From: William Charmley/AA/USEPA/US 

To: "Achanta, Chandana L." <Chandana_L._Achanta@omb.eop.gov> 

Cc: james.tamm@dot.gov, Kathryn Sargeant/AA/USEPA/US@EPA, Ken 

Davidson/DC/USEPA/US@EPA, Maureen Delaney/DC/USEPA/US@EPA, 

rebecca.yoon@dot.gov, Robin Moran/AA/USEPA/US@EPA, Steve.Wood@dot.gov 

Date: 03/31/2010 12:27 PM 

Subjec

t: 

RE: Summary of interagency working comments on draft rule under EO 12866 

Chandana - 

Attached is the preamble. 

With respect to the Joint TSD and the EPA RIA, there have been no substantive changes since 

the email Robin Moran sent to you yesterday at 4:42pm. We corrected the typo on page 8 of the 

RIA, and we have included a few references which were previously place holders. 

Please let us know ASAP when EPA can load these documents into ROCIS for clearance. 

Thanks 

Bill
1 

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 85, 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-AK50

Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel 

Economy Standards; Final Rule 

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

Safety Administration (NHTSA). 

ACTION: Final Rule.

_______________________________________________________________________ 

SUMMARY: EPA and NHTSA are issuing this joint Final Rule 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 Final Rule 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 
2 

oil consumption. EPA is finalizing greenhouse gas emissions standards under the Clean 

Air Act, and NHTSA is finalizing 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 will 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. NHTSA’s final rule also constitutes 

the agency’s Record of Decision for purposes of its National Environmental Policy Act 

(NEPA) analysis. 

DATES: This final rule is effective on [Insert date 60 days after publication in the 

Federal Register], sixty days after date of publication in the Federal Register. The 

incorporation by reference of certain publications listed in this regulation is approved by 

the Director of the Federal Register as of [Insert date 60 days after publication in the 

Federal Register]. 

ADDRESSES: EPA and NHTSA have established dockets for this action under Docket 

ID No. EPA-HQ-OAR-2009-0472 and NHTSA-2009-0059, respectively. All documents 

in the docket are listed on the www.regulations.gov web site. Although listed in the 

index, some information is not publicly available, e.g., CBI or other information whose 

disclosure is restricted by statute. Certain other material, such as copyrighted material, is 

not placed on the Internet and will be publicly available only in hard copy form. Publicly 
3 

available docket materials are available either electronically through 

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

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

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

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

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

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

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

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

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

Transportation and Air Quality, Assessment and Standards Division, Environmental 

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

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

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

address asdinfo@epa.gov. NHTSA: Rebecca Yoon, Office of Chief Counsel, National 

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

20590. Telephone: (202) 366-2992. 

 
4 

SUPPLEMENTARY INFORMATION: 

Does this Action Apply to Me? 

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

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

regulations,1

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

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

entities include: 

Category NAICS 

CodesA

Examples of Potentially Regulated Entities 

Industry 336111 

336112 

Motor vehicle manufacturers. 

Industry 811112 

811198 

541514 

Commercial Importers of Vehicles and Vehicle 

Components. 

A North American Industry Classification System (NAICS) 

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

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

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

 

1

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

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

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

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

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

2

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

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

FURTHER INFORMATION CONTACT. 

Table of Contents 

I. Overview of Joint EPA/NHTSA National Program 

A. Introduction 

1. Building Blocks of the National Program 

2. Public Participation 

B. Summary of the Joint Final Rule and Differences from the Proposal 

1. Joint Analytical Approach 

2. Level of the Standards 

3. Form of the Standards 

4. Program Flexibilities 

5. Coordinated Compliance 

C. Summary of Costs and Benefits of the National Program 

1. Summary of Costs and Benefits of NHTSA's CAFE 

 Standards 

2. Summary of Costs and Benefits of EPA's GHG Standards 

D. Background and Comparison of NHTSA and EPA Statutory Authority 

II. Joint Technical Work Completed for This Final Rule 

A. Introduction 

B. Developing the Future Fleet for Assessing Costs, Benefits, and Effects 

1. Why Did the Agencies Establish a Baseline and Reference Vehicle Fleet? 

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

3. How Did the Agencies Develop the Projected MY 2011-2016 Vehicle 

Fleet? 

4. How Was the Development of the Baseline and Reference Fleets for this 

Final Rule Different from NHTSA’s Historical Approach? 

5. How Does Manufacturer Product Plan Data Factor into the Baseline Used 

in this Final Rule? 

C. Development of Attribute-Based Curve Shapes 

D. Relative Car-Truck Stringency 

E. Joint Vehicle Technology Assumptions 

1. What Technologies Did the Agencies Consider? 

2. How Did the Agencies Determine the Costs and Effectiveness of Each of 

These Technologies? 

F. Joint Economic Assumptions 

G. What are the Estimated Safety Effects of the Final MYs 2012-2016 CAFE and 

GHG Standards? 

1. What did the Agencies Say in the NPRM with regard to Potential Safety 

Effects? 

2. What Public Comments did the Agencies Receive on the Safety Analysis 

and Discussions in the NPRM? 
6 

3. How has NHTSA Refined its Analysis for Purposes of Estimating the 

Potential Safety Effects of this Final Rule? 

4. What are the Estimated Safety Effects of this Final Rule? 

5. How do the Agencies Plan to Address this Issue Going Forward? 

III. EPA Greenhouse Gas Vehicle Standards 

A. Executive Overview of EPA Rule 

1. Introduction 

2. Why is EPA Establishing this Rule? 

3. What is EPA Adopting? 

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

B. 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 CO2 Standards Will Be Implemented for 

Individual Manufacturers 

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

5. CO2 Temporary Lead-Time Allowance Alternative Standards 

6. Deferment of CO2 Standards for Small Volume Manufacturers with 

Annual Sales Less than 5,000 Vehicles 

7. Nitrous Oxide and Methane Standards 

8. Small Entity Exemption 

C. Additional Credit Opportunities for CO2 Fleet Average Program 

1. Air Conditioning Related Credits 

2. Flexible Fuel and Alternative Fuel Vehicle Credits 

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

Hybrids, and Fuel Cell Vehicles 

4. Off-cycle Technology Credits 

5. Early Credit Options 

D. Feasibility of the Final 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 Decides Between Options to 

Improve CO2 Performance to Meet a Fleet Average Standard? 

6. Why Are the Final 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 
7 

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 Duty Vehicles and Fuel Economy Labeling 

F. How Will This Final Rule 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 Climate Indicators Associated with the Rule’s GHG 

Emissions Reductions 

G. How Will the Standards Impact Non-GHG Emissions and Their Associated 

Effects? 

1. Upstream Impacts of Program 

2. Downstream Impacts of Program 

3. Health Effects of Non-GHG Pollutants 

4. Environmental Effects of Non-GHG Pollutants 

5. Air Quality Impacts of Non-GHG Pollutants 

H. What Are the Estimated Cost, Economic, and Other Impacts of the Program? 

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 
8 

IV. NHTSA Final Rule and Record of Decision for Passenger Car and Light 

Truck CAFE Standards for MYs 2012-2016

A. Executive Overview of NHTSA Final Rule 

 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 Final 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. Energy Policy and Conservation Act, as Amended by the Energy 

Independence and Security Act 

C. Development and Feasibility of the Final Standards 

1. How Was the Baseline and Reference Vehicle Fleet Developed? 

 2. How Were the Technology Inputs Developed? 

 3. How Did NHTSA Develop the Economic Assumptions? 

4. How Does NHTSA Use the Assumptions in its Modeling Analysis? 

5. How Did NHTSA Develop the Shape of the Target Curves for the Final 

Standards? 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

2. Administrative Procedure Act 

3. National Environmental Policy Act 

E. What Are the Final 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 Final Standards Fulfill NHTSA’s Statutory Obligations? 

G. Impacts of the Final CAFE Standards 

1. How Will these Standards Improve Fuel Economy and Reduce GHG 

Emissions for MY 2012-2016 Vehicles? 

2. How Will these Standards Improve Fleet-Wide Fuel Economy and Reduce 

GHG Emissions Beyond MY 2016? 

3. How Will these Final Standards Impact Non-GHG Emissions and their 

Associated Effects? 

4. What are the Estimated Costs and Benefits of these Final Standards? 

5. How Would these Standards Impact Vehicle Sales?

6. Potential Unquantified Consumer Welfare Impacts of the Final Standards 

7. What Other Impacts (Quantitative and Unquantifiable) will These Final 

Standards Have? 
9 

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 

5. Other CAFE Enforcement Issues – Miscellaneous 

J. Other Near-Term Rulemakings Mandated by EISA 

1. Commercial Medium- and Heavy-Duty On-Highway Vehicles and Work 

Trucks 

 2. Consumer Information on Fuel Efficiency and Emissions

K. NHTSA’s Record of Decision 

L. Regulatory Notices and Analyses 

1. Executive Order 12866 and DOT Regulatory Policies and Procedures 

2. National Environmental Policy Act 

3. Clean Air Act (CAA) 

 4. National Historic Preservation Act (NHPA) 

5. Executive Order 12898 (Environmental Justice) 

6. Fish and Wildlife Conservation Act (FWCA) 

7. Coastal Zone Management Act (CZMA) 

8. Endangered Species Act (ESA) 

9. Floodplain Management (Executive Order 11988 & DOT Order 5650.2) 

10. Preservation of the Nation’s Wetlands (Executive Order 11990 & DOT 

Order 5660.1a) 

11. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection 

Act (BGEPA), Executive Order 13186. 

12. Department of Transportation Act (Section 4(f)) 

 13. Regulatory Flexibility Act 

 14. Executive Order 13132 (Federalism) 

 15. Executive Order 12988 (Civil Justice Reform) 

 16. Unfunded Mandates Reform Act 

 17. Regulation Identifier Number 

 18. Executive Order 13045 

 19. National Technology Transfer and Advancement Act 

 20. Executive Order 13211 

 21. Department of Energy Review 

 22. Privacy Act 
10 

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 final rules whose benefits 

will address the urgent and closely intertwined challenges of energy independence and 

security and global warming. These rules will implement a strong and coordinated 

federal greenhouse gas (GHG) 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 rules will achieve substantial reductions of 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. NHTSA’s final rule also constitutes the 

agency’s Record of Decision for purposes of its NEPA analysis. 

This joint rulemaking 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 GHG emissions and improve fuel economy 

for all new cars and light-duty trucks sold in the United States.3

 The National Program 

 

3

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

Available at: http://www.whitehouse.gov/the_press_office/President-Obama-Announces-National-FuelEfficiency-Policy/. Remarks by the President on National Fuel Efficiency Standards, The White House, 
11 

will deliver additional environmental and energy benefits, cost savings, and 

administrative efficiencies on a nationwide basis that would likely not be available under 

a less coordinated approach. The National Program also represents 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. The National Program will allow automakers to produce and sell a single fleet 

nationally, mitigating 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, 20094

 and responds to the President’s January 26, 2009 memorandum on 

CAFE standards for model years 2011 and beyond,5 the details of which can be found in 

Section IV of this joint notice. 

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

environment. As summarized in the Technical Support Document for EPA's 

Endangerment and Cause or Contribute Findings under Section 202(a) of the Clear Air 

Act, anthropogenic emissions of GHGs are very likely (90 to 99 percent probability) the 

cause of most of the observed global warming over the last 50 years.6

 The primary 

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

perfluorocarbons, and sulfur hexafluoride. Mobile sources emitted 31 percent of all U.S. 

 May 19, 2009. Available at: http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-onnational-fuel-efficiency-standards/. 

4

 74 FR 24007 (May 22, 2009). 

5

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

6

 “Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases 

Under Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR-2009-0472-11292, 

http://epa.gov/climatechange/endangerment.html. 
12 

GHGs in 2007 (transportation sources, which do not include certain off-highway sources, 

account for 28 percent) and have been the fastest-growing source of U.S. GHGs since 

1990.7

 Mobile sources addressed in the recent endangerment and contribution findings 

under CAA section 202(a)--light-duty vehicles, heavy-duty trucks, buses, and 

motorcycles--accounted for 23 percent of all U.S. GHG in 2007.8

 Light-duty vehicles 

emit CO2, methane, nitrous oxide, and hydrofluorocarbons and are responsible for nearly 

60 percent of all mobile source GHGs and over 70 percent of Section 202(a) mobile 

source GHGs. For light-duty vehicles in 2007, CO2 emissions represent about 94 percent 

of all greenhouse emissions (including HFCs), and the CO2 emissions measured over the 

EPA tests used for fuel economy compliance represent about 90 percent of total lightduty vehicle GHG emissions.9,10

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 

 

7

 U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 

1990-2007. EPA 430-R-09-004. Available at 

http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf 

8

 U.S. EPA. 2009 Technical Support Document for Endangerment and Cause or Contribute Findings for 

Greenhouse Gases under Section 202(a) of the Clean Air Act. 

Washington, DC. pp. 180-194. Available at 

http://epa.gov/climatechange/endangerment/downloads/Endangerment%20TSD.pdf 

9

 U.S. Environmental Protection Agency. 2009. Inventory of 

U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. EPA 430-R-09-004. 

Available at http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf 10 U.S. Environmental Protection Agency. RIA, Chapter 2 
13 

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

important component of the historically unprecedented U.S. 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. 

 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.11 While there are emission control technologies that reduce the pollutants 

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

converting them to other compounds, 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. 

 

 

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

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

Adaptation, and the Science Base,” National Academies Press, 1992. p. 287. 
14 

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 a provision in EPCA as originally enacted in 1975 requires the use of the 1975 

passenger car test procedures under which vehicle air conditioners are not turned on 

during fuel economy testing.12 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 fuel13 is then used to calculate the amount 

of fuel that had to be consumed per mile in order to produce that amount of CO2. Finally, 

that fuel consumption figure is converted into a miles-per-gallon figure. CAFE standards 

also do not address the 5-8 percent of GHG emissions that are not CO2, i.e., nitrous oxide 

 

12 Although EPCA does not require the use of 1975 test procedures for light trucks, those procedures are 

used for light truck CAFE standard testing purposes. 

13 This is the method that EPA uses to determine compliance with NHTSA’s CAFE standards. 
15 

(N2O), and methane (CH4) as well as emissions of CO2 and hydrofluorocarbons (HFCs) 

related to operation of the air conditioning system. 

b. EPA’s GHG 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,

14 a case involving EPA's a 2003 denial of a petition for 

rulemaking to regulate GHG emissions from motor vehicles under section 202(a) of the 

Clean Air Act (CAA).15 The Court held that GHGs fit within the definition of air 

pollutant in 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 

 

14 549 U.S. 497 (2007). 

15 68 FR 52922 (Sept. 8, 2003). 
16 

overlap, but there is no reason to think the two agencies cannot both administer their 

obligations and yet avoid inconsistency.”16 The case was remanded back to the Agency 

for reconsideration in light of the Court’s decision.17 

 On December 15, 2009, EPA published two findings (74 FR 66496): that 

emissions of GHGs from new motor vehicles and motor vehicle engines contribute to air 

pollution, and that the air pollution may reasonably be anticipated to endanger public 

health and welfare. 

c. California Air Resources Board Greenhouse Gas Program 

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

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

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

apply to model years 2009 through 2016 and require 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.18 The 

 

16549 U.S. at 531-32. 

17 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. Also see 74 FR 18886, at 1888-90 (April 24, 2009). 

18 74 FR 32744 (July 8, 2009). 
17 

granting of the waiver permits California and the other states to proceed with 

implementing the California emission standards. 

In addition, to promote the National Program, in May 2009, California announced 

its commitment to take several actions in support of the National Program, including 

revising its program for MYs 2009-2011 to facilitate compliance by the automakers, and 

revising its program for MYs 2012-2016 such that compliance with the federal GHG 

standards will be deemed to be compliance with California's GHG standards. This will 

allow the single national fleet produced by automakers to meet the two Federal 

requirements and to meet California requirements as well. California is proceeding with 

a rulemaking intended to revise its 2004 regulations to meet its commitments. Several 

automakers and their trade associations also announced their commitment to take several 

actions in support of the National Program, including not contesting the final GHG and 

CAFE standards for MYs 2012-2016, not contesting any grant of a waiver of preemption 

under the CAA for California’s GHG standards for certain model years, and to stay and 

then dismiss all pending litigation challenging California's regulation of GHG emissions, 

including litigation concerning preemption under EPCA of California’s and other states’ 

GHG standards. 

2. Public Participation

The agencies proposed their respective rules on September 28, 2009 (74 FR 

49454), and received a large number of comments representing many perspectives on the 
18 

proposed rule. The agencies received oral testimony at three public hearings in different 

parts of the country, and received written comments from more than 130 organizations, 

including auto manufacturers and suppliers, states, environmental and other nongovernmental organizations (NGOs), and over 129,000 comments from private citizens. 

The vast majority of commenters supported the central tenets of the proposed 

CAFE and GHG programs. That is, there was broad support from most organizations for 

a National Program that achieves a level of 250 gram/mile fleet average CO2, which 

would be 35.5 miles per gallon if the automakers were to meet this CO2 level solely 

through fuel economy improvements. The standards will be phased in over model years 

2012 through 2016 which will allow manufacturers to build a common fleet of vehicles 

for the domestic market. In general, commenters from the automobile industry supported 

the proposed standards as well as the credit opportunities and other compliance 

provisions providing flexibility, while also making some recommendations for changes. 

Environmental and public interest non-governmental organizations (NGOs), as well as 

most states that commented, were also generally supportive of the National Program 

standards. Many of these organizations also expressed concern about the possible impact 

on program benefits, depending on how the credit provisions and flexibilities are 

designed. The agencies also received specific comments on many aspects of the 

proposal. 

Throughout this notice, the agencies discuss many of the key issues arising from 

the public comments and the agencies' responses. In addition, the agencies have 
19 

addressed all of the public comments in the Response to Comments document associated 

with this final rule. 

B. Summary of the Joint Final Rule and Differences from the Proposal 

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

Clean Air Act (CAA), and NHTSA is establishing 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 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. 

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

respective final rules. This is reflected in many aspects of this joint rule. 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 standards. Also, to the extent allowed by law, the agencies have 

harmonized many elements of program design, such as the form of the standard (the 

footprint-based attribute curves), and the definitions used for cars and trucks. They have 

developed the same or similar compliance flexibilities, to the extent allowed and 

appropriate under their respective statutes, such as averaging, banking, and trading of 

credits, and have harmonized the compliance testing and test protocols used for purposes 
20 

of the fleet average standards each agency is finalizing. Finally, 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 establishing standards that 

result in a harmonized National Program. 

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

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

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

and NHTSA expect that automobile manufacturers will meet these 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 finalized in this notice will 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, increased use of hybrid and other advanced technologies, and 

the initial commercialization of electric vehicles and plug-in hybrids. NHTSA’s and 

EPA’s assessments of likely vehicle technologies that manufacturers will employ to meet 

the standards are discussed in detail below and in the Joint TSD. 

 
21 

The National Program is estimated to result in approximately 960 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 (MYs) 2012 

through 2016. In total, the combined EPA and NHTSA 2012-2016 standards will 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 actions also will 

provide important energy security benefits, as light-duty vehicles are about 95 percent 

dependent on oil-based fuels. The agencies project that the total benefits of the National 

Program will be more than $240 billion at a 3% discount rate, or more than $190 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 National Program will be less than $1,000. The average 

U.S. consumer who purchases a vehicle outright is estimated to 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 will see immediate savings 

due to their vehicle’s lower fuel consumption in the form of a net reduction in annual 

costs of $130-$180 throughout the duration of the loan (that is, the fuel savings will 

outweigh the increase in loan payments by $130-$180 per year). Whether a consumer 

takes out a loan or purchases a new vehicle outright, over the lifetime of a model year 

2016 vehicle, the consumer's net savings could be more than $3,000. The average 2016 
22 

MY vehicle will emit 16 fewer metric tons of CO2-equivalent emissions (that is, CO2

emissions plus HFC air conditioning leakage emissions) emissions during its lifetime. 

Assumptions that underlie these conclusions are discussed in greater detail in the 

agencies’ respective regulatory impact analyses and in Section III.H.5 and Section IV. 

This joint rule also results in important regulatory convergence and certainty to 

automobile companies. Absent this rule, 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 rule will 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, 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 will be deemed to 

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

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

requirements as well. California is proceeding with a rulemaking intended to revise its 

2004 regulations to meet its commitments. EPA and NHTSA are confident that these 

GHG and CAFE standards will successfully harmonize both the federal and state 

programs for MYs 2012-2016 and will allow our country to achieve the increased 

benefits of a single, nationwide program to reduce light-duty vehicle GHG emissions and 
23 

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 GHG emissions and high 

fuel economy vehicles in particular. In this respect, this action will 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 action covers MYs 2012-2016, many stakeholders encouraged EPA 

and NHTSA to also begin working toward standards for MY 2017 and beyond that would 

maintain a single nationwide program. The agencies recognize the importance of and are 

committed to a strong, coordinated national program for light-duty vehicles for model 

years beyond 2016. 

Key elements of the National Program finalized today are the level and form of 

the GHG and CAFE standards, the available compliance mechanisms, and general 

implementation elements. These elements are summarized in the following section, with 

more detailed discussions about EPA’s GHG program following in Section III, and about 

NHTSA’s CAFE program in Section IV. This joint final rule responds to the wide array 

of comments that the agencies received on the proposed rule. This section summarizes 

many of the major comments on the primary elements of the proposal and describes 

whether and how the final rule has changed, based on the comments and additional 
24 

analyses. Major comments and the agencies’ responses to them are also discussed in 

more detail in later sections of this preamble. For a full summary of public comments 

and EPA’s and NHTSA’s responses to them, please see the Response to Comments 

document associated with this final rule. 

1. Joint Analytical Approach

 NHTSA and EPA have worked closely together on nearly every aspect of this 

joint final rule. The extent and results of this collaboration are reflected in the elements 

of the respective NHTSA and EPA rules, 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 include the build up of the baseline and reference fleets, the derivation 

of the shape of the curves that define 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. 

EPA and NHTSA have jointly developed attribute curve shapes that each agency 

is using for its final standards. 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 analysis is the cost and effectiveness of the various 
25 

control technologies. These are used to analyze the feasibility and cost of potential GHG 

and CAFE standards. 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 the new standards. These are the OMEGA and Volpe models for EPA and 

NHTSA, respectively. The models and their inputs can also be found in the docket. 

Further description of the model and outputs can be found in Sections III 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 

final standards, which are summarized in the sections below. 

The vast majority of public comments expressed strong support for the joint 

analytical work performed for the proposal. Commenters generally agreed with the 

analytical work and its results, and supported the transparency of the analysis and its 

underlying data. Where commenters raised specific points, the agencies have considered 

them and made changes where appropriate. The agencies' further evaluation of various 

technical issues also led to a limited number of changes. A detailed discussion of these 

issues can be found in Section II of this preamble, and the Joint TSD. 
26 

2. Level of the Standards 

In this notice, EPA and NHTSA are establishing two separate sets of standards, 

each under its respective statutory authorities. EPA is setting national CO2 emissions 

standards for light-duty vehicles under section 202 (a) of the Clean Air Act. These 

standards will require these vehicles to meet an estimated combined average emissions 

level of 250 grams/mile of CO2 in model year 2016. NHTSA is setting CAFE standards 

for passenger cars and light trucks under 49 U.S.C. 32902. These standards will require 

manufacturers of those vehicles to meet an estimated combined average fuel economy 

level of 34.1 mpg in model year 2016. The 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’ 

standards include some important differences. Under the CO2 fleet average standards 

adopted 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 final CO2 standards. NHTSA did not do so because 

EPCA does not allow vehicle manufacturers to use air conditioning credits in complying 
27 

with CAFE standards for passenger cars.19 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, improvement 

in the efficiency of passenger car air conditioners is not 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 for MY 2016. The 250 grams per mile of CO2 equivalent 

emissions limit is equivalent to 35.5 mpg20 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 setting 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. 

The vast majority of public comments expressed strong support for the National 

Program standards, including the stringency of the agencies’ respective standards and the 

phase-in from model year 2012 through 2016. There were a number of comments 

supporting standards more stringent than proposed, and a few others supporting less 

stringent standards, in particular for the 2012-2015 model years. The agencies' 

 

19 There is no such statutory limitation with respect to light trucks. 

20 The agencies are using a common conversion factor between fuel economy in units of miles per gallon 

and CO2 emissions in units of grams per mile. This conversion factor is 8,887 grams CO2 per gallon 

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. 
28 

consideration of comments and their updated technical analyses led to only very limited 

changes in the footprint curves and did not change the agencies’ projections that the 

nationwide fleet will achieve a level of 250 grams/mile by 2016 (equivalent to 35.5 mpg). 

The responses to these comments are discussed in more detail in Sections III and IV, 

respectively, and in the Response to Comments document.

As proposed, NHTSA and EPA’s final standards, like the standards NHTSA 

promulgated in March 2009 for 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.21 The standards that must be met by each manufacturer's fleet will be determined 

by computing the sales-weighted average (harmonic average for CAFE) of the targets 

applicable to each of the manufacturer’s passenger cars and light trucks. Under these 

footprint-based standards, the levels required of individual manufacturers will depend, as 

noted above, on the mix of vehicles sold. NHTSA's and EPA’s respective standards are 

shown in the tables below. It is important to note that the standards are the attributebased curves established by each agency. The values in the tables below reflect the 

agencies’ projection of the corresponding fleet levels that will result from these attributebased curves. 

 As a result of public comments and updated economic and future fleet 

projections, EPA and NHTSA have updated the attribute based curves for this final rule, 

as discussed in detail in Section II.B of this preamble and Chapter 2 of the Joint TSD. 

 

21 See 49 CFR 523.2 for the exact definition of “footprint.” 
29 

This update in turn affects costs, benefits, and other impacts of the final standards. Thus, 

the agencies have updated their overall projections of the impacts of the final rule 

standards, and these results are only slightly different from those presented in the 

proposed rule. 

 As shown in Table I.B.2-1, NHTSA’s fleet-wide CAFE-required levels for 

passenger cars under the final standards are projected to increase from 33.3 to 37.8 mpg 

between MY 2012 and MY 2016. Similarly, fleet-wide CAFE levels for light trucks are 

projected to increase from 25.4 to 28.8 mpg. 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 numbers do not 

include the effects of other flexibilities and credits in the program. These standards 

represent a 4.3 percent average annual rate of increase relative to the MY 2011 

standards.22 

Table I.B.2-1 Average Required Fuel Economy (mpg) 

under Final CAFE Standards 

 2011-base 2012 2013 2014 2015 2016 

Passenger Cars 30.4 33.3 34.2 34.9 36.2 37.8 

Light Trucks 24.4 25.4 26.0 26.6 27.5 28.8 

Combined Cars & Trucks 27.6 29.7 30.5 31.3 32.6 34.1 

Accounting for the expectation that some manufacturers could continue to pay 

civil penalties rather than achieving required CAFE levels, and the ability to use FFV 

 

22 Because required CAFE levels depend on the mix of vehicles sold by manufacturers in a model year, 

NHTSA’s estimate of future required CAFE levels depends on its estimate of the mix of vehicles that will 

be sold in that model year. NHTSA currently estimates that the MY 2011 standards will require average 

fuel economy levels of 30.4 mpg for passenger cars, 24.4 mpg for light trucks, and 27.6 mpg for the 

combined fleet. 
30 

credits,23 NHTSA estimates that the CAFE standards will 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:24

Table I.B.2-2 Projected Fleet-Wide Achieved CAFE Levels under the Final 

Footprint-Based CAFE Standards (mpg) 

 2012 2013 2014 2015 2016 

Passenger Cars 32.3 33.5 34.2 35.0 36.2 

Light Trucks 24.5 25.1 25.9 26.7 27.5 

Combined Cars & Trucks 28.7 29.7 30.6 31.5 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....”25 

 

Based on NHTSA’s current market forecast, the agency’s estimates of these 

minimum standards under the MY 2012-2016 CAFE standards (and, for comparison, the 

final MY 2011 standard) are summarized below in Table I.B.2-3.26 For eventual 

 

23 The penalties are similar in function to essentially unlimited, fixed-price allowances. 24 NHTSA’s estimates account for availability of CAFE credits for the sale of flexible-fuel vehicles (FFVs), 

and for the potential that some manufacturers will pay civil penalties rather than comply with the CAFE 

standards. This yields NHTSA’s estimates of the real-world fuel economy that will likely be achieved 

under the final CAFE standards. NHTSA has not included any potential impact of car-truck credit transfer 

in its estimate of the achieved CAFE levels. 

25 49 U.S.C. 32902(b)(4). 

26 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 
31 

compliance calculations, the final calculated minimum standards will be updated to 

reflect the average fuel economy level required under the final standards. 

Table I.B.2-3 Estimated Minimum Standard for Domestically Manufactured Passenger 

Cars under MY 2011 and MY 2012-2016 CAFE Standards for Passenger Cars (mpg) 

2011 2012 2013 2014 2015 2016

28.0 30.7 31.4 32.1 33.3 34.7 

EPA is establishing GHG emissions standards, and Table I.B.2-4 provides EPA’s 

estimates of their projected overall fleet-wide CO2 equivalent emission levels.27 The 

g/mi values are CO2 equivalent values because they include the projected use of air 

conditioning (A/C) credits by manufacturers, which include both HFC and CO2

reductions.

Table I.B.2-4 Projected Fleet-Wide Emissions Compliance Levels under the FootprintBased CO2 Standards (g/mi) 

 2012 2013 2014 2015 2016 

Passenger Cars 263 256 247 236 225 

Light Trucks 346 337 326 312 298 

Combined Cars & Trucks 295 286 276 263 250 

As shown in Table I.B.2-4, fleet-wide CO2 emission level requirements for cars 

are projected to increase in stringency from 263 to 225 g/mi between MY 2012 and MY 

2016. Similarly, fleet-wide CO2 equivalent emission level requirements for trucks are 

projected to increase in stringency from 346 to 298 g/mi. As shown, the overall fleet 

 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. 

27 These levels do not include the effect of flexible fuel credits, transfer of credits between cars and trucks, 

temporary lead time allowance, or any other credits with the exception of air conditioning. 
32 

average CO2 level requirements are projected to increase in stringency from 295 g/mi in 

MY 2012 to 250 g/mi in MY 2016. 

EPA anticipates that manufacturers will take advantage of program flexibilities 

such as flexible 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.B.2-4, where full manufacturer compliance 

without credit trading is assumed. Table I.B.2-5 shows EPA’s 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 certain program 

flexibilities including flex fueled vehicle credits and the temporary lead time allowance 

alternative standards. The use of optional air conditioning credits is considered both in 

this analysis of achieved levels and of the compliance levels described above. As can be 

seen in Table I.B.2-5, the projected achieved levels are slightly higher for model years 

2012-2015 due to EPA's assumptions about manufacturers' use of the regulatory 

flexibilities, but by model year 2016 the achieved level is projected to be 250 g/mi for the 

fleet. 

Table I.B.2-5 Projected Fleet-Wide Achieved Emission Levels under the 

Footprint-Based CO2 Standards (g/mi) 

2012 2013 2014 2015 2016 

Passenger Cars 267 256 245 234 223 

Light Trucks 365 353 340 324 303 

Combined Cars & Trucks 305 293 280 266 250 
33 

Several auto manufacturers stated that the increasingly stringent requirements for 

fuel economy and GHG emissions in the early years of the program should follow a more 

linear phase-in. The agencies’ consideration of comments and of their updated technical 

analyses did not lead to changes to the phase-in of the standards discussed above. This 

issue is discussed in more detail in Sections II.D, and in Sections III and IV. 

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. Commenters were in general agreement 

with this assessment.28 As noted, these include improvements to the engines such as use 

of gasoline direct injection and downsized engines that use turbochargers to provide 

performance similar to that of larger engines, the use of advanced transmissions, 

increased use of start-stop technology, improvements in tire rolling resistance, 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 

assessments are that manufacturers will be able to meet the 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 

 

28 The close relationship between emissions of CO2 – the most prevalent greenhouse gas emitted by motor 

vehicles--and fuel consumption, means that the technologies to control CO2 emissions and to improve fuel 

economy overlap to a great degree. 
34 

business cycle of redesigning and upgrading their light-duty vehicle products, and in 

some cases introducing entirely new vehicles not on the market today. This rule allows 

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 rule, 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 also provides manufacturers the opportunity to plan for compliance using a multiyear time frame, again consistent with normal business practice. Over these five model 

years, there will 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. Various commenters stated that 

the proposed phase-in of the standards should be introduced more aggressively, less 

aggressively, or in a more linear manner. However, our consideration of these comments 

about the phase-in, as well as our revised analyses, leads us to conclude that the general 

rate of introduction of the standards as proposed remains appropriate. This conclusion is 

also not affected by the slight difference from the proposal in the final footprint-based 

curves. These issues are addressed further in Sections III and IV. 

Both agencies considered other standards as part of the rulemaking analyses, both 

more and less stringent than those proposed. EPA’s and NHTSA’s analyses of 

alternative standards are contained in Sections III and IV of this preamble, respectively, 

as well as the agencies' respective RIAs. 
35 

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. Some environmental and other organizations commented 

that the test procedures should be improved to reflect more real-world driving conditions; 

auto manufacturers in general do not support such changes to the test procedures at this 

time. 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 CAFE test procedures. For that reason, EPA is using the current CAFE test 

procedures for the CO2 standards and is not changing those test procures in this 

rulemaking. NHTSA, as discussed above, is limited by statute in what test procedures 

can be used for purposes of passenger car testing, although 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 continue to evaluate it in the context of a future rulemaking to address standards 
36 

for model year 2017 and thereafter. This could include consideration of 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 public comments on these 

issues and the final procedures for determining emissions credits for controls on air 

conditioners in Section III. 

Finally, based on the information EPA developed in its recent rulemaking that 

updated its fuel economy labeling program to better reflect average real-world fuel 

economy, the calculation of fuel savings and CO2 emissions reductions that will be 

achieved by the 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 

NHTSA and EPA proposed attribute-based standards for passenger cars and light 

trucks. NHTSA adopted an attribute approach based on vehicle footprint in its Reformed 

CAFE program for light trucks for model years 2008-2011,29 and recently extended this 

 

29 71 FR 17566 (Apr. 6, 2006). 
37 

approach to passenger cars in the CAFE rule for MY 2011 as required by EISA.30 The 

agencies also proposed using vehicle footprint as the attribute for the GHG and CAFE 

standards. Footprint is defined as a vehicle’s wheelbase multiplied by its track width -- in 

other words, the area enclosed by the points at which the wheels meet the ground. Most 

commenters that expressed a view on this topic supported basing the standards on an 

attribute, and almost all of these supported the proposed choice of vehicle footprint as an 

appropriate attribute. The agencies continue to believe that the standards are best 

expressed in terms of an attribute, and that the footprint attribute is the most appropriate 

attribute on which to base the standards. These issues are further discussed later in this 

notice and in Chapter 2 of the Joint TSD. 

Under the footprint-based standards, each manufacturer will have a GHG and 

CAFE target unique to its fleet, depending on the footprints of the vehicle models 

produced by that manufacturer. A manufacturer will have separate footprint-based 

standards for cars and for trucks. Generally, larger vehicles (i.e., vehicles with larger 

footprints) will 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 lower levels of CO2 and higher 

levels of fuel economy 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 will be 

based on its final model year production figures. A manufacturer’s calculation of fleet 

 

30 74 FR 14196 (Mar. 30, 2009). 
38 

average emissions at the end of the model year will thus be based on the productionweighted average emissions of each model in its fleet. 

The final footprint-based standards are very similar in shape to those proposed. 

NHTSA and EPA include more discussion of the development of the final curves in 

Section II below, with a full discussion in the Joint TSD. 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.B.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 rule, footprint). 

The manufacturers’ fleet average performance is determined by the productionweighted31 average (for CAFE, harmonic average) of those targets. NHTSA and EPA 

are setting CAFE and CO2 emissions standards defined by constrained linear functions 

and, equivalently, piecewise linear functions.32 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 establishing the attribute curves below for assigning a fuel economy 

level to an individual vehicle’s footprint value, for model years 2012 through 2016. 

 

31 Based on vehicles produced for sale in the United States. 

32 The equations are equivalent but are specified differently due to differences in the agencies’ respective 

models. 
39 

These mpg values will 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.B.3-1 below illustrates the passenger car CAFE standard 

curves for model years 2012 through 2016 while Figure I.B.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. 
40 

454035302520

35 40 45 50 55 60 65 70

)gpm(tegraT

Footprint (sf)

2011

20162015201420132012
41 

454035302520

35 40 45 50 55 60 65 70

)gpm(tegraT

Footprint (sf)

20162015201420132012

2011

Figure I.B.3-2. MY 2011 and MY 2012-2016 Light Truck Fuel Economy Targets 
42 

 EPA is establishing 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 will be production weighted to determine each manufacturer’s fleet average 

standard for cars and trucks. As with the CAFE curves above, the general form of the 

equation is the same for each vehicle category and each year, but the parameters of the 

equation differ for cars and trucks. Again, each parameter also changes on an annual 

basis, resulting in the yearly increases in stringency. Figure I.B.3-3 below illustrates the 

CO2 car standard curves for model years 2012 through 2016 while Figure I.B.3-4 shows 

the CO2 truck standard curves for model years 2012-2016. 
43 

Figure I.B.3-3 CO2 (g/mi) Car Standard Curves 
44 

Figure I.B.3-4 CO2 (g/mi) Truck Standard Curves 
45 

 NHTSA and EPA received a number of comments about the shape of the car and 

truck curves. We address these comments further in Section II.C below as well as in 

Sections III and IV. 

 As proposed, NHTSA and EPA will use the same vehicle category definitions for 

determining which vehicles are subject to the car curve standards versus the truck curve 

standards. In other words, a vehicle classified as a car under the NHTSA CAFE program 

will also be classified as a car under the EPA GHG program, and likewise for trucks. 

Auto industry commenters generally agreed with this approach and believe it is an 

important aspect of harmonization across the two agencies’ programs. Some other 

commenters expressed concern about potential consequences, especially in how cars and 

trucks are distinguished. However, EPA and NHTSA are employing 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.33 This issue is further discussed for 

the EPA standards in Section III, and for the NHTSA standards in Section IV. This 

approach of using CAFE definitions allows EPA’s CO2 standards and the CAFE 

standards to be harmonized across all vehicles for this program. However, EPA is not 

changing the car/truck definition for the purposes of any other previous rules. 

Generally speaking, a smaller footprint vehicle will have higher fuel economy and 

lower CO2 emissions relative to a larger footprint vehicle when both have the same 

degree of fuel efficiency improvement technology. In this final rule, the standards apply 

to a manufacturers overall fleet, not an individual vehicle, thus a manufacturers fleet 

 

33 49 CFR 523. 
46 

which is dominated by small footprint vehicles will have a higher fuel economy 

requirement (lower CO2 requirement) than a manufacturers whose fleet is dominated by 

large footprint vehicles. A footprint-based CO2 or CAFE 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 or improve fuel economy, 

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. While targets are 

manufacturer specific, rather than vehicle specific, Table I.B.3-1 illustrates the fact that 

different vehicle sizes will have varying CO2 emissions and fuel economy targets under 

the final standards. 

Table I.B.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 40 206 41.1 

Midsize 

car Ford Fusion 46 230 37.1 

Fullsize 

car Chrysler 300 53 263 32.6 

Example Light-duty Trucks 

Small SUV 

4WD Ford 

Escape 44 259 32.9 

Midsize 

crossover Nissan Murano 49 279 30.6 

Minivan Toyota Sienna 55 303 28.2 

Large 

pickup 

truck 

Chevy 

Silverado 67 348 24.7 
47 

4. Program Flexibilities

 EPA’s and NHTSA’s programs as established in this rule 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’ standards includes preserving manufacturers’ flexibilities 

in meeting the standards, to the extent appropriate and required by law. The following 

section provides an overview of this final rule’s flexibility provisions. Many auto 

manufacturers commented in support of these provisions as critical to meeting the 

standards in the lead time provided. Environmental groups, some states, and others 

raised concerns about the possibility for windfall credits and loss of program benefits. 

The provisions in the final rule are in most cases the same as those proposed. However 

consideration of the issues raised by commenters has led to modifications in certain 

provisions. These comments and the agencies’ response are discussed in Sections III and 

IV below and in the Response to Comments document. 

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

 Under this NHTSA and EPA final rule, the fleet average standards that apply to a 

manufacturer’s car and truck fleets are based on the applicable footprint-based curves. At 

the end of each model year, when production of the model year is complete, a 
48 

production-weighted fleet average will 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 can generate credits. Conversely, if the 

fleet average CO2/CAFE level does not meet the standard, the fleet would incur debits 

(also referred to as a shortfall). 

 Under the final program, a manufacturer whose fleet generates credits in a given 

model year would have several options for using those credits, including credit carryback, credit carry-forward, credit transfers, and credit trading. These provisions exist in 

the MY 2011 CAFE program under EPCA and EISA, and similar provisions are part of 

EPA’s Tier 2 program for light-duty vehicle criteria pollutant emissions, as well as many 

other mobile source standards issued by EPA under the CAA. The manufacturer will be 

able to carry back credits to offset a deficit that had accrued in a prior model year and 

was subsequently carried over to the current model year. EPCA also provides for this. 

EPCA restricts the carry-back of CAFE credits to three years, and as proposed EPA is 

establishing the same limitation, in keeping with the goal of harmonizing both sets of 

standards. 

 After satisfying any need to offset pre-existing deficits, remaining credits can 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.34 As proposed, under the GHG program, EPA is also allowing 

 

34 49 U.S.C. 32903(a)(2). 
49 

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. As proposed for purposes of 

this rule, EPA allows unlimited credit transfers across a manufacturer’s car-truck fleet to 

meet the GHG standard. This is based on the expectation that this flexibility will facilitate 

manufacturers' ability to comply with the GHG standards in the lead time provided, and 

will allow the required GHG emissions reductions to be achieved in the most cost 

effective way. Under the CAA, unlike under EISA, there is no statutory limitation on 

car-truck credit transfers. Therefore, EPA is not constraining car-truck credit transfers, as 

doing so would reduce the flexibility for lead time, and would increase costs with no 

corresponding environmental benefit. For the CAFE program, however, EISA limits the 

amount of credits that may be transferred, which has the effects of limiting the extent to 

which a manufacturer can rely upon credits in lieu of making fuel economy 

improvements to a particular portion of its vehicle fleet, but also of potentially increasing 

the costs of improving the manufacturer’s overall fleet. EISA also prohibits the use of 

transferred credits to meet the statutory minimum level for the domestic car fleet 
50 

standard.35 These and other statutory limits will continue to apply to the determination of 

compliance with the CAFE standards. 

 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. As proposed, EPA 

allows 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.36 Comments discussing these provisions supported the proposed approach. 

These final provisions are the same as proposed. 

As further discussed in Section IV of this preamble, NHTSA sought to find a way 

to provide credits for improving the efficiency of light truck air conditioners (A/Cs) and 

solicited public comments to that end. The agency did so because the power necessary to 

operate an A/C compressor places a significant additional load on the engine, thus 

reducing fuel economy and increasing CO2 tailpipe emissions. See Section III.C.1 below. 

The agency would have made a similar effort regarding cars, but a 1975 statutory 

provision made it unfruitful even to explore the possibility of administratively proving 

 

35 49 U.S.C. 32903(g)(4). 

36 49 U.S.C. 32903(f)(2). 
51 

such credits for cars. The agency did not identify a workable way of providing such 

credits for light trucks in the context of this rulemaking. 

b. Air Conditioning Credits Under the EPA Final Rule 

 Air conditioning (A/C) systems contribute to GHG emissions in two ways. 

Hydrofluorocarbon (HFC) refrigerants, which are powerful GHGs, can leak from the A/C 

system (direct A/C emissions). As just noted, operation of the A/C system also places an 

additional load on the engine, which results in additional CO2 tailpipe emissions (indirect 

A/C related emissions). EPA is allowing manufacturers to generate credits by reducing 

either or both types of GHG emissions related to A/C systems. Specifically, EPA is 

establishing a method to calculate CO2 equivalent reductions for the vehicle's 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 that this approach provides manufacturers with a 

highly cost-effective way to achieve a portion of GHG emissions reductions under the 

EPA program. EPA is estimating that manufacturers will on average generate 11 g/mi 

GHG credit toward meeting the 250 g/mi by 2016 (though some companies may generate 

more). EPA will also allow manufacturers to earn early A/C credits starting in MY 2009 

through 2011, as discussed further in a later section. There were many comments on the 

proposed A/C provisions. Nearly every one of these was supportive of EPA including 

A/C control as part of this rule, though there was some disagreement on some of the 

details of the program. The HFC crediting scheme was widely supported. The comments 

mainly were concentrated on indirect A/C related credits. The auto manufacturers and 
52 

suppliers had some technical comments on A/C technologies, and there were many 

concerns with the proposed idle test. EPA has made some minor adjustments in both of 

these areas that we believe are responsive to these concerns. EPA addresses A/C issues 

in greater detail in Section III of this preamble and in Chapter 2 of EPA’s RIA. 

c. Flexible-fuel and Alternative Fuel Vehicle Credits 

EPCA authorizes a compliance flexibility 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 E85 capable vehicles, which can run on either gasoline or a mixture 

of up to 85 percent ethanol and 15 percent gasoline (E85). 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.37 Although NHTSA expressed concern about the non-use of 

alternative fuel by FFVs in a 2002 report to Congress (Effects of the Alternative Motor 

Fuels Act CAFE Incentives Policy), EISA 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, no FFV credits will be available for CAFE compliance after 

MY 2019.38 For dedicated alternative fuel vehicles, there are no limits or phase-out of 

 

37 EPCA provides a statutory incentive for production of FFVs by specifying that their fuel economy is 

determined using a special calculation procedure that results in those vehicles being assigned a higher fuel 

economy level than would otherwise occur. This is typically referred to as an FFV credit. 38 Id.
53 

the credits. As required by the statute, NHTSA will continue to allow the use of FFV 

credits for purposes of compliance with the CAFE standards until the end of the EISA 

phase-out period. 

For the GHG program, as proposed, EPA will allow FFV credits in line with 

EISA limits, but only during the period from MYs 2012 to 2015. After MY 2015, EPA 

will only allow FFV credits based on a manufacturer’s demonstration that the alternative 

fuel is actually being used in the vehicles and based on the vehicle’s actual performance. 

EPA discusses this in more detail in Section III.C of the preamble, including a summary 

of key comments. These provisions are being finalized as proposed, with further 

discussion in Section III.C of how manufacturers can demonstrate that the alternative fuel 

is being used. 

d. Temporary Lead-time Allowance Alternative Standards Under the EPA 

Final Rule 

Manufacturers with limited product lines may be especially challenged in the 

early years of the National Program, and need additional lead time. 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 manufacturer fleets consist entirely of vehicles with very 

high baseline CO2 emissions. Their vehicles are above the CO2 emissions target for that 

vehicle footprint, but do not have other types of vehicles in their production mix with 
54 

which to average. Often, these manufacturers pay fines under the CAFE program rather 

than meet the applicable CAFE standard. EPA believes that these technological 

circumstances call for more lead time in the form of a more gradual phase-in of 

standards. 

 EPA is finalizing a temporary lead-time allowance for manufacturers that sell 

vehicles in the U.S. in MY 2009 and for which U.S. vehicle sales in that model year are 

below 400,000 vehicles. This allowance will be available only during the MY 2012-2015 

phase-in years of the program. A manufacturer that satisfies the threshold criteria will be 

able to treat a limited number of vehicles as a separate averaging fleet, which will be 

subject to a less stringent GHG standard.39 Specifically, a standard of 25 percent above 

the vehicle’s otherwise applicable foot-print target level will 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 setting 

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 will no longer be eligible for a different standard). EPA discusses this in 

more detail in Section III.B of the preamble. 

 EPA received comments from several smaller manufacturers that the TLAAS 

program was insufficient to allow manufacturers with very limited product lines to 

comply. These manufacturers commented that they need additional lead time to meet the 

 

39 EPCA does not permit such an allowance. Consequently, manufacturers who may be able to take 

advantage of a lead-time allowance under the GHG standards would be required to comply with the 

applicable CAFE standard or be subject to penalties for non-compliance. 
55 

standards, because their CO2 baselines are significantly higher and their vehicle product 

lines are even more limited, reducing their ability to average across their fleets compared 

even to other TLAAS manufacturers. EPA fully summarizes the public comments on the 

TLAAS program, including comments not supporting the program, in Section III.B. In 

summary, in response to the lead time issues raised by manufacturers, EPA is modifying 

the TLAAS program that applies to manufacturers with between 5,000 and 50,000 U.S. 

vehicle sales in MY 2009. EPA believes these provisions are necessary given that, 

compared with other TLAAS manufacturers, these manufacturers have even more limited 

product offerings across which to average and higher baseline CO2 emissions, and thus 

need additional lead-time to meet the standards. These manufactures would have an 

increased allotment of vehicles, a total of 250,000, compared to 100,000 vehicles (for 

other TLAAS-eligible manufacturers). In addition, the TLAAS program for these 

manufacturers would be extended by one year, through MY2016 for these vehicles, for a 

total of five years of eligibility. The other provisions of the TLAAS program would 

continue to apply, such as the restrictions on credit trading and the level of the standard. 

Additional restrictions would also apply to these vehicles, as discussed in Section III. In 

addition, for the smallest volume manufacturers, those with below 5,000 U.S. vehicle 

sales, EPA is not setting standards at this time but is instead deferring standards until a 

future rulemaking. This is the essentially the same approach we are using for small 

businesses, which are exempted from this rule. The unique issues involved with these 

manufacturers will be addressed in that future rulemaking. Further discussion of the 

public comment on these issues and details on these changes from the proposed program 

are included in Section III. 
56 

e. Additional Credit Opportunities under the Clean Air Act (CAA) 

 EPA is establishing additional opportunities for early credits in MYs 2009-2011 

through over-compliance with a baseline standard. The baseline standard is set to be 

equivalent, on a national level, to the California standards. Credits can be generated by 

over-compliance with this baseline in one of two ways – over-compliance 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 providing for 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 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 early credits 

provisions are designed to ensure that there would be no double counting of early credits. 

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 received comments from some environmental organizations and states 

expressing concern that these early credits were inappropriate windfall credits because 

they provided credits for actions that were not surplus, that is above what would 

otherwise be required for compliance with either state or federal motor vehicle standards. 
57 

This focused on the credits for over-compliance with the California standards generated 

during model years 2009 and perhaps 2010, where according to commenters the CAFE 

requirements were in effect more stringent than the California standards. EPA believes 

that early credits provide a valuable incentive for manufacturers that have implemented 

fuel efficient technologies in excess of their CAFE compliance obligations prior to 

MY2012. With appropriate restrictions, these credits, reflecting over-compliance over a 

three model year time frame (MY2009-2011) and not just over one or two model years, 

will be surplus reductions and not otherwise required by law. Therefore, EPA is 

finalizing these provisions largely as proposed, but in response to comments, with an 

additional restriction on the trading of MY 2009 credits. The overall structure of this 

early credit program addresses concerns about the potential for windfall credits in the 

first one or two model years. This issue is fully discussed in Section III.C. 

EPA is providing an additional temporary incentive to encourage the 

commercialization of advanced GHG/fuel economy control technologies--including 

electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles 

(FCVs)--for model years 2012-2016. EPA’s proposal included an emissions compliance 

value of zero grams/mile for EVs and FCVs, and the electric portion of PHEVs, and a 

multiplier in the range of 1.2 to 2.0, so that each advanced technology vehicle would 

count as greater than one vehicle in a manufacturer’s fleetwide compliance calculation. 

EPA received many comments on the proposed incentives. Many state and 

environmental organization commenters believed that the combination of these incentives 

could undermine the GHG benefits of the rule, and believed the emissions compliance 
58 

values should take into account the net upstream GHG emissions associated with 

electrified vehicles compared to vehicles powered by petroleum based fuel. Auto 

manufacturers generally supported the incentives, some believing the incentives to be a 

critical part of the National Program. Most auto makers supported both the zero 

grams/mile emissions compliance value and the higher multipliers. 

Upon considering the public comments on this issue, EPA is finalizing an 

advanced technology vehicle incentive program that includes a zero gram/mile emissions 

compliance value for EVs and FCVs, and the electric portion of PHEVs, for up to the 

first 200,000 EV/PHEV/FCV vehicles produced by a given manufacturer during 

MY2012-2016 (for a manufacturer that produces less than 25,000 EVs, PHEVs, and 

FCVs in MY2012), or for up to the first 300,000 EV/PHEV/FCV vehicles produced 

during MY2012-2016 (for a manufacturer that produces 25,000 or more EVs, PHEVs, 

and FCVs in MY2012). For any production greater than this amount, the compliance 

value for the vehicle will be greater than zero gram/mile, set at a level that reflects the 

vehicle’s net increase in upstream GHG emissions in comparison to the gasoline vehicle 

it replaces. In addition, EPA is not finalizing a multiplier. EPA will also allow this early 

advanced technology incentive program beginning in MYs 2009-2011. The purpose of 

these provisions is to provide a temporary incentive to promote technologies which have 

the potential to produce very large GHG reductions in the future. The tailpipe GHG 

emissions from EVs, FCVs, and PHEVs operated on grid electricity are zero, and 

traditionally the emissions of the vehicle itself are all that EPA takes into account for 

purposes of compliance with standards set under section 202(a). This has not raised any 
59 

issues for criteria pollutants, as upstream emissions associated with production and 

distribution of the fuel are addressed by comprehensive regulatory programs focused on 

the upstream sources of those emissions. At this time, however, there is no such 

comprehensive program addressing upstream emissions of GHGs, and the upstream GHG 

emissions associated with production and distribution of electricity are higher than the 

corresponding upstream GHG emissions of gasoline or other petroleum based fuels. In 

the future, vehicle fleet electrification combined with advances in low-carbon technology 

in the electricity sector have the potential to transform the transportation sector’s 

contribution to the country’s GHG emissions. EPA will reassess the issue of how to 

address EVs, PHEVs, and FCVs in rulemakings for model years 2017 and beyond, based 

on the status of advanced vehicle technology commercialization, the status of upstream 

GHG control programs, and other relevant factors. Further discussion of the temporary 

advanced technology vehicle incentives, including more detail on the public comments 

and EPA’s response, is found in Section III.C. 

EPA is also providing an option for manufacturers to generate credits for 

employing new and innovative technologies that achieve GHG reductions that are not 

reflected on current test procedures, as proposed. Examples of such “off-cycle” 

technologies might include solar panels on hybrids, adaptive cruise control, and active 

aerodynamics, among other technologies. These three credit provisions are discussed in 

more detail in Section III. 
60 

5. 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 have developed 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 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 compliance 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 fleet-average 

basis at the end of each model year, allowing model-level testing to continue throughout 

the year as is the current practice for CAFE determinations. The 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. 
61 

NHTSA and EPA do not anticipate any significant noncompliance under the 

National Program. However, failure to meet the fleet average standards (after credit 

opportunities are exhausted) would ultimately result in the potential for penalties under 

both EPCA and the CAA. The CAA allows EPA considerable discretion in assessment 

of penalties. Penalties under the CAA are typically determined on a vehicle-specific 

basis by determining the number of a manufacturer’s highest emitting vehicles that 

caused the fleet average standard violation. This is the same mechanism used for EPA’s 

National Low Emission Vehicle and Tier 2 corporate average standards, and to date there 

have been no instances of noncompliance. CAFE penalties are specified by EPCA and 

would be assessed for the entire noncomplying fleet at a rate of $5.50 times the number 

of vehicles in the fleet, times the number of tenths of mpg by which the fleet average falls 

below the standard. In the event of a compliance action arising out of the same facts and 

circumstances, EPA could consider CAFE penalties when determining appropriate 

remedies for the EPA case. 

Several stakeholders commented on the proposed coordinated compliance 

approach. The comments indicated broad support for the overall approach EPA 

proposed. In particular, both regulated industry and the public interest community 

appreciated the attempt to streamline compliance by adopting current practice where 

possible and by coordinating EPA and NHTSA compliance requirements. Thus the final 

compliance program design is largely unchanged from the proposal. Some commenters 

requested additional detail or clarification in certain areas and others suggested some 
62 

relatively narrow technical changes, and EPA has responded to these suggestions. EPA 

and NHTSA summarize these comments and the agencies’ responses in Sections III and 

IV, respectively, below. The Response to Comments document associated with this 

document includes all of the comments and responses received during the comment 

period. 

C. Summary of Costs and Benefits of the National Program 

 This section summarizes the projected costs and benefits of the CAFE and GHG 

emissions standards. These projections helped inform the agencies’ choices among the 

alternatives considered and provide further confirmation that the final standards are an 

appropriate choice within the spectrum of choices allowable under their respective 

statutory criteria. The costs and benefits projected by NHTSA to result from these CAFE 

standards are presented first, followed by those from EPA’s analysis of the GHG 

emissions standards. 

 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 standards would require slightly different 

fuel efficiency improvements. EPA’s 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. NHTSA was unable 

to make assumptions about manufacturers’ improving the efficiency of air conditioners 
63 

due to statutory limitations. In addition, the CAFE and GHG standards offer different 

program flexibilities, and the agencies’ analyses differ in their accounting for these 

flexibilities (for example, FFVs), 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. 

 NHTSA performed two analyses: a primary analysis that shows the estimates of 

costs, fuel savings, and related benefits that the agency considered for purposes of 

establishing new CAFE standards, and a supplemental analysis that reflects the agency’s 

best estimate of the potential real-world effects of the CAFE standards, including 

manufacturers’ potential use of FFV credits in accordance with the provisions of EISA 

concerning their availability. Because EPCA prohibits NHTSA from considering the 

ability of manufacturers to use of FFV credits to increase their fleet average fuel 

economy when establishing CAFE standards, the agency’s primary analysis 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’s supplemental analysis of the effect of FFV credits on benefits and 

costs from its CAFE standards, demonstrates 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 
64 

savings and CO2 reductions, because FFV credits reduce the fuel economy levels that 

manufacturers achieve not only under the 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 increase their average fuel economy 

through the use of 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 possibility that some manufacturers might utilize 

the opportunity under EPCA to transfer some CAFE credits between the passenger car 

and light truck fleets, but determined that in NHTSA’s year-by-year analysis, 

manufacturers’ credit transfers cannot be reasonably estimated at this time.40

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 

GHG standards reflect these assumptions. However, under the GHG standards, FFV 

credits would be available through MY 2015; starting in MY 2016, EPA will only allow 

FFV credits based on a manufacturer’s demonstration that the alternative fuel is actually 

 

40 NHTSA’s analysis estimates multi-year planning effects within a context in which each model year is 

represented explicitly, and technologies applied in one model year carry forward to future model years. 

NHTSA does not currently have a reasonable 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. 
65 

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 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 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 CAFE standards. In contrast, the CAA does not allow for fine 

payment (civil penalties) in lieu of compliance with emission standards, and EPA’s 

analysis of benefits from its standard thus assumes full compliance. This assumption 

results in higher estimates of fuel savings, of reductions in GHG emissions, and of 

manufacturers’ compliance costs to sell fleets that comply with both NHTSA’s CAFE 

program and EPA’s GHG program. 
66 

 In summary, the projected costs and benefits presented by NHTSA and EPA are 

not directly comparable, because the GHG emission levels established by EPA include 

air conditioning-related improvements in equivalent fuel efficiency and HFC reductions, 

because of the assumptions incorporated in EPA’s analysis regarding car-truck credit 

transfers, and because of EPA's projection of complete compliance with the GHG 

standards. It should also be expected that overall, EPA’s estimates of GHG reductions 

and fuel savings achieved by the 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 passenger car and light trucks GHG standards are slightly higher than NHTSA’s 

estimates for complying with the CAFE standards. 

 

 A number of stakeholders commented on NHTSA’s and EPA’s analytical 

assumptions in estimating costs and benefits of the program. These comments and any 

changes from the proposed values are summarized in Section II.F, and further in Sections 

III (for EPA) and IV (for NHTSA); the Response to Comments document presents the 

detailed responses to each of the comments. 

1. Summary of Costs and Benefits of NHTSA's CAFE 

Standards

NHTSA has analyzed in detail the costs and benefits of the final CAFE standards. 

Table I.C.1-1 presents the total costs, benefits, and net benefits for NHTSA’s final CAFE 
67 

standards. The values in Table I.C.1-1 display the total costs for all MY2012-2016 

vehicles and the benefits and net benefits represent the impacts of the standards over the 

full lifetime of the vehicles projected to be sold during model years 2012–2016. It is 

important to note that there is significant overlap in costs and benefits for NHTSA’s 

CAFE program and EPA’s GHG program and therefore combined program costs and 

benefits, which together comprise the National Program, are not a sum of the two 

individual programs. 

Table I.C.1-1 NHTSA’s Estimated 2012-2016 Model Year Costs, Benefits, and Net 

Benefits under the CAFE Standards before FFV Credits (2007 dollars) 

3% Discount Rate $billions 

 Costs $51.8 

 Benefits $182.5 

 Net Benefits $130.7 

7% Discount Rate 

 Costs $51.8 

 Benefits $146.3 

 Net Benefits $94.5 

 

NHTSA estimates that these new CAFE standards will lead to fuel savings 

totaling 61 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 $143 billion. At a 7% discount rate, the present value of the economic 

benefits resulting from those fuel savings is $112 billion.41

 

41 These figures do not account for the compliance flexibilities that NHTSA is prohibited from considering 

when determining the level of new CAFE standards, because manufacturers’ decisions to use those 

flexibilities are voluntary, 
68 

The agency further estimates that these new CAFE standards will lead to 

corresponding reductions in CO2 emissions totaling 655 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 $14.5 billion, based on a global social cost of 

carbon value of approximately $21 per metric ton (in 2010, and growing thereafter). 42 

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.C.1-2 NHTSA Fuel Saved (billion gallons) and CO2 Emissions Avoided (mmt) 

under CAFE Standards (without FFV Credits) 

 2012 2013 2014 2015 2016 Total 

Fuel (b. gal.) 4.2 8.9 12.5 16.0 19.5 61.0 

CO2 (mmt) 44 94 134 172 210 655 

 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 final 

standards: 

 

42 NHTSA also estimated the benefits associated with three more estimates of a one ton GHG reduction in 

2010 ($5, $35, and $65), which will likewise grow thereafter. See Section II for a more detailed discussion 

of the social cost of carbon. 
69 

Table I.C.1-3 NHTSA Fuel Saved (billion gallons) and CO2 Emissions Avoided (million 

metric tons, mmt) under CAFE Standards (with FFV Credits) 

 2012 2013 2014 2015 2016 Total 

Fuel (b. gal.) 4.9 8.2 11.3 15.0 19.1 58.6 

CO2 (mmt) 53 89 123 163 208 636 

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 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 $180 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. Note that the benefit 

calculation in Tables I.C.1-4 through 1-7 includes the benefits of reducing CO2

emissions,43 but not the benefits of reducing other GHG emissions. 

Table I.C.1-4 NHTSA Discounted Benefits ($billion) 

under the CAFE Standards (before FFV Credits, using 3 percent Discount Rate) 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 6.8 15.2 21.6 28.7 35.2 107.5 

Light Trucks 5.1 10.7 15.5 19.4 24.3 75.0 

 

43 CO2 benefits for purposes of these tables are calculated using the $21/ton SCC values. Note that net 

present value of reduced GHG emissions is calculated differently than other benefits. The same discount 

rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to 

calculate net present value of SCC for internal consistency. 
70 

Combined 11.9 25.8 37.1 48.0 59.5 182.5 

Using a 7% discount rate, NHTSA estimates that the present value of these 

benefits would total more than $145 billion over the same time period. 

Table I.C.1-5 NHTSA Discounted Benefits ($billion) 

Under the CAFE Standards (before FFV Credits, using 7 percent Discount Rate) 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 5.5 12.3 17.5 23.2 28.6 87.0 

Light Trucks 4.0 8.4 12.2 15.3 19.2 59.2 

Combined 9.5 20.7 29.7 38.5 47.8 146.2 

 

NHTSA estimates that FFV credits could reduce achieved benefits by about 3.8%: 

Table I.C.1-6a NHTSA Discounted Benefits ($billion) 

under the CAFE Standards (with FFV Credits, using a 3 percent Discount Rate) 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 7.6 13.7 19.1 25.6 34.0 100.0 

Light Trucks 6.4 10.4 14.6 19.8 24.4 75.6 

Combined 14.0 24.1 33.7 45.4 58.4 175.6 

Table I.C.1-6b NHTSA Discounted Benefits ($billion) 

under the CAFE Standards (with FFV Credits, using a 7 percent Discount Rate) 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 6.1 11.1 15.5 20.7 27.6 80.9 

Light Trucks 5.0 8.2 11.5 15.6 19.3 59.7 

Combined 11.2 19.3 27.0 36.4 46.9 140.7 

 NHTSA attributes most of these benefits—about $143 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 (AEO’s) reference case forecast from the 
71 

Annual Energy Outlook (AEO) 2010 Early Release. NHTSA’s Final Regulatory Impact 

Analysis (FRIA) accompanying this rule presents a detailed analysis of specific benefits 

of the rule. 

Table I.C.1-7 Summary of Benefits Fuel Savings and CO2 Emissions Reduction Due to 

the Rule (before FFV Credits) 

Amount Monetized Value (Discounted) 

3% Discount Rate 7% Discount Rate 

Fuel savings 61.0 billion gallons $143.0 billion $112.0 billion 

CO2 emissions 

reductions 

655 mmt $14.5 billion $14.5 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 standards – that is, 

outlays by vehicle manufacturers over and above those required to comply with the MY 

2011 CAFE standards – will total about $52 billion (i.e., during MYs 2012-2016). 

Table I.C.1-8 NHTSA Incremental Technology Outlays ($billion) 

under the CAFE Standards (before FFV Credits) 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 4.1 5.4 6.9 8.2 9.5 34.2 

Light Trucks 1.8 2.5 3.7 4.3 5.4 17.6 

Combined 5.9 7.9 10.5 12.5 14.9 51.7 

 NHTSA estimates that use of FFV credits could significantly reduce these 

outlays: 

Table I.C.1-9 NHTSA Incremental Technology Outlays ($billion) 

under CAFE Standards (with FFV Credits) 

 2012 2013 2014 2015 2016 Total 
72 

Passenger Cars 2.6 3.6 4.8 6.1 7.5 24.6 

Light Trucks 1.1 1.5 2.5 3.4 4.4 12.9 

Combined 3.7 5.1 7.3 9.5 11.9 37.5 

 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 

standards would lead to increases in average new vehicle prices ranging from $457 per 

vehicle in MY 2012 to $985 per vehicle in MY 2016: 

 

Table I.C.1-10 NHTSA Incremental Increases in Average New Vehicle Costs ($) 

under CAFE Standards (before FFV Credits) 

 2012 2013 2014 2015 2016 

Passenger Cars 505 573 690 799 907 

Light Trucks 322 416 621 752 961 

Combined 434 513 665 782 926 

 

NHTSA estimates that use of FFV credits could significantly reduce these costs, 

especially in earlier model years: 

Table I.C.1-11 NHTSA Incremental Increases in Average New Vehicle Costs ($) 

under CAFE Standards (with FFV Credits) 

 2012 2013 2014 2015 2016 

Passenger Cars 303 378 481 593 713 

Light Trucks 194 260 419 581 784 

Combined 261 333 458 589 737 

 NHTSA estimates, therefore, that the total benefits of these CAFE standards will 

be more than three times the magnitude of the corresponding costs. As a consequence, its 
73 

standards would produce net benefits of $130.7 billion at a 3 percent discount rate (with 

FFV credits, $138.2 billion) or $94.5 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 EPA's GHG Standards

 EPA has analyzed in detail the costs and benefits of the final GHG standards. 

Table I.C.2-1 shows EPA’s estimated lifetime discounted cost, benefits and net benefits 

for all vehicles projected to be sold in model years 2012-2016. It is important to note that 

there is significant overlap in costs and benefits for NHTSA’s CAFE program and EPA’s 

GHG program and therefore combined program costs and benefits are not a sum of the 

individual programs. 

Table I.C.2-1 EPA’s Estimated 2012-2016 Model Year Lifetime Discounted Costs, 

Benefits, and Net Benefits assuming the $21/ton SCC Valuea,b,c,d (2007 dollars) 

3% Discount Rate $billions 

Costs $51.5 

Benefits $240 

Net Benefits $189 

7% Discount Rate 

Costs $51.5 

Benefits $192 

Net Benefits $140 a

 Although EPA estimated the benefits associated with four different values of a one 

ton GHG reduction ($5, $21, $35, $65), for the purposes of this overview 

presentation of estimated costs and benefits EPA is showing the benefits associated 

with the marginal value deemed to be central by the interagency working group on 

this topic: $21 per ton of CO2e, in 2007 dollars and 2010 emissions. The $21/ton 

value applies to 2010 CO2 emissions and grows over time. 

b

 As noted in Section III.H, SCC increases over time. The $21/ton value applies to 

2010 CO2 emissions and grows larger over time. c

 Note that net present value of reduced GHG emissions is calculated differently than 

other benefits. The same discount rate used to discount the value of damages from 

future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value 

of SCC for internal consistency. Refer to Section III.H for more detail. 
74 

d Monetized GHG benefits exclude the value of reductions in non-CO2 GHG 

emissions (HFC, CH4 and N2O) expected under this final rule. Although EPA has 

not monetized the benefits of reductions in these non-CO2 emissions, the value of 

these reductions should not be interpreted as zero. Rather, the reductions in non-CO2

GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. 

The SCC TSD notes the difference between the social cost of non-CO2 emissions 

and CO2 emissions, and specifies a goal to develop methods to value non-CO2

emissions in future analyses.

Table I.C.2-2 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.C.2-2 are projected lifetime totals for each model year and are not discounted. As 

documented in EPA’s Final RIA, 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 reductions in CO2

emissions. The two agencies’ 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.C.2-2 EPA’s Estimated 2012-2016 Model Year Lifetime Fuel Saved and GHG

Emissions Avoided 

 2012 2013 2014 2015 2016 Total

Fuel (billion gallons) 4.0 5.5 7.3 10.5 14.3 41.6

Fuel (billion barrels) 0.10 0.13 0.17 0.25 0.34 0.99

Cars 

CO2 EQ (mmt) 49.3 68.5 92.7 134 177 521

 

Fuel (billion gallons) 3.3 5.0 6.6 9.0 12.2 36.1

Fuel (billion barrels) 0.08 0.12 0.16 0.21 0.29 0.86

Light Trucks 

CO2 EQ (mmt) 39.6 61.7 81.6 111 147 441

 
75 

Fuel (billion gallons) 7.3 10.5 13.9 19.5 26.5 77.7

Fuel (billion barrels) 0.17 0.25 0.33 0.46 0.63 1.85

Combined 

CO2 EQ (mmt) 88.8 130 174 244 325 962

Table I.C.2-3 shows EPA’s estimated lifetime discounted benefits for all vehicles 

sold in model years 2012-2016. Although EPA estimated the benefits associated with 

four different values of a one ton GHG reduction ($5, $21, $35, $65), for the purposes of 

this overview presentation of estimated benefits EPA is showing the benefits associated 

with one of these marginal values, $21 per ton of CO2, in 2007 dollars and 2010 

emissions. Table I.C.2-3 presents benefits based on the $21 value. Section III.H presents 

the four marginal values used to estimate monetized benefits of GHG reductions and 

Section III.H presents the program benefits using each of the four 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. The values in the table are 

discounted values for each model year of vehicles 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 four different social cost of carbon (SCC) values considered by EPA. The values in 

Table I.C.2-3 do not include costs associated with new technology required to meet the 

GHG standard. 

 

Table I.C.2-3 EPA’s Estimated 2012-2016 Model Year Lifetime Discounted Benefits 

Assuming the $21/ton SCC Valuea,b,c (billions of 2007 dollars) 

Discount Rate Model Year 
76 

2012 2013 2014 2015 2016 Total 

3% $21.8 $32.0 $42.8 $60.8 $83.3 $240 

7% $17.4 $25.7 $34.2 $48.6 $66.4 $192 a The benefits include all benefits considered by EPA such as the 

economic value of reduced fuel consumption and accompanying savings 

in refueling time, climate-related economic benefits from reducing 

emissions of CO2 (but not other GHGs), economic benefits from reducing 

emissions of PM and other air pollutants that contribute to its formation, 

and reductions in energy security externalities caused by U.S. petroleum 

consumption and imports. The analysis also includes disbenefits 

stemming from additional vehicle use, such as the economic damages 

caused by accidents, congestion and noise. 

b

 Note that net present value of reduced GHG emissions is calculated 

differently than other benefits. The same discount rate used to discount 

the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. 

Refer to Section III.H for more detail. 

c Monetized GHG benefits exclude the value of reductions in non-CO2

GHG emissions (HFC, CH4 and N2O) expected under this final rule. 

Although EPA has not monetized the benefits of reductions in these nonCO2 emissions, the value of these reductions should not be interpreted as 

zero. Rather, the reductions in non-CO2 GHGs will contribute to this 

rule’s climate benefits, as explained in Section III.F.2. The SCC TSD 

notes the difference between the social cost of non-CO2 emissions and 

CO2 emissions, and specifies a goal to develop methods to value non-CO2

emissions in future analyses. Also, as noted in Section III.H, SCC 

increases over time. The $21/ton value applies to 2010 emissions and 

grows larger over time. 

Table I.C.2-4 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.C.2-4 

are totals for the five model years throughout their projected lifetime and are not 

discounted. The monetized values shown in Table I.C.2-4 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.C.2-4 

reflect both a 3 percent and a 7 percent discount rate as noted. 
77 

Table I.C.2-4 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 $182, 3% discount rate 

$142, 7% discount rate 

CO2e emission reductions 

(CO2 portion valued assuming $21/ton 

CO2 in 2010) 

962 MMT CO2e $17a,b

a

 $17 billion for 858 MMT of reduced CO2 emissions. As noted in Section III.H, the $21/ton value applies 

to 2010 emissions and grows larger over time. Monetized GHG benefits exclude the value of reductions in 

non-CO2 GHG emissions (HFC, CH4 and N2O) expected under this final rule. Although EPA has not 

monetized the benefits of reductions in these non-CO2 emissions, the value of these reductions should not 

be interpreted as zero. Rather, the reductions in non-CO2 GHGs will contribute to this rule’s climate 

benefits, as explained in Section III.F.2. The SCC TSD notes the difference between the social cost of nonCO2 emissions and CO2 emissions, and specifies a goal to develop methods to value non-CO2 emissions in 

future analyses. 

b

 Note that net present value of reduced CO2 emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 

percent) is used to calculate net present value of SCC for internal consistency. Refer to Section III.H for 

more detail. 

Table I.C.2-5 shows EPA’s estimated incremental and total technology outlays for 

cars and trucks for each of the model years 2012-2016. The technology outlays shown in 

Table I.C.2-5 are for the industry as a whole and do not account for fuel savings 

associated with the program. 

Table I.C.2-5 EPA’s Estimated Incremental Technology Outlays (billions of 2007 

dollars) 

 2012 2013 2014 2015 2016 Total 

Cars $3.1 $5.0 $6.5 $8.0 $9.4 $31.9 

Trucks $1.8 $3.0 $3.9 $4.8 $6.2 $19.7 

Combined $4.9 $8.0 $10.3 $12.7 $15.6 $51.5 

 
78 

Table I.C.2-6 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 $342 relative to a 2012 model year car absent the National Program. 

The estimated increase for a 2013 model year car is $507 relative to a 2013 model year 

car absent the National Program (not $342 plus $507). 

Table I.C.2-6 EPA’s Estimated Incremental Increase in Average New Vehicle Cost (2007 

dollars per unit) 

 2012 2013 2014 2015 2016 

Cars $342 $507 $631 $749 $869 

Trucks $314 $496 $652 $820 $1,098 

Combined $331 $503 $639 $774 $948 

D. Background and Comparison of NHTSA and EPA Statutory Authority 

 Section I.C of the proposal contained a detailed overview discussion of the 

NHTSA and EPA statutory authorities. In addition to the discussion in the proposal, each 

agency discusses comments pertaining to its statutory authority and the agency’s 

responses in Sections III and IV of this notice, respectively. 
79 

II. Joint Technical Work Completed for This Final Rule 

A. Introduction 

In this section NHTSA and EPA discuss several aspects of the joint technical 

analyses on which the two agencies collaborated. These analyses are common to the 

development of each agency’s final standards. Specifically we discuss: the development 

of the vehicle market forecast used by each agency for assessing costs, benefits, and 

effects, the development of the attribute-based standard curve shapes, the determination 

of the relative stringency between the car and truck fleet standards, the technologies the 

agencies evaluated and their costs and effectiveness, and the economic assumptions the 

agencies included in their analyses. The Joint Technical Support Document (TSD) 

discusses the agencies’ joint technical work in more detail. 

 B. Developing the Future Fleet for Assessing Costs, Benefits, and Effects 

1. Why Did the Agencies Establish a Baseline and Reference Vehicle Fleet? 

In order to calculate the impacts of the EPA and NHTSA regulations, it is 

necessary to estimate the composition of the future vehicle fleet absent these regulations, 

to provide a reference point relative to which costs, benefits, and effects of the 

regulations are assessed. As in the proposal, EPA and NHTSA have developed this 

comparison fleet in two parts. The first step was to develop a baseline fleet based on 
80 

model year 2008 data. The second step was to project that fleet into model years 2011-

2016. This is called the reference fleet. The third step was to modify that MY 2011-

2016 reference fleet such that it had sufficient technology to meet the MY 2011 CAFE 

standards. This final version of the reference fleet is the light-duty fleet estimated to exist 

in MY 2012-2016 in the absence of today’s standards, based on the assumption that 

manufacturers would continue to meet the MY 2011 CAFE standards (or pay civil 

penalties allowed under EPCA44) in the absence of further increases in the stringency of 

CAFE standards. Each agency used this approach to develop 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. 

EPA and NHTSA proposed a transparent approach to developing the baseline and 

reference fleets, largely working from publicly available data. This proposed approach 

differed from previous CAFE rules, which relied on confidential manufacturers’ product 

plan information to develop the baseline. Most of the public comments to the NPRM 

addressing this issue supported this methodology for developing the inputs to the rule's 

analysis. Because the input sheets can be made public, stakeholders can verify and check 

EPA’s and NHTSA’s modeling, and perform their own analyses with these datasets. In 

this final rulemaking, EPA and NHTSA are using an approach very similar to that 

 

44 That is, the manufacturers who have traditionally paid fines under EPCA instead of complying with the 

CAFE standards were “allowed,” for purposes of the reference fleet, to reach only the CAFE level at which 

paying fines became more cost-effective than adding technology, even if that fell short of the MY 2011 

standards. 
81 

proposed, continuing to rely on publicly available data as the basis for the baseline and 

reference fleets. 

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

At proposal, EPA and NHTSA developed a baseline fleet comprised of model 

year 2008 data gathered from EPA’s emission certification and fuel economy database. 

MY 2008 was used as the basis for the baseline vehicle fleet because it was the most 

recent model year for which a complete set of data is publicly available. This remains the 

case. Manufacturers are not required to submit final sales and mpg figures for MY 2009 

until April 2010, 45 after the CAFE standard’s mandated promulgation date. 

Consequently, in this final rule, EPA and NHTSA made no changes to the method or the 

results of the MY 2008 baseline fleet used at proposal, except for some specific 

corrections to engineering inputs for some vehicle models reflected in the market forecast 

input to NHTSA’s CAFE model. More details about how the agencies constructed this 

baseline fleet can be found in Chapter 1.2 of the Joint TSD. Corrections to engineering 

inputs for some vehicle models in the market forecast input to NHTSA’s CAFE model 

are discussed in Chapter 2 of the Joint TSD. 

 

45 40 CFR 600.512-08, Model Year Report 
82 

3. How Did the Agencies Develop the Projected MY 2011-2016 Vehicle 

Fleet? 

EPA and NHTSA have based the projection of total car and total light truck sales 

for MYs 2011-2016 on projections made by the Department of Energy’s Energy 

Information Administration (EIA). EIA publishes a mid-term projection of national 

energy use called the Annual Energy Outlook (AEO). 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. In the 

proposal, the agencies used the three reports published by EIA as part of the AEO 2009. 

We also stated that updated versions of these reports could be used in the final rules 

should AEO timely issue a new version. EIA published an early version of its AEO 2010 

in December 2009, and the agencies are making use of it in this final rulemaking. The 

differences in projected sales in the 2009 report (used in the NPRM) and the early 2010 

report are very small, so NHTSA and EPA have decided to simply scale the NPRM 

volumes for cars and trucks (in the aggregate) to match those in the 2010 report. We thus 

employ the sales projections from the scaled updated 2009 Annual Energy Outlook, 

which is equivalent to AEO 2010 Early Release, for the final rule. The scaling factors for 

each model year are presented in Chapter 1 of the Joint TSD for this final rule. 

The agencies recognize that AEO 2010 Early Release does include some impacts 

of future projected increases in CAFE stringency. We have closely examined the 
83 

difference between AEO 2009 and AEO 2010 Early Release and we believe the 

differences in total sales and the car/truck split attributed to considerations of the standard 

in the final rule are small.46

In the AEO 2010 Early Release, EIA projects that total light-duty vehicle sales 

will gradually recover from their currently depressed levels by around 2013. In 2016, car 

sales are projected to be 9.4 million (57 percent) and truck sales are projected to be 7.1 

million (43 percent). Although the total level of sales of 16.5 million units is similar to 

pre-2008 levels, the fraction of car sales is projected to be higher than that existing in the 

2000-2007 timeframe. This projection reflects the impact of higher fuel prices, as well as 

EISA’s requirement that the new vehicle fleet average at least 35 mpg by MY 2020. The 

agencies note that AEO does not represent the fleet at a level of detail sufficient to 

explicitly account for the reclassification—promulgated as part of NHTSA’s final rule for 

MY 2011 CAFE standards—of a number of 2-wheel drive sport utility vehicles from the 

truck fleet to the car fleet for MYs 2011 and after. Sales projections of cars and trucks 

for future model years can be found in the Joint TSD for these final rules. 

In addition to a shift towards more car sales, sales of segments within both the car 

and truck markets have been changing and are expected to continue to change. 

Manufacturers are introducing more crossover models which offer much of the utility of 

 

46 The agencies have also looked at the impact of the rule in EIA’s projection, and concluded that the 

impact was small. EPA and NHTSA have evaluated the differences between the AEO 2010 (early draft) 

and AEO 2009 and found little difference in the fleet projections (or fuel prices). This analysis can be 

found in the memo to the docket: Kahan, A. and Pickrell, D. Memo to Docket EPA-HQ-OAR-2009-0472 

and Docket NHTSA-2009-0059. "Energy Information Administration’s Annual Energy Outlook 2009 and 

2010." March 24, 2010. 
84 

SUVs but use more car-like designs. The AEO 2010 report does not, however, 

distinguish such changes within the car and truck classes. In order to reflect these 

changes in fleet makeup, EPA and NHTSA considered several other available forecasts. 

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, modified as described below, for several reasons presented in the 

NPRM preamble47 and draft Joint TSD. 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. Noting this, and lacking a credible forecast of 

company and segment shares after 2015, the agencies assumed 2016 market share and 

market segments to be the same as for 2015. 

CSM Worldwide provides quarterly sales forecasts for the automotive industry. 

In the NPRM, the agencies identified a concern with the 2nd quarter CSM forecast that 

was used as a basis for the projection. CSM projections at that time were based on an 

industry that was going through a significant financial transition, and as a result the 

market share forecasts for some companies were impacted in surprising ways. As the 

industry’s situation has settled somewhat over the past year, the 4th quarter projection 

appears to address this issue – for example, it shows nearly a two-fold increase in sales 

for Chrysler compared to significant loss of market share shown for Chrysler in the 2nd

quarter projection. Additionally, some commenters, such as GM, recognized that the 

 

47 See, e.g., 74 FR 49484. 
85 

fleet appeared to include an unusually high number of large pickup trucks.48 In fact, the 

agencies discovered (independently of the comments) that CSM’s standard forecast 

included all vehicles below 14,000 GVWR, including class 2b and 3 heavy duty vehicles, 

which are not regulated by this final rule.49 The commenters were thus correct that light 

duty reference fleet projections at proposal had more full size trucks and vans due to the 

mistaken inclusion of the heavy duty versions of those vehicles. The agencies requested 

a separate data forecast from CSM that filtered their 4th quarter projection to exclude 

these heavy duty vehicles. The agencies then used this filtered 4th quarter forecast for the 

final rule. A detailed comparison of the market by manufacturer can be found in the final 

TSD. For the public’s reference, copies of the 2nd, 3rd, and 4th quarter CSM forecasts 

have been placed in the docket for this rulemaking.50

We then projected the CSM forecasts for relative sales of cars and trucks by 

manufacturer and by market segment onto the total sales estimates of AEO 2010. Tables 

II.B.3-1 and II.B.3-2 show the resulting projections for the reference 2016 model year 

and compare these to actual sales that occurred in baseline 2008 model year. Both tables 

show sales using the traditional definition of cars and light trucks. 

 

48 GM argued that the unusually large volume of large pickups led to higher overall requirements for those 

vehicles. As discussed below, the agencies’ analysis for the final rule corrects the number of large pickups. 

With this correction and other updates to the agencies’ market forecast and other analytical inputs, the 

target functions defining the final standards (and achieving the average required performance levels 

defining the national program) are very similar to those from the NPRM, especially for light trucks, as 

illustrated below in Figures II.C-7 and II.C-8. 49 These include the Ford F-250 & F-350, Econoline E-250, & E-350; Chevy Express, Silverado 2500, & 

3500; GMC Savana, Dodge 2500, & 3500; among others. 

50 The CSM Sales Forecast Excel file (“CSM North America Sales Forecasts 2Q09 3Q09 4Q09 for the 

Docket”) is available in the docket (Docket EPA-HQ-OAR-2009-0472). 
86 

Table II.B.3-1 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 

 

291,796 424,923 61,324 171,560 353,120 596,482 

Chrysler 

 

537,808 340,908 1,119,397 525,128 1,657,205 866,037 

Daimler 

 

208,052 272,252 79,135 126,880 287,187 399,133 

Ford 

 

709,583 1,118,727 1,158,805 1,363,256 1,868,388 2,481,983 

General Motors 

 

1,370,280 1,283,937 1,749,227 1,585,828 3,119,507 2,869,766 

Honda 

 

899,498 811,214 612,281 671,437 1,511,779 1,482,651 

Hyundai 

 

270,293 401,372 120,734 211,996 391,027 613,368 

Kia 

 

145,863 455,643 135,589 210,717 281,452 666,360 

Mazda 

 

191,326 350,055 111,220 144,992 302,546 495,047 

Mitsubishi 

 

76,701 49,914 24,028 88,754 100,729 138,668 

Porsche 

 

18,909 33,471 18,797 16,749 37,706 50,220 

Nissan 

 

653,121 876,677 370,294 457,114 1,023,415 1,333,790 

Subaru 

 

149,370 230,705 49,211 95,054 198,581 325,760 

Suzuki 

 

68,720 97,466 45,938 26,108 114,658 123,574 

Tata 

 

9,596 65,806 55,584 42,695 65,180 108,501 

Toyota 

 

1,143,696 2,069,283 1,067,804 1,249,719 2,211,500 3,319,002 

Volkswagen 

 

290,385 586,011 26,999 124,703 317,384 710,011 

Total 

 

7,034,997 9,468,365 6,806,367 7,112,689 13,841,364 16,580,353 
87 

Table II.B.3-2 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 829,896 530,945 Full-Size Pickup 1,331,989 1,379,036 

Luxury Car 1,048,341 1,548,242 Mid-Size Pickup 452,013 332,082 

Mid-Size Car 2,166,849 2,550,561 Full-Size Van 33,384 65,650 

Mini Car 617,902 1,565,373 Mid-Size Van 719,529 839,194 

Small Car 1,912,736 2,503,566 Mid-Size MAV* 110,353 116,077 

Specialty Car 459,273 769,679 Small MAV 231,265 62,514 

 Full-Size SUV* 559,160 232,619 

 Mid-Size SUV 436,080 162,502 

 Small SUV 196,424 108,858 

 Full-Size CUV* 264,717 260,662 

 Mid-Size CUV 923,165 1,372,200 

 Small CUV 1,548,288 2,181,296 

Total Sales** 7,034,997 9,468,365 6,806,367 7,079,323

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

**Total Sales are based on the classic Car/Truck definition. 

Determining which traditionally-defined trucks will be defined as cars for 

purposes of this final rule using the revised definition established by NHTSA for MYs 

2011 and beyond requires more detailed information about each vehicle model. This is 

described in greater detail in Chapter 1 of the final TSD. 

The forecasts obtained from CSM provided estimates of car and truck sales by 

segment and by manufacturer, but not by manufacturer for each market segment. 

Therefore, NHTSA and EPA needed other information on which to base these more 

detailed projected market splits. For this task, the agencies used as a starting point each 
88 

manufacturer’s sales by market segment from model year 2008, which is the baseline 

fleet. Because of the larger number of segments in the truck market, the agencies 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, the 

agencies found that Ford’s51 cars sales in 2008 were broken down as shown in Table 

II.B.3-3: 

Table II.B.3-3: Breakdown of Ford’s 2008 Car Sales 

Full-size cars 160,857 units 

Mid-size Cars 170,399 units 

Small/Compact Cars 180,249 units 

Subcompact/Mini Cars None 

Luxury cars 87,272 units 

Specialty cars 110,805 units 

 

EPA and NHTSA 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 AEO and 

CSM forecasts. For example, as indicated in Table II.B.3-1, Ford’s total car sales in 2008 

were 709,583 units, while the agencies project that they will increase to 1,113,333 units 

by 2016. This represents an increase of 56.9 percent. Thus, the agencies increased the 

2008 sales of each Ford car segment by 56.9 percent. This produced estimates of future 

sales which matched total car and truck sales per AEO and the manufacturer breakdowns 

 

51 Note: In the NPRM, Ford’s 2008 sales per segment, and the total number of cars was different than 

shown here. The change in values is due to a correction of vehicle segments for some of Ford’s vehicles. 
89 

per CSM. However, the sales splits by market segment would not necessarily match 

those of CSM (shown for 2016 in Table II.B.3-2). 

In order to adjust the market segment mix for cars, the agencies 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, and so on? The agencies have assumed that any changes in the sales of cars within 

these three segments were compensated for by proportional changes in the sales of the 

other four car segments. For example, for 2016, the figures in Table II.B.3-2 indicate that 

luxury car sales in 2016 are 1,548,242 units. Luxury car sales are 1,048,341 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 

decreased to 1,523,171 units. Thus, overall for 2016, luxury car sales had to increase by 

25,071 units or 6 percent. The agencies accordingly increased the luxury car sales by 

each manufacturer by this percentage. The absolute decrease in luxury car sales was 

spread across sales of full-size, mid-size, 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. 
90 

The agencies used a slightly different approach to adjust for changing sales of the 

remaining four car segments. Starting with full-size cars, the agencies again determined 

the overall percentage change that needed to occur in future year full-size car sales after 

1) adjusting for total sales per AEO 2010, 2) adjusting for manufacturer sales mix per 

CSM and 3) adjusting 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, the agencies assigned the entire change to mid-size vehicles. The agencies did 

so because the CSM data followed the trend of increasing volumes of smaller cars while 

reducing volumes of larger cars. If a consumer had previously purchased a full-size car, 

we thought it unlikely that their next purchase would decrease by two size categories, 

down 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 mid-size 

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 model years 2012-2016--the reference fleet--which matched 

the total sales projections of the AEO forecast and the manufacturer and segment splits of 

the CSM forecast. These sales splits can be found in Chapter 1 of the Joint TSD for this 

final rule. 
91 

As mentioned above, the agencies applied a slightly different process to truck 

sales, because the agencies 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, the agencies applied an iterative, 

but straightforward process for adjusting 2008 truck sales to match the AEO and CSM 

forecasts. 

The first three steps were exactly the same as for cars. EPA and NHTSA broke 

down each manufacturer’s truck sales into the truck segments as defined by CSM. The 

agencies then adjusted all manufacturers’ truck segment sales by the same factor so that 

total truck sales in each model year matched AEO projections for truck sales by model 

year. The agencies 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, the agencies adjusted the sales of each truck segment by a 

common factor so that total sales for that segment matched the combination of the AEO 

and CSM forecasts. For example, projected sales of large pickups across all 

manufacturers were 1,286,184 units in 2016 after adjusting total sales to match AEO’s 
92 

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 AEO’s total sales forecast indicated total large pickup sales of 

1,379,036 units. Thus, we increased each manufacturer’s sales of large pickups by 7 

percent.52 The agencies applied the same type of adjustment to all the other truck 

segments at the same time. The result was a set of sales projections which matched 

AEO’s total truck sales projection and CSM’s market segment forecast. However, after 

this step, sales 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 AEO’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 to the desired result. The agencies repeated these adjustments, 

matching manufacturer sales mix in one step and then market segment in the next 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 percent of our goal, which is well within the 

needs of this analysis. 

The next step in developing the reference fleets was to characterize the vehicles 

within each manufacturer-segment combination. In large part, this was based on the 

 

52 Note: In the NPRM this example showed 29 percent instead of 7 percent. The significant decrease was 

due to using the filtered 4th quarter CSM forecast. Commenters, such as GM, had commented that we had 

too many full-size trucks and vans, and this change addresses their comment. 
93 

characterization of the specific vehicle models sold in 2008 -- i.e., the vehicles 

comprising the baseline fleet. 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 by 

interested parties. Two, because it is constructed beginning with actual sales data, this 

vehicle fleet is limited to vehicle models known to satisfy consumer demands in light of 

price, utility, performance, safety, and other vehicle attributes. 

As noted above, the agencies gathered most of the information about the 2008 

baseline 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 economyimproving/CO2-reducing technologies considered in this final rule. Thus, the agencies 

augmented this description with publicly available data which includes more complete 

technology descriptions from Ward’s Automotive Group.53 In a few instances when 

required vehicle information (such as vehicle footprint) was not available from these two 

sources, the agencies obtained this information from publicly accessible internet sites 

such as Motortrend.com and Edmunds.com.54 

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 

 

53 Note that WardsAuto.com is a fee-based service, but all information is public to subscribers. 54 Motortrend.com and Edmunds.com are free, no-fee internet sites. 
94 

available at a much finer level of detail, essentially vehicle configuration. As mentioned 

above, the agencies placed each vehicle in the EPA certification database into one of the 

CSM market segments. The agencies then totaled the sales by each manufacturer for 

each market segment. If the combination of AEO 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 percent 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 percent of Toyota’s 

compact car sales. 

The projection of average footprint for both cars and trucks remained virtually 

constant over the years covered by the final rulemaking. This occurrence is strictly a 

result of the CSM projections. There are a number of trends that occur in the CSM 

projections that caused the average footprint to remain constant. First, as the number of 

subcompacts increases, so do the number of 2-wheel drive crossover vehicles (that are 

regulated as cars). Second, truck volumes have many segment changes during the 

rulemaking time frame. There is no specific footprint related trend in any segment that 

can be linked to the unchanging footprint, but there is a trend that non-pickups’ volumes 

will move from truck segments that are ladder frame to those that are unibody-type 

vehicles. A table of the footprint projections is available in the TSD as well as further 

discussion on this topic. 
95 

4. How Was the Development of the Baseline and Reference Fleets for this 

Final Rule Different from NHTSA’s Historical Approach?

 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. 

 

The proposal discusses many of the advantages and disadvantages of the market 

forecast approach used by the agencies, including the agencies’ interest in examining 

product plans as a check on the reference fleet developed by the agencies for this 

rulemaking. One of the primary reasons for the request for data in 2009 was to obtain 

permission from the manufacturers to make public their product plan information for 

model years 2010 and 2011. There are a number of reasons that this could be 

advantageous in the development of a reference fleet. First, some known changes to the 

fleet may not be captured by the approach of solely using publicly available information. 

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 Mercury Sable, the Pontiac Grand Prix, the 

Pontiac G5 and the Saturn Vue. These vehicle models appear explicitly in market inputs 

to NHTSA’s analysis, and are among those vehicle models included in the aggregated 
96 

vehicle types appearing in market inputs to EPA’s analysis. However, although the 

agencies recognize that these specific vehicles will be discontinued, we continue to 

include them in the market forecast because they are useful as a surrogate for successor 

vehicles that may appear in the rulemaking time frame to replace the discontinued 

vehicles in that market segment.55

Second, the agencies’ market forecast does not include some forthcoming vehicle 

models, such as the Chevrolet Volt, the Ford Fiesta and several publicly announced 

electric vehicles, including the announcements from Nissan regarding the Leaf. 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 defining specific vehicle models 

in the reference fleet 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. Chrysler Group LLC has announced plans to offer small- and mediumsized cars using Fiat powertrains. 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. 

Some commenters, such as CBD and NESCAUM, suggested that the agencies’ 

omission of known future vehicles and technologies in the reference fleet causes 

inaccuracies, which CBD further suggested could lead the agencies to set lower 

 

55 An example of this is in the GM Pontiac line, which is in the process of being phased out during the 

course of this rulemaking. GM has similar vehicles within their other brands (like Chevy) that will 

presumable pick up the loss in Pontiac share. We model this simply by leaving the Pontiac brand in. 
97 

standards. On the other hand, CARB commented that “the likely impact of this omission 

is minor.” Because the agencies’ analysis examines the costs and benefits of 

progressively adding technology to manufacturers’ fleets, the omission of future vehicles 

and technologies primarily affects how much additional technology (and, therefore, how 

much incremental cost and benefit) is available relative to the point at which the 

agencies’ examination of potential new standards begins. Thus, in fact, the omission only 

reflects the reference fleet, rather than the agencies’ conclusions regarding how stringent 

the standards should be. This is discussed further below. The agencies believe the 

above-mentioned comments by CBD, NESCAUM, and others are based on a 

misunderstanding of the agencies’ approach to analyzing potential increases in regulatory 

stringency. The agencies also note that manufacturers do not always use technology 

solely to increase fuel economy, and that use of technology to increase vehicles’ 

acceleration performance or utility would probably make that technology unavailable 

toward more stringent standards. Considering the incremental nature of the agencies’ 

analysis, and the counterbalancing aspects of potentially omitted technology in the 

reference fleet, the agencies believe their determination of the stringency of new 

standards has not been impacted by any such omissions. 

Moreover, EPA and NHTSA believe that not including such vehicles after MY 

2008 does not significantly impact our estimates of the technology required to comply 

with the standards. If included, these vehicles could increase the extent to which 

manufacturers are, in the reference case, expected to over-comply with the MY 2011 

CAFE standards, and could thereby make the new standards appear to cost less and yield 
98 

less benefit relative to the reference case. However, in the agencies’ judgment, 

production of the most advanced technology vehicles, such as the Chevy Volt or the 

Nissan Leaf (for example), will most likely be too limited during MY 2011 through MY 

2016 to significantly impact manufacturers’ compliance positions. While we are 

projecting the characteristics of the future fleet by extrapolating from the MY 2008 fleet, 

the primary difference between the future fleet and the 2008 fleet in the same vehicle 

segment is the use of additional CO2-reducing and fuel-saving technologies. Both the 

NHTSA and EPA models add such technologies to evaluate means of complying with the 

standards, and the costs of doing so. Thus, our future projections of the vehicle fleet 

generally shift vehicle designs towards those more likely to be typical of newer vehicles. 

Compared to using product plans that show continued fuel economy increases planned 

based on expectations that CAFE standards will continue to increase, this approach helps 

to clarify the costs and benefits of the new standards, as the costs and benefits of all fuel 

economy improvements beyond those required by the MY 2011 CAFE standards are 

being assigned to the final rules. In some cases, the “actual” (vs. projected or “modeled”) 

new vehicles being introduced into the market by manufacturers are done so in 

anticipation of this rulemaking. On the other hand, manufacturers may plan to continue 

using technologies to improve vehicle performance and/or utility, not just fuel economy. 

Our approach prevents some of these actual technological improvements and their 

associated cost and fuel economy improvements from being assumed in the reference 

fleet. Thus, the added technology will not be considered to be free (or having no 

benefits) for the purposes of this rule. 
99 

In this regard, the agencies further note that manufacturer announcements 

regarding forward models (or future vehicle models) need not be accepted automatically. 

Manufacturers tend to limit accurate production intent information in these releases for 

reasons such as: (a) competitors will closely examine their information for data in their 

product planning decisions; (b) the press coverage of forward model announcements is 

not uniform, meaning highly anticipated models have more coverage and materials than 

models that may be less exciting to the public and consistency and uniformity cannot be 

ensured with the usage of press information; and (c) these market projections are subject 

to change (sometimes significant), and manufacturers may not want to give the 

appearance of being indecisive, or under/over-confident to their shareholders and the 

public with premature release of information. 

NHTSA has evaluated the use of public manufacturer forward model press 

information to update the vehicle fleet inputs to the baseline and reference fleet. The 

challenges in this approach are evidenced by the continuous stream of manufacturer press 

releases throughout a defined rulemaking period. Manufacturers’ press releases suffer 

from the same types of inaccuracies that many commenters believe can affect product 

plans. Manufacturers can often be overly optimistic in their press releases, both on 

projected date of release of new models and on sales volumes. 

More generally and more critically, as discussed in the proposal and as endorsed 

by many of the public comments, there are several advantages to the approach used by 

the agencies in this final rule. Most importantly, today’s market forecast is much more 
100 

transparent. The information sources used to develop today’s market forecast are all 

either in the public domain or available commercially. 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 addition, by developing baseline and reference 

fleets 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. An additional advantage of the approach used for this rule is a 

consistent projection of the change in fuel economy and CO2 emissions across the various 

vehicles from the application of new technology. With the approach used for this final 

rule, the baseline market data comes from actual vehicles (on the road today) which have 

actual fuel economy test data (in contrast to manufacturer estimates of future product fuel 

economy) – so there is no question what is the basis for the fuel economy or CO2

performance of the baseline market data as it is. 

 

5. How Does Manufacturer Product Plan Data Factor into the Baseline used 

in this Final Rule? 

In the spring and fall of 2009, many manufacturers submitted product plans in 

response to NHTSA’s recent requests that they do so. 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: 
101 

• 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 for vehicles 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 agencies’ 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 manufacturer’s data. 

Also, some technical information that manufacturers have provided in product 

plans regarding specific vehicle models is, at least insofar as NHTSA and EPA have been 
102 

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 value56 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. 

Additionally, as discussed in the NPRM, in an effort to update the 2008 baseline 

to account for the expected changes in the fleet in the near-term model years 2009-2011 

described above, NHTSA requested permission from the manufacturers to make this 

limited product plan information public. Unfortunately, virtually no manufacturers 

agreed to allow the use of their data after 2009 model year. A few manufacturers, such as 

GM and Ford, stated we could use their 2009 product plan data after the end of 

 

56 A 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. 
103 

production (December 31), but this would not have afforded us sufficient time to do the 

analysis for the final rule. Since the agencies were unable to obtain consistent updates, 

the baseline and reference fleets were not updated beyond 2008 model year for the final 

rule. The 2008 baseline fleet and projections were instead updated using the latest AEO 

and CSM data as discussed earlier. 

 NHTSA and EPA recognize that the approach applied for the current rule gives 

transparency and openness of the vehicle market forecast high priority, and 

accommodates minor inaccuracies that may be introduced by not accounting for future 

product mix changes anticipated in manufacturers’ confidential product plans. For any 

future fleet analysis that the agencies are required to perform, NHTSA and EPA plan to 

request that manufacturers submit product plans and allow some public release of 

information. In performing this analysis, the agencies plan to reexamine potential 

tradeoffs between transparency and technical reasonableness, and to explain resultant 

choices.

C. Development of Attribute-Based Curve Shapes 

In the NPRM, NHTSA and EPA proposed to set attribute-based 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 
104 

fuel economy, and be expressed in the form of a mathematical function.57 The CAA has 

no such requirement, though in past rules, EPA has relied on both universal and attributebased 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, EPA also proposed to issue standards that are 

attribute-based and defined by mathematical functions. There was consensus in the 

public comments that EPA should develop attribute-based CO2 standards. 

 

Comments received in response to the agencies’ decision to base standards on 

vehicle footprint were largely supportive. Several commenters (BMW, NADA, 

NESCAUM) expressed support for attribute-based (as opposed to flat or universal) 

standards generally, and agreed with EPA’s decision to harmonize with NHTSA in this 

respect. Many commenters (Aluminum Association, BMW, ICCT, NESCAUM, NY 

DEC, Schade, Toyota) also supported the agencies’ decision to continue setting CAFE 

standards, and begin setting GHG standards, on the basis of vehicle footprint, although 

one commenter (NJ DEP) opposed the use of footprint due to concern that it encourages 

manufacturers to upsize vehicles and undercut the gains of the standard. Of the 

commenters supporting the use of footprint, several focused on the benefits of 

harmonization—both between EPA and NHTSA, and between the U.S. and the rest of the 

world. BMW commented, for example, that many other countries use weight-based 

standards rather than footprint-based. While BMW did not object to NHTSA’s and 

EPA’s use of footprint-based standards, it emphasized the impact of this non-

 

57 49 U.S.C. 32902(a)(3)(A). 
105 

harmonization on manufacturers who sell vehicles globally, and asked the agencies to 

consider these effects. NADA supported the use of footprint, but cautioned that the 

agencies must be careful in setting the footprint curve for light trucks to ensure that 

manufacturers can continue to provide functionality like 4WD and towing/hauling 

capacity. 

 

Some commenters requested that the agencies consider other or more attributes in 

addition to footprint, largely reiterating comments submitted to the MYs 2011-2015 

CAFE NPRM. Cummins supported the agencies using a secondary attribute to account 

for towing and hauling capacity in large trucks, for example, while Ferrari asked the 

agencies to consider a multi-attribute approach incorporating curb weight, maximum 

engine power or torque, and/or engine displacement, as it had requested in the previous 

round of CAFE rulemaking. An individual, Mr. Kenneth Johnson, commented that 

weight-based standards would be preferable to footprint-based ones, because weight 

correlates better with fuel economy than footprint, because the use of footprint does not 

necessarily guarantee safety the way the agencies say it does, and because weight-based 

standards would be fairer to manufacturers. 

 In response, EPA and NHTSA continue to believe that the benefits of footprintattribute-based standards outweigh any potential drawbacks raised by commenters, and 

that harmonization between the two agencies should be the overriding goal on this issue. 

As discussed by NHTSA in the MY 2011 CAFE final rule,58 the agencies believe that the 

possibility of gaming is lowest with footprint-based standards, as opposed to weight-

 

58 See 74 FR 14359 (Mar. 30, 2009). 
106 

based or multi-attribute-based standards. Specifically, standards that incorporate weight, 

torque, power, towing capability, and/or off-road capability in addition to footprint would 

not only be significantly more complex, but by providing degrees of freedom with respect 

to more easily-adjusted attributes, they would make it less certain that the future fleet 

would actually achieve the average fuel economy and CO2 levels projected by the 

agencies. The agencies recognize that based on economic and consumer demand factors 

that are external to this rule, the distribution of footprints in the future may be different 

(either smaller or larger) than what is projected in this rule. However, the agencies 

continue to believe that there will not be significant shifts in this distribution as a direct 

consequence of this rule. The agencies are therefore finalizing MYs 2012-2016 CAFE 

and GHG standards based on footprint. 

 The agencies also recognize that there could be benefits for a number of 

manufacturers if there was greater international harmonization of fuel economy and GHG 

standards, but this is largely a question of how stringent standards are and how they are 

enforced. It is entirely possible that footprint-based and weight-based systems can 

coexist internationally and not present an undue burden for manufacturers if they are 

carefully crafted. Different countries or regions may find different attributes appropriate 

for basing standards, depending on the particular challenges they face – from fuel prices, 

to family size and land use, to safety concerns, to fleet composition and consumer 

preference, to other environmental challenges besides climate change. The agencies 

anticipate working more closely with other countries and regions in the future to consider 
107 

how to mitigate these issues in a way that least burdens manufacturers while respecting 

each country’s need to meet its own particular challenges. 

Under an attribute-based standard, every vehicle model has a performance target 

(fuel economy and CO2 emissions for CAFE and CO2 emissions standards, respectively), 

the level of which depends on the vehicle’s attribute (for the proposal, footprint). The 

manufacturers’ fleet average performance is determined by the production-weighted59

average (for CAFE, harmonic average) of those targets. NHTSA and EPA are 

promulgating CAFE and CO2 emissions standards defined by constrained linear functions 

and, equivalently, piecewise linear functions.60 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 was defined according to the following formula:61

1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

a b

= ⎡ ⎛ ⎞ ⎤ ⎜ ⎟ × + ⎢ ⎥ ⎣ ⎝ ⎠ ⎦

where 

TARGET = the fuel economy target (in mpg) applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), 

 

59 Production for sale in the United States. 

60 The equations are equivalent but are specified differently due to differences in the agencies’ respective 

models. 

61 This function is linear in fuel consumption but not in fuel economy. 
108 

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. 

 Because the format is linear on a gallons-per-mile basis, not on a miles-per-gallon 

basis, it is plotted as fuel consumption below. Graphically, the constrained linear form 

appears as shown in Figure II.C-1. 
109 

0.0500.0450.0400.0350.0300.0250.0200.0150.0100.0050.000

35 40 45 50 55 60 65 70

Footprint (sf)

Fuel Consumption (gpm) 1/LIMIT UPPER 1/LIMIT LOWER INTERCEPT SLOPE

Figure II.C-1 The Shape of the Constrained Linear Form 
110 

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. 

EPA proposed 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 and for each model year. Described mathematically, EPA’s proposed 

piecewise linear function was as follows: 

Target = a, if x ≤ l 

Target = cx + d, if l < x ≤ h 

Target = b, if x > h 

 

In the constrained linear form similar in form to the fuel economy equation above, 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) 
111 

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

62

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-2. 

 

62 These a, b, d coefficients differ from the a, b, d coefficients in the constrained linear fuel economy 

equation primarily by a factor of 8887 (plus an additive factor for air conditioning). 
112 

30 35 40 45 50 55 60 65 70 Footprint (sq feet)

CO2 (gram/mile) or 

Fuel Consumption (gallons/mile)

lower limit = l Intercept = d

upper limit = h

slope = c

min = a

max = b

Figure II.C-2 The Shape of the Piecewise Linear Form 
113 

As for the constrained linear form, the specific form and stringency of the 

piecewise linear function 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 the proposed rules, 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 involved defining the relevant vehicle 

characteristics in the form used by NHTSA’s CAFE model (e.g., fuel economy, footprint, 

vehicle class, technology) described in Section II.B of this preamble and in Chapter 1 of 

the Joint TSD. However, because the baseline fleet utilizes a wide range of available fuel 

saving technologies, NHTSA used the CAFE model to develop a fleet to which all of the 

technologies discussed in Chapter 3 of the Joint TSD63 were applied, except dieselization 

and strong hybridization. This was accomplished 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. 

 

63 The 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. 
114 

In fitting the curves, NHTSA and EPA also continued to fit the sloped portion of 

the function to vehicle models between the footprint values at which the agencies 

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 result in stringency levels that are technologically infeasible 

and/or economically impracticable for those manufacturers that may elect to focus on the 

smallest 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 and EPA 

selected footprints above and below which to apply constraints (i.e., minimum and 

maximum values) on the function. The agencies believe that the linear form performs 

well in describing the observed relationship between footprint and fuel consumption or 

CO2 emissions for vehicle models within the footprint ranges covering most vehicle 

models, but that the single (as opposed to piecewise) linear form does not perform well in 

describing this relationship for the smallest and largest vehicle models. For passenger 
115 

cars, the agency noted that several manufacturers offer small, sporty coupes below 41 

square feet, such as the BMW Z4 and Mini, Honda S2000, Mazda MX-5 Miata, Porsche 

Carrera and 911, and Volkswagen New Beetle. Because such vehicles represent a small 

portion (less than 10 percent) of the passenger car market, yet often have performance, 

utility, and/or structural characteristics that could make it technologically infeasible 

and/or economically impracticable for manufacturers focusing on such vehicles to 

achieve the very challenging average requirements that could apply in the absence of a 

constraint, EPA and NHTSA proposed to “cut off” the linear portion of the passenger car 

function at 41 square feet. The agencies recognize that for manufacturers who make 

small vehicles in this size range, this cut off creates some incentive to downsize (i.e., 

further reduce the size, and/or increase the production of models currently smaller than 

41 square feet) to make it easier to meet the target. The cut off may also create the 

incentive for manufacturers who do not currently offer such models to do so in the future. 

However, at the same time, the agencies believe that there is a limit to the market for cars 

smaller than 41 square feet - most consumers likely have some minimum expectation 

about interior volume, among other things. The agencies thus believe that the number of 

consumers who will want vehicles smaller than 41 square feet (regardless of how they are 

priced) is small, and that the incentive to downsize in response to this final rule, if 

present, will be minimal. For consistency, the agency proposed to “cut off” the light 

truck function at the same footprint, although no light trucks are currently offered below 

41 square feet. The agencies 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. 
116 

NHTSA and EPA therefore also proposed to “cut off” the linear portion of the passenger 

car function at 56 square feet. Finally, the agencies 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 F150, GM Sierra/Silverado, Nissan Titan, and Toyota Tundra) appear to fall just above 66 

square feet in footprint. EPA and NHTSA therefore proposed to “cut off” the linear 

portion of the light truck function at 66 square feet. 

Having developed a set of vehicle emissions and footprint data which represent 

the benefit of all non-diesel, non-hybrid technologies, we determined 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 limits) and the straight line of 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 parameters (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). 
117 

The result of this methodology is shown below in Figures II.C-3 and II.C-4 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. 
118 

0.0600.0550.0500.0450.0400.0350.0300.0250.0200.0150.0100.0050.000

35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Consumption (gpm)

Figure II.C-3 “Maximum Technology” Passenger Fleet with Fitted Constrained Linear Function 
119 

0.0600.0550.0500.0450.0400.0350.0300.0250.0200.0150.0100.0050.000

35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Consumption (gpm)

Figure II.C--4 “Maximum Technology” Light Truck with Fitted Constrained Linear Function 
120 

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 same fleetwide fuel economy (and CO2 emission 

levels) for cars and light trucks described in the NPRM. 

A number of public comments generally supported the agencies’ choice of 

attribute-based mathematical functions, as well as the methods applied to fit the function. 

Ferrari indicated support for the use of a constrained linear form rather than a constrained 

logistic form, support for the application of limits on the functions’ values, support for a 

generally less steep passenger car curve compared to MY 2011, and support for the 

inclusion of all manufacturers in the analysis used to fit the curves. ICCT also supported 

the use of a constrained linear form. Toyota expressed general support for the methods 

and outcome, including a less-steep passenger car curve, and the application of limits on 

fuel economy targets applicable to the smallest vehicles. The UAW commented that the 

shapes and levels of the curves are reasonable. 

Other commenters suggested that changes to the agencies’ methods and results 

would yield better outcomes. GM suggested that steeper curves would provide a greater 

incentive for limited-line manufacturers to apply technology to smaller vehicles. GM 

argued that steeper and, in their view, fairer curves could be obtained by using salesweighted least-squares regression rather than minimization of the unweighted mean 
121 

absolute deviation. Conversely, students from UC Santa Barbara commented that the 

passenger car and light truck curves should be flatter and should converge over time in 

order to encourage the market to turn, as the agencies’ analysis assumes it will, away 

from light trucks and toward passenger cars. 

NADA commented that there should be no “cut-off” points (i.e., lower limits or 

floors), because these de facto “backstops” might limit consumer choice, especially for 

light trucks—a possibility also suggested by the Alliance. The Alliance and several 

individual manufacturers also commented that the cut-off point for light trucks should be 

shifted to 72 square feet (from the proposed 66 square feet), arguing that the 

preponderance of high-volume light truck models with footprints greater than 66 square 

feet is such that a 72 square foot cut-off point makes it unduly challenging for 

manufacturers serving the large pickup market and thereby constitutes a de facto

backstop. Also, with respect to the smallest light truck models, Honda commented that 

the cut-off point should be set at the point defining the smallest 10 percent of the fleet, 

both for consistency with the passenger car cut-off point, and to provide a greater 

incentive for manufacturers to downsize the smallest light truck models (which provide 

greater functionality than passenger cars). 

Other commenters focused on whether the agencies should have separate curves 

for different fleets or whether they should have a single curve that applied to both 

passenger cars and light trucks. This issue is related, to some extent, to commenters who 

discussed whether car and truck definitions should change. CARB, Ford, and Toyota 
122 

supported separate curves for cars and trucks, generally stating that different fleets have 

different functional characteristics and these characteristics are appropriately addressed 

by separate curves. Likewise, AIAM, Chrysler, and NADA supported leaving the current 

definitions of car and truck the same. CBD, ICCT, and NESCAUM supported a single 

curve, based on concerns about manufacturers gaming the system and reclassifying 

passenger cars as light trucks in order to obtain the often-less stringent light truck 

standard, which could lead to lower benefits than anticipated by the agencies. 

In addition, the students from UC Santa Barbara reported being unable to 

reproduce the agencies’ analysis to fit curves to the passenger car and light truck fleets, 

even when using the model, inputs, and external analysis files posted to NHTSA’s web 

site when the NPRM was issued. 

Having considered public comments, NHTSA and EPA have re-examined the 

development of curves underlying the standards proposed in the NPRM, and are 

promulgating standards based on the same underlying curves. The agencies have made 

this decision considering that, while EISA mandates that CAFE standards be defined by a 

mathematical function in terms of one or more attributes related to fuel economy, neither 

EISA nor the CAA require that the mathematical function be limited to the observed or 

theoretical dependence of fuel economy on the selected attribute or attributes. As a 

means by which CAFE and GHG standards are specified, the mathematical function can 

and does properly play a normative role. Therefore, NHTSA and EPA have concluded 

that, as supported by comments, the mathematical function can reasonably be based on a 
123 

blend of analytical and policy considerations, as discussed below and in the Joint 

Technical Support Document. 

With respect to GM’s recommendation that NHTSA and EPA use weighted leastsquares analysis, the agencies find that the market forecast used for analysis supporting 

both the NPRM and the final rule exhibits the two key characteristics that previously led 

NHTSA to use minimization of the unweighted Mean Absolute Deviation (MAD) rather 

than weighted least-squares analysis. First, projected model-specific sales volumes in the 

agencies’ market forecast cover an extremely wide range, such that, as discussed in 

NHTSA’s rulemaking for MY 2011, while unweighted regression gives low-selling 

vehicle models and high-selling vehicle models equal emphasis, sales-weighted 

regression would give some vehicle models considerably more emphasis than other 

vehicle models.64 The agencies’ intention is to fit a curve that describes a technical 

relationship between fuel economy and footprint, given comparable levels of technology, 

and this supports weighting discrete vehicle models equally. On the other hand, sales 

weighted regression would allow the difference between other vehicle attributes to be 

reflected in the analysis, and also would reflect consumer demand. 

 

64 For example, the agencies’ market forecast shows MY 2016 sales of 187,000 units for Toyota’s 2WD 

Sienna, and shows 27 model configurations with MY 2016 sales of fewer than 100 units. Similarly, the 

agencies’ market forecast shows MY 2016 sales of 268,000 for the Toyota Prius, and shows 29 model 

configurations with MY 2016 sales of fewer than 100 units. Sales-weighted analysis would give the 

Toyota Sienna and Prius more than a thousand times the consideration of many vehicle model 

configurations. Sales-weighted analysis would, therefore, cause a large number of vehicle model 

configurations to be virtually ignored. See discussion in NHTSA’s final rule for MY 2011 passenger car 

and light truck CAFE standards, 74 FR 14368 (Mar. 30, 2009), and in NHTSA’s NPRM for that 

rulemaking, 73 FR 24423-24429 (May 2, 2008). 
124 

Second, even after NHTSA’s “maximum technology” analysis to increase 

technological parity of vehicle models before fitting curves, the agencies’ market forecast 

contains many significant outliers. As discussed in NHTSA’s rulemaking for MY 2011, 

MAD is a statistical procedure that has been demonstrated to produce more efficient 

parameter estimates than least-squares analysis in the presence of significant outliers.65 

In addition, the agencies remain concerned that the steeper curves resulting from 

weighted least-squares analysis would increase the risk that energy savings and 

environmental benefits would be lower than projected, because the steeper curves would 

provide a greater incentive to increase sales of larger vehicles with lower fuel economy 

levels. Based on these technical considerations and these concerns regarding potential 

outcomes, the agencies have decided not to re-fit curves using weighted least-squares 

analysis, but note that they may reconsider using least-squares regression in future 

analysis. 

NHTSA and EPA have considered GM’s comment that steeper curves would 

provide a greater incentive for limited-line manufacturers to apply technology to smaller 

vehicles. While the agencies agree that a steeper curve would, absent any changes in 

fleet mix, tend to shift average compliance burdens away from GM and toward 

 

65 Id. In the case of a dataset not drawn from a sample with a Gaussian, or normal, distribution, there is 

often a need to employ robust estimation methods rather than rely on least-squares approach to curve 

fitting. The least-squares approach has as an underlying assumption that the data are drawn from a normal 

distribution, and hence fits a curve using a sum-of-squares method to minimize errors. This approach will, 

in a sample drawn from a non-normal distribution, give excessive weight to outliers by making their 

presence felt in proportion to the square of their distance from the fitted curve, and, hence, distort the 

resulting fit. With outliers in the sample, the typical solution is to use a robust method such as a minimum 

absolute deviation, rather than a squared term, to estimate the fit (see, e.g., ‘‘AI Access: Your Access to 

Data Modeling,’’ at http://www.aiaccess.net/English/Glossaries/GlosMod/e_gm_O_Pa.htm#Outlier). The 

effect on the estimation is to let the presence of each observation be felt more uniformly, resulting in a 

curve more representative of the data (see, e.g., Peter Kennedy, A Guide to Econometrics, 3rd edition, 1992, 

MIT Press, Cambridge, MA). 
125 

companies that make smaller vehicles, the agencies are concerned, as stated above, that 

steeper curves would increase the risk that induced increases in vehicle size could erode 

projected energy and environmental benefits. 

NHTSA and EPA have also considered the comments by the students from UC 

Santa Barbara indicating that the passenger car and light truck curves should be flatter 

and should converge over time. The agencies conclude that flatter curves would reduce 

the incentives intended in shifting from “flat” CAFE standards to attribute-based CAFE 

and GHG standards—those being the incentive to respond to attribute-based standards in 

ways that minimize compromises in vehicle safety, and the incentive for more 

manufacturers (than primarily those selling a wider range of vehicles) across the range of 

the attribute to have to increase the application of fuel-saving technologies. With regard 

to whether the agencies should set separate curves or a single one, NHTSA also notes that 

EPCA requires NHTSA to establish standards separately for passenger cars and light 

trucks, and thus concludes that the standards for each fleet should be based on the 

characteristics of vehicles in each fleet. In other words, the passenger car curve should 

be based on the characteristics of passenger cars, and the light truck curve should be 

based on the characteristics of light trucks—thus to the extent that those characteristics 

are different, an artificially-forced convergence would not accurately reflect those 

differences. However, such convergence could be appropriate depending on future trends 

in the light vehicle market, specifically further reduction in the differences between 

passenger car and light truck characteristics. While that trend was more apparent when 

car-like 2WD SUVs were classified as light trucks, it seems likely to diminish for the 
126 

model year vehicles subject to these rules as the truck fleet will be more purely “trucklike” than has been the case in recent years. 

NHTSA and EPA have also considered comments on the maxima and minima 

that the agencies have applied to “cut off” the linear function underlying the proposed 

curves for passenger cars and light trucks. Contrary to NADA’s suggestion that there 

should be no such cut-off points, the agencies conclude that curves lacking maximum 

fuel economy targets (i.e., minimum CO2 targets) would result in average fuel economy 

and GHG requirements that would not be technologically feasible or economically 

practicable for manufacturers concentrating on those market segments. In addition, 

minimum fuel economy targets (i.e., maximum CO2 targets) are important to mitigate the 

risk to energy and environmental benefits of potential market shifts toward large vehicles. 

The agencies also disagree with comments by the Alliance and several individual 

manufacturers that the cut-off point for light trucks should be shifted to 72 square feet 

(from the proposed 66 square feet) to ease compliance burdens facing manufacturers 

serving the large pickup market. Such a shift would increase the risk that energy and 

environmental benefits of the standards would be compromised by induced increases in 

the sales of large pickups, in situations where the increased compliance burden is feasible 

and appropriate. Also, the agencies’ market forecast suggests that most of the light trucks 

models with footprints larger than 66 square feet have curb weights near or above 5,000 

pounds. This suggests, in turn, that in terms of highway safety, there is little or no need 

to discourage downsizing of light trucks with footprints larger than 66 square feet. 

Based on these energy, environmental, technological feasibility, economic practicability, 
127 

and safety considerations, the agencies conclude that the light truck curve should be cut 

off at 66 square feet, as proposed, rather than at 72 square feet. The agencies also 

disagree with Honda’s suggestion that the cut-off point for the smallest trucks be shifted 

to a larger footprint value, because doing so could potentially increase the incentive to 

reclassify vehicles in that size range as light trucks, and could thereby increase the 

possibility that energy and environmental benefits of the rule would be less than 

projected. 

Finally, considering comments by the UC Santa Barbara students regarding 

difficulties reproducing NHTSA’s analysis, NHTSA reexamined its analysis, and 

discovered some erroneous entries in model inputs underlying the analysis used to 

develop the curves proposed in the NPRM. These errors are discussed in NHTSA’s final 

Regulatory Impact Analysis (FRIA) and have since been corrected. They include the 

following: incorrect valvetrain phasing and lift inputs for many BMW engines, incorrect 

indexing for some Daimler models, incorrectly enabled valvetrain technologies for rotary 

engines and Atkinson cycle engines, omitted baseline applications of cylinder 

deactivation in some Honda and GM engines, incorrect valve phasing codes for some 4-

cylinder Chrysler engines, omitted baseline applications of advanced transmissions in 

some VW models, incorrectly enabled advanced electrification technologies for several 

hybrid vehicle models, and incorrect DCT effectiveness estimates for subcompact 

passenger cars. These errors, while not significant enough to impact the overall analysis 

of stringency, did affect the fitted slope for the passenger car curve and would have 

prevented precise replication of NHTSA’s NPRM analysis by outside parties. 
128 

After correcting these errors and repeating the curve development analysis 

presented in the NPRM, NHTSA obtained the curves shown below in Figures II.C-5 and 

II.C-6 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. 
129 

0.0600.0550.0500.0450.0400.0350.0300.0250.0200.0150.0100.0050.000

35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Consumption (gpm)

Figure II.C-5 Revised “Maximum Technology” Passenger Fleet with Fitted Constrained Linear Function 
130 

0.0600.0550.0500.0450.0400.0350.0300.0250.0200.0150.0100.0050.000

35 40 45 50 55 60 65 70 75 80

)mpg(noitpmusnoCleuF

Footprint (sf)

Figure II.C-6 Revised “Maximum Technology” Light Truck with Fitted Constrained Linear Function 
131 

 This refitted passenger car curve is similar to that presented in the NPRM, and the 

refitted light truck curve is nearly identical the corresponding curve in the NPRM. 

However, the slope of the refitted passenger car curve is about 27 percent steeper (on a 

gpm per sf basis) than the curve presented in the NPRM. For passenger cars and light 

trucks, respectively, Figures II.C-7 and II.C-8 show the results of adjustment—discussed 

in the next section—of the above curves to yield the average required fuel economy 

levels corresponding to the final standards. 
132 

454035302520

35 40 45 50 55 60 65 70 75 80

)gpm(tegraT

Footprint (sf)

NPRMFinalRe-Fitted

Figure II.C-7 MY 2016 Passenger Car Targets: NPRM, Final Rule, and if Using Re-Fitted Curve 
133 

454035302520

35 40 45 50 55 60 65 70 75 80

)gpm(tegraT

Footprint (sf)

NPRMFinalRe-Fitted

Figure II.C-8 MY 2016 Light Truck Targets: NPRM, Final Rule, and if Using Re-Fitted Curve 
134 

While the resultant light truck curves are visually indistinguishable from one 

another, the refitted curve for passenger cars would increase stringency for the smallest 

cars, decrease stringency for the largest cars, and provide a greater incentive to increase 

vehicle size throughout the range of footprints within which NHTSA and EPA project 

most passenger car models will be sold through MY 2016. The agencies are concerned 

that these changes would make it unduly difficult for manufacturers to introduce new 

small passenger cars in the United States, and unduly risk losses in energy and 

environmental benefits by increasing incentives for the passenger car market to shift 

toward larger vehicles. 

Also, the agencies note that the refitted passenger car curve produces only a 

slightly closer fit to the corrected fleet than would the curve estimated in the NPRM; with 

respect to the corrected fleet (between the “cut off” footprint values, and after the 

“maximum technology” analysis discussed above), the mean absolute deviation for the 

refitted curve is 13.887 percent, and that of a refitted curve held to the original slope is 

13.933 percent. In other words, the data support the original slope very nearly as well as 

they support the refitted slope. 

Considering NHTSA’s and EPA’s concerns regarding the change in incentives 

that would result from a refitted curve for passenger cars, and considering that the data 

support the original curves about as well as they would support refitted curves, the 
135 

agencies are finalizing CAFE and GHG standards based on the curves presented in the 

NPRM. 

 

 Finally, regarding some commenters’ inability to reproduce the agencies’ NPRM 

analysis, NHTSA believes that its correction of the errors discussed above and its release 

(on NHTSA’s web site) of the updated Volpe model and all accompanying inputs and 

external analysis files should enable outside parties to independently reproduce the 

agencies’ analysis. If outside parties continue to experience difficulty in doing so, we 

encourage them to contact NHTSA, and the agency will do its best to provide assistance. 

Thus, in summary, the agencies’ approach to developing the attribute-based 

mathematical functions for MY 2012-2016 CAFE and CO2 standards represents the 

agencies’ best technical judgment and consideration of potential outcomes at this time, 

and we are confident that the conclusions have resulted in appropriate and reasonable 

standards. The agencies recognize, however, that aspects of these decisions may merit 

updating or revision in future analysis to support CAFE and CO2 standards or for other 

purposes. Consistent with best rulemaking practices, the agencies will take a fresh look 

at all assumptions and approaches to curve fitting, appropriate attributes, and 

mathematical functions in the context of future rulemakings. 

The agencies also recognized in the NPRM the possibility that lower fuel prices 

could lead to lower fleetwide fuel economy (and higher CO2 emissions) than projected in 

this rule. One way of addressing that concern is through the use of a universal 
136 

standard—that is, an average standard set at a (single) absolute level. This is often 

described as a “backstop standard.” The agencies explained that under the CAFE 

program, EISA requires such a minimum average fuel economy standard for domestic 

passenger cars, but is silent with regard to similar backstops for imported passenger cars 

and light trucks, while under the CAA, a backstop could be adopted under section 202(a) 

assuming it could be justified under the relevant statutory criteria. NHTSA and EPA also 

noted that the flattened portions of the curves at the largest footprints directionally 

address the issue of a backstop (i.e., the mpg “floor” or gpm “ceiling” applied to the 

curves provides a universal and absolute value for that range of footprints). The agencies 

sought 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. 

 The agencies received a number of comments regarding the need for a backstop 

beyond NHTSA’s alternative minimum standard. Comments were divided fairly evenly 

between support for and opposition to additional backstop standards. The following 

organizations supported the need for EPA and NHTSA to have explicit backstop 

standards: American Council for an Energy Efficient Economy (ACEEE), American 

Lung Association, California Air Resources Board (CARB), Environment America, 

Environment Defense Fund, Massachusetts Department of Environmental Protection, 

Natural Resources Defense Council (NRDC), Northeast States for Coordinated Air Use 

Management (NESCAUM), Public Citizen and Safe Climate Campaign, Sierra Club, 

State of Washington Department of Ecology, Union of Concerned Scientists, and a 
137 

number of private citizens. Commenters in favor of additional backstop standards for all 

fleets for both NHTSA and EPA66 generally stated that the emissions reductions and fuel 

savings expected to be achieved by MY 2016 depended on assumptions about fleet mix 

that might not come to pass, and that various kinds of backstop standards or “ratchet 

mechanisms”67 were necessary to ensure that those reductions were achieved in fact. In 

addition, some commenters68 stated that manufacturers might build larger vehicles or 

more trucks during MYs 2012-2016 than the agencies project, for example, because 1) 

any amount of slope in target curves encourages manufacturers to upsize, and 2) lower 

targets for light trucks than for passenger cars encourage manufacturers to find ways to 

reclassify vehicles as light trucks, such as by dropping 2WD versions of SUVs and 

offering only 4WD versions, perhaps spurred by NHTSA’s reclassification of 2WD 

SUVs as passenger cars. Both of these mechanisms will be addressed further below. 

Some commenters also discussed EPA authority under the CAA to set backstops,69

agreeing with EPA’s analysis that section 202 (a) allows such standards since EPA has 

wide discretion under that section to craft standards. 

The following organizations opposed a backstop: Alliance of Automobile 

Manufacturers (AAM), Association of International Automobile Manufacturers (AIAM), 

Ford Motor Company, National Automobile Dealers Association (NADA), Toyota Motor 

Company, and the United Auto Workers Union. Commenters stating that additional 

 

66 ACEEE, American Lung Association, CARB, Christopher Lish, Environment America, EDF, MA DEP, 

NRDC, NESCAUM, Public Citizen, Sierra Club et al., SCAQMD, UCS, WA DE 67 Commenters generally defined a “ratchet mechanism” as an automatic re-calculation of stringency to 

ensure cumulative goals are reached by 2016, even if emissions reductions and fuel savings fall short in the 

earlier years covered by the rulemaking. 

68 CBD, MA DEP, NJ DEP, Public Citizen, Sierra Club et al., UCS 69 CARB, Public Citizen, Sierra Club et al.
138 

backstops would not be necessary disagreed that upsizing was likely,70 and emphasized 

the anti-backsliding characteristics of the target curves. Others argued that universal 

absolute standards as backstops could restrict consumer choice of vehicles. Commenters 

making legal arguments under EPCA/EISA71 stated that Congress’ silence regarding 

backstops for imported passenger cars and light trucks should be construed as a lack of 

authority for NHTSA to create further backstops. Commenters making legal arguments 

under the CAA72 focused on the lack of clear authority under the CAA to create multiple 

GHG emissions standards for the same fleets of vehicles based on the same statutory 

criteria, and opposed EPA taking steps that would reduce harmonization with NHTSA in 

standard setting. Furthermore, AIAM indicated that EISA’s requirement that the 

combined (car and truck) fuel economy level reach at least 35 mpg by 2020 itself 

constitutes a backstop.73 One individual74 commented that while additional backstop 

standards might be necessary given optimism of fleet mix assumptions, both agencies’ 

 

70 For example, the Alliance and Toyota said that upsizing would not be likely because (1) it would not 

necessarily make compliance with applicable standards easier, since larger vehicles tend to be heavier and 

heavier vehicles tend to achieve worse fuel economy/emissions levels; (2) it may require expensive 

platform changes; (3) target curves become increasingly more stringent from year to year, which reduces 

the benefits of upsizing; and (4) the mpg floor and gpm ceiling for the largest vehicles (the point at which 

the curve is “cut off”) discourages manufacturers from continuing to upsize beyond a point because doing 

so makes it increasingly difficult to meet the flat standard at that part of the curve. 

71 AIAM, Alliance, Ford, NADA, Toyota 

72 Alliance, Ford, NADA, UAW 

73 NHTSA and EPA agree with AIAM that the EISA 35 mpg requirement in MY 2020 has a backstop-like 

function, in that it requires a certain level of achieved fleetwide fuel economy by a certain date, although it 

is not literally a backstop standard. Considering that NHTSA’s MY 2011 CAFE standards increased 

projected average fuel economy requirements (relative to the MY 2010 standards) at a significantly faster 

rate than would be required to achieve the 35-in-2020 requirement, and considering that the standards being 

finalized today would increase projected average combined fuel economy requirements to 34.1 mpg in MY 

2016, four years before MY 2020, the agencies believe that the U.S. vehicle market would have to shift in 

highly unexpected ways in order to put the 35-in-2020 requirement at risk, even despite the fact that due to 

the attribute-based standards, average fuel economy requirements will vary depending on the mix of 

vehicles produced for sale in the U.S. in each model year. The agencies further emphasize that both 

NHTSA and EPA plan to conduct and document retrospective analyses to evaluate how the market’s 

evolution during the rulemaking timeframe compares with the agencies’ forecasts employed for this 

rulemaking. Additionally, we emphasize that both agencies have the authority, given sufficient lead time, 

to revise their standards upwards if necessary to avoid missing the 35-in-2020 requirement. 74 Schade 
139 

authorities would probably need to be revised by Congress to clarify that backstop 

standards (whether for individual fleets or for the national fleet as a whole) were 

permissible. 

 In response, EPA and NHTSA remain confident that their projections of the 

future fleet mix are reliable, and that future changes in the fleet mix of footprints and 

sales are not likely to lead to more than modest changes in projected emissions reductions 

or fuel savings.75 Both agencies thus remain confident in these fleet projections and the 

resulting emissions reductions and fuel savings from the standards. As explained in 

Section II.B above, the agencies’ projections of the future fleet are based on the most 

transparent information currently available to the agencies. In addition, there are only a 

relatively few model years at issue. Moreover, market trends today are consistent with 

the agencies’ estimates, showing shifts from light trucks to passenger cars and increased 

emphasis on fuel economy from all vehicles. 

Finally, the shapes of the curves, including the “flattening” at the largest footprint 

values, tend to avoid or minimize regulatory incentives for manufacturers to upsize their 

fleet to change their compliance burden. Given the way the curves are fit to the data 

points (which represent vehicle models’ fuel economy mapped against their footprint), 

 

75 For reference, NHTSA’s March 2009 final rule establishing MY 2011 CAFE standards was based on a 

forecast that passenger cars would represent 57.6 percent of the MY 2011 fleet, and that MY 2011 

passenger cars and light trucks would average 45.6 square feet (sf) and 55.1 sf, respectively, such that 

average required CAFE levels would be 30.2 mpg, 24.1 mpg, and 27.3 mpg, respectively, for passenger 

cars, light trucks, and the overall light-duty fleet. Based on the agencies’ current market forecast, even as 

soon as MY 2011, passenger cars will comprise a larger share (59.2 percent) of the light vehicle market; 

passenger cars and light trucks will, on average, be smaller by 0.5 sf and 1.3 sf, respectively; and average 

required CAFE levels will be higher by 0.2 mpg, 0.3 mpg, and 0.3 mpg, respectively, for passenger cars, 

light trucks, and the overall light-duty fleet. 
140 

the agencies believe that there is little real benefit to be gained by a manufacturer 

upsizing their vehicles. As discussed above, the agencies’ analysis indicates that, for 

passenger car models with footprints falling between the two flattened portions of the 

corresponding curve, the actual slope of fuel economy with respect to footprint, if fit to 

that data by itself, is about 27 percent steeper than the curve the agencies are 

promulgating today. This difference suggests that manufacturers would, if anything, 

have more to gain by reducing vehicle footprint than by increasing vehicle footprint. For 

light trucks, the agencies’ analysis indicates that, for models with footprints falling 

between the two flatted portions of the corresponding curve, the slope of fuel economy 

with respect to footprint is nearly identical to the curve the agencies are promulgating 

today. This suggests that, within this range, manufacturers would typically have little 

incentive to either incrementally increase or reduce vehicle footprint. The agencies 

recognize that based on economic and consumer demand factors that are external to this 

rule, the distribution of footprints in the future may be different (either smaller or larger) 

than what is projected in this rule. However, the agencies continue to believe that there 

will not be significant shifts in this distribution as a direct consequence of this rule. 

At the same time, adding another backstop standard would have virtually no 

effect if the standard was weak, but a more stringent backstop could compromise the 

objectives served by attribute-based standards – that they distribute compliance burdens 

more equally among manufacturers, and at the same time encourage manufacturers to 

apply fuel-saving technologies rather than simply downsizing their vehicles, as they did 

in past decades under flat standards. This is why Congress mandated attribute-based 
141 

CAFE standards in EISA. This compromise in objectives could occur for any 

manufacturer whose fleet average was above the backstop, irrespective of why they were 

above the backstop and irrespective of whether the industry as a whole was achieving the 

emissions and fuel economy benefits projected for the final standards, the problem the 

backstop is supposed to address. For example, the projected industry wide level of 250 

gm/mile for MY 2016 is based on a mix of manufacturer levels, ranging from 

approximately 205 to 315 gram/mile76 but resulting in an industry wide basis in a fleet 

average of 250 gm/mile. Unless the backstop was at a very weak level, above the high 

end of this range, then some percentage of manufacturers would be above the backstop 

even if the performance of the entire industry remains fully consistent with the emissions 

and fuel economy levels projected for the final standards. For these manufacturers and 

any other manufacturers who were above the backstop, the objectives of an attribute 

based standard would be compromised and unnecessary costs would be imposed. This 

could directionally impose increased costs for some manufacturers. It would be difficult 

if not impossible to establish the level of a backstop standard such that costs are likely to 

be imposed on manufacturers only when there is a failure to achieve the projected 

reductions across the industry as a whole. An example of this kind of industry wide 

situation could be when there is a significant shift to larger vehicles across the industry as 

a whole, or if there is a general market shift from cars to trucks. The problem the 

agencies are concerned about in those circumstances is not with respect to any single 

manufacturer, but rather is based on concerns over shifts across the fleet as a whole, as 

compared to shifts in one manufacturer's fleet that may be more than offset by shifts the 

 

76 Based on estimated standards presented in Tables III.B.1-1 and III.B.1-2. 
142 

other way in another manufacturer's fleet. However, in this respect, a traditional 

backstop acts as a manufacturer specific standard. 

The concept of a ratchet mechanism recognizes this problem, and would impose 

the new more stringent standard only when the problem arises across the industry as a 

whole. While the new more stringent standards would enter into force automatically, 

any such standards would still need to provide adequate lead time for the manufacturers. 

Given the limited number of model years covered by this rulemaking and the short leadtime already before the 2012 model year, a ratchet mechanism in this rulemaking that 

would automatically tighten the standards at some point after model year 2012 is finished 

and apply the new more stringent standards for model years 2016 or earlier, would fail to 

provide adequate lead time for any new, more stringent standards 

 Additionally, we do not believe that the risk of vehicle upsizing or changing 

vehicle offerings to “game” the passenger car and light truck definitions is as great as 

commenters imply for the model years in question.77 The changes that commenters 

suggest manufacturers might make are neither so simple nor so likely to be accepted by 

consumers. For example, 4WD versions of vehicles tend to be more expensive and, other 

things being equal, have inherently lower fuel economy than their 2WD equivalent 

models. Therefore, although there is a market for 4WD vehicles, and some consumers 

might shift from 2WD vehicles to 4WD vehicles if 4WD becomes available at little or no 

extra cost, many consumers still may not desire to purchase 4WD vehicles because of 

 

77 We note that NHTSA’s recent clarification of the light truck definitions has significantly reduced the 

potential for gaming, and resulted in the reclassification of over a million vehicles from the light truck to 

the passenger car fleet. 
143 

concerns about cost premium and additional maintenance requirements; conversely, 

many manufacturers often require the 2WD option to satisfy demand for base vehicle 

models. Additionally, increasing the footprint of vehicles requires platform changes, 

which usually requires a product redesign phase (the agencies estimate that this occurs on 

average once every 5 years for most models). Alternatively, turning many 2WD SUVs 

into 2WD light trucks would require manufacturers to squeeze a third row of seats in or 

significantly increase their GVWR, which also requires a significant change in the 

vehicle.78 The agencies are confident that the anticipated increases in average fuel 

economy and reductions in average CO2 emission rates can be achieved without 

backstops under EISA or the CAA. As noted above, the agencies plan to conduct 

retrospective analysis to monitor progress. Both agencies have the authority to revise 

standards if warranted, as long as sufficient lead time is provided. 

The agencies acknowledge that the MY 2016 fleet emissions and fuel economy 

goals of 250 g/mi and 34.1 mpg for EPA and NHTSA respectively are estimates and not 

standards (the MY 2012-2016 curves are the standards). Changes in fuel prices, 

consumer preferences, and/or vehicle survival and mileage accumulation rates could 

result in either smaller or larger oil and GHG savings. As explained above and elsewhere 

in the rule, the agencies believe that the possibility of not meeting (or, alternatively, 

exceeding) fuel economy and emissions goals exists, but is not likely Given this, and 

given the potential complexities in designing an appropriate backstop, the agencies 

 

78 Increasing the GVWR of a light truck (assuming this was the only goal) can be accomplished in a 

number of ways, and must include consideration of: (1) redesign of wheel axles; (2) improving the vehicle 

suspension; (3) changes in tire specification (which will likely affect ride quality); (4) vehicle dynamics 

development (especially with vehicles equipped with electronic stability control); and (5) brake redesign. 

Depending on the vehicle, some of these changes may be easier or more difficult than others. 
144 

believe the balance here points to not adopting additional backstops at this time for the 

MYs 2012-2016 standards other than NHTSA’s finalizing of the ones required by 

EPCA/EISA for domestic passenger cars. Nevertheless, the agencies recognize there are 

many factors that are inherently uncertain which can affect projections in the future, 

including fuel price and other factors which are unrelated to the standards contained in 

this final rule. Such factors can affect consumer preferences and are difficult to predict. 

At this time and based on the available information, the agencies have not included a 

backstop for model years 2012–2016. However, if circumstances change in the future in 

unanticipated ways, the agencies may revisit the issue of a backstop in the context of a 

future rulemaking either for model years 2012-2016 or as needed for standards for model 

years beyond 2016. This issue will be discussed further in Sections III and IV. 

D. Relative Car-Truck Stringency 

The agencies proposed fleetwide standards with the projected levels of stringency 

of 34.1 mpg or 250 g/mi in MY 2016 (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 for those model years, the agencies 

were concerned that increasing the difference between the car and truck standards (either 

by 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 
145 

economy and CO2 reductions.79 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 for the proposal, the agencies explored a 

number of possible alternatives, and for the reasons described in the proposal used the 

Volpe model in order to estimate stringencies at which net benefits would be maximized. 

The agencies have followed the same approach in calculating the relative car-truck 

stringency for the final standards promulgated today. Further details of the development 

of this approach can be found in Section IV of this preamble as well as in NHTSA’s RIA 

and EIS. 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 

remained 31 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.B.1-1. 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 final rule. 

 

79 For 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. 
146 

454035302520

2011 2012 2013 2014 2015 2016

)gpm(EFderiuqeR.evA

Model Year

Combined (National Policy)Cars (Maximizing Net Benefits)Trucks (Maximizing Net Benefits)Combined (Maximizing Net Benefits)Cars (Pending)Trucks (Pending)Combined (Pending)

Passenger CarsCombined Ave.Light Trucks

Figure II.D-1 Shifting the Standards from the Maximizing Net Benefit Levels to the Levels Consistent with the Combined 

Fuel Economy Standards in this Rule 
147 

The final car and truck standards for EPA (Table I.B.1-4 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 Expected Fleet A/C Credits (in CO2 equivalent g/mi) from 2012-2016

Average Technology 

Penetration 

Average 

credit 

for cars 

Average 

credit for 

trucks 

Average 

credit for 

combined 

fleet 

2012 28%80 3.4 3.8 3.5 

2013 40% 4.8 5.4 5.0 

2014 60% 7.2 8.1 7.5 

2015 80% 9.6 10.8 10.0 

2016 85% 10.2 11.5 10.6 

The agencies sought comment on the use of this methodology for apportioning the 

fleet stringencies to relative car and truck standards for 2012-2016. General Motors 

commented that, compared to the passenger car standard, the light truck standard is too 

stringent because “the most fuel efficient cars and small trucks already meet the 2016 

MY requirements” but “the most fuel efficient large trucks must increase fuel economy 

by 20 percent to meet the 2016 MY requirements.” GM recommended that the agencies 

relax stringency specifically for large pickups, such as the Silverado. 

 

80 We assume slightly higher A/C penetration in 2012 than was assumed in the proposal only to correct for 

rounding that occurred in the curve setting process. 
148 

The agencies disagree with the premise of the comment that the standard is too 

stringent under the applicable statutory provisions because some existing large trucks are 

not already meeting a later model year standard. Our analysis shows that the standards 

are not too stringent for manufacturers selling these vehicles. The agencies’ analyses 

demonstrate a means by which manufacturers could apply cost-effective technologies in 

order to achieve the standards, and we have provided adequate lead time for the 

technology to be applied. More important, the agencies’ analysis demonstrate that the 

fleetwide emission standards for MY 2016 are technically feasible, for example by 

implementing technologies such as engine downsizing, turbocharging, direct injection, 

improving accessories and tire rolling resistance, etc. 

GM did not comment on the use of the methodology applied by the agencies to 

develop the gap between the passenger car and light truck standards—only on the 

outcome of the methodology. For the reasons discussed below, the agencies maintain 

that the methodology applied above provides an appropriate basis to determine the gap 

between the passenger car and light truck standards, and disagree with GM’s arguments 

that the outcome is unfair. 

First, GM’s argument incorrectly suggests that every individual vehicle model 

must achieve its fuel economy and emissions targets. CAFE standards and new GHG 

emissions standards apply to fleetwide average performance, not model-specific 

performance, even though average required levels are based on average model-specific 
149 

targets, and the agencies’ analysis demonstrates that GM and other manufacturers of 

large trucks can cost-effectively comply with the new standards. 

Second, GM implies that every manufacturer must be challenged equally with 

respect to fuel economy and emissions. Although NHTSA and EPA maintain that 

attribute-based CAFE and GHG emissions standards can more evenly balance 

compliance challenges, attribute-based standards are not intended to and cannot make 

these challenges equal, and while the agencies are mindful of the potential impacts of the 

standards on the relative competitiveness of different vehicle manufacturers, there is 

nothing in EPCA or the CAA81 requiring that these challenges be equal. 

We have also already addressed and rejected GM’s suggestion of shifting the “cut 

off” point for light trucks from 66 square feet to 72 square feet, thereby “dropping the 

floor” of the target function for light trucks. As discussed in the preceding section, this is 

so as not to forego the rules’ energy and environmental benefits, and because there is 

little or no safety basis to discourage downsizing of the largest light trucks. 

 

81 As NHTSA explained in the NPRM, 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.” CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 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. Similarly, 

EPA is afforded great discretion under section 202 (a) of the CAA to balance issues of technical feasibility, 

cost, adequacy of lead time, and safety, and certainly is not required to do so in a manner that imposes 

regulatory obligations uniformly on each manufacturer. See NRDC v. EPA, 655 F. 2d 318, 322, 328 (D.C. 

Cir. 1981) (wide discretion afforded by the statutory factors, and EPA predictions of technical feasibility 

afforded considerable discretion subject to constraints of reasonableness EPA predictions of technical 

feasibility afforded considerable discretion subject to constraints of reasonableness); and cf. International 

Harvester Co. v. Ruckelshaus, 479 F. 2d 615, 640 (D.C. Cir. 1973) ( “as long as feasible technology 

permits the demand for new passenger automobiles to be generally met, the basic requirements of the Act 

would be satisfied, even though this might occasion fewer models and a more limited choice of engine 

types”). 
150 

Finally, NHTSA and EPA disagree with GM’s claim that the outcome of the 

agencies’ approach is unfairly burdensome for light trucks as compared to passenger cars. 

Based on the agencies’ market forecast, NHTSA’s analysis indicates that incremental 

technology outlays could, on average, be comparable for passenger cars and light trucks 

under the final CAFE standards, and further indicates that the ratio of total benefits to 

total costs could be greater under the final light truck standards than under the final 

passenger car standards. 

E. Joint Vehicle Technology Assumptions 

Vehicle technology assumptions, i.e., assumptions about technologies' cost, 

effectiveness, and the rate at which they can be incorporated into new vehicles, are often 

controversial as they have a significant impact on the levels of the standards. The 

agencies must, therefore, take great care in developing and justifying these estimates. In 

developing technology inputs for the analysis of the MY 2012-2016 standards, the 

agencies reviewed the technology assumptions that NHTSA used in setting the MY 2011 

standards, the comments that NHTSA received in response to its May 2008 Notice of 

Proposed Rulemaking (NPRM), and the comments received in response to the NPRM for 

this rule. 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 Advance Notice of Proposed Rulemaking. The review of 
151 

these documents was supplemented with updated information from more current 

literature, new product plans from manufacturers, and from EPA certification testing. 

As a general matter, EPA and NHTSA believe that the best way to derive 

technology cost estimates is to conduct real-world tear down studies. Most of the 

commenters on this issue agreed. The advantages not only lie in the rigor of the 

approach, but also in its transparency. 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 and the processes 

required to integrate them. As such, tear down studies require a significant amount of 

time and are very costly. EPA has been conducting tear down studies to assess the costs 

of vehicle technologies under a contract with FEV. Further details for this methodology 

is described below and in the TSD. 

 Due to the complexity and time incurred in a tear down study, only a few 

technologies evaluated in this rulemaking have been costed in this manner thus far. The 

agencies prioritized the technologies to be costed first based on how prevalent the 

agencies believed they might be likely to be during the rulemaking time frame, and based 

on their anticipated cost-effectiveness. The agencies believe that the focus on these 

important technologies (listed below) is sufficient for the analysis in this rule, but EPA is 

continuing to analyze more technologies beyond this rule as part of studies both already 

underway and in the future. For most of the other technologies, because tear down 

studies were not yet available, the agencies decided to pursue, to the extent possible, the 
152 

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 in the Technical Support Document. 

Similarly, the agencies followed a BOM approach for developing the technology 

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 has been conducting a study 

for NHTSA to update Chapter 3 of their 2002 NAS Report, which presents technology 

effectiveness estimates for light-duty vehicles. The update takes a fresh look at that list 
153 

of technologies and their associated cost and effectiveness values. The updated NAS 

report was expected to be available on September 30, 2009, but has not been completed 

and released to the public. The results from this study thus are unavailable for this 

rulemaking. The agencies look forward to considering the results from this study as part 

of the next round of rulemaking for CAFE/GHG standards. 

1. What Technologies Did 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 lead time available for this rule is 

not sufficient to move most of these 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 
154 

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 FRIA, and Chapter 1 

of EPA’s final RIA. Technologies to reduce CO2 and HFC emissions from air 

conditioning systems are discussed in Section III of this preamble and in EPA’s final 

RIA. 

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 lowfriction lubricants. 

• Reduction of engine friction losses – can be achieved through low-tension 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.
155 

• 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 direct-injection 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. 
156 

• Combustion restart – can be used in conjunction with gasoline direct-injection 

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 after-treatment. The cost and effectiveness 

estimates for the diesel engine and aftertreatment system utilized in this final rule 

have been revised from the NHTSA MY 2011 CAFE final rule. Additionally, the 

diesel technology option has been made available to small cars in the Volpe and 

OMEGA models. Though this is not expected to make a significant difference in 

the modeling results, the agencies agreed with the commenters that supported 

such a revision. 
157 

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 to enable the engine to operate in a more efficient 

operating range over a broader range of vehicle operating conditions. 

• Dual clutch or automated shift manual transmissions – are similar to manual 

transmissions, but the vehicle controls shifting and launch functions. A dualclutch automated shift manual transmission uses separate clutches for evennumbered and odd-numbered gears, so the next expected gear is pre-selected, 

which allows for faster and smoother shifting.

• Continuously variable transmission – commonly uses V-shaped 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 and an infinite number of 

transmission ratios that enable the engine to operate in a more efficient operating 

range over a broader range of vehicle operating conditions. 
158 

• 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, 

thereby 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. 

• 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 non-driving 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 
159 

application of lighter and higher-strength 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 the final standards. 

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. The latter is covered explicitly within the A/C credit 

program. 

• 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 
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components for the purposes of improving tailpipe CO2 emissions as a result of 

A/C use. These technologies are discussed later in this preamble and 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 higher 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 starteralternator, 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 starter-alternator that is 
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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 stepped-ratio 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 than other hybrids. They also 
162 

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. 

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

These Technologies?

As mentioned above, EPA and NHTSA believe that the best way to derive 

technology cost estimates is to conduct real-world tear down studies. To date, the costs 

of the following five technologies have been evaluated with respect to their baseline (or 

replaced) technologies. For these technologies noted below, the agencies relied on the 

tear down data available and scaling methodologies used in EPA’s ongoing study with 

FEV. Only the cost estimate for the first technology on the list below was used in the 

NPRM. The others were completed subsequent to the publication of the NPRM. 
163 

1. Stoichiometric gasoline direct injection and turbo charging with engine 

downsizing (T-DS) for a large DOHC 4 cylinder engine to a small DOHC 

(dual overhead cam) 4 cylinder engine. 

2. Stoichiometric gasoline direct injection and turbo charging with engine 

downsizing for a SOHC single overhead cam) 3 valve/cylinder V8 engine 

to a SOHC V6 engine. 

3. Stoichiometric gasoline direct injection and turbo charging with engine 

downsizing for a DOHC V6 engine to a DOHC 4 cylinder engine. 

4. 6-speed automatic transmission replacing a 5-speed automatic 

transmission. 

5. 6-speed wet dual clutch transmission (DCT) replacing a 6-speed automatic 

transmission. 

 This costing methodology has been published and gone through a peer review.82 

Using this tear down costing methodology, FEV has developed costs for each of the 

above technologies. In addition, FEV and EPA extrapolated the engine downsizing costs 

for the following scenarios that were outside of the noted study cases:83

1. Downsizing a SOHC 2 valve/cylinder V8 engine to a DOHC V6. 

2. Downsizing a DOHC V8 to a DOHC V6. 

3. Downsizing a SOHC V6 engine to a DOHC 4 cylinder engine. 

4. Downsizing a DOHC 4 cylinder engine to a DOHC 3 cylinder engine. 

 

82 EPA-420-R-09-020; EPA docket number EPA-HQ-OAR-2009-0472-11282 and 11285 

83 “Binning of FEV Costs to GDI, Turbo-charging, and Engine Downsizing,” memorandum to Docket 

EPA-HQ-OAR-2009-0472, from Michael Olechiw, U.S. EPA, dated March 25, 2010. 
164 

 The agencies relied on the findings of FEV in part for estimating the cost of these 

technologies in this rulemaking. However, for some of the technologies, NHTSA and 

EPA modified FEV’s estimated costs. FEV made the assumption that these technologies 

would be mature when produced in large volumes (450,000 units or more). The agencies 

believe that there is some uncertainty regarding each manufacturer’s near-term ability to 

employ the technology at the volumes assumed in the FEV analysis. There is also the 

potential for near term (earlier than 2016) supplier-level Engineering, Design and Testing 

(ED&T) costs to be in excess of those considered in the FEV analysis as existing 

equipment and facilities are converted to production of new technologies. The agencies 

have therefore decided to average the FEV results with the NPRM values in an effort to 

account for these near-term factors. This methodology was done for the following 

technologies: 

1. Converting a port-fuel injected (PFI) DOHC I4 to a turbocharged-downsizedstoichiometric GDI DOHC I3. 

2. Converting a PFI DOHC V6 engine to a T-DS-stoichiometric GDI DOHC I4. 

3. Converting a PFI SOHC V6 engine to a T-DS-stoichiometric GDI DOHC I4. 

4. Converting a PFI DOHC V8 engine to a T-DS-stoichiometric GDI DOHC V6. 

5. Converting a PFI SOHC 3V V8 engine to a T-DS-stoichiometric GDI DOHC 

V6. 

6. Converting a PFI SOHC 2V V8 engine to a T-DS-stoichiometric GDI DOHC 

V6. 
165 

7. Replacing a 4-speed automatic transmission with a 6-speed automatic 

transmission. 

8. Replacing a 5-speed automatic transmission with a 6-speed automatic 

transmission. 

9. Replacing a 6-speed automatic transmission with a 6-speed wet dual clutch 

transmission. 

For the I4 to Turbo GDI I4 study applied in the NPRM, the agencies requested 

from FEV an adjusted cost estimate which accounted for these uncertainties as an 

adjustment to the base technology burden rate.84 These new costs are used in the final 

rules. These details are also further described in the memo to the docket.85 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 (including 

public comments) and using the BOM approach, the agencies worked together 

intensively to determine component costs for each of the technologies and build up the 

costs accordingly. Where estimates differ between sources, we have used our 

 

84 Burden costs include the following fixed and variable costs: rented and leased equipment; manufacturing 

equipment depreciation; plant office equipment depreciation; utilities expense; insurance (fire and general); 

municipal taxes; plant floor space (equipment and plant offices); maintenance of manufacturing equipment 

- non-labor; maintenance of manufacturing building - general, internal and external, parts, and labor; 

operating supplies; perishable and supplier-owned tooling; all other plant wages (excluding direct, indirect 

and MRO labor); returnable dunnage maintenance; and intra-company shipping costs (see EPA-HQ-OAR2009-0472-0149). 

85 “Binning of FEV Costs to GDI, Turbo-charging, and Engine Downsizing,” memorandum to Docket 

EPA-HQ-OAR-2009-0472, from Michael Olechiw, U.S. EPA, dated March 25, 2010. 
166 

engineering judgment to arrive at what we believe to be the best available cost estimate, 

and explained the basis for that exercise of judgment in the TSD. Building on NHTSA’s 

estimates developed for the MY 2011 CAFE final rule and EPA’s Advance Notice of 

Proposed Rulemaking, which relied on the EPA 2008 Staff Technical Report,86 the 

agencies took a fresh look at technology cost and effectiveness values for purposes of the 

joint rulemaking 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 

in NHTSA’s MY 2011 final rule based on recommendation from Ricardo, Inc., as 

described above. EPA used a similar approach in the EPA 2008 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 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 

 

86 EPA Staff Technical Report: Cost and Effectiveness Estimates of Technologies Used to Reduce LightDuty Vehicle Carbon Dioxide Emissions. EPA420-R-08-008, March 2008. 
167 

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,87,88,89,90,91,92,93 revised several component costs of several major technologies: 

turbocharging with engine downsizing (as described above), 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 final RIA. 

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,94

and indirect costs were accounted for using the ICM (indirect cost multiplier) approach 

explained in Chapter 3 of the Joint TSD, rather than using the traditional Retail Price 

Equivalent (RPE) multiplier approach. A report explaining how EPA developed the ICM 

 

87 National 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-update) 88 Northeast 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-update) 89 “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. 90 Energy 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 

91 Martec, “Variable Costs of Fuel Economy Technologies,” June 1, 2008, (the “2008 Martec Report”) 

available at Docket No. NHTSA-2008-0089-0169.1 

92 Vehicle fuel economy certification data 

93 Confidential data submitted by manufacturers in response to the March 2009 and other requests for 

product plans. 

94 NHTSA 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. 
168 

approach can be found in the docket for this rule. The comments addressing the ICM 

approach were generally positive and encouraging. However, one commenter suggested 

that we had mischaracterized the complexity of a few of our technologies, which would 

result in higher or lower markups than presented in the NPRM. That commenter also 

suggested that we had used the ICMs as a means of placing a higher level of 

manufacturer learning on the cost estimates. The latter comment is not true and the 

methodology behind the ICM approach is explained in detail in the reports that are 

available in the docket for this rule.95 The former is open to debate given the subjective 

nature of the engineering analysis behind it, but upon further thought both agencies 

believe that the complexities used in the NPRM were appropriate and have, therefore, 

carried those forward into the final rule. We discuss this in greater detail in the Response 

to Comments document. 

