*** E.O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Quote or Release During Review ***

Page 1 of 850 **ENVIRONMENTAL PROTECTION AGENCY**  **40 CFR Parts 85, 86, 1036, 1037, 1042 ,**  **1043 ,**  **1065, 1066, and 1068 DEPARTMENT OF TRANSP**  **ORTATION National Highway Traffic Safety**  **Administration 49 CFR Parts 523, 534, and 535**  **[EPA**

**– HQ** 

**– OAR** 

**– 2014** 

**– 0827;**  **NHTSA -**  **2014 -**  **0132; FRL -**  **9927 -**  **21 -**  **OAR ]**  **RIN 2060 -**  **AS16; RIN 2127 -**  **AL52 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium**  **- and Heavy**  **- Duty**  **Engines and Vehicles -**  **Phase 2**  **AGENC Y**  **:** Environmental Protection Agency (EPA) and National Highway Traffi c Safety Administration (NHTSA ), DOT. **ACTION:** Proposed Rules
.

__________________________________________________________________ **SUMMARY:** EPA and NHTSA , on behalf of the Department of Transportation, are each proposing rules to establish a comprehensive Phase 2 H eavy - D ut y (HD) N ational P rogram that will reduce greenhouse gas (GHG) emissions and fuel consumption for new on - road heavy
- dut y vehicles
. This t echnology
- advancing program would phase in over the long
- term, beginning in the 2018 model year and culminating in standards for model year 2027 , responding to the President’s directive on February

18, 2014, to develop new standards that will take us well into the next decade
. NHTSA’s proposed fuel consumption standards and EPA’s proposed carbon dioxide ( CO 2 ) emission standards are tailored to each of four regulatory categories of heav y - dut y vehicles: ( 1 ) Combination Tractors ; (2) Trailers used in combination with those tractors ; (3 ) Heav y - dut y Pickup Trucks and Vans; and ( 4 ) Vocational Vehicles. The proposal also includes separate standards for the engines that power combination tractors and vocational vehicles. Certain proposed requirements for control of GHG emissions are exclusive to EPA programs. These include EPA ’ s proposed hydrofluorocarbon standards to control leakage from air conditioning sy stems in vocational vehicles, and EPA’s proposed nitrous oxide (N 2 O) and methane ( CH 4 ) standards f or heav y - dut y engines
. Additionally , NHTSA is addressing misalignment in the Phase 1 standards between EPA and NHTSA to ensure there are no difference in compliance standards between the agencies. In an effort to promote efficiency , the agencies are also proposing to amend their rules to modify reporting requirements, such as the method by

which manufacturers submit pre
- model, mid
- model, and supplemental reports. EPA’s proposed HD Phase 2 GHG emission standards are authorized under the Clean Air Act and NHTSA’s proposed HD Phase 2 fuel consumption standards authorized under the EnergyPage 2 of 850

Independence and Security Act of 2007. These standards would begin with model year 2018 for trailers under EPA standards and 2021 for all of the other heav y - dut y vehicle an d engine categories. The agencies estimate that the combined standards w ould reduce CO 2 emissions by approximately 1 bi llion metric tons and save 1.8 b illion barrels of oil over the life of vehicles and engines sold during the Phase 2 program, providing over $ 200 billion in net societal benefits
. As noted, the proposal also includes certain EPA
- specific provisions relating to control of emissions of pollutants other than GHGs. EPA is seeking comment on non
- GHG emission standards relating to the use of a

uxiliary power units installed in tractors. In addition, EPA is proposing to clarify the classification of natural gas engines and other gaseous
- fueled heav y - dut y engines, and is proposing closed crankcase standards for emissions of all pollutants from natural gas heav y duty engines. EPA is also proposing technical amendments to EPA rules that apply to emissions of non
- GHG pollutants from light
- duty motor vehicles, marine diesel engines, and other nonroad engines and equipment. Finally , EPA is proposing to require that rebuilt engines installed in new incomplete vehicles meet the emission standards applicable in the year of assembly, including all applicable standards for criteria pollutants. **DATES:** EPA and NHTSA will jointly hold two public hearings on the following dates: **July 15, 2015 in Los Angeles, California and July 22, 2015 in Chicago, Illinois** 
. See the **SUPPLEMENTARY INFORMATION** section on “Public Participation” for more information about the public hearings. Comments on all aspects of th is proposal must be received on or before [ **insert date 60 da** **ys after publication**  **IN THE FEDERAL REGISTER].**  Under the Paperwork Reduction Act (PRA) , comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a cop y of your comments on or before [ **Insert date 30 days after publication IN THE FEDERAL REGISTER**  ]. **ADDRESSES:** Submit your comments, identified by Docket ID No. EPA

–HQ

– OAR

–2014
- 0827 (for EPA’s docket) and NHTSA
- 2014
- 0132 (for NHTSA’s docket) by one of the following methods:

• Online: www.regulations.gov: Follow the on
- line instructions for submitting comments.
• Email: a - and
- r - docket@epa.gov.
• Mail: **EPA** : Air and Radiation Docket and Information Center, Environmental Protection Agency , Mail code : 28221T, 1200 Pennsylvania Ave., NW., Washington, DC 20460. **NHTSA** : Docket Management Facility , M

– 30, U.S. Department of Transportation, West Building, Ground Fl oor, Rm. W12

– 140, 1200 New Jersey Avenue SE, Washington, DC 20590.
• Hand Delivery : **EPA:** EPA Docket Center, EPA WJC West Building, Room 3334, 1301 Constitution Ave., NW., Washington, DC 20460. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information.Page 3 of 850

**NHTSA:** West Building, Ground Floor, Rm. W12

– 140, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 4 p.m. Eastern Time, Monday through Fri day , except Federal Holiday s. Instructions: EPA and NHTSA have established dockets for this action under Direct your comments to Docket ID No. EPA

–HQ

– OAR

–2014
- 0827 and

/or NHTSA
- 2014
- 0132, respectivel y. See the **SUPPLEMENTARY INFORMATION** section on “Public Participation” for more information about submitting written comments. Docket: All documents in the docket are listed on the www.regulations.gov web site. Although listed in the index, some information is not publicly available, e.g. , 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 hard cop y form. Publicly availa ble docket materials are available either electronicall y through www.regulations.gov or in hard cop y at the following locations: **EPA** : Air and Radiation Docket and Information Center, EPA Docket Center, EPA/DC , EPA WJC West Building, 1301 Constitution Ave., N.W., Room 3334, Washington , 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. **NHTSA** : Docket Management Facility , M
- 30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12
- 140, 1200 New Jersey Avenue SE, Washington, DC 20590. The telephone number for the docket management facility is (202) 366
- 9324. 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: EPA:**  For hearing information or to register, please contac t: JoNell I ffland, Office of Transportation and Air Quality , Assessment and Standards Division (ASD), Environmental Protection Agency , 2000 Traverwood Drive, Ann Arbor MI 48105; Telephone number: (734) 214
- 4454; Fax number: (734) 214
- 4816; E
- mail address: iffland.jonell@epa.gov
. For all other information related to the rule, please contact : Tad Wysor , Office of Transportation and Air Quality , Assessment and Standards Division (ASD), Environmental Protection Agency , 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214
- 4332 ; email address: wy sor.tad@epa.gov. **NHTSA:** Ryan Hagen or Ana liese Marchesseault , Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE, Washington, DC 20590. Telephone: (202) 366
- 2992; ryan.hagen @dot.gov or analiese.marchesseault@dot.gov. **SUPPLEMENTARY INFORMATION:**Page 4 of 850



### A. **Does this Action Apply to Me ?**  This proposed action would affect 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, all types of buses, vocational vehicles including municipal, commercial, recreational vehicles, and commercial trailers 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 b y the greenhouse gas standards and corporate average fuel economy standards issued for light
- dut y model ye ar 2017
- 2025 vehicles. Proposed regulated categories and entities include the following: Category NAI CS Code a Examples of Potentially Affected Entities Industry 336111 Motor Vehicle Manufacturers, Engine Manufacturers, Truck Manufacturers , Truck Trailer Manufacturers 336112 333618 336120 336212 Industry 541514 Commercial Importers of Vehicles and Vehicle Components 811112 811198 Industry 336111 Alternative Fuel Vehicle Converters

336112 422720 454312 541514 541690 811198 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 entities not listed in the table could also be regulated. To determine whether your activities are regulated b y 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. 

### B. **Public Participation** EPA and N HTSA request comment on all aspects of this joint proposed rule. This section describes how yo u can participate in this process.Page 5 of 850

**(1) How Do I Prepare and Submit Comments?**  In this joint proposal, there are man y issues common to both EPA’s and NHTSA’s proposals . For the convenience of all parties, comments submitted to the EPA docket will be considered comments submitted to the NHTSA docket, and vice versa. An exception is that comments submitted to the NHTSA docket on NHTSA’s Draft Environmental Impact Statem ent (EI S) will not be considered submitted to the EPA docket. Therefore, the public only needs to submit comments to either one of the two agency dockets , although they

may submit comments to both if they

so choose . Comments that are submitted for consid eration by one agency

should be identified as such, and comments that are submitted for consideration by both agencies should be identified as such. Absent such identification, each agency will exercise its best judgment to determine whether a comment is submitted on its proposal. Further instructions for submitting comments to either EPA or NHTSA docket are described below. **EPA** : Direct your comments to Docket ID No EPA

–HQ

– OAR

–2014
- 0827 . EPA’s policy is that all comments received will be included in the public docket without change and may be made available online at www.regulations.gov , including an y personal information provided, unless the comment includes information claimed to be Co nfidential Business In formation (CBI) or other information whose disclosure is restricted b y statute. Do not submit information that you consider to be CBI or otherwise protected through www.regulations.gov or e - mail. The www.regulations.gov w eb site is an “ anony mous access ” sy stem, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e
- mail comment directl y to EPA without going through www.regulations.gov yo ur e - mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body

of your comment and with any disk or CD

–ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of s pecial characters, an y form of encry ption, and be free of any

defects or viruses. For additional information about EPA’s public docket visit the EPA Docket Center homepage at http:// www.epa.gov/epahome/dockets.htm
. **NHTSA** : Your comments must be written and in English. To ensure that your comments are correctly

filed in the Docket, please include the Docket number NHTSA
- 2014
- 0132 in your comments. Your comments must not be more than 15 pages long. 1 NHTSA established this limit to encourage you to write yo ur primary comments in a concise fashion. However, you may attach necessary

additional documents to your comments , and there is no limit on the length of the attachments. If you are submitting comments electronically as a PDF (Adobe) file, we ask that the documents submitted be scanned using the Optical Character Recognition (OCR)

1 See 49 CFR 553.21.Page 6 of 850

process, thus allowing the agencies to search and copy certain portions of your submissions. 2 Please note that pursuant to the Data Quality Act, in order for the substantive data to be relied upon and used b y the agenc y , it must meet the information quality standards set forth in the OMB and Department of Transportation (DOT) Data Quality Act guidelines. Accordingl y, we encourage you to consult the guidelines in preparing your comments. OMB’s guidelines may be accessed at http://www.whitehouse.gov/omb/fedreg/reproducible.html. DOT’s guidelines may be accessed at http://www.dot.gov/dataquality.htm. **(2) Tips for Preparing Your Comments**  When submitting comments, please remember to:

• Id entify

the rulemaking by

docket number and other identifying information (subject heading, **Federal Register** date and page number)
. • Explain why

you agree or disagree, suggest alternatives, and substitute language for your requested changes
. • Describe an y assumptions and provide an y technical information and/or data that yo u used
. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced
. • Provide specific examples to illustrate your concerns, and suggest alternatives
• Explain your views as clearl y as possible, avoiding the use of profanity or personal threats.
• Make sure to submit your comments by the comment period deadline identified in the **DATES** section above. **(3) How Can I**  **B e Sure**  **That My Comments Were Received?** NHTSA: If you submit your comments by mail and wish Docket Management to notify yo u upon its receipt of your comments, enclose a self
- addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard b y mail. **(4) How Do I Submit Confidential Business Information?**  Any confidential business information (CBI) submitted to one of the agencies will also be available to the other agency . However, as with all public comments, any CBI information onl y needs to be submitted to either one of the agencies’ dockets and it wil l be available to the other. Following are specific instructions for submitting CBI to either agency
. If you have an y questions about CBI or the procedures for claiming CBI, please consult the person s identified in the **FOR FURTHER INFORMATION CONTACT** sec tion.

2 Optical character recognition (OCR) is the process of converting an image of text, such as a scanned paper document or electronic f

ax file, into computer
- editable text.Page 7 of 850

**EPA** : Do not submit CBI to EPA through www.regulations.gov or e - mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically

within the disk or CD ROM the specific information that is claimed as CBI. In formation not marked as CBI will be included in the public docket without prior notice. In addition to one complete version of the comment th at includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set f

orth in 40 CFR Part 2. **NHTSA** : If you wish to submit any information under a claim of confidentiality , you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address g iven above under **FOR FURTHER INFORMATION CONTACT** . When you send a comment containing confidential business information, you should include a cover letter setting forth the information specified in our confidential business information regulation. 3 In addi tion, you should submit a copy from which you have deleted the claimed confidential business information to the Docket by one of the methods set forth above. **(5) How Can I Read the Comments Submitted By Other People?**  You may read the materials placed in the do cket for this document (e.g
. , the comments submitted in response to this document by other interested persons) at an y time by going to http://www.regulations.gov. Follow the online instructions for accessing the dockets. You may also read the materials at the EPA Docket Center or NHTSA Docket Management Facility by going to the street addresses given above under **ADDRESSES**
. **(6) How**  **D o I**  **P articipate in the**  **P ublic**  **H earings?**  EPA and NHTSA will jointly host two public hearings on the dates and locations described in the **DATES** section above. The agencies will issue further information on the public hearings in a separate Federal Register Notice. At all hearings, both agencies will accept comments on the rulemaki ng, and NHTSA will also accept comments on the EI S. If you would like to present testimony at the public hearings, we ask that you notify EPA and NHTSA contact persons listed in the **FOR FURTHER INFORMATION CONTACT** section at least ten day s before the heari ng. Once EPA and NHTSA learn how many people have registered to speak at the public hearing, we will allocate an appropriate amo unt of time to each participant . For planning purposes, each speaker should anticipate speaking for approximately ten minutes , although we may need to adjust the time for each speaker if there is a large turnout.Page 8 of 850

We suggest that you bring copies of your statement or other material for EPA and NHTSA panels. It would also be helpful if you send us a copy of your statement or othe r materials before the hearing. To accommodate as many speakers as possible, we prefer that speakers not use technological aids (e.g., audio
- visuals, computer slideshows). However, if you plan to do so, yo u must notify

the contact persons in the **FOR FUR THER INFORMATION CONTACT**  section above. You also must make arrangements to provide your presentation or any other aids to EPA and NHTSA in advance of the hearing in order to facilitate set
- up. Inaddition, we will reserve a block of time for an yone else in the audience who wants to give testimony
. The agencies will assume that comments made at the hearings are directed to the NPRM unless commenters specificall y reference NHTSA’s EI S in oral or written testimony
. The hearing will be held at a site access ible to individuals with disabilities. In dividuals who require accommodations such as sign language interpreters should contact the persons listed under **FOR FURTHER INFORMATION CONTACT** section above no later than ten day s before the date of the hearing. EPA and NHTSA will conduct the hearing informally , and technical rules of evidence will not apply . We will arrange for a written transcript of the hearing and keep the official record of the hearing open for 30 day s to allow you to submit supplementary information. You may make arrangements for copies of the transcript directly with the court reporter. 

### C. **Did EPA Conduct a Peer Review before Issuing this Notice?** This regulatory

action is supported by

influential scientific information. Therefore, EPA conducted a peer review consistent with OMB’s Final Information Qualit y Bulletin for Peer Review. As described in Section II.C.3, a peer review of updates to the vehicle simulation model (GEM) for the proposed Phase 2 standards has been completed. This version of GEM is based on the model used for the Phase 1 rule, which was peer
- reviewed b y a panel of four independent subject matter experts (from academia and a national laboratory). T he peer review report and the agency's response to the peer review comments are available in Docket ID No. EPA

–HQ

– OAR

– 2014
- 0827
. 

### D. **Executive Summary (1)**  **Commitment to Gree nhouse Gas Emission Reductions and Vehicle Fuel**  **Efficiency** As part of the Climate Action Plan announced in June 2013, 4 the President directed the Environmental Protection Agency (EPA) and the Department of Transportation ’s (DOT) National Highway

Traffic Sa fet y Administration (NHTSA) to set the next round of standards to reduce greenhouse gas (GHG) emissions and improve fuel efficiency for m edium
- and h eav y d uty v ehicles. More than 70 percent of the oil used in the United States and 28 percent of GHG

4 The White House, The President’s Climate Action Plan (June, 2013). http://www.whitehouse.gov/share/climate
action
- plan.Page 9 of 850

emissions come from the transportation sector , and since 2009 EPA and NHTSA have worked with industry

and states to develop ambitious, flexible standards for both the fuel economy and GHG emissions of l ight
- d uty v ehicles and the fuel efficiency and GHG emissions of heavy
- dut y vehicles. 5 , 6 The standards proposed here (referred to as Phase 2) w ould build on the l ight
- d ut y v ehicle standard s spanning model years 2011 to 2025 and on the initial phase of standards (referred to as P hase 1) for new m edium and h eavy - d ut y v ehicles (MDVs and HDVs) and engines in model years 2014 to 2018. Throughout every stage of development for these programs, EPA and NHTSA (collectivel y, the agencies , or “we” ) have worked in close partnership not only with one another, but with the vehicle manufacturing industry , environmental community leaders, and the State of California among other entities to create a single , effective set of national standards. Through two previous rulemakings, EPA and NHTSA have work ed with the auto industry to develop new fuel econom y and GHG emission standards for l ight
- d uty v ehicles. Taken together, the light
- duty vehicle standards span model years 2011 to 2025 and are the first significant improvement in fuel econom y in approximately two decades. Under the final program, average new car and light truck fuel economy is expected to double by 2025
. 7 This is projected to sav e consumers $1.7 trillion at the pump

— roughl y $8,200 per vehicle for a MY2025 vehicle

— reducing oi l consumption by 2.2 million barrels a day in 2025 and slashing GHG emissions by

6 billion metric tons over the lifetime of the vehicles sold during this period. 8 These fuel econom y standards are already delivering savings for American drivers. Between m odel years 2008 and 2013, the unadjusted average test fuel economy of new passenger cars and light trucks sold in the United States has increased by about four miles per gallon
. Altogether, l ight
- d uty v ehicle fuel economy standards finalized after 2008 have already saved nearl y one billion gallons of fuel and avoided more than 10 million tons of carbon dioxide emissions. 9 Similarly , EPA and NHTSA have previousl y develop ed joint GHG emission and fuel efficiency standards for MDVs and HDVs. Prior to these Phase 1 standards , heav y - dut y trucks and buses

– from delivery vans to the largest tractor
- trailers

– were required to meet pollution standards for soot and smog
- causing air pollutants, but no requirements existed for the fuel efficiency or carbon po llution from these vehicles. 10 By 2010, total fuel consumption and GHG emissions from MDVs and HDVs had been growing, and these vehicles accounted for 23 percent of total U.S. transportation
- related GHG emissions. 11 InAugust 2011, the agencies finaliz ed the groundbreaking Phase 1 standards for new MDVs and HDVs in model ye ars 2014 through 2018.

5 The White House, Improving the Fuel Efficiency of American Trucks

– Bolstering Energy Security, Cutting Carbon Pollution, Saving Money and Supporting Manufacturing Innovation (Feb. 2014), 2. 6 U.S. Environmental Protection Agency. 2014. Inventory of U.S . Greenhouse Gas Emissions and Sinks: 1990
- 2012. EPA 430
- R
- 14
- 003. Mobile sources emitted 28 percent of all U.S. GHG emissions in 2012. Available at http://www.epa.gov/climatechange/Downloads/ghgemissions/US
- GHG
- Inventory
- 2014
- Main
- Text.pdf 7 Id
. 8 Id
. 9 Id. at 3. 10 Id. 11 Id.Page 10 of 850

This program, developed with support from the trucking and engine industries, the State of California, Environment Canada, and leaders from the environmental community , set standards that are expected to save a projected 530 million barrels of oil and reduce carbon emissions by about 270 million metric tons , representing one of the most significant programs available to reduce domestic emissions of GHGs
. 12 The Phase 1 program, as well as the many additional actions called for in the President’s 2013 Climate Action Plan 13 including this Phase 2 rulemaking, not onl y result in meaningful decreases in GHG emissions, but support

– indeed are critical for

– United States le adership to encourage other countries to also achieve meaningful GHG reductions. This NPRM builds on our commitment to robust collaboration with stakeholders and the public. It follows an expansive and thorough outreach effort in which the agencies gath ered input, data and views from many interested stakeholders, involving over 200 meetings with heav y - dut y vehicle and engine manufacturers, technology suppliers, trucking fleets, truck drivers, dealerships, environmental organizations, and state agencies. As with the previous light
duty rules and the heavy
- duty Phase 1 rule, the agencies have consulted frequently with the California Air Resources Board staff during the development of this Phase 2 proposal, given California’s unique ability among the state s to adopt their own GHG standards for on
- highway engines and vehicles. The agencies look forward to feedback and ongoing conversation following the release of this NPRM from all stakeholders

– including through planned public hearings, written comments, and other opportunities for input
. **(2) Overview of Phase 1 Medium**  **- and Heavy**  **- Duty Vehicle Standards**  The President’s direction to EPA and NHTSA to develop GHG emission and fuel efficiency standards for MDVs and HDVs resulted in the agencies’ promulgation of the Phase 1 program in 2011, which covers new trucks and heavy vehicles in model years 2014 to 2018. The Phase 1 program includes specific standards for combination tractors, heavy
- dut y pickup trucks and vans, and vocational vehicles, and includes separat e standards for both vehicles and engines. The program offers extensive flexibility , allowing manufacturers to reach standards through average fleet calculations, a mix of technologies, and the use of various credit and banking programs. The Phase 1 pro gram was developed through close consultation with industry and other stakeholders, resulting in standards tailored to the specifics of each different class of vehicles and engines.

