

2014 ...................................... $10,900 

2015 ...................................... $13,900 

2016 ...................................... $17,500 

2020 ...................................... $18,000 

2030 ...................................... $17,900 

2040 ...................................... $19,300 

2050 ...................................... $20,900 

NPV, 3% ............................... $390,000 

NPV, 7% ............................... $216,600 

3. Cost per Ton of Emissions Reduced 

EPA has calculated the cost per ton of 

GHG (CO2-equivalent, or CO2e) 

reductions associated with this proposal 

using the above costs and the emissions 

reductions described in Section III.F. 

More detail on the costs, emission 

reductions, and the cost per ton can be 

found in the DRIA and Draft Joint TSD. 

EPA has calculated the cost per metric 

ton of GHG emissions reductions in the 

years 2020, 2030, 2040, and 2050 using 

the annual vehicle compliance costs and 

emission reductions for each of those 

years. The value in 2050 represents the 

long-term cost per ton of the emissions 

reduced. Note that EPA has not 

included the savings associated with 

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350Energy Information Administration, 

Supplemental tables to the Annual Energy Outlook 

2009, Updated Reference Case with American 

Recovery and Reinvestment Act. Available http:// 

www.eia.doe.gov/oiaf/aeo/supplement/stimulus/

regionalarra.html. April 2009. 

reduced fuel consumption, nor any of 

the other benefits of this proposal in the 

cost per ton calculations. If EPA were to 

include fuel savings in the cost 

estimates, the cost per ton would be less 

than $0, since the estimated value of 

fuel savings outweighs these costs. With 

regard to the proposed CH4 and N2O 

standards, since these standards would 

be emissions caps designed to ensure 

manufacturers do not backslide from 

current levels, EPA has not estimated 

costs associated with the standards 

(since the standards would not require 

any change from current practices nor 

does EPA estimate they would result in 

emissions reductions). 

The results for CO2e costs per ton 

under the proposed vehicle program are 

shown in Table III.H.3–1. 

TABLE III.H.3–1—ANNUAL COST PER METRIC TON OF CO2e REDUCED, IN $2007 DOLLARS

Year Cost a

($millions) 

CO2e 

Reduced 

(million metric 

tons) 

Cost per ton 

2020 ............................................................................................................................................. $18,000 170 $110 

2030 ............................................................................................................................................. 17,900 320 60 

2040 ............................................................................................................................................. 19,300 420 50 

2050 ............................................................................................................................................. 20,900 520 40 

a Costs here include vehicle compliance costs and do not include any fuel savings (discussed in Section III.H.4) or other benefits of this proposal (discussed in Sections III.H.6 through III.H 10). 

4. Reduction in Fuel Consumption and 

Its Impacts 

a. What Are the Projected Changes in 

Fuel Consumption? 

The proposed CO2 standards would 

result in significant improvements in 

the fuel efficiency of affected vehicles. 

Drivers of those vehicles would see 

corresponding savings associated with 

reduced fuel expenditures. EPA has 

estimated the impacts on fuel 

consumption for both the proposed 

tailpipe CO2 standards and the proposed 

A/C credit program. To do this, fuel 

consumption is calculated using both 

current CO2 emission levels and the 

proposed CO2 standards. The difference 

between these estimates represents the 

net savings from the proposed CO2

standards. Note that the total number of 

miles that vehicles are driven each year 

is different under each of the control 

case scenarios than in the reference case 

due to the ‘‘rebound effect,’’ which is 

discussed in Section III.H.4.c. 

The expected impacts on fuel 

consumption are shown in Table 

III.H.4–1. The gallons shown in the 

tables reflect impacts from the proposed 

CO2 standards, including the proposed 

A/C credit program, and include 

increased consumption resulting from 

the rebound effect. 

TABLE III.H.4–1—FUEL CONSUMPTION

IMPACTS OF THE PROPOSED VEHICLE STANDARDS AND A/C CREDIT

PROGRAMS

[Million gallons] 

Year Total 

2012 .............................................. 530 

2013 .............................................. 1,320 

2014 .............................................. 2,410 

2015 .............................................. 3,910 

TABLE III.H.4–1—FUEL CONSUMPTION

IMPACTS OF THE PROPOSED VEHICLE STANDARDS AND A/C CREDIT

PROGRAMS—Continued 

[Million gallons] 

Year Total 

2016 .............................................. 5,930 

2020 .............................................. 13,350 

2030 .............................................. 26,180 

2040 .............................................. 33,930 

2050 .............................................. 42,570 

b. What Are the Fuel Savings to the 

Consumer? 

Using the fuel consumption estimates 

presented in Section III.H.4.a, EPA can 

calculate the monetized fuel savings 

associated with the proposed CO2

standards. To do this, we multiply 

reduced fuel consumption in each year 

by the corresponding estimated average 

fuel price in that year, using the 

reference case taken from the AEO 

2009.350 AEO is the government 

consensus estimate used by NHTSA and 

many other government agencies to 

estimate the projected price of fuel. EPA 

has included all fuel taxes in these 

estimates since these are the prices paid 

by consumers. As such, the savings 

shown reflect savings to the consumer. 

These results are shown in Table 

III.H.4–2. Note that EPA presents the 

monetized fuel savings using pre-tax 

fuel prices in Section III.H.10. The fuel 

savings based on pre-tax fuel prices 

reflect the societal savings in contrast to 

the consumer savings presented in 

Table III.H.4–2. Also in Section III.H.10, 

EPA presents the benefit-cost of the 

proposal and, for that reason, present 

the fuel impacts as negative costs of the 

program while here EPA presents them 

as positive savings. 

TABLE III.H.4–2—ESTIMATED FUEL

CONSUMPTION SAVINGS TO THE

CONSUMER a

[Millions of 2007 dollars] 

Calendar year Total 

2012 ...................................... $1,400 

2013 ...................................... 3,800 

2014 ...................................... 7,200 

2015 ...................................... 12,400 

2016 ...................................... 19,400 

2020 ...................................... 48,400 

2030 ...................................... 100,000 

2040 ...................................... 136,800 

2050 ...................................... 181,000 

NPV, 3% ............................... 1,850,200 

NPV, 7% ............................... 826,900 

aFuel consumption savings calculated using 

taxed fuel prices. Fuel consumption impacts 

using pre-tax fuel prices are presented in Section III.H.10 as negative costs of the vehicle 

program 

As shown in Table III.H.4–2, EPA is 

projecting that consumers would realize 

very large fuel savings as a result of the 

standards contained in this proposal. 

There are several ways to view this 

value. Some, as demonstrated below in 

Section III.H.5, view these fuel savings 

as a reduction in the cost of owning a 

vehicle, whose full benefits consumers 

realize. This approach assumes that, 

regardless how consumers in fact make 

their decisions on how much fuel 

economy to purchase, they will gain 

these fuel savings. Another view says 

that consumers do not necessarily value 

fuel savings as equal to the results of 

this calculation. Instead, consumers 

may either undervalue or overvalue fuel 

economy relative to these savings, based 

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351Small, K. and K. Van Dender, 2007a. ‘‘Fuel 

Efficiency and Motor Vehicle Travel: The Declining 

Rebound Effect’’, The Energy Journal, vol. 28, no. 

1, pp. 25–51 (Docket EPA–HQ–OAR–2009–0472). 

352Sorrell, S. and J. Dimitropoulos, 2007. 

‘‘UKERC Review of Evidence for the Rebound 

Effect, Technical Report 2: Econometric Studies’’, 

UKERC/WP/TPA/2007/010, UK Energy Research 

Centre, London, October (Docket EPA–HQ–OAR– 

2009–0472). 

353Report by Kenneth A. Small of University of 

California at Irvine to EPA, ‘‘The Rebound Effect 

from Fuel Efficiency Standards: Measurement and 

Projection to 2030’’, June 12, 2009 (Docket EPA– 

HQ–OAR–2009–0472). 

354Report by David Greene of Oak Ridge National 

Laboratory to EPA, ‘‘Rebound 2007: Analysis of 

National Light-Duty Vehicle Travel Statistics,’’ 

March 24, 2009 (Docket EPA–HQ–OAR–2009– 

0472). Note, this report has been submitted for peer 

review. Completion of the peer review process is 

expected prior to the final rule. 

355 Kleit A.N., 1990. ‘‘The Effect of Annual 

Changes in Automobile Fuel Economy Standards.’’ 

Journal of Regulatory Economics 2: 151–172 

(Docket EPA–HQ–OAR–2009–0472); McCarthy, 

Patrick S., 1996. ‘‘Market Price and Income 

Elasticities of New Vehicle Demands.’’ Review of 

Economics and Statistics 78: 543–547 (Docket EPA– 

HQ–OAR–2009–0472); Goldberg, Pinelopi K., 1998. 

‘‘The Effects of the Corporate Average Fuel 

Efficiency Standards in the U.S.,’’ Journal of 

Industrial Economics 46(1): 1–33 (Docket EPA–HQ– 

OAR–2009–0472). 

356See, for instance, Gron, Ann, and Deborah 

Swenson, 2000. ‘‘Cost Pass-Through in the U.S. 

Automobile Market,’’ Review of Economics and 

Statistics 82: 316–324 (Docket EPA–HQ–OAR– 

2009–0472). 

357There is not a consensus in the literature on 

how consumers consider fuel economy in their 

vehicle purchases. Results are inconsistent, 

possibly due to fuel economy not being a major 

focus of many of the studies. Espey, Molly, and 

Santosh Nair (1995, ‘‘Automobile Fuel Economy: 

What Is It Worth?’’ Contemporary Economic Policy 

23: 317–323, (Docket EPA–HQ–OAR–2009–0472) 

find that their results are consistent with consumers 

using the lifetime of the vehicle, not just the first 

five years, in their fuel economy purchase 

decisions. This result suggests that the five-year 

time horizon used here may be an underestimate. 

on their personal preferences. This issue 

is discussed further in Section III.H.5 

and in Chapter 8 of the DRIA. 

c. VMT Rebound Effect 

The fuel economy rebound effect 

refers to the fraction of fuel savings 

expected to result from an increase in 

vehicle fuel economy—particularly one 

required by higher fuel efficiency 

standards—that is offset by additional 

vehicle use. The increase in vehicle use 

occurs because higher fuel economy 

reduces the fuel cost of driving, which 

is typically the largest single component 

of the monetary cost of operating a 

vehicle, and vehicle owners respond to 

this reduction in operating costs by 

driving slightly more. 

For this proposal, EPA is using an 

estimate of 10% for the rebound effect. 

This value is based on the most recent 

time period analyzed in the Small and 

Van Dender 2007 paper,351 and falls 

within the range of the larger body of 

historical work on the rebound effect.352

Recent work by David Greene on the 

rebound effect for light-duty vehicles in 

the U.S. further supports the hypothesis 

that the rebound effect is decreasing 

over time.353 If we were to use a 

dynamic estimate of the future rebound 

effect, our analysis shows that the 

rebound effect could be in the range of 

5% or lower.354 The rebound effect is 

also discussed in Section II.F of the 

preamble; the TSD, Section 4.2.5, 

reviews the relevant literature and 

discusses in more depth the reasoning 

for the rebound values used here. 

EPA also invites comments on other 

alternatives for estimating the rebound 

effect. As one illustration, variation in 

the price per gallon of gasoline directly 

affects the per-mile cost of driving, and 

drivers may respond just as they would 

to a change in the cost of driving 

resulting from a change in fuel 

economy, by varying the number of 

miles they drive. Because vehicles’ fuel 

economy is fixed in the short run, 

variation in the number of miles driven 

in response to changes in fuel prices 

will be reflected in changes in gasoline 

consumption. Under the assumption 

that drivers respond similarly to 

changes in the cost of driving whether 

they are caused by variation in fuel 

prices or fuel economy, the short-run 

price elasticity of demand for gasoline— 

which measures the sensitivity of 

gasoline consumption to changes in its 

price per gallon—may provide some 

indication about the magnitude of the 

rebound effect itself. EPA invites 

comment on the extent to which the 

short run elasticity of demand for 

gasoline with respect to its price can 

provide useful information about the 

size of the rebound effect. Specifically, 

we seek comment on whether it would 

be appropriate to use the price elasticity 

of demand for gasoline, or other 

alternative approaches, to guide the 

choice of a value for the rebound effect. 

5. Impacts on U.S. Vehicle Sales and 

Payback Period 

a. Vehicle Sales Impacts 

The methodology EPA used for 

estimating the impact on vehicle sales is 

relatively straightforward, but makes a 

number of simplifying assumptions. 

According to the literature, the price 

elasticity of demand for vehicles is 

commonly estimated to be ¥1.0.355 In 

other words, a one percent increase in 

the price of a vehicle would be expected 

to decrease sales by one percent, 

holding all other factors constant. For 

our estimates, EPA calculated the effect 

of an increase in vehicle costs due to the 

proposed standards and assume that 

consumers will face the full increase in 

costs, not an actual (estimated) change 

in vehicle price. (The estimated 

increases in vehicle cost due to the rule 

are discussed in Section III.H.2) This is 

a conservative methodology, since an 

increase in cost may not pass fully into 

an increase in market price in an 

oligopolistic industry such as the 

automotive sector.356 EPA also notes 

that we have not used these estimated 

sales impacts in the OMEGA Model. 

Although EPA uses the one percent 

price elasticity of demand for vehicles 

as the basis for our vehicle sales impact 

estimates, we assumed that the 

consumer would take into account both 

the higher vehicle purchasing costs as 

well as some of the fuel savings benefits 

when deciding whether to purchase a 

new vehicle. Therefore, the incremental 

cost increase of a new vehicle would be 

offset by reduced fuel expenditures over 

a certain period of time (i.e., the 

‘‘payback period’’). For the purposes of 

this rulemaking, EPA used a five-year 

payback period, which is consistent 

with the length of a typical new lightduty vehicle loan.357 This approach may 

not accurately reflect the role of fuel 

savings in consumers’ purchase 

decisions, as the discussion in Section 

III.H.1 suggests. If consumers consider 

fuel savings in a different fashion than 

modeled here, then this approach will 

not accurately reflect the impact of this 

rule on vehicle sales. 

This increase in costs has other effects 

on consumers as well: If vehicle prices 

increase, consumers will face higher 

insurance costs and sales tax, and 

additional finance costs if the vehicle is 

bought on credit. In addition, the resale 

value of the vehicles will increase. EPA 

estimates that, with corrections for these 

factors, the effect on consumer 

expenditures of the cost of the new 

technology should be 0.932 times the 

cost of the technology at a 3% discount 

rate, and 0.892 times the cost of the 

technology at a 7% discount rate. The 

details of this calculation are in the 

DRIA, Chapter 8.l. 

Once the cost estimates are adjusted 

for these additional factors, the fuel cost 

savings associated with the rule, 

discussed in Section III.H.4, are 

subtracted to get the net effect on 

consumer expenditures for a new 

vehicle. With the assumed elasticity of 

demand of ¥1, the percent change in 

this ‘‘effective price,’’ estimated as the 

adjusted increase in cost, is equal to the 

negative of the percent change in 

vehicle purchases. The net effect of this 

calculation is in Table III.H.5–1 and 

Table III.H.5–2. 

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The estimates provided in Table 

III.H.5–1 and Table III.H.5–2 are meant 

to be illustrative rather than a definitive 

prediction. When viewed at the 

industry-wide level, they give a general 

indication of the potential impact on 

vehicle sales. As shown below, the 

overall impact is positive and growing 

over time for both cars and trucks, 

because the estimated value of fuel 

savings exceeds the costs of meeting the 

higher standards. If, however, 

consumers do not take fuel savings and 

other costs into account as modeled 

here when they purchase vehicles, the 

results presented here may not reflect 

actual impacts on vehicle sales. 

TABLE III.H.5–1—VEHICLE SALES IMPACTS USING A 3% DISCOUNT RATE

Change in car 

sales Percent change Change in truck sales Percent change 

2012 ................................................................................................. 66,600 0.7 27,300 0.5 

2013 ................................................................................................. 93,300 0.9 161,300 2.8 

2014 ................................................................................................. 134,400 1.3 254,400 4.4 

2015 ................................................................................................. 236,300 2.2 368,400 6.5 

2016 ................................................................................................. 375,400 3.4 519,000 9.4 

Table III.H.5–1 shows the impacts on 

new vehicle sales using a 3% discount 

rate. The fuel savings are always higher 

than the technology costs. Although 

both cars and trucks show very small 

effects initially, over time vehicle sales 

become increasingly positive, as 

increased fuel prices make improved 

fuel economy more desirable. The 

increases in sales for trucks are larger 

than the increases for trucks (except in 

2012) in both absolute numbers and 

percentage terms. 

TABLE III.H.5–2—NEW VEHICLE SALES IMPACTS USING A 7% DISCOUNT RATE

Change in car 

sales Percent change Change in truck sales Percent change 

2012 ............................................................................................. 61,900 0 .7 25,300 0 .5 

2013 ............................................................................................. 86,600 0 .9 60,000 1 

2014 ............................................................................................. 125,200 1 .2 122,900 2 .1 

2015 ............................................................................................. 221,400 2 198,100 3 .5 

2016 ............................................................................................. 353,100 3 .2 291,500 5 .3 

Table III.H.5–2 shows the impacts on 

new vehicle sales using a 7% interest 

rate. While a 7% interest rate shows 

slightly lower impacts than using a 3% 

discount rate, the results are 

qualitatively similar to those using a 3% 

discount rate. Sales increase for every 

year. For both cars and trucks, sales 

become increasingly positive over time, 

as higher fuel prices make improved 

fuel economy more valuable. The car 

market grows more than the truck 

market in absolute numbers, but less on 

a percentage basis. 

The effect of this rule on the use and 

scrappage of older vehicles will be 

related to its effects on new vehicle 

prices, the fuel efficiency of new vehicle 

models, and the total sales of new 

vehicles. If the value of fuel savings 

resulting from improved fuel efficiency 

to the typical potential buyer of a new 

vehicle outweighs the average increase 

in new models’ prices, sales of new 

vehicles will rise, while scrappage rates 

of used vehicles will increase slightly. 

This will cause the ‘‘turnover’’ of the 

vehicle fleet—that is, the retirement of 

used vehicles and their replacement by 

new models—to accelerate slightly, thus 

accentuating the anticipated effect of the 

rule on fleet-wide fuel consumption and 

CO2 emissions. However, if potential 

buyers value future fuel savings 

resulting from the increased fuel 

efficiency of new models at less than the 

increase in their average selling price, 

sales of new vehicles will decline, as 

will the rate at which used vehicles are 

retired from service. This effect will 

slow the replacement of used vehicles 

by new models, and thus partly offset 

the anticipated effects of the proposed 

rules on fuel use and emissions. 

Because the agencies are uncertain 

about how the value of projected fuel 

savings from the proposed rules to 

potential buyers will compare to their 

estimates of increases in new vehicle 

prices, we have not attempted to 

estimate explicitly the effects of the rule 

on scrappage of older vehicles and the 

turnover of the vehicle fleet. We seek 

comment on the methods that might be 

used to estimate the effect of the 

proposed rule on the scrappage and use 

of older vehicles as part of the analysis 

to be conducted for the final rule. 

A detailed discussion of the vehicle 

sales impacts methodology is provided 

in the DRIA. EPA invites comments on 

this approach to estimating the vehicle 

sales impacts of this proposal. 

b. Consumer Payback Period and 

Lifetime Savings on New Vehicle 

Purchases 

Another factor of interest is the 

payback period on the purchase of a 

new vehicle that complies with the 

proposed standards. In other words, 

how long would it take for the expected 

fuel savings to outweigh the increased 

cost of a new vehicle? For example, a 

new 2016 MY vehicle is estimated to 

cost $1,050 more (on average, and 

relative to the reference case vehicle) 

due to the addition of new GHG 

reducing technology (see Section III.D.6 

for details on this cost estimate). This 

new technology will result in lower fuel 

consumption and, therefore, savings in 

fuel expenditures (see Section III.F.1 for 

details on fuel savings). But how many 

months or years would pass before the 

fuel savings exceed the upfront cost of 

$1,050? 

Table III.H.5–3 provides the answer to 

this question for a vehicle purchaser 

who pays for the new vehicle upfront in 

cash (we discuss later in this section the 

payback period for consumers who 

finance the new vehicle purchase with 

a loan). The table uses annual miles 

driven (vehicle miles traveled, or VMT) 

and survival rates consistent with the 

emission and benefits analyses 

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49610 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

presented in Chapter 4 of the draft joint 

TSD. The control case includes rebound 

VMT but the reference case does not, 

consistent with other parts of the 

analysis. Also included are fuel savings 

associated with A/C controls (in the 

control case only), but the expected 

A/C-related maintenance savings are not 

included. The likely A/C-related 

maintenance savings are discussed in 

Chapter 2 of EPA’s draft RIA. Further, 

this analysis does not include other 

societal impacts such as the value of 

increased driving, or noise, congestion 

and accidents since the focus is meant 

to be on those factors consumers 

consider most while in the showroom 

considering a new car purchase. Car/ 

truck fleet weighting is handled as 

described in Chapter 1 of the draft joint 

TSD. As can be seen in the table, it will 

take under 3 years (2 years and 8 

months at a 3% discount rate, 2 years 

and 10 months at a 7% discount rate) 

for the cumulative discounted fuel 

savings to exceed the upfront increase 

in vehicle cost. More detail on this 

analysis can be found in Chapter 8 of 

EPA’s draft RIA. 

TABLE III.H.5–3—PAYBACK PERIOD ON A 2016 MY NEW VEHICLE PURCHASE VIA CASH

[2007 dollars] 

Year of ownership Increased vehicle 

cost a

Annual fuel 

savings b

Cumulative 

discounted fuel 

savings at 3% 

Cumulative 

discounted fuel 

savings at 7% 

1 ....................................................................................................... $1,128 $443 $436 $428 

2 ....................................................................................................... ............................ 444 860 829 

3 ....................................................................................................... ............................ 443 1,272 1,203 

4 ....................................................................................................... ............................ 434 1,663 1,546 

a Increased cost of the proposed rule is $1,050; the value here includes nationwide average sales tax of 5.3% and increased insurance premiums of 1.98%; both of these percentages are discussed in Section 8.1.1 of EPA’s draft RIA. b Calculated using AEO 2009 reference case fuel price including taxes. 

However, most people purchase a 

new vehicle using credit rather than 

paying cash up front. The typical car 

loan today is a five year, 60 month loan. 

As of August 24, 2009, the national 

average interest rate for a 5 year new car 

loan was 7.41 percent. If the increased 

vehicle cost is spread out over 5 years 

at 7.41 percent, the analysis would look 

like that shown in Table III.H.5–4. As 

can be seen in this table, the fuel 

savings immediately outweigh the 

increased payments on the car loan, 

amounting to $162 in discounted net 

savings (3% discount rate) saved in the 

first year and similar savings for the 

next two years before reduced VMT 

starts to cause the fuel savings to fall. 

Results are similar using a 7% discount 

rate. This means that for every month 

that the average owner is making a 

payment for the financing of the average 

new vehicle their monthly fuel savings 

would be greater than the increase in 

the loan payments. This amounts to a 

savings on the order of $9 to $14 per 

month throughout the duration of the 5 

year loan. Note that in year six when the 

car loan is paid off, the net savings 

equal the fuel savings (as would be the 

case for the remaining years of 

ownership). 

TABLE III.H.5–4—PAYBACK PERIOD ON A 2016 MY NEW VEHICLE PURCHASE VIA CREDIT

[2007 dollars] 

Year of ownership Increased vehicle 

cost a

Annual fuel 

savings b

Annual 

discounted net 

savings at 3% 

Annual 

discounted net 

savings at 7% 

1 ....................................................................................................... $278 $443 $162 $159 

2 ....................................................................................................... 278 444 158 150 

3 ....................................................................................................... 278 443 153 139 

4 ....................................................................................................... 278 434 141 123 

5 ....................................................................................................... 278 423 127 107 

6 ....................................................................................................... 0 403 343 278 

aThis uses the same increased cost as Table III.H.4–3 but spreads it out over 5 years assuming a 5 year car loan at 7.41 percent. b Calculated using AEO 2009 reference case fuel price including taxes. 

The lifetime fuel savings and net 

savings can also be calculated for those 

who purchase the vehicle using cash 

and for those who purchase the vehicle 

with credit. This calculation applies to 

the vehicle owner who retains the 

vehicle for its entire life and drives the 

vehicle each year at the rate equal to the 

national projected average. The results 

are shown in Table III.H.5–5. In either 

case, the present value of the lifetime 

net savings is greater than $3,200 at a 

3% discount rate, or $2,400 at a 7% 

discount rate. 

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358The marginal and total benefit estimates 

presented in this section are limited to the impacts 

that can be monetized. Section III.F.2 of this 

preamble discusses the physical impacts of climate 

change, some of which are not monetized and are 

therefore omitted from the monetized benefits 

discussed here. 

359U.S. Environmental Protection Agency, 

‘‘Advance Notice of Proposed Rulemaking for 

Greenhouse Gases Under the Clean Air Act, 

Technical Support Document on Benefits of 

Reducing GHG Emissions,’’ June 2008. See 

www.regulations.gov and search for ID ‘‘EPA–HQ– 

OAR–2008–0138–0078.’’ 

360 IPCC WGII. 2007. Climate Change 2007— 

Impacts, Adaptation and Vulnerability Contribution 

of Working Group II to the Fourth Assessment 

Report of the IPCC. See EPA Docket, EPA–HQ– 

OAR–2009–0472. 

361See, e.g., Discounting and Intergenerational 

Equity (Paul Portney and John P. Weyant eds. 

1999). 

362For the purposes of this discussion, we 

present all values of the SCC as the cost per metric 

Continued 

TABLE III.H.5–5—LIFETIME DISCOUNTED NET SAVINGS ON A 2016 MY NEW VEHICLE PURCHASE

[2007 dollars] 

Purchase option 

Increased 

discounted 

vehicle cost 

Lifetime 

discounted fuel 

savings b

Lifetime 

discounted net 

savings 

3% discount rate 

Cash ................................................................................................................................. $1,128 $4,558 $3,446 

Credit a ............................................................................................................................. 1,293 4,558 3,265 

7% discount rate 

Cash ................................................................................................................................. 1,128 3,586 2,495 

Credit a ............................................................................................................................. 1,180 3,586 2,406 

aAssumes a 5 year loan at 7.41 percent. 

bFuel savings here were calculated using AEO 2009 reference case fuel price including taxes. 

Note that throughout this consumer 

payback discussion, the average number 

of vehicle miles traveled per year has 

been used. Drivers who drive more 

miles than the average would incur fuel 

related savings more quickly and, 

therefore, the payback would come 

sooner. Drivers who drive fewer miles 

than the average would incur fuel 

related savings more slowly and, 

therefore, the payback would come 

later. 

6. Benefits of Reducing GHG Emissions 

a. Introduction 

This proposal is designed to reduce 

greenhouse gas (GHG) emissions from 

light-duty vehicles. This section 

provides monetized estimates of some of 

the economic benefits of this proposal’s 

projected GHG emissions reductions.358

The total benefit estimates were 

calculated by multiplying a marginal 

dollar value (i.e., cost per ton) of carbon 

emissions, also referred to as ‘‘social 

cost of carbon’’ (SCC), by the anticipated 

level of emissions reductions in tons. 

We request comment on the approach 

used to estimate the set of SCC values 

used for this coordinated proposal as 

well as the other options considered. 

The estimates presented here are 

interim values. EPA and other agencies 

will continue to explore the underlying 

assumptions and issues. 

As discussed below, the interim 

dollar estimates of the SCC represent a 

partial accounting of climate change 

impacts. The quantitative account 

presented here is accompanied by a 

qualitative appraisal of climate-related 

impacts presented elsewhere in this 

proposal. For example, Section III.F.2 of 

the preamble presents a summary of the 

impacts and risks of climate change 

projected in the absence of actions to 

mitigate GHG emissions. Section III.F.2 

is based on EPA documents that 

synthesize major findings from the best 

available scientific assessments of the 

scientific literature that have gone 

through rigorous and transparent peer 

review, including the major assessment 

reports of both the Intergovernmental 

Panel on Climate Change (IPCC) and the 

U.S. Climate Change Science 

Program.359

The rest of this preamble section will 

provide the basis for the interim SCC 

values, and the estimates of the total 

climate-related benefits of the proposed 

rule that follow from these interim 

values. 

b. Derivation of Interim Social Cost of 

Carbon Values 

The ‘‘social cost of carbon’’ (SCC) is 

intended to be a monetary measure of 

the incremental damage resulting from 

carbon dioxide (CO2) emissions, 

including (but not limited to) net 

agricultural productivity loss, human 

health effects, property damages from 

sea level rise, and changes in ecosystem 

services. Any effort to quantify and to 

monetize the consequences associated 

with climate change will raise serious 

questions of science, economics, and 

ethics. But with full regard for the limits 

of both quantification and monetization, 

the SCC can be used to provide an 

estimate of the social benefits of 

reductions in GHG emissions. 

For at least three reasons, any 

particular figure will be contestable. 

First, scientific and economic 

knowledge about the impacts of climate 

change continues to grow. With new 

and better information about relevant 

questions, including the cost, burdens, 

and possibility of adaptation, current 

estimates will inevitably change over 

time. Second, some of the likely and 

potential damages from climate 

change—for example, the loss of 

endangered species—are generally not 

included in current SCC estimates. 

These omissions may turn out to be 

significant, in the sense that they may 

mean that the best current estimates are 

too low. As noted by the IPCC Fourth 

Assessment Report, ‘‘It is very likely that 

globally aggregated figures 

underestimate the damage costs because 

they cannot include many nonquantifiable impacts.’’ 360 Third, when 

economic efficiency criteria, under 

specific assumptions, are juxtaposed 

with ethical considerations, the 

outcome may be controversial.361 These 

ethical considerations, including those 

involving the treatment of future 

generations, should and will also play a 

role in judgments about the SCC (see in 

particular the discussion of the discount 

rate, below). 

To date, SCC estimates presented in 

recent regulatory documents have 

varied within and among agencies, 

including DOT, DOE, and EPA. For 

example, a regulation proposed by DOT 

in 2008 assumed a value of $7 per 

metric ton CO2 (2006$) for 2011 

emission reductions (with a range of 

$0–14 for sensitivity analysis; see EPA 

Docket, EPA–HQ–OAR–2009–0472).362

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49612 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

ton of CO2 emissions. Some discussions of the SCC 

in the literature use an alternative presentation of 

a dollar per metric ton of carbon. The standard 

adjustment factor is 3.67, which means, for 

example, that a SCC of $10 per ton of CO2 would 

be equivalent to a cost of $36.70 for a ton of carbon 

emitted. Unless otherwise indicated, a ‘‘ton’’ refers 

to a metric ton. 

363 73 FR 44416 (July 30, 2008). EPA, ‘‘Advance 

Notice of Proposed Rulemaking for Greenhouse 

Gases Under the Clean Air Act, Technical Support 

Document on Benefits of Reducing GHG 

Emissions,’’ June 2008. www.regulations.gov. 

Search for ID ‘‘EPA–HQ–OAR–2008–0318–0078. 

364 It is true that Federal statutes are presumed 

not to have extraterritorial effect, in part to ensure 

that the laws of the United States respect the 

interests of foreign sovereigns. But use of a global 

measure for the SCC does not give extraterritorial 

effect to Federal law and hence does not intrude on 

such interests. 

365 73 FR 44416 (July 30, 2008). EPA, ‘‘Advance 

Notice of Proposed Rulemaking for Greenhouse 

Gases Under the Clean Air Act, Technical Support 

Document on Benefits of Reducing GHG 

Emissions,’’ June 2008. www.regulations.gov. 

Search for ID ‘‘EPA–HQ–OAR–2008–0318–0078. 

366Richard Tol, The Social Cost of Carbon: 

Trends, Outliers, and Catastrophes, Economics: The 

Open-Access, Open-Assessment E-Journal, Vol. 2, 

2008–25. http://www.economics-ejournal.org/ 

economics/journalarticles/2008-25 (2008). See also 

EPA Docket, EPA–HQ–OAR–2009–0472. 

A regulation proposed by DOE in 2009 

used a range of $0–$20 (2007$). Both of 

these ranges were designed to reflect the 

value of damages to the United States 

resulting from carbon emissions, or the 

‘‘domestic’’ SCC. In the final MY2011 

CAFE EIS, DOT used both a domestic 

SCC value of $2/tCO2 and a global SCC 

value of $33/tCO2 (with sensitivity 

analysis at $80/tCO2) (in 2006 dollars 

for 2007 emissions), increasing at 2.4% 

per year thereafter. The final MY2011 

CAFE rule also presented a range from 

$2 to $80/tCO2 (see EPA Docket, EPA– 

HQ–OAR–2009–0472, for the MY2011 

EIS and final rule). EPA’s Advance 

Notice of Proposed Rulemaking for 

Greenhouse Gases discussed the 

benefits of reducing GHG emissions and 

identified what it described as ‘‘very 

preliminary’’ SCC estimates ‘‘subject to 

revision’’ that spanned three orders of 

magnitude. EPA’s global mean values 

were $68 and $40/tCO2 for discount 

rates of 2% and 3% respectively (in 

2006 real dollars for 2007 emissions).363

The current Administration has 

worked to develop a transparent 

methodology for selecting a set of 

interim SCC estimates to use in 

regulatory analyses until a more 

comprehensive characterization of the 

SCC is developed. This discussion 

proposes a set of values for the interim 

social cost of carbon resulting from this 

methodology. It should be emphasized 

that the analysis here is preliminary. 

This proposed joint rulemaking presents 

SCC estimates that reflect the 

Administration’s current understanding 

of the relevant literature and will be 

used for the short-term while an 

interagency group develops a more 

comprehensive characterization of the 

distribution of SCC values for future 

economic and regulatory analyses. The 

interim values should not be viewed as 

an expectation about the results of the 

longer-term process. The 

Administration is seeking comment in 

this proposed rule on all of the 

scientific, economic, and ethical issues 

before establishing improved estimates 

for use in future rulemakings. 

The outcomes of the Administration’s 

process to develop interim values are 

judgments in favor of (a) global rather 

than domestic values, (b) an annual 

growth rate of 3%, and (c) interim global 

SCC estimates for 2007 (in 2007 dollars) 

of $56, $34, $20, $10, and $5 per ton of 

CO2. The proposed figures are based on 

the following judgments. 

i. Global and Domestic Measures 

Because of the distinctive nature of 

the climate change problem, we present 

both a global SCC and a fraction of that 

value that represents impacts that may 

occur within the borders of the U.S. 

alone, or a ‘‘domestic’’ SCC, but fix our 

attention on the global measure. This 

approach represents a departure from 

past practices, which relied, for the 

most part, on domestic measures. As a 

matter of law, both global and domestic 

values are permissible; the relevant 

statutory provisions are ambiguous and 

allow selection of either measure.364

It is true that under OMB guidance, 

analysis from the domestic perspective 

is required, while analysis from the 

international perspective is optional. 

The domestic decisions of one nation 

are not typically based on a judgment 

about the effects of those decisions on 

other nations. But the climate change 

problem is highly unusual in the sense 

that it involves (a) a global public good 

in which (b) the emissions of one nation 

may inflict significant damages on other 

nations and (c) the United States is 

actively engaged in promoting an 

international agreement to reduce 

worldwide emissions. 

In these circumstances, we believe 

that the global measure is preferred. Use 

of a global measure reflects the reality 

of the problem and is consistent with 

the continuing efforts of the United 

States to ensure that emissions 

reductions occur in many nations. 

Domestic SCC values are also 

presented. The development of a 

domestic SCC is greatly complicated by 

the relatively few region- or countryspecific estimates of the SCC in the 

literature. One potential source of 

estimates comes from EPA’s ANPR 

Benefits TSD, using the Climate 

Framework for Uncertainty, Negotiation 

and Distribution (FUND) model.365 The 

resulting estimates suggest that the ratio 

of domestic to global benefits varies 

with key parameter assumptions. With a 

3% discount rate, for example, the U.S. 

benefit is about 6% of the global benefit 

of GHG reductions for the ‘‘central’’ 

(mean) FUND results, while, for the 

corresponding ‘‘high’’ estimates 

associated with a higher climate 

sensitivity and lower global economic 

growth, the U.S. benefit is less than 4% 

of the global benefit. With a 2% 

discount rate, the U.S. share is about 

2–5% of the global estimate. Comments 

are requested on whether the share of 

U.S. SCC is correlated with the discount 

rate. 

Based on this available evidence, an 

interim domestic SCC value equal to 6% 

of the global damages is proposed. This 

figure is around the middle of the range 

of available estimates cited above. It is 

recognized that the 6% figure is 

approximate and highly speculative. 

Alternative approaches will be explored 

before establishing improved values for 

future rulemakings. However, it should 

be noted that it is difficult to apportion 

global benefits to different regions. For 

example, impacts outside the U.S. 

border can have significant welfare 

implications for U.S. populations (e.g. 

tourism, disaster relief) and if not 

included, these omissions will lead to 

an underestimation of the ‘‘domestic’’ 

SCC. We request comment on this issue. 

ii. Filtering Existing Analyses 

There are numerous SCC estimates in 

the existing literature, and it is 

reasonable to make use of those 

estimates in order to produce a figure 

for current use. A starting point is 

provided by the meta-analysis in 

Richard Tol, 2008.366 With that starting 

point, the Administration proposes to 

‘‘filter’’ existing SCC estimates by using 

those that (1) are derived from peerreviewed studies; (2) do not weight the 

monetized damages to one country more 

than those in other countries; (3) use a 

‘‘business as usual’’ climate scenario; 

and (4) are based on the most recent 

published version of each of the three 

major integrated assessment models 

(IAMs): FUND, Policy Analysis for the 

Greenhouse Effect (PAGE), and DICE. 

Proposal (1) is based on the view that 

those studies that have been subject to 

peer review are more likely to be 

reliable than those that have not. 

Proposal (2) avoids treating the citizens 

of one nation (or different citizens 

within the U.S.) differently on the basis 

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367However, it is acknowledged that the most 

recently published results do not necessarily repeat 

prior modeling exercises with an updated model, so 

valuable information may be lost, for instance, 

estimates of the SCC using specific climate 

sensitivities or economic scenarios. In addition, 

although some older model versions were used to 

produce estimates between 1996 and 2001, there 

have been no significant modeling paradigm 

changes since 1996. 

368See OMB Circular A–4, pp. 35–36, citing 

Portney and Weyant, eds. (1999), Discounting and 

Intergenerational Equity, Resources for the Future, 

Washington, DC. See EPA Docket, EPA–HQ–OAR– 

2009–0472. 

of income considerations, which some 

may find controversial and in any event 

would significantly complicate that 

analysis. In addition, that approach is 

consistent with the potential 

compensation tests of Kaldor (1939) and 

Hicks (1940), which form the 

conceptual foundations of benefit-cost 

analysis and use unweighted sums of 

willingness to pay. Finally, this is the 

approach used in rulemakings across a 

variety of settings and consequently 

keeps USG policy consistent across 

contexts. 

Proposal (3) stems from the judgment 

that as a general rule, the proper way to 

assess a policy decision is by comparing 

the implementation of the policy against 

a counterfactual state where the policy 

is not implemented. In addition, our 

expectation is that most policies to be 

evaluated using these interim SCC 

estimates will constitute sufficiently 

small changes to the larger economy to 

make it safe to assume that the marginal 

benefits of emissions reductions will not 

change between the baseline and policy 

scenarios. 

Proposal (4) is based on four 

complementary judgments. First, the 

FUND, PAGE, and DICE models now 

stand as the most comprehensive and 

reliable efforts to measure the economic 

damages from climate change. Second, 

the latest versions of the three IAMs are 

likely to reflect the most recent evidence 

and learning, and hence they are 

presumed to be superior to those that 

preceded them.367

Third, any effort to choose among 

them, or to reject one in favor of the 

others, would be difficult to defend at 

the present time. In the absence of a 

clear reason to choose among them, it is 

reasonable to base the SCC on all of 

them. Fourth, in light of the 

uncertainties associated with the SCC, a 

range of values is more representative 

and the additional information offered 

by different models should be taken into 

account. 

iii. Use a Model-Weighted Average of 

the Estimates at Each Discount Rate 

We have just noted that at this time, 

a strong reason to prefer any of the three 

major IAMs (FUND, PAGE, and DICE) 

over the others has not been identified. 

To address the concern that certain 

models not be given unequal weight 

relative to the others, the estimates are 

based on an equal weighting of the 

means of the estimates from each of the 

models. Among estimates that remain 

after applying the filter, we begin by 

taking the average of all estimates 

within a model. The estimated SCC is 

then calculated as the average of the 

three model-specific averages. This 

approach is used to ensure that models 

with a greater number of published 

results do not exert unequal weight on 

the interim SCC estimates. 

It should be noted, however, that the 

resulting set of SCC estimates does not 

provide information about variability 

among or within models except in so far 

as they have different discounting 

assumptions. Comment is sought on 

whether model-weighting averaging of 

published estimates is appropriate for 

developing interim SCC estimates. 

iv. Apply a 3% Annual Growth Rate to 

the Chosen SCC Values 

SCC is expected to increase over time, 

because future emissions are expected 

to produce larger incremental damages 

as physical and economic systems 

become more stressed as the magnitude 

of climate change increases. Indeed, an 

implied growth rate in the SCC can be 

produced by most of the models that 

estimate economic damages caused by 

increased GHG emissions in future 

years. But neither the rate itself nor the 

information necessary to derive its 

implied value is commonly reported. In 

light of the limited amount of debate 

thus far about the appropriate growth 

rate of the SCC, applying a rate of 3% 

per year seems appropriate at this stage. 

This value is consistent with the range 

recommended by IPCC (2007) and close 

to the latest published estimate (Hope 

2008) (see EPA Docket, EPA–HQ–OAR– 

2009–0472, for both citations). 

(1) Discount Rates 

For estimation of the benefits 

associated with the mitigation of climate 

change, one of the most complex issues 

involves the appropriate discount rate. 

OMB’s current guidance offers a 

detailed discussion of the relevant 

issues and calls for discount rates of 3% 

and 7%. It also permits a sensitivity 

analysis with low rates (1–3%) for 

intergenerational problems: ‘‘If your rule 

will have important intergenerational 

benefits or costs you might consider a 

further sensitivity analysis using a lower 

but positive discount rate in addition to 

calculating net benefits using discount 

rates of 3 and 7 percent.’’ 368

The choice of a discount rate, 

especially over long periods of time, 

raises highly contested and exceedingly 

difficult questions of science, 

economics, philosophy, and law. See, 

e.g., William Nordhaus, The Challenge 

of Global Warming (2008); Nicholas 

Stern, The Economics of Climate 

Change (2008); Discounting and 

Intergenerational Equity (Paul Portney 

and John Weyant eds. 1999), in the EPA 

Docket, EPA–HQ–OAR–2009–0472. 

Under imaginable assumptions, 

decisions based on cost-benefit analysis 

with high discount rates might harm 

future generations—at least if 

investments are not made for the benefit 

of those generations. See Robert Lind, 

Analysis for Intergenerational 

Discounting, id. at 173, 176–177 (1999), 

in the EPA Docket, EPA–HQ–OAR– 

2009–0472. It is not clear that future 

generations would be willing to trade 

environmental quality for consumption 

at the same rate as the current 

generations. It is also possible that the 

use of low discount rates for particular 

projects might itself harm future 

generations, by diverting resources from 

private or public sector investments 

with higher rates of return for future 

generations. In the context of climate 

change, questions of intergenerational 

equity are especially important. 

Because of the substantial length of 

time in which CO2 and other GHG 

emissions reside in the atmosphere, 

choosing a high discount rate could 

result in irreversible changes in CO2

concentrations, and possibly irreversible 

climate changes (unless substantial 

reductions in short-lived climate forcing 

emissions are achieved). Even if these 

changes are reversible, delaying 

mitigation efforts could result in 

substantially higher costs of stabilizing 

CO2 concentrations. On the other hand, 

using too low a discount rate in benefitcost analysis may suggest some 

potentially economically unwarranted 

investments in mitigation. It is also 

possible that the use of low discount 

rates for particular projects might itself 

harm future generations, by ensuring 

that resources are not used in a way that 

would greatly benefit them. We invite 

comment on the methods used to select 

discount rates for application in 

deriving SCC values, and in particular, 

application of the Newell and Pizer 

work on uncertainty in discount rates in 

developing the SCC used in evaluating 

the climate-related benefits of this 

proposal. Comments are requested on 

the use of the rates discussed in this 

preamble and on alternative rates. We 

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49614 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

369Specifically, if the benefits of the policy are 

highly correlated with the returns from the broader 

economy, then the market rate should be used to 

discount the benefits. If the benefits are 

uncorrelated with the broader economy the long 

term government bond rate should be applied. 

Furthermore, if the benefits are negatively 

correlated with the broader economy, a rate less 

than that on long term government bonds should be 

used (Lind, 1982 pp. 89–90). 

370For example, see: Arrow KJ, Cline WR, Maler 

K–G, Munasinghe M, Squitieri R, Stiglitz JE. 1996. 

Intertemporal equity, discounting, and economic 

efficiency. Chapter 4 in Economic and Social 

Dimensions of Climate Change: Contribution of 

Working Group III to the Second Assessment 

Report, Summary for Policy Makers. Cambridge: 

Cambridge University Press; Dasgupta P. 2008. 

Discounting climate change. Journal of Risk and 

Uncertainty 37:141–169; Hoel M, Sterner T. 2007. 

Discounting and relative prices. Climatic Change 

84:265–280; Nordhaus WD. 2008. A Question of 

Balance: Weighing the Options on Global Warming 

Policies. New Haven, CT: Yale University Press; 

Stern N. 2008. The economics of climate change. 

The American Economic Review 98(2):1–37. See 

EPA Docket, EPA–HQ–OAR–2009–0472. 

371Sterner and Persson (2008) note that a 

consistent treatment of the marginal utility of 

consumption would require that if higher discount 

rates are justified by the diminishing marginal 

utility of consumption, e.g., a dollar of damages is 

worth less to future generations because they have 

greater income, then so-called equity weights 

should be used to account for the higher value that 

countries with lower income would place on a 

dollar of damages relative to the U.S. This is a 

consistent and logical outcome of application of the 

Ramsey framework. Because the distribution of 

climate change related damages is expected to be 

skewed towards developing nations with lower 

incomes, this can have significant implications for 

estimates of total global SCC if the Ramsey 

framework is used to derive discount rates. See EPA 

Docket, EPA–HQ–OAR–2009–0472 for Sterner and 

Persson (2008). 

372However, because climate change impacts may 

be outside the bounds of historical evidence, 

predictions about future growth in consumption 

based on past experience may be inaccurate. 

373For relevant discussion, see Arrow, K.J., W.R. 

Cline, K–G Maler, M. Munasinghe, R. Squiteri, 

J.E.Stiglitz, 1996. ‘‘Intertemporal equity, 

discounting and economic efficiency,’’ in Climate 

Change 1995: Economic and Social Dimensions of 

Climate Change, Contribution of Working Group III 

to the Second Assessment Report of the 

Intergovernmental Panel on Climate Change. See 

also Weitzman, M.L., 1999, in Portney P.R. and 

Weyant J.P. (eds.), Discounting and 

Intergenerational Equity, Resources for the Future, 

Washington, DC. See EPA Docket, EPA–HQ–OAR– 

2009–0472. 

374Richard Newell and William Pizer, 

Discounting the distant future: how much do 

uncertain rates increase valuations? J. Environ. 

Econ. Manage. 46 (2003) 52–71. See EPA Docket, 

EPA–HQ–OAR–2009–0472. 

also invite comment on how to best 

address the ethical and policy concerns 

in the context of selecting the 

appropriate discount rate. 

Reasonable arguments support the use 

of a 3% discount rate. First, that rate is 

among the two figures suggested by 

OMB guidance, and hence it fits with 

existing national policy. Second, it is 

standard to base the discount rate on the 

compensation that people receive for 

delaying consumption, and the 3% is 

close to the risk-free rate of return, 

proxied by the return on long term 

inflation-adjusted U.S. Treasury Bonds, 

as of this writing. Although these rates 

are currently closer to 2.5%, the use of 

3% provides an adjustment for the 

liquidity premium that is reflected in 

these bonds’ returns. However, this 

approach does not adjust for the 

significantly longer time horizon 

associated with climate change impacts. 

It could also be argued that the discount 

rate should be lower than 3% if the 

benefits of climate mitigation policies 

tend to be higher than expected in time 

periods when the returns to investments 

in rest of the economy are lower than 

normal. 

At the same time, others would argue 

that a 5% discount rate can be 

supported. The argument relies on 

several assumptions. First, this rate can 

be justified by reference to the level of 

compensation for delaying 

consumption, because it fits with 

market behavior with respect to 

individuals’ willingness to trade-off 

consumption across periods as 

measured by the estimated post-tax 

average real returns to risky private 

investments (e.g., the S&P 500). In the 

climate setting, the 5% discount rate 

may be preferable to the riskless rate 

because the benefits to mitigation are 

not known with certainty. In principal, 

the correct discount rate would reflect 

the variance in payoff from climate 

mitigation policy and the correlation 

between the payoffs of the policy and 

the broader economy.369

Second, 5%, and not 3%, is roughly 

consistent with estimates implied by 

inputs to the theoretically derived 

Ramsey equation presented below, 

which specifies the optimal time path 

for consumption. That equation 

specifies the optimal discount rate as 

the sum of two components. The first 

term (the product of the elasticity of the 

marginal utility of consumption and the 

growth rate of consumption) reflects the 

fact that consumption in the future is 

likely to be higher than consumption 

today, so diminishing marginal utility 

implies that the same monetary damage 

will cause a smaller reduction of utility 

in the future. Standard estimates of this 

term from the economics literature are 

in the range of 3%–5%.370 The second 

component reflects the possibility that a 

lower weight should be placed on utility 

in the future, to account for social 

impatience or extinction risk, which is 

specified by a pure rate of time 

preference (PRTP). A common estimate 

of the PRTP is 2%, though some 

observers believe that a principle of 

intergenerational equity suggests that 

the PRTP should be close to zero. It 

follows that discount rate of 5% is near 

the middle of the range of values that 

are able to be derived from the Ramsey 

equation.371

It is recognized that the arguments 

above—for use of market behavior and 

the Ramsey equation—face objections in 

the context of climate change, and of 

course there are alternative approaches. 

In light of climate change, it is possible 

that consumption in the future will not 

be higher than consumption today, and 

if so, the Ramsey equation will suggest 

a lower figure. The historical evidence 

is consistent with rising consumption 

over time.372

Some critics contend that using 

observed interest rates for intergenerational decisions imposes current 

preferences on future generations. For 

intergenerational equity, they argue that 

the discount rate should be below 

market rates to correct for market 

distortions and inefficiencies in 

intergenerational transfers of wealth 

(which are presumed to compensate 

future generations for damage), and to 

treat generations equitably based on 

ethical principles (see Broome 2008 in 

the EPA Docket, EPA–HQ–OAR–2009– 

0472).373

Additionally, some analyses attempt 

to deal with uncertainty with respect to 

interest rates over time. We explore 

below how this might be done.374

(2) Proposed Interim Estimates 

The application of the methodology 

outlined above yields interim estimates 

of the SCC that are reported in Table 

III.H.6–1. These estimates are reported 

separately using 3% and 5% discount 

rates. The cells are empty in rows 10 

and 11, because these studies did not 

report estimates of the SCC at a 3% 

discount rate. The model-weighted 

means are reported in the final or 

summary row; they are $34 per tCO2 at 

a 3% discount rate and $5 per tCO2 with 

a 5% discount rate. 

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375Most of the estimates in Table 1 rely on 

climate scenarios developed by the 

Intergovernmental Panel on Climate Change (IPCC). 

The IPCC published a new set of scenarios in 2000 

for use in the Third Assessment Report (Special 

Report on Emissions Scenarios—SRES). The SRES 

scenarios define four narrative storylines: A1, A2, 

B1 and B2, describing the relationships between the 

forces driving greenhouse gas and aerosol emissions 

and their evolution during the 21st century for large 

world regions and globally. Each storyline 

represents different demographic, social, economic, 

technological, and environmental developments 

that diverge in increasingly irreversible ways. The 

storylines are summarized in the SRES report 

(Nakicenovic et al., 2000; see also http:// 

sedac.ciesin.columbia.edu/ddc/sres/) (see EPA 

Docket, EPA–HQ–OAR–2009–0472). Although they 

were intended to represent BAU scenarios, at this 

point in time the B1 and B2 storylines are widely 

viewed as representing policy cases rather than 

business-as-usual projections, estimates derived 

from these scenarios to be less appropriate for use 

in benefit-cost analysis. They are therefore 

excluded. 376 Guo et al. (2006) report estimates based on two 

Gollier discounting schemes. The Gollier 

discounting assumes complex specifications about 

individual utility functions and risk preferences. 

After various conditions are satisfied, declining 

social discount rates emerge. Gollier Discounting 

Scheme 1 employs a certainty-equivalent social rate 

of time preference (SRTP) derived by assuming the 

regional growth rate is equally likely to be 1% 

above or below the original forecast growth rate. 

Gollier Discounting Scheme 2 calculates a certaintyequivalent social rate of time preference (SRTP) 

using five possible growth rates, and applies the 

new SRTP instead of the original. Hope (2008) 

conducts Monte Carlo analysis on the PRTP 

component of the discount rate. The PRTP is 

modeled as a triangular distribution with a min 

value of 1%/yr, a most likely value of 2%/yr, and 

a max value of 3%/yr. See EPA Docket, EPA–HQ– 

OAR–2009–0472 for the studies. 

377 It should be noted that reported discount rates 

may not be consistently derived across models or 

specific applications of models: While the discount 

rate may be identical, it may reflect different 

assumptions about the individual components of 

the Ramsey equation identified earlier. 

378 In contrast, an alternative approach based on 

Weitzman (2001) would assume that there is a 

constant discount rate that is uncertain and 

represented by a probability distribution. The 

Newell and Pizer, and Weitzman approaches are 

relatively recent contributions and we invite 

comment on the advantages and disadvantages of 

each. See EPA Docket, EPA–HQ–OAR–2009–0472. 

TABLE III.H.6–1—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/tCO2 IN 2007 (2007$)), BASED ON 3% AND

5% DISCOUNT RATES a

Model Study b Climate Scenario 3% 5% 

1 ........................ FUND ..... Anthoff et al. 2009 .................................. FUND default .......................................... 6 ¥1 

2 ........................ FUND ..... Anthoff et al. 2009 .................................. SRES A1b ............................................... 1 ¥1 

3 ........................ FUND ..... Anthoff et al. 2009 .................................. SRES A2 ................................................. 9 ¥1 

4 ........................ FUND ..... Link and Tol 2004 ................................... No THC ................................................... 12 3 

5 ........................ FUND ..... Link and Tol 2004 ................................... THC continues ........................................ 12 2 

6 ........................ FUND ..... Guo et al. 2006 ....................................... Constant PRTP ....................................... 5 ¥1 

7 ........................ FUND ..... Guo et al. 2006 ....................................... Gollier discount 1 .................................... 14 0 

8 ........................ FUND ..... Guo et al. 2006 ....................................... Gollier discount 2 .................................... 7 ¥1 

FUND Mean ............................................ 8.47 0 

9 ........................ PAGE ..... Wahba & Hope 2006 .............................. A2-scen ................................................... 59 7 

10 ...................... PAGE ..... Hope 2006 .............................................. ................................................................. .................... 7 

11 ...................... DICE ...... Nordhaus 2008 ....................................... ................................................................. .................... 8 

Summary .......... Model-weighted Mean ............................. 34 5 

aThe sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios.375 376 All 

values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) 

assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3% annual growth rate in 

the SCC, and adjusted for inflation using GDP deflator. bSee EPA Docket, EPA–HQ–OAR–2009–0472, for each study. 

In this proposal, benefits of reducing 

GHG emissions have been estimated 

using global SCC values of $34 and $5 

as these represent the estimates 

associated with the 3% and 5% 

discount rates, respectively.377 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 $20. (Based on the $20 

global value, the approximate domestic 

fraction of these benefits would be $1.20 

per ton of CO2 assuming that domestic 

benefits are 6% of the global benefits.) 

The distinctions between sets of 

estimates generated using different 

discount rates are due only in part to 

discount rate differences, because the 

models and parameters used to generate 

the estimates in the sets associated with 

different discount rates also vary. 

It is true that there is uncertainty 

about interest rates over long time 

horizons. Recognizing that point, 

Newell and Pizer (2003) have made a 

careful effort to adjust for that 

uncertainty (see EPA Docket, EPA–HQ– 

OAR–2009–0472). The Newell-Pizer 

approach models discount rate 

uncertainty as something that evolves 

over time.378 This is a different way to 

model discount rate uncertainty than 

the approach outlined above, which 

assumes there is a single discount rate 

with equal probability of 3% and 5%. 

Since Newell and Pizer (2003) is a 

relatively recent contribution to the 

literature, estimates based on this 

method are included with the aim of 

soliciting comment. 

Table III.H.6–2 reports on the 

application of the Newell-Pizer 

adjustments. The precise numbers 

depend on the assumptions about the 

data generating process that governs 

interest rates. Columns (1a) and (1b) 

assume that ‘‘random walk’’ model best 

describes the data and uses 3% and 5% 

discount rates, respectively. Columns 

(2a) and (2b) repeat this, except that it 

assumes a ‘‘mean-reverting’’ process. 

While the empirical evidence does not 

rule out a mean-reverting model, Newell 

and Pizer find stronger empirical 

support for the random walk model. 

EPA solicits comment on these and 

other models for representing the 

variation in interest rates over time. 

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49616 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

379Examples of impacts that are difficult to 

monetize, and have generally not been included in 

SCC estimates, include risks from extreme weather 

(death, disease, agricultural damage, and other 

economic damage from droughts, floods and 

wildfires) and possible long-term catastrophic 

events, such as collapse of the West Antarctic ice 

sheet or the release of large amounts of methane 

from melting permafrost. 

380 IPCC WGII. 2007. Climate Change 2007— 

Impacts, Adaptation and Vulnerability Contribution 

of Working Group II to the Fourth Assessment 

Report of the IPCC. See EPA Docket, EPA–HQ– 

OAR–2009–0472. 

381Radiative forcing is the change in the balance 

between solar radiation entering the atmosphere 

and the Earth’s radiation going out. On average, a 

positive radiative forcing tends to warm the surface 

of the Earth while negative forcing tends to cool the 

surface. Greenhouse gases have a positive radiative 

forcing because they absorb and emit heat. See 

http://www.epa.gov/climatechange/science/ 

recentac.html for more general information about 

GHGs and climate science. See EPA Docket, EPA– 

HQ–OAR–2009–0472. 

382Weitzman, Martin, 2009. On Modeling and 

Interpreting the Economics of Catastrophic Climate 

Change. Review of Economics and Statistics 9(1): 

1–19. See EPA Docket, EPA–HQ–OAR–2009–0472. 

TABLE III.H.6–2—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($ PER METRIC TON CO2 IN 2007 (2007$)) a, 

USING NEWELL & PIZER (2003) ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY b

Model Study c Climate 

scenario 

Random-walk 

model 

Mean-reverting 

model 

3% 

(1a) 

5% 

(1b) 

3% 

(2a) 

5% 

(2b) 

1 ........................ FUND ..... Anthoff et al. 2009 .......................... FUND default .................................. 10 0 7 ¥1 

2 ........................ FUND ..... Anthoff et al. 2009 .......................... SRES A1b ....................................... 2 0 1 ¥1 

3 ........................ FUND ..... Anthoff et al. 2009 .......................... SRES A2 ......................................... 15 0 10 ¥1 

4 ........................ FUND ..... Link and Tol 2004 ........................... No THC ........................................... 21 6 13 4 

5 ........................ FUND ..... Link and Tol 2004 ........................... THC continues ................................ 21 4 13 2 

6 ........................ FUND ..... Guo et al. 2006 ............................... Constant PRTP ............................... 9 0 6 ¥1 

7 ........................ FUND ..... Guo et al. 2006 ............................... Gollier discount 1 ............................ 14 0 14 0 

8 ........................ FUND ..... Guo et al. 2006 ............................... Gollier discount 2 ............................ 7 ¥1 7 ¥1 

FUND Mean .................................... 12 1 9 0 

9 ........................ PAGE ..... Wahba & Hope 2006 ...................... A2-scen ........................................... 100 13 65 8 

10 ...................... PAGE ..... Hope 2006 ...................................... ......................................................... ............ 13 ............ 8 

11 ...................... DICE ...... Nordhaus 2008 ............................... ......................................................... ............ 15 ............ 9 

Summary ........... Model-weighted Mean .................... 56 10 37 6 

aThe sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3% annual growth rate in 

the SCC, and adjusted for inflation using GDP deflator. See the Notes to Table III.H.6–1 for further details. bAssumes a starting discount rate of 3% or 5%. Newell and Pizer (2003) based adjustment factors are not applied to estimates from Guo et al. 

(2006) that use a different approach to account for discount rate uncertainty (rows 7–8). 

Note that the correction factor from Newell and Pizer is based on the DICE model. The proper adjustment may differ for other integrated assessment models that produce different time schedules of marginal damages. We would expect this difference to be minor. cSee EPA Docket, EPA–HQ–OAR–2009–0472, for each study. 

The resulting estimates of the social 

cost of carbon are necessarily greater. 

When the adjustments from the random 

walk model are applied, the estimates of 

the social cost of carbon are $10 and $56 

per ton of CO2, with the 5% and 3% 

discount rates, respectively. The 

application of the mean-reverting 

adjustment yields estimates of $6 and 

$37. Relying on the random walk model, 

analyses are also conducted with the 

value of the SCC set at $10 and $56. 

(3) Caveats 

There are at least four caveats to the 

approach outlined above. 

First, and as noted, the existing IAMs 

do not currently individually account 

for and assign value to all of the 

important physical and other impacts of 

climate change that are recognized in 

the climate change literature.379 The 

impacts of climate change are expected 

to be widespread, diverse, and 

heterogeneous. In addition, the exact 

magnitude of these impacts is uncertain, 

because of the inherent randomness in 

the Earth’s atmospheric processes, the 

U.S. and global economies, and the 

behaviors of current and future 

populations. To this extent, as 

emphasized by the IPCC, SCC estimates 

are ‘‘very likely’’ underestimated.380 In 

addition, the SCC approach also likely 

underestimates the value of GHG 

reductions because the marginal values 

apply only to CO2 emissions, which 

have different impacts than non-CO2

emissions because of variances in 

atmospheric lifetimes and radiative 

forcing.381 Although it is likely that our 

capability to quantify and monetize 

impacts will improve with time, it is 

also likely that even in future 

applications, a number of potentially 

significant benefits categories will 

remain unmonetized. In order to capture 

the benefits of mitigation these nonmonetized benefits should be discussed 

along with monetized benefits based on 

the SCC. 

Second, in the opposite direction, it is 

unlikely that the damage estimates 

adequately account for the directed 

technological change that climate 

change will cause. In particular, climate 

change will increase the return on 

investment to develop technologies that 

allow individuals to cope with climate 

change. For example, it is likely that 

scientists will develop crops that are 

better able to withstand high 

temperatures. In this respect, the current 

estimates may overstate the likely 

quantified damages, though the costs 

associated with the investments in 

adaptive technologies must also be 

considered (technologies must also be 

included in the calculations, as the 

benefits should reflect net welfare 

changes to society). 

Third, there has been considerable 

recent discussion of the risk of 

catastrophic impacts and of how best to 

account for worst-case scenarios. Recent 

work by Weitzman (2009) specifies 

some conditions under which the 

possibility of catastrophe would 

undermine the use of IAMs and 

conventional cost-benefit analysis.382

This research requires further 

exploration before its generality is 

known and the proper way to 

incorporate it into regulatory reviews is 

understood. We also request comments 

on approaches for measuring the 

premium associated with reductions in 

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383Specifically, Newell and Pizer (2003) found 

that modeling of uncertainty in economic growth 

causes the effective discount rate to decline over 

time. When starting at a 4% discount rate, the 

effective discount rate is 2% at 100 years and 1% 

at 200 years. See EPA Docket, EPA–HQ–OAR– 

2009–0472. 

384The Supreme Court recognized in 

Massachusetts v. EPA that a single action will not 

on its own achieve all needed GHG reductions, 

noting that ‘‘[a]gencies, like legislatures, do not 

generally resolve massive problems in one fell 

regulatory swoop.’’ See Massachusetts v. EPA, 549 

U.S. at 524 (2007). See EPA Docket, EPA–HQ– 

OAR–2009–0472. 

climate-related risks such as 

catastrophic events. 

Fourth, it is also worth noting that the 

SCC estimates are only relevant for 

incremental policies relative to the 

projected baselines, which capture 

business-as-usual scenarios. To evaluate 

non-marginal changes, such as might 

occur if the U.S. acts in tandem with 

other nations, it might be necessary to 

go beyond the simple expedient of using 

the SCC along the BAU path. This 

approach would require explicitly 

calculating the total benefits in a move 

from the BAU scenario to the policy 

scenario, without imposing the 

restriction that the marginal benefit 

remains constant over this range. 

(4) Other options 

The Administration considered other 

interim SCC options in addition to the 

approach described above; we request 

comment on each of them. One 

alternative option was to bring in SCC 

estimates in studies published after 

1995, rather than limiting the estimates 

to those in studies relying on the most 

recent published version of each of the 

three major integrated assessment 

models: PAGE, FUND, and DICE. 

Although some older model versions 

(and old versions of other models) were 

used to produce estimates between 1996 

and 2001, it appears that there have 

been no significant modeling paradigm 

changes since 1996. 

Another option was to select a range 

of SCC values for separate discount 

rates. For example, sensitivity analysis 

could be conducted at the lowest and 

highest SCC values reported in the 

filtered set of estimates for each 

discount rate considered. If considering 

SCC estimates from studies published 

after 1995 and a discount rate of 2 

percent, this option would result in a 

range of SCC values of $5/t-CO2 to $260/ 

t-CO2 (2007 emissions in 2007 dollars); 

at a 3 percent discount rate, the range 

would be $0 to $58/t-CO2. 

Finally, we considered the possibility 

that different assumptions under the 

Ramsey framework, such as placing 

approximately equal weight on the 

welfare of current and future 

generations, would imply a lower 

discount rate, such as 2%. The Newell 

and Pizer (2003) method applied to 

recent long-term risk free rates would 

likewise be approximately consistent 

with a certainty equivalent rate of 

2%.383

(5) Ongoing SCC Development 

As noted, this is an emphatically 

interim SCC value. The judgments 

described here will be subject to further 

scrutiny and exploration. 

c. Application of Interim SCC Estimates 

to GHG Emissions Reductions From 

This Proposed Rule 

The strategy underlying these joint 

proposals—to coordinate Federal efforts 

to reduce GHGs—warrants 

consideration when assessing the 

benefits. To be sure, while no single rule 

or action can independently achieve the 

deep worldwide emissions reductions 

necessary to halt and reverse the growth 

of GHGs. But the combined effects of 

multiple strategies to reduce GHG 

emissions domestically and abroad 

could make a major difference in the 

climate change impacts experienced by 

future generations.384

The projected net GHG emissions 

reductions associated with the proposal 

reflect an incremental change to 

projected total global emissions. 

Therefore, as shown in Section III.F.3, 

the projected global climate signal will 

be small but discernible—an 

incrementally lower projected 

distribution of global mean surface 

temperatures. 

Given that the climate response is 

projected to be a marginal change 

relative to the baseline climate, we 

estimate the marginal value of changes 

in climate change impacts over time and 

use this value to measure the monetized 

marginal benefits of the GHG emissions 

reductions projected for this proposal. 

Accordingly, EPA and NHTSA have 

used the set of interim, global SCC 

values described above to estimate the 

benefits of these coordinated proposals. 

The interim SCC values, which reflect 

the Administration’s interim 

interpretation of the current literature, 

are $5 (based on a 5% discount rate), 

$10 (5% using Newell-Pizer 

adjustment), $20 (average SCC value 

from the average SCC estimates based 

on 5% and 3%), $34 (3%), and $56 (3% 

using Newell-Pizer adjustment), in 2007 

dollars, and are based on a CO2

emissions change of 1 metric ton in 

2007. Table III.H.6–3 presents the 

interim SCC values in other years in 

2007 dollars. These values are presented 

as one of many considerations that will 

inform the Administration’s action on 

this proposed rule. 

TABLE III.H.6–3—INTERIM SCC SCHEDULE

Interim SCC schedule (2007$) a

Discount rate 

assumption 2007 2015 2020 2030 2040 2050 

5% ............................................................ $5 $7 $8 $10 $14 $18 

5% (Newell-Pizer) b .................................. 10 13 15 20 27 37 

Average SCC Values from 3% and 5% .. 20 25 29 39 52 70 

3% ............................................................ 34 43 50 67 90 120 

3% (Newell-Pizer) b .................................. 56 72 83 110 150 200 

aThe SCC values are dollar-year and emissions-year specific. These values are presented in 2007$, for individual year of emissions. To determine values for years not presented in the table, use a 3% growth rate. SCC values represent only a partial accounting for climate impacts. bSCC values are adjusted based on Newell and Pizer (2003) to account to future uncertainty in discount rates. See EPA Docket, EPA–HQ– 

OAR–2009–0472. 

Tables III.H.6–4 to III.H.6–6 provide 

the annual benefits for each year 

impacted by the proposed rule. As 

discussed above, marginal benefits of 

GHG reductions are projected to grow 

over time. The tables below summarize 

the total benefits for the lifetime of the 

rule, which are calculated by using the 

five interim SCC values. 

Total monetized benefits in each 

specific year are calculated by 

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49618 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

multiplying the marginal benefits 

estimates per metric ton of CO2 (the 

SCC) from Table III.H.6–3 by the 

reductions in CO2 for that year. Table 

III.H.6–5 approximates the total 

monetized benefits for non-CO2 GHGs 

by multiplying the SCC value by the 

reductions in non-CO2 GHGs for that 

year. Marginal benefit estimates per 

metric ton of non-CO2 GHGs are 

currently unavailable, but work is ongoing to monetize benefits related to the 

mitigation of other non-CO2 GHGs. 

Inclusion of these benefits is planned 

for the final rule. 

TABLE III.H.6–4—MONETIZED GHG BENEFITS OF VEHICLE PROGRAM, CO2 EMISSIONS

[Million 2007$] 

Year 

Emissions 

reduction 

(million 

metric tons) 

Discount rate 

3% 3% 

(Newell-Pizer) 

Average 

SCC from 3% 

and 5% 

5% 5% 

(Newell-Pizer) 

2015 ......................................................... 43.2 $1,900 $3,100 $1,100 $280 $560 

2020 ......................................................... 146 7,300 12,000 4,200 1,100 2,200 

2030 ......................................................... 289 19,000 32,000 11,000 2,900 5,900 

2040 ......................................................... 375 34,000 56,000 19,000 5,100 10,000 

2050 ......................................................... 470 57,000 95,000 33,000 8,600 17,000 

TABLE III.H.6–5—MONETIZED GHG BENEFITS OF VEHICLE PROGRAM, NON-CO2 EMISSIONS IN CO2-EQUIVALENTS

[Million 2007$] 

Year 

Emissions 

reduction 

(million metric 

tons) 

Discount rate 

3% 3% 

(Newell-Pizer) 

Average 

SCC from 3% 

and 5% 

5% 5% 

(Newell-Pizer) 

2015 ......................................................... 5.86 $250 $400 $150 $38 $76 

2020 ......................................................... 17.7 880 1,500 510 130 270 

2030 ......................................................... 35.3 2,400 3,900 1,400 360 700 

2040 ......................................................... 42.7 3,800 6,400 2,200 580 1,200 

2050 ......................................................... 48.2 5,800 9,700 3,400 880 1,800 

TABLE III.H.6–6—MONETIZED GHG BENEFITS OF VEHICLE PROGRAM, TOTAL CO2 AND NON-CO2 EMISSIONS IN CO2- 

EQUIVALENTS

[Million 2007$] a

Year 

Emissions 

reduction 

(million metric 

tons) 

Discount rate 

3% 3% 

(Newell-Pizer) 

Average 

SCC from 3% 

and 5% 

5% 5% 

(Newell-Pizer) 

2015 ......................................................... 49.1 $2,100 $3,500 $1,200 $320 $640 

2020 ......................................................... 165 8,200 14,000 4,700 1,200 2,500 

2030 ......................................................... 325 22,000 36,000 12,000 3,300 6,600 

2040 ......................................................... 417 38,000 63,000 22,000 5,700 11,000 

2050 ......................................................... 518 63,000 100,000 36,000 9,500 19,000 

a Numbers may not add exactly from Tables III.H.6–4 and III.H.6–5 due to rounding. 

7. Non-Greenhouse Gas Health and 

Environmental Impacts 

This section presents EPA’s analysis 

of the non-GHG health and 

environmental impacts that can be 

expected to occur as a result of the 

proposed light-duty vehicle GHG rule. 

GHG emissions are predominantly the 

byproduct of fossil fuel combustion 

processes that also produce criteria and 

hazardous air pollutants. The vehicles 

that are subject to the proposed 

standards are also significant sources of 

mobile source air pollution such as 

direct PM, NOX, VOCs and air toxics. 

The proposed standards would affect 

exhaust emissions of these pollutants 

from vehicles. They would also affect 

emissions from upstream sources 

related to changes in fuel consumption. 

Changes in ambient ozone, PM2.5, and 

air toxics that would result from the 

proposed standards are expected to 

affect human health in the form of 

premature deaths and other serious 

human health effects, as well as other 

important public health and welfare 

effects. 

It is important to quantify the health 

and environmental impacts associated 

with the proposed standard because a 

failure to adequately consider these 

ancillary co-pollutant impacts could 

lead to an incorrect assessment of their 

net costs and benefits. Moreover, copollutant impacts tend to accrue in the 

near term, while any effects from 

reduced climate change mostly accrue 

over a time frame of several decades or 

longer. 

EPA typically quantifies and 

monetizes the health and environmental 

impacts related to both PM and ozone 

in its regulatory impact analyses (RIAs), 

when possible. However, EPA was 

unable to do so in time for this proposal. 

EPA attempts to make emissions and air 

quality modeling decisions early in the 

analytical process so that we can 

complete the photochemical air quality 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49619 

385U.S. Environmental Protection Agency. (2008). 

Final Ozone NAAQS Regulatory Impact Analysis. 

Prepared by: Office of Air and Radiation, Office of 

Air Quality Planning and Standards. March. 

386U.S. Environmental Protection Agency. 

October 2006. Final Regulatory Impact Analysis 

(RIA) for the Proposed National Ambient Air 

Quality Standards for Particulate Matter. Prepared 

by: Office of Air and Radiation. 

387U.S. Environmental Protection Agency (U.S. 

EPA). 2009a. Regulatory Impact Analysis: National 

Emission Standards for Hazardous Air Pollutants 

from the Portland Cement Manufacturing Industry. 

Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. April. Available on the 

Internet at http://www.epa.gov/ttn/ecas/regdata/ 

RIAs/portlandcementria_4-20-09.pdf. 388U.S. Environmental Protection Agency (U.S. 

EPA). 2009b. Proposed NO2 NAAQS Regulatory 

Impact Analysis (RIA). Office of Air Quality 

Planning and Standards, Research Triangle Park, 

NC. April. Available on the Internet at http:// 

www.epa.gov/ttn/ecas/regdata/RIAs/ 

proposedno2ria.pdf. 389U.S. Environmental Protection Agency (U.S. 

EPA). 2008a. Regulatory Impact Analysis, 2008 

National Ambient Air Quality Standards for 

Ground-level Ozone, Chapter 6. Office of Air 

Quality Planning and Standards, Research Triangle 

Park, NC. March. Available at http://www.epa.gov/ 

ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf. 

390U.S. Environmental Protection Agency (U.S. 

EPA). 2009a. Regulatory Impact Analysis: National 

Emission Standards for Hazardous Air Pollutants 

from the Portland Cement Manufacturing Industry. 

Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. April. Available on the 

Internet at http://www.epa.gov/ttn/ecas/regdata/ 

RIAs/portlandcementria_4-20-09.pdf. 

391U.S. Environmental Protection Agency (U.S. 

EPA). 2009b. Proposed NO2 NAAQS Regulatory 

Impact Analysis (RIA). Office of Air Quality 

Planning and Standards, Research Triangle Park, 

NC. April. Available on the Internet at http:// 

www.epa.gov/ttn/ecas/regdata/RIAs/ 

proposedno2ria.pdf. 

modeling and use that data to inform 

the health and environmental impacts 

analysis. Resource and time constraints 

precluded the Agency from completing 

this work in time for the proposal. 

Instead, EPA is using PM-related 

benefits-per-ton values as an interim 

approach to estimating the PM-related 

benefits of the proposal. EPA also 

provides a complete characterization of 

the health and environmental impacts 

that will be quantified and monetized 

for the final rulemaking. 

This section is split into two subsections: the first presents the PMrelated benefits-per-ton values used to 

monetize the PM-related co-benefits 

associated with the proposal; the second 

explains what PM- and ozone-related 

health and environmental impacts EPA 

will quantify and monetize in the 

analysis for the final rule. EPA bases its 

analyses on peer-reviewed studies of air 

quality and health and welfare effects 

and peer-reviewed studies of the 

monetary values of public health and 

welfare improvements, and is generally 

consistent with benefits analyses 

performed for the analysis of the final 

Ozone National Ambient Air Quality 

Standard (NAAQS) and the final PM 

NAAQS analysis, as well as the recent 

Portland Cement National Emissions 

Standards for Hazardous Air Pollutants 

(NESHAP) RIA (U.S. EPA, 2009a), and 

NO2 NAAQS (U.S.≤ EPA, 

2009b).385 386 387 388

Though EPA is characterizing the 

changes in emissions associated with 

toxic pollutants, we will not be able to 

quantify or monetize the human health 

effects associated with air toxic 

pollutants for either the proposal or the 

final rule analyses. Please refer to 

Section III.G for more information about 

the air toxics emissions impacts 

associated with the proposed standards. 

a. Economic Value of Reductions in 

Criteria Pollutants 

As described in Section III.G, the 

proposed standards would reduce 

emissions of several criteria and toxic 

pollutants and precursors. In this 

analysis, EPA estimates the economic 

value of the human health benefits 

associated with reducing PM2.5

exposure. Due to analytical limitations, 

this analysis does not estimate benefits 

related to other criteria pollutants (such 

as ozone, NO2 or SO2) or toxics 

pollutants, nor does it monetize all of 

the potential health and welfare effects 

associated with PM2.5. 

This analysis uses a ‘‘benefit-per-ton’’ 

method to estimate a selected suite of 

PM2.5-related health benefits described 

below. These PM2.5 benefit-per-ton 

estimates provide the total monetized 

human health benefits (the sum of 

premature mortality and premature 

morbidity) of reducing one ton of 

directly emitted PM2.5, or its precursors 

(such as NOX, SOX, and VOCs), from a 

specified source. Ideally, the human 

health benefits would be estimated 

based on changes in ambient PM2.5 as 

determined by full-scale air quality 

modeling. However, this modeling was 

not possible in the timeframe for this 

proposal. 

The dollar-per-ton estimates used in 

this analysis are provided in Table 

III.H.7–1. In the summary of costs and 

benefits, Section III.H.10 of this 

preamble, EPA presents the monetized 

value of PM-related improvements 

associated with the proposal. 

TABLE III.H.7–1—BENEFITS-PER-TON VALUES (2007$) DERIVED USING THE ACS COHORT STUDY FOR PM-RELATED

PREMATURE MORTALITY (POPE ET AL., 2002) a AND A 3% DISCOUNT RATE b

Year c

All sources d Stationary (non-EGU) 

sources 

Mobile sources 

SOX VOC NOX Direct PM2.5 NOX Direct PM2.5

2015 ................................................................................. $28,000 $1,200 $4,700 $220,000 $4,900 $270,000 

2020 ................................................................................. 31,000 1,300 5,100 240,000 5,300 290,000 

2030 ................................................................................. 36,000 1,500 6,100 280,000 6,400 350,000 

2040 ................................................................................. 43,000 1,800 7,200 330,000 7,600 420,000 

aThe benefit-per-ton estimates presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et 

al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values would be approximately 145% 

(nearly two-and-a-half times) larger. bThe benefit-per-ton estimates presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 9% lower. cBenefit-per-ton values were estimated for the years 2015, 2020, and 2030. For 2040, EPA and NHTSA extrapolated exponentially based on 

the growth between 2020 and 2030. d Note that the benefit-per-ton value for SOX is based on the value for Stationary (Non-EGU) sources; no SOX value was estimated for mobile 

sources. The benefit-per-ton value for VOCs was estimated across all sources. 

The benefit per-ton technique has 

been used in previous analyses, 

including EPA’s recent Ozone National 

Ambient Air Quality Standards 

(NAAQS) RIA (U.S. EPA, 2008a),389

Portland Cement National Emissions 

Standards for Hazardous Air Pollutants 

(NESHAP) RIA (U.S. EPA, 2009a),390

and NO2 NAAQS (U.S. EPA, 2009b).391

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49620 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

392Although we summarize the main issues in 

this chapter, we encourage interested readers to see 

benefits chapter of the NO2 NAAQS for a more 

detailed description of recent changes to the PM 

benefits presentation and preference for the nothreshold model. 

393U.S. Environmental Protection Agency (U.S. 

EPA). 2008b. Technical Support Document: 

Calculating Benefit Per-Ton estimates, Ozone 

NAAQS Docket #EPA–HQ–OAR–2007–0225–0284. 

Office of Air Quality Planning and Standards, 

Research Triangle Park, NC. March. Available on 

the Internet at http://www.regulations.gov. 

394Fann, N. et al. (2009). The influence of 

location, source, and emission type in estimates of 

the human health benefits of reducing a ton of air 

pollution. Air Qual Atmos Health. Published 

online: 09 June, 2009. 

395The values included in this report are different 

from those presented in the article cited above. 

Benefits methods change to reflect new information 

and evaluation of the science. Since publication of 

the June 2009 article, EPA has made two significant 

changes to its benefits methods: (1) We no longer 

assume that a threshold exists in PM-related models 

of health impacts; and (2) We have revised the 

Value of a Statistical Life to equal $6.3 million (year 

2000$), up from an estimate of $5.5 million (year 

2000$) used in the June 2009 report. Please refer to 

the following Web site for updates to the dollar-perton estimates: http://www.epa.gov/air/benmap/ 

bpt.html. 

Table III.H.7–2 shows the quantified 

and unquantified PM2.5-related cobenefits captured in those benefit-perton estimates. 

TABLE III.H.7–2—HUMAN HEALTH AND WELFARE EFFECTS OF PM2.5

Pollutant/ 

effect Quantified and monetized in primary estimates Unquantified effects changes in 

PM2.5 ............. Adult premature mortality 

Bronchitis: chronic and acute 

Hospital admissions: respiratory and cardiovascular 

Emergency room visits for asthma 

Nonfatal heart attacks (myocardial infarction) 

Lower and upper respiratory illness 

Minor restricted-activity days 

Work loss days 

Asthma exacerbations (asthmatic population) 

Infant mortality 

Subchronic bronchitis cases 

Low birth weight 

Pulmonary function 

Chronic respiratory diseases other than chronic bronchitis 

Non-asthma respiratory emergency room visits 

Visibility 

Household soiling 

Consistent with the NO2 NAAQS,392

the benefits estimates utilize the 

concentration-response functions as 

reported in the epidemiology literature. 

To calculate the total monetized impacts 

associated with quantified health 

impacts, EPA applies values derived 

from a number of sources. For 

premature mortality, EPA applies a 

value of a statistical life (VSL) derived 

from the mortality valuation literature. 

For certain health impacts, such as 

chronic bronchitis and a number of 

respiratory-related ailments, EPA 

applies willingness-to-pay estimates 

derived from the valuation literature. 

For the remaining health impacts, EPA 

applies values derived from current 

cost-of-illness and/or wage estimates. 

Readers interested in reviewing the 

complete methodology for creating the 

benefit-per-ton estimates used in this 

analysis can consult the Technical 

Support Document (TSD) 393

accompanying the recent final ozone 

NAAQS RIA (U.S. EPA, 2008a). Readers 

can also refer to Fann et al. (2009) 394 for 

a detailed description of the benefit-perton methodology.395 A more detailed 

description of the benefit-per-ton 

estimates is also provided in the Draft 

Joint TSD that accompanies this 

rulemaking. 

As described in the documentation for 

the benefit per-ton estimates cited 

above, national per-ton estimates were 

developed for selected pollutant/source 

category combinations. The per-ton 

values calculated therefore apply only 

to tons reduced from those specific 

pollutant/source combinations (e.g., 

NO2 emitted from mobile sources; direct 

PM emitted from stationary sources). 

Our estimate of PM2.5 benefits is 

therefore based on the total direct PM2.5

and PM-related precursor emissions 

controlled by sector and multiplied by 

each per-ton value. 

The benefit-per-ton estimates are 

subject to a number of assumptions and 

uncertainties. 

• They do not reflect local variability 

in population density, meteorology, 

exposure, baseline health incidence 

rates, or other local factors that might 

lead to an overestimate or underestimate 

of the actual benefits of controlling fine 

particulates. EPA will conduct full-scale 

air quality modeling for the final 

rulemaking in an effort to capture this 

variability. 

• This analysis assumes that all fine 

particles, regardless of their chemical 

composition, are equally potent in 

causing premature mortality. This is an 

important assumption, because PM2.5

produced via transported precursors 

emitted from stationary sources may 

differ significantly from direct PM2.5

released from diesel engines and other 

industrial sources, but no clear 

scientific grounds exist for supporting 

differential effects estimates by particle 

type. 

• This analysis assumes that the 

health impact function for fine particles 

is linear within the range of ambient 

concentrations under consideration. 

Thus, the estimates include health 

benefits from reducing fine particles in 

areas with varied concentrations of 

PM2.5, including both regions that are in 

attainment with fine particle standard 

and those that do not meet the standard 

down to the lowest modeled 

concentrations. 

• There are several health benefits 

categories that EPA was unable to 

quantify due to limitations associated 

with using benefits-per-ton estimates, 

several of which could be substantial. 

Because the NOX and VOC emission 

reductions associated with this proposal 

are also precursors to ozone, reductions 

in NOX and VOC would also reduce 

ozone formation and the health effects 

associated with ozone exposure. 

Unfortunately, benefits-per-ton 

estimates do not exist due to issues 

associated with the complexity of the 

atmospheric air chemistry and 

nonlinearities associated with ozone 

formation. The PM-related benefits-perton estimates also do not include any 

human welfare or ecological benefits. 

Please refer to Chapter 7.3 of the RIA 

that accompanies this proposal for a 

description of the quantification and 

monetization of health impact for the 

FRM and a description of the 

unquantified co-pollutant benefits 

associated with this rulemaking. 

• There are many uncertainties 

associated with the health impact 

functions used in this modeling effort. 

These include: Within-study variability 

(the precision with which a given study 

estimates the relationship between air 

quality changes and health effects); 

across-study variation (different 

published studies of the same pollutant/ 

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396 Information on BenMAP, including 

downloads of the software, can be found at 

http://www.epa.gov/ttn/ecas/benmodels.html. 

397Science Advisory Board. 2001. NATA— 

Evaluating the National-Scale Air Toxics 

Assessment for 1996—an SAB Advisory. http:// 

www.epa.gov/ttn/atw/sab/sabrev.html. 

398 In April, 2009, EPA hosted a workshop on 

estimating the benefits of reducing hazardous air 

pollutants. This workshop built upon the work 

accomplished in the June 2000 Science Advisory 

Board/EPA Workshop on the Benefits of Reductions 

in Exposure to Hazardous Air Pollutants, which 

generated thoughtful discussion on approaches to 

Continued 

health effect relationship typically do 

not report identical findings and in 

some instances the differences are 

substantial); the application of 

concentration-response functions 

nationwide (does not account for any 

relationship between region and health 

effect, to the extent that such a 

relationship exists); extrapolation of 

impact functions across population (we 

assumed that certain health impact 

functions applied to age ranges broader 

than that considered in the original 

epidemiological study); and various 

uncertainties in the concentrationresponse function, including causality 

and thresholds. These uncertainties may 

under- or over-estimate benefits. 

• EPA has investigated methods to 

characterize uncertainty in the 

relationship between PM2.5 exposure 

and premature mortality. EPA’s final 

PM2.5 NAAQS analysis provides a more 

complete picture about the overall 

uncertainty in PM2.5 benefits estimates. 

For more information, please consult 

the PM2.5 NAAQS RIA (Table 5.5). 

• The benefit-per-ton estimates used 

in this analysis incorporate projections 

of key variables, including atmospheric 

conditions, source level emissions, 

population, health baselines and 

incomes, technology. These projections 

introduce some uncertainties to the 

benefit per ton estimates. 

• As described above, using the 

benefit-per-ton value derived from the 

ACS study (Pope et al., 2002) alone 

provides an incomplete characterization 

of PM2.5 benefits. When placed in the 

context of the Expert Elicitation results, 

this estimate falls toward the lower end 

of the distribution. By contrast, the 

estimated PM2.5 benefits using the 

coefficient reported by Laden in that 

author’s reanalysis of the Harvard Six 

Cities cohort fall toward the upper end 

of the Expert Elicitation distribution 

results. 

As mentioned above, emissions 

changes and benefits-per-ton estimates 

alone are not a good indication of local 

or regional air quality and health 

impacts, as there may be localized 

impacts associated with the proposed 

rulemaking. Additionally, the 

atmospheric chemistry related to 

ambient concentrations of PM2.5, ozone 

and air toxics is very complex. Fullscale photochemical modeling is 

therefore necessary to provide the 

needed spatial and temporal detail to 

more completely and accurately 

estimate the changes in ambient levels 

of these pollutants and their associated 

health and welfare impacts. As 

discussed above, timing and resource 

constraints precluded from conducting a 

full-scale photochemical air quality 

modeling analysis in time for the 

NPRM. For the final rule, however, a 

national-scale air quality modeling 

analysis will be performed to analyze 

the impacts of the standards on PM2.5, 

ozone, and selected air toxics. The 

benefits analysis plan for the final 

rulemaking is discussed in the next 

section. 

b. Human Health and Environmental 

Benefits for the Final Rule 

i. Human Health and Environmental 

Impacts 

To model the ozone and PM air 

quality benefits of the final rule, EPA 

will use the Community Multiscale Air 

Quality (CMAQ) model (see Section 

III.G.5.b for a description of the CMAQ 

model). The modeled ambient air 

quality data will serve as an input to the 

Environmental Benefits Mapping and 

Analysis Program (BenMAP).396

BenMAP is a computer program 

developed by EPA that integrates a 

number of the modeling elements used 

in previous RIAs (e.g., interpolation 

functions, population projections, 

health impact functions, valuation 

functions, analysis and pooling 

methods) to translate modeled air 

concentration estimates into health 

effects incidence estimates and 

monetized benefits estimates. 

Chapter 7.3 in the DRIA that 

accompanies this proposal lists the copollutant health effect exposureresponse functions EPA will use to 

quantify the co-pollutant incidence 

impacts associated with the final lightduty vehicles standard. These include 

PM- and ozone-related premature 

mortality, chronic bronchitis, nonfatal 

heart attacks, hospital admissions 

(respiratory and cardiovascular), 

emergency room visits, acute bronchitis, 

minor restricted activity days, and days 

of work and school lost. 

ii. Monetized Impacts 

To calculate the total monetized 

impacts associated with quantified 

health impacts, EPA applies values 

derived from a number of sources. For 

premature mortality, EPA applies a 

value of a statistical life (VSL) derived 

from the mortality valuation literature. 

For certain health impacts, such as 

chronic bronchitis and a number of 

respiratory-related ailments, EPA 

applies willingness-to-pay estimates 

derived from the valuation literature. 

For the remaining health impacts, EPA 

applies values derived from current 

cost-of-illness and/or wage estimates. 

Chapter 7.3 in the DRIA that 

accompanies this proposal presents the 

monetary values EPA will apply to 

changes in the incidence of health and 

welfare effects associated with 

reductions in non-GHG pollutants that 

will occur when these GHG control 

strategies are finalized. 

iii. Other Unquantified Health and 

Environmental Impacts 

In addition to the co-pollutant health 

and environmental impacts EPA will 

quantify for the analysis of the final 

standard, there are a number of other 

health and human welfare endpoints 

that EPA will not be able to quantify or 

monetize because of current limitations 

in the methods or available data. These 

impacts are associated with emissions of 

air toxics (including benzene, 1,3- 

butadiene, formaldehyde, acetaldehyde, 

acrolein, and ethanol), ambient ozone, 

and ambient PM2.5 exposures. Chapter 

7.3 of the DRIA lists these unquantified 

health and environmental impacts. 

While there will be impacts 

associated with air toxic pollutant 

emission changes that result from the 

final standard, EPA will not attempt to 

monetize those impacts. This is 

primarily because currently available 

tools and methods to assess air toxics 

risk from mobile sources at the national 

scale are not adequate for extrapolation 

to incidence estimations or benefits 

assessment. The best suite of tools and 

methods currently available for 

assessment at the national scale are 

those used in the National-Scale Air 

Toxics Assessment (NATA). The EPA 

Science Advisory Board specifically 

commented in their review of the 1996 

NATA that these tools were not yet 

ready for use in a national-scale benefits 

analysis, because they did not consider 

the full distribution of exposure and 

risk, or address sub-chronic health 

effects.397 While EPA has since 

improved the tools, there remain critical 

limitations for estimating incidence and 

assessing benefits of reducing mobile 

source air toxics. EPA continues to work 

to address these limitations; however, 

EPA does not anticipate having methods 

and tools available for national-scale 

application in time for the analysis of 

the final rules.398

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49622 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

estimating human health benefits from reductions 

in air toxics exposure, but no consensus was 

reached on methods that could be implemented in 

the near term for a broad selection of air toxics. 

Please visit http://epa.gov/air/toxicair/

2009workshop.html for more information about the 

workshop and its associated materials. 

399Source: U.S. Bureau of Economic Analysis, 

U.S. International Transactions Accounts Data, as 

shown on June 24, 2009. 

400Source: U.S. Department of Energy, Annual 

Energy Review 2008, Report No. DOE/EIA– 

0384(2008), Tables 5.1 and 5.13c, June 26, 2009. 401Leiby, Paul N. ‘‘Estimating the Energy Security 

Benefits of Reduced U.S. Oil Imports,’’ Oak Ridge 

National Laboratory, ORNL/TM–2007/028, Final 

Report, 2008. (Docket EPA–HQ–OAR–2009–0472) 402The ORNL study ‘‘The Energy Security 

Benefits of Reduced Oil Use, 2006–2015,’’ 

completed in March 2008, is an update version of 

the approach used for estimating the energy 

security benefits of U.S. oil import reductions 

developed in an ORNL 1997 Report by Leiby, Paul 

N., Donald W. Jones, T. Randall Curlee, and Russell 

Lee, entitled ‘‘Oil Imports: An Assessment of 

Benefits and Costs.’’ (Docket EPA–HQ–OAR–2009– 

0472). 

403AEO 2009 forecasts energy market trends and 

values only to 2030. The energy security premium 

estimates post-2030 were assumed to be the 2030 

estimate. 

8. Energy Security Impacts 

This proposal to reduce GHG 

emissions in light-duty vehicles results 

in improved fuel efficiency which, in 

turn, helps to reduce U.S. petroleum 

imports. A reduction of U.S. petroleum 

imports reduces both financial and 

strategic risks associated with a 

potential disruption in supply or a spike 

in cost of a particular energy source. 

This reduction in risk is a measure of 

improved U.S. energy security. This 

section summarizes our estimate of the 

monetary value of the energy security 

benefits of the proposed GHG vehicle 

standards against the reference case by 

estimating the impact of the expanded 

use of lower-GHG vehicle technologies 

on U.S. oil imports and avoided U.S. oil 

import expenditures. Additional 

discussion of this issue can be found in 

Chapter 5.1 of EPA’s RIA and Section 

4.2.8 of the TSD. 

a. Implications of Reduced Petroleum 

Use on U.S. Imports 

In 2008, U.S. petroleum import 

expenditures represented 21% of total 

U.S. imports of all goods and 

services.399 In 2008, the U.S. imported 

66% of the petroleum it consumed, and 

the transportation sector accounted for 

70% of total U.S. petroleum 

consumption. This compares to 

approximately 37% of petroleum from 

imports and 55% consumption of 

petroleum in the transportation sector in 

1975.400 It is clear that petroleum 

imports have a significant impact on the 

U.S. economy. Requiring lower-GHG 

vehicle technology in the U.S. is 

expected to lower U.S. petroleum 

imports. 

b. Energy Security Implications 

In order to understand the energy 

security implications of reducing U.S. 

petroleum imports, EPA has worked 

with Oak Ridge National Laboratory 

(ORNL), which has developed 

approaches for evaluating the economic 

costs and energy security implications 

of oil use. The energy security estimates 

provide below are based upon a 

methodology developed in a peerreviewed study entitled, ‘‘The Energy 

Security Benefits of Reduced Oil Use, 

2006–2015,’’ completed in March 2008. 

This recent study is included as part of 

the docket for this rulemaking.401 402

When conducting this recent analysis, 

ORNL considered the economic cost of 

importing petroleum into the U.S. The 

economic cost of importing petroleum 

into the U.S. is defined to include two 

components in addition to the purchase 

price of petroleum itself. These are: (1) 

The higher costs for oil imports 

resulting from the effect of increasing 

U.S. import demand on the world oil 

price and on OPEC market power (i.e., 

the ‘‘demand’’ or ‘‘monopsony’’ costs); 

and (2) the risk of reductions in U.S. 

economic output and disruption of the 

U.S. economy caused by sudden 

disruptions in the supply of imported 

petroleum to the U.S. (i.e., 

macroeconomic disruption/adjustment 

costs). Maintaining a U.S. military 

presence to help secure stable oil supply 

from potentially vulnerable regions of 

the world was not included in this 

analysis because its attribution to 

particular missions or activities is 

difficult. 

For this proposal, ORNL further 

updated the energy security premium by 

incorporating the most recent oil price 

forecast in the in the Energy Information 

Administration’s 2009 Annual Energy 

Outlook into its model. In order for the 

energy security premium estimated to 

be used in EPA’s OMEGA model, ORNL 

developed energy security estimates for 

a number of different years; please refer 

to Table III.H.8–1 for this information 

for years 2015, 2020, 2030 and 2040,403

as well as a breakdown of the 

components of the energy security 

premium for each of these years. The 

components of the energy security 

premium and their values are discussed 

in detail in the TSD, Chapter 4.2.8. 

TABLE III.H.8–1—ENERGY SECURITY PREMIUM IN 2015, 2020, 2030 AND 2040 (2007$/BARREL) 

Year 

(range) Monopsony Macroeconomic disruption/ adjustment costs Total mid-point 

2015 ............................................................... $11.79 ($4.26–$21.37) $6.70 ($3.11–$10.67) $18.49 ($9.80–$28.08) 

2020 ............................................................... $12.31 ($4.46–$22.53) $7.62 ($3.77–$12.46) $19.94 ($10.58–$30.47) 

2030 ............................................................... $10.57 ($3.84–$18.94) $8.12 ($3.90–$13.04) $18.69 ($10.52–$27.89) 

2040 ............................................................... $10.57 ($3.84–$18.94) $8.12 ($3.90–$13.04) $18.69 ($10.52–$27.89) 

The literature on the energy security 

for the last two decades has routinely 

combined the monopsony and the 

macroeconomic disruption components 

when calculating the total value of the 

energy security premium. However, in 

the context of using a global value for 

the Social Cost of Carbon (SCC) the 

question arises: How should the energy 

security premium be used when some 

benefits from the proposed rule, such as 

the benefits of reducing greenhouse gas 

emissions, are calculated at a global 

level? Monopsony benefits represent 

avoided payments by the U.S. to oil 

producers in foreign countries that 

result from a decrease in the world oil 

price as the U.S. decreases its 

consumption of imported oil. Although 

there is clearly a benefit to the U.S. 

when considered from the domestic 

perspective, the decrease in price due to 

decreased demand in the U.S. also 

represents a loss of income to oilproducing countries. Given the 

redistributive nature of this effect, do 

the negative effects on other countries 

‘‘net out’’ the positive impacts to the 

U.S.? If this is the case, then, the 

monopsony portion of the energy 

security premium should be excluded 

from the net benefits calculation for the 

rule. 

Based on this reasoning, EPA’s 

estimates of net benefits for this 

proposal exclude the portion of energy 

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404Estimated reductions in U.S. imports of 

finished petroleum products and crude oil are 95% 

of 88 million barrels (MMB) in 2015, 302 MMB in 

2020, 592 MMB in 2030, and 767 MMB in 2040. 

405Preliminary Regulatory Impacts Analysis, 

April 2008. Based on a detailed analysis of 

differences in fuel consumption, petroleum 

imports, and imports of refined petroleum products 

among the Reference Case, High Economic Growth, 

and Low Economic Growth Scenarios presented in 

the Energy Information Administration’s Annual 

Energy Outlook 2007, NHTSA estimated that 

approximately 50 percent of the reduction in fuel 

consumption is likely to be reflected in reduced 

U.S. imports of refined fuel, while the remaining 50 

percent would be expected to be reflected in 

reduced domestic fuel refining. Of this latter figure, 

90 percent is anticipated to reduce U.S. imports of 

crude petroleum for use as a refinery feedstock, 

while the remaining 10 percent is expected to 

reduce U.S. domestic production of crude 

petroleum. Thus on balance, each gallon of fuel 

saved is anticipated to reduce total U.S. imports of 

crude petroleum or refined fuel by 0.95 gallons. 

security benefits stemming from the 

U.S. exercising its monopsony power in 

oil markets. Thus, EPA only includes 

the macroeconomic disruption/ 

adjustment cost portion of the energy 

security premium. 

EPA invites comments on whether, 

when the global value for greenhouse 

gas reduction benefits is used, it may 

still be appropriate to include the 

monopsony benefits in net benefits 

calculation for the proposed rule. From 

one perspective, the global SCC is used 

in these calculations, not because the 

global net benefits of the rule are being 

computed (they are not), but rather 

because in the context of a global public 

good, the global marginal benefit is the 

correct domestic benefit against which 

domestic costs are to be compared. 

Similarly, energy security is inherently 

a domestic benefit. Thus, should the 

two benefits, if they are both viewed 

from this domestic perspective, be 

counted in the net benefits estimates for 

this rulemaking and more generally 

what are the overall implications of this 

approach to justifying regulation? If the 

monopsony benefits were included in 

this case, they could be significant. 

Total annual energy security benefits 

are derived from the estimated 

reductions in U.S. imports of finished 

petroleum products and crude oil using 

only the macroeconomic disruption/ 

adjustment portion of the energy 

security premium. These values are 

shown in Table III.H.8–2.404 The 

reduced oil estimates were derived from 

the OMEGA model, as explained in 

Section VI of this preamble. EPA used 

the same assumption that NHTSA used 

in its Corporate Average Fuel Economy 

and CAFE Reform for MY 2008–2011 

Light Trucks proposal, which assumed 

each gallon of fuel saved reduces total 

U.S. imports of crude oil or refined 

products by 0.95 gallons.405

TABLE III.H.8–2—TOTAL ANNUAL ENERGY SECURITY BENEFITS USING

ONLY THE MACROECONOMIC DISRUPTION/ADJUSTMENT COMPONENT

OF THE ENERGY SECURITY PREMIUM

IN 2015, 2020, 2030 AND 2040 

[Billions of 2007$] 

Year Benefits 

2015 ...................................... $0.59 

2020 ...................................... 2.30 

2030 ...................................... 4.81 

2040 ...................................... 6.23 

9. Other Impacts 

There are other impacts associated 

with the proposed CO2 emissions 

standards and associated reduced fuel 

consumption that vary with miles 

driven. Lower fuel consumption would, 

presumably, result in fewer trips to the 

filling station to refuel and, thus, time 

saved. The rebound effect, discussed in 

detail in Section III.H.4.c, produces 

additional benefits to vehicle owners in 

the form of consumer surplus from the 

increase in vehicle-miles driven, but 

may also increase the societal costs 

associated with traffic congestion, motor 

vehicle crashes, and noise. These effects 

are likely to be relatively small in 

comparison to the value of fuel saved as 

a result of the proposed standards, but 

they are nevertheless important to 

include. Table III.H.9–1 summarizes the 

other economic impacts. Please refer to 

Preamble Section II.F and the Draft Joint 

TSD that accompanies this proposal for 

more information about these impacts 

and how EPA and NHTSA use them in 

their analyses. 

TABLE III.H.9–1—ESTIMATED ECONOMIC EXTERNALITIES ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM

[Millions of 2007 dollars] 

Economic externalities 2020 2030 2040 2050 NPV, 3% NPV, 7% 

Value of Less Frequent Refueling ................................... $2,500 $4,900 $6,400 $8,000 $89,600 $41,000 

Value of Increased Driving a ............................................ 4,900 10,000 13,600 18,000 184,700 82,700 

Accidents, Noise, Congestion .......................................... ¥2,400 ¥4,900 ¥6,300 ¥7,900 ¥88,200 ¥40,200 

Annual Quantified Benefits ....................................... 5,000 10,000 13,700 18,100 186,100 83,500 

a Calculated using post-tax fuel prices. 

10. Summary of Costs and Benefits 

In this section EPA presents a 

summary of costs, benefits, and net 

benefits of the proposal. EPA presents 

fuel consumption impacts as negative 

costs of the vehicle program. 

Table III.H.10–1 shows the estimated 

annual societal costs of the vehicle 

program for the indicated calendar 

years. The table also shows the net 

present values of those costs for the 

calendar years 2012–2050 using both a 

3 percent and a seven percent discount 

rate. In this table, fuel savings are 

calculated using pre-tax fuel prices and 

are presented as negative costs 

associated with the vehicle program 

(rather than positive savings). 

Consumers are expected to receive the 

fuel savings presented here. The cost 

estimates for the fuel-saving technology 

are based on the assumptions that, to 

comply with the rule, no vehicle 

attributes will change except fuel 

economy and technology cost; that 

consumers will consider reduced fuel 

costs as a substitute for increased 

purchase price; and that consumers will 

not change the vehicles that they 

purchase. Instead, automakers are likely 

to redesign vehicles as part of their 

compliance strategies. If so, the 

redesigns may make the vehicles either 

less or more attractive to consumers. In 

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49624 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

406Radiative forcing is the change in the balance 

between solar radiation entering the atmosphere 

and the Earth’s radiation going out. On average, a 

positive radiative forcing tends to warm the surface 

of the Earth while negative forcing tends to cool the 

surface. Greenhouse gases have a positive radiative 

forcing because they absorb and emit heat. See 

http://www.epa.gov/climatechange/science/ 

recentac.html for more general information about 

GHGs and climate science. 

407See IPCC WGII, 2007 for discussion about 

implications of different marginal impacts among 

the GHGs. 

addition, consumers may choose to 

purchase different vehicles than they 

would in the absence of this rule. These 

changes may affect the satisfaction that 

consumers receive from their vehicles. 

Because of the unsettled state of the 

modeling of consumer choices 

(discussed in Section III.H.1 and in 

DRIA Section 8.1.2), this analysis does 

not measure these effects. To the extent 

that consumer satisfaction with vehicles 

may decline due to changes in vehicles 

other than fuel economy, or that 

consumers may take some of these fuel 

savings into account when they 

purchase their vehicles, the fuel savings 

may overstate the benefits of improved 

fuel economy to consumers. 

TABLE III.H.10–1—ESTIMATED SOCIETAL COSTS OF THE LIGHT-DUTY VEHICLE GHG PROGRAM

[Millions of 2007 dollars] 

Social costs 2020 2030 2040 2050 NPV, 3% NPV, 7% 

Vehicle Compliance Costs ............................................... $18,000 $17,900 $19,300 $20,900 $390,000 $216,600 

Fuel Savings a .................................................................. ¥43,100 ¥90,400 ¥125,000 ¥167,000 ¥1,677,600 ¥746,100 

Quantified Annual Costs ........................................... ¥25,100 ¥72,500 ¥105,700 ¥146,100 ¥1,287,600 ¥529,500 

a Calculated using pre-tax fuel prices. 

Table III.H.10–2 presents estimated 

annual societal benefits for the 

indicated calendar years. The table also 

shows the net present values of those 

benefits for the calendar years 2012– 

2050 using both a 3 percent and a 7 

percent discount rate. The table shows 

the benefits of reduced GHG 

emissions—and consequently the 

annual quantified benefits (i.e., total 

benefits)—for each of five interim SCC 

values considered by EPA. As discussed 

in Section III.H.6, there is a very high 

probability (very likely according to the 

IPCC) that the benefit estimates from 

GHG reductions are underestimates. 

One of the primary reasons is that 

models used to calculate SCC values do 

not include information about impacts 

that have not been quantified. 

In addition, the total GHG reduction 

benefits presented below likely 

underestimate the value of GHG 

reductions because they were calculated 

using the marginal values for CO2

emissions. The impacts of non-CO2

emissions vary from those of CO2

emissions because of differences in 

atmospheric lifetimes and radiative 

forcing.406 As a result, the marginal 

benefit values of non-CO2 GHG 

reductions and their growth rates over 

time will not be the same as the 

marginal benefits measured on a CO2- 

equivalent scale.407 Marginal benefit 

estimates per metric ton of non-CO2

GHGs are currently unavailable, but 

work is on-going to monetize benefits 

related to the mitigation of other nonCO2 GHGs. 

TABLE III.H.10–2—ESTIMATED SOCIETAL BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM

[Millions of 2007 dollars] 

Benefits 2020 2030 2040 2050 NPV, 3% NPV, 7% 

Reduced GHG Emissions at each assumed SCC value 

SCC 5% ........................................................ $1,200 $3,300 $5,700 $9,500 $69,200 $28,600 

SCC 5% Newell-Pizer ................................... 2,500 6,600 11,000 19,000 138,400 57,100 

SCC from 3% and 5% .................................. 4,700 12,000 22,000 36,000 263,000 108,500 

SCC 3% ........................................................ 8,200 22,000 38,000 63,000 456,900 188,500 

SCC 3% Newell-Pizer ................................... 14,000 36,000 63,000 100,000 761,400 314,200 

PM2.5 Related Benefits abc ................................... 1,400 3,000 4,600 6,700 59,800 26,300 

Energy Security Impacts (price shock) ................ 2,300 4,800 6,200 7,800 85,800 38,800 

Reduced Refueling .............................................. 2,500 4,900 6,400 8,000 89,600 41,000 

Value of Increased Driving d ................................ 4,900 10,000 13,600 18,000 184,700 82,700 

Accidents, Noise, Congestion .............................. ¥2,400 ¥4,900 ¥6,300 ¥7,900 ¥88,200 ¥40,200 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% ........................................................ $9,900 $21,100 $30,200 $42,100 $400,900 $177,200 

SCC 5% Newell-Pizer ................................... 11,200 24,400 35,500 51,600 470,100 205,700 

SCC from 3% and 5% .................................. 13,400 29,800 46,500 68,600 594,700 257,100 

SCC 3% ........................................................ 16,900 39,800 62,500 95,600 788,600 337,100 

SCC 3% Newell-Pizer ................................... 22,700 53,800 87,500 132,600 1,093,100 462,800 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49625 

bThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values 

would be approximately 145% (nearly two-and-a-half times) larger. cThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 

9% lower. d Calculated using pre-tax fuel prices. 

Table III.H.10–3 presents estimated 

annual net benefits for the indicated 

calendar years. The table also shows the 

net present values of those net benefits 

for the calendar years 2012–2050 using 

both a 3 percent and a 7 percent 

discount rate. The table includes the 

benefits of reduced GHG emissions— 

and consequently the annual net 

benefits—for each of five interim SCC 

values considered by EPA. As noted 

above, there is a very high probability 

(very likely according to the IPCC) that 

the benefit estimates from GHG 

reductions are underestimates because, 

in part, models used to calculate SCC 

values do not include information about 

impacts that have not been quantified. 

TABLE III.H.10–3—QUANTIFIED NET BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM a b

[Millions of 2007 dollars] 

2020 2030 2040 2050 NPV, 3% NPV, 7% 

Quantified Annual Costs ...................................... ¥$25,100 ¥$72,500 ¥$105,700 ¥$146,100 ¥$1,287,600 ¥$529,500 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% ........................................................ $9,900 $21,100 $30,200 $42,100 $400,900 $177,200 

SCC 5% Newell-Pizer ................................... 11,200 24,400 35,500 51,600 470,100 205,700 

SCC from 3% and 5% .................................. 13,400 29,800 46,500 68,600 594,700 257,100 

SCC 3% ........................................................ 16,900 39,800 62,500 95,600 788,600 337,100 

SCC 3% Newell-Pizer ................................... 22,700 53,800 87,500 132,600 1,093,100 462,800 

Quantified Net Benefits at each assumed SCC value 

SCC 5% ........................................................ $35,000 $93,600 $135,900 $188,200 $1,688,500 $706,700 

SCC 5% Newell-Pizer ................................... 36,300 96,900 141,200 197,700 1,757,700 735,200 

SCC from 3% and 5% .................................. 38,500 102,300 152,200 214,700 1,882,300 786,600 

SCC 3% ........................................................ 42,000 112,300 168,200 241,700 2,076,200 866,600 

SCC 3% Newell-Pizer ................................... 47,800 126,300 193,200 278,700 2,380,700 992,300 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. bFuel impacts were calculated using pre-tax fuel prices. 

EPA also conducted a separate 

analysis of the total benefits over the 

model year lifetimes of the 2012 through 

2016 model year vehicles. In contrast to 

the calendar year analysis, the model 

year lifetime analysis shows the lifetime 

impacts of the program on each of these 

MY fleets over the course of its lifetime. 

Full details of the inputs to this analysis 

can be found in DRIA Chapter 5. The 

societal benefits of the full life of each 

of the five model years from 2012 

through 2016 are shown in Tables 

III.H.10–4 and III.H.10–5 at both a 3 

percent and a 7 percent discount rate, 

respectively. The net benefits are shown 

in Tables III.H.10–6 and III.H.10–7 for 

both a 3 percent and a 7 percent 

discount rate. Note that the quantified 

annual benefits shown in Table 

III.H.10–4 and Table III.H.10–5 include 

fuel savings as a positive benefit. As 

such, the quantified annual costs as 

shown in Table III.H.10–6 and Table 

III.H.10–7 do not include fuel savings 

since those are included as benefits. 

Also note that each of the Tables 

III.H.10–4 through Table III.H.10–7 

include the benefits of reduced CO2

emissions—and consequently the total 

benefits—for each of five interim SCC 

values considered by EPA. As noted 

above, there is a very high probability 

(very likely according to the IPCC) that 

the benefit estimates from GHG 

reductions are underestimates because, 

in part, models used to calculate SCC 

values do not include information about 

impacts that have not been quantified. 

TABLE III.H.10–4—ESTIMATED SOCIETAL BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM, MODEL YEAR ANALYSIS

[Millions of 2007 dollars; 3% discount rate] 

Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) ......................... ¥$900 ¥$1,400 ¥$1,900 ¥$2,800 ¥$3,900 ¥$11,000 

Pretax Fuel Savings ($) ................................................... $15,600 $24,400 $34,800 $49,800 $68,500 $193,300 

Energy Security (price shock) ($) .................................... $400 $600 $900 $1,200 $1,600 $4,700 

Change in no. of Refuelings (#) ...................................... 500 700 1,000 1,300 1,800 5,300 

Change in Refueling Time (hours) .................................. 0 100 100 100 200 400 

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49626 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE III.H.10–4—ESTIMATED SOCIETAL BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM, MODEL YEAR ANALYSIS—Continued 

[Millions of 2007 dollars; 3% discount rate] 

Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Value of Reduced Refueling Time ($) ............................. $900 $1,400 $1,900 $2,700 $3,700 $10,500 

Value of Additional Driving ($) ......................................... $2,000 $3,000 $4,100 $5,700 $7,900 $22,700 

Value of PM2.5-related Health Impacts ($) abc ................. $600 $900 $1,200 $1,700 $2,200 $6,600 

Social Cost of Carbon (SCC) at each assumed SCC value 

SCC 5% .................................................................... $500 $700 $1,000 $1,400 $1,900 $5,600 

SCC 5% Newell-Pizer ............................................... 1,000 1,500 2,000 2,900 3,800 11,000 

SCC from 3% and 5% .............................................. 1,800 2,800 3,900 5,400 7,200 21,000 

SCC 3% .................................................................... 3,200 4,800 6,700 9,400 13,000 37,000 

SCC 3% Newell-Pizer ............................................... 5,300 8,100 11,000 16,000 21,000 61,000 

Total Benefits at each assumed SCC value 

SCC 5% .................................................................... $19,100 $29,600 $42,000 $59,700 $81,900 $232,400 

SCC 5% Newell-Pizer ............................................... 19,600 30,400 43,000 61,200 83,800 237,800 

SCC from 3% and 5% .............................................. 20,400 31,700 44,900 63,700 87,200 247,800 

SCC 3% .................................................................... 21,800 33,700 47,700 67,700 93,000 263,800 

SCC 3% Newell-Pizer ............................................... 23,900 37,000 52,000 74,300 101,000 287,800 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. bThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values 

would be approximately 145% (nearly two-and-a-half times) larger. cThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 

9% lower. 

TABLE III.H.10–5—ESTIMATED SOCIETAL BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG 

PROGRAM, MODEL YEAR ANALYSIS

[Millions of 2007 dollars; 7% discount rate] 

Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) ......................... ¥$700 ¥$1,100 ¥$1,500 ¥$2,200 ¥$3,100 ¥$8,700 

Pretax Fuel Savings ($) ................................................... $12,100 $19,000 $27,200 $39,000 $53,700 $150,900 

Energy Security (price shock) ($) .................................... $300 $500 $700 $900 $1,300 $3,700 

Change in no. of Refuelings (#) ...................................... 400 500 800 1,100 1,500 4,200 

Change in Refueling Time (hours) .................................. 0 0 100 100 100 300 

Value of Reduced Refueling Time ($) ............................. $700 $1,100 $1,500 $2,100 $2,900 $8,300 

Value of Additional Driving ($) ......................................... $1,500 $2,400 $3,200 $4,500 $6,300 $18,000 

Value of PM2.5-related Health Impacts ($)abc ................. $500 $700 $1,000 $1,300 $1,800 $5,300 

Social Cost of Carbon (SCC) at each assumed SCC value 

SCC 5% .................................................................... $400 $500 $700 $1,000 $1,300 $3,900 

SCC 5% Newell-Pizer ............................................... 700 1,100 1,500 2,000 2,500 7,700 

SCC from 3% and 5% .............................................. 1,400 2,100 2,800 3,700 4,800 15,000 

SCC 3% .................................................................... 2,400 3,600 4,800 6,500 8,300 26,000 

SCC 3% Newell-Pizer ............................................... 4,000 6,000 8,000 11,000 14,000 43,000 

Total Benefits at each assumed SCC value 

SCC 5% .................................................................... $14,800 $23,100 $32,800 $46,600 $64,200 $181,400 

SCC 5% Newell-Pizer ............................................... 15,100 23,700 33,600 47,600 65,400 185,200 

SCC from 3% and 5% .............................................. 15,800 24,700 34,900 49,300 67,700 192,500 

SCC 3% .................................................................... 16,800 26,200 36,900 52,100 71,200 203,500 

SCC 3% Newell-Pizer ............................................... 18,400 28,600 40,100 56,600 76,900 220,500 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49627 

bThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six Cities study (Laden et al., 2006), the values 

would be approximately 145% (nearly two-and-a-half times) larger. cThe PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate had been used, the values would be approximately 

9% lower. 

TABLE III.H.10–6—QUANTIFIED NET BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG PROGRAM, 

MODEL YEAR ANALYSIS a

[millions of 2007 dollars; 3% discount rate] 

Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel savings) b ......... $5,400 $8,400 $10,900 $13,900 $17,500 $56,100 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% .................................................................... $19,100 $29,600 $42,000 $59,700 $81,900 $232,400 

SCC 5% Newell-Pizer ............................................... 19,600 30,400 43,000 61,200 83,800 237,800 

SCC from 3% and 5% .............................................. 20,400 31,700 44,900 63,700 87,200 247,800 

SCC 3% .................................................................... 21,800 33,700 47,700 67,700 93,000 263,800 

SCC 3% Newell-Pizer ............................................... 23,900 37,000 52,000 74,300 101,000 287,800 

Quantified Net Benefits at each assumed SCC value 

SCC 5% .................................................................... $13,700 $21,200 $31,100 $45,800 $64,400 $176,300 

SCC 5% Newell-Pizer ............................................... 14,200 22,000 32,100 47,300 66,300 181,700 

SCC from 3% and 5% .............................................. 15,000 23,300 34,000 49,800 69,700 191,700 

SCC 3% .................................................................... 16,400 25,300 36,800 53,800 75,500 207,700 

SCC 3% Newell-Pizer ............................................... 18,500 28,600 41,100 60,400 83,500 231,700 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. bQuantified annual costs as shown here are the increased costs for new vehicles in each given model year. Since those costs are assumed to 

occur in the given model year (i.e., not over a several year time span), the discount rate does not affect the costs. 