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 

 

95 Rogozhin, Alex, Michael Gallaher, and Walter McManus, “Automobile Industry Retail Price Equivalent 

and Indirect Cost Multipliers,” EPA 420-R-09-003, Docket EPA Docket EPA-HQ-OAR-2009-0472-0142, 

February 2009, http://epa.gov/otaq/ld-hwy/420r09003.pdf; A. Rogozhin et al., International Journal of 

Production Economics 124 (2010) 360–368, Volume 124, Issue 2, April 2010.
169 

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. The agencies also 

carefully examined the pertinent public comments. 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 first into the NPRM, and now into these final rules. When 

NHTSA and EPA’s estimates for effectiveness diverged slightly due to differences in 

how the agencies apply technologies to vehicles in their respective models, we report the 

ranges for the effectiveness values used in each model. There were only a few comments 

on the technology effectiveness estimates used in the NPRM. Most of the technologies 
170 

that were mentioned in the comments were the more advanced technologies that are not 

assumed to have large penetrations in the market within the timeframe of this rule, 

notably hybrid technologies. Even if the effectiveness figures for hybrid vehicles were 

adjusted, it would have made little difference in the NHTSA and EPA analysis of the 

impacts and costs of the rule. The response to comments document has more specific 

responses to these comments. 

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 

enormous 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 the final standards, 

NHTSA and EPA believe that employing average values for technology effectiveness 

estimates, as adjusted depending on vehicle subclass, is an appropriate way of 
171 

recognizing the potential variation in the specific benefits that individual manufacturers 

(and individual vehicles) might obtain from adding a fuel-saving technology. 

Chapter 3 of the 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 final rule take into account 

only those associated with the initial build of the vehicle. Although comments were 

received to the NPRM that suggested there could be additional maintenance required with 

some new technologies (e.g., turbocharging, hybrids, etc.), and that additional 

maintenance costs could occur as a result, the agencies do not believe that the amount of 

additional cost will be significant in the timeframe of this rulemaking, based on the 

relatively low application rates for these technologies. The agencies will undertake a 

more detailed review of these potential costs in preparation for the next round of 

CAFE/GHG standards. 

F. Joint Economic Assumptions

The agencies’ final analysis of alternative CAFE and GHG standards for the 

model years covered by this final rulemaking rely on a range of forecast information, 

economic estimates, and input parameters. This section briefly describes the agencies’ 

choices of specific parameter values. These economic values play a significant role in 

determining the benefits of both CAFE and GHG standards. 
172 

In reviewing these variables and the agency’s estimates of their values for 

purposes of this final rule, NHTSA and EPA reconsidered previous comments that 

NHTSA had received, reviewed newly available literature, and reviewed comments 

received in response to the proposed rule. For this final rule, we made three major 

changes to the economic assumptions. First, we revised the technology costs to reflect 

more recently available data. Second, we updated fuel price and transportation demand 

assumptions to reflect the Annual Energy Outlook (AEO) 2010 Early Release. Third, we 

have updated our estimates of the social cost of carbon (SCC) based on a recent 

interagency process. The key economic assumptions are summarized below, and are 

discussed in greater detail in Section III (EPA) and Section IV (NHTSA), as well as in 

Chapter 4 of the Joint TSD, Chapter VIII of NHTSA’s RIA and Chapter 8 of EPA’s RIA. 

• 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 high-volume 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. 
173 

This accounts for both the direct and indirect costs associated with implementing 

new technologies in response to this final rule. The technology cost estimates for 

a select group of technologies have changed since the NPRM. These changes, as 

summarized in Section II.E and in Chapter 3 of the Joint TSD, were made in 

response to updated cost estimates available to the agencies shortly after 

publication of the NPRM, not in response to comments. In general, commenters 

were supportive of the cost estimates used in the NPRM and the transparency of 

the methodology used to generate them. 

• 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 
174 

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. This issue is discussed in EPA’s RIA, Section 

8.1.2 and NHTSA’s RIA Section VIII.H. The agencies requested 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 cargo-carrying capacity, or other dimensions of 

utility. Commenters did not provide recommendations for how to evaluate the 

quality of different models or identify a model appropriate for the agencies’ 

purposes. Some commenters expressed various concerns about the use of existing 

consumer vehicle choice models. While EPA and NHTSA are not using a 

consumer vehicle choice model to analyze the effects of this rule, we continue to 

investigate these models. 

• The on-road fuel economy “gap” – Actual fuel economy levels achieved by lightduty 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 final CAFE and GHG standards. The agencies use an onroad 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 
175 

driver of that vehicle is expected to be 16 mpg (20*.80).96 NHTSA previously 

used this estimate in its MY 2011 final rule, and the agencies confirmed it based 

on independent analysis for use in this FRM. No substantive comments were 

received on this input. 

• 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. For the proposed rule, the agencies had relied on the then most recent 

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

Annual Energy Outlook (AEO) 2009 (Revised Updated). However, for this final 

rule, the agencies have updated the analyses based on AEO 2010 (December 2009 

Early 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.97 AEO 

2010 includes slightly lower petroleum prices compared to AEO 2009. 

The forecasts of fuel prices reported in EIA’s AEO 2010 Early Release Reference 

Case extends through 2035, compared to the AEO 2009 which only went through 

 

96 U.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. 

97 Energy Information Administration, Annual Energy Outlook 2010, Early Release Reference Case 

(December 2009), Table 12. Available at http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html (last accessed 

February 02, 2010). 
176 

2030. As in the proposal, fuel prices beyond the time frame of AEO’s forecast 

were estimated using an average growth rate. 

While EIA revised AEO 2010, the vehicle MPG standards are similar to those that 

were published in AEO 2009. No substantive comments were received on the 

use of AEO as a source of fuel prices.98

• Consumer valuation of fuel economy and payback period – In estimating the 

impacts on vehicle sales, the agencies assume that potential buyers value the 

resulting fuel savings improvements that would result from alternative CAFE and 

GHG standards 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. 

One commenter argued that higher-fuel-economy vehicles should have higher 

resale prices than vehicles with lower fuel economy, but did not provide 

supporting data. This revision, if made, would increase the net benefits of the 

rule. Another commenter supported the use of a five-year payback period for this 

analysis. In the absence of data to support changes, EPA and NHTSA have kept 

the same assumptions. In the analysis of net benefits, EPA and NHTSA assume 

 

98 Kahan, A. and Pickrell, D. Memo to Docket EPA-HQ-OAR-2009-0472 and Docket NHTSA-2009-0059. 

"Energy Information Administration’s Annual Energy Outlook 2009 and 2010." March 24, 2010. 
177 

that vehicle buyers benefit from the full fuel savings over the vehicles’ lifetime, 

discounted for present value calculations at 3 and 7 percent. 

• Vehicle sales assumptions – The first step in estimating lifetime fuel consumption 

by vehicles produced during a model year is to calculate the number of vehicles 

expected to be produced and sold.99 The agencies relied on the AEO 2010 Early 

Release 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 age-specific 

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. No substantive comments were 

received on vehicle survival assumptions. 

• 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 

 

99 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 Feb. 15, 2010).
178 

Highway Administration’s 2001 National Household Transportation Survey 

(NHTS),100 adjusted to account for the effect on vehicle use of subsequent 

increases in fuel prices. Due to the lower fuel prices projected in AEO 2010, the 

average vehicle is estimated to be used slightly more (~3 percent) over its lifetime 

than assumed in the proposal. 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 2010 Early Release Reference Case. The growth rate in 

average annual car and light truck use produced by this calculation is 

approximately 1.1 percent per year.101 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. 102 While 

commenters requested further detail on the assumptions regarding total vehicle 

use, no specific issues were raised. 

• 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 more stringent 

CAFE and GHG standards – that is offset by additional vehicle use. The increase 

 

100 For a description of the Survey, see http://nhts.ornl.gov/quickStart.shtml (last accessed July 27, 2009). 101 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. 102 While 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. 
179 

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. We received comments supporting our proposed value of 10 

percent, although we also received comments recommending higher and lower 

values. However, we did not receive any new data or comments that justify 

revising the 10 percent value for the rebound effect at this time. 

• 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. These 

benefits are measured by the net “consumer surplus” resulting from increased 

vehicle use, over and above the fuel expenses associated with this additional 

travel. 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. 
180 

• 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.103 Please see the Chapter 4 of the 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 

 

103 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 Feb. 15, 2010); update available at

http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf (last accessed Feb. 15, 2010). 
181 

Administration to estimate the increased external costs caused by added driving 

due to the rebound effect.104 

• 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 expected costs from 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.105 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. Since the 

agencies are taking a global perspective with respect to the estimate of the social 

cost of carbon for this rulemaking, the agencies do not include the value of any 

 

104 These 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 Feb. 15, 2010). 105 See, 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. 
182 

reduction in monopsony payments as a benefit from lower fuel consumption, 

because those payments from a global perspective represent a transfer of income 

from consumers of petroleum products to oil suppliers rather than a savings in 

real economic resources. Similarly, the agencies do not include any savings in 

budgetary outlays to support U.S. military activities among the benefits of higher 

fuel economy and the resulting fuel savings. 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 $0.169 (2007$). 

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.106 

The energy security analysis conducted for this rule estimates that the world price 

of oil will fall modestly in response to lower U.S. demand for refined fuel. One potential 

result of this decline in the world price of oil would be an increase in the consumption of 

petroleum products outside the U.S., which would in turn lead to a modest increase in 

emissions of greenhouse gases, criteria air pollutants, and airborne toxics from their 

refining and use. While additional information would be needed to analyze this “leakage 

effect” in detail, NHTSA provides a sample estimate of its potential magnitude in its 

 

106 Each 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 percent imported 

crude petroleum and 10 percent domestically-produced 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 percent = 0.50 gallons + 0.45 gallons = 0.95 gallons. 
183 

Final EIS.107 This analysis indicates that the leakage effect is likely to offset only a 

modest fraction of the reductions in emissions projected to result from the rule. 

 EPA and NHTSA received comments about the treatment of the monopsony 

effect, macroeconomic disruption effect, and the military costs associated with the energy 

security benefits of this rule. The agencies did not receive any comments that justify 

changing the energy security analysis. As a result, the agencies continue to only use the 

macroeconomic disruption component of the energy security analysis under a global 

context when estimating the total energy security benefits associated with this rule. 

Further, the Agencies did not receive any information that they could use to quantity that 

component of military costs directly related to energy security, and thus did not modify 

that part of its analysis. A more complete discussion of the energy security analysis can 

be found in Chapter 4 of the Joint TSD, and Sections III and IV of this preamble. 

• Air pollutant emissions

o 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 

 

107 NHTSA Final Environmental Impact Statement: Corporate Average Fuel Economy Standards, 

Passenger Cars and Light Trucks, Model Years 2012-2016, February 2010, page 3-14. 
184 

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.

o Economic value of reductions in criteria air pollutants – For the purpose 

of the joint technical analysis, EPA and NHTSA estimate the economic 

value of the human health benefits associated with reducing exposure to 

PM2.5 using a “benefit-per-ton” method. These PM2.5-related benefit-perton 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 rule includes a description of 

these values. Separately, EPA also conducted air quality modeling to 

estimate the change in ambient concentrations of criteria pollutants and 

used this as a basis for estimating the human health benefits and their 

economic value. Section III.H.7 presents these benefits estimates.
185 

o Reductions in GHG emissions – Emissions of carbon dioxide and other 

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 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 2010).108 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.

o 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 

 

108 The 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. 
186 

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 received extensive comments about how to improve the 

characterization of the SCC and have since developed new estimates 

through an interagency modeling exercise. The comments addressed 

various issues, such as discount rate selection, treatment of uncertainty, 

and emissions and socioeconomic trajectories, and justified the revision of 

SCC for the final rule. The modeling exercise involved running three 

integrated assessment models using inputs agreed upon by the interagency 

group for climate sensitivity, socioeconomic and emissions trajectories, 

and discount rates. A more complete discussion of SCC can be found in 

the Technical Support Document, Social Cost of Carbon for Regulatory 

Impact Analysis Under Executive Order 12866 (hereafter, "SCC TSD"); 

revised SCC estimates corresponding to assumed values of the discount 

rate are shown in Table II.F-1.109 

 

109 Interagency Working Group on Social Cost of Carbon, U.S. Government, with participation by Council 

of Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of 

Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency, 

National Economic Council, Office of Energy and Climate Change, Office of Management and Budget, 
187 

 Table II.F-1 Social Cost of CO2, 2010 (in 2007 dollars) 

Discount Rate 5% 3% 2.5% 3% 

Source of 

Estimate 

Mean of Estimates Values 95th

percentile 

estimate 

2010 Estimate $5 $21 $35 $65 

• 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 final standards, the agencies 

have employed discount rates of both 3 percent and 7 percent. We received some 

comments on the discount rates used in the proposal, most of which were directed 

at the discount rates used to value future fuel savings and the rates used to value 

of the social cost of carbon. In general, commenters were supporting one of the 

discount rates over the other, although some suggested that our rates were too 

high or too low. We have revised the discounting used when calculating the net 

present value of social cost of carbon as explained in Sections III.H. and VI but 

have not revised our discounting procedures for other costs or benefits. 

For the reader’s reference, Table II.F-2 below summarizes the values used to 

calculate the impacts of each final standard. The values presented in this table are 

 Office of Science and Technology Policy, and Department of Treasury, “Social Cost of Carbon for 

Regulatory Impact Analysis Under Executive Order 12866,” February 2010, available in docket EPA-HQOAR-2009-0472. 
188 

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 recognize that each of these values has some degree of uncertainty, 

which the agencies further discuss in the Joint TSD. 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) inclusion of 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 RIA. 
189 

Table II.F-2 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

Average tank volume refilled during refueling stop 55%

Annual growth in average vehicle use 1.15%

Fuel Prices (2012-50 average, $/gallon)

Retail gasoline price $3.66

Pre-tax gasoline price $3.29

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) $ 1,300

Nitrogen oxides (NOX) – vehicle use $ 5,100

Nitrogen oxides (NOX) – fuel production and distribution $ 5,300

Particulate matter (PM2.5) – vehicle use $ 240,000

Particulate matter (PM2.5) – fuel production and distribution $ 290,000,

Sulfur dioxide (SO2) $ 31,000

Carbon dioxide (CO2) emissions in 2010

$ 5

$ 21

$ 35

$ 65

Annual Increase in CO2 Damage Cost

variable, 

depending 

on estimate

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 Rates Applied to Future Benefits 3%, 7%
190 

G. What are the Estimated Safety Effects of the Final MYs 2012-2016 

CAFE and GHG Standards? 

The primary goals of the final CAFE and GHG standards are to reduce fuel 

consumption and GHG emissions, but in addition to these intended effects, the agencies 

must consider the potential of the standards to affect vehicle safety110, which the agencies 

have assessed in evaluating the appropriate levels at which to set the final standards. 

Safety trade-offs associated with fuel economy increases have occurred in the past, and 

the agencies must be mindful of the possibility of future ones. These past safety tradeoffs occurred because manufacturers chose, at the time, to build smaller and lighter 

vehicles – partly in response to CAFE standards - rather than adding more expensive 

fuel-saving technologies (and maintaining vehicle size and safety), and the smaller and 

lighter vehicles did not fare as well in crashes as larger and heavier vehicles. 

Historically, as shown in FARS data analyzed by NHTSA, 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 per crash is higher for small/light vehicle crashes. 

Changes in relative safety are related to shifts in the distribution of vehicles on the 

road. A policy that induces a widening in the size distribution of vehicles on the road, 

could result in negative impacts on safety, The primary mechanism in this rulemaking for 

mitigating the potential negative effects on safety is the application of footprint-based 

 

110 In this rulemaking document, vehicle safety is defined as societal fatality rates which include fatalities to 

occupants of all the vehicles involved in the collisions, plus any pedestrians. 
191 

standards, which create a disincentive for manufacturers to produce smaller-footprint 

vehicles. . This is because as footprint decreases, the corresponding fuel economy/GHG 

emission target becomes more stringent.111 The shape of the footprint curves themselves 

have also been designed to be approximately “footprint neutral” within the sloped portion 

of the functions – that is, to neither encourage manufacturers to increase the footprint of 

their fleets, nor to decrease it. Upsizing also is discouraged through a “cut-off” at larger 

footprints. For both cars and light trucks there is a “cut-off” that affects vehicles smaller 

than 41 square feet. The agencies recognize that for manufacturers who make small 

vehicles in this size range, this cut off creates some incentive to downsize (i.e. further 

reduce the size and/or increase the production of models currently smaller than 41 square 

feet) to make it easier to meet the target. The cut off may also create some incentive for 

manufacturers who do not currently offer such models to do so in the future. However, at 

the same time, the agencies believe that there is a limit to the market for cars smaller than 

41 square feet - most consumers likely have some minimum expectation about interior 

volume, among other things. In addition, vehicles in this market segment are the lowest 

price point for the light-duty automotive market, with a number of models in the $10,000 

to $15,000 range. In order to justify selling more vehicles in this market in order to 

generate fuel economy or CO2 credits (that is, for this final rule to be the incentive for 

selling more vehicles in this small car segment), a manufacturer would need to add 

 

111 We note, however, that 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, or 

to other portions of the vehicle outside the wheels. The crush space provided by those portions of a vehicle 

can make important contributions to managing crash energy. At least one manufacturer has confidentially 

indicated plans to reduce overhang as a way of reducing mass on some vehicles during the rulemaking time 

frame. Additionally, simply because footprint-based standards create no incentive to downsize vehicles, 

does not mean that manufacturers may not choose to do so if doing so makes it easier to meet the overall 

standard (as, for example, if the smaller vehicles are so much lighter that they exceed their targets by much 

greater amounts). 
192 

additional technology to the lowest price segment vehicles, which could be challenging. 

Therefore, due to these two reasons (a likely limit in the market place for the smallest 

sized cars and the potential consumer acceptance difficulty in adding the necessary 

technologies in order to generate fuel economy and CO2 credits), the agencies believe 

that the incentive for manufacturers to increase the sale of vehicles smaller than 41 square 

feet due to this rulemaking, if present, is small. For further discussion on these aspects of 

the standards, please see Section II.C above and Chapter 2 of the Joint TSD. 

Manufacturers have stated, however, that they will reduce vehicle weight as one 

of the cost-effective means of increasing fuel economy and reducing CO2 emissions, and 

the agencies have incorporated this expectation into our modeling analysis supporting 

today’s final standards. NHTSA’s previous analyses examining the relationship between 

vehicle mass and fatalities found fatality increases as vehicle weight and size were 

reduced, but these previous analyses did not differentiate between weight reductions and 

size (i.e., weight and footprint) reductions. 

The question of the effect of changes in vehicle mass 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, as discussed by a number of commenters to the NPRM. 

This contentiousness arises, at least in part, from the difficulty of isolating vehicle mass 

from other confounding factors (e.g., driver behavior, or vehicle factors such as engine 

size and wheelbase). In addition, several vehicle factors have been closely related 

historically, such as vehicle mass, wheelbase, and track width. The issue has been 
193 

reviewed and analyzed in the literature for more than two decades. For the reader’s 

reference, much more information about safety in the CAFE context is available in 

Chapter IX of NHTSA’s FRIA. Chapter 7.6 of EPA’s final RIA also contained 

additional discussion on mass and safety. 

Over the past several years, as also discussed by a number of commenters to the 

NPRM, contention has arisen with regard to the applicability of analysis of historical 

crash data to future safety effects due to mass reduction. The agencies recognize that 

there are a host of factors that may make future mass reduction different than what is 

reflected in the historical data. For one, the footprint-based standards have been carefully 

developed by the agencies so that they do not encourage vehicle footprint reductions as a 

way of meeting the standards, but so that they do encourage application of fuel-saving 

technologies, including mass reduction. This in turn encourages manufacturers to find 

ways to separate mass reduction from footprint reduction, which will very likely result in 

a future relationship between mass and fatalities that is safer than the historical 

relationship. However, as manufacturers pursue these methods of mass reduction, the 

fleet moves further away from the historical trends, which the agencies recognize. 

NHTSA’s NPRM analysis of the safety effects of the proposed CAFE standards 

was based on NHTSA’s 2003 report concerning mass and size reduction in MYs 1991-

1999 vehicles, and evaluated a “worst-case scenario” in which the safety effects of the 

combined reductions of both mass and size for those vehicles were determined for the 
194 

future passenger car and light truck fleets.112 In the NPRM analysis, mass and size could 

not be separated from one another, resulting in what NHTSA recognized was a larger 

safety disbenefit than was likely under the MYs 2012-2016 footprint-based CAFE 

standards. NHTSA emphasized, however, that actual fatalities would likely be less than 

these “worst-case” estimates, and possibly significantly less, based on the various factors 

discussed in the NPRM that could reduce the estimates, such as careful mass reduction 

through material substitution, etc. 

For the final rule, as discussed in the NPRM and in recognition of the importance 

of conducting analysis that better reflects, within the limits of our current knowledge, the 

potential safety effects of future mass reduction in response to the final CAFE and GHG 

standards that is highly unlikely to involve concurrent reductions in footprint, NHTSA 

has revised its analysis in consultation with EPA. Perhaps the most important change has 

been that NHTSA agreed with commenters that it was both possible and appropriate to 

separate the effect of mass reductions from the effect of footprint reductions. NHTSA 

thus performed a new statistical analysis, hereafter referred to as the 2010 Kahane 

analysis, of the MYs 1991-99 vehicle database from its 2003 report (now including rather 

than excluding 2-door cars in the passenger car fleet), assessing relationships between 

fatality risk, mass, and footprint for both passenger cars and LTVs (light trucks and 

 

112 The analysis excluded 2-door cars. 
195 

vans).113 As part of its results, the new report presents an “upper-estimate scenario,” a 

“lower-estimate scenario,” as well as an “actual regression result scenario” representing 

potential safety effects of future mass reductions without corresponding vehicle size 

reductions, that assume, by virtue of being a cross-sectional analysis of historical data, 

that historical relationships between vehicle mass and fatalities are maintained. The 

“upper-estimate scenario” and “lower-estimate scenario” are based on NHTSA’s 

judgment as a vehicle safety agency, and are not meant to convey any more or less 

likelihood in the results, but more to convey a sense of bounding for potential safety 

effects of reducing mass while holding footprint constant. The upper-estimate scenario 

reflects potential safety effects given the report’s finding that that, using the one-step 

regression method of the 2003 Kahane report, the regression coefficients show that mass 

and footprint each accounted for about half the fatality increase associated with 

downsizing in a cross-sectional analysis of MYs 1991-1999 cars. A similar effect was 

found for lighter LTVs. Applying the same regression method to heavier LTVs, 

however, the coefficients indicated a significant societal fatality reduction when mass, 

but not footprint, is reduced in the heavier LTVs.114 Fatalities are reduced primarily 

because mass reduction in the heavier LTVs will reduce risk to occupants of the other 

 

113 “Relationships Between Fatality Risk, Mass, and Footprint in Model Year 1991-1999 and Other 

Passenger Cars and LTVs,” Charles J. Kahane, NCSA, NHTSA, March 2010. The text of the report may be 

found in Chapter IX of NHTSA’s FRIA, where it constitutes a section of that chapter. We note that this 

report has not yet been externally peer-reviewed, and therefore may be changed or refined after it has been 

subjected to peer review. The results of the report have not been included in the tables summarizing the 

costs and benefits of this rulemaking and did not affect the stringency of the standards. NHTSA has begun 

the process for obtaining peer review in accordance with OMB guidance. The agency will ensure that 

concerns raised during the peer review process are addressed before relying on the report for future 

rulemakings. The results of the peer review and any subsequent revisions to the report will be made 

available in a public docket and on NHTSA’s website as they are completed. 

114 Conversely, the coefficients indicate a significant increase if footprint is reduced. 
196 

cars and lighter LTVs involved in collisions with these heavier LTVs.115 Thus, even in 

the “upper-estimate scenario,” the potential fatality increases associated with mass 

reduction in the passenger cars would be to a large extent offset by the benefits of mass 

reduction in the heavier LTVs. 

The lower-estimate scenario, in turn, reflects NHTSA’s estimate of potential 

safety effects if future mass reduction is accomplished entirely by through material 

substitution, smart design,116 and component integration, among other things, that can 

reduce mass without perceptibly changing a vehicle’s shape, functionality, or safety 

performance, maintaining structural strength without compromising other aspects of 

safety. If future mass reduction follows this path, it could limit the added risk close to 

only the effects of mass per se (the ability to transfer momentum to other vehicles or 

objects in a collision), resulting in estimated effects in passenger cars that are 

substantially smaller than in the upper-estimate scenario based directly on the regression 

results. The lower-estimate scenario also covers both passenger cars and LTVs. 

 

115 We note that there may be some (currently non-quantifiable) welfare losses for purchasers of these 

heavier LTVs, the mass of which is reduced in response to these final standards. This is due to the fact that 

in certain crashes, as discussed below and in greater detail in Chapter IX of the NHTSA FRIA, more mass 

will always be helpful (although certainly in other crashes, the amount of mass reduction modeled by the 

agency will not be enough to have any significant effect on driver/occupant safety). However, we believe 

the effects of this will likely be minor. Consumer welfare impacts of the final rule are discussed in more 

detail in Chapter VIII of the NHTSA FRIA. 

116 Manufacturers may reduce mass through smart design using computer aided engineering (CAE) tools 

that can be used to better optimize load paths within structures by reducing stresses and bending moments 

applied to structures. 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.
197 

Overall, based on the new analyses, NHTSA estimated that fatality effects could 

be markedly less than those estimated in the “worst-case scenario” presented in the 

NPRM. The agencies believe that the overall effect of mass reduction in cars and LTVs 

may be close to zero, and may possibly be beneficial in terms of the fleet as a whole if 

mass reduction is carefully applied in the future (as with careful material substitution and 

other methods of mass reduction that can reduce mass without perceptibly changing a 

car’s shape, functionality, or safety performance, and maintain its structural strength 

without making it excessively rigid). This is especially important if the mass reduction in 

the heavier LTVs is greater (in absolute terms) than in passenger cars, as discussed 

further below and in the 2010 Kahane report. 

The following sections will address how the agencies addressed potential safety 

effects in the NPRM for the proposed standards, how commenters responded, and the 

work that NHTSA has done since the NPRM to revise its estimates of potential safety 

effects for the final rule. The final section discusses some of the agencies’ plans for the 

future with respect to potential analysis and studies to further enhance our understanding 

of this important and complex issue. 

1. What did the Agencies say in the NPRM with regard to Potential Safety 

Effects?

In the NPRM preceding these final standards, NHTSA’s safety assessment 

derived from the agency’s belief that some of these vehicle factors, namely vehicle mass 
198 

and footprint, could not be accurately separated. NHTSA relied on the 2003 study by Dr. 

Charles Kahane, 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.117 The study compares the fatality rates of LTVs and cars to quantify 

differences between vehicle types, given drivers of the same age/gender, etc. In that 

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, safety features, and size 

of the occupant compartment, that were naturally or historically confounded with mass in 

MYs 1991-1999 vehicles. The rationale was that adding length, width, or strength to a 

vehicle historically also made it heavier. 

NHTSA utilized the relationships between mass and safety from Kahane (2003), 

expressed as percentage increases in fatalities per 100-pound mass reduction, and 

examined the mass effects assumed in the NPRM modeling analysis. While previous 

CAFE rulemakings had limited mass reduction as a “technology option” to vehicles over 

5,000 pounds GVWR, both NHTSA’s and EPA’s modeling analyses in the NPRM 

included mass reduction of up to 5-10 percent of baseline curb weight, depending on 

vehicle subclass, in response to recently-submitted manufacturer product plans as well as 

public statements indicating that these levels were possible and likely. 5-10 percent 

represented a maximum bound; EPA’s modeling, for example, included average vehicle 

weight reductions of 4 percent between MYs 2011 and 2016, although the average pervehicle mass reduction was greater in absolute terms for light trucks than for passenger 

 

117 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 March 10, 2010). 
199 

cars. NHTSA’s assumptions for mass reduction were also limited by lead time such that 

mass reductions of 1.5 percent were included for redesigns occurring prior to MY 2014, 

and mass reductions of 5-10 percent were only “achievable” in redesigns occurring in 

MY 2014 or later. NHTSA further assumed that mass 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). 

Based on these assumptions of how manufacturers might comply with the 

standards, NHTSA examined the effects of the identifiable safety trends over the lifetime 

of the vehicles produced in each model year. The effects were estimated on a year-byyear basis, assuming that certain known safety trends would result in a reduction in the 

target population of fatalities from which the mass effects are derived.118 Using this 

method, NHTSA found a 12.6 percent reduction in fatality levels between 2007 and 

2020. The estimates derived from applying Kahane’s 2003 percentages to a baseline of 

2007 fatalities were then multiplied by 0.874 to account for changes that the agency 

believed would take place in passenger car and light truck safety between the 2007 

baseline on-road fleet used for that particular analysis and year 2020.119

 

118 NHTSA explained that there are several identifiable safety trends that are already in place or expected to 

occur in the foreseeable future and that were 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 2014.118 Additionally, the agency stated that it anticipates 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 mass reductions. Thus, while the percentage 

increases in Kahane (2003) was applied, the reduced base resulted in smaller absolute increases than those 

that were predicted in the 2003 report. 

119 Blincoe, 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) 
200 

NHTSA and EPA both emphasized that the safety effect estimates in the NPRM 

needed to be understood in the context of the 2003 Kahane report, which is based upon a 

cross-sectional 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 

those analyses were used to predict the safety-related fatalities that could occur in the 

unlikely event that weight reduction for MYs 2012-2016 is accomplished entirely by 

reducing mass and reducing footprint. Any estimates derived from those analyses 

represented a “worst-case” estimate of safety effects, for several reasons. 

 First, manufacturers are far less likely to reduce mass by “downsizing” (making 

vehicles smaller overall) under the current attribute-based standards, because the 

standards are based on vehicle footprint. The selection of footprint as the attribute in 

setting CAFE and GHG standards helps to reduce the incentive to alter a vehicle’s 

physical dimensions. This is because as footprint decreases, the corresponding fuel 

economy/GHG emission target becomes more stringent.120 The shape of the footprint 

curves themselves have also been designed to be approximately “footprint neutral” within 

the sloped portion of the functions – that is, to neither encourage manufacturers to 

increase the footprint of their fleets, nor to decrease it. For further discussion on these 

 

120 We note, however, that 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, or 

to other portions of the vehicle outside the wheels. The crush space provided by those portions of a vehicle 

can make important contributions to managing crash energy. NHTSA noted in the NPRM that at least one 

manufacturer has confidentially indicated plans to reduce overhang as a way of reducing mass on some 

vehicles during the rulemaking time frame. Additionally, simply because footprint-based standards create 

no incentive to downsize vehicles, does not mean that manufacturers may not choose to do so if doing so 

makes it easier to meet the overall standard (as, for example, if the smaller vehicles are so much lighter that 

they exceed their targets by much greater amounts). 
201 

aspects of the standards, please see Section II.C above and Chapter 2 of the Joint TSD. 

However, as discussed in Sections III.H.1 and IV.G.6 below, the agencies acknowledge 

some uncertainty regarding how consumer purchases will change in response to the 

vehicles designed to meet the MYs 2012-2016 standards. This could potentially affect 

the mix of vehicles sold in the future, including the mass and footprint distribution. 

As a result, the agencies found it likely that a significant portion of the mass 

reduction in the MY 2012-2016 vehicles would be accomplished by strategies, such as 

material substitution, smart design, reduced powertrain requirements121, and mass 

compounding, that have a lesser safety effect than the prevalent 1980s strategy of simply 

making the vehicles smaller. The agencies noted that to the extent that future mass 

reductions could be achieved by these methods—without any accompanying reduction in 

the size or structural strength of the vehicle—then the fatality increases associated with 

the mass reductions anticipated by the model as a result of the proposed standards could 

be significantly smaller than those in the worst-case scenario. 

However, even though the agencies recognized that these methods of mass 

reduction could be technologically feasible in the rulemaking time frame, and included 

them as such in our modeling analyses, the agencies diverged as to how potential safety 

effects accompanying such methods of mass reduction could be evaluated, particularly in 

relation to the worst-case scenario presented by NHTSA. NHTSA stated that it could not 

 

121 Reduced powertrain requirements do not include a reduction in performance. When vehicle mass is 

reduced, engine torque and transmission gearing can be altered so that acceleration performance is held 

constant instead of improving. A detailed discussion is included in Chapter 3 of the Technical Support 

Document. 
202 

predict how much smaller those increases would be for any given mixture of mass 

reduction methods, since the data on the safety effects of mass reduction alone (without 

size reduction) was not available due to the low numbers of vehicles in the current onroad fleet that have utilized these technologies extensively. Further, to the extent that 

mass reductions were accomplished through use of light, high-strength materials, 

NHTSA emphasized that there would be significant additional costs that would need to 

be determined and accounted for than were reflected in the agency’s proposal. 

 Additionally, NHTSA emphasized that while it thought material substitution and 

other methods of mass reduction could considerably lessen the potential safety effects 

compared to the historical trend, NHTSA also stated that it did not believe the effects in 

passenger cars would be smaller than zero. EPA disagreed with this, and stated in the 

NPRM that the safety effects could very well be smaller than zero. Even though 

footprint-based standards discourage downsizing as a way of “balancing out” sales of 

larger/heavier vehicles, they do not discourage manufacturers from reducing crush space 

in overhang areas or from reducing structural support as a way of taking out mass.122 

Moreover, NHTSA’s analysis had also found that lighter cars have a higher involvement 

rate in fatal crashes, even after controlling for the driver’s age, gender, urbanization, and 

region of the country. Being unable to explain this clear trend in the crash data, NHTSA 

stated that it must assume that mass reduction is likely to be associated with higher fatalcrash rates, no matter how the weight reduction is achieved.

 

122 However, we recognize that FMVSS and NCAP ratings may limit the manufacturer’s ability to reduce 

crush space or structural support. 
203 

NHTSA also noted in the NPRM that several studies by Dynamic Research, Inc. 

(DRI) had been repeatedly cited to the agency in support of the proposition that reducing 

vehicle mass while maintaining track width and wheelbase would lead to significant 

safety benefits. In its 2005 studies, one of which was published and peer-reviewed 

through the Society of Automotive Engineers as a technical paper, DRI attempted to 

assess the independent effects of vehicle weight and size (in terms of wheelbase and track 

width) on safety, and presented results indicating that reducing vehicle weight tends to 

reduce fatalities, but that reducing vehicle wheelbase and track width tends to increase 

fatalities. DRI’s analysis was based on FARS data for MYs 1985-1998 passenger cars 

and 1985-1997 light trucks, similar to the MYs 1991-1999 car and truck data used in the 

2003 Kahane report. However, DRI included 2-door passenger cars, while the 2003 

Kahane report excluded those vehicles out of concern that their inclusion could bias the 

results of the regression analysis, because a significant proportion of MYs 1991-1999 2-

door cars were sports and “muscle” cars, which have particularly high fatal crash rates for 

their relatively short wheelbases compared to the rest of the fleet. While in the NPRM 

NHTSA rejected the results of the DRI studies based in part on this concern, the agencies 

note that upon further consideration, NHTSA has agreed for this final rule that the 

inclusion of 2-door cars in regression analysis of historical data is appropriate, and indeed 

has no overly-biasing effects. 

The 2005 DRI studies also differed from the 2003 Kahane report in terms of their 

estimates of the effect of vehicle weight on rollover fatalities. The 2003 Kahane report 

analyzed a single variable, curb weight, as a surrogate for both vehicle size and weight, 
204 

and found that curb weight reductions would increase rollover fatalities. The DRI study, 

in contrast, attempted to analyze curb weight, wheelbase, and track width separately, and 

found that curb weight reduction would decrease rollover fatalities, while wheelbase 

reduction and track width reduction would increase them. DRI suggested that heavier 

vehicles may have higher rollover fatalities for two reasons: first, because taller vehicles 

tend to be heavier, so the correlation between vehicle height and weight and vehicle 

center-of-gravity height may make heavier vehicles more rollover-prone; and second, 

because heavier vehicles may have been less rollover-crashworthy due to FMVSS No. 

216’s constant (as opposed to proportional) requirements for MYs 1995-1999 vehicles 

weighing more than 3,333 lbs unloaded. 

Overall, DRI’s 2005 studies found a reduction in fatalities for cars (580 in the first 

study, and 836 in the second study) and for trucks (219 in the first study, 682 in the 

second study) for a 100 pound reduction in curb weight without accompanying wheelbase 

or track width reductions. In the NPRM, NHTSA disagreed with the results of the DRI 

studies, out of concern that DRI’s inclusion of 2-door cars in its analysis biased the 

results, and because NHTSA was unable to reproduce DRI’s results despite repeated 

attempts. NHTSA stated that it agreed intuitively with DRI’s conclusion that vehicle 

mass reductions without accompanying size reductions (as through substitution of a 

heavier material for a lighter one) would be less harmful than downsizing, but without 

supporting real-world data and unable to verify DRI’s results, NHTSA stated that it could 

not conclude that mass reductions would result in safety benefits. EPA, in contrast, 

believed that DRI’s results contained some merit, in particular because the study 
205 

separated the effects of mass and size and EPA stated that applying them using the curb 

weight reductions in EPA’s modeling analysis would show an overall reduction of 

fatalities for the proposed standards. 

On balance, both agencies recognized that mass reduction could be an important 

tool for achieving higher levels of fuel economy and reducing CO2 emissions, and 

emphasized that NHTSA’s fatality estimates represented a worst-case scenario for the 

potential effects of the proposed standards, and that actual fatalities will be less than these 

estimates, possibly significantly less, based on the various factors discussed in the NPRM 

that could reduce the estimates. The agencies sought comment on the safety analysis and 

discussions presented in the NPRM. 

2. What Public Comments did the Agencies Receive on the Safety Analysis 

and Discussions in the NPRM?

 Several dozen commenters addressed the safety issue. Claims and arguments 

made by commenters in response to the safety effects analysis and discussion in the 

NPRM tended to follow several general themes, as follows: 

• NHTSA’s safety effects estimates are inaccurate because they do not account for: 

o While NHTSA’s study only considers vehicles from MYs 1991-1999, 

more recently-built vehicles are safer than those, and future vehicles will 

be safer still; 
206 

o Lighter vehicles are safer than heavier cars in terms of crash-avoidance, 

because they handle and brake better; 

o Fatalities are linked more to other factors than mass; 

o The structure of the standards reduces/contributes to potential safety 

effects from mass reduction; 

o NHTSA could mitigate additional safety effects from mass reduction, if 

there are any, by simply regulating safety more; 

o Casualty risks range widely for vehicles of the same weight or footprint, 

which skews regression analysis and makes computer simulation a better 

predictor of the safety effects of mass reduction; 

• DRI’s analysis shows that lighter vehicles will save lives, and NHTSA reaches 

the opposite conclusion without disproving DRI’s analysis; 

o Possible reasons that NHTSA and DRI have reached different 

conclusions: 

 NHTSA’s study should distinguish between reductions in size and 

reductions in weight like DRI’s; 

 NHTSA’s study should include two-door cars; 

 NHTSA’s study should have used different assumptions; 

 NHTSA’s study should include confidence intervals; 

• NHTSA should include a “best-case” estimate in its study; 

• NHTSA should not include a “worst-case” estimate in its study; 
207 

The agencies recognize that the issue of the potential safety effects of mass 

reduction, which was one of the many factors considered in the balancing that led to the 

agencies’ conclusion as to appropriate stringency levels for the MYs 2012-2016 

standards, is of great interest to the public and could possibly be a more significant factor 

in regulators’ and manufacturers’ decisions with regard to future standards beyond MY 

2016. The agencies are committed to analyzing this issue thoroughly and holistically 

going forward, based on the best available science, in order to further their closely related 

missions of safety, energy conservation, and environmental protection. We respond to 

the issues and claims raised by commenters in turn below. 

NHTSA’s estimates are inaccurate because NHTSA’s study only considers 

vehicles from MYs 1991-1999, but more recently-built vehicles are safer than 

those, and future vehicles will be safer still

 A number of commenters (CAS, Adcock, NACAA, NJ DEP, NY DEC, UCS, and 

Wenzel) argued that the 2003 Kahane report, on which the “worst-case scenario” in the 

NPRM was based, is outdated because it considers the relationship between vehicle 

weight and safety in MYs 1991-1999 passenger cars. These commenters generally stated 

that data from MYs 1991-1999 vehicles provide an inaccurate basis for assessing the 

relationship between vehicle weight and safety in current or future vehicles, because the 

fleets of vehicles now and in the future are increasingly different from that 1990s fleet 

(more crossovers, fewer trucks, lighter trucks, etc.), with different vehicle shapes and 

characteristics, different materials, and more safety features. Several of these 
208 

commenters argued that NHTSA should conduct an updated analysis for the final rule 

using more recent data – Wenzel, for example, stated that an updated regression analysis 

that accounted for the recent introduction of crossover SUVs would likely find reduced 

casualty risk, similar to DRI’s previous finding using fatality data. CEI, in contrast, 

argued that the “safety trade-off” would not be eliminated by new technologies and 

attribute-based standards, because additional weight inherently makes a vehicle safer to 

its own occupants, citing the 2003 Kahane report, while AISI argued that Desapriya had 

found that passenger car drivers and occupants are two times more likely to be injured 

than drivers and occupants in larger pickup trucks and SUVs. 

 Several commenters (Adcock, CARB, Daimler, NESCAUM, NRDC, Public 

Citizen, UCS, Wenzel) suggested that NHTSA’s analysis was based on overly 

pessimistic assumptions about how manufacturers would choose to reduce mass in their 

vehicles, because manufacturers have a strong incentive in the market to build vehicles 

safely. Many of these commenters stated that several manufacturers have already 

committed publicly to fairly ambitious mass reduction goals in the mid-term, but several 

stated further that NHTSA should not assume that manufacturers will reduce the same 

amount of mass in all vehicles, because it is likely that they will concentrate mass 

reduction in the heaviest vehicles, which will improve compatibility and decrease 

aggressivity in the heaviest vehicles. Daimler emphasized that all vehicles will have to 

comply with the Federal Motor Vehicle Safety Standards, and will likely be designed to 

test well in NHTSA’s NCAP tests. 
209 

Other commenters (Aluminum Association, CARB, CAS, ICCT, MEMA, NRDC, 

U.S. Steel) also emphasized the need for NHTSA to account for the safety benefits to be 

expected in the future from use of advanced materials for lightweighting purposes and 

other engineering advances. The Aluminum Association stated that advanced vehicle 

design and construction techniques using aluminum can improve energy management and 

minimize adverse safety effects of their use,123 but that NHTSA’s safety analysis could 

not account for those benefits if it were based on MYs 1991-1999 vehicles. CAS, ICCT, 

and U.S. Steel discussed similar benefits for more recent and future vehicles built with 

high strength steel (HSS), although U.S. Steel cautioned that given the stringency of the 

proposed standards, manufacturers would likely be encouraged to build smaller and 

lighter vehicles in order to achieve compliance, which fare worse in head-on collisions 

than larger, heavier vehicles. AISI, in contrast to U.S. Steel, stated that in its research 

with the Auto/Steel Partnership and in programs supported by DOE, it had found that the 

use of new Advanced HSS steel grades could enable mass of critical crash structures, 

such as front rails and bumper systems, to be reduced by 25 percent without degrading 

performance in standard NHTSA frontal or IIHS offset instrumented crash tests 

compared to their “heavier counterparts.” 

 

123 The Aluminum Association (NHTSA-2009-0059-0067.3) stated that its research on vehicle safety 

compatibility between an SUV and a mid-sized car, done jointly with DRI, shows that reducing the weight 

of a heavier SUV by 20% (a realistic value for an aluminum-intensive vehicle) could reduce the combined 

injury rate for both vehicles by 28% in moderately severe crashes. The commenter stated that it would 

keep NHTSA apprised of its results as its research progressed. Based on the information presented, 

NHTSA believes that this research appears to agree with NHTSA’s latest analysis, which finds that a 

reduction in weight for the heaviest vehicles may improve overall fleet safety. 
210 

Agencies’ response:

NHTSA, in consultation with EPA and DOE, plans to begin updating the MYs 

1991-1999 database on which NHTSA’s safety analyses in the NPRM and final rule are 

based in the next several months in order to analyze the differences in safety effects 

against vehicles built in more recent model years. As this task will take at least a year to 

complete, beginning it immediately after the NPRM would not have enabled the agency 

to complete it and then conduct a new analysis during the period between the NPRM and 

the final rule. 

For purposes of this final rule, however, we believe that using the same MYs 

1991-1999 database as that used in the 2003 Kahane study provides a reasonable basis for 

attempting to estimate safety effects due to reductions in mass. While commenters often 

stated that updating the database would help to reveal the effect of recently-introduced 

lightweight vehicles with extensive material substitution, there have in fact not yet been a 

significant number of vehicles with substantial mass reduction/material substitution to 

analyze, and they must also show up in the crash databases for NHTSA to be able to add 

them to its analysis. Based on NHTSA’s research, specifically, on three statistical 

analyses over a 12-year period (1991-2003) covering a range of 22 model years (1978-

1999), NHTSA believes that the relationships between mass, size, and safety has only 

changed slowly over time, although we recognize that they may change somewhat more 

rapidly in the future.124 As the on-road fleet gains increasing numbers of vehicles with 

 

124 NHTSA notes the CAS’ comments regarding changes in the vehicle fleets since the introduction of 

CAFE standards in the late 1970s, but believes they apply more to the differences between late 1970s 
211 

increasing amounts of different methods of mass reduction applied to them, we may 

begin to discern changes in the crash databases due to the presence of these vehicles, but 

any such changes are likely to be slow and evolutionary, particularly in the context of 

MYs 2000-2009 vehicles. The agencies do expect that further analysis of historical data 

files will continue to provide a robust and practicable basis for estimating the potential 

safety effects that might occur with future reductions in vehicle mass. However, we 

recognize that estimates derived from analysis of historical data, like estimates from any 

other type of analysis (including simulation-based analysis, which cannot feasibly cover 

all relevant scenarios), will be uncertain in terms of predicting actual future outcomes 

with respect to a vehicle fleet, driving population, and operating environment that does 

not yet exist. 

 

The agencies also recognize that more recent vehicles have more safety features 

than 1990s vehicles, which are likely to make them safer overall. To account for this, 

NHTSA did adjust the results of both its NPRM and final rule analysis to include known 

safety improvements, like ESC and increases in seat belt use, that have occurred since 

MYs 1991-1999.125 However, simply because newer vehicles have more safety 

countermeasures, does not mean that the weight/safety relationship necessarily changes. 

More likely, it would change the target population (the number of fatalities) to which one 

would apply the weight/safety relationship. Thus, we still believe that some mass 

 through 1980s vehicles and 2010s vehicles than to the differences between 1990s and 2010s vehicles. 

NHTSA believes that the CAS comments regarding the phase-out of 1970s vehicles and their replacement 

with safer, better fuel-economy-achieving 1980s vehicles paint with rather too large a brush to be relevant 

to the main discussion of whether the 2003 Kahane report database can reasonably be used to estimate 

safety effects of mass reduction for the MYs 2012-2016 fleet. 

125 See NHTSA FRIA Chapter IX. 
212 

reduction techniques for both passenger cars and light trucks can make them less safe, in 

certain crashes as discussed in NHTSA’s FRIA, than if mass had not been reduced.126

As for NHTSA’s assumptions about mass reduction, in its analysis, NHTSA 

generally assumed that lighter vehicles could be reduced in weight by 5 percent while 

heavier light trucks could be reduced in weight by 10 percent. NHTSA recognizes that 

manufacturers might choose a different mass reduction scheme than this, and that its 

quantification of the estimated effect on safety would be different if they did. We 

emphasize that our estimates are based on the assumptions we have employed and are 

intended to help the agency consider the potential effect of the final standards on vehicle 

safety. Thus, based on the 2010 Kahane analysis, reductions in weight for the heavier 

light trucks would have positive overall safety effects,127 while mass reductions for 

passenger cars and smaller light trucks would have negative overall safety effects. 

NHTSA’s estimates are inaccurate because they do not account for the fact that 

lighter vehicles are safer than heavier cars in terms of crash-avoidance, because 

they handle and brake better

ICCT stated that lighter vehicles are better able to avoid crashes because they 

“handle and brake slightly better,” arguing that size-based standards encourage lighter-

 

126 If one has a vehicle (vehicle A), and both reduces the vehicle’s mass and adds new safety equipment to 

it, thus creating a variant (vehicle A1), the variant might conceivably have a level of overall safety for its 

occupants is equal to that of the original vehicle (vehicle A). However, vehicle A1 might not be as safe as 

second variant (vehicle A2) of vehicle A, one that is produced by adding to vehicle A the same new safety 

equipment added to the first variant, but this time without any mass reduction. 

127 This is due to the beneficial effect on the occupants of vehicles struck by the downweighted larger 

vehicles. 
213 

weight car-based SUVs with “significantly better handling and crash protection” than 

1996-1999 mid-size SUVs, which will reduce both fatalities and fuel consumption. ICCT 

stated that NHTSA did not include these safety benefits in its analysis. DRI also stated 

that its 2005 report found that crash avoidance improves with reduction in curb weight 

and/or with increases in wheelbase and track, because “Crash avoidance can depend, 

amongst other factors, on the vehicle directional control and rollover characteristics.” 

DRI argued that, therefore, “These results indicate that vehicle weight reduction tends to 

decrease fatalities, but vehicle wheelbase and track reduction tends to increase fatalities.” 

Agencies’ response:

In fact, NHTSA’s regression analysis of crash fatalities per million registration 

years measures the effects of crash avoidance, if there are any, as well as 

crashworthiness. Given that the historical empirical data for passenger cars show a trend 

of higher crash rates for lighter cars, it is unclear whether lighter cars have, in the net, 

superior crash avoidance, although the agencies recognize that they may have advantages 

in certain individual situations. EPA presents a discussion of improved accident 

avoidance as vehicle mass is reduced in Chapter 7.6 of its final RIA. The important point 

to emphasize is that it depends on the situation – it would oversimplify drastically to 

point to one situation in which extra mass helps or hurts and then extrapolate effects for 

crash avoidance across the board based on only that. 
214 

For example, the relationship of vehicle mass to rollover and directional stability 

is more complex than commenters imply. For rollover, it is true that if heavy pickups 

were always more top-heavy than lighter pickups of the same footprint, their higher 

center of gravity could make them more rollover-prone, yet some mass can be placed so 

as to lower a vehicle’s center of gravity and make it less rollover-prone. For mass 

reduction to be beneficial in rollover crashes, then, it must take center of gravity height 

into account along with other factors such as passenger compartment design and 

structure, suspension, the presence of various safety equipment, and so forth. 

Similarly, for directional stability, it is true that having more mass increases the 

“understeer gradient” of cars – i.e., it reinforces their tendency to proceed in a straight 

line and slows their response to steering input, which would be harmful where prompt 

steering response is essential, such as in a double-lane-change maneuver to avoid an 

obstacle. Yet more mass and a higher understeer gradient could help when it is better to 

remain on a straight path, such as on a straight road with icy patches where wheel slip 

might impair directional stability. Thus, while less vehicle mass can sometimes improve 

crash avoidance capability, there can also be situations when more vehicle mass can help 

in other kinds of crash avoidance. 

Further, NHTSA’s research suggests that additional vehicle mass may be even 

more helpful, as discussed in Chapter IX of NHTSA’s FRIA, when the average driver’s 

response to a vehicle’s maneuverability is taken into account. Lighter cars have 

historically (1976-2009) had higher collision-involvement rates than heavier cars – even 
215 

in multi-vehicle crashes where directional and rollover stability is not particularly an 

issue.128 Based on our analyses using nationally-collected FARS and GES data, drivers 

of lighter cars are more likely to be the culpable party in a 2-vehicle collision, even after 

controlling for footprint, the driver’s age, gender, urbanization, and region of the country. 

Thus, based on this data, it appears that lighter cars may not be driven as well as 

heavier cars, although it is unknown why this is so. If poor drivers intrinsically chose 

light cars (self-selection), it might be evidenced by an increase in antisocial driving 

behavior (such as DWI, drug involvement, speeding, or driving without a license) as car 

weight decreases, after controlling for driver age and gender – in addition to the increases 

in merely culpable driver behavior (such as failure to yield the right of way). But 

analyses in NHTSA’s 2003 report did not show an increase in antisocial driver behavior 

in the lighter cars paralleling their increase in culpable involvements. 

NHTSA also hypothesizes that certain aspects of lightness and/or smallness in a 

car may give a driver a perception of greater maneuverability that ultimately results in 

driving with less of a “safety margin,” e.g., encouraging them to weave in traffic. That 

may appear paradoxical at first glance, as maneuverability is, in the abstract, a safety 

plus. Yet the situation is not unlike powerful engines that could theoretically enable a 

 

128 See, e.g., NHTSA (2000). Traffic Safety Facts 1999. Report No. DOT HS 809 100. Washington, DC: 

National Highway Traffic Safety Administration, p. 71; Najm, W.G., Sen, B., Smith, J.D., and Campbell, 

B.N. (2003). Analysis of Light Vehicle Crashes and Pre-Crash Scenarios Based on the 2000 General 

Estimates System, Report No. DOT HS 809 573. Washington, DC: National Highway Traffic Safety 

Administration, p. 48. 
216 

driver to escape some hazards, but in reality have long been associated with high crash 

and fatality rates.129

NHTSA’s estimates are inaccurate because fatalities are linked more to other 

factors than mass

Tom Wenzel stated that the safety record of recent model year crossover SUVs 

indicates that weight reduction in this class of vehicles (small to mid-size SUVs) resulted 

in a reduction in fatality risk. Wenzel argued that NHTSA should acknowledge that other 

vehicle attributes may be as important, if not more important, than vehicle weight or 

footprint in terms of occupant safety, such as unibody construction as compared to 

ladder-frame, lower bumpers, and less rigid frontal structures, all of which make 

crossover SUVs more compatible with cars than truck-based SUVs. 

Marc Ross commented that fatalities are linked more strongly to intrusion than to 

mass, and stated that research by safety experts in Japan and Europe suggests the main 

cause of serious injuries and deaths is intrusion due to the failure of load-bearing 

elements to properly protect occupants in a severe crash. Ross argued that the results 

from this project have “overturned the original views about compatibility,” which thought 

that mass and the mass ratio were the dominant factors. Since footprint-based standards 

will encourage the reduction of vehicle weight through materials substitution while 

 

129 Robertson, L.S. (1991), “How to Save Fuel and Reduce Injuries in Automobiles,” The Journal of 

Trauma, Vol. 31, pp. 107-109; Kahane, C.J. (1994). Correlation of NCAP Performance with Fatality Risk 

in Actual Head-On Collisions, NHTSA Technical Report No. DOT HS 808 061. Washington, DC: 

National Highway Traffic Safety Administration, http://www-nrd.nhtsa.dot.gov/Pubs/808061.PDF, pp. 4-

7. 
217 

maintaining size, Ross stated, they will help to reduce intrusion and consequently 

fatalities, as the lower weight reduces crash forces while maintaining size preserves crush 

space. Ross argued that this factor was not considered by NHTSA in its discussion of 

safety. ICCT agreed with Ross’ comments on this issue. 

In previous comments on NHTSA rulemakings and in several studies, Wenzel and 

Ross have argued generally that vehicle design and “quality” is a much more important 

determinant of vehicle safety than mass. In comments on the NPRM, CARB, NRDC, 

Sierra Club, and UCS echoed this theme. 

ICCT commented as well that fatality rates in the EU are much lower than rates in 

the U.S., even though the vehicles in the EU fleet tend to be smaller and lighter than 

those in the U.S. fleet. Thus, ICCT argued, “This strongly supports the idea that vehicle 

and highway design are far more important factors than size or weight in vehicle safety.” 

ICCT added that “It also suggests that the rise in SUVs in the U.S. has not helped reduce 

fatalities.” CAS also commented that Germany’s vehicle fleet is both smaller and lighter 

than the American fleet, and has lower fatality rates. 

Agencies’ response:

NHTSA and EPA agree that there are many features that affect safety. While 

crossover SUVs have lower fatality rates than truck-based SUVs, there are no analyses 

that attribute the improved safety to mass alone, and not to other factors such as the lower 
218 

center of gravity or the unibody construction of these vehicles. While a number of 

improvements in safety can be made, they do not negate the potential that another 100 

lbs. could make a passenger car or crossover vehicle safer for its occupants, because of 

the effects of mass per se as discussed in NHTSA’s FRIA, albeit similar mass reductions 

could make heavier LTVs safer to other vehicles without necessarily harming their own 

drivers and occupants. Moreover, in the 2004 response to docket comments, NHTSA 

explained that the significant relationship between mass and fatality risk persisted even 

after controlling for vehicle price or nameplate, suggesting that vehicle “quality” as cited 

by Wenzel and Ross is not necessarily more important than vehicle mass. 

As for reductions in intrusions due to material substitution, the agencies agree 

generally that the use of new and innovative materials may have the potential to reduce 

crash fatalities, but such vehicles have not been introduced in large numbers into the 

vehicle fleet. The agencies will continue to monitor the situation, but ultimately the 

effects of different methods of mass reduction on overall safety in the real world (not just 

in simulations) will need to be analyzed when vehicles with these types of mass reduction 

are on the road in sufficient quantities to provide statistically significant results. For 

example, a vehicle that is designed to be much stiffer to reduce intrusion is likely to have 

a more severe crash pulse and thus impose greater forces on the occupants during a crash, 

and might not necessarily be good for elderly and child occupant safety in certain types 

of crashes. Such trade-offs make it difficult to estimate overall results accurately without 

real world data. The agencies will continue to evaluate and analyze such real world data 

as it becomes available, and will keep the public informed as to our progress. 
219 

ICCT’s comment illustrates the fact that different vehicle fleets in different countries can 

face different challenges. NHTSA does not believe that the fact that the EU vehicle fleet 

is generally lighter than the U.S. fleet is the exclusive reason, or even the primary factor, 

for the EU’s lower fatality rates. The data ICCT cites do not account for significant 

differences between the U.S. and EU such as in belt usage, drunk driving, rural/urban 

roads, driving culture, etc. 

The structure of the standards reduces/contributes to potential safety risks from 

mass reduction

Since switching in 2006 to setting attribute-based light truck CAFE standards, 

NHTSA has emphasized that one of the benefits of a footprint-based standard is that it 

discourages manufacturers from building smaller, less safe vehicles to achieve CAFE 

compliance by “balancing out” their larger vehicles, and thus avoids a negative safety 

consequence of increasing CAFE stringency.130 Some commenters on the NPRM 

(Daimler, IIHS, NADA, NRDC, Sierra Club et al.) agreed that footprint-based standards 

would protect against downsizing and help to mitigate safety risks, while others stated 

that there would still be safety risks even with footprint-based standards – CEI, for 

example, argued that mass reduction inherently creates safety risks, while IIHS and 

Porsche expressed concern about footprint-based standards encouraging manufacturers to 

 

130 We note that commenters were divided on whether they believed there was a clear correlation between 

vehicle size/weight and safety (CEI, Congress of Racial Equality, Heritage Foundation, IIHS, Spurgeon, 

University of PA Environmental Law Project) or whether they believed that the correlation was less clear, 

for example because they believed that vehicle design was more important than vehicle mass (CARB, 

Public Citizen). 
220 

manipulate wheelbase, which could reduce crush space and worsen vehicle handling. 

U.S. Steel and AISI both commented that the “aggressive schedule” for the proposed 

increases in stringency could encourage manufacturers to build smaller, lighter vehicles 

in order to comply. 

Some commenters also focused on the shape and stringency of the target curves 

and their potential effect on vehicle safety. IIHS agreed with the agencies’ tentative 

decision to cut off the target curves at the small-footprint end. Regarding the safety effect 

of the curves requiring less stringent targets for larger vehicles, while IIHS stated that 

increasing footprint is good for safety, CAS, Wenzel, and the UCSB students stated that 

decreasing footprint may be better for safety in terms of risk to occupants of other 

vehicles. Daimler, Wenzel, and the University of PA Environmental Law Project 

commented generally that more similar passenger car and light truck targets at identical 

footprints (as Wenzel put it, a single target curve) would improve fleet compatibility and 

thus, safety, by encouraging manufacturers to build more passenger cars instead of light 

trucks. 

Agencies’ response:

 The agencies continue to believe that footprint-based standards help to mitigate 

potential safety risks from downsizing if the target curves maintain sufficient slope, 

because, based on NHTSA’s analysis, larger-footprint vehicles are safer than smaller-
221 

footprint vehicles.131 The structure of the footprint-based curves will also discourage the 

upsizing of vehicles. Nevertheless, we recognize that footprint-based standards are not a 

panacea – NHTSA’s analysis continues to show that there was a historical relationship 

between lower vehicle mass and increased safety risk in passenger cars even if footprint 

is maintained, and there are ways that manufacturers may increase footprint that either 

improve or reduce vehicle safety, as indicated by IIHS and Porsche. 

 With regard to whether the agencies should set separate curves or a single one, 

NHTSA also notes in Section II.C that EPCA requires NHTSA to establish standards 

separately for passenger cars and light trucks, and thus concludes that the standards for 

each fleet should be based on the characteristics of vehicles in each fleet. In other words, 

the passenger car curve should be based on the characteristics of passenger cars, and the 

light truck curve should be based on the characteristics of light trucks—thus to the extent 

that those characteristics are different, an artificially-forced convergence would not 

accurately reflect those differences. However, such convergence could be appropriate 

depending on future trends in the light vehicle market, specifically further reduction in 

the differences between passenger car and light truck characteristics. While that trend 

was more apparent when car-like 2WD SUVs were classified as light trucks, it seems 

likely to diminish for the model year vehicles subject to these rules as the truck fleet will 

be more purely “truck-like” than has been the case in recent years. 

 

131 See Chapter IX of NHTSA’s FRIA. 
222 

NHTSA’s estimates are inaccurate because NHTSA could mitigate additional 

safety risks from mass reduction, if there are any, by simply regulating safety 

more

 Since NHTSA began considering the potential safety risks from mass reduction in 

response to increased CAFE standards, some commenters have suggested that NHTSA 

could mitigate those safety risks, if any, by simply regulating more.132 In response to the 

safety analysis presented in the NPRM, several commenters stated that NHTSA should 

develop additional safety regulations to require vehicles to be designed more safely, 

whether to improve compatibility (Adcock, NY DEC, Public Citizen, UCS), to require 

seat belt use (CAS, UCS), to improve rollover and roof crush resistance (UCS), or to 

improve crashworthiness generally by strengthening NCAP and the star rating system 

(Adcock). Wenzel commented further that “Improvements in safety regulations will have 

a greater effect on occupant safety than FE standards that are structured to maintain, but 

may actually increase, vehicle size.” 

Agencies’ response:

 NHTSA appreciates the commenters’ suggestions and notes that the agency is 

continually striving to improve motor vehicle safety consistent with its mission. As noted 

above, improving safety in other areas affects the target population that the 

mass/footprint relationship could affect, but it does not necessarily change the 

relationship. 

 

132 See, e.g., MY 2011 CAFE final rule, 74 FR 14403-05 (Mar. 30, 2009). 
223 

 The 2010 Kahane analysis discussed in this final rule evaluates the relative safety 

risk when vehicles are made lighter than they might otherwise be absent the final MYs 

2012-2016 standards. It does consider the effect of known safety regulations as they are 

projected to affect the target population. 

 

Casualty risks range widely for vehicles of the same weight or footprint, which 

skews regression analysis and makes computer simulation a better predictor of the 

safety effects of mass reduction

Wenzel commented that he had found, in his most recent work, after accounting 

for drivers and crash location, that there is a wide range in casualty risk for vehicles with 

the same weight or footprint. Wenzel stated that for drivers, casualty risk does generally 

decrease as weight or footprint increases, especially for passenger cars, but the degree of 

variation in the data for vehicles (particularly light trucks) at a given weight or footprint 

makes it difficult to say that a decrease in weight or footprint will necessarily result in 

increased casualty risk. In terms of risk imposed on the drivers of other vehicles, Wenzel 

stated that risk increases as light truck weight or footprint increases. 

Wenzel further stated that because a regression analysis can only consider the 

average trend in the relationship between vehicle weight/size and risk, it must “ignore” 

vehicles that do not follow that trend. Wenzel therefore recommended that the agency 

employ computer crash simulations for analyzing the effect of vehicle weight reduction 
224 

on safety, because they can “pinpoint the effect of specific vehicle designs on safety,” 

and can model future vehicles which do not yet exist and are not bound to analyzing 

historical data. Wenzel cited, as an example, a DRI simulation study commissioned by 

the Aluminum Association (Kebschull 2004), which used a computer model to simulate 

the effect of changing SUV mass or footprint (without changing other attributes of the 

vehicle) on crash outcomes, and showed a 15 percent net decrease in injuries, while 

increasing wheelbase by 4.5 inches while maintaining weight showed a 26 percent net 

decrease in serious injuries. 

Agencies’ response:

The agencies have reviewed Mr. Wenzel’s draft report for DOE to which he 

referred in his comments, but based on NHTSA’s work do not find such a wide range of 

safety risk for vehicles with the same weight, although we agree there is a range of risk 

for a given footprint. Wenzel found that for drivers, casualty risk does generally decrease 

as weight or footprint increases, especially for passenger cars, and that in terms of risk 

imposed on the drivers of other vehicles, risk increases as light truck weight or footprint 

increases, but concluded that the variation in the data precluded the possibility of drawing 

any conclusions. In the 2010 Kahane study presented in the FRIA, NHTSA undertook a 

similar analysis in which it correlated weight to fatality risk for vehicles of essentially the 

same footprint.133 The “decile analysis,” provided as a check on the trend/direction of 

NHTSA’s regression analysis, shows that societal fatality risk generally increases and 

rarely decreases for lighter relative to heavier cars of the same footprint. Thus, while Mr. 

 

133 Subsections 2.4 and 3.3 of new report. 
225 

Wenzel was reluctant to draw a conclusion, NHTSA believes that both our research and 

Mr. Wenzel’s appear to point to the same conclusion. We agree that there is a wide range 

in casualty risk among cars of the same footprint, but we find that that casualty risk is 

correlated with weight. The correlation shows that heavier cars have lower overall 

societal fatality rates than lighter cars of very similar footprint. 

The agencies agree that simulation can be beneficial in certain circumstances. 

NHTSA cautions, however, that it is difficult for a simulation analysis to capture the full 

range of variations in crash situations in the way that a statistical regression analysis 

does. Vehicle crash dynamics are complex, and small changes in initial crash conditions 

(such as impact angle or closing speed) can have large effects on injury outcome. This 

condition is a consequence of variations in the deformation mode of individual 

components (e.g., buckling, bending, crushing, material failure, etc.) and how those 

variations affect the creation and destruction of load paths between the impacting object 

and the occupant compartment during the crash event. It is therefore difficult to predict 

and assess structural interactions using computational methods when one does not have a 

detailed, as-built geometric and material model. Even when a complete model is 

available, prudent engineering assessments require extensive physical testing to verify 

crash behavior and safety. Despite all this, the agencies recognize that detailed crash 

simulations can be useful in estimating the relative structural effects of design changes 

over a limited range of crash conditions, and will continue to evaluate the appropriate use 

of this tool in the future. 
226 

Simplified crash simulations can also be valuable tools, but only when employed 

as part of a comprehensive analytical program. They are especially valuable in 

evaluating the relative effect and associated confidence intervals of feasible design 

alternatives. For example, the method employed by Nusholtz et al.

134 could be used by a 

vehicle designer to estimate the benefit of incremental changes in mass or wheelbase as 

well as the tradeoffs that might be made between them once that designer has settled on a 

preliminary design. A key difference between the research by Nusholtz and the research 

by Kebschull that Mr. Wenzel cited135 is in their suggested applications. The former is 

useful in evaluating proposed alternatives early in the design process – Nusholtz 

specifically warns that the model provides only “general insights into the overall risk ... 

and cannot be used to obtain specific response characteristics.” Mr. Wenzel implies the 

latter can “isolate the effect of specific design changes, such as weight reduction” and 

thus quantify the fleet-wide effect of substantial vehicle redesigns. Yet while Kebschull 

reports injury reductions to three significant digits, there is no validation that vehicle 

structures of the proposed weight and stiffness are even feasible with current technology. 

Thus, while the agencies agree that computer simulations can be useful tools, we also 

 

134 Nusholtz, G.S., G. Rabbiolo, and Y. Shi, “Estimation of the Effects of Vehicle Size and Mass on CrashInjury Outcome Through Parameterized Probability Manifolds,” Society of Automotive Engineers (2003), 

Document No. 2003-01-0905. Available at http://www.sae.org/technical/papers/2003-01-0905 (last 

accessed Feb. 15, 2010). 

135 Mr. Wenzel cites the report by Kebschull et al [2004, DRI-TR-04-04-02] as an example of what he 

regards as the effective use of computer crash simulation. NHTSA does not concur that this analysis 

represents a viable analytical method for evaluating the fleet-wide tradeoffs between vehicle mass and 

societal safety. The simulation method employed was not a full finite element representation of each major 

structural component in the vehicles in question. Instead, an Articulated Total Body (ATB) representation 

was constructed for each of two representative vehicles. In the ATB model, large structural subsystems 

were represented by a single ellipsoid. Consolidated load-deflection properties of these subsystems and the 

joints that tie them together were “calibrated” for an ATB vehicle model by requiring that it reproduce the 

acceleration pulse of a physical NHTSA crash test. NHTSA notes that vehicle simulation models that are 

calibrated to a single crash test configuration (e.g., a longitudinal NCAP test into a rigid wall) are often illequipped to analyze alternative crash scenarios (e.g., vehicle-to-vehicle crashes at arbitrary angles and 

lateral offsets). 
227 

recognize the value of statistical regression analysis for determining fleet-wide effects, 

because it inherently incorporates real-world factors in historical safety assessments.

DRI’s analysis shows that lighter vehicles will save lives, and NHTSA reaches 

the opposite conclusion without disproving DRI’s analysis

 The difference between NHTSA’s results and DRI’s results for the relationship 

between vehicle mass and vehicle safety has been at the crux of this issue for several 

years. While NHTSA offered some theories in the NPRM as to why DRI might have 

found a safety benefit for mass reduction, NHTSA’s work since then has enabled it to 

identify what we believe is the most likely reason for DRI’s findings. The potential near 

multicollinearity of the variables of curb weight, track width, and wheelbase creates some 

degree of concern that any regression models with those variables could inaccurately 

calibrate their effects. However, based on its own experience with statistical analysis, 

NHTSA believes that the specific two-step regression model used by DRI increases this 

concern, because it weakens relationships between curb weight and dependent variables 

by splitting the effect of curb weight across the two regression steps. 

 

 The comments below are in response to NHTSA’s theories in the NPRM about 

the source of the differences between NHTSA’s and DRI’s results. The majority of them 

are answered more fully in the 2010 Kahane report included in NHTSA’s FRIA, but we 

respond to them in this document as well for purposes of completeness. 
228 

NHTSA and DRI may have reached different conclusions because NHTSA’s 

study does not distinguish between reductions in size and reductions in weight 

like DRI’s

Several commenters (CARB, CBD, EDF, ICCT, NRDC, and UCS) stated that 

DRI had been able to separate the effect of size and weight in its analysis, and in so doing 

proved that there was a safety benefit to reducing weight without reducing size. The 

commenters suggested that if NHTSA properly distinguished between reductions in size 

and reductions in weight, it would find the same result as DRI. 

Agencies’ response:

 In the 2010 Kahane analysis presented in the FRIA, NHTSA did attempt to 

separate the effects of vehicle size and weight by performing regression analyses with 

footprint (or alternatively track width and wheelbase) and curb weight as separate 

independent variables. For passenger cars, NHTSA found that the regressions attribute 

the fatality increase due to downsizing about equally to mass and footprint – that is, the 

effect of reducing mass alone is about half the effect of reducing mass and reducing 

footprint. Unlike DRI’s results, NHTSA’s regressions for passenger cars and for lighter 

LTVs did not find a safety benefit to reducing weight without reducing size; while 

NHTSA did find a safety benefit for reducing weight in the heaviest LTVs, the 

magnitude of the benefit as compared to DRI’s was significantly smaller. NHTSA 
229 

believes that these differences in results may be an artifact of DRI’s two-step regression 

model, as explained above. 

NHTSA and DRI may have reached different conclusions because NHTSA’s 

study does not include two-door cars like DRI’s

One of NHTSA’s primary theories in the NPRM as to why NHTSA and DRI’s 

results differed related to DRI’s inclusion in its analysis of 2-door cars. NHTSA had 

excluded those vehicles from its analysis on the grounds that 2-door cars had a 

disproportionate crash rate (perhaps due to their inclusion of muscle and sports cars) 

which appeared likely to skew the regression. Several commenters argued that NHTSA 

should have included 2-door cars in its analysis. DRI and James Adcock stated that 2-

door cars should not be excluded because they represent a significant portion of the lightduty fleet, while CARB and ICCT stated that because DRI found safety benefits whether 

2-door cars were included or not, NHTSA should include 2-door cars in its analysis. 

Wenzel also commented that NHTSA should include 2-door cars in subsequent analyses, 

stating that while his analysis of MY 2000-2004 crash data from 5 states indicates that, in 

general, 4-door cars tend to have lower fatality risk than 2-door cars, the risk is even 

lower when he accounts for driver age/gender and crash location. Wenzel suggested that 

the increased fatality risk in the 2-door car population seemed primarily attributable to 

the sports cars, and that that was not sufficient grounds to exclude all 2-door cars from 

NHTSA’s analysis. 
230 

Agencies’ response:

The agencies agree that 2-door cars can be included in the analysis, and NHTSA 

retracts previous statements that DRI’s inclusion of them was incorrect. In its 2010 

analysis, NHTSA finds that it makes little difference to the results whether 2-door cars 

are included, partially included, or excluded from the analysis. Thus, analyses of 2-door 

and 4-door cars combined, as well as other combinations, have been included in the 

analysis. That said, no combination of 2-door and 4-door cars resulted in NHTSA’s 

finding a safety benefit for passenger cars due to mass reduction. 

NHTSA and DRI may have reached different conclusions due to different 

assumptions

DRI commented that the differences found between its study and NHTSA’s may 

be due to the different assumptions about the linearity of the curb weight effect and 

control variable for driver age, vehicle age, road conditions, and other factors. NHTSA’s 

analysis was based on a two-piece linear model for curb weight with two different weight 

groups (less than 2,950 lbs., and greater than or equal to 2.950 lbs). The DRI analysis 

assumed a linear model for curb weight with a single weight group. Additionally, DRI 

stated that NHTSA’s use of eight control variables (rather than three control variables 

like DRI used) for driver age introduces additional degrees of freedom into the 

regressions, which it suggested may be correlated with the curb weight, wheelbase, and 
231 

track width, and/or other control variables. DRI suggested that this may also affect the 

results and cause or contribute to the differences in outcomes between NHTSA and DRI. 

Agencies’ response:

NHTSA’s FRIA documents that NHTSA analyzed its database using both a single 

parameter for weight (a linear model) and two parameters for weight (a two-piece linear 

model). In both cases, the logistic regression responded identically, allocating the same 

way between weight, wheelbase, track width, or footprint.136 Thus, NHTSA does not 

believe that the differences between its results and DRI’s results are due to whether the 

studies used a single weight group or two weight groups. 

The FRIA also documents that NHTSA examined NHTSA’s use of eight control 

variables for driver age (ages 14-30, 30-50, 50-70, 70+ for males and females separately , 

versus DRI’s use of three control variables for age (FEMALE = 1 for females, 0 for 

males, YOUNGDRV = 35-AGE for drivers under 35, 0 for all others, OLDMAN = 

AGE-50 for males over 50, 0 for all others; OLDWOMAN = AGE-45 for females over 

45, 0 for all others) to see if that affected the results. NHTSA ran its analysis using the 

eight control variables and again using three control variables for age, and obtained 

similar results each time.137 Thus, NHTSA does not believe that the differences between 

its results and DRI’s results are due to the number of control variables used for driver 

age. 

 

136 Subsections 2.2 and 2.3 of new report 137 Id.
232 

NHTSA’s and DRI’s conclusions may be similar if confidence intervals are taken 

into account

DRI commented that NHTSA has not reported confidence intervals, while DRI 

has reported them in its studies. Thus, DRI argued, it is not possible to determine 

whether the confidence intervals overlap and whether the differences between NHTSA’s 

and DRI’s analyses are statistically significant. 

Agencies’ response:

NHTSA has included confidence intervals for the main results of the 2010 

Kahane analysis, as shown in Chapter IX of NHTSA’s FRIA. For passenger cars, the 

NHTSA results are a statistically significant increase in fatalities with a 100 pound 

reduction while maintaining track width and wheelbase (or footprint); the DRI results are 

a statistically significant decrease in fatalities with a 100 pound reduction while 

maintaining track width and wheelbase. The DRI results are thus outside the confidence 

bounds of the NHTSA results and do not overlap.

NHTSA should include a “best-case” estimate in its study

Several commenters (Center for Auto Safety, NRDC, Public Citizen, Sierra Club 

et al., and Wenzel) urged NHTSA to include a “best-case” estimate in the final rule, 
233 

showing scenarios in which lives were saved rather than lost. Public Citizen stated that 

there would be safety benefits to reducing the weight of the heaviest vehicles while 

leaving the weight of the lighter vehicles unchanged, and that increasing the number of 

smaller vehicles would provide safety benefits to pedestrians, bicyclists, and 

motorcyclists. Sierra Club et al. stated that new materials, smart design, and lighter, 

more advanced engines can all improve fuel economy while maintaining or increasing 

vehicle safety. Both Center for Auto Safety and Sierra Club argued that the agency 

should have presented a “best-case” scenario to balance out the “worst-case” scenario 

presented in the NPRM, especially if NHTSA itself believed that the worst-case scenario 

was not inevitable. NRDC requested that NHTSA present both a “best-case” and a “most 

likely” scenario. Wenzel simply stated that NHTSA did not present a “best-case” 

scenario, despite DRI’s finding in 2005 that fatalities would be reduced if track width 

was held constant. 

Agencies’ response:

NHTSA has included an “upper estimate” and a “lower estimate” in the new 2010 

Kahane analysis. The lower estimate assumes that mass reduction will be accomplished 

entirely by material substitution or other techniques that do not perceptibly change a 

vehicle’s shape, structural strength, or ride quality. The lower estimate examines specific 

crash modes and is meant to reflect the increase in fatalities for the specific crash modes 

in which a reduction in mass per se in the case vehicle would result in a reduction in 

safety: namely, collisions with larger vehicles not covered by the regulations (e.g., trucks 
234 

with a GVWR over 10,000 lbs), collisions with partially-movable objects (e.g., some 

trees, poles, parked cars, etc.), and collisions of cars or light LTVs with heavier LTVs – 

as well as the specific crash modes where a reduction in mass per se in the case vehicle 

would benefit safety: namely, collisions of heavy LTVs with cars or lighter LTVs. 

NHTSA believes that this is the effect of mass per se, i.e., the effects of reduced mass 

will generally persist in these crashes regardless of how the mass is reduced. The lower 

estimate attempts to quantify that scenario, although any such estimate is hypothetical 

and subject to considerable uncertainty. NHTSA believes that a “most likely” scenario 

cannot be determined with any certainty, and would depend entirely upon agency 

assumptions about how manufacturers intend to reduce mass in their vehicles. While we 

can speculate upon the potential effects of different methods of mass reduction, we 

cannot predict with certainty what manufacturers will ultimately do. 

NHTSA should not include a “worst-case” estimate in its study

NRDC, Public Citizen and Sierra Club et al. commented that NHTSA should 

remove the “worst-case scenario” estimate from the rulemaking, generally because it was 

based on an analysis that evaluated historical vehicles, and future vehicles would be 

sufficiently different to render the “worst-case scenario” inapplicable. 
235 

Agencies’ response:

NHTSA stated in the NPRM that the “worst-case scenario” addressed the effect of 

a kind of downsizing (i.e., mass reduction accompanied by footprint reduction) that was 

not likely to be a consequence of attribute-based CAFE standards, and that the agency 

would refine its analysis of such a scenario for the final rule. NHTSA has not used the 

“worst-case scenario” in the final rule. Instead, we present three scenarios: the first is an 

estimate based directly on the regression coefficients of weight reduction while 

maintaining footprint in the statistical analyses of historical data. As discussed above, 

presenting this scenario is possible because NHTSA attempted to separate the effects of 

weight and footprint reduction in the new analysis. However, even the new analysis of 

LTVs produced some coefficients that NHTSA did not consider entirely plausible. 

NHTSA also presents an “upper estimate” in which those coefficients for the LTVs were 

adjusted based on additional analyses and expert opinion as a safety agency and a “lower 

estimate,” which estimates the effect if mass reduction is accomplished entirely by 

safety-conscious technologies such as material substitution. 

3. How has NHTSA Refined its Analysis for Purposes of Estimating the 

Potential Safety Effects of this Final Rule?

During the past months, NHTSA has extensively reviewed the literature on 

vehicle mass, size, and fatality risk. NHTSA now agrees with DRI and other commenters 

that it is essential to analyze the effect of mass independently from the effects of size 
236 

parameters such as wheelbase, track width, or footprint – and that the NPRM’s “worstcase” scenario based on downsizing (in which weight, wheelbase, and track width could 

all be changed) is not useful for that purpose. The agency should instead provide 

estimates that better reflect the more likely effect of the regulation - estimating the effect 

of mass reduction that maintains footprint. 

Yet it is more difficult to analyze multiple, independent parameters than a single 

parameter (e.g., curb weight), because there is a potential concern that the near 

multicollinearity of the parameters – the strong, natural and historical correlation of mass 

and size – can lead to inaccurate statistical estimates of their effects.138 NHTSA has 

performed new statistical analyses of its historical database of passenger cars, light 

trucks, and vans (LTVs) from its 2003 report (now including also 2-door cars), assessing 

relationships between fatality risk, mass, and footprint. They are described in 

Subsections 2.2 (cars) and 3.2 (LTVs) of the 2010 Kahane report presented in Chapter IX 

of the FRIA. While the potential concerns associated with near multicollinearity are 

inherent in regression analyses with multiple size/mass parameters, NHTSA believes that 

the analysis approach in the 2010 Kahane report, namely a single-step regression 

analysis, generally reduces those concerns139 and models the trends in the historical data. 

The results differ substantially from DRI’s, based on a two-step regression analysis. 

 

138 Greene, W. H. (1993). Econometric Analysis, Second Edition. New York: Macmillan Publishing 

Company, pp. 266-268; Allison, P.D. (1999), Logistic Regression Using the SAS System. Cary, NC: SAS 

Institute Inc., pp. 48-51. The report shows variance inflation factor (VIF) scores in the 5-7 range for curb 

weight, wheelbase, and track width (or, alternatively, curb weight and footprint) in NHTSA’s database, 

exceeding the 2.5 level where near multicollinearity begins to become a concern in logistic regression 

analyses. 

139 NHTSA believes that, given the near multicollinearity of the independent variables, the two-step 

regression augments the possibility of estimating inaccurate coefficients for curb weight, because it 

weakens relationships between curb weight and dependent variables by splitting the effect of curb weight 

across the two regression steps as discussed further in Subsection 2.3 of NHTSA’s report. 
237 

Subsections 2.3 and 2.4 of the 2010 Kahane report attempt to account for the differences 

primarily by applying selected techniques from DRI’s analyses to NHTSA’s database. 

The statistical analyses – logistic regressions – of trends in MYs 1991-1999 

vehicles generate one set of estimates of the possible effects of reducing mass by 100 

pounds while maintaining footprint. While these effects might conceivably carry over to 

future mass reductions, there are two reasons that future safety effects of mass reduction 

could differ from projections from historical data: 

• The statistical analyses are “cross-sectional” analyses that estimate the increase in 

fatality rates for vehicles weighing n-100 pounds relative to vehicles weighing n 

pounds, across the spectrum of vehicles on the road, from the lightest to the 

heaviest. They do not directly compare the fatality rates for a specific make and 

model before and after a 100–pound reduction from that model. Instead, they use 

the differences across makes and models as a surrogate for the effects of actual 

reductions within a specific model; those cross-sectional differences could include 

trends that are statistically, but not causally related to mass. 

• The manner in which mass changed across MY 1991-1999 vehicles might not be 

consistent with future mass reductions, due to the availability of newer materials 

and design methods. 
238 

Therefore, Subsections 2.5 and 3.4 of the 2010 Kahane report supplement those estimates 

with one or more scenarios in which some of the logistic regression coefficients are 

replaced by numbers based on additional analyses and NHTSA’s judgment of the likely 

effect of mass per se (the ability to transfer momentum to other vehicles or objects in a 

collision) and of what trends in the historical data could be avoided by current massreduction technologies such as materials substitution. The various scenarios may be 

viewed as a plausible range of point estimates for the effects of mass reduction while 

maintaining footprint, but they should not be construed as upper and lower bounds. 

Furthermore, being point estimates, they are themselves subject to uncertainties, such as, 

for example, the sampling errors associated with statistical analyses. 

 The principal findings and conclusions of the 2010 Kahane report are as follows: 

Passenger cars: 

This database with the one-step regression method of the 2003 Kahane report 

estimates an increase of 700-800 fatalities when curb weight is reduced by 100 pounds 

and footprint is reduced by 0.65 square feet (the historic average footprint reduction per 

100-pound mass reduction in cars). The regression attributes the fatality increase about 

equally to curb weight and to footprint. The results are approximately the same whether 

2-door cars are fully included or partially included in the analysis or whether only 4-door 

cars are included (as in the 2003 report). Regressions by curb weight, track width and 

wheelbase produce findings quite similar to the regressions by curb weight and footprint, 
239 

but the results with the single “size” variable, footprint, rather than the two variables, 

track width and wheelbase vary even less with the inclusion or exclusion of 2-door cars. 

In Subsection 2.3 of the new report, a two-step regression method that resembles 

(without exactly replicating) the approach by DRI, when applied to the same (NHTSA’s) 

crash and registration data, estimates a large benefit when mass is reduced, offset by even 

larger fatality increases when track width and wheelbase (or footprint) are reduced. 

NHTSA believes that the benefit estimated by this method is inaccurate, due to the 

potential concerns with the near multicollinearity of the parameters (curb weight, track 

width, and wheelbase)140 even though the analysis is theoretically unbiased141. Almost 

any analysis incorporating those parameters has a possibility of inaccurate coefficients 

due to near multicollinearity; however, based on our own experience with other 

regression analyses of crash data, NHTSA believes a DRI-type two-step method 

augments the possibility of estimating inaccurate coefficients for curb weight, because it 

weakens relationships between curb weight and dependent variables by splitting the 

effect of curb weight across the two regression steps. 

In Subsection 2.4 of the new report, as a check on the results from the regression 

methods, NHTSA also performed what we refer to as “decile” analyses: simpler, tabular 

data analysis that compares fatality rates of cars of different mass but similar footprint. 

 

140 As evidenced by VIF scores in the 5-7 range, exceeding the 2.5 level where near multicollinearity 

begins to become a concern in logistic regression analyses. 

141 Subsection 2.3 of the 2010 Kahane report attempts to explain why the two-step method, when applied to 

NHTSA’s 2003 database, produces results a lot like DRI’s, but it does not claim that DRI obtained its 

results from its own database for exactly those reasons. NHTSA did not analyze DRI’s database. The twostep method is “theoretically unbiased” in the sense that it seeks to estimate the same parameters as the 

one-step analysis. 
240 

Decile analysis is not a precise tool because it does not control for confounding factors 

such as driver age/gender or the specific type of car, but it may be helpful in identifying 

the general directional trend in the data when footprint is held constant and curb weight 

varies. The decile analyses show that fatality risk in MY 1991-1999 cars generally 

increased and rarely decreased for lighter relative to heavier cars of the same footprint. 

They suggest that the historical, cross-sectional trend was generally in the lighter ↔ more 

fatalities direction and not in the opposite direction, as might be suggested by the 

regression coefficients from the method that resembles DRI’s approach. 

The regression coefficients from NHTSA’s one-step method suggest that mass 

and footprint each accounted for about half the fatality increase associated with 

downsizing in a cross-sectional analysis of 1991-1999 cars. They estimate the historical 

difference in societal fatality rates (i.e., including fatalities to occupants of all the vehicles 

involved in the collisions, plus any pedestrians) of cars of different curb weights but the 

same footprint. They may be considered an “upper-estimate scenario” of the effect of 

future mass reduction – if it were accomplished in a manner that resembled the historical 

cross-sectional trend – i.e., without any particular regard for safety (other than not to 

reduce footprint). 

However, NHTSA believes that future vehicle design is likely to take advantage 

of safety-conscious technologies such as materials substitution that can reduce mass 

without perceptibly changing a car’s shape or ride and maintain its structural strength. 

This could avoid much of the risk associated with lighter and smaller vehicles in the 
241 

historical analyses, especially the historical trend toward higher crash-involvement rates 

for lighter and smaller vehicles.142 It could thereby shrink the added risk close to just the 

effects of mass per se (the ability to transfer momentum to other vehicles or objects in a 

collision). Subsection 2.5 of the 2010 Kahane report attempts to quantify a “lowerestimate scenario” for the potential effect of mass reduction achieved by safety-conscious 

technologies; the estimated effects are substantially smaller than in the upper-estimate 

scenario based directly on the regression results. 

We note, again, that the preceding paragraph is conditional. Nothing in the CAFE 

standard requires manufacturers to use material substitution or, more generally, take a 

safety-conscious approach to mass reduction.143 Federal Motor Vehicle Safety Standards 

include performance tests that verify historical improvements in structural strength and 

crashworthiness, but few FMVSS provide test information that sheds light about how a 

vehicle rides or otherwise helps explain the trend toward higher crash-involvement rates 

for lighter and smaller vehicles. It is possible that using material substitution and other 

current mass reduction methods could avoid the historical trend in this area, but that 

remains to be studied as manufacturers introduce more of these vehicles into the on-road 

fleet in coming years. A detailed discussion of methods currently used for reducing the 

mass of passenger cars and light trucks is included in Chapter 3 of the Technical Support 

Document. 

 

142 This is discussed in greater depth in Subsections 2.1 and 2.5 of the 2010 Kahane report. The historic 

trend toward higher crash-involvement rates for lighter and smaller vehicles is documented in IIHS 

Advisory No. 5, July 1988, http://www.iihs.org/research/advisories/iihs_advisory_5.pdf; IIHS News 

Release, February 24, 1998, http://www.iihs.org/news/1998/iihs_news_022498.pdf; Auto Insurance Loss 

Facts, September 2009, http://www.iihs.org/research/hldi/fact_sheets/CollisionLoss_0909.pdf. 143 Footprint-based standards do not specify how or where to remove mass while maintaining footprint, nor 

do they categorically forbid footprint reductions, even if they discourage them. 
242 

LTVs: 

The principal difference between LTVs and passenger cars is that mass reduction 

in the heavier LTVs is estimated to have significant societal benefits, in that it reduces the 

fatality risk for the occupants of cars and light LTVs that collide with the heavier LTVs. 

By contrast, footprint (size) reduction in LTVs has a harmful effect (for the LTVs’ own 

occupants), as in cars. The regression method of the 2003 Kahane report applied to the 

database of that report estimates a societal increase of 231 fatalities when curb weight is 

reduced by 100 pounds and footprint is reduced by 0.975 square feet (the historic average 

footprint reduction per 100-pound mass reduction in LTVs). But the regressions attribute 

an overall reduction of 266 fatalities to the 100-pound mass reduction and an increase of 

497 fatalities to the .975-square-foot footprint reduction. The regression results constitute 

one of the scenarios for the possible societal effects of future mass reduction in LTVs. 

However, NHTSA cautions that some of the regression coefficients, even by 

NHTSA’s preferred method, might not accurately model the historical trend in the data, 

possibly due to near multicollinearity of curb weight and footprint or because of the 

interaction of both of these variables with LTV type.144 Based on supplementary 

analyses and discussion in Subsections 3.3 and 3.4, the new report defines an additional 

upper-estimate scenario that NHTSA believes may more accurately reflect the historical 

 

144 For example, mid-size SUVs of the 1990s typically had high mass relative to their short wheelbase and 

footprint (and exceptionally high rates of fatal rollovers); minivans typically have low mass relative to their 

footprint (and low fatality rates); heavy-duty pickup trucks used extensively for work tend to have more 

mass, for the same footprint, as basic full-sized pickup trucks that are more often used for personal 

transportation. 
243 

trend in the data and a lower-estimate scenario that may come closer to the effects of 

mass per se. All three scenarios, however, attribute a societal fatality reduction to mass 

reduction in the heavier LTVs. 

Overall effects of mass reduction while maintaining footprint in cars and LTVs: 

The immediate purpose of the new report’s analyses of relationships between fatality 

risk, mass, and footprint is to develop the four parameters that the Volpe model needs in 

order to predict the safety effects, if any, of the modeled mass reductions in MYs 2012-

2016 cars and LTVs over the lifetime of those vehicles. The four numbers are the overall 

percentage increases or decreases, per 100-pound mass reduction while holding footprint 

constant, in crash fatalities involving: (1) cars < 2,950 pounds (which was the median 

curb weight of cars in MY 1991-1999), (2) cars ≥ 2,950 pounds, (3) LTVs < 3,870 

pounds (which was the median curb weight of LTVs in those model years), and (4) LTVs 

≥ 3,870 pounds. Here are the percentage effects for each of the three alternative 

scenarios, again, the “upper-estimate scenario” and the “lower-estimate scenario” have 

been developed based on NHTSA’s expert opinion as a vehicle safety agency: 
244 

Fatality Increase per 100-Pound Reduction (%)145

Actual Regression 

Result Scenario 

NHTSA Expert 

Opinion UpperEstimate 

Scenario146

NHTSA Expert 

Opinion LowerEstimate Scenario 

Cars < 2,950 

pounds 2.21 2.21 1.02

Cars > 2,950 

pounds 0.90 0.90 0.44

LTVs < 3,870 

pounds 0.17 0.55 0.41

LTVs > 3,870 

pounds -1.90 -0.62 -0.73

In all three scenarios, the estimated effects of a 100-pound mass reduction while 

maintaining footprint are an increase in fatalities in cars < 2,950 pounds, substantially 

smaller increases in cars ≥ 2,950 pounds and LTVs < 3,870 pounds, and a societal benefit 

for LTVs ≥ 3,870 pounds (because it reduces fatality risk to occupants of cars and lighter 

LTVs they collide with). These are the estimated effects of reducing each vehicle by 

exactly 100 pounds. However, the actual mass reduction will vary by make, model, and 

year. The aggregate effect on fatalities can only be estimated by attempting to forecast, 

as NHTSA has using inputs to the Volpe model, the mass reductions by make and model. 

It should be noted, however, that a 100-pound reduction would be 5 percent of the mass 

of a 2000-pound car but only 2 percent of a 5000-pound LTV. Thus, a forecast that mass 

 

145 Reducing mass by 100 pounds in these vehicles is estimated to have the listed percentage effect on 

fatalities in crashes involving these vehicles. For example, if these vehicles are involved in crashes that 

result in 10,000 fatalities, 2.21 means that if mass is reduced by 100 pounds, fatalities will increase to 

10,221 and -0.73 means fatalities will decrease to 9,927. In the scenario based on actual regression results, 

the 1.96-sigma sampling errors in the above estimates are ±0.91 percentage points for cars < 2,950 pounds 

and also for cars ≥ 2,950 pounds, ±0.82 percentage points for LTVs < 3,870 pounds, and ±1.18 percentage 

points for LTVs ≥ 3,870 pounds. In other words, the fatality increase in the cars < 2,950 pounds and the 

societal fatality reduction attributed to mass reduction in the LTVs ≥ 3,870 pounds are statistically 

significant. The sampling errors associated with the scenario based on actual regression results perhaps 

also indicate the general level of statistical noise in the other two scenarios. 

146 For passenger cars, the upper-estimate scenario is the actual-regression-result scenario. 
245 

will decrease by an equal or greater percentage in the heavier vehicles than in the lightest 

cars would be proportionately more influenced by the benefit for mass reduction in the 

heavy LTVs than by the fatality increases in the other groups; it is likely to result in an 

estimated net benefit under one or more of the scenarios. It should also be noted, again, 

that the three scenarios are point estimates and are subject to uncertainties, such as the 

sampling errors associated with the regression results. In the scenario based on actual 

regression results, the 1.96-sigma sampling errors in the above estimates are + 0.91 

percentage points for cars < 2,950 pounds and also for cars > 2,950 pounds, + 0.82 

percentage points for LTVs < 3,870 pounds, and + 1.18 percentage points for LTVs >

3,870 pounds. In other words, the fatality increase in the cars < 2,950 pounds and the 

societal fatality reduction attributed to mass reduction in the LTVs > 3,870 pounds are 

statistically significant. The sampling errors associated with the scenario based on actual 

regression results perhaps also indicate the general level of statistical noise in the other 

two scenarios. 

4. What are the Estimated Safety Effects of this Final Rule?

The table below shows the estimated safety effects of the modeled reduction in 

vehicle mass provided in the NPRM and in this final rule in order to meet the MYs 2012-

2016 standards, based on the analysis described briefly above and in much more detail in 

Chapter IX of the FRIA. These are combined results for passenger cars and light trucks. 

A positive number is an estimated increase in fatalities and a negative number (shown in 
246 

parentheses) is an estimated reduction in fatalities over the lifetime of the model year 

vehicles compared to the MY 2011 baseline fleet. 

MY 

2012

MY 

2013

MY 

2014

MY 

2015

MY 

2016

NPRM “Worst Case” 34 54 194 313 493 

NHTSA Expert 

Opinion Final Rule 

Upper Estimate

9 14 26 24 22

NHTSA Expert 

Opinion Final Rule 

Lower Estimate

2 4 (17) (53) (80)

Actual Regression 

Result Scenario 0 2 (94) (206) (301) 

NHTSA emphasizes that the table above is based on the NHTSA’s assumptions 

about how manufacturers might choose to reduce the mass of their vehicles in response to 

the final rule, which are very similar to EPA’s assumptions. In general, as discussed 

above, the agencies assume that mass will be reduced by as much as 10 percent in the 

heaviest LTVs but only by as much as 5 percent in other vehicles and that substantial 

mass reductions will take place only in the year that models are redesigned. The actual 

mass reduction that is likely to occur in response to the standards will of course vary by 

make and model, depending on each manufacturer’s particular approach, with likely 

more opportunity for the largest LTVs that still use separate frame construction. 

The “upper estimate” presented above, as discussed in the FRIA, assumes only 

that manufacturers will reduce vehicle mass without reducing footprint. Thus, under such 

a scenario, safety effects could be somewhat adverse if, for example, manufacturers 

chose to reduce crush space associated with vehicle overhang as a way of reducing mass 
247 

without changing footprint. The “lower estimate,” in turn, is based on the assumption 

that manufacturers will reduce vehicle mass solely through methods like material 

substitution, which (under these assumptions) fully maintain not only footprint but also 

all structural integrity, and other aspects of vehicle safety. Under these scenarios, safety 

effects could be worse if mass reduction was not undertaken thoughtfully to maintain 

existing safety levels, but could also be better if it was undertaken with a thorough and 

extensive vehicle redesign to maximize both mass reduction and safety. 

 And finally, while NHTSA does not believe that the “worst-case” scenario 

presented in the NPRM is likely to occur during the MYs 2012-2016 timeframe, we 

cannot guarantee that manufacturers will never choose to reduce vehicle footprint, 

particularly if market forces lead to increased sales of small vehicles in response to sharp 

increases in the price of petroleum, though this situation would not be in direct response 

to the CAFE/GHG standards. Thus, we cannot completely reject the worst-case scenario 

for all vehicles, although we can and do recognize that the footprint-based standards will 

significantly limit the likelihood of its occurrence within the context of this rulemaking. 

In summary, the agencies recognize the balancing inherent in achieving higher 

levels of fuel economy and lower levels of CO2 emissions through reduction of vehicle 

mass. Based on the 2010 Kahane analysis that attempts to separate the effects of mass 

reductions and footprint reductions, and to account better for the possibility that mass 

reduction will be accomplished entirely through methods that preserves structural 

strength and vehicle safety, the agencies now believe that the likely deleterious safety 
248 

effects of the MYs 2012-2016 standards may be much lower than originally estimated. 

They may be close to zero, or possibly beneficial if mass reduction is carefully 

undertaken in the future and if the mass reduction in the heavier LTVs is greater (in 

absolute terms) than in passenger cars. In light of these findings, we believe that the 

balancing is reasonable. 

5. How do the Agencies Plan to Address this Issue Going Forward?

NHTSA and EPA believe that it is important for the agencies to conduct further 

study and research into the interaction of mass, size and safety to assist future 

rulemakings. The agencies intend to begin working collaboratively and to explore with 

DOE, CARB, and perhaps other stakeholders an interagency/ intergovernmental working 

group to evaluate all aspects of mass, size and safety. It would also be the goal of this 

team to coordinate government supported studies and independent research, to the extent 

possible, to help ensure the work is complementary to previous and ongoing research and 

to guide further research in this area. DOE’s EERE office has long funded extensive 

research into component advanced vehicle materials and vehicle mass reduction. Other 

agencies may have additional expertise that will be helpful in establishing a coordinated 

work plan. The agencies are interested in looking at the weight-safety relationship in a 

more holistic (complete vehicle) way, and thanks to this CAFE rulemaking NHTSA has 

begun to bring together parts of the agency— crashworthiness, and crash avoidance 

rulemaking offices and the agency’s Research & Development office—in an 

interdisciplinary way to better leverage the expertise of the agency. Extending this effort 
249 

to other agencies will help to ensure that all aspects of the weight-safety relationship are 

considered completely and carefully with our future research. The agencies also intend to 

carefully consider comments received in response to the NPRM in developing plans for 

future studies and research and to solicit input from stakeholders. 

The agencies also plan to watch for safety effects as the U.S. light-duty vehicle 

fleet evolves in response both to the CAFE/GHG standards and to consumer preferences 

over the next several years. Additionally, as new and advanced materials and component 

smart designs are developed and commercialized, and as manufacturers implement them 

in more vehicles, it will be useful for the agencies to learn more about them and to try to 

track these vehicles in the fleet to understand the relationship between vehicle design and 

injury/fatality data. Specifically, the agencies intend to follow up with study and research 

of the following: 

First, NHTSA is in the process of contracting with an independent institution to 

review the statistical methods that NHTSA and DRI have used to analyze historical data 

related to mass, size and safety, and to provide recommendation on whether the existing 

methods or other methods should be used for future statistical analysis of historical data. 

This study will include a consideration of potential near multicollinearity in the historical 

data and how best to address it in a regression analysis. This study is being initiated 

because, in response to the NPRM, NHTSA received a number of comments related to 

the methodology NHTSA used for the NPRM to determine the relationship between mass 

and safety, as discussed in detail above. 
250 

Second, NHTSA and EPA, in consultation with DOE, intend to begin updating 

the MYs 1991-1999 database on which the safety analyses in the NPRM and final rule 

are based with newer vehicle data in the next several months. This task will take at least 

a year to complete. This study is being initiated in response to the NPRM comments 

related to the use of data from MYs 1991-1999 in the NHTSA analysis, as discussed in 

detail above. 

Third, in order to assess if the design of recent model year vehicles that 

incorporate various mass reduction methods affect the relationships among vehicle mass, 

size and safety, NHTSA and EPA intend to conduct collaborative statistical analysis, 

beginning in the next several months. The agencies intend to work with DOE to identify 

vehicles that are using material substitution and smart design. After these vehicles are 

identified, the agencies intend to assess if there are sufficient data for statistical analysis. 

If there are sufficient data, statistical analysis would be conducted to compare the 

relationship among mass, size and safety of these smart design vehicles to vehicles of 

similar size and mass with more traditional designs. This study is being initiated because, 

in response to the NPRM, NHTSA received comments related to the use of data from 

MYs 1991-1999 in the NHTSA analysis that did not include new designs that might 

change the relationship among mass, size and safety, as discussed in detail above. 

NHTSA may initiate a two-year study of the safety of the fleet through an 

analysis of the trends in structural stiffness and whether any trends identified impact 
251 

occupant injury response in crashes. Vehicle manufacturers may employ stiffer light 

weight materials to limit occupant compartment intrusion while controlling for mass that 

may expose the occupants to higher accelerations resulting in a greater chance of injury 

in real-world crashes. This study would provide information that would increase the 

understanding of the effects on safety of newer vehicle designs. 

In addition, NHTSA and EPA, possibly in collaboration with DOE, may conduct 

a longer-term computer modeling-based design and analysis study to help determine the 

maximum potential for mass reduction in the MYs 2017-2021 timeframe, through direct 

material substitution and smart design while meeting safety regulations and guidelines, 

and maintaining vehicle size and functionality. This study may build upon prior research 

completed on vehicle mass reduction. This study would further explore the 

comprehensive vehicle effects, including dissimilar material joining technologies, 

manufacturer feasibility of both supplier and OEM, tooling costs, and crash simulation 

and perhaps eventual crash testing. 
252 

III. EPA Greenhouse Gas Vehicle Standards 

A. Executive Overview of EPA Rule

 1. Introduction

 The Environmental Protection Agency (EPA) is establishing GHG emissions 

standards for the largest sources of transportation GHGs--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 

emissions of the six gases discussed above (Section I.A). This action represents the firstever EPA rule to regulate vehicle GHG emissions under the Clean Air Act (CAA) and 

will establish standards for model years 2012-2016 and later light vehicles sold in the 

United States. 

 EPA is adopting 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 CO2 emissions-footprint curves, where each vehicle has a different CO2

emissions compliance target depending on its footprint value. Vehicle CO2 emissions 

will be measured over the EPA city and highway tests. The rule 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. 
253 

The EPA projects that the average light vehicle tailpipe CO2 level in model year 2011 

will be 325 grams per mile while the average vehicle fleetwide average CO2 emissions 

compliance level for the model year 2016 standard will be 250 grams per mile, an 

average reduction of 23 percent from today’s CO2 levels. 

 EPA is also finalizing 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 

standards is to limit any potential increases of tailpipe emissions of these compounds in 

the future but not to force reductions relative to today’s low levels. 

 

 This final rule responds to the Supreme Court’s 2007 decision in Massachusetts v. 

EPA147 which found that greenhouse gases fit within the definition of air pollutant in 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 making these 

decisions, the EPA Administrator is required to follow the language of section 202(a) of 

 

147 549 U.S.C. 497 (2007). For further information on Massachusetts v. EPA see the Endangerment and 

Cause or Contribute Findings for Greenhouse Gases under Section 202(a) the Clean Air Act, published in 

the Federal Register on December 15, 2009 (74 FR 66496). 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. This information is 

also available at: http://www.epa.gov/climatechange/endangerment.html. 
254 

the CAA. The case was remanded back to the Agency for reconsideration in light of the 

court's decision. 

 The Administrator has responded to the remand by issuing two findings under 

section 202(a) of the Clean Air Act.148 First, the Administrator found that the science 

supports a positive endangerment finding that the mix of six greenhouse gases (carbon 

dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)) 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 found that the combined emissions of 

the same six gases 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. Motor vehicles 

and new motor vehicle engines emit carbon dioxide, methane, nitrous oxide, and 

hydrofluorocarbons. EPA provides more details below on the legal and scientific bases 

for this final rule. 

 As discussed in Section I, this GHG rule is part of a joint National Program such 

that a large majority of the projected benefits are achieved jointly with NHTSA’s CAFE 

rule which is described in detail in Section IV of this preamble. EPA projects total CO2 

equivalent emissions savings of approximately 960 million metric tons as a result of the 

rule, and oil savings of 1.8 billion barrels over the lifetimes of the MY 2012-2016 

 

148 See 74 FR 66496 (Dec. 15, 2009), "Endangerment and Cause or Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean Air Act” 
255 

vehicles subject to the rule. EPA projects that over the lifetimes of the MY 2012-2016 

vehicles, the rule will cost $52 billion but will result in benefits of $240 billion at a 3 

percent discount rate, or $192 billion at a 7 percent discount rate (both values assume the 

average SCC value at 3%, i.e., the $21/ton SCC value in 2010). Accordingly, these light 

vehicle greenhouse gas emissions standards represent an important contribution under the 

Clean Air Act toward meeting long-term greenhouse gas emissions and import oil 

reduction goals, while providing important economic benefits as well. The results of our 

analysis of 2012-2016 MY vehicles, which we refer to as our “model year analysis,” are 

summarized in Tables III.H.10-4 to III.H.10-7. 

 We have also looked beyond the lifetimes of 2012-2016 MY vehicles at annual 

costs and benefits of the program for the 2012 through 2050 timeframe. We refer to this 

as our “calendar year” analysis (as opposed to the costs and benefits mentioned above 

which we refer to as our “model year analysis”). In our calendar year analysis, the new 

2016 MY standards are assumed to apply to all vehicles sold in model years 2017 and 

later. The net present values of annual costs for the 2012 through 2050 timeframe are 

$346 billion for new vehicle technology which will provide $1.5 billion in fuel savings, 

both values at a 3 percent discount rate. At a 7 percent discount rate over the same 

period, the technology costs are estimated at $192 billion which will provide $673 billion 

in fuel savings. The social benefits during the 2012 through 2050 timeframe are 

estimated at $454 billion and $305 billion at a 3 and 7 percent discount rate, respectively. 

Both of these benefit estimates assume the average SCC value at 3% (i.e., the $21/ton 

SCC value in 2010). The net benefits during this time period are then $1.7 billion and 
256 

$785 million at a 3 and 7 percent discount rate, respectively. The results of our “calendar 

year” analysis are summarized in Tables III.H 10-1 to III.H.10-3. 

 2. Why is EPA Establishing this Rule? 

 This rule 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 GHG 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 their 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 compliance and 

fuel economy determinations, which would require only minor modifications to 

accommodate greenhouse gas emissions regulations. Finally, this rule is an important 

step in responding to the Supreme Court’s ruling in Massachusetts vs. EPA, which 

applies to other emissions sources in addition to light-duty vehicles. In fact, EPA is 

currently evaluating controls for motor vehicles other than those covered by this rule, and 

is also reviewing seven motor vehicle related 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)). 
257 

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 that are directly 

emitted by human activities 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 likely the cause of most of the 

observed global warming over the last 50 years. 149 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, 

 

149“Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR-2009-0472-11292. 
258 

society, and the environment is included in EPA’s technical support document for the 

recently promulgated Endangerment and Cause or Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean Air Act.150 

 Mobile sources represent a large and growing share of United States greenhouse 

gases and include light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, 

heavy duty trucks, airplanes, railroads, marine vessels and a variety of other sources. In 

2007, all mobile sources emitted 31% of all U.S. GHGs, and were the fastest-growing 

source of U.S. GHGs in the U.S. since 1990. Transportation sources, which do not 

include certain off-highway sources such as farm and construction equipment, account 

for 28% of U.S. GHG emissions, and Section 202(a) sources, which include light-duty 

vehicles, light-duty trucks, medium-duty passenger vehicles, heavy-duty trucks, buses, 

and motorcycles account for 23% of total U.S. GHGs.151 

 Light vehicles emit 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.152 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 post-combustion control of hydrocarbon 

 

150 74 FR 66496 (Dec. 15, 2009). Both the Federal Register Notice and the Technical Support Document 

for Endangerment and Cause or Contribute Findings are found in the public docket No. EPA-OAR-2009-

0171, in the public docket established for this rulemaking, and at 

http://epa.gov/climatechange/endangerment.html. 

151 Inventory of U.S. Greenhouse Gases and Sinks: 1990-2007. 152 Mobile source carbon dioxide emissions in 2006 equaled 26 percent of total U.S. CO2 emissions. 
259 

emissions (such as catalytic converters).153 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.154 

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.155 

b. Basis for Action under the 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 found that 

the elevated concentrations of greenhouse gases in the atmosphere may reasonably be 

 

153 In 2006, methane emissions equaled 0.32 percent of total U.S. methane emissions Nitrous oxide is a 

produce of the reaction that occurs between nitrogen and oxygen during fuel combustion. 

154 In 2006, nitrous oxide emissions for these sources accounted for 8 percent of total U.S. nitrous oxide 

emissions. 

155 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. 
260 

anticipated to endanger public health and welfare.156 The Administrator defined the “air 

pollution” referred to in CAA section 202(a) to be the combined mix of six long-lived 

and directly emitted GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), 

hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). 

The Administrator has further found under CAA section 202(a) that emissions of the 

single air pollutant defined as the aggregate group of these same six greenhouse gases 

from new motor vehicles and new motor vehicle engines contribute to air pollution. As a 

result of these findings, section 202(a) requires EPA to issue standards applicable to 

emissions of that air pollutant. New motor vehicles and engines emit CO2, methane, N2O 

and HFC. This preamble describes the provisions that control emissions of CO2, HFCs, 

nitrous oxide, and methane. For further discussion of EPA’s authority under section 

202(a), see Section I.C.2 of the preamble to the proposed rule (74 FR at 49464-66). 

 There are a variety of other CAA Title II provisions that are relevant to standards 

established under section 202(a). The standards are applicable to motor vehicles for their 

useful life. EPA has the discretion in determining what standard applies over the 

vehicles’ useful life and has exercised that discretion in this rule. See Section III.E.4 

below. 

 

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 before they may sell or introduce their new motor vehicle into 

commerce, according to CAA section 206(a). The introduction into commerce of 

 

156 74 FR 66496 (Dec. 15, 2009). 
261 

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 in-use 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). Section III.E describes the 

rule’s certification, compliance, and enforcement mechanisms. 

c. EPA’s Endangerment and Cause or Contribute Findings for Greenhouse 

Gases under Section 202(a) of the Clean Air Act 

On December 7, 2009 EPA’s Administrator signed an action with two distinct 

findings regarding greenhouse gases under section 202(a) of the Clean Air Act. On 

December 15, 2009, the final findings were published in the Federal Register. This 

action is called the Endangerment and Cause or Contribute Findings for Greenhouse 

Gases under Section 202(a) of the Clean Air Act (Endangerment Finding).157 Below are 

the two distinct findings: 

• Endangerment Finding: The Administrator finds that the current and projected 

concentrations of the six key well-mixed greenhouse gases--carbon dioxide 

(CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), 

 

157 74 FR 66496 (Dec. 15, 2009) 
262 

perfluorocarbons (PFCs), and sulfur hexafluoride (SF6)--in the atmosphere 

threaten the public health and welfare of current and future generations. 

• Cause or Contribute Finding: The Administrator finds that the combined 

emissions of these well-mixed greenhouse gases from new motor vehicles and 

new motor vehicle engines contribute to the greenhouse gas pollution which 

threatens public health and welfare. 

 

 Specifically, the Administrator found, after a thorough examination of the 

scientific evidence on the causes and impact of current and future climate change, and 

careful review of public comments, 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 

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.158 The Administrator made 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 finding focused on 

impacts within the U.S. but noted that the evidence concerning risks and impacts 

occurring outside the U.S. provided further support for the finding. 

 

158 The U.S. Climate Change Science Program (CCSP) is now called the U.S. Global Change Research 

Program (GCRP). 
263 

 The key scientific findings supporting the 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. 

The Administrator found that emissions of the single air pollutant defined as the 

aggregate group of these same six greenhouse gases from new motor vehicles and new 

motor vehicle engines contribute to the air pollution and hence to the threat of climate 

change. Key facts supporting this 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.159 As noted above, these findings require EPA to issue 

 

159 This figure includes the greenhouse gas contributions of light vehicles, heavy duty vehicles, and 

remaining on-highway mobile sources. Light-duty vehicles are responsible for over 70 percent of Section 

202(a) mobile source GHGs, or about 17% of total U.S. greenhouse gas emissions. U.S. EPA.2009 

Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases 
264 

standards under section 202 (a) “applicable to emission” of the air pollutant that EPA 

found causes or contributes to the air pollution that endangers public health and welfare. 

The final emissions standards satisfy this requirement for greenhouse gases from lightduty vehicles. Under section 202(a) the Administrator has significant discretion in how 

to structure the standards that apply to the emission of the air pollutant at issue here, the 

aggregate group of six greenhouse gases. EPA has the discretion under section 202(a) to 

adopt separate standards for each gas, a single composite standard covering various 

gases, or any combination of these. In this rulemaking EPA is finalizing 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 

emission of the single air pollutant, the aggregate group of six greenhouse gases. EPA is 

not setting any standards for perfluorocarbons (PFCs) or sulfur hexafluoride (SF6) as they 

are not emitted by motor vehicles. 

 3. What is EPA Adopting? 

a. Light-Duty Vehicle, Light-Duty Truck, and Medium-Duty Passenger 

Vehicle Greenhouse Gas Emission Standards and Projected Compliance 

Levels 

The following section provides an overview of EPA’s final rule. The key public 

comments are not discussed here, but are discussed in the sections that follow which 

 under Section 202(a) of the Clean Air Act. Washington, DC. pp. 180-194. Available at 

http://epa.gov/climatechange/endangerment/downloads/Endangerment%20TSD.pdf .
265 

provide the details of the program. Comments are also discussed in the Response to 

Comments document. 

The CO2 emissions standards are by far the most important of the three standards 

and are the primary focus of this summary. As proposed, EPA is adopting an attributebased approach for the CO2 fleet-wide standard (one for cars and one for trucks), using 

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 finalizing for model years (MY) 

2012 and later: 
266 

Table III.A.3-1 Industry-Wide Greenhouse Gas Emissions Standards 

Standard/ 

Covered 

Compounds 

Form of 

Standard 

Level of 

Standard 

Credits Test Cycles 

CO2 Standard160: 

Tailpipe CO2

Fleetwide 

average footprint 

CO2-curves for 

cars and trucks 

Projected 

Fleetwide CO2

level of 250 g/mi 

(See footprint 

curves in Sec. 

III.B.2) 

CO2-e credits161 EPA 2-cycle 

(FTP and HFET 

test cycles)162

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 

* For N2O and CH4, manufacturers may optionally demonstrate compliance with a CO2-

equivalent standard equal to its footprint-based CO2 target level, using the FTP and HFET tests. 

One important flexibility associated with the CO2 standard is the option for 

manufacturers to obtain credits associated with improvements in their air conditioning 

systems. EPA is adopting the air conditioning provisions with minor modifications. 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). 

 

160 While 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 III.B 

161 CO2-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. 162 FTP 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. Separate mechanisms apply for 

A/C credits. 
267 

Neither of these strategies to reduce GHG emissions from air conditioners will be 

reflected in the EPA FTP or HFET tests. These improvements will 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 use this flexibility 

to earn air conditioning-related 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 finalized essentially as 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 allowing 

comparable CO2 credits for flexible fuel vehicles through MY 2015, but for MY 2016 

and beyond, the GHG rule treats 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 use-weighted average of the CO2 levels on gasoline and on the alternative fuel, and 

on a manufacturer’s demonstration of 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 will be achieved by manufacturer compliance 

with the GHG standards for MY2012-2016. 
268 

For MY2011, Table III.A.3-2 uses the NHTSA projections of the average fuel 

economy level that will be achieved by the MY 2011 fleet of 30.8 mpg for cars and 23.3 

mpg for trucks, converted to an equivalent combined car and truck CO2 level of 326 

grams per mile.163 EPA believes this is a reasonable estimate with which to compare the 

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 achieved 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 

promulgated CO2-footprint curves and projected footprint values, and will decrease each 

year to 250 grams per mile (g/mi) in MY2016. For MY2012-2016, the emissions impact 

of the projected utilization of flexible fuel vehicle (FFV) credits and the temporary leadtime allowance alternative standard (TLAAS, discussed below) are shown in the next two 

columns. 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 

 

163 As discussed in Section IV of this preamble. 
269 

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 76 g/mi CO2 emissions reductions associated with the final standards. The Projected 

2-cycle CO2 Emissions column shows the projected CO2 emissions as measured over the 

EPA 2-cycle tests, which will allow compliance with the standard assuming projected 

utilization of the FFV, TLAAS, and A/C credits. 

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 - - - (326) - (326) 

2012 295 6.5 1.2 303 3.5 307 

2013 286 5.8 0.9 293 5.0 298 

2014 276 5.0 0.6 282 7.5 290 

2015 263 3.7 0.3 267 10.0 277 

2016 250 0.0 0.1 250 10.6 261 

EPA is also finalizing 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 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 
270 

from MY2009-2011, credit for “off-cycle” CO2 reductions from new and innovative 

technologies that are not reflected in CO2/fuel economy tests, as well as the carry-forward 

and carry-backward of credits, and the ability to transfer credits between a 

manufacturer’s car and truck fleets. These flexibilities are being adopted with only very 

minor changes from the proposal, as discussed in Section III.C. 

EPA is finalizing an incentive to encourage the commercialization of advanced 

GHG/fuel economy control technologies, including electric vehicles (EVs), plug-in 

hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs), for model years 2012-

2016. EPA’s proposal included an emissions compliance value of zero grams/mile for 

EVs and FCVs, and the electric portion of PHEVs, and a multiplier in the range of 1.2 to 

2.0, so that each advanced technology vehicle would count as greater than one vehicle in 

a manufacturer’s fleet-wide compliance calculation. Several commenters were very 

concerned about these credits and upon considering the public comments on this issue, 

EPA is finalizing an advanced technology vehicle incentive program to assign a zero 

gram/mile emissions compliance value for EVs and FCVs, and the electric portion of 

PHEVs, for up to the first 200,000 EV/PHEV/FCV vehicles produced by a given 

manufacturer during MY2012-2016. For any production greater than this amount, the 

compliance value for the vehicle will be greater than zero gram/mile, set at a level that 

reflects the vehicle’s average net increase in upstream greenhouse gas emissions in 

comparison to the gasoline or diesel vehicle it replaces. EPA is not finalizing a multiplier 

based on the concerns potentially excessive credits using that incentive. EPA agrees that 

the multiplier, in combination with the zero grams/mile compliance value, would be 
271 

excessive. EPA will also allow this early advanced technology incentive program 

beginning in MYs 2009 through 2011. Further discussion on the advanced technology 

vehicle incentives, including more detail on the public comments and EPA’s response, is 

found in Section III.C. 

EPA is also finalizing a temporary lead-time allowance (TLAAS) for 

manufacturers that sell vehicles in the U.S. in MY 2009 and for which U.S. vehicle sales 

in that model year are below 400,000 vehicles. This allowance will be available only 

during the MY 2012-2015 phase-in years of the program. A manufacturer that satisfies 

the threshold criteria will be able to treat a limited number of vehicles as a separate 

averaging fleet, which will be subject to a less stringent GHG standard.164 Specifically, 

a standard of 125 percent of the vehicle’s otherwise applicable foot-print target level will 

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 setting 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 will no longer be eligible for a different 

standard). EPA discusses this in more detail in Section III.B of the preamble. 

 EPA received comments from several smaller manufacturers that the TLAAS 

program was insufficient to allow manufacturers with very limited product lines to 

comply. These manufacturers commented that they need additional lead-time to meet the 

 

164 EPCA does not permit such an allowance. Consequently, manufacturers who may be able to take 

advantage of a lead-time allowance under the GHG standards would be required to comply with the 

applicable CAFE standard or be subject to penalties for non-compliance. 
272 

standards, because their CO2 baselines are significantly higher and their vehicle product 

lines are even more limited, reducing their ability to average across their fleets compared 

even to other TLAAS manufacturers. EPA fully summarizes the public comments on the 

TLAAS program, including comments not supporting the program, in Section III.B. In 

summary, in response to the lead time issues raised by manufacturers, EPA is modifying 

the TLAAS program that applies to manufacturers with between 5,000 and 50,000 U.S. 

vehicle sales in MY 2009. These manufactures would have an increased allotment of 

vehicles, a total of 250,000, compared to 100,000 vehicles (for other TLAAS-eligible 

manufacturers. In addition, the TLAAS program for these manufacturers would be 

extended by one year, through MY2016 for these vehicles, for a total of five years of 

eligibility. The other provisions of the TLAAS program would continue to apply, such as 

the restrictions on credit trading and the level of the standard. Additional restrictions 

would also apply to these vehicles, as discussed in Section III.B.5. In addition, for the 

smallest volume manufacturers, those with U.S. sales of below 5,000 vehicles, EPA is not 

setting standards at this time but is instead deferring standards until a future rulemaking. 

This is the same approach we are using for small businesses. The unique issues involved 

with these manufacturers will be addressed in that future rulemaking. Further discussion 

of the public comment on these issues and details on these changes from the proposed 

program are included in Section III.B.6. The agency received comments on its 

compliance with the Regulatory Flexibility Act. As stated in Section III.I.3, small 

entities are not significantly impacted by this rulemaking. 
273 

EPA is also adopting 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 late model 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 costs or benefits associated with 

these standards. 

EPA has attempted to build on existing practice wherever possible in designing a 

compliance program for the GHG standards. In particular, the program structure 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 emissions 

and CAFE programs. 

EPA received numerous comments on issues related to the impacts on stationary 

sources, due to the Clean Air Act’s provisions for permitting requirements related to the 

issuance of the proposed GHG standards for new motor vehicles. Some comments 

suggested that EPA had underestimated the number of stationary sources that may be 
274 

subject to GHG permitting requirements; other comments suggested that EPA did not 

adequately consider the permitting impact on small business sources. Other comments 

related to EPA’s interpretation of the CAA’s provisions for subjecting stationary sources 

to permit regulation after GHG standards are set. EPA’s response to these comments is

contained in the Response to Comments document; however, many of these comments 

pertain to issues that EPA is addressing in its consideration of the final Greenhouse Gas 

Permit Tailoring Rule, Prevention of Significant Deterioration and Title V Greenhouse 

Gas Tailoring Rule; Proposed Rule, 74 FR 55292 (October 27, 2009) and will thus be 

fully addressed in that rulemaking. 

Some of the comments relating to the stationary source permitting issues 

suggested that EPA should defer setting GHG standards for new motor vehicles to avoid 

such stationary source permitting impacts. EPA is issuing these final GHG standards for 

light-duty vehicles as part of its efforts to expeditiously respond to the Supreme Court’s 

nearly three year old ruling in Massachusetts v. EPA, 549 U.S. 497 (2007). In that case, 

the Court held that greenhouse gases fit within the definition of air pollutant in the Clean 

Air Act, and that EPA is therefore compelled to respond to the rulemaking petition under 

section 202(a) by determining 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 stated that 

under section 202(a), "[i]f EPA makes [the endangerment and cause or contribute 
275 

findings], the Clean Air Act requires the agency to regulate emissions of the deleterious 

pollutant." 549 U.S. at 534. As discussed above, EPA has made the two findings on 

contribution and endangerment. 74 FR 66496 (December 15, 2009). Thus, EPA is 

required to issue standards applicable to emissions of this air pollutant from new motor 

vehicles. 

The Court properly noted that EPA retained "significant latitude" as to the "timing 

... and coordination of its regulations with those of other agencies" (id.). However it has 

now been nearly three years since the Court issued its opinion, and the time for delay has 

passed. In the absence of these final standards, there would be three separate federal and 

state regimes independently regulating light-duty vehicles to increase fuel economy and 

reduce 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 EPA-NHTSA program will allow automakers to meet all of these 

requirements with a single national fleet because California has indicated that it will 

accept compliance with EPA’s GHG standards as compliance with California's GHG 

standards. 74 FR at 49460. California has not indicated that it would accept NHTSA’s 

CAFE standards by themselves. Without EPA’s vehicle GHG standards, the states will 

not offer the federal program as an alternative compliance option to automakers and the 

benefits of a harmonized national program will be lost. California and several other 

states have expressed strong concern that, without comparable federal vehicle GHG 

standards, the states will not offer the federal program as an alternative compliance 

option to automakers. Letter dated February 23, 2010 from Commissioners of California, 
276 

Maine, New Mexico, Oregon and Washington to Senators Harry Reid and Mitch 

McConnell (Docket EPA-HQ-OAR-2009-0472-11400). The automobile industry also 

strongly supports issuance of these rules to allow implementation of the national program 

and avoid “a myriad of problems for the auto industry in terms of product planning, 

vehicle distribution, adverse economic impacts and, most importantly, adverse 

consequences for their dealers and customers.” Letter dated March 17, 2010 from 

Alliance of Automobile Manufacturers to Senators Harry Reid and Mitch McConnell, 

and Representatives Nancy Pelosi and John Boehner (Docket EPA-HQ-OAR-2009-0472-

11368). Thus, without EPA’s GHG standards as part of a federal harmonized program, 

important GHG reductions as well as benefits to the automakers and to consumers would 

be lost.165 In addition, delaying the rule would impose significant burdens and 

uncertainty on automakers, who are already well into planning for production of MY 

2012 vehicles, relying on the ability to produce a single national fleet. Delaying the 

issuance of this final rule would very seriously disrupt the industry’s plans 

Instead of delaying the LDV rule and losing the benefits of this rule and the 

harmonized national program, EPA is directly addressing concerns about stationary 

source permitting in other actions that EPA is taking with regard to such permitting. That 

is the proper approach to address the issue of stationary source permitting, as compared 

to delaying the issuance of this rule for some undefined, indefinite time period. 

 

165 As discussed elsewhere, EPA’s GHG standards achieve greater overall reductions in GHGs than 

NHTSA’s CAFE standards. 
277 

Some parties have argued that EPA’s issuance of this light-duty vehicle rule 

amounts to a denial of various administrative requests pending before EPA, in which 

parties have requested that EPA reconsider and stay the GHG endangerment finding 

published on December 15, 2009. That is not an accurate characterization of the impact 

of this final rule. EPA has not taken final action on these administrative requests, and 

issuance of this vehicle rule is not final agency action, explicitly or implicitly, on those 

requests. Currently, while we carefully consider the pending requests for reconsideration 

on endangerment, these final findings on endangerment and contribution remain in place. 

Thus under section 202(a) EPA is obligated to promulgate GHG motor vehicle standards, 

although there is no statutory deadline for issuance of the light-duty vehicle rule or other 

motor vehicle rules. In that context, issuance of this final light-duty vehicle rule does no 

more than recognize the current status of the findings -- they are final and impose a 

rulemaking obligation on EPA, unless and until we change them. In issuing the vehicle 

rule we are not making a decision on requests to reconsider or stay the endangerment 

finding, and are not in any way prejudicing or limiting EPA's discretion in making a final 

decision on these administrative requests. 

For discussion of comments on impacts on small entities and EPA’s compliance 

with the Regulatory Flexibility Act, see the discussion in Section III.I.3. 
278 

b. Environmental and Economic Benefits and Costs of EPA’s 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 percent and a 7 percent discount rate. As 

discussed previously, EPA recognizes that much of these same costs and benefits are also 

attributable to the CAFE standard contained in this joint final rule. 

Table III.A.3-3 Projected Quantifiable Benefits and Costs for CO2 Standard 

(in million 2007$) 

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

Quantified Annual 

Costsb -$20,100 -$64,000 -$101,900 -$152,200 -$1,199,700 -$480,700

Benefits from Reduced CO2 Emissions at each assumed SCC valuec,d,e

Avg SCC at 5% $900 $2,700 $4,600 $7,200 $34,500 $34,500

Avg SCC at 3% $3,700 $8,900 $14,000 $21,000 $176,700 $176,700

Avg SCC at 2.5% $5,800 $14,000 $21,000 $30,000 $299,600 $299,600

95th percentile SCC 

at 3% $11,000 $27,000 $43,000 $62,000 $538,500 $538,500

Other Impacts 

Criteria Pollutant 

Benefitsf,g,h,i B $1,200-

$1,300

$1,200-

$1,300

$1,200-

$1,300 $21,000 $14,000

Energy Security 

Impacts (price shock) $2,200 $4,500 $6,000 $7,600 $81,900 $36,900

Reduced Refueling $2,400 $4,800 $6,300 $8,000 $87,900 $40,100

Value of Increased 

Drivingj $4,200 $8,800 $13,000 $18,400 $171,500 $75,500

Accidents, Noise, 

Congestion -$2,300 -$4,600 -$6,100 -$7,800 -$84,800 -$38,600

Quantified Net Benefits at each assumed SCC valuec,d,e

Avg SCC at 5% $27,500 $81,500 $127,000 $186,900 $1,511,700 $643,100

Avg SCC at 3% $30,300 $87,700 $136,400 $200,700 $1,653,900 $785,300

Avg SCC at 2.5% $32,400 $92,800 $143,400 $209,700 $1,776,800 $908,200

95th percentile SCC 

at 3% $37,600 $105,800 $165,400 $241,700 $2,015,700 $1,147,100

a

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to Section III.F for more 

detail.
279 

b

 Quantified annual costs are negative because of fuel savings (see Table III.H.10-1 for a breakdown of the 

vehicle technology costs and fuel savings). The fuel savings outweigh the vehicle technology costs and, 

therefore, the costs are presented here are negative values. 

c

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

Technical Support Document (TSD) notes the difference between the social cost of non-CO2 emissions and 

CO2 emissions, and specifies a goal to develop methods to value non-CO2 emissions in future analyses. 

d Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $35-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates. 

e

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to SCC TSD for more detail. f

 Note that “B” indicates unquantified criteria pollutant benefits in the year 2020. For the final rule, we 

only modeled the rule’s PM2.5- and ozone-related impacts in the calendar year 2030. For the purposes of 

estimating a stream of future-year criteria pollutant benefits, we assume that the benefits out to 2050 are 

equal to, and no less than, those modeled in 2030 as reflected by the stream of estimated future emission 

reductions. The NPV of criteria pollutant-related benefits should therefore be considered a conservative 

estimate of the potential benefits associated with the final rule. 

g

 The benefits presented in this table include an estimate of PM-related premature mortality derived from 

Laden et al., 2006, and the ozone-related premature mortality estimate derived from Bell et al., 2004. If the 

benefit estimates were based on the ACS study of PM-related premature mortality (Pope et al., 2002) and 

the Levy et al., 2005 study of ozone-related premature mortality, the values would be as much as 70% 

smaller. 

h

 The calendar year benefits presented in this table assume either a 3% discount rate in the valuation of PMrelated premature mortality ($1,300 million) or a 7% discount rate ($1,200 million) to account for a twentyyear segmented cessation lag. Note that the benefits estimated using a 3% discount rate were used to 

calculate the NPV using a 3% discount rate and the benefits estimated using a 7% discount rate were used 

to calculate the NPV using a 7% discount rate. For benefits totals presented at each calendar year, we used 

the mid-point of the criteria pollutant benefits range ($1,250). 

i

 Note that the co-pollutant impacts presented here do not include the full complement of endpoints that, if 

quantified and monetized, would change the total monetized estimate of impacts. The full complement of 

human health and welfare effects associated with PM and ozone remain unquantified because of current 

limitations in methods or available data. We have not quantified a number of known or suspected health 

effects linked with ozone and PM for which appropriate health impact functions are not available or which 

do not provide easily interpretable outcomes (e.g., changes in heart rate variability). Additionally, we are 

unable to quantify a number of known welfare effects, including reduced acid and particulate deposition 

damage to cultural monuments and other materials, and environmental benefits due to reductions of 

impacts of eutrophication in coastal areas. 

j

Calculated using pre-tax fuel prices. 

4. Basis for the 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 of the proposed rule (74 FR at 49464-65). The 
280 

following is a summary of the basis for the final GHG 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 adopting 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 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 standards indicates that manufacturers 

will be able to meet the standards by employing a wide variety of technologies that are 

already commercially available and can be incorporated into their vehicles at the time of 

redesign. In addition to the consideration 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 standards can 

be met using technology that will be available in the lead-time provided. At the same 

time, it must be noted that because technology is commercially available today does not 

mean it can automatically be incorporated fleet-wide during the model years in question. 

As discussed below, and in detail in Section III.D.7, EPA and NHTSA carefully analyzed 

issues of adequacy of lead time in determining the level of the standards, and the agencies 
281 

are convinced both that lead time is sufficient to meet the standards but that major further 

additions of technology across the fleet is not possible during these model years. 

To account for additional lead-time concerns for various manufacturers of 

typically higher performance vehicles, EPA is adopting a Temporary Lead-time 

Allowance similar to that proposed 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 is deferring standards pending later rulemaking. 

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 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 –bymanufacturer costs. EPA considers the per vehicle costs estimated from this analysis to 

be 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 
282 

vehicles we estimate GHG reductions of approximately 960 million metric tons CO2 eq. 

and fuel reductions of 1.8 billion barrels of oil. These are important and significant 

reductions. EPA has also analyzed a variety of other impacts of the standards, ranging 

from the standards’ effects on emissions of non-GHG pollutants, impacts on noise, 

energy, safety and congestion. EPA has also quantified the cost and benefits of the 

standards, to the extent practicable. Our analysis to date indicates that the overall 

quantified benefits of the standards far outweigh the projected costs. Utilizing a 3% 

discount rate, 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.166 These values are estimated 

at $136 billion and $787 billion, respectively, using a 7% discount rate and the SCC 

discounted at 3 percent.167 

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 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 nonGHG), 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, 

 

166 Based on the mean SCC at 3 percent discount rate, which is $21 per metric ton CO2 in 2010 rising to 

$45 per metric ton CO2 in 2050. 167 SCC was discounted at 3 percent to maintain internal consistency in the SCC calculations while all other 

benefits were discounted at 7 percent. Specifically, the same discount rate used to discount the value of 

damages from future CO2 emissions is used to calculate net present value of SCC. 
283 

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 in 

emissions and in oil usage, and the significantly greater quantified benefits compared to 

quantified costs, EPA is confident that the 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 technologies which we are considering 

for purposes of setting standards under section 202(a) are 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 rule would result from the increased 

use of these technologies. EPA also recognizes that this 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 
284 

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 therefore evaluated two sets 

of alternative standards, one more stringent than the promulgated standards and one less 

stringent. 

The alternatives are 4% per year increase in standards which would be less 

stringent and a 6% per year increase in the standards which would be more stringent. 

EPA is not adopting either of these. As discussed in Section III.D.7, the 4% per year 

forgoes CO2 reductions which can be achieved at reasonable cost 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 penetration which appears 

inappropriate 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 adopting either of the alternatives.). EPA also 

believes that the no backsliding standards it is adopting for N2O and CH4 are appropriate 

under section 202(a). 

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

Medium-duty Passenger Vehicles 

 EPA is finalizing new emission standards to control greenhouse gases (GHGs) 

from light-duty vehicles. First, EPA is finalizing an emission standard for carbon dioxide 

(CO2) on a gram per mile (g/mile) basis that will apply to a manufacturer’s fleet of cars, 
285 

and a separate standard that will apply to a manufacturer’s fleet of trucks. CO2 is the 

primary greenhouse gas 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 finalizing separate 

emissions standards for two other GHGs: methane (CH4) and nitrous oxide (N20). 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 will be set as a cap 

that will limit emissions increases and prevent backsliding from current emission levels. 

The final standards described below will 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 light-duty trucks and MDPVs as “light 

trucks” or “trucks.”168

EPA’s program includes a number of credit opportunities and other flexibilities to 

help manufacturers comply, especially in the early years of the program. 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) 

 

168 As described in Section III.B.2., GHG emissions standards will use the same vehicle category 

definitions as are used in the CAFE program. 
286 

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 including A/C credits as an aspect of the standards, as mentioned 

above. EPA is also including several additional credit provisions that apply only in the 

initial model years of the program. These include flex fuel vehicle credits, incentives for 

the early commercialization of certain advanced technology vehicles, credits for new and 

innovative “off-cycle” technologies that are not captured by the current test procedures, 

and generation of credits prior to model year 2012. The A/C credits and additional credit 

opportunities are described in Section III.C. These credit programs will provide 

flexibility to manufacturers, which may be especially important during the early 

transition years of the program. EPA will also allow a manufacturer to carry a credit 

deficit into the future for a limited number of model years. A parallel provision, referred 

to as credit carry-back, will be part of the CAFE program. Finally, EPA is finalizing an 

optional compliance flexibility, the Temporary Leadtime Allowance Alternative Standard 

program, for intermediate volume manufacturers, and is deferring standards for the 

smallest manufacturers, as discussed in Sections III.B.5 and 6 below. 

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

The attribute-based CO2 standards, are projected to achieve a national fleet-wide 

average, covering both light cars and trucks, of 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 will begin with MY 2012, with a 
287 

generally linear increase in stringency from MY 2012 through MY 2016. EPA will have 

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 standards. The actual fleetwide 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, EPA discusses the year-by-year estimate of emissions reductions that are 

projected to be achieved by the standards. 

In general, the schedule of standards acts as a phase-in to the MY 2016 standards, 

and reflects consideration of the appropriate lead-time for each manufacturer to 

implement the requisite emission reductions technology across its product line.169 Note 

that 2016 is the final model year in which standards become more stringent. The 2016 

CO2 standards will 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 2016 MY 

standards will 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. 

 

169 See CAA section 202(a)(2). 
288 

EPA has estimated the overall fleet-wide CO2-equivalent emission levels that 

correspond with the 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 provides these estimates for each manufacturer.170 

As a result of public comments and updated economic and future fleet 

projections, the attribute based curves have been updated for this final rule, as discussed 

in detail in Section II.B of this preamble and Chapter 2 of the Joint TSD. This update in 

turn affects costs, benefits, and other impacts of the final standards - thus EPA's overall 

projection of the impacts of the final rule standards have been updated and the results are 

different than for the NPRM, though in general not by a large degree. 

 

170 These levels do not include the effect of flexible fuel credits, transfer of credits between cars and trucks, 

temporary lead time allowance, or any other credits. 
289 

Table III.B.1-1 Estimated Fleet CO2-equivalent Levels Corresponding to the Standards 

for Cars (g/mile) 

Manufacturer Model Year 

 2012 2013 2014 2015 2016 

BMW 266 259 250 239 228 

Chrysler 269 262 254 243 232 

Daimler 274 267 259 249 238 

Ford 267 259 251 240 229 

General 

Motors 268 261 252 241 230 

Honda 260 252 244 233 222 

Hyundai 260 254 246 233 222 

Kia 263 255 247 235 224 

Mazda 260 252 243 232 221 

Mitsubishi 257 249 241 230 219 

Nissan 263 256 248 237 226 

Porsche 244 237 228 217 206 

Subaru 253 246 237 226 215 

Suzuki 245 238 230 218 208 

Tata 288 280 272 261 250 

Toyota 259 251 243 232 221 

Volkswagen 256 249 240 229 219 
290 

Table III.B.1-2 Estimated Fleet CO2-equivalent Levels Corresponding to the Standards 

for Light Trucks (g/mile) 

Manufacturer Model Year 

 2012 2013 2014 2015 2016 

BMW 330 320 310 297 283 

Chrysler 342 333 323 309 295 

Daimler 343 332 323 308 294 

Ford 354 344 334 319 305 

General 

Motors 364 354 344 330 316 

Honda 327 318 309 295 281 

Hyundai 325 316 307 292 278 

Kia 335 327 318 303 289 

Mazda 319 308 299 285 271 

Mitsubishi 316 306 297 283 269 

Nissan 343 334 323 308 294 

Porsche 334 325 315 301 287 

Subaru 315 305 296 281 267 

Suzuki 320 310 300 286 272 

Tata 321 310 301 287 272 

Toyota 342 333 323 308 294 

Volkswagen 341 331 322 307 293 

 These estimates were aggregated based on projected production volumes into the 

fleet-wide averages for cars and trucks (Table III.B.1-3).171

 

171 Due to rounding during calculations, the estimated fleet-wide CO2-equivalent levels may vary by plus or 

minus 1 gram. 
291 

Table III.B.1-3 Estimated Fleet-wide CO2-equivalent Levels Corresponding to the 

Standards 

 Cars Trucks 

Model Year CO2 (g/mi) CO2 (g/mi) 

2012 263 346 

2013 256 337 

2014 247 326 

2015 236 312 

2016 and later 225 298 

As shown in Table III.B.1-3, fleet-wide CO2-equivalent emission levels for cars 

under the approach are projected to decrease from 263 to 225 grams per mile between 

MY 2012 and MY 2016. Similarly, fleet-wide CO2-equivalent emission levels for trucks 

are projected to decrease from 346 to 398 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 Regulatory Impact Analysis (RIA). 

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. 
292 

Table III.B.1-4 Estimated Fleet-wide Combined CO2-equivalent Levels Corresponding to 

the 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 finalizing standards that will 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. Comments from the 

Center for Biological Diversity (CBD) challenged EPA to increase the stringency of the 

standards for all of the years of the program, and even argued that 2016 standards should 

be feasible in 2012. Other commenters noted the non-linear increase in the standards 

from 2011 (CAFE) to the 2012 GHG standards. As explained in greater detail in Section 

III.D below and the relevant support documents, EPA believes that the 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 averaging, banking and trading provisions, as well 

as other credit-generating mechanisms, allow manufacturers further flexibilities which 

reduce the cost of the 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 CO2 standards, 

based on projections of what actions manufacturers are expected to take to reduce 
293 

emissions. The results of the analysis are discussed in detail in Section III.D below and 

in the RIA. EPA also presents the estimated costs and benefits of the car and truck CO2

standards in Section III.H. In developing the final rule, 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 lightduty vehicle products (and in some cases introduce entirely new vehicles not on the 

market today). Over these five model years there will 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 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 final rule, as it will avoid the much higher costs that 

will occur if manufacturers needed to add or change technology at times other than these 

scheduled redesigns. This time period will also provide manufacturers the opportunity to 

plan for compliance using a multi-year time frame, again in accord with their normal 
294 

business practice. Further details on lead time, redesigns and feasibility can be found in 

Section III-D. 

Consistent with the requirement of CAA section 202(a)(1) that standards be 

applicable to vehicles “for their useful life,” EPA is finalizing CO2 vehicle standards that 

will 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.172 Tier 2 refers to EPA’s standards for criteria pollutants such as NOX, HC, and 

CO. EPA is finalizing new CO2 standards for the same group of vehicles, and therefore 

the Tier 2 useful life will apply for CO2 standards as well. The in-use emission standard 

will be 10% higher than the model-level certification emission test results, to address 

issues of production variability and test-to-test variability. The in-use standard is 

discussed in Section III.E. 

EPA is requiring manufacturers 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 Test (HFET or ‘‘highway’’ test).173 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 

 

172 See 65 FR 6698 (February 10, 2000). 173 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. 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. 
295 

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 using these test 

procedures for the CO2 standards in this final rule, given the lack of data on control 

technology effectiveness under these procedures. 174 There were a number of 

commenters that advocated for a change in either the test procedures or the fuel economy 

calculation weighting factors. The U.S. Coalition for Advanced Diesel Cars urged a 

changing of the city/highway weighting factors from their current values of 45/55 to 

43/57 to be more consistent with the EPA (5-cycle) fuel economy labeling rule. EPA has 

decided that such a change would not be appropriate, nor consistent with the technical 

analyses supporting the 5-cycle fuel economy label rulemaking. The city/highway 

weighting of 43/57 was found to be appropriate when the city fuel economy is based on a 

combination of Bags 2 and 3 of the FTP and the city portion of the US06 test cycle, and 

when the highway fuel economy is based on a combination of the HFET and the highway 

portion of the US06 cycle. When city and highway fuel economy are based on the FTP 

and HFET cycles, respectively, the appropriate city/highway weighting is not 43/57, but 

very close to 55/45. Therefore, the weighting of the city and highway fuel economy 

values contained in this rule is appropriate for and consistent with the use of the FTP and 

HFET cycles to measure city and highway fuel economy. 

The American Council for an Energy-Efficient Economy (ACEEE), Cummins, 

and Sierra Club all suggested using more real-world test procedures. It is not feasible at 

this time to base the final CO2 standards on EPA’s five-cycle fuel economy formulae. 

Consistent with its name, these formulae require vehicle testing over five test cycles, the 

 

174 See 71 FR 77872, December 27, 2006. 
296 

two cycles associated with the proposed CO2 standards, plus the cold temperature FTP, 

the US06 high speed, high acceleration cycle and the SC03 air conditioning test. EPA 

considered employing the five-cycle calculation of fuel economy and GHG emissions for 

this rule, but there were a number of reasons why this was not practical. As discussed 

extensively in the Joint TSD, setting the appropriate levels of CO2 standards requires 

extensive knowledge of the CO2 emission control effectiveness over the certification test 

cycles. Such knowledge has been gathered over the FTP and HFET cycles for decades, 

but is severely lacking for the other three test cycles. EPA simply lacks the technical 

basis to project the effectiveness of the available technologies over these three test cycles 

and therefore, could not adequately support a rule which set CO2 standards based on the 

five-cycle formulae. The benefits of today’s rule do presume a strong connection 

between CO2 emissions measured over the FTP and HFET cycles and onroad operation. 

Since CO2 emissions determined by the five-cycle formulae are believed to correlate 

reasonably with onroad emissions, this implies a strong connection between emissions 

over the FTP and HFET cycles and the five cycle formulae. However, while we believe 

that this correlation is reasonable on average for the vehicle fleet, it may not be 

reasonable on a per vehicle basis, nor for any single manufacturer’s vehicles. Thus, we 

believe that it is reasonable to project a direct relationship between the percentage change 

in CO2 emissions over the two certification cycles and onroad emissions (a surrogate of 

which is the five-cycle formulae), but not reasonable to base the certification of specific 

vehicles on that untested relationship. Furthermore, EPA is allowing for off-cycle credits 

to encourage technologies that may not be not properly captured on the 2-cycle 

city/highway test procedure (although these credits could apply toward compliance with 
297 

EPA's standards, not toward compliance with the CAFE standards). For future analysis, 

EPA will consider examining new drive cycles and test procedures for fuel economy.175 

EPA is finalizing standards that 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 will 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 is finalizing the same vehicle category definitions that are used in the CAFE 

program for the 2011 model year standards.176 This approach allows EPA’s CO2

standards and the CAFE standards to be harmonized across all vehicles. In other words, 

vehicles will 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. The 

CAFE vehicle category definitions differ slightly from the EPA definitions for cars and 

light trucks used for the Tier 2 program and other EPA vehicle programs. However, EPA 

 

175 There were also a number of comments on air conditioner test procedures; these will be discussed in 

Section III.C and the RIA. 

176 See 49 CFR 523. 
298 

is not changing the vehicle category definitions for any other light-duty mobile source 

programs, except the GHG standards. 

EPA is finalizing 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. 

Some commenters requested a single or converging curve for both cars and 

trucks.177 EPA is not finalizing 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.178 Due to these differences, it is reasonable to 

separate the light-duty vehicle fleet into two groups. Second, EPA wishes 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. As discussed in Section IV, EPCA does 

not preclude NHTSA from issuing converging standards if its analysis indicates that these 

are the appropriate standards under the statute applicable separately to each fleet. 

 

177 CBD, ICCT and NESCAUM supported a single curve and the students at UC Santa Barbara commented 

on converging curves. 

178 There is a distinction between body-on-frame trucks and unibody cars and trucks that make them 

technically different in a number of ways. Also, 2WD vehicles tend to have lower CO2 emissions than 

their 4WD counterparts (all other things being equal). More discussion of this can be found in the TSD and 

RIA. 
299 

Finally, most of the advantages of a single standard for all light duty vehicles are 

also present in the two-fleet standards finalized here. Because EPA is allowing 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 will 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 finalizing separate car and truck fleet 

standards. However, it is possible that in the future, recent trends may continue such that 

cars may become more truck-like and trucks may become more car-like. Therefore, EPA 

will reconsider whether it is appropriate to use converging curves if justified by future 

analysis. 

For model years 2012 and later, EPA is finalizing a series of CO2 standards that 

are described mathematically by a family of piecewise linear functions (with respect to 

vehicle footprint).179 The form of the function is as follows: 

 

179 See final regulations at 40 CFR 86.1818-12. 
300 

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 parameter values that define the family of functions for the 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 244 315 4.72 50.5 41 56 

2013 237 307 4.72 43.3 41 56 

2014 228 299 4.72 34.8 41 56 

2015 217 288 4.72 23.4 41 56 

2016 and 

later 206 277 4.72 12.7 41 56 
301 

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 294 395 4.04 128.6 41 66 

2013 284 385 4.04 118.7 41 66 

2014 275 376 4.04 109.4 41 66 

2015 261 362 4.04 95.1 41 66 

2016 and 

later 247 348 4.04 81.1 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. 

The EPA received a number of comments on both the attribute and the shape of 

the curve. For reasons described in Section IIC and Chapter 2 of the TSD, the EPA feels 

that footprint is the most appropriate choice of attribute for this rule. More background 

discussion on other alternative attributes and curves EPA explored can be found in the 

EPA RIA. 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 a footprint-based program will harmonize EPA’s program and the CAFE program as 

a single national program, resulting in reduced compliance complexity for manufacturers. 

EPA’s reasons for using an attribute based standard are discussed in more detail in the 

Joint TSD. Also described in these other sections are the reasons why EPA is finalizing 

the slopes and the constraints as shown above. For future analysis, EPA will consider 

other options and suggestions made by commenters. 
302 

EPA also received public comments from three manufacturers, General Motors, 

Ford Motor Company, and Chrysler, suggesting that the GHG program should harmonize 

with an EPCA provision that allows a manufacturer to exclude emergency vehicles from 

its CAFE fleet by providing written notice to NHTSA.180 These manufacturers believe 

this provision is necessary because law enforcement vehicles (e.g., police cars) must be 

designed with special performance and features necessary for police work -- but which 

tend to raise GHG emissions and reduce fuel economy relative to the base vehicle. These 

commenters provided several examples of features unique to these special purpose 

vehicles that negatively impact GHG emissions, such as heavy-duty suspensions, unique 

engine and transmission calibrations, and heavy-duty components (e.g., batteries, 

stabilizer bars, engine cooling). These manufacturers believe consistency in addressing 

these vehicles between the EPA and NHTSA programs is critical, as a manufacturer may 

be challenged to continue providing the performance needs of the federal, state, and local 

government purchasers of emergency vehicles. 

EPA is not finalizing such an emergency vehicle provision in this rule, since we 

believe that it is feasible for manufacturers to apply the same types of technologies to the 

base emergency vehicle as they would to other vehicles in their fleet. However, EPA 

also recognizes that, because of the unique “performance upgrading” needed to convert a 

base vehicle into one that meets the performance demands of the law enforcement 

community – which tend to reduce GHGs relative to the base vehicles - there could be 

situations where a manufacturer is more challenged in meeting the GHG standards than 

the CAFE standards, simply due to inclusion of these higher-emitting vehicles in the 

 

180 49 U.S.C, 32902(e) 
303 

GHG program fleet. While EPA is not finalizing such an exclusion for emergency 

vehicles today, we do believe it is important to assess this issue in the future. EPA plans 

to assess the unique characteristics of these emergency vehicles and whether special 

provisions for addressing them are warranted. EPA plans to undertake this evaluation as 

part of a follow-up rulemaking in the next 18 months (this rulemaking is discussed in the 

context of small volume manufacturers in Section III.B.6. below). 
304 

Figure III.B.2-1. CO2 (g/mi) Car standard curves. 
305 

 

Figure III.B.2-2. CO2 (g/mi) Truck standard curves. 
306 

3. Overview of How EPA’s CO2 Standards Will Be Implemented for 

Individual Manufacturers 

 

 This section provides a brief overview of how EPA will implement the CO2

standards. Section III.E explains EPA’s approach to certification and compliance in 

detail. As proposed, EPA is finalizing two kinds of standards – fleet average standards 

determined by a manufacturer’s fleet makeup, and in-use standards that will apply to the 

individual vehicles that make up the manufacturer’s fleet. Although this is similar in 

concept to the current light-duty vehicle Tier 2 program, there are important differences. 

In explaining EPA’s 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. 
307 

 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 is retaining the Tier 2 approach of requiring manufacturers to demonstrate in 

good faith at the time of certification that vehicles in a test group will meet applicable 

standards throughout useful life. EPA is also retaining 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. 

These differences and resulting modifications to EPA’s certification protocols are 

summarized below and are described in detail in Section III.E. 

 EPA will continue to certify test groups as it does for Tier 2, and the CO2

emission results for the test vehicle will serve as the initial or default standard for all of 

the vehicles in the test group. However, manufacturers will later collect and submit data 
308 

for individual vehicle model types181 within each test group, based on the extensive fuel 

economy testing that occurs through the course of the model year. This model type data 

will be used to assign a distinct certification level for each model type, thus replacing the 

initial test group data as the compliance value for each model. It is these model type 

values that will be used to calculate the fleet average after the end of the model year.182 

The option to substitute model type data for the test group data is at the manufacturer's 

discretion, except they are required, as they are under the CAFE test protocols, to submit 

sufficient vehicle test data to represent no less than 90 percent of their actual model year 

production. The test group emissions data will continue to apply for any model type that 

is not covered by vehicle test data specific to that model type. 

EPA’s CO2 standards also differ from Tier 2 in that the fleet average calculation 

for Tier 2 is based on test group bin levels and test group sales whereas under the CO2

program the CO2 fleet average could be based on a combination of test group and model 

type emissions and model type production. For the new CO2 standards, the final 

regulations use production rather than sales in calculating the fleet average in order to 

closely conform with the CAFE program, which is a production-based program.183 

Production as defined in the regulations is relatively easy for manufacturers to track, but 

once the vehicle is delivered to dealerships the manufacturer becomes once step removed 

from the sale to the ultimate customer, and it becomes more difficult to track that final 

 

181 “Model type” is defined in 40 CFR 600.002-08 as “... a unique combination of car line, basic engine, 

and transmission class.” A “car line” is essentially a model name, such as “Camry,” “Malibu,” or “F150.” 

The fleet average is calculated on the basis of model type emissions 

182 The final in-use vehicle standards for each vehicle will also be based on the testing used to determine 

the model type values. As discussed in Section III.E.4, an in-use adjustment factor will be applied to the 

vehicle test results to determine the in-use standard that will apply during the useful life of the vehicle. 183 “Production” is defined as “vehicles produced and delivered for sale” and is not a measure of the 

number of vehicles actually sold. 
309 

transaction. There is no environmental impact of using production instead of actual sales, 

and many commenters supported maintaining alignment between EPA’s program and the 

CAFE program where possible. 

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

 As explained above, EPA is finalizing a fleet average CO2 program for passenger 

cars and light trucks. EPA has previously 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.184 The program will operate 

much like EPA’s existing averaging programs in that manufacturers will calculate 

production-weighted fleet average emissions at the end of the model year and compare 

their fleet average with a fleet average emission standard to determine compliance. As in 

other EPA averaging programs, the Agency is also finalizing 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, consistent with their typical redesign schedules.185 

 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 

 

184 For 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). 

185 See final regulations at 40 CFR 86.1865-12. 
310 

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 and at the same time it increases flexibility 

and reduces costs for the regulated industry. A wide range of commenters expressed 

general support for the ABT provisions. Some commenters noted issues regarding 

specific provisions of the ABT program, which will be discussed in the appropriate 

context below. Several commenters requested that EPA publicly release manufacturerspecific ABT data to improve the transparency of credit transactions. These comments 

are addressed in Section III.E. 

This section discusses generation of credits by achieving a fleet average CO2 level 

that is lower than the manufacturer’s CO2 fleet average standard. The final rule includes 

a variety of additional ways credits may be generated by manufacturers. Section III.C 

describes these additional opportunities to generate credits in detail. Manufacturers may 

earn credits 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, early credits can 

be generated prior to the program’s MY 2012 start date. The credits will be used to 
311 

determine a manufacturer’s compliance at the end of the model year. These credit 

generating opportunities are described below in Section III.C. 

 As explained earlier, manufacturers will determine the fleet average standard that 

applies to their car fleet and the standard for their truck fleet from the applicable 

attribute-based curve. A manufacturer’s credit or debit balance will be determined by 

comparing their fleet average with the manufacturer’s CO2 standard for that model year. 

The standard will be calculated from footprint values on the attribute curve and actual 

production levels of vehicles at each footprint. A manufacturer will generate credits if its 

car or truck fleet achieves a fleet average CO2 level lower than its standard and will 

generate debits if its fleet average CO2 level is above that standard. At the end of the 

model year, each manufacturer will 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 will generate credits, and if its fleet 

average CO2 level is above that standard its fleet will generate debits. 

 The regulations will 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 
312 

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’s standards 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 accounting 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 may be freely exchanged between car 

and truck compliance categories without the need for 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 derivation of the 

estimated vehicle lifetime miles traveled can be found in Chapter 4 of the Joint Technical 

Support Document. 

 A manufacturer that generates credits in a given year and vehicle category may 

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 
313 

programs. These provisions have the potential to reduce costs and compliance burden, 

and support the feasibility of the standards in terms of lead time and orderly redesign by a 

manufacturer, thus promoting and not reducing the environmental benefits of the 

program. 

 

 First, EPA proposed that the manufacturer must use any credits earned to offset 

any deficit that had accrued in the current year or in a prior model year that had been 

carried over to the current model year. NRDC commented that such a provision is 

necessary to prevent credit “shell games” from delaying the adoption of new 

technologies. EPA’s Tier 2 program includes such a restriction, and EPA is applying an 

identical restriction to the GHG program. Simply stated, a manufacturer may not bank 

(or carry forward) credits if that manufacturer is also carrying a deficit. In such a case, 

the manufacturer is obligated to use any current model year credits to offset that deficit. 

Using current model year credits to offset a prior model year deficit is referred to in the 

CAFE program as credit carry-back. EPA’s deficit carry-forward, or credit carry-back 

provisions are described further, below. 

 Second, after satisfying any needs to offset pre-existing deficits, remaining credits 

may be banked, or saved for use in future years. Credits generated in this program will 

be available to the manufacturer for use in any of the five model years after the model 

year in which they were generated, consistent with the CAFE program under EISA. This 

is also referred to as a credit carry-forward provision. 
314 

 EPA received a number of comments regarding the credit carry-back and carryforward provisions. Many supported the proposed consistency of these provisions with 

EISA and the flexibility provided by these provisions, and several offered qualified or 

tentative support. For example, NRDC encouraged EPA to consider further restrictions 

in the 2017 and later model years. Public Citizen expressed concern regarding the 

complexity of the program and how these provisions might obscure a straightforward 

determination of compliance in any given model year. At least two automobile 

manufacturers suggested modeling the program after California, which allows credits to 

be carried forward for three additional years following a discounting schedule. 

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 finalizing 

reasonable restrictions on credit life in this new program. The Agency believes 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 
315 

from interfering with the incentive to develop and transition to other more advanced 

emissions control technologies. As discussed below in Section III.C, early credits 

generated by a manufacturer are also be subject to the five year credit carry-forward 

restriction based on the year in which they are generated. This limits the effect of the 

early credits on the long-term emissions reductions anticipated to result from the new 

standards. 

 Third, the new program enables 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 may 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 provides important additional flexibility in the transition to emissions 

control technology without affecting overall emission reductions. Comments regarding 

the credit transfer provisions expressed general support, noting that it does not matter to 

the environment whether a gram of greenhouse gas is generated from a car or a truck. 

Additional comments regarding EPA’s streamlined megagram approach and method of 

accounting for expected vehicle lifetime miles traveled are summarized in Section III.E. 

 Finally, accumulated credits may be traded to another vehicle manufacturer. As 

with intra-company credit use, such inter-company credit trading provides flexibility in 

the transition to emissions control technology without affecting overall emission 

reductions. Trading credits to another vehicle manufacturer could be a straightforward 
316 

process between the two manufacturers, but could also involve third parties that could 

serve as credit brokers. Brokers may 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 heavy-duty engine NOX fleet 

average standards, although manufacturers have seldom made such exchanges. 

Comments generally reflected support for the credit trading flexibility, although some 

questioned the extent to which trading might actually occur. As noted above, comments 

regarding program transparency are addressed in Section III.E. 