 **Heavy -**  **duty combination tractors.** Combination tractors

— semi trucks that ty pically pull trailers

— are regulated under nine subcategories based on weight class, cab ty pe,

12 Id . at 4. 13 The President’s Climate Action Plan calls for GHG
- cutting actions including, for example, reducing carbon emissions from power plants and curbing hydrofluorocarbon and methane emissions.Page 11 of 850

and roof height. These vehicles represent approximately two - thirds of all fuel consumption and GHG emissions from MDVs and HDVs. 14

 **Heavy -**  **duty pickup trucks and vans.** Heavy
- duty pickup and van standards are based on a “work factor” attribute that combines a vehicle’s payload, towing capabilities, and the presence of 4
- wheel drive. These vehicles represent about 15 percent of the fuel consumption and GHG emissions from MDVs and HDVs. 15

 **Vocational vehicles.** Specialized vocation al vehicles, which consist of a very wide variety of truck and bus types (e.g., delivery , refuse, utility , dump, cement, transit bus, shuttle bus, school bus, emergenc y vehicles , and recreational vehicles) are regulated in three subcategories based on engine classification. These vehicles represent approximately

20 percent of the fuel consumption and GHG emissions from MDVs and HDVs. 16 The Phase 1 program includes EPA GHG standards for recreational vehicles, but not NHTSA fuel efficiency standards. 17

 **Heavy -**  **duty engines.** Inaddition to vehicle ty pes, the Phase 1 rule has separate standards for heavy
- dut y engines, to assure they contribute to the overall vehicle reductions in fuel consumption and GHG emissions. The Phase 1 standards are premised on utilization of immediately available technologies. The Phase 1 program provides flexibilities that facilitate compliance . These flexibilities help provide sufficient lead time for manufacturers to make necessary technological improvements and reduce the overall cost of the program, without compromising overall environmental and fuel consumption objectives. The primary flexibility

provisions are an engine averaging, b anking, and trading (ABT) program and a vehicle ABT program. These ABT programs allow for emission and/or fuel consumption credits to be averaged, banked, or traded within each of the regulatory

subcategories
. However, credits are not allowed to be tran sferred across sub categories. The Phase 1 program is projected to save 530 million barrels of oil and avoid 270 million metric tons of GHG emissions. 18 At the same time, the program is projected to produce $50 billion in fuel savings, and net societal bene fit s of $49 billion. Today , the Phase 1 fuel efficiency and GHG reduction standards are already reducing GHG emissions and U.S. oil consumption, and producing fuel savings for America ’s trucking industry
. The market appears to be very

14 U.S. Environmental Protection Agency. 2014. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990
- 2012. EPA 430
- R
- 14
- 003. Mobile sources emitted 28 percent of all U.S. GHG emissions in 2012. Available at http://www.epa.gov/climatechange/Downloads/ghgemissions/US
- GHG
- Inventory - 2014
- Main
- Text.pdf. 15. 15 Id. at 16. 16 Id. at 18. 17 The proposed Phase 2 program would also include NHTSA recreational vehicle fuel efficiency standards. 18 The White House, Improving the Fuel Efficiency of American Trucks

– Bolstering Energy Secur ity, Cutting Carbon Pollution, Saving Money and Supporting Manufacturing Innovation (Feb. 2014), 4.Page 12 of 850

accepting of the new technology , and the agencies have seen no evidence of “pre
- buy” effects in response to the standards
. **(3) Overview of Proposed Phase 2 Medium**  **- and Heavy**  **- Duty Vehicle Standards**  The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are a critical next step in improving fuel efficiency and reducing GHG . The proposed Phase 2 standards carry forward our commitment to meaningful collaboration wi th stakeholders and the public, as they build on more than 200 meetings with manufacturers, suppliers, trucking f leets, dealerships, state air quality

agencies, non - governmental organizations (NGOs), and other stakeholders to identify and understand the opportunities and challenges involved with this next level of fuel saving technology . These meetings have been inv aluable to the agencies, enabling the development of a proposal that appropriately balances all potential impacts and effectivel y m inimizes the possibility

of unintended consequences. Phase 2 would include technology
- advancing standards that would phase in over the long
- term (through model year 2027) to result in an ambitious, yet achievable program that would allow manufacturers to meet standards through a mix of different technologies at reasonable cost. The Phase 2 standards would maintain the underl yi ng regulatory structure developed in the Phase 1 program, such as the general categorization of MDVs and HDVs and the separate standards for vehicles and engines. However, the Phase 2 program would build on and advance Phase 1 in a number of important way s including : basing standards not only on currentl y available technologies but also on utilization of technologies now under development or not yet widely

deployed while providing significant lead time to assure adequate time to devel op, test, and phase in these controls; developing standards for trailers ; further encouraging innovation and providing flexibility ; including vehicles produced b y small business manufacturers; incorporating enhanced test procedures that (among other things ) allow individual drivetrain and powertrain performance to be reflected in the vehicle certification process; and using an expanded and improved compliance simulation model
.
 **Strengthening standards to account for ongoing technological advancements**  **.** Relative to the baseline as of the end of Phase 1, the proposed standards (labeled Alternative 3 or the “preferred alternative” throughout this proposal) would achieve vehicle fuel savings of up to 8 percent and 24 percent, depending on the vehicle categ ory . While costs are higher than for Phase 1, benefits greatl y exceed costs , and pay back periods are short, meaning that consumers will see substantial net savings over the vehicle lifetime. Pay back is estimated at about two years for tractors and trail ers, about five ye ars for vocational vehicles, and about three ye ars for heav y - duty pickups and vans. The agencies are further proposing to phase in these MY 2027 standards with interim standards for model years 2021 and 2024 (and for certain types of trailers, EPA is proposing model year 2018 phase
- in standards as well). In addition to the proposed standards , the agencies are considering another alternative (Alternative 4) , which would achieve the same performance as the proposed standards 2
- 3 ye ars earlier, leading to overall reductions in fuel use and greenhouse gas emissions. The agencies believe Al ternative 4 has the potential to be the maximum feasible and appropriate alternative; however, based on the evidence currently before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to thePage 13 of 850

timeframe e nvisioned by

that alternative. The agencies are proposing Alternative 3 based on their anal ys es and projections, and taking into account the agencies’ respective statutory considerations. The comments that the agencies receive on this NPRM will be instr umental in helping us determine standards that are appropriate (for EPA) and maximum feasible (for NHTSA), given the discretion that both agencies have under our respective statutes. Therefore, the agencies have presented different options and raised spec ific questions throughout the NPRM, focusing in particular on better understanding the perspectives on the feasible adoption rates of different technologies , considering associated costs and necessary lead time
.
 **Setting standards for trailers for the first time**  **.** Inaddition to retaining the vehicle and engine categories covered in the Phase 1 program, which include semi tractors, heav y - dut y pickup trucks and work vans, vocational vehicles, and separate standards for heavy
- dut y engines, the Phase 2 standards propose fuel efficiency and GHG emission standards for trailers used in combination with tractors
. Although the agencies are not proposing standards for all trailer types, the majority of new trailers would be covered.

 **Encouraging technological i nnovation while providing flexibility and options for**  **manufacturers.** For each category of HDV s , the standards would set performance targets that allow manufacturers to achieve reductions through a mix of different technologies and leave manufacturers free to choose any means of compliance. For tractors and vocational vehicles, enhanced test procedures and an expanded and improved compliance simulation model enable the proposed vehicle standards to encompass more of the complet e vehicle and to account for engine, transmission and driveline improvements than the Phase 1 program. With the addition of the powertrain and driveline to the compliance model, representative drive cycles and vehicle baseline configurations become critic ally important to assure the standards promote technologies that improve real world fuel efficiency and GHG emissions. This proposal updates drive cycles and vehicle configurations to better reflect real world operation
. For tractor standards, for exampl e, different combinations of improvements like advanced aerodynamics, engine improvements and waste
- heat recovery , automated transmission, and lower rolling resistance tires and automatic tire inflation can be used to meet standards
. Additionally , the ag encies’ analyses indicate that this proposal should have no adverse impact on vehicle or engine safety.

 **Providing flexibilities to help minimize effect on small businesses.** All small businesses are exempt from the Phase 1 standards . The agencies are p roposing to regulate small business entities under Phase 2 (notabl y certain trailer manufacturers), but have conducted extensive proceedings pursuant to Section 609 of the Regulatory Flexibility

Act , and otherwise have engaged in extensive consultation with stakeholders, and developed a proposed approach to provide targeted flexibilities geared toward helping small businesses comply with the Phase 2 standards . Specifically , the agencies are proposing to delay all new requirements b y one ye ar and simplify c ertification requirements for small businesses, and are further proposing additional specific flexibilities adapted to particular ty pes of trailers.Page 14 of 850

**Summary of the Proposed Phase 2 Medium -**  **and Heavy -**  **Duty Vehicle Rule Impacts to Fuel Consumption, GHG e**  **missions, Benefits and Costs over the Lifetim**  **e of Model Years 2018** 

**– 2029, Based on Analysis**  **Method A**  **,a,b,c 3%**  **7%** Fuel Reductions (billion gallons) 73
- 77 GHG Reductions (MMT , CO 2 eq) 932
- 990 Pre
- Tax Fuel Savings ($billion) 165
- 175 89
- 94 Discounted Technology

Costs ($billion) 25
- 25.4 16.8
- 17.1 Value of reduced emissions ($billion) 70.1

– 73.7 52.9

– 55.6 Total Costs ($billion) 30.3
- 30.8 19.8
- 20.2 Total Benefits ($billion) 261
- 276 156
- 165 Net Benefits ($billion) 231
- 245 136
- 144 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and mo re dynamic baseline , 1b, please see Section X.A.1. b Range reflects two reference case assumptions , one that projects very little improvement in ne w vehicle fuel efficiency absent new standards, and the second that projects mo re significant im provements in vehicle fuel efficiency absent ne w standards. c Benefits and net benefits (including those in the 7% discount rate column) use the 3 percent average S C C
- CO 2 value applied only to CO 2 emissions; GHG reductions include CO 2 , CH 4 , N 2 O and HFC reductions. **Summary of the Proposed Phase 2 Medium -**  **and Heavy -**  **Duty Vehicle Annual**  **Fuel and GHG Reductions, Program** **Costs, Benefits and Net Benefits in Calendar Years 2035 and 2050, Based on Analysis Method B**  **a 2035**  **2050** Fuel Reductions (Billion Gallons) 9.3 13.4 GHG Reduction (MMT, CO 2 eq) 127.1 183.4 Vehicle Program Costs (including Maintenance; Billions of 2012$)
- $6.0
- $7.1 Fuel Savings (Pre
- Tax; Billions of 2012$) $37.2 $57.5 Benefits (Billions of 2012$) $20.5 $32.9 Net Benefits (Billions of 2012$) $51.7 $83.2 Note s : a Benefits and net benefits use the 3 percent average S C C
- CO 2 value applied only to CO 2 emissions; GHG reductions include CO 2 , CH 4 , N 2 O and HFC reductions ; values reflect the preferred alternative relative to the less dynamic baseline (a reference case that projects very little improvement in new vehicle fuel economy absent ne w standards
.Page 15 of 850

**Summary of the Proposed Phase 2 Medium -**  **and Heavy -**  **Duty Vehicle Program Expected Per**  **- Vehicle Fuel**  **Savings, GHG Emission Reductions, and Cost for Key V ehicle Categories**  **, Based on Analysis Method B a**  MY 2021 MY 2024 MY 2027 Maximum Vehicle Fuel Savings and Tailpipe GHG Reduction (%) Tractors 13 20 24 Trailers b 4 6 8 Vocational Vehicles 7 11 16 Pickups/Vans 2.5 10 16 Per Vehicle Cost ($) c (% Increase in Typical Vehicle Price) d Tractors $6,710 (7%) $9,940 (10%) $11,680 (12%) Trailers $900 (4%) $1,010 (4%) $1,170 (5%) Vocational Vehicles $1,150 (2%) $1,770 (3%) $3,380 (5%) Pickups/Vans $520 (1%) $950 (2%) $1,340 (3%) Notes: a. Note that the proposed EPA standards for some categories of box trailers begin in model year 2018 ; values reflect the preferred alternative relative to the less dynamic baseline (a reference case that projects very little im provement in new vehicle fuel economy abs ent ne w standards
. b All engine costs are included c For this table, we use a typical vehicle price today of $100,000 for tractors, $25,000 for trailers, $70,000 for vocational vehicles and $40,000 for HD pickups/vans **Payback Periods for MY2027 Vehicles under the Proposed Standards**  **, Based on Analysis Method B (Payback**  **Occurs in the Year Shown; using 7% Discounting)**

Proposed Standards Tractors/Trailers 2 nd Vocational Vehicles 6 th Pickups/Vans 3 rd **(4) Issues Addressed in this**  **NPRM** This NPRM contains extensive discussion of the background, elements, and implications of the proposed Phase 2 program. Section I includes information on the MDV and HDV industry , related regulatory and non
- regulatory

programs, summaries of Phase 1 and Phase 2 programs, costs and benefits of the proposed standards, and relevant statutory authority for EPA and NHTSA. Section II disc usses vehicle simulation, engine standards, and test procedures. Sections III , IV , V , and VI detail the proposed standards for combination tractors, trailers, vocational vehicles, and heav y - dut y pickup trucks and vans. Sections VII and VIII discuss aggre gate GHG impacts, fuel consumption impacts, climate impacts, and impacts on non
- GHG emissions. Section IX evaluates the economic impacts of the proposed standards. Sections X, XI , and XII present the alternatives analy ses , consideration of natural gas ve hicles, and the agencies’ initial response to recommendations from the Academ y of Sciences. Finall y, Sections XIII and XIV discuss the changes that the proposed Phase 2 NPRM would have on Phase 1 standards and other regulatory provisions. In addition to this preamble, the agencies have alsoPage 16 of 850

prepared a joint Draft Regulatory Impact Analy sis (DRIA) which is available on our respective websites and in the public docket for this rulemaking which provides additional data, analy sis and discussion of the propose d standards and the alternatives anal yz ed b y the agencies. We request comment on all aspects of this proposed rulemaking, including the DRIA.Page 17 of 850

**Table of Contents** A. Does this Action Apply to Me? B. Public Participation C. Did EPA Conduct a Peer Review before Issuing this Notice? D. Executive Summary I. Overview A. Background B. Summary

of Phase 1 Program C. Summary

of the Proposed Phase 2 Standards and Requirements D. Summary

of the Costs and Benefits of the Proposed Rule E. EPA and NHTSA Statutory Authorities F. Other Issues II. Vehicle Simulation, Engine Standards and Test Procedures A. Introduction and Summary of Phase 1 and Phase 2 Regulatory Structures B. Phase 2 Proposed Regulatory Structure C. Proposed Vehicle Simulation Model

– Phase II GEM D. Proposed Engine Test Procedures and Engine Standards III. Class 7 and 8 Combination Tractors A. Summary

of the Phase 1 Tractor Program B. Overview of the Proposed Phase 2 Tractor Program C. Proposed Phase 2 Tractor Standards D. Feasibility

of the Proposed Tractor Standards E. Proposed Compliance Provisions for Tractors F. Flexibility

ProvisionsPage 18 of 850

IV . Trailers A. Summary

of Trailer Consideration in Phase 1 B. The Trailer Industry C. Proposed Phase 2 Trailer Standards D. Feasibility

of the Proposed Trailer Standards E. Alternative Standards and Feasibility Considered F. Trailer Standards: Compliance and Flexibilities V. Class 2b
- 8 Vocational V ehicles A. Summary

of Phase 1 Vocational Vehicle Standards B. Proposed Phase 2 Standards for Vocational Vehicles C. Feasibility

of the Proposed Vocational Vehicle Standards D. Alternative Vocational Vehicle Standards Considered E. Compliance Provisions for Vocational Vehicles VI . Heavy
- dut y Pickups and Vans A. Introduction and Summary of Phase 1 HD Pickup and Van Standards B. Proposed HD Pickup and Van Standards C. Feasibility

of Pickup and Van Standards D. DOT CAFE Model Analy sis of the Regulatory Alternatives for HD Pickups and Vans E. Compliance and Flexibility for HD Pickup and Van Standards VII. Aggregate GHG, Fuel Consumption, and Climate Impacts A. What Methodologies Did the Agencies Use to Project GHG Emissions and Fuel Consumption Impacts? B . Anal ys is of Fuel Consumption and GHG Emissions Impacts Resulting from Proposed Standards and Alternative 4 C. What Are the Projected Reductions in Fuel Consumption and GHG Emissions?Page 19 of 850 D. Climate Impacts and Indicators VIII. How Will This Proposed 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 IX . Economic and Other Impacts A. Conceptual Framework B. Vehicle
- Related Costs Associated with the Program C. Changes in Fuel Consumption and Expenditures D. Maintenance Expenditures E. Analy sis of the Rebound Effect F. Impact on Class Shifting, Fleet Turnover, and Sales G. Monetized GHG Impac ts H. Monetized Non
- GHG Health Impacts I. Energy Security Impacts J. Other Impacts K. Summary

of Benefits and Costs L. Emplo ym ent Impacts M. Cost of Ownership and Pay back Anal ys is N. Safet y Impacts X. Anal ys is of the Alternatives A. What Are the Alternatives that the Agencies Considered? B. How Do These Alternatives Compare in Overall Fuel Consumption and GHG Emissions Reductions and in Benefits and Costs?Page 20 of 850

XI . Natural Gas Vehicles and Engines

A. Natural Gas Engine and Vehicle Technology B. GHG Li fecycle Analysis for Natural Gas Vehicles C. Projected Use of LNG and CNG D. Natural Gas Emission Control Measures E. Dimethyl Ether XII. Agencies’ Response to Recommendations from the National Academ y of Sciences A. Overview B. Major Findings and Recomm endations of the NAS Phase 2 First Report XIII. Amendments to Phase 1 Standards A. EPA Amendments B. Other Compliance Provisions for NHTSA XIV. Other Proposed Regulatory Provisions A. Proposed Amendments Related to Heav y - Duty Highway Engines and Vehicles B . Amendments Affecting Gliders and Glider Kits C. Applying the General Compliance Provisions of 40 CFR Part 1068 to L ight
- Dut y Vehicles, Light
- Dut y Trucks, Chassis
- certified Class 2 B and 3 Heav y - Duty Vehicles and Highway Motorcycles D. Amendments to Genera l Compliance Provisions in 40 CFR Part 1068 E. Amendments to L ight
- Duty Greenhouse Gas Program Requirements F. Amendments to Highway and Nonroad Test Procedures and Certification Requirements G. Amendments Related to Nonroad Diesel Engines in 40 CFR Part 1 039 H. Amendments Related to Marine Diesel Engines in 40 CFR Parts 1042 and 1043 I. Amendments Related to L ocomotives in 40 CFR Part 1033 J. Miscellaneous EPA AmendmentsPage 21 of 850 K. Amending 49 CFR Parts 512 and 537 to Allow Electronic Submissions and Defining Data Formats for L ight
- Duty Vehicle Corporate Average Fuel Economy (CAFE) Reports XV. Statutory

and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review B. Nation al Environmental Policy Act C. Paperwork Reduction Act D. Regulatory

Flexibility

Act E. Unfunded Mandates Reform Act F. Executive Order 13132: Federalism G. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments H. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply , Distribution, or Use J. National Technology

Transfer and Advancement Act and 1 CFR Part 51 K. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and L ow - Income Populations XVI. EPA and NHTSA Statutory Authorities A. EPA B. NHTSA C. L ist of SubjectsPage 22 of 850



## I. **Overview A.**  **Back ground**  This background and summary of the proposed Phase 2 GHG emissions and fuel efficiency standards includes an overview of the heav y - dut y truck industry and related regulatory and non
- regulatory

programs, a summary

of the Phase 1 GHG emissions and fuel efficiency program, a summary

of the proposed Phase 2 standards and requirements, a summary of the costs and benefits of the proposed Phase 2 standards, discussion of EPA and NHTSA statutory authorities, and other issues. For purposes of this preamble, the terms “ heavy
- duty” or “ HD ” are used to apply to all highway vehicles and engines that are n ot within the range of light
- dut y passenger cars, light
duty trucks, and medium
- duty passenger vehicles (MDPV) covered by separate GHG and Corporate Average Fuel Economy (CAFE) standards. 19 They do not include motorcycles. Thus, in this rulemaking, unless specified otherwise, the heav y - dut y category incorporates all vehicles with a gross vehicle weight rating above 8,500 pounds, and the engines that power them, except for MDPVs. 20 , 21 Consistent with the President’s direction, over the past two years as we have developed this proposal, the agencies have met on an on
- going basis with a very large number of diverse stakeholders. This includes meetings, and in many cases site visits, with truck, trailer , and engine manufacturers; technology supplier companies an d their trade associations (e.g., transmissions, drive lines, fuel sy stems, turbochargers, tires, catal ys ts, and many others); line haul and vocational trucking firms and trucking associations; the trucking industries owner
operator association; truck deal erships and dealers associations; trailer manufacturers and their trade association; non
- governmental organizations (NGOs, including environmental NGOs, national security NGOs, and consumer advocacy NGOs); state air quality agencies; manufacturing labor un ions; and many other stakeholders. In particular, NHTSA and EPA have consulted on an on
- going basis with the California Air Resources Board (CARB) over the past two years as we have developed the Phase 2 proposal. Inaddition, CARB staff and managers have also participated with EPA and NHTSA in meetings with many external stakeholders, in particular with vehicle OEMs and technology suppliers. 22

19 2017 and Later Model Year Light
- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule, 77 FR 62623, October 15 , 2012. 20 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. 21 The En ergy Independence and Security Act of 2007 requires NHTSA to set standards for commercial medium
and heavy
- duty on
- highway vehicles, defined as on
- highway vehicles with a GVWR of 10,000 pounds or more, and work trucks, defined as vehicles with a GVWR betw een 8,500 and 10,000 pounds and excluding medium duty passenger vehicles. 22 Vehicle chassis manufacturers are known in this industry as original equipment manufacturers or OEMs.Page 23 of 850

NHTSA and EPA staff also participated in a large number of technical and policy conferences over the past two ye ars related to the technological, economic, and environmental aspects of the heav y - dut y trucking industry. The agencies also met with regulatory counterparts from several other nations who either have already or are considering establishing fuel consumpti on or GHG requirements, including outreach with representatives from the governments of Canada, the European Commission, Japan, and China. These comprehensive outreach actions b y the agencies provided us with information to assist in our identification of potential technologies that can be used to reduce heav y - dut y GHG emissions and improve fuel efficiency . The outreach has also helped the agencies to identify and understand the opportunities and challenges involved with the proposed standards for the heav y duty trucks, trailers, and engines detailed in this preamble, including time needed for implementation of various technologies and potential costs and fuel savings. The scope of this outreach effort to gather input for the proposal included well over 20 0 meetings with stakeholders. These meetings and conferences have been invaluable to the agencies. We believe they have enabled us to develop this proposal in such a way as to appropriately

balance all of the potential impacts, to minimize the possibility of unintended consequences, and to ensure that we are requesting comment on a wide range of issues that can inform the final rule. **(1) Brief Overview of the Heavy**  **- D**  **uty Truck Industry** The heav y - duty

sector is diverse in several respects, including the t ype s of manufacturing companies involved, the range of sizes of trucks and engines they produce, the ty

pes of work for which the trucks are designed, and the regulatory history of different subcategories of vehicles and engines. The current heav y - dut y fleet encompasses vehicles from the “18
- wheeler” combination tractors one sees on the highway to the largest pickup trucks and vans, as well as vocational vehicles cover ing a range between these extremes
. T ogether, the HD sector spans a wide range of vehicles with often specialized form and function. A primary indicator of the diversity among heavy
- duty

trucks is the range of load
- carrying capability across the industry
. The heav y - 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. 23 Table I
- 1 belo w outlines the vehicle weight classifications commonly used for man y years for a variety of purposes by businesses and by several Federal agencies, including the Department of Transportation, the Environmental Protection Agency , the Department of Commerce, and the Internal Revenue Service.