TABLE III.H.10–7—QUANTIFIED NET BENEFITS ASSOCIATED WITH THE PROPOSED LIGHT-DUTY VEHICLE GHG PROGRAM, 

MODEL YEAR ANALYSIS a

[millions of 2007 dollars; 7% Discount Rate] 

Monetized values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel savings) b ......... $5,400 $8,400 $10,900 $13,900 $17,500 $56,100 

Quantified Annual Benefits at each assumed SCC value 

SCC 5% .................................................................... $14,800 $23,100 $32,800 $46,600 $64,200 $181,400 

SCC 5% Newell-Pizer ............................................... 15,100 23,700 33,600 47,600 65,400 185,200 

SCC from 3% and 5% .............................................. 15,800 24,700 34,900 49,300 67,700 192,500 

SCC 3% .................................................................... 16,800 26,200 36,900 52,100 71,200 203,500 

SCC 3% Newell-Pizer ............................................... 18,400 28,600 40,100 56,600 76,900 220,500 

Quantified Net Benefits at each assumed SCC value 

SCC 5% .................................................................... $9,400 $14,700 $21,900 $32,700 $46,700 $125,300 

SCC 5% Newell-Pizer ............................................... 9,700 15,300 22,700 33,700 47,900 129,100 

SCC from 3% and 5% .............................................. 10,400 16,300 24,000 35,400 50,200 136,400 

SCC 3% .................................................................... 11,400 17,800 26,000 38,200 53,700 147,400 

SCC 3% Newell-Pizer ............................................... 13,000 20,200 29,200 42,700 59,400 164,400 

a Note that the co-pollutant impacts associated with the standards presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. Instead, the co-pollutant benefits are based on benefitper-ton values that reflect only human health impacts associated with reductions in PM2.5 exposure. Ideally, human health and environmental 

benefits would be based on changes in ambient PM2.5 and ozone as determined by full-scale air quality modeling. However, EPA was unable to 

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the co-pollutant benefits for the analysis of the final standards. bQuantified annual costs as shown here are the increased costs for new vehicles in each given model year. Since those costs are assumed to 

occur in the given model year (i.e., not over a several year time span), the discount rate does not affect the costs. 

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49628 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

I. Statutory and Executive Order 

Reviews 

1. Executive Order 12866: Regulatory 

Planning and Review 

Under section 3(f)(1) of Executive 

Order (EO) 12866 (58 FR 51735, October 

4, 1993), this action is an ‘‘economically 

significant regulatory action’’ because it 

is likely to have an annual effect on the 

economy of $100 million or more. 

Accordingly, EPA submitted this action 

to the Office of Management and Budget 

(OMB) for review under EO 12866 and 

any changes made in response to OMB 

recommendations have been 

documented in the docket for this 

action. 

In addition, EPA prepared an analysis 

of the potential costs and benefits 

associated with this action. This 

analysis is contained in the Draft 

Regulatory Impact Analysis, which is 

available in the docket for this 

rulemaking and at the docket Internet 

address listed under ADDRESSES above. 

2. Paperwork Reduction Act 

The information collection 

requirements in this proposed rule have 

been submitted for approval to the 

Office of Management and Budget 

(OMB) under the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. The 

Information Collection Request (ICR) 

document prepared by EPA has been 

assigned EPA ICR number 0783.56. 

The Agency proposes to collect 

information to ensure compliance with 

the provisions in this rule. This 

includes a variety of requirements for 

vehicle manufacturers. Section 208(a) of 

the Clean Air Act requires that vehicle 

manufacturers provide information the 

Administrator may reasonably require to 

determine compliance with the 

regulations; submission of the 

information is therefore mandatory. We 

will consider confidential all 

information meeting the requirements of 

section 208(c) of the Clean Air Act. 

As shown in Table III.J.2–1, the total 

annual burden associated with this 

proposal is about 39,900 hours and $5 

million, based on a projection of 33 

respondents. The estimated burden for 

vehicle manufacturers is a total estimate 

for both new and existing reporting 

requirements. Burden means the total 

time, effort, or financial resources 

expended by persons to generate, 

maintain, retain, or disclose or provide 

information to or for a Federal agency. 

This includes the time needed to review 

instructions; develop, acquire, install, 

and utilize technology and systems for 

the purposes of collecting, validating, 

and verifying information, processing 

and maintaining information, and 

disclosing and providing information; 

adjust the existing ways to comply with 

any previously applicable instructions 

and requirements; train personnel to be 

able to respond to a collection of 

information; search data sources; 

complete and review the collection of 

information; and transmit or otherwise 

disclose the information. 

TABLE III.J.2–1 ESTIMATED BURDEN FOR REPORTING AND RECORDKEEPING REQUIREMENTS

Number of respondents Annual burden 

hours Annual costs 

33 ............................................................................................................................................................................. 39,940 $5,001,000 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to a collection of information 

unless it displays a currently valid OMB 

control number. The OMB control 

numbers for EPA’s regulations in 40 

CFR are listed in 40 CFR part 9. 

To comment on the Agency’s need for 

this information, the accuracy of the 

provided burden estimates, and any 

suggested methods for minimizing 

respondent burden, including the use of 

automated collection techniques, EPA 

has established a public docket for this 

rule, which includes this ICR, under 

Docket ID number EPA–HQ–OAR– 

2007–0491. Submit any comments 

related to the ICR for this proposed rule 

to EPA and OMB. See ADDRESSES

section at the beginning of this notice 

for where to submit comments to EPA. 

Send comments to OMB at the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 725 

17th Street, NW., Washington, DC 

20503, Attention: Desk Office for EPA. 

Since OMB is required to make a 

decision concerning the ICR between 30 

and 60 days after September 28, 2009, 

a comment to OMB is best assured of 

having its full effect if OMB receives it 

by October 28, 2009. The final rule will 

respond to any OMB or public 

comments on the information collection 

requirements contained in this proposal. 

3. Regulatory Flexibility Act 

a. Overview 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to prepare 

a regulatory flexibility analysis of any 

rule subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. Small entities 

include small businesses, small 

organizations, and small governmental 

jurisdictions. 

For purposes of assessing the impacts 

of this rule on small entities, small 

entity is defined as: (1) A small business 

as defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201 (see table below); (2) a 

small governmental jurisdiction that is a 

government of a city, county, town, 

school district or special district with a 

population of less than 50,000; and (3) 

a small organization that is any not-forprofit enterprise which is independently 

owned and operated and is not 

dominant in its field. 

Table III.J.3–1 provides an overview 

of the primary SBA small business 

categories included in the light-duty 

vehicle sector: 

TABLE III.J.3—1 PRIMARY SBA SMALL BUSINESS CATEGORIES IN THE LIGHT-DUTY VEHICLE SECTOR

Industry a Defined as small entity by SBA if less than or equal to: NAICS 

codes b

Light-duty vehicles: 

—Vehicle manufacturers (including small volume manufacturers).1,000 employees ......................................................................... 336111 

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TABLE III.J.3—1 PRIMARY SBA SMALL BUSINESS CATEGORIES IN THE LIGHT-DUTY VEHICLE SECTOR—Continued 

Industry a Defined as small entity by SBA if less than or equal to: NAICS 

codes b

—Independent commercial importers ................................... $7 million annual sales ................................................................ 811111, 

811112, 

811198 

$23 million annual sales .............................................................. 441120 

100 employees ............................................................................ 423110, 

424990 

—Alternative fuel vehicle converters .................................... 750 employees ............................................................................ 336312, 

336322, 

336399 

1,000 employees ......................................................................... 335312 

$7 million annual sales ................................................................ 454312, 

485310, 

811198 

Notes: 

a Light-duty vehicle entities that qualify as small businesses would not be subject to this proposed rule. We are deferring action on small vehicle entities, and we intend to address these entities in a future rule. b North American Industrial Classification System. 

b. Summary of Potentially Affected 

Small Entities 

EPA has not conducted a Regulatory 

Flexibility Analysis or a SBREFA SBAR 

Panel for the proposed rule because we 

are proposing to certify that the rule 

would not have a significant economic 

impact on a substantial number of small 

entities. EPA is proposing to defer 

standards for manufacturers meeting 

SBA’s definition of small business as 

described in 13 CFR 121.201 due to the 

short lead time to develop this proposed 

rule, the extremely small emissions 

contribution of these entities, and the 

potential need to develop a program that 

would be structured differently for them 

(which would require more time). EPA 

would instead consider appropriate 

GHG standards for these entities as part 

of a future regulatory action. This 

includes small entities in three distinct 

categories of businesses for light-duty 

vehicles: Small volume manufacturers 

(SVMs), independent commercial 

importers (ICIs), and alternative fuel 

vehicle converters. Based on 

preliminary assessment, EPA has 

identified a total of about 47 vehicle 

businesses, about 13 entities (or 28 

percent) that fit the Small Business 

Administration (SBA) criterion of a 

small business. There are about 2 SVMs, 

8 ICIs, and 3 alternative fuel vehicle 

converters in the light-duty vehicle 

market which are small businesses (no 

major vehicle manufacturers meet the 

small-entity criteria as defined by SBA). 

EPA estimates that these small entities 

comprise about 0.03 percent of the total 

light-duty vehicle sales in the U.S. for 

the year 2007, and therefore the 

proposed deferment will have a 

negligible impact on the GHG emissions 

reductions from the proposed standards. 

To ensure that EPA is aware of which 

companies would be deferred, EPA is 

proposing that such entities submit a 

declaration to EPA containing a detailed 

written description of how that 

manufacturer qualifies as a small entity 

under the provisions of 13 CFR 121.201. 

Small entities are currently covered by 

a number of EPA motor vehicle 

emission regulations, and they routinely 

submit information and data on an 

annual basis as part of their compliance 

responsibilities. Because such entities 

are not automatically exempted from 

other EPA regulations for light-duty 

vehicles and light-duty trucks, absent 

such a declaration, EPA would assume 

that the entity was subject to the 

greenhouse gas control requirements in 

this GHG proposal. The declaration 

would need to be submitted at time of 

vehicle emissions certification under 

the EPA Tier 2 program. EPA expects 

that the additional paperwork burden 

associated with completing and 

submitting a small entity declaration to 

gain deferral from the proposed GHG 

standards would be negligible and 

easily done in the context of other 

routine submittals to EPA. However, 

EPA has accounted for this cost with a 

nominal estimate included in the 

Information Collection Request 

completed under the Paperwork 

Reduction Act. Additional information 

can be found in the Paperwork 

Reduction Act discussion in Section 

III.I.2. Based on this, EPA is proposing 

to certify that the rule would not have 

a significant economic impact on a 

substantial number of small entities. 

c. Conclusions 

I therefore certify that this proposed 

rule will not have a significant 

economic impact on a substantial 

number of small entities. However, EPA 

recognizes that some small entities 

continue to be concerned about the 

potential impacts of the statutory 

imposition of PSD requirements that 

may occur given the various EPA 

rulemakings currently under 

consideration concerning greenhouse 

gas emissions. As explained in the 

preamble for the proposed PSD tailoring 

rule, EPA is using the discretion 

afforded to it under section 609(c) of the 

RFA to consult with OMB and SBA, 

with input from outreach to small 

entities, regarding the potential impacts 

of PSD regulatory requirements as that 

might occur as EPA considers 

regulations of GHGs. Concerns about the 

potential impacts of statutorily imposed 

PSD requirements on small entities will 

be the subject of deliberations in that 

consultation and outreach. Concerned 

small entities should direct any 

comments relating to potential adverse 

economic impacts on small entities from 

PSD requirements for GHG emissions to 

the docket for the PSD tailoring rule. 

EPA continues to be interested in the 

potential impacts of the proposed rule 

on small entities and welcomes 

comments on issues related to such 

impacts. 

4. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under section 202 of the UMRA, 

EPA generally must prepare a written 

statement, including a cost-benefit 

analysis, for proposed and final rules 

with ‘‘Federal mandates’’ that may 

result in expenditures to State, local, 

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408U.S. EPA. (2009). Technical Support 

Document for Endangerment or Cause or Contribute 

Findings for Greenhouse Gases under Section 

202(a) of the Clean Air Act. Washington, DC: U.S. 

EPA. Retrieved on April 21, 2009 from http:// 

epa.gov/climatechange/endangerment/downloads/ 

TSD_Endangerment.pdf. 

and tribal governments, in the aggregate, 

or to the private sector, of $100 million 

or more in any one year. Before 

promulgating an EPA rule for which a 

written statement is needed, section 205 

of the UMRA generally requires EPA to 

identify and consider a reasonable 

number of regulatory alternatives and 

adopt the least costly, most costeffective or least burdensome alternative 

that achieves the objectives of the rule. 

The provisions of section 205 do not 

apply when they are inconsistent with 

applicable law. Moreover, section 205 

allows EPA to adopt an alternative other 

than the least costly, most cost-effective 

or least burdensome alternative if the 

Administrator publishes with the final 

rule an explanation why that alternative 

was not adopted. 

Before EPA establishes any regulatory 

requirements that may significantly or 

uniquely affect small governments, 

including tribal governments, it must 

have developed under section 203 of the 

UMRA a small government agency plan. 

The plan must provide for notifying 

potentially affected small governments, 

enabling officials of affected small 

governments to have meaningful and 

timely input in the development of EPA 

regulatory proposals with significant 

Federal intergovernmental mandates, 

and informing, educating, and advising 

small governments on compliance with 

the regulatory requirements. 

This proposal contains no Federal 

mandates (under the regulatory 

provisions of Title II of the UMRA) for 

State, local, or tribal governments. The 

rule imposes no enforceable duty on any 

State, local or tribal governments. EPA 

has determined that this rule contains 

no regulatory requirements that might 

significantly or uniquely affect small 

governments. EPA has determined that 

this proposal contains a Federal 

mandate that may result in expenditures 

of $100 million or more for the private 

sector in any one year. EPA believes that 

the proposal represents the least costly, 

most cost-effective approach to achieve 

the statutory requirements of the rule. 

The costs and benefits associated with 

the proposal are discussed above and in 

the Draft Regulatory Impact Analysis, as 

required by the UMRA. 

5. Executive Order 13132 (Federalism) 

This action does not have federalism 

implications. It will not have substantial 

direct effects on the States, on the 

relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This rulemaking 

would apply to manufacturers of motor 

vehicles and not to State or local 

governments. Thus, Executive Order 

13132 does not apply to this action. 

Although section 6 of Executive Order 

13132 does not apply to this action, EPA 

did consult with representatives of State 

governments in developing this action. 

In the spirit of Executive Order 13132, 

and consistent with EPA policy to 

promote communications between EPA 

and State and local governments, EPA 

specifically solicits comment on this 

proposed action from State and local 

officials. 

6. Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) 

This proposed rule does not have 

tribal implications, as specified in 

Executive Order 13175 (65 FR 67249, 

November 9, 2000). This rule will be 

implemented at the Federal level and 

impose compliance costs only on 

vehicle manufacturers. Tribal 

governments would be affected only to 

the extent they purchase and use 

regulated vehicles. Thus, Executive 

Order 13175 does not apply to this rule. 

EPA specifically solicits additional 

comment on this proposed rule from 

tribal officials. 

7. Executive Order 13045: ‘‘Protection of 

Children From Environmental Health 

Risks and Safety Risks’’ 

This action is subject to EO 13045 (62 

FR 19885, April 23, 1997) because it is 

an economically significant regulatory 

action as defined by EO 12866, and EPA 

believes that the environmental health 

or safety risk addressed by this action 

may have a disproportionate effect on 

children. A synthesis of the science and 

research regarding how climate change 

may affect children and other 

vulnerable subpopulations is contained 

in the Technical Support Document for 

Endangerment or Cause or Contribute 

Findings for Greenhouse Gases under 

Section 202(a) of the Clean Air Act, 

which can be found in the public docket 

for this proposed rule.408 A summary of 

the analysis is presented below. 

With respect to GHG emissions, the 

effects of climate change observed to 

date and projected to occur in the future 

include the increased likelihood of more 

frequent and intense heat waves. 

Specifically, EPA’s analysis has 

determined that severe heat waves are 

projected to intensify in magnitude, 

frequency, and duration over the 

portions of the U.S. where these events 

already occur, with potential increases 

in mortality and morbidity, especially 

among the young, elderly, and frail. EPA 

has estimated reductions in projected 

global mean surface temperatures as a 

result of reductions in GHG emissions 

associated with the standards proposed 

in this action (Section III.F). Children 

may receive benefits from reductions in 

GHG emissions because they are 

included in the segment of the 

population that is most vulnerable to 

hot temperatures. 

For non-GHG pollutants, EPA has 

determined that climate change is 

expected to increase regional ozone 

pollution, with associated risks in 

respiratory infection, aggravation of 

asthma, and premature death. The 

directional effect of climate change on 

ambient PM levels remains uncertain. 

However, disturbances such as wildfires 

are increasing in the U.S. and are likely 

to intensify in a warmer future with 

drier soils and longer growing seasons. 

PM emissions from forest fires can 

contribute to acute and chronic illnesses 

of the respiratory system, particularly in 

children, including pneumonia, upper 

respiratory diseases, asthma and chronic 

obstructive pulmonary diseases. 

The public is invited to submit 

comments or identify peer-reviewed 

studies and data that assess effects of 

early life exposure to the pollutants 

addressed by this proposed rule. 

8. Executive Order 13211 (Energy 

Effects) 

This rule is not a ‘‘significant energy 

action’’ as defined in Executive Order 

13211, ‘‘Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use’’ (66 FR 28355 (May 

22, 2001)) because it is not likely to 

have a significant adverse effect on the 

supply, distribution, or use of energy. In 

fact, this rule has a positive effect on 

energy supply and use. Because the 

GHG emission standards proposed 

today result in significant fuel savings, 

this rule encourages more efficient use 

of fuels. Therefore, we have concluded 

that this rule is not likely to have any 

adverse energy effects. Our energy 

effects analysis is described above in 

Section III.H. 

9. National Technology Transfer 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (‘‘NTTAA’’), Public Law 

104–113, 12(d) (15 U.S.C. 272 note) 

directs EPA to use voluntary consensus 

standards in its regulatory activities 

unless to do so would be inconsistent 

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409U.S. EPA. (2009). Technical Support 

Document for Endangerment or Cause or Contribute 

Findings for Greenhouse Gases under Section 

202(a) of the Clean Air Act. Washington, DC: U.S. 

EPA. Retrieved on April 21, 2009 from http:// 

epa.gov/climatechange/endangerment/downloads/ 

TSD_Endangerment.pdf. 

410Among the reports and studies noting this 

point are the following: 

John Podesta, Todd Stern and Kim Batten, 

‘‘Capturing the Energy Opportunity; Creating a 

Low-Carbon Economy,’’ Center for American 

Progress (November 2007), pp. 2, 6, 8, and 24–29, 

available at: http://www.americanprogress.org/

issues/2007/11/pdf/energy_chapter.pdf (last 

accessed August 9, 2009). 

Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing, 

Frank Verrastro, Jenna Goodward, David Pumphrey, 

and Britt Staley, ‘‘A Roadmap for a Secure, LowCarbon Energy Economy; Balancing Energy Security 

and Climate Change,’’ World Resources Institute 

and Center for Strategic and International Studies 

(January 2009), pp. 21–22; available at: http:// 

pdf.wri.org/secure_low_carbon_energy_

economy_roadmap.pdf (last accessed August 9, 

2009). 

Alliance to Save Energy et al., ‘‘Reducing the Cost 

of Addressing Climate Change Through Energy 

Efficiency (2009), available at: http://Aceee.org/ 

energy/climate/leg.htm (last accessed August 9, 

2009). 

John DeCicco and Freda Fung, ‘‘Global Warming 

on the Road; The Climate Impact of America’s 

Automobiles,’’ Environmental Defense (2006) pp. 

iv-vii; available at: http://www.edf.org/documents/

5301_Globalwarmingontheroad.pdf (last accessed 

August 9, 2009). 

‘‘Why is Fuel Economy Important?,’’ a Web page 

maintained by the Department of Energy and 

Environmental Protection Agency, available at 

http://www.fueleconomy.gov/feg/why.shtml (last 

accessed August 9, 2009); 

Robert Socolow, Roberta Hotinski, Jeffery B. 

Greenblatt, and Stephen Pacala, ‘‘Solving the 

Climate Problem: Technologies Available to Curb 

CO2 Emissions,’’ Environment, volume 46, no. 10, 

2004. Pages 8–19, available at: http:// 

www.princeton.edu/∼cmi/resources/

CMI_Resources_new_files/Environ_08-21a.pdf (last 

accessed August 9, 2009). 

411EPA Inventory of U.S. Greenhouse Gas 

Emissions and Sinks: 1990—2006 (April 2008), pp. 

ES–4, ES–8, and 2–24. Available at http:// 

www.epa.gov/climatechange/emissions/usgginv_

archive.html (last accessed August 9, 2009). 

412Podesta et al., p. 25; Ladislaw et al. p. 21; 

DeCicco et al. p. vii; ‘‘Reduce Climate Change,’’ a 

Web page maintained by the Department of Energy 

and Environmental Protection Agency at http:// 

www.fueleconomy.gov/feg/climate.shtml (last 

accessed August 9, 2009). 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

materials, specifications, test methods, 

sampling procedures, and business 

practices) that are developed or adopted 

by voluntary consensus standards 

bodies. NTTAA directs EPA to provide 

Congress, through OMB, explanations 

when the Agency decides not to use 

available and applicable voluntary 

consensus standards. 

For CO2, N2O, and CH4 emissions, 

EPA is proposing to collect data over the 

same tests that are used for the CAFE 

program. This will minimize the 

amount of testing done by 

manufacturers, since manufacturers are 

already required to run these tests. For 

A/C credits, EPA is proposing to use a 

consensus methodology developed by 

the Society of Automotive Engineers 

(SAE) and also a new A/C idle test. EPA 

knows of no consensus standard 

available for the A/C idle test. 

10. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order (EO) 12898 (59 FR 

7629 (Feb. 16, 1994)) establishes Federal 

executive policy on environmental 

justice. Its main provision directs 

Federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

With respect to GHG emissions, EPA 

has determined that this proposed rule 

will not have disproportionately high 

and adverse human health or 

environmental effects on minority or 

low-income populations because it 

increases the level of environmental 

protection for all affected populations 

without having any disproportionately 

high and adverse human health or 

environmental effects on any 

population, including any minority or 

low-income population. The reductions 

in CO2 and other GHGs associated with 

the proposed standards will affect 

climate change projections, and EPA has 

estimated reductions in projected global 

mean surface temperatures (Section 

III.F.3). Within settlements experiencing 

climate change, certain parts of the 

population may be especially 

vulnerable; these include the poor, the 

elderly, those already in poor health, the 

disabled, those living alone, and/or 

indigenous populations dependent on 

one or a few resources. 409 Therefore, 

these populations may receive benefits 

from reductions in GHGs. 

For non-GHG co-pollutants such as 

ozone, PM2.5, and toxics, EPA has 

concluded that it is not practicable to 

determine whether there would be 

disproportionately high and adverse 

human health or environmental effects 

on minority and/or low income 

populations from this proposed rule. 

J. Statutory Provisions and Legal 

Authority 

Statutory authority for the vehicle 

controls proposed today is found in 

section 202 (a) (which authorizes 

standards for emissions of pollutants 

from new motor vehicles which 

emissions cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare), 202 (d), 203–209, 216, and 301 

of the Clean Air Act, 42 U.S.C. 7521 (a), 

7521 (d), 7522, 7523, 7524, 7525, 7541, 

7542, 7543, 7550, and 7601. 

IV. NHTSA Proposal for Passenger Car 

and Light Truck CAFE Standards for 

MYs 2012–2016 

A. Executive Overview of NHTSA 

Proposal 

1. Introduction 

The National Highway Traffic Safety 

Administration (NHTSA) is proposing 

to establish corporate average fuel 

economy standards for passenger 

automobiles (passenger cars) and 

nonpassenger automobiles (light trucks) 

for model years (MY) 2012–2016. 

Improving vehicle fuel economy has 

been long and widely recognized as one 

of the key ways of achieving energy 

independence, energy security, and a 

low carbon economy.410 NHTSA’s 

proposed standards will require 

passenger cars and light trucks to meet 

an estimated combined average of 34.1 

mpg in MY 2016. This represents an 

average annual increase of 4.3 percent 

from the 27.3 mpg combined fuel 

economy level in MY 2011. NHTSA’s 

proposal projects total fuel savings of 

approximately 61.6 billion gallons over 

the lifetimes of the vehicles sold in 

model years 2012–2016, with 

corresponding net societal benefits of 

approximately $201.7 billion. 

The significance accorded improving 

fuel economy reflects several factors. 

Conserving energy, especially reducing 

the nation’s dependence on petroleum, 

benefits the U.S. in several ways. 

Improving energy efficiency has benefits 

for economic growth and the 

environment, as well as other benefits, 

such as reducing pollution and 

improving security of energy supply. 

More specifically, reducing total 

petroleum use decreases our economy’s 

vulnerability to oil price shocks. 

Reducing dependence on oil imports 

from regions with uncertain conditions 

enhances our energy security. 

Additionally, the emission of CO2 from 

the tailpipes of cars and light trucks is 

one of the largest sources of U.S. CO2

emissions.411 Using vehicle technology 

to improve fuel economy, and thereby 

reducing tailpipe emissions of CO2, is 

one of the three main measures of 

reducing those tailpipe emissions of 

CO2.412 The two other measures for 

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413Energy Information Administration, Petroleum 

Basic Statistics, updated July 2009. Available at 

http://www.eia.doe.gov/basics/quickoil.html (last 

accessed August 9, 2009). 

414President Obama Announces National Fuel 

Efficiency Policy, The White House, May 19, 2009. 

415 74 FR 24007 (May 22, 2009). 

416Panel 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, at 287. 

reducing the tailpipe emissions of CO2

are switching to vehicle fuels with 

lower carbon content and changing 

driver behavior, i.e., inducing people to 

drive less. 

While NHTSA has been setting fuel 

economy standards since the 1970s, 

today’s action represents the first-ever 

joint proposal by NHTSA with another 

agency, the Environmental Protection 

Agency. As discussed in Section I, 

NHTSA’s proposed MYs 2012–2016 

CAFE standards are part of a joint 

National Program, such that a large 

majority of the projected benefits are 

achieved jointly with EPA’s GHG rule, 

described in detail above in Section III 

of this preamble. These proposed CAFE 

standards are consistent with the 

President’s National Fuel Efficiency 

Policy announcement of May 19, 2009, 

which calls for harmonized rules for all 

automakers, instead of three 

overlapping and potentially inconsistent 

requirements from DOT, EPA, and the 

California Air Resources Board. And 

finally, the proposed CAFE standards 

and the analysis supporting them also 

respond to President’s Obama’s January 

26 memorandum regarding the setting of 

CAFE standards for model years 2011 

and beyond. 

2. Role of Fuel Economy Improvements 

in Promoting Energy Independence, 

Energy Security, and a Low Carbon 

Economy 

The need to reduce energy 

consumption is more crucial today than 

it was when EPCA was enacted in the 

mid-1970s. U.S. energy consumption 

has been outstripping U.S. energy 

production at an increasing rate. Net 

petroleum imports now account for 

approximately 57 percent of U.S. 

domestic petroleum consumption, and 

the share of U.S. oil consumption for 

transportation is approximately 71 

percent.413 Moreover, world crude oil 

production continues to be highly 

concentrated, exacerbating the risks of 

supply disruptions and their negative 

effects on both the U.S. and global 

economies. 

Gasoline consumption in the U.S. has 

historically been relatively insensitive 

to fluctuations in both price and 

consumer income, and people in most 

parts of the country tend to view 

gasoline consumption as a nondiscretionary expense. Thus, when 

gasoline’s share in consumer 

expenditures rises, the public 

experiences fiscal distress. This fiscal 

distress can, in some cases, have 

macroeconomic consequences for the 

economy at large. Additionally, since 

U.S. oil production is only affected by 

fluctuations in prices over a period of 

years, any changes in petroleum 

consumption (as through increased fuel 

economy) largely flow into changes in 

the quantity of imports. Although 

petroleum imports only account for 

about 2 percent of GDP, they are large 

enough to create a discernible fiscal 

drag. As a consequence, however, 

measures that reduce petroleum 

consumption, such as fuel economy 

standards, will flow directly into the 

balance-of-payments account, and 

strengthen the domestic economy to 

some degree. And finally, U.S. foreign 

policy has been affected for decades by 

rising U.S. and world dependency of 

crude oil as the basis for modern 

transportation systems, although fuel 

economy standards have only an 

indirect and general impact on U.S. 

foreign policy. 

The benefits of a low carbon economy 

are manifold. The U.S. transportation 

sector is a significant contributor to total 

U.S. and global anthropogenic 

emissions of greenhouse gases. Motor 

vehicles are the second largest 

greenhouse gas-emitting sector in the 

U.S., after electricity generation, and 

accounted for 24 percent of total U.S. 

greenhouse gas emissions in 2006. 

Concentrations of greenhouse gases are 

at unprecedented levels compared to the 

recent and distant past, which means 

that fuel economy improvements to 

reduce those emissions are a crucial 

step toward addressing the risks of 

global climate change. These risks are 

well documented in section III of this 

notice. 

3. The National Program 

NHTSA and EPA are each announcing 

proposed rules that have the effect of 

addressing 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-dutytrucks, and medium-duty passenger 

vehicles (hereafter light-duty vehicles), 

referred to as the National Program. The 

proposed rules represent a coordinated 

program that 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 will be commercially 

available and that can be incorporated at 

a reasonable cost. The agencies’ 

proposals will also provide regulatory 

certainty and consistency for the 

automobile industry by setting 

harmonized national standards. They 

were developed and are designed in 

ways that recognize and accommodate 

the serious current economic situation 

faced by this industry. 

This joint notice is consistent with the 

President’s announcement on May 19, 

2009 of a National Fuel Efficiency 

Policy that will reduce greenhouse gas 

emissions and improve fuel economy 

for all new cars and light-duty trucks 

sold in the United States,414 and with 

the Notice of Upcoming Joint 

Rulemaking signed by DOT and EPA on 

that date.415 This joint notice also 

responds to the President’s January 26, 

2009 memorandum on CAFE standards 

for model years 2011 and beyond, the 

details of which can be found in Section 

IV of this joint notice. 

a. 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. CO2 is the 

natural by-product of the combustion of 

fuel in motor vehicle engines. 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.416 Since the 

amount of CO2 emissions is essentially 

constant per gallon combusted of a 

given type of fuel, the amount of fuel 

consumption per mile is directly related 

to the amount of CO2 emissions per 

mile. In the real world, there is a single 

pool of technologies for reducing fuel 

consumption and CO2 emissions. Using 

those technologies in the way that 

minimizes fuel consumption also 

minimizes CO2 emissions. While there 

are emission control technologies that 

can capture or destroy the pollutants 

(e.g., carbon monoxide) that are 

produced by imperfect combustion of 

fuel, there is at present no such 

technology for CO2. In fact, the only way 

at present to reduce tailpipe emissions 

of CO2 is by reducing fuel consumption. 

The National Program thus has dual 

benefits: It conserves energy by 

improving fuel economy, as required of 

NHTSA by EPCA and EISA; in the 

process, it necessarily reduces tailpipe 

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417This is the method that EPA uses to determine 

compliance with NHTSA’s CAFE standards. 

418See 49 U.S.C. 32904(c). 

419 127 S.Ct. 1438 (2007). 

420 68 FR 52922 (Sept. 8, 2003). 

421 549 U.S. 497 (2007). 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 EPA from 2007–2008 in 

response to the Supreme Court remand. 

422 74 FR 18886 (Apr. 24, 2009). 

423 74 FR 7040 (Feb. 12, 2009). 

424 74 FR 32744 (July 8, 2009). 

CO2 emissions consonant with EPA’s 

purposes and responsibilities under the 

Clean Air Act. 

i. DOT’s CAFE Program 

In 1975, Congress enacted the Energy 

Policy and Conservation Act (EPCA), 

mandating 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. EPCA allocates the 

responsibility for implementing the 

program between NHTSA and EPA as 

follows: 

• NHTSA sets Corporate Average 

Fuel Economy (CAFE) standards for 

passenger cars and light trucks. 

• Because fuel economy performance 

is measured during emissions regulation 

testing, EPA establishes the procedures 

for testing, tests vehicles, collects and 

analyzes manufacturers’ test data, and 

calculates the average fuel economy of 

each manufacturer’s passenger cars and 

light trucks. EPA determines fuel 

economy by the simple expedient of 

measuring the amount of CO2 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. EPA then uses the carbon 

content of the test fuel417 to calculate 

the amount of fuel that had to be 

consumed per mile in order to produce 

that amount of CO2. Finally, EPA 

converts that fuel consumption figure 

into a miles-per-gallon figure. 

• Based on EPA’s calculation, 

NHTSA enforces the CAFE standards. 

The CAFE standards and compliance 

testing cannot capture all of the real 

world CO2 emissions, because EPCA 

requires EPA to use the 1975 passenger 

car test procedures under which vehicle 

air conditioners are not turned on 

during fuel economy testing.418 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. 

NHTSA has been setting CAFE 

standards pursuant to EPCA since the 

enactment of the statute. 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, 

among other things, attribute-based 

standards for passenger cars and light 

trucks. The most recent CAFE 

rulemaking action was the issuance of 

standards governing model years 2011 

cars and trucks. 

ii. EPA’s Greenhouse Gas Program 

On April 2, 2007, the U.S. Supreme 

Court issued its opinion in 

Massachusetts v. EPA,419 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 the Clean Air 

Act.420 The Court ruled that greenhouse 

gases are ‘‘pollutants’’ under the CAA 

and that the Act therefore authorizes 

EPA to regulate greenhouse gas 

emissions from motor vehicles if that 

agency makes the necessary findings 

and determinations under section 202 of 

the Act. The Court considered EPCA 

only briefly, stating that the two 

obligations may overlap, but there is no 

reason to think the two agencies cannot 

both administer their obligations and 

yet avoid inconsistency. 

EPA has been working on appropriate 

responses that are consistent with the 

decision of the Supreme Court in 

Massachusetts v. EPA.421 As part of 

those responses, in July 2008, EPA 

issued an Advance Notice of Proposed 

Rulemaking seeking comments on the 

impact of greenhouse gases on the 

environment and on ways to reduce 

greenhouse gas emissions from motor 

vehicles. EPA recently also 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.422

iii. California Air Resources Board’s 

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 lightduty 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. 

In 2008, EPA denied a request by 

California for a waiver of preemption 

under the CAA for its GHG emissions 

standards. However, consistent with 

another Presidential Memorandum of 

January 26, 2009, EPA reconsidered the 

prior denial of California’s request.423

EPA withdrew the prior denial and 

granted California’s request for a waiver 

on June 30, 2009.424 The granting of the 

waiver permits California’s emission 

standards to come into effect 

notwithstanding the general preemption 

of State emission standards for new 

motor vehicles that otherwise applies 

under the Clean Air Act. 

b. The President’s Announcement of 

National Fuel Efficiency Policy (May 

2009) 

The issue of three separate regulatory 

frameworks and overlapping 

requirements for reducing fuel 

consumption and CO2 emissions has 

been a subject of much controversy and 

legal disputes. On May 19, 2009 

President Obama announced a National 

Fuel Efficiency Policy aimed at both 

increasing fuel economy and reducing 

greenhouse gas pollution for all new 

cars and trucks sold in the United 

States, while also providing a 

predictable regulatory framework for the 

automotive industry. The policy seeks 

to set harmonized Federal standards to 

regulate both fuel economy and 

greenhouse gas emissions while 

preserving the legal authorities of the 

Department of Transportation, the 

Environmental Protection Agency and 

the State of California. The program 

covers model year 2012 to model year 

2016 and ultimately requires the 

equivalent of an average fuel economy 

of 35.5 mpg in 2016, if all CO2 reduction 

were achieved through fuel economy 

improvements. Building on the MY 

2011 standard that was set in March 

2009, this represents an average of 5 

percent increase in average fuel 

economy each year between 2012 and 

2016. 

In conjunction with the President’s 

announcement, the Department of 

Transportation and the Environmental 

Protection Agency issued on May 19, 

2009, a Notice of Upcoming Joint 

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425Record of OIRA’s action can be found at 

http://www.reginfo.gov/public/do/ 

eoHistReviewSearch (last accessed August 9, 2009). 

To find the report on the clearance of the draft final 

rule, select ‘‘Department of Transportation’’ under 

‘‘Economically Significant Reviews Completed’’ 

and select ‘‘2008’’ under ‘‘Select Calendar Year.’’ 

426The statement can be found at http:// 

www.dot.gov/affairs/dot0109.htm (last accessed 

August 9, 2009). 

427Currently, the National Highway Traffic Safety 

Administration does not have an Administrator. 

Ronald L. Medford is the Acting Deputy 

Administrator. 

428Under 49 U.S.C. 32904(c), EPA must use the 

same procedures for passenger automobiles that the 

Administrator used for model year 1975 (weighted 

55 percent urban cycle and 45 percent highway 

cycle), or procedures that give comparable results. 

Rulemaking to propose a strong and 

coordinated fuel economy and 

greenhouse gas National Program for 

Model Year (MY) 2012–2016 light duty 

vehicles. Consistent, harmonized, and 

streamlined requirements under that 

program hold out the promise of 

delivering environmental and energy 

benefits, cost savings, and 

administrative efficiencies on a 

nationwide basis that might not be 

available under a less coordinated 

approach. The proposed National 

Program makes 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. 

Establishing a harmonized approach to 

regulating light-duty vehicle greenhouse 

gas (GHG) emissions and fuel economy 

is critically important given the 

interdependent goals of addressing 

climate change and ensuring energy 

independence and security. 

Additionally, establishing a harmonized 

approach may help to mitigate the cost 

to manufacturers of having to comply 

with multiple sets of Federal and State 

standards 

4. Review of CAFE Standard Setting 

Methodology per the President’s January 

26, 2009 Memorandum on CAFE 

Standards for MYs 2011 and Beyond 

On May 2, 2008, NHTSA published a 

Notice of Proposed Rulemaking entitled 

Average Fuel Economy Standards, 

Passenger Cars and Light Trucks; Model 

Years 2011–2015, 73 Fed. Reg. 24352. In 

mid-October, the agency completed and 

released a final environmental impact 

statement in anticipation of issuing 

standards for those years. Based on its 

consideration of the public comments 

and other available information, 

including information on the financial 

condition of the automotive industry, 

the agency adjusted its analysis and the 

standards and prepared a final rule for 

MYs 2011–2015. On November 14, the 

Office of Information and Regulatory 

Affairs (OIRA) of the Office of 

Management and Budget concluded 

review of the rule as consistent with the 

Order.425 However, issuance of the final 

rule was held in abeyance. On January 

7, 2009, the Department of 

Transportation announced that the final 

rule would not be issued, saying: 

The Bush Administration will not 

finalize its rulemaking on Corporate 

Fuel Economy Standards. The recent 

financial difficulties of the automobile 

industry will require the next 

administration to conduct a thorough 

review of matters affecting the industry, 

including how to effectively implement 

the Energy Independence and Security 

Act of 2007 (EISA). The National 

Highway Traffic Safety Administration 

has done significant work that will 

position the next Transportation 

Secretary to finalize a rule before the 

April 1, 2009 deadline.426

a. Requests in the President’s 

Memorandum 

In light of the requirement to 

prescribe standards for MY 2011 by 

March 30, 2009 and in order to provide 

additional time to consider issues 

concerning the analysis used to 

determine the appropriate level of 

standards for MYs 2012 and beyond, the 

President issued a memorandum on 

January 26, 2009, requesting the 

Secretary of Transportation and 

Administrator427 of the National 

Highway Traffic Safety Administration 

NHTSA to divide the rulemaking into 

two parts: (1) MY 2011 standards, and 

(2) standards for MY 2012 and beyond. 

i. CAFE Standards for Model Year 2011 

The request that the final rule 

establishing CAFE standards for MY 

2011 passenger cars and light trucks be 

prescribed by March 30, 2009 was based 

on several factors. One was the 

requirement that the final rule regarding 

fuel economy standards for a given 

model year must be adopted at least 18 

months before the beginning of that 

model year (49 U.S.C. 32902(g)(2)). The 

other was that the beginning of MY 2011 

is considered for the purposes of CAFE 

standard setting to be October 1, 2010. 

ii. CAFE Standards for Model Years 

2012 and Beyond 

The President requested that, before 

promulgating a final rule concerning the 

model years after model year 2011, 

NHTSA 

[C]onsider the appropriate legal factors 

under the EISA, the comments filed in 

response to the Notice of Proposed 

Rulemaking, the relevant technological and 

scientific considerations, and to the extent 

feasible, the forthcoming report by the 

National Academy of Sciences mandated 

under section 107 of EISA. 

In addition, the President requested 

that NHTSA consider whether any 

provisions regarding preemption are 

appropriate under applicable law and 

policy. 

b. Implementing the President’s 

Memorandum 

In keeping with the President’s 

remarks on January 26 for new national 

policies to address the closely 

intertwined issues of energy 

independence, energy security and 

climate change, and for the initiation of 

serious and sustained domestic and 

international action to address them, 

NHTSA has developed CAFE standards 

for MY 2012 and beyond after collecting 

new information, conducting a careful 

review of technical and economic 

inputs and assumptions, and standard 

setting methodology, and completing 

new analyses. 

The goal of the review and reevaluation was to ensure that the 

approach used for MY 2012 and 

thereafter would produce standards that 

contribute, to the maximum extent 

possible under EPCA/EISA, to meeting 

the energy and environmental 

challenges and goals outlined by the 

President. We have sought to craft our 

program with the goal of creating the 

maximum incentives for innovation, 

providing flexibility to the regulated 

parties, and meeting the goal of making 

substantial and continuing reductions in 

the consumption of fuel. To that end, 

we have made every effort to ensure that 

the CAFE program for MYs 2012–2016 

is based on the best scientific, technical, 

and economic information available, 

and that such information was 

developed in close coordination with 

other Federal agencies and our 

stakeholders, including the States and 

the vehicle manufacturers. 

We have also re-examined EPCA, as 

amended by EISA, to consider whether 

additional opportunities exist to 

improve the effectiveness of the CAFE 

program. For example, EPCA authorizes 

increasing the amount of civil penalties 

for violating the CAFE standards.428

Further, if the test procedures used for 

light trucks were revised to provide for 

the operation of air conditioning during 

fuel economy testing, vehicle 

manufacturers would have a regulatory 

incentive to increase the efficiency and 

reduce the weight of air conditioning 

systems, thereby reducing both fuel 

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429 49 U.S.C. 32902(a). 

consumption and tailpipe emissions of 

CO2. 

With respect to the President’s request 

that NHTSA consider the issue of 

preemption, NHTSA is deferring further 

consideration of the preemption issue. 

The agency believes that it is 

unnecessary to address the issue further 

at this time because of the consistent 

and coordinated Federal standards that 

would apply nationally under the 

proposed National Program. 

The following paragraphs provide a 

summary addressing how NHTSA has 

complied with the President’s requests 

in the January 26 memorandum. 

NHTSA has reviewed comments 

received on the MY 2011 rulemaking 

and revisited its assumptions and 

methodologies for purposes of 

developing the proposed MY 2012–2016 

standards. For any given assumption or 

aspect of NHTSA’s analysis, comments 

rarely converged on a single position— 

and for many issues, NHTSA received 

diametrically-opposed comments from 

different parties—which makes it 

challenging to resolve the concerns of 

all parties in a single stroke. However, 

NHTSA has taken a fresh look at all the 

issues as part of its joint process with 

EPA, changing some assumptions and 

methodologies and validating others. 

The agency is confident that the 

assumptions and analysis used to 

develop these proposed standards 

represent the best possible approach 

that is consistent with NHTSA’s 

statutory requirements for setting the 

required fuel economy standards. 

The paragraphs below describe 

generally how the agency has reviewed 

comments on different issues related to 

the setting of the standards, and how the 

agency has either revised or validated 

its approach for the MY 2012–2016 

standards. Much more detail on how the 

agency addresses all of these issues is 

found below in the rest of NHTSA’s 

section of this preamble, in the joint 

TSD, and in NHTSA’s PRIA. 

How stringent should the standards 

be? How quickly should they increase? 

EPCA requires that NHTSA set its 

standards for each model year at the 

‘‘maximum feasible average fuel 

economy level that the Secretary 

decides the manufacturers can achieve 

in that model year’’ considering four 

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. None of these 

factors is further defined in the statute, 

and ‘‘maximum feasible average fuel 

economy level’’ is itself defined, if at all, 

only by reference to those four factors 

and the Secretary’s consideration of 

them.429 In addition, the agency has the 

authority to and traditionally does 

consider other relevant factors, such as 

the effect of the CAFE standards on 

motor vehicle safety. 

In the previous CAFE rulemaking, 

NHTSA proposed to set standards at the 

point at which societal net benefits were 

maximized, which drew a number of 

comments from both manufacturers and 

environmental and public interest 

groups. Manufacturers generally 

commented that standards should be 

lower than the ‘‘maximizing net 

benefits’’ alternative, due to lead time 

concerns and manufacturers’ difficulties 

in raising capital. Environmental and 

consumer groups, as well as a number 

of State Attorneys General, commented 

that NHTSA should set standards above 

that point, with some arguing in favor 

of standards as high as those at the point 

at which total costs equaled total 

benefits. Commenters also emphasized 

that NHTSA should ensure that 

standards increased ratably, as required 

by EISA. 

For this NPRM, NHTSA has analyzed 

the costs and benefits of the 

‘‘maximizing net benefits’’ alternative 

and other alternatives, using inputs that 

diverge substantially from those used in 

the analyses in the previous 

rulemakings to establish attribute-based 

standards. But the agency has not 

sought to use ‘‘maximizing net benefits’’ 

as a governing principle to select the 

applicable fuel economy standard in 

this NPRM. NHTSA’s balancing of the 

statutory factors in these difficult 

financial times leads it to make a 

different conclusion this time: NHTSA 

is proposing to set standards at 34.1 

mpg in MY 2016, below the point at 

which net benefits are maximized, due 

to economic practicability concerns. 

The results of the alternatives analysis 

for the ‘‘maximizing net benefits’’ 

alternative and the ‘‘total costs = total 

benefits’’ alternative may be found in 

the DEIS and in the PRIA. 

Additionally, because today’s 

proposed standards cover five model 

years, as opposed to the single model 

year covered by the March final rule, 

NHTSA is better able in this rulemaking 

to confirm that the standards do, in fact, 

increase ratably, as required by EISA. 

What attribute should NHTSA use to 

set the standards? 

In the previous rulemaking, most 

commenters agreed with NHTSA’s use 

of footprint as the vehicle attribute for 

setting CAFE standards. Some 

manufacturers commented that NHTSA 

should consider multiple attributes—for 

example, sports car manufacturers 

suggested a mix of footprint and 

horsepower, while truck manufacturers 

suggested a mix of footprint and towing, 

hauling, or off-road capability. Several 

members of Congress also supported the 

latter comment. 

For this NPRM, NHTSA and EPA 

together reconsidered the appropriate 

attribute for setting CAFE and CO2

standards, and conclude that footprint 

best provides the ability address safety 

concerns without creating undue risk 

that program benefits will be lost to 

induced mix shifting. More information 

about this decision may be found in 

Section IV.C.5 below, in the draft joint 

TSD, and in NHTSA’s PRIA. 

What data should NHTSA use to 

develop the baseline market forecast? 

In the previous rulemaking, the 

proposed standards were based on data 

from only the seven largest 

manufacturers. Several small and 

limited-line manufacturers commented 

that either the passenger car standards 

should be based on the plans of all 

manufacturers subject to the standards, 

or some alternative form of standard 

should be set for them. Ultimately, 

NHTSA set the MY 2011 standards 

based on the plans of all manufacturers 

subject to the standards. 

However, a number of commenters 

also called for NHTSA to cease using 

manufacturer’s confidential product 

plans in any way for developing the 

standards. Because manufacturers 

request confidentiality when they 

submit their product plans to the agency 

out of competitive concerns, NHTSA is 

prohibited by regulation from releasing 

that information to the public. Thus, 

when NHTSA developed a baseline 

market forecast using information from 

the manufacturer’s product plans, 

NHTSA could not release that forecast 

intact for public review. 

For this NPRM, in response to these 

concerns, NHTSA and EPA are using a 

baseline market file developed almost 

entirely from publicly-available data. 

Relying on adjusted MY 2008 CAFE 

compliance data enables the agency to 

make the baseline public and helps to 

address transparency concerns. 

However, by virtue of not being based 

on product plans, some manufacturers’ 

concerns that the baseline does not 

represent their particular intentions for 

MYs 2012–2016 may not be addressed. 

These issues are explained in more 

detail in Section IV.C.1 below, in the 

draft joint TSD, and in NHTSA’s PRIA. 

Did commenters agree with NHTSA’s 

technology assumptions? 

In the previous rulemaking, 

manufacturers generally commented 

that NHTSA had underestimated the 

costs of technologies and overestimated 

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430 74 FR 14371–72 (Mar. 30, 2009). 

their effectiveness, and that the rate of 

diesel and hybrid application required 

by the standards was too high, too 

quickly. Environmental and consumer 

groups, and the States Attorneys 

General who commented, largely argued 

the opposite. Environmental and 

consumer groups and the States 

Attorneys General also commented that 

NHTSA should include downweighting 

in its analysis for vehicles under 5,000 

lbs GVWR, while the Insurance Institute 

for Highway Safety (IIHS) argued that 

NHTSA’s approach to restricting 

downweighting to only those vehicles 

was correct. 

For this NPRM, NHTSA, with EPA, 

has revisited every one of its cost and 

effectiveness estimates for individual 

technologies. Many of the estimates 

used in the MY 2011 final rule have 

been validated, while some have 

changed, notably the estimates for 

turbocharging and downsizing, diesels, 

and hybrids. Overall, the individual 

technology costs are lower for purposes 

of this NPRM than in the MY 2011 final 

rule due to the Indirect Cost Markup 

methodology developed by EPA for this 

rulemaking, which results in a lower 

markup than the 1.5 Retail Price 

Equivalent (RPE) markup previously 

used. The considerable majority of 

estimates for individual technology 

effectiveness were validated; changes 

largely resulted from the redefinition of 

certain electrification-related 

technologies and mild hybrids. 

Additionally, NHTSA is now 

applying downweighting/material 

substitution to vehicles below 5,000 lbs 

GVWR, albeit in a way that, we believe, 

mitigates the safety concerns to some 

extent. These issues are explained in 

more detail in Section IV.C.2 below, in 

the draft joint TSD, and in NHTSA’s 

PRIA. 

With regard to the President’s request 

that NHTSA consider, ‘‘to the extent 

feasible, the forthcoming report by the 

National Academy of Sciences 

mandated under section 107 of EISA,’’ 

we note that it was not feasible to 

consider this report for purposes of this 

NPRM because it is not scheduled to be 

completed until Fall 2009. However, 

NHTSA intends to make it available in 

the rulemaking docket as soon as the 

agency receives it, and will consider it 

for the final rule. 

Did commenters agree with NHTSA’s 

economic assumptions? 

In the previous rulemaking, NHTSA 

primarily received comments regarding 

four particular economic assumptions. 

Regarding fuel prices, many 

commenters supported NHTSA’s use of 

the AEO 2008 Reference Case, while 

many commenters also argued, given 

high pump prices in summer 2008, that 

NHTSA should use at least the AEO 

High Price Case or possibly a higher 

estimate. Regarding the discount rate, 

some commenters supported NHTSA’s 

use of 7 percent, while others argued 

that NHTSA should use no higher than 

3 percent. Regarding the magnitude of 

the rebound effect, some commenters 

supported NHTSA’s use of a 15 percent 

rebound effect, while some called for a 

higher number and some called for 

numbers as low as zero percent. And 

finally, for the social cost of carbon, 

some commenters supported NHTSA’s 

use of a domestic value and stated that 

the value should be $7/ton or lower, 

while other commenters argued that 

NHTSA should use a global value much 

higher than $7/ton, although there was 

little consensus as to what precise 

number. 

For this NPRM, NHTSA, with EPA, 

has revisited every one of its economic 

assumptions. Many of the assumptions 

used in the MY 2011 final rule have 

been validated, while some have 

changed. For fuel prices, NHTSA used 

the AEO High Price Case in the MY 

2011 final rule, but stated that its 

decision was based on its expectation 

that the Reference Case would soon be 

revised to reflect higher estimates of 

future fuel prices. EIA did, in fact, 

revise the Reference Case upward in 

AEO 2009 to levels higher than the 2008 

High Price Case, and NHTSA has 

therefore elected to use the Reference 

Case for this NPRM. For the discount 

rate, NHTSA is continuing to conduct 

and present the results of analyses using 

both a 3 percent and a 7 percent rate, 

as is EPA in its analysis. For the 

rebound effect, NHTSA took a fresh look 

at the recent literature and developed 

new estimates for the rebound effect, 

and has used a value of 10 percent in 

its analysis. And for the social cost of 

carbon, based on the results of an 

interagency effort to develop an estimate 

that can be used by all government 

agencies in rulemakings that affect 

climate change, NHTSA has conducted 

analyses for this NPRM using a range of 

values from $5 to $56/ton, representing 

global SCC values. These issues are 

explained in Section II above, in more 

detail in Section IV.C.3 below, in the 

joint TSD, and in NHTSA’s PRIA. 

Did commenters agree with NHTSA’s 

analytical tools? 

In the previous rulemaking, although 

some commenters generally supported 

NHTSA’s use of the CAFE modeling 

system developed by DOT’s Volpe 

National Transportation Systems Center 

(Volpe Center), other commenters 

expressed concerns regarding the 

modeling system, the ways in which the 

system was applied, and accessibility of 

the system and its inputs and outputs. 

Technical concerns regarding the 

model itself centered on the fact that it 

does not apply a direct and explicit 

representation of the physical processes 

connecting the engineering 

characteristics of a given vehicle to that 

vehicle’s fuel economy. As NHTSA 

explained in its March 2009 Federal 

Register notice establishing final MY 

2011 CAFE standards, full vehicle 

simulation could useful in developing 

model inputs, but not, at least in the 

foreseeable future, in performing 

forward-looking analysis of the future 

fleet.430 Having again reconsidered this 

issue, NHTSA again concludes that with 

proper care in developing model inputs, 

the Volpe model is as ‘‘physics-based’’ 

as is practical or necessary for CAFE 

analysis. 

Some commenters also questioned the 

model’s structural assumptions about 

manufacturers’ compliance strategies. 

NHTSA has reconsidered this question 

with respect to the potential for 

systematic underestimation or 

overestimation of compliance costs. As 

a result, the Volpe model has been 

modified to account for manufacturers’ 

ability to engage in ‘‘multi-year 

planning,’’ adding more technology than 

necessary for compliance in an early 

model year when a vehicle model is 

being redesigned in order to carry that 

technology forward and facilitate 

compliance in later model years. This 

major change to the Volpe model tends 

to produce greater costs (and benefits) in 

earlier model years in order to reduce 

costs in later model years. 

Some commenters also questioned the 

model’s use of externally-specified 

‘‘phase-in caps’’ to constrain the speed 

at which technologies can practicably be 

adopted. NHTSA has reconsidered these 

inputs in light of the fact that the model 

also assumes that most technologies can 

only be practicably applied during a 

vehicle redesign or (in some cases) 

freshening, and tentatively concludes 

that these inputs can be significantly 

relaxed. The analysis supporting today’s 

proposal therefore relies almost 

exclusively on the redesign- and refreshrelated constraints to produce 

practicable estimates of potential 

technology adoption rates. We are 

seeking comment on this change to the 

model’s inputs, and note that further 

changes to these inputs would impact 

our analysis. 

Commenters had many other concerns 

regarding inputs to the model, such as 

economic inputs and technology-related 

estimates. Commenters often (and 

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431 74 FR 14372 (Mar. 30, 2009). 432See http://www.nhtsa.dot.gov (click on ‘‘Fuel 

Economy,’’ then ‘‘Related Links—CAFE Compliance 

and Effects Modeling System (Volpe Model)’’) 

433See 49 CFR 523.2 for the exact definition of 

‘‘footprint.’’ 

particularly in relation to the agency’s 

estimate of the social value of avoided 

CO2 emissions) mistakenly attributed 

these concerns to the model itself. In 

again reviewing commenters’ concerns 

regarding NHTSA’s analysis, the agency 

has carefully differentiated between (1) 

the model, (2) inputs to the model, and 

(3) ways in which the model is applied. 

We encourage commenters to do the 

same in reviewing the analysis 

supporting today’s proposal. 

Finally, some commenters expressed 

concern regarding the model’s 

transparency. However, as NHTSA 

explained in in the MY 2011 final rule, 

these concerns appeared to have been 

mistakenly applied to the model itself, 

as the actual lack of transparency 

related only to the agency’s use of 

manufacturers’ product plans, which 

formed the basis for inputs to the 

model.431 The agency had previously 

made publicly available the model, 

source code (i.e., computer 

programming instructions), model 

documentation, and sample input files. 

To make the model more easily 

accessible to the public, the agency 

began (in March 2009) placing all of this 

information on NHTSA’s Web site.432 In 

connection with today’s proposal, the 

agency is placing the updated model, 

code, and documentation on the Web 

site, along with inputs and outputs for 

agency’s current analysis. Among those 

inputs are those defining the agency’s 

baseline estimates of the MYs 2012– 

2016 U.S. market for passenger cars and 

light trucks, as these inputs do not, for 

today’s proposal, make use of 

manufacturers’ confidential product 

plans. 

How should NHTSA develop and fit 

the target curves? 

In the previous rulemaking, many 

commenters expressed concern about 

the steepness of the proposed curves for 

passenger cars, which occurred because 

of the way in which NHTSA fit the 

curves to the data. The more steep a 

curve is, the more rapidly mpg targets 

decrease as footprint increases. 

For this NPRM, NHTSA reconsidered 

how to address this concern and 

decided to propose curves that are based 

on a constrained linear function rather 

than a constrained logistic function, that 

are considerably less steep than the 

curves proposed in the previous 

rulemaking. This issue is discussed in 

greater detail in Section IV.C.5 below, in 

the joint TSD, and in NHTSA’s PRIA. 

Should NHTSA set additional 

‘‘backstop’’ standards besides the one 

established by Congress? 

In the previous rulemaking, several 

commenters argued that NHTSA must 

establish absolute backstop standards 

for imported passenger cars and light 

trucks, in addition to the one for 

domestically-manufactured passenger 

cars required by EISA. NHTSA 

examined its statutory authority and 

concluded that only a backstop for 

domestic passenger cars was 

permissible under the statute. 

For this NPRM, NHTSA has reexamined its authority, and while the 

agency still tentatively concludes that 

Congress’ intent is clear from the text of 

the statute, we recognize commenters’ 

concerns that attribute-based standards 

may not absolutely guarantee the level 

of fuel savings currently anticipated if 

market forces cause manufacturers to 

build larger vehicles in MYs 2012–2016. 

Thus, we seek comment on this issue, 

which is discussed in greater detail 

below in Section IV.C.5. 

Should NHTSA classify more vehicles 

as passenger cars rather than as light 

trucks? 

In the previous rulemaking, many 

commenters agreed with NHTSA’s 

decision to move many 2WD SUVs from 

the light truck to the passenger car fleet, 

but some commenters argued that 

NHTSA should go further and reclassify 

more light trucks as passenger cars. 

For this NPRM, NHTSA has 

reconsidered its vehicle classification 

system and has not included in the 

proposed regulatory text any changes to 

that system. However, NHTSA seeks 

comment on whether any changes 

should be adopted for that time period 

or whether changes, if any, should be 

deferred to MY 2017 and beyond. 

Classification issues are addressed in 

greater detail in Section IV.H below. 

5. Summary of the Proposed MY 2012– 

2016 CAFE Standards 

NHTSA is proposing CAFE standards 

that are, like the standards NHTSA 

promulgated in March 2009 for MY 

2011, 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.433

Under the proposed CAFE standards, 

each light vehicle model produced for 

sale in the United States would have a 

fuel economy target. The CAFE levels 

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. These targets, the 

mathematical form and coefficients of 

which are presented later in today’s 

notice, appear as follows when the 

values of the targets are plotted versus 

vehicle footprint: 

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434 In NHTSA’s analysis, ‘‘undercompliance’’ is 

mitigated either through use of FFV credits, use of 

existing or ‘‘banked’’ credits, or through fine 

payment. Because NHTSA cannot consider 

availability of credits in setting standards, the 

estimated achieved CAFE levels presented here do 

not account for their use. In contrast, because 

Continued 

Under these proposed footprint-based 

CAFE standards, the CAFE levels 

required of individual manufacturers 

depend, as noted above, on the mix of 

vehicles sold. 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 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. 

Based on the forecast developed for 

this NPRM of the MYs 2012–2016 

vehicle fleet, NHTSA estimates that the 

targets shown above would result in the 

following average required CAFE levels: 

TABLE IV.A.5–1—AVERAGE REQUIRED FUEL ECONOMY (MPG) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 33.6 34.4 35.2 36.4 38.0 

Light Trucks ............................................................................................. 25.0 25.6 26.2 27.1 28.3 

Combined .......................................................................................... 29.8 30.6 31.4 32.6 34.1 

For the reader’s reference, these miles 

per gallon would be equivalent to the 

following gallons per 100 miles for 

passenger cars and light trucks: 

2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 2.9762 2.907 2.8409 2.7473 2.6316 

Light Trucks ............................................................................................. 4.0 3.9063 3.8168 3.8168 3.5336 

NHTSA estimates that average 

achieved fuel economy levels will 

correspondingly increase through MY 

2016, but that manufacturers will, on 

average, undercomply 434 in some model 


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NHTSA is not prohibited from considering fine 

payment, the estimated achieved CAFE levels 

presented here include the assumption that BMW, 

Daimler (i.e., Mercedes), Porsche, and, Tata (i.e., 

Jaguar and Rover) will only apply technology up to 

the point that it would be less expensive to pay 

civil penalties. 

435 In NHTSA’s analysis, ‘‘overcompliance’’ 

occurs through multi-year planning: manufacturers 

apply some ‘‘extra’’ technology in early model years 

(e.g., MY 2014) in order to carry that technology 

forward and thereby facilitate compliance in later 

model years (e.g., MY 2016) 

436Consistent with EPCA, NHTSA has not 

accounted for manufacturers’ ability to earn CAFE 

credits for selling FFVs, carry credits forward and 

back between model years, and transfer credits 

between the passenger car and light truck fleets. 

years and overcomply 435 in others, 

reaching a combined average fuel 

economy of 33.7 mpg in MY 2016.436

Table IV.A.5–1 is the estimated required 

fuel economy for the proposed CAFE 

standards while Table IV.A.5–2 

includes the effects of some 

manufacturers’ payment of CAFE fines. 

In addition, Section IV.G.4 below 

contains an analysis of the achieved 

levels (and projected fuel savings, costs, 

and benefits) when the use of FFV 

credits is also assumed. 

TABLE IV.A.5–2—AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 32.9 34.2 35.2 36.5 37.6 

Light Trucks ............................................................................................. 24.9 25.7 26.5 27.4 28.1 

Combined .......................................................................................... 29.3 30.5 31.5 32.7 33.7 

For the reader’s reference, these miles 

per gallon would be equivalent to the 

following gallons per 100 miles for 

passenger cars and light trucks: 

2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 3.0438 2.9267 2.8398 2.7434 2.6623 

Light Trucks ............................................................................................. 4.0241 3.8952 3.7713 3.6495 3.5604 

NHTSA estimates that these fuel 

economy increases will lead to fuel 

savings totaling 61.6 billion gallons 

during the useful lives of vehicles sold 

in MYs 2012–2016: 

TABLE IV.A.5–3—FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................... 2.5 5.3 7.5 9.4 11.4 36.0 

Light Trucks ..................................................................... 1.8 3.7 5.4 6.8 7.8 25.6 

Combined .................................................................. 4.3 9.1 12.9 16.1 19.2 61.6 

The agency also estimates that these 

new CAFE standards will lead to 

corresponding reductions of CO2

emissions totaling 656 million metric 

tons (mmt) during the useful lives of 

vehicles sold in MYs 2012–2016: 

TABLE IV.A.5–4—AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................... 25 56 79 99 121 381 

Light Trucks ..................................................................... 19 40 58 73 85 275 

Combined .................................................................. 44 96 137 173 206 656 

The agency estimates that these fuel 

economy increases would produce other 

benefits (e.g., reduced time spent 

refueling), as well as some disbenefits 

(e.g., increase traffic congestion) caused 

by drivers’ tendency to increase travel 

when the cost of driving declines (as it 

does when fuel economy increases). The 

agency has estimated the total monetary 

value to society of these benefits and 

disbenefits, and estimates that the 

proposed standards will produce 

significant benefits to society. NHTSA 

estimates that, in present value terms, 

these benefits would total $200 billion 

over the useful lives of vehicles sold 

during MYs 2012–2016: 

TABLE IV.A.5–5—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................... 7.6 17.0 24.4 31.2 38.7 119.1 

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TABLE IV.A.5–5—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS—Continued 

2012 2013 2014 2015 2016 Total 

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 

NHTSA attributes most of these 

benefits—about $157 billion, as noted 

above—to reductions in fuel 

consumption, valuing fuel (for societal 

purposes) at future pretax prices in the 

Energy Information Administration’s 

(EIA’s) reference case forecast from 

Annual Energy Outlook (AEO) 2009. 

The Preliminary Regulatory Impact 

Analysis (PRIA) accompanying today’s 

proposed rule presents a detailed 

analysis of specific benefits of the 

proposed rule. 

Amount $ Value 

Fuel savings ........................................................................... 61.6 billion gallons ................................................................ $158.0 billion. 

CO2 emissions reductions ...................................................... 656 million metric tons (mmt) ............................................... $16.4 billion. 

NHTSA estimates that the necessary 

increases in technology application will 

involve considerable monetary outlays, 

totaling $62.5 billion in incremental 

outlays (i.e., beyond those attributable 

to the MY 2011 standards) by new 

vehicle purchasers during MYs 2012– 

2016: 

TABLE IV.A.5–6—INCREMENTAL TECHNOLOGY OUTLAYS ($B) UNDER PROPOSED CAFE STANDARDS

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 

Corresponding to these outlays and, to 

a much lesser extent, 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 $476 per vehicle in 

MY 2012 to $1,091 per vehicle in MY 

2016: 

TABLE IV.A.5–7—INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE PRICES ($) UNDER PROPOSED CAFE STANDARDS

2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 591 735 877 979 1,127 

Light Trucks ............................................................................................. 283 460 678 882 1,020 

Combined .......................................................................................... 476 635 806 945 1,091 

Tables IV.A.5–8 and IV.A.5–9 below 

present itemized costs and benefits for 

a 3 percent and a 7 percent discount 

rate, respectively, for the combined fleet 

(passenger cars and light trucks) in each 

model year and for all model years 

combined. Numbers in parentheses 

represent negative values. 

TABLE IV.A.5–8—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 3% DISCOUNT RATE

2012 2013 2014 2015 2016 Total 

Costs: 

Technology Costs ......................................... $5,695 $9,295 $12,454 $15,080 $17,633 $60,157 

Benefits: 

Lifetime Fuel Expenditures ........................... $10,197 $22,396 $32,715 $41,880 $50,823 $158,012 

Consumer Surplus from Additional Driving .. $751 $1,643 $2,389 $3,029 $3,639 $11,451 

Refueling Time Value ................................... $776 $1,551 $2,198 $2,749 $3,277 $10,550 

Petroleum Market Externalities ..................... $559 $1,194 $1,700 $2,129 $2,538 $8,121 

Congestion Costs ......................................... ($460 ) ($934 ) ($1,332 ) ($1,657 ) ($1,991 ) ($6,376 ) 

Noise Costs .................................................. ($7 ) ($14 ) ($21 ) ($26 ) ($31 ) ($99 ) 

Crash Costs .................................................. ($217 ) ($437 ) ($625 ) ($776 ) ($930 ) ($2,985 ) 

CO2 ............................................................... $1,028 $2,287 $3,382 $4,376 $5,372 $16,446 

CO ................................................................. $0 $0 $0 $0 $0 $0 

VOC .............................................................. $41 $80 $108 $131 $156 $518 

NOX ............................................................... $82 $132 $155 $174 $200 $744 

PM ................................................................. $220 $438 $621 $771 $904 $2,956 

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437Center for Biological Diversity v. NHTSA, 508 

F.3d 508 (9th Cir. 2007) (rejecting argument that 

EPCA precludes the use of a marginal cost-benefit 

analysis that attempted to weigh all of the social 

benefits (i.e., externalities as well as direct benefits 

to consumers) of improved fuel savings in 

determining the stringency of the CAFE standards). 

See also Entergy Corp. v. Riverkeeper, Inc., 129 

S.Ct. 1498, 1508 (2009) (‘‘[U]nder Chevron, that an 

agency is not required to [conduct a cost-benefit 

analysis] does not mean that an agency is not 

permitted to do so.’’) 

438National Research Council, ‘‘Effectiveness and 

Impact of Corporate Average Fuel Economy (CAFE) 

Standards,’’ National Academy Press, Washington, 

DC (2002). Available at http://www.nap.edu/ 

openbook.php?isbn=0309076013 (last accessed 

August 9, 2009). The conference committee report 

for the Department of Transportation and Related 

Agencies Appropriations Act for FY 2001 (Pub. L. 

106–346) directed NHTSA to fund a study by NAS 

to evaluate the effectiveness and impacts of CAFE 

standards (H. Rep. No. 106–940, p. 117–118). In 

response to the direction from Congress, NAS 

published this lengthy report. 

439NHTSA formerly used this approach for CAFE 

standards. EISA prohibits its use after MY 2010. 

440NAS, p. 9. 

TABLE IV.A.5–8—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 3% DISCOUNT RATE— 

Continued 

2012 2013 2014 2015 2016 Total 

SOX ............................................................... $161 $345 $490 $613 $731 $2,341 

Total ....................................................... $13,132 $28,680 $41,781 $53,394 $64,687 $201,676 

Net Benefits .................................... $7,044 $18,759 $27,090 $34,710 $41,386 $128,992 

TABLE IV.A.5–9—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 7% DISCOUNT RATE

2012 2013 2014 2015 2016 Total 

Costs: 

Technology Costs ......................................... $5,695 $9,295 $12,454 $15,080 $17,633 $60,157 

Benefits: 

Lifetime Fuel Expenditures ........................... $7,991 $17,671 $25,900 $33,264 $40,478 $125,305 

Consumer Surplus from Additional Driving .. $590 $1,301 $1,896 $2,412 $2,904 $9,102 

Refueling Time Value ................................... $624 $1,249 $1,770 $2,215 $2,642 $8,500 

Petroleum Market Externalities ..................... $448 $960 $1,367 $1,712 $2,043 $6,531 

Congestion Costs ......................................... ($371 ) ($753 ) ($1,074 ) ($1,335 ) ($1,606 ) ($5,138 ) 

Noise Costs .................................................. ($6 ) ($12 ) ($16 ) ($21 ) ($24 ) ($80 ) 

Crash Costs .................................................. ($173 ) ($352 ) ($503 ) ($626 ) ($749 ) ($2,403 ) 

CO2 ............................................................... $797 $1,781 $2,634 $3,410 $4,189 $12,813 

CO ................................................................. $0 $0 $0 $0 $0 $0 

VOC .............................................................. $33 $65 $87 $106 $125 $416 

NOX ............................................................... $60 $99 $120 $135 $156 $570 

PM ................................................................. $170 $344 $492 $613 $721 $2,339 

SOX ............................................................... $129 $278 $394 $493 $588 $1,882 

Total ....................................................... $10,292 $22,631 $33,066 $42,380 $51,468 $159,837 

Net Benefits .................................... $4,281 $12,832 $18,818 $24,414 $29,293 $89,638 

Neither EPCA nor EISA requires that 

NHTSA conduct a cost-benefit analysis 

in determining average fuel economy 

standards, but too, neither precludes its 

use.437 EPCA does require that NHTSA 

consider economic practicability among 

other factors, and NHTSA has 

concluded, as discussed elsewhere 

herein, that the standards it proposes 

today are economically practicable. 

Further validating and supporting its 

conclusion that the standards it 

proposes today are reasonable, a 

comparison of the standards’ costs and 

benefits shows that the standards’ 

estimated benefits far outweigh its 

estimated costs. Based on the figures 

reported above, NHTSA estimates that 

the total benefits of today’s proposed 

standards would be more three times 

the magnitude of the corresponding 

costs, such that the proposed standards 

would produce net benefits of nearly 

$138 billion over the useful lives of 

vehicles sold during MYs 2012–2016. 

B. Background 

1. Chronology of Events Since the 

National Academy of Sciences Called 

for Reforming and Increasing CAFE 

Standards 

a. National Academy of Sciences Issues 

Report on Future of CAFE Program 

(February 2002) 

i. Significantly Increasing CAFE 

Standards Without Making Them 

Attribute-Based Would Adversely Affect 

Safety 

In the 2002 congressionally-mandated 

report entitled ‘‘Effectiveness and 

Impact of Corporate Average Fuel 

Economy (CAFE) Standards,’’ 438 a 

committee of the National Academy of 

Sciences (NAS) (‘‘2002 NAS Report’’) 

concluded that the then-existing form of 

passenger car and light truck CAFE 

standards permitted vehicle 

manufacturers to comply in part by 

downweighting and even downsizing 

their vehicles and that these actions had 

led to additional fatalities. The 

committee explained that this safety 

problem arose because, at that time, the 

CAFE standards were not attributedbased and thus subjected all passenger 

cars to the same fuel economy target and 

all light trucks to the same target, 

regardless of their weight, size, or loadcarrying capacity.439 The committee 

said that this experience suggests that 

consideration should be given to 

developing a new system of fuel 

economy targets that reflects differences 

in such vehicle attributes. Without a 

thoughtful restructuring of the program, 

there would be the trade-offs that must 

be made if CAFE standards were 

increased by any significant amount.440

In response to these conclusions, 

NHTSA issued attribute-based CAFE 

standards for light trucks and sought 

legislative authority to issue attributebased CAFE standards for passenger 

cars before undertaking to raise the car 

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441NAS, pp. 2, 13, and 83. 

442NAS, pp. 4–5 (Finding 10). 

443NAS, p. 5 (Finding 12). 

444NAS, p. 87. 

445 71 FR 17566 (Apr. 6, 2006). 446 508 F.3d 508. 

standards. Congress went a step further 

in enacting EISA, not only authorizing 

the issuance of attribute-based 

standards, but also mandating them. 

ii. Climate Change and Other 

Externalities Justify Increasing the CAFE 

Standards 

The NAS committee said that there 

are two compelling concerns that justify 

a government-mandated increase in fuel 

economy, both relating to externalities. 

The first and most important concern, it 

argued, is the accumulation in the 

atmosphere of greenhouse gases, 

principally carbon dioxide.441

A second concern is that petroleum 

imports have been steadily rising 

because of the nation’s increasing 

demand for gasoline without a 

corresponding increase in domestic 

supply. The high cost of oil imports 

poses two risks: Downward pressure on 

the strength of the dollar (which drives 

up the cost of goods that Americans 

import) and an increase in U.S. 

vulnerability to macroeconomic shocks 

that cost the economy considerable real 

output. 

To determine how much the fuel 

economy standards should be increased, 

the committee urged that all social 

benefits be considered. That is, it urged 

not only that the dollar value of the 

saved fuel be considered, but also that 

the dollar value to society of the 

resulting reductions in greenhouse gas 

emissions and in dependence on 

imported oil should be calculated and 

considered. The committee said that if 

it is possible to assign dollar values to 

these favorable effects, it becomes 

possible to make at least crude 

comparisons between the socially 

beneficial effects of measures to 

improve fuel economy on the one hand, 

and the costs (both out-of-pocket and 

more subtle) on the other. 

iii. Reforming the CAFE Program Could 

Address Inequity Arising From the 

CAFE Structure 

The 2002 NAS report expressed 

concerns about increasing the standards 

under the CAFE program as currently 

structured. While raising CAFE 

standards under the existing structure 

would reduce fuel consumption, doing 

so under alternative structures ‘‘could 

accomplish the same end at lower cost, 

provide more flexibility to 

manufacturers, or address inequities 

arising from the present’’ structure.442

To address those structural problems, 

the report suggested various possible 

reforms. The report found that the 

‘‘CAFE program might be improved 

significantly by converting it to a system 

in which fuel targets depend on vehicle 

attributes.’’443 The report noted further 

that under an attribute-based approach, 

the required CAFE levels could vary 

among the manufacturers based on the 

distribution of their product mix. NAS 

stated that targets could vary among 

passenger cars and among trucks, based 

on some attribute of these vehicles such 

as weight, size, or load-carrying 

capacity. The report explained that a 

particular manufacturer’s average target 

for passenger cars or for trucks would 

depend upon the fractions of vehicles it 

sold with particular levels of these 

attributes.444

2. NHTSA Issues Final Rule 

Establishing Attribute-Based CAFE 

Standards for MY 2008–2011 Light 

Trucks (March 2006) 

The 2006 final rule reformed the 

structure of the CAFE program for light 

trucks by introducing an attribute-based 

approach and using that approach to 

establish higher CAFE standards for MY 

2008–2011 light trucks.445 Reforming 

the CAFE program enables it to achieve 

larger fuel savings, while enhancing 

safety and preventing adverse economic 

consequences. 

As noted above, under Reformed 

CAFE, fuel economy standards were 

restructured so that they are based on a 

vehicle attribute, a measure of vehicle 

size called ‘‘footprint.’’ It is the product 

of multiplying a vehicle’s wheelbase by 

its track width. A target level of fuel 

economy was established for each 

increment in footprint (0.1 ft2). Trucks 

with smaller footprints have higher fuel 

economy targets; conversely, larger ones 

have lower targets. A particular 

manufacturer’s compliance obligation 

for a model year is calculated as the 

harmonic average of the fuel economy 

targets for the manufacturer’s vehicles, 

weighted by the distribution of the 

manufacturer’s production volumes 

among the footprint increments. Thus, 

each manufacturer is required to comply 

with a single overall average fuel 

economy level for each model year of 

production. 

Compared to Unreformed (nonattributed-based) CAFE, Reformed CAFE 

enhances overall fuel savings while 

providing vehicle manufacturers with 

the flexibility they need to respond to 

changing market conditions. Reformed 

CAFE also provides a more equitable 

regulatory framework by creating a level 

playing field for manufacturers, 

regardless of whether they are full-line 

or limited-line manufacturers. We were 

particularly encouraged that Reformed 

CAFE will confer no compliance 

advantage if vehicle makers choose to 

downsize some of their fleet as a CAFE 

compliance strategy, thereby reducing 

the adverse safety risks associated with 

the Unreformed CAFE program. 

3. Ninth Circuit Issues Decision re Final 

Rule for MY 2008–2011 Light Trucks 

(November 2007) 

On November 15, 2007, the United 

States Court of Appeals for the Ninth 

Circuit issued its decision in Center for 

Biological Diversity v. NHTSA,446 the 

challenge to the MY 2008–11 light truck 

CAFE rule. The court held that EPCA 

permits, but does not require, the use of 

a marginal cost-benefit analysis. The 

court specifically emphasized NHTSA’s 

discretion to decide how to balance the 

statutory factors—as long as that 

balancing does not undermine the 

fundamental statutory purpose of energy 

conservation. 

However, the Court found that 

NHTSA had been arbitrary and 

capricious in the following respects: 

• NHTSA’s decision that it could not 

monetize the benefit of reducing CO2

emissions for the purpose of conducting 

its marginal benefit-cost analysis; 

• NHTSA’s lack, in the Court’s view, 

of a reasoned explanation for its 

decision not to establish a ‘‘backstop’’ 

(i.e., a fixed minimum CAFE standard 

applicable to manufacturers); 

• NHTSA’s lack, again in the Court’s 

view, of a reasoned explanation for its 

decision not to revise the regulatory 

definitions for the passenger car and 

light truck categories of automobiles so 

that some vehicles currently classified 

as light trucks are instead classified as 

passenger cars; 

• NHTSA’s decision not to subject 

most medium- and heavy-duty pickups 

and most medium- and heavy-duty 

cargo vans (i.e., those between 8,500 and 

10,000 pounds gross vehicle weight 

rating (GVWR,) to the CAFE standards; 

• NHTSA’s decision to prepare and 

publish an Environmental Assessment 

(EA) and making a finding of no 

significant impact notwithstanding what 

the Court found to be an insufficiently 

broad range of alternatives, insufficient 

analysis of the climate change effects of 

the CO2 emissions, and limited 

assessment of cumulative impacts in its 

EA under the National Environmental 

Policy Act (NEPA). 

The Court did not vacate the 

standards, but instead said it would 

remand the rule to NHTSA to 

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447The deadline in EPCA for issuing a final rule 

establishing, for the first time, a CAFE standard for 

a model year is 18 months before the beginning of 

that model year. 49 U.S.C. 32902(g)(2). The same 

deadline applies to issuing a final rule amending an 

existing CAFE standard so as to increase its 

stringency. Given that the agency has long regarded 

October 1 as the beginning of a model year, the 

statutory deadline for increasing the MY 2009 

standard was March 30, 2007, and the deadline for 

increasing the MY 2010 standard is March 30, 2008. 

Thus, the only model year for which there was 

sufficient time at the time of the Court’s decision 

to gather all of the necessary information, conduct 

the necessary analyses and complete a rulemaking 

was MY 2011. As noted earlier in this notice, 

however, EISA requires that a new standard be 

established for that model year. 

448See CBD v. NHTSA, 538 F.3d 1172 (9th Cir. 

2008). 

449 73 FR 61859 (Oct. 18, 2008). 

450The statement can be found at http:// 

www.dot.gov/affairs/dot0109.htm (last accessed 

August 9, 2009). 

promulgate new standards consistent 

with its opinion ‘‘as expeditiously as 

possible and for the earliest model year 

practicable.447 Under the decision, the 

standards established by the April 2006 

final rule would remain in effect unless 

and until amended by NHTSA. In 

addition, it directed the agency to 

prepare an Environmental Impact 

Statement. 

4. Congress Enacts Energy Security and 

Independence Act of 2007 (December 

2007) 

As noted above in Section I.B., EISA 

significantly changed the provisions of 

EPCA governing the establishment of 

future CAFE standards. These changes 

made it necessary for NHTSA to pause 

in its efforts so that it could assess the 

implications of the amendments made 

by EISA and then, as required, revise 

some aspects of the proposals it had 

been developing (e.g., the model years 

covered and credit issues). 

5. NHTSA Proposes CAFE Standards for 

MYs 2011–2015 (April 2008) 

The agency cannot set out the exact 

level of CAFE that each manufacturer 

would have been required to meet for 

each model year under the passenger car 

or light truck standards since the levels 

would depend on information that 

would not be available until the end of 

each of the model years, i.e., the final 

actual production figures for each of 

those years. The agency can, however, 

project what the industry-wide level of 

average fuel economy would have been 

for passenger cars and for light trucks if 

each manufacturer produced its 

expected mix of automobiles and just 

met its obligations under the proposed 

‘‘optimized’’ standards for each model 

year. 

Passenger 

cars mpg 

Light trucks 

mpg 

MY 2011 ........... 31.2 25.0 

MY 2012 ........... 32.8 26.4 

MY 2013 ........... 34.0 27.8 

MY 2014 ........... 34.8 28.2 

Passenger 

cars mpg 

Light trucks 

mpg 

MY 2015 ........... 35.7 28.6 

The combined industry-wide average 

fuel economy (in miles per gallon, or 

mpg) levels for both cars and light 

trucks, if each manufacturer just met its 

obligations under the proposed 

‘‘optimized’’ standards for each model 

year, would have been as follows: 

Combined 

mpg 

MY 2011 ................................... 27.8 

MY 2012 ................................... 29.2 

MY 2013 ................................... 30.5 

MY 2014 ................................... 31.0 

MY 2015 ................................... 31.6 

The annual average increase during 

this five year period would have been 

approximately 4.5 percent. Due to the 

uneven distribution of new model 

introductions during this period and to 

the fact that significant technological 

changes could be most readily made in 

conjunction with those introductions, 

the annual percentage increases were 

greater in the early years in this period. 

6. Ninth Circuit Revises its Decision re 

Final Rule for MY 2008–2011 Light 

Trucks (August 2008) 

In response to the Government 

petition for rehearing, the Ninth Circuit 

modified its decision by replacing its 

direction to prepare an EIS with a 

direction to prepare either a new EA or, 

if necessary, an EIS.448

7. NHTSA Releases Final Environmental 

Impact Statement (October 2008) 

On October 17, 2008, EPA published 

a notice announcing the availability of 

NHTSA’s final environmental impact 

statement (FEIS) for this rulemaking.449

Throughout the FEIS, NHTSA relied 

extensively on findings of the United 

Nations Intergovernmental Panel on 

Climate Change (IPCC) and the U.S. 

Climate Change Science Program 

(USCCSP). In particular, the agency 

relied heavily on the most recent, 

thoroughly peer-reviewed, and credible 

assessments of global climate change 

and its impact on the United States: the 

IPCC Fourth Assessment Report 

Working Group I4 and II5 Reports, and 

reports by the USCCSP that include 

Scientific Assessments of the Effects of 

Global Climate Change on the United 

States and Synthesis and Assessment 

Products. 

In the FEIS, NHTSA compared the 

environmental impacts of its preferred 

alternative and those of reasonable 

alternatives. It considered direct, 

indirect, and cumulative impacts and 

describes these impacts to inform the 

decisionmaker and the public of the 

environmental impacts of the various 

alternatives. 

Among other potential impacts, 

NHTSA analyzed the direct and indirect 

impacts related to fuel and energy use, 

emissions, including carbon dioxide 

and its effects on temperature and 

climate change, air quality, natural 

resources, and the human environment. 

Specifically, the FEIS used a climate 

model to estimate and report on four 

direct and indirect effects of climate 

change, driven by alternative scenarios 

of GHG emissions, including: 

1. Changes in CO2 concentrations; 

2. Changes in global mean surface 

temperature; 

3. Changes in regional temperature 

and precipitation; and 

4. Changes in sea level. 

NHTSA also considered the 

cumulative impacts of the proposed 

standards for MY 2011–2015 passenger 

cars and light trucks, together with 

estimated impacts of NHTSA’s 

implementation of the CAFE program 

through MY 2010 and NHTSA’s future 

CAFE rulemaking for MYs 2016–2020. 

8. Department of Transportation Decides 

not to Issue MY 2011–2015 Final Rule 

(January 2009) 

On January 7, 2009, the Department of 

Transportation announced that the Bush 

Administration would not issue the 

final rule, notwithstanding the Office of 

Information and Regulatory Affairs’ 

completion of review of the rule under 

Executive Order 12866, Regulatory 

Planning and Review, on November 14, 

2008.450

9. The President Requests NHTSA to 

Issue Final Rule for MY 2011 Only 

(January 2009) 

As explained above, in his 

memorandum of January 26, 2009, the 

President requested the agency to issue 

a final rule adopting CAFE standards for 

MY 2011 only. Further, the President 

requested NHTSA to establish standards 

for MY 2012 and later after considering 

the appropriate legal factors, the 

comments filed in response to the May 

2008 proposal, the relevant 

technological and scientific 

considerations, and, to the extent 

feasible, a forthcoming report by the 

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451The agency notes, for NEPA purposes, that the 

‘‘optimized standard’’ alternative adopted as the 

final standards corresponds to the ‘‘Optimized Mid2’’ scenario described in Section 2.2.2 of the FEIS. 

452Those numbers set out several paragraphs 

above. 

453Congress required that DOT establish a credit 

‘‘transferring’’ regulation, to allow individual 

manufacturers to move credits from one of their 

Continued 

National Academy of Sciences assessing 

automotive technologies that can 

practicably be used to improve fuel 

economy. 

10. NHTSA Issues Final Rule for MY 

2011 (March 2009) 

a. Introduction 

NHTSA’s review and analysis of 

comments on its proposal led the 

agency to make many changes to its 

methods for analyzing potential MY 

2011 CAFE standards, as well as to the 

data and other information to which the 

agency has applied these methods. The 

following are some of the more 

prominent changes: 

• After receiving, reviewing, and 

integrating updated product plans from 

vehicle manufacturers, NHTSA revised 

its forecast of the future light vehicle 

market. 

• NHTSA changed the methods and 

inputs it used to represent the 

applicability, availability, cost, and 

effectiveness of future fuel-saving 

technologies. 

• NHTSA based its fuel price forecast 

on the AEO 2008 High Case price 

scenario instead of the AEO 2008 

Reference Case. 

• NHTSA reduced mileage 

accumulation estimates (i.e., vehicle 

miles traveled) to levels consistent with 

this increased fuel price forecast. 

• NHTSA applied increased estimates 

for the value of oil import externalities. 

• NHTSA included all 

manufacturers—not just the largest 

seven—in the process used to fit the 

curve and estimate the stringency at 

which societal net benefits are 

maximized. 

• NHTSA tightened its application of 

the definition of ‘‘nonpassenger 

automobiles,’’ causing a reassigning of 

over one million vehicles from the light 

truck fleet to the passenger car fleet, and 

lowering the average fuel economy for 

cars due to the inclusion of vehicles 

previously categorized as trucks, as well 

as the average fuel economy for trucks 

because the truck category then had a 

larger proportion of heavier trucks. 

• NHTSA fitted the shape of the 

curve based on ‘‘exhaustion’’ of 

available technologies instead of on 

manufacturer-level optimization of 

CAFE levels. 

These changes affected both the shape 

and stringency of the attribute-based 

standards. Taken together, the last three 

of the above changes reduced the 

steepness of the curves defining fuel 

economy targets for passenger cars, and 

also less significantly reduced the 

steepness of the light truck curves. 

b. Standards 

The final rule established footprintbased fuel economy standards for MY 

2011 passenger cars and light trucks, 

where each vehicle manufacturer’s 

required level of CAFE was based on 

target levels of average fuel economy set 

for vehicles of different sizes and on the 

distribution of that manufacturer’s 

vehicles among those sizes. The curves 

defining the performance target at each 

footprint reflect the technological and 

economic capabilities of the industry. 

The target for each footprint is the same 

for all manufacturers, regardless of 

differences in their overall fleet mix. 

Compliance would be determined by 

comparing a manufacturer’s 

harmonically averaged fleet fuel 

economy levels in a model year with a 

required fuel economy level calculated 

using the manufacturer’s actual 

production levels and the targets for 

each footprint of the vehicles that it 

produces. 

The agency analyzed seven regulatory 

alternatives, one of which maximizes 

net benefits within the limits of 

available information and was known at 

the time as the ‘‘optimized standards.’’ 

The optimized standards were set at 

levels, such that, considering all of the 

manufacturers together, no other 

alternative is estimated to produce 

greater net benefits to society. Upon a 

considered analysis of all information 

available, including all information 

submitted to NHTSA in comments, the 

agency adopted the ‘‘optimized 

standard’’ alternative as the final 

standards for MY 2011.451 By limiting 

the standards to levels that can be 

achieved using technologies each of 

which are estimated to provide benefits 

that at least equal its costs, the net 

benefit maximization approach helped, 

at the time, to assure the marketability 

of the manufacturers’ vehicles and thus 

economic practicability of the 

standards. Providing this assurance 

assumed increased importance in view 

of current and anticipated conditions in 

the industry in particular and the 

economy in general. As was widely 

reported in the public domain 

throughout that rulemaking, and as 

shown in public comments, the national 

and global economies raised serious 

concerns. Even before those recent 

developments, the automobile 

manufacturers were already facing 

substantial difficulties. Together, these 

problems made NHTSA’s economic 

practicability analysis particularly 

important and challenging in that 

rulemaking. 

The agency could not set out the exact 

level of CAFE that each manufacturer 

would be required to meet for MY 2011 

under the passenger car or light truck 

standards because the levels will 

depend on information that will not be 

available until the end of that model 

year, i.e., the final actual production 

figures for that year. However, the 

following levels were projected for what 

the industry-wide level of average fuel 

economy will be for passenger cars and 

for light trucks if each manufacturer 

produced its expected mix of 

automobiles and just met its obligations 

under the ‘‘optimized’’ standards. 

Passenger 

cars mpg 

Light trucks 

mpg 

MY 2011 ........... 30.2 24.1 

The combined industry-wide average 

fuel economy (in miles per gallon, or 

mpg) levels for both cars and light 

trucks, if each manufacturer just met its 

obligations under the ‘‘optimized’’ 

standards, were projected as follows: 

Combined 

mpg 

mpg increase over 

prior year 

MY 2011 ........... 27.3 2.0 

In addition, per EISA, each 

manufacturer’s domestic passenger fleet 

is required in MY 2011 to achieve 27.5 

mpg or 92 percent of the CAFE of the 

industry-wide combined fleet of 

domestic and non-domestic passenger 

cars 452 for that model year, whichever 

is higher. This requirement resulted in 

the following projected alternative 

minimum standard (not attribute-based) 

for domestic passenger cars: 

Domestic 

passenger 

cars mpg 

MY 2011 ................................... 27.8 

c. Credits 

NHTSA also adopted a new Part 536 

on use of ‘‘credits’’ earned for exceeding 

applicable CAFE standards. Part 536 

implements the provisions in EISA 

authorizing NHTSA to establish by 

regulation a credit trading program and 

directing it to establish by regulation a 

credit transfer program.453 Since its 

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fleets to another (e.g., using a credit earned for 

exceeding the light truck standard for compliance 

with the domestic passenger car standard). Congress 

allowed DOT to establish a credit ‘‘trading’’ 

regulation, so that credits may be bought and sold 

between manufacturers and other parties. 

454Available at http://www.eia.doe.gov/oiaf/aeo/ 

index.html. The agencies have also used fuel price 

forecasts from AEO2009. Both agencies regard AEO 

a credible source not only of such forecasts, but also 

of many underlying forecasts, including forecasts of 

the size the future light vehicle market. 

455EPA also considered other sources of similar 

information, such as J.D. Powers, and concluded 

that CSM was better able to provide forecasts at the 

requisite level of detail for most of the model years 

of interest. 

enactment, EPCA has permitted 

manufacturers to earn credits for 

exceeding the standards and to apply 

those credits to compliance obligations 

in years other than the model year in 

which it was earned. EISA extended the 

‘‘carry-forward’’ period to five model 

years, and left the ‘‘carry-back’’ period 

at three model years. Under Part 536, 

credit holders (including, but not 

limited to, manufacturers) will have 

credit accounts with NHTSA, and will 

be able to hold credits, apply them to 

compliance with CAFE standards, 

transfer them to another ‘‘compliance 

category’’ for application to compliance 

there, or trade them. A credit may also 

be cancelled before its expiry date, if the 

credit holder so chooses. Traded and 

transferred credits will be subject to an 

‘‘adjustment factor’’ to ensure total oil 

savings are preserved, as required by 

EISA. EISA also prohibits credits earned 

before MY 2011 from being transferred, 

so NHTSA has developed several 

regulatory restrictions on trading and 

transferring to facilitate Congress’ intent 

in this regard. 

11. Energy Policy and Conservation Act, 

as Amended by the Energy 

Independence and Security Act 

NHTSA’s statutory authority and 

obligations under the Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended by the Energy Independence 

and Security Act of 2007 (EISA), is 

discussed at length above in Section 

I.B.1. 

C. Development and Feasibility of the 

Proposed Standards 

1. How Was the Baseline Vehicle Fleet 

Developed? 

a. Why Do the Agencies Establish a 

Baseline Vehicle Fleet? 

In order to determine what levels of 

stringency are feasible in future model 

years, the agencies must project what 

vehicles will exist in those model years, 

and then evaluate what technologies can 

feasibly be applied to those vehicles in 

order to raise their fuel economy and 

lower their CO2 emissions. The agencies 

therefore establish a baseline vehicle 

fleet representing those vehicles, based 

on the best available information. Each 

agency then developed a separate 

reference fleet, accounting (via their 

respective models) for the effect that the 

MY 2011 CAFE standards have on the 

baseline fleet. This reference fleet is 

then used for comparisons of 

technologies’ incremental cost and 

effectiveness, as well as the other 

relevant comparisons in the rule. 

b. What Data Did the Agencies Use To 

Construct the Baseline, and How Did 

They Do So? 

As explained in the Technical 

Support Document (TSD) prepared 

jointly by NHTSA and EPA, both 

agencies used a baseline vehicle fleet 

constructed beginning with EPA fuel 

economy certification data for the 2008 

model year, the most recent for which 

final data is currently available from 

manufacturers. This data was used as 

the source for MY 2008 production 

volumes and some vehicle engineering 

characteristics, such fuel economy 

ratings, engine sizes, numbers of 

cylinders, and transmission types. 

Some information important for 

analyzing new CAFE standards is not 

contained in the EPA fuel economy 

certification data. EPA staff estimated 

vehicle wheelbase and track widths 

using data from Motortrend.com and 

Edmunds.com. This information is 

necessary for estimating vehicle 

footprint, which is required for the 

analysis of footprint-based standards. 

Considerable additional information 

regarding vehicle engineering 

characteristics is also important for 

estimating the potential to add new 

technologies in response to new CAFE 

standards. In general, such information 

helps to avoid ‘‘adding’’ technologies to 

vehicles that already have the same or 

a more advanced technology. Examples 

include valvetrain configuration (e.g., 

OHV, SOHC, DOHC), presence of 

cylinder deactivation, and fuel delivery 

(e.g., MPFI, SIDI). To the extent that 

such engineering characteristics were 

not available in certification data, EPA 

staff relied on data published by Ward’s 

Automotive, supplementing this with 

information from Internet sites such as 

Motortrend.com and Edmunds.com. 

NHTSA staff also added some more 

detailed engineering characteristics (e.g, 

type of variable valve timing) using data 

available from ALLDATA® Online. 

Combined with the certification data, all 

of this information yielded a MY 2008 

baseline vehicle fleet. 

After the baseline was created the 

next step was to project the sales 

volumes for 2011–2016 model years. 

EPA used projected car and truck 

volumes for this period from Energy 

Information Administration’s (EIA’s) 

2009 Annual Energy Outlook (AEO).454

However, AEO projects sales only at the 

car and truck level, not at the 

manufacturer and model-specific level, 

which are needed in order to estimate 

the effects new standards will have on 

individual manufacturers. Therefore, 

EPA purchased data from 

CSM-Worldwide and used their 

projections of the number of vehicles of 

each type predicted to be sold by 

manufacturers in 2011–2015.455 This 

provided the year-by-year percentages of 

cars and trucks sold by each 

manufacturer as well as the percentages 

of each vehicle segment. Although it 

was, therefore, necessary to assume the 

same manufacturer and segment shares 

in 2016 as in 2015, 2016 estimates from 

CSM should be available for the final 

rule. Using these percentages 

normalized to the AEO projected 

volumes then provided the 

manufacturer-specific market share and 

model-specific sales for model years 

2011–2016. 

The processes for constructing the MY 

2008 baseline vehicle fleet and 

subsequently adjusting sales volumes to 

construct the MY 2011–2016 baseline 

vehicle fleet are presented in detail in 

Chapter 1 of the draft Joint Technical 

Support Document accompanying 

today’s notice. 

c. How Is This Different From NHTSA’s 

Historical Approach and Why is This 

Approach Preferable? 

As discussed above in Section II.B.3, 

NHTSA has historically based its 

analysis of potential new CAFE 

standards on detailed product plans the 

agency has requested from 

manufacturers planning to produce light 

vehicles for sale in the United States. In 

contrast, the current market forecast is 

based primarily on information sources 

which are all either in the public 

domain or available commercially. 

There are advantages to this approach, 

namely transparency and the potential 

to reduce some errors due to 

manufacturers’ misunderstanding of 

NHTSA’s request for information. There 

are also disadvantages, namely that the 

current market forecast does not 

represent certain changes likely to occur 

in the future vehicle fleet as opposed to 

the MY 2008 vehicle fleet, such as 

vehicles being discontinued and newly 

introduced. On balance, however, the 

agencies have carefully considered these 

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advantages and disadvantages of using a 

market forecast derived from public and 

commercial sources rather than from 

manufacturers’ product plans, and 

conclude that the advantages outweigh 

the disadvantages. 

Nevertheless, the agencies are hopeful 

that manufacturers will, in the future, 

agree to make public their plans 

regarding model years that are very 

near, such as MY 2010 or perhaps MY 

2011, so that this information can be 

incorporated into an analysis that is 

available for public review and 

comment. In any event, because NHTSA 

and EPA are releasing market inputs 

used in the agencies’ respective 

analyses, manufacturers, suppliers, and 

other automobile industry observers and 

participants can submit comments on 

how these inputs should be revised, as 

can all other reviewers. More 

information on the advantages and 

disadvantages of the current approach 

and the agencies’ decision to follow it 

is available in Section II.B.3. 

d. How Is This Baseline Different 

Quantitatively From the Baseline That 

NHTSA Used for the MY 2011 (March 

2009) Final Rule? 

As discussed above, the current 

baseline was developed from adjusted 

MY 2008 compliance data and covers 

MYs 2011–2016, while the baseline that 

NHTSA used for the MY 2011 CAFE 

rule was developed from confidential 

manufacturer product plans for MY 

2011. This section describes, for the 

reader’s comparison, some of the 

differences between the current baseline 

and the MY 2011 CAFE rule baseline. 

Estimated vehicle sales: 

The sales forecasts, based on the 

Energy Information Administration’s 

(EIA’s) Annual Energy Outlook 2009 

(AEO 2009), used in the current baseline 

indicate that the total number of light 

vehicles expected to be sold during MYs 

2011–2015 is 77 million, or about 15.4 

million vehicles annually. NHTSA’s MY 

2011 final rule forecast, based on AEO 

2008, of the total number of light 

vehicles likely to be sold during MY 

2011 through MY 2015 was 83 million, 

or about 16.6 million vehicles annually. 

Light trucks are expected to make up 40 

percent of the MY 2011 baseline market 

forecast in the current baseline, 

compared to 42 percent of the baseline 

market forecast in the MY 2011 final 

rule. These changes in both the overall 

size of the light vehicle market and the 

relative market shares of passenger cars 

and light trucks reflect changes in the 

economic forecast underlying AEO, and 

changes in AEO’s forecast of future fuel 

prices. 

The figures below attempt to 

demonstrate graphically the difference 

between the variation of fuel economy 

with footprint for passenger cars under 

the current baseline and MY 2011 final 

rule, and for light trucks under the 

current baseline and MY 2011 final rule, 

respectively. Figures IV.C.1–1 and 1–2 

show the variation of fuel economy with 

footprint for passenger car models in the 

current baseline and in the MY 2011 

final rule, while Figures IV.C.1–3 and 1– 

4 show the variation of fuel economy 

with footprint for light truck models in 

the current baseline and in the MY 2011 

final rule. However, it is difficult to 

draw meaningful conclusions by 

comparing figures from the current 

baseline with those of the MY 2011 final 

rule. In the current baseline the number 

of make/models, and their associated 

fuel economy and footprint, are fixed 

and do not vary over time—this is why 

the number of data points in the current 

baseline figures appears smaller as 

compared to the number of data points 

in the MY 2011 final rule baseline. In 

contrast, the baseline fleet used in the 

MY 2011 final rule varies over time as 

vehicles (with different fuel economy 

and footprint characteristics) are added 

to and dropped from the product mix. 


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456As explained below, although NHTSA 

normalized each manufacturer’s overall market 

share to produce a realistically-sized fleet, the 

product mix for each manufacturer that submitted 

product plans was preserved. The agency has 

reviewed manufacturers’ product plans in detail, 

and understands that manufacturers do not sell the 

same mix of vehicles in every model year. 

457 Kia is not listed in the table for the MY 2011 

final rule because it was considered as part of 

Hyundai for purposes of that analysis (i.e., 

Hyundai-Kia). 

Estimated manufacturer market 

shares: 

NHTSA’s expectations regarding 

manufacturers’ market shares (the basis 

for which is discussed below) have also 

changed since the MY 2011 final rule. 

These changes are reflected below in 

Table IV.C.1–1, which shows the 

agency’s sales forecasts for passenger 

cars and light trucks under the current 

baseline and the MY 2011 final rule.456

TABLE IV.C.1–1—SALES FORECASTS

[Production for U.S. sale in MY 2011, thousand units] 

Manufacturer 

Current baseline MY 2011 final rule 

Passenger Nonpassenger Passenger Nonpassenger 

Chrysler ............................................................................................................................ 194 403 707 1,216 

Ford .................................................................................................................................. 1,230 944 1,615 1,144 

General Motors ................................................................................................................ 1,156 1,314 1,700 1,844 

Honda .............................................................................................................................. 996 571 1,250 470 

Hyundai ............................................................................................................................ 570 127 655 221 

Kia 457 ............................................................................................................................... 302 98 

Nissan .............................................................................................................................. 794 421 789 479 

Toyota .............................................................................................................................. 1,474 1,059 1,405 1,094 

Other Asian ...................................................................................................................... 631 212 441 191 

European ......................................................................................................................... 888 399 724 190 

Total .......................................................................................................................... 8,235 5,547 9,286 6,849 

Dual-fueled vehicles: Manufacturers have also, during and 

since MY 2008, indicated plans to sell 

more dual-fueled or flexible-fuel 

vehicles (FFVs) in MY 2011 than 


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458See 49 U.S.C. 32905 and 32906. 

459 49 U.S.C. 32902(h). 

460Again, Kia is not listed in the table for the MY 

2011 final rule because it was considered as part of 

Hyundai for purposes of that analysis (i.e., 

Hyundai-Kia). 

461Mazda is not listed in the table for the MY 

2011 final rule because it was considered as part of 

Ford for purposes of that analysis. 

462EPA did not include Ferrari in the current 

baseline based on the conclusion that including 

them would not impact the results, and therefore 

Ferrari is not listed in the table for the current 

baseline. 

463EPA did not include Maserati in the current 

baseline based on the conclusion that including 

them would not impact the results, and therefore 

Maserati is not listed in the table for the current 

baseline. 

indicated in the current baseline of 

adjusted MY 2008 compliance data. 

FFVs create a potential market for 

alternatives to petroleum-based gasoline 

and diesel fuel. For purposes of 

determining compliance with CAFE 

standards, the fuel economy of a FFV is, 

subject to limitations, adjusted upward 

to account for this potential.458

However, NHTSA is precluded from 

‘‘taking credit’’ for the compliance 

flexibility by accounting for 

manufacturers’ ability to earn and use 

credits in setting the level of the 

standards.’’459 Some manufacturers plan 

to produce a considerably greater share 

of FFVs than can earn full credit under 

EPCA. The projected average FFV share 

of the market in MY 2011 is 6 percent 

for the current baseline, versus 17 

percent for the MY 2011 final rule. 

Estimated achieved fuel economy 

levels: 

Because manufacturers’ product plans 

also reflect simultaneous changes in 

fleet mix and other vehicle 

characteristics, the relationship between 

increased technology utilization and 

increased fuel economy cannot be 

isolated with any certainty. To do so 

would require an apples-to-apples 

‘‘counterfactual’’ fleet of vehicles that 

are, except for technology and fuel 

economy, identical—for example, in 

terms of fleet mix and vehicle 

performance and utility. The current 

baseline market forecast shows 

industry-wide average fuel economy 

levels somewhat higher in MY 2011 

than shown in the MY 2011 final rule. 

Under the current baseline, average fuel 

economy for MY 2011 is 26.7 mpg, 

versus 26.5 mpg under the baseline in 

the MY 2011 final rule. 

These differences are shown in greater 

detail below in Table IV.C.1–2, which 

shows manufacturer-specific CAFE 

levels (not counting FFV credits that 

some manufacturers expect to earn) 

from the current baseline versus the MY 

2011 final rule baseline (from 

manufacturers’ 2008 product plans) for 

passenger cars and light trucks. Table 

IV.C.1–3 shows the combined averages 

of these planned CAFE levels in the 

respective baseline fleets. These tables 

demonstrate that, while the difference at 

the industry level is not so large, there 

are significant differences in CAFE at 

the manufacturer level between the 

current baseline and the MY 2011 final 

rule baseline. For example, while Honda 

and Hyundai are essentially the same 

under both, Toyota and Nissan show 

increased combined CAFE levels under 

the current baseline (by 2.4 and 0.8 mpg 

respectively), while Chrysler, Ford, and 

GM show decreased combined CAFE 

levels under the current baseline (by 

1.1, 1.8, and 1.0 mpg, respectively) 

relative to the MY 2011 final rule 

baseline. 

TABLE IV.C.1–2—CURRENT BASELINE PLANNED CAFE LEVELS IN MY 2011 VERSUS MY 2011 FINAL RULE PLANNED

CAFE LEVELS

[Passenger and nonpassenger] 

Manufacturer 

Current baseline CAFE 

levels 

MY 2011 planned CAFE 

levels 

Passenger Nonpassenger Passenger Nonpassenger 

BMW ................................................................................................................................ 27.2 23.1 27.0 23.0 

Chrysler ............................................................................................................................ 28.4 21.8 28.2 23.1 

Ford .................................................................................................................................. 28.2 20.5 29.3 22.5 

Subaru ............................................................................................................................. 29.1 25.6 28.6 28.6 

General Motors ................................................................................................................ 28.5 20.9 30.3 21.4 

Honda .............................................................................................................................. 33.8 25.3 32.3 25.2 

Hyundai ............................................................................................................................ 31.5 24.3 31.7 26.0 

Tata .................................................................................................................................. 24.6 19.5 24.7 23.9 

Kia 460 ............................................................................................................................... 31.7 23.7 .................... ....................

Mazda 461 ......................................................................................................................... 31.0 26.7 .................... ....................

Daimler ............................................................................................................................. 27.3 21.0 25.2 20.6 

Mitsubishi ......................................................................................................................... 30.0 23.8 29.3 26.7 

Nissan .............................................................................................................................. 31.9 21.5 31.3 21.4 

Porsche ............................................................................................................................ 26.2 20.0 27.2 20.0 

Ferrari 462 ......................................................................................................................... .................... .................... 16.2 ....................

Maserati 463 ...................................................................................................................... .................... .................... 18.2 ....................

Suzuki .............................................................................................................................. 30.5 23.3 28.7 24.0 

Toyota .............................................................................................................................. 35.4 24.8 33.2 22.7 

Volkswagen ...................................................................................................................... 28.6 20.2 28.5 20.1 

Total/Average ........................................................................................................... 30.8 22.3 30.4 22.6 

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460Again, Kia is not listed in the table for the MY 

2011 final rule because it was considered as part of 

Hyundai for purposes of that analysis (i.e., 

Hyundai-Kia). 461Mazda is not listed in the table for the MY 

2011 final rule because it was considered as part of 

Ford for purposes of that analysis. 

462EPA did not include Ferrari in the current 

baseline based on the conclusion that including 

them would not impact the results, and therefore 

Ferrari is not listed in the table for the current 

baseline. 463EPA did not include Maserati in the current 

baseline based on the conclusion that including 

them would not impact the results, and therefore 

Maserati is not listed in the table for the current 

baseline. 

TABLE IV.C.1–3—CURRENT BASELINE

PLANNED CAFE LEVELS IN MY 

2011 VERSUS MY 2011 FINAL RULE

PLANNED CAFE LEVELS (COMBINED) 

Manufacturer Current 

baseline 

MY 2011 

final rule 

baseline 

BMW ................. 25.6 26.0 

Chrysler ............ 23.6 24.7 

Ford .................. 24.2 26.0 

Subaru .............. 27.5 28.6 

General Motors 23.9 24.9 

Honda ............... 30.1 30.0 

Hyundai ............. 29.9 30.0 

Tata ................... 21.1 24.4 

Kia ..................... 29.3 ....................

Mazda ............... 30.2 ....................

Daimler ............. 24.7 23.6 

Mitsubishi .......... 29.1 29.1 

TABLE IV.C.1–3—CURRENT BASELINE

PLANNED CAFE LEVELS IN MY 

2011 VERSUS MY 2011 FINAL RULE

PLANNED CAFE LEVELS (COMBINED)—Continued 

Manufacturer Current 

baseline 

MY 2011 

final rule 

baseline 

Nissan ............... 27.3 26.6 

Porsche ............. 23.2 22.0 

Ferrari ............... .................... 16.2 

Maserati ............ .................... 18.2 

Suzuki ............... 28.6 27.8 

Toyota ............... 30.0 27.6 

Volkswagen ...... 26.2 27.1 

Total/Average ......... 26.7 26.5 

Tables IV.C.1–4 through 1–6 

summarize other differences between 

the current baseline and manufacturers’ 

product plans submitted to NHTSA in 

2008 for the MY 2011 final rule. These 

tables present average vehicle footprint, 

curb weight, and power-to-weight ratios 

for each manufacturer represented in 

the current baseline and of the seven 

largest manufacturers represented in the 

product plan data, and for the overall 

industry. The tables containing product 

plan data do not identify manufacturers 

by name, and do not present them in the 

same sequence. 

Tables IV.C.1–4a and 1–4b show that 

the current baseline reflects a slight 

decrease in overall average passenger 

vehicle size relative to the 

manufacturers’ plans. This is a 

reflection of the market segment shifts 

underlying the sales forecasts of the 

current baseline. 

TABLE IV.C.1–4a—CURRENT BASELINE AVERAGE MY 2011 VEHICLE FOOTPRINT

[Square Feet] 

Manufacturer PC LT Avg. 

BMW ........................................................................................................................................................ 45.4 49.7 46.9 

Chrysler .................................................................................................................................................... 46.4 54.0 51.5 

Ford .......................................................................................................................................................... 46.2 57.9 51.3 

Subaru ..................................................................................................................................................... 43.1 46.3 44.4 

General Motors ........................................................................................................................................ 46.2 59.6 53.4 

Honda ...................................................................................................................................................... 44.3 49.4 46.2 

Hyundai .................................................................................................................................................... 44.7 48.8 45.5 

Tata .......................................................................................................................................................... 50.3 48.0 48.8 

Kia ............................................................................................................................................................ 45.2 51.6 46.7 

Mazda ...................................................................................................................................................... 44.3 46.9 44.7 

Daimler ..................................................................................................................................................... 46.6 53.3 49.0 

Mitsubishi ................................................................................................................................................. 43.8 46.4 44.1 

Nissan ...................................................................................................................................................... 45.2 55.4 48.8 

Porsche .................................................................................................................................................... 38.6 51.0 43.6 

Suzuki ...................................................................................................................................................... 41.0 47.2 42.3 

Toyota ...................................................................................................................................................... 44.0 51.1 47.0 

Volkswagen .............................................................................................................................................. 43.4 52.6 45.4 

Industry Average .............................................................................................................................. 45.0 54.4 48.8 

TABLE IV.C.1–4b—MY 2011 FINAL RULE AVERAGE PLANNED MY 2011 VEHICLE FOOTPRINT

[Square Feet] 

PC LT Avg. 

Manufacturer 1 ......................................................................................................................................... 46.7 58.5 52.8 

Manufacturer 2 ......................................................................................................................................... 46.0 5.4 47.1 

Manufacturer 3 ......................................................................................................................................... 44.9 52.8 48.4 

Manufacturer 4 ......................................................................................................................................... 45.4 55.8 49.3 

Manufacturer 5 ......................................................................................................................................... 45.2 57.5 50.3 

Manufacturer 6 ......................................................................................................................................... 48.5 54.7 52.4 

Manufacturer 7 ......................................................................................................................................... 45.1 49.9 46.4 

Industry Average .............................................................................................................................. 45.6 55.1 49.7 

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Tables IV.C.1–5a and 1–5b show that 

the current baseline reflects a decrease 

in overall average vehicle weight 

relative to the manufacturers’ plans. As 

above, this is most likely a reflection of 

the market segment shifts underlying 

the sales forecasts of the current 

baseline. 

TABLE IV.C.1–5a—CURRENT BASELINE AVERAGE MY 2011 VEHICLE CURB WEIGHT

[Pounds] 

Manufacturer PC LT Avg. 

BMW ........................................................................................................................................................ 3,535 4,612 3,900 

Chrysler .................................................................................................................................................... 3,498 4,506 4,178 

Ford .......................................................................................................................................................... 3,516 4,596 3,985 

Subaru ..................................................................................................................................................... 3,155 3,801 3,435 

General Motors ........................................................................................................................................ 3,495 5,030 4,311 

Honda ...................................................................................................................................................... 3,021 4,064 3,401 

Hyundai .................................................................................................................................................... 3,135 4,080 3,307 

Tata .......................................................................................................................................................... 3,906 5,198 4,717 

Kia ............................................................................................................................................................ 3,034 4,057 3,284 

Mazda ...................................................................................................................................................... 3,236 3,744 3,316 

Daimler ..................................................................................................................................................... 3,450 5,123 4,045 

Mitsubishi ................................................................................................................................................. 3,238 3,851 3,312 

Nissan ...................................................................................................................................................... 3,242 4,535 3,690 

Porsche .................................................................................................................................................... 3,159 4,907 3,874 

Suzuki ...................................................................................................................................................... 2,870 3,843 3,080 

Toyota ...................................................................................................................................................... 3,112 4,186 3,561 

Volkswagen .............................................................................................................................................. 3,479 5,673 3,959 

Industry Average .............................................................................................................................. 3,280 4,538 3,786 

TABLE IV.C.1–5b—MY 2011 FINAL RULE AVERAGE PLANNED MY 2011 VEHICLE CURB WEIGHT

[Pounds] 

PC LT Avg. 

Manufacturer 1 ......................................................................................................................................... 3,197 4,329 3,692 

Manufacturer 2 ......................................................................................................................................... 3,691 4,754 4,363 

Manufacturer 3 ......................................................................................................................................... 3,293 4,038 3,481 

Manufacturer 4 ......................................................................................................................................... 3,254 4,191 3,510 

Manufacturer 5 ......................................................................................................................................... 3,547 5,188 4,401 

Manufacturer 6 ......................................................................................................................................... 3,314 4,641 3,815 

Manufacturer 7 ......................................................................................................................................... 3,345 4,599 3,865 

Industry Average .............................................................................................................................. 3,380 4,687 3,935 

Tables IV.C.1–6a and IV.C.1–6b show 

that the current baseline reflects a 

decrease in average performance relative 

to that of the manufacturers’ product 

plans. This decreased performance is 

most likely a reflection of the market 

segment shifts underlying the sales 

forecasts of the current baseline, that is, 

an assumed shift away from higher 

performance vehicles. 

TABLE IV.C.1–6a—CURRENT BASELINE AVERAGE MY 2011 VEHICLE POWER-TO-WEIGHT RATIO

[hp/lb] 

Manufacturer PC LT Avg. 

BMW ........................................................................................................................................................ 0.072 0.061 0.068 

Chrysler .................................................................................................................................................... 0.055 0.052 0.053 

Ford .......................................................................................................................................................... 0.058 0.053 0.056 

Subaru ..................................................................................................................................................... 0.062 0.057 0.059 

General Motors ........................................................................................................................................ 0.056 0.056 0.056 

Honda ...................................................................................................................................................... 0.057 0.054 0.056 

Hyundai .................................................................................................................................................... 0.051 0.055 0.052 

Tata .......................................................................................................................................................... 0.077 0.057 0.064 

Kia ............................................................................................................................................................ 0.050 0.056 0.051 

Mazda ...................................................................................................................................................... 0.051 0.053 0.052 

Daimler ..................................................................................................................................................... 0.066 0.056 0.062 

Mitsubishi ................................................................................................................................................. 0.053 0.056 0.053 

Nissan ...................................................................................................................................................... 0.058 0.057 0.058 

Porsche .................................................................................................................................................... 0.105 0.073 0.092 

Suzuki ...................................................................................................................................................... 0.049 0.062 0.052 

Toyota ...................................................................................................................................................... 0.052 0.062 0.056 

Volkswagen .............................................................................................................................................. 0.058 0.052 0.056 

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TABLE IV.C.1–6a—CURRENT BASELINE AVERAGE MY 2011 VEHICLE POWER-TO-WEIGHT RATIO—Continued 

[hp/lb] 

Manufacturer PC LT Avg. 

Industry Average .............................................................................................................................. 0.056 0.056 0.056 

TABLE IV.C.1–6b—MY 2011 FINAL RULE AVERAGE PLANNED MY 2011 VEHICLE POWER-TO-WEIGHT RATIO

[hp/lb] 

PC LT Avg. 

Manufacturer 1 ......................................................................................................................................... 0.065 0.058 0.060 

Manufacturer 2 ......................................................................................................................................... 0.061 0.065 0.062 

Manufacturer 3 ......................................................................................................................................... 0.053 0.059 0.056 

Manufacturer 4 ......................................................................................................................................... 0.060 0.058 0.059 

Manufacturer 5 ......................................................................................................................................... 0.060 0.057 0.059 

Manufacturer 6 ......................................................................................................................................... 0.063 0.065 0.065 

Manufacturer 7 ......................................................................................................................................... 0.053 0.055 0.053 

Industry Average .............................................................................................................................. 0.060 0.059 0.060 

As discussed above, the agencies’ 

market forecast for MY 2012–2016 holds 

the performance and other 

characteristics of individual vehicle 

models constant, adjusting the size and 

composition of the fleet from one model 

year to the next. 

Refresh and redesign schedules (for 

application in NHTSA’s modeling): 

Expected model years in which each 

vehicle model will be redesigned or 

freshened constitute another important 

aspect of NHTSA’s market forecast. As 

discussed in Section IV.C.2.c below, 

NHTSA’s analysis supporting the 

current rulemaking times the addition of 

nearly all technologies to coincide with 

either a vehicle redesign or a vehicle 

freshening. Product plans submitted to 

NHTSA preceding the MY 2011 final 

rule contained manufacturers’ estimates 

of vehicle redesign and freshening 

schedules and NHTSA’s estimates of the 

timing of the five-year redesign cycle 

and the two- to three-year refresh cycle 

were made with reference to those 

plans. In the current baseline, in 

contrast, estimates of the timing of the 

refresh and redesign cycles were based 

on historical dates—i.e., counting 

forward from known redesigns 

occurring in or prior to MY 2008 for 

each vehicle in the fleet and assigning 

refresh and redesign years accordingly. 

After applying these estimates, the 

shares of manufacturers’ passenger car 

and light truck estimated to be 

redesigned in MY 2011 were as 

summarized below for the current 

baseline and the MY 2011 final rule. 