If a manufacturer has accrued a deficit at the end of a model year – that is, its fleet 

average level failed to meet the required fleet average standard – the manufacturer may 

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. 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.186 As noted above, such a deficit carryforward may only occur after the manufacturer has applied any banked credits or credits 

from another averaging set. If a deficit still remains after the manufacturer has applied all 

available credits, and the manufacturer did not obtain credits elsewhere, the deficit may 

be carried forward for up to three model years. No deficit may be carried into the fourth 

model year after the model year in which the deficit occurred. Any deficit from the first 

model year that remains after the third model year will constitute a violation of the 

 

186 EPA emission control programs that incorporate ABT provisions (e.g., the Tier 2 program and the 

Mobile Source Air Toxics program) have provided this three-year deficit carry-forward provision for this 

reason. See 65 FR 6745 (February 10, 2000), and 71 FR 8427 (February 26, 2007). 
317 

condition on the certificate, which will constitute a violation of the Clean Air Act and 

will be subject to enforcement action. 

 The averaging, banking, and trading provisions are generally consistent with those 

included in the CAFE program, with a few notable exceptions. As with EPA’s approach, 

CAFE allows five year carry-forward of credits and three year carry-back. Under CAFE, 

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 did not propose, and is not finalizing, these constraints on 

the use of transferred credits. 

 Additional details regarding the averaging, banking, and trading provisions and 

how EPA will implement these provisions can be found in Section III.E. 

5. CO2 Temporary Lead-Time Allowance Alternative Standards

EPA proposed adopting 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. As noted in the proposal, this option was 

designed to address two different situations where we project that more lead time is 
318 

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 final rule. The other 

situation involves manufacturers who have a limited line of vehicles and are therefore 

unable to average emissions performance across a full line of production. For example, 

some smaller volume manufacturers produce only vehicles with emissions above the 

corresponding CO2 footprint target, and do not have other types of vehicles (that exceed 

their compliance targets) 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 non-compliance through payment of civil penalties is 

impermissible for the GHG standards under the CAA, both of these types of 

manufacturers need additional lead time to upgrade vehicles and meet the standards. 

EPA proposed that this subset of manufacturers be allowed to produce up to 100,000 

vehicles over model years 2012-2015 that would be subject to a somewhat less stringent 

CO2 standard of 1.25 times the standard that would otherwise apply to those vehicles. 

Only manufacturers with total U.S. sales of less than 400,000 vehicles per year in MY 

2009 would be eligible for this allowance. Those manufacturers would have to exhaust 

designated program flexibilities in order to be eligible, and credit generating and trading 

opportunities for the eligible vehicles would be restricted. See 74 FR 49522-224. 
319 

EPA is finalizing the optional TLAAS provisions, with certain limited 

modifications, 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.187 EPA is finalizing modified provisions to address the unique lead-time 

issues of smaller volume manufacturers. One provision involves additional flexibility 

under the TLAAS program for manufacturers below 50,000 U.S. vehicle sales, as 

discussed further in Section III.B.5.b below. Another provision defers the CO2 standards 

for the smallest volume manufacturers, those below 5,000 U.S. vehicle sales, as discussed 

in Section III.B.6. 

Comments from several manufacturers strongly supported the TLAAS program as 

critical to provide the lead time needed for manufacturers to meet the standards. 

Volkswagen commented that TLAAS is an important aspect of EPA’s proposal and that 

it responds to the needs of some smaller manufacturers for additional lead time and 

flexibility under the CAA. Daimler Automotive Group commented that TLAAS is a 

critical element of the program and falls squarely within EPA’s discretion to provide 

appropriate lead time to limited-line low-volume manufacturers. BMW also commented 

that TLAAS is needed because most of the companies with limited lines will have to 

meet a more stringent fleet standard by 2016 than full-line manufacturers because they 

sell “feature-dense” vehicles (as opposed to light-weight large wheel-base vehicles) and 

no pick-up trucks. BMW commented that their MY 2016 footprint-based standard is 

projected to be 4 percent more stringent than the fleet average standard of 250 g/mile. 

 

187 See final regulations at 40 CFR 86.1818-12(e). 
320 

The Alliance of Automobile Manufacturers supported the flexibilities proposed by EPA, 

including TLAAS. As discussed in detail below, EPA received extensive comments from 

many smaller volume manufacturers that the proposed TLAAS program was insufficient 

to address lead time and feasibility issues they will face under the program. 

In contrast, EPA also received comments from the Center for Biological Diversity 

opposing the TLAAS program, commenting that an exception for high performance 

vehicles is not allowed under EPCA or the CAA and that it rewards manufacturers that 

pay penalties under CAFE and penalizes those that have complied with CAFE. This 

commenter suggests that manufacturers could decrease vehicle mass or power output of 

engines, purchase credits from another manufacturer, or earn off-cycle credits. EPA 

responds to these comments below. 

 

After carefully considering the public comments, EPA continues to believe that 

the TLAAS program is essential in providing necessary lead time and flexibility to 

eligible manufacturers in the early years of the standards. First, EPA believes that it is 

acting well within its legal authority in adopting the various TLAAS provisions. EPA is 

required to provide sufficient lead time for industry as a whole for standards under 

section 202 (a) (1), which mandates that standards 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.” Thus, although section 202 (a)(1) does not explicitly 

authorize this or any other specific lead time provision, it affords ample leeway for EPA 
321 

to craft provisions designed to provide adequate lead time, and to tailor those provisions 

as appropriate. We show below that the types of technology penetrations required for 

TLAAS-eligible vehicles in the program’s earlier years raise critical issues as to 

adequacy of lead time. As discussed in the EPA feasibility analysis provided in Section 

III.D.6 and III.D.7 several manufacturers eligible for TLAAS are projected to face a 

compliance shortfall in MY2016 without the TLAAS program, even with the full 

application of technologies assumed by the OMEGA Model, including hybrid use of up 

to 15 percent. These include BMW, Jaguar Land Rover, Daimler, Porsche, and 

Volkswagen In addition, the smaller volume manufacturers of this group (i.e., Jaguar 

Land Rover and Porsche) face the greatest shortfall (see Table III.D.6-4). Even with 

TLAAS, these manufacturers will need to take technology steps to comply with standards 

above and beyond those of other manufacturers. These manufacturers have relatively 

few models with high baseline emissions and this flexibility allows them additional lead 

time to adapt to a longer term strategy of meeting the final standards within their vehicle 

redesign cycles. 

Second, EPA has carefully evaluated other means of eligible manufacturers to 

meet the standards, such as utilizing available credit opportunities. Indeed, eligibility for 

the TLAAS, and for temporary deferral of regulation for very small volume 

manufacturers, is conditioned on first exhausting the various programmatic flexibilities 

including credit utilization. At the same time, a basic reason certain manufacturers are 

faced with special lead time difficulties is their inability to generate credits which can be 

then be averaged across their fleet because of limited product lines. And although 
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purchasing credits is an option under the program, there are no guarantees that credits 

will be available. Historic practice in fact suggests that manufacturers do not sell credits 

to competitors. While some of the smaller manufacturers covered by the TLAAS 

program may be in a position to obtain credits, they are not likely to be available for the 

TLAAS manufacturers across the board in the volume needed to comply without the 

TLAAS provisions. At the same time the TLAAS provisions have been structured such 

that any credits that do become available would likely be used before a manufacturer 

would turn to the more restricted and limiting TLAAS provisions. 

As discussed in Section III.C., off-cycle credits are available if manufacturers are 

able to employ new and innovative technologies not already in widespread use, which 

provide real-world emissions reductions not captured on the current test cycles. Further, 

these credits are eligible only for technologies that are newly introduced on just a few 

vehicle models, and are not yet in widespread use across the fleet. The magnitude of 

these credits are highly uncertain because they are based on new technologies, and EPA 

is not aware of any such technologies that would provide enough credits to bring these 

manufacturers into compliance without TLAAS lead time flexibility. Manufacturers first 

must develop these technologies and then demonstrate their emissions reductions 

capabilities, which will require lead time. Moreover, the technologies mentioned in the 

proposal which are the most likely to be eligible based on present knowledge, including 

solar panels and active aerodynamics, are likely to provide only small incremental 

emissions reductions. 
323 

We agree with the comment that reducing vehicle mass or power are potential 

methods for reducing emissions that should be employed by TLAAS-eligible 

manufacturers to help them meet standards. However, based on our assessment of the 

lead time needed for these manufacturers to comply with the standards, especially given 

their more limited product offerings and higher baseline emissions, we believe that 

additional time is needed for them to come into compliance. EPA can permissibly 

consider the TLAAS and other manufacturers’ lead time, cost, and feasibility issues in 

developing the primary standards and has discretion in setting the overall stringency of 

the standards to account for these factors. Natural Resources Defense Council v. 

Thomas, 805 F. 2d 410, 421 (D.C. Cir. 1986) (even when implementing technologyforcing provisions of Title II, EPA may base standards on an industry-wide capability 

“taking into account the broad spectrum of technological capabilities as well as cost and 

other factors” across the industry). EPA is not legally required to set standards that drive 

these manufacturers or their products out of the market, nor is EPA legally required to 

preserve a certain product line or vehicle characteristic. Instead EPA has broad discretion 

under section 202(a)(1) to set standards that reasonably balance lead time needs across 

the industry as a whole and vehicle availability. In this rulemaking, EPA has consistently 

emphasized the importance of obtaining very significant reductions in emissions of 

GHGs from the industry as a whole, and obtaining those reductions through regulatory 

approaches that avoid limiting the ability of manufacturers to provide model availability 

and choice for consumers. The primary mechanism to achieve this is the use of a 

footprint attribute curve in setting the increasingly stringent model year standards. The 

TLAAS provisions are a temporary and strictly limited modification to these attribute 
324 

standards allowing the TLAAS manufacturers lead time to upgrade their product lines to 

meet the 2016 GHG standards. EPA has made a reasonable choice here to preserve the 

overall stringency of the program, and to afford increased flexibility in the program’s 

early years to a limited class of vehicles to assure adequate lead time for all 

manufacturers to meet the strictest of the standards by MY 2016. 

As described below, EPA also carefully considered the comments of smaller 

volume manufacturers and believes additional lead time is needed. Therefore, EPA is 

finalizing the TLAAS program, similar to that proposed, and is also finalizing an 

additional TLAAS option for manufacturers with annual U.S. sales under 50,000 

vehicles. EPA is also deferring standards for manufacturers with annual sales of less than 

5,000 vehicles. These new TLAAS provisions and the small volume manufacturer 

deferment are discussed in detail below and in Section III.B.6. 

a. Base TLAAS Program 

 As proposed, EPA is establishing the TLAAS program for a specified subset of 

manufacturers. This alternative standard is an option only for 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. For manufacturers with 

annual U.S. sales of 50,000 or more but less than 400,000 vehicles, EPA is finalizing the 

TLAAS program largely as proposed. EPA proposed that under the TLAAS, qualifying 

manufacturers would be allowed to produce up to 100,000 vehicles that would be subject 
325 

to a somewhat less stringent CO2 standard of 1.25 times the standard that would 

otherwise apply to those vehicles. 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. EPA is retaining this limit for manufacturers with 

baseline MY 2009 sales of 50,000 but less than 400,000. In addition, as discussed further 

below, EPA is finalizing a variety of restrictions on the use of the TLAAS program, to 

ensure that only manufacturers who need more lead time for the kinds of reasons noted 

above are likely to use the program. 

 

Volvo and Saab commented that basing eligibility strictly on MY2009 sales 

would be problematic for these companies, which are being spun-off from larger 

manufacturer in the MY2009 time frame due to the upheaval in the auto industry over the 

past few years. These commenters offered a variety of suggestions including using 

MY2010 as the eligibility cut-off instead of MY2009, reassessing eligibility on a yearby-year basis as corporate relationships change, or allowing companies separated from a 

larger parent company by the end of 2010 to use their MY2009 branded U.S. sales to 

qualify for TLAAS. In response to these concerns, EPA recognizes that these companies 

currently being sold by larger manufacturer will share the same characteristics of the 

manufacturers for which the TLAAS program was designed. As newly independent 

companies, these firms will face the challenges of a narrower fleet of vehicles across 

which to average, and may potentially be in a situation, at least in the first few years, of 

paying fines under CAFE. Lead time concerns in the program’s initial years are in fact 
326 

particularly acute for these manufacturers since they will be newly independent, and thus 

would have even less of an opportunity to modify their vehicles to meet the standards. 

Therefore, EPA is finalizing an approach that allows manufacturers with U.S. “branded 

sales” in MY2009 under the umbrella of a larger manufacturer that become independent 

by the end of calendar year 2010 to use their MY2009 branded sales to qualify for 

TLAAS eligibility. In other words, a manufacturer will be eligible for TLAAS if it 

produced vehicles for the U.S. market in MY 2009, its branded sales of U.S. vehicles 

were less than 400,000 in MY2009 but whose vehicles were sold as part of a larger 

manufacturer, and it becomes independent by the end of calendar year 2010, if the new 

entity has sales below 400,000 vehicles. 

Manufacturers with no U.S. sales in MY2009 are not eligible to utilize the 

TLAAS program. EPA does not support the commenter’s suggestion of a year-by-year 

eligibility determination because it opens up the TLAAS program to an unknown 

universe of potential eligible manufacturers, with the potential for gaming. EPA does not 

believe the TLAAS program should be available to new entrants to the U.S. market since 

these manufacturers are not transitioning from the CAFE regime which allows fine 

paying as a means of compliance to a CAA regime which does not, and hence do not 

present the same types of lead time issues. Manufacturers entering the U.S. market for 

the first time thus will be fully subject to the GHG fleet-average standards. 

As proposed, manufacturers qualifying for TLAAS will be allowed to meet 

slightly less stringent standards for a limited number of vehicles. An eligible 
327 

manufacturer could have a total of up to 100,000 units of cars or trucks combined over 

model years 2012 – 2015 which 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. 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 necessary lead time 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. 

Finally, for manufacturers of 50,000 but less than 400,000 U.S. vehicles sales 

during 2009, the program expires at the end of MY 2015 as proposed. EPA continues to 

believe the program reasonably addresses a real world lead time constraint for these 

manufacturers, and does so in a way that balances the need for more lead time with the 

need to minimize any resulting loss in potential emissions reductions. In MY 2016, the 

TLAAS option thus ends for all but the smallest manufacturers opting for TLAAS, and 

manufacturers must comply with the same CO2 standards as non-TLAAS manufacturers; 

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 almost all except the smallest 
328 

companies beginning in MY2016. This option, even with the modifications being 

adopted, thereby results in more fuel savings and CO2 reductions than would be the case 

under the CAFE program by itself. 

EPA proposed that manufacturers meeting the cut-point of below 400,000 sales 

for MY 2009 but whose U.S. sales grew above 400,000 in any subsequent model years 

would remain eligible for the TLAAS program. The total sales number applies at the 

corporate level, so if a corporation owns several vehicle brands the aggregate sales for the 

corporation must 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 (except in the case of a 

manufacturer being sold by a larger manufacturer by the end of calendar year 2010, as 

discussed above). In other words, corporations grouped together for purposes of meeting 

CAFE standards in MY2009, must be grouped together for determining whether or not 

they are eligible under the 400,000 vehicle cut point. EPA is finalizing these provisions 

with the following modifications. EPA recognizes the dynamic corporate restructuring 

occurring in the auto industry and believes it is important to structure additional 

provisions to ensure there is no ability to game the TLAAS provisions and to ensure no 

unintended loss of feasible environmental benefits. Therefore, EPA is finalizing a 

provision that if two or more TLAAS eligible companies are later merged, with one 

company having at least 50% or more ownership of the other, or if the companies are 

combined for the purposes of EPA certification and compliance, the TLAAS allotment is 

not additive. The merged company will only be allowed the allotment for what is 
329 

considered the parent company under the new corporate structure. Further, if the newly 

formed company would have exceeded the 400,000 vehicle cut point based on combined 

MY2009 sales, the new entity is not eligible for TLAAS in the model year following the 

merger. EPA believes that such mergers and acquisitions would give the parent company 

additional opportunities to average across its fleet, eliminating one of the primary needs 

for the TLAAS program. This provision will not be retroactive and will not affect the 

TLAAS program in the year of the merger or for previous model years. EPA believes 

these additional provisions are essential to ensure the integrity of the TLAAS program by 

ensuring that it does not become available to large manufacturers through mergers and 

acquisitions. 

 

 As proposed, the TLAAS vehicles will be separate car and truck fleets for that 

model year and subject to the less stringent footprint-based standards of 1.25 times the 

primary fleet average that would otherwise apply. The manufacturer will determine what 

vehicles are assigned to these separate averaging sets for each model year. As proposed, 

credits from the primary fleet average program can be transferred and used in the TLAAS 

program. Credits generated within the TLAAS program may also be transferred between 

the TLAAS car and truck averaging sets (but not to the primary fleet as explained below) 

for use through MY2015 when the TLAAS ends. 

EPA is finalizing a number of restrictions on credit trading within the TLAAS 

program, as proposed. EPA is concerned that if credit use in the TLAAS program were 

unrestricted, some manufacturers would be able to place relatively clean vehicles in the 
330 

TLAAS fleet, and generate credits for the primary program fleet. First, credits generated 

under TLAAS may not be transferred or traded to the primary program. Therefore, any 

unused credits under TLAAS expire after model year 2015 (or 2016 for manufacturers 

with annual sales less than 50,000 vehicles). 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 where it is not needed. 

EPA continues to believe this provision is necessary to prevent credits from being earned 

simply by removing some high-emitting vehicles from the primary fleet. Absent this 

restriction, manufacturers would be able to choose to use the TLAAS for these vehicles 

and also be able to earn credits under the primary program that could be banked or traded 

under the primary program without restriction. Second, EPA is finalizing two additional 

restrictions on the use of 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 comply 

with the primary standard before accessing the TLAAS -- i.e., TLAAS eligibility is not 

available to those manufacturers with other readily-available means of compliance. 

Specifically, before using the TLAAS a manufacturer must: (1) use any banked emission 

credits from previous model years; 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, the company must make use of any available intra-manufacturer credit transfers 

first. Finally, EPA is restricting the use of banking and trading between companies of 
331 

credits in the primary program in years in which the TLAAS is being used. No such 

restriction is in place for years when the TLAAS is not being used. 

EPA received several comments in support of these credit restrictions for the 

TLAAS program. On the negative side, one manufacturer commented that the 

restrictions were not necessary, saying that the restrictions are counter to providing 

manufacturers with flexibility and that the emissions impacts estimated by EPA due to 

the full use of the program are small. However, EPA continues to believe that the 

restrictions are appropriate to prevent the potential gaming described above, and to 

ensure that the TLAAS program is used only by those manufacturers that have exhausted 

all other readily available compliance mechanisms and consequently have legitimate lead 

time issues. 

One manufacturer commented that the program is restrictive due to the 

requirement that manufacturers must decide prior to the start of the model year whether 

or not and how to use the TLAAS program. EPA did not intend for manufactures to have 

to make this determination prior to the start of the model year. EPA expects that 

manufacturers will provide a best estimate of their plans to use the TLAAS program 

during certification based on projected model year sales, as part of their pre model year 

report projecting their overall plan for compliance (as required by §600.514-12 of the 

regulations). Manufacturers must determine the program’s actual use at the end of the 

model year during the process of demonstrating year-end compliance. EPA recognizes 
332 

that depending on actual sales for a given model year, a manufacturer’s use of TLAAS 

may change from the projections used in the pre-model year report. 

b. Additional TLAAS Flexibility for Manufacturers with MY 2009 Sales of 

Less Than 50,000 Vehicles 

 EPA received extensive comments that the TLAAS program would not provide 

sufficient lead time and flexibility for companies with sales of significantly less than 

400,000 vehicles. Jaguar Land Rover, which separated from Ford in 2008, commented 

that it sells products only in the middle and large vehicle segments and that its total 

product range remains significantly more limited in terms of segments in comparison 

with its main competitors which typically have approximately 75% of their passenger car 

fleet in the small and middle segments. Jaguar Land Rover also commented that it has 

already committed $1.3 billion of investment to reducing CO2 from its vehicle fleet and 

that this investment is already delivering a range of technologies to improve the fuel 

economy and CO2 performance of its existing vehicles. Jaguar Land Rover submitted 

confidential business information regarding their future product plans and emissions 

performance capabilities of their vehicles which documents their assertions. 

Porsche commented that their passenger car footprint-based standard is the most 

stringent of any manufacturer and this, combined with their high baseline emissions level, 

means that it would need to reduce emissions by about 10 percent per year over the 2012 

– 2016 time-frame. Porsche commented that such reductions were not feasible. They 
333 

commented that their competitors will be able to continue to offer their full line of 

products because the competitors have a wider range of products with which to average. 

Porsche further commented that their product development cycles are longer than larger 

competitors. Porsche recommended for small limited line niche manufacturers that EPA 

require an annual 5 percent reduction in emissions from baseline up to a total reduction of 

25 percent, or to modify the TLAAS program to require such reductions. Porsche noted 

that this percent reduction would be in line with the average emissions reductions 

required for larger manufacturers. 

EPA also received comments from several very small volume manufacturers that, 

even with the TLAAS program, the proposed standards are not feasible for them, 

certainly not in the MY 2012-2016 MY time frame. These manufacturers included Aston 

Martin, McLaren, Lotus, and Ferrari. Their comments consistently focused on the need 

for separate, less stringent standards for small volume manufacturers. The manufacturers 

commented that they are willing to make progress in reducing emissions, but that 

separate, less-stringent small volume manufacturer standards are needed for them to 

remain in the U.S. market. The commenters note that their product line consists entirely 

of high end sports cars. Most of these manufacturers have only a few vehicle models, 

have annual sales on the order of a few hundred to a few thousand vehicles, and several 

have average baseline CO2 emissions in excess of 500 g/mile – nearly twice the industry 

average. McLaren commented that its vehicle model to be introduced in MY2011 will 

have class leading CO2 performance but that it would not be able to offer the vehicle in 

the U.S. market because it does not have other vehicle models with which to average. 
334 

Similarly, Aston Martin commented that it is of utmost importance that it is not required 

to reduce emissions significantly more than equivalent vehicles from larger 

manufacturers, which would render them uncompetitive due purely to the size of its 

business. Manufacturers also noted that they launch new products less frequently than 

larger manufacturers (e.g., Ferrari noted that their production period for models is 7-8 

years), and that suppliers serve large manufacturers first because they can buy in larger 

volumes. Some manufacturers also noted that they would be willing to purchase credits 

at a reasonable price, but they believed that credit availability from other manufacturers 

was highly unlikely due to the competitive nature of the auto industry. Several of these 

manufacturers provided confidential business information indicating their preliminary 

plans for reducing GHG emissions across their product lines through MY2016 and 

beyond. 

 The Association of International Automobile Manufacturers (AIAM) also 

commented that, because of their essential features, vehicles produced by small volume 

manufacturers would not be able to meet the proposed greenhouse gas standards. AIAM 

commented that “while it is possible that these small volume manufacturers (SVMs) 

might be able to comply with greenhouse gas standards by purchasing credits from other 

manufacturers, this is far too speculative a solution. The market for credits is 

unpredictable at this point. Other than exiting the U.S. market, therefore, the only other 

possible solution for an independent SVM would be to sell an equity interest in the 

company to a larger, full-line manufacturer, so that the emissions of the luxury vehicles 

could be averaged in with the much larger volume of other vehicles produced by the 
335 

major manufacturer. This cannot possibly be the outcome EPA intends, especially when 

measured against the minimal, if any, environmental benefit that would result.” AIAM 

commented further that “there is ample legal authority for EPA to provide SVMs a more 

generous lead-time allowance or an alternative standard. Indeed, EPA recognizes such 

authority in the proposal for a small entity exemption (for those companies defined under 

the Small Business Administration's regulations), see 74 FR at 49574, and in the TLAAS. 

These provisions are consistent with previous EPA rulemaking under the Clean Air Act 

which offer relief to SVMs.” AIAM recommended deferring standards for SVMs to a 

future rulemaking, providing EPA with adequate time to assess relevant product plans 

and technology feasibility information from SVMs, conduct the necessary reviews and 

modeling that may be needed, and consult with the stakeholders. 

These commenters noted that standards for the smallest manufacturers were 

deferred in the California program until MY2016 and that California’s program would 

have established standards for small volume manufacturers in MY 2016 at a level that 

would be technologically feasible. The commenters also suggested that California’s 

approach is similar to the approach being taken by EPA for small business entities. 

Further, these commenters noted that in Tier 2 and other light-duty vehicle programs, 

EPA has allowed small volume manufacturers (SVMs) until the end of the phase-in 

period to comply with standards. The commenters recommended that EPA should defer 

standards for SVMs, and conduct a future rulemaking to establish appropriate standards 

for SVMs starting in model year 2016. Alternatively, some manufacturers recommended 

establishing much less stringent standards for SVMs as part of the current rulemaking. 
336 

In summary, the manufacturers commented that their range of products was 

insufficient to allow them to meet the standards in the time provided, even with the 

proposed TLAAS program. Many of these manufacturers have baseline emissions 

significantly higher than their larger-volume competitors, and thus the CO2 reductions 

required from baseline under the program are larger for many of these companies than for 

other companies. Although they are investing substantial resources to reduce CO2

emissions, they believe that they will not be able to achieve the standards under the 

proposed approach. 

EPA also received comments urging us not to expand the TLAAS program. The 

commenters are concerned about the loss of benefits that would occur with any 

expansion. 

EPA has considered the comments carefully and concludes that additional 

flexibility is needed for these companies. After assessing the issues raised by 

commenters, EPA believes there are two groups of manufacturers that need additional 

lead time. The first group includes manufacturers with annual U.S. sales of less than 

5,000 vehicles per year. Standards for these small volume manufacturers are being 

deferred until a future rulemaking in the 2012 timeframe, as discussed in Section III.B.6, 

below. This will allow EPA to determine the appropriate level of standards for these 

manufacturers, as well as the small business entities, at a later time. The second group 

includes manufacturers with MY 2009 U.S. sales of less than 50,000 vehicles but above 
337 

the 5,000 vehicle threshold being established for small volume manufacturers. EPA has 

selected a cut point of 50,000 vehicles in order to limit the additional flexibility to only 

the smaller manufacturers with much more limited product lines over which to average. 

EPA has tailored these provisions as narrowly as possible to provide additional lead time 

only as needed by these smaller manufacturers. We estimate that the TLAAS program, 

including the changes below will result in a total decrease in overall emissions reductions 

of about one percent of the total projected GHG program emission benefits. These 

estimates are provided in RIA Chapter 5 Appendix A. 

 

For some of the companies, the reduction from baseline CO2 emissions required 

to meet the standards is clearly greater than for other TLAAS-eligible manufacturers. 

Compared with other TLAAS-eligible manufacturers, these companies also have more 

limited fleets across which to average the standards. Some companies have only a few 

vehicle models all of a similar utility, and thus their averaging abilities are extremely 

limited posing lead time issues of greater severity than other TLAAS-eligible 

manufacturers. EPA’s feasibility analysis provided in Section III.D., shows that these 

companies face a compliance shortfall significantly greater than other TLAAS companies 

(see Table III.D.6-4). This shortfall is primarily due to their narrow product lines and 

more limited ability to average across their vehicle fleets. In addition, with fewer models 

with which to average, there is a higher likelihood that phase-in requirements may 

conflict with normal product redesign cycles. 
338 

Therefore, for manufacturers with MY2009 U.S. sales of less than 50,000 

vehicles, EPA is finalizing additional TLAAS compliance flexibility through model year 

2016. These manufacturers will be allowed to place up to 200,000 vehicles in the 

TLAAS program in MY2012-2015 and an additional 50,000 vehicles in MY2016. To be 

eligible for the additional allotment above the base TLAAS level of 100,000 vehicles, 

manufacturers must annually demonstrate that they have diligently made a good faith 

effort to purchase credits from other manufacturers in order to comply with the base 

TLAAS program, but that sufficient credits were not available. Manufacturers must 

secure credits to the extent they reasonably available from other manufacturers to offset 

the difference between their emissions reductions obligations under the base TLAAS 

program and the expanded TLAAS program. Manufacturers must document their efforts 

to purchase credits as part of their end of year compliance report. All other aspects of the 

TLAAS program including the 1.25x adjustment to the standards and the credits 

provision restrictions remain the same as described above for the same reasons. This will 

still require the manufacturers to reduce emissions significantly in the 2012-2016 timeframe and to meet the final emissions standards in MY2017. The standards remain very 

challenging for these manufacturers but these additional provisions will allow them the 

necessary lead time for implementing their strategy for compliance with the final, most 

stringent standards. 

 The eligibility limit of 50,000 vehicles will be treated in a similar way as the 

400,000 vehicle eligibility limit is treated, as described above. Manufacturers with model 

year 2009 U.S. sales of less than 50,000 vehicles are eligible for the expanded TLAAS 
339 

flexibility. Manufacturers whose sales grow in later years above 50,000 vehicles without 

merger or acquisition will continue to be eligible for the expanded TLAAS program. 

However, manufacturers that exceed the 50,000 vehicle limit through mergers or 

acquisitions will not be eligible for the expanded TLAAS program in the model year 

following the merger or acquisition, but may continue to be eligible for the base TLAAS 

program if the MY2009 sales of the new company would have been below the 400,000 

vehicle eligibility cut point. The use of TLAAS by all the entities within the company in 

years prior to the merger must be counted against the 100,000 vehicle limit of the base 

program. If the 100,000 vehicle limit has been exceeded, the company is no longer 

eligible for TLAAS. 

 

6. Deferment of CO2 Standards for Small Volume Manufacturers with 

Annual Sales Less than 5,000 Vehicles 

 In the proposal, in the context of the TLAAS program, EPA recognized that there 

would be a wide range of companies within the eligible manufacturers with sales less 

than 400,000 vehicles in model year 2009. As noted in the proposal, 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, such as Aston Martin. EPA anticipated that there are a small number of such 

smaller volume manufacturers, which may face greater challenges in meeting the 

standards due to their limited product lines across which to average. EPA requested 
340 

comment on whether the proposed TLAAS program would provide sufficient lead-time 

for these smaller firms to incorporate the technology needed to comply with the proposed 

GHG standards. See 74 FR at 49524. 

EPA received comments from several very small volume manufacturers that the 

TLAAS program would not provide sufficient lead time, as described above. EPA agrees 

with comments that the standards would be extremely challenging and potentially 

infeasible for these small volume manufacturers, absent credits from other manufacturers, 

and that credit availability at this point is highly uncertain –Although these companies are 

planning to introduce significant GHG-reducing technologies to their product lines, they 

are still highly unlikely to meet the standards by MY2016. Because the products 

produced by these manufacturers are so unique, these manufacturers were not included in 

EPA’s OMEGA modeling assessment of the technology feasibility and costs to meet the 

proposed standards. As noted above, these manufacturers have only a few models and 

have very high baseline emissions. TLAAS manufacturers are projected to be required to 

reduce emissions by up to 39%, whereas SVMs in many cases would need to cut their 

emissions by more than half to comply with MY2016 standards. 

Given the unique feasibility issues raised for these manufacturers, EPA is 

deferring establishing CO2 standards for manufacturers with U.S. sales of less than 5,000 

vehicles.188 This will provide EPA more time to consider the unique challenges faced by 

these manufacturers. EPA expects to conduct this rulemaking in the 2012 timeframe. 

The deferment only applies to CO2 standards and SVMs must meet N2O and CH4 

 

188 See final regulations at 40 CFR 86.1801-12(k). 
341 

standards. EPA plans to set standards for these manufacturers as part of a future 

rulemaking in the next 18 months. This future rulemaking will allow EPA to fully 

examine the technologies and emissions levels of vehicles offered by small 

manufacturers and to determine the potential emissions control capabilities, costs, and 

necessary lead time. This timing may also allow a credits market to develop, so that EPA 

may consider the availability of credits during the rulemaking process. See State of 

Mass. v. EPA, 549 U.S. at 533 (EPA retains discretion as to timing of any regulations 

addressing vehicular GHG emissions under section 202 (a)(1)). We expect that standards 

would begin to be implemented in the MY2016 time frame. This approach is consistent 

with that envisioned by California for these manufacturers. EPA estimates that eligible 

small volume manufacturers currently comprise less than 0.1 percent of the total lightduty vehicle sales in the U.S., and therefore the deferment will have a very small impact 

on the GHG emissions reductions from the standards. 

In addition to the 5,000 vehicle per year cut point, to be eligible for deferment 

each year, manufacturers must also demonstrate due diligence in attempting to secure 

credits from other manufacturers. Manufacturers must make a good faith effort to secure 

credits to the extent they are reasonably available from other manufacturers to offset the 

difference between their baseline emissions and what their obligations would be under 

the TLAAS program starting in MY2012. 

 Eligibility will be determined somewhat differently compared to the TLAAS 

program. Manufacturers with either MY2008 or MY2009 U.S. sales of less than 5,000 
342 

vehicles will be initially eligible. This includes “branded sales” for companies that sold 

vehicles under a larger manufacturer but has become independent by the end of calendar 

year 2010. EPA is including MY2008 as well as MY2009 because some manufacturers 

in this market segment have such limited sales that they often drop in and out of the 

market from year to year. 

In determining eligibility, manufacturers must be aggregated according to the 

provisions of 40 CFR 86.1838-01(b)(3), which requires the sales of different firms to be 

aggregated in various situations, including where one firm has a 10% or more equity 

ownership of another firm, or where a third party has a 10% or more equity ownership of 

two or more firms. EPA received public comment from a manufacturer requesting that 

EPA should allow a manufacturer to apply to EPA to establish small volume 

manufacturer status based on the independence of its research, development, testing, 

design, and manufacturing from another firm that may have an ownership interest in that 

manufacturer. EPA has reviewed this comment, but is not finalizing such a provision at 

this time. EPA believes that this issue likely presents some competitive issues, which we 

would like to be fully considered through the public comment process. Therefore, EPA 

plans to consider this issue and seek public comments in our proposal for small volume 

manufacturer CO2 standards, which we expect to complete within 18 months. 

To remain eligible for the deferral from standards, the rolling average of three 

consecutive model years of sales must remain below 5,000 vehicles. EPA is establishing 

the 5,000 vehicle threshold to allow for some sales growth by SVMs, as SVMs typically 
343 

have annual sales of below 2,000 vehicles. However, EPA wants to ensure that standards 

for as few vehicles as possible are deferred and therefore believes it is appropriate that 

manufacturers with U.S. sales growing to above 5,000 vehicles per year be required to 

comply with standards (including TLAAS, as applicable). Manufacturers with unusually 

strong sales in a given year would still likely remain eligible, based on the three year 

rolling average. However, if a manufacturer takes steps to expand in the U.S. market on 

a permanent basis such that they consistently sell more than 5,000 vehicles per year, they 

must meet the TLAAS standards. EPA believes a manufacturer will be able to consider 

these provisions, along with other factors, in its planning to significantly expand in the 

U.S. market. 

For manufacturers exceeding the 5,000 vehicle rolling average through mergers or 

acquisitions of other manufacturers, those manufacturers will lose eligibility in the MY 

immediately following the last year of the rolling average. For manufacturers exceeding 

this level through sales growth, but remaining below a 50,000 vehicle threshold, the 

manufacturer will lose eligibility for the deferred standards in the second model year 

following the last year of the rolling average. For example, if the rolling average of MYs 

2009-2011 exceeded 5,000 vehicles but was below 50,000 vehicles, the manufacturer 

would not be eligible for the deferred standards in MY2013. For manufacturers with a 3-

year rolling average exceeding 50,000 vehicles, the manufacturer would lose eligibility in 

the MY immediately following the last model year in the rolling average. For example, if 

the rolling average of MYs 2009-2011 exceeded 50,000 vehicles, the manufacturer would 

not be eligible for the deferred standards in MY2012. Such manufacturers may continue 
344 

to be eligible for TLAAS, or the expanded TLAAS program, per the provisions described 

above. EPA believes these provisions are needed to ensure that the SVM deferment 

remains targeted to true small volume manufacturers and does not become available to 

larger manufacturers through mergers or acquisitions. EPA is including the 50,000 

vehicle criteria to differentiate between manufacturers that may slowly gain more sales 

and manufacturers that have taken major steps to significantly increase their presence in 

the U.S. market, such as by introducing new vehicle models. EPA believes 

manufacturers selling more than 50,000 vehicles should not be able to take advantage of 

the deferment, as they should be able to meet the applicable TLAAS standards through 

averaging across their larger product line. 

EPA is requiring that potential SVMs submit a declaration to EPA containing a 

detailed written description of how the manufacturer qualifies as a small volume 

manufacturer. The declaration must contain eligibility information including MY2008 

and 2009 U.S. sales, the last three completed MYs sales information, detailed information 

regarding ownership relationships with other manufacturers, and documentation of efforts 

to purchase credits from other manufacturers. Because such manufacturers are not 

automatically exempted from other EPA regulations for light-duty vehicles and light-duty 

trucks, entities are subject to the greenhouse gas control requirements in this program 

until such a declaration has been submitted and approved by EPA. The declaration must 

be submitted annually at the time of vehicle emissions certification under the EPA Tier 2 

program, beginning in MY2012. 
345 

7. Nitrous Oxide and Methane Standards

In addition to fleet-average CO2 standards, as proposed, EPA is establishing 

separate per-vehicle standards for nitrous oxide (N2O) and methane (CH4) emissions.189 

The agency's 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 typical of 

today's vehicles. EPA proposed to cap N2O at a level of 0.010 g/mi and to cap CH4 at a 

level of 0.03 g/mi. Both of these compounds are more potent contributors to global 

warming than CO2; N2O has a global warming potential, or GWP, of 298 and CH4 has a 

GWP of 25.190 

EPA received many comments on the proposed N2O and CH4 standards. A range 

of stakeholders supported the proposed approach of "cap" standards and the proposed 

emission levels, including most states and environmental organizations that addressed 

this topic, and the Manufacturers of Emissions Control Association. These commenters 

stated that EPA needs to address all mobile GHGs under the Clean Air Act, and N2O and 

CH4 are both more potent contributors to global warming than CO2. The Center for 

Biological Diversity commented that in light of the potency of these GHGs, EPA should 

develop standards which reduce emissions over current levels and that EPA had not 

analyzed either the technologies or the costs of doing so. EPA discusses these comments 

and our responses below and in the Response to Comments Document. 

 

189 See final regulations at 40 CFR 86.1818-12(f). 190 The global warming potentials (GWP) used in this rule are consistent with the Intergovernmental Panel 

on Climate Change (IPCC) Fourth Assessment Report (AR4). 
346 

Auto manufacturers generally did not support standards for these GHGs, stating 

that the levels of these GHGs from current vehicles are too small to warrant standards at 

this time. These commenters also stated that if EPA were to proceed with "cap" 

standards, the stringency of the proposed levels could restrict the introduction of some 

new technologies. Commenters specifically raised this concern with the examples of 

diesel and lean-burn gasoline for N2O, or natural gas and ethanol fueled vehicles for CH4. 

Only one manufacturer, Volkswagen, submitted actual test data to support these claims; 

very limited emission data on two concept vehicles -- a CNG vehicle and a flexible-fuel 

vehicle -- indicated measured emission levels near or above the proposed standards, but 

included no indication of whether any technological steps had been taken to reduce 

emissions below the cap levels. Many commenters support an approach of establishing a 

CO2 -equivalent standard, where N2O and CH4 could be averaged with CO2 emissions to 

result in an overall CO2-equivalent compliance value, similar to the approach California 

has used for its GHG standards191 Under such an approach, the auto industry 

commenters supported using a default value for N2O emissions in lieu of a measured test 

value. Several auto manufacturers also had concerns that a new requirement to measure 

N2O would require significant equipment and facility upgrades and would create testing 

challenges with new measurement equipment with which they have little experience. 

 EPA has considered these comments and is finalizing the cap standards for N2O 

and CH4 as proposed. EPA agrees with the NGO, state, and other commenters that lightduty vehicle emissions are small but important contributors to the U.S. N2O and CH4

 

191 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. 
347 

inventories, and that in the absence of a limitation, the potential for significant emission 

increases exists with the evolution of new vehicle and engine technologies. (Indeed, the 

industry commenters concede as much in stating that they are contemplating introducing 

vehicle technologies that could result in emissions exceeding the cap standard levels). 

EPA also believes that in most cases N2O and CH4 emissions from light-duty vehicles 

will remain well below the cap standards. Therefore, we are setting cap standards for 

these GHGs at the proposed levels. However, as described below, the agency is 

incorporating several provisions intended to address industry concerns about 

technological feasibility and leadtime, including an optional CO2-equivalent approach 

and, for N2O, more leadtime before testing will be required to demonstrate compliance 

with the emissions standard (in interim, manufacturers may certify based on a compliance 

statement based on good engineering judgment). 

a. Nitrous Oxide (N2O) Exhaust Emission Standard 

As stated above, N2O is a global warming gas with a high global warming 

potential.192 It accounts for about 2.3% of the current greenhouse gas emissions from 

cars and light trucks.193 EPA is setting a per-vehicle N2O emission standard of 0.010 

g/mi, measured over the traditional FTP vehicle laboratory test cycles. The standard will 

become effective in model year 2012 for all light-duty cars and trucks. The standard is 

designed to prevent increases in N2O emissions from current levels; i.e., it is a nobacksliding standard. 

 

192 N2O has a GWP of 298 according to the IPCC Fourth Assessment Report (AR4). 193 See RIA Chapter 2. 
348 

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 warm-up is short. This is largely due to the need to 

quickly reach the higher temperatures necessary for high catalyst efficiency to achieve 

emission compliance for criteria pollutants. As several auto manufacturer comments 

noted, N2O is a more significant concern with diesel vehicles, and potentially future 

gasoline lean-burn engines, equipped with advanced catalytic NOX emissions control 

systems. In the absence of N2O emission standards, these systems could be designed in a 

way that emphasizes efficient NOX control while at the same time 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 

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 setting an N2O emission standard that the agency believes will be met by 

current-technology gasoline vehicles at essentially no cost. As just noted, N2O formation 
349 

in current catalyst systems occurs, but the emission levels are relatively 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 standard will ensure that the design of 

advanced NOX control systems, especially for future diesel and lean-burn gasoline 

vehicles, will control N2O emission levels. While current NOX control approaches used 

on current Tier 2 diesel vehicles do not tend to favor the formation of N2O emissions, 

EPA believes that this N2O standard will discourage new emission control designs that 

achieve criteria emissions compliance at the cost of increased N2O emissions. Thus, the 

standard will 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 will not increase their emission levels, and that the cap will ensure that future 

vehicle designs will be appropriately controlled for N2O emissions. 

 

The level of the N2O standard is approximately two times the average N2O level 

of current gasoline passenger cars and light-duty trucks that meet the Tier 2 NOX

standards. EPA has not previously regulated N2O emissions, and available data on 

current vehicles is limited. However, EPA derived the standard from a combination of 

emission factor values used in modeling light duty vehicle emissions and limited recent 

EPA test data. 194,195 Because the standard represents a level 100 percent higher than the 

average current N2O level, we continue to believe that most if not all Tier 2 compliant 

gasoline and diesel vehicles will easily be able to meet the standards. Manufacturers 

typically use design targets for NOX emission levels of about 50% of the standard, to 

 

194 Memo to docket “Derivation of Proposed N2O and CH4 Cap Standards," Tad Wysor, EPA, November 

19, 2009. Docket EPA-HQ-OAR-2009-0472-6801 

195 Memo to docket “EPA NVFEL N2O Test Data,” Tony Fernandez, EPA. 
350 

account for in-use emissions deterioration and normal testing and production variability, 

and EPA expects that manufacturers will use a similar approach for N2O emission 

compliance. EPA did not propose and is not finalizing a more stringent standard for 

current vehicles because we believe that the stringent Tier 2 program and the associated 

NOX fleet average requirement already result in significant N2O control, and the agency 

does not expect current N2O levels to rise for these vehicles. Moreover, EPA believes 

that the CO2 standards will be challenging for the industry and that these standards should 

be the industry’s chief focus in this first phase of vehicular GHG emission controls. See 

Massachusetts v. EPA, 549 U.S. at 533 (EPA has significant discretion as to timing of 

GHG regulations); see also Sierra Club v. EPA, 325 F. 3d 374, 379 (D.C. Cir. 2003) 

(upholding anti-backsliding standards for air toxics under technology-forcing section 202 

(l) because it is reasonable for EPA to assess the effects of its other regulations on the 

motor vehicle sector before aggressively regulating emissions of toxic vehicular air 

pollutants. 

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 N2O standard will likely require these 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 
351 

costs of the advanced NOX control technologies already required to meet Tier 2 

standards. 

 

In the proposal, EPA sought comment on an approach of expressing N2O and CH4

in common terms of CO2-equivalent emissions and combining them into a single standard 

along with CO2 emissions. 74 FR at 49524. California’s “Pavley” program adopted such 

a CO2-equivalent emissions standards approach to GHG emissions.196 EPA was 

primarily concerned that such an approach could undermine the stringency of the CO2

standards, as the proposed standards were designed to “cap” N2O and CH4 emissions, 

rather than reflecting a level either that is the industry fleet-wide average or that would 

effect reductions in these GHGs. 

As noted above, several auto manufacturers expressed interest in such a CO2-

equivalent approach, due to concerns that the caps could be limiting for some advanced 

technology vehicles. While we continue to believe that the vast majority of light-duty 

vehicles will be able to easily meet the standards, we acknowledge that advanced diesel 

or lean-burn gasoline vehicles of the future may face slightly greater challenges. 

Therefore, after considering these comments, EPA is finalizing an optional compliance 

approach to provide flexibility for any advanced technologies that may have challenges in 

meeting the N2O or CH4 cap standards. 

 

196 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. 
352 

In lieu of complying with the separate N2O and CH4 cap standards, a 

manufacturer may choose to comply with a CO2-equivalent standard. A manufacturer 

choosing this option will convert its N2O and CH4 test results (or, as described below, a 

default N2O value for MY 2012-2014) into CO2-equivalent values and add this sum to 

their CO2 emissions. This CO2-equivalent value will still need to comply with the 

manufacturer’s footprint-based CO2 target level. In other words, a manufacturer could 

offset any N2O emissions (or any CH4 emissions) by taking steps to further reduce CO2. 

A manufacturer choosing this option will need to apply this approach to all of the test 

groups in its fleet. This approach is more environmentally protective overall than the cap 

standard approach, since the manufacturer will need to reduce its CO2 emissions to offset 

the higher N2O (or CH4) levels, but will not be allowed to increase CO2 above its 

footprint target level by reducing N2O (or CH4). 

 The compliance level in g/mi for the optional CO2-equivalent approach for 

gasoline vehicles is calculated as CO2 + (CWF/0.273 × NMHC) + (1.571 × CO) + (298 × 

N2O) + (25 × CH4).197 The N2O and CH4 values are the measured emission values for 

these GHGs, except N2O in model years 2012 through 2014. For these model years, 

manufacturers may use a default N2O value of 0.010 g/mi, the same value as the N2O cap 

standard. For MY 2015 and later, the manufacturer would need to provide actual test 

data on the emission data vehicle for each test group. (That is, N2O data would not be 

required for each model type, since EPA believes that there will likely be little N2O 

variability among model types within a test group.) EPA believes that its selection of 

0.010 g/mi as the N2O default value is an appropriately protective level, on the high end 

 

197 This equation will differ depending upon the fuel; see the final regulations for equations for other fuels. 
353 

of current technologies, as further discussed below. Consistent with the other elements of 

the equation, N2O and CH4 must be included at full useful life deteriorated values. This 

requires testing using the highway test cycle in addition to the FTP during the 

manufacturer’s deterioration factor (DF) development program. However, EPA 

recognizes that manufacturers may not be able to develop DFs for N2O and CH4 for all 

their vehicles in the 2012 model year, and thus EPA is allowing the use of alternative 

values through the 2014 model year. For N2O the alternative value is the DF developed 

for NOX emissions, and for CH4 the alternative value is the DF developed for NMOG 

emissions. Finally, for manufacturers using this option, the CO2-equivalent emission 

level would also be the basis for any credits that the manufacturer might generate. 

Manufacturers expressed concerns about their ability to acquire and install N2O 

analytical equipment. However, the agency continues to believe that such burdens, while 

not trivial, will also not be excessive. While many manufacturers do not appear to have 

invested yet in adding N2O measurement equipment to their test facilities, EPA is not 

aware of any information to indicate that that suppliers will have difficulty providing 

sufficient hardware, or that such equipment is unusually expensive or complex compared 

to existing measurement hardware. EPA allows N2O measurement using any of four 

methods, all of which are commercially available today. The costs of certification and 

other indirect costs of this rule are accounted for in the Indirect Cost Multipliers, 

discussed in Section III.H below. 
354 

Still, given the short lead-time for this rule and the newness of N2O testing to this 

industry, EPA proposed that manufacturers be able to apply for a certificate of 

conformity with the N2O standard for model year 2012 provided that they supply a 

compliance statement based on good engineering judgment. Under the proposal, 

beginning in MY2013, manufacturers would have needed to base certification on actual 

N2O testing data. This approach was intended to reasonably ensure that the emission 

standards are being met, while allowing manufacturers lead time to purchase new N2O 

emissions measurement equipment, modify certification test facilities, and begin N2O 

testing. After consideration of the comments, EPA agrees with manufacturers that one 

year of additional lead-time to begin actual N2O measurement across their vehicle fleets 

may be still be insufficient for manufacturers to efficiently make the necessary facility 

changes and equipment purchases. Therefore, EPA is extending the ability to certify 

based on a compliance statement for two additional years, through model year 2014. For 

2015 and later model years, manufacturers will need to submit measurements of N2O for 

compliance purposes. 

b. Methane (CH4) Exhaust Emission Standard 

Methane (CH4) is a greenhouse gas with a high global warming potential.198 It 

accounts for about 0.2% of the greenhouse gases from cars and light trucks.199

 

198 CH4 has a GWP of 25 according to the IPCC Fourth Assessment Report (AR4). 199 See RIA Chapter 2. 
355 

EPA is setting 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 will be met by current gasoline and diesel vehicles, and will prevent 

large increases in future CH4 emissions. This is particularly a concern in the event that 

alternative fueled vehicles with high methane emissions, like some past dedicated 

compressed natural gas (CNG) vehicles and some flexible-fueled vehicle when operated 

on E85 fuel, 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.200 However, CH4 emissions levels in the gasoline and 

diesel car and light truck fleet have nevertheless generally been controlled by the Tier 2 

standards for non-methane organic gases (NMOG). However, without an emission 

standard for CH4, there is no guarantee that future emission levels of CH4 will remain at 

current levels as vehicle technologies and fuels evolve. 

The standard will cap CH4 emission levels, with the expectation that emissions 

levels of current gasoline and diesel vehicles meeting the Tier 2 emission standards will 

not increase. The level of the standard will generally be achievable for typical vehicles 

through normal emission control methods already required to meet the Tier 2 emission 

standards for NMOG. Also, since CH4 is already measured under the current Tier 2 

regulations (so that it may be subtracted to calculate non-methane hydrocarbons), we 

believe that the standard will not result in any additional testing costs Therefore, EPA is 

not attributing any costs to this part of this program. Since CH4 is produced during fuel 

 

200 But 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)). 
356 

combustion in gasoline and diesel engines similarly to other hydrocarbon components, 

controls targeted at reducing overall NMOG levels are generally also effective in 

reducing CH4 emissions. Therefore, for typical gasoline and diesel vehicles, 

manufacturer strategies to comply with the Tier 2 NMOG standards have to date tended 

to prevent increases in CH4 emissions levels. The CH4 standard will ensure that 

emissions will be addressed if in the future there are increases in the use of natural gas or 

other alternative fuels or technologies that may result in higher CH4 emissions. 

As with the N2O standard, EPA is setting the level of the CH4 standard to be 

approximately two times the level of average CH4 emissions from Tier 2 gasoline 

passenger cars and light-duty trucks. EPA believes the standard will easily be met by 

current gasoline vehicles, and that flexible fuel vehicles operating on ethanol can be 

designed to resolve any potential CH4 emissions concerns. Similarly, since current diesel 

vehicles generally have even lower CH4 emissions than gasoline vehicles, EPA believes 

that diesels will also meet the CH4 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 and is inappropriate for that reason (and 

untimely as well, given the challenge of meeting the CO2 standards, as noted above). 

Some CNG-fueled vehicles have historically produced significantly higher CH4

emissions than gasoline or diesel vehicles. This is because CNG fuel is essentially 

methane and any unburned fuel that escapes combustion and is not oxidized by the 

catalyst is emitted as methane. However, in recent model years, the few dedicated CNG 
357 

vehicles sold in the U.S. meeting the Tier 2 standards have had CH4 control as effective 

as that of gasoline or diesel vehicles. Still, 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. Although EPA believes that in most cases that 

the 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. 

Some manufacturers have also expressed some concerns about CH4 emissions 

from flexible fueled vehicles operating on E85 (85% ethanol, 15% gasoline). However, 

we are not aware of any information would indicate that if engine-out CH4 proves to be 

higher than for a typical gasoline vehicle, that such emissions could not be managed by 

reasonably available control strategies (perhaps similar to those of used in dedicated 

CNG vehicles). 

 

As described above, in response to the comments, EPA will also allow 

manufacturers to choose to comply with a CO2-equivalent standard in lieu of complying 

with a separate CH4 cap standards. A manufacturer choosing this option would convert 

its N2O and CH4 test results into CO2-equivalent values (using the respective GWP 

values), and would then compare this value to the manufacturer's footprint-based CO2

target level to determine compliance. However, as with N2O, this approach will not 

permit a manufacturer to increase its CO2 by reducing CH4; the company's footprintbased CO2 target level would remain the same. 
358 

8. Small Entity Exemption

 As proposed, EPA is exempting from GHG emissions standards small entities 

meeting the Small Business Administration (SBA) size criteria of a small business as 

described in 13 CFR 121.201.201 EPA will instead consider appropriate GHG standards 

for these entities as part of a future regulatory action. This includes both U.S.-based and 

foreign 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) size criterion of a small business. EPA estimates there currently are 

approximately two small volume manufacturers, eight ICIs, and three alternative fuel 

vehicle converters in the light-duty vehicle market. Further detail is provided in Section 

III.I.3, below. 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 exemption will have a 

negligible impact on the GHG emissions reductions from the standards. 

To ensure that EPA is aware of which companies would be exempt, EPA 

proposed to require 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. EPA has reconsidered the need for this additional 

 

201 See final regulations at 40 CFR 86.1801-12(j). 
359 

submission under the regulations and is deleting it as not necessary. We already have 

information on the limited number of small entities that we expect would receive the 

benefits of the exemption, and do not need the proposed regulatory requirement to be 

able to effectively implement this exemption for those parties who in fact meet its terms. 

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 did not receive adverse comments regarding the proposed small entity 

exemption. EPA received comments concerning whether or not the small entity 

exemption applies to foreign manufacturers. EPA clarifies that foreign manufacturers 

meeting the SBA size criteria are eligible for the exemption, as was EPA’s intent during 

the proposal. 

C. Additional Credit Opportunities for CO2 Fleet Average Program 

 The final standards represent a significant multi-year challenge for manufacturers, 

especially in the early years of the program. Section III.B.4 above describes EPA's 

provisions for manufacturers to be able to generate credits by achieving fleet average 

CO2 emissions below their fleet average standard, and also how manufacturers can use 

credits to comply with the standards. As described in Section III.B.4, credits can be 

carried forward five years, carried back three years, transferred between vehicle 

categories, and traded between manufacturers. The credits provisions described below 
360 

provide manufacturers with additional ways to earn credits starting in MY 2012. EPA is 

also including early credits provisions for the 2009–2011 model years, as described 

below in Section III.C.5. 

The provisions described below provide additional flexibility, especially in the 

early years of the program. This 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. EPA is finalizing 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 and are 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 incentives, to incentivize the introduction of those vehicle 

technologies) and are verifiable. In addition, EPA believes that these credit programs do 

not provide an opportunity for manufacturers to earn “windfall” credits. Comments on 

the proposed EPA credit programs are summarized below along with EPA’s response, 

and are detailed in the Response to Comments document. 
361 

 1. Air Conditioning Related Credits

Manufacturers will be able to generate and use credits for improved air 

conditioner (A/C) systems in complying with the CO2 fleetwide average standards 

described above (or otherwise to be able to bank or trade the credits). 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 compliance 

using 2-cycle (city/highway) 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. 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 rule 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 5.1% 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 associated with 

leakage reductions are the direct leakage and the leakage associated with maintenance 

and servicing. Together these are equivalent to CO2 emissions of approximately 13.6 

g/mi per car and light-truck. EPA also estimates that indirect GHG emissions (additional 
362 

CO2 emitted due to the load of the A/C system on the engine) account for another 3.9% 

of light-duty GHG emissions.202 This is equivalent to CO2 emissions of approximately 

14.2 g/mi per vehicle. The derivation of these figures can be found in Chapter 2.2 of the 

EPA RIA. 

 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 mechanical power to the A/C system. 

With leakage, it is the high global warming potential (GWP) of the current automotive 

refrigerant (HFC-134a, with a GWP of 1430) that results in the CO2-equivalent impact of 

13.6 g/mi.203 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 reduce A/C leakage emissions by using leaktight components. Also, manufacturers can largely eliminate the global warming impact 

 

202 See Chapter 2, Section 2.2.1.2 of the RIA. 203 The global warming potentials (GWP) used in this rule are consistent with Intergovernmental Panel on 

Climate Change (IPCC) Fourth Assessment Report (AR4). (At this time, the IPCC Second Assessment 

Report (SAR) GWP values are used in the official U.S. greenhouse gas inventory submission to the climate 

change framework.) 
363 

of leakage emissions by adopting systems that use an alternative, low-GWP refrigerant, 

as discussed below.204 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 the 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.205

Manufacturers can make very feasible improvements to their A/C systems to 

address A/C system leakage and efficiency. EPA is finalizing two separate credit 

approaches to address leakage reductions and efficiency improvements independently. A 

leakage reduction credit will 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. An efficiency improvement credit will account for the 

various types of hardware and control of that hardware available to increase the A/C 

system efficiency. For purposes of use of A/C credits at certification, manufacturers will 

 

204 Refrigerant 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. 

205 We chose not to address 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 by the primary CO2 standards (Section III.B above). 
364 

be required to attest to 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 emission control 

technologies are similar (including hose materials and connections). There are, however, 

some fundamental differences between the systems that require a different approach, both 
365 

to controlling and to documenting that control. The most notable difference is that A/C 

systems are completely closed systems and always under significant pressure, 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. As a result, these emissions are typically too low to accurately 

measure in most current SHED chambers designed for fuel evaporative emissions 

measurement, especially for A/C systems that are new or early in life. 

A few commenters suggested that we allow manufacturers, as an option, to use an 

industry-developed “mini-shed” test procedure (SAE J2763 – Test Procedure for 

Determining Refrigerant Emissions from Mobile Air Conditioning Systems) to measure 

and report annual refrigerant leakage.206 However, while EPA generally prefers 

performance testing, for an individual vehicle A/C system or component, there is not a 

strong inherent correlation between a performance test using SAE J2763 and the designbased approach we are adopting (based on SAE J2727, as discussed below).207 

Establishing such a correlation would require testing of a fairly broad range of currenttechnology systems in order to establish the effects of such factors as production 

variability and assembly practices (which are included in J2727 scores, but not in J2763 

measurements). To EPA's knowledge, such a correlation study has not been done. At the 

same time, as discussed below, there are indications that much of the industry will 

eventually be moving toward alternative refrigerants with very low GWPs. EPA believes 

 

206 Honeywell and Volvo supported this view; most other commenters did not. 207 However, there is a correlation in the fleet between J2763 measurements and J2727 scores. 
366 

such a transition would diminish the value of any correlation studies that might be done 

to confirm the appropriateness of the SAE J2763 procedure as an option in this rule. For 

these reasons, EPA is therefore not adopting such an optional direct measurement 

approach to addressing refrigerant leakage at this time. 

Instead, as proposed, EPA is adopting a design-based method for manufacturers 

to demonstrate improvements in their A/C systems and components.208 Manufacturers 

implementing system designs expected to result in reduced refrigerant leakage will be 

eligible for credits that could then be used to meet their CO2 emission compliance 

requirements (or otherwise banked or traded). The A/C Leakage Credit provisions will 

generally assign larger credits to system designs that would result in greater leakage 

reductions. In addition, proportionately larger A/C Leakage Credits will be available to 

manufacturers that substitute a refrigerant with lower GWP than the current HFC-134a 

refrigerant. 

Our method for calculating A/C Leakage Credits is based closely on an industryconsensus 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 approach, manufacturers will choose from 

a menu of A/C equipment and components used in their vehicles in order to establish 

leakage scores which will characterize their A/C system leakage performance. Credits 

will be generated from leakage reduction improvements that exceed average fleetwide 

leakage rates. 

 

208 See final regulations at 40 CFR 86.1866-12(b). 
367 

EPA believes that the design-based approach will result in estimates of leakage 

emissions reductions that will be comparable to those that will eventually result from 

performance-based testing. We believe that this method appropriately approximates the 

real-world leakage rates for the expected MY 2012-2016 A/C systems. 

The cooperative industry and government Improved Mobile Air Conditioning 

(IMAC) program209 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. 

As proposed, a manufacturer wishing to generate A/C Leakage Credits will 

compare the components of its A/C system with a set of leakage-reduction technologies 

and actions based closely on that developed through IMAC and the Society of 

Automotive Engineers (as SAE Surface Vehicle Standard J2727, August 2008 version). 

The J2727 approach was 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 real-world leakage in new vehicles. The 

EPA credit approach addresses the same A/C components as does SAE J2727 and 

associates each component with the same gram-per-year leakage rate as the SAE method, 

 

209 Team 1-Refrigerant Leakage Reduction: Final Report to Sponsors, SAE, 2007. 
368 

although, as described below, EPA limits the credits allowed and also modifies it for 

other factors such as alternative refrigerants. 

A manufacturer choosing to generate A/C Leakage Credits will sum the leakage 

values for an A/C system for a total A/C leakage score according to the following 

formula. Because the primary GHG program standards are expressed in terms of vehicle 

exhaust CO2 emissions as measured in grams per mile, the credits programs adopted in 

this rule, including A/C related credits, must ultimately be converted to a common metric 

for proper calculation of credits toward compliance with the primary vehicle standards. 

This formula describes the conversion of 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: 

A/C Leakage Credit = (MaxCredit) * [ 1 - (LeakScore/AvgImpact) * 

(GWPRefrigerant/1430)] 

Where: 

MaxCredit is 12.6 and 15.6 g/mi CO2eq for cars and trucks, respectively. These values 

become 13.8 and 17.2 for cars and trucks, respectively, if low-GWP refrigerants are used, 

since this would generate additional credits from reducing emissions during maintenance 

events, accidents, and at end-of-life. 
369 

LeakScore is the leakage score of the A/C system as measured according to the EPA 

leakage method (based on the J2727 procedure, as discussed above) in units of g/yr. The 

minimum score that EPA considers feasible is fixed at 8.3 and 10.4 g/yr for cars and 

trucks respectively (4.1 and 5.2 g/yr for systems using electric A/C compressors) as 

discussed below. 

 

Avg Impact is the average current A/C leakage emission rate, which is 16.6 and 20.7 

g/yr for cars and trucks, respectively 

GWPRefrigerant is the global warming potential (GWP) for direct radiative forcing of 

the refrigerant. For purposes of this rule, the GWP of HFC-134a is 1430, the GWP of 

HFC-152a is 124, the GWP of HFO-1234yf is 4, and the GWP of CO2 as a refrigerant is 

1. 

The EPA Final RIA elaborates further on the development of each of the values 

incorporated in the A/C Leakage Credit formula above, as summarized here. First, as 

proposed, EPA estimates that leakage emission rates for systems using the current 

refrigerant (HFC-134a) could be feasibly reduced to rates no less than 50% of current 

rates -- or 8.3 and 10.4 g/yr for cars and trucks, respectively -- based on the conclusions 

of the IMAC study as well as consideration of refrigerant emissions over the full life of 

the vehicle. 
370 

Also, some commenters noted that A/C compressors powered by electric motors 

(e.g. as used today in several hybrid vehicle models) were not included in the IMAC 

study and yet allow for leakage emission rate reductions beyond EPA's estimates for 

systems with conventional belt-driven compressors. EPA agrees with these comments, 

and we have incorporated lower minimum emission rates into the formula above – 4.1 

and 5.2 g/yr for cars and trucks, respectively – in order to allow additional leakage 

reduction credits for vehicles that use sealed electric A/C compressors. The maximum 

available credits for these two approaches are summarized in Table III.C.1-1 below. 

AIAM commented that EPA should not set a lower limit on the leakage score, 

even for non-electric compressors. EPA has determined not to do so. First, although 

there do exist vehicles in the Minnesota data with lower scores than our proposed (and 

now final) minimum scores, there are very few car models that have scores less than 8.3, 

and these range from 7.0 to about 8.0 and the difference are small compared to our 

minimum score.210 More important, lowering the leakage limit would necessarily 

increase credit opportunities for equipment design changes, and EPA believes that these 

changes could discourage the environmentally optimal result of using low GWP 

refrigerants. Introduction of low GWP refrigerants could be discouraged because it may 

be less costly to reduce leakage than to replace many of the A/C system components. 

Moreover, due to the likelihood of in-use factors, even a leakless (according to J2727) 

R134a system will have some emissions due to manufacturing variability, accidents, 

deterioration, maintenance, and end of life emissions, a further reason to cap the amount 

 

210 The Minnesota refrigerant leakage data can be found at 

http://www.pca.state.mn.us/climatechange/mobileair.html#leakdata 
371 

of credits available through equipment design. The only way to guarantee a near zero 

emission system in-use is to use a low GWP refrigerant. The EPA has therefore decided 

for the purposes of this final rule to not change the minimum score for belt driven 

compressors due to the reason cited above and to the otherwise overwhelming support for 

the program as proposed from commenters. 

In addition, as discussed above, EPA recognizes that substituting a refrigerant 

with a significantly lower GWP will 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 and CO2 with a GWP of 1 -- are 

under serious development and have been demonstrated in prototypes by A/C component 

suppliers. The European Union has enacted regulations phasing in alternative refrigerants 

with GWP less than 150 starting this year, and the State of California proposed providing 

credits for alternative refrigerant use in its GHG rule. Within the timeframe of MYs 

2012-2016, EPA is not expecting widespread use of low-GWP refrigerants. However, 

EPA believes that these developments are promising, and, as proposed, has included in 

the A/C Leakage Credit formula above a factor to account for the effective GHG 

reductions that could be expected from refrigerant substitution. The A/C Leakage Credits 

that will be available will be a function of the GWP of the alternative refrigerant, with the 

largest credits being available for refrigerants with GWPs at or approaching a value of 1. 

For a hypothetical alternative refrigerant with a GWP of 1 (e.g., CO2 as a refrigerant), 

effectively eliminating leakage as a GHG concern, our credit calculation method could 
372 

result in maximum credits equal to total average emissions, or credits of 13.8 and 17.2 

g/mi CO2eq for cars and trucks, respectively, as incorporated into the A/C Leakage Credit 

formula above as the "MaxCredit" term. 

 Table III.C.1-1 summarizes the maximum A/C leakage credits available to a 

manufacturer, according to the formula above. 

Table III.C.1-1 Maximum Leakage Credit Available to Manufacturers 

 Car (g/mi) Truck (g/mi) 

R-134a refrigerant with belt-driven 

compressor 

6.3 7.8 

R-134a refrigerant with electric 

motor-driven compressor 

9.5 11.7 

Lowest-GWP refrigerant (GWP=1) 13.8 17.2 

 

It is possible that alternative refrigerants could, without compensating action by 

the manufacturer, reduce the efficiency of the A/C system (see related discussion of the 

A/C Efficiency Credit below.) However, as noted at proposal and discussed further in the 

following section, 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 due to the use of alternative 

refrigerants. 

Beyond the comments mentioned above, commenters generally supported or were 

silent about EPA's refrigerant leakage methodology (as based on SAE J2727), including 

the maximum leakage credits available, the technologies eligible for credit and their 
373 

associated leakage reduction values, and the potential for alternative refrigerants. All 

comments related to A/C credits are addressed in the Response to Comments Document. 

b. A/C Efficiency Credits 

Manufacturers that make improvements in their A/C systems to increase 

efficiency and thus reduce CO2 emissions due to A/C system operation may 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 (or otherwise 

bank and trade the credits). 

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/deicing 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 RIA. 
374 

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 currentlyexisting technology options for improving efficiency, including more efficient 

compressors, fans, and motors, and system 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, real-time 

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.1-2 below lists some of these technologies 

and their respective efficiency improvements. 

As discussed in the proposal, EPA is adopting a design-based “menu” approach 

for estimating efficiency improvements and, thus, quantifying A/C Efficiency Credits.211 

However, EPA’s ultimate preference is performance-based standards and credit 

mechanisms (i.e., using actual measurements) as typically providing a more accurate 

measure of performance. However, EPA has concluded that a practical, performancebased procedure for the purpose of accurately quantifying A/C-related CO2 emission 

reductions, and thus efficiency improvements for assigning credits, is not yet available. 

Still, EPA is introducing a new specialized performance-based test for the more limited 

purpose of demonstrating that actual efficiency improvements are being achieved by the 

 

211 See final regulations at 40 CFR 86.1866-12(c). 
375 

design improvements for which a manufacturer is seeking A/C credits. As discussed 

below, beginning in MY 2014, manufacturers wishing to generate A/C Efficiency Credits 

will need to show improvement on the new A/C Idle Test in order to then use the "menu" 

approach to quantify the number of credits attributable to those improvements. 

In response to comments concerning the applicability and effectiveness of 

technologies that were or were not included in our analysis, we have made several 

changes to the design-based menu.212 First, we have separated the credit available for 

‘recirculated air’213 technologies into those with closed-loop control of the air supply and 

those with open-loop control. By “closed-loop” control, we mean a system that uses 

feedback from a sensor, or sensors, (e.g., humidity, glass fogging, CO2, etc.) to actively 

control the interior air quality. For those systems that use “open-loop” control of the air 

supply, we project that since this approach cannot precisely adjust to varying ambient 

humidity or passenger respiration levels, the relative effectiveness will be less than that 

for systems using closed-loop control. 

Second, many commenters indicated that the electronic expansion valve, or EXV, 

should not be included in the menu of technologies, as its effectiveness may not be as 

high as we projected. Commenters noted that the SAE IMAC report stated efficiency 

improvements for an EXV used in conjunction with a more efficient compressor, and not 

as a stand alone technology and that no manufacturers are considering this technology for 

 

212 Commenters included the Alliance of Automobile Manufacturers, Jaguar Land Rover, Denso, and the 

Motor and Equipment Manufacturers Association, among others. 

213 Recirculated air is defined as air present in the passenger compartment of the vehicle (versus outside air) 

available for the A/C system to cool or condition. 
376 

their products within the timeframe of this rulemaking. We believe other technologies 

(improved compressor controls for example) can achieve the same benefit as an EXV, 

without the need for this unique component, and therefore are not adopting it as an option 

in the design menu of efficiency-improving A/C technologies. 

Third, many commenters requested that an internal heat exchanger, or IHX, be 

added to the design menu. EPA initially considered adding this technology, but in our 

initial review of studies on this component, we had understood that the value of the 

technology is limited to systems using the alternative refrigerant HFO-1234yf. Some 

manufacturers, however, commented that an IHX can also be used with systems using the 

current refrigerant HFC-134a to improve efficiency, and that they plan on implementing 

this technology as part their strategy to improve A/C efficiency. Based on these 

comments, and projections in a more recent SAE Technical Paper, we project that an IHX 

in a conventional HFC-134a system can improve system efficiency by 20%, resulting in a 

credit of 1.1 g/mi.214 Further discussion of IHX technology can be found in the RIA. 

Fourth, we have modified the definition of ‘improved evaporators and 

condensers’ to recognize that improved versions of these heat exchangers may be used 

separately or in conjunction with one another, and that an engineering analysis must 

indicate a COP improvement of 10% or better when using either or both components (and 

not a 10% COP improvement for each component). Furthermore, we have modified the 

regulation text to clarify what is considered to be the ‘baseline’ components for this 

 

214 Mathur, Gursaran D., "Experimental Investigation with Cross Fluted Double-Pipe Suction Line Heat 

Exchanger to Enhance A/C System Performance,” SAE 2009-01-0970, 2009. 
377 

analysis. We consider the baseline component to be the version which a manufacturer 

most recently had in production on the same vehicle or a vehicle in a similar EPA vehicle 

classification. The dimensional characteristics (e.g. tube configuration/ thickness/spacing, 

and fin density) of the baseline components are then compared to the new components, 

and an engineering analysis is required to demonstrate the COP improvement. 

For model years 2012 and 2013, a manufacturers wishing to generate A/C 

Efficiency Credits for a group of its vehicles with similar A/C systems will compare 

several of its vehicle A/C-related components and systems with a list of efficiency-related 

technology improvements (see Table III.C.1-2 below). Based on the technologies the 

manufacturer chooses, an A/C Efficiency Credit value will be established. This designbased approach will recognize the relationships and synergies among efficiency-related 

technologies. Manufacturers could receive credits 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 will be the total of these values, up to a maximum 

allowable credit of 5.7 g/mi CO2eq. This will be the maximum improvement from 

current average efficiencies for A/C systems (see the RIA for a full discussion of our 

derivation of the 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. A/C Efficiency Credits as adopted may not exceed 5.7 g/mi 

CO2eq. 
378 

Table III.C.1-2 Efficiency-Improving A/C Technologies and Credits 

Technology Description Estimated 

Reduction in 

A/C CO2

Emissions 

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 variabledisplacement compressor 

20% 1.1 

Default to recirculated air with closed-loop 

control of the air supply (sensor feedback to 

control interior air quality) whenever the 

ambient temperature is 75 °F or higher 

(although deviations from this temperature 

are allowed if accompanied by an 

engineering analysis) 

30% 1.7 

Default to recirculated air with open-loop 

control air supply (no sensor feedback) 

whenever the ambient temperature 75 °F or 

higher lower temperatures are allowed) 

20% 1.1 

Blower motor controls which limit wasted 

electrical energy (e.g., pulse width 

modulated power controller) 

15% 0.9 

Internal heat exchanger 20% 1.1 

Improved condensers and/or evaporators 

(with system analysis on the component(s) 

indicating a COP improvement greater than 

10%, when compared to previous industry 

standard designs) 

20% 1.1 

Oil Separator (with engineering analysis 

demonstrating effectiveness relative to the 

baseline design) 

10% 0.6 

The proposal requested comment on adjusting the efficiency credit for alternative 

refrigerants. Although a few commenters noted that the efficiency of an HFO1234yf 

system may differ from a current HFC-134a system,215 we believe that this difference 

does not take into account any efficiency improvements that may be recovered or gained 

 

215 Ford noted that “the physical properties of the alternative refrigerant R1234yf could result in a reduction 

of efficiency by 5 to 10 percent compared to R134a in use today with a similar refrigerant system and 

controls technology.” 
379 

when the overall system is specifically designed with consideration of the new refrigerant 

properties (as compared to only substituting the new refrigerant). EPA is therefore not 

adjusting the credits based on efficiency differences for this rule. 

 As noted above, for model years 2014 and later, manufacturers seeking to 

generate design-based A/C Efficiency Credits will also need to use a specific new EPA 

performance test to confirm that the design changes are resulting in improvements in A/C 

system efficiency as integrated into the vehicle. As proposed, beginning in MY 2014 

manufacturers will need to perform an A/C CO2 Idle Test for each A/C system (family) 

for which it desires to generate Efficiency Credits. Manufacturers will need to 

demonstrate an improvement over current average A/C CO2 levels (21.3 g/minute on the 

Idle Test) to qualify for the menu approach credits. Upon qualifying on the Idle Test, the 

manufacturer will be eligible to use the menu approach above to quantify the potential 

credits it could generate. To earn the full amount of credits available in the menu 

approach (limited to the maximum), the test must demonstrate a 30% or greater 

improvement in CO2 levels over the current average. 

 For A/C systems that achieve an improvement between 0-and-30% (or a result 

between 21.3 and 14.9 g/minute result on the A/C CO2 Idle Test), a credit can still be 

earned, but a multiplicative credit adjustment factor will be applied to the eligible credits. 

As shown in Figure III.C.1-1 this factor will be scaled from 1.0 to 0, with vehicles 

demonstrating a 30% or better improvement (14.9 g/min or lower) receiving 100% of the 

eligible credit (adj. factor = 1.0), and vehicles demonstrating a 0% improvement - 21.3 
380 

g/min or higher result -- receiving no credit (adj. factor = 0)). We adopted this 

adjustment factor in response to commenters who were concerned that a vehicle which 

incorporated many efficiency-improving technologies may not achieve the full 30% 

improvement, and as a result would receive no credit (thus discouraging them from using 

any of the technologies). Because there is environmental benefit (reduced CO2) from the 

use of even some of these efficiency-improving technologies, EPA believes it is 

appropriate to scale the A/C efficiency credits to account for these partial improvements. 
381 

Figure III.C.1-1 A/C Credit Adjustment Factor 
382 

EPA is adopting the A/C CO2 Idle Test procedure as proposed in most respects. 

This laboratory idle test is performed while the vehicle is at idle, similar to the idle 

carbon monoxide (CO) test that was once a part of EPA vehicle certification. The test 

determines the additional CO2 generated at idle when the A/C system is operated. The 

A/C CO2 Idle Test will 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 test includes tighter restrictions on test cell 

temperatures and humidity levels than apply for the basic FTP test procedure in order to 

more closely control the loads from operation of the A/C system. EPA is also adopting 

additional refinements to the required in-vehicle blower fan settings for manually 

controlled systems to more closely represent “real world” usage patterns. 

Many commenters questioned the ability of this test to measure the improved 

efficiency of certain A/C technologies, and stated that the test was not representative of 

real-world driving conditions. However, although EPA acknowledges that this test 

directly simulates a relatively limited range of technologies and conditions, we 

determined that it is sufficiently robust for the purpose of demonstrating that the system 

design changes are indeed implemented properly and are resulting in improved efficiency 

of a vehicle’s A/C system, at idle as well as under a range of operating conditions. 

Further details of the A/C Idle Test can be found in the RIA and the regulations, as well 

as in the Response to Comments Document. 
383 

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 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. The Idle Test will not be required in order to generate A/C 

Efficiency Credits until MY 2014 to allow sufficient time for manufacturers to make the 

necessary facilities improvements and to gain experience with the test. 

EPA also considered and invited comment on 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. EPA invited comment on using an adapted version of the SCO3, an 

existing test procedure that is part of the Supplemental Federal Test Procedure. EPA 

discussed and invited comment on the various benefits and concerns associated with 

using an adapted SCO3 test. There were many comments opposed to this proposal, and 

very few supporters. Most of the comments opposing this approach echoed the concerns 

made by in the NPRM. These included excessive testing burden, limited test facilities 

and the cost of adding new ones, and the concern that the SC03 test may not be 

sufficiently representative of in use A/C usage. Some commenters supported a derivative 

of the SCO3 test or multiple runs of other urban cycles (such as the LA-4) for quantifying 

A/C system efficiency. While EPA considers a test cycle that covers a broader range of 

vehicle speed and climatic conditions to be ideal, developing such a representative A/C 
384 

test would involve the work of many stakeholders, and would require a significant 

amount of time, exceeding the scope of this rule. EPA expects to continue working with 

industry, the California Air Resources Board, and other stakeholders to move toward 

increasingly robust performance tests and methods for determining the efficiency of 

mobile A/C systems and the related impact on vehicle CO2 emissions, including a 

potential adapted SC03 test. 

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 ozonedepleting 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 A/C systems. The 

regulations promulgated under section 609 (40 CFR part 82, subpart B) establish 

standards and requirements regarding the servicing of A/C systems. These regulations 

include establishing standards for equipment that recovers and recycles (or, for 

refrigerant blends, only recovers) refrigerant from A/C systems; requiring technician 

training and certification by an EPA-approved organization; establishing recordkeeping 

requirements; imposing sales restrictions; and prohibiting the venting of refrigerants. 
385 

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. 

 On September 14, 2006, EPA proposed to approve R-744 (CO2) for use in motor 

vehicle A/C systems (71 FR 55140) and on October 19, 2009, EPA proposed to approve 

the low-GWP refrigerant HFO-1234yf for these systems (74 FR 53445), both subject to 

certain requirements. Final action on both of these proposals is expected later this year. 

EPA previously issued a final rule allowing the use of HFC-152a as a refrigerant in motor 

vehicle A/C systems subject to certain requirements (June 12, 2008; 73 FR 33304). As 

discussed above, manufacturers transitioning to any of the approved refrigerants would 

be eligible for A/C Leakage Credits, the value of which would depend on the GWP of 

their refrigerant and the degree of leakage reduction of their systems. 

EPA views this 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 will dovetail with the Title VI section 
386 

609 standards which apply to maintenance events, and to end-of-vehicle life disposal. In 

fact, as noted, a benefit of the 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 will not conflict (or overlap) with the Title VI section 609 standards. 

EPA also believes the menu of leak control technologies described in this rule will 

complement the section 612 requirements, because these control technologies will help 

ensure that HFC-134a (or other refrigerants) will be used in a manner that further 

minimizes potential adverse effects on human health and the environment. 

2. Flexible Fuel and Alternative Fuel Vehicle Credits

EPA is finalizing its proposal to allow flexible-fuel vehicles (FFVs) and 

alternative fuel vehicles to generate credits for purposes of the GHG rule starting in the 

2012 model year. FFVs are vehicles that can run on both an alternative fuel and a 

conventional fuel. Most FFVs are E85 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). These credits are 

designed to complement the treatment of FFVs under CAFE, consistent with the emission 

reduction objectives of the CAA. As explained at proposal, EPCA includes an incentive 

under the CAFE program for production of dual-fueled vehicles or FFVs, and dedicated 

alternative fuel vehicles.216 For FFVs and dual-fueled vehicles, the EPCA/EISA credits 

have three elements: 1) the assumption that the vehicle is operated 50% of the time on 

the conventional fuel and 50% of the time on the alternative fuel, 2) that 1 gallon of 

 

216 49 U.S.C 32905 
387 

alternative fuel is treated as 0.15 gallon of fuel, essentially increasing the fuel economy of 

a vehicle on alternative fuel by a factor of 6.67, and 3) a “cap” provision that limits the 

maximum fuel economy increase that can be applied to a manufacturer’s overall CAFE 

compliance value for all CAFE compliance categories (i.e., domestic passenger cars, 

import passenger cars, and light trucks) to 1.2 mpg through 2014 and 1.0 mpg in 2015. 

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.217 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.218 

Under EPCA, for dedicated alternative fuel vehicles, there are no limits or phase-out. As 

proposed, FFV and Alternative Fuel Vehicle Credits will 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). 

 Manufacturers supported the inclusion of FFV credits in the program. Chrysler 

noted that the credits encourage manufacturers to continue production of vehicles capable 

of running on alternative fuels as the production and distribution systems of such fuels 

are developed. Chrysler believes the lower carbon intensity of such fuels is an 

opportunity for further greenhouse gas reductions and increased energy independence, 

and the continuance of such incentives recognizes the important potential of this 

 

217 See 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 32905 (b). 

This is typically referred to as an FFV credit. 218 49 U.S.C 32906 
388 

technology to reduce GHGs. Toyota noted that because actions taken by manufacturers 

to comply with EPA's regulation will, to a large extent, be the same as those taken to 

comply with NHTSA's CAFE regulation, it is appropriate for EPA to consider 

flexibilities contained in the CAFE program that clearly impact product plans and 

technology deployment plans already in place or nearly in place. Toyota believes that 

adopting the FFV credit for a transitional period of time appears to recognize this reality, 

while providing a pathway to eventually phase-out the flexibility. 

 As proposed, electric vehicles (EVs) or plug-in hybrid electric vehicles (PHEVs) 

are not eligible to generate this type of credit. These vehicles are covered by the 

advanced technology vehicle incentives 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 allowing FFV credits corresponding to the 

amounts allowed by the amended EPCA but only during the period from MYs 2012 to 

2015. (As discussed below in Section III.E., EPA is not allowing CAFE-based FFV 

credits to be generated as part of the early credits program.) As noted at proposal, 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 
389 

be considered in assessing necessary lead time for the CO2 standards. Manufacturers 

commented that the credits are necessary in allowing them to transition to the new 

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 requiring for MY 2016 and later that manufacturers 

will need to reliably estimate the extent to which 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. Beginning in MY2016, the FFV credits as described above for 

MY2012-2015 will no longer be available for EPA’s GHG program. Rather, GHG 

compliance values will be based on actual emissions performance of the FFV on 

conventional and alternative fuels, weighted by the actual use of these fuels in the FFVs. 

 

As with the CAFE program, EPA will base MY 2012-2015 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. 219 In 

addition, the measured CO2 emissions on the alternative fuel will 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. For example, for a flexible-fuel vehicle that emitted 330 g/mi CO2

 

219 49 U.S.C 32905 (b) 
390 

operating on E85 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 199.8g / mi

2

330 0.15 350

2 = × + =

 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. 

 EPA notes also that the above equation and example are based on an FFV that is 

an E85 vehicle. EPCA, as amended by EISA, also establishes the use of this approach, 

including the 0.15 factor, for all alternative fuels, not just E85.220 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 dual-fueled vehicles, such as a 

vehicle able to operate on gasoline and CNG.221 (For natural gas dual-fueled vehicles, 

EPCA establishes a factor of 0.823 gallons of fuel for every 100 cubic feet a natural gas 

used to calculate a gallons equivalent.222) The EISA’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 will use the 0.15 factor for all FFVs in order not to disrupt 

 

220 49 U.S.C 32905 (c) 221 49 U.S.C 32905 (d). 222 49 U.S.C 32905 (c). 
391 

manufacturers’ near-term compliance planning and assure sufficient lead time. EPA, in 

any case, expects the vast majority of FFVs to be E85 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 2015.223 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 proposed, but is not adopting, credit limits based on the overall industry 

average CO2 standards for cars and trucks. EPA also requested comments on basing the 

calculated CO2 credit limits on the individual manufacturer fleet-average standards 

calculated from the footprint curves. EPA received comment from one manufacturer 

supporting this approach. EPA also received comments from another manufacturer 

recommending that the credit limits for an individual manufacturer be based instead on 

that manufacturer’s fleet average performance. The commenter noted that this approach 

is in line with how CAFE FFV credit limits are applied. This is due to the fact that the 

GHG-equivalent of the CAFE 1.2 mpg cap will vary due to the non-linear relationship 

between fuel economy and GHGs/fuel consumption. EPA agrees with this approach 

since it best harmonizes how credit limits are determined in CAFE. EPA intended and 

continues to believe it is appropriate to provide essentially the same FFV credits under 

both programs for MYs 2012-2015. Therefore, EPA is finalizing FFV credits limits for 

MY2012-2015 based on a manufacturer’s fleet-average performance. For example, if a 

manufacturer’s 2012 car fleet average emissions performance was 260 g/mile (34.2 mpg), 

 

223 49 U.S.C 32906 (a). 
392 

the credit limit in CO2 terms would be 9.5 g/mile (34.2 mpg – 1.2 mpg = 33.0 mpg = 

269.5 g/mile) and if it were 270 g/mile the limit would be 10.2 g/mile. 

ii. Dedicated Alternative Fuel Vehicles 

 As proposed, EPA will 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: 

CO 330 0.15 49.5g / mi 2 = × =

b. Model Years 2016 and Later 

i. FFVs 

EPA is treating FFV credits the same as under EPCA for model years 2012-2015, 

but is applying a different approach starting with model year 2016. EPA recognizes that 

under EPCA automatic FFV credits are entirely phased out of the CAFE program by MY 

2020, and apply in the prior model years with certain limitations, but without a 

requirement that the manufacturers demonstrate actual use of the alternative fuel. Unlike 
393 

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 will treat FFVs for model years 2012-2015 the same as under EPCA, as part of 

providing sufficient lead time given manufacturers’ compliance strategies which rely on 

the existence of these EPCA statutory credits, as explained above. 

Starting with model year 2016, as proposed, EPA will no longer allow 

manufacturers to base FFV emissions on the use of the 0.15 factor credit described above, 

and on the use of an assumed 50% usage of alternative fuel. Instead, EPA believes the 

appropriate approach is to ensure that FFV emissions are based on demonstrated 

emissions performance. This will promote the environmental goals of the final program. 

EPA received several comments in support of EPA’s proposal to use this approach 

instead of the EPCA approach for MY2016 and later. Under the EPA program in 

MY2016 and later, manufacturers will be allowed to base an FFV’s emissions 

compliance value in part on the vehicle test values run on the alternative fuel, for that 

portion of its fleet for which the manufacturer demonstrates utilized the alternative fuel in 

the field. In other words, the default is to assume FFVs operate on 100% gasoline, and 

the emissions value for the FFV vehicle will be based on the vehicle’s tested value on 

gasoline. However, if a manufacturer can demonstrate that a portion of its FFVs are 

using an alternative fuel in use, then the FFV emissions compliance value can be 

calculated based on the vehicle’s tested value using the alternative fuel, prorated based on 

the percentage of the fleet using the alternative fuel in the field. An example calculation 
394 

is described below. EPA believes this approach will provide an actual incentive to ensure 

that such fuels are used. The incentive arises since actual use of the flexible fuel 

typically results in lower tailpipe GHG emissions than use of gasoline and hence 

improves the vehicles’ performance, making it more likely that its performance will 

improve a manufacturers’ average fleetwide performance. Based on existing certification 

data, E85 FFV CO2 emissions are typically about 5 percent lower on E85 than CO2

emissions on 100 percent gasoline. Moreover, currently there is little incentive to 

optimize CO2 performance for vehicles when running on E85. EPA believes the above 

approach would provide such an incentive to manufacturers and that E85 vehicles could 

be optimized through engine redesign and calibration to provide additional CO2

reductions. 

Under the EPCA credit provisions, there is an incentive to produce FFVs but no 

actual incentive to ensure that the alternative fuels are used, or that actual vehicle fuel 

economy improves. GHG and energy security benefits are only achieved if the 

alternative fuel is actually used and (for GHGs) that performance improves, and EPA’s 

approach for MY2016 and beyond will now provide such an incentive. This approach 

will promote greater use of alternative 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 basing the FFV 

program for MYs 2016 and thereafter 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. 
395 

For 2016 and later model years, EPA will therefore treat FFVs similarly to 

conventional fueled vehicles in that FFV emissions would be based on actual CO2 results 

from emission testing on the fuels on which it operates. In calculating the emissions 

performance of an FFV, manufacturers may base FFV emissions on vehicle testing based 

on the alternative fuel emissions, if they can demonstrate that the alternative fuel is 

actually being used in the vehicles. Performance will otherwise be calculated assuming 

use only of conventional fuel. The manufacturer must establish the ratio of operation that 

is on the alternative fuel compared to the conventional fuel. The ratio will be used to 

weight the CO2 emissions performance over the 2-cycle test on the two fuels. The 0.15 

conversion factor will no longer be included in the CO2 emissions calculation. For 

example, for a flexible-fuel vehicle that emitted 300 g/mi CO2 operating on E85 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: 

(300 0.10) (350 0.90) 345 g/mi CO2 = × + × =

 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, where the 

manufacturer intends for its performance to be calculated based on some use of 

alternative fuels. One option EPA is finalizing is establishing a rebuttable presumption 

using a national average approach based on national E85 fuel use. Manufacturers could 
396 

use this value along with their vehicle emissions results demonstrating lower emissions 

on E85 to determine the emissions compliance values for FFVs sold by manufacturers 

under this program. For example, national E85 volumes and national FFV sales may be 

used to prorate E85 use by manufacturer sales volumes and FFVs already in-use. Upon a 

manufacturer’s written request, EPA will 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 E85 sales, E85 usage will be assigned to each vehicle. This 

method accounts for the VMT of new FFVs and FFVs already in the existing fleet using 

VMT data in the model. The model will then be used to determine the ratio of E85 and 

gasoline for new vehicles being sold. Fluctuations in E85 sales and FFV sales will be 

taken into account to adjust the manufacturers’ E85 actual use estimates annually. EPA 

plans to make this assigned fuel usage factor available through guidance prior to the start 

of MY 2016 and adjust it annually as necessary. EPA believes this is a reasonable way to 

apportion E85 use across the fleet. 

If manufacturers decide not to use EPA’s assigned fuel usage based on the 

national average analysis, they have a second option of presenting their own data for 

consideration as the basis for evaluating fuel usage. Manufacturers have suggested 

demonstrations using vehicle on-board data gathering through the use of on-board 

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. Manufacturers must present a statistical analysis of alternative fuel usage data 

collected on actual vehicle operation. EPA is not attempting to specify how the data is 
397 

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 received comments that the 2016 and later FFV emissions performance 

methodology should be based on the life cycle emissions (i.e., including the upstream 

GHG emissions associated with fuel feedstocks, production, and transportation) 

associated with the use of the alternative fuel. Commenters are concerned that the use of 

ethanol will not result in lower GHGs on a lifecycle basis. After considering these 

comments, EPA is not including lifecycle emissions in the calculation of vehicle credits. 

EPA continues to believe that it is appropriate to base credits for MY2012-2015 on the 

EPCA/CAFE credits and to base compliance values for MY2016 on the demonstrated 

tailpipe emissions performance on gasoline and E85, and is finalizing this approach as 

proposed. EPA recently finalized its RFS2 rulemaking which addresses lifecycle 

emissions from ethanol and the upstream GHG benefits of E85 use are already captured 

by this program.224 

 

ii. Dedicated Alternative Fuel Vehicles 

 As proposed, for model years 2016 and later dedicated alternative fuel vehicles, 

CO2 will 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 

 

224 75 FR 14670 (March 26, 2010) 
398 

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 CO2 program. EPA did not receive comments on this approach. 

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

Hybrids, and Fuel Cell Vehicles

EPA is finalizing provisions that provide a temporary regulatory incentive for the 

commercialization of certain advanced vehicle power trains—electric vehicles (EVs), 

plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs)—for model year 

2012-2016 light-duty and medium-duty passenger vehicles.225 The purpose of these 

provisions is to provide a temporary incentive to promote technologies which have the 

potential to produce very large GHG reductions in the future, but which face major 

challenges such as vehicle cost, consumer acceptance, and the development of low-GHG 

fuel production infrastructure. The tailpipe GHG emissions from EVs, PHEVs operated 

on grid electricity, and hydrogen-fueled FCVs are zero, and traditionally the emissions of 

the vehicle itself are all that EPA takes into account for purposes of compliance with 

standards set under section 202(a). Focusing on vehicle tailpipe emissions has not raised 

any issues for criteria pollutants, as upstream emissions associated with production and 

distribution of the fuel are addressed by comprehensive regulatory programs focused on 

 

225 See final regulations at 40 CFR 86.1866-12(a). 
399 

the upstream sources of those emissions.226 At this time, however, there is no such 

comprehensive program addressing upstream emissions of GHGs, and the upstream GHG 

emissions associated with production and distribution of electricity are higher than the 

corresponding upstream GHG emissions of gasoline or other petroleum based fuels. In 

the future, if there were a program to comprehensively control upstream GHG emissions, 

then the zero tailpipe levels from these vehicles have the potential to produce very large 

GHG reductions, and to transform the transportation sector’s contribution to nationwide 

GHG emissions. 

This temporary incentive program applies only for the model years 2012-2016 

covered by this final rule. EPA will reassess the issue of how to address EVs, PHEVs, 

and FCVs in rulemakings for model years 2017 and beyond, based on the status of 

advanced technology vehicle commercialization, the status of upstream GHG emissions 

control programs, and other relevant factors. 

 In the Joint Notice of Intent, EPA stated that “EPA is currently considering 

proposing additional credit opportunities to encourage the commercialization of advanced 

GHG/fuel economy control technology such as electric vehicles and plug-in hybrid 

electric vehicles. These ‘super credits’ could 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.”227 Following through, EPA proposed two 

 

226 In this section, “upstream” means all fuel-related GHG emissions prior to the fuel being introduced to 

the vehicle. 

227 Notice of Upcoming Joint Rulemaking to Establish Vehicle GHG Emissions and CAFE Standards, 74 

FR 24007, 24011 (May 22, 2009) 
400 

mechanisms by which these vehicles would earn credits: 1) a zero grams/mile compliance 

value for EVs, FCVs, and for PHEVs when operated on grid electricity, and 2) a vehicle 

multiplier in the range of 1.2 to 2.0.228 

 The zero grams/mile compliance value for EVs (and for PHEVs when operated on 

grid electricity, as well as for FCVs which involve similar upstream GHG issues with 

respect to hydrogen production) is an incentive that operates like a credit because, while 

it accurately accounts for tailpipe GHG emissions, it does not reflect the increase in 

upstream GHG emissions associated with the electricity used by EVs compared to the 

upstream GHG emissions associated with the gasoline or diesel fuel used by conventional 

vehicles.229 For example, based on GHG emissions from today’s national average 

electricity generation (including GHG emissions associated with feedstock extraction, 

processing, and transportation) and other key assumptions related to vehicle electricity 

consumption, vehicle charging losses, and grid transmission losses, a midsize EV might 

have an upstream GHG emissions of about 180 grams/mile, compared to the upstream 

GHG emissions of a typical midsize gasoline car of about 60 grams/mile. Thus, the EV 

would cause a net upstream GHG emissions increase of about 120 grams/mile (in 

general, the net upstream GHG increase would be less for a smaller EV and more for a 

larger EV). The zero grams/mile compliance value provides an incentive because it is 

less than the 120 grams/mile value that would fully account for the net increase in GHG 

 

228 74 FR 49533-34. 229 See 74 FR 49533 (“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”). 
401 

emissions, counting upstream emissions.230 The net upstream GHG impact could change 

over time, of course, based on changes in electricity generation or gasoline production. 

 The proposed vehicle multiplier incentive would also have operated like a credit 

as it would have allowed an EV, PHEV, or FCV to count as more than one vehicle in the 

manufacturer’s fleet average. For example, combining a multiplier of 2.0 with a zero 

grams/mile compliance value for an EV would allow that EV to be counted as two 

vehicles, each with a zero grams/mile compliance value, in the manufacturer’s fleet 

average calculations. In effect, a multiplier of 2.0 would double the overall credit 

associated with an EV, PHEV, or FCV. 

 EPA explained in the proposal that the potential for large future emissions 

benefits from these technologies provides a strong reason for providing incentives at this 

time to promote their commercialization in the 2012-2016 model years. At the same 

time, EPA acknowledged that the zero grams/mile compliance value did not account for 

increased upstream GHG emissions. EPA requested comment on providing some type of 

incentive, the appropriateness of both the zero grams/mile and vehicle multiplier 

incentive mechanisms, and on any alternative approaches for addressing advanced 

technology vehicle incentives. EPA received many comments on these issues, which will 

be briefly summarized below. 

 

230 This 120 grams/mile value for a midsize EV is approximately similar to the compliance value for 

today’s most efficient conventional hybrid vehicle, so the EV would not be significantly more “GHGpositive” than the most efficient conventional hybrid counterpart under a full accounting approach. It 

should be noted that these emission levels would still be well below the footprint targets for the vehicles in 

question. 
402 

 Although some environmental organizations and State agencies supported the 

principle of including some type of regulatory incentive mechanism, almost all of their 

comments were opposed to the combination of both the zero grams/mile compliance 

value and multipliers in the higher end of the proposed range of 1.2 to 2.0. The California 

Air Resources Board stated that the proposed credits “are excessive” and the Union of 

Concerned Scientists stated that it “strongly objects” to the approach that lacks “technical 

justification” by not “accounting for upstream emissions.” The Natural Resources 

Defense Council (NRDC) stated that the credits could “undermine the emissions benefits 

of the program and will have the unintended consequence of slowing the development of 

conventional cleaner vehicle emission reduction technologies into the fleet.” NRDC, 

along with several other commenters who made the same point, cited an example based 

on Nissan’s public statements that it plans on producing up to 150,000 Nissan Leaf EVs 

in the near future at its plant in Smyrna, Tennessee.231 NRDC’s analysis showed that if 

EVs were to account for 10% of Nissan’s car fleet in 2016, the combination of the zero 

grams/mile and 2.0 multiplier would allow Nissan to make only relatively small 

improvements to its gasoline car fleet and still be in compliance. NRDC described a 

detailed methodology for calculating “true full fuel cycle emissions impacts” for EVs. 

The Sierra Club suggested that the zero grams/mile credit would “taint” EVs as the public 

comes to understand that these vehicles are not zero-GHG vehicles, and that the zero 

grams/mile incentive would allow higher gasoline vehicle GHG emissions. 

 

231 ”Secretary Chu Announces Closing of $1.4 Billion Loan to Nissan,” Department of Energy, January 28, 

2010, http://www.energy.gov/news/8581.htm. EPA Docket EPA-HQ-OAR-2009-0472. 
403 

Most vehicle manufacturers were supportive of both the zero grams/mile 

compliance value and a higher vehicle multiplier. The Alliance of Automobile 

Manufacturers supported zero grams/mile “since customers need to receive a clear signal 

that they have made the right choice by preferring an EV, PHEV, or EREV....However, 

the Alliance recognizes the need for a comprehensive approach with shared responsibility 

in order to achieve an overall carbon reduction.” Nissan claimed that zero grams/mile is 

“legally required,” stating that EPA’s 2-cycle test procedures do not account for upstream 

GHG emissions, that accounting for upstream emissions from electric vehicles but not 

from other vehicles would be arbitrary, and that including upstream GHG would “disrupt 

the careful balancing embedded into the National Program.” Several other manufacturers, 

including Ford, Chrysler, Toyota, and Mitsubishi, also supported the proposed zero 

grams/mile compliance value. BMW suggested a compliance value approach similar to 

that used for CAFE compliance (described below), which would yield a very low, nonzero grams/mile compliance value. Honda opposed the zero grams/mile incentive. Honda 

suggested that EPA should fully account for upstream GHG and “should separate 

incentives and credits from the measurement of emissions.” Automakers universally 

supported higher multipliers, many higher than the maximum 2.0 level proposed by EPA. 

Honda suggested a multiplier of 16.0 for FCVs. Mitsubishi supported the concept of 

larger, temporary incentives until advanced technology vehicle sales achieved a 10% 

market share. Finally, some commenters suggested that other technologies should also 

receive incentives, such as diesel vehicles, hydrogen-fueled internal combustion engines, 

and natural gas vehicles. 
404 

 Based on a careful consideration of these comments, EPA is modifying its 

proposed advanced technology vehicle incentive program for EVs, PHEVs, and FCVs 

produced in 2012-2016. EPA is not extending the program to include additional 

technologies at this time. The final incentive program, and our rationale for it, are 

described below. 

 One, the incentive program retains the zero grams/mile value for EVs and FCVs, 

and for PHEVs when operated on grid electricity, subject to vehicle production caps 

discussed below. EPA acknowledges that, based on current electricity and hydrogen 

production processes, that EVs, PHEVs, and FCVs yield higher upstream GHG emissions 

than comparable gasoline vehicles. But EPA reiterates its support for temporarily 

rewarding advanced emissions control technologies by foregoing modest emissions 

reductions in the short term in order to lay the foundation for the potential for much 

larger emission reductions in the longer term.232 EPA notes that EVs, PHEVs, and FCVs 

are potential GHG “game changers” if major cost and consumer barriers can be overcome 

and if there is a nationwide transformation to low-GHG electricity (or hydrogen, in the 

case of FCVs). 

 Although EVs and FCVs will have compliance values of zero grams/mile, PHEV 

compliance values will be determined by combining zero grams/mile for grid electricity 

operation with the GHG emissions from the 2-cycle test results during operation on liquid 

fuel, and weighting these values by the percentage of miles traveled that EPA believes 

 

232 EPA has adopted this strategy in several of its most recent and important mobile source rulemakings, 

such as its Tier 2 Light-Duty Vehicle, 2007 Heavy-Duty Highway, and Tier 4 Nonroad Diesel rulemakings. 
405 

will be performed on grid electricity and on liquid fuel, which will vary for different 

PHEVs. EPA is currently considering different approaches for determining the weighting 

factor to be used in calculating PHEV GHG emissions compliance values. EPA will 

consider the work of the Society of Automotive Engineers Hybrid Technical Standards 

Committee, as well as other relevant factors. EPA will issue a final rule on this 

methodology by the fall of 2010, when EPA expects some PHEVs to initially enter the 

market. 

EPA agrees with the comments by the environmental organizations, States, and 

Honda that the zero grams/mile compliance value will reduce the overall GHG benefits 

of the program. However, EPA believes these reductions in GHG benefits will be 

relatively small based on the projected production of EVs, PHEVs, and FCVs during the 

2012-2016 timeframe, along with the other changes that we are making in the incentive 

program. EPA believes this modest potential for reduction in near-term emissions 

control is more than offset by the potential for very large future emissions reductions that 

commercialization of these technologies could promote. 

 Two, the incentive program will not include any vehicle multipliers, i.e., an EV’s 

zero grams/mile compliance value will count as one vehicle in a manufacturer’s fleet 

average, not as more than one vehicle as proposed. EPA has concluded that the 

combination of the zero grams/mile and multiplier credits would be excessive. Compared 

to the maximum multiplier of 2.0 that EPA had proposed, dropping this multiplier 
406 

reduces the aggregate impact of the overall credit program by a factor of two (less so for 

lower multipliers, of course). 

 Three, EPA is placing a cumulative cap on the total production of EVs, PHEVs, 

and FCVs for which an individual manufacturer can claim the zero grams/mile 

compliance value during model years 2012-2016. The cumulative production cap will be 

200,000 vehicles, except those manufacturers that sell at least 25,000 EVs, PHEVs, and 

FCVs in MY2012 will have a cap of 300,000 vehicles for MY2012-2016. This higher cap 

option is an additional incentive for those manufacturers that take an early leadership role 

in aggressively and successfully marketing advanced technology vehicles. These caps 

are a second way to limit the potential GHG benefit losses associated with the incentive 

program and therefore are another response to the concerns that the proposed incentives 

were excessive and could significantly undermine the program’s GHG benefits. If, for 

example, 500,000 EVs were produced in 2012-2016 that qualified for the zero 

grams/mile compliance value, the loss in GHG benefits due to this program would be 

about 25 million metric tons, or less than 3 percent of the total projected GHG benefits of 

this program.233 The rationale for these caps is that the incentive for EVs, PHEVs, and 

FCVs is most critical when individual automakers are beginning to introduce advanced 

technologies in the market, and less critical once individual automakers have successfully 

achieved a reasonable market share and technology costs decline due to higher 

production volumes and experience. EPA believes that cap levels of 200,000-300,000 

 

233 See Regulatory Impact Analysis, Appendix 5.B. While it is, of course, impossible to predict the number 

of EVs, PHEVs, and FCVs that will be produced between 2012 and 2016 with absolute certainty, EPA 

believes that 500,000 “un-capped” EVs is an optimistic scenario. Fewer EVs, or a combination of 500,000 

EVs and PHEVs, would lessen the short-term reduction in GHG benefits. Production of more than 500,000 

“un-capped” EVs would increase the short-term reduction in GHG benefits. 
407 

vehicles over a five model year period are reasonable, as production greater than this 

would indicate that the manufacturer has overcome at least some of the initial market 

barriers to these advanced technologies. Further, EPA believes that it is unlikely that 

many manufacturers will approach these cap levels in the 2012-2016 timeframe.234 

Production beyond the cumulative vehicle production cap for a given 

manufacturer in MY2012-2016 would have its compliance values calculated according to 

a methodology that accounts in full for the net increase in upstream GHG emissions. For 

an EV, for example, this would involve: 1) measuring the vehicle electricity consumption 

in watt-hours/mile over the 2-cycle test (in the example introduced earlier, a midsize EV 

might have a 2-cycle test electricity consumption of 230 watt-hours/mile), 2) adjusting 

this watt-hours/mile value upward to account for electricity losses during transmission 

and vehicle charging (dividing 230 watt-hours/mile by 0.93 to account for 

grid/transmission losses and by 0.90 to reflect losses during vehicle charging yields a 

value of 275 watt-hours/mile), 3) multiplying the adjusted watt-hours/mile value by a 

nationwide average electricity upstream GHG emissions rate of 0.642 grams/watt-hour at 

the powerplant235 (275 watt-hours/mile multiplied by 0.642 grams GHG/watt-hour yields 

 

234 Fundamental power train changes in the automotive market typically evolve slowly over time. For 

example, over ten years after the U.S. introduction of the first conventional hybrid electric vehicle, total 

hybrid sales are approximately 300,000 units per year. 

235 The nationwide average electricity upstream GHG emissions rate of 0.642 grams GHG/watt-hour was 

calculated from 2005 nationwide powerplant data for CO2, CH4, and N2O emissions from eGRID2007 

(http://www.epa.gov/cleanenergy/energy-resources/egrid/index.html), converting to CO2 -e using Global 

Warming Potentials of 25 for CH4 and 298 for N2O, and multiplying by a factor of 1.06 to account for 

GHG emissions associated with feedstock extraction, transportation, and processing (based on Argonne 

National Laboratory’s The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation 

(GREET) Model, Version 1.8c.0, available at 

http://www.transportation.anl.gov/modeling_simulation/GREET/). EPA Docket EPA-HQ-OAR-2009-

0472. EPA recognizes that there are many issues involved with projecting the electricity upstream GHG 

emissions associated with future EV and PHEV use including, but not limited to, average vs marginal, 

daytime vs nighttime vehicle charging, geographical differences, and changes in future electricity 
408 

177 grams/mile), and 4) subtracting the upstream GHG emissions of a comparable 

midsize gasoline vehicle of 56 grams/mile to reflect a true net increase in upstream GHG 

emissions (177 grams/mile for the EV minus 56 grams/mile for the gasoline vehicle 

yields a net increase and EV compliance value of 121 grams/mile).236,237 The full 

accounting methodology for the portion of PHEV operation on grid electricity would use 

this same approach. 

EPA projects that the aggregate impact of the incentive program on advanced 

technology vehicle GHG compliance values will be similar to the way advanced 

technologies are treated under DOT’s CAFE program. In the CAFE program, the mpg 

value for an EV is determined using a “petroleum equivalency factor” that has a 1/0.15 

factor built into it similar to the flexible fuel vehicle credit.238 For example, under current 

regulations, an EV with a 2-cycle electricity consumption of 230 watt-hours/mile would 

have a CAFE rating of about 360 miles per gallon, which would be equivalent to a 

gasoline vehicle GHG emissions value of 25 grams/mile, which is close to EPA’s zero 

grams/mile for EV production that is below an individual automaker’s cumulative vehicle 

production cap. The exception would be if a manufacturer exceeded its cumulative 

vehicle production cap during MY2012-2016. Then, the same EV would have a GHG 

 feedstocks. EPA chose to use the 2005 national average value because it is known and documentable. 

Values appropriate for future vehicle use may be higher or lower than this value. EPA will reevaluate this 

value in future rulemakings. 

236 A midsize gasoline vehicle with a footprint of 45 square feet would have a MY2016 GHG target of 

about 225 grams/mile; dividing 8887 grams CO2/gallon of gasoline by 225 grams/mile yields an equivalent 

fuel economy level of 39.5 mpg; and dividing 2208 grams upstream GHG/gallon of gasoline by 39.5 mpg 

yields a midsize gasoline vehicle upstream GHG value of 56 grams/mile. The 2208 grams upstream 

GHG/gallon of gasoline is calculated from 19,200 grams upstream GHG/mmBtu (Renewable Fuel Standard 

Program, Regulatory Impact Analysis, Section 2.5.8, February 2010) and multiplying by 0.115 

mmBtu/gallon of gasoline. 

237 Manufacturers can utilize alternate calculation methodologies if shown to yield equivalent or superior 

results and if approved in advance by the Administrator. 

238 65 FR 36987 (June 12, 2000). 
409 

compliance value of about 120 grams/mile, which would be significantly higher than the 

25 gram/mile implied by the 360 mile/gallon CAFE value. 

EPA disagrees with Nissan that excluding upstream GHGs is legally required 

under section 202(a)(1). In this rulemaking, EPA is adopting standards under section 

202(a)(1), which provides EPA with broad discretion in setting emissions standards. This 

includes authority to structure the emissions standards in a way that provides an incentive 

to promote advances in emissions control technology. This discretion includes the 

adjustments to compliance values adopted in the final rule, the multipliers we proposed, 

and other kinds of incentives. EPA recognizes that we have not previously made 

adjustments to a compliance value to account for upstream emissions in a section 202(a) 

vehicle emissions standard, but that does not mean we do not have authority to do so in 

this case. In addition, EPA is not directly regulating upstream GHG emissions from 

stationary sources, but instead is deciding how much value to assign to a motor vehicle 

for purposes of compliance calculations with the motor vehicle standard. While the 

logical place to start is the emissions level measured under the test procedure, section 

202(a)(1) does not require that EPA limit itself to only that level. For vehicles above the 

production volume cap described above, EPA will adjust the measured value to a level 

that reflects the net difference in upstream GHG emissions compared to a comparable 

conventional vehicle. This will account for the actual GHG emissions increase 

associated with the use of the EV. As shown above, upstream GHG emissions 

attributable to increased electricity production to operate EVs or PHEVs currently exceed 

the upstream GHG emissions attributable to gasoline vehicles. There is a rational basis 
410 

for EPA to account for this net difference, as that best reflects the real world effect on the 

air pollution problem we are addressing. For vehicles above the cap, EPA is reasonably 

and fairly accounting for the incremental increase in upstream GHG emissions from both 

the electric vehicles and the conventional vehicles. EPA is not, as Nissan suggested, 

arbitrarily counting upstream emissions for electric vehicles but not for conventional fuel 

vehicles. 

EPA recognizes that every motor vehicle fuel and fuel production process has 

unique upstream GHG emissions impacts. EPA has discretion in this rulemaking under 

section 202(a) on whether to account for differences in net upstream GHG emissions 

relative to gasoline produced from oil, and intends to only consider upstream GHG 

emissions for those fuels that have significantly higher or lower GHG emissions impacts. 

At this time, EPA is only making such a determination for electricity, given that, as 

shown above in the example for a midsize car, electricity upstream GHG emissions are 

about three times higher than gasoline upstream GHG emissions. For example, the 

difference in upstream GHG emissions for both diesel fuel from oil and CNG from 

natural gas are relatively small compared to differences associated with electricity. Nor 

is EPA arbitrarily ignoring upstream GHG emissions of flexible fuel vehicles (FFVs) that 

can operate on E85. Data show that, on average, FFVs operate on gasoline over 99 

percent of the time, and on E85 fuel less than 1 percent of the time.239 EPA’s recently 

promulgated Renewable Fuel Standard Program shows that, with respect to aggregate 

lifecycle emissions including non-tailpipe GHG emissions (such as feedstock growth, 

transportation, fuel production, and land use), lifecycle emissions for ethanol from corn 

 

239 Renewable Fuel Standard Program (RFS2), Regulatory Impact Analysis, Section 1.7.4, February 2010. 
411 

using advanced production technologies are about 20 percent less GHG than gasoline 

from oil.240 Given this difference, and that E85 is used in FFVs less than 1 percent of the 

time, EPA has concluded that it is not necessary to adopt a more complicated upstream 

accounting for FFVs. Accordingly, EPA’s incentive approach here is both reasonable and 

authorized under section 202(a)(1). 

 In summary, EPA believes that this program for MY2012-2016 strikes a reasoned 

balance by providing a temporary regulatory incentive to help promote 

commercialization of advanced vehicle technologies which are potential game-changers, 

but which also face major barriers, while effectively minimizing potential GHG losses by 

dropping the proposed multiplier and adding individual automaker production volume 

caps. In the future, if there were a program to control utility GHG emissions, then these 

advanced technology vehicles have the potential to produce very large reductions in GHG 

emissions, and to transform the transportation sector’s contribution to nationwide GHG 

emissions. EPA will reassess the issue of how to address EVs, PHEVs, and FCVs in 

rulemakings for model years 2017 and beyond based on the status of advanced vehicle 

technology commercialization, the status of upstream GHG control programs, and other 

relevant factors. 

Finally, the criteria and definitions for what vehicles qualify for the advanced 

technology vehicle incentives are provided in Section III.E. These definitions for EVs, 

PHEVs, and FCVs ensure that only credible advanced technology vehicles are provided 

the incentives. 

 

240 75 FR 14670 (March 26, 2010) 
412 

4. Off-cycle Technology Credits

As proposed, EPA is adopting 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 significantly captured over the 2-cycle test procedure used 

to determine compliance with the fleet average standards (i.e., “off-cycle”).241 Eligible 

innovative technologies are 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 do not provide 

novel approaches to reducing greenhouse gas emissions. Manufacturers must obtain EPA 

approval for new and innovative technologies at the time of vehicle certification in order 

to earn credits for these technologies at the end of the model year. This approval must 

include the testing methodology to be used for quantifying credits. Further, any credits 

for these off-cycle technologies must be based on real-world GHG reductions not 

significantly 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 by 

increasing A/C efficiency, eligible technologies would not be primarily active during the 

2-cycle test and therefore the associated improvements in CO2 emissions would not be 

significantly captured. Because these technologies are not nearly so well developed and 

understood, EPA is not prepared to consider them in assessing the stringency of the CO2

 

241 See final regulations at 40 CFR 86.1866-12(d). 
413 

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. EPA believes that manufacturers should be 

able to generate credit for the emission reductions these technologies actually achieve, 

assuming these reductions can be adequately demonstrated and verified. 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, that bona fide reductions from 

these technologies should be considered in determining a manufacturer’s fleet average, 

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 received comments from a few manufacturers that the “new and innovative” 

criteria should be broadened. The commenters pointed out that there are technologies 

already in the marketplace that would provide emissions reductions off-cycle and that 

their use should be incentivized. One manufacturer suggested that off-cycle credits 

should be given for start-stop technologies. EPA does not agree that this technology, 

which EPA’s modeling projects will be widely used by manufacturers in meeting the CO2 

standards, should qualify for off-cycle credits. Start-stop technology already achieves a 

significant CO2 benefit on the current 2-cycle tests, which is why many manufacturers 

have announced plans to adopt in across large segments of the fleet. EPA recognizes 

there may be additional benefits to start-stop technology beyond the 2-cycle tests (e.g., 

heavy idle use), and that this is likely the case for other technologies that manufacturers 
414 

will rely on to meet the MY2012-2016 standards. EPA plans to continue to assess the 

off-cycle potential for these technologies in the future. However, EPA does not believe 

that off-cycle credits should be granted for technologies which we expect manufacturers 

to rely on in widespread use throughout the fleet in meeting the CO2 standards. Such 

credits could lead to double counting, as there is already significant CO2 benefit over the 

2-cycle tests. EPA expects that most if not all technologies that reduce CO2 emission on 

the 2-cycle test will also reduce CO2 emissions during the wide variety of in-use 

operation that is not directly captured in the 2-cycle test. This is no different than what 

occurs from the control technology on vehicles for criteria pollutants. We expect that the 

catalytic converter and other emission control technology will operate to reduce 

emissions throughout in-use driving, and not just when the vehicle is tested on the 

specified test procedure. The aim for this off-cycle credit provisions is to provide an 

incentive for technologies that normally would not be chosen as a GHG control strategy, 

as their GHG benefits are not measured on the specified 2-cycle test. It is not designed to 

provide credits for technology that does provide significant GHG benefits on the 2-cycle 

test and as expected will also typically provide GHG benefits in other kinds of operation. 

Thus, EPA is finalizing the “new and innovative” criteria as proposed. That is, the 

potential to earn off-cycle credits will be limited to those technologies that are new and 

innovative, are introduced in only a limited number of vehicle models (i.e., not in 

widespread use), and are not captured on the current 2-cycle tests. This approach will 

encourage future innovation, which may lead to the opportunity for future emissions 

reductions. 

 
415 

 As proposed, manufacturers would quantify CO2 reductions associated with the 

use of the innovative off-cycle technologies such that the credits could be applied on a 

g/mile equivalent basis, as is the case with A/C system improvements. Credits must be 

based on real additional reductions of CO2 emissions and must be quantifiable and 

verifiable with a repeatable methodology. As proposed, 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 in-use deterioration over the useful life of the vehicle, the manufacturer 

must 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 finalizing 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 must 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 manufacture must follow the procedures described 

below (as codified in today’s rules). 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. As 
416 

discussed below, EPA is also providing opportunity for public comment as part of the 

approval process for such non-5-cycle credits. 

 

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,242 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 high-speed 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. 

 

242 Fuel Economy Labeling of Motor Vehicles: Revisions to Improve Calculation of Fuel Economy 

Estimates; Final Rule (71 FR 77872, December 27, 2006). 
417 

EPA continues to believe that the use of these supplemental cycles may provide a 

method by which technologies not demonstrated on the baseline 2-cycles can be 

quantified and is finalizing this approach as proposed. 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. 

Although A/C credits for efficiency improvements will largely be captured in the 

A/C credits provisions through the credit menu of known efficiency improving 

components and controls, 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/C-related technologies could be 

applied to the 5-cycle equation to quantify the CO2 reductions of the technology. 
418 

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 regulatory evaluation/approval process will be relatively simple. The 

manufacturer will simply test vehicles with and without the technology installed or 

operating and compare results. All 5-cycles must be tested with the technology enabled 

and disabled, and the test results will used to calculate a combined city/highway CO2

value with the technology and without the technology. These values will then be 

compared to determine the amount of the credit; the combined city/highway CO2 value 
419 

with the technology operating will 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 will need to be performed in 

order to achieve the necessary strong degree of statistical significance of the credit 

determination results. This will have to be done for each model type for which a credit is 

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 will 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 will be multiplied by the total production of vehicles subject to that value to 

determine the total number of credits. 

 EPA received a few comments regarding the 5-cycle approach. While not 

commenting directly on the 5-cycle testing methodology, the Alliance raised general 

concerns that the proposed approach did not offer manufacturers enough certainty with 

regard to credit applications and testing in order to take advantage of the credits. The 

Alliance further commented that the proposal did not provide a level playing field to all 

manufacturers in terms of possible credit availability. The Alliance recommended that 

rather than attempting to quantify CO2 reductions with a prescribed test procedure on 

unknown technologies, EPA should handle credit applications and testing guidelines via 

future guidance letters, as technologies emerge and are developed. 
420 

 EPA believes that 5-cycle testing methodology is one clear and objective way to 

demonstrate certain off-cycle emissions control technologies, as discussed above. It 

provides certainty with regard to testing, and is available for all manufacturers. As 

discussed below, there are also other options for manufactures where the 5-cycle test is 

not appropriate. EPA is retaining this as a primary methodology for determining offcycle credits. For technologies not able to be demonstrated on the 5-cycle test, EPA is 

finalizing an approach that will include a public comment opportunity, as discussed 

below, which we believe addresses commenter concerns regarding maintaining a level 

playing field. 

b. Alternative Off-Cycle Credit Methodologies 

As proposed, in cases where the benefit of a technological approach to reducing 

CO2 emissions can not be adequately represented using existing test cycles, 

manufacturers will need to develop test procedures and analytical approaches to estimate 

the effectiveness of the technology for the purpose of generating credits. As discussed 

above, the first step must be a thorough assessment of whether the 5-cycle approach can 

be used to demonstrate a reduction in emissions. If EPA determines that the 5-cycle 

process is inadequate for the specific technology being considered by the manufacturer 

(i.e., the 5-cycle test does not demonstrate any emissions reductions), then an alternative 

approach may be developed and submitted to EPA for approval. The demonstration 
421 

program must 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 could be 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 on-road testing, modeling, or some other 

analytical approach, the manufacturer will be required to present a proposed methodology 

to EPA. EPA will approve the methodology and credits only if certain criteria are met. 

Baseline emissions and control emissions must 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. The analytical approach must be robust, verifiable, and 

capable of demonstrating the real-world emissions benefit with strong statistical 
422 

significance. Data must be on a vehicle model-specific basis unless a manufacturer 

demonstrated model specific data was not necessary. Approval of the approach to 

determining a CO2 benefit will not imply approval of the results of the program or 

methodology; when the testing, modeling, or analyses are complete the results will 

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. 

 In addition, EPA received several comments recommending that the approval 

process include an opportunity for public comment. As noted above, some manufacturers 

are concerned that there be a level playing field in terms of all manufacturers having a 

reasonable opportunity to earn credits under an approved approach. Commenters also 

want an opportunity for input in the methodology to ensure the accuracy of credit 

determinations for these technologies. Commenters point out that there are a broad 

number of stakeholders with experience in the issues pertaining to the technologies that 

could add value in determining the most appropriate method to assess these technologies’ 

performance. EPA agrees with these comments and is including an opportunity for 

public comment as part of the approval process. If and when EPA receives an application 

for off-cycle credits using an alternative non 5-cycle methodology, EPA will publish a 

notice of availability in the Federal Register with instructions on how to comment on 

draft off-cycle credit methodology. The public information available for review will 

focus on the methodology for determining credits but the public review obviously is 

limited to non-confidential business information. The timing for final approval will 
423 

depend on the comments received. EPA also believes that a public review will encourage 

manufacturers to be thorough in their preparation prior to submitting their application for 

credits to EPA for approval. EPA will take comments into consideration, and where 

appropriate, work with the manufacturer to modify their approach prior to approving any 

off-cycle credits methodology. EPA will give final notice of its determination to the 

general public as well as the applicant. Off-cycle credits would be available in the model 

year following the final approval. Thus, it will be imperative for a manufacturer pursuing 

this option to begin the process as early as possible. 

 EPA also received comments that the off-cycle credits highlights the inadequacy 

of current test procedures, and that there is a clear need for updated certification test 

procedures. As discussed in Section III. B., EPA believes the current test procedures are 

adequate for implementing the standards finalized today. However, EPA is interested in 

improving test procedures in the future and believes that the off-cycle credits program 

has the potential to provide useful data and insights both for the 5-cycle test procedures 

and also other test procedures that capture off-cycle emissions. 

 

5. Early Credit Options

 EPA is finalizing a program to allow manufacturers to generate early credits in 

model years 2009-2011.243 As described below, credits may be generated through early 

additional fleet average CO2 reductions, early A/C system improvements, early advanced 

technology vehicle credits, and early off-cycle credits. As with other credits, early credits 

 

243 See final regulations at 40 CFR 86.1867-12. 
424 

are subject to a five year carry-forward limit based on the model year in which they are 

generated. Manufacturers may transfer early credits between vehicle categories (e.g., 

between the car and truck fleet). With the exception of MY2009 early program credits, 

as discussed below, a manufacturer may trade other early credits to other 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 adopting certification, compliance, or in-use requirements for vehicles 

generating early credits. Since manufacturers are already certifying MY 2010 and in 

some cases even MY 2011 vehicles, doing so would make certification, compliance, and 

in-use requirements unworkable. As discussed below, manufacturers are required to 

submit an early credits report to EPA for approval no later than 90 days after the end of 

MY 2011. This report must 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. 

 a. Credits Based on Early Fleet Average CO2 Reductions 

 As proposed, EPA is finalizing opportunities for early credit generation in MYs 

2009-2011 through over-compliance with a fleet average CO2 baseline established by 

EPA. EPA is finalizing four pathways for doing so. In order to generate early CO2

credits, manufacturers must select one of the four paths for credit generation for the entire 
425 

three year period and may not switch between pathways for different model years. For 

two pathways, EPA is establishing the baseline 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, include credits 

based on over-compliance with CAFE standards in states that have not adopted the 

California standards. 

 EPA received comments from manufacturers in support of the early credits 

program as a necessary compliance flexibility. The Alliance commented that the early 

credits reward manufacturers for providing fleet performance that exceeds California and 

Federal standards and do not result in a windfall. AIAM commented that early credits are 

essential to assure the feasibility of the proposed standards and the need for such credits 

must be evaluated in the context of the dramatic changes the standards will necessitate in 

vehicle design and the current economic environment in which manufacturers are called 

upon to make the changes. Manufacturers also supported retaining all four pathways, 

commenting that eliminating pathways would diminish the flexibility of the program. 

EPA also received comments from many environmental organizations and states that the 

program would provide manufacturers with windfall credits because manufacturers will 

not have to take any steps to earn credits beyond those that are already planned and in 

some cases implemented. These commenters were particularly concerned that the 

California truck standards in MY 2009 are not as stringent as CAFE, so overcompliance 

with the California standards could be a windfall in MY 2009, and possibly even 

MY2010. These commenters supported an early credits program based on 
426 

overcompliance with the more stringent of either the CAFE or California standards in any 

given year. EPA is retaining the early credits program because EPA judges that they are 

not windfall credits, and manufacturers in some cases have reasonably relied on the 

availability of these credits, and have based early model year compliance strategies on 

their availability so that the credits are needed to provide adequate lead for the initial 

years of the program. However, as discussed below, EPA is restricting credit trading for 

MY2009 credits earned under the California-based pathways. 

Manufacturers selecting Pathway 1 will generate credits by over-complying with 

the California equivalent baseline established by EPA over the manufacturer’s fleet of 

vehicles sold nationwide. Manufacturers selecting Pathway 2 will generate credits 

against the California equivalent baseline only for the fleet of vehicles sold in California 

and the CAA section 177 states.244 This approach includes all CAA 177 states as of the 

date of promulgation of the Final Rule in this proceeding. Manufacturers are required to 

include both cars and trucks in the program. Under Pathways 1 and 2, EPA is requiring 

manufacturers to cover any deficits incurred against the baseline levels established by 

EPA during the three year period 2009-2011 before credits can 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 including this provision to help ensure the early 

credits generated under this program are consistent with the credits available under the 

 

244 CAA 177 states refers to states that have adopted the California GHG standards. At present, there are 

thirteen CAA 177 states: New York, Massachusetts, Maryland, Vermont, Maine, Connecticut, Arizona, 

New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Washington, as well as Washington, DC. 
427 

California program during these model years. In its comments, California supported such 

an approach. 

 Table III.C.5-1 provides the California equivalent baselines EPA is finalizing to 

be used as the basis for CO2 credit generation under the California-based pathways. 

These are the California GHG standards for the model years shown. EPA proposed to 

adjust the California standards by 2.0 g/mile to account for the exclusion of N2O and 

CH4, which are included in the California GHG standards, but not included in the credits 

program. EPA received comments from one manufacturer that this adjustment is in error 

and should not be made. The commenter noted that EPA already includes total 

hydrocarbons in the carbon balance determination of carbon related exhaust emissions 

and therefore already accounts for CH4. EPA also includes CO in the carbon related 

exhaust emissions determination which acts to offset the need for an N20 adjustment. 

The commenter noted that THC and CO add about 0.8 to 3.0 g/mile to the determination 

of carbon related emissions and therefore EPA should not make the 2.0g/mile adjustment. 

The commenter is correct, and therefore the final levels shown in the table below are 2.0 

g/mile higher than proposed. These comments are further discussed in the Response to 

Comments document. Manufacturers will 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 will need to achieve fleet levels below those 
428 

shown in the table in order to earn credits, using the California vehicle category 

definitions. 

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 323 439 

2010 301 420 

2011 267 390 

 

Manufacturers using Pathways 1 or 2 above will use year end car and truck sales 

in each category. Although production data is used for the program starting in 2012, 

EPA is using sales data for the early credits program in order to apportion vehicles by 

state. This is described further below. Manufacturers must 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 are 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, will be included in the fleet average level 

determination. In model year 2009, the California CO2 standard for cars (323 g/mi CO2) 

is equivalent to 323 g/mi CO2, and the California light-truck 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 program categorize 

vehicles. Manufacturers are required 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 
429 

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 received comments that this approach will provide windfall credits to 

manufacturers because the MY2009 California light truck standards is less stringent than 

the corresponding CAFE standards. While this could be accurate if credits were based on 

performance in just MY 2009, that is not how credits are determined. Credits are based 

on the performance over a three model year period, MY 2009-2011. As noted in the 

proposal, 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. Some commenters were very concerned about this issue and commented in 

support of restricting credit trading between firms of MY2009 credits based on the 

California program. EPA requested comments on this approach and is finalizing this 

credit trading restriction based on continued concerns regarding the issue of windfall 

credits. 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. Therefore, 
430 

manufacturers selecting Pathways 1, 2, or 3 will not be allowed to trade any MY 2009 

credits that they may generate. 

Commenters also recommended basing credits on the more stringent of the 

standards between CAFE and CARB, which for MY2009, would be the CAFE standards. 

However, EPA believes that this would not be necessary in light of the credit provisions 

requiring manufacturers choosing the California based pathways to use the California 

pathway for all three MYs 2009-2011, and the credit trading restrictions for MY2009 

discussed above. 

In addition, for Pathways 1 and 2, EPA is allowing manufacturers to include 

alternative compliance credits earned per the California alternative compliance 

program.245 These alternative compliance credits are based on the demonstrated use of 

alternative fuels in flex fuel vehicles. As with the California program, the credits are 

available beginning in MY 2010. Therefore, these early alternative compliance credits 

are available under EPA’s program for the 2010 and 2011 model years. FFVs are 

otherwise included in the early credit fleet average based on their emissions on the 

conventional fuel. This does not apply to EVs and PHEVs. The emissions of EVs and 

PHEVs are to be determined as described in Section III.C.3. Manufacturers may 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. 

 

245 See 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. 
431 

 EPA is also finalizing two additional early credit pathways manufacturers could 

select. Pathways 3 and 4 incorporate credits based on over-compliance with CAFE 

standards for vehicles sold outside of California and CAA 177 states in MY 2009-2011. 

Pathway 3 allows manufacturers to earn credits as under Pathway 2, plus earn CAFEbased credits in other states. Credits may 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 is for manufacturers choosing to forego California-based early credits 

entirely and earn only CAFE-based credits outside of California and CAA 177 states. 

Manufacturers may not include FFV credits under the CAFE-based early credit pathways 

since those credits do not automatically reflect actual reductions in CO2 emissions. 

The baselines for CAFE-based 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.246 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 will calculate a baseline using the footprints and sales of vehicles 

outside of California and CAA 177 states. The actual fleet CO2 performance calculation 

 

246 74 FR 14196, March 30, 2009. 
432 

will 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 

* Must be footprint-based standard for manufacturers selecting footprint option under 

CAFE 

 For the CAFE-based pathways, EPA is using 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 

therefore changes part way through the early credits program. EPA further recognizes 

that medium-duty passenger vehicles (MDPVs) are not part of the CAFE program until 

the 2011 model year, and therefore are 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 requires 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 
433 

in two different regions of the country.247 As with NLEV, the determination is to be 

based on where the completed vehicles are delivered as a point of first sale, which in 

most cases would be the dealer.248

 As noted above, manufacturers choosing to generate early CO2 credits must select 

one of the four pathways for the entire early credits program and would not be able to 

switch among them. Manufacturers must submit their early credits report to EPA when 

they submit their final CAFE report for MY 2011 (which is required to be submitted no 

later than 90 days after the end of the model year). Manufacturers will have until then to 

decide which pathway to select. This gives 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 finalizing: 

 

247 62 FR 31211, June 6, 1997. 248 62 FR 31212, June 6, 1997 
434 

Table III.C.5-3 Summary of Early Fleet Average CO2 Credit Pathways 

Common Elements - Manufacturers 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 CAFEbased 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 
435 

 b. Early A/C Credits 

 As proposed, EPA is finalizing provisions allowing manufacturers to earn early 

A/C credits in MYs 2009-2011 using the same A/C system design-based EPA provisions 

being finalized for MYs commencing in 2012, as described in Section III.C.1, above. 

Manufacturers will 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 must be included 

in one of the California-based early credit pathways described above in III.C.5.a. EPA is 

finalizing 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 must fold the A/C credits into the fleet average CO2 calculations under the 

California-based pathway. For example, the MY 2009 California-based program car 

baseline would be 323 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 

12 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. The early A/C credits for vehicles sold outside of California and 

177 states are based on the NHTSA vehicle categories established for the model year in 

which early A/C credits are being earned. 
436 

 c. Early Advanced Technology Vehicle Incentive 

 As discussed in Section III.C.3, above, EPA is finalizing an incentive for sales of 

advanced technology vehicles including EVs, PHEVs, and fuel cell vehicles. EPA is not 

including a multiplier for these vehicles. However, EPA is allowing the use of the 0 

g/mile value for electricity operation for up to 200,000 vehicles per manufacturer (or 

300,000 vehicles for any manufacturer that sells 25,000 or more advanced technology 

vehicles in MY 2012). EPA believes that providing an incentive for the sales of such 

vehicles prior to MY 2012 is consistent with the goal encouraging the introduction of 

such vehicles as early as possible. Therefore, manufacturers may use the 0 g/mile value 

for vehicles sold in MY2009-2011 consistent with the approach being finalized for MY 

2012-2016. Any vehicles sold prior to MY 2012 under these provisions must be counted 

against the cumulative sales cap of 200,000 (or 300,000, if applicable) vehicles. 

Manufacturers selling such vehicles in MY 2009-2011 have the option of either folding 

them into the early credits calculation under Pathways 1 through 4 described in III.C.5.a 

above, or tracking the sales of these vehicles separately for use in their fleetwide average 

compliance calculation in MY 2012 or later years, but may not do both as this would lead 

to double counting. Manufacturers tracking the sales of vehicles not folded into 

Pathways 1-4, may choose to use the vehicle counts along with the 0 g/mi emissions 

value (up to the applicable vehicle sales cap) to comply with 2012 or later standards. For 

example, if a manufacturer sells 1,000 EVs in MY 2011, the manufacturer would then be 

able to include 1,000 vehicles at 0 g/mile in their MY 2012 fleet to decrease the fleet 

average for that model year. Again, these 1,000 vehicles would be counted against the 
437 

cumulative cap of 200,000 or 300,000, as applicable, vehicles. Also, these 1,000 EVs 

would not be included in the early credit pathways discussed above in Section III.C.5.a, 

otherwise the vehicles would be double counted. As with early credits, these early 

advanced technology vehicles will be tracked by model year (2009, 2010, or 2011) and 

subject to the 5 year carry-forward restrictions. 

 d. Early Off-Cycle Credits 

 EPA’s is finalizing off-cycle innovative technology credit provisions, as described 

in Section III.C.4. EPA requested 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. EPA is finalizing this approach for early off-cycle 

credits as a way to encourage innovation to lower emissions as early as possible, 

including the requirements for public review described in Section III.C.4. Upon EPA 

approval of a manufacturer’s application for credits, the credits may be earned 

retroactively. EPA did not receive comments specifically on early off-cycle credits. 

D. Feasibility of the Final CO2 Standards 

This final rule 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 for MY 2012-2016 vehicles. As in many prior 

mobile source rulemakings, the decision on what standard to set is largely based on the 
438 

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 factors 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) to transport the vehicle, its passengers and its contents 

(and any towed loads), and 2) to 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, and 

the proposed and now final standards reflect this basic paradigm. 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 
439 

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 as well. 

 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, but this is not a 

necessary consequence of the rule but rather a matter of automaker choice. 

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 
440 

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 final 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 set of 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 
441 

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. The Center for Biological Diversity commented on 

EPA’s assumptions on redesign cycles, and these comments are addressed in Section 

III.D.7 below. 

 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 packaging in the vehicle, changes in 

vehicle shape to improve aerodynamic efficiency and the application of aluminum (and 

other lightweight materials) 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 
442 

increase in resources and costs that would occur if technology had to be added outside of 

the redesign process. 

 This final 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 final rule with the 

requirements of this final rule in mind. In fact, the lead time available for the start of 

model year 2012 (January 2011) is relatively short, less than a year. The time between 

this final rule and the start of 2013 model year (January 2012) production is under 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 final 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 uses an approach that accounts for and builds on this 
443 

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 final rule is 

commercially available and already being employed to a limited extent across the fleet 

(although the final rule will necessitate far wider penetration of these technologies 

throughout the fleet). The vast majority of the emission reductions which will result from 

this final rule will be produced from the increased use of these technologies. EPA also 

believes that this final rule will encourage the development and limited use of more 

advanced technologies, such as PHEVs and EVs, and the final rule is structured to 

facilitate this result 

In developing the final 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 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 
444 

standards. This assessment is documented in Chapter 3.1 of the RIA. 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 will 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 

(described in more detail below), and the car and truck footprint curves’ relative 

stringency discussed in Section II to determine what technology will 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 light-duty 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 final 

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 final standards and 

one that is less stringent. The technical feasibility of these alternative standards is 

discussed at the end of this section. 
445 

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 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 
446 

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. 

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 final 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-à-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 will 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 
447 

and NHTSA’s Joint Technical Support Document as well as EPA’s 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 final rule, it is necessary to project the 

GHG emissions characteristics of the future vehicle fleet absent this regulation. This is 

called the “reference” fleet. EPA and NHTSA develop this reference fleet using a three 

step process. Step one develops a set of detailed vehicle characteristics and sales for a 

specific model year (in this case, 2008). This is called the baseline fleet. Step two 

adjusts the sales of these vehicles using projections made by AEO and CSM to account 

for expected changes in market conditions. Step three applies fuel saving and emission 

control technology to these vehicles to the extent necessary for manufacturers to comply 

with the MY2011 CAFE standards. Thus, the reference fleet differs from the MY 2008 

baseline fleet in both the level of technology utilized and in terms of the sales of any 

particular vehicle. 

EPA and NHTSA perform steps one and two in an identical manner. The 

development of the characteristics of the baseline 2008 fleet and the adjustment of sales 

to match AEO and CSM forecasts is described in detail in Section II.B above. The two 

agencies perform step three in a conceptually identical manner, but each agency utilizes 

its own vehicle technology and emission model to project the technology needed to 
448 

comply with the 2011 CAFE standards. The agencies use the same two models to project 

the technology and cost of the 2012-2016 standards. Use of the same model for both precontrol and post-control costs ensures consistency. 

The agencies received one comment from the Center for Biological Diversity that 

the use of 2008 vehicles in our baseline and reference fleets inherently includes vehicle 

models which already have or will be discontinued by the time this rule takes effect and 

will be replaced by more advanced vehicle models. This is true. However, we believe 

that the use of 2008 vehicle designs is still the most appropriate approach available. 

First, as discussed in Section II.B above, the designs of these new vehicles at the level of 

detail required for emission and cost modeling are not publically available. Even the 

confidential descriptions of these vehicle designs are usually not of sufficient detail to 

facilitate the level of technology and emission modeling performed by both agencies. 

Second, steps two and three of the process used to create the reference fleet adjust both 

the sales and technology of the 2008 vehicles. Thus, our reference fleet reflects the 

extent that completely new vehicles are expected to shift the light vehicle market in terms 

of both segment and manufacturer. Also, by adding technology to facilitate compliance 

with the 2011 CAFE standards, we account for the vast majority of ways in which these 

new vehicles will differ from their older counterparts. 

 

The agencies also received a comment that some manufacturers have already 

announced plans to introduce technology well beyond that required by the 2011 MY 

CAFE standards. This commenter indicated that the agencies’ approach over-estimated 
449 

the technology and cost required by the proposed standards and resulted in less stringent 

standards being proposed than a more realistic reference fleet would have supported. 

First, the agencies agree that limiting the application of additional technology beyond that 

already on 2008 vehicles to only that required by the 2011 CAFE standards could underestimate the use of such technology absent this rule. However, it is difficult, if not 

impossible, to separate future fuel economy improvements made for marketing purposes 

from those designed to facilitate compliance with anticipated CAFE or CO2 emission 

standards. For example, EISA was signed over two years ago, which contained specific 

minimum limits on light vehicle fuel economy in 2020, while also requiring ratable 

improvements in the interim. NHTSA proposed fuel economy standards for the 2012-

2015 model years under the EISA provisions in April of 2008, although NHTSA 

finalized only 2011 standards for passenger vehicles. It is also true that manufacturers 

can change their plans based on market conditions and other factors. Thus, 

announcements of future plans are not certain. As mentioned above, these plans do not 

include specific vehicle characteristics. Thus, in order to avoid under-estimating the cost 

associated with this rule, the agencies have limited the fuel economy improvements in the 

reference fleet to those projected to result from the existing CAFE standards. We 

disagree with the commenter that this has caused the standards being promulgated today 

to be less stringent than would have been the case had we been able to confidently predict 

additional fuel economy and CO2 emission improvements which will occur absent this 

rule. The inclusion of such technology in the reference fleet would certainly have 

reduced the cost of this final rule, as well as the benefits, but would not have changed the 

final level of technology required to meet the final standards. Also, we believe that the 
450 

same impacts would apply to our evaluations of the two alternative sets of standards, the 

4% per year and 6% per year standards. We are confident that the vast majority of 

manufacturers would not comply with the least stringent of these standards (the 4% per 

year standards) in the absence of this rule. Thus, changes to the reference fleet would not 

have affected the differences in technology, cost or benefits between the final standards 

and the two alternatives. As described below, our rejection of the two alternatives in 

favor of the final standards is based primarily on the relative technology, cost and 

benefits associated with the three sets of standards than the absolute cost or benefit 

relative to the reference fleet. Thus, we do not agree with the commenter that our choice 

of reference fleet adversely impacted the development of the final standards being 

promulgated today. 

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 final CO2 emission standards. In 

summary, the reference fleet represents vehicle characteristics and sales in the 2012 and 

later model years absent this final rule. Technology is then added to these vehicles in 

order to reduce CO2 emissions to achieve compliance with the final CO2 standards. As 

noted above, EPA did not factor in any changes to vehicle utility or characteristics, or 

sales in projecting manufacturers’ compliance with this final rule. 

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 
451 

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. These groupings are the same as those used in 

the NPRM. 
452 

Table III.D.1-1 Vehicle Groupingsa

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 final rule is the 
453 

impact of the 2011 MY CAFE standards. 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. 

As was done for the NPRM, EPA has 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 EISAmandated 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 
454 

provisions are not. Practically, relative to the alternative, this increases both the cost and 

benefit of the final standards. In our analysis of this final 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 final rule is reduced. As this final rule eliminates the FFV credit 

(for purposes of CO2 emission compliance) starting in 2016, the net result is to increase 

the projected level of fuel savings from our final 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 final 

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 final 2012 and later CO2

standards. The description of this process is described in the following four sections and 

is essentially the same process used for the NPRM. 

A more detailed description of the methodology used to develop these sales 

projections can be found in the Joint TSD. Detailed sales projections by model year and 

manufacturer can also be found in the TSD. 
455 

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 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 RIA. 

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 AC-related maintenance savings in our cost and benefit analysis 

presented in Section III.H. EPA discusses the likely maintenance savings in Chapter 2 of 

the RIA, though these savings are not included in our final cost estimates for the final 

rule. 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 
456 

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 RIA. As demonstrated in the 

IMAC study (and described in Section III.C as well as the RIA), these levels are feasible 

and achievable with technologies that are available and cost-effective 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 final rule. 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.1 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 RIA. 

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/mi249 $17 

A/C efficiency improvements 5.7 g/mi $53 

 

249 This 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. 
457 

Table III.D.2-2 A/C Related Technology Penetration and Credit Levels Expected 

to be Earned 

 Average credit over entire fleet Technology 

Penetration Car Truck Fleet Average 

2012 28%250 3.4 3.8 3.5 

2013 40% 4.8 5.4 5.0 

2014 60% 7.2 8.1 7.5 

2015 80% 9.6 10.8 10.0 

2016 85% 10.2 11.5 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 typically apply new technologies in packages during 

model redesigns that occur approximately once 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, as explained at proposal, the approach taken here is to group 

technologies into packages of increasing cost and effectiveness. EPA determined that 19 

 

250 We assume slightly higher A/C penetration in 2012 than was assumed in the proposal to correct for 

rounding that occurred in the curve setting process. 
458 

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 sales-weighted 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 

configuration. Note also that these 19 vehicle types span the range of vehicle footprint 

(smaller footprints for smaller vehicles and larger footprints for larger vehicles) which 

serve as the basis for the standards being promulgated today. A complete list of vehicles 

and their associated vehicle types is shown above in Table III.D.1-1. 
459 

Within each of the 19 vehicle types, multiple technology packages were created in 

increasing technology content resulting in increasing effectiveness. Important to note 

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.251 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 is 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, EPA 

calculated the cost and effectiveness for the package. The first step 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 

 

251 When 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. 
460 

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. This is accomplished by incorporating more ratio selections 

and a wider ratio span into the transmissions. Some of the engine technologies have the 

same goal, such as cylinder deactivation, advanced valvetrains, and turbocharging. 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 
461 

transmission. Exceptions are aggressive shift logic and early torque converter lock-up 

that can be applied to vehicles with several types of automatic transmissions. 

EPA has chosen to use an engineering approach known as the lumped-parameter 

technique to determine these adjustment factors. The results from this approach were 

then applied directly to the vehicle packages. The lumped-parameter technique is well 

documented in the literature, and the specific approach developed by EPA is detailed in 

Chapter 1 of the RIA. 

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 Joint TSD. 

Table III.D.3-1 Reduction in Effectiveness for Selected Technology Pairs 

Engine Technology Transmission Technology Reduction in Combined 

Effectiveness 

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 Joint TSD. 
462 

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% $985 

3.0L V6 + GDI 

+ CCP + Deac 6 speed automatic 5% Mass Reduction 20.6% $1,238 

2.2L I4 + GDI + 

Turbo + DCP 6 speed DCT 10% Mass Reduction 

Start-Stop 34.3% $1,903 

 

4. Manufacturer’s 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.252 In following with these industry 

practices, EPA has created set of vehicle technology packages that represent the entire 

light duty fleet. 

 

252 The Center for Biological Diversity submitted comments disputing this distinction as well as the need 

for lead time. These comments are addressed in Section III.D.7. 
463 

In evaluating needed lead time, EPA has historically authorized 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 heavy-duty 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.253 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 are already making to their vehicles. This approach effectively avoids the 

 

253 See discussion in Section III.D.7 with references 
464 

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 final 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 final rule with the 

requirements of this final 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 final 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 emission-reducing 

technologies by the 2016 model year. Less intrusive technologies can be introduced into 

essentially all of 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,254 as 

well as IMA, powersplit and 2-mode hybrids) had a 15% penetration cap. 

 

254 While diesel engines are a mature technology and not “advanced”, the aftertreatment systems necessary 

for them in the U.S. market are advanced. 
465 

This is the same approach as was taken in the NPRM. EPA received several 

comments commending it on its approach to establishing technical feasibility via its use 

of the OMEGA model. The only adverse comment received regarding the application of 

technology was from the Center for Biological Diversity (CBD), which criticized EPA’s 

use of the 5-year redesign cycle. CBD argued that manufacturers occasionally redesign 

vehicles sooner than 5 years and that EPA did not quantify the cost of shortening the 

redesign cycle to less than 5 years and compare this cost to the increased benefit of 

reduced CO2 emissions. CBD also noted that manufacturers have been recently dropping 

vehicle lines and entire divisions with very little leadtime, indicating their ability to 

change product plans much quicker than projected above. 

EPA did not explicitly evaluate the cost of reducing the average redesign cycle to 

less than 5 years for two reasons. One, in the past, manufacturers have usually shortened 

the redesign cycle to address serious problems with the current design, usually lower than 

anticipated sales. However, the amortized cost of the capital necessary to produce a new 

vehicle design will increase by 23%, from one-fifth of the capital cost to one-fourth (and 

assuming a 3% discount rate). This would be on top of the cost of the emission control 

equipment itself. The only benefit of this increase in societal cost will be earlier CO2

emission reductions (and the other benefits associated with CO2 emission control). The 

capital costs associated with vehicle redesign go beyond CO2 emission control and 

potentially involve every aspect of the vehicle and can represent thousands of dollars. 
466 

We believe that it would be an inefficient use of societal resources to incur such costs 

when they can be obtained much more cost effectively just one year later. 

Two, the examples of manufacturers dropping vehicle lines and divisions with 

very short lead time is not relevant to the redesign of vehicles. There is no relationship 

between a manufacturer’s ability to stop selling a vehicle model or to close a vehicle 

division and a manufacturer's ability to redesign a vehicle. A company could decide to 

stop selling all of its products within a few weeks – but it would still take a firm 

approximately 5 years to introduce a major new vehicle line. It is relatively easy to stop 

the manufacture of a particular product (though this too can incur some cost -- such as 

plant wind-down costs, employee layoff or relocation costs, and dealership related costs). 

It is much more difficult to perform the required engineering design and development, 

design, purchase, and install the necessary capital equipment and tooling for components 

and vehicle manufacturing and develop all the processes associated with the application 

of a new technology. Further discussion of the CBD comments can be found in III.D.7 

below. 

5. How is EPA Projecting that a Manufacturer Decides Between Options to 

Improve CO2 Performance to Meet a Fleet Average Standard?

 EPA is generally taking the same approach to projecting the application of 

technology to vehicles as it did for the NPRM. With the exception of two comments, all 

commenters agreed with the modeling approach taken in the NPRM. One of these two 
467 

comments is addressed is Section III.D.1 above, while the other is addressed in Section 

III.D.3. above. 

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. As noted earlier, 

EPA developed a new vehicle model, the OMEGA model in order to make a reasonable 

estimate of how manufacturers will add technologies to vehicles in order to meet a fleetwide 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 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 
468 

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 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 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 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 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 

final 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 
469 

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 final CO2 standard which will 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
470 

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 
471 

with a single engine size (e.g., compact cars with four cylinder engine produced by Ford). 

These grouping 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 final 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 final 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 final regulations which 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 
472 

evaluating the 2011 MY CAFE standards, the car-truck trading was limited to 1.2 mpg. 

When evaluating the final CO2 standards, the OMEGA model was run only for MY 2016. 

OMEGA is designed to evaluate technology addition over a complete redesign cycle and 

2016 represents the final year of a redesign cycle starting with the first year of the final 

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 RIA to this final rule. When evaluating the 2016 standards using the 

OMEGA model, the final CO2 standard which manufacturers will 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 will 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. 

As noted above, EPA estimated separately the cost of the improved A/C systems 

required to generate the 11 g/mi credit. This is consistent with our final A/C credit 

procedures, which will 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 over-estimating both the cost 

and benefit of the addition of improved A/C technology relative to the true reference fleet 

to a small degree. 
473 

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 cost-effectiveness factor” to rank the 

technology packages in the order in which a manufacturer is likely to 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 cost-effectiveness 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 cost-effectiveness primarily to 
474 

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 

cost-effectiveness 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: 

[ ]

[ ] [ ] ( ) ∑

∑

+

=

− × ×

− − × ×

= 35

1

1

1 2

(1 )

1

i

i

i

PP

i

i i

Gap

dCO VMT

Gap

TechCost dFS VMT

ManufCostEff

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, and 

1- Gap = Ratio of onroad fuel economy to two-cycle (FTP/HFET) fuel economy 
475 

The OMEGA model does not currently allow for the VMT used in determining 

the various technology ranking factors to be a function of the rebound factor. If the user 

believed that the consideration of rebound VMT was important, they could increase their 

estimate of the payback period to simulate the impact of the rebound VMT. 

EPA describes the technology ranking methodology and manufacturer-based cost 

effectiveness metric in greater detail in a technical memo to the Docket for this final 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 final rule, 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 1 of the RIA, 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 
476 

reasonable to estimate that the added technology to improve CO2 level and fuel economy 

will retain this same percentage of value when the vehicle is five years old. However, it 

is less clear whether first purchasers, and thus, manufacturers consider this residual value 

when ranking technologies and making vehicle purchases, respectively. For this final 

rule, this factor was not included in our determination of manufacturer-based net costeffectiveness in the analyses performed in support of this final rule. 

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 RIA of this final rule contains further detail on the values of 

manufacturer-based net cost-effectiveness for the various technology packages. 

6. Why are the Final CO2 Standards Feasible?

 The finding that the final standards are technically feasible is based primarily on 

two factors. One is the level of technology needed to meet the final standards. The other 
477 

is the cost of this technology. The focus is on the final 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., power-split hybrid and 2-mode hybrid) and diesel255, 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 final 

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 as allowed under the applicable MY2011 CAFE 

regulations. 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 

 

255 While diesel engines are not an “advanced technology” per se, diesel engines that can meet EPA’s light 

duty Tier 2 Bin 5 NOx standards have advanced (and somewhat costly) aftertreatment systems on them that 

make this technology penetration cap appropriate in addition to their relatively high incremental costs. 
478 

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 to overhead cam engines (OHC-DEAC), adding a turbocharger 

and downsizing the engine (Turbo), diesel engine technology, 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 (StartStop), and converting a vehicle to an intermediate or strong hybrid design. This last 

category includes three current hybrid designs: integrated motor assist (IMA), power-split 

(PS), 2-mode hybrids and electric vehicles.256 

 

256 EPA did not project reliance on the use of any plug-in hybrid or battery electric vehicles when 

projecting manufacturers’ compliance with the 2016 standards. However, BMW did sell a battery electric 

vehicle in the 2008 model year, so these sales are included in the technology penetration estimates for the 

reference case and the final and alternative standards evaluated for 2016. 
479 

Table III.D.6-1 Penetration of Technology in 2008 Vehicles with 2016 Sales: Cars and 

Trucks 

GDI 

OHCDEAC Turbo Diesel 

6 Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

BMW 7.5% 0.0% 6.1% 0.0% 86% 0.9% 0% 0.1%

Chrysler 0.0% 0.0% 0.5% 0.1% 14% 0.0% 0% 0.0%

Daimler 0.0% 0.0% 6.5% 5.6% 76% 7.5% 0% 0.0%

Ford 0.4% 0.0% 2.2% 0.0% 29% 0.0% 0% 0.0%

General Motors 3.1% 0.0% 1.4% 0.0% 15% 0.0% 0% 0.3%

Honda 1.4% 7.1% 1.4% 0.0% 0% 0.0% 0% 2.1%

Hyundai 0.0% 0.0% 0.0% 0.0% 3% 0.0% 0% 0.0%

Kia 0.0% 0.0% 0.0% 0.0% 0% 0.0% 0% 0.0%

Mazda 13.6% 0.0% 13.6% 0.0% 26% 0.0% 0% 0.0%

Mitsubishi 0.0% 0.0% 0.0% 0.0% 10% 0.0% 0% 0.0%

Nissan 0.0% 0.0% 0.0% 0.0% 0% 0.0% 0% 0.8%

Porsche 58.6% 0.0% 14.9% 0.0% 49% 0.0% 0% 0.0%

Subaru 0.0% 0.0% 9.8% 0.0% 0% 0.0% 0% 0.0%

Suzuki 0.0% 0.0% 0.0% 0.0% 0% 0.0% 0% 0.0%

Tata 0.0% 0.0% 17.3% 0.0% 99% 0.0% 0% 0.0%

Toyota 6.8% 0.0% 0.0% 0.0% 21% 0.0% 0% 11.6%

Volkswagen 50.6% 0.0% 39.5% 0.0% 69% 13.1% 0% 0.0%

Overall 3.8% 0.8% 2.6% 0.1% 19.1% 0.5% 0.0% 2.2%

As can be seen, all of these technologies were already being used on some 2008 

MY vehicles, with the exception of direct injection gasoline engines with either cylinder 

deactivation or turbocharging and downsizing. Transmissions with more gearsets 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. 
480 

 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 also 

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, NHTSA projected that Porsche would achieve a 

CO2 emission level of 304.3 g/mi instead of the required 284.8 g/mi level (29.2 mpg 

instead of 31.2 mpg), and pay fines in lieu of further control. 
481 

Table III.D.6-2 Penetration of Technology Under 2011 MY CAFE Standards in 2016 

Sales: Cars and Trucks (Percent of Sales) 

 GDI 

OHCDEAC Turbo 

6 Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop 

Mass 

Reduction 

(%) 

BMW 44% 12% 30% 53% 37% 13% 2%

Chrysler 0% 0% 0% 18% 0% 0% 0%

Daimler 23% 22% 8% 52% 34% 26% 2%

Ford 0% 0% 3% 27% 0% 0% 0%

General 

Motors 3% 0% 1% 15% 0% 0% 0%

Honda 2% 6% 2% 0% 0% 0% 0%

Hyundai 0% 0% 0% 3% 0% 0% 0%

Kia 0% 0% 0% 0% 0% 0% 0%

Mazda 13% 0% 13% 20% 0% 0% 0%

Mitsubishi 32% 0% 2% 25% 35% 0% 1%

Nissan 0% 0% 0% 0% 0% 0% 0%

Porsche 92% 0% 75% 5% 55% 38% 4%

Subaru 0% 0% 9% 0% 0% 0% 0%

Suzuki 70% 0% 0% 3% 67% 67% 3%

Tata 85% 54% 20% 27% 73% 73% 6%

Toyota 7% 0% 0% 19% 0% 0% 0%

Volkswagen 89% 5% 81% 14% 78% 18% 3%

Overall 10% 2% 7% 16% 7% 3% 0%

Increase over 

2008 MY 6% 1% 4% -3% 6% 3% 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. The projected 

MY2016 fraction of automatic transmission with more gearsets actually decreases 

slightly 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, 
482 

Porsche, Tata (Jaguar/Land Rover) and VW. All of these manufacturers are projected to 

increase their use of 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 lower cost mature technology projected to be 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 and no hybrid 

vehicles were projected. Most manufacturers do not require the level of CO2 emission 

control associated with either of these technologies. The few manufacturers that would 

were projected to choose to pay CAFE fines in 2011 in lieu of adding diesel or hybrid 

technologies. 

 This 2008 baseline fleet, modified to meet 2011 standards, becomes our 

“reference” case. See Section II.B above. This is the fleet against which the final 2016 

standards are compared. Thus, it is also the fleet that is 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 EPA RIA. 
483 

 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 

projected technology that could be added will be slightly different. The differences, 

however, are relatively small since most manufacturers only require modest addition of 

technology to meet the 2011 CAFE standards. 

 EPA then used the OMEGA model once again to project the level of technology 

needed to meet the final 2016 CO2 emission standards. Using the results of the OMEGA 

model, every manufacturer was projected to be able to meet the final 2016 standards with 

the technology described above except for four: BMW, VW, Porsche and Tata (which is 

comprised of Jaguar and Land Rover vehicles in the U.S. fleet) . For these 

manufacturers, the results presented below are those with the fully allowable application 

of technology available in EPA’s OMEGA modeling analysis and not for the technology 

projected to enable compliance with the final 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 final 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.257

 

257 Many of the technologies shown in this table are mutually exclusive. Thus, 85% penetration might not 

be possible. For example, any use of hybrids will reduce the DEAC, Turbo, 6SPD, DCT, and 42V S-S 

technologies. Additionally, not every technology is available to be used on every vehicle type. 
484 

Table III.D.6-3 Final Penetration of Technology for 2016 CO2 Standards: Cars and 

Trucks 

 GDI 

OHCDEAC Turbo Diesel

6 Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

BMW 80% 21% 61% 6% 13% 63% 65% 14% 5%

Chrysler 79% 13% 17% 0% 31% 52% 54% 0% 6%

Daimler 76% 30% 53% 5% 12% 72% 67% 14% 5%

Ford 84% 21% 19% 0% 27% 60% 61% 0% 6%

General 

Motors 67% 25% 14% 0% 8% 61% 61% 0% 6%

Honda 43% 6% 2% 0% 0% 49% 18% 2% 3%

Hyundai 59% 0% 1% 0% 8% 52% 32% 0% 3%

Kia 33% 0% 1% 0% 0% 52% 4% 0% 2%

Mazda 60% 0% 14% 1% 17% 47% 41% 0% 4%

Mitsubishi 74% 0% 33% 0% 14% 74% 74% 0% 6%

Nissan 66% 7% 11% 0% 2% 62% 58% 1% 5%

Porsche 83% 15% 62% 8% 5% 45% 62% 15% 4%

Subaru 60% 0% 9% 0% 0% 58% 44% 0% 3%

Suzuki 77% 0% 0% 0% 10% 67% 67% 0% 4%

Tata 85% 55% 27% 0% 14% 70% 70% 15% 5%

Toyota 26% 7% 3% 0% 13% 40% 7% 12% 2%

Volkswagen 82% 18% 71% 11% 10% 68% 60% 15% 4%

Overall 60% 13% 15% 1% 12% 55% 42% 4% 4%

Increase 

over 2011 

CAFE 49% 11% 9% 1% -4% 48% 39% 2% 4%

 Table III.D.6-4 shows the 2016 standards, as well as the achieved CO2 emission 

levels for the five manufacturers which are not able to meet these standards under the 

premises of our modeling. It should be noted that the two sets of combined emission 

levels shown in Table III.D.6-4 are based on sales weighting car and truck emission 

levels. 
485 

Table III.D.6-4 Emissions of Manufacturers Unable to Meet Final 2016 Standards (g/mi 

CO2) 

 Achieved Emissions 2016 Standards Shortfall 

Manufacturer Car Truck Combined Car Truck Combined Combined

BMW 236.3 278.7 248.5 228.4 282.5 243.9 4.6 

Tata 258.6 323.6 284.2 249.9 272.5 258.8 25.4 

Daimler 246.3 297.8 262.6 238.3 294.3 256.1 6.5 

Porsche 244.1 332.0 273.4 206.1 286.9 233.0 40.4 

Volkswagen 223.5 326.6 241.6 218.6 292.7 231.6 10.0 

 

As can be seen, BMW and Daimler have the smallest shortfalls, 5-6 g/mi, while Porsche 

has the largest, 40 g/mi. 