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

vehicles (including those designed for primary purposes other than towing) also have a gross combined weight rating (GCWR), which des cribes the maximum load that the vehicle can haul, including the weight of a loaded trailer and the vehicle itself.Page 24 of 850 **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 > 33,00 0 In the framework of these vehicle weight classifications, the heav y - dut y truck sector refers to “ Class 2b ” through “ Class 8 ” vehicles and the engines that power those vehicles. 24 Unlike light
- dut y vehicles, which are primaril y used for transporting passengers for personal travel, heav y - duty vehicles fill much more diverse operator needs. Heav y - dut y pickup trucks and vans (Classes 2b and 3) are used chiefly as work truck s 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 sector is used for carrying cargo and/or performing specialized tasks. “Vocational” vehicles, which may span Classes 2b through 8, vary widely in size, including smaller and larger van trucks, utility “bucket” trucks, tank trucks, refuse trucks, urban and over
- the
- road buses, fire trucks, flat
- bed trucks, and dump trucks, among others. The annual mileage of these vehicles is as varied as their uses, but for the most part tends to fall in between heav y - dut y pickups/vans and the large combination tractors, typicall y from 15,000 to 150,000 miles per year. 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 operate 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. Together, Class 7 and 8 tractors and trailers account for approximately two - thirds of the heav y - duty sector’s total CO 2 emissions and fuel consumption. Trailer designs vary significantl y, reflecting the wide variety of cargo type s. However, the most common ty pes of trailers are box vans (dry and refrigerated), which are a focus of this Phase 2 rulemaking. The tractor
- trailers used in combination applications can and frequently do travel more than 150,000 miles per year and can o perate for 20
- 30 years . EPA and NHTSA have designed our respective proposed standards in careful consideration of the diversity and complexity

of the heav y - dut y truck industry , as discussed in Section I. B.

24 Class 2b vehicles manufactured as passenger vehicles (Medium Duty Passenger Vehicles, MDPVs) are covered by the light
- duty

GHG and fuel ec onomy standards and therefore are not addressed in this rulemaking.Page 25 of 850

**(2) Related Regulatory and Non**  **- Regulatory Programs**  (a ) History of EPA’s Heavy
-Duty Regulatory Program and Impacts of Greenhouse Gases on Climate Change This subsection provides an overview of the history of EPA’s h eav y - d uty r egulatory p rogram and i mpacts of greenhouse g ases on c limate c hange
. (i ) History of EPA’s Heavy
-Duty Regulatory Program Since the 1980s, EPA has acted several times to address tailpipe emissions of criteria pollutants and air toxics from heav y - dut y vehi cles and engines. During the last two decades these programs have primarily addressed emissions of particulate matter (PM) and the primary ozone precursors, h ydrocarbons (HC) and oxides of nitrogen (NO X ). These programs, which have successfull y achieved significant and cost
- effective reductions in emissions and associated health and welfare benefits to the nation, were an important basis of the Phase 1 program. See e.g. 66 FR 5002, 5008, 5011
- 12 (January 18, 2001) (detailing substantial public health ben efits of controls of criteria pollutants from heav y - dut y diesel engines, including bringing areas into attainment with primary

(public health) PM NAAQS, or contributing substantially to such attainment); National Petrochemical Refiners Association v. EPA , 287 F. 3d 1130, 1134 (D.C. Cir. 2002) (referring to the “dramatic reductions” in criteria pollutant emissions resulting from those on
- highway

heavy
- duty

engine standards, and upholding all of the standards). As required b y the Clean Air Act ( CAA ) , the emission standards implemented by these programs include standards that apply at the time that the vehicle or engine is sold and continue to apply in actual use. 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 many heavy
- duty

truck categories by

regulating heavy
- dut y engine emissions. A key

part of this success has been the development over many years of a well
establishe d, representative, and robust set of engine test procedures that industry and EPA now use routinely

to measure emissions and determine compliance with emission standards. These test procedures in turn serve the overall compliance program that EPA implements to help 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 alon e to overall emissions. (ii) Impacts of Greenhouse Gases on Climate Change In 2009, the EPA Administrator issued the document known as the Endangerment Finding under CAA Section 202(a)(1). 25 In the Endangerment Finding, which focused on public health and public welfare impacts within the United States, the Administrator found that elevated concentrations of GHG emission s in the atmosphere may reasonabl y be anticipated to endanger

25 “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act,” 74 FR 66496 (December 15, 2009) (“Endangerment Finding”).Page 26 of 850

public health and welfare of current and future generations. See also Coalition fo r Responsible Regulation v. EPA , 684 F. 3d 102, 117
- 123 (D.C. Cir. 2012 ) (upholding the endangerment finding in all respects). The following sections summarize the key information included in the Endangerment Finding. Climate change caused by human emiss ions of GHGs threatens public health in multiple way s. By raising average temperatures, climate change increases the likelihood of heat waves, which are associated with increased deaths and illnesses. While climate change also increases the likelihood of reductions in cold
- related mortality , evidence indicates that the increases in heat mortality will be larger than the decreases in cold mortality in the United States. Compared to a future without climate change, climate change is expected to increase ozo ne pollution over broad areas of the U.S., including in the largest metropolitan areas with the worst ozone problems, and thereb y increase the risk of morbidity and mortality . Other public health threats also stem from projected increases in intensity or frequency

of extreme weather associated with climate change, such as increased hurricane intensity , increased frequency of intense storms and heav y precipitation. Increased coastal storms and storm surges due to rising sea levels are expected to cause in creased drownings and other adverse health impacts. Children, the elderl y, and the poor are among the most vulnerable to these climate
- related health effects. See also 79 FR 75242 (Dec. 17, 2014) (climate change, and temperature increases in particular, likely to increase O3 (Ozone) pollution “over broad areas of the U.S., including the largest metropolitan areas with the worst O3 problems, increas[ing] the risk of morbidity and mortality”). Climate change caused by human emissions of GHGs also thre atens public welfare in multiple way s. Climate changes are expected to place large areas of the country at serious risk of reduced water supplies, increased water pollution, and increased occurrence of extreme events such as floods and droughts. Coastal areas are expected to face increased risks from storm and flooding damage to property , as well as adverse impacts from rising sea level, such as land loss due to inundation, erosion, wetland submergence and habitat loss. Climate change is expected to resu lt in an increase in peak electricity demand, and extreme weather from climate change threatens energy , transportation, and water resource infrastructure. Climate change may exacerbate ongoing environmental pressures in certain settlements, particularly i n Alaskan indigenous communities. Climate change also is very likely to fundamentally

rearrange U.S. ecos ys tems over the 21st century . Though some benefits may balance adverse effects on agriculture and forestry

in the next few decades, the body of evide nce points towards increasing risks of net adverse impacts on U.S. food production, agriculture and forest productivity as temperature continues to rise. These impacts are global and may exacerbate problems outside the U.S. that raise humanitarian, trade, and national security issues for the U.S. See also 79 FR 75382 (Dec. 17, 2014) (welfare effects of O3 increases due to climate change, with emphasis on increased wildfires). As outlined in Section VIII.A. of the 2009 Endangerment Finding, EPA's approach to providing the technical and scientific information to inform the Administrator's judgment regarding the question of whether GHGs endanger public health and welfare was to rel y primarily upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessments addressed the scientific issues that EPA was required to examine, were comprehensive in their c overage of the GHG andPage 27 of 850

climate change issues, and underwent rigorous and exacting peer review by the expert community , as well as rigorous levels of U.S. government review. Since the administrative record concerning the Endangerment Finding closed followin g EPA's 2010 Reconsideration Denial, a number of such assessments have been released. These assessments include the IPCC's 2012 “Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation” (SREX) and the 2013
- 2014 Fifth Assessment Report (AR5), the USGCRP's 2014 “Climate Change Impacts in the United States” (Climate Change Impacts), and the NRC's 2010 “Ocean Acidification: A National Strategy to Meet the Challenges of a Changing Ocean” (Ocean Acidification), 20 11 “Report on Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia” (Climate Stabilization Targets), 2011 “National Security Implications for U.S. Naval Forces” (National Security Implications), 2011 “Understandin g Earth's Deep Past: L essons for Our Climate Future” (Understanding Earth's Deep Past), 2012 “Sea Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future”, 2012 “Climate and Social Stress: Implications for Security Anal ys is” (Climate and Social Stress), and 2013 “Abrupt Impacts of Climate Change” (Abrupt Impacts) assessments. EPA has reviewed these new assessments and finds that the improved understanding of the climate sy stem they

present strengthens the case that GHG emi ssions endanger public health and welfare. In addition, these assessments highlight the urgency of the situation as the concentration of CO 2 in the atmosphere continues to rise. Absent a reduction in emissions, a recent National Research Council of the Nat ional Academies assessment projected that concentrations b y the end of the century

would increase to levels that the Earth has not experienced for millions of years. 26 In fact, that assessment stated that “the magnitude and rate of the present greenhouse g as increase place the climate sy stem in what could be one of the most severe increases in radiative forcing of the global climate sy stem in Earth history .” 27 What this means, as stated in another NRC assessment, is that: Emissions of carbon dioxide from th e burning of fossil fuels have ushered in a new epoch where human activities will largel y determine the evolution of Earth's climate. Because carbon dioxide in the atmosphere is long lived, it can effectivel y lock Earth and future generations into a range of impacts, some of which could become very severe. Therefore, emission reductions choices made today matter in determining impacts experienced not just over the next few decades, but in the coming centuries and millennia. 28 Moreover, due to the time
- lags inherent in the Earth's climate, the Climate Stabilization Targets assessment notes that the full warming from any given concentration of CO 2 reached will not be realized for several centuries.

26 National Research Council, Understanding Earth's Deep Past, p. 1 27 Id., p.138. 28 National Research Council, Climate Stabilization Targets, p. 3.Page 28 of 850

The recentl y released USGCRP “National Climate Assessment” 29 emphasizes that climate change is already happening now and it is happening in the United States. The assessment documents the increases in some extreme weather and climate events in recent decades, the damage and disruption to infrastructure and agriculture, and projects continued increases in impacts across a wide range of peoples, sectors, and ecos ys tems. These assessments underscore the urgency of reducing emissions now: Today's emissions will otherwise lead to raised atmospheric concentrations for thous ands of years, and raised Earth sy stem temperatures for even longer. Emission reductions today will benefit the public health and public welfare of current and future generations. Finally , it should be noted that the concentration of carbon dioxide in the atmosphere continues to rise dramatically
. In 2009, the ye ar of the Endangerment Finding, the average concentration of carbon dioxide as measured on top of Mauna Loa was 387 parts per million. 30 The average concentration in 2013 was 396 parts per million . And the monthly concentration in April of 2014 was 401 parts per million, the first time a monthly average has exceeded 400 parts per million since record keeping began at Mauna Loa in 1958, and for at least the past 800,000 ye ars according to ice core records. 31 (b ) 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 econom y standards for model years 2012
- 2016 (see 75 FR 25324). More recentl y, the agencies adopted even stricter stand ards for model years 2017 and later (77 FR 62624, October 15, 2012). The agencies have used the l ight
duty National Program as a model for th e HD National Program in several respects . This is most apparent in the case of heavy
- duty pickups and vans, whic h are similar to the light
- dut y trucks addressed in the l ight
- duty National Program both technologicall y as well as in terms of how they are manufactured (i.e., the same company often makes both the vehicle and the engine , and several light
- dut y manufacturers also manufacture HD pickups and vans )
. 32 For HD pickups and vans , there are close parallels to the light
- duty program in how the agencies have developed our respective heavy
- dut y standards and compliance structures . However , HD pickup s and vans are true work vehicles that are designed for much higher towing and payload capabilities than are light
- duty pickups and vans. T he technologies applied to light
- duty trucks are not all applicable to heav y - dut y pickups and vans at the same adopt ion rates, and the technologies often produce a lower percent reduction in CO 2 emissions and fuel consumption when used in heav y - dut y vehicles . Another difference between the light
- duty and the heavy
- duty

standards is that each

29 U.S. Global Change Research Program, Climate Change Im pacts in the United States: The Third National Climate Assessment, May 2014 Available at http://nca2014.globalchange.gov/
. 30 f tp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt
. 31 http://www.esrl.noaa.gov/gmd/ccgg/trends/
. 32 This is more broadly true for heavy
- duty pickup trucks than vans because every manufac turer of heavy
- duty pickup trucks also makes light
- duty pickup trucks, while only some heavy
- duty van manufacturers also make light
duty vans.Page 29 of 850

agency adopts heav y - duty st andards 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 collabo ration and coordination that characterized the development of the light
- dut y program throughout the Phase 1 rulemaking and the continued efforts for Phase 2 . Most notably , as with the light
- dut y program, manufacturers would continue to be able to design and build vehicles to meet a closel y coordinated, harmonized national program, and to avoid unnecessarily duplicative testing and compliance burdens. In addition, the averaging, banking, and trading provisions in the HD program, although structurally diffe rent from those of the light
- duty program, serve the same purpose, which is to allow manufacturers to achieve large reductions in fuel consumption and emissions while providing a broad mix of products to their customers. The agencies have also worked clos ely

with CARB to provide harmonized national standards
. (c) NHTSA and FMCSA’s Notice of Proposed Rulemaking for Heavy Vehicle Speed Limiters NHTSA and FMCSA plan to issue a NPRM that would respond to petitions from the American Trucking Associations ( ATA ) and Roadsafe America to require the installation of speed limiting devices on heav y trucks. In response to the petitions, NHTSA requested public comment on the subject and received thousands of comments supporting the petitioner ́s reque st. We believe this rule would have minimal cost, as all heav y trucks already have these devices installed, although some vehicles do not have the limit set. This rule would decrease the estimated 1,115 fatal crashes annuall y involving vehicles with a GVW R of over 11,793.4 kg (26,000 lbs) on roads with posted speed limits of 55 mph or above. NHTSA and EPA will continue to monitor the evolution of this rulemaking as it may impact the effectiveness of vehicle speed limiters, one of the technologies available to reduce fuel consumption and CO 2 emissions from heavy
- duty vehicles. The HD Phase 1 and proposed Phase 2 programs appl y fuel consumption and CO 2 emissions savings for speed limiters set at less than 65 mph. If the mandatory speed limiters are required to be set below 65 mph, then EPA and NHTSA would need to consider the potential impact on the HD Phase 2 technology effectiveness. (d ) EPA’s SmartWay Program EPA’s voluntary

SmartWay

Transport Partnership program encourages businesses to take actions that reduce fuel consumption and CO 2 emissions while cutting costs by working with the shipping, logistics, and carrier communities to identify low carbon strategies and technologies across their transportation supply chains. SmartWay

provides technical inform ation, benchmarking and tracking tools, market incentives, and partner recognition to facilitate and accelerate the adoption of these strategies. Through the SmartWay program and its related technology

assessment center, EPA has worked closely with truck and trailer manufacturers and truck fleets over the last ten years 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

technologies that can achieve these reductions. SmartWay partners have demonstrated these new and emerging technologies in their business operations, adding to thePage 30 of 850

body of technical data and information that EPA can disseminate to industry , researchers and other stakehold ers. Over the last several ye ars, EPA has developed hands
- on experience testing the largest heav y - dut y trucks and trailers and evaluating improvements in tire and vehicle aerodynamic performance. In developing the Phase 1 program, the agencies drew from this testing and from the SmartWay experience. In the same way , the agencies benefitted from SmartWay

in developing the proposed Phase 2 trailer program. (e) The State of California California has established ambitious goals for reducing GHG emissions from heavy - dut y vehicles and engines as part of an overall plan to reduce GHG emissions from the transportation sector in California
. 33 Heavy
- duty vehicles are responsible for one
- fifth of the total GHG emissions from transportation sources in California. In the past several ye ars the California Air Resources Board (CARB) has taken a number of actions to reduce GHG emissions from heavy
duty vehicles and engines. For example, i n 2008, the CARB adopted regulations to reduce GHG emissions from heav y - duty tractors that pull box
- typ e trailers through improvements in tractor and trailer aerodyn amics and the use of low rolling resistance tires
. 34 T he tractors and trailers subject to the CARB regulation are required to use SmartWay certified tractors and trailers, or re trofit their existing fleet with SmartWay verified technologies, consistent with California’ s state authority

to regulate both new and in
- use vehicles. R ecentl y, in December 2013, CARB adopted regulations that establish its own parallel Phase 1 program with standards consistent with EPA Phase 1 standards. On December 5, 2014, California’s Office of Administrative L aw approved CARB’s adoption of the Phase 1 standards, with an effective date of December 5, 2014. 35 Complementary

to its regulatory

efforts, CARB and other California agencies are investing significant public capital through various incentive programs to accelerate fleet turnover and stimulate technology innovation within the heavy
- dut y vehicle market (e.g., Air Quality Improvement, Carl Moyer, Loan Incentives, L ower - Emission School Bus and Goods Movement Emission Reduction Programs). 36 And, recentl y, California Governor Jerry Brown established a target of up to 50 percent petroleum reduction by 2030. In addition to California’s effor ts to reduce GHG emissions that contribute to climate change, California also faces unique air quality challenges as compared to many other regions of the United States. Man y areas of the state are classified as non
- attainment for both the ozone and parti culate matter National Ambient Air Quality Standards (NAAQS) with California having the

33 See http://www.arb.ca.gov/cc/cc.htm for details on the California Air Resources Board climate change actions, including a discussion of Assembly Bill 32, and the Climate Change Scoping Plan developed by CARB, which includes details regarding CARB’s future goals for reducing GHG emissions from heavy
- duty vehicles. 34 See http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm for a summary of CARB’s “Tractor
- Trailer Greenhouse Gas Regulation”. 35 See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for details regarding CARB’s adoption of the Phase 1 standards. 36 See http://www.arb.ca.gov/ba/fininfo.htm for detailed descriptions of CARB ’s mobile source incentive programs. Note that EPA works to support CARB’s heavy
- duty incentive programs through the West Coast Collaborative (http://westcoastcollaborative.org/) and the Clean Air Technology Initiative (http://www.epa.gov/region09/cleantec h/).Page 31 of 850

nation’s only

two “Extreme” ozone non
- attainment airsheds (the San Joaquin Valley and South Coast Air Basins). 37 By

2016, California must submit to EPA its Clean Air Ac t State Implementation Plans (SIPs) that demonstrate how the 2008 ozone and 2006 PM 2. 5 NAAQS will be met by Clean Air Act deadlines. Extreme ozone areas must attain the 2008 ozone NAAQS by no later than 2032 and PM 2.5 moderate areas must attain the 2006 PM 2.5 standard b y 2021 or, if reclassified to serious, by 2025. Heav y - dut y vehicles are responsible today for one
- third of the state’s oxides of nitrogen (NO X) emissions. California has estimated that the state’ s South Coast Air Basin will need nearl y a 90 percent reduction in heavy
- dut y vehicle NO X emissions by 2032 from 2010 levels to attain the 2008 NAAQS for ozone. Additionally , on November 25, 2014, EPA issued a proposal to strengthen the ozone NAAQS. I f a change to the ozone NAAQS is finalized, California and other areas of the country will need to identify and implement measures to reduce NO X as needed to complement Federal emission reduction measures. While this section is focused on California’s regulatory

programs and air quality needs, EPA recognizes that other states and local areas are concerned about the challenges of reducing NO X and attain ing , as well as maintaining , the ozone NAAQS (further discussed in Section VIII.D.1 below). In order to encourage the use of lower NO X emitting new heav y - dut y vehicles in California, in 2013 CARB adopted a voluntary low NO X emission standard for heav y - dut y engines. 38 In addition, in 2013 CARB awarded a major new research contract to Southwest Research Institute to investigate advanced technologies that could reduce heavy - dut y vehicle NO X emissions well below the current EPA and CARB standards. California has long had the unique ability amo ng states to adopt its own separate new motor vehicle standards per Section 209 of the Clean Air Act (CAA). Although section 209(a) of the CAA expressly

preempts states from adopting and enforcing standards relating to the control of emissions from new m otor vehicles or new motor vehicle engines (such as state controls for new heav y - duty engines and vehicles ) CAA section 209(b) directs EPA to waive this preemption under certain conditions. Under the waiver process set out in CAA Section 209(b), EPA has granted CARB a waiver for its initial heavy
- duty vehicle GHG regulation. 39 Even with California’s ability

under the CAA to establish its own emission standards, EPA and CARB have worked closel y together over the past several decades to largel y harmonize new vehicle criteria pollutant standard programs for heav y - dut y engines and heav y - dut y vehicles . In the past several ye ars EPA and NHTSA also consulted with CARB in the development of the Federal light
- dut y vehicle GHG and CAFE rulemakings for the 2012
- 2016 and 2017
- 2025 model years .

