***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

1 of EO12866_GHG+Fuel Eff Stds for Med - Heavy - Duty Engines+Vehicles 2060 - AP61 FRM Preamble_20110725.docx **ENVIRONMENTAL PROTECTION AGENCY**  40 CFR Parts 85, 86, 600, 1033, 1036, 1037, 1039, 1065, 1066, and 1068 **DEPARTMENT OF TRANSP ORTATION**  National Highway Traffic Safety Administration 49 CFR Parts 5 23, 534, and 5 35 [EPA

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– 0162; NHTSA - 2010 - 00 79 ; FRL - xxxx - x] RI N 2060 - AP61; RI

N 2127 - AK74 Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium - and Heav y- Duty

Engines and Vehi cles AGENCIES: Environmental Protection Agency (EPA) and National Highway Traffi c Safety Administration (NHTSA) ACTION: Final Rules

__________________________________________________________________ SUMMARY: EPA and NHTSA , on behalf of the Department of Transportation, are each finalizing rules to establish a comprehensive H eavy- D uty N ational P rogram that will reduce greenhouse gas emissions and fuel consumption for on - road heav y- duty vehicles , responding to the President’s directive on May 21, 2010, to take coordinated steps to produce a new generation of clean vehicles . NHTSA’s final fuel consumption standards and EPA’s final carbon dioxide ( CO 2 ) emissions standards are tailored to each of three regulatory

categories of he av y- duty vehicles: ( 1 ) Combination Tractors ; (2 ) Heav y- duty Pickup Trucks and Vans; and (3) Vocational Vehicles. The rules include separate standards for the engines that power combination tractors and vocational vehicles. Certain rules are exclusive to the EPA program. These include EPA ’ s final hydrofluorocarbon emissions standards to control leakage from air conditioning s ys tems in combination tractors, and pickup trucks and vans. These also include EPA’s final nitrous oxide (N 2 O) and methane (CH 4 ) emis sions standards that will appl y to all heav y duty engines, pickup truck s and vans. EPA is also finalizing provisions allowing light duty vehicle manufacturers to use CO 2 credits to meet the light - duty vehicle N 2 O and CH 4 standards , technical amendments to the fuel economy provisions for light - duty vehicles in 40 CFR part 600, and a technical amendment to the criteria pollutant emissions require ment s for certain switch locomotives in 40 CFR part 1039 . EPA’s final greenhouse gas emiss ion standards under the Clean Air Act w ill begin with model year 2014. NHTSA’s final fuel consumption standards under the Energy2 of

Independence and Security Act of 2007 w ill be voluntary in model years 2014 and 2015, becoming mandatory with model year 201 6 for most regulatory categories . Commercial trailers are not regulated in this phase of the Heavy- Duty National Program. The agencies estimate that the combined standards will reduce CO 2 emissions by approximately 2 7 0 million metric tons and save over 500 million barrels of oil over the life of vehicles sold during the 2014 through 2018 model years , providing over $ 7 b illion in net societal benefits, and $4 9 b illion in net societal benefits when private fuel savings are considered . DATES: These final rules are effective on **[Insert date 6**  **0 days after publication in the Federal**  **Register] ,**  sixt

y days after date of

publication in the **Federal Register** . The incorporation b y reference of certain publications listed in this regulation is approved b y the Director of the Federal Register as of **[Insert date 6 0 days**  **after publication in the**  **Federal Register]** . **ADDRESSES:** EPA and NHTSA have established dockets for this action under Docket ID No. EPA

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– 0162 and NHTSA - 2010 - 0079 , 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 availab le, e.g. , confidential business information or other information whose disclosure is restricted b y statute. Certain other material, such as cop yri ghted material, is not placed on the Internet and will be publicly available onl y in h ard copy form. Publicly

available docket materials are available either electronically

through www.regulations.gov or in hard cop y at the following locations: **EPA** : EPA Docket Center, EPA/DC , EPA West Building, 1301 Constitution Ave., N.W., Room 3334, Was hington DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday

through Friday , excluding legal holiday s. The telephone number for the Public Reading Room is (202) 566

– 174 4, and the telephone number for the Air Docket is (202) 566 - 1742. **NH TSA**  : 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 holiday s. **FOR FURTHER INFORMATION CONTACT:** NHTSA: Li ly Smith , Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE, Washington, DC 20590. Telephone: (202) 366 - 2992. EPA: Lauren Steele , Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency , 2000 Traverwood Drive, Ann Arbor, MI48105; telephone number: (734) 214 - 4788 ; fax number: (734) 214 - 4816 ; email addre ss: steele.lauren@epa.gov , or contact the Assessment and Standards Division , email OTAQPUBLICWEB @epa.gov. SUPPLEMENTARY INFORMATION:***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

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### A. **Does this Action Apply to Me** This action affect s companies that manufacture, sell, or import into the United States new heav y- duty engines and new Class 2b through 8 trucks, including combination tractors, school and transit buses, vocational vehicles such as utility service trucks, as well as 3⁄4 - ton and 1 - ton pickup trucks and vans. The heav y- duty category incorporates all motor vehicles with a gross vehicle weight rating of 8,500 pounds or greater, and the engines that power them, except for medium - duty passenger vehicles already covered by

the greenh ouse gas emissions standards and corporate average fuel econom y standards issued for light - dut y model ye ar 2012 - 2016 vehicles. Regulated categories and entities include the following: Category NAI CS Code a Examples of Potentially Affected Entities Industry 336111 Motor Vehicle Manufacturers, Engine and Truck Manufacturers 336112 336120 Industry 541514 Commercial Importers of Vehicles and Vehicle Components 811112 811198 Industry 336111 Alternative Fuel Vehicle Converters

336112 422720 454312 541514 541690 811198 Industry 333618 Manufacturers, remanufacturers and importers of locomotives and locomotive engines 336510 Note: a North American Industry Classification System (NAICS) This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely covered by th ese rules . This table lists the ty pes of entities that the agencies are aware may be regulated by this action. Other ty

pes of enti ties not listed in the table could also be regulated. To determine whether your activities are regulated by this action, you should carefully examine the applicability criteria in the referenced regulations. You may

direct questions regarding the applicability of this action to the persons listed in the preceding **FOR FURTHER INFORMATION CONTACT** section.

**Table of Contents**4 of

I. Overview A. Introduction B. Building Blocks of the Heav y- duty National Program C. Summary

of the Final EPA and NHTSA HD National Program D. Summary

of Costs and Benefits of the HD National Program E. Program Flexibilities F. EPA and NHTSA Statutory Authorities G. Future HD GHG and Fuel Consumption Rulemakings II. Final GHG and Fuel Consumption Standards for Heav y- duty Engines and Vehicles A. What Vehicles Will Be Affected? B. Class 7 and 8 Combination Tract ors C. Heav y- Dut y Pickup Trucks and Vans D. Class 2b - 8 Vocational Vehicles E. Other Standards Provisions III. Feasibility Assessments and Conclusions A. Class 7 - 8 Combination Tractor B. Heav y- Dut y Pickup Trucks and Vans C. Class 2b - 8 Vocational Vehicles IV . Final Regulatory

Flexibility

Provisions A. Averaging, Banking, and Trading Program B. Additional Flexibility

Provisions V. NHTSA and EPA Compliance, Certification, and Enforcement Provisions A. Overview B. Heav y- duty Pickup Trucks and Vans C. Heav y- Dut y Engines D. Class 7 and 8 Co mbination Tractors E. Class 2b - 8 Vocational Vehicles F. General Regulatory

Provisions G. Penalties VI . How Will This Program Impact Fuel Consumption, GHG Emissions, and Climate Change?***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

5 of A. What Methodologies Did the Agencies Use to Project GHG Emissions and Fuel Consumption Impacts? B. MOVES Anal ys is C. What Are the Projected Reductions in Fuel Consumption and GHG Emissions? D. Overview of Climate Change Impacts from GHG Emissions E. Changes in Atmospheric CO 2 Concentrations, Global Mean Temperature, Sea Level Rise, and Ocean pH Associated with the Program’s GHG Emissions Reductions VII. How Will This Final Action Impact Non - GHG Emissions and Their Associated Effects? A. Emissions Inventory

I mpacts B. Health Effects of Non - GHG Pollutants C. Environmental Effects of Non - GHG Pollutants D. Air Quality Impacts of Non - GHG Pollutants VIII. What are the Agencies’ Estimated Cost, Economic, and Other Impacts of the Final Program? A. Conceptual Framework for Evaluating Impacts B. Costs Associated With the Final Program C. Indirect Cost Multipliers D. Cost per Ton of Emissions Reductions E. Impacts of Reduction in Fuel Consumption F. Class Shifting and Fleet Turnover Impacts G. Benefits of Reducing CO 2 Emissions H. Non - GHG Health and Environmental Impacts I. Energ y Security Impacts J. Other Impacts K. The Effect of Safety Standards and Voluntary Safety Improvements on Vehicle Weight L. Summary

of Costs and Benefits from the Greenhouse Gas Emissions Perspective M. Summary

of Costs and Benefits from the Fuel Efficiency Perspective N. Employ

ment Impacts IX . Anal ys is of the Alternatives A. What Are the Alternatives that the Agencies Considered?6 of

B. How Do These Alternatives Compare in Overall GHG Emissions Reductions and Fuel Efficiency

and Cost? C . What I s the Agencies’ Decision Regarding Trailer Standards? X. Public Participation XI . NHTSA’s Record of Decision A. The Agency ’s Decision B. Alternatives Considered by NHTSA in Reaching its Decision, Including the Environmentally

Preferable Alternative C. Factors Balanced b y NHTSA in Making its Decision D. How the Factor s and Considerations Balanced by NHTSA Entered into its Decision E. The Agency ’s Preferences among Alternatives Based on Relevant Factors, Including Economic and Technical Considerations and Agency Statutory Missions F. Mitigation XII. Statutory

and Executive Order Reviews XIII. Statutory

Provisions and Legal Authority A. EPA B. NHTSA 

## I. **Overview A.**  **Introduction** EPA and NHTSA (“the agencies”) are announcing a first - ever program to reduce greenhouse gas (GHG) emissions and fuel consumption in the heavy - duty highway vehicle sector. This broad sector

– ranging from large pickups to sleeper - cab tractor s – together represent the second largest contributor to oil consumption and GHG emission s from the mobile source sector , after light - duty passe nger cars and trucks. These are the second joint rules issued by the agencies, following on the April 1, 2010 standards to sharply reduce GHG emissions and fuel consumption from MY 2012 - 2016 passenger cars and light trucks (published on May 7, 2010 at 75 FR 25324 ). In a May 21, 2010 memorandum to the Administrators of EPA and NHTSA (and the Secretaries of Transportation and Energy) , the President stated that “America has the opportunity

to lead the world in the development of a new generation of clean cars and trucks through innovative technologies and manufacturing that will spur economic growth and create high - quality domestic jobs, enhance our energy security , and improve***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

7 of our environment.” 2 , 3 In the May 2010 memorandum, the President s pecifically request ed the Administrators of EPA and NHTSA to “immediately begin work on a joint rulemaking under the Clean Air Act (CAA) and the Energy Independence and Security Act of 2007 (EISA) to establish fuel efficiency and greenhouse gas emissions standards for c ommercial m edium - and h eav y- d uty o n - h ighway v ehicles and w ork trucks beginning with the 2014 model year (MY).” In this final rulemaking each agency is addressing this Memorandum b y adopting rules under its respective authority that together comprise a coordinated and comprehensive HD National Program designed to address the urge nt and closely intertwined challenges of reduction of dependence on oil, achievement of energy security, and amelioration of global climate change. At the same time, the final program will enhance American competitiveness and job creation, benefit consumers and businesses b y reducing costs for transporting goods, and spur growth in the clean energy sector. The HD National Program the agencies are finalizing today reflects a collaborative effort between the agencies, a range of public interest nongovernmental organizations (NGOs), the state of California and the regulated industry . At the time of the President’s announcement, a number of major HD truck and engine manufacturers representing the vast majority of this industry , and the California Air Resources Board (California ARB) , sent letters to EPA and NHTSA supporting the creation of a HD National Program based on a common set of principles. In the letters, the stakeholders committed to working with the agencies and with other stakeholders t oward a program consistent with common principles, including:  In creased use of existing technologies to achieve significant GHG emissions and fuel consumption reductions;  A program that starts in 2014 and is fully phased in by 2018;  A program that w orks towards harmonization of methods for determining a vehicle’s GHG and fuel efficiency , recognizing the global nature of the issues and the industry ;  Standards that recognize the commercial needs of the trucking industry ; and  In centives leading to the earl y introduction of advanced technologies. The final rules adopted today reflect these principles.

2 Improving Energy Security, American Competitiveness and Job Creation, and Environmental Protection Through a Transformation of Our Nation’s Fleet of Cars And Trucks , ” Issued May 21, 2010, published at 75 FR 29399 , May 26, 2010 . 3 The May 2010 Presidential Memorandum also directed EPA and NHTSA, in close coordination with the California Air Resources Board, to build on the National Program for 2012 - 2016 MY light - duty vehicles by developing and proposing coordinated light - duty vehicle standards for MY 2017 - 2025. The agencies have taken an initial step in this process, releasing a Joint Notice of Intent and Initial Joint Technical Assessment Report in September 2010 (75 FR 62739) , and a Supplemental Notice of Intent (75 FR 76337). The agencies p lan to issue a full light - duty vehicle proposal to extend the National Program to MY 2017 - 2025 in September 2011.8 of The final HD National Program builds on many years of heavy- duty engine and vehicle technology

development to achieve what the agencies believe is the greatest d egree of fuel consumption and GHG emission reduction appropriate , technologicall y and economically

feasible, and cost - effective for model years 2014 - 2018 . In addition to taking aggressive steps that are reasonably possible now, based on the technological opportunities and pathways that present themselves during these model years , the agencies and industry

will also continue learning about emerging opportunities for this complex sector to further reduce fuel consumption and GHG emission through future regulatory

steps . Similarly , the agencies will parti cipate in efforts to improve our ability to accuratel y characterize the actual in - use fuel consumption and emissions of this complex sector. As technologi es progress in the coming years and as the agencies improve the regulatory

tools to evaluate real world vehicle performance , we expect that we will develop a second phase of regulations to reinforce these initial rules and achieve further reductions in GHG emissions and fuel consumption reduction for the mid - and longer term time frame (beyond 2018) . The agencies are committed to working with all interested stakeholders in this effort and to the extent possible working towards alignment with similar programs being developed in Canada, Mexico, Europe, China, and Japan. In doing so, we will continue t o evaluate man y of the structural and technical decisions we are making in today ’s final action in the context of new technologies and the new regulatory

tools that we expect to realize in the future. The regulatory

program we are finalizing today is large ly unchanged from the proposal the agencies made on November 30, 2010 (see 75 FR 741512) . The structure of the program and the stringency of the standards are essentiall y the same as proposed. We have made a number of changes to the tes ting requirements and reporting requirements to provide greater regulatory certainty and better align the NHTSA and EPA portions of the program. In response to comments, we have also made some changes to the averaging, banking and trading (ABT) provisions of the program that will make implementation of this final program more flexible for manufacturers. We have added provisions to further encourage the development of advanced technologies and to provide a more straightforward mechanism to certify engines and vehicles using innovative technologies. Finally in response to comments, we have made some technical changes to our emissions compliance model that results in different numeric standards for both combination tractors and vocational vehicles to more ac curately characterize emissions while maintaining the same overall stringency and therefore expected costs and benefits of the program. Heav y- dut y vehicles move much of the nation ’ s freight and carry out numerous other tasks, including utility work, concre te delivery , fire response, refuse collection, and many more. Heavy- duty vehicles are primaril y powered b y diesel engines, although about 37 percent of these vehicles are powered b y gasoline engines. 4 Heav y - duty trucks 5

4 References in this preamble to “gasoline” engines (and the vehicles powered by them) generally include other Otto - cycle engines as well, suc h as those fueled by ethanol and natural gas, except in contexts that are clearly gasoline - specific.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

9 of have long been an important part of the goods movement infrastructure in this country and have experienced significant growth over the last decade related to increased imports and exports of finished goods and increased shipping of finished goods to homes through internet purchases. The heav y - duty

sector is extremely

diverse in several respects, including types of manufacturing companies involved, the range of sizes of trucks and engines they produce, the types of work the trucks are designed to perform, and the regulatory history of different subcategories of vehicles and engines. The current heav y- duty fleet encompasses vehicles from the “ 18 - wheeler ” combination tractors one sees on the highway to school and transit buses, to vocational vehicles such as utility service trucks, as we ll as the largest pickup trucks and vans. For purposes of this preamble, the term “ heavy- duty” or “ HD ” is used to apply to all highway

vehicles and engines that are not within the range of light - duty vehicles, light - duty trucks, and medium - duty passenger v ehicles (MDPV) covered by the GHG and Corporate Average Fuel Economy (CAFE) standards issued for MY 2012 - 2016. 7 Italso does not include motorcycles. Thus, in this rulemaking, unless specified otherwise, the heav y- duty category incorporates all vehicles with a gross vehicle weight rating above 8,500 pounds, and the engines that power them, except for MDPVs. 8 The agencies proposed to cover all segments of the heav y- duty category above, except with respect to recreati onal vehicles ( RV’s or motor homes). We note that the Energy Independence and Security Act of 2007 requires NHTSA to set standards for “ commercial medium - and heav y- duty on - highway vehicles and work trucks. ” 9 The standards that EPA is finalizing today cover r ecreational on - h ighway vehicles , while NHTSA proposed not to include recreational vehicles based on an interpretation of the term “ commercial medium - and heav y- duty on - highway commercial” vehicles. NHTSA stated in the NPRM that recreational vehicles are non - commercial, and therefore outside of the ter

m and the scope of its rule. Oshkosh Corporation commented that this interpretation did not match the statutory definition of the term in EI SA, which defines “commercial medium - and heav y -

5 In this rulemaking, EPA and NHTSA use the term “truck” in a general way, referring to all categories of regulated heavy - duty highway vehicles (including buses). As such, the term is generally interchangeable with “heavy - duty vehicle.” 7 Light - Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule 75 FR 25323, May 7, 2010. 8 The CAA defines heavy - duty as a truck , bus or other motor vehicles with a gross vehicle weight rating exceeding 6 , 000 pounds ( CAA section 202(b)(3) ) . The term HD as used in this action refers to a subset of these vehicles and engines. 9 49 U.S.C. 32902(k)(2). “Commercial medium - and heavy - duty on - highway vehicles” are defined as on highway vehicles with a gross vehicle weight rating of 10,000 pounds or more, while “work trucks” are defined as vehicles rated between 8,500 and 10,000 pounds gross vehicle weight that are not MDPVs. See 49 U.S.C. §§ 3 2901(a)(7) and (a)(19).10 of

duty on - highway

vehicle” by

weight only , 10 and that therefore the agency ’s interpretation of the term should be expl icitly broadened to include all vehicles , and more than only vehicles that are not engaged in interstate commerce as defined b y the Federal Motor Carrier Safety Administration in 49 CFR § 202. Alternativel y, Oshkosh suggested that if NHTSA followe d the definition provided in EI SA, which makes no direct reference to the concept of “commercial,” there would be no logical reason to exclude RVs based on that definition. NHTSA has considered Oshkosh’s comment and reconsidered its interpretation that e ffectively

read words into the statutory definition. G iven the very wide variety of vehicles contained in the HD fleet, reading those words into the definition and thereb y excluding certain ty

pes of vehicles could create illogical results , i.e., treating similar vehicles differentl y . Therefore, NHTSA will adhere to the statutory definition contained in EI SA for this rulemaking. However, a s RVs were not included by NHTSA in the proposed regulation in the NPRM, they are not within the scope and must be excluded in NHTSA’s portion of the final program . Accordingl y, NHTSA will address this issue in the next rulemaking . However, as noted, RVs are subject to the CO2 standards for vocational vehicles. Setting fuel consumption standards for the heav y- duty sector, pursuant to NHTSA’s EISA authority , will also improve our energy and natio nal security by reducing our dependence on foreign oil , which has been a national objective since the first oil price shocks in the 1970s. Net petroleum imports now account for approximately 49 - 51 percent of U.S. petroleum consumption. World crude oil production is highly concentrated, exacerbating the risks of suppl y disruptions and price shocks as the recent unrest in North Africa and the Persian Gulf highlights. Recently , oil prices have been over $100 per barrel, gasoline and diesel fuel prices in ex cess of $4 per gallon , causing financial hardship for many families and businesses . The export of U.S. assets in exchange for oil imports continues to be an important component of the historically unprecedented U.S. trade deficits. Transportation account s for about 72 percent of U.S. petroleum consumption. Heav y- duty vehicles account for about 17 percent of transportation oil use, which means that they alone account for about 12 percent of all U.S. oil consumption . 11 Setting GHG emissions standards for the heav y- duty sector will help to ameliorate climate change . The EPA Administrator found after a thorough examination of the scientific evidence on the causes and i mpact of current and future climate change, and careful review of public comments, that the science compellingl y supports a positive finding that atmospheric concentrations of six greenhouse gases taken in combination result in air pollution which may reasonabl y be anticipated to endanger both public health***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

11 of and welfare and that the combined emissions of these greenhouse gases from new motor vehicles and engies contributes to the greenhouse gas air pollution that endangers public health and welfare. In her finding, the Administrator carefull y studied and relied heavil y upon the major findings and conclusio ns from the recent assessments of the U.S. Climate Change Science Program and the U.N. Intergovernmental Panel on Climate Change. 74 FR 66496, December 15, 2009 . As summarized in the Technical Support Document for EPA ’ s Endangerment and Cause or Contribute Findings under Section 202(a) of the Clean Air Act, anthropogenic emissions of GHGs are very likel y ( a 90 to 99 percent probability) the c ause of most of the observed global warming over the last 50 years. 12 P rimary GHGs of concern are carbon di oxide (CO 2 ), methane (C H 4 ), nitrous oxide (N 2 O ) , hydrofluorocarbons (HFCs) , perfluorocarbons (PFCs) , and sulfur hexafluoride (SF 6 ) . Mobile sources emitted 31 percent of all U.S. 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. 13 Mobile sources addressed in EPA’s endangerment and contribution findings under CAA section 202(a) -- light - duty vehicles, heavy- dut y trucks, buses, and m otorcycles -- accounted for 23 percent of all U.S. GHG emissions in 2007. 14 Heavy- duty vehicles emit CO 2 , C H 4 , N 2 O , and HFCs and are responsible for nearly 19 percent of all mobile source GHGs (nearly 6% of all U.S. GHGs) and about 25 p ercent of s ection 202(a) mobile source GHGs . For heav y- duty vehicles in 2007 , CO 2 emissions represent ed more than 99 percent of all GHG emissions (including HFCs ) . 15 In developing this HD National program , the a gencies have worked with a large and diverse group of stakeholders representing truck and engine manufacturers, trucking fleets, environmental organizations , and states including the State of California. 17 Further , it is our expectation based on our ongoing work with the State of California that the California ARB will be able to adopt regulations equivalent in practice to those of this HD National Program , just as it has done for past EPA regulation of heavy - duty trucks and engines. NHTSA and EPA h ave been working with C alifornia ARB to enable that outcome. In light of the industry ’ s diversity , and consistent with the recommendations of the National Academ y of Sciences (NAS) as discussed further below, the agencies are adopting a HD National Program that recognizes the different sizes and work 12 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, D.C., available at Docket: EPA - HQ - OAR - 2 009 - 0 171 - 11 645 , and at http://epa.gov/climatechange/endangerment.html. 13 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/down loads09/GHG2007entire_report - 508.pdf 14 See Endangerment TSD, Note 12 , above, at pp. 180 - 194. 15 U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: See Note 13 , above. 17 Pursuant to DOT Order 2100.2, NHTSA has docketed a memorandum recording those meetings that it attended and docume nts submitted by stakeholders which formed a basis for this action and w hich can be made publicly available in its docket for this rulemaking. DOT Order 2100.2 is available at http://www.reg - group.com/library/DOT2100 - 2.PDF .12 of

requirements of this wide range of heav y- duty vehicles and their engines. NHTSA ’ s final fuel consumption standards and EPA ’ s final GHG standards appl y to manufacturers of the following types of heavy- duty vehi cles and their engines; the final provisions for each of these are described in more detail below in this section:  Heav y- dut y Pickup Trucks and Vans  Combination Tractors  Vocational Vehicles As in the light - dut y 2012 - 2016 MY vehicle rule , EPA ’ s and NHTSA ’ s final standards for the heav y- duty sector are largely harmonized with one another due to the close and direct relationship between improving the fuel efficiency of these vehicles and reducing their CO 2 tailpipe emissions. For all vehicles that consume carbon - based fuels, the amount of CO 2 exhaust emissions is essentially constant per gallon for a given ty pe of fuel that is consumed. T he more efficient a heav y - duty truck is in completing its work, the lower its environmental impact will be , because the less fuel consume d to move cargo a given distance, the less CO 2 that truck emits directly into the air. T he technologies available for improving fuel effici ency , and therefore for reducing both CO 2 emissions and fuel consumption, are one and the same. 18 Because of this close technical relationship, NHTSA and EPA have been able to rely on jointl y - developed assumptions, anal ys es, and anal yt ical conclusions to s upport the standards and other provisions that NHTSA and EPA are adopting under our separate legal authorities. This program is based on standards for direct exhaust emissions from engines and vehicles. In characterizing the overall emissions impacts, benefits and costs of the program, analy ses of air pollutant emissions from upstream sources have been conducted. In this action, the agencies use the term upstream to include emissions from the production and distribution of fuel . A summary of th e anal ys is of upstream emissions can be found in Section VI.C of this preamble , and further details are available in Chapter 5 of the RIA. The timelines for the implementation of the final NHTSA and EPA standards are also closely

coordinated. EPA ’ s final GHG emission standards will begin in model year 2014. In order to provide for the four full model years of regulatory lead time required by EISA, as discussed in Section I. B. (5) below, NHTSA ’ s final fuel consumption standards will be voluntary in model years 2014 and 2015, becoming mandatory in model ye ar 2016, except for diesel engine standards which will be voluntary in model years 2014, 2015 and 2016, becoming mandatory in model year 2017. Both agenc ies are also allowing for early

compliance in model year 2013. A detailed discussion of how the final standards are consistent with each agency ’ s respective statutory requirements and authorities is found later in this preamble.

18 However, as discussed below , in addition to addressing CO 2 , the EPA ’ s final standards also include provisions to address other GHGs (nitrous oxide, methane, and air conditioning refrigerant emissions). See Sec tion II .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

13 of Allison Transmission stated that sufficient time must be taken before issuing the final rule s in order to ensure that the standards are supportable. As explained in Sect ions II and III below, as well as in the RIA, the agencies believe there is sufficient lead time to meet all of the standards adopted in today ’s rules. For those areas for which the agencies have determined that insufficient time is available to develop a ppropriate standards, such as for trailers, the agencies are not including regulations as part of this initial program. NHTSA received several comments related to the timing of the implementation of its fuel consumption standards. The E ngine Manufacturer s Association (E MA ) , the National Automobile Dealers Association (NADA ) , The Volvo Group ( Volvo ) , and Navistar argued that the timing of NHTSA’s standards violated the lead time requirement of 49 U.S.C. 32902(k)(3)(A), which states that standards under the new medium - and heav y- duty program shall have “not less than 4 full model years of regulatory lead - time.” The commenters seemed to interpret the voluntary program as the imposition of regulation upon industry . NADA described NHTSA’s standards during the voluntary period as “mandates.” NHTSA has reviewed this issue and believes that the regulatory schedule is consistent with the lead time requirement of 32902(k)(3). To clarify , NHTSA will not be imposing a mandatory

regulatory

program until 2016, and none of the voluntary standards will be “mandates.” As described in later sections, the voluntary standards would only

appl y to a manufacturer if it makes the voluntary and affirmative choice to opt - in to the program. 19 Mandatory NHTSA standards will first come into effec t in 2016, giving industry

four full years of lead time with the NHTSA fuel consumption standards . EMA, NADA, and Navistar also argued that the proposed standards would violate the stability

requirement of 49 U.S.C. 32902(k)(3)(B), which states that they shall have “not less than 3 full model years of regulatory stability .” EMA stated that since there are HD emission standards taking effect in 2013, the 2014 implementation date for this rule would violate the stability requirements. NADA argued that the MY 2014 - 2017/2018 phase - in period was inadequate to fulfill the stabili ty requirement. Congress has not spoken directly to the meaning of the words “regulatory stability .” NHTSA believes that the “regulatory stability” requirement exists to ensure that manufacturers will not be subject to new standards in repeated rulemaki ngs too rapidly , given that Congress did not include a minimum duration period for the MD/HD standards. 20 NHTSA further believes that s tandards , which as set provide for increasing stringency during the period that the standards are applicable under this rule to be the maximum feasible during the regulatory period , are within the meaning of the statute . In this statutory

context, NHTSA interprets the phrase “regulatory stability” in § 32902(k)(3)(B) as requiring that the standards remain in effect for three ye ars before they 19 Prior to or at the same time that a manufacturer submits its first application for a certificate of conformity; see Section V below . 20 In contrast, light - duty

standards must remain in place for “at least 1, but not more than 5, model years.” 23902(b)(3)(B).14 of

may be increased b y amendment . It does not prohibit standards which contain pre determined stringency

increases. As laid out in Section II below, NHTSA’s final standard s follow different phase in schedules based on differences between the regulatory categories. Consistent with NHTSA’s statutory

obligation to implement a program designed to achieve the maximum feasible fuel efficiency

improvement, the standards increase in stringency based upon increasing fleet penetration rates for the available technologies. The NPRM proposed phase - in schedules aligned with EPA’s, some of which followed pre - determined stringency

increases. The NPRM also noted that NHTSA was considerin g alternate standards that would not change in stringency during the time frame when the regulations are effective for those standards that increased thr oughout the mandatory program . As described in Section II below, the final rule includes the proposed alt ernate standards for those standards that follow such a stringency phase - in path. Therefore , NHTSA believes that the final rule provides ample stability for each standard. Each standard, associated phase - in schedule, and alternative standard implemented by

this final rule w as noticed in the NPRM. Those fuel consumption standards that become mandatory in 2017 will remain in effect through at least 2019. This further ensures that the fuel consumption standards in this rule will remain in effect for at least three ye ars, providing the statutorily- man dated three full years of regulatory stability , and ensuring that manufacturers will not be subject to new or amended standards too rapidl y. (The greenhouse gas emission standards remain in effect unless and until amended in all later model ye ars in an y c ase.) Therefore, NHTSA believes the commenters’ concern about regulatory stability is addressed in the structure of the rule. Neither EPA nor NHTSA is adopting standards at this time for GHG emissions or fuel consumption, respectively , for heav y- duty commercial trailers or for vehicles or engines manufactured b y small business es. The agencies recognize that ae rody namic and tire rolling resistance improvements to trailers represent a significant opportunity to reduce fuel consumption and GHGs as evidenced , among other thi ngs, by the work of the EPA SmartWay

program. While we are deferring action today on setting trailer standards, the agencies are committed to moving forward to create a regulatory program for trailers that would complement the current vehicle program . See Section IX for more details on the agencies’ decisions regarding trailers, and Sections II and XI I for more details on the agencies’ decisions regarding small businesses. 

### B. **Building Block** **s of the**  **Heavy -**  **duty National Progra**  **m** The standards that are being adopted in this notice represent the first time that NHTSA and EPA are regulating the heav y- duty sector for fuel consumption and GHG emissions, respectivel y. The HD National Program is rooted in EPA’s prior regulatory history , the SmartWay  Transport Partnership program, and extensive technical and engineering anal ys es done at the federal level. This section summarizes some of the most important of these precursors and foundations for this HD National Program.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

1 5 of **(1) EPA’s**  **Traditio nal Heavy**  **- duty Regulatory Program**  Since the 1980s, EPA has acted several times to address tailpipe emissions of criteria pollutants and air toxics from heavy- duty vehicles and engines. During the last 18 years, these programs have primaril y addressed emis sions of particulate matter (PM) and the primary

ozone precursors, h ydrocarbons (HC) and oxides of nitrogen (NO X ). These programs have successfully achieved significant and cost - effective reductions in emissions and associated health and welfare benefits to the nation. They have been structured in way s that account for the varying circumstances of the engine and truck industries. As required by the CAA, the emission standards implemented by these programs include standards that apply at the time that the vehicle or engine is sold as well as standards that appl y in actual use. As a result of these programs, new vehicles meeting current emission standards will emit 98% less NO X and 99% less PM than new trucks 20 ye ars ago. The resulting emission reductions provide significant public health and welfare benefits. The most recent EPA regulations which were full y phased - in in 2010, the monetized health and welfare benefits alone are projected to be greater than $70 billion in 2030

– benefits far exceeding compliance costs and not including the unmonetized benefits resulting from reductions in air toxics and ozone precursors ( 66 FR 5002, January

18, 2001 ). EPA ’ s overall program goal has alway s been to achieve emissions reductions from the complete vehicles that operate on our roads. The agency has often accomplished this goal for man y heav y - duty truck categories through the regulation of heavy- duty engine emissions. A key part of this success has been the development over many years of a well - established, representative, and robust set of engine test procedures that industry and EPA now routinel y use to measure emissions and determine compliance with emission standards. These test procedures in turn serve the overall compliance program that EPA implements to h elp ensure that emissions reductions are being achieved. By isolating the engine from the many variables involved when the engine is installed and operated in a HD vehicle, EPA has been able to accuratel y address the contribution of the engine alone to ov erall emissions. The agencies discuss below how the final program incorporates the existing engine - based approach used for criteria pollutant regulations, as well as new vehicle - based approaches. **(2) NHTSA**  **’ s Responsibilities to**  **Regulate Heavy**  **- Duty Fuel Effic**  **iency under EISA**  With the passage of the EI SA in December 2007, Congress laid out a framework developing the first fuel efficiency regulations for HD vehicles. As codified at 49 U.S.C. 32902(k), EISA requires NHTSA to develop a regulatory s ys tem for the f

uel efficiency of commercial medium - duty and heavy - duty

on - highway

vehicles and work trucks in three steps: a study

by NAS, a study

by NHTSA, and a rulemaking to develop the regulations themselves. 22

22 The NAS study is described below , and the NHTSA study accompanies this FRM.16 of Specificall y, section 102 of EI SA, codified at 49 U.S.C. 32902(k)(2), states that not later than two years after completion of the NHTSA study, DOT (b y delegation, NHTSA), in consultation with the Department of Energy (DOE) and EPA, shall develop a regulation to implement a “ commerci al medium - duty and heav y- duty

on - highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement. ” NHTSA interprets the timing requirements as permitting a regulation to be developed earlier, rather than as requiring the agency to wait a specified period of time. Congress specified that as part of the “ HD fuel efficiency improvement program designed to achieve the maximum feasible improvement, ” NHTSA must adopt and implement:  Appropriate test methods;  Measurement metrics;  Fuel economy

standards; 23 and  Compliance and enforcement protocols. Congress emphasized that the test methods, measurement metrics, standards, and compliance and enforcement protocols must all be appropriate , cost- effective , and techno logically feasible for commercial medium - duty and heav y- duty on - highway vehicles and work trucks. NHTSA notes that these criteria are different from the “ four factors ” of 49 U.S.C. 32902(f) 24 that have long governed NHTSA ’ s setting of fuel econom y standard s for passenger cars and light trucks, although many of the same issues are considered under each of these provisions. Congress also stated that NHTSA may set separate standards for different classes of HD vehicles, which the agency interprets broa dly

to allow regulation of HD engines in addition to HD vehicles, and provided requirements new to 49 U.S.C. 32902 in terms of timing of regulations, stating that the standards adopted as a result of the agency ’ s rulemaking shall provide not less than four full model years of regulatory lead time, and three full model ye ars of regulatory stability . **(3) National Academy of**  **Sciences Report on Heavy**  **- Duty Technology**  In April 2010 a s mandated by Congress in EISA, the National Research Council (NRC) under NAS issued a report to NHTSA and to Congress evaluating medium - duty

23 In the context of 49 U.S.C. 32902(k), NHTSA interprets “fuel economy standards” as referring not specifically to miles per gallon, as in the light - duty vehicle context, but instead more broadly to account as accurately as possible for MD/HD fuel efficiency . While it is a metric that NHTSA considered for setting MD/HD fuel efficiency standards, the agency recognizes that miles per gallon may not be an appropriate metric given the work that MD/HD vehicles are manufactured to do . NHTSA is thus finalizing alt ernative metrics as discussed further below . 24 49 U.S.C. 32902(f) states that “When deciding maximum feasible average fuel economy under this section, [NHTSA] shall consider technological feasibility, economic practicability, the effect of other motor vehi cle standards of the Government on fuel economy, and the need of the United States to conserve energy.”***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

17 of and heav y- duty truck fuel efficiency improvement opportunities , titled “ Technologies and Approaches to Reducing the Fuel Consumption of Medium - and Heav y- duty Vehicles. ” 25 This study

covers the sam e universe of heav y- duty vehicles that is the focus of this final rulemaking

– all highway vehicles that are not light - duty , MDPVs, or motorcycles. The agencies have carefully evaluated the research supporting this report and its recommendations and have incorporated them to the extent practicable in the development of this rulemaking. The NAS report is far reaching in its review of the technologies that are available and which may

become available in the future to reduce fuel consumption from medium and heav y- duty vehicles. In presenting the full range of technical opportunities the report includes technologies which may not be available until 2020 or even further into the future. As such, the report provides not only a valuable list of off the shelf technologies from which the agencies have drawn in developing this near - term 2014 - 2018 program consistent with statutory

authorities and with the set of principles set forth by the President, but the report also provides a road map th e agencies can use as we look to develop future regulations for this sector. A review of the technologies in the NAS report makes clear that there are not only man y technologies readil y available today to achieve important reductions in fuel consumptio n, like the ones we used in developing the 2014 - 2018 program, but there are also great opportunities for even larger reductions in the future through the development of advanced h ybrid drive systems and sophisticated engine technologies such as Rankine was te heat recovery . The agencies will again make extensive use of this report when we move forward to develop the next phase of regulations for medium and heav y- duty vehicles. Allison Transmission commented that NHTSA (implicitly , both agencies) had imprope rly

relied on the NAS report and failed to do sufficient independent anal ys is, which Allison claimed did not meet the statutory obligation to provide an adequate basis for the rule. First, an agency does not improperl y delegate its authority or judgment m erel y b y using work performed b y outside parties as the factual basis for its decision making. See U.S. Telecom Ass’n v. FCC, 359 F.3d 554, 568 (D.C. Cir. 2004); United Steelworkers of Am. v. Marshall, 647 F.2d 1189, 1216 - 17 (D.C. Cir. 1980). Here, although EPA and NHTSA carefull y considered the NAS report, the agencies’ consideration and use of the report was not uncritical and the agencies exercised reasonable independent judgment in developing the proposed and final rule s . Consistent with EI SA’s direction, NAS submitted a report evaluating MD/HD fuel economy standards to NHTSA in March of 2010. Indeed, many commenters argued that the agencies should have adopted more of the NAS report recommendations. The agencies reviewed the findings and recommendations of the NAS report when developing the proposed rule s , as was clearl y intended b y Congress, but also conducted an independent study , as described throughout the record to the propos al and summarized in Section X of 25 Committee to Assess Fuel Economy Technologies for Medium - and Heavy - Duty Vehicles; National Research Council; Transportation Research Board (2010). “T echnologies and Approaches to Reducing the Fuel Consumption of Medium - and Heavy - Duty Vehicles,” (hereafter, “NAS Report”). Washington, D.C., The National Academies Press. Available electronically from the National Academies Press Website at http://www. nap.edu/catalog. php?record_id=12845 (last accessed September 10, 2010).18 of

the NPRM , 75 FR at 743 51 - 56. In conducting its anal ys is of the NAS report, the agencies found that several key recommendations, such as the use of fuel efficiency metrics, were the best approach to implementing the new program. However, the agencies rejected other recommendations of the NAS report, for example , by proposing separate regulation of engines and vehicles and the regulation of large manufacturers. **(4) The NHTSA and EPA Light**  **- duty National GHG**  **and Fuel Economy Program**  On May 7 , 2010, EPA and NHTSA finalized the first - ever National Program for light - duty cars and trucks, which set GHG emissions and fuel economy standards for model years 2012 - 2016 (see 75 FR 25324) . The agencies have used the light - duty National Program as a model for this final HD National Program in many respects. This is most apparent in the case of heav y- duty pickups and vans, which are very similar to the light - duty trucks addressed in the light - duty National Program both technologically as well as in terms of how they are manufactured (i.e., the same company often makes both the vehicle and the engine). For these vehicles, there are close parallels to the light - dut y program in how the agencies have developed our respective final standards and compliance structures, althou gh, as discussed below, the technologies applied to light duty trucks are not invariably

applicable to heavy- duty pickups and vans at the same penetration rates in the lead time afforded in this heav y- duty action. Another difference is that each agency

ad opts standards based on attributes other than vehicle footprint, as discussed below. Due to the diversity of the remaining HD vehicles, there are fewer parallels with the structure of the light - duty program. However, the agencies have maintained the same collaboration and coordination that characterized the development of the light - duty program. Most notably , as with the light - duty program, manufacturers will be able to design and build vehicles to meet a closel y coordinated, harmonized national program, and avoid unnecessaril y duplicative testing and compliance burdens. **(5) EPA’s**  **Sm artWay Program**  EPA ’ s voluntary

SmartWay

Transport Partnership program encourages shipping and trucking companies to take actions that reduce fuel consumption and CO 2 by working w ith the shipping community and the freight sector to identify low carbon strategies and technologies, and b y providing technical information, financial incentives, and partner recognition to accelerate the adoption of these strategies. Through the SmartWay program, EPA has worked closely with truck manufacturers and truck fleets to develop test procedures to evaluate vehicle and component performance in reducing fuel consumption and has conducted testing and has established test programs to verify technolo gi es that can achieve these reductions. Over the last six years, EPA has developed hands - on experience testing the largest heav y- duty trucks and evaluating improvements in tire and vehicle aerodynamic performance. In 2010, according to vehicle manufacturers, approximately five percent of new combination heavy- duty trucks will meet the SmartWay

performance criteria demonstrating that they represent the pinnacle of current heav y - duty truck reductions in fuel consumption.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

19 of In developing this HD National Program, the agencies have drawn from the SmartWay

experience, as discussed in detail both in Sections II and III below (e.g., developing test procedures to evaluate trucks and truck components) but also in the RIA (estimating performance levels from the appli cation of the best available technologies identified in the SmartWay program). These technologies provide part of the basis for the GHG emission and fuel consumption standards in this rulemaking for certain ty pes of new heav y- dut y Class 7 and 8 combinati on tractors. In addition to identifying technologies, the SmartWay program includes operational approaches that truck fleet owners as well as individual drivers and their freight customers can incorporate , that the NHTSA and EPA believe will complement the final standards. These include such approaches as improved logistics and driver training, as discussed in the RIA . This approach is consistent with the one of the three alternative approaches that the NAS recommended be considered. The three approaches were raising fuel taxes, relax ing truck size and weight restrictions, and encouraging incentives to disseminate information to inform truck drivers about the relationship between driving behavior and fuel savings. Taxes and truck size and weight limits are mandated b y public law; as such, these options are outside EPA ’ s and NHTSA ’ s authority to implement. However, complementary operational measures like driver training, which SmartWay does promote, can c omplement the final standards and also provide benefits for the existing truck fleet, furthering the public policy objectives of addressing energy security and climate change. **(6) Environment Canada**  The Government of Canada’s Department of the Environment (Env ironment Canada) assisted EPA 's development of this rulemaking b y conducting emissions testing of heav y- duty vehicles at their test facilities to gather data on a range of possible test cycles, and to evaluate the impact of certain emissions reduction technologies. Environment Canada also facilitated the evaluation of heav y- duty vehicle aerodynamic properties at Canada’s National Research Council wind tunnel, and during coastdown testing. We expect the technical collaboration with Environment Canada to continue as we implement testing and compliance verification procedures for this rulemaking. We may also begin to develop a knowledge base enabling improvement upon this regulatory framework for model years beyond 2018 (for example, improvements to the means of demonstrating compliance). We also expect to continue our collaboration with Environment Canada on compliance issues. Collaboration with Environment Canada is taking place under the Canada - U.S. Air Quality

Committee.20 of



### C. **Summary of the**  **Final EPA and NHTSA HD National Program** When EPA first addressed emissions from heav y- duty trucks in the 1980s, it established standards for engines, based on the amount of work performed (grams of pollutant per unit of work, expressed as grams per brake horsepower - hour or g/bhp - hr). 26 This approach recognized the fact that engine characteristics are the dominant deter minant of the types of emissions generated, and engine - based technologies (including exhaust aftertreatment sy stems) need to be the focus for addressing those emissions. Vehicle - based technologies, in contrast, have less influence on overall truck emissio ns of the pollutants that EPA has regulated in the past. The engine testing approach also recognized the relativel y small number of distinct heav y- duty engine designs, as compared to the extremely wide range of truck designs. EPA concluded at that time that any

incremental gain in conventional emission control that could be achieved through regulation of the complete vehicle would be small in comparison to the cost of addressing the many variants of complete trucks that make up the heav y- duty sector

– sma ller and larger vocational vehicles for dozens of purposes, various designs of combination tractors, and many others. Addressing GHG emissions and fuel consumption from heav y- duty trucks, however, requires a different approach. Reducing GHG emissions and fuel consumption requires increasing the inherent efficiency of the engine as well as making changes to the vehicles to reduce the amount of work demanded from the engine in order to move the truck down the road. A focus on the entire vehicle is thus requ ired. For example, in addition to the basic emissions and fuel consumption levels of the engine, the aerodynamics of the vehicle can have a major impact on the amount of work that must be performed to transport freight at common highway speeds. For this first rulemaking, the agencies proposed a compl e mentary engine and vehicle approach in order to achieve the maximum feasible near - term reductions. NHTSA received comments on the proposal to create complementary engine and vehicle standards. Volvo and Daimler argued that EI SA limited NHTSA’s authority to the regulation of completed vehicles and did not give NHT SA authority to regulate engines. 49 U.S.C. 3290 2(k)(2) grants NHTSA broad authority to regulate this sector, stating simpl y that the Secretary “shall determine in a rulemaking proceeding how to implement a commercial medium - and heav y- duty on - highway vehicle and work truck fuel efficiency

improvement program designed to achieve the maximum feasible improvement,” considering a ppropriateness, cost - effectiveness, and technological feasibility . NHTSA does not believe that this language precludes the regulation of engines, but rather explicitly leaves the regulatory

approach to the agency ’s expertise and discretion. See 75 FR at 74173 n. 36. Considering the factors described in the NPRM and in Section s III and IV below , NHTSA continues to believe that the separate 26 The term “brake power” refers to engine torque and power as measured at the interface between the engine’s output shaft and the dynamometer. This contrasts with “indicated power”, which is a calculated value based on the pressure dynamics in the combustion chamber, not including internal losses that occur due to friction and pumping work. Since the measurement procedure inherently measures brake torque and power, the final regulat ions refer simply to g/hp - hr. This is consistent with EPA’s other emission control programs, which generally include standards in g/kW - hr.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

21 of regulation of engines and vehicles is both consistent with the agency ’s statutory mandate to determine how to implement a regulatory program designed to achieve the maximum feasible improvement and facilitates coordination with EPA’s efforts to reduce greenhouse gas emissions . The Clean Air act, of course, mandates standards for both “new motor vehicles” and “ new motor vehicle engines”, so there is no issue of authority for separate engine standards under the EPA GHG program. CAA section 202 (a)(1). As described elsewhere in this preamble, the final standards under the HD National Program address the complete vehicle, to the extent practicable and appropriate under the agencies’ respective statutory authorities, through complementary engine and vehicle standards. The agencies continue to believe that this complem entary engine and vehicle approach is the best way to achieve near term reductions from the heavy- duty sect or . However, we also recognize as did the NAS committee and a wide range of industry and environmental commenters, that in order to fu lly capture the multi - faceted sy nergistic aspects of engine and vehicle design a more comprehensive complete vehicle standard may

be appropriate in the future. The agencies are committed to fully exploring such a possibility

and to developing the tes ting and modeling tools necessary to enable such a regulatory

approach. We intend to work with all interested stakeholders as we move forward . **(1) Brief Overview**  **of the Heavy**  **- duty Truck Industry**  The heav y - duty

truck sector spans a wide range of vehicles with often unique form and function. A primary indicator of the extreme diversity among heavy- duty trucks is the range of load - carrying capability across the industry . The heavy- duty truck sector is often subdivided by vehicle weight classifications , as defined b y the vehicle ’ s gross vehicle weight rating ( GVWR), which is a measure of the combined curb (empty) weight and cargo carrying capacity of the truck . 27 Table I - 1 below outlines the vehicle weight classifications commonly used for man y years for a variety of purposes by businesses and b y several federal agencies, including the Department of Transportation, the Environmental Protection Agency , the Department of Commerce, and the Internal Revenue Service. **Table I**  **- 1**  **: Vehicle Weight Classification**  Class 2b 3 4 5 6 7 8 GVWR ( lb ) 8,501 -

10,000 10,001 -

14,000 14,001 -

16,000 16,001 -

19,500 19,501

- 26,000 26,001 -

33,000 > 33,001 In the framework of these vehicle weight classifications, the heav y- duty truck sector refers to Class 2b through Class 8 vehicles and the engines that power those

27 GVWR describes the maximum load that can be carried by a vehicle, including the weight of the vehicle itself. Heavy - duty

vehicles also have a gross combined weight rating (GCWR), which describes the maximum load that the vehicle can haul, including the weight of a loaded trailer and the vehicle itself.22 of

vehicles. 28 Unlike light - duty vehicles, which are primarily used for transporting passengers for personal travel, heavy- duty vehicles fill much more di verse operator needs . Heavy- duty pickup trucks and vans (Classes 2b and 3) are used chiefly as work truck and vans, and as shuttle vans, as well as for personal transportation , with an average annual mileage in the range of 15,000 miles. The rest of the heavy - duty sec tor is used for carryi ng cargo and/or performing specialized tasks. “ Vocational ” vehicles, which may span Classes 2b through 8, vary widel y in size, including smaller and larger van trucks, utility “bucket ” trucks, tank trucks, refuse trucks, urban and ov er - the - road buses, fire trucks, flat - bed trucks, and dump trucks, among others. The annual mileage of these trucks is as varied as their uses, but for the most part tends to fall in between heavy - dut y pickups/vans and the large combination tractors, typic ally from 15,000 to 150,000 miles per year, although some travel more and some less. Class 7 and 8 combination tractor trailers

– some equipped with sleeper cabs and some not -- are primaril y used for freight transportation. They are sold as tractors and sometimes run without a trailer in between loads , but most of the time they run with one or more trailers that can carry up to 50,000 pounds or more of payload , consuming significant quantities of fuel and producing significant amounts of GHG emissions . The combination tractor - trailers used in combination applications can travel more than 150,000 miles per year. EPA and NHTSA have designed our respective standards in careful consideration of the diversity

and complexity

of the heav y- duty truck industry , as discussed next. **(2) Summary**  **of Final EPA GHG Emission Standards and NHTSA Fuel Consumption**  **Standards** As described above, NHTSA and EPA recognize the importance of addressing the entire vehicle in reducing fuel consumption and GHG emissions. At the same time, the agencies understand that the complexity of the industry

means that we will need to use different approaches to achieve this goal, depending on the characteristics of each general ty pe of truck. We are therefore dividing the industry into three discrete regulatory categories for purposes of setting our respective standards

– combination tractors, heavyduty pickups and vans, and vocational vehicles -- based on the relative degree of homogeneity

among trucks within each category . For each regulato ry category , the agencies are adopting related but distinct program approaches reflecting the specific challenges that we see in these segments. In the following paragraphs, we discuss EPA ’ s final GHG emission standards and NHTSA ’ s final fuel consumption standards for the three regulatory

categories of heav y- duty vehicles and their engines. The agencies are adopting test metrics that express fuel consumption and GHG emissions relative to the most important measures of heav y- duty truck utility for each segment , consistent with the recommendation of the 2010 NAS Report that metrics should reflect and account for the work performed by various ty

pes of HD vehicles . This approach differs from NHTSA’s light - duty program that uses fue l economy as the basis. The NA S committee discussed the difference between fuel econom y (a measure of how

28 Class 2b vehicles designed as passenger vehicles (Medium Duty Passenger Vehicles, MDPVs) are covered by the light - duty GHG and fuel economy standards and not addressed in this rulemaking.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

23 of far a vehicle will go on a gallon of fuel) and fuel consumption (the inverse measure, of how much fuel is consumed in driving a given distance) as potential metrics for MD/HD regulations. The committee concluded that fuel economy would not be a good metric for judging the fuel efficiency of a heav y- duty vehicle, and stated that NHTSA should instead consider fuel consumption as the metric for its standards. As a result, for h eav y duty pickup trucks and vans, EPA and NHTSA are finalizing standards on a per - mile basis (g/mile for the EPA standards, gallons/100 miles for the NHTSA standards), as explained in Section I. C. (2) (b) below. For heavy - duty trucks, both combination and vocational, the agencies are adopting standards expressed in terms of the key measure of freight movement, tons of payload miles or, more simply , ton - miles. Hen ce, for EPA the final standards are in the form of the mass of emissions from carrying a ton of cargo over a distance of one mile (g/ton - mi). Similarly , the final NHTSA standards are in terms of gallons of fuel consumed over a set distance (one thousand m iles), or gal/1,000 ton - mile. Finally , for engines, EPA is adopting standards in the form of grams of emissions per unit of work (g/bhp - hr), the same metric used for the heavy - duty highway engine standards for criteria pollutants today . Similarl y, NHTSA is finalizing standards for heavy- duty engines in the form of gallons of fuel consumption per 100 units of work (gal/100 bhp hr). Section II below discusses the final EPA and NHTSA standards in greater detail. (a ) Class 7 and 8 Combination Tractors Class 7 and 8 combination tractors and their engines contribute the largest portion of the total GHG emissions and fuel consumption of the heav y- duty sector , approximately 65 percent , due to their large payload s, their high annual miles traveled , and their major role in national freight transport. 29 These vehicles consist of a cab and engine (tractor or combination tractor) and a detachable trailer. In general, reducing GHG emissions and fuel consumption for these vehicles will involve improvements in aerodynamics and tires and reduction in idle operation, as well as engine - based efficiency improvements. In general, the heavy- duty combination tractor industry consists of tractor manufacturers (which manufacture the tractor and purchase and install the engine) and trailer manufacturers . These manufacturers are usually not the same entity . We are not aware of an y m anufacturer that ty picall y assembles both the finished truck and the trailer and introduces the combination into commerce for sale to a buyer. T he owners of trucks and trailers are often distinct as well . A t ypical truck buyer will purchase only the tractor. The trailers are usually purchased and owned b y fleets and shippers. This occurs in part because trucking fleets on average maintain 3 trailers per tractor and in some cases as many as 6 or more trailers per tractor. There are also large differences in the kinds of manufacturers involved with producing tractors and trailers. For HD highway tractors

29 The on - highway Class 7 and 8 combination tractors constitute the vast majority of this regulatory category, and form the backbo ne of this HD National Program. A small fraction of combination tractors are used in off

- road applications and are regulated differently, as described in Section II.and their engines, a relatively limited n of these products. The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relatively

small in size and production volume. Setting standards for t recognition of the large differences between these manufacturing industries, which can then warrant consideration of different regulatory approaches. Based on these industry

characteristics straightforward regulatory approach for combination tractors and trailers is to establish standards for tractors separatel y from trailers agencies are adopting standards for the tractor did not propose and are not As with the other regulatory categories of heavy have concluded that achieving reductions in GHG emissions and fuel cons combination tractors requires addressing both the cab and the engine, and EPA and NHTSA each are adopting standards that reflect this conclusion. The importance of the cab is that its design determines the amount of power that the engine must moving the truck down the road. As illustrated in additional power from the engine include air resistance (aerod ynamics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the dr The importance of the engine design is that it determines the basic GHG emissions and fuel consumption performance of the engine for the variet y of demands placed on the engine, regardless of the characteristics of the cab in which it is instal intend for the final standards to result in the application of improved technologies for lower GHG emissions and fuel consumption for both the cab and the engine

**Figure**

30 Adapted from Figure 4.1 . Class 8 Truck Energy Audit, Program: A Government- Industry Research Partnership, 21CT 24 of and their engines, a relatively limited n umber of manufacturers produce the vast majority of these products. The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relatively

small in size and production volume. Setting standards for t he products involved -- tractors and trailers recognition of the large differences between these manufacturing industries, which can then warrant consideration of different regulatory approaches. Based on these industry

characteristics , EPA and NHTSA believe that the most straightforward regulatory approach for combination tractors and trailers is to establish

tractors separatel y from trailers . As discussed below in Section adopting standards for the tractor s and their engines in this rulemaking, are not adopting standards for trailers. As with the other regulatory categories of heavy - duty vehicles, EPA and NHTSA have concluded that achieving reductions in GHG emissions and fuel cons combination tractors requires addressing both the cab and the engine, and EPA and NHTSA each are adopting standards that reflect this conclusion. The importance of the cab is that its design determines the amount of power that the engine must moving the truck down the road. As illustrated in Figure I - 1 , the loads that require additional power from the engine include air resistance (aerod ynamics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the dr The importance of the engine design is that it determines the basic GHG emissions and fuel consumption performance of the engine for the variet y of demands placed on the engine, regardless of the characteristics of the cab in which it is instal led. The agencies intend for the final standards to result in the application of improved technologies for lower GHG emissions and fuel consumption for both the cab and the engine

**Figure I**  **- 1**  **: Com bination**  **Tractor and Trailer Loads 30** 

Class 8 Truck Energy Audit, Technology Roadmap for the 21st Century Truck Industry Research Partnership, 21CT - 001, December 2000 .

umber of manufacturers produce the vast majority of these products. The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relatively

small in size and production tractors and trailers -- requires recognition of the large differences between these manufacturing industries, which can nd NHTSA believe that the most straightforward regulatory approach for combination tractors and trailers is to establish As discussed below in Section IX , the s and their engines in this rulemaking, but

duty vehicles, EPA and NHTSA have concluded that achieving reductions in GHG emissions and fuel cons umption from combination tractors requires addressing both the cab and the engine, and EPA and NHTSA each are adopting standards that reflect this conclusion. The importance of the cab is that its design determines the amount of power that the engine must produce in , the loads that require additional power from the engine include air resistance (aerod ynamics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the dr ivetrain). The importance of the engine design is that it determines the basic GHG emissions and fuel consumption performance of the engine for the variet y of demands placed on the

led. The agencies intend for the final standards to result in the application of improved technologies for lower GHG emissions and fuel consumption for both the cab and the engine .