On an industry average basis, the technology penetrations are very similar to 

those projected in the proposal. There is a slight shift from the use of cylinder 

deactivation to the two advanced transmission technologies. This is due to the fact that 

the estimated costs for these three technologies have been updated, and thus, their relative 

cost effectiveness when applied to specific vehicles have also shifted. The reader is 

referred to Section II.E of this preamble as well as Chapter 3 of the Joint TSD for a 

detailed description of the cost estimates supporting this final rule and to the RIA for a 

description of the selection of technology packages for specific vehicle types. The other 

technologies shown in Table III.D.6-4 changed by 2 percent or less between the proposal 

and this final rule. 

As can be seen, the overall average reduction in vehicle weight is projected to be 

4 percent. This reduction varies across the two vehicle classes and vehicle base weight. 

For cars below 2,950 pounds curb weight, the average reduction is 2.8 percent (75 

pounds), while the average was 4.3 percent (153 pounds) for cars above 2,950 curb 
486 

weight. For trucks below 3,850 pounds curb weight, the average reduction is 4.7 percent 

(163 pounds), while it was 5.1 percent (240 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 4.4 percent (186 pounds), while it was 7.0 percent (376 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 final 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 technologies. 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 
487 

sales in 2016, it does not 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 final 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 final 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. 
488 

-20-40-60

0

80604020

120100

BMW Chrysler DaimlerFord GeneralMotors Honda HyundaiKia Mazda Mitsubishi Nissan Porsche Subaru SuzukiTa at Toyota Volkswagen

) CO2 Emissions (g/mi Car Truck

Figure III.D.6-1 CO2 Emission Reduction Required in 2016 from 2008 Vehicles After Removing the 

Benefit of Technology Already Present, Relative to That for the Fleet as a Whole 
489 

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 acceleration 

performance (henceforth referred to as “performance”). The footprint-based form of the 

final 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 

fuel economy test procedure. So manufacturers with higher average performance levels 

will tend to have higher average CO2 emissions for any given footprint. This variability at 

any given footprint contributes to much of the scatter in the data (shown for example on 

plots like Figures II.C.1-3 through II.C.1-6). 

 We developed a methodology to assess the impact of these two factors on each 

manufacturer’s projected compliance with the 2016 standards. First, we had to remove 

(or isolate) the effect of CO2 control technology already being employed on 2008 
490 

vehicles. As described above, 2008 vehicles exhibit a wide range of control technology 

and leaving these impacts in place would confound the assessment of performance and 

weight on CO2 emissions. Thus, the first step was to estimate each vehicle’s “no 

technology” CO2 emissions. To do this, we used the EPA lumped parameter model 

(described in the TSD) to estimate the overall percentage reduction in CO2 emissions 

associated with technology already on the vehicle and then backed out this effect 

mathematically. Second, we performed a least-square linear regression of these no 

technology CO2 levels against curb weight and the ratio of rated engine horsepower to 

curb weight simultaneously. The ratio of rated engine horsepower to curb weight is a 

good surrogate for acceleration performance and the data is available for all vehicles, 

whereas the zero to sixty time is not. Both factors were found to be statistically 

significant at the 95% confidence level. Together, they explained over 80% of the 

variability in vehicles’ CO2 emissions for cars and over 70% for trucks. Third, we 

determined the sales-weighted average curb weight per footprint for cars and trucks, 

respectively, for the fleet as a whole. We also determined the sales-weighted average of 

the ratio of rated engine horsepower to curb weight for cars and trucks, respectively, for 

the fleet as a whole. Fourth, we adjusted each vehicle’s “no technology” CO2 emissions 

to eliminate the degree to which the vehicle had higher or lower acceleration performance 

or curb weight per footprint relative to the car or truck fleet as a whole. For example, if a 

car’s ratio of horsepower to weight was 0.007 and the average ratio for all cars was 

0.006, then the vehicle’s “no technology” CO2 emission level was reduced by the 

difference between these two values (0.001) times the impact of the ratio of horsepower 

to weight on car CO2 emissions from the above linear regression. Finally, we substituted 
491 

these performance and weight adjusted CO2 emission levels for the original, “no 

technology” CO2 emission levels shown in Figure III.D.6-1. The results are shown in 

Figure III.D.6-2. 
492 -10

-20-30-40

0

302010

BMWDaimler

GeneralMotorsHyundaiMazdaNissanSubaru Tata Volk ws agen

) CO2 Emissions (g/mi Car Truck

Figure III.D.6-2 CO2 Emission Reduction Required in 2016 From 2008 Vehicles After 1) Removing 

the Benefit of Technology Already Present, and 2) Adjusting for Differences in Weight per 

Footprint, and Performance, Relative to That for the Fleet as a as a Whole
493 

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 variability among the 

manufacturers’ CO2 emissions. Most of the manufacturers with high positive 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 

acceleration 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 straightforward. Some consumers desire 

high acceleration performance and some manufacturers orient their sales towards these 

consumers. However, the cost in terms of CO2 emissions is clear. Manufacturers 

producing relatively heavy or high performance vehicles presently (with concomitant 

increases CO2 emissions) will require greater levels of technology in order to meet the 

final CO2 standards in 2016. 

 As can be seen from Table III.D.6-3 above, widespread use of several 

technologies is projected due to the final 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 
494 

transmissions are projected to be either 6+ 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. 

 In their comments, Porsche stated that their vehicles have twice the power-toweight ratio as the fleet average and that their vehicles presently have a high degree of 

technology penetration, which allows them to meet the 2009 CAFE standards. Porsche 

also commented that the 2016 standards are not feasible for their firm, in part due to the 

high level of technologies already present in their vehicles and due to their “very long 

production life cycles”. BMW in their comments stated that their vehicles are “featuredense” thus “requiring additional efforts to comply” with future standards.258 Ferrari, in 

their comments, states that the standards are not feasible for high-performance sports cars 

without compromising on their “distinctiveness”. They also state that because they 

already have many technologies on the vehicles, “there are limited possibilities for 

further improvements.” Finally Ferrari states that smaller volume manufacturers have 

higher costs “because they can be distributed over very limited production volumes”, and 

they have longer product lifecycles. The latter view was also shared by Lotus. These 

comments will be addressed below, but are cited here as supporting the conclusions from 

the above analysis that high performance and feature dense vehicles have a greater 

challenge meeting the 2016 standards. In general, other manufacturers covering the rest 

 

258 As a side note, one of the benefits for the off-cycle technology credits allowed in this final rule is the 

opportunity this flexibility provides for some of these ‘feature dense’ vehicles to generate such credits to 

assist, to some extent, in the companies’ ability to comply. 
495 

of the fleet and other commenters agreed with EPA’s analysis in the proposal of projected 

technology usage, and supported the view that the 2016 model year standards were 

feasible in the lead-time provided. 

 In response to the comments above, EPA foresees no significant technical or 

engineering issues with the projected deployment of these technologies across the fleet by 

MY 2016, with their incorporation being folded into the vehicle redesign process (with 

the exception of some of the small volume manufacturers). 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 

based on a 42-volt architecture also represent a 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 EPA estimated 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% of sales, with some manufacturers projected to use higher levels. 
496 

 Most manufacturers are not projected to hybridize any vehicles to comply with 

the final standards. The hybrids shown for Toyota are projected to be sold even in the 

absence of the final standards. However the relatively high hybrid penetrations (14-15%) 

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 RIA, a maximum 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. Hybrids are a relatively costly technology option which requires 

significant changes to a vehicle’s powertrain design, and EPA estimates that 

manufacturers will require a significant amount of lead time and capital investment to 

introduce this technology into the market in very large numbers. Thus the EPA captures 

this significant change in production facilities with a lower penetration cap. A more 

thorough discussion of lead time limitations can be found below and in Section III.B.5. 

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 4 percent, compared with 3 percent in the 

reference case. This 4 percent level is believed to be well within the capability of the 

hybrid component industry by 2016. Thus, the primary challenge for these five 
497 

companies would be at the manufacturer level, redesigning a relatively large percentage 

of sales to include hybrid technology. The final TLAAS provisions will provide 

significant needed lead time to these manufacturers for pre-2016 compliance, since all 

qualified companies are 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 mass reduction, electric and/or plug-in hybrid vehicles 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 (while the 15% cap on the application of hybrid technology is reasonable for 

the industry as a whole, higher percentages are certainly possible for individual 

manufacturers, particularly those with small volumes). 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. 

EPA believes it is likely that there will be certain high volume manufacturers that 

will earn a significant amount of early GHG credits starting in 2010 that would expire 5 

years later, by 2015, unused. It is possible that these manufacturers may be willing to sell 
498 

these credits to manufacturers with whom there is little or no direct competition.259 

Furthermore, a large number of manufacturers have also stated publicly that they support 

the 2016 standards. 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, Nissan, 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 model year

2016 non-compliance for BMW, Daimler, and Volkswagen is based on an inability of our 

model at this time 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 (feature dense) 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. 

 

259 For example, a manufacturer that only sells electric vehicles may very well sell the credits they earn to 

another manufacturer that does not sell any electric vehicles. 
499 

 For 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 final standards. Comments 

from the manufactures provided broad support for this conclusion. A limited number of 

commenters presented specific concerns about their technology opportunities, and EPA 

has described above (and elsewhere in the rule) the paths available for them to comply. 

 In sum, EPA believes that the emissions reductions called for by the final 

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 final 

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 air-conditioning systems.260 

 

260 Note that the actual cost of the A/C technology is estimated at $71 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 $60 per vehicle ($71 x 85% = $60). 
500 

Table III.D.6-4 Cost of Technology per Vehicle in 2016 ($2007) 

2011 MY CAFE Standards, 

Relative to 2008 MY 

Final 2016 CO2 Standards, Relative to 

2011 MY CAFE Standards 

 Cars Trucks All Cars Trucks All 

BMW $346 $423 $368 $1,558 $1,195 $1,453 

Chrysler $33 $116 $77 $1,129 $1,501 $1,329 

Daimler $468 $683 $536 $1,536 $931 $1,343 

Ford $73 $161 $106 $1,108 $1,442 $1,231 

General Motors $31 $181 $102 $899 $1,581 $1,219 

Honda $0 $0 $0 $635 $473 $575 

Hyundai $0 $69 $10 $802 $425 $745 

Kia $0 $42 $7 $667 $247 $594 

Mazda $0 $0 $0 $855 $537 $808 

Mitsubishi $328 $246 $295 $817 $1,218 $978 

Nissan $0 $61 $18 $686 $1,119 $810 

Porsche $473 $706 $550 $1,506 $759 $1,257 

Subaru $68 $62 $66 $962 $790 $899 

Suzuki $49 $232 $79 $1,015 $537 $937 

Tata $611 $1,205 $845 $1,181 $680 $984 

Toyota $0 $0 $0 $381 $609 $455 

Volkswagen $228 $482 $272 $1,848 $972 $1,694 

Overall $63 $138 $89 $870 $1,099 $948 

As can be seen, the industry average cost of complying with the 2011 MY CAFE 

standards is quite low, $89 per vehicle. This cost is $11 per vehicle higher than that 

projected in the NPRM. This change is very small and is due to several factors, mainly 

changes in the projected sales of each manufacturer’s specific vehicles, and changes in 

estimated technology costs. Similar to the costs projected in the NPRM, the range of 

costs across manufacturers is quite large. Honda, Mazda and Toyota are projected to face 

no cost. In contrast, Mitsubishi, Porsche, Tata and Volkswagen face costs of at least 

$272 per vehicle. As described above, three of these last four manufacturers (all but 
501 

Mitsubishi) face high costs to meet even the 2011 MY CAFE standards due to either their 

vehicles’ weight per unit footprint or performance. Porsche would have been projected to 

face lower costs in 2016 if they were not expected to pay CAFE fines in 2011. 

 As shown in the last row of Table III.D.6-4, the average cost of technology to 

meet the final 2016 standards for cars and trucks combined relative to the 2011 MY 

CAFE standards is $948 per vehicle. This is $103 lower than that projected in the 

NPRM, due primarily to lower technology cost projections for the final rule compared to 

the NPRM for certain technologies. (See Chapter 1 of the Joint TSD for a detailed 

description of how our technology costs for the final rule differ from those used in the 

NPRM). As was the case in the NPRM, Table III.D.6-4 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 $948 per vehicle cost is significant, 

representing 3.4 percent of the total cost of a new vehicle. However, as discussed below, 

the fuel savings associated with the final standards exceed this cost significantly. In 

general, commenters supported EPA’s cost projections, as discussed in Section II. 

 

 While the CO2 emission compliance modeling using the OMEGA model focused 

on the final 2016 MY standards, the final standards for 2012-2015 are also feasible. As 

discussed above, manufacturers develop their future 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 
502 

redesigned in 2012-2015. The final 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 final 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 debit carry-forward 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 manufacture could take advantage of the many optional credit generation 

provisions contained in this final rule, including early-credit generation for model years 

2009-2011, credits for advanced technology vehicles, and credits for the application of 

technology which result in off-cycle GHG reductions. Finally, 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 
503 

would be in a position to provide credits at a reasonable technology cost. Thus, EPA 

believes the final standards for 2012-2016 would be feasible. Further discussion of the 

technical feasibility of the interim year standards, including for smaller volume 

manufacturers can be found in Section III.B, in the discussion on the Temporary 

Leadtime Allowance Alternative Standards. 

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

Two alternative sets of CO2 standards were considered. One set would reduce 

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 final 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 projected CO2 standards in 2016 for each manufacturer under these two 

alternative scenarios and under the final rule are shown in Table III.D.7-1. 
504 

Table III.D.7-1 Overall Average CO2 Emission Standards by Manufacturer in 

2016 

 4% per Year Final Rule 6% per Year 

BMW 248 244 224 

Chrysler 270 266 245 

Daimler 260 256 236 

Ford 261 257 237 

General Motors 275 271 250 

Honda 248 244 224 

Hyundai 234 231 212 

Kia 239 236 217 

Mazda 232 228 210 

Mitsubishi 244 239 219 

Nissan 250 245 226 

Porsche 237 233 213 

Subaru 238 234 214 

Suzuki 222 218 199 

Tata 263 259 239 

Toyota 249 245 225 

Volkswagen 236 232 213 

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. 
505 

Table III.D.7-2 Technology Penetration - 4% per Year CO2 Standards in 2016: Cars and 

Trucks Combined 

 GDI 

OHCDEAC Turbo Diesel 

6 Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

BMW 80% 21% 61% 6% 13% 63% 65% 14% 5%

Chrysler 67% 13% 17% 0% 26% 52% 54% 0% 6%

Daimler * 76% 30% 53% 5% 12% 72% 67% 14% 5%

Ford 77% 18% 16% 0% 25% 58% 59% 0% 5%

General 

Motors 62% 24% 11% 0% 7% 57% 57% 0% 5%

Honda 44% 6% 2% 0% 0% 49% 15% 2% 2%

Hyundai 52% 0% 1% 0% 3% 52% 28% 0% 3%

Kia 37% 0% 1% 0% 0% 57% 0% 0% 2%

Mazda 79% 0% 14% 1% 17% 66% 60% 0% 5%

Mitsubishi 85% 0% 31% 0% 16% 72% 72% 0% 6%

Nissan 69% 7% 11% 0% 2% 64% 61% 1% 6%

Porsche * 83% 15% 62% 8% 5% 45% 62% 15% 4%

Subaru 72% 0% 9% 0% 0% 70% 37% 0% 3%

Suzuki 70% 0% 0% 0% 3% 67% 67% 0% 3%

Tata * 85% 55% 27% 0% 14% 70% 70% 15% 5%

Toyota 15% 7% 0% 0% 13% 30% 7% 12% 1%

Volkswagen * 82% 18% 71% 11% 10% 68% 60% 15% 4%

Overall 56% 13% 14% 1% 11% 53% 41% 4% 4%

Increase over 

2011 CAFE 46% 11% 7% 1% -5% 46% 38% 2% 4%

* These manufacturers were unable to meet the final 2016 standards with the imposed 

caps on technology. 
506 

Table III.D.7-3 Technology Penetration - 6% per Year Alternative Standards in 2016: 

Cars and Trucks Combined 

 GDI 

OHCDEAC Turbo Diesel 

6 Speed 

Auto 

Trans 

Dual 

Clutch 

Trans 

StartStop Hybrid 

Mass 

Reduction 

(%) 

BMW * 80% 21% 61% 6% 13% 63% 65% 14% 5%

Chrysler 85% 13% 50% 0% 3% 82% 83% 2% 8%

Daimler * 76% 30% 53% 5% 12% 72% 67% 14% 5%

Ford* 85% 13% 57% 0% 4% 74% 75% 10% 7%

General 

Motors 85% 25% 43% 0% 2% 83% 83% 2% 8%

Honda 68% 6% 10% 0% 1% 65% 65% 2% 6%

Hyundai 73% 1% 12% 0% 9% 64% 64% 0% 5%

Kia 62% 0% 1% 0% 0% 62% 61% 0% 5%

Mazda 85% 0% 19% 1% 4% 80% 82% 0% 7%

Mitsubishi* 85% 4% 42% 0% 4% 75% 75% 10% 7%

Nissan 85% 8% 38% 0% 0% 78% 81% 4% 8%

Porsche * 83% 15% 62% 8% 5% 45% 62% 15% 4%

Subaru 84% 0% 18% 1% 3% 79% 80% 0% 6%

Suzuki 85% 0% 85% 0% 0% 85% 85% 0% 8%

Tata * 85% 55% 27% 0% 14% 70% 70% 15% 5%

Toyota 71% 7% 5% 0% 20% 49% 47% 12% 4%

Volkswagen * 82% 18% 71% 11% 10% 68% 60% 15% 4%

Overall 79% 12% 33% 1% 7% 69% 69% 6% 6%

Increase over 

2011 CAFE 69% 10% 26% 1% -9% 62% 66% 4% 6%

* These manufacturers were unable to meet the final 2016 standards with the imposed 

caps on technology. 

With respect to the 4 percent per year standards, the levels of requisite control 

technology are lower than those under the final standards, as would be expected. 

Industry-wide, the largest decreases were a 7 percent decrease in use of gasoline direct 

injection engines, a 4 percent decrease in the use of dual clutch transmissions, and a 2 

percent decrease in the application of start-stop technology. On a manufacturer specific 

basis, the most significant decreases were a 10 percent or larger decrease in the use of 
507 

stop-start technology for Honda, Kia, Mitsubishi and Suzuki and a 12 percent drop in 

turbocharger use for Mitsubishi. 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 

final standards in 2016. Porsche, Tata and Volkswagen continue to be unable to comply 

with the CO2 standards in 2016, even under the 4 percent per year standard scenario. 

BMW just complied under this scenario, so its costs and technology penetrations are the 

same as under the final standards. 

With respect to the 6 percent per year standards, the levels of requisite control 

technology increased substantially relative to those under the final standards, as again 

would be expected. Industry-wide, the largest increase was a 25 percent increase in the 

application of start-stop technology and 13-17 percent increases in the use of gasoline 

direct injection engines, turbocharging and dual clutch transmissions. On a manufacturer 

specific basis, the most significant increases were a 10 percent increase in hybrid 

penetration for Ford and Mitsubishi. 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 

final standards in 2016. Our projections for BMW, Porsche, Tata and Volkswagen 

continue to show they are unable to comply with the CO2 standards in 2016, so our 

projections for these manufacturers do not differ relative to the final standards, though the 

amount of short-fall for each firm increases significantly, by an additional 20 g/mi CO2

per firm. However, Ford and Mitsubishi join this list as can be seen from Figure III.D.6-

2. The CO2 emissions from Ford's cars are very similar to those of the industry when 

adjusted for technology, weight and performance. However, their trucks emit more than 
508 

25% more CO2 per mile than the industry average. It is possible that addressing this 

issue would resolve their difficulty in complying with the 6 percent per year scenario. 

Both Mitsubishi's cars and truck emit roughly 10% more than the industry average 

vehicles after adjusting for technology, weight and performance. Again, addressing this 

issue could resolve their difficulty in complying with the 6 percent per year scenario. 

Five manufacturers are projected to need to increase their use of start-stop technology by 

at least 30 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, 

relative to 2011 MY CAFE 

standards 

6 Percent per Year Standards, 

relative to 2011 MY CAFE 

standards 

 Cars Trucks All Cars Trucks All 

BMW $1,558 $1,195 $1,453 $1,558 $1,195 $1,453 

Chrysler $1,111 $1,236 $1,178 $1,447 $2,156 $1,827 

Daimler $1,536 $931 $1,343 $1,536 $931 $1,343 

Ford $1,013 $1,358 $1,140 $1,839 $2,090 $1,932 

General Motors $834 $1,501 $1,148 $1,728 $2,030 $1,870 

Honda $598 $411 $529 $894 $891 $893 

Hyundai $769 $202 $684 $1,052 $1,251 $1,082 

Kia $588 $238 $527 $1,132 $247 $979 

Mazda $766 $537 $733 $1,093 $1,083 $1,092 

Mitsubishi $733 $1,164 $906 $1,224 $1,840 $1,471 

Nissan $572 $1,119 $729 $1,151 $1,693 $1,306 

Porsche $1,506 $759 $1,257 $1,506 $759 $1,257 

Subaru $962 $616 $836 $1,173 $1,316 $1,225 

Suzuki $1,015 $179 $879 $1,426 $1,352 $1,414 

Tata $1,181 $680 $984 $1,181 $680 $984 

Toyota $323 $560 $400 $747 $906 $799 

Volkswagen $1,848 $972 $1,694 $1,848 $972 $1,694 

Overall $811 $1,020 $883 $1,296 $1,538 $1,379 
509 

As can be seen, the average cost of the 4 percent per year standards is only $65 

per vehicle less than that for the final standards. This incremental cost is very similar to 

that projected in the NPRM. In contrast, the average cost of the 6 percent per year 

standards is over $430 per vehicle more than that for the final standards, which is $80 

less than that projected in the NPRM (again due to lower technology costs). Compliance 

costs are entering the region of non-linearity. The $65 cost savings of the 4 percent per 

year standards relative to the final rule represents $19 per g/mi CO2 increase. The $430 

cost increase of the 6 percent per year standards relative to the final rule represents a25 

per g/mi CO2 increase. More importantly, two additional manufacturers, Ford and 

Mitsubishi, are projected to be unable to comply with the 6% per year standards. In 

addition, under the 6% per year standards, four manufacturers (Chrysler, General Motors, 

Suzuki and Nissan) are within 2 g/mi CO2 of the minimum achievable levels projected by 

EPA’s OMEGA model analysis for 2016. 

 

 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 final rule 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 EPA’s GHG standards 
510 

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 final standards. In absolute percent increases in the 

technology penetration, compared to the final standards the 6% per year alternative 

requires for the industry as a whole: an 18% increase in GDI fuel systems, an 11% 

increase in turbo-downsize 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 
511 

compared to the final standards. At the same time, CO2 emissions would be reduced by 

about 8%, compared to the 250 g/mi target level. 

As noted above, EPA’s OMEGA model predicts that for model year 2016, Ford, 

Mitsubhisi, Mercedes, BMW, Volkswagen, Jaguar-LandRover, and Porsche do not meet 

their target under the 6 percent per year scenario. In addition, Chrysler, General Motors, 

Suzuki and Nissan all are within 2 grams/mi CO2 of maximizing the applicable 

technology allowed under EPA’s OMEGA model – that is, these companies have almost 

no head-room for compliance. In total, these 11 companies represent more than 58 

percent of total 2016 projected U.S. light-duty vehicle sales. This provides a strong 

indication that the 6 percent per year standard is much more stringent than the final 

standards, and presents a significant risk of non-compliance for many firms, including 

four of the seven largest firms by U.S. sales. 

These technology and cost increases are significant, given the amount of leadtime between now and model years 2012-2016. In order to achieve the levels of 

technology penetration for the final 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 now 

and over the next few years, under the final standards. EPA believes that the final rule (a 
512 

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 

Joint Technical Support Document and the 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 reduction 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. The 6% per year alternative standard would 

impose significantly increased pressure on capital and other resources, indicating it is 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 
513 

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. 

Jaguar/Land Rover, in their comments, agreed that the more stringent standards 

would not be economically practicable, and several automotive firms indicated that the 

proposed standards, while feasible, would be overly challenging.261 On the other hand, 

the Center for Biological Diversity (henceforth referred to here as CBD), strongly urged 

EPA to adopt more stringent standards. CBD gives examples of higher standards in other 

nations to support their contention that the standards should be more stringent. CBD also 

claims that the agencies are “setting standards that deliberately delay implementation of 

technology that is available now” by setting lead time for the rule greater than 18 months. 

CBD also accuses the agencies of arbitrarily “adhering to strict five-year manufacturer 

‘redesign cycles.’” CBD notes that the agencies have stated that all of the “technologies 

are already available today,” and EPA 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.” Based on the agencies’ previous statements, CBD 

concludes that the fleet can meet the 250 g/mi target in 2010. EPA believes that in all 

cases, CBD’s analysis for feasibility and necessary lead time is flawed. 

 Other countries’ absolute fleetwide standards are not a reliable or directly 

relevant comparison. The fleet make-up in other nations is quite different than that of the 

United States. CBD primarily cites the European Union and Japan as examples. Both of 

 

261 See comments from Toyota, General Motors 
514 

these regions have a large fraction of small vehicles (with lower average weight, and 

footprint size) when compared to vehicles in the U.S. Also the U.S. has a much greater 

fraction of light-duty trucks. In particular in Europe, there is a much higher fraction of 

diesel vehicles in the existing fleet, which leads to lower CO2 emissions in the baseline 

fleet as compared to the U.S. This is in large part due to the significantly different fuel 

prices seen in Europe as compared to the U.S. The European fleet also has a much higher 

penetration of manual transmission than the U.S., which also results in lower CO2

emissions. Moreover, these countries use different test cycles, which bias CO2 emissions 

relative to the EPA 2 cycle test cycles. When looked at from a technology-basis, with the 

exception of the existing large penetration of diesels and manual transmissions in the 

European fleet – there is no “magic” in the European and Japanese markets which leads 

to lower fleet-wide CO2 emissions. In fact, from a technology perspective, the standards 

contained in this final rule are premised to a large degree on the same technologies which 

the European and Japanese governments have relied upon to establish their CO2 & fuel 

economy limits for this same time frame and for the fleet mixes in their countries. That is 

for example, large increases in the use of 6+ speed transmissions, automated manual 

transmissions, gasoline direct injection, engine downsizing and turbocharging, and startstop systems. CBD has not provided any detailed analysis of what technologies are 

available in Europe which EPA is not considering – and there are no such “magic” 

technologies. The vast majority of the differences between the current and future CO2

performance of the Japanese and European light-duty vehicle fleets are due to differences 

in the size and current composition of the vehicle fleets in those two regions – not 
515 

because EPA has ignored technologies which are available for application to the U.S. 

market in the 2012-2016 time frame. 

If CBD is advocating a radical reshifting of domestic fleet composition, (such as 

requiring U.S. consumers to purchase much smaller vehicles and requiring U.S. 

consumers to purchase vehicles with manual transmissions), it is sufficient to say that 

standards forcing such a result are not compelled under section 202 (a), where reasonable 

preservation of consumer choice remains a pertinent factor for EPA to consider in 

balancing the relevant statutory factors. See also International Harvester (478 F. 2d at 

640 (Administrator required to consider issues of basic demand for new passenger 

vehicles in making technical feasibility and lead time determinations). Thus EPA 

believes that the standard is at the proper level of stringency for the projected domestic 

fleet in the 2012-2016 model years taking into account the wide variety of consumer 

choice that is reflected in this projection of the domestic fleet. 

As mentioned earlier (in III.D.4), CBD’s comments on available lead time also 

are inaccurate. Under section 202 (a), standards 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.” Having sufficient lead time includes among other 

things, the time required to certify vehicles. For example, model year 2012 vehicles will 

be tested and certified for the EPA within a short time after the rule is finalized, and this 

can start as early as calendar year 2010, for MY 2012 vehicles that can be produced in 
516 

calendar year 2011. In addition, these 2012 MY vehicles have already been fully 

designed, with prototypes built several years earlier. It takes several years to redesign a 

vehicle, and several more to design an entirely new vehicle not based on an existing 

platform. Thus, redesign cycles are an inextricable component of adequate lead time 

under the Act. A full line manufacturer only has limited staffing and financial resources 

to redesign vehicles, therefore the redesigns are staggered throughout a multi-year period 

to optimize human capital.262 Furthermore, redesigns require a significant outlay of 

capital from the manufacturer. This includes research and development, material and 

equipment purchasing, overhead, benefits, etc. These costs are significant and are 

included in the cost estimates for the technologies in this rule. Because of the manpower 

and financial capital constraints, it would only be possible to redesign all the vehicles 

across a manufacturer’s line simultaneously if the manufacturer has access to tremendous 

amounts of ready capital and an unrealistically large engineering staff– However no 

major automotive firm in the world has the capability to undertake such an effort, and it 

is unlikely that the supplier basis could support such an effort if it was required by all 

major automotive firms. Even if this unlikely condition were possible, the large 

engineering staff would then have to be downsized or work on the next redesign of the 

entire line another few years later. This would have the effect of increasing the cost of 

the vehicles. 

 

262 See for example “How Automakers Plan Their Products”, Center for Automotive Research, July 2007. 
517 

There is much evidence to indicate that the average redesign cycle in the industry 

is about 5 years.263 There are some manufacturers who have longer cycles (such as 

smaller manufacturers described above), and there are others who have shorter cycles for 

some of their products. EPA believes that there are no full line manufacturers who can 

maintain significant redesigns of vehicles (with relative large sales) in 1 or 2 years, and 

CBD has provided no evidence indicating this is technically feasible. A complete 

redesign of the entire U.S. light-duty fleet by model year 2012 is clearly infeasible, and 

EPA believes that several model years additional lead time is necessary in order for the 

manufacturers to meet the standards. The graduated increase in the stringency of the 

standards from MYs 2012 through 2016 accounts for this needed lead time. 

 There are other reasons that the fleet cannot meet the 250g/mi CO2 target in 2012 

(much less in 2010). The commenter reasons that if technology is in use now – even if 

limited use—it can be utilized across the fleet nearly immediately. This is not the case. 

An immediate demand from original equipment manufacturers (OEMs) to supply 100% 

of the fleet with these technologies in 2012 would cause their suppliers to encounter the 

same lead time issues discussed above. Suppliers have limited capacity to change their 

current production over to the newer technologies quickly. Part of this reason is due to 

engineering, cost and manpower constraints as described above, but additionally, the 

suppliers face an issue of “stranded capital”. This is when the basic tooling and machines 

that produce the technologies in question need to be replaced. If these tools and 

machines are replaced before they near the end of their useful life, the suppliers are left 

 

263 See for example “Car Wars 2010-2013, The U.S. automotive product pipeline”, John Murphy, Research 

Analyst, Bank of America/Merrill Lynch research paper, July 15, 2009. 
518 

with “stranded capital” i.e., a significant financial loss because they are replacing 

perfectly good equipment with newer equipment. This situation can also occur for the 

OEMs. In an extreme example, a plant that switches over from building port fuel 

injected gasoline engines to building batteries and motors, will require a nearly complete 

retooling of the plant. In a less extreme example, a plant that builds that same engine and 

switches over to suddenly building smaller turbocharged direct injection engines with 

starter alternators might have significant retooling costs as well as stranded capital. 

Finally, it takes a significant amount of time to retool a factory and smoothly validate the 

tooling and processes to mass produce a replacement technology. This is why most 

manufacturers do this process over time, replacing equipment as they wear out. CBD has 

not accounted for any of these considerations. EPA believes that attempting to force the 

types of massive technology penetration needed in the early model years of the standard 

to achieve the 2016 standards would be physically and cost prohibitive. 

A number of automotive firms and associations (including the Alliance of 

Automobile Manufacturers, Mercedes, and Toyota) commented that the standards during 

the early model years, in particular MY2012, are too stringent, and that a more linear 

phase-in of the standards beginning with the MY2011 CAFE standards and ending with 

the 250 gram/mi proposed EPA projected fleet-wide level in MY2016 is more 

appropriate. In the May 19, 2009 Joint Notice of Intent, EPA and NHTSA stated that the 

standards would have “... a generally linear phase-in from MY 2012 through to model 

year 2016.” (74 FR 24008). The Alliance of Automobile Manufacturers stated that the 

phase-in of the standards is not linear, and they proposed a methodology for the CAFE 
519 

standards to be a linear progression from MY2011 to MY2016. The California Air 

Resources Board commented that the proposed level of stringency, including the EPA 

proposed standards for MY2012-2015, were appropriate and urged EPA to finalize the 

standards as proposed and not reduce the stringency in the early model years as this 

would result in a large loss of the GHG reductions from the National Program. EPA 

agrees with the comments from CARB, and we have not reduced the stringency of the 

program for the early model years. While some automotive firms indicated a desire to 

see a linear transition from the Model Year 2011 CAFE standards, our technology and 

cost analysis indicates that our standards are appropriate for these interim years. As 

shown in Section III.H of this final rule, the final standards result in significant GHG 

reductions, including the reductions from MY2012-2015, and at reasonable costs, 

providing appropriate lead time. The automotive industry commenters did not point to a 

specific technical issue with the standards, but rather their desire for a linear phase-in 

from the existing 2011 CAFE standards. 

In summary, the EPA believes that the MY2012-2016 standards finalized are 

feasible and that there are compelling reasons not to adopt more stringent standards, 

based on a reasonable weighing of the statutory factors, including available technology, 

its cost, and the lead time necessary to permit its development and application.. For 

further discussion of these issues, see Chapter 4 of the RIA as well as the response to 

comments. 
520 

E. Certification, Compliance, and Enforcement 

 1. Compliance Program Overview

This section describes EPA's comprehensive program to ensure compliance with 

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 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 EPA and 

NHTSA programs recognize, and replicate 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 coordinated 

approach, the compliance mechanisms for both programs are consistent and nonduplicative. 
521 

 Vehicle emission standards established under the CAA apply throughout a 

vehicle's full useful life. Today’s rule establishes fleet average greenhouse gas 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 establishing inuse standards that apply throughout a vehicle’s useful life, with the in-use standard 

determined by adding an adjustment factor to the emission results used to calculate the 

fleet average. EPA’s program will thus not only assess compliance with the fleet average 

standards described in Section III.B, but will also assess compliance with the in-use 

standards. As it does now, EPA will use a variety of compliance mechanisms to conduct 

these assessments, including pre-production certification and post-production, in-use 

monitoring once vehicles enter customer service. Specifically, EPA is establishing 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 an assessment of compliance with the in-use 

standards concurrent with existing EPA and manufacturer Tier 2 emission compliance 

testing programs. Under this compliance program manufacturers will 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 

received broad comment from regulated industry and from the public interest community 

supporting this overall compliance program structure. The compliance program is 

outlined in further detail below. 
522 

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 will 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 will 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 will 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’s 

proposal to extend this approach to the GHG program received overwhelming support 

from vehicle manufacturers. EPA is finalizing GHG requirements under which 

manufacturers will 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.264 Manufacturers will submit one data set in satisfaction of both CAFE and 

 

264 As discussed in Section III.B.1, vehicle and fleet average compliance will be based on a combination of 

CO2, HC, and CO emissions. This is consistent with the carbon balance methodology used to determine 

fuel consumption for the labeling and CAFE programs. The final regulations account for these total carbon 

emissions appropriately and refer to the sum of these emissions as the “carbon-related exhaust emissions” 
523 

GHG requirements such that EPA’s program will 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. Now manufacturers will 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 will be 

determined on a manufacturer by manufacturer basis, separately for cars and trucks, using 

the footprint attribute curves. EPA will 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 will then compare the actual fleet 

average to the manufacturer's footprint standard to determine compliance, taking into 

consideration use of averaging and 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 carryforward and carry-back credits and the remediation of deficits (see Section III.C). A 

failure to meet the fleet average standard after credit opportunities have been exhausted 

 (CREE). Although regulatory text uses the more accurate term “CREE” to represent the CO2 – equivalent 

sum of carbon emissions, the term CO2 is used as shorthand throughout Section III.E as a more familiar 

term for most readers. 
524 

could ultimately result in penalties and injunctive orders under the CAA as described in 

Section III.E.6 below. 

 EPA received considerable comment about the need for transparency in its 

implementation of the greenhouse gas program and specifically about the need for public 

access to information about Agency compliance determinations. Many comments 

emphasized the importance of making greenhouse gas compliance information publicly 

available to ensure such transparency. EPA also received comment from industry about 

the need to protect confidential business information. Both transparency and protection of 

confidential information are longstanding EPA practices, and both will remain priorities 

in EPA’s implementation of the greenhouse gas program. EPA periodically provides 

mobile source emissions and fuel economy information to the public, for example 

through the annual Compliance Report265 and Fuel Economy Trends Report.266 As 

proposed, 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 fleet average emission levels compared with standards, 

and final compliance status for a model year after credit reconciliation occurs. EPA 

intends to regularly disseminate non-confidential, model-level and fleet information for 

each manufacturer after the close of the model year. EPA will reassess data release needs 

and opportunities once the program is underway. 

 

265 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 

266 Light-Duty Automotive Technology and Fuel-Economy Trends: 1975 Through 2008; EPA-420-S-08-

003; September 2008. This document is available electronically at http://www.epa.gov/otaq/fetrends.htm 
525 

 Beyond transparency in reporting emissions data and compliance status, EPA is 

concerned, as a matter of principle moving into a new era of greenhouse gas control, that 

greenhouse gas reductions reported for purposes of compliance with the standards 

adopted in this rule will be reflected in the real world and not just as calculated fleet 

average emission levels or measured certification test results. Therefore EPA will pay 

close attention to technical details behind manufacturer reports. For example, EPA 

intends to look closely at each manufacturer’s certification testing procedures, GHG 

calculation procedures, and laboratory correlation with EPA’s laboratory, and to carefully 

review manufacturer pre-production, production, and in-use testing programs. In 

addition, EPA plans to monitor GHG performance through its own in-use surveillance 

program in the coming years. This will ensure that the environmental benefits of the rule 

are achieved as well as ensure a level playing field for all. 

b. Required Minimum Testing For Fleet Average CO2

 EPA received no public comment on provisions that would extend current CAFE 

testing requirements and flexibilities to the GHG program, and is finalizing as proposed 

minimum testing requirements for fleet average CO2 determination. EPA will require and 

use the same test data to determine a manufacturer’s compliance with both the CAFE 

standard and 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.267 The CAFE testing covers the vast majority of models in a 

manufacturer’s fleet. Manufacturers industry-wide currently test more than 1,000 

 

267 See 40 CFR 600.010-08(d). 
526 

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 will 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

fleet average standard. 

 EPA will 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. EPA will continue to accept use of 

substituted data in the GHG program, but only when the substituted data are also used for 

CAFE purposes. 

 EPA regulations for CAFE testing permit the use of analytically derived fuel 

economy data in lieu of conducting actual fuel economy tests in certain situations.268 

Analytically derived data are generated mathematically using expressions determined by 

EPA and are allowed on a limited basis when a manufacturer has not tested a specific 

vehicle configuration. This has been done as a way to reduce some of the testing burden 

on manufacturers without sacrificing accuracy in fuel economy measurement. EPA has 

 

268 40 CFR 600.006-08(e) 
527 

issued guidance that provides details on analytically derived data and that specifies the 

conditions when analytically derived fuel economy data may be used. EPA will apply 

the same guidance to the GHG program and will allow any analytically derived data used 

for CAFE to also satisfy the GHG data reporting requirements. EPA will revise the terms 

in the current equations for analytically derived fuel economy to specify them in terms of 

CO2. Analytically derived CO2 data will 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 fleet-average 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.269 

 

269 CAA section 206(a)(1). 
528 

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.270 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.271 

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 with the fleet average 

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 fleet-wide 

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. 

 

270 The 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. 

271 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. 
529 

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 will similarly condition each certificate of conformity for the GHG program 

upon a manufacturer's demonstration of compliance with the manufacturer’s fleet-wide 

average CO2 standard. The following discussion explains how EPA will integrate the 

new GHG vehicle certification program into the existing certification program. 

a. Compliance Plans 

 In an effort to expedite the Tier 2 program certification process and facilitate 

early resolution of any compliance related concerns, EPA conducts annual reviews of 

each manufacturer’s certification, in-use compliance and fuel economy plans for 

upcoming model year vehicles. EPA meets with each manufacturer individually, typically 

before the manufacturer begins to submit applications for certification for the new model 

year. Discussion topics include compliance plans for the upcoming model year, any new 

product offerings/new technologies, certification and/or testing issues, phase-in and/or 
530 

ABT plans, and a projection of potential EPA confirmatory test vehicles. EPA has been 

conducting these compliance preview meetings for more than 10 years and has found 

them to be very useful for both EPA and manufacturers. Besides helping to expedite the 

certification process, certification preview meetings provide an opportunity to resolve 

potential issues before the process begins. The meetings give EPA an early opportunity 

to assess a manufacturer’s compliance strategy, which in turn enables EPA to address any 

potential concerns before plans are finalized. The early interaction reduces the likelihood 

of unforeseen issues occurring during the actual certification of a test group which can 

result in the delay or even termination of the certification process. 

For the reasons discussed above, along with additional factors, EPA believes it is 

appropriate for manufacturers to include their GHG compliance plan information as part 

of the new model year compliance preview process. This requirement is both consistent 

with existing practice under Tier 2 and very similar to the pre-model year report required 

under existing and new CAFE regulation. Furthermore, in light of the production 

weighted fleet average program design in which the final compliance determination 

cannot be made until after the end of the model year, EPA believes it is especially 

important for manufacturers to demonstrate that they have a credible compliance plan 

prior to the beginning of certification. 

Several commenters raised concerns about EPA’s proposal for requiring 

manufacturers to submit GHG compliance plans. AIAM stated that EPA did not identify 

a clear purpose for the review of the plans, criteria for evaluating the plans, or 
531 

consequences if EPA found the plans to be unacceptable. AIAM also expressed concern 

over the appropriateness of requiring manufacturers to prepare regulatory compliance 

plans in advance, since vicissitudes of the market and other factors beyond a 

manufacturer’s direct control may change over the course of the year and affect the 

model year outcome. Finally, AIAM commented that EPA should not attempt to take 

any enforcement action based on an asserted inadequacy of a plan. The comments stated 

that compliance should be determined only after the end of a model year and the 

subsequent credit earning period. The Alliance commented that there was an 

inconsistency between the proposed preamble language and the regulatory language in 

600.514-12(a)(2)(i). The preamble language indicated that the compliance report should 

be submitted prior to the beginning of the model year and prior to the certification of any 

test group, while the regulatory language stated that the pre-model year report must be 

submitted during the month of December. The Alliance pointed out that if EPA wanted 

GHG compliance plan information before the certification of any test groups, the 

regulatory language would need to be corrected. 

EPA understands that a manufacturer’s plan may change over the course of a 

model year and that compliance information manufacturers present prior to the beginning 

of a new model year may not represent the final compliance outcome. Rather, EPA 

views the compliance plan as a manufacturer’s good-faith projection of strategy for 

achieving compliance with the greenhouse gas standard. It is not EPA’s intent to base 

compliance action solely on differences between projections in the compliance plan and 

end of year results. EPA understands that compliance with the GHG program will be 
532 

determined at the end of the model year after all appropriate credits have been taken into 

consideration. 

As stated earlier, a requirement to include GHG compliance information in the 

new model year compliance preview meetings is consistent with long standing EPA 

policy. The information will provide EPA with an early overview of the manufacturer’s 

GHG compliance plan and allow EPA to make an early assessment as to possible issues, 

questions, or concerns with the program in order to expedite the certification process and 

help manufacturers better understand overall compliance provisions of the GHG 

program. Therefore, EPA is finalizing revisions to 40 CFR 600.514-12 which will 

require manufacturers to submit a compliance plan to EPA prior to the beginning of the 

model year and prior to the certification of any test group. The compliance plan must, at a 

minimum, include a manufacturer’s projected footprint profile, projected total and modellevel production volumes, projected fleet average and model-level CO2 emission values, 

projected fleet average CO2 standards and projected fleet average CO2 credit status. In 

addition, EPA will expect the compliance plan to explain the various credit, transfer and 

trading options that will be used to comply with the standard, including the amount of 

credit the manufacturer intends to generate for air conditioning leakage, air conditioning 

efficiency, off-cycle technology, and various early credit programs. The compliance plan 

should also indicate how and when any deficits will be paid off through accrual of future 

credits. 
533 

EPA has corrected the inconsistency between the proposed preamble and 

regulatory language with respect to when the compliance report must be submitted and 

what level of information detail it must contain. EPA is finalizing revisions to 40 CFR 

600.514-12 which require the compliance plan to be submitted to EPA prior to the 

beginning of the model year and prior to the certification of any test group. Today’s 

action will also finalize simplified reporting requirements as discussed above. 

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.272 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.273 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). 

 

 

272 40 CFR 86.1827-01. 273 EPA 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). 
534 

 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 affect CO2 generation and emissions but are not 

included in EPA's test group criteria.274 Most important among these may be vehicle 

weight, horsepower, aerodynamics, vehicle size, and performance features. 

 As described in the proposal, EPA considered but did not propose 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 pre-production 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. Twoand 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. 

 

274 EPA 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). 
535 

For these reasons, EPA will retain the current Tier 2 test group structure for cars 

and light trucks in the certification requirements for CO2. EPA believes that the current 

test group concept is also appropriate for N20 and CH4 because the technologies that are 

employed to control N2O and CH4 emissions will generally be the same as those used to 

control the criteria pollutants. Vehicle manufacturers agreed with this assessment and 

universally supported the use of current Tier 2 test groups in lieu of developing separate 

CO2 test groups. 

At the time of certification, manufacturers may 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 further testing will generally be required for 

compliance with the fleet average CO2 standard as described below. EPA's issuance of a 

certificate will 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. 

As just discussed, the “worst case” Emissions Data Vehicle selected 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 emits 

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. 
536 

 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. Vehicle manufacturers expressed concern with this approach as well, and 

EPA ultimately rejected this approach because it could have required manufacturers 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 proposed and will adopt provisions that allow a single Emission 

Data Vehicle to represent the test group for both Tier 2 and CO2 certification. The 

manufacturer will 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 will generally be replaced with actual, model-level CO2

values based on results from CAFE testing that occurs later in the model year. This model 
537 

level data will become the official certification test results (as per the conditioned 

certificate) and will 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. 

 

 Manufacturers will be subject to two standards, 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 applied to each 

model. For each model, the in-use standard will generally be set at 10% higher than the 

level used for that model in calculating the fleet average (see Section III.E.4).275 The 

certificate will cover both of these standards, and the manufacturer will 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. 

 

 

275 In cases where configuration or sub-configuration level data exist, the in-use standard will be set at 10% 

higher than those emissions test results. See Section III.E.4 
538 

 c. Certification Testing Protocols and Procedures 

To be consistent with CAFE, EPA will 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 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.7 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, 

and any other carbon-containing exhaust components such as aldehyde emissions from 

alcohol-fueled vehicles. CO emissions are adjusted by a coefficient that reflects the 
539 

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 compounds being accounted 

for). Thus, EPA will calculate the carbon-related exhaust emissions, also known as 

“CREE,” of each test vehicle 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 

where: CWF = the carbon weight fraction of the test fuel 

 

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 rule, EPA will add CO2, N2O, and CH4

to the emissions measured in the course of Tier 2 and CAFE confirmatory testing. The 

N2O and methane measurement requirements will begin for model year 2015, when 

requirements for manufacturer measurement to comply with the standard also take effect. 

The emission values measured at the EPA laboratory will continue to stand as official, as 

under existing regulatory programs. 

Under current practice, if during EPA’s confirmatory fuel economy testing, the 

EPA fuel economy value differs from the manufacturer's value by more than 3%, 

manufacturers can request a re-test. The re-test results stand as official, even if they 
540 

differ by more than 3% from the manufacturer’s value. EPA proposed extending this 

practice to CO2 results, but manufacturers commented that this could lead to duplicative 

testing and increased test burden. EPA agrees that the close relationship between CO2 and 

fuel economy precludes the need to conduct additional confirmatory tests for both fuel 

economy and CO2 to resolve potential discrepancies. Therefore EPA will continue to 

allow a re-test request based on a 3% or greater disparity in manufacturer and EPA 

confirmatory fuel economy test values, 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).. 

 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 NOX fleet average standards 

and the new 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 years276 or 120,000 miles with an optional 15 year or 150,000 mile provision. A 

similar approach is used for heavy-duty engines, however a specific Family Emissions 

Level is assigned to the engine family at certification, as compared to a pre-defined bin 

emissions level as in Tier 2. 

 

276 11 years for heavy-light-duty trucks, ref. 40 CFR 86.1805-12 
541 

As noted above, the in-use CO2 standard under the greenhouse gas program, like 

Tier 2, will apply to individual vehicles and is separate from the fleet-average standard. 

However, unlike the Tier 2 program and other EPA fleet average standards, the modellevel CO2 test results are themselves used to calculate the fleet average standard for 

compliance purposes. This is consistent with the current CAFE practice, but it means the 

fleet average standard and the emission test results used to calculate compliance with the 

fleet average standard do not take into account test-to-test variability and production 

variability that can affect in-use levels. Since the CO2 fleet average uses the model level 

emissions test results themselves for purposes of calculating the fleet average, EPA 

proposed an adjustment factor for the in-use standard to provide some margin for 

production and test-to-test variability that could result in differences between the initial 

emission test results used to calculate the fleet average and emission results obtained 

during subsequent in-use testing. EPA proposed that each model’s in-use CO2 standard 

would be the model specific level used in calculating the fleet average, adjusted to be 

10% higher. 

 EPA received significant comment from industry expressing concern with the inuse standard. The comments focused on concerns about manufacturer liability for in-use 

CO2 performance and for the most part did not address the proposed 10% adjustment 

level or even the need for an adjustment to account for variability. Some comments 

suggested that an in-use standard is not necessary because in-use testing is not mandated 

in the CAA. Others stated that since there is no evidence that CO2 emission levels 
542 

increase over time, there is no need for an in-use standard. Finally, there was a general 

concern that failure to meet the in-use standard would result in recall liability and that 

recall can only be used in cases where it can be demonstrated that a “repair” can remedy 

the nonconformity. One manufacturer provided comments supporting the use of a 10% 

adjustment factor for the in-use standard. These comments also recommended that the 

10% adjustment factor be applied to configuration or subconfiguration data rather than to 

model-level data unless the lower-level data were not available. Finally, the manufacturer 

expressed concern that a straight 10% adjustment would result in inequity between highand low-emitting vehicles. 

Section 202(a)(1) specifies that emissions standards are to be applicable for the 

useful life of the vehicle. The in-use emissions standard for CO2 implements this 

provision. While EPA agrees that the CAA does not require the Agency to perform inuse testing to monitor compliance with in-use standards, the Act clearly authorizes in-use 

testing. EPA has a long tradition of performing in-use testing and has found it to be an 

effective tool in the overall light-duty vehicle compliance program. EPA continues to 

believe that it is appropriate to perform in-use testing and that the evaluation of individual 

vehicle performance for all regulated emission constituents, including CO2, N2O and 

CH4, is necessary to ensure compliance with all light-duty requirements. EPA also 

believes that the CAA clearly mandates that all emission standards apply for a vehicle’s 

useful life and that an in-use standard is therefore necessary. 
543 

EPA agrees with industry commenters that there is little evidence to indicate that 

CO2 emission levels from current-technology vehicles increase over time. However, as 

stated above, the CAA mandates that all emission standards apply for a vehicle’s useful 

life regardless of whether the emissions increase over time. In addition, there are factors 

other than emission deterioration over time that can cause in-use emissions to be greater 

than emission standards. The most obvious are component defects, production mistakes, 

and the stacking of component production and design tolerances. Any one of these can 

cause an exceedance of emission standards for individual vehicles or whole model lines. 

Finally EPA believes that it is essential to monitor in-use GHG emissions performance of 

new technologies, for which there is currently no in-use experience, as they enter the 

market. Thus EPA believes that the value in establishing an in-use standard extends 

beyond just addressing emission deterioration over time from current technology 

vehicles. 

The concern over recall liability in cases where there is no effective repair remedy 

has some legitimate basis. For example, EPA agrees there would be a concern if a 

number of vehicles for a particular model were to have in-use emissions that exceed the 

in-use standard, with no effective repair available to remedy the noncompliance. 

However, EPA does not anticipate a scenario involving exceedance of the in-use standard 

that would cause the Agency to pursue a recall unless there is a repairable cause of the 

exceedance. At the same time, failures to emission-related components, systems, 

software, and calibrations do occur that could result in a failure of the in-use CO2

standard. For example, a defective oxygen sensor that causes a vehicle to burn excessive 
544 

fuel could result in higher CO2 levels that would exceed the in-use standard. While it is 

likely that such a problem would affect other emissions as well, there would still be a 

demonstratable, repairable problem such that a recall might be valid. Therefore, EPA 

believes that a CO2 in-use standard is statutorily required and can serve as a useful tool 

for determining compliance with the GHG program. 

EPA agrees with the industry comment that it is appropriate where possible to 

apply the 10% adjustment factor to the vehicle-level emission test results, rather than to a 

model-type value that includes production weighting factors. If no subconfiguration test 

data are available, then the adjustment factor will be applied to the model-type value. 

Therefore, EPA is finalizing an in-use standard based on a 10% multiplicative adjustment 

factor but the adjustment will be applied to emissions test results for the vehicle 

subconfiguration if such data exist, or to the model-type emissions level used to calculate 

the fleet average if subconfiguration test data are not available. 

 

 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 
545 

not change over time. Therefore, vehicles designed for a given CO2 emissions level will 

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 has therefore determined that an assigned deterioration factor be applied 

at the time of certification. At this time EPA will use an additive assigned deterioration 

factor of zero, or a multiplicative factor of one. EPA anticipates that the deterioration 

factor will 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 will explore with each manufacturer any new technologies that could 

warrant use of a different deterioration factor. For any vehicle model determined likely 
546 

to experience increases in CO2 emissions over the vehicle’s useful life, manufacturers 

will not be allowed to use the assigned deterioration factor but rather will be required to 

establish an appropriate factor. If such an instance were to occur, EPA would allow 

manufacturers to use the whole-vehicle mileage accumulation method currently offered 

in EPA's regulations.277

 

 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. EPA recognizes 

that manufacturers have not been required to account for durability effects of N2O and 

CH4 prior to now. EPA also realizes that industry will need sufficient time to explore 

durability options and become familiar with procedures for determining deterioration of 

N2O and CH4. Therefore, until the 2015 model year, rather than requiring manufacturers 

to establish a durability program for N2O and CH4, EPA will allow manufacturers to 

attest that vehicles meet the deteriorated, full useful life standard. If manufacturers 

choose to comply with the optional CO2 equivalent standard, EPA will allow the use of 

the manufacturer’s existing NOX deterioration factor for N2O and the existing NMOG 

deterioration factor for CH4. 

 

 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. 

 

277 40 CFR 86.1823-08 
547 

As such, EPA has authority to require a manufacturer to remedy any noncompliance 

issues. The remedy can range from adjusting a manufacturer’s credit balance to the 

voluntary or mandatory recall of noncompliant vehicles. These potential remedies 

provide 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 in-use levels of criteria pollutants when they are in their first 

and fourth 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.278 The emissions data collected from IUVP serve several purposes. IUVP 

results provide 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 manufacturer 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, onboard refueling vapory recovery (ORVR) emissions and onboard diagnostics (OBD) data. 

Manufacturers are required to provide data for all regulated criteria pollutants. 

Some manufacturers have voluntarily submitted CO2 data as part of IUVP. EPA proposed 

that manufacturers provide CO2, N2O, and CH4 data as part of the IUVP. EPA also 

 

278 64 FR 23906, May 4, 1999. 
548 

proposed that in order to adequately analyze and assess in-use CO2 results, which are 

based on the combination of FTP and highway cycle test results, the highway fuel 

economy test would also need to be part of IUVP. The University of California, Santa 

Barbara expressed support for including N2O and CH4 emissions as part of the IUVP. 

Manufacturer comments were almost unanimously opposed to including any GHG as part 

of the IUVP. Specifically, industry commented that CO2 emissions do not deteriorate 

over time and in some cases actually improve. Ford provided data for several 2004 

through 2007 model year vehicles that indicate CO2 emissions improved an average of 

1.42% when vehicles were tested over 5,000 miles. Manufacturers commented that the 

inclusion of a greenhouse gas emissions requirement and the highway test cycle as part of 

the IUVP would unnecessarily increase burden on manufacturers and provide no benefit, 

since CO2 emissions do not deteriorate over time. Manufacturers also commented that 

N2O and CH4 emissions are very low and by EPA’s own account only represent about 

1% of total light-duty vehicle GHG emissions. They also expressed concern over the cost 

and burden of measuring N2O for IUVP, since many manufacturers use contractor 

laboratories to assist in their IUVP testing and many of these facilities do not have the 

necessary equipment to measure N2O. They stated that since it was unnecessary to 

include CO2 emissions as part of IUVP and since N2O and CH4 were such small 

contributors to GHG emissions, it did not make sense to include N2O and CH4 as part of 

the IUVP either. They felt that N2O and CH4 could be more appropriately handled 

through attestation or an annual unregulated emissions report. 
549 

As discussed above, although EPA shares the view expressed in manufacturer 

comments that historical data demonstrate little CO2 deterioration, in-use emissions can 

increase for a number of reasons other than deterioration over time. For example, 

production or design errors can result in increased GHG emissions. Components that 

aren’t built as they were designed or vehicles inadvertently assembled improperly or with 

the wrong parts or with parts improperly designed can result in GHG emissions greater 

than those demonstrated to EPA during the certification process and used in calculating 

the manufacturer’s fleet average. The “stacking” of component design and production 

tolerances can also result in in-use emissions that are greater than those used in 

calculating a manufacturer’s fleet average. 

EPA believes IUVP testing is also important to monitor in-use versus certification 

emission levels. Because the emphasis of the GHG program is on a manufacturer’s fleet 

average standard, it is difficult for EPA to make an assessment as to whether 

manufacturer’s vehicles are actually producing the GHG levels claimed in their fleet 

average without some in-use data for comparison. For example, EPA has expressed 

concern that with the in-use standard based on a 10% adjustment factor, there would be 

an incentive for manufacturers to develop their fleet average utilizing the full range of the 

10% in-use standard. The only way for EPA to assess whether manufacturers are 

designing and producing vehicles that meet their respective fleet average standards is for 

EPA to be able to review in-use GHG emissions from the IUVP. 
550 

Finally EPA does have some concern about potential CO2 emissions deterioration 

in advanced technologies for which we currently have no in-use experience or data. Since 

CAFE has never had an in-use requirement and today’s final regulations are the first ever 

GHG standards, there has been no need to focus on GHG emissions in-use as there will 

be with the new GHG standards. Many of the advanced technologies that EPA expects 

manufacturers to use to meet the GHG standards have been introduced in production 

vehicles, but until now not for the purpose of controlling greenhouse gas emissions. For 

example, advanced dual-clutch or seven-speed automatic transmissions, and start-stop 

technologies have not been broadly tested in the field for their long-term CO2

performance. In-use GHG performance information for vehicles using these technologies 

is needed for many reasons, including evaluation of whether allowing use of assigned 

deterioration factors for CO2 in lieu of actual deterioration factors will continue to be 

appropriate. 

Therefore, EPA is finalizing the requirement that all manufacturers must provide 

IUVP emissions data for CO2. EPA will also require manufacturers to perform the 

highway test cycle as part of IUVP. Since the 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 

understands that requiring manufacturers to also measure N2O and CH4 will be initially 

challenging, since many manufacturer facilities do not currently have the proper 

analytical equipment. To be consistent with timing of the N2O and CH4 emissions 
551 

standards for this rule, N2O and CH4 will not be required for IUVP until the 2015 model 

year. 

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 

for vehicles tested in the IUVP 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 substance. EPA proposed to exclude IUVP 

data for CO2, N2O, and CH4 emissions from the IUCP thresholds EPA felt that there 

was not sufficient data to determine if the existing IUCP thresholds were appropriate or 

even applicable to those emissions. The University of California, Santa Barbara 

disagreed with EPA’s concerns and recommended that CO2, N2O, and CH4 emissions all 

be subject to the IUVP threshold criteria. Manufacturers commented that since CO2

performance is a function of vehicle design and cannot be remedied in the field with the 

addition or replacement of emissions control devices like traditional criteria pollutants, it 

would not be appropriate or necessary to include IUCP threshold criteria for GHG 

emissions. 

EPA continues to believe that the IUCP is an important part of EPA’s in-use 

compliance program for traditional criteria pollutants. For GHG emissions, EPA believes 

the IUCP will also be a valuable future tool for achieving compliance. However, there are 

insufficient data today to determine whether the current IUCP threshold criteria are 
552 

appropriate for GHG 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. Therefore, for today’s final action, EPA will exclude IUVP data for CO2, 

N2O, and CH4 emissions from the IUCP thresholds. 

 EPA has also administered its own in-use 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 will 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 standard used for fleet average calculation 

are the same. In-use 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 
553 

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, it would be inappropriate to compare an individual vehicle 

to the fleet average, since that vehicle could have been certified to an emission level that 

is different than the fleet average level. 

This will also be true for the CO2 fleet average standard. Therefore, to ensure that 

an individual vehicle complies with the 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 CO2 standards and Tier 2 

standards. For Tier 2, the standard level used for the fleet average calculation is one of 

eight different emission levels, or “bins,” whereas for the CO2 fleet average standard, the 

standard level used for the fleet average calculation 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.279 In contrast, the CO2 fleet average standard will be calculated using the actual 

vehicle model-level CO2 values from the certification test vehicles. With a specified 

 

279 In a similar fashion, the fleet average for heavy-duty engines is calculated using a Family Emission 

Level, determined by the manufacturer, which is different from the emission level of the test engine. 
554 

certification emission standard, such as the Tier 2 “bins,” manufacturers typically attempt 

to over-comply 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 CO2

standards, the emission level used to calculate the fleet average 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 value 

used for calculating the fleet average. 

The CO2 fleet average standard is based on the performance of pre-production 

technology that is 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 proposed an in-use standard that was 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 certification standards. This intentional 

difference between the actual emission level and the emission standard is referred to as 
555 

“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 

in-use standards are typically the levels used to calculate the fleet average. 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 a 

reasonable cushion for in-use variability that is beyond a manufacturer’s control. EPA 

proposed a factor of 10% that would act as a surrogate for a certification margin. The 

factor would only be applicable to CO2 emissions, and would be applied to the modellevel test results that are used to establish the model-level in-use standard. 

 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 
556 

approaching 50%.280 However, there are some fundamental differences between CO2

emissions and other criteria pollutants in the magnitude of the compounds. 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. 

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 calculation of the fleet average, EPA will discuss the matter with the 

manufacturer and consider possible resolutions such as changes to ensure that the 

 

280 See 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 
557 

emissions test data more accurately reflect the emissions level of vehicles at the time of 

production, increased EPA confirmatory testing, and other similar measures. 

Commenters generally did not comment on whether 10% was the appropriate 

level for the adjustment factor. Honda did support use of the proposed 10% adjustment 

factor for the in-use standard. But Honda also recommended that the 10% adjustment 

factor be applied to subconfiguration data rather than the model-level data unless there 

was no subconfiguration data available. Honda also expressed some concern over the 

inequity a straight 10% adjustment would incur between high- and low-emitting vehicles. 

They suggested that rather than using an across-the-board 10% multiplicative adjustment 

factor applied to the model-level CO2 value for all vehicles, it would be more equitable to 

take the sum of a 5% multiplicative factor applied to the model-level CO2 value and a 5% 

factor applied to the manufacturer’s fleet CO2 target. 

 EPA understands that use of a multiplicative adjustment factor would result in a 

higher absolute in-use value for a vehicle that has higher CO2 than for a vehicle with a 

lower CO2. However, this difference is not relevant to the purpose of the adjustment 

factor, which is to provide some cushion for test and production variability. EPA does not 

believe the difference would be great enough to confer the higher-emitting vehicles with 

an unfair advantage with respect to emissions variability. 

Given that the purpose of the in-use standard is to enable a fair comparison 

between certification and in-use emission levels, EPA agrees that it is appropriate to 
558 

apply the 10% adjustment factor to actual emission test results rather than to model-type 

emission levels which are production weighted. Therefore, EPA is finalizing an in-use 

standard that applies a multiplicative 10% adjustment factor to the subconfiguration 

emissions values, if such are available. (For flexible-fuel and dual-fuel vehicles the 

multiplicative factor will be applied to the test results on each fuel. In other words, these 

vehicles will have two applicable in-use emission standards; one for operation on the 

conventional fuel and one for operation on the alternative fuel.) If no emissions data 

exist at the subconfiguration level the adjustment will be applied to the model-type value 

as originally proposed. If the in-use emission result for a vehicle exceeds the emissions 

level, as applicable, adjusted as just described by 10%, then the vehicle will have 

exceeded the in-use emission standard. The in-use standard will apply to all in-use 

compliance testing including IUVP, selective enforcement audits, and EPA’s internal test 

program. 

5. Credit Program Implementation

As described in Section III.E.2 above, for each manufacturer’s model year 

production, the manufacturer will average the CO2 emissions within each of the two 

averaging sets (passenger cars and trucks) and compare that with its respective fleet 

average standards (which in turn will have been determined from the appropriate 

footprint curve applicable to that model year). In addition to this within-company 

averaging, when a manufacturer’s fleet average CO2 values of vehicles produced in an 

averaging set over-complies compared to the applicable fleet average standard, the 
559 

manufacturer could generate credits that it could save for later use (banking) or could sell 

or otherwise distribute to another manufacturer (trading). Section III.C discusses 

opportunities for manufacturers to improve their fleet average, beyond the credits that are 

simply calculated by over-achieving their applicable fleet average 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. 

EPA is promulgating two broad types of credit programs under this rulemaking. 

One type of credit directly lowers a manufacturer’s actual fleet average by virtue of being 

applied within the methodology for calculating the fleet average emissions. Examples of 

this type of credit include the credits available for alternative fuel vehicles and the 

advanced technology vehicle provisions. 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 reviews the 

different types of credits and shows where and how they are calculated and how they 

impact a manufacturer’s available credits. 

a. Basic Credits: Fleet Average Emissions are Below the Standard 

As just noted, basic credits are earned by a manufacturer’s fleet that performs 

better than the applicable fleet average standard. Manufacturers will calculate their fleet 
560 

average standards (separate standards are calculated for cars and trucks) using the 

footprint-based equations described in Section III.B. A manufacturer’s actual end-ofyear fleet average 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. As part of this rulemaking, EPA has amended key 

subparts and sections of Part 600 to require that fleet average CO2 emissions be 

calculated in a manner parallel to the way CAFE values are calculated. First, 

manufacturers will determine a CO2-equivalent value for each model type. The CO2-

equivalent value is a summation of the carbon-containing constituents of the exhaust 

emissions on a CO2-equivalent basis. For gasoline and diesel vehicles this simply 

involves measurement of total hydrocarbons and carbon monoxide in addition to CO2. 

The calculation 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 currently necessary to determine 

fuel economy for the labeling and CAFE programs, and thus no new testing or data 

collection will be required. 281 Second, manufacturers will calculate a fleet average by 

weighting the CO2 value for each model type by the production of that model type, as 

they currently do for the CAFE program. Again, this will be done separately for cars and 

trucks. Finally, the manufacturer will compare the calculated standard with the fleet 

average that is actually achieved to determine the credits (or debits) that are generated. 

 

281 Note that the final rule also provides an option for manufacturers to incorporate N2O and CH4 in this 

calculation at their CO2-equivalent values. 
561 

Both the determination of the applicable standard and the actual fleet average will be 

done after the model year is complete and using final model year vehicle production data. 

Consider a basic hypothetical example where Manufacturer “A” has calculated a 

car fleet average standard of 300 grams/mile and a car fleet average of 290 grams/mile 

(Table 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 manufacturer’s production of 500,000. This 

result is then multiplied by the assigned lifetime vehicle miles travelled (for cars this is 

195,264 miles, as discussed in Joint TSD Chapter 4), then finally divided by 1,000,000 to 

convert from grams to total megagrams. The result is the total number of megagrams of 

credit generated by the manufacturer’s car fleet. The same methodology is used to 

calculate the total number of megagrams of deficit, if the manufacturer was not able to 

comply with the fleet average standard. In this example, the result is 976,320 megagrams 

of credits, as shown in Table III.E.5-1. 

Table III.E.5-1 Summary for Manufacturer A: Earning Basic Credits 

 CO2 Totals 

Total production Conventional: 500,000 290 g/mi 500,000 

Fleet average 

standard 

 300 g/mi 

Fleet average 290 g/mi 

Credits [(300-290) × 500,000 × 195,264] ÷ 

1,000,000 

 = 954,855 Mg 
562 

b. Interim Advanced Technology Vehicle Provisions 

 The lower exhaust greenhouse gas emissions of some advanced technology 

vehicles can directly benefit a manufacturer’s fleet average, thus increasing the amount of 

fleet average-based credits they earn (or reducing the amount of debits that would 

otherwise accrue). Manufacturers that produce electric vehicles, plug-in hybrid electric 

vehicles, or fuel cell electric vehicles will include these vehicles in the fleet average 

calculation with their model type emission values. As described in detail in Section 

III.C.3, the emissions from electric vehicles and plug-in hybrid electric vehicles when 

operating on electricity will be accounted for by assuming zero emissions (0 g/mi CO2) 

for a limited number of vehicles through the 2016 model year. This interim limited use 

of 0 g/mi will be allowed for the technologies specifically noted above and as defined in 

the regulations, with the limitation that the vehicles must be certified to Tier 2 Bin 5 

emission standards or cleaner (i.e., advanced technology vehicles must contribute to 

criteria pollutant reductions as well as to greenhouse gas emission reductions). 

 EPA proposed specific definitions for the vehicle technologies eligible for these 

provisions. One manufacturer suggested the following changes in their comments: 

• Insert an additional criterion for electric vehicles that specifically states that an 

electric vehicle may not have an onboard combustion engine/generator system. 

• A minor deletion of text from the definition for “Fuel cell.” 
563 

• The deletion of the requirement that a PHEV have an equivalent all-electric range 

of more than 10 miles. 

EPA agrees with the first comment. As written in the proposal, a vehicle with an 

onboard combustion engine that serves as a generator would not have been excluded 

from the definition of electric vehicle. However, EPA believes it should be. Although 

such a vehicle might be propelled by an electric motor directly, if the indirect source of 

electricity is an onboard combustion engine then the vehicle is fundamentally not an 

electric vehicle. EPA is also adopting the commenter’s proposed rephrasing of the 

definition for “Fuel cell,” which is simpler and clearer. Finally, in the context of the 

advanced technology incentive provisions in this final rule, EPA concurs with the 

commenter that the requirement that a PHEV have an equivalent all-electric range of at 

least ten miles is unnecessary. In the context of the proposed credit multiplier EPA was 

concerned that some vehicles could install a charging system on a limited battery and 

gain credit beyond what the limited technology would deserve simply by virtue of being 

defined as a PHEV. However, because EPA is not finalizing the proposed multiplier 

provisions (see Section III.C.3) and is instead using as the sole incentive the zero 

emission tailpipe level as the compliance value for a manufacturer’s fleetwide average, 

this concern is no longer valid. Since EPA is not promulgating multipliers, the concern 

expressed at proposal no longer applies, and each PHEV will get a benefit from 

electricity commensurate with its measured use of grid electricity, thus EPA is no longer 

concerned about the multiplier effect. Thus, EPA is finalizing the following definitions 

in the regulations: 
564 

• 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: 

o Recharge energy must be drawn from a source off the vehicle, such as 

residential electric service; 

o The vehicle must be certified to the emission standards of Bin #1 of Table 

S04-1 in paragraph (c)(6) of §86.1811; and 

o The vehicle does not have an onboard combustion engine/generator 

system as a means of providing electrical energy. 

• 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 noncombustion reaction of a consumable fuel, typically hydrogen. 

• Plug-in hybrid electric vehicle (PHEV) means a hybrid electric vehicle that 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. 

With some simplifying assumptions, assume that 25,000 of Manufacturer A’s fleet 

are now plug-in hybrid electric vehicles with a calculated CO2 value of 80 g/mi, and the 

remaining 475,000 are conventional technology vehicles with an average CO2 value of 
565 

290 grams/mile. By including the advanced technology PHEVs in their fleet, 

Manufacturer A now has more than 2.9 million credits (Table III.E.5-2). 

Table III.E.5-2 Summary for Manufacturer A: 

Earning Basic and Interim Advanced Technology Credits 

 CO2 Totals 

Total production Conventional: 475,000 290 

g/mi 

 500,000 

 PHEV: 25,000 80 g/mi 

Fleet average 

standard 

 300 

g/mi 

 

Fleet average [(475,000 × 290) + (25,000 × 80)] 

÷ [500,000] 

280 

g/mi 

 

Credits [(300-280) × 500,000 × 195,264] 

÷ 1,000,000 

 = 1,952,640 

Mg 

c. Flexible-Fuel Vehicle Credits 

As noted in Section III.C, treatment of flexible-fuel vehicle (FFV) credits differs 

between model years 2012-2015 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 final regulations have been modified as needed 

to do the calculations in terms of grams per mile of CO2 values rather than miles per 

gallon. These credits are integral to the fleet average calculation and allow the vehicles 

to be represented by artificially reduced emissions. To use this credit program, the CO2

values of FFVs will be represented by the average of two things: the CO2 value while 

operating on gasoline and the CO2 value while operating on the alternative fuel 

multiplied by 0.15. 
566 

For MY 2012 to 2015 for example, Manufacturer A makes 30,000 FFVs with 

CO2 values of 280 g/mi using gasoline and 260 g/mi using E85. The CO2 value 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 

Including these FFVs with the applicable credit in Manufacturer A’s fleet 

average, as shown below in Table 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. 

Table III.E.5-3 Summary for Manufacturer A: 

Earning Basic, Interim Advanced Technology, and Flexible Fuel Vehicle Credits 

 CO2 Totals 

Total production Conventional: 445,000 290 g/mi 500,000 

 PHEV: 25,000 80 g/mi 

 FFV: 30,000 160 g/mi 

Fleet average 

standard 

 300 g/mi 

Fleet average [(445,000 × 290) + (25,000 × 80) + 

30,000 x 160] 

÷ [500,000] 

272 g/mi 

Credits [(300-272) × 500,000 × 195,264] 

÷ 1,000,000 

 = 2,733,696 

Mg 

 In the 2016 and later model years, the calculation of FFV emissions differ 

substantially from prior years in that the determination of the CO2 value to represent an 

FFV model type will be based upon the actual use of the alternative fuel and on actual 

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 will apply to an FFV by 

default would be the value determined for operation on conventional fuel. However, if 
567 

the manufacturer believes that the alternative fuel is used in real-world driving and that 

accounting for this use could improve the fleet average, the manufacturer has two 

options. First, the regulations 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 will be published by 

EPA, and that weighting value would be available for all manufacturers to use for that 

fuel. The second option allows 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 must be approved by EPA before their use is allowed. In either 

case, whether EPA supplies the weighting factors or EPA approves a manufacturer’s 

alternative fuel weighting factors, 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. In the example above, for 

instance, the default CO2 value for the fictional FFV described above would be the 

gasoline value of 280 g/mi, and the resulting fleet average and total credits would be 279 

g/mi and 2,050,272 megagrams, respectively. However, if the EPA determines that realworld ethanol use amounts to 40 percent of driving, then using the equation above the 
568 

FFV would be included in the fleet average calculation with a CO2 value of 272 g/mi, 

resulting in an overall fleet average of 278 g/mi and total credit accumulation of 

2,147,904 megagrams. 

d. Dedicated Alternative Fuel Vehicle Credits 

Like the FFV credit program described above, these credits will 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 (Table III.E.5-4). Prior to the 2016 

model year the CO2 emissions representing these CNG vehicles will be 33 grams/mile 

(220 × 0.15). 
569 

Table III.E.5-4 Summary for Manufacturer A: 

Earning Basic, Advanced Technology, Flexible Fuel Vehicle, and Dedicated Alternative 

Fuel Vehicle Credits 

 CO2 Totals 

Total production Conventional: 425,000 290 g/mi 500,000 

 PHEV: 25,000 80 g/mi 

 FFV: 30,000 160 g/mi 

 CNG: 20,000 33 g/mi 

Fleet average 

standard 

 300 g/mi 

Fleet average [(425,000 × 290) + (25,000 × 80) + 

(30,000 × 160) + (20,000 × 33)] 

÷ [500,000] 

261 g/mi 

Credits [(300-261) × 500,000 × 195,264] 

÷ 1,000,000 

 = 3,807,648 

Mg 

The calculation for 2016 and later will be the same except the 0.15 credit 

adjustment factor is removed from the equation, and the CNG vehicles in this example 

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 or fleet average standard. 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 calculations shown above. 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 can 

generate credits for reducing the leakage of refrigerant from their air conditioning 
570 

systems. To do this the manufacturer will identify an air conditioning system 

improvement, indicate that they 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 regulations. Air conditioning credits will 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 will need to be calculated separately 

for cars and trucks. Thus, the resulting grams per mile credit determined from the 

appropriate car or truck equation will be multiplied by the lifetime VMT assigned by 

EPA (195,264 for cars; 225,865 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 will 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: 
571 

[13.8 × [1 – (12/16.6 × 850/1430)] = 7.9 g/mi. 

Total megagrams of credits would then be: 

[ 7.9 × 250,000 × 195,264] ÷ 1,000,000 = 385,646 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 4,193,294 megagrams of credits. 

f. Air Conditioning Efficiency Credits 

As noted in Section III.C.1.b, manufacturers may 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. 
572 

In order to put these credits on the same basis as the basic and other credits 

describe above, the air conditioning efficiency credits are calculated separately for cars 

and trucks. Thus, the resulting grams per mile credit determined in the above equation is 

multiplied by the lifetime VMT, and then divided by 1,000,000 to get the total 

megagrams of efficiency 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 will determine their credit based on 

selections from a menu of technologies, each of which provides a gram per mile credit 

amount. The credits will be summed for all the technologies implemented by the 

manufacturer, but cannot 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 × 195,264] ÷ 1,000,000 = 278,251 Mg. 
573 

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 4,471,545 megagrams of credits. 

g. Off-Cycle Technology Credits 

As described in Section III.C, these credits will be available for certain new or 

innovative 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 will 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 is 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. 
574 

Existing regulations describe how to calculate 5-cycle fuel economy values, and the GHG 

regulations contain provisions that describe how to calculate 5-cycle CO2 values (see 40 

CFR 600.114-08). The manufacturer will have to design a test program that accounts for 

vehicle differences if the technology is installed in different vehicle types, and enough 

data will have to be collected to address data uncertainty issues. Manufacturers seeking 

to generate off-cycle credits based on a 5-cycle analysis will be required to submit a 

description of their test program and the results to EPA for approval. 

As noted in Section III.C.4, a manufacturer-developed testing, data collection, and 

analysis program will require additional EPA approval and oversight. EPA received 

considerable comment from environmental and public interest organizations suggesting 

that EPA’s decisions about which technologies merit off-cycle credit should be open and 

public. EPA agrees that a public process will help ensure a fair review and alleviate 

concerns about potential misuse of the off-cycle credit flexibility. Therefore EPA intends 

to seek public comment on manufacturer proposals for off-cycle credit that do not use the 

5-cycle approach to quantify emission reductions. EPA will consider any comments it 

receives in determining whether and how much credit is appropriate. Manufacturers 

should submit proposals well in advance of their desired decision date to allow time for 

these public and EPA reviews. 

Once the demonstration of the CO2 reduction of an off-cycle technology is 

complete, and the resulting value accounts for variations in driving, climate and other 

conditions across the country, the two approaches are treated fundamentally the same 
575 

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 

will determine the total credit value by multiplying the gram per mile per vehicle credit 

by the production 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 4.4 grams /mile and that is installed 

in 175,000 cars would generate credits as follows: 

[ 4.4 × 175,000 × 195,264] ÷ 1,000,000 = 150,353 Mg. 

h. End-of-Year Reporting 

In general, implementation of the averaging, banking, and trading (ABT) 

program, including the calculation of credits and deficits, will be accomplished via 

existing reporting mechanisms. EPA’s existing regulations define how manufacturers 

calculate fleet average miles per gallon for CAFE compliance purposes. Today’s action 

modifies 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-of-year report for each model year, submitted to EPA, which details the test results 
576 

and calculations that determine each manufacturer’s CAFE levels. EPA will now require 

a similar report that includes fleet average CO2 levels and related information. That can 

be integrated with the CAFE report at the manufacturer’s option. In addition to requiring 

reporting of the actual fleet average achieved, this end-of-year report will 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 will 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, the number of credits bought or sold, and the 

resulting balance of credits or debits. 

Because of the multitude of credit programs that are available under the 

greenhouse gas program, the end-of-year 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 report will 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 will be required to identify the number and type 

of these vehicles and the effect of these credits on their fleet average. The same will be 

true for credits due to flexible-fuel and alternative-fuel vehicles, although for 2016 and 

later flexible-fuel credits manufacturers may also have to provide a demonstration of the 

actual use of the alternative fuel in-use and the resulting calculations of CO2 values for 
577 

such vehicles. For air conditioning leakage credits manufacturers will have to include a 

summary of their use of such credits that will 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 

procedure, and reporting will have to detail compliance with the phase-in as well as the 

test results and the resulting efficiency credits generated. Similar reporting requirements 

will also apply to the variety of possible off-cycle credit options, where manufacturers 

will 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 will expect manufacturers to 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 will be required to submit projections of all of the elements described 

above, plus any projected credit trading transactions (described below). 
578 

Finally, to the extent that there are any credit transactions, the manufacturer will 

have to detail in the end-of-year report documentation on all credit transactions that the 

manufacturer has engaged in. Information for each transaction will 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. The 

final report is due to EPA within 90 days of the end of the model year, or no later than 

March 31 in the calendar year after the calendar year named for the model year. For 

example, the final GHG report for the 2012 model year is due no later than March 31, 

2013. Failure by the manufacturer to submit the annual report in the specified time 

period will 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, manufacturers will report to EPA their fleet 

average and 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 will review the annual 

reports, figures, and calculations submitted by the manufacturer to determine any 

nonconformance. 
579 

Each certificate, required prior to introduction into commerce, will be conditioned 

upon the manufacturer attaining the CO2 fleet average standard. If a manufacturer fails to 

meet this condition and has 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 will review the manufacturer's production for the model year in which the deficit 

originated and designate which vehicles caused the fleet average standard to be exceeded. 

EPA proposed that the vehicles that would be identified as nonconforming would 

come from the most recent model year, and some comments pointed out that this was 

inconsistent with how the NLEV and Tier 2 programs were structured. EPA agrees with 

these comments and is finalizing an enforcement structure that is essentially identical to 

the one in place for existing programs. 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. 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 produced 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. 
580 

 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 rule.282 This section of 

the 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. 

 Manufacturer comments expressed concern about potential enforcement action for 

violations of the greenhouse gas standards, and the circumstances under which EPA 

would impose penalties. Manufacturers also suggested that EPA should adopt a penalty 

structure similar to the one in place under CAFE. 

The CAA specifies different civil penalty provisions for noncompliance than 

EPCA does, and EPA cannot therefore adopt the CAFE penalty structure. However, 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 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 

 

282 42 U.S.C. 7524(a), Civil Monetary Penalty Inflation Adjustment, 69 FR 7121 (Feb. 13, 2004) and Civil 

Monetary Penalty Inflation Adjustment Rule, 73 FR 75340 (Dec. 11,2008). 
581 

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.283. The 

underlying principle of this penalty factor is to operate as a safety mechanism when 

necessary to prevent injustice.284 

 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 gas standards as to any 

 

283 In re Spang & Co., 6 E.A.D. 226, 249 (EAB 1995) 284 B.J. Carney Industries, 7 E.A.D. 171, 232, n. 82 (EAB 1997). 
582 

other regulated emission. Acts that are prohibited by section 203 of the Clean Air Act 

include the introduction into commerce or the sale of a vehicle without a certificate of 

conformity, removing or otherwise defeating emission control equipment, the sale or 

installation of devices designed to defeat emission controls, and other actions. EPA 

proposed to include in the regulations a new section that details these prohibited acts. 

Prior regulations, such as the NLEV program, had included such a section, and although 

there is no burden associated with the regulations or any specific need to repeat what is in 

the Clean Air Act, EPA believes that including this language in the regulations provides 

clarity and improves the ease of use and completeness of the regulations. No comments 

were received on the proposal, and EPA is finalizing the section on prohibited acts (see 

40 CFR 86.1854-12). 

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 will also apply this policy 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 have 

done so for CAFE purposes. 

 
583 

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 rule. 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 rule is not 

known. EPA will assess its compliance testing and other activities associated with the 

rule and may amend its fees regulations in the future to include any warranted new costs. 

c. Small Entity Exemption 

 EPA is exempting small entities, and these entities (necessarily) would not be 

subject to the certification requirements of this rule. 

As discussed in Section III.B.8, 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 GHG requirements, pending future regulatory action. EPA 

proposed that such entities instead be required to 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. EPA has reconsidered the need for this additional 
584 

submission under the regulations and is deleting it as not necessary. We already have 

information on the limited number of small entities that we expect would receive the 

benefits of the exemption, and do not need the proposed regulatory requirement to be 

able to effectively implement this exemption for those parties who in fact meet its terms. 

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. 

As discussed in detail in Section III.B.6, small volume manufacturers with annual 

sales volumes of less than 5,000 vehicles will also be deferred from the CO2 standards, 

pending future regulatory action. These manufacturers would still be required to meet 

N2O and CH4 standards, however. To qualify for CO2 standard deferral, manufacturers 

would need to submit a declaration to EPA, and would also be required to demonstrate 

due diligence in having attempted to first secure credits from other manufacturers. 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 volume manufacturer 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 volume manufacturer declaration would be due in 

September, 2011. If 2012 model year vehicles are not planned for introduction until 

March, 2012, then the declaration would have to be submitted in December, 2011. Such 

manufacturers are not automatically exempted from other EPA regulations for light-duty 
585 

vehicles and light-duty trucks; therefore, absent this annual declaration EPA would 

assume that each manufacturer was not deferred from compliance with the 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.285 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 did not propose that CO2 emissions would become one 

of the applicable standards required to be monitored by the OBD system. EPA did not 

propose CO2 become an applicable standard for OBD because it was confident that many 

of the emission-related 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 did not have data on the feasibility or effectiveness of 

 

285 40 CFR 86.1806-04 
586 

monitoring various emission systems and components for CO2 emissions and did not 

believe that it would be prudent to include CO2 emissions without such information. 

EPA did not address whether N2O or CH4 emissions should become applicable 

standards for OBD monitoring in the proposal. Several manufacturers felt that EPA’s 

silence on this issue implied that EPA was proposing that N2O and CH4 emissions 

become applicable OBD standards. They commented that EPA should not include them 

as part of OBD. They felt that adding N2O and CH4 would significantly increase OBD 

development burden, without significant benefit, since any malfunctions that increase 

N2O and CH4 would likely be caught by current OBD system designs. EPA agrees with 

the manufacturer’s comments on including N2O and CH4 as applicable standards. 

Therefore, at this time, EPA is not requiring CO2, N2O, and CH4 emissions as one of the 

applicable standards required for the OBD monitoring threshold. EPA plans to evaluate 

OBD monitoring technology, with regard to monitoring these GHG emissions-related 

systems and components, and may choose to propose to includeCO2, N2O, and CH4

emissions as part of the OBD requirements in a future regulatory action. 

e. Applicability of Current High Altitude Provisions to Greenhouse Gases 

Vehicles covered by this rule must meet the CO2, N2O and CH4 standard at 

altitude. The CAA requires emission standards under section 202 for light-duty vehicles 

and trucks to apply at all altitudes.286 EPA does not expect vehicle CO2, CH4, or N2O 

emissions to be significantly different at high altitudes based on vehicle calibrations 

 

286 See CAA 206(f). 
587 

commonly used at all altitudes. Therefore, EPA will retain its current high altitude 

regulations so manufacturers will not normally be required to submit vehicle CO2 test 

data for high altitude. Instead, they must 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 will 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 will be required to include 

emissions data to allow EPA evaluate and quantify any emission impact and validity of 

the AECD. 

 

f. Applicability of Standards to Aftermarket Conversions 

 With the exception of the small entity and small volume exemptions, EPA’s 

emission standards, including greenhouse gas standards, will continue to apply as stated 

in the applicability sections of the relevant regulations. The greenhouse gas standards are 

being incorporated into 40 CFR part 86, subpart S, which includes exhaust and 

evaporative emission standards for criteria pollutants. Subpart S includes requirements 

for new light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, Ottocycle 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 will qualify 

for and seek the small entity and/or small volume exemption, but those that do not qualify 
588 

will be required to meet the applicable emission standards, including the greenhouse gas 

standards. 

g. Geographical Location of Greenhouse Gas Fleet Vehicles 

One manufacturer commented that the CAFE sales area location defined by 

Department of Transportation regulations is different than the EPA sales area location 

defined by the CAA. DOT regulations require CAFE compliance287 in the 50 states, the 

District of Columbia, and Puerto Rico. However, EPA emission certification regulations 

require emission compliance288 in the 50 states, the District of Columbia, the Puerto Rico, 

the Virgin Islands, Guam, American Samoa and the Commonwealth of the Northern 

Mariana Islands. 

The comment stated that EPA has the discretion under the CAA to align the sales 

area location of production vehicles for the greenhouse gas fleet with the sales area 

location for the CAFE fleet and recommended that EPA amend the definitions in 40 CFR 

86.1803 accordingly. This would exclude from greenhouse gas requirements production 

 

287 DOT regulations at 49 CFR 525.4(a)(5) read “The term customs territory of the United States is used as 

defined in 19 U.S.C. 1202.” Section 19 U.S.C. 1202 has been replaced by the Harmonized Tariff Schedule 

of the United States. The Harmonized Tariff Schedule reads in part that "The term 'customs territory of the 

United States'...includes only the States, the District of Columbia, and Puerto Rico." 288 Section 216 of the Clean Air Act defines the term commerce to mean “(A) commerce between any place 

in any State and any place outside thereof; and (B) commerce wholly within the District of Columbia.” 

Section 302(d) of the Clean Air Act reads “The term ``State'' means a State, the District of Columbia, the 

Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa and includes the 

Commonwealth of the Northern Mariana Islands.” In addition, 40 CFR 85.1502 (14) regarding the 

importation of motor vehicles and motor vehicle engines defines the United States to include “the States, 

the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 

Islands, Guam, American Samoa, and the U.S. Virgin Islands.” 
589 

vehicles that are introduced into commerce in the Virgin Islands, Guam, American 

Samoa, and the Commonwealth of the Northern Mariana. 

Although EPA has tried to harmonize greenhouse gas and CAFE requirements in 

this rule to the extent possible, EPA believes that the approach suggested in comment 

would be contrary to the requirements of the Act. EPA does not believe that the Agency 

has discretion under the CAA to exclude from greenhouse gas requirements production 

vehicles introduced into commerce in the Virgin Islands, Guam, American Samoa, and 

the Commonwealth of the Northern Mariana Islands. In addition, this change would 

introduce an undesirable level of complexity into the certification process and result in 

confusion due to vehicles intended for commerce in separate geographical locations 

being covered under a single certificate. For these reasons, EPA will retain the proposed 

greenhouse gas production vehicle sales area location as defined in the CAA. 

 

9. Miscellaneous Revisions to Existing Regulations 

a. Revisions and Additions to Definitions 

EPA has amended its definitions of "engine code," "transmission class," and 

"transmission configuration" in its vehicle certification regulations (Part 86) to conform 

to 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 will not determine which vehicle is selected for emission 
590 

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). Since the same vehicles tested to determine corporate average fuel economy 

will also be tested to determine fleet average CO2, the same definitions will apply. Thus 

EPA has amended its Part 86 definitions of the above terms to conform to the definitions 

in Part 600. 

 

 Two provisions have been amended to bring EPA's fuel economy regulations in 

Part 600 into conformity with the fleet average CO2 requirement contained in this 

rulemaking and with NHTSA's reform truck regulations. First, the definition of 

"footprint" in this rule is also being added 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 amending 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 included in this rule for fleet 

average CO2 and fuel economy compliance. 

 b. Addition of Ethanol Fuel Economy Calculation Procedures 

 EPA has amended part 600 to add calculation procedures 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 
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regulatory language – which specifies how to determine the fuel economy of gasoline, 

diesel, compressed natural gas, and methanol fueled vehicles – has not previously been 

updated to specify procedures for vehicles operating on ethanol. Under today’s rule EPA 

is requiring use of a carbon balance approach for ethanol-fueled vehicles that is similar to 

the way carbon-related exhaust emissions are calculated for vehicles operating on other 

fuels for the purpose of determining fuel economy and for compliance with the fleet 

average CO2 standards. The carbon balance formula is similar to the one in place for 

methanol, except that ethanol and acetaldehyde emissions must also be measured for 

ethanol-fueled vehicles. The 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 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. 
592 

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.289 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 1980 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 produces fewer than 10,000 vehicles of all kinds worldwide. EPA believes 

that this exemption language is no longer appropriate and is deleting 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 

 

289 45 FR 49256, July 24, 1980. 
593 

example, the 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 has revised 

40 CFR Part 600 applicability regulations such that these electric vehicle exemptions are 

deleted starting with the 2012 model year. 
594 

d. Miscellaneous Conforming Regulatory Amendments 

EPA has made a number of minor amendments to update the regulations as 

needed or to ensure that the regulations are consistent with changes 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 regulatory text to ensure a complete understanding of the regulatory changes 

being promulgated by EPA. 

In the process of amending regulations that vary in applicability by model year, 

EPA has several approaches that can be taken. The first option is to amend an existing 

section of the regulations. For example, EPA did this in the final regulations with 

§86.111-94. In this case EPA chose to directly amend this section – which applies to 

1994 and later model years as indicated by the suffix after the hyphen – but ensure that 

the model year of applicability of the amendments (2015 and later for N2O measurement) 

is stated clearly in the regulatory text. A second option is to create a new section with 

specific applicability to the 2012 and later model years; i.e., a section number with a “12” 
595 

following the hyphen. This approach typically involves pulling forward all the language 

from an earlier model year section, then amending as needed (but it could also involve a 

wholesale revision and replacement with entirely new language). For example, EPA took 

this approach with §86.1809-12. Although only paragraphs (d) and (e) contain revisions 

pertaining to this greenhouse gas rule, the remainder of the section is “pulled forward” 

from a prior model year section (in this case, §86.1809-10) for completeness. Thus 

paragraphs (a) through (c) are unchanged relative to the prior model year section. 

Readers should therefore be aware that sections that are indicated as taking effect in the 

2012 model year may differ in only subtle ways from the prior model year section being 

superseded. A third approach (not used in this regulation) is to use the “Reserved. For 

guidance see...” technique. For example, in the §86.1809-12, rather than bring forward 

the existing language from paragraphs (a) through (c) EPA could have simply put a 

statement in the regulations directing the reader to refer back to §86.1809-10 for those 

requirements. This method has been used in the past, but is not being used in this 

regulation. 

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

Provisions

As outlined in the proposal, Section 207(a) of the Clean Air Act (CAA) requires 

manufacturers to provide a defect warranty that warrants a vehicle is designed to comply 

with emission standards and will be free from defects that may cause noncompliance over 

the specified warranty period which is 2 years/24,000 miles (whichever is first) or, for 
596 

major emission control components, 8 years/ 80,000 miles. The warranty covers parts 

which must function properly to assure continued compliance with emission standards. 

The proposal explained that under the greenhouse gas rule, this coverage would include 

compliance with the proposed CO2, CH4, and N2O standards. The proposal did not 

discuss the CAA Section 207(b) performance warranty. 

EPA proposed to include air conditioning system components under the CAA 

section 207(a) emission warranty in cases where manufacturers use air conditioning 

leakage and efficiency credits to comply with the proposed fleet average CO2 standards. 

The warranty period of 2 years/ 24,000 miles would apply. EPA requested comments as 

to whether any other parts or components should be designated as ‘‘emission related 

parts’’ and thus subject to warranty and defect reporting provisions under this rule. 

 

The Alliance of Automobile Manufacturers (Alliance), Toyota and the State of 

New Jersey provided comments. The State of New Jersey supported EPA’s proposal to 

include motor vehicle air conditioning system components under the emission warranty 

provisions. Both the Alliance and Toyota commented that emission warranty 

requirements are not appropriate for mobile air conditioners because 1) in-use 

performance of the air conditioning system at levels comparable to a new vehicle is not 

needed to achieve the emission levels targeted by EPA and 2) manufacturer general 

warranties already cover air conditioning systems and are typically longer than the twoyear/24,000 mile proposed emissions warranty period. 
597 

Regarding direct emissions (refrigerant leakage), the Alliance and Toyota 

commented that warranty requirements are unnecessary for refrigerants with a global 

warming potential (GWP) below 150 because the environmental impact is negligible 

even if refrigerants are released from the system. Regarding indirect emissions (fuel 

consumed to power the air conditioning system), the Alliance commented that EPA 

should not require warranty coverage of the air conditioning system because in the vast 

majority of air conditioning failure modes, the system stops cooling and ceases operation 

-- either because the critical moving parts stop moving or because the system is switched 

off -- thereby actually reducing the indirect CO2 emissions. 

EPA received no comments regarding 1) other parts or components which should 

be designated as ‘‘emission related parts’’ subject to warranty requirements, 2) defect 

reporting requirements, or 3) other requirements associated with warranty and defect 

reporting requirements (e.g., voluntary emission-related recall reporting requirements, 

performance warranty requirements, voluntary aftermarket parts certification 

requirements or tampering requirements. 

Defect Warranty. EPA’s current policy for defect warranty requirements is 

provided in Section 207 of the Act. There are currently no defect warranty regulations. 

Congress provided under Section 207(a) and (b) of the CAA that emission-related 

components shall be covered under the 207(a) defect warranty and the 207(b) 

performance warranty for the warranty period outlined in section 207(i) of the CAA. For 

example, section 207(a) reads in part: 
598 

“....the manufacturer of each new motor vehicle and new motor vehicle engine shall 

warrant to the ultimate purchaser and each subsequent purchaser that such vehicle 

or engine is (A) designed, built and equipped so as to conform at the time of sale 

with applicable regulations under section 202, and (B) free from defects in materials 

and workmanship which cause such vehicle or engine to fail to conform with 

applicable regulations for its useful life (as determined under sec. 202(d)). In the 

case of vehicles and engines manufactured in the model year 1995 and thereafter 

such warranty shall require that the vehicle or engine is free from any such defects 

for the warranty period provided under subsection (i).” 

Section 207(i) reads in part: 

"(i) Warranty Period.--- 

(1) In General.—For purposes of subsection (a)(1) and subsection (b), the warranty 

period, effective with respect to new light-duty trucks and new light-duty vehicles 

and engines, manufactured in model year 1995 and thereafter, shall be the first 2 

years or 24,000 miles of use (whichever first occurs), except as provided in 

paragraph (2). For the purposes of subsection (a)(1) and subsection (b), for other 

vehicles and engines the warranty period shall be the period established by the 

Administrator by regulation (promulgated prior to the enactment of the Clean Air 

Act Amendments of 1990) for such purposes unless the Administrator subsequently 

modifies such regulation. 

(2) In the case of a specified major emission control component, the warranty period 

for new light-duty trucks and new light-duty vehicles manufactured in the model 

year 1995 and thereafter for purposes of subsection (a)(1) and subsection (b) shall 

be 8 years or 80,000 miles of use (whichever first occurs). As used in this 

paragraph, the term 'specified major emission control component' means only a 
599 

catalytic converter, an electronic emissions control unit, and an onboard emissions 

diagnostic device, except that the Administrator may designate any other pollution 

control device or component as a specified major emission control component if--- 

(A) the device or component was not in general use on vehicles and engines 

manufactured prior to the model year 1990; and (B) the Administrator determines 

that the retail cost (exclusive of installation costs) of such device or component 

exceeds $200 (in 1989 dollars, adjusted for inflation or deflation as calculated by 

the Administrator at the time of such determination....." 

Thus, the CAA provides the basis of the warranty requirements contained in 

today’s final rule, which will cover “emission related parts” necessary to provide 

compliance with CO2, CH4, and N2O standards. Emission related parts would include 

those parts, systems, components and software installed for the specific purpose of 

controlling emissions or those components, systems, or elements of design which must 

function properly to assure continued vehicle emission compliance, including compliance 

with CO2, CH4, and N2O standards; (similar to the current definition of “emission related 

parts” provided in 40 CFR 85.2102(14) for performance warranty requirements). For 

example, today’s action will extend defect warranty requirements to emission-related 

components on advanced technology vehicles such as cylinder deactivation components 

or batteries used in hybrid-electric vehicles. 

Under today’s rule, EPA will extend the defect warranty requirement to emissionrelated components necessary to meet CO2, CH4, and N2O standards, including emissionrelated components which are used to obtain optional credits for 1) certification of 

advanced technology vehicles, 2) credits for reduction of air conditioning refrigerant 
600 

leakage, 3) credits for improving air conditioning system efficiency, 4) credits for offcycle CO2 reducing technologies, and 5) optional early credits for 2009-2011 model year 

vehicles outlined in the provisions of 40 CFR 86.1867-12 (which are required to be 

reported to EPA after the 2011 model year). 

Regarding the comments received by the Alliance and Toyota, that warranty 

coverage is not needed for air conditioning components, EPA believes that the Clean Air 

Act requires warranty coverage on components used to demonstrate compliance with the 

emission standards, including components used in the optional credit programs for 

reduction of air conditioning refrigerant leakage and air conditioning efficiency 

improvements. EPA does not have the discretion to forgo warranty requirements by 

regulation in today’s final rule. Thus, the Agency is adopting defect warranty 

requirements for air conditioning components as proposed. 

Effective date of Warranty for Components used to Obtain Early Credits. 

Regarding the defect warranty for emission-related components used to obtain optional 

early credits for 2009-2011 vehicles, the defect warranty should provide coverage for 

these components at the time the early credits report is submitted to EPA (e.g., no later 

than 90 days after the end of the 2011 model year). For example, the defect warranty for 

early credit components does not have to apply retroactively (before the manufacturer 

declares the credits to EPA). The Agency believes this approach is reasonable, because 1) 

manufacturer’s early credit plans may not be finalized until after vehicles have been 

produced; 2) manufacturers will be provided satisfactory lead time to provide warranty 
601 

requirements to customers; and 3) the manufacturer’s basic (bumper-to-bumper) warranty 

for air conditioning and other early credit components are typically longer than the twoyear/24,000 mile proposed warranty period which will be applicable to most early credit 

components. ). 

Performance Warranty. EPA did not propose any changes to the current 

performance warranty requirements, because the performance warranty preconditions 

outlined in section 207(b) of the CAA have not been satisfied. For example, section 

207(b) of the CAA comes into play if EPA issues performance warranty short test 

regulations and determines that there are inspection facilities available in the field to 

determine when vehicles do not comply with greenhouse gas emission standards. Once 

EPA issues performance warranty short test regulations, then the CAA performance 

warranty provisions require the manufacturer to pay for emission-related repairs if a 

vehicle is properly maintained and used, and fails the short test and is required to repair 

the vehicle. Currently the provisions of 85.2207 and 85.2222 provide performance 

warranty short test (commonly called an inspection and maintenance or I/M test). The 

provisions of 85.2207 and 85.2222 provide an I/M test procedure and failure criteria 

based on an inspection of the onboard diagnostic (OBD) system of the vehicle. The OBD 

inspection procedure in 85.2222 is currently used in most areas of the country where I/M 

tests are required. For example, a vehicle fails the OBD test procedure outlined in 

85.2222 if the vehicle’s MIL is commanded to be “on” during the I/M test procedure. 
602 

Although most areas of the country which require I/M testing use the OBD test 

procedure outlined in 40 CFR 85.2207 and 85.2222, the NPRM did not propose that the 

OBD system would be required monitor CO2, CH4 or N2O emission performance, ref 74 

FR 49574 and 74 FR 49755. Therefore, the performance warranty preconditions in 

201(b) of the CAA are not currently in effect for greenhouse gas CO2 emissions. The 

performance warranty continues to apply for criteria pollutants but not for greenhouse 

emissions. 

Defect Reporting and Voluntary Emission-related Recall Reporting Requirements. 

EPA did not propose any changes to the current defect reporting and voluntary emissionrelated recall reporting requirements outlined in the provisions of 40 CFR 85.1901-1909. 

Although EPA requested comments, we did not receive any comments on defect 

reporting and voluntary emission-related recall reporting requirements. Current 

regulations require manufacturers to submit a defect report to EPA whenever an 

emission-related defect exists in 25 or more in-use vehicles or engines of the same model 

year. The defect report is required to be submitted to EPA within 15 working days of the 

time the manufacturer become aware of that a defect affects 25 or more vehicles. Current 

regulations require manufacturers to submit to EPA voluntary emission-related recall 

reports within 15 working days of the date when owner notification begins. 

Similar to the performance warranty requirements outlined above, the Agency 

believes that as proposed, defect reporting and voluntary emission-related recall reporting 

requirements would apply to emission-related components necessary to meet CO2, CH4, 
603 

and N2O standards for the useful life of the vehicle, including emission-related 

components that are used to obtain optional credits for 1) certification of advanced 

technology vehicles, 2) credits for reduction of air conditioning refrigerant leakage, 3) 

credits for improving air conditioning system efficiency, and 4) credits for off-cycle CO2

reducing technologies, and 5) optional early credits for 2009-2011 model year vehicles 

outlined in the provisions of 40 CFR 86.1867-12 (which are required to be reported to 

EPA after the 2011 model year). For early credit components, defect reporting 

requirements and voluntary emission-related recall reporting requirements become 

effective at the time the early credits report is submitted to EPA (e.g., no later than 90 

days after the end of the 2011 model year). 

The final rule includes a minor clarification to the provisions of 40 CFR 85.1902 

(b) and (d) to clarify that beginning with the 2012 model year, manufacturers are required 

to report emission-related defects and voluntary emission recalls to EPA, including 

emission-related defects and voluntary emission recalls related to greenhouse gas 

emissions (CH4, N2O and CO2). 

 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 duty vehicles. EPA believes 

it is important that the fuel-economy label affixed to the new vehicles provide consumers 

with the critical information they need to make smart purchase decisions, especially in 
604 

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. 

Therefore, in proposing this greenhouse gas action, EPA sought comment on 

issues surrounding consumer vehicle labeling in general, and labeling of advanced 

technology vehicles in particular. EPA specifically asked for input as to whether today’s 

miles per gallon fuel economy metric provides adequate information to consumers. 

EPA received considerable public input in response to the request for comment in 

the proposal. Since the greenhouse gas rule was proposed in September, 2009, EPA has 

initiated a separate rulemaking to explore in detail the information displayed on the fuel 

economy label and the methodology for deriving that information. The purpose of the 

vehicle labeling rulemaking is 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. 

EPA will consider all vehicle labeling comments received in response to the 

greenhouse gas proposal in its development of the new labeling rule in coming months. 

We encourage the interested public to stay engaged and continue to provide input on this 

issue in the context of the vehicle labeling rulemaking. 
605 

F. How Will This Final Rule 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. As shown below, U.S. GHGs are 

estimated to make up roughly 17 percent of total worldwide emissions in 2010, and the 

contribution of direct emissions from cars and light-trucks to this U.S. share is growing 

over time, reaching an estimated 19 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 (MMTCO2eq)

 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 

Onlyb 1,243 1,293 1,449 1,769 2,219 

a

ADAGE model projections, U.S. EPA 290 

b MOVES2010 (2010), OMEGA Model (2020-50) U.S. EPA. See RIA Chapter 5.3 for modeling 

details. 

 

290 U.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). ADAGE model projections of 

worldwide and U.S. totals include EISA, and are provided for context. 
606 

EPA’s GHG rule 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 rule is part of a joint National 

Program such that a large majority of the projected benefits would be achieved jointly 

with NHTSA’s CAFE standards, which are described in detail in Section IV. EPA 

estimates the reductions attributable to the GHG program over time assuming the model 

year 2016 standards continue indefinitely post-2016,291 compared to a reference 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-eq emissions by 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 “upstream” emission reductions from 

gasoline extraction, production and distribution processes as a result of reduced gasoline 

demand associated with this rule. 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 program 

would be 307 million metric tons CO2-equivalent (MMTCO2eq) annually by 2030, which 

 

291 This analysis does not include the EISA requirement for 35 MPG through 2020 or California’s Pavley 1 

GHG standards. The standards are intended to supersede these requirements, and the baseline case for 

comparison are the emissions that would result without further action above the currently promulgated fuel 

economy standards. 
607 

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 approximately 50 million cars and light trucks from the 

road in this timeframe.292 

EPA projects the total reduction of the program over the full life of model year 

2012-2016 vehicles to be about 960 MMTCO2eq, with fuel savings of 78 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 

standards. 

The impacts on global mean temperature and global mean sea level rise resulting 

from these emission reductions are discussed in Section III.F.3. 

1. Impact on GHG Emissions

This action 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 

 

292 Estimated using MOVES2010, the average vehicle in the light duty fleet emitted 5.1 tons of CO2 during 

calendar year 2008. 
608 

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 subject to 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 the emission caps set forth in this rule, which are meant to prevent emission 

backsliding and to bring diesel vehicles equipped with advanced technology 

aftertreatment, and other advanced technology vehicles such as lean-burn gasoline 

vehicles, into alignment with current gasoline vehicle emissions.293

No substantive comments were received on the emissions modeling methods or 

on the greenhouse gas inventories presented in the proposal. These analyses are updated 

here to include model revisions and more recent economic analysis, including revised 

estimates of future vehicle sales, fuel prices, and vehicle miles traveled. The primary 

source for these data is the AEO 2010 preliminary release.294 For more details, please see 

the TSD and RIA Chapter 5. 

 

293 EPA is adopting a compliance option whereby manufacturers can comply with a CO2 equivalent 

standard in lieu of meeting the CH4 and N2O standards. This should have no effect on the estimated GHG 

reductions attributable to the rule since a condition of meeting that alternative standard is that the fleetwide 

CO2 target remains in place. 294 Energy Information Administration. Annual Energy Outlook 2010 Early Release. 

http://www.eia.doe.gov/oiaf/aeo/. 
609 

 As detailed in the RIA, EPA estimated calendar year tailpipe CO2 reductions 

based on pre- and post-control CO2 gram per mile levels from EPA’s OMEGA model and 

assumed to continue indefinitely into the future, coupled with VMT projections derived 

from AEO 2010 Early Release. 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, the TLAAS program and FFV 

credits. EPA also estimated full lifetime reductions for model years 2012-2016 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 rule allows 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 50 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 
610 

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 Chapter 5 of the RIA. 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 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 RIA. 

a. Calendar Year Reductions for Future Years 

 

Table III.F.1-1 shows reductions estimated from these GHG standards assuming a 

pre-control case of 2011 MY standards continuing indefinitely beyond 2011, and a postcontrol case in which 2016 MY GHG standards continue indefinitely beyond 2016.295 

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 307 MMTCO2eq annually by 2030 (a 

21 percent reduction in U.S. car and light truck emissions), and grow to over 500 

 

295 Legally, the 2011 CAFE standards only apply to the 2011 model year and no standards apply to future 

model years. However, we do not believe that it would be appropriate to assume that no CAFE standards 

would apply beyond the 2011 model year when projecting the impacts of this rule. 
611 

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 GHG Reductions (MMTCO2eq per year)

Calendar Year: 2020 2030 2040 2050 

Net Reduction* 156.4 307.0 401.5 505.9 

Net CO2 139.1 273.3 360.4 458.7 

Net other GHG 17.3 33.7 41.1 47.2 

Downstream Reduction 125.2 245.7 320.7 403.0

CO2 (excluding A/C) 101.2 199.5 263.2 335.1

A/C – indirect CO2 10.6 20.2 26.5 33.8

 A/C – direct HFCs 13.3 26.0 30.9 34.2

 CH4 (rebound effect) 0.0 0.0 0.0 0.0 

 N2O (rebound effect) 0.0 -0.1 -0.1 -0.1 

Upstream Reduction 31.2 61.3 80.8 102.9

CO2 27.2 53.5 70.6 89.9 

CH4 3.9 7.6 10.0 12.7 

N2O 0.1 0.3 0.3 0.4 

 

Percent reduction relative to U.S. 

reference (cars + light trucks) 12.1% 21.2% 22.7% 22.8%

Percent reduction relative to U.S. 

reference (all sectors) 2.1% 4.0% 5.0% 6.0%

Percent reduction relative to 

worldwide reference 0.3% 0.6% 0.7% 0.8%

* 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 program.296 These results, including both upstream 

 

296 As detailed in the RIA Chapter 5 and TSD Chapter 4, for this analysis the full life of the vehicle is 

represented by average lifetime mileages for cars (195,000 miles) and trucks (226,000 miles) averaged over 

calendar years 2012 through 2030, a function of how far vehicles drive per year and scrappage rates. 
612 

and downstream GHG contributions, are presented in Table III.F.1-2, showing lifetime 

reductions of about 960 MMTCO2eq, with fuel savings of 78 billion gallons (1.8 billion 

barrels) of gasoline. 

Table III.F.1-2 Projected Net GHG Reductions (MMTCO2eq per year)

Model Year Lifetime GHG 

Reduction 

(MMT CO2 EQ) 

Lifetime Fuel 

Savings 

(Billion Gallons) 

2012 88.9 7.3 

2013 130.2 10.5 

2014 174.2 13.9 

2015 244.2 19.5 

2016 324.6 26.5 

Total Program Benefit 962.0 77.7 

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 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 25.0 

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 vehicle GHG standards are attributed solely to this rebound effect. 
613 

Table III.F.1-3 GHG Impact Of 10% VMT Rebounda

(MMTCO2eq per year)

2020 2030 2040 2050 

Total GHG Increase 13.0 25.0 32.9 41.9 

Tailpipe & Indirect A/C CO2 10.2 19.6 25.8 32.8 

Upstream GHGs b 2.8 5.4 7.1 9.1 

Tailpipe CH4 0.0 0.0 0.0 0.0 

Tailpipe N2O 0.0 0.1 0.1 0.1 

a

 These 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 

GHG emission standards. 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 253 g/mile CO2eq (4%), and 230 g/mile CO2eq(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 RIA Chapter 5. 

EPA’s assessment of these alternative standards, including our response to public 

comments, is discussed in Section III.D. 
614 

Table III.F.1-4 Calendar Year Impacts Of Alternative Scenarios

Calendar Year 

 Scenario CY 2020 CY2030 CY 2040 CY 2050 

Primary -156.4 -307.0 -401.5 -505.8 

4% -141.9 -286.2 -375.4 -472.9 

Total GHG 

Reductions (MMT 

CO2eq) 6% -202.6 -403.4 -529.3 -668.7 

Primary -12.6 -24.7 -32.6 -41.5 

4% -11.3 -22.9 -30.3 -38.6 

Fuel Savings 

(Billion Gallons 

Gasoline 

Equivalent) 

6% -16.7 -33.2 -43.9 -55.9 

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 

Primary -88.8 -130.2 -174.2 -244.2 -324.6 -962.0 

4% -39.9 -96.6 -155.4 -226.5 -303.6 -822.0 

Total GHG 

Reductions (MMT 

CO2eq) 6% -61.7 -146.5 -237.0 -332.2 -427.6 -1,204.9 

Primary -7.3 -10.5 -13.9 -19.5 -26.5 -77.7 

4% -2.9 -7.1 -12.2 -18.0 -24.6 -64.8 

Fuel Savings 

(Billion Gallons 

Gasoline 

Equivalent) 

6% -4.9 -12.0 -19.4 -27.3 -35.6 -99.1 

2. Overview of Climate Change Impacts from GHG Emissions

Once emitted, GHGs 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. GHG emissions come mainly from the combustion of 

fossil fuels (coal, oil, and gas), with additional contributions from the clearing of forests 

and agricultural activities. The transportation sector represents a significant portion, 28%, 

of U.S. GHG emissions.297

 

297 U.S. EPA (2009) Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2007. EPA-430-R-09-

004, Washington, DC. 
615 

This section provides a summary of observed and projected changes in GHG 

emissions and associated climate change impacts. The source document for the section 

below is the Technical Support Document (TSD)298 for EPA’s Endangerment and Cause 

or Contribute Findings Under the Clean Air Act.299 Below is the Executive Summary of 

the TSD which provides technical support for the endangerment and cause or contribute 

analyses concerning GHG emissions under section 202(a) of the Clean Air Act. The 

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 action and other U.S. and global actions. The TSD was updated and revised 

based on expert technical review and public comment as part of EPA’s rulemaking 

process for the final Endangerment Findings. The key findings synthesized here and the 

information throughout the TSD are primarily drawn from the assessment reports of the 

Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change Science 

Program (CCSP), the U.S. Global Change Research Program (USGCRP), and the 

National Research Council (NRC).300

 

298 “Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse 

Gases Under Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR-2009-0472-11292 299 See 74 FR 66496 (Dec. 15, 2009) 300 For a complete list of core references from IPCC, USGCRP/CCSP, NRC and others relied upon for 

development of the TSD for EPA’s Endangerment and Cause or Contribute Findings see section 1(b), 

specifically, Table 1.1 of the TSD. 
616 

a. Observed Trends in Greenhouse Gas Emissions and Concentrations 

The primary long-lived GHGs directly emitted by human activities include carbon 

dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), 

perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Greenhouse gases have a 

warming effect by trapping heat in the atmosphere that would otherwise escape to space. 

In 2007, U.S. GHG emissions were 7,150 teragrams301 of CO2 equivalent302 (TgCO2eq). 

The dominant gas emitted is CO2, mostly from fossil fuel combustion. Methane is the 

second largest component of U.S. emissions, followed by N2O and the fluorinated gases 

(HFCs, PFCs, and SF6). Electricity generation is the largest emitting sector (34% of total 

U.S. GHG emissions), followed by transportation (28%) and industry (19%). 

Transportation sources under Section 202(a)303 of the Clean Air Act (passenger 

cars, light duty trucks, other trucks and buses, motorcycles, and passenger cooling) 

emitted 1,649 TgCO2eq in 2007, representing 23% of total U.S. GHG emissions. U.S. 

transportation sources under Section 202(a) made up 4.3% of total global GHG emissions 

in 2005,304 which, in addition to the United States as a whole, ranked only behind total 

GHG emissions from China, Russia, and India but ahead of Japan, Brazil, Germany, and 

 

301 One teragram (Tg) = 1 million metric tons. 1 metric ton = 1,000 kilograms = 1.102 short tons = 2,205 

pounds. 

302 Long-lived GHGs are compared and summed together on a CO2-equivalent basis by multiplying each 

gas by its global warming potential (GWP), as estimated by IPCC. In accordance with United Nations 

Framework Convention on Climate Change (UNFCCC) reporting procedures, the U.S. quantifies GHG 

emissions using the 100-year timeframe values for GWPs established in the IPCC Second Assessment 

Report. 

303 Source categories under Section 202(a) of the Clean Air Act are a subset of source categories considered 

in the transportation sector and do not include emissions from non-highway sources such as boats, rail, 

aircraft, agricultural equipment, construction/mining equipment, and other off-road equipment. 

304 More recent emission data are available for the United States and other individual countries, but 2005 is 

the most recent year for which data for all countries and all gases are available. 
617 

the rest of the world’s countries. In 2005, total U.S. GHG emissions were responsible for 

18% of global emissions, ranking only behind China, which was responsible for 19% of 

global GHG emissions. The scope of this action focuses on GHG emissions under 

Section 202(a) from passenger cars and light duty trucks source categories (see Section 

III.F.1). 

The global atmospheric CO2 concentration has increased about 38% from preindustrial levels to 2009, and almost all of the increase is due to anthropogenic emissions. 

The global atmospheric concentration of CH4 has increased by 149% since pre-industrial 

levels (through 2007); and the N2O concentration has increased by 23% (through 2007). 

The observed concentration increase in these gases can also be attributed primarily to 

anthropogenic emissions. The industrial fluorinated gases, HFCs, PFCs, and SF6, have 

relatively low atmospheric concentrations but the total radiative forcing due to these 

gases is increasing rapidly; these gases are almost entirely anthropogenic in origin. 

Historic data show that current atmospheric concentrations of the two most 

important directly emitted, long-lived GHGs (CO2 and CH4) are well above the natural 

range of atmospheric concentrations compared to at least the last 650,000 years. 

Atmospheric GHG concentrations have been increasing because anthropogenic emissions 

have been outpacing the rate at which GHGs are removed from the atmosphere by natural 

processes over timescales of decades to centuries. 
618 

b. Observed Effects Associated With Global Elevated Concentrations of 

GHGs 

Current ambient air concentrations of CO2 and other GHGs remain well below 

published exposure thresholds for any direct adverse health effects, such as respiratory or 

toxic effects. 

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. This total net heating effect, 

referred to as forcing, is estimated to be +1.6 (+0.6 to +2.4) watts per square meter 

(W/m2

), with much of the range surrounding this estimate due to uncertainties about the 

cooling and warming effects of aerosols. However, as aerosol forcing has more regional 

variability than the well-mixed, long-lived GHGs, the global average might not capture 

some regional effects. The combined radiative forcing due to the cumulative (i.e., 1750 to 

2005) increase in atmospheric concentrations of CO2, CH4, and N2O is estimated to be 

+2.30 (+2.07 to +2.53) W/m2. The rate of increase in positive radiative forcing due to 

these three GHGs during the industrial era is very likely to have been unprecedented in 

more than 10,000 years.

Warming of the climate system is unequivocal, as is now evident from 

observations of increases in global average air and ocean temperatures, widespread 

melting of snow and ice, and rising global average sea level. Global mean surface 
619 

temperatures have risen by 1.3 ± 0.32°F (0.74°C ± 0.18°C) over the last 100 years. Eight 

of the 10 warmest years on record have occurred since 2001. 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. 

Most of the observed increase in global average temperatures since the mid-20th 

century is very likely due to the observed increase in anthropogenic GHG concentrations. 

Climate model simulations suggest natural forcing alone (i.e., changes in solar irradiance) 

cannot explain the observed warming. 

U.S. temperatures also warmed during the 20th and into the 21st century; 

temperatures are now approximately 1.3°F (0.7°C) warmer than at the start of the 20th

century, with an increased rate of warming over the past 30 years. Both the IPCC305 and 

the CCSP reports attributed recent North American warming to elevated GHG 

concentrations. In the CCSP (2008) report,306 the authors find that for North America, 

“more than half of this warming [for the period 1951-2006] is likely the result of humancaused greenhouse gas forcing of climate change.” 

 

305 Hegerl, G.C. et al. (2007) Understanding and Attributing Climate Change. In: 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. 

306 CCSP (2008) Reanalysis of Historical Climate Data for Key Atmospheric Features: Implications for 

Attribution of Causes of Observed Change. A Report by the U.S. Climate Change Science Program and the 

Subcommittee on Global Change Research [Randall Dole, Martin Hoerling, and Siegfried Schubert (eds.)]. 

National Oceanic and Atmospheric Administration, National Climatic Data Center, Asheville, NC, 156 pp. 
620 

Observations show that changes are occurring in the amount, intensity, frequency 

and type of precipitation. Over the contiguous United States, total annual precipitation 

increased by 6.1% from 1901 to 2008. It is likely that there have been increases in the 

number of heavy precipitation events within many land regions, even in those where 

there has been a reduction in total precipitation amount, consistent with a warming 

climate. 

There is strong evidence that global sea level gradually rose in the 20th century 

and is currently rising at an increased rate. It is not clear whether the increasing rate of 

sea level rise is a reflection of short-term variability or an increase in the longer-term 

trend. Nearly all of the Atlantic Ocean shows sea level rise during the last 50 years with 

the rate of rise reaching a maximum (over 2 millimeters [mm] per year) in a band along 

the U.S. east coast running east-northeast. 

Satellite data since 1979 show that annual average Arctic sea ice extent has 

shrunk by 4.1% per decade. The size and speed of recent Arctic summer sea ice loss is 

highly anomalous relative to the previous few thousands of years. 

Widespread changes in extreme temperatures have been observed in the last 50 

years across all world regions, including the United States. Cold days, cold nights, and 

frost have become less frequent, while hot days, hot nights, and heat waves have become 

more frequent. 
621 

Observational evidence from all continents and most oceans shows that many 

natural systems are being affected by regional climate changes, particularly temperature 

increases. However, directly attributing specific regional changes in climate to 

emissions of GHGs from human activities is difficult, especially for precipitation. 

Ocean CO2 uptake has lowered the average ocean pH (increased acidity) level by 

approximately 0.1 since 1750. Consequences for marine ecosystems can include reduced 

calcification by shell-forming organisms, and in the longer term, the dissolution of 

carbonate sediments.

Observations show that climate change is currently affecting U.S. physical and 

biological systems in significant ways. The consistency of these observed changes in 

physical and biological systems and the observed significant warming likely cannot be 

explained entirely due to natural variability or other confounding non-climate factors.

c. Projections of Future Climate Change With Continued Increases in 

Elevated GHG Concentrations

Most future scenarios that assume no explicit GHG mitigation actions (beyond 

those already enacted) project increasing global GHG emissions over the century, with 

climbing GHG concentrations. Carbon dioxide is expected to remain the dominant 

anthropogenic GHG over the course of the 21st century. The radiative forcing associated 

with the non-CO2 GHGs is still significant and increasing over time. 
622 

Future warming over the course of the 21st century, even under scenarios of lowemission growth, is very likely to be greater than observed warming over the past 

century. According to climate model simulations summarized by the IPCC,307 through 

about 2030, the global warming rate is affected little by the choice of different future 

emissions scenarios. By the end of the 21st century, projected average global warming 

(compared to average temperature around 1990) varies significantly depending on the 

emission scenario and climate sensitivity assumptions, ranging from 3.2 to 7.2°F (1.8 to 

4.0°C), with an uncertainty range of 2.0 to 11.5°F (1.1 to 6.4°C).

All of the United States is very likely to warm during this century, and most areas 

of the United States are expected to warm by more than the global average. The largest 

warming is projected to occur in winter over northern parts of Alaska. In western, central 

and eastern regions of North America, the projected warming has less seasonal variation 

and is not as large, especially near the coast, consistent with less warming over the 

oceans. 

It is very likely that heat waves will become more intense, more frequent, and 

longer lasting in a future warm climate, whereas cold episodes are projected to decrease 

significantly. 

 

307 Meehl, G.A. et al. (2007) Global Climate Projections. In: 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. 
623 

Increases in the amount of precipitation are very likely in higher latitudes, while 

decreases are likely in most subtropical latitudes and the southwestern United States, 

continuing observed patterns. The mid-continental area is expected to experience drying 

during summer, indicating a greater risk of drought. 

Intensity of precipitation events is projected to increase in the United States and 

other regions of the world. More intense precipitation is expected to increase the risk of 

flooding and result in greater runoff and erosion that has the potential for adverse water 

quality effects. 

It is likely that hurricanes will become more intense, with stronger peak winds 

and more heavy precipitation associated with ongoing increases of tropical sea surface 

temperatures. Frequency changes in hurricanes are currently too uncertain for confident 

projections. 

By the end of the century, global average sea level is projected by IPCC308 to rise 

between 7.1 and 23 inches (18 and 59 centimeter [cm]), relative to around 1990, in the 

absence of increased dynamic ice sheet loss. Recent rapid changes at the edges of the 

Greenland and West Antarctic ice sheets show acceleration of flow and thinning. While 

an understanding of these ice sheet processes is incomplete, their inclusion in models 

would likely lead to increased sea level projections for the end of the 21st century. 

 

308 IPCC (2007) Summary for Policymakers. In: 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. 
624 

Sea ice extent is projected to shrink in the Arctic under all IPCC emissions 

scenarios. 

d. Projected Risks and Impacts Associated With Future Climate Change 

Risk to society, ecosystems, and many natural Earth processes increase with 

increases in both the rate and magnitude of climate change. Climate warming may 

increase the possibility of large, abrupt regional or global climatic events (e.g., 

disintegration of the Greenland Ice Sheet or collapse of the West Antarctic Ice Sheet). 

The partial deglaciation of Greenland (and possibly West Antarctica) could be triggered 

by a sustained temperature increase of 2 to 7°F (1 to 4oC) above 1990 levels. Such 

warming would cause a 13 to 20 feet (4 to 6 meter) rise in sea level, which would occur 

over a time period of centuries to millennia. 

The CCSP309 reports that climate change has the potential to accentuate the 

disparities already evident in the American health care system, as many of the expected 

health effects are likely to fall disproportionately on the poor, the elderly, the disabled, 

and the uninsured. The IPCC310 states with very high confidence that climate change 

 

309 Ebi, K.L., J. Balbus, P.L. Kinney, E. Lipp, D. Mills, M.S. O’Neill, and M. Wilson (2008) Effects of 

Global Change on Human Health. In: Analyses 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, pp. 2-1 to 2-78. 

310 Field, C.B. et al. (2007) North America. In: Climate 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. 
625 

impacts on human health in U.S. cities will be compounded by population growth and an 

aging population. 

Severe heat waves are projected to intensify in magnitude and duration over the 

portions of the United States where these events already occur, with potential increases in 

mortality and morbidity, especially among the elderly, young, and frail. 

Some reduction in the risk of death related to extreme cold is expected. It is not 

clear whether reduced mortality from cold will be greater or less than increased heatrelated mortality in the United States due to climate change. 

Increases in regional ozone pollution relative to ozone levels without climate 

change are expected due to higher temperatures and weaker circulation in the United 

States and other world cities relative to air quality levels without climate change. 

Climate change is expected to increase regional ozone pollution, with associated risks in 

respiratory illnesses and premature death. In addition to human health effects, 

tropospheric ozone has significant adverse effects on crop yields, pasture and forest 

growth, and species composition. The directional effect of climate change on ambient 

particulate matter levels remains uncertain. 

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 
626 

or a few resources. Thus, the potential impacts of climate change raise environmental 

justice issues. 

The CCSP311 concludes 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 in some areas, 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. 

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. Over North America, forest growth and productivity have been 

observed to increase since the middle of the 20th century, in part due to observed climate 

 

311 Backlund, P., A. Janetos, D.S. Schimel, J. Hatfield, M.G. Ryan, S.R. Archer, and D. Lettenmaier (2008) 

Executive Summary. In: The Effects of Climate Change on Agriculture, Land Resources, Water Resources, 

and Biodiversity in the United States. A Report by the U.S. Climate Change Science Program and the 

Subcommittee on Global Change Research. Washington, DC., USA, 362 pp. 
627 

change. Rising CO2 will very likely increase photosynthesis for forests, but the increased 

photosynthesis will likely only increase wood production in young forests on fertile soils. 

The combined effects of expected increased temperature, CO2, nitrogen deposition, 

ozone, and forest disturbance on soil processes and soil carbon storage remain unclear. 

Coastal communities and habitats will be increasingly stressed by climate change 

impacts interacting with development and pollution. Sea level is rising along much of the 

U.S. coast, and the rate of change will very likely increase in the future, exacerbating the 

impacts of progressive inundation, storm-surge flooding, and shoreline erosion. Storm 

impacts are likely to be more severe, especially along the Gulf and Atlantic coasts. Salt 

marshes, other coastal habitats, and dependent species are threatened by sea level rise, 

fixed structures blocking landward migration, and changes in vegetation. Population 

growth and rising value of infrastructure in coastal areas increases vulnerability to 

climate variability and future climate change. 

Climate change will likely further constrain already overallocated water resources 

in some regions of the United States, increasing competition among agricultural, 

municipal, industrial, and ecological uses. Although water management practices in the 

United States are generally advanced, particularly in the West, the reliance on past 

conditions as the basis for current and future planning may no longer be appropriate, as 

climate change increasingly creates conditions well outside of historical observations. 

Rising temperatures will diminish snowpack and increase evaporation, affecting seasonal 

availability of water. In the Great Lakes and major river systems, lower water levels are 
628 

likely to exacerbate challenges relating to water quality, navigation, recreation, 

hydropower generation, water transfers, and binational relationships. Decreased water 

supply and lower water levels are likely to exacerbate challenges relating to aquatic 

navigation in the United States. 

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. 

Ocean acidification is projected to continue, resulting in the reduced biological 

production of marine calcifiers, including corals. 

Climate change is likely to affect U.S. energy use and energy production and 

physical and institutional infrastructures. It will also likely interact with and possibly 

exacerbate ongoing environmental change and environmental pressures in settlements, 

particularly in Alaska where indigenous communities are facing major environmental and 

cultural impacts. The U.S. energy sector, which relies heavily on water for 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 stormwater management systems, will be at 
629 

greater risk of flooding, sea level rise and storm surge, low flows, and other factors that 

could impair performance. 

Disturbances such as wildfires and insect outbreaks are increasing in the United 

States and are likely to intensify in a warmer future with warmer winters, 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 and constraints from development, habitat fragmentation, invasive 

species, and broken ecological connections will alter ecosystem structure, function, and 

services. 

Climate change impacts will vary in nature and magnitude across different 

regions of the United States. 

• Sustained high summer temperatures, heat waves, and declining air quality are 

projected in the Northeast,312 Southeast,313 Southwest,314 and Midwest.315 Projected 

 

312 Northeast includes West Virginia, Maryland, Delaware, Pennsylvania, New Jersey, New York, 

Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine. 

313 Southeast includes Kentucky, Virginia, Arkansas, Tennessee, North Carolina, South Carolina, southeast 

Texas, Louisiana, Mississippi, Alabama, Georgia, and Florida. 

314 Southwest includes California, Nevada, Utah, western Colorado, Arizona, New Mexico (except the 

extreme eastern section), and southwest Texas. 

315 The Midwest includes Minnesota, Wisconsin, Michigan, Iowa, Illinois, Indiana, Ohio, and Missouri. 
630 

climate change would continue to cause loss of sea ice, glacier retreat, permafrost 

thawing, and coastal erosion in Alaska. 

• Reduced snowpack, earlier spring snowmelt, and increased likelihood of seasonal 

summer droughts are projected in the Northeast, Northwest,316 and Alaska. More 

severe, sustained droughts and water scarcity are projected in the Southeast, Great 

Plains,317 and Southwest. 

• The Southeast, Midwest, and Northwest in particular are expected to be impacted by 

an increased frequency of heavy downpours and greater flood risk. 

• Ecosystems of the Southeast, Midwest, Great Plains, Southwest, Northwest, and 

Alaska are expected to experience altered distribution of native species (including 

local extinctions), more frequent and intense wildfires, and an increase in insect pest 

outbreaks and invasive species. 

• Sea level rise is expected to increase storm surge height and strength, flooding, 

erosion, and wetland loss along the coasts, particularly in the Northeast, Southeast, 

and islands. 

• Warmer water temperatures and ocean acidification are expected to degrade 

important aquatic resources of islands and coasts such as coral reefs and fisheries. 

• A longer growing season, low levels of warming, and fertilization effects of carbon 

dioxide may benefit certain crop species and forests, particularly in the Northeast and 

Alaska. Projected summer rainfall increases in the Pacific islands may augment 

limited freshwater supplies. Cold-related mortality is projected to decrease, 

 

316 The Northwest includes Washington, Idaho, western Montana, and Oregon. 317 The Great Plains includes central and eastern Montana, North Dakota, South Dakota, Wyoming, 

Nebraska, eastern Colorado, Nebraska, Kansas, extreme eastern New Mexico, central Texas, and 

Oklahoma 
631 

especially in the Southeast. In the Midwest in particular, heating oil demand and 

snow-related traffic accidents are expected to decrease.

Climate change impacts in certain regions of the world may exacerbate problems 

that raise humanitarian, trade, and national security issues for the United States. The 

IPCC318 identifies the most vulnerable world regions as the Arctic, because of the effects 

of high rates of projected warming on natural systems; Africa, especially the sub-Saharan 

region, because of current low adaptive capacity as well as climate change; small islands, 

due to high exposure of population and infrastructure to risk of sea level rise and 

increased storm surge; and Asian mega-deltas, such as the Ganges-Brahmaputra and the 

Zhujiang, due to large populations and high exposure to sea level rise, storm surge and 

river flooding. Climate change has been described as a potential threat multiplier with 

regard to national security issues. 

3. Changes in Global Climate Indicators Associated with the Rule’s GHG 

Emissions Reductions 

EPA examined319 the reductions in CO2 and other GHGs associated with this 

action and analyzed the projected effects on global mean surface temperature and sea 

level, two common indicators of climate change. The analysis projects that this action 

 

318 Parry, M.L. et al. (2007) Technical Summary. In: Climate 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, pp. 23S78. 319 Using 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 RIA for 

additional information. 
632 

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 commenter agreed that the modeling results showed 

small, but quantifiable, reductions in the global atmospheric CO2 concentration, as well 

as a reduction in projected global mean surface temperature and sea level rise, from 

implementation of this action, across all climate sensitivities. As such, the commenter 

encourages the agencies to move forward with this action while continuing to develop 

additional, more stringent vehicle standards beyond 2016. 

Another commenter indicated that the projected changes in climate impacts 

resulting from this action are small and therefore not meaningful. EPA disagrees with this 

view as the reductions may be small in overall magnitude, but in the global climate 

change context, they are quantifiable showing a clear directional signal across a range of 

climate sensitivities.320,321 EPA therefore determines that the projected reductions in 

atmospheric CO2, global mean temperature and sea level rise are meaningful in the 

context of this rule. EPA addresses this point further in the Response to Comments 

document. For the final rule, EPA provides an additional climate change impact analysis 

for projected changes in ocean pH in the context of this action. In addition, EPA updated 

the modeling analysis based on the revised GHG emission reductions provided in Section 

III.F.1; however, the change in modeling results was very small in magnitude. Based on 

 

320 The National Research Council (NRC) 2001 study, Climate Change Science: An Analysis of Some Key 

Questions, defines climate sensitivity as the sensitivity of the climate system to a forcing is commonly 

expressed in terms of the global mean temperature change that would be expected after a time sufficiently 

long enough for both the atmosphere and ocean to come to equilibrium with the change in climate forcing. 

321 To capture some of the uncertainty in the climate system, the changes in atmospheric CO2, projected 

temperatures and sea level were estimated across the most current Intergovernmental Panel on Climate 

Change (IPCC) range of climate sensitivities, 1.5°C to 6.0°C. 
633 

the reanalysis the results for projected atmospheric CO2 concentrations are estimated to 

be reduced by an average of 2.9 ppm (previously 3.0 ppm), global mean temperature is 

estimated to be reduced by 0.006 to 0.015 °C by 2100 (previously 0.007 to 0.016 °C) and 

sea-level rise is projected to be reduced by approximately 0.06-0.14cm by 2100 

(previously 0.06-0.15cm). 

a. Estimated Projected Reductions in Atmospheric CO2 Concentration, 

Global Mean Surface Temperatures Sea Level Rise and Ocean pH 

EPA estimated changes in the atmospheric CO2 concentration, global mean 

surface temperature and sea level to 2100 resulting from the emissions reductions in this 

action 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.1 were applied as net reductions to 

a peer reviewed global reference case (or baseline) emissions scenario to generate an 

emissions scenario specific to this action. For the scenario related to this action, 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 for 2020 and then continuing to 2100. Details about the 
634 

reference case scenario and how the emissions reductions were applied to generate the 

scenario can be found in the RIA Chapter 7. 

Changes in atmospheric CO2 concentration, temperature, and sea-level for both 

the reference case and the emissions scenarios associated with this action were computed 

using MAGICC. To compute the reductions in the atmospheric CO2 concentrations as 

well as in temperature and sea level resulting from this action, the output from the 

scenario associated with this final rule was subtracted from an existing Global Change 

Assessment Model (GCAM, formerly MiniCAM) reference 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).322 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 RIA 

Chapter 7.4. 

The results of this modeling, summarized in Table III.F.3-1, show small, but 

quantifiable, reductions in atmospheric CO2 concentrations, projected global mean 

surface temperature and sea level resulting from this action, across all climate 

 

322 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/ 
635 

sensitivities. As a result of the emission reductions from this action, the atmospheric CO2

concentration is projected to be reduced by an average of 2.9 parts per million (ppm), the 

global mean temperature is projected to be reduced by approximately 0.006-0.015°C by 

2100, and global mean sea level rise is projected to be reduced by approximately 0.06-

0.14cm by 2100. The reductions are small relative to the IPCC’s 2100 “best estimates” 

for global mean temperature increases (1.8 – 4.0oC) 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 this 

rule and therefore does not come from previously published work. Further discussion of 

EPA’s modeling analysis is found in the final RIA.

Table III.F.3-1 Effect of GHG Emissions Reductions On Projected Changes in Global 

Climate for the Final Vehicles Rulemaking (for climate sensitivities ranging from 1.5-

6°C)

Measure Units Year Projected Change 

Atmospheric CO2

Concentration ppm 2100 -2.7-3.1

Global Mean Surface 

Temperature o C 2100 -0.006-0.015

Sea Level Rise cm 2100 -0.06-0.14

Ocean pH pH units 2100 0.0014

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 action) across all climate sensitivities. 
636 

The IPCC323 has noted that ocean acidification due to the direct effects of 

elevated CO2 concentrations will impair a wide range of planktonic and other marine 

organisms that use aragonite to make their shells or skeletons. EPA used the Program 

CO2SYS,324 version 1.05 to estimate projected changes in tropical ocean pH based on the 

atmospheric CO2 concentration reductions resulting from this action and other specified 

input conditions (e.g., sea surface temperature characteristic of tropical waters). The 

program performs calculations relating parameters of the carbon dioxide (CO2) system in 

seawater. EPA used the program to calculate ocean pH as a function of atmospheric CO2, 

among other specified input conditions. Based on the projected atmospheric CO2

concentration reductions (average of 2.9 ppm by 2100) that would result from this rule, 

the program calculates an increase in ocean pH of about 0.0014 pH units in 2100. Thus, 

this analysis indicates the projected decrease in atmospheric CO2 concentrations from 

today’s rule would result in an increase in ocean pH. 

EPA’s analysis of the rule’s effect on global climate conditions is intended to 

quantify these potential reductions using the best available science. While EPA’s 

modeling results of the effect of this rule alone show small differences in climate effects 

(CO2 concentration, temperature, sea-level rise, ocean pH), when expressed in terms of 

 

323 Fischlin, A. et al. (2007) Ecosystems, their Properties, Goods, and Services. In: Climate 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. 

324 Lewis, E., and D. W. R. Wallace. 1998. Program Developed for CO2 System Calculations. 

ORNL/CDIAC-105. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. 

Department of Energy, Oak Ridge, Tennessee. 
637 

global climate endpoints and global GHG emissions, they yield results that are repeatable 

and consistent within the modeling frameworks used. 

G. How Will the Standards Impact Non-GHG Emissions and Their 

Associated Effects? 

In addition to reducing the emissions of greenhouse gases, this rule will 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 non-GHG emission impacts from the 

GHG 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) and the effects of our assumptions about ethanol-blended fuel 

(E10), as discussed below. 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. 
638 

As in the proposal, for this analysis we attribute decreased fuel consumption from 

this program to gasoline only, while assuming no effect on volumes of ethanol and other 

renewable fuels because they are mandated under the Renewable Fuel Standard (RFS2). 

However, because this rule does not assume RFS2 volumes of ethanol in the baseline, the 

result is a greater projected market share of E10 in the control case.325 In fact, the GHG 

standards will not be affecting the market share of E10, because EPA’s analysis for the 

RFS2 rule predicts 100% E10 penetration by 2014.326

The amount of E10 affects downstream non-GHG emissions. In the proposal, 

EPA stated these same fuel assumptions and qualitatively noted that there were likely 

unquantified impacts on non-GHG emissions between the two cases. In DRIA Chapter 5, 

EPA indicated its plans to quantify these impacts in the air quality modeling and in the 

final rule inventories. Upstream emission impacts depend only on fuel volumes, so the 

impacts presented here reflect only the reduced gasoline consumption. 

The inventories presented in this rulemaking include an analysis of these fuel 

effects which was conducted using EPA’s Motor Vehicle Emission Simulator 

(MOVES2010). The most notable impact, although still relatively slight, is a 2.2 percent 

increase in 2030 in national acetaldehyde emissions over the baseline scenario. It should 

be noted that these emission impacts are not due to the new GHG vehicle standards. 

 

325 When this rule’s analysis was initiated, the RFS2 rule was not yet final. Therefore, it assumes the 

ethanol volumes in Annual Energy Outlook 2007 (U.S. Energy Information Administration, Annual Energy 

Outlook 2007, Transportation Demand Sector Supplemental Table. 

http://www.eia.doe.gov/oiaf/archive/aeo07/supplement/index.html) 

326 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-

006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332. See also 75 FR 14670, March 26, 2010. 
639 

These impacts are instead a consequence of the assumed ethanol volumes. This program 

does not mandate an increase in E10, nor any particular fuel blend. The emission impact 

of this shift was also modeled in the RFS2 rule. 

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, and PM we estimate net reductions because the emissions reductions from 

upstream sources are larger than the emission increases due to downstream sources. In 

the case of CO, we estimate slight emission increases, because there are relatively small 

reductions in upstream emissions, and thus the projected downstream emission increases 

are greater than the projected emission decreases due to reduced fuel production. For 

SOx, downstream emissions are roughly proportional to fuel consumption, therefore a 

decrease is seen in both upstream and downstream sources. 

 For all criteria 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 

program would reduce total NOX, PM and SOX inventories by 0.1 to 0.8 percent and 

reduce the VOC inventory by 1.0 percent, while increasing the total national CO 

inventory by 0.6 percent. 

As shown in Table III.G-2, EPA estimates that the GHG program would result in 

small changes for air toxic emissions compared to total U.S. inventories across all 

sectors. In 2030, EPA estimates the program would reduce total benzene and 1,3 
640 

butadiene emissions by 0.1 to 0.3 percent. Total acrolein and formaldehyde emissions 

would increase by 0.1 percent. Acetaldehyde emissions would increase by 2.2 percent. 

One commenter requested that EPA present emission inventories for additional air 

toxics. EPA is presenting inventories for certain air toxic emissions which were 

identified as key national and regional-scale cancer and noncancer risk drivers in past 

National Air Toxics Assessments (NATA). For additional details, please refer to the 

Response to Comments document.327 

Other factors which may impact non-GHG 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 non-GHG 

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. EPA does not 

project increased penetration of diesels as necessary to meet the GHG standards. 

 

327 U.S. EPA. National Air Toxics Assessment. 2002, 1999, and 1996. Available at: 

http://www.epa.gov/nata/ 
641 

• Early introduction of electric vehicles and plug-in hybrid electric vehicles, which 

would reduce criteria emissions in cases where those vehicles are able to be 

certified to lower certification standards. This 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 rule. 

Table III.G-1 Annual Criteria Emission Impacts of Program (short tons) 

 Total Impacts Upstream Impacts Downstream Impacts

 2020 2030 2020 2030 2020 2030 

VOC -60,187 -115,542 -64,506 -126,749 4,318 11,207 

 % of total 

inventory -0.51% -1.01% -0.55% -1.11% 0.04% 0.01% 

CO 3,992 170,675 -6,165 -12,113 10,156 182,788 

 % of total 

inventory 0.01% 0.56% -0.02% -0.04% 0.01% 0.6% 

NOX -5,881 -21,763 -19,291 -37,905 13,410 16,143 

 % of total 

inventory -0.02 -0.07% -0.06% -0.12% 0.04% 0.05% 

PM2.5 -2,398 -4,564 -2,629 -5,165 231.0 602.3 

 % of total 

inventory -0.03% -0.05% -0.03% -0.06% 0.00% 0.01% 

SOX -13,832 -27,443 -11,804 -23,194 -2,027 -4,249 

 % of total 

inventory -0.41% -0.82% -0.35% -0.69% -0.06% -0.13% 
642 

Table III.G-2 Annual Air Toxic Emission Impacts of Program (short tons) 

 Total Impacts Upstream Impacts Downstream Impacts 

 2020 2030 2020 2030 2020 2030 

1,3-Butadiene -95 -21 -1.5 -3.0 -93.6 -18.1 

 % of total 

inventory -0.38% -0.10% -0.01% -0.01% -0.37% -0.09% 

Acetaldehyde 760 668 -6.8 -13.4 766.9 681.5 

 % of total 

inventory 2.26% 2.18% -0.02% -0.04% 2.28% 2.22% 

Acrolein 1 5 -0.9 -1.8 1.7 6.5 

 % of total 

inventory 0.01% 0.07% -0.01% -0.03% 0.03% 0.10% 

Benzene -890 -523 -139.6 -274.3 -750.0 -248.3 

 % of total 

inventory -0.48% -0.29% -0.08% -0.15% -0.40% -0.14% 

Formaldehyde -49 15 -51.4 -101.0 2.1 116.3 

 % of total 

inventory -0.06% 0.02% -0.06% -0.12% 0.00% 0.14% 

1. Upstream Impacts of Program 

 

No substantive comments were received on the upstream inventory modeling used 

in the proposal. The rulemaking inventories were updated with the revised estimates of 

fuel savings as detailed in Section III.F. 

 

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 127,000 tons, NOX by 38,000 tons, and 

PM2.5 by 5,000 tons. Table III.G-2 shows the corresponding impacts on upstream air 
643 

toxic emissions in 2030. Formaldehyde decreases by 101 tons, benzene by 274 tons, 

acetaldehyde by 13 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,328 but in some cases the 

GREET values were modified or updated by EPA to be consistent with the National 

Emission Inventory (NEI).329 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 formaldehyde. The development of these emission factors is detailed in 

RIA Chapter 5. 

 

328 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/ 329 U.S. EPA. 2002 National Emissions Inventory (NEI) Data and Documentation, 

http://www.epa.gov/ttn/chief/net/2002inventory.html . 
644 

2. Downstream Impacts of Program

No substantive comments were received on the emission modeling or emission 

inventories presented in this section. However, two changes in modeling differentiate the 

analysis presented here from that presented in the proposal. Economic inputs such as fuel 

prices and vehicle sales were updated from AEO 2009 to AEO 2010 Early Release, and 

as described above, the effects of ethanol volume assumptions were explicitly modeled. 

Thus, the primary differences in non-GHG emissions between the proposed rule and final 

rule are attributed more to these changes in analytic inputs, and less to changes in the 

GHG standards program. 

 Downstream emission impacts attributable to this program are due to the VMT 

rebound effect and the ethanol volume assumptions. 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 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 approximately a 1 percent increase in VMT. 

 As detailed in the introduction to this section, fuel composition also has effects on 

vehicle emissions and particularly air toxics. The relationship between fuel composition 

and emission impacts used in MOVES2010 and applied in this analysis match those 
645 

developed for the recent Renewable Fuels Standard (RFS2) requirement, and are 

extensively documented in the RFS2 RIA and supporting documents.330 

 

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 impacts from the rebound effect and the change in fuel supply grow over time 

as the fleet turns over to cleaner CO2 vehicles, so that by 2030 VOC would increase by 

11,000 tons, NOX by 16,000 tons, and PM2.5 by 600 tons. Table III.G-2 shows the 

corresponding impacts on air toxic emissions. These impacts in 2030 include 18 fewer 

tons of 1,3-butadiene, 668 additional tons of acetaldehyde, 248 fewer tons of benzene, 

116 additional tons of formaldehyde, and 6.5 additional tons of acrolein. 

For this analysis, MOVES2010 was used to estimate base VOC, CO, NOX, PM 

and air toxics emissions for both control and reference cases. Rebound emissions from 

light duty cars and trucks were then calculated using the OMEGA model post-processor 

and added to the control case. A more complete discussion of the inputs, methodology, 

and results is contained in RIA Chapter 5. 

3. Health Effects of Non-GHG Pollutants

In this section we discuss health effects associated with exposure to some of the 

criteria and air toxics impacted by the vehicle standards; PM, ozone, NOX and SOX, CO 

 

330 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-

006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332. See also 75 FR 14670, March 26, 2010 
646 

and air toxics. No substantive comments were received on the 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 coarse-fraction 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 
647 

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 Integrated Science 

Assessment for Particulate Matter (ISA).331 Further discussion of health effects 

associated with PM can also be found in the RIA for this rule. The ISA summarizes 

evidence associated with PM2.5, PM10-2.5, and ultrafine particles (UFPs). 

The ISA concludes that health effects associated with short-term exposures (hours 

to days) to ambient PM2.5 include non-fatal cardiovascular effects, mortality, and 

respiratory effects, such as exacerbation of asthma symptoms in children and hospital 

admissions and emergency department visits for chronic obstructive pulmonary disease 

(COPD) and respiratory infections.332 The ISA notes that long-term exposure to PM2.5

(months to years) is associated with the development/progression of cardiovascular 

disease, premature mortality, and respiratory effects, including reduced lung function 

 

331 U.S. EPA (2009) Integrated Science Assessment for Particulate Matter. EPA 600/R-08/139F, Docket 

EPA-HQ-OAR-2009-0472-11295 

332 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. Section 2.3.1.1. 
648 

growth, increased respiratory symptoms, and asthma development.333 The ISA concludes 

that that the currently available scientific evidence from epidemiologic, controlled human 

exposure studies, and toxicological studies supports that a causal association exists 

between short- and long-term exposures to PM2.5 and cardiovascular effects and 

mortality. Furthermore, the ISA concludes that the collective evidence supports likely 

causal associations between short- and long-term PM2.5 exposures and respiratory effects. 

The ISA also concludes that the evidence is suggestive of a causal association for 

reproductive and developmental effects and cancer, mutagenicity, and genotoxicity and 

long-term exposure to PM2.5.

334

For PM10-2.5, the ISA concludes that the current evidence is suggestive of a causal 

relationship between short-term exposures and cardiovascular effects, such as 

hospitalization for ischemic heart disease. There is also suggestive evidence of a causal 

relationship between short-term PM10-2.5 exposure and mortality and respiratory effects. 

Data are inadequate to draw conclusions regarding the health effects associated with 

long-term exposure to PM10-2.5.

335

 

For UFPs, the ISA concludes that there is suggestive evidence of a causal 

relationship between short-term exposures and cardiovascular effects, such as changes in 

heart rhythm and blood vessel function. It also concludes that there is suggestive 

 

333 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. page 2-12, Sections 

7.3.1.1 and 7.3.2.1. 

334 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. Section 2.3.2. 

335 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. Section 2.3.4, Table 2-6. 
649 

evidence of association between short-term exposure to UFPs and respiratory effects. 

Data are inadequate to draw conclusions regarding the health effects associated with 

long-term exposure to UFP’s.336

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.337 

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 

high-temperature day. Ozone can be transported hundreds of miles downwind from 

 

336 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. Section 2.3.5, Table 2-6. 

337 U.S. EPA. (2006). Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R-05/004aF-cF. Washington, DC: U.S. EPA. Docket EPA-HQ-OAR-2009-0472-0099 through -

0101. 
650 

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.338, 339 

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 non-accidental 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 ozone-related 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 

 

338 U.S. EPA.(2006). Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). 

EPA/600/R-05/004aF-cF. Washington, DC: U.S. EPA.

339 U.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. Docket EPA-HQ-OAR-2009-0472-0105 through -0106. 
651 

benefits of reducing ozone exposure.340 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. 

 

340 National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits 

from Controlling Ozone Air Pollution. The National Academies Press: Washington, D.C. Docket EPAHQ-OAR-2009-0472-0322. 
652 

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 andNO2 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 EPA Integrated 

Science Assessment (ISA) for Nitrogen Oxides.341 The EPA has concluded that the 

 

341 U.S. EPA (2008). Integrated Science Assessment for Oxides of Nitrogen – Health Criteria (Final 

Report). EPA/600/R-08/071. Washington, DC: U.S.EPA. Docket EPA-HQ-OAR-2009-0472-0350. 
653 

findings of epidemiologic, controlled human 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 allergen-induced airway inflammatory 

response following 30-minute exposures of asthmatics to NO2 concentrations as low as 

0.26 ppm. In addition, small but significant increases in non-specific airway 

hyperresponsiveness were reported following 1-hour exposures of asthmatics to 0.1 ppm 

NO2. 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 
654 

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 EPA Integrated 

Science Assessment for Sulfur Oxides.342 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 short-term 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. 

 

342 U.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. Docket EPA-HQOAR-2009-0472-0335. 
655 

 d. Carbon Monoxide 

Information on the health effects of carbon monoxide (CO) can be found in the 

EPA Integrated Science Assessment (ISA) for Carbon Monoxide.343 The ISA concludes 

that ambient concentrations of CO are associated with a number of adverse health 

effects.344 This section provides a summary of the health effects associated with 

exposure to ambient concentrations of CO.345 

Human clinical studies of subjects with coronary artery disease show a decrease 

in the time to onset of exercise-induced angina (chest pain) and electrocardiogram 

changes following CO exposure. In addition, epidemiologic studies show associations 

between short-term CO exposure and cardiovascular morbidity, particularly increased 

emergency room visits and hospital admissions for coronary heart disease (including 

ischemic heart disease, myocardial infarction, and angina). Some epidemiologic 

evidence is also available for increased hospital admissions and emergency room visits 

for congestive heart failure and cardiovascular disease as a whole. The ISA concludes 

that a causal relationship is likely between short-term exposures to CO and 

cardiovascular morbidity. It also concludes that available data are inadequate to conclude 

 

343 U.S. EPA, 2010. Integrated Science Assessment for Carbon Monoxide (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-09/019F, 2010. 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686 344 The ISA evaluates the health evidence associated with different health effects, assigning one of five 

“weight of evidence” determination: causal relationship, likely to be a causal relationship, suggestive of a 

causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship. For 

definitions of these levels of evidence, please refer to Section 1.6 of the ISA. 

345 Personal exposure includes contributions from many sources, and in many different environments. 

Total personal exposure to CO includes both ambient and nonambient components; and both components 

may contribute to adverse health effects. 
656 

that a causal relationship exists between long-term exposures to CO and cardiovascular 

morbidity. 

Animal studies show various neurological effects with in-utero CO exposure. 

Controlled human exposure studies report inconsistent neural and behavioral effects 

following low-level CO exposures. The ISA concludes the evidence is suggestive of a 

causal relationship with both short- and long-term exposure to CO and central nervous 

system effects. 

A number of epidemiologic and animal toxicological studies cited in the ISA have 

evaluated associations between preterm birth and cardiac birth defects and CO exposure. 

The epidemiologic studies provide limited evidence of a CO-induced effect on pre-term 

births and birth defects, with weak evidence for a decrease in birth weight. Animal 

toxicological studies have found associations between perinatal CO exposure and 

decrements in birth weight, as well as other developmental outcomes. The ISA 

concludes these studies are suggestive of a causal relationship between long-term 

exposures to CO and developmental effects and birth outcomes. 

Epidemiologic studies provide evidence of effects on respiratory morbidity such 

as changes in pulmonary function, respiratory symptoms, and hospital admissions 

associated with ambient CO concentrations. A limited number of epidemiologic studies 

considered copollutants such as ozone, SO2, and PM in two-pollutant models and found 

that CO risk estimates were generally robust, although this limited evidence makes it 
657 

difficult to disentangle effects attributed to CO itself from those of the larger complex air 

pollution mixture. Controlled human exposure studies have not extensively evaluated the 

effect of CO on respiratory morbidity. Animal studies at levels of 50-100 ppm CO show 

preliminary evidence of altered pulmonary vascular remodeling and oxidative injury. 

The ISA concludes that the evidence is suggestive of a causal relationship between shortterm CO exposure and respiratory morbidity, and inadequate to conclude that a causal 

relationship exists between long-term exposure and respiratory morbidity. 

Finally, the ISA concludes that the epidemiologic evidence is suggestive of a 

causal relationship between short-term exposures to CO and mortality. Epidemiologic 

studies provide evidence of an association between short-term exposure to CO and 

mortality, but limited evidence is available to evaluate cause-specific mortality outcomes 

associated with CO exposure. In addition, the attenuation of CO risk estimates which 

was often observed in copollutant models contributes to the uncertainty as to whether CO 

is acting alone or as an indicator for other combustion-related pollutants. The ISA also 

concludes that there is not likely to be a causal relationship between relevant long-term 

exposures to CO and mortality. 

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 
658 

exposure to the class of pollutants known collectively as “air toxics”. 346 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.347 Emissions and ambient concentrations of 

compounds are discussed in the RIA chapters 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.348,349,350 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 

 

346 U. S. EPA. 2002 National-Scale Air Toxics Assessment. 

http://www.epa.gov/ttn/atw/nata12002/risksum.html Docket EPA-HQ-OAR-2009-0472-11322 347 U.S. EPA .2009. National-Scale Air Toxics Assessment for 2002. http://www.epa.gov/ttn/atw/nata2002/ 

Docket EPA-HQ-OAR-2009-0472-11321 

348 U.S. EPA. 2000. Integrated Risk Information System File for Benzene. This material is available 

electronically at http://www.epa.gov/iris/subst/0276.htm. Docket EPA-HQ-OAR-2009-0472-1659. 349 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. Docket EPA-HQ-OAR-2009-0472-0366 350 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 colonystimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-3695. Docket EPA-HQ-OAR-2009-0472-0370. 
659 

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.351,352 

A number of adverse noncancer health effects including blood disorders, such as 

preleukemia and aplastic anemia, have also been associated with long-term exposure to 

benzene.353,354 The most sensitive noncancer effect observed in humans, based on 

current data, is the depression of the absolute lymphocyte count in blood.355, 356 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 known.357,358,359,360 EPA’s IRIS program has not yet evaluated 

these new data.

 

351 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. Docket EPA-HQ-OAR-2009-0472-0366 

352 U.S. Department of Health and Human Services National Toxicology Program 11th Report on 

Carcinogens available at: http://ntp.niehs.nih.gov/go/16183. 

353 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193-

197. Docket EPA-HQ-OAR-2009-0472-0368. 

354 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541-554. 

Docket EPA-HQ-OAR-2009-0472-0325. 