37 See http://www.epa.gov/airquality/greenbk/index.html for more information on EPA’s nonattainment designations. 38 See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for a des cription of the CARB optional reduced NO X emission standards for on
- road heavy
- duty engines. 39 See EPA’s waiver of CARB’s heavy
- duty tractor
- trailer greenhouse gas regulation applicable to new 2011 through 2013 model year Class 8 tractors equipped with integrated sleeper berths (sleeper
- cab tractors) and 2011 and subsequent model year dry
- can and refrigerated
- van trailers that are pulled by such tractors on California highways at 79 FR 46256 (August 7, 2014 ).Page 32 of 850

As discussed above, California operates under state authority to establish its own new heav y - dut y vehicle and engine emission standards, including standards for CO 2 , methane, N 2 O, and hydrofluorocarbons. EPA recognizes this in dependent authority, and we also recognize the potential benefits for the regulated industry if the Federal Phase 2 standards could result in a single, National Program that would meet the NHTSA and EPA’s statutory requirements to set appropriate and maximum feasible standards, and also be equivalent to potential future new heav y - dut y vehicle and engine GHG standards established by CARB (addressing the same model ye ars as addressed by

the final Federal Phase 2 program and requiring the same technologies). Similarly , CARB has expressed support in the past for a Federal heavy
- dut y Phase 2 program that would produce significant GHG reductions both at the Federal level and in California that could enable CARB to adopt the same standards at the state level. T his is similar to CARB’s approach for the Federal heav y - dut y P hase 1 program, and with past EPA criteria pollutant standards for heavy
- duty vehicles and engines. In order to further the opportunity for maintaining coordinated Federal and California standards in the Phase 2 timeframe (as well as to benefit from different technical expertise and perspective) , NHTSA and EPA have consulted on an on - going basis with CARB over the past two years as we have developed the Phase 2 proposal. The agencies’ technical staff have shared information on technology cost, technology effectiveness, and feasibility with the CARB staff. We have also received information from CARB on these same topics. EPA and NHTSA have also shared preliminary results from several of our mo deling exercises with CARB as we examined different potential levels of stringency

for the Phase 2 program. In addition, CARB staff and managers have also participated with EPA and NHTSA in meetings with many external stakeholders, in particular with vehi cle OEMs and technology suppliers. In addition to information on GHG emissions, CARB has also kept EPA and NHTSA informed of the state’s need to consider opportunities for additional NO X emission reductions from heav y - duty

vehicles. CARB has asked the agencies to consider opportunities in the Heavy
Duty Phase 2 rulemaking to encourage or incentivize further NO X emission reductions, in addition to the petroleum and GHG reductions which would come from the Phase 2 standards. When combined with the Phase 1 standards , the technologies the agencies are projecting to be used to meet the proposed GHG emission and fuel efficiency standards would be expected to reduce NO X emissions by over 450,000 tons in 2050 (see Section VIII). EPA and NHTSA believe that through this information sharing and dialog we will enhance the potential for the Phase 2 program to result in a National Program that can b e adopted not only by the Federal agencies , but also by the State of California, given the strong interest from the regulated industry for a harmonized State and Federal program. The agencies will continue to seek input from CARB, and from all stakeholders, throughout this rulemaking. (f ) Environment Canad

a On March 13, 2013, Environment Canada (EPA’s Canadian counterpart) published its own regulations to control GHG emissions from heav y - dut y vehicle s and engines, beginning with MY 2014. These regulat ions are closel y aligned with EPA’s Phase 1 program to achieve aPage 33 of 850

common set of North American standards. Environment Canada has expressed its intention to amend these regulations to further limit emissions of greenhouse gases from new on
- road heav y duty v ehicles and their engines for post
- 2018 MYs. As with the development of the current regulations, Environment Canada is committed to continuing to work closely with EPA to maintain a common Canada

– United States approach to regulating GHG emissions for post
- 2018 MY vehicles and engines. This approach will build on the long history of regulatory

alignment between the two countries on vehicle emissions pursuant to the Canada

– United States Air Quality Agreement. 41 Environment Canada has also been of great assi stance during the development of this Phase 2 proposal. In particular, Environment Canada supported aerodynamic testing, and conducted chassis dy namometer emissions testing. (g ) Recommendations of the National Academy of Sciences In April 2010 as mandated by Congress in the Energy Independence and Security Act of 2007 (EI SA), the National Research Council (NRC) under the National Academ y of Sciences (NAS) issued a report to NHTSA and to Congress evaluating medium
- and heav y - dut y truck fuel efficiency imp rovement opportunities, titled “Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - duty Vehicles.” That NAS report was far reaching in its review of the technologies that were available and that might 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 included technologies that may not be available until 2020 or even further into the future. The report provided not only a valuable list of off the shelf technologies from which the agencies drew in developing the Phase 1 program, but also provided useful information the agencies have considered when developing this second phase of regulations. In April 2014, the NAS issued another report: “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium and Heav y - Duty Vehicles, Phase Two, First Report.” This study

outlines a number of recommendations to the U.S. Department of Transportation and NHTSA on technical and policy matters to consider when addressing the fuel efficiency of our nation’s medium
- and heavy
- duty vehicles. In particular, this report provided recommendations with respect to:

 The Greenhouse Gas Emission Model (GEM) simulation tool used by the agencies to assess compliance with vehicle standards  Regulation of trailers  Natural gas
- fueled engines and vehicles  Data collection on in
- use operation As described in Sections II, IV, and XII, the agencies are proposing to incorporate many of these re commendations into this proposed Phase 2 program, especiall y those recommendations relating to the GEM simulation tool and to trailers.

41 http://www.ijc.org/en_/Air_Quality__AgreementPage 34 of 850



### B. **Summary of Phase 1**  **Program (1)**  **EPA Phase 1**  **GHG Emission Standards and NHTSA Phase 1**  **Fuel Consumption Standards**  The EPA Phase 1 GHG mandatory standards commenced in MY 2014 and include increased stringency

for standards applicable to MY 2017 and later MY vehicles and engines. NHTSA’s fuel consumption standards are voluntary for MYs 2014 and 2015, due to lead time requirem ents in EISA, and apply on a mandatory

basis thereafter. They

also increase in stringency

for MY 2017. Both agencies have allowed voluntary earl y compliance starting in MY 2013 and e ncourage d manufacturer s ’ participation through credit incentives
. Given the complexity

of the heav y - dut y industry , the agencies divided the industry into three discrete categories for purposes of setting our respective Phase 1 standards

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

among trucks within each category
. The Phase 1 rule also include separate standards for the engines that power combination tractors and vocational vehicles. For each regulatory

category , the agencies adopt ed re lated but distinct program approaches reflecting the specific challenges in these segments. In the following paragraphs, we summarize briefl y EPA’s final GHG emission standards and NHTSA’s final fuel consumption standards for the three regulatory

categori es of heavy
- dut y vehicles and for the engines powering vocational vehicles and tractors
. See Sections III, V, and VI for additional details on the Phase 1 standards. To respect differences in design and typical uses that drive different technology soluti ons, the agencies segmented each regulatory class into subcategories. The category
- specific structure enabled the agencies to set standards that appropriately reflect the technology

available for each regulatory

subcategory

of vehicles and the engines for use in each type of vehicle. The Phase 1 program als o provided several flexibilities , as summarized in Section I .B(3)
. The agencies are proposing to base the Phase 2 standards on test procedures that differ from those used for Phase 1, including the revised GEM simulation tool. Significant revisions to GEM are discussed in Section II and the draft RIA Chapter 4, and other test procedures are discussed further in the draft RIA Chapter 3. It is important to note that due to these test procedure changes, the Phase 1 standards and the proposed Phase 2 standards are not directly comparable in an absolute sense . In particular, the proposed revisions to the 55 mph and 65 mph highway cruise cycles for tractors and vocational vehicles have the effect of making the cycles more challenging (albeit more representative of actual driving conditions). We are not proposing to apply thes e revisions to the Phase 1 program because doing so would significantly change the stringency

of the Phase 1 standards, for which manufacturers have already developed engineering plans and are now producing products to meet. Moreover, the agencies intend such changes to address a broader range of technologies not part of the projected compliance path for use in Phase 1. (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 - dut y sector, approximately two - thirds , due to their large payloads, their high annual miles traveled, and their major role in nationalPage 35 of 850

freight transport. These vehicles consist of a cab and engine (tractor o r combination tractor) and a detachable trailer. The primary manufacturers of combination tractors in the United States are Daimler Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the tractor manufacturers and Cummins (an independent engi ne manufacturer) also produce heavy
- dut y engines used in tractors. The Phase 1 standards require manufacturers to reduce GHG emissions and fuel consumption for these vehicles and engines , which we expect them to do through improvements in aerodyn amics and tires , reductions in tractor weight, reduction in idle operation, as well as engine
- based efficiency improvements. 42 The Phase 1 tractor standards differ depending on gross vehicle weight rating (GVWR) ( i.e. , whether th e 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.” The agencies created nine subcategories within the Class 7 and 8 combination tractor category reflecting combinations of these attributes. The agencies set Phase 1 standards for each of these subcategories beginning in MY 2014 , with more stringent standards following in MY 2017. 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 MY 2010 tractor and engine
. For Phase 1, manufacturers demonstrate compliance with the tractor CO 2 and fuel consumption standards using a vehicle simulation tool described in Section II. The tractor inputs to the simulation tool in Phase 1 are the aerody namic performance, tire rolling resistance, vehicle speed limiter, automatic engine shutdown, and weight reduction. The agencies have veri fied, through our own confirmatory testing, that the values inputs into the model by manufacturers are generall y correct. Prior to and after adopting the Phase 1 standards, the agencies worked with manufacturers to minimize impacts of this process on thei r normal business practices
. In addition to the final Phase 1 tractor - based standards for CO 2 , EPA adopted a separate standard to reduce leakage of hydrofluorocarbon ( HFC ) refrigerant from cabin air conditioning (A/C) sy stems from combination tractors, t o apply to the tractor manufacturer. This HFC leakage standard is independent of the CO 2 tractor standard. Manufacturers can choose technologies from a menu of leak
- reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance. Given that HFC leakage does not relate to fuel efficiency , NHTSA did not adopt corresponding HFC standards. (b ) Heavy
-Duty Pickup Trucks and Vans (Class 2b and 3) Heav y - dut y vehicles with a GVWR between 8,501 and 10,000 lb are classifi ed as Class 2b motor vehicles. Heavy
- dut y vehicles with a GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles. Class 2b and Class 3 heav y - dut y vehicles (referred to in

42 We note although the standards’ stringency is predicated on use of certain technologies, and the agencies’ assessed the cost of the rule based on the cost of use of those technologies, the standards can be met by any means. Put another way, the rules create a performance standard, and do not mandate any particular means of achieving that level of performance.Page 36 of 850

these rules as “HD pickups and vans”) together emit about 15 pe rcent of today ’s GHG emissions from the heav y - duty

vehicle sector. 43 The majority

of HD pickups and vans are 3⁄4
- ton and 1
- ton pickup trucks, 12
- and 15
- passenger vans , 44 and large work vans that are sold by vehicle manufacturers as complete vehicles, with no secondary manufacturer making substantial modifications prior to registration and use. These vehicles can also be sold as cab
- complete vehicles (i.e., incomplete vehicles that include complete or nearly complete cabs that are sold to secondary manufacturers)
. The majority of heav y - dut y pickups and vans are produced b y companies with major light
- dut y m arkets in the United States. Furthermore, th e 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 efficiency improvements. For these reasons, EPA and NHTSA concluded that it was appropriate to adopt GHG standards, expressed as grams per mile, and fuel consumption standards , expressed as gallons per 100 miles, for HD pickups and vans based on the whole vehicle ( including the engine), consistent with the way these vehicles have been regulated b y EPA for criteria pollutants and also consistent with the way their light
- dut y counterpart vehicles are regulated b y NHTSA and EPA . This complete vehicle approach adopted by

both agencies for HD pickups and vans was consistent with the recommendations of the NAS Committee in its 2010 Report. For the light
- dut y GHG and fuel econom y standards, the agencies based the emissions and fuel economy

targets on vehicle footprint (the wheelbase times the average track width). For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel economy target levels reflecting 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 have found that a work
- based metric would be a more appropriate attribute than the footprint attribute utilized in the light
- duty vehicle rulemaking, given that work
- based measures such as towing and payload capacities are critical elements of these vehicles’ functionality . EPA and NHTSA therefore adopted standards for HD pickups and vans based on a “work factor” attribute that c ombines their payload and towing capabilities, with an added adjustment for 4
- wheel drive vehicles. Each manufacturer’s fleet average Phase 1 standard is based on production volume
weighting of target standards for all vehicles, which in turn are based on each vehicle’s work factor. These target standards are taken from a set of curves (mathematical functions), specified in 40 CFR 1037.104 with separate curves for gasoline and diesel. 45 However, both gasoline and diesel vehicles in this category are includ ed in a single averaging set. EPA phased in the CO 2 standards gradually

starting in the 2014 MY, at 15
- 20
- 40
- 60
- 100 percent of the MY 2018

43 EPA MOVES M odel, http://www.epa.gov/otaq/models/moves/index.htm 44 Note that 12
- passenger vans are subject to the light
- duty standards as medium
- duty passenger vehicles (MDPVs) and are not subject to this proposal. 45 As explained in Section XII, EPA is proposing to recodify the Phase 1 requirements for pickups and vans from 40 CFR 1037.104 into 40 CFR part 86, which is also the regulatory part that applies for light
- duty vehicles.Page 37 of 850

standards stringency

level in MYs 2014
- 2015
- 2016
- 2017
- 2018, respectively . The phase
- in takes the form of a set of t arget curves, with increasing stringency in each MY. NHTSA allowed manufacturers to select one of two fuel consumption standard alternatives for MYs 2016 and later. The first alternative defined individual gasoline vehicle and diesel vehicle fuel consumpt ion target curves that will not change for MYs 2016
- 2018, and are equivalent to EPA’s 67
- 67
- 67
- 100 percent target curves in MYs 2016
- 2017
- 2018
- 2019, respectivel y. The second alternative defined target curves that are equivalent to EPA’s 40
- 60
- 100 percent target curves in MYs 2016
- 2017
- 2018, respectivel y. NHTSA allowed manufacturers to opt voluntarily into the NHTSA HD pickup and van program in MYs 2014 or 2015 at target curves equivalent to EPA’s target curves. If a manufacturer chose to opt in for one c ategory , they

would be required to opt in for all categories. In other words a manufacturer would be unable to opt in for Class 2b vehicles, but opt out for Class 3 vehicles. EPA also adopted an alternative phase
- in schedule for manufacturers wanting to h ave stable standards for model years 2016
- 2018. The standards for heav y - dut y pickups and vans, like those for light
- dut y vehicles, are expressed as set of target standard curves, with increasing stringency

in each model year. The final EPA standards for 2018 (including a separate standard to control air conditioning s ys tem leakage) represent an average per
- vehicle reduction in GHG emission s of 17 percent for diesel vehicles and 12 percent for gasoline vehicles (relative to pre
control baseline vehicles)
. The NHTSA standard will require these vehicles to achieve up to about 15 percent reduction in fuel consumption and greenhouse gas emissions by MY 2018 (relative to pre
- control baseline vehicles)
. Manufacturers demonstrate compliance based on entire vehi cle chassis certification using the same duty cycles used to demonstrate compliance with criteria pollutant standards. (c) Class 2b

- 8 Vocational Vehicles Class 2b
- 8 vocational vehicles inclu de a wide variety of vehicle types, and ser

ve a vast range of functions . Some examples include service for urban delivery , refuse hauling, utility service, dump, concrete mixing, transit service, shuttle service, school bus, emergency , motor homes, and tow trucks. In Phase 1, we define d Class 2b
- 8 vocational vehicle s as all heav y - dut y vehicles that are not included in either the h eavy- duty p ickup and v an category or the Class 7 and 8 tractor category . EPA ’s and NHTS A’s Phase 1 standards for this vocational vehicle category generall y appl y at the chassis manufacturer level. Class 2b
- 8 vocational vehicles and their engines emit approximately 20 percent of the GHG emissions and burn approximately 21 percent of the fuel consumed b y t oday ’s heavy
- dut y truck sector
. 46 The Phase 1 program for vocational vehicles has vehicle standards and separate engine standards, both of which differ based on the weight class of the vehicle into which the engine will be installed. T he vehicle weight class groups mirror those used for the engine standards
-- Classes 2b
- 5 ( light heav y - duty or LHD in EPA regulations) , Classes 6&7 ( medium heavy - dut y

46 EPA MOVES model, http://www.epa.gov/otaq/models/moves/index.htmPage 38 of 850

or MHD in EPA regulations) and Class 8 (heav y heav y - dut y or HHD in EPA regulations). Manufacturers demonstrate compliance with the Phase 1 vocational vehicle CO 2 and fuel consumption standards us ing a vehicle simulation tool described in Section II. The Phase 1 program for vocational vehicles limited the simulation tool inputs to tire rolling resistance. The model assumes the use of a ty pical representative, compliant engine in the simulation, r esulting in one overall value for CO 2 emissions and one for fuel consumption. E ngines use d in vocational vehicles are subject to separate Phase 1 engine
- based standards. Optional certification paths, for EPA and NHTSA, are also provided to enhance the fl exibilities for vocational vehicles . Manufacturers producing spark
- ignition (or gasoline) cab
complete or in complete vehicle s weighing over 14,000 pounds GVWR and below 26,001 pounds GVWR have the option to certify to the complete vehicle standards for he avy - dut y pickup trucks and vans rather than using the separate engine and chassis standards for vocational vehicles. (d ) Engine Standards The agencies established separate Phase 1 performance standards for the engines manufactured for use in vocational vehicle s and Class 7 and 8 tractors. 47 These engine standards vary depending on engine size linked to intended vehicle service class
. EPA’s engine
- based CO 2 standards and NHTSA’s engine
- based fuel consumption standards are being implemented using EPA’s existing test procedures and regulatory structure for criteria pollutant emissions from heav y - dut y engines. The agencies also finalized a regulatory alternative whereb y a manufacturer, for an interim period of the 2014
- 2016 MYs, would have the option to comply with a unique standard based on a three percent reduction from an individual engine model’s own 2011 MY baseline level. 48 (e) Manufacturers Excluded from the Phase 1 Standards Phase 1 t emporaril y deferred greenhouse gas emissions and fuel consumption standards for an y manufacturers of heav y - dut y engines, manufacturers of combination tractors, and chassis manufacturers for vocational vehicles that meet the “small business” size criteria set by the Small Business Administration (SBA). 13 CFR 121.201 def ines a small business by

the maximum number of emplo ye es; for example, this is currently 1,000 for heavy
- dut y vehicle manufacturing and 750 for engine manufacturing. In order to utilize this exemption, qualifying small businesses must submit a declaration to the agencies. See Section I. F. (1) (b) for a summary of how Phase 2 would apply

for small businesses.