Technology Roadmap for the 21st Century Truck***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

25 of Accordingl y, for Class 7 and 8 combination tractors, the agencies are each finalizing two sets of standards. For vehicle - related emissions and fuel consumption, tractor manufacturers are required to meet vehicle - based standards. Compliance with the vehic le standard will ty

pically be determined based on a customized vehicle simulation model, called the Greenhouse gas Emissions Model (GEM) , which is consistent with the NAS Report recommendations to require compliance testing for combination tractors using v ehicle simulation rather than chassis dy namometer testing. This compliance model was developed b y EPA specificall y for this final action. It is an accurate and cost effective alternative to measuring emissions and fuel consumption while operating the veh icle on a chassis dy

namometer. Instead of using a chassis dy namometer as an indirect way to evaluate real - world operation and performance, various characteristics of the vehicle are measured and these measurements are used as inputs to the model. These c haracteristics relate to key technologies appropriate for this subcategory of truck

– including aerodynamic features, weight reductions, tire rolling resistance, the presence of idle - reducing technology, and vehicle speed limiters. The model also assumes the use of a representative typical engine, rather than a vehicle - specific engine, because engines are regulated separately . Using these inputs, the model will be used to quantify the overall performance of the vehicle in terms of CO 2 emissions and fuel co nsumption. The model ’ s development and design, as well as the sources for inputs, are discussed in detail in Section II below and in Chapter 4 of the RIA. (i ) Final Standards for Class 7 and 8 Combination Tractors and Their Engines The vehicle standards that EPA and NHTSA are adopting for Class 7 and 8 combination tractor manufacturers are based on several key attributes related to GHG emissions and fuel consumption that we believe reasonably represent the many differences in utility

and performance among th ese vehicles. The final standards differ depending on GVWR ( i.e ., whether the truck is Class 7 or Class 8), the height of the roof of the cab, and whether it is a “ day cab ” or a “ sleeper cab.” These later two attributes are important because the height o f the roof, designed to correspond to the height of the trailer, significantl y affects air resistance, and a sleeper cab generall y corresponds to the opportunity

for extended duration idle emission and fuel consumption improvements. We received a number o f comments supporting this approach and no comments that provided a compelling reason to change our approach in this final action. Thus, the agencies have created nine subcategories within the Cl ass 7 and 8 combination tractor category based on the differe nces in expected emissions and fuel consumption associated with the key attributes of GVWR, cab ty pe, and roof height. The agencies are setting standards beginning in 2014 model year with more stringent standards following in 2017 model year. Table I - 2 presents the agencies’ respective standards for combination tractor manufacturers for the 2017 model year . The standards represent an overall fuel consumption and CO 2 emissions reduction up to 23 percent from the tractors and the engines installed in them when compared to a baseline 2010 model ye ar tractor and engine without idle shutdown technology . The stan dard values shown below differ somewhat from the proposal, reflecting refinements made to the GEM in response to comments. These changes did not impact our estimates of the relative26 of

effectiveness of the various control technologies modeled in this final a ction nor the overall cost or benefits or cost effectiveness estimated for these final vehicle standards. As proposed, the agencies are exempting certain types of tractors which operate off - road to be exempt from the combination tractor vehicle standards (although standards would still apply

to the engines installed in these vehicles). The criteria for tracto rs to be considered off

- road have been amended slightl y from those proposed, in response to public comment. The agencies have also recognized, again in response to public coment, that some combination tractors operate in a manner essentially the same as v ocational vehicles and have created a subcategory of “vocational tractors” as a result. Vocational tractors will be subject to the standards for vocational vehicles rather than the combination tractor standards. S ee Section II. B of this preamble . **Table I**  **- 2**  **: Heavy -**  **duty Co**  **mbination Tr**  **actor EPA Emissions Standards (g CO**  **2 /ton**  **- mi**  **le) and**

**NHTSA Fuel Consumption Standards**  **(gal/ 1,000**  **ton -**  **mile)** 2017 Model Year CO 2 Grams per Ton - Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 104 8 0 66 Mid Roof 115 86 73 High Roof 120 89 72 2017 Model Year Gallons of Fuel per 1,000 Ton - Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 10. 2 7.8 6.5 Mid Roof 11.3 8.4 7.2 High Roof 11. 8 8. 7 7. 1 In addition, the agencies are finalizing separate performance standards for the engines manufactured for use in these trucks. EPA ’ s engine - based CO 2 standards and NHTSA ’ s engine - based fuel consumption standards are implemented using EPA’s existing test procedures and regulatory structure for criteria pollutant emissions from medium - and heav y- duty engines. As at proposal, the final engine standards vary depending on engine size linked to intended vehicle service class. Consistent with our proposal, the agencies are finalizing an interim alternative compression ignition engine standard for model years 2014 - 2016. This altern ative standard is designed to provide a glide path for legacy diesel engine products that may not be able to compl y with the final engine standards for model years 2014 - 16 given the short (approximately 2 - ye ar) lead time of this program. We believe this alternative standard is appropriate for a first - ever program when the overall baseline performance of the industry is quite varied and where the short lead time means that not every product can be brought into compliance b y 2014. The alternative standard only applies through and including model year 2016.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

27 of Separatel y, EPA is adopting standards for combination tractors that appl y i n use. EPA is also finalizing engine - based N 2 O and CH 4 standards for manufacturers of the engines used in these combination tractors. EPA is finalizing separate engine - based standards for N 2 O and CH 4 because the agency believes that emissions of these GHGs are technologicall y related solely to the engine, fu el, and emissions aftertreatment sy stems, and the agency

is not aware of any

influence of vehicle - based technologies on these emissions. NHTSA is not incorporating standards for N 2 O and CH 4 because these emissions do not impact fuel consumption in a signi ficant way . The standards that EPA is finalizing for N 2 O and CH 4 are less stringent than those we proposed, reflecting new data provided to EPA in comments on the proposal showing that the current baseline level of N 2 O and CH 4 emissions varies more than EPA had expected. EPA expects that manufacturers of current engine technologies will be able to compl y with the final N 2 O and CH 4 “cap” standards with little or no technological improvements; the value of the standards will be to prevent significant increases in these emissions as alternative technologies are developed and introduced in the future. Compliance with the final EPA engine - based CO 2 standards and the final NHTSA engine - based fuel consumption standards, as well as the final EPA N 2 O and CH 4 standards, will be determined using the appropriate EPA engine test procedure, as discussed in Section s II .B, II.D, and II.E below. As with the other categories of heav y- duty vehicles, EPA and NHTSA are finalizing respective stand ards that will apply to Class 7 and 8 tr actor s at the time of production (as in Table I - 2 , above). In addition, EPA is finalizing separate standards that will apply

for a specified period of time in use. All of the standards for these vehicles , as well as details about the provisions for certification and implementation of these standards, are discussed in more detail in Sections II, III, IV, and V below and in the RIA. (ii) EPA’s Final Air Conditioning Leakage Standard for Class 7 and 8 Combination Tractors In addition to the final EPA tractor - and engine - based standards for CO 2 and engine - based standards for N 2 O, and CH 4 emissions, EPA is finalizing a separate standard to reduce leakage of HFC refrigerant from cabin air conditioning (A/C) sy stems from combination tractors, to apply to the tractor manufacturer. This standard is independent of the CO 2 tractor standard, as discussed below in Section II.E.5 . Because the current refrigerant used widel y in all these s ys tems has a very high global warming potential, EPA is concerned about leakage of refrigerant. 32 Because the interior volume to be cooled for most tractor cabins is sim ilar to that of light - dut y vehicles , the size and design of current tractor A/C sy stems is also very similar. The compliance approach for Class 7 and 8 tractors is therefore similar to that in the light - dut y rule in that these standards are des ign - based. Manufacturers will choose

32 The global warming potential for HFC - 134a refrigerant of 1430 used in this program is consistent with the Intergovernmental Panel on Climate Change Fourth Assessment Report.28 of

technologies from a menu of leak - reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance. However, the final heav y - duty A/C provisions differ in two important w ay s from those established in the light - duty rule. First, the light - duty provisions were established as voluntary

way s to generate credits towards the CO 2 g/mi standard, and EPA took into account the expected use of such credits in determin ing the stringency of the CO 2 emissions standards. In the HD National Program, EPA is requiring that manufacturers actuall y meet a standard

– as opposed to having the opportunity to earn a credit -- for A/C refrigerant leakage. Thus, refrigerant leakage control is not separatel y acc ounted for in the final heav y - duty CO 2 standards. We are taking this approach here recognizing that while the benefits of leakage control are almost identical between light - duty and heavy duty vehicles on a per vehicle basis, these benefits on a per mile basis expressed as a percentage of overall GHG emissions are much smaller for heav y- duty vehicles due to their much higher CO 2 emissions rates and higher annual mileage when compared to light - duty vehicles. Hence a credit - based approach as done for light - duty vehicles would provide less motivation for manufacturers to install low leakage s ys tems even though such sy stems represent a highl y cost effective means to control GHG emissions. The second difference relates to the expression of the leakage rate. The light - duty A/C leakage standard is expressed in terms of grams per year. For EPA’s heavy - duty program, however, because of the wide variety of system designs and arrangements, a one - size - fits - all gram per year standard would not be appropriate, so EPA is adopting a standard in terms of annual mass leakage rate for A/C sy stems with refrigerant capacities less than or equal to 733 grams and percent of total refrigerant leakage per year for A/C sy stems with refrigerant capacities greater than 733 gr ams . Th e percent of total refrigerant leakage per year requires the total refrigerant capacity of the A/C sy stem to be taken into account in determining compliance. EPA believes that this approach -- a standard instead of a credit, and basing the stan dard on percent or mass of leakage over time

– is more appropriate for heav y- duty tractors than the light - duty vehicle approach and that it will achieve the desired reductions in refrigerant leakage. Compliance with the standard will be determined through a showing by the tractor manufacturer that it s A/C sy stem incorporates a combination of low - leak technologies sufficient to meet the leakage rate of the applicable standard. The “ menu ” of technologies is very similar to that established in the light - duty 2012 - 2016 MY vehicle rule. 33 Finally , the agencies did not propose and are not adopting an A/C s ys tem efficiency standard in this heavy - duty rulemaking, although an efficiency c redit was a part of the light - duty

rule. The much larger emissions of CO 2 from a heav y - duty tractor as compared to those from a light - duty vehicle mean that the relative amount of CO 2 that could be reduced through A/C efficiency improvements is very

small .

33 EPA has approved an alternati ve refrigerant, HFO - 1234yf, which has a very low GWP, for use in light duty vehicle mobile A/C systems. The final heavy - duty vehicle A/C leakage standard is designed to account for use of an alternative, low - GWP refrigerant. If in the future this refrig erant is approved for heavy - duty applications and if it becomes widespread as a substitute for HFC - 134a in heavy - duty vehicle mo bile A/C systems, EPA may propose to revise or eliminate the leakage standard.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

29 of A more detailed discussion of A/C related issues is found in Section II .E.5 of this preamble. (b ) Heavy -Duty Pickup Trucks and Vans (Class 2b and 3 ) Heav y- dut y vehicles with GVWR between 8,501 and 10,000 lb are classified in the industry

as Class 2b motor vehicles per the Federal Motor Carrier Safety Administration definition. As discussed above, Class 2b includes MDPVs that are regulated b y the agencies under the light - duty vehicle rule , and the agencies are not adopting additional requirements fo r MDPVs in this rulemaking. Heavy - duty vehicles with GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles. Class 2b and Class 3 heavy - duty vehicles (referred to in these rules as “ HD pickups and vans”) together emit about 15 percent of today ’s GHG emissions from the heavy - duty vehicle sector. About 90 percent of HD pickups and vans are 3⁄4 - ton and 1 - ton pickup trucks, 12 - and 15 - passenger vans, and large work vans that are sold by vehicle manufacturers as complete vehic les, with no secondary manufacturer making substantial modifications prior to registration and use. These vehicle manufacturers are companies with major light - duty markets in the United States, primarily Ford, General Motors, and Chry sler. Furthermore, the technologies available to reduce fuel consumption and GHG emissions from this segment are similar to the technologies used on light - duty pickup trucks , including both engine efficiency improvements (for gasoline and diesel engines) and vehicle efficienc y improvements. For these reasons, EPA believes it is appropriate to adopt GHG standards for HD pickups and vans based on the whole vehicle (including the engine), expressed as grams per mile, consistent with the way these vehicles are regulated b y EPA t oday for criteria pollutants. NHTSA believes it is appropriate to adopt corresponding gallons per 100 mile fuel consumption standards that are likewise based on the whole vehicle. This complete vehicle approach being adopted by both agencies for HD picku ps and vans is consistent with the recommendations of the NAS Committee in their 2010 Report. EPA and NHTSA also believe that the structure and many of the detailed provisions of the recentl y finalized light - duty

GHG and fuel economy

program, which also i nvolves vehicle - based standards, are appropriate for the HD pickup and van GHG and fuel consumption standards as well, and this is reflected in the standards each agency is finalizing, as detailed in Section II.C. These commonalities include a new vehicl e fleet average standard for each manufacturer in each model ye ar and the determination of these fleet average standards based on production volume - weighted targets for each model, with the targets varying based on a defined vehicle attribute. Vehicle tes ting will be conducted on chassis dy

namo meters using the drive cycles from the EPA Federal Test Procedure30 of

( Li ght - dut y FTP or “ city ” test) and Highway Fuel Economy

Test (HFET or “ highway” tes t). 34 For the light - dut y GHG and fuel econom y standards, the agenci es factored in vehicle size by

basing the emissions and fuel economy targets on vehicle footprint (the wheelbase times the average track width). 35 For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel economy target levels in acknowledgement of their inherent tendency to consume more fuel and emit more GHGs per mile. For HD pickups and vans, the agencies believe that setting standards based on vehicle attributes is appropriate, but feel that a work - based metric serves as a better attribute than the footprint attribute utilized in the light - duty vehicle rulemaking. Work - based measures such as payload and towing capability are key among the parameters that characterize differen ces in the design of these vehicles, as well as differences in how the vehicles will be utilized. Buyers consider these utility - based attributes when purchasing a heav y- duty pickup or van. EPA and NHTSA are therefore finalizing standards for HD pi ckups and vans based on a “work factor” attribute that combines their payload and towing capabilities, with an added adjustment for 4 - wheel drive vehicles. The agencies received a number of comments supporting this approach arguing , as the agencies had , that this approach was an effective way to encourage technology

development and to appropriately reflect the utility

of work vehicles while setting a consistent metric measure of vehicle performance . . As propo sed, the agencies are adopting provisions such that each manufacturer’s fleet average standard will be based on production volume - weighting of target standards for all vehicles that in turn are based on each vehicle’s work factor. These target standards are taken from a set of curves (mathematical functions), presented in Section II.C below and in §1037.104 . EPA is also phasing in the CO 2 standards gradually starting in the 2014 model year, at 15 - 20 - 40 - 60 - 100 percent of the model year 2018 standards stringency level in model years 2014 - 2015 - 2016 - 2017 - 2018, respectivel y. The phase - in takes the form of a set of target standard curves, with increasing stringency in each model ye ar, as detailed in Section II.C. The final EPA standards for 2018 (including a separate stan dard to control air conditioning s ys tem leakage) represent an average per vehicle reduction in GHGs of 17 percent for diesel vehicles and 12 percent for gasoline vehicles, compared to a common baseline, as described in Sections II.C and III.B of this preamble. The rule contains separate standards for diesel and gasoline heavy duty pickups and vans for reasons described in Section II.C below. EPA is also finalizing a compliance alternative whereb y manufacturers can phase in different percentages: 15 - 20 - 67 - 67 - 67 - 100 percent of the model year 2019 standards stringency level in model years 2014 - 2015 - 2016 - 2017 - 2018 - 2019, respectively . This compliance alternative parallels and is equivalent to NHTSA’s first alternative described below.

34 The Light - duty FTP is a vehicle driving cycle that was originally developed for certifying light - duty vehicles and subsequently applied to HD chassis testing for criteria pollutants. This contrasts with the Heavy - duty

FTP, w hich refers to the transient engine test cycles used for certifying heavy - duty engines (with separate cycles specified for diesel and spark - ignition engines). 35 EISA requires CAFE standards for passenger cars and light trucks to be attribute - based; see 49 U.S.C. 32902(b)(3)(A).***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

31 of NHTSA is allowing manufacturers to select one of two fuel consumption standard alternatives for model years 2016 and later. T he first alternative defines individual gasoline vehicle and diesel vehicle fuel consumption target curves that will not change for model years 2016 - 2018 , and are equivalent to EPA’s 67 - 67 - 67 - 100 percent target curves in model ye ars 2016 - 2017 - 2018 - 2019, respectivel y . The target curves for this alternative are presented in Section II.C. The second alternative uses target curves that are equivalent to the EPA’s 40 - 60 - 100 percent target curves in model year s 2016 - 2017 - 2018 , respectivel y . Stringency for the alternatives has been selected to allow a manufacturer, through the use of the credit and deficit carry- forward provisions that the agencies are also finalizing, to rel y on the same prod uct plans to satisfy

either of these two alternatives, and also EPA requirements. If a manufacturer cannot meet an applicable standard in a given model year, it may make up its shortfall by

overcompl yi ng in a subsequent year, called reconciling a credit deficit. NHTSA is also allowing manufacturers to voluntarily opt into the NHTSA HD pickup and van program in model ye ars 2014 or 2015. For these model years, NHTSA’s fuel consumption target curves are equivalent to EPA’s target curves. The agencies received a number of comments suggesting that the standards for heav y- duty pickups and vans should be made more stringent for gasoline vehicles and that the phase - in timing of the standards should be accelerated to the 2016 model year (from 2018). We also received comments arguing that the proposed standards were aggressive and could only be met given the phase - in schedules proposed by the agencies. In response to these comments, we reviewed again the technology assessments from the 2010 NAS report, our own joint light - duty 2012 - 2016 rulemaking, and information provided b y the commenters relevant to the stringency of these standards. After reviewing all of the information, we continue to conclude that the proposed standards and associated phase - in schedules represent technically stringent but reasonable standards considering the available lead time and costs to bring the necessary technologies to market and our own assessments of the efficacy of the technologies when applied to heav y- duty pickup trucks and vans. Further detail on the feasibility of the standards and the agencies’ choices among alternative standards is found in S ection III.C below. The form and stringency

of the EPA and NHTSA standard s curves are based on a set of vehicle, engine, and transmission technologies expected to be used to meet the recentl y established GHG emissions and fuel economy standards f

or model year 2012 - 2016 light - duty

vehicles, with full consideration of how th ese technologies are likel y to perform in heav y- duty vehicle testing and use. All of these technologies are already in use or have been announced for upcoming model years in some light - duty vehicle models , and some are in use in a portion of HD pickups an d vans as well . The technologies include:  advanced 8 - speed automatic transmissions  aerodynamic improvements  electro - hydraulic power steering  engine friction reductions32 of

 improved accessories  low friction lubricants in powertrain components  lower rolling res istance tires  lightweighting  gasoline direct injection  diesel aftertreatment optimization  air conditioning s ys tem leakage reduction (for EPA program onl y) See Section III. B for a detailed anal ys is of these and other pote ntial technologies, including their feasibility, costs, and effectiveness when emplo yed for reducing fuel consumption and CO 2 emissions in HD pickups and vans . A relativel y small number of HD pickups and vans are sold b y vehicle manufacturers as incomplet e vehicles, without the primary load - carrying device or container attached. We are generall y regulating these vehicles as Class 2b through 8 vocational vehicles but are also allowing manufacturers the option to choose to comply with heav y- dut y pickup or van standards , as described in Section I.C . (2)(c) . Although , as with vocational vehicles generall y , we have little information on baseline aerody namic performance and opportunities for improvement , a sizeable subset of these incomplete vehicles, often called cab - chassis vehicles, are sold by the vehicle manufacturers in configurations with many of the components that affect GHG emissions and fuel consumption identical to those on complete pickup truck or van counterparts

— including engines, cabs, frames, transmissions, axles, and wheels. We are including provisions that will allow manufacturers to include these vehicles , as well as some Class 4 and 5 vehicles, to be regulated under the chassis - based HD pickup and van program (i.e. subject to the standards for HD pickup s and van s ) , rather than the vocational vehicle program. These provisions are described in Section V.B (1)(e ). In addition to the EPA CO 2 emission standards and the NHTSA fuel consumption standards for HD pickups and vans, EPA is also finalizing standards for two additional GHGs, N 2 O and CH 4 , as well as standards for air conditioning - related HFC emissions. These standards are discussed in more detail in Section II.E. Finally , EPA is finalizing standards that will apply

to HD pickups and vans in use. All of the standards for these HD pickups and vans, as well as details about the provisions for certification and implementatio n of these standards, are discussed in Section II.C. (c) Class 2b - 8 Vocational Vehicles Class 2b - 8 vocational vehicle s consist of a wide variety of vehicle ty pes. Some of the primary

applications for vehicle s in this segment include delivery , refuse, utility , dump, and cement trucks; transit, shuttle, and school buses; emergency vehicles, motor***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

33 of homes, 36 tow trucks, among others . These vehicle s and their engines contribute approximately 20 percent of today ’ s heavy- duty truck sector GHG emissions . Manufacturing of vehicles in this segment of the industry is organized in a more complex way

than that of the other heav y- duty categories . Class 2b - 8 vocational vehicle s are often built as a chassis with an installed engine and an installed transmission. Both the engine and transmissions are typicall y manufactured b y other manufacturers and the chassis manufacturer purchases and installs them. Many of the same companies that build Class 7 and 8 tractors are also in the Class 2b - 8 chassis manufacturing market. The chassis is ty

picall y then sent to a body manufacturer , which completes the vehicle by installing the appropriate feature -- such as dump bed, delivery box, or utility bucket -- onto the chassis. Vehicle b ody manufacturers tend to be small busine sses that specialize in specific types of bodies or specialized features . EPA and NHTSA proposed that in this vocational vehicle category the proposed GHG and fuel consumption standards appl y to chassis manufacturers. Chassis manufacturers play

a central role in the manufacturing process . T he product they produce

– the chassis with engine and transmission

– includes the primary technologies that affect GHG emissions and fuel consumption. They also constitute a much more limited group of manufacturers for purposes of developing and implementing a regulatory

program. The agencies believe that a focus on the body manufacturers would be much less practical, since they represent a much more diverse set of manufacturers, many of whom are small businesses . Further , the part of the vehicle that they add affords very few opportunities to reduce GHG emissions and fuel consumption (given the limited role that aerodynamics plays in man y ty pes of lower speed and stop - and - go operation ty picall y found with vocational vehicles.) Therefore, the agencies proposed that the standards in this vocational vehicle category would apply

to the chassis manufacturers of all heav y- duty vehicles not otherwise covered b y the HD pickup and van standards or Class 7 and 8 combination tractor standards discussed above. The agencies requested comm ent on the proposed focus on chassis manufacturers. Volvo commented that the EI SA does not speak to the regulation of subs ys tems, such as incomplete vehicles, and argued that on the other hand, Section 32902(k)(2) prescribes the regulation of vehicles. Vo lvo further stated that precedent for the regulation of complete vehicles exists in the light - duty fuel econom y rule. As noted above, NHTSA does not believe that EISA mandates a particular regulatory approach, but rather gives the agency wide latitude and explicitly leaves that determination to the agency . NHTSA also notes that its heavy- duty rule creates a new fuel efficiency program for which the light - dut y program does not necessarily serve as a useful precedent for considerations of its structure. Un like the light - duty fuel econom y program, MD/HD vehicles are produced in widely diverse stages. Further, given the MD/HD market structure, where the complete vehicle manufacturers are numerous, diverse, and often small businesses, the regulation of comple te vehicles would create unique difficulties for

36 NHTSA’s final fuel consumption s tandards will not apply to recreational vehicles, as discussed in earlier in this preamble section .34 of

the application of appropriate and feasible technologies. These same considerations justify EPA’s determination, pursuant to CAA section 202 (a), to regulate only chassis manufacturers in this first stage o f GHG rules for the heav y- duty sector. NHTSA also notes that this rule does not represent the first time that the agency has regulated incomplete vehicles. Rather, incomplete vehicles have a history of regulation under the Federal Motor Vehicle Safety St andards. 37 For this first phase of the HD National Program, NHTSA and EPA believe that given the complexity of the manufacturing process for vocational vehicles, and given the wide range of entities that participate in that process, vehicle fuel consumptio n standards would be most appropriately applied to chassis manufacturers and not to body builders. The agencies continue to believe that regulation of the chassis manufacturers for this vocational vehicle category will achieve the maximum feasible improv ement in fuel efficiency for purposes of EI SA and appropriate emissions reductions for purposes of the CAA . Therefore, consistent with our proposal the final standards in this vocational vehicle category

appl y to the chassis manufa cturers of all heav y- duty vehicles not otherwise covered b y the HD pickup and van standards or Class 7 and 8 combination tractor standards discussed above. As discussed above, EPA and NHTS A have concluded that reductions in GHG emissions and fuel consumpti on require addressing both the vehicle and the engine. As discussed above for Class 7 and 8 combination tractors, the agencies are each finalizing two sets of standards for Class 2b - 8 vocational vehicles. For vehicle - related emissions and fuel consumptio n, the agencies are adopting standards for chassis manufacturers: EPA CO 2 (g/ton - mile) standards and NHTSA fuel consumption (gal/1,000 ton - mile) standards). While the agencies believe that a freight - based metric is broadly appropriate for vocational vehi cles because the vocational vehicle population is dominated by

freight trucks and maintain that it is appropriate for the first phase of the program, the agencies may consider other metrics for future phases of a H D program. M anufacturers will use GEM, the same customized vehicle simulation model used for Class 7 and 8 tractors, to determine compliance with the vocational vehicle standards finalized in this action . The primary manufacturer - generated input into the GEM for this category of trucks will be a measure of tire rolling resistance, as discussed further below, because tire improvements are the primary means of vehicle improvement available at this time for vocational veh icles. The model also assumes the use of a ty pical representative , compliant engine in the simulation, resulting in an overall value for CO 2 emissions and one for fuel consumption. This is done for the same reason as for combination tractors. As is the c ase for combination tractors, the manufacturers of the engines intended for vocational vehicles will be subject to separate engine - based standards. (i ) Final Standards for Class 2b - 8 Vocational Vehicles and their Engines Based on our analy sis and research, the agencies believe that the primary opportunity for reductions in vocational vehicle GHG emissions and fuel consumption will be through improved engine technologies and improved tire rolling resistance. For engines, E PA and NHTSA are adopting separate standards for the manufacturers of

37 See 49 U.S.C. §§ 567.5 and 568.4***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

35 of engines used in Class 2b - 8 vocational vehicles (the same approach as for combination tractors and engines intended for use in those tractors) . EPA ’ s final engine - based CO 2 standards and NHTSA ’ s final engine - based fuel consumption standards vary based on the expected weight class and usage of the truck into which the engine will be installed. Tire rolling resistance is closely related to the weight of the vehicle. Therefore, we are adop ting vehicle - based standards for these trucks which vary according to one key attribute, GVWR. For this initial HD rulemaking, we are adopting standards based on the same groupings of truck weight classes used for the engine standards -- light heavy- dut y, medium heav y- dut y, and heav y heav y- duty. These groupings are appropriate for the final vehicle - based standards because they parallel the general divisions among key engine characteristics, as discussed in Section II. The agencies are also finalizing an i nterim alternative compression ignition (diesel) engine standard for model years 2014 - 2016, again analogous to the alternative standards for compression ignition engines use in combination tractors. The need for this provision and our considerations in adopting it are the same for the engines used in vocational vehicles as for the engines used in combination tractors. As we proposed, these alternative standards will only be available through model year 2016. Inaddition , manufacturers that use the interim alternative diesel engine standards for model years 2014 - 2016 under the EPA program must us e equivalent fuel consumption standards under the NHTSA program . For the 2014 to 2016 model years, manufacturers may also choose to meet alternative engine standards that are phased - in over the model years to coincide with new EPA On Board Diagnostic ( OB D ) requirements applicable for these same model years. See Sections II.B and II. D below. The agencies received a significant number of comments arguing that our proposed standards for vocational vehicles did not reflect all of the technologies identified in the 2010 NAS report. The commenters encouraged the agencies to expand the program to bring in additional reductions through the use of new transmission technologies, vehicle weight reductions and hybrid drivetrains. In general, the agencies agree with the commenters ’ central contention that there are additional technologies to improve the fuel efficiency of vocational vehicles. As discussed later, we are finalizing provisions to allow new technologies to be brought into the program through t he innovative technology

credit program. More specifically , we are including provisions to account for and credit the use of h ybrid technology as a technology that can reduce emissions and fuel consumption. Hy brid technology

can currentl y be a cost - effec tive technology

in certain specific vocational applications, and the agencies want to recognize and promote the use of this technology . (See Sections I .E and IV below.) However, we are not finalizing standards that are premised on the use of these additi onal technologies because we have not been able to develop the test procedures, regulatory mechanisms and baseline performance data necessary to adopt a more comprehensive approach to controlling fuel efficiency and GHG emissions from vocational vehicles. In concept, the agencies would need to know the baseline weight, aerodynamic performance, and transmission configuration for the wide range of vocatio nal vehicles produced today . We36 of

do not have this information even for relativel y s mall portions of this market (e.g. concrete mixers ) nor are we well informed regarding the potential tradeoffs to changes to vehicle utility

that might exist for changes to concrete mixer designs in response to a regulation. Nor did the commenters provide an y s uch information. Absent this information and the necessary regulatory

tools, we believe the standards we are finalizing for vocational vehicles represent the most appropriate standards for this segment during the model years of the first phase of the program . We intend to address fuel consumption and GHG emissions from these vehicles in a more comprehensive manner through future regulation and look forward to working with all stakeholders on this important segment in the future. The agencies are setting standards beginning in the 2014 model year and establishing more stringent standards in the 2017 model year. Table I - 3 presents EPA ’ s final CO 2 standards and NHTSA ’ s final fuel consumption standards for chassis manufacturers of Class 2b through Class 8 vocational vehicles for the 2017 model year. The 2017 model year s tandards represent a 6 to 9 percent reduction in CO 2 emissions and fuel consumption over a 2010 model year vehicle. **Table I**  **- 3**  **: Final 2017 Class 2b -**  **8 Vocational Vehicle EPA CO 2**  **Standards and NHTSA Fuel Consumption Standards**  EPA CO 2 (gram/ton - mile) Standard Effective 2017 Model Year

Li ght Heav y- Dut y Class 2b - 5 Medium Heav yDuty Class 6 - 7 Heav y Heav y- Duty

Class 8 CO 2 Emissions 373 225 222 NHTSA Fuel Consumption (gallon per 1,000 ton - mile) Standard Effective 2017 Model Year Li ght Heav y- Dut y

Class 2b - 5 Medium Heav yDuty Class 6 - 7 Heav y Heav y- Duty

Class 8 Fuel Consumption 36. 7 22.1 21.8 As mentioned above for Class 7 and 8 combination tractors, EPA believes that N 2 O and CH 4 emissions are technologicall y related solely to the engine, fuel, and emissions aftertreatment sy stems, and the agency is not aware of any

influence of vehicle - based technologies on these emissions. Therefore, for Class 2b - 8 vocational vehicles, EPA’s final N 2 O and CH 4 standards cover manufacturers of the engines to be used in vocational vehicles. EPA did not propose, nor are we adopting separate vehicle based standards for these GHGs. As for the engines used in Class 7 and 8 tractors, we are finalizing a somewhat higher N 2 O and CH 4 emission standards reflecting new data submitted to the agencies during the public comment period . EPA expects that manufacturers of current engine technologies will be able to compl y with the final “cap” standards with little or no technological improvements; the value of the standards is that they will prevent significant increases in these emission s as alternative technologies are developed and introduced in the future. Compliance with the final EPA engine - based CO 2 standards and the final NHTSA fuel consumption standards, as well as the final EPA***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

37 of N 2 O and CH 4 standards, will be determined using the appropriate EPA engine test procedure, as discussed in Section II below. As with the other regulatory categories of heavy- duty vehicles, EPA and NHTSA are adopting standards that apply to Class 2b - 8 vocational vehicles at the time of production, and EPA is adopting standards for a specified period of time in use. All of the standards for these trucks, as well as details about the final provisions for certification and implementation of these standards, are discussed in more detail later in this notice and in the RIA. EPA did not propose, nor is it adopting A/C refrigerant leakage standards for Class 2b - 8 vocational vehicles, primarily because of the number of entities involved in their manufacture and thus the potential for different entities besides th e chassis manufacturer to be involved in the A/C sy stem production and installation. (d ) What Manufacturers Are Not Covered by the Final Standards? The NPRM proposed to defer temporaril y greenhouse gas emissions and fuel consumption standards for an y manufacturers of heavy- duty engines, manufacturers of combination tractors, and chassis manufacturers for vocational vehicles that meet the “small business” size criteria set b y the Small Business Administration (SBA). 13 CFR 121.201 defines a small busi ness by the maximum number of employees; for example, this is currently

1,000 for heav y- duty vehicle manufacturing and 750 for engine manufacturing. 38 The agencies stated that they would instead consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S. - based and foreign small - volume heav y- duty manufacturers. To ensure that the agencies are aware of which companies would be exempt, the agencies proposed to require that such enti ties submit a declaration describing how it qualifies as a small entity

under the provisions of 13 CFR 121.201 to EPA and NHTSA as prescribed in Section V below . EPA and NHTSA were not aware of an y manufacturers of HD pickups and vans that meet these criteria. For each of the other categories and for engines, the agencies identified a small number of manufacturers that would appear to qualify as small businesses under the SBA size criterion, which were estimated to comprise a negligible percentage of the U.S. market. 39 Therefore, the agencies believed that deferri ng the standards for these companies at this time would have a negligible impact on the GHG emission reductions and fuel consumption reductions that the program would otherwise achieve. The agencies proposed to consider appropriate GHG emissions and fuel consumption standards for these entities as part of a future regulatory action.

38 See § 1036.150 and § 1037.150 39 Two heavy - duty

com bination tractor and ten chassis manufacturers each comprising less than 0.5 percent of the total tractor and vocational market based on Polk Registration Data from 2003 through 2007, and three engine manufacturing entities based on comp any information included in Hoover’s, comprising less than 0.1 percent of the total heavy - duty engine sales in the United States based on 2009 and 2010 EPA certification information.38 of The Institute for Policy

Integrity ( IP I ) commented that the small business exemption proposed in the NPRM was based on the improper framework of whether the exemption would have a negligible impact, and did not adequatel y explain why the regulation of small businesses would face special compliance and administrative burdens. IP I argued that the onl y proper basis for this exemption would be if the agencies could explain how the se burdens create costs that exceeded the benefits of regulation. NHTSA believes that developing standards that are “appropriate, cost - effective, and technologicall y feasible” under 49 USC 32902(k)(2) includes the authority to ex clude certain manu facturers if their inclusion would work against these statutory factors. Similarly , under section 202 (a) of the CAA, EPA may reasonabl y choose to defer regulation of industry segments based on considerations of cost, cost - effectiveness and available lead time for standards. As noted above, small businesses make up a very small percentage of the market and are estimated to have a negligible impact on the emissions and fuel consumption goals of this program . The short lead time before the CO 2 standards take effect , the extremely small fuel savings and emissions contribution of these entities, and the potential need to develop a program that would be structured differentl y for them (which would require more time to determine and adopt), all led to the decision that the inclusion of small businesses would not be appropriate at this time. Therefore, the final rule ex empt s small business es as proposed . Volvo and EMA stated that by exempting small businesses based on the definition from SBA, the rule s would create a competitive advantage for small businesses over larger entities. EMA commented that the exemption should not apply to market segments where a smal l business has a significant share of a particular HD market. Volvo argued that the exempted businesses could expand their product offerings or sell vehicles on behalf of larger entities, thereb y inappropriatel y increasing the scope of the exclus ion . The agencies anticipate that the gain a manufacturer might achieve b y restructuring its practices and products to circumvent the standard (which for vocational vehicles simply means installing low rolling resistance tires) in the first few ye ars of this program will be outweighed b y the costs, particularl y as small businesses anticipate their potential inclusion in the next rulemaking. Volvo also commented that the agencies should elaborate on the requirements for the exemption in greater detail. The agencies agree that this may help to clarify

the process. As suggested by Volvo, the agencies will consider affiliations to other companies and evidence of spin - offs for the purpose of circumventing the standards in determining whether a business qualifies as a small entity for this ex clu sion . Each declaration must be submitted in writing to EPA and NHTSA as prescribed in Section V below, and a manufacturer would not be considered exempt until EPA and NHTSA have made a formal determination as to their status in writing. As the agencies gain more experience with this exemption, these clarifications may be codified in the regulatory te x t of a future rulemaking. Volvo further commented that the agencies were adopting a n ex emption of “small business es ” in order to avoid doing a S mall Business Regulatory Enforcement Fairness Act (S BREFA ) and Regulatory Flexibility

Act ( RFA ) anal ys is. The agencies would like***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

39 of to reiterate that they

have decided not to include small businesses at this time due to the factors described above. The discussion on an RFA anal ys is is laid out in Section IX(4). The agencies continue to believe that deferring the standards for these companies at this time will have a negligible impact on the GHG emission reductions and fuel consumption reductions that the program would otherwise achieve. Therefore, the final rule s include the small business exempti on as proposed . The specific deferral provisions are discussed more detail in Section II. The agencies will consider appropriate GHG emissions and fuel consumption standards for these entities as part of a future regulatory action. (e) Light- duty Vehicle CH 4 and N

2 O Standards Flexibility After finalization of the N 2 O and CH 4 standards for light - duty vehicles as part of the 2012 - 2016 MY program, some manufacturers raised concerns that they may have difficulty meeting those standards across their l ight - duty vehicle fleets. In response to these concerns, as part of the same Federal Register notice as the heav y- duty proposal, EPA requested comments on additional options for manufacturers to comply with light duty vehicle N 2 O and CH 4 standards to provide additional near - term flexibility . Commenters providing comment on this issue supported additional flexibility for manufacturers. EPA is finalizing provisions allowing manufacturers to use CO 2 credits, on a CO 2 - equivalent basis, to m eet the N 2 O and CH 4 standards, which is consistent with many commenters’ preferred approach. Manufacturers will have the option of using CO 2 credits to meet N 2 O and CH 4 standards on a test group basis as needed for MYs 2012 - 2016. (f ) Alternative Fuel Engines and Vehicles The agencies believe that it is also appropriate to take steps to recognize the benefits of flexible - fueled vehicles (FFVs) and dedicated alternative - fueled vehicles. In the NPRM, EPA proposed to determine the emissions performance of dedicat ed alternative fuel engines and pickup trucks and vans by measuring tailpipe CO 2 emissions. NHTSA proposed to determine fuel consumption performance of non - electric dedicated alternative fuel engines and pickup trucks and vans by measuring fuel consumptio n with the alternative fuel and then calculating a petroleum equivalent fuel consumption using a Petroleum Equivalency

Factor (PEF) that is determined by the Department of Energy . NHTSA proposed to treat electric vehicles as having zero fuel consumption, comparable to the EPA proposal. Both agencies proposed to determine FFV performance in the same way as for GHG emissions for light - duty vehicles, with a 50 - 50 weighting of alternative and conventional fuel test results through MY 2015, and a weighting based on demonstrated fuel use in the real world after MY 2015 (defaulting to an assumption of 100 percent conventional fuel use). This approach was considered to be a reasonable and logical way

to properly

credit alternative fuel use in FFVs in the real world without imposing a difficult burden of proof on manu f ac turers. However, unlike in th e light - duty rule, the agencies do not believe it is appropriate to create a provision for additional40 of

incentives similar to the 2012 - 2015 light - duty incentive program (see 49 USC 32904) because the HD sector does not have the incentives mandated in EI SA for light - duty FFVs, and so has not relied on the existence of such credits in devising compliance strategies for the early

model years of this program. See 74 FR at 49531. In fact, manufacturers have not in the past produced FFV heav y- duty vehicles. On the other hand, the agencies sought comment on how to properly recognize the impact of the use of alternative fuels, and E85 in particular, in HD pickups and vans, including the proper accounting for alternative fuel use in FFVs in the real world. 40 See 75 FR at 74198 . T he agencies received several comments from natural gas vehicle (NGV) interests arguing for greater crediting of NGVs than the proposed approach would have provided. Clean Energy , Hayday

Farms, Border Valley , AGA, Ryder, Encana, and a group of NGV interests commented that the NPRM ignored Congress’ intent to incentivize the use of NGVs by not including the conversion factor that exists in the light - duty statutory language. The commenters argued that Congress’ intent to incentivize NGV s is evident i n the formula contained in 49 U.S.C. 32905, which deems a gallon equivalent of gaseous fuel to have a fuel content of 0.15 gallon of fuel. The commenters also argued that Congress implicitly

intended NGVs to be incentivized in th is rulemaking , as evidence d by the incentives in the light - duty statutory text. AGA and Hayday

suggested that the agencies were not including the NGV incentive from light - duty because Congress did not explicitly include it in 49 U.S.C. 32902(k), and argued that this would contradi ct the agencies’ inclusion of other incentives similar to the light - duty rule. The American Trucking Association expressed support for estimating natural gas fuel efficiency

by using carbon emissions from natural gas rather than energy content to estimate fuel consumption. ATA explained that two vehicles can achieve the same fuel efficiency , yet one operated on natural gas would have a lower carbon dioxide emissions rate. A natural gas conversion factor that uses carbon content versus energy content is a more appropriate method for calculating fuel consumption , in the commenter’s view . A number of other groups commented on the appropriate method to use in establishing fuel consumption from alternative fueled vehicles. A group of NGV interests , Ryder, Bo rder Valley Trading, Waste Management, Robert Bosch and the Blue Green Alliance encouraged the agencies to adopt the 0.15 conversion factor in estimating fuel consumptio n for FFVs and alternative fuel vehicles finalized in the light - duty 2012 - 2016 MY ve hicle standards. The suggested incentive would effectively reduces the calculated fuel consumption for FFVs and alternative fuel vehicles b y a factor of 85 percent. T he commenters argue d that the incentive is needed for heavy - duty vehicles to encourage the use of natural gas and to reduce the nation’s dependence on petroleum. The agencies reassessed the options for treating the CO 2 and fuel consumption performance of alternative fuel v ehicles in response to comments and because the agencies recognized that the treatment of alternate fuel vehicles was one of the few provisions in the proposal where the EPA and NHTSA programs were not aligned. The agencies conducted an analy sis comparing fuel consumption calculated based on CO 2

40 E85 is a blended fuel consisting of nominally 15 percent gasoline and 8 5 percent ethanol.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

41 of emissions 41 to fuel consumption calculated based on gasoline or diesel energy equivalency to evaluate impacts of a consistent consumption measurement for all vehicle classes covered b y this program and to furthe r understand how alternative fuels would be impacted b y this measurement methodology. In particular the agencies evaluated how measuring consumption via CO 2 emissions would hinder or benefit the application of alternative fuels versus following similar alternative fuel incentivizing programs provided via statute for the Agency’s light - duty programs. The anal ys is showed measuring a vehicle’s CO 2 output converted to fuel consumption provided a fuel consumption measurement benefit to those vehicles operati ng on fuels other than gasoline or diesel. For CNG, LNG and LPG the benefit is approximately 19 percent to 24 percent, for biodiesel and ethanol blends the benefit is approximately 1 percent to 3 percent, and for electricity and h ydrogen fuels the benefit is 100 percent benefit, as fuel consumption is zero. The agencies also considered that the EPA Renewable Fuel Standard, 42 a separate program, requires an increase in the volume of renewable fuels used in the U.S. transportation sector. For the fuels cove red b y the Renewable Fuels Standard additional incentives are not needed in this regulation given the large volume increases required under RFS. The agencies continue to believe that alternative - fueled vehicles , including NGVs , provide fuel consumption ben efits that should be accounted for in this program. However, the agencies do not agree with the commenters’ claim that the NGV incentive contained in EI SA, and re flected in the light - duty program , is an explicit Congressional directive that must also be a pplied to the heavy- duty

program, nor that the light - duty incentive for NGVs should be interpreted as an implicit Congressional directive for NGVs to be incentivized in the heav y- duty program. Further, the agencies believe that the fuel consumption benefi ts that alternative fuel vehicles w ould obtain through measuring CO 2 emissions for the EPA program and converting CO 2 emissions to fuel consumption for the NHTSA program accuratel y reflect s their energy benefits . T h is, in conjunction with the volumetric increases required by the Renewable Fuels Standard, provide s sufficient incentives for these vehicles. The agencies continue to believe that the light - dut y conversion factor is not appropriate for this program . Instead, the agencies are finalizing me asuring the performance of alternative fueled vehicles b y measuring CO 2 emissions for the EPA program and converting CO 2 emissions to fuel consumption for the NHTSA program. The agencies are also finalizing measuring FFV performance with a 50 - 50 weighting of alternative and conventional fuel test results through MY 2015, and an ag ency- or manufacturer - determined weighting based on demonstrated fuel use in the real world after MY 2015 (defaulting to an assumption of 100 percent conventional fuel use). 41 Fuel consumption calculated from measured CO 2 using conversion factors of 8,887 g CO 2 /gallon for gasoline (for alternative fuel engines that are derived from gasoline engines), and 10,180 g CO 2 /gallon for diesel fuel (for alternative f uel engines that are derived from diesel engines). 42 EPA is responsible for developing and implementing regulations to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. The RFS program was created unde r the Energy Policy Act (EPAct) of 2005, and expanded under the Energy Independence and Security Act (EISA) of 2007.42 of The agencies believe this structure accuratel y reflects the fuel consumption of the vehicles while at the same time providing a n incentive for the alternative fuel use. (For example, natural gas heavy duty engines perform 20 to 30 percent better than their diesel and gasoline counterparts from a CO 2 perspective, and so meet the standards adopted in these rules without cost, and indeed will be credit generators without cost.) We believe this is a substantial enough advantage to spur the market for these vehicles. The calculation at the same time does not overestimate the benefit from th ese technolog ies , which could reduce the effectiveness of the regulation. Therefore, the final rule s do not include the light - dut y 0.15 conversion factor for NGVs. The agencies would like to clarify that the decision not to include an NGV incentive was based on this policy determination, not on a belief that incentives present in the light - duty rule could not be developed for the heav y- duty sector bec a u se they were not explicitly

included in Section 32902(k). NHTSA recognizes that EPCA/EI SA promotes incentives for alternative fueled vehicles for different purposes than does the CAA, and that there may be additional energy and national security

benefits that could be achieved through increasing fleet percentages of natural gas and other alternative - fueled vehicles. More alternative - fueled vehicles on road would arguably displace petroleum - fueled vehicles, and thereb y increase both U.S. energy

and national security b y reducing the nation’s dependence on foreign o il. However, the agencies believe that the benefits of harmonization would outweigh any potential gains in this area. In addition to reducing industry burden and creating regulatory

efficiency , a harmonization rule both adheres to the President’s May 201 0 memorandum calling for a joint rulemaking, 43 and Executive Order 13563. 44 The agencies believe that a divergence of standards in this area would have significant negative consequences. Dis - harmonization would effectivel y make the NHTSA program irrelevant , but would increase burdens for both manufacturers and the agencies in the areas of compliance and reporting. Further, dis - harmonized standards would likely

lead to credit excesses in NHTSA’s program for which there would be no demand. On the other hand , achieving harmonized standards has many benefits for the public, the regulated industries, and the agencies. By reducing regulatory

inefficiency , harmonization decreases costs for all parties involved, including taxpayers. Harmonization also allows manufacturers to project clear benefits for the application of GHG - reduction and fuel efficiency technologies, thus spurring their adoption, and

43 Improving Energy Security, American Competitiveness and Job Creation, and Environmental Protection Through a Transformation of Our Nation’s Fleet of Cars And Trucks , ” Issued May 21, 2010, published at 75 FR 29399 , May 26, 2010 .

44 EO 13563 states that an agency shall “ tailor its regulations to impose the least burden on society, consistent with obtaining regula tory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations,” and “promote such coordination, simplification, and harmonization” as will reduce redundancy, inconsistency, and costs of multipl e regulatory requirements.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

43 of reduces incentives for gaming the regulatory s ys tem instead of achieving real GHG and fuel efficiency

benefits. T his combined rulemaking b y EPA and NHTSA is designed to regulate two separate characteristics of heav y duty vehicles: greenhouse gas emissions (GHG) and fuel consumption. In the case of diesel or gasoline powered vehicles, there is a one - to - one relations hip between these two characteristics. Each gallon of gasoline combusted by a truck engine generates approximately 8,887 grams of CO 2 ; and each gallon of diesel fuel burned generates about 10,180 grams of CO 2 . Because no available technologies reduce CO2 emissions per gallon of fuel combusted, any rule that limits CO 2 emissions is effectivel y identical to a rule that limits fuel consumption. Compliance b y a truck manufacturer with the NHTSA fuel econom y rule assures compliance with the EPA rule, and vice versa. For alternativel y fueled vehicles, which use no petroleum, the situation is different. For example, a natural gas vehicle that achieves approximately the same fuel econom y as a diesel powered vehicle would emit 20 percent less CO 2 ; and a natural g as vehicle with the same fuel economy as a gasoline vehicle would emit 30 percent less CO 2 . Yet natural gas vehicles consume no petroleum. To the extent that the goal of the NHTSA fuel economy

portion of this rulemaking is to curb petroleum use, then natural gas vehicles should be credited with zero fuel consumption per mile. Similar differences between oil consumption and GHG would appl y t o electric vehicles, h ybrid electric vehicles, and biofuel - powered vehicles. NHTSA notes that the purpose of EPCA/E IS A is not merely to curb petroleum use – it is more generally to secure energy independence, which can be achieved by reducing petroleum use. The value of incentivizing natural gas, electric vehicles, biofuels, hydrogen, or other alt fuel vehicles for en ergy independence is limited to the extent that the alternative fuels may be imported. In recent rulemakings for light - duty vehicles, EPA and NHTSA have followed the light - duty specific statutory

provision that treats one gallon of alternative fuel as e quivalent to 0.15 gallons of gasoline. Following that precedent in this heavy duty rule would mean that, for example, a natural gas powered truck would have attributed to it 20 percent less CO 2 emissions than a comparable diesel powered truck, but 85 percent less fuel consumption. Engine manufacturers with a relatively large share of alternative - fuel products would likely

have an easier time compl ying with NHTSAs average fuel econom y standard than EPAs GHG standard. Similarly, engine manufacturers with a relativel y small share of alternative - fuel products would have a relativel y easier time complying with EPA’s CO 2 standard than with NHTSA’s fuel economy standard. In that way , the rule would not differ from the light duty vehicle rules. Instead, in this rule, EPA and NHTSA are finalizing identical rules. Fuel consumption for alternatively- powered vehicles will be calculated according to their CO2 emissions. In that way , there will be a one - to - one relationship between fuel economy and GHG emissions for all vehicles. To the extent that this rule relies upon reduced44 of

petroleum consumption specificall y to promote the goals of EPCA/EI SA, there will be a one - to - one relationship between this reduction and greenhouse gas emissions, by design, whether or not that relationship accuratel y reflects reduced petroleum consumption and GHG emissions for all vehicles. In addition to the significant harmonization benefits noted above, this has the advantage of reducing some of the paperwork and compliance burden this rul e will impose on the truck manufacturers. On the other hand, it has the disadvantage of discouraging some cost - effective means of reducing petroleum consumption by

trucks, and the accompan yi ng energy securit y costs. By

attributing to natural gas engines o nly

20 percent less fuel consumption than comparable diesel engines, because they

emit 20 percent less CO 2 , rather than attributing to them a much larger percentage reduction in fuel consumption, because they use no petroleum, this uniform rulemaking does not incentivize technologies that reduce consumption of petroleum - based fuels. Agencies are considering for future rulemakings writing harmonized standards in a way that also accurately

reflect the true fuel consumption and greenhouse gas emissions. Un der such standards, an y given vehicle might “over compl y” with the fuel econom y standard, but might “under compl y” with the CO 2 standard. Therefore, in meeting the fleet - wide requirements, a manufacturer would need to meet both standards using all availabl e options, such as credit trading and technology mix. Allowing for two distinct standards may

enable manufacturers to achieve the twin goals of reducing greenhouse gas emissions and decreasing consumption of petroleum - based fuels in the most cost - effective manner. 

### D. **Summary of Costs and Benefits of the HD National Program**  This section summarizes the projected costs and benefits of the final NHTSA fuel consumption and EPA GHG emissions standards. These projections help ed to inform the agencies’ choices among the alternatives considered an d provide further confirmation that the final standards are an appropriate choice within the spectrum of choices allowable under the agencies’ respective statutory criteria. NHTSA and EPA have used common projected cost s and benefits as the bases for our respective standards. The agencies have anal yzed in detail the projected costs and benefits of the final GHG and fuel consumption standards. Table I - 4 shows estimated lifetime discounted program cost s (including technological outlay s) , fuel saving s, and benefits for all heav y duty vehicles projected to be sold in model years 2014 - 2018 over these vehicles’ lives . The benefits include impacts such as climate - related economic benefits from reducing emissi ons of CO 2 (but not other GHGs) and reductions in energy security externalities caused b y U.S. petroleum consumption and imports. The anal ys is also includes economic impacts stemming f rom additional heavy- duty vehicle use attributable to fuel savings , such as the economic damages caused by accidents, congestion and noise. Note that benefits reflect on estimated values for the social cost of carbon (SCC) , as describe d in Section VIII.G. The costs and benefits summarized here are slightly higher than at proposal, reflecting the use of 2009 (versus 2008) dollars, some minor changes to our cost***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

45 of estimates in response to comments, and a change to the 2011 Annual Energy Outlook (AEO) estimate of economic growth and future fuel prices. In aggregate, these changes lead to an increased estimate of the net benefits of the final action compared to the proposal. **Table I**  **- 4**  **: Estimated Lifetime Discounted Costs, Benefits, and Net Benefits**  **for 2014**  **- 2018 Model**  **Year HD Vehicles**  **assuming the Model Average, 3% Discount Rate**  **SCC Value a,b**  **(200 9**  **dollars)**

Lifeti me Present V alue c

– 3% Discount Rate Program Costs $ 8.1 Fuel Savings $ 50 Benefits $ 7.3 Net Benefits d $49

Annualized V alue e

– 3% Discount Rate Annualized benefits $2.6 Annualized costs $0.4 Net benefits $2.2

Lifetime Present V alue c - 7% Discount Rate Program Costs $ 8.1 Fuel Savings $ 34 Benefits $6.7 Net Benefits d $ 33

Annualized V alue e

– 7% Discount Rate Annualized benefits $3.1 Annualized costs $0. 6 Net benefits $ 2.5 Note s: a The agencies estimated the benefits associated with four different values of a one ton CO 2 reduction ( mo del average at 2.5% discount rate, 3%, and 5%; 95 th percentile at 3% ), which each increase over time. F or the purposes of this overview presentation of estimated c osts and benefits , however, we are showing the benefits associated with the marginal value deemed to be central by the interagency working group on this topic: the mo del average at 3% discount rate , in 200 9 dollars. Section VIII.F provides a complete lis t of values for the 4 estimates . 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 VIII.F for more detail . c Present value is the total, aggregated amount that a series of monetized costs or benefits that occur over time is worth now (in year 2009 dollar terms), discounting future values to the present. d Net present benefits reflect the fuel savings plus benefits minus costs. e T he annualized value is the constant annual value through a given time period (2012 through 2050 in this analysis) whose summed present value equals the present value from which it was derived . Table I - 5 shows the estimated lifetime reductions in CO 2 emissions (in million metric tons (MMT)) and fuel consumption for all heavy - duty vehicles sold in the model46 of

ye ars 2014 - 2018. The values in Table I - 5 are projected lifetime totals for each model ye ar and are not discounted. The two agencies’ standards together comprise the HD National Program, and the agencie s’ respective GHG emissions and fuel consumption standards, jointly , are the source of the benefits and costs of the HD National Program. **Table I**  **- 5**  **: Estimated Lifetime**  **Reductions in Fuel Consumption and**  **CO 2**  **Em issions**  **f or 2014**  **- 2018**  **Model Year HD Vehicles** All Heavy - Duty Vehicles 2014 MY 2015 MY 2016 MY 2017 MY 2018 MY Total Fuel (billion gallons) 4.0 3.6 3.6 5.1 5.8 22. 1 Fuel (billion barrels) 0.10 0.09 0. 0 8 0.12 0.14 0.5 3 CO 2 (MMT) a 50.2 44.8 44. 0 6 2.8 7 1.7 27 3 Note: a Includes upstream and downstream CO 2 reductions . Table I - 6 shows the estimated lifetime discounted benefits for all heav y- duty vehicles sold in model years 2014 - 2018. Although the agencies estimated the benefits associated with four different values of a one ton CO 2 reduction ($5, $22, $36, $66), for the purposes of this overview presentation of estimated benefits the agencies are showing the benefits associated with one of these marginal values, $22 per ton of CO 2 , in 200 9 dollars and 2010 emissions . Table I - 6 presents benefits based on the $22 per ton of CO 2 value. Section VIII.F presents the four marginal values used to estimate monetized benefits of CO 2 reductions and Section VIII presents the program benefits using each of the four marginal values, which represent onl y a partial accounting of total benefits due to omitted climate change impacts and other factors that are not readil y monetized. The valu es in the table are discounted values for each model year of vehicles throughout their projected lifetimes. The anal ys is include s other economic impacts such as fuel savings, energy securit y , and other externalities such as impacts on accidents, congestio n and noise. However, the model year lifetime anal ys is supporting the program omits other impacts such as benefits related to non - GHG emission reductions. 45 The lifetime discounted benefits are shown for one of four different SCC values considered b y EPA and NHTSA. The values in Table I - 6 do not include costs associated with new technology

required to meet the GHG and fuel consumption standard s . **Table I**  **- 6**  **: Estimated Lifetime Discounted Benefits**  **for 2014**  **- 2018 Model Year**  **HD Vehicles Assuming** 

**the Model Average, 3% Discount Rate**  **SCC Value a,b**  **,c (billions of 200**  **9 dollars)**  Discount Rate Model Year

2014 2015 2016 2017 2018 Total 3% $10.7 $9. 4 $9.2 $13.2 $14.9 $5 7 7% $8. 3 $ 6.9 $6.6 $9.2 $10.1 $41 Notes: a The analysis includes impacts such as the economic value of reduced fuel consumption and accompanying climate - related economic benefits from reducing emissions of CO 2 (but not other

45 Non - GHG emissions and health - related impacts were estimated for the calendar year analysis. See Section VII for more information about non - GHG emission impacts and Section VIII for more information about non - GHG - related health im pacts.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

47 of GHGs), and reductions in energy security externalities caused by U.S. petroleum consumption and im ports. The analysis also includes economic impacts stemming from additional heavy - duty vehicle use, such as the economic damages caused by ac cidents, congestion and noise. b Note that net present value of reduced CO 2 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 VIII.F for more detail , including a list of all four SCC values, which increase over time . c Benefits in this table include fuel savings. Table I - 7 shows the agencies’ estimated lifetime fuel savings, lifetime CO 2 emission reductions, and the monetized net present values of those fuel savings and CO 2 emission reductions. The gallons of fuel and CO 2 emission reductions are projected lifetime values for all vehicles sold in the model years 2014 - 2018. The estimated fuel savings in billions of barrels and the GHG reductions in million metric tons of CO 2 shown in Table I - 7 are totals for the five model ye ars throughout their projected lifetime and are not discounted. The monetized values shown in Table I - 7 are the summed values of the discounted monetized - fuel consumption and monetized - CO 2 reductions for the five model years 2014 - 2018 throughout their lifetimes. The monetized values in Table I - 7 reflect both a 3 percent and a 7 percent discount rate as noted. **Table I**  **- 7**  **: Estimated Lifetime**  **Reductions and Associated Discounted Monetized Benefits**  **for 2014**  **-**

**2018 Model Year HD Vehicles**  **(m onetized values in 200**  **9 dollars)**  Amount $ value (billions) Fuel Consumption Reductions 0.5 3 billion barre ls $50. 1 , 3% discount rate $34. 4 , 7% discount rate CO 2 Emission Reductions a V alued assuming $22/ton CO 2 in 2010 27 3 MMT CO 2 $5.8 b Notes: a Includes both upstream and downstream CO 2 emission reductions. b Note that net present value of reduced CO 2 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 S ection VIII.F for more detail. Table I - 8 shows the estimated incremental and total technology outlay s for all heav y- duty vehicles for each of the model ye ars 2014 - 2018. The technology outlay s shown in Table I - 8 are f

or the industry

as a whole and do not account for fuel saving s associated with the program.48 of **Table I**  **- 8**  **: Estimated Incremental Technology Outlays**  **for 2014**  **- 2018 Model Year**  **HD Vehicles (billions of 200**  **9 dollars)**  2014 MY 2015 MY 2016 MY 2017 MY 2018 MY Total All Heav yDuty Vehicles $ 1. 6 $ 1.4 $ 1.5 $ 1.6 $ 2.0 $ 8. 1 Table I - 9 shows the agencies’ estimated incremental cost increase of the average new heav y- dut y vehicle for each model year 2014 - 201 8 . The values shown are incremental to a baseline vehicle and are not cumulative. **Table I**  **- 9**  **: Estimated Incremental Increase in Average Cost**  **for 2014**  **- 2018 Model Year**  **HD Vehicles (200**  **9 dollars per unit)**  2014 MY 2015

MY 2016 MY 2017 MY 2018 MY Combination Tractors $6,019 $5,871 $5,677 $6,413 $6,215 HD Pickups &Vans $165 $215 $422 $631 $1,048 Vocational Vehicles $329 $320 $397 $387 $378 Both costs and benefits presented in this section are in comparison to a reference case with no improvements in fuel consumption or greenhouse gas emissions in model ye ars 2014 to 2018. 

### E. **Program Flexibilities** For each of the heav y- duty vehicle and heavy - d

uty engine categories for which we are adopting respective standards, EPA and NHTSA are also finalizing provisions designed to give manufacturers a degree of flexibility in compl yi ng with the standards. These final provisions have enabled the agencies to consider overall standards that are more stringent and that will become effective sooner than we could consider with a more rigid program, one in which all of a manufacturer’s similar vehicles or engines would be required to achieve the same emissions or f uel consumption levels, and at the same time. 46 We believe that incorporating carefull y structured regulatory flexibility

provisions into the overall program is an important way to achieve each agency ’s goals for the program. NHTSA’s and EPA’s flexibility provisions are essentially identical in structure and function. For combination tractor and vocational vehicle categories and for heavyduty engines, we are finalizing four primary types of flexibility : averaging, banking, and trading (ABT) provisions; earl y credits; advanced technology credits (including h ybrid powertrains); and innovative technology credit provisions. The final ABT provisions are

46 NHTSA notes that it has greater flexibility in the HD program to include consideration of credits and other flexibilities in determining appropriate and feasible levels of stringency than it does in the light - duty CAFE program. Cf. 49 U.S.C. 3 2902(h), which applies to light - duty CAFE but not heavy - duty fuel efficiency under 49 U.S.C. 32902(k).***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

49 of patterned on existing EPA and NHTSA ABT programs and will allow a vehicle manufacturer to reduce CO 2 emission and fuel consumption levels further than the level of the standard for one or more vehicles to generate ABT credits. The manufacturer can use those credits to offset higher emission or fuel consumption levels in the same averaging set , “bank” the credits for later use, or “trade” the credits to another manufacturer. For HD pickups and vans, we are finalizing a fleet averagin g sy stem very similar to the light - duty

GHG and CAFE fleet averaging s ys tem. At proposal, we restricted the use of the ABT provisions of the program to vehicles or engines within the same regulatory subcategory . This meant that credit exchanges could only happen between similar vehicles meeting the same standards. We proposed this approach for two reasons. First, we were concerned about a level playing field between different manufacturers who may not participate equally

in the various truck and eng ine markets covered in the regulation. Second, we were concerned about the uncertainties inherent in credit calculations that are based on projections of lifetime emissions for different vehicles in wholly different vehicle markets. In response to comments, we have revised our ABT provisions to provide greater flexibility while continuing to provide assurance that the projected reductions in fuel consumption and GHG emissions will be achieved. We are relaxing the restriction on averaging, banking, and trading of credits between the various regulatory subcategories, by

defining three HD vehicle averaging sets: Light Heav y- Dut y (Classes 2b - 5); Medium Heav y- Duty (Class 6 - 7); and Heav y Heavy- Duty (Class 8). This allows the use of credits between vehicles within the same weight class. This means that a Class 8 day cab tractor can exchange credits with a Class 8 high roof sleeper tractor but not with a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can exchange credits with a Class 8 tractor. W e are adopting these revisions based on comments from the regulated industry that convinced us these changes would allow the broadest trading possible while maintaining a level playing field among the various market segments. The agencies believe that restricting trading to within the same eight c lasses as EPA’s existing criteria pollutant program (i.e. Heavy- Heavy Duty, Light Heav y - Duty , Medium Heav y - Dut y) , but not restricting trade between vehicle or engine ty pe (such as vocational) , is appropriate and reasonable. We do not expect emissions from engines and vehicles

– when restricted by weight class

– to be dissimilar. W e therefore expect that the lifetime vehicle performance and emissions levels will be very similar a cross these defined categories , and the estimated credit calculations will fairly ensure the expected fuel consumption and GHG reductions. The agencies considered even broader trading provisions, but decided that in this first phase of regulation it would be prudent to start with a program that aligned with the current market structure and the well - established criteria pollutant trading provisions. We intend to investigate whe ther additional cost savings could be realized through broader trading provisions and whether through improved test procedures and trading mechanisms our concerns regarding potential fuel efficiency and environmental loss could be addressed or lessened. R educing the cost of regulation through broader use of market tools is a priority

for the Administration. Therefore, we intend to seek public50 of

comment after credit trading begins in 2013, the first year we expect manufacturers to begin certifying 2014 model ye ar vehicles. We believe that input will be better informed by the work the agencies and the regulated industry will have put into implementing this first phase of heav y- dut y regulations. Using this input, the agencies intend to consider whether broade r credit trading is more appropriate in developing the next phase of heavyduty regulations. This program does not allow credits to be exchanged between heav y- duty vehicles and light - dut y vehicles, nor can credits be traded from heav y- duty vehicle flee ts to light - duty vehicle fleets or vice versa. The engine ABT provisions are also changed from the proposal and now are the same as in EPA’s existing criteria pollutant emission rules . The agencies have broadened the averaging sets to inclu de both FTP - certified and SET - certified engines in the same averaging set. For example, a SET - certified engine intended for a Class 8 tractor can exchange credits with a FTP - certified engine intended for a Class 8 vocational vehicle. The agencies are finalizing three year deficit carry- forward provisions for heav y duty engines and vehicles within a limited time frame. This flexibility is expected to provide an opportunity for manufacturers to make necessary technological improvements and reduce the ov erall cost of the program without compromising overall environmental and fuel economy

objectives. This flexibility , similar to the flexibility the agencies have offered under the light - duty vehicle program, is intended to assist the broad goal of harmonizi ng the two agencies’ standards while preserving the flexibility of manufacturers of vehicles and engines in meeting the standards, to the extent appropriate and required by law. During the MYs 2014

–2018 manufacturers are expected to go through th e normal business cycle of redesigning and upgrading their h eav y- duty engine and vehicle products, and in some cases introducing entirel y new vehicles and engines not on the market today . As explained in the following paragraph, the carry- forward provision will allow manufacturers the time needed to incorporate technology to achieve GHG reductions and improve fuel econom y during the vehicle redesign process. We received comments from (Center for Biological Diversity) against the need to offer the deficit carry- forward flexibility . (CBD) has stated that allowing manufacturers to carry- forward deficits for up to three ye ars would incentiv iz e delay s in investment and technological innovation and allow for the generation of additional tons of GHG emissions that may

be prevented today . However, the deficit carry- forward flexibility (as well as ABT generall y) has enabled the agencies to consider overall standards that are more stringent and that will become effective at an earlier period than we could consider with a more rigid program. The agencies also believe this flexibility is an important aspect of the p rogram , 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, i.e. the cost of adopting a new engine or vehicle platform mid - production or mid - design. This time period would also provide manufacturers the opportunity to plan for compliance using a multi - year time frame, again consistent with normal business practice. Over these four model years, there would be an opportunity for manufacturers to***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

51 of evaluate pra ctically

all of their vehicle and engine model platforms and add technology in a cost effective way

to control GHG emissions and improve fuel economy . As noted above, in addition to ABT, the other primary flexibility

provisions in this program involve opportunities to generate early credits, advanced technology credits (including for use of hy

brid powertrains), and innovative technology credits. For the earl y credits and advanced technology credits, the agencies sought comment on the appropriat eness of providing a 1.5x multiplier as an incentive for their use. We received a number of comments supporting the idea of a credit multiplier, arguing it was an appropriate means to incentivize the earl y compliance and advanced technologies the agencies sought. We received other comments suggesting a multiplier was unnecessary . After considering the comments, the agencies have decided to finalize a 1.5x multiplier consistent with our request for comments. We believe that given the very short lead time of the program and the nascent nature of the advanced technologies identified in the proposal, that a 1.5x multiplier is an effective means to bring technology forward into the heav y- duty sector sooner than would otherwise occur. In addition, advanced te chnology credits could be used an ywhere within the heav y duty sector (including both vehicles and engines), but early

credits would be restricted to use within the same defined averaging set generating the credit. For other technologies which can reduce C O 2 and fuel consumption, but for which there do not yet exist established methods for quantifying reductions, the agencies still wish to encourage the development of such innovative technologies, and are therefore adopting special “innovative technology” c redits. These innovative technology credits will apply

to technologies that are shown to produce emission and fuel consumption reductions that are not adequatel y recognized on the current test procedures and that are not yet in widespread use in the heavy - duty sector . Manufacturers will need to quantify

the reductions in fuel consumption and CO 2 emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures. As with ABT, the use of innovative technol ogy credits will only

be allowed for use among vehicles and engines of the same defined averaging set generating the credit , as described above. The credit multiplier will not be used for innovative technology credits. CBD argued that including an y opportunities for manufacturers to earn credits in the final rule would violate NHTSA’s statutory mandate to implement a program designed to achieve the maximum feasible improvement. NHTSA strongl y believes that creating credit flexibilities for manufacturers for this first phase of the HD National Program is fully consistent with the agency ’s obligation to develop a fuel efficiency improvement program designed to achieve the maximum feasible improvement. EI SA gives NHTSA broad authority to develop “compliance and enforcement protocols” that are “appropriate, cost - effective, and technologicall y feasible,” and the agency believes that compliance flexibilities such as the opportunity

to earn and use credits to meet the standards ar e a reasonable and appropriate interpretation of that authority , along with the other compliance and enforcement provisions developed for this final rule. Unlike in NHTSA’s light - duty52 of

program, where the agency is restricted from considering the availabili ty of credits in determining the maximum feasible level of stringency for the fuel economy

standards, 47 in this HD National Program, NHTSA and EPA have based the levels of stringency in part on our assumptions of the use of available flexibilities that have been built into the program to incentivize over - compliance in some respects, to balance out potential under compliance in others. By assuming the use of credits for compliance, the agencies were able to set the fuel consumption/GHG standards at more stringent levels than would otherwise have been feasible. Greater improvements in fuel efficiency will occur under more stringent standards; manufacturers will simply have greater flexibility

to determine where and how to make those improvements than they wo uld have without credit options. Further, this is consistent with EO s 12866 and 13563, which encourage agencies to design regulations that promote innovation and flexibility where possible. 48 A detailed discussion of each agency ’s ABT, early credit, advanced technology , and innovative technology provisions for each regulatory category of heavy - duty vehicles and engines is found in Section IV below. 