Table IV.C.1–7 below shows the 

percentages of each manufacturer’s 

fleets expected to be redesigned in MY 

2011 for the current baseline. Table 

IV.C.1–8 presents corresponding 

estimates from the market forecast used 

by NHTSA in the analysis supporting 

the MY 2011 final rule (again, to protect 

confidential information, manufacturers 

are not identified by name). 

TABLE IV.C.1–7—CURRENT BASELINE, SHARE OF FLEET REDESIGNED IN MY 2011 

Manufacturer PC LT Avg. 

BMW ........................................................................................................................................................ 32% 40% 34% 

Chrysler .................................................................................................................................................... 0% 11% 8% 

Ford .......................................................................................................................................................... 12% 7% 10% 

Subaru ..................................................................................................................................................... 0% 51% 22% 

General Motors ........................................................................................................................................ 20% 2% 11% 

Honda ...................................................................................................................................................... 31% 33% 32% 

Hyundai .................................................................................................................................................... 20% 0% 16% 

Tata .......................................................................................................................................................... 28% 100% 73% 

Kia ............................................................................................................................................................ 35% 87% 48% 

Mazda ...................................................................................................................................................... 0% 0% 0% 

Daimler ..................................................................................................................................................... 0% 0% 0% 

Mitsubishi ................................................................................................................................................. 0% 56% 7% 

Nissan ...................................................................................................................................................... 4% 18% 9% 

Porsche .................................................................................................................................................... 0% 100% 41% 

Suzuki ...................................................................................................................................................... 8% 21% 11% 

Toyota ...................................................................................................................................................... 4% 24% 12% 

Volkswagen .............................................................................................................................................. 23% 0% 18% 

Industry Average .............................................................................................................................. 15% 17% 15% 

TABLE IV.C.1–8—MY 2011 FINAL RULE, SHARE OF FLEET REDESIGNED IN MY 2011 

PC 

(percent) 

LT 

(percent) 

Avg. 

(percent) 

Manufacturer 1 ......................................................................................................................................... 19 0 11 

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49654 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

464The abbreviations are used in this section both 

for brevity and for the reader’s reference if they 

wish to refer to the expanded decision trees and the 

model input and output sheets, which are available 

in Docket No. NHTSA–2009–0059 and on NHTSA’s 

Web site. 

465A date of 2011 means the technology can be 

applied in all model years, while a date of 2014 

means the technology can only be applied in model 

years 2014 through 2016. 

TABLE IV.C.1–8—MY 2011 FINAL RULE, SHARE OF FLEET REDESIGNED IN MY 2011—Continued 

PC 

(percent) 

LT 

(percent) 

Avg. 

(percent) 

Manufacturer 2 ......................................................................................................................................... 34 27 29 

Manufacturer 3 ......................................................................................................................................... 5 0 3 

Manufacturer 4 ......................................................................................................................................... 7 0 5 

Manufacturer 5 ......................................................................................................................................... 19 0 11 

Manufacturer 6 ......................................................................................................................................... 34 28 33 

Manufacturer 7 ......................................................................................................................................... 27 28 28 

Overall .............................................................................................................................................. 20 9 15 

We continue, therefore, to estimate 

that manufacturers’ redesigns will not 

be uniformly distributed across model 

years. This is in keeping with standard 

industry practices, and reflects what 

manufacturers actually do—NHTSA has 

observed that manufacturers in fact do 

redesign more vehicles in some years 

than in others. NHTSA staff have 

closely examined manufacturers’ 

planned redesign schedules, contacting 

some manufacturers for clarification of 

some plans, and confirmed that these 

plans remain unevenly distributed over 

time. For example, although Table 8 

shows that NHTSA expects Company 2 

to redesign 34 percent of its passenger 

car models in MY 2011, current 

information indicates that this company 

will then redesign only (a different) 10 

percent of its passenger cars in MY 

2012. Similarly, although Table 8 shows 

that NHTSA expects four of the largest 

seven light truck manufacturers to 

redesign virtually no light truck models 

in MY 2011, current information also 

indicates that these four manufacturers 

will redesign 21–49 percent of their 

light trucks in MY 2012. 

e. How Does Manufacturer Product Plan 

Data Factor Into the Baseline Used in 

This Proposal? 

As discussed in Section II.B.4 above, 

while the agencies received updated 

product plans in Spring 2009 in 

response to NHTSA’s request, the 

baseline data used in this proposal is 

not informed by these product plans, 

because they contain confidential 

business information the agencies are 

legally required to protect from 

disclosure, and because the agencies 

have concluded that, for purposes of 

this NPRM, a transparent baseline is 

preferable. 

However, as also discussed above, 

NHTSA has conducted a separate 

analysis that does make use of these 

product plans, contained in NHTSA’s 

PRIA. NHTSA performed this separate 

analysis for purposes of comparison 

only. NHTSA used the publicly 

available baseline for all analysis related 

to the development and evaluation of 

the proposed new CAFE standards. 

2. How Were the Technology Inputs 

Developed? 

As discussed above in Section II.E, for 

developing the technology inputs for the 

MY 2012–2016 CAFE and GHG 

standards, the agencies primarily began 

with the technology inputs used in the 

MY 2011 CAFE final rule and in the July 

2008 EPA ANPRM, and then reviewed, 

as requested by President Obama in his 

January 26 memorandum, the 

technology assumptions that NHTSA 

used in setting the MY 2011 standards 

and the comments that NHTSA received 

in response to its May 2008 Notice of 

Proposed Rulemaking. In addition, the 

agencies supplemented their review 

with updated information from more 

current literature, new product plans 

and from EPA certification testing. More 

detail is available regarding how the 

agencies developed the technology 

inputs for this NPRM above in Section 

II.E, in Chapter 3 of the Draft Joint TSD, 

and in Section V of NHTSA’s PRIA. 

a. What Technologies Does NHTSA 

Consider? 

Section II.E.1 above describes the 

fuel-saving technologies considered by 

the agencies that manufacturers could 

use to improve the fuel economy of their 

vehicles during MYs 2012–2016. The 

majority of the technologies described 

in this section are readily available, well 

known, and could be incorporated into 

vehicles once production decisions are 

made. As discussed, the technologies 

considered fall into five broad 

categories: Engine technologies, 

transmission technologies, vehicle 

technologies, electrification/accessory 

technologies, and hybrid technologies. 

Table IV.C.2–1 below lists all the 

technologies considered and provides 

the abbreviations used for them in the 

Volpe model,464 as well as their year of 

availability, which for purposes of 

NHTSA’s analysis means the first model 

year in the rulemaking period that the 

Volpe model is allowed to apply a 

technology to a manufacturer’s fleet.465

Year of availability recognizes that 

technologies must achieve a level of 

technical viability before they can be 

implemented in the Volpe model, and 

are thus a means of constraining 

technology use until such time as it is 

considered to be technologically 

feasible. For a more detailed description 

of each technology and their costs and 

effectiveness, we refer the reader to 

Chapter 3 of the joint TSD and Section 

V of NHTSA’s PRIA. 

TABLE IV.C.2–1—LIST OF TECHNOLOGIES IN NHTSA’S ANALYSIS

Technology Model abbreviation Year available 

Low Friction Lubricants ................................................................................................ LUB ........................................................... 2011 

Engine Friction Reduction ............................................................................................ EFR ........................................................... 2011 

VVT—Coupled Cam Phasing (CCP) on SOHC ........................................................... CCPS ........................................................ 2011 

Discrete Variable Valve Lift (DVVL) on SOHC ............................................................ DVVLS ...................................................... 2011 

Cylinder Deactivation on SOHC ................................................................................... DEACS ...................................................... 2011 

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466As an additional note, since combustion 

restart was unavailable in the MY 2011 time frame, 

the technology titled diesel following combustion 

restart (DSLC), which as the name indicates was 

only applied after combustion restart, was also 

unavailable. Accordingly, DSLC, which was 

described and discussed in the MY 2011 final rule, 

is now available in the current analysis. 

TABLE IV.C.2–1—LIST OF TECHNOLOGIES IN NHTSA’S ANALYSIS—Continued 

Technology Model abbreviation Year available 

VVT—Intake Cam Phasing (ICP) ................................................................................. ICP ............................................................ 2011 

VVT—Dual Cam Phasing (DCP) ................................................................................. DCP .......................................................... 2011 

Discrete Variable Valve Lift (DVVL) on DOHC ............................................................ DVVLD ...................................................... 2011 

Continuously Variable Valve Lift (CVVL) ..................................................................... CVVL ......................................................... 2011 

Cylinder Deactivation on DOHC .................................................................................. DEADD ..................................................... 2011 

Cylinder Deactivation on OHV ..................................................................................... DEACO ..................................................... 2011 

VVT—Coupled Cam Phasing (CCP) on OHV ............................................................. CCPO ........................................................ 2011 

Discrete Variable Valve Lift (DVVL) on OHV ............................................................... DVVLO ...................................................... 2011 

Conversion to DOHC with DCP ................................................................................... CDOHC ..................................................... 2011 

Stoichiometric Gasoline Direct Injection (GDI) ............................................................ SGDI ......................................................... 2011 

Combustion Restart ...................................................................................................... CBRST ...................................................... 2014 

Turbocharging and Downsizing .................................................................................... TRBDS ...................................................... 2011 

Exhaust Gas Recirculation (EGR) Boost ..................................................................... EGRB ........................................................ 2013 

Conversion to Diesel following CBRST ....................................................................... DSLC ........................................................ 2011 

Conversion to Diesel following TRBDS ....................................................................... DSLT ......................................................... 2011 

6-Speed Manual/Improved Internals ............................................................................ 6MAN ........................................................ 2011 

Improved Auto. Trans. Controls/Externals ................................................................... IATC .......................................................... 2011 

Continuously Variable Transmission ............................................................................ CVT ........................................................... 2011 

6/7/8-Speed Auto. Trans with Improved Internals ....................................................... NAUTO ..................................................... 2011 

Dual Clutch or Automated Manual Transmission ........................................................ DCTAM ..................................................... 2011 

Electric Power Steering ................................................................................................ EPS ........................................................... 2011 

Improved Accessories .................................................................................................. IACC ......................................................... 2011 

12V Micro-Hybrid .......................................................................................................... MHEV ........................................................ 2011 

Belt Integrated Starter Generator ................................................................................. BISG ......................................................... 2011 

Crank Integrated Starter Generator ............................................................................. CISG ......................................................... 2011 

Power Split Hybrid ........................................................................................................ PSHEV ...................................................... 2011 

2-Mode Hybrid .............................................................................................................. 2MHEV ...................................................... 2011 

Plug-in Hybrid ............................................................................................................... PHEV ........................................................ 2011 

Mass Reduction 1 (1.5%) ............................................................................................. MS1 ........................................................... 2011 

Mass Reduction 2 (3.5%–8.5%) .................................................................................. MS2 ........................................................... 2014 

Low Rolling Resistance Tires ....................................................................................... ROLL ......................................................... 2011 

Low Drag Brakes .......................................................................................................... LDB ........................................................... 2011 

Secondary Axle Disconnect 4WD ................................................................................ SAX ........................................................... 2011 

Aero Drag Reduction .................................................................................................... AERO ........................................................ 2011 

For purposes of this NPRM and as 

discussed in greater detail in the joint 

TSD, NHTSA and EPA carefully 

reviewed the list of technologies used in 

the agency’s analysis for the MY 2011 

final rule. Given the relatively short 

amount of time, from a technologydevelopment perspective, that has 

elapsed since March 2009 and this 

NPRM, NHTSA and EPA concluded that 

the considerable majority of 

technologies were correctly defined and 

continued to be appropriate for use in 

the analysis supporting the proposed 

standards. However, some refinements 

were made as discussed below. 

Specific to its modeling, NHTSA has 

revised eight of the technologies used in 

the current analysis from those 

considered in the MY 2011 final rule. 

Specifically, two technologies which 

were previously unavailable in the MY 

2011 time frame are now available (in 

the extended MY 2012–2016 period); 

one technology has been combined with 

another; one is newly introduced; three 

have revised names and/or definitions; 

and one has been deleted entirely. 

These changes are discussed further 

below, and NHTSA seeks comment on 

both these changes and the validation of 

the unchanged technology assumptions 

and estimates. 

Availability: In the MY 2011 final 

rule, two of the engine technologies— 

EGR boost and combustion restart— 

were unavailable because they were not 

considered technologically feasible until 

beyond that rulemaking time frame. 

While both were described and 

discussed in the MY 2011 final rule, 

neither was applied in the modeling 

process that supported those 

standards.466 In this analysis, EGR boost 

becomes available in MY 2013, and 

combustion restart in MY 2014, so both 

are being applied by the Volpe model, 

as needed, in this analysis. 

Merging of technologies: In the MY 

2011 final rule, higher voltage and 

improved alternator (HVIA) was used to 

represent changes in the design of the 

alternator, effectively optimizing it for 

higher efficiency (instead of for low cost 

as is typically done). For purposes of 

this analysis, the HVIA technology is no 

longer represented individually, but 

instead has been incorporated into a 

new-to-this-analysis technology called 

belt integrated starter generator, or 

BISG, as discussed next. 

New technology: In the MY 2011 final 

rule, two levels of mild hybrid 

technology were defined: A 12 volt 

micro-hybrid (MHEV) system, which 

utilized a belt-driven starter generator 

operating at 12 volts, and the more 

capable integrated starter generator 

technology (ISG) operating at higher 

voltages (100 volts). ISG envisioned 

both belt and crank configured starter 

generator systems. In the current 

proposal, and in an effort to offer a 

broader spectrum of more diversified 

mild hybrid technologies for the 

modeling process to choose from, 

NHTSA has added the BISG technology 

to the electrification decision tree, and 

redefined the ISG technology to be a 

crank mounted version of ISG, 

accordingly renamed to CISG. 

The BISG technology is a belt-coupled 

system like the 12-volt MHEV, but it 

operates at a higher voltage (e.g., 42 

volts) and thus can make use of 

regenerative braking, as well as 

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467Examples of such weight savings associated 

with new platform introductions have been 

provided in confidential product plan information 

provided by some manufacturers. 

468EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-Duty Vehicle Carbon Dioxide 

Emissions. EPA420–R–08–008, March 2008. 

potentially adding some limited motive 

power. Since BISG is a higher voltage 

system, optimization of the alternator 

occurs as part of the BISG technology 

application; hence the HVIA technology 

is no longer needed as a separate 

technology. Additionally, the CISG 

technology is now defined as a crank 

mounted system that operates at higher 

voltages (100 volts) than BISG, yet at 

lower voltage than the strong hybrids 

(300 volts) that make greater use of 

regenerative braking and provide greater 

motive power capability. Thus, three 

levels of mild hybrid technology exist in 

the current proposal, as opposed to the 

two levels offered in the MY 2011 final 

rule. 

Revisions and Deletions: The Mass 

Reduction/Material Substitution 

technologies have been revised for the 

current proposal. In the MY 2011 final 

rule, the Volpe model used three levels 

of material substitution technologies, 

referred to as MS1, MS2, and MS5, 

which were progressively applied to 

vehicles with curb weights in excess of 

5,000 pounds (2,268 kg) so as to reduce 

weight by up to a 5 percent maximum. 

In keeping with the agency’s desire to 

limit potential negative impacts to 

safety performance as a result of vehicle 

weight reduction, material substitution 

was not applied to vehicles with curb 

weights below 5,000 pounds. In 

contrast, in the current analysis, and in 

keeping with some manufacturers’ 

stated plans to decrease overall fleet 

weights regardless of subclass or curb 

weight, NHTSA now defines two Mass 

Reduction/Material Substitution 

technologies as follows: 

The Mass Reduction 1.5 percent 

(MS1) represents a 1.5 percent weight 

decrease through material substitution 

applicable to all vehicle subclasses, 

regardless of curb weight, that can be 

applied throughout the rulemaking 

period (and at refresh or redesign cycle 

times). This technology is similar to the 

MS1 technology used in the prior 

analysis in terms of the scale of the 

weight reduction (1 versus 1.5 percent), 

the methods and techniques 

manufacturers are anticipated to use in 

achieving the reductions, and when in 

the product cycle the model applies it 

(at refresh or redesign). 

A second technology, Mass Reduction 

3.5–8.5 percent (MS2), has also been 

defined. The MS2 technology is 

unavailable until MY 2014, and can 

only be applied by the Volpe model at 

a product redesign cycle. MS2 assumes 

a 3.5 to 8.5 percent weight reduction 

dependent on subclass (with the 

smaller/lighter subclasses receiving the 

lowest amounts of reduction, 3.5 

percent, and the larger/heavier vehicles 

the 8.5 percent) via the types of more 

intrusive and complex mass reduction 

associated with a complete vehicle 

redesign.467 MS2 is cumulative to MS1, 

as it is only applied after MS1, therefore 

the maximum weight reduction that can 

occur for smaller subclass vehicles is 5 

percent, while large cars, truck, and 

SUVs could experience 10 percent 

weight reductions. Restricting weight 

reduction on smaller vehicle to lower 

limits, and vice versa for larger vehicles, 

is intended to mitigate or minimize the 

potential safety consequences from the 

modeled weight reductions. Postponing 

the availability of the technology until 

MY 2014 recognizes the lead time 

required to implement platform 

redesigns that would be necessary for 

these levels of weight reduction and 

mass reduction. NHTSA seeks comment 

on the agency’s use of a two-step 

process, with the higher applications of 

MS in MYs 2014 and beyond, and the 

process of applying smaller mass 

reductions to lighter vehicles and higher 

reductions to heavier vehicles for the 

purpose of maintaining safety 

neutrality. 

The MS5 technology used in the MY 

2011 final rule is deleted. 

Additionally, for purposes of this 

NPRM, NHTSA has revised the 

applicability of the diesel technologies 

to restrict it to vehicles with engines of 

6 cylinders or more. NHTSA seeks 

comment on its decision not to apply 

diesel technologies to vehicles with 4- 

cylinder engines. NHTSA also seeks 

comment on the revised costing 

methodology for diesel technologies. 

Besides these, all other technologies 

considered in this analysis were also 

considered in the analysis for the MY 

2011 final rule, and although the costs 

and effectiveness estimates may have 

been revised as discussed further below, 

the other technologies remain otherwise 

unchanged for the purposes of this 

analysis in terms of their definition, 

functionality, and configuration. Thus, 

with this catalog of technologies as a 

starting point, NHTSA could then 

review and consider effectiveness and 

cost estimates for each technology, and, 

through the Volpe model analysis, how 

a manufacturer might feasibly apply 

these technologies to their MY 2012– 

2016 vehicles in order to achieve 

compliance with the proposed 

standards. 

b. How Did NHTSA Determine the Costs 

and Effectiveness of Each of These 

Technologies for Use in Its Modeling 

Analysis? 

Building on NHTSA’s estimates 

developed for the MY 2011 CAFE final 

rule and EPA’s Advanced Notice of 

Proposed Rulemaking, which relied on 

the 2008 Staff Technical Report,468 the 

agencies took a fresh look at technology 

cost and effectiveness values for 

purposes of the joint proposal under the 

National Program. This joint work is 

reflected in Chapter 3 of the Draft Joint 

TSD and in Section II of this preamble, 

which is summarized below. For more 

detailed information on the 

effectiveness and cost of fuel-saving 

technologies, please refer to Chapter 3 of 

the joint TSD and Section V of NHTSA’s 

PRIA. 

Generally speaking, while NHTSA 

and EPA found that much of the cost 

information used in NHTSA’s MY 2011 

final rule and EPA’s 2008 staff report 

was consistent to a great extent, the 

agencies, in reconsidering information 

from many sources, revised several 

component costs of several major 

technologies: turbocharging/ 

downsizing, mild and strong hybrids, 

diesels, SGDI, and Valve Train Lift 

Technologies. These are discussed at 

length in the joint TSD and in NHTSA’s 

PRIA. Additionally, most effectiveness 

estimates used in both the MY 2011 

final rule and the 2008 EPA staff report 

were determined to be accurate and 

were carried forward without significant 

change into this rulemaking. When 

NHTSA and EPA’s estimates for 

effectiveness diverged slightly due to 

differences in how agencies apply 

technologies to vehicles in their 

respective models, we report the ranges 

for the effectiveness values used in each 

model. For much more information on 

the costs and effectiveness of individual 

technologies, we refer the reader to 

Chapter 3 of the joint TSD and Section 

V of NHTSA’s PRIA. 

NHTSA notes that, in developing 

technology cost and effectiveness 

estimates, the agencies have made every 

effort to hold constant aspects of vehicle 

performance and utility typically valued 

by consumers, such as horsepower, 

carrying capacity, and towing and 

hauling capacity. For example, NHTSA 

includes in its analysis technology cost 

and effectiveness estimates that are 

specific to performance passenger cars 

(i.e., sports cars), as compared to nonperformance passenger cars. When 

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commenting on the agencies’ technology 

cost and effectiveness estimates, 

NHTSA urges commenters either to 

place any related comments within the 

same context, or explain any 

assumptions or estimates regarding 

increases or decreases in vehicle 

performance or utility. Additionally, 

NHTSA seeks comment on the extent to 

which commenters believe that the 

agencies have been successful in 

holding constant these elements of 

vehicle performance and utility in 

developing the technology cost and 

effectiveness estimates. 

Additionally, NHTSA notes that the 

technology costs included in this NPRM 

take into account only those associated 

with the initial build of the vehicle. The 

agencies seek comments on the 

additional lifetime costs, if any, 

associated with the implementation of 

advanced technologies, including 

warranty, maintenance and replacement 

costs, such as the replacement costs for 

low rolling resistance tires, low friction 

lubricants, and hybrid batteries, and 

maintenance costs for diesel 

aftertreatment components. 

While the agencies believe that the 

ideal estimates for the final rule would 

be based on tear down studies or BOM 

approach and subjected to a transparent 

peer-reviewed process, NHTSA and 

EPA are confident that the thorough 

review conducted, led to the best 

available conclusion regarding 

technology costs and effectiveness 

estimates for the current rulemaking and 

resulted in excellent consistency 

between the agencies’ respective 

analyses for developing the CAFE and 

CO2 standards. 

NHTSA seeks comment on the 

incremental cost and effectiveness 

estimates employed by the agency in the 

Volpe modeling analysis for this NPRM, 

examples of which are provided in table 

form below. These example Tables 

present effectiveness and cost estimates 

which are incremental in nature, 

according to the decision trees used in 

the Volpe modeling analysis. Thus, the 

effectiveness and cost estimates are not 

absolute to a single baseline vehicle, but 

are incremental to the technology that 

precedes it. 

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BILLING CODE 6560–50–C 

c. How Does NHTSA Use These 

Assumptions in Its Modeling Analysis? 

NHTSA’s analysis, using the Volpe 

model, relies on several inputs and data 

files to conduct the compliance 

analysis, as discussed further below and 

in Section V of the PRIA. For the 

purposes of applying technologies, the 

Volpe model primarily uses three data 

files, one that contains data on the 

vehicles expected to be manufactured in 

the model years covered by the 

rulemaking, one that identifies the 

appropriate stage within the vehicle’s 

life-cycle for the technology to be 

applied, and one that contains data/ 

parameters regarding the available 

technologies the model can apply. 

These inputs are discussed below. 

As discussed above, the Volpe model 

begins with an initial state of the 

domestic vehicle market, which in this 

case is the market for passenger cars and 

light trucks to be sold during the period 

covered by the proposed standards. The 


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469The market file for the MY 2011 final rule, 

which included data for MYs 2011–2015, had 5500 

records, or rows, about 5 times what we are using 

in this analysis of the MY 2008 certification data. 

However, both market files had the same number 

of fields, or rows. 

470Because CAFE standards apply to the average 

performance of each manufacturer’s fleet of cars 

and light trucks, the impact of potential standards 

on individual manufacturers cannot be credibly 

estimated without analysis of fleets manufacturers 

can be expected to produce in the future. 

Furthermore, because required CAFE levels under 

an attribute-based CAFE standard depend on 

manufacturers’ fleet composition, the stringency of 

an attribute-based standard cannot be predicted 

without performing analysis at this level of detail. 

471For example, applying material substitution 

through weight reduction, or even something as 

simple as low rolling-resistance tires, to a vehicle 

will likely require some level of validation and 

testing to ensure that the vehicle may continue to 

be certified as compliant with NHTSA’s Federal 

Motor Vehicle Safety Standards (FMVSS). Weight 

reduction might affect a vehicle’s crashworthiness; 

low rolling-resistance tires might change vehicle’s 

braking characteristics or how it performs in crash 

avoidance tests. 

vehicle market is defined on a modelby-model, engine-by-engine, and 

transmission-by-transmission basis, 

such that each defined vehicle model 

refers to a separately defined engine and 

a separately defined transmission. 

For the current proposal, which 

covers MYs 2012–2016, the light vehicle 

(passenger car and light truck) market 

forecast was developed jointly by 

NHTSA and EPA staff using MY 2008 

CAFE compliance data. The MY 2008 

compliance data includes about 1,100 

vehicle models, about 400 specific 

engines, and about 200 specific 

transmissions, which is a somewhat 

lower level of detail in the 

representation of the vehicle market 

than that used by NHTSA in recent 

CAFE analyses.469 However, within the 

limitations of information that can be 

made available to the public, it provides 

the foundation for a realistic analysis of 

manufacturer-specific costs and the 

analysis of attribute-based CAFE 

standards, and is much greater than the 

level of detail used by many other 

models and analyses relevant to light 

vehicle fuel economy.470

In addition to containing data about 

each vehicle, engine, and transmission, 

this file contains information for each 

technology under consideration as it 

pertains to the specific vehicle (whether 

the vehicle is equipped with it or not), 

the model year the vehicle is 

undergoing redesign, and information 

about the vehicle’s subclass for 

purposes of technology application. In 

essence, the model considers whether it 

is appropriate to apply a technology to 

a vehicle. 

Is a vehicle already equipped, or can 

it not be equipped, with a particular 

technology? 

The market forecast file provides 

NHTSA the ability to identify, on a 

technology by technology basis, which 

technologies may already be present 

(manufactured) on a particular vehicle, 

engine, or transmission, or which 

technologies are not applicable (due to 

technical considerations) to a particular 

vehicle, engine, or transmission. These 

identifications are made on a model-bymodel, engine-by-engine, and 

transmission-by-transmission basis. For 

example, if the market forecast file 

indicates that Manufacturer X’s Vehicle 

Y is manufactured with Technology Z, 

then for this vehicle Technology Z will 

be shown as used. Additionally, NHTSA 

has determined that some technologies 

are only suitable or unsuitable when 

certain vehicle, engine, or transmission 

conditions exist. For example, 

secondary axle disconnect is only 

suitable for 4WD vehicles, and cylinder 

deactivation is unsuitable for any engine 

with fewer than 6 cylinders, while CVTs 

can only be applied to unibody vehicles. 

Similarly, comments received to the 

2008 NPRM indicated that cylinder 

deactivation could not be applied to 

vehicles equipped with manual 

transmissions, due primarily to 

driveability and NVH concerns. The 

Volpe model employs ‘‘engineering 

constraints’’ to address issues like these, 

which are a programmatic method of 

controlling technology application that 

is independent of other constraints. 

Thus, the market forecast file would 

indicate that the technology in question 

should not be applied to the particular 

vehicle/engine/transmission (i.e., is 

unavailable). Since multiple vehicle 

models may be equipped with an engine 

or transmission, this may affect multiple 

models. In using this aspect of the 

market forecast file, NHTSA ensures the 

Volpe model only applies technologies 

in an appropriate manner, since before 

any application of a technology can 

occur, the model checks the market 

forecast to see if it is either already 

present or unavailable. 

NHTSA seeks comment on whether 

this approach is reasonable and ensures 

that technologies are applied in an 

appropriate manner. 

Is a vehicle being redesigned or 

refreshed? 

Manufacturers typically plan vehicle 

changes to coincide with certain stages 

of a vehicle’s life cycle that are 

appropriate for the change, or in this 

case the technology being applied. In 

the automobile industry there are two 

terms that describe when technology 

changes to vehicles occur: redesign and 

refresh (i.e., freshening). Vehicle 

redesign usually refers to significant 

changes to a vehicle’s appearance, 

shape, dimensions, and powertrain. 

Redesign is traditionally associated with 

the introduction of ‘‘new’’ vehicles into 

the market, often characterized as the 

‘‘next generation’’ of a vehicle, or a new 

platform. Vehicle refresh usually refers 

to less extensive vehicle modifications, 

such as minor changes to a vehicle’s 

appearance, a moderate upgrade to a 

powertrain system, or small changes to 

the vehicle’s feature or safety equipment 

content. Refresh is traditionally 

associated with mid-cycle cosmetic 

changes to a vehicle, within its current 

generation, to make it appear ‘‘fresh.’’ 

Vehicle refresh generally occurs no 

earlier than two years after a vehicle 

redesign, or at least two years before a 

scheduled redesign. For the majority of 

technologies discussed today, 

manufacturers will only be able to apply 

them at a refresh or redesign, because 

their application would be significant 

enough to involve some level of 

engineering, testing, and calibration 

work.471

Some technologies (e.g., those that 

require significant revision) are nearly 

always applied only when the vehicle is 

expected to be redesigned, like 

turbocharging and engine downsizing, 

or conversion to diesel or hybridization. 

Other technologies, like cylinder 

deactivation, electric power steering, 

and aerodynamic drag reduction can be 

applied either when the vehicle is 

expected to be refreshed or when it is 

expected to be redesigned, while a few 

others, like low friction lubricants, can 

be applied at any time, regardless of 

whether a refresh or redesign event is 

conducted. Accordingly, the model will 

only apply a technology at the particular 

point deemed suitable. These 

constraints are intended to produce 

results consistent with manufacturers’ 

technology application practices. For 

each technology under consideration, 

NHTSA stipulates whether it can be 

applied any time, at refresh/redesign, or 

only at redesign. The data forms another 

input to the Volpe model. NHTSA 

develops redesign and refresh schedules 

for each of a manufacturer’s vehicles 

included in the analysis, essentially 

based on the last known redesign year 

for each vehicle and projected forward 

in a 5-year redesign and a 2–3 year 

refresh cycle, and this data is also stored 

in the market forecast file. We note that 

this approach is different than NHTSA 

has employed previously for 

determining redesign and refresh 

schedules, where NHTSA included the 

redesign and refresh dates in the market 

forecast file as provided by 

manufacturers in confidential product 

plans. The new approach is necessary 

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472The NAS classes included subcompact cars, 

compact cars, midsize cars, large cars, small SUVs, 

midsize SUVs, large SUVs, small pickups, large 

pickups, and minivans. 

given the nature of the new baseline 

which as a single year of data does not 

contain its own refresh and redesign 

cycle cues for future model years, and 

to ensure the complete transparency of 

the agency’s analysis. Vehicle redesign/ 

refresh assumptions are discussed in 

more detail in Section V of the PRIA 

and in Chapter 3 of the TSD. NHTSA 

seeks comment on its application for 

this proposal of refresh and redesign 

schedules to manufacturers’ vehicles 

counting from the last known redesign 

in or prior to the baseline fleet, as 

compared to its approach in the MY 

2011 final rule. 

Once the model has concluded that a 

technology should be applied to a 

vehicle, the model must evaluate which 

technology should be applied. This will 

depend on the vehicle subclass to which 

the vehicle is assigned; what 

technologies have already been applied 

to the vehicle (i.e., where in the 

‘‘decision tree’’ the vehicle is); when the 

technology is first available (i.e., year of 

availability); whether the technology is 

still available (i.e., ‘‘phase-in caps’’); and 

the costs and effectiveness of the 

technologies being considered. 

Technology costs may be reduced, in 

turn, by learning effects, while 

technology effectiveness may be 

increased or reduced by synergistic 

effects between technologies. In the 

technology input file, NHTSA has 

developed a separate set of technology 

data variables for each of the twelve 

vehicle subclasses. Each set of variables 

is referred to as an ‘‘input sheet,’’ so for 

example, the subcompact input sheet 

holds the technology data that is 

appropriate for the subcompact 

subclass. Each input sheet contains a 

list of technologies available for 

members of the particular vehicle 

subclass. The following items are 

provided for each technology: the name 

of the technology, its abbreviation, the 

decision tree with which it is 

associated, the (first) year in which it is 

available, the upper and lower cost and 

effectiveness (fuel consumption 

reduction) estimates, the learning type 

and rate, the cost basis, its applicability, 

and the phase-in values. 

To which vehicle subclass is the 

vehicle assigned? 

As part of its consideration of 

technological feasibility, the agency 

evaluates whether each technology 

could be implemented on all types and 

sizes of vehicles, and whether some 

differentiation is necessary in applying 

certain technologies to certain types and 

sizes of vehicles, and with respect to the 

cost incurred and fuel consumption and 

CO2 emissions reduction achieved when 

doing so. The 2002 NAS Report 

differentiated technology application 

using ten vehicle ‘‘classes’’ (4 cars 

classes and 6 truck classes),472 but did 

not determine how cost and 

effectiveness values differ from class to 

class. NAS’s purpose in separating 

vehicles into these classes was to create 

groups of ‘‘like’’ vehicles, i.e., vehicles 

similar in size, powertrain 

configuration, weight, and consumer 

use, and for which similar technologies 

are applicable. NHTSA similarly 

differentiates vehicles by ‘‘subclass’’ for 

the purpose of applying technologies to 

vehicles and assessing their incremental 

costs and effectiveness. NHTSA assigns 

each vehicle manufactured in the 

rulemaking period to one of 12 

subclasses: for passenger cars, 

Subcompact, Subcompact Performance, 

Compact, Compact Performance, 

Midsize, Midsize Performance, Large, 

and Large Performance; and for light 

trucks, Small SUV/Pickup/Van, Midsize 

SUV/Pickup/Van, Large SUV/Pickup/ 

Van, and Minivan. 

For this NPRM as for the MY 2011 

final rule, NHTSA divides the vehicle 

fleet into subclasses based on model 

inputs, and applies subclass-specific 

estimates, also from model inputs, of the 

applicability, cost, and effectiveness of 

each fuel-saving technology. Therefore, 

the model’s estimates of the cost to 

improve the fuel economy of each 

vehicle model depend upon the 

subclass to which the vehicle model is 

assigned. 

Each vehicle’s subclass is stored in 

the market forecast file. When 

conducting a compliance analysis, if the 

Volpe model seeks to apply technology 

to a particular vehicle, it checks the 

market forecast to see if the technology 

is available and if the refresh/redesign 

criteria are met. If these conditions are 

satisfied, the model determines the 

vehicle’s subclass from the market data 

file, which it then uses to reference 

another input called the technology 

input file. NHTSA reviewed its 

methodology for dividing vehicles into 

subclasses for purposes of technology 

application that it used in the MY 2011 

final rule, and concluded that the same 

methodology would be appropriate for 

this NPRM for MYs 2012–2016, but the 

agency invites comments on the method 

of assigning vehicles to subclasses for 

the purposes of technology application 

in the CAFE model, and on the issue of 

technology-application subclasses 

generally. The subclasses and the 

methodology for dividing vehicles 

among them are discussed in more 

detail in Section V of the PRIA and in 

Chapter 3 of the TSD. 

For the reader’s reference, the 

subclasses and example vehicles from 

the market forecast file are provided in 

the tables below. 

PASSENGER CAR SUBCLASSES EXAMPLE (MY 2008) VEHICLES

Class Example vehicles 

Subcompact .............................................................................................. Chevy Aveo, Honda Civic. 

Subcompact Performance ........................................................................ Mazda Miata, Saturn Sky. 

Compact ................................................................................................... Chevy Cobalt, Nissan Sentra and Altima. 

Compact Performance .............................................................................. Audi S4 Quattro, Mazda RX8. 

Midsize ...................................................................................................... Chevy Camaro (V6), Toyota Camry, Honda Accord, Hyundai Azera. 

Midsize Performance ................................................................................ Chevy Corvette, Ford Mustang (V8), Nissan G37 Coupe. 

Large ......................................................................................................... Audi A8, Cadillac CTS and DTS. 

Large Performance ................................................................................... Bentley Arnage, Daimler CL600. 

LIGHT TRUCK SUBCLASSES EXAMPLE (MY 2008) VEHICLES

Class Example vehicles 

Minivans .................................................................................................... Dodge Caravan, Toyota Sienna. 

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LIGHT TRUCK SUBCLASSES EXAMPLE (MY 2008) VEHICLES—Continued 

Class Example vehicles 

Small SUV/Pickup/Van ............................................................................. Ford Escape & Ranger, Nissan Rogue. 

Midsize SUV/Pickup/Van .......................................................................... Chevy Colorado, Jeep Wrangler 4-door, Volvo XC70, Toyota Tacoma. 

Large SUV/Pickup/Van ............................................................................. Chevy Silverado, Ford Econoline, Toyota Sequoia. 

What technologies have already been 

applied to the vehicle (i.e., where in the 

‘‘decision trees’’ is it)? 

NHTSA’s methodology for technology 

application analysis developed out of 

the approach taken by NAS in the 2002 

Report, and evaluates the application of 

individual technologies and their 

incremental costs and effectiveness. 

Incremental costs and effectiveness of 

individual technologies are relative to 

the prior technology state, which means 

that it is crucial to understand what 

technologies are already present on a 

vehicle in order to determine correct 

incremental cost and effectiveness 

values. The benefit of the incremental 

approach is transparency in accounting, 

insofar as when individual technologies 

are added incrementally to individual 

vehicles, it is clear and easy to 

determine how costs and effectiveness 

adds up as technology levels increase. 

To keep track of incremental costs 

and effectiveness and to know which 

technology to apply and in which order, 

the Volpe model’s architecture uses a 

logical sequence, which NHTSA refers 

to as ‘‘decision trees,’’ for applying fuel 

economy-improving technologies to 

individual vehicles. In the MY 2011 

final rule, NHTSA worked with Ricardo 

to modify previously-employed decision 

trees in order to allow for a much more 

accurate application of technologies to 

vehicles. For purposes of the NPRM, 

NHTSA reviewed the technology 

sequencing architecture and updated, as 

appropriate, the decision trees used in 

the analysis reported in the final rule for 

MY 2011. 

In general, and as described in great 

detail in the MY 2011 final rule and in 

Section V of the current PRIA, each 

technology is assigned to one of the five 

following categories based on the 

system it affects or impacts: engine, 

transmission, electrification/accessory, 

hybrid or vehicle. Each of these 

categories has its own decision tree that 

the Volpe model uses to apply 

technologies sequentially during the 

compliance analysis. The decision trees 

were designed and configured to allow 

the Volpe model to apply technologies 

in a cost-effective, logical order that also 

considers ease of implementation. For 

example, software or control logic 

changes are implemented before 

replacing a component or system with a 

completely redesigned one, which is 

typically a much more expensive 

option. In some cases, and as 

appropriate, the model may combine the 

sequential technologies shown on a 

decision tree and apply them 

simultaneously, effectively developing 

dynamic technology packages on an asneeded basis. For example, if 

compliance demands indicate, the 

model may elect to apply LUB, EFR, and 

ICP on a dual overhead cam engine, if 

they are not already present, in one 

single step. An example simplified 

decision tree for engine technologies is 

provided below; the other simplified 

decision trees may be found in Chapter 

3 of the joint TSD and in the PRIA. 

Expanded decision trees are available in 

the docket for this NPRM. 

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Each technology within the decision 

trees has an incremental cost and an 

incremental effectiveness estimate 

associated with it, and estimates are 

specific to a particular vehicle subclass 

(see the tables in Section V of the PRIA). 

Each technology’s incremental estimate 

takes into account its position in the 

decision tree path. If a technology is 

located further down the decision tree, 

the estimates for the costs and 

effectiveness values attributed to that 

technology are influenced by the 

incremental estimates of costs and 

effectiveness values for prior technology 

applications. In essence, this approach 

accounts for ‘‘in-path’’ effectiveness 

synergies, as well as cost effects that 

occur between the technologies in the 

same path. When comparing cost and 

effectiveness estimates from various 

sources and those provided by 

commenters in the previous CAFE 


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473See, e.g., 74 FR 14238–46 (Mar. 30, 2009) for 

a full discussion of the decision trees in NHTSA’s 

MY 2011 final rule, and Docket No. NHTSA–2009– 

0062–0003.1 for an expanded decision tree used in 

that rulemaking. 

474While phase-in caps are expressed as specific 

percentages of a manufacturer’s fleet to which a 

technology may be applied in a given model year, 

phase-in caps cannot always be applied as precise 

limits, and the Volpe model in fact allows 

‘‘override’’ of a cap in certain circumstances. When 

only a small portion of a phase-in cap limit 

remains, or when the cap is set to a very low value, 

or when a manufacturer has a very limited product 

line, the cap might prevent the technology from 

being applied at all since any application would 

cause the cap to be exceeded. Therefore, the Volpe 

model evaluates and enforces each phase-in cap 

constraint after it has been exceeded by the 

application of the technology (as opposed to 

evaluating it before application), which can result 

in the described overriding of the cap. 

475 74 FR 14268–14271 (Mar. 30, 2009). 

476See 74 FR 14270 (Mar 30, 2009) for further 

discussion and examples. 

rulemakings, it is important that the 

estimates evaluated are analyzed in the 

proper context, especially as concerns 

their likely position in the decision trees 

and other technologies that may be 

present or missing. Not all estimates 

available in the public domain or 

offered for the agencies’ consideration 

during the comment period can be 

evaluated in an ‘‘apples-to-apples’’ 

comparison with those used by the 

Volpe model, since in some cases the 

order of application, or included 

technology content, is inconsistent with 

that assumed in the decision tree. 

The MY 2011 final rule discussed in 

detail the revisions and improvements 

made to the Volpe model and decision 

trees during that rulemaking process, 

including the improved handling and 

accuracy of valve train technology 

application and the development and 

implementation of a method for 

accounting path-dependent correction 

factors in order to ensure that 

technologies are evaluated within the 

proper context. The reader should 

consult the MY 2011 final rule 

documents for further information on 

these modeling techniques, all of which 

continued to be utilized in developing 

this proposal.473 To the extent that the 

decision trees have changed for 

purposes of this NPRM, it was due not 

to revisions in the order of technology 

application, but rather to redefinitions 

of technologies or addition or 

subtraction of technologies. NHTSA 

seeks comment on the decision trees 

described here and in the PRIA. 

Is the next technology available in 

this model year? 

As discussed above, the majority of 

technologies considered are available on 

vehicles today, and thus will be 

available for application in the 

rulemaking time frame. Some 

technologies, however, will not become 

available for purposes of NHTSA’s 

analysis until later in the rulemaking 

time frame. When the model is 

considering whether to add a 

technology to a vehicle, it checks its 

year of availability—if the technology is 

available, it may be added; if it is not 

available, the model will consider 

whether to switch to a different decision 

tree to look for another technology, or 

will skip to the next vehicle in a 

manufacturer’s fleet. The year of 

availability for each technology is 

provided above in Table IV.C.2–1. 

Has the technology reached the 

phase-in cap for this model year? 

Besides the refresh/redesign cycles 

used in the Volpe model, which 

constrain the rate of technology 

application at the vehicle level so as to 

ensure a period of stability following 

any modeled technology applications, 

the other constraint on technology 

application employed in NHTSA’s 

analysis is ‘‘phase-in caps.’’ Unlike 

vehicle-level cycle settings, phase-in 

caps constrain technology application at 

the vehicle manufacturer level.474 They 

are intended to reflect a manufacturer’s 

overall resource capacity available for 

implementing new technologies (such 

as engineering and development 

personnel and financial resources), 

thereby ensuring that resource capacity 

is accounted for in the modeling 

process. At a high level, phase-in caps 

and refresh/redesign cycles work in 

conjunction with one another to avoid 

the modeling process out-pacing an 

OEM’s limited pool of available 

resources during the rulemaking time 

frame, especially in years where many 

models may be scheduled for refresh or 

redesign. This helps to ensure 

technological feasibility and economic 

practicability in determining the 

stringency of the standards. 

NHTSA has been developing the 

concept of phase-in caps over the course 

of the last several CAFE rulemakings, as 

discussed in greater detail in the MY 

2011 final rule,475 and in Section V of 

the PRIA and Chapter 3 of the joint TSD. 

The MY 2011 final rule employed nonlinear phase-in caps (that is, caps that 

varied from year to year) that were 

designed to respond to comments 

raising lead-time concerns in reference 

to the agency’s proposed MY 2011–2015 

standards, but because the final rule 

covered only one model year, many 

phase-in caps for that model year were 

lower than had originally been 

proposed. NHTSA emphasized that the 

MY 2011 phase-in caps were based on 

assumptions for the full five year period 

of the proposal (2011–2015), and stated 

that it would reconsider the phase-in 

settings for all years beyond 2011 in a 

future rulemaking analysis. 

For purposes of the current proposal 

for MYs 2012–2016, as in the MY 2011 

final rule, NHTSA combines phase-in 

caps for some groups of similar 

technologies, such as valve phasing 

technologies that are applicable to 

different forms of engine design (SOHC, 

DOHC, OHV), since they are very 

similar from an engineering and 

implementation standpoint. When the 

phase-in caps for two technologies are 

combined, the maximum total 

application of either or both to any 

manufacturer’s fleet is limited to the 

value of the cap.476 In contrast to the 

phase-in caps used in the MY 2011 final 

rule, NHTSA has increased the phase-in 

caps for most of the technologies, as 

discussed below. 

In developing phase-in cap values for 

purposes of the current proposal, 

NHTSA initially considered the fact that 

many of the technologies commonly 

applied by the model, those placed near 

the top of the decision trees, such as low 

friction lubes, valve phasing, electric 

power steering, improved automatic 

transmission controls, and others, have 

been commonly available to 

manufacturers for several years now. 

Many technologies, in fact, precede the 

2002 NAS Report, which estimated that 

such technologies would take 4 to 8 

years to penetrate the fleet. Since the 

current proposal would take effect in 

MY 2012, nearly 10 years beyond the 

NAS report, and extends to MY 2016, 

and in the interest of harmonization 

with EPA’s proposal, NHTSA 

tentatively determined that higher 

phase-in caps were likely justified. 

Additionally, NHTSA considered the 

fact that manufacturers, as part of the 

agreements supporting the National 

Program, appear to be anticipating 

higher technology application rates than 

those used in the MY 2011 final rule. 

This also supported higher phase-in 

caps for purposes of the proposal. 

Thus, while phase-in caps for the MY 

2011 final rule reached a maximum of 

50 percent for a couple of technologies 

and generally fell in the range between 

0 and 20 percent, phase-in caps for this 

NPRM for the majority of technologies 

are set to reach 85 or 100 percent by MY 

2016, although more advanced 

technologies like diesels and strong 

hybrids reach only 15 percent by MY 

2016. 

Theoretically, significantly higher 

phase-in caps, such as those used in the 

current proposal as compared to those 

used in the MY 2011 final rule, should 

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477The modeling output for the analysis 

underlying these proposed standards is available on 

NHTSA’s Web site. 

478The baseline fleet sets the starting point, from 

a technology point of view, for where the model 

begins the technology application process, so 

changes have a direct impact on the net application 

of technology. 

479NHTSA will conduct a sensitivity analysis on 

the volume-based learning value of 20 percent for 

the final rule. 

result in higher levels of technology 

penetration in the modeling results. 

Reviewing the modeling output does 

not, however, indicate unreasonable 

levels of technology penetration for the 

proposed standards.477 NHTSA believes 

that this is due to the interaction of the 

various changes in methodology for the 

current proposal—changes to phase-in 

caps are but one of a number of 

revisions to the Volpe model and its 

inputs that could potentially impact the 

rate at which technologies are applied 

in this proposal as compared to prior 

rulemakings. Other revisions that could 

impact application rates include the use 

of transparent CAFE certification data in 

baseline fleet formulation and the use of 

other data for projecting it forward,478 or 

the use of a multi-year planning 

programming technique to apply 

technology retroactively to earlier-MY 

vehicles, both of which may have a 

direct impact on the modeling process. 

Conversely the model and inputs 

remain unchanged in other areas that 

also could impact technology 

application, such as in the refresh/ 

redesign cycle settings, estimates used 

for the technologies, both of which 

remain largely unchanged from the MY 

2011 final rule. These changes together 

make it difficult to predict how phasein caps should be expected to function 

in the new modeling process. 

Thus, after reviewing the output files, 

NHTSA tentatively concludes that the 

higher phase-in caps, and the resulting 

technology application rates produced 

by the Volpe model, at both the industry 

and manufacturer level, are appropriate 

for this proposal, achieving a suitable 

level of stringency without requiring 

unrealistic or unachievable penetration 

rates. However, the agency will consider 

comments received on this approach in 

determining what phase-in caps to 

employ in the analysis for the final rule, 

and may change the caps in response to 

comments and/or further analysis. One 

additional question the agency has, 

which may be primarily academic at 

this point, is what impact lower phasein caps, such as those used in earlier 

rulemakings, would have on compliance 

costs (and whether they might counterintuitively increase costs by forcing 

more expensive technologies). NHTSA 

seeks comment on the revised phase-in 

caps as compared to the MY 2011 final 

rule, and particularly on whether, 

combined with the refresh and redesign 

assumptions, they help to ensure 

sufficient lead time for manufacturers to 

make the technology changes required 

by the proposed standards. Readers are 

invited to review and assess the phasein caps listed and described more fully 

in Section V of the PRIA, along with the 

application and penetration rates found 

in the Volpe model’s output files, and 

after making their own assessment, 

provide comment and recommendations 

to the agency as appropriate. 

Is the technology less expensive due 

to learning effects? 

Historically, NHTSA did not 

explicitly account for the cost 

reductions a manufacturer might realize 

through learning achieved from 

experience in actually applying a 

technology. Since working with EPA to 

develop the 2008 NPRM for MYs 2011– 

2015, and with Ricardo to refine the 

concept for the March 2009 MY 2011 

final rule, NHTSA has accounted for 

these cost reductions through two kinds 

of mutually exclusive learning, 

‘‘volume-based’’ and ‘‘time-based’’ 

which it continues to use in this 

proposal, as discussed below. 

In the 2008 NPRM, NHTSA applied 

learning factors to technology costs for 

the first time. These learning factors 

were developed using the parameters of 

learning threshold, learning rate, and 

the initial cost, and were based on the 

‘‘experience curve’’ concept which 

describes reductions in production costs 

as a function of accumulated production 

volume. The typical curve shows a 

relatively steep initial decline in cost 

which flattens out to a gentle 

downwardly sloping line as the volume 

increase to large values. In the NPRM, 

NHTSA applied a learning rate discount 

of 20 percent for each successive 

doubling of production volume (on a 

per manufacturer basis), and a learning 

threshold of 25,000 units was assumed 

(thus a technology was viewed as being 

fully learned out at 100,000 units). The 

factor was only applied to certain 

technologies that were considered 

emerging or newly implemented on the 

basis that significant cost improvements 

would be achieved as economies of 

scale were realized (i.e., the 

technologies were on the steep part of 

the curve). 

In the MY 2011 final rule, NHTSA 

continued to use this learning factor, 

referring to it as volume-based learning 

since the cost reductions were 

determined by production volume 

increases, and again only applied it to 

emerging technologies. However, and in 

response to comments, NHTSA revised 

its assumptions on learning threshold, 

basing them instead on an industrywide production basis, and increasing 

the threshold to 300,000 units annually. 

Commenters to the 2008 NPRM also 

described another type of learning factor 

which NHTSA decided to adopt and 

implement in the MY 2011 final rule. 

Commenters described a relatively small 

negotiated cost decrease that occurred 

on an annual basis through contractual 

agreements with first tier component 

and systems suppliers for readily 

available, high volume technologies 

commonly in use by multiple OEMs. 

Based on the same experience curve 

principal, however at production 

volumes that were on the flatter part of 

the curve (and thus the types of volumes 

that represent annual industry 

volumes), NHTSA adopted this type 

learning and referred to it as time-based 

learning. An annual cost reduction of 3 

percent in the second and each 

subsequent year, which was consistent 

with estimates from commenters and 

supported by work Ricardo conducted 

for NHTSA, was used in the final rule. 

In developing this proposal, NHTSA 

and EPA have reviewed both types of 

learning factors, and the thresholds 

(300,000) and reduction rates (20 

percent for volume,479 3 percent for 

time-based) they rely on, and as 

implemented in the MY 2011 final rule, 

and agreed that both factors continue to 

be accurate and appropriate; each 

agency has thus implemented time- and 

volume-based learning in their analyses. 

Noting that only one type of learning 

can be applied to any single technology, 

if any learning is applied at all, the 

agencies reviewed each to determine 

which learning factor was appropriate. 

Volume-based learning is applied to the 

higher complexity hybrid technologies, 

while no learning is applied to 

technologies likely to be affected by 

commodity costs (LUB, ROLL) or that 

have loosely-defined BOMs (EFR, LDB), 

as was the case in the MY 2011 final 

rule. Chapter 3 of the joint TSD shows 

the specific learning factors that NHTSA 

has applied in this analysis for each 

technology, and discusses learning 

factors and each agencies’ use of them 

further. NHTSA seeks comment on its 

use of learning factors, including the 

types, the thresholds, and the reduction 

rates proposed, and particularly on the 

revisions to the learning (time- and 

volume-based) logic as compared to the 

MY 2011 final rule. 

Is the technology more or less 

effective due to synergistic effects? 

When two or more technologies are 

added to a particular vehicle model to 

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480More specifically, the products of the 

differences between one and the technologyspecific levels of effectiveness in reducing fuel 

consumption. For example, not accounting for 

interactions, if technologies A and B are estimated 

to reduce fuel consumption by 10% (i.e., 0.1) and 

20% (i.e., 0.2) respectively, the ‘‘product of the 

individual effectiveness values’’ would be 1–0.1 

times 1–0.2, or 0.9 times 0.8, which equals 0.72, 

corresponding to a combined effectiveness of 28% 

rather than the 30% obtained by adding 10% to 

20%. The ‘‘synergy factors’’ discussed in this 

section further adjust these multiplicatively 

combined effectiveness values. 

481EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-duty Vehicle Carbon Dioxide 

Emissions; EPA420–R–08–008, March 2008. 

482U.S. Department of Energy, Energy 

Information Administration, Transportation Sector 

Module of the National Energy Modeling System: 

Model Documentation 2007, May 2007, 

Washington, DC, DOE/EIAM070(2007), at 29–30. 

Available at http://tonto.eia.doe.gov/ftproot/ 

modeldoc/m070(2007).pdf (last accessed Jul. 6, 

2009). 

improve its fuel efficiency and reduce 

CO2 emissions, the resultant fuel 

consumption reduction may sometimes 

be higher or lower than the product of 

the individual effectiveness values for 

those items.480 This may occur because 

one or more technologies applied to the 

same vehicle partially address the same 

source (or sources) of engine, drivetrain 

or vehicle losses. Alternately, this effect 

may be seen when one technology shifts 

the engine operating points, and 

therefore increases or reduces the fuel 

consumption reduction achieved by 

another technology or set of 

technologies. The difference between 

the observed fuel consumption 

reduction associated with a set of 

technologies and the product of the 

individual effectiveness values in that 

set is referred to for purposes of this 

rulemaking as a ‘‘synergy.’’ Synergies 

may be positive (increased fuel 

consumption reduction compared to the 

product of the individual effects) or 

negative (decreased fuel consumption 

reduction). An example of a positive 

synergy might be a vehicle technology 

that reduces road loads at highway 

speeds (e.g., lower aerodynamic drag or 

low rolling resistance tires), that could 

extend the vehicle operating range over 

which cylinder deactivation may be 

employed. An example of a negative 

synergy might be a variable valvetrain 

system technology, which reduces 

pumping losses by altering the profile of 

the engine speed/load map, and a sixspeed automatic transmission, which 

shifts the engine operating points to a 

portion of the engine speed/load map 

where pumping losses are less 

significant. As the complexity of the 

technology combinations is increased, 

and the number of interacting 

technologies grows accordingly, it 

becomes increasingly important to 

account for these synergies. 

NHTSA and EPA determined 

synergistic impacts for this rulemaking 

using EPA’s ‘‘lumped parameter’’ 

analysis tool, which EPA described at 

length in its March 2008 Staff Technical 

Report.481 The lumped parameter tool is 

a spreadsheet model that represents 

energy consumption in terms of average 

performance over the fuel economy test 

procedure, rather than explicitly 

analyzing specific drive cycles. The tool 

begins with an apportionment of fuel 

consumption across several loss 

mechanisms and accounts for the 

average extent to which different 

technologies affect these loss 

mechanisms using estimates of engine, 

drivetrain and vehicle characteristics 

that are averaged over the EPA fuel 

economy drive cycle. Results of this 

analysis were generally consistent with 

those of full-scale vehicle simulation 

modeling performed in 2007 by Ricardo, 

Inc. 

For the current rulemaking, NHTSA 

used the lumped parameter tool as 

modified in the MY 2011 CAFE final 

rule. NHTSA modified the lumped 

parameter tool from the version 

described in the EPA Staff Technical 

Report in response to public comments 

received in its rulemaking. The 

modifications included updating the list 

of technologies and their associated 

effectiveness values to match the 

updated list of technologies used in the 

final rule. NHTSA also expanded the 

list of synergy pairings based on further 

consideration of the technologies for 

which a competition for losses would be 

expected. These losses are described in 

more detail in Section V of the PRIA. 

NHTSA and EPA incorporate 

synergistic impacts in their analyses in 

slightly different manners. Because 

NHTSA applies technologies 

individually in its modeling analysis, 

NHTSA incorporates synergistic effects 

between pairings of individual 

technologies. The use of discrete 

technology pair incremental synergies is 

similar to that in DOE’s National Energy 

Modeling System (NEMS).482 Inputs to 

the Volpe model incorporate NEMSidentified pairs, as well as additional 

pairs from the set of technologies 

considered in the Volpe model. 

NHTSA notes that synergies that 

occur within a decision tree are already 

addressed within the incremental values 

assigned and therefore do not require a 

synergy pair to address. For example, all 

engine technologies take into account 

incremental synergy factors of preceding 

engine technologies, and all 

transmission technologies take into 

account incremental synergy factors of 

preceding transmission technologies. 

These factors are expressed in the fuel 

consumption improvement factors in 

the input files used by the Volpe model. 

For applying incremental synergy 

factors in separate path technologies, 

the Volpe model uses an input table (see 

the tables in Chapter 3 of the TSD and 

in the PRIA) which lists technology 

pairings and incremental synergy factors 

associated with those pairings, most of 

which are between engine technologies 

and transmission/electrification/hybrid 

technologies. When a technology is 

applied to a vehicle by the Volpe model, 

all instances of that technology in the 

incremental synergy table which match 

technologies already applied to the 

vehicle (either pre-existing or 

previously applied by the Volpe model) 

are summed and applied to the fuel 

consumption improvement factor of the 

technology being applied. Synergies for 

the strong hybrid technology fuel 

consumption reductions are included in 

the incremental value for the specific 

hybrid technology block since the 

model applies technologies in the order 

of the most effectiveness for least cost 

and also applies all available 

electrification and transmission 

technologies before applying strong 

hybrid technologies. NHTSA seeks 

comment on whether the synergistic 

effects presented are accurate, and 

whether there are other synergies that 

the agency may have overlooked. 

d. Where Can Readers Find More 

Detailed Information About NHTSA’s 

Technology Analysis? 

Much more detailed information is 

provided in Section V of the PRIA, and 

a discussion of how NHTSA and EPA 

jointly reviewed and updated 

technology assumptions for purposes of 

this NPRM is available in Chapter 3 of 

the TSD. Additionally, all of NHTSA’s 

model input and output files are now 

public and available for the reader’s 

review and consideration. The 

technology input files can be found in 

the docket for this NPRM, Docket No. 

NHTSA–2009–0059, and on NHTSA’s 

Web site. And finally, because much of 

NHTSA’s technology analysis for 

purposes of this NPRM builds on the 

work that was done for the MY 2011 

final rule, we refer readers to that 

document as well for background 

information concerning how NHTSA’s 

methodology for technology application 

analysis has evolved over the past 

several rulemakings, both in response to 

comments and as a result of the agency’s 

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483 74 FR 14233–308 (Mar. 30, 2009). 

growing experience with this type of 

analysis.483

3. How Did NHTSA Develop the 

Economic Assumption Inputs? 

NHTSA’s preliminary analysis of 

alternative CAFE standards for the 

model years covered by this proposed 

rulemaking relies on a range of forecast 

variables, economic assumptions, and 

parameter values. This section describes 

the proposed sources of these forecasts, 

the rationale underlying each 

assumption, and the agency’s 

preliminary choices of specific 

parameter values. These proposed 

economic values play a significant role 

in determining the benefits of 

alternative CAFE standards, as they 

have for the last several CAFE 

rulemakings. Under those alternatives 

where standards would be established 

by reference to their costs and benefits, 

these economic values also affect the 

levels of the CAFE standards 

themselves. Some of these variables 

have more important effects on the level 

of CAFE standards and the benefits from 

requiring alternative increases in fuel 

economy than do others. 

In reviewing these variables and the 

agency’s estimates of their values for 

purposes of this NPRM, NHTSA 

reconsidered previous comments it had 

received and reviewed newly available 

literature. As a consequence, the agency 

elected to revise some of its economic 

assumptions and parameter estimates, 

while retaining others. Some of the most 

important changes, which are discussed 

in greater detail below, as well as in 

Chapter 4 of the joint TSD and in 

Chapter VIII of the PRIA, include 

significant revisions to the markup 

factors for technology costs; reducing 

the rebound effect from 15 to 10 

percent; and revising the value of 

reducing CO2 emissions based on recent 

interagency efforts to develop estimates 

of this value for government-wide use. 

For the reader’s reference, Table IV.C.3– 

1 below summarizes the values used to 

calculate the economic benefits from 

each alternative. The agency seeks 

comment on the economic assumptions 

presented in the table and discussed 

below. 

TABLE IV.C.3–1—ECONOMIC VALUES FOR BENEFITS COMPUTATIONS

(2007$) 

Fuel Economy Rebound Effect ............................................................................................................................................................ 10% 

‘‘Gap’’ between test and on-road MPG ............................................................................................................................................... 20% 

Value of refueling time per ($ per vehicle-hour) ................................................................................................................................. $ 24.64 

Annual growth in average vehicle use ................................................................................................................................................ 1.1% 

Fuel Prices (2012–50 average, $/gallon) 

Retail gasoline price ..................................................................................................................................................................... $3.77 

Pre-tax gasoline price ................................................................................................................................................................... $3.40 

Economic Benefits from Reducing Oil Imports ($/gallon) 

‘‘Monopsony’’ Component ............................................................................................................................................................ $ 0.00 

Price Shock Component ............................................................................................................................................................... $ 0.17 

Military Security Component ........................................................................................................................................................ $ 0.00 

Total Economic Costs ($/gallon) ........................................................................................................................................... $ 0.17 

Emission Damage Costs (2020, $/ton or $/metric ton) 

Carbon monoxide ......................................................................................................................................................................... $ 0 

Volatile organic compounds (VOC) .............................................................................................................................................. $ 1,283 

Nitrogen oxides (NOx)—vehicle use ............................................................................................................................................ $ 5,116 

Nitrogen oxides (NOx)—fuel production and distribution ............................................................................................................. $ 5,339 

Particulate matter (PM2.5)—vehicle use ....................................................................................................................................... $ 238,432 

Particulate matter (PM2.5)—fuel production and distribution ........................................................................................................ $ 292,180 

Sulfur dioxide (SO2) ...................................................................................................................................................................... $ 30,896 

Carbon dioxide (CO2) ................................................................................................................................................................... $ 20 

Annual Increase in CO2 Damage Cost ........................................................................................................................................ 3% 

External Costs from Additional Automobile Use ($/vehicle-mile) 

Congestion .................................................................................................................................................................................... $ 0.054 

Accidents ...................................................................................................................................................................................... $ 0.023 

Noise ............................................................................................................................................................................................. $ 0.001 

Total External Costs .............................................................................................................................................................. $ 0.078 

External Costs from Additional Light Truck Use ($/vehicle-mile) 

Congestion .................................................................................................................................................................................... $0.048 

Accidents ...................................................................................................................................................................................... $0.026 

Noise ............................................................................................................................................................................................. $0.001 

Total External Costs .............................................................................................................................................................. $0.075 

Discount Rate Applied to Future Benefits ........................................................................................................................................... 3% 

a. Costs of Fuel Economy-Improving 

Technologies 

We developed detailed estimates of 

the costs of applying fuel economyimproving technologies to vehicle 

models jointly with EPA for use in 

analyzing the impacts of alternative 

standards considered in this 

rulemaking. The estimates were based 

on those reported by the 2002 NAS 

Report analyzing costs for increasing 

fuel economy, but were modified for 

purposes of this analysis as a result of 

extensive consultations among 

engineers from NHTSA, EPA, and the 

Volpe Center. As part of this process, 

the agency also developed varying cost 

estimates for applying certain fuel 

economy technologies to vehicles of 

different sizes and body styles. We may 

adjust these cost estimates based on 

comments received to this NPRM. 

The technology cost estimates used in 

this analysis are intended to represent 

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49668 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

484NHTSA notes that in addition to the 

technology cost analysis employing this ‘‘ICM’’ 

approach, the PRIA contains a sensitivity analysis 

using a technology cost multiplier of 1.5. 

485See, e.g., Kleit A.N., 1990. ‘‘The Effect of 

Annual Changes in Automobile Fuel Economy 

Standards.’’ Journal of Regulatory Economics 2: 

151–172; Berry, Steven, James Levinsohn, and Ariel 

Pakes, 1995. ‘‘Automobile Prices in Market 

Equilibrium,’’ Econometrica 63(4): 841–940; 

McCarthy, Patrick S., 1996. ‘‘Market Price and 

Income Elasticities of New Vehicle Demands.’’ 

Review of Economics and Statistics 78: 543–547; 

and Goldberg, Pinelopi K., 1998. ‘‘The Effects of the 

Corporate Average Fuel Efficiency Standards in the 

US,’’ Journal of Industrial Economics 46(1): 1–33. 486 71 FR 77871 (Dec. 27, 2006). 

manufacturers’ direct costs for highvolume production of vehicles with 

these technologies and sufficient 

experience with their application so that 

all remaining cost reductions due to 

‘‘learning curve’’ effects have been fully 

realized. However, NHTSA recognizes 

that manufacturers’ actual costs for 

employing these technologies include 

additional outlays for accompanying 

design or engineering changes to models 

that use them, development and testing 

of prototype versions, recalibrating 

engine operating parameters, and 

integrating the technology with other 

attributes of the vehicle. Manufacturers’ 

indirect costs for employing these 

technologies also include expenses for 

product development and integration, 

modifying assembly processes and 

training assembly workers to install 

them, increased expenses for operation 

and maintaining assembly lines, higher 

initial warranty costs for new 

technologies, any added expenses for 

selling and distributing vehicles that use 

these technologies, and manufacturer 

and dealer profit. In previous CAFE 

rulemakings and in NHTSA’s safety 

rulemakings, the agency has accounted 

for these additional costs by using a 

Retail Price Equivalent (RPE) multiplier 

of 1.5. For purposes of this rulemaking, 

based on recent work by EPA, NHTSA 

has applied indirect cost multipliers 

ranging from 1.11 to 1.64 to the 

estimates of vehicle manufacturers’ 

direct costs for producing or acquiring 

each technology to improve fuel 

economy.484 These multipliers vary 

with the complexity of each technology 

and the time frame over which costs are 

estimated. More complex technologies 

are associated with higher multipliers 

because of the larger increases in 

manufacturers’ indirect costs for 

developing, producing (or procuring), 

and deploying these more complex 

technologies. The appropriate 

multipliers decline over time for 

technologies of all complexity levels, 

since increased familiarity and 

experience with their application is 

assumed to reduce manufacturers’ 

indirect costs for employing them. 

NHTSA seeks comment regarding the 

new indirect cost multiplier approach to 

technology costs estimates. We note 

additionally that this issue will be 

addressed in the upcoming revised NAS 

report. 

b. Potential Opportunity Costs of 

Improved Fuel Economy 

An important concern is whether 

achieving the fuel economy 

improvements required by alternative 

CAFE standards would require 

manufacturers to compromise the 

performance, carrying capacity, safety, 

or comfort of their vehicle models. To 

the extent that it does so, the resulting 

sacrifice in the value of these attributes 

to consumers represents an additional 

cost of achieving the required 

improvements in fuel economy. While 

exact dollar values of these attributes to 

consumers are difficult to infer, 

differences in vehicle purchase prices 

and buyers’ choices among competing 

models that feature different 

combinations of these characteristics 

clearly demonstrate that changing 

vehicle attributes clearly affect the 

utility and economic value that vehicles 

provide to potential buyers.485

NHTSA and EPA have approached 

this potential problem by developing 

cost estimates for fuel economyimproving technologies that include any 

additional manufacturing costs that 

would be necessary to maintain the 

originally planned levels of 

performance, comfort, carrying capacity, 

and safety of any light-duty vehicle 

model to which those technologies are 

applied. In doing so, the agencies 

followed the precedent established by 

the 2002 NAS Report, which estimated 

‘‘constant performance and utility’’ 

costs for fuel economy technologies. 

NHTSA has used these as the basis for 

its continuing efforts to refine the 

technology costs it uses to analyze 

manufacturer’s costs for complying with 

alternative passenger car and light truck 

CAFE standards for MYs 2012–2016. 

Although the agency has revised its 

estimates of manufacturers’ costs for 

some technologies significantly for use 

in this rulemaking, these revised 

estimates are still intended to represent 

costs that would allow manufacturers to 

maintain the performance, carrying 

capacity, and utility of vehicle models 

while improving their fuel economy. 

Although we believe that our tentative 

cost estimates for fuel economyimproving technologies should be 

generally sufficient to prevent 

significant reductions in consumer 

welfare provided by vehicle models to 

which manufacturers apply those 

technologies, it is possible that they do 

not include adequate allowance for the 

necessary efforts by manufacturers to 

prevent sacrifices in these attributes on 

all vehicle models. If this is the case, the 

true economic costs of achieving higher 

fuel economy should include the 

opportunity costs to vehicle owners of 

any sacrifices in vehicles’ performance, 

carrying capacity, and utility and the 

agency’s estimated technology costs 

would underestimate the true economic 

costs of improving fuel economy. 

Recognizing this possibility, it may be 

preferable for NHTSA to estimate 

explicitly the changes in vehicle buyers’ 

welfare from the combination of higher 

prices for new vehicle models, increases 

in their fuel economy, and any 

accompanying changes in vehicle 

attributes such as performance, 

passenger- and cargo-carrying capacity, 

or other dimensions of utility. The net 

change in buyer’s welfare that results 

from the combination of these changes 

would provide a more accurate estimate 

of the true economic costs for improving 

fuel economy. The agency seeks 

comment on this or other possible ways 

to deal with this extremely important 

issue. 

c. The On-Road Fuel Economy ‘‘Gap’’ 

Actual fuel economy levels achieved 

by light-duty vehicles in on-road driving 

fall somewhat short of their levels 

measured under the laboratory-like test 

conditions used by EPA to establish its 

published fuel economy ratings for 

different models. In analyzing the fuel 

savings from alternative CAFE 

standards, NHTSA has previously 

adjusted the actual fuel economy 

performance of each light truck model 

downward from its rated value to reflect 

the expected size of this on-road fuel 

economy ‘‘gap.’’ On December 27, 2006, 

EPA adopted changes to its regulations 

on fuel economy labeling, which were 

intended to bring vehicles’ rated fuel 

economy levels closer to their actual onroad fuel economy levels.486

In its Final Rule, EPA estimated that 

actual on-road fuel economy for lightduty vehicles averages 20 percent lower 

than published fuel economy levels. For 

example, if the overall EPA fuel 

economy rating of a light truck is 20 

mpg, the on-road fuel economy actually 

achieved by a typical driver of that 

vehicle is expected to be 16 mpg 

(20*.80). NHTSA employed EPA’s 

revised estimate of this on-road fuel 

economy gap in its analysis of the fuel 

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487Federal Highway Administration, Highway 

Statistics, 2000 through 2006 editions, Table VM– 

1; see http://www.fhwa.dot.gov/policy/ohpi/hss/ 

hsspubs.cfm (last accessed July 27, 2009). 

488Energy Information Administration, Annual 

Energy Outlook 2009, Revised Updated Reference 

Case (April 2009), Table 12. Available at http:// 

www.eia.doe.gov/oiaf/servicerpt/stimulus/excel/

aeostimtab_12.xls(last accessed July 26, 2009). 

EIA’s Updated Reference Case reflects the effects of 

the American Reinvestment and Recovery Act of 

2009, as well as the most recent revisions to the 

U.S. and global economic outlook. 

489This projection uses the rate of increase in fuel 

prices for 2020–2030 rather than that over the 

complete forecast period (2009–2030) because there 

is extreme volatility in the forecasts for the years 

2009 through approximately 2020. Using the 

average rate of change over the complete 2009–2030 

forecast period would result in projections of 

declining fuel prices after 2030. 

savings resulting from alternative CAFE 

standards evaluated in the MY 2011 

final rule. 

For purposes of this NPRM, NHTSA 

conducted additional analysis of this 

issue. The agency used data on the 

number of passenger cars and light 

trucks of each model year that were 

registered for use during calendar years 

2000 through 2006, average fuel 

economy for passenger cars and light 

trucks produced during each model 

year, and estimates of average miles 

driven per year by cars and light trucks 

of different ages. These data were 

combined to develop estimates of the 

average fuel economy that the U.S. 

passenger car and light truck fleets 

would have achieved from 2000 through 

2006 under test conditions. 

NHTSA compared these estimates to 

the Federal Highway Administration’s 

(FHWA) published values of actual onroad fuel economy for passenger cars 

and light trucks during each of those 

years.487 FHWA’s estimates of actual 

fuel economy for passenger cars 

averaged 22 percent lower than 

NHTSA’s estimates of its fleet-wide 

average value under test conditions over 

this period, while FHWA’s estimates for 

light trucks averaged 17 lower than 

NHTSA’s estimates of average light 

truck fuel economy under test 

conditions. These results appear to 

confirm that the 20 percent on-road fuel 

economy discount or gap represents a 

reasonable estimate for use in evaluating 

the fuel savings likely to result from 

alternative CAFE standards for MY 

2012–2016 vehicles. 

d. 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 both to new 

vehicle buyers and to society. NHTSA 

relied on the most recent fuel price 

projections from the U.S. Energy 

Information Administration’s (EIA) 

Annual Energy Outlook (AEO) for this 

analysis. Specifically, we used the AEO 

2009 (April 2009 release) Reference 

Case forecasts of inflation-adjusted 

(constant-dollar) retail gasoline and 

diesel fuel prices, which represent the 

EIA’s most up-to-date estimate of the 

most likely course of future prices for 

petroleum products.488

While NHTSA relied on the forecasts 

of fuel prices presented in AEO 2008 

High Price Case in the MY 2011 final 

rule, we noted at the time that we were 

relying on that estimate primarily 

because volatility in the oil market 

appeared to have overtaken the 

Reference Case, and that we anticipated 

that the Reference Case forecast would 

be significantly higher in the next AEO. 

In fact, EIA’s AEO 2009 Reference Case 

forecast projects higher retail fuel prices 

in most future years than those forecast 

in the High Price Case from AEO 2008. 

NHTSA is thus confident that the AEO 

2009 Reference Case is an appropriate 

forecast for projected future fuel prices. 

Measured in constant 2007 dollars, 

the Reference Case forecast of retail 

gasoline prices during calendar year 

2020 is $3.62 per gallon, rising 

gradually to $3.82 by the year 2030 

(these values include Federal, State and 

local taxes). To obtain fuel price 

forecasts for the years 2031 through 

2050, the agency assumes that retail fuel 

prices will continue to increase after 

2030 at the average annual rates 

projected for 2020–2030 in the AEO 

2009 Revised Reference Case.489 This 

assumption results in a projected retail 

price of gasoline that reaches $4.25 in 

2007 dollars by the year 2050. 

The value of fuel savings resulting 

from improved fuel economy to buyers 

of light-duty vehicles is determined by 

the retail price of fuel, which includes 

Federal, State, and any local taxes 

imposed on fuel sales. Total taxes on 

gasoline, including Federal, State, and 

local levies averaged $0.42 per gallon 

during 2006, while those levied on 

diesel averaged $0.50. Because fuel 

taxes represent transfers of resources 

from fuel buyers to government 

agencies, however, rather than real 

resources that are consumed in the 

process of supplying or using fuel, their 

value must be deducted from retail fuel 

prices to determine the value of fuel 

savings resulting from more stringent 

CAFE standards to the U.S. economy as 

a whole. 

NHTSA follows the assumptions used 

by EIA in AEO 2009 that State and local 

gasoline taxes will keep pace with 

inflation in nominal terms, and thus 

remain constant when expressed in 

constant 2007 dollars. In contrast, EIA 

assumes that Federal gasoline taxes will 

remain unchanged in nominal terms, 

and thus decline throughout the forecast 

period when expressed in constant 2007 

dollars. These differing assumptions 

about the likely future behavior of 

Federal and State/local fuel taxes are 

consistent with recent historical 

experience, which reflects the fact that 

Federal as well as most State motor fuel 

taxes are specified on a cents-per-gallon 

basis, and typically require legislation to 

change. 

The projected value of total taxes is 

deducted from each future year’s 

forecast of retail gasoline and diesel 

prices reported in AEO 2009 to 

determine the economic value of each 

gallon of fuel saved during that year as 

a result of improved fuel economy. 

Subtracting fuel taxes results in a 

projected value for saving gasoline of 

$3.22 per gallon during 2020, rising to 

$3.45 per gallon by the year 2030. 

EIA includes ‘‘High Price Case’’ and 

‘‘Low Price Case’’ forecasts in each 

AEO, which reflect uncertainties 

regarding future levels of oil production 

and demand. These alternative 

scenarios project retail gasoline prices 

that range from a low of $2.02 to a high 

of $5.04 per gallon during 2020, and 

from $2.04 to $5.47 per gallon during 

2030. In conjunction with our 

assumption that fuel taxes will remain 

constant in real or inflation-adjusted 

terms over this period, these forecasts 

imply pre-tax values of saving fuel 

ranging from $1.63 to $4.65 per gallon 

during 2020, and from $1.67 to $5.10 

per gallon in 2030. In conducting the 

preliminary analysis of uncertainty in 

benefits and costs from alternative 

CAFE standards required by OMB, 

NHTSA evaluated the sensitivity of its 

benefits estimates to these alternative 

forecasts of future fuel prices. The 

results of this sensitivity analysis can be 

found in the PRIA. 

e. Consumer Valuation of Fuel Economy 

and Payback Period 

In estimating the value of fuel 

economy improvements that would 

result from alternative CAFE standards 

to potential vehicle buyers, NHTSA 

assumes, as in the MY 2011 final rule, 

that buyers value the resulting fuel 

savings over only part of the expected 

lifetime of the vehicles they purchase. 

Specifically, we assume that buyers 

value fuel savings over the first five 

years of a new vehicle’s lifetime, and 

discount the value of these future fuel 

savings at a 3 percent annual rate. The 

five-year figure represents 

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49670 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

490 Vehicles are defined to be of age 1 during the 

calendar year corresponding to the model year in 

which they are produced; thus for example, model 

year 2000 vehicles are considered to be of age 1 

during calendar year 2000, age 1 during calendar 

year 2001, and to reach their maximum age of 26 

years during calendar year 2025. NHTSA considers 

the maximum lifetime of vehicles to be the age after 

which less than 2 percent of the vehicles originally 

produced during a model year remain in service. 

Applying these conventions to vehicle registration 

data indicates that passenger cars have a maximum 

age of 26 years, while light trucks have a maximum 

lifetime of 36 years. See Lu, S., NHTSA, Regulatory 

Analysis and Evaluation Division, ‘‘Vehicle 

Survivability and Travel Mileage Schedules,’’ DOT 

HS 809 952, 8–11 (January 2006). Available at 

http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf 

(last accessed July 27, 2009). 

491Available at http://www.eia.doe.gov/oiaf/aeo/ 

index.html. NHTSA and EPA made the simplifying 

assumption that projected sales of cars and light 

trucks during each calendar year from 2012 through 

2016 represented the likely production volumes for 

the corresponding model year. The agency did not 

attempt to establish the exact correspondence 

between projected sales during individual calendar 

years and production volumes for specific model 

years. 

492Because AEO 2009’s ‘‘car’’ and ‘‘truck’’ classes 

did not reflect NHTSA’s recent reclassification (in 

March 2009 for enforcement beginning MY 2011) of 

many two wheel drive SUVs from the nonpassenger 

(i.e., light truck) fleet to the passenger car fleet, EPA 

staff made adjustments to account for such vehicles 

in the baseline. 

493EPA also considered other sources of similar 

information, such as J.D. Powers, and concluded 

that CSM was better able to provide forecasts at the 

requisite level of detail for most of the model years 

of interest. 

494Lu, S., NHTSA, Regulatory Analysis and 

Evaluation Division, ‘‘Vehicle Survivability and 

Travel Mileage Schedules,’’ DOT HS 809 952, 8–11 

(January 2006). Available at http://wwwnrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed 

August 9, 2009). These updated survival rates 

suggest that the expected lifetimes of recent-model 

passenger cars and light trucks are 13.8 and 14.5 

years. 

495For a description of the Survey, see http:// 

nhts.ornl.gov/quickStart.shtml (last accessed 

August 9, 2009). 

496This approach differs from that used in the 

MY 2011 final rule, where it was assumed that 

future growth in the total number of cars and light 

trucks in use resulting from projected sales of new 

vehicles was adequate by itself to account for 

growth in total vehicle use, without assuming 

continuing growth in average vehicle use. 

approximately the current average term 

of consumer loans to finance the 

purchase of new vehicles. We recognize 

that the period over which individual 

buyers finance new vehicle purchases 

may not correspond exactly to the time 

horizons they apply in valuing fuel 

savings from higher fuel economy. 

The agency deducts the discounted 

present value of fuel savings over the 

first five years of a vehicle model’s 

lifetime from the technology costs 

incurred by its manufacturer to improve 

that model’s fuel economy to determine 

the increase in its ‘‘effective price’’ to 

buyers. The Volpe model uses these 

estimates of effective costs for 

increasing the fuel economy of each 

vehicle model to identify the order in 

which manufacturers would be likely to 

select models for the application of fuel 

economy-improving technologies in 

order to comply with stricter standards. 

The average value of the resulting 

increase in effective cost from each 

manufacturer’s simulated compliance 

strategy is also used to estimate the 

impact of alternative standards on its 

total sales for future model years. 

However, it is important to recognize 

that NHTSA estimates the aggregate 

value to the U.S. economy of fuel 

savings resulting from alternative 

standards—or their ‘‘social’’ value—over 

the entire expected lifetimes of vehicles 

manufactured under those standards, 

rather than over this shorter ‘‘payback 

period’’ we assume for their buyers. The 

procedure the agency uses for doing so 

is discussed in detail in the following 

section. 

f. Vehicle Survival and Use 

Assumptions 

NHTSA’s first step in estimating 

lifetime fuel consumption by vehicles 

produced during a model year is to 

calculate the number expected to 

remain in service during each year 

following their production and sale.490

This is calculated by multiplying the 

number of vehicles originally produced 

during a model year by the proportion 

typically expected to remain in service 

at their age during each later year, often 

referred to as a ‘‘survival rate.’’ 

To estimate production volumes of 

passenger cars and light trucks for 

individual manufacturers, NHTSA 

relied on a baseline market forecast 

constructed by EPA staff beginning with 

MY 2008 CAFE certification data. After 

constructing a MY 2008 baseline, EPA 

used projected car and truck volumes 

for this period from Energy Information 

Administration’s (EIA’s) 2009 Annual 

Energy Outlook (AEO).491 However, 

AEO projects sales only at the car and 

truck level, not at the manufacturer and 

model-specific level, which are needed 

in order to estimate the effects new 

standards will have on individual 

manufacturers.492 Therefore, EPA 

purchased data from CSM–Worldwide 

and used their projections of the 

number of vehicles of each type 

predicted to be sold by manufacturers in 

2011–2015.493 This provided the yearby-year percentages of cars and trucks 

sold by each manufacturer as well as the 

percentages of each vehicle segment. 

Although it was thus necessary to 

assume the same manufacturer and 

segment shares in 2016 as in 2015, 2016 

estimates from CSM should be available 

for the final rule. Using these 

percentages normalized to the AEO 

projected volumes then provided the 

manufacturer-specific market share and 

model-specific sales for model years 

2011–2016. 

To estimate the number of passenger 

cars and light trucks originally 

produced during model years 2012 

through 2016 that will remain in use 

during each subsequent year the agency 

applied age-specific survival rates for 

cars and light trucks to these adjusted 

forecasts of passenger car and light truck 

sales. In 2008, NHTSA updated its 

previous estimates of car and light truck 

survival rates using the most current 

registration data for vehicles produced 

during recent model years, in order to 

ensure that they reflected recent 

increases in the durability and expected 

life spans of cars and light trucks.494

The next step in estimating fuel use 

is to calculate the total number of miles 

that model year 2012–2016 cars and 

light trucks remaining in use will be 

driven each year. To estimate total miles 

driven, the number projected to remain 

in use during each future year is 

multiplied by the average number of 

miles they are expected to be driven at 

the age they will reach in that year. The 

agency estimated annual usage of cars 

and light trucks of each age using data 

from the Federal Highway 

Administration’s 2001 National 

Household Transportation Survey 

(NHTS).495 Because these estimates 

reflect the historically low gasoline 

prices that prevailed at the time the 

2001 NHTS was conducted, however, 

NHTSA adjusted them to account for 

the effect on vehicle use of subsequent 

increases in fuel prices. Details of this 

adjustment are provided in Chapter VIII 

of the PRIA and Chapter of the draft 

joint TSD. 

Increases in average annual use of 

cars and light trucks have been an 

important source of historical growth in 

the total number of miles they are 

driven each year. To estimate future 

growth in their average annual use for 

purposes of this rulemaking, NHTSA 

calculated the rate of growth in the 

adjusted mileage schedules derived 

from the 2001 NHTS necessary for total 

car and light truck travel to increase at 

the rate forecast in the AEO 2009 

Reference Case.496 This rate was 

calculated to be consistent with future 

changes in the overall size and age 

distributions of the U.S. passenger car 

and light truck fleets that result from the 

agency’s forecasts of total car and light 

truck sales and updated survival rates. 

The resulting growth rate in average 

annual car and light truck use of 

approximately 1.1 percent per year was 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49671 

497While the adjustment for future fuel prices 

reduces average mileage at each age from the values 

derived from the 2001 NHTS, the adjustment for 

expected future growth in average vehicle use 

increases it. The net effect of these two adjustments 

is to increase expected lifetime mileage by about 18 

percent significantly for both passenger cars and 

about 16 percent for light trucks. 

498To illustrate these calculations, the agency’s 

adjustment of the AEO 2009 Revised Reference Case 

forecast indicates that 9.26 million passenger cars 

will be produced during 2012, and the agency’s 

updated survival rates show that 83 percent of these 

vehicles, or 7.64 million, are projected to remain in 

service during the year 2022, when they will have 

reached an age of 10 years. At that age, passenger 

achieving the fuel economy level they are projected 

to achieve under the Baseline alternative are driven 

an average of about 800 miles, so surviving model 

year 2012 passenger cars will be driven a total of 

82.5 billion miles (= 7.64 million surviving vehicles 

× 10,800 miles per vehicle) during 2022. Summing 

the results of similar calculations for each year of 

their 26-year maximum lifetime, model year 2012 

passenger cars will be driven a total of 1,395 billion 

miles under the Baseline alternative. Under that 

alternative, they are projected to achieve a test fuel 

economy level of 32.4 mpg, which corresponds to 

actual on-road fuel economy of 25.9 mpg (= 32.4 

mpg × 80 percent). Thus their lifetime fuel use 

under the Baseline alternative is projected to be 

53.9 billion gallons (= 1,395 billion miles divided 

by 25.9 miles per gallon). 

499Some studies estimate that the long-run 

rebound effect is significantly larger than the 

immediate response to increased fuel efficiency. 

Although their estimates of the adjustment period 

required for the rebound effect to reach its long-run 

magnitude vary, this long-run effect is most 

appropriate for evaluating the fuel savings and 

emissions reductions resulting from stricter 

standards that would apply to future model years. 

500For details of the agency’s analysis, see 

Chapter VIII of the PRIA and Chapter 4 of the draft 

joint TSD accompanying this proposed rule. 

501The agency used several different model 

specifications and estimation procedures to control 

for the effect of fuel prices on fuel efficiency in 

order to obtain accurate estimates of the rebound 

effect. 

applied to the mileage figures derived 

from the 2001 NHTS to estimate annual 

mileage during each year of the 

expected lifetimes of MY 2012–2016 

cars and light trucks.497

Finally, the agency estimated total 

fuel consumption by passenger cars and 

light trucks remaining in use each year 

by dividing the total number of miles 

surviving vehicles are driven by the fuel 

economy they are expected to achieve 

under each alternative CAFE standard. 

Each model year’s total lifetime fuel 

consumption is the sum of fuel use by 

the cars or light trucks produced during 

that model year during each year of 

their life spans. In turn, the savings in 

a model year’s lifetime fuel use that will 

result from each alternative CAFE 

standard is the difference between its 

lifetime fuel use at the fuel economy 

level it attains under the Baseline 

alternative, and its lifetime fuel use at 

the higher fuel economy level it is 

projected to achieve under that 

alternative standard.498

g. Accounting for the Rebound Effect of 

Higher Fuel Economy 

The fuel economy rebound effect 

refers to the fraction of fuel savings 

expected to result from an increase in 

vehicle fuel economy—particularly an 

increase required by the adoption of 

higher CAFE standards—that is offset by 

additional vehicle use. The increase in 

vehicle use occurs because higher fuel 

economy reduces the fuel cost of 

driving, typically the largest single 

component of the monetary cost of 

operating a vehicle, and vehicle owners 

respond to this reduction in operating 

costs by driving slightly more. By 

lowering the marginal cost of vehicle 

use, improved fuel economy may lead to 

an increase in the number of miles 

vehicles are driven each year and over 

their lifetimes. Even with their higher 

fuel economy, this additional driving 

consumes some fuel, so the rebound 

effect reduces the net fuel savings that 

result when new CAFE standards 

require manufacturers to improve fuel 

economy. 

The magnitude of the rebound effect 

is an important determinant of the 

actual fuel savings that are likely to 

result from adopting stricter CAFE 

standards. Research on the magnitude of 

the rebound effect in light-duty vehicle 

use dates to the early 1980s, and 

generally concludes that a statistically 

significant rebound effect occurs when 

vehicle fuel efficiency improves.499 The 

agency reviewed studies of the rebound 

effect it had previously relied upon, 

considered more recently published 

estimates, and developed new estimates 

of its magnitude for purposes of this 

NPRM.500 Recent studies provide some 

evidence that the rebound effect has 

been declining over time, and may 

decline further over the immediate 

future if incomes rise faster than 

gasoline prices. This result appears 

plausible, because the responsiveness of 

vehicle use to variation in fuel costs is 

expected to decline as they account for 

a smaller proportion of the total 

monetary cost of driving, which has 

been the case until very recently. At the 

same time, rising personal incomes 

would be expected to reduce the 

sensitivity of vehicle use to fuel costs as 

the time component of driving costs— 

which is likely to be related to income 

levels—accounts for a larger fraction the 

total cost of automobile travel. NHTSA 

developed new estimates of the rebound 

effect by using national data on lightduty vehicle travel over the period from 

1950 through 2006 to estimate various 

econometric models of the relationship 

between vehicle miles-traveled and 

factors likely to influence it, including 

household income, fuel prices, vehicle 

fuel efficiency, road supply, the number 

of vehicles in use, vehicle prices, and 

other factors.501 The results of NHTSA’s 

analysis are consistent with the findings 

from other recent research: The average 

long-run rebound effect ranged from 16 

percent to 30 percent over the period 

from 1950 through 2007, while 

estimates of the rebound effect in 2007 

range from 8 percent to 14 percent. 

Projected values of the rebound effect 

for the period from 2010 through 2030, 

which the agency developed using 

forecasts of personal income, fuel 

prices, and fuel efficiency from AEO 

2009’s Reference Case, range from 4 

percent to 16 percent, depending on the 

specific model used to generate them. 

In light of these results, the agency’s 

judgment is that the apparent decline 

over time in the magnitude of the 

rebound effect justifies using a value for 

future analysis that is lower than 

historical estimates, which average 15– 

25 percent. Because the lifetimes of 

vehicles affected by the alternative 

CAFE standards considered in this 

rulemaking will extend from 2012 until 

nearly 2050, a value that is significantly 

lower than historical estimates appears 

to be appropriate. Thus NHTSA has 

elected to use a 10 percent rebound 

effect in its analysis of fuel savings and 

other benefits from higher CAFE 

standards for this NPRM. 

NHTSA also invites comment on 

other alternatives for estimating the 

rebound effect. As one illustration, 

variation in the price per gallon of 

gasoline directly affects the per-mile 

cost of driving, and drivers may respond 

just as they would to a change in the 

cost of driving resulting from a change 

in fuel economy, by varying the number 

of miles they drive. Because vehicles’ 

fuel economy is fixed in the short run, 

variation in the number of miles driven 

in response to changes in fuel prices 

will be reflected in changes in gasoline 

consumption. Under the assumption 

that drivers respond similarly to 

changes in the cost of driving whether 

they are caused by variation in fuel 

prices or fuel economy, the short-run 

price elasticity of gasoline—which 

measures the sensitivity of gasoline 

consumption to changes in its price per 

gallon—may provide some indication 

about the magnitude of the rebound 

effect itself. NHTSA invites comment on 

the extent to which the short-run 

elasticity of demand for gasoline with 

respect to its price can provide useful 

information about the size of the 

rebound effect. Specifically, we seek 

comment on whether it would be 

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49672 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

502The consumer surplus provided by added 

travel is estimated as one-half of the product of the 

decline in fuel cost per mile and the resulting 

increase in the annual number of miles driven. 

503 If manufacturers respond to improved fuel 

economy by reducing the size of fuel tanks to 

maintain a constant driving range, the resulting cost 

savings will presumably be reflected in lower 

vehicle sales prices. 

504See Department of Transportation, Guidance 

Memorandum, ‘‘The Value of Saving Travel Time: 

Departmental Guidance for Conducting Economic 

Evaluations,’’ Apr. 9, 1997. http://ostpxweb.dot.gov/ 

policy/Data/VOT97guid.pdf (last accessed August 

9, 2009); update available at http:// 

ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11- 

03.pdf (last accessed August 9, 2009). 

505The hourly wage rate during 2008 is estimated 

to average $25.50 when expressed in 2007 dollars. 

Personal travel in urban areas (which represents 94 

percent of urban travel) is valued at 50 percent of 

the hourly wage rate, while business travel (the 

remaining 6 percent of urban travel) is valued at 

100 percent of the hourly wage rate. For intercity 

travel, personal travel (87 percent of total intercity 

travel) is valued at 70 percent of the wage rate, 

while business travel (13 percent) is valued at 100 

percent of the wage rate. The resulting values of 

travel time are $12.67 for urban travel and $17.66 

for intercity travel, and must be multiplied by 

vehicle occupancy (1.6) to obtain the estimated 

values of time per vehicle hour in urban and rural 

driving. Finally, about 66% of driving occurs in 

urban areas, while the remaining 34% takes place 

in rural areas, and these percentages are used to 

calculate a weighted average of the value of time 

in all driving. 

506These estimates were developed by FHWA for 

use in its 1997 Federal Highway Cost Allocation 

Study; see http://www.fhwa.dot.gov/policy/hcas/ 

final/index.htm (last accessed August 9, 2009). 

appropriate to use the price elasticity of 

demand for gasoline, or other alternative 

approaches, to guide the choice of a 

value for the rebound effect. 

Additionally, NHTSA recognizes that 

as the world price of oil falls in 

response to lower U.S. demand for oil, 

there is the potential for an increase in 

oil use and, in turn, greenhouse gas 

emissions outside the U.S. This so 

called international oil ‘‘take back’’ 

effect is difficult to estimate. Given that 

oil consumption patterns vary across 

countries, there will be different 

demand responses to a change in the 

world price of crude oil. In addition, 

many countries around the world 

subsidize their oil consumption. It is not 

clear how oil consumption would 

change due to changes in the market 

price of oil given the current pattern of 

demand and subsidies. Further, many 

countries, especially in the developed 

countries/regions (i.e., the European 

Union), already have or anticipate 

implementing policies to limit GHG 

emissions. Further out in the future, it 

is anticipated that developing countries 

would take actions to reduce their GHG 

emissions as well. Any increases in 

petroleum consumption and GHG 

emissions in other nations that occurs in 

response to a decline in world 

petroleum prices would be attributed to 

those nations, and recorded in their 

respective GHG emissions inventories. 

Thus, including the same increase in 

emissions as part of the impact of 

adopting CAFE standards in the U.S. 

would risk double-counting of global 

emissions totals. NHTSA seeks 

comment on how to estimate the 

international ‘‘take back’’ effect and its 

impact on fuel consumption and GHG 

emissions. See the Energy Security 

section of the TSD, 4.2.8, for more 

discussion of the impact of the proposed 

vehicle rule on oil markets. 

h. Benefits From Increased Vehicle Use 

The increase in vehicle use from the 

rebound effect provides additional 

benefits to their owners, who may make 

more frequent trips or travel farther to 

reach more desirable destinations. This 

additional travel provides benefits to 

drivers and their passengers by 

improving their access to social and 

economic opportunities away from 

home. As evidenced by their decisions 

to make more frequent or longer trips 

when improved fuel economy reduces 

their costs for driving, the benefits from 

this additional travel exceed the costs 

drivers and passengers incur in making 

more frequent or longer trips. 

The agency’s analysis estimates the 

economic benefits from increased 

rebound-effect driving as the sum of fuel 

costs drivers incur plus the consumer 

surplus they receive from the additional 

accessibility it provides.502 Because the 

increase in travel depends on the extent 

of improvement in fuel economy, the 

value of benefits it provides differs 

among model years and alternative 

CAFE standards. Under even those 

alternatives that would impose the 

highest standards, however, the 

magnitude of these benefits represents a 

small fraction of total benefits. 

i. The Value of Increased Driving Range 

Improving vehicles’ fuel economy 

may also increase their driving range 

before they require refueling. By 

reducing the frequency with which 

drivers typically refuel, and by 

extending the upper limit of the range 

they can travel before requiring 

refueling, improving fuel economy thus 

provides some additional benefits to 

their owners.503 NHTSA re-examined 

this issue for purposes of this 

rulemaking, and found no information 

in comments or elsewhere that would 

cause the agency to revise its previous 

approach. Since no direct estimates of 

the value of extended vehicle range are 

available, NHTSA calculates directly the 

reduction in the annual number of 

required refueling cycles that results 

from improved fuel economy, and 

applies DOT-recommended values of 

travel time savings to convert the 

resulting time savings to their economic 

value.504

As an illustration, a typical small light 

truck model has an average fuel tank 

size of approximately 20 gallons. 

Assuming that drivers typically refuel 

when their tanks are 55 percent full (i.e., 

11 gallons in reserve), increasing this 

model’s actual on-road fuel economy 

from 24 to 25 mpg would extend its 

driving range from 216 miles (= 9 

gallons × 24 mpg) to 225 miles (= 9 

gallons × 25 mpg). Assuming that it is 

driven 12,000 miles/year, this reduces 

the number of times it needs to be 

refueled each year from 55.6 (= 12,000 

miles per year/216 miles per refueling) 

to 53.3 (= 12,000 miles per year/225 

miles per refueling), or by 2.3 refuelings 

per year. 

Weighted by the nationwide mix of 

urban and rural driving, personal and 

business travel in urban and rural areas, 

and average vehicle occupancy for 

driving trips, the DOT-recommended 

values of travel time per vehicle-hour is 

$24.64 (in 2007 dollars).505 Assuming 

that locating a station and filling up 

requires five minutes, the annual value 

of time saved as a result of less frequent 

refueling amounts to $4.72 (calculated 

as 5/60 × 2.3 × $24.64). This calculation 

is repeated for each future year that 

model year 2012–2016 cars and light 

trucks would remain in service. Like 

fuel savings and other benefits, the 

value of this benefit declines over a 

model year’s lifetime, because a smaller 

number of vehicles originally produced 

during that model year remain in 

service each year, and those remaining 

in service are driven fewer miles. 

NHTSA recognizes that many 

assumptions made in its estimate for the 

value of increased driving range are 

subject to uncertainty. Please see 

Chapter 4 of the TSD and Chapter 8 of 

NHTSA’s PRIA for more information 

about the uncertainty regarding these 

assumptions. 

j. Added Costs From Congestion, 

Crashes and Noise 

Increased vehicle use associated with 

the rebound effect also contributes to 

increased traffic congestion, motor 

vehicle accidents, and highway noise. 

NHTSA relies on estimates of per-mile 

congestion, accident, and noise costs 

caused by increased use of automobiles 

and light trucks developed by the 

Federal Highway Administration to 

estimate these increased costs.506

NHTSA employed these estimates 

previously in its analysis accompanying 

the MY 2011 final rule, and continues 

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507See, e.g., Bohi, Douglas R. and W. David 

Montgomery (1982). Oil Prices, Energy Security, 

and Import Policy, Washington, DC: Resources for 

the Future, Johns Hopkins University Press; Bohi, 

D. R., and M. A. Toman (1993). ‘‘Energy and 

Security: Externalities and Policies,’’ Energy Policy 

21:1093–1109; and Toman, M. A. (1993). ‘‘The 

Economics of Energy Security: Theory, Evidence, 

Policy,’’ in A. V. Kneese and J. L. Sweeney, eds. 

(1993). Handbook of Natural Resource and Energy 

Economics, Vol. III. Amsterdam: North-Holland, pp. 

1167–1218. 

508Leiby, Paul N., Donald W. Jones, T. Randall 

Curlee, and Russell Lee, Oil Imports: An 

Assessment of Benefits and Costs, ORNL–6851, Oak 

Ridge National Laboratory, November 1, 1997. 

Available at http://pzl1.ed.ornl.gov/ORNL6851.pdf 

(last accessed August 9, 2009). 

509Leiby, Paul N. ‘‘Estimating the Energy Security 

Benefits of Reduced U.S. Oil Imports,’’ Oak Ridge 

National Laboratory, ORNL/TM–2007/028, Revised 

July 23, 2007. Available at http://pzl1.ed.ornl.gov/ 

energysecurity.html (click on link below ‘‘Oil 

Imports Costs and Benefits’’) (last accessed August 

9, 2009). 

510Peer Review Report Summary: Estimating the 

Energy Security Benefits of Reduced U.S. Oil 

Imports, ICF, Inc., September 2007. 

511The reduction in payments from U.S. oil 

purchasers to domestic petroleum producers is not 

included as a benefit, since it represents a transfer 

that occurs entirely within the U.S. economy. 

to find them appropriate for this NPRM 

after reviewing the procedures used by 

FHWA to develop them and considering 

other available estimates of these values. 

The agency multiplies FHWA’s 

estimates of per-mile costs by the 

annual increases in automobile and 

light truck use from the rebound effect 

to yield the estimated increases in 

congestion, accident, and noise 

externality costs during each future 

year. 

k. Petroleum Consumption and Import 

Externalities 

U.S. consumption and imports of 

petroleum products also 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 cushion against 

resulting price increases.507

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 their market prices. Conversely, 

lowering U.S. imports of crude 

petroleum or refined fuels by reducing 

domestic fuel consumption can reduce 

these external costs, and any reduction 

in their total value that results from 

improved fuel economy represents an 

economic benefit of more stringent 

CAFE standards, in addition to the 

value of saving fuel itself. 

NHTSA has carefully reviewed its 

assumptions regarding the appropriate 

value of these benefits for this proposed 

rule. In analyzing benefits from its 

recent actions to increase light truck 

CAFE standards for model years 2005– 

07 and 2008–11, NHTSA relied on a 

1997 study by Oak Ridge National 

Laboratory (ORNL) to estimate the value 

of reduced economic externalities from 

petroleum consumption and imports.508

More recently, ORNL updated its 

estimates of the value of these 

externalities, using the analytic 

framework developed in its original 

1997 study in conjunction with recent 

estimates of the variables and 

parameters that determine their 

value.509 The updated ORNL study was 

subjected to a detailed peer review by 

experts selected by EPA, and its 

estimates of the value of oil import 

externalities were subsequently revised 

to reflect their comments and 

recommendations.510

At the request of EPA, ORNL further 

revised its 2008 estimates of external 

costs from U.S. oil imports to reflect 

recent changes in the outlook for world 

petroleum prices and continuing 

changes in the structure and 

characteristics of global petroleum 

supply and demand. 

These most recent revisions increase 

ORNL’s estimates of the ‘‘monopsony 

premium’’ associated with U.S. oil 

imports, which measures the reduced 

value of payments from U.S. oil 

purchasers to foreign oil suppliers 

beyond the savings from reduced 

purchases of petroleum itself that 

results when lower U.S. import demand 

reduces the world price of petroleum.511

Consistency with NHTSA’s use of 

estimates of the global benefits from 

reducing emissions of CO2 and other 

greenhouse gases in this analysis, 

however, requires the use of a global 

perspective for assessing their net value. 

From this perspective, reducing these 

payments simply results in a transfer of 

resources from foreign oil suppliers to 

U.S. purchasers (or more properly, in a 

savings in the value of resources 

previously transferred from U.S. 

purchasers to foreign producers), and 

provides no real savings in resources to 

the global economy. Thus NHTSA’s 

analysis of the benefits from adopting 

higher CAFE standards for MY 2012– 

2016 cars and light trucks excludes the 

reduced value of monopsony payments 

by U.S. oil consumers that might result 

from lower fuel consumption by these 

vehicles. 

The literature on the energy security 

for the last two decades has routinely 

combined the monopsony and the 

macroeconomic disruption components 

when calculating the total value of the 

energy security premium. However, in 

the context of using a global value for 

the Social Cost of Carbon (SCC) the 

question arises: How should the energy 

security premium be used when some 

benefits from the proposed rule, such as 

the benefits of reducing greenhouse gas 

emissions, are calculated at a global 

level? Monopsony benefits represent 

avoided payments by the U.S. to oil 

producers in foreign countries that 

result from a decrease in the world oil 

price as the U.S. decreases its 

consumption of imported oil. Although 

there is clearly a benefit to the U.S. 

when considered from the domestic 

perspective, the decrease in price due to 

decreased demand in the U.S. also 

represents a loss of income to oilproducing countries. Given the 

redistributive nature of this effect, do 

the negative effects on other countries 

‘‘net out’’ the positive impacts to the 

U.S.? If this is the case, then, the 

monopsony portion of the energy 

security premium should be excluded 

from the net benefits calculation for the 

rule. 

As the preceding discussion has 

indicated, the agencies omitted the 

reduction in monopsony payments that 

occurs when U.S. petroleum 

consumption and imports are reduced 

from their estimates of economic 

benefits for the proposed rules. Since 

the reduction in monopsony payments 

by U.S. oil consumers is exactly offset 

by a decline in income to suppliers of 

imported oil, this omission ensures 

consistency of the agencies’ analysis 

with the inclusion of global benefits 

from reducing emissions of greenhouse 

gas emissions. The agencies seek 

comment on whether, from other 

perspectives, it would be reasonable to 

include both the global value of 

reducing GHG emissions and the 

reduction in monopsony payments by 

U.S. consumers of petroleum products 

in their estimates of total economic 

benefits from reducing U.S. fuel 

consumption. 

ORNL’s most recently revised 

estimates of the increase in the expected 

costs associated with potential 

disruptions in U.S. petroleum imports 

imply that each gallon of imported fuel 

or petroleum saved reduces the 

expected costs of oil supply disruptions 

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512However, the agency conducted a sensitivity 

analysis of the potential effect of assuming that 

some reduction military spending would result 

from fuel savings and reduced petroleum imports 

in order to investigate its impacts on the standards 

and fuel savings. 

513 Differences between forecast annual U.S. 

imports of crude petroleum and refined products 

among these three scenarios range from 24–89 

percent of differences in projected annual gasoline 

and diesel fuel consumption in the U.S. These 

differences average 49 percent over the forecast 

period spanned by AEO 2009. 

514 Differences between forecast annual U.S. 

imports of crude petroleum among these three 

scenarios range from 67–97 percent of differences 

in total U.S. refining of crude petroleum, and 

average 85 percent over the forecast period spanned 

by AEO 2009. 

515This figure is calculated as 50 gallons + 50 

gallons * 90% = 50 gallons + 45 gallons = 95 

gallons. 

516The MOVES model assumes that the per-mile 

rates at which these pollutants are emitted are 

determined by EPA regulations and the 

effectiveness of catalytic after-treatment of engine 

exhaust emissions, and are thus unaffected by 

changes in car and light truck fuel economy. 

517These are 30 and 15 parts per million (ppm, 

measured on a mass basis) for gasoline and diesel 

respectively, which produces emission rates of 0.17 

grams of SO2 per gallon of gasoline and 0.10 grams 

per gallon of diesel. 

518Argonne National Laboratories, The 

Greenhouse Gas and Regulated Emissions from 

Transportation (GREET) Model, Version 1.8, June 

2007, available at http:// 

www.transportation.anl.gov/modeling_simulation/ 

GREET/index.html (last accessed August 9, 2009). 

519Emissions that occur during vehicle refueling 

at retail gasoline stations (primarily evaporative 

emissions of volatile organic compounds, or VOCs) 

are already accounted for in the ‘‘tailpipe’’ emission 

factors used to estimate the emissions generated by 

increased light truck use. GREET estimates 

emissions in each phase of gasoline production and 

distribution in mass per unit of gasoline energy 

content; these factors are then converted to mass 

per gallon of gasoline using the average energy 

content of gasoline. 

to the U.S. economy by $0.16 per gallon 

(in 2007$). The reduction in expected 

disruption costs represents a real 

savings in resources, and thus 

contributes economic benefits in 

addition to the savings in fuel 

production costs that result from 

increasing fuel economy. NHTSA 

employs this value in its evaluation of 

the economic benefits from adopting 

higher CAFE standards for MY 2012– 

2016 cars and light trucks. 

NHTSA’s analysis does not include 

savings in budgetary outlays to support 

U.S. military activities among the 

benefits of higher fuel economy and the 

resulting fuel savings.512 NHTSA’s 

analysis of benefits from alternative 

CAFE standards for MY 2012–2016 also 

excludes any cost savings from 

maintaining a smaller SPR from its 

estimates of the external benefits of 

reducing gasoline consumption and 

petroleum imports. This view concurs 

with that of the recent ORNL study of 

economic costs from U.S. oil imports, 

which concludes that savings in 

government outlays for these purposes 

are unlikely to result from reductions in 

consumption of petroleum products and 

oil imports on the scale of those 

resulting from higher CAFE standards. 

Based on a detailed analysis of 

differences in fuel consumption, 

petroleum imports, and imports of 

refined petroleum products among the 

Reference Case, High Economic Growth, 

and Low Economic Growth Scenarios 

presented in AEO 2009, NHTSA 

estimates that approximately 50 percent 

of the reduction in fuel consumption 

resulting from adopting higher CAFE 

standards is likely to be reflected in 

reduced U.S. imports of refined fuel, 

while the remaining 50 percent would 

be reduce domestic fuel refining.513 Of 

this latter figure, 90 percent is 

anticipated to reduce U.S. imports of 

crude petroleum for use as a refinery 

feedstock, while the remaining 10 

percent is expected to reduce U.S. 

domestic production of crude 

petroleum.514 Thus on balance, each 

100 gallons of fuel saved as a 

consequence of higher CAFE standards 

is anticipated to reduce total U.S. 

imports of crude petroleum or refined 

fuel by 95 gallons.515

l. Air Pollutant Emissions 

i. Impacts on Criteria Air Pollutant 

Emissions 

Criteria air pollutants emitted by 

vehicles and during fuel production 

include carbon monoxide (CO), 

hydrocarbon compounds (usually 

referred to as ‘‘volatile organic 

compounds,’’ or VOC), nitrogen oxides 

(NOX), fine particulate matter (PM2.5), 

and sulfur oxides (SOX). While 

reductions in domestic fuel refining and 

distribution that result from lower fuel 

consumption will reduce U.S. emissions 

of these pollutants, additional vehicle 

use associated with the rebound effect 

from higher fuel economy will increase 

their emissions. Thus the net effect of 

stricter CAFE standards on emissions of 

each criteria pollutant depends on the 

relative magnitudes of its reduced 

emissions in fuel refining and 

distribution, and increases in its 

emissions from vehicle use. Because the 

relationship between emissions in fuel 

refining and vehicle use is different for 

each criteria pollutant, the net effect of 

fuel savings from the proposed 

standards on total emissions of each 

pollutant is likely to differ. We note that 

any benefits in terms of criteria air 

pollutant reductions resulting from this 

rule would not be direct benefits. 

With the exception of SO2, NHTSA 

calculated annual emissions of each 

criteria pollutant resulting from vehicle 

use by multiplying its estimates of car 

and light truck use during each year 

over their expected lifetimes by per-mile 

emission rates appropriate to each 

vehicle type, fuel, model year, and age. 

These emission rates were developed by 

U.S. EPA using its Motor Vehicle 

Emission Simulator (Draft MOVES 

2009).516 Emission rates for SO2 were 

calculated by NHTSA using average fuel 

sulfur content estimates supplied by 

EPA, together with the assumption that 

the entire sulfur content of fuel is 

emitted in the form of SO2.517 Total SO2

emissions under each alternative CAFE 

standard were calculated by applying 

the resulting emission rates directly to 

estimated annual gasoline and diesel 

fuel use by cars and light trucks. 

As with other impacts, the changes in 

emissions of criteria air pollutants 

resulting from alternative increases in 

CAFE standards for MY 2012–2016 cars 

and light trucks were calculated from 

the differences between emissions 

under each alternative that would 

increase CAFE standards, and emissions 

under the baseline alternative. 

NHTSA estimated the reductions in 

criteria pollutant emissions from 

producing and distributing fuel that 

would occur under alternative CAFE 

standards using emission rates obtained 

by EPA from Argonne National 

Laboratories’ Greenhouse Gases and 

Regulated Emissions in Transportation 

(GREET) model.518 The GREET model 

provides separate estimates of air 

pollutant emissions that occur in 

different phases of fuel production and 

distribution, including crude oil 

extraction, transportation, and storage, 

fuel refining, and fuel distribution and 

storage.519 EPA modified the GREET 

model to change certain assumptions 

about emissions during crude petroleum 

extraction and transportation, as well as 

to update its emission rates to reflect 

adopted and pending EPA emission 

standards. NHTSA converted these 

emission rates from the mass per fuel 

energy content basis on which GREET 

reports them to mass per gallon of fuel 

supplied using estimates of fuel energy 

content supplied by GREET. 

The resulting emission rates were 

applied to the agency’s estimates of fuel 

consumption under each alternative 

CAFE standard to develop estimates of 

total emissions of each criteria pollutant 

during fuel production and distribution. 

The assumptions about the effects of 

changes in fuel consumption on 

domestic and imported sources of fuel 

supply discussed above were then 

employed to calculate the effects of 

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520 In effect, this assumes that the distances crude 

oil travels to U.S. refineries are approximately the 

same regardless of whether it travels from domestic 

oilfields or import terminals, and that the distances 

that gasoline travels from refineries to retail stations 

are approximately the same as those from import 

terminals to gasoline stations. 

521All emissions from increased vehicle use are 

assumed to occur within the U.S., since CAFE 

standards would apply only to vehicles produced 

for sale in the U.S. 

522These reflect differences in the typical 

geographic distributions of emissions of each 

pollutant, their contributions to ambient PM2.5

concentrations, pollution levels (predominantly 

those of PM2.5), and resulting changes in population 

exposure. 

reductions in fuel use from alternative 

CAFE standards on changes in imports 

of refined fuel and domestic refining. 

NHTSA’s analysis assumes that 

reductions in imports of refined fuel 

would reduce criteria pollutant 

emissions during fuel storage and 

distribution only. Reductions in 

domestic fuel refining using imported 

crude oil as a feedstock are assumed to 

reduce emissions during fuel refining, 

storage, and distribution, because each 

of these activities would be reduced. 

Reduced domestic fuel refining using 

domestically-produced crude oil is 

assumed to reduce emissions during all 

four phases of fuel production and 

distribution.520

Finally, NHTSA calculated the net 

changes in domestic emissions of each 

criteria pollutant by summing the 

increases in emissions projected to 

result from increased vehicle use, and 

the reductions anticipated to result from 

lower domestic fuel refining and 

distribution.521 As indicated previously, 

the effect of adopting higher CAFE 

standards on total emissions of each 

criteria pollutant depends on the 

relative magnitudes of the resulting 

reduction in emissions from fuel 

refining and distribution, and the 

increase in emissions from additional 

vehicle use. Although these net changes 

vary significantly among individual 

criteria pollutants, the agency projects 

that on balance, adopting higher CAFE 

standards would reduce emissions of all 

criteria air pollutants except carbon 

monoxide (CO). 

The net changes in domestic 

emissions of fine particulates (PM2.5) 

and its chemical precursors (such as 

NOX, SOX, and VOCs) are converted to 

economic values using estimates of the 

reductions in health damage costs per 

ton of emissions of each pollutant that 

is avoided, which were developed and 

recently revised by EPA. These savings 

represent the estimated reductions in 

the value of damages to human health 

resulting from lower atmospheric 

concentrations and population exposure 

to air pollution that occur when 

emissions of each pollutant that 

contributes to atmospheric PM2.5

concentrations are reduced. The value 

of reductions in the risk of premature 

death due to exposure to fine particulate 

pollution (PM2.5) account for a majority 

of EPA’s estimated values of reducing 

criteria pollutant emissions, although 

the value of avoiding other health 

impacts is also included in these 

estimates. These values do not include 

a number of unquantified benefits, such 

as reduction in the welfare and 

environmental impacts of PM2.5

pollution, or reductions in health and 

welfare impacts related to other criteria 

pollutants (ozone, NO2, and SO2) and air 

toxics. EPA estimates different PMrelated per-ton values for reducing 

emissions from vehicle use than for 

reductions in emissions of that occur 

during fuel production and 

distribution.522 NHTSA applies these 

separate values to its estimates of 

changes in emissions from vehicle use 

and fuel production and distribution to 

determine the net change in total 

economic damages from emissions of 

these pollutants. 

EPA projects that the per-ton values 

for reducing emissions of criteria 

pollutants from both mobile sources 

(including motor vehicles) and 

stationary sources such as fuel refineries 

and storage facilities will increase over 

time. These projected increases reflect 

rising income levels, which are assumed 

to increase affected individuals’ 

willingness to pay for reduced exposure 

to health threats from air pollution, as 

well as future population growth, which 

increases population exposure to future 

levels of air pollution. 

ii. Reductions in CO2 Emissions 

Emissions of carbon dioxide and other 

greenhouse gases (GHGs) occur 

throughout the process of producing 

and distributing transportation fuels, as 

well as from fuel combustion itself. By 

reducing the volume of fuel consumed 

by passenger cars and light trucks, 

higher CAFE standards will reduce GHG 

emissions generated by fuel use, as well 

as throughout the fuel supply cycle. 

Lowering these emissions is likely to 

slow the projected pace and reduce the 

ultimate extent of future changes in the 

global climate, thus reducing future 

economic damages that changes in the 

global climate are expected to cause. By 

reducing the probability that climate 

changes with potentially catastrophic 

economic or environmental impacts will 

occur, lowering GHG emissions may 

also result in economic benefits that 

exceed the resulting reduction in the 

expected future economic costs caused 

by gradual changes in the earth’s 

climatic systems. 

Quantifying and monetizing benefits 

from reducing GHG emissions is thus an 

important step in estimating the total 

economic benefits likely to result from 

establishing higher CAFE standards. 

The agency estimated emissions of CO2

from passenger car and light truck use 

by multiplying the number of gallons of 

each type of fuel (gasoline and diesel) 

they are projected to consume under 

alternative CAFE standards by the 

quantity or mass of CO2 emissions 

released per gallon of fuel consumed. 

This calculation assumes that the entire 

carbon content of each fuel is converted 

to CO2 emissions during the combustion 

process. Carbon dioxide emissions 

account for nearly 95 percent of total 

GHG emissions that result from fuel 

combustion during vehicle use. 

iii. Economic Value of Reductions in 

CO2 Emissions 

NHTSA has taken the economic 

benefits of reducing CO2 emission into 

account in this rulemaking, both in 

developing proposed CAFE standards 

and in assessing the economic benefits 

of each alternative that was considered. 

Since direct estimates of the economic 

benefits from reducing GHG emissions 

are generally not reported in published 

literature on the impacts of climate 

change, these benefits are typically 

assumed to be the ‘‘mirror image’’ of the 

estimated incremental costs resulting 

from an increase in those emissions. 

That is, the benefits from reducing 

emissions are usually measured by the 

savings in estimated economic damages 

that an equivalent increase in emissions 

would otherwise have caused. 

The ‘‘social cost of carbon’’ (SCC) is 

intended to be a monetary measure of 

the incremental damage resulting from 

carbon dioxide (CO2) emissions, 

including (but not limited to) net 

agricultural productivity loss, human 

health effects, property damages from 

sea level rise, and changes in ecosystem 

services. Any effort to quantify and to 

monetize the consequences associated 

with climate change will raise serious 

questions of science, economics, and 

ethics. But with full regard for the limits 

of both quantification and monetization, 

the SCC can be used to provide an 

estimate of the social benefits of 

reductions in GHG emissions. 

For at least four reasons, any 

particular figure will be contestable. 

First, scientific and economic 

knowledge about the impacts of climate 

change continues to grow. With new 

and better information about relevant 

questions, including the cost, burdens, 

and possibility of adaptation, current 

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523For the purposes of this discussion, we 

present all values of the SCC as the cost per ton of 

CO2 emissions. Some discussions of the SCC in the 

literature use an alternative presentation of a dollar 

per ton of Carbon. The standard adjustment factor 

is 3.67, which means, for example, that a SCC of 

$10 per ton of CO2 would be equivalent to a cost 

of $36.70 for a ton of carbon emitted. 