355 Rothman, 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. Docket EPA-HQOAR-2009-0472-0326. 

356 U.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. Docket EPA-HQ-OAR-2009-0472-0327. 357 Qu, 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. Docket EPA-HQ-OAR-2009-0472-0328. 

358 Qu, 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. Docket 

EPA-HQ-OAR-2009-0472-0329. 

359 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004) Hematotoxically in Workers Exposed to Low 

Levels of Benzene. Science 306: 1774-1776. Docket EPA-HQ-OAR-2009-0472-0330. 
660 

ii. 1,3-Butadiene

EPA has characterized 1,3-butadiene as carcinogenic to humans by 

inhalation.361,362 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.363,364 

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 

 360 Turtletaub, 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. Docket EPA-HQ-OAR2009-0472-0385. 

361 U.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. Docket 

EPA-HQ-OAR-2009-0472-0386. 

362 U.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. Docket EPA-HQOAR-2009-0472-1660 

363 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. Docket 

EPA-HQ-OAR-2009-0472-0387 

364 U.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-F1F6-975E7FCE50709CB4C932. 
661 

human data on these effects are available. The most sensitive effect was ovarian atrophy 

observed in a lifetime bioassay of female mice.365

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.366 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.367, 368 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.369 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 

 

365 Bevan, 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. Docket EPA-HQ-OAR-2009-0472-0388. 

366 U.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. Docket EPA-HQ-OAR2009-0472-0389. 

367 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from 

lymphohematopoetic malignancies among workers in formaldehyde industries. Journal of the National 

Cancer Institute 95: 1615-1623. Docket EPA-HQ-OAR-2009-0472-0336.

368 Hauptmann, 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. 

Docket EPA-HQ-OAR-2009-0472-0337.

369 Beane 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. Docket EPA-HQ-OAR-2009-

0472-0338. 
662 

formaldehyde.370 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.371 Recently, the 

IARC re-classified formaldehyde as a human carcinogen (Group 1).372 

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.373,374 

 

370 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an 

update. Occup. Environ. Med. 61: 193-200. Docket EPA-HQ-OAR-2009-0472-0339.

371 Coggon, 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. Docket EPA-HQ-OAR-2009-

0472-0340. 

372 International Agency for Research on Cancer (IARC). 2006. Formaldehyde, 2-Butoxyethanol and 1-tertButoxypropan-2-ol. Volume 88. (in preparation), World Health Organization, Lyon, France. Docket EPAHQ-OAR-2009-0472-1164 

373 Agency 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 Docket EPA-HQ-OAR-2009-0472-1191. 374 WHO (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 InterOrganization Programme for the Sound Management of Chemicals. Geneva. Docket EPA-HQ-OAR-2009-

0472-1199. 
663 

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.375 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 the IARC.376,377 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.378 In short-term (4 week) rat studies, 

degeneration of olfactory epithelium was observed at various concentration levels of 

acetaldehyde exposure.379, 380 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 

 

375 U.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. Docket EPA-HQ-OAR-2009-0472-0390. 376 U.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. 

377 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. Docket EPA-HQ-OAR-2009-0472-0387 

378 U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. This material is available 

electronically at http://www.epa.gov/iris/subst/0290.htm. 379 Appleman, 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. 

380 Appleman, 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. Docket EPA-HQ-OAR-2009-0472-0392. 
664 

bronchoconstriction upon acetaldehyde inhalation.381 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. 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.382 These data and additional studies regarding 

acute effects of human exposure to acrolein are summarized in EPA’s 2003 IRIS Human 

Health Assessment for acrolein.383 Evidence available from studies in humans indicate 

that levels as low as 0.09 ppm (0.21 mg/m3

) for five minutes may elicit subjective 

complaints of eye irritation with increasing concentrations leading to more extensive eye, 

nose and respiratory symptoms.384 Lesions to the lungs and upper respiratory tract of 

rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein.385 

 

381 Myou, 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. Docket 

EPA-HQ-OAR-2009-0472-0408. 

382 Sim VM, Pattle RE. Effect of possible smog irritants on human subjects JAMA165: 1980-2010, 1957. 

Docket EPA-HQ-OAR-2009-0472-0395. 

383 U.S. EPA (U.S. Environmental Protection Agency). (2003) Toxicological review of acrolein in support 

of summary information on Integrated Risk Information System (IRIS) National Center for Environmental 

Assessment, Washington, DC. EPA/635/R-03/003. Available online at: http://www.epa.gov/ncea/iris. 384 Weber-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 Docket EPA-HQ-OAR-2009-

0472-0394. 

385 Integrated Risk Information System File of Acrolein. Office of Research and Development, National 

Center for Environmental Assessment, Washington, DC. This material is available at 

http://www.epa.gov/iris/subst/0364.htm Docket EPA-HQ-OAR-2009-0472-0391. 
665 

Acute exposure effects in animal studies report bronchial hyper-responsiveness.386 In a 

recent study, the acute respiratory irritant effects of exposure to 1.1 ppm acrolein were 

more pronounced in mice with allergic airway disease by comparison to non-diseased 

mice which also showed decreases in respiratory rate.387 Based on these animal data 

and demonstration of similar effects in humans (e.g., reduction in respiratory rate), 

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. 

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.388 The IARC determined in 1995 that acrolein 

was not classifiable as to its carcinogenicity in humans.389

 

386 U.S. EPA (U.S. Environmental Protection Agency). (2003) Toxicological review of acrolein in support of 

summary information on Integrated Risk Information System (IRIS) National Center for Environmental 

Assessment, Washington, DC. EPA/635/R-03/003. Available online at: http://www.epa.gov/ncea/iris. 387 Morris 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. Docket 

EPA-HQ-OAR-2009-0472-0396. 

388 U.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 

389 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. Docket EPA-HQ-OAR-2009-0472-0393 
666 

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.390,391 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 

 

390 Perera, 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. Docket 

EPA-HQ-OAR-2009-0472-0372. 

391 Perera, 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. Docket EPA-HQ-OAR-2009-0472-0373. 
667 

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.392 The draft reassessment completed external peer 

review.393 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. 

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.394 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.395 

Naphthalene also causes a number of chronic non-cancer effects in animals, including 

abnormal cell changes and growth in respiratory and nasal tissues.396

 

392 U. 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. Docket EPA-HQ-OAR-2009-0472-0272. 393 Oak 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 Docket EPA-HQ-OAR-2009-0472-0273. 394 National 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://ntpserver.niehs.nih.gov. 

395 International Agency for Research on Cancer (IARC). (2002). Monographs on the Evaluation of the 

Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France. Docket EPA-HQ-OAR-2009-0472-

0274.

396 U. 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 
668 

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 final rule. Mobile 

source air toxic compounds that would potentially be impacted include ethylbenzene, 

propionaldehyde, toluene, and xylene. Information regarding the health effects of these 

compounds can be found in EPA’s IRIS database.397

f. Exposure and Health Effects Associated with Traffic 

Populations who live, work, or attend school near major roads experience 

elevated exposure concentrations to a wide range of air pollutants, as well as higher risks 

for a number of adverse health effects. While the previous sections of this preamble have 

focused on the health effects associated with individual criteria pollutants or air toxics, 

this section discusses the mixture of different exposures near major roadways, rather than 

the effects of any single pollutant. As such, this section emphasizes traffic-related air 

pollution, in general, as the relevant indicator of exposure rather than any particular 

pollutant. 

 

397 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris 
669 

 Concentrations of many traffic-generated air pollutants are elevated for up to 300-

500 meters downwind of roads with high traffic volumes.398 Numerous sources on roads 

contribute to elevated roadside concentrations, including exhaust and evaporative 

emissions, and resuspension of road dust and tire and brake wear. Concentrations of 

several criteria and hazardous air pollutants are elevated near major roads. Furthermore, 

different semi-volatile organic compounds and chemical components of particulate 

matter, including elemental carbon, organic material, and trace metals, have been 

reported at higher concentrations near major roads. 

 Populations near major roads experience greater risk of certain adverse health 

effects. The Health Effects Institute published a report on the health effects of trafficrelated air pollution.399 It concluded that evidence is “sufficient to infer the presence of a 

causal association” between traffic exposure and exacerbation of childhood asthma 

symptoms. The HEI report also concludes that the evidence is either “sufficient” or 

“suggestive but not sufficient” for a causal association between traffic exposure and new 

childhood asthma cases. A review of asthma studies by Salam et al. (2008) reaches 

similar conclusions.400 The HEI report also concludes that there is “suggestive” evidence 

for pulmonary function deficits associated with traffic exposure, but concluded that there 

is “inadequate and insufficient” evidence for causal associations with respiratory health 

care utilization, adult-onset asthma, COPD symptoms, and allergy. A review by Holguin 

 

398 Zhou, Y.; Levy, J.I. (2007) Factors influencing the spatial extent of mobile source air pollution impacts: 

a meta-analysis. BMC Public Health 7: 89. doi:10.1186/1471-2458-7-89 

399 HEI Panel on the Health Effects of Air Pollution. (2010) Traffic-related air pollution: a critical review 

of the literature on emissions, exposure, and health effects. [Online at www.healtheffects.org] 400 Salam, M.T.; Islam, T.; Gilliland, F.D. (2008) Recent evidence for adverse effects of residential 

proximity to traffic sources on asthma. Current Opin Pulm Med 14: 3-8. 
670 

(2008) notes that the effects of traffic on asthma may be modified by nutrition status, 

medication use, and genetic factors.401

 The HEI report also concludes that evidence is “suggestive” of a causal 

association between traffic exposure and all-cause and cardiovascular mortality. There is 

also evidence of an association between traffic-related air pollutants and cardiovascular 

effects such as changes in heart rhythm, heart attack, and cardiovascular disease. The 

HEI report characterizes this evidence as “suggestive” of a causal association, and an 

independent epidemiological literature review by Adar and Kaufman (2007) concludes 

that there is “consistent evidence” linking traffic-related pollution and adverse 

cardiovascular health outcomes.402

 Some studies have reported associations between traffic exposure and other health 

effects, such as birth outcomes (e.g., low birth weight) and childhood cancer. The HEI 

report concludes that there is currently “inadequate and insufficient” evidence for a 

causal association between these effects and traffic exposure. A review by RaaschouNielsen and Reynolds (2006) concluded that evidence of an association between 

childhood cancer and traffic-related air pollutants is weak, but noted the inability to draw 

firm conclusions based on limited evidence.403

 

 

401 Holguin, F. (2008) Traffic, outdoor air pollution, and asthma. Immunol Allergy Clinics North Am 28: 

577-588. 

402 Adar, S.D.; Kaufman, J.D. (2007) Cardiovascular disease and air pollutants: evaluating and improving 

epidemiological data implicating traffic exposure. Inhal Toxicol 19: 135-149. 

403 Raaschou-Nielsen, O.; Reynolds, P. (2006) Air pollution and childhood cancer: a review of the 

epidemiological literature. Int J Cancer 118: 2920-2929. 
671 

There is a large population in the U.S. living in close proximity of major roads. 

According to the Census Bureau’s American Housing Survey for 2007, approximately 20 

million residences in the U.S., 15.6% of all homes, are located within 300 feet (91 m) of a 

highway with 4+ lanes, a railroad, or an airport.404 Therefore, at current population of 

approximately 309 million, assuming that population and housing similarly distributed, 

there are over 48 million people in the U.S. living near such sources. The HEI report also 

notes that in two North American cities, Los Angeles and Toronto, over 40% of each 

city’s population live within 500 meters of a highway or 100 meters of a major road. It 

also notes that about 33% of each city’s population resides within 50 meters of major 

roads. Together, the evidence suggests that a large U.S. population lives in areas with 

elevated traffic-related air pollution. 

 People living near roads are often socioeconomically disadvantaged. According 

to the 2007 American Housing Survey, a renter-occupied property is over twice as likely 

as an owner-occupied property to be located near a highway with 4+ lanes, railroad or 

airport. In the same survey, the median household income of rental housing occupants 

was less than half that of owner-occupants ($28,921/$59,886). Numerous studies in 

individual urban areas report higher levels of traffic-related air pollutants in areas with 

high minority or poor populations.405,406,407

 

404 U.S. Census Bureau (2008) American Housing Survey for the United States in 2007. Series H-150 

(National Data), Table 1A-6. [Accessed at 

http://www.census.gov/hhes/www/housing/ahs/ahs07/ahs07.html on January 22, 2009] 405 Lena, T.S.; Ochieng, V.; Carter, M.; Holguín-Veras, J.; Kinney, P.L. (2002) Elemental carbon and 

PM2.5 levels in an urban community heavily impacted by truck traffic. Environ Health Perspect 110: 

1009-1015. 

406 Wier, M.; Sciammas, C.; Seto, E.; Bhatia, R.; Rivard, T. (2009) Health, traffic, and environmental 

justice: collaborative research and community action in San Francisco, California. Am J Public Health 99: 

S499-S504. 
672 

 Students may also be exposed in situations where schools are located near major 

roads. In a study of nine metropolitan areas across the U.S., Appatova et al. (2008) found 

that on average greater than 33% of schools were located within 400 m of an Interstate, 

U.S., or state highway, while 12% were located within 100 m.408 The study also found 

that among the metropolitan areas studied, schools in the Eastern U.S. were more often 

sited near major roadways than schools in the Western U.S. 

 Demographic studies of students in schools near major roadways suggest that this 

population is more likely than the general student population to be of non-white race or 

Hispanic ethnicity, and more often live in low socioeconomic status locations. 409,410,411 

There is some inconsistency in the evidence, which may be due to different local 

development patterns and measures of traffic and geographic scale used in the studies.408 

4. Environmental Effects of Non-GHG Pollutants

In this section we discuss some of the environmental effects of PM and its 

precursors such as visibility impairment, atmospheric deposition, and materials damage 

and soiling, as well as environmental effects associated with the presence of ozone in the 

 407 Forkenbrock, D.J. and L.A. Schweitzer, Environmental Justice and Transportation Investment Policy. 

Iowa City: University of Iowa, 1997. 

408 Appatova, A.S.; Ryan, P.H.; LeMasters, G.K.; Grinshpun, S.A. (2008) Proximal exposure of public 

schools and students to major roadways: a nationwide U.S. survey. J Environ Plan Mgmt 409 Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.; Ostro, B. (2004) Proximity of California 

public schools to busy roads. Environ Health Perspect 112: 61-66. 

410 Houston, D.; Ong, P.; Wu, J.; Winer, A. (2006) Proximity of licensed child care facilities to nearroadway vehicle pollution. Am J Public Health 96: 1611-1617. 

411 Wu, Y.; Batterman, S. (2006) Proximity of schools in Detroit, Michigan to automobile and truck traffic. 

J Exposure Sci Environ Epidemiol 16: 457-470. 
673 

ambient air, such as impacts on plants, including trees, agronomic crops and urban 

ornamentals, and environmental effects associated with air toxics. No substantive 

comments were received on the environmental effects of non-GHG pollutants. 

a. Visibility 

Visibility can be defined as the degree to which the atmosphere is transparent to 

visible light.412 Visibility impairment is caused by light scattering and absorption by suspended 

particles and gases. 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 

2009 PM ISA.413

EPA is pursuing a two-part strategy to address visibility. First, 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 

 

412 National Research Council, 1993. Protecting Visibility in National Parks and Wilderness Areas. 

National Academy of Sciences Committee on Haze in National Parks and Wilderness Areas. National 

Academy Press, Washington, DC. Docket EPA-HQ-OAR-2005-0161. This book can be viewed on the 

National Academy Press Website at http://www.nap.edu/books/0309048443/html/ 

413 U.S. EPA (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. 

Environmental Protection Agency, Washington, DC, EPA/600/R-08/139F, 2009. Docket EPA-HQ-OAR2009-0472-11295. 
674 

humidity, and has set secondary PM2.5 standards.414 The secondary PM2.5 standards act in 

conjunction with the regional haze program. The regional haze rule (64 FR 35714) was 

put in place in July 1999 to protect the visibility in mandatory class I federal areas. There 

are 156 national parks, forests and wilderness areas categorized as mandatory class I 

federal areas (62 FR 38680-81, July 18, 1997).415 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. 

 

414 The existing annual primary and secondary PM2.5 standards have been remanded and are being 

addressed in the currently ongoing PM NAAQS review. 

415 These areas are defined in CAA section 162 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. 
675 

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 Air Quality Criteria Document 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 
676 

environmental and human health hazard posed by several pollutants including mercury, 

dioxin and PCBs.416

Adverse impacts on water quality can occur when atmospheric contaminants 

deposit to the water surface or when material deposited on the land enters a waterbody 

through runoff. Potential impacts of atmospheric deposition to waterbodies 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 nitrogennutrient 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 toxics may lead to the human ingestion of contaminated fish, impairment of 

drinking 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.417,418,419,420,421 

Atmospheric deposition of nitrogen and sulfur contributes to acidification, 

altering biogeochemistry and affecting animal and plant life in terrestrial and aquatic 

 

416 U.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. Docket EPA-HQ-OAR-2009-0472-0091. 417 U.S. EPA (2004) National Coastal Condition Report II. Office of Research and Development/ Office of 

Water. EPA-620/R-03/002. Docket EPA-HQ-OAR-2009-0472-0089. 

418 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. Docket 

EPA-HQ-OAR-2009-0472-11297. 

419 Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. Factors influencing the atmospheric 

depositional fluxes of stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79. 

Docket EPA-HQ-OAR-2009-0472-11299. 

420 Lu, 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. Docket 

EPA-HQ-OAR-2009-0472-11296. 

421 Marvin, 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. Docket EPA-HQ-OAR-2009-

0472-11300. 
677 

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 leads to nutrient enrichment and altered biogeochemical cycling. In 

aquatic systems increased nitrogen can alter species assemblages and cause 

eutrophication. In terrestrial systems nitrogen loading can lead to loss of nitrogen 

sensitive lichen species, decreased biodiversity of grasslands, meadows and other 

sensitive habitats, and increased potential for invasive species. For a broader explanation 

of the topics treated here, refer to the description in Section 7.1.2 of the RIA. 

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 
678 

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). 

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.422 In laboratory experiments, a wide range of tolerance to VOCs has been 

observed.423 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 

 

422 U.S. EPA. 1991. Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3-91/001. 

Docket EPA-HQ-OAR-2009-0472-0401. 

423 Cape 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. 

Docket EPA-HQ-OAR-2009-0472-0357. 
679 

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.424 

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.425, 426, 427 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

Air quality modeling was performed to assess the impact of the vehicle standards 

on criteria and air toxic pollutants. In this section, we present information on current 

modeled levels of pollution as well as projections for 2030, with respect to ambient 

PM2.5, ozone, selected air toxics, visibility levels and nitrogen and sulfur deposition. The 

 

424 Cape 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. 

Docket EPA-HQ-OAR-2009-0472-0357. 

425 Viskari E-L. 2000. Epicuticular wax of Norway spruce needles as indicator of traffic pollutant 

deposition. Water, Air, and Soil Pollut. 121:327-337. Docket EPA-HQ-OAR-2009-0472-1128. 426 Ugrekhelidze D, F Korte, G Kvesitadze. 1997. Uptake and transformation of benzene and toluene by 

plant leaves. Ecotox. Environ. Safety 37:24-29. Docket EPA-HQ-OAR-2009-0472-1142. 

427 Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic 

components of motor vehicle emissions for the spruce Picea abies. Environ. Pollut. 48:235-243. Docket 

EPA-HQ-OAR-2009-0472-0358. 
680 

air quality modeling results indicate that the GHG standards have relatively small but 

measureable impacts on ambient concentrations of these pollutants. The results are 

discussed in more detail below and in Section 7.2 of the RIA. No substantive comments 

were received on our plans for non-GHG air quality modeling that were detailed in the 

proposal for this rule. 

We used the Community Multi-scale Air Quality (CMAQ) photochemical model, 

version 4.7.1, for our analysis. This version of CMAQ includes a number of 

improvements to previous versions of the model. These improvements are discussed in 

Section 7.2 of the RIA. 

a. Particulate Matter 

i. Current Levels 

PM2.5 concentrations exceeding the level of the PM2.5 NAAQS occur in many 

parts of the country. In 2005, EPA designated 39 nonattainment areas for the 1997 PM2.5

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 

revised in 2006 and the 2006 24-hour PM2.5 NAAQS became effective on December 18, 

2006. On October 8, 2009, the EPA issued final nonattainment area designations for the 

2006 24-hour PM2.5 NAAQS (74 FR 58688, November 13, 2009). These designations 

include 31 areas composed of 120 full or partial counties with a population of over 70 

million. In total, there are 54 PM2.5 nonattainment areas composed of 243 counties with a 

population of almost 102 million people. 
681 

ii. Projected Levels without this Rule 

States with PM2.5 nonattainment areas are required to take action to bring those 

areas into compliance in the future. Areas designated as not attaining the 1997 PM2.5

NAAQS will need to attain the 1997 standards in the 2010 to 2015 time frame, and then 

maintain them thereafter. The 2006 24-hour PM2.5 nonattainment areas will be required 

to attain the 2006 24-hour PM2.5 NAAQS in the 2014 to 2019 time frame and then be 

required to maintain the 2006 24-hour PM2.5 NAAQS thereafter. The vehicle standards 

finalized in this action become effective in 2012 and therefore may be useful to states in 

attaining or maintaining the PM2.5 NAAQS. 

EPA has already adopted many emission control programs that are expected to 

reduce ambient PM2.5 levels and which will assist in reducing the number of areas that 

fail to achieve the PM2.5 NAAQS. Even so, our air quality modeling projects that in 

2030, with all current controls but excluding the impacts of the vehicle standards adopted 

here, at least 9 counties with a population of almost 28 million may not attain the 1997 

annual PM2.5 standard of 15 μg/m3

 and 26 counties with a population of over 41 million 

may not attain the 2006 24-hour PM2.5 standard of 35 μg/m3

. These numbers do not 

account for those areas that are close to (e.g., within 10 percent of) the PM2.5 standards. 

These areas, although not violating the standards, will also benefit from any reductions in 

PM2.5 ensuring long-term maintenance of the PM2.5 NAAQS. 
682 

iii. Projected Levels with this Rule 

 

Air quality modeling performed for this final rule shows that in 2030 the majority 

of the modeled counties will see decreases of less than 0.05 μg/m3

 in their annual PM2.5

design values. The decreases in annual PM2.5 design values that we see in some counties 

are likely due to emission reductions related to lower gasoline production at existing oil 

refineries; reductions in direct PM2.5 emissions and PM2.5 precursor emissions (NOX and 

SOX) contribute to reductions in ambient concentrations of both direct PM2.5 and 

secondarily-formed PM2.5. The maximum projected decrease in an annual PM2.5 design 

value is 0.07 μg/m3

 in Harris County, TX. There are also a few counties that are 

projected to see increases of no more than 0.01 μg/m3

 in their annual PM2.5 design values. 

These small increases in annual PM2.5 design values are likely related to downstream 

emission increases. On a population-weighted basis, the average modeled 2030 annual 

PM2.5 design value is projected to decrease by 0.01 μg/m3

 due to this final rule. Those 

counties that are projected to be above the annual PM2.5 standard in 2030 will see slightly 

larger population-weighted decreases of 0.03 μg/m3

 in their design values due to this 

final rule. 

In addition to looking at annual PM2.5 design values, we also modeled the impact 

of the standards on 24-hour PM2.5 design values. Air quality modeling performed for this 

final rule shows that in 2030 the majority of the modeled counties will see changes of 

between -0.05 μg/m3

 and +0.05 μg/m3 in their 24-hour PM2.5 design values. The 

decreases in 24-hour PM2.5 design values that we see in some counties are likely due to 
683 

emission reductions related to lower gasoline production at existing oil refineries; 

reductions in direct PM2.5 emissions and PM2.5 precursor emissions (NOX and SOX) 

contribute to reductions in ambient concentrations of both direct PM2.5 and secondarilyformed PM2.5. The maximum projected decrease in a 24-hour PM2.5 design value is 0.21 

μg/m3

 in Harris County, TX. There are also some counties that are projected to see 

increases of less than 0.05 μg/m3

 in their 24-hour PM2.5 design values. These small 

increases in 24-hour PM2.5 design values are likely related to downstream emission 

increases. On a population-weighted basis, the average modeled 2030 24-hour PM2.5

design value is projected to decrease by 0.01 μg/m3

 due to this final rule. Those counties 

that are projected to be above the 24-hour PM2.5 standard in 2030 will see slightly larger 

population-weighted decreases of 0.05 μg/m3

 in their design values due to this final rule. 

b. Ozone 

i. Current Levels 

8-hour ozone concentrations exceeding the level of the ozone NAAQS occur in 

many parts of the country. In 2008, the EPA amended the ozone NAAQS (73 FR 16436, 

March 27, 2008). The final 2008 ozone NAAQS rule set forth revisions to the previous 

1997 NAAQS for ozone to provide increased protection of public health and welfare. 

EPA recently proposed to reconsider the 2008 ozone NAAQS (75 FR 2938, January 19, 

2010). Because of the uncertainty the reconsideration proposal creates regarding the 

continued applicability of the 2008 ozone NAAQS, EPA has used its authority to extend 

by 1 year the deadline for promulgating designations for those NAAQS (75 FR 2936, 

January 19, 2010). The new deadline is March 12, 2011. EPA intends to complete the 
684 

reconsideration by August 31, 2010. If EPA establishes new ozone NAAQS as a result 

of the reconsideration, they would replace the 2008 ozone NAAQS and requirements to 

designate areas and implement the 2008 NAAQS would no longer apply. 

As of January 6, 2010 there are 51 areas designated as nonattainment for the 1997 

8-hour ozone NAAQS, comprising 266 full or partial counties with a total population of 

over 122 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. Table III.G.5-1 provides an 

estimate, based on 2005-07 air quality data, of the counties with design values greater 

than the 2008 8-hour ozone NAAQS of 0.075 ppm. 

Table III.G.5-1 

Counties with Design Values Greater Than the Ozone NAAQS 

 NUMBER OF 

COUNTIES 

POPULATIONA

1997 Ozone Standard: counties within the 54 

areas currently designated as nonattainment 

(as of 1/6/10) 

266 122,343, 799 

2008 Ozone Standard: additional counties 

that would not meet the 2008 NAAQS (based 

on 2006-2008 air quality data)b

156 36,678,478 

Total 422 159,022,277 

Notes: 

a

 Population numbers are from 2000 census data. 

b

 Area designations for the 2008 ozone NAAQS have not yet been made. Nonattainment for the 2008 

Ozone NAAQS would be based on three years of air quality data from later years. Also, the county 

numbers in this row include only the counties with monitors violating the 2008 Ozone NAAQS. The 

numbers in this table may be an underestimate of the number of counties and populations that will 

eventually be included in areas with multiple counties designated nonattainment. 
685 

ii. Projected Levels without this Rule 

States with 8-hour ozone nonattainment areas are required to take action to bring 

those areas into compliance in the future. Based on the final rule designating and 

classifying 8-hour ozone nonattainment areas for the 1997 standard (69 FR 23951, April 

30, 2004), most 8-hour ozone nonattainment areas will be required to attain the ozone 

NAAQS in the 2007 to 2013 time frame and then maintain the NAAQS thereafter. As 

noted, EPA is reconsidering the 2008 ozone NAAQS. If EPA promulgates different 

ozone NAAQS in 2010 as a result of the reconsideration, these standards would replace 

the 2008 ozone NAAQS and there would no longer be a requirement to designate areas 

for the 2008 NAAQS. EPA would designate nonattainment areas for a potential new 

2010 primary ozone NAAQS in 2011. The attainment dates for areas designated 

nonattainment for a potential new 2010 primary ozone NAAQS are likely to be in the 

2014 to 2031 timeframe, depending on the severity of the problem.428 

EPA has already adopted many emission control programs that are expected to 

reduce ambient ozone levels and assist in reducing the number of areas that fail to 

achieve the ozone NAAQS. Even so, our air quality modeling projects that in 2030, with 

all current controls but excluding the impacts of the vehicle standards, up to 16 counties 

with a population of almost 35 million may not attain the 2008 ozone standard of 0.075 

ppm (75 ppb). These numbers do not account for those areas that are close to (e.g., 

within 10 percent of) the 2008 ozone standard. These areas, although not violating the 

 

428 U.S. EPA 2010, Fact Sheet Revisions to Ozone Standards. 

http://www.epa.gov/groundlevelozone/pdfs/fs20100106std.pdf 
686 

standards, will also be impacted by changes in ozone as they work to ensure long-term 

maintenance of the ozone NAAQS. 

iii. Projected Levels with this Rule 

 We do not expect this rule to have a meaningful impact on ozone concentrations, 

given the small magnitude of the ozone impacts and the fact that much of the impact is 

due to ethanol assumptions that are independent of this rule. Our modeling projects 

increases in ozone design value concentrations in many areas of the country and 

decreases in ozone design value concentrations in a few areas. However, the increases in 

ozone design values are not due to the standards finalized in this rule, but are related to 

our assumptions about the volume of ethanol that will be blended into gasoline. The 

ethanol volumes will be occurring as a result of the recent Renewable Fuel Standards 

(RFS2) rule.429 

The ethanol volume assumptions are discussed in the introduction to Section III.G 

of this preamble. We attribute decreased fuel consumption and production from this 

program to gasoline only, while assuming constant ethanol volumes in our reference and 

control cases. Holding ethanol volumes constant while decreasing gasoline volumes 

increases the market share of 10% ethanol (E10) in the control case. However, the 

increased E10 market share is projected to occur regardless of this rule; in the RFS2 

analysis we project 100% E10 by 2014. The air quality impacts of this effect are 

 

429 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-

006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332. See also 75 FR 14670, March 26, 2010 
687 

included in our analyses for the recent RFS2 rule. As the RFS2 analyses indicate, 

increasing usage of E10 fuels (when compared with E0 fuels) can increase NOX

emissions and thereby increase ozone concentrations, especially in NOX-limited areas 

where relatively small amounts of NOX enable ozone to form rapidly.430 

The majority of the ozone design value increases are less than 0.1 ppb. The 

maximum projected increase in an 8-hour ozone design value is 0.25 ppb in Richland 

County, South Carolina. As mentioned above there are some areas which see decreases 

in their ozone design values. The decreases in ambient ozone concentration are likely 

due to projected upstream emissions decreases in NOX and VOCs from reduced gasoline 

production. The maximum decrease projected in an 8-hour ozone design value is 0.22 

ppb in Riverside County, California. On a population-weighted basis, the average 

modeled 8-hour ozone design values are projected to increase by 0.01 ppb in 2030 and 

the design values for those counties that are projected to be above the 2008 ozone 

standard in 2030 will see population-weighted decreases of 0.10 ppb. 

c. Air Toxics 

i. Current Levels 

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.431 The levels 

of air toxics to which people are exposed vary depending on where people live and work 

 

430 Sections 3.4.2.1.2 and 3.4.3.3 of the Renewable Fuel Standard Program (RFS2) Regulatory Impact 

Analysis, EPA-420-R-10-006, February 2010. Docket EPA-HQ-OAR-2009-0472-11332 

431 U. S. EPA. (2009) 2002 National-Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2002/. 

Docket EPA-HQ-OAR-2009-0472-11321 
688 

and the kinds of activities in which they engage, as discussed in detail in U.S. EPA’s 

most recent Mobile Source Air Toxics Rule.432 According to the National Air Toxic 

Assessment (NATA) for 2002,433 mobile sources were responsible for 47 percent of 

outdoor toxic emissions, over 50 percent of the cancer risk, and over 80 percent of the 

noncancer hazard. Benzene is the largest contributor to cancer risk of all 124 pollutants 

quantitatively assessed in the 2002 NATA and mobile sources were responsible for 59 

percent of benzene emissions in 2002. Over the years, EPA has implemented a number 

of mobile source and fuel controls resulting in VOC reductions, which also reduce 

benzene and other air toxic emissions. 

ii. Projected Levels 

Our modeling indicates that the GHG standards have relatively little impact on 

national average ambient concentrations of the modeled air toxics. Additional detail on 

the air toxics results can be found in Section 7.2.2.3 of the RIA. 

d. Nitrogen and Sulfur Deposition 

i. Current Levels 

Over the past two decades, the EPA has undertaken numerous efforts to reduce 

nitrogen and sulfur deposition across the U.S. Analyses of long-term monitoring data for 

the U.S. show that deposition of both nitrogen and sulfur compounds has decreased over 

the last 17 years although many areas continue to be negatively impacted by deposition. 

 

432 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile 

Sources; Final Rule. 72 FR 8434, February 26, 2007. Docket EPA-HQ-OAR-2009-0472-0271, 0271.1 and 

0271.2 

433 U. S. EPA. (2009) 2002 National-Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2002/. 

Docket EPA-HQ-OAR-2009-0472-11321 
689 

Deposition of inorganic nitrogen and sulfur species routinely measured in the U.S. 

between 2004 and 2006 were as high as 9.6 kilograms of nitrogen per hectare per year 

(kg N/ha/yr) and 21.3 kilograms of sulfur per hectare per year (kg S/ha/yr). The data 

show that reductions were more substantial for sulfur compounds than for nitrogen 

compounds. These numbers are generated by the U.S. national monitoring network and 

they likely underestimate nitrogen deposition because neither ammonia nor organic 

nitrogen is measured. In the eastern U.S., where data are most abundant, total sulfur 

deposition decreased by about 44% between 1990 and 2007, while total nitrogen 

deposition decreased by 25% over the same time frame.434 

ii. Projected Levels 

Our air quality modeling does not show substantial overall nationwide impacts on 

the annual total sulfur and nitrogen deposition occurring across the U.S. as a result of the 

vehicle standards required by this rule. For sulfur deposition the vehicle standards will 

result in annual percent decreases of 0.5% to more than 2% in locations with refineries as 

a result of the lower output from refineries due to less gasoline usage. These locations 

include the Texas and Louisiana portions of the Gulf Coast; the Washington D.C. area; 

Chicago, IL; portions of Oklahoma and northern Texas; Bismarck, North Dakota; 

Billings, Montana; Casper, Wyoming; Salt Lake City, Utah; Seattle, Washington; and 

San Francisco, Los Angeles, and San Luis Obispo, California. The remainder of the 

country will see only minimal changes in sulfur deposition, ranging from decreases of 

 

434 U.S. EPA. U.S. EPA's 2008 Report on the Environment (Final Report). U.S. Environmental Protection 

Agency, Washington, D.C., EPA/600/R-07/045F (NTIS PB2008-112484). Docket EPA-HQ-OAR-2009-

0472-11298. Updated data available online at: 

http://cfpub.epa.gov/eroe/index.cfm?fuseaction=detail.viewInd&ch=46&subtop=341&lv=list.listByChapter

&r=201744 
690 

less than 0.5% to increases of less than 0.5%. For a map of 2030 sulfur deposition 

impacts and additional information on these impacts, see Section 7.2.2.5 of the RIA. The 

impacts of the vehicle standards on nitrogen deposition are minimal, ranging from 

decreases of up to 0.5% to increases of up to 0.5%. 

e. Visibility 

i. Current Levels 

As mentioned in Section III.G.5.a, millions of people live in nonattainment areas 

for the PM2.5 NAAQS. These populations, as well as large numbers of individuals who 

travel to these areas, are likely to experience visibility impairment. In addition, while 

visibility trends have improved in mandatory class I federal areas, the most recent data 

show that these areas continue to suffer from visibility impairment. In summary, 

visibility impairment is experienced throughout the U.S., in multi-state regions, urban 

areas, and remote mandatory class I federal areas. 

ii. Projected Levels 

Air quality modeling conducted for this final rule was used to project visibility 

conditions in 138 mandatory class I federal areas across the U.S. in 2030. The results 

show that all the modeled areas will continue to have annual average deciview levels 

above background in 2030.435 The results also indicate that the majority of the modeled 

 

435 The level of visibility impairment in an area is based on the light-extinction coefficient and a unitless 

visibility index, called a “deciview”, which is used in the valuation of visibility. The deciview metric 

provides a scale for perceived visual changes over the entire range of conditions, from clear to hazy. Under 

many scenic conditions, the average person can generally perceive a change of one deciview. The higher 
691 

mandatory class I federal areas will see no change in their visibility, but some mandatory 

class I federal areas will see improvements in visibility due to the vehicle standards and a 

few mandatory class I federal areas will see visibility decreases. The average visibility at 

all modeled mandatory class I federal areas on the 20% worst days is projected to 

improve by 0.002 deciviews, or 0.01%, in 2030. Section 7.2.2.6.2 of the RIA contains 

more detail on the visibility portion of the air quality modeling. 

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

Program? 

In this section, EPA presents the costs and impacts of EPA’s 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 average fuel economy increases 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. These costs and benefits are appropriately analyzed separately by each 

agency and should not be added together. 

This section outlines the basis for assessing the benefits and costs of the GHG 

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, 

 the deciview value, the worse the visibility. Thus, an improvement in visibility is a decrease in deciview 

value. 
692 

purchases, and use of vehicles. These private effects include the upfront 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, because they affect people in ways other than the effect on 

the market for and use of new vehicles and are generally not taken into account by the 

purchaser of the vehicle. The external effects include the climate impacts, the effects on 

non-GHG pollutants, energy security impacts, 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 optimize their 

purchases of fuel economy, with full information and perfect foresight, in perfectly 

efficient markets, it is possible that they have already considered these benefits in their 

vehicle purchase decisions. If so, then no net private benefits would result from the 

program, because consumers would already buy vehicles with the amount of fuel 

economy that is optimal for them; requiring additional fuel economy would alter both the 

purchase prices of new cars and their lifetime streams of operating costs in ways that will 

inevitably reduce consumers’ well-being. If these conditions do not hold, then the private 

benefits and costs would both count toward the program’s benefits. Section III.H.1 

discusses this issue more fully. 

The net benefits of EPA’s final program consist of the effects of the program on: 
693 

• 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, and other flexibilities built into the final program) 

• fuel savings associated with reduced fuel usage resulting from the program 

• greenhouse gas emissions, 

• other pollutants, 

• noise, congestion, accidents, 

• energy security impacts, 

• reduced refueling events 

• increased driving due to the “rebound” effect. 

EPA also presents the cost-effectiveness of the standards. 

The total monetized benefits (excluding fuel savings) under the program are 

projected to be $17.5 to $41.8 billion in 2030, using a 3 percent discount rate applied to 

the valuation of PM2.5-related premature mortality and depending on the value used for 

the social cost of carbon. The total monetized benefits (excluding fuel savings) under the 

program are projected to be $17.4 to $41.7 billion in 2030, using a 7 percent discount rate 

applied to the valuation of PM2.5-related premature mortality and depending on the value 

used for the social cost of carbon. These benefits are summarized below in Table 

III.H.10-2. The costs of the program in 2030 are estimated to be approximately $15.8 

billion for new vehicle technology less $79.8 billion in savings realized by consumers 

through fewer fuel expenditures (calculated using pre-tax fuel prices). These costs are 
694 

summarized below in Table III.H.10-1. The estimates developed here use as a baseline 

for comparison the fuel economy associated with MY 2011 vehicles. To the extent that 

greater fuel economy improvements than those assumed to occur under the baseline may 

have occurred due to market forces alone (absent the rule), the analysis overestimates 

private and social net benefits. 

EPA has undertaken an analysis of the economy-wide impacts of the GHG 

tailpipe standards as an exploratory exercise that EPA believes could provide additional 

insights into the potential impacts of the program.436 These results were not a factor 

regarding the appropriateness of the GHG tailpipe standards. It is important to note that 

the results of this modeling exercise are dependent on the assumptions associated with 

how producers will make fuel economy improvements and how consumers will respond 

to increases in higher vehicle costs and improved vehicle fuel economy as a result of the 

program. 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 

rule are summarized in the following sections and are presented in more detail in the RIA 

for this rulemaking. 

 

436 See Memorandum to Docket, “Economy-Wide Impacts of Proposed Greenhouse Gas Tailpipe 

Standards,” March 4, 2010. Docket EPA-HQ-OAR-2009-0472. 
695 

1. Conceptual Framework for Evaluating Consumer Impacts

For this 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 an economic conundrum. On the one hand, 

consumers are expected to gain significantly from the rules, as the increased cost of fuel 

efficient cars appears to be far smaller than the fuel savings. Yet these technologies are 

readily available; financially savvy consumers could have sought vehicles with improved 

fuel efficiency, and auto makers seeking those customers could have offered them. 

Assuming full information, perfect foresight, perfect competition, and financially rational 

consumers and producers, standard economic theory suggests that normal market 

operations would have provided the private net gains to consumers, and the only benefits 

of the rule would be due to external benefits. If our analysis projects net private benefits 

that consumers have not realized in this perfectly functioning market, then increased fuel 

economy should be accompanied by a corresponding loss in consumer welfare. This 

calculation assumes that consumers accurately predict and act on all the benefits they will 

get from a new vehicle, and that producers market products providing those benefits. The 

existence of large private net benefits from this rule, then, suggests either that the 
696 

assumptions noted above do not hold, or that EPA’s analysis has missed some factor(s) 

tied to improved fuel economy that reduce(s) consumer welfare. 

With respect to the latter, EPA believes the costs of the technologies developed 

for this rule take into account the cost needed to ensure that all vehicle qualities 

(including performance, reliability, and size) stay constant, except for fuel economy and 

vehicle price. As a result, there would need to be some other changed qualities that 

would reduce the benefits consumers receive from their vehicles. Changing 

circumstances (e.g., increased demand for horsepower in response to a drop in fuel 

prices), and any changes in vehicle attributes that manufacturers elect to make may result 

in additional private impacts to vehicle buyers from requiring increased fuel economy. 

Most comments generally supported the cost estimates and the maintenance of vehicle 

quality, though two comments expressed concern over unspecified losses to vehicle 

quality. Even if there is some such unidentified loss (which, given existing evidence and 

modeling capabilities, is very difficult to quantify), EPA believes that under realistic 

assumptions, the private gains from the rule, together with the social gains (in the form of 

reduction of externalities), will continue to substantially outweigh the costs. 

The central conundrum has been referred to as the Energy Paradox in this setting 

(and in several others).437 In short, the problem is that consumers appear not to purchase 

 

437 Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation 

Technology. Resource and Energy Economics, 16(2), 91-122. Docket EPA-HQ-OAR-2009-0472-11415. 
697 

products that are in their economic self-interest. There are strong theoretical reasons why 

this might be so:438 

• Consumers might be myopic and hence undervalue the long-term. 

• Consumers might lack information or a full appreciation of information even 

when it is presented. 

• Consumers might be especially averse to the short-term losses associated with the 

higher prices of energy efficient products relative to the uncertain future fuel 

savings, even if the expected present value of those fuel savings exceeds the cost 

(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, and the 

lack of salience might lead consumers to neglect an attribute that it would be in 

their economic interest to consider. 

• In the case of vehicle fuel efficiency, and perhaps as a result of one or more of the 

foregoing factors, consumers may have relatively few choices to purchase 

vehicles with greater fuel economy once other characteristics, such as vehicle 

class, are chosen.439 

 

438 For an overview, see id. 439 For instance, the range of fuel economy (combined city and highway) available among all listed 2010 6-

cylinder minivans is 18 to 20 miles per gallon. With a manual-transmission 4-cylinder minivan, it is 

possible to get 24 mpg. See http://www.fueleconomy.gov, which is jointly maintained by the U.S. 

Department of Energy and the EPA. For recent but unpublished evidence, see Allcott, Hunt, and Nathan 

Wozny, “Gasoline Prices, Fuel Economy, and the Energy Paradox” (2010), available at 

http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf . 
698 

A great deal of work in behavioral economics identifies and elaborates factors of 

this sort, which help account for the Energy Paradox.440 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.441 For example, it might 

well be questioned whether significant reductions in refueling time, and corresponding 

private savings, are fully internalized when consumers are making purchasing decisions. 

Considerable research findings indicate that the Energy Paradox is real and 

significant but the literature has not reached a consensus about the reasons for its 

existence. Several researchers have found evidence suggesting that consumers do not 

give full or appropriate weight to fuel economy in purchasing decisions. For example, 

Sanstad and Howarth442 argue that consumers optimize behavior without full information 

by resorting to imprecise but convenient rules of thumb. Some studies find that a 

substantial portion of this undervaluation can be explained by inaccurate assessments of 

energy savings, or by uncertainty and irreversibility of energy investments due to 

fluctuations in energy prices.443 For a number of reasons, consumers may undervalue 

 

440 Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation 

Technology. Resource and Energy Economics, 16(2), 91-122. Docket EPA-HQ-OAR-2009-0472-11415. 

See also Allcott and Wozny, supra note. 

441 For example, it might be maintained that, at the time of purchase, consumers take full account of the 

time spent refueling 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. 

442 Sanstad, A., and R. Howarth (1994). “’Normal’ Markets, Market Imperfections, and Energy Efficiency.” 

Energy Policy 22(10): 811‐818 (Docket EPA-HQ-OAR-2009-0472-11416). 443 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 

(Docket EPA-HQ-OAR-2009-0472-11538); 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 (Docket EPA-HQ-OAR-2009-0472-11539); Metcalf, 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(Docket 
699 

future energy savings due to routine mistakes in how they evaluate these trade-offs. For 

instance, the calculation of fuel savings is complex, and consumers may not make it 

correctly.444 The attribute of fuel economy may be insufficiently salient, leading to a 

situation in which consumers pay less than $1 for an expected $1 benefit in terms of 

discounted gasoline costs.445 Larrick and Soll (2008) find 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).446 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. Cost 

calculations based on the average do not distinguish between those that may gain or lose 

as a result of the policy.447 Studies regularly show that fuel economy plays a role in 

consumers’ vehicle purchases, but modeling that role is still in development, and there is 

no consensus that most consumers make fully informed tradeoffs.448 

 EPA-HQ-OAR-2009-0472-11540); Hassett, K., and G. Metcalf (1995), "Energy Tax Credits and 

Residential Conservation Investment: Evidence from Panel Data," Journal of Public Economics 57: 

201‐217(Docket EPA-HQ-OAR-2009-0472-11543); Metcalf, G., and K. Hassett (1999), "Measuring the 

Energy Savings from Home Improvement Investments: Evidence from Monthly Billing Data," The Review 

of Economics and Statistics 81(3): 516‐528 (Docket EPA-HQ-OAR-2009-0472-0051); van Soest D., and E. 

Bulte (2001), “Does the Energy‐Efficiency Paradox Exist? Technological Progress and Uncertainty.” 

Environmental and Resource Economics 18: 101–12 (Docket EPA-HQ-OAR-2009-0472-11542). 444 Turrentine, 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-2009-0472-0041). 445 Allcott, Hunt, and Nathan Wozny, “Gasoline Prices, Fuel Economy, and the Energy Paradox” (2010), 

available at http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf (Docket EPAHQ-OAR-2009-0472-11554) . 

446 Sanstad, A., and R. Howarth (1994). “’Normal’ Markets, Market Imperfections, and Energy Efficiency.” 

Energy Policy 22(10): 811-818 (Docket EPA-HQ-OAR-2009-0472-11415); Larrick, R. P., and J.B. Soll 

(2008). “The MPG illusion.” Science 320: 1593-1594 (Docket EPA-HQ-OAR-2009-0472-0043). 447 Hausman J., Joskow P. (1982). “Evaluating the Costs and Benefits of Appliance Efficiency Standards.” 

American Economic Review 72: 220–25 (Docket EPA-HQ-OAR-2009-0472-11541). 448 E.g., Goldberg, Pinelopi Koujianou, “Product Differentiation and Oligopoly in International Markets: 

The Case of the U.S. Automobile Industry,” Econometrica 63(4) (July 1995): 891-951 (Docket EPA-HQOAR-2009-0472-0021); Goldberg, Pinelopi Koujianou, “The Effects of the Corporate Average Fuel 

Efficiency Standards in the U.S.,” Journal of Industrial Economics 46(1) (March 1998): 1-33 (Docket 
700 

Some studies find that a substantial portion of the Energy Paradox can be 

explained in models of consumer behavior. For instance, one set of studies finds that 

accounting for uncertainty in fuel savings over time due to unanticipated changes in fuel 

prices goes a long way toward explaining this paradox. In this case, consumers give up 

some uncertain future fuel savings to avoid higher upfront costs. 

A recent review commissioned by EPA supports the finding of great variability, 

by looking at one key parameter: the role of fuel economy in consumers’ vehicle 

purchase decisions.449 The review finds no consensus on the role of fuel economy in 

consumer purchase decisions. Of 27 studies, significant numbers of them find that 

consumers undervalue, overvalue, or value approximately correctly the fuel savings that 

they will receive from improved fuel economy. The variation in the value of fuel 

economy in these studies is so high that it appears to be inappropriate to identify one 

central estimate from the literature. Thus, estimating consumer response to higher 

vehicle fuel economy is still unsettled science. 

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 

 EPA-HQ-OAR-2009-0472-0017); Busse, 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-

0472-0044). 

449 Greene, David L. “How Consumers Value Fuel Economy: A Literature Review.” EPA Report EPA420-R-10-008, March 2010 (Docket EPA-HQ-OAR-2009-0472-11575). 
701 

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, and poor ability to calculate 

savings. Also as noted, fuel economy may not be as salient as other vehicle 

characteristics when a consumer is considering vehicles. If these arguments are valid, 

then there will be significant gains to consumers of the government mandating additional 

fuel economy. 

EPA requested and received a number of comments discussing the role of the 

Energy Paradox in consumer vehicle purchase decisions. Ten commenters, primarily 

from a number of academic and non-governmental organizations, argued that there is a 

gap between the fuel economy that consumers purchased and the cost-effective amount, 

due to a number of market and behavioral phenomena. These include consumers having 

inadequate information about future fuel savings relative to up-front costs; imperfect 

competition among auto manufacturers; lack of choice over fuel economy within classes; 

lack of salience of fuel economy relative to other vehicle features at the time of vehicle 

purchase; consumer use of heuristic decision-making processes or other rules of thumb, 

rather than analyzing fuel economy decisions; consumer risk and loss aversion leading to 

more attention to up-front costs than future fuel savings; and consumer emphasis on 

visible, status-providing features of vehicles more than on relatively invisible features 

such as fuel economy. The RIA, Chapter 8.1.2, includes further discussion of these 

phenomena. 
702 

Because of the gap between the fuel economy consumers purchase and the costeffective amount, those and additional commenters support using the full value of fuel 

savings as a benefit of the rule. A few asserted, in addition, that auto companies would 

benefit from offering vehicles with improved fuel economy. Automakers might 

underprovide fuel economy because they believe consumers would not buy it, or that it is 

not as salient as price when consumers are buying a vehicle. The commenters who 

supported the existence of the gap cite these phenomena as a basis for regulation of fuel 

economy. In contrast, two commenters (the United Auto Workers and one nonprofit 

research organization) argued that the market for fuel economy works efficiently; 

consumers reveal through their purchase decisions that additional fuel economy is not 

important for them. These commenters expressed concern that regulation to promote 

more fuel economy would limit consumers’ choices as well as the value of the vehicles to 

consumers. Yet other commenters (including some states) noted that the rule protects the 

existing variety and choice of vehicles in the market; for this reason, the value of vehicles 

to consumers should not suffer as a result of the rule. 

While acknowledging the diversity of perspectives, EPA continues to include the 

full fuel savings as private benefits of the rule. Improved fuel economy will significantly 

reduce consumer expenditures on fuel, thus benefiting consumers. It is true that 

limitations in modeling affect our ability to estimate how much of these savings would 

have occurred in the absence of the rule. For example, some of the technologies 

predicted to be adopted in response to the rule may already be developing due to shifts in 
703 

consumer demand for fuel economy. It is possible that some of these savings would have 

occurred in the absence of the rule. To the extent that greater fuel economy 

improvements than those assumed to occur under the baseline may have occurred due to 

market forces alone (absent the rule), the analysis overestimates private and social net 

benefits. In the absence of robust means to identify the changes in fuel economy that 

would have occurred without the rule, we estimate the benefits and costs under the 

assumption that the rule will lead to more fuel-efficient vehicles than would have 

occurred without the rule. As discussed below, limitations in modeling also affect our 

ability to estimate the effects of the rule on net benefits in the market for vehicles. 

Consumer vehicle choice models estimate what vehicles consumers buy based on 

vehicle and consumer characteristics. In principle, such models could provide a means of 

understanding both the role of fuel economy in consumers’ purchase decisions and the 

effects of this rule on the benefits that consumers will get from vehicles. The NPRM 

included a discussion of the wide variation in the structure and results of these models. 

Models or model results have not frequently been systematically compared to each other. 

When they have, the results show large variation over, for instance, the value that 

consumers place on additional fuel economy. As a result, EPA found that further 

assessment needed to be done before adopting a consumer vehicle choice model. In the 

NPRM, EPA asked for comment on the state of the art of consumer vehicle choice 

modeling and whether it is sufficiently developed for use in regulatory analysis. 
704 

The responses were varied. Of the six commenters on this issue, five supported 

EPA’s performing consumer vehicle choice modeling, but only in general terms; they did 

not provide recommendations for how to evaluate the quality of different models or 

identify a model appropriate for EPA’s purposes. One commenter argued that, if key 

differences across models were controlled, then different models would produce similar 

results, but there were no suggestions for what choices to make to control the key 

differences. One commenter specifically asked for estimates that quantify losses to 

consumer welfare. Two commenters mentioned the importance of taking into account 

any losses in vehicle attributes due to increasing fuel economy, but without specific 

guidance for how to do so. Some commenters, including some who supported the use of 

these models, highlighted some of the models’ potential limitations. Two commenters 

noted the challenges of modeling for vehicles that are not yet in the market. Most 

consumer vehicle choice models are based on existing vehicle fleets. Future vehicles will 

present combinations of vehicle characteristics not previously seen in markets, such as 

higher fuel economy and higher price with other characteristics constant; the existing 

models may not do well in predicting consumer responses to these changes. One 

comment suggested that the models might be sufficient for predicting changes in 

consumer purchase patterns, but not for calculating the welfare gains and losses to 

consumers of the changes. 

EPA has not used a consumer vehicle choice model for the final rule analysis, due 

to concerns we explained in the proposal (and discussed in Chapter 8.1 of the RIA), and 

because no new information became available to resolve those concerns. It is likely that 
705 

variation exists in measuring consumer response to changes in fuel economy as well as 

other vehicle characteristics, such as performance. Thus, there does not appear to be 

evidence at this time to develop robust estimates of consumer welfare effects of changes 

in vehicle attributes. As noted earlier, EPA’s and NHTSA’s cost estimates are based on 

maintaining these other vehicle attributes. Comments generally supported the finding 

that our cost and technology estimates succeeded in maintaining these other attributes. 

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 program. 

These issues are discussed in detail in RIA Chapter 8.1.2. 

The next issue is the potential for loss in consumer welfare due to the rule. As 

mentioned above (and discussed more thoroughly in Section III.D of this preamble), the 

technology cost estimates developed here take into account the costs to hold other vehicle 

attributes, such as size and performance, constant. In addition, the analysis assumes that 

the full technology costs are passed along to consumers. With these assumptions, 

because welfare losses are monetary estimates of how much consumers would have to be 

compensated to be made as well off as in the absence of the change,450 the price increase 

measures the loss to the consumer.451 Assuming that the full technology cost gets passed 

 

450 This approach describes the economic concept of compensating variation, a payment of money after a 

change that would make a consumer as well off after the change as before it. A related concept, equivalent 

variation, estimates the income change that would be an alternative to the change taking place. The 

difference between them is whether the consumer’s point of reference is her welfare before the change 

(compensating variation) or after the change (equivalent variation). In practice, these two measures are 

typically very close together. 

451 Indeed, it is likely to be an overestimate of the loss to the consumer, because the consumer has choices 

other than buying the same vehicle with a higher price; she could choose a different vehicle, or decide not 

to buy a new vehicle. The consumer would choose one of those options only if the alternative involves less 
706 

along to the consumer as an increase in price, the technology cost thus measures the 

welfare loss to the consumer. Increasing fuel economy would have to lead to other 

changes in the vehicles that consumers find undesirable for there to be additional losses 

not included in the technology costs. 

At this time EPA has no available methods to estimate potential additional effects 

on consumers not included in the technology cost estimates, e.g., due to changes in 

vehicles that consumers find undesirable, shifts in consumer demand for other attributes, 

and uncertainties about the long term reliability of new technologies. Comments on the 

rule generally supported EPA’s analysis of the technology costs and the assumption that 

other vehicle characteristics were not adversely affected. Any consumer welfare loss 

cannot be quantified at this time. For reasons stated above, EPA believes that any such 

loss is likely far smaller than the private gains, including fuel savings and reduced 

refueling time. 

Chapter 8.1 of the RIA discusses in more depth the research on the Energy 

Paradox and the state of the art of consumer vehicle choice modeling. 

2. Costs Associated with the Vehicle Program 

 In this section, EPA presents our estimate of the costs associated with the final 

vehicle program. The presentation here summarizes the costs associated with the new 

 loss than paying the higher price. Thus, the increase in price that the consumer faces would be the upper 

bound of loss of consumer welfare, unless there are other changes to the vehicle due to the fuel economy 

improvements that make the vehicle less desirable to consumers. 
707 

vehicle technology expected to be added to meet the new GHG standards, including 

hardware costs to comply with the 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 RIA, and Chapter 3 of the 

Joint TSD. For more detail on the outputs of the OMEGA model and the overall vehicle 

program costs summarized here, the reader is directed to Chapters 4 and 7 of the RIA. 

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. Some comments were received that addressed 

the technology costs that served as inputs to the OMEGA model as was mentioned in 

Section II.E. While those comments did not result in changes to the technology cost 

inputs, the technology cost estimates for a select group of technologies have changed 

since the NPRM thus changing the vehicle program costs presented here. These changes, 

as summarized in Section II.E and in Chapter 3 of the Joint TSD, were made in response 

to updated cost estimates, from the FEV teardown study, available to the agencies shortly 

after publication of the NPRM, not in response to comments. Those cost changes are 
708 

summarized in Section II.E and in Chapter 3 of the Joint TSD. EPA believes that we 

have been conservative in estimating the vehicle hardware costs associated with this rule. 

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 new 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 

early credit generation and advanced vehicle technology credits. 

a. Vehicle Compliance Costs Associated with the 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.452 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 rule relative to what the future vehicle fleet would be expected to 

 

452 “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. 
709 

look like absent this 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 program.453 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 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.454 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 will be incurred. Once the program has been fully implemented, some 

of the indirect costs will no longer be attributable to these standards and, as such, a lower 

ICM factor is applied to direct costs in years following full implementation. The ICM 

 

453 Note that the assumption made here is that the standards 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 

rule in the years prior to 2022 would be eliminated in 2022 and later. 

454 Need to add the recent reference for this study by RTI. Alex Rogozhin et al., Automobile Industry 

Regail 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). 
710 

factors used range from 1.07 to 1.39 in the long-term (2022 and later) depending on the 

complexity of the given technology.455 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 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. Note that, in general the comments received were supportive of our use 

of ICMs as opposed to the more traditional Retail Price Equivalent (RPE).456 However, 

we did receive some comment that we applied inappropriate ICM factors to some 

technologies. We have not changed our approach in response to those comments as 

explained in greater detail in our Response to Comments document. 

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 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 

 

455 Gloria Helfand and Todd Sherwood, “Documentation of the Development of Indirect Cost Multipliers 

for Three Automotive Technologies,” Office of Transportation and Air Quality, U.S. EPA, August 2009 

(Docket EPA-HQ-OAR-2009-0472). 

456 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. 
711 

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 

Chapter 3 of the Joint TSD. 

The technology cost estimates discussed in Section III.D and detailed in Chapter 3 

of the Joint TSD are used to build up technology package cost estimates which are then 

used as inputs to the OMEGA model. EPA discusses our technology packages and 

package costs in Chapter 1 of the RIA. 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 rule. As 
712 

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 is applied 

because some indirect costs decrease or are no longer considered attributable to the 

program (e.g., warranty costs go down). 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 Chapter 6 of the RIA. 

Table III.H.2-1 Industry Average Vehicle Compliance Costs Associated with the Tailpipe 

CO2 Standards 

($/vehicle in 2007 dollars) 

Calendar Year $/car $/truck 

$/vehicle 

(car & truck 

combined) 

2012 $342 $314 $331 

2013 $507 $496 $503 

2014 $631 $652 $639 

2015 $749 $820 $774 

2016 $869 $1,098 $948 

2017 $869 $1,098 $947 

2018 $869 $1,098 $945 

2019 $869 $1,098 $943 

2020 $869 $1,098 $940 

2021 $869 $1,098 $939 

2022 $817 $1,032 $882 

2030 $817 $1,032 $878 

2040 $817 $1,032 $875 

2050 $817 $1,032 $875 
713 

b. Annual Costs of the Vehicle Program 

 The costs presented here represent the incremental costs for newly added 

technology to comply with the final 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 Vehicle Program 

($Millions of 2007 dollars)

Year Quantified 

Annual Costs

2012 $4,900

2013 $8,000

2014 $10,300

2015 $12,700

2016 $15,600

2020 $15,600

2030 $15,800

2040 $17,400

2050 $19,000

NPV, 3% $345,900

NPV, 7% $191,900

3. Cost per Ton of Emissions Reduced

EPA has calculated the cost per ton of GHG (CO2-equivalent, or CO2e) reductions 

associated with this rule 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 
714 

found in the RIA and 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. EPA has also calculated 

the cost per metric ton of GHG emission reductions including the savings associated with 

reduced fuel consumption (presented below in Section III.H.4). This latter calculation 

does not include the other benefits associated with this rule such as those associated with 

criteria pollutant reductions or energy security benefits as discussed later in sections 

III.H.4 through III.H.9. By including the fuel savings in the cost estimates, the cost per 

ton is less than $0, since the estimated value of fuel savings outweighs the vehicle 

program costs. With regard to the CH4 and N2O standards, since these standards will be 

emissions caps designed to ensure that manufacturers do not backslide from current 

levels, EPA has not estimated costs associated with the standards (since the standards will 

not require any change from current practices nor does EPA estimate they will result in 

emissions reductions). 

The results for CO2e costs per ton under the rule 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 

Vehicle 

Program 

Costa 

($Millions) 

Fuel Savings b

($Millions) 

CO2e Reduced 

(Million Metric 

Tons) 

Cost per Ton 

of the Vehicle 

Program Onlya

Cost per Ton 

of the Vehicle 

Program with 

Fuel Savings b

2020 $15,600 -$35,700 160 $100 -$130 

2030 $15,800 -$79,800 310 $50 -$210 

2040 $17,400 -$119,300 400 $40 -$250 

2050 $19,000 -$171,200 510 $40 -$300 

a

 Costs here include vehicle compliance costs and do not include any fuel savings. 

b Fuel savings calculated using pre-tax fuel prices. 
715 

4. Reduction in Fuel Consumption and its Impacts

a. What Are the Projected Changes in Fuel Consumption? 

The new CO2 standards will result in significant improvements in the fuel 

efficiency of affected vehicles. Drivers of those vehicles will see corresponding savings 

associated with reduced fuel expenditures. EPA has estimated the impacts on fuel 

consumption for both the tailpipe CO2 standards and the A/C credit program. To do this, 

fuel consumption is calculated using both current CO2 emission levels and the new CO2

standards. The difference between these estimates represents the net savings from the 

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. EPA also notes that consumers 

who drive more than our average estimates for vehicle miles traveled (VMT) will 

experience more fuel savings; consumers who drive less than our average VMT estimates 

will experience less fuel savings. 

The expected impacts on fuel consumption are shown in Table III.H.4-1. The 

gallons shown in the tables reflect impacts from the new CO2 standards, including the 

A/C credit program, and include increased consumption resulting from the rebound 

effect. 
716 

Table III.H.4-1 Fuel Consumption Impacts of the Vehicle Standards and A/C Credit 

Programs 

 (Million gallons) 

Year Total 

2012 550

2013 1,320

2014 2,330

2015 3,750

2016 5,670

2020 12,590

2030 24,730

2040 32,620

2050 41,520

 

b. What are the Monetized Fuel Savings? 

 Using the fuel consumption estimates presented in Section III.H.4.a, EPA can 

calculate the monetized fuel savings associated with the 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 2010 Early 

Release.457 AEO is the government consensus estimate used by NHTSA and many other 

government agencies to estimate the projected price of fuel. EPA has done this 

calculation using both the pre-tax and post-tax fuel prices. Since the post-tax fuel prices 

are what consumers pay, the fuel savings calculated using these prices represent the 

savings consumers will see. The pre-tax fuel savings are those savings that society will 

see. These results are shown in Table III.H.4-2. Note that in Section III.H.10, EPA 

 

457 Energy Information Administration. Annual Energy Outlook 2010 Early Release. Supplemental 

Transportation Tables. December 2009. http://www.eia.doe.gov/oiaf/aeo/supplement/sup_tran.xls 
717 

presents the benefit-cost of the rule and, for that reason, presents only the pre-tax fuel 

savings. 

Table III.H.4-2 Estimated Monetized Fuel Savings 

(Millions of 2007 dollars) 

Calendar Year

Fuel 

Savings 

(pre-tax) 

Fuel 

Savings 

(post-tax) 

2012 $1,137 $1,400 

2013 $2,923 $3,800 

2014 $5,708 $6,900 

2015 $9,612 $11,300 

2016 $14,816 $17,400 

2020 $35,739 $41,100 

2030 $79,838 $89,100 

2040 $119,324 $131,700 

2050 $171,248 $186,300 

NPV, 3% $1,545,638 $1,723,900 

NPV, 7% $672,629 $755,700 

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 rule. As discussed further 

in Section III.H.1, it is a conundrum from an economic perspective that these large fuel 

savings have not been provided by automakers and purchased by consumers. A number 

of behavioral and market phenomena may lead to this disparity between the fuel 

economy that makes financial sense to consumers and the fuel economy they purchase. 

Regardless how consumers make their decisions on how much fuel economy to purchase, 

EPA expects that, in the aggregate, they will gain these fuel savings, which will provide 

actual money in consumers’ pockets. We received considerable comment on this issue, 

as discussed in Section III.H.1, and the issue is discussed further in Chapter 8 of the RIA. 
718 

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 rule, 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,458 and falls within the range of the larger body of historical work on the rebound 

effect.459 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.

460 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.461 The rebound effect is 

 

458 Small, 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-2009-0472-0018). 

459 Sorrell, 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-2009-0472-0012). 

460 Report 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-OAR2009-0472-0002). 

461 Revised Report by David Greene of Oak Ridge National Laboratory to EPA, “Rebound 2007: Analysis 

of National Light-Duty Vehicle Travel Statistics,” February 9, 2010 (Docket EPA-HQ-OAR-2009-0472-

0220). This paper has been accepted for an upcoming special issue of Energy Policy, although the 

publication date has not yet been determined. 
719 

also further discussed in Chapter 4 of the Joint TSD which reviews the relevant literature 

and discusses in more depth the reasoning for the rebound values used here. 

We received several comments on the proposed value of the rebound effect. The 

California Air Resources Board (CARB) and the New Jersey Department of 

Environmental Protection supported the use of a 10% rebound effect, although CARB 

encouraged EPA to consider lowering the value to 5%. Other commenters, such as the 

Missouri Department of Natural Resources, the International Council on Clean 

Transportation (ICCT), the Center for Biological Diversity, and the Consumer Federation 

of America, recommended using a lower rebound effect. ICCT specifically 

recommended that the dynamic rebound effect methodology utilized by Small & Van 

Dender was the most appropriate methodology, which would support a rebound effect of 

5% or lower. In contrast, the National Association of Dealerships asserted that the 

rebound effect should be higher (e.g., in the lower range of the 15-30% historical range), 

but did not submit any data to support this claim. 

While we appreciate the input provided by commenters, we did not receive any 

new data or analysis to justify revising our initial estimates of the rebound effect at this 

time. Based on the positive comments we received, we will continue using the dynamic 

rebound effect to help inform our estimate of the rebound effect in future rulemakings. 

However, given the relatively new nature of this analytical approach, we believe the 

larger body of historical studies should also be considered when determining the value of 

the rebound effect. As we described in the Technical Support Document, the more recent 
720 

literature suggests that the rebound effect is 10% or lower, whereas the larger body of 

historical studies suggests a higher rebound effect. Therefore, we will continue to use the 

10% rebound effect for this rulemaking. However, we plan to update our estimate of the 

rebound effect in future rulemakings as new data becomes available. 

We also invited comments on whether we should also explore other alternatives 

for estimating the rebound effect, such as whether it would be appropriate to use the price 

elasticity of demand for gasoline to guide the choice of a value for the rebound effect. 

We received only one comment on this issue from ICCT. In their comments, ICCT 

stated that the short run elasticity can provide a useful point of comparison for rebound 

effect estimates, but it should not be used to guide the choice of a value for the rebound 

effect. Therefore, we have not incorporated this metric into our analysis. 

5. Impacts on U.S. Vehicle Sales and Payback Period

a. Vehicle Sales Impacts 

 

 This analysis compares two effects. On the one hand, the vehicles will become 

more expensive, which would, by itself, discourage sales. On the other hand, the vehicles 

will have improved fuel economy and thus lower operating costs. If consumers do not 

accurately compare the value of fuel savings with the increased cost of fuel economy 

technology in their vehicle purchase decisions, as discussed in Preamble III.H.1, they will 

continue to behave in this way after this rule. If auto makers have accurately gauged how 
721 

consumers consider fuel economy when purchasing vehicles and have provided the 

amount that consumers want in vehicles, then consumers should not be expected to want 

the more fuel-efficient vehicles. After all, auto makers would have provided as much 

fuel economy as consumers want. If, on the other hand, auto makers underestimated 

consumer demand for fuel economy, as suggested by some commenters and discussed in 

Preamble Section III.H.1 and RIA Section 8.1.2, then this rule may lead to production of 

more desirable vehicles, and vehicle sales may increase. This assumption implies that 

auto makers have missed some profit-making opportunities. 

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 -

1.0.462 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 GHG standards and 

assumes 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 

 

462 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-2009-0472-0015); 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-2009-0472-0016); 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-2009-0472-0017). 
722 

as the automotive sector.463 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 

light-duty vehicle loan.464 The one commenter on this analysis stated that use of the fiveyear payback period was reasonable. 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 

 

463 See, 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-2009-0472-0007). 

464 As discussed further in Section III.H.1, there 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, and possibly due to sensitivity of results to modeling and 

data used. A survey by Greene (Greene, David L. “How Consumers Value Fuel Economy: A Literature 

Review.” EPA Report EPA-420-R-10-008, March 2010 (Docket EPA-HQ-OAR-2009-0472-11575)) finds 

that estimates in the literature of the value that consumers place on fuel economy when buying a vehicle 

range from negative – consumers would pay to reduce fuel economy – to more than 1000 times the value of 

fuel savings. 
723 

increase. EPA received no comments on these adjustments. The only change to these 

adjustments between the NPRM and this discussion is an updating of the interest rate on 

auto loans. EPA estimates that, with corrections for these factors, the effect on consumer 

expenditures of the cost of the new technology should be 0.914 times the cost of the 

technology at a 3% discount rate, and 0.876 times the cost of the technology at a 7% 

discount rate. The details of this calculation are in the RIA, 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. The values have 

changed slightly from the NPRM, due to changes in fuel prices and fuel savings, 

technology costs, and baseline vehicle sales projections, in addition to the adjustment in 

financing costs. 

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 fuel savings associated with this rule are expected to exceed the technology costs, the 

effective prices of vehicles (the adjusted increase in technology cost less the fuel savings 
724 

over five years) to consumers will fall, and consumers will buy more new vehicles. As a 

result, the lower net cost of the vehicles is projected to lead to an increase in sales for 

both cars and trucks. 

As discussed above, this result depends on the assumption that more fuel efficient 

vehicles that yield net consumer benefits over five years would not otherwise be offered 

on the vehicle market due to market failures on the part of vehicle manufacturers. If 

vehicles that achieve the fuel economy standards prescribed by today’s rulemaking would 

already be available, but consumers chose not to purchase them, then this rulemaking 

would not result in an increase in vehicle sales, because it does not alter how consumers 

make decisions about which vehicles to purchase. In addition, this analysis has not 

accounted for a number of factors that might affect consumer vehicle purchases, such as 

changing market conditions, changes in vehicle characteristics that might accompany 

improvements in fuel economy, or consumers considering a different “payback period” 

for their fuel economy purchases. If consumers use a shorter payback period, the sales 

impacts will be less positive, possibly negative; if consumers use a higher payback 

period, the impacts will be more positive. Also, this is an aggregate analysis; some 

individual consumers (those who drive less than estimated here) will face lower net 

benefits, while others (who drive more than estimated here) will have even greater 

savings. These complications add considerable uncertainty to our vehicle sales impact 

analysis. 
725 

Table III.H.5-1 Vehicle Sales Impacts Using a 3% Discount Rate 

 Change in Car 

Sales 

% Change Change in 

Truck Sales 

% Change 

2012 67,500 0.7 62,100 1.1 

2013 76,000 0.8 190,200 3.2 

2014 114,000 1.1 254,900 4.3 

2015 222,200 2.1 352,800 6.1 

2016 360,500 3.3 488,000 8.6 

Table III.H.5-1 shows the impacts on new vehicle sales using a 3% discount rate. 

The fuel savings over five years 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 

% Change Change in 

Truck Sales 

% Change 

2012 62,800 0.7 58,300 1 

2013 70,500 0.7 92,300 1.5 

2014 106,100 1 127,700 2.1 

2015 208,400 2 194,200 3.3 

2016 339,400 3.1 280,000 4.9 

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 
726 

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 (i.e., 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 this rule on fuel use and emissions. 

Because the agencies are uncertain about how the value of projected fuel savings 

from this rule 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. 
727 

A detailed discussion of the vehicle sales impacts methodology is provided in the 

Chapter 8 of EPA’s RIA. 

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 new 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 $948 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.H.10) for details 

on fuel savings). But how many months or years would pass before the fuel savings 

exceed the upfront cost of $948? 

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 presented in Chapter 4 of the 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 
728 

case only). Not included here are the likely A/C-related maintenance savings as 

discussed in Chapter 2 of EPA’s 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 think about most while in the 

showroom considering a new car purchase. Car/truck fleet weighting is handled as 

described in Chapter 1 of the Joint TSD. As can be seen in the table, it will take under 3 

years (2 years and 7 months at a 3% discount rate, 2 years and 9 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 RIA. 

Table III.H.5-3 Payback Period on a 2016 MY New Vehicle Purchase via Cash (2007 

dollars) 

YEAR OF 

OWNERSHIP 

INCREASED 

VEHICLE COSTa 

ANNUAL FUEL 

SAVINGSb

CUMULATIVE 

DISCOUNTED 

FUEL SAVINGS 

AT 3% 

CUMULATIVE 

DISCOUNTED 

FUEL SAVINGS 

AT 7% 

1 $1,018 $424 $418 $410 

2 $420 $820 $790 

3 $414 $1,204 $1,139 

4 $402 $1,567 $1,457 a

 Increased vehicle cost due to the rule is $948; 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 RIA. 

b Calculated using AEO 2010 Early Release 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 February 9, 

2010, the national average interest rate for a 5 year new car loan was 6.54 percent. If the 

increased vehicle cost is spread out over 5 years at 6.54 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 $177 in 
729 

discounted net savings (3% discount rate) 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 $15 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 COSTa ANNUAL FUEL 

SAVINGSb

ANNUAL 

DISCOUNTED 

NET SAVINGS AT 

3% 

ANNUAL 

DISCOUNTED 

NET SAVINGS AT 

7% 

1 $245 $424 $177 $173 

2 $245 $420 $167 $158 

3 $245 $414 $157 $142 

4 $245 $402 $142 $124 

5 $245 $391 $127 $107 

6 $0 $374 $318 $258 a This 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 6.54 percent. 

b

 Calculated using AEO 2010 Early Release 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 $3,100 at a 3% discount rate, or $2,300 at a 7% discount rate. 
730 

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 $1,018 $4,306 $3,303 

Credit a $1,140 $4,306 $3,166 

7% discount rate 

Cash $1,018 $3,381 $2,396 

Credit a $1,040 $3,381 $2,340 a

 Assumes a 5 year loan at 6.54 percent. 

b Fuel savings here were calculated using AEO 2010 Early Release 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. Social Cost of Carbon 

In today’s final rule, EPA and NHTSA assigned a dollar value to reductions in 

CO2 emissions using the marginal dollar value of climate-related damages resulting from 

carbon emissions, also referred to as “social cost of carbon” (SCC). The SCC estimates 

used in today’s rule were recently developed by an interagency process, in which EPA 

and NHTSA participated. As part of the interagency group, EPA and NHTSA have 

critically evaluated the new SCC estimates and endorse them for use in these regulatory 
731 

analyses, for the reasons presented below. The SCC TSD, Social Cost of Carbon for 

Regulatory Impact Analysis Under Executive Order 12866, presents a more detailed 

description of the methodology used to generate the new estimates, the underlying 

assumptions, and the limitations of the new SCC estimates. 

Under Executive Order 12866, agencies are required, to the extent permitted by 

law, “to assess both the costs and the benefits of the intended regulation and, recognizing 

that some costs and benefits are difficult to quantify, propose or adopt a regulation only 

upon a reasoned determination that the benefits of the intended regulation justify its 

costs.” The purpose of the SCC estimates presented here is to incorporate the social 

benefits of reducing carbon dioxide (CO2) emissions from light-duty vehicles into a costbenefit analysis of this final rule, which has a small, or “marginal,” impact on cumulative 

global emissions. The estimates are presented with an acknowledgement of the many 

uncertainties involved and with a clear understanding that they should be updated over 

time to reflect increasing knowledge of the science and economics of climate impacts. 

The interagency process that developed these SCC estimates involved a group of 

technical experts from numerous agencies, which met on a regular basis to consider 

public comments, explore the technical literature in relevant fields, and discuss key 

model inputs and assumptions. The main objective of this process was to develop a range 

of SCC values using a defensible set of input assumptions grounded in the existing 

scientific and economic literatures. In this way, key uncertainties and model differences 
732 

transparently and consistently inform the range of SCC estimates used in this rulemaking 

process. 

The interagency group selected four SCC values for use in regulatory analyses, 

which EPA and NHTSA have applied to this final rule. Three values are based on the 

average SCC from three integrated assessment models, at discount rates of 2.5, 3, and 5 

percent. The fourth value, which represents the 95th percentile SCC estimate across all 

three models at a 3 percent discount rate, is included to represent higher-than-expected 

impacts from temperature change further out in the tails of the SCC distribution. 

Table III.H.6-1 Social Cost of CO2, 2010 – 2050a

 (in 2007 dollars)

Discount Rate 5% 3% 2.5% 3% 

Year Avg Avg Avg 95th 

2010 5 21 35 65 

2015 6 24 38 73 

2020 7 26 42 81 

2025 8 30 46 90 

2030 10 33 50 100 

2035 11 36 54 110 

2040 13 39 58 119 

2045 14 42 62 128 

2050 16 45 65 136 a

 The SCC estimates presented above have been rounded to nearest dollar 

for consistency with the benefits analysis. The SCC TSD presents 

estimates rounded to the nearest tenth of a cent. 

i. Monetizing Carbon Dioxide Emissions 

The “social cost of carbon” (SCC) is an estimate of the monetized damages 

associated with an incremental increase in carbon emissions in a given year. It is 
733 

intended to include (but is not limited to) changes in net agricultural productivity, human 

health, property damages from increased flood risk, and the value of ecosystem services. 

We report estimates of the social cost of carbon in dollars per metric ton of carbon 

dioxide throughout this document. 

When attempting to assess the incremental economic impacts of carbon dioxide 

emissions, the analyst faces a number of serious challenges. A 2009 report from the 

National Academies of Science points out that any assessment will suffer from 

uncertainty, speculation, and lack of information about (1) future emissions of 

greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) 

the impact of changes in climate on the physical and biological environment, and (4) the 

translation of these environmental impacts into economic damages.465 As a result, any 

effort to quantify and monetize the harms associated with climate change will raise 

serious questions of science, economics, and ethics and should be viewed as provisional. 

Despite the serious limits of both quantification and monetization, SCC estimates 

can be useful in estimating the social benefits of reducing carbon dioxide emissions. 

Under Executive Order 12866, agencies are required, to the extent permitted by law, “to 

assess both the costs and the benefits of the intended regulation and, recognizing that 

some costs and benefits are difficult to quantify, propose or adopt a regulation only upon 

a reasoned determination that the benefits of the intended regulation justify its costs.” 

EPA and NHTSA have used the SCC estimates to incorporate social benefits from 

 

465National Research Council (2009). Hidden Costs of Energy: Unpriced Consequences of Energy 

Production and Use. National Academies Press. 
734 

reducing carbon dioxide emissions from light-duty vehicles into a cost-benefit analysis of 

this final rule, which has a small, or “marginal,” impacts on cumulative global emissions. 

Most federal regulatory actions can be expected to have marginal impacts on global 

emissions. 

For policies that have marginal impacts on global emissions, the benefits from 

reduced (or costs from increased) emissions in any future year can be estimated by 

multiplying the change in emissions in that year by the SCC value appropriate for that 

year. The net present value of the benefits can then be calculated by multiplying each of 

these future benefits by an appropriate discount factor and summing across all affected 

years. This approach assumes that the marginal damages from increased emissions are 

constant for small departures from the baseline emissions path, an approximation that is 

reasonable for policies that have effects on emissions that are small relative to cumulative 

global carbon dioxide emissions. For policies that have a large (non-marginal) impact on 

global cumulative emissions, there is a separate question of whether the SCC is an 

appropriate tool for calculating the benefits of reduced emissions; we do not attempt to 

answer that question here. 

As noted above, the interagency group convened on a regular basis to consider 

public comments, explore the technical literature in relevant fields, and discuss key inputs 

and assumptions in order to generate SCC estimates. In addition to EPA and NHTSA, 

agencies that actively participated in the interagency process included the Departments of 

Agriculture, Commerce, Energy, and Treasury. This process was convened by the 
735 

Council of Economic Advisers and the Office of Management and Budget, with active 

participation and regular input from the Council on Environmental Quality, National 

Economic Council, Office of Energy and Climate Change, and Office of Science and 

Technology Policy. The main objective of this process was to develop a range of SCC 

values using a defensible set of input assumptions that are grounded in the existing 

literature. In this way, key uncertainties and model differences can more transparently 

and consistently inform the range of SCC estimates used in the rulemaking process. 

The interagency group selected four global SCC estimates for use in regulatory 

analyses. For 2010, these estimates are $5, $21, $35, and $65 (in 2007 dollars). The first 

three estimates are based on the average SCC across models and socio-economic and 

emissions scenarios at the 5, 3, and 2.5 percent discount rates, respectively. The fourth 

value is included to represent the higher-than-expected impacts from temperature change 

further out in the tails of the SCC distribution. For this purpose, we use the SCC value for 

the 95th percentile at a 3 percent discount rate. The central value is the average SCC 

across models at the 3 percent discount rate. For purposes of capturing the uncertainties 

involved in regulatory impact analysis, we emphasize the importance and value of 

considering the full range. These SCC estimates also grow over time. For instance, the 

central value increases to $24 per ton of CO2 in 2015 and $26 per ton of CO2 in 2020. 

See the SCC TSD for the full range of annual SCC estimates from 2010 to 2050. 

These new SCC estimates represent global measures and the center of our current 

attention because of the distinctive nature of the climate change problem. The climate 
736 

change problem is highly unusual in at least two respects. First, it involves a global 

externality: emissions of most greenhouse gases contribute to damages around the world 

even when they are emitted in the United States. Consequently, to address the global 

nature of the problem, the SCC must incorporate the full (global) damages caused by 

GHG emissions. Second, climate change presents a problem that the United States alone 

cannot solve. Even if the United States were to reduce its greenhouse gas emissions to 

zero, that step would be far from enough to avoid substantial climate change. Other 

countries would also need to take action to reduce emissions if significant changes in the 

global climate are to be avoided. 

It is important to emphasize that the interagency process is committed to updating 

these estimates as the science and economic understanding of climate change and its 

impacts on society improves over time. Specifically, the interagency group has set a 

preliminary goal of revisiting the SCC values within two years or at such time as 

substantially updated models become available, and to continue to support research in 

this area. In the meantime, the interagency group will continue to explore the issues 

raised in the SCC TSD and consider public comments as part of the ongoing interagency 

process. 

ii. Social Cost of Carbon Values Used in Past Regulatory Analyses 

To date, economic analyses for Federal regulations have used a wide range of 

values to estimate the benefits associated with reducing carbon dioxide emissions. In the 
737 

final model year 2011 CAFE rule, the Department of Transportation (DOT) used both a 

“domestic” SCC value of $2 per ton of CO2 and a “global” SCC value of $33 per ton of 

CO2 for 2007 emission reductions (in 2007 dollars), increasing both values at 2.4 percent 

per year. It also included a sensitivity analysis at $80 per ton of CO2. A domestic SCC 

value is meant to reflect the value of damages in the United States resulting from a unit 

change in carbon dioxide emissions, while a global SCC value is meant to reflect the 

value of damages worldwide. 

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton 

CO2 (in 2006 dollars) for 2011 emission reductions (with a range of $0-$14 for sensitivity 

analysis), also increasing at 2.4 percent per year. A regulation finalized by DOE in 

October of 2008 used a domestic SCC range of $0 to $20 per ton CO2 for 2007 emission 

reductions (in 2007 dollars). In addition, EPA’s 2008 Advance Notice of Proposed 

Rulemaking for Greenhouse Gases identified what it described as “very preliminary” 

SCC estimates subject to revision. EPA’s global mean values were $68 and $40 per ton 

CO2 for discount rates of approximately 2 percent and 3 percent, respectively (in 2006 

dollars for 2007 emissions). 

In 2009, an interagency process was initiated to offer a preliminary assessment of 

how best to quantify the benefits from reducing carbon dioxide emissions. To ensure 

consistency in how benefits are evaluated across agencies, the Administration sought to 

develop a transparent and defensible method, specifically designed for the rulemaking 

process, to quantify avoided climate change damages from reduced CO2 emissions. The 
738 

interagency group did not undertake any original analysis. Instead, it combined SCC 

estimates from the existing literature to use as interim values until a more comprehensive 

analysis could be conducted. 

The outcome of the preliminary assessment by the interagency group was a set of 

five interim values: global SCC estimates for 2007 (in 2006 dollars) of $55, $33, $19, 

$10, and $5 per ton of CO2. The $33 and $5 values represented model-weighted means 

of the published estimates produced from the most recently available versions of three 

integrated assessment models (DICE, PAGE, and FUND) at approximately 3 and 5 

percent discount rates.466 The $55 and $10 values were derived by adjusting the 

published estimates for uncertainty in the discount rate (using factors developed by 

Newell and Pizer (2003)) at 3 and 5 percent discount rates, respectively.467 The $19 value 

was chosen as a central value between the $5 and $33 per ton estimates. All of these 

values were assumed to increase at 3 percent annually to represent growth in incremental 

damages over time as the magnitude of climate change increases. 

These interim values represent the first sustained interagency effort within the 

U.S. government to develop an SCC for use in regulatory analysis. The results of this 

preliminary effort were presented in several proposed and final rules and were offered for 

 

466 The DICE (Dynamic Integrated Climate and Economy) model by William Nordhaus evolved from a 

series of energy models and was first presented in 1990 (Nordhaus and Boyer 2000, Nordhaus 2008). The 

PAGE (Policy Analysis of the Greenhouse Effect) model was developed by Chris Hope in 1991 for use by 

European decision-makers in assessing the marginal impact of carbon emissions (Hope 2006, Hope 2008). 

The FUND (Climate Framework for Uncertainty, Negotiation, and Distribution) model, developed by 

Richard Tol in the early 1990s, originally to study international capital transfers in climate policy. is now 

widely used to study climate impacts (e.g., Tol 2002a, Tol 2002b, Anthoff et al. 2009, Tol 2009). 

467 Newell, R., and W. Pizer. 2003. Discounting the distant future: how much do uncertain rates increase 

valuations? Journal of Environmental Economics and Management 46: 52-71. 
739 

public comment in connection with proposed rules. In particular, EPA and NHTSA used 

the interim SCC estimates in the joint proposal leading to this final rule. 

iii. Approach and Key Assumptions 

Since the release of the interim values, interagency group has reconvened on a 

regular basis to generate improved SCC estimates, which EPA and NHTSA used in this 

final rule. Specifically, the group has considered public comments and further explored 

the technical literature in relevant fields. The general approach to estimating SCC values 

was to run the three integrated assessment models (FUND, DICE, and PAGE) using the 

following inputs agreed upon by the interagency group: 

• A Roe and Baker distribution for the climate sensitivity parameter 

bounded between 0 and 10 with a median of 3 °C and a cumulative 

probability between 2 and 4.5 °C of two-thirds.468

• Five sets of GDP, population and carbon emissions trajectories based 

on the recent Stanford Energy Modeling Forum, EMF-22. 

• Constant annual discount rates of 2.5, 3, and 5 percent. 

The SCC TSD presents a summary of the results and details the modeling exercise and 

the choices and assumptions that underlie the resulting estimates of the SCC. The 

complete model results are available in the docket for this final rule [EPA-HQ-OAR2009-0472]. 

 

468 Roe, G., and M. Baker. 2007. “Why is climate sensitivity so unpredictable?” Science 318:629-632 
740 

It is important to recognize that a number of key uncertainties remain, and that 

current SCC estimates should be treated as provisional and revisable since they will 

evolve with improved scientific and economic understanding. The interagency group also 

recognizes that the existing models are imperfect and incomplete. The National 

Academy of Science (2009) points out that there is tension between the goal of producing 

quantified estimates of the economic damages from an incremental ton of carbon and the 

limits of existing efforts to model these effects. The SCC TSD highlights a number of 

concerns and problems that should be addressed by the research community, including 

research programs housed in many of the agencies participating in the interagency 

process to estimate the SCC. 

The U.S. Government will periodically review and reconsider estimates of the 

SCC used for cost-benefit analyses to reflect increasing knowledge of the science and 

economics of climate impacts, as well as improvements in modeling. In this context, 

statements recognizing the limitations of the analysis and calling for further research take 

on exceptional significance. The interagency group offers the new SCC values with all 

due humility about the uncertainties embedded in them and with a sincere promise to 

continue work to improve them. 
741 

iv. Use of New SCC Estimates to Calculate GHG Benefits for this Final Rule 

The table below summarizes the total GHG benefits for the lifetime of the rule, 

which are calculated by using the four new SCC values. Specifically, EPA calculated the 

total monetized benefits in each year by multiplying the marginal benefits estimates per 

metric ton of CO2 (the SCC) by the reductions in CO2 for that year. 

Table III.H.6-2 Monetized CO2 Benefits of Vehicle Program, CO2 Emissionsa,b (Million 

2007$) 

BENEFITS 

YEAR 

CO2 EMISSIONS 

REDUCTION 

(Million Metric 

Tons) Avg SCC at 5% 

($5-$16)c Avg SCC at 3% 

($21-$45)c Avg SCC at 2.5% ($35-$65)c

95th percentile 

SCC at 3% 

($65-$136)c

2020 139 $900 $3,700 $5,800 $11,000 

2030 273 $2,700 $8,900 $14,000 $27,000 

2040 360 $4,600 $14,000 $21,000 $43,000 

2050 459 $7,200 $21,000 $30,000 $62,000 a Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. 

b

 Numbers may not compute exactly from Tables III.H.6-1 and III.H.6-2 due to rounding. 

c As noted above, SCC increases over time; tables lists ranges for years 2010 through 2050. See Table 

III.H.6-1 for the SCC estimates corresponding to the years in this table. 

b. Summary of the Response to Comments 

EPA and NHTSA received extensive public comments about the scientific, 

economic, and ethical issues involved in estimating the SCC, including the proposed 
742 

rule’s estimates of the value of emissions reductions from new cars and trucks.469 In 

particular, the comments addressed the methodology used to derive the interim SCC 

estimates, limitations of integrated assessment models, discount rate selection, treatment 

of uncertainty and catastrophic impacts, use of global and domestic SCC, and the 

presentation and use of SCC estimates. The rest of this preamble section briefly 

summarizes EPA’s response to the comments; the Response to Comments document 

provides the complete responses to all comments received. 

 

EPA received extensive comments about the methodology and discount rates used 

to derive the interim SCC estimates. While one commenter from the auto industry noted 

that the interim methodology was acceptable given available data, many commenters 

(representing academic and environmental organizations) expressed concerns that the 

filters were too narrow, stated that model-weighting averaging was inappropriate, and 

recommended that EPA use lower discount rates. These commenters also discussed 

alternative approaches to select discount rates and generally recommended that EPA use 

lower rates to give more weight to climate damages experienced by future generations. 

For the final rule, EPA conducted new analyses of SCC. EPA did not continue 

with its interim approach to derive estimates from the existing literature and instead 

conducted new model runs that produced a vast amount of SCC data at three separate 

certainty-equivalent discount rates (2.5, 3, and 5 percent). As discussed further in the 

 

469 EPA estimated GHG benefits in the proposed rule using a set of interim SCC values developed by an 

interagency group, in which EPA and NHTSA participated. As discussed in the SCC TSD, the interagency 

group selected the interim estimates from the existing literature and agreed to use those interim estimates in 

regulatory analyses until it could develop a more comprehensive characterization of the SCC. 
743 

SCC TSD, this modeling exercise resulted in a fuller distribution of SCC estimates and 

better accounted for uncertainty through a Monte Carlo analysis. Comments on specific 

issues are addressed in the Response to Comments document. 

EPA received comments on the limitations of the integrated assessment models 

concluding that the selection of models and reliance on the model authors’ datasets 

contributed to the downward bias of the interim SCC estimates. In this final rule, EPA 

relied on the default values in each model for the remaining parameter; research gaps and 

practical constraints required EPA to limit its modification of the models to 

socioeconomic and emissions scenarios, climate sensitivity, and discount rate. While 

EPA recognizes that the models’ translations of physical impacts to economic values are 

incomplete, approximate, and highly uncertain, it regards them as the best currently 

available representations. EPA also considered, for each model, the treatment of 

uncertainty, catastrophic impacts, and omitted impacts, and as discussed in the SCC TSD 

and the Response to Comments document, used best available information and 

techniques to quantify such impacts as feasible and supplemented the SCC with 

qualitative assessments. Comments on specific issues are addressed in the Response to 

Comments document. 

Six commenters, representing academia and environmental organizations, 

supported the proposed rule’s preference for global SCC estimates while several industry 

groups stated that under the Clean Air Act, EPA is prohibited from using global 

estimates. EPA agrees that a global measure of GHG mitigation benefits is both 
744 

appropriate and lawful for EPA to consider in evaluating the benefits of GHG emissions 

standards adopted under section 202(a). Global climate change represents a problem that 

the United States cannot solve alone without global action, and for a variety of reasons 

there is a value to the U.S. from domestic emissions reductions that reduce the harm 

occurring globally. This is not exercise of regulatory authority over conduct occurring 

overseas, but instead is a reasonable exercise of discretion in how to place a monetary 

value on a reduction in domestic emissions. See the Response to Comments document 

for a complete discussion of this issue. 

Finally, EPA received various comments regarding the presentation of the SCC 

methodology and resulting estimates. EPA has responded to these concerns by 

presenting a detailed discussion about the methodology, including key model 

assumptions, as well as uncertainties and research gaps associated with the SCC 

estimates and the implications for the SCC estimates. Among these key assumptions and 

uncertainties are issues involving discount rates, climate sensitivity and socioeconomic 

scenario assumptions, incomplete treatment of potential catastrophic impacts, incomplete 

treatment of non-catastrophic impacts, uncertainty in extrapolation of damages to high 

temperatures, incomplete treatment of adaptation and technological change, and 

assumptions about risk aversion to high-impact outcomes (see SCC TSD). 

 
745 

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 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 

standards are also significant sources of mobile source air pollution such as direct PM, 

NOX, VOCs and air toxics. The standards will affect exhaust emissions of these 

pollutants from vehicles. They will also affect emissions from upstream sources related 

to changes in fuel consumption. Changes in ambient ozone, PM2.5, and air toxics that 

will result from the 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. 

As many commenters noted, it is important to quantify the health and 

environmental impacts associated with the final rule because a failure to adequately 

consider these ancillary co-pollutant impacts could lead to an incorrect assessment of 

their net costs and benefits. Moreover, co-pollutant 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. 
746 

This section is split into two sub-sections: the first presents the PM- and ozonerelated health and environmental impacts associated with final rule in calendar year (CY) 

2030; the second presents the PM-related benefits-per-ton values used to monetize the 

PM-related co-benefits associated with the model year (MY) analysis of the final rule.470 

a. Quantified and Monetized Non-GHG Human Health Benefits of the 2030 

Calendar Year (CY) Analysis 

This analysis reflects the impact of the final light-duty GHG rule in 2030 

compared to a future-year reference scenario without the rule in place. Overall, we 

estimate that the final rule will lead to a net decrease in PM2.5-related health impacts (see 

Section III.G.5 of this preamble for more information about the air quality modeling 

results). While the PM-related air quality impacts are relatively small, the decrease in 

population-weighted national average PM2.5 exposure results in a net decrease in adverse 

PM-related human health impacts (the decrease in national population-weighted annual 

average PM2.5 is 0.0036 μg/m3). 

The air quality modeling (discussed in Section III.G.5) projects very small 

increases in ozone concentrations in many areas, but these are driven by the ethanol 

production volumes mandated by the recently finalized RFS2 rule and are not due to the 

 

470 EPA typically analyzes rule impacts (emissions, air quality, costs and benefits) in the year in which they 

occur; for this analysis, we selected 2030 as a representative future year. We refer to this analysis as the 

“Calendar Year” (CY) analysis. EPA also conducted a separate analysis of the impacts over the model year 

lifetimes of the 2012 through 2016 model year vehicles. We refer to this analysis as the “Model Year” 

(MY) analysis. In contrast to the CY analysis, the MY lifetime analysis shows the lifetime impacts of the 

program on each of these MY fleets over the course of its lifetime. 
747 

standards finalized in this rule. While the ozone-related impacts are very small, the 

increase in population-weighted national average ozone exposure results in a small 

increase in ozone-related health impacts (population-weighted maximum 8-hour average 

ozone increases by 0.0104 ppb). 

We base our analysis of the final rule’s impact on human health in 2030 on peerreviewed studies of air quality and human health effects.471,472 These methods are 

described in more detail in the RIA that accompanies this action. Our benefits methods 

are also consistent with recent rulemaking analyses such as the proposed Portland 

Cement National Emissions Standards for Hazardous Air Pollutants (NESHAP) RIA,473

the final NO2 NAAQS, 474 and the final Category 3 Marine Engine rule.475 To model the 

ozone and PM air quality impacts of the final rule, we used the Community Multiscale 

Air Quality (CMAQ) model (see Section III.G.5). The modeled ambient air quality data 

serves as an input to the Environmental Benefits Mapping and Analysis Program 

 

471 U.S. Environmental Protection Agency. (2006). Final Regulatory Impact Analysis (RIA) for the 

National Ambient Air Quality Standards for Particulate Matter. Prepared by: Office of Air and Radiation. 

Retrieved March, 26, 2009 at http://www.epa.gov/ttn/ecas/ria.html. EPA-HQ-OAR-2009-0472-0240 472 U.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. Retrieved March, 

26, 2009 at http://www.epa.gov/ttn/ecas/ria.html. EPA-HQ-OAR-2009-0472-0238 473 U.S. Environmental Protection Agency (U.S. EPA). 2009. 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. Accessed March 15, 

2010. EPA-HQ-OAR-2009-0472-0241 

474 U.S. Environmental Protection Agency (U.S. EPA). 2010. Final 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/FinalNO2RIAfulldocument.pdf. 

Accessed March 15, 2010. EPA-HQ-OAR-2009-0472-0237 

475 U.S. Environmental Protection Agency. 2009. Regulatory Impact Analysis: Control of Emissions of 

Air Pollution from Category 3 Marine Diesel Engines. EPA-420-R-09-019, December 2009. Prepared by 

Office of Air and Radiation. http://www.epa.gov/otaq/regs/nonroad/marine/ci/420r09019.pdf. Accessed 

February 9, 2010. EPA-HQ-OAR-2009-0472-0283 
748 

(BenMAP).476 BenMAP is a computer program developed by the U.S. EPA that 

integrates a number of the modeling elements used in previous analyses (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. 

The range of total monetized ozone- and PM-related health impacts is presented 

in Table III.H.7-1. We present total benefits based on the PM- and ozone-related 

premature mortality function used. The benefits ranges therefore reflect the addition of 

each estimate of ozone-related premature mortality (each with its own row in Table 

III.H.7-1) to estimates of PM-related premature mortality. These estimates represent 

EPA’s preferred approach to characterizing a best estimate of benefits. As is the nature 

of Regulatory Impact Analyses (RIAs), the assumptions and methods used to estimate air 

quality benefits evolve to reflect the Agency’s most current interpretation of the scientific 

and economic literature. 

 

476 Information on BenMAP, including downloads of the software, can be found at 

http://www.epa.gov/ttn/ecas/ benmodels.html. 
749 

Table III.H.7-1 Estimated 2030 Monetized PM-and Ozone-Related Health Benefitsa

2030 Total Ozone and PM Benefits – PM Mortality Derived from American Cancer Society Analysis and 

Six-Cities Analysisa

Premature Ozone 

Mortality Function 

Reference Total Benefits 

(Millions, 2007$, 3% 

Discount Rate)b,c,d 

Total Benefits 

(Millions, 2007$, 7% 

Discount Rate) b,c,d

Bell et al., 2004 Total: $510 - $1,300 

PM: $550 - $1,300 

Ozone: -$40 

Total: $460 - $1,200 

PM: $500 - $1,200 

Ozone: -$40 

Huang et al., 2005 Total: $490 - $1,300 

PM: $550 - $1,300 

Ozone: -$64 

Total: $440 - $1,200 

PM: $500 - $1,200 

Ozone: -$64 

Multi-city analyses 

Schwartz, 2005 Total: $490 - $1,300 

PM: $550 - $1,300 

Ozone: -$60 

Total: $440 - $1,200 

PM: $500 - $1,200 

Ozone: -$60 

Bell et al., 2005 Total: $430 - $1,200 

PM: $550 - $1,300 

Ozone: -$120 

Total: $380 - $1,100 

PM: $500 - $1,200 

Ozone: -$120 

Ito et al., 2005 Total: $380 - $1,200 

PM: $550 - $1,300 

Ozone: -$170 

Total: $330 - $1,000 

PM: $500 - $1,200 

Ozone: -$170 

Meta-analyses 

Levy et al., 2005 Total: $380 - $1,200 

PM: $550 - $1,300 

Ozone: -$170 

Total: $330 - $1,000 

PM: $500 - $1,200 

Ozone: -$170 

Notes: 

a Total includes premature mortality-related and morbidity-related ozone and PM2.5 benefits. Range was 

developed by adding the estimate from the ozone premature mortality function to the estimate of PM2.5-

related premature mortality derived from either the ACS study (Pope et al., 2002)477 or the Six-Cities study 

(Laden et al., 2006).478 

b

 Note that total benefits presented here do not include a number of unquantified benefits categories. A 

detailed listing of unquantified health and welfare effects is provided in Table III.H.7-2. c

 Results reflect the use of both a 3 and 7 percent discount rate, as recommended by EPA’s Guidelines for 

Preparing Economic Analyses and OMB Circular A-4. Results are rounded to two significant digits for 

ease of presentation and computation. 

d

 Negatives indicate a disbenefit, or an increase in health effect incidence. 

The benefits in Table III.H.7-1 include all of the human health impacts we are 

able to quantify and monetize at this time. However, the full complement of human 

health and welfare effects associated with PM and ozone remain unquantified because of 

 

477 Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. (2002). 

“Lung Cancer, Cardiopulmonary Mortality, and Long-term Exposure to Fine Particulate Air Pollution.” 

Journal of the American Medical Association 287:1132-1141. EPA-HQ-OAR-2009-0472-0263 

478 Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. (2006). Reduction in Fine Particulate Air 

Pollution and Mortality. American Journal of Respiratory and Critical Care Medicine. 173: 667-672. 

EPA-HQ-OAR-2009-0472-1661 
750 

current limitations in methods or available data. We have not quantified a number of 

known or suspected health effects linked with ozone and PM for which appropriate health 

impact functions are not available or which do not provide easily interpretable outcomes 

(e.g., changes in heart rate variability). Additionally, we are unable to quantify a number 

of known welfare effects, including reduced acid and particulate deposition damage to 

cultural monuments and other materials, and environmental benefits due to reductions of 

impacts of eutrophication in coastal areas. These are listed in Table III.H.7-2. As a 

result, the health benefits quantified in this section are likely underestimates of the total 

benefits attributable to the final rule. 

Table III.H.7-2 Unquantified and Non-Monetized Potential Effects 

Pollutant/Effects Effects Not Included in Analysis - Changes in: 

Ozone Healtha Chronic respiratory damageb 

Premature aging of the lungsb 

Non-asthma respiratory emergency room visits 

Exposure to UVb (+/-)e

Ozone Welfare Yields for 

-commercial forests 

-some fruits and vegetables 

-non-commercial crops 

Damage to urban ornamental plants 

Impacts on recreational demand from damaged forest aesthetics 

Ecosystem functions 

Exposure to UVb (+/-)e 

PM Healthc Premature mortality - short term exposuresd

Low birth weight 

Pulmonary function 

Chronic respiratory diseases other than chronic bronchitis 

Non-asthma respiratory emergency room visits 

Exposure to UVb (+/-)e 

PM Welfare Residential and recreational visibility in non-Class I areas 

Soiling and materials damage 

Damage to ecosystem functions 

Exposure to UVb (+/-)e 
751 

Nitrogen and Sulfate 

Deposition Welfare 

Commercial forests due to acidic sulfate and nitrate deposition 

Commercial freshwater fishing due to acidic deposition 

Recreation in terrestrial ecosystems due to acidic deposition 

Existence values for currently healthy ecosystems 

Commercial fishing, agriculture, and forests due to nitrogen deposition 

Recreation in estuarine ecosystems due to nitrogen deposition 

Ecosystem functions 

Passive fertilization 

CO Health Behavioral effects 

HC/Toxics Healthf Cancer (benzene, 1,3-butadiene, formaldehyde, acetaldehyde) 

Anemia (benzene) 

Disruption of production of blood components (benzene) 

Reduction in the number of blood platelets (benzene) 

Excessive bone marrow formation (benzene) 

Depression of lymphocyte counts (benzene) 

Reproductive and developmental effects (1,3-butadiene) 

Irritation of eyes and mucus membranes (formaldehyde) 

Respiratory irritation (formaldehyde) 

Asthma attacks in asthmatics (formaldehyde) 

Asthma-like symptoms in non-asthmatics (formaldehyde) 

Irritation of the eyes, skin, and respiratory tract (acetaldehyde) 

Upper respiratory tract irritation and congestion (acrolein) 

HC/Toxics Welfare Direct toxic effects to animals 

Bioaccumulation in the food chain 

Damage to ecosystem function 

Odor 

Notes: 

a

 The public health impact of biological responses such as increased airway responsiveness to stimuli, 

inflammation in the lung, acute inflammation and respiratory cell damage, and increased susceptibility to 

respiratory infection are likely partially represented by our quantified endpoints. 

b

 The public health impact of effects such as chronic respiratory damage and premature aging of the lungs 

may be partially represented by quantified endpoints such as hospital admissions or premature mortality, 

but a number of other related health impacts, such as doctor visits and decreased athletic performance, 

remain unquantified. 

c

 In addition to primary economic endpoints, there are a number of biological responses that have been 

associated with PM health effects including morphological changes and altered host defense mechanisms. 

The public health impact of these biological responses may be partly represented by our quantified 

endpoints. 

d

 While some of the effects of short-term exposures are likely to be captured in the estimates, there may be 

premature mortality due to short-term exposure to PM not captured in the cohort studies used in this 

analysis. However, the PM mortality results derived from the expert elicitation do take into account 

premature mortality effects of short term exposures. e

 May result in benefits or disbenefits. 

f

 Many of the key hydrocarbons related to this rule are also hazardous air pollutants listed in the CAA. 

While there will be impacts associated with air toxic pollutant emission changes 

that result from the final rule, we do not attempt to monetize those impacts. This is 

primarily because currently available tools and methods to assess air toxics risk from 
752 

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.479 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, we did not have the methods and tools available for 

national-scale application in time for the analysis of the final rule.480 

EPA is also unaware of specific information identifying any effects on listed 

endangered species from the small fluctuations in pollutant concentrations associated 

with this rule (see Section III.G.5). Furthermore, our current modeling tools are not 

designed to trace fluctuations in ambient concentration levels to potential impacts on 

particular endangered species. 

 

479 Science 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. EPA-HQ-OAR-2009-0472-0244 480 In April, 2009, EPA hosted a workshop on estimating the benefits or 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 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. 
753 

i. Quantified Human Health Impacts 

Tables III.H.7-3 and III.H.7-4 present the annual PM2.5 and ozone health impacts 

in the 48 contiguous U.S. states associated with the final rule for 2030. For each 

endpoint presented in Tables III.H.7-3 and III.H.7-4, we provide both the mean estimate 

and the 90% confidence interval. 

Using EPA’s preferred estimates, based on the American Cancer Society (ACS) 

and Six-Cities studies and no threshold assumption in the model of mortality, we estimate 

that the final rule will result in between 60 and 150 cases of avoided PM2.5-related 

premature deaths annually in 2030. As a sensitivity analysis, when the range of expert 

opinion is used, we estimate between 22 and 200 fewer premature mortalities in 2030 

(see Table 7.7 in the RIA that accompanies this rule). For ozone-related premature 

mortality in 2030, we estimate a range of between 4 to 18 additional premature 

mortalities related to the ethanol production volumes mandated by the recently finalized 

RFS2 rule481 (and reflected in the air quality modeling for this rule), but are not due to the 

final standards themselves. 

 

481 EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact Analysis. EPA-420-R-10-

006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332. EPA-HQ-OAR-2009-0472-11332. See also 

75 FR 14670, March 26, 2010 
754 

Table III.H.7-3 Estimated PM2.5-Related Health Impactsa

Health Effect 

2030 Annual Reduction 

in Incidence 

(5th% - 95th%ile) 

Premature Mortality – Derived from epidemiology 

literatureb

 Adult, age 30+, ACS Cohort Study (Pope et al., 

2002) 

 Adult, age 25+, Six-Cities Study (Laden et al., 2006)

 Infant, age <1 year (Woodruff et al., 1997) 

60 

(23 – 96) 

150 

(83 – 220) 

0 

(0-1) 

Chronic bronchitis (adult, age 26 and over) 42 

(8 – 77) 

Non-fatal myocardial infarction (adult, age 18 and 

over) 

100 

(38 – 170) 

Hospital admissions - respiratory (all ages)c 13 

(7 – 20) 

Hospital admissions - cardiovascular (adults, age 

>18)d

 

32 

(23 – 38) 

Emergency room visits for asthma (age 18 years and 

younger) 

42 

(25 – 59) 

Acute bronchitis, (children, age 8-12) 95 

(0 – 190) 

Lower respiratory symptoms (children, age 7-14) 1,100 

(540 – 1,700) 

Upper respiratory symptoms (asthmatic children, age 

9-18) 

850 

(270 – 1,400) 

Asthma exacerbation (asthmatic children, age 6-18) 1,000 

(120 – 2,900) 

Work loss days 7,600 

(6,600 – 8,500) 

Minor restricted activity days (adults age 18-65) 45,000 

(38,000 – 52,000) 

Notes: 

a Incidence is rounded to two significant digits. Estimates represent incidence within the 48 

contiguous United States. 

b PM-related adult mortality based upon the American Cancer Society (ACS) Cohort Study (Pope et 

al., 2002) and the Six-Cities Study (Laden et al., 2006). Note that these are two alternative estimates 

of adult mortality and should not be summed. PM-related infant mortality based upon a study by 
755 

Woodruff, Grillo, and Schoendorf, (1997).482

c Respiratory hospital admissions for PM include admissions for chronic obstructive pulmonary 

disease (COPD), pneumonia and asthma. 

d Cardiovascular hospital admissions for PM include total cardiovascular and subcategories for 

ischemic heart disease, dysrhythmias, and heart failure. 

Table III.H.7-4 Estimated Ozone-Related Health Impactsa 

Health Effect 

2030 Annual Reduction in 

Incidence 

(5th% - 95th%ile) 

Premature Mortality, All agesb

Multi-City Analyses 

 Bell et al. (2004) – Non-accidental 

 Huang et al. (2005) – Cardiopulmonary 

 Schwartz (2005) – Non-accidental 

Meta-analyses: 

 Bell et al. (2005) – All cause 

 Ito et al. (2005) – Non-accidental 

 Levy et al. (2005) – All cause 

-4 

(-8 – 0) 

-7 

(-14 – 1) 

-6 

(-13 – 1) 

-13 

(-24 - -2) 

-18 

(-30 - -6) 

-18 

(-28 - -9) 

Hospital admissions- respiratory causes (adult, 

65 and older)c 

-38 

(-86 - -6) 

Hospital admissions -respiratory causes 

(children, under 2) 

-6 

(-13 – 1) 

Emergency room visit for asthma (all ages) -16 

(-51 – 8) 

Minor restricted activity days (adults, age 18-

65) 

-18,000 

(-40,000 – 3,700) 

School absence days -7,700 

(-16,000 – 1,200) 

Notes: 

a

 Negatives indicate a disbenefit, or an increase in health effect incidence. Incidence is rounded 

to two significant digits. Estimates represent incidence within the 48 contiguous U.S. 

b

 Estimates of ozone-related premature mortality are based upon incidence estimates derived from 

several alternative studies: Bell et al. (2004); Huang et al. (2005); Schwartz (2005) ; Bell et al. 

(2005); Ito et al. (2005); Levy et al. (2005). The estimates of ozone-related premature mortality 

should therefore not be summed. 

c Respiratory hospital admissions for ozone include admissions for all respiratory causes and 

subcategories for COPD and pneumonia. 

 

482 Woodruff, T.J., J. Grillo, and K.C. Schoendorf. 1997. “The Relationship Between Selected Causes of 

Postneonatal Infant Mortality and Particulate Air Pollution in the United States.” Environmental Health 

Perspectives 105(6):608-612. EPA-HQ-OAR-2009-0472-0382 
756 

ii. Monetized Benefits 

Table III.H.7-5 presents the estimated monetary value of changes in the incidence 

of ozone and PM2.5-related health effects. All monetized estimates are stated in 2007$. 

These estimates account for growth in real gross domestic product (GDP) per capita 

between the present and 2030. Our estimate of total monetized benefits in 2030 for the 

final rule, using the ACS and Six-Cities PM mortality studies and the range of ozone 

mortality assumptions, is between $380 and $1,300 million, assuming a 3 percent 

discount rate, or between $330 and $1,200 million, assuming a 7 percent discount rate. 

As the results indicate, total benefits are driven primarily by the reduction in PM2.5-

related premature fatalities each year. 

Table III.H.7-5 Estimated Monetary Value of Changes in Incidence of Health and 

Welfare Effects (in millions of 2007$) a,b

 2030 

PM2.5-Related Health Effect (5th and 95th %ile) 

Adult, age 30+ - ACS study 

(Pope et al., 2002) 

 3% discount rate 

 7% discount rate 

$510 

($70 - $1,300) 

$460 

($63 - $1,200) 

Adult, age 25+ - Six-Cities study 

(Laden et al., 2006) 

 3% discount rate 

 7% discount rate 

$1,300 

($190 - $3,300) 

$1,200 

($180 - $3,000) 

Premature Mortality – 

Derived from Epidemiology 

Studiesc,d,

Infant Mortality, <1 year – 

(Woodruff et al. 1997) 

$1.8 

($0 - $7.0) 

Chronic bronchitis (adults, 26 and over) $22 

($1.9 - $77) 

Non-fatal acute myocardial infarctions 

 3% discount rate 

 7% discount rate 

$14 

($3.9 - $35) 

$14 

($3.6 - $35) 
757 

Hospital admissions for respiratory causes $0.20 

($0.01 - $0.29) 

Hospital admissions for cardiovascular causes $0.91 

($0.58 - $1.3) 

Emergency room visits for asthma $0.016 

($0.009 - $0.024) 

Acute bronchitis (children, age 8–12) $0.007 

($0 – $0.018) 

Lower respiratory symptoms (children, 7–14) $0.022 

($0.009 - $0.043) 

Upper respiratory symptoms (asthma, 9–11) $0.027 

($0.008 - $0.061) 

Asthma exacerbations $0.058 

($0.006 - $0.17) 

Work loss days $1.2 

($1.0 - $1.3) 

Minor restricted-activity days (MRADs) $2.9 

($1.7 - $4.2) 

Ozone-related Health Effect 

Bell et al., 2004 -$38 

(-$110 - $4.2) 

Huang et al., 2005 -$62 

(-$180 - $4.7) 

Premature Mortality, All ages – 

Derived from Multi-city analyses

Schwartz, 2005 -$58 

(-$170 - $8.8) 

Bell et al., 2005 -$120 

(-$330 - -$7.9) 

Ito et al., 2005 -$170 

(-$430 - -$19) 

Premature Mortality, All ages – 

Derived from Meta-analyses 

Levy et al., 2005 -$170 

(-$410 - -$21) 

Hospital admissions- respiratory causes (adult, 65 and older) -$0.92 

(-$2.1 - $0.27) 

Hospital admissions- respiratory causes (children, under 2) -$.21 

(-$.45 - $0.031) 

Emergency room visit for asthma (all ages) -$0.006 

(-$0.018 - $0.003) 

Minor restricted activity days (adults, age 18-65) -$1.2 

(-$2.7 - $0.25) 

School absence days -$0.71 

(-$1.4 - $0.11) 

Notes: 

a

 Negatives indicate a disbenefit, or an increase in health effect incidence. Monetary benefits are 

rounded to two significant digits for ease of presentation and computation. PM and ozone benefits 

are nationwide. 

b

 Monetary benefits adjusted to account for growth in real GDP per capita between 1990 and the 

analysis year (2030). 

c

 Valuation assumes discounting over the SAB recommended 20 year segmented lag structure. 

Results reflect the use of 3 percent and 7 percent discount rates consistent with EPA and OMB 

guidelines for preparing economic analyses. 
758 

iii. What Are the Limitations of the Benefits Analysis? 

Every benefit-cost analysis examining the potential effects of a change in 

environmental protection requirements is limited to some extent by data gaps, limitations 

in model capabilities (such as geographic coverage), and uncertainties in the underlying 

scientific and economic studies used to configure the benefit and cost models. 

Limitations of the scientific literature often result in the inability to estimate quantitative 

changes in health and environmental effects, such as potential increases in premature 

mortality associated with increased exposure to carbon monoxide. Deficiencies in the 

economics literature often result in the inability to assign economic values even to those 

health and environmental outcomes which can be quantified. These general uncertainties 

in the underlying scientific and economics literature, which can lead to valuations that are 

higher or lower, are discussed in detail in the RIA and its supporting references. Key 

uncertainties that have a bearing on the results of the benefit-cost analysis of the final rule 

include the following: 

• The exclusion of potentially significant and unquantified benefit categories (such 

as health, odor, and ecological impacts of air toxics, ozone, and PM); 

• Errors in measurement and projection for variables such as population growth; 

• Uncertainties in the estimation of future year emissions inventories and air 

quality; 
759 

• Uncertainty in the estimated relationships of health and welfare effects to changes 

in pollutant concentrations including the shape of the C-R function, the size of the 

effect estimates, and the relative toxicity of the many components of the PM 

mixture; 

• Uncertainties in exposure estimation; and 

• Uncertainties associated with the effect of potential future actions to limit 

emissions. 

As Table III.H.7-5 indicates, total benefits are driven primarily by the reduction in 

PM2.5-related premature mortalities each year. Some key assumptions underlying the 

premature mortality estimates include the following, which may also contribute to 

uncertainty: 

• Inhalation of fine particles is causally associated with premature death at 

concentrations near those experienced by most Americans on a daily basis. 

Although biological mechanisms for this effect have not yet been completely 

established, the weight of the available epidemiological, toxicological, and 

experimental evidence supports an assumption of causality. The impacts of 

including a probabilistic representation of causality were explored in the expert 

elicitation-based results of the PM NAAQS RIA. 

• All fine particles, regardless of their chemical composition, are equally potent in 

causing premature mortality. This is an important assumption, because PM 

produced via transported precursors emitted from engines may differ significantly 

from PM precursors released from electric generating units and other industrial 
760 

sources. However, no clear scientific grounds exist for supporting differential 

effects estimates by particle type. 

• The C-R function for fine particles is approximately 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 PM, 

including both regions that may be in attainment with PM2.5 standards and those 

that are at risk of not meeting the standards. 

• There is uncertainty in the magnitude of the association between ozone and 

premature mortality. The range of ozone impacts associated with the final rule is 

estimated based on the risk of several sources of ozone-related mortality effect 

estimates. In a recent report on the estimation of ozone-related premature 

mortality published by the National Research Council, 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.483 EPA 

has requested advice from the National Academy of Sciences on how best to 

quantify uncertainty in the relationship between ozone exposure and premature 

mortality in the context of quantifying benefits. 

Acknowledging omissions and uncertainties, we present a best estimate of the 

total benefits based on our interpretation of the best available scientific literature and 

methods supported by EPA’s technical peer review panel, the Science Advisory Board’s 

 

483 National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits 

from Controlling Ozone Air Pollution. The National Academies Press: Washington, D.C. EPA-HQ-OAR2009-0472-0322 
761 

Health Effects Subcommittee (SAB-HES). The National Academies of Science (NRC, 

2002) has also reviewed EPA’s methodology for analyzing the health benefits of 

measures taken to reduce air pollution. EPA addressed many of these comments in the 

analysis of the final PM NAAQS.484,485 This analysis incorporates this most recent work 

to the extent possible. 

b. PM-related Monetized Benefits of the Model Year (MY) Analysis 

As described in Section III.G, the final standards will reduce emissions of several 

criteria and toxic pollutants and precursors. In the MY 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. 

The MY 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 associated with the MY analysis would be estimated based on changes in 

 

484 National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air 

Pollution Regulations. The National Academies Press: Washington, D.C. 

485 U.S. Environmental Protection Agency. October 2006. Final Regulatory Impact Analysis (RIA) for the 

National Ambient Air Quality Standards for Particulate Matter. Prepared by: Office of Air and Radiation. 

Available at http://www.epa.gov/ttn/ecas/ria.html. EPA-HQ-OAR-2009-0472-0240 
762 

ambient PM2.5 as determined by full-scale air quality modeling. However, this modeling 

was not possible in the timeframe for the final rule. 

The dollar-per-ton estimates used in this analysis are provided in Table III.H.7-6. 

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 rule. 

Table III.H.7-6 Benefits-per-ton Values (2007$) Derived Using the ACS Cohort Study 

for PM-related Premature Mortality (Pope et al., 2002)a

All Sourcesd Stationary (Non-EGU) 

Sources 

Year Mobile Sources c

SOX VOC NOX Direct PM2.5 NOX Direct PM2.5

Estimated Using a 3 Percent Discount Rateb 

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 

Estimated Using a 7 Percent Discount Rateb 

2015 $26,000 $1,100 $4,200 $200,000 $4,400 $240,000 

2020 $28,000 $1,200 $4,600 $220,000 $4,800 $270,000 

2030 $33,000 $1,400 $5,500 $250,000 $5,800 $320,000 

2040 $39,000 $1,600 $6,600 $300,000 $6,900 $380,000 a The 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 SixCities study (Laden et al., 2006), the values would be approximately 145% (nearly two-and-a-half times) 

larger. 

b

 The benefit-per-ton estimates presented in this table assume either a 3 percent or 7 percent discount rate in 

the valuation of premature mortality to account for a twenty-year segmented cessation lag. c

 Benefit-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,486 the 

 

486 U.S. Environmental Protection Agency (U.S. EPA). 2008. 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 
763 

proposed Portland Cement National Emissions Standards for Hazardous Air Pollutants 

(NESHAP) RIA,487 and the final NO2 NAAQS (U.S. EPA, 2009b).488 Table III.H.7 -7 

shows the quantified and unquantified PM2.5-related co-benefits captured in those benefitper-ton estimates. 

Table III.H.7-7 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,489 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 

 <http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>. Accessed March 15, 2010. EPAHQ-OAR-2009-0472-0108 

487 U.S. Environmental Protection Agency (U.S. EPA). 2009. 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>. Accessed March 

15, 2010. EPA-HQ-OAR-2009-0472-0241 

488 U.S. Environmental Protection Agency (U.S. EPA). 2010. Final 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/FinalNO2RIAfulldocument.pdf. 

Accessed March 15, 2010. EPA-HQ-OAR-2009-0472-0237 

489 Although we summarize the main issues in this chapter, we encourage interested readers to see the 

benefits chapter of the final NO2 NAAQS for a more detailed description of recent changes to the PM 

benefits presentation and preference for the no-threshold model. 
764 

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)490 accompanying the recent final ozone NAAQS RIA. Readers can 

also refer to Fann et al. (2009)491 for a detailed description of the benefit-per-ton 

methodology.492 A more detailed description of the benefit-per-ton estimates is also 

provided in the 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 

 

490 U.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>. EPA-HQ-OAR-2009-0472-0228 491 Fann, 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. 

EPA-HQ-OAR-2009-0472-0229 

492 The 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 website for updates to the dollar-per-ton estimates: 

http://www.epa.gov/air/benmap/bpt.html. EPA-HQ-OAR-2009-0472-0227 
765 

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. 

• Dollar-per-ton estimates 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. In Section III.G, we 

describe the full-scale air quality modeling conducted for the 2030 

calendar year analysis in an effort to capture this variability. 

• There are several health benefits categories that EPA was unable to 

quantify in the MY analysis due to limitations associated with using 

benefits-per-ton estimates, several of which could be substantial. Because 

NOX and VOC emissions are also precursors to ozone, changes in NOX 

and VOC would also impact ozone formation and the health effects 

associated with ozone exposure. Benefits-per-ton estimates do not exist 

for ozone, however, due to issues associated with the complexity of the 

atmospheric air chemistry and nonlinearities associated with ozone 

formation. The PM-related benefits-per-ton estimates also do not include 

any human welfare or ecological benefits. Please refer to Chapter 7 of the 

RIA that accompanies this rule for a description of the quantification and 
766 

monetization of health impacts for the CY analysis and a description of the 

unquantified co-pollutant benefits associated with this rulemaking. 

• 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 this rulemaking. Additionally, the atmospheric 

chemistry related to ambient concentrations of PM2.5, ozone and air toxics is very 

complex. Full-scale 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. Timing and resource constraints precluded EPA from conducting full-scale 

photochemical air quality modeling for the MY analysis. We have, however, conducted 
767 

national-scale air quality modeling for the CY analysis to analyze the impacts of the 

standards on PM2.5, ozone, and selected air toxics. 

8. Energy Security Impacts

 This rule 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 caused by potential sudden 

disruptions in the supply of imported petroleum to the U.S. 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 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 percent of total U.S. 

imports of all goods and services.493 In 2008, the U.S. imported 66 percent of the 

petroleum it consumed, and the transportation sector accounted for 70 percent of total 

U.S. petroleum consumption. This compares to approximately 37 percent of petroleum 

 

493 Source: U.S. Bureau of Economic Analysis, U.S. International Transactions Accounts Data, as shown on 

June 24, 2009. 
768 

from imports and 55 percent of consumption from petroleum in the transportation sector 

in 1975.494 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 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 provided below are based upon a 

methodology developed in a peer-reviewed study entitled "The Energy Security Benefits 

of Reduced Oil Use, 2006-2015," completed in March 2008. This study is included as 

part of the docket for this rulemaking.495,496

 When conducting this 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. 

 

494 Source: U.S. Department of Energy, Annual Energy Review 2008, Report No. DOE/EIA-0384(2008), 

Tables 5.1 and 5.13c, June 26, 2009. 

495 Leiby, 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) 

496 The 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-HQOAR-2009-0472) 
769 

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 hard to quantify. 

 

 One commenter on this rule felt that that the magnitude of the economic 

disruption portion of the energy security benefit may be too high. This commenter cites a 

recent paper written by Stephen P.A. Brown and Hillard G. Huntington, entitled 

"Estimating U.S. Oil Security Premiums" (September 2009) as the basis for their 

comment. The Agency reviewed this paper and found that it conducted a somewhat 

different analysis than the one conducted by ORNL in support of this rule. The Brown 

and Huntington paper focuses on policies and the energy security implications of 

increasing U.S. demand for oil (or at least holding U.S. oil consumption constant), while 

the ORNL analysis examines the energy security implications of decreasing U.S. oil 

consumption and oil imports. These asymmetrical analyses would be expected to yield 

somewhat different energy security results. 

 However, even given the different scenarios consider, the Brown and Huntington 

estimates are roughly similar to the ORNL estimates. For example, for an increase in 

U.S. consumption that leads to an increase in U.S. imports of oil, Brown and Huntington 
770 

estimate a 2015 disruption premium of $4.87 per barrel, with an uncertainty range from 

$1.03 to $14.10 per barrel. The corresponding 2015 estimate for ORNL as the result of a 

reduction in U.S. oil imports is $6.70 per barrel, with an uncertainty range of $3.11 to 

$10.67 per barrel. Given that the two studies analyze different scenarios, since the 

Brown and Huntington disruption premiums are well within the uncertainty range of the 

ORNL study, and given that the ORNL scenario matches the specific oil market impacts 

anticipated from the rule while the Brown and Huntington paper does not, the Agency 

has concluded that the ORNL disruption security premium estimates are more applicable 

for analyzing this final rule. 

In the energy security literature, the macroeconomic disruption component of the 

energy security premium traditionally has included both (1) increased payments for 

petroleum imports associated with a rapid increase in world oil prices, and (2) the GDP 

losses and adjustment costs that result from projected future oil price shocks. One 

commenter suggested that the increased payments associated with rapid increases in 

petroleum prices (i.e., price increases in a disrupted market) represent transfers from U.S. 

oil consumers to petroleum suppliers rather than real economic costs, and therefore, 

should not be counted as a benefit. 

 This approach would represent a significant departure from how the 

macroeconomic disruption costs associated with oil price shocks have been quantified in 

the broader energy security literature, and the Agencies believe it should be analyzed in 

more detail before being applied in a regulatory context. In addition, the Agencies also 
771 

believe that there are compelling reasons to treat higher oil import costs during oil supply 

disruptions differently than simple wealth transfers that reflect the exercise of market 

power by petroleum sellers or consumers. According to the OMB definition of a transfer: 

“Benefit and cost estimates should reflect real resource use. Transfer payments are 

monetary payments from one group to another that do not affect total resources available 

to society...The net reduction in the total surplus (consumer plus producer) is a real cost 

to society, but the transfer from buyers to sellers resulting from a higher price is not a real 

cost since the net reduction automatically accounts for the transfer from buyers to 

sellers.”497 In other words, pure transfers do not lead to changes in the allocation or 

consumption of economic resources, whereas changes in the resource allocation or use 

produce real economic costs or benefits. 

While price increases during oil price disruptions can result in large transfers of 

wealth, they also result in a combination of real resource shortages, costly short-run shifts 

in energy supply, behavioral and demand adjustments by energy users, and other 

response costs. Unlike pure transfers, the root cause of the disruption price increase is a 

real resource supply reduction due, for example, to disaster or war. Regions where 

supplies are disrupted (i.e., the U.S.) suffer very high costs. Businesses’ and households’ 

emergency responses to supply disruptions and rapid price increases are likely to 

consume some real economic resources, in addition to causing financial losses to the U.S. 

economy that are matched by offsetting gains elsewhere in the global economy. 

 

497 OMB Circular A-4, September 17, 2003. See 

http://www.whitehouse.gov/omb/assets/omb/circulars/a004/a-4.pdf 
772 

 While households and businesses can reduce their petroleum consumption, invest 

in fuel switching technologies, or use futures markets to insulate themselves in advance 

against the potential costs of rapid increases in oil prices, when deciding how extensively 

to do so, they are unlikely to account for the effect of their petroleum consumption on the 

magnitude of costs that supply interruptions and accompanying price shocks impose on 

others. As a consequence, the U.S. economy as a whole will not make sufficient use of 

these mechanisms to insulate itself from the real costs of rapid increases in energy prices 

and outlays that usually accompany oil supply interruptions.498 Therefore, the ORNL 

estimate of macroeconomic disruption and adjustment costs that the Agencies use to 

value energy security benefits includes the increased oil import costs stemming from oil 

price shocks that are unanticipated and not internalized by advance actions of U.S. 

consumers of petroleum products. The Agencies believe that, as the ORNL analysis 

argues, the uninternalized oil import costs that occur during oil supply interruptions 

represents a real cost associated with U.S. petroleum consumption and imports, and that 

reducing its value by lowering domestic petroleum consumption and imports thus 

represents a real economic benefit from lower fuel consumption. 

 For this rule, ORNL estimated the energy security premium by incorporating the 

oil price forecast of the Energy Information Administration’s 2009 Annual Energy 

Outlook (AEO) to its model. The Agency considered, but rejected the option, of further 

updating this analysis using the oil price estimates provided by the AEO 2010. Given the 

 

498 For a more complete discussion of the reasons why the oil import cost component of the macroeconomic 

disruption and adjustment costs includes some real costs and does not represent a pure transfer, see Paul N. 

Leiby, Estimating the Energy Security Benefits of Reduced U.S. Oil Imports: Final Report, ORNL-TM2007-028, Oak Ridge National Laboratory, March 14, 2008, pp. 21-25. 
773 

broad uncertainty bands around oil price forecasts and the relatively modest change in oil 

price forecasts between the AEO 2009 and AEO 2010, the Agency felt that updating to 

AEO 2010 oil prices would not significantly change the results of this energy security 

analysis. Finally, the EPA used its OMEGA model in conjunction with ORNL’s energy 

security premium estimates to develop the total energy security benefits for a number of 

different years; please refer to Table III.H.8-1 for this information for years 2015, 2020, 

2030 and 2040,499 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 Joint TSD Chapter 4. 

Because the price of oil is determined globally, supply and demand shocks 

anywhere in the world will have an adverse impact on the United States (and on all other 

oil consuming countries). The total economic costs of those shocks to the U.S. will 

depend on both U.S. petroleum consumption and imports of petroleum and refined 

products. The analysis relied upon to estimate energy security benefits from reducing 

U.S. petroleum consumption estimates the value of energy security using the estimated 

oil import premium, and is thus consistent with how much of the energy security 

literature reports energy security impacts. Since this rule is expected to have little impact 

on the U.S. supply of crude petroleum, a reduction in U.S. fuel consumption is expected 

to be reflected predominantly in reduced imports of petroleum and refined fuel. The 

estimated energy security premium associated with a reduction in U.S. petroleum 

consumption that leads to a reduction in imports would likely be somewhat larger, due to 

 

499 AEO 2009 forecasts energy market trends and values only to 2030. The energy security premium 

estimates post-2030 were assumed to be the 2030 estimate. 
774 

diminished sensitivity of the U.S. economy to oil supply shocks that would accompany 

the reduction in oil consumption. 

 In addition, while the estimates of energy security externalities used in this 

analysis depend on a combination of U.S. petroleum consumption and imports, they have 

been expressed as per barrel of petroleum imported into the U.S. The Agencies’ analyses 

apply these estimates to the reduction in U.S. imports of crude petroleum and refined 

products that is projected to result from the rule in order to determine the benefits that are 

likely to result from fuel savings and the consequent reduction in imports. Thus, the 

estimates of energy security externalities have been used in this analysis in a way that is 

completely consistent with how they are defined and measured in the ORNL analysis 

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 
775 

the energy security premium be used when some benefits from the rule, such as the 

benefits of reducing greenhouse gas emissions, are calculated using a global value? 

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 oil-producing 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. 

OMB’s Circular A-4 gives guidance in this regard. Domestic pecuniary benefits (or 

transfers between buyers and sellers) generally should not be included because they do 

not represent real resource costs, though A-4 notes that transfers to the U.S. from other 

countries may be counted as benefits as long as the analysis is conducted from a U.S. 

perspective. 

 Energy security is broadly defined as protecting the U.S. economy against 

circumstances that threaten significant short- and long-term increases in energy costs. 

Energy security is inherently a domestic benefit. Accordingly, it is possible to argue that 

the use of the domestic monopsony benefit may not necessarily be in conflict with the use 

of the global SCC, because the global SCC represents the benefits against which the costs 

of our (i.e., the U.S.’s) domestic mitigation efforts should be judged. In the final analysis, 
776 

the Agency has determined that using only the macroeconomic disruption component of 

the energy security benefit is the appropriate metric for this rule. 

At proposal, the Agency took the position that since a global perspective was 

being taken with the use of the global SCC, that the monopsony benefits “net out” and 

were a transfer. Two commenters felt that the monopsony effect should be excluded 

from net benefits calculations for the rule since it is a “pecuniary” externality or does not 

represent an efficiency gain. One of the commenters suggested that EPA instead conduct 

a distributional analysis of the monopsony impacts of the final rule. The Agency 

disagrees that all pecuniary externalities should necessarily be excluded from net benefits 

calculations as a general rule. In this case considered here, the oil market is noncompetitive, and if the social decision-making unit of interest is the U.S., there is an 

argument for accounting for the monopsony premium to assess the excess transfer of 

wealth caused by the exercise of cartel power outside of the U.S. 

 

However, for the final rule, the Agency continues to take a global perspective 

with respect to climate change by using the global SCC. Therefore, the Agency did not 

count monopsony benefits since they “net out” with losses to other countries outside the 

U.S. Since a global perspective has been taken, a distributional analysis was not 

undertaken for this final rule, since the losses to the losers (oil producers that export oil to 

the U.S.) would equal the gains to the winners (U.S. consumers of imported oil). As a 

result, the Agency has included only the macroeconomic disruption portion of the energy 

security benefits to monetize the total energy security benefits of this rule. Hence, the 
777 

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.8-2.500 The reduced oil estimates were derived from the OMEGA model, as 

explained in Section III.F 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 rule, which assumed that each gallon of fuel saved reduces total U.S. 

imports of crude oil or refined products by 0.95 gallons.501

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 $0.57 

2020 $2.17 

2030 $4.55 

2040 $6.00 

9. Other Impacts

There are other impacts associated with the CO2 emissions standards and 

associated reduced fuel consumption that vary with miles driven. Lower fuel 

 

500 Estimated reductions in U.S. imports of finished petroleum products and crude oil are 95% of 89 million 

barrels (MMB) in 2015, 300 MMB in 2020, 590 MMB in 2030, and 778 MMB in 2040. 501 Preliminary 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. 
778 

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 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 Joint TSD that accompanies this 

rule for more information about these impacts and how EPA and NHTSA use them in 

their analyses. 

Note that for the estimated value of less frequent refueling events, EPA's estimate 

is subject to a number of uncertainties which we discuss in detail in Chapter 4.1.11 of the 

Joint TSD, and the actual value could be higher or lower than the value presented here. 

Specifically, the analysis makes three assumptions: (a) that manufacturers will not adjust 

fuel tank capacities downward (from the current average of 19.3 gallons) when they 

improve the fuel economy of their vehicle models. (b) that the average fuel purchase (55 

percent of fuel tank capacity) is the typical fuel purchase. (c) that 100 percent of all 

refueling is demand-based; i.e., that every gallon of fuel which is saved would reduce the 

need to return to the refueling station. A new research project is being planned by DOT 

which will include a detailed study of refueling events, and which is expected to improve 

upon these assumptions. These assumptions and the new DOT research project are 

discussed in detail in Joint TSD Chapter 4.2.10. 
779 

Table III.H.9-1 Other Impacts Associated with the Light-Duty Vehicle GHG Program 

 ($Millions of 2007 dollars) 

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

Value of Less 

Frequent 

Refueling 

$2,400 $4,800 $6,300 $8,000 $87,900 $40,100 

Value of 

Increased 

Drivinga

$4,200 $8,800 $13,000 $18,400 $171,500 $75,500 

Accidents, 

Noise, 

Congestion 

-$2,300 -$4,600 -$6,100 -$7,800 -$84,800 -$38,600 

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 

rule. 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 7 percent discount 

rate. In this table, fuel savings are calculated using pre-tax fuel prices. 

 Consumers are expected to receive the fuel savings presented here. The cost 

estimates for the fuel-saving technology are based on designs that will hold all vehicle 

attributes constant except fuel economy and technology cost. This analysis also assumes 

that consumers will not change the vehicles that they purchase. Automakers may 

redesign vehicles as part of their compliance strategies. The redesigns should be 

expected to make the vehicles more attractive to consumers, because the ability to hold 

all other attributes constant means that the only reason to change them is to make them 
780 

more marketable to consumers. In addition, consumers may choose to purchase different 

vehicles than they would in the absence of this rule. These changes may affect the net 

benefits that consumers receive from their vehicles. If consumers can buy the same 

vehicle as before, except with increased price and fuel economy, then the increase in 

vehicle price is the maximum loss in welfare to the consumer, because compensating the 

increase in price would leave her able to buy her previous vehicle with no change. If she 

decides to purchase a different vehicle, or not to purchase a vehicle, she would do so only 

if she were better off than buying her original choice. Because of the unsettled state of the 

modeling of consumer choices (discussed in Section III.H.1 and in RIA Section 8.1.2), 

this analysis does not measure these effects. If the technology costs are not sufficient to 

maintain other vehicle attributes, then it is possible that automakers would be required to 

make less marketable vehicles in order to comply with the rule; as a result, there may be 

an additional loss in consumer welfare due to the rule. While EPA received comments 

expressing concern over the possibility of these losses, there were no specific losses 

identified. 

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 

$15,600 $15,800 $17,400 $19,000 $345,900 $191,900

Fuel Savingsa -$35,700 -$79,800 -$119,300 -$171,200 -$1,545,600 -$672,600

Quantified 

Annual Costs -$20,100 -$64,000 -$101,900 -$152,200 -$1,199,700 -$480,700

a Calculated using pre-tax fuel prices. 
781 

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 CO2 emissions—and consequently the annual quantified 

benefits (i.e., total benefits)—for each of four SCC values considered by EPA. As 

discussed in the RIA Section 7.5, the IPCC Fourth Assessment Report (2007) concluded 

that that the benefit estimates from CO2 reductions are “very likely” 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, these monetized GHG benefits exclude the value of reductions in 

non-CO2 GHG emissions (HFC, CH4, N2O) expected under this final rule. Although 

EPA has not monetized the benefits of reductions in non-CO2 GHGs, the value of these 

reductions should not be interpreted as zero. Rather, the reductions in non-CO2 GHGs 

will contribute to this rule’s climate benefits, as explained in Section III.F. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and SCC and 

specifies a goal to develop methods to value non-CO2 emissions in future analyses. 
782 

Table III.H.10-2 Estimated Societal Benefits Associated with the Light-Duty Vehicle 

GHG Program (Millions of 2007 dollars) 

Benefits Category 2020 2030 2040 2050 NPV, 3%a NPV, 7% a

Reduced CO2 Emissions at each assumed SCC valueb,c

Avg SCC at 5% $900 $2,700 $4,600 $7,200 $34,500 $34,500

Avg SCC at 3% $3,700 $8,900 $14,000 $21,000 $176,700 $176,700

Avg SCC at 2.5% $5,800 $14,000 $21,000 $30,000 $299,600 $299,600

95th percentile SCC at 3% $11,000 $27,000 $43,000 $62,000 $538,500 $538,500

Criteria Pollutant 

Benefitsd,e,f,g B $1,200-

$1,300

$1,200-

$1,300

$1,200- 

$1,300 $21,000 $14,000

Energy Security Impacts 

(price shock) $2,200 $4,500 $6,000 $7,600 $81,900 $36,900

Reduced Refueling $2,400 $4,800 $6,300 $8,000 $87,900 $40,100

Value of Increased Drivingh $4,200 $8,800 $13,000 $18,400 $171,500 $75,500

Accidents, Noise, 

Congestion -$2,300 -$4,600 -$6,100 -$7,800 -$84,800 -$38,600

Quantified Annual Benefits at each assumed SCC valueb,c

Avg SCC at 5% $7,400 $17,500 $25,100 $34,700 $312,000 $162,400

Avg SCC at 3% $10,200 $23,700 $34,500 $48,500 $454,200 $304,600

Avg SCC at 2.5% $12,300 $28,800 $41,500 $57,500 $577,100 $427,500

95th percentile SCC at 3% $17,500 $41,800 $63,500 $89,500 $816,000 $666,400 a

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

b

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. c

 Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates. 

d

 Note that “B” indicates unquantified criteria pollutant benefits in the year 2020. For the final rule, we 

only modeled the rule’s PM2.5- and ozone-related impacts in the calendar year 2030. For the purposes of 

estimating a stream of future-year criteria pollutant benefits, we assume that the benefits out to 2050 are 

equal to, and no less than, those modeled in 2030 as reflected by the stream of estimated future emission 

reductions. The NPV of criteria pollutant-related benefits should therefore be considered a conservative 

estimate of the potential benefits associated with the final rule. 

e

 The benefits presented in this table include an estimate of PM-related premature mortality derived from 

Laden et al., 2006, and the ozone-related premature mortality estimate derived from Bell et al., 2004. If the 

benefit estimates were based on the ACS study of PM-related premature mortality (Pope et al., 2002) and 

the Levy et al., 2005 study of ozone-related premature mortality, the values would be as much as 70% 

smaller. 

f

 The calendar year benefits presented in this table assume either a 3% discount rate in the valuation of PMrelated premature mortality ($1,300 million) or a 7% discount rate ($1,200 million) to account for a twentyyear segmented cessation lag. Note that the benefits estimated using a 3% discount rate were used to 

calculate the NPV using a 3% discount rate and the benefits estimated using a 7% discount rate were used 
783 

to calculate the NPV using a 7% discount rate. For benefits totals presented at each calendar year, we used 

the mid-point of the criteria pollutant benefits range ($1,250). 

g Note that the co-pollutant impacts presented here do not include the full complement of endpoints that, if 

quantified and monetized, would change the total monetized estimate of impacts. The full complement of 

human health and welfare effects associated with PM and ozone remain unquantified because of current 

limitations in methods or available data. We have not quantified a number of known or suspected health 

effects linked with ozone and PM for which appropriate health impact functions are not available or which 

do not provide easily interpretable outcomes (e.g., changes in heart rate variability). Additionally, we are 

unable to quantify a number of known welfare effects, including reduced acid and particulate deposition 

damage to cultural monuments and other materials, and environmental benefits due to reductions of 

impacts of eutrophication in coastal areas. 

h 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 CO2 emissions (and consequently the annual net benefits) for each 

of four SCC values considered by EPA. As noted above, the benefit estimates from CO2 

reductions are “very likely,” according to the IPCC Fourth Assessment Report, 

underestimates because, in part, models used to calculate SCC values do not include 

information about impacts that have not been quantified. 
784 

Table III.H.10-3 Quantified Net Benefits Associated with the Light-Duty Vehicle GHG 

Programa

 (Millions of 2007 dollars) 

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

Quantified Annual 

Costs -$20,100 -$64,000 -$101,900 -$152,200 -$1,199,700 -$480,700

Quantified Annual Benefits at each assumed SCC valuec,d

Avg SCC at 5% $7,400 $17,500 $25,100 $34,700 $312,000 $162,400

Avg SCC at 3% $10,200 $23,700 $34,500 $48,500 $454,200 $304,600

Avg SCC at 2.5% $12,300 $28,800 $41,500 $57,500 $577,100 $427,500

95th percentile SCC at 

3% $17,500 $41,800 $63,500 $89,500 $816,000 $666,400

Quantified Net Benefits at each assumed SCC valuec,d

Avg SCC at 5% $27,500 $81,500 $127,000 $186,900 $1,511,700 $643,100

Avg SCC at 3% $30,300 $87,700 $136,400 $200,700 $1,653,900 $785,300

Avg SCC at 2.5% $32,400 $92,800 $143,400 $209,700 $1,776,800 $908,200

95th percentile SCC at 

3% $37,600 $105,800 $165,400 $241,700 $2,015,700 $1,147,100

a Fuel impacts were calculated using pre-tax fuel prices. 

b

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

c

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. 

d

 Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates.

 

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 presented in Table III.H.10-1 through Table III.H.10-3, 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 RIA 

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 
785 

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 four SCC 

values considered by EPA. As noted above, the benefit estimates from CO2 reductions 

are “very likely,” according to the IPCC Fourth Assessment Report, 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 Lifetimes of 2012-2016 

Model Year Vehicles (Millions of 2007 dollars; 3% Discount Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) -$1,100 -$1,600 -$2,100 -$2,900 -$3,900 -$11,600

Pretax Fuel Savings ($) $16,100 $23,900 $32,200 $46,000 $63,500 $181,800

Energy Security (price shock) ($)a $900 $1,400 $1,800 $2,500 $3,500 $10,100

Value of Reduced Refueling time ($) $1,100 $1,600 $2,100 $3,000 $4,000 $11,900

Value of Additional Driving ($) $2,400 $3,400 $4,400 $6,000 $7,900 $24,000

Value of PM2.5-related Health Impacts 

($)b,c,d $700 $900 $1,300 $1,800 $2,400 $7,000

Reduced CO2 Emissions at each assumed SCC valuee,f,g 

Avg SCC at 5% $400 $500 $700 $1,000 $1,300 $3,800

Avg SCC at 3% $1,700 $2,400 $3,100 $4,400 $5,900 $17,000

Avg SCC at 2.5% $2,700 $3,900 $5,200 $7,200 $9,700 $29,000

95th percentile SCC at 3% $5,100 $7,300 $9,600 $13,000 $18,000 $53,000

Total Benefits at each assumed SCC valuee,f,g

Avg SCC at 5% $20,500 $30,100 $40,400 $57,400 $78,700 $227,000

Avg SCC at 3% $21,800 $32,000 $42,800 $60,800 $83,300 $240,200

Avg SCC at 2.5% $22,800 $33,500 $44,900 $63,600 $87,100 $252,200

95th percentile SCC at 3% $25,200 $36,900 $49,300 $69,400 $95,400 $276,200 a Note that, due to a calculation error in the proposal, the energy security impacts for the model year 

analysis were roughly half what they should have been. 

 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 benefit-per-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-
786 

scale air quality modeling. However, EPA was unable to conduct a full-scale air quality modeling analysis 

associated with the vehicle model year lifetimes for the final rule. c

 The 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. 

d

 The 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

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

f

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. g

 Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates.

Table III.H.10-5 Estimated Societal Benefits Associated with the Lifetimes of 2012-

2016 Model Year Vehicles (Millions of 2007 dollars; 7% Discount Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Cost of Noise, Accident, Congestion ($) -$900 -$1,200 -$1,600 -$2,300 -$3,100 -$9,200

Pretax Fuel Savings ($) $12,500 $18,600 $25,100 $36,000 $49,600 $141,900

Energy Security (price shock) ($)a $800 $1,100 $1,400 $2,000 $2,700 $8,000

Value of Reduced Refueling time ($) $900 $1,300 $1,700 $2,400 $3,200 $9,400

Value of Additional Driving ($) $1,900 $2,700 $3,500 $4,700 $6,200 $19,000

Value of PM2.5-related Health Impacts 

($)b,c,d $500 $800 $1,000 $1,400 $1,900 $5,600

Reduced CO2 Emissions at each assumed SCC valuee,f,g

Avg SCC at 5% $400 $500 $700 $1,000 $1,300 $3,800

Avg SCC at 3% $1,700 $2,400 $3,100 $4,400 $5,900 $17,000

Avg SCC at 2.5% $2,700 $3,900 $5,200 $7,200 $9,700 $29,000

95th percentile SCC at 3% $5,100 $7,300 $9,600 $13,000 $18,000 $53,000

Total Benefits at each assumed SCC valuee,f,g

Avg SCC at 5% $16,100 $23,800 $31,800 $45,200 $61,800 $178,500

Avg SCC at 3% $17,400 $25,700 $34,200 $48,600 $66,400 $191,700

Avg SCC at 2.5% $18,400 $27,200 $36,300 $51,400 $70,200 $203,700

95th percentile SCC at 3% $20,800 $30,600 $40,700 $57,200 $78,500 $227,700 a Note that, due to a calculation error in the proposal, the energy security impacts for the model year 

analysis were roughly half what they should have been. 

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 benefit-per-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-
787 

scale air quality modeling. However, EPA was unable to conduct a full-scale air quality modeling analysis 

associated with the vehicle model year lifetimes for the final rule. c

 The 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. 

d

 The 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

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

f

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. g

 Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates.

Table III.H.10-6 Quantified Net Benefits Associated with the Lifetimes of 2012-2016 

Model Year Vehicles (Millions of 2007 dollars; 3% Discount Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel 

savings)a $4,900 $8,000 $10,300 $12,700 $15,600 $51,500

Quantified Annual Benefits at each assumed SCC valueb,c,d

Avg SCC at 5% $20,500 $30,100 $40,400 $57,400 $78,700 $227,000

Avg SCC at 3% $21,800 $32,000 $42,800 $60,800 $83,300 $240,200

Avg SCC at 2.5% $22,800 $33,500 $44,900 $63,600 $87,100 $252,200

95th percentile SCC at 3% $25,200 $36,900 $49,300 $69,400 $95,400 $276,200

Quantified Net Benefits at each assumed SCC valueb,c,d

Avg SCC at 5% $15,600 $22,100 $30,100 $44,700 $63,100 $175,500

Avg SCC at 3% $16,900 $24,000 $32,500 $48,100 $67,700 $188,700

Avg SCC at 2.5% $17,900 $25,500 $34,600 $50,900 $71,500 $200,700

95th percentile SCC at 3% $20,300 $28,900 $39,000 $56,700 $79,800 $224,700 a

 Quantified 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. 

b

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

c Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. 
788 

d

 Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates.

Table III.H.10-7 Quantified Net Benefits Associated with the Lifetimes of 2012-2016 

Model Year Vehicles (Millions of 2007 dollars; 7% Discount Rate) 

Monetized Values (millions) 2012MY 2013MY 2014MY 2015MY 2016MY Sum 

Quantified Annual Costs (excluding fuel 

savings) a $4,900 $8,000 $10,300 $12,700 $15,600 $51,500

Quantified Annual Benefits at each assumed SCC valueb,c,d

Avg SCC at 5% $16,100 $23,800 $31,800 $45,200 $61,800 $178,500

Avg SCC at 3% $17,400 $25,700 $34,200 $48,600 $66,400 $191,700

Avg SCC at 2.5% $18,400 $27,200 $36,300 $51,400 $70,200 $203,700

95th percentile SCC at 3% $20,800 $30,600 $40,700 $57,200 $78,500 $227,700

Quantified Net Benefits at each assumed SCC valueb,c,d

Avg SCC at 5% $11,200 $15,800 $21,500 $32,500 $46,200 $127,000

Avg SCC at 3% $12,500 $17,700 $23,900 $35,900 $50,800 $140,200

Avg SCC at 2.5% $13,500 $19,200 $26,000 $38,700 $54,600 $152,200

95th percentile SCC at 3% $15,900 $22,600 $30,400 $44,500 $62,900 $176,200 a

 Quantified 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. 

b

 Note that net present value of reduced GHG emissions is calculated differently than other benefits. The 

same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) 

is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD for more 

detail. 

c

 Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and 

N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these 

non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions 

in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC 

TSD notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a 

goal to develop methods to value non-CO2 emissions in future analyses. 

d Section III.H.6 notes that SCC increases over time. Corresponding to the years in this table, the SCC 

estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for 

Average SCC at 2.5%: $36-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also 

presents these SCC estimates. 

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 
789 

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 Final 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 final 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., and has been assigned OMB control number 

0783.57. The information collection requirements are not enforceable until OMB 

approves them. 

The Agency is finalizing requirements for manufacturers to submit 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 
790 

mandatory. We will consider confidential all information meeting the requirements of 

section 208(c) of the Clean Air Act. 

As shown in Table III.I.2-1, the total annual burden associated with this rule 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 new 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.I.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. In 

addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control 
791 

numbers for various regulations to list the regulatory citations for the information 

requirements contained in this final rule. 

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 directly subject to the rule. 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-for-profit 

enterprise which is independently owned and operated and is not dominant in its field. 

Table III.I.3-1 provides an overview of the primary SBA small business 

categories included in the light-duty vehicle sector: 
792 

Table III.I.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 Codesb 

Light-duty vehicles: 

- vehicle manufacturers 

(including small volume manufacturers) 

- independent commercial importers 

- alternative fuel vehicle converters 

1,000 employees 

$7 million annual sales 

$23 million annual sales 

100 employees 

50 employees 

750 employees 

1,000 employees 

$7 million annual sales 

336111 

811111, 811112, 811198 

441120 

423110, 424990 

336312, 336322, 336399 

335312 

454312, 485310, 811198 

Notes: 

a Light-duty vehicle entities that qualify as small businesses would not be subject to this rule. We are 

exempting 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 rule because we are certifying that the rule would not have a significant 

economic impact on a substantial number of small entities directly subject to the rule. As 

proposed, EPA is exempting manufacturers meeting SBA’s business size criteria for 

small business as provided in 13 CFR 121.201, due to the short lead time to develop this 

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 U.S. and foreign small entities in three 
793 

distinct categories of businesses for light-duty vehicles: small volume manufacturers 

(SVMs), independent commercial importers (ICIs), and alternative fuel vehicle 

converters. EPA has identified a total of about 47 vehicle businesses; about 13 entities 

(or 28 percent) fit the Small Business Administration (SBA) criteria of a small business. 

There are about 2 SVMs, 8 ICIs, and 3 alternative fuel vehicle converters in the lightduty 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., and therefore 

the exemption will have a negligible impact on the GHG emissions reductions from the 

standards. 

To ensure that EPA is aware of which companies would be exempt, EPA 

proposed to require 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. EPA has reconsidered the need for this additional 

submission under the regulations and is deleting it as not necessary. We already have 

information on the limited number of small entities that we expect would receive the 

benefits of the exemption, and do not need the proposed regulatory requirement to be 

able to effectively implement this exemption for those parties who in fact meet its terms. 

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. Based on this, EPA is certifying that the rule would not 

have a significant economic impact on a substantial number of small entities. 
794 

c. Conclusions 

I therefore certify that this 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 (74 FR 55292, Oct. 27, 2009), EPA used 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 that might occur as EPA considers regulations of GHGs. Concerns about 

the potential impacts of statutorily imposed PSD requirements on small entities were the 

subject of deliberations in that consultation and outreach. EPA has compiled a summary 

of that consultation and outreach, which is available in the docket for the Tailoring Rule 

(EPA-HQ-OAR-2009-0517). 

 

4. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-

1538, requires Federal agencies, unless otherwise prohibited by law, 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, 
795 

including a cost-benefit analysis, for proposed and final rules with "Federal mandates" 

that may result in expenditures to State, local, and tribal governments, in the aggregate, or 

to the private sector, of $100 million or more in any one year. 

This rule is not subject to the requirements of section 203 of UMRA because it 

contains no regulatory requirements that might significantly or uniquely affect small 

governments. This rule 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 rule 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 action represents the least costly, most cost-effective approach to 

achieve the statutory requirements of the rule. The costs and benefits associated with the 

rule are discussed above and in the Final 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 applies to 
796 

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 

solicited comment on the proposed action from State and local officials. Many state and 

local governments submitted public comments on the rule, the majority of which were 

supportive of the EPA’s greenhouse gas program. However, these entities did not 

provide comments indicating there would be a substantial direct effect on state or local 

governments resulting from this rule. 

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

Governments)

 This action 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 

will be affected only to the extent they purchase and use regulated vehicles. Thus, 

Executive Order 13175 does not apply to this action. 
797 

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 rule.502 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 of the scientific assessment literature 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 finalized in this action 

(Section III.F). Children may receive benefits from reductions in GHG emissions 

 

502 U.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, D.C.: U.S. EPA.. Docket EPAHQ-OAR-2009-0472-11292 
798 

because they are included in the segment of the population that is most vulnerable to 

extreme 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. 

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 finalized 

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. 
799 

9. National Technology Transfer Advancement Act

 Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(“NTTAA”), Public Law No. 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 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. 

 The rulemaking involves technical standards. Therefore, the Agency conducted a 

search to identify potentially applicable voluntary consensus standards. For CO2, N2O, 

and CH4 emissions, we identified no such standards, and none were brought to our 

attention in comments. Therefore, EPA is collecting data over the same test cycles that 

are used for the CAFE program following standardized test methods and sampling 

procedures. This will minimize the amount of testing done by manufacturers, since 

manufacturers are already required to run these tests. For A/C system leakage 

improvement credits, EPA identified a Society of Automotive Engineers (SAE) 

methodology and EPA’s approach is based closely on this SAE methodology. For the 

A/C system efficiency improvement credits, including the new idle test, EPA generally 

uses standardized test methods and sampling procedures. However, EPA knows of no 
800 

consensus standard available for an A/C idle test to measure system efficiency 

improvements. 

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 final 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 

standards will affect climate change projections, and EPA has estimated reductions in 

projected global mean surface temperatures (Section III.F.3). Within communities 

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, 
801 

those living alone, and/or indigenous populations dependent on one or a few resources.

503 In addition, the U.S. Climate Change Science Program504 stated as one of its 

conclusions: “The United States is certainly capable of adapting to the collective impacts 

of climate change. However, there will still be certain individuals and locations where 

the adaptive capacity is less and these individuals and their communities will be 

disproportionally impacted by climate change.” Therefore, these specific subpopulations 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 final rule. 

11. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a 

rule may take effect, the agency promulgating the rule must submit a rule report, which 

includes a copy of the rule, to each House of the Congress and to the Comptroller 

General of the United States. EPA will submit a report containing this rule and other 

 

503 U.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, D.C.: U.S. EPA. Docket EPAHQ-OAR-2009-0472-11292 

504 CCSP (2008) Analyses 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. 
802 

required information to the U.S. Senate, the U.S. House of Representatives, and the 

Comptroller General of the United States prior to publication of the rule in the Federal 

Register. A Major rule cannot take effect until 60 days after it is published in the Federal 

Register. This action is a “major rule” as defined by 5 U.S.C. 804(2). This rule will be 

effective [Insert date 60 days after publication in the Federal Register], sixty days 

after date of publication in the Federal Register. 

J. Statutory Provisions and Legal Authority 

Statutory authority for the vehicle controls finalized 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 Final Rule and Record of Decision for Passenger Car and Light 

Truck CAFE Standards for MYs 2012-2016 

 

A. Executive Overview of NHTSA Final Rule 

 

1. Introduction

The National Highway Traffic Safety Administration (NHTSA) is establishing 

Corporate Average Fuel Economy (CAFE) standards for passenger automobiles 
803 

(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.505 NHTSA’s CAFE 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 27.6 mpg combined fuel economy level 

in MY 2011. NHTSA’s final rule projects total fuel savings of approximately 61 billion 

gallons over the lifetimes of the vehicles sold in model years 2012-2016, with 

corresponding net societal benefits of over $180 billion using a 3 percent discount rate.506

 

505 Among 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 March 1, 2010). 

Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing, Frank Verrastro, Jenna Goodward, David Pumphrey, 

and Britt Staley, “A Roadmap for a Secure, Low-Carbon 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 March 1, 2010). 

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 March 1, 2010). 

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 March 1, 2010). 

“Why is Fuel Economy Important?,” a webpage maintained by the Department of Energy and 

Environmental Protection Agency, available at http://www.fueleconomy.gov/feg/why.shtml (last accessed 

March 1, 2010); 

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/mae/people/faculty/socolow/ENVIRONMENTDec2004issue.pdf (last accessed 

March 1, 2010). 