## VI. **How W** **i l**  **l This Pr**  **ogram Impact Fuel Consumption, GHG**  **Em issions, and Clim**  **ate Change? A.**  **What Methodologies**  **Did t he Agencies Use to Project GHG**  **Emissions and Fuel Consumption Impacts?** EPA and NHTSA used EPA’s official mobile source emissions inventory model named Motor Vehicle Emissions Simulator (MOVES2010) 49 , to estimate emission and fuel consumption impacts of thes e final rules. MOVES has the capability to take in user inputs to modify

default data to better estimate emissions for different scenarios, such as different regulatory

alternatives, state implementation plans (SIPs), geographic locations, vehicle activity, and microscale projects. The agencies performed multiple MOVES runs to establish reference case and control case emission inventories and fuel consumption values. The agencies ran MOVES with user input databases that reflected characteristics of the final rules, such as

47 49 U.S.C. 32902(h). 48 EO 12866 states that an agency must “design its regulations in the most cost - effective manner to achieve the regulatory objective... consider[ing] incentives for innovation... [and] flexibility,” among other factors ; EO 13563 directs agencies to “seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovatio n,” and “ identify and cons ider regulatory approaches that... maintain flexibility.” 49 MOVES homepage: http://www.epa.gov/otaq/models/moves/index.htm . Version MOVES2010 was used for emissions impacts analysis for this action . Current version as of September 14, 2010 is an updated version named MOVES2010a, available directly from the MOVES homepage. To replicate results from this action , MOVES2010 must be used.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

53 of emissions improvements and recent sales projections. Some post - processing of the model output was required to ensure proper results. The agencies ran MOVES for non - GHGs, CO 2 , CH 4 , and N2 O for calendar ye ars 2005, 2018, 2030, and 2050. Additional runs were performed for just the three greenhouse gases and for fuel consumption for every calendar year from 2014 to 2050, inclusive, which fed the economy- wide modeling, monetized greenhouse ga s benefits estimation, and climate impacts anal ys es . The agencies also used MOVES to estimate emissions and fuel consumption impacts for the other alternatives considered and described in Section IX. 

### B. **MOVES Analysis**  **(1) Inputs and Assumptions**  The anal ys is performed for the final action mirrors what was done for the proposal. The methods and models are the same, with differences l yi ng primarily in the inputs, as a result of updates in the program, standards, and baseline data. (a ) Reference R un U

pdates Sin ce MOVES2010a vehicle sales and activity data were developed from AEO2009, EPA first updated these data using sales and activity estimates from AEO2011. MOVES2010a defaults were used for all other parameters to estimate the reference case emissions inv entories. (b ) Control Run Updates EPA developed additional user input data for MOVES runs to estimate control case inventories. To account for improvements of engine and vehicle efficiency , EPA developed several user inputs to run the control case in MOVES. As explained at proposal, since MOVES does not operate based on Heav y- duty FTP cycle results, EPA used the percent reduction in engine CO 2 emissions expected due to the final rules to develop energy

inputs for the control case runs. 75 FR at 74280. Als o, EPA used the percent reduction in aerody namic drag and tire rolling resistance coefficients and reduction in average total running weight (gross combined weight) expected from the final rules to develop road load input for the control case. The sales and activity data update s used in the reference case were used in the control case. Details of all the MOVES runs, input data tables, and post - processing steps are available in the docket (EPA - HQ - OAR - 2010 - 0162). Table VI - 1 and Table VI - 2 describe the estimated expected reductions from these final rules, which were input into MOVES for estimating control case emissions inventories.54 of **Table VI**  **- 1**  **: Estim ated Reductions in Engine CO**  **2 Emission Rates**  **50** GVWR C lass Fuel Model Y ears CO 2 Reduction from 2010 MY HHD (8a - 8b) Diesel 2014 - 2016 3% 2017+ 6% MHD (6 - 7) and LHD 4 - 5 Diesel 2014 - 2016 5% 2017+ 9% Gasoline 2016+ 5% **Table VI**  **- 2**  **: Estim ated**  **Reductions in Rolling Resistance Coefficient, Aerodynam ic Drag Coefficient,**  **and Gross Combined Weight** TRUCK TYPE REDUCTION IN TIRE ROLLING RESI STANCE COEFFI CI ENT FROM BASELINE REDUCTION IN

AERODYNAMIC DRAG COEFFICIENT FROM BASELINE WEI GHT REDUCTION (LBS.) Combination long - haul 9.6% 12.1% 400 Combination short haul 7.0% 5.9% 321 Straight trucks, refuse trucks, motor homes, transit buses, and other vocational vehicles 5.0 % 0% 0

Since nearl y all HD pickup trucks and vans will be certified on a chassis dy namometer, the CO 2 reductions for these vehicles will not be represented as engine and road load reduction components , but rather as total vehicle CO 2 reductions . These estimated reductions are described in Table VI - 3 .

50 Section II of this preamble discusses an alternative engine standard for the HD diesel engines in the 2014, 2015, and 2016 model years. To the extent that engines using this alternative are expected to have baseline emissions greater than the industry average, the reduction from the industry ave rage projected in this program wo uld be reduced.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

55 of **Table VI**  **- 3**  **: Estim ated**  **Total Vehicle CO 2**  **Reductions for HD Pickup Trucks and Vans** GVWR C lass Fuel Model year CO 2 Reduction from Baseline HD Pickup Trucks and Vans Gasoline 2014 1.5% 2015 2% 2016 4% 2017 6% 2018+ 10% Diesel 2014 2.3%

2015 3% 2016 6% 2017 9% 2018+ 15% 

### C. **What Are the**  **Projected Reductions in Fuel Consumption and GHG Emissions?**  EPA and NHTSA expect significant reductions in GHG emissions and fuel consumption from these final rules

– emission reductions from both downstream (tailpipe) and upstream (fuel production and distribution) sources, and fuel consumption reductions from more efficient vehicles. Increased vehicle efficiency and reduced vehicle fuel consumption will also reduce GHG emissions from upstream sources. The following subse ctions summarize the GHG emissions and fuel consumption reductions expected from these final rules. **(1) Downstream (Tailpipe)**  Consistent with the proposal, EPA used MOVES to estimate downstream GHG inventories from these final rules. We expect reductions in C O 2 from all heav y- duty vehicle categories. The reductions come from engine and vehicle improvements. EPA expects N 2 O emissions to increase very slightly because of a rebound in vehicle miles traveled (VMT) and because significant vehicle emissions reduct ions are not expected from these final rules. In the proposal, we did not account for differences in methane emissions from use of auxiliary power units (APUs) during extended idling from sleeper cab combination tractors. After accounting for these diffe rences, EPA expects methane emissions to decrease primarily due to differences in hydrocarbon emission characteristics between on - road diesel engines and APUs. The amount of methane emitted as a fraction of total hydrocarbons is significantly less for APU s than for diesel engines equipped with diesel particulate filters. Overall, downstream GHG emissions will be reduced significantly and are described in the following subsections.56 of For CO 2 and fuel consumption, the total energy consumption “pollutant ” was run in MOVES rather than CO 2 itself. The energy was converted to fuel consumption based on fuel heating values assumed in the Renewable Fuels Standard and used in the development of MOVES emission and energy rates. These values are 117,250 kJ/gallo n for gasoline blended with ten percent ethanol ( E10 ) 51 and 138,451 kJ/gallon for diesel. 52 To calculate CO 2 , the agencies assumed a CO 2 content of 8,576 g/gallon for E10 and 10,180 g/gallon for diesel. Table VI - 4 shows the fleet - wide GHG reductions and fuel savings from reference case to control case through the lifetime of model year 2014 through 2018 heav y - dut y vehicles. Table VI - 5 shows the downstream GHG emissions reductions and fuel savings in 2018, 2030, and 2050. The anal ys is follows what was done for the proposal. We did not receive comments indicating t hat this analy sis was inappropriate or insufficient for estimating downstream emissions impacts of this program.

**Table VI**  **- 4**  **Model Year 2014 through 2018 Lifetim e GHG Reductions and Fuel Savings by Heavy**  **** **duty Truck Category** Downstream GHG Reductions (MMT CO 2 eq) Fuel Savings (billion gallons) HD pickups/vans 18 1.9 Vocational 2 4 2. 4 Combination short - haul (Day cabs) 50 4.9 Combination long - haul (Sleeper cabs) 135 12.9

**Table VI**  **- 5**  **: Annual Downstream** **GHG Emissions Reductions and Fuel Savings in 2018, 2030, and 2050**  Downstream GHG Reductions (MMT CO 2 eq) Diesel Savings (million gallons) Gasoline Savings

(million gallons) 2018 2 2 2, 123 5 9 2030 6 1 5, 670 34 9 2050 89 8, 158 5 22 **(2) Upstream (Fuel Production and Distribution)**  Using the same approach as used in the NPRM, the u pstream GHG emission reductions associated with the production and distribution of fuel were projected using

51 Renewable Fuels Standards assumptions of 115,000 BTU/gallon gasoline (E0) and 76,330 BTU/gallon ethanol (E100) weighted 90% and 10%, respectively, and converted to kJ at 1.055 kJ/B TU . 52 MOVES2004 Energy an d Emission Inputs. EPA420 - P - 05 - 003, March 2005. http://www.epa.gov/otaq/models/ngm/420p05003.pdf***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

57 of emission factors from DOE’s “Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation” ( GREET1.8 ) model, with some modifications consistent with the Li ght - Dut y 2012 - 2016 MY v ehicle rule . More information regarding these modifications can be found in the RIA Chapter 5. These estimates include both international and domestic emission reductions, since reductions in foreign exports of finished gasoline and/or crude 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 United States ; a breakdown and discussion of projected international versus domestic reductions is included in the RIA Chapter 5 . GHG emission redu ctions from upstream sources can be found in Table VI - 6 .

**Table VI**  **- 6**  **: Annual Upstream GHG Emissions Reductions in 2018, 2030, and 2050**

CO 2 (MMT) CH 4 (MMT

CO 2 eq) N 2 O (MMT

CO 2 eq) Total GHG (MMT

CO 2 eq) 2018 5.1 0. 9 0.02 6.0 2030 12. 2 1.9 0.06 14. 2 2050 16.4 2.5 0. 08 19.0 **(3) HFC Emissions**  Based on projected HFC emission reductions due to the final AC leakage standards, EPA estimates the HFC reductions to be 120,000 metric tons of CO 2 eq in 2018, 440,000 metric tons of CO 2 eq emissions in 2030 and 600,000 metric tons CO 2 eq in 2050, as detailed in RIA Chapter 5.3.4. **(4) Total (Upstream + Downstream + HFC)**  Table VI - 7 combines downstream results from Table VI - 5 , upstream results Table VI - 6 , and HFC results to show total GHG reductions for calendar years 2018, 2030, and 2050. **Table VI**  **- 7**  **: Annual Total GHG Emissions Reductions in 2018, 2030, and 2050** GHG Reductions (MMT CO 2 eq) 2018 2 9 2030 7 6 2050 1 0 8 

### D. **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 millenia , meaning that 1) their concentrations become well mixed throughout the global atmosphere regardless of emission origin, and 2) their effects on climate are long l asting. GHG emissions come mainly from the combustion of58 of

fossil fuels (coal, oil, and gas), with additional contributions from the clearing of forests and agricultural activities. Transportation activities, in aggregate, are the second largest contributor to total U.S. GHG emissions (27 percent of total emissions ) despite a decline in emissions from this sector during 2008 . 53 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) 54 for EPA’s Endangerment and Cause or Contribute Findings Under the Clean Air Act (74 FR 66496, December 15, 2009). Below is the Executive Summary of the TSD which provides technical su pport for the endangerment and cause or contribute analy ses concerning GHG emissions under section 202(a) of the CAA . 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 program and other U.S. and global actions. The TSD was updated and revised based on expert technical review and public co mment as part of EPA’s rulemaking process for the final Endangerment Findings . The key findings sy nthesized here and the information throughout the TSD are primaril y 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 NRC. 55 In May 2010, the NRC published its comprehensive assessment, “Advancing the Science of Climate Change .” 56 Itconcluded that “climate change is occurring, is caused largel y b y human activities, and poses significant risks for

—and in man y cases is already affecting

— a broad range of human and natural systems.” Furthermore, the NRC stated that this conclusion i s based on findings that are “consistent with the conclusions of recent assessments b y the U.S. Global Change Research Program, the Intergovernmental Panel on Climate Change’s Fourth Assessment Report, and other assessments of the state of scientific knowl edge on climate change.” These are the same assessments that served as the primary

scientific references underl yi ng the Administrator’s Endangerment Finding. Importantly , this recent NRC assessment represents another independent and critical inquiry

of the state of climate change science, separate and apart from the previous IPCC and USGCRP assessments **(1) Observed Trends in Greenhouse Gas Emissions and Concentrations**  The primary

long - lived GHGs directl y emitted by human activities include CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 . Greenhouse gases have a warming effect by trapping

53 U.S. EPA (2010) Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990

–2007. EPA - 430 - R - 10 - 006, Washington, DC. 54 See Endangerment TSD, Note 12 above. 55 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 Docket: EPA - HQ - OAR - 2009 - 0171 - 11645 . 56 National Research Council (NRC) (2010). Advancing the Science of Climate Change. National Academy Press . Washington, DC.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

59 of heat in the atmosphere that would otherwise escape to space. In 2007, U.S. GHG emissions were 7,150 teragrams 57 of CO 2 equivalent 58 (TgCO 2 eq). The dominant gas emitted is CO 2 , mostly

from fossil fuel combustion. Methane is the second largest component of U.S. emissions, followed by N 2 O and the fluorinated gases (HFCs, PFCs, and SF 6 ). Electricity generation is the largest emitting sector (34% of total U.S. GHG emissions), followed by

transportation (2 7 %) and industry (19%). Transportation sources under s ecti on 202 (a) 59 of the CAA (passenger cars, light duty trucks, other trucks and buses, motorcycles, and passenger cooling) emitted 1,649 TgCO 2 eq in 2007, representing 23% of total U.S. GHG emissions. U.S. transportation sources under s ection 202 (a) made up 4.3% of total global GHG emissions in 2005, 60 which, in addition to the United States as a whole, ranked onl y behind total GHG emissions from China, Russia, and India but ahead of Japan, Brazil, Germany , and 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. Th e scope of this final action focuses on GHG emissions under section 202(a) from heavy- duty source categories (see Section II) . The global atmospheric CO 2 concentration has increased about 38% from pre industrial levels to 2009, and almost all of the increase is due to anthropogenic emissions. The global atmospheric concentration of CH 4 has increased by 149% si nce pre - industrial levels (through 2007); and the N 2 O concentration has increased b y 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 SF 6 , have relativel y 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 (CO 2 and CH 4 ) 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 b y natural processes over timescales of decades to centuries.

57 One teragram (Tg) = 1 million metric tons. 1 metric ton = 1,000 kilograms = 1.102 short tons = 2,205 pounds. 58 Long - liv ed GHGs are compared and summed together on a CO 2 - equivalent basis by multiplying each gas by its global warming potential (GWP), as estimated by IPCC. In accordance with United Nations Framew ork Convention on Climate Change (UNFCCC) reporting procedures, the U.S. quantifies GHG emissions in the official U.S. greenhouse gas inventory submission to the UNFCCC using the 100 - year time frame values for GWPs established in the 1996 IPCC Second Assessment Report. 59 Source categories under Section 202(a) of the CAA 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. 60 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.60 of **(2) Observed Effects Associated With Global Elevated Concentrations of**  **GHGs** Greenhouse gases, at current (and projected) atmospheric concentrations, remain well below published exposure thresholds for an y direct adverse health effects and are not expected to pose exposure risks (i.e., from breathing/inhalation) . The global average net effect of the increase in atmos pheric 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/m 2 ), 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 CO 2 , CH 4 , and N 2 O is estimated to be +2.30 (+2.07 to +2.53) W/m2 . The rate of in crease 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 gl obal average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level. Global mean surface temperatures have risen by 1.3 ± 0.32  F (0.74°C ± 0.18  C) over the last 100 years. Nine 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 likel y 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 20 th and into the 21 st century ; temperatures are now approximately 1.3°F (0.7°C) warmer than at the start of the 20 th century , with an increased rate of warming over the past 30 years. Both the IP CC 61 and the CCSP reports attributed recent North American warming to elevated GHG concentrations. In the CCSP (2008) report, 62 the authors find that for North America,

61 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. 62 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 .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

61 of “more than half of this warming [for the period 1951 - 2006] is likely the result of human ca used greenhouse gas forcing of climate change.” Observations show that changes are occurring in the amount, intensity , frequency and ty pe of precipitation. Over the contiguous United States, total annual precipitation increased b y 6.1% from 1901 to 2008 . It is likely that there have been increases in the number of heav y 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 20 th century and is currentl y 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. Nearl y 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 avera ge Arctic sea ice extent has shrunk by 4.1% per decade. The size and speed of recent Arctic summer sea ice loss is highl y anomalous relative to the previous few thousands of years. Widespread changes in extreme temperatures have been observed in the last 50 ye ars across all world regions, including the United States. Cold day s, cold nights, and frost have become less frequent, while hot day s, hot nights, and heat waves have become more frequent. Observational evidence from all continents and most oceans s hows that many natural s ys tems 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 p recipitation. Ocean CO 2 uptake has lowered the average ocean pH (increased acidity) level by approximately

0.1 since 1750. Consequences for marine ecos ys tems 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. phy sical and biological s ys tems in significant way s. The consistency of these observed changes in phy sical and biological sy stems and the observed significant warming likely cannot be explained entirely

due to natural variability or other confounding non - climate factors. **(3) Projections of Future Climate Change**  **w ith 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 dominant62 of

anthropogenic GHG over the course of the 21 st century . The radiative forcing associated with the non - CO 2 GHGs is still significant and increasing over time. Future warming over the course of the 21 st century, even under scenarios of low emission growth, is very

likely to be greater than observed warming over the pas t century . According to climate model simulations summarized by the IPCC , 63 through about 2030, the global warming rate is affected little by the choice of different future emissions scenarios. By

the end of the 21 st century , projected average global warm ing (compared to average temperature around 1990) varies significantl y 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 likel y that heat waves will become more intense, more frequent, and longer lasting in a future warm climate, whereas cold episodes are projected to decrease significantl y. In creases in the amount of precipitation are very likely in higher latitudes, while decreases are likel y in most subtropical latitudes and the southw estern 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 adv erse water quality effects. It is likel y that hurricanes will become more intense, with stronger peak winds and more heav y 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 b y IPCC 64 to rise between 7.1 and 23 inches (18 and 59 centimeter [cm]), relative to around 1990, in the 63 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. 64 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.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

63 of absence of increased dyn amic 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 21 st century . Sea ice extent is projected to shrink in the Arctic under all IPCC emissions scenarios. **(4) Projected Risks and Impacts Associated With Future Climate Change**  Risk to society , ecos ys tems, and many natural Earth p rocesses 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 l evel, which would occur over a time period of centuries to millennia. The CCSP 65 reports that climate change has the potential to accentuate the disparities already evident in the American health care s ys tem, as many of the expected health effects are like ly

to fall disproportionatel y on the poor, the elderly , the disabled, and the uninsured. The IPCC 66 states with very high confidence that climate change 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 , especiall y among the elderly, young, and frail. Some r eduction 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 heat related mortality in the United States due to climate change. I ncreases 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 incre ase regional ozone pollution, with associated risks in 65 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. 66 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.64 of

respiratory

illnesses and premature death. In addition to human health effects, tropospheric ozone has significant adverse effects on crop yi elds, 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 elderl y, those alrea dy in poor health, the disabled, those living alone, and/or indigenous populations dependent on one or a few resources. Thus, the potential impacts of climate change raise environmental justice issues. The CCSP 67 concludes that, with increased CO 2 and temp erature, the life cycle of grain and oilseed crops will likely progress more rapidly . But, as temperature rises, these crops will increasingl y begin to experience failure, especiall y if climate variability increases and precipitation lessens or becomes mo re variable. Furthermore, the marketable yi eld of many horticultural crops (e.g., tomatoes, onions, fruits) is very likel y to be more sensitive to climate change than grain and oilseed crops. Higher temperatures will very likely reduce livestock productio n 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 negativel y affected; warm - water fisheries will generall y 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 20 th century , in part due to observed climate change. Rising CO 2 will very likely increa se photosy

nthesis for forests, but the increased photosy nthesis will likely

only increase wood production in young forests on fertile soils. The combined effects of expected increased temperature, CO 2 , nitrogen deposition, ozone, and forest disturbance on soil processes and soil carbon storage remain unclear. Coastal communities and habitats will be increasingl y stressed b y 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 likel y increase in the future, exacerbating the impacts of progressive inundation, storm - surge flooding, and shoreline erosion. Storm impacts are likel y to be more severe, especiall y along the Gulf and Atlantic coasts. Salt marshes, othe r coastal habitats, and dependent species are threatened b y sea level rise, fixed structures blocking landward migration, and changes in vegetation. Population

67 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.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

65 of growth and rising value of infrastructure in coastal areas increases vulnerability to climate v ariability

and future climate change. Climate change will likely further constrain already over- allocated 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 generall y 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 increasingl y 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 sy stems, lower water levels are likely to exacerbate challenges relating to water quality , navigation, recreation, h ydropower generation, water transfers, and binational relationships. Decreased water suppl y and lower water levels are likel y to exacerbate challenges relating to aquatic navigation in the United States. H igher water temperatures, increased precipitation intensity , and longer periods of low flows will exacerbate man y 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 b y other species better adapted to warmer water. In the long term, warmer water and changing flow may result in deterioration of aquatic ecos ys tems. Ocean acidification is projected to continue, resulting in the reduced bio logical production of marine calcifiers, including corals. Climate change is likely

to affect U.S. energy

use and energy

production and phy sical and institutional infrastructures. It will also likely interact with and possibly exacerbate ongoing environm ental change and environmental pressures in settlements, particularl y in Alaska where indigenous communities are facing major environmental and cultural impacts. The U.S. energy sector, which relies heavil y on water for hydropower and cooling capacity, may be adversel y 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 s ys tems, will be at greater risk of floo ding, 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 likel y 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 21 st c entury , changes in climate will cause species to shift north and to higher elevations and fundamentally rearrange U.S. ecosy stems. Differential capacities for range shifts and constraints from development, habitat fragmentation, invasive66 of

species, and brok en ecological connections will alter ecos ys tem structure, function, and services. **(5) Present and Projected U.S. Regional Climate Change Impacts**  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, 68 Southeast, 69 Southwest, 70 and Midwest. 71 Projected climate change would continue to cause loss of sea ice, glacier retreat, permafrost thawing, and coastal eros ion in Alaska. Reduced snowpack, earlier spring snowmelt, and increased likelihood of seasonal summer droughts are projected in the Northeast, Northwest, 72 and Alaska. More severe, sustained droughts and water scarcity are projected in the Southeast, Great Plains, 73 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. Ecosy stems 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, particularl y 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, especiall y in

68 Northeast includes W est Virginia, Maryland, Delaware, Pennsylvania, New Jersey, Ne w York, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine. 69 Southeast includes Kentucky, Virginia, Arkansas, Tennessee, North Carolina, South Carolina, southeast Texas , Louisiana, Mississippi, Alabama, Georgia, and Florida. 70 Southwest includes California, Nevada, Utah, western Colorado, Arizona, New Mexico (except the extreme eastern section), and southwest Texas. 71 The Midwest includes Minnesota, Wisconsin, Michigan, Iowa, Illinois, Indiana, Ohio, and Missouri. 72 The Northwest includes Washington, Idaho, western Montana, and Oregon. 73 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***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

67 of the Southeast . In the Midwest in particular, heating oil demand and snow - related traffic accidents are expected to decrease. Clim ate change impacts in certain regions of the world may exacerbate problems that raise humanitarian, trade, and national security issues for the United States. The IPCC 74 identifies the most vulnerable world regions as the Arctic, because of the effects of high rates of projected warming on natural s ys tems; 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 ris e 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 mult iplier with regard to national security issues. 

### E. **Changes in Atmospheric CO**  **2** 

### Concentrations, Global Mean **Temperature, Sea Level Rise**  **, and Ocean pH Associated with the**  **Program ’s GHG Emissions Reductions**  EPA examined 75 the reductions in CO 2 and other GHGs assoc iated with th is rulemaking and analyzed the projected effects on atmospheric CO 2 concentrations, global mean surface temperature , sea level rise , and ocean pH which are common variables used as indicators of climate change. The anal ys is projects that the preferred alternative of this program will reduce atmospheric concentrations of CO 2 , global climate warming and sea level rise relative to the reference case . Although the projected reductions and improvements are small in comparison to the total proje cted climate change , they are quantifiable , directionally consistent, and will contribute to reducing the risks associated with climate change . Climate change is a global phenomenon and EPA recognizes that this one national action alone will not prevent it: EPA notes this would be true for an y given GHG mitigation action when taken alone. EPA also notes that a substantial portion of CO 2 emitted into the atmosphere is not removed by natural processes for millennia, and therefore each unit of CO 2 not emitte d into the atmosphere due to this program avoids essentially

permanent climate change on centennial time scales . EPA determines that the projected reductions in atmospheric CO 2 , global mean temperature and sea level rise are meaningful in the context of this final action. In addition, EPA has conducted an anal ys is to evaluate the projected changes in ocean pH in the context of the changes in emissions from this rulemaking. The results of the anal ys is demonstrate that relative to the reference case, p rojected atmospheric CO 2 concentrations 74 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 Kingdo m, pp. 23 S 78. 75 Using the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGICC) 5.3v2, http://www.cgd.ucar.edu/cas/wigley/magicc/), EPA estimated the effects of this rulemaking’s greenhouse gas emissions reductions on global mean tempe rature and sea level. Please refer to Chapter 8.4 of the RIA for additional information.68 of

are estimated to be reduced by 0.691 to 0.787 part per million by volume (ppmv), global mean temperature is estimated to be reduced b y 0.0017 to 0.0042°C, and sea - level rise is projected to be reduced by approximately 0.017 - 0.040 cm by 2100, based on a range of climate sensitivities. The anal ys is also demonstrates that ocean pH will increase by 0.0003 pH units by

2100 relative to the reference case. **(1) Estimated Projected Reductions in**  **Atmospheric CO 2**  **Con centration,**  **Global Mean Surface Temperatures ,**  **Sea Level Rise , and Ocean pH**  EPA estimated changes in the atmospheric CO 2 concentration, global mean temperature , and sea level rise out to 2100 resulting from the emissions reductions in this rulemaking using the GCAM ( Global Change Assessment Model, formerl y MiniCAM), integrated assessment model 76 coupled with the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGI CC, version 5.3 v2 ). 77 G CAM was used to create the globall y and temporally consi stent set of climate relevant variables required for running MAGI CC. MAGI CC was then used to estimate the projected change in the se variables over time. Given the magnitude of the estimated emissions reductions associated with th is action , a simple climat e model such as MAGICC is reasonable for estimating the atmospheric and climate response. This widel y- used, peer reviewed modeling tool was also used to project temperature and sea level rise under different emissions scenarios in the Third and Fourth Ass essments of the IPCC. The integrated impact of the following pollutant and greenhouse gas emissions changes are considered: CO 2 , CH 4 , N2 O, HFC - 134a, NO X , CO 2 and SO 2 , and volatile organic compounds (VOC). For CO 2 , CH 4 , HFC - 134a, and N 2 O an annual time - series of (upstream + downstream) emissions reductions estimated from the rulemaking were input directly . The GHG emissions reductions , from Section VI .C, were applied as net reductions to a global reference case (or baseline) emissions sc enario in GCAM to generate an emissions scenario specific to this rulemaking . For CO, VOCs, SO 2 , and NO X , emissions reductions were estimated for 2018, 2030, and 2050 (provided in Section VII.A). EPA then linearly scaled emissions reductions for these gas es between a zero input value in 2013 and the value supplied for 2018 to produce the reductions for 2014 - 2018. A similar scaling was used for 2019 - 2029 and 2031 - 2050. The emissions reductions past 2050 for all gases were scaled with total U.S. road transportation fuel consumption from the GCAM reference scenario. Road transport fuel consumption past 2050 does not change significantly and thus emissions reductions remain relatively

76 G CAM is a long - term , global integrated assessment model of energy, economy, agriculture and land use, that considers the sources of emissions of a suite of GHG ’ s, e mitted in 14 globally disaggregated regions, the fate of emissions to the atmosphere, and the consequences of changing concentrations of greenhouse related gases for climate change. GCAM begins with a representation of demographic and economic developments in each region and combines these with assumptions about technology development to describe an internally consistent representation of energy, agriculture, land - use, and economic developments that i n turn shape global emissions. Brenkert A, S. Smith, S. Kim, and H. Pitcher, 2003: Model Documentation for the MiniCAM. PNNL 14337, Pacific Northwest National Laboratory, Richland, Washington. 77 Wigley, T.M.L. 2008. MAGICC 5.3.v2 User Manual. UCAR

– Climate and Global Dynamics Division, Boulder, Colorado. http://www.cgd.ucar.edu/cas/wigley/magicc/***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

69 of constant from 2050 through 2100. Specific d etails about the GCAM referenc e case scenario can be found in Chapter 8.4 of the RIA that accompanies this preamble . MAGI CC calculates the forcing response at the global scale from changes in atmospheric concentrations of CO 2 , CH 4 , N2 O, HFCs, and tropospheric ozone. It also includes the effects of temperature changes on stratospheric ozone and the effects of CH 4 emissions on stratospheric water vapor. Changes in CH 4 , NO X , VOC, and CO emissions affect both O 3 concentrations and CH 4 concentrations. MAGI CC includes the relative climate forcing effects of changes in sulfate concentrations due to changing SO 2 emissions, including both the direct effect of sulfate particles and the indirect effects related to cloud interactions. However, MAGICC does not calculate the effect of changes in c oncentrations of other aerosols such as nitrates, black carbon, or organic carbon, making the assumption that the sulfate cooling effect is a prox y for the sum of all the aerosol effects. Therefore, the climate effects of changes in PM 2.5 emissions and precursors (besides SO 2 ) which are presented in the RIA Chapter 5 were not included in the calculations in this section . MAGI CC also calculates all climate effects at the global scale. This global scale captures the climate effects of the long - lived, well - mixed greenhouse gases, but does not address the fact that short - lived climate forcers such as aerosols and ozone can have effects that vary with location and timing of emissions. Black carbon in particular is known to cause a positiv e forcing or warming effect b y absorbing incoming solar radiation, but there are uncertainties about the magnitude of that warming effect and the interaction of black carbon (and other co - emitted aerosol species) with clouds. While black carbon is likely to be an important contributor to climate change, it would be premature to include quantification of black carbon climate impacts in an anal ys is of the final standards at this time. Changes in atmospheric CO 2 concentration, global mean temperature , and se a level rise for both the reference case and the emissions scenarios associated with this action were computed using MAGICC. To c alculate the reductions in the atmospheric CO 2 concentrations as well as in temperature and sea level resulting from this actio n , the output from the policy scenario associated with th e preferred approach of this action was subtracted from an existing Global Change Assessment Model (GCAM, formerl y MiniCAM ) reference emission scenario. To capture some key uncertainties in the climate sy stem with the MAGICC model, changes in atmospheric CO 2 , global mean temperature and sea level rise were projected across the most current IPCC range of climate sensitivities , from 1.5°C to 6.0°C . 78 This range reflects the uncertainty for equilibrium climate sensitivity

for how much global mean temperature would rise if the concentration of carbon dioxide in the atmosphere were to double. The information for this range come from constraints from past climate change on various time scale s, and the spread of

78 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. Th e 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 /70 of

results for climate sensitivity from ensembles of models. 79 Details about this modeling anal ys is can be found in the RIA Chapter 8.4 . The results of this modeling , summarized in Table VI - 8 , show small, but quantifiable, reduction s in atmospheric CO 2 concentrations, projected global mean temperature and sea level resulting from this action , across all climate sensitivities. As a result of the emiss ion reductions from the final standards for this action, relative to the reference case the atmospheric CO 2 concentration is projected to be reduced by 0.691 - 0.787 ppmv, the global mean temperature is projected to be reduced b y approximately 0.0017 - 0.0042 °C by

2100 , and global mean sea level rise is projected to be reduced b y approximately 0.017 - 0.040 cm by 2100. The range of reductions in global mean temperature and sea level rise is larger than that for CO 2 concentrations because CO 2 concentrations are onl y weakl y coupled to climate sensitivity through the dependence on temperature of the rate of ocean absorption of CO 2 , whereas the magnitude of temperature change response to CO 2 changes (and therefore sea level rise) is more tightly coupled to climate s ensitivity in the MAGICC model. **Table VI**  **- 8**  **: Impact of GHG Emissions Reductions**  **o n Projected Changes in Global Clim**  **ate Associated with**  **the Final Rulem**  **aking (**  **Based on a range of clim**  **ate sensitiv ities**  **from 1.5**  **- 6°C)**  Variable Units Year Projected Change Atmospheric CO 2 Concentration ppmv 2100 - 0.691 to - 0.787 Global Mean Surface Temperature o C 2100 - 0.00 17 to - 0.0 042 Sea Level Rise cm 2100 - 0. 017 to - 0. 040 Ocean pH pH units 2 100 0.00 03 a Note: a The value for projected change in ocean pH is based on a climate sensitivity of 3.0. The projected reductions are small relative to the change in temperature (1.8

– 4.8 oC ), sea level rise (27

– 51 cm), and ocean acidity ( - 0.30 pH units) from 1990 to 2100 from the MAGICC simulations for the GCAM reference case. However, this is to be expected given the magnitude of emissions reductions expected from the program in the context of global emissions. This uncertainty range does not include the effects of uncertainty in future emissions. It should also be noted that the calculations in MAGI CC do not include the possible effects of accelerate d ice flow in Greenland and/or Antarctica: the recent NRC report estimated a likely sea level increase for the A1B SRES scenario of 0.5 to 1.0 meters. 80 Further discussion of EPA’s modeling anal ys is is found in the RIA, Chapter 8 .

79 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. 80 Nationa l Research Council, 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millenia. Washington, DC: National Academies Press.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

71 of EPA used the Program CO2S YS, 81 version 1.05 to estimate projected changes in ocean pH for tropical waters based on the atmospheric CO 2 concentration change (reduction) resulting from this action. The program performs calculations relating parameters of the CO 2 sy stem in seawater. EPA used the program to calculate ocean pH as a function of atmospheric CO 2 concentrations, among other specified input conditions. Based on the projected atmospheric CO 2 concentration reductions resulting from this action, the program calculates an increase in ocean pH of 0.00 03 pH units in 2100 relative to the reference case (compared to a decrease of 0.3 pH units from 1990 to 2100 in the reference case). Thus, this analy sis indicates the projected decrease in atmospheric CO 2 concentrations from the program will result in an increase in ocean pH. For additional validation, results were generated using different known constants from the literature. A comprehensive discussion of the modeling anal ys is associated with ocean pH is provide d in the RIA, Chapter 8. **(2) Program’s Effect on Climate**  As a substantial portion of CO 2 emitted into the atmosphere is not removed by natural processes for millennia, each unit of CO 2 not emitted into the atmosphere avoids essentially

permanent climate chan ge on centennial time scales. Reductions in emissions in the near - term are important in determining long - term climate stabilization and associated impacts experienced not just over the next decades but in the coming centuries and millennia. 82 Though the m agnitude of the avoided climate change projected here is small in comparison to the total projected changes , these reductions represent a reduction in the adverse risks associated with climate change (though these risks were not formall y estimated for this action) across a range of equilibrium climate sensitivities. EPA’s anal ys is of the program’s impact on global climate conditions is intended to quantify

these potential reductions using the best available science. EPA’s modeling results show repeatable, consistent reductions relative to the reference case in changes of CO 2 concentration, temperature, sea - level rise, and ocean pH over the next century .

81 Lewis, E., and D. W. R. Wallace. 1998. Program Developed for CO 2 System Calculations. ORNL/CDIAC - 105. Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak Ridge, Tennessee. 82 See NRC 2011, Note 80 . 83 Although the net impact is small when aggregated to the national level, it is unlikely that the geographic location of increases in downstream PM 2.5 emissions will coincide with the location of decreases in upstream PM 2.5 emissions. I mp acts of the emissions changes are included in the air quality modeling , discussed in Section VII.D of this preamble and in Chapter 8 of the RIA.72 of



## VII. **How Wi**  **ll This Final**  **Action Impact Non -**  **GHG Emissions and**  **Their**

**A ssociated Effects?**  **A. Emissions Inventory Im**  **pacts (1)**  **Upstream Impacts of the Program** In creasing efficiency in heavy - duty vehicles will result in reduced fuel demand and therefore reductions in the emissions associated with all processes involved in getting petroleum to the pump. These projected upstre am emission impacts on criteria pollutants are summarized in Table VII - 1 . Table VII - 2 shows the corresponding projected impacts on upstream air toxic emissions in 2030. **Table VII**  **- 1**  **: Overall estim ated upstream impacts on criteria pollutants for calendar years 2018,**  **2030, and 2050 (short tons)** Calendar Year NO X VOC CO PM 2.5 2018 - 6,475 - 1,765 - 2,217 - 971 2030 - 9,975 - 4, 367 - 3, 331 - 1,3 79 2050 - 14,243 - 6,379 - 4,785 - 1,998 **Table VII**  **- 2**  **: Overall estim ated upstream**  **im pacts on air toxics for calendar years 2018, 2030, and**  **2050 (short tons)** Calendar Y ear Benzene 1,3 - butadiene Formaldeh yd e Acetaldeh yd e Acrolein 2018 - 12 - 0.6 - 12 - 1 - 0.2 2030 - 19 - 0.9 - 26 - 3 - 0.5 2050 - 28 - 1.2 - 35 - 5 - 0.6 To project 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 and diesel . For the purpose of assessing domestic - only emission reductio ns it was necessary to estimate the fraction of fuel savings attributable to domestic finished gasoline and diesel , and of this fuel what fraction is produced from domestic crude. For this anal ys is EPA estimated that 50 percent of fuel savings is attributable to domestic finished gasoline and diesel and that 90 percent of this gasoline and diesel 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 but in some cases the GREET values were modified or updated by EPA to be consistent with the National Emission Inventory . These updates are consistent with those used for the upstream analy sis included in the Light - Duty GHG rulemaking. More info rmation on the development of the emission factors used in this anal ys is can be found in RIA Chapter 5.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

73 of **(2) Downstream Impacts of the Program**  While these final rules do not regulate non - GHG pollutants, EPA expects reductions in downstream emissions of most non - GHG pollutants. These pollutants include NO X , SO 2, VOC, CO, and PM. The primary reason s for this are the improvements in road load (aerodynamics and tire rolling resistance) under the program and the agency ’s anticipation of increase d use of APUs in combination tractors for GHG reduction purposes during extended idling . APUs exhibit different non - GHG emissions characteristics compared to the on - road engines they would replace during extended idling. Another reason is that emissions from certain pollutants (e.g., SO 2 ) are proportional to fuel consumption. For vehicle typ es not affected b y road load improvements, non - GHG emissions may increase very

slightl y due to VMT rebound. EPA used MOVES to determine non - GHG emissions inventories for baseline and control cases. Further information about the MOVES analy sis is available in Section VIand RIA Chapter 5. The improvements in road load, use of APUs, and VMT rebound were included in the MOVES runs and post - processing. Table VII - 3 summarizes the downstream criteria pollutant impacts of this program. Most of the impacts shown are through projected increased APU use. Bec ause APUs are required to meet much less stringent PM 2.5 standards than on - road engines , the projected widespread use of APUs leads to higher PM 2.5 . Table VII - 4 summarizes the downstre am air toxics impacts of this program. **Table VII**  **- 3**  **: Overall Estim ated**  **Downstream Impacts on Criteria Pollutants (short tons)**  Calendar Year Downstream

NO X Downstream

VOC Downstream

SO 2 Downstream

CO Downstream

PM 2.5 a 2018 - 107, 135 - 12,95 1 - 145 - 25,6 14 8 03 2030 - 235, 046 - 25,5 02 - 423 - 52,2 12 1,7 51 2050 - 326, 413 - 35,1 26 - 614 - 72,0 49 2,4 41 Note: a Positive number means emissions would increase from baseline to control case. PM 2.5 from tire wear and brake wear is included.

**Table VII**  **- 4**  **: Overall Estim ated Downstream** **Impacts on Air Toxics (short tons)** Calendar Year Benzene 1,3 - butadiene Formaldeh yd e Acetaldeh yd e Acrolein 2018 - 158 - 0.3 - 2,853 - 871 - 120 2030 - 341 0.4 - 6,255 - 1,908 - 263 2050 - 472 0.8 - 8,689 - 2,650 - 365 **(3) Total Impacts of the Program**  As shown in Table VII - 5 and Table VI I - 6 , the agencies estimate that this program would result in reductions of NO X , VOC, CO, PM, and air toxics . For NO X , VOC, and CO, much of the net reductions are realized through the use of APUs , which emit these74 of

pollutants at a lower rate than on - road engines during extended idle operation. Additional reductions are achieved in all pollutants through reduced road load (improved aerodynamics and tire rolling resistance), which reduces the amount of work required to travel a given distance. For SO X , downstream emissions are roughly proportional to fuel consumption; therefore a decrease is seen in both upstream and downstream sources. The downstream increase in PM 2.5 due to APU use is mostly negated by

upstream PM 2.5 reductions, though our calculations show a slight net increase in 2030 and 2050. 83 **Table VII**  **- 5**  **: Overall Estim ated Total Impacts (Upstream Plus Downstream** **) on Criteria Pollutants Results are shown in both short tons and percent change from** **baseline to control case.** CY NO X VOC SO 2 CO PM 2.5 short tons % short

tons % short

tons % short tons % short tons % 2 018 - 113, 610 6.2 - 14, 715 5.6 - 4,566 - 4.5 - 27, 832 1.0 - 16 7 0.2 2 030 - 245, 129 21.0 - 29,9 32 16.0 - 6,888 - 10.1 - 55, 579 2.1 3 56 0 .1 2 050 - 34 0,656 23.7 - 41,5 0 6 18.3 - 9,857 - 11.0 - 76, 834 2.2 4 43 0 .1 **Table VII**  **- 6**  **: Overall E**  **stim ated**  **T otal**  **I mpacts (**  **U pstream**  **P lus**  **D ownstream** **) I**  **mpacts on A**  **ir T**  **oxics** CY Benzene 1,3 - butadiene Formaldeh yd e Acetaldeh yd e Acrolein short tons % short

tons % short

tons % short

tons % short

tons % 2018 - 170 - 4.8 - 0.9 - 0.1 - 2,865 - 18.3 - 873 - 13.9 - 120.0 - 12.4 2030 - 3 59 - 15.0 - 0.5 - 0.1 - 6,282 - 46.2 - 1,912 - 40.2 - 263.0 - 40.0 2050 - 500 - 17.4 - 0.4 - 0.1 - 8,725 - 49.5 - 2,655 - 44.2 - 365.4 - 44.5 

### B. **Health Effects of Non -**  **GHG Pollutants** In this section we discuss health effects associated with exposure to some of the criteria and air toxic pollutants impacted by the final heavy- duty vehicle standards. **(1) Particulate Matter**  (a ) Background Particulate matter is a generic term for a broad class of chemicall y and ph ysically diverse substances. It can be principall y characterized as discrete particles that exist in the condensed (liquid or solid) phase spanning several orders of magnitude in si ze. Since 1987, EPA has delineated that subset of inhalable particles small enough to penetrate to

83 Although the net impact is small when aggregated to the national level, it is unlikely that the geographic location of increases in downstream PM 2.5 emissions will coincide with the location of decreases in upstream PM 2.5 emissions. I mpacts of the emissions changes are included in the air quality modeling , discussed in Section VII.D of this preamble and in Chapter 8 of the RIA.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

75 of the thoracic region (including the tracheobronchial and alveolar regions) of the respiratory

tract (referred to as thoracic particles). Current National Amb ient Air Quality Standards (NAAQS) use PM 2.5 as the indicator for fine particles (with PM 2.5 referring to particles with a nominal mean aerodynamic diameter less than or equal to 2.5 μm), and use PM 10 as the indicator for purposes of regulating the coarse fraction of PM 10 (referred to as thoracic coarse particles or coarse - fraction particles; generally including particles with a nominal mean aerody namic diameter greater than 2.5 μm and less than or equal to 10 μm, or PM 10 - 2.5 ). Ultrafine particles are a su bset of fine particles, generally less than 100 nanometers (0.1 μm) in aerodynamic diameter. Fine particles are produced primaril y b y combustion processes and b y transformations of gaseous emissions (e.g., SO X , NO X , and VOC) in the atmosphere. The chemical and ph ys ical properties of PM 2.5 may vary greatl y with time, region, meteorology , and source category . Thus, PM 2.5 may include a complex mixture of different pollutants including sulfates, nitrates, organic compounds, elemental carbon and metal c ompounds. These particles can remain in the atmosphere for day s to weeks and travel hundreds to thousands of kilometers. (b ) 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 (I SA) . 84 Further discussion of health effects associated with PM can also be found in the RIA for this final action . The ISA summarizes evidence associated with PM 2.5 , PM 10 - 2.5 , and ultrafine particles. The I SA concludes that health effects associated with short - term exposures (hours to day s) to ambient PM 2.5 include mortality , cardiovascular effects, such as altered vasomotor function and hospital admissions and emergency department visits for ischemic heart disease and congestive heart failure, and respiratory effects, such as exacerbation of asthma symptoms in children and hospital admissions and emergency department visits for chronic obstructive pulmonary disease and r espiratory

infections . 85 The I SA notes that l ong - term exposure to PM 2.5 (months to years) is associated with the development/progression of cardiovascular disease, premature mortality , and respiratory effects, including reduced lung function growth, increa sed respiratory s ymptoms, and asthma development. 86 The I SA concludes that the currentl y available scientific evidence from epidemiologic, controlled human exposure, and toxicological studies supports a causal association between short - and long - term expos ures to PM 2.5 and cardiovascular effects and mortality. Furthermore, the IS A concludes that the collective evidence supports likely

causal associations between short - and long - term PM 2.5 exposures and respiratory

effects. The ISA also concludes that the scientific evidence is suggestive of a 84 U.S. EPA (2009) Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R - 08/139F, Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 85 See U.S. EPA, 2009 Final PM ISA , Note 84 , at Section 2.3.1.1. 86 See U.S. EPA 2009 Final PM ISA , Note 84 , at page 2 - 12, Sections 7.3.1.1 and 7.3.2.1.76 of

causal association for reproductive and developmental effects and cancer, mutagenicity , and genotoxicity

and long - term exposure to PM 2. 5 . 87 For PM 10 - 2.5 , the I SA 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 PM 10 - 2.5 exposure and mortality and respiratory effects. Data are inadequate to draw conclusions regarding the health effects associated with long - term exposure to PM 10 - 2.5 . 88 For ultrafine particles, the I SA concludes that there is suggestive evidence of a causal relationship between short - term exposur es and cardiovascular effects, such as changes in heart rh ythm and blood vessel function. It also concludes that there is suggestive evidence of association between short - term exposure to ultrafine particles and respiratory

effects. Data are inadequate to draw conclusions regarding the health effects associated with long - term exposure to ultrafine particles. 89 **(2) Ozone**  (a ) Background Ground - level ozone pollution is ty pically formed by

the reaction of VOC and NO X in the lower atmosphere in the presence of sunlight. These pollutants, often referred to as ozone precursors, are emitted by many ty pes 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. 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 day s and the air is relativel y stagnant, ozone and its precursors can build up and result in more ozone than ty picall y occurs on a single high - temperature day . Ozone can be transported hundreds of miles downwind from precursor emissions, resulting in elevated ozone levels even in areas with low local VOC or NO X emissions. (b ) Health Effects of Ozone The health and welfare effects of ozone are well documented and are assessed in EPA’s 200 6 Air Quality

Criteria Document and 2007 Staff Paper. 90 , 91 People who are

87 See U.S. EPA 2009 Final PM ISA , Note 8 4 , at Section 2.3.2. 88 See U.S. EPA 2009 Final PM ISA , Note 84 , at Section 2.3.4, Table 2 - 6. 89 See U.S. EPA 2009 Final PM ISA , Note 84 , at Section 2.3.5, Table 2 - 6. 90 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 - 20 10 - 0 16 2 .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

77 of more susceptible to effects associated with exposure to ozone can include children, the elderl y, and individuals with respiratory disease such as asthma. Those with greater exposure s to ozone, for instance due to time spent outdoors (e.g., children and outdoor workers), are of particular concern. Ozone can irritate the respiratory s ys tem, causing coughing, throat irritation, and breathing discomfort. Ozone can reduce lung function and cause pulmonary

inflammation in healthy

individuals. Ozone can also aggravate asthma, leading to more asthma attacks that require medical attention and/or the use of additional medication. Thus, ambient ozone may cause both healthy

and asthmatic indi viduals to limit their outdoor activities. In addition, there is suggestive evidence of a contribution of ozone to cardiovascular - related morbidity and highl y suggestive evidence that short - term ozone exposure directl y or indirectly contributes to non - acc idental 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

NRC, a panel of experts and reviewers concluded that short - term exposure to ambient ozone is likely to contribute to premature deaths and that ozone - related mortality should be included in estimates of the health benefits of reducing ozone exposure. 92 Animal toxicological evidence i ndicates 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. The respiratory

effects observed in controlled human exposure stud ies and animal studies are coherent with the evidence from epidemiologic studies supporting 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 . **(3) Nitrogen Oxides and Sulfur Oxides**  (a ) Background Nitrogen dioxide (NO 2 ) is a member of the NO X family of gases. Most NO 2 is formed in the air through the oxidation of nitric oxide (NO) emitted when fuel is burned at a high temperature. SO 2 , a member of the sulfur oxide (SO X) family of gases, is formed from burning fuels containing sulfur (e.g., coal or oil derive d), extracting gasoline from oil, or extracting metals from ore. SO 2 and NO 2 can dissolve in water droplets and further oxidize to form sulfuric and nitric acid which react with ammonia to form sulfates and nitrates, both of which are important component s of ambient PM. The health effects of ambient PM are discussed in

91 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 - 20 10 - 0 16 2. 92 National Research Co uncil (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution . The National Academies Press: Washington, D.C. Docket EPA HQ - OAR - 20 10 - 0 16 278 of

Section VII. B. (1) (b) of this preamble. NO X and NMHC are the two major precursors of ozone. The health effects of ozone are covered in Section VII. B. (2) (b) . (b ) Health Effects of NO2 In formation on the health effects of NO 2 can be found in the EPA Integrated Science Assessment (I SA) for Nitrogen Oxides. 93 The EPA has concluded that the 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 NO 2 exposure. The I SA concludes that the strongest evidence for such a relationship comes from epidemiologic studies of respiratory effects including sy mptoms, emergency

department visits, and hospital admissions. The I SA also draws two broad conclusions regarding airway responsiveness following NO 2 exposure. First, the I SA concludes that NO 2 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 NO 2 concentrations as low as 0.26 ppm . In addition, small but significant increases in non - specific airway hy perresponsiveness were reported following 1 - hour exposures of asthmatics to 0.1 ppm NO 2 . Second, exposure to NO 2 has been found to enhance the inherent responsiveness of the airway

to subsequent nonspecif

ic 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 NO 2 exposure have the potential to increase s ymptoms and worsen asthma control. Together, the epidemiologic and experimental data sets form a plausible, consistent, and coherent description of a relationship between NO 2 exposures and an array of adverse heal th effects that range from the onset of respiratory s ymptoms to hospital admission. Although the weight of evidence supporting a causal relationship is somewhat less certain than that associated with respiratory morbidity , NO 2 has also been linked to oth er health endpoints. These include all - cause (nonaccidental) mortality , hospital admissions or emergency department visits for cardiovascular disease, and decrements in lung function growth associated with chronic exposure. (c) Health Effects of SO2 In formati on on the health effects of SO 2 can be found in the EPA Integrated Science Assessment for Sulfur Oxides. 94 SO 2 has long been known to cause adverse respiratory

health effects, particularl y among individuals with asthma. Other potentially sensitive groups include children and the elderl y. During periods of elevated ventilation, asthmatics may

experience s ymptomatic 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

93 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 - 20 10 - 0 16 2 . 94 U.S. EPA. (2008). Integrated Science Assessment (ISA) for Sulfur Oxides

– Health Criteria (Final Report) . EPA/600/R - 08/047F. Washington, D C: U.S. Environmental Protection Agency. Docket EPA - HQ OAR - 20 10 - 0 16 2 .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

79 of health effects and short - term exposure to SO 2 . Separatel y, based on an evaluation of the epidemiologic evidence of associations between short - term exposure to SO 2 and mortality , the EPA has concluded that the overall evidence is suggestive of a causal relationship between short - term exposure to SO 2 and mortality . **(4) Carbon**  **Monoxide** In formation on the health effects of C O can be found in the EPA Integrated Science Assessment (I SA) f or Carbon Monoxide . 95 The I SA concludes that ambient concentrations of CO are associated with a number of adverse health effects. 96 This section provides a summary of the health effects associated with exposure to ambient concentrations of CO . 97 Human cli nical 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 - ter

m CO exposure and cardiovascular morbidity , particularl y increased emergency

room visits and hospital admissions for coronary heart disease (including ischemic heart disease, myocardial infarction, and angina). Some epidemiologic evidence is also availabl e 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 to exist between short - term exposures to CO and cardiovascular morbidi ty . It also concludes that available data are inadequate to conclude 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 I SA concludes the evidence is suggestive of a causal relationship with both short - and long - term exposure to CO and central nervous s ys tem effects. A number of epidemiologic and animal toxicological studies cited in the ISA have evaluated associations between CO exposure and birth outcomes such as preterm birth or cardiac birth defects. The epidemiologic studies provide limited evidenc e of a CO induced effect on preterm births and birth defects, with weak evidence for a decrease in birth weight. Animal toxicological studies have found associations between perinatal CO 95 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. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686 . Docket EPA - HQ - OAR - 20 10 - 0 16 2 96 The ISA evaluates the health evidence associated with different health effects, assigning one of five “weight of evidence” determinations: 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. 97 Personal exposure includes contributions from many sources, and in many different environments. Tot al personal exposure to CO includes both ambient and nonambient components; and both components may contribute to adverse health effects.80 of

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 change s in pulmonary

function, respiratory

s ymptoms, and hospital admissions associated with ambient CO concentrations. A limited number of epidemiologic studies considered copollutants such as ozone, SO 2 , and PM in two - pollutant models and found that CO risk e stimates were generally robust, although this limited evidence makes it 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 e ffect 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 I SA concludes that the evidence is suggestive of a causal relationship between sh ort term CO exposure and respiratory morbidity , and inadequate to conclude that a causal relationship exists between long - term exposure and respiratory morbidity. Finally , the I SA 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 , b ut 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 I SA also concludes that there is not likely to be a causal relationship between relevant long - term exposures to CO and mortality . **(5) Air**  **Toxics** Heav y- dut y vehicle emissions contribute to ambient levels of air toxics known or suspected as human or animal carcinogens, or that have noncancer health effects. The population experiences an elevated risk of cancer and other noncancer health effects from exposure to the class of pollutants known collectively as “ air toxics .” 98 These compounds include, but are not limited to, benzene, 1,3 - butadiene, formaldehyde, acetaldeh yde, acrolein, diesel particulate matter and exhaust organic gases, polycyclic organic matter, and naphthalene. These compounds were identified as national or regional risk drivers or contributors in the 2005 National - scale Air Toxics Assessment and have significant inventory contributions from mobile sources. 99 (a ) Diesel Exhaust Heav y- dut y diesel engines emit diesel exhaust, a complex mixture composed of carbon dioxide, oxygen, nitrogen, water vapor, carbon monoxide, nitrogen compounds, 98 U. S. EPA. 2002 National - Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata12002/risksum.html Docket EPA - HQ - OAR - 20 10 - 0 16 2 99 U.S. EPA 2009. National - Scale Air Toxics Assessment for 2002. http://www.epa.gov/ttn/atw /nata2002/ Docket EPA - HQ - OAR - 20 10 - 0 16 2***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