47 See 76 FR 57114/2 explaining why NHTSA’s authority under the Energy Independence and Safety Act includes authority to establish separate engine stand ards. 48 See 76 FR 57144.Page 39 of 850

The agencies stated that they would 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 heavy
- dut y manufacturers. **(2) Costs and Benefits of the**  **Phase 1 Program**  Overall, EPA and NHTSA estimated that the Phase 1 HD National Program will cost the affected industry

about $8 billion, while saving vehicle owners fuel costs of nearl y $50 billion over the lifetimes of MY 2014
- 2018 vehicles. The agencies also estimated that the combined standards will re duce CO 2 emissions by about 270 million metric tons and save about 530 million barrels of oil over the life of MY 2014 to 2018 vehicles. The agencies estimated additional monetized benefits from CO 2 reductions, improved energy security , reduced time spent refueling, as well as possible disbenefits from increased driving accidents, traffic congestion, and noise. When considering all these factors, we estimated that Phase 1 of the HD National Program will yield $49 billion in net benefits to society over the lifetimes of MY 2014
- 2018 vehicles. EPA estimated the benefits of reduced ambient concentrations of particulate matter and ozone resulting from the Phase 1 program to range from $1.3 to $4.2 billion in 2030. 49 In total, we estimated the combined Phase 1 standards will reduce GHG emissions from the U. S. heav y - dut y fleet by approximately

76 million metric tons of CO 2 - equivalent annuall y b y 2030. Inits Environmental Impact Statement for the Phase 1 rule, NHTSA also quantified and/or discussed other potential impacts of the program, such as the health and environmental impacts associated with changes in ambient exposures to toxic air pollutants and the benefits associated with avoided non
- CO 2 GHGs (methane, nitrous oxide, and HFCs). **(3) Phase 1**  **Program Flexibi lities**  As noted above, the agencies adopted numerous provisions designed to give manufacturers a degree of flexibility in complying with the Phase 1 standards. These provisions , which are essentiall y identical in structure and function in NHTSA’s and EPA’s regulations, 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 fuel consumption levels, and at the same time. 50 Phase 1 included four primary t yp es of flexibility : averaging, banking, and trading (ABT) provisions; early

credits; advanced technology credits (including hy

brid po wertrains); and

49 Note: These calendar year benefits do not represent the same time frame as the model year lifetime benefits described above, so they are not additive. 50 NHTSA explained 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. 32902(h), which applies to light
- duty CAFE but not heavy
- duty fuel efficiency under 49 U.S.C. 32902(k).Page 40 of 850

innovative technology

credit provisions. The ABT provisions we re patterned on existing EPA and NHTSA ABT programs (including the light
- duty GHG and fuel economy

standards) and will allow a vehicle manufacturer to reduce CO 2 emission and fu el 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. As also noted above, f or HD pickups and vans, we adopted a fleet averaging sy stem very

similar to the light
- dut y GHG and CAFE fleet averaging s ys tem. Inboth programs, manufacturers are allowed to carry - forward deficits for up to three ye ars without penalty
. T he agencies provided in the ABT programs flexibility for situations in which a manufacturer is unable to avoid a negative credit balance at the end of the year. In such cases, manufacturers are not considered to be out of compliance unless they are unable to make up the difference in credits b y the end of the third subsequent model year. In total, the Phase 1 program divides the heav y - duty sector into 19 subcategories of vehicles. These su

bcategories are grouped into 9 averaging sets to provide greater opportunities in leveraging compliance. F or tractors and vocational vehicles, the fleet averaging sets are Classes 2b through 5, Classes 6 and 7, and Class 8 weight classes. For engines, th e fleet averaging sets are gasoline engines, light heav y - duty diesel engines, medium heavy
- dut y diesel engines, and heav y heavy
- dut y diesel engines. Complete HD pickups and vans (both spark
ignition and compression
- ignition) are the final fleet averaging set. As noted above, the agencies included a restriction on averaging, banking, and trading of credits between the various regulatory subcategories by

defining three HD vehicle averaging sets: l ight h eav y - d

ut y (C lasses 2b
- 5); m edium h eavy - d ut y (Class 6
- 7); and h eav y h eavy- d ut y (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 C lass 7 tractor. Also, a Class 8 vocational vehicle can exchange credits with a Class 8 tractor. However, we did not allow trading between engines and chassis. We similarly allowed for trading among engine categories only within an averaging set, of whic h there are four: spark
- ignition engines, compression
- ignition light heav y - duty engines, compression
- ignition medium heavy
- duty engines, and compression
- ignition heav y heav y - dut y engines. In addition to ABT, the other primary flexibility

provisions in th e Phase 1 program involve opportunities to generate earl y credits, advanced technology credits (including for use of hy brid powertrains), and innovative technology credits. 51 For the earl y credits and advanced technology

credits, the agencies adopted a 1.5 x multiplier , meaning that manufacturers would get 1.5 credits for each earl y credit and each advanced technology credit . In addition, advanced technology

credits for Phase 1 can be used any where within the heavy
- duty sector (including

51 Early credits are for engines and vehicles certified before EPA standards became mandatory, advanced technology credits are for hybrids and/or Rankine cycle engines, and innovative technology credits are for other technologies not in the 2010 fleet whose benefits are not reflected using the Phase 1 test procedures.Page 41 of 850

both vehicles and en gines). Put another way , as a means of promoting this promising technology , the Phase 1 rule does not restrict averaging or trading b y averaging set in this instance. For other vehicle or engine technologies that can reduce CO 2 and fuel consumpti on, but for which there do not ye t exist established methods for quantifying reductions, the agencies wanted to encourage the development of such innovative technologies, and therefore adopted special “innovative technology” credits. These innovative technology credits apply

to technologies that are shown to produce emission and fuel consumption reductions that are not adequatel y recognized on the Phase 1 test procedures and that we re not yet in widespread use in the heav y - dut y sector before MY 2010 . Manu facturers 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 technology credits is allowed o nl y among vehicles and engines of the same defined averaging set generating the credit, as described above. The credit multiplier likewise does not apply for innovative technology

credits. **(4) Implementation of Phase 1**  Manufacturers have already begun complying with the Phase 1 standards. In some cases manufacturers voluntarily chose to comply

early , before compliance was mandatory
. The Phase 1 rule allows manufacturers to generate credits for such earl y compliance. The market appears to be very ac cepting of the new technology , and the agencies have seen no evidence of “pre
- buy” effects in response to the standards. In fact sales have been higher in recent years than they were before Phase 1 began. Moreover, manufacturers’ compliance plans are taking advantage of the Phase 1 flexibilities, and we have ye t to see significant non
- compliance with the standards. **(5) Litigation on Phase 1 Rule**  The D.C. Circuit recently rejected all challenges to the agencies’ Phase 1 regulations. The court did not reac h the merits of the challenges, holding that none of the petitioners had standing to bring their actions, and that a challenge to NHTSA’s denial of a rulemaking petition could only

be brought in District Court. See Delta Construction Co. v. EPA, 2015 U.S. App. LEX IS 6780, F.3d (D.C. Cir. April 24, 2015). 

### C. **Summary of the Proposed Phase 2 Standards and Requirements** The agencies are proposing new standards that build on and enhance existing Phase 1 standards, as well as proposing the first ever standards for certain trailers used in combination with heav y - dut y tractors. Taken together, the proposed Phase 2 program would comprise a set of largel y technology
- advancing standards that would achieve greater GHG and fuel consumption savings than the Phase 1 program. As described in more detail in the following sections, the agencies are proposing these standards because, based on the information available at this time, we believe they

would best match our respective statutory authorities when considered in the context of available technology , feasible reductions of emissions and fuel consumption, costs, lead time, safety, and other relevant factors. The agencies request comment on all aspects of ourPage 42 of 850

feasibility anal ys is including projections of feasible mark et adoption rates and technological effectiveness for each technology
. The proposed Phase 2 standards would represent a more technology
- forcing 52 approach than the Phase 1 approach, predicated on use of both off
- the
- shelf technologies and emerging technolog ies that are not yet in widespread use. The agencies are proposing standards for MY 2027 that would likely

require manufacturers to make extensive use of these technologies. For existing technologies and technologies in the final stages of development, w e project that manufacturers would likely appl y them to nearl y all vehicles, excluding those specific vehicles with applications or uses that would prevent the technology from functioning properl y. We also project as one possible compliance pathway that m anufacturers could apply other more advanced technologies such as h yb rids and waste engine heat recovery s ys tems, although at lower application rates. Under Alternative 3, the preferred alternative, the agencies propose to provide ten years of lead time fo r manufacturers to meet these 2027 standards , which the agencies believe is adequate to implement the technologies industry could use to meet the proposed standards. For some of the more advanced technologies production prototy pe parts are not yet available, though they are in the research stage with some demonstrations in actual vehicles. 53 Additionally , even for the more developed technologies, phasing in more stringent standards over a longer timeframe may

help manufacturers to ensure better reliability of the technology

and to develop packages to work in a wide range of applications. Moving more quickl y, however, as in Alternative 4, would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions. As discussed later, the agencies are also proposing new standards in MYs 2 018 (trailers only), 2021, and 2024 to ensure manufacturers make steady progress toward the 2027 standards, thereb y achieving steady and feasible reductions in GHG emissions and fuel consumption in the ye ars leading up to the MY 2027 standards. Moving mor e quickly , however, as in Alternative 4, would lead to earlier and greater cumulative fuel and greenhouse gas savings. Providing additional lead time can often enable manufacturers to resolve technological challenges or to find lower cost means of meeting new regulatory standards, effectively

making them more feasible in either case. See generally NRDC v. EPA , 655 F. 2d 318, 329 (D.C. Cir. 1981). On the other hand, manufacturers and/or operators may incur additional costs if regulations require them to make changes to their products with less lead time than

52 In this context, the term “technology
- forcing” is used to distinguish standards that will effectively require manufacturers to develop new technologies (or to significantly improve technologies) from standards that can be met using off

- the
- shelf technology alone. Technology
- forcing standards do not require manufacturers to use any specific technologies. 53 “Prototype” as it is used here refers to technologies that have a potentially production
- feasible design that is expected to meet all performance, functional, reliability, safety, manufacturing, cost and other requirements and ob jectives that is being tested in laboratories and on highways under a full range of operating conditions, but is not yet available in production vehicles already for sale in the market.Page 43 of 850

manufacturers would normally have when bringing a new technology to the market or expanding the application of existing technologies. After developing a new technology , manufacturers ty picall y conduct extensive field tests to ensure its durability and reliability

in actual use. Standards that accelerate technology deploy ment can lead to manufacturers incurring additional costs to accelerate this development work, or can lead to manufacturers beginning production before such testing can be completed. Some industry stakeholders have informed EPA that when manufacturers introduced new emission control technologies (primarily diesel particulate filters) in response to the 2007 heav y - dut y engine standards they did not perform sufficient product development validation, which led to additional costs for operators when the technologies required repairs or other resulted in other operational issues in use . Thus, the issues of costs, lead time, and reliability are intertwined for the agencies’ determination of whether standards are reasonable. Another important consideration is the possibility of disrupting the market, such as might happen if we were to adopt standards that manufacturers respond to by applying a new technology

too suddenl y . Several of the heav y - duty vehicle manufacturers, fleets, and commercial truc k dealerships informed EPA that for fleet purchases that are planned more than a ye ar in advance, expectations of reduced reliability, increased operating costs, reduced residual value, or of large increases in purchase prices can lead the fleets to pull
- ahead by several months planned future vehicle purchases b y pre - buying vehicles without the newer technology . In the context of the Class 8 tractor market, where a relatively small number of larg e fleets ty pically purchase very

large volumes of tractors, such actions by a small number of firms can result in large swings in sales volumes. Such market impacts would be followed b y some period of reduced purchases that can lead to temporary layoffs at the factories producing the engines and vehicles, as well as at supplier factories , and disruptions at dealerships. Such market impacts also can reduce the overall environmental and fuel consumption benefits of the standards by delaying the rate at which the fleet turns over. See International Harvester v. EPA, 478 F. 2d 615, 634 (D.C. Cir. 1973)
. A number of industry stakeholders have informed EPA that the 2007 EPA heav y - dut y engine criteria pollutant standard resulted in this pull
- ahead phenomenon for the Class 8 tractor market. The agencies understand the potential impact that a pull
- ahead can have on American manufacturing and labor, dealerships, truck purchasers, and on the program’s environmental and fuel savings goals , and have taken steps in the design of the proposed program to avoid such disruption. These steps include the following :

 Providing considerable lead tim e  The standards will result in significantl y lower operating costs for vehicle owners (unlike the 2007 standard , which increased operating costs)  Phasing in the standards  Structuring the program so the industry will have a significant range of technology

choices to be considered for compliance, rather than the one or two new technologies the OEMs pursued in 2007  Allowing manufacturers to use emissions averaging, banking and trading to phase in the technology

even further We request comment on the sufficiency of the proposed Phase 2 structure, lead time, and stringency

to avoid market disruptions
. We note an important difference , however, betweenPage 44 of 850

standards for criteria pollutants, with gen erall y no attendant fuel savings , and the fuel consumption/GHG emission standards proposed today , which provide immediate and direct financial benefits to vehicle purchasers , who will begin saving money on fuel costs as soon as they begin operating the vehicles. It would seem logical, therefore, that vehicle purchasers (and manufacturers) would weigh those significant fuel savings against the potential for increased costs th at could result from applying fuel
- saving technologies sooner than they might otherwise choose in the absence of the standards. Given that fuel savings increase (and payback periods generall y decrease) as the standards increase in stringency , it would als o seem more likel y that the expected higher fuel savings would outweight the higher costs in manufacturers’ and purchasers’ calculations. As discussed in the Phase 1 final rule, NHTSA has certain statutory considerations to take into account when determining feasibility of the preferred alternative. 54 The Energy Independence and Security Act (EISA) states that NHTSA (in consultation with EPA and the Secretary of Energy) shall develop a commercial medium
- and heav y - duty fuel efficiency program designed “to achieve the maximum feasible improvement.” 55 Although there is no definition of maximum feasible standards in EI SA, NHTSA is directed to consider three fac tors when determining what the maximum feasible standards are. Those factors are the extent to which the standards are “appropriate , cost - effectiveness, and technological feasible ,” 56 which modify “feasible” beyond its plain me aning of “capable of being done.” NHTSA has the broad discretion to weigh and balance the aforementioned factors in order to accomplish EI SA’s mandate of determining maximum feasible standards. The fact that the factors may

often be at odds gives NHTSA significant discretion to decide what weight to give each of the competing factors, policies and concerns and then determine how to balance them

— as long as NHTSA’s balancing does not undermine the fundamental purpose of the EISA : energy conservation , and a s long as that balancing rea s onabl y accommodates “ conflicting policies that were committed to the agency ’s care by the statute.” 57 EPA also has significant discretion in assessing, weighing, and balancing the relevant statutory criteria . Section 202(a)( 2) of the Clean Air Act requires that the standards “take effect after such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period. ” This language affords EPA considerable discretion in how to weight the critical statutory factors of emission reductions, cost, and lead time. 76 FR 57129
- 130. Section 202 (a) also allows (although it does not compel) EPA to adopt technolo gy - forcing standards. Id. at 57130. Giving due consideration to the agencies’ respective statutory criteria discussed above, the agencies are proposing these technology
- forcing standards for MY 2027. The agencies

54 75 FR 57198. 55 49 U.S.C 32902(k). 56 Id
. 57 Center for Biological Diversity v. National Highway Traffic Safety Admin ., 538 F.3d 1172, 1195 (9th Cir. 2008).Page 45 of 850

nevertheless recognize that there is some uncertainty in projecting costs and effectiveness, especiall y for those technologies not yet widel y available, but believe that the thresholds proposed for consideration account for realistic projectio ns of technological development discussed throughout this notice and in the draft RIA. T he agencies are requesting comment on the alternatives described in Section X below. These alternatives range from Alternative 1 (which is a no
- action alternative th at serves as the baseline for our cost and benefit anal ys es) to Alternative 5 (which includes the most stringent of the alternative standards analyzed by the agencies). The assessment of these different alternatives considers the importance of allowing manufacturers sufficient flexibility and discretion while achieving meaningful fuel consumption and GHG emissions reductions across vehicle ty pes. The agencies look forward to receiving comments on questions of feasibility and long
- term projections of costs and effectiveness
. As discussed throughout this document, the agencies believe Alternative 4 has potential to be the maximum feasible alternative, however, based on the evidence currentl y before us, the agencies have outstanding questions regarding relati ve risks and benefits of that option in the timeframe envisioned
. Alternative 3 is generally designed to achieve the vehicle levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with two to three years of additional lead
- t ime

– i.e., the Alternative 3 standards would end up in the same place as the Alternative 4 standards, but two to three years later, meaning that manufacturers could, in theory , apply new technology

at a more gradual pace and with greater flexibility as di scussed above. H owever, Alternative 4 would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions. In the sections that follow, the agencies have closely examined the potential feasibility of Alternative 4 for each subcategory
. The agencies may consider establishing final fuel efficiency and GHG standards in whole or in part in the Alternative 4 timeframe if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectivel y. The agencies seek comment on the fea sibility of Alternative 4, whether for some or for all segments, including empirical data on its appropriateness, cost
- effectiveness, and technological feasibility
. The agencies also note the possibility of adoption in MY 2024 of a standard reflecting dep loy ment of some, rather than all, of the technologies on which Alternative 4 is predicated. It is also possible that the agencies could adopt some or all of the proposal (Alternative 3) earlier than MY 2027, but later than MY 2024, based especiall y on lea d time considerations. Any such choices would involve a considered weighing of the issues of feasibility of projected technology

penetration rates, associated costs, and necessary lead time, and would consider the information on available technologies, th eir level of performance and costs set out in the administrative record to this proposal. Sections II through VI of this notice explain the consideration that the agencies took into account in considering options and proposing a preferred alternative based on balancing of the statutory factors under CAA Section 202 (a)(1) and (2), and under 49 U.S.C. Section 32902 (k) of EI SA. **(1) Carryover from Phase 1 Program and Proposed Compliance Changes**  Phase 2 will carry

over many

of the compliance approaches develope d for Phase 1, with certain changes as described below. Readers are referred to the proposed regulatory text forPage 46 of 850

much more detail. Note that some of these provisions are being carried over with revisions or additions (such as those needed to address trai lers). (a ) Certification NHTSA and EPA are proposing to appl y the same general certification procedures for Phase 2 as are currentl y being used for certifying to the Phase 1 standards. The agencies, however, are proposing changes to the simulation tool used for the vocational vehicle, tractor and trailer standards that would allow the simulation tool to more specificall y reflect improvements to transmissions and drivetrains. 58 Rather than the model using default values for transmissions and drivetrains, m anufacturers would enter measured or tested values as inputs reflecting performance of their actual transmission and drivetrain technologies. The agencies appl y essentially the same process for certifying tractors and vocational vehicles, and propose lar gel y to appl y it to trailers as well . The Phase 1 certification process for engines used in tractors and vocational vehicles was based on EPA’s process for showing compliance with the heavy
- dut y engine criteria pollutant standards, and the agencies propos e to continue it for Phase 2. Finally , we also propose to continue certifying HD pickups and vans using the Phase 1 vehicle certification process, which is very similar to the light
- dut y vehicle certification process. EPA is also proposing to clarify prov isions related to confirming a manufacturer’s test data during certification (i.e., confirmatory testing) and verifying a manufacturer’s vehicles are being produced to perform as described in the application for certification (i.e., selective enforcement a

udits or SEAs). The confirmatory testing provisions for engines and vehicles are in 40 CFR 1036.235 and 1037.235. The SEA provisions are in 40 CFR 1036.301 and 1037.301. Note that these clarifications would also apply for Phase 1 engines and vehicles. EPA welcomes suggestions for alternative approaches that would offer the same degree of compliance assurance for GHGs as these programs offer with respect to criteria pollutants. (b ) Averaging, Banking and Trading (ABT) The Phase 1 ABT provisions we re patterne d on established EPA ABT programs that have proven to work well. In Phase 1, the agencies determined this flexibility would provide an opportunity

for manufacturers to make necessary technological improvements and reduce the overall cost of the program wi thout compromising overall environmental and fuel econom y objectives. We propose to generall y continue this Phase 1 approach with few revisions for vehicles regulated in Phase 1. As described in Section IV, we are proposing a more limited averaging program for trailers. The agencies see the ABT program as playing an important role in making the proposed technology
- advancing standards feasible, by help ing to address many issues of technological challenges in the context of lead time and cost s . It provide s

58 As described in Section IV, although the proposed trailer standards were developed using the simulation tool, the agencies are proposing a co mpliance structure that does not require trailer manufacturers to actually use the compliance tool.Page 47 of 850

manufacturers flexibilities that assist the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more aggressive pace than without ABT. ABT programs are more than just add
- on provisions included to help reduce costs, and can be, as in EPA’s Title II programs generally , an integral part of the standard setting itself. A well
- designed ABT program can also provide important environmental and energy securit y benefits b y increasing the speed at which new technologies can be implemented (which means that more benefits accrue over time than with later
- commencing standards) and at the same time increase flexibility

for, and reduce costs to, the regulated industry and ultimately consume rs . W ithout ABT provisions (and other related flexibilities), standards would typically have to be numericall y less stringent since the numerical standard would have to be adjusted to accommodate issues of feasibility and available lead time. See 75 FR at 25412
- 13. By offering ABT credits and additional flexibilities the agencies can offer progressively more stringent standards that help meet our fuel consumption reduction and GHG emission goals at a faster and more cost - effective pace
. 59 (i ) Carryover of Phase 1 Credits and Credit Life The agencies propose to continue the five
- ye ar credit life provisions from Phase 1 , and are not proposing an y additional restriction on the use of banked Phase 1 credits in Phase 2. In other words, Phase 1 credits in MY2019 co uld be used in Phase 1 or in Phase 2 in MYs 2021
- 2024. Although, as we have already noted, the numerical values of proposed Phase 2 standards are not directly

comparable in an absolute sense to the existing Phase 1 standards (in other words, a given vehi cle would have a different g/ton
- mile emission rate when evaluated using Phase 1 GEM than it would when evaluated using Phase 2 GEM), we believe that the Phase 1 and Phase 2 credits are largely equivalent. Because the standards and emission levels are included in a relative sense (as a difference), it is not necessary for the Phase 1 and Phase 2 stand ards to be directly

equivalent in an absolute sense in order for the credits to be equivalent
. This is best understood by examining the way in which credits are calculated. For example, the credit equations in 40 CFR 1037.705 and 49 CFR 535.7 calculate cr edits as the product of the difference between the standard and the vehicle’s emission level (g/ton
- mile or gallon/ 1,000 ton
- mile ), the regulatory payload (tons), production volume, and regulatory useful life (miles). Phase 2 would not change payloads, production volumes, or useful lives for tractors, medium and heav y heavy
- dut y engines, or medium and heav y heav y - dut y vocational vehicles. However, EPA is proposing to change the regulatory useful lives of HD pickup s and van s, light heav y - dut y vocational vehicles, spark
- ignited engines, and light heavy
- dut y compression
ignition engines. Because useful life is a factor in determining the value of a credit, the agencies are proposing interim adjustment factors to ensure banked credits maintain their value in the transition from Phase 1 to Phase 2
.