506 This value is based on what NHTSA refers to as “Reference Case” inputs, which are based on the 

assumptions that NHTSA has employed for its main analysis (as opposed to sensitivity analyses to examine 

the effect of variations in the assumptions on costs and benefits). The Reference Case inputs include fuel 

prices based on the AEO 2010 Reference Case, a 3 percent discount rate, a 10 percent rebound effect, a 

value for the social cost of carbon (SCC) of $21/metric ton CO2 (in 2010, rising to $45/metric ton in 2050, 

at a 3 percent discount rate), etc. For a full listing of the Reference Case input assumptions, see Section 

IV.C.3 below. 
804 

The significance accorded to 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.507 Using vehicle technology to improve fuel economy, thereby 

reducing tailpipe emissions of CO2, is one of the three main measures of reducing 

those tailpipe emissions of CO2.

508 The two other measures for 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 final rule by NHTSA with another agency, the 

Environmental Protection Agency. As discussed in Section I, NHTSA’s final MYs 2012-

2016 CAFE standards are part of a joint National Program. A large majority of the 

projected benefits are achieved jointly with EPA’s GHG rule, described in detail above in 

 

507 EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 – 2006 (April 2008), pp. ES-4, ES8, and 2-24. Available at http://www.epa.gov/climatechange/emissions/usgginv_archive.html (last 

accessed March 1, 2010). 

508 Podesta et al., p. 25; Ladislaw et al. p. 21; DeCicco et al. p. vii; “Reduce Climate Change,” a webpage 

maintained by the Department of Energy and Environmental Protection Agency at 

http://www.fueleconomy.gov/feg/climate.shtml (last accessed March 1, 2010). 
805 

Section III of this preamble. These final CAFE standards are consistent with the 

President’s National Fuel Efficiency Policy announcement of May 19, 2009, which called 

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 final 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.509 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 non-discretionary expense. Thus, when 

 

509 Energy Information Administration, Petroleum Basic Statistics, updated July 2009. Available at 

http://www.eia.doe.gov/basics/quickoil.html (last accessed March 1, 2010). 
806 

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. Since 

petroleum imports account for about 2 percent of GDP, increase in oil imports can create 

a discernable fiscal drag. As a consequence, measures that reduce petroleum 

consumption, such as fuel economy standards, will directly benefit the balance-ofpayments 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. 
807 

3. The National Program

NHTSA and EPA are each announcing final rules that have the effect of 

addressing the urgent and closely intertwined challenges of energy independence and 

security and global warming. These final rules call for a strong and coordinated federal 

greenhouse gas and fuel economy program for passenger cars, light-duty-trucks, and 

medium-duty passenger vehicles (hereafter light-duty vehicles), referred to as the 

National Program. The final 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 in the rulemaking timeframe. The agencies’ final rules 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 relatively short amount of lead time for the model years covered by the 

rulemaking and the serious current economic situation faced by this industry. 

These joint standards are 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,510 and with the Notice of Upcoming Joint Rulemaking signed by DOT and EPA 

 

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

Available at http://www.whitehouse.gov/the_press_office/President-Obama-Announces-National-FuelEfficiency-Policy/ (last accessed March 15, 2010). 
808 

on that date.511 This joint final rule 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 below. 

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.512 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 

 

511 74 FR 24007 (May 22, 2009). 512 Panel on Policy Implications of Greenhouse Warming, National Academy of Sciences, National 

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

Adaptation, and the Science Base,” National Academies Press, 1992, at 287. 
809 

process, it necessarily reduces tailpipe 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 measuring the amount of CO2 emitted from the tailpipe, rather than 

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 fuel513 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. 

 

513 This is the method that EPA uses to determine compliance with NHTSA’s CAFE standards. 
810 

• 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 currently requires EPA to use the 1975 passenger car test 

procedures under which vehicle air conditioners are not turned on during fuel economy 

testing.514 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 

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 to 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, attributebased 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,

515 a case involving a 2003 order of the Environmental Protection Agency (EPA) 

denying a petition for rulemaking to regulate greenhouse gas emissions from motor 

 

514 See 49 U.S.C. 32904(c). 515 127 S.Ct. 1438 (2007). 
811 

vehicles under the Clean Air Act.516 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. 517 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 issued a final rule finding that 

emissions of GHGs from new motor vehicles and motor vehicle engines cause or 

contribute to air pollution that endanger public health and welfare.518 

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 

 

516 68 FR 52922 (Sept. 8, 2003). 517 549 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. 

518 74 FR 66496 (Dec. 15, 2009). 
812 

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

apply to model years 2009 through 2016 and require CO2 emissions levels for passenger 

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

g/mi for light trucks in 2009, decreasing 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.519 EPA withdrew the 

prior denial and granted California’s request for a waiver on June 30, 2009.520 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 

 

519 74 FR 66495 (Dec. 15, 2009). The endangerment finding was challenged by industry in a filing 

submitted December 23, 2009; a hearing date does not appear to have been set. 

520 74 FR 32744 (July 8, 2009). 
813 

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 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 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. A harmonized approach to regulating lightduty 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, a harmonized approach may help to mitigate 

the cost to manufacturers of having to comply with multiple sets of federal and state 

standards 
814 

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 FR 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.521 

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. 

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 

 

521 Record of OIRA’s action can be found at http://www.reginfo.gov/public/do/eoHistReviewSearch (last 

accessed March 1, 2010). 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.” 
815 

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 Administrator 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 
816 

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, 2009 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 re-evaluation 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 
817 

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.522 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 of air 

conditioning systems, thereby reducing both fuel consumption and tailpipe emissions of 

CO2.

523 

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 apply nationally under the National 

Program. 

 

522 Under 49 U.S.C. 32912(c), roughly, NHTSA may raise the penalty amount if the agency decides that 

doing so will increase energy conservation substantially without having a substantial deleterious impact on 

the economy, employment, or competition among automobile manufacturers. 523 Under 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. 
818 

As requested in the President’s memorandum, NHTSA 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 more 

information on how the proposed CAFE standards were developed with those comments 

in mind, see the NPRM and the supporting documents. 

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

 NHTSA is issuing 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.524 Under the final CAFE standards, each light vehicle model produced for sale in 

the United States has a fuel economy target. The CAFE levels that must be met by the 

fleet of each manufacturer will 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: 

 

524 See 49 CFR 523.2 for the exact definition of “footprint.” 
819 

Figure IV.A.5-1 Final MY 2011 and Final MY 2012-2016 

Passenger Car Fuel Economy Targets 

20

25

30

35

40

45

35 40 45 50 55 60 65 70

T

a

r

g

e

t

(

m

p

g

)

Footprint (sf)

2011

2016

2015

2014

2013

2012
820 

Figure IV.A.5-2 Final MY 2011 and Final MY 2012-2016 

Light Truck Fuel Economy Targets 

 

20

25

30

35

40

45

35 40 45 50 55 60 65 70

T

a

r

g

e

t

(

m

p

g

)

Footprint (sf)

2011

2016

2015

2014

2013

2012
821 

 Under these final 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 final rule of the MYs 2012-2016 vehicle 

fleet, NHTSA estimates that the targets shown above will result in the following 

estimated average required CAFE levels: 

Table IV.A.5-1 Estimated Average Required Fuel Economy (mpg) 

under Final Standards 

 2012 2013 2014 2015 2016 

Passenger Cars 33.3 34.2 34.9 36.2 37.8 

Light Trucks 25.4 26.0 26.6 27.5 28.8 

Combined Cars & Trucks 29.7 30.5 31.3 32.6 34.1 

For the reader’s reference, these miles per gallon values would be equivalent to the 

following gallons per 100 miles values for passenger cars and light trucks: 

2012 2013 2014 2015 2016 

Passenger Cars 3.00 2.93 2.86 2.76 2.65 

Light Trucks 3.94 3.85 3.76 3.63 3.48 

Combined Cars & Trucks 3.36 3.28 3.19 3.07 2.93 
822 

 

NHTSA estimates that average achieved fuel economy levels will 

correspondingly increase through MY 2016, but that manufacturers will, on average, 

undercomply525 in some model years and overcomply526 in others, reaching a combined 

average fuel economy of 33.7 mpg in MY 2016.527 Table IV.A.5-1 is the estimated 

required fuel economy for the final CAFE standards while Table IV.A.5-2 includes the 

effects of some manufacturers’ payment of CAFE fines and use of FFV credits. 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 assumed. 

Table IV.A.5-2 Estimated Average Achieved Fuel Economy (mpg) 

under Final Standards 

 2012 2013 2014 2015 2016 

Passenger Cars 32.8 34.4 35.3 36.3 37.2 

Light Trucks 25.1 26.0 27.0 27.6 28.5 

Combined Cars & Trucks 29.3 30.6 31.7 32.6 33.7 

For the reader’s reference, these miles per gallon values would be equivalent to 

the following gallons per 100 miles values for passenger cars and light trucks: 

 

525 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. 

526 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) 527 Consistent 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. 
823 

 2012 2013 2014 2015 2016 

Passenger Cars 3.05 2.91 2.83 2.76 2.69 

Light Trucks 3.99 3.84 3.71 3.62 3.50 

Combined Cars & Trucks 3.42 3.27 3.15 3.06 2.97 

 NHTSA estimates that these fuel economy increases will lead to fuel savings 

totaling 61 billion gallons during the lifetimes of vehicles sold in MYs 2012-2016 (all 

following tables assume Reference Case economic inputs): 

Table IV.A.5-3. Fuel Saved (billion gallons) under Final Standards 

2012 2013 2014 2015 2016 Total 

Passenger Cars 2.4 5.2 7.2 9.4 11.4 35.7 

Light Trucks 1.8 3.7 5.3 6.5 8.1 25.4 

Combined 4.2 8.9 12.5 16.0 19.5 61.0 

The agency also estimates that these new CAFE standards will lead to 

corresponding reductions of CO2 emissions totaling 655 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 Final Standards 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 25 54 77 101 123 380 

Light Trucks 19 40 57 71 88 275 

Combined 44 94 134 172 210 655 

 

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., increased 

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 
824 

monetary value to society of these benefits and disbenefits, and estimates that the final 

standards will produce significant benefits to society. NHTSA estimates that, in present 

value terms, these benefits would total over $180 billion over the useful lives of vehicles 

sold during MYs 2012-2016: 

Table IV.A.5-5 Present Value of Benefits ($billion) under Final CAFE Standards 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 6.8 15.2 21.6 28.7 35.2 107.5 

Light Trucks 5.1 10.7 15.5 19.4 24.3 75.0 

Combined 11.9 25.8 37.1 48 59.5 182.5 

 NHTSA attributes most of these benefits—about $143 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) 2010. The Final Regulatory Impact Analysis (FRIA) 

accompanying today’s final rule presents a detailed analysis of specific benefits of the 

final rule. 

Amount Monetized Value (Discounted) 

3% Discount Rate 7% Discount Rate 

Fuel savings 61.0 billion gallons $143.0 billion $112.0 billion 

CO2 emissions 

reductions528

655 mmt $14.5 billion $14.5 billion 

NHTSA estimates that the necessary increases in technology application will 

involve considerable monetary outlays, totaling $52 billion in incremental outlays (i.e., 

 

528 We note that the net present value of reduced CO2 emissions is calculated differently than other benefits. 

The same discount rate used to discount the value of damages from future emissions (SCC at 5 percent, 3 

percent, and 2.5 percent) is used to calculate the net present value of the SCC for internal consistency. 

Additionally, we note that the SCC increases over time. See Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, United 

States Government, February 2010 (available in Docket No. NHTSA-2009-0059 for more information. 
825 

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 Final CAFE Standards 

 2012 2013 2014 2015 2016 Total 

Passenger Cars 4.1 5.4 6.9 8.2 9.5 34.2 

Light Trucks 1.8 2.5 3.7 4.3 5.4 17.6 

Combined 5.9 7.9 10.5 12.5 14.9 51.7 

 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 

final standards would lead to increases in average new vehicle prices, ranging from $322 

per vehicle in MY 2012 to $961 per vehicle in MY 2016: 

 

Table IV.A.5-7 Incremental Increases in Average New Vehicle Prices ($) under Final 

CAFE Standards 

 2012 2013 2014 2015 2016 

Passenger Cars 505 573 690 799 907 

Light Trucks 322 416 621 752 961 

Combined 434 513 665 782 926 

 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, again assuming 

Reference Case inputs (except for the variation in discount rate). Numbers in parentheses 

represent negative values. 
826 

Table IV.A.5-8 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 

5,903 7,890 10,512 12,539 14,904 51,748 

Benefits

Savings in 

Lifetime Fuel 

Expenditures 

9,265 20,178 29,083 37,700 46,823 143,048 

Consumer 

Surplus from 

Additional 

Driving 

696 1,504 2,150 2,754 3,387 10,491 

Value of Savings 

in Refueling 

Time 

706 1,383 1,939 2,464 2,950 9,443 

Reduction in 

Petroleum 

Market 

Externalities 

545 1,154 1,630 2,080 2,543 7,952 

Reduction in 

Climate-Related 

Damages from 

Lower CO2

Emissions529

921 2,025 2,940 3,840 4,804 14,528 

Reduction in Health Damage Costs from Lower Emissions of Criteria Air Pollutants: 

CO 0 0 0 0 0 0 

VOC 42 76 102 125 149 494 

NOX 70 104 126 146 166 612 

PM 205 434 612 776 946 2,974 

SOX 158 332 469 598 731 2,288 

Dis-Benefits from Increased Driving: 

Congestion Costs (447) (902) (1,282) (1,633) (2,000) (6,264)

Noise Costs (9) (18) (25) (32) (39) (122)

Crash Costs (217) (430) (614) (778) (950) (2,989)

Total Benefits 11,936 25,840 37,132 48,040 59,509 182,457 

Net Benefits 6,033 17,950 26,619 35,501 44,606 130,709 

 

529 See supra note 528. 
827 

Table IV.A.5-9 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 

5,903 7,890 10,512 12,539 14,904 51,748 

Benefits

Savings in 

Lifetime Fuel 

Expenditures 

7,197 15,781 22,757 29,542 36,727 112,004 

Consumer 

Surplus from 

Additional 

Driving 

542 1,179 1,686 2,163 2,663 8,233 

Value of Savings 

in Refueling 

Time 

567 1,114 1,562 1,986 2,379 7,608

Reduction in 

Petroleum 

Market 

Externalities 

432 917 1,296 1,654 2,023 6,322

Reduction in 

Climate-Related 

Damages from 

Lower CO2

Emissions530

921 2,025 2,940 3,840 4,804 14,530 

Reduction in Health Damage Costs from Lower Emissions of Criteria Air Pollutants: 

CO 0 0 0 0 0 0 

VOC 32 60 80 99 119 390

NOX 53 80 98 114 131 476

PM 154 336 480 611 748 2,329

SOX 125 265 373 475 581 1,819

Dis-Benefits from Increased Driving: 

Congestion Costs (355) (719) (1,021) (1,302) (1,595) (4,992)

Noise Costs (7) (14) (20) (26) (31) (98)

Crash Costs (173) (342) (488) (619) (756) (2,378)

Total Benefits 9,488 20,682 29,743 38,537 47,793 146,243

Net Benefits 3,586 12,792 19,231 25,998 32,890 94,497

 

530 See supra note 529. 
828 

Neither EPCA nor EISA requires that NHTSA conduct a cost-benefit analysis in 

determining average fuel economy standards, but too, neither precludes its use.531 EPCA 

does require that NHTSA consider economic practicability among other factors, and 

NHTSA has concluded, as discussed elsewhere herein, that the standards it promulgates 

today are economically practicable. Further validating and supporting its conclusion that 

the standards it promulgates 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 

final standards would be more than three times the magnitude of the corresponding costs, 

such that the final standards would produce net benefits of over $130 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) 

 

531 Center 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.”) 
829 

i. Significantly Increasing CAFE Standards Without Making them Attributebased Would Adversely Affect Safety 

In the 2002 congressionally-mandated report entitled “Effectiveness and Impact 

of Corporate Average Fuel Economy (CAFE) Standards,” 532 a majority of the 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 attributed-based 

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 load-carrying capacity.533 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 trade-offs 

that must be made if CAFE standards were increased by any significant amount.534

 

532 National 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 March 1, 2010). 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. 

533 NHTSA formerly used this approach for CAFE standards. EISA prohibits its use after MY 2010. 534 NAS, p. 9. As discussed at length in prior CAFE rules, two members of the NAS Committee dissented 

from the majority opinion that there would be safety impacts to downweighting under a flat-standard 

system. 
830 

 In response to these conclusions, NHTSA considered various attributes and 

ultimately issued footprint-based CAFE standards for light trucks and sought legislative 

authority to issue attribute-based CAFE standards for passenger cars before undertaking 

to raise the car 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 

increasing the fuel economy standards, both relating to externalities. The first and most 

important concern, it argued, is the accumulation in the atmosphere of greenhouse gases, 

principally carbon dioxide.535 

 

 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 of such increases be considered. That is, it urged 

 

535 NAS, pp. 2, 13, and 83. 
831 

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. 

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 it was then structured. While raising CAFE standards under the 

then 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.536 

 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.”537 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 

 

536 NAS, pp. 4-5 (Finding 10). 537 NAS, p. 5 (Finding 12). 
832 

would depend upon the fractions of vehicles it sold with particular levels of these 

attributes.538 

b. 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.539 Reforming the CAFE program 

enabled it to achieve larger fuel savings, while enhancing safety and preventing adverse 

economic consequences. 

 As noted above, fuel economy standards were restructured so that they were 

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. 

 

538 NAS, p. 87. 539 71 FR 17566 (Apr. 6, 2006). 
833 

Compared to non-attribute-based CAFE, attribute-based CAFE enhances overall 

fuel savings while providing vehicle manufacturers with the flexibility they need to 

respond to changing market conditions. Attribute-based 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 attribute-based 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 non-attribute-based CAFE 

program. 

c. 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,

540 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. 

Although the Court found that NHTSA had been arbitrary and capricious in several 

respects, the Court did not vacate the standards, but instead said it would remand the rule 

to NHTSA to promulgate new standards consistent with its opinion “as expeditiously as 

 

540 508 F.3d 508. 
834 

possible and for the earliest model year practicable.” 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. 

d. 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). 

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

The agency could not 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 could, however, project what the industry-wide level of 

average fuel economy would have been for passenger cars and for light trucks if each 
835 

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 

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. 
836 

f. 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.541

g. 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 the MYs 2011-2015 

rulemaking.542 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 

 

541 See CBD v. NHTSA, 538 F.3d 1172 (9th Cir. 2008). 542 73 FR 61859 (Oct. 18, 2008). 
837 

cumulative impacts and describes these impacts to inform the decision maker 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. 
838 

h. 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. 543

i. 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 National Academy of Sciences assessing automotive 

technologies that can practicably be used to improve fuel economy. 

 

543 The statement can be found at http://www.dot.gov/affairs/dot0109.htm (last accessed March 1, 2010). 
839 

j. NHTSA Issues Final Rule for MY 2011 (March 2009) 

i. Standards 

The final rule established footprint-based fuel economy standards for MY 2011 

passenger cars and light trucks. 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 
840 

standard” alternative as the final standards for MY 2011.544 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, for the reasons discussed extensively in that final rule. 

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 

 

544 The agency notes, for NEPA purposes, that the “optimized standard” alternative adopted as the final 

standards corresponds to the “Optimized Mid-2” scenario described in Section 2.2.2 of the FEIS. 
841 

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 cars545 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 

ii. 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.546 Since its 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 

 

545 Those numbers set out several paragraphs above. 546 Congress 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. 
842 

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. 

2. Energy Policy and Conservation Act, as Amended by the Energy 

Independence and Security Act

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

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

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

including ones having environmental and foreign policy implications. EPCA allocates 

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

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

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

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

trucks; and NHTSA enforces the standards based on EPA’s calculations. 
843 

 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.547 

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. 

 

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

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

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

of the EPCA: energy conservation.”) 
844 

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.”548 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 

 

548 67 FR 77015, 77021 (Dec. 16, 2002). 
845 

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

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

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

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

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

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

 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.”549 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. 

 

549 CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 
846 

(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,550 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 years551 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. 

NHTSA also recognizes that in some cases the effect of other motor vehicle 

standards of the Government on fuel economy may be neutral or positive. For example, 

to the extent the GHG standards set by EPA and California 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 lower-GHG-producing air 

 

550 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. 551 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534, 33537 (Jun. 30, 1977). 
847 

conditioners. The agency considered EPA’s standards and the harmonization benefits of 

the National Program in developing its own standards. 

(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.”552 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. 

 

552 42 FR 63184, 63188 (1977). 
848 

(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 
849 

associated with the rebound effect553 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,554 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.”555 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 

 

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

goes down, as when fuel economy improves. 

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

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

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

Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2007). 555 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added) 
850 

from diesels were then both a source of concern and unregulated.556 In 1988, NHTSA 

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

environmental assessment addressing that subject.557 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.558 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.559 

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

establish, manufacturers were encouraged to 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, which resulted in a higher mass differential between 

 

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

33533,33540-1 and 33551 (Jun. 30, 1977), and for MY 1983-85 light trucks, 45 FR 81593, 81597 (Dec. 

11, 1980). 

557 53 FR 33080, 33096 (Aug. 29, 1988). 558 53 FR 39275, 39302 (Oct. 6, 1988). 559 See, e.g., Center for Auto Safety v. NHTSA (CAS), 793 F. 2d 1322 (D.C. Cir. 1986) (Administrator’s 

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

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

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

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

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

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

Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 120 at n.11 (D.C. Cir. 1990). 
851 

the smallest and the largest vehicles, with a correspondingly greater risk to safety. 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, and because all vehicles are required to 

continue improving their fuel economy. 

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

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

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.560 As noted 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 

 

560 49 U.S.C. 32902(h). 
852 

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 
853 

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 fleet-wide average fuel economy 

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

i.e., the proportion of the fleet that is small-, medium- or large-sized. 
854 

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 many 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. 

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. 

NHTSA sought comment in the NPRM 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, but decided 

against finalizing either option for purposes of this final rule, choosing to defer the matter 

for now. Modernizing the passenger car test procedures, or even providing similar 

credits, would not be possible under EPCA as currently written. 
855 

c. Enforcement and Compliance Flexibility 

EPA is responsible for measuring automobile manufacturers’ CAFE so that 

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

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

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

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

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

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

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

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

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

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

approve the plan. 

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

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

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

in an earlier year or expects to earn credits in a later year.561 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 

 

561 EPCA does not provide authority for seeking to enjoin violations of the CAFE standards. 
856 

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 provisions562 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 attributebased approach to setting CAFE standards fuel economy targets are established for 

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

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

 

562 49 U.S.C. 30120, Remedies for defects and noncompliance. 
857 

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. 

C. Development and Feasibility of the Final Standards 

 

1. How Was the Baseline and Reference Vehicle Fleet Developed?

a. Why Do the Agencies Establish a Baseline and Reference Vehicle Fleet? 

As also discussed in Section II.B above, 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 established a baseline vehicle fleet representing those vehicles, based 

on the best available transparent information. Each agency then developed a separate 

reference fleet, accounting (via their respective analytical 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 for other 

relevant comparisons in the rule. 
858 

Because NHTSA and EPA have different established practices, the agencies’ 

rulemaking documents (the Federal Register notice, Joint Technical Support Document, 

agency-specific Regulatory Impact Analyses, and NHTSA Environmental Impact 

Analysis) have some differences in terminology. In connection with its first-ever GHG 

emissions rule under the CAA, EPA has used the term “baseline fleet” to refer to the MY 

2008 fleet (i.e., from EPA certification and fuel economy data for MY 2008) prior to 

adjustment to reflect projected shifts in market composition. NHTSA, as in recent CAFE 

rulemakings, refers to the resultant market forecast, as specified in CAFE model input 

files (and corresponding input files for EPA’s OMEGA model), as the “baseline” fleet. 

EPA refers to this fleet as the “reference fleet.” NHTSA refers to the “no action” 

standards identified in the EIS (that is, the MY 2011 standards carried forward through 

MY 2016) as defining the “baseline” scenario, and refers to the fleet to which 

technologies have been added in response to these standards as the “adjusted baseline” 

fleet.563 EPA refers to this as the “final reference fleet.” These differences in 

terminology are summarized in the following table: 

Fleet Description EPA Terminology NHTSA Terminology 

MY 2008 Fleet with MY 2008 Production 

Volumes 

Baseline MY 2008 Fleet 

MY 2008 Fleet Adjusted to Reflect Projected 

Market Shifts 

Reference Fleet Baseline [Market 

Forecast] 

MY 2008 Fleet Adjusted to Reflected Projected 

Market Shifts and Response to MY 2011 CAFE 

Standards 

[Final] Reference Fleet Adjusted Baseline 

The agencies have retained this mixed terminology in order to facilitate 

comparison to past rulemakings. In general, EPA’s RIA and the Joint TSD apply EPA’s 

 

563 Some manufacturers’ baseline fleets (as reflected in the agencies’ market forecast) do not, without 

applying additional technology and/or CAFE credits, show compliance with the baseline standards. 
859 

nomenclature, NHTSA’s RIA and EIS apply NHTSA’s nomenclature, and the joint 

Federal Register notice uses EPA’s nomenclature when focusing on GHG emissions 

standards, and NHTSA’s nomenclature when focusing CAFE standards. 

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 model year 

for which final data is currently available from manufacturers. These data were used as 

the source for MY 2008 production volumes and some vehicle engineering 

characteristics, such as 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 footprintbased 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. 
860 

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 the 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).564 

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 CSMWorldwide and used their projections of the number of vehicles of each type predicted to 

be sold by manufacturers in 2011-2015.565 This provided the year-by-year percentages of 

cars and trucks sold by each manufacturer as well as the percentages of each vehicle 

segment. The changes between company market share and industry market segments 

were most significant from 2011-2014, while for 2014-2015 the changes were relatively 

 

564 Available at http://www.eia.doe.gov/oiaf/aeo/index.html (last accessed March 15, 2010). Specifically, 

while the total volume of both cars and trucks was obtained from AEO 2010, the car-truck split was 

obtained from AEO 2009. The agencies have also used fuel price forecasts from AEO 2010. 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. 565 EPA also considered other sources of similar information, such as J.D. Powers, and concluded that CSM 

was more appropriate for purposes of this rulemaking analysis. 
861 

small. Noting this, and lacking a credible forecast of company and segment shares after 

2015, the agencies assumed 2016 market share and market segments to be the same as for 

2015. 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 Joint Technical Support Document 

accompanying today’s final rule. 

c. How is This Different From NHTSA’s Historical Approach and Why is 

This Approach Preferable? 

 As discussed above in Section II.B.4, 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-duty 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 
862 

vehicles being discontinued and newly introduced. On balance, however, 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 conclude that the advantages outweigh the disadvantages. 

Although manufacturers did not comment on the agency’s proposal to rely on 

public and commercial information rather than manufacturers’ confidential product plans 

when developing a market forecast, those organizations that did comment on this issue 

supported this change. The California Air Resources Board (CARB) and Center for 

Biological Diversity (CBD) both commended the resultant increase in transparency. 

CARB further indicated that the use of public and commercial information should 

produce a better forecast. On the other hand, as discussed above in Section I, CBD and 

the Northeast States for Coordinated Air Use Management (NESCAUM) both raised 

concerns regarding the resultant omission of some new vehicle models, and the inclusion 

of some vehicles to be discontinued, while CARB suggested that the impact of these 

inaccuracies should be minor. 

As discussed above in Section II.B.4, while a baseline developed using publicly 

and commercially available sources has both advantages and disadvantages relative to a 

baseline developed using manufacturers’ product plans, NHTSA has concluded for 

today’s rule that the advantages outweigh the disadvantages. Today’s approach is much 

more transparent than the agency’s past approach of relying on product plans, and as 
863 

discussed in Section II.B.4, any inaccuracies related to new or discontinued vehicle 

models should have only a minor impact on the agency’s analysis. 

For subsequent rulemakings, NHTSA remains hopeful that manufacturers will 

agree to make public their plans for model years that are very near, so that this 

information could be incorporated into analysis available for public review and comment. 

In any event, because NHTSA is releasing market inputs used in the agency’s analysis of 

this final rule, all interested parties can review these inputs fully, as intended in adopting 

the transparent approach. More information on the advantages and disadvantages of the 

current approach and the agencies’ decision to follow it is available in Section II.B.4. 

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. This comparison 

provides a basis for understanding general characteristics and measures of the difference, 

in this case, between using publicly (and commercially) available sources and using 

manufacturers’ confidential product plans. The current baseline, while developed using 

the same methods as the baseline used for MYs 2012-2016 NPRM, reflects updates to the 
864 

underlying commercially-available forecast of manufacturer and market segment shares 

of the future light vehicle market. These changes are discussed above in Section II.B. 

 Estimated vehicle sales: 

The sales forecasts, based on the Energy Information Administration’s (EIA’s) 

Annual Energy Outlook 2010 (AEO 2010), 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.566 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 41 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, 

 

566 Please see Section II.B above and Chapter 1 of the Joint TSD for more discussion on the agencies’ use 

of AEO 2010 to determine the sales forecasts for light vehicles during the model years covered by the 

rulemaking, as well as the memo available at Docket No. NHTSA-2009-059-0222. 
865 

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. 
866 

Figure IV.C.1-1 Planned Fuel Economy vs. Footprint, Passenger Cars in Current Baseline 

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35 40 45 50 55 60 65 70 75

Footprint (sf)

Fuel Economy(mpg)
867 

Figure IV.C.1-2 Planned Fuel Economy vs. Footprint, Passenger Cars in MY 2011 Final 

Rule

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35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Economy (mpg)
868 

Figure IV.C.1-3 Planned Fuel Economy vs. Footprint, Light Trucks in Current Baseline

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70

35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Economy (mpg)
869 

Figure IV.C.1-4 Planned Fuel Economy vs. Footprint, Light Trucks in MY 2011 Final 

Rule 

10

15

20

25

30

35

40

45

50

55

60

65

70

35 40 45 50 55 60 65 70 75 80

Footprint (sf)

Fuel Economy (mpg)
870 

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, given that the 

agency is relying on different sources of material for these assumptions as discussed in 

Section II.B above and Chapter 1 of the Joint TSD. 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.567

Table IV.C.1-1 Sales Forecasts (Production for U.S. Sale in MY 2011, Thousand Units) 

 Current Baseline MY 2011 Final Rule 

Manufacturer Passenger Nonpassenger Passenger Nonpassenger

Chrysler 326 737 707 1,216

Ford 1,344 792 1,615 1,144

General Motors 1,249 1,347 1,700 1,844

Honda 851 585 1,250 470

Hyundai 382 46 655 221

Kia 306 88 

Nissan 612 331 789 479

Toyota 1,356 888 1,405 1,094

Other Asian 664 246 441 191

European 833 396 724 190

Total 7,923 5,458 9,286 6,849

 

567 As 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. 
871 

 Dual-fueled vehicles: 

Manufacturers have also, during and since MY 2008, indicated to the agency that 

they intend to sell more dual-fueled or flexible-fuel vehicles (FFVs) in MY 2011 than 

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.568 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.”569 

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 7 

percent for the current baseline, versus 17 percent for the MY 2011 final rule. NHTSA 

notes that in MY 2008 (the model year providing the vehicle models upon which today’s 

market forecast is based), the three U.S.-based OEMs produced most of the FFVs offered 

for sale in the U.S., yet these OEMs account are projected to account for a smaller share 

of the future market in the forecast the agency has used to develop and analyze today’s 

rule than in the forecast the agency used to develop and analyze the MY 2011 standards. 

 

568 See 49 U.S.C. 32905 and 32906. 569 49 U.S.C..32902(h). 
872 

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 lower in MY 2011 than shown in the MY 2011 

final rule and the MYs 2012-2016 NPRM. Under the current baseline, average fuel 

economy for MY 2011 is 26.4 mpg, versus 26.5 mpg under the baseline in the MY 2011 

final rule, and 26.7 mpg under the baseline in the MYs 2012-2016 NPRM. The 0.3 mpg 

change relative to the MYs 2012-2016 baseline is the result of changes in manufacturer 

and market segment shares of the MY 2011 market. 

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. 
873 

For example, while Volkswagen is essentially the same under both, Toyota and Nissan 

show increased combined CAFE levels under the current baseline (by 1.9 and 0.7 mpg 

respectively), while Chrysler, Ford, and GM show decreased combined CAFE levels 

under the current baseline (by 1.4, 1.1, and 0.8 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) 

Current baseline CAFE 

levels 

MY 2011 planned CAFE 

levels 

Manufacturer Passenger Nonpassenger Passenger Nonpassenger

BMW 27.2 23.0 27.0 23.0

Chrysler 27.8 21.8 28.2 23.1

Ford 28.0 21.0 29.3 22.5

Subaru 29.2 26.1 28.6 28.6

General Motors 28.2 21.2 30.3 21.4

Honda 33.5 25.0 32.3 25.2

Hyundai 32.5 24.3 31.7 26.0

Tata 24.6 19.6 24.7 23.9

Kia570 31.7 23.7 

Mazda571 30.6 26.0 

Daimler 26.4 21.0 25.2 20.6

Mitsubishi 29.4 23.6 29.3 26.7

Nissan 31.7 21.7 31.3 21.4

Porsche 26.2 20.0 27.2 20.0

Ferrari572 16.2 

Maserati573 18.2 

Suzuki 30.9 23.3 28.7 24.0

Toyota 35.1 23.7 33.2 22.7

Volkswagen 29.1 20.2 28.5 20.1

Total/Average 30.3 22.2 30.4 22.6

 

570 Again, 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). 

571 Mazda 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. 

572 EPA 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. 573 EPA 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. 
874 

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 25.0 26.0 

Chrysler 23.3 24.7 

Ford 24.9 26.0 

Subaru 27.9 28.6 

General Motors 24.1 24.9 

Honda 29.5 30.0 

Hyundai 31.3 30.0 

Tata 21.4 24.4 

Kia 29.5 

Mazda 29.8 

Daimler 24.4 23.6 

Mitsubishi 27.4 29.1 

Nissan 27.3 26.6 

Porsche 23.7 22.0 

Ferrari 16.2 

Maserati 18.2 

Suzuki 29.7 27.8 

Toyota 29.5 27.6 

Volkswagen 27.0 27.1 

Total/Average 26.4 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 powerto-weight ratios for each manufacturer represented in the current baseline and of the 

seven largest manufacturers represented in the product plan data used in that rulemaking, 

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. 

 
875 

 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 49.9 47.5 

Chrysler 46.8 52.8 50.9 

Daimler 47.1 53.3 49.0 

Ford 46.3 56.1 49.9 

General 

Motors 46.4 58.2 52.5 

Honda 44.3 49.1 46.3 

Hyundai 44.4 48.7 44.8 

Kia 45.2 51.0 46.5 

Mazda 44.4 47.3 44.9 

Mitsubishi 43.8 46.5 44.6 

Nissan 45.3 53.9 48.3 

Porsche 38.6 51.0 42.8 

Subaru 43.1 26.6 36.8 

Suzuki 40.8 47.2 41.6 

Tata 50.3 47.8 48.8 

Toyota 44.0 53.0 47.6 

Volkswagen 43.5 52.6 45.1 

Industry 

Average 45.2 53.5 48.6 

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 
876 

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 4,648 4,055 

Chrysler 3,572 4,469 4,194 

Daimler 3,583 5,127 4,063 

Ford 3,526 4,472 3,877 

General Motors 3,528 4,978 4,281 

Honda 3,040 4,054 3,453 

Hyundai 3,014 4,078 3,129 

Kia 3,035 4,007 3,252 

Mazda 3,258 3,803 3,348 

Mitsubishi 3,298 3,860 3,468 

Nissan 3,251 4,499 3,689 

Porsche 3,159 4,906 3,760 

Subaru 3,176 2,001 2,727 

Suzuki 2,842 3,843 2,965 

Tata 3,906 5,171 4,627 

Toyota 3,109 4,321 3,589 

Volkswagen 3,445 5,672 3,839 

Industry 

Average 3,313 4,499 3,797 

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 
877 

 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 0.067 

Chrysler 0.055 0.052 0.053 

Daimler 0.068 0.056 0.064 

Ford 0.058 0.054 0.056 

General Motors 0.057 0.056 0.056 

Honda 0.056 0.054 0.056 

Hyundai 0.052 0.055 0.052 

Kia 0.050 0.056 0.051 

Mazda 0.052 0.055 0.052 

Mitsubishi 0.053 0.056 0.054 

Nissan 0.059 0.057 0.058 

Porsche 0.105 0.073 0.094 

Subaru 0.060 0.030 0.048 

Suzuki 0.049 0.062 0.051 

Tata 0.077 0.057 0.065 

Toyota 0.053 0.062 0.056 

Volkswagen 0.057 0.052 0.056 

Industry Average 0.057 0.056 0.056 
878 

Table IV.C.1-6b MY 2011 Final Rule Average Planned MY 2011 Vehicle Power-toWeight 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 threeyear 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 
879 

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% 37% 34% 

Chrysler 0% 13% 9% 

Daimler 0% 0% 0% 

Ford 12% 8% 11% 

General Motors 17% 3% 9% 

Honda 29% 26% 28% 

Hyundai 26% 0% 23% 

Kia 38% 83% 48% 

Mazda 0% 0% 0% 

Mitsubishi 0% 59% 18% 

Nissan 5% 25% 12% 

Porsche 0% 100% 34% 

Subaru 0% 42% 16% 

Suzuki 4% 21% 6% 

Tata 28% 100% 69% 

Toyota 5% 15% 9% 

Volkswagen 16% 0% 13% 

Industry Average 13% 15% 14% 
880 

Table IV.C.1-8 MY 2011 Final Rule, Share of Fleet Redesigned in MY 2011 

PC LT Avg. 

Manufacturer 1 19% 0% 11% 

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 IV.C.1-8 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 IV.C.1-8 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. 
881 

e. How does Manufacturer Product Plan Data Factor into the Baseline Used 

in this Rule? 

As discussed in Section II.B.5 above, while the agencies received updated product 

plans in Spring and Fall 2009 in response to NHTSA’s requests, the baseline data used in 

this final rule is not informed by these product plans, except with respect to specific 

engineering characteristics (e.g., GVWR) of some MY 2008 vehicle models, because 

these product plans contain confidential business information that the agencies are legally 

required to protect from disclosure, and because the agencies have concluded that, for 

purposes of this final rule, a transparent baseline is preferable. 

For the NPRM, NHTSA conducted a separate analysis that did make use of these 

product plans. NHTSA performed this separate analysis for purposes of comparison 

only. For today’s final rule NHTSA used the publicly available baseline for all analysis 

related to the development and evaluation of the new CAFE standards. As discussed 

above in Section II.B.4, while a baseline developed using publicly and commercially 

available sources has both advantages and disadvantages relative to a baseline developed 

using manufacturers’ product plans, NHTSA has concluded for today’s rule that the 

advantages outweigh the disadvantages. NHTSA plans to consider these advantages and 

disadvantages further in connection with future rulemakings, taking into account changes 

in the market, changes in the scope and quality of publicly and commercially available 
882 

data, and any changes in manufacturers’ willingness to make some product planning 

information publicly available. 

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, as well as the comments received to the NPRM for this rule. In 

addition, the agencies supplemented their review with updated information from the FEV 

tear-down studies contracted by EPA, 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 final rule above in Section II.E, in Chapter 3 of 

the Joint TSD, and in Section V of NHTSA’s FRIA. 

 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 
883 

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,574 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.575 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 FRIA. 

 

574 The 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-2009-0059-0156 and on NHTSA’s website. 

575 A 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. 
884 

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

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 DEACD 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
885 

For purposes of this final rule 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. 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 final standards. However, some refinements were made as 

discussed in the NPRM.576 Additionally, the following refinements were made for 

purposes of the final rule. 

Specific to its modeling, NHTSA has revised two technologies used in the final 

rule analysis from those considered in the NPRM. These revisions were based on 

comments received in response to the NPRM and the identification of area to improve 

accuracy. In the NPRM, a diesel engine option (DSLT or DSLC) was not available for 

small vehicles because it did not appear to be a cost-effective option. However, based on 

comments received in response to the NPRM, the agency added a diesel engine option for 

small vehicles. Additionally, in the NPRM, the mass reduction/material substitution 

technology, MS1, assumed engine downsizing. However, for purposes of the final rule, 

engine downsizing is no longer assumed for MS1, thus slightly lowering the effectiveness 

estimate to better reflect how manufacturers might implement small amounts of mass 

reduction/material substitution. Chapter 3 of the Joint TSD and Section V of NHTSA’s 

FRIA provide a more detailed explanation of these revisions. 

 

576 74 FR at 49655-56 (Sept. 28, 2009). 
886 

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 EPA’s 2008 Staff 

Technical Report,577 the agencies took a fresh look at technology cost and effectiveness 

values and incorporated additional FEV tear-down study results for purposes of this final 

rule. This joint work is reflected in Chapter 3 of the Joint TSD and in Section II of this 

preamble, as 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 FRIA. NHTSA and EPA are confident that the thorough review conducted 

for purposes of this final rule led to the best available conclusions 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. 

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 for purposes of the 

NRPM: mild and strong hybrids, diesels, SGDI, and Valve Train Lift Technologies. In 

 

577 EPA Staff Technical Report: Cost and Effectiveness Estimates of Technologies Used to Reduce LightDuty Vehicle Carbon Dioxide Emissions. EPA420-R-08-008, March 2008. Available at Docket No. 

NHTSA-2009-0059-0027. 
887 

addition, based on FEV tear-down studies, the costs for turbocharging/downsizing, 6-,7-

,8-speed automatic transmissions, and dual clutch transmissions were revised for this 

final rule. These revisions are discussed at length in the Joint TSD and in NHTSA’s 

FRIA. 

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 the agencies apply technologies 

to vehicles in their respective models, we report the ranges for the effectiveness values 

used in each model. For purposes of the final rule analysis, NHTSA made only a couple 

of changes to the effectiveness estimates. Specifically, in reviewing the NPRM 

effectiveness estimates for this final rule NHTSA discovered that the DCTAM 

effectiveness value for Subcompact and Compact subclasses was incorrect; the (lower) 

wet clutch effectiveness estimate had been used instead of the intended (higher) dry 

clutch estimate for these vehicle classes.578 Thus, NHTSA corrected these effectiveness 

estimates. Additionally, as discussed above, the effectiveness estimate for MS1 was 

revised (lowered) to better represent the impact of reducing mass at a refresh. 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 FRIA. 

 

578 “Dry clutch” DCTAMs and “wet clutch” DCTAMs have different characteristics and different uses. A 

dry clutch DCTAM is more efficient and less expensive than a wet clutch DCTAM, which requires a wetclutch-type hydraulic system to cool the clutches. However, without a cooling system, a dry clutch 

DCTAM has a lower torque capacity. Dry clutch DCTAMs are thus ideal for smaller vehicles with lower 

torque ratings, like those in the Subcompact and Compact classes, while wet clutch DCTAMs would be 

more appropriate for, e.g., larger trucks. Thus, it is appropriate to distinguish accordingly in DCTAM 

effectiveness between subclasses. 
888 

As a general matter, NHTSA received relatively few comments related to 

technology cost and effectiveness estimates as compared to the number received on these 

issues in previous CAFE rulemakings. The California Air Resources Board (CARB) 

generally agreed with cost estimates used in the NPRM analysis. NHTSA also received 

comments from the Aluminum Association, General Motors, Honeywell, International 

Council on Clean Transportation (ICCT), Manufacturers of Emission Controls 

Association (MECA), Motor and Equipment Manufacturers Association (MEMA) and 

the New Jersey Department of Environmental Protection related to cost and effectiveness 

estimates for specific technologies, including but not limited to hybrids, diesels, 

turbocharging and downsizing, and mass reduction/material substitution. A detailed 

description of these comments and NHTSA’s responses can be found in Section V of 

NHTSA’s FRIA. 

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 non-performance passenger cars. NHTSA sought comment on the extent 

to which commenters believed that the agencies have been successful in holding constant 

these elements of vehicle performance and utility in developing the technology cost and 

effectiveness estimates, but received relatively little in response. NHTSA thus concludes 
889 

that commenters had no significant issues with its approach for purposes of this 

rulemaking, but the agency will continue to analyze this issue going forward. 

Additionally, NHTSA notes that the technology costs included in this final rule 

take into account only those associated with the initial build of the vehicle. The agencies 

sought comment 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, but received no responses. The agency will continue to examine this issue 

closely for subsequent rulemakings, particularly as manufacturers turn increasingly to 

even more advanced technologies in the future that may have more significant lifetime 

costs.

The tables below provide examples of the incremental cost and effectiveness 

estimates employed by the agency in developing this final rule, according to the decision 

trees used in the Volpe modeling analysis. Thus, the effectiveness and cost estimates are 

not absolute to a single reference vehicle, but are incremental to the technology or 

technologies that precede it. 
890 

Table IV.C.2-2 Technology Effectiveness Estimates Employed in the Volpe Model for Certain Technologies 

VEHICLE TECHNOLOGY INCREMENTAL FUEL CONSUMPTION REDUCTION (-%) 

Subcomp. 

Car 

Compact 

Car 

Midsize 

Car 

Large 

Car 

Perform. 

Subcomp. 

Car 

Perform. 

Compact 

Car 

Perform. 

Midsize 

Car 

Perform. 

Large 

Car 

Minivan 

LT 

Small 

LT 

M

Low Friction Lubricants 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 VVT - Dual Cam Phasing (DCP) 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2Discrete Variable Valve Lift (DVVL) on DOHC 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1.0 - 3.0 1Cylinder Deactivation on OHV n.a. n.a. n.a. 3.9 - 5.5 n.a. 3.9 - 5.5 3.9 - 5.5 3.9 - 5.5 3.9 - 5.5 n.a. 3Stoichiometric Gasoline Direct Injection (GDI) 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2Turbocharging and Downsizing 4.2 - 4.8 4.2 - 4.8 4.2 - 4.8 1.8 - 1.9 4.2 - 4.8 1.8 - 1.9 1.8 - 1.9 1.8 - 1.9 1.8 - 1.9 4.2 -4.8 16/7/8-Speed Auto. Trans with Improved Internals 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1.4 - 3.4 1Electric Power Steering 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 1.0 - 2.0 112V Micro-Hybrid 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.5 - 3.5 2.0 - 3.0 2.5 - 3.5 2.5 - 3.5 3.0 - 4.0 2.5 - 3.5 2.0 - 3.0 2Crank mounted Integrated Starter Generator 

8.6 - 8.9 8.6 - 8.9 8.6 - 8.9 8.7 - 8.9 8.6 - 8.9 8.7 - 8.9 8.7 - 8.9 8.7 - 8.9 8.7 - 8.9 8.6 - 8.9 8

Power Split Hybrid 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 6.3 - 12.4 Aero Drag Reduction 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2.0 - 3.0 2
891 

Table IV.C.2-3 Technology Cost Estimates Employed in the Volpe Model for Certain Technol

VEHICLE TECHNOLOGY ICM COSTS PER VEHICLE ($) 

Subcomp. 

Car 

Compact 

Car 

Midsize 

Car 

Large 

Car 

Perform. 

Subcomp. 

Car 

Perform. 

Compact 

Car 

Perform. 

Midsize 

Car 

Perform. 

Large 

Car 

Minivan 

LT 

Sma

LT 

Nominal baseline engine (for cost purpose) Inline 4 Inline 4 Inline 4 V6 Inline 4 V6 V6 V8 V6 Inlin

4 

Low Friction Lubricants 3 3 3 3 3 3 3 3 3 3 VVT - Dual Cam Phasing (DCP) 38 38 38 82 38 82 82 82 82 38 Discrete Variable Valve Lift (DVVL) on DOHC 142 142 142 206 142 206 206 294 206 142 Cylinder Deactivation on OHV n.a. n.a. n.a. 168 n.a. 168 168 192 168 n.aStoichiometric Gasoline Direct Injection (GDI) 236 236 236 342 236 342 342 392 342 236 Turbocharging and Downsizing 445 445 445 325 445 325 325 919 325 445 6/7/8-Speed Auto. Trans with Improved Internals 112 112 112 112 112 - 214 112 - 214 112 - 214 112 - 214 112 - 214 112 Electric Power Steering 106 106 106 106 106 106 106 106 106 106 12V Micro-Hybrid 288 311 342 367 314 337 372 410 337 325 Crank mounted Integrated Starter Generator 2,791 3,107 3,319 3,547 2,839 3,149 3,335 3,571 3,149 3,14Power Split Hybrid 1,600 2,133 2,742 3,261 3,661 4,018 5,287 6,723 4,018 2,33Aero Drag Reduction 48 48 48 48 48 48 48 48 48 48 
892 

c. How Does NHTSA Use These Assumptions in its Modeling Analysis? 

 NHTSA relies on several inputs and data files to conduct the compliance analysis 

using the Volpe model , as discussed further below and in Section V of the FRIA. For 

the purposes of applying technologies, the Volpe model primarily uses two data files, one 

that contains data on the vehicles expected to be manufactured in the model years 

covered by the rulemaking and identifies the appropriate stage within the vehicle’s lifecycle 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 final standards. The vehicle market is defined on a 

model-by-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 standards, which cover MYs 2012-2016, the light-duty 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—previous analyses 

would count a vehicle as “new” in any year when significant technology differences are 
893 

made, such as at a redesign.579 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-duty vehicle fuel economy.580

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 estimated 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 

 

579 The market file for the MY 2011 final rule, which included data for MYs 2011-2015, had 5500 vehicles, 

about 5 times what we are using in this analysis of the MY 2008 certification data. 

580 Because 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 the fleets that 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. 
894 

identifications are made on a model-by-model, engine-by-engine, and transmission-bytransmission 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 likely be applied to vehicles equipped with 

manual transmissions during the rulemaking timeframe, due primarily to the cylinder 

deactivation system not being able to anticipate gear shifts. 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. 

In response to the NPRM, NHTSA received comments from GM that included a 

description of technical considerations, concerns, limitations and risks that need to be 
895 

considered when implementing turbocharging and downsizing technologies on full size 

trucks. These include concerns related to engine knock, drivability, control of boost 

pressure, packaging complexity, enhanced cooling for vehicles that are designed for 

towing or hauling, and noise, vibration and harshness. NHTSA judges that the expressed 

technical considerations, concerns, limitations and risks are well recognized within the 

industry and it is standard industry practice to address each during the design and 

development phases of applying turbocharging and downsizing technologies. Cost and 

effectiveness estimates used in the final rule are based on analysis that assumes each of 

these factors is addressed prior to production implementation of the technologies. In 

comments related to full size trucks, GM commented that potential to address knock limit 

concerns through various alternatives, which include use of higher octane premium fuel 

and/or the addition of a supplemental ethanol injection system. For this rulemaking, 

NHTSA has not assumed that either of these approaches is implemented to address knock 

limit concerns, and these technologies are not included in assessment of turbocharging 

and downsizing feasibility, cost or effectiveness.581 In addition, NHTSA has received 

confidential business information from a manufacturer that supports that turbocharging 

and downsizing is feasible on a full size truck product during the rulemaking period. 

 

581 Note that for one of the teardown analysis cost studies of turbocharging and downsizing conducted by 

FEV, in which a 2.4L I4 DOHC naturally aspirated engine was replaced by a 1.6L I4 DOHC SGDI 

turbocharged engine, the particular 1.6L turbocharged engine chosen for the study was a premium octane 

fuel engine. For this rulemaking, NHTSA intends that a turbocharged and downsized engine achieve 

comparable performance to a baseline engine without requiring premium octane fuel. For the FEV study of 

the 1.6L turbocharged engine, this could be achieved through the specification of an engine with a 

displacement of slightly greater than 1.6L. NHTSA judges that a slightly larger engine would have small 

effect on the overall cost analysis used in this rulemaking. For all other teardown studies conducted by 

FEV, both the naturally aspirated engine and the replacement turbocharged and downsized engine were 

specified to use regular octane fuel. 
896 

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.582 

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 

 

582 For 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 a vehicle’s braking characteristics or how it performs in crash avoidance tests. 
897 

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 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 FRIA and in Chapter 3 of 

the TSD. 
898 

NHTSA received comments from the Center for Biological Diversity (CBD) and 

Ferrari regarding redesign cycles. CBD stated that manufacturers do not necessarily 

adhere to the agencies’ assumed five-year redesign cycle, and may add significant 

technologies by redesigning vehicles at more frequent intervals, albeit at higher costs. 

CBD argued that NHTSA should analyze the costs and benefits of manufacturers 

choosing to redesign vehicles more frequently than a 5-year average. Conversely, Ferrari 

agreed with the agencies that major technology changes are introduced at vehicle 

redesigns, rather than at vehicle freshenings, stating further that as compared to full-line 

manufacturers, small-volume manufacturers in fact may have 7 to 8-year redesign cycles. 

In response, NHTSA recognizes that not all manufacturers follow a precise five-year 

redesign cycle for every vehicle they produce,583 but continues to believe that the fiveyear redesign cycle assumption is a reasonable estimate of how often manufacturers can 

make major technological changes for purposes of its modeling analysis.584 NHTSA has 

 

583 In prior NHTSA rulemakings, the agency was able to account for shorter redesign cycles on some 

models (e.g., some sedans), and longer redesign cycles on others (e.g., cargo vans), but has standardized the 

redesign cycle in this analysis using the transparent baseline. 584 In the MY 2011 final rule, NHTSA noted that the CAR report submitted by the Alliance, prepared by 

the Center for Automotive Research and EDF, stated that “For a given vehicle line, the time from 

conception to first production may span two and one-half to five years,” but that “The time from first 

production (“Job#1”) to the last vehicle off the line (“Balance Out”) may span from four to five years to 

eight to ten years or more, depending on the dynamics of the market segment,” The CAR report then stated 

that “At the point of final production of the current vehicle line, a new model with the same badge and 

similar characteristics may be ready to take its place, continuing the cycle, or the old model may be 

dropped in favor of a different product.” See NHTSA-2008-0089-0170.1, Attachment 16, at 8 (393 of pdf). 

NHTSA explained that this description, which states that a vehicle model will be redesigned or dropped 

after 4-10 years, was consistent with other characterizations of the redesign and freshening process, and 

supported the 5-year redesign and 2-3 year refresh cycle assumptions used in the MY 2011 final rule. See

id., at 9 (394 of pdf). Given that the situation faced by the auto industry today is not so wholly different 

from that in March 2009, when the MY 2011 final rule was published, and given that the commenters did 

not present information to suggest that these assumptions are unreasonable (but rather simply that different 

manufacturers may redesign their vehicles more or less frequently, as the range of cycles above indicates), 

NHTSA believes that the assumptions remain reasonable for purposes of this final rule analysis. See also

“Car Wars 2009-2012, The U.S. automotive product pipeline”, John Murphy, Research Analyst, Merrill 

Lynch research paper, May 14, 2008 and “Car Wars 2010-2013, The U.S. automotive product pipeline,” 

John Murphy, Research Analyst, Bank of America/Merrill Lynch research paper, July 15, 2009. Available 

at http://www.autonews.com/assets/PDF/CA66116716.PDF. (last accessed March 15, 2010). 
899 

considered attempting to quantify the increased cost impacts of setting standards that rise 

in stringency so rapidly that manufacturers are forced to apply “usual redesign” 

technologies at non-redesign intervals, but such an analysis would be exceedingly 

complex and is beyond the scope of this rulemaking given the timeframe and the current 

condition of the industry. NHTSA emphatically disagrees that the redesign cycle is a 

barrier to increasing penetration of technologies as CBD suggests, but we also believe 

that standards so stringent that they would require manufacturers to abandon redesign 

cycles entirely would be beyond the realm of economic practicability and technological 

feasibility, particularly in this rulemaking timeframe given lead time and capital 

constraints. Manufacturers can and will accomplish much improvement in fuel economy 

and GHG reductions while applying technology consistent with their redesign schedules. 

Once the model indicates 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 
900 

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 is 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),585 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 “like” 

vehicles and assessing their incremental costs and effectiveness. NHTSA assigns each 

 

585 The NAS classes included subcompact cars, compact cars, midsize cars, large cars, small SUVs, midsize 

SUVs, large SUVs, small pickups, large pickups, and minivans. 
901 

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 final rule as for the NPRM, 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 

final rule for MYs 2012-2016. No comments were received on the vehicle subclasses 

employed in the agency’s NPRM analysis, and NHTSA has retained the subclasses and 

the methodology for dividing vehicles among them for the final rule analysis. Vehicle 
902 

subclasses are discussed in more detail in Section V of the FRIA 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, Hyundai Accent 

Subcompact Performance Mazda MX-5, BMW Z4 

Compact Chevy Cobalt, Nissan Sentra and Altima 

Compact Performance Audi S4, Mazda RX-8 

Midsize Chevy Impala, 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 

Small 

SUV/Pickup/Van 

Ford Escape & Ranger, Nissan Rogue 

Midsize 

SUV/Pickup/Van 

Chevy Colorado, Jeep Wrangler, Toyota Tacoma 

Large 

SUV/Pickup/Van 

Chevy Silverado, Ford E-Series, Toyota Sequoia 
903 

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 add 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 economyimproving 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 final 

rule, 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 

and in the MY 2012-2016 NPRM. 
904 

 

In general, and as described in great detail in the MY 2011 final rule and in 

Section V of the current FRIA, 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 as-needed 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 FRIA. 

Expanded decision trees are available in the docket for this final rule. 
905 

Figure IV.C.2-1 Engine Technology (EngMod) Decision Tree 
906 

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 FRIA). 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 this 

and the previous CAFE 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 that have been offered for the agencies’ consideration 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 
907 

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 final rule.586 

To the extent that the decision trees have changed for purposes of the NPRM and this 

final rule, 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 did not receive any comments related to the use or ordering of the 

decision trees, and the agency continued to use the decision trees as they were proposed 

in the NPRM. 

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 (albeit in varying degrees) in the 

model years covered by this rule. 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. 

 

586 See, 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. 
908 

CBD commented that because many of the technologies considered in the NPRM 

are currently available, manufacturers should be able to attain mpg levels equivalent to 

the MY 2016 standards in MY 2009. In response, as discussed above, technology 

“availability” is not determined based simply on whether the technology exists, but 

depends also on whether the technology has achieved a level of technical viability that 

makes it appropriate for widespread application. This depends in turn on component 

supplier constraints, capital investment and engineering constraints, and manufacturer 

product cycles, among other things. Moreover, even if a technology is available for 

application, it may not be available for every vehicle. Some technologies may have 

considerable fuel economy benefits, but cannot be applied to some vehicles due to 

technological constraints – for example, cylinder deactivation cannot be applied to 

vehicles with current 4-cylinder engines (because not enough cylinders are present to 

deactivate some and continue moving the vehicle) or on vehicles with manual 

transmissions within the rulemaking timeframe. The agencies have provided for 

increases over time to reach the mpg level of the MY 2016 standards precisely because of 

these types of constraints, because they have a real effect on how quickly manufacturers 

can apply technology to vehicles in their fleets. 

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 
909 

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.587 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 for purposes of the 

agency’s modeling analysis over the course of the last several CAFE rulemakings, as 

discussed in greater detail in the MY 2011 final rule,588 and in Section V of the FRIA and 

Chapter 3 of the Joint TSD. The MY 2011 final rule employed non-linear 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 

 

587 While 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. 

588 74 FR 14268–14271 (Mar. 30, 2009) 
910 

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.589

For purposes of this final rule 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.590 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 this final rule, 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 this final rule would take effect in MY 2012, nearly 10 

 

589 See 74 FR at 14269 (Mar. 20, 2009). 590 See 74 FR at 14270 (Mar. 30, 2009) for further discussion and examples. 
911 

years beyond the NAS report, and extends to MY 2016, and in the interest of 

harmonization with EPA’s proposal, NHTSA 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 analysis underlying this final rule. 

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 final rule 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. 

NHTSA received comments from the Alliance and ICCT relating to phase-in 

caps. The Alliance commented that the higher phase-in caps in the NPRM analysis (as 

compared to the MY 2011 final rule) “ignore OEM engine architecture 

differences/limitations,” arguing that the agency must consider manufacturing investment 

and lead time implications when defining phase-in caps. ICCT did not raise the issue of 

phase-in caps directly, but commented that the agencies had not provided information in 

the proposal documents explaining when each manufacturer can implement the different 

technologies and how long it will take the technologies to spread across the fleet. ICCT 

argued that this information was crucial to considering how quickly the stringency of the 

standards could be increased, and at what cost. 
912 

In response to the Alliance comments, the phase-in cap constraint is, in fact, 

exactly intended to account for manufacturing investment and lead time implications, as 

discussed above: phase-in caps are intended to reflect a manufacturer’s overall resource 

capacity available for implementing new technologies (such as engineering and 

development personnel and financial resources), to help ensure that resource capacity is 

accounted for in the modeling process. Although the phase-in caps for the analysis 

supporting these standards are higher than the phase-in caps employed in the MY 2011 

final rule, as stated in the NPRM, the agencies considered the fact that manufacturers, as 

part of the agreements supporting the National Program, appear to be anticipating higher 

technology application rates during the rulemaking timeframe – indicating that the values 

selected for the phase-in caps are more likely within the range of practicability. 

Additionally, the agencies did not receive any comments from manufacturers indicating a 

direct concern with the proposed application rates, which they were able to review in the 

detailed manufacturer level model outputs. The agencies believe that as manufacturers 

focus their resources (i.e., engineering, capital investment, etc.) on fuel economyimproving technologies, many of which have been in production for many years, the 

application rates being modeled are appropriate for the timeframe being analyzed. 

In response to ICCT’s comments, the combination of phase-in caps, 

refresh/redesign cycles, engineering constraints, etc., are intended to simulate 

manufacturers’ technology application decisions, and ultimately define the technology 

application/implementation rates for each manufacturer. NHTSA has used the best 
913 

public data available to define refresh and redesign schedules to define technology 

implementation, which allows us to apply technologies at the specific times each 

manufacturer is planning. There was full notice of not just the phase-in caps themselves, 

but their specific application as well. NHTSA notes that the PRIA and the FRIA do 

contain manufacturer-specific application/implementation rates for prominent 

technologies, and that manufacturer-specific technology application as employed in the 

agency’s analysis is available in full in the Volpe model outputs available on NHTSA’s 

website. The model outputs present the resultant application of technologies at the 

industry, manufacturer, and vehicle levels. 

Theoretically, significantly higher phase-in caps, such as those used in the current 

proposal and final rule as compared to those used in the MY 2011 final rule, should 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 final standards.591 NHTSA believes that this is due to the interaction 

of the various changes in methodology for this final rule—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 the modeling analysis for this final 

rule as compared to prior rulemakings. Other revisions that could impact modeled 

application rates include the use of transparent CAFE certification data in baseline fleet 

formulation and the use of other data for projecting it forward,592 or the use of a multi-

 

591 The modeling output for the analysis underlying these final standards is available on NHTSA’s website. 592 The 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 projected net application of 

technology. 
914 

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 phase-in caps should be expected 

to function in the new modeling process. 

Thus, after reviewing the output files, NHTSA 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 the analysis underlying these 

final standards, achieving a suitable level of stringency without requiring unrealistic or 

unachievable penetration rates. 

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 

rule, as discussed below. 
915 

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 industry-wide production basis, and increasing the threshold to 

300,000 units annually. 
916 

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 the proposed standards, NHTSA and EPA reviewed both types of 

learning factors, and the thresholds (300,000) and reduction rates (20 percent for volume, 

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 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. Volumebased learning was applied to the higher complexity hybrid technologies, while no 

learning was 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 
917 

has applied in this analysis for each technology, and discusses learning factors and each 

agencies’ use of them further. 

ICCT and Ferrari commented on learning curves. ICCT stated the agencies could 

improve the accuracy of the learning curve assumptions if they used a more dynamic or 

continuous learning curve that is more technology-specific, rather than using step 

decreases as the current time- and volume-based learning curves appear to do. ICCT also 

commented on the appropriate application of volume- versus time-based learning, and 

stated further that worldwide production volumes should be taken into account when 

developing learning curves. Ferrari commented that is more difficult for small-volume 

manufacturers to negotiate cost decreases from things like cost learning effects with their 

suppliers, implying that learning effects may not be applicable equally for all 

manufacturers. 

NHTSA agrees that a continuous curve, if implemented correctly, could 

potentially improve the accuracy of modeling cost-learning effects, although the agency 

cannot estimate at this time how significant the improvement would be. To implement a 

continuous curve, however, NHTSA would need to develop a learning curve cost model 

to be integrated into the agency’s existing model for CAFE analysis. Due to time 

constraints the agencies were not able to investigate fully the use of a continuous costlearning effects curve for each technology, but we will investigate the applicability of this 

approach for future rulemakings. For purposes of the final rule analysis, however, 
918 

NHTSA believes that while more detailed cost learning approaches may eventually be 

possible, the approach taken for this final rule is valid. 

Additionally, while the agencies agree that worldwide production volumes can 

impact learning curves, the agencies do not forecast worldwide vehicle production 

volumes in addition to the already complex task of forecasting the U.S. market. That 

said, the agencies do consider current and projected worldwide technology proliferation 

when determining the maturity of a particular technology used to determine the 

appropriateness of applying time- or volume-based learning, which helps to account for 

the effect of globalized production. 

With regard to ICCT’s comments on the appropriate application of volumeversus time-based learning, however, it seems as though ICCT is referencing a study that 

defines volume- and time-based learning in a different manner than the current 

definitions used by the agencies, and so is not directly relevant. The agencies use 

“volume-based” learning for non-mature technologies that have the potential for 

significant cost reductions through learning, while “time-based” learning is used for 

mature technologies that have already had significant cost reductions and only have the 

potential for smaller cost reductions. For “time-based” learning, the agencies chose to 

emulate the small year-over-year cost reductions manufacturers realize through defined 

cost reductions, approximately 3 percent per year, negotiated into contracts with 

suppliers. A more detailed description of how the agencies define volume- and timebased learning can be found in NHTSA’s PRIA. 
919 

And finally, in response to Ferrari’s comment, NHTSA recognizes that cost 

negotiations can be different for different manufacturers, but believes that on balance, 

cost learning at the supplier level will generally impact costs to all purchasers. Thus, if 

cost reductions are realized for a particular technology, all entities that purchase the 

technology will benefit from these cost reductions. 

Is the technology more or less effective due to synergistic effects?

When two or more technologies are added to a particular vehicle model to 

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.593 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 

 

593 More specifically, the products of the differences between one and the technology-specific 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 percent (i.e., 0.1) and 20 percent (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 percent rather than the 30 

percent obtained by adding 10 percent to 20 percent. The “synergy factors” discussed in this section 

further adjust these multiplicatively combined effectiveness values. 
920 

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 six-speed 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.594 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. 

 

594 EPA Staff Technical Report: Cost and Effectiveness Estimates of Technologies Used to Reduce Lightduty Vehicle Carbon Dioxide Emissions; EPA420-R-08-008, March 2008. Available at Docket No. 

NHTSA-2009-0059-0027. 
921 

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 that 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 FRIA. 

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).595 Inputs to the Volpe model 

incorporate NEMS-identified 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 

 

595 U.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 March 15, 2010). 
922 

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 FRIA) 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 received only one comment regarding synergies, from MEMA, who 

commented that NHTSA’s Volpe model adequately addressed synergistic effects. 

Having received no information to the contrary, NHTSA finalized the synergy approach 

and values for the final rule. 
923 

d. Where Can Readers Find More Detailed Information about NHTSA’s 

Technology Analysis? 

 Much more detailed information is provided in Section V of the FRIA, and a 

discussion of how NHTSA and EPA jointly reviewed and updated technology 

assumptions for purposes of this final rule 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 final rule, Docket No. NHTSA-2009-0059, and on NHTSA’s website. 

And finally, because much of NHTSA’s technology analysis for purposes of this final 

rule 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 growing experience with this type 

of analysis.596

3. How Did NHTSA Develop its Economic Assumptions?

NHTSA’s analysis of alternative CAFE standards for the model years covered by 

this rulemaking relies on a range of forecast variables, economic assumptions, and 

parameter values. This section describes the sources of these forecasts, the rationale 

underlying each assumption, and the agency’s choices of specific parameter values. 

 

596 74 FR 14233-308 (Mar. 30, 2009). 
924 

These 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 final rule, NHTSA reconsidered previous comments it had received and 

comments received to the NPRM, as well as reviewed newly available literature. As a 

consequence, the agency elected to revise some of its economic assumptions and 

parameter estimates from previous rulemakings at the NPRM stage, 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 FRIA, 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 comments the agency received and its responses are discussed in detail below, as 

well as in the TSD and FRIA. For the reader’s reference, Table IV.C.3-1 below 

summarizes the values used to calculate the economic benefits from each alternative. 
925 

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

Average percentage of tank refilled per refueling 55%

Percent of drivers refueling in response to low fuel level 100%

Annual growth in average vehicle use 1.15%

Fuel Prices (2012-50 average, $/gallon) 

Retail gasoline price $3.66

Pre-tax gasoline price $3.29

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) $ 1,300

Nitrogen oxides (NOx) – vehicle use $ 5, 300

Nitrogen oxides (NOx) – fuel production and distribution $ 5,100

Particulate matter (PM2.5) – vehicle use $ 290,000

Particulate matter (PM2.5) – fuel production and distribution $ 240,000

Sulfur dioxide (SO2) $ 31,000

Carbon dioxide (CO2) $ 21597

Annual Increase in CO2 Damage Cost 

Varies by 

year

External Costs from Additional Automobile Use ($/vehiclemile) 

Congestion $ 0.054

Accidents $ 0.023

Noise $ 0.001

Total External Costs $ 0.078

External Costs from Additional Light Truck Use ($/vehiclemile) 

Congestion $0.048

Accidents $0.026

Noise $0.001

Total External Costs $0.075

Discount Rate Applied to Future Benefits 3%, 7%

 

597 The $21 value is for CO2 emissions in 2010, which rises to $45/ton in 2050, at an average discount rate 

of 3 percent. 
926 

a. Costs of Fuel Economy-Improving Technologies 

NHTSA and EPA previously developed detailed estimates of the costs of 

applying fuel economy-improving technologies to vehicle models for use in analyzing the 

impacts of alternative standards considered in the proposed rulemaking, including 

varying cost estimates for applying certain fuel economy technologies to vehicles of 

different sizes and body styles. These estimates were modified for purposes of this 

analysis as a result of extensive consultations among engineers from NHTSA, EPA, and 

the Volpe Center. Building on NHTSA’s estimates developed for the MY 2011 CAFE 

final rule and EPA’s Advanced Notice of Proposed Rulemaking, which relied on EPA’s 

2008 Staff Technical Report, the two agencies took a fresh look at technology cost and 

effectiveness values and incorporated FEV tear-down study results for purposes of this 

joint final rule under the National Program. 

While NHTSA generally found that much of the cost information used in the 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 the component costs 

of several major technologies including: turbocharging/downsizing, mild and strong 

hybrids, diesels, SGDI, and Valve Train Lift Technologies for purposes of the NPRM. In 

addition, based on FEV tear-down studies, the costs for turbocharging/downsizing, 6-,7-
927 

,8-speed automatic transmissions, and dual clutch transmissions were revised for this 

final rule. 

The technology cost estimates used in this analysis are intended to represent 

manufacturers’ direct costs for high-volume 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 
928 

improve fuel economy.598 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 and EPA received far fewer specific comments on technology cost 

estimates than in previous CAFE rulemakings, which suggests that most, although not all, 

stakeholders generally agreed with the agencies’ assumptions. Several commenters 

supported the agencies’ use of tear-down studies for developing some of the technology 

costs, largely citing the agencies’ own reasons in support of that methodology. Some 

specific comments were received with regard to hybrid and other technology costs, to 

which the agencies are responding directly in Chapter 3 of the Joint TSD and in the 

agencies’ respective FRIAs. Generally speaking, however, to the extent that 

commenters disagreed with the agencies’ cost estimates, often the disagreement stemmed 

from assumptions about the technology’s maturity, which the agencies have tried to 

account for in the analysis. These issues are discussed further in Chapter 3 of the TSD. 

Additionally, we note that technology costs will also be addressed in the upcoming 

revised NAS report. 

 

598 NHTSA notes that in addition to the technology cost analysis employing this “ICM” approach, the FRIA 

contains a sensitivity analysis using a technology cost multiplier of 1.5. 
929 

With regard to the indirect cost multiplier approach, commenters also generally 

supported the higher level of specificity provided by the ICM approach compared to the 

RPE approach, although some commenters suggested specific refinements to the 

measurement of ICMs. For example, while the automotive dealer organization NADA 

argued that all dealer costs of sales should be included in “dealer profit,” another 

commenter noted expressly that the ICM does not include profits. Comments from ICCT 

also argued in favor of revising the “technology complexity” component of the ICM to 

account for the complexity of integrating a new technology into a vehicle, rather than for 

only the complexity of producing the technology itself. These comments and others on 

the ICM are addressed in Chapter 3 of the Joint TSD and in the agencies’ respective 

FRIAs. NHTSA notes that profits were not included in the indirect cost estimates of this 

rule, and also that NHTSA’s sensitivity analysis, presented in Chapter X of the FRIA, 

indicates that using the 1.5 RPE multiplier would result in higher costs compared to 

today’s final rule costs incorporating the ICM multiplier, although even with those higher 

costs the 1.5 RPE analysis still resulted in significant net benefits for the rulemaking as a 

whole. NHTSA continues to study this issue and may employ a different approach in 

future rulemakings. 

b. Potential Opportunity Costs of Improved Fuel Economy 

An important concern is whether achieving the fuel economy improvements 

required by alternative CAFE standards might result in manufacturers compromising the 

performance, carrying capacity, safety, or comfort of their vehicle models. To the extent 
930 

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. 

(This possibility is addressed in detail in Section IV.G.6.) Although 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 varying combinations of 

these characteristics clearly demonstrate that changes in these attributes affect the utility 

and economic value that vehicles offer to potential buyers.599

NHTSA and EPA have approached this potential problem by developing cost 

estimates for fuel economy-improving 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 

 

599 See, e.g., 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-2009-0472-0015); Berry, Steven, 

James Levinsohn, and Ariel Pakes, 1995. “Automobile Prices in Market Equilibrium,” Econometrica 63(4): 

841-940 (Docket NHTSA-2009-0059-0031); McCarthy, Patrick S., 1996. “Market Price and Income 

Elasticities of New Vehicle Demands.” Review of Economics and Statistics 78: 543-547 (Docket NHTSA2009-0059-0039); and 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-

0017). 
931 

performance, carrying capacity, and utility of vehicle models while improving their fuel 

economy. 

Although we believe that our cost estimates for fuel economy-improving 

technologies include adequate provision for accompanying outlays that are necessary to 

prevent any significant degradation in other attributes that vehicle owners value, 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 omitting these will cause the agency’s estimated technology 

costs to underestimate the true economic costs of improving fuel economy. 

Recognizing this possibility, it would be desirable 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. Although the agency has been unable to 

develop a procedure for doing so as part of this rulemaking, Section IV.G.6. below 

includes a detailed analysis and discussion of how omitting possible changes in vehicle 
932 

attributes other than their prices and fuel economy might affect its estimates of benefits 

and costs resulting from the standards this rule establishes. 

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 on-road fuel 

economy levels.600 

In its Final Rule, EPA estimated that actual on-road fuel economy for light-duty 

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 savings resulting from alternative CAFE standards evaluated in the 

MY 2011 final rule. 

 

600 71 FR 77871 (Dec. 27, 2006). 
933 

For purposes of this final rule, 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 

rated 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 vehicle fleet would have achieved from 2000 through 2006 if cars and light 

trucks of each model year achieved the same fuel economy levels in actual on-road 

driving as they did under test conditions when new. 

NHTSA compared these estimates to the Federal Highway Administration’s 

(FHWA) published values of actual on-road fuel economy for passenger cars and light 

trucks during each of those years.601 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. 

 

601 Federal Highway Administration, Highway Statistics, 2000 through 2006 editions, Table VM-1; See 

http://www.fhwa.dot.gov/policy/ohpi/hss/hsspubs.cfm (last accessed March 1, 2010). 
934 

NHTSA received no comments on this issue in response to the NPRM. 

Accordingly, it has not revised its estimate of the on-road fuel economy gap from the 20 

percent figure used previously. 

d. Fuel Prices and the Value of Saving Fuel 

Projected future fuel prices are a critical input into the 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 2010 Early Release (December 2009) 

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.602 This forecast is somewhat lower than the 

AEO 2009 Reference Case forecast the agency relied upon in the analysis it conducted 

for the NPRM. Over the period from 2010 to 2030, the AEO 2010 Early Release 

Reference Case forecast of retail gasoline prices used in this analysis averages $3.18 per 

 

602 Energy Information Administration, Annual Energy Outlook 2010 Early Release, Reference Case 

(December 2009), Table A12. Available at http://www.eia.doe.gov/oiaf/aeo/pdf/appa.pdf, p. 25(last 

accessed March 1, 2010). These forecasts reflect 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 lead to a decline in its future price, there is some concern about whether the 

AEO 2010 forecast of fuel prices 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 agency notes 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 then recently-passed EISA 

legislation.602 The fuel price forecasts reported in EIA’s Revised Release of AEO 2008 differed by less 

than one cent per gallon throughout 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 2010 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. 
935 

gallon (in 2007 dollars), in contrast to the $3.38 per gallon average price for that same 

period forecast in the earlier AEO 2009 Reference Case and used in the NPRM analysis. 

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. We also anticipated that the Reference Case forecasts would be 

significantly higher in subsequent editions of AEO, and that in future rulemaking 

analyses the agency would be likely to rely on the Reference Case rather than High Price 

Case forecasts. In fact, both EIA’s AEO 2009 Reference Case and its subsequent AEO 

2010 Early Release Reference Case forecasts project 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 2010 Early Release Reference Case is an appropriate forecast for 

projected future fuel prices. 

NHTSA and EPA received relatively few comments on the fuel prices used in the 

NPRM analysis, compared to previous CAFE rulemakings. Two commenters, CARB 

and NADA, supported the use of AEO’s Reference Case for use in the agencies’ analysis, 

although they disagreed on the agencies’ use of the High and Low Price Cases for 

sensitivities. Both commenters emphasized the sensitivity of the market and the 

agencies’ analysis to higher and lower gas prices, and on that basis, CARB supported the 

use of the High and Low Price Cases in sensitivity analysis but urged the agencies to 

caveat the “Reference Case” results more explicitly. In contrast, NADA argued that the 
936 

agencies should not use the High and Low Price Cases, because EIA does not assign 

specific probabilities to either of them. Only one commenter, James Adcock, argued that 

the agencies should use forecasts of future fuel prices other than those reported in AEO; 

Adcock stated that future fuel prices should be assumed to be higher than current pump 

prices. 

Measured in constant 2007 dollars, the AEO 2010 Early Release Reference Case 

forecast of retail gasoline prices during calendar year 2010 is $2.44 per gallon, and rises 

gradually to $3.83 by the year 2035 (these values include federal, state and local taxes). 

However, the agency’s analysis of the value of fuel savings over the lifetimes of MY 

2012-2016 cars and light trucks requires forecasts extending through calendar year 2050, 

approximately the last year during which a significant number of MY 2016 vehicles will 

remain in service. To obtain fuel price forecasts for the years 2036 through 2050, the 

agency assumes that retail fuel prices will continue to increase after 2035 at the average 

annual rates projected for 2025 through 2035 in the AEO 2010 Early Release Reference 

Case.603 This assumption results in a projected retail price of gasoline that reaches $4.49 

in 2007 dollars during 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. The agency has updated the estimates of 

 

603 This 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. 
937 

gasoline taxes it employed in the NPRM using the recent data on state fuel tax rates; 

expressed in 2007 dollars, federal gasoline taxes are currently $0.178, while state and 

local gasoline taxes together average $0.231 per gallon, for a total tax burden of $0.401 

per gallon. 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, NHTSA deducts their value from retail fuel prices to 

determine the true value of fuel savings resulting from more stringent CAFE standards to 

the U.S. economy. 

NHTSA follows the assumptions used by EIA in AEO 2010 Early Release that 

state and local gasoline taxes will keep pace with inflation in nominal terms, and thus 

remain constant when expressed in constant 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 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 rather than an ad valorem

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 to 

determine the economic value of each gallon of fuel saved during that year as a result of 

improved fuel economy. Subtracting fuel taxes from the retail prices forecast in AEO 

2010 Early Release results in a projected value for saving gasoline of $2.04 per gallon 
938 

during 2010, rising to $3.48 per gallon by the year 2035,and averaging $2.91 over this 

25-year period. 

Although the Early Release of AEO 2010 contains only the Reference Case 

forecast, EIA includes “High Price Case” and “Low Price Case” forecasts in each year’s 

complete AEO, which reflect uncertainties regarding future levels of oil production and 

demand. For this final rule, NHTSA has continued to use the most recent “High Price 

Case” and “Low Price Case” forecasts available, which are those from AEO 2009. While 

NHTSA recognizes that these forecasts are not probabilistic, as NADA commented, we 

continue to believe that using them for sensitivity analyses provides valuable information 

for agency decision-makers, because it illustrates the sensitivity of the rule’s primary 

economic benefit resulting from uncertainty about future growth in world demand for 

petroleum energy and the strategic behavior of oil suppliers. 

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 (all figures in 2007 dollars). 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 $1.66 to $5.09 per gallon in 2030 (again, all figures are in constant 

2007 dollars). In conducting the 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. Detailed results and 
939 

discussion of this sensitivity analysis can be found in the FRIA. Generally, however, this 

analysis confirmed that as several commenters suggested, the primary economic benefit 

resulting from the rule – the value of fuel savings – is quite sensitive to forecast fuel 

prices. 

e. Consumer Valuation of Fuel Economy and Payback Period 

In estimating the impacts on vehicle sales that would result from alternative 

CAFE standards to potential vehicle buyers, NHTSA assumes, as in the MY 2011 final 

rule, that potential vehicle 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 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 
940 

manufacturers would be likely to select models for the application of fuel economyimproving 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. 

One commenter, NADA, supported the agency’s assumption of a five-year period 

for buyers’ valuation of fuel economy, on the basis that the considerable majority of 

consumers seek to recoup costs quickly. However, NADA also encouraged the agencies 

to ensure that purchaser finance costs, opportunity costs of vehicle ownership, and 

increased maintenance costs were accounted for. Another commenter, James Adcock, 

argued that the assumption of a five-year period was irrational, because it did not account 

for the fact that first purchasers will be able to sell a higher-mpg vehicle for more money 

than a lower-mpg vehicle. 

 In response to these comments, the agency notes that it 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 the shorter 5-year “payback period” we assume that 

manufacturers employ to represent the preferences of vehicle buyers. The 5-year 

payback period is only utilized to identify the likely sequence of improvements in fuel 

economy that manufacturers are likely to make to their different vehicle models. The 

procedure the agency uses for calculating lifetime fuel savings is discussed in detail in the 
941 

following section, while alternative assumptions about the time horizon over which 

potential buyers consider fuel savings in their vehicle purchasing decisions are analyzed 

and discussed in detail in Section IV.G.6 below. 

Valuing fuel savings over vehicles’ entire lifetimes in effect recognizes the gains 

that future vehicle owners will receive, even if initial purchasers of higher-mpg models 

are not able to recover the entire remaining value of fuel savings when they re-sell those 

vehicles. The agency acknowledges, however, that it has not accounted for any effects of 

increased financing costs for purchasing vehicles with higher fuel economy or increased 

expenses for maintaining them on benefits to vehicle owners, over either the short-run 

payback period or the full lifetimes of vehicles. 

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.604 This is calculated by multiplying the number 

of vehicles originally produced during a model year by the proportion typically expected 

 

604 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 March 1, 

2010).
942 

to remain in service at their age during each later year, often referred to as a “survival 

rate.” 

As discussed in more detail in Section II.B.3 above and in Chapter 1 of the TSD, 

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 and NHTSA used projected car and truck volumes for this period from 

Energy Information Administration’s (EIA’s) Annual Energy Outlook (AEO) 2009 in the 

NPRM analysis.605 For the analysis supporting this final rule, NHTSA substituted the 

revised forecasts of total volume reported in EIA’s Annual Energy Outlook 2010 Early 

Release. However, Annual Energy Outlook forecasts only total car and light truck sales, 

rather than sales at the manufacturer and model-specific level, which the agencies require 

in order to estimate the effects new standards will have on individual manufacturers.606 

To estimate sales of individual car and light truck models produced by each 

manufacturer, EPA purchased data from CSM Worldwide and used its projections of the 

number of vehicles of each type (car or truck) that will be produced and sold by 

 

605 Available at http://www.eia.doe.gov/oiaf/aeo/index.html (last accessed March 15, 2010). 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. 606 Because 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. 
943 

manufacturers in model years 2011 through 2015.607 This provided year-by-year 

estimates of the percentage of cars and trucks sold by each manufacturer, as well as the 

sales percentages accounted for by each vehicle market segment. (The distributions of 

car and truck sales by manufacturer and by market segment for the 2016 model year and 

beyond were assumed to be the same as CSM’s forecast for the 2015 calendar year.) 

Normalizing these percentages to the total car and light truck sales volumes projected for 

2012 through 2016 in AEO 2009 provided manufacturer-specific market share and 

model-specific sales estimates for those model years. The volumes were then scaled to 

AEO 2010 total volume for each year. 

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.608 

 

607 EPA 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. 608 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://wwwnrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed March 1, 2010). These updated survival rates suggest 

that the expected lifetimes of recent-model passenger cars and light trucks are 13.8 and 14.5 years. 
944 

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).609 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 

FRIA and Chapter 4 of the 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 2010 Early Release Reference Case.610 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 

 

609 For a description of the Survey, See http://nhts.ornl.gov/quickStart.shtml (last accessed March 1, 2010). 610 This 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. 
945 

truck use of 1.15 percent per year 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.611 

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.612 

 

611 While 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. 

612 To 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 x 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 x 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). 
946 

NHTSA and EPA received no comments on their respective NPRMs indicating 

that these assumptions should be updated or reconsidered. Thus the agencies have 

continued to employ them in the analysis supporting this final rule. 

g. Accounting for the Fuel Economy 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 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 
947 

efficiency improves.613 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 the NPRM.614 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 

light-duty 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.615 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 

 

613 Some 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. 

614 For details of the agency’s analysis, see Chapter VIII of the PRIA and Chapter 4 of the draft Joint TSD 

accompanying this proposed rule. 

615 The 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. 
948 

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 used a 10 percent rebound effect in its 

analysis of fuel savings and other benefits from higher CAFE standards for the NPRM. 

The agency also sought comment on other alternatives for estimating the rebound effect, 

such as 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.

NHTSA and EPA received far fewer comments on the rebound effect than were 

previously received to CAFE rulemakings. Only one commenter, NJ DEP, expressly 

supported the agencies’ assumption of 10 percent for the rebound effect; other 

commenters (CARB, CBD, ICCT) argued that 10 percent should be the absolute 

maximum value and that the rebound effect assumed by the agencies should be lower, 

and would also be expected to decline over time. ICCT added that the price elasticity of 
949 

gasoline demand could be a useful comparison for the rebound effect, but should not be 

used to derive it. Other commenters argued that a rebound effect either was unlikely to 

occur (James Hyde), or was unlikely to produce a uniform increase in use of all vehicles 

with improved fuel economy (Missouri DNR). NADA argued, in contrast, that the 

agencies had not provided sufficient justification for lowering the rebound effect to 10 

percent from the “historically justified” range of 15 to 30 percent. 

 The agency’s interpretation of historical and recent evidence on the magnitude 

of the rebound effect is that a significant fuel economy rebound effect exists, and 

commenters did not provide any additional data or analysis to justify revising our initial 

estimates of the rebound effect. Therefore, the data available at this time do not justify 

using a rebound effect below the 10 percent figure employed in its NPRM analysis. 

NHTSA believes that projections of a continued decline in the magnitude of the rebound 

effect are unrealistic because they assume the rate at which it declines in response to 

increasing incomes remain constant, and in some cases imply that the rebound effect will 

become negative in the near future. In addition, the continued increases in fuel prices 

used in this analysis will tend to increase the magnitude of the rebound effect, thus 

offsetting part of the effect of rising incomes. As the preceding discussion indicates, 

there is a wide range of estimates for both the historical magnitude of the rebound effect 

and its projected future value, and there is some evidence that the magnitude of the 

rebound effect appears to be declining over time. Nevertheless, NHTSA requires a single 

point estimate for the rebound effect as an input to its analysis, although a range of 

estimates can be used to test the sensitivity to uncertainty about its exact magnitude. For 
950 

the final rule, NHTSA chose to use 10 percent as its primary estimate of the rebound 

effect, with a range of 5-15 percent for use in sensitivity testing. 

The 10 percent figure is well below those reported in almost all previous research, 

and it is also below most estimates of the historical and current magnitude of the rebound 

effect developed by NHTSA. However, other recent research - particularly that 

conducted by Small and Van Dender and by Greene - reports persuasive evidence that the 

magnitude of the rebound effect is likely to be declining over time, and the forecasts 

developed by NHTSA also suggest that this is likely to be the case. As a consequence, 

NHTSA concluded that a value below the historical estimates reported here is likely to 

provide a more reliable estimate of its magnitude during the future period spanned by 

NHTSA's analysis of the impacts of this rule. The 10 percent estimate meets this 

condition, since it lies below the 15-30 percent range of estimates for the historical 

rebound effect reported in most previous research, and at the upper end of the 5-10 

percent range of estimates for the future rebound effect reported in the recent studies by 

Small and Van Dender and by Greene. It also lies within the 3-16 percent range of 

forecasts of the future magnitude of the rebound effect developed by NHTSA in its recent 

research. In summary, the 10 percent value was not derived from a single point estimate 

from a particular study, but instead represents a reasonable compromise between the 

historical estimates and the projected future estimates. NHTSA will continue to review 

this estimate of the rebound effect in future rulemakings, but the agency has continued to 

use the 10 percent rebound effect over the entire future period spanned by the analysis it 

conducted for this final rule. 
951 

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 reboundeffect driving as the sum of fuel costs drivers incur plus the consumer surplus they 

receive from the additional accessibility it provides.616 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. Because no comments addressed 

this issue of benefits from increased vehicle use or the procedure used to estimate them, 

the agencies have finalized their proposed assumptions for purposes of the final rule 

analysis. 

 

616 The 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. 
952 

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.617 

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.618 

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 

x 24 mpg) to 225 miles (= 9 gallons x 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 

 

617 If manufacturers respond to improved fuel economy by reducing the size of fuel tanks to maintain a 

constant driving range, the resulting cost saving will presumably be reflected in lower vehicle sales prices. 618 See 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 March 1, 2010); update available at

http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-03.pdf (last accessed March 1, 2010). 
953 

(= 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 DOTrecommended values of travel time per vehicle-hour is $24.64 (in 2007 dollars).619 

Assuming that locating a station and filling up requires a total of five minutes, the annual 

value of time saved as a result of less frequent refueling amounts to $4.72 (calculated as 

5/60 x 2.3 x $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. 

Although the agencies received no public comments on the procedures they used 

to estimate the benefits from less frequent refueling or the magnitude of those benefits, 

we note also that the estimated value of less frequent refueling events is subject to a 

number of uncertainties which we discuss in detail in Chapter 4.1.11 of the Joint TSD, 

and the actual value could be higher or lower than the value presented here. Specifically, 

 

619 The 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. 
954 

the analysis makes three assumptions: (a) that manufacturers will not adjust fuel tank 

capacities downward (from the current average of 19.3 gallons) when they improve the 

fuel economy of their vehicle models. (b) that the average fuel purchase (55 percent of 

fuel tank capacity) is the typical fuel purchase. (c) that 100 percent of all refueling is 

demand-based; i.e., that every gallon of fuel which is saved would reduce the need to 

return to the refueling station. NHTSA has planned a new research project which will 

include a detailed study of refueling events, and which is expected to improve upon these 

assumptions. These assumptions and the upcoming research project are discussed in 

detail in Joint TSD Chapter 4.2.10, as well as in Chapter VIII of NHTSA’s FRIA. 

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.620 NHTSA employed these estimates previously in its 

analysis accompanying the MY 2011 final rule, and after reviewing the procedures used 

by FHWA to develop them and considering other available estimates of these values, 

continues to find them appropriate for use in this final rule. The agency multiplies 

FHWA’s estimates of per-mile costs by the annual increases in automobile and light 

 

620 These 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 March 1, 2010). 
955 

truck use from the rebound effect to yield the estimated increases in congestion, accident, 

and noise externality costs during each future year. 

One commenter, Inrix, Inc., stated that “deeply connected vehicles,” i.e., those 

with built-in computer systems to help drivers identify alternative routes to avoid 

congestion, are better able to avoid congestion than conventional vehicles. The 

commenter argued that increased use of these models may be less likely to contribute to 

increased congestion, and urged the agencies to consider the impact of this on their 

estimates of fuel use and GHG emissions. NHTSA notes that the number of such 

vehicles is extremely small at present, and is likely to remain modest for the model years 

affected by this rule, and has thus continued to employ the estimates of congestion costs 

from additional rebound-effect vehicle use that it utilized in the NPRM analysis. The 

agency recognizes that these vehicles may become sufficiently common in the future that 

their effect on the fuel economy drivers actually experience could become significant, but 

notes that to the extent this occurs, it would be reflected in the gap between test and onroad fuel economy. NHTSA will continue to monitor the production of such vehicles and 

their representation in the vehicle fleet in its future rulemakings. 

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) 
956 

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.621 

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 final 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 

 

621 See, 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 (Docket 

NHTSA-2009-0062-24); and Toman, M. A. (1993). "The Economics of Energy Security: Theory, 

Evidence, Policy," in A. V. Kneese and J. L. Sweeney, eds. (1993) (Docket NHTSA-2009-0062-23). 

Handbook of Natural Resource and Energy Economics, Vol. III. Amsterdam: North-Holland, pp. 1167-

1218. 
957 

economic externalities from petroleum consumption and imports.622 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.623 The updated ORNL study was 

subjected to a detailed peer review comissioned by EPA, and ORNL’s estimates of the 

value of oil import externalities were subsequently revised to reflect their comments and 

recommendations of the peer reviewers.624 Finally, 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, as well as 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 increase in payments 

from U.S. oil purchasers to foreign oil suppliers beyond the increased purchase price of 

petroleum itself that results when increased U.S. import demand raises the world price of 

petroleum.625 However, the monopsony premium represents a financial transfer from 

consumers of petroleum products to oil producers, which does not entail the consumption 

of real economic resources. Thus reducing the magnitude of the monopsony premium 

 

622 Leiby, 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 March 1, 2010). 623 Leiby, 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 March 1, 2010). 

624 Peer Review Report Summary: Estimating the Energy Security Benefits of Reduced U.S. Oil Imports, 

ICF, Inc., September 2007. Available at Docket No. NHTSA-2009-0059-0160. 625 The 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. 
958 

produces no savings in real economic resources globally or domestically, although it does 

reduce the value of the financial transfer from U.S. consumers of petroleum products to 

foreign suppliers of petroleum. Accordingly, NHTSA’s analysis of the benefits from 

adopting proposed CAFE standards for MY 2012-2016 cars and light trucks excluded the 

reduced value of monopsony payments by U.S. oil consumers that might result from 

lower fuel consumption by these vehicles. The agency sought comment on whether it 

would be reasonable to include 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. 

 Commenters from NYU School of Law argued that monopsony payments should 

be treated as a distributional effect, not a standard efficiency benefit. An individual 

commenter, A.G. Fraas, also supported the agencies’ exclusion of the monopsony benefit, 

arguing that it represents a pecuniary externality that should not be considered in benefitcost analyses of governmental actions—again, in essence, that it represents a 

distributional effect. These comments support the agency’s decision to exclude any 

reduction in monopsony premium payments that results from lower U.S. petroleum 

imports from its accounting of benefits from reduced fuel consumption. Thus the agency 

continues to exclude any reduction in monopsony premium payments from its estimates 

of benefits for the stricter CAFE standards this final rule establishes. 

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 
959 

imported fuel or petroleum saved reduces the expected costs of oil supply disruptions to 

the U.S. economy by $0.169 per gallon (in 2007$). In contrast to reduced monopsony 

premium payments, 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 analysis of the economic benefits from adopting higher CAFE standards for MY 2012-

2016 cars and light trucks. 

A.G. Fraas commented on this proposed rule and felt that that magnitude of the 

economic disruption portion of the energy security benefit may be too high. He cites a 

recent paper written by Stephen P.A. Brown and Hillard G. Huntington, entitled 

“Estimating U.S. Oil Security Premiums” (September 2009). He commented that the 

Brown and Huntington premium associated with replacing oil imports by increased 

domestic oil production while keeping U.S. oil consumption unchanged (i.e., “the cost of 

displacing a barrel of domestic oil with a barrel of imported oil”) ranges from $2.17 per 

barrel in 2015 to $2.37 per barrel in 2030 (2007$), or $0.052 to $0.056 per gallon. 

In contrast, this rule is not a domestic oil supply initiative, but is one intended to 

reduce domestic oil consumption and thereby also to a significant extent reduce U.S. oil 

imports. When NHTSA used the ORNL Energy Security Premium Analysis to calculate 

the energy security premium for this rule, it based the energy security premium on 

decreased demand for oil and oil products. The agency estimated that most of the 

decreased demand for oil and oil products would come from decreased imports of oil, 
960 

given the inelasticity of U.S. supply and the modest estimated change in world oil price. 

The Brown and Huntington estimates for this change, considering the disruption 

component alone, are much in line with the ORNL estimates. For a reduction in U.S. 

consumption that largely leads to a reduction in imports, Brown and Huntington estimate 

a midpoint premium of $4.98 per barrel in 2015 rising to $6.82 per barrel by 2030 

(2007$). The 2015 disruption premium estimate has an uncertainty range of $1.10 to 

$14.35 (2007$). The corresponding 2030 estimate from ORNL is only about 19 percent 

higher ($8.12/bbl), with an uncertainty range -- $3.90 to $13.04 – completely enclosed by 

that of Brown and Huntington. Thus, we conclude that the ORNL disruption security 

premium estimates for this rule is roughly consistent with the Brown and Huntington 

results.

Commenters from the NYU School of Law agreed that reduced disruption costs 

should be counted as a benefit, but stated that the agencies should disaggregate and 

exclude any reduction in wealth transfers that occur during oil shocks from their 

calculation of this benefit. NHTSA acknowledges that for consistency with its exclusion 

of reductions in monopsony premium payments from the benefits of reduced fuel 

consumption and petroleum imports, it may be necessary to exclude reductions in the 

wealth transfer component of macroeconomic disruption costs from the benefits of 

reducing U.S. petroleum imports. In future rulemakings, the agency will assess the 

arguments for excluding the wealth transfer component of disruption costs from its 

accounting of benefits from reducing domestic fuel consumption and U.S. petroleum 
961 

imports, and explore whether it is practical to estimate its value separately and exclude it 

from the benefits calculations. 

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.626 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. 

Commenters from the NYU School of Law stated that the agencies were justified 

in not including a value for military security, as long as the agencies incorporate the 

increased protection value of the SPR into their calculation of disruption effects. CBD 

and James Adcock disagreed, and stated that the agencies should, in fact, include a value 

for military security – CBD cited several studies, and Mr. Adcock presented his own 

value of $0.275 per gallon. CARB stated simply that the agencies should include a 

sensitivity analysis for military security at $0.15 per gallon, in addition to the $0.05 per 

gallon already evaluated. EDF also cited studies claiming a benefit for increased national 

security 

 

626 However, 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. 
962 

In response to the comments from CBD and Mr. Adcock, NHTSA’s examination 

of the historical record indicates that while costs for U.S. military security may vary over 

time in response to long-term changes in the level of oil imports into the U.S., these costs 

are unlikely to decline in response to the small reductions in U.S. oil imports (relative to 

total oil imports) that are typically projected to result from raising CAFE standards for 

light-duty vehicles. U.S. military activities in regions that represent vital sources of oil 

imports also serve a broader range of security and foreign policy objectives than simply 

protecting oil supplies, and as a consequence are unlikely to vary significantly in 

response to the modest changes in the level of oil imports likely to be prompted by higher 

CAFE standards. 

The agency does not find evidence in the historical record that Congress or the 

Executive Branch has ever attempted to calibrate U.S. military expenditures, overall force 

levels, or specific deployments to any measure of global oil market activity or U.S. 

reliance on petroleum imports, or to any calculation of the projected economic 

consequences of hostilities arising in the Persian Gulf. Instead, changes in U.S. force 

levels, deployments, and thus military spending in that region have been largely governed 

by political events, emerging threats, and other military and political considerations, 

rather than by shifts in U.S. oil consumption or imports. NHTSA thus concludes that the 

levels of U.S. military activity and expenditures are likely to remain unaffected by even 

relatively large changes in light duty vehicle fuel consumption, and has continued to 
963 

exclude any reduction in these outlays from its estimates of the economic benefits 

resulting from lower U.S. fuel consumption and petroleum imports. 

In response to the comments from the NYU School of Law, NHTSA will explore 

how it might estimate the contribution of the SPR to reducing potential macroeconomic 

costs from oil supply disruptions, although the agency notes that to some extent the 

existence of the SPR may already be reflected in the magnitude of price elasticities of the 

supplies of foreign oil available for import to the U.S. However, the agency notes that 

the size of the SPR has not appeared to change significantly in response to historical 

variation in U.S. petroleum consumption or imports, suggesting that its effect on the 

magnitude of potential macroeconomic costs from disruptions in petroleum imports may 

be limited. 

Finally, in response to the comment from EDF, the agency notes that the value of 

$0.05 per gallon for the reduction in military security outlays that is used for sensitivity 

analysis assumes that the entire reduction in U.S. petroleum imports resulting from 

higher CAFE standards would reflect lower imports from Persian Gulf suppliers, that the 

estimate of annual U.S. military costs for securing Persian Gulf oil supplies reported by 

Delucchi and Murphy is correct, and that Congress would reduce half of these outlays in 

proportion to any decline in U.S. oil imports from the region. The $0.15 per gallon 

estimate recommended by CARB would thus require that U.S. military outlays to protect 

Persian Gulf oil supplies are three times as large as Delucchi and Murphy estimate, or 

that Congress would reduce military spending in that region more than in proportion to 
964 

any reduction in U.S. petroleum imports originating there. Because it views these 

possibilities as unrealistic, NHTSA has continued to use the $0.05 figure in its sensitivity 

analysis, rather than the higher figure suggested. 

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 estimated 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 reduce domestic fuel 

refining.627 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.628 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.629 

NHTSA employed this estimate in the analysis presented in the NPRM, and 

received no comments on the assumptions or data used to develop it. Hence the agency 

has continued to assume that each 100 gallons of fuel saved as a consequence of the 

CAFE standards established by this final rule will reduce total U.S. imports of crude 

 

627 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. 

628 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. 

629 This figure is calculated as 50 gallons + 50 gallons*90% = 50 gallons + 45 gallons = 95 gallons. 
965 

petroleum or refined fuel by 95 gallons. NHTSA has applied the estimates of economic 

benefits from lower U.S. petroleum imports to the resulting estimate of reductions in 

imports of crude petroleum and refined fuel. 

l. Air Pollutant Emissions 

i. Changes in 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. 
966 

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 (MOVES 2010).630 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.

631 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 

 

630 The 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. 631 These 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. 
967 

Regulated Emissions in Transportation (GREET) model.632 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.633 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 

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 

 

632 Argonne 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 March 15, 

2010). 

633 Emissions 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. 
968 

assumed to reduce emissions during fuel refining, storage, and distribution, because each 

of these activities would be reduced. Reduced domestic fuel refining using domesticallyproduced crude oil is assumed to reduce emissions during all four phases of fuel 

production and distribution.634

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.635 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 

 

634 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. We note that while assuming that all changes in upstream emissions result from a 

decrease in petroleum production and transport, our analysis of downstream criteria pollutant impacts 

assumes no change in the composition of the gasoline fuel supply. 

635 All 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. 
969 

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 PM-related per-ton values for reducing emissions from vehicle 

use than for reductions in emissions of that occur during fuel production and 

distribution.636 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 

 

636 These 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. 
970 

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. 

NHTSA and EPA received no comments on the procedures they employed to 

estimate the reductions in emissions of criteria air pollutants reported in their respective 

NPRMs, or on the unit economic values the agencies applied to those reductions to 

calculate their total value. Thus the agencies have continued to employ these procedures 

and values in the analysis reported in this final rule. However, the agencies have made 

some minor changes in the emission factors used to calculate changes in emissions 

resulting from increased vehicle use; these revisions are detailed in Chapter 4 of the Final 

Technical Support Document accompanying this rule. 

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 
971 

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 alternative CAFE standards and in assessing the 

economic benefits of each alternative that was considered. Since direct estimates of the 

economic benefits from reducing CO2 or other 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. Thus the benefits from reducing CO2 emissions are usually 
972 

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 increased carbon dioxide (CO2) emissions, including 

losses in agricultural productivity, the economic damages caused by adverse effects on 

human health, property losses and damages resulting from sea level rise, and changes in 

the value of ecosystem services. The SCC is usually expressed in dollars per additional 

metric ton of CO2 emissions occurring during a specified year, and is higher for more 

distant future years because the damages caused by an additional ton of emissions 

increase with larger existing concentrations of CO2 in the earth’s atmosphere. Marginal 

reductions in CO2 emissions that are projected to result from lower fuel consumption, 

refining, and distribution during each future year are multiplied by the estimated SCC 

appropriate for that year, which is used to represent the value of eliminating each ton of 

CO2 emissions, to determine the total economic benefit from reduced emissions during 

that year. These benefits are then discounted to their present value as usual, using a 

discount rate that is consistent with that used to develop the estimate of the SCC itself. 

 The agency’s NPRM incorporated the federal interagency working group’s 

interim guidance on appropriate SCC values for estimating economic benefits from 

reductions in CO2 emissions. NHTSA specifically asked for comment on the procedures 

employed by the group to develop its recommended values, as well as on the 

reasonableness and correct interpretation of those values. Comments the agency received 
973 

address several different issues, including (1) the interagency group’s procedures for 

selecting SCC estimates to incorporate in its recommended values; (2) the 

appropriateness of the procedures the agency used to combine and summarize these 

estimates; (3) the parameter values and input assumptions used by different researchers to 

develop their estimates of the SCC; (4) the choice between global and domestic estimates 

of the SCC for use in federal regulatory analysis, (5) the discount rates used to derive 

estimates of the SCC; and (6) the overall level of the agency’s SCC estimates. 

NHTSA’s procedures for selecting SCC estimates

Many of the comments NHTSA received concerned the group’s procedures for 

selecting published estimates and aggregating them to arrive at its range of recommended 

values. CARB asked for a clearer explanation of why mean SCC estimates from only 

two of the three major climate models were included in the average values reported in the 

interim guidance, and whether the arithmetic mean of reported values is the appropriate 

measure of their central tendency. Students from the University of California at Santa 

Barbara (UCSB) noted that the interagency group often selected only a single SCC 

estimate from studies reporting multiple estimates or a range of values to include in 

developing its summary values, and objected that this procedure caused the group to 

understate the degree of uncertainty surrounding its recommended values. 

Steven Rose also noted that the interagency group’s “filtering” of published 

estimates of the SCC on the basis of their vintage and input assumptions tended to restrict 
974 

the included estimates to a relatively narrow band that excluded most potentially 

catastrophic climate changes, and thus was not representative of the wide uncertainty 

surrounding the “true” SCC. If the purpose of incorporating the SCC into regulatory 

analysis was effectively to price CO2 emissions so that emitters would account for 

climate damages caused by their actions, he reasoned, then the estimate to be used should 

incorporate the wide range of uncertainty surrounding the magnitude of potential 

damages. 

Rose also noted that many of the more recent studies reporting estimates of the 

SCC were designed to explore the influence of different factors on the extent and timing 

of climate damages, rather than to estimate the SCC specifically, and thus that these more 

recent estimates were not necessarily more informative than SCC estimates reported in 

some older studies. Rose argued that because there has been little change in major 

climate models since about 2001, all estimates published after that date should be 

considered in order to expand the size of the sample represented by average values, rather 

than limiting it by including only the most recently-reported estimates. 

James Adcock objected to the interagency group’s reliance on Tol’s survey of 

published estimates of the SCC, since many of the estimates it included were developed 

by Tol himself. In contrast, Steven Rose argued that the Tol survey offered a useful way 

to summarize and represent variation among published estimates of the SCC, and thus to 

indicate the uncertainty surrounding its true value. 
975 

Procedures for Summarizing Published SCC Estimates 

Steven Rose argued that combining SCC estimates generated using different 

discount rates was inappropriate, and urged the interagency group instead to select one or 

more discount rates and then to average only SCC estimates developed using the same 

discount rate. Rose also noted that the interagency group’s explanation of how it applied 

the procedure developed by Newell and Pizer to incorporate uncertainty in the discount 

rate was inadequately detailed, and in any case it may not be appropriate for use in 

combining SCC estimates that were based on different discount rates. UCS also 

questioned NHTSA’s use of averaging to combine estimates of the SCC relying on 

different discount rates, as well as the agency’s equal weighting of upper- and lowerbound SCC estimates reported in published studies. 

NESCAUM commented that the interagency group’s basis for deriving the $20 

SCC estimate from its summary of published values was not adequately clear, and that 

the group’s guidance should clarify the origin of this value. NESCAUM also urged the 

interagency group to identify a representative range of alternative SCC estimates for use 

in assessing benefits from reduced emissions, rather than a single value. 

Ford commented that the interagency group’s methodology for developing an 

estimate of the SCC was acceptable, but argued that NHTSA agency should rely on the 

costs of reducing CO2 emissions in other sectors of the U.S. economy to evaluate 

economic benefits from reducing motor vehicle emission. Ford asserted that this 
976 

represented a more reliable estimate of the benefits from reducing emissions than the 

potential climate damages avoided by reducing vehicle emissions, since lowering vehicle 

emissions reduces the need to control emissions from other economic sectors. 

Parameter values and Input Assumptions Underlying SCC Estimates

CARB also noted that some of the wide variation in published SCC estimates 

relied upon by the interagency group could be attributed to authors’ differing assumptions 

about future GHG emissions scenarios and choices of discount rates. Steven Rose noted 

that SCC estimates derived using future emissions scenarios that assumed significant 

reductions in emissions were probably inappropriate for use in federal regulatory 

analysis, since federally regulations must be adopted individually and are each likely to 

lead to only marginal reductions in emissions, so it is unreasonable to assume that their 

collective effect on future emissions will be large. 

CARB also emphasized that SCC estimates were not available over the same 

range of discount rates for all major climate models, thus making averages of available 

results less reliable as indicators of any central tendency in estimates of the SCC. To 

remedy this shortcoming, the Pew Center on Climate Change urged the interagency 

group to analyze the sensitivity of SCC estimates to systematic variation in uncertain 

model parameters and input scenarios as a means of identifying the range of uncertainty 

in the SCC itself, as well as to include a risk premium in its SCC estimates as a means of 
977 

compensating for climate models’ omission of potential economic damages from 

catastrophic climate changes. 

CBD commented that the interim nature of the interagency group’s guidance 

made it impossible for decision-makers to determine whether the agency’s proposed 

CAFE standards were sufficiently stringent. CBD also argued that economic models’ 

exclusion of some potential climate impacts caused them to underestimate the “true” 

SCC, and that the interagency group’s procedure of averaging published estimates failed 

to convey important information about variation in estimates of the SCC to decision 

makers. In a related comment, the Pew Center on Climate Change cautioned against use 

of the interagency group’s interim SCC estimates for analyzing benefits from NHTSA’s 

final rule, on the grounds that some older estimates of the SCC surveyed for the interim 

guidance implausibly suggested that there could be positive net benefits from climate 

change, while more recent research suggests uniformly negative economic impacts. 

James Adcock presented his own estimate of the value of reducing CO2

emissions, which he derived by assuming that climate change would completely 

eliminate the economic value of all services provided by the local natural environment 

within a 50-year time frame. In addition, Adcock urged that federal agencies use a 

consistent estimate of the SCC in their regulatory analyses, and that this estimate be 

updated regularly to reflect new knowledge; he also asserted that the SCC should be 

above the per-ton price of CO2 emissions permits under a cap-and-trade system. 
978 

Global vs. Domestic SCC Values

NADA argued that NHTSA should employ an estimate of the domestic value of 

reducing CO2 emissions for purposes of estimating their aggregate economic benefits, 

since the agency includes only the domestic value of benefits stemming from reductions 

in other environmental and energy security externalities. In contrast, both the Pew Center 

on Climate Change and students from the University of California at Santa Barbara 

(UCSB) asserted that a global value of the SCC was appropriate for use even in analyzing 

benefits from U.S. domestic environmental regulations such as CAFE, and Steven Rose 

added that it was difficult to identify any proper role for a domestic estimate of the SCC. 

James Adcock commented that the agency’s derivation of the fraction of the global SCC 

it employed (6 percent) to obtain a domestic value was not clearly explained. 

Discount Rates Used to Derive SCC Estimates

NRDC also cited the effect of positive discount rates on damages occurring in the 

distant future, which reduce the present value of those damages to misleadingly low 

levels. Similarly, Steven Rose argued that the interagency group should have used 

discount rates below the 3 percent lower bound the group selected, and that the discount 

rate should also have been allowed to vary over time to account for uncertainty in its true 

value. The Pew Center also urged NHTSA to account explicitly for uncertainty 

surrounding the correct discount rate, but did not indicate how the agency should do so. 
979 

CARB echoed the recommendation for including SCC values reflecting discount 

rates below 3 percent, since EPA had previously used lower rates in previously proposed 

rules to discount benefits that were not expected to occur until the distant future, and thus 

to be experienced mainly by future generations. The New Jersey Department of 

Environmental Protection noted that giving nearly equal weight to future generations 

would imply a discount rate of less than 3 percent -- probably in the neighborhood of 2 

percent -- and endorsed the interagency group’s use of the procedure developed by 

Newell and Pizer to account for uncertainty surrounding the correct discount rate. 

The Pew Center urged the agency to ignore SCC estimates derived using discount 

rates above 5 percent, and instead to use the lowest possible rates, even including the 

possibility of negative values. Similarly, NRDC asserted that both the 3 percent and 5 

percent discount rates selected by the interagency group are inappropriately high, but did 

not recommend a specific alternative rate. Students from UCSB observed that the 

interagency group’s equal weighting of the 3 percent and 5 percent rates appeared to be 

inconsistent with the more frequent use of 3 percent in published estimates of the SCC, as 

well as with OMB’s guidance that the 3 percent rate was appropriate for discounting 

future impacts on consumption. The group urged NHTSA to consider a wider range of 

discount rates in its revised estimates of the SCC, including some below 3 percent. CBD 

argued that the discount rate should increase over the future to reflect the potential for 

catastrophic climate impacts. 
980 

CBD asserted that because the potential consequences of climate change are so 

extreme, that future economic impacts of climate change should not be discounted (i.e., a 

0 percent discount rate should be used). James Adcock echoed this view. 

Overall Level of SCC Estimates

NRDC argued that the SCC estimate recommended by the interagency group was 

likely to be too low, because of most models’ omission of some important climate 

impacts, particularly including potential catastrophic impacts resulting from nonincremental changes in climate conditions. CARB argued that it seemed prudent to 

include SCC values as high as $200 per ton, to reflect the possibility of low-probability 

but catastrophic changes in the global climate and the resulting economic damages. 

The New Jersey Department of Environmental Protection pointed out that SCC 

estimates reviewed by the IPCC ranged as high as $95/ton, and that the Stern Report’s 

estimate was $85/ton, suggesting the possibility that the interagency group may have 

inappropriately filtered out the highest estimates of the SCC. Other commenters 

including NACAA, NESCAUM, NRDC, and UCS urged NHTSA to employ higher SCC 

values than it used in the NPRM analysis, but did not recommend specific values. CARB 

urged the agency to use higher values of the SCC than it employed in its NPRM analysis, 

and recommended a value of $25/ton, growing at 2.4 percent annually, or alternatively, a 

fixed value of $50/ton. 
981 

Steven Rose cautioned against applying a uniform 3 percent annual growth rate to 

all of the provisional SCC estimates recommended by the interagency group, and noted 

that the base year where such growth is assumed to begin should be determined carefully 

for each estimate. 

Finally, the Institute for Energy Research commented that NHTSA had probably 

overstated the reductions in CO2 emissions that would result from the proposed standards 

– and thus their economic value – because of the potential for compensating increases in 

emissions, such as those cause by increased retention and use of older, less fuel-efficient 

vehicles in the fleet. 

After carefully considering comments received to the NPRM, for purposes of this 

final rule, NHTSA has relied on estimates of the SCC developed by the federal 

interagency working group convened for the specific purpose of developing new 

estimates to be used by U.S. federal agencies in regulatory evaluations. Under Executive 

Order 12866, federal agencies are required, to the extent permitted by law, “to assess 

both the costs and the benefits of the intended regulation and, recognizing that some costs 

and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned 

determination that the benefits of the intended regulation justify its costs.” The group’s 

purpose in developing new estimates of the SCC was to allow federal agencies to 

incorporate the social benefits of reducing carbon dioxide (CO2) emissions into costbenefit analyses of regulatory actions that have small, or “marginal,” impacts on 

cumulative global emissions, as most federal regulatory actions can be expected to have. 
982 

The interagency group convened on a regular basis to consider public comments, 

explore the technical literature in relevant fields, and discuss key inputs and assumptions 

in order to generate SCC estimates. Agencies that actively participated in the interagency 

process included the Environmental Protection Agency and the Departments of 

Agriculture, Commerce, Energy, Transportation, and Treasury. This process was 

convened by the Council of Economic Advisers and the Office of Management and 

Budget, with active participation and regular input from the Council on Environmental 

Quality, National Economic Council, Office of Energy and Climate Change, and Office 

of Science and Technology Policy. The main objective of this process was to develop a 

range of SCC values using a defensible set of input assumptions that are grounded in the 

existing literature. In this way, key uncertainties and model differences can more 

transparently and consistently inform the range of SCC estimates used in the rulemaking 

process. 

The interagency group developed its estimates of the SCC estimates while clearly 

acknowledging the many uncertainties involved, and with a clear understanding that they 

should be updated over time to reflect increasing knowledge of the science and 

economics of climate impacts. Technical experts from numerous agencies met on a 

regular basis to consider public comments, explore the technical literature in relevant 

fields, and discuss key model inputs and assumptions. The main objective of this process 

was to develop a range of SCC values using a defensible set of input assumptions 

grounded in the existing scientific and economic literature. In this way, key uncertainties 
983 

and model differences transparently and consistently can inform the range of SCC 

estimates used in the rulemaking process. 

The group ultimately selected four SCC values for use in regulatory analyses. 

Three values are based on the average SCC from three integrated assessment models, 

using discount rates of 2.5, 3, and 5 percent. The fourth value, which represents the 95th

percentile SCC estimate across all three models at a 3 percent discount rate, is included to 

represent the possibility of higher-than-expected impacts from temperature change that 

lie further out in the tails of the distribution of SCC estimates. Table IV.C.3-2 

summarizes the interagency group’s estimates of the SCC during various future years. 

The SCC estimates reported in the table assume that the marginal damages from 

increased emissions are constant for small departures from the baseline emissions path, 

an approximation that is reasonable for policies that have effects on emissions that are 

small relative to cumulative global carbon dioxide emissions. 

Table IV.C.3-2 Social Cost of CO2 Emissions, 2010 – 2050 (2007 dollars) 

Discount Rate 5% 3% 2.5% 3% 

Source Average of Estimates 95th Percentile Estimate 

2010 4.7 21.4 35.1 64.9 

2015 5.7 23.8 38.4 72.8 

2020 6.8 26.3 41.7 80.7 

2025 8.2 29.6 45.9 90.4 

2030 9.7 32.8 50.0 100.0 

2035 11.2 36.0 54.2 109.7 

2040 12.7 39.2 58.4 119.3 

2045 14.2 42.1 61.7 127.8 

2050 15.7 44.9 65.0 136.2 
984 

As Table IV.C.3-2 shows, the four SCC estimates selected by the interagency 

group for use in regulatory analyses are $5, $21, $35, and $65 (in 2007 dollars) for 

emissions occurring in the year 2010. The first three estimates are based on the average 

SCC across models and socio-economic and emissions scenarios at the 5, 3, and 2.5 

percent discount rates, respectively. The fourth value is included to represent the higherthan-expected impacts from temperature change further out in the tails of the SCC 

distribution. For this purpose, the group elected to use the SCC value for the 95th

percentile at a 3 percent discount rate. 

The central value identified by the interagency group is the average SCC across 

models at the 3 percent discount rate, or $21 per metric ton in 2010. To capture the 

uncertainties involved in regulatory impact analysis, however, the group emphasized the 

importance of considering the full range of estimated SCC values. As the table also 

shows, the SCC estimates also rise over time; for example, the central value increases to 

$24 per ton of CO2 in 2015 and $26 per ton of CO2 in 2020. 

The interagency group is committed to updating these estimates as the science and 

economic understanding of climate change and its impacts on society improves over 

time. Specifically, the group has set a preliminary goal of revisiting the SCC values 

within two years or at such time as substantially updated models become available, and to 

continue to support research in this area. U.S. federal agencies will periodically review 

and reconsider estimates of the SCC used for cost-benefit analyses to reflect increasing 
985 

knowledge of the science and economics of climate impacts, as well as improvements in 

modeling. 

Details of the process used by the interagency group to develop its SCC estimates, 

complete results including year-by-year estimates of each of the four values, and a 

thorough discussion of their intended use and limitations is provided in the document 

Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, 

Interagency Working Group on Social Cost of Carbon, United States Government, 

February 2010.637

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 proposed increases in CAFE 

standards for MY 2012-2016 passenger cars and light trucks, NHTSA employed a 

discount rate of 3 percent per year, but also presents these benefit and cost estimates at a 

7 percent discount rate. 

 While both discount rates are presented, NHTSA believes that 3 percent is the 

most appropriate rate for discounting future benefits from increased CAFE standards 

 

637 This document is available in the docket for this rulemaking (NHTSA-2009-0059). 
986 

because most or all of vehicle manufacturers’ costs for complying with higher CAFE 

standards will ultimately be reflected in higher sales prices for their new vehicle models. 

By increasing sales prices for new cars and light trucks, CAFE regulations 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 

consumers’ rate of time preference.638 

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 consumers’ rate of time 

preference, NHTSA believes that 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 is more appropriate than 7 percent, but presents both.639 One commenter, 

NRDC, supported the agencies’ use of a 3 percent discount rate as consistent with DOE 

practice in energy efficiency-related rulemakings and OMB guidance. OMB guidance 

actually requires that benefits and costs be presented at both a 3 and a 7 percent discount 

rate. 

Because there is some remaining uncertainty about whether vehicle manufacturers 

will completely recover their costs for complying with higher CAFE standards by 

 

638 Id. 639 Office 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). 
987 

increasing vehicle sales prices, however, NHTSA also presents these benefit and cost 

estimates using a higher discount rate. OMB guidance indicates that the real economywide 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 OMB estimates that this rate currently averages about 7 

percent.640 Thus the agency has also examined its benefit and cost estimates for 

alternative MY 2012-2016 CAFE standards using a 7 percent real discount rate. 

In its proposed rule, NHTSA sought comment on whether it should evaluate 

CAFE standards using a discount rate of 3 percent, 7 percent, or an alternative value. 

NRDC not only opposed the agency’s use of a 7 percent discount rate, but also opposed 

conducting even sensitivity analyses with discount rates higher than 3 percent. In 

contrast, two other commenters, NADA and the Institute for Energy Research, advised 

that the agencies should use discount rates of 7 percent or higher. NADA argued that the 

most appropriate discount rate would be one closer to historical financing rates on motor 

vehicle loans (which currently average about 6.5 percent), while the Institute for Energy 

Research argued that consumers may have much higher discount rates than the agencies 

assumed, perhaps even as high as 25 percent. 

After carefully considering these comments, NHTSA has elected to use discount 

rates of both 3 and 7 percent in the analysis supporting this final rule. As indicated 

above, the agency believes that vehicle manufacturers will recover most or all of their 

added costs for complying with the CAFE standards this rule establishes by raising sales 

 

640 Id.
988 

prices for some or all vehicle models. As a consequence, this regulation will thus 

primarily affect vehicle purchases and related consumption decisions, which suggests that 

its future benefits and costs should be discounted at the rate of time preference vehicle 

buyers reveal in their consumption and savings behavior. OMB’s 3 percent figure 

appears to be a conservative (i.e., low) estimate of this rate, because it assumes in effect 

that vehicle buyers face little risk about the value of future fuel savings and other benefits 

from the rule; nevertheless, in the current economic environment it appears to represent a 

reasonable estimate of consumers’ rate of time preference. Thus NHTSA has mainly 

relied upon 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 

One important exception to the 3 percent discount rate is the rates used to 

discount benefits from reducing CO2 emissions from the years in which reduced 

emissions occur, which span the lifetimes of MY 2012-2016 cars and light trucks, to their 

present values. In order to ensure consistency in the derivation and use of the interagency 

group’s estimates of the unit values of reducing CO2 emissions, the benefits from 

reducing those emissions during each future year are discounted using the same

“intergenerational” discount rates that were used to derive each of the alternative unit 

values of reducing CO2 emissions. As indicate in Table IV.C.3-2 above, these rates are 

2.5 percent, 3 percent, and 5 percent depending on which estimate of the SCC is being 

considered.641 

 

641 The fact that the 3 percent discount rate used by the interagency group to derive its central estimate of 

the SCC is identical to the 3 percent short-term or “intra-generational” discount rate used by NHTSA to 

discount future benefits other than reductions in CO2 emissions is coincidental, and should not be 

interpreted as a required condition that must be satisfied in future rulemakings. 
989 

n. Accounting for Uncertainty in Benefits and Costs 

In analyzing the uncertainty surrounding its estimates of benefits and costs from 

alternative 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, 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. 
990 

o. Where Can Readers Find More Information About the Economic 

Assumptions? 

 Much more detailed information is provided in Chapter VIII of the FRIA, and a 

discussion of how NHTSA and EPA jointly reviewed and updated economic assumptions 

for purposes of this final rule is available in Chapter 4 of the Joint 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 

final rule, NHTSA-2009-0059, and on NHTSA’s website.642 Finally, because much of 

NHTSA’s economic analysis for purposes of this final rule 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.643

4. How Does NHTSA Use the Assumptions in its Modeling Analysis?

In developing today’s final 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 

 

642 See http://www.nhtsa.dot.gov (click on “Fuel Economy Standards (CAFE),” click on “Related Links: 

CAFE Compliance and Effects Modeling System: The Volpe Model.”) 

643 74 FR 14308-14358 (Mar. 30, 2009). 
991 

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 final rule, as are inputs for and 

outputs from analysis of today’s final CAFE standards. 

a. How Does the Model Operate? 

As discussed above, the agency uses the Volpe model to estimate how 

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. 
992 

This exercise constitutes a simulation of manufacturers’ decisions regarding compliance 

with CAFE standards. 

This compliance simulation begins with the following inputs: (a) the baseline and 

reference market forecast discussed above in Section IV.C.1 and Chapter 1 of the TSD, 

(b) technology-related estimates discussed above in Section IV.C.2 and Chapter 3 of the 

TSD, (c) economic inputs discussed above in Section IV.C.3 and Chapter 4 of the TSD, 

and (d) inputs defining baseline and 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.644 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”645 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-

 

644 NHTSA does its best to remain scrupulously neutral in the application of technologies through the 

modeling analysis, to avoid picking technology “winners.” The technology application methodology has 

been reviewed by the agency over the course of several rulemakings, and commenters have been generally 

supportive of the agency’s approach. See, e.g., 74 FR 14238-14246 (Mar. 30, 2009). 

645 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. 
993 

effective (from the manufacturer’s perspective) than adding further 

technology.646

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. This is designed to simulate a manufacturer’s decision to plan for CAFE 

obligations several years in advance, which NHTSA believes better replicates 

manufacturers’ actual behavior as compared to the year-by-year evaluation which EPCA 

would otherwise require. 

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 stringency and then set the standard at that level, while ensuring 

ratable increases in average fuel economy.647 The multi-year planning capability 

 

646 This 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 thus includes the possibility of 

manufacturers choosing to pay fines in its modeling analysis in order to achieve what the agency believes is 

a more realistic simulation of manufacturer decision-making. Unlike flex-fuel and other credits, NHTSA is 

not barred by statute from considering fine-payment in determining maximum feasible standards under 

EPCA/EISA. 49 U.S.C. 32902(h). 

647 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 
994 

mentioned above increases the model’s ability to simulate manufacturers’ real-world 

behavior, accounting for the fact that manufacturers will seek out compliance paths for 

several model years at a time, while accommodating the year-by-year requirement. 

The model also calculates the costs, effects, and benefits of technologies that it 

estimates could be added in response to a given CAFE standard.648 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 attributebased CAFE standard, following the steps described below. It can also be used to 

 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. 

648 As 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 February 21, 2010). 
995 

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 today’s 

final standards, the agency did not use the Volpe model’s curve fitting routines; rather, as 

discussed above in Section II, the agency fitted curves outside the model (as for the 

NPRM) but elected to retain the curve shapes defining the proposed standards. 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. 
996 

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.649 Also, although some observers have criticized analyses the agency has 

conducted using the Volpe model, those criticisms have largely concerned inputs to the 

model (such as fuel prices and the estimated economic cost of CO2 emissions), not the 

model itself. In comments on the NPRM preceding today’s final rule, one of these 

observers, the Center for Biological Diversity (CBD), suggested that the revisions to such 

inputs have produced an unbiased cost-benefit analysis. 

One commenter, the International Council on Clean Transportation (ICCT) 

suggested that the Volpe model is excessively complex and insufficiently transparent. 

However, in NHTSA’s view, the complexity of the Volpe model has evolved in response 

to the complex analytical demands surrounding very significant regulations impacting a 

large and important sector of the economy, and ICCT’s own comments illustrate some of 

the potential pitfalls of model simplification. Furthermore, ICCT’s assertions regarding 

model transparency relate to the use of confidential business information, not to the 

Volpe model itself; as discussed elsewhere in this final rule, NHTSA and the Volpe 

Center have taken pains to make the Volpe model transparent by releasing the model and 

supporting documentation, along with the underlying source code and accompanying 

model inputs and outputs. Therefore, the agency disagrees with these ICCT comments. 

 

649 74 FR 14372 (Mar. 30, 2009). 
997 

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-by-year 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 

that would be “maximum feasible” for that year.650 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. 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 

 

650 49 U.S.C. 32902(a). 
998 

true manufacturer product-development cycles, and therefore could not be 

technologically feasible or economically practicable. 

In response to these concerns, and to 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., timebased learning), both of which evolve on year-by-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 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” 
999 

dynamically, based on vehicle characteristics, redesign schedules, and schedules for 

increases in CAFE standards. For example, under the final CAFE standards for 

passenger cars, the CAFE model estimated that manufacturers could apply turbocharged 

SGDI engines mated with dual-clutch AMTs to 2.4 million passenger cars in MY 2016, 

about 22 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 final 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 
1000 

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 pre-determined 

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 attribute-based 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. 
1001 

c. What Changes Has DOT Made to the Model? 

As discussed in the NPRM preceding today’s final rule, the Volpe model has been 

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.651 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 conducting 

analysis to support the NPRM and in analyzing the standards finalized today. 

Consequently, this new capability often produces results indicating that manufacturers 

could over-comply in some model years (with corresponding increases in costs and 

 

651 Although 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. 
1002 

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 
1003 

new vehicle fuel economy and prices. A fuller description of this attempt can be found in 

Section V of the FRIA. 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. 

In the NPRM preceding today’s final rule, NHTSA sought comment on ways to 

improve on this earlier work and develop this capability effectively. Some comments 

implied that the agency should continue work to do so, without providing specific 

recommendations. The Alliance of Automobile Manufacturers identified consumer 

choice as one of several factors outside the industry’s control yet influential with respect 

to the agencies’ analysis. Also, the University of Pennsylvania Environmental Law 

Project suggested that the rule would change consumers’ vehicle purchasing decisions, 

and the California Air Resources Board expressed support for continued consideration of 

consumer choice modeling. On the other hand, citing concerns regarding model 

calibration, handling of advanced technologies, and applicability to the future light 

vehicle market, ACEEE, ICCT, UCS, and NRDC all expressed opposition to the 

possibility of using consumer choice models in estimating the costs and benefits of new 

standards. Notwithstanding comments on this issue, NHTSA has been unable to further 

develop this capability in time to include it in the analysis supporting decisions regarding 

final CAFE standards. The agency will, however, continue efforts to develop and make 

use of this capability in future rulemakings, taking into account comments received in 

connection with today’s final rule. 
1004 

d. Does the Model Set the Standards? 

 Since NHTSA began using the Volpe model in CAFE analysis, some commenters 

have interpreted the agency’s use of the model as the way by which the agency chooses 

the maximum feasible fuel economy standards. This is incorrect. 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, it was not the model’s decision to seek that level of stringency, it 

was the agency’s, as it is always the agency’s decision what level of CAFE stringency is 

appropriate. Ultimately, NHTSA’s selection of appropriate CAFE standards 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 
1005 

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 final standards, based on the agency’s determinations and 

assumptions. Others assess alternative standards, some of which exceed the final 

standards and/or the point at which net benefits are maximized.652 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. 

 

652 See Section IV.F below for a discussion of the regulatory alternatives considered in this rulemaking. 
1006 

 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)653 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 or 2007 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 final 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. 

NHTSA is aware of two attempts by commenters to install and use the Volpe 

model in connection with the NPRM. James Adcock, an individual reviewer, reported 

difficulties installing the model on a computer with Microsoft® Office 2003 installed. 

Also, students from the University of California at Santa Barbara, though successful in 

installing and running the model, reported being unable to reproduce NHTSA’s results 

underlying the development of the shapes of the passenger car and light truck curves. 

Regarding the difficulties Mr. Adcock reported encountering, NHTSA staff is 

aware of no attempts to contact the agency for assistance locating supporting material 

 

653 We 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. 
1007 

related to the MYs 2012-2016 CAFE rulemaking. Further, the model documentation 

provides specific minimum hardware requirements and also indicates operating 

environment requirements, both of which have remained materially unchanged for more 

than a year. Volpe Center staff members routinely install and run the model successfully 

on new laptops, desktops, and servers as part of normal equipment refreshes and 

interagency support activities. We believe, therefore, that if the minimum hardware and 

operating environment requirements are met, installing and running the model should be 

straightforward and successful. The model documentation notes that some of the 

development and operating environment used by the Volpe model (e.g., the software 

environment rather than the hardware on which that software environment operates), 

particularly the version of Microsoft® Excel used by the model, is Microsoft® Office 

2003. We recognize that some users may have more recent versions of Microsoft® 

Office. However, as in the case of other large organizations, software licensing 

decisions, including the version of Microsoft® Office, is centralized in the Office of the 

Chief Information Officer. Nonetheless, the Volpe Model is proven on both Microsoft® 

Office version 2003 and the newer 2007 version. 

As discussed in Section II.C, considering comments by the UC Santa Barbara 

students regarding difficulties reproducing NHTSA’s analysis, NHTSA reexamined its 

analysis, and discovered some erroneous entries in model inputs underlying the analysis 

used to develop the curves proposed in the NPRM. These errors are discussed in the 

FRIA and have since been corrected. Updated inputs and outputs have been posted to 
1008 

NHTSA’s web site, and should enable outside replication of the analysis documented in 

today’s notice. 

5. How Did NHTSA Develop the Shape of the Target Curves for the Final 

Standards?

 In developing the shape of the target curves for today’s final 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 final 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 larger-footprint vehicles have less stringent 

targets) in ways that could compromise energy and environmental benefits. Given 

comments received in response to the NPRM preceding this final rule, it appears that the 

constrained linear function developed here significantly mitigates prior steepness 

concerns, and appropriately balances, for purposes of this rulemaking, the objectives of 
1009 

(1) discouraging vehicle downsizing that could compromise highway safety and (2) 

avoiding an overly strong incentive to increase vehicle sizes in ways that could 

compromise energy and environmental benefits. 

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.654 Like the MY 2011 

standards, the MY 2012-2016 passenger car and light truck standards are attribute-based 

and defined by a mathematical function.655 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. 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 

 

654 49 U.S.C. 32902(a)(3)(A). 655 As discussed in Chapter 2 of the TSD, EPA is also setting 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. 
1010 

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 attribute-based system 

than under a comparable industry-wide standard. 
1011 

Second, attribute-based standards minimize the incentive for manufacturers to 

respond to CAFE in ways harmful to safety.656 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 fleet-wide 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.657 A universal industry-wide 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, attribute-based 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 

 

656 The 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. 

657 Id. at 4-5, finding 10. 
1012 

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 universal 

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 finalized 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. Section II discusses the reasons that the agency does not 

believe that fuel savings and emissions reductions will be significantly lower than 

anticipated such as to warrant additional backstop measures beyond the one mandated by 

EISA, but the agency will monitor the situation and consider further rulemaking solutions 

if necessary and as lead time permits. See also Section IV.E.3 below for further 

discussion of NHTSA’s backstop authority. 

b. What Attribute Does NHTSA Use, and Why? 

Consistent with the MY 2011 CAFE standards, NHTSA is using 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. 
1013 

As discussed in Section IV.D.1.a.ii below, 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. NHTSA’s research indicates that reductions in vehicle mass tend to compromise 

vehicle safety if applied on an equal basis across the entire light duty vehicle fleet, 

however if greater mass reduction is applied to the higher mass vehicles (the larger light 

trucks), an improvement in aggregate fleet safety is possible. Footprint-based standards 

provide an incentive to use advanced lightweight materials and structures that, if 

carefully designed and validated, should minimize impacts on safety, although that will 

be better proven as these vehicles become more prevalent in the future. 

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 
1014 

to more easily-adjusted attributes, they would make it less certain that the future fleet 

would actually achieve the projected average fuel economy and CO2 reduction levels. 

 As discussed above in Section II.C, NHTSA and EPA sought comment on 

whether the agencies should consider setting standards for the final rule based on another 

attribute or another combination of attributes. Although NHTSA specifically requested 

that the commenters address the concerns raised 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, commenters raising the issue 

largely reiterated comments submitted in prior CAFE rulemakings, which the agency 

answered in the MY 2011 final rule.658 As a result, and as discussed further in Section II, 

the agencies finalized target curve standards based on footprint for MYs 2012-2016. 

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: 

 

658 See 74 FR at 14358-59 (Mar. 30, 2009). 
1015 

( )

( )

1

1 11

1

FOOTPRINT c d

FOOTPRINT c d

TARGET

e

a ba e

−

−

= ⎛ ⎞ + − ⎜ ⎟ ⎝ ⎠ +

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 2.718,659

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: 

 

659 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. 
1016 

Figure IV.C.5-1 MY 2011 CAFE Standards for Passenger Cars and Light Trucks

20

25

30

35

40

45

35 40 45 50 55 60 65 70

Footprint (sf)

Target (mpg)

Passenger Cars

Light Trucks
1017 

d. What Mathematical Function is NHTSA Using for the MYs 2012-2016 

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 for the final CAFE standards. 

In revisiting this question, NHTSA found that the final MY 2011 CAFE standard 

for passenger cars, though less steep than the MY 2011 standard NHTSA final 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 fullline 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 
1018 

certain vehicles, in order to “balance out” other vehicles subject to the same standard. 

As discussed above in Section II.C, NHTSA and EPA have considered comments by 

students from UC Santa Barbara indicating that the passenger car and light truck curves 

should be flatter. The agencies conclude that flatter curves would reduce the incentives 

intended in shifting from “flat” CAFE standards to attribute-based CAFE and GHG 

standards—those being the incentive to respond to attribute-based standards in ways that 

minimize compromises in vehicle safety, and the incentive for more manufacturers (than 

primarily those selling a wider range of vehicles) across the range of the attribute to have 

to increase the application of fuel-saving technologies. 

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 at that time, 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 final 

standards, and considered comments discussed above in Section II, NHTSA, with EPA, 

concludes that for both passenger cars and light trucks, the constrained linear functions 

finalized today remain meaningfully sloped over a wide footprint range, thereby 
1019 

providing a well-distributed disincentive to downsize vehicles in ways that could 

compromise highway safety. Further, the constrained linear functions finalized today are 

not so steeply sloped that they 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, today’s final CAFE 

standards are defined by constrained linear functions. 

The constrained linear function is defined according to the following formula: 

1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

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. 
1020 

e. How Did NHTSA Fit the Coefficients that Determine the Shape of the 

Final Curves? 

For purposes of this final rule and the preceding NPRM, and for EPA’s use in 

developing new CO2 emissions standards, potential curve shapes were fitted 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 FRIA and Chapter 3 of 

the Joint TSD660 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. 

However, while this approach produced curves that the agencies’ judged 

appropriate for the NPRM, it did not do so for the final rule. Corrections to some 

engineering inputs in NHTSA’s market forecast, while leading to a light truck curve 

 

660 The 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 final standards. NHTSA and EPA did include diesel engines and 

strong hybrid vehicle technologies in all other portions of their analyses. 
1021 

nearly identical to that derived for the NPRM, yielded a considerably steeper passenger 

car curve. As discussed above in Section II, NHTSA and EPA are concerned about the 

incentives that would result from a significantly steeper curve. Considering this, and 

considering that the updated analysis—in terms of the error measure applied by the 

agency—supports the curve from the NPRM nearly as well as it supports the steeper 

curve, NHTSA and EPA are promulgating final standards based on the curves proposed 

in the NPRM. 

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. Section II.C also discusses 

comments NHTSA and EPA received on this process, and on the outcomes thereof. 

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.661 First, the standards are subject to a 

 

661 EISA added the following additional requirements: (1) Standards must be attribute-based and 

expressed in the form of a mathematical function. 49 U.S.C. 32902(b)(3)(A). (2) Standards for MYs 

2011-2020 must “increase ratably” in each model year. 49 U.S.C. 32902(b)(2)(C). This requirement does 

not have a precise mathematical meaning, particularly because it must be interpreted in conjunction with 
1022 

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 2020.662 Second, as discussed 

above and at length in the March 2009 final rule establishing the MY 2011 CAFE 

standards, EPCA requires that the 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, based on a balancing of 

express statutory and other factors.663 The implication of this second requirement is that 

it calls for setting a standard that exceeds 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. The ultimate determination of what standards can be considered 

maximum feasible involves a weighing and balancing of these factors. NHTSA received 

a number of comments on how the agency interprets its statutory requirements, and will 

respond to them in this section. 

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

level for that model year. Generally speaking, the requirement for ratable increases means that the annual 

increases should not be disproportionately large or small in relation to each other. 662 49 U.S.C. 32902(b)(2)(A). 663 49 U.S.C. 32902(a). 
1023 

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 technologyforcing 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. 

Commenters appear to have generally agreed with the agency’s interpretation of 

technological feasibility. NESCAUM commented that the proposed standards were 

technologically feasible and cost-effective in the rulemaking timeframe. CBD and the 

UCSB students focused their comments more on the technology-forcing aspects of the 

definition of technological feasibility. CBD commented that the standards must be below 

the level of all that is technologically feasible if all the technology necessary to meet 
1024 

them is available today. The UCSB students similarly commented that the agencies 

should not base regulations for MY 2016 solely on technologies available today, that they 

should also consider technologies still in the research phase for the later years of the 

rulemaking timeframe. 

 While NHTSA agrees that the technological feasibility factor can include a degree 

of technology forcing, and that this could certainly be appropriate given EPCA’s 

overarching purpose of energy conservation, we note that determining what levels of 

technology to require in the rulemaking timeframe requires a balancing of all relevant 

factors. Technologies that are still in the research phase now may be sufficiently 

advanced to become available for commercial application in, for example, MY 2016. 

However, given the rate at which the standards already require average mpg to rise, and 

given the current state of the industry, NHTSA does not believe that it would be 

reasonable to set standards mandating that manufacturers devote substantial resources to 

bringing these technologies to market immediately rather than to simply improving the 

fuel economy of their fleets by applying more of the technologies on the market today. 

As will be discussed further in Section IV.F below, technological feasibility is one of four 

factors that the agency balances in determining what standards would be maximum 

feasible for each model year. As the balancing may vary depending on the circumstances 

at hand for the model years in which the standards are set, the extent to which 

technological feasibility is simply met or plays a more dynamic role may also shift. 
1025 

(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.”664 In an attempt to ensure the standards’ economic practicability, the 

agency considers a variety of factors, including the annual rate at which manufacturers 

can increase the percentage of the 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.”665 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 

 

664 67 FR 77015, 77021 (Dec. 16, 2002). 665 CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 
1026 

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 factor must be considered in the context of the 

competing concerns associated with different levels of standards. Prior to the MY 2005-

2007 rulemaking, the agency generally 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 should 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. 

Besides the many commenters raising economic practicability as an issue in the 

context of the stringency of the proposed standards, some commenters also directly 

addressed the agency’s interpretation of economic practicability. AIAM commented that 

NHTSA has wide discretion to consider economic practicability concerns as long as 

EPCA’s overarching purpose of energy conservation is met, and that it would be within 

NHTSA’s statutory discretion to set standards at levels below those at which net benefits 
1027 

are maximized due to economic practicability. GM and Mitsubishi both commented that 

consideration of economic practicability should include more focus on individual 

manufacturers: GM stated that NHTSA must consider sales and employment impacts on 

individual manufacturers and not just industry in the aggregate, while Mitsubishi 

emphasized the difficulties of limited-line manufacturers in meeting standards that might 

be economically practicable for full-line manufacturers. CBD commented that a 

determination of economic practicability should not be tied to “differences between 

incremental improvements” that “fail to consider all relevant costs and benefits and fail to 

analyze the overall impact of the proposed standards.” CBD pointed to the three-to-one 

benefit-cost ratio of the proposed standards to argue that much more stringent standards 

would still be economically practicable. ACEEE also commented that standards set at 

the level at which net benefits are maximized should be considered a “lower bound” for 

determining economic practicability. 

 While NHTSA agrees with AIAM in general that the agency has wide discretion 

to consider economic practicability concerns, we do not believe that economic 

practicability will always counsel setting standards lower than the point at which net 

benefits are maximized, given that it must be considered in the context of the overall 

balancing and EPCA’s overarching purpose of energy conservation. Depending on the 

conditions of the industry and the assumptions used in the agency’s analysis of 

alternative stringencies, NHTSA could well find that standards that maximize net 

benefits, or even higher standards, could be economically practicable. To that end, 

however, given the current conditions faced by the industry, which is perhaps just now 
1028 

passing the nadir of the economy-wide downturn and looking at a challenging road to 

recovery, and the relatively limited amount of lead time for MYs 2012-2016, we disagree 

with CBD’s comment that the benefit-cost ratio of the final standards indicates that more 

stringent standards would be economically practicable during the rulemaking timeframe 

and with ACEEE’s comment that standards higher than those that would maximize net 

benefits would be economically practicable at this time. These comments overlook the 

fact that nearly all manufacturers are capital-constrained at this time and may be for the 

next couple of model years; access to capital in a down market is crucial to making the 

investments in technology that the final standards will require, and requiring more 

technology will require significantly more capital, to which manufacturers would not 

likely have access. Moreover, economic practicability depends as well on manufacturers’ 

ability to sell the vehicles that the standards require them to produce. If per-vehicle costs 

increase too much too soon, consumers may defer new vehicle purchases, which defeats 

the object of raising CAFE standards to get vehicles with better mileage on the road 

sooner and meet the need of the Nation to conserve energy. See Section IV.F below for 

further discussion of these issues. 

 

As for GM’s and Mitsubishi’s comments, while the agency does consider 

carefully the impacts on individual manufacturers in the agency’s analysis, as shown in 

the FRIA, we reiterate that economic practicability is not keyed to any single 

manufacturer. One of the main benefits of attribute-based standards is greater regulatory 

fairness – for all the manufacturers who build vehicles of a particular footprint, the target 

for that footprint is the same, yet each manufacturer has their own individual compliance 
1029 

obligation depending on the mix of vehicles they produce for sale. More manufacturers 

are required to improve their fuel economy, yet in a fairer way. And while some 

manufacturers may face difficulties under a given CAFE standard, others will find 

opportunities. The agency’s consideration of economic practicability recognizes these 

difficulties and opportunities in the context of the industry as a whole, and in the context 

of balancing against the other statutory factors, as discussed further below. 

(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,666 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 667 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 has said that it 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, 

 

666 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. 667 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534, 33537 (Jun. 30, 1977). 
1030 

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.”668 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 

statutorily-specified CAFE standards for MY 1978-1980 passengers cars.669 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. 

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 

 

668 42 FR 33534, 33537 (Jun. 30, 1977). 669 That provision was deleted as obsolete when EPCA was codified in 1994. 
1031 

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 endangerment finding, its 

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

standards for light-duty vehicles, 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. 

In the NPRM, NHTSA tentatively concluded that the effects of the EPA and 

California standards are neither positive nor negative because the proposed rule resulted 

in consistent standards among all components of the National Program, but sought 

comment 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. NHTSA stated that it had 
1032 

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

Program in developing its own proposed maximum feasible standards. 

The Alliance commented that the extent to which the consideration of other motor 

vehicle standards of the government should affect NHTSA’s standard-setting process was 

entirely within the agency’s discretion. The Alliance agreed with NHTSA that the 

original intent of the factor was to ensure that NHTSA accounted for other government 

standards that might reduce fuel economy or inhibit fuel economy improvements, but 

stated that since GHG standards set by EPA and California overlap CAFE standards so 

extensively, and are thus functionally equivalent to CAFE standards (plus air 

conditioning), those standards should be “basically irrelevant to NHTSA’s mission to set 

fuel economy standards, unless some specific aspect of the GHG standards actually 

makes it harder for mfrs to improve fuel economy.” The Alliance stated further that 

NHTSA must still determine what levels of CAFE standards would be maximum feasible 

regardless of the findings or standards set by EPA and California. Thus, the Alliance 

stated, for purposes of the MYs 2012-2016 CAFE standards, EPA’s GHG standards 

could be sufficiently considered by NHTSA given the agency’s decision to harmonize as 

part of the National Program,670 while California’s GHG standards need not be 

considered because of the state’s agreement under the National Program that compliance 

with EPA’s standards would constitute compliance with its own. Ford concurred 

individually with the Alliance comments. NADA, in contrast, commented that EPA’s 

GHG standards should not be considered as an “other vehicle standard” for purposes of 

 

670 The University of Pennsylvania Environmental Law Project offered a similar comment. 
1033 

this statutory factor, and argued that NHTSA need not and should not consider 

California’s GHG standards due to preemption under EPCA. 

 Commenters from the state of California (the Attorney General and the Air 

Resources Board), in contrast, stated that NHTSA must consider the effects of the 

California GHG standards on fuel economy as a baseline for NHTSA’s analysis, to give 

credit to the state’s leadership role in achieving the levels required by the National 

Program. CBD seconded this comment.671 The California Attorney General further 

stated that Congress discussed both positive and negative impacts of other standards on 

fuel economy in the 1975 Conference Reports preceding EPCA’s enactment.672 CARB 

and the University of Pennsylvania Environmental Law Project both cited the Green 

Mountain Chrysler673 and Central Valley Chrysler674 cases as supporting NHTSA’s 

consideration of CARB’s GHG standards pursuant to this factor. 

NHTSA believes that these comments generally support the agency’s 

interpretation of this factor as stated in the NPRM. While the agency may consider both 

positive and negative effects of other motor vehicle standards of the Government on fuel 

economy in determining what level of CAFE standards would be maximum feasible, 

given the fact that the final rule results in consistent standards among all components of 

the National Program, and given that NHTSA considered the harmonization benefits of 

 

671 NHTSA answered similar comments in the FEIS. See FEIS Section 10.2.4.2 for the agency’s response. 672 Citing HR Rep 94-340 at 86-87, 89-91 (1975 USCCAN 1762, 1848-49, 1851-53). 673 Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie, 508 F.Supp.2d 295 (D.Vt. 2007). 674 Central Valley Chrysler Jeep, Inc. v. Goldstene, 529 F.Supp.2d 1151 (E.D. Cal. 2007). 
1034 

the National Program in developing its own standards, the agency’s obligation to balance 

this factor with the others may be considered accounted for. 

(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.”675 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. 

 While a number of commenters cited the need of the nation to conserve energy in 

calling for the agency to set more stringent CAFE standards, none disagreed with the 

agency’s interpretation of this factor and its influence on the statutory balancing required 

by EPCA. CBD, for example, commented that “Increasing mileage standards for this 

vehicle fleet is the single most effective and quickest available step the U.S. can take to 

conserve energy and to reduce the U.S. dependence on foreign oil, and also has an 

immediate and highly significant effect on total U.S. GHG emissions,” and that 

accordingly, NHTSA should consider the need of the nation to conserve energy as 

counseling the agency to raise standards at a faster rate. NHTSA agrees that this factor 

tends to influence stringency upwards, but reiterates that the need of the nation to 

conserve energy is still but one of four factors that must be balanced, as discussed below. 

 

675 42 FR 63184, 63188 (1977). 
1035 

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 FR 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, manufacturers were encouraged to respond to higher standards by 
1036 

building smaller, less safe vehicles in order to “balance out” the larger, safer vehicles that 

the public generally preferred to buy, which resulted in a higher mass differential 

between the smallest and the largest vehicles, with a correspondingly greater risk to 

safety. Under the attribute-based standards being finalized 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, and because all vehicles are 

required to continue improving their fuel economy. In prior rulemakings, NHTSA 

limited the application of mass reduction/material substitution in our modeling analysis to 

vehicles over 5,000 lbs GVWR,676 but for purposes of today’s final standards, NHTSA 

has revised its modeling analysis to allow some application of mass reduction/material 

substitution for all vehicles, although it is concentrated in the largest and heaviest 

vehicles, 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 Joint TSD and in 

Section V of the FRIA; and the estimated safety impacts that may be due to the final 

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 

 

676 See 74 FR 14396-14407 (Mar. 30, 2009). 
1037 

manufacturers to take advantage of several EPCA provisions that facilitate compliance 

with the CAFE standards and thereby reduce the costs of compliance.677 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 voluntarily-employed measures. If the 

agency were 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.”678 

 

677 49 U.S.C. 32902(h). 678 Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1341 (C.A.D.C. 1986). 
1038 

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 broad 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,679 and as long as that balancing reasonably accommodates “conflicting 

policies that were committed to the agency's care by the statute.”680 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.681 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, as 

 

679 Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1195 (9th Cir. 2008) 680 CAS, 1338 (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council , Inc., 467 U.S. 837, 

845) 

681 CBD v. NHTSA, 538 F.3d 1172, 1198 (9th Cir. 2008) 
1039 

noted above, 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. 

v. Other Standards – Minimum Domestic Passenger Car Standard

 The minimum domestic passenger car standard was added to the CAFE program 

through EISA, when Congress gave NHTSA explicit authority to set universal standards 

for domestically-manufactured passenger cars at the level of 27.5 mpg or 92 percent of 

the average fuel economy of the combined domestic and import passenger car fleets in 

that model year, whichever was greater.682 This minimum standard was intended to act 

as a “backstop,” ensuring that domestically-manufactured passenger cars reached a given 

mpg level even if the market shifted in ways likely to reduce overall fleet mpg. Congress 

was silent as to whether the agency could or should develop similar backstop standards 

 

682 49 U.S.C. 32902(b)(4). 
1040 

for imported passenger cars and light trucks. NHTSA has struggled with this question 

since EISA was enacted. 

 In the MY 2011 final rule, facing comments split fairly evenly between support 

and opposition to additional backstop standards, NHTSA noted Congress’ silence and 

“accept[ed] at least the possibility that ... [it] could be reasonably interpreted as 

permissive rather than restrictive,” but concluded based on the record for that rulemaking 

as a whole that additional backstop standards were not necessary for MY 2011, given the 

lack of leadtime for manufacturers to change their MY 2011 vehicles, the apparentlygrowing public preference for smaller vehicles, and the anti-backsliding characteristics of 

the footprint-based curves.683 NHTSA stated, however, that it would continue to monitor 

manufacturers’ product plans and compliance, and would revisit the backstop issue if it 

became necessary in future rulemakings.684

 Thus, in the MYs 2012-2016 NPRM, NHTSA again sought comment on the issue 

of additional backstop standards, recognizing the possibility that low fuel prices during 

the years that the MYs 2012-2016 vehicles are in service might lead to less than 

anticipated fuel savings.685 NHTSA asked commenters, in addressing this issue, to 

consider reviewing the agency’s discussion in the MY 2011 final rule, which the agency 

described as concluding that its authority was likely limited by Congress’ silence to 

setting only the backstop that Congress expressly provided for.686 EPA also sought 

 

683 74 FR at 14412 (Mar. 30, 2009). 684 Id. 685 74 FR at 49685 (Sept. 28, 2009). 686 Id. at 49637, 49685 (Sept. 28, 2009). 
1041 

comment on whether it should set backstop standards under the CAA for MYs 2012-

2016. 

 As discussed above in Section II, many commenters addressed the backstop issue, 

and again comments were fairly evenly split between support and opposition to additional 

backstop standards. While commenters opposed to additional backstops, such as the 

Alliance, largely reiterated NHTSA’s previous statements with regard to its backstop 

authority, some commenters in favor of additional backstops provided more detailed legal 

arguments than have been previously presented for the agency’s consideration. Section II 

provides NHTSA’s and EPA’s general response to comments on the backstop issue; this 

section provides NHTSA’s specific response to the legal arguments by Sierra Club et 

al.

687 on the agency’s authority to set additional backstop standards. 

 The Sierra Club et al. commented that a more permissive reading of Congress’ 

silence in EISA was appropriate given the context of the statute, the 9th Circuit’s revised 

opinion in CBD v. NHTSA, and the assumptions employed in the NPRM analysis. The 

commenters stated that given that EISA includes the 35-in-2020 and ratable increase 

requirements, and given that CAFE standards were only just starting to rise for light 

trucks at the time of EISA’s enactment and had remained at the statutory level of 27.5 

mpg for passenger cars for many years, it appears that Congress’ intent in EISA was to 

raise CAFE standards as rapidly as possible. Thus, the commenters stated, if the purpose 

 

687 NHTSA refers to these commenters by the shorthand “Sierra Club et al.,” but the group consists of the 

Sierra Club, the Safe Climate Campaign, the Coalition for Clean Air, the Alliance for Climate Protection, 

and Environment America. Their comments may be found at Docket No. EPA-HQ-OAR-2009-0472-

7278.1. 
1042 

of EISA was to promote the maximum feasible increase in fuel economy with ratable 

increases, then there was no reason to think that backstop standards would be inconsistent 

with that purpose – if they were inconsistent, Congress would not have included one for 

domestic passenger cars. Similarly, Congress could not have thought that additional 

backstops were inconsistent with attribute-based standards, or it would not have included 

one for domestic passenger cars.688 The commenters also cited D.C. Circuit case law 

stating that congressional silence leaves room for agency discretion; specifically, that 

“[w]hen interpreting statutes that govern agency action, [the courts] have consistently 

recognized that a congressional mandate in one section and silence in another often 

‘suggests not a prohibition but simply a decision not to mandate any solution in the 

second context, i.e., to leave the question to agency discretion.’”689

 The Sierra Club et al. also commented that it appeared that the 9th Circuit’s 

revised opinion in CBD v. NHTSA supported the agency’s discretion to set additional 

backstops, since it was revised after the passage of EISA and did not change its earlier 

holding (pertaining to the original EPCA language) that backstop standards were within 

the agency’s discretion.690

 And finally, the commenters stated that NHTSA’s rationale for not adopting 

additional backstops in the MY 2011 final rule should not be relied on for MYs 2012-

 

688 The commenters also suggested that NHTSA could set attribute-based backstop standards if it was 

concerned that Congress’ mandate to set attribute-based standards generally precluded additional flat 

backstops. 

689 Citing Catawba County, N.C. v. EPA, 571 F.3d 20, 36 (D.C. Cir. 2009) (quoting Cheney R. Co. v. ICC, 

902 F.2d 66, 69 (D.C. Cir. 1990)). 

690 Citing CBD v. NHTSA, 538 F.3d at 1204-06 (9th Cir. 2008). 
1043 

2016, namely, that the agency’s belief that backstop standards were unnecessary to 

ensure the expected levels of fuel savings given the short lead time between the 

promulgation of the final standards and the beginning of MY 2011, the apparent growing 

consumer preference for smaller vehicles, and the existing anti-backsliding measures in 

the attribute-based curves. As described above in Section II, these commenters (and 

many others) expressed concern about the agencies’ fleet mix assumptions and their 

potential effect on estimated fuel savings. 

 In response, and given D.C. Circuit precedent as cited above, NHTSA agrees that 

whether to adopt additional minimum standards for imported passenger cars and light 

trucks is squarely within the agency’s discretion, and that such discretion should be 

exercised as necessary to avoid undue losses in fuel savings due to market shifts or other 

forces while still respecting the statutorily-mandated manufacturer need for lead time in 

establishing CAFE standards. However, as discussed above in Section II.C, NHTSA 

remains confident that the projections of the future fleet mix are reliable, and that future 

changes in the fleet mix of footprints and sales are not likely to lead to more than modest 

changes in projected emissions reductions or fuel savings. There are only a relatively 

few model years at issue, and market trends today are consistent with the agencies’ 

estimates, showing shifts from light trucks to passenger cars and increased emphasis on 

fuel economy from all vehicles. The shapes of the curves also tend to avoid or minimize 

regulatory incentives for manufacturers to upsize their fleet to change their compliance 

burden, and the risk of vehicle upsizing or changing vehicle offerings to “game” the 

passenger car and light truck definitions to which commenters refer is not so great for the 
1044 

model years in question, because the changes that commenters suggest manufacturers 

might make are neither so simple nor so likely to be accepted by consumers, as discussed 

above. 

 Thus, NHTSA is confident that the anticipated increases in average fuel economy 

and reductions in average CO2 emission rates can be achieved without backstops under 

EISA, as noted above. Nevertheless, we acknowledge that the MY 2016 fuel economy 

goal of 34.1 mpg is an estimate and not a standard,691 and that changes in fuel prices, 

consumer preferences, and/or vehicle survival and mileage accumulation rates could 

result in either smaller or larger oil savings. However, as explained above and elsewhere 

in the rule, NHTSA believes that the possibility of not meeting (or, alternatively, 

exceeding) fuel economy goals exists, but is not likely to lead to more than modest 

changes in the currently-projected levels of fuel and GHG savings. NHTSA plans to 

conduct retrospective analysis to monitor progress, and has the authority to revise 

standards if warranted, as long as sufficient lead time is provided. Given this, and given 

the potential complexities in designing an appropriate backstop, NHTSA believes that the 

balance here points to not adopting additional backstops at this time for the MYs 2012-

2016 standards other than NHTSA’s issuing the ones required by EPCA/EISA for 

domestic passenger cars. If, during the timeframe of this rule, NHTSA observes a 

significant shift in the manufacturer’s product mix resulting in a relaxation of their 

estimated targets, NHTSA and EPA will reconsider options, both for MYs 2012-2016 

and future rulemakings. 

 

691 The MYs 2012-2016 passenger car and light truck curves are the actual standards. 
1045 

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 
1046 

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.”692 

The APA also requires that agencies provide notice and comment to the public 

when proposing regulations.693 Two commenters, the American Chemistry Council and 

the American Petroleum Institute, argued that the agreements by auto manufacturers and 

California to support the National Program indicated that a “deal” had been struck 

between the agencies and these parties, which was not available as part of the 

administrative record and which the public had not been given the opportunity to 

comment on. The commenters argued that this violated the APA. 