524 73 FR 44416 (July 30, 2008). EPA, ‘‘Advance 

Notice of Proposed Rulemaking for Greenhouse 

Gases Under the Clean Air Act, Technical Support 

Document on Benefits of Reducing GHG 

Emissions,’’ June 2008. www.regulations.gov. 

Search for ID ‘‘EPA–HQ–OAR–2008–0318–0078.’’ 

525 It is true that Federal statutes are presumed 

not to have extraterritorial effect, in part to ensure 

that the laws of the United States respect the 

interests of foreign sovereigns. But use of a global 

measure for the SCC does not give extraterritorial 

effect to Federal law and hence does not intrude on 

such interests. 

526Richard Tol, The Social Cost of Carbon: 

Trends, Outliers, and Catastrophes, Economics: The 

Open-Access, Open-Assessment E-Journal, Vol. 2, 

2008–25. http://www.economics-ejournal.org/ 

economics/journalarticles/2008-25 (2008). 

estimates will inevitably change over 

time. Second, some of the likely and 

potential damages from climate 

change—for example, the loss of 

endangered species—are generally not 

included in current SCC estimates. 

These omissions may turn out to be 

significant; in the sense that they may 

mean that the best current estimates are 

too low. As noted by the IPCC Fourth 

Assessment Report, ‘‘It is very likely that 

globally aggregated figures 

underestimate the damage costs because 

they cannot include many nonquantifiable impacts.’’ Third, it is 

unlikely that the damage estimates 

account for the directed technological 

change that will lead to innovations that 

reduce the costs of responding to 

climate change—for example, it is likely 

that scientists will develop crops that 

are better able to withstand high 

temperatures. In this respect, the current 

estimates may overstate the likely 

damages. Fourth, controversial ethical 

judgments, including those involving 

the treatment of future generations, play 

a role in judgments about the SCC (see 

in particular the discussion of the 

discount rate, below). 

To date, SCC estimates presented in 

recent regulatory documents have 

varied within and among agencies, 

including DOT, DOE, and EPA. For 

example, a regulation proposed by DOT 

in 2008 assumed a value of $7 per ton 

CO2 523 (2006$) for 2011 emission 

reductions (with a range of $0–14 for 

sensitivity analysis). A regulation 

finalized by DOE used a range of $0–$20 

(2007$). Both of these ranges were 

designed to reflect the value of damages 

to the United States resulting from 

carbon emissions, or the ‘‘domestic’’ 

SCC. In the final MY 2011 CAFE EIS, 

DOT used both a domestic SCC value of 

$2/tCO2 and a global SCC value of 

$33/tCO2 (with sensitivity analysis at 

$80/tCO2), increasing at 2.4 percent per 

year thereafter. The final MY 2011 

CAFE rule also presented a range from 

$2 to $80/tCO2. EPA’s Advance Notice 

of Proposed Rulemaking for Greenhouse 

Gases discussed the benefits of reducing 

GHG emissions and identified what it 

described as ‘‘very preliminary’’ SCC 

estimates ‘‘subject to revision’’ that 

spanned three orders of magnitude. 

EPA’s global mean values were $68 and 

$40/tCO2 for discount rates of 2 percent 

and 3 percent respectively (in 2006 real 

dollars for 2007 emissions).524

The current Administration has 

worked to develop a transparent 

methodology for selecting a set of 

interim SCC estimates to use in 

regulatory analyses until a more 

comprehensive characterization of the 

distribution of SCC is developed. This 

discussion proposes a set of values for 

the interim social cost of carbon. It 

should be emphasized that the analysis 

here is preliminary. Today’s proposed 

joint rulemaking presents SCC estimates 

that reflect the Administration’s current 

understanding of the relevant literature. 

These interim estimates are being used 

for the short-term while an interagency 

group develops a more comprehensive 

characterization of the distribution of 

SCC values for future economic and 

regulatory analyses. The interim values 

should not be viewed as a statement 

about the results of the longer-term 

process. The Administration will be 

evaluating and seeking comment in the 

preamble to today’s proposed rule on all 

of the scientific, economic, and ethical 

issues before establishing final estimates 

for use in future rulemakings. 

The outcomes of the Administration’s 

process to develop interim values are 

judgments in favor of (a) global rather 

than domestic values, (b) an annual 

growth rate of 3%, and (c) interim global 

SCC estimates for 2007 (in 2006 dollars) 

of $55, $33, $19, $10, and $5 per ton of 

CO2. Notably, we have centered our 

current attention on a SCC of $19. The 

proposed figures are based on the 

following judgments. 

1. Global and domestic measures. 

Because of the distinctive nature of the 

climate change problem, we present 

both a global SCC and a fraction of that 

value that represents impacts that may 

occur within the borders of the U.S. 

alone, or a ‘‘domestic’’ SCC, but center 

our current attention on the global 

measure. This approach represents a 

departure from past practices, which 

relied, for the most part, on domestic 

measures. As a matter of law, both 

global and domestic values are 

permissible; the relevant statutory 

provisions are ambiguous and allow 

selection of either measure.525

It is true that under OMB guidance, 

analysis from the domestic perspective 

is required, while analysis from the 

international perspective is optional. 

The domestic decisions of one nation 

are not typically based on a judgment 

about the effects of those decisions on 

other nations. But the climate change 

problem is highly unusual in the sense 

that it involves (a) a global public good 

in which (b) the emissions of one nation 

may inflict significant damages on other 

nations and (c) the United States is 

actively engaged in promoting an 

international agreement to reduce 

worldwide emissions. 

In these circumstances, we believe the 

global measure is preferred. Use of a 

global measure reflects the reality of the 

problem and is expected to contribute to 

the continuing efforts of the United 

States to ensure that emissions 

reductions occur in many nations. 

Domestic SCC values are also 

presented. The development of a 

domestic SCC is greatly complicated by 

the relatively few region- or countryspecific estimates of the SCC in the 

literature. One potential source of 

estimates comes from a recent 

unpublished EPA modeling effort using 

the FUND model. The resulting 

estimates suggest that the ratio of 

domestic to global benefits varies with 

key parameter assumptions. With a 3 

percent discount rate, for example, the 

U.S. benefit is about 6 percent of the 

global benefit for the ‘‘central’’ (mean) 

FUND results, while, for the 

corresponding ‘‘high’’ estimates 

associated with a higher climate 

sensitivity and lower global economic 

growth, the U.S. benefit is less than 4 

percent of the global benefit. With a 2 

percent discount rate, the U.S. share is 

about 2–5 percent of the global estimate. 

Based on this available evidence, an 

interim domestic SCC value equal to 6 

percent of the global damages is 

proposed. This figure is in the middle 

of the range of available estimates from 

the literature. It is recognized that the 6 

percent figure is approximate and 

highly speculative and alternative 

approaches will be explored before 

establishing final values for future 

rulemakings. 

2. Filtering existing analyses. There 

are numerous SCC estimates in the 

existing literature, and it is reasonable 

to make use of those estimates in order 

to produce a figure for current use. A 

starting point is provided by the metaanalysis in Richard Tol, 2008.526 With 

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527See OMB Circular A–4, pp. 35–36, citing 

Portney and Weyant, eds. (1999), Discounting and 

Intergenerational Equity, Resources for the Future, 

Washington, DC. 

that starting point, the Administration 

proposes to ‘‘filter’’ existing SCC 

estimates by using those that (1) are 

derived from peer-reviewed studies; (2) 

do not weight the monetized damages to 

one country more than those in other 

countries; (3) use a ‘‘business as usual’’ 

climate scenario; and (4) are based on 

the most recent published version of 

each of the three major integrated 

assessment models (IAMs): FUND, 

PAGE, and DICE. 

Proposal (1) is based on the view that 

those studies that have been subject to 

peer review are more likely to be 

reliable than those that have not been. 

Proposal (2) is based on a principle of 

neutrality and simplicity; it does not 

treat the citizens of one nation (or 

different citizens within the U.S.) 

differently on the basis of speculative or 

controversial considerations. Further, it 

is consistent with the potential 

compensation tests of Kaldor (1939) and 

Hicks (1940), which use unweighted 

sums of willingness to pay. Finally, this 

is the approach used in rulemakings 

across a variety of settings and 

consequently keeps U.S. government 

policy consistent across contexts. 

Proposal (3) stems from the judgment 

that as a general rule, the proper way to 

assess a policy decision is by comparing 

the implementation of the policy against 

a counterfactual state where the policy 

is not implemented. In addition, our 

expectation is that most policies to be 

evaluated using these interim SCC 

estimates will constitute small enough 

changes to the larger economy to safely 

assume that the marginal benefits of 

emissions reductions will not change 

between the baseline and policy 

scenarios. A departure from this 

approach would be to consider a more 

dynamic setting in which other 

countries might implement policies to 

reduce GHG emissions at an unknown 

future date and the U.S. could choose to 

implement such a policy now or at a 

future date. 

Proposal (4) is based on four 

complementary judgments. First, the 

FUND, PAGE, and DICE models now 

stand as the most comprehensive and 

reliable efforts to measure the economic 

damages from climate change. Second, 

the latest versions of the three IAMs are 

likely to reflect the most recent evidence 

and learning, and hence they are 

presumed to be superior to those that 

preceded them. Third, any effort to 

choose among them, or to reject one in 

favor of the others, would be difficult to 

defend at the present time. In the 

absence of a clear reason to choose 

among them, it is reasonable to base the 

SCC on all of them. Fourth, in light of 

the uncertainties associated with the 

SCC, the additional information offered 

by different models is important. 

3. Use a model-weighted average of 

the estimates at each discount rate. At 

this time, a scientifically valid reason to 

prefer any of the three major IAMs 

(FUND, PAGE, and DICE) has not been 

identified. Accordingly, to address the 

concern that certain models not be given 

unequal weight relative to the other 

models, the estimates are based on an 

equal weighting of the means of the 

estimates from each of the models. 

Among estimates that remain after 

applying the filter, we begin by taking 

the average of all estimates within a 

model. The estimated SCC is then 

calculated as the average of the three 

model-specific averages. This approach 

is used to ensure that models with a 

greater number of published results do 

not exert unequal weight on the interim 

SCC estimates. 

4. Apply a 3 percent annual growth 

rate to the chosen SCC values. SCC is 

assumed to increase over time, because 

future emissions are expected to 

produce larger incremental damages as 

physical and economic systems become 

more stressed as the magnitude of 

climate change increases. Indeed, an 

implied growth rate in the SCC can be 

produced by most of the models that 

estimate economic damages caused by 

increased GHG emissions in future 

years. But neither the rate itself nor the 

information necessary to derive its 

implied value is commonly reported. In 

light of the limited amount of debate 

thus far about the appropriate growth 

rate of the SCC, applying a rate of 3 

percent per year seems appropriate at 

this stage. This value is consistent with 

the range recommended by IPCC (2007) 

and close to the latest published 

estimate (Hope 2008). 

(1) Discount Rates 

For estimation of the benefits 

associated with the mitigation of climate 

change, one of the most complex issues 

involves the appropriate discount rate. 

OMB’s current guidance offers a 

detailed discussion of the relevant 

issues and calls for discount rates of 3 

percent and 7 percent. It also permits a 

sensitivity analysis with low rates (1–3 

percent) for intergenerational problems: 

‘‘If your rule will have important 

intergenerational benefits or costs you 

might consider a further sensitivity 

analysis using a lower but positive 

discount rate in addition to calculating 

net benefits using discount rates of 3 

and 7 percent.’’ 527

The choice of a discount rate, 

especially over long periods of time, 

raises highly contested and exceedingly 

difficult questions of science, 

economics, philosophy, and law. See, 

e.g., William Nordhaus, The Challenge 

of Global Warming (2008); Nicholas 

Stern, The Economics of Climate 

Change (2007); Discounting and 

Intergenerational Equity (Paul Portney 

and John Weyant eds. 1999). It is not 

clear that future generations would be 

willing to trade environmental quality 

for consumption at the same rate as the 

current generations. Under imaginable 

assumptions, decisions based on costbenefit analysis with high discount rates 

might harm future generations—at least 

if investments are not made for the 

benefit of those generations. See Robert 

Lind, Analysis for Intergenerational 

Discounting, id. at 173, 176–177. It is 

also possible that the use of low 

discount rates for particular projects 

might itself harm future generations, by 

ensuring that resources are not used in 

a way that would greatly benefit them. 

In the context of climate change, 

questions of intergenerational equity are 

especially important. 

Reasonable arguments support the use 

of a 3 percent discount rate. First, that 

rate is among the two figures suggested 

by OMB guidance, and hence it fits with 

existing national policy. Second, it is 

standard to base the discount rate on the 

compensation that people receive for 

delaying consumption, and the 3 

percent is close to the risk-free rate of 

return, proxied by the return on long 

term inflation-adjusted U.S. Treasury 

Bonds, as of this writing. Although 

these rates are currently closer to 2.5 

percent, the use of 3 percent provides an 

adjustment for the liquidity premium 

that is reflected in these bonds’ returns. 

At the same time, others would argue 

that a 5 percent discount rate can be 

supported. The argument relies on 

several assumptions. First, that rate can 

also be justified by reference to the level 

of compensation for delaying 

consumption, because it fits with 

market behavior with respect to 

individuals’ willingness to trade-off 

consumption across periods as 

measured by the estimated post-tax 

average real returns to risky private 

investments (e.g., the S&P 500). In the 

climate setting, the 5 percent discount 

rate may be preferable to the riskless 

rate because it is based on risky 

investments and the return to projects to 

mitigate climate change is also risky. In 

contrast, the 3 percent riskless rate may 

be a more appropriate discount rate for 

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49678 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

528Specifically, if the benefits of the policy are 

highly correlated with the returns from broader 

economy, then the market rate should be used to 

discount the benefits. If the benefits are 

uncorrelated with the broader economy the long 

term government bond rate should be applied. 

Furthermore, if the benefits are negatively 

correlated with the broader economy a rate less 

than that on long term government bonds should be 

used (Lind, 1982 pp. 89–90). 

529See Arrow, K.J., W.R. Cline, K-G Maler, M. 

Munasinghe, R. Squiteri, J.E. Stiglitz, 1996. 

‘‘Intertemporal equity, discounting and economic 

efficiency,’’ in Climate Change 1995: Economic and 

Social Dimensions of Climate Change, Contribution 

of Working Group III to the Second Assessment 

Report of the Intergovernmental Panel on Climate 

Change. See also Weitzman, M.L., 1999. In Portney, 

P.R. and Weyant J.P. (eds.), Discounting and 

Intergenerational Equity, Resources for the Future, 

Washington, DC. 

530Richard Newell and William Pizer, 

Discounting the distant future: how much do 

uncertain rates increase valuations? J. Environ. 

Econ. Manage. 46 (2003) 52–71. 

531Most of the estimates in Table 1 rely on 

climate scenarios developed by the 

Intergovernmental Panel on Climate Change (IPCC). 

The IPCC published a new set of scenarios in 2000 

for use in the Third Assessment Report (Special 

Report on Emissions Scenarios—SRES). The SRES 

scenarios define four narrative storylines: A1, A2, 

B1 and B2, describing the relationships between the 

forces driving greenhouse gas and aerosol emissions 

and their evolution during the 21st century for large 

world regions and globally. Each storyline 

represents different demographic, social, economic, 

technological, and environmental developments 

that diverge in increasingly irreversible ways. The 

storylines are summarized in Nakicenovic et al., 

2000 (see also http://sedac.ciesin.columbia.edu/ 

ddc/sres/). Because the B1 and B2 storylines 

represent policy cases rather than business-as-usual 

projections, estimates derived from these scenarios 

to be less appropriate for use in benefit-cost 

analysis. They are therefore excluded. 

532 Guo et al. (2006) report estimates based on two 

Gollier discounting schemes. The Gollier 

discounting assumes complex specifications about 

individual utility functions and risk preferences. 

After various conditions are satisfied, declining 

social discount rates emerge. Gollier Discounting 

Scheme 1 employs a certainty-equivalent social rate 

of time preference (SRTP) derived by assuming the 

regional growth rate is equally likely to be 1% 

above or below the original forecast growth rate. 

Gollier Discounting Scheme 2 calculates a certaintyequivalent social rate of time preference (SRTP) 

using five possible growth rates, and applies the 

new SRTP instead of the original. Hope (2008) 

conducts Monte Carlo analysis on the PRTP 

component of the discount rate. The PRTP is 

modeled as a triangular distribution with a min 

value of 1%/yr, a most likely value of 2%/yr, and 

a max value of 3%/yr. 

projects where the return is known with 

a high degree of confidence (e.g., 

highway guardrails). In principal, the 

correct discount rate would reflect the 

variance in payoff from climate 

mitigation policy and the correlation 

between the payoffs of the policy and 

the broader economy.528

Second, 5 percent, and not 3 percent, 

is roughly consistent with estimates 

implied by reasonable inputs to the 

theoretically derived Ramsey equation, 

which specifies the optimal time path 

for consumption. That equation 

specifies the optimal discount rate as 

the sum of two components. The first 

term (the product of the elasticity of the 

marginal utility of consumption and the 

growth rate of consumption) reflects the 

fact that consumption in the future is 

likely to be higher than consumption 

today, so diminishing marginal utility 

implies that the same monetary damage 

will cause a smaller reduction of utility 

in the future. Standard estimates of this 

term from the economics literature are 

in the range of 3 percent–5 percent. The 

second component reflects the 

possibility that a lower weight should 

be placed on utility in the future, to 

account for social impatience or 

extinction risk, which is specified by a 

pure rate of time preference (PRTP). A 

common estimate of the PRTP is 2 

percent, though some observers believe 

that a principle of intergenerational 

equity suggests that the PRTP should be 

close to zero. It follows that discount 

rate of 5 percent is near the middle of 

the range of values that are able to be 

derived from the Ramsey equation. 

It is recognized that the arguments 

above—for use of market behavior and 

the Ramsey equation—face objections in 

the context of climate change, and of 

course there are alternative approaches. 

In light of climate change, it is possible 

that consumption in the future will not 

be higher than consumption today, and 

if so, the Ramsey equation will suggest 

a lower figure. However, the historical 

evidence is consistent with rising 

consumption over time. 

Some critics note that using observed 

interest rates for inter-generational 

decisions imposes current preferences 

on future generations, which some 

economists say may not be appropriate. 

For generational equity, they argue that 

the discount rate should be below 

market rates to correct for market 

distortions and inefficiencies in intergenerational transfers of wealth (which 

are presumed to compensate future 

generations for damage), and to treat 

generations equitably based on ethical 

principles (see Broome 2008).529

Additionally, some analyses attempt 

to deal with uncertainty with respect to 

interest rates over time. We explore 

below how this might be done.530

(2) Proposed Interim Estimates 

The application of the methodology 

outlined above yields interim estimates 

of the SCC that are reported in Table 

IV.C.3–2. These estimates are reported 

separately using 3 percent and 5 percent 

discount rates. The cells are empty in 

rows 10 and 11, because these studies 

did not report estimates of the SCC at 

a 3 percent discount rate. The modelweighted means are reported in the final 

or summary row; they are $33 per tCO2

at a 3 percent discount rate and $5 per 

tCO2 with a 5 percent discount rate. 

TABLE IV.C.3–2—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/tCO2 IN 2007 (2006$)), BASED ON 3% AND

5% DISCOUNT RATES* 

Model Study Climate scenario 3% 5% 

1 FUND ................................................. Anthoff et al. 2009 ................................... FUND default ........................................... 6 ¥1 

2 FUND ................................................. Anthoff et al. 2009 ................................... SRES A1b ............................................... 1 ¥1 

3 FUND ................................................. Anthoff et al. 2009 ................................... SRES A2 ................................................. 9 ¥1 

4 FUND ................................................. Link and Tol 2004 ................................... No THC ................................................... 12 3 

5 FUND ................................................. Link and Tol 2004 ................................... THC continues ......................................... 12 2 

6 FUND ................................................. Guo et al. 2006 ....................................... Constant PRTP ....................................... 5 ¥1 

7 FUND ................................................. Guo et al. 2006 ....................................... Gollier discount 1 .................................... 14 0 

8 FUND ................................................. Guo et al. 2006 ....................................... Gollier discount 2 .................................... 7 ¥1 

FUND Mean ............................................ 8.25 0 

9 PAGE ................................................. Wahba & Hope 2006 ............................... A2-scen ................................................... 57 7 

10 PAGE ............................................... Hope 2006 ............................................... .................................................................. .......... 7 

11 DICE ................................................. Nordhaus 2008 ........................................ .................................................................. .......... 8 

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533 It should be noted that reported discount rates 

may not be consistently derived across models or 

specific applications of models: While the discount 

rate may be identical, it may reflect different 

assumptions about the individual components of 

the Ramsey equation identified earlier. 

534 In contrast, an alternative approach based on 

Weitzman (2001) would assume that there is a 

constant discount rate that is uncertain and 

represented by a probability distribution. The 

Newell and Pizer, and Weitzman approaches are 

relatively recent contributions, and we invite 

comment on the advantages and disadvantages of 

each. 

TABLE IV.C.3–2—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/tCO2 IN 2007 (2006$)), BASED ON 3% AND

5% DISCOUNT RATES*—Continued 

Model Study Climate scenario 3% 5% 

Summary ................................................. .................................................................. Model-weighted Mean ............................. 33 5 

* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios.531 532 All 

values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) 

assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. 

Analyses have been conducted at $33 

and $5 as these represent the estimates 

associated with the 3 percent and 5 

percent discount rates, respectively.533

The 3 percent and 5 percent 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. (Based on the $19 

global value, the approximate domestic 

fraction of these benefits would be $1.14 

per ton of CO2 assuming that domestic 

benefits are 6 percent of the global 

benefits. 

It is true that there is uncertainty 

about interest rates over long time 

horizons. Recognizing that point, 

Newell and Pizer (2003) have made a 

careful effort to adjust for that 

uncertainty. The Newell-Pizer approach 

models discount rate uncertainty as 

something that evolves over time.534

This is a relatively recent contribution 

to the literature, and estimates based on 

this method are included with the aim 

of soliciting comment. 

There are several concerns with using 

this approach in this context. First, it 

would be a departure from current OMB 

guidance. Second, an approach that 

would average what emerges from 

discount rates of 3 percent and 5 

percent reflects uncertainty about the 

discount rate, but based on a different 

model of uncertainty. The Newell-Pizer 

approach models discount rate 

uncertainty as something that evolves 

over time; in contrast, the preferred 

approach (outlined above) assumes that 

there is a single discount rate with equal 

probability of 3 percent and 5 percent. 

Table IV.C.3–3 reports on the 

application of the Newell-Pizer 

adjustments. The precise numbers 

depend on the assumptions about the 

data generating process that governs 

interest rates. Columns (1a) and (1b) 

assume that ‘‘random walk’’ model best 

describes the data and uses 3 percent 

and 5 percent discount rates, 

respectively. Columns (2a) and (2b) 

repeat this, except that it assumes a 

‘‘mean-reverting’’ process. While the 

empirical evidence does not rule out a 

mean-reverting model, Newell and Pizer 

find stronger empirical support for the 

random walk model. 

TABLE IV.C.3–3—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/tCO2 IN 2007 (2006$))*, USING NEWELL & 

PIZER (2003) ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY** 

Model Study Climate scenario 

Random-walk 

model 

Meanreverting 

model 

3% 

(1a) 

5% 

(1b) 3% 

(2a) 

5% 

(2b) 

1 FUND ........................... Anthoff et al. 2009 ................................ FUND default ........................................ 10 0 7 ¥1 

2 FUND ........................... Anthoff et al. 2009 ................................ SRES A1b ............................................. 2 0 1 ¥1 

3 FUND ........................... Anthoff et al. 2009 ................................ SRES A2 ............................................... 15 0 10 ¥1 

4 FUND ........................... Link and Tol 2004 ................................. No THC ................................................. 20 6 13 4 

5 FUND ........................... Link and Tol 2004 ................................. THC continues ...................................... 20 4 13 2 

6 FUND ........................... Guo et al. 2006 ..................................... Constant PRTP ..................................... 9 0 6 ¥1 

7 FUND ........................... Guo et al. 2006 ..................................... Gollier discount 1 .................................. 14 0 14 0 

8 FUND ........................... Guo et al. 2006 ..................................... Gollier discount 2 .................................. 7 ¥1 7 ¥1 

FUND Mean .......................................... 12 1 9 0 

9 PAGE ........................... Wahba & Hope 2006 ............................ A2-scen ................................................. 97 13 63 8 

10 PAGE ......................... Hope 2006 ............................................ ............................................................... .......... 13 .......... 8 

11 DICE .......................... Nordhaus 2008 ..................................... ............................................................... .......... 15 .......... 9 

Summary ........................... ............................................................... Model-weighted Mean .......................... 55 10 36 6 

* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. See the Notes to Table 1 for further details. 

** Assumes a starting discount rate of 3 percent or 5 percent. Newell and Pizer (2003) based adjustment factors are not applied to estimates 

from Guo et al. (2006) that use a different approach to account for discount rate uncertainty (rows 7–8). 

Note that the correction factor from Newell and Pizer is based on the DICE model. The proper adjustment may differ for other integrated assessment models that produce different time schedules of marginal damages. We would expect this difference to be minor. 

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535 Id. 

536Office of Management and Budget, Circular A– 

4, ‘‘Regulatory Analysis,’’ September 17, 2003, 33. 

Available at http://www.whitehouse.gov/omb/ 

circulars/a004/a-4.pdf (last accessed August 9, 

2009). 

537 Id. 

The resulting estimates of the social 

cost of carbon are necessarily greater. 

When the adjustments from the random 

walk model are applied, the estimates of 

the social cost of carbon are $10 and $55 

per ton of CO2, with the 5 percent and 

3 percent discount rates, respectively. 

The application of the mean-reverting 

adjustment yields estimates of $6 and 

$36. Relying on the random walk model, 

analyses are also conducted with the 

value of the SCC set at $10 and $55. 

(3) Caveats 

There are at least four caveats to the 

approach outlined above. 

First, the impacts of climate change 

are expected to be widespread, diverse, 

and heterogeneous. In addition, the 

exact magnitude of these impacts is 

uncertain, because of the inherent 

randomness in the Earth’s atmospheric 

processes, the U.S. and global 

economies, and the behaviors of current 

and future populations. Current IAM do 

not currently individually account for 

and assign value to all of the important 

physical and other impacts of climate 

change that are recognized in the 

climate change literature. Although it is 

likely that our capability to quantify and 

monetize impacts will improve with 

time, it is also likely that even in future 

applications, there are a number of 

potentially significant benefits 

categories that will remain 

unmonetized. 

Second, in the opposite direction, it is 

unlikely that the damage estimates 

adequately account for the directed 

technological change that climate 

change will cause. In particular, climate 

change will increase the return on 

investment to develop technologies that 

allow individuals to better cope with 

climate change. For example, it is likely 

that scientists will develop crops that 

are better able to withstand high 

temperatures. In this respect, the current 

estimates may overstate the likely 

damages. 

Third, there has been considerable 

recent discussion of the risk of 

catastrophic impacts and of how best to 

account for worst-case scenarios. Recent 

research by Weitzman (2009) specifies 

some conditions under which the 

possibility of catastrophe would 

undermine the use of IAMs and 

conventional cost-benefit analysis. This 

research requires further exploration 

before its generality is known and the 

optimal way to incorporate it into 

regulatory reviews is understood. 

Fourth, it is also worth noting that the 

SCC estimates are only relevant for 

incremental policies relative to the 

projected baselines, which capture 

business-as-usual scenarios. To evaluate 

non-marginal changes, such as might 

occur if the U.S. acts in tandem with 

other nations, then it might be necessary 

to go beyond the simple expedient of 

using the SCC along the BAU path. In 

particular, it would be correct to 

calculate the aggregate WTP to move 

from the BAU scenario to the policy 

scenario, without imposing the 

restriction that the marginal benefit 

remains constant over this range. 

All of the values derived from this 

process are expressed in 2006 dollars. 

NHTSA has adjusted them to their 

equivalent values in 2007 dollars for 

consistency with other values used in 

its analysis of benefits from adopting 

higher CAFE standards for MY 2012– 

2016 passenger cars and light trucks. 

The resulting value upon which we 

have centered our analysis, which is 

derived from the figures reported in the 

tables above, is equivalent to $20 per 

metric ton of CO2 emissions avoided 

when expressed in 2007$, and the 

agency has relied on this value in its 

analysis. NHTSA has also analyzed the 

sensitivity of its benefit estimates to 

alternative values of $5, $10, $34, and 

$56 per metric ton of CO2 emissions 

avoided, with all figures again in 2007$. 

Each of these values applies to 

emissions during 2007, and are assumed 

to grow in real terms by 3 percent 

annually beginning in 2007. NHTSA 

seeks comments on these values and the 

approach used to derive them. 

m. Discounting Future Benefits and 

Costs 

Discounting future fuel savings and 

other benefits is intended to account for 

the reduction in their value to society 

when they are deferred until some 

future date, rather than received 

immediately. The discount rate 

expresses the percent decline in the 

value of these benefits—as viewed from 

today’s perspective—for each year they 

are deferred into the future. In 

evaluating the benefits from alternative 

increases in CAFE standards for MY 

2012–2016 passenger cars and light 

trucks, NHTSA has employed a 

discount rate of 3 percent per year. The 

agency has also tested the sensitivity of 

these benefit and cost estimates to the 

use of a 7 percent discount rate. 

Although these are the same discount 

rates analyzed in the MY 2011 final 

rule, NHTSA has chosen to use 3 

percent as the basis for the Reference 

Case in this proposed rule rather than 

the 7 percent rate it employed 

previously, for the reasons discussed 

below. 

The primary reason that NHTSA has 

selected 3 percent as the appropriate 

rate for discounting future benefits from 

increased CAFE standards is that most 

or all of vehicle manufacturers’ costs for 

complying with higher CAFE standards 

are likely to be reflected in higher sales 

prices for their new vehicle models. By 

increasing sales prices for new cars and 

light trucks, CAFE regulation will thus 

primarily affect vehicle purchases and 

other private consumption decisions. 

Both economic theory and OMB 

guidance on discounting indicate that 

the future benefits and costs of 

regulations that mainly affect private 

consumption should be discounted at 

the social rate of time preference.535

OMB guidance also indicates that 

savers appear to discount future 

consumption at an average real (that is, 

adjusted to remove the effect of 

inflation) rate of about 3 percent when 

they face little risk about its likely level. 

Since the real rate that savers use to 

discount future consumption represents 

a reasonable estimate of the social rate 

of time preference, NHTSA has 

employed the 3 percent rate to discount 

projected future benefits and costs 

resulting from higher CAFE standards 

for MY 2012–2016 passenger cars and 

light trucks.536

Because there is some uncertainty 

about the extent to which vehicle 

manufacturers will be able to recover 

their costs for complying with higher 

CAFE standards by increasing vehicle 

sales prices, however, NHTSA has also 

tested the sensitivity of these benefit 

and cost estimates to the use of a higher 

percent discount rate. OMB guidance 

indicates that the real economy-wide 

opportunity cost of capital is the 

appropriate discount rate to apply to 

future benefits and costs when the 

primary effect of a regulation is ‘‘* * * 

to displace or alter the use of capital in 

the private sector,’’ and estimates that 

this rate currently averages about 7 

percent.537 Thus the agency has also 

tested the sensitivity of its benefit and 

cost estimates for alternative MY 2012– 

2016 CAFE standards to the use of a 7 

percent real discount rate. NHTSA seeks 

comment on whether it should evaluate 

CAFE standards using a discount rate of 

3 percent, 7 percent, or an alternative 

value. 

n. Accounting for Uncertainty in 

Benefits and Costs 

In analyzing the uncertainty 

surrounding its estimates of benefits and 

costs from alternative CAFE standards, 

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538 74 FR 14308–14358 (Mar. 30, 2009). 

539 In a given model year, the model makes 

additional technologies available to each vehicle 

model within several constraints, including (a) 

whether or not the technology is applicable to the 

vehicle model’s technology class, (b) whether the 

vehicle is undergoing a redesign or freshening in 

the given model year, (c) whether engineering 

aspects of the vehicle make the technology 

unavailable (e.g., secondary axle disconnect cannot 

be applied to two-wheel drive vehicles), and (d) 

whether technology application remains within 

‘‘phase in caps’’ constraining the overall share of a 

manufacturer’s fleet to which the technology can be 

added in a given model year. Once enough 

technology is added to a given manufacturer’s fleet 

in a given model year that these constraints make 

further technology application unavailable, 

technologies are exhausted for that manufacturer in 

that model year. 

540This possibility was added to the model to 

account for the fact that under EPCA/EISA, 

manufacturers must pay fines if they do not achieve 

compliance with applicable CAFE standards. 49 

U.S.C. 32912(b). NHTSA recognizes that some 

manufacturers will find it more cost-effective to pay 

fines than to achieve compliance, and believes that 

to assume these manufacturers would exhaust 

available technologies before paying fines would 

cause unrealistically high estimates of market 

penetration of expensive technologies such as 

diesel engines and strong hybrid electric vehicles, 

as well as correspondingly inflated estimates of 

both the costs and benefits of any potential CAFE 

standards. 

NHTSA has considered alternative 

estimates of those assumptions and 

parameters likely to have the largest 

effect. These include the projected costs 

of fuel economy-improving technologies 

and their expected effectiveness in 

reducing vehicle fuel consumption, 

forecasts of future fuel prices, the 

magnitude of the rebound effect, the 

reduction in external economic costs 

resulting from lower U.S. oil imports, 

the value to the U.S. economy of 

reducing carbon dioxide emissions, and 

the discount rate applied to future 

benefits and costs. The range for each of 

these variables employed in the 

uncertainty analysis is presented in the 

section of this notice discussing each 

variable. 

The uncertainty analysis was 

conducted by assuming independent 

normal probability distributions for 

each of these variables, using the low 

and high estimates for each variable as 

the values below which 5 percent and 

95 percent of observed values are 

believed to fall. Each trial of the 

uncertainty analysis employed a set of 

values randomly drawn from each of 

these probability distributions, 

assuming that the value of each variable 

is independent of the others. Benefits 

and costs of each alternative standard 

were estimated using each combination 

of variables. A total of 1,000 trials were 

used to establish the likely probability 

distributions of estimated benefits and 

costs for each alternative standard. 

o. Where Can Readers Find More 

Information About the Economic 

Assumptions? 

Much more detailed information is 

provided in Chapter VIII of the PRIA, 

and a discussion of how NHTSA and 

EPA jointly reviewed and updated 

economic assumptions for purposes of 

this NPRM is available in Chapter 4 of 

the TSD. In addition, all of NHTSA’s 

model input and output files are now 

public and available for the reader’s 

review and consideration. The 

economic input files can be found in the 

docket for this NPRM, NHTSA–2009– 

0059, and on NHTSA’s Web site. 

Finally, because much of NHTSA’s 

economic analysis for purposes of this 

NPRM builds on the work that was done 

for the MY 2011 final rule, we refer 

readers to that document as well for 

background information concerning 

how NHTSA’s assumptions regarding 

economic inputs for CAFE analysis have 

evolved over the past several 

rulemakings, both in response to 

comments and as a result of the agency’s 

growing experience with this type of 

analysis.538

4. How Does NHTSA Use the 

Assumptions in Its Modeling Analysis? 

In developing today’s proposed CAFE 

standards, NHTSA has made significant 

use of results produced by the CAFE 

Compliance and Effects Model 

(commonly referred to as ‘‘the CAFE 

model’’ or ‘‘the Volpe model’’), which 

DOT’s Volpe National Transportation 

Systems Center developed specifically 

to support NHTSA’s CAFE rulemakings. 

The model, which has been constructed 

specifically for the purpose of analyzing 

potential CAFE standards, integrates the 

following core capabilities: 

(1) Estimating how manufacturers 

could apply technologies in response to 

new fuel economy standards, 

(2) Estimating the costs that would be 

incurred in applying these technologies, 

(3) Estimating the physical effects 

resulting from the application of these 

technologies, such as changes in travel 

demand, fuel consumption, and 

emissions of carbon dioxide and criteria 

pollutants, and 

(4) Estimating the monetized societal 

benefits of these physical effects. 

An overview of the model follows 

below. Separate model documentation 

provides a detailed explanation of the 

functions the model performs, the 

calculations it performs in doing so, and 

how to install the model, construct 

inputs to the model, and interpret the 

model’s outputs. Documentation of the 

model, along with model installation 

files, source code, and sample inputs are 

available at NHTSA’s web site. The 

model documentation is also available 

in the docket for today’s proposed rule, 

as are inputs for and outputs from 

analysis of today’s proposed CAFE 

standards. 

a. How Does the Model Operate? 

As discussed above, the agency uses 

the Volpe model to estimate the extent 

to which manufacturers could attempt 

to comply with a given CAFE standard 

by adding technology to fleets that the 

agency anticipates they will produce in 

future model years. This exercise 

constitutes a simulation of 

manufacturers’ decisions regarding 

compliance with CAFE standards. 

This compliance simulation begins 

with the following inputs: (a) The 

baseline market forecast discussed 

above in Section IV.C.1, (b) technologyrelated estimates discussed above in 

Section IV.C.2, (c) economic inputs 

discussed above in Section IV.C.3, and 

(d) inputs defining the characteristics of 

potential new CAFE standards. For each 

manufacturer, the model applies 

technologies in a sequence that follows 

a defined engineering logic (‘‘decision 

trees’’ discussed in the MY 2011 final 

rule and in the model documentation) 

and a cost-minimizing strategy in order 

to identify a set of technologies the 

manufacturer could apply in response to 

new CAFE standards. The model 

applies technologies to each of the 

projected individual vehicles in a 

manufacturer’s fleet, until one of three 

things occurs: 

(1) The manufacturer’s fleet achieves 

compliance with the applicable 

standard; 

(2) The manufacturer ‘‘exhausts’’ 539

available technologies; or 

(3) For manufacturers estimated to be 

willing to pay civil penalties, the 

manufacturer reaches the point at which 

doing so would be more cost-effective 

(from the manufacturer’s perspective) 

than adding further technology.540

As discussed below, the model has 

also been modified in order to apply 

additional technology in early model 

years if doing so will facilitate 

compliance in later model years. 

The model accounts explicitly for 

each model year, applying most 

technologies when vehicles are 

scheduled to be redesigned or 

freshened, and carrying forward 

technologies between model years. The 

CAFE model accounts explicitly for 

each model year because EPCA requires 

that NHTSA make a year-by-year 

determination of the appropriate level of 

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541 49 U.S.C. 32902(a) states that at least 18 

months before the beginning of each model year, 

the Secretary of Transportation shall prescribe by 

regulation average fuel economy standards for 

automobiles manufactured by a manufacturer in 

that model year, and that each standard shall be the 

maximum feasible average fuel economy level that 

the Secretary decides the manufacturers can 

achieve in that year. NHTSA has long interpreted 

this statutory language to require year-by-year 

assessment of manufacturer capabilities. 49 U.S.C. 

32902(b)(2)(C) also requires that standards increase 

ratably between MY 2011 and MY 2020. 

542As for all of its other rulemakings, NHTSA is 

required by Executive Order 12866 and DOT 

regulations to analyze the costs and benefits of 

CAFE standards. Executive Order 12866, 58 FR 

51735 (Oct. 4, 1993); DOT Order 2100.5, 

‘‘Regulatory Policies and Procedures,’’ 1979, 

available at http://regs.dot.gov/ 

rulemakingrequirements.htm (last accessed August 

21, 2009). 

543 74 FR 14372 (Mar. 30, 2009). 

544 49 U.S.C. 32902(a). 

stringency and then set the standard at 

that level, while ensuring ratable 

increases in average fuel economy.541

The model also calculates the costs, 

effects, and benefits of technologies that 

it estimates could be added in response 

to a given CAFE standard.542 It 

calculates costs by applying the cost 

estimation techniques discussed above 

in Section IV.C.2, and by accounting for 

the number of affected vehicles. It 

accounts for effects such as changes in 

vehicle travel, changes in fuel 

consumption, and changes in 

greenhouse gas and criteria pollutant 

emissions. It does so by applying the 

fuel consumption estimation techniques 

also discussed in Section IV.C.2, and the 

vehicle survival and mileage 

accumulation forecasts, the rebound 

effect estimate and the fuel properties 

and emission factors discussed in 

Section IV.C.3. Considering changes in 

travel demand and fuel consumption, 

the model estimates the monetized 

value of accompanying benefits to 

society, as discussed in Section IV.C.3. 

The model calculates both the 

undiscounted and discounted value of 

benefits that accrue over time in the 

future. 

The Volpe model has other 

capabilities that facilitate the 

development of a CAFE standard. It can 

be used to fit a mathematical function 

forming the basis for an attribute-based 

CAFE standard, following the steps 

described below. It can also be used to 

evaluate many (e.g., 200 per model year) 

potential levels of stringency 

sequentially, and identify the stringency 

at which specific criteria are met. For 

example, it can identify the stringency 

at which net benefits to society are 

maximized, the stringency at which a 

specified total cost is reached, or the 

stringency at which a given average 

required fuel economy level is attained. 

This allows the agency to compare more 

easily the impacts in terms of fuel 

savings, emissions reductions, and costs 

and benefits of achieving different levels 

of stringency according to different 

criteria. The model can also be used to 

perform uncertainty analysis (i.e., 

Monte Carlo simulation), in which input 

estimates are varied randomly according 

to specified probability distributions, 

such that the uncertainty of key 

measures (e.g., fuel consumption, costs, 

benefits) can be evaluated. 

b. Has NHTSA Considered Other 

Models? 

Nothing in EPCA requires NHTSA to 

use the Volpe model. In principle, 

NHTSA could perform all of these tasks 

through other means. For example, in 

developing the standards proposed 

today, the agency did not use the Volpe 

model’s curve fitting routines, because 

they could not be modified in time to 

reflect the change in the mathematical 

function defining the proposed CAFE 

standards. The Volpe model may be 

modified to do so for the final rule, 

although the agency can also continue 

to fit the mathematical function outside 

the model. In general, though, these 

model capabilities have greatly 

increased the agency’s ability to rapidly, 

systematically, and reproducibly 

conduct key analyses relevant to the 

formulation and evaluation of new 

CAFE standards. 

During its previous rulemaking, 

which led to the final MY 2011 

standards promulgated earlier this year, 

NHTSA received comments from the 

Alliance and CARB encouraging 

NHTSA to examine the usefulness of 

other models. As discussed in that final 

rule, NHTSA, having undertaken such 

consideration, concluded that the Volpe 

model is a sound and reliable tool for 

the development and evaluation of 

potential CAFE standards.543

In reconsidering and reaffirming this 

conclusion for purposes of this NPRM, 

NHTSA notes that the Volpe model not 

only has been formally peer-reviewed 

and tested through three rulemakings, 

but also has some features especially 

important for the analysis of CAFE 

standards under EPCA/EISA. Among 

these are the ability to perform year-byyear analysis, and the ability to account 

for engineering differences between 

specific vehicle models. 

EPCA requires that NHTSA set CAFE 

standards for each model year at the 

level appropriate for that year.544 Doing 

so requires the ability to analyze each 

model year and, when developing 

regulations covering multiple model 

years, to account for the 

interdependency of model years in 

terms of the appropriate levels of 

stringency for each one. Also, as part of 

the evaluation of the economic 

practicability of the standards, as 

required by EPCA, NHTSA has 

traditionally assessed the annual costs 

and benefits of the standards as it is 

permitted to do so. The first (2002) 

version of DOT’s model treated each 

model year separately, and did not 

perform this type of explicit accounting. 

Manufacturers took strong exception to 

these shortcomings. For example, GM 

commented in 2002 that ‘‘although the 

table suggests that the proposed 

standard for MY 2007, considered in 

isolation, promises benefits exceeding 

costs, that anomalous outcome is merely 

an artifact of the peculiar Volpe 

methodology, which treats each year 

independently of any other * * *.’’ In 

2002, GM also criticized DOT’s analysis 

for, in some cases, adding a technology 

in MY 2006 and then replacing it with 

another technology in MY 2007. GM 

(and other manufacturers) argued that 

this completely failed to represent true 

manufacturer product-development 

cycles, and therefore could not be 

technologically feasible or economically 

practicable. 

In response to these concerns, and 

related concerns expressed by other 

manufacturers, DOT modified the CAFE 

model in order to account for 

dependencies between model years and 

to better represent manufacturers’ 

planning cycles, in a way that still 

allowed NHTSA to comply with the 

statutory requirement to determine the 

appropriate level of the standards for 

each model year. This was 

accomplished by limiting the 

application of many technologies to 

model years in which vehicle models 

are scheduled to be redesigned (or, for 

some technologies, ‘‘freshened’’), and by 

causing the model to ‘‘carry forward’’ 

applied technologies from one model 

year to the next. 

During the recent rulemaking for MY 

2011 passenger cars and light trucks, 

DOT further modified the CAFE model 

to account for cost reductions 

attributable to ‘‘learning effects’’ related 

to volume (i.e., economies of scale) and 

the passage of time (i.e., time-based 

learning), both of which evolve on yearby-year basis. These changes were 

implemented in response to comments 

by environmental groups and other 

stakeholders. 

The Volpe model is also able to 

account for important engineering 

differences between specific vehicle 

models, and to thereby reduce the risk 

of applying technologies that may be 

incompatible with or already present on 

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545Although a manufacturer may, in addition, 

generate CAFE credits in early model years for use 

in later model years (or, less likely, in later years 

for use in early years), EPCA does not allow 

NHTSA, when setting CAFE standards, to account 

for manufacturers’ use of CAFE credits. 

a given vehicle model. Some 

commenters have previously suggested 

that manufacturers are most likely to 

broadly apply generic technology 

‘‘packages,’’ and the Volpe model does 

tend to form ‘‘packages’’ dynamically, 

based on vehicle characteristics, 

redesign schedules, and schedules for 

increases in CAFE standards. For 

example, under the proposed CAFE 

standards for passenger cars, the CAFE 

model estimated that manufacturers 

could apply turbocharged SGDI engines 

mated with dual-clutch AMTs to 1.8 

million passenger cars in MY 2016, 

about 16 percent of the MY 2016 

passenger car fleet. Recent 

modifications to the model, discussed 

below, to represent multi-year planning, 

increase the model’s tendency to add 

relatively cost-effective technologies 

when vehicles are estimated to be 

redesigned, and thereby increase the 

model’s tendency to form such 

packages. 

On the other hand, some 

manufacturers have indicated that 

especially when faced with significant 

progressive increases in the stringency 

of new CAFE standards, they are likely 

to also look for narrower opportunities 

to apply specific technologies. By 

progressively applying specific 

technologies to specific vehicle models, 

the CAFE model also produces such 

outcomes. For example, under the 

proposed CAFE standards for passenger 

cars, the CAFE model estimated that in 

MY 2012, some manufacturers could 

find it advantageous to apply SIDI to 

some vehicle models without also 

adding turbochargers. 

By following this approach of 

combining technologies incrementally 

and on a model-by-model basis, the 

CAFE model is able to account for 

important engineering differences 

between vehicle models and avoid 

unlikely technology combinations. For 

example, the model does not apply 

dual-clutch AMTs (or strong hybrid 

systems) to vehicle models with 6-speed 

manual transmissions. Some vehicle 

buyers prefer a manual transmission; 

this preference cannot be assumed 

away. The model’s accounting for 

manual transmissions is also important 

for vehicles with larger engines: For 

example, cylinder deactivation cannot 

be applied to vehicles with manual 

transmissions, because there is no 

reliable means of predicting when the 

driver will change gears. By retaining 

cylinder deactivation as a specific 

technology rather than part of a predetermined package and by retaining 

differentiation between vehicles with 

different transmissions, DOT’s model is 

able to target cylinder deactivation only 

to vehicle models for which it is 

technologically feasible. 

The Volpe model also produces a 

single vehicle-level output file that, for 

each vehicle model, shows which 

technologies were present at the outset 

of modeling, which technologies were 

superseded by other technologies, and 

which technologies were ultimately 

present at the conclusion of modeling. 

For each vehicle, the same file shows 

resultant changes in vehicle weight, fuel 

economy, and cost. This provides for 

efficient identification, analysis, and 

correction of errors, a task with which 

the public can now assist the agency, 

since all inputs and outputs are public. 

Such considerations, as well as those 

related to the efficiency with which the 

Volpe model is able to analyze attributebased CAFE standards and changes in 

vehicle classification, and to perform 

higher-level analysis such as stringency 

estimation (to meet predetermined 

criteria), sensitivity analysis, and 

uncertainty analysis, lead the agency to 

conclude that the model remains the 

best available to the agency for the 

purposes of analyzing potential new 

CAFE standards. 

c. What Changes Has DOT Made to the 

Model? 

Prior to being used for analysis 

supporting today’s proposal, the Volpe 

model was revised to make some minor 

improvements, and to add one 

significant new capability: the ability to 

simulate manufacturers’ ability to 

engage in ‘‘multi-year planning.’’ Multiyear planning refers to the fact that 

when redesigning or freshening 

vehicles, manufacturers can anticipate 

future fuel economy or CO2 standards, 

and add technologies accounting for 

these standards. For example, a 

manufacturer might choose to overcomply in a given model year when 

many vehicle models are scheduled for 

redesign, in order to facilitate 

compliance in a later model year when 

standards will be more stringent yet few 

vehicle models are scheduled for 

redesign.545 Prior comments have 

indicated that the Volpe model, by not 

representing such manufacturer choices, 

tended to overestimate compliance 

costs. However, because of the technical 

complexity involved in representing 

these choices when, as in the Volpe 

model, each model year is accounted for 

separately and explicitly, the model 

could not be modified to add this 

capability prior to the statutory deadline 

for the MY 2011 final standards. 

The model now includes this 

capability, and NHTSA has applied it in 

analyzing the standards proposed today. 

Consequently, this often produces 

results indicating that manufacturers 

could over-comply in some model years 

(with corresponding increases in costs 

and benefits in those model years) and 

thereby ‘‘carry forward’’ technology into 

later model years in order to reduce 

compliance costs in those later model 

years. NHTSA believes this better 

represents how manufacturers would 

actually respond to new CAFE 

standards, and thereby produces more 

realistic estimates of the costs and 

benefits of such standards. 

The Volpe model has also been 

modified to accommodate inputs 

specifying the amount of CAFE credit to 

be applied to each manufacturer’s fleet. 

Although the model is not currently 

capable of estimating manufacturers’ 

decisions regarding the generation and 

use of CAFE credits, and EPCA does not 

allow NHTSA, in setting CAFE 

standards, to take into account 

manufacturers’ potential use of credits, 

this additional capability in the Volpe 

model provides a basis for more 

accurately estimating costs, effects, and 

benefits that may actually result from 

new CAFE standards. Insofar as some 

manufacturers actually do earn and use 

CAFE credits, this provides NHTSA 

with some ability to examine outcomes 

more realistically than EPCA allows for 

purposes of setting new CAFE 

standards. 

In comments on recent NHTSA 

rulemakings, some reviewers have 

suggested that the Volpe model should 

be modified to estimate the extent to 

which new CAFE standards would 

induce changes in the mix of vehicles in 

the new vehicle fleet. NHTSA, like EPA, 

agrees that a ‘‘market shift’’ model, also 

called a consumer vehicle choice model, 

could provide useful information 

regarding the possible effects of 

potential new CAFE standards. An 

earlier experimental version of the 

Volpe model included a multinomial 

logit model that estimated changes in 

sales resulting from CAFE-induced 

increases in new vehicle fuel economy 

and prices. A fuller description of this 

attempt can be found in Section V of the 

PRIA. However, NHTSA has thus far 

been unable to develop credible 

coefficients specifying such a model. In 

addition, as discussed in Section II.H.4, 

such a model is sensitive to the 

coefficients used in it, and there is great 

variation over some key values of these 

coefficients in published studies. 

NHTSA seeks comment on ways to 

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546We note, however, that files from any 

supplemental analysis conducted that relied in part 

on confidential manufacturer product plans cannot 

be made public, as prohibited under 49 CFR part 

512. 

547 49 U.S.C. 32902(a)(3)(A). 

548As discussed in Chapter 2 of the TSD, EPA is 

also proposing to set attribute-based CO2 standards 

that are defined by a mathematical function, given 

the advantages of using attribute-based standards 

and given the goal of coordinating and harmonizing 

the CAFE and CO2 standards as expressed by 

President Obama in his announcement of the new 

National Program and in the joint NOI. 

improve on this earlier work and 

develop this capability effectively. If the 

agency is able to do so prior to 

conducting analysis supporting 

decisions regarding final CAFE 

standards, it will attempt to reintegrate 

this capability in the Volpe model and 

include these effects in its analysis of 

final standards. If not, NHTSA will 

continue efforts to develop and make 

use of this capability in future 

rulemakings. 

d. Does the Model Set the Standards? 

Although NHTSA currently uses the 

Volpe model as a tool to inform its 

consideration of potential CAFE 

standards, the Volpe model does not 

determine the CAFE standards that 

NHTSA proposes or promulgates as 

final regulations. The results it produces 

are completely dependent on inputs 

selected by NHTSA, based on the best 

available information and data available 

in the agency’s estimation at the time 

standards are set. Although the model 

has been programmed in previous 

rulemakings to estimate at what 

stringency net benefits are maximized, 

NHTSA has not done so here and has 

instead used the Volpe model to 

estimate stringency levels that produce 

roughly constant rates of increase in the 

combined average required fuel 

economy. Ultimately, NHTSA’s 

selection of a CAFE standard is 

governed and guided by the statutory 

requirements of EPCA, as amended by 

EISA: NHTSA sets the standard at the 

maximum feasible average fuel economy 

level that it determines is achievable 

during a particular model year, 

considering technological feasibility, 

economic practicability, the effect of 

other standards of the Government on 

fuel economy, and the need of the 

nation to conserve energy. 

NHTSA considers the results of 

analyses conducted by the Volpe model 

and analyses conducted outside of the 

Volpe model, including analysis of the 

impacts of carbon dioxide and criteria 

pollutant emissions, analysis of 

technologies that may be available in 

the long term and whether NHTSA 

could expedite their entry into the 

market through these standards, and 

analysis of the extent to which changes 

in vehicle prices and fuel economy 

might affect vehicle production and 

sales. Using all of this information—not 

solely that from the Volpe model—the 

agency considers the governing 

statutory factors, along with 

environmental issues and other relevant 

societal issues such as safety, and 

promulgates the standards based on its 

best judgment on how to balance these 

factors. 

This is why the agency considered 

eight regulatory alternatives, only one of 

which reflects the agency’s proposed 

standards, based on the agency’s 

determinations and assumptions. Others 

assess alternative standards, some of 

which exceed the proposed standards 

and/or the point at which net benefits 

are maximized. These comprehensive 

analyses, which also included scenarios 

with different economic input 

assumptions as presented in the FEIS 

and FRIA, are intended to inform and 

contribute to the agency’s consideration 

of the ‘‘need of the United States to 

conserve energy,’’ as well as the other 

statutory factors. 49 U.S.C. 32902(f). 

Additionally, the agency’s analysis 

considers the need of the nation to 

conserve energy by accounting for 

economic externalities of petroleum 

consumption and monetizing the 

economic costs of incremental CO2

emissions in the social cost of carbon. 

NHTSA uses information from the 

model when considering what standards 

to propose and finalize, but the model 

does not determine the standards. 

e. How Does NHTSA Make the Model 

Available and Transparent? 

Model documentation, which is 

publicly available in the rulemaking 

docket and on NHTSA’s web site, 

explains how the model is installed, 

how the model inputs (all of which are 

available to the public) 546 and outputs 

are structured, and how the model is 

used. The model can be used on any 

Windows-based personal computer with 

Microsoft Office 2003 and the Microsoft 

.NET framework installed (the latter 

available without charge from 

Microsoft). The executable version of 

the model and the underlying source 

code are also available at NHTSA’s Web 

site. The input files used to conduct the 

core analysis documented in this 

proposed rule are available in the public 

docket. With the model and these input 

files, anyone is capable of 

independently running the model to 

repeat, evaluate, and/or modify the 

agency’s analysis. 

5. How Did NHTSA Develop the Shape 

of the Target Curves for the Proposed 

Standards? 

In developing the shape of the target 

curves for today’s proposed standards, 

NHTSA took a new approach, primarily 

in response to comments received in the 

MY 2011 rulemaking. NHTSA’s 

authority under EISA allows 

consideration of any ‘‘attribute related 

to fuel economy’’ and any 

‘‘mathematical function.’’ While the 

attribute, footprint, is the same for these 

proposed standards as the attribute used 

for the MY 2011 standards, the 

mathematical function is new. 

Both vehicle manufacturers and 

public interest groups expressed 

concern in the MY 2011 rulemaking 

process that the constrained logistic 

function, particularly the function for 

the passenger car standards, was overly 

steep and could lead, on the one hand, 

to fuel economy targets that were overly 

stringent for small footprint vehicles, 

and on the other hand, to a greater 

incentive for manufacturers to upsize 

vehicles in order to reduce their 

compliance obligation (because largerfootprint vehicles have less stringent 

targets) in ways that could compromise 

energy and environmental benefits. We 

tentatively believe that the constrained 

linear function developed here 

significantly mitigates steepness 

concerns, but we seek comment on 

whether readers agree, and whether 

there are any other issues relating to the 

new approach that NHTSA should 

consider in developing the curves for 

the final rule. 

a. Standards Are Attribute-Based and 

Defined by a Mathematical Function 

EPCA, as amended by EISA, expressly 

requires that CAFE standards for 

passenger cars and light trucks be based 

on one or more vehicle attributes related 

to fuel economy, and be expressed in 

the form of a mathematical function.547

Like the MY 2011 standards, the MY 

2012–2016 passenger car and light truck 

standards are attribute-based and 

defined by a mathematical function.548

Also like the MY 2011 standards, the 

MY 2012–2016 standards are based on 

the footprint attribute. However, unlike 

the MY 2011 standards, the MY 2012– 

2016 standards are defined by a 

constrained linear rather than a 

constrained logistic function. The 

reasons for these similarities and 

differences are explained below. 

As discussed above in Section II, 

under attribute-based standards, the 

fleet-wide average fuel economy that a 

particular manufacturer must achieve in 

a given model year depends on the mix 

of vehicles that it produces for sale. 

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549The 2002 NAS Report described at length and 

quantified the potential safety problem with average 

fuel economy standards that specify a single 

numerical requirement for the entire industry. See 

NAS Report at 5, finding 12. 

550 Id. at 4–5, finding 10. 

551 74 FR 14409–14412 (Mar. 30, 2009). 

Until NHTSA began to set ‘‘Reformed’’ 

attribute-based standards for light trucks 

in MYs 2008–2011, and until EISA gave 

NHTSA authority to set attribute-based 

standards for passenger cars beginning 

in MY 2011, NHTSA set ‘‘universal’’ or 

‘‘flat’’ industry-wide average CAFE 

standards. Attribute-based standards are 

preferable to universal industry-wide 

average standards for several reasons. 

First, attribute-based standards increase 

fuel savings and reduce emissions when 

compared to an equivalent universal 

industry-wide standard under which 

each manufacturer is subject to the same 

numerical requirement. Absent a policy 

to require all full-line manufacturers to 

produce and sell essentially the same 

mix of vehicles, the stringency of the 

universal industry-wide standards is 

constrained by the capability of those 

full-line manufacturers whose product 

mix includes a relatively high 

proportion of larger and heavier 

vehicles. In effect, the standards are 

based on the mix of those 

manufacturers. As a result, the 

standards are generally set below the 

capabilities of full-line and limited-line 

manufacturers that sell predominantly 

lighter and smaller vehicles. 

Under an attribute-based system, in 

contrast, every manufacturer is more 

likely to be required to continue adding 

more fuel-saving technology each year 

because the level of the compliance 

obligation of each manufacturer is based 

on its own particular product mix. 

Thus, the compliance obligation of a 

manufacturer with a higher percentage 

of lighter and smaller vehicles will have 

a higher compliance obligation than a 

manufacturer with a lower percentage of 

such vehicles. As a result, all 

manufacturers must use technologies to 

enhance the fuel economy levels of the 

vehicles they sell. Therefore, fuel 

savings and CO2 emissions reductions 

should be higher under an attributebased system than under a comparable 

industry-wide standard. 

Second, attribute-based standards 

minimize the incentive for 

manufacturers to respond to CAFE in 

ways harmful to safety.549 Because each 

vehicle model has its own target (based 

on the attribute chosen), attribute-based 

standards provide no incentive to build 

smaller vehicles simply to meet a fleetwide average. Since smaller vehicles are 

subject to more stringent fuel economy 

targets, a manufacturer’s increasing its 

proportion of smaller vehicles would 

simply cause its compliance obligation 

to increase. 

Third, attribute-based standards 

provide a more equitable regulatory 

framework for different vehicle 

manufacturers.550 A universal industrywide average standard imposes 

disproportionate cost burdens and 

compliance difficulties on the 

manufacturers that need to change their 

product plans and no obligation on 

those manufacturers that have no need 

to change their plans. Attribute-based 

standards spread the regulatory cost 

burden for fuel economy more broadly 

across all of the vehicle manufacturers 

within the industry. 

And fourth, attribute-based standards 

respect economic conditions and 

consumer choice, instead of having the 

government mandate a certain fleet mix. 

Manufacturers are required to invest in 

technologies that improve the fuel 

economy of their fleets, regardless of 

vehicle mix. Additionally, attributebased standards help to avoid the need 

to conduct rulemakings to amend 

standards if economic conditions 

change, causing a shift in the mix of 

vehicles demanded by the public. 

NHTSA conducted three rulemakings 

during the 1980s to amend passenger 

car standards for MYs 1986–1989 in 

response to unexpected drops in fuel 

prices and resulting shifts in consumer 

demand that made the passenger car 

standard of 27.5 mpg infeasible for 

several years following the change in 

fuel prices. 

As discussed above in Section II, for 

purposes of the CAFE standards 

proposed in this NPRM, NHTSA 

recognizes that the risk, even if small, 

does exist that low fuel prices in MYs 

2012–2016 might lead indirectly to less 

than currently anticipated fuel savings 

and emissions reductions. Thus, we 

seek comment on whether backstop 

standards, or any other method within 

the agencies’ statutory authority, should 

and can be implemented for the import 

and light truck fleets in order to achieve 

the fuel savings that attribute-based 

standards might not absolutely 

guarantee. Commenters are encouraged, 

but not required, to review and respond 

to NHTSA’s discussion of this issue in 

the MY 2011 final rule as a starting 

point.551

b. What Attribute Does NHTSA Use, and 

Why? 

Consistent with the MY 2011 CAFE 

standards, NHTSA is proposing to use 

footprint as the attribute for the MY 

2012–2016 CAFE standards. There are 

several policy reasons why NHTSA and 

EPA both believe that footprint is the 

most appropriate attribute on which to 

base the standards, as discussed below. 

As discussed in the PRIA, in 

NHTSA’s judgment, from the standpoint 

of vehicle safety, it is important that the 

CAFE standards be set in a way that 

does not encourage manufacturers to 

respond by selling vehicles that are in 

any way less safe. While NHTSA’s 

research also indicates that reductions 

in vehicle mass tend to compromise 

vehicle safety, footprint-based standards 

provide an incentive to use advanced 

lightweight materials and structures that 

would be discouraged by weight-based 

standards, because manufacturers can 

use them to improve a vehicle’s fuel 

economy without their use necessarily 

resulting in a change in the vehicle’s 

target level of fuel economy. 

Further, although we recognize that 

weight is better correlated with fuel 

economy than is footprint, we continue 

to believe that there is less risk of 

‘‘gaming’’ (artificial manipulation of the 

attribute(s) to achieve a more favorable 

target) by increasing footprint under 

footprint-based standards than by 

increasing vehicle mass under weightbased standards—it is relatively easy for 

a manufacturer to add enough weight to 

a vehicle to decrease its applicable fuel 

economy target a significant amount, as 

compared to increasing vehicle 

footprint. We also agree with concerns 

raised in 2008 by some commenters in 

the MY 2011 CAFE rulemaking that 

there would be greater potential for 

gaming under multi-attribute standards, 

such as standards under which targets 

would also depend on attributes such as 

weight, torque, power, towing 

capability, and/or off-road capability. 

Standards that incorporate such 

attributes in conjunction with footprint 

would not only be significantly more 

complex, but by providing degrees of 

freedom with respect to more easilyadjusted attributes, they would make it 

less certain that the future fleet would 

actually achieve the projected average 

fuel economy and CO2 reduction levels. 

However, while NHTSA tentatively 

concludes that footprint is the most 

appropriate attribute upon which to 

base the proposed standards, 

recognizing strong public interest in this 

issue, we seek comment on whether the 

agency should consider setting 

standards for the final rule based on 

another attribute or another 

combination of attributes. If commenters 

suggest that the agency should consider 

another attribute or another 

combination of attributes, the agency 

specifically requests that the 

commenters address the concerns raised 

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552 e is the irrational number for which the slope 

of the function y = numberx is equal to 1 when x 

is equal to zero. The first 8 digits of e are 2.7182818. 

in the paragraphs above regarding the 

use of other attributes, and explain how 

standards should be developed using 

the other attribute(s) in a way that 

contributes more to fuel savings and 

CO2 reductions than the footprint-based 

standards, without compromising 

safety. 

c. What Mathematical Function Did 

NHTSA Use for the RecentlyPromulgated MY 2011 CAFE Standards? 

The MY 2011 CAFE standards are 

defined by a continuous, constrained 

logistic function, which takes the form 

of an S-curve, and is defined according 

to the following formula: 

TARGET

e

FOOTPRINT c

FOOTPRINT c

=

+ − ⎛

⎝

⎜ ⎞

⎠

⎟ +

( ) −

( ) −

1

1 11

a ba 1

e d

d

Here, TARGET is the fuel economy target 

(in mpg) applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), b and 

a are the function’s lower and upper 

asymptotes (also in mpg), e is approximately 

equal to 2.718,552 c is the footprint (in square 

feet) at which the inverse of the fuel economy 

target falls halfway between the inverses of 

the lower and upper asymptotes, and d is a 

parameter (in square feet) that determines 

how gradually the fuel economy target 

transitions from the upper toward the lower 

asymptote as the footprint increases. 

After fitting this mathematical form 

(separately) to the passenger car and 

light truck fleets and determining the 

stringency of the standards (i.e., the 

vertical positions of the curves), NHTSA 

arrived at the following curves to define 

the MY 2011 standards: 

d. What Mathematical Function is 

NHTSA Proposing to Use for New CAFE 

Standards, and Why? 

In finalizing the MY 2011 standards, 

NHTSA noted that the agency is not 

required to use a constrained logistic 

function and indicated that the agency 

may consider defining future CAFE 

standards in terms of a different 

mathematical function. NHTSA has 

done so in preparation for the proposed 

CAFE standards. 

In revisiting this question, NHTSA 

found that the final MY 2011 CAFE 

standard for passenger cars, though less 


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553The agencies excluded diesel engines and 

strong hybrid vehicle technologies from this 

exercise (and only this exercise) because the 

agencies expect that manufacturers would not need 

to rely heavily on these technologies in order to 

comply with the proposed standards. NHTSA and 

EPA did include diesel engines and strong hybrid 

vehicle technologies in all other portions of their 

analyses. 

554EISA added the following additional 

requirements. Standards must be attribute-based 

and expressed in the form of a mathematical 

function. 49 U.S.C. 32902(b)(3)(A). Standards for 

MYs 2011–2020 must ‘‘increase ratably’’ in each 

model year. 49 U.S.C. 32902(b)(2)(C). NHTSA 

interprets this requirement, in combination with the 

requirement to set the standards for each model 

year at the level determined to be the maximum 

feasible level for that model year, to mean that the 

annual increases should not be disproportionately 

large or small in relation to each other. 

555 49 U.S.C. 32902(b)(2)(A). 

steep than the MY 2011 standard 

NHTSA proposed in 2008, continues to 

concentrate the sloped portion of the 

curve (from a compliance perspective, 

the area in which upsizing results in a 

slightly lower applicable target) within 

a relatively narrow footprint range 

(approximately 47–55 square feet). 

Further, most passenger car models 

have footprints smaller than the curve’s 

51.4 square foot inflection point, and 

many passenger car models have 

footprints at which the curve is 

relatively flat. 

For both passenger cars and light 

trucks, a mathematical function that has 

some slope at most footprints where 

vehicles are produced is advantageous 

in terms of fairly balancing regulatory 

burdens among manufacturers, and in 

terms of providing a disincentive to 

respond to new standards by 

downsizing vehicles in ways that 

compromise vehicle safety. For 

example, a flat standard may be very 

difficult for a full-line manufacturer to 

meet, while requiring very little of a 

manufacturer concentrating on small 

vehicles, and a flat standard may 

provide an incentive to manufacturers 

to downsize certain vehicles, in order to 

‘‘balance out’’ other vehicles subject to 

the same standard. 

As a potential alternative to the 

constrained logistic function, NHTSA 

had, in proposing MY 2011 standards, 

presented information regarding a 

constrained linear function. As shown 

in the 2008 NPRM, a constrained linear 

function has the potential to avoid 

creating a localized region (in terms of 

vehicle footprint) over which the slope 

of the function is relatively steep. 

Although NHTSA did not receive public 

comments on this option, the agency 

indicated that it still believed a linear 

function constrained by upper (on a 

gpm basis) and possibly lower limits 

could merit reconsideration in future 

CAFE rulemakings. 

Having re-examined a constrained 

linear function for purposes of the 

proposed standards, NHTSA tentatively 

concludes that for both passenger cars 

and light trucks, it remains 

meaningfully sloped over a wide 

footprint range, thereby providing a 

well-distributed disincentive to 

downsize vehicles in ways that could 

compromise highway safety. Further, 

the constrained linear function 

proposed today is not so steeply sloped 

that it would provide a strong incentive 

to increase vehicle size in order to 

obtain a lower CAFE requirement and 

higher CO2 limit, thereby compromising 

energy and environmental benefits. 

Therefore, the CAFE standards proposed 

today are defined by constrained linear 

functions. 

The constrained linear function is 

defined according to the following 

formula: 

TARGET

MIN MAX c FOOTPRINT d,

=

× + ⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢ ⎤

⎦

⎥

1

1 1

a b,

Here, TARGET is the fuel economy target 

(in mpg) applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), b and 

a are the function’s lower and upper 

asymptotes (also in mpg), respectively, c is 

the slope (in gpm per square foot) of the 

sloped portion of the function, and d is the 

intercept (in gpm) of the sloped portion of 

the function (that is, the value the sloped 

portion would take if extended to a footprint 

of 0 square feet. The MIN and MAX functions 

take the minimum and maximum, 

respectively of the included values; for 

example, MIN(1,2) = 1, MAX(1,2) = 2, and 

MIN[MAX(1,2),3)]=2. The following chart 

shows an example of a linear target function, 

where a = 0.0241 gpm (41.6 mpg), b = 0.032 

gpm (31.2 mpg), c = 0.000531 gpm per square 

foot, and d = 0.002292 gpm (436 mpg). 

Because the function is linear on a gpm basis, 

not an mpg basis, it is plotted on this basis. 

e. How Did NHTSA Fit the Coefficients 

That Determine the Shape of the 

Proposed Curves? 

For purposes of this NPRM, and for 

EPA’s use in developing new CO2

emissions standards, the basic curve 

shapes were developed using methods 

similar to those applied by NHTSA in 

fitting the curves defining the MY 2011 

standards. We began with the market 

inputs discussed above, but because the 

baseline fleet is technologically 

heterogeneous, NHTSA used the CAFE 

model to develop a fleet to which nearly 

all the technologies discussed in Section 

V of the PRIA and Chapter 3 of the joint 

TSD 553 were applied, by taking the 

following steps: (1) Treating all 

manufacturers as unwilling to pay civil 

penalties rather than applying 

technology, (2) applying any technology 

at any time, irrespective of scheduled 

vehicle redesigns or freshening, and (3) 

ignoring ‘‘phase-in caps’’ that constrain 

the overall amount of technology that 

can be applied by the model to a given 

manufacturer’s fleet. These steps helped 

to increase technological parity among 

vehicle models, thereby providing a 

better basis (than the baseline fleet) for 

estimating the statistical relationship 

between vehicle size and fuel economy. 

More information on the process for 

fitting the passenger car and light truck 

curves for MYs 2012–2016 is available 

above in Section II.C, and NHTSA refers 

the reader to that section and to Chapter 

2 of the joint TSD. NHTSA seeks 

comment on this approach to fitting the 

curves. We note that final decisions on 

this issue will play an important role in 

determining the form and stringency of 

the final CAFE and CO2 standards, the 

incentives those standards will provide 

(e.g., with respect to downsizing small 

vehicles), and the relative compliance 

burden faced by each manufacturer. 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

a. Standard Setting 

NHTSA must establish separate 

standards for MY 2011–2020 passenger 

cars and light trucks, subject to two 

principal requirements.554 First, the 

standards are subject to a minimum 

requirement regarding stringency: They 

must be set at levels high enough to 

ensure that the combined U.S. passenger 

car and light truck fleet achieves an 

average fuel economy level of not less 

than 35 mpg not later than MY 2020.555

Second, as discussed above and at 

length in the March 2009 final rule 

establishing the MY 2011 CAFE 

standards, EPCA requires that the 


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556 49 U.S.C. 32902(a). 

557 67 FR 77015, 77021 (Dec. 16, 2002). 558CEI–I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 

559 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. 

560 42 FR 63184, 63188 (Dec. 15, 1977). See also 

42 FR 33534, 33537 (Jun. 30, 1977). 

561 42 FR 33534, 33537 (Jun. 30, 1977). 

562That provision was deleted as obsolete when 

EPCA was codified in 1994. 

agency establish standards for all new 

passenger cars and light trucks at the 

maximum feasible average fuel economy 

level that the Secretary decides the 

manufacturers can achieve in that 

model year.556 The implication of this 

second requirement is that it calls for 

exceeding the minimum requirement if 

the agency determines that the 

manufacturers can achieve a higher 

level. When determining the level 

achievable by the manufacturers, EPCA 

requires that the agency consider the 

four statutory factors of technological 

feasibility, economic practicability, the 

effect of other motor vehicle standards 

of the Government on fuel economy, 

and the need of the United States to 

conserve energy. In addition, the agency 

has the authority to and traditionally 

does consider other relevant factors, 

such as the effect of the CAFE standards 

on motor vehicle safety. 

i. Statutory Factors Considered in 

Determining the Achievable Level of 

Average Fuel Economy 

As none of the four factors is defined 

in EPCA and each remains interpreted 

only to a limited degree by case law, 

NHTSA has considerable latitude in 

interpreting them. NHTSA interprets the 

four statutory factors as set forth below. 

(1) Technological Feasibility 

‘‘Technological feasibility’’ refers to 

whether a particular technology for 

improving fuel economy is available or 

can become 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. It 

can, instead, set technology-forcing 

standards, i.e., ones that make it 

necessary for manufacturers to engage in 

research and development in order to 

bring a new technology to market. 

(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.’’ 557 In an attempt to ensure the 

economic practicability, the agency 

considers a variety of factors, including 

the annual rate at which manufacturers 

can increase the percentage of its fleet 

that has a particular type of fuel saving 

technology, and cost to consumers. 

Consumer acceptability is also an 

element of economic practicability. 

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.’’ 558 Instead, the agency 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. 

Thus, NHTSA believes that this term 

must be applied in the context of the 

competing concerns associated with 

different levels of standards. Prior to 

switching to attribute-based standards 

in the MY 2008–2011 rulemaking, the 

agency sought to ensure the economy 

practicability of standards in part by 

setting them at or near the capability of 

the ‘‘least capable manufacturer’’ with a 

significant share of the market, i.e., 

typically the manufacturer whose 

vehicles are, on average, the heaviest 

and largest. In the first several 

rulemakings to establish attribute based 

standards, the agency applied marginal 

cost benefit analysis. This ensured that 

the agency’s application of technologies 

was limited to those that would pay for 

themselves and thus would have 

significant appeal to consumers. 

However, the agency can and has 

limited its application of technologies to 

those technologies, with or without the 

use of such analysis. 

(3) The Effect of Other Motor Vehicle 

Standards of the Government on Fuel 

Economy 

‘‘The effect of other motor vehicle 

standards of the Government on fuel 

economy,’’ involves an analysis of the 

effects of compliance with emission,559

safety, noise, or damageability standards 

on fuel economy capability and thus on 

average fuel economy. In previous CAFE 

rulemakings, the agency has said that 

pursuant to this provision, it considers 

the adverse effects of other motor 

vehicle standards on fuel economy. It 

said so because, from the CAFE 

program’s earliest years 560 until 

present, the effects of such compliance 

on fuel economy capability over the 

history of the CAFE program have been 

negative ones. In those instances in 

which the effects are negative, NHTSA 

is called upon to ‘‘mak[e] a 

straightforward adjustment to the fuel 

economy improvement projections to 

account for the impacts of other Federal 

standards, principally those in the areas 

of emission control, occupant safety, 

vehicle damageability, and vehicle 

noise. However, only the unavoidable 

consequences should be accounted for. 

The automobile manufacturers must be 

expected to adopt those feasible 

methods of achieving compliance with 

other Federal standards which minimize 

any adverse fuel economy effects of 

those standards.’’ 561 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. 

The ‘‘other motor vehicle standards’’ 

consideration has thus in practice 

functioned in a fashion similar to the 

provision in EPCA, as originally 

enacted, for adjusting the statutorilyspecified CAFE standards for MY 1978– 

1980 passengers cars.562 EPCA did not 

permit NHTSA to amend those 

standards based on a finding that the 

maximum feasible level of average fuel 

economy for any of those three years 

was greater or less than the standard 

specified for that year. Instead, it 

provided that the agency could only 

reduce the standards and only on one 

basis: if the agency found that there had 

been a Federal standards fuel economy 

reduction, i.e., a reduction in fuel 

economy due to changes in the Federal 

vehicle standards, e.g., emissions and 

safety, relative to the year of enactment, 

1975. 

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563 42 FR 63184, 63188 (1977). 

564See 74 FR 14396–14407 (Mar. 30, 2009). 

565 49 U.S.C. 32902(h). 

The ‘‘other motor vehicle standards’’ 

provision is broader than the Federal 

standards fuel economy reduction 

provision. Although the effects analyzed 

to date under the ‘‘other motor vehicle 

standards’’ provision have been 

negative, there could be circumstances 

in which the effects are positive. In the 

event that the agency encountered such 

circumstances, it would be required to 

consider those positive effects. For 

example, if changes in vehicle safety 

technology led to NHTSA’s amending a 

safety standard in a way that permits 

manufacturers to reduce the weight 

added in complying with that standard, 

that weight reduction would increase 

vehicle fuel economy capability and 

thus increase the level of average fuel 

economy that could be determined 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, the agency 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. 

Thus, NHTSA tentatively concludes 

that the effects of the EPA and 

California standards are neither positive 

nor negative because the proposed rule 

results in consistent standards among 

all components of the National Program. 

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.’’ 563 Environmental 

implications principally include those 

associated with reductions in emissions 

of criteria pollutants and CO2. A prime 

example of foreign policy implications 

are energy independence and security 

concerns. 

ii. Other Factors Considered by NHTSA 

The agency historically has 

considered the potential for adverse 

safety consequences in setting CAFE 

standards. This practice is recognized 

approvingly in case law. As the courts 

have recognized, ‘‘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, 901 F.2d 107, 120 

n. 11 (DC Cir. 1990) (‘‘CEI I’’) (citing 42 

Fed. Reg. 33534, 33551 (June 30, 1977)). 

The courts have consistently upheld 

NHTSA’s implementation of EPCA in 

this manner. See, e.g., Competitive 

Enterprise Institute v. NHTSA, 956 F.2d 

321, 322 (D.C. Cir. 1992) (‘‘CEI II’’) (in 

determining the maximum feasible fuel 

economy standard, ‘‘NHTSA has always 

taken passenger safety into account.’’) 

(citing CEI I, 901 F.2d at 120 n. 11); 

Competitive Enterprise Institute v. 

NHTSA, 45 F.3d 481, 482–83 (D.C. Cir. 

1995) (‘‘CEI III’’) (same); Center for 

Biological Diversity v. NHTSA, 538 F.3d 

1172, 1203–04 (9th Cir. 2008) 

(upholding NHTSA’s analysis of vehicle 

safety issues associated with weight in 

connection with the MY 2008–11 light 

truck CAFE rule). Thus, in evaluating 

what levels of stringency would result 

in maximum feasible standards, NHTSA 

assesses the potential safety impacts and 

considers them in balancing the 

statutory considerations and to 

determine the appropriate level of the 

standards. 

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 today, that risk is reduced 

because building smaller vehicles 

would tend to raise a manufacturer’s 

overall CAFE obligation, rather than 

only raising its fleet average CAFE. 

However, even if the manufacturers did 

not engage in any downsizing under 

attribute-based standards, there is still 

the possibility that manufacturers 

would rely on downweighting to 

improve their fuel economy (for a given 

vehicle at a given footprint target) in 

ways that may reduce safety to a greater 

or lesser extent. While NHTSA 

recognizes that manufacturers may 

nonetheless choose this option for 

raising their CAFE levels, in prior 

rulemakings we have limited the 

application of downweighting/material 

substitution in our modeling analysis to 

vehicles over 5,000 lbs GVWR.564

For purposes of today’s proposed 

standards, however, NHTSA has revised 

its modeling analysis to allow some 

application of downweighting/material 

substitution for all vehicles, including 

those under 5,000 lbs GVWR, because 

we believe that this is more consistent 

with how manufacturers will actually 

respond to the standards. However, as 

discussed above, NHTSA does not 

mandate the use of any particular 

technology by manufacturers in meeting 

the standards. More information on the 

new approach to modeling 

manufacturer use of downweighting/ 

material substitution is available in 

Chapter 3 of the draft joint TSD and in 

Section V of the PRIA; and the 

estimated safety impacts that may be 

due to the proposed standards are 

described below. 

iii. Factors That NHTSA Is Prohibited 

From Considering 

EPCA also 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.565 As discussed 

further below, 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. 

The effect of the prohibitions against 

considering these flexibilities in setting 

the CAFE standards is that the 

flexibilities remain voluntarilyemployed measures. If the agency were 

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49690 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

566Center for Auto Safety v. NHTSA, 793 F.2d 

1322, 1341 (C.A.D.C. 1986). 

567Center for Biological Diversity v. NHTSA, 538 

F.3d 1172, 1195 (9th Cir. 2008). 

568CAS, 1338 (quoting Chevron U.S.A., Inc. v. 

Natural Resources Defense Council, Inc., 467 U.S. 

837, 845). 

569CBD v. NHTSA, 538 F.3d 1172, 1198 (9th Cir. 

2008). 570 Ibid., 1181. 

instead to assume manufacturer use of 

those flexibilities in setting new 

standards, that assumption would result 

in higher standards and thus tend to 

require manufacturers to use those 

flexibilities. 

iv. Determining the Level of the 

Standards by Balancing the Factors 

NHTSA has broad discretion in 

balancing the above factors in 

determining the appropriate levels of 

average fuel economy at which to set the 

CAFE standards for each model year. 

Congress ‘‘specifically delegated the 

process of setting * * * fuel economy 

standards with broad guidelines 

concerning the factors that the agency 

must consider.’’ 566 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. The exercise of that discretion is 

subject to the necessity of ensuring that 

NHTSA’s balancing does not undermine 

the fundamental purpose of the EPCA: 

Energy conservation,567 and as long as 

that balancing reasonably 

accommodates ‘‘conflicting policies that 

were committed to the agency’s care by 

the statute.’’ 568 The balancing of the 

factors in any given rulemaking is 

highly dependent on the factual and 

policy context of that rulemaking. Given 

the changes over time in facts bearing 

on assessment of the various factors, 

such as those relating to the economic 

conditions, fuel prices and the state of 

climate change science, the agency 

recognizes that what was a reasonable 

balancing of competing statutory 

priorities in one rulemaking may not be 

a reasonable balancing of those 

priorities in another rulemaking.569

Nevertheless, the agency retains 

substantial discretion under EPCA to 

choose among reasonable alternatives. 

EPCA neither requires nor precludes 

the use of any type of cost-benefit 

analysis as a tool to help inform the 

balancing process. While NHTSA used 

marginal cost-benefit analysis in the 

first two rulemakings to establish 

attribute-based CAFE standards, it was 

not required to do so and is not required 

to continue to do so. Regardless of what 

type of analysis is or is not used, 

considerations relating to costs and 

benefits remain an important part of 

CAFE standard setting. 

Because the relevant considerations 

and factors can reasonably be balanced 

in a variety of ways under EPCA, and 

because of uncertainties associated with 

the many technological and cost inputs, 

NHTSA considers a wide variety of 

alternative sets of standards, each 

reflecting different balancing of those 

policies and concerns, to aid it in 

discerning reasonable outcomes. Among 

the alternatives providing for an 

increase in the standards in this 

rulemaking, the alternatives range in 

stringency from a set of standards that 

increase, on average, 3 percent annually 

to a set of standards that increase, on 

average, 7 percent annually. 

2. Administrative Procedure Act 

To be upheld under the ‘‘arbitrary and 

capricious’’ standard of judicial review 

in the APA, an agency rule must be 

rational, based on consideration of the 

relevant factors, and within the scope of 

the authority delegated to the agency by 

the statute. The agency must examine 

the relevant data and articulate a 

satisfactory explanation for its action 

including a ‘‘rational connection 

between the facts found and the choice 

made.’’ Burlington Truck Lines, Inc. v. 

United States, 371 U.S. 156, 168 (1962). 

Statutory interpretations included in 

an agency’s rule are subjected to the 

two-step analysis of Chevron, U.S.A., 

Inc. v. Natural Resources Defense 

Council, 467 U.S. 837, 104 S.Ct. 2778, 

81 L.Ed.2d 694 (1984). Under step one, 

where a statute ‘‘has directly spoken to 

the precise question at issue,’’ id. at 842, 

104 S.Ct. 2778, the court and the agency 

‘‘must give effect to the unambiguously 

expressed intent of Congress,’’ id. at 

843, 104 S.Ct. 2778. If the statute is 

silent or ambiguous regarding the 

specific question, the court proceeds to 

step two and asks ‘‘whether the agency’s 

answer is based on a permissible 

construction of the statute.’’ Id. 

If an agency’s interpretation differs 

from the one that it has previously 

adopted, the agency need not 

demonstrate that the prior position was 

wrong or even less desirable. Rather, the 

agency would need only to demonstrate 

that its new position is consistent with 

the statute and supported by the record, 

and acknowledge that this is a departure 

from past positions. The Supreme Court 

emphasized this recently in FCC v. Fox 

Television, 129 S.Ct. 1800 (2009). When 

an agency changes course from earlier 

regulations, ‘‘the requirement that an 

agency provide reasoned explanation for 

its action would ordinarily demand that 

it display awareness that it is changing 

position,’’ but ‘‘need not demonstrate to 

a court’s satisfaction that the reasons for 

the new policy are better than the 

reasons for the old one; it suffices that 

the new policy is permissible under the 

statute, that there are good reasons for 

it, and that the agency believes it to be 

better, which the conscious change of 

course adequately indicates.’’ 570

3. National Environmental Policy Act 

As discussed above, EPCA requires 

the agency to determine what level at 

which to set the CAFE standards for 

each model year by considering the four 

factors of technological feasibility, 

economic practicability, the effect of 

other motor vehicle standards of the 

Government on fuel economy, and the 

need of the United States to conserve 

energy. NEPA directs that 

environmental considerations be 

integrated into that process. To 

accomplish that purpose, NEPA requires 

an agency to compare the potential 

environmental impacts of its proposed 

action to those of a reasonable range of 

alternatives. 

To explore the environmental 

consequences in depth, NHTSA has 

prepared a draft environmental impact 

statement. The purpose of an EIS is to 

‘‘provide full and fair discussion of 

significant environmental impacts and 

[to] inform decisionmakers and the 

public of the reasonable alternatives 

which would avoid or minimize adverse 

impacts or enhance the quality of the 

human environment.’’ 40 CFR 1502.1. 

NEPA is ‘‘a procedural statute that 

mandates a process rather than a 

particular result.’’ Stewart Park & 

Reserve Coal., Inc. v. Slater, 352 F.3d at 

557. The agency’s overall EIS-related 

obligation is to ‘‘take a ‘hard look’ at the 

environmental consequences before 

taking a major action.’’ Baltimore Gas & 

Elec. Co. v. Natural Res. Def. Council, 

Inc., 462 U.S. 87, 97, 103 S.Ct. 2246, 76 

L.Ed.2d 437 (1983). Significantly, ‘‘[i]f 

the adverse environmental effects of the 

proposed action are adequately 

identified and evaluated, the agency is 

not constrained by NEPA from deciding 

that other values outweigh the 

environmental costs.’’ Robertson v. 

Methow Valley Citizens Council, 490 

U.S. 332, 350, 109 S.Ct. 1835, 104 

L.Ed.2d 351 (1989). 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49691 

571Required CAFE levels shown here are 

estimated required levels based on NHTSA’s 

current projection of manufacturers’ vehicle fleets 

in MYs 2012–2016. Actual required levels are not 

determined until the end of each model year, when 

all of the vehicles produced by a manufacturer in 

that model year are known and their compliance 

obligation can be determined with certainty. The 

target curves, as defined by the constrained linear 

function, and as embedded in the function for the 

sales-weighted harmonic average, are the real 

‘‘standards’’ being proposed today. 

The agency must identify the 

‘‘environmentally preferable’’ 

alternative, but need not adopt it. 

‘‘Congress in enacting NEPA * * * did 

not require agencies to elevate 

environmental concerns over other 

appropriate considerations.’’ Baltimore 

Gas and Elec. Co. v. Natural Resources 

Defense Council, Inc., 462 U.S. 87, 97 

(1983). Instead, NEPA requires an 

agency to develop alternatives to the 

proposed action in preparing an EIS. 42 

U.S.C. 4332(2)(C)(iii). The statute does 

not command the agency to favor an 

environmentally preferable course of 

action, only that it make its decision to 

proceed with the action after taking a 

hard look at environmental 

consequences. 

E. What Are the Proposed CAFE 

Standards? 

1. Form of the Standards 

Each of the CAFE standards that 

NHTSA is proposing today for 

passenger cars and light trucks is 

expressed as a mathematical function 

that defines a fuel economy target 

applicable to each vehicle model and, 

for each fleet, establishes a required 

CAFE level determined by computing 

the sales-weighted harmonic average of 

those targets.571

As discussed above in Section II.C, 

NHTSA is proposing to determine fuel 

economy targets using a constrained 

linear function defined according to the 

following formula: 

TARGET

MIN MAX c FOOTPRINT d,

=

× + ⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢ ⎤

⎦

⎥

1

1 1

a b,

Here, TARGET is the fuel economy target 

(in mpg) applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), b and 

a are the function’s lower and upper 

asymptotes (also in mpg), respectively, c is 

the slope (in gpm per square foot) of the 

sloped portion of the function, and d is the 

intercept (in gpm) of the sloped portion of 

the function (that is, the value the sloped 

portion would take if extended to a footprint 

of 0 square feet). The MIN and MAX 

functions take the minimum and maximum, 

respectively of the included values. 

As also discussed in Section II.C, 

under the proposed standards (as under 

the recently-promulgated MY 2011 

standards), the CAFE level required of 

any given manufacturer will be 

determined by calculating the 

production-weighted harmonic average 

of the fuel economy targets applicable to 

each vehicle model: 

CAFE

SALES

SALES

TARGET

required

i

i

i

=

∑

∑

i

i

Here, CAFErequired is the required level for 

a given fleet, SALESi is the number of units 

of model i produced for sale in the United 

States, TARGETi is the fuel economy target 

applicable to model i (according to the 

equation shown in Chapter II and based on 

the footprint of model i), and the summations 

in the numerator and denominator are both 

performed over all models in the fleet in 

question. 

The proposed standards are, therefore, 

specified by the four coefficients 

defining fuel economy targets: 

a = upper limit (mpg) 

b = lower limit (mpg) 

c = slope (gpm per square foot) 

d = intercept (gpm) 

The values of the coefficients are 

different for the passenger car standards 

and the light truck standards. 

2. Passenger Car Standards for MYs 

2012–2016 

For passenger cars, NHTSA is 

proposing CAFE standards defined by 

the following coefficients during MY 

2012–2016: 

TABLE IV.E.2–1—COEFFICIENTS DEFINING PROPOSED MY 2012–2016 FUEL ECONOMY TARGETS FOR PASSENGER CARS

Coefficient 2012 2013 2014 2015 2016 

a (mpg) ....................................................................... 36 .23 37 .15 38 .08 39 .55 41 .38 

b (mpg) ....................................................................... 28 .12 28 .67 29 .22 30 .08 31 .12 

c (gpm/sf) ................................................................... 0 .0005308 0 .0005308 0 .0005308 0 .0005308 0 .0005308 

d (gpm) ....................................................................... 0 .005842 0 .005153 0 .004498 0 .003520 0 .002406 

These coefficients result in footprintdependent target curves shown 

graphically below. The MY 2011 final 

standard, which is specified by a 

constrained logistic function rather than 

a constrained linear function, is shown 

for comparison. 


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49692 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

572 In the March 2009 final rule establishing MY 

2011 standards for passenger cars and light trucks, 

NHTSA estimated that the required fuel economy 

levels for passenger cars would average 30.2 mpg 

under the MY 2011 passenger car standard. Based 

on the agency’s current forecast of the MY 2011 

passenger car market, which anticipates greater 

numbers of passenger cars than the forecast used in 

the MY 2011 final rule, NHTSA now estimates that 

the average required fuel economy level for 

passenger cars will be 30.5 mpg in MY 2011. 

As discussed, the CAFE levels 

required of individual manufacturers 

will depend on the mix of vehicles they 

produce for sale in the United States. 

Based on the market forecast of future 

sales that NHTSA has used to examine 

today’s proposed CAFE standards, the 

agency estimates that the targets shown 

above will result in the following 

average required fuel economy levels for 

individual manufacturers during MYs 

2012–2016 (an updated estimate of the 

average required fuel economy level 

under the final MY 2011 standard is 

shown for comparison): 572

TABLE IV.E.2–2—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY 2011 AND PROPOSED MY 2012– 

2016 CAFE STANDARDS FOR PASSENGER CARS

Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW ........................................................ 30.2 33.2 34.0 34.8 36.0 37.5 

Chrysler .................................................... 29.6 33.0 33.7 34.5 35.3 36.8 

Daimler ..................................................... 29.4 32.6 33.1 33.8 35.0 36.4 

Ford .......................................................... 29.8 33.0 33.7 34.5 35.8 37.3 

General Motors ........................................ 30.3 33.0 33.8 34.6 35.8 37.3 

Honda ....................................................... 30.8 33.9 34.7 35.5 36.8 38.4 

Hyundai .................................................... 30.8 33.8 34.6 35.5 36.8 38.3 

Kia ............................................................ 30.6 33.6 34.4 35.2 36.5 38.0 

Mazda ...................................................... 30.7 34.1 34.8 35.7 37.0 38.6 

Mitsubishi ................................................. 31.0 34.4 35.3 36.1 37.4 39.2 

Nissan ...................................................... 30.7 33.5 34.2 35.0 36.2 37.8 

Porsche .................................................... 31.2 36.2 37.2 38.1 39.6 41.4 

Subaru ...................................................... 31.0 34.8 35.7 36.5 37.9 39.6 

Suzuki ...................................................... 31.2 35.9 36.8 37.7 39.2 41.0 

Tata .......................................................... 27.8 30.7 31.4 32.1 33.1 34.4 

Toyota ...................................................... 30.8 34.1 34.9 35.7 37.0 38.6 

Volkswagen .............................................. 30.8 34.6 35.4 36.2 37.5 39.1 

Average ............................................. 30.5 33.6 34.4 35.2 36.4 38.0 


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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49693 

573 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. 

We note that a manufacturer’s 

required average fuel economy level for 

a model year under the proposed 

standards would be based on its actual 

production numbers in that model year. 

Therefore, its official required fuel 

economy level would not be known 

until the end of that model year. 

However, because the targets for each 

vehicle footprint would be established 

in advance of the model year, a 

manufacturer should be able to estimate 

its required level accurately. 

3. Minimum Domestic Passenger Car 

Standards 

EISA expressly requires each 

manufacturer to meet a minimum fuel 

economy standard for domestically 

manufactured passenger cars in addition 

to meeting the standards set by NHTSA. 

According to the statute (49 U.S.C. 

32902(b)(4)) 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 nondomestic passenger automobile fleets 

manufactured for sale in the United 

States by all manufacturers in the model 

year. The agency must publish the 

projected minimum standards in the 

Federal Register when the passenger car 

standards for the model year in question 

are promulgated. 

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 IV.E.2–1.573 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 IV.E.3–1—ESTIMATED MINIMUM STANDARD FOR DOMESTICALLY MANUFACTURED PASSENGER CARS UNDER FINAL

MY 2011 AND PROPOSED MY 2012–2016 CAFE STANDARDS FOR PASSENGER CARS

2011 2012 2013 2014 2015 2016 

28.0 30.9 31.6 32.4 33.5 34.9 

4. Light Truck Standards 

For light trucks, NHTSA is proposing CAFE standards defined by the following coefficients during MYs 2012–2016: 

TABLE IV.E.4–1—COEFFICIENTS DEFINING PROPOSED MY 2012–2016 FUEL ECONOMY TARGETS FOR LIGHT TRUCKS

Coefficient 2012 2013 2014 2015 2016 

a (mpg) ....................................................................... 29 .44 30 .32 31 .30 32 .70 34 .38 

b (mpg) ....................................................................... 22 .06 22 .55 23 .09 23 .84 24 .72 

c (gpm/sf) ................................................................... 0 .0004546 0 .0004546 0 .0004546 0 .0004546 0 .0004546 

d (gpm) ....................................................................... 0 .01533 0 .01434 0 .01331 0 .01194 0 .01045 

These coefficients result in footprintdependent targets shown graphically 

below. The MY 2011 final standard, 

which is specified by a constrained 

logistic function rather than a 

constrained linear function, is shown 

for comparison. 

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49694 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

574 In the March 2009 final rule establishing MY 

2011 standards for passenger cars and light trucks, 

NHTSA estimated that the required fuel economy 

levels for light trucks would average 24.1 mpg 

under the MY 2011 light truck standard. Based on 

the agency’s current forecast of the MY 2011 light 

truck market, NHTSA now estimates that the 

required fuel economy levels will average 24.2 mpg 

in MY 2011. The increase in the estimate reflects 

a slight decrease in the size of the average light 

truck. 

Given these targets, the CAFE levels 

required of individual manufacturers 

will depend on the mix of vehicles they 

produce for sale in the United States. 

Based on the market forecast NHTSA 

has used to examine today’s proposed 

CAFE standards, the agency estimates 

that the targets shown above will result 

in the following average required fuel 

economy levels for individual 

manufacturers during MYs 2012–2016 

(an updated estimate of the average 

required fuel economy level under the 

final MY 2011 standard is shown for 

comparison): 574

TABLE IV.E.4–2—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY 2011 AND PROPOSED MY 2012– 

2016 CAFE STANDARDS FOR LIGHT TRUCKS

Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW ........................................................ 25.7 26.3 27.0 27.7 28.8 30.1 

Chrysler .................................................... 24.2 25.2 25.8 26.4 27.3 28.5 

Daimler ..................................................... 24.7 25.4 26.1 26.9 27.9 29.1 

Ford .......................................................... 23.3 24.3 24.9 25.3 26.2 27.3 

General Motors ........................................ 22.9 23.6 24.2 24.8 25.6 26.6 

Honda ....................................................... 25.6 26.4 27.1 27.9 29.0 30.4 

Hyundai .................................................... 25.9 26.6 27.3 28.1 29.3 30.6 

Kia ............................................................ 25.1 25.8 26.4 27.2 28.3 29.6 

Mazda ...................................................... 26.3 27.4 28.1 28.8 29.9 31.4 

Mitsubishi ................................................. 26.4 27.4 28.1 28.9 30.1 31.6 

Nissan ...................................................... 24.1 25.0 25.6 26.1 27.0 28.2 

Porsche .................................................... 25.5 26.0 26.7 27.4 28.5 29.8 

Subaru ...................................................... 26.5 27.5 28.3 29.2 30.4 31.8 

Suzuki ...................................................... 26.3 27.2 27.9 28.7 29.9 31.3 

Tata .......................................................... 26.1 26.9 27.6 28.4 29.6 31.0 

Toyota ...................................................... 25.2 25.7 26.3 27.1 28.1 29.3 

Volkswagen .............................................. 25.0 25.6 26.2 26.9 27.9 29.2 

Average ............................................. 24.2 25.0 25.6 26.2 27.1 28.3 


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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49695 

575Notice of intent to prepare an EIS, 74 FR 

14857, 14859–60, April 1, 2009. 

576The stringency indicated by each of these 

alternatives depends on the value of inputs to 

NHTSA’s analysis. Results presented here for these 

two alternatives are based on NHTSA’s reference 

case inputs, which underlie the central analysis of 

the proposed standards. In the accompanying PRIA, 

the agency presents the results of that analysis to 

explore the sensitivity of results to changes in key 

economic inputs. Because of numerous changes in 

model inputs (e.g., discount rate, rebound effect, 

CO2 value, technology cost estimates), our analysis 

often exhausts all available technologies before 

reaching the point at which total costs equal total 

benefits. In these cases, the stringency that exhausts 

all available technologies is considered. 

As discussed above with respect to 

the proposed passenger cars standards, 

we note that a manufacturer’s required 

fuel economy level for a model year 

under the proposed standards would be 

based on its actual production numbers 

in that model year. 

F. How Do the Proposed Standards 

Fulfill NHTSA’s Statutory Obligations? 

In developing the proposed MY 2012– 

16 standards, the agency developed and 

considered a wide variety of 

alternatives. NHTSA took a new 

approach to defining alternatives as 

compared to the most recent prior CAFE 

rulemaking. In response to comments 

received in the last round of 

rulemaking, in our March 2009 notice of 

intent to prepare an environmental 

impact statement, the agency selected a 

range of candidate stringencies that 

increased annually, on average, 3% to 

7%.575 That same approach has been 

carried over to this NPRM and to the 

accompanying DEIS and PRIA. The 

majority of the alternatives considered 

in this rulemaking are defined as 

average percentage increases in 

stringency—3 percent per year, 4 

percent per year, 5 percent per year, and 

so on. NHTSA believes that this 

approach more clearly communicates 

the level of stringency of each 

alternative and is more intuitive than 

alternatives defined in terms of different 

cost-benefit ratios, and still allows us to 

identify alternatives that represent 

different ways to balance NHTSA’s 

statutory requirements under EPCA/ 

EISA. 

In the notice of intent, we noted that 

each of the listed alternatives 

represents, in part, a different way in 

which NHTSA could conceivably 

balance conflicting policies and 

considerations in setting the standards. 

We were mindful that the agency would 

need to weigh and balance many factors, 

such as the technological feasibility, 

economic practicability, including 

leadtime considerations for the 

introduction of technologies and 

impacts on the auto industry, the 

impacts of the standards on fuel savings 

and CO2 emissions, fuel savings by 

consumers; as well as other relevant 

factors such as safety. For example, the 

7% Alternative, the most stringent 

alternative, weighs energy conservation 

and climate change considerations more 

heavily and technological feasibility and 

economic practicability less heavily. In 

contrast, the 3% Alternative, the least 

stringent alternative, places more weight 

on technological feasibility and 

economic practicability. We recognized 

that the ‘‘feasibility’’ of the alternatives 

also may reflect differences and 

uncertainties in the way in which key 

economic (e.g., the price of fuel and the 

social cost of carbon) and technological 

inputs could be assessed and estimated 

or valued. 

In subsequently developing the NPRM 

and the associated analytical 

documents, the agency expanded the 

list of alternatives to provide a degree of 

analytical continuity between the old 

and new approach to defining 

alternatives in an effort help the agency 

and the public understand the 

similarities and dissimilarities between 

the two approaches and to make the 

transition to the new approach. To that 

end, we included and analyzed two 

additional alternatives, one that sets 

standards at the point where net 

benefits are maximized, and another 

that sets standards at the point at which 

total costs are equal to total benefits.576

With respect to the first of those 

alternatives, we note that Executive 

Order 12866 focuses attention on an 

approach that maximizes net benefits. 

Further, since NHTSA has thus far set 

attribute-based CAFE standards at the 

point at which net benefits are 

maximized, we believed it would be 

useful and informative to consider the 

potential impacts of that approach as 

compared to the new approach for MYs 

2012–2016. 

After working with EPA in thoroughly 

reviewing and in some cases reassessing 

the effectiveness and costs of 

technologies, most of which are already 

being incorporated in at least some 

vehicles, market forecasts and economic 

assumptions, we used the Volpe model 

extensively to assess the technologies 

that the manufacturers could apply in 

order to comply with each of the 

alternatives. This permitted us to assess 

the variety, amount and cost of the 

technologies that could be needed to 

enable the manufacturers to comply 

with each of the alternatives. NHTSA 

estimated how the application of these 

and other technologies could increase 

vehicle costs. The following five figures 

show industry-wide average 

incremental (i.e., relative to the 

reference fleet) per-vehicle costs, for 

each model year, each fleet, and the 

combined fleet. Estimates specific to 

each manufacturer are shown in the 

accompanying PRIA. 

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Corresponding to these per-vehicle 

cost increases, NHTSA estimated total 

incremental outlays for additional 

technology in each model year. The 

following figure shows cumulative 

results for MY 2012–2016 for industry 

and Chrysler, Ford, General Motors, 

Honda, Nissan, and Toyota. This figure 

focuses on these manufacturers as they 

currently (in MY 2008) represent three 

large U.S.-headquartered and three large 

foreign-headquartered full-line 

manufacturers. 


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For each alternative, NHTSA has also 

estimated all corresponding effects for 

each model year, including fuel savings, 

CO2 reductions, and other effects, as 

well as the estimated societal benefits of 

these effects. 

TABLE IV.F.1—FUEL SAVINGS, CO2 REDUCTIONS, AND TECHNOLOGY COSTS FOR REGULATORY ALTERNATIVES

Regulatory alternative Fuel savings 

(b. gal) 

CO2

reductions 

(mmt) 

Cost 

($b) 

3% per Year ................................................................................................................................. 37 404 29 

4% per Year ................................................................................................................................. 54 582 46 

5% per Year ................................................................................................................................. 69 718 74 

6% per Year ................................................................................................................................. 83 846 103 

Maximum Net Benefit .................................................................................................................. 90 923 111 

7% per Year ................................................................................................................................. 91 934 116 

Total Cost = Total Benefit .................................................................................................... 95 977 122 

The accompanying PRIA presents a 

detailed analysis of these results. 

Relevant to EPCA’s requirement that 

NHTSA consider, among other factors, 

economic practicability and the need of 

the nation to conserve energy, the 

following figure compares the 

incremental technology outlays 

presented above to the corresponding 

cumulative fuel savings. 

The agency then assessed which 

alternative would represent a reasonable 

balancing of the statutory criteria, given 

the difficulties confronting the industry 

and the economy, and the priorities and 

policy goals of the President. Those 

priorities and goals include achieving 

nationally harmonized and coordinated 

program for regulating fuel economy 

and GHG emissions. 

Part of that assessment entailed an 

evaluation of the stringencies necessary 

to achieve both Federal and State GHG 

emission reduction goals, especially 

those of California and the States that 

have adopted its GHG emission 

standard for motor vehicles. Given that 

EPCA requires attribute-based 

standards, NHTSA and EPA determined 

the level at which an attribute-based 

GHG emissions standard would need to 

be set to achieve the goals of California. 

This was done by evaluating a 

nationwide CAA standard for MY 2016 

that would require the levels of 

technology upgrade, across the country, 

which California standards would 

require for the subset of vehicles sold in 

California under the California 

standards for MY 2009–2016 (known as 

‘‘Pavley 1’’). In essence, the stringency 

of the California Pavley 1 program was 

evaluated, but for a national standard. 

For a number of reasons discussed in 

section III.D, an assessment was 

developed of an equivalent national 

new vehicle fleet-wide CO2 performance 

standards for model year 2016 which 

would result in the new vehicle fleet in 

the State of California having CO2

performance equal to the performance 

from the California Pavley 1 standards. 

That level, 250 g/mi, is equivalent to 

35.5 mpg if the GHG standard is met 


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577Separately, NHTSA has conducted analysis 

that accounts for EPCA’s provisions regarding FFVs. 

578Because NHTSA’s modeling represents every 

model year explicitly, accounts for estimates of 

when vehicle model redesigns will occur, and sets 

aside these compliance flexibilities, the agency’s 

modeling produces results that differ varyingly 

from EPA’s for specific manufacturers, fleets, and 

model years. 

579Also, the ‘‘Max NB’’ and the ‘‘TC = TB’’ 

alternatives depend on the inputs to the agencies’ 

analysis. The sensitivity analysis presented in the 

PRIA documents the response of these alternatives 

to changes in key economic inputs. For example, 

the combined average required fuel economy under 

the ‘‘Max NB’’ alternative is 36.8 mpg under the 

reference case economic inputs presented here, and 

ranges from 32.8 mpg to 37.2 mpg under the 

alternative economic inputs presented in the PRIA. 

exclusively by fuel economy 

improvements. 

To obtain the counterpart CAFE 

standard, we then adjusted that level 

downward to account for differences 

between the more prescriptive EPCA 

and the more flexible CAA. These 

differences give EPA greater ability 

under the CAA to provide compliance 

flexibilities that would enable 

manufacturers to achieve compliance 

with a given level of requirement under 

the CAA at less cost than with the same 

level of requirement under EPCA. 

Principal among those greater 

flexibilities are the credits that EPA can 

provide for improving the efficiency of 

air conditioners and reducing the 

leakage of refrigerants from them. The 

adjustments result in a figure of 34.1 

mpg as the appropriate counterpart 

CAFE standard. This differential gives 

manufacturers the opportunity to reach 

35.5 mpg under the CAA in ways that 

would significantly reduce their costs. 

Were NHTSA instead to establish its 

standard at the same level, 

manufacturers would need to make 

substantially greater expenditures on 

fuel-saving technologies to reach 35.5 

mpg under EPCA. 

Given the importance to this 

rulemaking of achieving a harmonized 

National Program, we created a new 

alternative whose annual percentage 

increases would achieve 34.1 mpg by 

MY 2016. That alternative is one which 

increases on average at 4.3% annually. 

This new alternative, like the seven 

alternative presented above, represents a 

unique balancing of the statutory factors 

and other relevant considerations. We 

have added that alternative to the table 

below. 

Regulatory 

alternative 

Fuel 

savings 

(b. gal) 

CO2

reductions 

(mmt) 

Cost 

($b) 

3% per Year ..... 37 404 29 

4% per Year ..... 54 582 46 

Regulatory 

alternative 

Fuel 

savings 

(b. gal) 

CO2

reductions 

(mmt) 

Cost 

($b) 

Proposed (4.3% 

per Year) ....... 62 656 60 

5% per Year ..... 69 718 74 

6% per Year ..... 83 846 103 

Maximum Net 

Benefit ........... 90 923 111 

7% per Year ..... 91 934 116 

Total Cost = 

Total 

Benefit .... 95 977 122 

As noted earlier, NHTSA has used the 

Volpe model to analyze each of these 

alternatives based on analytical inputs 

determined jointly with EPA. For a 

given regulatory alternative, the Volpe 

model estimates how each manufacturer 

could apply technology in response to 

the MY 2012 standard (separately for 

cars and trucks), carries technologies 

applied in MY 2012 forward to MY 

2013, and then estimates how each 

manufacturer could apply technology in 

response to the MY 2013 standard. 

When analyzing MY 2013, the model 

considers the potential to add ‘‘extra’’ 

technology in MY 2012 in order to carry 

that technology into MY 2013, thereby 

avoiding the use of more expensive 

technologies in MY 2013. The model 

continues in this fashion through MY 

2016, and then performs calculations to 

estimate the costs, effects, and benefits 

of the applied technologies, and to 

estimate any civil penalties owed based 

on projected noncompliance. For each 

regulatory alternative, the model 

calculates incremental costs, effects, and 

benefits relative to the regulatory 

baseline (i.e., the no-action alternative), 

under which the MY 2011 CAFE 

standards continue through MY 2016. 

The model calculates results for each 

model year, because EPCA requires that 

NHTSA set its standards for each model 

year at the ‘‘maximum feasible average 

fuel economy level that the Secretary 

decides the manufacturers can achieve 

in that model year’’ considering four 

statutory factors. Pursuant to EPCA’s 

directive notice not to consider statutory 

credits in establishing CAFE standards, 

NHTSA did not FFV credits, credits 

carried forward and backward, and 

transferred credit.577 578 In addition, the 

analysis reflects the ability of 

manufacturers to pay fines in lieu of 

compliance. 

Because it entails year-by-year 

examination of eight regulatory 

alternatives for, separately, passenger 

cars and light trucks, NHTSA’s analysis 

involves a large amount of information. 

Detailed results of this analysis are 

presented separately in the PRIA 

accompanying today’s notice. The 

remainder of this section discusses a 

combination of aggregated and 

illustrative results of this analysis. 

The following figure compares 

average fuel economy levels required of 

manufacturers under the eight 

regulatory alternatives in MYs 2012, 

2014, and 2016. Required levels for MY 

2013 and MY 2015 fall between those 

for MYs 2012 and 2014 and MYs 2014 

and 2016, respectively. Although 

required levels for these interim years 

are not presented in the following figure 

to limit the complexity of the figure, 

they do appear in the accompanying 

PRIA.579

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As this figure illustrates, the proposed 

standards involve a ‘‘faster start’’ toward 

increased stringency than do any of the 

alternatives that increase steadily (i.e., 

the 3%/y, 4%/y, 5%/y, 6%/y, and 7%/ 

y alternatives). However, by MY 2016, 

the stringency of the proposed standards 

reflects an average annual increase of 

4.3%/y. The proposed standards, 

therefore, represent an alternative that 

could be referred to as ‘‘4.3% per year 

with a fast start’’ or a ‘‘front-loaded 

4.3% average annual increase.’’ 

In NHTSA’s analysis, these achieved 

average fuel economy levels result from 

the application of technology rather 

than changes in the mix of vehicles 

produced for sale in the U.S. The 

accompanying PRIA presents detailed 

estimates of additional technology 

penetration into the NHTSA reference 

fleet associated with each regulatory 

alternative. The following four charts 

illustrate the results of this analysis, 

considering the application of four 

technologies by six manufacturers and 

the industry as a whole. Technologies 

include gasoline direct injection (GDI), 

engine turbocharging and downsizing, 

diesel engines, and strong HEV systems 

(including CISG systems). GDI and 

turbocharging are among the 

technologies that play an important role 

in achieving the fuel economy 

improvements shown in NHTSA’s 

analysis, and diesels and strong HEVs 

represent technologies involving 

significant challenges for widespread 

use through MY 2016. These figures 

focus on Chrysler, Ford, General Motors, 

Honda, Nissan, and Toyota, as these 

manufacturers currently (in MY 2008) 

represent three large U.S.-headquartered 

and three large foreign-headquartered 

full-line manufacturers. For each 

alternative, the figures show additional 

application of technology by MY 2016. 

The PRIA presents results for all model 

years, technologies, and manufacturers, 

and NHTSA has considered these 

broader results when considering the 

eight regulatory alternatives. 


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The agency began the process of 

winnowing the alternatives by 

determining whether any of the lower 

stringency alternatives should be 

eliminated from consideration. To begin 

with, the agency needs to ensure that its 

standards are high enough to enable the 

combined fleet of passenger cars and 

light trucks to achieve at least 35 mpg 

not later than MY 2020, as required by 

EISA. Achieving that level makes it 

necessary for the chosen alternative to 

increase at over 3 percent annually. 

NHTSA has concluded that it must 

reject the 3%/y and 4%/y alternatives. 

Given that CO2 and fuel savings are very 

closely correlated, the above chart 

reveals that the 3%/y and 4%/y 

alternative would not produce the 

reductions in fuel savings and CO2

emissions that the Nation needs at this 

time. Picking either of those alternatives 

would unnecessarily result in foregoing 

substantial benefits, in terms of fuel 


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savings and reduced CO2 emissions, 

which would be achievable at 

reasonable cost. Further, NHTSA has 

tentatively concluded that it must reject 

the 3%/y and 4%/y alternatives, as 

neither would lead to the regulatory 

harmonization that forms a vital core 

principle of the National Program that 

EPA and NHTSA are jointly striving to 

implement. In order to achieve a 

harmonized National Program, an 

average annual increase of 4.3% is 

necessary. 

In contrast, at the upper end of the 

range of alternatives, the agency was 

concerned that the increased benefits 

offered by those alternatives were 

available only at excessive cost and 

might not be practicable in all cases 

within the available leadtime. 

NHTSA first considered the 

environmentally-preferable alternative. 

Based on the information provided in 

the DEIS, the environmentallypreferable alternative would be that 

involving stringencies at which total 

costs most nearly equal total benefits. 

NHTSA notes that NEPA does not 

require that agencies choose the 

environmentally-preferable alternative if 

doing so would be contrary to the 

choice that the agency would otherwise 

make under its governing statute. Given 

the levels of stringency required by the 

environmentally-preferable alternative 

and the lack of lead time to achieve 

such levels between now and MY 2016, 

NHTSA tentatively concludes that the 

environmentally-preferable alternative 

would not be economically practicable 

or technologically feasible, and thus 

tentatively concludes that it would 

result in standards that would be 

beyond the level achievable for MYs 

2012–2016. 

NHTSA determined that it would be 

inappropriate to propose any of the 

other more stringent alternatives due to 

concerns over lead time and economic 

practicability. 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 MYs 2012 and 2013. 

As revealed by the figures shown 

above, 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 stoichiometric 

gasoline direct injection engines and 

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. 

NHTSA does not believe that more 

stringent standards would meet EPCA’s 

requirement that CAFE standards be 

economically practicable. The figures 

presented above reveal that increasing 

stringency beyond the proposed 

standards would entail significant 

additional application of technology— 

technology that, though perhaps feasible 

for individual vehicle models, would 

not be economically practicable for the 

industry at the scales involved. Among 

the more stringent alternatives, the one 

closest in stringency to the standards 

proposed today is the alternative under 

which combined CAFE stringency 

increases at 5% annually. As indicated 

above, this alternative would yield fuel 

savings and CO2 reductions about 12% 

and 9% higher, respectively, than the 

proposed standards. However, 

compared to the proposed standards, 

this alternative would increase outlays 

for new technologies during MY 2012– 

2016 by about 24%, or $14b. Average 

MY 2016 cost increases would, in turn, 

rise from $1,076 under the proposed 

standards to $1,409 when stringency 

increases at 5% annually. This 

represents a 30% increase in per-vehicle 

cost for only a 3% increase in average 

performance (on a gallon-per-mile basis 

to which fuel savings are proportional). 

The following three tables summarize 

estimated manufacturer-level average 

incremental costs for the 5%/y 

alternative and the average of the 

passenger and light truck fleets: 

TABLE IV.F.3—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER THE 5%/Y ALTERNATIVE CAFE STANDARDS FOR

PASSENGER CARS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 474 541 667 883 1,190 

Chrysler ................................................................................ 726 1,464 1,832 1,928 1,913 

Daimler ................................................................................. 132 209 814 1,094 1,467 

Ford ...................................................................................... 979 1,556 1,572 1,918 2,181 

General Motors .................................................................... 94 934 1,242 1,541 1,808 

Honda ................................................................................... 55 263 408 451 671 

Hyundai ................................................................................ 518 531 943 1,007 1,152 

Kia ........................................................................................ 180 344 440 612 796 

Mazda .................................................................................. 603 919 1,294 1,569 1,863 

Mitsubishi ............................................................................. 1,106 1,141 2,594 2,962 2,913 

Nissan .................................................................................. 298 587 1,344 1,402 1,517 

Porsche ................................................................................ 209 240 350 465 581 

Subaru .................................................................................. 353 454 1,828 2,258 2,201 

Suzuki .................................................................................. 204 1,453 2,444 2,580 2,624 

Tata ...................................................................................... 202 239 428 632 1,350 

Toyota .................................................................................. 133 127 194 285 446 

Volkswagen .......................................................................... 231 550 688 828 1,202 

Average ......................................................................... 337 664 916 1,079 1,291 

TABLE IV.F.4—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER THE 5%/Y ALTERNATIVE CAFE STANDARDS FOR

LIGHT TRUCKS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................. 297 306 403 753 935 

Chrysler .............................................................................. 113 475 1,058 1,271 1,538 

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TABLE IV.F.4—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER THE 5%/Y ALTERNATIVE CAFE STANDARDS FOR

LIGHT TRUCKS—Continued 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

Daimler ............................................................................... 172 198 227 459 528 

Ford .................................................................................... 732 1,201 1,685 2,345 2,380 

General Motors .................................................................. .......................... 786 1,121 1,275 1,457

Honda ................................................................................. 646 614 1,139 1,265 1,624 

Hyundai .............................................................................. 990 1,009 2,106 2,206 2,148 

Kia ...................................................................................... .......................... 309 713 1,181 1,692 

Mazda ................................................................................ 434 608 612 722 953 

Mitsubishi ........................................................................... 11 88 2,102 2,081 2,817 

Nissan ................................................................................ 793 891 1,419 1,535 1,907 

Porsche .............................................................................. (17 ) 55 117 962 1,009 

Subaru ................................................................................ 1,398 1,370 1,501 1,441 1,486 

Suzuki ................................................................................ 6 2,169 2,093 2,028 2,155 

Tata .................................................................................... .......................... 77 160 242 695 

Toyota ................................................................................ 113 427 906 1,065 1,291 

Volkswagen ........................................................................ (11 ) 55 127 209 286 

Average ....................................................................... 373 742 1,179 1,449 1,641 

TABLE IV.F.5—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER THE 5%/Y ALTERNATIVE CAFE STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 415 469 590 848 1,123 

Chrysler ................................................................................ 351 888 1,392 1,632 1,747 

Daimler ................................................................................. 148 205 591 884 1,167 

For∧d .................................................................................... 872 1,401 1,623 2,110 2,269 

General Motors .................................................................... 52 868 1,189 1,426 1,660 

Honda ................................................................................... 272 386 638 701 955 

Hyundai ................................................................................ 610 625 1,167 1,228 1,330 

Kia ........................................................................................ 143 337 489 707 942 

Mazda .................................................................................. 571 862 1,181 1,443 1,732 

Mitsubishi ............................................................................. 959 975 2,525 2,854 2,902 

Nissan .................................................................................. 462 683 1,367 1,441 1,627 

Porsche ................................................................................ 120 172 272 623 717 

Subaru .................................................................................. 743 787 1,709 1,964 1,942 

Suzuki .................................................................................. 152 1,637 2,349 2,434 2,504 

Tata ...................................................................................... 71 144 267 420 1,001 

Toyota .................................................................................. 125 233 440 549 724 

Volkswagen .......................................................................... 182 460 586 716 1,043 

Average ......................................................................... 350 692 1,010 1,207 1,409 

These cost increases derive from 

accelerated application of advanced 

technologies as stringency increases 

past the levels in the proposed 

standards. For example, under the 

proposed standards, additional diesel 

application rates average 2% for the 

industry and range from 0% to 7% 

among Chrysler, Ford, GM, Honda, 

Nissan, and Toyota. Under standards 

increasing in combined stringency at 

5% annually, these rates more than 

double, averaging 5% for the industry 

and ranging from 2% to 13% for the 

same six manufacturers. The agency 

tentatively concludes that the levels of 

technology penetration required by the 

proposed standards are reasonable. 