81 of sulfur compounds and numerous low - molecular - weight h ydrocarbons. A number of these gaseous h ydrocarbon components are individually known to b e toxic, including aldeh ydes, benzene and 1,3 - butadiene. The diesel particulate matter present in diesel exhaust consists mostly of fine particles (< 2.5 μm), including a significant fraction of ultrafine particles (< 0.1 μm). These particles have a larg e surface area which makes them an excellent medium for adsorbing organics and their small size makes them highl y respirable. Man y of the organic compounds present in the gases and on the particles, such as polycyclic organic matter, are individuall y known to have mutagenic and carcinogenic properties. Diesel exhaust varies significantly in chemical composition and particle sizes between different engine ty pes (heav y- duty , light - duty), engine operating conditions (idle, accelerate, decelerate), and fuel f ormulations (high/low sulfur fuel). Also, there are emissions differences between on - road and nonroad engines because the nonroad engines are generally

of older technology . After being emitted in the engine exhaust, diesel exhaust undergoes dilution as w ell as chemical and phy sical changes in the atmosphere. The lifetime for some of the compounds present in diesel exhaust ranges from hours to day s. 100 (i ) Diesel Exhaust: Potential Cancer Effects In EPA’s 2002 Diesel Health Assessment Document (Diesel HAD), 101 exposure to diesel exhaust was classified as likely to be carcinogenic to humans by inhalation from environmental exposures, in accordance with the revised draft 1996/1999 EPA cancer guidelines. A number of other agencies (National Institute for Occupational Safety and Health, the International Agency for Research on Cancer, the World Health Organization, California EPA, and the U.S. Department of Health and Human Services) have made similar classifications. However, EPA also concluded in the Diesel HAD that it is not possible currentl y to calculate a cancer unit risk for diesel exhaust due to a variety of factors that limit the current studies, such as limited quantitative exposure histories in occupational groups investigated for lung cancer. For the Diesel HAD, EPA reviewed 22 epidemiologic studies on the subject of the carcinogenicity

of workers exposed to diesel exhaust in various occupations, finding increased lung cancer risk, although not always statistically significant, in 8 out of 10 cohort studies and 10 out of 12 case - control studies within several industries. Relative risk for lung cancer associated with exposure ranged from 1.2 to 1.5, although a few studies show relative risks as high as 2.6. Additionally , the Diesel HAD also relied on two ind ependent meta - analy ses, which examined 23 and 30 occupational studies respectivel y, which found statistically significant increases in smoking - adjusted relative lung cancer risk associated with exposure to diesel exhaust of 1.33 to 1.47. These meta anal ys es demonstrate the effect of pooling many studies and in this case show the 100 U.S. EPA (2002). Health Assessment Document for Diesel Engine Exhaust . EPA/600/8 - 90/057F Office of Research and Development, Washington DC. Retrieved on March 17, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060 . Docket EPA - HQ - OAR - 20 10 - 0 16 2 101 See U.S. EPA (2002) Diese l HAD , Note 100 , at pp. 1 - 1, 1 - 2.82 of

positive relationship between diesel exhaust exposure and lung cancer across a variety of diesel exhaust - exposed occupations. 102 , 103 In the absence of a cancer unit risk, the Diesel HA D sought to provide additional insight into the significance of the diesel exhaust - cancer hazard b y estimating possible ranges of risk that might be present in the population. An exploratory analy sis was used to characterize a possible risk range b y comparing a ty pical environmental exposure level for highway

diesel sources to a selected range of occupational exposure levels. The occupationall y observed risks were then proportionally scaled according to the exposure ratios to obtain an estimate of the pos sible environmental risk. A number of calculations are needed to accomplish this, and these can be seen in the EPA Diesel HAD. The outcome was that environmental risks from diesel exhaust exposure could range from a low of 10 - 4 to 10 - 5 to as high as 10 - 3 , reflecting the range of occupational exposures that could be associated with the relative and absolute risk levels observed in the occupational studies. Because of uncertainties, the anal ys is acknowledged that the risks could be lower than 10 - 4 or 10 - 5 , and a zero risk from diesel exhaust exposure was not ruled out. (ii) Diesel Exhaust: Other Health Effects Noncancer health effects of acute and chronic exposure to diesel exhaust emissions are also of concern to the EPA. EPA derived a diesel exhaust reference concentration (RfC) from consideration of four well - conducted chronic rat inhalation studies showing adverse pulmonary effects. 104 , 105 , 106 , 107 The RfC is 5 μg/m 3 for diesel exhaust as measured b y diesel particulate matter . This RfC does not consider allergenic effects such as those associated with asthma or immunologic effects. There is growing evidence, discussed in the Diesel HAD, that exposure to diesel exhaust can exacerbate these effects, but the exposure - response data are presentl y lacking to derive an Rf C. The EPA Diesel HAD states, “With [diesel particulate matter] being a ubiquitous component of ambient PM, there is an uncertainty about the adequacy of the existing [diesel exhaust] noncancer database to identify all of the pertinent [diesel exhaust] - ca used noncancer health hazards.” (p. 9 - 19). The Diesel HAD concludes “that acute exposure to [diesel exhaust] has been associated with irritation of the eye, nose, and throat, respiratory

102 Bhatia, R., Lopipero, P., Smith, A. (1998). Diesel exposure and lung cancer. Epidemiology, 9(1) , 84 - 91. Docket EPA - HQ - OAR - 20 10 - 0 16 2 103 Lipsett, M. Campleman, S. (1999). Occupational exposure to diesel exhaust and lung cancer: a meta analysis . Am J Public Health, 80(7), 1009 - 1017. Docket EPA - HQ - OAR - 20 10 - 0 16 2 104 Ishinishi, N. Kuwabara, N. Takaki, Y., et al. (19 88). Long - term inhalation experiments on diesel exhaust. In: Diesel exhaust and health risks. Results of the HERP studies. Ibaraki, Japan: Research Committee for HERP Studies; pp.11 - 84. Docket EPA - HQ - OAR - 20 10 - 0 16 2 105 Heinrich, U., Fuhst, R., Rittinghausen, S., et al. (1995). Chronic inhalation exposure of Wistar rats and two different strains of mice to diesel engine exhaust, carbon black, and titanium dioxide. Inhal Toxicol, 7, 553 - 556. Docket EPA - HQ - OAR - 20 10 - 0 16 2 106 Mauderly, J.L., Jones, R.K., Griffith, W.C., et al. (1987). Diesel exhaust is a pulmonary carcinogen in rats exposed chronically by inhalation. Fundam. Appl. Toxicol., 9, 208 - 221. Docket EPA - HQ - OAR - 20 10 - 0 16 2 107 Nikula, K.J., Snipes, M.B., Barr, E.B., et al . (1995). Comparative pulmonary toxicities and carcinogenicities of chronically inhaled diesel exhaust and carbon black in F344 rats. Fundam. Appl. Toxicol, 25 , 80 - 94 . . Docket EPA - HQ - OAR - 20 10 - 0 16 2***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

83 of sy mptoms (cough and phlegm), and neuroph ys iological sy mptoms such as headache, lightheadedness, nausea, vomiting, and numbness or tingling of the extremities.” 108 (iii) Ambient PM 2.5 Levels and Exposure to Diesel Exhaust PM The Diesel HAD also briefly summarizes health effects associated with ambient PM and discusses the EPA’s annual PM 2.5 NAAQS of 15 μg/m 3 . There is a much more extensive body

of human data showing a wide spectrum of adverse health effects associated with exposure to ambient PM, of which diesel exhaust is an important component. The PM 2.5 NAAQS is designed to pro vide protection from the noncancer and premature mortality

effects of PM 2.5 as a whole. (iv) Diesel Exhaust PM Exposures Exposure of people to diesel exhaust depends on their various activities, the time spent in those activities, the locations where these acti vities occur, and the levels of diesel exhaust pollutants in those locations. The major difference between ambient levels of diesel particulate and exposure levels for diesel particulate is that exposure accounts for a person moving from location to locat ion, proximity to the emission source, and whether the exposure occurs in an enclosed environment. Occupational Exposures Occupational exposures to diesel exhaust from mobile sources can be several orders of magnitude greater than ty pical exposures in the non - occupationally exposed population. Over the ye ars, diesel particulate exposures have been measured for a number of occupational groups. A wide range of exposures have been reported, from 2 μg/m 3 to 1,280 μg/m 3, for a variety of occupations. As discussed in the Diesel HAD, the National Institute of Occupational Safety and Health has estimated a total of 1,400,000 workers are occupationall y exposed to diesel exhaust from on - road and nonroad vehicles. Elevated Con centrations and Ambient Exposures in Mobile Source - Impacted Areas Regions immediatel y downwind of highway s or truck stops may experience elevated ambient concentrations of directl y- emitted PM 2.5 from diesel engines. Due to the unique nature of highway s an d truck stops, emissions from a large number of diesel engines are concentrated in a small area. Studies near roadway s with high truck traffic indicate higher concentrations of components of diesel PM than other locations. 109 , 110 , 111

108 See U.S. EPA (2002), Diesel HAD at Note 100 , at p. 9 - 9. 109 Zhu, Y.; Hinds, W.C.; Kim, S.; Shen, S.; Sioutas, C. (2002) Study of ultrafine particles near a major highway with heavy - duty diesel traffic. Atmospheric Environment 36: 4323 - 4335. Docket EPA - HQ OAR - 20 10 - 0 16 2 110 Lena, T.S; Ochieng, V.; 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. Docket EPA - HQ - OAR - 20 10 - 0 1 6 284 of

High ambient particle conc entrations have also been reported near trucking terminals, truck stops, and bus garages. 112 , 113 , 114 Additional discussion of exposure and health effects associated with traffic is included below in Section VII. B. (5) (j) . (b ) Benzene The EPA’s Integrated Risk Information Sy stem ( IRI S ) database lists benzene as a known human carcinogen (causing leukemia) b y 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 . 115 , 116 , 117 EPA states in its IRI S database that data indicate a causal relationship between benzene exposure and acute l ymphocy tic leukemia and suggest a relationship between benzene exposure and chronic non - ly mphocy tic leukemia and chronic ly mphocy tic leukemia. Th e International Agency for Research on Carcinogens ( IARC ) has determined that benzene is a human carcinogen and the U.S. Department of Health and Human Services ( DHHS ) has characterized benzene as a known human carcinogen. 118 , 119 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. 120 , 121 The most sensitive noncancer effect observed in humans, based on current data, is the depression of the abs olute ly mphocy te count in blood. 122 , 123 In addition, 111 Soliman, A.S.M.; Jacko, J.B.; Palmer, G.M. (2006) Development of an empirical model to estimate real world fine particulate matter emission factors: the Traffic Air Quality model. J Air & Waste Manage Assoc 56: 1540 - 1549. Docket EPA - HQ - OAR - 20 10 - 0 16 2 112 Davis, M.E.; Smith, T.J.; Laden, F.; Hart, J.E.; Ryan, L.M.; Garshick, E. (2006) Modeling particle exposure in U.S. trucking terminals. Environ Sci Techol 40: 4226 - 4232. Docket EPA - HQ - OAR - 20 10 - 0 16 2 113 Miller, T.L.; Fu, J.S.; Hromis, B.; Storey, J.M. (2 007) Diesel truck idling emissions

– measurements at a PM 2.5 hot spot. Proceedings of the Annual Conference of the Transportation Research Board, paper no. 07 - 2609. Docket EPA - HQ - OAR - 20 10 - 0 16 2 114 Ramachandran, G.; Paulsen, D.; Watts, W.; Kittelson, D. (2005) Mass, surface area, and number metrics in diesel occupational exposure assessment. J Environ Monit 7: 728 - 735. Docket EPA - HQ - OAR - 2010 - 0162 115 U.S. EPA. 2000. Integrated Risk Information Syste m File for Benzene. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm. Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 116 International Agency for Research on Cancer. 1982. Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29. Some industrial chemicals and dyestuffs, World Health Organization, Lyo n, France, p. 345 - 389. Docket EPA - HQ - OAR - 20 10 - 0 16 2 117 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, V.A. 1992. Synergistic action of the benzene metabolite hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colony stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691 - 3695. Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 118 See IARC , Note 116 , above . 119 U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens available at: http://ntp.niehs.nih.gov/go/16183. Docket EPA - HQ - OAR - 20 10 - 0 16 2 120 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193 - 197. Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 121 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541 - 554. Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 122 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***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

85 of recent work, including studies sponsored b y the Health Effects Institute (HEI), provides evidence that biochemical responses are occurring at lower levels of benzene exposure than previously

known. 124 , 125 , 126 , 127 EPA’s IRI S program has not yet evaluated these new data. (c) 1,3 -Butadiene EPA has characterized 1,3 - butadiene as carcinogenic to humans by inhalation. 128 , 129 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. 130 , 131 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 carcinogene sis are unknown; however, the scientific evidence strongly suggests that the carcinogenic effects are mediated b y genotoxic metabolites. Animal data suggest that females may be more sensitive than males for cancer effects associated with 1,3 - butadiene exp osure; there are insufficient data in humans from which to draw conclusions about sensitive subpopulations. 1,3 -

among Chinese workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236 - 246. Docket EPA - HQ OAR - 20 10 - 0 16 2 . 123 U.S. EPA (2002) Toxicological Revie w of Benzene (Noncancer Effects). Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Envi ronmental Assessment, Washington DC. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm. Docket EPA - HQ - OAR - 20 10 - 0 16 2 . 124 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; L i, 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 - 20 10 - 0 16 2 . 125 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 - 2010 - 0162 . 126 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 - 20 10 - 0 16 2 . 127 Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in rodents at doses rele vant to human exposure from Urban Air. Research Reports Health Effect Inst. Report No.113. Docket EPA - HQ - OAR 20 10 - 0 16 2 . 128 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 - 2010 - 0162 . 129 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 - HQ OAR - 2010 - 0162 130 International Agency for Research on Cancer (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, Fr ance. Docket EPA - HQ OAR - 2010 - 0162 131 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 - 975E 7FCE50709CB4C932. Docket EPA - HQ - OAR - 2010 - 0 16286 of

b utadiene also causes a variety of reproductive and developmental effects in mice; no human data on these effects are available. The most sens itive effect was ovarian atroph y observed in a lifetime bioassay of female mice. 132 (d ) Formaldehyde Since 1987, EPA has classified formaldeh yde as a probable human carcinogen based on evidence in humans and in rats, mice, hamsters, and monkey s. 133 EPA is current ly reviewing recently

published epidemiological data. For instance, research conducted b y the National Cancer Institute found an increased risk of nasophary ngeal cancer and l ymphohematopoietic malignancies such as leukemia among workers exposed to formald eh yde. 134 , 135 In an anal ys is of the ly mphohematopoietic cancer mortality from an extended follow - up of these workers, the National Cancer Institute confirmed an association between ly

mphohematopoietic cancer risk and peak exposure s. 136 A recent National Institute of Occupational Safety and Health study of garment workers also found increased risk of death due to leukemia among workers exposed to formaldehyde. 137 Extended follow - up of a cohort of British chemical workers did not find evidence of an increase in na sophary

ngeal or ly

mphohematopoie tic cancers, but a continuing statisticall y significant excess in lung cancers was reported. 138 Recentl y, the IARC re - classified formaldeh yde as a human carcinogen (Group 1). 139 Formaldeh yd e 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 meta plasia and loss of cilia . Animal studies suggest that formaldeh yde may

also cause airway

inflammation

– including eosinophil infiltration into

132 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 - 2010 - 0162 . 133 U.S. EPA (1987) Assessment of Health Risks to Garment Worke rs and Certain Home Residents from Exposure to Formaldehyde, Office of Pesticides and Toxic Substances, April 1987. Docket EPA - HQ - OAR 2010 - 0162. 134 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 - 2010 - 0162. 135 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 - 2010 - 0162. 136 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 - 2010 - 0162. 137 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 - 2010 - 0162 . 138 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 - 2010 - 0162 . 139 International Agency for Research on Cancer. 2006. Formaldehyde, 2 - Butoxyethanol and 1 - tert Butoxypropan - 2 - ol. Volume 88. (in preparation), World Health Organization, Lyon, France. Do cket EPA HQ - OAR - 2010 - 0162***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

87 of the airway s. There are several studies that suggest that formaldehyde may increase the risk of asthma

– particu larly in the young. 140 , 141 (e) Acetaldehyde Acetaldeh yd e is classified in EPA’s IRI S database as a probable human carcinogen, based on nasal tumors in rats , and is considered toxic by the inhalation, oral, and intravenous routes . 142 Acetaldeh yd e is reasonably antic ipated to be a human carcinogen b y the U.S. DHHS in the 11 th Report on Carcinogens and is classified as possibly carcinogenic to humans (Group 2B) by the IARC. 143 , 144 EPA is currently conducting a reassessment of cancer risk from inhal ation exposure to acetal dehyde. The primary

noncancer effects of exposure to acetaldehyde vapors include irritation of the eyes, skin, and respiratory tract. 145 In short - term (4 week) rat studies, degeneration of olfactory epithelium was observed at various concentration levels of acetaldeh yde exposure . 146 , 147 Data from these studies were used b y 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 bronchoco nstriction upon acetaldehyde inhalation. 148 The agency is currently conducting a reassessment of the health hazards from inhalation exposure to acetaldehyde.

140 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/tp11 1.html Docket EPA - HQ - OAR - 2010 - 0162. 141 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 Inter Organization Programme for the Sound Management of Chemicals. Geneva. Docket EPA - HQ - OAR - 2010 - 0162 . 142 U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. Research and Development, National Center for Environmental Assessment, Washington, DC. Available at http://www.epa.gov/iris/subst/0290.htm. Docket EPA - HQ - OAR - 2010 - 0162 . 143 U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcino gens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724 - F1F6 - 975E 7FCE50709CB4C932. Docket EPA - HQ - OAR - 2010 - 0162. 144 International Agency for Research on Cancer. 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 - 2010 - 0162 145 See Integrated Risk Information System File of Acetaldehyde , Note 142 , above. 146 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. A ppl. Toxicol. 6: 331 - 336. Docket EPA - HQ - OAR - 2010 - 0162 147 Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982. Inhalation toxicity of acetaldehyde in rats. I. Ac ute and subacute studies. Toxicology. 23: 293 - 297. Docket EPA - HQ - OAR - 2010 - 0162 . 148 Myou, S.; Fuji mura, 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 - 2010 - 016288 of (f ) Acrolein Acrolein is extremely

acrid and irritating to humans when inhaled, with acute exposure r esulting in upper respiratory tract irritation, mucus hy persecretion 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. 149 These data and additional studies regarding acute effects of human exposure to acrolein are summarized in EPA’s 2003 IR IS Human Health Assessment for acrolein. 150 Evidence available from studies in humans indicate that levels as low as 0.09 ppm (0.21 mg/m 3 ) for five minutes may elicit subjective complaints of eye irritation with increasing concentrations leading to more extensive eye, nose and respiratory

s ymptoms. 151 Lesions to the lungs and upper respiratory tract of rats, rabbit s, and hamsters have been observed after subchronic exposure to acrolein. 152 Acute exposure effects in animal studies report bronchial hy per - responsiveness. 153 In a recent study, the acute respiratory irritant effects of exposure to 1.1 ppm acrolein were mor e pronounced in mice with allergic airway disease by

comparison to non - diseased mice which also showed decreases in respiratory rate. 154 Based on these animal data and demonstration of similar effects in humans (e.g., reduction in respiratory rate), individ uals with compromised respiratory function (e.g., emph ys ema, 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 a crolein 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. 155 The IARC determined in 1995 that acrolein was not classifiable as to its carcinogenicity in humans . 156

149 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. p. 10. Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf . Docket EPA - HQ - OAR - 2010 - 0162 150 See U.S. EPA 2003 Toxicological revie w of acrolein, Note 149 , above. 151 See U.S. EPA 2003 Toxicological revie w of acrolein, Note 149 , at p. 11. 152 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 - 2010 - 0162 . 153 See U.S. 2003 Toxicological review of acrolein, Note 149 , at p. 15. 154 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 - 2010 - 0162 . 155 U.S. EPA. 2003. Integrated Risk Information System File of Acrolein. Research and Development, Nationa l Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm Docket EPA - HQ - OAR - 2010 - 0162. 156 International Agency for Research on Cancer. 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 - 2010 - 0162***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

89 of (g ) Polycyclic Organic Matter The term pol yc yclic organic matter (POM) defines a broad class of compounds that includes the polycyclic aromatic hydrocarbon compounds (PAHs) . One of these compounds, naphthalene, is discussed separately below. POM compounds are formed primarily from combustion and are present in the atmosphere in gas and particulate form. Cancer is the major concern from exposure to POM. Epidemiologic studies have reporte d an increase in lung cancer in humans exposed to diesel exhaust, coke oven emissions, roofing tar emissions, and cigarette smoke; all of these mixtures contain POM compounds . 157 158 Animal studies have reported respiratory tract tumors from inhalation exposur e to benzo[a]py

rene and alimentary

tract and l iver tumors from oral exposure to benzo[a]py

rene. EPA has classified seven PAHs (benzo[a]py rene, benz[a]anthracene, chry sene, benzo[b]fluoranthene, benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3 - cd]py

rene) as Group B2, probable human carcinogen s. 159 Recent studies have found that maternal exposures to PAHs 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 in presc hool children (3 years of age). 160 , 161 EPA has not yet evaluated these recent studies. (h ) Naphthalene Naphthalene is found in small quantities in gasoline and diesel fuels. Naphthalene emissions have been measured in larger quantities in both gasoline and diesel exhaust compared with evaporative emissions from mobile sources, indicating it is primarily a product of combustion. EPA released an external review draft of a reassessment of the inhalation carcinogenicity of naphthalene based on a number of recent anim al carcinogenicity studies. 162 The draft reassessment completed external peer

157 Agency for Toxic Subs tances and Disease Registry (ATSDR). 199 5. Toxicological profile for Polycyclic Aromatic Hydrocarbons (PAHs). Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles /TP.asp?id=122&tid=25. 158 U.S. EPA (2002). Health Assessment Document for Diesel Engine Exhaust . EPA/600/8 - 90/057F Office of Research and Development, Washington DC. http://cfpub.epa.go v/ncea/cfm/recordisplay.cfm?deid=29060 . Docket EPA - HQ - OAR - 20 10 - 0 16 2 159 U.S. EPA (1997). Integrated Risk Information System File of indeno(1,2,3 - cd)pyrene. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/ncea/iris/subst/0457.htm. 160 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. Envi ron Health Perspect. 111: 201 - 205. 161 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 neurodevel opment in the first 3 years of life among inner - city children. Environ Health Perspect 114: 1287 - 1292. 162 U. S. EPA. 2004. Toxicological Revie w of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk I nformation 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 - 2010 - 0162 .90 of

review. 163 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 "reasonabl y anticipated to be a human carcinogen" in 2004 on the basis of bioassay s reporting clear evidence of carcinogeni city

in rats and some evidence of carcinogenicity in mice. 164 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. 165 Naphthalene also c auses a number of chronic non - cancer effects in animals, including abnormal cell changes and growth in respiratory and nasal tissues. 166 (i ) Other Air Toxics In addition to the compounds described above, other compounds in gaseous hydrocarbon and PM emissions from heav y- duty vehicles will be affected by this final action. 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 IRI S database. 167 (j ) 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 an y single pollutant. As such, this section emphasizes traffic - related air pollution, in general, as the relevant indicator of exposure rather than any particular pollutant. Concentrations of man y traffic - generated air pollutants are elevated for up to 300 - 500 meters downwind of roads with high traffic volumes. 168 Numerous sources on roads contribute to elevated roadside concentrations, including exhaust and evaporative 163 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 - 2010 - 0162. 164 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://ntp server.niehs.nih.gov . Docket EPA - HQ - OAR - 2010 - 0162. 165 International Agency for Research on Cancer. (2002). Monographs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France. Docket EPA - HQ - OAR - 2010 - 0162. 166 U. S. EPA. 1998. Toxicological Revie w 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 Docket EPA - HQ - OAR - 2010 - 0162. 167 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris 168 Zho u, 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 Docket EPA - HQ - OAR - 2010 - 0162.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

91 of 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 traffic related air pollution. 169 Itconcluded that evidence is “sufficient to infer the presence of a causal association” between traffic exposure and exacerbation of childhood asthma sy mptoms. The HEI report also concludes that the evidence is either “sufficient” or “su ggestive 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. 170 The HEI report also concludes that there is “suggestive” eviden ce 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, chronic obstructive pulmonary dise ase sy

mptoms, and allergy . A review b y Holguin (2008) notes that the effects of traffic on asthma may be modified by

nutrition status, medication use, and genetic factors. 171 The HEI report also concludes that evidence is “suggestive” of a causal associatio n 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 rh ythm, heart attack, and cardiovascular disease. T he HEI report characterizes this evidence as “suggestive” of a causal association, and an independent epidemiological literature review b y Adar and Kaufman (2007) concludes that there is “consistent evidence” linking traffic - related pollution and adverse c ardiovascular health outcomes. 172 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 currentl y “inadequate and insufficient” evidence for a causal association between these effects and traffic exposure. A review by Raaschou Nielsen and Rey

nolds (2006) concluded that evidence of an association between

169 HEI Panel on the Health Effects of Air Pollution. (2010) Traffic - related air pollution: a critical review of the literature on emiss ions, exposure, and health effects. [Online at www.healtheffects.org ] Docket EPA - HQ - OAR - 2010 - 0162. 170 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. Docket EPA - HQ - OAR - 2010 - 0162 171 Holguin, F. (2008) Traffic, outdoor air pollution, and asthma. Immunol Allergy Clinics North Am 28: 577 - 588. Docket EPA - HQ - OAR - 2010 - 0162. 172 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. Docket EPA - HQ - OAR 2010 - 0162.92 of

childhood cancer and traffic - related air pollutants is weak, but noted the inability to draw firm conclusions based on limited evidence. 173 There is a large population in the United States living in close proximity of major roads. According to the Census Bureau’s American Housing Survey for 2007, approximately

20 mil lion residences in the United States, 15.6% of all homes, are located within 300 feet (91 m) of a highway with 4+ lanes, a railroad, or an airport. 174 Therefore, at current population of approximately 309 million, assuming that population and housing are si milarl y distributed, there are over 48 million people in the United States living near such sources. The HEI report also notes that in two North American cities, L os Angeles and Toronto, over 40% of each city ’s population live within 500 meters of a highw ay 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. Peo ple living near roads are often socioeconomically disadvantaged. According to the 2007 American Housing Survey , a renter - occupied property is over twice as likel y 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 h igh minority

or poor populations. 175 , 176 , 177 Students may

also be exposed in situations where schools are located near major roads. In a study of nine metropolitan areas across the United States, 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. 178 The study also found that among the metropolitan areas studied, schools in the Eastern United States were more often sited near major roadway s than schools in the Western United States.

173 Raaschou -Nielsen, O.; Reynolds, P. (2006) Air pollution and childho od cancer: a review of the epidemiological literature. Int J Cancer 118: 2920 - 2929. Docket EPA - HQ - OAR - 2010 - 0162 174 U.S. Census Bureau (2008) American Housing Survey for the United States in 2007. Series H - 150 (National Data), Table 1A - 7. [Accessed at http://www.census.gov/hhes/www/housing/ahs/ahs07/ahs07.html on January 22, 2009] Docket EPA - HQ OAR - 2010 - 0162. 175 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. Docket EPA - HQ - OAR - 2010 - 0162 176 Wier, M.; Sciammas, C.; Seto, E.; Bhatia, R.; Rivard, T. (2009) Health, traffic, and environmental justice: collaborative research and community action in S an Francisco, California. Am J Public Health 99: S499 - S504. Docket EPA - HQ - OAR - 2010 - 0162 177 Forkenbrock, D.J. and L.A. Schweitzer, Environmental Justice and Transportation Investment Policy . Iowa City: University of Iowa, 1997. Docket EPA - HQ - OAR - 2010 - 01 62 178 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 Docket EPA HQ - OAR - 2010 - 0162***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

93 of Demographic studies of students in schools near major roadway s 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 i n low socioeconomic status locations. 179 , 180 , 181 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. 178 

### C. **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 material s damage and soiling , as well as environmental effects associated with the presence of ozone in the ambient air , such as impacts on plants, including trees, agronomic crops and urban ornamentals , and environmental effects associated with air toxics . **(1) Visibi**  **lity** Visibility can be defined as the degree to which the atmosphere is transparent to visible light. 182 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 enjoy ment of daily

activities in all parts of the country . Individuals value good visibility for the well - being it provides them directl y, where they live and work, and in places where they

enjoy recreational opportunities. Visibility is also highl y 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 200 9 PM I SA. 183 EPA is pursuing a two - part strategy to address visibility

impairment. First, EPA developed the regional haze program (64 FR 35714) which 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 - 38681, July

18, 1997). 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. Second, EPA has concluded that PM 2.5 causes adverse effects on visibility in other areas that are not protected b y the Regional Haze Rule, depending on PM 2.5 concentrations and other factors that control their visibility impact effectiveness such as dry chemical 179 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. Docket EPA - HQ - OAR - 2010 - 0162 180 Houston, D.; Ong, P.; Wu, J.; Winer, A. (2006) Proximity of licensed child care facilities to near roadway vehicle pollution. Am J Public Health 96: 1611 - 1617. Docket EPA - HQ - OAR - 2010 - 0162 181 Wu, Y.; Batterman, S. (2006) Proximity of schools in Detroit, Michigan to automobile and truck traffic. J Exposure Sci Environ Epidemiol 16: 457 - 470. Docket EPA - HQ - OAR - 2010 - 0162 182 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 - 2010 - 0162 . This book can be viewed on the National Academy Press Website at http://www.nap.edu/books/0309048443/html/ 183 See U.S. EPA 2009 Final PM ISA , Note 84 .94 of

composition and relative humidity (i.e., an indicator of the water composition of the particles), and has set secondary PM 2.5 standards to address these areas. The existing annual primary

and secondary

PM 2.5 standards have been remanded and are being addressed in the currently ongoing PM NAAQS review. The secondary PM 2.5 standards serve as a reasonable complement to the Regional Haze Progr am. **(2) Plant and Ecosystem Effects of Ozone**  Elevated o zone levels contribute to environmental effects, with impacts to plants and ecos ys tems being of most concern. Ozone can produce both acute and chronic injury in sensitive species depending on the concentr ation 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 d amage to plants includes visible injury to leaves and impaired photosy nthesis, both of which can lead to reduced plant growth and reproduction, resulting in reduced crop yi elds, forestry production, and use of sensitive ornamentals in landscaping. In addi tion, the impairment of photosy nthesis, the process by which the plant makes carbohydrates (its source of energy and food), can lead to a subsequent reduction in root growth and carboh ydrate storage below ground , result ing in other, more subtle plant and e cos ys tems impacts. These latter impacts include increased susceptibility of plants to insect attack, disease, harsh weather, interspecies competition and overall decreased plant vigor. The adverse effects of ozone on forest and other natural vegetation can potentially lead to species shifts and loss from the affected ecos ys tems, resulting in a loss or reduction in associated ecos ys tem goods and services. Last ly , visible ozone injury to leaves can result in a loss of aesthetic value in areas of special s cenic significance like national parks and wilderness areas. The final 2006 Ozone Air Quality Criteria Document presents more detailed information on ozone effect s on vegetation and ecos ys tems. **(3) Atmospheric Deposition**  Wet and dry

deposition of ambient part iculate matter delivers a complex mixture of metals (e.g., mercury , zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., pol yc yclic organic matter , dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic eco sy stems. 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 phy sical 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 depositi on has been identified as a key component of the environmental and human health hazard posed by several pollutants including mercury , dioxin and PCBs. 184

184 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 - 2010 - 0162 .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

95 of 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 nitrogen nutrient enrichment contributes to toxic algae blooms and zones of depleted oxygen, which can lead to fish kills, frequentl y in coastal waters. Deposition of heavy metals or other toxi c s m ay

lead to the human ingestion of contaminated fish, impairment of drinking water, damage to the marine ecology , and limit s 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. 185 , 186 , 187 , 188 , 189 Atmospheric deposition of nitrogen and sulfur contributes to acidification, altering biogeochemistry

and affecting animal and plant life in terrestrial and aquatic ecos ys tems across the United S tates. The sensitivity of terrestrial and aquatic ecos ys tems 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 biot a and affects the abundance and nutritional value of preferred prey species, threatening biodiversity and ecos ys tem function. Over time, acidifying deposition also re moves 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 rub ens ) 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 biogeoc hemical cycling. In aquatic s ys tems increased nitrogen can alter species assemblages and cause eutrophication. In terrestrial sy stems nitrogen loading can lead to loss of nitrogen sensitive lichen species, decreased biodiversity of grasslands, meadows an d 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.

185 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 - 2010 - 0162 . 186 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. Characterization of atmospheric trace elements o n PM2.5 particulate matter over the New York -New Jersey harbor estuary. Atmos. Environ. 36: 1077 - 1086. Docket EPA - HQ - OAR - 2010 - 0162 . 187 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 - 2010 - 0162 . 188 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 - 2010 - 0162 . 189 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 - 2010 - 0162 .96 of Adverse impacts on soil chemistry and plant life have been observed for areas heavily influenc ed b y atmospheric deposition of nutrients, metals and acid species, resulting in species shifts, loss of biodiversity , forest decline and damage to forest productivity . Potential impacts also include adverse effects to human health through ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction in crop yi eld, and limited use of land due to contamination. Atmospheric deposition of pollutants can reduce the aesthetic appeal of buildings and c ulturall y important articles through soiling , and can contribute directly (or in conjunction with other pollutants) to structural damage b y means of corrosion or erosion. Atmospheric deposition may affect materials principally by promoting and acceleratin g 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 electrol yt ic, h ygroscopic, and acidic properties , and their ability to ad sorb co rrosive gases (principall y sulfur dioxide). **(4) Environmental Effects of Air Toxics**  Emissions from producing, transporting and combusting f uel contribute to ambient levels of pollutants that contribute to adverse effects on vegetation. Volatile organic compounds, some of which are considered air toxics, have long been suspected to play a role in vegetation damage. 190 Inlaboratory experiments, a wide range of tolerance to VOCs has been observed. 191 Decreases in harvested seed pod weight have been reported for the more sensitive plants, and some studies have reported effects on seed germination, flowering and fruit ripening. Effects of individual VOCs or their role in conjunction with other stressors (e.g., acidification, drought, temperature extremes) have not been well studied. In a recent study of a mixture of VOCs including ethanol and toluene on herbaceous plants, significant effects on seed production, leaf water content and photosy

nthetic efficiency

were reported for some plant species. 192 Research su ggests 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. 193 , 194 , 195 The impacts of VOCs on plant reproduction may have long - term

190 U.S. EPA. 1991. Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3 - 91/001. Docket EPA - HQ - OAR - 2010 - 0162 . 191 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 - 2010 - 0162 . 192 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. 200 3. Effects of VOCs on herbaceous plants in an open - top chamber experiment. Environ. Pollut. 124:341 - 343. Docket EPA - HQ - OAR - 2010 - 0162 . 193 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 - 2010 - 0162 . 194 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 - 2010 - 0162 . 195 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 - 2010 - 0162.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

97 of implications for biodiversity and survival of native species near major roadway s. 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 th ese compounds to affect herbivores or insects. 

### D. **Air Quality Impacts of Non -**  **GHG Pollutants** Air quality

modeling was performed to assess the impact of the heavy- duty vehicle standards on criteria and air toxic pollutants . In this section, we present informat ion on current modeled levels of pollution as well as projec tions for 2030, with respect to ambient PM 2.5 , ozone , selected air toxics, visibility levels and nitrogen and sulfur deposition. The results are discussed in more detail in Section 8.2 of the RIA . We used the Community

Multi - scale Air Quality (CMAQ) photochemical model , version 4.7.1, for our analy sis. This version of CMAQ includes a number of improvements to previous versions of the model. These improvements are discussed in Section 8.2.2 of the RIA. **(1) Ozone**  (a ) 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 revisio ns to the previous 1997 NAAQS for ozone to provide increased protection of public health and welfare. On January 6, 2010, EPA pr oposed to reconsider the 2008 ozone NAAQS to ensure that they are requisite to protect public health with an ample margin of sa fety , and requisite to protect public welfare (75 FR 2938, January 19, 2010) . EPA intends to complete the reconsideration by July

31, 2011 . If, as a result of the reconsideration, EPA promulgates different ozone standards, the new 201 1 ozone standards wo uld replace the 2008 ozone standards and the requirement to designate areas for the replaced 2008 standards would no longer appl y. As of April 21 , 2011 there are 44 areas designated as nonattainment for the 1997 8 - hour ozone NAAQS, comprising 2 42 full or partial counties with a total population of over 118 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 likel y unde restimate 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 VII - 7 provides an estimate, based on 2006 - 08 air quality data , of the counties with design values greater than the 2008 8 - hour ozone NAAQS of 0.075 ppm.98 of **Table VII**  **- 7**  **Counties with Design Values Greater Than the Ozone NAAQS** NUMBER OF COUNTIES POPULATION A 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 w ould 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. (b ) Projected Levels without this Final Acti on 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. I f EPA promulgates different ozone NAA QS in 201 1 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. Attainment dates for an y 2011 ozone NAAQS would range from 3 to 20 years from designation, depending on the area’s classification. 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 heav y- duty standards, up to 10 countie s with a population of over 3 0 million may not attain the 2008 ozone standard of 0.075 ppm (75 ppb) . These number s 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 standards, will also be impacted b y changes in ozone as they work to ensur e long - term maintenance of the ozone NAAQS. (c) Projected Levels with this Final Action Our modeling indicates ozone design value concentrations will decrease in many areas of the country . The decreases in ozone design values are likely due to projected tailpipe reductions in NO X and projected ups tream emissions decreases in NO X and VOCs from reduced gasoline production . The majority of the ozone design value***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

99 of decreases are less than 1 ppb. The maximum projected decrease in an 8 - hour ozone design value is 1.57 ppb in Jefferson County , Tennessee . O n a population - weighted basis, the average modeled 8 - hour ozone design values are projected to decrease b y 0.39 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 0.16 ppb due to the heav y- dut y standards. **(2) Particulate Matter**  (a ) Current Levels PM 2.5 concentrations exceeding the level of the PM 2.5 NAAQS occur in many parts of the country . In 2005 , EPA designated 39 nonattainment areas for the 1997 PM 2. 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 PM 2.5 NAAQS was revised in 2006 and the 2006 24 - hour PM 2.5 NAAQS became effective on December 18, 2006. On October 8, 2009, the EPA issued final nonattainment area designations for the 2006 24 - hour PM 2.5 NAAQS (74 FR 58688, November 13, 2009). These designations include 32 areas composed of 121 full or partial counties with a population of over 70 million . Intotal, there are 54 PM 2.5 nonattainment areas composed of 243 counties with a population of almost 102 million people. (b ) Projected Levels without this Final Action States with PM 2.5 nonattainment areas are required to take action to bring those areas into compliance in the future. Areas designated as not attaining the 1997 PM 2.5 NAAQS will need to attain the 1997 standards in the 2010 to 2015 time frame, and then maintain them thereafter. The 2006 24 - hour PM 2.5 nonattainment areas will be required to attain the 2006 24 - hour PM 2.5 NAAQS in the 2014 to 2019 time frame and then be required to maintain the 2006 24 - hour PM 2.5 NAAQS thereafter. The heavy- duty standards finalized in this action become effective in 2012 and therefore may be useful to states in attaining or maintaining the PM 2.5 NAAQS. EPA has already adopted many emission control programs that are expected to reduce ambient PM 2 .5 levels and which will assist in reducing the number of areas that fail to achieve the PM 2.5 NAAQS. Even so, our air quality modeling projects that in 2030 , with all current controls but excluding the impacts of the heav y- duty standards adopted here , at least 4 counties with a population of almost 7 million may not attain the 1997 annual PM 2.5 standard of 15 μg/m 3 and 22 counties with a population of over 33 million may

not attain the 2006 24 - hour PM 2.5 standard of 3 5 μg/m 3 . These numbers do not account for those areas that are close to (e.g., within 10 percent of) the PM 2.5 standard s . These areas, although not violating the standards, will also benefit from any reductions in PM 2.5 ensuring long - term maintenance of the PM 2.5 NAAQS.100 of (c) Projected Levels wi th this Final Action Air quality

modeling performed for this final action shows that in 2030 the majority of the modeled counties will see decreases of less than 0.01 μg/m 3 i n their annual PM 2.5 design values. The decreases in annual PM 2.5 design values that we see in some counties are likel y due to emission reductions related to lower fuel production at existing oil refineries and/or reductions in PM 2.5 precursor emissions (NO X , SO X , and VOCs ) due to improvements in road load . The maximum projected decrease in an annual PM 2.5 design value is 0.03 μg/m 3 in Allen County , Indiana and Canyon County , Idaho. On a population - weighted basis, the average modeled 2030 annual PM 2.5 design value is projected to decrease b y 0.01 μg/m 3 due to this final action. In addition to looking at annual PM 2.5 design values , we also modeled the impact of the standards on 24 - hour PM 2.5 design values . Air quality modeling performed for this final action shows that in 2030 the majority of the modeled counties will see changes of between - 0.05 μg/m 3 and 0 μg/m 3 i n their 24 - hour PM 2.5 design values. The decreases in annual PM 2.5 design values that we see in some counties are likel y due to emission reductions related to lower fuel production at existing oil refineries and/or reductions in PM 2.5 precursor emissions (NO X , SO X , and VOCs ) due to improvements in road load . The maximum projected decrease in a 24 - hour PM 2.5 design value is 0.27 μg/m 3 in Canyon Count y, ID. There are also some counties that are projected to see increases of less than 0.1 μg/m 3 in their 24 - hour PM 2.5 design values . These small increases in 24 - hour PM 2.5 design values are likel y related to downstream emission increases from APUs. On a population - weighted b asis, the average modeled 2030 24 - hour PM 2.5 design value is projected to decrease b y 0.03 μg/m 3 due to this final action. Those counties that are projected to be above the 24 - hour PM 2.5 standard in 2030 will see slightly smaller population - weighted decre ases of 0.01 μg/m 3 in their design values due to this final action. **(3) Air Toxics**  (a ) 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. 196 The levels of air toxics to which people are exposed vary depending on where people live and work and the kinds of activities in which they engage, as discussed in detail in U.S. EPA’s most recent Mobile Source Air Toxics Rule. 197 According to the National Air Toxic Assessment (NATA) for 2005 , 198 mobile sources were responsible for 43 percent of outdoor toxic emissions and over 50 percent of the cancer risk and noncancer hazard . Benzene is the largest contributor to cancer risk of all 124 pollutants quantitatively

196 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 8434, February 26, 2007. 197 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 8434, February 26, 2007. 198 U. S. EPA. ( 20 11 ) 200 5 National - Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata200 5 /. Docket EPA - HQ - OAR - 2010 - 0162.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

101 of assessed in the 2002 NATA and mobile sources were responsible for 59 percent of benzene emissions in 2002 . Over the ye ars, EPA has implemented a number of mobile source and fuel controls resulting in VOC reductions, which also reduce benzene and o ther air toxic emissions. (b ) Projected Levels Our modeling indicates that the heav y- duty standards have relativel y little impact on national average ambient concentrations of the modeled air toxics. Additional detail on the air toxics results can be found in Section 8.2.3.3 of the RIA. **(4) Nitrogen and Sulfur Deposition**  (a ) Current Levels Over the past two decades, the EPA has undertaken numerous efforts to reduce nitrogen and sulfur deposition across the U.S. Analy ses of long - term monitoring data for the U.S. sh ow that deposition of both nitrogen and sulfur compounds has decreased over the last 17 years although many areas continue to be negativel y impacted by deposition. Deposition of inorganic nitrogen and sulfur species routinely measured in the U.S. between 200 5 and 200 7 were as high as 9.6 kilograms of nitrogen per hectare (kg N/ha) averaged over three ye ars and 20.8 kilograms of sulfur per hectare (kg S/ha ) averaged over three years . 199 The data show that reductions were more substantial for sulfur compounds than for nitrogen compounds. These numbers are generated b y the U.S. national monitoring network and they likel y underestimate nitrogen deposition because neither ammonia nor organic nitrogen is measured. In the eastern U.S., where data are most abundant, total sulfur d eposition decreased by about 44 % between 1990 and 200 7, while total nitrogen deposition decreased b y 25 % over the same time frame. 200 (b ) Projected Levels Our air quality modeling projects decreases in nitrogen deposition, especially in the Midwest, as a result of the heav y- duty standards required b y this final action. The heav y- duty standards will result in annual percent decreases of 0.5% to more than 2% in some cities in the Midwest, Phoenix, Albuquerque, and some areas in Texas. The remainder of the country

will see only

minimal changes in nitrogen deposition, ranging from decreases of less than 0.5% to increases of less than 0.5%. For a map of 2030

199 U.S. EPA. U.S. EPA's 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 - 2010 - 0162. Updated data available online at: http://cfpub.epa.gov/eroe/index.cfm? fuseaction=detail.viewInd&ch=46&subtop=341&lv=list .listByChapter &r=201744 200 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 - 20 10 - 0 16 2 . Updated data available online at: http://cfpub.epa.gov/eroe/index.cfm? fuseaction=detail.viewInd&ch=46&subtop=341&lv=list.listByChapter &r=201744102 of

nitrogen deposition impacts and additional information on these impacts, see Section 8.2.3.4 of the RIA. The impacts of the heav y- duty standards on sulfur deposition are minimal, ranging from decreases of up to 0.5% to increases of up to 0.5%. **(5) Visibility**  (a ) Current Levels As mentioned in Section VII.D(1)(a) , million s of people live in nonattainment areas for the PM 2.5 NAAQS. These populations, as well as large numbers of individuals who travel to these areas, are likel y to experience visibility impairment. In addition, while visibility

trends have improved in mandatory class I federal are as, 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. (b ) Projected Levels Air quality

modeling conducted for this final action 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 decivie w levels above background in 2030. 201 The results also indicate that the majority of the modeled mandatory

class I federal areas will see very little change in their visibility , but some mandatory

class I federal areas will see improvements in visibility du e to the heav y- duty 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 day s is projected to improve b y 0.01 deciviews, or 0.06%, in 2030 . Section 8.2.3.5 of the RIA contains more detail on the visibility portion of the air quality modeling. 

## VIII. **What ar e the**  **Agencies ’**  **Estim ated Cost, Economic, and**  **Other Impacts of the Final**  **Program?** In this section, we present the costs and impacts of the fin al HD National Program. It is important to note that NHTSA’s final fuel consumption standards and EPA’s final GHG emissions standards will both be in effect, and each will lead to average fuel efficiency

increases and GHG emission reductions. The two age ncies’ final standards comprise the HD National Program. The net benefits of the final HD National Program consist of the effects of the program on:

201 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 pe rson can generally perceive a change of one deciview . The higher the deciview value, the worse the visibility. Thus, an improvement in visibility is a decrease in deciview value.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

103 of  the vehicle program costs (costs of compl yi ng with the vehicle CO 2 standards)  fuel savings associated with reduced fuel usage resulting from the program  reductions in greenhouse gas emissions,  the reductions in other (non - GHG) pollutants,  costs associated with increases in noise, congestion, and accidents resulting from increased vehicle use,  improvements i n U.S. energy security impacts,  benefits associated with increased vehicle use due to the “rebound” effect. We also present the cost - effectiveness of the standards, or the cost per ton of emissions reduced. Where possible, we identify the uncertain aspe cts of these economic impacts and attempt to quantify them when/if possible (e.g., sensitivity ranges associated with quantified and monetized GHG impacts ; probabilistic uncertainty associated with non - GHG health benefits ). For some impacts, however, there is a lack of adequate information to inform a probabilistic assessment of uncertainty . EPA continues to work toward developing a comprehensive strategy for characterizing the aggregate impact of uncertainty in key elements of its analyses and we wil l continue to work to refine these uncertainty analyses in the future as time and resources permi t. The program may

have other effects that are not included here. The agencies sought comment on whether an y costs or benefits were omitted from this analysis , so that they could be explicitly

recognized in the final rules. In particular, as discussed in Section III and in Chapter 2 of the RIA, the technology cost estimates developed here take into account the costs to hold other vehicle attributes, such as si ze and performance, constant. In addition, the anal ys is assumes that the full technology costs are passed along to vehicle buyers. With these assumptions, because welfare losses are monetary estimates of how much buyers would have to be compensated to be made as well off as in the absence of the change, 202 the price increase measures the loss to the buyer. 203 Assuming that the full technology cost gets passed along to the buyer as an increase in price, the technology

cost thus measures the welfare loss to th e buyer. Increasing fuel efficiency would have to lead to other changes in the vehicles that buyers find undesirable for there to be additional losses not included in the technology costs.

202 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 th em 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 ty pically very close together. 203 Indeed, it is likely to be an over estimate of the loss to the buyer , because the buyer 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 buyer wo uld choose one of those options only if the alte rnative involves less loss than paying the higher price. Thus, the increase in price that the buyer 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 th e vehicle less desirable to buyers .104 of The agencies sought comments, including supporting data and quantitative anal ys es, of any

additional impacts of the final standards on vehicle attributes and performance, and other potential aspects that could positively or negatively affect the welfare implications of this final rulemaking, not addressed in this anal y sis. The comments received by the agencies did not provide any clear insights into this question. Some comments noted the diversity of the trucking industry and expressed a request that the program continue the great variety of options for the industry , because of the variation in needs for different customers. Additional comments noted that the separate engine and vehicle programs support the maintenance of variety and current market structure. Though a few commenters raised concerns, no information w as offered to indicate that choice will in fact be limited by the program, or that other vehicle attributes are adversely

affected. The total monetized benefits (excluding fuel savings) under the program are projected to be $ 4.3 to $ 11.1 billion in 2030 , depending on the value used for the social cost of carbon. These benefits are summarized below in Table VIII - 31 . The costs of the program in 2030 are estimated to be approximately $ 2. 6 billion for new engine an d truck technology , less $ 20. 6 billion in savings realized by trucking operations through fewer fuel expenditures (calculated using pre - tax fuel prices). These costs are summarized below in Table VIII - 29 . The present value of the total monetized benefits (excluding fuel savings) under the program is expected to range from $ 48.7 billion to $ 180.1 billion with a 3% discount rate; with a 7% discount rate, the total monetized benefits are expected to range from $ 24.3 billion to $ 155.7 billion. These values, summarized in Table VIII - 31 , depend on the value used for the social cost of carbon. The present value of costs of the program for new engine and truck technology , in Table VIII - 29 , are expected to be $ 47.4 billion using a 3% discount rate, and $ 24.7 billion with a 7% discount rate, less fuel savings (calculated using pre - tax fuel prices) of $ 375.3 billion with a 3% discount rate, and $ 166.5 billion with a 7% discount rate. Total net present benefits (in Table VIII - 32 ) are thus expected to range from $ 376.6 billion to $ 508 billion with a 3% discount rate, and $ 166.1 billion to $ 297.5 billion with a 7% discount rate. The estimates developed here are measured against a baseline fuel efficiency associated with MY 2010 vehicles . The a gencies also considered an alternate baseline associated with AEO 2011 projections, which is further discussed in S ection IX. All calculations presented in S ection V III use the constant 2010 vehicle baseline. The extent to which fuel efficiency

improvements may

have occurred in the absence of the rules affects the net benefits associated with the program. I f trucks were to install technologies to achieve the fuel savings and reduced GHG emissions in the absence of this program, then both the costs and benefits of these fuel savi ngs could be attributed to market forces, not the rules. As a baseline for estimates of the extent of fuel - saving technologies that might have been adopted in the absence of the program, the proposal used the level of these technologies in MY 2010 vehicle s. We sought comment on whether the agencies should use an alternative baseline based on data provided by commenters to estimate the degree to which the technologies discussed in the proposal would have been adopted in the absence of these rules. No comme nts were received on this issue. One comment cites the EPA draft RIA as noting a historic 1% per ye ar improvement in fuel efficiency , and***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

105 of argues that the rules are therefore not needed; the actual figure in the draft RIA, however, was a 0.09% per ye ar imp rovement. EPA has undertaken an analy sis of the econom y- wide impacts of the final heav y duty truck fuel efficiency and GHG standards as an exploratory exercise that EPA believes could provide additional insights into the potential impacts of the program. 204 These results were not a factor regarding the appropriateness of the final standards. It is important to note that the results of this modeling exercise are dependent on the assumptions associated with how manufacturers would make fuel efficiency improve ments and how trucking operations would respond to increases in higher vehicle costs and improved vehicle fuel efficiency as a result of the final program. Further information on these and other aspects of the economic impacts of our rules are summarize d in the following sections and are presented in more detail in the RIA for this final rulemaking. 

### A. **Conceptual Framework for Evaluating Impacts** This regulation is motivated primarily by the goals of reducing emissions of greenhouse gases and promoting U.S. energy security by reducing consumption and imports of petroleum - based fuels. These motivations involve classic externalities, meaning that private decisions do not incorporate all of the costs associated with these problems; these costs are not borne completel y b y the households or businesses whose actions are responsible for them. In the absence of some mechanism to “internalize” these costs

– that is, to transfer their burden to individuals or firms whose decisions impose them

– individuals and firms w ill consume more petroleum - based fuels than is socially optimal. Externalities are a classic motivation for government intervention in markets. These externalities, as well as effects due to changes in emissions of other pollutants and other impacts, are discussed in Sections VIII.H

– VIII.K. In some cases, these classic externalities are by themselves enough to justify the costs of imposing fuel efficiency standards. F or some discount rates and some projected social costs of carbon, however, the reduc tions in these external costs are less than the costs of new fuel saving technologies needed to meet the standards . (See T able s 9 - 18 and 9 - 1 9 in the RIA .) Nevertheless , th is regulation reduces trucking companies’ fuel costs; according to our estimates, these savings in fuel costs are by themselves sufficient to pay for the technologies over periods of time considerably shorter than vehicles’ expected lifetimes under the assumptions used for this analy sis (e.g., AEO 2011 projected fuel prices). If these estimates are correct, then the entire value of the reductions in external costs represents additional net benefits of the program, beyond those resulting from the fact that the value of fuel savings exceeds the costs of technologies necessary to achieve them.

204 See Memorandum to Docket, “ Economy - Wide Im pacts of Proposed Heavy - Duty Truck Greenhouse Gas Emissions and Fuel Efficiency Standards ”, October 8, 2010. Docket EPA - HQ - OAR - 2010 - 0162.106 of It is often asserted that there are cost - effective fuel - saving technologies that markets do not take advantage of . This is commonly

known as the “energy gap” or “energy paradox.” S tandard economic theory suggests that in normall y functioning competitive markets, interactions between vehicle buyers and producers would lead producers to incorporate all cost - effective technology into the vehicles that they offer, without government intervention. Unlike in the light - duty v ehicle market, the vast majority of vehicles in the medium - and heav y- duty truck market are purchased and operated b y businesses with narrow profit margins, and for which fuel costs represent a substantial operating expense. Even in the presence of uncer tainty and imperfect information

– conditions that hold to some degree in every market

– we generally

expect firms to attempt to minimize their costs in an effort to survive in a competitive marketplace, and therefore to make decisions that are in the best interest of the company and its owners and/or shareholders. In this case, the benefits of the rules would be due exclusively to reducing the economic costs of externalities resulting from fuel production and consumption. However, as discussed below in S ection VIII.E, the agencies have estimated that the application of fuel - saving technologies in response to the final standards would , on average, yi eld private returns to truck owners of 140% to 420% (see Table VIII - 21 below). T he agencies have also estim ated that the application of these technologies would be significantl y lower in the absence of the final standards ( i.e. , under the “no action” regulatory

alternative), meaning that truck buyers and operators ignore opportunities to make investments in higher fuel efficiency that appear to offer significant cost savings . As discussed in the NPRM, there are several possible explanations in the economics literature for why trucking companies do not adopt technologies that would be expected to increase their profits: there could be a classic market failure in the trucking industry

– market power, externalities, or asy mmetric or incomplete (i.e., missing market) information; there could be institutional or behavioral rigidities in the industry (union rules, standard operating procedures, statutory requirements, loss aversion, etc.), whereb y participants collective ly

do not minimize costs; or the engineering estimates of fuel savings and costs fo r these technologies might overstate their benefits or understate th eir costs in real - world application s . To try to understand why trucking companies have not adopted these seemingl y cost - effective fuel - saving technologies, the agencies surveyed published literature about the energy

paradox, and held discussions with numerous truck market participants. The proposal discussed five categories of possible explanations derived from these sources . Collectively , these five hy potheses may explain the apparent inconsistency between the engineering anal ys is, which finds a number of cost - effective methods of improving fuel efficiency , and the observation that many of these technologies are not widely adopted. These h ypotheses include imperfect information in the original and resale markets, split incentives, uncertainty about future fuel prices, and adjustment and transactions costs. As the discussion indicated, some of these explanations suggest failures in the private market for fuel - saving technology in addition to the externalities caused b y producing and consuming fuel that are the primary motivation for the rules.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

107 of Other explanations suggest market - based behaviors that may imply additional costs of regulating truck fuel efficiency that are not accounted for in this anal ys is. As noted above, an additional explanation

– adverse e ffects on other vehicle attributes -- did not elicit supporting information in the public comments. Anecdotal evidence from various segments of the trucking industry suggests that many

of the hy potheses discussed here may play a role in explaining the puzzle of why truck purchasers appear to under - invest in fuel efficiency , although different explanations may apply to different segments, or even different companies. The published literature does not appear to include empirical anal ys is or data related to this question. The agencies invite d comment on these explanations, and on an y data or information that could be used to investigate the role of an y or all of these five hy potheses in explaining this energy paradox as it applies specifically to trucks . Som e comments expressed dissatisfaction about the explanations presented; they argued that these arguments were not sufficient to explain the phenomenon. These comments argued that the truck owners and operators are better judges of the appropriate amount of fuel efficiency than are government agencies; they choose not to invest because of warranted skepticism about these technologies. The agencies also request ed comment and information regarding any other hy potheses that could explain the appearance that cost effective fuel - saving technologies have not been widely incorporated into trucks . The following discussion summarizes the fuller discussion provided in the NPRM and includes discussion of the comments received. **(1) Information Issues in the Original Sale**  **Markets** One potential h ypothesis for wh y the trucking industry does not adopt what appear to be inexpensive fuel saving technologies is that there is inadequate or unreliable information available about the effectiveness of many fuel - saving technologies f or new vehicles. If reliable information on the effectiveness of many new technologies is absent, truck buyers will understandabl y be reluctant to spend additional money to purchase vehicles equipped with unproven technologies. This lack of information can manifest itself in multiple way s. For instance, the problem may

arise purely because collecting reliable information on technologies is costly (also see Section VIII.A. 5 on transaction costs). Moreover, information has aspects of a public good , in that no single firm has the incentive to do the costly experimentation to determine whether or not particular technologies are cost - effective, while all firms benefit from the knowledge that would be gained from that experimentation. Similarly , if multiple f irms must conduct the same tests to get the same information, costs could be reduced b y some form of coordination of information gathering. While its effect on information is indirect, we expect the requirement for the use of new technologies included in this program will circumvent these information issues, resulting in their adoption, thus providing more readily available information about their benefits. The agencies appreciate, however, that the diversity of truck uses, driving108 of

situations, and driver b ehavior will lead to variation in the fuel savings that individual trucks or fleets experience from using specific technologies. One commenter noted that the SmartWay program targets semi - truck owners and thus should have the largest impact on that secto r, rather than vocational or medium - duty trucks . H owever, the gap between actual investment in fuel efficiency and the agencies’ estimates of optimal investment is largest for combination tractor s . Some of the difference in magnitude is lik ely to be due to the higher vehicle miles traveled for semi trucks compared to medium - duty and vocational vehicles: more driving means more fuel savings. Additionall y, not even a majority of semi - trucks are owned b y participants in SmartWay ; non - particip ants are unlikel y to get all the benefits of participants. Other explanations, noted below, are also likely to play a role. This observation may also suggest some limitations of improved information provision as a means of addressing the “efficiency

gap. ” **(2) Information Issues in the Resale Market**  In addition to issues in the new vehicle market, a second h ypothesis for why trucking companies may

not adopt what appear to be cost - effective technologies to save fuel is that the resale market may not adequately reward the addition of fuel - saving technology

to vehicles to ensure their original purchase by new truck buye rs. This inadequate pay

back for users beyond the original owner may contribute to the short pay back period that new purchasers appear to expect. 205 The agencies requested data and information on the extent to which costs of fuel saving equipment can be recovered in the resale truck market. No data were received. One reviewer disputed this theory on the basis that people are willing to pay more for better vehicles, new or used. It is not clear, however, whether buye rs of used vehicles can tell which are the better vehicles. 206 Some of this unwillingness to pay for fuel - saving technology may be due to the extension of the information problems in the n ew vehicle market into resale markets. Buyers in the resale market have no more reason to trust information on fuel - saving technologies than buyers in the original market. Because actual fuel efficiency of trucks on the road depends on many factors, including geography and driving styles or habits, even objective sources such as logs of truck performance for used vehicles may not provide reliable information about the fuel efficiency that potential purchasers of used trucks will experience. A related poss ibility

is that vehicles will be used for different purposes by their second owners than those for which they were originall y designed, and the fuel - saving technology

is therefore of less value.