In response, under the APA, agencies “must justify their rulemakings solely on 

the basis of the record [they] compile[] and make[] public.”694 Any informal contacts 

that occurred prior to the release of the NPRM may have been informative for the 

agencies and other parties involved in developing the NPRM, but they did not release the 

agencies of their obligation consider and respond to public comments on the NPRM and 

to justify the final standards based on the public record. The agencies believe that the 

 

692 Ibid., 1181. 693 5 U.S.C. 553. 694 Sierra Club v. Costle, 657 F.2d 298, 401 (D.C. Cir. 1981). 
1047 

record fully justifies the final standards, demonstrating analytically that they are the 

maximum feasible and reasonable for the model years covered. Thus, we disagree that 

there has been any violation of the APA. 

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 both a 

draft and a final 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. 
1048 

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). 

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. 

This final rule also constitutes a Record of Decision for NHTSA under NEPA. 

Section IV.K below provides much more information on the agency’s NEPA analysis for 

this rulemaking, and on how this final rule constitutes a Record of Decision. 
1049 

E. What are the Final CAFE Standards? 

1. Form of the Standards

Each of the CAFE standards that NHTSA is finalizing 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.695

As discussed above in Section II.C, NHTSA has determined fuel economy targets 

using a constrained linear function defined according to the following formula: 

1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

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 

 

695 Required 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 established today. 
1050 

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. 

In the NPRM preceding today’s final rule (as under the recently-promulgated MY 

2011 standards), NHTSA proposed that the CAFE level required of any given 

manufacturer be determined by calculating the production-weighted harmonic average of 

the fuel economy targets applicable to each vehicle model: 

i

i

required

i

i i

SALES

CAFE SALES

TARGET

=

∑

∑

 

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. 

However, comments by Honda and Toyota indicate that the defined variables 

used in the equations could be interpreted differently by vehicle manufacturers. The 

term “footprint of a vehicle model” could be interpreted to mean that a manufacturer only 

has to use one representative footprint within a model type or that it is necessary to use 
1051 

all the unique footprints and corresponding fuel economy target standards within a model 

type when determining a fleet target standard. 

In the same NPRM, EPA proposed new regulations which also include the 

calculation of standards based on the attribute of footprint. The EPA regulation text is 

specific and states that standards will be derived using the target values “for each unique 

combination of model type and footprint value” (proposed regulation text 40 CFR 

86.1818-12 (c)(2)(ii)(B) for passenger automobiles and (c)(3)(ii)(B) for light trucks). 

Also, in an EPA final rule issued November 25, 2009, the manufacturers are required to 

provide in their final model year reports to EPA data for “each unique footprint within 

each model type” used to calculate the new CAFE program fuel economy levels (40 CFR 

600.512-08(c)(8)and(9)). Using this term would be more definitive than using terms such 

as “footprint of a vehicle model” and would more fully harmonize the NHTSA and EPA 

regulations. Therefore, under the final CAFE standards promulgated today, a 

manufacturer’s “fleet target standard” will be derived from the summation of the targets 

for all and every unique footprint within each model type for all model types that make 

up a fleet of vehicles. Also, to provide greater clarity, the equation will use the variable 

name PRODUCTION rather than SALES to refer to production of vehicles for sale in the 

United States. Otherwise, for purposes of the final rule the same equation will apply: 

i

i

required

i

i i

PRODUCTION

CAFE PRODUCTION

TARGET

=

∑

∑

 
1052 

However, PRODUCTIONi is the number of units produced for sale in the United 

States of each i

th unique footprint within each model type, produced for sale in the United 

States, and TARGETi is the corresponding fuel economy target (according to the equation 

shown in Chapter II and based on the corresponding footprint), and the summations in the 

numerator and denominator are both performed over all unique footprint and model type 

combinations in the fleet in question. The equations and terms specified for calculating 

the required CAFE fleet values in Part 531.5 (b) and (c) for MYs 2012-2016, and Part 

533.5 (g), (h) and (i) for MYs 2008-2016 will be updated accordingly. Although the 

agency is not changing the equations for the MY 2011 standards, we would expect 

manufacturers to follow the same procedures for calculating their required levels for that 

model year. Also, the Appendices in each of these parts will also be updated to provide 

corresponding examples of calculating the fleet standards. 

Corresponding changes to regulatory text defining CAFE standards are discussed 

below in Section IV.I. 

 The final 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) 
1053 

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 proposed CAFE standards defined by the following 

coefficients during MYs 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 

After updating inputs to its analysis, and revisiting the form and stringency of 

both passenger cars and light truck standards, as discussed in Section II, NHTSA is 

finalizing passenger car CAFE standards defined by the following coefficients during 

MYs 2012-2016: 

Table IV.E.2-2 Coefficients Defining Final MY 2012-2016 Fuel Economy Targets for 

Passenger Cars

Coefficient 2012 2013 2014 2015 2016 

a (mpg) 35.95 36.80 37.75 39.24 41.09 

b (mpg) 27.95 28.46 29.03 29.90 30.96 

c (gpm/sf) 0.0005308 0.0005308 0.0005308 0.0005308 0.0005308 

d (gpm) 0.006057 0.005410 0.004725 0.003719 0.002573 
1054 

These coefficients reflect the agency’s decision, discussed above in Section II, to 

leave the shapes of both the passenger car and light truck curves unchanged. They also 

reflect the agency’s reevaluation of the “gap” in stringency between the passenger car 

and light truck standard, also discussed in Section II. 

These coefficients result in the footprint-dependent 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. 
1055 

Figure IV.E.2-1 Final MY 2011 and Final MY 2012-2016 Fuel Economy Target Curves 

for Passenger Cars 

20

25

30

35

40

45

35 40 45 50 55 60 65 70

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2016

2015

2014

2013

2012
1056 

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 final 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)696: 

Table IV.E.2-3 Estimated Average Fuel Economy Required under Final MY 2011 and 

Final MY 2012-2016 CAFE Standards for Passenger Cars 

Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 30.2 33.0 33.7 34.5 35.7 37.3 

Chrysler 29.4 32.6 33.3 34.1 35.2 36.7 

Daimler 29.2 32.0 32.7 33.3 34.4 35.8 

Ford 29.7 32.9 33.7 34.4 35.6 37.1 

General Motors 30.3 32.7 33.5 34.2 35.4 36.9 

Honda 30.8 33.8 34.6 35.4 36.7 38.3 

Hyundai 30.9 33.8 34.3 35.1 36.6 38.2 

Kia 30.6 33.4 34.2 35.0 36.3 37.9 

Mazda 30.6 33.8 34.6 35.5 36.8 38.4 

Mitsubishi 31.0 34.2 35.0 35.8 37.1 38.7 

Nissan 30.7 33.3 34.1 34.9 36.1 37.7 

Porsche 31.2 35.9 36.8 37.8 39.2 41.1 

Subaru 31.0 34.6 35.5 36.3 37.7 39.4 

Suzuki 31.2 35.8 36.6 37.5 39.0 40.8 

Tata 28.0 30.7 31.4 32.1 33.3 34.7 

Toyota 30.8 33.9 34.7 35.5 36.8 38.4 

Volkswagen 30.8 34.3 35.0 35.9 37.2 38.8 

Average 30.4 33.3 34.2 34.9 36.2 37.8 

 

696 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 30.4 

mpg in MY 2011. This does not mean that the agency is making the standards more stringent for that 

model year, or that any manufacturer will necessarily face a more difficult CAFE standard, it simply 

reflects the change in assumptions about what vehicles will be produced for sale in that model year. The 

target curve remains the same, and each manufacturer’s compliance obligation will still be determined at 

the end of the model year. 
1057 

Because a manufacturer’s required average fuel economy level for a model year 

under the final standards will be based on its actual production numbers in that model 

year, its official required fuel economy level will not be known until the end of that 

model year. However, because the targets for each vehicle footprint will 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 non-domestic 

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. 

As published in the MY 2011 final rule, the domestic minimum passenger car 

standard for MY 2011 was set at 27.8 mpg, which represented 92 percent of the final 
1058 

projected passenger car standards promulgated for that model year.697 NHTSA stated at 

the time that “The final calculated minimum standards will be updated to reflect any 

changes in the projected passenger car standards.”698 Subsequently, in the NPRM 

proposing the MYs 2012-2016 standards, NHTSA noted that given changes in the 

projected estimated required passenger car standard for MY 2011,699 92 percent of that 

standard would be 28.0 mpg, not 27.8 mpg, and proposed to raise the minimum domestic 

passenger car standard accordingly. 

The Alliance commented to the NPRM that the minimum domestic passenger car 

standard is subject to the 18-month lead time rule for standards per 49 U.S.C. per 49 

U.S.C. 32902(a), and that NHTSA therefore cannot revise it at this time. Toyota 

individually offered identical comments. 

49 U.S.C. 32902(b)(4)(B) does state that the minimum domestic passenger car 

standard shall be 92 percent of the projected average fuel economy for the passenger car 

fleet, “which projection shall be published in the Federal Register when the standard for 

that model year is promulgated in accordance with this section.” In reviewing the statute, 

the agency concurs that the minimum domestic passenger car standard should be based 

on the agency’s fleet assumptions when the passenger car standard for that year is 

promulgated, which would make it inappropriate to change the minimum standard for 

 

697 See 74 FR at 14410 (Mar. 30, 3009). 698 Id. 699 Readers should remember, of course, that the “estimated required standard” is not necessarily the 

ultimate mpg level with which manufacturers will have to comply, because the ultimate mpg level for each 

manufacturer is determined at the end of the model year based on the target curves and the mix of vehicles 

that each manufacturer has produced for sale. The mpg level designated as “estimated required’ is exactly 

that, an estimate. 
1059 

MY 2011 at this time. However, we note that we do not read this language to preclude 

any change in the minimum standard after it is first promulgated for a model year. As 

long as the 18-month lead-time requirement of 49 U.S.C. 32902(a) is respected, NHTSA 

believes that the language of the statute suggests that the 92 percent should be determined 

anew any time the passenger car standards are revised. 

The Alliance also commented that the minimum domestic passenger car standard 

should be based on the projected “actual” (NHTSA refers to this as “estimated achieved”) 

mpg level for the combined passenger car fleet, rather than based on the projected 

“target” mpg level (NHTSA refers to this as “estimated required”) for the combined fleet. 

The Alliance argued that the plain language of the statute states that 92 percent should be 

taken of the “average fuel economy projected ... for the combined ... fleets,” which is 

different than the average fuel economy standard projected. The Alliance further argued 

that using the “estimated achieved” value to determine the 92 percent will avoid 

inadvertently “considering” FFV credits in setting the minimum standard, since the 

“estimated achieved” value is determined by ignoring FFV credits. Toyota individually 

offered identical comments. 

NHTSA disagrees that the minimum standard should be based on the estimated 

achieved levels rather than the estimated required levels. NHTSA interprets Congress’ 

reference in the second clause of 32902(b)(4)(B) to the standard promulgated in that 

model year as indicating that Congress intended “projected average fuel economy” in the 

first clause to pertain to the estimated required level, not the estimated achieved level. 
1060 

The Alliance’s concern that a minimum standard based on the estimated required level 

“inadvertently considers” FFV credits is misplaced, because NHTSA is statutorily 

prohibited from considering FFV credits in setting maximum feasible standards. Thus, 

NHTSA has continued to determine the minimum domestic passenger car standard based 

on the estimated required mpg levels projected for the model years covered by the 

rulemaking. 

Based on NHTSA’s current market forecast, the agency’s estimates of these 

minimum standards under the final MY 2012-2016 CAFE standards (and, for 

comparison, the final MY 2011 minimum domestic passenger car standard) are 

summarized below in Table IV.E.3-1. 

Table IV.E.3-1 Estimated Minimum Standard for Domestically Manufactured Passenger 

Cars under Final MY 2011 and Final MY 2012-2016 CAFE Standards for Passenger Cars 

2011 2012 2013 2014 2015 2016

27.8 30.7 31.4 32.1 33.3 34.7 

4. Light Truck Standards

For light trucks, NHTSA proposed CAFE standards defined by the following 

coefficients during MYs 2012-2016: 
1061 

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 

After updating inputs to its analysis, and revisiting the form and stringency of 

both passenger cars and light truck standards, as discussed in Section II, NHTSA is 

finalizing light truck CAFE standards defined by the following coefficients during MYs 

2012-2016: 

Table IV.E.4-2 Coefficients Defining Final MY 2012-2016 Fuel Economy Targets for 

Light Trucks

Coefficient 2012 2013 2014 2015 2016 

a (mpg) 29.82 30.67 31.38 32.72 34.42 

b (mpg) 22.27 22.74 23.13 23.85 24.74 

c (gpm/sf) 0.0004546 0.0004546 0.0004546 0.0004546 0.0004546 

d (gpm) 0.014900 0.013968 0.013225 0.011920 0.010413 

As for passenger cars, these coefficients reflect the agency’s decision, discussed 

above in Section II, to leave the shapes of both the passenger car and light truck curves 

unchanged. They also reflect the agency’s reevaluation of the “gap” in stringency 

between the passenger car and light truck standard, also discussed in Section II. 

These coefficients result in the footprint-dependent 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. 
1062 

Figure IV.E.4-1 Final MY 2011 and Final MY 2012-2016 Fuel Economy Targets for 

Light Trucks 

20

25

30

35

40

45

35 40 45 50 55 60 65 70

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2011

2016

2015

2014

2013

2012
1063 

Again, 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 final 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)700: 

Table IV.E.4-3 Estimated Average Fuel Economy Required under Final MY 2011 and 

Final MY 2012-2016 CAFE Standards for Light Trucks

Manufacturer MY 2011 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 25.6 26.6 27.3 27.9 28.9 30.2 

Chrysler 24.5 25.7 26.2 26.8 27.8 29.0 

Daimler 24.7 25.6 26.3 26.9 27.8 29.1 

Ford 23.7 24.8 25.4 26.0 27.0 28.1 

General Motors 23.3 24.2 24.8 25.2 26.1 27.2 

Honda 25.7 26.9 27.5 28.0 29.1 30.4 

Hyundai 25.9 27.0 27.6 28.2 29.3 30.7 

Kia 25.2 26.2 26.7 27.3 28.3 29.5 

Mazda 26.2 27.6 28.4 28.9 30.1 31.5 

Mitsubishi 26.4 27.8 28.5 29.1 30.2 31.7 

Nissan 24.5 25.6 26.2 26.8 27.8 29.1 

Porsche 25.5 26.3 26.9 27.5 28.5 29.8 

Subaru 26.5 27.9 28.6 29.2 30.4 31.9 

Suzuki 26.3 27.5 28.2 28.8 29.9 31.4 

Tata 26.2 27.4 28.2 28.8 29.9 31.3 

Toyota 24.6 25.7 26.2 26.8 27.8 29.1 

Volkswagen 25.0 25.8 26.4 27.0 28.0 29.2 

Average 24.4 25.4 26.0 26.6 27.5 28.8 

 

700 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 24.4 mpg in MY 2011. The 

increase in the estimate reflects a decrease in the size of the average light truck. 
1064 

As discussed above with respect to the final passenger cars standards, we note that 

a manufacturer’s required fuel economy level for a model year under the final standards 

will be based on its actual production numbers in that model year. 

F. How Do the Final Standards Fulfill NHTSA’s Statutory Obligations? 

In developing the proposed MY 2012-16 standards, the agency developed and 

considered a wide variety of alternatives. 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%.701 That same approach has been carried over to this 

final rule and to the accompanying FEIS and FRIA. Thus, 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 clearly communicates the level of stringency of each alternative and 

allows us to identify alternatives that represent different ways to balance NHTSA’s 

statutory requirements under EPCA/EISA. 

In the NPRM, we noted that each of the listed alternatives represents, in part, a 

different way in which NHTSA could conceivably balance different policies and 

considerations in setting the standards. We were mindful that the agency needs to weigh 

and balance many factors, such as technological feasibility, economic practicability, 

 

701 Notice of intent to prepare an EIS, 74 FR 14857, 14859-60, April 1, 2009. 
1065 

including lead time considerations for the introduction of technologies and impacts on the 

auto industry, the impacts of the standards on fuel savings and CO2 emissions, and fuel 

savings by consumers, as well as other relevant factors such as safety. For example, the 

7% 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. We also recognized that 

some technologies (e.g., , PHEVs and EVs) will not be available for more than limited 

commercial use through MY 2016, and that even those technologies that could be more 

widely commercialized through MY 2016 cannot all be deployed on every vehicle model 

in MY 2012 but require a realistic schedule for more widespread commercialization to be 

within the realm of economically practicability. 

In addition to the alternatives that increase evenly at annual rates ranging from 

3% to 7%, NHTSA also included alternatives developed using benefit-cost criteria. The 

agency emphasized benefit-cost-related alternatives in its rulemakings for MY 2008-2011 

and, subsequently, MY 2011 standards. By including such alternatives in its current 

analysis, the agency is providing a degree of analytical continuity between the two 

approaches to defining alternatives in an effort to illustrate the similarities and 

dissimilarities. To that end, we included and analyzed two additional alternatives, one 
1066 

that sets standards at the point where net benefits are maximized (labeled “MNB” in the 

table below), and another that sets standards at the point at which total costs are most 

nearly equal to total benefits (labeled “TCTB” in the table below).702 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 attributebased 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, NHTSA used the 

Volpe model extensively to assess the technologies that the manufacturers could apply in 

order to comply with each of the alternatives. This allowed us to assess the variety, 

amount and cost of the technologies that could be used 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, reduce fuel consumption, and reduce CO2

emissions. 

 

702 The 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 FRIA, 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. 
1067 

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 other relevant goals and priorities. Those priorities and goals include 

maximizing energy conservation and achieving a nationally harmonized and coordinated 

program for regulating fuel economy and GHG emissions. 

Part of that assessment of alternatives 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 a national attribute-based GHG emissions standard would 

need to be set to achieve the same emission reductions in California as the California 

GHG program. This was done by evaluating a nationwide Clean Air Act standard for 

MY 2016 that would apply across the country and require the levels of emissions 

reduction 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 national new vehicle fleet-wide CO2 performance standards for model 

year 2016 which would result in the new light-duty 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 were met 
1068 

exclusively by fuel economy improvements – and the overall result is the model year 

2016 goals of the National Program. 

However, the level of stringency for the National Program goal of 250 g/mi CO2

can be met with both fuel economy “tailpipe” improvements as well as other GHGreduction related improvements, such as A/C refrigerant leakage reductions. CAFE 

standards, as discussed elsewhere in this final rule, cannot be met by improvements that 

cannot be accounted for on the FTP/HFET tests. Thus, setting CAFE standards at 35.5 

mpg would require more tailpipe technology (at more expense to manufacturers) than 

would be required under such a CAA standard. To obtain an equivalent CAFE standard, 

we determined how much tailpipe technology would be necessary in order to meet an 

mpg level of 35.5 if manufacturers also employed what EPA deemed to be an average 

amount of A/C “credits” (leakage and efficiency) to reach the 250 g/mi equivalent. This 

results in a figure of 34.1 mpg as the appropriate counterpart CAFE standard. This 

differential gives manufacturers the opportunity to reach 35.5 mpg equivalent 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. 

Thus, as part of the process of considering all of the factors relevant under EPCA 

for setting standards, in a context where achieving a harmonized National Program is 

important, for the proposal we created a new alternative whose annual percentage 

increases would achieve 34.1 mpg by MY 2016. That alternative is one which increases 
1069 

on average at 4.3% annually. This new alternative, like the seven alternatives presented 

above, represents a unique balancing of the statutory factors and other relevant 

considerations. For the reader’s reference, the estimated required levels of stringency for 

each alternative in each model year are presented below: 

Table IV.F-1 Estimated Required Fuel Economy Level for Regulatory Alternatives.703

Alt. 1 Alt. 2 Alt. 3 Alt. 4 Alt. 5 Alt. 6 Alt. 7 Alt. 8 Alt. 9 

No 

Action 

3%/year 

Increase 

4%/year 

Increase

~4.3%/year

Increase 

5%/year

Increase

~6.0%/year 

Increase 

MNB 

6%/year 

Increase 

7%/year 

Increase 

~6.6%/year 

Increase 

 TCTB 

2012 

Passenger 

Cars 30.5 31.7 32.1 33.3 32.4 33.0 32.7 33.0 33.4

Light Trucks 24.4 24.1 24.4 25.4 24.6 26.3 24.9 25.1 26.3

Combined 27.8 28.3 28.6 29.7 28.8 30.0 29.1 29.4 30.3

2013 

Passenger 

Cars 30.5 32.6 33.3 34.2 33.9 36.1 34.5 35.2 36.7

Light Trucks 24.4 24.8 25.3 26.0 25.8 27.7 26.3 26.8 28.0

Combined 27.8 29.1 29.7 30.5 30.3 32.3 30.8 31.4 32.8

2014 

Passenger 

Cars 30.5 33.5 34.5 34.9 35.5 38.1 36.5 37.6 39.2

Light Trucks 24.5 25.5 26.3 26.6 27.0 29.1 27.8 28.6 29.7

Combined 28.0 30.0 30.9 31.3 31.8 34.2 32.7 33.7 35.0

2015 

Passenger 

Cars 30.5 34.4 35.8 36.2 37.1 39.4 38.6 40.1 40.7

Light Trucks 24.4 26.2 27.2 27.5 28.3 30.3 29.4 30.5 30.7

Combined 28.0 31.0 32.2 32.6 33.4 35.6 34.7 36.0 36.5

2016 

Passenger 

Cars 30.5 35.4 37.2 37.8 39.0 40.9 40.9 42.9 42.3

Light Trucks 24.4 27.0 28.3 28.8 29.7 31.1 31.1 32.6 31.8

Combined 28.1 32.0 33.6 34.1 35.2 36.9 36.9 38.7 38.0

 

703 Also, the “MNB” and the “TCTB” alternatives depend on the inputs to the agencies’ analysis. The 

sensitivity analysis presented in the FRIA documents the response of these alternatives to changes in key 

economic inputs. For example, the combined average required fuel economy under the “MNB” alternative 

is 36.9 mpg under the reference case economic inputs presented here, and ranges from 33.7 mpg to 37.2 

mpg under the alternative economic inputs presented in the FRIA. See Table X-14 in the FRIA. 
1070 

The following figure presents this same information but in a different way, 

comparing estimated 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 FRIA. 
1071 

Figure IV.F-1 Average Estimated Required Fuel Economy (MYs 2012, 2014, and 2016) 

20 

25 

30 

35 

40 

45 

A

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PC, 2012

LT, 2012

Comb., 2012

PC, 2014

LT, 2014

Comb., 2014

PC, 2016

LT, 2016

Comb. 2016

3%/y 4%/y Final 5%/y 6%/y Max

NB

7%/y TC=TB

 
1072 

As this figure illustrates, the final 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 

final standards reflects an average annual increase of 4.3%/y. The final 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.” 

For each alternative, including today’s final standards, NHTSA has 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. The 

accompanying FRIA presents a detailed analysis of these results. Table IV.F-2 presents 

fuel savings, CO2 reductions, and total industry cost outlays for model year 2012 – 2016 

for the eight alternatives. 

Table IV.F-2 Fuel Savings, CO2 Reductions, and Technology Costs for Regulatory 

Alternatives 

Regulatory Alternative Fuel Savings

(b. gal)

CO2 Reductions 

(mmt)

Cost 

($b)

3% per Year 34 373 23 

4% per Year 50 539 39 

Final (4.3% per Year) 61 655 52 

5% per Year 68 709 63 

6% per Year 82 840 90 

Maximum Net Benefit 90 925 103 

7% per Year 93 945 111 

Total Cost = Total Benefit 96 986 114 
1073 

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 requirement that NHTSA not consider statutory 

credits in establishing CAFE standards, NHTSA did not consider FFV credits, credits 

carried forward and backward, and transferred credits in this calculation704, 705 In 

 

704 NHTSA has conducted a separate analysis, discussed above in Section I, which accounts for EPCA’s 

provisions regarding FFVs. 

705 For a number of reasons, the results of this modeling differ from EPA’s for specific manufacturers, 

fleets, and model years. These reasons include representing every model year explicitly, accounting for 

estimates of when vehicle model redesigns will occur, and not considering those compliance flexibilities 

where EPCA forbids such consideration in setting CAFE standards. It should be noted, however, that these 

flexibilities in fact provide manufacturers significant latitude to manage their compliance obligations. 
1074 

addition, the analysis incorporates fines for some manufacturers that have traditionally 

paid fines rather than comply with the standards. 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 NHTSA’s FRIA. 

In reviewing the results of the various alternatives, NHTSA confirmed that 

progressive increases in stringency require progressively greater deployment of fuelsaving technology and corresponding increases in technology outlays and related costs, 

fuel savings, and CO2 emission reductions. To begin, NHTSA estimated total 

incremental outlays for additional technology in each model year. The following figure 

shows cumulative results for MYs 2012-2016 for industry as a whole and Chrysler, Ford, 

General Motors, Honda, Nissan, and Toyota. This figure focuses on these manufacturers 

as they currently (in MY 2010) represent three large U.S.-headquartered and three large 

foreign-headquartered full-line manufacturers. 
1075 

Figure IV.F-2 Incremental Technology Outlays (MYs 2012-2016) 

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1076 

As part of the incremental technology outlays, NHTSA also analyzes which 

technologies manufacturers could apply to meet the standards. In NHTSA’s analysis, 

manufacturers achieve compliance with the fuel economy levels through application of 

technology rather than through changes in the mix of vehicles produced for sale in the 

U.S. The accompanying FRIA 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 by 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 

presented because they 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 are presented because they represent technologies involving significant cost 

and related lead time challenges for widespread use through MY 2016. These figures 

focus on Chrysler, Ford, General Motors, Honda, Nissan, and Toyota, as above. For each 

alternative, the figures show additional application of technology by MY 2016.706 

 

706 The FRIA presents results for all model years, technologies, and manufacturers, and NHTSA has 

considered these broader results when considering the eight regulatory alternatives. 
1077 

Figure IV.F-3 Additional Application of GDI (MY 2016) 

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1078 

Figure IV.F-4 Additional Application of Engine Turbocharging & Downsizing 

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1079 

Figure IV.F-5 Additional Application of Diesel Engines (MY 2016) 

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1080 

Figure IV.F-6 Additional Application of CISG and Strong HEV Systems (MY 2016) 

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1081 

The modeling analysis demonstrates that applying these technologies, of course, 

results in fuel savings. 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 and related cost presented 

above for the industry to the corresponding cumulative fuel savings. 
1082 

Figure IV.F-7 Incremental Technology Outlays and Fuel Savings (MYs 2012-2016) 

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Cost Fuel Savings
1083 

These incremental technology outlays (and corresponding fuel savings) also result 

in corresponding increases in incremental cost per vehicle, as shown below. 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 NHTSA’s FRIA. 
1084 

Figure IV.F-8 Average Incremental Per-Vehicle Costs (MY 2012) 
1085 

Figure IV.F-9 Average Incremental Per-Vehicle Costs (MY 2013) 
1086 

Figure IV.F-10 Average Incremental Per-Vehicle Costs (MY 2014) 
1087 

Figure IV.F-11 Average Incremental Per-Vehicle Costs (MY 2015) 
1088 

Figure IV.F-12 Average Incremental Per-Vehicle Costs (MY 2016) 
1089 

As discussed in the NPRM, 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. 

Additionally, given that CO2 and fuel savings are very closely correlated, 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 savings and reduced CO2

emissions, which would be achievable at reasonable cost. And finally, neither the 3%/y 

nor the 4%/y alternatives 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. These alternatives would give inadequate weight to other standards of the 

Government, specifically EPA’s and CARB’s. Thus, the agency concluded that 

alternatives less stringent than the proposed standards would not yield the emissions 

reductions required to produce a harmonized national program and would not produce 

corresponding fuel savings, and therefore would not place adequate emphasis on the 

nation’s need to conserve energy. NHTSA has therefore concluded that it must reject the 

3%/y and 4%/y alternatives. 
1090 

NHTSA then considered the “environmentally-preferable” alternative. Based on 

the information provided in the FEIS, the environmentally-preferable alternative would 

be that involving stringencies that increase at 7% annually.707 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 technology and cost required by the 

environmentally-preferable alternative and the lack of lead time to achieve such levels 

between now and MY 2016, as discussed further below, NHTSA concludes that the 

environmentally-preferable alternative would not be economically practicable or 

technologically feasible, and thus concludes that it would result in standards that would 

be beyond the level achievable for MYs 2012-2016. 

For the other alternatives, NHTSA determined that it would be inappropriate to 

choose any of the other more stringent alternatives due to concerns over lead time and 

economic practicability. There are real-world technological and economic 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. The alternatives more 

stringent than the final standards begin to accrue costs considerably more rapidly than 

they accrue fuel savings and emissions reductions, and at levels that are increasingly 

economically burdensome, especially considering the need to make underlying 

investments (e.g., for engineering and tooling) well in advance of actual production. As 

shown in Figures IV-2 to IV-6 above, while the final standards already require aggressive 

 

707 See, e.g., FEIS, figure S-12, p. 18, which shows that 7%/y alternative yields greatest cumulative effect 

on global mean temperature. 
1091 

application of technologies, more stringent standards would require more widespread use 

(including more substantial implementation of advanced technologies such as 

stoichiometric gasoline direct injection engines, diesel engines, and strong hybrids), and 

would raise serious issues of adequacy of lead time, not only to meet the standards but to 

coordinate such significant changes with manufacturers’ redesign cycles. The agency 

maintains, as it has historically, that there is an important distinction between 

considerations of technological feasibility and economic practicability, both of which 

enter into the agency’s determination of the maximum feasible levels of stringency. A 

given level of performance may be technologically feasible (i.e., setting aside economic 

constraints) for a given vehicle model. However, it would not be economically 

practicable to require a level of fleet average performance that assumes every vehicle will 

immediately (i.e., within 18 months of the rule’s promulgation) perform at its highest 

technologically feasible level, because manufacturers do not have unlimited access to the 

financial resources or the time required to hire enough engineers, build enough facilities, 

and install enough tooling. The lead time reasonably needed to make capital investments 

and to devote the resources and time to design and prepare for commercial production of 

a more fuel efficient vehicle is an important element that NHTSA takes into 

consideration in establishing the standards. 

In addition, the figures presented above reveal that increasing stringency beyond 

the final standards would entail significant additional application of technology. Among 

the more stringent alternatives, the one closest in stringency to the standards being 

finalized today is the alternative under which combined CAFE stringency increases at 5% 
1092 

annually. As indicated above, this alternative would yield fuel savings and CO2

reductions about 11% and 8% higher, respectively, than the final standards. However, 

compared to the final standards, this alternative would increase outlays for new 

technologies during MY 2012-2016 by about 22%, or $12b. Average MY 2016 cost 

increases would, in turn, rise from $903 under the final standards to $1,152 when 

stringency increases at 5% annually. This represents a 28% 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). Additionally, the 5%/y alternative disproportionally burdens 

the light truck fleet requiring a nearly $400 (42 percent) cost increase in MY 2016 

compared to the final standards. 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 3 4 24 184 585 

Chrysler 734 1,303 1,462 1,653 1,727 

Daimler - - 410 801 1,109 

Ford 743 1,245 1,261 1,583 1,923 

General Motors 448 823 1,187 1,425 1,594 

Honda 50 109 271 375 606 

Hyundai 747 877 1,057 1,052 1,124 

Kia 49 128 197 261 369 

Mazda 555 718 1,166 1,407 1,427 

Mitsubishi 534 507 2,534 3,213 3,141 

Nissan 294 491 965 1,064 1,125 

Porsche 68 (52) (51) (50) (49) 

Subaru 292 324 1,372 1,723 1,679 

Suzuki - 959 1,267 1,316 1,540 

Tata 111 93 183 306 710 

Toyota 31 29 52 129 212 

Volkswagen 145 428 477 492 783 

Average 337 540 726 886 1,053 
1093 

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 169 160 201 453 868 

Chrysler 360 559 1,120 1,216 1,432 

Daimler 60 55 51 52 51 

Ford 1,207 1,663 1,882 2,258 2,225 

General Motors 292 628 866 968 1,136 

Honda 258 234 611 750 1,047 

Hyundai 711 685 1,923 1,909 1,862 

Kia 47 293 556 782 1,157 

Mazda 248 408 419 519 768 

Mitsubishi - - 1,037 1,189 1,556 

Nissan 613 723 2,142 2,148 2,315 

Porsche - (0) (1) 469 469 

Subaru 1,225 1,220 1,365 1,374 1,330 

Suzuki - 1,998 1,895 1,837 2,096 

Tata - - - - 503 

Toyota 63 187 594 734 991 

Volkswagen - - 514 458 441 

Average 415 628 1,026 1,173 1,343 

Table IV.F-5 Average Incremental Costs ($/vehicle) under the 5%/y Alternative CAFE 

Standards for Passenger Cars and Light Trucks Combined 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 72 64 84 265 666 

Chrysler 499 870 1,272 1,414 1,569 

Daimler 20 20 281 554 773 

Ford 914 1,407 1,498 1,838 2,034 

General Motors 371 726 1,033 1,205 1,379 

Honda 135 157 396 518 769 

Hyundai 742 838 1,237 1,186 1,235 

Kia 49 168 273 355 506 

Mazda 500 667 1,053 1,272 1,330 

Mitsubishi 371 352 1,973 2,386 2,506 

Nissan 399 565 1,344 1,387 1,467 

Porsche 52 (39) (35) 130 124 

Subaru 617 628 1,369 1,597 1,553 

Suzuki - 1,134 1,381 1,404 1,630 

Tata 61 56 101 182 629 

Toyota 43 82 239 333 466 

Volkswagen 117 333 486 486 723 

Average 367 573 836 987 1,152 
1094 

These cost increases derive from increased application of advanced technologies 

as stringency increases past the levels in the final standards. For example, under the final 

standards, additional diesel application rates average 1.6% for the industry and range 

from 0% to 3% among Chrysler, Ford, GM, Honda, Nissan, and Toyota. Under standards 

increasing in combined stringency at 5% annually, these rates more than triple, averaging 

6.2% for the industry and ranging from 0% to 21% for the same six manufacturers. 

These technology and cost increases are significant, given the amount of leadtime between now and model years 2012-2016. In order to achieve the levels of 

technology penetration for the final 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 now 

and over the next few years, under the final standards. NHTSA believes that the final 

rule 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 

Joint Technical Support Document and the agency’s Regulatory Impact Analysis, the 

average model year 2016 per-vehicle cost increase of more than $900 includes an 

estimate of both the increase in capital investments by the auto companies and the 
1095 

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, 

are 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 reduction 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. 

The agency concludes that the levels of technology penetration required by the 

final standards are reasonable. Increasing the standards beyond those levels would lead 

to rapidly increasing dependence on advanced technologies with higher costs—

technology that, though perhaps technologically feasible for individual vehicle models, 

would, at the scales involved, pose too great an economic burden given the state of the 

industry, particularly in the early years of the rulemaking time frame.708

Therefore, the agency concluded that these more stringent alternatives would give 

insufficient weight to economic practicability and related lead time concerns, given the 

current state of the industry and the rate of increase in stringency that would be required. 

 

708 Although the final standards are projected to be slightly more costly than the 5% alternative in MY 

2012, that alternative standard becomes progressively more costly than the final standards in the remaining 

model years. See Figures IV.F.8 through IV.F.10 above. Moreover, as discussed above, after MY 2012, 

the 5% alternative standard yields less incremental fuel economy benefits at increased cost (both industrywide and per vehicle), directionally the less desirable result. These increased costs incurred to increase fuel 

economy through MY 2016 would impose significantly increased economic burden on the manufacturers in 

the next few calendar years to prepare for these future model years. In weighing the statutory factors, 

NHTSA accordingly rejected this alternative in favor of the final standard. 
1096 

Overall, the agency concluded that among the alternatives considered by the agency, the 

proposed alternative contained the maximum feasible CAFE standards for MYs 2012-

2016 as they were the most appropriate balance of the various statutory factors. 

Some commenters argued that the agency should select a more stringent 

alternative than that proposed in the NPRM. The Union of Concerned Scientists (UCS) 

commented that NHTSA should set standards to produce the “maximum environmental 

benefit” available at “reasonable” cost, and at least at the stringency maximizing net 

benefits. Students from the University of California at Santa Barbara commented that the 

agency should have based standards not just on technologies known to be available, but 

also on technologies that may be available in the future—and should do so in order to 

force manufacturers to “reach” to greater levels of performance. Also, the Center for 

Biological Diversity (CBD) commented that, having conducted an unbiased cost-benefit 

analysis showing benefits three times the magnitude of costs for the proposed alternative, 

the agency should select a more stringent alternative. CBD also argued that the agency 

should have evaluated the extent to which manufacturers could deploy technology more 

rapidly than suggested by a five-year redesign cycle. 

Conversely, other commenters argued that NHTSA should select a less stringent 

alternative, either in all model years or at least in the earlier model years. Chrysler, VW, 

and the Alliance of Automobile Manufacturers commented that the stringency of 

NHTSA’s CAFE standards should be further reduced relative to that of EPA’s GHG 

emissions standards, so that manufacturers would not be required by CAFE to add any 
1097 

tailpipe technology beyond what they thought would be necessary to meet an mpg level 

of 35.5 minus the maximum possible A/C credits that could be obtained under the EPA 

program. Also, Chrysler, Daimler, Toyota, Volkswagen, and the Alliance argued that the 

agency should reduce the rate of increase in stringency to produce steadier and more 

“linear” increases between MY 2011 and MY 2016. In addition, the Heritage Foundation 

commented that the proposed standards would, in effect, force accelerated progress 

toward EISA’s “35 mpg by 2020” requirement, causing financially-stressed 

manufacturers to incur undue costs that would passed along to consumers. 

However, most commenters supported the agency’s selection of the proposed 

standards. The American Chemical Society, the New York Department of 

Environmental Conservation, the Washington State Department of Ecology, and several 

individuals all expressed general support for the levels of stringency proposed by 

NHTSA as part of the joint proposal. General Motors and Nissan both indicated that the 

proposed standards are consistent with the National Program announced by the President 

and supported in letters of commitment signed by these companies’ executives. Finally, 

the California Air Resources Board (CARB) strongly supported the stringency of the 

proposed standards, as well as the agencies’ underlying technical analysis and weighing 

of statutory factors. CARB further commented that the stringency increases in the earlier 

model years are essential to providing environmental benefits at least as great as would 

be achieved through state-level enforcement of CARB’s GHG emissions standards.709 

 

709 Generally speaking, the cumulative benefits (in terms of fuel savings and GHG reductions) of frontloaded standards will be greater than standards that increase linearly. 
1098 

The agency has considered these comments and all others, and having considered 

those comments, believes the final standards best balance all relevant factors that the 

agency considers when determining maximum feasible CAFE standards. As discussed 

below, having updated inputs to its analysis and correspondingly updated its definition 

and analysis of these regulatory alternatives, the agency continues to conclude that 

manufacturers can respond to the proposed standards with technologies that will be 

available at reasonable cost. The agency finds that alternatives less stringent that the one 

adopted today would leave too much technology “on the shelf” unnecessarily, thereby 

failing to deliver the fuel savings that the nation needs or to yield environmental benefits 

necessary to support a harmonized national program. In response to some manufacturers’ 

suggestion that NHTSA’s CAFE standards should be made even less stringent compared 

to EPA’s GHG emissions standards, NHTSA notes that the difference, consistent with 

the underlying Notice of Intent, is based on the agencies’ estimate of the average amount 

of air conditioning credit earned, not the maximum theoretically available, and that 

NHTSA’s analysis indicates that most manufacturers can achieve the CAFE standards by 

MY 2016 using tailpipe technologies. This is fully consistent with the agency’s historical 

position. As NHTSA explained in the NPRM, the Conference Report for EPCA, as 

enacted in 1975, makes clear, and applicable 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.” CEI-I, 

793 F.2d 1322, 1352 (D.C. Cir. 1986). 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. Thus, the law permits CAFE standards 
1099 

exceeding the projected capability of any particular manufacturer as long as the standard 

is economically practicable for the industry as a whole. 

While some manufacturers may find greater A/C improvements to be a more costeffective way of meeting the GHG standards, that does not mean those manufacturers 

will be unable to meet the CAFE standards with tailpipe technologies. NHTSA’s 

analysis has demonstrated a feasible path to compliance with the CAFE standards for 

most manufacturers using those technologies. “Economic practicability” means just that, 

practicability, and need not always mean what is “cheapest” or “most cost-effective” for a 

specific manufacturer. Moreover, many of the A/C improvements on which 

manufacturers intend to rely for meeting the GHG standards will reduce GHG emissions, 

specifically HFC emissions, but they will not lead to greater fuel savings.710 The core 

purpose of the CAFE standards under EPCA is to reduce fuel consumption. NHTSA 

believes that less stringent standards would allow tailpipe fuel economy technologies to 

be left on the table that can be feasibly and economically applied, and failing to apply 

them would lead to a loss in fuel savings. This would not place appropriate emphasis on 

the core CAFE purpose of conserving fuel. For this reason, we decline to reduce the 

stringency of our standards as requested by some manufacturers. Similarly, we decline to 

pursue with EPA in this rulemaking the suggestion by one commenter that that agency’s 

calculation authority under EPCA be used to provide A/C credits. 

 

710 This is not to say that NHTSA means, in any way, to deter manufacturers from employing A/C 

technologies to meet EPA’s standards, but simply to say that NHTSA’s independent obligation to set 

maximum feasible CAFE standards to be met through application of tailpipe technologies alone must be 

fulfilled, while recognizing the flexibilities offered in another regulatory program. 
1100 

With respect to some manufacturers’ concerns regarding the increase in 

stringency through MY 2013, the agency notes that stringency increases in these model 

years are especially important in terms of the accumulation of fuel savings and emission 

reductions over time. In addition, a weakening would risk failing to produce emission 

reductions at least as great as might be achieved through CARB’s GHG standards. 

Therefore, the agency believes that alternatives less stringent than the one adopted today 

would not give sufficient emphasis to the nation’s need to conserve energy. The 

requirement to set standards that increase ratably between MYs 2011 and 2020 must also 

be considered in the context of what levels of standards would be maximum feasible. 

The agency believes that the rate of increase of the final standards is reasonable. 

On the other hand, the agency disagrees with comments by UCS, CBD, and others 

indicating that more stringent standards would be appropriate. As discussed above, 

alternatives more stringent than the one adopted today would entail a rapidly increasing 

dependence on the most expensive technologies and those which are technically more 

demanding to implement, with commensurately rapid increases in costs. In the agency’s 

considered judgment, these alternatives are not economically practicable, nor do they 

provide correspondingly sufficient lead time. The agency also disagrees with CBD’s 

assertion that NHTSA and EPA have been overly conservative in assuming an average 

redesign cycle of 5 years. There are some manufacturers who apply longer cycles (such 

as smaller manufacturers described above), there are others who have shorter cycles for 

some of their products, and there are some products (e.g., cargo vans) that tend to be 

redesigned on longer cycles. NHTSA believes that there are no full line manufacturers 
1101 

who can maintain significant redesigns of vehicles (with relative large sales) in 1 or 2 

years, and CBD has provided no evidence indicating this would be practicable. A 

complete redesign of the entire U.S. light-duty fleet by model year 2012 is clearly 

infeasible, and NHTSA and EPA believe that several model years additional lead time is 

necessary in order for the manufacturers to meet the most stringent standards. The 

graduated increase in the stringency of the standards from MYs 2012 through 2016 

accounts for the economic necessity of timing the application of many major technologies 

to coincide with scheduled model redesigns. 

In contrast, through analysis of the illustrative results shown above, as well as the 

more complete and detailed results presented in the accompanying FRIA, NHTSA has 

concluded that the final standards are technologically feasible and economically 

practicable. The final standards will require manufacturers to apply considerable 

additional technology, starting with very significant investment in technology design, 

development and capital investment called for in the next few years. Although NHTSA 

cannot predict how manufacturers will respond to the final 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 final standards would extend beyond levels achievable by 
1102 

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 costly technologies, 

such as diesel engines and advanced technologies, such as strong HEVs. 

As shown below, NHTSA estimates that the final standards could lead to average 

incremental costs ranging from $303 per vehicle (for light trucks in MY 2012) to $947 

per vehicle (for light trucks in MY 2016), increasing steadily from $396 per vehicle for 

all light vehicles in MY 2012 to $903 for all light vehicle in MY 2016. NHTSA 

estimates that these costs would vary considerably among manufacturers, but would 

rarely exceed $1,800 per vehicle. The following three tables summarize estimated 

manufacturer-level average incremental costs for the final standards and the average of 

the passenger and light truck fleets: 

Table IV.F-6 Average Incremental Costs ($/vehicle) under Final Passenger Car CAFE 

Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 3 4 24 184 585 

Chrysler 734 1,043 1,129 1,270 1,358 

Daimler - - 410 801 1,109 

Ford 1,619 1,537 1,533 1,713 1,884 

General Motors 448 896 1,127 1,302 1,323 

Honda 33 98 205 273 456 

Hyundai 559 591 768 744 838 

Kia 110 144 177 235 277 

Mazda 555 656 799 854 923 

Mitsubishi 534 460 1,588 1,875 1,831 

Nissan 119 323 707 723 832 

Porsche 68 (52) (51) (50) (49) 

Subaru 292 324 988 1,385 1,361 

Suzuki - 625 779 794 1,005 

Tata 111 93 183 306 710 

Toyota 31 29 41 121 126 

Volkswagen 145 428 477 492 783 

Average 455 552 670 774 880 
1103 

Table IV.F-7 Average Incremental Costs ($/vehicle) under Final Light Truck CAFE 

Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 252 239 277 281 701 

Chrysler 360 527 876 931 1,170 

Daimler 60 51 51 52 51 

Ford 465 633 673 1,074 1,174 

General Motors 292 513 749 807 986 

Honda 233 217 370 457 806 

Hyundai 693 630 1,148 1,136 1,113 

Kia 400 467 582 780 1,137 

Mazda 144 241 250 354 480 

Mitsubishi - - 553 686 1,371 

Nissan 398 489 970 1,026 1,362 

Porsche - (1) (1) 469 469 

Subaru 1,036 995 1,016 1,060 1,049 

Suzuki - 1,797 1,744 1,689 1,732 

Tata - - - - 503 

Toyota 130 150 384 499 713 

Volkswagen - - 514 458 441 

Average 303 411 615 741 947 

Table IV.F-8 Average Incremental Costs ($/vehicle) under Final CAFE Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 

BMW 106 94 110 213 618 

Chrysler 499 743 989 1,084 1,257 

Daimler 20 18 281 554 773 

Ford 1,195 1,187 1,205 1,472 1,622 

General Motors 371 705 946 1,064 1,165 

Honda 116 144 266 343 585 

Hyundai 577 599 847 805 879 

Kia 176 221 263 334 426 

Mazda 482 587 716 778 858 

Mitsubishi 371 319 1,200 1,389 1,647 

Nissan 211 376 792 813 984 

Porsche 52 (39) (35) 130 124 

Subaru 551 552 998 1,267 1,248 

Suzuki - 823 954 946 1,123 

Tata 61 56 101 182 629 

Toyota 67 70 159 248 317 

Volkswagen 117 333 486 486 723 

Average 396 498 650 762 903 
1104 

In summary, NHTSA has considered eight regulatory alternatives, including the 

final 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 final 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, and would forego these benefits even 

though there is adequate lead time to implement reasonable and feasible technology for 

the vehicles. Conversely, the agency has concluded that more stringent standards would 

involve levels of additional technology and cost that would be economically 

impracticable and, correspondingly, would provide inadequate lead time, considering the 

economic state of the automotive industry, would not be economically practicable. 

Therefore, having considered these eight regulatory alternatives, and the statutorilyrelevant 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 final standards,711 NHTSA concludes that the final 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. 

 

711 See Section IV.G.7 below. 
1105 

G. Impacts of the Final CAFE Standards 

1. How Will These 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 Estimated Average Required Fuel Economy (mpg) 

under Final Standards 

Model Year 2012 2013 2014 2015 2016 

Passenger Cars 33.3 34.2 34.9 36.2 37.8 

Light Trucks 25.4 26.0 26.6 27.5 28.8 

Combined 29.7 30.5 31.3 32.6 34.1 

 NHTSA estimates that average achieved fuel economy levels will 

correspondingly increase through MY 2016, but that manufacturers will, on average, 

undercomply712 in some model years and overcomply713 in others, reaching a combined 

average fuel economy of 33.7 mpg in MY 2016:714

 

712 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 
1106 

Table IV.G.1-2 Estimated Average Achieved Fuel Economy (mpg) 

under Final Standards 

Model Year 2012 2013 2014 2015 2016 

Passenger Cars 32.8 34.4 35.3 36.3 37.2 

Light Trucks 25.1 26.0 27.0 27.6 28.5 

Combined 29.3 30.6 31.7 32.6 33.7 

 NHTSA estimates that these fuel economy increases will lead to fuel savings 

totaling 61 billion gallons during the useful lives of vehicles manufactured in MYs 2012-

2016: 

Table IV.G.1-3 Fuel Saved (billion gallons) under Final Standards 

Model Year 2012 2013 2014 2015 2016 Total 

Passenger Cars 2.4 5.2 7.2 9.4 11.4 35.7 

Light Trucks 1.8 3.7 5.3 6.5 8.1 25.4 

Combined 4.2 8.9 12.5 16.0 19.5 61.0 

 The agency also estimates that these new CAFE standards will lead to 

corresponding reductions of CO2 emissions totaling 655 million metric tons (mmt) during 

the useful lives of vehicles sold in MYs 2012-2016: 

 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. 

713 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) 714 Consistent 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. 
1107 

Table IV.G.1-4 Carbon Dioxide Emissions (mmt) Avoided under Final Standards 

Model Year 2012 2013 2014 2015 2016 Total 

Passenger Cars 25 54 77 101 123 380 

Light Trucks 19 40 57 71 88 275 

Combined 44 94 134 172 210 655 

2. How Will These 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 being 

finalized today for MY 2016 would be established for subsequent model years, the effects 

of the final 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. lightduty vehicle fleet will be comprised of cars and light trucks that meet the MY 2016 

standard. The impact of the new 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 standards as stringent as those established for MY 2016. 

As Table IV.G.2-1 shows, NHTSA estimates that the fuel economy increases 

resulting from the final standards will lead to reductions in total fuel consumption by cars 

and light trucks of 10 billion gallons during 2020, increasing to 32 billion gallons by 

2050. Over the period from 2012, when the final standards would begin to take effect, 

through 2050, cumulative fuel savings would total 729 billion gallons, as Table IV.G.2-1 

also indicates. 
1108 

Table IV.G.2-1 Reduction in Fleet-Wide Fuel Use (billion gallons) under Final 

Standards 

Calendar Year 2020 2030 2040 2050 Total, 2012-

2050

Passenger Cars 6 13 17 21 469

Light Trucks 4 7 9 11 260 

Combined 10 20 26 32 729 

 The energy security analysis conducted for this rule estimates that the world price 

of oil will fall modestly in response to lower U.S. demand for refined fuel. One potential 

result of this decline in the world price of oil would be an increase in the consumption of 

petroleum products outside the U.S., which would in turn lead to a modest increase in 

emissions of greenhouse gases, criteria air pollutants, and airborne toxics from their 

refining and use. While additional information would be needed to analyze this “leakage 

effect” in detail, NHTSA provides a sample estimate of its potential magnitude in its 

Final EIS.715 This analysis indicates that the leakage effect is likely to offset only a 

modest fraction of the reductions in emissions projected to result from the rule. 

As a consequence of these reductions in fleet-wide fuel consumption, the agency 

also estimates that the new 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 annual CO2 emissions associated with 

passenger car and light truck use in the U.S. use will decline by 116 million metric tons 

(mmt) in 2020 as a consequence of the new standards, as Table IV.G.2-2 reports. The 

table also shows that the this annual reduction is estimated to grow to nearly 400 million 

 

715 NHTSA Final Environmental Impact Statement: Corporate Average Fuel Economy Standards, 

Passenger Cars and Light Trucks, Model Years 2012-2016, February 2010, page 3-14.. 
1109 

metric tons by the year 2050, and will total nearly 9 billion metric tons over the period 

from 2012, when the final 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 Final Standards

Calendar Year 2020 2030 2040 2050 Total, 2012-

2050 

Passenger Cars 69 153 205 255 5,607 

Light Trucks 49 89 112 136 3,208 

Combined 117 242 316 391 8,815 

 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, 

based on analysis documented in the final Environmental Impact Statement (EIS) that 

informed the agency’s decisions regarding this rule, 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

Projected Change in Measure 

Measure Units Date No 

Action

With 

Proposed 

Standards 

Difference

Atmospheric CO2

Concentration ppm 2100 783.0 780.3 -2.7

Increase in Global Mean 

Surface Temperature o C 2100 3.136 3.125 -0.011

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%
1110 

3. How Will These Final 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 new 

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 light-duty vehicles required by the new 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 
1111 

from lower fuel production and distribution will outweigh the increase in emissions from 

vehicle use, resulting in a net decline in their total emissions.716 

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 final standards during calendar year 2030. By that date, the majority of lightduty vehicles in use will have met the MY 2016 CAFE standards, so these reductions 

provide a useful index of the long-term impact of the final standards on air pollution and 

its consequences for human health. 

 

716 As stated elsewhere, while the agency’s analysis assumes that all changes in upstream emissions result 

from a decrease in petroleum production and transport, the analysis of non-GHG emissions in future 

calendar years also assumes that retail gasoline composition is unaffected by this rule; as a result, the 

impacts of this rule on downstream non-GHG emissions (more specifically, on air toxics) may be 

underestimated. See also Section III.G above for more information. 
1112 

Table IV.G.3-1a Projected Changes in Emissions of Criteria Air Pollutants from Car and 

Light Truck Use (calendar year 2030; tons)

Criteria Air Pollutant 

Vehicle 

Class 

Source of 

Emissions 

Nitrogen 

Oxides 

(NOx) 

Particulate 

Matter 

(PM2.5) 

Sulfur 

Oxides 

(SOx) 

Volatile 

Organic 

Compounds 

(VOC) 

Vehicle use 2,718 465 -2,442 2,523 

Fuel 

production 

and 

distribution 

-20,970 -2,831 -12,698 -75,342 

Passenger 

Cars 

All sources -18,252 -2,366 -15,140 -72,820 

Vehicle use 3,544 176 -1,420 1,586

Fuel 

production 

and 

distribution

-12,252 -1,655 -7,424 -43,763

Light 

Trucks

All sources -8,707 -1,479 -8,845 -42,177

Vehicle use 6,263 642 -3,862 4,108

Fuel 

production 

and 

distribution 

-33,222 -4,487 -20,122 -119,106 

Total

All sources -26,959 -3,845 -23,984 -114,997 
1113 

Table IV.G.3-1b Projected Changes in Emissions of Airborne Toxics from Car and Light 

Truck Use (calendar year 2030; tons) 

Toxic Air Pollutant 

Vehicle Class Source of 

Emissions Benzene 1,3-

Butadiene Formaldehyde

Vehicle use 72 18 59 

Fuel production 

and distribution 

-161 -2 -58 Passenger Cars 

All sources -89 16 1 

Vehicle use 38 10 65 

Fuel production 

and distribution 

-94 -1 -34 Light Trucks 

All sources -55 9 32 

Vehicle use 111 28 124 

Fuel production 

and distribution

-254 -3 -91 Total

All sources -144 25 33

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, based on analysis documented in the final Environmental Impact 

Statement (EIS) that informed the agency’s decisions regarding this rule, are derived 

from PM2.5-related dollar-per-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 
1114 

other criteria air pollutants (particularly ozone) and air toxics. However, emissions 

changes and dollar-per-ton estimates alone are not necessarily a good indication of local 

or regional air quality and health impacts, as there may be localized impacts associated 

with this rulemaking, because the atmospheric chemistry related to ambient 

concentrations of PM2.5, ozone, and air toxics is very complex. Full-scale photochemical 

modeling provides the necessary 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. Although EPA conducted such modeling for purposes of the 

final rule, it was not available in time to be included in NHTSA’s FEIS. See Section 

III.G above for EPA’s description of the full-scale air quality modeling it conducted for 

the 2030 calendar year in an effort to capture this variability. 

Table IV.G.3-2 Projected Reductions in Health Impacts of Exposure to Criteria Air 

Pollutants from Final Standards (calendar year 2030) 

Health Impact Measure

Projected 

Reduction 

(2030)

Mortality (ages 30 and older) premature deaths per year 243 to 623

Chronic Bronchitis cases per year 160

Emergency Room Visits for Asthma number per year 222

Work Loss workdays per year 28,705

 4. What Are the Estimated Costs and Benefits of These Final Standards?

 NHTSA estimates that the final 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 
1115 

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. 
1116 

Table IV.G.4-1 Addition of Technologies to Passenger Car Fleet under Final Standards 

Technology 

MY 

2012 

MY 

2013 

MY 

2014 

MY 

2015 

MY 

2016 

Low Friction Lubricants 14% 18% 19% 21% 21% 

Engine Friction Reduction 15% 37% 41% 43% 52% 

VVT - Coupled Cam Phasing (CCP) on SOHC 2% 3% 3% 5% 7% 

Discrete Variable Valve Lift (DVVL) on SOHC 0% 1% 1% 4% 4% 

Cylinder Deactivation on SOHC 0% 0% 0% 0% 0% 

VVT - Intake Cam Phasing (ICP) 0% 0% 0% 0% 0% 

VVT - Dual Cam Phasing (DCP) 11% 15% 16% 17% 24% 

Discrete Variable Valve Lift (DVVL) on DOHC 9% 19% 22% 23% 29% 

Continuously Variable Valve Lift (CVVL) 0% 0% 0% 0% 0% 

Cylinder Deactivation on DOHC 0% 0% 0% 1% 2% 

Cylinder Deactivation on OHV 0% 1% 1% 1% 1% 

VVT - Coupled Cam Phasing (CCP) on OHV 0% 1% 2% 2% 2% 

Discrete Variable Valve Lift (DVVL) on OHV 0% 1% 1% 2% 3% 

Conversion to DOHC with DCP 0% 0% 0% 0% 0% 

Stoichiometric Gasoline Direct Injection (GDI) 9% 18% 21% 24% 28% 

Combustion Restart 0% 0% 1% 4% 9% 

Turbocharging and Downsizing 8% 14% 16% 19% 21% 

Exhaust Gas Recirculation (EGR) Boost 0% 8% 10% 13% 17% 

Conversion to Diesel following TRBDS 2% 2% 2% 2% 2% 

Conversion to Diesel following CBRST 0% 0% 0% 0% 0% 

6-Speed Manual/Improved Internals 1% 1% 1% 1% 1% 

Improved Auto. Trans. Controls/Externals 0% 3% 4% 1% -3% 

Continuously Variable Transmission 0% 0% 0% 0% 0% 

6/7/8-Speed Auto. Trans with Improved Internals 0% 0% 1% 1% 2% 

Dual Clutch or Automated Manual Transmission 12% 26% 34% 47% 54% 

Electric Power Steering 9% 22% 25% 26% 38% 

Improved Accessories 18% 25% 27% 31% 41% 

12V Micro-Hybrid 0% 0% 0% 0% 0% 

Belt mounted Integrated Starter Generator 4% 11% 19% 24% 25% 

Crank mounted Integrated Starter Generator 3% 3% 3% 3% 3% 

Power Split Hybrid 2% 2% 2% 2% 2% 

2-Mode Hybrid 0% 0% 0% 0% 0% 

Plug-in Hybrid 0% 0% 0% 0% 0% 

Mass Reduction (1.5%) 18% 26% 32% 39% 46% 

Mass Reduction (3.5% to 8.5%) 0% 0% 17% 31% 40% 

Low Rolling Resistance Tires 4% 16% 23% 32% 35% 

Low Drag Brakes 2% 3% 4% 4% 6% 

Secondary Axle Disconnect - Unibody 0% 0% 0% 0% 0% 

Secondary Axle Disconnect - Ladder Frame 1% 2% 2% 2% 2% 

Aero Drag Reduction 6% 20% 29% 34% 38% 
1117 

Table IV.G.4-2 Addition of Technologies to Light Truck Fleet under Final Standards 

Technology 

MY 

2012 

MY 

2013 

MY 

2014 

MY 

2015 

MY 

2016 

Low Friction Lubricants 18% 20% 22% 23% 23% 

Engine Friction Reduction 14% 34% 35% 40% 51% 

VVT - Coupled Cam Phasing (CCP) on SOHC 2% 3% 3% 2% 2% 

Discrete Variable Valve Lift (DVVL) on SOHC 1% 2% 2% 2% 3% 

Cylinder Deactivation on SOHC 6% 6% 6% 6% 5% 

VVT - Intake Cam Phasing (ICP) 0% 0% 0% 1% 1% 

VVT - Dual Cam Phasing (DCP) 6% 8% 13% 13% 17% 

Discrete Variable Valve Lift (DVVL) on DOHC 9% 12% 17% 17% 18% 

Continuously Variable Valve Lift (CVVL) 0% 0% 0% 0% 0% 

Cylinder Deactivation on DOHC 1% 1% 1% 1% 0% 

Cylinder Deactivation on OHV 0% 1% 1% 2% 7% 

VVT - Coupled Cam Phasing (CCP) on OHV 0% 0% 0% 0% 13% 

Discrete Variable Valve Lift (DVVL) on OHV 0% 13% 14% 19% 19% 

Conversion to DOHC with DCP 0% 0% 0% 0% 0% 

Stoichiometric Gasoline Direct Injection (GDI) 12% 17% 23% 24% 31% 

Combustion Restart 0% 0% 3% 5% 18% 

Turbocharging and Downsizing 3% 6% 10% 10% 14% 

Exhaust Gas Recirculation (EGR) Boost 0% 2% 6% 6% 9% 

Conversion to Diesel following TRBDS 1% 1% 1% 1% 1% 

Conversion to Diesel following CBRST 0% 0% 0% 0% 0% 

6-Speed Manual/Improved Internals 0% 0% 0% 0% 0% 

Improved Auto. Trans. Controls/Externals 0% -11% -17% -28% -32% 

Continuously Variable Transmission 0% 0% 0% 0% 0% 

6/7/8-Speed Auto. Trans with Improved Internals -2% -2% -2% -2% -1% 

Dual Clutch or Automated Manual Transmission 10% 32% 46% 58% 65% 

Electric Power Steering 7% 11% 11% 20% 27% 

Improved Accessories 7% 9% 10% 15% 23% 

12V Micro-Hybrid 0% 0% 0% 0% 0% 

Belt mounted Integrated Starter Generator 5% 10% 19% 20% 21% 

Crank mounted Integrated Starter Generator 0% 0% 0% 0% 0% 

Power Split Hybrid 1% 1% 1% 1% 1% 

2-Mode Hybrid 0% 0% 0% 0% 0% 

Plug-in Hybrid 0% 0% 0% 0% 0% 

Mass Reduction (1.5%) 4% 5% 21% 35% 48% 

Mass Reduction (3.5% to 8.5%) 0% 0% 19% 33% 54% 

Low Rolling Resistance Tires 11% 12% 13% 16% 17% 

Low Drag Brakes 14% 32% 30% 31% 40% 

Secondary Axle Disconnect - Unibody 0% 0% 0% 0% 0% 

Secondary Axle Disconnect - Ladder Frame 17% 19% 20% 21% 28% 

Aero Drag Reduction 13% 15% 20% 22% 25% 
1118 

Table IV.G.4-3 Addition of Technologies to Overall Fleet under Final Standards 

Technology 

MY 

2012 

MY 

2013 

MY 

2014 

MY 

2015 

MY 

2016 

Low Friction Lubricants 16% 18% 20% 22% 22% 

Engine Friction Reduction 15% 36% 39% 42% 51% 

VVT - Coupled Cam Phasing (CCP) on SOHC 2% 3% 3% 4% 5% 

Discrete Variable Valve Lift (DVVL) on SOHC 0% 1% 2% 3% 3% 

Cylinder Deactivation on SOHC 2% 3% 2% 2% 2% 

VVT - Intake Cam Phasing (ICP) 0% 0% 0% 0% 0% 

VVT - Dual Cam Phasing (DCP) 9% 13% 15% 16% 22% 

Discrete Variable Valve Lift (DVVL) on DOHC 9% 16% 20% 21% 25% 

Continuously Variable Valve Lift (CVVL) 0% 0% 0% 0% 0% 

Cylinder Deactivation on DOHC 0% 1% 0% 1% 1% 

Cylinder Deactivation on OHV 0% 1% 1% 1% 3% 

VVT - Coupled Cam Phasing (CCP) on OHV 0% 1% 1% 1% 6% 

Discrete Variable Valve Lift (DVVL) on OHV 0% 6% 6% 8% 8% 

Conversion to DOHC with DCP 0% 0% 0% 0% 0% 

Stoichiometric Gasoline Direct Injection (GDI) 10% 17% 22% 24% 29% 

Combustion Restart 0% 0% 1% 4% 12% 

Turbocharging and Downsizing 6% 11% 14% 16% 19% 

Exhaust Gas Recirculation (EGR) Boost 0% 6% 8% 11% 14% 

Conversion to Diesel following TRBDS 1% 2% 2% 2% 2% 

Conversion to Diesel following CBRST 0% 0% 0% 0% 0% 

6-Speed Manual/Improved Internals 0% 0% 0% 0% 1% 

Improved Auto. Trans. Controls/Externals 0% -2% -4% -10% -13% 

Continuously Variable Transmission 0% 0% 0% 0% 0% 

6/7/8-Speed Auto. Trans with Improved Internals -1% 0% 0% 0% 1% 

Dual Clutch or Automated Manual Transmission 11% 28% 38% 51% 58% 

Electric Power Steering 8% 18% 20% 24% 34% 

Improved Accessories 13% 19% 21% 25% 35% 

12V Micro-Hybrid 0% 0% 0% 0% 0% 

Belt mounted Integrated Starter Generator 5% 11% 19% 23% 23% 

Crank mounted Integrated Starter Generator 2% 2% 2% 2% 2% 

Power Split Hybrid 2% 2% 2% 1% 1% 

2-Mode Hybrid 0% 0% 0% 0% 0% 

Plug-in Hybrid 0% 0% 0% 0% 0% 

Mass Reduction (1.5%) 13% 18% 28% 37% 47% 

Mass Reduction (3.5% to 8.5%) 0% 0% 18% 32% 45% 

Low Rolling Resistance Tires 7% 14% 19% 26% 29% 

Low Drag Brakes 6% 14% 14% 14% 18% 

Secondary Axle Disconnect - Unibody 0% 0% 0% 0% 0% 

Secondary Axle Disconnect - Ladder Frame 7% 8% 8% 8% 11% 

Aero Drag Reduction 9% 18% 26% 30% 34% 
1119 

 In order to pay for this additional technology (and, for some manufacturers, civil 

penalties), NHTSA estimates that the cost of an average passenger car and light truck 

will, relative to levels resulting from compliance with baseline (MY 2011) standards, 

increase by $505-$907 and $322-$961, respectively, during MYs 2011-2016. The 

following tables summarize the agency’s estimates of average cost 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 Cost Increases ($) 

under Final Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016

BMW 157 196 255 443 855 

Chrysler 794 1,043 1,129 1,270 1,358 

Daimler 160 198 564 944 1,252 

Ford 1,641 1,537 1,533 1,713 1,884 

General Motors 552 896 1,127 1,302 1,323 

Honda 33 98 205 273 456 

Hyundai 559 591 768 744 838 

Kia 110 144 177 235 277 

Mazda 632 656 799 854 923 

Mitsubishi 644 620 1,588 1,875 1,831 

Nissan 119 323 707 723 832 

Porsche 316 251 307 390 496 

Subaru 413 472 988 1,385 1,361 

Suzuki 242 625 779 794 1,005 

Tata 243 258 370 532 924 

Toyota 31 29 41 121 126 

Volkswagen 293 505 587 668 964 

Total/Average 505 573 690 799 907 
1120 

Table IV.G.4-5 Average Light Truck Incremental Cost Increases ($) 

under Final Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016

BMW 252 272 338 402 827 

Chrysler 409 527 876 931 1,170 

Daimler 98 123 155 189 260 

Ford 465 633 673 1,074 1,174 

General Motors 336 513 749 807 986 

Honda 233 217 370 457 806 

Hyundai 693 630 1,148 1,136 1,113 

Kia 406 467 582 780 1,137 

Mazda 144 241 250 354 480 

Mitsubishi 39 77 553 686 1,371 

Nissan 398 489 970 1,026 1,362 

Porsche 44 76 109 568 640 

Subaru 1,036 995 1,016 1,060 1,049 

Suzuki 66 1,797 1,744 1,689 1,732 

Tata 66 110 137 198 690 

Toyota 130 150 384 499 713 

Volkswagen 44 77 552 557 606 

Total/Average 322 416 621 752 961 

Table IV.G.4-6 Average Incremental Cost Increases ($) 

By Manufacturer under Final Standards 

Manufacturer MY 2012 MY 2013 MY 2014 MY 2015 MY 2016

BMW 196 225 283 430 847 

Chrysler 553 743 989 1,084 1,257 

Daimler 139 171 417 695 937 

Ford 1,209 1,187 1,205 1,472 1,622 

General Motors 446 705 946 1,064 1,165 

Honda 116 144 266 343 585 

Hyundai 577 599 847 805 879 

Kia 177 221 263 334 426 

Mazda 545 587 716 778 858 

Mitsubishi 459 453 1,200 1,389 1,647 

Nissan 211 376 792 813 984 

Porsche 250 207 243 452 544 

Subaru 630 650 998 1,267 1,248 

Suzuki 231 823 954 946 1,123 

Tata 164 199 265 396 832 

Toyota 67 70 159 248 317 

Volkswagen 245 410 579 648 901 

Total/Average 434 513 665 782 926 
1121 

Based on the agencies’ estimates of manufacturers’ future sales volumes, these 

cost increases will lead to a total of $51.7 billion in incremental outlays during MYs 

2012-2016 for additional technology attributable to the final standards: 

Table IV.G.4-7 Incremental Technology Outlays ($b) under Final Standards 

2012 2013 2014 2015 2016 Total 

Passenger Cars 4.1 5.4 6.9 8.2 9.5 34.2 

Light Trucks 1.8 2.5 3.7 4.3 5.4 17.6 

Combined 5.9 7.9 10.5 12.5 14.9 51.7 

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 is intended 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 final 

CAFE standards. Although these costs are difficult to estimate accurately, they 

nonetheless represent a notable category of omitted costs if they have not been 

adequately accounted for in the cost estimates. Similarly, the agency’s estimates of net 

benefits for meeting higher CAFE standards does not estimate the economic value of 

potential changes in motor vehicle fatalities and injuries that could result from reductions 

in the size or weight of vehicles. While NHTSA reports a range of estimates of these 

potential safety effects below and in the FRIA (ranging from a net negative monetary 

impact to a net positive benefits for society), no estimate of their economic value is 

included in the agency’s estimates of the net benefits resulting from the final standards. 
1122 

Finally, while NHTSA is confident that the cost estimates are the best available 

and appropriate for purposes of this final rule, 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. 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 final standards. 

 However, offsetting these costs, the achieved increases in fuel economy will also 

produce significant benefits to society. NHTSA attributes most of these benefits to 

reductions in fuel consumption, valuing fuel savings at future pretax prices in EIA’s 

reference case forecast from AEO 2010. The total benefits also include other benefits 

and dis-benefits, 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 
1123 

additional travel. The FRIA accompanying today’s final rule presents a detailed analysis 

of the rule’s specific benefits. 

As Table IV.G.4-8 shows, NHTSA estimates that at the discount rate of 3 percent 

prescribed in OMB guidance for regulatory analysis, the present value of total benefits 

from the final CAFE standards over the lifetimes of MY 2012-2016 passenger cars and 

light trucks will be $182.5 billion. 

Table IV.G.4-8 Present Value of Benefits ($billion) under Final Standards using 3 

percent Discount Rate717

2012 2013 2014 2015 2016 Total 

Passenger Cars 6.8 15.2 21.6 28.7 35.2 107.5 

Light Trucks 5.1 10.7 15.5 19.4 24.3 75.0 

Combined 11.9 25.8 37.1 48.0 59.5 182.5 

Table IV.G.4-9 reports that the present value of total benefits from requiring cars 

and light trucks to achieve the fuel economy levels specified in the final CAFE standards 

for MYs 2012-16 will be $146.2 billion when discounted at the 7 percent rate also 

required by OMB guidance. Thus the present value of fuel savings and other benefits 

over the lifetimes of the vehicles covered by the final standards is $36.3 billion – or about 

20 percent – lower when discounted at a 7 percent annual rate than when discounted 

using the a 3 percent annual rate.718

 

717 Unless otherwise indicated, all tables in Section IV report benefits calculated using the Reference Case 

input assumptions, with future benefits resulting from reductions in carbon dioxide emissions discounted at 

the 3 percent rate prescribed in the interagency guidance on the social cost of carbon. 718 For tables that report total or net benefits using a 7 percent discount rate, future benefits from reducing 

carbon dioxide emissions are discounted at 3 percent, in order to maintain consistency with the discount 

rate used to develop the reference case estimate of the social cost of carbon. All other future benefits 

reported in these tables are discounted using the 7 percent rate. 
1124 

Table IV.G.4-9 Present Value of Benefits ($billion) under Final Standards using 7 

percent Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 5.5 12.3 17.5 23.2 28.6 87.0 

Light Trucks 4.0 8.4 12.2 15.3 19.2 59.2 

Combined 9.5 20.7 29.7 38.5 47.8 146.2 

 For both the passenger car and light truck fleets, NHTSA estimates that 

the benefits of today’s final standards will exceed the corresponding costs in every model 

year, so that the net social benefits from requiring higher fuel economy – the difference 

between the total benefits that result from higher fuel economy and the technology 

outlays required to achieve it – will be substantial. Because the technology outlays 

required to achieve the fuel economy levels required by the final standards are incurred 

during the model years when vehicles are produced and sold, however, they are not 

subject to discounting, so that their present value does not depend on the discount rate 

used.719 Thus the net benefits of the final standards differ depending on whether the 3 

percent or 7 percent discount rate is used, but only because the choice of discount rates 

affects the present value of total benefits, and not that of technology costs. 

As Table IV.G.4-10 shows, over the lifetimes of the affected (MY 2012-2016) 

vehicles, the agency estimates that when the benefits of the final standards are discounted 

at a 3 percent rate, they will exceed the costs of the final standards by $130.7 billion: 

 

719 Although technology costs are incurred at the beginning of each model year’s lifetime and thus are not 

subject to discounting, the discount rate does influence the effective cost of some technologies. Because 

NHTSA assumes some manufacturers will be willing to pay civil penalties when compliance costs become 

sufficiently high, It is still possible for the discount rate to affect the agency’s estimate of total technology 

outlays. However, this does not occur under the alternative NHTSA has adopted for its final MY 2012-16 

CAFE standards. 
1125 

Table IV.G.4-10 Present Value of Net Benefits ($billion) under Final Standards using 3 

percent Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 2.7 9.7 14.8 20.5 25.7 73.3 

Light Trucks 3.4 8.2 11.8 15.0 18.9 57.4 

Combined 6.0 18.0 26.6 35.5 44.6 130.7 

As indicated previously, when fuel savings and other future benefits resulting 

from the final standards are discounted at the 7 percent rate prescribed in OMB guidance, 

they are $36.3 billion lower than when the 3 percent discount rate is applied. Because 

technology costs are not subject to discounting, using the higher 7 percent discount rate 

reduces net benefits by exactly this same amount. Nevertheless, Table IV.G.4-11 shows 

that the net benefits from requiring passenger cars and light trucks to achieve higher fuel 

economy are still substantial even when future benefits are discounted at the higher rate, 

totaling $94.5 billion over MYs 2012-16. Net benefits are thus about 28 percent lower 

when future benefits are discounted at a 7 percent annual rate than at a 3 percent rate. 

Table IV.G.4-11 Present Value of Net Benefits ($billion) under Final Standards using 7 

percent Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 1.3 6.8 10.6 15.0 19.0 52.9 

Light Trucks 2.3 5.9 8.6 11.0 13.9 41.6 

Combined 3.6 12.8 19.2 26.0 32.9 94.5 

NHTSA’s estimates of economic benefits from establishing higher CAFE 

standards are 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 
1126 

MY 2011 CAFE standards, and under alternative increases in the standards that apply to 

MYs 2012-16 passenger cars and light trucks. Specifically, if the agency has 

underestimated the fuel economy levels that manufacturers would have achieved under 

the baseline scenario – or is too optimistic about the fuel economy levels that 

manufacturers will actually achieve under the final standards – its estimates of fuel 

savings and the resulting economic benefits attributable to this rule will be too large. 

Another major source of potential overestimation in the agency’s estimates of 

benefits from requiring higher fuel economy stems from its reliance on the Reference 

Case fuel price forecasts reported in AEO 2010. Although NHTSA believes that these 

forecasts are the most reliable that are available, they are nevertheless significantly higher 

than the fuel price projections reported in most previous editions of EIA’s Annual Energy 

Outlook, and reflect projections of world oil prices that are well above forecasts issued by 

other firms and government agencies. If the future fuel prices projected in AEO 2010 

prove to be too high, the agency’s estimates of the value of future fuel savings – the 

major component of benefits from this rule – will also be too high. 

In addition, it is possible that NHTSA’s estimates of economic benefits from the 

effects of saving fuel on U.S. petroleum consumption and imports are too high. The 

estimated “energy security premium” the agency uses to value reductions in U.S. 

petroleum imports includes both increased payments for petroleum imports that occur 

when world oil prices increase rapidly, and losses in U.S. GDP losses and adjustment 

costs that result from oil price shocks. One commenter suggested increased import costs 
1127 

associated with rapid increases in petroleum prices represent transfers from U.S. oil 

consumers to petroleum suppliers rather than real economic costs, so any reduction in 

their potential magnitude should be excluded when calculating benefits from lower U.S. 

petroleum imports. If this view is correct, then the agency’s estimates of benefits from 

the effect of reduced fuel consumption on U.S. petroleum imports would indeed be too 

high.720 

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. If the AEO 2010 forecast of fuel prices proves to 

be too low, for example, NHTSA will have underestimated the value of fuel savings that 

will result from adopting higher CAFE standards for MY 2012-16. 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. 

 

720 Doing so, however, would represent a significant departure from how disruption costs associated with 

oil price shocks have been quantified in research on the value of energy security, and NHTSA believes this 

issue should be analyzed in more detail before these costs are excluded. Moreover, the agency believes that 

increases in import costs during oil supply disruptions differ from transfers due to the existence of U.S. 

monopsony power in the world oil market, since they reflect real resource shortages and costly short-run 

shifts in demand by energy users, rather than losses to consumers of petroleum products that that are 

matched by offsetting gains to suppliers. Thus the agency believes that reducing their expected value 

provides real economic benefits, and they do not represent pure transfers. 
1128 

NHTSA’s benefit estimates could also be too low because they exclude or 

understate the economic value of certain potentially significant categories of benefits 

from reducing fuel consumption. As one example, EPA’s estimates 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. EPA’s estimates exclude these benefits because no reliable dollar-perton 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. 

Similarly, 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.721 For example, none of the 

three models used to value climate-related economic damages includes ocean 

acidification or loss of species and wildlife. The models also may not adequately capture 

certain other impacts, such as potentially abrupt changes in climate associated with 

thresholds that govern climate system responses, inter-sectoral and inter-regional 

interactions, including global security impacts of high-end extreme warming, or limited 

near-term substitutability between damage to natural systems and increased consumption. 

 

721 Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency 

Working Group on Social Cost of Carbon, United States Government, February 2010. Available in Docket 

No. NHTSA-2009-0059. 
1129 

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 following tables present itemized costs and benefits for the combined 

passenger car and light truck fleets for each model year affected by the final standards as 

well as for all model years combined, using both discount rates prescribed by OMB 

regulatory guidance. Table IV.G.4-12 reports technology outlays, each separate 

component of benefits (including costs associated with additional driving due to the 

rebound effect, labeled “dis-benefits”), the total value of benefits, and net benefits, using 

the 3 percent discount rate. (Numbers in parentheses represent negative values.) 
1130 

Table IV.G.4-12 Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet 

using 3 percent Discount Rate ($m) 

 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Costs

Technology 

Costs 5,903 7,890 10,512 12,539 14,904 51,748 

Benefits

Savings in 

Lifetime Fuel 

Expenditures 

9,265 20,178 29,083 37,700 46,823 143,048 

Consumer 

Surplus from 

Additional 

Driving 

696 1,504 2,150 2,754 3,387 10,491 

Value of Savings 

in Refueling 

Time 

706 1,383 1,939 2,464 2,950 9,443 

Reduction in 

Petroleum 

Market 

Externalities 

545 1,154 1,630 2,080 2,543 7,952 

Reduction in 

Climate-Related 

Damages from 

Lower CO2

Emissions722

921 2,025 2,940 3,840 4,804 14,528 

Reduction in Health Damage Costs from Lower Emissions of Criteria Air Pollutants: 

CO 0 0 0 0 0 0 

VOC 42 76 102 125 149 494 

NOX 70 104 126 146 166 612 

PM 205 434 612 776 946 2,974 

SOX 158 332 469 598 731 2,288 

Dis-Benefits from Increased Driving: 

Congestion Costs (447) (902) (1,282) (1,633) (2,000) (6,264)

Noise Costs (9) (18) (25) (32) (39) (122)

Crash Costs (217) (430) (614) (778) (950) (2,989)

Total Benefits 11,936 25,840 37,132 48,040 59,509 182,457 

Net Benefits 6,033 17,950 26,619 35,501 44,606 130,709 

 

722 Using the central value of $21 per metric ton for the SCC, and discounting future benefits from reduced 

CO2 emissions at a 3 percent annual rate. Additionally, we note that the $21 per metric ton value for the 

SCC applies to calendar year 2010, and increases over time. See the interagency guidance on SCC for 

more information. 
1131 

Similarly, Table IV.G.4-13 below reports technology outlays, the individual 

components of benefits (including “dis-benefits” resulting from additional driving) and 

their total, and net benefits, using the 7 percent discount rate. (Again, numbers in 

parentheses represent negative values.) 
1132 

Table IV.G.4-13 Itemized Cost and Benefit Estimates for the Combined Vehicle Fleet 

using 7 percent Discount Rate ($m) 

 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016 Total 

Costs

Technology 

Costs 5,903 7,890 10,512 12,539 14,904 51,748 

Benefits

Savings in 

Lifetime Fuel 

Expenditures 

7,197 15,781 22,757 29,542 36,727 112,004 

Consumer 

Surplus from 

Additional 

Driving 

542 1,179 1,686 2,163 2,663 8,233 

Value of Savings 

in Refueling 

Time 

567 1,114 1,562 1,986 2,379 7,608 

Reduction in 

Petroleum 

Market 

Externalities 

432 917 1,296 1,654 2,023 6,322 

Reduction in 

Climate-Related 

Damages from 

Lower CO2

Emissions723

921 2,025 2,940 3,840 4,804 14,530 

Reduction in Health Damage Costs from Lower Emissions of Criteria Air Pollutants: 

CO 0 0 0 0 0 0 

VOC 32 60 80 99 119 390 

NOX 53 80 98 114 131 476 

PM 154 336 480 611 748 2,329 

SOX 125 265 373 475 581 1,819 

Dis-Benefits from Increased Driving: 

Congestion Costs (355) (719) (1,021) (1,302) (1,595) (4,992)

Noise Costs (7) (14) (20) (26) (31) (98)

Crash Costs (173) (342) (488) (619) (756) (2,378)

Total Benefits 9,488 20,682 29,743 38,537 47,793 146,243 

Net Benefits 3,586 12,792 19,231 25,998 32,890 94,497 

 

723 Using the central value of $21 per metric ton for the SCC, and discounting future benefits from reduced 

CO2 emissions at a 3 percent annual rate. Additionally, we note that the $21 per metric ton value for the 

SCC applies to calendar year 2010, and increases over time. See the interagency guidance on SCC for 

more information. 
1133 

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 final standards to a meaningful extent. 

As discussed in the FRIA, 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 multi-year planning 

effects are represented, there is no basis to estimate reliably how manufacturers might use 

these mechanisms. Accounting for the FFV provisions indicates that achieved fuel 

economies would be 0.5-1.3 mpg lower than when these provisions are not considered 

(for comparison see Table IV.G.1-2 above): 
1134 

Table IV.G.4-14 Average Achieved Fuel Economy (mpg) under Final Standards (with 

FFV Credits) 

2012 2013 2014 2015 2016 

Passenger Cars 32.3 33.5 34.2 35.0 36.2 

Light Trucks 24.5 25.1 25.9 26.7 27.5 

Combined 28.7 29.7 30.6 31.5 32.7 

 As a result, NHTSA estimates that, when FFV credits are taken into account, fuel 

savings will total 58.6 billion gallons—about 3.9 percent less than the 61.0 billion gallons 

estimated when these credits are not considered: 

Table IV.G.4-15 Fuel Saved (billion gallons) under Final Standards (with FFV Credits) 

2012 2013 2014 2015 2016 Total 

Passenger Cars 2.7 4.7 6.4 8.4 11.0 33.1 

Light Trucks 2.3 3.6 5.0 6.6 8.1 25.5 

Combined 4.9 8.2 11.3 15.0 19.1 58.6 

 The agency similarly estimates CO2 emissions reductions will total 636 million 

metric tons (mmt), about 2.9 percent less than the 655 mmt estimated when these credits 

are not considered:724

Table IV.G.4-16 Avoided Carbon Dioxide Emissions (mmt) under Final Standards (with 

FFV Credits) 

2012 2013 2014 2015 2016 Total 

Passenger Cars 28 50 69 91 119 357 

Light Trucks 25 39 54 72 88 279 

Combined 53 89 123 163 208 636 

 

724 Differences in the application of diesel engines lead to differences in the incremental percentage 

changes in fuel consumption and carbon dioxide emissions. 
1135 

 This analysis further indicates that significant reductions in outlays for additional 

technology will result when FFV provisions are taken into account. Table IV.G.4-17 

below shows that as a result, total technology costs are estimated to decline to $37.5 

billion, or about 27 percent less than the $51.7 billion estimated when excluding these 

provisions: 

Table IV.G.4-17 Incremental Technology Outlays ($b) under Final Standards with FFV 

Credits 

2012 2013 2014 2015 2016 Total 

Passenger Cars 2.6 3.6 4.8 6.1 7.5 24.6 

Light Trucks 1.1 1.5 2.5 3.4 4.4 12.9 

Combined 3.7 5.1 7.3 9.5 11.9 37.5 

 Because NHTSA’s analysis indicated that FFV provisions will not significantly 

reduce fuel savings, the agency’s estimate of the present value of total benefits will be 

$175.6 billion when discounted at a 3 percent annual rate, as Table IV.G.4-18 following 

reports. This estimate of total benefits is $6.9 billion, or about 3.8 percent, lower than the 

$182.5 billion reported previously for the analysis that excluded these provisions: 

Table IV.G.4-18 Present Value of Benefits ($billion) under Final Standards with FFV 

Credits using 3 percent Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 7.6 13.7 19.1 25.6 34.0 100.0 

Light Trucks 6.4 10.4 14.6 19.8 24.4 75.6 

Combined 14.0 24.1 33.7 45.4 58.4 175.6 

 Similarly, because the FFV are not expected to reduce fuel savings significantly, 

NHTSA estimates that the present value of total benefits will decline only slightly from 

its previous estimate when future fuel savings and other benefits are discounted at the 
1136 

higher 7 percent rate. Table IV.G.4-19 reports that the present value of benefits from 

requiring higher fuel economy for MY 2012-16 cars and light trucks will total $140.7 

billion when discounted using a 7 percent rate, about $5.5 billion (or again, 3.8 percent ) 

below the previous $146.2 billion estimate of total benefits when FFV credits were not 

permitted: 

Table IV.G.4-19 Present Value of Benefits ($billion) under Final Standards with FFV 

Credits using 7 percent Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 6.1 11.1 15.5 20.7 27.6 80.9

Light Trucks 5.0 8.2 11.5 15.6 19.3 59.7

Combined 11.2 19.3 27.0 36.4 46.9 140.7

Although the discounted present value of total benefits will be slightly lower 

when FFV provisions are taken into account, the agency estimates that these provisions 

will slightly increase net benefits. This occurs because the flexibility these provisions 

provide to manufacturers will allow them to reduce technology costs for meeting the new 

standards by considerably more than the reduction in the value of fuel savings and other 

benefits. As Table IV.G.4-20 shows, the agency estimates that the availability of FFV 

credits will increase net benefits from the final CAFE standards to $138.2 billion from 

the previously-reported estimate of $130.7 billion without those credits, or by about 5.7 

percent. 
1137 

Table IV.G.4-20 Present Value of Net Benefits ($billion) under Final Standards with 

FFV Credits using 3% Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 5.1 10.1 14.3 19.5 26.5 75.4 

Light Trucks 5.3 8.8 12.1 16.4 20.0 62.7 

Combined 10.4 19.0 26.5 35.9 46.5 138.2 

Similarly, Table IV.G.4-21 immediately below shows that NHTSA estimates 

manufacturers’ use of FFV credits will raise net benefits from requiring higher fuel 

economy for MY 2012-16 cars and light trucks to $103.2 billion if a 7 percent discount 

rate is applied to future benefits. This estimate is $8.7 billion – or about 9.2% – higher 

than the previously-reported $94.5 billion estimate of net benefits without the availability 

of FFV credits using that same discount rate. 

Table IV.G.4-21 Present Value of Net Benefits ($billion) under Final Standards with 

FFV Credits using 7% Discount Rate 

2012 2013 2014 2015 2016 Total 

Passenger Cars 3.6 7.5 10.7 14.6 20.0 56.4

Light Trucks 3.9 6.6 9.1 12.3 14.9 46.8

Combined 7.5 14.1 19.7 26.9 35.0 103.2

The agency has also performed several sensitivity analyses to examine the effects 

of varying important assumptions that affect its estimates of benefits and costs from 

higher CAFE standards for MY 2012-16 cars and light trucks. We examine the 

sensitivity of fuel savings, total economic benefits, and technology costs with respect to 

the following five economic parameters: 
1138 

1) The price of gasoline: The Reference Case uses the AEO 2010 reference case 

estimate for the price of gasoline. In this sensitivity analysis we examine the 

effect of instead using the AEO 2009 high and low price forecasts. 

2) 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 instead using a 5 percent or 15 

percent rebound effect. 

3) The values of CO2 benefits: The Reference Case uses $21 per ton (in 2010 in 

2007$, rising over time to $45 in 2030) to quantify the benefits of reducing CO2

emissions and $0.17 per gallon to quantify the energy security benefits from 

reducing fuel consumption. In the sensitivity analysis, we examine the effect of 

using values of $5, and $65 per ton instead of the reference value of $21 per ton 

to value CO2 benefits. These values can be translated into cents per gallon by 

multiplying by 0.0089,725 giving the following values: 

($5 per ton CO2) x 0.0089 = $0.045 per gallon 

 ($21 per ton CO2) x 0.0089 = $0.187per gallon 

($35 per ton CO2) x 0.0089 = $0.312 per gallon 

 ($67 per ton CO2) x 0.0089 = $0.596 per gallon 

 

725 The 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. 
1139 

4) 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 instead using a value of 5 cents per gallon. 

Varying each of these four parameters in isolation results in 9 additional economic 

scenarios, in addition to the Reference case. These are listed in Table IV.G.4-22 below, 

together with two additional scenarios that use combinations of these parameters that 

together produce the lowest and highest benefits. 

Table IV.G.4-22 Sensitivity Analyses Evaluated in NHTSA’s FRIA 

Name Fuel Price Discount 

Rate 

Rebound 

Effect 

SCC Military 

Security 

Reference AEO 20210 

Reference Case 

3% 10% $21 0¢/gal 

High Fuel Price AEO 2009 High 

Price Case 

3% 10% $21 0¢/gal 

Low Fuel Price AEO 2009 Low 

Price Case 

3% 10% $21 0¢/gal 

5% Rebound Effect AEO 20210 

Reference Case 

3% 5% $21 0¢/gal 

15% Rebound 

Effect 

AEO 20210 

Reference Case 

3% 15% $21 0¢/gal 

$67/ton CO2 Value AEO 20210 

Reference Case 

3% 10% $67 0¢/gal 

$35/ton CO2 Value AEO 20210 

Reference Case 

3% 10% $35 0¢/gal 

$5/ton CO2 Value AEO 20210 

Reference Case 

3% 10% $5 0¢/gal 

$5/ton CO2 AEO 20210 

Reference Case 

3% 10% $5 0¢/gal 

5¢/gal Military 

Security Value 

AEO 20210 

Reference Case 

3% 10% $21 5¢/gal 

Lowest Discounted 

Benefits 

AEO 2009 Low 

Price Case 

7% 15% $5 0¢/gal 

Highest Discounted 

Benefits 

AEO 2009 High 

Price Case 

3% 5% $67 5¢/gal 
1140 

The basic results of the sensitivity analyses were as follows: 

1) The various economic assumptions have no effect on the final passenger car 

and light truck standards established by this rule, because these are determined 

without reference to economic benefits. 

2) Varying the economic assumptions individually has comparatively modest 

impacts on fuel savings resulting from the adopted standards. The range of 

variation in fuel savings in response to changes in individual assumptions 

extends from a reduction of nearly 5 percent to an increase of that same 

percentage. 

3) The economic parameter with the greatest impacts on fuel savings is the 

magnitude of the rebound effect. Varying the rebound effect from 5 percent 

to 15 percent is responsible for a 4.6 percent increase and 4.6 percent 

reduction in fuel savings compared to the Reference results. 

4) The only other parameter that has a significant effect on fuel savings is 

forecast fuel prices, although its effect is complex because changes in fuel 

prices affect vehicle use and fuel consumption in both the baseline and under 

the final standards. 

5) Variation in forecast fuel prices and in the value of reducing CO2 emissions 

have significant effects on the total economic benefits resulting from the final 

standards. Changing the fuel price forecast to AEO’s High Price forecast 

raises estimated economic benefits by almost 40 percent, while using AEO’s 

Low Price forecast reduces total economic benefits by only about 5 percent. 
1141 

Raising the value of eliminating each ton of CO2 emissions to $67 increases 

total benefits by 15 percent. 

6) Varying all economic parameters simultaneously has a significant effect on 

total economic benefits. The combination of parameter values producing the 

highest benefits increases their total by slightly more than 50 percent, while 

that producing the lowest benefits reduces their value by almost 55 percent. 

However, varying these parameters in combination has less significant effects 

on other measures; for example, the high- and low-benefit combinations of 

parameter values raise or lower fuel savings and technology costs by only 

about 5 percent. 

For more detailed information regarding NHTSA’s sensitivity analyses for this final rule, 

please see Chapter X of NHTSA’s FRIA. 

5. How Would These Final Standards Impact Vehicle Sales?

 The effect of this rule on sales of new vehicles depends partly on how potential 

buyers evaluate and respond to its effects on vehicle prices and fuel economy. The rule 

will make new cars and light trucks more expensive, as manufacturers attempt to recover 

their costs for complying with the rule by raising vehicle prices, which by itself would 

discourage sales. At the same time, the rule will require manufacturers to improve the 

fuel economy of at least some of their models, which will lower their operating costs. 
1142 

However, this rule will not change the way that potential buyers evaluate 

improved fuel economy. If some consumers find it difficult to estimate the value of future 

fuel savings and correctly compare it with the increased cost of purchasing higher fuel 

economy (possibilities discussed below in Section IV.G.6) – or if they simply have low 

values of saving fuel – this rule will not change that situation, and they are unlikely to 

purchase the more fuel-efficient models that manufacturers offer. To the extent that other 

consumers more completely or correctly account for the value of fuel savings and the 

costs of acquiring higher fuel economy in their purchasing decisions, they will also 

continue to do so, and they are likely to view models with improved fuel economy as 

more attractive purchases than currently available models. The effect of the rule on sales 

of new vehicles will depend on which form of behavior is more widespread. 

In general we would expect that the net effect of this rule would be to reduce sales 

of new vehicles or leave them unchanged. If consumers are satisfied with the 

combinations of fuel economy levels and prices that current models offer, we would 

expect some to decide that the higher prices of those models no longer justify purchasing 

them, even though they offer higher fuel economy. Other potential buyers may decide to 

purchase the same vehicle they would have before the rule took effect, or to adjust their 

purchases in favor of models offering other attributes. Thus sales of new models would 

decline, regardless of whether “consumer-side” failures in the market for fuel economy 

currently lead buyers to under-invest in fuel economy. However, if there is some market 

failure on the producer or supply side that currently inhibits manufacturers from offering 

increases in fuel economy that would increase their profits – for example, if producers 
1143 

have underestimated the demand for fuel economy, or do not compete vigorously to 

provide as much as buyers would prefer – then the new standards would make vehicles 

more attractive to many buyers, and their sales should increase (potential explanations for 

such producer market failures are discussed in Section IV.G.6 below). 

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. The methodology NHTSA used for 

estimating the impact on vehicle sales in effect assumes that the latter situation will 

prevail; although it is relatively straightforward, it relies on a number of simplifying 

assumptions. 

There is a broad consensus in the economic literature that the price elasticity for 

demand for automobiles is approximately –1.0.726 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 

 

726 Kleit, A.N. (1990). “The Effect of Annual Changes in Automobile Fuel Economy Standards,” Journal 

of Regulatory Economics, vol. 2, pp 151-172 (Docket EPA-HQ-OAR-2009-0472-0015); Bordley, R. 

(1994). “An Overlapping Choice Set Model of Automotive Price Elasticities,” Transportation Research B, 

vol 28B, no 6, pp 401-408 (Docket NHTSA-2009-0059-0153); 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 (Docket NHTSA-2009-0059-0039). 
1144 

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.727 

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 potentially 

increase beyond that estimated here, which could result in an increase in sales levels. 

 

727 Gron, Ann and Swenson, Deborah, 2000, “Cost Pass-Through in the U.S. Automobile Market,” The 

Review of Economics and Statistics, 82: 316-324. (Docket EPA-HQ-OAR-2009-0472-0007) 
1145 

 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.728 The 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 depend on 

 

728 National 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 February 26, 2010). 
1146 

vehicle value. The Insurance Information Institute provides the average value of 

collision plus comprehensive insurance in 2006 as $448.729 This is compared to an 

average price for light vehicles of $24,033 for 2006.730 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 five year 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.731 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 

 

729 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 March 15, 2010). 730 $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. 

731 New 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. 
1147 

purchase.732 Discounting the additional 3.2 percent (16 percent / 5 years) per year over 

the 5 years using a 3 percent mid-year discount rate733 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.734 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, results 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) 

 

732 Based on www.bankrate.com auto loan calculator for a 5 year loan at 6 percent. 733 For a 3 percent discount rate, the summation of 3.2 percent x 0.9853 in year one, 3.2 x 0.9566 in year 

two, 3.2 x 0.9288 in year three, 3.2 x 0.9017 in year 4, and 3.2 x 0.8755 in year five. 734 Consumer Reports, August 2008, “What That Car Really Costs to Own.” Available at

http://www.consumerreports.org/cro/cars/pricing/what-that-car-really-costs-to-own-4-08/overview/whatthat-car-really-costs-to-own-ov.htm (last accessed February 26, 2010). 
1148 

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, light 

trucks, and both combined for the final standards. 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, and 

Combined 

 MY 2012 MY 2013 MY 2014 MY 2015 MY 2016

Passenger Cars -65,202 46,801 103,422 168,334 227,039

Light Trucks 48,561 106,658 139,893 171,920 213,868

Combined -16,641 153,459 243,315 340,255 440,907

The estimates provided in the tables above 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 fuel savings 

associated with this rule are expected to exceed the technology costs, the effective prices 

of vehicles (the adjusted increase in technology cost less the fuel savings over five years) 

to consumers will fall, and consumers will buy more new vehicles. As a result, the lower 

net cost of the vehicles is projected to lead to an increase in sales for both cars and trucks. 

As discussed above, this result depends on the assumption that more fuel efficient 

vehicles yielding net consumer benefits over their first five years would not otherwise be 
1149 

offered, due to market failures on the part of vehicle manufacturers. However, vehicle 

models that achieve the fuel economy targets prescribed by today’s rulemaking are 

already available, and consumers do not currently purchase a combination of them that 

meets the fuel economy levels this rule requires. This suggests that the rule may not 

result in an increase in vehicle sales, because it does not alter how consumers currently 

make decisions about which models to purchase. In addition, this analysis has not 

accounted for a number of factors that might affect consumer vehicle purchases, such as 

changing market conditions, changes in vehicle characteristics that might accompany 

improvements in fuel economy, or consumers considering a different “payback period” 

for their fuel economy purchases. If consumers use a shorter payback period, sales will 

increase by less than estimated here, and might even decline, while if consumers use 

longer payback periods, the increase in sales is likely to be larger than reported. In 

addition, because this is an aggregate analysis some individual consumers (including 

those who drive less than estimated here) will receive lower net benefits from the 

increase n fuel economy this rule requires, while others (who drive more than estimated 

here) will realize even greater savings. These complications – which have not been 

taken into account in our analysis – add considerable uncertainty to our estimates of 

changes in vehicle sales resulting from this rule. 

6. Potential Unquantified Consumer Welfare Impacts of the Final Standards

 The underlying goal of the CAFE and GHG standards is to increase social 

welfare, in the broadest sense, and as shown in earlier sections, NHTSA projects that the 
1150 

MY 2012-2016 CAFE standards will yield large net social benefits. In its net benefits 

analysis, NHTSA made every attempt to include all of the costs and benefits that could be 

identified and quantified. 

 It is important to highlight several features of the rulemaking analysis that 

NHTSA believes gives high confidence to its conclusion that there are large net social 

benefits from these standards. First, the agencies adopted footprint-based standards in 

large part so that the full range of vehicle choices in the marketplace could be maintained. 

Second, the agencies performed a rigorous technological feasibility, cost, and leadtime 

analysis that showed that the standards could be met while maintaining current levels of 

other vehicle attributes such as safety, utility, and performance. Third, widespread 

automaker support for the standards, in conjunction with the future product plans that 

have been provided by automakers to the agencies and recent industry announcements on 

new product offerings, provides further indication that the standards can be met while 

retaining the full spectrum of vehicle choices. 

 

Notwithstanding these points, and its high degree of confidence that the benefits 

amply justify the costs, NHTSA recognizes the possibility of consumer welfare impacts 

that are not accounted for in its analysis of benefits and costs from higher CAFE 

standards. The agencies received public comments expressing diverging views on this 

issue. The majority of commenters suggested that potential losses in welfare from 

requiring higher fuel economy were unlikely to be a significant concern, because of the 

many imperfections in the market for fuel economy. In contrast, other comments 
1151 

suggested that potential unidentified and unquantified consumer welfare losses could be 

large. Acknowledging the comments, the FRIA provides a sensitivity analysis showing 

how various levels of unidentified consumer welfare losses would affect the projected net 

social benefits from the CAFE standards established by this final rule. 

There are two viewpoints for evaluating the costs and benefits of the increase in 

CAFE standards: the private perspective of vehicle buyers themselves on the higher fuel 

economy levels that the rule would require, and the economy-wide or “social” 

perspective on the costs and benefits of requiring higher fuel economy. It is important, in 

short, to distinguish between costs and benefits that are “private” and costs and benefits 

that are “social.” The agency’s analysis of benefits and costs from requiring higher fuel 

efficiency, presented above, includes several categories of benefits (“social benefits”) that 

are not limited to automobile purchasers and that extend throughout the U.S. economy, 

such as reductions in the energy security costs associated with U.S. petroleum imports 

and in the economic damages expected to result from climate change. In contrast, other 

categories of benefits – principally the economic value of future fuel savings projected to 

result from higher fuel economy – will be experienced exclusively by the initial 

purchasers and subsequent owners of vehicle models whose fuel economy manufacturers 

elect to improve as part of their strategies for complying with higher CAFE standards 

(“private benefits”). 

Although the economy-wide or “social” benefits from requiring higher fuel 

economy represent an important share of the total economic benefits from raising CAFE 
1152 

standards, NHTSA estimates that benefits to vehicle buyers themselves will significantly 

exceed the costs of complying with the stricter fuel economy standards this rule 

establishes, as shown above. Since the agency also assumes that the costs of new 

technologies manufacturers will employ to improve fuel economy will ultimately be 

shifted to vehicle buyers in the form of higher purchase prices, NHTSA concludes that 

the benefits to vehicle buyers from requiring higher fuel efficiency will far outweigh the 

costs they will be required to pay to obtain it. However, this raises the question of why 

current purchasing patterns do not already result in higher average fuel economy, and 

why stricter fuel efficiency standards should be necessary to achieve that goal. 

 

As an illustration, Table IV.G.6-1 reports the agency’s estimates of the average 

lifetime values of fuel savings for MY 2012-2016 passenger cars and light trucks 

calculated using future retail fuel prices, which are those likely to be used by vehicle 

buyers to project the value of fuel savings they expect from higher fuel economy. The 

table compares NHTSA’s estimates of the average lifetime value of fuel savings for cars 

and light trucks to the price increases it projects to result as manufacturers attempt to 

recover their costs for complying with increased CAFE standards for those model years 

by increasing vehicle sales prices. As the table shows, the agency’s estimates of the 

present value of lifetime fuel savings (discounted using the OMB-recommended 3% rate) 

substantially outweigh projected vehicle price increases for both cars and light trucks in 

every model year, even under the assumption that all of manufacturers’ technology 

outlays are passed on to buyers in the form of higher selling prices for new cars and light 

trucks. By model year 2016, NHTSA projects that average lifetime fuel savings will 
1153 

exceed the average price increase by more than $2,000 for cars, and by more than $2,700 

for light trucks. 

Table IV.G.6-1 Value of Lifetime Fuel Savings vs. Vehicle Price Increases 

Model year Fleet Measure 2012 2013 2014 2015 2016 

Value of Fuel Savings $759 $1,349 $1,914 $2,480 $2,932 

Average Price Increase $505 $573 $690 $799 $907 Passenger 

Cars Difference $255 $897 $1,264 $1,680 $2,025 

 

Value of Fuel Savings $828 $1,634 $2,277 $2,887 $3,700 

Average Price Increase $322 $416 $621 $752 $961 Light 

Trucks Difference $506 $1,218 $1,656 $2,135 $2,739 

The comparisons above immediately raise the question of why current vehicle 

purchasing patterns do not already result in average fuel economy levels approaching 

those that this rule would require, and why stricter CAFE standards should be necessary 

to increase the fuel economy of new cars and light trucks. They also raise the question of 

why manufacturers do not elect to provide higher fuel economy even in the absence of 

increases in CAFE standards, since the comparisons in Table IV.G.6-1 suggest that doing 

so would increase the value of many new vehicle models by far more than it would raise 

the cost of producing them (and thus raise their purchase prices), thus presumably 

increasing sales of new vehicles. More specifically, why would potential buyers of new 

vehicles hesitate to make investments in higher fuel economy that would produce the 

substantial economic returns illustrated by the comparisons presented in Table IV.G.6-1? 

And why would manufacturers voluntarily forego opportunities to increase the 

attractiveness, value, and competitive positioning of their car and light truck models by 

improving their fuel economy? 
1154 

The majority of comments received on this topic answered these questions by 

pointing out many reasons why the market for vehicle fuel economy does not appear to 

work perfectly, and accordingly, that properly designed CAFE standards would be 

expected to increase consumer welfare. Some of these imperfections might stem from 

standard market failures (such as an absence of adequate information on the part of 

consumers); some of them might involve findings in behavioral economics (including, for 

example, a lack of sufficient consumer attention to long-term savings, or a lack of 

salience, to consumers at the time of purchase, of relevant benefits, including fuel and 

time savings). Both theoretical and empirical research suggests that many consumers do 

not make energy-efficient investments even when those investments would pay off in the 

relatively short-term.735 This research is in line with related findings that consumers may 

underweight benefits and costs that are less salient or that will be realized only in the 

future.736 

 

Existing work provides support for the agency’s conclusion that the benefits 

buyers will receive from requiring manufacturers to increase fuel economy far outweigh 

the costs they will pay to acquire those benefits, by identifying aspects of normal 

behavior that may explain buyers’ current reluctance to purchase vehicles whose higher 

 

735 Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation 

Technology. Resource and Energy Economics, 16(2); see Hunt Alcott and Nathan Wozny, Gasoline Prices, 

Fuel Economy, and the Energy Paradox (2010, available at 

http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf 736 Hossain, Janjim, and John Morgan (2009). “. . . Plus Shipping and Handling: Revenue 

(Non)Equivalence in Field Experiments on eBay,” Advances in Economic Analysis and Policy vol. 6; 

Barber, Brad, Terrence Odean, and Lu Zheng (2005). “Out of Sight, Out of Mind: The Effectsof Expenses 

on Mutual Fund Flows,” Journal of Business vol. 78, no. 6, pp. 2095-2020.
1155 

fuel economy appears to offer an attractive economic return. For example, consumers’ 

understandable aversion to the prospect of losses (“loss aversion”) may produce an 

exaggerated sense of uncertainty about the value of future fuel savings, making 

consumers reluctant to purchase a more fuel-efficient vehicle seem unattractive, even 

when doing so is likely to be a sound economic decision. Compare the finding in Greene 

et al. (2009) to the effect 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.737 

The well-known finding that as gas prices rise, consumers show more willingness 

to pay for fuel-efficient vehicles is not inconsistent with the possibility that many 

consumers undervalue gasoline costs and fuel economy at the time of purchase. In 

ordinary circumstances, such costs may be a relatively “shrouded” attribute in 

consumers’ decisions, in part because the savings are cumulative and extend over a 

significant period of time. This claim fits well with recent findings to the effect that 

many consumers are willing to pay less than $1 upfront to obtain a $1 benefit reduction in 

discounted gasoline costs.738

 

737 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. 

Surprisingly, the authors find that uncertainty regarding the future price of gasoline appears to be less 

important than uncertainty surrounding the expected lifetimes of new vehicles. (Docket NHTSA-2009-

0059-0154) 

738 See Alcott and Wozny.
1156 

Some research suggests that the consumers’ apparent unwillingness to purchase 

more fuel efficient vehicles stems from their inability to value future fuel savings 

correctly. For example, Larrick and Soll (2008) find evidence that consumers do not 

understand how to translate changes in fuel economy, which is denominated in miles per

gallon, into resulting changes in fuel consumption, measured in gallons per time 

period.739 Sanstad and Howarth (1994) argue that consumers resort to imprecise but 

convenient rules of thumb to compare vehicles that offer different fuel economy ratings, 

and that this behavior can cause many buyers to underestimate the value of fuel savings, 

particularly from significant increases in fuel economy.740 If the behavior identified in 

these studies is widespread, then the agency’s estimates suggesting that the benefits to 

vehicle owners from requiring higher fuel economy significantly exceed the costs of 

providing it are indeed likely to be correct. 

Another possible reconciliation of the agency’s claim that the average vehicle 

buyer will experience large fuel savings from the higher CAFE standards this rule 

establishes with the fact that the average fuel economy of vehicles currently purchased 

falls well short of the new standards is that the values of future savings from higher fuel 

economy vary widely across consumers. As an illustration, one recent review of 

consumers’ willingness to pay for improved fuel economy found estimates that varied 

from less than 1% to almost ten times the present value of the resulting fuel savings when 

 

739 Larrick, R. P., and J.B. Soll (2008). “The MPG illusion.” Science 320: 1593-1594. 740 Sanstad, A., and R. Howarth (1994). “’Normal’ Markets, Market Imperfections, and Energy Efficiency.” 

Energy Policy 22(10): 811-818. 
1157 

those are discounted at 7% over the vehicle’s expected lifetime.741 The wide variation in 

these estimates undoubtedly reflects methodological and measurement differences among 

the studies surveyed. However, it may also reveal that the expected savings from 

purchasing a vehicle with higher fuel economy vary widely among individuals, because 

they travel different amounts, have different driving styles, or simply have varying 

expectations about future fuel prices. 

These differences reflect the possibility that many buyers with high valuations of 

increased fuel economy already purchase vehicle models that offer it, while those with 

lower values of fuel economy emphasize other vehicle attributes in their purchasing 

decisions. A related possibility is that because the effects of differing fuel economy 

levels are relatively modest when compared to those provided by other, more prominent 

features of new vehicles - passenger and cargo-carrying capacity, performance, safety, 

etc. - it is simply not in many shoppers’ interest to spend the time and effort necessary to 

determine the economic value of higher fuel economy, attempt to isolate the component 

of a new vehicle’s selling price that is related to its fuel economy, and compare these two. 

(This possibility is consistent with the view that fuel economy is a relatively “shrouded” 

attribute.) In either case, the agency’s estimates of the average value of fuel savings that 

will result from requiring cars and light trucks to achieve higher fuel economy may be 

correct, but those savings may not be large enough to lead a sufficient number of buyers 

 

741 Greene, David L., “How Consumers Value Fuel Economy: A Literature Review,” Draft report to U.S. 

Environmental Protection Agency, Oak Ridge National Laboratory, December 29, 2009; see Table 10, p. 

37. 

See also David Greene 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-

0472-0045). The study actually calculated the willingness to pay for reduced vehicle operating costs, of 

which vehicle fuel economy is a major component. 
1158 

to push for vehicles with higher fuel economy to increase average fuel economy from its 

current levels. 

Defects in the market for cars and light trucks could also lead manufacturers to 

undersupply fuel economy, even in cases where many buyers were willing to pay the 

increased prices necessary to provide it. 

To be sure, the relevant market, taken as a whole, has a great deal of competition. 

But even in those circumstances, there may not such competition with respect to all 

vehicle attributes. Incomplete or “asymmetric” access to information on vehicle 

attributes such as fuel economy – whereby manufacturers of new vehicles or sellers of 

used cars and light trucks have more complete knowledge of the value of purchasing 

higher fuel economy, than do potential buyers – may also prevents sellers of new or used 

vehicles from capturing its full value. In this situation, the level of fuel efficiency 

provided in the markets for new or used vehicles might remain persistently lower than 

that demanded by potential buyers (at least if they are well-informed). 

It is also possible that deliberate decisions by manufacturers of cars and light 

trucks, rather than constraints on the combinations of fuel economy, carrying capacity, 

and performance that manufacturers can offer using current technologies, limit the range 

of fuel economy available to buyers within individual vehicle market segments, such as 

full-size automobiles, small SUVs, or minivans. As an illustration, once a potential buyer 

has decided to purchase a minivan, the range of fuel economy among current models 
1159 

extends only from 18 to 24 mpg.742 Manufacturers might make such decisions if they 

underestimate the premiums that shoppers in certain market segments are willing to pay 

for more fuel-efficient versions of the vehicle models thy currently offer to prospective 

buyers within those segments. If this occurs, manufacturers may fail to supply levels of 

fuel efficiency as high as those buyers are willing to pay for, and the average fuel 

efficiency of their entire new vehicle fleets could remain below the levels that potential 

buyers demand and are willing to pay for. (Of course this possibility is most realistic if it 

is also assumed that buyers are imperfectly informed or if fuel economy savings are not 

sufficiently salient). However, other commenters suggested that, if one assumes a 

perfectly functioning market, there must be unidentified consumer welfare losses that 

could offset the private fuel savings that consumers are currently foregoing. 

One explanation for this apparent paradox is that NHTSA’s estimates of benefits 

and costs from requiring manufacturers to improve the fuel efficiency of their vehicle 

models do not match potential vehicle buyers’ assessment of the likely benefits and costs 

from requiring higher fuel efficiency. This could occur because the agency’s underlying 

assumptions about some of the factors that affect the value of fuel savings differ from 

those made by potential buyers, because NHTSA has used different estimates for some 

components of the benefits from saving fuel than do buyers, or because the agency has 

failed to account for some potential costs of achieving higher fuel economy. 

 

742 This is the range of combined city and highway fuel economy levels from lowest (Toyota Siena 4WD) 

to highest (Mazda 5) available for model year 2010; 

http://www.fueleconomy.gov/feg/bestworstEPAtrucks.htm (last accessed February 15, 2010). 
1160 

For example, buyers may not value increased fuel economy as highly as the 

agencies’ calculations suggest, because they have shorter time horizons than the full 

vehicle lifetimes assumed by NHTSA and EPA, or because, when buying vehicles, they 

discount future fuel future savings using higher rates than those prescribed by OMB for 

evaluating federal regulations. Potential buyers may also anticipate lower fuel prices in 

the future than those forecast by the Energy Information Administration, or may expect 

larger differences between vehicles’ rated and actual on-road MPG levels than the 

agencies estimate. 

To illustrate the first of these possibilities, Table IV.G.6-2 shows the effect of 

differing assumptions about vehicle buyers’ time horizons for assessing the value of 

future fuel savings. Specifically, the table compares the average value of fuel savings 

from purchasing a MY 2016 car or light truck when fuel savings are evaluated over 

different time horizons to the estimated increase in its price. This table shows that as 

reported previously in Table IV.G.6-2, when fuel savings are evaluated over the entire 

expected lifetime of a MY 2016 car (approximately 14 years) or light truck (about 16 

years), their discounted present value (using the OMB-recommended 3% discount rate) 

lifetime fuel savings exceeds the estimated average price increase by more than $2,000 

for cars and by more than $2,700 for light trucks. 

If buyers are instead assumed to consider fuel savings over a 10-year time 

horizon, however, the present value of fuel savings exceeds the projected price increase 

for a MY 2016 car by about $1,300, and by somewhat more than $1,500 for a MY 2016 
1161 

light truck. Finally, Table VI.G.6-2 shows that under the assumption that buyers consider 

fuel savings only over the length of time for which they typically finance new car 

purchases (slightly more than 5 years during 2009), the value of fuel savings exceeds the 

estimated increase in the price of a MY 2016 car by only about $350, and the 

corresponding difference is reduced to slightly more than $500 for a MY 2016 light 

truck.. 

Table IV.G.6-2 Value of Fuel Savings vs. Vehicle Price Increases with Alternative 

Assumptions about Vehicle Buyer Time Horizons 

Value over Alternative Time Horizons 

Vehicle Measure Expected 

Lifetime743 10 Years Average Loan Term744

Fuel Savings $2,932 $2,180 $1,254 

Price Increase $907 $907 $907 

MY 2016 

Passenger 

Car Difference $2,025 $1,273 $347 

Fuel Savings $3,700 $2,508 $1,484 

Price Increase $961 $961 $961 MY 2016 

Light Truck Difference $2,739 $1,547 $523 

Potential vehicle buyers may also discount future fuel future savings using higher 

rates than those typically used to evaluate federal regulations. OMB guidance prescribes 

that future benefits and costs of regulations that mainly affect private consumption 

decisions, as will be the case if manufacturers’ costs for complying with higher fuel 

economy standards are passed on to vehicle buyers, should be discounted using a 

 

743 Expected lifetimes are approximately 14 years for cars and 16 years for light trucks. 744 Average term on new vehicle loans made by auto finance companies during 2009 was 62 months; See 

Board of Governors of the Federal Reserve System, Federal Reserve Statistical Release G.19, Consumer 

Credit. Available at http://www.federalreserve.gov/releases/g19/Current (last accessed March 1, 2010). 
1162 

consumption rate of time preference.745 OMB estimates that savers currently discount 

future consumption at an average real or inflation-adjusted rate of about 3 percent when 

they face little risk about its likely level, which makes it a reasonable estimate of the 

consumption rate of time preference. However, vehicle buyers may view the value of 

future fuel savings that results from purchasing a vehicle with higher fuel economy as 

risky or uncertain, or they may instead discount future consumption at rates reflecting 

their costs for financing the higher capital outlays required to purchase more fuelefficient models. In either case, they may discount future fuel savings at rates well above 

the 3% assumed in NHTSA’s evaluation in their purchase decisions. 

Table IV.G.6-3 shows the effects of higher discount rates on vehicle buyers’ 

evaluation of the fuel savings projected to result from the CAFE standards established by 

this rule, again using MY 2016 passenger cars and light trucks as an example. As Table 

IV.G.6-1 showed previously, average future fuel savings discounted at the OMB 3% 

consumer rate exceed the agency’s estimated price increases by more than $2,000 for MY 

2016 passenger cars and by more than $2,700 for MY 2016 light trucks. If vehicle 

buyers instead discount future fuel savings at the average new-car loan rate during 2009 

(6.7%), however, these differences decline to slightly more than $1,400 for cars and 

$1,900 for light trucks, as Table IV.G.6-3 illustrates. 

This is a potentially plausible alternative assumption, because buyers are likely to 

finance the increases in purchase prices resulting from compliance with higher CAFE 

 

745 Office of Management and Budget, Circular A-4, “Regulatory Analysis,” September 17, 2003, 33. 

Available at http://www.whitehouse.gov/omb/assets/regulatory_matters_pdf/a-4.pdf (last accessed March 

1, 2010). 
1163 

standards as part of the process of financing the vehicle purchase itself. Finally, as the 

table also shows, discounting future fuel savings using a consumer credit card rate (which 

averaged 13.4% during 2009) reduces these differences to less than $800 for a MY 2016 

passenger car and less than $1,100 for the typical MY 2016 light truck. Note, however, 

that even at these higher discount rates, the table shows that the private net benefits from 

purchasing a vehicle with the average level of fuel economy this rule requires remains

large. 

Table IV.G.6-3 Value of Fuel Savings vs. Vehicle Price Increases with Alternative 

Assumptions about Consumer Discount Rates 

Value over Alternative Time Horizons 

Vehicle Measure OMB 

Consumer 

Rate (3%) 

New Car 

Loan Rate 

(6.7%)746

OMB 

Investment 

Rate (7%) 

Consumer 

Credit 

Card Rate 

(13.4%)747

Fuel Savings $2,932 $2,336 $2,300 $1,669 

Price Increase $907 $907 $907 $907 

MY 2016 

Passenger 

Car Difference $2,025 $1,429 $1,393 $762 

Fuel Savings $3,700 $2,884 $2,836 $2,030 

Price Increase $961 $961 $961 $961 

MY 2016 

Light 

Truck Difference $2,739 $1,923 $1,875 $1,069 

Combinations of a shorter time horizon and a higher discount rate could further 

reduce or even eliminate the difference between the value of fuel savings and the 

agency’s estimates of increases in vehicle prices. One plausible combination would be 

for buyers to discount fuel savings over the term of a new car loan, using the interest rate 

 

746 Average rate on 48-month new vehicle loans made by commercial banks during 2009 was 6.72%; See 

Board of Governors of the Federal Reserve System, Federal Reserve Statistical Release G.19, Consumer 

Credit. Available at http://www.federalreserve.gov/releases/g19/Current (last accessed March 1, 2010). 747 Average rate on consumer credit card accounts at commercial banks during 2009 was 13.4%; See Board 

of Governors of the Federal Reserve System, Federal Reserve Statistical Release G.19, Consumer Credit. 

Available at http://www.federalreserve.gov/releases/g19/Current (last accessed March 1, 2010). 
1164 

on that loan as a discount rate. Doing so would reduce the amount by which future fuel 

savings exceed the estimated increase in the prices of MY 2016 vehicles to about $340 

for passenger cars and $570 for light trucks. Some evidence also suggests directly that 

vehicle buyers may employ combinations of higher discount rates and shorter time 

horizons for their purchase decisions; for example, 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. 748 As these comparisons and evidence illustrate, reasonable alternative 

assumptions about how consumers might evaluate the major benefit from requiring 

higher fuel economy can significantly affect the benefits they expect to receive when they 

decide to purchase a new vehicle. 

Imaginable combinations of shorter time horizons, higher discount rates, and 

lower expectations about future fuel prices or annual vehicle use and fuel savings could 

make potential buyers hesitant or even unwilling to purchase vehicles offering the 

increased fuel economy levels this rule will require manufacturers to produce. At the 

same time, they might cause vehicle buyers’ collective assessment of the aggregate 

benefits and costs of this rule to differ from NHTSA’s estimates. If consumers’ views 

about critical variables such as future fuel prices or the appropriate discount rate differ 

sufficiently from the assumptions used by the agency, some or perhaps many potential 

vehicle buyers might conclude that the value of fuel savings and other benefits they will 

experience from higher fuel economy are not sufficient to justify the increase in purchase 

 

748 Kubik, M. (2006). Consumer Views on Transportation and Energy. Second Edition. Technical Report: 

National Renewable Energy Laboratory. Available at Docket No. NHTSA-2009-0059-0038. 
1165 

prices they expect to pay. This would explain why their current choices among available 

models do not result in average fuel economy levels approaching those this rule would 

require. 

Another possibility is that achieving the fuel economy improvements required by 

stricter fuel economy standards might mean that manufacturers will forego planned future 

improvements in performance, carrying capacity, safety, or other features of their vehicle 

models that represent important sources of utility to vehicle owners. Although the 

specific economic values that vehicle buyers attach to individual vehicle attributes such 

as fuel economy, performance, passenger- and cargo-carrying capacity, and other sources 

of vehicles’ utility are difficult to infer from their purchasing decisions and vehicle 

prices, changes in vehicle attributes can significantly affect the overall utility that 

vehicles offer to potential buyers. Foregoing future improvements in these or other 

highly-valued attributes could be viewed by potential buyers as an additional cost of 

improving fuel economy. 

As indicated in its previous discussion of technology costs, NHTSA has 

approached this potential problem by developing cost estimates for fuel economyimproving technologies that include allowances for any additional manufacturing costs 

that would be necessary to maintain the reference fleet (or baseline) levels of 

performance, comfort, capacity, or safety of light-duty vehicle models to which those 

technologies are applied. In doing so, the agency followed the precedent established by 

the 2002 NAS Report on improving fuel economy, which estimated “constant 
1166 

performance and utility” costs for technologies that manufacturers could employ to 

increase the fuel efficiency of cars or light trucks. Although NHTSA 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, safety, carrying capacity, and utility of 

vehicle models while improving their fuel economy. The adoption of the footprint-based 

standards also addresses this concern. 

Finally, vehicle buyers may simply prefer the choices of vehicle models they now 

have available to the combinations of price, fuel economy, and other attributes that 

manufacturers are likely to offer when required to achieve higher overall fuel economy. 

If this is the case, their choices among models – and even some buyers’ decisions about 

whether to purchase a new vehicle – will respond accordingly, and their responses to 

these new choices will reduce their overall welfare. Some may buy models with 

combinations of price, fuel efficiency, and other attributes that they consider less 

desirable than those they would otherwise have purchased, while others may simply 

postpone buying a new vehicle. The use of the footprint-based standards, the level of 

stringency, and the lead time this rule allows manufacturers are all intended to ensure that 

this does not occur. Although the potential losses in buyers’ welfare associated with 

these responses cannot be large enough to offset the estimated value of fuel savings 

reported in the agencies’ analyses, they might reduce the benefits from requiring 

manufacturers to achieve higher fuel efficiency, particularly in combination with the 

other possibilities outlined previously. 
1167 

 As the foregoing discussion suggests, the agency does not have a complete 

answer to the question of why the apparently large differences between its estimates of 

benefits from requiring higher fuel economy and the costs of supplying it do not result in 

higher average fuel economy for new cars and light trucks in the absence of this rule. 

One explanation is that NHTSA’s estimates are reasonable, and that for the reasons 

outlined above, the market for fuel economy is not operating efficiently. NHTSA 

believes that the existing literature gives support for the view that because of various 

market failures (including behavioral factors, such as emphasis on the short-term and a 

lack of salience), there are likely to be substantial private gains, on net, from the rule, but 

it will continue to investigate new empirical literature as it become available. 

NHTSA acknowledges the possibility that it has incorrectly characterized the 

impact of the CAFE standards this rule establishes on consumers. To recognize this 

possibility, this section presents an alternative accounting of the benefits and costs of 

CAFE standards for MYs 2012-2016 passenger cars and light trucks and discusses its 

implications. Table IV.G.6-4 displays the economic impacts of the rule as viewed from 

the perspective of potential buyers, and also reconciles the estimated net benefits of the 

rule as they are likely to be viewed by vehicle buyers with its net benefits to the economy 

as a whole. 

As the table shows, the total benefits to vehicle buyers (line 4) consist of the value 

of fuel savings at retail fuel prices (line 1), the economic value of vehicle occupants’ 
1168 

savings in refueling time (line 2), and the economic benefits from added rebound-effect 

driving (line 3). As the zero entries in line 5 of the table suggest, the agency’s estimate of 

the retail value of fuel savings reported in line 1 is assumed to be correct, and no losses in 

consumer welfare from changes in vehicle attributes (other than those from increases in 

vehicle prices) are assumed to occur. Thus there is no reduction in the total private 

benefits to vehicle owners, so that net private benefits to vehicle buyers (line 6) are equal 

to total private benefits (reported previously in line 4). 

As Table IV.G.6-4 also shows, the decline in fuel tax revenues (line 7) that results 

from reduced fuel purchases is in effect a social cost that offsets part of the benefits of 

fuel savings to vehicle buyers (line 1).749 Thus the sum of lines 1 and 7 is the savings in 

fuel production costs that was reported previously as the value of fuel savings at pre-tax 

prices in the agency’s usual accounting of benefits and costs. Lines 8 and 9 of Table 

IV.G.6-4 report the value of reductions in air pollution and climate-related externalities 

resulting from lower emissions during fuel production and consumption, while line 10 

reports the savings in energy security externalities to the U.S. economy from reduced 

consumption and imports of crude petroleum and refined fuel. Line 12 reports the costs 

of increased congestion delays, accidents, and noise that result from additional driving 

due to the fuel economy rebound effect; net social benefits (line 13) is thus the sum of the 

 

749 Strictly speaking, fuel taxes represent a transfer of resources from consumers of fuel to government 

agencies and not a use of economic resources. Reducing the volume of fuel purchases simply reduces the 

value of this transfer, and thus cannot produce a real economic cost or benefit. Representing the change in 

fuel tax revenues in effect as an economy-wide cost is necessary to offset the portion of fuel savings 

included in line 1 that represents savings in fuel tax payments by consumers. This prevents the savings in 

tax revenues from being counted as a benefit from the economy-wide perspective. 
1169 

change in fuel tax revenues, the reduction in environmental and energy security 

externalities, and increased costs from added driving. 

Line 14 of Table IV.G.6-4 shows manufacturers’ technology outlays for meeting 

higher CAFE standards for passenger cars and light trucks, which represent the principal 

cost of requiring higher fuel economy. The net total benefits (line 15 of the table) 

resulting from the rule consist of the sum of private (line 6) and external (line 13) 

benefits, minus technology costs (line 14); as expected, the figures reported in line 15 of 

the table are identical to those reported previously in the agency’s customary format. 

Table IV.G.6-4 highlights several important features of this rule’s economic 

impacts. First, comparing the rule’s net private (line 6) and external (line 13) benefits 

makes it clear that a substantial majority of the benefits from requiring higher fuel 

economy are experienced by vehicle buyers, with only a small share distributed 

throughout the remainder of the U.S. economy. In turn, the vast majority of private 

benefits stem from fuel savings. External benefits are small because the value of 

reductions in environmental and energy security externalities is almost exactly offset by 

the decline in fuel tax revenues and the increased costs associated with added vehicle use 

via the rebound effect of higher fuel economy. As a consequence, the net economic 

benefits of the rule mirror closely its benefits to private vehicle buyers and the technology 

costs for achieving higher fuel economy, again highlighting the importance of accounting 

for any other effects of the rule on the economic welfare of vehicle buyers. 
1170 

Table IV.G.6-4 Private, Social, and Total Benefits and Costs of MY 2012-16 CAFE 

Standards: Passenger Cars plus Light Trucks 

Model Year 

Entry 2012 2013 2014 2015 2016 

Total, 

2012-

2016 

1. Value of Fuel Savings (at Retail Fuel Prices) $10.5 $22.9 $32.9 $42.5 $52.7 $161.6 

2. Savings in Refueling Time $0.7 $1.4 $1.9 $2.5 $3.0 $9.4 

3. Consumer Surplus from Added Driving $0.7 $1.5 $2.2 $2.8 $3.4 $10.5 

4. Total Private Benefits (=1+2+3) $11.9 $25.8 $37.0 $47.8 $59.0 $181.5 

5. Reduction in Private Benefits $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 

6. Net Private Benefits (=1+2) $11.9 $25.8 $37.0 $47.8 $59.0 $181.5 

7. Change in Fuel Tax Revenues -$1.3 -$2.7 -$3.8 -$4.8 -$5.9 -$18.5 

8. Reduced Health Damages from Criteria 

Emissions $0.5 $0.9 $1.3 $1.6 $2.0 $6.4 

9. Reduced Climate Damages from CO2

Emissions $0.9 $2.0 $2.9 $3.8 $4.8 $14.5 

10. Reduced Energy Security Externalities $0.5 $1.2 $1.6 $2.1 $2.5 $8.0 

11. Reduction in Externalities (=8+9+10) $1.9 $4.1 $5.9 $7.6 $9.3 $28.8 

12. Increased Costs of Congestion, etc. -$0.7 -$1.3 -$1.9 -$2.4 -$3.0 -$9.4 

13. Net Social Benefits (=7+11+12) $0.0 $0.1 $0.1 $0.3 $0.5 $1.0 

14. Technology Costs $5.9 $7.9 $10.5 $12.5 $14.9 $51.7 

15. Net Social Benefits (=6+12-14) $6.0 $17.9 $26.6 $35.5 $44.6 $130.7 

 As discussed in detail previously, NHTSA believes that the aggregate benefits 

from this rule amply justify its aggregate costs, but it remains possible that the agency has 

overestimated the value of fuel savings to buyers and subsequent owners of the cars and 

light trucks to which higher CAFE standards will apply. It is also possible that the 

agency has failed to identify and value reductions in consumer welfare that could result 

from buyers’ responses to changes in vehicle attributes that manufacturers make as part 

of their efforts to achieve higher fuel economy. To acknowledge these possibilities, 

NHTSA examines their potential impact on the rule’s benefits and costs, showing the 

rule’s economic impacts for MY 2012-16 passenger cars and light trucks under varying 

theoretical assumptions about the agency’s potential overestimation of private benefits 
1171 

from higher fuel economy and the value of potential changes in other vehicle attributes. 

See Chapter VIII of the FRIA. 

7. What Other Impacts (Quantitative and Unquantifiable) will These Final 

Standards Have?

In addition to the quantified benefits and costs of fuel economy standards, the 

final standards 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. 
1172 

Technology Forcing

The final 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. Several commenters agreed. These innovative 

approaches may reduce the cost of the final 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 rulemaking. We have not attempted to estimate the extent to 

which not-yet-invented technologies will appear, either within the time period of the 

current rulemaking or that might be available after MY 2016. 
1173 

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 final rule raises vehicle 

costs by over $900 by 2016, and for some manufacturers costs will increase by $1000-

$1800. Depending on the retail price of the vehicle, this could represent a significant 

increase in the overall vehicle cost and subsequently increase insurance rates, operation 

costs, and maintenance costs. Comprehensive insurance costs are likely to be directly 

related to price increases, but liability premiums will go up by a smaller proportion 

because the bulk of liability coverage reflects the cost of personal injury. The impact on 

operation and maintenance costs is less clear, because the maintenance burden and useful 

life of each technology are not known. However, one of the common consequences of 

using more complex or innovative technologies is a decline in vehicle reliability and an 

increase in 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 for purposes of this final 

rule. The agency will analyze this issue further for future rulemakings to attempt to 

gauge its impact more completely. 
1174 

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-toquantify 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 most vehicles will to some extent be 

impacted by the standards. 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. 
1175 

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. Elsewhere in this analysis, NHTSA estimates that vehicle sales 

will increase. This would occur because 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’ costs. Under these circumstances, 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 

would decline, as would 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. 

 

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 
1176 

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 or decrease the cost 

of blended gasoline and diesel depending on crude oil prices and tax subsidies. The 

potential extra cost of renewable fuels would be borne through a cross-subsidy: the price 

of every gallon of blended gasoline could rise sufficiently to pay for any extra cost of 

renewable fuels. However, if the price of fuel increases enough, the consumer could 

actually realize a savings through the increased usage of renewable fuels. The final 

CAFE rule, by reducing total fuel consumption, could 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. 

 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 

corresponding 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 
1177 

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 final rule will itself be small. 

Macroeconomic Impacts of this Rule

 

The final rule will have a number of consequences that may have short-run 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 

passenger cars and light trucks 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 longrun output. 

• Decreasing the world price of oil should induce an increase in long-run output. 

NHTSA has not studied the macroeconomic effects of the final rule, however a 

discussion of the economy-wide impacts of this rule conducted by EPA is presented in 
1178 

Section III.H and is included in the docket. 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 final rule 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 the risk of oil market disruption. We have not included estimates of 

monopsony effects or the cost of military expenditures associated with petroleum 

imports. 

Distributional Effects

 The final rule analysis provides a national-level distribution of impacts for gas 

price and similar variables. NHTSA also shows the effects of the EIA high and low gas 

price forecasts on the aggregate benefits in the sensitivity analysis. Generally, this rule 

has the greatest impact on those individuals who purchase vehicles. In terms of how the 

benefits of the rule might accrue differently for different consumers, consumers who 

drive more than our mean estimates for VMT will see more fuel savings, while those who 

drive less than our mean VMT estimates will see less fuel savings. 
1179 

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 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 off-highway 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 523, to guide the agency and 

manufacturers in classifying vehicles. 

Under EPCA, there are two general groups of automobiles that qualify as nonpassenger 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 offhighway operation, regardless of whether they might have been manufactured primarily 

for passenger transportation.750 NHTSA’s classification rule directly tracks those two 

 

750 49 U.S.C. 32901(a)(18). We note that the statute refers both to vehicles that are 4WD and to vehicles 

over 6,000 lbs GVWR as potential candidates for off-road capability, if they also meet the “significant 
1180 

broad groups of non-passenger 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.

751 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 

 feature ...designed for off-highway operation” as defined by the Secretary. NHTSA would consider 

“AWD” vehicles as 4WD for purposes of this determination – they send power to all wheels of the vehicle 

all the time, while 4WD vehicles may only do so part of the time, which appears to make them equal 

candidates for off-road capability given other necessary characteristics. 751 538 F.3d 1172 (9th Cir. 2008). 
1181 

capacity” criterion of 523.5(a)(4) for cargo van-type vehicles, rather than for SUVs with 

removable second-row seats unless they truly have greater cargo-carrying than passengercarrying 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, NHTSA recognizes that manufacturers may have an incentive to 

classify vehicles as light trucks if 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 often the case given the current fleet, 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 and towing and hauling capacity (and correspondingly, although not 

necessarily, heavier 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 

choose to make such changes before or during the model years covered by this 

rulemaking. 
1182 

In the NPRM, 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 sought comment on the 

following potential changes to NHTSA’s vehicle classification system, as well as 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-yet-unknown fueleconomy capabilities of future minivans and 3-row 2WD SUVs, and the unknown state 

of the vehicle market (particularly for MYs 2017 and beyond), NHTSA did not feel that it 
1183 

could say with certainty that moving these vehicles could negatively affect potential 

stringency levels for either passenger cars or light trucks. Thus, although such a change 

would not be made applicable during the MY 2012-2016 time frame, NHTSA sought 

comment on why the agency 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. 

Comments received on this issue were split between support and opposition. As 

perhaps expected, the Alliance, AIAM, NADA, Chrysler, Ford, and Toyota all 

commented in favor of maintaining 3-row vehicles as light trucks indefinitely. The 

Alliance and Chrysler stated that the existing definitions for light trucks are consistent 

with Congressional intent in EPCA and EISA, given that Congress could have changed 

the 3-row definition in passing EISA but did not do so. The Alliance, AIAM, and 

Chrysler also argued that the functional characteristics of 3-row vehicles do make them 

“truck-like,” citing their “high load characteristics” and ability to carry cargo if their seats 

are stowed or removed. Ford and Toyota emphasized the need for stability in the 

definitions as manufacturers adjust to the recent reclassification of many 2WD SUVs 

from the truck to the car fleet, and the Alliance argued further that moving the 3-row 

vehicles to the car fleet would simply deter manufacturers from continuing to provide 

them, causing consumers to purchase larger full-size vans instead and resulting in less 

fuel savings and emissions reductions. Toyota stated further that no significant changes 

have occurred in the marketplace (as in, not all 2WD SUVs suddenly have 3 rows) to 
1184 

trigger additional reclassification beyond that required by the MY 2011 final rule. 

Hyundai neither supported nor objected to reclassification, but requested ample lead time 

for the industry if any changes are eventually made. 

Other commenters favored reclassification of 3-row vehicles from the truck to the 

car fleet: NJ DEP expressed general support for reclassifying 3-row vehicles for MYs 

2017 and beyond, while the UCSB student commenters seemed to support reclassifying 

these vehicles for the current rulemaking. The UCSB students stated that EPCA/EISA 

properly distinguishes light trucks based on their “specialized utility,” either their ability 

to go off-road or to transport material loads, but that 3-row vehicles do not generally have 

such utility as sold, and are clearly primarily sold and used for transporting passengers. 

The UCSB students suggested that reclassifying the 3-row vehicles from the truck to the 

car fleet could help to ensure the anticipated levels of fuel savings by moving the fleet 

closer to the 67/33 fleet split assumed in the agencies’ analysis for MY 2016, and stated 

that this would increase fuel economy over the long term. The students urged NHTSA to 

look at the impact on fuel savings from reclassifying these vehicles for the model years 

covered by the rulemaking. 

 In response, NHTSA did conduct such an analysis to attempt to consider the 

impact of moving these vehicles. As previously stated, the agency’s hypothesis is that 

moving 3-row vehicles from the truck to the car fleet will tend to bring the achieved fuel 

economy levels down in both fleets – the car fleet achieved levels could theoretically fall 

due to the introduction of many more vehicles that are relatively heavy for their footprint 
1185 

and thus comparatively less fuel economy-capable, while the truck fleet achieved levels 

could theoretically fall due to the characteristics of the vehicles remaining in the fleet 

(4WDs and pickups, mainly) that are often comparatively less fuel-economy capable than 

3-row vehicles, although more vehicles would be subject to the relatively more stringent 

passenger car standards, assuming the curves were not refit to the data. 

 The agency first identified which vehicles should be moved. We identified all of 

the 3-row vehicles in the baseline (MY 2008) fleet,752 and then considered whether any 

could be properly classified as a light truck under a different provision of 49 CFR 523.5 – 

about 40 vehicles were classifiable under §523.5(b) as off-highway capable. 

 The agency then transferred those remaining 3-row vehicles from the light truck 

to the passenger car input sheets for the Volpe model, re-estimated the gap in stringency 

between the passenger car and light truck standards, shifted the curves to obtain the same 

overall average required fuel economy as under the final standards, and ran the model to 

evaluate potential impacts (in terms of costs, fuel savings, etc.) of moving these vehicles. 

The results of this analysis may be found in the same location on NHTSA’s web site as 

the results of the analysis of the final standards. In summary, moving the vehicles 

reduced the stringency of the passenger car standards by approximately 0.8 mpg on 

average for the five years of the rule, and reduced the stringency of the light truck 

standards by approximately 0.2 mpg on average for the five years of the rule. It also 

caused the gap between the car curve and the truck curve to decrease or narrow slightly, 

by 0.1 mpg. However, the analysis also showed that such a shift in 3-row vehicles could 

 

752 Of the 430 light trucks models in the fleet, 175 of these had 3 rows. 
1186 

result in approximately 676 million fewer gallons of fuel consumed (equivalent to about 

1 percent of the reduction in fuel consumption under the final standards) and 7.1 mmt 

fewer CO2 emissions (equivalent to about 1 percent of the reduction in CO2 emissions 

under the final standards) over the lifetime of the MYs 2012-2016 vehicles. This result is 

attributable to slight differences (due to rounding precision) in the overall average 

required fuel economy levels in MYs 2012-2014, and to the retention of the relatively 

high lifetime mileage accumulation (compared to “traditional” passenger cars) of the 

vehicles moved from the light truck fleet to the passenger car fleet.

 The changes in overall costs and vehicle price did not necessarily go in the same 

direction for both fleets, however. Overall costs of applying technology for the passenger 

car fleet went up approximately $1 billion per year for each of MYs 2012-2016, while 

overall costs for the light truck fleet went down by an average of approximately $800 

million for each year, such that the net effect was approximately $200 million additional 

spending on technology each year (equivalent to about 2 percent of the average increase 

in annual technology outlays under the final standards). Assuming manufacturers would 

pass that cost forward to consumers by increasing vehicle costs, vehicle prices would 

increase by an average of approximately $13 during MYs 2012-2016. 

However, one important point to note in this comparative analysis is that, due to 

time constraints, the agency did not attempt to refit the respective fleet target curves or to 

change the intended required stringency in MY 2016 of 34.1 mpg for the combined 

fleets. If we had refitted curves following the same procedures described above in 
1187 

Section II, considering the vehicles in question, we expect that we might have obtained a 

somewhat steeper passenger car curve, and a somewhat flatter light truck curve. If so, 

this might have increased the gap in between portions of the passenger car and light truck 

curves. 

 NHTSA agrees with the industry commenters that some degree of stability in the 

passenger car and light truck definitions will assist the industry in making the transition 

to the stringency of the new National Program, and therefore will not reclassify 3-row 

vehicles to the passenger car fleet for purposes of MYs 2012-2016. Going forward, the 

real question is how to balance the benefits of regulatory stability against the potential 

benefits of greater fuel savings if reclassification is determined to lead in that direction. 

NHTSA believes that this question merits much further analysis before the agency can 

make a decision for model years beyond MY 2016, and will provide further opportunity 

for public comment regarding that analysis prior to finalizing any changes in the future. 

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 
1188 

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 concluded that because Congress explicitly designated 

vehicles with GVWRs over 6,000 pounds as “off-highway 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 
1189 

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 sought comment 

in the NPRM on how the agency might go about reviewing this question as more 

information about manufacturer behavior is accumulated, but no commenters really 

responded to this issue directly, although several cited the possibility that manufacturers 

might cease to build 2WD SUVs as a way of avoiding the higher passenger car curve 

targets in arguing that the agencies should implement backstop standards for all fleets. 

Since NHTSA has already stated above that it will revisit the backstop question as 

necessary in the future, we may as well add that we will consider the need to classify 

“like” vehicles together as necessary in the future. 

 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 suggested in the NPRM that it could explore additional 

approaches, although it cautioned that 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 
1190 

categories more consistent with current vehicle fleets (i.e., sedans, minivans, SUVs, 

pickup trucks, etc.). NHTSA sought comment on whether and why it should pursue any 

of these courses of action. 

 Some commenters (ICCT, CBD, NESCAUM) did raise the issue of removing the 

regulatory distinction between cars and trucks and setting standards for the entire fleet of 

vehicles, but those commenters did not appear to recognize the fact that EPCA/EISA 

expressly requires that NHTSA set separate standards for passenger cars and light trucks. 

As the statute is currently written, NHTSA does not believe that a single standard would 

be appropriate unless the observed relationship between footprint and fuel economy of 

the two fleets converged significantly over time. Nevertheless, NHTSA will continue to 

monitor the issue going forward. 

 Besides these issues in vehicle classification, NHTSA additionally received 

comments from two manufacturers on issues not raised by NHTSA in the NPRM. VW 

requested clarification with respect to how the agency evaluates a vehicle for off-road 

capability under 49 CFR 523.5(b)(2), asking the agency to measure vehicles with “active 

ride height management” at the “height setting representative of off-road operation if the 

vehicle has the capability to change ride height.” NHTSA issued an interpretation to 

Porsche in 2004 addressing this issue, when Porsche asked whether a driver-controlled 

variable ride height suspension system could be used in the “off-road” ride height 

position to meet the suspension parameters required for an off- road classification 
1191 

determination.753 Porsche argued that a vehicle should not need to satisfy the four-outof-five criteria at all ride heights in order to be deemed capable of off-highway operation. 

NHTSA agreed that 523.5(b)(2) does not require a vehicle to meet four of the five criteria 

at all ride heights, but stated that a vehicle must meet four out of the five criteria in at 

least one ride height. The agency determined that it would be appropriate to measure the 

vehicle’s running clearance with the vehicle’s adjustable suspension placed in the 

position(s) intended for off-road operation under real-world conditions. 

 Thus, NHTSA clarifies that the agency would consider it appropriate to measure 

vehicles for off-road capability at the height setting intended for off-road operation under 

real-world conditions. However, we note that before this question need be asked and 

answered, the vehicle must first either be equipped with 4WD or be rated at more than 

6,000 pounds gross vehicle weight to be eligible for classification as a light truck under 

49 CFR 523.5(b). 

 The final comment on the issue of vehicle classification was received from 

Honda, who recommended that deformable aero parts, such as strakes, should be 

excluded from the ride height measurements that determine whether a vehicle qualifies as 

a truck for off-road capability. The air strakes described by Honda are semi-deformable 

parts similar to a mud flap that can be used to improve a vehicle’s aerodynamics, and 

thus to improve its fuel economy. Honda argued that NHTSA would deter the 

application of this technology if it did not agree to measure ride height with the air 

 

753 Available at http://isearch.nhtsa.gov/files/porschevrhs.html (last accessed Mar. 1, 2010). 
1192 

strakes at their most deformed state, because otherwise a vehicle so equipped would have 

to be classified as a passenger car and thus be faced with the more stringent standard. 

 In response, Honda did not provide enough information to the agency for the 

agency to make a decision with regard to how air strakes should be considered in 

measuring a vehicle for off-road capability. NHTSA personnel would prefer to directly 

examine a vehicle equipped with these devices before considering the issue further. The 

agency will defer consideration of this issue to another time, and no changes will be made 

in this final rule in response to this comment. 

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 
1193 

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 midmodel year reports submitted by manufacturers pursuant to 49 CFR 537, Automotive 

Fuel Economy Reports.754 The reports for the current model year are submitted to 

NHTSA every December and July. As of the time of this final rule, NHTSA has received 

pre-model year reports from manufacturers for MY 2010, and anticipates receiving mid--

model year reports for MY 2010 in July of this year. Although the reports are used for 

NHTSA’s reference only, they help the agency, and the manufacturers who prepare them, 

 

754 49 CFR Part 537 is authorized by 49 U.S.C. 32907. 
1194 

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 proposed to amend Part 537 to allow for electronic 

submission of the pre- and mid-model year CAFE reports. The only comments 

addressing this proposal were from Ferrari, who supported it in the interest of efficiency, 

and Ford, who did not object as long as CBI was sufficiently protected. Having received 

no comments objecting, NHTSA is finalizing this change to Part 537. 

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 EPCA755 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. 

As discussed above in Section III, a number of commenters raised the issue of 

whether the city and highway test procedures and the calculation are still appropriate or 

 

755 49 U.S.C. 32904(c). 
1195 

whether they may be outdated. Several commenters argued that the calculation should be 

more “real-world”: for example, ACEEE stated that EPA should use a “correction 

factor” like the one used for the fuel economy label in the interim until test procedures 

can be changed, while BorgWarner, Cummins, Honeywell, MECA, and MEMA argued 

that EPA should change the weighting of the city and highway cycles (to more highway 

and less city) to reflect current American driving patterns and to avoid biasing the 

calculation against technologies that provide greater efficiency in highway driving than in 

city driving. Sierra Club et al. commented that the fact that EPA was proposing to allow 

off-cycle credits indicated that the test procedures and the calculation needed updating. 

Several commenters (API, James Hyde, MECA, NACAA, and NY DEC) stated that the 

test procedures should use more “real-world” fuel, like E-10 instead of “indolene clear.” 

The UCSB students also had a number of comments aimed at making the test procedures 

more thorough and real-world. Several industry-related commenters (AIAM, Ferrari, and 

Ford) argued to the contrary that existing test procedures and calculations are fine for 

now, and that any changes would require significant lead time to allow manufacturers to 

adjust their plans to the new procedures. 

Statutorily, the decision to change the test procedures or calculation is within 

EPA’s discretion, so NHTSA will not attempt to answer these comments in detail, see

supra Section III for EPA’s responses. We note simply that the agency recognizes the 

need for lead time for the industry if test procedures were to change in the future to 

become more real-world, and will keep it in mind. 
1196 

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, 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 equipping 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. In the 

NPRM, NHTSA sought comment regarding implementing such amendments beginning 

in MY 2017 and also on the more immediate 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. NHTSA emphasized that modernizing the passenger car test 

procedures as well would not be possible under EPCA as currently written. 

Comments were split as to whether the test procedure should be changed. Several 

manufacturers and manufacturer groups (BMW, GM, Toyota, VW, the Alliance) opposed 

changes to the test procedures to account for A/C usage on the grounds that any changes 

could create negative unintended consequences. Public Citizen also opposed changes to 

the test procedure, arguing that the fuel economy information presented to the consumer 

on the fuel economy label is already confusing, and that further changes to the light truck 

test procedures when there was no authority to change the passenger car test procedures 
1197 

would simply result in more confusion. In contrast, NJ DEP fully supported changes to 

the light truck test procedures beginning with MY 2017, and an individual commenter 

(Weber) also supported the inclusion of A/C in the test procedures to represent real-world 

“A/C on” time. 

However, some of the same commenters –BMW, Toyota, and VW, for example – 

that opposed changes to the test procedure supported NHTSA allowing credits for A/C. 

Toyota stated that it supported anything that increased compliance flexibility, while VW 

emphasized that A/C credits for CAFE would help to address the fact that NHTSA’s 

standards could end up being more stringent than EPA’s for manufacturers relying 

heavily on A/C improvements to meet the GHG standards. NJ DEP also supported 

interim A/C credits for light trucks, but in contrast to VW, argued that the light truck 

standards would have to be made more stringent to account for those credits if they were 

allowed. 

Other commenters (Chrysler, Daimler, Ferrari) supported interim A/C credits for 

light truck CAFE, but stated that such credits could simply be added to EPA’s calculation 

of CAFE under 49 U.S.C. 32904(c) without any change in the test procedure ever being 

necessary. Daimler stated that the prohibition on changing the test procedure, according 

to legislative history, was to avoid sudden and dramatic changes and provide consistency 

for manufacturers in the beginning of the CAFE program, but that nothing indicated that 

EPA was barred from updating the way a manufacturer’s fuel economy is calculated after 

the test procedures are followed. Daimler emphasized that EPA has broad authority in 
1198 

how it calculates fuel economy, and that adding credits at the end of the calculation 

would make CAFE more consistent with the GHG program and recognize real-world 

benefits not measured by the test cycle. Daimler argued that if EPA did not include A/C 

credits as part of the calculation, it would remove incentives to improve A/C, because 

those gains could not be used for CAFE compliance and NHTSA has no authority to 

include A/C in determining stringency, because A/C is a “parasitic load” that does not 

impact mpg. 

Some commenters opposed interim A/C credits. CARB stated that no A/C credits 

should be given under EPCA unless the test procedures can be changed to fully account 

for A/C and NHTSA is given clear authority for A/C, while GM stated that NHTSA’s 

authority to create additional types of credits must be limited by the fact that Congress 

clearly provided in EPCA for some types of CAFE credits but not for A/C-related credits 

for CAFE. 

NHTSA has decided not to implement interim A/C credits for purposes of this 

final rule and MYs 2012-2016 light trucks. Changes to the test procedure for light trucks 

will be considered by the agencies in subsequent rulemakings. 

 While NHTSA agrees with commenters that the EPA authority to consider how 

fuel economy is calculated is broad, especially as to light trucks, we disagree that credits 

could simply be added to the CAFE calculation without making parallel changes in 

CAFE standard stringency to reflect their availability. CAFE stringency is determined, in 
1199 

part, with reference to the technologies available to manufacturers to improve mpg. If a 

technology draws power from the engine, like A/C, then making that technology more 

efficient to reduce its load on the engine will conserve fuel, consistent with EPCA’s 

purposes. However, as noted above, some technologies that improve mpg are not 

accounted for in current CAFE test procedures. NHTSA agrees that the test procedures 

should be updated to account for the real-world loads on the engine and their impact on 

fuel economy, but recognizes that manufacturers will need lead-time and advance notice 

in order to ready themselves for such changes and their impact on CAFE compliance. 

Thus, if manufacturers are able to achieve improvements in mpg that are not 

reflected on the test cycle, then the level of CAFE that they are capable of achieving is 

higher than that which their performance on the test cycle would otherwise indicate, 

which suggests, in turn, that a higher stringency is feasible. NHTSA has determined that 

the current CAFE levels being finalized today are feasible using traditional “tailpipe 

technologies” alone. If manufacturers are capable of improving fuel economy beyond 

that level using A/C technologies, and wish to receive credit for doing so, then NHTSA 

believes that more stringent CAFE standards would need to be established. Not raising 

CAFE could allow manufacturers to leave tailpipe technology on the table and make 

cheaper A/C improvements, which would not result in the maximum feasible fuel savings 

contemplated by EPCA.

 Because raising CAFE stringency in conjunction with allowing A/C credits was 

not a possibility clearly contemplated in the NPRM, NHTSA does not believe that it 
1200 

would be within scope of notice for purposes of this rulemaking. Accordingly, the final 

rule cannot provide for interim A/C credits. However, if NHTSA were to allow A/C 

credits in the future, NHTSA believes it would be required to increase standard 

stringency accordingly, to avoid losses in fuel savings, as stated above. NHTSA will 

consider this approach further, ensuring that any changes to the treatment of A/C and 

accompanying changes in CAFE stringency are made with sufficient notice and leadtime. 

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), and 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 
1201 

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 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 
1202 

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.756

 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 provisions757 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. 

 

756 Honeywell commented that any fines imposed and collected under the CAFE and GHG standards 

should be appropriated to the development of vehicle technologies that continue to improve fuel economy 

in the future, and that the direct application of the penalties collected would support the underlying 

legislative policy and drive innovation. While NHTSA certainly would not oppose such an outcome, it 

would lie within the hands of Congress and not the agency to direct the use of the fines in that manner. 

757 49 U.S.C. 30120, Remedies for defects and noncompliance. 
1203 

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 attributebased approach to setting CAFE standards fuel economy targets are established for 

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

those targets on a model-by-model or vehicle-by-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. 

Several commenters encouraged the agency to increase the transparency of how 

the agency monitors and enforces CAFE compliance. EDF, Public Citizen, Sierra Club et 

al., UCS, and Porsche all commented that NHTSA should publish an annual compliance 
1204 

report for manufacturers, and Porsche suggested that it be available online. Sierra Club et 

al. and Porsche stated that this would help clarify manufacturers’ credit status (for the 

benefit of the public and manufacturers looking to purchase credits, respectively) and 

sales, and Sierra Club et al. further stated that the agency should make public all 

information regarding credits and attained versus projected fleet average mpg levels. 

EDF similarly urged the agency to provide publicly a compliance report every year that 

would include any recommended adjustments to the program, enforcement actions, or 

prospective policy action to ensure the policy objectives are achieved. 

 In response, NHTSA agrees that there could be substantial benefits to increasing 

the transparency of information concerning the credit holdings of each credit holder. 

Along with the MY 2011 final rule, NHTSA issued a new regulation 49 CFR 536 to 

implement the new CAFE credit trading and transfer programs authorized by EISA. 

Paragraph 536.5(e) requires that we periodically publish credit holding information. 

NHTSA plans to make this information available to the public on the NHTSA web site. 

The exact format that will be used to display this information has not been finalized but it 

is our plan to begin making this information available no later than calendar year 2011 to 

coincide with MY 2011 when manufacturers may begin utilizing credit trades and 

transfers. 
1205 

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 

alternative-fueled 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 alternative-fueled 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, capable of running on either the alternative fuel or gasoline) 
1206 

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 

0.15.758 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 0.15.759

 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).760 Thus, if a vehicle averages 25 miles per 100 ft3

of natural gas, 

then: 

 

 

758 49 U.S.C. 32905(a). 759 49 U.S.C. 32905(b) 760 49 U.S.C. 32905(c). 
1207 

 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 2019.761 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 538 implements the statutory alternative-fueled and dual-fueled 

automobile manufacturing incentive. NHTSA updated Part 538 as part of this final rule 

to reflect the EISA changes extending the incentive to MY 2019, 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 

 

761 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. 
1208 

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. The manufacturer would then be allowed to weight the gasoline and 

alternative fuel test results based on the proportion of actual usage of both fuels, as 

discussed above in Section III. 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 requested comment in the NPRM on whether it should seek 

legislative changes to revise its authority to address this issue. 

 

 NHTSA received only one comment on this issue: VW commented that NHTSA 

should not seek a change in its authority, because Congress’ intent for NHTSA is already 

clear. VW did, however, encourage NHTSA to include the statutory FFV credit phaseout in Part 538, which the agency is doing. 

 b. Credit Trading and Transfer 

As part of 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.762 Since its enactment, EPCA has permitted manufacturers to 

 

762 Congress 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 
1209 

earn credits for exceeding the standards and to carry those credits backward or forward. 

EISA extended the “carry-forward” 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.763 

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. 

 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. 

763 Ford and Toyota both commented on NHTSA’s use of the adjustment factor: Ford stated that it 

preferred a streamlined “megagrams” approach like EPA was proposing, while Toyota stated that NHTSA 

and EPA should use consistent VMT estimates for purposes of all analysis and for use in the adjustment 

factor. In response to Ford, NHTSA is maintaining use of the adjustment factor just finalized last March, 

which uses mpg rather than gallons or grams and is thus consistent with the rest of the CAFE program. In 

response to Toyota, NHTSA agrees that consistency of VMT estimates should be maintained and will 

revise the adjustment factor as necessary. 
1210 

NHTSA recognizes that some manufacturers may have to rely on credit 

transferring for compliance in MYs 2012-2017.764 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 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 

 

764 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. 
1211 

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 sought comment in the NPRM on this 

interpretation of EISA. 

Only one commenter, VW, commented on NHTSA’s interpretation of EISA as 

allowing the banking of transferred credits, and agreed with it. VW suggested that 

NHTSA revise Part 536 to clarify accordingly, and that NHTSA include the statutory 

transfer cap in Part 536 as well. While NHTSA does not believe that including the 

statutory transfer cap in the regulation is necessary, NHTSA will revise Part 536 in this 

final rule by amending the definition of “transfer” as follows (in bold and italics): 

Transfer means the application by a manufacturer of credits earned by that 

manufacturer in one compliance category or credits acquired be trade (and 

originally earned by another manufacturer in that category) to achieve compliance 

with fuel economy standards with respect to a different compliance category. For 

example, a manufacturer may purchase light truck credits from another 

manufacturer, and transfer them to achieve compliance in the manufacturer’s 

domestically manufactured passenger car fleet. Subject to the credit transfer 

limitations of 49 U.S.C. 32903 (g)(3), credits can also be transferred across 

compliance categories and banked or saved in that category to be carried 

forward or backward to address a credit shortfall. 
1212 

 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 $785,772,714.50 

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 2008 fleets, six 

manufacturers paid CAFE fines for not meeting an applicable standard—Ferrari, 

Maserati, Mercedes-Benz, Porsche, Chrysler and Fiat—for a total of $12,922,255,50. 

NHTSA recognizes that some manufacturers may use the option to pay fines as a 

CAFE compliance flexibility—presumably, when paying fines is deemed more costeffective than applying additional fuel economy-improving 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 
1213 

conformity 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 
1214 

requested in the NPRM 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. 

Only Ferrari and Daimler commented on this issue. Both manufacturers argued 

that raising the penalty would have no impact on fuel savings and would simply hurt the 

manufacturers forced to pay it. Daimler stated further that the agency’s asking for a 

quantitative analysis ignores the fact that manufacturers pay fines because they cannot 

increase energy savings any further. Thus, again, the agency finds itself without a clear 

quantitative explanation of what the benefits and drawbacks to raising the penalty might 

be, but it continues to appear that the range of possible increase is insufficient to result in 

additional substantial energy conservation. NHTSA will therefore defer consideration of 

this issue for purposes of this rulemaking. 