Increasing the standards beyond those 

levels would lead to rapidly increasing 

dependence on advanced technologies 

with higher costs, particularly in the 

early years of the rulemaking time 

frame, according to the agency’s 

analysis, and potentially pose too great 

an economic burden given the state of 

the industry. 

In contrast, through analysis of the 

illustrative results shown above, as well 

as the more complete and detailed 

results presented in the accompanying 

PRIA, NHTSA has concluded that the 

proposed standards are technologically 

feasible and economically practicable. 

The proposed standards will require 

manufacturers to apply considerable 

additional technology. Although 

NHTSA cannot predict how 

manufacturers will respond to the 

proposed standards, the agency’s 

analysis indicates that the standards 

could lead to significantly greater use of 

advanced engine and transmission 

technologies. As shown above, the 

agency’s analysis shows considerable 

increases in the application of SGDI 

systems and engine turbocharging and 

downsizing. Though not presented 

above, the agency’s analysis also shows 

similarly large increases in the use of 

dual-clutch automated manual 

transmissions (AMTs). However, the 

agency’s analysis does not suggest that 

the additional application of these 

technologies in response to the 

proposed standards would extend 

beyond levels achievable by the 

industry. These technologies are likely 

to be applied to at least some extent 

even in the absence of new CAFE 

standards. In addition, the agency’s 

analysis indicates that most 

manufacturers would rely only to a 

limited extent on the most expensive 

and advanced technologies, including 

diesel engines and strong HEVs. 

As shown above, NHTSA estimates 

that the proposed standards could lead 

to average incremental costs ranging 

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from $291 per vehicle (for light trucks 

in MY 2011) to $1,085 per vehicle (for 

passenger cars in MY 2016), increasing 

steadily from $421 per vehicle in for all 

light vehicles in MY 2011 $1,076 for all 

light vehicle in MY 2016. NHTSA 

estimates that these costs would vary 

considerably among manufacturers, but 

would rarely exceed $2,000 per vehicle. 

The following three tables summarize 

estimated manufacturer-level average 

incremental costs for the proposed 

standards and the average of the 

passenger and light truck fleets: 

TABLE IV.F.6—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER PROPOSED PASSENGER CAR CAFE STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 524 552 634 828 1,124 

Chrysler ................................................................................ 775 1,304 1,473 1,583 1,582 

Daimler ................................................................................. 182 215 781 1,039 1,401 

Ford ...................................................................................... 1,746 1,719 1,735 1,880 2,078 

General Motors .................................................................... 143 990 1,189 1,387 1,553 

Honda ................................................................................... 31 122 205 287 494 

Hyundai ................................................................................ 418 452 643 726 868 

Kia ........................................................................................ 319 359 387 473 647 

Mazda .................................................................................. 658 735 965 991 1,26 

Mitsubishi ............................................................................. 1,156 1,076 1,715 2,076 2,035 

Nissan .................................................................................. 653 712 1,155 1,153 1,275 

Porsche ................................................................................ 270 256 306 399 498 

Subaru .................................................................................. 408 465 1,493 1,877 1,838 

Suzuki .................................................................................. 259 1,001 1,445 1,494 1,675 

Tata ...................................................................................... 246 244 395 577 1,284 

Toyota .................................................................................. 133 127 155 257 267 

Volkswagen .......................................................................... 286 561 650 767 1,125 

Average ......................................................................... 498 674 820 930 1,085 

TABLE IV.F.7—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER PROPOSED LIGHT TRUCK CAFE STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 325 327 380 708 884 

Chrysler ................................................................................ 152 399 749 892 1,188 

Daimler ................................................................................. 322 289 316 420 478 

Ford ...................................................................................... 471 629 693 1,323 1,365 

General Motors .................................................................... 33 533 752 792 962 

Honda ................................................................................... 390 380 616 749 1,006 

Hyundai ................................................................................ 774 744 1,301 1,322 1,292 

Kia ........................................................................................ 228 373 547 843 1,218 

Mazda .................................................................................. 340 608 610 679 776 

Mitsubishi ............................................................................. 55 94 1,546 1,732 2,123 

Nissan .................................................................................. 541 608 903 1,022 1,312 

Porsche ................................................................................ 28 46 84 913 954 

Subaru .................................................................................. 1,203 1,140 1,213 1,197 1,184 

Suzuki .................................................................................. 50 1,451 1,404 1,358 1,373 

Tata ...................................................................................... 44 83 127 193 635 

Toyota .................................................................................. 172 309 665 764 877 

Volkswagen .......................................................................... 28 61 99 160 231 

Average ......................................................................... 291 485 701 911 1,058 

TABLE IV.F.8—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER PROPOSED CAFE STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 457 483 560 796 1,061 

Chrysler ................................................................................ 393 777 1,061 1,271 1,408 

Daimler ................................................................................. 236 243 604 834 1,106 

Ford ...................................................................................... 1,195 1,242 1,262 1,629 1,762 

General Motors .................................................................... 94 785 997 1,131 1,304 

Honda ................................................................................... 162 212 335 429 647 

Hyundai ................................................................................ 488 509 769 835 944 

Kia ........................................................................................ 300 362 416 535 740 

Mazda .................................................................................. 598 712 907 944 1,193 

Mitsubishi ............................................................................. 1,007 921 1,692 2,033 2,045 

Nissan .................................................................................. 616 679 1,078 1,115 1,286 

Porsche ................................................................................ 174 179 231 562 643 

Subaru .................................................................................. 705 711 1,392 1,632 1,602 

Suzuki .................................................................................. 204 1,117 1,434 1,458 1,598 

Tata ...................................................................................... 115 150 234 368 938 

Toyota .................................................................................. 147 191 331 429 468 

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580See Section IV.G.7 below. 

581 In NHTSA’s analysis, ‘‘undercompliance’’ is 

mitigated either through use of FFV credits, use of 

existing or ‘‘banked’’ credits, or through fine 

payment. Because NHTSA cannot consider 

availability of credits in setting standards, the 

estimated achieved CAFE levels presented here do 

not account for their use. In contrast, because 

NHTSA is not prohibited from considering fine 

payment, the estimated achieved CAFE levels 

presented here include the assumption that BMW, 

Daimler (i.e., Mercedes), Porsche, and Tata (i.e., 

Jaguar and Rover) will only apply technology up to 

the point that it would be less expensive to pay 

civil penalties. 

582 In NHTSA’s analysis, ‘‘overcompliance’’ 

occurs through multi-year planning: Manufacturers 

apply some ‘‘extra’’ technology in early model years 

(e.g., MY 2014) in order to carry that technology 

forward and thereby facilitate compliance in later 

model years (e.g., MY 2016) 

583Consistent with EPCA, NHTSA has not 

accounted for manufacturers’ ability to earn CAFE 

credits for selling FFVs, carry credits forward and 

back between model years, and transfer credits 

between the passenger car and light truck fleets. 

TABLE IV.F.8—AVERAGE INCREMENTAL COSTS ($/VEHICLE) UNDER PROPOSED CAFE STANDARDS—Continued 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

Volkswagen .......................................................................... 233 470 550 657 970 

Average ......................................................................... 421 605 777 924 1,076 

In summary, NHTSA has considered 

eight regulatory alternatives, including 

the proposed standards, examining 

technologies that could be applied in 

response to each alternative, as well as 

corresponding costs, effects, and 

benefits. The agency has concluded that 

alternatives less stringent than the 

proposed standards would not produce 

the fuel savings and CO2 reductions 

necessary at this time to achieve either 

the overarching purpose of EPCA, i.e., 

energy conservation, or an important 

part of the regulatory harmonization 

underpinning the National Program. 

Conversely, the agency has concluded 

that more stringent standards would 

involve levels of additional technology 

and cost that, considering the fragile 

state of the automotive industry, would 

not be economically practicable. 

Therefore, having considered these eight 

regulatory alternatives, and the 

statutorily-relevant factors of 

technological feasibility, economic 

practicability, the effect of other motor 

vehicle standards of the Government on 

fuel economy, and the need of the 

United States to conserve energy, along 

with other relevant factors such as the 

safety impacts of the proposed 

standards,580 NHTSA tentatively 

concludes that the proposed standards 

represent a reasonable balancing of all 

of these concerns, and are the maximum 

feasible average fuel economy levels 

that the manufacturers can achieve in 

MYs 2012–2016. 

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? 

As discussed above, the CAFE level 

required under an attribute-based 

standard depends on the mix of vehicles 

produced for sale in the U.S. Based on 

the market forecast that NHTSA and 

EPA have used to develop and analyze 

new CAFE and CO2 emissions 

standards, NHTSA estimates that the 

new CAFE standards will require CAFE 

levels to increase by an average of 4.3 

percent annually through MY 2016, 

reaching a combined average fuel 

economy requirement of 34.1 mpg in 

that model year: 

TABLE IV.G.1–1—AVERAGE REQUIRED FUEL ECONOMY (MPG) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 

Passenger Cars ................................................................... 33.6 34.4 35.2 36.4 38.0 

Light Trucks ......................................................................... 25.0 25.6 26.2 27.1 28.3 

Combined ...................................................................... 29.8 30.6 31.4 32.6 34.1 

NHTSA estimates that average 

achieved fuel economy levels will 

correspondingly increase through MY 

2016, but that manufacturers will, on 

average, undercomply 581 in some model 

years and overcomply 582 in others, 

reaching a combined average fuel 

economy of 33.7 mpg in MY 2016: 583

TABLE IV.G.1–2—AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 

Passenger Cars ................................................................... 32.9 34.2 35.2 36.5 37.6 

Light Trucks ......................................................................... 24.9 25.7 26.5 27.4 28.1 

Combined ...................................................................... 29.3 30.5 31.5 32.7 33.7 

NHTSA estimates that these fuel 

economy increases will lead to fuel 

savings totaling 61.6 billion gallons 

during the useful lives of vehicles sold 

in MYs 2012–2016: 

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TABLE IV.G.1–3—FUEL SAVED (BILLION GALLONS) 

[Under proposed standards] 

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 2.5 5.3 7.5 9.4 11.4 36.0 

Light Trucks ............................................. 1.8 3.7 5.4 6.8 7.8 25.6 

Combined .......................................... 4.3 9.1 12.9 16.1 19.2 61.6 

The agency also estimates that these 

new CAFE standards will lead to 

corresponding reductions of CO2

emissions totaling 656 million metric 

tons (mmt) during the useful lives of 

vehicles sold in MYs 2012–2016: 

TABLE IV.G.1–4—AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 25 56 79 99 121 381 

Light Trucks ..................................................................................................................... 19 40 58 73 85 275 

Combined .................................................................................................................. 44 96 137 173 206 656 

2. How Would These Proposed 

Standards Improve Fleet-Wide Fuel 

Economy and Reduce GHG Emissions 

Beyond MY 2016? 

Under the assumption that CAFE 

standards at least as stringent as those 

proposed for MY 2016 would be 

established for subsequent model years, 

the effects of the proposed standards on 

fuel consumption and GHG emissions 

will continue to increase for many 

years. This will occur because over 

time, a growing fraction of the U.S. 

light-duty vehicle fleet will be 

comprised of cars and light trucks that 

meet the MY 2016 standard. The impact 

of the proposed standards on fuel use 

and GHG emissions will continue to 

grow through approximately 2050, 

when virtually all cars and light trucks 

in service will have met the MY 2016 

standard. 

As Table IV.G.2–1 shows, NHTSA 

estimates that the fuel economy 

increases resulting from the proposed 

standards will lead to reductions in total 

fuel consumption by cars and light 

trucks of 9 billion gallons during 2020, 

increasing to 30 billion gallons by 2050. 

Over the period from 2012—when the 

proposed standards would begin to take 

effect—through 2050, cumulative fuel 

savings would total 693 billion gallons, 

as Table IV.G.2–1 also indicates. 

TABLE IV.G.2–1—REDUCTION IN FLEET-WIDE FUEL USE (BILLION GALLONS) UNDER PROPOSED STANDARDS

Calendar year 2020 2030 2040 2050 

Total, 

2012– 

2050 

Passenger Cars ........................................................................................................... 5 12 16 19 431 

Light Trucks ................................................................................................................. 4 7 9 11 262 

Combined .............................................................................................................. 9 19 25 30 693 

As a consequence of these reductions 

in fleet-wide fuel consumption, the 

agency also estimates that the proposed 

CAFE standards for MYs 2012–2016 

will lead to corresponding reductions in 

CO2 emissions from the U.S. light-duty 

vehicle fleet. Specifically, NHTSA 

estimates that total CO2 emissions 

associated with passenger car and light 

truck use in the U.S. use will decline by 

111 million metric tons (mmt) during 

2020 as a consequence of the proposed 

standards, as Table IV.G.2–2 reports. 

The table also shows that the this 

reduction is estimated to grow to 355 

million metric tons by the year 2050, 

and will total 8,247 million metric tons 

over the period from 2012, when the 

proposed standards would take effect, 

through 2050. 

TABLE IV.G.2–2—REDUCTION IN FLEET-WIDE CARBON DIOXIDE EMISSIONS (MMT) FROM PASSENGER CAR AND LIGHT

TRUCK USE UNDER PROPOSED STANDARDS

Calendar year 2020 2030 2040 2050 

Total, 

2012– 

2050 

Passenger Cars ........................................................................................................... 64 144 186 222 5,117 

Light Trucks ................................................................................................................. 47 87 110 132 3,130 

Combined .............................................................................................................. 111 231 295 355 8,247 

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These reductions in fleet-wide CO2

emissions, together with corresponding 

reductions in other GHG emissions from 

fuel production and use, would lead to 

small but significant reductions in 

projected changes in the future global 

climate. These changes are summarized 

in Table IV.G.2–3 below. 

TABLE IV.G.2–3—EFFECTS OF REDUCTIONS IN FLEET-WIDE CARBON DIOXIDE EMISSIONS (MMT) ON PROJECTED

CHANGES IN GLOBAL CLIMATE

Measure Units Date 

Projected change in measure 

No action With proposed 

standards Difference 

Atmospheric CO2 Concentration ......................... ppm ............................................ 2100 783.0 780.3 ¥2.7 

Increase in Global Mean Surface Temperature .. °C ............................................... 2100 3.136 3.126 ¥0.010 

Sea Level Rise .................................................... cm .............................................. 2100 38.00 37.91 ¥0.09 

Global Mean Precipitation ................................... % change from 1980–1999 avg. 2090 4.59% 4.57% ¥0.02% 

3. How Would These Proposed 

Standards Impact Non-GHG Emissions 

and Their Associated Effects? 

Under the assumption that CAFE 

standards at least as stringent as those 

proposed for MY 2016 would be 

established for subsequent model years, 

the effects of the proposed standards on 

air quality and its associated health 

effects will continue to be felt over the 

foreseeable future. This will occur 

because over time a growing fraction of 

the U.S. light-duty vehicle fleet will be 

comprised of cars and light trucks that 

meet the MY 2016 standard, and this 

growth will continue until 

approximately 2050. 

Increases in the fuel economy of lightduty vehicles required by the proposed 

CAFE standards will cause a slight 

increase in the number of miles they are 

driven, through the fuel economy 

‘‘rebound effect.’’ In turn, this increase 

in vehicle use will lead to increases in 

emissions of criteria air pollutants and 

some airborne toxics, since these are 

products of the number of miles 

vehicles are driven. 

At the same time, however, the 

projected reductions in fuel production 

and use reported in Table IV.G.2–1 

above will lead to corresponding 

reductions in emissions of these 

pollutants that occur during fuel 

production and distribution 

(‘‘upstream’’ emissions). For most of 

these pollutants, the reduction in 

upstream emissions resulting from 

lower fuel production and distribution 

will outweigh the increase in emissions 

from vehicle use, resulting in a net 

decline in their total emissions. 

Tables IV.G.3–1a and 3–1b report 

estimated reductions in emissions of 

selected criteria air pollutants (or their 

chemical precursors) and airborne 

toxics expected to result from the 

proposed standards during calendar 

year 2030. By that date, the majority of 

light-duty vehicles in use will have met 

the proposed MY 2016 CAFE standards, 

so these reductions provide a useful 

index of the long-term impact of the 

proposed standards on air pollution and 

its consequences for human health. 

TABLE IV.G.3–1a—PROJECTED CHANGES IN EMISSIONS OF CRITERIA AIR POLLUTANTS FROM CAR AND LIGHT TRUCK

USE

[Calendar year 2030; tons] 

Vehicle class Source of emissions 

Criteria air pollutant 

Nitrogen oxides (NOX) Particulate 

matter (PM2.5) 

Sulfur oxides 

(SOX) 

Volatile organic compounds (VOC) 

Passenger Cars ................................ Vehicle use ....................................... 1,791 630 ¥2,375 2,157 

Fuel production and distribution ....... ¥19,022 ¥2,539 ¥11,363 ¥75,031 

All sources ........................................ ¥17,231 ¥1,909 ¥13,738 ¥72,874 

Light Trucks ...................................... Vehicle use ....................................... 1,137 257 ¥1,401 1,094 

Fuel production and distribution ....... ¥11,677 ¥1,569 ¥7,031 ¥43,667 

All sources ........................................ ¥10,540 ¥1,312 ¥8,432 ¥42,573 

Total ........................................... Vehicle use ....................................... 2,928 887 ¥3,776 3,251 

Fuel production and distribution ....... ¥30,699 ¥4,108 ¥18,394 ¥118,698 

All sources ........................................ ¥27,771 ¥3,221 ¥22,170 ¥115,447 

TABLE IV.F.3–1b—PROJECTED CHANGES IN EMISSIONS OF AIRBORNE TOXICS FROM CAR AND LIGHT TRUCK USE

[Calendar year 2030; tons] 

Vehicle class Source of emissions 

Toxic air pollutant 

Benzene 1,3-Butadiene Formaldehyde 

Passenger Cars .............................................. Vehicle use ..................................................... 67 19 72 

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TABLE IV.F.3–1b—PROJECTED CHANGES IN EMISSIONS OF AIRBORNE TOXICS FROM CAR AND LIGHT TRUCK USE— 

Continued 

[Calendar year 2030; tons] 

Vehicle class Source of emissions 

Toxic air pollutant 

Benzene 1,3-Butadiene Formaldehyde 

Fuel production and distribution ..................... ¥158 ¥1 ¥54 

All sources ...................................................... ¥91 18 18 

Light Trucks .................................................... Vehicle use ..................................................... 45 9 32 

Fuel production and distribution ..................... ¥93 ¥1 ¥33 

All sources ...................................................... ¥48 8 ¥1 

Total ......................................................... Vehicle use ..................................................... 112 28 104 

Fuel production and distribution ..................... ¥251 ¥2 ¥87 

All sources ...................................................... ¥139 26 17 

Note: Positive values indicate increases in emissions; negative values indicate reductions. 

In turn, the reductions in emissions 

reported in Tables IV.G.3–1a and 3–1b 

are projected to result in significant 

declines in the health effects that result 

from population exposure to these 

pollutants. Table IV.G.3–2 reports the 

estimated reductions in selected PM2.5- 

related human health impacts that are 

expected to result from reduced 

population exposure to unhealthful 

atmospheric concentrations of PM2.5. 

The estimates reported in Table IV.G.3– 

2 are derived from PM2.5-related dollarper-ton estimates that include only 

quantifiable reductions in health 

impacts likely to result from reduced 

population exposure to particular matter 

(PM). They do not include all health 

impacts related to reduced exposure to 

PM, nor do they include any reductions 

in health impacts resulting from lower 

population exposure to other criteria air 

pollutants (particularly ozone) and air 

toxics. NHTSA and EPA are using PMrelated benefits-per-ton values as an 

interim approach to estimating the PMrelated benefits of the proposal. To 

model the ozone and PM air quality 

benefit sof the final rule, the analysis 

will utilize ambient concentration data 

derived from full-scale photochemical 

air quality modeling. 

TABLE IV.G.3–2—PROJECTED REDUCTIONS IN HEALTH IMPACTS OF EXPOSURE TO CRITERIA AIR POLLUTANTS FROM

PROPOSED STANDARDS

[Calendar year 2030] 

Health impact Measure Projected reduction (2030) 

Mortality (ages 30 and older) ................................................... premature deaths per year ...................................................... 217 to 554 

Chronic Bronchitis ..................................................................... cases per year ......................................................................... 142 

Emergency Room Visits for Asthma ........................................ number per year ....................................................................... 198 

Work Loss ................................................................................. workdays per year .................................................................... 25,522 

4. What Are the Estimated Costs and 

Benefits of These Proposed Standards? 

NHTSA estimates that the proposed 

standards could entail significant 

additional technology beyond the levels 

reflected in the baseline market forecast 

used by NHTSA. This additional 

technology will lead to increases in 

costs to manufacturers and vehicle 

buyers, as well as fuel savings to vehicle 

buyers. The following three tables 

summarize the extent to which the 

agency estimates technologies could be 

added to the passenger car, light truck, 

and overall fleets in each model year in 

response to the proposed standards. 

Percentages reflect the technology’s 

additional application in the market, 

and are negative in cases where one 

technology is superseded (i.e., 

displaced) by another. For example, the 

agency estimates that many automatic 

transmissions used in light trucks could 

be displaced by dual clutch 

transmissions. 

BILLING CODE 6560–50–P 

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BILLING CODE 6560–50–C 

In order to pay for this additional 

technology (and, for some 

manufacturers, civil penalties), NHTSA 

estimates that average passenger car and 

light truck prices will, relative to levels 

resulting from compliance with baseline 

(MY 2011) standards, increase by $591- 

$1,127 and $283-$1,020, respectively, 

during MYs 2011–2016. The following 

tables summarize the agency’s estimates 

of average price increases for each 

manufacturer’s passenger car, light 

truck, and overall fleets (with 

corresponding averages for the 

industry): 

TABLE IV.G.4–4—AVERAGE PASSENGER CAR INCREMENTAL PRICE INCREASES ($) UNDER PROPOSED STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 524 552 634 828 1,124 

Chrysler ................................................................................ 775 1,304 1,473 1,583 1,582 

Daimler ................................................................................. 182 215 781 1,039 1,401 


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TABLE IV.G.4–4—AVERAGE PASSENGER CAR INCREMENTAL PRICE INCREASES ($) UNDER PROPOSED STANDARDS— 

Continued 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

Ford ...................................................................................... 1,746 1,719 1,735 1,880 2,078 

General Motors .................................................................... 143 990 1,189 1,387 1,553 

Honda ................................................................................... 31 122 205 287 494 

Hyundai ................................................................................ 418 452 643 726 868 

Kia ........................................................................................ 319 359 387 473 647 

Mazda .................................................................................. 658 735 965 991 1,263 

Mitsubishi ............................................................................. 1,156 1,076 1,715 2,076 2,035 

Nissan .................................................................................. 653 712 1,155 1,153 1,275 

Porsche ................................................................................ 270 256 306 399 498 

Subaru .................................................................................. 408 465 1,493 1,877 1,838 

Suzuki .................................................................................. 259 1,001 1,445 1,494 1,675 

Tata ...................................................................................... 246 244 395 577 1,284 

Toyota .................................................................................. 133 127 155 257 267 

Volkswagen .......................................................................... 286 561 650 767 1,125 

Total/Average ................................................................ 498 674 820 930 1,085 

TABLE IV.G.4–5—AVERAGE LIGHT TRUCK INCREMENTAL PRICE INCREASES ($) UNDER PROPOSED STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 325 327 380 708 884 

Chrysler ................................................................................ 152 399 749 892 1,188 

Daimler ................................................................................. 322 289 316 420 478 

Ford ...................................................................................... 471 629 693 1,323 1,365 

General Motors .................................................................... 33 533 752 792 962 

Honda ................................................................................... 390 380 616 749 1,006 

Hyundai ................................................................................ 774 744 1,301 1,322 1,292 

Kia ........................................................................................ 228 373 547 843 1,218 

Mazda .................................................................................. 340 608 610 679 776 

Mitsubishi ............................................................................. 55 94 1,546 1,732 2,123 

Nissan .................................................................................. 541 608 903 1,022 1,312 

Porsche ................................................................................ 28 46 84 913 954 

Subaru .................................................................................. 1,203 1,140 1,213 1,197 1,184 

Suzuki .................................................................................. 50 1,451 1,404 1,358 1,373 

Tata ...................................................................................... 44 83 127 193 635 

Toyota .................................................................................. 172 309 665 764 877 

Volkswagen .......................................................................... 28 61 99 160 231 

Total/Average ................................................................ 291 485 701 911 1,058 

TABLE IV.G.4–6—AVERAGE INCREMENTAL PRICE INCREASES ($) BY MANUFACTURER UNDER PROPOSED STANDARDS

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW .................................................................................... 457 483 560 796 1,061 

Chrysler ................................................................................ 393 777 1,061 1,271 1,408 

Daimler ................................................................................. 236 243 604 834 1,106 

Ford ...................................................................................... 1,195 1,242 1,262 1,629 1,762 

General Motors .................................................................... 94 785 997 1,131 1,304 

Honda ................................................................................... 162 212 335 429 647 

Hyundai ................................................................................ 488 509 769 835 944 

Kia ........................................................................................ 300 362 416 535 740 

Mazda .................................................................................. 598 712 907 944 1,193 

Mitsubishi ............................................................................. 1,007 921 1,692 2,033 2,045 

Nissan .................................................................................. 616 679 1,078 1,115 1,286 

Porsche ................................................................................ 174 179 231 562 643 

Subaru .................................................................................. 705 711 1,392 1,632 1,602 

Suzuki .................................................................................. 204 1,117 1,434 1,458 1,598 

Tata ...................................................................................... 115 150 234 368 938 

Toyota .................................................................................. 147 191 331 429 468 

Volkswagen .......................................................................... 233 470 550 657 970 

Total/Average ................................................................ 421 605 777 924 1,076 

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584The agency seeks comment above on 

appropriate values for these costs. 

Based on the agencies’ estimates of 

manufacturers’ future sales volumes, 

these price increases will lead to a total 

of $60.2 billion in incremental outlays 

during MYs 2012–2016 for additional 

technology attributable to the proposed 

standards: 

TABLE IV.G.4–7—INCREMENTAL TECHNOLOGY OUTLAYS ($B) UNDER PROPOSED STANDARDS

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 notes that these estimates of 

the economic costs for meeting higher 

CAFE standards omit certain potentially 

important categories of costs, and may 

also reflect underestimation (or possibly 

overestimation) of some costs that are 

included. For example, although the 

agency’s analysis attempts to hold 

vehicle performance, capacity, and 

utility constant in estimating the costs 

of applying fuel-saving technologies to 

vehicles, the analysis imputes no cost to 

any actual reductions in vehicle 

performance, capacity, and utility that 

may result from manufacturers’ efforts 

to comply with the proposed CAFE 

standards. Although these costs are 

difficult to estimate accurately, they 

nonetheless represent a potentially 

significant category of omitted costs. 

Similarly, the agency’s estimates of 

costs for meeting higher CAFE standards 

does not estimate the economic value of 

potential increases in motor vehicle 

fatalities and injuries that could result 

from reductions in the size or weight of 

vehicles. While NHTSA reports worstcase estimates of these increases in 

fatalities and injuries, no estimate of 

their economic value is included in the 

agency’s estimates of the net benefits 

resulting from the proposed standards 

due to ongoing discussion regarding 

these potential impacts. 

Finally, it is possible that the agency 

may have underestimated or 

overestimated manufacturers’ direct 

costs for applying some fuel economy 

technologies, or the increases in 

manufacturer’s indirect costs associated 

with higher vehicle manufacturing 

costs. In either case, the technology 

outlays reported here will not correctly 

represent the costs of meeting higher 

CAFE standards. Similarly, NHTSA’s 

estimates of increased costs of 

congestion, accidents, and noise 

associated with added vehicle use are 

drawn from a 1997 study, and the 

correct magnitude of these values may 

have changed since they were 

developed.584 If this is the case, the 

costs of increased vehicle use associated 

with the fuel economy rebound effect 

will differ from the agency’s estimates 

in this analysis. Thus, like the agency’s 

estimates of economic benefits, 

estimates of total compliance costs 

reported here may underestimate or 

overestimate the true economic costs of 

the proposed standards. 

However, offsetting these costs, the 

achieved increases in fuel economy will 

also produce significant benefits to 

society. NHTSA estimates that, in 

present value terms (at a discount rate 

of 3 percent), these benefits will total 

$201.7 billion over the useful lives of 

light vehicles sold during MYs 2012– 

2016: 

TABLE IV.G.4–8—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED STANDARDS

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 

NHTSA attributes most of these 

benefits to reductions in fuel 

consumption, valuing fuel at future 

pretax prices in EIA’s reference case 

forecast from AEO 2009. The total 

benefits shown in the above table also 

include other benefits and disbenefits, 

examples of which include the social 

values of reductions in CO2 and criteria 

pollutant emissions, the value of 

additional travel (induced by the 

rebound effect), and the social cost of 

additional congestion, accidents, and 

noise attributable to that additional 

travel. The PRIA accompanying today’s 

proposed rule presents a detailed 

analysis of specific benefits of the 

proposed rule. 

For both the passenger car and light 

truck fleets, NHTSA estimates that the 

benefits of today’s proposed standards 

will exceed the corresponding costs in 

every model year. Over the useful lives 

of the affected (MY 2012–2016) 

vehicles, the agency estimates that the 

benefits of the proposed standards will 

exceed the costs of the proposed 

standards by $141.5 billion: 

TABLE IV.G.4–9—PRESENT VALUE OF NET BENEFITS ($BILLION) UNDER PROPOSED STANDARDS

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 3.5 10.5 16.0 21.3 26.9 78.3 

Light Trucks ............................................. 3.9 8.9 13.3 17.0 20.1 63.2 

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49716 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

585Because some economic inputs change the 

effective cost of some technologies, and NHTSA 

assumes some manufacturers will be willing to pay civil penalties based on economic considerations, 

this outcome is not assured. 

TABLE IV.G.4–9—PRESENT VALUE OF NET BENEFITS ($BILLION) UNDER PROPOSED STANDARDS—Continued 

2012 2013 2014 2015 2016 Total 

Combined .......................................... 7.4 19.4 29.3 38.3 47.1 141.5 

NHTSA’s estimates of economic 

benefits from establishing higher CAFE 

are also subject to considerable 

uncertainty. Most important, the 

agency’s estimates of the fuel savings 

likely to result from adopting higher 

CAFE standards depend critically on the 

accuracy of the estimated fuel economy 

levels that will be achieved under both 

the baseline scenario, which assumes 

that manufacturers will continue to 

comply with the MY 2011 CAFE 

standards, and under alternative 

increases in the standards that apply to 

MY 2012–16 passenger cars and light 

trucks. Specifically, if the agency has 

underestimated the fuel economy levels 

that manufacturers will achieve under 

the baseline scenario, its estimates of 

fuel savings and the resulting economic 

benefits will be too large. As another 

example, the agency’s estimate of 

benefits from reducing the threat of 

economic damages from disruptions in 

the supply of imported petroleum to the 

U.S. applies to calendar year 2015. If the 

magnitude of this estimate would be 

expected to grow after 2015 in response 

to increases in U.S. petroleum imports, 

growth in the level of U.S. economic 

activity, or increases in the likelihood of 

disruptions in the supply of imported 

petroleum, the agency may have 

underestimated the benefits from the 

reduction in petroleum imports 

expected to result from adopting higher 

CAFE standards. 

However, it is also possible that 

NHTSA’s estimates of economic benefits 

from establishing higher CAFE 

standards underestimate the true 

economic benefits of the fuel savings 

those standards would produce. This is 

partly because the agency has been 

unable to develop monetized estimates 

of the economic value of certain 

potentially significant categories of 

benefits from reducing fuel 

consumption. Specifically, the agency’s 

estimate of the economic value of 

reduced damages to human health 

resulting from lower exposure to criteria 

air pollutants includes only the effects 

of reducing population exposure to 

PM2.5 emissions. Although this is likely 

to be the most significant component of 

health benefits from reduced emissions 

of criteria air pollutants, it excludes the 

value of reduced damages to human 

health and other impacts resulting from 

lower emissions and reduced 

population exposure to other criteria air 

pollutants, including ozone and nitrous 

oxide (N2O), as well as airborne toxics. 

The agency’s analysis excludes these 

benefits because no reliable estimates of 

the health impacts of criteria pollutants 

other than PM2.5 or of the health impacts 

of airborne toxics were available to use 

in developing estimates of these 

benefits. 

In addition, the agency’s estimate of 

the value of reduced climate-related 

economic damages from lower 

emissions of GHGs excludes many 

sources of potential benefits from 

reducing the pace and extent of global 

climate change. These include 

reductions in the risk of catastrophic 

changes in the global climate, lower 

costs for necessary adaptations to 

changes in climate, reduced water 

supply within specific global subregions, reductions in damages caused 

by severe storms, lower population 

exposure to harmful air pollution levels, 

reductions in ecosystem impacts and 

risks to natural resources of global 

significance, and reduced threats from 

widespread social or political unrest. 

Including monetized estimates of 

benefits from reducing the extent of 

climate change and these associated 

impacts would increase the agency’s 

estimates of benefits from adopting 

higher CAFE standards. 

The benefits, costs, and net benefits 

shown above are all based on a discount 

rate of 3 percent. As documented in the 

accompanying PRIA, the agency 

examined the sensitivity of results to 

changes in many economic inputs. With 

an alternative discount rate of 7 percent, 

incremental technology outlays were 

virtually identical to those estimated at 

a 3 percent discount rate: 585

TABLE IV.G.4–10—INCREMENTAL TECHNOLOGY OUTLAYS ($B) UNDER PROPOSED STANDARDS (USING 7 PERCENT

DISCOUNT RATE) 

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 

However, the present value of the 

benefits accrued over the lifetime of the 

vehicles covered by the proposal is 

about 20 percent smaller when 

discounted at a 7 percent annual rate 

than when discounted at a 3 percent 

annual rate: 

TABLE IV.G.4–11—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (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 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49717 

TABLE IV.G.4–11—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (USING 7 PERCENT

DISCOUNT RATE)—Continued 

2012 2013 2014 2015 2016 Total 

Combined .......................................... 10.3 22.6 33.1 42.4 51.5 159.8 

As a result, net benefits are 38 percent 

lower when total benefits are 

discounted at a 7 percent annual rate: 

TABLE IV.G.4–12—PRESENT VALUE OF NET BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (USING 7 PERCENT

DISCOUNT RATE) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 1.9 7.0 11.1 15.1 19.3 54.5 

Light Trucks ............................................. 2.7 6.3 9.5 12.2 14.5 45.2 

Combined .......................................... 4.6 13.3 20.6 27.3 33.8 99.7 

The following tables also present 

itemized costs and benefits for the 

combined fleet for each year of the 

proposed standards and for all the years 

combined, at 3 and 7 percent discount 

rates, respectively. Numbers in 

parentheses represent negative values. 

TABLE IV.G.4–13—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 3% DISCOUNT RATE

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Costs: 

Technology Costs ............................. $5,695 $9,295 $12,454 $15,080 $17,633 $60,157 

Benefits 

Lifetime Fuel Expenditures ............... 10,197 22,396 32,715 41,880 50,823 158,012 

Consumer Surplus from Additional 

Driving ........................................... 751 1,643 2,389 3,029 3,639 11,451 

Refueling Time Value ....................... 776 1,551 2,198 2,749 3,277 10,550 

Petroleum Market Externalities ......... 559 1,194 1,700 2,129 2,538 8,121 

Congestion Costs ............................. (460) (934) (1,332) (1,657) (1,991) (6,376) 

Noise Costs ...................................... (7) (14) (21) (26) (31) (99) 

Crash Costs ...................................... (217) (437) (625) (776) (930) (2,985) 

CO2 ................................................... 1,028 2,287 3,382 4,376 5,372 16,446 

CO ..................................................... 0 0 0 0 0 0 

VOC .................................................. 41 80 108 131 156 518 

NOX ................................................... 82 132 155 174 200 744 

PM ..................................................... 220 438 621 771 904 2,956 

SOX ................................................... 161 345 490 613 731 2,341 

Total ........................................... 13,132 28,680 41,781 53,394 64,687 201,676 

Net Benefits ............................................. 7,044 18,759 27,090 34,710 41,386 128,992 

TABLE IV.G.4–14—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 7% DISCOUNT RATE

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Costs 

Technology Costs ............................. $5,695 $9,295 $12,454 $15,080 $17,633 $60,157 

Benefits: 

Lifetime Fuel Expenditures ............... 7,991 17,671 25,900 33,264 40,478 125,305 

Consumer Surplus from Additional 

Driving ........................................... 590 1,301 1,896 2,412 2,904 9,102 

Refueling Time Value ....................... 624 1,249 1,770 2,215 2,642 8,500 

Petroleum Market Externalities ......... 448 960 1,367 1,712 2,043 6,531 

Congestion Costs ............................. (371) (753) (1,074) (1,335) (1,606) (5,138) 

Noise Costs ...................................... (6) (12) (16) (21) (24) (80) 

Crash Costs ...................................... (173) (352) (503) (626) (749) (2,403) 

CO2 ................................................... 797 1,781 2,634 3,410 4,189 12,813 

CO ..................................................... 0 0 0 0 0 0 

VOC .................................................. 33 65 87 106 125 416 

NOX ................................................... 60 99 120 135 156 570 

PM ..................................................... 170 344 492 613 721 2,339 

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49718 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

586 Differences in the application of diesel engines 

lead to differences in the incremental percentage 

changes in fuel consumption and carbon dioxide 

emissions. 

TABLE IV.G.4–14—ITEMIZED COST AND BENEFIT ESTIMATES FOR THE COMBINED VEHICLE FLEET, 7% DISCOUNT RATE— 

Continued 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

SOX ................................................... 129 278 394 493 588 1,882 

Total ........................................... 10,292 22,631 33,066 42,380 51,468 159,837 

Net Benefits ............................................. 4,281 12,832 18,818 24,414 29,293 89,638 

The above benefit and cost estimates 

did not reflect the availability and use 

of flexibility mechanisms, such as 

compliance credits and credit trading, 

because EPCA prohibits NHTSA from 

considering the effects of those 

mechanisms in setting CAFE standards. 

However, the agency noted that, in 

reality, manufacturers were likely to 

rely to some extent on flexibility 

mechanisms provided by EPCA and 

would thereby reduce the cost of 

complying with the proposed standards 

to a meaningful extent. 

As discussed in the PRIA, NHTSA has 

performed an analysis to estimate the 

costs and benefits if EPCA’s provisions 

regarding FFVs are accounted for. The 

agency considered also attempting to 

account for other EPCA flexibility 

mechanisms, in particular credit 

transfers between the passenger and 

nonpassenger fleets, but has concluded 

that, at least within a context in which 

each model year is represented 

explicitly, technologies carry forward 

between model years, and multiyear 

planning effects are represented, there is 

no basis to reliably estimate how 

manufacturers might use these 

mechanisms. Accounting for the FFV 

provisions indicates that achieved fuel 

economies would be 0.6–1.1 mpg lower 

than when these provisions are not 

considered (for comparison see Table 

IV.G.1–2 above): 

TABLE IV.G.4–15—AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED STANDARDS (WITH FFV CREDITS) 

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 ...................................................................... 28.7 29.6 30.4 31.6 32.7 

As a result, NHTSA estimates that, 

when FFV credits are taken into 

account, fuel savings will total 58.8 

billion gallons—about 4.5 percent less 

than the 61.6 billion gallons estimated 

when these credits are not considered: 

TABLE IV.G.4–16—FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS (WITH FFV CREDITS) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 2.5 5.0 6.9 8.6 10.9 33.9 

Light Trucks ............................................. 2.0 3.3 5.0 6.8 7.9 24.9 

Combined .......................................... 4.5 8.2 11.8 15.4 18.8 58.8 

The agency similarly estimates CO2

emissions reductions would total 639 

million metric tons (mmt), about 2.6 

percent less than the 656 mmt estimated 

when these credits are not 

considered:586

TABLE IV.G.4–17—AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED STANDARDS (WITH FFV CREDITS) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 27 54 75 93 118 368 

Light Trucks ............................................. 22 36 54 74 86 272 

Combined .......................................... 49 90 129 167 204 639 

This analysis further indicates 

significant reductions in outlays for 

additional technology when FFV 

provisions are taken into account— 

about $45b, or about 25 percent less 

than the $60b estimated when excluding 

these provisions: 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49719 

587The molecular weight of Carbon (C) is 12, the 

molecular weight of Oxygen (O) is 16, thus the 

molecular weight of CO2 is 44. One ton of C = 44/ 

12 tons CO2 = 3.67 tons CO2. 1 gallon of gas weighs 

2,819 grams, of that 2,433 grams are carbon. $1.00 

CO2 = $3.67 C and $3.67/ton * ton/1000kg * kg/ 

1000g * 2433g/gallon = (3.67 * 2433)/1000 * 1000 

= $0.0089/gallon. 

TABLE IV.G.4–18—INCREMENTAL TECHNOLOGY OUTLAYS ($B) UNDER PROPOSED 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 

Because NHTSA’s analysis indicated 

that FFV provisions would not 

significantly reduce fuel savings, the 

agency’s estimate of discounted benefits 

when including these provisions, 

$192.5b, is only about 4.5 percent lower 

than the $201.7b shown above for the 

analysis that excluded these provisions: 

TABLE IV.G.4–19—PRESENT VALUE OF BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (WITH FFV CREDITS) 

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 

However, although the agency 

estimates lower discounted benefits 

when FFV provisions are taken into 

account, the agency estimates that these 

provisions slightly increase net benefits 

(by about 4 percent, from $141.5b to 

$147.2b) because costs decrease by more 

than discounted benefits: 

TABLE IV.G.4–20—PRESENT VALUE OF NET BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (WITH FFV CREDITS) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ....................................... 5.3 11.5 16.4 21.2 27.8 82.3 

Light Trucks ............................................. 4.8 8.2 12.8 17.8 21.3 64.9 

Combined .......................................... 10.2 19.7 29.2 39.0 49.1 147.2 

The agency has performed several 

sensitivity analyses to examine 

important assumptions. We examine 

sensitivity with respect to the following 

five economic parameters: 

(1) The price of gasoline: The 

Reference Case uses the AEO 2009 

reference case estimate for the price of 

gasoline. In this sensitivity analysis we 

examine the effect of using the AEO 

high or low forecast estimates instead. 

(2) The discount rate: The Reference 

Case uses a discount rate of 3 percent to 

discount future benefits. In the 

sensitivity analysis, we equally examine 

the effect of using a 7 percent discount 

rate instead. 

(3) The rebound effect: The Reference 

Case uses a rebound effect of 10 percent 

to project increased miles traveled as 

the cost per mile driven decreases. In 

the sensitivity analysis, we examine the 

effect of using a 5 percent or 15 percent 

rebound effect instead. 

(4) The values of CO2 benefits and 

monopsony: The Reference Case uses 

$20 per ton to quantify the benefits of 

reducing CO2 emissions and $0.178 per 

gallon to quantify the benefits of 

reducing fuel consumption. In the 

sensitivity analysis, we examine the 

effect of using values of $5, $10, $34, or 

$56 per ton instead to value CO2

benefits. These values can be translated 

into cents per gallon by multiplying by 

0.0089,587 giving the following values: 

($5 per ton CO2) x 0.0089 = $0.0445 per 

gallon 

($10 per ton CO2) x 0.0089 = $0.089 per 

gallon 

($20 per ton CO2) x 0.0089 = $0.178 per 

gallon 

($34 per ton CO2) x 0.0089 = $0.3026 

per gallon 

($56 per ton CO2) x 0.0089 = $0.4984 

per gallon 

The $5 per ton value reflects the 

domestic impacts of CO2 emissions and 

so we use a nonzero monopsony cost, 

namely $0.30 cents per gallon, when 

valuing CO2 emissions at $5 per ton. 

The higher per-ton values of CO2

emissions reflect the global impacts of 

CO2 emissions and we so use $0 per 

gallon for monopsony in these cases. 

(5) Military security: The Reference 

Case uses $0 per gallon to quantify the 

military security benefits of reducing 

fuel consumption. In the sensitivity 

analysis, we examine the impact of 

using a value of 5 cents per gallon 

instead. 

Varying each of the above 5 

parameters in isolation results in 10 

economic scenarios, not including the 

Reference case. These are listed in Table 

IV.G.4–21 below, together with two 

additional scenarios that use values for 

these parameters that produce the 

lowest and highest valued benefits. 

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49720 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

588 Kleit, A.N. (1990). ‘‘The Effect of Annual 

Changes in Automobile Fuel Economy Standards,’’ 

Journal of Regulatory Economics, vol. 2, pp. 151– 

172; Bordley, R. (1994). ‘‘An Overlapping Choice 

Set Model of Automotive Price Elasticities,’’ 

Transportation Research B, vol. 28B, no. 6, pp. 401– 

408; McCarthy, P.S. (1996). ‘‘Market Price and 

Income Elasticities of New Vehicle Demands,’’ The 

Review of Economics and Statistics, vol. LXXVII, 

no. 3, pp. 543–547. 

589 Gron, Ann and Swenson, Deborah, 2000, ‘‘Cost 

Pass-Through in the U.S. Automobile Market,’’ The 

Review of Economics and Statistics, 82: 316–324. 

590National average financing terms for 

automobile loans are available from the Board of 

Governors of the Federal Reserve System G.19 

‘‘Consumer Finance’’ release. See http:// 

www.federalreserve.gov/releases/g19/ (last accessed 

August 9, 2009). 

TABLE IV.G.4–21—SENSITIVITY ANALYSES EVALUATED IN NHTSA’S PRIA 

Name Fuel price Discount rate Rebound 

effect SCC Monopsony effect 

Military 

security 

Reference .......................................... Reference ............ 3% 10% $20 0¢/gal 0¢/gal 

High Fuel Price .................................. High ..................... 3% 10% $20 0¢/gal 0¢/gal 

Low Fuel Price ................................... Low ...................... 3% 10% $20 0¢/gal 0¢/gal 

7% Discount Rate .............................. Reference ............ 7% 10% $20 0¢/gal 0¢/gal 

5% Rebound Effect ............................ Reference ............ 3% 5% $20 0¢/gal 0¢/gal 

15% Rebound Effect .......................... Reference ............ 3% 15% $20 0¢/gal 0¢/gal 

$56/ton CO2 Value ............................. Reference ............ 3% 10% $56 0¢/gal 0¢/gal 

$34/ton CO2 ....................................... Reference ............ 3% 10% $34 0¢/gal 0¢/gal 

$10/ton CO2 ....................................... Reference ............ 3% 10% $10 0¢/gal 0¢/gal 

$5/ton CO2 ......................................... Reference ............ 3% 10% $5 30¢/gal 0¢/gal 

5¢/gal Military Security Value ............ Reference ............ 3% 10% $20 0¢/gal 5¢/gal 

Lowest Discounted Benefits .............. Low ...................... 7% 15% $5 0¢/gal 0¢/gal 

Highest Discounted Benefits ............. High ..................... 3% 5% $56 0¢/gal 5¢/gal 

The basic results of the sensitivity 

analyses were as follows: 

(1) The various economic 

assumptions have similar effects on the 

passenger car and light truck standards. 

(2) Varying the economic assumptions 

has virtually no impact on achieved fuel 

economy. 

(3) The economic parameter with the 

greatest impact is fuel price. Changing 

the fuel price forecast to AEO’s High or 

Low forecasts impacts benefits by about 

±37 percent. However, the impact of 

fuel price on other quantities, such as 

cost, is much smaller, resulting in 

increases or decreases of 3–8 percent. 

(4) Economic parameters other than 

fuel price and the rebound effect had no 

effect on per-vehicle cost, total cost, fuel 

savings, or CO2 reductions. Their 

impacts on benefits were 6 percent or 

less, with the exception of the 7 percent 

discount rate, which decreased benefits 

by 20 percent, and the $56/ton CO2

value, which raised benefits by 14 

percent. 

(5) Changing all economic parameters 

simultaneously (among the considered 

values) changes benefits by at most 

about 60 percent. However impacts to 

other quantities, such as cost, are much 

smaller, resulting in increases or 

decreases of 6 percent or less. 

(6) Impacts other than those discussed 

in 1) through 5) were small (5 percent 

or less). 

For more detailed information 

regarding NHTSA’s sensitivity analyses 

for this NPRM, please see Chapter X of 

NHTSA’s PRIA. 

5. How Would These Proposed 

Standards Impact Vehicle Sales? 

Higher fuel economy standards are 

expected to increase the price of 

passenger cars and light trucks, because 

manufacturers will have to add 

technology to vehicles to increase their 

fuel economy, the cost for which they 

will likely pass on in some fashion to 

consumers. NHTSA examined the 

potential impact of higher vehicle prices 

on sales on an industry-wide basis for 

passenger cars and light trucks 

separately. We note that the analysis 

conducted for this rule does not have 

the precision to examine effects on 

individual manufacturers or different 

vehicle classes. 

There is a broad consensus in the 

economic literature that the price 

elasticity for demand for automobiles is 

approximately –1.0.588 Thus, every one 

percent increase in the price of the 

vehicle would reduce sales by one 

percent. Elasticity estimates assume no 

perceived change in the quality of the 

product. However, in this case, vehicle 

price increases result from adding 

technologies that improve fuel 

economy. If consumers did not value 

improved fuel economy at all, and 

considered nothing but the increase in 

price in their purchase decisions, then 

the estimated impact on sales from price 

elasticity could be applied directly. 

However, NHTSA believes that 

consumers do value improved fuel 

economy, because it reduces the 

operating cost of the vehicles. NHTSA 

also believes that consumers consider 

other factors that affect their costs and 

have included these in the analysis. 

The main question, however, is how 

much of the retail price needed to cover 

the technology investments to meet 

higher fuel economy standards will 

manufacturers be able to pass on to 

consumers. The ability of manufacturers 

to pass the compliance costs on to 

consumers depends upon how 

consumers value the fuel economy 

improvements.589 Consumer valuation 

of fuel economy improvements often 

depends upon the price of gasoline, 

which has recently been very volatile. 

The estimates reported below as part of 

NHTSA’s analysis on sales impacts 

assume that manufacturers will be able 

to pass all of their costs to improve fuel 

economy on to consumers. To the extent 

that NHTSA has accurately predicted 

the price of gasoline and consumers’ 

reactions, and manufacturers can pass 

on all of the costs to consumers, then 

the sales and employment impact 

analyses are reasonable. On the other 

hand, if manufacturers only increase 

retail prices to the extent that 

consumers value these fuel economy 

improvements (i.e., to the extent that 

they value fuel savings), then there 

would be no impact on sales, although 

manufacturers’ profit levels would fall. 

Sales losses are predicted to occur only 

if consumers fail to value fuel economy 

improvements at least as much as they 

pay in higher vehicle prices. Likewise, 

if fuel prices rise beyond levels used in 

this analysis, consumer valuation of 

improved fuel economy could increase 

to match or exceed their initial 

investment, resulting in no impact or 

even an increase in sales levels. 

To estimate the average value 

consumers place on fuel savings at the 

time of purchase, NHTSA assumes that 

the average purchaser considers the fuel 

savings they would receive over a 5-year 

time frame. NHTSA chose 5 years 

because this is the average length of 

time of a financing agreement.590 The 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49721 

591 Insurance Information Institute, 2008, 

‘‘Average Expenditures for Auto Insurance By State, 

2005–2006.’’ Available at http://www.iii.org/media/ 

facts/statsbyissue/auto/ (last accessed August 9, 

2009). 

592 $29,678/$26,201 = 1.1327 * $22,651 = $25,657 

average price for light trucks. In 2006, passenger 

cars were 54 percent of the on-road fleet, and light 

trucks were 46 percent of the on-road fleet, 

resulting in an average light vehicle price for 2006 

of $24,033. 593New car loan rates in 2007 averaged about 7.8 

percent at commercial banks and 4.5 percent at auto 

finance companies, so their average is close to 7 

percent. 

594Based on www.bankrate.com auto loan 

calculator for a 5-year loan at 6 percent. 

595For a 3 percent discount rate, the summation 

of 3.2 percent × 0.9853 in year one, 3.2 × 0.9566 

in year two, 3.2 × 0.9288 in year three, 3.2 × 0.9017 

in year 4, and 3.2 × 0.8755 in year five. 

596Consumer Reports, August 2008, ‘‘What That 

Car Really Costs to Own.’’ Available at http:// 

www.consumerreports.org/cro/cars/pricing/whatthat-car-really-costs-to-own-4-08/overview/whatthat-car-really-costs-to-own-ov.htm (last accessed 

August 9, 2009). 

present values of these savings were 

calculated using a 3 percent discount 

rate. NHTSA used a fuel price forecast 

that included taxes, because this is what 

consumers must pay. Fuel savings were 

calculated over the first 5 years and 

discounted back to a present value. 

NHTSA believes that consumers may 

consider several other factors over the 5- 

year horizon when contemplating the 

purchase of a new vehicle. NHTSA 

added these factors into the calculation 

to represent how an increase in 

technology costs might affect 

consumers’ buying considerations. 

First, consumers might consider the 

sales taxes they have to pay at the time 

of purchasing the vehicle. NHTSA took 

sales taxes in 2007 by State and 

weighted them by population by State to 

determine a national weighted-average 

sales tax of 5.5 percent. 

Second, NHTSA considered insurance 

costs over the 5-year period. More 

expensive vehicles will require more 

expensive collision and comprehensive 

(e.g., theft) car insurance. The increase 

in insurance costs is estimated from the 

average value of collision plus 

comprehensive insurance as a 

proportion of average new vehicle price. 

Collision plus comprehensive insurance 

is the portion of insurance costs that 

depends on vehicle value. The 

Insurance Information Institute provides 

the average value of collision plus 

comprehensive insurance in 2006 as 

$448.591 This is compared to an average 

price for light vehicles of $24,033 for 

2006.592 Average prices and estimated 

sales volumes are needed because price 

elasticity is an estimate of how a percent 

increase in price affects the percent 

decrease in sales. 

Dividing the insurance cost by the 

average price of a new vehicle gives the 

proportion of comprehensive plus 

collision insurance as 1.86 percent of 

the price of a vehicle. If we assume that 

this premium is proportional to the new 

vehicle price, it represents about 1.86 

percent of the new vehicle price, and 

insurance is paid each year for the fiveyear period we are considering for 

payback. Discounting that stream of 

insurance costs back to present value 

indicates that the present value of the 

component of insurance costs that vary 

with vehicle price is equal to 8.5 

percent of the vehicle’s price at a 3 

percent discount rate. 

Third, NHTSA considered that 70 

percent of new vehicle purchasers take 

out loans to finance their purchase. The 

average new vehicle loan is for 5 years 

at a 6 percent rate.593 At these terms, the 

average person taking a loan will pay 16 

percent more for their vehicle over the 

5 years than a consumer paying cash for 

the vehicle at the time of purchase.594

Discounting the additional 3.2 percent 

(16 percent/5 years) per year over the 5 

years using a 3 percent mid-year 

discount rate 595 results in a discounted 

present value of 14.87 percent higher for 

those taking a loan. Multiplying that by 

the 70 percent of consumers who take 

out a loan means that the average 

consumer would pay 10.2 percent more 

than the retail price for loans the 

consumer discounted at a 3 percent 

discount rate. 

Fourth, NHTSA considered the 

residual value (or resale value) of the 

vehicle after 5 years and expressed this 

as a percentage of the new vehicle price. 

In other words, if the price of the 

vehicle increases due to fuel economy 

technologies, the resale value of the 

vehicle will go up proportionately. The 

average resale price of a vehicle after 5 

years is about 35 percent of the original 

purchase price.596 Discounting the 

residual value back 5 years using a 3 

percent discount rate (35 percent * 

.8755) gives an effective residual value 

at new of 30.6 percent. 

NHTSA then adds these four factors 

together. At a 3 percent discount rate, 

the consumer considers she could get 

30.6 percent back upon resale in 5 years, 

but will pay 5.5 percent more for taxes, 

8.5 percent more in insurance, and 10.2 

percent more for loans, resulting in a 

6.48 percent return on the increase in 

price for fuel economy technology. 

Thus, the increase in price per vehicle 

is multiplied by 0.9352 (1¥0.0648) 

before subtracting the fuel savings to 

determine the overall net consumer 

valuation of the increase of costs on her 

purchase decision. 

The following table shows the 

estimated impact on sales for passenger 

cars and light trucks combined for the 

proposed alternative. For all model 

years except MY 2012, NHTSA 

anticipates an increase in sales, based 

on consumers valuing the improvement 

in fuel economy more than the increase 

in price. 

TABLE IV.G.5–1—POTENTIAL IMPACT ON SALES, PASSENGER CARS AND LIGHT TRUCKS COMBINED

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

¥58,058 .......................................................................................................................... 52,719 178,470 342,628 454,520 

6. What Are the Consumer Welfare 

Impacts of These Proposed Standards? 

There are two viewpoints for 

evaluating the costs and benefits of the 

proposed increase in CAFE standards: 

The private perspective of vehicle 

buyers themselves on the higher fuel 

economy levels the proposed rule 

would require, and the economy-wide 

or ‘‘social’’ perspective on the costs and 

benefits of requiring higher fuel 

economy. From the perspective of 

vehicle buyers, raising CAFE standards 

would impose significant costs in the 

form of higher prices for new vehicles, 

as manufacturers attempt to recover 

their added costs for producing vehicles 

with higher fuel efficiency. If vehicle 

manufacturers are unable to fully 

recover their higher costs for producing 

more fuel-efficient cars and light trucks 

through higher sales prices, they will 

bear part of these costs in the form of 

reduced ‘‘producer surplus’’ or shortterm profits. 

Other private costs from requiring 

higher fuel economy also result from 

changes in the welfare of potential 

vehicle buyers, as they respond to 

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49722 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

597 Vehicle buyers are likely to value fuel savings 

using retail fuel prices, which include taxes levied 

by Federal, State, and some local governments. 

Because the reduction in these tax payments 

resulting from lower fuel purchases is exactly offset 

by lower tax revenues to government agencies (and 

reduced spending on the transportation 

infrastructure and other investments financed by 

fuel taxes), it does not represent a net benefit from 

the perspective of the U.S. economy as a whole. 

Thus the social costs of requiring higher fuel 

efficiency also include an adjustment to reflect the 

reduction in fuel tax revenues that results from 

reduced fuel purchases by new-car buyers. 

higher vehicle prices by purchasing 

different models or postponing their 

purchases of new vehicles. The effects 

of requiring higher fuel economy on 

consumer welfare also depend on 

whether manufacturers elect to make 

other changes in vehicle attributes as 

they comply with stricter CAFE 

standards, such as performance, 

passenger- and cargo-carrying capacity, 

comfort, or occupant safety. Although 

NHTSA believes it has employed 

estimates of costs for improving fuel 

economy that include adequate 

allowances for any accompanying 

modifications necessary to maintain 

new vehicles’ current levels of other 

attributes, any changes in these 

attributes that manufacturers elect to 

make will represent additional private 

costs to vehicle buyers from requiring 

increased fuel economy. 

At the same time, raising CAFE 

standards also provides important 

private benefits to vehicle buyers, 

mainly in the form of the values buyers 

assign to the future savings in fuel costs 

they believe are likely to result from 

purchasing more fuel-efficient vehicles. 

Although these values are likely to vary 

significantly among buyers depending 

on their expectations about future fuel 

prices, how long they anticipate owning 

their vehicles, and how much they 

expect to drive, fuel savings are the 

primary source of private benefits from 

increased fuel economy. In addition, 

requiring new cars and light trucks to 

attain higher fuel economy will also 

provide benefits to their buyers through 

the increase in vehicle use associated 

with the fuel economy rebound effect, 

as well as from increases in vehicles’ 

driving range, which allow drivers to 

refuel less frequently. 

From the social perspective, the 

economic benefits and costs of 

establishing higher CAFE standards 

include not only these private benefits 

and costs, but also changes in the value 

of environmental and economic 

externalities that result from fuel 

consumption and vehicle use.597 These 

include the reduction in potential 

climate-related economic damages 

resulting from lower CO2 emissions, 

reduced damages to human health from 

lower emissions of criteria air 

pollutants, reductions in economic 

externalities associated with U.S. 

petroleum imports, and increases in 

traffic congestion, vehicle noise, and 

accidents caused by the increased 

driving that results through the fuel 

economy rebound effect. 

NHTSA has estimated most elements 

of the private and social benefits and 

costs that will result from its proposal 

to establish higher CAFE standards for 

model years 2012 through 2016, and the 

agency reports detailed empirical 

estimates of these impacts in this 

document and its Preliminary 

Regulatory Impact Analysis for the 

proposed rule. However, the agency is 

unable to provide a definitive 

accounting of the private costs and 

benefits from establishing higher CAFE 

standards, because we are unable to 

estimate the losses in consumer welfare 

that are likely to result from the effects 

of higher prices for on the number of 

new vehicles sold or on the mix of 

specific vehicle models that buyers 

decide to purchase. Assuming that the 

agency has correctly estimated each of 

the other costs and benefits that will 

result from the proposed rule, its 

estimates of the net private and total 

(private plus social) benefits represent 

their maximum possible values, and 

considering the rule’s impacts on 

consumer welfare would invariably 

reduce the agency’s reported estimates 

of the proposed rule’s net private and 

total benefits. 

If the agency’s estimates of technology 

costs are indeed adequate to maintain 

vehicles’ current levels of these other 

attributes constant, the only changes in 

vehicles’ characteristics resulting from 

higher CAFE standards will be 

improvements in the fuel economy and 

increases in sales prices for some (or 

perhaps even all) models. In this case, 

the welfare effects of requiring higher 

fuel economy depend on exactly how 

potential vehicle buyers value the future 

savings in fuel costs that they anticipate 

will result from purchasing vehicles 

with higher fuel economy. 

If the market for new vehicles is 

perfectly competitive and consumers 

have reliable information to estimate the 

likely magnitude and value of future 

fuel savings from buying more efficient 

models, economic theory suggests that 

they will make correct trade-offs 

between higher initial costs for 

purchasing more fuel-efficient vehicles 

and subsequent reductions in their 

operating costs. These include lower 

fuel expenditures, savings in the time 

they spend refueling, and the benefits 

from any additional driving they do in 

response to its lower per-mile cost. The 

assumption that consumers have 

adequate information, foresight, and 

capability to make such trade-offs has 

been challenged on both theoretical and 

empirical grounds. If this assumption is 

accurate, however, no net private 

benefits can result from requiring higher 

fuel economy, since doing so will alter 

both the purchase prices of new cars 

and their lifetime streams of operating 

costs in ways that will inevitably reduce 

consumers’ well-being. 

The essence of this view is that in the 

absence of the regulation, consumers 

fully understand their current and 

future costs for owning and using 

vehicles, and make tradeoffs between 

these that maximize their individual 

welfare. From this viewpoint, CAFE 

standards—or any other regulation that 

alters this trade-off—will reduce their 

private well being. The intuition behind 

this conclusion is probably best 

captured by recognizing that automobile 

manufacturers currently sell a wide 

range of vehicle models, including 

many that already comply with the 

CAFE standards proposed in this rule. 

Yet sufficiently few buyers elect to 

purchase these vehicles that the average 

fuel economy of new vehicles sold 

today remains well below the levels this 

rule would require. 

On the other hand, a great deal of 

recent evidence suggests that many 

consumers do not accurately trade off 

current and future costs of owning and 

operating cars. For example, it appears 

that some buyers do not know how to 

estimate future savings in fuel costs 

from purchasing a higher-mpg vehicle, 

or that they incorrectly estimate the 

increased expense of purchasing a more 

fuel-efficient new car. In this situation, 

higher CAFE standards—which will 

increase purchase prices for new cars, 

but reduce their lifetime operating 

costs—can indeed improve consumers’ 

financial well-being. If these 

circumstances are widespread, then it is 

likely that requiring manufacturers to 

achieve higher fuel economy can 

increase private well-being, and thus 

that potentially significant savings in 

private costs can result from the 

proposed rule. 

Whether these circumstances are 

indeed typical is largely a question of 

the values that consumers place on 

additional fuel economy. NHTSA is not 

currently in a position to reach a 

conclusive judgment on this issue, and 

is thus unable to determine how 

requiring higher fuel economy levels is 

likely to affect consumer welfare, even 

if the only impacts of the proposed rule 

are to change the sales prices and fuel 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49723 

598Energy Information Administration, U.S. 

Department of Energy (1996). Issues in Midterm 

Analysis and Forecasting 1996, DOE/EIA–0607(96), 

Washington, D.C. Available at http://www.osti.gov/ 

bridge/purl.cover.jsp?purl=/366567–BvCFp0/ 

webviewable/ (last accessed Jul. 7, 2009). 

599 Kubik, M. (2006). Consumer Views on 

Transportation and Energy. Second Edition. 

Technical Report: National Renewable Energy 

Laboratory. 

600 Greene, David L., and Jin-Tan Liu (1988). 

‘‘Automotive Fuel Economy Improvements and 

Consumers’ Surplus.’’ Transportation Research Part 

A 22A(3): 203–218. The study actually calculated 

the willingness to pay for reduced vehicle operating 

costs, of which vehicle fuel economy is a major 

component. 

601Espey, Molly, and Santosh Nair (2005). 

‘‘Automobile Fuel Economy: What is it Worth?’’ 

Contemporary Economic Policy 23(3): 317–323; 

McManus, Walter M. (2006). ‘‘Can Proactive Fuel 

Economy Strategies Help Automakers Mitigate 

Fuel-Price Risks?’’ University of Michigan 

Transportation Research Institute. 

602 Gramlich, Jacob (2008). ‘‘Gas Prices and 

Endogenous Product Selection in the U.S. 

Continued 

economy levels of new cars and light 

trucks, as the agency assumes. 

Even if these are the only changes that 

result from the proposed rule, however, 

changes in the sales prices and fuel 

economy levels of some new vehicle 

models are likely to affect some 

potential buyers’ decisions about 

whether to purchase a car and what type 

or model to purchase. Research has 

demonstrated that previous CAFE rules 

and market-based changes in operating 

costs (for example, resulting from 

changes in gasoline prices) lead 

consumers to alter the number and 

types of cars they purchase, and that 

these changes can lead to losses in 

consumer well-being. However, NHTSA 

is not currently able to provide 

empirical estimates of the magnitude of 

potential losses in vehicle buyers’ 

welfare resulting from postponement of 

their decisions to purchase new vehicles 

or changes in the specific models they 

elect to buy. 

For both of these reasons, the likely 

impacts of adopting higher CAFE 

standards on consumer welfare remain 

unknown. Because changes in consumer 

welfare are an important component of 

the total private costs and benefits 

resulting from higher standards, the 

magnitude and even the direction of the 

net private economic impact of adopting 

stricter CAFE standards also remains 

unknown. 

How Do Consumers Value Fuel 

Economy? 

For this proposed rule, NHTSA 

estimates several sources of private 

benefits to vehicle buyers, including 

savings in future fuel costs, the value of 

time saved due to less frequent 

refueling, and utility gained from 

additional travel that results from the 

rebound effect. In combination, the 

agency’s estimates suggest that these 

private savings greatly outweigh its 

estimates of the costs to consumers for 

providing higher fuel economy, even 

without accounting for the additional 

social benefits from higher fuel 

economy. This is due primarily to the 

very large estimated value of future fuel 

savings from higher fuel economy, 

which in turn partly reflects the 

agency’s use of modest discount rates (3 

percent and 7 percent). 

Even without considering the 

unmeasured welfare losses likely to 

result from changes in the number of 

new cars sold and the specific models 

purchased, however, this finding 

presents a conundrum. On the one 

hand, requiring higher fuel economy 

levels appears likely to produce large 

net benefits, primarily because the 

increased cost of producing more fuelefficient cars and light trucks appears to 

be far outweighed by the value of the 

future fuel savings projected to result 

from higher fuel economy (assuming 

modest discount rates). At the same 

time, however, vehicle manufacturers 

currently produce many models that 

would allow them to meet the proposed 

higher CAFE standards, yet at least on 

average, buyers reveal a preference for 

lower fuel economy than the proposed 

rule would require. 

In this situation, often referred to as 

the Energy Efficiency Paradox, 

consumers appear not to purchase 

products that are in their economic 

self-interest. There are theoretical 

reasons that could explain such 

behavior: consumers may be myopic, 

and thus undervalue the long term; they 

might lack information or be unable to 

use it properly even when it is 

presented to them; they may be 

particularly averse to potential 

short-term losses associated with 

purchasing energy-efficient products 

(the behavioral phenomenon of ‘‘loss 

aversion’’); or even if consumers have 

relevant knowledge, the benefits of 

energy efficient vehicles might not seem 

sufficiently important to them at the 

time they decide to purchase a new car. 

A great deal of work in behavioral 

economics has suggested the possibility 

that factors of this sort help account for 

the Energy Efficiency Paradox. 

Another possible explanation for the 

paradox between the apparently large 

private benefits to vehicle buyers from 

requiring higher fuel economy and the 

reluctance of many buyers to purchase 

new vehicles with higher fuel economy 

is that consumers may apply much 

higher discount rates than the agency 

has used when they evaluate future cost 

savings from purchasing more fuelefficient vehicles or other capital goods 

offering gains in energy efficiency. For 

example, the Energy Information 

Agency (1996) has used discount rates 

as high as 111 percent for water heaters 

and 120 percent for electric clothes 

dryers.598

Some evidence also suggests directly 

that vehicle buyers employ high 

discount rates: consumers surveyed by 

Kubik (2006) reported that fuel savings 

would have to be adequate to pay back 

the additional purchase price of a more 

fuel-efficient vehicle in less than 3 years 

to persuade a typical buyer to purchase 

it. 599 In short, there appears to be no 

consensus in the literature on what the 

private discount rate should be in the 

context of vehicle purchase decisions. 

Another possible reconciliation of the 

Energy Efficiency Paradox, which poses 

a significant complication for evaluating 

the private benefits resulting from 

higher CAFE standards, is that the 

values consumers place on the future 

savings from higher fuel economy may 

vary sufficiently widely that it is 

unclear whether on average this value 

exceeds the costs of providing higher 

fuel economy. A 1988 review of 

consumers’ willingness to pay for 

improved fuel economy found estimates 

that varied by more than an order of 

magnitude: For a $1 per year reduction 

in vehicle operating costs, consumers 

would be willing to spend between 

$0.74 and $25.97 in increased vehicle 

price.600 (For comparison, the present 

value of saving $1 per year on fuel for 

15 years at a 3 percent discount rate is 

$11.94, while a 7 percent discount rate 

produces a present value of $8.78.) 

Thus, this study finds that some 

consumers appear to be willing to pay 

far too much to obtain future fuel 

savings, while others may be willing to 

pay far too little. 

Although NHTSA has not found an 

updated survey of these values, a few 

examples suggest that vehicle choice 

models also imply wide variation in 

estimates of how much people are 

willing to pay for fuel savings. For 

instance, Espey and Nair (2005) and 

McManus (2006) find that consumers 

are willing to pay nearly $600 extra to 

purchase a vehicle that achieves one 

additional mile per gallon.601 In 

contrast, Gramlich (2008) finds that 

consumers’ willingness to pay for an 

increase from 25 mpg to 30 mpg varies 

between $4,100 (for luxury cars when 

gasoline costs $2/gallon) to $20,560 (for 

SUVs when gasoline costs $3.50/ 

gallon).602 Thus, some buyers appear 

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49724 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Automobile Industry.’’ Available at http:// 

www.econ.yale.edu/seminars/apmicro/am08/ 

gramlich-081216.pdf (last accessed May 1, 2009). 

603Metcalf, G., and D. Rosenthal (1995). ‘‘The 

‘New’ View of Investment Decisions and Public 

Policy Analysis: An Application to Green Lights 

and Cold Refrigerators,’’ Journal of Policy Analysis 

and Management 14: 517–531. 

604 Greene, D., J. German, and M. Delucchi (2009). 

‘‘Fuel Economy: The Case for Market Failure’’ in 

Reducing Climate Impacts in the Transportation 

Sector, Sperling, D., and J. Cannon, eds. Springer 

Science. 

605 Dasgupta, S., S. Siddarth, and J. Silva-Risso 

(2007). ‘‘To Lease or to Buy? A Structural Model of 

a Consumer’s Vehicle and Contract Choice 

Decisions.’’ Journal of Marketing Research 44: 490– 

502. 

606Sanstad, A., and R. Howarth (1994). ‘‘ ‘Normal’ 

Markets, Market Imperfections, and Energy 

Efficiency.’’ Energy Policy 22(10): 811–818; Larrick, 

R.P., and J.B. Soll (2008). ‘‘The MPG illusion.’’ 

Science 320: 1593–1594. 

607National Research Council, ‘‘Effectiveness and 

Impact of Corporate Average Fuel Economy (CAFE) 

Standards,’’ National Academy Press, Washington, 

DC (2002). Available at http://www.nap.edu/ 

openbook.php?isbn=0309076013 (last accessed 

September 11, 2009). 

not to make accurate trade-offs between 

higher initial purchase prices and 

subsequent fuel savings. At the same 

time, however, these results may simply 

reflect the fact that the expected savings 

from purchasing higher fuel economy 

vary widely among individuals, because 

they travel different amounts or have 

different driving styles. 

Finally, it is possible that the 

apparent Energy Efficiency Paradox is in 

fact not a paradox at all when one 

considers the uncertainty surrounding 

future fuel prices and a vehicle’s 

expected lifetime and usage. As Metcalf 

and Rosenthal (1995) indicate, 

purchasing higher fuel economy 

requires buyers to weigh known, 

up-front costs that are essentially 

irreversible (that is, they have a 

relatively low salvage value if the return 

never materializes) against an unknown 

future stream of fuel savings.603 They 

find some evidence that this accounts 

for a large portion of the seeming 

inconsistency between low cost 

opportunities to invest in energy 

efficiency and the current lack of 

investment in them. This would not 

imply failure on the part of consumers 

in making decisions, but rather that the 

rate of return buyers require on their 

vehicle purchases (or other energy 

efficiency investments) is much higher 

than that implied by a 3 percent 

discount rate that does not include a 

provision for uncertainty. 

Greene et al. (2009) find additional 

support for this conclusion in the 

context of fuel economy decisions: They 

find that the expected net present value 

of increasing the fuel economy of a 

passenger car from 28 to 35 miles per 

gallon falls from $405 when calculated 

using standard net present value 

calculations to nearly zero when 

uncertainty regarding future cost 

savings is taken into account.604 In 

contrast to Metcalf and Rosenthal, 

Greene et al. find that uncertainty 

regarding the future price of gasoline is 

less important than uncertainty 

surrounding the expected lifetimes of 

new vehicles. Supporting this 

hypothesis is a finding by Dasgupta et 

al. (2007) that consumers are more 

likely to lease than buy a vehicle with 

higher maintenance costs, because 

leasing provides them with the option to 

return it before those costs become too 

high.605

In contrast, other research suggests 

that the Energy Efficiency Paradox is 

real and significant, and owes to 

consumers’ inability to value future fuel 

savings appropriately. For example, 

Sanstad and Howarth (1994) argue that 

consumers optimize behavior without 

full information by resorting to 

imprecise but convenient rules of 

thumb. Larrick and Soll (2008) find 

evidence that consumers do not 

understand how to translate changes in 

miles per gallon into fuel savings.606 If 

the behavior identified in these studies 

is indeed widespread, then significant 

gains to consumers can result from 

requiring higher fuel economy. 

How NHTSA Proposes To Treat the 

Issue of Welfare Losses 

In the course of future rulemakings, 

the agency intends to explore methods 

that would allow it to present a more 

comprehensive accounting of private 

costs and benefits from requiring higher 

fuel economy, including more detailed 

estimates of changes in the welfare of 

new vehicle buyers that are likely to 

result from higher CAFE standards. One 

promising approach to estimating the 

full welfare loss associated with CAFE’s 

impact on vehicle purchasing decisions 

is using consumer vehicle choice 

models to evaluate the simultaneous 

effects of increases in sales prices, 

improvements in fuel economy, and 

changes in other attributes of specific 

vehicle models, rather than in the 

average values of these variables. 

NHTSA invites comments on the state 

of the art of consumer vehicle choice 

modeling, as well as on the prospects 

for these models to yield reliable 

estimates of changes in consumer 

welfare from requiring higher fuel 

economy. 

7. What Are the Estimated Safety 

Impacts of These Proposed Standards? 

As discussed above, in evaluating the 

appropriate levels at which to establish 

new CAFE standards, NHTSA must 

assess any potential safety trade-offs. 

Safety trade-offs associated with fuel 

economy increases have occurred in the 

past and the possibility of future ones 

remains a concern. In the 

congressionally-mandated report 

entitled ‘‘Effectiveness and Impact of 

Corporate Average Fuel Economy 

(CAFE) Standards,’’ a committee of the 

National Academy of Sciences (NAS) 

(‘‘2002 NAS Report’’) 607 concluded that 

the then-existing form of passenger car 

and light truck CAFE standards, 

together with market forces, created an 

incentive for vehicle manufacturers to 

comply in part by downweighting and 

even downsizing their vehicles and that 

these actions led to additional fatalities. 

Given the cost advantages of downsizing 

instead of substituting lighter, higher 

strength materials, NAS urged that the 

CAFE program be restructured to reduce 

the regulatory incentive to downsize. As 

NAS observed, the ability to reduce 

weight without reducing size does not 

mean they will exclusively rely on those 

means of weight reduction. Responding 

to NAS’ concern, Congress mandated in 

EISA that CAFE standards be based on 

an attribute related to fuel economy, like 

footprint or weight. 

Given the relative cost-effectiveness of 

at least some approaches to weight 

reduction, it is reasonable to assume 

that the vehicle manufacturers will 

choose weight reduction as one means 

of achieving compliance with the 

proposed standards. In fact, informal 

statements by the vehicle manufacturers 

themselves indicate that they intend to 

engage in some weight reduction, as 

appropriate for certain vehicle models, 

during the rulemaking time frame. 

While the manufacturers generally 

indicate that they plan to reduce weight 

without reducing size, their adherence 

to those plans would not remove all 

bases for any safety concerns. 

The question of the effect of changes 

in vehicle weight on safety in the 

context of fuel economy is a complex 

question that poses serious analytic 

challenges and has been a contentious 

issue for many years. This 

contentiousness arises, at least in part, 

from the difficulty of isolating vehicle 

weight from other confounding factors 

(e.g., driver behavior, or vehicle factors 

such as engine size and wheelbase). In 

addition, at least in the past, several 

vehicle factors have been closely 

related, such as vehicle mass, 

wheelbase, track width, and structural 

integrity. The issue has been addressed 

in the literature for more than two 

decades. For the reader’s reference, 

much more information about safety in 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49725 

608 74 FR 14396–14407 (Mar. 30, 2009). 

609 Kahane, Charles J., Ph.D., ‘‘Vehicle Weight, 

Fatality Risk and Crash Compatibility of Model 

Year 1991–99 Passenger Cars and Light Trucks,’’ 

DOT HS 809 662, October 2003, Executive 

Summary. Available at http://www.nhtsa.dot.gov/ 

cars/rules/regrev/evaluate/809662.html (last 

accessed August 12, 2009). 

610 Vehicle footprint is not synonymous with 

vehicle size. Since the footprint is only that portion 

of the vehicle between the front and rear axles, 

footprint based standards do not discourage 

downsizing the portions of a vehicle in front of the 

front axle and to the rear of the rear axle. The crush 

space provided by those portions of a vehicle can 

make important contributions to managing crash 

energy. 611 Id. 

the CAFE context is available in the MY 

2011 final rule 608 and in Section IX of 

the PRIA. 

Conducting the safety assessment for 

this rulemaking is thus difficult since, 

in general, it is unclear to what extent 

the higher fatality risk of smaller and 

lighter vehicles is associated with their 

reduced mass as compared to their 

reduced physical dimensions. That is 

because, historically, the safest vehicles 

have been heavy and large, while the 

vehicles with the highest fatal-crash 

rates have been light and small, both 

because the crash rate is higher for 

small/light vehicles and because the 

fatality rate is higher for small/light 

vehicle crashes.609 Intuitively, a 

reduction in mass while maintaining 

physical dimensions is likely to be less 

harmful than a reduction in both mass 

and physical dimensions. 

As noted above, the manufacturers 

have generally informally stated that 

they plan to use weight reduction 

methods that do not involve size 

reduction. That is plausible since the 

selection of footprint as the attribute in 

setting CAFE standards helps to 

minimize the incentive to reduce a 

vehicle’s physical dimensions. This is 

because as footprint decreases, the 

corresponding fuel economy target 

decreases.610

However, NHTSA cautions that 

vehicle footprint is not synonymous 

with vehicle size. Since the footprint is 

only that portion of the vehicle bounded 

by the front and rear axles and by the 

wheels, footprint based standards do not 

discourage downsizing the portions of a 

vehicle in front of the front axle and to 

the rear of the rear axle (front and rear 

overhand). Similarly, they do not 

discourage downsizing the portions of a 

vehicle outside its wheels (side 

overhang). The crush space provided by 

those portions of a vehicle can make 

important contributions to managing 

crash energy. We note that at least one 

manufacturer has confidentially 

indicated plans to reduce overhang as a 

way of reducing weight on some 

vehicles during the rulemaking time 

frame. 

Neither the CAFE standards nor our 

analysis of the feasibility of fuel 

economy improvements mandates mass 

reduction or any other specific 

technology application. In addition, 

considering NHTSA’s analysis of the 

observed relationship between vehicle 

mass and the prevalence of fatalities, 

NHTSA has, except for vehicles with 

baseline curb weight over 5,000 pounds, 

excluded weight reduction from its 

analysis of potential CAFE standards in 

past rulemakings. The agency followed 

this analytical approach in order to 

ensure that its consideration of new 

standards was not dependent on weight 

reduction that could potentially 

compromise highway safety, 

recognizing, though, that the structure 

of CAFE standards does not prohibit 

manufacturers from making such 

responses to new CAFE standards. The 

agency implemented this approach by 

setting the Volpe model to apply this 

exclusion when estimating how 

manufacturers could apply technology 

in response to new CAFE standards. 

In its rulemakings on MY 2008–2011 

light truck CAFE standards and MY 

2011 car and light truck CAFE 

standards, NHTSA received comments 

suggesting that NHTSA expand the 

applicability of weight reduction 

technologies in its modeling to vehicles 

under 5,000 pounds, because, according 

to the commenters, weight reduction 

can be accompanied by proper vehicle 

design to assure that vehicle safety is 

not compromised. In the final rules in 

those rulemakings, the agency said that 

there may be great possibilities in the 

use of material substitution and other 

processes to minimize the safety effects 

of reducing weight. The agency further 

noted that this should be explored as 

data become available. 

After reviewing its assumptions and 

methodologies per the President’s 

January 26 memorandum and working 

with EPA in this rulemaking, NHTSA 

revised its approach to include weight 

reduction of up to 5–10 percent of 

baseline curb weight, depending on 

vehicle type. Recently-submitted 

manufacturer product plans as well as 

public statements from a number of the 

manufacturers suggest some of them 

expect that by MY 2016, they will be 

able to reduce the weight of some 

specific vehicle models by similar 

levels. However, NHTSA does not 

believe that, except where already 

planned, such significant weight 

reductions can be achieved in MY 2012 

or MY 2013, because there is not enough 

lead time for the necessary design, 

engineering, and tooling. NHTSA 

estimates that weight reductions of 1.5 

percent can be achieved during 

redesigns occurring prior to MY 2014, 

and that weight reductions of 5–10 

percent can be achieved in redesigns 

occurring in MY 2014 or later. For 

purposes of analyzing CAFE standards, 

NHTSA has further assumed that weight 

reductions would be limited to 5 

percent for small vehicles (e.g., 

subcompact passenger cars), and that 

reductions of 10 percent would only be 

applied to the larger vehicle types (e.g., 

large light trucks). 

NHTSA’s modeling approach is 

similar to EPA’s in terms of maximum 

available weight reduction for any 

vehicle model, sensitive to vehicle 

safety in terms of when and to which 

vehicle types significant weight 

reduction can be achieved safely, and 

supported by information in some 

manufacturers’ product plans. Some 

manufacturers have indicated that, in 

later model years, they plan to reduce 

significantly the weight of some specific 

vehicle models, and that they plan to do 

so without reducing vehicle size. 

NHTSA’s analysis results in similar 

degrees of weight reduction, applied 

more widely to some manufacturers. 

NHTSA notes, though, that some 

manufacturers are also planning 

considerable changes in product mix, 

and some of these changes could mean 

reduced average size along with reduced 

average weight. In NHTSA’s (and EPA’s) 

analysis, such changes in product mix 

are not counted, because they are either 

in the baseline market forecast, or are 

not estimated. 

As stated above, neither the CAFE 

standards nor our analysis mandates 

mass reduction, or mandates that if 

mass reduction occurs, it be done in any 

specific manner. However, mass 

reduction is one of the technology 

applications available to the 

manufacturers and has been used by 

them in the past. A degree of mass 

reduction is used by the Volpe model in 

determining the capabilities of 

manufacturers and in predicting both 

cost and fuel consumption impacts of 

improved CAFE standards. 

In this section, we briefly summarize 

our analysis of the potential impacts of 

these mass reductions on vehicle safety. 

NHTSA’s quantified analysis is based 

on the 2003 Kahane study,611 which 

estimates the effect of 100-pound 

reductions in MYs 1991–1999 heavy 

light trucks and vans (LTVs), light LTVs, 

heavy passenger cars, and light 

passenger cars. The study compares the 

fatality rates of LTVs and cars to 

quantify differences between vehicle 

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612We note that the Volpe model currently does 

not account for the weight of safety standards that 

will be added compared to the MY 2008 baseline, 

nor does it account for the societal cost of 

reductions in weight. However, both of these items 

will be added to the model for the final rule; doing 

so will raise the weight of every vehicle by roughly 

17 pounds in MY 2016 (slightly less in earlier 

years), which will likely require manufacturers to 

add slightly more technology to reach the final 

standards than they were estimated to need to reach 

the proposed standards. However, NHTSA does not 

expect the impact of these roughly 17 pounds per 

vehicle to have a significant impact on the safety 

analysis. 613Blincoe, L. and Shankar, U, ‘‘The Impact of 

Safety Standards and Behavioral Trends on Motor 

Vehicle Fatality Rates,’’ DOT HS 810 777, January 

2007. See Table 4 comparing 2020 to 2007 (37,906/ 

43,363 = 12.6% reduction (1¥.126 = .874). 

614For a similar discussion of effect of weight 

reduction on different crash modes, see 

Effectiveness and Impact of Corporate Average Fuel 

Economy Standards, NAS 1972, pp 74–75. 

types, given drivers of the same age/ 

gender, etc. In this analysis, the effect of 

‘‘weight reduction’’ is not limited to the 

effect of mass per se, but includes all the 

factors, such as length, width, structural 

strength, and size of the occupant 

compartment, that were naturally or 

historically confounded with mass in 

MYs 1991–1999 vehicles. The rationale 

is that adding length, width, or strength 

to a vehicle will also make it heavier. 

The agency utilized the relationships 

between weight and safety from Kahane 

(2003), expressed as percentage 

increases in fatalities per 100-pound 

weight reduction, and examined the 

weight impacts assumed in this CAFE 

analysis. However, there are several 

identifiable safety trends that are 

already in place or expected to occur in 

the foreseeable future and that are not 

accounted for in the study. For example, 

two important new safety standards that 

have already been issued and will be 

phasing in during the rulemaking time 

frame. Federal Motor Vehicle Safety 

Standard No. 126 (49 CFR 571.126) will 

require electronic stability control in all 

new vehicles by MY 2012, and the 

upgrade to Federal Motor Vehicle Safety 

Standard No. 214 (Side Impact 

Protection, 49 CFR 571.214) will likely 

result in all new vehicles being 

equipped with head-curtain air bags by 

MY 2014.612 Additionally, we anticipate 

continued improvements in driver (and 

passenger) behavior, such as higher 

safety belt use rates. All of these will 

tend to reduce the absolute number of 

fatalities resulting from weight 

reductions. Thus, while the percentage 

increases in Kahane (2003) was applied, 

the reduced base has resulted in smaller 

absolute increases than those that were 

predicted in the 2003 report. 

The agency examined the impacts of 

the identifiable safety trends over the 

lifetime of the vehicles produced in 

each model year. An estimate of these 

impacts was contained in a previous 

agency report.613 The impacts were 

estimated on a year-by-year basis, but 

could be examined in a combined 

fashion. The agency assumed that the 

safety trends will result in a reduction 

in the target population of fatalities from 

which the weight impacts are derived. 

Using this method, we found a 12.6 

percent reduction in fatality levels 

between 2007 and 2020. The estimates 

derived from applying Kahane’s 

percentages to a baseline of 2007 

fatalities were thus multiplied by 0.874 

to account for changes that the agency 

believes will take place in passenger car 

and light truck safety between the 2007 

baseline on-road fleet used for this 

particular analysis and year 2020. 

We note that because these new 

analyses are based on the method 

shown in Kahane (2003), which predicts 

the safety effect of 100-pound mass 

reductions in MY 1991–1999 light 

trucks and vans (LTVs) and passenger 

cars, the new analyses need to be 

understood in the context of that study. 

Specifically, the numbers in the new 

analyses represent an upper bound (or 

worst case) fatality estimate—that is, the 

estimate would only apply if all weight 

reductions come from reducing both 

weight and footprint. Kahane’s 

conclusions are based upon a crosssectional analysis of the actual on-road 

safety experience of 1991–1999 

vehicles. For those vehicles, heavier 

usually also meant larger-footprint. 

Hence, the numbers in the new analyses 

predict the safety-related fatalities that 

would occur in the unlikely event that 

weight reduction for MYs 2012–2016 is 

accomplished entirely by reducing mass 

and reducing footprint. 

Exclusive reliance on downsizing for 

the model years covered by this 

rulemaking is unlikely for the following 

reasons. As noted above, the 

manufacturers have generally indicated 

that they plan reduce weight without 

reducing size. Further, the flat CAFE 

standards in effect when those MY 

1991–1999 vehicles were produced had 

no penalty for such a strategy for 

improving fuel economy. In contrast, as 

discussed above, the current attributebased CAFE standards do not encourage 

vehicle downsizing by reducing 

footprint. This structural change to the 

CAFE program means that the CAFE 

standards now favor the use of weight 

reduction strategies that do not involve 

simply making that portion of the 

vehicle smaller. These other strategies 

include downsizing the engine and 

adding turbocharging, as well as 

materials substitution. 

Given this structural change to the 

CAFE program, it is likely that a 

significant portion of the weight 

reduction in the MY 2012–2016 vehicles 

will be accomplished by strategies that 

have a lesser safety impact than the 

prevalent 1990s strategy of simply 

making the vehicles smaller, although 

NHTSA is unable to predict how large 

a portion. For example, a manufacturer 

could conceivably add length, width, or 

strength to a vehicle by replacing 

existing materials with light, highstrength components. 

To the extent that future weight 

reductions could be achieved by 

substituting light, high-strength 

materials for existing materials— 

without any accompanying reduction in 

the size or structural strength of the 

vehicle—then NHTSA believes that the 

fatality increases associated with the 

weight reductions anticipated by the 

model as a result of the proposed 

standards could be significantly smaller 

than those in the worst-case scenario. 

However, NHTSA does not currently 

have information (on-road data) to 

calibrate and predict how much smaller 

those increases would be for any given 

mixture of material substitution and 

downsizing, since the data on the safety 

effects of mass reduction alone is not 

available due to the low numbers of 

vehicles in the current on-road fleet that 

have utilized this technology 

extensively. Further, to the extent that 

weight reductions were accomplished 

through use of light, high-strength 

materials, there would be significant 

additional costs that would need to be 

determined and accounted for. Those 

higher costs are not reflected in 

NHTSA’s cost-benefit analysis for this 

proposal. 

Nevertheless, even though NHTSA 

cannot quantify these safety effects, we 

can project that they could be 

significantly less than those that would 

result from simple downsizing. 

However, we are also convinced that the 

safety effects are larger than zero for the 

following reasons: 

• The effects of mass per se (laws of 

physics) will persist regardless whether 

mass is reduced by material 

substitution, downsizing, or any other 

method. There are a variety of crash 

types that could be impacted in various 

ways by changes in vehicle weight and 

at times by the way in which the 

vehicle’s weight is changed. The 

following discussion examines weight 

reduction by either engine size 

reductions or material substitution and 

its impact on each of the different crash 

types.614

Let us assume that Car A weighs X 

pounds and that Car B weighs X¥100 

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615Blincoe et al., The Economic Impact of Motor 

Vehicle Crashes 2000, May 2002, DOT HS 809 446. 

Data from this report were updated for inflation and 

combined with the current DOT guidance on value 

of a statistical life to estimate the comprehensive 

value of a statistical life. 

616Based on data in Blincoe et al., updated for 

inflation and reflecting the Department’s current 

VSL of $5.8 million. 

pounds and that Cars A and B have the 

same footprint, overhang and structural 

strength. 

Æ Single-vehicle crashes 

Hitting an immovable object (like a 

big tree or bridge abutment). 

In most cases, there would be little 

impact on vehicle safety if Car A and 

Car B each hit a different immovable 

object at the same speed because the 

change in velocity (delta-V) would be 

the same for both vehicles. 

Hitting a partially movable object (like 

a small tree, parked car, storefront, or 

dwelling). 

Heavier vehicles will impart more 

force to movable objects than lighter 

vehicles. This will increase the chance 

that the movable objects will break, 

crush, or otherwise give way and 

increase the distance over which the 

striking vehicle can decelerate, which 

will reduce the delta-V for the vehicle’s 

occupants. 

Single-vehicle rollovers. 

Smaller vehicles end up in more 

rollover crashes than larger vehicles. 

Part of the reason for this is the static 

stability factor, since smaller vehicles 

have less track width. Part of the reason 

for this is the way smaller vehicles are 

driven. Given the same track width for 

Car A and Car B, the impact on rollovers 

is hard to determine since the weight 

helps build up momentum and the 

influence of momentum versus weight 

for tripped rollovers is hard to discern. 

Æ Multi-vehicle crashes 

Frontal impact—two light vehicles. 

While a collision of Car B with Car B 

is likely to have the same risk as a 

similar collision of Car A with Car A, 

the final answer on safety will depend 

upon what vehicle sizes receive overall 

weight reductions. As NHTSA’s study 

shows, if weight is taken out of the 

larger light trucks, overall safety is 

improved. If weight is taken out of 

passenger cars or smaller light trucks, 

overall safety decreases. Overall, we 

can’t determine whether there will be an 

overall difference in safety. 

Side impact—struck vehicle. 

As a struck vehicle, Car B is at a 

disadvantage because its delta V would 

be increased. Car B would be less safe. 

Side impact—striking vehicle. 

NHTSA analyses have shown that for 

a striking vehicle in a side impact, 

weight is not as important as striking 

height. Weight does have an impact, 

because of imparting a lower delta V on 

the struck vehicle. When struck by Car 

B, the struck vehicle would be 

somewhat safer. 

Side impact—overall. 

Overall, there will be a minimal 

difference in safety. 

Collision with an older light vehicle. 

Car B would experience a higher delta 

V and a higher fatality risk than Car A, 

if either were struck by the same pre2012 vehicle. But the occupants of the 

older vehicle would experience a lower 

delta V and a lower risk if struck by Car 

B. 

Collision with a medium-sized truck 

(somewhat over 10,000 GVWR). 

Medium-size trucks are not affected 

by CAFE and do not need to decrease 

their weight. Car B would experience a 

higher delta V and a higher risk than Car 

A. (The risk to the occupants of the 

medium-size truck would be minimally 

higher with Car A.) Overall, Car B 

would be less safe. 

Collision with a fully-loaded tractor 

trailer (significantly over 10,000 

GVWR). 

Car B would experience a higher delta 

V than Car A, but in this case, the 

difference in delta V would be minimal. 

Risk would be similar in both cars. 

Æ Pedestrian/bicyclist impacts 

In general, Car A would impose a 

slightly higher delta V on the pedestrian 

than Car B, but the difference would be 

so small that risk for the pedestrian 

would essentially be the same either 

way. 

• Our attribute-based standards have 

the excellent feature that they can avoid 

encouraging reductions in footprint. 

However, weight can be removed by 

downsizing, rather than material 

substitution, even while maintaining 

footprint: 

Æ By reducing the overhang in front 

of the front wheels and behind the rear 

wheels. These are protective structures 

whose removal would increase risk to 

occupants by reducing vehicle crush 

space. 

Æ By thinning or removing structures 

within the vehicle. 

• NHTSA has found that lighter 

vehicles are driven in a manner that 

results in a higher involvement rate in 

fatal crashes, even after controlling for 

the driver’s age, gender, urbanization, 

and region of the country. However, in 

our response in the MY 2011 final rule 

to the DRI analyses, we were unable to 

attribute this effect to any obvious 

‘‘size’’ parameter such as track width or 

wheelbase. In non-rollover crashes, 

weight continued to be the most 

important parameter, even when track 

width and wheelbase were included as 

independent variables. Until we 

understand the phenomenon better, we 

assume that weight reduction is likely to 

be associated with higher fatal-crash 

rates, no matter how the weight 

reduction is achieved. 

Table IV.G.7–1 below shows the 

results of NHTSA’s worst case analysis 

of safety-related fatalities separately for 

each model year. Additionally, the 

societal impacts of increasing fatalities 

can be monetized using DOT’s 

estimated comprehensive cost per life of 

$6.1 million. This consists of a value of 

a statistical life of $5.8 million plus 

external economic costs associated with 

fatalities such as medical care, 

insurance administration costs and legal 

costs.615

NHTSA has also calculated an 

assumed impact on injuries and added 

that to the societal costs of fatalities. 

This assumed impact is based on past 

studies indicating that fatalities account 

for roughly 44 percent of total 

comprehensive costs due to injury.616 If 

weight impacts non-fatal injuries 

roughly proportional to its impact on 

fatalities, then total costs would be 

roughly 2.3 times those noted in Table 

IV.G.7–2. The potential societal costs for 

just fatalities are shown in Table IV.G.7– 

2. The combined potential social costs 

are shown in Table IV.G.7–4. 

Looking at the results on a calendar 

year basis, we also note that the safety 

impacts of the Kahane analysis based 

weight reduction have a slow onset. 

Passenger cars typically have a 10–25 

year lifetime, and light trucks somewhat 

longer. Thus, some of the fatalities for 

MY 2016 light trucks will not occur 

until after 2050. Moreover, the weight 

reductions are small in the early model 

years 2012 and 2013. The vehicles with 

reduced weight will only be a small 

proportion of the entire on-road fleet in 

the initial calendar years of these 

proposed CAFE standards. The 

influence of these factors is illustrated 

in Table IV.G.7–3 below. 

Additionally, there will be significant 

fuel-saving benefits from these proposed 

standards, up to 61.6 billion gallons 

during the lifetime of MYs 2012–2016 

vehicles. There will also be significant 

reductions in CO2 emissions, up to 656 

million metric tons during that same 

time period. 

Improved fuel economy will also 

result in a decrease in harmful criteria 

pollutants, which will decrease 

premature deaths due to a number of 

diseases related to environmental 

pollution. The literature strongly 

supports the causal relationship 

between health and exposure to criteria 

pollutants. However, as with vehicle 

safety impacts, there is much 

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617 Docket No. NHTSA–2003–16318–0016. 

uncertainty regarding the exact level of 

health impacts that might be achieved 

with this rule. Thus, there are 

potentially both positive and negative 

impacts that could result from this 

rulemaking. We have not attempted to 

quantify other beneficial health impacts 

that are expected to result from the 

proposed standards, including the 

results of a decrease in the rate of global 

warming, and increased energy security 

resulting from a lesser dependence on 

oil imported volatile regions of the 

world, but they, too, could be 

significant. 

In summary, the agency recognizes 

the balancing inherent in achieving 

higher levels of fuel economy through 

reduction of vehicle weight. We 

emphasize that these safety-related 

fatality estimates represent a worst case 

scenario for the potential effects of this 

rulemaking, and that actual fatalities 

will be less than these estimates, 

possibly significantly less, based on the 

qualitative discussion above of the 

various factors that could reduce the 

estimates. At the same time, however, 

the agency cannot specify a reasonable 

lower-bound estimate. It is possible that 

the impact could be fairly small, but the 

agency is unable to specify a lowerbound at this time due to a lack of 

studies that address the safety risk 

associated with weight reduction that is 

not also accompanied by size reduction. 

Additionally, the estimates presented 

here do not include estimates for 

injuries. Nevertheless, we believe that 

the balancing is reasonable. 

In the absence of data that permit 

examining the fatality impact of 

reductions in weight and footprint 

independently, we considered whether 

it would be appropriate to use the 

industry-sponsored DRI study to 

estimate a lower-bound value. However, 

as noted below, the agency’s inability to 

reproduce DRI’s results raises questions 

whether the DRI reports sufficiently 

satisfy reproducibility criteria and thus 

have the quality, objectivity, utility, and 

integrity needed for information relied 

upon and disseminated by the Federal 

Government to the public. Reliance 

upon non-reproducible studies 

undermines the credibility of the 

Government’s scientific information. 

Further, the DRI reports raise a 

significant additional data quality 

concern. They have not been subjected 

to a rigorous form of peer review. 

DRI produced several studies between 

2000 and 2005, funded by a 

manufacturer of small vehicles and 

purporting to analyze mass, track width, 

and wheelbase as independent 

variables. DRI’s 2002 paper indicated 

that reducing mass would be beneficial, 

while reducing track width and 

wheelbase would be harmful. If true, 

this meant that weight reduction would 

benefit safety if track width and 

wheelbase were maintained. However, 

NHTSA has concluded that the 2002 

DRI study inadvertently introduced 

significant biases in the analysis, as a 

result of including 2-door cars in the 

analysis. Dr. Kahane’s analyses have 

excluded 2-door passenger cars on the 

grounds that in the data reviewed in 

those analyses (and by DRI in its 

analysis), 2-door cars consisted in 

considerable part of sports and muscle 

cars. Including sports and muscle cars 

in a regression analysis of vehicle 

weight and safety biases the results for 

two primary reasons: first, because 

sports and muscle cars tend to have 

short wheelbases but be relatively heavy 

for their size, they function as outliers 

in the regression analysis and thus 

distort the derived relationships and 

second, because sports and muscle cars 

as a group tend to be disproportionately 

involved in crashes. NHTSA provided 

this response to DRI publicly in 2004.617

In response, DRI submitted a new study 

in 2005 with a sensitivity analysis 

limited to 4-door cars, excluding police 

cars. DRI further stated that it could 

mimic NHTSA’s logistic regression 

approach for an analysis of model year 

1991–98 4-door cars in calendar year 

1995–1999 crashes. DRI stated that its 

updated 2005 analysis still showed 

results directionally similar to its earlier 

work—increased risk for lower track 

width and wheelbase, reduced risk for 

lower mass—although DRI 

acknowledged that the wheelbase and 

mass effects were no longer statistically 

significant after removing the 2-door 

cars from the analysis. 

Since receiving it, NHTSA has 

disagreed with the results of DRI’s 2005 

analysis, most recently on record in the 

MY 2011 CAFE final rule, for two 

primary reasons. First, even using the 

same (NHTSA) data and methodology as 

DRI used, NHTSA has been unable to 

reproduce DRI’s 2005 results. And 

second, to our knowledge, unlike Dr. 

Kahane’s 2003 study, DRI’s 2005 study 

has not been rigorously peer-reviewed. 

The following provides an example of 

how NHTSA has tried to reproduce 

DRI’s results, unsuccessfully. In MY 

1991–1998, the average car weighing x 

+ 100 pounds had a track width that 

was 0.34 inches larger and a wheelbase 

that was 1.01 inches longer. Thus, one 

could say that a ‘‘historical’’ 100-pound 

weight reduction would have been 

accompanied by a 0.34 inch track width 

reduction and a 1.01 inch wheelbase 

reduction. However, using a reasonable 

check, if one dissociates weight, track 

width, and wheelbase and treats them as 

independent parameters, DRI’s logistic 

regression of model year 1991–1998 4- 

door cars excluding police cars 

attributes the following effects: 

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618Regression analysis involves modeling and 

analyzing several variables, when the focus is on 

the relationship between a dependent variable and 

one or more independent variables. Logistic 

regression analysis involves three variables. 

619See, e.g., Kahane (2003), Table 2 on p. xi. 

However, applying NHTSA’s logistic 

regression analyses 618 to NHTSA’s 

database, exactly as described in the 

agency’s response to comments on its 

2003 report, except for limiting the data 

to model years 1991–98, instead of 

1991–99, produces results that are not at 

all like DRI’s. Mass still has the largest 

effect, exceeding track width, and it 

moves in the expected direction. 

NHTSA obtained its estimates by 

adding the results from 12 individual 

logistic regressions: Six types of crashes 

multiplied by two car-weight groups 

(less than 2,950 pounds; 2,950 pounds 

or more).619 DRI does not appear to have 

followed the same procedures, based on 

the widely differing results. 

Based on our review, NHTSA is not 

persuaded by the DRI analysis. 

NHTSA’s analyses do not corroborate 

the 2005 DRI study that suggested mass 

could be reduced without safety harm 

and perhaps with safety benefit. 

Moreover, even though NHTSA’s 

analyses continue to attribute a much 

larger effect for mass than for track 

width or wheelbase in small cars, 

NHTSA has never said that mass alone 

is the single factor that increases or 

decreases fatality risk. There may not be 

a single factor, but rather it may be that 

mass and some of the other factors that 

are historically correlated with mass, 

such as wheelbase and track width, 

together are the factors. 

We note that comparatively it would 

seem the least harmful way to reduce 

mass would be from material 

substitution, where one replaces a heavy 

material with a lighter one that delivers 

the same performance, or other designs 

that reduce mass while maintaining 

wheelbase and track width. While this 

may seem intuitively to be the case, 

there is an absence of supporting data 

for the thrust of the 2005 DRI analysis, 

because those changes have not 

happened to any substantial number of 

vehicles in the real world. NHTSA thus 

has no way, yet, of proving the intuitive 

conclusion. We do know that mass has 

historically been correlated with 

wheelbase and track width, and that 

reductions in mass have also reduced 

those other factors. Until there is an 

analysis that clearly demonstrates that 

mass does not matter for safety, NHTSA 

concludes it should be guided by the 

decades’ worth of studies suggesting 


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49730 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

that mass is the most important of the 

related factors. 

The tables below contain NHTSA’s 

estimates of the safety-related fatality 

impacts of the proposed standards, the 

costs associated with those impacts, and 

the overall change in impacts given 

other anticipated mitigating effects 

during the next several years. Again, we 

emphasize that the safety-related fatality 

impacts presented below represent a 

worst case scenario, and that NHTSA 

believes that the fatality increases 

associated with the anticipated weight 

reductions could be significantly 

smaller than those shown, because 

manufacturers are unlikely to respond 

to this rulemaking by decreasing the 

footprint or reducing the structural 

integrity of their vehicles. 

In addition, we note that the 

implementation of new Federal Motor 

Vehicle Safety Standards, combined 

with behavioral changes (e.g., further 

increases in safety belt use), will 

produce important reductions in the 

number of deaths and injuries that 

would otherwise occur in the vehicles 

subject to this rulemaking over their 

lifetime. 

NHTSA seeks comments on its 

analysis of the safety impacts of the 

proposed standards. To aid the agency 

in refining its analysis for the final rule, 

including its attempts to assess 

reasonable upper and lower ends of the 

potential range of estimated fatalities, 

NHTSA requests that each vehicle 

manufacturer provide, for inclusion in 

the record of this rulemaking, detailed 

information concerning the extent to 

which and manner in which it plans to 

reduce the weight of each of its models 

for the period covered by this 

rulemaking, and the cost of each method 

used. Manufacturers should include in 

those plans whether there will be any 

footprint or other size reduction, 

whether through reducing the size of an 

existing model, mix shifting or other 

means. Please also submit the analysis, 

including engineering or computer 

simulation analysis, performed to assess 

the possible safety impacts of such 

planned weight reduction. In addition, 

please submit the results of any vehicle 

crash or component tests that would aid 

in assessing those impacts. 

TABLE IV.G.7–1—COMPARISON OF THE CALCULATED WORST CASE WEIGHT SAFETY-RELATED FATALITY IMPACTS OF THE

PENDING PROPOSED STANDARDS OVER THE LIFETIME OF THE VEHICLES PRODUCED IN EACH MODEL YEAR

[Increase in fatalities compared to the Calendar Year 2007 fatality level] 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

Baseline MY 2011 standards continued for lifetime of vehicles 

Passenger cars .................................................................... 13 15 18 18 19 

Light trucks ........................................................................... 13 15 17 17 18 

Combined ...................................................................... 26 30 35 35 37 

Proposed standards 

Passenger cars .................................................................... 42 64 165 242 379 

Light trucks ........................................................................... 18 20 64 106 150 

Combined ...................................................................... 60 84 229 348 530 

Difference between proposed standards and baseline continued 

Passenger cars .................................................................... 29 49 147 224 360 

Light trucks ........................................................................... 5 5 47 89 132 

Combined ...................................................................... 34 54 194 313 493 

NOTE—all estimates in this table are worst-case. Actual values could be significantly less. 

TABLE IV.G.7–2—CALCULATED WORST CASE WEIGHT SAFETY-RELATED FATALITY IMPACTS ON SOCIETAL COSTS FOR

THE PROPOSED STANDARDS OVER THE LIFETIME OF THE VEHICLES PRODUCED IN EACH MODEL YEAR

[$ millions] 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Passenger cars ........................................ 177 299 897 1,366 2,916 4,935 

Light trucks ............................................... 31 31 287 543 805 1,696 

Combined .......................................... 207 329 1,183 1,909 3,001 6,637 

NOTE—all estimates in this table are worst-case. Actual values could be significantly less. 

TABLE IV.G.7–3—ESTIMATED WORST CASE IMPACT OF WEIGHT ON CALCULATED FATALITIES BY CALENDAR YEAR

[Additional fatalities by model year and calendar year] 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 MY 2017 MY 2018 MY 2019 MY 2020 Totals 

2012 ..... 3 .................. .................. .................. .................. .................. .................. .................. .................. 3 

2013 ..... 3 5 .................. .................. .................. .................. .................. .................. .................. 8 

2014 ..... 3 5 19 .................. .................. .................. .................. .................. .................. 27 

2015 ..... 3 5 19 30 .................. .................. .................. .................. .................. 57 

2016 ..... 3 5 18 29 47 .................. .................. .................. .................. 102 

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TABLE IV.G.7–3—ESTIMATED WORST CASE IMPACT OF WEIGHT ON CALCULATED FATALITIES BY CALENDAR YEAR— 

Continued 

[Additional fatalities by model year and calendar year] 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 MY 2017 MY 2018 MY 2019 MY 2020 Totals 

2017 ..... 3 5 17 28 46 47 .................. .................. .................. 146 

2018 ..... 3 5 16 27 44 46 47 .................. .................. 187 

2019 ..... 3 4 16 26 42 44 46 47 .................. 226 

2020 ..... 2 4 15 24 40 42 44 46 47 264 

NOTE—all estimates in this table are worst-case. Actual values could be significantly less. 

The following table is based on the 

worst-case scenario estimate for 

fatalities. 

TABLE IV.G.7–4—CALCULATED WORST CASE WEIGHT SAFETY IMPACTS ON SOCIETAL COSTS FOR THE PROPOSED

STANDARDS OVER THE LIFETIME OF THE VEHICLES PRODUCED IN EACH MODEL YEAR, ESTIMATED FATALITIES AND

ASSUMED INJURIES

[$ millions] 

MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Undiscounted: 

Passenger Cars ......................... $406 $686 $2,058 $3,136 $5,040 $11,326 

Light Trucks ............................... 70 70 658 1,246 1,848 3,892 

Combined .................................. 476 756 2,716 4,382 6,888 15,218 

Discounted 3%: 

Passenger Cars ................................ 337 570 1,709 2,604 4,185 9,405 

Light Trucks ...................................... 56 56 528 1,000 1,482 3,122 

Combined .......................................... 393 626 2,237 3,604 5,668 12,527 

Discounted 7%: 

Passenger Cars ................................ 272 460 1,379 2,101 3,377 7,588 

Light Trucks ...................................... 44 44 415 785 1,165 2,453 

Combined .......................................... 316 504 1,794 2,886 4,542 10,042 

NOTE—all estimates in this table are worst-case. Actual values could be significantly less. 

Discount factors: passenger cars, 3% = 0.8304, 7% = 0.67; light trucks, 3% = 0.8022, 7% = 0.6303. 

8. What Other Impacts (Quantitative and 

Unquantifiable) Will These Proposed 

Standards Have? 

In addition to the quantified benefits 

and costs of fuel economy standards, the 

standards we are proposing will have 

other impacts that we have not 

quantified in monetary terms. The 

decision on whether or not to quantify 

a particular impact depends on several 

considerations: 

• Does the impact exist, and can the 

magnitude of the impact reasonably be 

attributed to the outcome of this 

rulemaking? 

• Would quantification help NHTSA 

and the public evaluate standards that 

may be set in rulemaking? 

• Is the impact readily quantifiable in 

monetary terms? Do we know how to 

quantify a particular impact? 

• If quantified, would the monetary 

impact likely be material? 

• Can a quantification be derived 

with a sufficiently narrow range of 

uncertainty so that the estimate is 

useful? 

NHTSA expects that this rulemaking 

will have a number of genuine, material 

impacts that have not been quantified 

due to one or more of the considerations 

listed above. In some cases, further 

research may yield estimates for future 

rulemakings. 

Technology Forcing 

The proposed rule will improve the 

fuel economy of the U.S. new vehicle 

fleet, but it will also increase the cost 

(and presumably, the price) of new 

passenger cars and light trucks built 

during MYs 2012–2016. We anticipate 

that the cost, scope, and duration of this 

rule, as well as the steadily rising 

standards it requires, will cause 

automakers and suppliers to devote 

increased attention to methods of 

improving vehicle fuel economy. 

This increased attention will 

stimulate additional research and 

engineering, and we anticipate that, 

over time, innovative approaches to 

reducing the fuel consumption of light 

duty vehicles will emerge. These 

innovative approaches may reduce the 

cost of the proposed rule in its later 

years, and also increase the set of 

feasible technologies in future years. 

We have attempted to estimate the 

effect of learning on known technologies 

within the period of the proposed 

rulemaking. We have not attempted to 

estimate the extent to which not-yetinvented technologies will appear, 

either within the time period of the 

current rulemaking or that might be 

available after MY 2016. 

Effects on Vehicle Maintenance, 

Operation, and Insurance Costs 

Any action that increases the cost of 

new vehicles will subsequently make 

such vehicles more costly to maintain, 

repair, and insure. In general, this effect 

can be expected to be a positive linear 

function of vehicle costs. The proposed 

rulemaking, however, raises vehicle 

costs by only a few percent at most, and 

hence the change in maintenance and 

operation costs, distributed over the 

expected life of regulated vehicles and 

discounted back to the present, is 

probably de minimus in terms of the full 

analysis. 

One of the common consequences of 

using more complex or innovative 

technologies is a decline in vehicle 

reliability and an increase in 

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maintenance costs, borne, in part, by the 

manufacturer (through warranty costs, 

which are included in the indirect costs 

of production) and, in part by the 

vehicle owner. NHTSA believes that 

this effect is difficult to quantify, but 

likely to be de minimus as well. 

Effects on Vehicle Miles Traveled 

(VMT) 

While NHTSA has estimated the 

impact of the rebound effect on VMT, 

we have not estimated how a change in 

vehicle sales could impact VMT. Since 

the value of the fuel savings to 

consumers outweighs the technology 

costs, new vehicle sales are predicted to 

increase. A change in vehicle sales will 

have complicated and a hard-to-quantify 

effect on vehicle miles traveled given 

the rebound effect, the trade-in of older 

vehicles, etc. In general, overall VMT 

should not be significantly affected. 

Effect on Composition of Passenger Car 

and Light Truck Sales 

In addition, manufacturers, to the 

extent that they pass on costs to 

customers, may distribute these costs 

across their motor vehicle fleets in ways 

that affect the composition of sales by 

model. To the extent that changes in the 

composition of sales occur, this could 

affect fuel savings to some degree. 

However, NHTSA’s view is that the 

scope for compositional effects is 

relatively small, since the total effect of 

the regulation itself will be to increase 

costs by only a few percent. 

Compositional effects might be 

important with respect to compliance 

costs for individual manufacturers, but 

are unlikely to be material for the rule 

as a whole. 

NHTSA is continuing to study 

methods of estimating compositional 

effects and may be able to develop 

methods for use in future rulemakings. 

Effects on the Used Vehicle Market 

The effect of this rule on the use and 

scrappage of older vehicles will be 

related to its effects on new vehicle 

prices, the fuel efficiency of new vehicle 

models, and the total sales of new 

vehicles. If the value of fuel savings 

resulting from improved fuel efficiency 

to the typical potential buyer of a new 

vehicle outweighs the average increase 

in new models’ prices, sales of new 

vehicles will rise, while scrappage rates 

of used vehicles will increase slightly. 

This will cause the ‘‘turnover’’ of the 

vehicle fleet—that is, the retirement of 

used vehicles and their replacement by 

new models—to accelerate slightly, thus 

accentuating the anticipated effect of the 

rule on fleet-wide fuel consumption and 

CO2 emissions. However, if potential 

buyers value future fuel savings 

resulting from the increased fuel 

efficiency of new models at less than the 

increase in their average selling price, 

sales of new vehicles will decline, as 

will the rate at which used vehicles are 

retired from service. This effect will 

slow the replacement of used vehicles 

by new models, and thus partly offset 

the anticipated effects of the proposed 

rules on fuel use and emissions. 

Because the agencies are uncertain 

about how the value of projected fuel 

savings from the proposed rules to 

potential buyers will compare to their 

estimates of increases in new vehicle 

prices, we have not attempted to 

estimate explicitly the effects of the rule 

on scrappage of older vehicles and the 

turnover of the vehicle fleet. We seek 

comment on the methods that might be 

used to estimate the effect of the 

proposed rule on the scrappage and use 

of older vehicles as part of the analysis 

to be conducted for the final rule. 

Impacts of Changing Fuel Composition 

on Costs, Benefits, and Emissions 

EPAct, as amended by EISA, creates a 

Renewable Fuels Standard that sets 

targets for greatly increased usage of 

renewable fuels over the next decade. 

The law requires fixed volumes of 

renewable fuels to be used—volumes 

that are not linked to actual usage of 

transportation fuels. 

Ethanol and biodiesel (in the required 

volumes) may increase the cost of 

gasoline and diesel depending on crude 

oil prices and tax subsidies. The extra 

cost of renewable fuels will be borne 

through a cross-subsidy: The price of 

every gallon of gasoline will rise 

sufficiently to pay for the extra cost of 

renewable fuels. The proposed CAFE 

rule, by reducing total fuel 

consumption, would tend to increase 

any necessary cross-subsidy per gallon 

of fuel, and hence raise the market price 

of transportation fuels, while there 

would be no change in the volume or 

cost of renewable fuels used. 

Some of these effects are indirectly 

incorporated in NHTSA’s analysis of the 

proposed CAFE rule because they are 

directly incorporated in EIA’s 

projections of future gasoline and diesel 

prices in the Annual Energy Outlook, 

which incorporates in its baseline both 

a Renewable Fuel Standard and an 

increasing CAFE standard. 

The net effect of incorporating an RFS 

then might be to slightly reduce the 

benefits of the rule because affected 

vehicles might be driven slightly less, 

and because they emit slightly fewer 

greenhouse gas emissions per gallon. In 

addition there might be deadweight 

losses from the induced reduction in 

VMT. All of these effects are difficult to 

estimate, because of uncertainty in 

future crude oil prices, uncertainty in 

future tax policy, and uncertainty about 

how petroleum marketers will actually 

comply with the RFS, but they are likely 

to be small, because the cumulative 

deviation from baseline fuel 

consumption induced by the proposed 

rule will itself be small. 