59 See NRDC v. Thomas, 805 F. 2d 410, 425 (D.C. Cir. 1986) (upholding averaging as a reasonable and permissible means of implementing a statutory provision requiring technology
- forcing standards).Page 48 of 850

For Phase 1, EPA aligned the useful life for GHG emissions with the useful life already i n place for criteria pollutants. After the Phase 1 rule s w ere finalized, EPA updated the usef ul life for criteria pollutants as part of the Tier 3 rulemaking. 60 The new useful life implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs first. This is the same useful life proposed in Phase 2 for HD pickup s and van s, light heav y - duty vocational vehicles, spark
- ignited engines, and light heav y - dut y compression
- ignition engines. The numerical value of the adjustment factor for each of these regulatory categories depends on the Phase 1 useful life. These are described in detail below i n this preamble in Sections II, V, and VI. Without th ese adjustment factor s the proposed change s in useful life would effectivel y result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the chang e s in the useful life
. With the relativel y flat deterioration generall y associated with CO 2 , EPA does not believe the proposed change s in useful life would significantl y affect the feasibility of the proposed Phase 2 standards. EPA requests comments on the proposed change s to useful life. We note that the primary

purpose of allowing manufacturers to bank credits is to provide flexibility in managing transitions to new standards. The five
- year credit life is substantial, and would allow credits generated in either Phase 1 or earl y i n Phase 2 to be used for the intended purpose. The agencies believe longer credit life is not necessary to accomplish this transition. Restrictions on credit life serve to reduce the likelihood that any manufacturer would be able to use banked credits to disrupt the heav y - dut y vehicle market in an y given ye ar b y effectivel y limiting the amount of credits that can be held. Without this limit, one manufacturer that saved enough credits over many years could achieve a significant cost advantage by using all the credits in a single year. The agencies believe, subject to consideration of public comment, that allowing a five ye ar credit life for all credits, and as a consequence allowing use of Phase 1 credits in Phase 2, creates a ppropriate flexibility

and appropriatel y facilitates a smooth transition to each new level of standards. Although we are not proposing an y additional restrictions on the use of Phase 1 credits, we are requesting comment on this issue. Early indications suggest that positive market reception to the Phase 1 technologies could lead to manufacturers accumulating credit surpluses that could be quite large at the beginning of the proposed Phase 2 program. This appears especiall y likel y for tractors. The agencies are specificall y requesting comment on the likelihood of this happening, and whether an y regulatory ch anges would be appropriate in response. For example, should the agencies limit the amount of credits that could be carried over from Phase1 or limit them to the first year or two of the Phase 2 program? Also, if we determine that large surpluses are likel y, how should that factor into our decision on the feasibility of more stringent standards in MY 2021? (ii) Averaging Sets EPA has historically

restricted averaging to some extent for its HD emission standards to avoid creating unfair competitiv e advantages or environmental risks due to credits being inconsistent. Under Phase 1, averaging, banking and trading can onl y occur within and between

60 79 FR 23492, April 28, 2014 and 40 CFR 86.1805
- 17.Page 49 of 850

specified “averaging sets” (with the exception of credits generated through use of specified advanced te chnologies). We propose to continue this regime in Phase 2, to retain the existing vehicle and engine averaging sets, and create new trailer averaging sets. We also propose to continue the averaging set restrictions from Phase 1 in Phase 2. These averaging sets for vehicles are:

 Complete pickups and vans  Other light heav y - dut y vehicles (Classes 2b
- 5)  Medium heav y - dut y vehicles (Class 6
- 7)  Heav y heav y - dut y vehicles (Class 8)  Long dry

van trailers  Short dry

van trailers  Long refrigerated trailers  Short refrigerated trailers We also propose not to allow trading between engines and chassis, even within the same vehicle class. Such trading would essentially result in double counting of emission credits, because the same engine technology

would likely generate credits relative to both standards. We similarly would limit trading among engine categories to trades within the designated averaging sets:

 Spark
- ignition engines  Compression
- ignition light heav y - dut y engines  Compression
- ignition medium heavy
- duty engines  Compression
- ignition heavy heavy
- dut y engines The agencies continue to believe that restricting trading to within the same eight classes would provide adequate opportunit ies for manufacturers to make necessary technological improvements and to reduce the overall cost of the program without compromising overall environmental and fuel efficiency objectives, and is therefore appropriate and reasonable under EPA’s authority

and maximum feasible under NHTSA’s authority , respectively
. We do not expect emissions from engines and vehicles

– when restricted by weight class

– to be dissimilar. We therefore expect that the lifetime vehicle performance and emissions levels will be very similar across these defined categories, and the estimated credit calculations will fairly ensure the expected fuel consumption and GHG emission reductions. We continue to believe, subject to consideration of public comment, that the Phase 1 averaging sets create the most flexibility that is appropriate without creatin g an unfair advantage for manufacturers with erraticall y integrated portfolios, including engines and vehicles. See 76 FR 57240. The agencies committed in Phase 1 to seek public comment after credit trading begins with manufacturers certifying in 2014 on whether broader credit trading is more appropriate in developing the next phase of HD regulations (76 FR 57128, September 15, 2011). The 2014 model year end of year reports will become available to the agencies in mid
- 2015. Therefore, the agencies w ill provide information at that point. We welcome comment on averaging set restrictions. The agencies propose to continue this carry forward provision for phase 2 for the same reasons.Page 50 of 850

(iii) Credit Deficits The Phase 1 regulations allow manufacturers to carry - forward deficits for up to three ye ars without penalt y . This is an important flexibility because the program is designed to address the diversity

of the heav y - dut y industry by allowing manufacturers to sell a mix of engines or vehicles that have very dif ferent emission levels and fuel efficiencies. Under this construct, manufacturers can offset sales of engines or vehicles not meeting the standards by selling others (within the same averaging set) that are much better than required. However, in any give n year it is possible that the actual sales mix will not balance out and the manufacturer may be short of credits for that model year. The three year provision allows for this possibility and creates additional compliance flexibility to accommodate it. (iv) Ad vanced Technology Credits At this time, the agencies believe it is no longer appropriate to provide extra credit for the technologies identified as advanced technologies for Phase 1, although we are requesting comment on this issue. The Phase 1 advanced t echnology credits were adopted to promote the implementation of advanced technologies, such as hy brid powertrains, Rankine cycle engines, all
- electric vehicles, and fuel cell vehicles (see 40 CFR 1037.150(i)). As the agencies stated in the Phase 1 final r

ule, the Phase 1 standards were not premised on the use of advanced technologies but we expected these advanced technologies to be an important part of the Phase 2 rulemaking (76 FR 57133, September 15, 2011). The proposed Phase 2 heavy
- duty engine and ve hicles standards are premised on the use of some advanced technologies, making them equivalent to other fuel
- saving technologies in this context. We believe the Phase 2 standards themselves would provide sufficient incentive to develop them. We request c omment on this issue, especially with respect to electric vehicle, plug
- in hy brid, and fuel cell technologies. Although the proposed standards are premised on some use of Rankine cycle engines and hy brid powertrains, none of the proposed standards are bas ed on projected utilization of the use of the other advanced technologies. (Note that the most stringent alternative is based on some use of these technologies ). Commenters are encouraged to consider the recently

adopted light
- duty

program, which inclu des temporary incentives for these technologies. (c) Innovative Technology and Off

- Cycle Credits The agencies propose to largel y continue the Phase 1 innovative technology program but to redesignate it as an off
- cycle program for Phase 2. In other words, beginning in MY 2021 technologies that are not fully accounted for in the GEM simulation tool, or by compliance dy namometer testing would be considered “ off
- cy cle ” , including those technologies that may no l onger be considered innovative technologies. However, we are not proposing to appl y this flexibility to trailers (which were not part of Phase 1) in order to simplify the program for trailer manufacturers. T he agencies propose to maintain that, i n order f or a manufacturer t o receive credits for Phase 2, the off

- cycle technology would still need to meet the requirement that it was not in common use prior to MY 2010. Although, we have not identified specific off
- cycle technologiesPage 51 of 850

at this time that should b e excluded, we believe it may be prudent to continue this requirement to avoid the potential for manufacturers to receive windfall credits for technologies that they were already using before MY 2010. Nevertheless, the agencies seek comment on whether off
- cycle technologies in the Phase 2 program should be limited in this way . In particular, the agencies are concerned that because the proposed Phase 2 program would be implemented MY 2021 and may extend beyond 2027, the agencies and manufacturers may have difficulty i n the future determining whether an off
- cycle technology

was in common use prior to MY 2010. Moreover, because we have not identified a single off
- cycle technology

that should be excluded by this provision at this time, we are concerned that this approach may create an unnecessary

hindrance to the off
- cycle program. Manufacturers would be able to carry over an innovative technology credit s from Phase 1 into Phase 2 , subject to the same restrictions as other credits . Manufacturers would also be able to carry over the improvement factor (not the credit value) of a technology , if certain c riteria were met. The agencies would require documentation for all off
- cycle requests similar to those required b y EPA for its light
- dut y GHG program. Additionally , NHTSA would not grant an y off
- cy cle credits for crash avoidance technologies. NHTSA would also require manufacturers to consider the safety of off
- cycle technologies and would request a safety assessment from the manufacturer for all off
- cyc le technologies. The agencies seek comment on these proposed changes , as well as the possibility of adopting aspects of the light
- dut y off
- cycle program. (d ) Alternative Fuels The agencies are proposing to largely continue the Phase 1 approach for engines an d vehicles fueled b y fuels other than gasoline and diesel. 61 Phase 1 engine emission standards applied uniquely

for gasoline
- fueled and diesel
- fueled engines. The regulations in 40 CFR part 86 implement these distinctions for alternative fuels by dividing engines into Otto
- cycle and Diesel
- cycle technologies based on the combustion cycle of the engine. The agencies are, however, proposing a small change that is described in Section II. Under the proposed change, we would require manufacturers to divide their natural gas engines into primary intended service classes, like the current requirement for compression
- ignition engines. An y alternative fuel
engine qualifying as a medium heavy
- dut y engine or a heav y heav y - duty engine would be subject to all the em ission standards and other requirements that appl y to compression
- ignition engines. Note that this small change in approach would also apply with respect to EPA’s criteria pollutant program. We are also proposing that the Phase 2 standards apply exclusive ly

at the vehicle tailpipe. That is, compliance is based on vehicle fuel consumption and GHG emission reductions, and

61 See Section I. F. (1) (a) for a summary of certain specific changes we are proposing or considering for natural gas
fueled engines and vehicles.Page 52 of 850

does not reflect an y so - called lifecycle emission properties. The agencies have explained why it is reasonable that the heavy dut y stand ards be fuel neutral in this manner. See 76 FR 57123; see also 77 FR at 51705 (Aug. 24. 2012) and 77 FR at 51500 (Aug. 27, 2012). In particular, EPA notes that there is a separate, statutorily
- mandated program under the Clean Air Act which encourages use of renewable fuels in transportation fuels, including renewable fuel used in heav y - dut y diesel engines. This program considers lifecycle greenhouse gas emissions compared to petroleum fuel. NHTSA notes that the fuel efficiency standards are necessarily tailpipe
- based, and that a lifecycle approach would likely render it impossible to harmonize the fuel efficiency

and GHG emission standards, to the great detriment of our goal of achieving a coordinated program . 77 FR 51500
- 501; see also 77 FR 51705 (similar finding by EPA) ; see also section I.F. (1) (a) below
. One consequence of the tailpipe
- based approach is that the agencies are propos ing to treat vehicles powered b y el ectricity the same as in Phase 1
. In Phase 1, EPA treated all electric vehicl es as having zero emissions of CO 2 , CH 4 , and N 2 O (see 40 CFR 1037.150(f)). Similarly , NHTSA adopted regulations in Phase 1 that set the fuel consumption standards based on the fuel consumed b y the vehicle. The agencies also did not require emission testi ng for electric vehicles in Phase 1. The agencies considered the potential unintended consequence of not accounting for upstream emissions from the charging of heav y - duty electric vehicles. In our reassessment for Phase 2, we have not found any all
- electric heav y - duty

vehicles that have certified by 2014. As we look to the future, we project very limited adoption of all
- electric vehicles into the market. Therefore, we believe that this provision is still appropriate. Unlike the 2017
- 2025 light
- dut y rul e, which included a cap whereb y upstream emissions would be counted after a certain volume of sales (see 77 FR 62816
- 62822 ), we believe there is no need to propose a cap for heav y - dut y vehicles because of the small likelihood of significant production of EV technologies in the Phase 2 timeframe. We welcome comments on this approach. 62 Note that we also request comment on upstream emissions for natural gas in Section XI. (e) Phase 1 Interim Provisions EPA adopted several flexibilities for the Phase 1 program (40 CFR 1036.150 and 1037.150) as interim provisions. Because the existing regulations do not have an end date for Phase 1, most of these provisions did not have an explicit end date. NHTSA adopted similar provisions. With few exceptions, the agencies a re proposing not to appl y these provisions to Phase 2. These will generally remain in effect for the Phase 1 program. In particular, the agencies note that we do not propose to continue the blanket exemption for small manufacturers. Instead, the agencie s propose to adopt narrower and more targeted r elief. **(2) Proposed Phase 2 Standards**  This section briefl y summarizes the proposed Phase 2 standards for each category and identifies the technologies that the agencies project would be needed to meet the standard s.

62 See also Section I. C. (1) (b)(iv) above (soliciting comment on need for advanced technology incentive credits for heavy duty EVs).Page 53 of 850

Given the large number of dif ferent regulatory

categories and model ye ars for which separate standards are being proposed, the actual numerical standards are not listed. Readers are referred to Sections II through IVfor the tables of proposed standards. (a ) Summary of the Proposed Engine Standards The agencies are proposing to continue the basic Phase 1 structure for the Phase 2 engine standards. There would be separate standards and test cycles for tractor engines, vocational diesel engines, and vocatio nal gasoline engines. However, as described in Section II, we are proposing a revised test cycle for tractor engines to better reflect actual in
- use operation. For diesel engines, the agencies are proposing standards for MY 2027 requiring reduction in CO 2 emissions and fuel consumption of 4.2 percent better than the 2017 baseline. 63 We are also proposing standards for MY 2021 and MY 2024, requiring reductions in CO 2 emissions and fuel consumption of 1.5 to 3.7 percent better than the 2017 baseline. The agencies project that these reductions would be feasible based on technological changes that would improv e combustion and reduce ene rgy losses. For most of these imp rovements, the agencies project manufacturers will begin applying them to about 50 percent of their heavy
- duty engines by

2021, and ultimately

appl y them to about 90 percent of their heav y - dut y engines by 2024. However, for some of these improvements we p roject more limited application rates. In particular, we project a more limited use of waste exhaust heat recovery s ys tems in 2027, projecting that about 10 percent of tractor engines will have turbo
- compounding s ys tems, and an additional 15 percent of tr actor engines would employ Rankine
- cycle waste heat recovery
. We do not project that turbo
- compounding or Rankine
- cycle waste heat recovery technology

will be utilized in vocational engines. Although we see great potential for waste heat recovery sy stems to achieve significant fuel savings and CO 2 emission reductions , we are not projecting that the technology could be available for more wide
- spread use in this time frame. For gasoline vocational engines, we are n ot proposing new more stringent engine standards. Gasoline engines used in vocational vehicles are generally the same engines as are used in the complete HD pickup s and vans in the Class 2b and 3 weight categories. Given the relativel y small sales volum es for gasoline
- fueled vocational vehicles, manufacturers typicall y cannot afford to invest significantly in developing separate technology for these vocational vehicle engines. Thus, we project that vocational gasoline engines would include the same technology

as would be used to meet the pickup and van chassis standards, and this would result in some real world reductions in CO 2 emissions and fuel consumptio n. Although it is difficult at this time to project how much improvement would be observed during certification testing, it seems likely

that these improvements would reduce measured CO 2 emissions and fuel consumption by

about one percent . Therefore, we are requesting comment on finalizing a Phase 2 standard of 621 g/hp
- hr for gasoline engines (i.e., one percent more stringent than the 2016 Phase 1 standard of 627 g/hp
- hr) in MY 2027
. We note that the proposed MY 2027 vehicle standards for gasoline
- fueled vocational vehicles are predicated in part on the use of advanced

63 Phase 1 standards for diesel engines will be fully phased
- in by MY 2017.Page 54 of 850

friction reduction techn ology with effectiveness over the GEM cycles of about one percent. We also request comment on whether not proposing more stringent standards for gasoline engines would create an incentive for purchasers who would have otherwise chosen a diesel vehicle to instead choose a gasoline vehicle.Page 55 of 850

**Table I**  **- 2**  **Summary of Phase 1 and Proposed Phase 2 Requirements for Engines in Com** **bination Tractors and Vocational Vehicles**  **Phase 1 Program Alternative 3**  **- 2027**  **(proposed standard) Alternative 4** 

**– 2024 (also**  **under consideration)**

Covered in this category Engines installed in tractors and vocational chassis. Share of HDV fuel consumption and GHG emissions Com bination tractors and vocational vehicles account for approximately 85 percent of fuel use and GHG emissions in the medium and heavy duty truck sector. Per vehicle fuel consumption and CO 2 im provement 5%
- 9% improvement over MY

2010 baseline, depending vehicle application. Im provements are in addition to im provements from tractor and vocational vehicle standards. 4% improvement over MY 2017 for diesel engines. Note that im provements are captured in complete vehicle tractor and vocational vehicle standards, so that engine improvements and the vehicle improvement shown below are not additive.
Form of the standard EPA: CO 2 grams/horsepower
- hour and NHTSA: gallons of fuel/horsepower - hour Example t echnology options available to he lp manufacturers meet standards Com bustion, air handling, friction and emissions after
treatment technology im provements Further technology improvements and increased use of all Phase 1 technologies, plus waste heat recovery systems for tractor engines (e .g., turbo
- com pound and Rankine
- cycle ) Flexibilities ABT program which allows emissions and fuel consumption credits to be averaged, banked, or traded (five year credit life )
. Manufacturers allowed to carry - forward credit deficits for up to three model years. Interim incentives for advanced technologies, recognition of innovative (off

- cycle) technologies not accounted for by the HD Phase 1 test procedures, and credits for certifying early. Same as Phase 1, except no advanced technology incentives. Adju stment factor of 1. 36 proposed for credits carried forward from Phase 1 to Phase 2 for SI and LHD CI engines due to proposed change in useful life
.

(b ) Summary of the Proposed Tractor Standards As explained in Section III, the agencies are proposing to larg el y continue the Phase 1 tractor program but to propose new standards. The tractor standards proposed for MY 2027 would achieve up to 24 percent lower CO 2 emissio ns and fuel consumption than a 2017 model ye ar Phase 1 tractor
. The agencies project that the proposed 2027 tractor standards could be met through improvements in the:Page 56 of 850  Engine 64 (including some use of waste heat recovery sy stems)  Transmission  D riveline  A erodynamic design  Tire rolling resistance  Idle performance  O ther accessories of the tractor. The agencies’ evaluation shows that some of these technologies are available today , but have very low adoption rates on current vehicles, while others will require some lead time for development. The agencies are proposin g to enhance the GEM vehicle simulation tool to recognize these technologies, as described in Section II.C. We have also determined that there is sufficient lead time to introduce many of these tractor and engine technologies into the fleet at a reasonable cost starting in the 2021 model year. T he proposed 20 21 model year standards for combination tractors and engines would achieve up to 13 percent lower CO 2 emissions and fuel consumption than a 2017 model year Phase 1 tractor, and the 2024 model year stan dards would achieve up to 20 percent lower CO 2 emissions and fuel consumption
.