205 See NAS 2010, Note **Error! Bookm ark not defined.**  **216** , at p. 188. 206 Akerlof, George A. “The Market for ‘Lemons’” Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics 84(3) (1970): 488 - 500 points out that asymmetric in formation

– the seller has better information than the buyer

– can potentially lead to complete failure of a market, even when both buyers and sellers would benefit from trade.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

109 of It is possible, though, that the fuel savings experienced by the secondary purchasers may

not match those experienced b y their original owners if the optimal secondary new use of the vehicle does not earn as many benefits from the technologies. One commenter asks whether the fuel - saving technology is unvalued be cause it is unproven or overrated. In that case, the premium for fuel - saving technology in the secondary market should accuratel y reflect its value to potential buyers participating in that market, even if it is lower than its value in the original market , and the market has not failed. Because the information necessary to optimize use in the secondary market may not be readil y available or reliable, however, buyers in the resale market may have less ability

than purchasers of new vehicles to identify and gain the advantages of new fuel - saving technologies, and may thus be even less likely

to pay a premium for them. For these reasons, purchasers’ willingness to pay for fuel efficiency

technologies may be even lower in the resale market than in the original equipment market. Even when fuel - saving technologies will provide benefits in the resale markets, purchasers of used vehicles may

not be willing to compensate their original owners fully for their remaining value. As a result, the purchasers of original equipment may expect the resale market to provide inadequate appropriate compensation for the new technologies, even when those technologies would reduce costs for the new buye rs. This information issue may partially explain what appears to be the very s hort pay back periods required for new technologies in the new vehicle market. **(3) Split**  **I ncentives**  **in the M edium**  **- and**  **H eavy**  **- D**  **uty T**  **ruck I**  **ndustry** A third hy

pothesis explaining the energy paradox as applied to trucking involves split incentives. When markets wor k effectivel y, signals provided b y transactions in one market are quickl y transmitted to related markets and influence the decisions of buyers and sellers in those related markets. For instance, in a well - functioning market sy stem, changes in the expected future price of fuel should be transmitted rapidl y to those who purchase trucks, who will then reevaluate the amount of fuel - saving technology to purchase for new vehicles. If for some reason a truck purchaser will not be directly responsible for future fuel costs, or the individual who will be responsible for fuel costs does not decide which truck characteristics to purchase, then those price signals may not be transmitted effectivel y, and incentives can be described as “split.” One place where such a s plit may occur is between the owners and operators of trucks. Because they

are generall y responsible for purchasing fuel, truck operators have strong incentives to economize on its use, and are thus likely to support the use of fuel saving technology . Ho wever, the owners of trucks or trailers are often different from operators, and may

be more concerned about their longevity or maintenance costs than about their fuel efficiency , when purchasing vehicles. As a result, capital investments by truck owners m ay

be channeled into equipment that improves vehicles’ durability or reduces their maintenance costs, rather than into fuel - saving technology . If operators can choose freel y among the trucks they drive, competition among truck owners to employ operators w ould encourage owners to invest in fuel - saving technology . However, if truck owners have more ability to choose among operators, then market signals for improved110 of

fuel savings that would normally be transmitted to truck owners may be muted. Truck fleets that rent their vehicles may provide an example: renters may observe the cost of renting the truck, but not its fuel efficiency ; if so, then the purchasers will aim for vehicles with lower costs, to lower the cost of the rental. It might be possible to te st this theory by comparing the fuel efficiency of trucks by

owner - operators with those that are leased b y operators. The agencies have not had the data to conduct such a test. One commenter noted that there are alway s tradeoffs in an investment decision: a purchaser may

prefer to invest in other vehicle attributes than fuel efficiency. In an efficient market, however, a purchaser should invest in fuel - saving technology as long as the increase in fuel - saving technology costs less than the expected fuel s avings. This result should hold regardless of the level of investment in other attributes, unless there are constraints on a purchaser’s access to investment capital. The agencies believe that truck fleets do have an incentive to make investments in fuel efficiency , and that this assumption is reflected in the regulatory anal ys is. The agencies also believe, however, that sufficient evidence suggests that truck fleets are not availing themselves of all the opportunities for efficiency improvements . In addition, the NAS report notes that split incentives can arise between tractor and trailer operat ors. 207 Trailers affect the fuel efficiency of shipping, but trailer owners do not face strong incentives to coordinate with truck owners. EPA and NHTSA are not regulating trailers in this action. By itself, information provision may be inadequate to addre ss the potential underinvestment in fuel efficiency resulting from such split incentives. In this setting, regulation may

contribute to fuel savings that otherwise may be difficult to achieve. **(4) Uncertainty A**  **bout Future Cost Savings** Another h ypothesis for the lack of adoption of seemingl y fuel saving technologies may be uncertainty

about future fuel prices or truck maintenance costs . When purchasers have less than perfect foresight about future operating expenses , they may implicitly discount future saving s in those costs due to uncertainty about potential returns from investments that reduce future costs. In contrast, the immediate costs of the fuel - saving or maintenance - reducing technologies are certain and immediate, and thus not subject to discounting . In this situation, both the expected return on capital investments in higher fuel efficiency

and potential variance about its expected rate may play a role in a firm’s calculation of its pay

back period on such investments. In the context of energy effici ency investments for the home, Metcalf and Rosenthal (1995) and Metcalf and Hassett (1995) observe that households weigh known, up - front costs that are essentially irreversible against an unknown stream of future fuel

207 See NAS 2010, Note **Error! Bookm ark not defined.**  **216** , at p. 182.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

111 of savings. 208 Notably , in this situation, r equiring households to adopt technologies more quickly may make them worse off by

imposing additional risk on them . Greene et al (2009) also find s support for this explanation in the context of light duty fuel econom y decisions: a loss - averse consumer’s expected net present value of increasing the fuel economy of a passenger car can be very close to zero , even if a risk neutral expected value calculation shows that its buyer can expect significant net benefits from purchasing a more fuel - efficient car . 209 Supporting this hy pothesis is a finding by Dasgupta et. al (2007) that consumers are more likely to lease than buy

a vehicle with higher maintenance costs because it provides them with the option to return it before those costs become too high. 210 However, the agencies know of no studies that have estimated the impact of uncertainty on perceived future savings for medium - and heav y duty vehicles . Purchasers’ uncertainty

about future fuel prices implies that mandating improvements in fuel efficiency can reduce the expected utility associated with truck purchases. This is because adopting such regulation requires purchasers to assume a greater level of risk than they would in its absence, even if the future fuel savings predicted b y a risk - neutral cal culation actually materialize. One commenter expressed support for this argument. Thus the mere existence of uncertainty about future savings in fuel costs does not b y itself assure that regulations requiring improved fuel efficiency will necessarily

pro vide economic benefits for truck purchasers and operators. On the other hand, because risk aversion reduces expected returns for businesses, competitive pressures can reduce risk aversion: risk - neutral companies can make higher average profits over time. Thus, significant risk aversion is unlikely to survive competitive pressures. **(5) Adjustment and Transactions Costs**  Another h ypothesis is that transactions costs of changing to new technologies (how easil y drivers will adapt to the changes, e.g.) may slow or prevent their adoption. Because of the diversity in the trucking industry, truck owners and fleets may like to see how a new technology

works in the field, when applied to their specific operations, before they

adopt it. One commenter expressed support for this argument. If a conservative approach to new technologies leads truck buyers to adopt new technologies slowly , then successful new technologies are likely to be adopted over time without

208 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 Ana lysis and Management 14: 517

– 531. Hassett and Metcalf (1995). “ Energy Tax Credits and Residential Conservation Investment: Evidence from Panel Data ” Journal of Public Economics 57 (1995): 201 - 217. Metcalf, G., and K. Hassett (1999). “ Measuring the Energy S avings from Home Improvement Investments: Evidence from Monthly Billing Data. ” The Review of Economics and Statistics 81(3): 516 - 528. 209 Greene, D., J. German, and M. Delucchi (2009). “Fuel Economy: The Case for Market Failure” in Reducing Climate Impacts i n the Transportation Sector, Sperling, D., and J. Cannon, eds. Springer Science. 210 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 Re search 44: 490

– 502.112 of

market intervention, but with potentially significant delay s in achieving fuel saving, environment, and energy

securit y benefits. In addition, there may

be costs associated with training drivers to realize the potential fuel savings enabled by new technologies, or with accelerating fleet operators’ scheduled fleet turnover and replacement to hasten their acquisition of vehicles equipped with new fuel - saving technologies. Here, again, there may be no market failure; requiring the widespread use of these technologies may impose adjustment and transactions costs not i ncluded in this analy sis. As in the discussion of the role of risk, these adjustment and transactions costs are typically immediate and undiscounted, while their benefits are future and uncertain; risk or loss aversion may further discourage companies fro m adopting new technologies. To the extent that there may be transactions costs associated with the new technologies, then regulation gives all new truck purchasers a level playing field, because it will require all of them to adjust on approximately the s ame time schedule. If experience with the new technologies serves to reduce uncertainty and risk, the industry as a whole may

become more accepting of new technologies. This could increase demand for future new technologies and induce additional benefits in the legacy fleet through complementary

efforts such as SmartWay . **(6) Additional Hypotheses**  In the public comments, two additional ideas were raised for the lack of adoption of what appears to be cost - effective fuel - saving technology . The first suggestion is that tighter diesel emissions standards caused fuel efficiency for diesel trucks to decline in the past decade. Because engine manufacturers would have to invest heavil y (both financiall y and with personnel) in emissions reduction technologies, they wo uld not invest in fuel efficiency . The costs associated with the decline in fuel efficiency due to the emissions regulations were accounted for in that rulemaking. A second suggestion is that a truck may be a “positional good”

– that is, a good whose va lue depends on how it compares to the goods owned by others. If trucks confer status on their owners or operators, and if that status depends on easil y observable characteristics, then owners may invest disproportionately in status - granting characteristic s rather than less visible characteristics, such as fuel efficiency . Because status depends on comparisons to others, an “arms race” may develop in which all parties spend additional money

on visible characteristics but may not manage to make themselves b etter off. In this case, regulation may improve welfare: by

increasing the requirements for non - positional fuel efficiency , regulation could reduce expenditures made purel y for competition rather than actual increase in welfare. In a competitive busines s, cost reduction provides a major opportunity cost to investing in status rather than in fuel - saving technology ; thus, this argument may play less of a role in the heavyduty market than in the consumer market for vehicles. Both these h ypotheses leave ope n the question, though, why additional investments were not made in fuel efficiency if they would provide rapid pay back. Truck***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

113 of purchasers should, in principle, be willing to buy additional fuel - saving technology as long as it is cost - effective, regardless of other vehicle attributes. L imited access to capital, if it is a problem in this sector, might provide some reason for the “crowding out” of the purchase of fuel - saving technology . The agencies received no evidence indicating that constrained access t o capital might explain the efficiency gap in this market . **(7) Summary**  On the one hand, commercial vehicle operators are under competitive pressure to reduce operating costs, and thus their purchasers would be expected to pursue and rapidl y adopt cost - effectiv e fuel - saving technologies. On the other hand, the short pay back period required b y buyers of new trucks is a s ymptom that suggests some combination of uncertainty about future cost savings, transactions costs, and imperfectly functioning markets. In addition, widespread use of tractor - trailer combinations introduces the possibility

that owners of trailers may have weaker incentives than truck owners or operators to adopt fuel - saving technology f or their trailers. The market for medium - and heav y- duty tr

ucks may face these problems, both in the new vehicle market and in the resale market. Provision of information about fuel - saving technologies through voluntary programs such as SmartWay will assist in the adoption of new cost - saving technologies, but diff usion of new technologies can still be obstructed. Those who are willing to experiment with new technologies expect to find cost savings, but those may be difficult to prove. As noted above, because individual results of new technologies vary , new truck purchasers may

find it difficult to identify or verify the effects of fuel - saving technologies. Those who are risk - averse are likel y to avoid new technologies out of concerns over the possibility of inadequate returns on the investment, or with other adve rse impacts. Competitive pressures in the freight transport industry can provide a strong incentive to reduce fuel consumption and improve environmental performance. However, not every

driver or trucking fleet operating today has the requisite ability

or interest to access the technical information, some of which is already provided by SmartWay , nor the resources necessary to evaluate this information within the context of his or her own freight operation. It is unclear, as discussed above, whether some o r many of the technologies would be adopted in the absence of the program. To the extent that they would have been adopted, the costs and the benefits attributed to those technologies may not in fact be due to the program and may

therefore be overstated. Both baselines used project substantially less adoption than the agencies consider to be cost - effective. The agencies will continue to explore reasons for this slow adoption of cost - effective technologies. 

### B. **Costs Associated With the Final Program** In this sectio n, the agencies present the estimated costs associated with the final program. The presentation here summarizes the costs associated with new technology expected to be added to meet the new GHG and fuel consumption standards. The114 of

anal ys is summarized here provides the estimate of incremental costs on a per truck basis and on an annual total basis. The presentation here summarizes the best estimate by EPA and NHTSA staff as to the technology

mix expected to be employed for compliance. For details behind the cost estimates associated with individual technologies, the reader is directed to Section III of this preamble and to Chapter 2 of the RIA . With respect to the cost estimates presented here, the agencies note that, because these estimates relate to t echnologies which are in most cases already available, these cost estimates are technically robust. **(1) Costs per Truck**  For the heavy- dut y pickup trucks and vans, the agencies have used a methodology consistent with that used for our recent light - duty joint rulemaking since most of the technologies expected for heav y- duty pickup trucks and vans is consistent with that expected for the larger light - duty trucks. The cost estimates presented in the recent light duty joint rulemaking were then scaled upward to account for the larger weight, towing capacity , and work demands of the trucks in these heav ier classes. For details on that scaling process and the resultant costs for individual technologies, the reader is directed to Section III of this preamble and to Chapter 2 of the RIA . Note also that all cost estimates have been updated to 2009 dollars for this analy sis while the heavy - duty GHG emissions and fuel efficiency proposal was presented in 2008 dollars and the light - dut y rule was presented in 2007 dollars. For the loose heav y- duty gasoline engines, we have generally used engine - related costs from the heav y- duty pickup truck and van estimates since the loose heavy - duty gasoline engines are essentially the same engines as those sold into the heavy- duty pickup truck and van market. For heav y- duty diesel engines, the agencies have estimated costs using a different methodology

than that employed in the recent light - duty joint rulemaking. In the light duty 2012 - 2016 MY vehicle rule , the fixed costs were included in the hardware costs via an indirect cost multiplier. As such, the hardware costs presented in that analy sis, and in the cost estimates for Class 2b and 3 trucks, included both the actual hardware and the associated fixed costs. For this analy sis, some of the fixed costs are estimated separatel y for HD diesel engines and are presented separately from the hardware costs. For details, the reader is directed to Chapter 2 of the RIA . Importantly , both methodologies after the figures are totaled account for all the costs associated with the program. As noted above, all costs are presented in 2009 dollars. The estimates of vehicle compliance costs cover the years leading up to

– 2012 and 2013

– and including implementation of the program

– 2014 through 2018. Also presented are costs for the years following implementation to shed light on the long term (2022 and later) cost impacts of the program. The year 2022 was chosen here consistent with the light - duty 2012 - 2016 MY vehicle rule . T hat year was considered long term in***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

115 of that anal ys is because the 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 representi ng the short - term. Since many of the costs used in this analysis are based on costs in the light - duty rule anal ysis, consistency

with that analy sis seems appropriate. Some of the individual technology cost estimates are presented in brief in Section III , and account for both the direct and indirect costs incurred in the manufacturing and dealer industries (for a complete presentation of technology costs, please refer to Chapter 2 of the RIA). To account for the indirect costs on Class 2b and 3 pickup trucks and vans, the agencies have applied an I CM factor to all of the direct costs to arrive at the estimated technology

cost. The I CM factor used was 1.24 in the short - t erm (2014 through 2021) to account for differences in the levels of R&D, tooling, and other indirect costs that will be incurred. Once the program has been full y 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 2022 and later. The agencies have also applied I CM factors to Class 4 through 8 trucks and to heav y- duty diesel engine technologies. Markup factors in these categories range from 1.15 to 1.30 in the short term (2014 through 2021) depending on the complexity of the given technology . We have modified the manner in which I CMs are applied in that they are no longer applied as a simple multiplicative factor on top of the direct manufacturing costs. Instead, we have broken out the warranty cost portion of the I CM and apply it in a multiplicative manner then add the non - warranty cost portion of the I CM to that. The latter portion, that for non - warranty costs, is determined for a given year and held con stant rather than decreasing ye ar - over - ye ar. This new approach, which responds to criticisms from some that the multiplicative approach used in the past essentially double counts learning effects, is discussed in Section VIII.C and is detailed in Chapter 2 of the RIA. Note that, for the HD diesel engines, the agencies have applied the ICMs to ensure that our estimates are conservative since we have estimated fixed costs separatel y for technologies applied to these categories -- effectively

making the use of markups a double counting of indirect costs. For the details on the background and the concept behind our use of ICMs to calculate indirect costs, please refer to the report that has been placed in the docket for this final action. 211 The agencies have also considered the impacts of manufacturer learning on the technology

cost estimates by reflect ing the phenomenon of volume - based learning curve cost reductions in our modeling using two algorithms depending on where in the learning cycle ( i.e., on what po rtion of the learning curve) we consider a technology to be

– “ steep ” portion of the curve for newer technologies and “ flat ” portion of the curve for mature technologies. The observed phenomenon in the economic literature which supports manufacture r learni ng cost reductions are based on reductions in costs as production volumes increase, and the economic literature suggests these cost reductions occur indefinitely , though the absolute magnitude of the cost reductions decrease as production volumes increase (with the highest absolute cost reduction occurring with the 211 RTI International. Heavy - duty Truck Retail Price Equivalent and Indirect Cost Multipliers. July 2010.116 of

first doubling of production). The agencies use the terminology “ steep ” and “ flat ” portion of the curve to distinguish among newer technologies and more mature technologies, respectively , and ho w learning cost reductions are applied in cost anal ys es . The steep learning algorithm applies for the earl y, steep portion of the learning curve and is estimated to result in 20 percent lower costs after two full years of implementation (i.e., a 201 6 MY c ost would be 20 percent lower than the 201 4 and 201 5 model year costs for a new technology

being implemented in 201 4 ). The flat learning algorithm applies for the flatter portion of the learning curve and is estimated to result in 3 percent lower costs in each of the five ye ars following first introduction of a mature technology added in response to this final action . Once two steep learning steps have occurred (for technologies having steep learning applied), flat learning would begin. For technologies to which flat learning is applied, learning would begin in year 2 at 3 percent per year for 5 years. Beyond 5 years of flat learning at 3 percent per year, 5 years of flat learning at 2 percent per ye ar, then 5 at 1 percent per year become effective. Le arning impacts have been considered 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, presumabl y, learning impacts have already occurred. The agencies have applied the steep learning algorithm for only a handful of technologies considered to be new or emerging technologies such as energy recovery s ystems and thermal storage units which might one day be used on big trucks. For most technologies, the agen cies have considered them to be more established and, hence, the agencies have applied the lower flat learning algorithm. For more discussion of the learning approach and the technologies to which each typ e of learning has been applied the reader is direc ted to Chapter 2 of the RIA . The technology

cost estimates discussed in Section III and detailed in Chapter 2 of the RIA are used to build up technology package cost estimates. For each engine and truck class, a single package for each was developed capable of compl yi ng with the final standards and the costs for each package was generated. The technology packages and p ackage costs are discussed in more detail in Chapter 2 of the RIA. The compliance cost estimates take into account all credits and trading programs and include costs associated with air conditioning controls. Table VIII - 1 presents the average incremental costs per truck for this final action. For HD pickup trucks and vans (Class 2b and 3), costs increase as the standards become more stringent in 2014 through 2018. F ollowing 2018, costs then decrease going forward as learning effects result in decreased costs for individual technologies. By 2022, the long term ICMs take effect and costs decrease yet again. For vocational vehicles, cost trends are more difficult to discern as diesel engines begin adding technology

in 2014, gasoline engines begin adding technology in 2016, and the trucks themselves begin adding technology in 2014. With learning effects the costs, in general, decrease each year except for the heavy- duty gasoline engine changes in 2016. Long term I CMs take effect in 2022 to provide more cost reductions. For combination tractors, costs generall y decrease each ye ar due to learning effects with the exception of 2017 when the engines placed in sleeper cab tractors add turbo compounding. Following that, learning impacts result in cost reductions and the long term IC Ms take effect in 2022 for further cost reductions. By 2030 and later, cost

– per - truck estimates remain constant for all classes. Regarding the long term IC Ms taking effect in 2022, the agencies***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

117 of consider this the point at which some indirect costs decrease or are no longer considered attributable to the program (e.g., warranty costs go down). Costs per truck remain essentially

constant thereafter .

**Table VIII**  **- 1**  **: Estimated Cost per Truck (200**  **9 dollars)**  HD Pickups & Vans Vocational Combination 2014 $165 $329 $6,019 2015 $215 $320 $5,871 2016 $422 $397 $5,677 2017 $631 $387 $6,413 2018 $1,048 $378 $6,215 2020 $985 $366 $6,004 2030 $977 $311 $5,075 2040 $977 $305 $5,075 2050 $977 $304 $5,075 These costs would, presumably , have some impact on new truck prices, although the agencies make no attempt at determining what the impact of increased costs would be on new truck prices. Nonetheless, on a percentage basis, the costs shown in Table VIII - 1 for 2018 MY trucks (when all final requirements are full y implemented) would be roughl y three percent for a ty pical HD pickup truck or van, less than one percent for a ty pical vocational vehicle, and roughl y six percent for a typical combination truck/tractor using new truck prices of $40,000, $100,000 and $100,000, respectivel y. The costs would represent lower or higher percentages of new truck prices for new tru cks with higher or lower prices, respectively . Given the wide range of new truck prices in these categories

— a Class 4 Vocational work truck might be $40,000 when new while a Class 8 refuse truck (i.e., a large vocational vehicle) might be as much as $200, 000 when new

—it is very difficult to reflect incremental costs as percentages of new truck prices for all trucks. What is presented here is the average cost ( Table VIII - 1 ) compared with ty pical new truck prices. As noted above, the fixed costs were estimated separatel y from the hardware costs for HD diesel engines that are placed in vocational vehicles and combination tractors. Those fixed costs are not included in Table VIII - 1 . The agencies have estimated the R&D costs at $6.8 million per manufacturer per ye ar for five years and the new test cell costs (to accommodate measurement of N 2 O emissions) at $63,087 per m anufacturer. The test cell costs of N 2 O emissions measurement has been adjusted for the final rulemaking to reflect comments which stated approximately 75 percent of manufacturers would be required to update existing equipment while the other 25 percent w ould require new equipment. These costs appl y individually for LHD, MHD and HHD engines. Given the 14 manufacturers impacted b y the final standards, 11 of which are estimated to sell both MHD and HHD engines and 3 of which are estimated to sell LHD engin es, we have estimated a five ye ar annual R&D cost of $170.3 million dollars (2 x 11 x $6.8 million plus 3 x $7.75 million for each ye ar 2012 - 2016) and a one - time test cell cost of $1.6 million dollars (2 x 11 x $63,087 plus 3 x $63,087 in 2013). Estimatin g118 of

annual sales of HD diesel engines at roughl y 600,000 units results in roughly $284 per engine per ye ar for five years beginning in 2012 and ending in 2016. Again, these costs are not reflected in Table VIII - 1 , but are included in Table VIII - 2 as “Other Engineering Costs.” The certification and compliance program costs, for all engine and truck ty pes, are estimated at $6.5 million in the first year dropping to $2.3 million in each year thereafter and continuing indefinitely . These costs are detailed in the “Draft Supporting Statement for Information Collection Request” which is contained in the docket for this final action. 212 The costs are higher in the first year due to capital expenses required to comply with new reporting burdens (facility upgrade costs are included in engineering costs as described above). Estimating annual sales of heavy- duty trucks at roughl y 1.5 million units would result in just over $4 per engine/truck in the first year and less than $2 per engine/truck per year thereafter. These costs are not reflected in Table VIII - 1, but are included in Table VIII - 2 below as “Compliance Program” costs. **(2) Annual Costs of the HD National Program**  The costs presented here represent the incremental costs for newl y added technology

to comply

with the program . Together with the projected increases in truck sales, the increas es in per - truck average costs shown in Table VIII - 1 , above result in the total annual costs presented in Table VIII - 2 below. Note that the costs presented in Table VIII - 2 do not include the savings that will occur as a result of the improvements to fuel consumption. Those impacts are presented in Section VIII. E. Note also that the costs presented here represent co sts estimated to occur presuming that the final standards will continue in perpetuity. Any changes to the final standards would be considered as part of a future rulemaking. In other words, the final standards do not appl y only to 2014 - 2018 model year tr

ucks - they

do, in fact, appl y to all 2014 and later model ye ar trucks. We present more detail regarding the 2014 - 2018 model year trucks in Sections VIII.L and M, where we summarize all monetized costs and benefits.

212 “Draft Supporting Statement for Information Collection Request,” Control of Greenhouse Gas Emissions from New Motor Vehicles: Proposed Heavy - Duty Engine and Vehicle Standards, EPA ICR Tracking Number 2394.01.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

119 of **Table VIII**  **- 2**  **: Annual Costs Associated with the Pro**  **gram ($Millions of 200**  **9 dollars)**  Year HD Pickup

and Van s Vocational

Vehicles Combination

Tractors Other

Engineering Costs Compliance

Program Costs Annual

Costs 2012 $0 $0 $0 $170 $0 $170 2013 $0 $0 $0 $172 $0 $172 2014 $130 $185 $1,078 $170 $6.5 $1,569 2015 $157 $170 $922 $170 $2.3 $1,422 2016 $300 $202 $820 $170 $2.3 $1,495 2017 $447 $198 $951 $0 $2.3 $1,598 2018 $751 $201 $1,000 $0 $2.3 $1,955 2020 $754 $202 $1,001 $0 $2.3 $1,959 2030 $918 $216 $1,076 $0 $2.3 $2,212 2040 $1,024 $281 $1,372 $0 $2.3 $2,679 2050 $1,156 $354 $1,777 $0 $2.3 $3,290 NPV, 3% $17,070 $4 ,950 $24,487 $793 $52 $47,352 NPV, 7% $8,467 $2 ,588 $12,855 $724 $30 $24,665 

### C. **I ndirect Cost**  **Multipliers (1)**  **Markup Factors to Estimate Indirect Costs** For all segments in this analy sis, indirect costs are estimated by applying indirect cost multipliers (I CM) to direct cost estimates. ICMs were calculated by EPA as a basis for estimating the impact on indirect costs of individual vehicle technology changes that would result from regulatory actions. Separate ICMs were derived for low, medium, and high complexity

technologies, thus enabling estimates of indirect costs that reflect the variation in research, overhead, and other indirect costs that can occur among different technologies. I CMs were also applied in the light - duty rule . Prior to developing the ICM methodology , EPA and NHTSA both applied a retail price equival ent (RPE) factor to estimate indirect costs. RPEs are estimated by dividing the total revenue of a manufacturer b y the direct manufacturing costs. As such, it includes all forms of indirect costs for a manufacturer and assumes that the ratio applies equa lly for all technologies. I CMs are based on RPE estimates that are then modified to reflect only

those elements of indirect costs that would be expected to change in response to a regulatory- induced technology change. For example, warranty costs would be reflected in both RPE and I CM estimates, while marketing costs might only be reflected in an RPE estimate but not an I CM estimate for a particular technology , if the new regulatory- induced technology change is not one expected to be marketed to consumers. Because ICMs calculated by EPA are for individual technologies, many of which are small in scale, they

often reflect a subset of RPE costs; as a result, the RPE is ty picall y higher than an ICM. This is not alway s the case, as I CM estimates for complex t echnologies may

reflect higher than average indirect costs, with the resulting ICM larger than the averaged RPE for the industry .120 of There is some level of uncertainty surrounding both the I CM and RPE markup factors. The ICM estimates used in this final action group all technologies into three broad categories and treat them as if individual technologies within each of the three categories (low, medium, and high complexity ) will have the same ratio of indirect costs to direct costs. This simplification m eans it is likely that the direct cost for some technologies within a category will be higher and some lower than the estimate for the category in general. More importantly , the IC M estimates have not been validated through a direct accounting of actual i ndirect costs for individual technologies. Rather, the I CM estimates were developed using adjustment factors developed in two separate occasions: the first, a consensus process, was reported in the RTI report; the second, a modified Delphi method, was co nducted separately and reported in an EPA memo. 213 Both these panels were composed of EPA staff members with previous background in the automobile industry ; the memberships of the two panels overlapped but were not the same. 214 The panels evaluated each elem ent of the industry ’s RPE estimates and estimated the degree to which those elements would be expected to change in proportion to changes in direct manufacturing costs. The method and estimates in the RTIreport were peer reviewed b y three industry expert s and subsequently by reviewers for the International Journal of Production Economics. 215 RPEs themselves are inherently difficult to estimate because the accounting statements of manufacturers do not neatly categorize all cost elements as either direct or indirect costs. Hence, each researcher developing an RPE estimate must apply a certain amount of judgment to the allocation of the costs. Moreover, RPEs for heav y- and medium - duty trucks and for engine manufacturers are not as well studied as they are fo r the light - duty automobile industry . Since empirical estimates of I CMs are ultimatel y derived from the same data used to measure RPEs, this affects both measures. However, the value of RPE has not been measured for specific technologies, or for groups o f specific technologies. Thus applying a single average RPE to any given technology

by definition overstates costs for very simple technologies, or understates them for advanced technologies. In the proposal, we requested comment on our ICM factors and wh ether it was most appropriate to use ICMs or RPEs. We received no comment on the issue specificall y, other than basic comments that perhaps our I CM factors were low. In response, for this final action, we have adjusted our I CM factors such that they are slightly higher and, importantly , we have changed the way in which the factors are applied. The first change

—increased ICM factors

— has been done as a result of further thought among the EPA and NHTSA team that the I CM factors presented in the original

213 Helfand, Gloria, and Sherwood, Todd. “Documentation of the Development of Indirect Cost Multipliers for Three Automotive Technologies.” Memorandum, Assessment and Standards Division, Office of Transportation and Air Quality, U.S. Environmental Protection Agency, August 2009. 214 NHTSA staff participated in the development of the process for the second, modified Delphi panel, and reviewed the results as they were developed, but did not serve on the panel. 215 The results of the RTI report were published in Alex Rogozhin, Michael Gallaher, Glo ria Helfand, and Walter McManus, “Using Indirect Cost Multipliers to Estimate the Total Cost of Adding New Technology in the Automobile Industry.” International Journal of Production Economics 124 (2010): 360 - 368.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

121 of RTI report 216 for low and medium complexity technologies should no longer be used and that we should rel y solely on the modified - Delphi values for these complexity levels. 217 For that reason, we have eliminated the averaging of original RTI values with modified Delphi values and instead are rel yi ng solel y on the modified - Delphi values for low and medium complexity

technologies. The second change

—the way the factors are applied

— results in the warranty

portion of the indirect costs being applied as a multiplicativ e factor (thereb y decreasing going forward as direct manufacturing costs decrease due to learning), and the remainder of the indirect costs being applied as an additive factor (thereb y remaining constant year - over - year and not being reduced due to learning). This second change has a comparativel y large impact on the resultant technology costs and, we believe, more appropriately estimates costs over time. Inaddition to these changes, a secondary- level change was also made as part of this I CM recalculation to the light - duty ICMs and, therefore, to the I CMs used in this analy sis for heavy - duty pickups and vans. That change was to revise upward the RPE level reported in the original RTIreport from an original value of 1.46 to 1.5 to reflect the long term average RPE. The original RTI study was based on 2008 data. However, an anal ysis of historical RPE data indicates that, although there is year to year variation, the average RPE has remained constant at roughl y 1.5. ICMs will be applied to future ye ar’s data and therefore NHTSA and EPA staff believe that it would be appropriate to base ICMs on the historical average rather than a single ye ar’s result. Therefore, ICMs were adjusted to reflect this average level since the original value exclude d net income. As a result, even the High 1 and High 2 ICMs used for heavy - duty pickups and vans have also changed. These changes to our ICMs and the methodology are described in greater detail in Chapter 2 of the final RIA. 

### D. **Cost per Ton of Emissi ons Reductions**  The agencies have calculated the cost per ton of GHG reductions associated with this program on a CO 2 eq basis using the above costs and the emissions reductions described in Section s VIand VII . These values are presented in Table VI II - 3 through Table VIII - 5 for HD pickups & vans, vocational vehicles and combination trucks/tractors, respe ctively . The cost per metric ton of GHG emissions reductions has been calculated in the ye ars 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. The agencies have also calculated the cost per metric ton of GHG emission reductions including the savings associated with reduced fuel consumption (presented below in Section VIII. E. ). This latter calculation does not include the other benefits associated with this program such as those associated with energy securit y benefits as discussed later in S ection VIII .I . By including the fuel savings in the cost estimates, the cost per ton is generally less than $0 since the estimated value of fuel savings outweighs the program costs. The results for 216 Rogozhin, Alex, Michael Gallaher, and Walter McManus. “Automobile Industry Retail Price Equivalent and Indirect Cost Multipliers.” Report prepared for EPA by RTI International. EPA Report EPA - 420 - R - 09 - 003, February 2009. 217 Helfand, Gloria, and Sherwood, Todd. “Documentation of the Development of Indirect Cost Multipliers for Three Automotive Technologies.” Memorandum, Assessment and Stand ards Division, Office of Transportation and Air Quality, U.S. Environmental Protection Agency, August 2009.122 of

CO 2 eq costs per ton under the HD National Program across all regulated c ategories are shown in Table VIII - 6 . **Table VIII**  **- 3**  **: Annual Cost per Metric Ton of CO**  **2 e**  **q Reduced**  **– HD**  **Pickup Trucks & Vans (200 9**  **dollars)** Year Program Cost Fuel

Savings (post - tax) CO 2 eq

Reduced Cost per Ton

(without Fuel Savings) Cost per Ton

(with Fuel Savings) 2020 $800 $1,000 3 $240 - $60 2030 $900 $3,300 10 $90 - $230 2040 $1,000 $4,700 14 $70 - $270 2050 $1,200 $5,900 16 $80 - $300

**Table VIII**  **- 4**  **: Annual Cost per Metric Ton of CO**  **2 e**  **q Reduced**  **– Vocational**  **Vehicle s (200**  **9 dollars)**  **218** Year Program Cost Fuel

Savings (post - tax) CO 2 eq

Reduced Cost per Ton

(without Fuel Savings) Cost per Ton

(with Fuel Savings) 2020 $200 $1,200 4 $50 - $240 2030 $200 $2,600 9 $20 - $270 2040 $300 $3,800 12 $30 - $300 2050 $400 $5,000 14 $30 - $330

**Table VIII**  **- 5**  **: Annual Cost per Metric Ton of CO**  **2 e**  **q Reduced**  **– Combination**  **Tractors (200**  **9 dollars)**  **219** Year Program Cost Fuel

Savings (post - tax) CO 2 eq

Reduced Cost per Ton

(without Fuel Savings) Cost per Ton

(with Fuel Savings) 2020 $1,000 $8,700 32 $30 - $240 2030 $1,100 $17,000 57 $20 - $280 2040 $1,400 $22,100 68 $20 - $300 2050 $1,800 $28,500 78 $20 - $340

218 The program costs, fuel savings, and CO 2 eq reductions of the engines installed in vocational vehicles are em bedded in the vehicle standards and an alysis. 219 The program costs, fuel savings, and CO 2 eq reductions of the engines installed in tractors are embedded in the tractor standards and analysis.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

123 of **Table VIII**  **- 6**  **: Annual Cost**  **p er Metric Ton of CO**  **2 eq**  **Reduced –**  **Final (200**  **9 dollars)**  Year Program

Cost Fuel

Savings (post - tax) CO 2 eq

Reduced Cost per Ton

(without Fuel Savings) Cost per Ton

(with Fuel Savings) 2020 $2,000 $10,900 39 $50 - $230 2030 $2,200 $23,000 76 $30 - $270 2040 $2,700 $30,600 94 $30 - $300 2050 $3,300 $39,500 108 $30 - $340 

### E. **Impacts of Reduction in Fuel Consumption (1)**  **What are the Projected Changes in Fuel Consumption** The new CO 2 standards will result in significant improvements in the fuel efficiency of affected trucks. Dri vers of those trucks will see corresponding savings associated with reduced fuel expenditures. The agencies have estimated the impacts on fuel consumption for the tailpipe CO 2 standards. To do this, fuel consumption is calculated using both current CO 2 e mission levels and the new CO 2 standards. The difference between these estimates represents the net savings from the CO 2 standards. Note that the total number of miles that vehicles are driven each ye ar is different under the control case scenario than in the reference case due to the “rebound effect,” which is discussed in Section VIII. E. (5) . EPA also notes that drivers who drive more than our average estimates for vehicle miles traveled (VMT) will experience more fuel savings; drivers who drive less than our average VMT estimates will experience less fuel savings. The expected impacts on fuel consumption are shown in Table VIII - 7 . The gallons shown in the tables reflect impacts from the new fuel consumption and CO 2 standards and include increased consumption resulting from the rebound effect.124 of **Table VIII**  **- 7**  **: Fuel Consumption**  **Reduction s of the Pro**  **gram (Million gallons)** 

Year Gasoline Diesel 2014 1 473 2015 3 846 2016 14 1,171 2017 31 1,643 2018 58 2,123 2020 114 2,986 2030 348 5,670 2040 453 7,046 2050 522 8,158 **(2) Potential Impacts on Global Fuel Use and Emissions**  EPA’s quantified reductions in fuel consumption focus on the gains from reducing fuel used b y heavy- duty vehicles within the United States. However, as discussed in Section VIII.I , EPA also recogn izes that this regulation will lower the world price of oil (the “monopsony” effect). Lowering oil prices could lead to an uptick in oil consumption globally , leading to a corresponding increase in GHG emissions in other countries. This global increase i n emissions could slightly offset some of the emission reductions achieved domestically as a result of the regulation. **(3) What are the Monetized Fuel Savings?**  Using the fuel consumption estimates presented in Table VIII - 7 , the agencies can calculate the monetized fuel savings associated with the final standards. To do this, reduced fuel consumption is multiplied in each ye ar b y the corresponding estimated average fuel price in that year, using the reference case taken from the AEO 201 1 . These estimates do not account for the significant uncertainty in future fuel prices; the monetized fuel savings will be understated if actual fuel prices are higher ( or ov erstated if fuel prices are lower) than estimated. AEO is a standard reference used b y NHTSA and EPA and man y other government agencies to estimate the projected price of fuel. This has been done using both the pre - tax and post - tax fuel prices. Since the post - tax fuel prices are the prices paid at fuel pumps , the fuel savings calculated using these prices represent the savings consumers would see. The pre - tax fuel savings are those savings that society would see. These results are shown in Table VIII - 8 . Note that in Section s V III. L and M , the overall benefit s and cost s of the rule s are presented and, for that reason, onl y the pre - tax fuel savings are presented there .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

125 of **Table VIII**  **- 8**  **: Estimated Monetized Fuel Savings ($Millions of 200**  **9 dollars)** 

Year Fuel Savings

(pre - tax) Fuel Savings

(post - tax) 2014 $1,200 $1,400 2015 $2,200 $2,600 2016 $3,300 $3,800 2017 $4,800 $5,500 2018 $6,400 $7,400 2020 $9,600 $10,900 2030 $20,600 $23,000 2040 $28,000 $30,600 2050 $36,500 $39,500 NPV, 3% $375,300 $415,300 NPV, 7% $166,500 $185,400 As shown in Table VIII - 8 , the agencies are projecting that truck consumers would realize very

large fuel savings as a result of the final standards . As discussed further in the introductory

paragraphs of Section V II I , it is a conundrum from an economic perspective that these large fuel savings have not been provided b y manufacturers and purchased b y consumers of these products . Unlike in the light - duty vehicle market, the vast majority

of vehicles in the medium - and heavy- duty truck market are purchased and operated b y businesses; for them, fuel costs may represent substantial operating expenses. Even in the presence of uncertainty and imperfect information

– conditions that hold to some degree in every

market

– we generally

expect firms to be cost - minimizing to survive in a competitive marketplace and to make decisions that are therefore in the best interest of the compan y and its owners and/or shareholders. A number of behavioral and market phenomena may lead to a disconnect between how businesses account for fuel savings in their decisions and the way in which we account for the full stream of fuel savings for these rules, including imperfect information in the original and resale markets, split incentives, uncertainty in future fuel prices, and adjustment or transactions costs (see Section VIII. A for a more detailed discussion). As discussed below in the context of rebound in Section VIII.E.5, the nature of the explanation for this gap may influence the actual magnitude of the fuel savings. **(4) Payback Period and Lifetime Savings on New Truck Purchases**  Another factor of interest is the pay back period on the purchase of a new truck that complies with the new standards. In other words, how long would it take for the e xpected fuel savings to outweigh the increased cost of a new vehicle? For example, a new 2018 MY HD pickup truck and van is estimated to cost $1,473 more, a vocational vehicle $419 more, and a combination tractor $6,215 more (all values are on average, and relative to the reference case vehicle) due to the addition of new GHG reducing technology . This new technology will result in lower fuel consumption and, therefore,126 of

savings in fuel expenditures. But how many months or years would pass before the fuel savings exceed the upfront costs? Table VIII - 9 shows the pay back period analy sis for HD pickup trucks and vans. The table shows fuel cons umed under the reference case and fuel consumed b y a 2018 model year truck under the program, inclusive of fuel consumed due to rebound miles. The decrease in fuel consumed under the program is then monetized by

multiplying by

the fuel price reported b y A EO (reference case) for 2018 and later. This value represents the fuel savings expected under the program for a HD pickup or van. These savings are then discounted each ye ar since future savings are considered to be of less value than current savings. S hown next are estimated increased costs (costs do not necessarily reflect increased prices which may be higher or lower than costs) for the new truck (refer to Table VI II - 1 ). The next columns of Table VIII - 9 show the period required for the fuel savings to exceed the new truck costs. As seen in the table, in the second ye ar of ownership, the discounted fuel savings (at both 3% and 7% discount rates) have begun to outweigh the increased cost of the truc k. As shown in the table, the full life savings using 3% discounting would be $ 6,138 and at 7% discounting would be $4, 459 . Costs in this section, and summarized in Section VIII. L, are shown from the greenhouse gas perspective where fuel savings are treated as negative costs , since the primary motivations of this program are U.S. energy securit y and reductions in GHG emissions. From that perspective, the benefits of the program are the external effects, and the net effects on truck owners and oper ators are the costs. EPA prefers to account for all costs (positive and negative) directly realized by

the end user to accuratel y present the total cost and to differentiate those costs and cost savings from more generall y realized societal benefits. In Section VIII.M, the agencies also present summary tables that show the cost and benefit anal ys is from the fuel efficiency perspective, where the purpose of a program to regulate fuel efficiency is primarily

to save fuel. From this perspective, fuel saving s are counted as benefits that occur over the lifetime of the vehicle as it consumes less fuel, rather than as negative costs that would be experienced either at the time of purchase or over the lifetime of the vehicle. OMB’s Circular A - 4, which provides guidance to Federal agencies on the development of regulatory anal ys is, makes clear that either approach is acceptable.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

127 of **Table VIII**  **- 9**  **: Payback Period for a 2018 Model Year HD Pickup or Van (2009$) Year of**  **Ownership Reduced**  **Fuel Use**

**(gallons) b**  **Fuel Savings a**  **Increased Cost**  **Cumulative Savings Gasoline**  **Diesel 3%** 

**Discount 7%** 

**Discount 3%** 

**Discount 7%** 

**Discount 1**  67 122 $627 $616 - $1, 048 - $421 - $433 **2** 67 122 $617 $583 $196 $151 **3** 66 120 $600 $546 $796 $696 **4** 64 117 $570 $499 $1,366 $1,196 **5** 62 113 $544 $458 $1,910 $1,654 **6** 59 108 $507 $411 $2,417 $2,065 **7** 56 102 $474 $370 $2,890 $2,435 **Full Life** 894 1,617 $7,187 $5,507 - $1, 048 $ 6,138 $4, 459 Note s : a Fuel savings calculated using the AEO 201 1 reference case fuel prices through 2035. Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035 . Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy - duty trucks during their lifetimes. b Gallons under the control case include gallons consumed during rebound driving. The story is somewhat different for vocational vehicle s and combination tractor s. These cases are shown in Table VIII - 10 and Table VII I - 11 , respectivel y. Since these trucks travel more miles in a given year, their payback periods are shorter and are expected to occur within the second ye ar of ownership under both the 3% and 7% discounting cases. As can be seen in Table VIII - 10 and Table VI I I - 11 , the lifetime fuel savings are estimated to be considerable with savings of $ 5,494 (3%) and $ 4,268 (7%) for the vocational vehicles and $72,875 (3%) and $58,162 (7%) for the combination tractors.128 of **Table VIII**  **- 10**  **: Payback Period for a 2018 Model Year Vocational Vehicle (2009$) Year of**  **Ownership Reduced**  **Fuel Use**

**(gallons) b**  **Fuel Savings a**  **Increased Cost**  **Cumulative Savings Gasoline**  **Diesel 3%**  **Discount 7%** 

**Discount 3%** 

**Discount 7%** 

**Discount 1**  51 161 $702 $690 - $ 378 $325 $312 **2** 47 146 $637 $602 $962 $914 **3** 44 134 $576 $524 $1,538 $1,438 **4** 41 122 $516 $452 $2,054 $1,889 **5** 38 110 $463 $390 $2,516 $2,279 **6** 34 98 $404 $328 $2,921 $2,607 **7** 31 87 $359 $280 $3,279 $2,887 **Full Life** 550 1,458 $5,872 $4,646 - $ 378 $5,494 $4,268 Notes: a Fuel savings calculated using the AEO 201 1 reference case fuel prices through 2035. Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035 . Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy - duty trucks during their lifetimes. b Gallons under the control case include gallons consumed during rebound driving. **Table VII**  **I -**  **11 : Payback Period for a 2018 Model Year Com** **bination Tractor (2009$) Year of**  **Ownershi p**  **Reduced Fuel Use**

**(gallons) b**  **Fuel Savings a**  **Increase d Cost**  **Cumulative**

**Savings Gasoline**  **Diesel 3%**  **Discoun t**  **7% Discoun**  **t 3%** 

**Discount 7%** 

**Discoun t**  **1** 0 3,223 $10,736 $10,539 - $6,215 $4,522 $4,324 **2** 0 2,897 $9,619 $9,089 $14,141 $13,413 **3** 0 2,619 $8,564 $7,790 $22,705 $21,203 **4** 0 2,359 $7,532 $6,595 $30,237 $27,797 **5** 0 2,096 $6,626 $5,585 $36,863 $33,382 **6** 0 1,842 $5,684 $4,611 $42,546 $37,993 **7** 0 1,617 $4,951 $3,867 $47,497 $41,860 **Full Life** 0 26,148 $79,089 $64,376 - $6,215 $72,875 $58,162 Notes: a Fuel savings calculated using the AEO 201 1 reference case fuel prices through 2035. Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035 . Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy - duty trucks during their lifetimes. b Gallons under the control case include gallons consumed during rebound driving. All of these pay

back analy ses include fuel consumed during rebound VMT in the control case but not in the reference case, consistent with other parts of the anal ys is. Further, this analy sis does not include other societal impacts such as reduced time spent refueling or noise, congestion and accidents since the focus is meant to be on those factors buye rs think about most while considering a new truck purchase. Note also that operators that drive more miles per year than the average would realize greater fuel savings than estimated here, and those that drive fewer miles per year would realize***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

129 of lesser savings. The same holds true for operators that keep their ve hicles longer (i.e., more years) than average in that they would realize greater lifetime fuel savings than operators that keep their vehicles for fewer ye ars than average. Likewise, should fuel prices be higher than the AEO 2011 reference case, operators will realize greater fuel savings than estimated here while they would realize lesser fuel savings were fuel prices to be lower than the AEO 2011 reference case. **(5) Rebound Effect**  The VMT rebound effect refers to the fraction of fuel savings expected to result from an increase in fuel efficiency that is offset by additional vehicle use. If truck shipping costs decrease as a result of lower fuel costs, an increase in truck VMT may occur. Unlike the light - duty rebound effect, the heav y- duty (HD) rebound e ffect has not been extensively

studied. Because the factors influencing the HD rebound effect are generall y different from those affecting the light - duty rebound effect, much of the research on the light - duty rebound effect is not likely to appl y to the H D sectors. O ne of the major differences between the HD rebound effect and the light - duty rebound effect is that HD vehicles are used primarily for business purposes. Since these businesses are profit driven, decision makers are highl y likely to be aware of the costs and benefits of different shipping decisions, both in the near term and long term. Therefore, shippers are much more likely

to take into account changes in the overall operating costs per mile when making shipping decisions that affect VMT. Another difference from the light - duty case is that, as discussed in the recent NAS Report220 , when calculating the percentage change in trucking costs to determine the rebound effect, all changes in the operating costs should be considered. The cost of la bor and fuel generall y constitute the top two shares of truck operating costs, depending on the price of petroleum, 221 , distance traveled, type of truck, and commodity. 222 Finally , the equipment costs associated with the purchase or lease of the truck is also a significant component of total operating costs. Even though vehicle costs are lump - sum purchases, they can be considered operating costs for trucking firms, and these costs are, in many cases, expected to be passed onto the final consumers of shipping services on a variable basis. This shipping cost increase could help temper the rebound effect relative to the case of light - duty vehicles, in which vehicle costs are not considered an operating cost by vehicle owners. When calculating the net change in o perating costs, both the increase in new vehicle costs and the decrease in fuel costs per mile should be taken into consideration. The higher the net cost savings, the higher the expected rebound effect. Conversel y, if the upfront vehicle costs outweighe d future cost savings and total costs increased,

220 S e e NAS Report, Note **Error! Bookmark not defined. 216**  221 American Transportation Research Institute, An Analysis of the Operational Costs of Trucking , December 2008 (Docket ID: EPA - HQ - OAR - 2010 - 0162 - 0007). 222 Transport Canada, Operating Cost of Trucks, 2005. See http://www.tc.gc.ca/eng/policy/report - acg operatingcost2005 - 2005 - e - 2 - 1727.htm , accessed on July 16, 2010 (Docket ID: EPA - HQ - OAR - 2010 - 0162 - 0006 ). See also ATRI, 2008.130 of

shipping costs would rise, which would likely result in a decrease in truck VMT. In theory , other changes such as maintenance costs and insurance rates would also be taken into account, although information on these potential cost changes is extremely limited. In the proposal, we invited comments on the most appropriate methodology for factoring new vehicle purchase or leasing costs into the per - mile operating costs. We also invited comment or data on how these regulations could affect maintenance, insurance, or other operating costs. We did not receive an y comments on these assumptions. The following sections describe the factors affecting the rebound effect, different methodologies for estimating the reb ound effect, and examples of different estimates of the rebound effect to date. According to the NAS study , it is “ not possible to provide a confident measure of the rebound effect , ” yet NAS concluded that a rebound effect likely exists and that “estimate s of fuel savings from regulatory standards will be somewhat misestimated if the rebound effect is not considered.” While we believe the HD rebound effect needs to be studied in more detail, we have attempted to capture the potential impact of the rebound effect in our anal ys is. In the proposal, we solicited data on the rebound effect and input on the most appropriate estimates to use for the rebound effect. However, we did not receive any new data or substantive comments. Therefore, for this final acti on, we continue to use a rebound effect for vocational vehicles of 15%, a rebound effect for HD pickup trucks and vans of 10%, and a rebound effect for combination tractors of 5%. These VMT impacts are reflected in the estimates of total GHG and other air pollution reductions presented in Chapter 5 of the RIA. (a ) Factors Affecting the Magnitude of the Rebound Effect The HD vehicle rebound effect is driven b y the interaction of several different factors. In the short - run, decreasing the fuel cost per mil e of driving could lead to a decrease in end product prices. Lower prices could stimulate additional demand for those products, which would then result in an increase in VMT. In the long run, shippers could reorganize their logistics and distribution networks to take advantage of lower truck shipping costs. For example, shippers may shift away

from other modes of shipping such as rail, barge, or air. In addition, shippers may also choose to reduce the number of warehouses, reduce load rates, and make sm aller, more frequent shipments, all of which could also lead to an increase in HD VMT. Finally , the benefits of the fuel savings could ripple through the economy , which could in turn increase overall demand for goods and services shipped b y trucks, and th erefore increase HD VMT. Conversel y, if a fuel efficiency regulation leads to net increases in the cost of trucking because fuel savings do not fully offset the increase in upfront vehicle costs, then the price of trucking services could rise, spurring a decrease in HD VMT and a shift to alternative shipping modes. These effects would also ripple through the econom y. (b ) Options for Quantifying the Rebound Effect As described in the previous section, the fuel efficiency rebound effect for HD vehicles has not been studied as extensively as the rebound effect for light - duty vehicles, and virtually

no research has been conducted on the HD pickup truck and van rebound***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

131 of effect. In the proposal, we discussed four options for quantifying the rebound effect and r equested comments. We did not receive any substantive comments on the described methodologies. (i ) Aggregate Estimates The aggregate approximation approach quantifies the overall change in truck VMT as a result of a percentage change in freight rates. It is important to note that most of the aggregate estimates measure the change in freight demanded (tons or ton - miles), rather than a change in fuel consumption or VMT. The change in tons or ton - miles is more accurately

characterized as a freight elasticity . Therefore, it may not be entirel y appropriate to interpret these freight elasticities as measures of the rebound effect, although these terms are sometimes used interchangeabl y in the literature. 223 Given these caveats, freight elasticity estimates rel y on estimates of aggregate price elasticity of demand for trucking services, given a percentage change in trucking prices, which is generall y referred to as an “own - price elasticity.” Estimates of trucking own - price elasticities vary

widel y from positive 1 .72 to negative 7.92), and there is no general consensus on the most appropriate values to use, though a 2004 literature survey found aggregate elasticity estimates generall y fall in the range of - 0.5 to - 1.5. 224 Inother words, given an own - price elasticity of - 1.5, a 10% decrease in trucking prices leads to a 15% increase in truck shipping demand. Another challenge of estimating the rebound effect using freight elasticities is that these values appear to vary substantiall y based on the demand elasticity measure (e.g., ton or ton - mile), the model specification (e.g., linear functional form or log linear), the length of the trip, and the ty pe of cargo. In general, elasticity estimates of longer trips tend to be larger than elasticity estimates for shorter trips. In addition, elasticities tend to be larger for lower - value commodities compared to higher - value commodities. Although these factors explain some of the differences in estimates, much of the observed variation cannot be explained quantitatively . For example, a recent study that controlled for these variables onl y accounted for about half of the observed variation. 225 Another important variable influencing freight elasticity estimates is whether potential mode shifting is taken into account. Although the total demand for freight transport is generally

determined by

economic activity , there is often the choice of shipping freight on modes other than truck. This is because the United States has extensive rail, waterway

and air transport networks i n addition to an extensive highway network; these networks closely parallel each other and are often both viable choices for freight transport for long - distance routes within the continent. If rates go down for one mode, there will be an increase in deman d for that mode and some demand will be shifted

223 Memo from Energy and Environmental Research Associates , LLC Regarding HDV Rebound Effect, dated June 8 , 2011. 224 Graham and Glaister, “Road Traffic Demand Elasticity Estimates: A Review,” Transport Revie ws Volume 24, 3, pp. 261 - 274, 2004 (Do cket ID: EPA - HQ - OAR - 2010 - 0162 - 000 5). 225 Li, Z., D.A. Hensher, and J.M. Rose, Identifying sources of systematic variation in direct price elasticities from revealed preference studies of inter- city freight demand. Transport Policy, 2011 .132 of

from other modes. This “cross - price elasticity” is a measure of the percentage change in demand for shipping b y another mode (e.g., rail) given a percentage change in the price of trucking. Aggregate estimates of cross - price elasticities also vary widely , and there is no general consensus on the most appropriate value to use for anal yt ical purposes. The NAS report cites values ranging from 0.35 to 0.59. 226 Other reports provide significantly different cross - price elasticities, ranging from 0.1 227 to 2.0. 228 When considering intermodal shift, the most relevant kinds of shipments are those that are competitive between rail and truck modes. These trips generall y include long haul shipments greater than 500 miles, which weigh between 50,000 and 80,000 pounds (the legal road limit in many states). Special kinds of cargo like coal and short - haul deliveries are of less interest because they are generall y not economically transferable between truck and rail modes, and they would not be expected to shift modes except under an extreme price change. However, the total amount of freight that could potentially

be subject to mode shifting has also not been studied extensively . (ii) Sector- Specific Estimates Given the limited data available regarding the HD rebound effect, the aggregate approach greatly

simplifies many

of the assumptions associated with calculations of the rebound effect. In reality, however, responses to changes in fuel efficiency and new vehicle costs will vary significantly based on the commodities affected. A detailed, sector - specific approach would be expected to more accuratel y reflect changes in the trucking market in response to the standards in this program . For example, input - output tables could b e used to determine the trucking cost share of the total delivered price of a commodity . Using the change in trucking prices described in the aggregate approach, the product - specific demand elasticities could be used to calculate the change in sales and s hipments for each product. The change in shipment increases could then be weighted b y the share of the trucking industry total, and then summed to get the total increase in trucking output. A simplifying assumption could then be made that the increase in output results in an increase in VMT. To the best of our knowledge, this ty pe of data has not yet been collected. We did not receive any new information in response to our request for comments in the proposal, therefore we were unable to use this method ology for estimating the rebound effect for this final action. (iii) Econometric Estimates Similar to the methodology used to estimate the light - duty rebound effect, the HD rebound effect could be modeled econometricall y by estimating truck demand as a 226 See 2010 NAS Rep ort, Note **Error! Bookm ark not defined.**  **216** . See also 2009 Cambridge Sy stematics, Inc., Draft Final Paper commissioned by the NAS in support of the medium - duty and heavy duty report. Assessment of Fuel Economy Technologies for Medium and Heavy - duty Vehicles: Commissioned Paper on Indirect Costs and Alternative Approaches Docket ID: EPA - HQ - OAR - 201 0 - 0162 - 0009). 227 Friedlaender, A. and Spady, R. (1980) A derived demand function for freight transportation, Revie w of Economics and Statistics, 62, pp. 432

–441 (Docket ID: EPA - HQ - OAR - 2010 - 0162 - 0004). 228 Christidis and Leduc, “Longer and Heavier Vehicles fo r freight transport,” European Commission Joint Research Center’s Institute for Prospective Technology Studies, 2009 (Docket ID: EPA - HQ - OAR - 2010 - 0162 - 0010).***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

133 of funct ion of economic activity (e.g., GDP) and different input prices (e.g., vehicle prices, driver wages, and fuel costs per mile). This ty pe of econometric model could be estimated for either truck VMT or ton - miles as a measure of demand. The resulting elast icity estimates could then be used to determine the change in trucking demand, given the change in fuel cost and truck prices per mile from these standards. One of the challenges associated with an econometric anal ys is is the potential for omitted variabl e bias, which could either overstate or understate the potential rebound effect if the omitted variable is correlated with the controlled variables. (iv) Other Modeling Approaches Regulation of the heav y- duty industry has been studied in more detail in Europe, as the European Commission (EC) has considered allowing longer and heavier trucks for freight transport. Part of the anal ys is considered by the EC relies on country- specific modeling of changes in the freight sector that would result from changes in regul ations. 229 This approach attempts to explicitly calculate modal shift decisions and impacts on GHG emissions. Although similar ty pes of anal ys is have not been conducted extensively in the United States, research is currentl y underway that explores the potential for intermodal shifting in the United States. For example, Winebrake and Corbett have developed the Geospatial Intermodal Freight Transportation model, which evaluates the potential for GHG emissions reductions based on mode shifting, given existing limitations of infrastructure and other route characteristics in the United States. 230 This model connects multiple road, rail, and waterway transportation networks and embeds activitybased calculations in the model. Within this intermodal network, the model assigns various economic, time - of - delivery , energy , and environmental attributes to real - world goods movement routes. The model can then calculate different network optimization scenarios, based on changes in prices and policies. 231 However, more wor k is needed in this area to determine whether this ty pe of methodology

is appropriate for the purposes of capturing the rebound effect. Therefore, we have not been able to use this methodology for estimating the rebound effect for this final action. (c) Es timates of the Rebound Effect The aggregate methodology was used by

Cambridge S ys tematics, Inc. (CSI) to show several examples of the magnitude of the rebound effect. 232 In their paper commissioned by

the NAS in support of the recent HD report, CSI calcul ated an effective

229 Christidis and Leduc, “Longer and Heavier Vehicles for freight transport,” European Commission Joint Research Center’s Institute for Prospective Technology Studies, 2009. 230 Winebrake, James and Corbett, James J. (2010). “Improving the Energy Efficiency and Environmental Performance of Goods Movement,” in Sperling, Daniel and James S. C annon (2010) Climate and Transportation Solutions: Findings from the 2009 Asilomar Conference on Transportation and Energy Policy. See http://www.its.ucdavis.edu/events/2009book/Chapter13.pdf (Docket ID: EPA - HQ - OAR 2010 - 0162 - 0011) 231 Winebrake, J. J.; Corbett, J. J.; Falzarano, A.; Ha wker, J. S.; Korfmacher, K.; Ketha, S.; Zilora, S., Assessing Energy, Environmental, and Econ om ic Tradeoffs in Intermodal Freight Transportation, Journal of the Air &W

aste Management Association , 58(8), 2008 (Docket ID: EPA - HQ - OAR - 2010 - 0162 - 0008) . 232 Cambridge Systematics, Inc., 2009 .134 of

rebound effect for two different technology cost and fuel savings scenarios associated with an example Class 8 truck. Scenario 1 increased average fuel economy from 5.59 mpg to 6.8 mpg, with an additional cost of $22,930. Scenario 2 inc reased the average fuel econom y to 9.1 mpg, at an incremental cost of $71,630 per vehicle. The CSI examples provided estimates using a range of own - price elasticities ( - 0.5 to - 1.5) and cross - price elasticities (0.35 to 0.59) from the literature. Based o n these two scenarios and a number of simplifying assumptions to aid the calculations, CSI found a rebound effect of 11 - 31% for Scenario 1 and 5 - 16% for Scenario 2 when the fuel savings from reduced rail usage were not taken into account (“First rebound ef fect”). When the fuel savings from reduced rail usage were included in the calculations, the overall rebound effect was between 9 - 13% for Scenario 1 and 3 - 15% for Scenario 2 (“Second Rebound Effect”). See Table VI II - 12 . CSIincluded a number of caveats associated with these calculations. Namely , the elasticity estimates derived from the literature are “heavil y reliant on factors including the ty pe of demand measures anal yz ed (vehicle - miles of travel, ton - miles, or tons), anal ys is geograph y, trip lengths, markets served, and commodities transported .” Furthermore, the CSIexample only

focused on Class 8 combination tractors and did not attempt to quantify the potentia l rebound effect for any other truck classes. Finall y, these scenarios were characterized as “sketches” and were not included in the final NAS report. In fact, the NAS report asserted that it is “not possible to provide a confident measure of the rebound effect , ” yet concluded that a rebound effect likely exists and that “estimates of fuel savings from regulatory standards will be somewhat misestimated if the rebound effect is not considered.” **Table VIII**  **- 12**  **: Range of Rebound Effect Estim ates from Cambridge Systematics Aggregate**  **Assessment** Scenario 1 (6.8 mpg, $22,930) Scenario 2

(9.1 mpg, $71,630) “First Rebound Effect” (increase in truck VMT resulting from decrease in operating costs) 11 - 31% 5 - 16% “Second Rebound Effect” (net fuel savings when decreases from rail are taken into account) 9 - 13 % 3 - 15% As an alternative, using the econometric approach, NHTSA has estimated the rebound effect in the short run and long run for single unit (Class 4 - 7) and (Class 8) combination tractors. As shown in Table VIII - 13 : , the estimates for the long - run rebound effect are larger than the estimates in the short run, which is consistent with the theory that shippers have more flexibility to change their behavior (e.g., restructure contracts or logistics) when they

are given mo re time. In addition, the estimates derived from the national data also showed larger rebound effects compared to the state data. 233 One 233 NHTSA’s estimates of the rebound effect are derived from econometric analysis of national and state VMT data reported in Federal Highway Administration, Highway Statistics , various editions, Tables VM - 1 and VM - 4. Specifically, the estimates of the rebound effect reported in Table VIII - 10 are ranges of the***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

135 of possible explanation for the difference in the estimates is that the national rebound estimates are capturing some of the impacts of changes in economic activity. Historically , large increases in fuel prices are highly correlated with economic downturns, and there may not be enough variation in the national data to differentiate the impact of fuel price changes from chang es in economic activity . In contrast, some states may see an increase in output when energy prices increase (e.g., large oil producing states such as Texas and Alaska); therefore, the state data may be more accurately

isolating the individual impact of fu el price changes. **Table VIII**  **- 13**  **: Range of Rebound Effect Estim ates from NHTSA Econometric Analysis**  Truck Ty pe National Data State Data Short Run Long Run Short Run Long Run Single Unit 13 - 22% 28 - 45% 3 - 8% 12 - 21% Combination N/A 12 - 14% N/A 4 - 5% As discussed throughout this section, there are multiple methodologies for quantifying the rebound effect, and these different methodologies produce a large range of potential values of the rebound effect. However, for the purposes of quantifying the rebound effect for this program, we have used a rebound effect with respect to changes in fuel costs per mile on th e lower range of the long - run estimates. Given the fact that the long - run state estimates are generall y more consistent with the aggregate estimates, for this program we have chosen a rebound effect for vocational vehicles (single unit trucks) of 15% that is within the range of estimates from both methodologies. Similarly , we have chosen a rebound effect for combination tractors of 5%. To date, no estimates of the HD pickup truck and van rebound effect have been cited in the literature. Since these veh icles are used for very different purposes than heav y- duty vehicles, it does not necessarily seem appropriate to apply one of the heav y duty estimates to the HD pickup trucks and vans. These vehicles are more similar in use to large light - dut y vehicles, s o for the purposes of our anal ys is, we have chosen to apply the light - dut y rebound effect of 10% to this class of vehicles. For the purposes of this program, we have not taken into account any potential fuel savings or GHG emission reductions from the rail sector due to mode shifting. We requested comments on this assumption in the proposal, but we did not receive any new data or input. estimated short - run and long - run elasticities of annual VMT by single - unit and combination trucks with respect to fuel cost per mile driven. (Fuel cost per mile driven during each year is equal to averag e fuel price per gallon during that year divided by average fuel economy of the truck fleet during that same year.) These estimates are derived from time - series regression of annual national aggregate VMT for the period 1970 - 2008 on measures of nationwide economic activity, including aggregate GDP, the value of durable and nondurable goods production, and the volume of U.S. exports and imports of goods, and variables affecting the price of trucking services (driver wage rates, truck purchase prices, and fu el costs), and from regression of VMT for each individual state over the period 1994 - 2008 on similar variables measured at the state level.136 of Furthermore, we have made a number of simplifying assumptions in our calculations, which are discussed in more detai l in the RIA. Specificall y, we have not attempted to capture how current market failures might impact the rebound effect. The direction and magnitude of the rebound effect in the HD market are expected to vary depending on the existence and types of mark et failures affecting the fuel efficiency of the trucking fleet. If firms are already accuratel y accounting for the costs and benefits of these technologies and fuel savings, then these regulations would increase their net costs, because trucks would alre ady include all the cost - effective technologies. As a result, the rebound effect would actually be negative and truck VMT would decrease as a result of these final regulations. However, if firms are not optimizing their behavior today due to factors such as lack of reliable information (see Section VIII.A. for further discussion), it is more likely

that truck VMT would increase. If firms recognize their lower net costs as a result of these regulations and pass those costs along to their customers, then the rebound effect would increase truck VMT. This response assumes that trucking rates include both truck purchase costs and fuel costs, and that the truck purchase costs included in the rates spread those costs over the full expected lifetime of the truck s. If those costs are spread over a shorter period, as the expected short pay back period implies, then those purchase costs will inhibit reduction of freight rates, and the rebound effect will be smaller. As discussed in more detail in Section VIII.A, if there are market failures such as split incentives, estimating the rebound effect may depend on the nature of the failures. For example, if the original purchaser cannot fully recoup the higher upfront costs through fuel savings before selling the vehicl e nor pass those costs onto the resale buyer, the firm would be expected to raise shipping rates. A firm purchasing the truck second hand might lower shipping rates if the firm recognizes the cost savings after operating the vehicle, leading to an increas e in VMT. Similarl y, if there are split incentives and the vehicle buyer isn’t the same entity that purchases the fuel, than there would theoreticall y be a positive rebound effect. In this scenario, fuel savings would lower the net costs to the fuel purc haser, which would result in a larger increase in truck VMT. If all of these scenarios occur in the marketplace, the net effect will depend on the extent and magnitude of their relative effects, which are also likel y to vary across truck classes (for ins tance, split incentives may be a much larger problem for Class 7 and 8 tractors than they

are for HD pickup trucks). Additional details on the rebound effect are included in the RIA. 