Macroeconomic Impacts of This Rule 

The proposed rule will have a number 

of consequences that may have shortrun and longer-run macroeconomic 

effects. It is important to recognize, 

however, that these effects do not 

represent benefits in addition to those 

resulting directly from reduced fuel 

consumption and emissions. Instead, 

they represent the economic effects that 

occur as these direct impacts filter 

through the interconnected markets 

comprising the U.S. economy. 

• Increasing the cost and quality (in 

the form of better fuel economy) of new 

light duty vehicles will have ripple 

effects through the rest of the economy. 

Depending on the assumptions made, 

the rule could generate very small 

increases or declines in output. 

• Reducing consumption of imported 

petroleum should induce an increase in 

long-run output. 

• Decreasing the world price of oil 

should induce an increase in long-run 

output. 

NHTSA has not studied the 

macroeconomic effects of the proposal, 

however a discussion of the economywide impacts of this rule conducted by 

EPA is included in Section III.H.5. 

Although economy-wide models do not 

capture all of the potential impacts of 

this rule (e.g., improvements in product 

quality), these models can provide 

valuable insights on how this proposal 

would impact the U.S. economy in ways 

that extend beyond the transportation 

sector. 

Military Expenditures 

This analysis contains quantified 

estimates for the social cost of 

petroleum imports based on monopsony 

effects and the risk of oil market 

disruption. We have not included 

estimates of the cost of military 

expenditures associated with petroleum 

imports. 

H. Vehicle Classification 

Vehicle classification, for purposes of 

the CAFE program, refers to whether 

NHTSA considers a vehicle to be a 

passenger automobile or a light truck, 

and thus subject to either the passenger 

automobile or the light truck standards. 

As NHTSA explained in the MY 2011 

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620 538 F.3d 1172 (9th Cir. 2008). 

rulemaking, EPCA categorizes some 

light 4-wheeled vehicles as passenger 

automobiles (cars) and the balance as 

non-passenger automobiles (light 

trucks). EPCA defines passenger 

automobiles as any automobile (other 

than an automobile capable of offhighway operation) which NHTSA 

decides by rule is manufactured 

primarily for use in the transportation of 

not more than 10 individuals. EPCA 

501(2), 89 Stat. 901. NHTSA created 

regulatory definitions for passenger 

automobiles and light trucks, found at 

49 CFR part 523, to guide the agency 

and manufacturers in classifying 

vehicles. 

Under EPCA, there are two general 

groups of automobiles that qualify as 

non-passenger automobiles or light 

trucks: (1) Those defined by NHTSA in 

its regulations as other than passenger 

automobiles due to their having design 

features that indicate they were not 

manufactured ‘‘primarily’’ for 

transporting up to ten individuals; and 

(2) those expressly excluded from the 

passenger category by statute due to 

their capability for off-highway 

operation, regardless of whether they 

might have been manufactured 

primarily for passenger transportation. 

NHTSA’s classification rule directly 

tracks those two broad groups of nonpassenger automobiles in subsections (a) 

and (b), respectively, of 49 CFR 523.5. 

For the purpose of this NPRM for the 

MYs 2012–2016 standards, EPA agreed 

to use NHTSA’s regulatory definitions 

for determining which vehicles would 

be subject to which CO2 standards. 

In the MY 2011 rulemaking, NHTSA 

took a fresh look at the regulatory 

definitions in light of several factors and 

developments: its desire to ensure 

clarity in how vehicles are classified, 

the passage of EISA, and the Ninth 

Circuit’s decision in CBD v. NHTSA.620

NHTSA explained the origin of the 

current definitions of passenger 

automobiles and light trucks by tracing 

them back through the history of the 

CAFE program, and did not propose to 

change the definitions themselves at 

that time, because the agency concluded 

that the definitions were largely 

consistent with Congress’ intent in 

separating passenger automobiles and 

light trucks, but also in part because the 

agency tentatively concluded that doing 

so would not lead to increased fuel 

savings. However, the agency tightened 

the definitions in § 523.5 to ensure that 

only vehicles that actually have 4WD 

will be classified as off-highway 

vehicles by reason of having 4WD (to 

prevent 2WD SUVs that also come in a 

4WD ‘‘version’’ from qualifying 

automatically as ‘‘off-road capable’’ 

simply by reason of the existence of the 

4WD version). It also took this action to 

ensure that manufacturers may only use 

the ‘‘greater cargo-carrying capacity’’ 

criterion of 523.5(a)(4) for cargo vantype vehicles, rather than for SUVs with 

removable second-row seats unless they 

truly have greater cargo-carrying than 

passenger-carrying capacity ‘‘as sold’’ to 

the first retail purchaser. NHTSA 

concluded that these changes increased 

clarity, were consistent with EPCA and 

EISA, and responded to the Ninth 

Circuit’s decision with regard to vehicle 

classification. 

However, manufacturers currently 

have an incentive to classify vehicles as 

light trucks because, generally speaking, 

the fuel economy target for light trucks 

with a given footprint is less stringent 

than the target for passenger cars with 

the same footprint. This is due to the 

fact that the curves are based on actual 

fuel economy capabilities of the 

vehicles to which they apply. Because 

of characteristics like 4WD, towing and 

hauling capacity, and heavy weight, the 

vehicles in the current light truck fleet 

are generally less capable of achieving 

higher fuel economy levels as compared 

to the vehicles in the passenger car fleet. 

2WD SUVs are the vehicles that could 

be most readily redesigned so that they 

can be ‘‘moved’’ from the passenger car 

to the light truck fleet. A manufacturer 

could do this by adding a third row of 

seats, for example, or boosting GVWR 

over 6,000 lbs for a 2WD SUV that 

already meets the ground clearance 

requirements for ‘‘off-road capability.’’ 

A change like this may only be possible 

during a vehicle redesign, but since 

vehicles are redesigned, on average, 

every 5 years, at least some 

manufacturers may make such changes 

before or during the model years 

covered by this rulemaking. 

In looking forward to model years 

beyond 2011 and considering how 

CAFE should operate in the context of 

the National Program and previouslyreceived comments as requested by 

President Obama, NHTSA seeks 

comment on the following potential 

changes to NHTSA’s vehicle 

classification system. We request 

comment also on whether, if any of the 

changes were to be adopted, they should 

be applied to any of the model years 

covered by this rulemaking or whether, 

due to lead time concerns, they should 

apply only to MY 2017 and thereafter. 

Reclassifying Minivans and other ‘‘3- 

row’’ light trucks as passenger cars (i.e., 

removing 49 CFR 523.5(a)(5)): 

NHTSA has received repeated 

comments over the course of the last 

several rulemakings from environmental 

and consumer groups regarding the 

classification of minivans as light trucks 

instead of as passenger cars. 

Commenters have argued that because 

minivans generally have three rows of 

seats, are built on unibody chassis, and 

are used primarily for transporting 

passengers, they should be classified as 

passenger cars. NHTSA did not accept 

these arguments in the MY 2011 final 

rule, due to concerns that moving 

minivans to the passenger car fleet 

would lower the fuel economy targets 

for those passenger cars having 

essentially the same footprint as the 

minivans, and thus lower the overall 

fuel average fuel economy level that the 

manufacturers would need to meet. 

However, due to the new methodology 

for setting standards, the as-yetunknown fuel-economy capabilities of 

future minivans and 3-row 2WD SUVs, 

and the unknown state of the vehicle 

market (particularly for MYs 2017 and 

beyond), NHTSA can no longer say with 

certainty that moving these vehicles 

could negatively affect potential 

stringency levels for either passenger 

cars or light trucks. 

Although such a change would not be 

made applicable during the MY 2012– 

2016 time frame, we seek comment on 

why NHTSA should or should not 

consider, as part of this rulemaking, 

reclassifying minivans (and other 

current light trucks that qualify as such 

because they have three rows of 

designated seating positions as standard 

equipment) for MYs 2017 and after. 

Classifying ‘‘like’’ vehicles together: 

Many commenters objected in the 

rulemaking for the MY 2011 standards 

to NHTSA’s regulatory separation of 

‘‘like’’ vehicles. Industry commenters 

argued that it was technologically 

inappropriate for NHTSA to place 4WD 

and 2WD versions of the same SUV in 

separate classes. They argued that the 

vehicles are the same, except for their 

drivetrain features, thus giving them 

similar fuel economy improvement 

potential. They further argued that all 

SUVs should be classified as light 

trucks. Environmental and consumer 

group commenters, on the other hand, 

argued that 4WD SUVs and 2WD SUVs 

that are ‘‘off-highway capable’’ by virtue 

of a GVWR above 6,000 pounds should 

be classified as passenger cars, since 

they are primarily used to transport 

passengers. In the MY 2011 rulemaking, 

NHTSA rejected both of these sets of 

arguments. NHTSA concluded that 2WD 

SUVs that were neither ‘‘off-highway 

capable’’ nor possessed ‘‘truck-like’’ 

functional characteristics were 

appropriately classified as passenger 

cars. At the same time, NHTSA also 

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621 49 CFR Part 537 is authorized by 49 U.S.C. 

32907. 622 49 U.S.C. 32904(c). 

concluded that because Congress 

explicitly designated vehicles with 

GVWRs over 6,000 pounds as ‘‘offhighway capable’’ (if they meet the 

ground clearance requirements 

established by the agency), NHTSA did 

not have authority to move these 

vehicles to the passenger car fleet. 

With regard to the first argument, that 

‘‘like’’ vehicles should be classified 

similarly (i.e., that 2WD SUVs should be 

classified as light trucks because, 

besides their drivetrain, they are ‘‘like’’ 

the 4WD version that qualifies as a light 

truck), NHTSA continues to believe that 

2WD SUVs that do not meet any part of 

the existing regulatory definition for 

light trucks should be classified as 

passenger cars. However, NHTSA 

recognizes the additional point raised 

by industry commenters in the MY 2011 

rulemaking that manufacturers may 

respond to this tighter classification by 

ceasing to build 2WD versions of SUVs, 

which could reduce fuel savings. In 

response to that point, NHTSA stated in 

the MY 2011 final rule that it expects 

that manufacturer decisions about 

whether to continue building 2WD 

SUVs will be driven in much greater 

measure by consumer demand than by 

NHTSA’s regulatory definitions. If it 

appears, in the course of the next 

several model years, that manufacturers 

are indeed responding to the CAFE 

regulatory definitions in a way that 

reduces overall fuel savings from 

expected levels, it may be appropriate 

for NHTSA to review this question 

again. NHTSA seeks comment on how 

the agency might go about reviewing 

this question as more information about 

manufacturer behavior is accumulated. 

With regard to the second argument, 

that NHTSA should move vehicles that 

qualify as ‘‘off-highway capable’’ from 

the light truck to the passenger car fleet 

because they are primarily used to 

transport passengers, NHTSA reiterates 

that EPCA is clear that certain vehicles 

are non-passenger automobiles (i.e., 

light trucks) because of their offhighway capabilities, regardless of how 

they may be used day-to-day. 

However, NHTSA could explore 

additional approaches, although not all 

could be pursued on current law. 

Possible alternative legal regimes might 

include: (a) classifying vehicles as 

passenger cars or light trucks based on 

use alone (rather than characteristics); 

(b) removing the regulatory distinction 

altogether and setting standards for the 

entire fleet of vehicles instead of for 

separate passenger car and light truck 

fleets; or (c) dividing the fleet into 

multiple categories more consistent 

with current vehicle fleets (i.e., sedans, 

minivans, SUVs, pickup trucks, etc.). 

NHTSA seeks comment on whether and 

why it should pursue any of these 

courses of action. 

I. Compliance and Enforcement 

1. Overview 

NHTSA’s CAFE enforcement program 

and the compliance flexibilities 

available to manufacturers are largely 

established by statute—unlike the CAA, 

EPCA and EISA are very prescriptive 

and leave the agency limited authority 

to increase the flexibilities available to 

manufacturers. This was intentional, 

however. Congress balanced the energy 

saving purposes of the statute against 

the benefits of the various flexibilities 

and incentives it provided and placed 

precise limits on those flexibilities and 

incentives. For example, while the 

Department sought authority for 

unlimited transfer of credits between a 

manufacturer’s car and light truck fleets, 

Congress limited the extent to which a 

manufacturer could raise its average fuel 

economy for one of its classes of 

vehicles through credit transfer in lieu 

of adding more fuel saving technologies. 

It did not want these provisions to slow 

progress toward achieving greater 

energy conservation or other policy 

goals. In keeping with EPCA’s focus on 

energy conservation, NHTSA has done 

its best, for example, in crafting the 

credit transfer and trading regulations 

authorized by EISA, to ensure that total 

fuel savings are preserved when 

manufacturers exercise their compliance 

flexibilities. 

The following sections explain how 

NHTSA determines whether 

manufacturers are in compliance with 

the CAFE standards for each model 

year, and how manufacturers may 

address potential non-compliance 

situations through the use of 

compliance flexibilities or fine payment. 

2. How Does NHTSA Determine 

Compliance? 

a. Manufacturer Submission of Data and 

CAFE Testing by EPA 

NHTSA begins to determine CAFE 

compliance by considering pre- and 

mid-model year reports submitted by 

manufacturers pursuant to 49 CFR part 

537, Automotive Fuel Economy 

Reports.621 The reports for the current 

model year are submitted to NHTSA 

every December and July. As of the time 

of this NPRM, NHTSA has received 

mid-model year reports from 

manufacturers for MY 2009, and 

anticipates receiving pre-model year 

reports for MY 2010 at the end of this 

year. Although the reports are used for 

NHTSA’s reference only, they help the 

agency, and the manufacturers who 

prepare them, anticipate potential 

compliance issues as early as possible, 

and help manufacturers plan 

compliance strategies. Currently, 

NHTSA receives these reports in paper 

form. In order to facilitate submission 

by manufacturers and consistent with 

the President’s electronic government 

initiatives, NHTSA proposes to amend 

Part 537 to allow for electronic 

submission of the pre- and mid-model 

year CAFE reports. 

NHTSA makes its ultimate 

determination of manufacturers’ CAFE 

compliance upon receiving EPA’s 

official certified and reported CAFE 

data. The EPA certified data is based on 

vehicle testing and on final model year 

data submitted by manufacturers to EPA 

pursuant to 40 CFR 600.512, Model Year 

Report, no later than 90 days after the 

end of the calendar year. Pursuant to 49 

U.S.C. 32904(e), EPA is responsible for 

calculating automobile manufacturers’ 

CAFE values so that NHTSA can 

determine compliance with the CAFE 

standards. In measuring the fuel 

economy of passenger cars, EPA is 

required by EPCA 622 to use the EPA test 

procedures in place as of 1975 (or 

procedures that give comparable 

results), which are the city and highway 

tests of today, with adjustments for 

procedural changes that have occurred 

since 1975. EPA uses similar procedures 

for light trucks, although, as noted 

above, EPCA does not require it to do 

so. One notable shortcoming of the 1975 

test procedure is that it does not include 

a provision for air conditioner usage 

during the test cycle. As discussed in 

Section III above of the preamble, air 

conditioner usage increases the load on 

a vehicle’s engine, reducing fuel 

efficiency and increasing CO2

emissions. Since the air conditioner is 

not turned on during testing, equipping 

a vehicle model with a relatively 

inefficient air conditioner will not 

adversely affect that model’s measured 

fuel economy, while quipping a vehicle 

model with a relatively efficient air 

conditioner will not raise that model’s 

measured fuel economy. 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 in 

section I.D.2 regarding implementing 

such amendments beginning in MY 

2017 and also on the more immediate 

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623 49 U.S.C. 30120, Remedies for defects and 

noncompliance. 

interim step of providing credits under 

49 U.S.C. 32904(c) for light trucks 

equipped with relatively efficient air 

conditioners for MYs 2012–2016. 

Modernizing the passenger car test 

procedures as well would not be 

possible under EPCA as currently 

written. 

b. NHTSA Then Analyzes EPA– 

Certified CAFE Values for Compliance 

Determining CAFE compliance is 

fairly straightforward. After testing, EPA 

verifies the data submitted by 

manufacturers and issues final CAFE 

reports to manufacturers and to NHTSA 

between April and October of each year 

(for the previous model year). NHTSA 

then identifies the manufacturers’ 

compliance categories (fleets) that do 

not meet the applicable CAFE fleet 

standards. 

To determine if manufacturers have 

earned credits that would offset those 

shortfalls, NHTSA calculates a 

cumulative credit status for each of a 

manufacturer’s vehicle compliance 

categories according to 49 U.S.C. 32903. 

If a manufacturer’s compliance category 

exceeds the applicable fuel economy 

standard, NHTSA adds credits to the 

account for that compliance category. If 

a manufacturer’s vehicles in a particular 

compliance category fall below the 

standard fuel economy value, NHTSA 

will provide written notification to the 

manufacturer that it has not met a 

particular fleet standard. The 

manufacturer will be required to 

confirm the shortfall and must either: 

Submit a plan indicating it will allocate 

existing credits, and/or for MY 2011 and 

later, how it will earn, transfer and/or 

acquire credits; or pay the appropriate 

civil penalty. The manufacturer must 

submit a plan or payment within 60 

days of receiving agency notification. 

The amount of credits are determined 

by multiplying the number of tenths of 

a mpg by which a manufacturer 

exceeds, or falls short of, 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. 

Credits used to offset shortfalls are 

subject to the three and five year 

limitations as described in 49 U.S.C. 

32903(a). Transferred credits are subject 

to the limitations specified by 49 U.S.C. 

32903(g)(3). The value of each credit, 

when used for compliance, received via 

trade or transfer is adjusted, using the 

adjustment factor described in 49 CFR 

part 536.4, pursuant to 49 U.S.C. 

32903(f)(1). Credit allocation plans 

received from the manufacturer will be 

reviewed and approved by NHTSA. 

NHTSA will approve a credit allocation 

plan unless it finds the proposed credits 

are unavailable or that it is unlikely that 

the plan will result in the manufacturer 

earning sufficient credits to offset the 

subject credit shortfall. If a plan is 

approved, NHTSA will revise the 

respective manufacturer’s credit account 

accordingly. If a plan is rejected, 

NHTSA will notify the respective 

manufacturer and request a revised plan 

or payment of the appropriate fine. 

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. 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. 

All penalties are paid to the U.S. 

Treasury and not to NHTSA itself. 

Unlike the National Traffic and Motor 

Vehicle Safety Act, EPCA does not 

provide for recall and remedy in the 

event of a noncompliance. The presence 

of recall and remedy provisions 623 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 which must provide the 

requisite type and level of performance. 

If a vehicle does not, it is noncompliant. 

Typically, a vehicle does not entirely 

lack an item or equipment or feature. 

Instead, the equipment or features fails 

to perform adequately. Recalling the 

vehicle to repair or replace the 

noncompliant equipment or feature can 

usually be readily accomplished. 

In contrast, a CAFE standard applies 

to a manufacturer’s entire fleet for a 

model year. It does not require that a 

particular individual vehicle be 

equipped with any particular equipment 

or feature or meet a particular level of 

fuel economy. It does require that the 

manufacturer’s fleet, as a whole, 

comply. Further, although under the 

attribute-based approach to setting 

CAFE standards fuel economy targets 

are established for individual vehicles 

based on their footprints, the vehicles 

are not required to comply with those 

targets on a model-by-model or vehicleby-vehicle basis. However, as a practical 

matter, if a manufacturer chooses to 

design some vehicles so they fall below 

their target levels of fuel economy, it 

will need to design other vehicles so 

they 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. 

After enforcement letters are sent, 

NHTSA continues to monitor receipt of 

credit allocation plans or civil penalty 

payments that are due within 60 days 

from the date of receipt of the letter by 

the vehicle manufacturer, and takes 

further action if the manufacturer is 

delinquent in responding. 

3. What Compliance Flexibilities Are 

Available Under the CAFE Program and 

How Do Manufacturers Use Them? 

There are three basic flexibilities 

permitted by EPCA/EISA that 

manufacturers can use to achieve 

compliance with CAFE standards 

beyond applying fuel economyimproving technologies: (1) Building 

dual- and alternative-fueled vehicles; (2) 

banking, trading, and transferring 

credits earned for exceeding fuel 

economy standards; and (3) paying 

fines. We note again that while these 

flexibility mechanisms will reduce 

compliance costs to some degree for 

most manufacturers, 49 U.S.C. 32902(h) 

expressly prohibits NHTSA from 

considering the availability of credits 

(either for building dual- or alternativefueled vehicles or from accumulated 

transfers or trades) in determining the 

level of the standards. Thus, NHTSA 

may not raise CAFE standards because 

manufacturers have enough credits to 

meet higher standards. This is an 

important difference from EPA’s 

authority under the CAA, which does 

not contain such a restriction, and 

which allows EPA to set higher 

standards as a result. 

a. Dual- and Alternative-Fueled 

Vehicles 

As discussed at length in prior 

rulemakings, EPCA encourages 

manufacturers to build alternativefueled and dual- (or flexible-) fueled 

vehicles by providing special fuel 

economy calculations for ‘‘dedicated’’ 

(that is, 100 percent) alternative fueled 

vehicles and ‘‘dual-fueled’’ (that is, 

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624 49 U.S.C. 32905(a). 

625 49 U.S.C. 32905(b) 

626 49 U.S.C. 32905(c). 

627 49 U.S.C. 32906(a). NHTSA notes that the 

incentive for dedicated alternative-fuel 

automobiles, automobiles that run exclusively on 

an alternative fuel, at 49 U.S.C. 32905(a), was not 

phased-out by EISA. 

628Congress required that DOT establish a credit 

‘‘transferring’’ regulation, to allow individual 

manufacturers to move credits from one of their 

fleets to another (e.g., using a credit earned for 

exceeding the light truck standard for compliance 

with the domestic passenger car standard). Congress 

allowed DOT to establish a credit ‘‘trading’’ 

regulation, so that credits may be bought and sold 

between manufacturers and other parties. 

629 In contrast, manufacturers stated in comments 

in NHTSA’s MY 2011 rulemaking that they did not 

anticipate a robust market for credit trading, due to 

competitive concerns. NHTSA does not yet know 

whether those concerns will continue to deter 

manufacturers from exercising the trading 

flexibility during MYs 2012–2016. 

capable of running on either the 

alternative fuel or gasoline) vehicles. 

The fuel economy of a dedicated 

alternative fuel vehicle is determined by 

dividing its fuel economy in equivalent 

miles per gallon of gasoline or diesel 

fuel by 0.15.624 Thus, a 15 mpg 

dedicated alternative fuel vehicle would 

be rated as 100 mpg. For dual-fueled 

vehicles, the rating is the average of the 

fuel economy on gasoline or diesel and 

the fuel economy on the alternative fuel 

vehicle divided by 0.15.625

For example, this calculation 

procedure turns a dual-fueled vehicle 

that averages 25 mpg on gasoline or 

diesel into a 40 mpg vehicle for CAFE 

purposes. This assumes that (1) the 

vehicle operates on gasoline or diesel 50 

percent of the time and on alternative 

fuel 50 percent of the time; (2) fuel 

economy while operating on alternative 

fuel is 15 mpg (15/.15 = 100 mpg); and 

(3) fuel economy while operating on gas 

or diesel is 25 mpg. Thus: 

CAFE FE = 1/{0.5/(mpg gas) + 0.5/(mpg 

alt fuel)} = 1/{0.5/25 + 0.5/100) = 

40 mpg 

In the case of natural gas, the 

calculation is performed in a similar 

manner. The fuel economy is the 

weighted average while operating on 

natural gas and operating on gas or 

diesel. The statute specifies that 100 

cubic feet (ft3) of natural gas is 

equivalent to 0.823 gallons of gasoline. 

The gallon equivalency of natural gas is 

equal to 0.15 (as for other alternative 

fuels).626 Thus, if a vehicle averages 25 

miles per 100 ft3 of natural gas, then: 

CAFE FE = (25/100) * (100/.823)* (1/ 

0.15) = 203 mpg 

Congress extended the incentive in 

EISA for dual-fueled automobiles 

through MY 2019, but provided for its 

phase out between MYs 2015 and 

2019.627 The maximum fuel economy 

increase which may be attributed to the 

incentive is thus as follows: 

Model year mpg 

increase 

MYs 1993–2014 ..................... 1 .2 

MY 2015 ................................. 1 .0 

MY 2016 ................................. 0 .8 

MY 2017 ................................. 0 .6 

MY 2018 ................................. 0 .4 

MY 2019 ................................. 0 .2 

After MY 2019 ........................ 0 

49 CFR part 538 implements the 

statutory alternative-fueled and dualfueled automobile manufacturing 

incentive. NHTSA is proposing to 

update Part 538 as part of this NPRM to 

reflect the EISA changes, but to the 

extent that 49 U.S.C. 32906(a) differs 

from the current version of 49 CFR 

538.9, the statute supersedes the 

regulation, and regulated parties may 

rely on the text of the statute. 

A major difference between EPA’s 

statutory authority and NHTSA’s 

statutory authority is that the CAA 

contains no specific prescriptions with 

regard to credits for dual- and 

alternative-fueled vehicles comparable 

to those found in EPCA/EISA. As an 

exercise of that authority, and as 

discussed in Section III above, EPA is 

offering similar credits for dual- and 

alternative-fueled vehicles through MY 

2015 for compliance with its CO2

standards, but for MY 2016 and beyond 

EPA will establish CO2 emission levels 

for alternative fuel vehicles based on 

measurement of actual CO2 emissions 

during testing, plus a manufacturer 

demonstration that the vehicles are 

actually being run on the alternative 

fuel. NHTSA has no such authority 

under EPCA/EISA to require that 

vehicles manufactured for the purpose 

of obtaining the credit actually be run 

on the alternative fuel, but requests 

comment on whether it should seek 

legislative changes to revise its authority 

to address this issue. 

b. Credit Trading and Transfer 

In the MY 2011 final rule, NHTSA 

established Part 536 for credit trading 

and transfer. Part 536 implements the 

provisions in EISA authorizing NHTSA 

to establish by regulation a credit 

trading program and directing it to 

establish by regulation a credit transfer 

program.628 Since its enactment, EPCA 

has permitted manufacturers to earn 

credits for exceeding the standards and 

to carry those credits backward or 

forward. EISA extended the ‘‘carryforward’’ period from three to five 

model years, and left the ‘‘carry-back’’ 

period at three model years. Under Part 

536, credit holders (including, but not 

limited to, manufacturers) will have 

credit accounts with NHTSA, and will 

be able to hold credits, use them to 

achieve compliance with CAFE 

standards, transfer them between 

compliance categories, or trade them. A 

credit may also be cancelled before its 

expiry date, if the credit holder so 

chooses. Traded and transferred credits 

are subject to an ‘‘adjustment factor’’ to 

ensure total oil savings are preserved, as 

required by EISA. EISA also prohibits 

credits earned before MY 2011 from 

being transferred, so NHTSA has 

developed several regulatory restrictions 

on trading and transferring to facilitate 

Congress’ intent in this regard. EISA 

also establishes a ‘‘cap’’ for the 

maximum increase in any compliance 

category attributable to transferred 

credits: for MYs 2011–2013, transferred 

credits can only be used to increase a 

manufacturer’s CAFE level in a given 

compliance category by 1.0 mpg; for 

MYs 2014–2017, by 1.5 mpg; and for 

MYs 2018 and beyond, by 2.0 mpg. 

NHTSA recognizes that some 

manufacturers may have to rely on 

credit transferring for compliance in 

MYs 2012–2017.629 As a way to improve 

the transferring flexibility mechanism 

for manufacturers, NHTSA interprets 

EISA not to prohibit the banking of 

transferred credits for use in later model 

years. Thus, NHTSA believes that the 

language of EISA may be read to allow 

manufacturers to transfer credits from 

one fleet that has an excess number of 

credits, within the limits specified, to 

another fleet that may also have excess 

credits instead of transferring only to a 

fleet that has a credit shortfall. This 

would mean that a manufacturer could 

transfer a certain number of credits each 

year and bank them, and then the 

credits could be carried forward or back 

‘‘without limit’’ later if and when a 

shortfall ever occurred in that same 

fleet. NHTSA bases this interpretation 

on 49 U.S.C. 32903(g)(2), which states 

that transferred credits ‘‘are available to 

be used in the same model years that the 

manufacturer could have applied such 

credits under subsections (a), (b), (d), 

and (e), as well as for the model year in 

which the manufacturer earned such 

credits.’’ The EISA limitation applies 

only to the application of such credits 

for compliance in particular model 

years, and not their transfer per se. If 

transferred credits have the same 

lifespan and may be used in carry-back 

and carry-forward plans, it seems 

reasonable that they should be allowed 

to be stored in any fleet, rather than 

only in the fleet in which they were 

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630NHTSA TP–537–01, March 30, 2009. 

Available at http://www.nhtsa.gov/portal/site/

nhtsa/ 

menuitem.b166d5602714f9a73baf3210dba046a0/, 

scroll down to ‘‘537’’ (last accessed July 18, 2009). 

631 49 CFR 523.2. 

632 Id. 

633 Id. 

634Offset of a wheel is the distance from its hub 

mounting surface to the centerline of the wheel, i.e., 

measured laterally inboard or outboard. 

Zero offset—the hub mounting surface is even 

with the centerline of the wheel. 

Positive offset—the hub mounting surface is 

outboard of the centerline of the wheel (toward 

street side). 

Negative offset—the hub mounting surface is 

inboard of the centerline of the wheel (away from 

street side). 

earned. Of course, manufacturers could 

not transfer and bank credits for 

purposes of achieving the minimum 

standard for domestically-manufactured 

passenger cars, as prohibited by 49 

U.S.C. 32903(g)(4). Transferred and 

banked credits would additionally still 

be subject to the adjustment factor when 

actually used, which would help to 

ensure that total oil savings are 

preserved while still offering greater 

flexibility to manufacturers. This 

interpretation of EISA also helps 

NHTSA, to some extent, to harmonize 

better with EPA’s CO2 program, which 

allows unlimited banking and transfer 

of credits. NHTSA seeks comment on 

this interpretation of EISA. 

c. Payment of Fines 

If a manufacturer’s average miles per 

gallon for a given compliance category 

(domestic passenger car, imported 

passenger car, light truck) falls below 

the applicable standard, and the 

manufacturer cannot make up the 

difference by using credits earned or 

acquired, the manufacturer is subject to 

penalties. The penalty, as mentioned, 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, manufactured for that model year. 

NHTSA has collected $772,850,459.00 

to date in CAFE penalties, the largest 

ever being paid by DaimlerChrysler for 

its MY 2006 import passenger car fleet, 

$30,257,920.00. For their MY 2007 

fleets, five manufacturers paid CAFE 

fines for not meeting an applicable 

standard—Ferrari, Maserati, MercedesBenz, Porsche, and Volkswagen—for a 

total of $37,385,941.00 

NHTSA recognizes that some 

manufacturers may use the option to 

pay fines as a CAFE compliance 

flexibility—presumably, when paying 

fines is deemed more cost-effective than 

applying additional fuel economyimproving technology, or when adding 

fuel economy-improving technology 

would fundamentally change the 

characteristics of the vehicle in ways 

that the manufacturer believes its target 

consumers would not accept. NHTSA 

has no authority under EPCA/EISA to 

prevent manufacturers from turning to 

fine-payment if they choose to do so. 

This is another important difference 

from EPA’s authority under the CAA, 

which allows EPA to revoke a 

manufacturer’s certificate of compliance 

that permits it to sell vehicles if EPA 

determines that the manufacturer is in 

non-compliance, and does not permit 

manufacturers to pay fines in lieu of 

compliance with applicable standards. 

NHTSA has grappled repeatedly with 

the issue of whether fines are 

motivational for manufacturers, and 

whether raising fines would increase 

manufacturers’ compliance with the 

standards. EPCA authorizes increasing 

the civil penalty very slightly up to 

$10.00, exclusive of inflationary 

adjustments, if NHTSA decides that the 

increase in the penalty ‘‘will result in, 

or substantially further, substantial 

energy conservation for automobiles in 

the model years in which the increased 

penalty may be imposed; and will not 

have a substantial deleterious impact on 

the economy of the United States, a 

State, or a region of a State.’’ 49 U.S.C. 

32912(c). 

To support a decision that increasing 

the penalty would result in ‘‘substantial 

energy conservation’’ without having ‘‘a 

substantial deleterious impact on the 

economy,’’ NHTSA would likely need to 

provide some reasonably certain 

quantitative estimates of the fuel that 

would be saved, and the impact on the 

economy, if the penalty were raised. 

Comments received on this issue in the 

past have not explained in clear 

quantitative terms what the benefits and 

drawbacks to raising the penalty might 

be. Additionally, it may be that the 

range of possible increase that the 

statute provides, i.e., up to $10 per tenth 

of a mpg, is insufficient to result in 

substantial energy conservation, 

although changing this would require an 

amendment to the statute by Congress. 

While NHTSA continues to seek to gain 

information on this issue to inform a 

future rulemaking decision, we request 

that commenters wishing to address this 

issue please provide, as specifically as 

possible, estimates of how raising or not 

raising the penalty amount will or will 

not substantially raise energy 

conservation and impact the economy. 

4. Other CAFE Enforcement Issues— 

Variations in Footprint 

NHTSA has a standardized test 

procedure for determining vehicle 

footprint,630 which is defined by 

regulation as follows: 

Footprint is defined as the product of 

track width (measured in inches, 

calculated as the average of front and 

rear track widths, and rounded to the 

nearest tenth of an inch) times 

wheelbase (measured in inches and 

rounded to the nearest tenth of an inch), 

divided by 144 and then rounded to the 

nearest tenth of a square foot.631

‘‘Track width,’’ in turn, is defined as 

‘‘the lateral distance between the 

centerlines of the base tires at ground, 

including the camber angle.’’ 632

‘‘Wheelbase’’ is defined as ‘‘the 

longitudinal distance between front and 

rear wheel centerlines.’’ 633

NHTSA began requiring 

manufacturers to submit this 

information as part of their pre-model 

year reports in MY 2008 for light trucks, 

and will require manufacturers to 

submit this information for passenger 

cars as well beginning in MY 2011. 

Manufacturers have submitted the 

required information for their light 

trucks, but NHTSA has identified 

several issues with regard to footprint 

measurement, that could affect how 

required fuel economy levels are 

calculated for a manufacturer. The 

paragraphs that follow explain NHTSA’s 

views regarding these issues, and solicit 

public input on what NHTSA should do 

to address them in the future. 

a. Variations in Track Width 

By definition, wheelbase 

measurement should be very consistent 

from one vehicle to another of the same 

model. Track width, in contrast, may 

vary in two respects: Wheel offset,634

and camber. Most current vehicles have 

wheels with positive offset, with 

technical specifications for offset 

typically expressed in millimeters. 

Additionally, for most vehicles, the 

camber angle of each of a vehicle’s 

wheels is specified as a range, i.e., front 

axle, left and right within minus 0.9 to 

plus 0.3 degree and rear axle, left and 

right within minus 0.9 to plus 0.1 

degree. Given the small variations in 

offset and camber angle dimensions, the 

potential effects of components (wheels) 

and vehicle specifications (camber) 

within existing designs on vehicle 

footprints are considered insignificant. 

However, NHTSA recognizes that 

manufacturers may change the 

specifications of and the equipment on 

vehicles, even those that are not 

redesigned or refreshed, during a model 

year and from year to year. There may 

be opportunity for manufacturers to 

change specifications for wheel offset 

and camber to increase a vehicle’s track 

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width and footprint, and thus decrease 

their required fuel economy level. 

NHTSA believes that this is likely 

easiest on vehicles that already have 

sufficient space to accommodate 

changes without accompanying changes 

to the body profile and/or suspension 

component locations. 

There may be drawbacks to such a 

decision, however. Changing from 

positive offset wheels to wheels with 

zero or negative offset will move tires 

and wheels outward toward the fenders. 

Increasing the negative upper limit of 

camber will tilt the top of the tire and 

wheel inward and move the bottom 

outward, placing the upper portion of 

the rotating tires and wheels in closer 

proximity to suspension components. In 

addition, higher negative camber can 

adversely affect tire life and the on-road 

fuel economy of the vehicle. 

Furthermore, it is likely that most 

vehicle designs have already used the 

available space in wheel areas since, by 

doing so, the vehicle’s handling 

performance is improved. Therefore, it 

seems unlikely that manufacturers will 

make significant changes to wheel offset 

and camber. 

b. How Manufacturers Designate ‘‘Base 

Tires’’ and Wheels 

According to the definition of ‘‘track 

width’’ in 49 CFR 523.2, manufacturers 

must determine track width when the 

vehicle is equipped with ‘‘base tires.’’ 

Section 523.2 defines ‘‘base tire,’’ in 

turn, as ‘‘the tire specified as standard 

equipment by a manufacturer on each 

configuration of a model type.’’ NHTSA 

did not define ‘‘standard equipment.’’ 

In their pre-model year reports 

required by 49 CFR part 537, 

manufacturers have the option of either 

(A) reporting a base tire for each model 

type, or (B) reporting a base tire for each 

vehicle configuration within a model 

type, which represents an additional 

level of specificity. If different vehicle 

configurations have different footprint 

values, then reporting the number of 

vehicles for each footprint will improve 

the accuracy of the required fuel 

economy level for the fleet, since the 

pre-model year report data is part of 

what manufacturers use to determine 

their CAFE obligations. 

For example, assume a manufacturer’s 

pre-model year report listed five vehicle 

configurations that comprise one model 

type. If the manufacturer provides only 

one vehicle configuration’s front and 

rear track widths, wheelbase, footprint 

and base tire size to represent the model 

type, and the other vehicle 

configurations all have a different tire 

size specified as standard equipment, 

the footprint value represented by the 

manufacturer may not capture the full 

spectrum of footprint values for that 

model type. Similarly, the base tires of 

a model type may be mounted on two 

or more wheels with different offset 

dimensions for different vehicle 

configurations. Of course, if the 

footprint value for all vehicle 

configurations is essentially the same, 

there would be no need to report by 

vehicle configuration. However, if 

footprints are different—larger or 

smaller—reporting for each group with 

similar footprints or for each vehicle 

configuration would produce a more 

accurate result. 

c. Vehicle ‘‘Design’’ Values Reported by 

Manufacturers 

NHTSA understands that the track 

widths and wheelbase values and the 

calculated footprint calculated values, 

as provided in pre-model year reports, 

are based on vehicle designs. This can 

lead to inaccurate calculations of 

required fuel economy level. For 

example, if the values reported by 

manufacturers are within an expected 

range of values, but are skewed to the 

higher end of the ranges, the required 

fuel economy level for the fleet will be 

artificially lower, an inaccurate attribute 

based value. Likewise, it would be 

inaccurate for manufacturers to submit 

values on the lower end of the ranges, 

but would decrease the likelihood that 

measured values would be less than the 

values reported and reduce the 

likelihood of an agency inquiry. Since 

not every vehicle is identical, it is also 

probable that variations between 

vehicles exist that can affect track 

width, wheelbase and footprint. As with 

other self-certifications, each 

manufacturer must decide how it will 

report, by model type, vehicle 

configuration, or a combination, and 

whether the reported values have 

sufficient margin to account for 

variations. 

To address this, the agency will be 

monitoring the track widths, wheelbases 

and footprints reported by 

manufacturers, and anticipates 

measuring vehicles to determine if the 

reported and measured values are 

consistent. We will look for year-to-year 

changes in the reported values. We can 

compare MY 2008 light truck 

information and MY 2010 passenger car 

information to the information reported 

in subsequent model years. Moreover, 

under 49 CFR 537.8, manufacturers may 

make separate reports to explain why 

changes have occurred or they may be 

contacted by the agency to explain 

them. 

d. How Manufacturers Report This 

Information in their Pre-Model Year 

Reports 

49 CFR 537.7(c) requires that 

manufacturers’ pre-model year reports 

include ‘‘model type and configuration 

fuel economy and technical 

information.’’ The fuel economy of a 

‘‘model type’’ is, for many 

manufacturers, comprised of a number 

of vehicle configurations. 49 CFR 537.4 

states that ‘‘model type’’ and ‘‘vehicle 

configuration’’ are defined in 40 CFR 

part 600. Under that Part, ‘‘model type’’ 

includes engine, transmission, and drive 

configuration (2WD, 4WD, or all-wheel 

drive), while ‘‘vehicle configuration’’ 

includes those parameters plus test 

weight. Model type is important for 

calculating fuel economy in the new 

attribute-based system—the required 

fuel economy level for each of a 

manufacturer’s fleets is calculated using 

the number of vehicles within each 

model type and the applicable fuel 

economy target for each model type. 

In MY 2008 and 2009 pre-model year 

reports for light trucks, manufacturers 

have expressed information in different 

ways. Some manufacturers that have 

many vehicle configurations within a 

model type have included information 

for each vehicle configuration’s track 

width, wheelbase and footprint. Other 

manufacturers reported vehicle 

configuration information per 

§ 537.7(c)(4), but provided only model 

type track width, wheelbase and 

footprint information for subsections 

537.7(c)(4)(xvi)(B)(3), (4) and (5). 

NHTSA believes that these 

manufacturers may have reported the 

information this way because the track 

widths, wheelbase and footprint are 

essentially the same for each vehicle 

configuration within each model type. A 

third group of manufacturers submitted 

model type information only, 

presumably because each model type 

contains only one vehicle configuration. 

NHTSA does not believe that this 

variation in reporting methodology 

presents an inherent problem, as long as 

manufacturers follow the specifications 

in Part 537 for reporting format, and as 

long as pre-model year reports provide 

information that is accurate and 

represents each vehicle configuration 

within a model type. The report may, 

but need not, be similar to what 

manufacturers submit to EPA as their 

end-of-model year report. However, 

NHTSA seeks comment on any potential 

benefits or drawbacks to requiring a 

more standardized reporting 

methodology. If commenters 

recommend increasing standardization, 

NHTSA requests that they provide 

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635 Defined as an on-highway vehicle with a gross 

vehicle weight rating of 10,000 pounds or more. 

636 Defined as a vehicle that is both rated at 

between 8,500 and 10,000 pounds gross vehicle 

weight; and also is not a medium-duty passenger 

vehicle (as defined in 40 CFR 86.1803–01, as in 

effect on the date of EISA’s enactment. 

specific examples of what information 

should be required and how NHTSA 

should require it to be provided. 

J. Other Near-Term Rulemakings 

Mandated by EISA 

1. Commercial Medium- and HeavyDuty On-Highway Vehicles and Work 

Trucks 

EISA added a new provision to 49 

U.S.C. 32902 requiring DOT, in 

consultation with DOE and EPA, to 

examine the fuel efficiency of 

commercial medium- and heavy-duty 

on-highway vehicles 635 and work 

trucks 636 and determine the appropriate 

test procedures and methodologies for 

measuring their fuel efficiency, as well 

as the appropriate metric for measuring 

and expressing their fuel efficiency 

performance and the range of factors 

that affect their fuel efficiency. Work on 

developing these standards is on-going. 

2. Consumer Information 

EISA also added a new provision to 

49 U.S.C. 32908 requiring DOT, in 

consultation with DOE and EPA, to 

develop and implement by rule a 

program to require manufacturers to 

label new automobiles sold in the 

United States with: 

(1) Information reflecting an 

automobile’s performance on the basis 

of criteria that EPA shall develop, not 

later than 18 months after the date of the 

enactment of EISA, to reflect fuel 

economy and greenhouse gas and other 

emissions over the useful life of the 

automobile; and 

(2) A rating system that would make 

it easy for consumers to compare the 

fuel economy and greenhouse gas and 

other emissions of automobiles at the 

point of purchase, including a 

designation of automobiles with the 

lowest greenhouse gas emissions over 

the useful life of the vehicles; and with 

the highest fuel economy. 

DOT must also develop and 

implement by rule a program to require 

manufacturers to include in the owner’s 

manual for vehicles capable of operating 

on alternative fuels information that 

describes that capability and the 

benefits of using alternative fuels, 

including the renewable nature and 

environmental benefits of using 

alternative fuels. 

EISA further requires DOT, in 

consultation with DOE and EPA, to 

• Develop and implement by rule a 

consumer education program to 

improve consumer understanding of 

automobile performance described [by 

the label to be developed] and to inform 

consumers of the benefits of using 

alternative fuel in automobiles and the 

location of stations with alternative fuel 

capacity; 

• Establish a consumer education 

campaign on the fuel savings that would 

be recognized from the purchase of 

vehicles equipped with thermal 

management technologies, including 

energy efficient air conditioning systems 

and glass; and 

• By rule require a label to be 

attached to the fuel compartment of 

vehicles capable of operating on 

alternative fuels, with the form of 

alternative fuel stated on the label. 

49 U.S.C. 32908(g)(2) and (3). DOT has 

42 months from the date of EISA’s 

enactment (by the end of 2011) to issue 

final rules under this subsection. Work 

on developing these standards is also 

on-going. 

Additionally, in preparation for this 

future rulemaking, NHTSA will 

consider appropriate metrics for 

presenting fuel economy-related 

information on labels. Based on the nonlinear relationship between mpg and 

fuel costs as well as emissions, 

inclusion of the ‘‘gallons per 100 miles’’ 

metric on fuel economy labels may be 

appropriate going forward, although the 

mpg information is currently required 

by law. A cost/distance metric may also 

be useful, as could a CO2e grams per 

mile metric to facilitate comparisons 

between conventional vehicles and 

alternative fuel vehicles and to 

incorporate information about air 

conditioning-related emissions. NHTSA 

seeks comment on these options. 

K. Regulatory Notices and Analyses 

1. Executive Order 12866 and DOT 

Regulatory Policies and Procedures 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’ (58 FR 51735, 

Oct. 4, 1993), provides for making 

determinations whether a regulatory 

action is ‘‘significant’’ and therefore 

subject to OMB review and to the 

requirements of the Executive Order. 

The Order defines a ‘‘significant 

regulatory action’’ as one that is likely 

to result in a rule that may: 

(1) Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or Tribal governments or 

communities; 

(2) Create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

(3) Materially alter the budgetary 

impact of entitlements, grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or 

(4) Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

The rulemaking proposed in this 

NPRM will be economically significant 

if adopted. Accordingly, OMB reviewed 

it under Executive Order 12866. The 

rule, if adopted, would also be 

significant within the meaning of the 

Department of Transportation’s 

Regulatory Policies and Procedures. 

The benefits and costs of this proposal 

are described above. Because the 

proposed rule would, if adopted, be 

economically significant under both the 

Department of Transportation’s 

procedures and OMB guidelines, the 

agency has prepared a Preliminary 

Regulatory Impact Analysis (PRIA) and 

placed it in the docket and on the 

agency’s Web site. Further, pursuant to 

OMB Circular A–4, we have prepared a 

formal probabilistic uncertainty analysis 

for this proposal. The circular requires 

such an analysis for complex rules 

where there are large, multiple 

uncertainties whose analysis raises 

technical challenges or where effects 

cascade and where the impacts of the 

rule exceed $1 billion. This proposal 

meets these criteria on all counts. 

2. National Environmental Policy Act 

NHTSA has initiated the 

Environmental Impact Statement (EIS) 

process under the National 

Environmental Policy Act (NEPA), 42 

U.S.C. 4321–4347, and implementing 

regulations issued by the Council on 

Environmental Quality (CEQ), 40 CFR 

part 1500, and NHTSA, 49 CFR part 

520. On April 1, 2009, NHTSA 

published a notice of intent to prepare 

an EIS for this rulemaking and 

requested scoping comments. (74 FR 

14857) The notice invites Federal, State, 

and local agencies, Indian tribes, and 

the public to participate in the scoping 

process and to help identify the 

environmental issues and reasonable 

alternatives to be examined in the EIS. 

The scoping notice also provides 

information about the proposed 

standards, the alternatives NHTSA 

expects to consider in its NEPA 

analysis, and the scoping process. 

Concurrently with this NPRM, 

NHTSA is releasing a Draft 

Environmental Impact Statement (DEIS). 

NHTSA prepared the DEIS to analyze 

and disclose the potential 

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637NEPA is codified at 42 U.S.C. 4321–4347. CEQ 

NEPA implementing regulations are codified at 40 

Code of Federal Regulations (CFR) Parts 1500–1508. 

NHTSA NEPA implementing regulations are 

codified at 49 CFR Part 520. 

environmental impacts of the proposed 

MY 2012–2016 CAFE standards for the 

total fleet of passenger cars and light 

trucks and reasonable alternative 

standards for the NHTSA CAFE Program 

pursuant to the Council on 

Environmental Quality (CEQ) 

regulations implementing NEPA, DOT 

Order 5610.1C, and NHTSA 

regulations.637 The DEIS compares the 

potential environmental impacts of 

alternative mile per gallon (mpg) levels 

that will be considered by NHTSA for 

the final rule. It also analyzes direct, 

indirect, and cumulative impacts and 

analyzes impacts in proportion to their 

significance. 

The DEIS also describes potential 

environmental impacts to a variety of 

resources. Resources that may be 

affected by the proposed action and 

alternatives include water resources, 

biological resources, land use and 

development, safety, hazardous 

materials and regulated wastes, noise, 

socioeconomics, and environmental 

justice. These resource areas were 

assessed qualitatively in the DEIS. 

Throughout the DEIS, NHTSA has 

relied extensively on findings of the 

United Nations Intergovernmental Panel 

on Climate Change (IPCC), the U.S. 

Climate Change Science Program 

(CCSP), and EPA. Our discussion relies 

heavily on the most recent, thoroughly 

peer-reviewed, and credible assessments 

of global and U.S. climate change: the 

IPCC Fourth Assessment Report 

(Climate Change 2007), EPA’s proposed 

Endangerment and Cause or Contribute 

Findings for Greenhouse Gases under 

Section 202(a) of the Clean Air Act and 

the accompanying Technical Support 

Document (TSD), and CCSP and 

National Science and Technology 

Council reports that include the 

Scientific Assessment of the Effects of 

Global Change on the United States and 

Synthesis and Assessment Products. 

The DEIS cites these sources and the 

studies they review frequently. 

Because of the link between the 

transportation sector and GHG 

emissions, NHTSA recognizes the need 

to consider the possible impacts on 

climate and global climate change in the 

analysis of the effects of these fuel 

economy standards. NHTSA also 

recognizes the difficulties and 

uncertainties involved in such an 

impact analysis. Accordingly, consistent 

with CEQ regulations on addressing 

incomplete or unavailable information 

in environmental impact analyses, 

NHTSA has reviewed existing credible 

scientific evidence that is relevant to 

this analysis and summarized it in the 

DEIS. NHTSA has also employed and 

summarized the results of research 

models generally accepted in the 

scientific community. 

Although the alternatives have the 

potential to decrease GHG emissions 

substantially, they do not prevent 

climate change, but only result in 

reductions in the anticipated increases 

in CO2 concentrations, temperature, 

precipitation, and sea level. They would 

also, to a small degree, delay the point 

at which certain temperature increases 

and other physical effects stemming 

from increased GHG emissions would 

occur. As discussed below, NHTSA 

presumes that these reductions in 

climate effects will be reflected in 

reduced impacts on affected resources. 

NHTSA consulted with various 

Federal agencies in the development of 

the DEIS, including EPA, Bureau of 

Land Management, Centers for Disease 

Control and Prevention, Minerals 

Management Service, National Park 

Service, U.S. Army Corps of Engineers, 

U.S. Forest Service, and Advisory 

Council on Historic Preservation. 

NHTSA is also exploring its obligations 

under Section 7 of the Endangered 

Species Act with the U.S. Fish and 

Wildlife Service and the National 

Oceanic and Atmospheric 

Administration Fisheries Service. 

The main direct and indirect effects 

resulting from the different alternatives 

analyzed in the DEIS are as follows: 

Fuel consumption: For passenger cars, 

fuel consumption under the No Action 

Alternative is 171 billion gallons in 

2060. Fuel consumption ranges from 

156.1 billion gallons under Alternative 

2 (3-Percent Alternative) to 133.7 billion 

gallons under Alternative 9 (TCTB). 

Fuel consumption is 149.3 billion 

gallons under the Preferred Alternative. 

For light trucks, fuel consumption 

under the No Action Alternative is 

105.4 billion gallons in 2060. Fuel 

consumption ranges from 97.1 billion 

gallons under Alternative 2 (3-Percent 

Alternative) to 83.8 billion gallons 

under Alternative 9 (TCTB). Fuel 

consumption is 92.2 billion gallons 

under the Preferred Alternative 

(Alternative 4). 

Air quality: Emissions of criteria 

pollutants change very little between 

the No Action Alternative and 

Alternatives 2 through 4. In the case of 

particulate matter (PM2.5), sulfur oxides 

(SOX), nitrogen oxides (NOX), and 

volatile organic compounds (VOCs), the 

No Action Alternative results in the 

highest emissions, and emissions 

generally decline as fuel economy 

standards increase across alternatives. 

There are some increases from 

Alternative 6 through Alternative 9, but 

emissions remain below the levels 

under the No Action Alternative. In the 

case of carbon monoxide (CO), 

emissions under Alternatives 2 through 

4 are slightly higher than under the No 

Action Alternative. Emissions of CO 

decline as fuel economy standards 

increase across Alternatives 5 through 9. 

The trend for toxic air pollutant 

emissions across the alternatives is 

mixed. Emissions of nearly all toxic air 

pollutants are highest under the No 

Action Alternative, except for those of 

acrolein, which increases with each 

successive alternative and are highest 

under Alternative 9. The acrolein 

emissions are an upper-bound estimate 

and actual emissions might be less. 

Emissions of acetaldehyde, benzene, 

and DPM in 2030 decrease with 

successive alternatives from Alternative 

1 to Alternative 9. Emissions of 1,3- 

butadiene increase slightly from 

Alternative 3 (4-Percent Alternative) to 

Alternative 4 (Preferred), and emissions 

of formaldehyde increase slightly from 

Alternative 8 (7-Percent Alternative) to 

Alternative 9 (TCTB) in 2030. 

The reductions in emissions are 

expected to lead to reductions in 

adverse health effects. There would be 

reductions in adverse health effects 

nationwide under Alternatives 2 (3- 

Percent Alternative) through 9 (TCTB) 

compared to the No Action Alternative. 

These reductions primarily reflect the 

projected PM2.5 reductions, and 

secondarily the reductions in SO2. The 

economic value of health impacts would 

vary proportionally with changes in 

health outcomes. 

Climate: The DEIS uses a climate 

model to estimate the changes in CO2

concentrations, global mean surface 

temperature, and changes in sea level 

for each alternative CAFE standard. 

NHTSA used the publicly available 

modeling software, Model for 

Assessment of Greenhouse Gas-induced 

Climate Change (MAGICC) version 

5.3.v2 to estimate changes in key direct 

and indirect effects. The application of 

MAGICC version 5.3.v2 uses the 

emissions estimates for CO2, CH4, N2O, 

CO, NOX, SO2, and VOCs from the 

Volpe model. A sensitivity analysis was 

completed to examine the relationship 

among selected CAFE alternatives and 

likely climate sensitivities, and the 

associated direct and indirect effects for 

each combination. These relationships 

can be used to infer the effect of 

emissions associated with the regulatory 

alternatives on direct and indirect 

climate effects. 

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638The reference scenario for global emissions 

assumes the absence of significant global GHG 

control policies. It is based on the Climate Change 

Science Program’s (CCSP) Synthesis and 

Assessment Product (SAP) 2.1 MiniCAM reference 

scenario, and has been revised by the Joint Global 

Change Research Institute to update emission 

estimates of non-CO2 gases. 

639These conclusions are not meant to be 

interpreted as expressing NHTSA’s views that 

impacts on global mean surface temperature, 

precipitation, or sea-level rise are not areas of 

concern for policymakers. Under NEPA, the agency 

is obligated to discuss the environmental impact[s] 

of the proposed action. 42 U.S.C. 4332(2)(C)(i) 

(emphasis added). This analysis fulfills NHTSA’s 

obligations in this regard. 

640NHTSA considers these AEO projected mpg 

increases to be reasonably foreseeable future actions 

under NEPA because the AEO projections reflect 

future consumer and industry actions that result in 

ongoing mpg gains through 2030. The AEO 

projections of fuel economy gains beyond the EISA 

requirement of combined achieved 35 mpg by 2020 

result from a future forecasted increase in consumer 

demand for fuel economy resulting from projected 

fuel price increases. Since the AEO forecasts do not 

extend beyond the year 2030, the mpg estimates for 

MY 2030 through MY 2060 remain constant. 

For the analysis using MAGICC, 

NHTSA has assumed that global 

emissions consistent with the No Action 

Alternative (Alternative 1) follow the 

trajectory provided by the 

Representative Concentration Pathway 

(RCP) 4.5 MiniCAM (Mini Climate 

Assessment Model) reference 

scenario.638 The SAP 2.1 global 

emissions scenarios were created as part 

of CCSP’s effort to develop a set of longterm (2000 to 2100) global emissions 

scenarios that incorporate an update of 

economic and technology data and 

utilize improved scenario development 

tools compared to the IPCC Special 

Report on Emissions Scenarios (SRES) 

developed more than a decade ago. 

The results rely primarily on the RCP 

4.5 MiniCAM reference scenario to 

represent an emissions scenario, that is, 

future global emissions assuming no 

additional climate policy. Each 

alternative was simulated by calculating 

the difference in annual GHG emissions 

in relation to the No Action Alternative 

and subtracting this change from the 

RCP 4.5 MiniCAM reference scenario to 

generate modified global-scale 

emissions scenarios, which each show 

the effect of the various regulatory 

alternatives on the global emissions 

path. 

To estimate changes in global 

precipitation, this EIS uses increases in 

global mean surface temperature 

combined with a scaling approach and 

coefficients from the IPCC Fourth 

Assessment Report. 

For all of the climate change analysis, 

the approaches focus on marginal 

changes in emissions that affect climate. 

Thus, the approaches result in a 

reasonable characterization of climate 

change for a given set of emissions 

reductions, regardless of the underlying 

details associated with those emissions 

reductions. The climate sensitivity 

analysis provides a basis for 

determining climate responses to 

varying climate sensitivities under the 

No Action Alternative (Alternative 1) 

and the Preferred Alternative 

(Alternative 4). Some responses of the 

climate system are believed to be nonlinear; by using a range of emissions 

cases and climate sensitivities, the 

effects of the alternatives in relation to 

different scenarios and sensitivities can 

be estimated. 

GHG emissions: Although GHG 

emissions from new passenger cars and 

light trucks will continue to rise over 

2012 through 2100 (absent other 

reduction efforts), the effect of the 

alternatives is to slow this increase by 

varying amounts. Emissions for the 

period range from 196,341 million 

metric tons of CO2 (MMTCO2) for the 

TCTB Alternative (Alternative 9) to 

244,821 MMTCO2 for the No Action 

Alternative (Alternative 1). Compared to 

the No Action Alternative, projections 

of emissions reductions over the period 

2012 to 2100 due to the MY 2012–2016 

CAFE standards range from 19,169 to 

48,480 MMTCO2. Compared to 

cumulative global emissions of 

5,293,896 MMTCO2 over this period 

(projected by the RCP 4.5 MiniCAM 

reference scenario), this rulemaking is 

expected to reduce global CO2 emissions 

by about 0.4 to 0.9 percent. 

To get a sense of the relative impact 

of these reductions, it can be helpful to 

consider the relative importance of 

emissions from passenger cars and light 

trucks as a whole and to compare them 

against emissions projections from the 

transportation sector. As mentioned 

earlier, U.S. passenger cars and light 

trucks currently account for significant 

CO2 emissions in the United States. 

With the action alternatives reducing 

U.S. passenger car and light truck CO2

emissions by 7.8 to 19.8 percent, the 

CAFE alternatives would have a 

noticeable impact on total U.S. CO2

emissions. Compared to total U.S. CO2

emissions in 2100 projected by the 

MiniCAM reference scenario of 7,886 

MMTCO2, the action alternatives would 

reduce annual U.S. CO2 emissions by 

3.5 to 8.9 percent in 2100. 

CO2 concentration, global mean 

surface temperature, sea-level rise, and 

precipitation: Estimated CO2

concentrations for 2100 range from 

778.4 ppm under the most stringent 

alternative (TCTB) to 783.0 ppm under 

the No Action Alternative. For 2030 and 

2050, the range is even smaller. Because 

CO2 concentration is the key driver of 

other climate effects (which in turn act 

as drivers on resource impacts), this 

leads to small differences in these 

effects. For the No Action alternative, 

the temperature increase from 1990 is 

0.92 °C for 2030, 1.56 °C for 2050, and 

3.14 °C for 2100. The differences among 

alternatives are small. For 2100, the 

reduction in temperature increase, in 

relation to the No Action Alternative, 

ranges from 0.007 °C to 0.018 °C. Given 

that all the action alternatives reduce 

temperature increases slightly in 

relation to the No Action Alternative, 

they also slightly reduce predicted 

increases in precipitation. 

In summary, the impacts of the 

proposed action and alternatives on 

global mean surface temperature, 

precipitation, or sea-level rise are small 

in absolute terms. This is because the 

action alternatives have a small 

proportional change in the emissions 

trajectories in the RCP 4.5 MiniCAM 

reference scenario.639 This is due 

primarily to the global and multisectoral nature of the climate change 

issues. 

Under CEQ regulations, NHTSA must 

also analyze cumulative impacts, 

defined as ‘‘the impact on the 

environment which results from the 

incremental impact of the action when 

added to other past, present, and 

reasonably foreseeable future actions 

regardless of what agency or person 

undertakes such other actions.’’ 40 CFR 

1508.7. Following is a description of the 

cumulative effects of the proposed 

action and alternatives on energy, air 

quality, and climate. 

The methodology for evaluating 

cumulative effects includes the 

reasonably foreseeable future actions of 

projected average annual passenger-car 

and light-truck mpg estimates from 2016 

through 2030 that differ from mpg 

estimates reflected in the analysis of the 

direct and indirect impacts of MY 2012 

through MY 2016 fuel economy 

requirements under each of the action 

alternatives, assuming no further 

increases in average new passenger-car 

or light-truck mpg after 2016. The 

evaluation of cumulative effects projects 

ongoing gains in average new passengercar and light-truck mpg consistent with 

further increases in CAFE standards to 

an EISA-mandated minimum level of 35 

mpg combined for passenger cars and 

light trucks by the year 2020, along with 

AEO April 2009 (updated) Reference 

Case projections of annual percentage 

gains of 0.51 percent in passenger-car 

mpg and 0.86 percent in light-truck mpg 

through 2030.640 AEO Reference Case 

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49742 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

641These conclusions are not meant to be 

interpreted as expressing NHTSA’s views that 

impacts on air quality is not an area of concern for 

policymakers. Under NEPA, the agency is obligated 

to discuss the environmental impact[s] of the 

proposed action. 42 U.S.C. 4332(2)(C)(i) (emphasis 

added). This analysis fulfills NHTSA’s obligations 

in this regard. 

projections are regarded as the official 

U.S. government energy projections by 

both the public and private sector. 

The assumption that all action 

alternatives reach the EISA 35 mpg 

target by 2020, with mpg growth at the 

AEO forecast rate from 2020 to 2030, 

results in estimated cumulative impacts 

for Alternatives 2, 3, and 4 that are 

substantially equivalent, with any minor 

variation in cumulative impacts across 

these Alternatives due to the specific 

modeling assumptions used to ensure 

that each Alternative achieves at least 

35 mpg by 2020. Therefore, the 

cumulative impacts analysis adds 

substantively to the analysis of direct 

and indirect impacts when comparing 

cumulative impacts between 

Alternatives 4 through 9, but not when 

comparing cumulative impacts between 

Alternatives 2 through 4. Another 

important difference in the methodology 

for evaluating cumulative effects is that 

the No Action Alternative (Alternative 

1) also reflects the AEO Reference Case 

projected annual percentage gains of 

0.51 percent in car mpg and 0.86 

percent in light truck mpg for the period 

2016 through 2030, whereas the direct 

and indirect impacts analysis assumed 

no increases in average new passengercar or light-truck mpg after 2016 under 

any alternative, including the No Action 

Alternative. NHTSA also considered 

other reasonably foreseeable actions that 

would affect greenhouse gas emissions, 

such as regional, national, and 

international initiatives and programs to 

reduce GHG emissions. 

Fuel consumption: The nine 

alternatives examined in the DEIS will 

result in different future levels of fuel 

use, total energy, and petroleum 

consumption, which will in turn have 

an impact on emissions of GHG and 

criteria air pollutants. For passenger 

cars, by 2060, fuel consumption reaches 

160.4 billion gallons under the No 

Action Alternative (Alternative 1). 

Consumption falls across the 

alternatives, from 139.4 billion gallons 

under the Preferred Alternative 

(Alternative 4) to 125.7 billion gallons 

under the TCTB Alternative (Alternative 

9) representing a fuel savings of 21.0 to 

34.7 billion gallons in 2060, as 

compared to fuel consumption projected 

under the No Action Alternative. For 

light trucks, fuel consumption by 2060 

reaches 94.8 billion gallons under the 

No Action Alternative (Alternative 1). 

Consumption declines across the 

alternatives, from 83.3 billion gallons 

under the 3-Percent Alternative 

(Alternative 2) to 75.7 billion gallons 

under the TCTB Alternative (Alternative 

9). This represents a fuel savings of 11.5 

to 19.1 billion gallons in 2060, as 

compared to fuel consumption projected 

under the No Action Alternative. 

Air quality: In the case of PM2.5, SOX, 

NOX, and VOCs, the No Action 

Alternative results in the highest 

emissions, and emissions generally 

decline as fuel economy standards 

increase across alternatives. Exceptions 

to this declining trend are NOX under 

the Preferred Alternative (Alternative 4); 

PM2.5 under Alternatives 3 and 4, and 

Alternatives 8 and 9; SOX under 

Alternatives 3 (4-Percent Alternative) 

and 4 (Preferred Alternative); and VOCs 

under Alternative 4. Despite these 

individual increases, emissions of 

PM2.5, SOX, NOX, and VOCs remain 

below the levels under the No Action 

Alternative (Alternative 1). In the case 

of CO, emissions under Alternatives 2 

through 4 are slightly higher than under 

the No Action Alternative. Emissions of 

CO decline as fuel economy standards 

increase across Alternatives 5 through 9. 

As with criteria pollutants, emissions 

of most toxic air pollutants would 

decrease from one alternative to the next 

more stringent alternative. The 

exceptions are acetaldehyde emissions, 

which would increase under Alternative 

4; acrolein emissions, which increase 

under each of the alternatives; benzene 

emissions, which would increase under 

Alternative 4; 1,3-butadiene, which 

would increase under Alternatives 2 

and 4; diesel particulate matter (DPM), 

which would increase under 

Alternatives 3 and 4; and formaldehyde, 

which would increase under 

Alternatives 3, 5, 6, 8, and 9. The 

changes in toxic air pollutant emissions, 

whether positive or negative, generally 

would be small relative to Alternative 1 

emissions levels.641 The exceptions are 

acetaldehyde emissions, which would 

decrease by more than 10 percent under 

Alternative 9; acrolein emissions, which 

would increase across successive 

alternatives (as noted above, the 

acrolein emissions are an upper-bound 

estimate and actual emissions might be 

less); benzene emissions, which would 

decrease by more than 10 percent under 

Alternatives 8 and 9; and DPM 

emissions, which would decrease by 

more than 10 percent under all action 

alternatives. 

Cumulative emissions generally 

would be less than noncumulative 

emissions for the same combination of 

pollutant, year, and alternative because 

of differing changes in VMT and fuel 

consumption under the cumulative case 

compared to the noncumulative case. 

The exceptions are acrolein for all 

alternatives except Alternative 9, and 

1,3-butadiene for all alternatives except 

Alternative 2 (3-Percent Alternative). 

The reductions in emissions are 

expected to lead to reductions in 

cumulative adverse health effects. There 

would be reductions in adverse health 

effects nationwide under Alternatives 2 

(3-Percent Alternative) through 9 

(TCTB) compared to the No Action 

Alternative. Reductions in adverse 

health effects decrease from Alternative 

2 (3-Percent Alternative) through 

Alternative 4 (Preferred Alternative), 

and then increase under Alternatives 5 

(5-Percent Alternative through 

Alternative 9 (TCTB). These reductions 

primarily reflect the projected PM2.5

reductions, and secondarily the 

reductions in SO2. The economic value 

of health impacts would vary 

proportionally with changes in health 

outcomes. 

Climate change: As with the analysis 

of the direct and indirect effects of the 

proposed action and alternatives on 

climate change, for the cumulative 

impacts analysis this EIS uses MAGICC 

version 5.3.v2 to estimate the changes in 

CO2 concentrations, global mean surface 

temperature, and changes in sea level 

for each alternative CAFE standard. To 

estimate changes in global precipitation, 

NHTSA uses increases in global mean 

surface temperature combined with a 

scaling approach and coefficients from 

the IPCC Fourth Assessment Report. A 

sensitivity analysis was completed to 

examine the relationship among the 

alternatives and likely climate 

sensitivities, and the associated direct 

and indirect effects for each 

combination. These relationships can be 

used to infer the effect of emissions 

associated with the regulatory 

alternatives on direct and indirect 

climate effects. 

One of the key categories of inputs to 

MAGICC is a time series of global GHG 

emissions. In assessing the cumulative 

effects on climate, NHTSA used the 

CCSP SAP 2.1 MiniCAM Level 3 

scenario to represent a Reference Case 

global emission scenario, that is, future 

global emissions assuming significant 

global actions to address climate 

change. This Reference Case global 

emission scenario serves as a baseline 

against which the climate benefits of the 

various alternatives can be measured. 

The Reference Case global emissions 

scenario used in the cumulative impacts 

analysis (and described in Chapter 4 of 

this EIS) differs from the global 

emissions scenario used for the climate 

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642The regional, national, and international 

initiatives and programs discussed above are those 

which NHTSA has tentatively concluded are 

reasonably foreseeable past, current, or future 

actions to reduce GHG emissions. Although some 

of the actions, policies, or programs listed are not 

associated with precise GHG reduction 

commitments, collectively they illustrate a current 

and continuing trend of U.S. and global awareness, 

emphasis, and efforts towards significant GHG 

reductions. Together they imply that future 

commitments for reductions are probable and, 

therefore, reasonably foreseeable under NEPA. 

643Because the actual increase in global mean 

surface temperature lags the commitment to 

warming, the impact on global mean surface 

temperature increase is less than the long-term 

commitment to warming. 

644These conclusions are not meant to be 

interpreted as expressing NHTSA’s views that 

impacts on global mean surface temperature, 

precipitation, or sea-level rise are not areas of 

concern for policymakers. Under NEPA, the agency 

is obligated to discuss the environmental impact[s] 

of the proposed action. 42 U.S.C. 4332(2)(C)(i) 

(emphasis added). This analysis fulfills NHTSA’s 

obligations in this regard. 

change modeling presented in Chapter 

3. In Chapter 4, the Reference Case 

global emission scenario reflects 

reasonably foreseeable actions in global 

climate change policy; in Chapter 3, the 

global emissions scenario used for the 

analysis assumes that there are no 

significant global controls. Given that 

the climate system is non-linear, the 

choice of a global emissions scenario 

could produce different estimates of the 

benefits of the proposed action and 

alternatives, if the emission reductions 

of the alternatives were held constant. 

The SAP 2.1 MiniCAM Level 3 

scenario assumes a moderate level of 

global GHG reductions, resulting in a 

global atmospheric CO2 concentration of 

roughly 650 parts per million by volume 

(ppmv) as of 2100. The following 

regional, national, and international 

initiatives and programs are reasonably 

foreseeable actions to reduce GHG 

emissions: Regional Greenhouse Gas 

Initiative (RGGI); Western Climate 

Initiative (WCI); Midwestern 

Greenhouse Gas Reduction Accord; 

EPA’s Proposed GHG Emissions 

Standards; H.R. 2454: American Clean 

Energy and Security Act (‘‘WaxmanMarkey Bill’’); Renewable Fuel Standard 

(RFS2); Program Activities of DOE’s 

Office of Fossil Energy; Program 

Activities of DOE’s Office of Nuclear 

Energy; United Nation’s Framework 

Convention on Climate Change 

(UNFCCC)—The Kyoto Protocol and 

upcoming Conference of the Parties 

(COP) 15 in Copenhagen, Denmark; G8 

Declaration—Summit 2009; and the 

Asia Pacific Partnership on Clean 

Development and Climate.642 The SAP 

2.1 MiniCAM Level 3 scenario provides 

a global context for emissions of a full 

suite of GHGs and ozone precursors for 

a Reference Case harmonious with 

implementation of the above policies 

and initiatives. Each of the action 

alternatives was simulated by 

calculating the difference in annual 

GHG emissions in relation to the No 

Action Alternative, and subtracting this 

change in the MiniCAM Level 3 

scenario to generate modified globalscale emissions scenarios, which each 

show the effect of the various regulatory 

alternatives on the global emissions 

path. 

NHTSA used the MiniCAM Level 3 

scenario as the primary global emissions 

scenario for evaluating climate effects, 

and used the MiniCAM Level 2 scenario 

and the RCP 4.5 MiniCAM reference 

emissions scenario to evaluate the 

sensitivity of the results to alternative 

emission scenarios. The sensitivity 

analysis provides a basis for 

determining climate responses to 

varying levels of climate sensitivities 

and global emissions and under the No 

Action Alternative (Alternative 1) and 

the Preferred Alternative (Alternative 4). 

Some responses of the climate system 

are believed to be non-linear; by using 

a range of emissions cases and climate 

sensitivities, it is possible to estimate 

the effects of the alternatives in relation 

to different reference cases. 

Cumulative GHG emissions: 

Projections of GHG emissions 

reductions over the 2012 to 2100 period 

due to the MY 2012–2016 CAFE 

standards and other reasonably 

foreseeable future actions ranged from 

27,164 to 44,626 MMTCO2. Compared to 

global emissions of 3,919,462 MMTCO2

over this period (projected by the SAP 

2.1 MiniCAM Level 3 scenario), the 

incremental impact of this rulemaking is 

expected to reduce global CO2 emissions 

by about 0.7 to 1.1 percent from their 

projected levels under the No Action 

Alternative. 

CO2 concentration, global mean 

surface temperature, sea-level rise, and 

precipitation: For the mid-range results 

of MAGICC model simulations for the 

No Action Alternative and the eight 

action alternatives in terms of CO2

concentrations and increase in global 

mean surface temperature in 2030, 2050, 

and 2100, the impact on the growth in 

CO2 concentrations and temperature is 

just a fraction of the total growth in CO2

concentrations and global mean surface 

temperature. However, the relative 

impact of the action alternatives is 

illustrated by the reduction in growth of 

both CO2 concentrations and 

temperature in the TCTB Alternative 

(Alternative 9). 

There is a fairly narrow band of 

estimated CO2 concentrations as of 

2100, from 653.5 ppm for the TCTB 

Alternative (Alternative 9) to 657.5 ppm 

for the No Action Alternative 

(Alternative 1). For 2030 and 2050, the 

range is even smaller. Because CO2

concentrations are the key driver of all 

other climate effects, this leads to small 

differences in these effects. 

The MAGICC simulations of mean 

global surface air temperature increases 

are also shown in Table S–18. For all 

alternatives, the cumulative global mean 

surface temperature increase is about 

0.80 °C to 0.81 °C as of 2030; 1.32 to 

1.33 °C as of 2050; and 2.59 to 2.61 °C 

as of 2100.643 The differences among 

alternatives are small. For 2100, the 

reduction in temperature increase for 

the action alternatives in relation to the 

No Action Alternative is about 0.01 to 

0.02 °C. 

The impact on sea-level rise in 2100 

ranges from 32.84 centimeters under the 

No Action Alternative (Alternative 1) to 

32.68 centimeters under the TCTB 

Alternative (Alternative 9), for a 

maximum reduction of 0.16 centimeter 

by 2100 from the action alternatives. 

Given that the action alternatives 

would reduce temperature increases 

slightly in relation to the No Action 

Alternative (Alternative 1), they also 

would reduce predicted increases in 

precipitation slightly. In summary, the 

impacts of the proposed action and 

alternatives and other reasonably 

foreseeable future actions on global 

mean surface temperature, sea-level rise, 

and precipitation are relatively small in 

the context of the expected changes 

associated with the emissions 

trajectories in the SRES scenarios.644

This is due primarily to the global and 

multi-sectoral nature of the climate 

problem. 

NHTSA examined the sensitivity of 

climate effects on key assumptions used 

in the analysis. The two variables for 

which assumptions were varied were 

climate sensitivity and global emissions. 

Climate sensitivities used included 

2.0, 3.0, and 4.5 °C for a doubling of CO2

concentrations in the atmosphere. 

Global emissions scenarios used 

included the SAP 2.1 MiniCAM Level 3 

(650 ppm as of 2100), the SAP 2.1 

MiniCAM Level 2 (550 ppm as of 2100), 

and RCP 4.5 MiniCAM reference 

scenario (783 ppm as of 2100). The 

sensitivity analysis is based on the 

results provided for two alternatives— 

the No Action Alternative (Alternative 

1) and the Preferred Alternative 

(Alternative 4). The sensitivity analysis 

was conducted only for two alternatives, 

as this was deemed sufficient to assess 

the effect of various climate sensitivities 

on the results. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

49744 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

645Equilibrium climate sensitivity (or climate 

sensitivity) is the projected responsiveness of 

Earth’s global climate system to forcing from GHG 

drivers, and is often expressed in terms of changes 

to global surface temperature resulting from a 

doubling of CO2 in relation to pre-industrial 

atmospheric concentrations. According to IPCC, 

using a likely emissions scenario that results in a 

doubling of the concentration of atmospheric CO2, 

there is a 66- to 90-percent probability of an 

increase in surface warming of 2.5 to 4.0 °C by the 

end of the century (relative to 1990 average global 

temperatures), with 3 °C as the single most likely 

surface temperature increase. 

646See 42 U.S.C. 4332 (requiring Federal agencies 

to ‘‘identify and develop methods and procedures 

* * * which will insure that presently 

unquantified environmental amenities and values 

may be given appropriate consideration’’); 40 CFR 

1502.23 (requiring an EIS to discuss the 

relationship between a cost-benefit analysis and any 

analyses of unquantified environmental impacts, 

values, and amenities); CEQ, Considering 

Cumulative Effects Under the National 

Environmental Policy Act (1984), available at 

http://ceq.hss.doe.gov/nepa/ccenepa/ccenepa.htm 

(recognizing that agencies are sometimes ‘‘limited 

to qualitative evaluations of effects because causeand-effect relationships are poorly understood’’ or 

cannot be quantified). 

The results of these simulations 

illustrate the uncertainty due to factors 

influencing future global emissions of 

GHGs (factors other than the CAFE 

rulemaking). The use of different 

climate sensitivities 645 (the equilibrium 

warming that occurs at a doubling of 

CO2 from pre-industrial levels) can 

affect not only warming but also 

indirectly affect sea-level rise and CO2

concentration. The use of alternative 

global emissions scenarios can influence 

the results in several ways. Emissions 

reductions can lead to larger reductions 

in the CO2 concentrations in later years 

because more anthropogenic emissions 

can be expected to stay in the 

atmosphere. 

NHTSA’s analysis indicates that the 

sensitivity of the simulated CO2

emissions in 2030, 2050, and 2100 to 

assumptions of global emissions and 

climate sensitivity is low; stated simply, 

CO2 emissions do not change much with 

changes in global emissions and climate 

sensitivity. For 2030 and 2050, the 

choice of global emissions scenario has 

little impact on the results. By 2100, the 

Preferred Alternative (Alternative 4) has 

the greatest impact in the global 

emissions scenario with the highest CO2

emissions (MiniCAM Reference) and the 

least impact in the scenario with the 

lowest CO2 emissions (MiniCAM Level 

2). The total range of the impact of the 

Preferred Alternative on CO2

concentrations in 2100 is from 2.2 to 2.6 

ppm. The Reference Case using the 

MiniCAM Level 3 scenario and a 3.0 °C 

climate sensitivity has an impact of 2.4 

ppm. 

The sensitivity of the simulated global 

mean surface temperatures for 2030 is 

also low due primarily to the slow rate 

at which the global mean surface 

temperature increases in response to 

increases in radiative forcing. The 

relatively slow response in the climate 

system explains the observation that 

even by 2100, when CO2 concentrations 

more than double in comparison to preindustrial levels, the temperature 

increase is below the equilibrium 

sensitivity levels, i.e., the climate 

system has not had enough time to 

equilibrate to the new CO2

concentrations. Nonetheless, as of 2100 

there is a larger range in temperatures 

across the different values of climate 

sensitivity: The reduction in global 

mean surface temperature from the No 

Action Alternative to the Preferred 

Alternative ranges from 0.008 °C for the 

2.0 °C climate sensitivity to 0.012 °C for 

the 4.5 °C climate sensitivity, for the 

MiniCAM Level 3 emissions scenario. 

The impact on global mean surface 

temperature due to assumptions 

concerning global emissions of GHGs is 

also important. The scenario with the 

higher global emissions of GHGs (viz., 

the MiniCAM Reference) has a slightly 

lower reduction in global mean surface 

temperature, and the scenario with 

lower global emissions (viz., the 

MiniCAM Level 2) has a slightly higher 

reduction. This is in large part due to 

the non-linear and near-logarithmic 

relationship between radiative forcing 

and CO2 concentrations. At high 

emissions levels, CO2 concentrations are 

higher and, as a result, a fixed reduction 

in emissions yields a lower reduction in 

radiative forcing and global mean 

surface temperature. 

The sensitivity of the simulated sealevel rise to changes in climate 

sensitivity and global GHG emissions 

mirrors that of global temperature. 

Scenarios with lower climate 

sensitivities have lower increases in sealevel rise. The greater the climate 

sensitivity, the greater the decrement in 

sea-level rise for the Preferred 

Alternative as compared to the No 

Action Alternative. 

Resource impacts of climate change: 

The effects of the alternatives on 

climate—CO2 concentrations, 

temperature, precipitation, and sea-level 

rise—can translate into impacts on key 

resources including terrestrial and 

freshwater ecosystems; marine, coastal 

systems, and low-lying areas; food, 

fiber, and forest products; industries, 

settlements, and society; and human 

health. Although the alternatives have 

the potential to substantially decrease 

GHG emissions, they would not alone 

prevent climate change from occurring. 

The magnitude of the changes in climate 

effects that the alternatives would 

produce—two to five parts per million 

of CO2, a few hundredths of a degree 

Celsius difference in temperature, a 

small percentage change in the rate of 

precipitation increase, and 1 or 2 

millimeters of sea-level rise—are too 

small to address quantitatively in terms 

of their impacts on resources. Given the 

enormous resource values at stake, these 

distinctions could be important—very 

small percentages of huge numbers can 

still yield substantial results—but they 

are too small for current quantitative 

techniques to resolve. Consequently, the 

discussion of resource impacts does not 

distinguish among the CAFE 

alternatives; rather, it provides a 

qualitative review of the benefits of 

reducing GHG emissions and the 

magnitude of the risks involved in 

climate change.646

NHTSA examined the impacts 

resulting from global climate change 

due to all global emissions on the U.S. 

and global scale. Impacts to freshwater 

resources could include changes in 

precipitation patterns, decreasing 

aquifer recharge in some locations, 

changes in snowpack and timing of 

snowmelt, salt-water intrusion from sealevel changes, changes in weather 

patterns resulting in flooding or drought 

in certain regions, increased water 

temperature, and numerous other 

changes to freshwater systems that 

disrupt human use and natural aquatic 

habitats. Impacts to terrestrial 

ecosystems could include shifts in 

species range and migration patterns, 

potential extinctions of sensitive species 

unable to adapt to changing conditions, 

increases in the occurrence of forest 

fires and pest infestation, and changes 

in habitat productivity because of 

increased atmospheric CO2. Impacts to 

coastal ecosystems, primarily from 

predicted sea-level rise, could include 

the loss of coastal areas due to 

submersion and erosion, additional 

impacts from severe weather and storm 

surges, and increased salinization of 

estuaries and freshwater aquifers (for 

example, one impact could be 

reductions in manatee habitat in the 

Florida coastal areas). Impacts to land 

use and several key economic sectors 

could include flooding and severeweather impacts to coastal, floodplain, 

and island settlements; extreme heat 

and cold waves; increases in drought in 

some locations; and weather- or sealevel related disruptions of the service, 

agricultural, and transportation sectors. 

Impacts to human health could include 

increased mortality and morbidity due 

to excessive heat, increases in 

respiratory conditions due to poor air 

quality, increases in water and foodmstockstill on DSKH9S0YB1PROD with PROPOSALS

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647BMW, Daimler (Mercedes), Chrysler, Ferrari, 

Ford, Subaru, General Motors, Honda, Hyundai, 

Kia, Lotus, Maserati, Mazda, Mitsubishi, Nissan, 

Porsche, Subaru, Suzuki, Tata, Toyota, and 

Volkswagen. 

648The Regulatory Flexibility Act only requires 

analysis of small domestic manufacturers. There are 

two passenger car manufacturers that we know of, 

Saleen and Tesla, and no light truck manufacturers. 649 61 FR 4729 (Feb. 7, 1996). 

borne diseases, changes to the seasonal 

patterns of vector-borne diseases, and 

increases in malnutrition. 

Non-climate cumulative impacts of 

CO2 emissions: In addition to its role as 

a GHG in the atmosphere, CO2 is 

transferred from the atmosphere to 

water, plants, and soil. In water, CO2

combines with water molecules to form 

carbonic acid. When CO2 dissolves in 

seawater, a series of well-known 

chemical reactions begin that increase 

the concentration of hydrogen ions and 

make seawater more acidic, which has 

adverse effects on corals and some other 

marine life. 

Increased concentrations of CO2 in the 

atmosphere can also stimulate plant 

growth to some degree, a phenomenon 

known as the CO2 fertilization effect. 

This effect could have positive 

ramifications for agricultural 

productivity and forest growth. The 

available evidence indicates that 

different plants respond in different 

ways to enhanced CO2 concentrations. 

As with the climate effects of CO2, the 

changes in non-climate impacts 

associated with the alternatives are 

difficult to assess quantitatively. 

Whether the distinction in 

concentrations is substantial across 

alternatives is not clear because the 

damage functions and potential 

existence of thresholds for CO2

concentration are not known. However, 

what is clear is that a reduction in the 

rate of increase in atmospheric CO2, 

which all the action alternatives would 

provide to some extent, would reduce 

the ocean acidification effect and the 

CO2 fertilization effect. 

For much more information on 

NHTSA’s NEPA analysis, please see the 

DEIS. 

3. Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act (5 U.S.C. 601 et seq., as amended by 

the Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996), whenever an agency is required 

to publish a notice of rulemaking for 

any proposed or final rule, it must 

prepare and make available for public 

comment a regulatory flexibility 

analysis that describes the effect of the 

rule on small entities (i.e., small 

businesses, small organizations, and 

small governmental jurisdictions). The 

Small Business Administration’s 

regulations at 13 CFR part 121 define a 

small business, in part, as a business 

entity ‘‘which operates primarily within 

the United States.’’ 13 CFR 121.105(a). 

No regulatory flexibility analysis is 

required if the head of an agency 

certifies the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

I certify that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. The following is NHTSA’s 

statement providing the factual basis for 

the certification (5 U.S.C. 605(b)). 

If adopted, the proposal would 

directly affect twenty-one large single 

stage motor vehicle manufacturers.647

The proposal would also affect two 

small domestic single stage motor 

vehicle manufacturers, Saleen and 

Tesla.648 According to the Small 

Business Administration’s small 

business size standards (see 13 CFR 

121.201), a single stage automobile or 

light truck manufacturer (NAICS code 

336111, Automobile Manufacturing; 

336112, Light Truck and Utility Vehicle 

Manufacturing) must have 1,000 or 

fewer employees to qualify as a small 

business. Both Saleen and Tesla have 

less than 1,000 employees and make 

less than 1,000 vehicles per year. We 

believe that the rulemaking would not 

have a significant economic impact on 

these small vehicle manufacturers 

because under Part 525, passenger car 

manufacturers making less than 10,000 

vehicles per year can petition NHTSA to 

have alternative standards set for those 

manufacturers. Tesla produces only 

electric vehicles with fuel economy 

values far beyond those proposed today, 

so we would not expect them to need 

to petition for relief. Saleen modifies a 

very small number of vehicles produced 

by one of the 21 large single-stage 

manufacturers, and currently does not 

meet the 27.5 mpg passenger car 

standard, nor is it anticipated to be able 

to meet the standards proposed today. 

However, Saleen already petitions the 

agency for relief. If the standard is 

raised, it has no meaningful impact on 

Saleen, because it must still go through 

the same process to petition for relief. 

Given that there already is a mechanism 

for handling small businesses, which is 

the purpose of the Regulatory Flexibility 

Act, a regulatory flexibility analysis was 

not prepared. 

4. Executive Order 13132 (Federalism) 

Executive Order 13132 requires 

NHTSA to develop an accountable 

process to ensure ‘‘meaningful and 

timely input by State and local officials 

in the development of regulatory 

policies that have federalism 

implications.’’ The Order defines the 

term ‘‘Policies that have federalism 

implications’’ to include regulations 

that have ‘‘substantial direct effects on 

the States, on the relationship between 

the national government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government.’’ Under the Order, 

NHTSA may not issue a regulation that 

has federalism implications, that 

imposes substantial direct compliance 

costs, and that is not required by statute, 

unless the Federal government provides 

the funds necessary to pay the direct 

compliance costs incurred by State and 

local governments, or NHTSA consults 

with State and local officials early in the 

process of developing the proposed 

regulation. 

NHTSA solicits comment on this 

proposed action from State and local 

officials. In his January 26 

memorandum, the President requested 

NHTSA to ‘‘consider whether any 

provisions regarding preemption are 

consistent with the EISA, the Supreme 

Court’s decision in Massachusetts v. 

EPA and other relevant provisions of 

law and the policies underlying them.’’ 

NHTSA is deferring consideration of the 

preemption issue. The agency believes 

that it is unnecessary to address the 

issue further at this time because of the 

consistent and coordinated Federal 

standards that would apply nationally 

under the proposed National Program. 

5. Executive Order 12988 (Civil Justice 

Reform) 

Pursuant to Executive Order 12988, 

‘‘Civil Justice Reform,’’ 649 NHTSA has 

considered whether this rulemaking 

would have any retroactive effect. This 

proposed rule does not have any 

retroactive effect. 

6. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires Federal agencies to prepare a 

written assessment of the costs, benefits, 

and other effects of a proposed or final 

rule that includes a Federal mandate 

likely to result in the expenditure by 

State, local, or tribal governments, in the 

aggregate, or by the private sector, of 

more than $100 million in any one year 

(adjusted for inflation with base year of 

1995). Adjusting this amount by the 

implicit gross domestic product price 

deflator for 2006 results in $126 million 

(116.043/92.106=1.26). Before 

promulgating a rule for which a written 

statement is needed, section 205 of 

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49746 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

650The national median hourly rate for 

mechanical engineers, May 2008, according to the 

Bureau of Labor Statistics, is $36.02. See http:// 

www.bls.gov/oes/2008/may/oes_nat.htm#b17-0000 

(last accessed August 26, 2009). 

UMRA generally requires NHTSA to 

identify and consider a reasonable 

number of regulatory alternatives and 

adopt the least costly, most costeffective, or least burdensome 

alternative that achieves the objectives 

of the rule. The provisions of section 

205 do not apply when they are 

inconsistent with applicable law. 

Moreover, section 205 allows NHTSA to 

adopt an alternative other than the least 

costly, most cost-effective, or least 

burdensome alternative if the agency 

publishes with the final rule an 

explanation why that alternative was 

not adopted. 

This proposed rule will not result in 

the expenditure by State, local, or tribal 

governments, in the aggregate, of more 

than $126 million annually, but it will 

result in the expenditure of that 

magnitude by vehicle manufacturers 

and/or their suppliers. In promulgating 

this proposal, NHTSA considered a 

variety of alternative average fuel 

economy standards lower and higher 

than those proposed. NHTSA is 

statutorily required to set standards at 

the maximum feasible level achievable 

by manufacturers based on its 

consideration and balancing of relevant 

factors and has tentatively concluded 

that the proposed fuel economy 

standards are the maximum feasible 

standards for the passenger car and light 

truck fleets for MYs 2012–2016 in light 

of the statutory considerations. 

7. Paperwork Reduction Act 

Under the procedures established by 

the Paperwork Reduction Act of 1995, a 

person is not required to respond to a 

collection of information by a Federal 

agency unless the collection displays a 

valid OMB control number. This section 

describes a request for clearance for a 

collection of information associated 

with product plan information to assist 

the agency in developing final corporate 

average fuel economy standards for MY 

2012 through 2016 passenger cars and 

light trucks. The establishment of those 

standards is required by the Energy 

Policy and Conservation Act, as 

amended by the Energy Independence 

and Security Act (EISA) of 2007, Pub. L. 

110–140. In compliance with the PRA, 

this notice requests comment on the 

Information Collection Request (ICR) 

abstracted below. The ICR describes the 

nature of the information collection and 

its expected burden. This is a request for 

an extension of an existing collection. 

Agency: National Highway Traffic 

Safety Administration (NHTSA). 

Title: 49 CFR parts 531 and 533 

Passenger Car Average Fuel Economy 

Standards—Model Years 2008–2020; 

Light Truck Average Fuel Economy 

Standards—Model Years 2008–2020; 

Production Plan Data 

Type of Request: Extension of existing 

collection. 

OMB Clearance Number: 2127–0655. 

Form Number: This collection of 

information will not use any standard 

forms. 

Summary of the Collection of 

Information 

In this collection of information, 

NHTSA is requesting any updates to 

previously-submitted future product 

plans from vehicle manufacturers, as 

well as production data through the 

recent past, including data about 

engines and transmissions for model 

year (MY) 2008 through MY 2020 

passenger cars and light trucks and the 

assumptions underlying those plans. If 

manufacturers have not previously 

submitted product plan information to 

NHTSA and wish to do so, NHTSA also 

requests such information from them. 

NHTSA requests information for MYs 

2008–2020 to supplement other 

information used by NHTSA in 

developing a realistic forecast of the MY 

2012–2016 vehicle market, and in 

evaluating what technologies may 

feasibly be applied by manufacturers to 

achieve compliance with the MY 2012– 

2016 standards. Information regarding 

earlier model years may help the agency 

to better account for cumulative effects 

such as volume- and time-based 

reductions in costs, and also may help 

to reveal product mix and technology 

application trends during model years 

for which the agency is currently 

receiving actual corporate average fuel 

economy (CAFE) compliance data. 

Information regarding later model years 

may help the agency gain a better 

understanding of how manufacturers’ 

plans through MY 2016 relate to their 

longer-term expectations regarding 

Energy Independence and Security Act 

requirements, market trends, and 

prospects for more advanced 

technologies. 

NHTSA will also consider 

information from model years before 

and after MYs 2012–2016 when 

reviewing manufacturers’ planned 

schedules for redesigning and 

freshening their products, in order to 

examine how manufacturers anticipate 

tying technology introduction to 

product design schedules and to 

consider how the agency should 

account for those schedules in its 

analysis for the final rule. In addition, 

the agency is requesting information 

regarding manufacturers’ estimates of 

the future vehicle population, and fuel 

economy improvements and 

incremental costs attributed to this 

notice. 

Description of the Need for the 

Information and Use of the Information 

NHTSA needs the information 

described above to aid in assessing what 

CAFE standards should be established 

for MY 2012 through 2016 passenger 

cars and light trucks. 

Description of the Likely Respondents 

(Including Estimated Number, and 

Proposed Frequency of Response to the 

Collection of Information) 

It is estimated that this collection 

affects approximately 22 motor vehicle 

manufacturers. The information that is 

the subject of this collection of 

information is collected whenever 

NHTSA publishes a notice of proposed 

rulemaking for the purpose of setting 

CAFE standards. 

Estimate of the Total Annual Reporting 

and Recordkeeping Burden Resulting 

From the Collection of Information 

It is estimated that this collection 

affects approximately 22 vehicle 

manufacturers. One major manufacturer 

(General Motors) estimated their burden 

to be approximately 4,300 hours. The 

burden to other manufacturers was 

estimated using sales weights relative to 

General Motor’s total sales (e.g., if a 

manufacturer produces 50 percent as 

many vehicles as General Motors, their 

burden is estimated to be 4,300 * 0.5 = 

2,150 hours). Therefore the burden to 

each manufacturer depends on the 

number of vehicles that manufacturer 

produces. The total estimated burden is 

16,000 hours annually. 

Number of Affected Vehicle 

Manufacturers.

22 

Annual Labor Hours for Each 

Manufacturer To Prepare 

and Submit Required Information.

Variable 

Total Annual Information 

Collection Burden.

16,000 Hours 

The monetized cost associated with this 

information collection is determined by 

multiplying the total labor hours by an 

appropriate labor rate. For this 

information collection, we believe 

vehicle manufacturers will use 

mechanical engineers to prepare and 

submit the data. Therefore, we are 

applying a labor rate of $36.02 per hour 

which is the median national wage for 

mechanical engineers.650 Thus, the 

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651 62 FR 19885 (Apr. 23, 1997). 652 66 FR 28355 (May 18, 2001). 

estimated monetized annual cost is 

16,000 hours × $36.02 per hour = 

$576,320. 

Comments are specifically sought on 

the following issues: 

• Whether the collection of 

information is necessary for the proper 

performance of the functions of the 

Department, including whether the 

information will have practical utility. 

• Whether the Department’s estimate 

for the burden of the information 

collection is accurate. 

• Ways to minimize the burden of the 

collection of information on 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

Please send comments to the docket 

number cited in the heading of this 

notice. PRA comments are due within 

60 days following publication of this 

document in the Federal Register. The 

agency recognizes that the amendment 

to the existing collection of information 

may be subject to revision in response 

to public comments and the OMB 

review. 

For further information on this 

proposal to extend the collection of 

information, please contact Ken Katz, 

Fuel Economy Division, Office of 

International Policy, Fuel Economy, and 

Consumer Programs, National Highway 

Traffic Safety Administration, 1200 New 

Jersey Avenue, SE., Washington, DC 

20590. You may also contact him by 

phone at (202) 366–0846 or by fax at 

(202) 493–2290. 

8. Regulation Identifier Number 

The Department of Transportation 

assigns a regulation identifier number 

(RIN) to each regulatory action listed in 

the Unified Agenda of Federal 

Regulations. The Regulatory Information 

Service Center publishes the Unified 

Agenda in April and October of each 

year. You may use the RIN contained in 

the heading at the beginning of this 

document to find this action in the 

Unified Agenda. 

9. Executive Order 13045 

Executive Order 13045 651 applies to 

any rule that: (1) Is determined to be 

economically significant as defined 

under E.O. 12866, and (2) concerns an 

environmental, health, or safety risk that 

NHTSA has reason to believe may have 

a disproportionate effect on children. If 

the regulatory action meets both criteria, 

we must evaluate the environmental 

health or safety effects of the proposed 

rule on children, and explain why the 

proposed regulation is preferable to 

other potentially effective and 

reasonably foreseeable alternatives 

considered by us. 

Chapter 4 of NHTSA’s DEIS notes that 

breathing PM can cause respiratory 

ailments, heart attack, and arrhythmias 

(Dockery et al. 1993, Samet et al. 2000, 

Pope et al. 1995, 2002, 2004, Pope and 

Dockery 2006, Dominici et al. 2006, 

Laden et al. 2006, all in Ebi et al. 2008). 

Populations at greatest risk could 

include children, the elderly, and those 

with heart and lung disease, diabetes 

(Ebi et al. 2008), and high blood 

pressure (Ku ̈nzli et al. 2005, in Ebi et al. 

2008). Chronic exposure to PM could 

decrease lifespan by 1 to 3 years (Pope 

2000, in American Lung Association 

2008). Increasing PM concentrations are 

expected to have a measurable adverse 

impact on human health (Confalonieri 

et al. 2007). 

Additionally, the DEIS notes that 

substantial morbidity and childhood 

mortality has been linked to water- and 

food-borne diseases. Climate change is 

projected to alter temperature and the 

hydrologic cycle through changes in 

precipitation, evaporation, 

transpiration, and water storage. These 

changes, in turn, potentially affect 

water-borne and food-borne diseases, 

such as salmonellosis, campylobacter, 

leptospirosis, and pathogenic species of 

vibrio. They also have a direct impact 

on surface water availability and water 

quality. It has been estimated that more 

than 1 billion people in 2002 did not 

have access to adequate clean water 

(McMichael et al. 2003, in Epstein et al. 

2006). Increased temperatures, greater 

evaporation, and heavy rain events have 

been associated with adverse impacts on 

drinking water through increased 

waterborne diseases, algal blooms, and 

toxins (Chorus and Bartram 1999, Levin 

et al. 2002, Johnson and Murphy 2004, 

all in Epstein et al. 2006). A seasonal 

signature has been associated with 

waterborne disease outbreaks (EPA 

2009b). In the United States, 68 percent 

of all waterborne diseases between 1948 

and 1994 were observed after heavy 

rainfall events (Curriero et al. 2001a, in 

Epstein et al. 2006). 

Climate change could further impact 

a pathogen by directly affecting its life 

cycle (Ebi et al. 2008). The global 

increase in the frequency, intensity, and 

duration of red tides could be linked to 

local impacts already associated with 

climate change (Harvell et al. 1999, in 

Epstein et al. 2006); toxins associated 

with red tide directly affect the nervous 

system (Epstein et al. 2006). 

Many people do not report or seek 

medical attention for their ailments of 

water-borne or food-borne diseases; 

hence, the number of actual cases with 

these diseases is greater than clinical 

records demonstrate (Mead et al. 1999, 

in Ebi et al. 2008). Many of the 

gastrointestinal diseases associated with 

water-borne and food-borne diseases 

can be self-limiting; however, 

vulnerable populations include young 

children, those with a compromised 

immune system, and the elderly. 

Thus, as detailed in the DEIS, NHTSA 

has evaluated the environmental health 

and safety effects of the proposed rule 

on children. The DEIS also explains 

why the proposed regulation is 

preferable to other potentially effective 

and reasonably foreseeable alternatives 

considered by the agency. 

10. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act (NTTAA) requires NHTA to 

evaluate and use existing voluntary 

consensus standards in its regulatory 

activities unless doing so would be 

inconsistent with applicable law (e.g., 

the statutory provisions regarding 

NHTSA’s vehicle safety authority) or 

otherwise impractical. 

Voluntary consensus standards are 

technical standards developed or 

adopted by voluntary consensus 

standards bodies. Technical standards 

are defined by the NTTAA as 

‘‘performance-base or design-specific 

technical specification and related 

management systems practices.’’ They 

pertain to ‘‘products and processes, 

such as size, strength, or technical 

performance of a product, process or 

material.’’ 

Examples of organizations generally 

regarded as voluntary consensus 

standards bodies include the American 

Society for Testing and Materials 

(ASTM), the Society of Automotive 

Engineers (SAE), and the American 

National Standards Institute (ANSI). If 

NHTSA does not use available and 

potentially applicable voluntary 

consensus standards, we are required by 

the Act to provide Congress, through 

OMB, an explanation of the reasons for 

not using such standards. 

There are currently no voluntary 

consensus standards relevant to today’s 

proposed CAFE standards. 

11. Executive Order 13211 

Executive Order 13211 652 applies to 

any rule that: (1) Is determined to be 

economically significant as defined 

under E.O. 12866, and is likely to have 

a significant adverse effect on the 

supply, distribution, or use of energy; or 

(2) that is designated by the 

Administrator of the Office of 

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49748 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Information and Regulatory Affairs as a 

significant energy action. If the 

regulatory action meets either criterion, 

we must evaluate the adverse energy 

effects of the proposed rule and explain 

why the proposed regulation is 

preferable to other potentially effective 

and reasonably feasible alternatives 

considered by us. 

The proposed rule seeks to establish 

passenger car and light truck fuel 

economy standards that will reduce the 

consumption of petroleum and will not 

have any adverse energy effects. 

Accordingly, this proposed rulemaking 

action is not designated as a significant 

energy action. 

12. Department of Energy Review 

In accordance with 49 U.S.C. 

32902(j)(1), we submitted this proposed 

rule to the Department of Energy for 

review. That Department did not make 

any comments that we have not 

addressed. 

13. Plain Language 

Executive Order 12866 requires each 

agency to write all rules in plain 

language. Application of the principles 

of plain language includes consideration 

of the following questions: 

• Have we organized the material to 

suit the public’s needs? 

• Are the requirements in the rule 

clearly stated? 

• Does the rule contain technical 

language or jargon that isn’t clear? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the rule easier to 

understand? 

• Would more (but shorter) sections 

be better? 

• Could we improve clarity by adding 

tables, lists, or diagrams? 

• What else could we do to make the 

rule easier to understand? 

If you have any responses to these 

questions, please include them in your 

comments on this proposal. 

14. Privacy Act 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an organization, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

statement in the Federal Register (65 FR 

19477–78, April 11, 2000) or you may 

visit http://www.dot.gov/privacy.html. 

List of Subjects 

40 CFR Part 86 

Administrative practice and 

procedure, Confidential business 

information, Labeling, Motor vehicle 

pollution, Reporting and recordkeeping 

requirements. 

40 CFR Part 600 

Administrative practice and 

procedure, Electric power, Fuel 

economy, Incorporation by reference, 

Labeling, Reporting and recordkeeping 

requirements. 

49 CFR Part 531 and 533 

Fuel economy. 

49 CFR Part 537 

Fuel economy, Reporting and 

recordkeeping requirements. 

49 CFR Part 538 

Administrative practice and 

procedure, Fuel economy, Motor 

vehicles, Reporting and recordkeeping 

requirements. 

Environmental Protection Agency 

40 CFR Chapter I 

For the reasons set forth in the 

preamble, the Environmental Protection 

Agency proposes to amend parts 86 and 

600 of title 40, Chapter I of the Code of 

Federal Regulations as follows: 

PART 86—CONTROL OF EMISSIONS 

FROM NEW AND IN-USE HIGHWAY 

VEHICLES AND ENGINES 

1. The authority citation for part 86 

continues to read as follows: 

Authority: 42 U.S.C. 7401–7671q. 

2. Section 86.1 is amended by adding 

paragraphs (b)(2)(xxxix) through (xxxxi) 

to read as follows: 

§ 86.1 Reference materials. 

* * * * * 

(b) * * * 

(2) * * * 

(xxxix) SAE J2064, December 2005, 

R134a Refrigerant Automotive AirConditioned Hose, IBR approved for 

§ 86.166–12. 

(xxxx) SAE J2727, revised August 

2008, HFC–134a Mobile Air 

Conditioning System Refrigerant 

Emission Chart, IBR approved for 

§ 86.166–12. 

(xxxxi) SAE J2765, October, 2008, 

Procedure for Measuring System COP 

[Coefficient of Performance] of a Mobile 

Air Conditioning System on a Test 

Bench, IBR approved for § 86.1866–12. 

* * * * * 

Subpart B—[Amended] 

3. Section 86.111–94 is amended by 

revising paragraph (b) introductory text 

to read as follows: 

§ 86.111–94 Exhaust gas analytical 

system. 

* * * * * 

(b) Major component description. The 

exhaust gas analytical system, Figure 

B94–7, consists of a flame ionization 

detector (FID) (heated, 235 ° ± 15 °F 

(113 ° ± 8 °C) for methanol-fueled 

vehicles) for the determination of THC, 

a methane analyzer (consisting of a gas 

chromatograph combined with a FID) 

for the determination of CH4, nondispersive infrared analyzers (NDIR) for 

the determination of CO and CO2, a 

chemiluminescence analyzer (CL) for 

the determination of NOX, and an 

analyzer meeting the requirements 

specified in § 86.167–12 for the 

determination of N2O for 2012 and later 

model year vehicles. A heated flame 

ionization detector (HFID) is used for 

the continuous determination of THC 

from petroleum-fueled diesel-cycle 

vehicles (may also be used with 

methanol-fueled diesel-cycle vehicles), 

Figure B94–5 (or B94–6). The analytical 

system for methanol consists of a gas 

chromatograph (GC) equipped with a 

flame ionization detector. The analysis 

for formaldehyde is performed using 

high-pressure liquid chromatography 

(HPLC) of 2,4-dinitrophenylhydrazine 

(DNPH) derivatives using ultraviolet 

(UV) detection. The exhaust gas 

analytical system shall conform to the 

following requirements: 

* * * * * 

4. Section 86.127–00 is amended as 

follows: 

a. By revising the introductory text. 

b. By revising paragraph (a) 

introductory text. 

c. By revising paragraph (a)(1), 

d. By revising paragraph (b). 

e. By revising paragraph (c). 

f. By revising paragraphs (d) and (e). 

§ 86.127–00 Test procedures; overview. 

Applicability. The procedures 

described in this subpart are used to 

determine the conformity of vehicles 

with the standards set forth in subpart 

A or S of this part (as applicable) for 

light-duty vehicles, light-duty trucks, 

and medium-duty passenger vehicles. 

Except where noted, the procedures of 

paragraphs (a) through (b) of this 

section, § 86.127–96 (c) and (d), and the 

contents of §§ 86.135–94, 86.136–90, 

86.137–96, 86.140–94, 86.142–90, and 

86.144–94 are applicable for 

determining emission results for vehicle 

exhaust emission systems designed to 

comply with the FTP emission 

standards, or the FTP emission element 

required for determining compliance 

with composite SFTP standards. 

Paragraphs (f) and (g) of this section 

discuss the additional test elements of 

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aggressive driving (US06) and air 

conditioning (SC03) that comprise the 

exhaust emission components of the 

SFTP. Section 86.127–96(e) discusses 

fuel spitback emissions and paragraphs 

(h) and (i) of this section are applicable 

to all vehicle emission test procedures. 

Section 86.127–00 includes text that 

specifies requirements that differ from 

§ 86.127–96. Where a paragraph in 

§ 86.127–96 is identical and applicable 

to § 86.127–00, this may be indicated by 

specifying the corresponding paragraph 

and the statement ‘‘[Reserved]. For 

guidance see § 86.127–96.’’ 

(a) The overall test consists of 

prescribed sequences of fueling, 

parking, and operating test conditions. 

Vehicles are tested for any or all of the 

following emissions, depending upon 

the specific test requirements and the 

vehicle fuel type: 

(1) Gaseous exhaust THC, NMHC, CO, 

NOX, CO2, N2O, CH4, CH3OH, C2H5OH, 

C2H4O, and HCHO. 

* * * * * 

(b) The FTP Otto-cycle exhaust 

emission test is designed to determine 

gaseous THC, CO, CO2, CH4, NOX, N2O, 

and particulate mass emissions from 

gasoline-fueled, methanol-fueled and 

gaseous-fueled Otto-cycle vehicles as 

well as methanol and formaldehyde 

from methanol-fueled Otto-cycle 

vehicles, as well as methanol, ethanol, 

acetaldehyde, and formaldehyde from 

ethanol-fueled vehicles while 

simulating an average trip in an urban 

area of 11 miles (18 kilometers). The test 

consists of engine start-ups and vehicle 

operation on a chassis dynamometer 

through a specified driving schedule 

(see paragraph (a) of appendix I to this 

part for the Urban Dynamometer Driving 

Schedule). A proportional part of the 

diluted exhaust is collected 

continuously for subsequent analysis, 

using a constant volume (variable 

dilution) sampler or critical flow venturi 

sampler. 

(c) The diesel-cycle exhaust emission 

test is designed to determine particulate 

and gaseous mass emissions during a 

test similar to the test in § 86.127(b). For 

petroleum-fueled diesel-cycle vehicles, 

diluted exhaust is continuously 

analyzed for THC using a heated sample 

line and analyzer; the other gaseous 

emissions (CH4, CO, CO2, N2O, and 

NOX) are collected continuously for 

analysis as in § 86.127(b). For methanoland ethanol-fueled vehicles, THC, 

methanol, formaldehyde, CO, CO2, CH4, 

N2O, and NOX are collected 

continuously for analysis as in 

§ 86.127(b). Additionally, for ethanolfueled vehicles, ethanol and 

acetaldehyde are collected continuously 

for analysis as in § 86.127(b). THC, 

methanol, ethanol, acetaldehyde, and 

formaldehyde are collected using heated 

sample lines, and a heated FID is used 

for THC analyses. Simultaneous with 

the gaseous exhaust collection and 

analysis, particulates from a 

proportional part of the diluted exhaust 

are collected continuously on a filter. 

The mass of particulate is determined 

by the procedure described in § 86.139. 

This testing requires a dilution tunnel as 

well as the constant volume sampler. 

(d)–(e) [Reserved]. For guidance see 

§ 86.127–96. 

* * * * * 

5. Section 86.135–00 is amended by 

revising paragraph (a) to read as follows: 

§ 86.135–12 Dynamometer procedure. 

* * * * * 

(a) Overview. The dynamometer run 

consists of two tests, a ‘‘cold’’ start test, 

after a minimum 12-hour and a 

maximum 36-hour soak according to the 

provisions of §§ 86.132 and 86.133, and 

a ‘‘hot’’ start test following the ‘‘cold’’ 

start by 10 minutes. Engine startup 

(with all accessories turned off), 

operation over the UDDS and engine 

shutdown make a complete cold start 

test. Engine startup and operation over 

the first 505 seconds of the driving 

schedule complete the hot start test. The 

exhaust emissions are diluted with 

ambient air in the dilution tunnel as 

shown in Figure B94–5 and Figure B94– 

6. A dilution tunnel is not required for 

testing vehicles waived from the 

requirement to measure particulates. Six 

particulate samples are collected on 

filters for weighing; the first sample plus 

backup is collected during the first 505 

seconds of the cold start test; the second 

sample plus backup is collected during 

the remainder of the cold start test 

(including shutdown); the third sample 

plus backup is collected during the hot 

start test. Continuous proportional 

samples of gaseous emissions are 

collected for analysis during each test 

phase. For gasoline-fueled, natural gasfueled and liquefied petroleum gasfueled Otto-cycle vehicles, the 

composite samples collected in bags are 

analyzed for THC, CO, CO2, CH4, NOX, 

and, for 2012 and later model year 

vehicles, N2O. For petroleum-fueled 

diesel-cycle vehicles (optional for 

natural gas-fueled, liquefied petroleum 

gas-fueled and methanol-fueled dieselcycle vehicles), THC is sampled and 

analyzed continuously according to the 

provisions of § 86.110. Parallel samples 

of the dilution air are similarly analyzed 

for THC, CO, CO2, CH4, NOX, and, for 

2012 and later model year vehicles, 

N2O. For natural gas-fueled, liquefied 

petroleum gas-fueled and methanolfueled vehicles, bag samples are 

collected and analyzed for THC (if not 

sampled continuously), CO, CO2, CH4, 

NOX, and, for 2012 and later model year 

vehicles, N2O. For methanol-fueled 

vehicles, methanol and formaldehyde 

samples are taken for both exhaust 

emissions and dilution air (a single 

dilution air formaldehyde sample, 

covering the total test period may be 

collected). For ethanol-fueled vehicles, 

methanol, ethanol, acetaldehyde, and 

formaldehyde samples are taken for 

both exhaust emissions and dilution air 

(a single dilution air formaldehyde 

sample, covering the total test period 

may be collected). Parallel bag samples 

of dilution air are analyzed for THC, CO, 

CO2, CH4, NOX, and, for 2012 and later 

model year vehicles, N2O. Methanol and 

formaldehyde samples may be omitted 

for 1990 through 1994 model years 

when a FID calibrated on methanol is 

used. 

* * * * * 

6. A new § 86.165–12 is added to 

subpart B to read as follows: 

§ 86.165–12 Air conditioning idle test 

procedure. 

(a) Applicability. This section 

describes procedures for determining air 

conditioning-related CO2 emissions 

from 2014 and later model year lightduty vehicles, light-duty trucks, and 

medium-duty passenger vehicles. The 

results of this test are used to qualify for 

air conditioning efficiency CO2 credits 

according to § 86.1866–12(c). 

(b) Overview. The test consists of a 

brief period to stabilize the vehicle at 

idle, followed by a ten-minute period at 

idle when CO2 emissions are measured 

without any air conditioning systems 

operating, followed by a ten-minute 

period at idle when CO2 emissions are 

measured with the air conditioning 

system operating. This test is designed 

to determine the air conditioningrelated CO2 emission value, in grams 

per minute. If engine stalling occurs 

during cycle operation, follow the 

provisions of § 86.136–90 to restart the 

test. Measurement instruments must 

meet the specifications described in this 

subpart. 

(c) Test cell ambient conditions. 

(1) Ambient humidity within the test 

cell during all phases of the test 

sequence shall be controlled to an 

average of 50 ± 5 grains of water/pound 

of dry air. 

(2) Ambient air temperature within 

the test cell during all phases of the test 

sequence shall be controlled to 75 ± 

2 °F on average and 75 ± 5 °F as an 

instantaneous measurement. Air 

temperature shall be recorded 

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49750 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

continuously at a minimum of 30 

second intervals. 

(d) Test sequence. 

(1) Connect the vehicle exhaust 

system to the raw sampling location or 

dilution stage according to the 

provisions of this subpart. For dilution 

systems, dilute the exhaust as described 

in this subpart. Continuous sampling 

systems must meet the specifications 

provided in this subpart. 

(2) Test the vehicle in a fully warmedup condition. If the vehicle has soaked 

for two hours or less since the last 

exhaust test element, preconditioning 

may consist of a 505 Cycle, 866 Cycle, 

US06, or SC03, as these terms are 

defined in § 86.1803–01, or a highway 

fuel economy test procedure, as defined 

in § 600.002–08 of this chapter. For 

longer soak periods, precondition the 

vehicle using one full Urban 

Dynamometer Driving Schedule. Ensure 

that the vehicle has stabilized at test cell 

ambient conditions such that the 

vehicle interior temperature is not 

substantially different from the external 

test cell temperature. Windows may be 

opened during preconditioning to 

achieve this stabilization. 

(3) Immediately after the 

preconditioning, turn off any cooling 

fans, if present, close the vehicle’s hood, 

fully close all the vehicle’s windows, 

ensure that all the vehicle’s air 

conditioning systems are set to full off, 

start the CO2 sampling system, and then 

idle the vehicle for not less than 1 

minute and not more than 5 minutes to 

achieve normal and stable idle 

operation. 

(4) Measure and record the 

continuous CO2 concentration for 600 

seconds. Measure the CO2 concentration 

continuously using raw or dilute 

sampling procedures. Multiply this 

concentration by the continuous (raw or 

dilute) flow rate at the emission 

sampling location to determine the CO2

flow rate. Calculate the CO2 cumulative 

flow rate continuously over the test 

interval. This cumulative value is the 

total mass of the emitted CO2. 

(5) Within 60 seconds after 

completing the measurement described 

in paragraph (d)(4) of this section, turn 

on the vehicle’s air conditioning system. 

Set automatic air conditioning systems 

to a temperature 9 °F (5 °C) below the 

ambient temperature of the test cell. Set 

manual air conditioning systems to 

maximum cooling with recirculation 

turned off, except that recirculation 

shall be enabled if the air conditioning 

system automatically defaults to a 

recirculation mode when set to 

maximum cooling. Continue idling the 

vehicle while measuring and recording 

the continuous CO2 concentration for 

600 seconds as described in paragraph 

(d)(4) of this section. Air conditioning 

systems with automatic temperature 

controls are finished with the test. 

Manually controlled air conditioning 

systems must complete one additional 

idle period described in paragraph (d)(6) 

of this section. 

(6) This paragraph (d)(6) applies only 

to manually controlled air conditioning 

systems. Within 60 seconds after 

completing the measurement described 

in paragraph (d)(5) of this section, leave 

the vehicle’s air conditioning system on 

and set as described in paragraph (d)(5) 

of this section but set the fan speed to 

the lowest setting that continues to 

provide air flow. Recirculation shall be 

turned off except that if the system 

defaults to a recirculation mode when 

set to maximum cooling and maintains 

recirculation with the low fan speed, 

then recirculation shall continue to be 

enabled. After the fan speed has been 

set, continue idling the vehicle while 

measuring and recording the continuous 

CO2 concentration for a total of 600 

seconds as described in paragraph (d)(4) 

of this section. 

(e) Calculations. (1) For the 

measurement with no air conditioning, 

calculate the CO2 emissions (in grams 

per minute) by dividing the total mass 

of CO2 from paragraph (d)(4) of this 

section by 10.0 (the duration in minutes 

for which CO2 is measured). Round this 

result to the nearest whole gram per 

minute. 

(2)(i) For the measurement with air 

conditioning in operation for automatic 

air conditioning systems, calculate the 

CO2 emissions (in grams per minute) by 

dividing the total mass of CO2 from 

paragraph (d)(5) of this section by 10.0. 

Round this result to the nearest whole 

gram per minute. 

(ii) For the measurement with air 

conditioning in operation for manually 

controlled air conditioning systems, 

calculate the CO2 emissions (in grams 

per minute) by summing the total mass 

of CO2 from paragraphs (d)(5) and (d)(6) 

of this section and dividing by 20.0. 

Round this result to the nearest whole 

gram per minute. 

(3) Calculate the increased CO2

emissions due to air conditioning (in 

grams per minute) by subtracting the 

results of paragraph (e)(1) of this section 

from the results of paragraph (e)(2)(i) or 

(ii) of this section, whichever is 

applicable. 

7. A new § 86.166–12 is added to 

subpart B to read as follows: 

§ 86.166–12 Method for calculating 

emissions due to air conditioning leakage. 

This section describes procedures 

used to determine a refrigerant leakage 

rate from vehicle-based air conditioning 

units. The results of this test are used to 

determine air conditioning leakage 

credits according to § 86.1866–12(b). 

(a) Emission totals. Calculate an 

annual rate of refrigerant leakage from 

an air conditioning system using the 

following equation: 

Grams/YRTOT = Grams/YRRP + Grams/ 

YRSP + Grams/YRFH + Grams/YRMC + 

Grams/YRC ¥ Grams/YRCREDIT

Where: 

Grams/YRTOT = Total air conditioning system 

emission rate in grams per year and 

rounded to the nearest tenth of a gram 

per year. 