64 Althou gh the agencies are proposing separate engine standards and separate engine certification, engine im provements would also be reflected in the vehicle certification process. Thus, it is appropriate to also consider engine improvements in the context of the vehicle standards.Page 57 of 850

**Table I**  **- 3**  **Summary of Phase 1 and Proposed Phase 2 Requirements for Class 7 and Class 8 Combination**  **Tractors Phase 1 Program**  **Alternative 3 -**  **2027 (proposed standard)**  **Alternative 4**

**– 2024 (also**  **under consideration)**

Covered in this category Tractors that are designed to pull trailers and move freight. Share of HDV fuel consumption and GHG emissions Com bination tractors and their engines account for approximately two thirds of fuel use and GHG emissions in the medium and heavy duty truck sector. Per vehicle fuel consumption and CO 2 im provement 10%
- 23% improvement over MY

2010 baseline, depending on tractor category. Improve ments are in addition to improvements from engine standards. 18%
- 24% improvement over MY 2017 standards

Form of the standard EPA: CO 2 grams/ton payload mile and NHTSA: gallons of fuel/1,000 ton payload mile Example t echnology options available to help manufacturers meet standards Aerodynamic drag im provements; low rolling resistance tires; high strength steel and aluminum weight reduction; extended idle reduction; and speed limiters Further technology improvements and increased use of all Phase 1 technologies, plus engine improvements, improved and automated transmissions and axles, powertrain optimization, tire inflation systems, and predictive cruise control (depending on tractor type) Flexibilities ABT program which allows emissions and fue l consumption credits to be averaged, banked, or traded (five year credit life )
. Manufacturers allowed to carry - forward credit deficits for up to three model years. Interim incentives for advanced technologies, recognition of innovative (off

- cycle) techn ologies not accounted for by the HD Phase 1 test procedures, and credits for certifying early. Same as Phase 1, except no extra credits for advanced technologies or early certification.

(c) Summary of the Proposed Trailer Standards This NPRM proposes a set of GHG emission and fuel consumption standards for manufacturers of new trailers that are used in combination with tractors that would significantl y reduce CO 2 and fuel consumption from combination tractor
- trailers nationwide over a period of several ye ars. As described in Section IV, there are numerous aerodynamic and tire technologies available to manufacturers to accomplish these proposed standards
. For the most part, these technologies have already been introduced into the mar ket to some extent through EPA’s voluntary SmartWay

program. However, adoption is still somewhat limited. The agencies are propos ing incremental levels of Phase 2 standards that would apply beginning in MY 2018 and be fully phased
- in by

2027. These standards are predicated on use ofPage 58 of 850

aerodynamic and tire improvements, with trailer OEMs making incrementally greater improvements in MYs 2021 and 2024 as standard stringency increases in each of those model ye ars. EPA’s GHG emission standards would be mandatory beginning in MY 2018, while NHTSA’s fuel consumption standards would be voluntary beginning in MY 2018, and be mandatory

beginning in MY 2021. As described in Section XV.D and Chapter 12 of the draft RIA, the agencies are proposing special provisions to minimize the impacts on small trailer manufacturers. These provisions have been informed by and are largel y consistent with recommendations coming from the SBAR Panel that EPA conducted pursuant to Section 609(b) of the Regulatory Flexibility Act (RFA). Broadl y, these provisions provide additional lead time for small manufacturers, as well as simplified testing and compliance requirements. The agencies are also requesting comment on whether there is a nee d for additional provisions to address small business issues.Page 59 of 850 **Table I**  **- 4**  **Summary of Proposed Phase 2 Requirements for Trailers**  **Phase 1 Program Alternative 3**  **- 2027**  **(proposed standard) Alternative 4** 

**– 202**  **4 (also under**  **consideration)** Covered in this category Trailers hauled by low, mid, and high roof day and sleeper cab tractors, except those qualified as logging, mining, stationary or heavy
- haul. Share of HDV fuel consumption and GHG emissions Trailers are modeled together with combination tractors and their engines. Together, they account for approximately two thirds of fuel use and GHG emissions in the medium and heavy duty truck sector. Per vehicle fuel consumption and CO 2 im provement N/A Between 3% and 8% improvement over MY 2017 baseline, depending on the trailer type. Form of the standard N/A EPA: CO 2 grams/ton payload mile and NHTSA: gallons /1,000 ton payload mile Example t echnology options available to help manufacturers meet standards N/A Lo w rolling resistance tires, automatic tire inflation systems, weight reduction for most trailers, aerodynamic improvements such as side and rear fairings, gap closing devices, and undercarriage treatment for box
- type trailers (e.g., dry and refrigerated vans) Flexibilities N/A One year delay in implementation for small businesses, trailer manufacturers may use pre
- approved devices to avoid testing, averaging program for manufacturers of dry and refrigerated box trailers (d ) Summary of the Proposed Vocatio nal Vehicle Standards As explained in Section V, the agencies are proposing to revise the Phase 1 vocational vehicle program and to p ropose new standards. These proposed standards also reflect further sub
- categorization from Phase 1 , with separate prop osed standards based on mode of operation: urban, regional , and multi
- purpose. The agencies are also proposing alternative standards for emergency

vehicles. The agencies project that the proposed vocational vehicle standards could be met through improvements in the engine, transmission, driveline, lower rolling resistance tires, workday idle reduction technologies, and weight reduction , plus some application of hy brid technology
. These are described in Section V of this preamble and in Chapter 2. 9 of the draft RIA. These MY 2027 standards would achieve up to 16 percent lower CO 2 emissions and fuel consumption than MY 2017 Phase 1 standards. The agencies are also proposing revisions to the compliance regime for vocational vehicles. These include : the ad dition of an idle cycle that would be weighted along with the other drive cycles; and revisions to the vehicle simulation tool to reflect specific improvements to the engine, transmission, and driveline
. Similar to the tractor program, we have deter mined that there is sufficient lead time to introduce man y of these new technologies into the fleet starting in MY 2021 . Therefore, we are proposing new standards for MY 2021 and 2024 . Based on our analy sis , the MY 2021 standards for vocational vehicles would achieve up to 7 percent lower CO 2 emissions and fuel consumption than a MY 2017 Phase 1 vehicle , on average , and the MY 2024 standards would achieve up to 11 percent lower CO 2 emissions and fuel consumption. In Phase 1, EPA adopted air conditioning ( A/C ) refrigerant leakage standards for tractors, as well as for heav y - duty pickups and vans, but not for vocational vehicles. For Phase 2, EPAPage 60 of 850

believes that it would be feasible to appl y similar A/C refrigerant leakage standards for vocational vehicles, beginning with the 2021 model year. The process for certifying that low leakage components are used would follow the s ystem currentl y in place for comparable s ys tems in tractors.Page 61 of 850

**Table I**  **- 5**  **Summary of Phase 1 and Proposed Phase 2 Requirements for Vocational Vehicle Chassis** 

**Phase 1 Program Alternative 3**  **- 2027**  **(proposed standard) Alternative 4** 

**– 2024 (also**  **under consideration)** Covered in this category Class 2b

– 8 chassis that are intended for vocational services such as delivery vehicles, emergency vehicles, dump truck, tow trucks, cement mixer, refuse trucks, etc., except those qualified as off
highway vehicles. Because of sector diversity, vocational vehicle chassis are segmented into Light, Medium and Heavy Duty vehicle categories and for Phase 2 each of these segments are further subdivided using three duty cycles: Regional, Multi
- purpose, and Urban. Share of HDV fuel consumption and GHG emissions Vocational vehicles account f or approximately 20 percent of fuel use and GHG emissions in the medium and heavy duty truck sector categories Per vehicle fuel consumption and CO 2 im provement 2% improvement over MY

2010 baseline. Im provements are in addition to improvements from engine standards. Up to 16% improvement over MY 2017 standards

Form of the standard EPA: CO 2 grams/ton payload mile and NHTSA: gallons of fuel/1,000 ton payload mile Example t echnology options available to help manufacturers meet standards Lo w rolling resist ance tires Further technology improvements and increased use of Phase 1 technologies, plus improved engines, transmissions and axles, powertrain optimization, weight reduction, hybrids, and workday idle reduction systems. Flexibilities ABT program which allows emissions and fuel consumption credits to be averaged, banked, or traded (five year credit life )
. Manufacturers allowed to carry - forward credit deficits for up to three model years. Interim incentives for advanced technologies, recognition of innovative (off
cycle) technologies not accounted for by the HD Phase 1 test procedures, and credits for certifying early. Same as Phase 1, except no advanced technology incentives. Chassis intended for emergency vehicles have proposed Phase 2 standar ds based only on Phase 1 technologies, and may continue to certify using a simplified Phase 1
- style GEM tool. Adjustment factor of 1. 36 proposed for credits carried forward from Phase 1 to Phase 2 due to proposed change in useful life
.

(e) Summary of the Pro

posed Heavy

-Duty Pickup and Van Standards The agencies are proposing to adopt new Phase 2 GHG emission and fuel consumption standards for heav y - dut y pickups and vans that would be applied in largel y the same manner as the Phase 1 standards. These standards are based on th e extensive use of most known and proven technologies, and could result in some use of strong hy brid powertrain technology
. These proposed standards would commence in MY 2021. Overall, the proposed standards are 16 percent more stringent by 202 7
.Page 62 of 850 **Table I**  **- 6**  **Summary of Phase 1 and Proposed Phase 2 Requirements for HD Pickups and Vans** 

**Phase 1 Program Alternative 3**  **- 2027**  **(proposed standard) Alternative 4** 

**– 2025 (also under**  **consideration)** Covered in this category Class 2b and 3 complete pickup trucks and vans, including all work vans and 15
- passenger vans but excluding 12
- passenger vans which are subject to light
- duty standards. Share of HDV fuel consumption and GHG emissions HD pickups and vans account for approximately 15% of fuel use and GHG emissions in the medium and heavy duty truck sector. Per vehicle fuel consumption and CO 2 im provement 15% improvement over MY 2010

baseline for diesel vehicles, and 10% im provement for gasoline v ehicles 16% improvement over MY 2018
- 2020 standards
Form of the standard Phase 1 standards are based upon a “work factor” attribute that combines truck payload and towing

capabilities, with an added adjustment for 4
- wheel drive vehicles. There are separate target curves for diesel
- powered and gasoline
- powered vehicles. As proposed, the Phase 2 standards would be based on the same approach. Example t echnology options available to help manufacturers meet standards Engine improvements, transmission im provements, aerodynamic drag im provements, low

rolling resistance tires, weight reduction, and improved accessories. Further technology improvements and increased use of all Phase 1 technologies, plus engine stop
- start, and powertrain hybridization (mild and strong). Flexibilities Two optional phase
- in schedules; ABT program which allows emissions and fuel consumption credits to be averaged, banked, or traded (five year credit life). Manufacturers allowed to carry - forward credit deficits for up to three model years. Interim incentives for advanced technologies, recognition of innovative (off
- cycle) technologies not accounted for by the HD Phase 1 test procedures, and credits for certifying early. Proposed to be same as Phase 1, with phase
- in schedule based on year
- over - year increase in stringency. Adjustment factor of 1.25 proposed for credits carried forward from Phase 1 to Phase 2 due to proposed change in useful life. Proposed cessation of advanced technology incentives in 2021 and continuation of off
- cycle credits.

(f ) Summary of the Proposed Final Numeric Standards by Regulatory Subcategory Table I
- 7 lists the proposed final (i.e., MY 2027) numeric standards by regulatory subcategory for tractors, trailers, vocational vehicles and engines
. Note that these are the same final numeric stand ards for Alternative 4, but for Alternative 4 these would be implemented in MY 2024 instead of MY 2027.

**Table I**  **- 7**  **Proposed Final (MY 2027) Num eric Standards by Regulatory Subcategory** Page 63 of 850 Regulatory Subcategory CO 2 Grams per Ton
Mile (for engines CO 2 Grams per Brake Horsepower
- Hour) Fuel Consumption gallon per 1,000 ton
mile (for engines gallons per 100 Brake Horsepower
- Hour Tractors Class 7 Low Roof Day Cab 87 8.5462 Class 7 Mid Roof Day Cab 96 9.4303 Class 7 High Roof Day Cab 96 9.4303 Class 8 Low Roof Day Cab 70 6.8762 Class 8 Mid Roof Day Cab 76 7.4656 Class 8 High Roof Day Cab 76 7.4656 Class 8 Low Roof Sleeper Cab 62 6.0904 Class 8 Mid Roof Sleeper Cab 69 6.7780 Class 8 High Roof Sleeper Cab 67 6.5815 Trailers Long Dry Box Trailer 77 7.5639 Short Dry Box Trailer 140 13.7525 Long Refrigerated Box Trailer 80 7.8585 Short Refrigerated Box Trailer 144 14.1454 Vocational Diesel LHD Urban 272 26.7191 LHD Multi
- Purpose 280 27.5049 LHD Regional 292 28.6837 MHD Urban 172 16.8959 MHD Multi
- Purpose 174 17.0923 MHD Regional 170 16.6994 HHD Urban 182 17.8782 HHD Multi
- Purpose 183 17.9764 HHD Regional 174 17.0923 Vocational Gasoline LHD Urban 299 33.6446 LHD Multi
- Purpose 308 34.6574 LHD Regional 321 36.1202 MHD Urban 189 21.2670Page 64 of 850 MHD Multi
- Purpose 191 21.4921 MHD Regional 187 21.0420 HHD Urban 196 22.0547 HHD Multi
- Purpose 198 22.2797 HHD Regional 188 21.1545 Diesel Engines LHD Vocational 553 5.4322 MHD Vocational 553 5.4322 HHD Vocational 533 5.2358 MHD Tractor 466 4.5776 HHD Tractor 441 4.3320 Similar to Phase 1 the agencies are proposing for Phase 2 a set of continuous equation
based standards for HD pickups and vans. Please refer to Section 6, subsection B.1, for a description of these standards, including associated tables and figures. 

### D. **Summary of the Costs and Benefits of the Proposed Rule** This section summarizes the projected costs and benefits of the proposed NHTSA fuel consumption and EPA GHG emission standards, along with those of Alternative 4. These projections helped to inform the agencies’ choices among the alternatives considered, along with other relevant factors , and NHTSA’s D raft Environmental Impact Statement (DEI S). See Sections VII through IX and the Draft RIA for additional details about these projections. For this rule, the agencies conducted coordinated and complementary analy ses using two anal yt ical methods for the heavy
- dut y pickup and van segment by employing both DOT’s CAFE model and EPA’s MOVES model. The agencies used EPA’s MOVES model to estimate fuel consumption and emissions impacts for tractor
- trailers (including the engine that power s the tractor), and vocational vehicles (including the en gine that powers the vehicle). Additional calculations were performed to determine corresponding monetized program costs and benefits. For heav y - dut y pickups and vans, the agencies performed complementary analyses , which we refer to as “Method A” and “Me thod B
. ” In Method A, the CAFE model was used to project a pathway the industry

could use to comply

with each regulatory

alternative and the estimated effects on fuel consumption, emissions, benefits and costs. In Method B, the CAFE model was used to pro

ject a pathway the industry could use to comply

with each regulatory

alternative, along with resultant impacts on per vehicle costs, and the MOVES model was used to calculate corresponding changes in total fuel consumption and annual emissions. Additional calculations were performed to determine corresponding monetized program costs and benefits. NHTSA considered Method A as its central anal ys is and Method B as a supplemental analy sis. EPA considered the results of both methods. The agencies concluded t hat both methods led the agencies to the same conclusions and the same selection of the proposed standards. See Section VII for additional discussion of these two methods.Page 65 of 850

**(1) Reference Case against Which Costs and Benefits are Calculated**  The N o A ction A lte rnative for today ’s anal ys is, alternatively referred to as the “baseline” or “reference case,” assumes that the agencies would not issue new rules regarding MD/HD fuel efficiency and GHG emissions. This is the baseline against which costs and benefits for the proposed standards are calculated. The reference case assumes that model year 2018 standards would be extended indefinitely and without change. The agencies recognize that if the proposed rule is not adopted, manufacturers will continue to introduce new heav y - dut y vehicles in a competitive market that responds to a range of factors. Thus manufacturers might have continued to improve technologies to reduce heavy
duty vehicle fuel consumption. Thus, a s described in Section VII, both agencies full y anal yz ed the proposed standards and the regulatory alternatives against two reference cases. The first case uses a baseline that projects very little improvement in new vehicles in the absence of new Phase 2 standards, and the second uses a more dyn amic baseline that projects more significant improvements in vehicle fuel efficiency . NHTSA considered its primary analy sis to be based on the more dynamic baseline, where certain cost
- effective technologies are assumed to be applied by manufacturers to impro ve fuel efficiency beyond the Phase 1 requirements in the absence of new Phase 2 standards. EPA considered both reference cases. The results for all of the regulatory

alternatives relative to both reference cases, derived via the same methodologies discu ssed in this section, are presented in Section X of the preamble
. The agencies chose to analyze these two different baselines because the agencies recognize that there are a number of factors that create uncertainty in projecting a baseline against which t o compare the future effects of the proposed action and the remaining alternatives. The composition of the future fleet

— such as the relative position of individual manufacturers and the mix of products they each offer

— cannot be predicted with certainty at this time. Additionally , the heavy
- dut y vehicle market is diverse, as is the range of vehicle purchasers. Heav y - dut y vehicle manufacturers have reported that their customers’ purchasing decisions are influenced by their customers’ own determinations of minimum total cost of ownership, which can be unique to a particular customer’s circumstances. For example, some customers (e.g., less
- than
- truckload or package delivery operators) operate their vehicles within a limited geographic region and ty pically own their own vehicle maintenance and repair centers within that region. These operato rs tend to own their vehicles for long time periods, and sometimes for the entire service life of the vehicle. Their total cost of ownership is influenced b y their ability

to better control their own maintenance costs, and thus they can afford to consider fuel efficiency

technologies that have longer pay back periods, outside of the vehicle manufacturer’s warranty period. Other customers (e.g. truckload or long
- haul operators) tend to operate cross - country , and thus must depend upon truck dealer service ce nters for repair and maintenance. Some of these customers tend to own their vehicles for about four to seven ye ars, so that they

t ypicall y do not have to pay for repair and maintenance costs outside of either the manufacturer’s warranty period or some oth er extended warranty period
. Many of these customers tend to require seeing evidence of fuel efficiency technology payback periods on the order of 18 to 24 months before seriousl y considering evaluating a new technology for potential adoption within their fleet (NAS 2010, Roeth et al. 2013, Klemick et al. 2014) . Purchasers of HD pickups and vans wanting better fuel efficiency tend to demand that fuel consumption improvements pay

back within approximately one to three years, but some HD pickup and vanPage 66 of 850

owne rs accrue relatively

few vehicle miles traveled per year, such that they may be less likely

to adopt new fuel efficiency technologies , while other owners who use their vehicle(s) with greater intensity may be even more willing to pay for fuel efficiency

improvements . Regardless of the ty pe of customer, their determination of minimum total cost of ownership involves the customer balancing their own unique circumstances with a heav y - dut y vehicle’s initial purchase price, availability

of credit and lease opti ons, expectations of vehicle reliability , resale value and fuel efficiency technology

pay back periods. The degree of the incentive to adopt additional fuel efficiency technologies also depends on customer expectations of future fuel prices, which directly impacts customer pay back periods. Purchasing decisions are not based exclusively on pay back period, but also include the considerations discussed above and in Section X.A.1. For the baseline analy sis, the agencies use pay back period as a prox y for all o f these considerations, and therefore the pay

back period for the baseline anal ys is is shorter than the pay back period industry uses as a threshold for the further consideration of a technology
. The agencies request comment on the appropriateness of these reference cases. See Section X.A.1 of this Preamble and Chapter 11 of the draft RIA for a more detailed discussion of baselines
. As part of a sensitivity

analy sis, additional baseline scenarios were also evaluated for HD pickups and vans. See Section VI of this Preamble and Chapter 10 of the draft RIA for a detailed discussion of these additional scenarios. **(2) Costs and Benefits Pro** **jected for the Standards Being Proposed and Alternative 4** The tables below summarize the benefits and costs for the program in two way s: first, from the perspective of a program designed to improve the Nation’s energy securit y and to conserve energy

by improving fuel efficiency and then from the perspective of a program designed to reduce GHG emissions
. The individual categories of benefits and costs presented in the tables below are defined more full y and presented in more detail in Chapter 8 of the draft RIA. Table I
- 8 show s benefits and costs for the proposed standards and A lternative 4 from the perspective of a program designed to improve the Nation’s energy s ecurity and conserve energy by improving fuel efficiency . From this viewpoint, technology costs occur when the vehicle is purchased
. F uel savings are counted as benefits that occur over th e lifetimes of the vehicles produced during the model years subject to the Phase 2 standards as they consume less fuel
.Page 67 of 850

**Table I**  **- 8**  **Lifetime Fuel Savings, GH G Reductions, Benefits, Costs and Net Benefits for Model Years 2018**  **-**

**2029 Vehicles Using Analysis Method**  **A (Billions of 2012$)** a , b **Category Alternative**  **3 Preferred**  **4** 3% Discount Rate 7%

Discount Rate 3%

Discount Rate 7%

Discount Rate Fuel Reductions (Billion Gallons) 72.2

– 76.7 81.9

– 86.7 GHG reductions (MMT CO 2 eq) 990

– 1,050 1,110

– 1,180 Vehicle Program: Technology and Indirect Costs, Normal Profit on Additional Investments 25.0 ‒ 25.4 16.8 ‒

17.1 32.9 ‒

34.3 22.5 ‒

23.5 Additional Routine Maintenance 1.0 ‒ 1.1 0.6 ‒ 0.6 1.0 ‒ 1.1 0.6 ‒ 0.7 Congestion, Accidents, and Noise from Increased Vehicle Use 4.5 ‒ 4.7 2.6 ‒ 2.8 4.7 ‒ 4.9 2.7 ‒ 2.8 **Total Costs** 30.5 ‒ 31.1 20.0 ‒

20.5 38.7 ‒

40.8 25.8 ‒

27.0 Fuel Savings (valued at pre
- tax prices) 165.1 ‒ 175.1 89.2 ‒

94.2 187.4 ‒

198.3 102.0 ‒

107.5 Savings from Less Frequent Refueling 2.9 ‒ 3.1 1.5 ‒ 1.6 3.4 ‒ 3.6 1.8 ‒ 2.0 Economic Benefits from Additional Vehicle Use 14.7 ‒ 15.1 8.2 ‒ 8.4 15.0 ‒ 15.4 8.4 ‒ 8.6 Reduced Climate Damages from GHG Emissions c 32.9 ‒ 34.9 32.9 ‒