### F. **Class Shifting and Fleet Turnover Impacts** The agencies considered two additional potential indirect costs, benefits, effects, and externalities which may lead to unintended consequences of the pro gram to improve the fuel efficiency

and reduce GHG emissions from HD trucks. The next sections cover the agencies’ qualitative di scussions on potential class shifting and fleet turnover effects. **(1) Class**  **S hifting**  Heav y- dut y vehicles are ty picall y configured and purchased to perform a function. For example, a concrete mixer truck is purchased to transport concrete, a***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

137 of combination tractor is purchased to move freight with the use of a trailer, and a Class 3 pickup truck could be purchased b y a landscape company to pull a trailer carrying lawnmowers. The purchaser makes decisions based on many attributes of the vehicle, including th e gross vehicle weight rating of the vehicle which in part determines the amount of freight or equipment that can be carried. If the final HD National Program impacts either the performance of the vehicle or the marginal cost of the vehicle relative to the other vehicle classes, then consumers may choose to purchase a different vehicle, resulting in the unintended consequence of increased fuel consumption and GHG emissions in - use. The agencies, along with the NAS panel, found that there is little or no literature which evaluates class shifting between trucks. 234 NHTSA and EPA qualitatively evaluated the final rules in light of potential class shifting. The agencies looked at four potential cases of shifting: - from light - duty pickup trucks to heav y- duty pickup trucks; from sleeper cabs to day

cabs; from combination tractors to vocational vehicles; and within vocational vehicles. Li ght - dut y pickup trucks, those with a GVWR of less than 8,500 pounds, are currentl y regulated under the existing CAFE program and will meet GHG emissions standards beginning in 2012. The increased stringency of the light - duty 2012 - 2016 MY vehicle rule has led some to speculate that vehicle consumers may choose to purchase heav y- duty pickup trucks that are c urrentl y unregulated if the cost of the light - duty regulation is high relative to the cost to buy the larger heavy- duty pickup trucks. Since fuel consumption and GHG emissions rise significantly with vehicle mass, a shift from light - duty trucks to heavy- d

uty trucks would likely lead to higher fuel consumption and GHG emissions, an untended consequence of the regulations. Given the significant price premium of a heav y- duty truck (often five to ten thousand dollars more than a light - duty pickup), we believe that such a class shift would be unlikely even absent this program. With these final regulations, any incentive for such a class shift is significantly diminished. The final regulations for the HD pickup trucks, and similarly for vans, are based on simil ar technologies and therefore reflect a similar expected increase in cost when compared to the light - duty GHG regulation. Hence, the combination of the two regulations provides little incentive for a shift from light - duty trucks to HD trucks. To the exte nt that our final regulation of heav y- duty pickups and vans could conceivabl y encourage a class shift towards lighter pickups, this unintended consequence would in fact be expected to lead to lower fuel consumption and GHG emissions as the smaller light - duty pickups are significantly more efficient than heavy - duty pickup trucks. The projected cost increases for this final action differ significantly between Class 8 day cabs and Class 8 sleeper cabs, reflecting our expectation that compliance with the final standards will lead truck consumers to specify sleeper cabs equipped with APUs while day cab consumers will not. Since Class 8 day cab and sleeper cab trucks perform essentially

the same function when hauling a trailer, this raises the possibility that th e higher cost for an APU equipped sleeper cab could lead to a shift from sleeper cab to day

234 See 2010 NAS Report, Note **Error! Bookm ark not defined.**  **216** , page 152.138 of

cab trucks. We do not believe that such an intended consequence will occur for the following reasons. The addition of a sleeper berth to a tractor cab is not a co nsumer selectable attribute in quite the same way as other vehicle features. The sleeper cab provides a utility

that long - distance trucking fleets need to conduct their operations -- an on - board sleeping berth that lets a driver comply with federally- mand ated rest periods, as required b y the Department of Transportation Federal Motor Carrier Safety Administration's hours - of - service regulations. The cost of sleeper trucks is already higher than the cost of day cabs, yet the fleets that need this utility purchase them. 235 A day cab simply

cannot provide this utility . The need for this utility would not be changed even if the marginal costs to reduce greenhouse gas emissions from sleeper cabs exceed the marginal costs to reduce greenhouse gas emissions from d ay cabs. 236 A trucking fleet could decide to put its drivers in hotels in lieu of using sleeper berths, and switch to day cabs. However, this is unlikely to occur in any

great number, since the added cost for the hotel stay s would far overwhelm differences in the marginal cost between day and sleeper cabs. Even if some fleets do opt to buy hotel rooms and switch to day cabs, they would be highl y unlikel y to purchase a day cab that was aerodynamically worse than the sleeper cab they

replaced, since the need for features optimized for long - distance hauling would not have changed. So in practice, there would likely be little difference to the environment for an y s witching that might occur. Further, while our projected costs assume the purchase of an APU for compliance, in fact our regulatory structure would allow compliance using a near zero cost software utility that eliminates tractor idling after five minutes. Using this compliance approach, the cost difference between a Class 8 sleeper cab and day

cab du e to our final regulations is small. We are providing this alternative compliance approach reflecting that some sleeper cabs are used in team driving situations where one driver sleeps while the other drives. In that situation, an APU is unnecessary

sinc e the tractor is continually being driven when occupied. When it is parked, it will automatically eliminate any

additional idling through the shutdown software. If trucking companies choose this option, then costs based on purchase of APUs may

overestimate the costs of this program to this sector. Class shifting from combination tractors to vocational vehicles may occur if a customer deems the additional marginal cost of tractors due to the regulation to be greater than the utility

provided by

the tractor . The agencies initially considered this issue when deciding whether to include Class 7 tractors with the Class 8 tractors or regulate them as vocational vehicles. The agencies’ evaluation of the combined vehicle weight rating of the Class 7 shows that i f these vehicles were treated significantly differently

from the Class 8 tractors, then they could be easil y substituted for Class 8 tractors. Therefore, the agencies are finalizing to include both classes in the tractor category . The agencies believe th at a shift from tractors to vocational vehicles would be limited because of the ability of tractors to pick up and drop off trailers at locations which cannot be done by vocational vehicles. 235 A baseline tractor price of a new day cab is $89,500 versus $113,000 for a new sleeper cab based on information gathered by ICF in the “Investigation of Costs for Strategies to Reduce Greenhouse Gas Emissions for H eavy - Duty On - Road Vehicles”, July 2010. Page 3. Docket Identification Number EPA HQ - OAR - 2010 - 0162 - 0044. 236 The average marginal cost difference between sleeper cabs and day cabs in the proposal is nearly $6,000.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

139 of The agencies do not envision that the final regulatory program wi ll cause class shifting within the vocational class. The marginal cost difference due to the regulation of vocational vehicles is minimal. The cost of LRR tires on a per tire basis is the same for all vocational vehicles so the only difference in marginal cost of the vehicles is due to the number of axles. The agencies believe that the utility gained from the additional load carryi ng capability of the additional axle will outweigh the additional cost for heavier vehicles. 237 In conclusion, NHTSA and EPA be lieve that the final regulatory structure for HD trucks does not significantly change the current competitive and market factors that determine purchaser preferences among truck typ es. Furthermore, even if a small amount of shifting does occur, any result ing GHG impacts are likel y to be negligible because an y vehicle class that sees an uptick in sales is also being regulated for fuel efficiency . Therefore, the agencies did not include an impact of class shifting on the vehicle populations used to assess the benefits of the program. **(2) Fleet Turnover Effect**  A regulation that increases the cost to purchase and/or operate trucks could impact whether a consumer decides to purchase a new truck and the timing of that purchase. The term pre - buy

refers to the idea that truck purchases may occur earlier than otherwise planned to avoid the additional costs associated with a new regulatory requirement. Slower fleet turnover, or low - buy s, may occur when owners opt to keep their existing truck rather than purchase a ne w truck due to the incremental cost of the regulation. The NAS panel discusses the topics associated with HD truck fleet turnover. NAS noted that there is some empirical evidence of pre - buy behavior in response to the 2004 and 2007 heav y- duty engine emi ssion standards, with larger impacts occurring in response to higher costs. 238 However, those regulations increased upfront costs to firms without any

offsetting future cost savings from reduced fuel purchases. In summary , NAS stated that ...during periods of stable or growing demand in the freight sector, pre buy behavior may

have significant impact on purchase patterns, especially for larger fleets with better access to capital and financing. Under these same conditions, smaller operators may simpl y elect t o keep their current equipment on the road longer, all the more likel y given continued improvements in diesel engine durability over time. On the other hand, to the extent that fuel economy improvements can offset incremental purchase costs, these impacts will be lessened. Nevertheless, when it

237 The final rule projects the difference in costs between the HHD and MHD vocational vehicle technologies is approximately $30. 238 See NAS Report, Note **Error! Bookmark not defined. 216**  , pp. 150 - 151140 of comes to efficiency

investments, most heavy- duty fleet operators require relativel y quick payback periods, on the order of two to three ye ars. 239 The final regulations are projected to return fuel savings to the truck owners that offset the cost of the regulation within a few years for vocational vehicles and Class 7 and 8 tractors, the categories where the potential for prebuy and delayed fleet turnover are concerns. In the case of vocational vehicles, the added cost is small enough that it is unlikely to have a substantial effect on purchasing behavior. In the case of Class 7 and 8 trucks, the effects of the regulation on purchasing behavior will depend on the nature of the market failures and the extent to whic h firms consider the projected future fuel savings in their purchasing decisions. If trucking firms account for the rapid pay back, they

are unlikel y to strategically accelerate or delay

their purchase plans at additional cost in capital to avoid a regulation that will lower their overall operating costs. As discussed in Section VIII.A, this scenario may occur if this final program reduces uncertainty about fuel - saving technologies. More reliable information about way s to reduce fuel consumption allows truck purchasers to evaluate better the benefits and costs of additional fuel savings, primaril y in the original vehicle market, but possibly in the resale market as well. Other market failures may leave open the possibility of some pre - buy

or delayed purchasing behavior. Firms may not consider the full value of the future fuel savings for several reasons. For instance, truck purchasers may not want to invest in fuel efficiency because of uncertainty about fuel prices. Another explanation is that the re sale market may not full y recognize the value of fuel savings, due to lack of trust of new technologies or changes in the uses of the vehicles. Lack of coordination (also called split incentives

— see Section VIII.A) between truck purchasers (who emphasize the up - front costs of the trucks) and truck operators, who would like the fuel savings, can also lead to pre - buy or delayed purchasing behavior. If these market failures prevent firms from fully internalizing fuel savings when deciding on vehicle purchase s, then pre - buy and delayed purchase could occur and could result in a slight decrease in the GHG benefits of the regulation. Thus, whether pre - buy

or delayed purchase is likely to play a significant role in the truck market depends on the specific behav iors of purchasers in that market. Without additional information about which scenario is more likely to be prevalent, the Agencies are not projecting a change in fleet turnover characteristics due to this regulation. 

### G. **Benefits of Reducing CO 2**  

### Emissions **(1) Social Cost of Carbon**  EPA has assigned a dollar value to reductions in CO 2 emissions using recent estimates of the social cost of carbon (SCC). The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity , 239 See NAS Report, Note **Error! Bookmark not defined. 216**  , page 151.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

141 of human health, property

damages from increased flood risk, and the value of ecos ys tem services due to climate change. The SCC estimates used in this analy sis were developed through an interagency

process that included EPA, DOT/NHTSA, and other executive branch entities, and concluded in February 2010. We first used these SCC estimates in the benefits analy sis for the l ight - d uty 2012 - 2016 MYv ehicle rule ; see th at rule’s preamble for a discussion of application of the SCC . 240 The SCC Technical Support Document (SCC TSD) provides a complete discussion of the methods used to develop these SCC estimates. 241 The interagency

group selected four SCC values for use in regulatory anal yses, which we have applied in this analy sis: $5, $22, $36, and $6 7 per metric ton of CO 2 emissions in 2010, in 200 9 dollars. 242 , 243 The first three values are based on the average SCC from three integrated assessment models, at discount rates of 5 , 3, and 2. 5 percent, respectivel y. SCCs at several discount rates are included because the literature shows that the SCC is quite sensiti ve to assumptions about the discount rate, and because no consensus exists on the appropriate rate to use in an intergenerational context. The fourth value is the 95th percentile of the SCC from all three models at a 3 percent discount rate. It is include d to represent higher - than - expected impacts from temperature change further out in the tails of the SCC distribution. L ow probability , high impact events are incorporated into all of the SCC values through explicit consideration of their effects in two of the three models as well as the use of a probability density function for equilibrium climate sensitivity . Treating climate sensitivity probabilistically

results in more high temperature outcomes, which in turn lead to higher projections of damages. The S CC increases over time because future emissions are expected to produce larger incremental damages as ph ys ical and economic sy stems become more stressed in response to greater climatic change. Note that the interagency group estimated the growth rate of the SCC directly using the three integrated assessment models rather than assuming a constant annual growth rate. This helps to ensure that the estimates are internally consistent with other modeling assumptions. Table VIII - 14 presents the SCC estimates used in this analy sis.

240 See 2010 Light - DutyFinal Rule, Note **7** , docket ID EPA - HQ - OAR - 2009 - 0472 - 11424 . 241 Docket ID EPA - HQ - OAR - 2009 - 0472 - 114577, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon , with participation by Council of Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of Commer ce, Department of Energy, Department of Transportation, Environmental Protection Agency, National Economic Council, Office of Energy and Climate Change, Office of Management and Budget, Office of Science and Technology Policy, and Department of Treasury (F ebruary 2010). Also available at http://epa.gov/otaq/climate/regulations.htm 242 The interagency group decided that these estimates apply only to CO 2 emissions. Given that warming profiles and impac ts other than temperature change ( e.g., ocean acidification) vary across GHGs, the group concluded “transforming gases into CO 2 - equivalents using GWP, and then multiplying the carbon equivalents by the SCC, would not result in accurate estimates of the soc ial costs of non - CO 2 gases” (SCC TSD, pg 13). 243 The SCC estimates were converted from 2007 dollars to 2008 dollars using a GDP price deflator (1.021) and again to 2009 dollars using a GDP price deflator (1.009) obtained from the Bureau of Economic Analysis , National Income and Product Accounts Table 1.1.4, Prices Indexes for Gross Domestic Product .142 of When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analy st faces a number of serious chall enges. A recent 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 sy stem, (3) the impact of changes in climate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages. 244 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. The interagency

group noted a number of limitations to the SCC analysis, including the incomplete way in which the integrated assessment m odels capture catastrophic and non - catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk aversion. The limited amount of re search linking climate impacts to economic damages makes the interagency modeling exercise even more difficult. The interagency group hopes that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory anal ys is by the Federal government will continue to evolve with improvements in modeling. Additional details on these limitations are discussed in the SCC TSD. We received several comments regarding the SCC estimates used to anal yz e the proposed standards . In particular, these commenters discussed the incomplete treatment of impacts as well as discount rate selection. EPA has reviewed these comments in detail and responded to them in the EPA Response to Comments Document for the Joint Rulemaking. As not ed in that document , the U.S. government intends to revise these estimates, taking into account new research findings that were not included in the first round , and has set a preliminary goal of revisiting the SCC values in the next few years or at such t ime as substantially updated models become available, and to continue to support research in this area. The EPA Response to Comments Document for the Joint Rulemaking discusses ongoing research in greater detail. Applying the global SCC estimates, shown in Table VIII - 14 , to the estimated domestic reductions in CO 2 emissions under this final program , we estimate the dollar value of the climate related benefits for each analysis year. For internal consistency , the annual benefits are discounted back to net present value terms using the same discount rate as each SCC estimate ( i.e., 5%, 3%, and 2.5%) rather than 3% and 7%. 245 These estimates are provided in Table VIII - 15 .

244 National Research Council (2009). Hidden Costs of Energy: Unpriced Co nsequences of Energy Production and Use . National Academies Press. See docket ID EPA - HQ - OAR - 2009 - 0472 - 11486. 245 It is possible that other benefits or costs of final regulations unrelated to CO 2 emissions will be discounted at rates that differ from those used to develop the SCC estimates.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

143 of **Table VIII**  **- 14**  **: Social Cost of CO 2**  **, 201 2**  **– 2050**  **a (in 200**  **9 dollars**  **per Metric Ton )**  Year Discount Rate and Statistic

5% Average 3% Average 2.5% Average 3% 95th Percentile **2012** $5.28 $23.06 $37.53 $70.14 **2015** $5.93 $24.58 $39.57 $75.03 **2020** $7.01 $27.10 $42.98 $83.17 **2025** $8.53 $30.43 $47.28 $93.11 **2030** $10.05 $33.75 $51.58 $103.06 **2035** $11.57 $37.08 $55.88 $113.00 **2040** $13.09 $40.40 $60.19 $122.95 **2045** $14.63 $43.34 $63.59 $131.66 **2050** $16.18 $46.27 $66.99 $140.37 Note: a The SCC values are dollar - year and emissions - year specific. **Table VIII**  **- 15**  **: Monetized CO**  **2 Benefits of**  **Vehicle Program**  **, CO 2**  **Em issions**  **a (Million 200**  **9 $)**  YEAR CO 2

EMISSIONS REDUCTION (MMT) BENEFITS

Avg SCC at 5% ($5 - $16) a Avg SCC at 3%

($23 - $46) a Avg SCC at

2.5% ($38 - $67) a 95 th percentile

SCC at 3% ($70 - $140) a 2020 37.7 $264 $1,021 $1,619 $3,133 2030 73.1 $734 $2,467 $3,770 $7,532 2040 90.3 $1,182 $3,650 $5,437 $11,108 2050 103.9 $1,682 $4,810 $6,963 $14,590 Net Present Value b $9,045 $46,070 $78,037 $140,432 Notes : a Except for the last row (net present value), the SCC values are dollar - year and emissions - year specific . b Net present value of reduced CO 2 emissions is calculated differently from 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. 

### H. **Non -**  **GHG Health a nd Environmental Impacts**  This section presents EPA’s anal ys is of the non - GHG health and environmental impacts that can be expected to occur as a result of the HD National Program . GHG emissions are predominantly the b yproduct of fossil fuel combustion pro cesses 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, NO X , VOCs and air toxics. The standards will affect exhaust emis sions of these pollutants from vehicles. They will also affect emissions from upstream sources related to changes in fuel consumption. Changes in ambient ozone, PM 2.5 , and air toxics that will result from the standards are expected to affect human health in the form of144 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 rules because a failure to adequatel y consider these ancillary co - pollutant impacts could lead to an incorrect assessment of their net costs and benefits. Moreover, co - pollutant impacts tend to a ccrue in the near term, while an y effects from reduced climate change mostl y accrue over a time frame of several decades or longer. This section is organized as follows : the first presents the PM - and ozone - related health and environmental impacts associ ated with final program in calendar year (CY) 2030 ; the second discusses the related co - benefits associated with the model year (MY) anal ys is of the program . 246 **(1) Quantified**  **and Monetized Non -**  **GHG Human Health Benefits of the 2030**  **Calendar Year Analysis** Thi s analy sis reflects the impact of the HD National Program in 2030 compared to a future - ye ar reference scenario without the program in place. 247 Overall, we estimate that the final rule s will lead to a net decrease in PM 2.5 - related health impacts . S ee Sectio n VII. D 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 PM 2.5 exposure results in a net decrease in adverse PM - related human health impacts (the decrease in national population - weighted annual average PM 2.5 is 0.00 5 μg/m 3 ). The air quality modeling also projects decreases in ozone concentrations in many areas. While the ozone - related impacts are relatively sm all, the de crease in population weighted national average ozone exposure results in a net decrease in ozone - related health impacts (population - weighted maximum 8 - hour average ozone de creases b y 0. 16 4 ppb).

246 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 flee ts over the course of its lifetime. 247 The future - year reference scenario to which the program impacts are compared in this section assumes no future gains in mpg (a “flat” scenario). For the final rulemaking, the agencies have also conducted a sensitivity analysis relative to the baseline assumptions. Th e alternative baseline assumes annual mp g projections , in the absence of the program , which were developed by the U.S. Energy Information Administration (EIA) for the Annual Energy Outlook (AEO). A description of the alternative baseline can be found in RIA Chapter 6. Due to time and resource constraints, EPA was unable to conduct full - scale photoche mical air quality modeling to reflect the final rule impacts relative to this alternative baseline.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

145 of We base our analy sis of the program’s impact on human health in 2030 on peer reviewed studies of air quality and human health effects. 248 , 249 These methods are described in more detail in the RIA that accompanies this action . Our benefits methods are also consistent with recent rulemaking anal ys es such as the final Transport Rule, 250 the light - dut y 2012 - 2016 MY v ehicle r ule, 251 and the final Portland Cement National Emissions Standards for Hazardou s Air Pollutants (NESHAP) RIA. 252 To model the ozone and PM air quality impacts of this final action , we used the Community Multiscale Air Qu ality

(CMAQ) model (see Chapter 8.2.2 of the RIA that accompanies this preamble ). The modeled ambient air quality data serves as an input to the Environmental Benefits Mapping and Analy sis Program version 4. 0 (BenMAP). 253 BenMAP is a computer program developed by the U.S. EPA that integrates a number of the modeling elements used in previous analy ses (e.g., interpolation functions, population projections, health impact functions, valuation functions, analy sis 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 VIII - 16 . 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 - relate d premature mortality ( each with its own row in Table VIII - 16 ) 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 Anal ys es (RIAs), the assumptions and methods used to estimate air quality benefits evolve to reflect the a gency ’s most current interpretation of the scientific and economic literature.

248 U.S. Environmental Protection Agency. (2006). Final Regulatory Impact Analysis (RIA) for the Proposed 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 249 U.S. Environmental Protection Agency. (2008). Final Ozone NAAQS Regulatory Impact Analysis . Prepared by: Office of Air and Radiat ion, Office of Air Quality Planning and Standards. Retrieved March, 26, 2009 at http://www.epa.gov/ttn/ecas/ria.html 250 Final Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone. Signed July 6 , 2011. Available at http://epa.gov/airtransport/ 251 U.S. Environmental Protection Agency. (2010). Regulatory Impact Analysis : Final Rulemaking to Establish Light - Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards , EPA - 420 - R - 10 - 009, April 2010. Available on the internet : http://www.epa.gov/otaq/climate/regulations/420r10009.pdf 252 U.S. Environmental Protec tion Agency (U.S. EPA). 2010 . Regulatory Impact Analysis: National Emission Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. Offi ce of Air Quality Planning and Standards, Research Triangle Park, NC. Augues . Available on the Internet at < http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementfinalria.pdf >. EPA - HQ - OAR - 2009 - 0472 - 0241 253 Information on BenMAP, including downloads of the software, can be found at http://www.epa.gov/ttn/ecas/ benmodels.html.146 of **Table VIII**  **- 16**  **: Estimated 2030 Monetized PM**  **- and Ozone**  **- Related Health Benefits**  **a** 2030 Total Ozone and PM Benefits

– PM Mortality Derived from American Cancer Society Analysis and Six - Cities Analysis a Premature Ozone Mortality Function Reference Total Benefits ( B illions , 200 9 $, 3% Discount Rate) b, c Total Benefits ( B illions , 200 9 $, 7% Discount Rate) b, c Multi - city analyses Bell et al., 2004 Total: $ 1.3 - $ 2.4 PM: $ 0.74 - $1.8 Ozone: $ 0.55 Total: $ 1.2 - $ 2.2 PM: $ 0.67 - $ 1.6 Ozone: $ 0.55 Huang et al., 2005 Total: $ 1.6 - $ 2.7 PM: $ 0.74 - $1.8 Ozone: $ 0.91 Total: $ 1.6 - $ 2.5 PM: $ 0.67 - $1.6 Ozone: $ 0.91 Schwartz, 2005 Total: $ 1.6 - $ 2.6 PM: $ 0.74 - $1.8 Ozone: $ 0.83 Total: $ 1.5 - $ 2.5 PM: $ 0.67 - $1.6 Ozone: $ 0.83 Meta - analyses Bell et al., 2005 Total: $ 2.4 - $ 3.5 PM: $ 0.74 - $1.8 Ozone: $ 1.7 Total: $ 2.4 - $ 3.3 PM: $ 0.67 - $1.6 Ozone: $ 1.7 Ito et al., 2005 Total: $ 3.1 - $ 4.2 PM: $ 0.74 - $1.8 Ozone: $ 2.4 Total: $ 3.0 - $ 4.0 PM: $ 0.67 - $1.6 Ozone: $ 2.4 Levy et al., 2005 Total: $ 3.1 - $ 4.2 PM: $ 0.74 - $1.8 Ozone: $ 2.4 Total: $ 3.1 - $ 4.0 PM: $ 0.67 - $1.6 Ozone: $ 2.4 Notes: a Total includes premature mortality - related and morbidity - related ozone and PM 2.5 benefits. Range was developed by adding the estimate from the ozone premature mortality function to the estimate of PM 2.5 - related premature mortality derived from either the ACS study (Pope et al., 2002) or the Six - Cities study (Laden et al., 2006). b Note that total benefits presented here do not include a number of unquantified benefits categories. A detailed listing of unquantified health and welfar e effects is provided in Table VIII - 17 . 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. The benefits in Table VIII - 16 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 remai n 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 provi de easil y 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. The se are listed in Table VIII - 17 . As a result, the health benefits quantifi ed in this section are likely underestimates of the total benefits attributable to th is final action .

**Table VIII**  **- 17**  **: Unquantified and Non**  **- Monetized Potential Effects**  Pollutant/Effects Effects Not Included in Analysis - Changes in:***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

147 of Pollutant/Effects Effects Not Included in Analysis - Changes in: Ozone Healtha Chronic respiratory damage b

Premature aging of the lungs b 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 Health c Premature mortality - short term exposures d

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 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 Health f Cancer (benzene, 1,3 -butadiene, formaldehyde, acetaldehyde)

Anemia (benzene) Disruption of production of blood com ponents (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)148 of

Pollutant/Effects Effects Not Included in Analysis - Changes in: 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 repre sented 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 num ber 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 inc luding 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 i n 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 eff

ects of short term exposures. e May result in benefits or disbenefits. f Many of the key hydrocarbons related to this action are also hazardous air pollutants listed in the CAA. While there will be impacts associated with air toxic pollutant emission changes that result from th is final action , we do not attempt to monetize those impacts. This is primarily because currently

available tools and methods to assess air toxics risk from mobile sources at the national scale are not adequate for extrapolation to incidence estimations or benefits assessment. The best suite of tools and methods currently available for assessment at the national scale are those used in the National - Scale Air Toxics Assessment (NATA). The EPA Science Advisory Board specifically

comm ented in their review of the 1996 NATA that these tools were not yet ready for use in a national - scale benefits analy sis, because they did not consider the full distribution of exposure and risk, or address sub - chronic health effects. 254 While EPA has since improved the se tools, there remain critical limitations for estimating incidence and assessing benefits of reducing mobile source air toxics. As part of the second prospective anal ys is of the benefits and costs of the Clean Air Act , 255 EPA conducted a cas e study anal ys is of the health effects associated with reducing exposure to benzene in Houston from implementation of the Clean Air Act . While reviewing the draft report, EPA’s Advisory Council on Clean Air Compliance Analy sis concluded that “the challenge s for assessing progress in health improvement as a result of reductions in emissions of hazardous air pollutants (HAPs) are daunting...due

254 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. 255 U.S. Environm ental Pro tection Agency (U.S. EPA). 2011 . The Benefits and Costs of the Clean Air Act from 1990 to 2020 . Office of Air and Radiation, Washington, DC. March. Available on the Internet at <http://www.epa.gov/air/sect812/feb11/fullreport.pdf>.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

149 of to a lack of exposure - response functions, uncertainties in emissions inventories and background levels, the difficul ty of extrapolating risk estimates to low doses and the challenges of tracking health progress for diseases, such as cancer, that have long latency periods .” 256 EPA continues to work to address these limitations; however, we did not have the methods and tool s available for national - scale application in time for the anal ys is of the final action . 257 EPA is also unaware of specific information identifying an y effects on listed endangered species from the small fluctuations in pollutant concentrations associated with this program (see Section VII.D ). Furthermore, our current modeling tools are not designed to trace fluctuations in ambient concentration levels to potential impacts on particular endangered species. (a ) Quantified Human Health Impacts Table VIII - 18 and Table VIII - 19 present the annual PM 2.5 and ozone health imp acts , respectivel y, in the 48 contiguous U.S. states associated with the HD National Program for 2030. For each endpoint presented in Table VIII - 18 and Table VIII - 19 , 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 studi es and no threshold assumption in the model of mortality , we estimate that the final rules will result in between 7 8 and 200 cases of avoided PM 2.5 - related premature mortalities annually in 2030. As a sensitivity analy sis, when the range of expert opinion is used, we estimate between 2 6 and 2 60 fewer premature mortalities in 2030 (see Table 8 - 14 in the RIA that accompanies this action). For ozone - related premature mortality in 2030 , we estimate a range of between 5 4 to 24 0 fewer premature mortalities . **Table VIII**  **- 18**  **: Estimated PM**  **2.5 -**  **Related Health Impacts a**  Health Effect 2030 Annual Reduction in Incidence (5 th % - 95 th %ile)

256 U.S. Enviro nmental Protection Agency

— Science Advisory Board (U.S. EPA - SAB). 2008. Benefits of Reducing Benzene Emissions in Houston, 1990

–2020 . EPA - COUNCIL - 08 - 001. July. Available at <http://yosemite.epa.gov/sab/sabproduct.nsf/D4D7EC9DAEDA8A548525748600728A83/$File/E PA COUNCIL - 08 - 001 - unsigned.pdf>. 257 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 o f 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 n ear 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.150 of Health Effect 2030 Annual Reduction in Incidence (5 th % - 95 th %ile) Premature Mortality

– Derived from epidemiology literature b 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) 7 8 ( 30

– 1 30 ) 200 ( 110

– 290 ) 0 (0

– 1 ) Chronic bronchitis (adult, age 26 and over) 53 ( 1 0

– 97 ) Non - fatal myocardial infarction (adult, age 18 and over) 1 50 ( 54

– 240 ) Hospital admissions - respiratory (all ages) c 2 0 (1 0

– 3 0 ) Hospital admissions - cardiovascular (adults, age >18) d 4 5 ( 3 2

– 52 ) Emergency room visits for asthma (age 18 years and younger) 8 1 ( 48

– 1 20 ) Acute bronchitis, (children, age 8 - 12) 130 (0

– 270 ) Lower respiratory symptoms (children, age 7 - 14) 1,600 ( 750

– 2,400 ) Upper respiratory symptoms (asthmatic children, age 9 - 18) 1,200 ( 370

– 2,000 ) Asthma exacerbation (asthmatic children, age 6 - 18) 1,400 (1 60

– 4,0 00) Work loss days 9,7 00 ( 8,5 00

– 11,0 00) Minor restricted activity days (adults age 18 - 65) 57 ,000 ( 48,0 00

– 66 ,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 (Lade n 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 Woodruff, Grillo, and Schoendorf, (1997). 258 c Respiratory hospital admissions for PM include admi ssions 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.

258 Woodruff, T.J., J. Grillo, and K.C. Schoendorf. 1997. “The Relationship Betw een Selected Causes of Postneonatal Infant Mortality and Particulate Air Pollution in the United States.” Environmental Health Perspectives 105(6):608 - 612.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

151 of **Table VIII**  **- 19**  **: Estimated**  **Ozone -**  **Related Health Im pacts**  **a** Health Effect 2030 Annual Reduction in Incidence (5th% - 95th%ile) Premature Mortality, All ages b 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 It o et al. (2005)

– Non - accidental Levy et al. (2005)

– All cause 5 4 (2 3

– 84 ) 90 ( 43

– 140 ) 82 ( 34

– 130 ) 1 70 ( 96

– 250 ) 240 (1 60

– 320 ) 240 (1 80

– 310 ) Hospital admissions - respiratory causes (adult, 65 and older)c 510 ( 69

– 870 ) Hospital admissions - respiratory causes (children, under 2) 3 20 (1 60

– 470 ) Emergency room visit for asthma (all ages) 230 (0

– 630 ) Minor restricted activity days (adults, age 18 - 65) 300 ,000 ( 150 ,000

– 450 ,000) School absence days 1 20,000 ( 52,0 00

– 170 ,000 Notes: a 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 estimate s 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. (b ) Monetized Benefits Table VIII - 20 presents the estimated monetary value of changes in the incidence of ozone and PM 2.5 - related health effects. All monetized estimates are stated in 2009 $ . 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 203 0 for the program , using the ACS and Six - Cities PM mortality studies and the range of ozone152 of

mortality assumptions, is betwee n $1 .3 and $ 4.2 b illion, assuming a 3 percent discount rate, or between $ 1.2 and $ 4.0 b illion , assuming a 7 percent discount rate. **Table VIII**  **- 20**  **: Estimated Monetary Value of Changes in Incidence of Health and Welfare Effects**  **in 2030**  **( M**  **illions of 2009$) a,b**  **PM 2.5**  **- Related Health Effect**  **(5 th**  **and 95 th**  **%ile)** Premature Mortality

– Derived from Epidemiology Studies c,d, Adult, age 30+ - ACS study (Pope et al., 2002) 3% discount rate 7% discount rate $ 680 ($ 87 - $ 1,800 ) $ 620 ($ 79 - $ 1,600 ) Adult, age 25+ - Six - Cities study (Laden et al., 2006) 3% discount rate 7% discount rate $ 1,800 ($2 5 0 - $ 4,300 ) $ 1,600 ($ 220 - $ 3,900 ) Infant Mortality, <1 year

– (Woodruff et al. 1997) $ 2.5 ($0 - $ 9.4 ) Chronic bronchitis (adults, 26 and over) $ 29 ($ 2.4 - $ 9 6) Non - fatal acute myocardial infarctions 3% discount rate 7% discount rate $1 6 ($ 3.7 - $ 38 ) $ 16 ($ 3.4 - $ 38 ) Hospital admissions for respiratory causes $0. 3 1 ($0. 15 - $0. 4 5) Hospital admissions for cardiovascular causes $ 1.3 ($0. 83 - $ 1.8 ) Emergency room visits for asthma $0.0 3 ($0.0 2 - $0.0 5 ) Acute bronchitis (children, age 8

– 12) $0.01 ($0 - $0.03) Lower respiratory symptoms (children, 7

– 14) $0.0 3 ($0.0 1 - $0.0 6 ) Upper respiratory symptoms (asthma, 9

– 11) $0.0 4 ($0.0 1 - $0.0 8 ) Asthma exacerbations $0.0 8 ($0 .009 - $0. 23 ) Work loss days $ 1.6 ($ 1.4 - $ 1.8 ) Minor restricted - activity days (MRADs) $ 3.6 ($ 2.1 - $ 5.2 )***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

153 of **Ozone -**  **related Health Effect** Premature Mortality, All ages

– Derived from Multi - city analyses Bell et al., 2004 $ 520 ($ 69 - $ 1,300 ) Huang et al., 2005 $ 880 ($ 120 - $ 2,200 ) Schwartz, 2005 $ 800 ($ 100 - $ 2,000 ) Premature Mortality, All ages

– Derived from Meta - analyses Bell et al., 2005 $ 1,700 ($ 240 - $ 4,100 ) It o et al., 2005 $ 2,300 ($ 350 - $ 5,500 ) Levy et al., 2005 $ 2,400 ($ 350 - $ 5,500 ) Hospital admissions - respiratory causes (adult, 65 and older) $ 13 ($ 1.7 - $ 22 ) Hospital admissions - respiratory causes (children, under 2) $ 3.4 ($ 1.8 - $ 5.0 ) Emergency room visit for asthma (all ages) $ 0.09 ($0 - $0. 2 3) Minor restricted activity days (adults, age 18 - 65) $ 19 ($ 8.6 - $ 32 ) School absence days $ 11 ($ 5.0 - $ 16 ) Notes: a 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. (c) What Are the Limitations of the Benefits Analysis? Every benefit - cost analy sis 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 underl yi ng scientific and economic studies used to configure the benefit and cost models. Limitations of the scientific literat ure often result in the inability to estimate quantitative changes in health and environmental effects, such as potential decreases in premature mortality associated with decreased exposure to carbon monoxide. Deficiencies in the economics literature ofte n 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. Key154 of

uncertainties that have a bearing on the results of the benefit - cost anal ys is of the final rules include the following:  The exclusion of potentially significant and unquantified benefit categories (such as health, odor, and ecological benefits of reduction in air toxics, ozone, and PM);  Errors in measurement and projection for variables such as population growth;  Uncertainties in the estimation of future ye ar emissions inventories and air quality ;  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 V III - 20 indicates, total benefits are driven primaril y b y the reduction in premature mortalities each year. Some key assumptions underlying the premature mortality estimates include the following, which may also contribute to uncertaint y:  Inhalation of fine part icles is causally associated with premature death at concentrations near those experienced b y most Americans on a daily basis. Although biological mechanisms for this effect have not yetbeen completel y established, the weight of the available epidemiolog ical, 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 equall y potent in causing premature mortality . This is an important assumption, because PM produced via transported precursors emitted from heav y- duty engines may differ significantly from PM precursors released from electric generating units and other industrial 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 c oncentrations 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 PM 2.5 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 benefits associated with the coordinated strategy is estimated based on the risk of several sources of ozone - related mortality effect estimates. In a 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 prem ature deaths and that ozone - related mortality should be included in estimates of***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

155 of the health benefits of reducing ozone exposure. 259 EPA has requested advice from the National Academ y of Sciences on how best to quantify uncertainty in the relationship betwee n ozone exposure and premature mortality in the context of quantifying benefits. Despite the uncertainties described above, we believe this anal ys is provides a conservative estimate of the estimated non - GHG health and environmental benefits of the standard s in future ye ars because of the exclusion of potentially significant benefit categories that are not quantifiable at this time. Acknowledging benefits omissions and uncertainties, we present a best estimate of the total benefits based on our interpretati on of the best available scientific literature and methods supported by EPA’s technical peer review panel, the Science Advisory Board’s Health Effects Subcommittee (SAB - HES). The National Academies of Science (NRC, 2002) has also reviewed EPA’s methodolog y for anal yz ing the health benefits of measures taken to reduce air pollution. EPA addressed man y of these comments in the anal ys is of the final PM NAAQS. 260 , 261 This anal ys is incorporates this work to the extent possible. **(2) Non**  **- GHG Human Health Benefits**  **of the Model Year (MY) Analysis**  As described in Section VII , the final standards will reduce emissions of several criteria and toxic pollutants and precursors. EPA ty picall y anal yz es rule impacts (emissions, air quality , costs and benefits) in the year in wh ich they occur; for the anal ys is of non - GHG ambient air quality and health impacts, we selected 2030 as a representative future year since resource and time constraints precluded EPA from considering multiple calendar years. We refer to this analysis as the “Calendar Year” (CY) anal ys is because the benefits of the program reflect impacts across all regulated vehicles in a calendar ye ar. EPA also conducted a separate anal ys is of the impacts over the model year lifetimes of the 2014 through 2018 model year vehicles. We refer to this analy sis as the “Model Year” (MY) analy sis (see Chapter 6 of the RIA that accompanies this preamble). In contrast to the CY analy sis, the MY analy sis estimates the impacts of the program on each MY fleet over the course of its lifetime. Due to analy tical and resource limitations, however, MY non - GHG emissions (direct PM, VOCs , NO 2 and SO 2 ) were not estimated for this anal ys is. Because MY impacts are measured in relation to onl y the lifetime of a particular vehicle model year (2014, 2015, 2016, 2017, and 2018), and assumes no additional controls to model year vehicles beyond 2018, the impa cts are smaller than if the impacts of all regulated vehicles were considered. We therefore expect that the non GHG health - related benefits associated with the MY anal ys is will be smaller than those

259 National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution. The National Academies Press: Washington, D.C. 260 National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air Pollution Regulations. The National Academies Press: Washington, D.C. 261 U. S. Environmental Protection Agency. October 2006. Final Regulatory Impact Analysis (RIA) for the Proposed National Ambient Air Quality Standards for Particulate Matter . Prepared by: Office of Air and Radiation. Available at http ://www.epa.gov/ttn/ecas/ria.html.156 of

estimated for the CY analy sis, both in a given year (suc h as 2030) and in present value terms across a given time period (such as 2014

– 2050). 

### I. **Energy Security**  **Impacts** Th e HD National Program is designed to reduce fuel consumption and GHG emissions in medium and heav y- duty (HD) vehicles, which will result i n improved fuel efficiency and , in turn, help to reduce U.S. petroleum imports. A reduction of U.S. petroleum imports reduces both financial and strategic risks caused b y potential sudden disruptions in the supply

of imported petroleum to the U.S. This r eduction in risk is a measure of improved U.S. energy security . This section summarizes the agencies’ estimates of U.S. oil import reductions and energy security benefits of the final HD National Program . Additional discussion of this issue can be found in Chapter 9. 7 of the RIA. **(1) 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. 262 In2008, the United States imported 66 percent of the p etroleum it consumed, and the transportation sector accounted for 70 percent of total U.S. petroleum consumption. This compares to approximately 37 percent of petroleum from imports and 55 percent of consumption from petroleum in the transportation sector in 1975. 263 Itis clear that petroleum imports have a significant impact on the U.S. econom y. Requiring lower GHG vehicle technology and fuel efficient technology in HD vehicles in the U.S. is expected to lower U.S. o il imports. EPA used the MOVES model to estimate the fuel savings due to this program. A detailed explanation of the MOVES model can be found in Chapter 5 of the RIA. Based on a detailed anal ysis of differences in fuel consumption, petroleum imports, and imports of refined petroleum products and crude oil using the Reference Case presented in the Energy Information Administration’s Annual Energy Outlook (AEO) 2011 Earl y Release , EPA and NHTSA estimate that approximately 50 percent of the reduction in fuel consumption resulting from adopting improved GHG emissions standards and fuel efficiency standards is likel y to be reflected in reduced U.S. imports of refined fuel, while the remaining 50 percent is expected to be reflected in reduced domestic fuel refin ing . 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 gall on of fuel saved as a consequence of the HD GHG and fuel efficiency standards is anticipated to reduce total U.S. imports of petroleum by 0.95 gallons. 264 The 262 Source: U.S. Bureau of Economic Analysis, U.S. International Transactions Accounts Data, as shown on June 24, 2009. 263 Source: U.S. Department of Energy, Annual Energy Revie w 2008, Report No. DOE/EIA - 0384(2008), Tables 5.1 and 5.13c, June 26, 20 09. 264 This figure is calculated as 0.50 + 0.50*0.9 = 0.50 + 0.45 = 0.95.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

157 of agencies’ estimates of the reduction in U.S. oil imports from this program for selected ye ars, in millions of barrels per day , are presented in Table VIII - 21 below. These estimates assume that the fuel efficiency of HD vehicles remains constant in the baseline. **Table VIII**  **- 21**  **: U.S. Oil Import Reductions from the HD National Program** **for Selected Years (M**  **illions of**  **Barrels per Day, mmbd)** Year mmbd 2020 0. 202 2030 0. 393 2040 0. 489 2050 0. 566 **(2) Energy Security Implications**  In order to understand the energy securit y 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 provide d 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 final action . 265 , 266 When conducting this analy sis, ORNL considered the full economic cost of importing petroleum into the United States. The economic cost of importing petroleum into the U.S. is defined to include two components in addition to the purchase price of petroleum itself. These are: (1) the higher costs for oil imports resulting from the effect of increasing U.S. import demand on the world oil price and on the market power of the Organization of the Petroleum Exporting Countries (i.e., the “ demand ” or “ monopsony” costs); and (2) the risk of reductions in U.S. economic output and disruption of the U.S. econom y caused b y sudden disruptions in the supply of imported petroleum to th e U.S. (i.e., macroeconomic disruption/adjustment costs). Maintaining a U.S. military presence to help secure stable oil supply from potentiall y vulnerable regions of the world was not included in this analy sis because its attribution to particular missi ons or activities is hard to quantify . For this action , ORNL estimated energy securit y premium s by

incorpor ating the most recent available AEO 2011 Earl y Release oil price forecasts and market trends. Energy security premiums fo r the years 2020, 2030, 2040, and 2050 are presented in

265 Leiby, Paul N. , " Estimating the Energy Security Benefits of Reduced U.S. Oil Import s " Oak Ridge National Laboratory, ORNL/TM - 2007/028, Final Report, 2008. (Docket EPA - HQ - OAR - 2010 - 01 62) 266 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 im port reductions developed in an ORNL 1997 Report by Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee, entitled “ Oil Imports: An Assessment of Benefits and Costs. " (Docket EPA - HQ OAR - 20 10 - 0162 )158 of

Table VIII - 22 , as well as a breakdown of the components of the energy security premium s for each of these years. 267 The components of th e energy security premium s and their values are discussed in detail in Chapter 9. 7 of the RIA.

**Table VIII**  **- 22**  **: Energy Security Prem** **ium s in Selected Years (2009$/Barrel)**  Year (range) Monopsony Macroeconomic Disruption/Adjustment Costs Total Mid - Point 2020 $11.29

($3.86 - $21.32) $7.11 ($3.50 - $11.40) $18.41 ($9.70 - $28.94) 2030 $11.17

($3.92 - $20.58) $8.32 ($4.04 - $13.33) $19.49 ($10.49 - $29.63) 20 35 $10.56

($3.69 - $19.62) $8.71 ($3.86 - $14.35) $19.27 ($10.32 - $29.13) The literature on the energy securit y for the last two decades has routinel y combined the monopsony and the macroeconomic disruption components when calculating the total value of the energy securit y premium. However, in the context of using a global SCC value, the question arises: how should the energy security premium be determined when a global perspective is taken? Monopsony benefits represent avoided pay

ments by the United States to oil producers in foreign countries that result from a decrease in th e world oil price as the U.S. decreases its consumption of imported oil. Several commenters commented on the agencies’ energy securit y anal ys is of this program. The Conservative Law Foundation, Interfaith Care for Creation, Environmental Defense Fund an d American Lung Association (EDF/ALA) and R. Desjardin noted that the standards in this program will increase our national security b y decreasing U.S. dependence on foreign oil imports. The Competitive Enterprise Institute (CEI) felt that there is no relationship between reduced U.S. oil imports and U.S. energy securit y; the commenter sees no relationship between reduced oil imports and, for example, the number of hijackings, bombings, and other terrorist - related activities that have occurred through t ime. CBD commented that the benefit of the reduction of military costs associated with maintaining a secure oil supply should be fully

accounted for, and EDF recommended a more extensive anal ys is of the external security costs of oil dependence. The age ncies recognize that potential national and energy securit y risks exist due to the possibility

of tension over oil supplies. Much of the world’s oil and gas supplies are located in countries facing social, economic, and demographic challenges , thus making them even more vulnerable to potential local instability . For example, in 2010 just over 40 percent of world oil supply came from OPEC nations, and this share is not expected to decline in the AE O 2011 projections through 2030. Approximately 28 percent of global supply

is from Persian Gulf countries alone. As another measure of

267 AEO 2011 forecasts energy market trends and values only to 2035. The energy security premium estimates post - 2035 were assumed to be the 2035 estimate.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

159 of concentration, of the 137 countries/principalities that export either crude oil or refined petroleum product, the top 12 have recentl y accounted for over 55 percent of exports. 268 Eight of these countrie s are members of OPEC, and a 9th is Russia. 269 Ina market where even a 1 - 2 percent supply loss raises prices noticeably , and where a 10 percent supply loss could lead to a significant price shock, this regional concentration is of concern. Historically , the countries of the Middl e East have been the source of eight of the ten major world oil disruptions 270 with the 9 th originating in Venezuela, an OPEC member . Because of U.S. dependence on oil, the military could be called on to protect energy resources through such measures as securing shipping lanes from foreign oil fields. To maintain such military effectiveness and flexibility , the Department of Defense identified in the Quadrennial Defense Review that it is “increasing its use of renewable energy supplies and reducing energy demand to improve operational effectiveness, reduce greenhouse gas emissions in support of U.S. climate change initiatives, and protect the Department from energy price fluctuations.” 272 The Department of the Nav y has also stated that the Navy and Marine Corps rely

far too much on petroleum, which “degrades the strategic position of our country and the tactical performance of our forces. The global supply

of oil is finite, it is becomin g increasingl y difficult to find and exploit, and over time cost continues to rise.” 273 In remarks given to the White House Energy Security Summit on April 26, 2011, Deputy Securit y of Defense William J. Lynn, III noted the direct impact of energy security on military

readiness and flexibility . According to Deputy Security Lynn, “ Today , energy

technology

remains a critical element of our military superiority . Addressing energy

needs must be a fundamental part of our military planning.” 274 Thus, to the degree to which the final rule s reduce reliance upon imported energy supplies or promotes the development of technologies that can be deployed by either consumers or the nation’s defense forces, the United States could expect benefits related to national sec urity, reduced energy costs, and increased energy suppl y. Th e s e benefit s are wh y President Obama has identified this program as a key component for improving

268 Based on data from the CIA, combining various recent years, https://www.cia.gov/library/publications/the - wo rld - factbook/rankorder/2176rank.html . 269 The other three are Norway, Canada, and the EU, an exporter of product. 270 IEA 2011 “IEA Response System for Oil Supply Emergencies

272 U.S. Department of Defense. 2010. Quadrennial Defense Revie w Report. Secretary of Defense: Washington, D.C. 128 pages. 273 The Department of the Navy’s Energy Goals ( http://www.navy.mil/features/Navy_EnergySecurity.pdf ) (Last accessed May 31, 2011). 274 U.S. Department of Defense, Speech: Remarks at the White House Energy Security Summit. Tuesday, April 26, 2011. ( http://www.defense.gov/speeches/speech.aspx?speechid=1556 ) (Last accessed May 31, 2011).160 of

energy efficiency

and putting America on a path to reducing oil imports in the Blueprint f or a Secure Energy

Future. 275 Although the agencies recognize that there clearl y is a benefit to the United States from reducing dependence on foreign oil, the agencies have been unable to calculate the monetary benefit that the United States will receive from the improvements in national security expected to result from this program . In contrast, the other portion of the energy security premium, the U.S. macroeconomic disruption and adjustment cost that arises from U.S. petroleum imports , is included in the energy security benefits estimated for this program. To summarize, the agencies have included only the macroeconomic disruption portion of the energy

security benefits to estimate the monetary value of the total energy security benefits of this program. The agencies have calculated energy security in very specific terms, as the reduction of both financial and strategic risks caused by potential sudden disruptions in the supply of imported petroleum to the U.S. Reducing the amount of oil imported red

uces those risks, and thus increases the nation’s energy securit y. Another commenter, citing Administration guidelines (OMB Circular A - 4) for conducting economic analy ses, felt that the agency should include the monopsony benefit as part of its overall costs and benefits anal ys is. After reviewing the guidelines cited by the commenter, the agencies have conclud ed that excluding the monopsony benefit from its overall costs and benefits analy sis continues to be appropriate when a global perspective is taken. However, the agencies recognize that the monopsony benefit has distributional impacts for the U.S., and co ntinue to describe and discuss the monopsony benefit in this section of the Preamble. The t otal annual energy

securit y benefits for the final HD National Program are reported in Table VIII - 23 for the ye ars 2020, 2030, 2040 and 2050. **Table VIII**  **- 23**  **: Total Annual Energy Security Benefits from** **the HD National Program**

**in 2020, 2030, 2040 and 2050 (Millions, 2009$)** Year Benefits 2020 $ 499 2030 $ 1,132 2040 $ 1,477 2050 $ 1,710 

### J. **Other Impacts (1)**  **Noise, Congestion and Accidents** Increased vehicle use associated with a positive rebound effect also contributes to increased traffic congestion, motor vehicle accidents, and highway noise. Depending on

275 The White House, Blueprint for a Secure Energy Future (March 30, 2011) ( http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf ) (Last accessed May 27, 2011).***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

161 of how the additional travel is distributed throughout the day and on where it takes pla ce, additional vehicle use can contribute to traffic congestion and delay s by increasing traffic volumes on facilities that are already heavil y 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. Because drivers do not take these added costs into account in deciding when and where to travel, they must be account ed for separately as a cost of the added driving associated with the rebound effect. EPA and NHTSA rel y on estimates of congestion, accident, and noise costs caused b y pickup trucks and vans, single unit trucks, buses, and combination tractors developed b y the Federal Highway Administration to estimate the increased external costs caused b y added driving due to the rebound effect. 276 The Federal Highway Administration (FHWA) estimates are intended to measure the increases in costs from added congestion, prop erty damages and injuries in traffic accidents, and noise levels caused b y various ty

pes of trucks that are borne by persons other than their drivers (or “marginal” external costs). EPA and NHTSA employed estimates from this source previously

in the anal y sis accompan yi ng the l ight - Duty 2012 - 16 MY vehicle rule. The agencies continue to find them appropriate for this anal ys is after reviewing the procedures used b y FHWA to develop them and considering other available estimates of these va lues. FHWA’s congestion cost estimates for trucks, which are weighted averages based on the estimated fractions of peak and off - peak freeway

travel for each class of trucks, already account for the fact that trucks make up a smaller fraction of peak peri od traffic on congested roads because they try to avoid peak periods when possible. FHWA’s congestion cost estimates focus on freeway s because non - freeway effects are less serious due to lower traffic volumes and opportunities to re - route around the conge stion. The agencies, however, applied the congestion cost to the overall VMT increase, though the fraction of VMT on each road ty pe used in MOVES range from 27 to 29 percent of the vehicle miles on freeways for vocational vehicles and 53 percent for combination tractors. The results of this analy sis potentiall y overestimate the costs and provide a conservative estimate. The agencies are using FHWA’s “Middle” estimates for marginal congestion, accident, and noise costs caused b y increased travel from tru cks . This approach is consistent with the current methodology used in the L ight - Duty

GHG rulemaking anal ys is. These costs are multiplied by the annual increases in vehicle miles travelled from the positive rebound effect to yield the estimated cost increases resulting from in creased congestion, accident s , and noise during each future ye ar. The values the agencies used to calculate these increased costs are included in Table VI II - 24 : .

276 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 July 21, 2010 ).162 of **Table VIII**  **- 24**  **: Noise, Accident, and Congestion Costs per Mile (2009$)** External Costs Pickup T ruck s and

V ans ($/VMT) V ocational V ehicles

($/VMT) C ombination

T r a c tor s ($/VMT) Congestion $0.0 49 $0. 111 $0. 108 Accidents $0.0 27 $0. 019 $0. 022 Noise $0.001 $0.0 09 $0.0 20 In aggregate, the increased costs due to noise, accidents, and congestion from the additional truck driving are presented in Table VIII - 25 .

**Table VIII**  **- 25**  **: Accident, Noise, and Congestion Costs (Millions, 2009$)**  Year Pickup Trucks

and Vans Vocational

Vehicles Combination

Tractors Total Costs 2012 $0 $0 $0 $0 2013 $0 $0 $0 $0 2014 $8 $21 $18 $46 2015 $15 $38 $31 $84 2016 $22 $55 $43 $120 2017 $29 $71 $54 $153 2018 $36 $85 $64 $186 2020 $51 $112 $83 $246 2030 $105 $195 $138 $437 2040 $130 $256 $166 $551 2050 $148 $298 $191 $638 NPV, 3% $1,818 $3,620 $2,492 $7,929 NPV, 7% $832 $1,680 $1,184 $3,695 **(2) Savings Due to Reduced Refueling Time**  Reducing the fuel consumption of heavy - duty trucks may either increase their driving range before they require refueling , or motivate truck purchasers to buy , and manufacturers to offer, smaller fuel tanks . Keeping the fuel tank the same size allows truck operators to reduc e the frequency with which drivers ty

picall y refuel their vehicles; it thus extend s the upper limit of the range they can travel before requiring refueling. Alternativel y, if purchasers and manufacturers respond to improved fuel efficiency by reducing the size of fuel tanks to maintain a constant driving range, the smaller tank will require less time in actua l refueling . Because refueling time represents a time cost of truck operation, these time savings should be incorporated into truck purchasers’ decisions over how much fuel saving technology

they want in their vehicles. The savings calculated here thus raise the same questions discussed in Preamble VIII.A and RIA Section 9.1 does the apparent existence of these savings reflect failures in the market for fuel efficiency , or does it***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

163 of reflect costs not addressed in this analy sis? The response to these que stions could vary across truck segment. See those sections for further anal ys is of this question. This analy sis estimates the reduction in the annual time spent filling the fuel tank; this reduced time could come either from fewer refueling events, if the fuel tank stay s the same size, or less time spent during each refueling event, if the fuel tank is made proportionatel y smaller. The refueling savings are calculated as the savings in the amount of time that would have been necessary to pump the fuel. T he calculation does not include time spent searching for a fuel station or other time spent at the station; it is assumed that the time savings occur onl y during refueling. The value of the time saved is estimated at the hourl y rate recommended for truck operators ($22.36 in 2009 dollars) in DOT guidance for valuing time savings. 277 The refueling savings include the increased fuel consumption resulting from additional mileage associated with the rebound effect. However, the estimate of the rebound effect do es not account for any reduction in net operating costs from lower refueling time. As discussed earlier, the rebound effect should be a measure of the change in VMT with respect to the net change in overall operating costs . Ideally , changes in refueling t ime would factor into this calculation, al though the effect is expected to be minor because refueling time savings are small relative to the value of reduce d fuel expenditures. The details of this calculation are discussed in the RIA Chapter 9.3.2. The savings associated with reduced refueling time for a truck of each typ e throughout its lifetime are shown in Table VIII - 26 . The aggregate savings associated with reduc ed refueling time are shown in Table VIII - 27 for vehicles sold in 2014 through 2050.