 4. Other CAFE Enforcement Issues—Variations in Footprint

NHTSA has a standardized test procedure for determining vehicle footprint,765

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 

 

765 NHTSA 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). 
1215 

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.766

“Track width,” in turn, is defined as “the lateral distance between the centerlines of the 

base tires at ground, including the camber angle.”767 “Wheelbase” is defined as “the 

longitudinal distance between front and rear wheel centerlines.”768

NHTSA began requiring manufacturers to submit this information on footprint, 

wheelbase, and track width 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 2010. 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 as discussed below. 

 

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,769 and camber. Most current vehicles have wheels with positive offset, with 

 

766 49 CFR 523.2. 767 Id. 768 Id. 769 Offset 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) 
1216 

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 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 

 Negative offset – the hub mounting surface is inboard of the centerline of the wheel (away from street side) 
1217 

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. No comments were received on this issue. 

 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 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 
1218 

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. No comments were received on this issue. 

 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 
1219 

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. No 

comments were received on this issue. 

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 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 
1220 

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 sought comment in the NPRM on any potential benefits or 

drawbacks to requiring a more standardized reporting methodology. NHTSA requested 
1221 

that, if commenters recommend increasing standardization, they provide specific 

examples of what information should be required and how NHTSA should require it to be 

provided but no comments were received on this specific issue. 

However, on a related topic, Honda and Toyota both commented on the equations 

and corresponding terms used to calculate the fleet required standards. Both 

manufacturers indicated that the terms defined for use in the equations could be 

interpreted differently by vehicle manufacturers. For example, the term “footprint of a 

vehicle model” could be interpreted to mean that a manufacturer only has to use one 

representative footprint within a model type or that it is necessary to use all the unique 

footprints and corresponding fuel economy target standards within a model type when 

determining a fleet target standard. This issue is discussed in more detail in Section IV.E. 

above. 

 5. Other CAFE Enforcement Issues – Miscellaneous

Hyundai commented that 49 CFR 537.9 appeared to contain erroneous references 

to 40 CFR 600.506 and 600.506(a)(2), which seemed not to exist, and asked the agency 

to check those references. In response, NHTSA examined the issue and found that 40 

CFR 600.506 was, in fact, eliminated by a final rule published on April 6, 1984 (49 FR 

13832). That section of 40 CFR originally required manufacturers to submit preliminary 

CAFE data to EPA prior to submitting the final end of the year data. EPA’s primary 

intent for eliminating the requirement, as stated in the final rule, was to reduce 
1222 

administration burden. To address these inaccurate references, NHTSA is revising Part 

537 to delete references to 40 CFR 600.506. This will not impact the existing 

requirements for the pre-model year, mid-model year and supplemental reports 

manufacturers must submit to NHTSA under Part 537. 

J. Other Near-Term Rulemakings Mandated by EISA

1. Commercial Medium- and Heavy-Duty On-Highway Vehicles and Work 

Trucks

EISA added new provisions to 49 U.S.C. 32902 requiring DOT, in consultation 

with DOE and EPA, to conduct a study regarding a program to require improvements in 

the fuel efficiency of commercial medium- and heavy-duty on-highway vehicles and 

work trucks and then to conduct a rulemaking to adopt and implement such a program . 

In the study, the agency must examine the fuel efficiency of commercial medium- and 

heavy-duty on-highway vehicles770 and work trucks771 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. Then the agency must determine in a 

rulemaking proceeding how to implement a commercial medium- and heavy-duty onhighway vehicle and work truck fuel efficiency improvement program designed to 

 

770 Defined as an on-highway vehicle with a gross vehicle weight rating of 10,000 pounds or more. 771 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. 
1223 

achieve the maximum feasible improvement, and adopt and implement appropriate test 

methods, measurement metrics, fuel economy standards, and compliance and 

enforcement protocols that are appropriate, cost-effective, and technologically feasible 

for commercial medium- and heavy-duty on-highway vehicles and work trucks. The 

agency is working closely with EPA on developing a proposal for these standards. 

 

 2. Consumer Information on Fuel Efficiency and Emissions

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 
1224 

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 ongoing. The agency is working closely with EPA on developing a proposal for these 

regulations. 
1225 

Additionally, in preparation for this future rulemaking, NHTSA will consider 

appropriate metrics for presenting fuel economy-related information on labels. Based on 

the non-linear 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. 

 

K. Record of Decision 

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 GHG emissions. 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. 

In accordance with President Obama’s May 19, 2009 announcement, this final 

rule promulgates the fuel economy standards for MYs 2012-2016. This final rule 

constitutes the Record of Decision (ROD) for NHTSA’s MYs 2012-2016 CAFE 
1226 

standards, pursuant to the National Environmental Policy Act (NEPA) and the Council on 

Environmental Quality’s (CEQ) implementing regulations.772 See 40 CFR 1505.2. 

As required by CEQ regulations, this final rule and ROD sets forth the following: 

(1) the agency’s decision; (2) alternatives considered by NHTSA in reaching its decision, 

including the environmentally preferable alternative; (3) the factors balanced by NHTSA 

in making its decision, including considerations of national policy; (4) how these factors 

and considerations entered into its decision; and (5) the agency’s preferences among 

alternatives based on relevant factors, including economic and technical considerations 

and agency statutory missions. This final rule also briefly addresses mitigation. 

The Agency’s Decision

In the DEIS and the FEIS, the agency identified the approximately 4.3-percent 

average annual increase alternative as NHTSA’s Preferred Alternative. After carefully 

reviewing and analyzing all of the information in the public record including technical 

support documents, the FEIS, and public and agency comments submitted on the DEIS, 

the FEIS, and the NPRM, NHTSA has decided to proceed with the Preferred Alternative. 

The Preferred Alternative requires approximately a 4.3-percent average annual increase 

in mpg for MYs 2012-2016. This decision results in an estimated required MY 2016 

fleetwide 37.8 mpg for passenger cars and 28.7 mpg for light trucks. As stated in the 

 

772 NEPA is codified at 42 U.S.C. 4321-47. CEQ NEPA implementing regulations are codified at 40 Code 

of Federal Regulations (CFR) Parts 1500-08. 
1227 

FEIS, the Preferred Alternative results in a combined estimated required fleetwide 34.1 

mpg in MY 2016. 

Following publication of the FEIS, the federal government Interagency Working 

Group on Social Cost of Carbon made public a revised estimate of the Social Cost of 

Carbon to support federal regulatory activities where reducing CO2 emissions is an 

important potential outcome. NHTSA relied upon the interagency group’s interim 

guidance published in August 2009 for the FEIS analysis. For this final rule NHTSA has 

updated the analysis and now uses the central SCC value of $21 per metric ton (2010 

emissions) identified in the interagency group’s revised guidance.773 See Section 

IV.C.3.l.iii. 

The group’s purpose in developing new estimates of the SCC was to allow federal 

agencies to incorporate the social benefits of reducing carbon dioxide (CO2) emissions 

into cost-benefit analyses of regulatory actions that have small, or “marginal,” impacts on 

cumulative global emissions, as most federal regulatory actions can be expected to have. 

The interagency group convened on a regular basis to consider public comments, explore 

the technical literature in relevant fields, and discuss key inputs and assumptions in order 

to generate SCC estimates. The revised SCC estimates represent the interagency group’s 

 

773 The $21/ton estimate is for 2010 emissions and increases over time because of damages resulting from 

increased GHG concentrations. $21 is the average SCC at the 3 percent discount rate. The other three 

estimates include: Avg SCC at 5% ($5-$16); Avg SCC at 2.5% ($35-$65); and 95th percentile at 3% ($65-

$136). 
1228 

consideration of the literature and judgments about how to monetize some of the benefits 

of GHG mitigation.774 

Incorporating the revised estimate, NHTSA’s analysis indicates that the Agency’s 

Decision will likely result in slightly greater fuel savings and CO2 emissions reductions 

than those noted in the EIS. The revised SCC valuation applied for purposes of the final 

rule resulted in a slightly smaller gap in stringency between the passenger car and light 

truck standards; the ratio of passenger car stringency (i.e., average required fuel 

economy) to light truck stringency in MY 2016 shrank from 1.318 to 1.313, or about 0.4 

percent. Because manufacturers projected to pay civil penalties (rather than fully 

complying with CAFE standards) account for a smaller share of the light truck market 

than of the passenger car market, and because lifetime mileage accumulation is somewhat 

higher for light trucks than for passenger cars, this slight shift in relative stringency 

caused average fuel economy levels achieved under the preferred alternative to increase 

by about 0.02 mpg during MYs 2012-2016, resulted in corresponding lifetime (i.e., over 

the full useful life of MYs 2012-2016 vehicles) fuel savings increases of about 0.9 

percent, and corresponding increases in lifetime CO2 emission reductions of about 1.1 

percent. For environmental impacts associated with NHTSA’s Decision, see Section 

IV.G of this final rule. 

The incorporation of the revised interagency estimate of SCC results in minimal 

changes to the required fleetwide mpg for some model years covered by this final rule. 

 

774 The interagency group intends to update these estimates as the science and economic understanding of 

climate change and its impacts on society improves over time. 
1229 

All changes are less than or equal to .1 mpg (but may reflect an increase when rounding 

up during calculations) and continue to result, on average, in a 4.3 percent annual 

increase in mpg.775 See Section IV.F for discussion of required annual fleetwide mpg. 

For a discussion of the agency’s selection of the Preferred Alternative as 

NHTSA’s Decision, see Section IV.F of this final rule. 

Alternatives Considered by NHTSA in Reaching its Decision, Including the 

Environmentally Preferable Alternative

When preparing an EIS, NEPA requires an agency to compare the potential 

environmental impacts of its proposed action and a reasonable range of alternatives. 

NHTSA identified alternative stringencies that represent the spectrum of potential actions 

the agency could take. The environmental impacts of these alternatives, in turn, represent 

the spectrum of potential environmental impacts that could result from NHTSA’s chosen 

action in setting CAFE standards. Specifically, the DEIS and FEIS analyzed the impacts 

of the following eight “action” alternatives: 3-Percent Alternative (Alternative 2), 4-

Percent Alternative (Alternative 3), Preferred Alternative (Alternative 4), 5-Percent 

Alternative (Alternative 5), an alternative that maximizes net benefits (MNB) 

(Alternative 6), 6-Percent Alternative (Alternative 7), 7-Percent Alternative (Alternative 

8), and an alternative under which total cost equals total benefit (TCTB) (Alternative 9). 

 

775 There are no “substantial changes to the proposed action” and there are no “significant new 

circumstances or information relevant to environmental concerns and bearing on the proposed action or its 

impacts.” Therefore, consistent with 40 CFR 1502.9(c), no supplement to the EIS is required. Moreover, 

the environmental impacts of this decision fall within the spectrum of impacts analyzed in the DEIS and the 

FEIS. 
1230 

The DEIS and FEIS also analyzed the impacts that would be expected if NHTSA 

imposed no new requirements (the No Action Alternative). In accordance with CEQ 

regulations, the agency selected a Preferred Alternative in the DEIS and the FEIS (the 

approximately 4.3-percent average annual increase alternative). 

In response to public comments, the FEIS expanded the analysis to determine 

how the proposed alternatives were affected by variations in the economic assumptions 

input into the computer model NHTSA uses to calculate the costs and benefits of various 

potential CAFE standards (the Volpe model). Variations in economic assumptions can 

be used to examine the sensitivity of costs and benefits of each of the alternatives, 

including future fuel prices, the value of reducing CO2 emissions (referred to as the social 

cost of carbon or SCC), the magnitude of the rebound effect, and the value of oil import 

externalities. Different combinations of economic assumptions can also affect the 

calculation of environmental impacts of the various action alternatives. This occurs 

partly because some economic inputs to the Volpe model—notably fuel prices and the 

size of the rebound effect – influence its estimates of vehicle use and fuel consumption, 

the main factors that determine emissions of GHGs, criteria air pollutants, and airborne 

toxics. See section 2.4 of the FEIS for a discussion of the sensitivity analysis conducted 

for the FEIS. 

The agency considered and analyzed each of the individual economic assumptions 

to determine which assumptions most accurately represent future economic conditions. 
1231 

For a discussion of the analysis supporting the selection of the economic assumptions 

relied on by the agency in this final rule, see Section IV.C.3. 

Also in response to comments, the agency conducted a national-scale 

photochemical air quality modeling and health risk assessment for a subset of the DEIS 

alternatives to support and confirm the health effects and health-related economic 

estimates of the EIS. The photochemical air quality study is included as Appendix F to 

the EIS. The study used air quality modeling and health benefits analysis tools to 

quantify the air quality and health-related benefits associated with the alternative CAFE 

standards. Four alternatives from the DEIS were modeled: the No Action Alternative 

and Alternative 2 (the 3-Percent Alternative) to represent fuel economy requirements at 

the lower end of the range; Alternative 4 (the Preferred Alternative) and Alternative 8 

(the 7-Percent Alternative) to represent fuel economy requirements at the higher end of 

the range. 

The agency compared the potential environmental impacts of alternative mpg 

levels, analyzing direct, indirect, and cumulative impacts. For a discussion of the 

environmental impacts associated with each of the alternatives, see Chapters 3 and 4 of 

the FEIS. 

Alternative 8 (the 7-Percent Alternative) is the overall Environmentally Preferable 

Alternative, because it would result in the largest reductions in fuel use and GHG 

emissions by vehicles produced during MYs 2012-2016 among the alternatives 
1232 

considered. Under each alternative the agency considered, the reduction in fuel 

consumption resulting from higher fuel economy causes emissions that occur during fuel 

refining and distribution to decline. For most pollutants, this decline is more than 

sufficient to offset the increase in tailpipe emissions that results from increased driving 

due to the fuel economy rebound effect, leading to a net reduction in total emissions from 

fuel production, distribution, and use. Because it leads to the largest reductions in fuel 

refining, distribution, and consumption among the alternatives considered, Alternative 8 

would also lead to the largest net reductions in emissions of CO2 and other GHGs, most 

criteria air pollutants,776 as well as the mobile source air toxics (MSATs) benzene and 

diesel particulate matter (diesel PM).

However, NHTSA’s environmental analysis indicates that emissions of the 

MSATs acetaldehyde, acrolein, 1,3-butadiene, and formaldehyde would increase under 

some alternatives, with the largest increases in emissions of these MSATs projected to 

occur under Alternative 8 in most future years. This occurs because the rates at which 

these MSATs are emitted during fuel refining and distribution are very low relative to 

their emission rates during vehicle use. As a consequence, the reductions in their total 

emissions during fuel refining and distribution that result from lower fuel use are 

insufficient to offset the increases in emissions that result from additional vehicle use. 

The amount by which increased tailpipe emissions of these MSATs exceeds the 

 

776 Reductions in emissions of two criteria air pollutants, fine particulate matter (PM2.5) and sulfur oxides 

(SOx), are forecast to be slightly larger for Alternative 9 (TCTB) than for Alternative 8. Because the 

estimates of health benefits depend most critically on changes in particulate matter emissions, this causes 

the health benefits estimates reported in this FEIS to be slightly larger for Alternative 9 than for Alternative 

8. See Section 3.3 of the FEIS. Nonetheless, for the other reasons explained above, NHTSA considers 

Alternative 8 to be the overall Environmentally Preferable Alternative. 
1233 

reductions in their emissions during fuel refining and distribution increases for 

alternatives that require larger improvements in fuel economy, and in most future years is 

smallest under Alternative 2 (which would increase CAFE standards least rapidly among 

the action alternatives) and largest under Alternative 8 (which would require the most 

rapid increase in fuel economy). Thus while Alternative 8 is the environmentally 

preferable alternative on the basis of CO2 and other GHGs, most criteria air pollutants, 

and some MSATs, other alternatives are environmentally preferable from the standpoint 

of the criteria air pollutants fine particulate matter and sulfur oxides, as well as the 

MSATs acetaldehyde, acrolein, 1,3-butadiene, and formaldehyde. Overall, however, 

NHTSA considers Alternative 8 to be the Environmentally Preferable Alternative. 

For additional discussion regarding the alternatives considered by the agency in 

reaching its decision, including the Environmentally Preferable Alternative, see Section 

IV.F of this final rule. For a discussion of the environmental impacts associated with 

each alternative, see Chapters 3 and 4 of the FEIS. 

Factors Balanced By NHTSA In Making Its Decision

For discussion of the factors balanced by NHTSA in making its decision, see 

Sections IV.D. and IV.F of this final rule. 
1234 

How the Factors and Considerations Balanced by NHTSA Entered into its 

Decision

For discussion of how the factors and considerations balanced by the agency 

entered into NHTSA’s Decision, see Section IV.F of this final rule. 

The Agency’s Preferences Among Alternatives Based on Relevant Factors, 

Including Economic and Technical Considerations and Agency Statutory 

Missions

 For discussion of the agency’s preferences among alternatives based on relevant 

factors, including economic and technical considerations, see Section IV.F of this final 

rule. 

Mitigation

The CEQ regulations specify that a ROD must “state whether all practicable 

means to avoid or minimize environmental harm from the alternative selected have been 

adopted, and if not, why they were not.” 49 CFR 1505.2(c). The majority of the 

environmental effects of NHTSA’s action are positive, i.e., beneficial environmental 

impacts, and would not raise issues of mitigation. The only negative environmental 

impacts are the projected increase in emissions of carbon monoxide and certain air toxics, 

as discussed above under the Environmentally Preferable Alternative, and in Section 2.6 
1235 

and Chapter 5 of the FEIS. The agency forecasts these increases because, under all the 

alternatives analyzed in the EIS, increase in vehicle use due to improved fuel economy is 

projected to result in growth in total miles traveled by passenger cars and light trucks. 

This growth is exacerbated by the expected growth in the number of passenger cars and 

light trucks in use in the United States. The growth in travel outpaces emissions 

reductions for some pollutants, resulting in projected increases for these pollutants. 

NHTSA’s authority to promulgate new fuel economy standards is limited and 

does not allow regulation of vehicle emissions or of factors affecting vehicle emissions, 

including driving habits. Consequently, under the CAFE program, NHTSA must set 

standards but is unable to take steps to mitigate the impacts of these standards. However, 

we note that the Department of Transportation is currently implementing initiatives that 

work toward the stated Secretarial policy goal of reducing annual vehicle miles traveled. 

Chapter 5 of the FEIS outlines a number of other initiatives across government that could 

ameliorate the environmental impacts of motor vehicle use. 

L. Regulatory Notices and Analyses 

Following is a discussion of regulatory notices and analyses relevant to this 

rulemaking. 
1236 

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. 
1237 

 The rulemaking proposed in this NPRM is economically significant. 

Accordingly, OMB reviewed it under Executive Order 12866. The rule is also significant 

within the meaning of the Department of Transportation’s Regulatory Policies and 

Procedures. 

 The benefits and costs of this rule are described above. Because the rule is 

economically significant under both the Department of Transportation’s procedures and 

OMB guidelines, the agency has prepared a Final Regulatory Impact Analysis (FRIA) 

and placed it in the docket and on the agency’s website. Further, pursuant to OMB 

Circular A-4, we have prepared a formal probabilistic uncertainty analysis for this rule. 

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 final rule meets these criteria on all 

counts. 

2. National Environmental Policy Act

Under NEPA, a Federal agency must prepare an Environmental Impact Statement 

(EIS) on proposed actions that could significantly impact the quality of the human 

environment. The requirement is designed to serve three major functions: (1) to provide 

the decisionmaker(s) with a detailed description of the potential environmental impacts of 

a proposed action prior to its adoption, (2) to rigorously explore and evaluate all 
1238 

reasonable alternatives, and (3) to inform the public of, and allow comment on, such 

efforts. 

In addition, the CEQ regulations emphasize agency cooperation early in the 

NEPA process, and allow a lead agency (in this case, NHTSA) to request the assistance 

of other agencies that either have jurisdiction by law or have special expertise regarding 

issues considered in an EIS.777 NHTSA invited EPA to be a cooperating agency because 

of its special expertise in the areas of climate change and air quality. On May 12, 2009, 

EPA agreed to become a cooperating agency.778

NHTSA, in cooperation with EPA, prepared a draft EIS (DEIS), solicited public 

comments in writing and in a public hearing, and prepared a final EIS (FEIS) responding 

to those comments. Specifically, in April 2009, NHTSA published an NOI to prepare an 

EIS for proposed MYs 2012-2016 CAFE standards.779 See 40 CFR 1501.7. 

On September 25, 2009, EPA issued its Notice of Availability of the DEIS,780

triggering the 45-day public comment period. See 74 FR 48951. See also 40 CFR 

 

777 40 CFR 1501.6. 778 Consistent with the National Fuel Efficiency Policy that the President announced on May 19, 2009, EPA 

and NHTSA published their Notice of Upcoming Joint Rulemaking to ensure a coordinated National 

Program on GHG emissions and fuel economy for passenger cars, light-duty trucks, and medium-duty 

passenger vehicles. NHTSA takes no position on whether the EPA proposed rule on GHG emissions could 

be considered a “connected action” under the CEQ regulation at 40 CFR Section 1508.25. For purposes of 

the EIS, however, NHTSA decided to treat the EPA proposed rule as if it were a “connected action” under 

that regulation to improve the usefulness of the EIS for NHTSA decisionmakers and the public. NHTSA is 

aware that Section 7(c) of the Energy Supply and Environmental Coordination Act of 1974 expressly 

exempts from NEPA requirements EPA action taken under the CAA. See 15 U.S.C. 793(c)(1). 

779 See Notice of Intent to Prepare an Environmental Impact Statement for New Corporate Average Fuel 

Economy Standards, 74 FR 14857 (Apr. 1, 2009). 

780 Also on September 25, 2009, NHTSA published a Federal Register Notice of Availability of its DEIS. 

See 74 FR 48894. NHTSA’s Notice of Availability also announced the date and location of a public 
1239 

1506.10. In accordance with CEQ regulations, the public was invited to submit written 

comments on the DEIS until November 9, 2009. See 40 CFR 1503, et seq. 

NHTSA mailed (both electronically and through regular U.S. mail) over 500 

copies of the DEIS to interested parties, including federal, state, and local officials and 

agencies; elected officials, environmental and public interest groups; Native American 

tribes; and other interested individuals. NHTSA held a public hearing on the DEIS at the 

National Transportation Safety Board Conference Center in Washington, DC on October 

30, 2009. 

NHTSA received 11 written comments from interested stakeholders, including 

federal agencies, state agencies, environmental advocacy groups, and private citizens. In 

addition, three interested parties spoke at the public hearing. The transcript from the 

public hearing and written comments submitted to NHTSA are part of the administrative 

record, and are available on the Federal Docket, which can be found on the Web at 

http://www.regulations.gov, Reference Docket No. NHTSA-2009-0059. 

NHTSA reviewed and analyzed all comments received during the public 

comment period and revised the FEIS in response to comments on the EIS where 

appropriate.781 For a more detailed discussion of NHTSA’s scoping and comment 

periods, see Section 1.5 and Chapter 10 of the FEIS. 

 hearing, and invited the public to participate at the hearing on October 30, 2009, in Washington, DC. See

id. 781 The agency also changed the FEIS as a result of updated information that became available after 

issuance of the DEIS. 
1240 

On February 22, 2010, NHTSA submitted the FEIS to the EPA. NHTSA also 

mailed (both electronically and through regular U.S. mail) over 500 copies of the FEIS to 

interested parties and posted the FEIS on its website, 

http://www.nhtsa.gov/portal/fueleconomy.jsp. On March 3, 2010, EPA published a 

Notice of Availability of the FEIS in the Federal Register. See 75 FR 9596. 

The FEIS analyzes and discloses the potential environmental impacts of the 

proposed MYs 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 National Environmental Policy Act (NEPA), the Council on Environmental Quality 

(CEQ) regulations implementing NEPA, DOT Order 5610.1C, and NHTSA 

regulations.782 The FEIS compared the potential environmental impacts of alternative 

mile per gallon (mpg) levels considered by NHTSA for the final rule. It also analyzed 

direct, indirect, and cumulative impacts and analyzes impacts in proportion to their 

significance. See the FEIS and the FEIS Summary for a discussion of the environmental 

impacts analyzed. Docket Nos. NHTSA-2009-0059-0140, NHTSA-2009-0059-0141. 

The MYs 2012-2016 CAFE standards adopted in this final rule have been 

informed by analyses contained in the Final Environmental Impact Statement, Corporate 

Average Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 2012-

2016, Docket No. NHTSA-2009-0059 (FEIS). For purposes of this rulemaking, the 

 

782 NEPA 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. 
1241 

agency referred to an extensive compilation of technical and policy documents available 

in NHTSA’s EIS/Rulemaking docket and EPA’s docket. NHTSA’s EIS and rulemaking 

docket and EPA’s rulemaking docket can be found on the Web at 

http://www.regulations.gov, Reference Docket Nos.: NHTSA-2009-0059 (EIS and 

Rulemaking) and EPA-HQ-OAR-2009-0472 (EPA Rulemaking). 

Based on the foregoing, the agency concludes that the environmental analysis and 

public involvement process complies with NEPA implementing regulations issued by 

CEQ, DOT Order 5610.1C, and NHTSA regulations.783 

3. Clean Air Act (CAA)

The CAA (42 U.S.C. 7401) is the primary Federal legislation that addresses air 

quality. Under the authority of the CAA and subsequent amendments, the EPA has 

established National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, 

which are relatively commonplace pollutants that can accumulate in the atmosphere as a 

result of normal levels of human activity. The EPA is required to review the NAAQS 

every five years and to change the levels of the standards if warranted by new scientific 

information. 

The air quality of a geographic region is usually assessed by comparing the levels 

of criteria air pollutants found in the atmosphere to the levels established by the NAAQS. 

 

783 NEPA is codified at 42 U.S.C. 4321-4347. CEQ’s NEPA implementing regulations are codified at 40 

CFR Pts. 1500-1508, and NHTSA’s NEPA implementing regulations are codified at 49 CFR Part 520. 
1242 

Concentrations of criteria pollutants within the air mass of a region are measured in parts 

of a pollutant per million parts of air (ppm) or in micrograms of a pollutant per cubic 

meter (μg/m3) of air present in repeated air samples taken at designated monitoring 

locations. These ambient concentrations of each criteria pollutant are compared to the 

permissible levels specified by the NAAQS in order to assess whether the region’s air 

quality is potentially unhealthful. 

When the measured concentrations of a criteria pollutant within a geographic 

region are below those permitted by the NAAQS, the region is designated by the EPA as 

an attainment area for that pollutant, while regions where concentrations of criteria 

pollutants exceed Federal standards are called nonattainment areas (NAAs). Former 

NAAs that have attained the NAAQS are designated as maintenance areas. Each NAA is 

required to develop and implement a State Implementation Plan (SIP), which documents 

how the region will reach attainment levels within time periods specified in the CAA. In 

maintenance areas, the SIP documents how the State intends to maintain compliance with 

the NAAQS. When EPA changes a NAAQS, States must revise their SIPs to address 

how they will attain the new standard. 

Section 176(c) of the CAA prohibits Federal agencies from taking actions in 

nonattainment or maintenance areas that do not “conform” to the State Implementation 

Plan (SIP). The purpose of this conformity requirement is to ensure that Federal activities 

do not interfere with meeting the emissions targets in the SIPs, do not cause or contribute 
1243 

to new violations of the NAAQS, and do not impede the ability to attain or maintain the 

NAAQS. The EPA has issued two sets of regulations to implement CAA Section 176(c): 

 The Transportation Conformity Rules (40 CFR 51 Subpart T), which apply 

to transportation plans, programs, and projects funded under title 23 United 

States Code (U.S.C.) or the Federal Transit Act. Highway and transit 

infrastructure projects funded by FHWA or the Federal Transit 

Administration (FTA) usually are subject to transportation conformity. 

 The General Conformity Rules (40 CFR 51 Subpart W) apply to all other 

Federal actions not covered under transportation conformity. The General 

Conformity Rules established emissions thresholds, or de minimis levels, for 

use in evaluating the conformity of a project. If the net emission increases 

due to the project are less than these thresholds, then the project is presumed 

to conform and no further conformity evaluation is required. If the emission 

increases exceed any of these thresholds, then a conformity determination is 

required. The conformity determination may entail air quality modeling 

studies, consultation with EPA and State air quality agencies, and 

commitments to revise the SIP or to implement measures to mitigate air 

quality impacts. 

The CAFE standards and associated program activities are not funded under title 

23 U.S.C. or the Federal Transit Act. Further, CAFE standards are established by 
1244 

NHTSA and are not an action undertaken by FHWA or FTA. Accordingly, the CAFE 

standards are not subject to transportation conformity. 

The General Conformity Rules contain several exemptions applicable to “Federal 

actions,” which the conformity regulations define as: “any activity engaged in by a 

department, agency, or instrumentality of the Federal Government, or any activity that a 

department, agency or instrumentality of the Federal Government supports in any way, 

provides financial assistance for, licenses, permits, or approves, other than activities 

[subject to transportation conformity].” 40 CFR 51.852. “Rulemaking and policy 

development and issuance” are exempted at 40 CFR 51.853(c)(2)(iii). Since NHTSA’s 

CAFE standards involve a rulemaking process, its action is exempt from general 

conformity. Also, emissions for which a Federal agency does not have a “continuing 

program responsibility” are not considered “indirect emissions” subject to general 

conformity under 40 CFR 51.852. “Emissions that a Federal agency has a continuing 

program responsibility for means emissions that are specifically caused by an agency 

carrying out its authorities, and does not include emissions that occur due to subsequent 

activities, unless such activities are required by the Federal agency.” 40 CFR 51.852. 

Emissions that occur as a result of the final CAFE standards are not caused by NHTSA 

carrying out its statutory authorities and clearly occur due to subsequent activities, 

including vehicle manufacturers’ production of passenger car and light truck fleets and 

consumer purchases and driving behavior. Thus, changes in any emissions that result 

from NHTSA’s final CAFE standards are not those for which the agency has a 

“continuing program responsibility” and NHTSA is confident that a general conformity 
1245 

determination is not required. NHTSA has evaluated the potential impacts of air 

emissions under NEPA. 

 4. National Historic Preservation Act (NHPA)

The NHPA (16 U.S.C. 470) sets forth government policy and procedures 

regarding “historic properties”—that is, districts, sites, buildings, structures, and objects 

included in or eligible for the National Register of Historic Places (NRHP). See also 36 

CFR 800. Section 106 of the NHPA requires federal agencies to “take into account” the 

effects of their actions on historic properties. The agency concludes that the NHPA is not 

applicable to NHTSA’s Decision, because it does not directly involve historic properties. 

The agency has, however, conducted a qualitative review of the related direct, indirect, 

and cumulative impacts, positive or negative, of the alternatives on potentially affected 

resources, including historic and cultural resources. See Sections 3.5 and 4.5 of the FEIS. 

5. Executive Order 12898 (Environmental Justice)

 

Under Executive Order 12898, Federal agencies are required to identify and 

address any disproportionately high and adverse human health or environmental effects 

of its programs, policies, and activities on minority populations and low-income 

populations. NHTSA complied with this order by identifying and addressing the 

potential effects of the alternatives on minority and low-income populations in Sections 
1246 

3.5 and 4.5 of the FEIS, where the agency set forth a qualitative analysis of the 

cumulative effects of the alternatives on these populations. 

 

6. Fish and Wildlife Conservation Act (FWCA)

 

The FWCA (16 U.S.C. 2900) provides financial and technical assistance to States 

for the development, revision, and implementation of conservation plans and programs 

for nongame fish and wildlife. In addition, the Act encourages all Federal agencies and 

departments to utilize their authority to conserve and to promote conservation of 

nongame fish and wildlife and their habitats. The agency concludes that the FWCA is 

not applicable to NHTSA’s Decision, because e it does not directly involve fish and 

wildlife. 

7. Coastal Zone Management Act (CZMA)

The Coastal Zone Management Act (16 U.S.C. 1450) provides for the 

preservation, protection, development, and (where possible) restoration and enhancement 

of the nation’s coastal zone resources. Under the statute, States are provided with funds 

and technical assistance in developing coastal zone management programs. Each 

participating State must submit its program to the Secretary of Commerce for approval. 

Once the program has been approved, any activity of a Federal agency, either within or 

outside of the coastal zone, that affects any land or water use or natural resource of the 
1247 

coastal zone must be carried out in a manner that is consistent, to the maximum extent 

practicable, with the enforceable policies of the State’s program. 

The agency concludes that the CZMA is not applicable to NHTSA’s Decision, 

because it does not involve an activity within, or outside of, the nation’s coastal zones. 

The agency has, however, conducted a qualitative review of the related direct, indirect, 

and cumulative impacts, positive or negative, of the alternatives on potentially affected 

resources, including coastal zones. See Sections 3.5 and 4.5 of the FEIS. 

8. Endangered Species Act (ESA)

Under Section 7(a)(2) of the Endangered Species Act (ESA) federal agencies 

must ensure that actions they authorize, fund, or carry out are “not likely to jeopardize” 

federally listed threatened or endangered species or result in the destruction or adverse 

modification of the designated critical habitat of these species. 16 U.S.C. 1536(a)(2). If 

a federal agency determines that an agency action may affect a listed species or 

designated critical habitat, it must initiate consultation with the appropriate Service – the 

U.S. Fish and Wildlife Service (FWS) of the Department of the Interior and/ or National 

Oceanic and Atmospheric Administration’s National Marine Fisheries Service (NOAA 

Fisheries Service) of the Department of Commerce, depending on the species involved—

in order to ensure that the action is not likely to jeopardize the species or destroy or 

adversely modify designated critical habitat. See 50 CFR 402.14. Under this standard, 
1248 

the federal agency taking action evaluates the possible effects of its action and determines 

whether to initiate consultation. See 51 FR 19926, 19949 (Jun. 3, 1986). 

NHTSA has reviewed applicable ESA regulations, case law, guidance, and 

rulings in assessing the potential for impacts to threatened and endangered species from 

the proposed CAFE standards. NHTSA believes that the agency’s action of setting 

CAFE standards, which will result in nationwide fuel savings and, consequently, 

emissions reductions from what would otherwise occur in the absence of the agency’s 

CAFE standards, does not require consultation with NOAA Fisheries Service or the FWS 

under section 7(a)(2) of the ESA. For additional discussion of the agency’s rationale, see 

Appendix G of the FEIS. Accordingly, NHTSA has concluded its review of this action 

under Section 7 of the ESA. 

NHTSA has worked with EPA to assess ESA requirements and develop the 

agencies’ responses to comments addressing this issue. NHTSA notes that EPA has 

reached the same conclusion as NHTSA, and has determined that ESA consultation is not 

required for its action taken today pursuant to the Clean Air Act. EPA’s determination 

with regard to ESA is set forth in its response to comments regarding ESA requirements, 

and can be found in EPA’s Response to Comments document, which EPA will place in 

the EPA docket for this rulemaking (OAR-2009-0472), and on the EPA website. As set 

forth therein, EPA adopts the reasoning of NHTSA’s response in Appendix G of the 

FEIS as applied to EPA’s rulemaking action. 
1249 

9. Floodplain Management (Executive Order 11988 & DOT Order 5650.2)

These Orders require Federal agencies to avoid the long- and short-term adverse 

impacts associated with the occupancy and modification of floodplains, and to restore 

and preserve the natural and beneficial values served by floodplains. Executive Order 

11988 also directs agencies to minimize the impact of floods on human safety, health and 

welfare, and to restore and preserve the natural and beneficial values served by 

floodplains through evaluating the potential effects of any actions the agency may take in 

a floodplain and ensuring that its program planning and budget requests reflect 

consideration of flood hazards and floodplain management. DOT Order 5650.2 sets forth 

DOT policies and procedures for implementing Executive Order 11988. The DOT Order 

requires that the agency determine if a proposed action is within the limits of a base 

floodplain, meaning it is encroaching on the floodplain, and whether this encroachment is 

significant. If significant, the agency is required to conduct further analysis of the 

proposed action and any practicable alternatives. If a practicable alternative avoids 

floodplain encroachment, then the agency is required to implement it. 

In this rulemaking, the agency is not occupying, modifying and/or encroaching on 

floodplains. The agency, therefore, concludes that the Orders are not applicable to 

NHTSA’s Decision. The agency has, however, conducted a review of the alternatives on 

potentially affected resources, including floodplains. See Section 4.5 of the FEIS. 
1250 

10. Preservation of the Nation’s Wetlands (Executive Order 11990 & DOT 

Order 5660.1a)

These Orders require Federal agencies to avoid, to the extent possible, 

undertaking or providing assistance for new construction located in wetlands unless the 

agency head finds that there is no practicable alternative to such construction and that the 

proposed action includes all practicable measures to minimize harms to wetlands that 

may result from such use. Executive Order 11990 also directs agencies to take action to 

minimize the destruction, loss or degradation of wetlands in “conducting Federal 

activities and programs affecting land use, including but not limited to water and related 

land resources planning, regulating, and licensing activities.” DOT Order 5660.1a sets 

forth DOT policy for interpreting Executive Order 11990 and requires that transportation 

projects “located in or having an impact on wetlands” should be conducted to assure 

protection of the Nation’s wetlands. If a project does have a significant impact on 

wetlands, an EIS must be prepared. 

The agency is not undertaking or providing assistance for new construction 

located in wetlands. The agency, therefore, concludes that these Orders do not apply to 

NHTSA’s Decision. The agency has, however, conducted a review of the alternatives on 

potentially affected resources, including wetlands. See Section 4.5 of the FEIS. 
1251 

11. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection 

Act (BGEPA), Executive Order 13186.

 

The MBTA provides for the protection of migratory birds that are native to the 

United States by making it illegal for anyone to pursue, hunt, take, attempt to take, kill, 

capture, collect, possess, buy, sell, trade, ship, import, or export any migratory bird 

covered under the statute. The statute prohibits both intentional and unintentional acts. 

Therefore, the statute is violated if an agency acts in a manner that harms a migratory 

bird, whether it was intended or not. See, e.g., United States v. FMC Corp., 572 F.2d 902 

(2nd Cir. 1978). 

 

The BGEPA (16 U.S.C. 668) prohibits any form of possession or taking of both 

bald and golden eagles. Under the BGEPA, violators are subject to criminal and civil 

sanctions as well as an enhanced penalty provision for subsequent offenses. 

 

Executive Order 13186, “Responsibilities of Federal Agencies to Protect 

Migratory Birds,” helps to further the purposes of the MBTA by requiring a Federal 

agency to develop a Memorandum of Understanding (MOU) with the Fish and Wildlife 

Service when it is taking an action that has (or is likely to have) a measurable negative 

impact on migratory bird populations. 
1252 

 The agency concludes that the MBTA, BGEPA, and Executive Order 13186 do 

not apply to NHTSA’s Decision, because there is no disturbance and/or take involved in 

NHTSA’s Decision. 

12. Department of Transportation Act (Section 4(f))

Section 4(f) of the Department of Transportation Act of 1966 (49 U.S.C. 303), as 

amended by Pub. Law §109-59, is designed to preserve publicly owned parklands, 

waterfowl and wildlife refuges, and significant historic sites. Specifically, Section 4(f) of 

the Department of Transportation Act provides that DOT agencies cannot approve a 

transportation program or project that requires the use of any publicly owned land from a 

significant public park, recreation area, or wildlife and waterfowl refuge, or any land 

from a significant historic site, unless a determination is made that: 

 There is no feasible and prudent alternative to the use of land, and 

 The program or project includes all possible planning to minimize harm to the 

property resulting from use, or 

 A transportation use of Section 4(f) property results in a de minimis impact. 

The agency concludes that the Section 4(f) is not applicable to NHTSA’s 

Decision because this rulemaking does not require the use of any publicly owned land. 

For a more detailed discussion, please see Section 3.5 of the FEIS. 
1253 

 13. 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 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 this final rule will 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)). 

The final rule directly affects twenty-one large single stage motor vehicle 

manufacturers.784 According to current information, the final rule would also affect two 

small domestic single stage motor vehicle manufacturers, Saleen and Tesla.785 

According to the Small Business Administration’s small business size standards (see 13 

 

784 BMW, Daimler (Mercedes), Chrysler, Ferrari, Ford, Subaru, General Motors, Honda, Hyundai, Kia, 

Lotus, Maserati, Mazda, Mitsubishi, Nissan, Porsche, Subaru, Suzuki, Tata, Toyota, and Volkswagen. 785 The 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. 
1254 

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 above those finalized 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. Ferrari commented that NHTSA will not necessarily always grant 

the petitions of small vehicle manufacturers for alternative standards, and that therefore 

the relief is not guaranteed.786 In response, NHTSA notes that the fact that the agency 

may not grant a petition for an alternative standard for one manufacturer at one time does 

not mean that the mechanism for handling small businesses is unavailable for all. Thus, 

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. 

 

786 We note that Ferrari would not currently qualify for such an alternative standard, because it does not 

manufacture fewer than 10,000 passenger automobiles per year, as required by 49 U.S.C. 32902(d) for 

exemption from the main passenger car CAFE standard. 
1255 

 

 14. 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. Several 

state agencies provided comments to the proposed standards. 

Additionally, 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 will apply nationally 

under the National Program. 
1256 

 15. Executive Order 12988 (Civil Justice Reform)

 Pursuant to Executive Order 12988, “Civil Justice Reform,”787 NHTSA has 

considered whether this rulemaking would have any retroactive effect. This final rule 

does not have any retroactive effect. 

 16. 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 UMRA generally requires NHTSA to 

identify and consider a reasonable number of regulatory alternatives and adopt the least 

costly, most cost-effective, 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. 

 

787 61 FR 4729 (Feb. 7, 1996). 
1257 

 This final 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 final rule, 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 concluded that the final 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. 

 17. 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. 

 18. Executive Order 13045

 Executive Order 13045788 applies to any rule that: (1) Is determined to be 

economically significant as defined under E.O. 12866, and (2) concerns an 

 

788 62 FR 19885 (Apr. 23, 1997). 
1258 

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 FEIS 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).789 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 

(Künzli 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 FEIS 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. Increased temperatures, greater evaporation, and heavy rain events 

 

789 The references referred to in the remainder of this section are detailed in Section 7.4.5 of the FEIS. 
1259 

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. 2005). 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. 2005). 

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. 2005); toxins associated with red tide directly affect the nervous 

system (Epstein et al. 2005). 

Many people do not report or seek medical attention for their ailments of waterborne 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 FEIS, NHTSA has evaluated the environmental health and 

safety effects of agency’s action on children. 
1260 

 19. 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. 
1261 

 There are currently no voluntary consensus standards relevant to today’s final 

CAFE standards. 

 20. Executive Order 13211

 Executive Order 13211790 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 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 final rule and explain why the final regulation is preferable to other 

potentially effective and reasonably feasible alternatives considered by us. 

 The final 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 final rulemaking action is not designated as a 

significant energy action. 

 21. Department of Energy Review

 In accordance with 49 U.S.C. 32902(j)(1), we submitted this final rule to the 

Department of Energy for review. That Department did not make any comments that we 

have not addressed. 

 

790 66 FR 28355 (May 18, 2001). 
1262 

 
1263 

 22. 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 85 

Confidential business information, Imports, Labeling, Motor vehicle pollution, Reporting 

and recordkeeping requirements, Research, Warranties. 

40 CFR Part 86 

Administrative practice and procedure, Confidential business information, Incorporation 

by reference, 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. 
1264 

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 

PART 85—CONTROL OF AIR POLLUTION FROM MOBILE SOURCES 

1. The authority citation for part 85 continues to read as follows: 

Authority: 42 U.S.C. 7401–7671q. 

Subpart T -- [Amended] 

2. Section 85.1902 is amended by revising paragraphs (b) and (d) to read as follows: 
1265 

§85.1902 Definitions. 

* * * * * 

(b) The phrase emission-related defect shall mean: 

(1) A defect in design, materials, or workmanship in a device, system, or 

assembly described in the approved Application for Certification (required by 40 CFR 

86.1843-01 and 86.1844-01, and by 40 CFR 86.001-22 and similar provisions of 40 CFR 

part 86) which affects any parameter or specification enumerated in appendix VIII of this 

part; or 

(2) A defect in the design, materials, or workmanship in one or more emissions 

control or emission-related parts, components, systems, software or elements of design 

which must function properly to assure continued compliance with vehicle emission 

requirements, including compliance with CO2, CH4, N2O, and carbon-related exhaust 

emission standards; 

* * * * * 

(d) The phrase Voluntary Emissions Recall shall mean a repair, adjustment, or 

modification program voluntarily initiated and conducted by a manufacturer to remedy 

any emission-related defect for which direct notification of vehicle or engine owners has 

been provided, including programs to remedy defects related to emissions standards for 

CO2, CH4, N2O, and/or carbon-related exhaust emissions. 

* * * * * 
1266 

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY 

VEHICLES AND ENGINES 

3. The authority citation for part 86 continues to read as follows: 

Authority: 42 U.S.C. 7401-7671q. 

4. Section 86.1 is amended by adding paragraphs (b)(2)(xxxix) through (xxxx) to read as 

follows: 

§86.1 Reference materials.

* * * * * 

 (b) * * * 

 (2) * * * 

 (xxxix) SAE J2064, Revised December 2005, R134a Refrigerant Automotive AirConditioned Hose, IBR approved for §86.166-12. 

 (xxxx) 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. 

* * * * * 
1267 

Subpart B--[Amended]

5. 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 40 CFR 1065.275 for the determination of N2O (required 

for 2015 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: 
1268 

* * * * * 

6. Section 86.113-04 is amended by revising the entry for RVP in the table in paragraph 

(a)(1) to read as follows: 

§86.113-04 Fuel specifications. 

* * * * * 

 (a) * * * 

 (1) * * * 

Item ASTM test method No. Value 

* * * * * * * 

RVP2,3 D 323 8.7-9.2 (60.0-63.4) 

* * * * * * * 

* * * * * 

7. A new §86.127-12 is added to read as follows: 

§86.127-12 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 (d) of this 

section, and the contents of §§86.135–00, 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 
1269 

emission element required for determining compliance with composite SFTP standards. 

Paragraph (e) of this section discusses fuel spitback emissions. Paragraphs (f) and (g) of 

this section discuss the additional test elements of aggressive driving (US06) and air 

conditioning (SC03) that comprise the exhaust emission components of the SFTP. 

Paragraphs (h) and (i) of this section are applicable to all vehicle emission test 

procedures. 

(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, NMOG, CO, NOX, CO2, N2O, CH4, CH3OH, 

C2H5OH, C2H4O, and HCHO. 

(2) Particulates. 

(3) Evaporative HC (for gasoline-fueled, methanol-fueled and gaseous-fueled 

vehicles) and CH3OH (for methanol-fueled vehicles). The evaporative testing portion of 

the procedure occurs after the exhaust emission test; however, exhaust emissions need 

not be sampled to complete a test for evaporative emissions. 

(4) Fuel spitback (this test is not required for gaseous-fueled vehicles). 

(b) The FTP Otto-cycle exhaust emission test is designed to determine gaseous 

THC, NMHC, NMOG, 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 approximately 11 miles (approximately 18 
1270 

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 the test described in paragraph (b) of this section. 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 paragraph (b) of this section. 

For methanol- and ethanol-fueled vehicles, THC, methanol, formaldehyde, CO, CO2, 

CH4, N2O, and NOX are collected continuously for analysis as in paragraph (b) of this 

section. Additionally, for ethanol-fueled vehicles, ethanol and acetaldehyde are collected 

continuously for analysis as in paragraph (b) of this section. 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) The evaporative emission test (gasoline-fueled vehicles, methanol-fueled and 

gaseous-fueled vehicles) is designed to determine hydrocarbon and methanol evaporative 

emissions as a consequence of diurnal temperature fluctuation, urban driving and hot 

soaks following drives. It is associated with a series of events that a vehicle may 
1271 

experience and that may result in hydrocarbon and/or methanol vapor losses. The test 

procedure is designed to measure: 

(1) Diurnal emissions resulting from daily temperature changes (as well as 

relatively constant resting losses), measured by the enclosure technique (see §86.133-96); 

(2) Running losses resulting from a simulated trip performed on a chassis 

dynamometer, measured by the enclosure or point-source technique (see §86.134-96; this 

test is not required for gaseous-fueled vehicles); and 

(3) Hot soak emissions, which result when the vehicle is parked and the hot 

engine is turned off, measured by the enclosure technique (see §86.138-96). 

(e) Fuel spitback emissions occur when a vehicle's fuel fill neck cannot 

accommodate dispensing rates. The vehicle test for spitback consists of a short drive 

followed immediately by a complete refueling event. This test is not required for 

gaseous-fueled vehicles. 

(f) The element of the SFTP for exhaust emissions related to aggressive driving 

(US06) is designed to determine gaseous THC, NMHC, CO, CO2, CH4, and NOX

emissions from gasoline-fueled or diesel-fueled vehicles (see §86.158–08 Supplemental 

test procedures; overview, and §86.159–08 Exhaust emission test procedures for US06 

emissions). The test cycle simulates urban driving speeds and accelerations that are not 

represented by the FTP Urban Dynamometer Driving Schedule simulated trips discussed 

in paragraph (b) of this section. The test consists of vehicle operation on a chassis 

dynamometer through a specified driving cycle (see paragraph (g), US06 Dynamometer 

Driving Schedule, of appendix I to this part). A proportional part of the diluted exhaust is 
1272 

collected continuously for subsequent analysis, using a constant volume (variable 

dilution) sampler or critical flow venturi sampler. 

(g)(1) The element of the SFTP related to the increased exhaust emissions caused 

by air conditioning operation (SC03) is designed to determine gaseous THC, NMHC, 

CO, CO2, CH4, and NOX emissions from gasoline-fueled or diesel fueled vehicles related 

to air conditioning use (see §86.158–08 Supplemental federal test procedures; overview 

and §86.160–00 Exhaust emission test procedure for SC03 emissions). The test cycle 

simulates urban driving behavior with the air conditioner operating. The test consists of 

engine startups and vehicle operation on a chassis dynamometer through specified 

driving cycles (see paragraph (h), SC03 Dynamometer Driving Schedule, of appendix I to 

this part). 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. The testing sequence includes an approved preconditioning cycle, a 10 

minute soak with the engine turned off, and the SC03 cycle with measured exhaust 

emissions. 

(2) The SC03 air conditioning test is conducted with the air conditioner operating 

at specified settings and the ambient test conditions of: 

(i) Air temperature of 95 °F; 

(ii) 100 grains of water/pound of dry air (approximately 40 percent relative 

humidity); 

(iii) Simulated solar heat intensity of 850 W/m2

 (see §86.161–00(d)); and 

(iv) Air flow directed at the vehicle that will provide representative air conditioner 

system condenser cooling at all vehicle speeds (see §86.161–00(e)). 
1273 

(3) Manufacturers have the option of simulating air conditioning operation during 

testing at other ambient test conditions provided they can demonstrate that the vehicle tail 

pipe exhaust emissions are representative of the emissions that would result from the 

SC03 cycle test procedure and the ambient conditions of paragraph (g)(2) of this section. 

The simulation test procedure must be approved in advance by the Administrator (see 

§§86.162–03 and 86.163–00). 

(h) Except in cases of component malfunction or failure, all emission control 

systems installed on or incorporated in a new motor vehicle shall be functioning during 

all procedures in this subpart. Maintenance to correct component malfunction or failure 

shall be authorized in accordance with §86.007–25 or §86.1834–01 as applicable. 

(i) Background concentrations are measured for all species for which emissions 

measurements are made. For exhaust testing, this requires sampling and analysis of the 

dilution air. For evaporative testing, this requires measuring initial concentrations. (When 

testing methanol-fueled vehicles, manufacturers may choose not to measure background 

concentrations of methanol and/or formaldehyde, and then assume that the concentrations 

are zero during calculations.) 

8. A new §86.135-12 is added 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. 
1274 

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 gas-fueled and liquefied petroleum gasfueled Otto-cycle vehicles, the composite samples collected in bags are analyzed for 

THC, CO, CO2, CH4, NOX, and, for 2015 and later model year vehicles, N2O. For 

petroleum-fueled diesel-cycle vehicles (optional for natural gas-fueled, liquefied 

petroleum gas-fueled and methanol-fueled diesel-cycle vehicles), THC is sampled and 

analyzed continuously according to the provisions of §86.110-94. Parallel samples of the 

dilution air are similarly analyzed for THC, CO, CO2, CH4, NOX, and, for 2015 and later 

model year vehicles, N2O. For natural gas-fueled, liquefied petroleum gas-fueled and 

methanol-fueled vehicles, bag samples are collected and analyzed for THC (if not 

sampled continuously), CO, CO2, CH4, NOX, and, for 2015 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, 
1275 

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 2015 and later model year vehicles, N2O. 

(b) During dynamometer operation, a fixed speed cooling fan shall be positioned 

so as to direct cooling air to the vehicle in an appropriate manner with the engine 

compartment cover open. In the case of vehicles with front engine compartments, the fan 

shall be squarely positioned within 12 inches (30.5 centimeters) of the vehicle. In the case 

of vehicles with rear engine compartments (or if special designs make the above 

impractical), the cooling fan shall be placed in a position to provide sufficient air to 

maintain vehicle cooling. The fan capacity shall normally not exceed 5300 cfm (2.50 

m3

/sec). However, if the manufacturer can show that during field operation the vehicle 

receives additional cooling, and that such additional cooling is needed to provide a 

representative test, the fan capacity may be increased, additional fans used, variable 

speed fan(s) may be used, and/or the engine compartment cover may be closed, if 

approved in advance by the Administrator. For example, the hood may be closed to 

provide adequate air flow to an intercooler through a factory installed hood scoop. 

Additionally, the Administrator may conduct certification, fuel economy and in-use 

testing using the additional cooling set-up approved for a specific vehicle. 

(c) The vehicle speed as measured from the dynamometer rolls shall be used. A 

speed vs. time recording, as evidence of dynamometer test validity, shall be supplied on 

request of the Administrator. 
1276 

(d) Practice runs over the prescribed driving schedule may be performed at test 

point, provided an emission sample is not taken, for the purpose of finding the minimum 

throttle action to maintain the proper speed-time relationship, or to permit sampling 

system adjustment. Note: When using two-roll dynamometers a truer speed-time trace 

may be obtained by minimizing the rocking of the vehicle in the rolls; the rocking of the 

vehicle changes the tire rolling radius on each roll. This rocking may be minimized by 

restraining the vehicle horizontally (or nearly so) by using a cable and winch. 

(e) The drive wheel tires may be inflated up to a gauge pressure of 45 psi (310 

kPa) in order to prevent tire damage. The drive wheel tire pressure shall be reported with 

the test results. 

(f) lf the dynamometer has not been operated during the 2-hour period 

immediately preceding the test, it shall be warmed up for 15 minutes by operating at 30 

mph (48 kph) using a non-test vehicle or as recommended by the dynamometer 

manufacturer. 

(g) If the dynamometer horsepower must be adjusted manually, it shall be set 

within 1 hour prior to the exhaust emissions test phase. The test vehicle shall not be used 

to make this adjustment. Dynamometers using automatic control of pre-selectable power 

settings may be set anytime prior to the beginning of the emissions test. 

(h) The driving distance, as measured by counting the number of dynamometer 

roll or shaft revolutions, shall be determined for the transient cold start, stabilized cold 

start, and transient hot start phases of the test. The revolutions shall be measured on the 

same roll or shaft used for measuring the vehicle's speed. 
1277 

(i) Four-wheel drive and all-wheel drive vehicles may be tested either in a fourwheel drive or a two-wheel drive mode of operation. In order to test in the two-wheel 

drive mode, four-wheel drive and all-wheel drive vehicles may have one set of drive 

wheels disengaged; four-wheel and all-wheel drive vehicles which can be shifted to a 

two-wheel mode by the driver may be tested in a two-wheel drive mode of operation. 

9. 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 light-duty 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 conditioning-related 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. 
1278 

(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 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 warmed-up 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 soak 

periods longer than two hours, 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. 
1279 

(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 after this 600 second idle 

period. Manually controlled air conditioning systems must complete one additional idle 

period as described in paragraph (d)(6) of this section. 
1280 

(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 operation, 

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 tenth of a 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 tenth of a 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 tenth of a gram per minute. 
1281 

(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. 

(f) The Administrator may prescribe procedures other than those in this section 

for air conditioning systems and/or vehicles that may not be susceptible to satisfactory 

testing by the procedures and methods in this section. For example, the Administrator 

may prescribe alternative air conditioning system settings for systems with controls that 

are not able to meet the requirements in this section. 

10. 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 in 

grams per year 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

Where: 

Grams/YRTOT = Total air conditioning system emission rate in grams per year and 

rounded to the nearest tenth of a gram per year. 
1282 

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. 

(b) Rigid pipe connections. 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 O-ring connections. 

MG = The number of metal gasket connections. 
1283 

(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 = 0.522 × [(0.3 × HSSP) + (0.2 × LSSP) + (0.2 × STV) + (0.2 × 

TXV)] 

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. 

LSSP = The number of low side service ports. 

STV = The total number of switches, transducers, and pressure relief valves. 

TXV = The number of 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 

all hoses in the system to calculate a total flexible hose emission rate for the system. Hose 

end connections shall be included in the calculations in paragraph (b) of this section. 

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 for ER from the following table: 
1284 

ER 

Material/configuration 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) Definitions. The following definitions apply to this section: 
1285 

(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. 

Subpart S--[Amended] 

11. 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, light-duty trucks, medium-duty passenger vehicles, and 

Otto-cycle complete heavy-duty vehicles, including multi-fueled, 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. 
1286 

(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, medium-duty 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 heavy-duty 

vehicle of 14,000 pounds Gross Vehicle Weight Rating or less in accordance with the 

provisions for complete heavy-duty vehicles. Heavy-duty 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 Gross Vehicle Weight Rating or less under the heavy-duty engine 

or heavy-duty vehicle provisions of subpart A of this part without advance approval from 
1287 

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 

heavy-duty 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 are 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 greenhouse gas 

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 
1288 

emission standards in this subpart, including carbon dioxide (CO2), nitrous oxide (N2O), 

and methane (CH4). 

(j) Exemption from greenhouse gas emission standards for small businesses. 

Manufacturers that qualify as a small business under the Small Business Administration 

regulations in 13 CFR part 121 are exempt from the greenhouse gas emission standards 

specified in §86.1818-12 and in associated provisions in this part and in part 600 of this 

chapter. Both U.S.-based and non-U.S.-based businesses are eligible for this exemption. 

The following categories of businesses (with their associated NAICS codes) may be 

eligible for exemption based on the Small Business Administration size standards in 13 

CFR 121.201. 

(1) Vehicle manufacturers (NAICS code 336111). 

(2) Independent commercial importers (NAICS codes 811111, 811112, 811198, 

423110, 424990, and 441120). 

(3) Alternate fuel vehicle converters (NAICS codes 335312, 336312, 336322, 

336399, 454312, 485310, and 811198). 

(k) Conditional exemption from greenhouse gas emission standards. 

Manufacturers meeting the eligibility requirements described in paragraph (k)(1) and (2) 

of this section may request a conditional exemption from compliance with the emission 

standards described in §86.1818-12 paragraphs (c) through (e) and associated provisions 

in this part and in part 600 of this chapter. The terms “sales” and “sold” as used in this 

paragraph (k) shall mean vehicles produced and delivered for sale (or sold) in the states 

and territories of the United States. For the purpose of determining eligibility the sales of 

related companies shall be aggregated according to the provisions of §86.1838-01(b)(3). 
1289 

(1) Eligibility requirements. Eligibility as determined in this paragraph (k) shall 

be based on the total sales of combined passenger automobiles and light trucks. 

Manufacturers must meet one of the requirements in paragraph (k)(1)(i) or (ii) of this 

section to initially qualify for this exemption. 

(i) A manufacturer with 2008 or 2009 model year sales of more than zero and 

fewer than 5,000 is eligible for a conditional exemption from the greenhouse gas 

emission standards described in §86.1818-12 paragraphs (c) through (e). 

(ii) A manufacturer with 2008 or 2009 model year sales of more than zero and 

fewer than 5,000 while under the control of another manufacturer, where those 2008 or 

2009 model year vehicles bore the brand of the producing manufacturer but were sold by 

or otherwise under the control of another manufacturer, and where the manufacturer 

producing the vehicles became independent no later than December 31, 2010, is eligible 

for a conditional exemption from the greenhouse gas emission standards described in 

§86.1818-12 paragraphs (c) through (e). 

(2) Maintaining eligibility for exemption from greenhouse gas emission 

standards. To remain eligible for exemption under this paragraph (k) the manufacturer’s 

average sales for the three most recent consecutive model years must remain below 

5,000. If a manufacturer’s average sales for the three most recent consecutive model 

years exceeds 4999, the manufacturer will no longer be eligible for exemption and must 

meet applicable emission standards according to the provisions in this paragraph (k)(2). 

(i) If a manufacturer’s average sales for three consecutive model years exceeds 

4999, and if the increase in sales is the result of corporate acquisitions, mergers, or 

purchase by another manufacturer, the manufacturer shall comply with the emission 
1290 

standards described in §86.1818-12 paragraphs (c) through (e), as applicable, beginning 

with the first model year after the last year of the three consecutive model years. 

(ii) If a manufacturer’s average sales for three consecutive model years exceeds 

4999 and is less than 50,000, and if the increase in sales is solely the result of the 

manufacturer’s expansion in vehicle production, the manufacturer shall comply with the 

emission standards described in §86.1818-12 paragraphs (c) through (e), as applicable, 

beginning with the second model year after the last year of the three consecutive model 

years. 

(iii) If a manufacturer’s average sales for three consecutive model years exceeds 

49,999, the manufacturer shall comply with the emission standards described in 

§86.1818-12 paragraphs (c) through (e), as applicable, beginning with the first model 

year after the last year of the three consecutive model years. 

(2) Requesting the conditional exemption from standards. To be exempted from 

the standards described in §86.1818-12 paragraphs (c) through (e), the manufacturer must 

submit a declaration to EPA containing a detailed written description of how the 

manufacturer qualifies under the provisions of this paragraph (k). The declaration must 

describe eligibility information that includes the following: model year 2008 and 2009 

sales, sales volumes for each of the most recent three model years, detailed information 

regarding ownership relationships with other manufacturers, details regarding the 

application of the provisions of §86.1838-01(b)(3) regarding the aggregation of sales of 

related companies, and documentation of good-faith efforts made by the manufacturer to 

purchase credits from other manufacturers. This declaration must be signed by a chief 

officer of the company, and must be made prior to each model year for which the 
1291 

exemption 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 

exemption is requested, but not later than December of the calendar year prior to the 

model year for which exemption is requested. A conditional exemption will be granted 

when EPA approves the exemption declaration. The declaration must be sent to the 

Environmental Protection Agency at the following address: Director, Compliance and 

Innovative Strategies Division, U.S. Environmental Protection Agency, 2000 Traverwood 

Drive, Ann Arbor, Michigan 48105. 

12. 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 “Carbon-related exhaust emissions.” 

i. By adding the definition for “Combined CO2.” 

j. By adding the definition for “Combined CREE.” 

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.” 
1292 

n. By revising the definition for “Flexible fuel vehicle.” 

o. By adding the definition for “Footprint.” 

p. By adding the definition for “Fuel cell electric vehicle.” 

q. By adding the definition for “Highway fuel economy test procedure.” 

r. By adding the definition for “Hybrid electric vehicle.” 

s. By adding the definition for “Interior volume index.” 

t. By revising the definition for “Model type.” 

u. By adding the definition for “Motor vehicle.” 

v. By adding the definition for “Multi-fuel 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 “Plug-in 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. 

* * * * * 
1293 

 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 electricdriven, or a combination of compressor drive mechanisms); compressor refrigerant 

capacity; the number and type of rigid pipe and flexible hose connections; the 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 

length and 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. 
1294 

(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. 

* * * * * 

Carbon-related exhaust emissions (CREE) has the meaning given in §600.002-08 

of this chapter. 

* * * * * 

Combined CO2 means the CO2 value determined for a vehicle (or vehicles) by 

averaging the city and highway CO2 values, weighted 0.55 and 0.45 respectively. 

Combined CREE means the CREE value determined for a vehicle (or vehicles) by 

averaging the city and highway fuel CREE 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) The vehicle is capable of drawing recharge energy from a source off the 

vehicle, such as residential electric service; and 
1295 

(2) The vehicle must be certified to the emission standards of Bin #1 of Table 

S04-1 in §86.1811-09(c)(6). 

(3) The vehicle does not have an onboard combustion engine/generator system as 

a means of providing electrical energy. 

* * * * * 

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 and on a methanol or ethanol fuel, or any mixture of the 

petroleum fuel and methanol or ethanol. 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 
1296 

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 vehicle means an electric vehicle propelled solely by an electric motor 

where energy for the motor is supplied by an electrochemical cell that produces 

electricity via the non-combustion reaction of a consumable fuel, typically hydrogen. 

* * * * * 

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, where recharge energy 

for the energy storage system comes solely from sources on board the vehicle. 

* * * * * 

Interior volume index has the meaning given in §600.315-08 of this chapter. 

* * * * * 

Model type has the meaning given in §600.002-08 of this chapter. 

* * * * * 

Motor vehicle has the meaning given in §85.1703 of this chapter. 

* * * * * 

Multi-fuel vehicle means any motor vehicle capable of operating on two or more 

different fuel types, either separately or simultaneously. 
1297 

* * * * * 

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 §88.104–94(g) of 

this chapter. 

Plug-in hybrid electric vehicle (PHEV) means a hybrid electric vehicle that has 

the capability to charge the battery from an off-vehicle electric source, such that the offvehicle source cannot be connected to the vehicle while the vehicle is in motion. 

* * * * * 

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. 
1298 

* * * * * 

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. 

* * * * * 

13. A new §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 
1299 

credit programs used by the manufacturer to comply with the fleet average CO2 emission 

standards in §86.1818-12. 

(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. 

14. 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 emission-related powertrain systems or components during the 
1300 

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, CH4, and N2O are not required to be monitored by the OBD system. 

* * * * * 

15. A new §86.1809-12 is added to read as follows: 

§86.1809-12 Prohibition of defeat devices. 

(a) No new light-duty vehicle, light-duty truck, medium-duty passenger vehicle, 

or complete heavy-duty vehicle shall be equipped with a defeat device. 

(b) The Administrator may test or require testing on any vehicle at a designated 

location, using driving cycles and conditions that may reasonably be expected to be 

encountered in normal operation and use, for the purposes of investigating a potential 

defeat device. 

(c) For cold temperature CO and cold temperature NMHC emission control, the 

Administrator will use a guideline to determine the appropriateness of the CO and 

NMHC emission control at ambient temperatures between 25 °F (the upper bound of the 

FTP test temperature range) and 68 °F (the lower bound of the FTP test temperature 

range). The guideline for CO emission congruity across the intermediate temperature 

range is the linear interpolation between the CO standard applicable at 25 °F and the CO 

standard applicable at 68 °F. The guideline for NMHC emission congruity across the 
1301 

intermediate temperature range is the linear interpolation between the NMHC FEL pass 

limit (e.g. 0.3499 g/mi for a 0.3 g/mi FEL) applicable at 20 °F and the Tier 2 NMOG 

standard to which the vehicle was certified at 68 °F, where the intermediate temperature 

NMHC level is rounded to the nearest hundredth for comparison to the interpolated line. 

For vehicles that exceed this CO emissions guideline or this NMHC emissions guideline 

upon intermediate temperature cold testing: 

(1) If the CO emission level is greater than the 20 °F emission standard, the 

vehicle will automatically be considered to be equipped with a defeat device without 

further investigation. If the intermediate temperature NMHC emission level, rounded to 

the nearest hundredth, is greater than the 20 °F FEL pass limit, the vehicle will be 

presumed to have a defeat device unless the manufacturer provides evidence to EPA's 

satisfaction that the cause of the test result in question is not due to a defeat device. 

(2) If the CO emission level does not exceed the 20 °F emission standard, the 

Administrator may investigate the vehicle design for the presence of a defeat device 

under paragraph (d) of this section. If the intermediate temperature NMHC emission 

level, rounded to the nearest hundredth, does not exceed the 20 °F FEL pass limit the 

Administrator may investigate the vehicle design for the presence of a defeat device 

under paragraph (d) of this section. 

(d) The following provisions apply for vehicle designs designated by the 

Administrator to be investigated for possible defeat devices: 

(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 
1302 

Procedure (FTP or SFTP) or the Highway Fuel Economy Test Procedure (described in 

subpart B of 40 CFR part 600), or the Air Conditioning Idle Test (described in §86.165-

12), when the vehicle is operated under conditions that may reasonably be expected to be 

encountered in normal operation and use. 

(2) The following information requirements apply: 

(i) Upon request by the Administrator, the manufacturer must provide an 

explanation containing detailed information regarding test programs, engineering 

evaluations, design specifications, calibrations, on-board computer algorithms, and 

design strategies incorporated for operation both during and outside of the Federal 

emission test procedures. 

(ii) For purposes of investigations of possible cold temperature CO or cold 

temperature NMHC defeat devices under this paragraph (d), the manufacturer must 

provide an explanation to show, to the satisfaction of the Administrator, that CO 

emissions and NMHC emissions are reasonably controlled in reference to the linear 

guideline across the intermediate temperature range. 

(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 non-methane organic gases, carbon 

monoxide, carbon dioxide, oxides of nitrogen, nitrous oxide, methane, and formaldehyde 

measured on the Federal Test Procedure (subpart B of this part) and on the Highway Fuel 

Economy Test Procedure (subpart B of 40 CFR Part 600) does not occur in the 

temperature range of 20 to 86 °F. For diesel vehicles, the engineering evaluation must 

also include particulate emissions. 
1303 

16. 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. 

* * * * * 

17. A new §86.1818-12 is added to read as follows: 
1304 

 §86.1818-12 Greenhouse gas emission standards for light-duty vehicles, light-duty 

trucks, and medium-duty passenger vehicles. 

(a) Applicability. This section contains standards and other regulations applicable 

to the emission of the air pollutant defined as the aggregate group of six greenhouse 

gases: carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and 

sulfur hexafluoride. 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 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 medium-duty passenger vehicles. 

Manufacturers that qualify as a small business according to the requirements of 

§86.1801-12(j) are exempt from the emission standards in this section. Manufacturers 

that have submitted a declaration for a model year according to the requirements of 

§86.1801-12(k) for which approval has been granted by the Administrator are 

conditionally exempt from the emission standards in paragraphs (c) through (e) of this 

section for the approved model year. 

(b) Definitions. For the purposes of this section, the following definitions shall 

apply: 
1305 

(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 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 passenger automobiles and light 

trucks, 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 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 

Temporary Leadtime Allowance Alternative Standards for qualifying manufacturers 

specified in paragraph (e) of this section shall not include vehicles subject to the 

Temporary Leadtime Allowance Alternative 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: 
1306 

(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 244.0 

2013 237.0 

2014 228.0 

2015 217.0 

2016 and later 206.0 

(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 315.0 

2013 307.0 

2014 299.0 

2015 288.0 

2016 and later 277.0 

(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 and rounded to the nearest 0.1 grams/mile: 

Target CO2 = [ ] 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: 
1307 

Model Year b 

2012 50.5 

2013 43.3 

2014 34.8 

2015 23.4 

2016 and later 12.7 

 

(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: 
1308 

Model Year CO2 Target 

Value 

(grams/mile) 

2012 294.0 

2013 284.0 

2014 275.0 

2015 261.0 

2016 and later 247.0 

(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 395.0 

2013 385.0 

2014 376.0 

2015 362.0 

2016 and later 348.0 

(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 and rounded to the nearest 0.1 grams/mile: 

Target CO2 = ( ) 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: 
1309 

Model Year b 

2012 128.6 

2013 118.7 

2014 109.4 

2015 95.1 

2016 and later 81.1 

(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)(3)(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 shall be the combined city/highway carbon-related exhaust emission value 

calculated for the appropriate vehicle carline/subconfiguration according to the 

provisions of §600.113-08(g)(4) of this chapter multiplied by 1.1 and rounded to the 

nearest whole gram per mile. For in-use vehicle carlines/subconfigurations for which a 

combined city/highway carbon-related exhaust emission value was not determined under 

§600.113(g)(4) of this chapter, the in-use exhaust CO2 emission standard shall be the 
1310 

combined city/highway carbon-related exhaust emission value calculated according to the 

provisions of §600.208-12 of this chapter for the vehicle model type (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. For vehicles that are capable of 

operating on multiple fuels, including but not limited to alcohol dual fuel, natural gas 

dual fuel and plug-in hybrid electric vehicles, a separate in-use standard shall be 

determined for each fuel that the vehicle is capable of operating on. 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. 

(e) Temporary Lead Time Allowance Alternative Standards. (1) The interim fleet 

average CO2 standards in this paragraph (e) are optionally applicable to each qualifying 

manufacturer, where the terms “sales” or “sold” as used in this paragraph (e) means 

vehicles produced and delivered for sale (or sold) in the states and territories of the 

United States. 

(i) A qualifying manufacturer is a manufacturer with sales of 2009 model year 

combined passenger automobiles and light trucks of greater than zero and less than 

400,000 vehicles. 

(A) If a manufacturer sold less than 400,000 but more than zero 2009 model year 

combined passenger automobiles and light trucks while under the control of another 

manufacturer, where those 2009 model year passenger automobiles and light trucks bore 

the brand of the producing manufacturer, and where the producing manufacturer became 

independent no later than December 31, 2010, the producing manufacturer is a qualifying 

manufacturer. 
1311 

(B) In the case where two or more qualifying manufacturers combine as the result 

of merger or the purchase of 50 percent or more of one or more companies by another 

company, and if the combined 2009 model year sales of the merged or combined 

companies is less than 400,000 but more than zero (combined passenger automobiles and 

light trucks), the corporate entity formed by the combination of two or more qualifying 

manufacturers shall continue to be a qualifying manufacturer. The total number of 

vehicles that the corporate entity is allowed to include under the Temporary Leadtime 

Allowance Alternative Standards shall be determined by paragraph (e)(2) or (e)(3) of this 

section where sales is the total combined 2009 model year sales of all of the merged or 

combined companies. Vehicles sold by the companies that combined by 

merger/acquisition to form the corporate entity that were subject to the Temporary 

Leadtime Allowance Alternative Standards in paragraph (e)(4) of this section prior to the 

merger/acquisition shall be combined to determine the remaining number of vehicles that 

the corporate entity may include under the Temporary Leadtime Allowance Alternative 

Standards in this paragraph (e). 

 (C) In the case where two or more manufacturers combine as the result of merger 

or the purchase of 50 percent or more of one or more companies by another company, 

and if the combined 2009 model year sales of the merged or combined companies is 

equal to or greater than 400,000 (combined passenger automobiles and light trucks), the 

new corporate entity formed by the combination of two or more manufacturers is not a 

qualifying manufacturer. Such a manufacturer shall meet the emission standards in 

paragraph (c) of this section beginning with the model year that is numerically two years 

greater than the calendar year in which the merger/acquisition(s) took place. 
1312 

(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) A qualifying manufacturer may not use these Temporary Leadtime 

Allowance Alternative Standards until they have used all available banked credits and/or 

credits available for transfer accrued under §86.1865-12(k). A qualifying manufacturer 

with a net positive credit balance calculated under §86.1865-12(k) in any model year 

after considering all available credits either generated, carried forward from a prior model 

year, transferred from other averaging sets, or obtained from other manufacturers, may 

not use these Temporary Leadtime Allowance Alternative Standards in such model year. 

(2) Qualifying manufacturers may select any combination of 2012 through 2015 

model year passenger automobiles and/or light trucks to include under the Temporary 

Leadtime Allowance Alternative Standards determined in this paragraph (e) 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. 

(3) Qualifying manufacturers with sales of 2009 model year combined passenger 

automobiles and light trucks in the United States of greater than zero and less than 50,000 

vehicles may select any combination of 2012 through 2015 model year passenger 

automobiles and/or light trucks to include under the Temporary Leadtime Allowance 

Alternative Standards determined in this paragraph (e) up to a cumulative total of 

200,000 vehicles, and additionally may select up to 50,000 2016 model year vehicles to 
1313 

include under the Temporary Leadtime Allowance Alternative Standards determined in 

this paragraph (e). To be eligible for the provisions of this paragraph (e)(3) qualifying 

manufacturers must provide annual documentation of good-faith efforts made by the 

manufacturer to purchase credits from other manufacturers. Without such documentation, 

the manufacturer may use the Temporary Leadtime Allowance Alternative Standards 

according to the provisions of paragraph (e)(2) of this section, and the provisions of this 

paragraph (e)(3) shall not apply. 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. 

(4) To calculate the applicable Temporary Leadtime Allowance Alternative 

Standards, 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 Temporary Leadtime Allowance Alternative Standards, subject to the limitations 

expressed in paragraphs (e)(1) through (3) of this section. 

(i) The Temporary Leadtime Allowance Alternative Standard applicable to 

qualified passenger automobiles as defined in §600.002-08 of this chapter 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 Temporary Leadtime Allowance Alternative Standard. 

(ii) The Temporary Leadtime Allowance Alternative Standard applicable to 

qualified light trucks (i.e. non-passenger automobiles as defined in §600.002-08 of this 
1314 

chapter) 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 Temporary Leadtime Allowance Alternative Standard. 

(5) Manufacturers choosing to optionally apply these standards are subject to the 

restrictions on credit banking and trading specified in §86.1865-12. 

(f) Nitrous oxide (N2O) and methane (CH4) exhaust emission standards for 

passenger automobiles and light trucks. Each manufacturer’s fleet of combined 

passenger automobile and light trucks must comply with N2O and CH4 standards using 

either the provisions of paragraph (f)(1) of this section or the provisions of paragraph 

(f)(2) of this section. The manufacturer may not use the provisions of both paragraphs 

(f)(1) and (f)(2) of this section in a model year. For example, a manufacturer may not use 

the provisions of paragraph (f)(1) of this section for their passenger automobile fleet and 

the provisions of paragraph (f)(2) for their light truck fleet in the same model year. 

(1) Standards applicable to each test group. 

(i) 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. 

(ii) 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. 
1315 

(2) Including N2O and CH4 in fleet averaging program. Manufacturers may elect 

to not meet the emission standards in paragraph (f)(1) of this section. Manufacturers 

making this election shall include N2O and CH4 emissions in the determination of their 

fleet average carbon-related exhaust emissions, as calculated in subpart F of part 600 of 

this chapter. Manufacturers using this option must include both N2O and CH4 full useful 

life values in the fleet average calculations for passenger automobiles and light trucks. 

Use of this option will account for N2O and CH4 emissions within the carbon-related 

exhaust emission value determined for each model type according to the provisions part 

600 of this chapter. This option requires the determination of full useful life emission 

values for both the Federal Test Procedure and the Highway Fuel Economy Test. 

18. 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 industry-wide 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 
1316 

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. (i) For manufacturers complying with the emission standards 

for N2O and CH4 specified in §86.1818-12(f)(1), deterioration factors for N2O and CH4

shall be determined according to the provisions of paragraphs (a) through (l) of this 

section. 

(ii) For manufacturers complying with the fleet averaging option for N2O and CH4

as allowed under §86.1818-12(f)(2), separate deterioration factors shall be determined for 

the FTP and HFET test cycles. Therefore each FTP test performed on the durability data 
1317 

vehicle selected under §86.1822-01 of this part must also be accompanied by an HFET 

test. 

(iii) For the 2012 through 2014 model years only, manufacturers may use 

alternative deterioration factors. For N2O, the alternative deterioration factor to be used to 

adjust FTP and HFET emissions is the deterioration factor determined for NOX emissions 

according to the provisions of this section. For CH4, the alternative deterioration factor to 

be used to adjust FTP and HFET emissions is the deterioration factor determined for 

NMOG or NMHC emissions according to the provisions of this section. 

(3) Other carbon-related exhaust emissions. Deterioration factors shall be 

determined according to the provisions of paragraphs (a) through (l) of this section. 

Optionally, in lieu of determining emission-specific FTP and HFET deterioration factors 

for CH3OH (methanol), HCHO (formaldehyde), C2H5OH (ethanol), and C2H4O 

(acetaldehyde), manufacturers may use the deterioration factor determined for NMOG or 

NMHC emissions according to the provisions of this section. 

(4) 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. 

19. 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. 
1318 

* * * * * 

(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 light-duty 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 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. 

20. 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) * * * 
1319 

(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 through 2014 model years 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. 

* * * * * 

21. 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) * * *
1320 

(4) Retesting for fuel economy reasons or for compliance with greenhouse gas 

exhaust emission standards in §86.181-12 may be conducted under the provisions of 

§600.008–08 of this chapter. 

(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, lightduty 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 carbon-related exhaust 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 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). 
1321 

(i) For use in the fuel economy and exhaust greenhouse gas 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 by doing so will also accept as official the calculated CREE value 

associated with the lower fuel economy test results. 

(ii) The manufacturer shall conduct a second retest of the FTP or highway test if 

the fuel economy 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 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 exhaust greenhouse gas fleet 

averaging program) the lowest fuel economy of the original test, the first confirmatory 

test, and the second confirmatory test fuel economy results, and by doing so will also 

accept as official the calculated CREE value associated with the lowest fuel economy test 

results. 

(c) * * * 

(1) * * * 

(ii) Official test results for fuel economy and exhaust CO2 emission purposes are 

determined in accordance with the provisions of §600.008–08 of this chapter. 

* * * * * 
1322 

22. 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. 

* * * * * 

23. 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) * * * 
1323 

(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. 

* * * * * 

(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 part 600, subpart B of this 

chapter. 

* * * * * 

(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 
1324 

fuel economy test as described in part 600, subpart B of this chapter. 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). 

* * * * * 

24. 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 heavy-
1325 

duty 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. 

* * * * * 

25. 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 
1326 

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). 

* * * * * 

26. 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 
1327 

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. 
1328 

(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 

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)). 
1329 

(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 
1330 

in proper functioning of the device or element when the motor vehicle operates on 

conventional fuel. 

27. 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

emissions. 

(c) Altitude. Altitude requirements for CO2 standards are provided in §86.1810–

09(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 greenhouse gas emission standards in 

§86.1818-12 according to the provisions of §86.1801-12(j). 
1331 

(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 production-weighted average basis, for each separate 

averaging set, at the end of each model year, using the procedure described in paragraph 

(j) 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, 
1332 

the manufacturer must include a statement in the application for certification, in 

accordance with §86.1844–01(d)(11) and §86.1810–09(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 (in units of grams per mile rounded to the nearest whole number) 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: 

(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 Temporary Leadtime Allowance 

Alternative Standards specified in §86.1818-12(e), if applicable; and 

(iv) Light trucks subject to the Temporary Leadtime Allowance Alternative 

Standards specified in §86.1818-12(e), if applicable. 
1333 

(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)(9). 

(2) The certificate issued for each test group requires all model types within that 

test group to meet the in-use emission standards to which each model type is certified as 

outlined in §86.1818-12(d). 

(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) 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)(8) 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)(8) of this 
1334 

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)(8) 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. 
1335 

(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 and separately for passenger automobiles and light 

trucks, 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 ProductionWeighted 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 §600.511-80 of this chapter; and 

Vehicle Lifetime Miles is 195,264 for passenger automobiles and 225,865 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 
1336 

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 in-use 

testing failures from a failure to a non-failure. The enforcement of the averaging standard 
1337 

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 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)(8) of this section). 

(iii) Special provisions for manufacturers using the Temporary Leadtime 

Allowance Alternative 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 Temporary Leadtime Allowance Alternative 

Standards specified in §86.1818-12(e). 

(B) Credits generated by a passenger automobile or light truck averaging set 

subject to the Temporary Leadtime Allowance Alternative Standards specified in 

§86.1818-12(e)(4)(i) or (ii) of this section may be used to offset a deficit generated by an 

averaging set subject to the Temporary Leadtime Allowance Alternative Standards 

through the 2015 model year, except that manufacturers qualifying under the provisions 

of §86.1818-12(e)(3) may use such credits to offset a deficit generated by an averaging 

set subject to the Temporary Leadtime Allowance Alternative Standards through the 

2016 model year . 

(C) Credits generated by an averaging set subject to the Temporary Leadtime 

Allowance Alternative Standards specified in §86.1818-12(e)(4)(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 
1338 

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 Temporary Leadtime Allowance 

Alternative Standards specified in §86.1818-12(e)(4)(i) or (ii) may be banked for use in a 

future model year (to offset a deficit generated by an averaging set subject to the 

Temporary Leadtime Allowance Alternative Standards). All such credits shall expire at 

the end of the 2015 model year, except that manufacturers qualifying under the 

provisions of §86.1818-12(e)(3) may use such credits to offset a deficit generated by an 

averaging set subject to the Temporary Leadtime Allowance Alternative Standards 

through the 2016 model year. 

(E) A manufacturer with any vehicles subject to the Temporary Leadtime 

Allowance Alternative Standards specified in §86.1818-12(e)(4)(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 or bank 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 
1339 

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 debits were first incurred 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 
1340 

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) 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. 
1341 

(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 light-duty 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. 

(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 
1342 

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 requested by the Administrator. 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 
1343 

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 §86.1867-12(b) of this section shall include in the 2012 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. 
1344 

(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 §86.1867-12(c) shall include in the 2012 report, separately 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 cumulative model year production of eligible vehicles starting with the 

2009 model year. 

(C) The carbon-related exhaust emission value by model type and model year. 

(v) Manufacturers calculating early off-cycle technology credits under paragraph 

§86.1867-12(d) shall include in the 2012 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 of this chapter, 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 
1345 

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 voiding 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. 

28. A new §86.1866-12 is added to subpart S to read as follows: 

§86.1866-12 CO2 fleet average credit programs. 

(a) Incentive for certification of advanced technology vehicles. Electric vehicles, 

plug-in hybrid electric vehicles, and fuel cell vehicles, as those terms are defined in 

§86.1803-01, that are certified and produced in the 2012 through 2016 model years may 

be eligible for a reduced CO2 emission value under the provisions of this paragraph (a) 

and under the provisions of part 600 of this chapter. 
1346 

(1) Electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles may 

use a value of zero (0) grams/mile of CO2 to represent the proportion of electric operation 

of a vehicle that is derived from electricity that is generated from sources that are not 

onboard the vehicle. 

(2) The use of zero (0) grams/mile CO2 is limited to the first 200,000 combined 

electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles produced and 

delivered for sale by a manufacturer in the 2012 through 2016 model years, except that a 

manufacturer that produces and delivers for sale 25,000 or more such vehicles in the 

2012 model year shall be subject to a limitation on the use of zero (0) grams/mile CO2 to 

the first 300,000 combined electric vehicles, plug-in hybrid electric vehicles, and fuel cell 

vehicles produced and delivered for sale by a manufacturer in the 2012 through 2016 

model years. 

(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 (b) for each air 

conditioning system that the manufacturer is using to generate CO2 credits. 

Manufacturers may also generate early air conditioning refrigerant leakage credits under 

this paragraph (b) for the 2009 through 2011 model years according to the provisions of 

§86.1867-12(b). 

(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. 
1347 

(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: 

⎥

⎦

⎤ ⎢

⎣

⎡

⎟

⎟

⎠

⎞

⎜

⎜

⎝

⎛ ⎟×

⎠

⎞ ⎜

⎝

⎛ = × −

HFC a

REF

GWP

Leakage GWP L MaxCredit

6 134 16. eakage credit 1

Where: 

MaxCredit is 12.6 (grams CO2-equivalent/mile)for air conditioning systems using 

HFC-134a, and 13.8 (grams CO2-equivalent/mile) 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/year (4.1 

grams/year for systems using electric compressors) the rate for the purpose of this 

formula shall be 8.3 grams/year (4.1 grams/year for systems using electric compressors); 

The constant 16.6 is the average passenger car impact of air conditioning leakage 

in units of grams/year; 

GWPREF means the global warming potential of the refrigerant as indicated in 

paragraph (b)(5) of this section or as otherwise determined by the Administrator; 

GWPHFC134a means the global warming potential of HFC-134a as indicated in 

paragraph (b)(5) of this section or as otherwise determined by the Administrator. 

(ii) Light trucks: 

⎥

⎦

⎤ ⎢

⎣

⎡

⎟

⎟

⎠

⎞

⎜

⎜

⎝

⎛ ⎟ ×

⎠

⎞ ⎜

⎝

⎛ = × −

HFC a

REF

GWP

Leakage GWP L MaxCredit

7 134 20. eakage credit 1
1348 

Where: 

MaxCredit is 15.6 (grams CO2-equivalent/mile) for air conditioning systems using 

HFC-134a, and 17.2 (grams CO2-equivalent/mile) 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/year (5.2 

grams/year for systems using electric compressors) the rate for the purpose of this 

formula shall be 10.4 grams/year (5.2 grams/year for systems using electric 

compressors); 

The constant 20.7 is the average passenger car impact of air conditioning leakage 

in units of grams/year; 

GWPREF means the global warming potential of the refrigerant as indicated in 

paragraph (b)(5) of this section or as otherwise determined by the Administrator; 

GWPR134a means the global warming potential of HFC-134a as indicated in 

paragraph (b)(5) of this section or as otherwise determined 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 x Production x VLM) ÷ 1,000,000 

Where: 

Leakage = the CO2-equivalent leakage credit value in grams per mile determined 

in paragraph (b)(2) of this section. 
1349 

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 195,264 and for 

light trucks shall be 225,865. 

(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). 

(5) The following values for refrigerant global warming potential (GWPREF), or 

alternative values as determined by the Administrator, shall be used in the calculations of 

this paragraph (b). The Administrator will determine values for refrigerants not included 

in this paragraph (b)(5) upon request by a manufacturer. 

(i) For HFC-134a, GWPREF =1430; 

(ii) For HFC-152a, GWPREF =124; 

(iii) For HFO-1234yf,: GWPREF =4; 

(iv) For CO2, GWPREF= 1. 

(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 
1350 

paragraph (c) for the 2009 through 2011 model years according to the provisions of 

§86.1867-12(b). 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 externally-controlled, variable-displacement compressor 

(e.g. a compressor that controls displacement based on temperature setpoint and/or 

cooling demand of the air conditioning system control settings inside the passenger 

compartment): 1.7 g/mi. 

(ii) Reduced reheat, with externally-controlled, fixed-displacement or pneumatic 

variable displacement compressor (e.g. a compressor that controls displacement based on 

conditions within, or internal to, the air conditioning system, such has head pressure, 

suction pressure, or evaporator outlet temperature): 1.1 g/mi. 

(iii) Default to recirculated air with closed-loop control of the air supply (sensor 

feedback to control interior air quality) whenever the ambient temperature is 75 °F or 

higher: 1.7 g/mi. Air conditioning systems that operated with closed-loop control of the 

air supply at different temperatures may receive credits by submitting an engineering 

analysis to the Administrator for approval. 

(iv) Default to recirculated air with open-loop control air supply (no sensor 

feedback) whenever the ambient temperature is 75 °F or higher: 1.1 g/mi. Air 
1351 

conditioning systems that operate with open-loop control of the air supply at different 

temperatures may receive credits by submitting an engineering analysis to the 

Administrator for approval. 

(v) Blower motor controls which limit wasted electrical energy (e.g. pulse width 

modulated power controller): 0.9 g/mi. 

(vi) Internal heat exchanger (e.g. a device that transfers heat from the highpressure, liquid-phase refrigerant entering the evaporator to the low-pressure, gas-phase 

refrigerant exiting the evaporator): 1.1 g/mi. 

(vii) Improved condensers and/or evaporators with system analysis on the 

component(s) indicating a coefficient of performance improvement for the system of 

greater than 10% when compared to previous industry standard designs): 1.1 g/mi. 

(viii) Oil separator: 0.6 g/mi. The manufacturer must submit an engineering 

analysis demonstrating the increased improvement of the system relative to the baseline 

design, where the baseline component for comparison is the version which a 

manufacturer most recently had in production on the same vehicle design or in a similar 

or related vehicle model. The characteristics of the baseline component shall be 

compared to the new component to demonstrate the improvement. 

(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 
1352 

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 x Production x VLM) ÷ 1,000,000 

Where: 

Credit = the CO2 efficiency credit value in grams per mile determined in 

paragraph (c)(2) or (c)(5) of this section, whichever is applicable. 

Production = The total number of passenger cars or light trucks, whichever is 

applicable, produced with the air conditioning system to which to the efficiency credit 

value from paragraph (c)(2) of this section applies. 

VLM = vehicle lifetime miles, which for passenger cars shall be 195,264 and for 

light trucks shall be 225,865. 

(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. 
1353 

(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 21.3 grams per minute. 

(A) If the increased CO2 emissions determined from the Idle Test Procedure in 

§86.165-14 is less than or equal to 14.9 grams/minute, the total credit value for use in 

paragraph (c)(3) of this section shall be as determined in paragraph (c)(2) of this section. 

(B) If the increased CO2 emissions determined from the Idle Test Procedure in 

§86.165-14 is greater than 14.9 grams/minute and less than 21.3 grams/minute, the total 

credit value for use in paragraph (c)(3) of this section shall be as determined according to 

the following formula: 

⎥

⎦

⎤ ⎢

⎣

⎡ ⎟

⎠

⎞ ⎜

⎝

⎛ − = × − 6.4

14.9

1 1 ITP TCV TCV

Where: 

TCV=The total credit value for use in paragraph (c)(3) of this section; 
1354 

TCV1=The total credit value determined according to paragraph (c)(2) of this 

section; and 

ITP= the increased CO2 emissions determined from the Idle Test Procedure in 

§86.165-14. 

(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 externally-controlled, 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 externally-controlled, 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. 
1355 

(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 and prevent fogging of windows 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 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) Improved condensers and/or evaporators 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. The 
1356 

manufacturer must submit an engineering analysis demonstrating the increased 

improvement of the system relative to the baseline design, where the baseline 

component(s) for comparison is the version which a manufacturer most recently had in 

production on the same vehicle design or in a similar or related vehicle model. The 

dimensional characteristics (e.g., tube configuration/thickness/spacing, and fin density) of 

the baseline component(s) shall be compared to the new component(s) to demonstrate the 

improvement in coefficient of performance. 

(vi) 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. With prior 

EPA approval, 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 criteria in this paragraph 

(d)(1) must be met as determined by the Administratory: 

(i) The technology must be an innovative and novel vehicle- or engine-based 

approach to reducing greenhouse gas emissions, and not in widespread use. 
1357 

(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 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. 
1358 

(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 §600.114-08 of this chapter. 

(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 off-cycle technology operating from the 5-cycle city/highway 

combined carbon-related 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. 
1359 

The alternative demonstration program must be approved in advance by the 

Administrator and should: 

(A) Use modeling, on-road testing, on-road 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 (rounded to the nearest whole number) shall be calculated separately for passenger 

automobiles and light trucks according to the following formula: 

Total Credits (Megagrams) = (Credit x Production x 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 195,264 and for 

light trucks shall be 225,865. 
1360 

(3) Notice and opportunity for public comment. The Administrator will publish a 

notice of availability in the Federal Register notifying the public of a manufacturer’s 

proposed alternative off-cycle credit calculation methodology. The notice will include 

details regarding the proposed methodology, but will not include any Confidential 

Business Information. The notice will include instructions on how to comment on the 

methodology. The Administrator will take public comments into consideration in the 

final determination, and will notify the public of the final determination. Credits may not 

be accrued using an approved methodology until the model year following the final 

approval. 

29. 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 EPA approval and 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. The terms “sales” and “sold” as used in this section shall mean 

vehicles produced and delivered for sale in the states and territories of the United States. 

(a) Early fleet average CO2 reduction credits. Manufacturers may optionally 

generate credits for reductions in their fleet average CO2 emissions achieved in the 2009 
1361 

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 §600.510-12 of this chapter, 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 §600.510-12(j)(2)(ii)(B) of this chapter, 

without the use of the 0.15 multiplicative factor. 
1362 

(C) The average carbon-related exhaust emissions for natural gas fueled model 

types shall be calculated according to the provisions of §600.510-12(j)(2)(iii)(B) of this 

chapter, without the use of the 0.15 multiplicative factor. 

(D) The average carbon-related exhaust emissions for alcohol dual fueled model 

types shall be the value measured using gasoline or diesel fuel, as applicable, and shall be 

calculated according to the provisions of §600.510-12(j)(2)(vi) of this chapter, 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 the value measured using gasoline or diesel fuel, as applicable, and 

shall be calculated according to the provisions of §600.510-12(j)(2)(vii) of this chapter, 

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) Carbon-related exhaust emission values for electric, fuel cell, and plug-in 

hybrid electric model types 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 323 439 

2010 301 420 

2011 267 390 
1363 

(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 §600.511-80 of this chapter; and 

Vehicle Lifetime Miles is 195,264 for the LDV/LDT1 averaging set and 225,865 

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, and credits 

earned in the 2009 model year may not be traded to other manufacturers. 
1364 

(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 California and 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 vehicle emissions from any of the following categories of motor 

vehicles: Passenger cars, light-duty 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, and credits 

earned in the 2009 model year may not be traded to other manufacturers. 

(3) Pathway 3. Pathway 3 credits are those credits earned under Pathway 2 as 

described in paragraph (a)(2) of this section in California and in the section 177 states 
1365 

determined in paragraph (a)(2)(i) of this section, combined with additional credits earned 

in the set of states that does not include California and 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) 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. 

(iii) 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. 

(iv) Average carbon-related exhaust emission values shall be determined 

according to the provisions of §600.510-12 of this chapter, 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; 
1366 

(B) The average carbon-related exhaust emissions for alcohol fueled model types 

shall be calculated according to the provisions of §600.510-12(j)(2)(ii)(B) of this chapter, 

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 §600.510-12(j)(2)(iii)(B) of this 

chapter, 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 §600.510-12(j)(2)(vi) of this 

chapter, without the use of 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 §600.510-12(j)(2)(vii) of 

this chapter, without the use of the 0.15 multiplicative factor and with F=0. 

(F) Section 600.510-12(j)(3) of this chapter shall not apply. Electric, fuel cell, 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. 

(v) 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 
1367 

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 manufacturer-specific 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 manufacturer-specific 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 manufacturer-specific 

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 manufacturer-specific 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. 

(vi) 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 
1368 

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 §600.511-80 of this chapter 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 195,264 for the LDV/LDT1 averaging set and 225,865 

for the LDT2/HLDT/MDPV averaging set. 

(vii) 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, and credits earned in the 

2009 model year may not be traded to other manufacturers. 

(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 

California and 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. 
1369 

(b) Early air conditioning leakage and efficiency credits. (1) Manufacturers may 

optionally generate air conditioning refrigerant leakage credits according to the 

provisions of §86.1866-12(b) 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 are required to comply with California greenhouse gas 

requirements in model years 2009-2011 (for California and section 177 states) may not 

generate early air conditioning credits for vehicles sold in California and the section 177 

states as determined in paragraph (a)(2)(i) of this section. 

(c) Early advanced technology vehicle incentive. Vehicles eligible for this 

incentive are electric vehicles, fuel cell 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 vehicles, and plug-in hybrid electric vehicles in their fleet averages 

calculated under any of the early credit pathways 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 five-year carryforward limitation. 
1370 

(i) Eligible 2009 model year vehicles may be used in the calculation of a 

manufacturer’s fleet average carbon-related 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 carbon-related 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 carbon-related exhaust emissions in the 2012 through 2016 

model years. 

(3)(i) To use the advanced technology vehicle incentive, the manufacturer will 

apply the 2009, 2010, and/or 2011 model type sales volumes and their model type 

emission levels to the manufacturer’s fleet average calculation. 

(ii) The early advanced technology vehicle incentive 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 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. 
1371 

(4) Manufacturers may use zero grams/mile to represent the carbon-related 

exhaust emission values for the electric operation of 2009 through 2011 model year 

electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles subject to the 

limitations in §86.1866-12(a). The 2009 through 2011 model year vehicles using zero 

grams per mile shall count against the 200,000 or 300,000 caps on use of this credit 

value, whichever is applicable under §86.1866-12(a). 

(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) 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. 

(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 appropriate averaging sets (e.g. LDV/LDT1 and 

LDT2/HLDT/MDPV averaging sets for pathways 1 and 2; LDV, LDT/2011 MDPV, 
1372 

LDV/LDT1 and LDT2/HLDT/MDPV averaging sets for Pathway 3; LDV and LDT/2011 

MDPV averaging sets for Pathway 4): 

(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. 
1373 

(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 

30. The authority citation for part 600 continues to read as follows: 

Authority: 49 U.S.C. 32901—23919q, Pub. L. 109–58. 

31. 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 

32. The heading for subpart A is revised as set forth above. 

33. A new §600.001-12 is added to subpart A to read as follows: 

§600.001-12 General applicability. 
1374 

(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 carbon-related 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 §86.1818-12 of this chapter. 

34. 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 vehicle.” 

g. By adding the definition for “Hybrid electric vehicle.” 

h. By revising the definition for “Non-passenger automobile.” 

i. By revising the definition for “Passenger automobile.” 

j. By adding the definition for “Plug-in hybrid electric vehicle.” 

k. By adding the definition for “Track width.” 
1375 

l. By adding the definition for “Wheelbase.” 

§600.002-08 Definitions. 

* * * * * 

Base tire means the tire specified as standard equipment by the manufacturer. 

* * * * * 

Carbon-related exhaust emissions (CREE) 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 relative to the CO2

carbon weight fractoin, as specified in §600.113-08. For example, carbon-related exhaust 

emissions (weighted 55 percent city and 45 percent highway) are used to demonstrate 

compliance with fleet average CO2 emission standards outlined in §86.1818(c) of this 

chapter. 

* * * * * 

Electric vehicle has the meaning given in §86.1803-01 of this chapter. 

* * * * * 

Footprint has the meaning given in §86.1803-01 of this chapter. 

* * * * * 

Fuel cell has the meaning given in §86.1803-01 of this chapter. 

Fuel cell vehicle has the meaning given in §86.1803-01 of this chapter. 

* * * * * 

Hybrid electric vehicle (HEV) has the meaning given in §86.1803-01 of this 

chapter. 
1376 

* * * * * 

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) has the meaning given in §86.1803-01 of 

this chapter. 

* * * * * 

Track width has the meaning given in §86.1803-01 of this chapter. 

* * * * * 

Wheelbase has the meaning given in §86.1803-01 of this chapter. 

* * * * * 

35. Section 600.006-08 is amended as follows: 

a. By revising the section heading. 

b. By revising paragraph (b)(2)(ii). 

c. By revising paragraph (b)(2)(iv). 

d. By revising paragraph (c) introductory text. 

e. By adding paragraph (c)(5). 

f. By revising paragraph (e). 

g. By revising paragraph (g)(3). 
1377 

§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) The manufacturer shall submit the following fuel economy data: 

* * * * * 

(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. Manufacturers incorporating N2O and CH4 emissions in their fleet average carbonrelated exhaust emissions as allowed under §86.1818(f)(2) of this chapter shall also 

submit N2O and CH4 emission data where applicable. The fuel economy and CO2

emission test results shall be adjusted in accordance with paragraph (g) of this section. 
1378 

* * * * * 

(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. 
1379 

(ii)(A) The manufacturer shall adjust all carbon-related exhaust emission (CREE) 

test data generated by vehicles with engine-drive system combinations with more than 

6,200 miles by using the following equation: 

CREE4,000mi= CREET[0.979 + 5.25×10−6

(mi)] 

Where: 

CREE4,000mi= CREE emission data adjusted to 4,000-mile test point. 

CREET= Tested emissions value of CREE 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 §86.1837-01 of 

this chapter as applicable. CREE values shall be rounded to the nearest gram per mile. 

* * * * * 

36. 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) * * * 
1380 

(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 engine-system 

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 §86.1823-08 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. 

* * * * * 
1381 

(f) All vehicles used to generate fuel economy and carbon-related exhaust 

emissions data, and for which emission standards apply, must be covered by a certificate 

of conformity under part 86 of this chapter before: 

* * * * * 

37. Section 600.008-08 is amended by revising the section 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 
1382 

the lowest of several fuel economy results to represent the vehicle, the manufacturer shall 

select the carbon-related exhaust emissions value from the test results associated with the 

lowest fuel economy results. 

* * * * * 

38. Section 600.010-08 is amended by revising paragraph (d) to read as follows: 

§600.010-08 Vehicle test requirements and minimum data requirements. 

* * * * * 

(d) Minimum data requirements for the manufacturer's average fuel economy and 

average carbon-related exhaust emissions For the purpose of calculating the 

manufacturer's average fuel economy and average carbon-related exhaust emissions 

under §600.510, the manufacturer shall submit FTP (city) and HFET (highway) test data 

representing at least 90 percent of the manufacturer's actual model year production, by 

configuration, for each category identified for calculation under §600.510–08(a). 

39. Section 600.011-93 is amended to read as follows: 

§600.011-93 Reference materials. 

(a) Incorporation by reference. The documents referenced in this section have 

been incorporated by reference in this part. The 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 inspected at the U.S. Environmental Protection Agency, Office of 
1383 

Air and Radiation, 1200 Pennsylvania Ave., NW., Washington, DC 20460, phone (202) 

272–0167, 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

and is available from the sources listed below: 

(b) ASTM. The following material is available from the American Society for 

Testing and Materials. Copies of these materials may be obtained from American Society 

for Testing and Materials, ASTM International, 100 Barr Harbor Drive, PO Box C700, 

West Conshohocken, PA, 19428-2959, phone 610-832-9585. http://www.astm.org/.

(1) ASTM E 29–67 (Reapproved 1973) Standard Recommended Practice for 

Indicating Which Places of Figures Are To Be Considered Significant in Specified 

Limiting Values, IBR approved for §§ 600.002–93, and 600.002–08. 

(2) 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, IBR approved for §§ 600.113–93, 600.510–93, 

600.113–08, 600.510– 08, and 600.510-12. 

(3) ASTM D 3343–90 Standard Test Method for Estimation of Hydrogen Content 

of Aviation Fuels, IBR approved for §§ 600.113–93, and 600.113–08. 

(4) ASTM D 3338–92 Standard Test Method for Estimation of Net Heat of 

Combustion of Aviation Fuels, IBR approved for §§ 600.113–93, and 600.113–08. 

(5) ASTM D 240–92 Standard Test Method for Heat of Combustion of Liquid 

Hydrocarbon Fuels by Bomb Calorimeter, IBR approved for §§ 600.113–93, 600.510–93, 

600.113–08, and 600.510–08. 
1384 

(6) ASTM D975–04c Standard Specification for Diesel Fuel Oils, IBR approved 

for § 600.107–08. 

(7) ASTM D 1945–91 Standard Test Method for Analysis of Natural Gas By Gas 

Chromatography, IBR approved for §§ 600.113–93, 600.113–08. 

(c) SAE Material. The following material is available from the Society of 

Automotive Engineers. Copies of these materials may be obtained from Society of 

Automotive Engineers World Headquarters, 400 Commonwealth Dr., Warrendale, PA 

15096–0001, phone (877) 606–7323 (U.S. and Canada) or (724) 776–4970 (outside the 

U.S. and Canada), or at http://www.sae.org. 

(1) Motor Vehicle Dimensions—Recommended Practice SAE 1100a (Report of 

Human Factors Engineering Committee, Society of Automotive Engineers, approved 

September 1973 as revised September 1975), IBR approved for §§ 600.315-08 and 

600.315-82. 

(2) [Reserved] 

Subpart B—FUEL ECONOMY AND CARBON-RELATED EXHAUST 

EMISSION REGULATIONS FOR 1978 AND LATER MODEL YEAR 

AUTOMOBILES--TEST PROCEDURES 

40. The heading for subpart B is revised as set forth above. 

41. A new §600.101-12 is added to subpart B to read as follows: 
1385 

§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 carbon-related exhaust 

emissions. 

42. Section 600.111-08 is amended by revising paragraph (f) to read as follows: 

§600.111-08 Test procedures. 

* * * * * 

(f) Special Test Procedures. The Administrator may prescribe test procedures, 

other than those set forth in this Subpart B, for any vehicle which is not susceptible to 

satisfactory testing and/or testing results by the procedures set forth in this part. For 

example, special test procedures may be used for advanced technology vehicles, 

including, but not limited to battery electric vehicles, fuel cell vehicles, plug-in hybrid 

electric vehicles and vehicles equipped with hydrogen internal combustion engines. 

Additionally, the Administrator may conduct fuel economy and carbon-related exhaust 

emission testing using the special test procedures approved for a specific vehicle. 
1386 

43. A new §600.113-12 is added to subpart B to read as follows: 

 

§600.113-12 Fuel economy and carbon-related exhaust emission 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 and carbon-related 

exhaust emission 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 gasfueled vehicles, non-methane hydrocarbons (NMHC) and methane (CH4). For 

manufacturers selecting the fleet averaging option for N2O and CH4 as allowed under 

§86.1818-12(f)(2) of this chapter the calculations of the carbon-related exhaust emissions 

require the input of grams/mile values for nitrous oxide (N2O) and methane (CH4). 

Emissions shall be determined 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) Calculate the FTP fuel economy. 
1387 

(1) Calculate the weighted grams/mile values for the FTP test for CO2, HC, and 

CO, and where applicable, CH3OH, C2H5OH, C2H4O, HCHO, NMHC, N2O 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 separately the grams/mile values for the cold transient phase, 

stabilized phase and hot transient phase of the FTP test. For vehicles with more than one 

source of propulsion energy, one of which is a rechargeable energy storage system, or 

vehicles with special features that the Administrator determines may have a rechargeable 

energy source, whose charge can vary during the test, calculate separately the grams/mile 

values for the cold transient phase, stabilized phase, hot transient phase and hot stabilized 

phase of the FTP test. 

(b) Calculate the HFET fuel economy. 

(1) Calculate the mass values for the highway fuel economy test for HC, CO and 

CO2, and where applicable, CH3OH, C2H5OH, C2H4O, HCHO, NMHC, N2O 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, N2O 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) Calculate the cold temperature FTP fuel economy. 

(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, 
1388 

N2O and CH4 as specified in §86.144(b) of this chapter. For 2008 through 2010 dieselfueled vehicles, HC measurement is optional. 

(2) Calculate separately the grams/mile values for the cold transient phase, 

stabilized phase and hot transient phase of the cold temperature FTP test in §86.244 of 

this chapter. 

(3) Measure and record the test fuel's properties as specified in paragraph (f) of 

this section. 

 (d) Calculate the US06 fuel economy. 

(1) Calculate the total grams/mile values for the US06 test for HC, CO and CO2, 

and where applicable, CH3OH, C2H5OH, C2H4O, HCHO, NMHC, N2O 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, N2O 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 
1389 

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. 

(3) Measure and record the test fuel's properties as specified in paragraph (f) of 

this section. 

 (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, N2O and CH4 as specified 

in §86.144(b) of this chapter. 

(2) Measure and record the test fuel's properties as specified in paragraph (f) of 

this section. 

(f) Fuel property determination and analysis. 

(1) Gasoline test fuel properties shall be determined by analysis of a fuel sample 

taken from the fuel supply. A sample shall be taken after each addition of fresh fuel to the 

fuel supply. Additionally, the fuel shall be resampled once a month to account for any 

fuel property changes during storage. Less frequent resampling may be permitted if EPA 

concludes, on the basis of manufacturer-supplied data, that the properties of test fuel in 

the manufacturer's storage facility will remain stable for a period longer than one month. 

The fuel samples shall be analyzed to determine the following fuel properties: 

(i) Specific gravity measured using 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” (incorporated 

by reference at §600.011-93). 
1390 

(ii) Carbon weight fraction measured using ASTM D 3343–90 “Standard Test 

Method for Estimation of Hydrogen Content of Aviation Fuels” (incorporated by 

reference at §600.011-93). 

(iii) Net heating value (Btu/lb) determined using ASTM D 3338–92 “Standard 

Test Method for Estimation of Net Heat of Combustion of Aviation Fuels” (incorporated 

by reference at §600.011-93). 

(2) Methanol 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” (incorporated by reference at §600.011-93) 

for the blend, 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” (incorporated by reference at §600.011-93) 

for the gasoline fuel component and also for the methanol fuel component and combining 

as follows. 

SG = SGg × volume fraction gasoline + SGm × volume fraction methanol. 

(ii)(A) Carbon weight fraction using the following equation: 

CWF = CWFg × MFg+ 0.375 × MFm 

Where: 
1391 

CWFg= Carbon weight fraction of gasoline portion of blend measured using 

ASTM D 3343–90 “Standard Test Method for Estimation of Hydrogen Content of 

Aviation Fuels” (incorporated by reference at §600.011-93). 

MFg=Mass fraction gasoline=(G × SGg)/(G × SGg + M × SGm) 

MFm=Mass fraction methanol=(M × SGm)/(G × SGg + M × SGm) 

Where: 

G=Volume fraction gasoline. 

M=Volume fraction methanol. 

SGg=Specific gravity of gasoline as measured using 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” (incorporated by reference at §600.011-93). 

SGm=Specific gravity of methanol as measured using 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” (incorporated by reference at §600.011-93). 

(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). 

(3) Natural gas test fuel shall be analyzed to determine the following fuel 

properties: 
1392 

(i) Fuel composition measured using ASTM D 1945–91 “Standard Test Method 

for Analysis of Natural Gas By Gas Chromatography” (incorporated by reference at 

§600.011-93). 

(ii) Specific gravity measured as based on fuel composition per ASTM D 1945–

91 “Standard Test Method for Analysis of Natural Gas by Gas Chromatography” 

(incorporated by reference at §600.011-93). 

(iii) Carbon weight fraction, based on the carbon contained only in the 

hydrocarbon constituents of the fuel. This equals the weight of carbon in the hydrocarbon 

constituents divided by the total weight of fuel. 

(iv) Carbon weight fraction of the fuel, which equals the total weight of carbon in 

the fuel (i.e , includes carbon contained in hydrocarbons and in CO2) divided by the total 

weight of fuel. 

(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” (incorporated by reference at §600.011-93) 

for the blend. 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” (incorporated by reference at §600.011-93) 

for the gasoline fuel component and also for the methanol fuel component and combining 

as follows. 
1393 

SG = SGg × volume fraction gasoline + SGm × volume fraction ethanol. 

(ii)(A) Carbon weight fraction using the following equation: 

CWF = CWFg × MFg+ 0.521 × MFe 

Where: 

CWFg= Carbon weight fraction of gasoline portion of blend measured using 

ASTM D 3343–90 “Standard Test Method for Estimation of Hydrogen Content of 

Aviation Fuels” (incorporated by reference at §600.011-93). 

MFg=Mass fraction gasoline=(G × SGg)/(G × SGg+ E × SGm) 

MFe=Mass fraction ethanol=(E × SGm)/(G × SGg+ E × SGm) 

Where: 

G=Volume fraction gasoline. 

E=Volume fraction ethanol. 

SGg=Specific gravity of gasoline as measured using 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” (incorporated by reference at §600.011-93). 

SGm=Specific gravity of ethanol as measured using 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” (incorporated by reference at §600.011-93). 

(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 
1394 

the procedures are superior to or equally as accurate as those specified in this paragraph 

(f)(2)(ii). 

(g) Calculate separate FTP, highway, US06, SC03 and Cold temperature FTP fuel 

economy and carbon-related exhaust emissions from the grams/mile values for total HC, 

CO, CO2 and, where applicable, CH3OH, C2H5OH, C2H4O, HCHO, NMHC, N2O, 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) Emission values for fuel economy calculations. The emission values (obtained 

per paragraph (a) through (e) of this section, as applicable) used in the calculations of fuel 

economy in 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 fuel economy in this section shall be rounded to 

the nearest gram/mile. 

(2) Emission values for carbon-related exhaust emission calculations. 

(i) 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 §86.1823-08 of this chapter, then these test values shall be used in the 

calculations of carbon-related exhaust emissions in this section. 

(ii) 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 §86.1823-08 of this chapter, then these test values shall be 

adjusted by the appropriate deterioration factor determined according to §86.1823-08 of 

this chapter before being used in the calculations of carbon-related exhaust emissions in 
1395 

this section. For vehicles within a test group, the appropriate NMOG deterioration factor 

may be used in lieu of the deterioration factors for CH3OH, C2H5OH, and/or C2H4O 

emissions. 

(iii) The emission values determined in paragraph (g)(2)(A) or (B) 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 carbon-related exhaust emissions in this section shall be rounded to the 

nearest gram/mile. 

(iv) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, N2O and CH4 emission values 

for use in the calculation of carbon-related exhaust emissions in this section shall be the 

values determined according to paragraph (g)(2)(iv)(A), (B), or (C) of this section. 

(A) The FTP and HFET test values as determined for the emission data vehicle 

according to the provisions of §86.1835-01 of this chapter. These values shall apply to all 

vehicles tested under this section that are included in the test group represented by the 

emission data vehicle and shall be adjusted by the appropriate deterioration factor 

determined according to §86.1823-08 of this chapter before being used in the calculations 

of carbon-related exhaust emissions in this section. 

(B) The FTP and HFET test values as determined according to testing conducted 

under the provisions of this subpart. These values shall be adjusted by the appropriate 

deterioration factor determined according to §86.1823-08 of this chapter before being 

used in the calculations of carbon-related exhaust emissions in this section. 
1396 

(C) For the 2012 through 2014 model years only, manufacturers may use an 

assigned value of 0.010 g/mi for N2O FTP and HFET test values. This value is not 

required to be adjusted by a deterioration factor. 

(3) 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. 

(4) For the purpose of determining the applicable in-use emission standard under 

§86.1818-12(d) of this chapter, the combined city/highway carbon-related exhaust 

emission value for a vehicle subconfiguration is calculated by arithmetically averaging 

the FTP-based city and HFET-based highway carbon-related exhaust emission values, as 

determined in §600.113(a) and (b) of this section for the subconfiguration, weighted 0.55 

and 0.45 respectively, and rounded to the nearest tenth of a gram per mile. 

(h)(1) For gasoline-fueled automobiles tested on test fuel specified in §86.113–

04(a) of this chapter, 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. 
1397 

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)(A) For 2012 and later model year gasoline-fueled automobiles tested on test 

fuel specified in §86.113–04(a) of this chapter, 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/0.273×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. 

(B) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, the carbon-related exhaust 

emissions in grams per mile for 2012 and later model year gasoline-fueled automobiles 

tested on test fuel specified in §86.113–04(a) of this chapter is to be calculated using the 

following equation and rounded to the nearest 1 gram per mile: 

CREE = [(CWF/0.273)×NMHC] + (1.571×CO) + CO2 + (298×N2O) + (25×CH4) 
1398 

Where: 

CREE means the carbon-related exhaust emissions as defined in §600.002-08. 

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. 

N2O= Grams/mile N2O as obtained in paragraph (g) of this section. 

CH4 = Grams/mile CH4 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)(A) 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: 
1399 

CREE = (3.172×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. 

(B) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, the carbon-related exhaust 

emissions in grams per mile for 2012 and later model year diesel-fueled automobiles is to 

be calculated using the following equation and rounded to the nearest 1 gram per mile: 

CREE = (3.172×NMHC) + (1.571×CO) + CO2 + (298×N2O) + (25×CH4) 

Where: 

CREE means the carbon-related exhaust emissions as defined in §600.002-08. 

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. 

N2O= Grams/mile N2O as obtained in paragraph (g) of this section. 

CH4 = Grams/mile CH4 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)) 
1400 

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 paragraph (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)(A) 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/0.273×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. 
1401 

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. 

(B) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, the carbon-related exhaust 

emissions in grams per mile for 2012 and later model year methanol-fueled automobiles 

and automobiles designed to operate on mixtures of gasoline and methanol is to be 

calculated using the following equation and rounded to the nearest 1 gram per mile: 

CREE = [(CWFexHC/0.273)×NMHC] + (1.571×CO) + (1.374×CH3OH) + 

(1.466×HCHO) + CO2 + (298×N2O) + (25×CH4) 

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). 

NMHC = Grams/mile HC as obtained in paragraph (g) of this section. 

CO = Grams/mile CO as obtained in paragraph (g) of this section. 
1402 

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. 

N2O = Grams/mile N2O as obtained in paragraph (g) of this section. 

CH4 = Grams/mile CH4 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: 

( )( )( ) ( ) ( ) NMHC NG

HC NG NG

e CH CWF NMHC CO CO CO

CWF D

mpg

4 2 2

/

0.749 0.429 0.273

121.5

× + × + × + × −

× × =

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/ft3

 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. 
1403 

CO2NG = grams of carbon dioxide in the natural gas fuel consumed per mile of 

travel. 

CO2NG = FCNG × DNG × WFCO2

Where: 

( ) ( ) ( ) ( )

NG NG

4 NMHC 2

NG CWF D

0.749 CH CWF NMHC 0.429 CO 0.273 CO FC

×

× + × + × + × =

= cubic feet of natural gasfuel consumed per mile

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” 

(incorporated by reference at §600.011-93). 

(2)(A) 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 = 2.743×CH4 + CWFNMHC/0.273×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. 
1404 

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. 

(B) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, the carbon-related exhaust 

emissions in grams per mile for 2012 and later model year automobiles fueled with 

natural gas is to be calculated using the following equation and rounded to the nearest 1 

gram per mile: 

CREE = (25×CH4)+ [(CWFNMHC/0.273)×NMHC] + (1.571×CO) + CO2 + 

(298×N2O) 

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. 

N2O = Grams/mile N2O as obtained in paragraph (g) of this section. 
1405 

 (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 C2H5OH (ethanol) as obtained in paragraph (d) of this 

section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (d) of this 

section. 
1406 

(2)(A) 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/0.273×HC) + (1.571×CO) + (1.374×CH3OH) + 

(1.466×HCHO) + (1.911×C2H5OH) + (1.998×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 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 C2H5OH (ethanol) as obtained in paragraph (d) of this 

section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (d) of this 

section. 
1407 

(B) For manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter, the carbon-related exhaust 

emissions in grams per mile for 2012 and later model year ethanol-fueled automobiles 

and automobiles designed to operate on mixtures of gasoline and ethanol is to be 

calculated using the following equation and rounded to the nearest 1 gram per mile: 

CREE = [(CWFexHC/0.273)×NMHC] + (1.571×CO) + (1.374×CH3OH) + 

(1.466×HCHO) + (1.911×C2H5OH) + (1.998×C2H4O) + CO2 + (298×N2O) + (25×CH4) 

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. 

NMHC = 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 C2H5OH (ethanol) as obtained in paragraph (d) of this 

section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (d) of this 

section. 
1408 

N2O= Grams/mile N2O as obtained in paragraph (g) of this section. 

CH4= Grams/mile CH4 as obtained in paragraph (g) of this section. 

(m) Carbon-related exhaust emissions for electric vehicles, fuel cell vehicles and 

plug-in hybrid electric vehicles. Manufacturers shall determine carbon-related exhaust 

emissions for electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles 

according to the provisions of this paragraph (m). Subject to the limitations described in 

§86.1866-12(a) of this chapter, the manufacturer may be allowed to use a value of 0 

grams/mile to represent the emissions of fuel cell vehicles and the proportion of electric 

operation of a electric vehicles and plug-in hybrid electric vehicles that is derived from 

electricity that is generated from sources that are not onboard the vehicle, as described in 

paragraphs (m)(1) through (3) of this section. 

(1) For 2012 and later model year electric vehicles, but not including fuel cell 

vehicles, the carbon-related exhaust emissions in grams per mile is to be calculated using 

the following equation and rounded to the nearest one gram per mile: 

CREE = CREEUP - CREEGAS

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002-

08, which may be set equal to zero for eligible 2012 through 2016 model year electric 

vehicles as described in §86.1866-12(a) of this chapter. 

CREEUP = 0.7670 × EC, and 

CREEGAS = 0.2485 × TargetCO2, 

Where: 
1409 

EC = The vehicle energy consumption in watt-hours per mile, determined 

according to procedures established by the Administrator under §600.111-08(f). 

TargetCO2 = The CO2 Target Value determined according to §86.1818-12(c)(2) 

of this chapter for passenger automobiles and according to §86.1818-12(c)(3) of this 

chapter for light trucks. 

(2) For 2012 and later model year plug-in hybrid electric vehicles, the carbonrelated exhaust emissions in grams per mile is to be calculated using the following 

equation and rounded to the nearest one gram per mile: 

CREE = CREECD + CREECS, 

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002-

08. 

CREECS = The carbon-related exhaust emissions determined for charge-sustaining 

operation according to procedures established by the Administrator under §600.111-

08(f); and 

CREECD = (ECF × CREECDEC) + [(1-ECF) × CREECDGAS] 

Where: 

CREECD = The carbon-related exhaust emissions determined for charge-depleting 

operation determined according to the provisions of this section for the applicable fuel 

and according to procedures established by the Administrator under §600.111-08(f); 

CREECDEC = The carbon-related exhaust emissions determined for electricity 

consumption during charge-depleting operation, which shall be determined using the 

method specified in paragraph (m)(1) of this section and according to procedures 
1410 

established by the Administrator under §600.111-08(f), and which may be set equal to 

zero for eligible 2012 through 2016 model year vehicles as described in §86.1866-12(a) 

of this chapter; 

CREECDGAS = The carbon-related exhaust emissions determined for chargedepleting operation determined according to the provisions of this section for the 

applicable fuel and according to procedures established by the Administrator under 

§600.111-08(f); and 

ECF = Electricity consumption factor as determined by the Administrator under 

§600.111-08(f). 

(3) For 2012 and later model year fuel cell vehicles, the carbon-related exhaust 

emissions in grams per mile shall be calculated using the method specified in paragraph 

(m)(1) of this section, except that CREEUP shall be determined according to procedures 

established by the Administrator under §600.111-08(f). As described in §86.1866-12(a) 

of this chapter the value of CREE may be set equal to zero for eligible 2012 through 2016 

model year fuel cell vehicles. 

(n) 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 for 

fuel economy and carbon-related exhaust emissions may be used in lieu of the methods 

described in this section if shown to yield equivalent or superior results and if approved 

in advance by the Administrator. 

44. Section 600.114-08 is amended as follows: 

a. By revising the section heading. 
1411 

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 chapter. 

* * * * * 

(d) City carbon-related exhaust emission value. For each vehicle tested, determine 

the 5-cycle city carbon-related exhaust emissions using the following equation: 

(1) CityCREE = 0.905× (StartCREE + RunningCREE)

Where: 

(i) StartCREE = 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + ×

×

4.1

0.76 StartCREE 0.24 StartCREE 0.33 75 20

Where: 

( ) X X CREEX StartCREE = 3.6× Bag1CREE − Bag3

Where: 

Bag Y CREEX= 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 = 
1412 

[ ] ( ) ( ) ( )

[ ] ( )( )

0.144 [ ] SC03CREE ( ) ( )( ) 0.61 Bag3 CREE 0.39 Bag2 CREE

0.18 0.5 Bag2 CREE 0.5 Bag3 CREE

0.82 0.48 Bag2 CREE 0.41 Bag3 CREE 0.11 US06CityCREE

75 75

20 20

75 75

× − × + ×

× × + × +

× × + × + × +

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 carbon-related exhaust emissions using the following 

equation: 

HighwayCREE = 0.905× (StartCREE + RunningCREE)

Where: 

(i) StartCREE = 

 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + × = ×

60

0.76 StartCREE 0.24 StartCREE 0.33 75 20

Where: 

( ) X X CREEX StartCREE = 3.6× Bag1CREE − Bag3

(ii) Running CREE = 

[ ] ( ) ( )

[ ] SC CREE ( ) ( )( ) Bag CREE Bag CREE

US HighwayCREE HFET CREE

75 75 0.045 03 0.61 3 0.39 2

1.007 0.79 06 0.21

× − × + ×

× × + × +

Where: 

BagYXCREE =carbon-related exhaust emissions in grams per mile over Bag Y at 

temperature X, 
1413 

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 carbon-related 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 = 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + ×

×

4.1

0.76 StartCREE 0.24 StartCREE 0.33 75 20
1414 

Where: 

(1) StartCREE75 = 

( ) ( ) 75 75 75 3.6× Bag1CREE − Bag 3CREE75 + 3.9× Bag 2CREE − Bag 4CREE

and 

(2) StartCREE20 = 

( ) 20 20 = 3.6× Bag1CREE − Bag 3CREE

 (B) RunningCREE = 

[ ] ( ) ( ) ( )

[ ] ( )( )

[ ] SC CREE ( ) ( )( ) Bag CREE Bag CREE

Bag CREE Bag CREE

Bag CREE Bag CREE US CityCREE

75 75

20 20

75 75

0.144 03 0.61 3 0.39 4

0.18 0.5 2 0.5 3

0.82 0.48 4 0.41 3 0.11 06

× − × + ×

× × + × +

× × + × + × +

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 = 
1415 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + × = ×

60

0.76 StartCREE 0.24 StartCREE 0.33 75 20

Where: 

( ) ( ) 75 75 75 CREE75 StartCREE = 3.6× Bag1CREE − Bag3CREE75 + 3.9× Bag 2CREE − Bag 4

and

( ) 20 20 CREE20 StartCREE = 3.6× Bag1CREE − Bag3

(B) RunningCREE = 

[( ) ( )]

[ ] SC CREE ( ) ( )( ) Bag CREE Bag CREE

US HighwayCREE HFET CREE

75 75 0.045 03 0.61 3 0.39 4

1.007 0.79 06 0.21

× − × + ×

× × + × +

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 = 
1416 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + × = ×

4.1

0.76 StartCREE 0.24 StartCREE 0.33 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 phases 3 and 4 of the FTP test conducted at an ambient 

temperature of 75 °F. 

(B) RunningCREE = 

[ ] ( ) ( )

[ ] ( )( )

0.144 [ ] SC03CREE ( ) Bag3/4 CREE

0.18 0.5 Bag2 CREE 0.5 Bag3 CREE

0.82 0.90 Bag3/4 CREE 0.10 US06CityCREE

75

20 20

75

× −

× × + × +

× × + × +

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 phases 3 and 4 of the FTP test conducted at an ambient 

temperature of 75 °F. 
1417 

(ii) Highway carbon-related exhaust emissions. 

HighwayCREE = 0.905 × (StartCREE + RunningCREE)

Where: 

(A) StartCREE = 

( )⎟

⎠

⎞ ⎜

⎝

⎛ × + ×

×

60

0.76 StartCREE 0.24 StartCREE 0.33 75 20

Where: 

( ) 75 75 CREE75 StartCREE = 7.5× Bag1/2CREE − Bag3/4

and 

( ) 20 20 CREE20 StartCREE = 3.6× Bag1CREE − Bag3

(B) RunningCREE = 

[ ] ( ) ( )

0.045 [ ] SC03CREE Bag3/4 CREE

1.007 0.79 US06HighwayCREE 0.21 HFETCREE

× − 75

× × + × +

Where: 

US06 Highway 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 gram 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 Bag 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.
1418 

Subpart C—Procedures for Calculating Fuel Economy and Carbon-related Exhaust 

Emission Values for 1977 and Later Model Year Automobiles 

45. The heading for subpart C is revised as set forth above. 

46. 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. 

47. A new §600.206-12 is added to subpart C to read as follows: 

§600.206-12 Calculation and use of FTP-based 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 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 
1419 

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 carbon-related 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 §600.208-12(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 

carbon-related 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 
1420 

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 FTP-based 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 HFETbased highway carbon-related 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 carbon-related 

exhaust emission values from the tests performed using gasoline or diesel test fuel. 
1421 

(ii) Calculate the city, highway, and combined fuel economy and carbon-related 

exhaust emission values from the tests performed using alcohol or natural gas test fuel. 

(b) If only one equivalent petroleum-based 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. 

(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. 

48. 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 carbon-related exhaust emission 

values as determined in §600.206–12(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 carbonrelated 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. 
1422 

(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. 
1423 

(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 of this 

chapter. 

(4) Vehicle configuration fuel economy and carbon-related exhaust emission 

values, as determined in §600.206–12 (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. 
1424 

(6) For the purposes of calculating a base level fuel economy or carbon-related 

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 carbonrelated 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 carbon-related 

exhaust emission values from the tests performed using gasoline or diesel test fuel. 

(ii) Calculate the city, highway, and combined fuel economy and carbon-related 

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 carbonrelated exhaust emission values as determined in §600.206–12 (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-
1425 

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 carbonrelated 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 
1426 

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 carbon-related 

exhaust emission values from the tests performed using gasoline or diesel test fuel. 

(ii) Calculate the city, highway, and combined fuel economy and carbon-related 

exhaust emission values from the tests performed using alcohol or natural gas test fuel. 

Subpart D—[Amended] 

49. 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 Carbon-related Exhaust Emissions 

50. The heading for subpart F is revised as set forth above. 
1427 

51. 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. The provisions of this subpart are applicable 

to medium-duty passenger vehicles and to manufacturers of such vehicles. 

52. 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 paragraph (b) of this section for any running change approved or 

implemented under §§86.079–32, 86.079–33, 86.082–34, or 86.1842–01 of this chapter, 

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 
1428 

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 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 
1429 

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 §600.208–12(a)(2), the manufacturer 

shall submit fuel economy and carbon-related exhaust emissions data for each 

subconfiguration added by a running change. 

53. 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. 

54. A new §600.510-12 is added to subpart F to read as follows: 
1430 

§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 

categories 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 as determined by the Secretary of Transportation. For example, 

categories may include, but are not limited to domestically manufactured and/or nondomestically manufactured passenger automobiles as determined by the Secretary of 

Transportation. 

(ii) [Reserved] 

(iii) An average fuel economy calculation will be made for the category of trucks 

as determined by the Secretary of Transportation. For example, categories may include, 

but are not limited to domestically manufactured trucks, non-domestically manufactured 

trucks, light-duty trucks, medium-duty passenger vehicles, and/or heavy-duty trucks as 

determined by the Secretary of Transportation. 

(iv) [Reserved] 

(2) Average carbon-related exhaust emissions will be calculated to the nearest one 

gram per mile for the categories 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. 
1431 

(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 carbon-related 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 §600.208–12 

of this section except that: 

(i) Separate fuel economy values will be calculated for model types and base 

levels associated with car lines for each category of passenger automobiles and light 

trucks as determined by the Secretary of Transportation pursuant to paragraph (a)(1) of 

this section. 

(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 
1432 

(vi) At the manufacturer's option, those vehicle configurations that are selfcompensating to altitude changes may be separated by sales into high-altitude sales 

categories and low-altitude 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 §600.208–12(a)(4)(ii). 

(3) The fuel economy and carbon-related 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 for each category of passenger automobiles and light trucks as 

determined by the Secretary of Transportation pursuant to paragraph (a)(1) of this 

section. 

(ii) Total model year production data, as required by this subpart will be used 

instead of sales projections; and 

(iii) The fuel economy value of diesel-powered 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)(1) 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 
1433 

(i) For gasoline-fueled and diesel-fueled 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 §600.208-12(b)(5)(i); and 

(B) The combined model type fuel economy value for operation on alcohol fuel as 

determined in §600.208-12(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 §600.208-12(b)(5)(i); and 

(B) The combined model type fuel economy value for operation on natural gas as 

determined in §600.208-12(b)(5)(ii) divided by 0.15 provided the requirements of 

paragraph (g) of this section are met. 
1434 

(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 automobile categories identified in paragraph (a)(1) 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 salesweighted 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. 
1435 

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; 
1436 

(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. 

FEaltis 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); 

FEpetis the fuel economy [miles/gallon] while operated on petroleum fuel 

(gasoline or diesel) as determined in §600.113(a) and (b); 
1437 

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 premeasured using a test 

method which has been approved in advance by the Administrator. 

(B) The density for alcohol fuels shall be premeasured using 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” (incorporated by reference at §600.011-93). 

(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) For model years 1993 and later, and for each category of automobile identified 

in paragraph (a)(1) of this section, the maximum increase in average fuel economy 
1438 

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 

Increase 

(mpg) 

1993-2014 1.2 

2015 1.0 

2016 0.8 

2017 0.6 

2018 0.4 

2019 0.2 

2020 and later 0.0 

(1) The Administrator shall calculate the increase in average fuel economy to 

determine if the maximum increase provided in paragraph (h) of this section has been 

reached. The Administrator shall calculate the average fuel economy for each category of 

automobiles specified in paragraph (a)(1) of this section by subtracting the average fuel 

economy 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 from the average fuel economy values determined in paragraph (c) of this section. 

The difference is limited to the maximum increase specified in paragraph (h) of this 

section. 

(2) [Reserved] 

(i) For model years 2012 through 2015, and for each category of automobile 

identified in paragraph (a)(1) of this section, the maximum decrease in average carbonrelated exhaust emissions determined in paragraph (j) of this section attributable to 
1439 

alcohol dual fuel automobiles and natural gas dual fuel automobiles shall be calculated 

using the following formula, and rounded to the nearest tenth of a gram per mile: 

Maximum Decrease = FltAvg

MPG

FltAvg MAX

−

⎥

⎦

⎤ ⎢

⎣

⎡ − 8887

8887

Where: 

FltAvg = The fleet average CREE value for passenger automobiles or light trucks 

determined for the applicable model year according to paragraph (j) of this section, 

except by assuming all alcohol dual fuel and natural gas dual fuel automobiles are 

operated exclusively on gasoline (or diesel) fuel. 

MPGMAX = The maximum increase in miles per gallon determined for the 

appropriate model year in paragraph (h) of this section. :(1) The Administrator shall 

calculate the decrease in average carbon-related exhaust emissions to determine if the 

maximum decrease provided in this paragraph (i) has been reached. The Administrator 

shall calculate the average carbon-related exhaust emissions for each category of 

automobiles specified in paragraph (a) of this section by subtracting the average carbonrelated exhaust emission values determined in paragraph (j) 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] 
1440 

(j) The average carbon-related exhaust emissions will be calculated individually 

for each category identified in paragraph (a)(1) 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 diesel-fueled 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, except that manufacturers complying with the fleet averaging option for N2O and 

CH4 as allowed under §86.1818-12(f)(2) of this chapter must perform this calculation 

such that N2O and CH4 values are not multiplied by 0.15; or 

(B) For alcohol-fueled model types, for model years 2016 and later, the carbonrelated 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, except that manufacturers complying with the fleet averaging option for N2O 
1441 

and CH4 as allowed under §86.1818-12(f)(2) of this chapter must perform this calculation 

such that N2O and CH4 values are not multiplied by 0.15; 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 carbon-related exhaust emissions value for 

operation on gasoline or diesel fuel as determined in §600.208-12(b)(5)(i); and 

(B) The combined model type carbon-related exhaust emissions value for 

operation on alcohol fuel as determined in §600.208-12(b)(5)(ii) multiplied by 0.15 

provided the requirements of paragraph (g) of this section are met, except that 

manufacturers complying with the fleet averaging option for N2O and CH4 as allowed 

under §86.1818-12(f)(2) of this chapter must perform this calculation such that N2O and 

CH4 values are not multiplied by 0.15; 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 carbon-related exhaust emissions value for 

operation on gasoline or diesel as determined in §600.208-12(b)(5)(i); and 

(B) The combined model type carbon-related exhaust emissions value for 

operation on natural gas as determined in §600.208-12(b)(5)(ii) multiplied by 0.15 
1442 

provided the requirements of paragraph (g) of this section are met, except that 

manufacturers complying with the fleet averaging option for N2O and CH4 as allowed 

under §86.1818-12(f)(2) of this chapter must perform this calculation such that N2O and 

CH4 values are not multiplied by 0.15. 

(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 carbon-related exhaust emissions value for 

operation on alcohol fuel as determined in §600.208-12(b)(5)(ii); and 

CREEgas = The combined model type carbon-related exhaust emissions value for 

operation on gasoline or diesel fuel as determined in §600.208-12(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; 
1443 

CREEalt = The combined model type carbon-related exhaust emissions value for 

operation on natural gas as determined in §600.208-12(b)(5)(ii); and 

CREEgas = The combined model type carbon-related exhaust emissions value for 

operation on gasoline or diesel fuel as determined in §600.208-12(b)(5)(i). 

 (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 real-world 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 
1444 

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. 

55. 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 
1445 

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/HFET-based 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); 
1446 

(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 

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 vice-president) 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. 

(8) For 2008–2010 light truck model year reports, the average fuel economy 

standard or the “required fuel economy level” pursuant to 49 CFR Part 533, as applicable. 

Model year reports for light trucks meeting required fuel economy levels pursuant to 49 

CFR 533.5(g) and (h) shall include information in sufficient detail to verify the accuracy 

of the calculated required fuel economy level. Such information is expected to include 

but is not limited to, production information for each unique footprint within each model 

type contained in the model year report and the formula used to calculate the required 

fuel economy level. Model year reports for required fuel economy levels shall include a 
1447 

statement that the method of measuring vehicle track width, measuring vehicle wheelbase 

and calculating vehicle footprint is accurate and complies with applicable Department of 

Transportation requirements. 

(9) For 2011 and later model year reports, the “required fuel economy level” 

pursuant to 49 CFR Parts 531 or 533, as applicable. Model year reports shall include 

information in sufficient detail to verify the accuracy of the calculated required fuel 

economy level, including but is not limited to, production information for each unique 

footprint within each model type contained in the model year report and the formula used 

to calculate the required fuel economy level. Model year reports shall include a statement 

that the method of measuring vehicle track width, measuring vehicle wheelbase and 

calculating vehicle footprint is accurate and complies with applicable Department of 

Transportation requirements. 

(10) For 2012 and later model year reports, the “required fuel economy level” 

pursuant to 49 CFR Parts 531 or 533 as applicable, and the applicable fleet average CO2 

emission standards. Model year reports shall include information in sufficient detail to 

verify the accuracy of the calculated required fuel economy level and fleet average CO2 

emission standards, including but is not limited to, production information for each 

unique footprint within each model type contained in the model year report and the 

formula used to calculate the required fuel economy level and fleet average CO2 

emission standards. Model year reports shall include a statement that the method of 

measuring vehicle track width, measuring vehicle wheelbase and calculating vehicle 

footprint is accurate and complies with applicable Department of Transportation and EPA 

requirements. 
1448 

(11) For 2012 and later model year reports, a detailed (but easy to understand) list 

of vehicle models and the applicable in-use CREE emission standard. The list of models 

shall include the applicable carline/subconfiguration parameters (including carline, 

equivalent test weight, road-load horsepower, axle ratio, engine code, transmission class, 

transmission configuration and basic engine); the test parameters (ETW and a, b, c, 

dynamometer coefficients) and the associated CREE emission standard. The 

manufacturer shall provide the method of identifying EPA engine code for applicable inuse vehicles. 

56. 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 model year, each manufacturer shall 

submit a pre-model year report. 

(2) The pre-model year report required by this section for each model year must 

be submitted before the model year begins and before the certification of any test group, 

no later than December 31 of the calendar year two years before the model year. For 

example the pre-model year report for the 2012 model year must be submitted no later 

than December 31, 2010). 

(3) Each report required by this section must: 
1449 

(i) Identify the report as a pre-model year report; 

(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) Be based upon all information and data available to the manufacturer 

approximately 30 days before the report is submitted to the Administrator. 

(b) Content of pre model year reports. (1) Each pre-model year report must 

include the following information for each compliance category for the applicable future 

model year and to the extent possible, two model years into the future: 

(i) The manufacturer’s estimate of it’s footprint-based fleet average CO2 standards 

(including temporary lead time allowance alternative standards, if applicable); 

(ii) Projected total and model-level production volumes for each applicable 

standard category; 

(iii) Projected fleet average CO2 compliance level for each applicable standard 

category; and the model-level CO2 emission values which form the basis of the 

projection; 

(iv) Projected fleet average CO2 credit/debit status for each applicable standard 

category; 
1450 

(v) A description of the various credit, transfer and trading options that will be 

used to comply with each applicable standard category, including the amount of credit the 

manufacturer intends to generate for air conditioning leakage, air conditioning efficiency, 

off-cycle technology, and various early credit programs; 

(vi) A description of the method which will be used to calculate the carbonrelated exhaust emissions for any electric vehicles, fuel cell vehicles and plug-in hybrid 

vehicles; 

(vii) A summary by model year (beginning with the 2009 model year) of the 

number of electric vehicles, fuel cell vehicles and plug-in hybrid vehicles using (or 

projected to use) the advanced technology vehicle incentives program; 

(viii) The methodology which will be used to comply with N2O and CH4 emission 

standards; and 

(ix) Other information requested by the Administrator. 

(2) Manufacturers must submit, in the pre-model year report for each model year 

in which a credit deficit is generated (or projected to be generated), a compliance plan 

demonstrating how the manufacturer will comply with the fleet average CO2 standard by 

the end of the third year after the deficit occurred. 
1451 

Department of Transportation 

49 CFR Chapter V 

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 amends 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 as follows: 

a. By revising paragraph (a) introductory text. 

b. By revising paragraph (c). 

c. By redesignating paragraph (d) as paragraph (e). 

d. By adding a new paragraph (d). 
1452 

§ 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. 

Where: 

CAFErequired is the required level for a given fleet (domestic passenger 

automobiles or import passenger automobiles), 

Subscript i is a designation of multiple groups of automobiles, where each group’s 

designation, i.e,, i = 1, 2, 3, etc., represents automobiles that share a unique model 

type and footprint within the applicable fleet, either domestic passenger 

automobiles or import passenger automobiles. 
1453 

Productioni is the number of passenger automobiles produced for sale in the 

United States within each ith designation, i.e., which shares the same model type 

and footprint. 

TARGETi is the fuel economy target in miles per gallon (mpg) applicable to the 

footprint of passenger automobiles within each ith designation, i.e., which shares 

the same model type and footprint, calculated according to Figure 3 and rounded 

to the nearest hundredth of a mpg, i.e., 35.455 = 35.46 mpg, and the summations 

in the numerator and denominator are both performed over all models in the fleet 

in question. 

Figure 3: 

1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

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. 

TABLE III—PARAMETERS FOR THE PASSENGER AUTOMOBILE FUEL ECONOMY TARGETS
1454 

Parameters Model year 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.......................................... 27.8 

2012.......................................... 30.7 

2013.......................................... 31.4 

2014.......................................... 32.1 

2015.......................................... 33.3 

2016.......................................... 34.7 

* * * * * 

3. Add Appendix A to Part 531 to read as follows: 

APPENDIX A TO PART 531 – EXAMPLE OF CALCULATING COMPLIANCE UNDER §531.5(c) 

Assume a hypothetical manufacturer (Manufacturer X) produces a fleet of 

domestic passenger automobiles in MY 2012 as follows: 
1455 

Appendix A, Table 1 

Model Type 

Group Carline 

Name 

Basic 

Engine 

(L) 

Transmission 

Class Description 

Actual Measured 

Fuel Economy 

(mpg) 

Volume 

1 PC A FWD 1.8 A5 2-door sedan 34.0 1,500 

2 PC A FWD 1.8 M6 2-door sedan 34.6 2,000 

3 PC A FWD 2.5 A6 4-door wagon 33.8 2,000 

4 PC A AWD 1.8 A6 4-door wagon 34.4 1,000 

5 PC A AWD 2.5 M6 2-door hatchback 32.9 3,000 

6 PC B RWD 2.5 A6 4-door wagon 32.2 8,000 

7 PC B RWD 2.5 A7 4-door sedan 33.1 2,000 

8 PC C AWD 3.2 A7 4-door sedan 30.6 5,000 

9 PC C FWD 3.2 M6 2-door coupe 28.5 3,000 

 Total 27,500 

NOTE TO APPENDIX A, TABLE 1. Manufacturer X’s required corporate average fuel 

economy level standard under §531.5(c) would first be calculated by determining the fuel 

economy targets applicable to each unique model type and footprint combination for 

model type groups 1-9 as illustrated in Appendix A, Table 2: 

Appendix A, Table 2 

Manufacturer X calculates a fuel economy target standard for each unique model type 

and footprint combination. 
1456 

Model Type 

Group Carline 

Name 

Basic 

Engine 

(L) 

Transmission 

Class Description Base Tire 

Size 

Wheelbase 

(inches) 

Track 

Width 

F&R 

Average 

(inches) 

Footprint 

(ft2

) Volume 

Fuel 

Economy 

Target 

Standard 

(mpg) 

1a PC A 

FWD 1.8 A5 2-door 

sedan 205/75R14 99.8 61.2 42.4 900 35.27 

1b PC A 

FWD 1.8 A5 2-door 

sedan 215/70R15 99.8 60.9 42.2 600 35.40 

2 PC A 

FWD 1.8 M6 2-door sedan 215/70R15 99.8 60.9 42.2 2,000 35.40 

3 PC A 

FWD 2.5 A6 4-door wagon 215/70R15 100.0 60.9 42.3 2,000 35.35 

4 PC A 

AWD 1.8 A6 4-door 

wagon 235/60R15 100.0 61.2 42.5 1,000 35.21 

5 PC A 

AWD 2.5 M6 2-door hatchback 225/65R16 99.6 59.5 41.2 3,000 36.12 

6a PC B 

RWD 2.5 A6 4-door wagon 235/65R16 109.2 67.2 51.0 4,000 30.40 

6b PC B 

RWD 2.5 A6 4-door 

wagon 265/55R18 109.2 66.8 50.7 4,000 30.55 

7 PC B 

RWD 2.5 A7 4-door 

sedan 235/65R17 109.2 67.8 51.4 2,000 30.18 

8 PC C 

AWD 3.2 A7 4-door sedan 265/55R18 111.3 67.8 52.4 5,000 29.71 

9 PC C 

FWD 3.2 M6 2-door 

coupe 225/65R16 111.3 67.2 51.9 3,000 29.93 

 Total 27,500 

 

NOTE TO APPENDIX A, TABLE 2. With the appropriate fuel economy targets 

determined for each unique model type and footprint combination, Manufacturer X’s 

required fuel economy target standard would be calculated as illustrated in Appendix A, 

Figure 1. 
1457 

Appendix A, Figure 1 

Calculation of Manufacturer X’s target fuel economy standard 

Fleet’s target fuel economy standard = 31.8 mpg 

Appendix A, Figure 2 

Calculation of Manufacturer X’s actual fuel economy value. 

Fleet’s actual fuel economy = 32.0 mpg 

Manufacturer's Domestic Passenger Automobile Production for Applicable Model Year

Group1 Group2 Group3 Group4 Group5

Volume Volume Volume Volume Volum

Group1 Group2 Group3 Group4

FuelEcon FuelEcon FuelEcon FuelEcon

++++

Group6 Group7 Group8 Group9

e Volume Volume Volume Volume

Group5 Group6 Group7 Group8 Group9

FuelEcon FuelEcon FuelEcon FuelEcon FuelEcon

27,500 1500 2000 2000 1

34.0 34.6 33.8

⎡ ⎤

⎢ ⎥ ⎢ ++++ ⎥ ⎢ ⎥ ⎢ ⎥ ⎣ ⎦

+++

000 3000 8000 2000 5000 3000

34.4 32.9 32.2 33.1 30.6 28.5

⎡ ⎤ +++++ ⎢ ⎥ ⎣ ⎦

Manufacturer's Domestic Passenger Automobile Production for Applicable Model Year

Group1a Group1b Group2 Group3 Group7

Volume Volume Volume Volume Volume

Group1a Group1b Group2 Group3 G

Target Target Target Target

+ + + ++ L

Group8 Group9

Volume Volume

roup7 Group8 Group9

Target Target Target

27,500

900 600 2000 2000 1000 3000 4000 4000 2000 5000 3000

35.27 35.40 35.40 35.35 35.21 36.12 30.40 30.55 30.18 29.71 29.93

⎡ ⎤ ⎢ ⎥

+ +

⎣ ⎦

⎡ ⎤ ++++++ ++++ ⎢ ⎥ ⎣ ⎦
1458 

NOTE TO APPENDIX A, FIGURE 2. Since the actual average fuel economy of Manufacturer 

X’s fleet is 32.0 mpg, as compared to its required fuel economy level of 31.8 mpg, 

Manufacturer X complied with the CAFE standard for MY 2012 as set forth in 

section 531.5(c). 

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) * * * 

* * * * * 
1459 

Where: 

CAFErequired is the required level for a given fleet, 

Subscript i is a designation of multiple groups of light trucks, where each group’s 

designation, i.e,, i = 1, 2, 3, etc., represents light trucks that share a unique model 

type and footprint within the applicable fleet. 

Productioni is the number of units of light trucks produced for sale in the United 

States within each ith designation, i.e., which share the same model type and 

footprint. 

TARGETi is the fuel economy target in miles per gallon (mpg) applicable to the 

footprint of light trucks within each ith designation, i.e., which shares the same 

model type and footprint, calculated according to Figure 3 and rounded to the 

nearest hundredth of a mpg, i.e., 35.455 = 35.46 mpg, and the summations in the 

numerator and denominator are both performed over all models in the fleet in 

question. 

Figure 3: 1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

a b

= ⎡ ⎛ ⎞ ⎤ ⎜ ⎟ × + ⎢ ⎥ ⎣ ⎝ ⎠ ⎦
1460 

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

Parameters Model year a b c d 

2012................................. 29.44 22.06 0.0004546 0.01533 

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: 
1461 

APPENDIX A TO PART 533 -- EXAMPLE OF CALCULATING COMPLIANCE UNDER §533.5(i) 

Assume a hypothetical manufacturer (Manufacturer X) produces a fleet of light 

trucks in MY 2012 as follows: 

Appendix A, Table 1 

Model Type 

Group Carline Name 

Basic 

Engine 

(L) 

Transmission 

Class Description 

Actual Measured 

Fuel Economy 

(mpg) 

Volume 

1 Pickup A 

2WD 4 A5 Reg cab, MB 27.1 800 

2 Pickup B 

2WD 4 M5 Reg cab, MB 27.6 200 

3 Pickup C 

2WD 4.5 A5 Reg cab, LB 23.9 300 

4 Pickup C 

2WD 4 M5 Ext cab, MB 23.7 400 

5 Pickup C 

4WD 4.5 A5 Crew cab, SB 23.5 400 

6 Pickup D 

2WD 4.5 A6 Crew cab, SB 23.6 400 

7 Pickup E 

2WD 5 A6 Ext cab, LB 22.7 500 

8 Pickup E 

2WD 5 A6 Crew cab, MB 22.5 500 

9 Pickup F 2WD 4.5 A5 Reg cab, LB 22.5 1,600 

10 Pickup F 4WD 4.5 A5 Ext cab, MB 22.3 800 

11 Pickup F 4WD 4.5 A5 Crew cab, SB 22.2 800 

 Total 6,700 

NOTE TO APPENDIX A, TABLE 1. Manufacturer X’s required corporate average 

fuel economy level under § 533.5(i) would first be calculated by determining the fuel 

economy targets applicable to each unique model type and footprint combination for 

model type groups (1-11) illustrated in Appendix A, Table 2: 
1462 

Appendix A, Table 2 

Manufacturer X calculates a fuel economy target standard value for each unique model 

type and footprint combination. 

Model Type 

Group Carline 

Name 

Basic 

Engine 

(L) 

Transmission 

Class Description Base Tire 

Size 

Wheelbase 

(inches) 

Track 

Width 

F&R 

Average 

(inches) 

Footprint 

(ft2

) Volume 

Fuel 

Economy 

Target 

Standard 

(mpg) 

1 Pickup 

A 2WD 4 A5 Reg cab, MB 235/75R15 100.0 68.8 47.8 800 26.99 

2a Pickup 

B 2WD 4 M5 Reg cab, 

MB 235/75R15 100.0 68.2 47.4 100 27.13 

2b Pickup 

B 2WD 4 M5 Reg cab, 

MB 235/70R16 100.0 68.4 47.5 100 27.08 

3 Pickup 

C 2WD 4.5 A5 Reg cab, LB 255/70R17 125.0 68.8 59.7 300 23.54 

4 Pickup 

C 2WD 4 M5 Ext cab, MB 255/70R17 125.0 68.8 59.7 400 23.54 

5 Pickup 

C 4WD 4.5 A5 Crew cab, 

SB 275/70R17 150.0 69.0 71.9 400 22.06 

6a Pickup 

D 2WD 4.5 A6 Crew cab, SB 255/70R17 125.0 68.8 59.7 200 23.54 

6b Pickup 

D 2WD 4.5 A6 Crew cab, 

SB 285/70R17 125.0 69.2 60.1 200 23.45 

7 Pickup 

E 2WD 5 A6 Ext cab, LB 255/70R17 125.0 68.8 59.7 500 23.54 

8 Pickup 

E 2WD 5 A6 Crew cab, MB 285/70R17 125.0 69.2 60.1 500 23.45 

9 Pickup 

F 2WD 4.5 A5 Reg cab, LB 255/70R17 125.0 68.9 59.8 1,600 23.52 

10 Pickup 

F 4WD 4.5 A5 Ext cab, MB 275/70R17 150.0 69.0 71.9 800 22.06 

11 Pickup 

F 4WD 4.5 A5 Crew cab, SB 285/70R17 150.0 69.2 72.1 800 22.06 

 Total 6,700 

NOTE TO APPENDIX A, TABLE 2. With the appropriate fuel economy targets 

determined for each unique model type and footprint combination, Manufacturer X’s 

required fuel economy target standard would be calculated as illustrated in Appendix A, 

Figure 1. 
1463 

Appendix A, Figure 1 

Calculation of Manufacturer X’s target fuel economy standard value. 

Fleet’s target fuel economy standard = 23.5 mpg 

Appendix A, Figure 2 

Calculation of Manufacturer X’s actual fuel economy value. 

Fleet’s actual fuel economy value = 23.3 mpg 

Manufacturer's Light Truck Production for Applicable Model Year

Group1 Group2 Group3 Group4 Group5 Gr

Volume Volume Volume Volume Volume

Group1 Group2 Group3 Group4 Group5

FuelEcon FuelEcon FuelEcon FuelEcon FuelEcon

+++++

oup6 Group7 Group8 Group9 Group10 Group11

Volume Volume Volume Volume Volume Volume

Group6 Group7 Group8 Group9 Group10 Group11

FuelEcon FuelEcon FuelEcon FuelEcon FuelEcon FuelEcon

 

⎡ ⎤ ⎢ ⎥

⎢ +++++ ⎥ ⎢ ⎥ ⎢ ⎥ ⎣ ⎦

6,700 800 200 300 400 400 400 500 500 1600 800 800

27.1 27.6 23.9 23.7 23.5 23.6 22.7 22.5 22.5 22.3 22.2

⎡ ⎤ +++ +++++ ++ ⎢ ⎥ ⎣ ⎦

Manufacturer's Light Truck Production for Applicable Model Year Group1 Group2a Group2b Group3 Group9

Volume Volume Volume Volume Volume

Group1 Group2a Group2b Group3 Gro

Target Target Target Target

+ + + ++ L

Group10 Group11

Volume Volume

up9 Group10 Group11

Target Target Target

6,700

800 100 100 300 400 400 200 200 500 500 1600 800 800

26.99 27.13 27.08 23.54 23.54 22.06 23.54 23.45 23.54 23.45 23.52 22.06 22.06

⎡ ⎤ ⎢ ⎥ ⎢ + + ⎥ ⎢ ⎥ ⎢ ⎥ ⎣ ⎦

⎡ ++++++++++++ ⎢

⎣

⎤

⎥

⎦
1464 

NOTE TO APPENDIX A, FIGURE 2. Since the actual average fuel economy of 

Manufacturer X’s fleet is 23.3 mpg, as compared to its required fuel economy level of 

23.5 mpg, Manufacturer X did not comply with the CAFE standard for MY 2012 as set 

forth in section 533.5(i). 

* * * * * 

PART 536—TRANSFER AND TRADING OF FUEL ECONOMY CREDITS

7. The authority citation for part 563 continues to read as follows: 

Authority: Sec. 104, Pub. L. 110-140 (49 U.S.C. 32903); delegation of authority at 49 

CFR 1.50. 

8. Amend § 536.3 by revising the definition of “Transfer” in paragraph (b) to read as 

follows: 

§ 536.3 Definitions 

* * * * * 

 (b) * * * 

Transfer means the application by a manufacturer of credits earned by that 

manufacturer in one compliance category or credits acquired be trade (and originally 

earned by another manufacturer in that category) to achieve compliance with fuel 
1465 

economy standards with respect to a different compliance category. For example, a 

manufacturer may purchase light truck credits from another manufacturer, and transfer 

them to achieve compliance in the manufacturer’s domestically manufactured passenger 

car fleet. Subject to the credit transfer limitations of 49 U.S.C. 32903 (g)(3), credits can 

also be transferred across compliance categories and banked or saved in that category to 

be carried forward or backwards later to address a credit shortfall. 

* * * * * 

9. Amend §536.4 by revising the values for the lifetime vehicle miles traveled used in 

the terms VMTe and VMTu required to calculate the adjustment factor in paragraph (c) to 

read as follows: 

VMTe = Lifetime vehicle miles traveled as provided in the following table for the 

model year and compliance category in which the credit was earned. 

VMTu = Lifetime vehicle miles traveled as provided in the following table for the 

model year and compliance category in which the credit is used for compliance. 

 

Model Year Lifetime Vehicle Miles Traveled (VMT) 

2012 2013 2014 2015 2016 

Passenger 

Cars 

177,238 177,366 178,652 180,497 182,134 

Light Trucks 208,471 208,537 209,974 212,040 213,954 
1466 

* * * * * 

PART 537—AUTOMOTIVE FUEL ECONOMY REPORTS

10. 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. 

11. 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. 

* * * * * 

12. Amend § 537.6 by removing paragraph (c)(1) and redesignating paragraph (c)(2) as 

paragraph (c). 
1467 

§ 537.6 [Amended] 

13. 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, 

* * * * * 

14. Amend § 537.8 by revising paragraph (c)(1) and removing and reserving paragraph 

(c)(2) to read as follows: 

§ 537.8 Supplementary reports.

* * * * * 
1468 

 (c)(1) Each report required by paragraph (a)(1), (2), or (3) of this section must be 

submitted in accordance with 537.5(c) not more than 45 days after the date on which the 

manufacturer determined, or could have determined with reasonable diligence, that a 

report is required under paragraph (a)(1), (2), or (3) of this section. 

(2) [Reserved] 

* * * * * 

15. Amend § 537.9 by revising paragraph (c) to read as follows: 

§ 537.9 Determination of fuel economy values and average fuel economy.

* * * * * 

 (c) Average Fuel Economy. Average fuel economy must be based upon fuel 

economy values calculated under paragraph (b) of this section for each model type and 

must be calculated in accordance with subpart F of 40 CFR part 600, except that fuel 

economy values for running changes and for new base levels are required only for those 

changes made or base levels added before the average fuel economy is required to be 

submitted under this part. 

* * * * * 

PART 538—MANUFACTURING INCENTIVES FOR ALTERNATIVE FUEL 

VEHICLES

16. The authority citation for part 538 continues to read as follows: 
1469 

Authority: 49 U.S.C. 32901, 32905, and 32906; delegation of authority at 49 CFR 1.50. 

17. 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. 

18. 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 natural gas. 

 

19. Amend § 538.7 by revising paragraph (b)(1) to read as follows: 
1470 

Final Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standards 

Page 1469/1469 

§ 538.7 Petitions for reduction of minimum driving range

* * * * * 

 (b) Each petition shall: 

 (1) Be addressed to: Administrator, National Highway Traffic Safety 

Administration, 1200 New Jersey Avenue, SE, Washington, DC 20590. 

* * * * * 

Dated: April 1, 2010 

____________________ 

Ray LaHood, 

Secretary, Department of Transportation 

Dated: April 1, 2010 

____________________ 

Lisa P. Jackson, 

Administrator, Environmental Protection Agency