Grams/YRRP = Emission rate for rigid pipe 

connections as described in paragraph 

(b) of this section. 

Grams/YRSP = Emission rate for service ports 

and refrigerant control devices as 

described in paragraph (c) of this section. 

Grams/YRFH = Emission rate for flexible 

hoses as described in paragraph (d) of 

this section. 

Grams/YRMC = Emission rate for heat 

exchangers, mufflers, receiver/driers, 

and accumulators as described in 

paragraph (e) of this section. 

Grams/YRC = Emission rate for compressors 

as described in paragraph (f) of this 

section. 

Grams/YRCREDIT = Leakage monitoring credit, 

as applicable, from paragraph (g) of this 

section. 

(b) Fittings. Determine the grams per 

year emission rate for rigid pipe 

connections using the following 

equation: 

Grams/YRRP = 0.00522 · [(125 · SO) + 

(75 · SCO) + (50 · MO) + (10 · SW) 

+ (5 · SWO) + (MG)] 

Where: 

Grams/YRRP = Total emission rate for rigid 

pipe connections in grams per year. 

SO = The number of single O-ring 

connections. 

SCO = The number of single captured O-ring 

connections. 

MO = The number of multiple O-ring 

connections. 

SW = The number of seal washer 

connections. 

SWO = The number of seal washer with Oring connections. 

MG = The number of metal gasket 

connections. 

(c) Service ports and refrigerant 

control devices. Determine the grams 

per year emission rate for service ports 

and refrigerant control devices using the 

following equation: 

Grams/YRSP = (0.3 · HSSP · 0.522) + (0.2 

· LSSP · 0.522) + (0.2 · STV · 0.522) 

+ (0.2 · TXV · 0.522) 

Where: 

Grams/YRSP = The emission rate for service 

ports and refrigerant control devices, in 

grams per year. 

HSSP = The number of high side service 

ports. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49751 

LSSP = The number of low side service ports. 

STV = The total number of switches, 

transducers, and pressure relief valves. 

TXV = The number of TXV refrigerant 

control devices. 

(d) Flexible hoses. Determine the 

permeation emission rate in grams per 

year for each segment of flexible hose 

using the following equation, and then 

sum the values for each hose in the 

system to calculate a total emission rate 

for the system: 

Grams/YRFH = 0.00522 · (3.14159 · ID · 

L · ER) 

Where: 

Grams/YRFH = Emission rate for a segment of 

flexible hose in grams per year. 

ID = Inner diameter of hose, in millimeters. 

L = Length of hose, in millimeters. 

ER = Emission rate per unit internal surface 

area of the hose, in g/mm2. Select the 

appropriate value from the following 

table: 

Material/configuration 

ER 

High-pressure side Low-pressure side 

All rubber hose .................................................................................................................................... 0 .0216 0 .0144 

Standard barrier or veneer hose ......................................................................................................... 0 .0054 0 .0036 

Ultra-low permeation barrier or veneer hose ...................................................................................... 0 .00225 0 .00167 

(e) Heat exchangers, mufflers, 

receiver/driers, and accumulators. Use 

an emission rate of 0.261 grams per year 

as a combined value for all heat 

exchangers, mufflers, receiver/driers, 

and accumulators (Grams/YRMC). 

(f) Compressors. Determine the 

emission rate for compressors using the 

following equation, except that the final 

term in the equation (‘‘1500/SSL’’) is not 

applicable to electric (or semi-hermetic) 

compressors: 

Grams/YRC = 0.00522 · [(300 · OHS) + 

(200 · MHS) + (150 · FAP) + (100 

· GHS) + (1500/SSL)] 

Where: 

Grams/YRC = The emission rate for the 

compressors in the air conditioning 

system, in grams per year. 

OHS = The number of O-ring housing seals. 

MHS = The number of molded housing seals. 

FAP = The number of fitting adapter plates. 

GHS = The number of gasket housing seals. 

SSL = The number of lips on shaft seal (for 

belt-driven compressors only). 

(g) Leakage monitoring credits. 

Electronic monitoring systems that 

provide indication of a refrigerant loss 

to the operator through an interior 

driver information display or an air 

conditioning-specific malfunction 

indicator when the air conditioning 

system has lost 40 percent of its charge 

capacity shall use a credit of 1 g/yr. 

(h) Definitions. The following 

definitions apply to this section: 

(1) All rubber hose means a Type A 

or Type B hose as defined by SAE J2064 

with a permeation rate not greater than 

15 kg/m2/year when tested according to 

SAE J2064. SAE J2064 is incorporated 

by reference; see § 86.1. 

(2) Standard barrier or veneer hose 

means a Type C, D, E, or F hose as 

defined by SAE J2064 with a permeation 

rate not greater than 5 kg/m2/year when 

tested according to SAE J2064. SAE 

J2064 is incorporated by reference; see 

§ 86.1. 

(3) Ultra-low permeation barrier or 

veneer hose means a hose with a 

permeation rate not greater than 1.5 kg/ 

m2/year when tested according to SAE 

J2064. SAE J2064 is incorporated by 

reference; see § 86.1. 

8. A new § 86.167–12 is added to 

subpart B to read as follows: 

§ 86.167–12 N2O measurement devices. 

(a) General component requirements. 

We recommend that you use an analyzer 

that meets the specifications in Table 1 

of 40 CFR 1065.205. Note that your 

system must meet the linearity 

verification in 40 CFR 1065.307. 

(b) Instrument types. You may use any 

of the following analyzers to measure 

N2O: 

(1) Nondispersive infra-red (NDIR) 

analyzer. You may use an NDIR 

analyzer that has compensation 

algorithms that are functions of other 

gaseous measurements and the engine’s 

known or assumed fuel properties. The 

target value for any compensation 

algorithm is 0.0% (that is, no bias high 

and no bias low), regardless of the 

uncompensated signal’s bias. 

(2) Fourier transform infra-red (FTIR) 

analyzer. You may use an FTIR analyzer 

that has compensation algorithms that 

are functions of other gaseous 

measurements and the engine’s known 

or assumed fuel properties. The target 

value for any compensation algorithm is 

0.0% (that is, no bias high and no bias 

low), regardless of the uncompensated 

signal’s bias. Use EPA Test Method 320 

‘‘Measurement of Vapor Phase Organic 

and Inorganic Emissions by Extractive 

Fourier Transform Infrared (FTIR) 

Spectroscopy’’ for spectral 

interpretation (see 40 CFR part 63 

appendix A). 

(3) Photoacoustic analyzer. You may 

use a photoacoustic analyzer that has 

compensation algorithms that are 

functions of other gaseous 

measurements. The target value for any 

compensation algorithm is 0.0% (that is, 

no bias high and no bias low), regardless 

of the uncompensated signal’s bias. Use 

an optical wheel configuration that 

gives analytical priority to measurement 

of the least stable components in the 

sample. Select a sample integration time 

of at least 5 seconds. Take into account 

sample chamber and sample line 

volumes when determining flush times 

for your instrument. 

(4) Gas chromatograph (GC) analyzer. 

You may use a gas chromatograph with 

Electron Capture Detector (ECD) to 

measure N2O concentrations of diluted 

exhaust for batch sampling. You may 

use a packed or porous layer open 

tubular (PLOT) column phase of 

suitable polarity and length to achieve 

adequate resolution of the N2O peak for 

analysis. Examples of acceptable 

columns are a PLOT column consisting 

of bonded polystyrene-divinylbenzene 

or a Porapack Q packed column. Take 

the column temperature profile and 

carrier gas selection into consideration 

when setting up your method to achieve 

adequate N2O peak resolution. 

(c) Interference validation. Perform 

interference validation for NDIR, FTIR, 

and Photoacoustic analyzers using the 

procedures of § 86.168–12 as follows: 

(1) Certain interference gases can 

positively interfere with these analyzers 

by causing a response similar to N2O as 

follows: 

(i) The interference gases for NDIR 

analyzers are CO, CO2, H2O, CH4 and 

SO2. Note that interference species, with 

the exception of H2O, are dependent on 

the N2O infrared absorption band 

chosen by the instrument manufacturer 

and should be determined 

independently for each analyzer. 

(ii) Use good engineering judgment to 

determine interference gases for FTIR. 

Note that interference species, with the 

exception of H2O, are dependent on the 

N2O infrared absorption band chosen by 

the instrument manufacturer and should 

be determined independently for each 

analyzer. 

(iii) The interference gases for 

photoacoustic analyzers are CO, CO2, 

and H2O. 

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(2) Analyzers must have combined 

interference that is within (0.0 ± 1.0) 

mol/mol. We strongly recommend a 

lower interference that is within (0.0 ± 

0.5) mol/. 

9. A new § 86.168–12 is added to 

subpart B to read as follows: 

§ 86.168–12 Interference verification for 

N2O analyzers. 

(a) Scope and frequency. See 40 CFR 

1065.275 to determine whether you 

need to verify the amount of 

interference after initial analyzer 

installation and after major 

maintenance. 

(b) Measurement principles. 

Interference gasses can positively 

interfere with certain analyzers by 

causing a response similar to N2O. If the 

analyzer uses compensation algorithms 

that utilize measurements of other gases 

to meet this interference verification, 

simultaneously conduct these other 

measurements to test the compensation 

algorithms during the analyzer 

interference verification. 

(c) System requirements. See 40 CFR 

1065.275 for system requirements 

related to allowable interference levels. 

(d) Procedure. Perform the 

interference verification as follows: 

(1) Start, operate, zero, and span the 

N2O FTIR analyzer as you would before 

an emission test. If the sample is passed 

through a dryer during emission testing, 

you may run this verification test with 

the dryer if it meets the requirements of 

40 CFR 1065.342. Operate the dryer at 

the same conditions as you will for an 

emission test. You may also run this 

verification test without the sample 

dryer. 

(2) Create a humidified test gas by 

bubbling a multi component span gas 

that incorporates the target interference 

species and meets the specifications in 

40 CFR 1065.750 through distilled water 

in a sealed vessel. If the sample is not 

passed through a dryer during emission 

testing, control the vessel temperature to 

generate an H2O level at least as high as 

the maximum expected during emission 

testing. If the sample is passed through 

a dryer during emission testing, control 

the vessel temperature to generate an 

H2O level at least as high as the level 

determined in 40 CFR 1065.145(e)(2) for 

that dryer. Use interference span gas 

concentrations that are at least as high 

as the maximum expected during 

testing. 

(3) Introduce the humidified 

interference test gas into the sample 

system. You may introduce it 

downstream of any sample dryer, if one 

is used during testing. 

(4) If the sample is not passed through 

a dryer during this verification test, 

measure the water mole fraction, xH2O,

of the humidified interference test gas as 

close as possible to the inlet of the 

analyzer. For example, measure 

dewpoint, Tdew, and absolute pressure, 

ptotal, to calculate xH2O. Verify that the 

water content meets the requirement in 

paragraph (d)(2) of this section. If the 

sample is passed through a dryer during 

this verification test, you must verify 

that the water content of the humidified 

test gas downstream of the vessel meets 

the requirement in paragraph (d)(2) of 

this section based on either direct 

measurement of the water content (e.g., 

dewpoint and pressure) or an estimate 

based on the vessel pressure and 

temperature. Use good engineering 

judgment to estimate the water content. 

For example, you may use previous 

direct measurements of water content to 

verify the vessel’s level of saturation. 

(5) If a sample dryer is not used in this 

verification test, use good engineering 

judgment to prevent condensation in the 

transfer lines, fittings, or valves from the 

point where xH2O is measured to the 

analyzer. We recommend that you 

design your system so that the wall 

temperatures in the transfer lines, 

fittings, and valves from the point where 

xH2O is measured to the analyzer are at 

least 5 °C above the local sample gas 

dewpoint. 

(6) Allow time for the analyzer 

response to stabilize. Stabilization time 

may include time to purge the transfer 

line and to account for analyzer 

response. 

(7) While the analyzer measures the 

sample’s concentration, record its 

output for 30 seconds. Calculate the 

arithmetic mean of this data. 

(8) The analyzer meets the 

interference verification if the result of 

paragraph (d)(7) of this section meets 

the tolerance in 40 CFR 1065.275. 

(9) You may also run interference 

procedures separately for individual 

interference gases. If the interference gas 

levels used are higher than the 

maximum levels expected during 

testing, you may scale down each 

observed interference value by 

multiplying the observed interference 

by the ratio of the maximum expected 

concentration value to the actual value 

used during this procedure. You may 

run separate interference concentrations 

of H2O (down to 0.025 mol/mol H2O 

content) that are lower than the 

maximum levels expected during 

testing, but you must scale up the 

observed H2O interference by 

multiplying the observed interference 

by the ratio of the maximum expected 

H2O concentration value to the actual 

value used during this procedure. The 

sum of the scaled interference values 

must meet the tolerance specified in 40 

CFR 1065.275. 

Subpart S—[Amended] 

10. A new § 86.1801–12 is added to 

read as follows: 

§ 86.1801–12 Applicability. 

(a) Applicability. Except as otherwise 

indicated, the provisions of this subpart 

apply to new light-duty vehicles, lightduty trucks, medium-duty passenger 

vehicles, and Otto-cycle complete 

heavy-duty vehicles, including multifueled, alternative fueled, hybrid 

electric, plug-in hybrid electric, and 

electric vehicles. These provisions also 

apply to new incomplete light-duty 

trucks below 8,500 Gross Vehicle 

Weight Rating. In cases where a 

provision applies only to a certain 

vehicle group based on its model year, 

vehicle class, motor fuel, engine type, or 

other distinguishing characteristics, the 

limited applicability is cited in the 

appropriate section of this subpart. 

(b) Aftermarket conversions. The 

provisions of this subpart apply to 

aftermarket conversion systems, 

aftermarket conversion installers, and 

aftermarket conversion certifiers, as 

those terms are defined in 40 CFR 

85.502, of all model year light-duty 

vehicles, light-duty trucks, mediumduty passenger vehicles, and complete 

Otto-cycle heavy-duty vehicles. 

(c) Optional applicability. 

(1) [Reserved] 

(2) A manufacturer may request to 

certify any incomplete Otto-cycle heavyduty vehicle of 14,000 pounds Gross 

Vehicle Weight Rating or less in 

accordance with the provisions for 

complete heavy-duty vehicles. Heavyduty engine or heavy-duty vehicle 

provisions of subpart A of this part do 

not apply to such a vehicle. 

(3) [Reserved] 

(4) Upon preapproval by the 

Administrator, a manufacturer may 

optionally certify an aftermarket 

conversion of a complete heavy-duty 

vehicle greater than 10,000 pounds 

Gross Vehicle Weight Rating and of 

14,000 pounds Gross Vehicle Weight 

Rating or less under the heavy-duty 

engine or heavy-duty vehicle provisions 

of subpart A of this part. Such 

preapproval will be granted only upon 

demonstration that chassis-based 

certification would be infeasible or 

unreasonable for the manufacturer to 

perform. 

(5) A manufacturer may optionally 

certify an aftermarket conversion of a 

complete heavy-duty vehicle greater 

than 10,000 pounds Gross Vehicle 

Weight Rating and of 14,000 pounds 

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Gross Vehicle Weight Rating or less 

under the heavy-duty engine or heavyduty vehicle provisions of subpart A of 

this part without advance approval from 

the Administrator if the vehicle was 

originally certified to the heavy-duty 

engine or heavy-duty vehicle provisions 

of subpart A of this part. 

(d) Small volume manufacturers. 

Special certification procedures are 

available for any manufacturer whose 

projected or actual combined sales in all 

States and territories of the United 

States of light-duty vehicles, light-duty 

trucks, heavy-duty vehicles, and heavyduty engines in its product line 

(including all vehicles and engines 

imported under the provisions of 40 

CFR 85.1505 and 85.1509) are fewer 

than 15,000 units for the model year in 

which the manufacturer seeks 

certification. The small volume 

manufacturer’s light-duty vehicle and 

light-duty truck certification procedures 

and described in § 86.1838–01. 

(e)–(g) [Reserved] 

(h) Applicability of provisions of this 

subpart to light-duty vehicles, light-duty 

trucks, medium-duty passenger 

vehicles, and heavy-duty vehicles. 

Numerous sections in this subpart 

provide requirements or procedures 

applicable to a ‘‘vehicle’’ or ‘‘vehicles.’’ 

Unless otherwise specified or otherwise 

determined by the Administrator, the 

term ‘‘vehicle’’ or ‘‘vehicles’’ in those 

provisions apply equally to light-duty 

vehicles (LDVs), light-duty trucks 

(LDTs), medium-duty passenger 

vehicles (MDPVs), and heavy-duty 

vehicles (HDVs), as those terms are 

defined in § 86.1803–01. 

(i) Applicability of provisions of this 

subpart to exhaust CO2 emissions. 

Numerous sections in this subpart refer 

to requirements relating to ‘‘exhaust 

emissions.’’ Unless otherwise specified 

or otherwise determined by the 

Administrator, the term ‘‘exhaust 

emissions’’ refers at a minimum to 

emissions of all pollutants described by 

emission standards in this subpart, 

including carbon dioxide (CO2) starting 

with the 2012 model year. 

(j) Conditional exemption from 

greenhouse gas emission standards for 

small businesses. Businesses meeting 

the Small Business Administration size 

standard defining a small business as 

described in 13 CFR 121.201 are eligible 

for exemption from the greenhouse gas 

emission standards specified in 

§ 86.1818–12 and associated provisions. 

To be exempted from these provisions, 

businesses must submit a declaration to 

EPA containing a detailed written 

description of how the business 

qualifies as a small business under the 

provisions of 13 CFR 121.201. This 

declaration must be signed by a chief 

officer of the company, and must be 

made prior to each model year for 

which the small business status is 

requested. The declaration must be 

submitted to EPA at least 30 days prior 

to the introduction into commerce of 

any vehicles for each model year for 

which the small business status is 

requested, but not later than December 

of the calendar year prior to the model 

year for which exemption is requested. 

Exemption will be granted when EPA 

approves the small business declaration. 

The declaration of small business status 

must be sent to the Environmental 

Protection Agency at the following 

address: Director, Certification and 

Innovative Strategies Division, U.S. 

Environmental Protection Agency, 2000 

Traverwood Drive, Ann Arbor, 

Michigan 48105. 

(1) The following categories of 

businesses (with their associated NAICS 

codes) may apply for exemption based 

on the Small Business Administration 

size standards in 13 CFR 121.201. 

(i) Vehicle manufacturers (NAICS 

code 336111). 

(ii) Independent commercial 

importers (NAICS codes 811111, 

811112, 811198, 423110, 424990, and 

441120). 

(iii) Alternate fuel vehicle converters 

(NAICS codes 335312, 336312, 336322, 

336399, 454312, 485310, and 811198). 

(2) For purposes of determining the 

number of employees or annual sales 

revenue for small entities, the entity 

shall include the employees or annual 

sales revenue of any subsidiary 

companies, any parent company, 

subsidiaries of the parent company in 

which the parent has a controlling 

interest, and any joint ventures. 

(3) An entity may use the provisions 

of this paragraph (j) only if it has 

primary responsibility for designing and 

assembling, converting, or modifying 

the subject vehicles. 

(4) An entity may import vehicles 

under this paragraph (j) only if that 

entity has primary responsibility for 

designing and assembling, converting or 

modifying the subject vehicles. 

11. Section 86.1803–01 is amended as 

follows: 

a. By adding the definition for ‘‘Air 

conditioning idle test.’’ 

b. By adding the definition for ‘‘Air 

conditioning system.’’ 

c. By revising the definition for 

‘‘Banking.’’ 

d. By adding the definition for ‘‘Base 

level.’’ 

e. By adding the definition for ‘‘Base 

tire.’’ 

f. By adding the definition for ‘‘Base 

vehicle.’’ 

g. By revising the definition for ‘‘Basic 

engine.’’ 

h. By adding the definition for 

‘‘Battery electric vehicle.’’ 

i. By adding the definition for 

‘‘Carbon-related exhaust emissions.’’ 

j. By adding the definition for 

‘‘Combined CO2.’’ 

k. By adding the definition for 

‘‘Electric vehicle.’’ 

l. By revising the definition for 

‘‘Engine code.’’ 

m. By adding the definition for 

‘‘Ethanol fueled vehicle.’’ 

n. By revising the definition for 

‘‘Flexible fuel vehicle.’’ 

o. By adding the definition for 

‘‘Footprint.’’ 

p. By adding the definition for ‘‘Fuel 

cell.’’ 

q. By adding the definition for ‘‘Fuel 

cell electric vehicle.’’ 

r. By adding the definition for 

‘‘Highway fuel economy test 

procedure.’’ 

s. By adding the definition for 

‘‘Hybrid electric vehicle.’’ 

t. By adding the definition for 

‘‘Interior volume index.’’ 

u. By adding the definition for ‘‘Motor 

vehicle.’’ 

v. By adding the definition for ‘‘Multifuel vehicle.’’ 

w. By adding the definition for 

‘‘Petroleum equivalency factor.’’ 

x. By adding the definition for 

‘‘Petroleum-equivalent fuel economy.’’ 

y. By adding the definition for 

‘‘Petroleum powered accessory.’’ 

z. By adding the definition for ‘‘Plugin hybrid electric vehicle.’’ 

aa. By adding the definition for 

‘‘Production volume.’’ 

bb. By revising the definition for 

‘‘Round, rounded, or rounding.’’ 

cc. By adding the definition for 

‘‘Subconfiguration.’’ 

dd. By adding the definition for 

‘‘Track width.’’ 

ee. By revising the definition for 

‘‘Transmission class.’’ 

ff. By revising the definition for 

‘‘Transmission configuration.’’ 

gg. By adding the definition for 

‘‘Wheelbase.’’ 

§ 86.1803–01 Definitions. 

* * * * * 

Air Conditioning Idle Test means the 

test procedure specified in § 86.165–12. 

Air conditioning system means a 

unique combination of air conditioning 

and climate control components, 

including: compressor type (e.g., belt, 

gear, or electric-driven, or a 

combination of compressor drive 

mechanisms); compressor refrigerant 

capacity; the number and type of rigid 

pipe and flexible hose connections; the 

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number of high side service ports; the 

number of low side service ports; the 

number of switches, transducers, and 

expansion valves; the number of TXV 

refrigerant control devices; the number 

and type of heat exchangers, mufflers, 

receiver/dryers, and accumulators; and 

the type of flexible hose (e.g., rubber, 

standard barrier or veneer, ultra-low 

permeation). 

* * * * * 

Banking means one of the following: 

(1) The retention of NOX emission 

credits for complete heavy-duty vehicles 

by the manufacturer generating the 

emission credits, for use in future model 

year certification programs as permitted 

by regulation. 

(2) The retention of cold temperature 

non-methane hydrocarbon (NMHC) 

emission credits for light-duty vehicles, 

light-duty trucks, and medium-duty 

passenger vehicles by the manufacturer 

generating the emission credits, for use 

in future model year certification 

programs as permitted by regulation. 

(3) The retention of NOX emission 

credits for light-duty vehicles, light-duty 

trucks, and medium-duty passenger 

vehicles for use in future model year 

certification programs as permitted by 

regulation. 

(4) The retention of CO2 emission 

credits for light-duty vehicles, light-duty 

trucks, and medium-duty passenger 

vehicles for use in future model year 

certification programs as permitted by 

regulation. 

Base level has the meaning given in 

§ 600.002–08 of this chapter. 

Base tire has the meaning given in 

§ 600.002–08 of this chapter. 

Base vehicle has the meaning given in 

§ 600.002–08 of this chapter. 

Basic engine has the meaning given in 

§ 600.002–08 of this chapter. 

Battery electric vehicle means a motor 

vehicle propelled solely by an electric 

motor where energy for the motor is 

supplied by a battery. 

* * * * * 

Carbon-related exhaust emissions 

means the summation of the carboncontaining constituents of the exhaust 

emissions, with each constituent 

adjusted by a coefficient representing 

the carbon weight fraction of each 

constituent, as specified in § 600.113– 

08. 

* * * * * 

Combined CO2 means the CO2 value 

determined for a vehicle (or vehicles) by 

averaging the city and highway fuel 

economy values, weighted 0.55 and 0.45 

respectively. 

* * * * * 

Electric vehicle means a motor vehicle 

that is powered solely by an electric 

motor drawing current from a 

rechargeable energy storage system, 

such as from storage batteries or other 

portable electrical energy storage 

devices, including hydrogen fuel cells, 

provided that: 

(1) Recharge energy must be drawn 

from a source off the vehicle, such as 

residential electric service; and 

(2) The vehicle must be certified to 

the emission standards of Bin #1 of 

Table S04–1 in § 86.1811–09(c)(6). 

* * * * * 

Engine code means a unique 

combination within a test group of 

displacement, fuel injection (or 

carburetor) calibration, choke 

calibration, distributor calibration, 

auxiliary emission control devices, and 

other engine and emission control 

system components specified by the 

Administrator. For electric vehicles, 

engine code means a unique 

combination of manufacturer, electric 

traction motor, motor configuration, 

motor controller, and energy storage 

device. 

* * * * * 

Ethanol-fueled vehicle means any 

motor vehicle or motor vehicle engine 

that is engineered and designed to be 

operated using ethanol fuel (i.e., a fuel 

that contains at least 50 percent ethanol 

(C2H5OH) by volume) as fuel. 

* * * * * 

Flexible fuel vehicle means any motor 

vehicle engineered and designed to be 

operated on a petroleum fuel, a 

methanol or ethanol fuel, or any mixture 

of the two. Methanol-fueled and 

ethanol-fueled vehicles that are only 

marginally functional when using 

gasoline (e.g., the engine has a drop in 

rated horsepower of more than 80 

percent) are not flexible fuel vehicles. 

Footprint is the product of track width 

(measured in inches, calculated as the 

average of front and rear track widths, 

and rounded to the nearest tenth of an 

inch) and wheelbase (measured in 

inches and rounded to the nearest tenth 

of an inch), divided by 144 and then 

rounded to the nearest tenth of a square 

foot. 

Fuel cell means an electrochemical 

cell that produces electricity via the 

reaction of a consumable fuel on the 

anode with an oxidant on the cathode 

in the presence of an electrolyte. 

Fuel cell electric vehicle means a 

motor vehicle propelled solely by an 

electric motor where energy for the 

motor is supplied by a fuel cell. 

* * * * * 

Highway Fuel Economy Test 

Procedure (HFET) has the meaning 

given in § 600.002–08 of this chapter. 

* * * * * 

Hybrid electric vehicle (HEV) means a 

motor vehicle which draws propulsion 

energy from onboard sources of stored 

energy that are both an internal 

combustion engine or heat engine using 

consumable fuel, and a rechargeable 

energy storage system such as a battery, 

capacitor, hydraulic accumulator, or 

flywheel. 

* * * * * 

Interior volume index has the 

meaning given in § 600.315–08 of this 

chapter. 

* * * * * 

Motor vehicle has the meaning given 

in 40 CFR 85.1703. 

* * * * * 

Multi-fuel vehicle means any motor 

vehicle capable of operating on two or 

more different fuel types, either 

separately or simultaneously. 

* * * * * 

Petroleum equivalency factor means 

the value specified in 10 CFR 474.3(b), 

which incorporates the parameters 

listed in 49 U.S.C. 32904(a)(2)(B) and is 

used to calculate petroleum-equivalent 

fuel economy. 

Petroleum-equivalent fuel economy 

means the value, expressed in miles per 

gallon, that is calculated for an electric 

vehicle in accordance with 10 CFR 

474.3(a), and reported to the 

Administrator of the Environmental 

Protection Agency for use in 

determining the vehicle manufacturer’s 

corporate average fuel economy. 

* * * * * 

Petroleum-powered accessory means a 

vehicle accessory (e.g., a cabin heater, 

defroster, and/or air conditioner) that: 

(1) Uses gasoline or diesel fuel as its 

primary energy source; and 

(2) Meets the requirements for fuel, 

operation, and emissions in 40 CFR part 

88.104–94(g). 

Plug-in hybrid electric vehicle (PHEV) 

means a hybrid electric vehicle that: 

(1) Has the capability to charge the 

battery from an off-vehicle electric 

source, such that the off-vehicle source 

cannot be connected to the vehicle 

while the vehicle is in motion, and 

(2) Has an equivalent all-electric range 

of no less than 10 miles. 

* * * * * 

Production volume has the meaning 

given in § 600.002–08 of this chapter. 

* * * * * 

Round, rounded or rounding means, 

unless otherwise specified, that 

numbers will be rounded according to 

ASTM–E29–93a, which is incorporated 

by reference in this part pursuant to 

§ 86.1. 

* * * * * 

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Subconfiguration has the meaning 

given in § 600.002–08 of this chapter. 

* * * * * 

Track width is the lateral distance 

between the centerlines of the base tires 

at ground, including the camber angle. 

* * * * * 

Transmission class has the meaning 

given in § 600.002–08 of this chapter. 

Transmission configuration has the 

meaning given in § 600.002–08 of this 

chapter. 

* * * * * 

Wheelbase is the longitudinal 

distance between front and rear wheel 

centerlines. 

* * * * * 

12. A new section 86.1805–12 is 

added to read as follows: 

§ 86.1805–12 Useful life. 

(a) Except as permitted under 

paragraph (b) of this section or required 

under paragraphs (c) and (d) of this 

section, the full useful life for all LDVs 

and LLDTs is a period of use of 10 years 

or 120,000 miles, whichever occurs first. 

The full useful life for all HLDTs, 

MDPVs, and complete heavy-duty 

vehicles is a period of 11 years or 

120,000 miles, whichever occurs first. 

These full useful life values apply to all 

exhaust, evaporative and refueling 

emission requirements except for 

standards which are specified to only be 

applicable at the time of certification. 

These full useful life requirements also 

apply to all air conditioning leakage 

credits, air conditioning efficiency 

credits, and other credit programs used 

by the manufacturer to comply with 

fleet average CO2 emission standards. 

(b) Manufacturers may elect to 

optionally certify a test group to the Tier 

2 exhaust emission standards for 

150,000 miles to gain additional NOX

credits, as permitted in § 86.1860–04(g), 

or to opt out of intermediate life 

standards as permitted in § 86.1811– 

04(c). In such cases, useful life is a 

period of use of 15 years or 150,000 

miles, whichever occurs first, for all 

exhaust, evaporative and refueling 

emission requirements except for cold 

CO standards and standards which are 

applicable only at the time of 

certification. 

(c) Where intermediate useful life 

exhaust emission standards are 

applicable, such standards are 

applicable for five years or 50,000 miles, 

whichever occurs first. 

(d) Where cold CO standards are 

applicable, the useful life requirement 

for compliance with the cold CO 

standard only, is 5 years or 50,000 

miles, whichever occurs first. 

13. Section 86.1806–05 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 86.1806–05 On-board diagnostics for 

vehicles less than or equal to 14,000 

pounds GVWR. 

(a) * * * 

(1) Except as provided by paragraph 

(a)(2) of this section, all light-duty 

vehicles, light-duty trucks and complete 

heavy-duty vehicles weighing 14,000 

pounds GVWR or less (including 

MDPVs) must be equipped with an 

onboard diagnostic (OBD) system 

capable of monitoring all emissionrelated powertrain systems or 

components during the applicable 

useful life of the vehicle. All systems 

and components required to be 

monitored by these regulations must be 

evaluated periodically, but no less 

frequently than once per applicable 

certification test cycle as defined in 

paragraphs (a) and (d) of Appendix I of 

this part, or similar trip as approved by 

the Administrator. Emissions of CO2 are 

not required to be monitored by the 

OBD system. 

* * * * * 

14. Section 86.1809–10 is amended by 

revising paragraphs (d)(1) and (e) to read 

as follows: 

§ 86.1809–10 Prohibition of defeat devices. 

* * * * * 

(d) * * * 

(1) The manufacturer must show to 

the satisfaction of the Administrator that 

the vehicle design does not incorporate 

strategies that unnecessarily reduce 

emission control effectiveness exhibited 

during the Federal Test Procedure or 

Supplemental Federal Test Procedure 

(FTP or SFTP), or, for 2012 and later 

model years, the Highway Fuel 

Economy Test Procedure or the Air 

Conditioning Idle Test, when the 

vehicle is operated under conditions 

that may reasonably be expected to be 

encountered in normal operation and 

use. 

* * * * * 

(e) For each test group the 

manufacturer must submit, with the Part 

II certification application, an 

engineering evaluation demonstrating to 

the satisfaction of the Administrator that 

a discontinuity in emissions of nonmethane organic gases, carbon 

monoxide, carbon dioxide, oxides of 

nitrogen and formaldehyde measured on 

the Federal Test Procedure (subpart B of 

this part) does not occur in the 

temperature range of 20 to 86 °F. For 

diesel vehicles, the engineering 

evaluation must also include particulate 

emissions. 

15. Section 86.1810–09 is amended by 

revising paragraph (f) to read as follows: 

§ 86.1810–09 General standards; increase 

in emissions; unsafe condition; waivers. 

* * * * * 

(f) Altitude requirements. (1) All 

emission standards apply at low altitude 

conditions and at high altitude 

conditions, except for the following 

standards, which apply only at low 

altitude conditions: 

(i) The supplemental exhaust 

emission standards as described in 

§ 86.1811–04(f); 

(ii) The cold temperature NMHC 

emission standards as described in 

§ 86.1811–10(g); 

(iii) The evaporative emission 

standards as described in § 86.1811– 

09(e). 

(2) For vehicles that comply with the 

cold temperature NMHC standards 

described in § 86.1811–10(g) and the 

CO2, N2O, and CH4 exhaust emission 

standards described in § 86.1818–12, 

manufacturers must submit an 

engineering evaluation indicating that 

common calibration approaches are 

utilized at high altitudes. Any deviation 

from low altitude emission control 

practices must be included in the 

auxiliary emission control device 

(AECD) descriptions submitted at 

certification. Any AECD specific to high 

altitude must require engineering 

emission data for EPA evaluation to 

quantify any emission impact and 

validity of the AECD. 

* * * * * 

16. A new § 86.1818–12 is added to 

read as follows: 

§ 86.1818–12 Greenhouse gas emission 

standards for light-duty vehicles, light-duty 

trucks, and medium-duty passenger 

vehicles. 

(a) Applicability. This section 

contains regulations implementing 

greenhouse gas emission standards for 

CO2, N2O, and CH4 applicable to all 

LDVs, LDTs and MDPVs. This section 

applies to 2012 and later model year 

LDVs, LDTs and MDPVs, including 

multi-fuel vehicles, vehicles fueled with 

alternative fuels, hybrid electric 

vehicles, plug-in hybrid electric 

vehicles, electric vehicles, and fuel cell 

electric vehicles. Unless otherwise 

specified, multi-fuel vehicles must 

comply with all requirements 

established for each consumed fuel. The 

provisions of this section also apply to 

aftermarket conversion systems, 

aftermarket conversion installers, and 

aftermarket conversion certifiers, as 

those terms are defined in 40 CFR 

85.502, of all model year light-duty 

vehicles, light-duty trucks, and 

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medium-duty passenger vehicles. 

Manufacturers meeting the requirements 

of § 86.1801–12(j) are exempted from 

the requirements of this section. 

(b) Definitions. For the purposes of 

this section, the following definitions 

shall apply: 

(1) Passenger automobile means a 

motor vehicle that is a passenger 

automobile as that term is defined in 49 

CFR 523.4. 

(2) Light truck means a motor vehicle 

that is a non-passenger automobile as 

that term is defined by the Department 

of Transportation in 49 CFR 523.5. 

(c) Fleet average CO2 standards for 

passenger automobiles and light trucks. 

(1) For a given individual model year’s 

production of vehicles, manufacturers 

must comply with a fleet average CO2

standard calculated according to the 

provisions of this paragraph (c). 

Manufacturers must calculate separate 

fleet average CO2 standards for their 

passenger automobile and the light 

truck fleets, as those terms are defined 

in this section. Each manufacturer’s 

fleet average CO2 standards determined 

in this paragraph (c) shall be expressed 

in whole grams per mile, in the model 

year specified as applicable. 

Manufacturers eligible for and choosing 

to participate in the optional interim 

fleet average CO2 standards for 

qualifying manufacturers specified in 

paragraph (e) of this section shall not 

include vehicles subject to the optional 

interim fleet average CO2 standards in 

the calculations of their primary 

passenger automobile or light truck 

standards determined in this paragraph 

(c). Manufacturers shall demonstrate 

compliance with the applicable 

standards according to the provisions of 

§ 86.1865–12. 

(2) Passenger automobiles. 

(i) Calculation of CO2 target values for 

passenger automobiles. A CO2 target 

value shall be determined for each 

passenger automobile as follows: 

(A) For passenger automobiles with a 

footprint of less than or equal to 41 

square feet, the gram/mile CO2 target 

value shall be selected for the 

appropriate model year from the 

following table: 

Model year CO2 target value 

(grams/mile) 

2012 ................................ 242 

2013 ................................ 234 

2014 ................................ 227 

2015 ................................ 215 

2016 and later ................ 204 

(B) For passenger automobiles with a 

footprint of greater than 56 square feet, 

the gram/mile CO2 target value shall be 

selected for the appropriate model year 

from the following table: 

Model year CO2 target value 

(grams/mile) 

2012 ................................ 313 

2013 ................................ 305 

2014 ................................ 297 

2015 ................................ 286 

2016 and later ................ 275 

(C) For passenger automobiles with a 

footprint that is greater than 41 square 

feet and less than or equal to 56 square 

feet, the gram/mile CO2 target value 

shall be calculated using the following 

equation: 

TargetCO2 = [4.72 × f] + b 

Where: 

f is the vehicle footprint, as defined in 

§ 86.1803; and 

b is selected from the following table for the 

appropriate model year: 

Model year b 

2012 ................................ 48.8 

2013 ................................ 40.8 

2014 ................................ 33.2 

2015 ................................ 22.0 

2016 and later ................ 10.9 

(ii) Calculation of the fleet average 

CO2 standard for passenger 

automobiles. In each model year 

manufacturers must comply with the 

CO2 exhaust emission standard for their 

passenger automobile fleet, calculated 

for that model year as follows: 

(A) A CO2 target value shall be 

determined according to paragraph 

(c)(2)(i) of this section for each unique 

combination of model type and 

footprint value. 

(B) Each CO2 target value, determined 

for each unique combination of model 

type and footprint value, shall be 

multiplied by the total production of 

that model type/footprint combination 

for the appropriate model year. 

(C) The resulting products shall be 

summed, and that sum shall be divided 

by the total production of passenger 

automobiles in that model year. The 

result shall be rounded to the nearest 

whole gram per mile. This result shall 

be the applicable fleet average CO2

standard for the manufacturer’s 

passenger automobile fleet. 

(3) Light trucks. 

(i) Calculation of CO2 target values for 

light trucks. A CO2 target value shall be 

determined for each light truck as 

follows: 

(A) For light trucks with a footprint of 

less than or equal to 41 square feet, the 

gram/mile CO2 target value shall be 

selected for the appropriate model year 

from the following table: 

Model year CO2 target value 

(grams/mile) 

2012 ................................ 298 

2013 ................................ 287 

2014 ................................ 276 

2015 ................................ 261 

2016 and later ................ 246 

(B) For light trucks with a footprint of 

greater than 66 square feet, the gram/ 

mile CO2 target value shall be selected 

for the appropriate model year from the 

following table: 

Model year CO2 target value 

(grams/mile) 

2012 ................................ 399 

2013 ................................ 388 

2014 ................................ 377 

2015 ................................ 362 

2016 and later ................ 347 

(C) For light trucks with a footprint 

that is greater than 41 square feet and 

less than or equal to 66 square feet, the 

gram/mile CO2 target value shall be 

calculated using the following equation: 

CO2TargetValue = (4.04 × f) + b 

Where: 

f is the footprint, as defined in § 86.1803; and 

b is selected from the following table for the 

appropriate model year: 

Model year b 

2012 ................................ 132.6 

2013 ................................ 121.6 

2014 ................................ 110.3 

2015 ................................ 95.2 

2016 and later ................ 80.4 

(ii) Calculation of fleet average CO2

standards for light trucks. In each model 

year manufacturers must comply with 

the CO2 exhaust emission standard for 

their light truck fleet, calculated for that 

model year as follows: 

(A) A CO2 target value shall be 

determined according to paragraph 

(c)(2)(i) of this section for each unique 

combination of model type and 

footprint value. 

(B) Each CO2 target value, which 

represents a unique combination of 

model type and footprint value, shall be 

multiplied by the total production of 

that model type/footprint combination 

for the appropriate model year. 

(C) The resulting products shall be 

summed, and that sum shall be divided 

by the total production of light trucks in 

that model year. The result shall be 

rounded to the nearest whole gram per 

mile. This result shall be the applicable 

fleet average CO2 standard for the 

manufacturer’s light truck fleet. 

(d) In-use CO2 exhaust emission 

standards. The in-use exhaust CO2

emission standard for each model type 

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shall be the combined city/highway 

carbon-related exhaust emission value 

calculated according to the provisions of 

40 CFR 600.208–08 (except that total 

model year production data shall be 

used instead of sales projections) 

multiplied by 1.1 and rounded to the 

nearest whole gram per mile. These 

standards apply to in-use testing 

performed by the manufacturer 

pursuant to regulations at § 86.1845–04 

and 86.1846–01 and to in-use testing 

performed by EPA. For any model type 

that is not covered by vehicle testing 

conducted according to 40 CFR 

600.208–08 the applicable in-use 

standard shall be the CO2-equivalent 

value submitted at certification 

according to the provisions of § 86.1841 

multiplied by 1.1 and rounded to the 

nearest whole gram per mile. 

(e) Optional interim fleet average CO2

standards for qualifying manufacturers. 

(1) The interim fleet average CO2

standards in this paragraph (e) are 

optionally applicable to each qualifying 

manufacturer as follows: 

(i) A qualifying manufacturer is a 

manufacturer with sales of 2009 model 

year combined passenger automobiles 

and light trucks in the United States of 

less than 400,000 vehicles, except that 

manufacturers with no U.S. sales in the 

2009 model year do not qualify for the 

optional interim standards. 

(ii) For the purposes of making the 

determination in paragraph (e)(1)(i) of 

this section, ‘‘manufacturer’’ shall mean 

that term as defined at 49 CFR 531.4 and 

as that definition was applied to the 

2009 model year for the purpose of 

determining compliance with the 2009 

corporate average fuel economy 

standards at 49 CFR parts 531 and 533. 

(iii) Only 2012 through 2015 model 

year passenger automobiles and light 

trucks are eligible for these standards. 

All model year 2016 and later passenger 

automobiles and light trucks are subject 

to the fleet average standards described 

in paragraph (c) of this section. 

(iv) A qualifying manufacturer may 

select any combination of 2012 through 

2015 model year passenger automobiles 

and/or light trucks to comply with these 

optional standards up to a cumulative 

total of 100,000 vehicles. Vehicles 

selected to comply with these standards 

shall not be included in the calculations 

of the manufacturer’s fleet average 

standards under paragraph (c) of this 

section. 

(v) A qualifying manufacturer may not 

use these optional interim fleet average 

CO2 standards until they have used all 

available banked CO2 credits and/or CO2

credits available for transfer. A 

qualifying manufacturer with a net 

positive credit balance in any model 

year after considering all available 

credits generated, carried forward from 

a prior model year, transferred from 

other averaging sets, or obtained from 

other manufacturers, may not use these 

optional interim fleet average CO2

standards in such model year. 

(2) To calculate an optional interim 

fleet average CO2 standard, qualifying 

manufacturers shall determine the fleet 

average standard separately for the 

passenger automobiles and light trucks 

selected by the manufacturer to be 

subject to the interim fleet average CO2

standard, subject to the limitations 

expressed in paragraphs (e)(1)(iii) and 

(iv) of this section. 

(i) The interim fleet average CO2

standard applicable to qualified 

passenger automobiles shall be the 

standard calculated using the provisions 

of paragraph (c)(2)(ii) of this section for 

the appropriate model year multiplied 

by 1.25 and rounded to the nearest 

whole gram per mile. For the purposes 

of applying paragraph (c)(2)(ii) of this 

section to determine the standard, the 

passenger automobile fleet shall be 

limited to those passenger automobiles 

subject to the interim fleet average CO2

standard. 

(ii) The interim fleet average CO2

standard applicable to qualified light 

trucks shall be the standard calculated 

using the provisions of paragraph 

(c)(3)(ii) of this section for the 

appropriate model year multiplied by 

1.25 and rounded to the nearest whole 

gram per mile. For the purposes of 

applying paragraph (c)(3)(ii) of this 

section to determine the standard, the 

light truck fleet shall be limited to those 

light trucks subject to the interim fleet 

average CO2 standard. 

(3) Manufacturers choosing to 

optionally apply these standards are 

subject to the restrictions on credit 

banking and trading specified in 

§ 86.1865–12. 

(f) N2O standards for light-duty 

vehicles, light-duty trucks, and mediumduty passenger vehicles. Exhaust 

emissions of nitrous oxide (N2O) shall 

not exceed 0.010 grams per mile at full 

useful life, as measured according to the 

Federal Test Procedure (FTP) described 

in subpart B of this part. 

(g) Methane standards for light-duty 

vehicles, light-duty trucks, and mediumduty passenger vehicles. Exhaust 

emissions of methane (CH4) shall not 

exceed 0.030 grams per mile at full 

useful life, as measured according to the 

Federal Test Procedure (FTP) described 

in subpart B of this part. 

17. Section 86.1823–08 is amended by 

adding paragraph (m) to read as follows: 

§ 86.1823–08 Durability demonstration 

procedures for exhaust emissions. 

* * * * * 

(m) Durability demonstration 

procedures for vehicles subject to the 

greenhouse gas exhaust emission 

standards specified in 86.1818–12. 

(1) CO2. (i) Unless otherwise specified 

under paragraph (m)(1)(ii) of this 

section, manufacturers may use a 

multiplicative CO2 deterioration factor 

of one or an additive deterioration factor 

of zero. 

(ii) Based on an analysis of industrywide data, EPA may periodically 

establish and/or update the 

deterioration factor for CO2 emissions 

including air conditioning and other 

credit related emissions. Deterioration 

factors established and/or updated 

under this paragraph (m)(1)(ii) will 

provide adequate lead time for 

manufacturers to plan for the change. 

(iii) Alternatively, manufacturers may 

use the whole-vehicle mileage 

accumulation procedures in § 86.1823– 

08 paragraphs (c) or (d)(1) to determine 

CO2 deterioration factors. In this case, 

each FTP test performed on the 

durability data vehicle selected under 

§ 86.1822–01 of this part must also be 

accompanied by an HFET test, and 

combined FTP/HFET CO2 results 

determined by averaging the city (FTP) 

and highway (HFET) CO2 values, 

weighted 0.55 and 0.45 respectively. 

The deterioration factor will be 

determined for this combined CO2

value. Calculated multiplicative 

deterioration factors that are less than 

one shall be set to equal one, and 

calculated additive deterioration factors 

that are less than zero shall be set to 

zero. 

(iv) If, in the good engineering 

judgment of the manufacturer, the 

deterioration factors determined 

according to paragraphs (m)(1)(i), 

(m)(1)(ii), or (m)(1)(iii) of this section do 

not adequately account for the expected 

CO2 emission deterioration over the 

vehicle’s useful life, the manufacturer 

may petition EPA to request a more 

appropriate deterioration factor. 

(2) N2O and CH4. Deterioration factors 

for N2O and CH4 shall be determined 

according to the provisions of 

§ 86.1823–08. 

(3) Air Conditioning leakage and 

efficiency or other emission credit 

requirements to comply with exhaust 

CO2 standards. Manufactures will attest 

to the durability of components and 

systems used to meet the CO2 standards. 

Manufacturers may submit engineering 

data to provide durability 

demonstration. 

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18. Section 86.1827–01 is amended by 

revising paragraph (a)(5) and by adding 

paragraph (f) to read as follows: 

§ 86.1827–01 Test group determination. 

* * * * * 

(a) * * * 

(5) Subject to the same emission 

standards (except for CO2), or FEL in the 

case of cold temperature NMHC 

standards, except that a manufacturer 

may request to group vehicles into the 

same test group as vehicles subject to 

more stringent standards, so long as all 

the vehicles within the test group are 

certified to the most stringent standards 

applicable to any vehicle within that 

test group. Light-duty trucks and lightduty vehicles may be included in the 

same test group if all vehicles in the test 

group are subject to the same emission 

standards, with the exception of the CO2

standard, the light-duty truck idle CO 

standard, and/or the total HC standard. 

* * * * * 

(f) Unless otherwise approved by the 

Administrator, a manufacturer of 

electric vehicles must create separate 

test groups based on the type of battery 

technology, the capacity and voltage of 

the battery, and the type and size of the 

electric motor. 

19. Section 86.1829–01 is amended by 

revising paragraph (b)(1)(i) and by 

adding paragraph (b)(1)(iii)(G) to read as 

follows: 

§ 86.1829–01 Durability and emission 

testing requirements; waivers. 

* * * * * 

(b) * * * 

(1) * * * 

(i) Testing at low altitude. One EDV 

shall be tested in each test group for 

exhaust emissions using the FTP and 

SFTP test procedures of subpart B of 

this part and the HFET test procedure of 

subpart B of part 600 of this chapter. 

The configuration of the EDV will be 

determined under the provisions of 

§ 86.1828–01 of this subpart. 

* * * * * 

(iii) * * * 

(G) For the 2012 model year only, in 

lieu of testing a vehicle for N2O 

emissions, a manufacturer may provide 

a statement in its application for 

certification that such vehicles comply 

with the applicable standards. Such a 

statement must be based on previous 

emission tests, development tests, or 

other appropriate information and good 

engineering judgment. 

* * * * * 

20. Section 86.1835–01 is amended as 

follows: 

a. By revising paragraph (a)(4). 

b. By revising paragraph (b)(1) 

introductory text. 

c. By adding paragraph (b)(1)(vi). 

d. By revising paragraph (b)(3). 

e. By revising paragraph (c)(1)(ii). 

§ 86.1835–01 Confirmatory certification 

testing. 

(a) * * * 

(4) Retesting for fuel economy reasons 

or for compliance with applicable 

exhaust CO2 emission standards may be 

conducted under the provisions of 40 

CFR 600.008–01. 

(b) * * * 

(1) If the Administrator determines 

not to conduct a confirmatory test under 

the provisions of paragraph (a) of this 

section, manufacturers of light-duty 

vehicles, light-duty trucks, and/or 

medium-duty passenger vehicles will 

conduct a confirmatory test at their 

facility after submitting the original test 

data to the Administrator whenever any 

of the conditions listed in paragraphs 

(b)(1)(i) through (vi) of this section exist, 

and complete heavy-duty vehicles 

manufacturers will conduct a 

confirmatory test at their facility after 

submitting the original test data to the 

Administrator whenever the conditions 

listed in paragraph (b)(1)(i) or (b)(1)(ii) 

of this section exist, as follows: 

* * * * * 

(vi) The exhaust CO2 emissions of the 

test as measured in accordance with the 

procedures in 40 CFR Part 600 are lower 

than expected based on procedures 

approved by the Administrator. 

* * * * * 

(3) For light-duty vehicles, light-duty 

trucks, and medium-duty passenger 

vehicles the manufacturer shall conduct 

a retest of the FTP or highway test if the 

difference between the fuel economy or 

carbon-related exhaust emissions of the 

confirmatory test and the original 

manufacturer’s test equals or exceeds 

three percent (or such lower percentage 

to be applied consistently to all 

manufacturer conducted confirmatory 

testing as requested by the manufacturer 

and approved by the Administrator). 

(i) For use in the fuel economy and 

CO2 fleet averaging program described 

in 40 CFR parts 86 and 600, the 

manufacturer may, in lieu of conducting 

a retest, accept as official the lower of 

the original and confirmatory test fuel 

economy results, and the higher of the 

original and confirmatory test CO2

results. 

(ii) The manufacturer shall conduct a 

second retest of the FTP or highway test 

if the fuel economy or CO2 emissions 

difference between the second 

confirmatory test and the original 

manufacturer test equals or exceeds 

three percent (or such lower percentage 

as requested by the manufacturer and 

approved by the Administrator) and the 

fuel economy or CO2 emissions 

difference between the second 

confirmatory test and the first 

confirmatory test equals or exceeds 

three percent (or such lower percentage 

as requested by the manufacturer and 

approved by the Administrator). In lieu 

of conducting a second retest, the 

manufacturer may accept as official (for 

use in the fuel economy program and 

the CO2 fleet averaging program) the 

lowest fuel economy and highest CO2

emissions of the original test, the first 

confirmatory test, and the second 

confirmatory test fuel economy results. 

(c) * * * 

(1) * * * 

(ii) Official test results for fuel 

economy and exhaust CO2 emission 

purposes are determined in accordance 

with the provisions of 40 CFR 600.008– 

01. 

* * * * * 

21. Section 86.1841–01 is amended by 

adding paragraph (a)(3) and revising 

paragraph (b) to read as follows: 

§ 86.1841–01 Compliance with emission 

standards for the purpose of certification. 

(a) * * * 

(3) Compliance with CO2 exhaust 

emission standards shall be 

demonstrated at certification by the 

certification levels on the FTP and 

HFET tests for carbon-related exhaust 

emissions determined according to 

§ 600.113–08 of this chapter. 

* * * * * 

(b) To be considered in compliance 

with the standards for the purposes of 

certification, the certification levels for 

the test vehicle calculated in paragraph 

(a) of this section shall be less than or 

equal to the standards for all emission 

constituents to which the test group is 

subject, at both full and intermediate 

useful life as appropriate for that test 

group. 

* * * * * 

22. Section 86.1845–04 is amended as 

follows: 

a. By revising paragraph (a)(1). 

b. By revising paragraph (b)(5)(i). 

c. By revising paragraph (c)(5)(i). 

§ 86.1845–04 Manufacturer in-use 

verification testing requirements. 

(a) * * * 

(1) A manufacturer of LDVs, LDTs, 

MDPVs and/or complete HDVs must 

test, or cause to have tested, a specified 

number of LDVs, LDTs, MDPVs and 

complete HDVs. Such testing must be 

conducted in accordance with the 

provisions of this section. For purposes 

of this section, the term vehicle includes 

light-duty vehicles, light-duty trucks 

and medium-duty passenger vehicles. 

* * * * * 

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(b) * * * 

(5) * * * 

(i) Each test vehicle of a test group 

shall be tested in accordance with the 

Federal Test Procedure and the US06 

portion of the Supplemental Federal 

Test Procedure as described in subpart 

B of this part, when such test vehicle is 

tested for compliance with applicable 

exhaust emission standards under this 

subpart. Test vehicles subject to 

applicable exhaust CO2 emission 

standards under this subpart shall also 

be tested in accordance with the 

highway fuel economy test as described 

in subpart B of 40 CFR part 600. 

* * * * * 

(c) * * * 

(5) * * * 

(i) Each test vehicle shall be tested in 

accordance with the Federal Test 

Procedure and the US06 portion of the 

Supplemental Federal Test Procedure as 

described in subpart B of this part when 

such test vehicle is tested for 

compliance with applicable exhaust 

emission standards under this subpart. 

Test vehicles subject to applicable 

exhaust CO2 emission standards under 

this subpart shall also be tested in 

accordance with the highway fuel 

economy test as described in subpart B 

of 40 CFR part 600. The US06 portion 

of the SFTP is not required to be 

performed on vehicles certified in 

accordance with the National LEV 

provisions of subpart R of this part. One 

test vehicle from each test group shall 

receive a Federal Test Procedure at high 

altitude. The test vehicle tested at high 

altitude is not required to be one of the 

same test vehicles tested at low altitude. 

The test vehicle tested at high altitude 

is counted when determining the 

compliance with the requirements 

shown in Table S04–06 and Table S04– 

07 in paragraph (b)(3) of this section or 

the expanded sample size as provided 

for in this paragraph (c). 

* * * * * 

23. Section 86.1846–01 is amended by 

revising paragraphs (a)(1) and (b) 

introductory text to read as follows: 

§ 86.1846–01 Manufacturer in-use 

confirmatory testing requirements. 

(a) * * * 

(1) A manufacturer of LDVs, LDTs 

and/or MDPVs must test, or cause 

testing to be conducted, under this 

section when the emission levels shown 

by a test group sample from testing 

under §§ 86.1845–01 or 86.1845–04, as 

applicable, exceeds the criteria specified 

in paragraph (b) of this section. The 

testing required under this section 

applies separately to each test group and 

at each test point (low and high mileage) 

that meets the specified criteria. The 

testing requirements apply separately 

for each model year starting with model 

year 2001. These provisions do not 

apply to heavy-duty vehicles or heavyduty engines prior to the 2007 model 

year. These provisions do not apply to 

emissions of CO2, CH4, and N2O. 

* * * * * 

(b) Criteria for additional testing. A 

manufacturer shall test a test group or 

a subset of a test group as described in 

paragraph (j) of this section when the 

results from testing conducted under 

§§ 86.1845–01 and 86.1845–04, as 

applicable, show mean emissions for 

that test group of any pollutant(s) 

(except CO2, CH4, and N2O) to be equal 

to or greater than 1.30 times the 

applicable in-use standard and a failure 

rate, among the test group vehicles, for 

the corresponding pollutant(s) of fifty 

percent or greater. 

* * * * * 

24. Section 86.1848–10 is amended by 

adding paragraph (c)(9) to read as 

follows: 

§ 86.1848–10 Certification. 

* * * * * 

(c) * * * 

(9) For 2012 and later model year 

LDVs, LDTs, and MDPVs, all certificates 

of conformity issued are conditional 

upon compliance with all provisions of 

§§ 86.1818–12 and 86.1865–12 both 

during and after model year production. 

The manufacturer bears the burden of 

establishing to the satisfaction of the 

Administrator that the terms and 

conditions upon which the certificate(s) 

was (were) issued were satisfied. For 

recall and warranty purposes, vehicles 

not covered by a certificate of 

conformity will continue to be held to 

the standards stated or referenced in the 

certificate that otherwise would have 

applied to the vehicles. 

(i) Failure to meet the fleet average 

CO2 requirements will be considered a 

failure to satisfy the terms and 

conditions upon which the certificate(s) 

was (were) issued and the vehicles sold 

in violation of the fleet average CO2

standard will not be covered by the 

certificate(s). The vehicles sold in 

violation will be determined according 

to § 86.1865–12(k)(7). 

(ii) Failure to comply fully with the 

prohibition against selling credits that 

are not generated or that are not 

available, as specified in § 86.1865–12, 

will be considered a failure to satisfy the 

terms and conditions upon which the 

certificate(s) was (were) issued and the 

vehicles sold in violation of this 

prohibition will not be covered by the 

certificate(s). 

* * * * * 

25. A new § 86.1854–12 is added to 

read as follows: 

§ 86.1854–12 Prohibited acts. 

(a) The following acts and the causing 

thereof are prohibited: 

(1) In the case of a manufacturer, as 

defined by § 86.1803, of new motor 

vehicles or new motor vehicle engines 

for distribution in commerce, the sale, 

or the offering for sale, or the 

introduction, or delivery for 

introduction, into commerce, or (in the 

case of any person, except as provided 

by regulation of the Administrator), the 

importation into the United States of 

any new motor vehicle or new motor 

vehicle engine subject to this subpart, 

unless such vehicle or engine is covered 

by a certificate of conformity issued 

(and in effect) under regulations found 

in this subpart (except as provided in 

Section 203(b) of the Clean Air Act (42 

U.S.C. 7522(b)) or regulations 

promulgated thereunder). 

(2)(i) For any person to fail or refuse 

to permit access to or copying of records 

or to fail to make reports or provide 

information required under Section 208 

of the Clean Air Act (42 U.S.C. 7542) 

with regard to vehicles. 

(ii) For a person to fail or refuse to 

permit entry, testing, or inspection 

authorized under Section 206(c) (42 

U.S.C. 7525(c)) or Section 208 of the 

Clean Air Act (42 U.S.C. 7542) with 

regard to vehicles. 

(iii) For a person to fail or refuse to 

perform tests, or to have tests performed 

as required under Section 208 of the 

Clean Air Act (42 U.S.C. 7542) with 

regard to vehicles. 

(iv) For a person to fail to establish or 

maintain records as required under 

§§ 86.1844, 86.1862, 86.1864, and 

86.1865 with regard to vehicles. 

(v) For any manufacturer to fail to 

make information available as provided 

by regulation under Section 202(m)(5) of 

the Clean Air Act (42 U.S.C. 7521(m)(5)) 

with regard to vehicles. 

(3)(i) For any person to remove or 

render inoperative any device or 

element of design installed on or in a 

vehicle or engine in compliance with 

regulations under this subpart prior to 

its sale and delivery to the ultimate 

purchaser, or for any person knowingly 

to remove or render inoperative any 

such device or element of design after 

such sale and delivery to the ultimate 

purchaser. 

(ii) For any person to manufacture, 

sell or offer to sell, or install, any part 

or component intended for use with, or 

as part of, any vehicle or engine, where 

a principal effect of the part or 

component is to bypass, defeat, or 

render inoperative any device or 

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element of design installed on or in a 

vehicle or engine in compliance with 

regulations issued under this subpart, 

and where the person knows or should 

know that the part or component is 

being offered for sale or installed for this 

use or put to such use. 

(4) For any manufacturer of a vehicle 

or engine subject to standards 

prescribed under this subpart: 

(i) To sell, offer for sale, introduce or 

deliver into commerce, or lease any 

such vehicle or engine unless the 

manufacturer has complied with the 

requirements of Section 207 (a) and (b) 

of the Clean Air Act (42 U.S.C. 7541 (a), 

(b)) with respect to such vehicle or 

engine, and unless a label or tag is 

affixed to such vehicle or engine in 

accordance with Section 207(c)(3) of the 

Clean Air Act (42 U.S.C. 7541(c)(3)). 

(ii) To fail or refuse to comply with 

the requirements of Section 207 (c) or 

(e) of the Clean Air Act (42 U.S.C. 7541 

(c) or (e)). 

(iii) Except as provided in Section 

207(c)(3) of the Clean Air Act (42 U.S.C. 

7541(c)(3)), to provide directly or 

indirectly in any communication to the 

ultimate purchaser or any subsequent 

purchaser that the coverage of a 

warranty under the Clean Air Act is 

conditioned upon use of any part, 

component, or system manufactured by 

the manufacturer or a person acting for 

the manufacturer or under its control, or 

conditioned upon service performed by 

such persons. 

(iv) To fail or refuse to comply with 

the terms and conditions of the 

warranty under Section 207 (a) or (b) of 

the Clean Air Act (42 U.S.C. 7541 (a) or 

(b)). 

(b) For the purposes of enforcement of 

this subpart, the following apply: 

(1) No action with respect to any 

element of design referred to in 

paragraph (a)(3) of this section 

(including any adjustment or alteration 

of such element) shall be treated as a 

prohibited act under paragraph (a)(3) of 

this section if such action is in 

accordance with Section 215 of the 

Clean Air Act (42 U.S.C. 7549); 

(2) Nothing in paragraph (a)(3) of this 

section is to be construed to require the 

use of manufacturer parts in 

maintaining or repairing a vehicle or 

engine. For the purposes of the 

preceding sentence, the term 

‘‘manufacturer parts’’ means, with 

respect to a motor vehicle engine, parts 

produced or sold by the manufacturer of 

the motor vehicle or motor vehicle 

engine; 

(3) Actions for the purpose of repair 

or replacement of a device or element of 

design or any other item are not 

considered prohibited acts under 

paragraph (a)(3) of this section if the 

action is a necessary and temporary 

procedure, the device or element is 

replaced upon completion of the 

procedure, and the action results in the 

proper functioning of the device or 

element of design; 

(4) Actions for the purpose of a 

conversion of a motor vehicle or motor 

vehicle engine for use of a clean 

alternative fuel (as defined in title II of 

the Clean Air Act) are not considered 

prohibited acts under paragraph (a) of 

this section if: 

(i) The vehicle complies with the 

applicable standard when operating on 

the alternative fuel; and 

(ii) In the case of engines converted to 

dual fuel or flexible use, the device or 

element is replaced upon completion of 

the conversion procedure, and the 

action results in proper functioning of 

the device or element when the motor 

vehicle operates on conventional fuel. 

26. A new § 86.1865–12 is added to 

subpart S to read as follows: 

§ 86.1865–12 How to comply with the fleet 

average CO2 standards. 

(a) Applicability. (1) Unless otherwise 

exempted under the provisions of 

§ 86.1801–12(j), CO2 fleet average 

exhaust emission standards apply to: 

(i) 2012 and later model year 

passenger automobiles and light trucks. 

(ii) Aftermarket conversion systems as 

defined in 40 CFR 85.502. 

(iii) Vehicles imported by ICIs as 

defined in 40 CFR 85.1502. 

(2) The terms ‘‘passenger automobile’’ 

and ‘‘light truck’’ as used in this section 

have the meanings as defined in 

§ 86.1818–12. 

(b) Useful life requirements. Full 

useful life requirements for CO2

standards are defined in § 86.1818–12. 

There is not an intermediate useful life 

standard for CO2 standards. 

(c) Altitude. Altitude requirements for 

CO2 standards are provided in 

§ 86.1810–12(f). 

(d) Small volume manufacturer 

certification procedures. Certification 

procedures for small volume 

manufacturers are provided in 

§ 86.1838–01. Small businesses meeting 

certain criteria may be exempted from 

the fleet average CO2 standards under 

§ 86.1801–12(j). 

(e) CO2 fleet average exhaust emission 

standards. The fleet average standards 

referred to in this section are the 

corporate fleet average CO2 standards 

for passenger automobiles and light 

trucks set forth in 86.1818–12(c) and (e). 

The fleet average CO2 standards 

applicable in a given model year are 

calculated separately for passenger 

automobiles and light trucks for each 

manufacturer and each model year 

according to the provisions in 

§ 86.1818–12. Each manufacturer must 

comply with the applicable CO2 fleet 

average standard on a productionweighted average basis, for each 

separate averaging set, at the end of each 

model year, using the procedure 

described in paragraph (c) of this 

section. 

(f) In-use CO2 standards. In-use CO2

exhaust emission standards applicable 

to each model type are provided in 

§ 86.1818–12(d). 

(g) Durability procedures and method 

of determining deterioration factors 

(DFs). Deterioration factors for CO2

exhaust emission standards are 

provided in § 86.1823–08(m). 

(h) Vehicle test procedures. (1) The 

test procedures for demonstrating 

compliance with CO2 exhaust emission 

standards are contained in subpart B of 

this part and subpart B of part 600 of 

this chapter. 

(2) Testing of all passenger 

automobiles and light trucks to 

determine compliance with CO2 exhaust 

emission standards set forth in this 

section must be on a loaded vehicle 

weight (LVW) basis, as defined in 

§ 86.1803–01. 

(3) Testing for the purpose of 

providing certification data is required 

only at low altitude conditions. If 

hardware and software emission control 

strategies used during low altitude 

condition testing are not used similarly 

across all altitudes for in-use operation, 

the manufacturer must include a 

statement in the application for 

certification, in accordance with 

§§ 86.1844–01(d)(11) and 86.1810–12(f), 

stating what the different strategies are 

and why they are used. 

(i) Calculating the fleet average 

carbon-related exhaust emissions. (1) 

Manufacturers must compute separate 

production-weighted fleet average 

carbon-related exhaust emissions at the 

end of the model year for passenger 

automobiles and light trucks, using 

actual production, where production 

means vehicles produced and delivered 

for sale, and certifying model types to 

standards as defined in § 86.1818–12. 

The model type carbon-related exhaust 

emission results determined according 

to 40 CFR 600 subpart F become the 

certification standard for each model 

type. 

(2) Manufacturers must separately 

calculate production-weighted fleet 

average carbon-related exhaust 

emissions levels for the following 

averaging sets according to the 

provisions of part 600 subpart F of this 

chapter: 

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(i) Passenger automobiles subject to 

the fleet average CO2 standards 

specified in § 86.1818–12(c)(2); 

(ii) Light trucks subject to the fleet 

average CO2 standards specified in 

§ 86.1818–12(c)(3); 

(iii) Passenger automobiles subject to 

the optional interim fleet average CO2

standards specified in § 86.1818–12(e), 

if applicable; and 

(iv) Light trucks subject to the 

optional interim fleet average CO2

standards specified in § 86.1818–12(e), 

if applicable. 

(j) Certification compliance and 

enforcement requirements for CO2

exhaust emission standards. (1) 

Compliance and enforcement 

requirements are provided in § 86.1864– 

10 and § 86.1848–10(c)(8). 

(2) The certificate issued for each test 

group requires all model types within 

that test group to meet the emission 

standard to which each model type is 

certified. 

(3) Each manufacturer must comply 

with the applicable CO2 fleet average 

standard on a production-weighted 

average basis, at the end of each model 

year, using the procedure described in 

paragraph (i) of this section. 

(4) Manufacturers must compute 

separate CO2 fleet averages for passenger 

automobiles and light trucks. The 

production-weighted CO2 fleet averages 

must be compared with the applicable 

fleet average standard. 

(5) Each manufacturer must comply 

on an annual basis with the fleet average 

standards as follows: 

(i) Manufacturers must report in their 

annual reports to the Agency that they 

met the relevant corporate average 

standard by showing that their 

production-weighted average CO2

emissions levels of passenger 

automobiles and light trucks, as 

applicable, are at or below the 

applicable fleet average standard; or 

(ii) If the production-weighted average 

is above the applicable fleet average 

standard, manufacturers must obtain 

and apply sufficient CO2 credits as 

authorized under paragraph (k)(7) of 

this section. A manufacturer must show 

that they have offset any exceedence of 

the corporate average standard via the 

use of credits. Manufacturers must also 

include their credit balances or deficits 

in their annual report to the Agency. 

(iii) If a manufacturer fails to meet the 

corporate average CO2 standard for four 

consecutive years, the vehicles causing 

the corporate average exceedence will 

be considered not covered by the 

certificate of conformity (see paragraph 

(k)(7) of this section). A manufacturer 

will be subject to penalties on an 

individual-vehicle basis for sale of 

vehicles not covered by a certificate. 

(iv) EPA will review each 

manufacturer’s production to designate 

the vehicles that caused the exceedence 

of the corporate average standard. EPA 

will designate as nonconforming those 

vehicles in test groups with the highest 

certification emission values first, 

continuing until reaching a number of 

vehicles equal to the calculated number 

of noncomplying vehicles as determined 

in paragraph (k)(7) of this section. In a 

group where only a portion of vehicles 

would be deemed nonconforming, EPA 

will determine the actual 

nonconforming vehicles by counting 

backwards from the last vehicle 

produced in that test group. 

Manufacturers will be liable for 

penalties for each vehicle sold that is 

not covered by a certificate. 

(k) Requirements for the CO2

averaging, banking and trading (ABT) 

program. (1) A manufacturer whose CO2

fleet average emissions exceed the 

applicable standard must complete the 

calculation in paragraph (k)(4) of this 

section to determine the size of its CO2

deficit. A manufacturer whose CO2 fleet 

average emissions are less than the 

applicable standard must complete the 

calculation in paragraph (k)(4) of this 

section to generate CO2 credits. In either 

case, the number of credits or debits 

must be rounded to the nearest whole 

number. 

(2) There are no property rights 

associated with CO2 credits generated 

under this subpart. Credits are a limited 

authorization to emit the designated 

amount of emissions. Nothing in this 

part or any other provision of law 

should be construed to limit EPA’s 

authority to terminate or limit this 

authorization through a rulemaking. 

(3) Each manufacturer must comply 

with the reporting and recordkeeping 

requirements of paragraph (l) of this 

section for CO2 credits, including early 

credits. The averaging, banking and 

trading program is enforceable through 

the certificate of conformity that allows 

the manufacturer to introduce any 

regulated vehicles into commerce. 

(4) Credits are earned on the last day 

of the model year. Manufacturers must 

calculate, for a given model year, the 

number of credits or debits it has 

generated according to the following 

equation, rounded to the nearest 

megagram: 

CO2 Credits or Debits (Mg) = [(CO2

Standard—Manufacturer’s 

Production-Weighted Fleet Average 

CO2 Emissions) × (Total Number of 

Vehicles Produced) × (Vehicle 

Lifetime Miles)] ÷ 1,000,000 

Where: 

CO2 Standard = the applicable standard for 

the model year as determined by 

§ 86.1818–12; 

Manufacturer’s Production-Weighted Fleet 

Average CO2 Emissions = average 

calculated according to paragraph (i) of 

this section; 

Total Number of Vehicles Produced = The 

number of vehicles domestically 

produced plus those imported as defined 

in 40 CFR 600.511–80; and 

Vehicle Lifetime Miles is 190,971 for 

passenger automobiles and 221,199 for 

light trucks. 

(5) Total credits or debits generated in 

a model year, maintained and reported 

separately for passenger automobiles 

and light trucks, shall be the sum of the 

credits or debits calculated in paragraph 

(k)(4) of this section and any of the 

following credits, if applicable: 

(i) Air conditioning leakage credits 

earned according to the provisions of 

86.1866–12(b); 

(ii) Air conditioning efficiency credits 

earned according to the provisions of 

86.1866–12(c); 

(iii) Off-cycle technology credits 

earned according to the provisions of 

86.1866–12(d). 

(6) Unused CO2 credits shall retain 

their full value through the five 

subsequent model years after the model 

year in which they were generated. 

Credits available at the end of the fifth 

model year after the year in which they 

were generated shall expire. 

(7) Credits may be used as follows: 

(i) Credits generated and calculated 

according to the method in paragraph 

(k)(4) of this section may not be used to 

offset deficits other than those deficits 

accrued with respect to the standard in 

§ 86.1818–12. Credits may be banked 

and used in a future model year in 

which a manufacturer’s average CO2

level exceeds the applicable standard. 

Credits may be exchanged between the 

passenger automobile and light truck 

fleets of a given manufacturer. Credits 

may also be traded to another 

manufacturer according to the 

provisions in paragraph (k)(8) of this 

section. Before trading or carrying over 

credits to the next model year, a 

manufacturer must apply available 

credits to offset any deficit, where the 

deadline to offset that credit deficit has 

not yet passed. 

(ii) The use of credits shall not change 

Selective Enforcement Auditing or inuse testing failures from a failure to a 

non-failure. The enforcement of the 

averaging standard occurs through the 

vehicle’s certificate of conformity. A 

manufacturer’s certificate of conformity 

is conditioned upon compliance with 

the averaging provisions. The certificate 

will be void ab initio if a manufacturer 

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fails to meet the corporate average 

standard and does not obtain 

appropriate credits to cover its shortfalls 

in that model year or subsequent model 

years (see deficit carry-forward 

provisions in paragraph (k)(7) of this 

section). Manufacturers must track their 

certification levels and production 

unless they produce only vehicles 

certified to CO2 levels below the 

standard and do not plan to bank 

credits. 

(iii) Special provisions for 

manufacturers using the optional 

interim fleet average CO2 standards. (A) 

Credits generated by vehicles subject to 

the fleet average CO2 standards 

specified in § 86.1818–12(c) may only 

be used to offset a deficit generated by 

vehicles subject to the optional interim 

fleet average CO2 standards specified in 

§ 86.1818–12(e). 

(B) Credits generated by a passenger 

automobile or light truck averaging set 

subject to the optional interim fleet 

average CO2 standards specified in 

§ 86.1818–12(e)(2)(i) or (ii) of this 

section may be used to offset a deficit 

generated by an averaging set subject to 

the optional interim fleet average CO2

standards through the 2015 model year. 

(C) Credits generated by an averaging 

set subject to the optional interim fleet 

average CO2 standards specified in 

§ 86.1818–12(e)(2)(i) or (ii) of this 

section may not be used to offset a 

deficit generated by an averaging set 

subject to the fleet average CO2

standards specified in § 86.1818– 

12(c)(2) or (3) or otherwise transferred to 

an averaging set subject to the fleet 

average CO2 standards specified in 

§ 86.1818–12(c)(2) or (3). 

(D) Credits generated by vehicles 

subject to the optional interim fleet 

average CO2 standards specified in 

§ 86.1818–12(e)(2)(i) or (ii) may be 

banked for use in a future model year, 

except that all such credits shall expire 

at the end of the 2015 model year. 

(E) A manufacturer with any vehicles 

subject to the optional interim fleet 

average CO2 standards specified in 

§ 86.1818–12(e)(2)(i) or (ii) of this 

section in a model year in which that 

manufacturer also generates credits with 

vehicles subject to the fleet average CO2

standards specified in § 86.1818–12(c) 

may not trade those credits or bank 

those credits earned against the fleet 

average standards in § 86.1818–12(c) for 

use in a future model year. 

(8) The following provisions apply if 

debits are accrued: 

(i) If a manufacturer calculates that it 

has negative credits (also called 

‘‘debits’’ or a ‘‘credit deficit’’) for a given 

model year, it may carry that deficit 

forward into the next three model years. 

Such a carry-forward may only occur 

after the manufacturer exhausts any 

supply of banked credits. At the end of 

the third model year, the deficit must be 

covered with an appropriate number of 

credits that the manufacturer generates 

or purchases. Any remaining deficit is 

subject to a voiding of the certificate ab 

initio, as described in this paragraph 

(k)(8). Manufacturers are not permitted 

to have a credit deficit for four 

consecutive years. 

(ii) If debits are not offset within the 

specified time period, the number of 

vehicles not meeting the fleet average 

CO2 standards (and therefore not 

covered by the certificate) must be 

calculated. 

(A) Determine the gram per mile 

quantity of debits for the noncompliant 

vehicle category by multiplying the total 

megagram deficit by 1,000,000 and then 

dividing by the vehicle lifetime miles 

for the vehicle category (passenger 

automobile or light truck) specified in 

paragraph (k)(4) of this section. 

(B) Divide the result by the fleet 

average standard applicable to the 

model year in which the deficit failed to 

be offset and round to the nearest whole 

number to determine the number of 

vehicles not meeting the fleet average 

CO2 standards. 

(iii) EPA will determine the vehicles 

not covered by a certificate because the 

condition on the certificate was not 

satisfied by designating vehicles in 

those test groups with the highest CO2

emission values first and continuing 

until reaching a number of vehicles 

equal to the calculated number of 

noncomplying vehicles as determined 

in paragraph (k)(7) of this section. If this 

calculation determines that only a 

portion of vehicles in a test group 

contribute to the debit situation, then 

EPA will designate actual vehicles in 

that test group as not covered by the 

certificate, starting with the last vehicle 

produced and counting backwards. 

(iv)(A) If a manufacturer ceases 

production of passenger cars and light 

trucks, the manufacturer continues to be 

responsible for offsetting any debits 

outstanding within the required time 

period. Any failure to offset the debits 

will be considered a violation of 

paragraph (k)(7)(i) of this section and 

may subject the manufacturer to an 

enforcement action for sale of vehicles 

not covered by a certificate, pursuant to 

paragraphs (k)(7)(ii) and (iii) of this 

section. 

(B) If a manufacturer is purchased by, 

merges with, or otherwise combines 

with another manufacturer, the 

controlling entity is responsible for 

offsetting any debits outstanding within 

the required time period. Any failure to 

offset the debits will be considered a 

violation of paragraph (k)(7)(i) of this 

section and may subject the 

manufacturer to an enforcement action 

for sale of vehicles not covered by a 

certificate, pursuant to paragraphs 

(k)(7)(ii) and (iii) of this section. 

(v) For purposes of calculating the 

statute of limitations, a violation of the 

requirements of paragraph (k)(7)(i) of 

this section, a failure to satisfy the 

conditions upon which a certificate(s) 

was issued and hence a sale of vehicles 

not covered by the certificate, all occur 

upon the expiration of the deadline for 

offsetting debits specified in paragraph 

(k)(7)(i) of this section. 

(9) The following provisions apply to 

CO2 credit trading: 

(i) EPA may reject CO2 credit trades 

if the involved manufacturers fail to 

submit the credit trade notification in 

the annual report. 

(ii) A manufacturer may not sell 

credits that are not available for sale 

pursuant to the provisions in paragraph 

(k)(6)(i) of this section. 

(iii) In the event of a negative credit 

balance resulting from a transaction, 

both the buyer and seller are liable. EPA 

may void ab initio the certificates of 

conformity of all test groups 

participating in such a trade. 

(iv) (A) If a manufacturer trades a 

credit that it has not generated pursuant 

to paragraph (k) of this section or 

acquired from another party, the 

manufacturer will be considered to have 

generated a debit in the model year that 

the manufacturer traded the credit. The 

manufacturer must offset such debits by 

the deadline for the annual report for 

that same model year. 

(B) Failure to offset the debits within 

the required time period will be 

considered a failure to satisfy the 

conditions upon which the certificate(s) 

was issued and will be addressed 

pursuant to paragraph (k)(7) of this 

section. 

(v) A manufacturer may only trade 

credits that it has generated pursuant to 

paragraph (k)(4) of this section or 

acquired from another party. 

(l) Maintenance of records and 

submittal of information relevant to 

compliance with fleet average CO2

standards—(1) Maintenance of records. 

(i) Manufacturers producing any lightduty vehicles, light-duty trucks, or 

medium-duty passenger vehicles subject 

to the provisions in this subpart must 

establish, maintain, and retain all the 

following information in adequately 

organized records for each model year: 

(A) Model year. 

(B) Applicable fleet average CO2

standards for each averaging set as 

defined in paragraph (i) of this section. 

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(C) The calculated fleet average CO2

value for each averaging set as defined 

in paragraph (i) of this section. 

(D) All values used in calculating the 

fleet average CO2 values. 

(ii) Manufacturers producing any 

passenger cars or light trucks subject to 

the provisions in this subpart must 

establish, maintain, and retain all the 

following information in adequately 

organized records for each passenger car 

or light truck subject to this subpart: 

(A) Model year. 

(B) Applicable fleet average CO2

standard. 

(C) EPA test group. 

(D) Assembly plant. 

(E) Vehicle identification number. 

(F) Carbon-related exhaust emission 

standard to which the passenger car or 

light truck is certified. 

(G) In-use carbon-related exhaust 

emission standard. 

(H) Information on the point of first 

sale, including the purchaser, city, and 

State. 

(iii) Manufacturers must retain all 

required records for a period of eight 

years from the due date for the annual 

report. Records may be stored in any 

format and on any media, as long as 

manufacturers can promptly send EPA 

organized written records in English if 

we ask for them. Manufacturers must 

keep records readily available as EPA 

may review them at any time. 

(iv) The Administrator may require 

the manufacturer to retain additional 

records or submit information not 

specifically required by this section. 

(v) Pursuant to a request made by the 

Administrator, the manufacturer must 

submit to the Administrator the 

information that the manufacturer is 

required to retain. 

(vi) EPA may void ab initio a 

certificate of conformity for vehicles 

certified to emission standards as set 

forth or otherwise referenced in this 

subpart for which the manufacturer fails 

to retain the records required in this 

section or to provide such information 

to the Administrator upon request, or to 

submit the reports required in this 

section in the specified time period. 

(2) Reporting. (i) Each manufacturer 

must submit an annual report. The 

annual report must contain for each 

applicable CO2 standard, the calculated 

fleet average CO2 value, all values 

required to calculate the CO2 emissions 

value, the number of credits generated 

or debits incurred, all the values 

required to calculate the credits or 

debits, and the resulting balance of 

credits or debits. 

(ii) For each applicable fleet average 

CO2 standard, the annual report must 

also include documentation on all credit 

transactions the manufacturer has 

engaged in since those included in the 

last report. Information for each 

transaction must include all of the 

following: 

(A) Name of credit provider. 

(B) Name of credit recipient. 

(C) Date the trade occurred. 

(D) Quantity of credits traded in 

megagrams. 

(E) Model year in which the credits 

were earned. 

(iii) Manufacturers calculating early 

air conditioning leakage and/or 

efficiency credits under paragraph (b) of 

this section shall report the following 

information for each model year 

separately for passenger automobiles 

and light trucks and for each air 

conditioning system used to generate 

credits: 

(A) A description of the air 

conditioning system. 

(B) The leakage credit value and all 

the information required to determine 

this value. 

(C) The total credits earned for each 

averaging set, model year, and region, as 

applicable. 

(iv) Manufacturers calculating early 

advanced technology vehicle credits 

under paragraph (c) of this section shall 

report, for each model year and 

separately for passenger automobiles 

and light trucks, the following 

information: 

(A) The number of each model type of 

eligible vehicle sold. 

(B) The carbon-related exhaust 

emission value by model type and 

model year. 

(v) Manufacturers calculating early 

off-cycle technology credits under 

paragraph (d) of this section shall 

report, for each model year and 

separately for passenger automobiles 

and light trucks, all test results and data 

required for calculating such credits. 

(vi) Unless a manufacturer reports the 

data required by this section in the 

annual production report required 

under § 86.1844–01(e) or the annual 

report required under § 600.512–12, a 

manufacturer must submit an annual 

report for each model year after 

production ends for all affected vehicles 

produced by the manufacturer subject to 

the provisions of this subpart and no 

later than May 1 of the calendar year 

following the given model year. Annual 

reports must be submitted to: Director, 

Compliance and Innovative Strategies 

Division, U.S. Environmental Protection 

Agency, 2000 Traverwood, Ann Arbor, 

Michigan 48105. 

(vii) Failure by a manufacturer to 

submit the annual report in the 

specified time period for all vehicles 

subject to the provisions in this section 

is a violation of section 203(a)(1) of the 

Clean Air Act (42 U.S.C. 7522 (a)(1)) for 

each applicable vehicle produced by 

that manufacturer. 

(viii) If EPA or the manufacturer 

determines that a reporting error 

occurred on an annual report previously 

submitted to EPA, the manufacturer’s 

credit or debit calculations will be 

recalculated. EPA may void erroneous 

credits, unless traded, and will adjust 

erroneous debits. In the case of traded 

erroneous credits, EPA must adjust the 

selling manufacturer’s credit balance to 

reflect the sale of such credits and any 

resulting credit deficit. 

(3) Notice of opportunity for hearing. 

Any revoking of the certificate under 

paragraph (l)(1)(vi) of this section will 

be made only after EPA has offered the 

affected manufacturer an opportunity 

for a hearing conducted in accordance 

with § 86.614–84 for light-duty vehicles 

or § 86.1014–84 for light-duty trucks 

and, if a manufacturer requests such a 

hearing, will be made only after an 

initial decision by the Presiding Officer. 

27. A new section 86.1866–12 is 

added to subpart S to read as follows: 

§ 86.1866–12 CO2 fleet average credit 

programs. 

(a) Additional credits for certification 

of advanced technology vehicles. A 

manufacturer may generate additional 

credits by certifying and producing 

electric vehicles, plug-in hybrid electric 

vehicles, or fuel cell electric vehicles, as 

those terms are defined in § 86.1803–01, 

in the 2012 through 2016 model years. 

When calculating the fleet average CO2

emissions according to the provisions of 

part 600 subpart F of this chapter, the 

manufacturer may multiply the number 

of advanced technology vehicles 

produced by [1.2–2.0]. This multiplier 

may be used if the following conditions 

are met: 

(1) Documentation of the use of this 

multiplier and the number of credits 

generated by its use shall be included in 

the annual report to the Administrator; 

(2) Vehicles must be certified to Tier 

2 Bin No. 5 or a more stringent set of 

emissions standards in § 86.1811– 

04(c)(6); 

(3) These multipliers may not be used 

after the 2016 model year; 

(b) Credits for reduction of air 

conditioning refrigerant leakage. 

Manufacturers may generate credits 

applicable to the CO2 fleet average 

program described in § 86.1865–12 by 

implementing specific air conditioning 

system technologies designed to reduce 

air conditioning refrigerant leakage over 

the useful life of their passenger cars 

and/or light trucks. Credits shall be 

calculated according to this paragraph 

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49764 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

(b) for each air conditioning system that 

the manufacturer is using to generate 

CO2 credits. 

(1) The manufacturer shall calculate 

an annual rate of refrigerant leakage 

from an air conditioning system in 

grams per year according to the 

provisions of § 86.166–12. 

(2) The CO2-equivalent gram per mile 

leakage reduction to be used to calculate 

the total credits generated by the air 

conditioning system shall be 

determined according to the following 

formulae, rounded to the nearest tenth 

of a gram per mile: 

(i) Passenger automobiles: 

L MaxCredit Leakage GWP

GWP

NEW

HFC

eakage credit = ×− ⎛

⎝

⎜ ⎞

⎠ 1 ⎟×

16 6 1 . 34a

⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢

⎢

⎤

⎦

⎥

⎥

Where: 

MaxCredit is 12.6 for air conditioning 

systems using HFC 134a, and 13.8 for air 

conditioning systems using a refrigerant 

with a lower global warming potential. 

Leakage means the annual refrigerant leakage 

rate determined according to the 

provisions of § 86.166–12(a), except if 

the calculated rate is less than 8.3 grams 

per year the rate for the purpose of this 

formula shall be 8.3 grams per year; 

GWPNEW means the global warming potential 

of the refrigerant, if such refrigerant is 

not R134a, as determined by the 

Administrator; 

GWPHFC134a means the global warming 

potential of HFC 134a, which shall be 

equal to 1430 unless determined 

otherwise by the Administrator. 

(ii) Light trucks: 

L MaxCredit Leakage GWP

GWP

NEW

HFC

eakage credit = ×− ⎛

⎝

⎜ ⎞

⎠ 1 ⎟×

20 7 1 . 34a

⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢

⎢

⎤

⎦

⎥

⎥

Where: 

MaxCredit is 15.6 for air conditioning 

systems using HFC 134a, and 17.2 for air 

conditioning systems using a refrigerant with 

a lower global warming potential. 

Leakage means the annual refrigerant 

leakage rate determined according to the 

provisions of § 86.166–12(a), except if the 

calculated rate is less than 10.4 grams per 

year the rate for the purpose of this formula 

shall be 10.4 grams per year; 

GWPNEW means the global warming potential 

of the refrigerant, if such refrigerant is 

not HFC 134a, as determined by the 

Administrator; 

GWPR134a means the global warming 

potential of HFC 134a, which shall be 

equal to 1430 unless determined 

otherwise by the Administrator. 

(3) The total leakage reduction credits 

generated by the air conditioning system 

shall be calculated separately for 

passenger cars and light trucks 

according to the following formula: 

Total Credits (megagrams) = (Leakage × 

Production × VLM) ÷ 1,000,000 

Where: 

Leakage = the CO2-equivalent leakage credit 

value in grams per mile determined in 

paragraph (b)(2) of this section. 

Production = The total number of passenger 

cars or light trucks, whichever is 

applicable, produced with the air 

conditioning system to which to the 

leakage credit value from paragraph 

(b)(2) of this section applies. 

VLM = vehicle lifetime miles, which for 

passenger cars shall be 190,971 and for 

light trucks shall be 221,199. 

(4) The results of paragraph (b)(3) of 

this section, rounded to the nearest 

whole number, shall be included in the 

manufacturer’s credit/debit totals 

calculated in § 86.1865–12(k)(5). 

(c) Credits for improving air 

conditioning system efficiency. 

Manufacturers may generate credits 

applicable to the CO2 fleet average 

program described in § 86.1865–12 by 

implementing specific air conditioning 

system technologies designed to reduce 

air conditioning-related CO2 emissions 

over the useful life of their passenger 

cars and/or light trucks. Credits shall be 

calculated according to this paragraph 

(c) for each air conditioning system that 

the manufacturer is using to generate 

CO2 credits. Manufacturers may also 

generate early air conditioning 

efficiency credits under this paragraph 

(b) for the 2009 through 2011 model 

years according to the provisions of 

§ 86.1867–12(c). For model years 2012 

and 2013 the manufacturer may 

determine air conditioning efficiency 

credits using the requirements in 

paragraphs (c)(1) through (4) of this 

section. For model years 2014 and later 

the eligibility requirements specified in 

paragraph (c)(5) of this section must be 

met before an air conditioning system is 

allowed to generate credits. 

(1) Air conditioning efficiency credits 

are available for the following 

technologies in the gram per mile 

amounts indicated: 

(i) Reduced reheat, with externallycontrolled, variable-displacement 

compressor: 1.7 g/mi. 

(ii) Reduced reheat, with externallycontrolled, fixed-displacement or 

pneumatic variable displacement 

compressor: 1.1 g/mi. 

(iii) Default to recirculated air mode 

whenever the air conditioning system is 

being used to reduce cabin air 

temperature and the outside air 

temperature is greater than 75 °F: 1.7 g/ 

mi. 

(iv) Blower motor and cooling fan 

controls which limit waste energy (e.g. 

pulsewidth modulated power 

controller): 0.9 g/mi. 

(v) Electronic expansion valve: 1.1 g/ 

mi. 

(vi) Improved evaporators and 

condensers (with system analysis on 

each component indicating a coefficient 

of performance improvement greater 

than 10%, when compared to previous 

design): 1.1 g/mi. 

(vii) Oil separator: 0.6 g/mi. 

(2) Air conditioning efficiency credits 

are determined on an air conditioning 

system basis. For each air conditioning 

system that is eligible for a credit based 

on the use of one or more of the items 

listed in paragraph (c)(1) of this section, 

the total credit value is the sum of the 

gram per mile values listed in paragraph 

(c)(1) of this section for each item that 

applies to the air conditioning system. 

If the sum of those values for an air 

conditioning system is greater than 5.7 

grams per mile, the total credit value is 

deemed to be 5.7 grams per mile. 

(3) The total efficiency credits 

generated by an air conditioning system 

shall be calculated separately for 

passenger cars and light trucks 

according to the following formula: 

Total Credits (Megagrams) = (Credit × 

Production × VLM) ÷ 1,000,000 

Where: 


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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49765 

Credit = the CO2 efficiency credit value in 

grams per mile determined in paragraph 

(c)(2) of this section. 

Production = The total number of passenger 

cars or light trucks, whichever is 

applicable, produced with the air 

conditioning system to which the 

efficiency credit value from paragraph 

(c)(2) of this section applies. 

VLM = vehicle lifetime miles, which for 

passenger cars shall be 190,971 and for 

light trucks shall be 221,199. 

(4) The results of paragraph (c)(3) of 

this section, rounded to the nearest 

whole number, shall be included in the 

manufacturer’s credit/debit totals 

calculated in § 86.1865–12(k)(5). 

(5) Use of the Air Conditioning Idle 

Test Procedure is required after the 2013 

model year as specified in this 

paragraph (c)(5). 

(i) After the 2013 model year, for each 

air conditioning system selected by the 

manufacturer to generate air 

conditioning efficiency credits, the 

manufacturer shall perform the Air 

Conditioning Idle Test Procedure 

specified in § 86.165–14 of this part. 

(ii) Using good engineering judgment, 

the manufacturer must select the vehicle 

configuration to be tested that is 

expected to result in the greatest 

increased CO2 emissions as a result of 

the operation of the air conditioning 

system for which efficiency credits are 

being sought. If the air conditioning 

system is being installed in passenger 

automobiles and light trucks, a separate 

determination of the quantity of credits 

for passenger automobiles and light 

trucks must be made, but only one test 

vehicle is required to represent the air 

conditioning system, provided it 

represents the worst-case impact of the 

system on CO2 emissions. 

(iii) For an air conditioning system to 

be eligible to generate credits in the 

2014 and later model years, the 

increased CO2 emissions as a result of 

the operation of that air conditioning 

system determined according to the Idle 

Test Procedure in § 86.165–14 must be 

less than 14.9 grams per minute. 

(iv) Air conditioning systems with 

compressors that are solely powered by 

electricity shall submit Air Conditioning 

Idle Test Procedure data to be eligible to 

generate credits in the 2014 and later 

model years, but such systems are not 

required to meet a specific threshold to 

be eligible to generate such credits, as 

long as the engine remains off for a 

period of at least 2 minutes during the 

air conditioning on portion of the Idle 

Test Procedure in § 86.165–12 (d). 

(6) The following definitions apply to 

this paragraph (c): 

(i) Reduced reheat, with externallycontrolled, variable displacement 

compressor means a system in which 

compressor displacement is controlled 

via an electronic signal, based on input 

from sensors (e.g. position or setpoint of 

interior temperature control, interior 

temperature, evaporator outlet air 

temperature, or refrigerant temperature) 

and air temperature at the outlet of the 

evaporator can be controlled to a level 

at 41 °F, or higher. 

(ii) Reduced reheat, with externallycontrolled, fixed-displacement or 

pneumatic variable displacement 

compressor means a system in which 

the output of either compressor is 

controlled by cycling the compressor 

clutch off-and-on via an electronic 

signal, based on input from sensors (e.g. 

position or setpoint of interior 

temperature control, interior 

temperature, evaporator outlet air 

temperature, or refrigerant temperature) 

and air temperature at the outlet of the 

evaporator can be controlled to a level 

at 41 °F, or higher. 

(iii) Default to recirculated air mode 

means that the default position of the 

mechanism which controls the source of 

air supplied to the air conditioning 

system shall change from outside air to 

recirculated air when the operator or the 

automatic climate control system has 

engaged the air conditioning system (i.e. 

evaporator is removing heat), except 

under those conditions where 

dehumidification is required for 

visibility (i.e. defogger mode). In 

vehicles equipped with interior air 

quality sensors (e.g. humidity sensor, or 

carbon dioxide sensor), the controls may 

determine proper blend of air supply 

sources to maintain freshness of the 

cabin air while continuing to maximize 

the use of recirculated air. At any time, 

the vehicle operator may manually 

select the non-recirculated air setting 

during vehicle operation but the system 

must default to recirculated air mode on 

subsequent vehicle operations (i.e. next 

vehicle start). The climate control 

system may delay switching to 

recirculation mode until the interior air 

temperature is less than the outside air 

temperature, at which time the system 

must switch to recirculated air mode. 

(iv) Blower motor and cooling fan 

controls which limit waste energy means 

a method of controlling fan and blower 

speeds which does not use resistive 

elements to decrease the voltage 

supplied to the motor. 

(v) Electronic expansion valve means 

a valve which throttles the expansion of 

the refrigerant where the position of the 

valve (and flow of refrigerant) is 

controlled via an electronic signal, 

based on input from sensors (e.g. 

position or setpoint of interior 

temperature control, interior 

temperature, evaporator outlet air 

temperature, or refrigerant temperature). 

(vi) Improved evaporators and 

condensers means that the coefficient of 

performance (COP) of air conditioning 

system using improved evaporator and 

condenser designs is 10 percent higher, 

as determined using the bench test 

procedures described in SAE J2765 

‘‘Procedure for Measuring System COP 

of a Mobile Air Conditioning System on 

a Test Bench,’’ when compared to a 

system using standard, or prior model 

year, component designs. SAE J2765 is 

incorporated by reference; see § 86.1. 

(vii) Oil separator means a 

mechanism which removes at least 50 

percent of the oil entrained in the oil/ 

refrigerant mixture exiting the 

compressor and returns it to the 

compressor housing or compressor inlet, 

or a compressor design which does not 

rely on the circulation of an oil/ 

refrigerant mixture for lubrication. 

(d) Credits for CO2-reducing 

technologies where the CO2 reduction is 

not captured on the Federal Test 

Procedure or the Highway Fuel 

Economy Test. Manufacturers may 

optionally generate credits applicable to 

the CO2 fleet average program described 

in § 86.1865–12 by implementing 

innovative technologies that have a 

measurable, demonstrable, and 

verifiable real-world CO2 reduction. 

These optional credits are referred to as 

‘‘off-cycle’’ credits and may be earned 

through the 2016 model year. 

(1) Qualification criteria. To qualify 

for this credit, the following must be 

true: 

(i) The technology must be an 

innovative and novel vehicle- or enginebased approach to reducing greenhouse 

gas emissions, and not in widespread 

use. 

(ii) The CO2-reducing impact of the 

technology must not be significantly 

measurable over the Federal Test 

Procedure and the Highway Fuel 

Economy Test. The technology must 

improve CO2 emissions beyond the 

driving conditions of those tests. 

(iii) The technology must be able to be 

demonstrated to be effective for the full 

useful life of the vehicle. Unless the 

manufacturer demonstrates that the 

technology is not subject to in-use 

deterioration, the manufacturer must 

account for the deterioration in their 

analysis. 

(2) Quantifying the CO2 reductions of 

an off-cycle technology. The 

manufacturer may use one of the two 

options specified in this paragraph 

(d)(2) to measure the CO2-reducing 

potential of an innovative off-cycle 

technology. The option described in 

paragraph (d)(2)(ii) of this section may 

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49766 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

be used only with EPA approval, and to 

use that option the manufacturer must 

be able to justify to the Administrator 

why the 5-cycle option described in 

paragraph (d)(2)(i) of this section 

insufficiently characterizes the 

effectiveness of the off-cycle technology. 

The manufacturer should notify EPA in 

their pre-model year report of their 

intention to generate any credits under 

paragraph (d) of this section. 

(i) Technology demonstration using 

EPA 5-cycle methodology. To 

demonstrate an off-cycle technology and 

to determine a CO2 credit using the EPA 

5-cycle methodology, the manufacturer 

shall determine 5-cycle city/highway 

combined carbon-related exhaust 

emissions both with the technology 

installed and operating and without the 

technology installed and/or operating. 

The manufacturer shall conduct the 

following steps, both with the off-cycle 

technology installed and operating and 

without the technology operating or 

installed. 

(A) Determine carbon-related exhaust 

emissions over the FTP, the HFET, the 

US06, the SC03, and the cold 

temperature FTP test procedures 

according to the test procedure 

provisions specified in 40 CFR part 600 

subpart B and using the calculation 

procedures specified in § 600.113–08 of 

this chapter. 

(B) Calculate 5-cycle city and highway 

carbon-related exhaust emissions using 

data determined in paragraph 

(d)(2)(i)(A) of this section according to 

the calculation procedures in 

paragraphs (d) through (f) of 40 CFR 

600.114–08. 

(C) Calculate a 5-cycle city/highway 

combined carbon-related exhaust 

emission value using the city and 

highway values determined in 

paragraph (d)(2)(i)(B) of this section. 

(D) Subtract the 5-cycle city/highway 

combined carbon-related exhaust 

emission value determined with the offcycle technology operating from the 5- 

cycle city/highway combined carbonrelated exhaust emission value 

determined with the off-cycle 

technology not operating. The result is 

the gram per mile credit amount 

assigned to the technology. 

(ii) Technology demonstration using 

alternative EPA-approved methodology. 

In cases where the EPA 5-cycle 

methodology described in paragraph 

(d)(2)(i) of this section cannot 

adequately measure the emission 

reduction attributable to an innovative 

off-cycle technology, the manufacturer 

may develop an alternative approach. 

Prior to a model year in which a 

manufacturer intends to seek these 

credits, the manufacturer must submit a 

detailed analytical plan to EPA. EPA 

will work with the manufacturer to 

ensure that an analytical plan will result 

in appropriate data for the purposes of 

generating these credits. The alternative 

demonstration program must be 

approved in advance by the 

Administrator and should: 

(A) Use modeling, on-road testing, onroad data collection, or other approved 

analytical or engineering methods; 

(B) Be robust, verifiable, and capable 

of demonstrating the real-world 

emissions benefit with strong statistical 

significance; 

(C) Result in a demonstration of 

baseline and controlled emissions over 

a wide range of driving conditions and 

number of vehicles such that issues of 

data uncertainty are minimized; 

(D) Result in data on a model type 

basis unless the manufacturer 

demonstrates that another basis is 

appropriate and adequate. 

(iii) Calculation of total off-cycle 

credits. Total off-cycle credits in 

Megagrams of CO2 shall be calculated 

separately for passenger automobiles 

and light trucks according to the 

following formula: 

Total Credits (Megagrams) = (Credit × 

Production × VLM) ÷ 1,000,000 

Where: 

Credit = the 5-cycle credit value in grams per 

mile determined in paragraph (d)(2)(i)(D) 

or (d)(2)(ii) of this section. 

Production = The total number of passenger 

cars or light trucks, whichever is 

applicable, produced with the off-cycle 

technology to which to the credit value 

determined in paragraph (d)(2)(i)(D) or 

(d)(2)(ii) of this section applies. 

VLM = vehicle lifetime miles, which for 

passenger cars shall be 190,971 and for 

light trucks shall be 221,199. 

28. A new § 86.1867–12 is added to 

subpart S to read as follows: 

§ 86.1867–12 Optional early CO2 credit 

programs. 

Manufacturers may optionally 

generate CO2 credits in the 2009 through 

2011 model years for use in the 2012 

and later model years subject to the 

provisions of this section. 

Manufacturers may generate early fleet 

average credits, air conditioning leakage 

credits, air conditioning efficiency 

credits, early advanced technology 

credits, and early off-cycle technology 

credits. Manufacturers generating any 

credits under this section must submit 

an early credits report to the 

Administrator as required in this 

section. 

(a) Early fleet average CO2 reduction 

credits. Manufacturers may optionally 

generate credits for reductions in their 

fleet average CO2 emissions achieved in 

the 2009 through 2011 model years. To 

generate early fleet average CO2

reduction credits, manufacturers must 

select one of the four pathways 

described in paragraphs (a)(1) through 

(4) of this section. The manufacturer 

may select only one pathway, and that 

pathway must remain in effect for the 

2009 through 2011 model years. Fleet 

average credits (or debits) must be 

calculated and reported to EPA for each 

model year under each selected 

pathway. Early credits are subject to five 

year carry-forward restrictions based on 

the model year in which the credits are 

generated. 

(1) Pathway 1. To earn credits under 

this pathway, the manufacturer shall 

calculate an average carbon-related 

exhaust emission value to the nearest 

one gram per mile for the classes of 

motor vehicles identified in this 

paragraph (a)(1), and the results of such 

calculations will be reported to the 

Administrator for use in determining 

compliance with the applicable CO2

early credit threshold values. 

(i) An average carbon-related exhaust 

emission value calculation will be made 

for the combined LDV/LDT1 averaging 

set. 

(ii) An average carbon-related exhaust 

emission value calculation will be made 

for the combined LDT2/HLDT/MDPV 

averaging set. 

(iii) Average carbon-related exhaust 

emission values shall be determined 

according to the provisions of 40 CFR 

600.510–12, except that: 

(A) Total U.S. model year sales data 

will be used, instead of production data; 

(B) The average carbon-related 

exhaust emissions for alcohol fueled 

model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(ii)(B), without the use 

of the 0.15 multiplicative factor. 

(C) The average carbon-related 

exhaust emissions for natural gas fueled 

model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(iii)(B), without the use 

of the 0.15 multiplicative factor. 

(D) The average carbon-related 

exhaust emissions for alcohol dual 

fueled model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(vi), without the use of 

the 0.15 multiplicative factor and with 

F=0. For the 2010 and 2011 model years 

only, if the California Air Resources 

Board has approved a manufacturer’s 

request to use a non-zero value of F, the 

manufacturer may use such an approved 

value. 

(E) The average carbon-related 

exhaust emissions for natural gas dual 

fueled model types shall be calculated 

according to the provisions of 40 CFR 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49767 

600.510–12(j)(2)(vii), without the use of 

the 0.15 multiplicative factor and with 

F=0. For the 2010 and 2011 model years 

only, if the California Air Resources 

Board has approved a manufacturer’s 

request to use a non-zero value of F, the 

manufacturer may use such an approved 

value. 

(F) 40 CFR 600.510–12(j)(3) shall not 

apply. Electric, fuel cell electric, and 

plug-in hybrid electric model type 

carbon-related exhaust emission values 

shall be included in the fleet average 

determined under paragraph (a)(1) of 

this section only to the extent that such 

vehicles are not being used to generate 

early advanced technology vehicle 

credits under paragraph (c) of this 

section. 

(iv) Fleet average CO2 credit threshold 

values. 

Model year LDV/LDT1 LDT2/HLDT/ 

MDPV 

2009 ........................................................................................... 321 ............................................................................................ 437 

2010 ........................................................................................... 299 ............................................................................................ 418 

2011 ........................................................................................... 265 ............................................................................................ 388 

(v) Credits are earned on the last day 

of the model year. Manufacturers must 

calculate, for a given model year, the 

number of credits or debits it has 

generated according to the following 

equation, rounded to the nearest 

megagram: 

CO2 Credits or Debits (Mg) = [(CO2

Credit Threshold ¥ Manufacturer’s 

Sales Weighted Fleet Average CO2

Emissions) × (Total Number of 

Vehicles Sold) × (Vehicle Lifetime 

Miles)] ÷ 1,000,000 

Where: 

CO2 Credit Threshold = the applicable credit 

threshold value for the model year and 

vehicle averaging set as determined by 

paragraph (a)(1)(iv) of this section; 

Manufacturer’s Sales Weighted Fleet Average 

CO2 Emissions = average calculated 

according to paragraph (a)(1)(iii) of this 

section; 

Total Number of Vehicles Sold = The number 

of vehicles domestically sold as defined 

in 40 CFR 600.511–80; and 

Vehicle Lifetime Miles is 190,971 for the 

LDV/LDT1 averaging set and 221,199 for 

the LDT2/HLDT/MDPV averaging set. 

(vi) Deficits generated against the 

applicable CO2 credit threshold values 

in paragraph (a)(1)(iv) of this section in 

any averaging set for any of the 2009– 

2011 model years must be offset using 

credits accumulated by any averaging 

set in any of the 2009–2011 model years 

before determining the number of 

credits that may be carried forward to 

the 2012. Deficit carry forward and 

credit banking provisions of § 86.1865– 

12 apply to early credits earned under 

this paragraph (a)(1), except that deficits 

may not be carried forward from any of 

the 2009–2011 model years into the 

2012 model year. 

(2) Pathway 2. To earn credits under 

this pathway, manufacturers shall 

calculate an average carbon-related 

exhaust emission value to the nearest 

one gram per mile for the classes of 

motor vehicles identified in paragraph 

(a)(1) of this section, and the results of 

such calculations will be reported to the 

Administrator for use in determining 

compliance with the applicable CO2

early credit threshold values. 

(i) Credits under this pathway shall be 

calculated according to the provisions of 

paragraph (a)(1) of this section, except 

credits may only be generated by 

vehicles sold in a model year in States 

with a section 177 program in effect in 

that model year. For the purposes of this 

section, ‘‘section 177 program’’ means 

State regulations or other laws that 

apply to any of the following categories 

of motor vehicles: Passenger cars, lightduty trucks up through 6,000 pounds 

GVWR, and medium-duty vehicles from 

6,001 to 14,000 pounds GVWR, as these 

categories of motor vehicles are defined 

in the California Code of Regulations, 

Title 13, Division 3, Chapter 1, Article 

1, Section 1900. 

(ii) A deficit in any averaging set for 

any of the 2009–2011 model years must 

be offset using credits accumulated by 

any averaging set in any of the 2009– 

2011 model years before determining 

the number of credits that may be 

carried forward to the 2012 model year. 

Deficit carry forward and credit banking 

provisions of § 86.1865–12 apply to 

early credits earned under this 

paragraph (a)(1), except that deficits 

may not be carried forward from any of 

the 2009–2011 model years into the 

2012 model year. 

(3) Pathway 3. Pathway 3 credits are 

those credits earned under Pathway 2 as 

described in paragraph (a)(2) of this 

section and in the section 177 States 

determined in paragraph (a)(2)(i) of this 

section, combined with additional 

credits earned in the set of states that 

does not include the section 177 States 

determined in paragraph (a)(2)(i) of this 

section and calculated according to this 

paragraph (a)(3). 

(i) Manufacturers shall earn 

additional credits under Pathway 3 by 

calculating an average carbon-related 

exhaust emission value to the nearest 

one gram per mile for the classes of 

motor vehicles identified in this 

paragraph (a)(3). The results of such 

calculations will be reported to the 

Administrator for use in determining 

compliance with the applicable CO2

early credit threshold values. 

(ii) Credits may only be generated by 

vehicles sold in the States not included 

in the section 177 States determined in 

paragraph (a)(2)(i) of this section. 

(iii) An average carbon-related 

exhaust emission value calculation will 

be made for the passenger automobile 

averaging set. The term ‘‘passenger 

automobile’’ shall have the meaning 

given by the Department of 

Transportation at 49 CFR 523.4 for the 

specific model year for which the 

calculation is being made. 

(iv) An average carbon-related exhaust 

emission value calculation will be made 

for the light truck averaging set. The 

term ‘‘light truck’’ shall have the 

meaning given by the Department of 

Transportation at 49 CFR 523.5 for the 

specific model year for which the 

calculation is being made. 

(v) Average carbon-related exhaust 

emission values shall be determined 

according to the provisions of 40 CFR 

600.510–12, except that: 

(A) Total model year sales data will be 

used, instead of production data, except 

that vehicles sold in the section 177 

States determined in paragraph (a)(2)(i) 

of this section shall not be included; 

(B) The average carbon-related 

exhaust emissions for alcohol fueled 

model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(ii)(B), without the use 

of the 0.15 multiplicative factor. 

(C) The average carbon-related 

exhaust emissions for natural gas fueled 

model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(iii)(B), without the use 

of the 0.15 multiplicative factor. 

(D) The average carbon-related 

exhaust emissions for alcohol dual 

fueled model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(vi), without the use of 

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the 0.15 multiplicative factor and with 

F=0. 

(E) The average carbon-related 

exhaust emissions for natural gas dual 

fueled model types shall be calculated 

according to the provisions of 40 CFR 

600.510–12(j)(2)(vii), without the use of 

the 0.15 multiplicative factor and with 

F=0. 

(F) 40 CFR 600.510–12(j)(3) shall not 

apply. Electric, fuel cell electric, and 

plug-in hybrid electric model type 

carbon-related exhaust emission values 

shall be included in the fleet average 

determined under paragraph (a)(1) of 

this section only to the extent that such 

vehicles are not being used to generate 

early advanced technology vehicle 

credits under paragraph (c) of this 

section. 

(vi) Pathway 3 fleet average CO2 credit 

threshold values. 

(A) For 2009 and 2010 model year 

passenger automobiles, the fleet average 

CO2 credit threshold value is 323 grams/ 

mile. 

(B) For 2009 model year light trucks 

the fleet average CO2 credit threshold 

value is 381 grams/mile, or, if the 

manufacturer chose to optionally meet 

an alternative manufacturer-specific 

light truck fuel economy standard 

calculated under 49 CFR 533.5 for the 

2009 model year, the gram per mile fleet 

average CO2 credit threshold shall be 

the CO2 value determined by dividing 

8887 by that alternative manufacturerspecific fuel economy standard and 

rounding to the nearest whole gram per 

mile. 

(C) For 2010 model year light trucks 

the fleet average CO2 credit threshold 

value is 376 grams/mile, or, if the 

manufacturer chose to optionally meet 

an alternative manufacturer-specific 

light truck fuel economy standard 

calculated under 49 CFR 533.5 for the 

2010 model year, the gram per mile fleet 

average CO2 credit threshold shall be 

the CO2 value determined by dividing 

8887 by that alternative manufacturerspecific fuel economy standard and 

rounding to the nearest whole gram per 

mile. 

(D) For 2011 model year passenger 

automobiles the fleet average CO2 credit 

threshold value is the value determined 

by dividing 8887 by the manufacturerspecific passenger automobile fuel 

economy standard for the 2011 model 

year determined under 49 CFR 531.5 

and rounding to the nearest whole gram 

per mile. 

(E) For 2011 model year light trucks 

the fleet average CO2 credit threshold 

value is the value determined by 

dividing 8887 by the manufacturerspecific light truck fuel economy 

standard for the 2011 model year 

determined under 49 CFR 533.5 and 

rounding to the nearest whole gram per 

mile. 

(vii) Credits are earned on the last day 

of the model year. Manufacturers must 

calculate, for a given model year, the 

number of credits or debits it has 

generated according to the following 

equation, rounded to the nearest 

megagram: 

CO2 Credits or Debits (Mg) = [(CO2

Credit Threshold ¥ Manufacturer’s 

Sales Weighted Fleet Average CO2

Emissions) × (Total Number of 

Vehicles Sold) × (Vehicle Lifetime 

Miles)] ÷ 1,000,000 

Where: 

CO2 Credit Threshold = the applicable credit 

threshold value for the model year and 

vehicle averaging set as determined by 

paragraph (a)(3)(vii) of this section; 

Manufacturer’s Sales Weighted Fleet Average 

CO2 Emissions = average calculated 

according to paragraph (a)(3)(vi) of this 

section; 

Total Number of Vehicles Sold = The number 

of vehicles domestically sold as defined 

in 40 CFR 600.511–80 except that 

vehicles sold in the section 177 States 

determined in paragraph (a)(2)(i) of this 

section shall not be included; and 

Vehicle Lifetime Miles is 190,971 for the 

LDV/LDT1 averaging set and 221,199 for 

the LDT2/HLDT/MDPV averaging set. 

(viii) Deficits in any averaging set for 

any of the 2009–2011 model years must 

be offset using credits accumulated by 

any averaging set in any of the 2009– 

2011 model years before determining 

the number of credits that may be 

carried forward to the 2012. Deficit 

carry forward and credit banking 

provisions of 86.1865–12 apply to early 

credits earned under this paragraph 

(a)(3), except that deficits may not be 

carried forward from any of the 2009– 

2011 model years into the 2012 model 

year. 

(4) Pathway 4. Pathway 4 credits are 

those credits earned under Pathway 3 as 

described in paragraph (a)(3) of this 

section in the set of states that does not 

include the section 177 States 

determined in paragraph (a)(2)(i) of this 

section and calculated according to 

paragraph (a)(3) of this section. Credits 

may only be generated by vehicles sold 

in the set of states that does not include 

the section 177 States determined in 

paragraph (a)(2)(i) of this section. 

(b) Early air conditioning leakage and 

efficiency credits. (1) Manufacturers 

may optionally generate air 

conditioning refrigerant leakage credits 

according to the provisions of paragraph 

(b) of § 86.1866–12 and/or air 

conditioning efficiency credits 

according to the provisions of 

§ 86.1866–12(c) in model years 2009 

through 2011. The early credits are 

subject to five year carry forward limits 

based on the model year in which the 

credits are generated. Credits must be 

tracked by model type and model year. 

(2) Manufacturers that select Pathway 

4 described in paragraph (a)(4) of this 

section may not generate early air 

conditioning credits for vehicles sold in 

the section 177 States as determined in 

paragraph (a)(2)(i) of this section. 

(c) Early advanced technology vehicle 

credits. Vehicles eligible for this credit 

are electric vehicles, fuel cell electric 

vehicles, and plug-in hybrid electric 

vehicles, as those terms are defined in 

§ 86.1803–01. If a manufacturer chooses 

to not include electric vehicles, fuel cell 

electric vehicles, and plug-in hybrid 

electric vehicles in their fleet averages 

calculated under any of the options 

described in paragraph (a) of this 

section, the manufacturer may generate 

early advanced technology vehicle 

credits pursuant to this paragraph (c). 

(1) The manufacturer shall record the 

sales and carbon-related exhaust 

emission values of eligible vehicles by 

model type and model year for model 

years 2009 through 2011 and report 

these values to the Administrator under 

paragraph (e) of this section. 

(2) Manufacturers may use the 2009 

through 2011 eligible vehicles in their 

fleet average calculations starting with 

the 2012 model year, subject to a fiveyear carry-forward limitation. 

(i) Eligible 2009 model year vehicles 

may be used in the calculation of a 

manufacturer’s fleet average carbonrelated exhaust emissions in the 2012 

through 2014 model years. 

(ii) Eligible 2010 model year vehicles 

may be used in the calculation of a 

manufacturer’s fleet average carbonrelated exhaust emissions in the 2012 

through 2015 model years. 

(iii) Eligible 2011 model year vehicles 

may be used in the calculation of a 

manufacturer’s fleet average carbonrelated exhaust emissions in the 2012 

through 2016 model years. 

(3) (i) To use advanced technology 

vehicle credits, the manufacturer will 

apply the 2009, 2010, and/or 2011 

model type sales volumes and their 

model type emission levels to a 

manufacturer’s fleet average calculation 

using the credit multiplier specified in 

§ 86.1866–12(a). 

(ii) Early advanced technology vehicle 

credits must be used to offset a deficit 

in one of the 2012 through 2016 model 

years, as appropriate under paragraph 

(c)(2) of this section. 

(iii) The advanced technology vehicle 

sales and emission values may be 

included in a fleet average calculation 

for passenger automobiles or light 

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trucks, but may not be used to generate 

credits in the model year in which they 

are included or in the averaging set in 

which they are used. Use of early 

advanced technology vehicle credits is 

limited to offsetting a deficit that would 

otherwise be generated without the use 

of those credits. Manufacturers shall 

report the use of such credits in their 

model year report for the model year in 

which the credits are used. 

(d) Early off-cycle technology credits. 

Manufacturers may optionally generate 

credits for the implementation of certain 

CO2-reducing technologies according to 

the provisions of § 86.1866–12(d). 

(e) Early credit reporting 

requirements. Each manufacturer shall 

submit a report to the Administrator, 

known as the early credits report, that 

reports the credits earned in the 2009 

through 2011 model years under this 

section. 

(1) The report shall contain all 

information necessary for the 

calculation of the manufacturer’s early 

credits in each of the 2009 through 2011 

model years. 

(2) The early credits report shall be in 

writing, signed by the authorized 

representative of the manufacturer and 

shall be submitted no later than 90 days 

after the end of the 2011 model year. 

(3) Manufacturers using one of the 

optional early fleet average CO2

reduction credit pathways described in 

paragraph (a) of this section shall report 

the following information separately for 

the LDV/LDT1 and LDT2/HLDT/MDPV 

averaging sets: 

(i) The pathway that they have 

selected (1, 2, 3, or 4). 

(ii) A carbon-related exhaust emission 

value for each model type of the 

manufacturer’s product line calculated 

according to paragraph (a) of this 

section. 

(iii) The manufacturer’s average 

carbon-related exhaust emission value 

calculated according to paragraph (a) of 

this section for the applicable averaging 

set and region and all data required to 

complete this calculation. 