277 U.S. Department of Transportation, “Revised Departmental Guidance for Valuation of Travel Time in Economic Analysis,” February 11, 2003, Table 4 (which show s a value of $18.10 in 2000 dollars) ; available at http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2 - 11 - 03.pdf (last accessed September 9, 2010).164 of **Table VIII**  **- 26**  **: Lifetime Refueling Savings for a 2018 MY Truck of Each Type (2009$)**

Pickup Trucks and Vans Vocational Vehicles Combination Tractor 3% Discount Rate $31 $ 34 $341 7% Discount Rate $19 $ 22 $223

**Table VIII**  **- 27**  **: Annual Refueling Savings (Millions, 2009$)** Year Pickup Trucks

and Vans Vocational

Vehicles Combination

Tractor Total 2012 $0.0 $0.0 $0.0 $0.0 2013 $0.0 $0.0 $0.0 $0.0 2014 $0.2 $1.4 $8.0 $9.6 2015 $0.5 $2.6 $14.3 $17.3 2016 $1.3 $3.8 $19.6 $24.6 2017 $2.7 $6.2 $26.7 $35.6 2018 $5.2 $8.5 $33.8 $47.5 2020 $10.5 $12.7 $46.2 $69.3 2030 $32.6 $25.8 $82.9 $141 2040 $43.4 $35.1 $100.5 $179 2050 $50.1 $41.3 $116.1 $207 NPV, 3% $541 $468 $1,467 $2,476 NPV, 7% $231 $2 10 $685 $1,126 

### K. **The Effect of Safety Standards**  **and Voluntary Safety Improvements**  **on Vehicle Weight** Safety standards developed by NHTSA in previous rulemakings may make compliance with the fuel efficiency and CO 2 emissions standards more difficult or may reduce the projected benefits of the program. The primary way that safety regulations can impact fuel efficiency and CO 2 emissions is through increased vehicle weight, which reduces the fuel efficiency (and thus increases the CO 2 emissions) of the vehicle. Using MY 2010 as a baseline, this section discusses the effects of other government regulations on MY s 2014 - 2016 medium and heav y- duty vehicle fuel efficiency and CO 2 emissions . At this time, no known safety standards wil l affect new models in MY 2017 or 2018. NHTSA’s estimates are based on cost and weight tear - down studies of a few vehicles and cannot possibly

cover all the variations in the manufacturers’ fleets. NHTSA also requested, and various manufacturers provided , confidential estimates of increases in weight resulting from safety improvements. Those increases are shown in subsequent tables. We have broken down our anal ys is of the impact of safety standards that might affect the MY s 2014 - 20 16 fleets into three parts: 1) those NHTSA final rules with known effective dates, 2) proposed rules or soon - to - be proposed rules b y NHTSA with or***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

165 of without final effective dates, and 3) currentl y voluntary safety improvements planned by the manufacturers. **(1) Weight Impacts of R**  **equired Safety Standards** NHTSA has undertaken several rulemakings in which several standards would become effective for medium - and heav y- duty (MD/HD) vehicles between MY 2014 and MY 2016. We will examine the potential impact on MD/HD vehicle weights for MY s 2014 - 2016 using MY 2010 as a baseline.  FMVSS 119, Heav y Truck Tires Endurance and High Speed Tests  FMVSS 121, Air Brake Sy stems Stopping Distance  FMVSS 214, Motor Coach Lap/Shoulder Belts  MD/HD Vehicle Electronic Stability Control Sy stems (a ) FMVSS 119

, Heavy Truck Tires Endurance and High Speed Tests NHTSA tentatively

determined that the FMVSS No. 119 performance tests developed in 1973 should be updated to reflect the increased operational speeds and duration of truck tires in commercial service. A No tice of Proposed Rulemaking (NPRM) was issued December 7, 2010 (75 FR 60036). It proposed to increase significantly the stringency

of the endurance test and to add a new high speed test. The data in the large truck crash causation study (LTCCS) that prec eded that NPRM found that J and Lload range tires were having proportionatel y more problems than the other sizes and the agency ’s test results indicate that H, J , and L load range tires are more likely to fail the proposed requirements among the targeted F, G, H, J and Lload range tires. 278 To address these problems, the H and J load range tires could potentially use improved rubber compounds, which would add no weight to the tires, to reduce heat retention and improve the durability

of the tires. The L l oad range tires, in contrast, appear to need to use high tensile strength steel chords in the tire bead, carcass and belt areas, which would enable a weight reduction with no strength penalties. Thus , if the update to FMVSS No. 119 was finalized, we antic ipate no change in weight for H and J load range tires and a small reduction in weight for L load range tires. This proposal could become a final rule with an effective date of MY 2016. (b ) FMVSS No. 121, Airbrake Systems Stopping Distance FMVSS No. 121 contains performance and equipment requirements for braking sy stems on vehicles with air brake sy stems. The most recent major final rule affecting FMVSS No. 121 was published on July 27, 2009 , and became effective on November 24, 2009 (MY 20 09). The final rule requires the vast majority of new heavy

truck tractors (approximately

99 percent of the fleet) to achieve a 30 percent reduction in stopping distance compared to currently required levels. Three - ax l e tractors with a gross vehicle 278 “Preliminary Regulatory Impact Analysis, FMVSS No. 119, New Pneumatic Tires for Motor Vehicles with a GVWR of More Than 4,536 kg (10,000 pounds), June 2010.166 of

weight rating (GVWR) of 59,600 pounds or less must meet the reduced stopping distance requirements b y August 1, 2011 (MY 2011) , while two - axle tractors and tractors with a GVWR above 59,600 pounds must meet the reduced stopping distance requirements by the lat er date of August 1, 2013 (MY 2013). NHTSA determined that there are several brake s ys tems that can meet the requirements established in the final rule , including installation of larger S - cam drum brakes or disc brake s ys tems at all positions, or hy brid disc and larger rear S - cam drum brake s ys tems. According to data provided by a manufacturer (Bendix) in response to the NPRM , the heaviest drum brakes weigh more than the lightest disc brakes , while the heaviest disc brakes weigh more than the lightest dr um brakes. For a three - axle tractor equipped with all disc brakes, then, the total weight could increase by 212 pounds or could decrease by 134 pounds compared to an all - drum - braked tractor , depending on which disc or drum brakes are used for comparison. The improved brakes may add a small amount of weight to the affected vehicle s for MY s 2014 - 2016 , resulting in a slight increase in fuel consumption. (c) FMVSS No. 208, Motor coach Lap/Shoulder Belts NHTSA is proposing lap/shoulder belts for all motorcoach s eats. About 2,000 motorcoaches are sold per year in the United States. Based on preliminary results from the agency ’s cost/weight teardown studies of motor coach seats, 279 NHTSA estimate s that the weight added b y 3 - point lap/shoulder belts ranges from 5.96 to 9.95 pounds per 2 - person seat. This is the weight onl y of the seat belt assembly itself , and does not include changing the design of the seat, reinforcing the floor, walls or other areas of the motor coach. Few current production motor coaches have b een installed with lap/shoulder belts on their seats, and the number of vehicles with these belts already installed could be negligible. Assuming a 54 passenger motor coach, the added weight for the 3 - point lap/shoulder belt assembly would be in the range of 161 to 269 pounds (27 * (5.96 to 9.95)) per vehicle. This proposal could become a final rule with an effective date of MY 2016. (d ) Electronic Stability Control Systems (ESC) for Medium - and Heavy -Duty (MD/HD) Vehicles The purpose of an ESC system for M D/HD vehicles is to reduce crashes caused by rollover or by

directional loss - of

- control. ESC monitors a vehicle’s rollover threshold and lateral stability

using vehicle speed, wheel speed, steering wheel angle, lateral acceleration, side slip and yaw rate data and upon sensing an impending rollover or loss of directional control situation automatically reduces engine throttle and applies braking forces to individual wheels or sets of wheel to slow the vehicle down and regain directional control. ESC is n ot currently required in MD/HD vehicles , but could be proposed to be required in the se vehicles b y NHTSA. FMVSS No. 105, Hydraulic and electric brake s ys tems, requires multipurpose passenger vehicles, trucks and buses with a

279 Cost and Weight Analysis of Two Motorcoach Seating Systems: One With and One Without Three Point Lap/Shoulder Belt Restraints, Ludtke and Associates, July 2010.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

167 of GVWR greater than 4,536 kg (10,000 pounds) to be equipped with an antilock brake sy stem (ABS). All MD/HD vehicles h av ing a GVWR of more than 10,000 pounds, are required to have ABS installed by that standard. In addition to the existing ABS functionality, ESC requires sensors including a yaw rate sensor, lateral acceleration sensor, steering angle sensor and brake pre ssure sensor along with a brake solenoid valve. According to data provided by Meritor WABCO, the weight of an ESC system for the model 4S4M tractor is estimated to be around 55. 5 pounds, and the weight of the ABS only is estimated to be 45.5 pounds. Thus , we estimate the added weight for the ESC for the vehicle to be 10 (55. 5

– 45.5) pounds. **(2) Summary**  **– Overview**  **of Anticipated Weight Increases** Table VIII - 28 s ummarizes estimates made by NHTSA regarding the weight added by the above di scussed standards or likel y rulemakings. NHTSA estimates that weight additions required b y final rules and likel y NHTSA regulations effective in MY 2016 compared to the MY 2010 fleet will increase motor coach vehicle weight by 171 to 279 pounds and will i ncrease other heav y- duty truck weights by

10 pounds. **Table VIII**  **- 28**  **: Weight Additions Due to Final Rules or Likely NHTSA Regulations: Com** **paring MY 2016 to the MY 2010 Baseline Fleet**  Standard Number Added Weight in pounds MD/HD Vehicle Added Weight in kilograms MD/HD Vehicle 119 0 0 121 0 (?) 0 (?) 208 Motor coaches only 161 - 269 73 - 122 MD/HD Vehicle Electronic Stability Control Sy stems 10 4.5 Total Motor coaches 171 - 279 77.5 - 126.5 Total All other MD/HD vehicles 10 4.5 **(3) Effects of Vehicle Mass Reduction on**  **Safety** NHTSA and EPA have been considering the effect of vehicle weight on vehicle safety for the past several years in the context of our joint rulemaking for light - duty vehicle CAFE and GHG standards, consistent with NHTSA’s long - standing consideration of safety effects in setting CAFE standards. Combining all modes of impact, the latest anal ys is by NHTSA for the light - duty 2012 - 2016 MY vehicle rule 280

280 “Final Regulatory Impact Analysis, Corporate Average Fuel Economy for MY 2012 - MY 2016 Passenger Cars and Light Trucks”, NHTSA, March 2010, (Docket No. NHTSA - 2009 - 0059 - 0344.1).168 of

found that reducing the weight of the heavier light trucks (LT > 3,870) had a positive overall effect on safety, reducing societal fatalities. In the context of the current rulemaking for HD fuel consumption and GHG standards, one would expect that reducing the weight of medium - duty trucks similarly would, if an ything, have a positive impact on safety . However, given the large difference in weight between light - duty vehicles and medium - duty trucks, and even larger difference between light - duty vehicles and heavy- duty

vehicles with loads, the agencies believe that the impact of weight reductions of medium - and heav y - duty trucks would not have a noticeable impact on safety for an y of these c lasses of vehicles. However, the agencies recognize that it is important to conduct further study and research into the interaction of mass, size and safety to assist future rulemakings, and we expect that the collaborative interagency work currently

on - go ing to address this issue for the light - dut y vehicle context may also be able to inform our evaluation of safety effects for the final HD program . We intend to continue monitoring this issue going forward, and may take steps in a future rulemaking if it appears that the MD/HD fuel efficiency and GHG standards have unforeseen safety consequences. The American Chemistry Council stated in comments to the agencies that plastics and plastic composite materials provide a new way

to lighten vehicles while maintaining passenger safety. They added that properties of plastics including strength to weight ratio, energy absorption, and flexible design make these materials well suited for the manufacture of medium - and heav y- duty vehicles. They submitted supporting anal ys es with their comments. The National School Transportation Association stated that added structural integrity requirements increase weight of school buses, and thus decrease fuel economy . They asked that if there are safety and fuel econ om y trade - offs, manufacturers should be able to receive a waiver from the regulation’s requirements. Since no weight reduction is required for school buses

– or an y other vocational vehicle

– the agencies do not believe this is an issue with the current regulation. 

### L. **Summary of Costs and Benefits** In this section, the agencies present a summary of costs, benefits, and net ben efits of the HD National program. Table VIII - 29 shows the estimated annual monetized costs of the final program for the indicated calendar years. The table also shows the net present values of those costs for the calendar ye ars 2012 - 2050 using both 3 percent and 7 percent discount rates. 281 Table VIII - 30 shows the estimated annual monetized fuel savings of the final program. The table also shows the net present values of those fuel savings for the same calendar years using both 3 percent and 7 percent discount rates. In this table, the aggregate value of fuel savings is calculated using pre - tax fuel prices since savings in fuel taxes do not represent a reduction in the value of economic resources utilized in producing and consuming fuel. Note that fuel savings shown here result from reductions

281 For the estimation of the stream of costs and benefits, we assume that afte r implementation of the final MY 2014 - 2017 standards, the 2017 standards apply to each year out to 2050 .***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

169 of in fleet - wi de fuel use. Thus, they grow over time as an increasing fraction of the fleet meets the 2018 standards. **Table VIII**  **- 29**  **: Estimated**  **Monetized Costs of the**  **Final Program** **(Millions ,**  **200 9$**  **) a**  2020 2030 2040 2050 NPV, Y ears 2012 - 2050, 3% D iscount R ate NPV, Y ears

2012 - 2050, 7% D iscount R ate Technology Costs $2,000 $2,200 $2,700 $3,300 $47,400 $24,700 Note : a Technology costs for separate truck segments can be found in Section VIII.B.1.

**Table VIII**  **- 30**  **: Estimated**  **Fuel Savings of the**  **Final Program** **(Millions ,**  **200 9$**  **) a**  2020 2030 2040 2050 NPV, Y ears 2012 - 2050, 3% D iscount R ate NPV, Y ears

2012 - 2050, 7% D iscount R ate Fuel Savings (pre - tax) $9,600 $20,600 $28,000 $36,500 $375,300 $166,500 Note: a F uel savings for separate truck segments can be found in Section VIII.B.1. Table VIII - 31 presents estimated annual monetized 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 3 percent and 7 percent discount rates. The table shows the benefits of reduced CO 2 emissions

—and consequentl y the annual quantified benefits (i.e., total benefits)

— for each of four SCC values estimated by the interagency working group. As discussed in the RIA Section 9.3 , there are some limitations to the SCC analy sis, including the in complete way in which the integrated assessment models capture catastrophic and non - catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions r egarding risk aversion. In addition, these monetized GHG benefits exclude the value of net reductions in non - CO 2 GHG emissions (CH 4 , N 2 O, HFC) expected under this action. Although EPA has not monetized the benefits of reductions in non - CO 2 GHGs, the v alue of these reductions should not be interpreted as zero. Rather, the net reductions in non - CO 2 GHGs will contribute to this program’s climate benefits, as explained in Section VI .C .170 of **Table VIII**  **- 31**  **: Monetized Benefits Associated with the**  **Final Program** **(Million s,**  **200 9$)** 

2020 2030 2040 2050 NPV, Years 2012 - 2050, 3% Discount Rate a NPV, Years

2012 - 2050, 7% Discount Rate a Reduced CO 2 Emissions at each assumed SCC value b 5% (avg SCC) $300 $700 $1,200 $1,700 $9,000 $9,000 3% (avg SCC) $1,000 $2,500 $3,600 $4,800 $46,100 $46,100 2.5% (avg SCC) $1,600 $3,800 $5,400 $7,000 $78,000 $78,000 3% (95th percentile) $3,100 $7,500 $11,100 $14,600 $140,400 $140,400 Energy Security Impacts (price shock) $500 $1,100 $1,500 $1,700 $19,800 $8,800 Accidents, Congestion, Noise - $200 - $400 - $600 - $600 - $7,900 - $3,700 Refueling Savings $100 $100 $200 $200 $2,500 $1,100 Non - GHG Impacts c ,d B $2,800 $2,800 $2,800 $25,300 $9,100 Non - CO 2 GHG Impacts e n/a n/a n/a n/a n/a n/a Total Annual Benefits at each assumed SCC value b 5% (avg SCC) $700 $4,300 $5,100 $5,800 $48,700 $24,300 3% (avg SCC) $1,400 $6,100 $7,500 $8,900 $85,800 $61,400 2.5% (avg SCC) $2,000 $7,400 $9,300 $11,100 $117,700 $93,300 3% (95 th percentile) $3,500 $11,100 $15,000 $18,700 $180,100 $155,700 Notes: a Net present value of reduced CO 2 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 Section VIII.G 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%: $22 - $46 ; f or Average SCC at 2.5%: $36 - $66 ; and for 95 th percentile SCC at 3%: $66 - $139 . See Section VIII.F . c Note that “ B ” indicates unquantified criteria pollutant benefits in the year 2020. For the analysis of the final program , we only modeled the rule ’ s PM 2.5 - and ozone - related impacts in the calendar year 2030. For the purpose s 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 program . d Non - GHG - related health and welfare impacts (related to PM 2.5 and ozone exposure) range between $1 ,300 and $ 4,200 million in 2030, 2040, and 2050 . $2 ,8 00 was chosen as the mid - point of this range for the purposes of estimating total benefits across all monetized categories. e The monetized GHG benefits presented in this analysis exclude the value of changes in n on - CO 2 GHG emissions expected under this program (S ee RIA Chapter 5). Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. Table VIII - 32 presents estimated annual net benefits for the indicated calendar ye ars. The table also shows the net present values of those net benefits for the calendar***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

171 of ye ars 2012 - 2050 using both 3 perce nt and 7 percent discount rate s . The table includes the benefits of reduced CO 2 emissions (and consequently the annual net benefits) for each of four SCC values considered b y EPA. **Table VIII**  **- 32**  **: Monetized Net Benefits Associated with the**  **Final Program** **(Million s,**  **200 9$**  **)**

2020 2030 2040 2050 NPV, 3% a NPV, 7% a Technology Costs $2,000 $2,200 $2,700 $3,300 $47,400 $24,700 Fuel Savings $9,600 $20,600 $28,000 $36,500 $375,300 $166,500 Total Annual Benefits at each assumed SCC value b 5% (avg SCC) $700 $4,300 $5,100 $5,800 $48,700 $24,300 3% (avg SCC) $1,400 $6,100 $7,500 $8,900 $85,800 $61,400 2.5% (avg SCC) $2,000 $7,400 $9,300 $11,100 $117,700 $93,300 3% (95th percentile) $3,500 $11,100 $15,000 $18,700 $180,100 $155,700 Monetized Net Benefits at each a ssumed SCC value c 5% (avg SCC) $8,300 $22,700 $30,400 $39,000 $376,600 $166,100 3% (avg SCC) $9,000 $24,500 $32,800 $42,100 $413,700 $203,200 2.5% (avg SCC) $9,600 $25,800 $34,600 $44,300 $445,600 $235,100 3% (95th percentile) $11,100 $29,500 $40,300 $51,900 $508,000 $297,500 Notes: a N et present value of reduced CO 2 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 S CC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $36 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c Net Benefits equal Fuel Savings minus Technology Costs plus Benefits. EPA also conducted a separate anal ys is of the total benefits over the model year lifetimes of the 201 4 through 201 8 model year trucks . In contrast to the calendar ye ar anal ys is presented above in Table VIII - 29 through Table VIII - 32 , the model year lifetime anal ys is below shows the impacts of the final program on vehicles produced during each of the model years 2014 through 2018 over the course of their expected lifetime s . The net societal benefits over the full life times of vehicles produced during each of the five model years from 201 4 through 201 8 are shown in Table VIII - 33 and Table VIII - 34 at both 3 percent and 7 percent discount rate s , respectively .172 of **Table VIII**  **- 33**  **: Monetized Technology**  **Costs, Fuel Savings,**  **Benefits, and Net Benefits Associated with the Lifetimes of 2014**  **- 2018 Model Year Trucks (Millions**  **, 200**  **9$ ; 3% Discount**  **Rate)**

2014 MY 2015

MY 2016

MY 2017

MY 2018

MY Sum Technology Costs - $1,600 - $1,400 - $1,500 - $1,600 - $2,000 - $8,100 Fuel Savings (pre - tax) $9,300 $8,300 $8,100 $11,500 $12,900 $50,100 Energy Security Impacts (price shock) $500 $400 $400 $600 $700 $2,700 Accidents, Congestion, Noise - $300 - $300 - $300 - $300 - $300 - $1,500 Refueling Savings $60 $60 $60 $80 $100 $400 Non - CO 2 GHG Impacts and Non GHG Impacts c,d n/a n/a n/a n/a n/a n/a Reduced CO 2 Emissions at each assumed SCC value a, b 5% (avg SCC) $200 $200 $200 $300 $300 $1,200 3% (avg SCC) $1,100 $900 $900 $1,300 $1,500 $5,700 2.5% (avg SCC) $1,800 $1,600 $1,500 $2,100 $2,400 $9,400 3% (95th percentile) $3,300 $2,900 $2,800 $4,000 $4,500 $17,000 Monetized Net Benefits at each assumed SCC value a, b 5% (avg SCC) $8,200 $7,300 $7,000 $10,600 $11,700 $44,800 3% (avg SCC) $9,100 $8,000 $7,700 $11,600 $12,900 $49,300 2.5% (avg SCC) $9,800 $8,700 $8,300 $12,400 $13,800 $53,000 3% (95th percentile) $11,300 $10,000 $9,600 $14,300 $15,900 $60,600 Notes: a N et present value of reduced CO 2 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 S CC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $36 - $6 6; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exclude the value of changes in non - CO 2 GHG emissions expected under this action (see RIA Chapter 5) . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not es timated for this analysis.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

173 of **Table VIII**  **- 34**  **: Monetized Technology**  **Costs, Fuel Savings,**  **Benefits, and Net Benefits Associated with**  **the Lifetimes of 2014 -**  **2018 Model Year Trucks (Millions ,**  **200 9$**  **; 7% Discount Rate)**

2014 MY 2015

MY 2016 MY 2017

MY 2018

MY Sum Technology Costs - $1,600 - $1,400 - $1,500 - $1,600 - $2,000 - $8,100 Fuel Savings (pre - tax) $6,900 $5,900 $5,600 $7,600 $8,300 $34,400 Energy Security Impacts (price shock) $400 $300 $300 $400 $400 $1,800 Accidents, Congestion, Noise - $200 - $200 - $200 - $200 - $200 - $1,000 Refueling Savings $50 $40 $40 $60 $60 $200 Non - CO 2 GHG Impacts and Non - GHG Impacts c,d n/a n/a n/a n/a n/a n/a Reduced CO 2 Emissions at each assumed SCC value a, b 5% (avg SCC) $200 $200 $200 $300 $300 $1,200 3% (avg SCC) $1,100 $900 $900 $1,300 $1,500 $5,700 2.5% (avg SCC) $1,800 $1,600 $1,500 $2,100 $2,400 $9,400 3% (95th percentile) $3,300 $2,900 $2,800 $4,000 $4,500 $17,000 Monetized Net Benefits at each assumed SCC value a, b 5% (avg SCC) $5,800 $4,800 $4,400 $6,600 $6,900 $28,500 3% (avg SCC) $6,700 $5,500 $5,100 $7,600 $8,100 $33,000 2.5% (avg SCC) $7,400 $6,200 $5,700 $8,400 $9,000 $36,700 3% (95th percentile) $8,900 $7,500 $7,000 $10,300 $11,100 $44,300 Notes: a N et present value of reduced CO 2 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 Section VIII.G 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%: $22 - $46 ; f or Average SCC at 2.5%: $36 - $66 ; and for 95 th percentile SCC at 3%: $66 - $139 . Section VIII.G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exc lude the value of changes in non - CO 2 GHG emissions expected under this action (see RIA Chapter 5). Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis. Table VIII - 36 Table VIII - 35 and Table VI II - 36 show similar model year estimates to those provided above in Table VIII - 33 and Table VIII - 34 , but reflect specific differences in the NHTSA HD program over the 3 mandatory model years of that program. These include no HD diesel engine impacts prior to MY 2017, assumption of th e NHTSA phase - in schedule for HD pickup trucks and vans which achieves 3 year phase - in stability

(67% - 67% - 67% - 100% in MY 2016 - 2019 respectively), the inclusion of combination tractors from MY 2016 forward, and the exclusion of RVs, which are not regulated by

NHTSA.174 of **Table VIII**  **- 35**  **: Monetized**  **Technology Costs,**  **Fuel Savings, Benefits,**  **and Net Benefits Associated with the Lifetimes of 201**  **6 -**  **2018 Model Year Trucks (Millions ,**  **200 9$**  **; 3**  **% Discount Rate)** 2016 MY 2017 MY 2018 MY Sum Technology Costs - $1,500 - $1,600 - $1,700 - $5,200 Fuel Savings (pre - tax) $5,500 $10,900 $11,500 $27,900 Energy Security Impacts (price shock) $300 $600 $600 $1,500 Accidents, Congestion, Noise - $300 - $300 - $300 - $900 Refueling Savings $40 $80 $80 $200 Non - CO 2 GHG Impacts and Non GHG Impacts c,d n/a n/a n/a n/a Reduced CO 2 Emissions at each assumed SCC value a, b 5% (avg SCC) $100 $300 $300 $700 3% (avg SCC) $600 $1,200 $1,300 $3,100 2.5% (avg SCC) $1,000 $2,000 $2,200 $5,200 3% (95th percentile) $1,900 $3,800 $4,000 $9,700 Monetized Net Benefits at each assumed SCC value a, b 5% (avg SCC) $4,100 $10,000 $10,500 $24,200 3% (avg SCC) $4,600 $10,900 $11,500 $26,600 2.5% (avg SCC) $5,000 $11,700 $12,400 $28,700 3% (95th percentile) $5,900 $13,500 $14,200 $33,200 Notes: a N et present value of reduced CO 2 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. Re fer to the SCC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2 .5%: $36 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exclude the value of changes in non - CO 2 GHG emissions expected under this proposal (see RIA Chapter 5) . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were no t estimated for this analysis. **Table VIII**  **- 36**  **: Monetized**  **Technology Costs,**  **Fuel Savings, Benefits, and**  **Net Benefits Associated with the Lifetimes of 201**  **6 -**  **2018 Model Year Trucks (Millions ,**  **200 9$**  **; 7% Discount Rate)** 2016 MY 2017 MY 2018 MY Sum Technology

Costs - $1,500 - $1,600 - $1,700 - $5,200 Fuel Savings (pre - tax) $3,800 $7,200 $7,300 $18,300 Energy Security Impacts (price shock) $200 $400 $400 $1,000 Accidents, Congestion, Noise - $200 - $200 - $200 - $600***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

175 of 2016 MY 2017 MY 2018 MY Sum Refueling Savings $30 $50 $50 $130 Non - CO 2 GHG Impacts and Non GHG Impacts c,d n/a n/a n/a n/a Reduced CO 2 Emissions at each assumed SCC value a, b 5% (avg SCC) $100 $300 $300 $700 3% (avg SCC) $600 $1,200 $1,300 $3,100 2.5% (avg SCC) $1,000 $2,000 $2,200 $5,200 3% (95th percentile) $1,900 $3,800 $4,000 $9,700 Monetized Net Benefits at each assumed SCC value a, b 5% (avg SCC) $2,400 $6,200 $6,200 $14,300 3% (avg SCC) $2,900 $7,100 $7,200 $16,700 2.5% (avg SCC) $3,300 $7,900 $8,100 $18,800 3% (95th percentile) $4,200 $9,700 $9,900 $23,300 Notes: a N et present value of reduced CO 2 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 S CC TSD for more detail. b Section VIII.G 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%: $22 - $46 ; f or Average SCC at 2.5%: $36 - $6 6 ; and for 95 th percentile SCC at 3%: $66 - $139 . Section VIII.G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exclude the value of changes in non - CO 2 GHG emissions expected under this proposal (see RIA Chapter 5) . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis. 

### M. **Employment Impacts**  **(1) Introduction**  Although analy sis of employ ment impacts is not part of a cost - benefit analy sis (except to the extent that labor costs contribute to costs), employ ment impacts of federal rules are of particular concern in the current economic climate of sizeable unemploy ment. The recentl y issued Executive Order 13563, “Improving Regulation and Regulatory Review” (January

18, 2011), states, “ Our regulatory s ys tem must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation ” (emphasis added). Although EPA and NHTSA did not undertake an employment anal ys is of the proposed rules, several commenters suggested that we undertake an employ ment analy sis for the final rulemaking. Consistent with Executive order 13563, we have provided a discussion of the potential employ ment impacts of the Heavy- Duty National Program . Our general conclusion is that employ ment impacts in the regulated sector (truck and engine manufacturing) and the parts sectors depend on a combination of factors, some of which are positive, and some of which can be positive or negative; effects on176 of

employ ment in the transport and shipping sectors are ambiguous; the fuel supplying sectors may

face reduced employ

ment; and there may

be increased general employ ment due to reduction in costs that may be passed along to the transport industry and thus to the public. Because we did not include employ ment analy sis in the NPRM and provide opportunity

for public comment on the methods, we here present a qualitative discussion. Because the discussion is qualitative, we d o not sum the net effects on employ ment in the econom y. We also note that the employment effects may be different in the immediate implementation phase than in the ongoing compliance phase; this anal ys is focuses on the longer - term effects rather than the immediate effects. When the econom y is at full employment, an environmental regulation is unlikely to have much impact on net overall U.S. employment ; instead, labor would primarily be shifted from one sector to another. These shifts in employ ment impose an opportunity cost on society , approximated by the wages of the employees, as regulation diverts workers from other activities in the economy . 282 In this situation, any effects on net employ ment are likel y to be transitory as workers change jobs . ( For example , some workers may

need to be retrained or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers). 283 It is also true that , if a regulation comes into effect during a period of high unemploy ment, a change in labor demand due to regulation may affect net overall U.S. employ ment because the labor market is not in equilibrium. Either negative or positive effects are possible. Schmalansee and Stavins 284 point out that net po sitive employ ment effects are possible in the near term when the economy is at less than full employ ment due to the potential hiring of idle labor resources by the regulated sector to meet new requirements (e.g., to install new equipment) and new economic activity in sectors related to the regulated sector. In the longer run, the net effect on emplo ym ent is more difficult to predict and will depend on the way in which the related industries respond to the regulatory

requirements. As Schmalansee and Stavins note, it is possible that the magnitude of the effect on employ ment could vary

over time, region, and sector, and positive effects on employment in some regions or sectors could be offset by negative effects in other regions or sectors. For this reason, they urge caution in reporting partial employ ment effects since it can “paint an inaccurate picture of net employment impacts if not placed in the broader economic context.” This rulemaking is expected to have a relativel y s mall effect on net employment in the United States through the regulated sector

– the truck and engine manufacturer industry

– and several related sectors, specifically , industries that supply the truck and

282 Schmalensee, Richard, and Robert N. Stavins. “A Guide to Economic and Policy Analysis of EPA’s Transport Rule.” White paper commissioned by Excelon Corporation, March 2011.

283 Although the employment level would not change substantially, there would be costs to the workers associated with shifting from one activity to another. Jacobson, Louis S., Robert J. LaLonde, and Daniel G. Sullivan, “Earnings L osses of Displaced Workers.” American Economic Review 83(4) (1993): 685 - 709. 284 Ibid.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

177 of engine manufacturing industry (e.g., truck parts), the trucking industry itself , other industries involved in transporting goods (e.g., rail and shipping) , the petroleum refining sector, and the retail sector. According to the U.S. Bureau of Labor Statistics, about 1.25 million people were employed in the truck transportation indus try and about 675,000 people were emplo yed in the motor vehicle parts industry between 2010 and 2011. 285 Although heav y- dut y vehicles (HD) account for approximately 4% of the vehicles on the road, these vehicles consume more than 20% of on - road gasoline and diesel fuel use. As discussed in Chapter 5 of this RIA, this rulemaking is predicted to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery industry . The petroleum refinery industry employed about 65,000 people in the U. S. in 2009, the most recent ye ar that employ

ment estimates are available for this sector. 286 As discussed in Chapter 5 of this RIA, this rulemaking is predicted to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery industry . The petroleum refinery industry employed about 65,000 people in the U.S. in 2009, the most recent ye ar that employ ment estimates are available for this sector. 287 Finall y, since the net reduction in cost associated with th e s e rule s is expected to lead to lower transportation and shipping costs, in a competitive market a substantial portion of those cost saving s will be passed along to consumers, who then will have additional discretionary income (how much of the cost is passed along to consumers depends on market structure and the relative price elasticities). Several commenters suggested that the HD vehicle rules would lead to an increase in employ ment in affected sectors b y offering the potential for new employment opportunities in the design and production of new vehicle technologies. Also, these commenters suggest ed that since the U.S. manufacturers and suppliers are leaders in certain advanced truck technologies, this program has the potential to help them consolidate their leadership and thrive in a global market. In this context, several commenters referred to an assessment by the Union of Concerned Scientists (UCS) and CalStart of the economic and employ ment benefits of the improved efficiency in HD vehicles. 288 The study

predicts an increase in tens of thousands of jobs be tween 2020 and 2030 , as result of higher fuel efficiency for HD vehicles. These quantitative estimates were derived using a standard input - output model, though the estimates themselves have not yet been peer reviewed. Input - output (I/O) models do not acc ount for opportunity costs of labor

– that is, all employ ment needs due to the regulatory change will be met by unemployed workers. In addition, I/O models assume no changes in the average use of labor per dollar of output in the affected sectors. For th ese and other reasons, these may at best be considered an imprecise upper bound on actual emplo ym ent impacts. 289

285 U.S. Bureau of Labor Statistics seasonally - adjusted Current Employment Statistics Survey for the Truck Transportation Industry (NAICS 484) and the Motor Vehicle Parts Manufacturing Industry (NAICS 3363). 287 U.S. Census Bureau, 2009 Annual Survey of Manufactures, Published December 3, 2010. 287 U.S. Census Bureau, 2009 Annual Survey of Manufactures, Published December 3, 2010. 288 Union of Concerned Scientists and CalStart, Delivering Jobs: The Economic Costs and Benefits of Im proving Fuel Economy of Heavy Duty Vehicles, July, 2010. http://www.ucs usa.org/deliveringjobs . 289 Berck, Peter, and Sandra Hoffman. “Assessing the Employment Impacts of Environmental and Natural Resource Policy.” Environmental and Resource Economics 22 (2002): 133 - 156.178 of Determining the direction of employ ment effects even in the regulated industry may be difficult due to the presence of competing effects that le ad to an ambiguous adjustment in employ

ment as a result of environmental regulation. Morgenstern, Pizer and Shih 290 identify

three separate way s that employment levels may change in the regulated industry

in response to a new (or more stringent) regulation.  Demand effect : higher production costs due to the regulation will lead to higher market prices; higher prices in turn reduce demand for the good, reducing the demand for labor to make that good . In the authors’ words, the “extent of this effect depends on the cost increase passed on to consumers as well as the demand elasticity of industry output”.  Cost effect : As costs go up, plants add more capital and labor (holding other factors constant), with potentially positive effects on employ ment; in the authors’ words, as “production costs rise, more inputs, including labor, are used to produce the same amount of output”.  Factor- shift effect: post - regulation production technologies may be more or less labor - intensive (i.e., more/less labor is required per dollar of output) (“factor - shift effect”). In the authors’ words, “environment al activities may

be more labor intensive than conventional production,” meaning that “the amount of labor per dollar of output will rise,” though it is also possible that “cleaner operations could involve automation and less employ ment, for example”. The “demand effect” is expected to have a negative effect on emplo ym ent, the “cost effect” to have a positive effect on employ ment, and the “factor - shift effect” has an ambiguous effect on employ ment. Without more information with respect to the magnitudes of these competing effects, it is not possible to predict the total effect environmental regulation will have on employ ment levels in a regulated sector Morgenstern et al. estimated the effects on emplo yment of spending on pollution abatement for four highly polluting/regulated industries (pulp and paper, plastics, steel, and petroleum refining). They conclude that increased abatement expenditures generall y have not caused a significant change in employ ment in those sectors. More specifically , their r esults show that, on average across the industries studied, each additional $1 million spent on pollution abatement results in a (statistically insignificant) net increase of 1.5 jobs. While the specific sectors Morgenstern et al. examined are different th at the sectors considered here, the methodology that Morgenstern et al. developed is still useful in this context. **(2) Overview of Affected Sectors**  The above discussion focuses on employ ment changes in the regulated sector, but the regulated sector is not the only source of changes in emplo ym ent. In these rules, the 290 Morgenstern, Richard D., William A. Pizer, and Jhih - S hyang Shih. “Jobs Versus the Environment: An Industry - Level Perspective.” Journal of Environmental Economics and Management 43 (2002): 412 - 436.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

179 of regulated sectors are truck and engine manufacturers; they are responsible for meeting the standards set in these rules. The effects of these rules are also likely to have impacts beyond the direc tly

regulated sector. Some of the related sectors which these rules are also likely

to impact include: motor vehicle parts producers, to the extent that the truck and engine industries purchase components rather than manufacture them in - house; shippi ng and transport, because man y companies in this sector purchase trucks and their operating costs will be affected b y both higher truck prices and fuel savings; oil refineries due to reduced demand for petroleum - based fuels; and the final retail market, wh ich is where an y net cost reductions due to fuel savings are ultimately expected to be experienced. We acknowledge that there may be impacts in other sectors that are not discussed here, but we have sought to include the sectors where we think the impacts are most direct. The following discussion describes the direction of impacts on employ ment in these industries. The effects of the HD National Program on net U.S. employ ment depend, not only

on their relative magnitudes, but also on employ ment level s in the overall econom y. As previously discussed, in a full - employ ment economy

these sector specific impacts will be mostly offset by employment changes elsewhere in the econom y and would not be expected to result in a net change in jobs. However, in an econom y with significant unemploy ment these changes may

affect net employ

ment in the U.S. (a ) Truck and Engine Manufacturers The regulated sector consists of truck and engine manufacturers. Emplo yment associated with manufacturing trucks and engines may be a ffected by

the demand, cost, and factor - shift effects. Demand Effect The demand effect depends on the effects of this rulemaking on HD vehicle sales. If vehicle sales increase, then more people will be required to assemble trucks and their components. If vehicle sales decrease, employ ment associated with these activities will decrease. The effects of this rulemaking on HD vehicle sales depend on the perceived desirability

of the new vehicles. Unlike in Morgenstern et al.’s study, where the demand effect decreased emplo yment, there are countervailing possibilities in the HD market due to the fuel savings resulting from this program. On one hand, this rulemaking will increase vehicle costs; by itself, this effect would reduce vehicle sales. On the other hand, this rulemaking will reduce the fuel costs of operating the veh icle; by itself, this effect would increase vehicle sales, especiall y if potential buyers have an expectation of higher fuel prices. The agencies have not made an estimate of the potential change in vehicle sales. However as discussed in Preamble Sectio n VIII.E.5 the agencies have estimated an increase in vehicle miles traveled (i.e., VMT rebound) due to the reduced operating costs of trucks meeting these new standards. Since increased VMT is most likely to be met with more drivers and more trucks, our projection of VMT rebound is suggestive of an increase in vehicle sales and truck driver emplo ym ent (recognizing that these increases may

be partially

offset by a decrease in manufacturing and sales for equipment of other modes of transportation such as rail cars or barges).180 of As discussed above in Section VIII.A, the agencies find that the reduction in fuel costs associated with this rulemaking outweigh the increase in vehicle cost. This finding is puzzling: market forces should lead truck manufacturers a nd buyers to install all cost effective fuel - saving technology , but the agencies find that they have not. Section VIII.A discusses various h ypotheses that have been suggested to explain this phenomenon. Some of the explanations suggest that vehicle manuf acturers and buye rs will benefit from the rulemaking, and vehicle sales will increase; others suggest that the opposite might occur. The agencies do not have strong evidence supporting one specific explanation over another. However, some in the heav y- duty i ndustry indicate the potential for an increase in jobs. As stated by Tom Linebarger (President and Chief Operatin g Officer of Cummins ) and Fred Krupp (President of the Environmental Defense Fund), “ Finall y, strong environmental standards play a crucial role in getting innovations to market that will create economic opportunity for American companies and jobs for American workers. . . . It helps that Cummins and other forward - thinking businesses view this as an opportunity

to innovate and increase inter national market share. ” 291 One commenter raised the issue of whether there could be a loss of recreation vehicle (RV) industry

jobs due to a reduction in the sales of motor homes and towable RVs. As mentioned above, the effects of this rulemaking on HD veh icle sales depend on the desirability

of the new vehicles. Cost Effect The truck and engine manufacturing sector has great flexibility in how to respond to the requirement for reduced greenhouse gases and increasing fuel efficiency , with a broad suite of technologies being available to achieve the standards. These technologies are described in detail in Chapter 2 of this RIA. Among these technologies, a distinction can be made between technologies that can be “added on” to conventional trucks versus tho se that replace features of a conventional truck. “Added on” features , such as auxiliary power units, require additional labor to install the technologies on trucks, thus clearl y increasing labor demand (the “cost effect”). The pure cost effect alway s increases employ ment, though the net effect on the regulated industry depends on its effects in combination with the demand and factor - shift effects. Factor- Shift Effect For “replacement” technologies, the predicted impact on labor demand from regulation d epends on the change in the amount of labor used to build and install one ty pe of technology

compared to another. In some cases, the new technologies are predicted to be more complex than the existing technologies and may therefore requ ire additional labor installation inputs. In other cases, the opposite may be true : labor intensity

may be lower for some replacement technologies.

291 Tom Linebarger (President and Chief Operatin g Officer of Cummins ) and Fred Krupp (President of the Environme ntal Defense Fund), "Clear rules can create better engines, clean air," Indianapolis Star, October 28, 2010, p. 19; included as part of Cummins' comments on the rule, Docket Number EP A - HQ - OAR - 2010 - 0162 - 1765.1[1]***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

181 of M ost of the technologies that are expected to be used to meet these standards are replacement tec hnologies . For example, almost all of the engine improvements involve replacement technologies that are not expected to significantl y change the labor requirements. Sim ilarly , regulations of the chassis on vocational vehicles will only require the installation of a different ty pe of tire, which is also not expected to have large labor intensity

impacts. Therefore, the potential magnitude of the factor shift effect is expected to be relativel y small, though slightl y positive due to the additional labor needed to install more complex technologies. Summary for the Truck and Engine Manufacturing Sector For the truck and engine manufacturing sector, the demand effect may result in either increased or decreased emplo y ment ; the cost effect is expected to increase employ ment; and the factor - shift effect is expected to have a small, possibly slightly positive effect on employment in this sector. The net effect on employ ment in this sector depends on the sum of these factors. (b ) Motor Vehicle Parts Manufacturing Sector Some vehicle parts are made in - house and would be included directly in the regulated sector . Others are made b y independent suppliers and are not directly regulated, but they

will be affected by

the rules as well. The parts manufacturing sector will be involved primarily in providing “add - on” parts, or components for replacement parts built internally . If demand for these parts increa se s due to the increased use of these parts , employ

ment effects in this sector are expected to be positive. If the demand effect in the regulated sectors is significantl y negative enough, it is possible that demand for other parts may

decrease. As noted, the agencies do not predict a direction for the demand effect. (c) Transport and Shipping Sectors Although not directl y regulated by these ru les, employ ment effects in the transport and shipping sector are likely to result from these regulations. If the overall cost of shipping a ton of freight decreases because of increased fuel efficiency (taking into account the increase in upfront purchasi ng costs), in a perfectl y competitive industry these costs savings will be passed along to customers. With lower prices, demand for shipping would lead to an increase in demand for truck shipping services (consistent with the VMT rebound effect anal ys is) and therefore an increase in employ ment in the truck shipping sector . In addition, if the relative cost of shipping freight via trucks becomes cheaper than shipping b y other modes (e.g., rail or barge), then emplo ym ent in the truck transport industry

is l ikely to increase. I f the trucking industry is more labor intensive than other modes, we would expect this effect to lead to an overall increase in employ ment in the transport and shipping sectors. 292 , 293 Such a shift would, however, be 292 American Transportation Research Institute , “ An Analysis of the Operational Costs of Trucking: 2011 Update .” See http://www.atri online.org/research/results/Op_Costs_2011_Update_one_page_summary.pdf .182 of

at the expense of emplo yment in the sectors that are losing business to trucking. The first effect

– a gain due to lower shipping costs

– is likely to lead to a net increase in employ ment. The second effect, due to mode - shifting, may increase employ

ment in trucking, but decreases in other shipping sectors. (d ) Fuel Suppliers In addition to the effects on the trucking industry and related truck parts sector, these rules will result in reductions in fuel use that lower GHG emissions. Fuel saving, principally

redu ctions in liquid fuels such as diesel and gasoline, will affect employ ment in the fuel suppliers industry sectors, principall y the Petroleum Refinery sector. 294 Expected fuel consumption reductions b y fuel typ e, and b y heav y- duty vehicle ty pe, can be found in Table VIII - 7. These reductions reflect impacts from the new fuel efficiency and GHG standards and include increased consumption from the rebound effect. These fuel savings are monetized in Table VIII - 8 by multiplying the reduced fuel consumption in e ach year by the corresponding estimated average fuel price in that year, using the Reference Case from the AEO 2011. In 2014, the pre - tax fuel savings is $1.2 billion (2009$). While these figures represent a level of fuel savings for purchasers of fuel, it also represents a loss in value of output for the petroleum refinery industry . Since 50 percent of the fuel would have been refined in the U.S., the loss in output to the U.S. Petroleum Refinery

sector is $600 million (2009$), which will result in redu ced sectoral employ ment. 295 Because this sector is very capital - intensive, the employ ment effect is not expected to be large. (e) Fuel Savings As a result of this rulemaking, it is anticipated that trucking firms will experience fuel savings. Fuel savings lowe r the costs of transportation goods and services . In a competitive market, the fuel saving s that initially accrue to trucking firms are likel y to be passed along as lower transportation costs that, in turn, could result in lower prices for final goods and services. Alternativel y, the savings could be kept internall y in firms for investments or for returns to firm owners. In either case, the savings will accrue to so me segment of consumers: either owners of trucking firms or the general public. In both cases, the effect will be increased spending b y consumers in other sectors of the econom y, creating jobs in a diverse set of sectors, including retail and service indu stries.

293 Association of American Railroads, “All Inclusive Index and Rail Adjustment Factor.” June 3, 2011. See http://www.aar.org/~/media/aar/RailCostIndexes/AAR - RCAF - 2011 - Q3.ashx 294 North American Industry Classification System (NAICS) Code 32411. 295 EPA and NHTSA estimate that approximately 50 percent of the reduction in fuel consumption resulting from adopting improved fuel GHG standards and fuel efficiency standards is likely to be reflected in reduced U.S. imports of refined fuel, while the remain ing 50 percent is 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. Because we do not expect to see a significant reduction in crude oil production in the U.S., we do not expect this rule to have a significant impact on the Oil and Gas Extraction industry sector in the U.S. (NAICS 211000). For more information, refer to Section VIII - I on the energy security impacts from the program.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

183 of As mentioned above, the value of fuel savings from this rulemaking is projected to be $1.2 billion (2009$) in 2014, according to Table VIII - 8. If all those savings are spent , the fuel savings will stimulate i ncreased employ ment in the economy through those expenditures. If the fuel savings accrue primarily to firm owners, they

may either reinvest the money

or take it as profit. Reinvesting the money in firm operations would increase emplo ym ent directly . If they take the money

as profit, to the extent that these owners are wealthier than the general public, they may spend less of the savings, and the resulting emplo ym ent impacts would be smaller than if the savings went to the public. Thus, while fuel saving s are expected to decrease employ ment in the refinery

sector, they are expected to increase employ ment through increased consumer expenditures. **(3) Summary**  The net emplo ym ent effects of this rulemaking are expected to be found through out several key

sectors: truck and engine manufacturers, the trucking industry , truck parts manufacturing, fuel production, and consumers. For the regulated sector, the demand effect may

result in either increased or decreased employ ment, depending on the net effect on HD vehicle sales ; the cost effect is expected to increase employ ment in the regulated sector; and the factor - shift effect is expected to have a small, possibly slightl y positive effect on employment, though we cannot definitively say this is the case without quantification. The net effect depends on the combination of these effects. In creased expenditures by

truck and engine parts manufacturers are expected to require increased labor to build parts, though this effect also depends on any changes in overall demand and on the labor intensity of production of new parts ; increased complexity of technologies may

imply increased labor inputs for some parts, though others might be less labor - intensive. It is possible, if access to capital markets is limited, that this rule might displace other HD sector investment, which would reduce employ ment associated with those activities. Lo wer prices for shipping are expected to lead to an increase in demand for truck shipping services and, therefore, an increase in emplo ym ent in that sector , though this effect may be offset somewhat by

changes in employ

ment in other shipping sectors. Reduced fuel production impl ies less employ ment in the fuel provision sectors. Finally , an y net cost savings would be expected to be passed along to some segment of consumers: either the general public or the owners of trucking firms, who are expected then to increase employ ment through their expenditures . Given the job creation as a result of the $1.2B (2009$) in fuel savings in 2014 and the possible employ ment increases in the manufacturing and parts sectors, we find it highl y unlikel y that there would be significant net job losse s related to this policy . Given the current level of unemploy ment, net positive employ ment effects are possible, especiall y in the near term, due to the potential hiring of idle labor resources by the regulated sector to plan for and meet new requirements . In the future, when full employ ment is expected to return, any changes in emplo ym ent levels in the regulated sector due to this program are mostly expected to be offset b y changes in emplo ym ent in other sectors .184 of



## IX. **Analysis of the Alternatives**  The heav y - duty

truck segment is very

complex. The sector consists of a diverse group of impacted parties, including engine manufacturers, chassis manufacturers, truck manufacturers, trailer manufacturers, truck fleet owners and the public. The final standards that the agencies have adopted today maximize the environmental and fuel savings benefits of the program while taking into consideration the unique and varied nature of the regulated industries. In developing this final rulemaking, we considered a number of alternatives that could have resulted in potentially fewer or greater GHG and fuel consumption reductions than the program we are finalizing. This section summarizes the alternatives we considered and presents assessments of technology costs, CO 2 reductions, and fuel savings associated with each alternative. The agencies reduced the number of alternatives analyzed in this final rulemaking compared to the proposal because we did not receive any comments supporting standard setting for a smaller subset than HD pickup trucks, combination tractors, and vocational vehicles (as well as engines used in vocational vehicles and combination tractors). As discussed below, the agencies have also refined some of the alternatives anal yz ed in response to the comments received. 

### A. **What Are the Alternatives that the Agencies Considered?** In developing alternatives, NHTSA must consider EI SA's requirement for the MD/HD fuel efficiency

program noted above. 49 U.S.C. 32902(k)(2) and (3) contain the following three requirements specific to the MD/HD vehicle fuel efficiency improvement program: (1) The program must be “designed to achieve the maximum feasible improvement”; (2) the various required aspects of the program must be appropriate, cost effective, and technologically feasible for MD/HD vehicles; and (3) the standards adopted under the program must provide not less than four model ye ars of lead time and three model ye ars of regulatory stability. In considering these various requirements, NHTSA will also acco unt for relevant environmental and safety considerations. The alternatives below represent a broad range of approaches for a HD vehicle fuel efficiency

and GHG emissions program. Details regarding the modeling of each alternative are included in RIA Chap ter 6. The alternatives in order of increasing fuel efficiency and GHG emissions reductions are: **(1) Alternative 1: No Action**  A “no action” alternative assumes that the agencies would not issue rules regarding a MD/HD fuel efficiency improvement program. This alternative is presented in order for NHTSA to comply with the National Environmental Policy Act (NEPA) and to provide an anal yt ical baseline against which to compare environmental impacts of the other regulatory

alternatives. 296 The agencies refer to this as the “No Action Alternative” 296 NEPA re quires agencies to consider a “ no action ” alternative in their NEPA analyses and to compare the e ffects of not taking action with the effe cts of the reasonable action alternatives to demonstrate the different environmental effects of the action alternatives. See 40 CFR 1502.2(e), 1502.14(d). CEQ has explained that “ [T]he regulations require the analysis of the no action alternative even if the agency is under a court order or legislative command to act. This analysis provides a benchmark, enabling decision makers to compare***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

185 of or as a “no increase” or “baseline” alternative. As described in RIA Chapter 5, this no a ction alternative is considered the reference case. The no action alternative first presented in this final action is based on the assumption that the new vehicle fleet continues to perform at the same level as new 2010 vehicles. In this way , it pro vides a comparison between today ’s new trucks and the increased cost and reduced fuel consumption of future compliant vehicles. The agencies recognize that there is substantial uncertainty in determining an appropriate baseline against which to compare the effects of the proposed action. The lack of prior regulation of HD fuel efficiency means that there is a lack of historic data regarding trends in this sector. Therefore, in this final action , the agencies have also included an analy sis using a ba seline derived from annual projections developed by the U.S. Energy

Information Administration (EIA) for the Annual Energy Outlook (AEO). For this alternative baseline, the agencies analyzed the new truck fuel economy projections for the Light Commercial Trucks, along with the Medium - and Heav y- Duty Freight Vehicles developed in AEO 2011. 297 The agencies converted the fuel econom y improvements into CO 2 emissions reductions relative to a 2010 model year (see RIA Chapter 6). The baseline derived from the AEO forecast provides a comparison between the impacts of the proposed standards and EIA’s projection of future new truck performance absent regulation. This alternative baseline is informative in showing one possible projection of future vehicle performance based on other factors beyond the regulation the agencies are finalizing today . The AEO forecast makes a number of assumptions that should be noted. AEO 2011 assumes improved fuel efficiency for 8,500 - 10,000 lb. GVWR heavy - duty

pickups due to the light - d uty 2012 - 2016 MY regulations. We project a similar capability

for fuel econom y improvement as AEO does for this class of vehicles; however, the agencies recognize that absent regulation manufacturers may decline to add the necessary technologies to reach the level of our proposed standards . For medium and heav y - duty vocational vehicles, AEO 2011 projects a small reduction in fuel efficiency

over time (an increase in fuel consumption), similar to that achieved under the MY 2010 baseline. For Class 8 combi nation tractors, the AEO 2011 baseline projections an annual improvement of approximately 0.3 percent. We are not able to make an estimate of the cost of the AEO 2011 alternative baseline because we are not able to accuratel y determine the technology mix u sed in the AEO 2011 anal ys is to achieve the projected improvements in fuel efficiency . We do know they

differ significantly

from our own analysis as the EIA projections do not include the full range of technologies considered by the agencies (e.g. EIA’s analy sis the magnitude of environmental effects of the action alternatives. [See 40 CFR 1502.14(c).] * * * Inclusion of such an analysis in the EIS is necessary to inform Congress, the public, and the President as intended by NEPA. [See 40 CFR 1500.1(a).]'' Forty Most Asked Questions Concerning CEQ's National Environmental Policy Act Regulations, 46 FR 18026 (1981) (emphasis added). 297 U.S. Energy Information Administration. Annual Energy Outlook 2011 Early Release. Last viewed on March 29, 2011 at http://www.eia.doe.gov/forecasts/aeo/ . See Supplemental Tables 7, 63, and 68.186 of

does not consider the use of idle reduction technologies and diesel auxiliary power units to reduce fuel consumption associated with vehicle hotel ing). If one were to assume that the cost of the AEO2011 baseline was proportional to projected improvement relative to our preferred alternative, the total AEO2011 baseline cost estimate would be approximately

equal to the total cost of the preferred case, but vary by category . **(2) Alternative 2: 12 Percent Less Stringent than the Preferred Alternative**  Alternative 2 represents an alternative stringency level to the agencies’ preferred approach. Alternative 2 represents a stringency level which is approximately 12 percent less stringent than the preferred approach. The agencies calculated the Alternativ e 2 stringency

level in order to meet two goals. First, we sought to create an alternative that regulated the same engine and vehicle categories as the preferred alternative, but at lower stringency

(10 - 20 percent lower) than the preferred alternative. S econd we wanted an alternative that reflected removal of the least cost effective technology that we believed manufacturers would add last in order to meet the preferred alternative. In other words, we wanted an alternative that as closel y as possible ref lected the last increment in stringency

prior to reaching our preferred alternative. Please see Table 2 - 39 in RIA Chapter 2 for a list of all of the technologies, as well as their cost and relative effectiveness. The resulting Alternative 2 is based o n the same technologies used in Alternative 3 except as follows for each of the three categories. The combination tractor standard would be based on the removal of the Advanced SmartWay

aerodynamic package and weight reduction technologies , which decreases the average combination tractor GHG emissions and fuel consumption reduction by approximately

1 percent. The HD pickup truck and van standard would be based on removal of the 5 percent mass reduction technology , which decreases the avera ge truck reduction of fuel consumption and GHG emissions by approximately

1.6 percent. The vocational vehicle standard would be based on removal of low rolling resistance tires

– in essence meaning that there would be no expected improvement in performan ce from vocational vehicles, onl y from engines used to power them . This alternative would also reduce the amount of technologies applied to diesel engines used in vocational vehicles such that the engines achieve a 3 percent reduction in 2014 model ye ar and a 5 percent reduction in 2017 model year, both compared to a 2010 model year baseline , The agencies have decided not to finalize Alternative 2 , because as shown below , Alternative 3 is more stringent, is technicall y feasible , and results in a greater net benefit to society . **(3) Alternative 3: Preferred Alternative and Final Standards**  Alternative 3 represents the agencies’ pre ferred approach. This alternative consists of the finalized fuel efficiency and GHG standards for HD engines, HD pickup trucks and vans, Class 2b through Class 8 vocational vehicles, and Class 7 and 8***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

187 of combination tractors. Details regarding modeling of this alternative are included in RIA Chapter 5 as the control case. The agencies selected Alternative 3 over Alternatives 4 and 5 described below because the agencies concluded that alternatives 4 and 5 were not technically feasible to achieve given the leadtime provided in th e s e final rule s . Hence, we have concluded that Alternative 3 represents the maximum feasible improvement. Section 2 of this preamble provides an explanation of the consideration that agencies gave to setting more stringent standards based on the application of additional technologies and our reasons for concluding that the identified technologies for each of the vehicle and engine standards that constitute Alternative 3 represented the maximum feasible improvement based on t echnological feasibility . In general, we reached this conclusion for one of two reasons. For some technologies such as Rankine Waste Heat Recovery engine technologies, the agencies have concluded that the technology is still in the research phase and wil l not be developed full y for new engine production in the time frame of this first regulatory action. In other cases, the agencies concluded that the manufacturing capacity for technologies such as advanced battery s ys tems for heav y- duty h ybrid drivetrain s could not be expanded quickly

enough to allow for significant vehicle production volume in the time frame of this program . **(4) Alternative 4: 20 Percent More Stringent than the Preferred Alternative**  Alternative 4 represents a modeled alternative which is 20 percent more stringent than the preferred approach. The agencies derived the stringency level based on similar goals as for Alternative 2. Specificall y, we wanted an alternative that would reflect an incremental improvement over the preferred alter native based on adding the next most cost effective technology in each of the categories. We believed these were the technologies most likely

to be attempted by

manufacturers if a more stringent standard were established. A s discussed above and in the feasibility discussion in Section III, we are not finalizing Alternative 4 because we do not believe that the technologies used in this alternative can be developed and introduced in the time frametime frame of this rulemaking. We note that the estimated costs for this alternative are denoted as ‘+c.’ The +c is intended to make clear that the cost estimates we are showing do not include additional costs related to pulling ahead the development and expanding manufacturing base for the additional technologies (for example, building new factories in the next few ye ars). The resulting Alternative 4 is based on the same technologies used in Alternative 3 except as follows for each of the three categories. The combination tractor standard would be based on the addition of Rankine waste heat recovery

s ys tems and 100 percent application of advanced aerody namic technologies, such as underbody airflow treatment, advanced gap reduction, rearview cameras to replace mi rrors, and wheel sy stem streamlining, to high roof sleeper cab combination tractors. The agencies do not believe that either advanced aerody namic technologies or Rankine waste heat recovery s ys tems should be used to set the standard for HD engines in 2017 MY because this technology is still in the research phase. The agencies assumed 59 percent of all combination tractors are sleeper cabs and of those, 80188 of

percent are high roof sleeper cabs. The agencies assumed a 12 kWh waste heat recovery sy stem would r educe CO 2 emissions by 6 percent at a cost of $8,400 per truck. 298 The estimated reduction in CO 2 emissions from the engine for this alternative is included in RIA Chapter 6. The impact of 100 percent application of the advanced aerody namic technology

package would lead to a total 20.7 percent reduction in Cd values for high roof sleeper cabs over a 2 010 MY baseline tractor. The incremental cost of this technology

over the preferred case is $1,027 per vehicle. The HD pickup truck and van standard would be based on the addition of the turbocharged, downsized technology to gasoline engines which would bring the total reduction for gasoline HD pickup trucks and vans to 15 percent and match the level of reduction for the diesel pickup trucks. The agencies do not consider this to be a technology

from which the 2017MY gasoline HD pickup truck standards sh ould be premised on because we are not yet convinced that turbocharged downsized gasoline engines can be applied to heav y- duty truck applications in a durable manner. We are aware that manufacturers are testing such engines and that in pickup trucks with a duty cycle representing a mix of passenger vehicle and work applications the engines can be durable. However, we are unable to conclude today that such engines will be durable and hence technicall y feasible when applied in heav y- duty truck applications with an expected higher average load factor. The estimated incremental cost increase to HD pickup trucks and vans to replace a stoichiometric gasoline direct injected V8 engine with coupled cam phasing used in Alternative 3 with a V6 stoichiometric gasoli ne direct injection DOHC with dual cam phasing, discrete valve lift, and twin turbochargers is estimated to be $1,743. 299 The vocational vehicle standard would be based on the addition hy brid powertrains to 6 percent of the vehicles. The agencies assumed a 32 percent per vehicle reduction in GHG emissions and fuel consumption due to the hy brid with a cost of $26,667 per vehicle based on the average effectiveness and costs developed in the NAS report for box trucks, bucket trucks, and refuse haulers. 300 **(5) Alter**  **native 5: Trailers**  **Plus Accelerated Hybrid** Alternative 5 builds on Alternative 4 through additional hy brid powertrain application rates in the HD sector and b y adding a performance standard for fuel efficiency and GHG e missions to commercial trailers. This alternative includes all elements of Alternative 4 (some of which we already regard as infeasible in the model ye ars covered b y the final rule s ), plus the application of additional hy brid powertrains to the pickup truc ks, vans, vocational vehicles, and tractors. In addition, the agencies applied aerodyn amic technologies to commercial box trailers, along with tire technologies for all commercial trailers. The agencies set the h ybrid penetration for each category such that it represents 50 percent of the HD pickup truck and van segment, 50 percent of vocational vehicles, 298 TIAX. 2009. Page 4 - 20. 299 See RIA Chapter 2, Table 2.35. 300 NAS Report. Page 146.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

189 of and 5 percent of tractors in 2017 model year. The agencies have concluded that it is not feasible to achieve h ybrid technology penetration rates at or even near these levels in the time frametime frame of this rulemaking. As with Alternative 4, we include a +c in our cost estimates for this alternative to reflect additional costs not estimated by the agencies. The agencies assumed that a h ybrid powertrain would provide a 32 percent reduction in CO 2 emissions and f

uel consumption of a vocational vehicle at a projected cost of $26,667 per vehicle, based on the average of the NAS report findings for box trucks, bucket trucks, and refuse vehicles. 301 The agencies are projecting a cost of $9,000 per vehicle for the HD pi ckup trucks and vans with an effectiveness of 18 percent, again based on the NAS report. 302 Lastl y, the effectiveness of hybrid powertrains installed in tractors was assumed to be 10 percent at a cost of $25,000 based on the NAS report. 303 The combination tra ctor technology package for Alternative 5 includes the preferred alternative technologies, waste heat recovery and Advanced SmartWay aerodynamic package used in Alternative 4, and application of hy brid powertrains discussed above, in addition to a regulation for commercial trailers pulled by combination tractors. The agencies assumed a box trailer program would mirror the SmartWay program and include tire and aerodyn amic requirements. The agencies added low rolling resistance tires to all commercial trailers, which are assumed to have 15 percent lower rolling resistance than the baseline trailer tire which is equivalent to the target value required b y SmartWay . The aerody namics of the box trailers were assumed to improve the coefficient of drag for the combination tractor - trailer b y 10 percent through the application of technologies such as trailer skirts and gap reducers. 304 These technologies would result in further reductions in drag coefficient and rolling resistance coefficient from the MY 2010 baseline. As stated above for hybrids, the agencies do not believe that it is possible to achieve technology penetration rates at or even near these levels in the time framet ime frame of this rulemaking. The combination tractor costs for this alternative are equal to the costs in Alternative 4, plus $25,000 for h ybrid powertrains in ten percent of tractors, plus the costs of trailers. The costs for the trailer program of A lternative 5 were derived based on the assumption that trailer aerodyn amic improvements would cost $2,150 per trailer. This cost assumes side fairings and gap reducers and is based on the ICF cost estimate. 305 The agencies applied the aerodynamic improveme nt to only box trailers, which represent approximately

60 percent of the trailer sales. The agencies used $528 per trailer (2014 MY cost) for low rolling resistance based on the agencies’ estimate of $66 per tire in the tractor program. Lastl y, the agenc ies assumed the trailer volume is equal to three times the tractor volume based on the 3:1 ratio of trailers to tractors in the market today .

301 NAS Report. Page 146. 302 NAS Report. Page 146. 303 NAS Report. Page 146. 304 The Cd improvement of 10 percent for trailer improvements was derived from the TIAX report, Table 4 - 26 on page 4 - 50. 305 Assumed retail prices of $1,300 for side skirts and $850 for gap reducers based on the ICF Cost Report, page 90.190 of



### B. **How Do These Alternatives Compare in Overall GHG Emissions Reductions and Fuel Efficiency and Cost?**  The agencies analyzed all five alternatives through the MOVES model to evaluate the impact of each alternative, as shown in **Table** IX - 1 . The table contains the annual CO 2 and fuel savings in 2030 and 2050 for each alternative (relative to the reference scenario of Alternative 1), presenting both the total savings across all regulatory categories, and for each regulatory

category . Table IX - 2 presents the annual technology costs associated with each alternative (relative to the reference scenario of Alternative 1) in 2030 and 2050 for each regulatory category . In addition, the total annual downstream impacts of NO X , CO, PM, and VOC emissions in 2030 for each of the alternatives are included in **Table** IX - 3 . Lastl y, the agencies project the monetized net benefits associated with each alternative in 2030 and 2050 as shown in **Table** IX - 4 and **Table** IX - 5 . **Table IX**  **- 1**  **: Annual CO 2**  **and Oil Reductions Relative to Alternative 1 in 2030 and 2050** DOWNSTREAM CO 2 REDUCTIONS (MMT) OIL REDUCTIONS (BILLION GALLONS) 2030 2050 2030 2050 Alt. 1 Baseline 0 0 0 0 Alt. 1a AEO 2011 Baseline - Total 39 90 3.9 9.0 Tractors 29 73 2.9 7.1 HD Pickup Trucks 9 16 0.9 1.7 Vocational Vehicles 1 2 0.1 0.2 Alt. 2 L ess Stringent - Total 54 78 5.4 7.7 Tractors 42 59 4.2 5.8 HD Pickup Trucks 7 11 0.8 1.2 Vocational Vehicles 5 7 0.4 0.7 Alt. 3 Preferred

– Total 61 88 6.0 8.7 Tractors 45 63 4.4 6.2 HD Pickup Trucks 8 13 0.9 1.3 Vocational Vehicles 7 11 0.7 1.1 Alt. 4 More Stringent

– Total 74 107 7.4 10.7 Tractors 53 74 5.2 7.3 HD Pickup Trucks 10 15 1.0 1.6 Vocational Vehicles 11 18 1.1 1.8 Alt. 5 Max Technology

– Total 99 146 9.8 14.5 Tractors 61 85 6.0 8.3 HD Pickup Trucks 15 24 1.6 2.5 Vocational Vehicles 23 37 2.2 3.6***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

191 of **Table IX**  **- 2**  **: Technology Cost Projections Relative to Alternative 1 for Each Alternative a**  TECHNOLOGY COSTS (20 09$ MILLIONS) 2030 2050 Alt. 1 Baseline $0 $0 Alt. 1a AEO 2011 Baseline

– Total b -- -- Tractors -- -- HD Pickup Trucks -- -- Vocational Vehicles -- -- Alt. 2 L ess Stringent

– Total $1,676 $2,440 Tractors $743 $1,227 HD Pickup Trucks $817 $1,029 Vocational Vehicles $117 $185 Alt. 3 Preferred

– Total $2,210 $3,287 Tractors $1,076 $1,777 HD Pickup Trucks $918 $1,156 Vocational Vehicles $216 $354 Alt. 4 More Stringent

– Total $5,211+c $6,996+c Tractors $1,953+c $3,225+c HD Pickup Trucks $1,442+c $1,816+c Vocational Vehicles $1,816+c $1,954+c

$17,909+c $27,306+c Alt. 5 Max Technology

– Total $2,747+c $4,292+c Tractors $5,669+c $7,142+c HD Pickup Trucks $9,493+c $15,873+c Vocational Vehicles $5,211+c $6,996+c Notes: a The +c is intended to make clear that the cost estimates we are showing do not include additional costs related to pulling ahead the development and expanding manufacturing base for these technologies. b The agencies did not conduct a cost analysis for th e AEO2011 baseline. **Table IX**  **- 3**  **: Downstream Impacts Relative to Alternative 1 of Key Non**  **- GHGs for Each**  **Alternative in 2030**  NO X CO PM 2.5 VOC Alt. 1 Baseline 0% 0% 0% 0% Alt. 1a AEO 2011 Baseline 8.8% 1.0% - 3.8% 7.2% Alt. 2 L ess Stringent - 21.9% - 2.0% 8.4% - 19.0% Alt. 3 Preferred - 22.0% - 2.0% 8.5% - 19.1% Alt. 4 More Stringent - 22.5% - 2.0% 8.7% - 19.5% Alt. 5 Max Technology

- 22.9% - 2.1% 8.4% (1) - 20.0%192 of **Table IX**  **- 4**  **: Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year Vehicles(3% discount rate, Million 2009 dollars)** Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $5,900 - $8,100 - $20,700+c - $37,200+c Fuel Savings (pre - tax) $0 $45,000 $50,100 $63,900 $79,100 Reduced CO 2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $1,100 $1,200 $1,600 $1,900 3% (avg SCC) $0 $5,100 $5,700 $7,200 $9,000 2.5% (avg SCC) $0 $8,400 $9,400 $12,000 $15,000 3% (95th percentile) $0 $16,000 $17,000 $22,000 $27,000 Energy Security Impacts (price shock) $0 $2,400 $2,700 $3,400 $4,200 Accidents, Congestion, Noise $0 - $1,300 - $1,500 - $1,600 - $1,600 Refueling Savings $0 $300 $400 $500 $600 Non - CO 2 GHG Impacts and Non - GHG Impacts c N/A N/A N/A N/A N/A Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $41,600 $44,800 $47,100+c $47,000+c 3% (avg SCC) $0 $45,600 $49,300 $52,700+c $54,100+c 2.5% (avg SCC) $0 $48,900 $53,000 $57,500+c $60,100+c 3% (95th percentile) $0 $56,500 $60,600 $67,500+c $72,100+c Notes: a Net present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII.G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII.G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exclude the value of changes in non - CO 2 GHG emissions expected under this rulemaking (see RIA Ch apter 5). Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d “+c” indicates additional costs not estimated in this rulemaking.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

193 of **Table IX**  **- 5**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for Lifetime of 2014 through 2018 Model Year Vehicles(7% discount rate, Million 2009 dollars)**  Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $5,900 - $8,100 - $20,700+c - $37,200+c Fuel Savings (pre - tax) $0 $30,900 $34,400 $43,800 $53,900 Reduced CO 2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $1,100 $1,200 $1,600 $1,900 3% (avg SCC) $0 $5,100 $5,700 $7,200 $9,000 2.5% (avg SCC) $0 $8,400 $9,400 $12,000 $15,000 3% (95th percentile) $0 $16,000 $17,000 $22,000 $27,000 Energy Security Impacts (price shock) $0 $1,600 $1,800 $2,300 $2,900 Accidents, Congestion, Noise $0 - $900 - $1,000 - $1,100 - $1,100 Refueling Savings $0 $200 $200 $300 $400 Non - CO 2 GHG Impacts and Non - GHG Impacts c N/A N/A N/A N/A N/A Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $27,000 $28,500 $26,200+c $20,800+c 3% (avg SCC) $0 $31,000 $33,000 $31,800+c $27,900+c 2.5% (avg SCC) $0 $34,300 $36,700 $36,600+c $33,900+c 3% (95th percentile) $0 $41,900 $44,300 $46,600+c $45,900+c Notes: a Net present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII.G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII.G also presents these SCC estimates. c The monetized GHG benefits presented in this analysis exclude the value of changes in non - CO 2 GHG emissions expected under this rulemaking (see RIA Ch apter 5). Although EPA has not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero.

d “+c” indicates additional costs not estimated in this rulemaking. The agencies also project the monetized net benefits associated with each alternative b y vehicle class for the 2014 through 2018 MY vehicles over their lifetimes as shown in Table IX - 6 through Table IX - 8 at a 3 percent discount rate for HD pickup trucks & vans, vocational vehicles and combination tractors, respectivel y, and in Table IX - 9 through Table IX - 11 at a 7 percent discount rate for HD pickup trucks & vans, vocational vehicles and combination tractors, respectivel y.194 of **Table IX**  **- 6**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year HD Pickup Trucks & Vans (**  **3% discount rate, Million**  **200 9**  **dollars)** Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $1,780 - $1,970 - $3,220+c - $9,890+c Fuel Savings (pre - tax) $0 $3,480 $4,060 $4,910 $7,700 Energy Security Impacts (price shock) $0 $190 $220 $270 $420 Accidents, Congestion, Noise $0 - $330 - $350 - $370 - $350 Refueling Savings $0 $40 $50 $60 $90 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $100 $100 $100 $200 3% (avg SCC) $0 $500 $500 $600 $900 2.5% (avg SCC) $0 $800 $900 $1,100 $1,500 3% (95th percentile) $0 $1,400 $1,600 $1,900 $2,800 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $1,700 $2,110 $1,750+c - $1,830+c 3% (avg SCC) $0 $2,100 $2,510 $2,250+c - $1,130+c 2.5% (avg SCC) $0 $2,400 $2,910 $2,750+c - $530+c 3% (95th percentile) $0 $3,000 $3,610 $3,550+c $770+c Notes: a N et present value of reduced CO 2 emissions is calculated differently than other benefits. T he 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 the SCC TSD for more detail. b Section VIII. G notes that SCC increases over time. C orresponding to the years in this table, the SCC estimates range as follows: f or Average SCC at 5%: $ 5 - $16; for Average SCC at 3%: $ 22 - $46; for Average SCC at 2.5%: $ 3 6 - $66; and for 95th percentile SCC at 3%: $ 66 - $139. S ection VIII. G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis . Although EPA has not mo netized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero.

d “+ c ” indicates additional costs not estimated in this rulemaking. **Table IX**  **- 7**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year Vocational Vehicles (**  **3% discount rate, Million 200**  **9 dollars)** ***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

195 of Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $670 - $1,140 - $9,140+c - $15,840+c Fuel Savings (pre - tax) $0 $3,420 $5,420 $8,930 $14,270 Energy Security Impacts (price shock) $0 $180 $290 $480 $760 Accidents, Congestion, Noise $0 - $540 - $650 - $670 - $500 Refueling Savings $0 $40 $60 $110 $170 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $100 $100 $200 $300 3% (avg SCC) $0 $400 $600 $1,000 $1,500 2.5% (avg SCC) $0 $700 $1,100 $1,700 $2,600 3% (95th percentile) $0 $1,300 $1,900 $3,100 $4,700 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $2,530 $4,080 - $90+c - $840+c 3% (avg SCC) $0 $2,830 $4,580 $710+c $360+c 2.5% (avg SCC) $0 $3,130 $5,080 $1,410+c $1,460+c 3% (95th percentile) $0 $3,730 $5,880 $2,810+c $3,560+c

Notes: a N et present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any

increases or reductions should not be interpreted as zero. d “+ c ” indicates additional costs not estimated in this rulemaking. **Table IX**  **- 8**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year Com bination Tractors**  **( 3% discount rate,**  **Million 200 9**  **dollars)**196 of Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $3,300 - $4,950 - $8,430+c - $11,540+c Fuel Savings (pre - tax) $0 $38,140 $40,650 $50,030 $57,190 Energy Security Impacts (price shock) $0 $2,030 $2,160 $2,660 $3,040 Accidents, Congestion, Noise $0 - $450 - $480 - $590 - $770 Refueling Savings $0 $230 $250 $300 $350 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $900 $1,000 $1,200 $1,400 3% (avg SCC) $0 $4,200 $4,500 $5,600 $6,500 2.5% (avg SCC) $0 $7,000 $7,500 $9,300 $11,000 3% (95th percentile) $0 $13,000 $14,000 $17,000 $20,000 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $37,550 $38,630 $45,170+c $49,670+c 3% (avg SCC) $0 $40,850 $42,130 $49,570+c $54,770+c 2.5% (avg SCC) $0 $43,650 $45,130 $53,270+c $59,270+c 3% (95th percentile) $0 $49,650 $51,630 $60,970+c $68,270+c

Notes: a N et present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any

increases or reductions should not be interpreted as zero. d “+ c ” indicates additional costs not estimated in this rulemaking. **Table IX**  **- 9**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year HD Pickup Trucks & Vans (**  **7% discount rate, Million**  **200 9**  **dollars)******* E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

197 of Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 Mo re

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $1,780 - $1,970 - $3,220+c - $9,890+c Fuel Savings (pre - tax) $0 $2,180 $2,550 $3,090 $4,830 Energy Security Impacts (price shock) $0 $120 $140 $170 $260 Accidents, Congestion, Noise $0 - $220 - $230 - $250 - $230 Refueling Savings $0 $30 $30 $40 $60 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $100 $100 $100 $200 3% (avg SCC) $0 $500 $500 $600 $900 2.5% (avg SCC) $0 $800 $900 $1,100 $1,500 3% (95th percentile) $0 $1,400 $1,600 $1,900 $2,800 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $430 $620 - $70+c - $4,770+c 3% (avg SCC) $0 $830 $1,020 $430+c - $4,070+c 2.5% (avg SCC) $0 $1,130 $1,420 $930+c - $3,470+c 3% (95th percentile) $0 $1,730 $2,120 $1,730+c - $2,170+c

Notes: a N et present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any

increases or reductions should not be interpreted as zero. d “+ c ” indicates additional costs not estimated in this rulemaking. **Table IX**  **- 10**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year Vocational Vehicles (**  **7% discount rate, Million 200**  **9 dollars)** 198 of Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $670 - $1,140 - $9,140+c - $15,840+c Fuel Savings (pre - tax) $0 $2,280 $3,630 $5,970 $9,410 Energy Security Impacts (price shock) $0 $120 $190 $320 $500 Accidents, Congestion, Noise $0 - $380 - $450 - $460 - $350 Refueling Savings $0 $30 $40 $70 $110 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $100 $100 $200 $300 3% (avg SCC) $0 $400 $600 $1,000 $1,500 2.5% (avg SCC) $0 $700 $1,100 $1,700 $2,600 3% (95th percentile) $0 $1,300 $1,900 $3,100 $4,700 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $1,480 $2,370 - $3,040+c - $5,870+c 3% (avg SCC) $0 $1,780 $2,870 - $2,240+c - $4,670+c 2.5% (avg SCC) $0 $2,080 $3,370 - $1,540+c - $3,570+c 3% (95th percentile) $0 $2,680 $4,170 - $140+c - $1,470+c

Notes: a N et present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII. G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII. G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis . Although EPA has not monetized changes in non - CO 2 GHGs, the value of any

increases or reductions should not be interpreted as zero. d “+ c ” indicates additional costs not estimated in this rulemaking.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

199 of **Table IX**  **- 11**  **Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for**  **Lifetime of 2014 through 2018 Model Year Com bination Tractors**  **( 7% discount rate,**  **Million 200 9**  **dollars)** Alt.1 Baseline Alt.2 Less

Stringent Alt.3

Preferred Alt.4 More

Stringent Alt.5 Max

Technology Truck Program Costs d $0 - $3,300 - $4,950 - $8,430+c - $11,540+c Fuel Savings (pre - tax) $0 $26,420 $28,170 $34,710 $39,680 Energy Security Impacts (price shock) $0 $1,410 $1,500 $1,850 $2,110 Accidents, Congestion, Noise $0 - $320 - $340 - $420 - $550 Refueling Savings $0 $160 $170 $210 $240 Non - CO 2 GHG Im

pacts and Non - GHG Im

pacts c N/A N/A N/A N/A N/A Reduced CO2 Emissions at Each Assumed SCC Value a,b 5% (avg SCC) $0 $900 $1,000 $1,200 $1,400 3% (avg SCC) $0 $4,200 $4,500 $5,600 $6,500 2.5% (avg SCC) $0 $7,000 $7,500 $9,300 $11,000 3% (95th percentile) $0 $13,000 $14,000 $17,000 $20,000 Monetized Net Benefits at Each Assumed SCC Value a,b 5% (avg SCC) $0 $25,270 $25,550 $29,120+c $31,340+c 3% (avg SCC) $0 $28,570 $29,050 $33,520+c $36,440+c 2.5% (avg SCC) $0 $31,370 $32,050 $37,220+c $40,940+c 3% (95th percentile) $0 $37,370 $38,550 $44,920+c $49,940+c

Notes: a Net present value of reduced CO 2 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 the SCC TSD for more detail. b Section VIII.G 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%: $22 - $46; for Average SCC at 2.5%: $3 6 - $66; and for 95th percentile SCC at 3%: $66 - $139. Section VIII.G also presents these SCC estimates. c Due to analytical and resource limitations, MY non - GHG emissions (direct PM, VOCs, NO 2 and SO 2 ) were not estimated for this analysis. Although EPA ha s not monetized changes in non - CO 2 GHGs, the value of any increases or reductions should not be interpreted as zero. d “+c” indicates additional costs not estimated in this rulemaking. 

### C. **What Is the Agencies’ Decision Regarding Trailer Standards?** A central theme throughout our HD Program is the recognition of the diversity and complexity

of the heavy- duty

vehicle segment. Trailers are an important part of this segment and are no less diverse in the range of functions and applications they serve. They are the primary

vehicle for moving freight in the United States. The ty pe of freight varies from retail products to be sold in stores, to bulk goods such as stones, to industrial liquids such as chemicals, to equipment such as bulldozers. Semi - trail ers come in a large variety of styl es – box, refrigerated box, flatbed, tankers, bulk, dump, grain, and many others. The most common ty pe of trailer is the box trailer, but even box trailers come in200 of

many different lengths ranging from 28 feet to 53 feet o r greater, and in different widths, heights, depths, materials (wood, composites, and/or aluminum), construction (curtain side or hard side), axle configuration (sliding tandem or fixed tandem), and multiple other distinct features. NHTSA and EPA believe trailers impact the fuel consumption and CO 2 emissions from combination tractors and the agencies see opportunities for reductions. Unlike our experience with trucks and engines, the agencies have very limited experience related to regulating trailers for fuel efficiency or emissions. L ikewise, the trailer manufacturing industry

has only the most limited experience compl yi ng with regulations related to emissions and none with regard to EPA or NHTSA certification and compliance procedures. The agencies bro adl y solicited comments on controlling fuel efficiency and GHG emissions through eventual trailer regulations as we described in the notice of proposed rulemaking which could set the foundation of a future rulemaking for trailers. 75 FR at 74345 - 351 (alth ough this was a solicitation for comment regarding future action outside the present rulemaking). The general theme of the comments received was that technologies exist today that can improve trailer efficiency . We received several comments from stakehol ders which encouraged the agencies to set fuel efficiency and GHG emissions standards for trailers in this rulemaking. The agencies also received comments supporting a delay in trailer regulations. Specifically , IPIcommented that the agencies should regulate trailers at least to some degree, arguing that the agencies’ reasoning for not doing so was insufficient and requesting a plan and schedule in the final rule for the future regulation of trailers. One commenter recognized that there are well over 10 0 trailer manufacturers in the U.S., with almost all being small businesses. They stressed the need for the agencies to reach out to the trailer industry and associations prior to developing a regulatory

program for this industry . In addition, they state d that time is needed to develop sufficient research into the area. None of the commenters that supported trailer regulation in this action addressed the complexities of the trailer industry , nor a method to measure trailer aerodynamic improvements In the NPRM, the agencies discussed relatively conceptual approaches to how a future trailer regulation could be developed ; however, we did not provide a proposed test procedure or proposed standard . The agencies proposed to delay the regulation of trailers, as the inclusion would not be feasible at this time due to the lack of a test procedure and the m yri ad of technical and policy issues not teed up in the NPRM or addressed in comments. Additionally , since a number of trailer manufacturing entities are small businesses, EPA and NHTSA need to allow sufficient time to convene a SBREFA panel to conduct the proper outreach to the potentially impacted stakeholders. NHTSA and EPA agree that the regulation of trailers, when appropriate, is likely to provide fuel efficiency

benefits. W e continue to believe that both agencies must perform a more comprehensive assessment of the trailer industry , and therefore that their inclusion at this time is not feasible. Until that time, the SmartWay Transport Partnership Program will continue to encourage the development and use of technologies to reduce fuel consumption and CO 2 emissions from trailers.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

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## X. **Public Participation**  The agencies proposed their respective rules on November 30, 201 0 (75 FR 74152). Two public hearings were held to provide interested parties the opportunity to present data, views, or arguments concerning the proposal; the first hearing was held in Chicago, IL on November 15, 2010, and the second in Cambridge, MA on November 18, 2010. The public was invited to submit written comments on the proposal during the formal comment period, which end ed on January 31, 2011. The agencies received ov er 41,000 comments - over 3,000 of them unique - from industry , environmental organizations, states, and individuals. The vast majority

of commenters supported the central tenets of the proposed HD National Program. That is, there was broad support for a national program which would reduce fuel consumption and GHG emissions from the three heavy- duty regulatory categories

– heavy- duty pickup trucks and vans, vocational vehicles, and combination tractors. The agencies received specific comments on many aspects of the propos al. 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 addressed all of the public comments in the Response to Comments document associated with this final action and located in the docket (Docket ID EPA

–HQ

– OAR

–2010

– 0162, or NHTSA - 2010 - 0079). 

## XI **. NHTSA** **’s Record**  **of Decision** On May 21, 2010, President Obama issued a memorandum entitled “Improving Energy Security, American Competitiveness and Job Creation, and Environmental Protection through a Transformation of our Nation’s Fleet of Cars and Trucks” to the Secretary of Transpo rtation, the Administrator of NHTSA, the Administrator of EPA, and the Secretary

of Energy . 306 The memorandum requested that the Administrators of EPA and NHTSA begin work on a Joint Rulemaking under EISA and the Clean Air Act and establish fuel efficiency and GHG emission standards for commercial medium - and heav y- duty vehicles beginning with MY 2014. The President requested that NHTSA implement fuel efficiency standards and EPA implement GHG emission standards that take into account the market structure o f the trucking industry and the unique demands of heav y- duty vehicle applications; seek harmonization with applicable S tate standards; consider the findings and recommendations published in the National Academy of Sciences (NAS) report on medium - and heav y- duty truck regulation; strengthen the industry and enhance job creation in the United States; and seek input from all stakeholders, while recognizing the continued leadership role of California and other S tates.

306 The White House, Offi ce of the Press Secretary, Presidential Memorandum Regarding Fuel Efficiency Standards (May 21, 2010) ; The White House, Office of the Press Secretary, President Obama Directs Administration to Create First-Ever National Efficiency and Emissions Standards f or Medium - and Heavy Duty Trucks (May

21, 2010) .202 of In accordance with this policy , this Final Rule promulgates fuel efficiency standards for HD vehicles built in MYs 2014 - 2018. This Final Rule constitutes the Record of Decision (ROD) for NHTSA’s HD vehicle Fuel Efficiency Improvement Program , pursuant to the National Environmental Policy Act (NEP A) and the Council on Environmental Quality ’s (CEQ) implementing regulations. 307 See 40 CFR § 1505.2. As required b y CEQ regulations, this Final Rule and ROD sets forth the following: (1) the agency’s decision; (2) alternatives considered by NHTSA in reach ing its decision, including the environmentall y 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 a gency ’s preferences among alternatives based on relevant factors, including economic and technical considerations and agency statutory missions. This Final Rule also briefly addresses mitigation . 

### A. **The Agency’s Decision** In the D raft Environmental Impact Statement (D EI S ) and the F inal Environmental Impact Statement (F EI S ) , the agency identified a Preferred Alternative which would set overall fuel consumption standards for HD vehicles and engines . The Preferred Alternative, identified as Alternative 3 in the FEI S, would include standards for engines used in Classes 2b - 8 vocational vehicles (except engines in HD pickups and vans, which are regulated as complete vehicles), fuel consumption standards f or HD pickups and vans by work factor, overall vehicle fuel consumption standards for Classes 2b - 8 vocational vehicles (in gal/1,000 ton - miles), and overall fuel consumption standards for Classes 7 and 8 tractors. The Preferred Alternative identified in the NPRM, DEI S, and FEI S assumed that the vocational vehicle standards would lead to a 10 percent reduction in the tire rolling resistance level s of the tires installed in vocational veh icles. After carefull y reviewing and anal yz ing all of the information in the public record including technical support documents, the FEIS, and public and agency comments submitted on the DEI S, the FEIS, and the NPRM, NHTSA has decided to finalize a standard that includes slightl y more stringent requirements for vocational vehicles than those included in the Preferred Alternative analyzed in the FEIS . Subsequent to issuing the proposed rule, NHTSA and EPA conducted a tire testing program to evaluate the tire rolling resistance of 156 different tires across a wide range of truck applications. The results of the study indicate that the baseline tire rolling resistance of this segment of vehicles was better than the level assumed during the proposal. In the final action, therefore, the agencies made the vocational truck stand ards slightly more stringent than those included as part of the Preferred Alternative for the FEIS, reflecting the better overall performance of tires in this segment. In addition, the agencies have reduced the projected improvement in

307 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.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

203 of average tire perfor

mance from 10 percent to 5 percent, reflecting the better than expected baseline performance. NHTSA’s anal ys is indicates that the Agency ’s Decision will result in slightly less fuel savings and CO 2 emissions reductions than those noted in the EI S. 308 For e nvironmental impacts associated with the final rule , see Section s V I . C and VII of this Final Rule. 309 

### B. **Alternatives Considered by NHTSA in Reaching its Decision, Including the Environmentally Preferable Alternative**  When preparing an EI S, NEPA requires an agency to compare the potential environmental impacts of its proposed action and a reasonable range of alternatives. In the FEIS, NHTSA identified alternative s that represent the spectrum of potential actions the ag ency

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 fuel efficiency standards for HD vehicles . T he FEIS anal yz ed the impacts of four “action” alternatives , each of which would separately regulate segments of the HD vehicle fleet. 310 Three of the action alternatives (Alternatives 2, 3 and 4) would regulate the same vehicle categories, but at increasing levels of stringency , with Alternative 2 being the least stringent alternative and Alternative 4 being the most stringent. Alternatives 2 and 4 were constructed by starting with the Preferred Alternative (Alternative 3) and either removing the least cost effective technology

in each of the vehicle categories or adding the next most cost effective technology

in each of the vehicle categories. 311 Alternative 5 built on the Preferred Alternative b y adding a performance standard for the commercial trailers pu lled by tractors and by

specifying more stringent standards based on accelerated adoption of hy brid powertrains for HD vehicles. The DEI S and FEIS also analyzed the impacts that would be expected if NHTSA adopted no HD vehicle standards (the No Action Alte rnative). For a discussion of the environmental impacts associated with each of the alternatives, see C hapters 3 and 4 of the FEI S.

308 The agencies’ analysis indicates that the change results in a decrease in total 2014 - 2050 fuel savings of about 1. 05% percent com pared to the Preferred Alternative modeled in the EIS and a corresponding increase in CO 2 emission s . 309 The environmental impacts of this decision fall within the spectrum of impacts analyzed in the DEIS and the FEIS. There are no “substantial changes to the proposed action” and there are no “significant new circumstances or information relevant to environm ental concerns and bearing on the proposed action or its im pacts.” Therefore, consistent with 40 CFR § 1502.9(c), no supplement to the EIS is required. 310 In the DEIS, NHTSA analyzed several alternatives that applied only to specific components and/or seg ments of the HD vehicle fleet. Many commenters urged the agency to consider alternatives that applied to the entire HD vehicle fleet, reasoning that such an approach would be more consistent with EISA requirements. After careful consideration, NHTSA deci ded that those alternatives that would set standards for the whole fleet

—that is, the engine as well as the entire vehicle for pickup trucks and vans, vocational vehicles, and tractors

—

best met the purpose and need for this action. It also allows for the achievement of the “maximum feasible improvement” in HD fuel efficiency. Therefore, the FEIS examined impacts associated with four of the action alternatives analyzed in the DEIS. 311 See Section 2.3.2 of the FEIS.204 of Along with the FEIS, the agency c onducted a national - scale photochemical air quality modeling and health risk assessment fo r 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 F EI S. The study used air quality modeling and health bene fits anal ysis tools to quantify the air quality

and health - related benefits associated with the alternative HD standards. NHTSA’s environmental anal ys is indicates that Alternative 5 ( Trailers and Accelerated Hy

brid) is the overall Environmentally Prefera ble Alternative because it would result in the largest reductions in fuel use and GHG emissions among the alternatives considered. Under each action alternative the agency considered, the reduction in fuel consumption resulting from higher fuel e fficienc y 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 efficiency rebound ef fect, 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 5 would also lead to the lowest total emissions of CO 2 and other GHGs, as well as most criteria air pollutants and mobile source air toxics (MSATs) . 312 NHTSA’s environmental anal ys is indicates that emissions of c arbon monoxide (CO) , acrolein, acetaldehyde, and f ormaldehyde are slightly

( less than one percent ) higher under Alternative 5 than under some other action alternatives and analy sis ye ars. This occurs when increased tailpipe emissions are forecast to exceed the reductions in emissions due to reduced fuel refining and distribution. Thus , while Alternative 5 is the environmentally

preferable alternative on the basis of CO 2 and other GHGs , and on the basis of most criteria air pollutants and MSATs, other alternatives are environmentally preferable from the s tandpoint of some criteria air pollutants and MSATs in some years. Overall, NHTSA considers Alternative 5 to be the Environme ntally Preferable Alternative. For additional discussion regarding the alternatives considered b y the agency in reaching its decis ion, including the Environmentally Preferable Alternative, see Section IX of this Final Rule. For a discussion of the environmental impacts associated with each alternative, see Ch apters 3 and 4 of the FEIS. 

### C. **Factors Balanced b**  **y NHTSA i**  **n Mak ing**  **it s**  **Decision** For discussion of the factors balanced b y NHTSA in making its decision, see Section s III, VIII and IX of this Final Rule.

312 E missions of d iesel particulate matter (DPM) and fine particulate matter (PM 2.5 ) for Alternative 5 are forecast to be lower than under other action alternatives under all analysis years, but slightly high er than under the No Action Alternative in analysis years 2030 and 2050. See FEIS Table 3 .5.2 - 5. This anomaly results from the agencies’ assumptions regarding the percent of all long - haul tractors that use an APU rather than the truck’s engine as a power source during extended idling (discussed further in FEIS Section 3.2.4.1).***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

205 of 

### D. **How the Factors and Considerations Balanced by NHTSA Entered into its Decision**  For discussion of how the factors and considerations balanced b y the agency entered into NHTSA’s Decision, see S ections III, VIII and IX of this Final Rule. 

### E. **The Agency’s Preferences a**  **mong Alternatives Based on Relevant Factors, Including Economic and Technical Considerations and**  **Agency Statutory Missi ons**  For discussion of the agency ’s preferences among alternatives based on relevant factors, including economic and technical considerations, see Section VIII and IX of this Final Rule. 

### F. **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, wh y 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. E missions of criteria and toxic air pollutants are generall y projected to decrease under the final standards under all anal ys is ye ars as compared to their levels under the No Action Alternative. Anal ys is of the environmental trends reported in the FEIS indicates that the only exceptions to this decline are emissions of PM 2.5 , DPM , and 1,3 - butadiene in some analysis years. See Chapter 5 of the FEIS. The agency forecasts these emissio ns increases because, under all the alternatives anal yz ed in the EI S, increase in vehicle use due to improved fuel e fficiency is projected to result in growth in total miles traveled by HD vehicles . The growth in travel outpaces emissions reductions for s ome pollutants, resulting in projected i ncreases for these pollutants. In addition, NHTSA’s NEPA anal ys is predicted increases in emissions of air toxic and criteria pollutants to occur under certain alternatives based on assumptions about the use of Auxil iary Power Units (APUs). For example, NHTSA’s NEPA anal ys is assumes that some manufacturers will install anti - idling technologies (including APUs) on some vehicle classes to meet the requirements of the rule and that drivers’ subsequent use of those APUs w ill result in an increase in emissions of some criteria and toxic air pollutants. NHTSA’s authority to promulgate new fuel e fficienc y standards for HD vehicles is limited and does not allow regulation of vehicle emissions or of factors affecting vehicle em issions, including driving habits and APU usage . Consequentl y, under the HD Fuel Efficiency

Improvement P rogram, NHTSA must set standards but is unable to take steps to mitigate the impacts of these standards. Chapter 5 of the FEIS outlines a number of o ther initiatives across government that could ameliorate the environmental impacts of motor vehicle use, including the use of HD vehicles.206 of



## XII. **Statutory and Executive Order Reviews (1)**  **Executive Order 12866: Regulatory Planning and Revie w**  Under section 3(f)( 1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this action is an “economically significant regulatory

action” because it is likely to have an annual effect on the economy of $100 million or more. Accordingl y, the agencies submitted this actio n to the Office of Management and Budget (OMB) for review under Executive Order 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action. N HTSA is also subject to Executive Order 13563 (76 FR 3821, January 21, 2011) and the Department of Transportation’s Regulatory Policies and Procedures . T h e s e final rule s are also significant within the meaning of the DOT Regulatory Policies and Procedures. Executive Order 12866 additionall y require s NHTSA to submit this action to OMB for review and document an y changes made in response to OMB recommendations . In addition, the agencies prepared an anal ys is of the potential costs and benefits associated with this action. This ana ly sis is contained in the Regulatory Impact Anal ys is, which is available in the docket for these rules and at the docket internet address listed under **ADDRESSES** above. **(2) National Environmental Policy Act**  Under NEPA, a Federal agency must prepare an Environme ntal Impact Statement (EI S) on proposed actions that could significantl y 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 potenti al environmental impacts of a proposed action prior to its adoption, (2) to rigorously explore and evaluate all reasonable alternatives, and (3) to inform the public of, and allow comment on, such efforts. In addition, the CEQ regulations emphasize agenc y cooperation earl y 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. 313 At NHTSA’s request, bo th EPA and the Federal Motor Carrier Safety Administration (FMCSA) agreed to act as cooperating agencies in the preparation of the EIS. EPA has special expertise in climate change and air quality , and FMCSA has special expertise regarding HD vehicles . NH TSA, in cooperation with EPA and FMCSA , prepared a DE IS , solicited public comments in writing and in public hearing s , and prepared an FEIS responding to those comments. Specificall y, in June 2010 , NHTSA published a Notice of Intent to prepare an

313 40 CFR § 1501.6.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

207 of EI S for proposed HD fuel efficiency standards. 314 See 40 CFR § 1501.7. On October 29, 2010 , EPA issued its Notice of Availability of the DEI S, 315 triggering a public comment period. See 40 CFR § 1506.10. T he public was invited to submit written comments on the DEI S until January

3, 2011 . NHTSA mailed (both electronicall y and through regular U.S. mail) copies of the DEI S to interested parties, including federal, state, and local officials and agencies; elected officials ; environmental and pub lic interest groups; Native American tribes; and other interested individuals. NHTSA and EPA held two hearings on the proposed rule s and the EI S, the first on November 15, 2010 in Chicago, I llinois, and the second on November 18, 2010 in Cambridge, Massac husetts. NHTSA received 3,048 written comments to the DEI S and the NPRM . 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 onl ine at http://www.regulations.gov , Reference Docket No. NHTSA - 2010 - 00 79 . NHTSA reviewed and analyzed all comments received during the public comment period and revised the FEIS in response to comments on the EI S wh ere appropriate. 316 On June 20, 2011 , NHTSA submitted the FEIS to EPA. NHTSA also mailed (both electronically

and through regular U.S. mail) the FEIS to interested parties and posted the FEIS on its website, http://www.nhtsa.gov/ f uel - econom y. On June 24, 201 1 , EPA published a Notice of Availability of the FEIS in the Federal Register . 317 The FEIS anal yz e s and disclose s the potential environmental impacts of the proposed HD fuel efficiency standards pursuant to the National Environmental Policy Act (NEPA), the CEQ regulations implementing NEPA, DOT Order 5610.1C, and NHTSA regulations. 318 The F EI S compare s the potential environmental impacts of alternative standards considered b y NHTSA for the final rule. It also anal yze s direct, indirect, and cumulative impacts and anal yz e s impacts in proportion to their significance. See the FE IS and the FEIS Summary for a discussion of the environmental impacts anal yz ed. Docket No. NHTSA - 2011 - 0079. The standards adopted in thi s Final Rule have been informed b y anal ys es contained in the Medium - and Heavy -Duty Fuel Efficiency Improvement Program, Final Environmental Impact Statement, Docket No. NHTSA - 20 10 - 00 7 9 (FEIS). For purposes of this rulemaking, the agency referred to an ex tensive compilation of technical and policy documents available in NHTSA’s EIS/Rulemaking docket and EPA’s docket. 314 See Notice of Intent to Prepare an Environmental Impact Statement for New Medium - and Heavy - Duty Fuel Efficiency Improvement Program, 75 FR 33565 (June 14, 2010). 315 Environmental Impact Statements; Notice of Availability, 75 FR 66756 (Oct. 29, 2 010); NHTSA also published a separate Notice of Availability describing the program in greater detail, 75 FR 68312 (Nov. 5, 2010). 316 The agency also changed the FEIS as a result of updated information that became available after issuance of the DEIS. 317 7 6 FR 37111 (June 24, 2011) . 318 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 520.208 of

NHTSA’s EIS and rulemaking docket and EPA’s rulemaking docket can be found online at http://www.regulations.gov , Reference Docket Nos.: NHTSA - 20 10 - 00 7 9 (EI S and Rulemaking) and EPA - HQ - OAR - 20 10 - 0 162 (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. (a ) 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 E PA has established National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, which are relativel y 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 b y new scientific information. The air quality of a geographic region is usuall y assessed b y comparing the levels of criteria air pollutants found in the atmosphere to the lev els established by the NAAQS. 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 s amples 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 excee d 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 re ach 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 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 Part 93, Subpart A), which apply to transportation plans, programs, and projects funded or approved***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

209 of under U.S.C. Title 23 or the Federal Transit Laws (49 U.S.C. Chapter 53). Projects funded by

the Federal Highway

Administration (FHWA) or the Federal Transit Administration (FTA) usuall y are subject to transportation conformity . See 40 CFR § 93.102.

 The General Conformity Rules (40 CFR Part 93, Subpart B) appl y to all other federal actions not covered under transportation conformity . The General Conformity

Rule established emissions thresholds, or de minimis levels, for use in evaluating the conformi ty of a project. If the net emissions increases attributable to the project are less than these thresholds, then the project is presumed to conform and no further conformity evaluation is required. If the emissions increases exceed any of these threshold s, then a conformity determination is required. The conformity determination can 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 final fuel consumption standards and associated program activities are not funded or approved under U.S.C. Title 23 or the Federal Transit Act. Further, NHTSA’s HD Fuel Efficiency

Improvement Program is not a highway or transit project funded or approved b y FHWA or FTA. Accordingl y, the standards and associated rulemakings are not subject to transportation conformity . Under the General Conformity Rule, a conformity

determination is required where a Federal action would result in total direct and indirect emissions of a criteria pollutant or precursor equaling or exceeding the rates specified in 40 CFR § 93.153(b)(1) and (2) for nonattainment and maintenance areas. As explained below, NHTSA’s action results in neither direct nor indirect emiss ions as defined in 40 CFR § 93.152. The General Conformity Rule defines direct emissions as those of “a criteria pollutant or its precursors that are caused or initiated by the Federal action and originate in a nonattainment or maintenance area and occur at the same time and place as the action and are reasonabl y foreseeable.” 40 CFR § 93.152. Because NHTSA’s action only sets fuel consumption standards for HD vehicles, it causes no direct emissions within the meaning of the General Conformity Rule. In direct emissions under the General Conformity Rule include emissions or precursors: (1) that are caused or initiated b y the Federal action and originate in the same nonattainment or maintenance area but occur at a different time or place than the action; (2) that are reasonabl y foreseeable; (3) that the agency can practicall y control; and (4) for which the agency

has continuing program responsibility . 40 CFR § 93.152. Each element of the definition must be met to qualify as an indirect emission. NHTSA h as determined that, for the purposes of general conformity , emissions that occur as a result of the fuel consumption standards are not caused by NHTSA’s action, but rather occur due to subsequent activities that the agency cannot practicall y control. “[E] ven if a210 of

Federal licensing, rulemaking, or other approving action is a required initial step for a subsequent activity

that causes emissions, such initial steps do not mean that a Federal agency can practicall y control any resulting emissions” (75 FR 17254 , 17260; 40 CFR § 93.152). NHTSA cannot control vehicle manufacturers’ production of HD vehicles and consumer purchasing and driving behavior. For the purposes of anal yz ing the environmental impacts of this action under NEPA, NHTSA has made assumptions r egarding the technologies manufacturers will install and how companies will react to increased fuel efficiency standards. Specifically , NHTSA’s NEPA analy sis predicted increases in air toxic and criteria pollutants to occur in some nonattainment areas und er certain alternatives based on assumptions about the use of APUs and the rebound effect. For example, NHTSA’s NEPA anal ys is assumes that some manufacturers will install anti - idling technologies (including APUs) on some vehicle classes to meet the requir ements of the program and that drivers’ subsequent use of those APUs will result in an increase in some criteria pollutants. However, neither NHTSA’s nor EPA’s rule s mandate this specific manufacturer decision or driver behavior

– the program does not require that manufacturers install APUs to meet the requirements of the rule, and it does not require drivers to use anti - idling technologies instead of, for example, shutting off all power when parked. Similarly , NHTSA’s NEPA anal ys is assumes a rebound effect, wherein the standards could create an incentive for additional vehicle use by reducing the cost of fuel consumed per mile driven. This rebound effect is an estimate of how NHTSA assumes some drivers will react to the rule and is useful for estimating the costs and benefits of the rule, but the agency does not have the statutory authority, or the program responsibility , to control, among other items discussed above, the actual vehicle miles traveled b y drivers. Accordingl y, changes in any emissions that result from NHTSA’s HD vehicle Fuel Efficiency Improvement Program are not changes that the agency can practicall y control; therefore, this action causes no indirect emissions and a general conformity determination is not required. (b ) Natio nal 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 H istoric Places (NRHP). See also 36 CFR Part 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 becau se it does not directl y 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 hi storic and cultural resources. See Section 4.5 of the FE IS . (c) Executive Order 12898 (Environmental Justice) Under Executive Order 12898, Federal agencies are required to identify and address an y 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 Section s***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

211 of 3. 6 and 4.6 of the FEIS, where the agency set forth a qualitative anal ys is of the cumulative effects of the alternatives on these populations. (d ) Fish and W

ildlife Conservation Act (FWCA) The FWCA (16 U.S.C. § 2900) provides financial and technical assi stance 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 it does not directly involve fish and wildlife. (e) 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 techn ical 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, an y activity of a Federal agency , either within or outside of the coastal zone, that affects an y land or water use or natural resource of the 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 Section 4.5 of the FE IS . (f ) 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/ o r 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 de stroy or adversel y modify

designated critical habitat. See 50 CFR § 402.14. Under this standard, 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).212 of NHTSA received one comment to the Scoping notice for the HD program indicating that the agency should engage in consultation under Section 7 of the ESA when anal yz ing the overall impact of GHG emissions and other air pollutants. NHTSA has re viewed applicable ESA regulations, case law, guidance, and rulings in assessing the potential for impacts to threatened and endangered species from the HD fuel efficiency standards. Consistent with NHTSA’s determination under the agency ’s most recent light duty fuel econom y rule, NHTSA believes that the agency ’s action, which will result in nationwide fuel savings and, consequentl y, emissions reductions from what would otherwise occur in the absence of the agency ’s action , does not require consul tation with NOAA Fisheries Service or the FWS under S ection 7(a)(2) of the ESA. For discussion of the agency ’s rationale in the context of the CAFE program , see Appendix G of the FE IS for MYs 2012 - 2016, available at: http://www.nhtsa.gov/fuel - econom y . Accordingl y, NHTSA has concluded its review of this action under Section 7 of the ESA. (g ) 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, mean ing it is encroaching on the floodplain, and whether this encroachment is significant. If significant, the agency is required to conduct further anal ys is of the proposed action and an y practicable alternatives. If a practicable alternative avoids floodpl ain encroachment, then the agency is required to implement it. In this rulemaking, the agency is not occup yi ng, modifying and/or encroaching on floodplains. The agency , therefore, concludes that the Orders are not applicable to NHTSA’s Decision. The ag ency has, however, conducted a review of the alternatives on potentially

affected resources, including floodplains. See Section 4.5 of the FEIS. (h ) 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 affectin g land use, including but not limited to water and related land resources planning, regulating, and licensing activities.” DOT Order 5660.1a sets***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

213 of 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 constructi on 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 FE IS . (i ) Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection Act (B GEPA), 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

bi rd 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 Co rp. , 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 s ubsequent 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 Wildlif e Service when it is taking an action that has (or is likely to have) a measurable negative impact on migratory

bird populations. 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. (j ) 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 b y Pub. Law § 109 - 59, is designed to preserve publicly owned parklands, waterfowl and wildlife refuges, and significant historic sites. Specificall y, 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 publicl y o wned 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, and2 14 of  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 publicl y owned land. For a more detailed discussion, please see Section 3. 1 of the FE IS . **(3) Paperwork**  **Reduction Act** The information collection requirements in these rules have be en submitted for approval to OMB under the Paperwork Reduction Act , 44 U.S.C. 3501 et seq . The information collection requirements are not enforceable until OMB approves them . The a genc ies propose to collect information to ensure compliance with the provi sions in these rules . This includes a variety of testing, reporting and recordkeeping requirements for vehicle manufacturers. Section 208(a) of the CAA requires that vehicle manufacturers provide information the Administrator may reasonably

require to de termine compliance with the regulations; submission of the information is therefore mandatory . We will consider confidential all information meeting the requirements of section 208(c) of the CAA . It is estimated that this collection affects approximatel y 35 engine and vehicle manufacturers. The information that is subject to this collection is collected whenever a manufacturer applies for a certificate of conformity . Under section 206 of the CAA (42 U.S.C. 7521), a manufacturer must have a certificate of conformity before a vehicle or engine can be introduced into commerce. The burden to the manufacturers affected b y these rules has a range based on the number of engines and vehicles a manufacturer produces. The total estimated burden associated with these rules is 25,052 hours annually (see Table XII - 1 : ). T h is estimated burden for engine and vehicle manufacturers is a total estimate for new reporting requirements. Burden is defined at 5 CFR 1320.3(b).

**Table XII**  **- 1**  **: Burden for Reporting and Recordkeeping Requirements**  Number of Affected Vehicle Manufacturers 34 Annual Labor Hours for Each Manufacturer to Prepare and Submit Required Information Varies Total Annual Information Collection Burden 35 , 804 Hours 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 are listed in 40 CFR part 9. When this I CR is approved b y OMB, the agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in this final action.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

215 of **(4) Regulatory Flexibility Act**  (a ) Overview The Regulatory

Flexibility

Act generally

requires an agency

to prepare a regulatory

flexibility

ana ly sis 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 entit ies. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of these rules on small entities, small entity is defined as: (1) a small business as defined b y S BA regulations at 13 CFR 121.201; (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 i ndependently owned and operated and is not dominant in its field. (b ) Summary of Potentially Affected Small Entities The agencies have not conducted an Initial Regulatory Flexibility

Anal ys is for th is action because we are certifying that the se rule s would not have a significant economic impact on a substantial number of small entities. The agencies are defer ring standards for manufacturers meeting SBA’s definition of small business as described in 13 CFR 121.201 due to the extremely small fuel savings and emi ssions contribution of these entities , and the short lead time to develop these rules , especiall y with our expectation that the program would need to be structured differentl y for them (which would require more time). The agencies are instead envisionin g fuel consumption and GHG emissions standards for these entities as part of a future regulatory action. This includes small entities in several distinct categories of businesses for heavy - duty engines and vehicles: chassis manufacturers, combination trac tor manufacturers, and alternative fuel engine converters. Based on a preliminary

assessment, the agencies have identified a total of about 17 engine manufacturers, 3 complete pickup truck and van manufacturers, 11 combination tractor manufacturers and 43 heavy- duty chassis manufacturers. Notably , several of these manufacturers produce vehicles in more than just one regulatory category ( HD pickup truck s/vans, combination tractors, or vocational vehicles (i.e. heav y- duty chassi s manufacturers)). Based on the ty pes of vehicles they

manufacture, these companies, however, w ould be subject to slightly different testing and reporting requirements. Taking this feature of the heavy- duty trucking sector into account, the agencies estimate that although there are fewer than 30 manufacturers covered by the pro gram , there close to 60 divisions with these companies that w ill be subject to the final regulations. Of these, about 15 entities fit the SBA criteri a of a small business. There are approximately three eng ine converters, two tractor manufacturers, and ten heavy - dut y chassis manufacturers in the heavy- duty engine and vehicle market that are small216 of

businesses. (No major heavy- duty engine manufacturer s, heav y- duty chassis manufacturers, or tractor manufacturers meet the small - entity criteria as defined by SBA). The agencies estimate that these small entities comprise less than 0.35 percent of the total heav y- duty vehicle sales in the United States , and therefore the deferment will have a negligible impact on th e fuel consumption and GHG emissions reductions from the final standards. To ensure that the agencies are aware of which companies are be ing deferred, the agencies are requiring that such entities submit a declaration to the agencies containing a detaile d written description of how that manufacturer qualifies as a small entity under the provisions of 13 CFR 121.201. Some small entities, such as heav y - duty tractor and chassis manufacturers, are not currently covered under criteria pollutant motor vehicle emissions regulations. Small engine entities are currentl y covered b y a number of EPA motor vehicle emission regulations, and they routinely submit information and data on an annual basis as part of their compliance responsibilities. Because such entitie s are not automatically

exempted from other EPA regulations for heav y- duty engines and vehicles, absent such a declaration, EPA would assume that the entity was subject to the greenhouse gas control requirements in this program . The declaration to the age ncies w ill need to be submitted at the time of either engine or vehicle emissions certification under the HD highway

engine program for criteria pollutants . The agencies expect that the additional paperwork burden associated with completing and submitting a small entity declaration to gain deferral from the final GHG and fuel consumption standards w ill be negligible and easily done in the context of other routine submittals to the agencies . However, the agencies have accounted for this cost with a nominal estimate included in the Information Collection Request completed under the Paperwork Reduction Act. Additional information can be found in the Paperwork Reduction Act discussion in Section XI I. (3) Paperwork Reduction Act . B ased on this, the agencies are certifying that the rule s w il l not have a significant economic impact on a substantial number of small entities. **(5) Unfunded Mandates Reform Act**  Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P ub . L. 104 - 4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the agencies generally must prepare a written statement, including a cost benefit anal ys is, 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 $ 1 34 mill ion or more in an y one ye ar. Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generall y requires the agencies to identify and consider a reasonable number of regulatory alternatives and adopt the least costly , mo st 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 the agencies to adopt an alternative other than the least costl y, most cost - effective or least burdensome alternative if the Administrator (of either agency) publishes with the final rule an explanation why that alternative was not adopted.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

217 of Before the agencies establish any regulatory

requirements that may

significantly or uniquely

affect small governments, including tribal governments, they must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentiall y affected small governments, en abling officials of affected small governments to have meaningful and timely input in the development of EPA and NHTSA regulat ions with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance w ith the regulatory requirements. These rules contain no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments. The rule s impose no enforceable duty on an y State, local or tribal governments. T he agencies have determined that these rules contain no regulatory requirements that might significantl y or uniquely affect small governments. T he agencies have determined that these rules contain a Federal mandate that may result in expenditures of $ 100 or more for the private sector in any one year. T he agencies believe that the pro gram represents the least costl y, most cost - effective approach to achieve the statutory requirements of the rule s . Section VIII. L, above, explains why

the agencies believe that the fuel savings that will result from these rules will lead to lower prices econom y- wide, improving U.S. international competitiveness. The costs and benefits associated with the pro gram are discussed in more detail above in Section VIII and in the Re gulatory Impact Anal ys is, as required b y the UMRA. Table XI - 3 presents the rule - related benefits, costs and net benefits in both present value terms and in annualized terms. In both cases, the discounted values are based on an underlying time varying stream of cost and benefit values that extend into the future (2012 through 2050). The distribution of each monetized economic impact over time can be viewed in the RIA that accompanies these rules . Present values represent the total amount that a stream of monetized costs/ benefits /net benefits that occur over time are worth now (in year 200 9 dollar terms for this anal ys is ), accounting for the time value of money by discounting future values using either a 3 or 7 percent discount rate, per OMB Circular A - 4 guidance . An annualized value takes the present value and converts it into a constant stream of annual values through a given time period (2012 through 2050 in this analy sis) and thus averages (in present value terms) the annual values. The present value of the constant stream of annualized values equals the present value of the underlying time varying stream of values . The ratio of benefits to costs is identical whether it is measured with present values or annualized values. It is important to note that annualized values cannot simply be summed over time to reflect total costs/benefits/net benefits; they must be discounted and summed. Additionally , the annualized value can vary substantially

from the time varyingstream of cost/benefit/net benefit v alues that occur in an y gi ven year .218 of **Table XI -**  **3: Esti**  **ma ted**  **Lifetime and Annualized Discounted**  **Costs, Benefits, and Net Benefits**  **for 2014**  **- 2018 Model Year**  **HD Vehicles assuming the $22/ton SCC Value**  **a,b (**  **billions 200**  **9 dollars)**  Costs Benefits Net Benefits Lifetime Present Value c,d

– 3% Discount Rate $8. 1 $5 7 $49 Annualized V alue c,e

– 3% Discount Rate $0.4 $2.6 $2.2 Lifetime Present Value c,d

– 7% Discount Rate $8. 1 $ 41 $ 33 Annualized V alue c,e

– 7 % Discount Rate $0. 6 $3.1 $2. 5 Note s: a Although the agencies estimated the benefits associated with four different values of a one ton CO 2 reduction (SCC: $5, $22, $36, $66), for the purposes of this overview presentation of estimated costs and benefits we are showing the benefits associated with the marginal value deemed to be central by the interagency working group on this topic: $22 per ton of CO 2 , in 2008 dollars and 2010 emissions and fuel consumption. As noted in Section VIII.G , SCC increases over time. b Note that net present value of reduced GHG emissions is calculated differently than other benefits. The same discount rate used t o 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 consi stency. Refer to Section VIII.G for more detail. c Discounted values presented in this table are based on an underlying series of cost and benefit values that extend into the future (2012 through 2050). The distribution of each monetized economic impact over time can be viewed in the RIA that accompanies this preamble. d Present value is the total, aggregate d amount that a series of monetized costs or benefits that occur over time is worth now (in year 2008 dollar terms), discounting future values to the present. e The annualized value is the constant annual value through a given time period (2012 through 205 0 in this analysis) whose summed present value equals the present value from which it was derived . **(6) 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. These rules will appl y to manufacturers of motor vehicles and not to state or local governments. Thus, Executive Order 13132 does not apply to this action . Although section 6 of Executive Order 13132 does not apply

to this action, the agencies did consult with representatives of state governments in developing this action . NHTSA notes that EPCA contains a provision (49 U.S.C. 32919(a)) that expressly preempts any

State or local government from adopting or enforcing a law or regulation related t o fuel econom y standards or average fuel econom y standards for automobiles covered b y an average fuel economy standard under 49 U.S.C. Chapter 329. However, commercial medium - and heav y - duty on - highway vehicles and work trucks are not “automobiles,” as de fined in 49 U.S.C. 32901(a)(3). Accordingl y, NHTSA has tentatively

concluded that EPCA’s express preemption provision would not reach the fuel efficiency standards to be established in this rulemaking. NHTSA also considered the issue of implied or conf lict preemption. The possibility

of such preemption is dependent upon there being an actual conflict between a standard established b y NHTSA in this rulemaking and a State or local law or regulation. See Spriestma v. Mercury Marine, 537 U.S. 51, 64 - 65 (2 002). At present, NHTSA has***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

219 of no knowledge of an y State or local law or regulation that would actuall y conflict with one of the fuel efficiency

standards be ing established in this rulemaking. **(7) Executive Order**  **13175 (Consultation and Coordination with India**  **n Tribal Governments)**  Th e s e final rule s do not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). These rules will be implemented at the Federal level and impose compliance costs onl y on vehicle manufacturers. Tribal governments would be affected onl y to the extent they purchase and use regulated vehicles. Thus, Executive Order 13175 does not apply to these rules . **(8) Executive Order 13045: “Protection of Children from Environmental**  **Health Risks and Safety Risks”** This action is subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is an economically significant regulatory

action as defined by Executive Order 12866, and the agencies believe that the environmental health or safety risk addressed by this action may

have a disproportionate effect on children. A s ynthesis 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 s ection 202(a) of the Clean Air Act, which can be found in the public docket for these rules . 319 A summary of the anal ys is 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 anal ys is 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 United States where these events already occur, with potential increases in mortality and morbidity, especiall y among the youn g, elderl y, and frail. EPA has estimated reductions in projected global mean surface temperatures as a result of reductions in GHG emissions associated with the final standards in this action (Section II). Children may receive benefits from reductions i n GHG emissions 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 c limate change is expected to increase regional ozone pollution, with associated ris ks in respiratory infection, aggravation of asthma, and premature death. The directional effect of climate change on ambient PM levels remains uncertain. However, d isturbances such as wildfires are increasing in the United States and are likel y to intensi fy 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 s ys tem, particularl y in children, including

319 See Endangerment TSD, Note 10, above.220 of

pneumonia, upper respiratory diseases, asthma and chronic obstructive pulmonary diseases. **(9) Executive**  **Order 13211 (Energy Effects)** This rulemaking is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy

Supply , Distributio n, 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, these rules have a positive effect on energy suppl y and use. Because the final GHG emission and f uel consumption standards will result in significant fuel savings, these rules encourage more efficient use of fuels. Therefore, we have concluded that these rules are not likely to have an y adverse energy effects. Our energy effects analysis is describe d above in Section VIII.H . **(10) 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 the agencies to use voluntary

consen sus 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 bu siness practices) that are developed or adopted by voluntary

consensus standards bodies. NTTAA directs the agencies to provide Congress, through OMB, explanations when the agencies decide not to use available and applicable voluntary consensus standards. For CO 2 , N 2 O, and CH 4 emissions and fuel consumption from heav y- duty engines , the agencies will collect data over the same tests that are used for the heav y - duty highway engine program for criteria pollutants . This will minimize the amount of testing done by manufacturers, since manufacturers are already required to run these tests. For CO 2 , N 2 O, and CH 4 emissions and fuel consumption from complete pickup trucks and vans , the agencies will collect data over the same tests that are used for EPA’s heav y- duty

highway engine program for criteria pollutants and for the California Air Resources Board . This will minimize the amount of testing done by manufacturers, since manufacturers are already required to run these tests. For CO 2 emissions and fuel consumpti on from heavy- duty combination tractors and vocational vehicles , the agencies will collect data through the use of a simulation model instead of a full - vehicle chassis dy namometer testing . This will minimize the amount of testing done by manufacturers . E PA ’ s compliance assessment tool is based upon well - established engineering and ph ys ics principals that are the basis of general academic understanding in this area, and the foundation of any dynamic vehicle simulation model, including the models cited b y I CCT in its study . 320 Therefore, the EPA’s compliance assessment tool satisfies the description of a consensus . For the

320 ICCT. ICCT Evaluation of Vehicle Simulation Tools. 2009.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

221 of evaluation of tire rolling resistance input to the model, EPA is finalizing to use the I SO 28580 test, a voluntary

consensus methodology . EPA is adopting several alternatives for the evaluation of aerodyn amics which allows the industry to continue to use their own evaluation tools because EPA does not know of a single consensus standard available for heav y- duty truck aerodynamic evaluation . For air conditioning standard s, EPA is finalizing a consensus methodology developed b y the Society of Automotive Engineers (SAE). **(11) Executive Order 12898: Federal Actions to Address Environmental**  **Justice in Minority Populations and Low -**  **Income Population s**  Executive Order 12898 (59 FR 7629 , Feb ruary 16, 1994) establishes federal executive policy

on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted b y law, to make environmental justice part of their mission by

identifying and addressi ng, 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 dete rmined that th ese final rule s will not have disproportionately high and adverse human health or environmental effects on minority or low - income populations because they increase the level of environmental protection for all affected populations without hav ing an y disproportionately high and adverse human health or environmental effects on any population, including any minorit y or low - income population. The reductions in CO 2 and other GHGs associated with the standards will affect climate change projections , and EPA has estimated reductions in projected global mean surface temperatures (Section VI ). 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, those living alone, and/or indigenous populations dependent on one or a few resources. 321 In addition, the U.S. Climate Change Science Program stated as one of its conclusions: “The United States is certainly capable of adapti ng 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 b y climate change.” 322 Theref ore, these specific sub - populations may receive benefits from reductions in GHGs. For non - GHG co - pollutants such as ozone, PM 2.5 , and toxics, EPA has concluded that it is not practicable to determine whether there would be disproportionately high and adv erse human health or environmental effects on minority and/or low income populations from these rules . 321 See Endangerment TSD, Note 10, above. 322 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. [Gam ble, J.L. (ed.), K.L. Ebi, F.G. Sussman, T.J. Wilbanks, (Authors)]. U.S. Environmental Protection Agency, Washington, DC, USA.222 of **(12) 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 , generall y provides that before a rule may take effect, the agency

promulgating the rule must submit a rule report, which includes a cop y of the rule, to each House of the Congress and to the Comptroller General of the United States. The agencies will submit a report containing th e s e rule s and other 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 s in the Federal Register. A Major rule cannot take effect until 60 day s after it is published in the Federal Register. This action is a “major rule” as defined by 5 U.S.C. 804( 2). Th e s e rule s will be effective **[Insert date 60 days after publication in the Federal Register],** sixty day s after date of publication in the **Federal Register** . **(13) Privacy**  **Act** Anyone is able to search the electronic form of all comments received into any of our dockets b y 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 rev iew 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 . 

## XIII. **Statutory Provisions**  **and Legal Authority**  **A. EPA**  Statutory auth ority for the vehicle controls in these rules is found in CAA section 202(a) (which authorizes standards for emissions of pollutants from new motor vehicles which emissions cause or contribute to air pollution which may reasonabl y be anticipated to endang er public health or welfare), sections 202(d), 203 - 209, 216, and 301 of the CAA , 42 U.S.C. 7521 (a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 7601. 

### B. **NHTSA** Statutory authority for the fuel consumption standards in these rules is found in EI SA section 103 (which authorizes a fuel efficiency improvement program, designed to achieve the maximum feasible improvement to be created for commercial medium - and heav y- duty on - highway

vehicles and work trucks, to include appropriate test methods, me asurement metrics, standards, and compliance and enforcement protocols that are appropriate, cost - effective and technologically feasible) of the Energy

Independence and Security Act of 2007, 49 U.S.C. 32902(k). 

### List of Subjects 40 CFR Part 85 Confidential business information, Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Research, Warranties.***** E.O. 12866 Review –**  **Draft –**  **Do Not Cite, Quote, or Release During Review *****

223 of 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. 40 CFR Parts 1033 Administrative practice and procedure, Air pollution control . 40 CFR Parts 1036 and 1037 Administrative practice and procedure, Air pollution control, Confidential business information, Environmental protection, Incorporation by reference, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Warranties. 40 CFR Part 1039 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential business information, Imports, Labeling, Penalties, Reporting and recordkeeping requirements, Warranties. 40 CFR Parts 1065 and 1066 Administrative practice and procedure, Air pollution control, Reporting and recordkeeping requirements, Research. 40 CFR Part 1068 Environmental protection, Administrative practice and procedure, Confidential business information, Imports, Incorporation by reference, Motor vehicle pollution, Penalties, Reporting and recordkeeping requirements, Warranties. 49 CFR Parts 523, 534, and 535 Fuel Efficiency