(iv) The credits earned for each 

averaging set, model year, and region, as 

applicable. 

(4) Manufacturers calculating early air 

conditioning leakage and/or efficiency 

credits under paragraph (b) of this 

section shall report the following 

information for each model year 

separately for passenger automobiles 

and light trucks and for each air 

conditioning system used to generate 

credits: 

(i) A description of the air 

conditioning system. 

(ii) The leakage credit value and all 

the information required to determine 

this value. 

(iii) The total credits earned for each 

averaging set, model year, and region, as 

applicable. 

(5) Manufacturers calculating early 

advanced technology vehicle credits 

under paragraph (c) of this section shall 

report, for each model year and 

separately for passenger automobiles 

and light trucks, the following 

information: 

(i) The number of each model type of 

eligible vehicle sold. 

(ii) The carbon-related exhaust 

emission value by model type and 

model year. 

(6) Manufacturers calculating early 

off-cycle technology credits under 

paragraph (d) of this section shall 

report, for each model year and 

separately for passenger automobiles 

and light trucks, all test results and data 

required for calculating such credits. 

PART 600—FUEL ECONOMY AND 

CARBON-RELATED EXHAUST 

EMISSIONS OF MOTOR VEHICLES 

29. The authority citation for part 600 

continues to read as follows: 

Authority: 49 U.S.C. 32901–23919q, Pub. 

L. 109–58. 

30. The heading for Part 600 is revised 

as set forth above. 

Subpart A—Fuel Economy and 

Carbon-Related Exhaust Emission 

Regulations for 1977 and Later Model 

Year Automobiles—General Provisions 

31. The heading for subpart A is 

revised as set forth above. 

32. A new § 600.001–12 is added to 

subpart A to read as follows: 

§ 600.001–12 General applicability. 

(a) The provisions of this subpart are 

applicable to 2012 and later model year 

automobiles and to the manufacturers of 

2012 and later model year automobiles. 

(b) Fuel economy and related 

emissions data. Unless stated otherwise, 

references to fuel economy or fuel 

economy data in this subpart shall also 

be interpreted to mean the related 

exhaust emissions of CO2, HC, and CO, 

and where applicable for alternative fuel 

vehicles, CH3OH, C2H5OH, C2H4O, 

HCHO, NMHC and CH4. References to 

average fuel economy shall be 

interpreted to also mean average carbonrelated exhaust emissions. References to 

fuel economy data vehicles shall also be 

meant to refer to vehicles tested for 

carbon-related exhaust emissions for the 

purpose of demonstrating compliance 

with fleet average CO2 standards in 40 

CFR 86.1818–12. 

33. Section 600.002–08 is amended as 

follows: 

a. By adding the definition for ‘‘Base 

tire.’’ 

b. By adding the definition for 

‘‘Carbon-related exhaust emissions.’’ 

c. By adding the definition for 

‘‘Electric vehicle.’’ 

d. By adding the definition for 

‘‘Footprint.’’ 

e. By adding the definition for ‘‘Fuel 

cell.’’ 

f. By adding the definition for ‘‘Fuel 

cell electric vehicle.’’ 

g. By adding the definition for 

‘‘Hybrid electric vehicle.’’ 

h. By revising the definition for ‘‘Nonpassenger automobile.’’ 

i. By revising the definition for 

‘‘Passenger automobile.’’ 

j. By adding the definition for ‘‘Plugin hybrid electric vehicle.’’ 

§ 600.002–08 Definitions. 

* * * * * 

Base tire means the tire specified as 

standard equipment by the 

manufacturer. 

* * * * * 

Carbon-related exhaust emissions 

means the summation of the carboncontaining constituents of the exhaust 

emissions, with each constituent 

adjusted by a coefficient representing 

the carbon weight fraction of each 

constituent, as specified in § 600.113– 

08. 

* * * * * 

Electric vehicle means a vehicle that 

is powered solely by an electric motor 

drawing current from a rechargeable 

energy storage system, such as from 

storage batteries or other portable 

electrical energy storage devices, 

including hydrogen fuel cells, provided 

that: 

(1) Recharge energy must be drawn 

from a source off the vehicle, such as 

residential electric service; and 

(2) The vehicle must be certified to 

the emission standards of Bin #1 of 

Table S04–1 in paragraph (c)(6) of 

§ 86.1811 of this chapter. 

* * * * * 

Footprint is the product of track width 

(measured in inches, calculated as the 

average of front and rear track widths, 

and rounded to the nearest tenth of an 

inch) times wheelbase (measured in 

inches and rounded to the nearest tenth 

of an inch), divided by 144 and then 

rounded to the nearest tenth of a square 

foot. For purposes of this definition, 

track width is the lateral distance 

between the centerlines of the base tires 

at ground, including the camber angle. 

For purposes of this definition, 

wheelbase is the longitudinal distance 

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between front and rear wheel 

centerlines. 

* * * * * 

Fuel cell means an electrochemical 

cell that produced electricity via the 

reaction of a consumable fuel on the 

anode with an oxidant on the cathode 

in the presence of an electrolyte. 

Fuel cell electric vehicle means a 

motor vehicle propelled solely by an 

electric motor where energy for the 

motor is supplied by a fuel cell. 

* * * * * 

Hybrid electric vehicle (HEV) means a 

motor vehicle which draws propulsion 

energy from onboard sources or stored 

energy that are both an internal 

combustion engine or heat engine using 

consumable fuel, and a rechargeable 

energy storage system such as a battery, 

capacitor, or flywheel. 

* * * * * 

Non-passenger automobile has the 

meaning given by the Department of 

Transportation at 49 CFR 523.5. This 

term is synonymous with ‘‘light truck.’’ 

* * * * * 

Passenger automobile has the 

meaning given by the Department of 

Transportation at 49 CFR 523.4. 

* * * * * 

Plug-in hybrid electric vehicle (PHEV) 

means a hybrid electric vehicle that: 

(1) Has the capability to charge the 

battery from an off-vehicle electric 

source, such that the off-vehicle source 

cannot be connected to the vehicle 

while the vehicle is in motion, and 

(2) Has an equivalent all-electric range 

of no less than 10 miles. 

* * * * * 

34. Section 600.006–08 is amended as 

follows: 

a. By revising the heading. 

b. By revising paragraph (b)(2)(ii). 

c. By revising paragraph (b)(2)(iv). 

d. By adding paragraph (c)(5). 

e. By revising paragraph (e). 

f. By revising paragraph (g)(3). 

§ 600.006–08 Data and information 

requirements for fuel economy data 

vehicles. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) In the case of electric vehicles, 

plug-in hybrid electric vehicles, and 

hybrid electric vehicles, a description of 

all maintenance to electric motor, motor 

controller, battery configuration, or 

other components performed within 

2,000 miles prior to fuel economy 

testing. 

* * * * * 

(iv) In the case of electric vehicles, 

plug-in hybrid electric vehicles, and 

hybrid electric vehicles, a copy of 

calibrations for the electric motor, motor 

controller, battery configuration, or 

other components on the test vehicle as 

well as the design tolerances. 

* * * * * 

(c) * * * 

(5) Starting with the 2012 model year, 

the data submitted according to 

paragraphs (c)(1) through (c)(4) of this 

section shall include total HC, CO, CO2, 

and, where applicable for alternative 

fuel vehicles, CH3OH, C2H5OH, C2H4O, 

HCHO, NMHC and CH4. The fuel 

economy and CO2 emission test results 

shall be adjusted in accordance with 

paragraph (g) of this section. Round the 

test results as follows: 

* * * * * 

(e) In lieu of submitting actual data 

from a test vehicle, a manufacturer may 

provide fuel economy values derived 

from a previously tested vehicle, where 

the fuel economy and carbon-related 

exhaust emissions are expected to be 

equivalent (or less fuel-efficient and 

with higher carbon-related exhaust 

emissions). Additionally, in lieu of 

submitting actual data from a test 

vehicle, a manufacturer may provide 

fuel economy and carbon-related 

exhaust emission values derived from 

an analytical expression, e.g., regression 

analysis. In order for fuel economy 

values derived from analytical methods 

to be accepted, the expression (form and 

coefficients) must have been approved 

by the Administrator. 

* * * * * 

(g) * * * 

(3)(i) The manufacturer shall adjust 

all fuel economy test data generated by 

vehicles with engine-drive system 

combinations with more than 6,200 

miles by using the following equation: 

FE4,000mi = FET[0.979 + 5.25 × 

10¥6(mi)]¥1

Where: 

FE4,000mi = Fuel economy data adjusted to 

4,000-mile test point rounded to the 

nearest 0.1 mpg. 

FET = Tested fuel economy value rounded to 

the nearest 0.1 mpg. 

mi = System miles accumulated at the start 

of the test rounded to the nearest whole 

mile. 

(ii)(A) The manufacturer shall adjust 

all CO2 exhaust emission test data 

generated by vehicles with engine-drive 

system combinations with more than 

6,200 miles by using the following 

equation: 

CO24,000mi= CO2T[0.979 + 5.25 × 

10¥6(mi)] 

Where: 

CO24,000mi = CO2 emission data adjusted to 

4,000-mile test point. 

CO2T = Tested emissions value of CO2 in 

grams per mile. 

mi = System miles accumulated at the start 

of the test rounded to the nearest whole 

mile. 

(B) Emissions test values and results 

used and determined in the calculations 

in paragraph (g)(3)(ii) of this section 

shall be rounded in accordance with 40 

CFR 86.1837–01 as applicable. CO2

values shall be rounded to the nearest 

gram per mile. 

* * * * * 

35. Section 600.007–08 is amended as 

follows: 

a. By revising paragraph (b)(4) 

through (6). 

b. By revising paragraph (c). 

c. By revising paragraph (f) 

introductory text. 

§ 600.007–08 Vehicle acceptability. 

* * * * * 

(b) * * * 

(4) Each fuel economy data vehicle 

must meet the same exhaust emission 

standards as certification vehicles of the 

respective engine-system combination 

during the test in which the city fuel 

economy test results are generated. This 

may be demonstrated using one of the 

following methods: 

(i) The deterioration factors 

established for the respective enginesystem combination per § 86.1841–01 of 

this chapter as applicable will be used; 

or 

(ii) The fuel economy data vehicle 

will be equipped with aged emission 

control components according to the 

provisions of 86.1823–01 of this 

chapter. 

(5) The calibration information 

submitted under § 600.006(b) must be 

representative of the vehicle 

configuration for which the fuel 

economy and carbon-related exhaust 

emissions data were submitted. 

(6) Any vehicle tested for fuel 

economy or carbon-related exhaust 

emissions purposes must be 

representative of a vehicle which the 

manufacturer intends to produce under 

the provisions of a certificate of 

conformity. 

* * * * * 

(c) If, based on review of the 

information submitted under 

§ 600.006(b), the Administrator 

determines that a fuel economy data 

vehicle meets the requirements of this 

section, the fuel economy data vehicle 

will be judged to be acceptable and fuel 

economy and carbon-related exhaust 

emissions data from that fuel economy 

data vehicle will be reviewed pursuant 

to § 600.008. 

* * * * * 

(f) All vehicles used to generate fuel 

economy and carbon-related exhaust 

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emissions data, and for which emission 

standards apply, must be covered by a 

certificate of conformity under part 86 

of this chapter before: 

* * * * * 

36. Section 600.008–08 is amended by 

revising the heading and paragraph 

(a)(1) to read as follows: 

§ 600.008–08 Review of fuel economy and 

carbon-related exhaust emission data, 

testing by the Administrator. 

(a) Testing by the Administrator. (1) 

(i) The Administrator may require that 

any one or more of the test vehicles be 

submitted to the Agency, at such place 

or places as the Agency may designate, 

for the purposes of conducting fuel 

economy tests. The Administrator may 

specify that such testing be conducted at 

the manufacturer’s facility, in which 

case instrumentation and equipment 

specified by the Administrator shall be 

made available by the manufacturer for 

test operations. The tests to be 

performed may comprise the FTP, 

highway fuel economy test, US06, SC03, 

or Cold temperature FTP or any 

combination of those tests. Any testing 

conducted at a manufacturer’s facility 

pursuant to this paragraph shall be 

scheduled by the manufacturer as 

promptly as possible. 

(ii) Starting with the 2012 model year, 

evaluations, testing, and test data 

described in this section pertaining to 

fuel economy shall also be performed 

for carbon-related exhaust emissions, 

except that carbon-related exhaust 

emissions shall be arithmetically 

averaged instead of harmonically 

averaged, and in cases where the 

manufacturer selects the lowest of 

several fuel economy results to 

represent the vehicle, the manufacturer 

shall select the highest of the carbonrelated exhaust emissions test results to 

represent the vehicle. 

* * * * * 

Subpart B—[Amended] 

37. A new § 600.101–12 is added to 

subpart B to read as follows: 

§ 600.101–12 General applicability. 

(a) The provisions of this subpart are 

applicable to 2012 and later model year 

automobiles and to the manufacturers of 

2012 and later model year automobiles. 

(b) Fuel economy and carbon-related 

emissions data. Unless stated otherwise, 

references to fuel economy or fuel 

economy data in this subpart shall also 

be interpreted to mean the related 

exhaust emissions of CO2, HC, and CO, 

and where applicable for alternative fuel 

vehicles, CH3OH, C2H5OH, C2H4O, 

HCHO, NMHC and CH4. References to 

average fuel economy shall be 

interpreted to also mean average carbonrelated exhaust emissions. 

38. Section 600.113–08 is amended as 

follows: 

a. By revising the introductory text. 

b. By revising paragraph (a)(1). 

c. By revising paragraph (b)(1) and (2). 

d. By revising paragraph (c)(1). 

e. By revising paragraph (d)(1) and (2). 

f. By revising paragraph (e). 

g. By adding paragraph (f)(4). 

h. By revising paragraphs (g) through 

(l). 

i. By adding paragraph (m). 

§ 600.113–08 Fuel economy calculations 

for FTP, HFET, US06, SC03 and cold 

temperature FTP tests. 

The Administrator will use the 

calculation procedure set forth in this 

paragraph for all official EPA testing of 

vehicles fueled with gasoline, diesel, 

alcohol-based or natural gas fuel. The 

calculations of the weighted fuel 

economy values require input of the 

weighted grams/mile values for total 

hydrocarbons (HC), carbon monoxide 

(CO), and carbon dioxide (CO2); and, 

additionally for methanol-fueled 

automobiles, methanol (CH3OH) and 

formaldehyde (HCHO); and, 

additionally for ethanol-fueled 

automobiles, methanol (CH3OH), 

ethanol (C2H5OH), acetaldehyde 

(C2H4O), and formaldehyde (HCHO); 

and additionally for natural gas-fueled 

vehicles non-methane hydrocarbons 

(NMHC) and methane (CH4) for the FTP, 

HFET, US06, SC03 and cold 

temperature FTP tests. Additionally, the 

specific gravity, carbon weight fraction 

and net heating value of the test fuel 

must be determined. The FTP, HFET, 

US06, SC03 and cold temperature FTP 

fuel economy and carbon-related 

exhaust emission values shall be 

calculated as specified in this section. 

An example fuel economy calculation 

appears in Appendix II of this part. 

(a) * * * 

(1) Calculate the weighted grams/mile 

values for the FTP test for CO2, HC, and 

CO, and where applicable, CH3OH, 

C2H5OH, C2H4O, HCHO, NMHC and 

CH4 as specified in § 86.144(b) of this 

chapter. Measure and record the test 

fuel’s properties as specified in 

paragraph (f) of this section. 

* * * * * 

(b) * * * 

(1) Calculate the mass values for the 

highway fuel economy test for HC, CO 

and CO2, and where applicable, CH3OH, 

C2H5OH, C2H4O, HCHO, NMHC and 

CH4 as specified in § 86.144(b) of this 

chapter. Measure and record the test 

fuel’s properties as specified in 

paragraph (f) of this section. 

(2) Calculate the grams/mile values 

for the highway fuel economy test for 

HC, CO and CO2, and where applicable 

CH3OH, C2H5OH, C2H4O, HCHO, NMHC 

and CH4 by dividing the mass values 

obtained in paragraph (b)(1) of this 

section, by the actual distance traveled, 

measured in miles, as specified in 

§ 86.135(h) of this chapter. 

* * * * * 

(c) * * * 

(1) Calculate the weighted grams/mile 

values for the cold temperature FTP test 

for HC, CO and CO2, and where 

applicable, CH3OH, C2H5OH, C2H4O, 

HCHO, NMHC and CH4 as specified in 

§ 86.144(b) of this chapter. For 2008 

through 2010 diesel-fueled vehicles, HC 

measurement is optional. 

* * * * * 

(d) * * * 

(1) Calculate the total grams/mile 

values for the US06 test for HC, CO and 

CO2, and where applicable, CH3OH, 

C2H5OH, C2H4O, HCHO, NMHC and 

CH4 as specified in § 86.144(b) of this 

chapter. 

(2) Calculate separately the grams/ 

mile values for HC, CO and CO2, and 

where applicable, CH3OH, C2H5OH, 

C2H4O, HCHO, NMHC and CH4, for both 

the US06 City phase and the US06 

Highway phase of the US06 test as 

specified in § 86.164 of this chapter. In 

lieu of directly measuring the emissions 

of the separate city and highway phases 

of the US06 test according to the 

provisions of § 86.159 of this chapter, 

the manufacturer may, with the advance 

approval of the Administrator and using 

good engineering judgment, optionally 

analytically determine the grams/mile 

values for the city and highway phases 

of the US06 test. To analytically 

determine US06 City and US06 

Highway phase emission results, the 

manufacturer shall multiply the US06 

total grams/mile values determined in 

paragraph (d)(1) of this section by the 

estimated proportion of fuel use for the 

city and highway phases relative to the 

total US06 fuel use. The manufacturer 

may estimate the proportion of fuel use 

for the US06 City and US06 Highway 

phases by using modal CO2, HC, and CO 

emissions data, or by using appropriate 

OBD data (e.g., fuel flow rate in grams 

of fuel per second), or another method 

approved by the Administrator. 

* * * * * 

(e) Calculate the SC03 fuel economy. 

(1) Calculate the grams/mile values 

for the SC03 test for HC, CO and CO2, 

and where applicable, CH3OH, C2H5OH, 

C2H4O, HCHO, NMHC and CH4 as 

specified in § 86.144(b) of this chapter. 

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(2) Measure and record the test fuel’s 

properties as specified in paragraph (f) 

of this section. 

(f) * * * 

(4) Ethanol test fuel shall be analyzed 

to determine the following fuel 

properties: 

(i) Specific gravity using either: 

(A) ASTM D 1298–85 (Reapproved 

1990) ‘‘Standard Practice for Density, 

Relative Density (Specific Gravity), or 

API Gravity of Crude Petroleum and 

Liquid Petroleum Products by 

Hydrometer Method’’ for the blend. This 

incorporation by reference was 

approved by the Director of the Federal 

Register in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Copies may 

be obtained from the American Society 

for Testing and Materials, 100 Barr 

Harbor Drive, P.O. Box C700, West 

Conshohocken, PA 19428–2959. Copies 

may be inspected at U.S. EPA 

Headquarters Library, EPA West 

Building, Constitution Avenue and 14th 

Street, NW., Room 3340, Washington, 

DC, or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html or: 

(B) ASTM D 1298–85 (Reapproved 

1990) ‘‘Standard Practice for Density, 

Relative Density (Specific Gravity), or 

API Gravity of Crude Petroleum and 

Liquid Petroleum Products by 

Hydrometer Method’’ for the gasoline 

fuel component and also for the 

methanol fuel component and 

combining as follows. This 

incorporation by reference was 

approved by the Director of the Federal 

Register in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Copies may 

be obtained from the American Society 

for Testing and Materials, 100 Barr 

Harbor Drive, P.O. Box C700, West 

Conshohocken, PA 19428–2959. Copies 

may be inspected at U.S. EPA 

Headquarters Library, EPA West 

Building, Constitution Avenue and 14th 

Street, NW., Room 3340, Washington, 

DC, or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html. 

SG = SGg × volume fraction gasoline + 

SGm × volume fraction ethanol. 

(ii)(A) Carbon weight fraction using 

the following equation: 

CWF = CWFg × MFg+ 0.375 × MFe 

Where: 

CWFg = Carbon weight fraction of gasoline 

portion of blend per ASTM D 3343–90 

‘‘Standard Test Method for Estimation of 

Hydrogen Content of Aviation Fuels.’’ 

This incorporation by reference was 

approved by the Director of the Federal 

Register in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Copies may be 

obtained from the American Society for 

Testing and Materials, 100 Barr Harbor 

Drive, P.O. Box C700, West 

Conshohocken, PA 19428–2959. Copies 

may be inspected at U.S. EPA 

Headquarters Library, EPA West 

Building, Constitution Avenue and 14th 

Street, NW., Room 3340, Washington, 

DC, or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, or 

go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html. 

MFg = Mass fraction gasoline = (G × 

SGg)/(G × SGg + E × SGm) 

MFe = Mass fraction methanol = (E × 

SGm)/(G × SGg + E × SGm) 

Where: 

G = Volume fraction gasoline. 

E = Volume fraction ethanol. 

SGg = Specific gravity of gasoline as 

measured by ASTM D 1298–85 

(Reapproved 1990) ‘‘Standard Practice 

for Density, Relative Density (Specific 

Gravity), or API Gravity of Crude 

Petroleum and Liquid Petroleum 

Products by Hydrometer Method.’’ This 

incorporation by reference was approved 

by the Director of the Federal Register in 

accordance with 5 U.S.C. 552(a) and 1 

CFR part 51. Copies may be obtained 

from the American Society for Testing 

and Materials, 100 Barr Harbor Drive, 

P.O. Box C700, West Conshohocken, PA 

19428–2959. Copies may be inspected at 

U.S. EPA Headquarters Library, EPA 

West Building, Constitution Avenue and 

14th Street, NW, Room 3340, 

Washington DC, or at the National 

Archives and Records Administration 

(NARA). For information on the 

availability of this material at NARA, call 

202–741–6030, or go to: http:// 

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html. 

SGm = Specific gravity of methanol as 

measured by ASTM D 1298–85 

(Reapproved 1990) ‘‘Standard Practice 

for Density, Relative Density (Specific 

Gravity), or API Gravity of Crude 

Petroleum and Liquid Petroleum 

Products by Hydrometer Method.’’ This 

incorporation by reference was approved 

by the Director of the Federal Register in 

accordance with 5 U.S.C. 552(a) and 1 

CFR part 51. Copies may be obtained 

from the American Society for Testing 

and Materials, 100 Barr Harbor Drive, 

P.O. Box C700, West Conshohocken, PA 

19428–2959. Copies may be inspected at 

U.S. EPA Headquarters Library, EPA 

West Building, Constitution Avenue and 

14th Street, NW, Room 3340, 

Washington DC, or at the National 

Archives and Records Administration 

(NARA). For information on the 

availability of this material at NARA, call 

202–741–6030, or go to: http:// 

www.archives.gov/federal_register/ 

code_of_federal_regulations/

ibr_locations.html. 

(B) Upon the approval of the 

Administrator, other procedures to 

measure the carbon weight fraction of 

the fuel blend may be used if the 

manufacturer can show that the 

procedures are superior to or equally as 

accurate as those specified in this 

paragraph (f)(2)(ii). 

(iii) Net heating value (BTU/lb) per 

ASTM D 240–92 ‘‘Standard Test Method 

for Heat of Combustion of Liquid 

Hydrocarbon Fuels by Bomb 

Calorimeter.’’ This incorporation by 

reference was approved by the Director 

of the Federal Register in accordance 

with 5 U.S.C. 552(a) and 1 CFR part 51. 

Copies may be obtained from the 

American Society for Testing and 

Materials, 100 Barr Harbor Drive, P.O. 

Box C700, West Conshohocken, PA 

19428–2959. Copies may be inspected at 

U.S. EPA Headquarters Library, EPA 

West Building, Constitution Avenue and 

14th Street, NW, Room 3340, 

Washington DC, or at the National 

Archives and Records Administration 

(NARA). For information on the 

availability of this material at NARA, 

call 202–741–6030, or go to: http:// 

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html. 

* * * * * 

(g) Calculate separate FTP, highway, 

US06, SC03 and Cold temperature FTP 

fuel economy from the grams/mile 

values for total HC, CO, CO2 and, where 

applicable, CH3OH, C2H5OH, C2H4O, 

HCHO, NMHC and CH4, and the test 

fuel’s specific gravity, carbon weight 

fraction, net heating value, and 

additionally for natural gas, the test 

fuel’s composition. 

(1) If the emission values (obtained 

per paragraph (a) through (e) of this 

section, as applicable) were obtained 

from testing with aged exhaust emission 

control components as allowed under 

86.1823–01, then these test values shall 

be used in the calculations of this 

section. 

(2) If the emission values (obtained 

per paragraph (a) through (e) of this 

section, as applicable) were not 

obtained from testing with aged exhaust 

emission control components as 

allowed under 86.1823–01, then these 

test values shall be adjusted by the 

appropriate deterioration factor 

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determined according to 86.1823–01 

before being used in the calculations of 

this section. 

(3) The emission values determined in 

paragraph (g)(1) or (2) of this section 

shall be rounded in accordance with 

§ 86.094–26(a)(6)(iii) or § 86.1837–01 of 

this chapter as applicable. The CO2

values (obtained per this section, as 

applicable) used in each calculation of 

this section shall be rounded to the 

nearest gram/mile. The specific gravity 

and the carbon weight fraction (obtained 

per paragraph (f) of this section) shall be 

recorded using three places to the right 

of the decimal point. The net heating 

value (obtained per paragraph (f) of this 

section) shall be recorded to the nearest 

whole Btu/lb. 

(h)(1) For gasoline-fueled automobiles 

tested on test fuel specified in § 86.113– 

04(a), the fuel economy in miles per 

gallon is to be calculated using the 

following equation and rounded to the 

nearest 0.1 miles per gallon: 

mpg = (5174 × 104 × CWF × SG)/[((CWF 

× HC) + (0.429 × CO) + (0.273 × 

CO2)) × ((0.6 × SG × NHV) + 5471)] 

Where: 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CWF = Carbon weight fraction of test fuel as 

obtained in paragraph (g) of this section. 

NHV = Net heating value by mass of test fuel 

as obtained in paragraph (g) of this 

section. 

SG = Specific gravity of test fuel as obtained 

in paragraph (g) of this section. 

(2) For 2012 and later model year 

gasoline-fueled automobiles tested on 

test fuel specified in § 86.113–04(a), the 

carbon-related exhaust emissions in 

grams per mile is to be calculated using 

the following equation and rounded to 

the nearest 1 gram per mile: 

CREE = CWF*HC + 1.571*CO + CO2

Where: 

CREE means the carbon-related exhaust 

emissions as defined in § 600.002–08. 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CWF = Carbon weight fraction of test fuel as 

obtained in paragraph (g) of this section. 

(i)(1) For diesel-fueled automobiles, 

calculate the fuel economy in miles per 

gallon of diesel fuel by dividing 2778 by 

the sum of three terms and rounding the 

quotient to the nearest 0.1 mile per 

gallon: 

(i)(A) 0.866 multiplied by HC (in 

grams/miles as obtained in paragraph (g) 

of this section), or 

(B) Zero, in the case of cold FTP 

diesel tests for which HC was not 

collected, as permitted in § 600.113– 

08(c); 

(ii) 0.429 multiplied by CO (in grams/ 

mile as obtained in paragraph (g) of this 

section); and 

(iii) 0.273 multiplied by CO2 (in 

grams/mile as obtained in paragraph (g) 

of this section). 

(2) For 2012 and later model year 

diesel-fueled automobiles, the carbonrelated exhaust emissions in grams per 

mile is to be calculated using the 

following equation and rounded to the 

nearest 1 gram per mile: 

CREE = 0.866*HC + 1.571*CO + CO2

Where: 

CREE means the carbon-related exhaust 

emissions as defined in § 600.002–08. 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

(j)(1) For methanol-fueled 

automobiles and automobiles designed 

to operate on mixtures of gasoline and 

methanol, the fuel economy in miles per 

gallon is to be calculated using the 

following equation: 

mpg = (CWF × SG × 3781.8)/((CWFexHC

× HC) + (0.429 × CO) + (0.273 × 

CO2) + (0.375 × CH3OH) + (0.400 × 

HCHO)) 

Where: 

CWF = Carbon weight fraction of the fuel as 

determined in paragraph (f)(2)(ii) of this 

section. 

SG = Specific gravity of the fuel as 

determined in paragraph (f)(2)(i) of this 

section. 

CWFexHC = Carbon weight fraction of exhaust 

hydrocarbons = CWFg as determined in 

(f)(2)(ii) of this section (for M100 fuel, 

CWFexHC= 0.866). 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as 

obtained in paragraph (d) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) 

as obtained in paragraph (g) of this 

section. 

(2) For 2012 and later model year 

methanol-fueled automobiles and 

automobiles designed to operate on 

mixtures of gasoline and methanol, the 

carbon-related exhaust emissions in 

grams per mile is to be calculated using 

the following equation and rounded to 

the nearest 1 gram per mile: 

CREE = (CWFexHC × HC) + (1.571 × CO) 

+ (1.374 × CH3OH) + (1.466 × 

HCHO) + CO2

Where: 

CREE means the carbon-related exhaust 

emission value as defined in § 600.002– 

08. 

CWFexHC = Carbon weight fraction of exhaust 

hydrocarbons = CWFg as determined in 

(f)(2)(ii) of this section (for M100 fuel, 

CWFexHC = 0.866). 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as 

obtained in paragraph (d) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) 

as obtained in paragraph (g) of this 

section. 

(k)(1) For automobiles fueled with 

natural gas, the fuel economy in miles 

per gallon of natural gas is to be 

calculated using the following equation: 

mpg

CWF D

CWF NMHC e

HC/NG NG

NMHC

= × ×

( ) × + × ( ) + ×

121 5

0 749 0 429 4

.

. (. CH CO) . + ×− ( ) 0 273 ( ) CO CO 2 2NG

Where: 

mpge = miles per equivalent gallon of natural 

gas. 

CWFHC/NG = carbon weight fraction based on 

the hydrocarbon constituents in the 

natural gas fuel as obtained in paragraph 

(g) of this section. 

DNG = density of the natural gas fuel [grams/ 

ft 3 at 68 °F (20 °C) and 760 mm Hg 

(101.3 kPa)] pressure as obtained in 

paragraph (g) of this section. 

CH4, NMHC, CO, and CO2 = weighted mass 

exhaust emissions [grams/mile] for 

methane, non-methane HC, carbon 

monoxide, and carbon dioxide as 

calculated in § 600.113. 

CWFNMHC = carbon weight fraction of the 

non-methane HC constituents in the fuel 

as determined from the speciated fuel 

composition per paragraph (f)(3) of this 

section. 


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CO2NG = grams of carbon dioxide in the 

natural gas fuel consumed per mile of 

travel. 

CO2NG = FCNG × DNG × WFCO2

Where: 

FC cubic feet of natural gas fuel consumed per mile NG = = ( ) 0 74 . 9 0 429 • + • ( ) + •+ • ( )

•

CH CWF NMHC CO) 0.273 CO

CWF D

4 NMHC 2

NG NG

( .

Where: 

CWFNG = the carbon weight fraction of the 

natural gas fuel as calculated in 

paragraph (f) of this section. 

WFCO2 = weight fraction carbon dioxide of 

the natural gas fuel calculated using the 

mole fractions and molecular weights of 

the natural gas fuel constituents per 

ASTM D 1945–91 ‘‘Standard Test 

Method for Analysis of Natural Gas by 

Gas Chromatography.’’ This 

incorporation by reference was approved 

by the Director of the Federal Register in 

accordance with 5 U.S.C. 552(a) and 1 

CFR part 51. Copies may be obtained 

from the American Society for Testing 

and Materials, 100 Barr Harbor Drive, 

P.O. Box C700, West Conshohocken, PA 

19428–2959. Copies may be inspected at 

U.S. EPA Headquarters Library, EPA 

West Building, Constitution Avenue and 

14th Street, NW., Room 3340, 

Washington, DC, or at the National 

Archives and Records Administration 

(NARA). For information on the 

availability of this material at NARA, call 

202–741–6030, or go to: http:// 

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html. 

(2) For automobiles fueled with 

natural gas, the carbon-related exhaust 

emissions in grams per mile is to be 

calculated for 2012 and later model year 

vehicles using the following equation 

and rounded to the nearest 1 gram per 

mile: 

CREE = 10.916 × CH4 + CWFNMHC × 

NMHC + 1.571 × CO + CO2

Where: 

CREE means the carbon-related exhaust 

emission value as defined in § 600.002– 

08. 

CH4 = Grams/mile CH4 as obtained in 

paragraph (g) of this section. 

NMHC = Grams/mile NMHC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CWFNMHC = carbon weight fraction of the 

non-methane HC constituents in the fuel 

as determined from the speciated fuel 

composition per paragraph (f)(3) of this 

section. 

(l)(1) For ethanol-fueled automobiles 

and automobiles designed to operate on 

mixtures of gasoline and ethanol, the 

fuel economy in miles per gallon is to 

be calculated using the following 

equation: 

mpg = (CWF × SG × 3781.8)/((CWFexHC

× HC) + (0.429 × CO) + (0.273 × 

CO2) + (0.375 × CH3OH) + (0.400 × 

HCHO) + (0.521 × C2H5OH) + (0.545 

× C2H4O)) 

Where: 

CWF = Carbon weight fraction of the fuel as 

determined in paragraph (f)(4) of this 

section. 

SG = Specific gravity of the fuel as 

determined in paragraph (f)(4) of this 

section. 

CWFexHC = Carbon weight fraction of exhaust 

hydrocarbons = CWFg as determined in 

(f)(4) of this section. 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2 = Grams/mile CO2 as obtained in 

paragraph (g) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as 

obtained in paragraph (d) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) 

as obtained in paragraph (g) of this 

section. 

C2H5OH = Grams/mile CH3OH (ethanol) as 

obtained in paragraph (d) of this section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) 

as obtained in paragraph (d) of this 

section. 

(2) For 2012 and later model year 

ethanol-fueled automobiles and 

automobiles designed to operate on 

mixtures of gasoline and ethanol, the 

carbon-related exhaust emissions in 

grams per mile is to be calculated using 

the following equation and rounded to 

the nearest 1 gram per mile: 

CREE = (CWFexHC × HC) + (1.571 × CO) 

+ (1.374 × CH3OH) + (1.466 × 

HCHO) + (0.955 × C2H5OH) + (0.999 

× C2H4O) + CO2

Where: 

CREE means the carbon-related exhaust 

emission value as defined in § 600.002– 

08. 

CWFexHC= Carbon weight fraction of exhaust 

hydrocarbons = CWFg as determined in 

(f)(4) of this section. 

HC = Grams/mile HC as obtained in 

paragraph (g) of this section. 

CO = Grams/mile CO as obtained in 

paragraph (g) of this section. 

CO2= Grams/mile CO2as obtained in 

paragraph (g) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as 

obtained in paragraph (d) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) 

as obtained in paragraph (g) of this 

section. 

C2H5OH = Grams/mile CH3OH (ethanol) as 

obtained in paragraph (d) of this section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) 

as obtained in paragraph (d) of this 

section. 

(m) Equations for fuels other than 

those specified in paragraphs (h) 

through (l) of this section may be used 

with advance EPA approval. Alternate 

calculation methods may be used if 

shown to yield equivalent or superior 

results and if approved in advance by 

the Administrator. 

39. Section 600.114–08 is amended as 

follows: 

a. By revising the heading. 

b. By revising the introductory text. 

c. By adding paragraphs (d) through 

(f). 

§ 600.114–08 Vehicle-specific 5-cycle fuel 

economy and carbon-related exhaust 

emission calculations. 

Paragraphs (a) through (c) of this 

section apply to data used for fuel 

economy labeling under Subpart D of 

this part. Paragraphs (d) through (f) of 

this section are used to calculate 5-cycle 

carbon-related exhaust emissions values 

for the purpose of determining optional 

technology-based CO2 emissions credits 

under the provisions of paragraph (d) of 

§ 86.1866–12 of this title. 

* * * * * 

(d) City carbon-related exhaust 

emission value. For each vehicle tested, 

determine the 5-cycle city carbonrelated exhaust emissions using the 

following equation: 

(1) CityCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(i) StartCREE = 

0 33

0 76 0 24

4 1 . . .. ×

⎛( ) × +×

⎝

⎜ ⎞

⎠

⎟ StartCREE StartCREE 75 20


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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49775 

Where: 

StartCREE× = 3.6 × (Bag1CREE× ¥ 

Bag3CREE×) 

Where: 

Bag Y CREE× = the carbon-related exhaust 

emissions in grams per mile during the 

specified bag of the FTP test conducted 

at an ambient temperature of 75 °F or 20 

°F. 

(ii) Running CREE= 

0.82 × [(0.48 × Bag275CREE) + (0.41 × 

Bag375CREE) + 0.11 × US06CityCREE)] + 

0.18 × [(0.5 × Bag220CREE) + (0.5 × 

Bag320CREE)] + 0.144 × [SC03CREE ¥ 

((0.61 × Bag375CREE) + (0.39 × 

Bag275CREE))] 

Where: 

BagYXCREE = carbon-related exhaust 

emissions in grams per mile over Bag Y 

at temperature X. 

US06 City CREE = carbon-related exhaust 

emissions in grams per mile over the 

‘‘city’’ portion of the US06 test. 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test. 

(e) Highway carbon-related exhaust 

emissions. (1) For each vehicle tested, 

determine the 5-cycle highway carbonrelated exhaust emissions using the 

following equation: 

HighwayCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(1) StartCREE = 

= ×⎛( ) × +×

⎝

⎜ ⎞

⎠

0 33 ⎟ 0 76 0 24

60 . . . StartCREE StartCREE 75 20

Where: 

StartCREE× = 3.6 × (Bag1CREE× ¥ 

Bag3CREE×) 

(ii) Running CREE = 

1.007 × [(0.79 × US06 Highway CREE) + 

(0.21 × HFET CREE)] + 0.045 × 

[SC03CREE ¥ ((0.61 × Bag375CREE) 

+ (0.39 × Bag275CREE))] 

Where: 

BagYXCREE =carbon-related exhaust 

emissions in grams per mile over Bag Y 

at temperature X, 

US06 Highway CREE = carbon-related 

exhaust emissions in grams per mile over 

the highway portion of the US06 test, 

HFET CREE = carbon-related exhaust 

emissions in grams per mile over the 

HFET test, 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test. 

(f) Carbon-related exhaust emissions 

calculations for hybrid electric vehicles. 

Hybrid electric vehicles shall be tested 

according to California test methods 

which require FTP emission sampling 

for the 75 °F FTP test over four phases 

(bags) of the UDDS (cold-start, transient, 

warm-start, transient). Optionally, these 

four phases may be combined into two 

phases (phases 1 + 2 and phases 3 + 4). 

Calculations for these sampling methods 

follow. 

(1) Four-bag FTP equations. If the 4- 

bag sampling method is used, 

manufacturers may use the equations in 

paragraphs (a) and (b) of this section to 

determine city and highway carbonrelated exhaust emissions values. If this 

method is chosen, it must be used to 

determine both city and highway 

carbon-related exhaust emissions. 

Optionally, the following calculations 

may be used, provided that they are 

used to determine both city and 

highway carbon-related exhaust 

emissions values: 

(i) City carbon-related exhaust 

emissions. 

CityCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(A) StartCREE = 

0 33

0 76 0 24

4 1 . . .. ×

⎛( ) × +×

⎝

⎜ ⎞

⎠

⎟ StartCREE StartCREE 75 20

Where: 

(1) StartCREE75 = 

3.6 × (Bag1CREE75 ¥ Bag3CREE75) + 3.9 × 

(Bag2CREE75 - Bag4CREE75) 

and 

(2) StartCREE20 = 

= 3.6 × (Bag1CREE20 ¥ Bag3CREE20) 

(B) RunningCREE = 

0.82 × [(0.48 × Bag475CREE) + (0.41 × 

Bag375CREE) + (0.11 × 

US06CityCREE)] + 0.18 × [(0.5 × 

Bag220 CREE) + (0.5 × Bag375

CREE)] + 0.144 × [(SC03CREE ¥ 

((0.61 × Bag375 CREE) + (0.39 × 

Bag475 CREE))] 

Where: 

US06 Highway CREE = carbon-related 

exhaust emissions in grams per mile over 

the city portion of the US06 test. 

US06 Highway CREE = carbon-related 

exhaust emissions in miles per gallon 

over the Highway portion of the US06 

test. 

HFET CREE = carbon-related exhaust 

emissions in grams per mile over the 

HFET test. 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test. 

(ii) Highway carbon-related exhaust 

emissions. 

HighwayCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(A) StartCREE = 

= ×⎛( ) × +×

⎝

⎜ ⎞

⎠

0 33 ⎟ 0 76 0 24

60 . . . StartCREE StartCREE 75 20

Where: 

StartCREE75 = 3.6 × (Bag1CREE75 ¥ 

Bag3CREE75) + 3.9 × (Bag2CREE75 ¥ 

Bag4CREE75) 

and 

StartCREE20 = 3.6 × (Bag1CREE20 ¥ 

Bag3CREE20) 

(B) RunningCREE = 

1.007 × [(0.79 × US06 HighwayCREE) + 

(0.21 × HFET CREE)] + 0.045 × 

[SC03CREE = ((0.61 × Bag375CREE) 

+ (0.39 × Bag475CREE))] 


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Where: 

US06 Highway CREE = carbon-related 

exhaust emissions in grams per mile over 

the Highway portion of the US06 test, 

HFET CREE = carbon-related exhaust 

emissions in grams per mile over the 

HFET test, 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test. 

(2) Two-bag FTP equations. If the 2-bag 

sampling method is used for the 75 

°F FTP test, it must be used to 

determine both city and highway 

carbon-related exhaust emissions. 

The following calculations must be 

used to determine both city and 

highway carbon-related exhaust 

emissions: 

(i) City carbon-related exhaust 

emissions. 

CityCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(A) StartCREE = 

= ×⎛( ) × +×

⎝

⎜ ⎞

⎠

0 33 ⎟ 0 76 0 24

4 1 . . ..

StartCREE StartCREE 75 20

Where: 

StartCREE75 = 3.6 × (Bag1⁄2CREE75 ¥ 

Bag3⁄4CREE75) 

and 

StartCREE20 = 3.6 × (Bag1CREE20 ¥ 

Bag3CREE20) 

Where: 

Bag Y FE20= the carbon-related exhaust 

emissions in grams per mile of fuel 

during Bag 1 or Bag 3 of the 20 °F FTP 

test, and 

Bag X/Y FE75 = carbon-related exhaust 

emissions in grams per mile of fuel 

during combined phases 1 and 2 or 

phrases 3 and 4 of the FTP test 

conducted at an ambient temperature of 

75 °F. 

(B) RunningCREE = 

0.82 × [(0.90 × Bag3/475CREE) + (0.10 × 

US06CityCREE)] + (0.18 × [(0.5 × 

Bag220 CREE) + (0.5 × Bag320 CREE)] 

+ 0.144 × [(SC03CREE ¥ ((Bag3⁄475

CREE)] 

Where: 

US06 City CREE = carbon-related exhaust 

emissions in grams per mile over the city 

portion of the US06 test, and 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test, and 

Bag X/Y FE75 = carbon-related exhaust 

emissions in grams per mile of fuel 

during combined phases 1 and 2 or 

phrases 3 and 4 of the FTP test 

conducted at an ambient temperature of 

75 °F. 

(ii) Highway carbon-related exhaust 

emissions. 

HighwayCREE = 0.905 × (StartCREE + 

RunningCREE) 

Where: 

(A) StartCREE = 

0 33

0 76 0 24

60 . . . ×

⎛( ) × +×

⎝

⎜ ⎞

⎠

⎟ StartCREE StartCREE 75 20

Where: 

StartCREE75 = 7.5 × (Bag1⁄2CREE75 ¥ 

Bag3⁄4CREE75) 

and 

StartCREE20 = 3.6 × (Bag1CREE20 ¥ 

Bag3CREE20) 

(B) RunningCREE = 

1.007 × [(0.79 × US06 HighwayCREE) + 

(0.21 × HFET CREE)] + 0.045 × 

[SC03CREE ¥ Bag3/475CREE) 

Where: 

US06 City CREE = carbon-related exhaust 

emissions in grams per mile over the city 

portion of the US06 test, and 

SC03 CREE = carbon-related exhaust 

emissions in grams per mile over the 

SC03 test, and 

Bag Y FE20 = the carbon-related exhaust 

emissions in grams per mile of fuel 

during Bag 1 or 3 of the 20 °F FTP test, 

and 

Bag X/Y FE75 = carbon-related exhaust 

emissions in grams per mile of fuel during 

phases 1 and 2 or phases 3 and 4 of the FTP 

test conducted at an ambient temperature of 

75 °F. 

40. Section 600.115–08 is amended by 

revising the introductory text to read as 

follows: 

§ 600.115–08 Criteria for determining the 

fuel economy label calculation method for 

2011 and later model year vehicles. 

This section provides the criteria to 

determine if the derived 5-cycle method 

for determining fuel economy label 

values, as specified in § 600.210–08 

(a)(2) or (b)(2), as applicable, may be 

used to determine label values for 2011 

and later model year vehicles. Separate 

criteria apply to city and highway fuel 

economy for each test group. The 

provisions of this section are optional. 

If this option is not chosen, or if the 

criteria provided in this section are not 

met, fuel economy label values for 2011 

and later model year vehicles must be 

determined according to the vehiclespecific 5-cycle method specified in 

§ 600.210–08(a)(1) or (b)(1), as 

applicable. However, dedicated 

alternative-fuel vehicles, dual fuel 

vehicles when operating on alternative 

fuel, and MDPVs may use the derived 5- 

cycle method for determining fuel 

economy labels for 2011 and later model 

years whether or not the criteria 

provided in this section are met. 

* * * * * 

Subpart C—Procedures for Calculating 

Fuel Economy and Carbon-related 

Exhaust Emission Values for 1977 and 

Later Model Year Automobiles 

41. The heading for subpart C is 

revised as set forth above. 

42. A new § 600.201–12 is added to 

subpart C to read as follows: 

§ 600.201–12 General applicability. 

The provisions of this subpart are 

applicable to 2012 and later model year 

automobiles and to the manufacturers of 

2012 and later model year automobiles. 

43. A new § 600.206–12 is added to 

subpart C to read as follows: 

§ 600.206–12 Calculation and use of FTPbased and HFET-based fuel economy and 

carbon-related exhaust emission values for 

vehicle configurations. 

(a) Fuel economy and carbon-related 

exhaust emissions values determined 

for each vehicle under § 600.113(a) and 

(b) and as approved in § 600.008–08 (c), 

are used to determine FTP-based city, 

HFET-based highway, and combined 

FTP/Highway-based fuel economy and 

carbon-related exhaust emission values 


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for each vehicle configuration for which 

data are available. 

(1) If only one set of FTP-based city 

and HFET-based highway fuel economy 

values is accepted for a vehicle 

configuration, these values, rounded to 

the nearest tenth of a mile per gallon, 

comprise the city and highway fuel 

economy values for that configuration. If 

only one set of FTP-based city and 

HFET-based highway carbon-related 

exhaust emission values is accepted for 

a vehicle configuration, these values, 

rounded to the nearest gram per mile, 

comprise the city and highway carbonrelated exhaust emission values for that 

configuration. 

(2) If more than one set of FTP-based 

city and HFET-based highway fuel 

economy and/or carbon-related exhaust 

emission values are accepted for a 

vehicle configuration: 

(i) All data shall be grouped according 

to the subconfiguration for which the 

data were generated using sales 

projections supplied in accordance with 

§ 600.208(a)(3). 

(ii) Within each group of data, all fuel 

economy values are harmonically 

averaged and rounded to the nearest 

0.0001 of a mile per gallon and all 

carbon-related exhaust emission values 

are arithmetically averaged and rounded 

to the nearest tenth of a gram per mile 

in order to determine FTP-based city 

and HFET-based highway fuel economy 

and carbon-related exhaust emission 

values for each subconfiguration at 

which the vehicle configuration was 

tested. 

(iii) All FTP-based city fuel economy 

and carbon-related exhaust emission 

values and all HFET-based highway fuel 

economy and carbon-related exhaust 

emission values calculated in paragraph 

(a)(2)(ii) of this section are (separately 

for city and highway) averaged in 

proportion to the sales fraction (rounded 

to the nearest 0.0001) within the vehicle 

configuration (as provided to the 

Administrator by the manufacturer) of 

vehicles of each tested subconfiguration. 

Fuel economy values shall be 

harmonically averaged and carbonrelated exhaust emission values shall be 

arithmetically averaged. The resultant 

fuel economy values, rounded to the 

nearest 0.0001 mile per gallon, are the 

FTP-based city and HFET-based 

highway fuel economy values for the 

vehicle configuration. The resultant 

carbon-related exhaust emission values, 

rounded to the nearest tenth of a gram 

per mile, are the FTP-based city and 

HFET-based highway carbon-related 

exhaust emission values for the vehicle 

configuration. 

(3)(i) For the purpose of determining 

average fuel economy under § 600.510– 

08, the combined fuel economy value 

for a vehicle configuration is calculated 

by harmonically averaging the FTPbased city and HFET-based highway 

fuel economy values, as determined in 

§ 600.206(a)(1) or (2) of this section, 

weighted 0.55 and 0.45 respectively, 

and rounded to the nearest 0.0001 mile 

per gallon. A sample of this calculation 

appears in Appendix II of this part. 

(ii) For the purpose of determining 

average carbon-related exhaust 

emissions under § 600.510–08, the 

combined carbon-related exhaust 

emission value for a vehicle 

configuration is calculated by 

arithmetically averaging the FTP-based 

city and HFET-based highway carbonrelated exhaust emission values, as 

determined in § 600.206(a)(1) or (2) of 

this section, weighted 0.55 and 0.45 

respectively, and rounded to the nearest 

tenth of gram per mile. 

(4) For alcohol dual fuel automobiles 

and natural gas dual fuel automobiles 

the procedures of paragraphs (a)(1) or 

(2) of this section, as applicable, shall be 

used to calculate two separate sets of 

FTP-based city, HFET-based highway, 

and combined fuel economy and 

carbon-related exhaust emission values 

for each configuration. 

(i) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using gasoline or 

diesel test fuel. 

(ii) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using alcohol or 

natural gas test fuel. 

(b) If only one equivalent petroleumbased fuel economy value exists for an 

electric vehicle configuration, that 

value, rounded to the nearest tenth of a 

mile per gallon, will comprise the 

petroleum-based fuel economy for that 

configuration. The carbon-related 

exhaust emission value for that 

configuration shall be 0 grams per mile. 

(c) If more than one equivalent 

petroleum-based fuel economy value 

exists for an electric vehicle 

configuration, all values for that vehicle 

configuration are harmonically averaged 

and rounded to the nearest 0.0001 mile 

per gallon for that configuration. The 

carbon-related exhaust emission value 

for that configuration shall be 0 grams 

per mile. 

44. A new § 600.208–12 is added to 

subpart C to read as follows: 

§ 600.208–12 Calculation of FTP-based 

and HFET-based fuel economy and carbonrelated exhaust emission values for a model 

type. 

(a) Fuel economy and carbon-related 

exhaust emission values for a base level 

are calculated from vehicle 

configuration fuel economy and carbonrelated exhaust emission values as 

determined in § 600.206–08(a), (b), or (c) 

as applicable, for low-altitude tests. 

(1) If the Administrator determines 

that automobiles intended for sale in the 

State of California are likely to exhibit 

significant differences in fuel economy 

and carbon-related exhaust emission 

values from those intended for sale in 

other states, she will calculate fuel 

economy and carbon-related exhaust 

emission values for each base level for 

vehicles intended for sale in California 

and for each base level for vehicles 

intended for sale in the rest of the 

States. 

(2) In order to highlight the fuel 

efficiency and carbon-related exhaust 

emission values of certain designs 

otherwise included within a model 

type, a manufacturer may wish to 

subdivide a model type into one or more 

additional model types. This is 

accomplished by separating 

subconfigurations from an existing base 

level and placing them into a new base 

level. The new base level is identical to 

the existing base level except that it 

shall be considered, for the purposes of 

this paragraph, as containing a new 

basic engine. The manufacturer will be 

permitted to designate such new basic 

engines and base level(s) if: 

(i) Each additional model type 

resulting from division of another model 

type has a unique car line name and that 

name appears on the label and on the 

vehicle bearing that label; 

(ii) The subconfigurations included in 

the new base levels are not included in 

any other base level which differs only 

by basic engine (i.e., they are not 

included in the calculation of the 

original base level fuel economy values); 

and 

(iii) All subconfigurations within the 

new base level are represented by test 

data in accordance with § 600.010– 

08(c)(1)(ii). 

(3) The manufacturer shall supply 

total model year sales projections for 

each car line/vehicle subconfiguration 

combination. 

(i) Sales projections must be supplied 

separately for each car line-vehicle 

subconfiguration intended for sale in 

California and each car line/vehicle 

subconfiguration intended for sale in 

the rest of the States if required by the 

Administrator under paragraph (a)(1) of 

this section. 

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49778 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

(ii) Manufacturers shall update sales 

projections at the time any model type 

value is calculated for a label value. 

(iii) The provisions of paragraph (a)(3) 

of this section may be satisfied by 

providing an amended application for 

certification, as described in § 86.1844– 

01. 

(4) Vehicle configuration fuel 

economy and carbon-related exhaust 

emission values, as determined in 

§ 600.206–08 (a), (b) or (c), as 

applicable, are grouped according to 

base level. 

(i) If only one vehicle configuration 

within a base level has been tested, the 

fuel economy and carbon-related 

exhaust emission values from that 

vehicle configuration will constitute the 

fuel economy and carbon-related 

exhaust emission values for that base 

level. 

(ii) If more than one vehicle 

configuration within a base level has 

been tested, the vehicle configuration 

fuel economy values are harmonically 

averaged in proportion to the respective 

sales fraction (rounded to the nearest 

0.0001) of each vehicle configuration 

and the resultant fuel economy value 

rounded to the nearest 0.0001 mile per 

gallon; and the vehicle configuration 

carbon-related exhaust emission values 

are arithmetically averaged in 

proportion to the respective sales 

fraction (rounded to the nearest 0.0001) 

of each vehicle configuration and the 

resultant carbon-related exhaust 

emission value rounded to the nearest 

gram per mile. 

(5) The procedure specified in 

paragraph (a)(1) through (4) of this 

section will be repeated for each base 

level, thus establishing city, highway, 

and combined fuel economy and 

carbon-related exhaust emission values 

for each base level. 

(6) For the purposes of calculating a 

base level fuel economy or carbonrelated exhaust emission value, if the 

only vehicle configuration(s) within the 

base level are vehicle configuration(s) 

which are intended for sale at high 

altitude, the Administrator may use fuel 

economy and carbon-related exhaust 

emission data from tests conducted on 

these vehicle configuration(s) at high 

altitude to calculate the fuel economy or 

carbon-related exhaust emission value 

for the base level. 

(7) For alcohol dual fuel automobiles 

and natural gas dual fuel automobiles, 

the procedures of paragraphs (a)(1) 

through (6) of this section shall be used 

to calculate two separate sets of city, 

highway, and combined fuel economy 

and carbon-related exhaust emission 

values for each base level. 

(i) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using gasoline or 

diesel test fuel. 

(ii) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using alcohol or 

natural gas test fuel. 

(b) For each model type, as 

determined by the Administrator, a city, 

highway, and combined fuel economy 

value and a carbon-related exhaust 

emission value will be calculated by 

using the projected sales and fuel 

economy and carbon-related exhaust 

emission values for each base level 

within the model type. Separate model 

type calculations will be done based on 

the vehicle configuration fuel economy 

and carbon-related exhaust emission 

values as determined in § 600.206–08 

(a), (b) or (c), as applicable. 

(1) If the Administrator determines 

that automobiles intended for sale in the 

State of California are likely to exhibit 

significant differences in fuel economy 

and carbon-related exhaust emission 

values from those intended for sale in 

other States, she will calculate fuel 

economy and carbon-related exhaust 

emission values for each model type for 

vehicles intended for sale in California 

and for each model type for vehicles 

intended for sale in the rest of the 

States. 

(2) The sales fraction for each base 

level is calculated by dividing the 

projected sales of the base level within 

the model type by the projected sales of 

the model type and rounding the 

quotient to the nearest 0.0001. 

(3)(i) The FTP-based city fuel 

economy values of the model type 

(calculated to the nearest 0.0001 mpg) 

are determined by dividing one by a 

sum of terms, each of which 

corresponds to a base level and which 

is a fraction determined by dividing: 

(A) The sales fraction of a base level; 

by 

(B) The FTP-based city fuel economy 

value for the respective base level. 

(ii) The FTP-based city carbon-related 

exhaust emission value of the model 

type (calculated to the nearest gram per 

mile) are determined by a sum of terms, 

each of which corresponds to a base 

level and which is a product determined 

by multiplying: 

(A) The sales fraction of a base level; 

by 

(B) The FTP-based city carbon-related 

exhaust emission value for the 

respective base level. 

(4) The procedure specified in 

paragraph (b)(3) of this section is 

repeated in an analogous manner to 

determine the highway and combined 

fuel economy and carbon-related 

exhaust emission values for the model 

type. 

(5) For alcohol dual fuel automobiles 

and natural gas dual fuel automobiles, 

the procedures of paragraphs (b)(1) 

through (4) of this section shall be used 

to calculate two separate sets of city, 

highway, and combined fuel economy 

values and two separate sets of city, 

highway, and combined carbon-related 

exhaust emission values for each model 

type. 

(i) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using gasoline or 

diesel test fuel. 

(ii) Calculate the city, highway, and 

combined fuel economy and carbonrelated exhaust emission values from 

the tests performed using alcohol or 

natural gas test fuel. 

Subpart D—Fuel Economy Regulations 

for 1977 and Later Model Year 

Automobiles—Labeling 

45. A new § 600.301–12 is added to 

subpart D to read as follows: 

§ 600.301–12 General applicability. 

(a) Unless otherwise specified, the 

provisions of this subpart are applicable 

to 2012 and later model year 

automobiles. 

(b) [Reserved] 

Subpart F—Fuel Economy Regulations 

for Model Year 1978 Passenger 

Automobiles and for 1979 and Later 

Model Year Automobiles (Light Trucks 

and Passenger Automobiles)— 

Procedures for Determining 

Manufacturer’s Average Fuel Economy 

and Manufacturer’s Average Carbonrelated Exhaust Emissions 

46. The heading for subpart F is 

revised as set forth above. 

47. A new § 600.501–12 is added to 

subpart F to read as follows: 

§ 600.501–12 General applicability. 

The provisions of this subpart are 

applicable to 2012 and later model year 

passenger automobiles and light trucks 

and to the manufacturers of 2012 and 

later model year passenger automobiles 

and light trucks. 

48. A new § 600.507–12 is added to 

subpart F to read as follows: 

§ 600.507–12 Running change data 

requirements. 

(a) Except as specified in paragraph 

(d) of this section, the manufacturer 

shall submit additional running change 

fuel economy and carbon-related 

exhaust emissions data as specified in 

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paragraph (b) of this section for any 

running change approved or 

implemented under §§ 86.079–32, 

86.079–33, or 86.082–34 or 86.1842–01 

as applicable, which: 

(1) Creates a new base level or, 

(2) Affects an existing base level by: 

(i) Adding an axle ratio which is at 

least 10 percent larger (or, optionally, 10 

percent smaller) than the largest axle 

ratio tested. 

(ii) Increasing (or, optionally, 

decreasing) the road-load horsepower 

for a subconfiguration by 10 percent or 

more for the individual running change 

or, when considered cumulatively, since 

original certification (for each 

cumulative 10 percent increase using 

the originally certified road-load 

horsepower as a base). 

(iii) Adding a new subconfiguration 

by increasing (or, optionally, 

decreasing) the equivalent test weight 

for any previously tested 

subconfiguration in the base level. 

(iv) Revising the calibration of an 

electric vehicle, fuel cell electric 

vehicle, hybrid electric vehicle, plug-in 

hybrid electric vehicle or other 

advanced technology vehicle in such a 

way that the city or highway fuel 

economy of the vehicle (or the energy 

consumption of the vehicle, as may be 

applicable) is expected to become less 

fuel efficient (or optionally, more fuel 

efficient) by 4.0 percent or more as 

compared to the original fuel economy 

label values for fuel economy and/or 

energy consumption, as applicable. 

(b)(1) The additional running change 

fuel economy and carbon-related 

exhaust emissions data requirement in 

paragraph (a) of this section will be 

determined based on the sales of the 

vehicle configurations in the created or 

affected base level(s) as updated at the 

time of running change approval. 

(2) Within each newly created base 

level as specified in paragraph (a)(1) of 

this section, the manufacturer shall 

submit data from the highest projected 

total model year sales subconfiguration 

within the highest projected total model 

year sales configuration in the base 

level. 

(3) Within each base level affected by 

a running change as specified in 

paragraph (a)(2) of this section, fuel 

economy and carbon-related exhaust 

emissions data shall be submitted for 

the vehicle configuration created or 

affected by the running change which 

has the highest total model year 

projected sales. The test vehicle shall be 

of the subconfiguration created by the 

running change which has the highest 

projected total model year sales within 

the applicable vehicle configuration. 

(c) The manufacturer shall submit the 

fuel economy data required by this 

section to the Administrator in 

accordance with § 600.314(b). 

(d) For those model types created 

under § 600.208–08(a)(2), the 

manufacturer shall submit fuel economy 

and carbon-related exhaust emissions 

data for each subconfiguration added by 

a running change. 

49. A new § 600.509–12 is added to 

subpart F to read as follows: 

§ 600.509–12 Voluntary submission of 

additional data. 

(a) The manufacturer may optionally 

submit data in addition to the data 

required by the Administrator. 

(b) Additional fuel economy and 

carbon-related exhaust emissions data 

may be submitted by the manufacturer 

for any vehicle configuration which is to 

be tested as required in § 600.507 or for 

which fuel economy and carbon-related 

exhaust emissions data were previously 

submitted under paragraph (c) of this 

section. 

(c) Within a base level, additional fuel 

economy and carbon-related exhaust 

emissions data may be submitted by the 

manufacturer for any vehicle 

configuration which is not required to 

be tested by § 600.507. 

50. A new § 600.510–12 is added to 

subpart F to read as follows: 

§ 600.510–12 Calculation of average fuel 

economy and average carbon-related 

exhaust emissions. 

(a)(1) Average fuel economy will be 

calculated to the nearest 0.1 mpg for the 

classes of automobiles identified in this 

section, and the results of such 

calculations will be reported to the 

Secretary of Transportation for use in 

determining compliance with the 

applicable fuel economy standards. 

(i) An average fuel economy 

calculation will be made for the 

category of passenger automobiles that 

is domestically manufactured as defined 

in § 600.511(d)(1). 

(ii) An average fuel economy 

calculation will be made for the 

category of passenger automobiles that 

is not domestically manufactured as 

defined in § 600.511(d)(2). 

(iii) An average fuel economy 

calculation will be made for the 

category of light trucks that is 

domestically manufactured as defined 

in § 600.511(e)(1). 

(iv) An average fuel economy 

calculation will be made for the 

category of light trucks that is not 

domestically manufactured as defined 

in § 600.511(e)(2). 

(2) Average carbon-related exhaust 

emissions will be calculated to the 

nearest one gram per mile for the classes 

of automobiles identified in this section, 

and the results of such calculations will 

be reported to the Administrator for use 

in determining compliance with the 

applicable CO2 emission standards. 

(i) An average carbon-related exhaust 

emissions calculation will be made for 

passenger automobiles. 

(ii) An average carbon-related exhaust 

emissions calculation will be made for 

light trucks. 

(b) For the purpose of calculating 

average fuel economy under paragraph 

(c) of this section and for the purpose of 

calculating average carbon-related 

exhaust emissions under paragraph (j) of 

this section: 

(1) All fuel economy and carbonrelated exhaust emissions data 

submitted in accordance with 

§ 600.006(e) or § 600.512(c) shall be 

used. 

(2) The combined city/highway fuel 

economy and carbon-related exhaust 

emission values will be calculated for 

each model type in accordance with 

§ 600.208–08 of this section except that: 

(i) Separate fuel economy values will 

be calculated for model types and base 

levels associated with car lines that are: 

(A) Domestically produced; and 

(B) Nondomestically produced and 

imported; 

(ii) Total model year production data, 

as required by this subpart, will be used 

instead of sales projections; 

(iii) [Reserved] 

(iv) The fuel economy value will be 

rounded to the nearest 0.1 mpg; 

(v) The carbon-related exhaust 

emission value will be rounded to the 

nearest gram per mile; and 

(vi) At the manufacturer’s option, 

those vehicle configurations that are 

self-compensating to altitude changes 

may be separated by sales into highaltitude sales categories and lowaltitude sales categories. These separate 

sales categories may then be treated 

(only for the purpose of this section) as 

separate configurations in accordance 

with the procedure of § 600.208– 

08(a)(4)(ii). 

(3) The fuel economy and carbonrelated exhaust emission values for each 

vehicle configuration are the combined 

fuel economy and carbon-related 

exhaust emissions calculated according 

to § 600.206–08(a)(3) except that: 

(i) Separate fuel economy values will 

be calculated for vehicle configurations 

associated with car lines that are: 

(A) Domestically produced; and 

(B) Nondomestically produced and 

imported; 

(ii) Total model year production data, 

as required by this subpart will be used 

instead of sales projections; and 

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(iii) The fuel economy value of dieselpowered model types will be multiplied 

by the factor 1.0 to convert gallons of 

diesel fuel to equivalent gallons of 

gasoline. 

(c) Except as permitted in paragraph 

(d) of this section, the average fuel 

economy will be calculated individually 

for each category identified in paragraph 

(a) of this section as follows: 

(1) Divide the total production 

volume of that category of automobiles; 

by 

(2) A sum of terms, each of which 

corresponds to a model type within that 

category of automobiles and is a fraction 

determined by dividing the number of 

automobiles of that model type 

produced by the manufacturer in the 

model year; by 

(i) For gasoline-fueled and dieselfueled model types, the fuel economy 

calculated for that model type in 

accordance with paragraph (b)(2) of this 

section; or 

(ii) For alcohol-fueled model types, 

the fuel economy value calculated for 

that model type in accordance with 

paragraph (b)(2) of this section divided 

by 0.15 and rounded to the nearest 0.1 

mpg; or 

(iii) For natural gas-fueled model 

types, the fuel economy value 

calculated for that model type in 

accordance with paragraph (b)(2) of this 

section divided by 0.15 and rounded to 

the nearest 0.1 mpg; or 

(iv) For alcohol dual fuel model types, 

for model years 1993 through 2019, the 

harmonic average of the following two 

terms; the result rounded to the nearest 

0.1 mpg: 

(A) The combined model type fuel 

economy value for operation on gasoline 

or diesel fuel as determined in 

§ 600.208(b)(5)(i); and 

(B) The combined model type fuel 

economy value for operation on alcohol 

fuel as determined in § 600.208(b)(5)(ii) 

divided by 0.15 provided the 

requirements of § 600.510(g) are met; or 

(v) For natural gas dual fuel model 

types, for model years 1993 through 

2019, the harmonic average of the 

following two terms; the result rounded 

to the nearest 0.1 mpg: 

(A) The combined model type fuel 

economy value for operation on gasoline 

or diesel as determined in 

§ 600.208(b)(5)(i); and 

(B) The combined model type fuel 

economy value for operation on natural 

gas as determined in § 600.208(b)(5)(ii) 

divided by 0.15 provided the 

requirements of paragraph (g) of this 

section are met. 

(d) The Administrator may approve 

alternative calculation methods if they 

are part of an approved credit plan 

under the provisions of 15 U.S.C. 2003. 

(e) For passenger categories identified 

in paragraphs (a)(1) and (2) of this 

section, the average fuel economy 

calculated in accordance with paragraph 

(c) of this section shall be adjusted using 

the following equation: 

AFEadj = AFE[((0.55 × a × c) + (0.45 × 

c) + (0.5556 × a) + 0.4487)/((0.55 × 

a) + 0.45)] + IW 

Where: 

AFEadj = Adjusted average combined fuel 

economy, rounded to the nearest 0.1 

mpg; 

AFE = Average combined fuel economy as 

calculated in paragraph (c) of this 

section, rounded to the nearest 0.0001 

mpg; 

a = Sales-weight average (rounded to the 

nearest 0.0001 mpg) of all model type 

highway fuel economy values (rounded 

to the nearest 0.1 mpg) divided by the 

sales-weighted average (rounded to the 

nearest 0.0001 mpg) of all model type 

city fuel economy values (rounded to the 

nearest 0.1 mpg). The quotient shall be 

rounded to 4 decimal places. These 

average fuel economies shall be 

determined using the methodology of 

paragraph (c) of this section. 

c = 0.0014; 

IW = (9.2917 × 10 ¥3 × SF3IWC × FE3IWC) ¥ 

(3.5123 × 10 ¥3 × SF4ETW × FE4IWC). 

Note: Any calculated value of IW less than 

zero shall be set equal to zero. 

SF3IWC = The 3000 lb. inertia weight class 

sales divided by total sales. The quotient 

shall be rounded to 4 decimal places. 

SF4ETW = The 4000 lb. equivalent test weight 

category sales divided by total sales. The 

quotient shall be rounded to 4 decimal 

places. 

FE4IWC = The sales-weighted average 

combined fuel economy of all 3000 lb. 

inertia weight class base levels in the 

compliance category. Round the result to 

the nearest 0.0001 mpg. 

FE4IWC = The sales-weighted average 

combined fuel economy of all 4000 lb. 

inertia weight class base levels in the 

compliance category. Round the result to 

the nearest 0.0001 mpg. 

(f) The Administrator shall calculate 

and apply additional average fuel 

economy adjustments if, after notice and 

opportunity for comment, the 

Administrator determines that, as a 

result of test procedure changes not 

previously considered, such correction 

is necessary to yield fuel economy test 

results that are comparable to those 

obtained under the 1975 test 

procedures. In making such 

determinations, the Administrator must 

find that: 

(1) A directional change in measured 

fuel economy of an average vehicle can 

be predicted from a revision to the test 

procedures; 

(2) The magnitude of the change in 

measured fuel economy for any vehicle 

or fleet of vehicles caused by a revision 

to the test procedures is quantifiable 

from theoretical calculations or best 

available test data; 

(3) The impact of a change on average 

fuel economy is not due to eliminating 

the ability of manufacturers to take 

advantage of flexibility within the 

existing test procedures to gain 

measured improvements in fuel 

economy which are not the result of 

actual improvements in the fuel 

economy of production vehicles; 

(4) The impact of a change on average 

fuel economy is not solely due to a 

greater ability of manufacturers to 

reflect in average fuel economy those 

design changes expected to have 

comparable effects on in-use fuel 

economy; 

(5) The test procedure change is 

required by EPA or is a change initiated 

by EPA in its laboratory and is not a 

change implemented solely by a 

manufacturer in its own laboratory. 

(g)(1) Alcohol dual fuel automobiles 

and natural gas dual fuel automobiles 

must provide equal or greater energy 

efficiency while operating on alcohol or 

natural gas as while operating on 

gasoline or diesel fuel to obtain the 

CAFE credit determined in paragraphs 

(c)(2)(iv) and (v) of this section or to 

obtain the carbon-related exhaust 

emissions credit determined in 

paragraphs (j)(2)(ii) and (iii). The 

following equation must hold true: 

Ealt/Epet> or = 1 

Where: 

Ealt = [FEalt/(NHValt × Dalt)] × 106 = energy 

efficiency while operating on alternative 

fuel rounded to the nearest 0.01 miles/ 

million BTU. 

Epet = [FEpet/(NHVpet × Dpet)] × 106 = energy 

efficiency while operating on gasoline or 

diesel (petroleum) fuel rounded to the 

nearest 0.01 miles/million BTU. 

FEalt is the fuel economy [miles/gallon for 

liquid fuels or miles/100 standard cubic 

feet for gaseous fuels] while operated on 

the alternative fuel as determined in 

§ 600.113–08(a) and (b); 

FEpet is the fuel economy [miles/gallon] while 

operated on petroleum fuel (gasoline or 

diesel) as determined in § 600.113(a) and 

(b); 

NHValt is the net (lower) heating value [BTU/ 

lb] of the alternative fuel; 

NHVpet is the net (lower) heating value [BTU/ 

lb] of the petroleum fuel; 

Dalt is the density [lb/gallon for liquid fuels 

or lb/100 standard cubic feet for gaseous 

fuels] of the alternative fuel; 

Dpet is the density [lb/gallon] of the 

petroleum fuel. 

(i) The equation must hold true for 

both the FTP city and HFET highway 

fuel economy values for each test of 

each test vehicle. 

(ii)(A) The net heating value for 

alcohol fuels shall be determined per 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49781 

ASTM D 240–92 ‘‘Standard Test Method 

for Heat of Combustion of Liquid 

Hydrocarbon Fuels by Bomb 

Calorimeter.’’ This incorporation by 

reference was approved by the Director 

of the Federal Register in accordance 

with 5 U.S.C. 552(a) and 1 CFR part 51. 

Copies may be obtained from the 

American Society for Testing and 

Materials, 100 Barr Harbor Drive, P.O. 

Box C700, West Conshohocken, PA 

19428–2959. Copies may be inspected at 

U.S. EPA Headquarters Library, EPA 

West Building, Constitution Avenue and 

14th Street, NW., Room 3340, 

Washington, DC, or at the National 

Archives and Records Administration 

(NARA). For information on the 

availability of this material at NARA, 

call 202–741–6030, or go to: http:// 

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html. 

(B) The density for alcohol fuels shall 

be determined per ASTM D 1298–85 

(Reapproved 1990) ‘‘Standard Practice 

for Density, Relative Density (Specific 

Gravity), or API Gravity of Crude 

Petroleum and Liquid Petroleum 

Products by Hydrometer Method.’’ This 

incorporation by reference was 

approved by the Director of the Federal 

Register in accordance with 5 U.S.C. 

552(a) and 1 CFR part 51. Copies may 

be obtained from the American Society 

for Testing and Materials, 100 Barr 

Harbor Drive, P.O. Box C700, West 

Conshohocken, PA 19428–2959. Copies 

may be inspected at U.S. EPA 

Headquarters Library, EPA West 

Building, Constitution Avenue and 14th 

Street, NW., Room 3340, Washington, 

DC, or at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, 

or go to: http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html. 

(iii) The net heating value and density 

of gasoline are to be determined by the 

manufacturer in accordance with 

§ 600.113(f). 

(2) [Reserved] 

(3) Alcohol dual fuel passenger 

automobiles and natural gas dual fuel 

passenger automobiles manufactured 

during model years 1993 through 2019 

must meet the minimum driving range 

requirements established by the 

Secretary of Transportation (49 CFR part 

538) to obtain the CAFE credit 

determined in paragraphs (c)(2)(iv) and 

(v) of this section. 

(h) [Reserved] 

(i) For model years 2012 through 

2015, and for each category of 

automobile identified in paragraph 

(a)(2) of this section, the maximum 

decrease in average carbon-related 

exhaust emissions determined in 

paragraph (c) of this section attributable 

to alcohol dual fuel automobiles and 

natural gas dual fuel automobiles shall 

be as follows: 

Model year 

Maximum decrease—passenger automobiles 

(g/mi) 

Maximum decrease—light 

trucks 

(g/mi) 

2012 ......................................................................................................................................................................... 9.8 17.9 

2013 ......................................................................................................................................................................... 9.3 17.1 

2014 ......................................................................................................................................................................... 8.9 16.3 

2015 ......................................................................................................................................................................... 6.9 12.6 

(1) The Administrator shall calculate 

the decrease in average carbon-related 

exhaust emissions to determine if the 

maximum decrease provided in 

paragraph (i) of this section has been 

reached. The Administrator shall 

calculate the average carbon-related 

exhaust emissions for each category of 

automobiles specified in paragraph 

(a)(2) of this section by subtracting the 

average carbon-related exhaust emission 

values determined in paragraphs 

(b)(2)(vi), (b)(2)(vii), and (c) of this 

section from the average carbon-related 

exhaust emission values calculated in 

accordance with this section by 

assuming all alcohol dual fuel and 

natural gas dual fuel automobiles are 

operated exclusively on gasoline (or 

diesel) fuel. The difference is limited to 

the maximum decrease specified in 

paragraph (i) of this section. 

(2) [Reserved] 

(j) The average carbon-related exhaust 

emissions will be calculated 

individually for each category identified 

in paragraph (a)(2) of this section as 

follows: 

(1) Divide the total production 

volume of that category of automobiles 

into: 

(2) A sum of terms, each of which 

corresponds to a model type within that 

category of automobiles and is a product 

determined by multiplying the number 

of automobiles of that model type 

produced by the manufacturer in the 

model year by: 

(i) For gasoline-fueled and dieselfueled model types, the carbon-related 

exhaust emissions value calculated for 

that model type in accordance with 

paragraph (b)(2) of this section; or 

(ii)(A) For alcohol-fueled model types, 

for model years 2012 through 2015, the 

carbon-related exhaust emissions value 

calculated for that model type in 

accordance with paragraph (b)(2) of this 

section multiplied by 0.15 and rounded 

to the nearest gram per mile; or 

(B) For alcohol-fueled model types, 

for model years 2016 and later, the 

carbon-related exhaust emissions value 

calculated for that model type in 

accordance with paragraph (b)(2) of this 

section; or 

(iii)(A) For natural gas-fueled model 

types, for model years 2012 through 

2015, the carbon-related exhaust 

emissions value calculated for that 

model type in accordance with 

paragraph (b)(2) of this section 

multiplied by 0.15 and rounded to the 

nearest gram per mile; or 

(B) For natural gas-fueled model 

types, for model years 2016 and later, 

the carbon-related exhaust emissions 

value calculated for that model type in 

accordance with paragraph (b)(2) of this 

section; or 

(iv) For alcohol dual fuel model types, 

for model years 2012 through 2015, the 

arithmetic average of the following two 

terms, the result rounded to the nearest 

gram per mile: 

(A) The combined model type carbonrelated exhaust emissions value for 

operation on gasoline or diesel fuel as 

determined in § 600.208(b)(5)(i); and 

(B) The combined model type carbonrelated exhaust emissions value for 

operation on alcohol fuel as determined 

in § 600.208(b)(5)(ii) multiplied by 0.15 

provided the requirements of 

§ 600.510(g) are met; or 

(v) For natural gas dual fuel model 

types, for model years 2012 through 

2015, the arithmetic average of the 

following two terms; the result rounded 

to the nearest gram per mile: 

(A) The combined model type carbonrelated exhaust emissions value for 

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49782 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

operation on gasoline or diesel as 

determined in § 600.208(b)(5)(i); and 

(B) The combined model type carbonrelated exhaust emissions value for 

operation on natural gas as determined 

in § 600.208(b)(5)(ii) multiplied by 0.15 

provided the requirements of paragraph 

(g) of this section are met. 

(vi) For alcohol dual fuel model types, 

for model years 2016 and later, the 

combined model type carbon-related 

exhaust emissions value determined 

according to the following formula and 

rounded to the nearest gram per mile: 

CREE = (F × CREEalt) + ((1¥F) × 

CREEgas) 

Where: 

F = 0.00 unless otherwise approved by the 

Administrator according to the 

provisions of paragraph (k) of this 

section; 

CREEalt = The combined model type carbonrelated exhaust emissions value for 

operation on alcohol fuel as determined 

in § 600.208(b)(5)(ii); and 

CREEgas = The combined model type carbonrelated exhaust emissions value for 

operation on gasoline or diesel fuel as 

determined in § 600.208(b)(5)(i). 

(vii) For natural gas dual fuel model 

types, for model years 2016 and later, 

the combined model type carbon-related 

exhaust emissions value determined 

according to the following formula and 

rounded to the nearest gram per mile: 

CREE = (F × CREEalt) + ((1¥F) × 

CREEgas) 

Where: 

F = 0.00 unless otherwise approved by the 

Administrator according to the 

provisions of paragraph (k) of this 

section; 

CREEalt = The combined model type carbonrelated exhaust emissions value for 

operation on natural gas as determined 

in § 600.208(b)(5)(ii); and 

CREEgas = The combined model type carbonrelated exhaust emissions value for 

operation on gasoline or diesel fuel as 

determined in § 600.208(b)(5)(i). 

(3) The production volume of electric, 

fuel cell electric and plug-in hybrid 

electric model types for model years 

2012 through 2016 may be adjusted by 

the multiplier specified in 40 CFR 

86.1866–12(a) and in accordance with 

the provisions of 40 CFR 86.1866–12(a). 

The adjusted production volumes shall 

be accounted for both in the total 

production volume specified in 

paragraph (j)(1) of this section and in 

the model type production volume 

specified in paragraph (j)(2) of this 

section. 

(k) Alternative in-use weighting 

factors for dual fuel model types. Using 

one of the methods in either paragraph 

(k)(1) or (2) of this section, 

manufacturers may request the use of 

alternative values for the weighting 

factor F in the equations in paragraphs 

(j)(2)(vi) and (vii) of this section. Unless 

otherwise approved by the 

Administrator, the manufacturer must 

use the value of F that is in effect in 

paragraphs (j)(2)(vi) and (vii) of this 

section. 

(1) Upon written request from a 

manufacturer, the Administrator will 

determine and publish by written 

guidance an appropriate value of F for 

each requested alternative fuel based on 

the Administrator’s assessment of realworld use of the alternative fuel. Such 

published values would be available for 

any manufacturer to use. The 

Administrator will periodically update 

these values upon written request from 

a manufacturer. 

(2) The manufacturer may optionally 

submit to the Administrator its own 

demonstration regarding the real-world 

use of the alternative fuel in their 

vehicles and its own estimate of the 

appropriate value of F in the equations 

in paragraphs (j)(2)(vi) and (vii) of this 

section. Depending on the nature of the 

analytical approach, the manufacturer 

could provide estimates of F that are 

model type specific or that are generally 

applicable to the manufacturer’s dual 

fuel fleet. The manufacturer’s analysis 

could include use of data gathered from 

on-board sensors and computers, from 

dual fuel vehicles in fleets that are 

centrally fueled, or from other sources. 

The analysis must be based on sound 

statistical methodology and must 

account for analytical uncertainty. Any 

approval by the Administrator will 

pertain to the use of values of F for the 

model types specified by the 

manufacturer. 

51. A new § 600.512–12 is added to 

subpart F to read as follows: 

§ 600.512–12 Model year report. 

(a) For each model year, the 

manufacturer shall submit to the 

Administrator a report, known as the 

model year report, containing all 

information necessary for the 

calculation of the manufacturer’s 

average fuel economy and all 

information necessary for the 

calculation of the manufacturer’s 

average carbon-related exhaust 

emissions. 

(1) The results of the manufacturer 

calculations and summary information 

of model type fuel economy values 

which are contained in the average fuel 

economy calculation shall also be 

submitted to the Secretary of the 

Department of Transportation, National 

Highway and Traffic Safety 

Administration. 

(2) The results of the manufacturer 

calculations and summary information 

of model type carbon-related exhaust 

emission values which are contained in 

the average calculation shall be 

submitted to the Administrator. 

(b)(1) The model year report shall be 

in writing, signed by the authorized 

representative of the manufacturer and 

shall be submitted no later than 90 days 

after the end of the model year. 

(2) The Administrator may waive the 

requirement that the model year report 

be submitted no later than 90 days after 

the end of the model year. Based upon 

a request by the manufacturer, if the 

Administrator determines that 90 days 

is insufficient time for the manufacturer 

to provide all additional data required 

as determined in § 600.507, the 

Administrator shall establish an 

alternative date by which the model 

year report must be submitted. 

(3) Separate reports shall be submitted 

for passenger automobiles and light 

trucks (as identified in § 600.510). 

(c) The model year report must 

include the following information: 

(1)(i) All fuel economy data used in 

the FTP/HFET-based model type 

calculations under § 600.208–12, and 

subsequently required by the 

Administrator in accordance with 

§ 600.507; 

(ii) All carbon-related exhaust 

emission data used in the FTP/HFETbased model type calculations under 

§ 600.208–12, and subsequently 

required by the Administrator in 

accordance with § 600.507; 

(2)(i) All fuel economy data for 

certification vehicles and for vehicles 

tested for running changes approved 

under § 86.1842–01 of this chapter; 

(ii) All carbon-related exhaust 

emission data for certification vehicles 

and for vehicles tested for running 

changes approved under § 86.1842–01 

of this chapter; 

(3) Any additional fuel economy and 

carbon-related exhaust emission data 

submitted by the manufacturer under 

§ 600.509; 

(4)(i) A fuel economy value for each 

model type of the manufacturer’s 

product line calculated according to 

§ 600.510(b)(2); 

(ii) A carbon-related exhaust emission 

value for each model type of the 

manufacturer’s product line calculated 

according to § 600.510(b)(2); 

(5)(i) The manufacturer’s average fuel 

economy value calculated according to 

§ 600.510(c); 

(ii) The manufacturer’s average 

carbon-related exhaust emission value 

calculated according to § 600.510(j); 

(6) A listing of both domestically and 

nondomestically produced car lines as 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49783 

determined in § 600.511 and the cost 

information upon which the 

determination was made; and 

(7) The authenticity and accuracy of 

production data must be attested to by 

the corporation, and shall bear the 

signature of an officer (a corporate 

executive of at least the rank of vicepresident) designated by the 

corporation. Such attestation shall 

constitute a representation by the 

manufacturer that the manufacturer has 

established reasonable, prudent 

procedures to ascertain and provide 

production data that are accurate and 

authentic in all material respects and 

that these procedures have been 

followed by employees of the 

manufacturer involved in the reporting 

process. The signature of the designated 

officer shall constitute a representation 

by the required attestation. 

52. A new § 600.514–12 is added to 

subpart F to read as follows: 

§ 600.514–12 Reports to the Environmental 

Protection Agency. 

This section establishes requirements 

for automobile manufacturers to submit 

reports to the Environmental Protection 

Agency regarding their efforts to reduce 

automotive greenhouse gas emissions. 

(a) General Requirements. (1) For each 

current model year, each manufacturer 

shall submit a pre-model year report, 

and, as required by paragraph (d) of this 

section, supplementary reports. 

(2)(i) The pre-model year report 

required by this section for each model 

year must be submitted during the 

month of December (e.g., the pre-model 

year report for the 2012 model year 

must be submitted during December, 

2011). 

(ii) Each supplementary report must 

be submitted in accordance with 

paragraph (e)(3) of this section. 

(3) Each report required by this 

section must: 

(i) Identify the report as a pre-model 

year report or supplementary report as 

appropriate; 

(ii) Identify the manufacturer 

submitting the report; 

(iii) State the full name, title, and 

address of the official responsible for 

preparing the report; 

(iv) Be submitted to: Director, 

Compliance and Innovative Strategies 

Division, U.S. Environmental Protection 

Agency, 2000 Traverwood, Ann Arbor, 

Michigan 48105; 

(v) Identify the current model year; 

(vi) Be written in the English 

language; and 

(vii)(A) Specify any part of the 

information or data in the report that the 

manufacturer believes should be 

withheld from public disclosure as trade 

secret or other confidential business 

information. 

(B) With respect to each item of 

information or data requested by the 

manufacturer to be withheld, the 

manufacturer shall: 

(1) Show that disclosure of the item 

would result in significant competitive 

damage; 

(2) Specify the period during which 

the item must be withheld to avoid that 

damage; and 

(3) Show that earlier disclosure would 

result in that damage. 

(4) Each report required by this 

section must be based upon all 

information and data available to the 

manufacturer 30 days before the report 

is submitted to the Administrator. 

(b) General content of reports. (1) Premodel year report. Except as provided 

in paragraph (b)(3) of this section, each 

pre-model year report for each model 

year must contain the information 

required by paragraph (c)(1) of this 

section. 

(2) Supplementary report. Each 

supplementary report must contain the 

information required by paragraph 

(e)(2)(i), (ii), or (iii), as appropriate. 

(3) Exceptions. (i) The pre-model year 

report is not required to contain the 

information specified in paragraphs 

(c)(2), (c)(3)(i) and (i), or (c)(3)(iv)(N) 

and (S) of this section if that report is 

required to be submitted before the fifth 

day after the date by which the 

manufacturer must submit the 

preliminary determination of its average 

fuel economy for the current model year 

to the Environmental Protection Agency 

under 40 CFR 600.506, when such 

determination is required. Each 

manufacturer that does not include 

information under the exception in the 

immediately preceding sentence shall 

indicate in its report the date by which 

it must submit that preliminary 

determination. 

(ii) The pre-model year report 

submitted by an incomplete automobile 

manufacturer for any model year is not 

required to contain the information 

specified in paragraphs (c)(3)(iv)(O) 

through (Q) and (c)(3)(v) of this section. 

The information provided by the 

incomplete automobile manufacturer 

under (c)(3) shall be according to base 

level instead of model type or carline. 

(c) Pre-model year reports. (1) Provide 

the information required by paragraphs 

(c)(2) and (3) of this section for the 

manufacturer’s passenger automobiles 

and light trucks for the current model 

year. 

(2) Projected average and required 

carbon-related exhaust emissions. (i) 

State the projected average carbonrelated exhaust emissions for the 

manufacturer’s automobiles determined 

in accordance with § 600.510–12 and 

based upon the carbon-related exhaust 

emission values and projected sales 

figures provided under paragraph 

(c)(3)(ii) of this section. 

(ii) State the projected final average 

carbon-related exhaust emissions value 

that the manufacturer anticipates having 

if changes implemented during the 

model year will cause that average to be 

different from the average carbonrelated exhaust emissions projected 

under paragraph (c)(2)(i) of this section. 

(iii) State the projected required 

carbon-related exhaust emissions value 

for the manufacturer’s passenger 

automobiles and light trucks determined 

in accordance with 40 CFR 86.1818–12 

and based upon the projected sales 

figures provided under paragraph 

(c)(3)(ii) of this section. 

(iv) State the projected final required 

carbon-related exhaust emissions value 

that the manufacturer anticipates having 

if changes implemented during the 

model year will cause the targets to be 

different from the target carbon-related 

exhaust emissions projected under 

paragraph (c)(2)(iii) of this section. 

(v) State whether the manufacturer 

believes that the projections it provides 

under paragraphs (c)(2)(ii) and (c)(2)(iv) 

of this section, or if it does not provide 

an average or target under those 

paragraphs, the projections it provides 

under paragraphs (c)(2)(i) and (c)(2)(iii) 

of this section, sufficiently represent the 

manufacturer’s average and target 

carbon-related exhaust emissions for the 

current model year. In the case of a 

manufacturer that believes that the 

projections are not sufficiently 

representative for those purposes, state 

the specific nature of any reason for the 

insufficiency and the specific additional 

testing or derivation of carbon-related 

exhaust emission values by analytical 

methods believed by the manufacturer 

necessary to eliminate the insufficiency 

and any plans of the manufacturer to 

undertake that testing or derivation 

voluntarily and submit the resulting 

data to the Environmental Protection 

Agency under 40 CFR 600.509. 

(vi) State the number of credits, if any, 

projected to be earned under the 

provisions of § 86.1866–12 and the 

sources and calculations of such credits. 

(3) Model type and configuration fuel 

economy and technical information. (i) 

For each model type of the 

manufacturer’s passenger cars and light 

trucks, provide the information 

specified in paragraph (c)(3)(ii) of this 

section in tabular form. List the model 

types in order of increasing average 

inertia weight from top to bottom down 

the left side of the table and list the 

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49784 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

information categories in the order 

specified in paragraph (c)(3)(ii) of this 

section from left to right across the top 

of the table. 

(ii)(A) Combined carbon-related 

exhaust emissions value; and 

(B) Projected sales for the current 

model year and total sales of all model 

types. 

(iii) For each vehicle configuration 

whose carbon-related exhaust emission 

value was used to calculate the carbonrelated exhaust emission values for a 

model type under paragraph (c)(3)(ii) of 

this section, provide the information 

specified in paragraph (c)(3)(iv) of this 

section in tabular form. If a tabular form 

is used then list the vehicle 

configurations, by model type in the 

order listed under paragraph (c)(3)(ii) of 

this section, from top to bottom down 

the left of the table and list the 

information categories across the top of 

the table from left to right in the order 

specified in paragraph (c)(3)(iv) of this 

section. Other formats (such as copies of 

EPA reports) which contain all the 

required information in a readily 

identifiable form are also acceptable. 

(iv)(A) Loaded vehicle weight; 

(B) Equivalent test weight; 

(C) Engine displacement, liters; 

(D) SAE net rated power, kilowatts; 

(E) SAE net horsepower; 

(F) Engine code; 

(G) Fuel system (number of carburetor 

barrels or, if fuel injection is used, so 

indicate); 

(H) Emission control system; 

(I) Transmission class; 

(J) Number of forward speeds; 

(K) Existence of overdrive (indicate 

yes or no); 

(L) Total drive ratio (N/V); 

(M) Axle ratio; 

(N) Combined fuel economy; 

(O) Projected sales for the current 

model year; 

(P) In the case of passenger 

automobiles: 

(1) Interior volume index, determined 

in accordance with subpart D of 40 CFR 

part 600, 

(2) Body style, 

(3) Beginning model year 2012, base 

tire as defined in § 600.002–08, 

(4) Beginning model year 2012, track 

width as defined in § 600. 002–08, 

(5) Beginning model year 2012, 

wheelbase as defined in § 600. 002–08, 

and 

(6) Beginning model year 2012, 

footprint as defined in § 600. 002–08. 

(Q) In the case of light trucks: 

(1) Passenger-carrying volume, 

(2) Cargo-carrying volume, 

(3) Beginning model year 2012, base 

tire as defined in § 600.002–08, 

(4) Beginning model year 2012, track 

width as defined in § 600.002–08, 

(5) Beginning model year 2012, 

wheelbase as defined in § 600.002–08, 

and 

(6) Beginning model year 2012, 

footprint as defined in § 600.002–08. 

(R) Frontal area; 

(S) Road load power at 50 miles per 

hour, if determined by the manufacturer 

for purposes other than compliance 

with this part to differ from the road 

load setting prescribed in 40 CFR 

86.177–11(d); 

(T) Optional equipment that the 

manufacturer is required under 40 CFR 

parts 86 and 600 to have actually 

installed on the vehicle configuration, 

or the weight of which must be included 

in the curb weight computation for the 

vehicle configuration, for fuel economy 

and CO2 emission testing purposes. 

(v) For each model type of automobile 

which is classified as an automobile 

capable of off-highway operation under 

49 CFR 523, provide the following data: 

(A) Approach angle; 

(B) Departure angle; 

(C) Breakover angle; 

(D) Axle clearance; 

(E) Minimum running clearance; and 

(F) Existence of 4-wheel drive 

(indicate yes or no). 

(vi) The CO2 emission values 

provided under paragraphs (c)(3)(ii) and 

(iv) of this section shall be determined 

in accordance with § 600.208–12. 

(d) Supplementary reports. (1)(i) 

Except as provided in paragraph (d)(4) 

of this section, each manufacturer 

whose most recently submitted report 

contained an average carbon-related 

exhaust emissions projection under 

(c)(2)(ii) of this section, or, if no average 

carbon-related exhaust emission value 

was projected under that paragraph, 

under paragraph (c)(2)(i), that was not 

greater than the applicable average CO2

emissions standard and who now 

projects an average carbon-related 

exhaust emissions value which is 

greater than the applicable standard 

shall file a supplementary report 

containing the information specified in 

paragraph (d)(2)(i) of this section. 

(ii) Except as provided in paragraph 

(d)(4) of this section, each manufacturer 

that determines that its average carbonrelated exhaust emissions for the 

current model year as projected under 

paragraph (c)(2)(ii) of this section or, if 

no average carbon-related exhaust 

emissions value was projected under 

that paragraph, as projected under 

paragraph (c)(2)(i) of this section, is less 

representative than the manufacturer 

previously reported it to be under 

paragraph (c)(2)(iii) of this section, this 

paragraph (d), or both, shall file a 

supplementary report containing the 

information specified in paragraph 

(d)(2)(ii) of this section. 

(iii) Each manufacturer whose premodel year report omits any of the 

information specified in (c)(2), (c)(3)(i) 

and (ii), or (c)(3)(iv)(P) and (Q) shall file 

a supplementary report containing the 

information specified in paragraph 

(d)(2)(iii) of this section. 

(2)(i) The supplementary report 

required by paragraph (d)(1)(i) of this 

section must contain: 

(A) Such revisions of and additions to 

the information previously submitted by 

the manufacturer under this part 

regarding the automobiles whose 

projected average carbon-related 

exhaust emissions value has increased 

as specified in paragraph (d)(1)(i) of this 

section as are necessary— 

(1) To reflect the increase and its 

cause; 

(2) To indicate a new projected 

average carbon-related exhaust 

emissions value based upon these 

additional measures. 

(B) An explanation of the cause of the 

increase in average carbon-related 

exhaust emissions that led to the 

manufacturer’s having to submit the 

supplementary report required by 

paragraph (d)(1)(i) of this section. 

(ii) The supplementary report 

required by paragraph (d)(1)(ii) of this 

section must contain: 

(A) A statement of the specific nature 

of and reason for the insufficiency in the 

representativeness of the projected 

average carbon-related exhaust 

emissions; 

(B) A statement of specific additional 

testing or derivation of carbon-related 

exhaust emissions values by analytical 

methods believed by the manufacturer 

necessary to eliminate the insufficiency; 

and 

(C) A description of any plans of the 

manufacturer to undertake that testing 

or derivation voluntarily and submit the 

resulting data to the Environmental 

Protection Agency under 40 CFR 

600.509. 

(iii) The supplementary report 

required by paragraph (d)(1)(iii) of this 

section must contain: 

(A) All of the information omitted 

from the pre-model year report under 

paragraph (b)(3)(ii); and 

(B) Such revisions of and additions to 

the information submitted by the 

manufacturer in its pre-model year 

report regarding the automobiles 

produced during the current model year 

as are necessary to reflect the 

information provided under paragraph 

(b)(3)(i) of this section. 

(3)(i) Each report required by 

paragraph (d)(1)(i) or (ii) of this section 

must be submitted in accordance with 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49785 

paragraph (a)(3) not more than 45 days 

after the date on which the 

manufacturer determined, or could 

have, with reasonable diligence, 

determined that a report is required 

under paragraph (d)(1)(i) or (ii) of this 

section. 

(ii) Each report required by paragraph 

(d)(1)(iii) of this section must be 

submitted in accordance with paragraph 

(a)(3) of this section not later than five 

days after the day by which the 

manufacturer is required to submit a 

preliminary calculation of its average 

fuel economy for the current model year 

to the Environmental Protection Agency 

under 40 CFR 600.506. 

(4) A supplementary report is not 

required to be submitted by the 

manufacturer under paragraph (d)(1)(i) 

or (ii) of this section: 

(i) With respect to information 

submitted under this part before the 

most recent report submitted by the 

manufacturer under this part, or 

(ii) When the date specified in 

paragraph (d)(3) of this section occurs 

after the day by which the pre-model 

year report for the model year 

immediately following the current 

model year must be submitted by the 

manufacturer under this part. 

(e) Determination of carbon-related 

exhaust emission values and average 

carbon-related exhaust emissions. 

(1) Vehicle configuration carbonrelated exhaust emission values. (i) For 

each vehicle configuration for which a 

carbon-related exhaust emission value is 

required under paragraph (e)(3) of this 

section and has been determined and 

approved under 40 CFR part 600, the 

manufacturer shall submit that carbonrelated exhaust emission value. 

(ii) For each vehicle configuration 

specified in paragraph (e)(1)(i) of this 

section for which a carbon-related 

exhaust emissions value approved 

under 40 CFR part 600, does not exist, 

but for which a carbon-related exhaust 

emissions value determined under that 

part exists, the manufacturer shall 

submit that carbon-related exhaust 

emissions value. 

(iii) For each vehicle configuration 

specified in paragraph (e)(1)(i) of this 

section for which a carbon-related 

exhaust emissions value has been 

neither determined nor approved under 

40 CFR part 600, the manufacturer shall 

submit a carbon-related exhaust 

emissions value based on tests or 

analyses comparable to those prescribed 

or permitted under 40 CFR part 600 and 

a description of the test procedures or 

analytical methods used. 

(2) Base level and model type carbonrelated exhaust emission values. For 

each base level and model type, the 

manufacturer shall submit a carbonrelated exhaust emission value based on 

the values submitted under paragraph 

(e)(1) of this section and calculated in 

the same manner as base level and 

model type carbon-related exhaust 

emission values are calculated for use 

under subpart F of 40 CFR part 600. 

(3) Average carbon-related exhaust 

emissions. Average carbon-related 

exhaust emissions must be based upon 

carbon-related exhaust emission values 

calculated under paragraph (e)(2) of this 

section for each model type and must be 

calculated in accordance with 40 CFR 

600.506, using the configurations 

specified in 40 CFR 600.506(a)(2), 

except that carbon-related exhaust 

emission values for running changes 

and for new base levels are required 

only for those changes made or base 

levels added before the average carbonrelated exhaust emission value is 

required to be submitted under this 

section. 

In consideration of the foregoing, 

under the authority of 49 U.S.C. 32901, 

32902, 32903, and 32907, and 

delegation of authority at 49 CFR 1.50, 

NHTSA proposes to amend 49 CFR 

Chapter V as follows: 

PART 531—PASSENGER 

AUTOMOBILE AVERAGE FUEL 

ECONOMY STANDARDS 

1. The authority citation for part 531 

continues to read as follows: 

Authority: 49 U.S.C. 32902; delegation of 

authority at 49 CFR 1.50. 

2. Amend § 531.5 by redesignating 

paragraph (d) as paragraph (e), revising 

the introductory text of paragraph (a), 

revising paragraph (c), and adding a 

new paragraph (d) to read as follows: 

§ 531.5 Fuel economy standards. 

(a) Except as provided in paragraph 

(e) of this section, each manufacturer of 

passenger automobiles shall comply 

with the average fuel economy 

standards in Table I, expressed in miles 

per gallon, in the model year specified 

as applicable: 

* * * * * 

(c) For model years 2012–2016, a 

manufacturer’s passenger automobile 

fleet shall comply with the fuel 

economy level calculated for that model 

year according to Figure 2 and the 

appropriate values in Table III. 

Figure 2 : CAFE

SALES

SALES

TARGET

required

i

i

i

=

∑

∑

i

i

Where: 

CAFErequired is the required level for a given 

fleet, 

SALESi is the number of units of model i 

produced for sale in the United States, 

TARGETi is the fuel economy target 

applicable to model i (according to the 

equation shown in Figure 3 and based on 

the footprint of model i), 

and the summations in the numerator and 

denominator are both performed over all 

models in the fleet in question. 

Figure 3 : TARGET

MIN MAX c FOOTPRINT d,

=

× + ⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢ ⎤

⎦

⎥

1

1 1

a b,

Where: 

TARGET is the fuel economy target (in mpg) 

applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), 

Parameters a, b, c, and d are defined in Table 

III, and 

The MIN and MAX functions take the 

minimum and maximum, respectively of 

the included values. 


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49786 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE III—PARAMETERS FOR THE PASSENGER AUTOMOBILE FUEL ECONOMY TARGETS

Model year 

Parameters 

a b c d 

2012 ................................................................................................................. 36.23 28.12 0.0005308 0.005842 

2013 ................................................................................................................. 37.15 28.67 0.0005308 0.005153 

2014 ................................................................................................................. 38.08 29.22 0.0005308 0.004498 

2015 ................................................................................................................. 39.55 30.08 0.0005308 0.003520 

2016 ................................................................................................................. 41.38 31.12 0.0005308 0.002406 

(d) In addition to the requirement of 

paragraphs (b) and (c) of this section, 

each manufacturer shall also meet the 

minimum standard for domestically 

manufactured passenger automobiles 

expressed in Table IV: 

TABLE IV 

Model year Minimum 

standard 

2011 .......................... 28.0 

2012 .......................... 30.9 

2013 .......................... 31.6 

2014 .......................... 32.4 

2015 .......................... 33.5 

2016 .......................... 34.9 

* * * * * 

3. Add Appendix A to Part 531 to 

read as follows: 

Appendix A to Part 531—Example of 

Calculating Compliance Under § 531.5 

Paragraph (b) 

Assume a hypothetical manufacturer 

(Manufacturer X) produces a fleet of 

passenger automobiles in MY 2011 as 

follows: 

Appendix A, Table 1 

Model Carline Desc Eng/Trans Drive 

system 

Fuel econ 

mpg 

Production 

volume 

Footprint 

(ft2) 

A ......................................... PC A ............ 2DS .............. 1.8L, A5 ....... FWD ............. 32.5 1,500 39.2 

B ......................................... PC B ............ 2DS .............. 1.8L, M6 ....... FWD ............. 33.1 2,000 39.2 

C ......................................... PC C ............ 2DCv ............ 1.8L, A5 ....... FWD ............. 32.3 2,000 39.1 

D ......................................... PC D ............ 2DCv ............ 1.8L, M6 ....... FWD ............. 32.9 1,000 39.1 

E1 ....................................... PC E ............ 4DS .............. 2.5L, A6 ....... FWD ............. 31.5 3,000 47.1 

E2 ....................................... ...................... SUV .............. ...................... ...................... 30.4 1,000 

F ......................................... PC F ............. 4DW ............. 2.5L, A6 ....... AWD ............. 30.2 8,000 47.1 

G1 ...................................... PC G ............ 4DS .............. 2.5L, A7 ....... FWD ............. 31.7 2,000 48.4 

G2 ...................................... ...................... SUV .............. ...................... ...................... 30.6 5,000 

H ......................................... PC H ............ 4DS .............. 3.2L, A7 ....... RWD ............ 29.3 5,000 48.4 

30,500 

Abbreviations: 2DS = two door sedan, 2DCv = two door convertible, SUV = sport utility vehicle, 4DW = four door station wagon, 1.8L = 1.8 liter 

displacement engine, A5 = five speed automatic transmission, M6 = six speed manual transmission, FWD = front wheel drive, AWD = all wheel 

drive, and RWD = rear wheel drive. 

Note to Appendix A Table 1. Manufacturer 

X’s required corporate average fuel economy 

level under section 531.5(b) would first be 

calculated by determining the fuel economy 

targets applicable to each model type (A 

through H) as illustrated in Appendix A, 

Table 2. 

Appendix A, Table 2 

Manufacturer X calculates target fuel 

economy values for each model. 

Model Carline Base tire 

Wheel 

base 

(in) 

Track width Foot 

print 

(ft2) 

Prod 

vol 

Target 

fuel econ 

(mpg) Front 

(in) 

Rear 

(in) 

Avg 

(in) 

A ...................................... PC A ............ 205/75R14 ... 96.0 58.8 58.8 58.8 39.2 1,500 31.19 

B ...................................... PC B ............ 215/70R15 ... 96.0 58.8 58.8 58.8 39.2 2,000 31.19 

C ...................................... PC C ............ 215/70R15 ... 96.1 58.5 58.7 58.6 39.1 2,000 31.19 

D ...................................... PC D ............ 235/60R15 ... 96.1 58.5 58.7 58.6 39.1 1,000 31.19 

E1 .................................... PC E ............ 225/65R16 ... 105.0 64.7 64.5 64.6 47.1 3,000 30.52 

E2 .................................... ...................... ...................... ................ ................ ................ ................ ................ 1,000 

F ...................................... PC F ............. 235/65R16 ... 105.0 64.6 64.6 64.6 47.1 8,000 30.52 

G1 .................................... PC G ............ 235/65R17 ... 107.0 65.1 65.3 65.2 48.4 2,000 29.34 

G2 .................................... ...................... ...................... ................ ................ ................ ................ ................ 5,000 

H ...................................... PC H ............ 265/55R18 ... 107.0 65.2 65.2 65.2 48.4 5,000 29.34 

30,500 

Note to Appendix A Table 2. Accordingly, 

vehicle models A, B, C, D, E, F, G and H 

would be compared to fuel economy values 

of 31.19, 31.19, 31.19, 31.19, 30.52, 30.52, 

29.34 and 29.34 mpg, respectively. With the 

appropriate fuel economy targets calculated, 

Manufacturer X’s required fuel economy 

would be calculated as illustrated in 

‘‘Appendix A Figure 1.’’ 

Appendix A, Figure 1 

Calculation of Manufacturer X’s target fuel 

economy standard. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49787 

Manufacturer’s Passenger Automobile Production for Applicable Model Year

Volume A

Target A

Volume B

Target B

Volume C

T

+ +

arget C

Volume D

Target D

Volume E

Target E

Volume F

Target 

+++

F

Volume G

Target G

Volume H

Target H

+ +

+

30 500

1 500

31 19

2 000

,

,

.

,

31 19

2 000

31 19

1 000

31 19

4 000

30 52

8 000

30 52

7 000

. 29

,

.

,

.

,

.

,

.

, +++++ .,

34 .

5 000

29 34

+

Manufacturer X’s passenger car fleet target 

fuel economy standard = 30.2 mpg 

Appendix A, Figure 2 

Calculation of Manufacturer X’s actual fuel 

economy. 

Manufacturer’s Passenger Automobile Production for Applicable Model Year

Volume A

Mpg A

Volume B

Mpg B

Volume C

Mpg C

V

+++

olume D

Mpg D

Volume E

Mpg E

Volume F

Mpg F

Volume G

Mpg G

Vo

+++ +

lume H

Mpg H

30 500

1 500

32 5

2 000

33 1

2 000

32 3

1 000

32 9

,

,

.

,

.

,

.

,

. + + ++

3 000

31 5

1 000

30 4

8 000

30 2

2 000

31 7

5 000

30 6

5 000

29

,

.

,

.

,

.

,

.

,

.

, ++ + + +

.3

Manufacturer X’s passenger car fleet actual 

fuel economy performance = 31.2 mpg 

Note to Appendix A Figure 2. Since the 

actual average fuel economy of Manufacturer 

X’s fleet is 31.2 mpg, as compared to its 

required fuel economy level of 30.2 mpg, 

Manufacturer X complied with the CAFE 

standard for MY 2011 as set forth in section 

531.5(b). 

PART 533—LIGHT TRUCK FUEL 

ECONOMY STANDARDS 

4. The authority citation for part 533 

continues to read as follows: 

Authority: 49 U.S.C. 32902; delegation of 

authority at 49 CFR 1.50. 

5. Amend § 533.5 by adding Figures 2 

and 3 and Table VI at the end of 

paragraph (a), and adding paragraph (i), 

to read as follows: 

§ 533.5 Requirements. 

(a) * * * 

* * * * * 

Figure 2 : CAFE

SALES

SALES

TARGET

required

i

i

i

=

∑

∑

i

i

Where: 

CAFErequired is the required level for a given 

fleet, 

SALESi is the number of units of model i 

produced for sale in the United States, 

TARGETi is the fuel economy target 

applicable to model i (according to the 

equation shown in Figure 3 and based on 

the footprint of model i), and the 

summations in the numerator and 

denominator are both performed over all 

models in the fleet in question. 

Figure 3 : TARGET

MIN MAX c FOOTPRINT d,

=

× + ⎛

⎝

⎜ ⎞

⎠

⎟ ⎡

⎣

⎢ ⎤

⎦

⎥

1

1 1

a b,

Where: 

TARGET is the fuel economy target (in mpg) 

applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), 

Parameters a, b, c, and d are defined in Table 

VI, and 

The MIN and MAX functions take the 

minimum and maximum, respectively of 

the included values. 

TABLE VI—PARAMETERS FOR THE LIGHT TRUCK FUEL ECONOMY TARGETS

Model year 

Parameters 

A b c d 

2012 ................................................................................................................. 29.44 22.06 0.0004546 0.01533 


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49788 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

TABLE VI—PARAMETERS FOR THE LIGHT TRUCK FUEL ECONOMY TARGETS—Continued 

Model year 

Parameters 

A b c d 

2013 ................................................................................................................. 30.32 22.55 0.0004546 0.01434 

2014 ................................................................................................................. 31.30 23.09 0.0004546 0.01331 

2015 ................................................................................................................. 32.70 23.84 0.0004546 0.01194 

2016 ................................................................................................................. 34.38 24.72 0.0004546 0.01045 

* * * * * 

(i) For model years 2012–2016, a 

manufacturer’s light truck fleet shall 

comply with the fuel economy level 

calculated for that model year according 

to Figures 2 and 3 and the appropriate 

values in Table VI. 

6. Revise Appendix A to Part 533 to 

read as follows: 

Appendix A to Part 533—Example of 

Calculating Compliance Under § 533.5 

Paragraph (h) 

Assume a hypothetical manufacturer 

(Manufacturer X) produces a fleet of light 

trucks in MY 2011 as follows: 

Appendix A, Table 1 

Model Carline Desc Eng/Trans Drive 

system 

Fuel econ 

mpg 

Production 

volume 

Footprint 

(ft2) 

A ......................................... PU A ............ RC, MB ........ 4.0L, A5 ....... 2WD ............. 27.1 800 47.8 

B ......................................... PU B ............ RC, MB ........ 4.0L, M5 ....... 2WD ............. 27.6 200 47.8 

C1 .......................................

C2 .......................................

C3 .......................................

PU C ............ RC, LB .........

EC,MB ..........

CC, SB .........

4.5L, A5 ....... 2WD ............. 23.9 

23.7 

23.5 

300 

400 

400 

59.7 

D ......................................... PU D ............ CC, SB ......... 4.5L, A6 ....... 2WD ............. 23.6 400 59.7 

E1 .......................................

E2 .......................................

PU E ............ EC, LB .........

CC, MB ........

5.0L, A6 ....... 2WD ............. 22.7 

22.5 

500 

500 

71.8 

F1 .......................................

F2 .......................................

F3 .......................................

PU F ............. RC, LB .........

EC, MB ........

CC, SB .........

4.5L, A5 ....... 4WD ............. 22.5 

22.3 

22.2 

1,600 

800 

800 

59.8 

G ........................................ PU G ............ CC, SB ......... 5.0L, A6 ....... 4WD ............. 22.3 800 59.8 

H1 .......................................

H2 .......................................

PU H ............ EC, LB .........

CC, MB ........

5.0L, A6 ....... 4WD ............. 22.2 

22.1 

1,000 

1,000 

71.9 

9,500 ........................

Abbreviations: PU = pickup truck, RC = regular cab, EC = extended cab, CC = crew cab, SB = short cargo bed, MB = medium cargo bed, LB 

= long cargo bed, 4.0L = 4.0 liter engine, A5 = five speed automatic transmission, M5 = five speed manual transmission, 2WD = two wheel drive, 

4WD = four wheel drive. 

Appendix A, Table 2 

Manufacturer X calculates target fuel 

economy values for each model. 

Model Carline Base tire 

Wheel 

base 

(in) 

Track width Foot 

print 

(ft2) 

Prod 

vol 

Target 

fuel econ 

(mpg) Front 

(in) 

Rear 

(in) 

Avg 

(in) 

A ...................................... PU A ............ 235/75R15 ... 100.0 68.6 69.0 68.8 47.8 800 30.26 

B ...................................... PU B ............ 235/75R15 ... 100.0 68.6 69.0 68.8 47.8 200 30.26 

C1 .................................... ...................... ...................... ................ ................ ................ ................ ................ 300 ................

C2 .................................... PU C ............ 255/70R17 ... 125.0 68.7 68.9 68.8 59.7 400 24.09 

C3 .................................... ...................... ...................... ................ ................ ................ ................ ................ 400 ................

D ...................................... PU D ............ 255/70R17 ... 125.0 68.7 68.9 68.8 59.7 400 24.09 

E1 .................................... PU E ............ 275/70R17 ... 150.0 68.9 68.9 68.9 71.8 500 24.00 

E2 .................................... ...................... ...................... ................ ................ ................ ................ ................ 500 ................

F1 .................................... ...................... ...................... ................ ................ ................ ................ ................ 1,600 ................

F2 .................................... PU F ............. 255/70R17 ... 125.0 69.0 68.8 68.9 59.8 800 24.09 

F3 .................................... ...................... ...................... ................ ................ ................ ................ ................ 800 ................

G ...................................... PU G ............ 255/70R17 ... 125.0 69.0 68.8 68.9 59.8 800 24.09 

H1 ....................................

H2 ....................................

PU H ............ 275/70R17 ... 150.0 68.9 69.1 69.0 71.9 1,000 

1,000 

24.00 

9,500 ................

Note to Appendix A Table 2. Accordingly, 

vehicle models A, B, C, D, E, F, G and H 

would be compared to fuel economy values 

of 30.26, 30.26, 24.09, 24.09, 24.00, 24.09, 

24.09 and 24.00 mpg, respectively. With the 

appropriate fuel economy targets calculated, 

Manufacturer X’s required fuel economy 

would be calculated as illustrated in 

‘‘Appendix A Figure 1.’’ 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49789 

Appendix A, Figure 1 

Calculation of Manufacturer X’s target fuel 

economy standard. 

Manufacturer’s Light Truck Production for Applicable Model Year

Volume A

Target A

Volume B

Target B

Volume C

Target C

V

+++

olume D

Target D

Volume E

Target E

Volume F

Target F

Volume 

+++

G

Target G

Volume H

Target H

+

+ +

9 500

800

30 26

200

20 26

1 100

24

,

. .

,

.09

400

24 09

1 000

24 00

3 200

24 09

800

24 09

2 000

24 00

+++++ .

,

.

,

. .

,

.

Manufacturer X’s light truck fleet target 

fuel economy standard = 24.6 mpg 

Appendix A, Figure 2 

Calculation of Manufacturer X’s actual fuel 

economy. 

Manufacturer’s Light Truck Production for Applicable Model Year

Volume A

Mpg A

Volume B

Mpg B

Volume C

Mpg C

Volume D

Mp

+++

g D

Volume E

Mpg E

Volume F

Mpg F

Volume G

Mpg G

Volume H

Mpg

+++ +

 H

9 500

800

27 1

200

27 6

300

23 9

400

23 7

400

23 5

400

23 6

50

,

...... ++++++

0

22 7

500

22 5

1 600

22 5

800

22 3

800

22 2

800

22 3

1 000

. . 22 2

,

. ...

,

. ++ ++++ +

1 000

22 1

,

.

Manufacturer X’s light truck fleet actual 

fuel economy performance = 23.0 mpg 

Note to Appendix A Figure 2. Since the 

actual average fuel economy of Manufacturer 

X’s fleet is 23.0 mpg, as compared to its 

required fuel economy level of 24.6 mpg, 

Manufacturer X did not comply with the 

CAFE standard for MY 2011 as set forth in 

section 533.5(h). 

PART 537—AUTOMOTIVE FUEL 

ECONOMY REPORTS 

7. The authority citation for part 537 

continues to read as follows: 

Authority: 49 U.S.C. 32907, delegation of 

authority at 49 CFR 1.50. 

8. Amend § 537.5 by revising 

paragraph (c)(4) to read as follows: 

§ 537.5 General requirements for reports. 

* * * * * 

(c) * * * 

(4) Be submitted in 5 copies to: 

Administrator, National Highway 

Traffic Safety Administration, 1200 New 

Jersey Avenue, SE., Washington, DC 

20590, or submitted electronically to the 

following secure e-mail address: 

cafe@dot.gov. Electronic submissions 

should be provided in a pdf format. 

* * * * * 

9. Amend § 537.7 by revising 

paragraphs (c)(4)(xvi)(A)(4) and 

(c)(4)(xvi)(B)(4) to read as follows: 

§ 537.7 Pre-model year and mid-model 

year reports. 

* * * * * 

(c) * * * 

(4) * * * 

(xvi)(A) * * * 

(4) Beginning model year 2010, front 

axle, rear axle and average track width 

as defined in 49 CFR 523.2, 

* * * * * 

(B) * * * 

(4) Beginning model year 2010, front 

axle, rear axle and average track width 

as defined in 49 CFR 523.2, 

* * * * * 

PART 538—MANUFACTURING 

INCENTIVES FOR ALTERNATIVE FUEL 

VEHICLES 

10. The authority citation for part 538 

continues to read as follows: 

Authority: 49 U.S.C. 32901, 32905, and 

32906; delegation of authority at 49 CFR 1.50. 

11. Revise § 538.1 to read as follows: 

§ 538.1 Scope. 

This part establishes minimum 

driving range criteria to aid in 

identifying passenger automobiles that 

are dual-fueled automobiles. It also 

establishes gallon equivalent 

measurements for gaseous fuels other 

than natural gas. 

12. Revise § 538.2 to read as follows: 

§ 538.2 Purpose. 

The purpose of this part is to specify 

one of the criteria in 49 U.S.C. chapter 

329 ‘‘Automobile Fuel Economy’’ for 

identifying dual-fueled passenger 

automobiles that are manufactured in 

model years 1993 through 2019. The 

fuel economy of a qualifying vehicle is 

calculated in a special manner so as to 

encourage its production as a way of 

facilitating a manufacturer’s compliance 

with the Corporate Average Fuel 

Economy standards set forth in part 531 

of this chapter. The purpose is also to 

establish gallon equivalent 

measurements for gaseous fuels other 

than nautral gas. 

13. Revise § 538.7(b)(1) to read as 

follows: 

§ 538.7 Petitions for reduction of minimum 

driving range. 

* * * * * 

(b) * * * 

(1) Be addressed to: Administrator, 

National Highway Traffic Safety 

Administration, 1200 New Jersey 

Avenue, SE., Washington, DC 20590. 

* * * * * 

Dated: September 15, 2009. 

Ray LaHood, 

Secretary, Department of Transportation. 

Dated: September 15, 2009. 

Lisa P. Jackson, 

Administrator, Environmental Protection 

Agency. 

[FR Doc. E9–22516 Filed 9–17–09; 4:15 pm] 

BILLING CODE 4910–59–P; 6560–50–P 


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