34.9 37.3 ‒

39.4 37.3 ‒

39.4 Reduced Health Damages from Non
GHG Emissions 37.2 ‒ 38.8 20 ‒ 20.7 40.9 ‒ 42.5 22.1 ‒

22.8 Increased U.S. Energy Security 8.1 ‒ 8.9 4.3 ‒ 4.7 9.3 ‒ 10.2 5.0 ‒ 5.5 **Total Benefits** 261 ‒ 276 156 ‒ 165 293 ‒ 309 177 ‒ 186 **Net Benefits** 231 ‒ 245 136 ‒ 144 255 ‒ 269 151 ‒ 159 Note s : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Range reflects two reference case assumptions 1a and 1b. c Benefits and net benefits use the 3 percent global average SCC value applied only to CO 2 emissions; GHG reductions include CO 2 , CH 4 , N 2 O and HFC reductions , and include benefits to other nations as well as the U.S
. See Draft RIA Chapter 8.5 and Preamble Section IX.G for further discussion. Table I
- 9 show s benefits and cost from the perspective of reducing GHG. **Table I**  **- 9**  **Lifetime Fuel Savings, GHG Reductions, Benefits, Costs and Net Benefits for Model Years**

**2018 -**  **2029 Vehicles Using Analysis Method**  **B (Billions of 2012$) a**  **, b**Page 68 of 850 **Category Alternative**  **3 Preferred**  **4** 3% Discount Rate 7%

Discount Rate 3%

Discount Rate 7%

Discount Rate Fuel Reductions (Billion Gallons) 70.2 to 75.8 79.7 to 85.4 GHG reductions (MMT CO 2 eq) 960 to 1,040 1090 to 1,160 Vehicle Program (e.g., technology and indirect costs, normal profit on additional investments) - $24.6 to
- $25.1 - $16.3 to
-

$16.6 - $33.1 to
-

$33.5 - $22.2 to
-

$22.5 Additional Routine Maintenance
- $1.1 to
- $1.1 - $0.6 to
-

$0.6 - $1.1 to
-

$1.1 - $0.6 to
-

$0.6 Fuel Savings (valued at pre
- tax prices) $159 to $171 $84.2 to

$90.1 $181 to

$193 $96.5 to

$103 Energy Security $8.5 to $9.3 $4.4 to $4.8 $9.8 to $10.6 $5.2 to $5.6 Congestion, Accidents, and Noise from Increased Vehicle Use - $4.2 to
- $4.3 - $2.4 to
-

$2.4 - $4.2 to
-

$4.3 - $2.4 to
-

$2.4 Savings from Less Frequent Refueling $2.8 to $3.1 $1.4 to $1.6 $3.3 to $3.6 $1.7 to $1.9 Economic Benefits from Additional Vehicle Use $14.8 to $14.9 $8.2 to $8.2 $14.7 to $14.8 $8.1 to $8.1 Benefits from Reduced Non
- GHG Emissions c $37.4 to $39.7 $17.7 to

$18.8 $41.2 to

$43.5 $19.7 to

$20.7 Reduced Climate Damages from GHG Emissions d $31.6 to $34.0 $35.9 to $38.3 **Net Benefits** $224 to $242 $128 to

$138 $248 to

$265 $142 to

$152 Note s : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Range reflects two baseline assumptions 1a and 1b. c Range reflects both the two baseline assumptions 1a and 1b using the mid
- point of the low and high $/ton estimates for calculating benefits. c d Benefits and net benefits use the 3 percent average SCCO2 value applied only to CO 2 emissions; GHG reductions include CO 2 , CH 4 and N 2 O reductions. Table I
- 10 breaks down by vehicle category

the benefits and costs for the proposed standards and A lternative 4 using the Method A analy tical approach. For additional detail on per
vehicle break
- downs of costs and benefits, please see Chapter 10.

**Table I**  **- 10**  **Per Vehicle Category**  **Lifetim e Fuel Savings, GHG Reductions, Benefits,**  **Costs and Net Benefits for**  **Model Years 2018 -**  **2029 Vehicles Using Analysis Method A (Billions of 2012$)**  **, Relative to Baseline 1b a** Page 69 of 850 **Key Costs and Benefits by Vehicle Category**  **Alternative 3**  **Preferred 4**  3% Discount Rate 7%

Discount Rate 3%

Discount Rate 7%

Discount Rate **Tractors, Including Engines, and Trailers** Fuel Reductions (Billion Gallons) 56.1 61.6 GHG Reductions (MMT CO 2 eq) 731.1 803.1 Total Costs 15.2 10.0 17.7 11.9 Total Benefits 177.8 105.4 194.2 115.7 Net Benefits 162.6 95.4 176.5 103.9 **Vocational Vehicles, Including Engines** Fuel Reductions (Billion Gallons) 8.3 10.9 GHG Reductions (MMT CO 2 eq) 107.0 139.8 Total Costs 9.5 6.1 12.8 8.4 Total Benefits 27.7 16.0 35.0 20.6 Net Benefits 18.1 9.9 22.1 12.1 **HD Pickups and Vans** Fuel Reductions (Billion Gallons) 7.8 9.3 GHG Reductions (MMT CO 2 eq) 94.1 112.8 Total Costs 5.5 3.7 7.8 5.3 Total Benefits 23.5 14.1 28.3 17.1 Net Benefits 18.0 10.5 20.4 11.9 Note s : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. **Table I**  **- 11**  **Per Vehicle Costs**  **Relative to Baseline 1a** 3 Proposed Standards 4 MY 2021 MY 2024 MY 2027 MY 2021 MY 2024 Per Vehicle Cost ($) a Tractors $6,710 $9,940 $11, 70 0 $10,200 $12,400 Trailers $900 $1,010 $1,170 $1,080 $1,230 Vocational Vehicles $1,150 $1,770 $3,380 $1,990 $3,590 Pickups/Vans $5 20 $ 950 $1,340 $1,050 $1,730 Note:Page 70 of 850 a Per vehicle c osts include new engine and vehicle technology only ; costs associated with increased insurance, taxes and maintenance are included in the payback period values. An important metric to vehicle purchasers is the payback period that can be expected on any new purchase. In other words, there is greater willingness to pay for new t echnology

if that new technology

“pay s back” within an acceptable period of time. The agencies make no effort to define the acceptable period of time, but seek to estimate the pay back period for others to make the decision themselves. The pay back period is the point at which reduced fuel expenditures outpace increased vehicle costs, including increased maintenance, insurance premiums and taxes. The pay back periods for vehicles meeting the standards considered for the final year of implementation (MY2024 f or alternative 4 and MY2027 for the proposed standards) are shown in Table I
- 12 , and are similar for both Method A and Method B.
**Table I**  **- 12**  **Payback Periods for MY2027 Vehicles under the Proposed Standards and for MY2024 Vehicles Under Alternative 4**  **Relative to Baseline 1a (Payback Occurs in the Year Shown; using 7% Discounting)**  Proposed Standards Alternative 4 Tractors/Trailers 2 nd 2 nd Vocational Vehicles 6 th 6 th Pickups/Vans 3 rd 4 th **(3) Cost Effectiveness**  These proposed regulations implement Section 32902 (k) of EISA and Section 202 (a) (1) and (2) of the Clean Air Act. Through the 2007 EISA, Congress directed NHTSA to create a medium
- and heav y - duty vehicle fuel efficiency program designed to achieve the maximum feasible improvement b y considering appropriateness, cost
- effectiveness, and technological feasibility to determin e m aximum feasible standards. 65 The Clean Air Act requires that an y air pollutant emission standards for heav y - dut y vehicles and engines take into account the costs of any requisite technology

and the lead time necessary to implement such technology . Both agencies considered overall costs, overall benefits and cost effectiveness in developing the Phase 1 standards. Although th ere are different way s to evaluate cost effectiveness, the essence is to consider some measure of costs relative to some measure of impacts. Considering that Congress enacted EPCA and EI SA to, among other things, address the need to conserve energy , the ag encies have evaluated the proposed standards in terms of costs per gallon of fuel conserved. As described in the draft RIA, the agencies also evaluated the

65 This EISA requirement applies to regulation of medium
- and heavy
- duty vehicles. For many years, and as reaffirmed by Congress in 2007, “economic practicability” has been among the factors EPCA requires NHTSA to consider when setting light
- duty fuel economy standards at the (required) maximum feasible levels. NHTSA interprets “economic practicability” as a factor involving considerations broader than those likely to be involved in “cost effectiveness”.Page 71 of 850

proposed standards us in g the same approaches employed in HD Phase 1. Together, the agencies have considered the following three ratios of cost effectiveness: 1. Total costs per gallon of fuel conserved. 2. Technology

costs per ton of GHG emissions reduced
. 3. Technology

costs minus fuel savings per ton of GHG emissions reduced
. By all three of these measures, the proposed standards would be highl y cost effective. As discussed below, the agencies estimate that over the lifetime of heav y - duty vehicles produced for sale in the U.S. during model ye ars 2018
- 2029, the proposed standards would cost about $30 billion and conserve about 75 billion gallons of fuel, such that the first measure of cost effectiveness would be about 40 cents per gallon. Relative to fuel prices underlying the agencies’ anal ys is, the agencies have concluded that today ’s proposed standards woul d be cost effective. With respect to the second measure, which is useful for comparisons to other GHG rules, the proposed standards would have overall $/ton costs similar to the HD Phase 1 rule. As Chapter 7 of the draft RIA shows, technology costs by the mselves would amount to less than $50 per metric ton of GHG ( CO 2 eq) for the entire HD Phase 2 program. This compares well to both the HD Phase 1 rule, which was estimated to cost about $30 per metric ton of GHG (without fuel savings), and to the age ncies’ estimates of the social cost of carbon. Thus, even without accounting for fuel savings, the proposed standards would be cost
- effective. The third measure deducts fuel savings from technology costs, which also is useful for comparisons to other GHG rules. On this basis, net costs per ton of GHG emissions reduced would be negative under the proposed standards. This means that the value of the fuel savings would be greater than the technology costs, and there would be a net cost saving for vehicle owners. In other words, the technologies would pay for themselves (indeed, more than pay for themselves) in fuel savings. In addition, while the net economic benefits (i.e., total benefits minus total costs) of the proposed standards is not a traditional measure of their cost - effectiveness, the agencies have concluded that the total costs of the proposed standards are justified in part by their significant economic benefits. As discussed in the previous subsection and in Section IX, this rule would provid e benefits beyond the fuel conserved and GHG emissions avoided . The rule’s net benefits is a measure that quantifies each of its various benefits in economic terms , including the economic value of the fuel it saves and the climate
- related damages it avoid s , and compares their sum to the rule’s estimated costs. The agencies estimate that the proposed standards would result in net economic benefits exceeding $100 billion, making this a highly beneficial rule. Our current anal ys is of Alternative 4 also shows that, if technologicall y feasible, it would have similar cost
- effectiveness but with greater net benefits (see Chapter 11 of the draft RIA). For example, the agencies estimate costs under Alternative 4 could be about $40 billion and about 85 billion gall ons of fuel could be conserved, such that the first measure of cost effectiveness would be about 47 cents per gallon. However, the agencies considered all of the relevant factors, not just relative cost
- effectiveness, when selecting the proposed standards fromPage 72 of 850

among the alternatives considered. Relative cost
- effectiveness was not a limiting factor for the agencies in selecting the proposed standards. Itis also worth noting that the proposed standards and the Alternative 4 standards appear very cost effec tive, regardless of which reference case is used for the baseline, such that all of the anal ys es reinforced the agencies’ findings. 

### E. **EPA and NHTSA Statutory Authorities**  This section briefl y summarizes the respective statutory authority for EPA and NHTSA to promulgate the Phase 1 and proposed Phase 2 programs. For additional details of the agencies’ authority, see Section XV of this notice as well as the Phase 1 rule. 66 **(1) EPA Authority**  Statutory authority for the vehicle controls in this proposal is found in CAA S ection 202(a) (1) and (2) (which requires EPA to establish standards for emissions of pollutants from new motor vehicles and engines which emissions cause or contribute to air pollution which may reasonabl y be anticipated to endanger publi c health or welfare), S ections 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. Title II of the CAA provides for comprehensive regulation of mobile sources, authorizing EPA to regulate emissions of air pollutants from all mobile source categories. When acting under Title II of the CAA, EPA considers such issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the lead time necessary to implement the technology , and based on this the feasibility and practicability

of potential standards; the impacts of potential standards on emissions reductions of both GHGs and non
- GHG emission s; the impacts of standards on oil conservation and energy securit y; the impacts of standards on fuel savings b y customers; the impacts of standards on the truck industry; other energy impacts; as well as other relevant factors such as impacts on safety. This proposed action implements a specific provision from Title II, S ection 202(a). Section 202(a)(1) of the CAA states that “the Administrator shall by regulation prescribe (and from time to time revise)...standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles ..., which in his judgment cause, or contribute to, air pollution which may

reasonably

be anticipated to endanger public health or welfare.” With EPA’s December 2009 final findings that certain greenhouse gases may reasonably

be anticipated to endanger public health and welfare and that emissions of GHGs from S ection 202 (a) sources cause or contribute to that endangerment, S ection 202(a) requires EPA to issue standards applicable to emissions of those pollutants from new motor vehicles. See Coalition for Res ponsible Regulation v. EPA , 684 F. 3d at 116
- 125, 126
- 27 (upholding EPA’s endangerment and cause and contribute findings, and further affirming EPA’s conclusion that it is legall y compelled to issue standards under Section 202 (a) to address emission of th e pollutant which

66 76 FR 57106 at 57129, Septemb er 15, 2011.Page 73 of 850

endangers after making the endangerment and cause of contribute findings); see also id. at 127
- 29 (upholding EPA’s light
- duty GHG emission standards for MYs 2012
- 2016 in their entiret y). Other aspects of EPA’s legal authority, including i t authority under Section 202 (a), its testing authority under Section 203 of the Act, and its enforcement authorities under Section 207 of the Act are discussed fully in the Phase 1 rule, and need not be repeated here. See 76 FR 57129
- 130. The proposed r

ule includes GHG emission and fuel efficiency standards applicable to trailers

– an essential part of the tractor
- trailer motor vehicle. Class 7/8 heavy
- dut y vehicles are composed of three major components:

– the engine, the cab
- chassis (i.e. the tractor) , and the trailer. The fact that the vehicle consists of two detachable parts does not mean that either of the parts is not a motor vehicle. The trailer’s sole purpose is to serve as the cargo
- hauling part of the vehicle. Without the tractor, the traile r cannot transport property. The tractor is likewise incomplete without the trailer. The motor vehicle needs both parts, plus the engine, to accomplish its intended use. Connected together, a tractor and trailer constitute ‘‘a self
propelled vehicle des igned for transporting . . . property on a street or highway ,’’ and thus meet the definition of ‘‘motor vehicle’’ under Section 216(2) of the CAA. Thus, as EPA has previously

explained, we interpret our authority to regulate motor vehicles to include auth ority to regulate such trailers. See 79 FR 46259 (August 7, 2014). 67 This analy sis is consistent with definitions in the Federal regulations issued under the CAA at 40 CFR 86.1803.01, where a heav y - dut y vehicle ‘‘that has the primary load carrying dev ice or container attached’’ is referred to as a ‘‘[c]omplete heavy
- dut y vehicle,’’ while a heav y - dut y vehicle or truck ‘‘which does not have the primary load carrying device or container attached’’ is referred to as an ‘‘[i]ncomplete heavy
- dut y vehicle’’ or ‘‘[i]ncomplete truck.’’ The trailers that would be covered b y this proposal are properl y considered ‘‘the primary load carryi ng device or container’’ for the heavy
- dut y vehicles to which they become attached for use. Therefore, under these definitions, such trailers are implicitly part of a ‘‘complete heavy
- dut y vehicle,’’ and thus part of a ‘‘motor vehicle .’’ 68 , 69 , 70 The argument that trailers do not themselves emit pollutants and so are not subject to emission standards is also unfounded. First, the argument lacks a factual predicate. Trailers

67 Indeed, an argument that a trailer is not a motor vehicle because, considered (artificially) as a separate piece of equipment it is not self

- propelled, applies equally to the cab
- chassis

– the tractor. No entity has suggested that tractors are not motor vehicles; nor is such an argument plausible. 68 We note further, however, that certain hauled items, for example a boat, would not be considered to be a trailer under the proposal. See proposed section 1037.801, proposing to define “trailer’ as being “designed for cargo and for being drawn by a tractor.” 69 This concept is likewise reflected in the definition of “tractor” in the parallel Department of Transportation regulations: “a truck designed primarily for drawing other motor vehicles and not so constructed as to carry a load other than a part of the weight of the vehicle and the load so draw n.” See 49 CFR part 571.3. 70 EPA’s proposed definition of “vehicle” in 40 CFR 1037.801 makes clear that an incomplete trailer becomes a vehicle (and thus subject to the prohibition against introduction into commerce with a certificate) when it has a frame with axles attached. Complete trailers are also vehicles.Page 74 of 850

indisputably

contribute to the motor vehicle’s CO 2 emissions by increasing engine load, and these emissions can be reduced through various means such as trailer aerodynamic and tire rolling resistance improvements
. See Section IV below. The argument also lacks a legal predicate. Section 202 (a) (1) authorizes standards applicable to emissions of air pollutants “from” either the motor vehicle or the engine. There is no requirement that pollutants be emitted from a specified part of the motor vehicle or engine. And indeed, the argument proves too much, since tractors and vocational vehicle chassis likewise contribute to emissions ( including contributing by

the same mechanisms that trailers do) but do not the mselves directly emit pollutants. The fact that Section 202 (a)(1) applies explicitly to both motor vehicles and engines likewise indicates that EPA has unquestionable authority to interpret pollutant emission caused by the vehicle component to be “from” the motor vehicle and so within its regulatory authority under Section 202 (a)(1). 71 **(2) NHTSA Authority**  T he Energy

Policy and Conservation Act (EPCA) of 1975 mandates a regulatory program for motor vehicle fuel economy to meet the various facets of the need t o conserve energy . In December 2007, Congress enacted the Energy Independence and Security Act (EISA), amending EPCA to require, among other things, the creation of a medium
- and heav y - duty fuel efficiency program for the first time. Statutory authori ty for the fuel consumption standards in th is proposed rule is found in EI SA S ection 103, 49 U.S.C. 32902(k). This section 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, measurement metrics, standards, and compliance and enforcement protocols that are appropriate, cost
- effective and technologically feasible
. NHTSA has respons ibility for fuel econom y and consumption standards, and assures compliance with EISA through rulemaking, including standard
- setting; technical reviews, audits and studies; investigations; and enforcement of implementing regulations including penalty action s. This proposed rule would continue to fulfill the requirements of Section 103 of EISA, which instructs NHTSA to create a fuel efficiency improvement program for “ commercial medium
- and heav y - duty on
- highway vehicles and work trucks ” by rulemaking, whic h is to include standards, test methods, measurement metrics, and enforcement protocols. See 49 U.S.C. 32902(k)(2). Congress directed that the standards, test methods, measurement metrics, and compliance and enforcement protocols be “ appropriate, cost
- ef fective, and technologically feasible ” for the vehicles to be regulated, while achieving the “ maximum feasible improvement ” in fuel

71 This argument applies equally to emissions of criteria pollutants, whose rate of emissio n is likewise affected by vehicle characteristics. It is for this reason that EPA’s implementing rules for criteria pollutants from heavy duty vehicles and engines specify a test weight for certification testing, since that weight influences the amount of pollution emission.Page 75 of 850

efficiency
. NHTSA has broad discretion to balance the statutory factors in Section 103 in developing fuel consumption standards to achieve the maximum feasible improvement. As discussed in the Phase 1 final rule notice, NHTSA has determined that the five year statutory limit on average fuel economy standards that applies to passengers and l ight trucks is not applicable to the HD vehicle and engine standards. As a result, the Phase 1 HD engine and vehicle standards remain in effect indefinitely at their 2018 or 2019 MY levels until amended by a future rulemaking action. As was contemplated in that notice, NHTSA is currentl y engaging in th is Phase 2 rulemaking action. Therefore, the Phase 1 standards would not remain in effect at their 2018 or 2019 MY levels indefinitel y; they would remain in effect until the MY Phase 2 standards appl y . In accordance with Section 103 of EI SA, NHTSA will ensure that not less than four full MYs of regulatory lead
- time and three full MYs of regulatory stability are provided for in the Phase 2 standards. (a ) Authority to Regulate Trailers As contemplated in the Pha se 1 NPRM and FR, the agencies are proposing standards for trailers in this rulemaking. Because Phase 1 did not include standards for trailers, NHTSA did not discuss its authority

for regulating them in the NPRM or FR; that authority is described here EI S A directs NHTSA to “determine in a rulemaking proceeding how to implement a commercial medium
- and heav y - dut y on - highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement....” EI SA defines a comm ercial medium
- and heav y - dut y on - highway vehicle to mean “an on
- highway vehicle with a GVWR of 10,000 pounds or more.” A “work truck” is defined as a vehicle between 8,500 and 10,000 pounds GVWR that is not an MDPV. These definitions do not explicitly ex clude trailers, in contrast to MDPVs. Because Congress did not act to exclude trailers when defining GVWRs, despite demonstrating the ability to exclude MDPVs, it is reasona ble to interpret the provision to include them
. B oth commercial medium
- and heav y - duty on - highway

vehicles and work trucks , though, must be vehicles in order to be regulated under this program
. Although EISA does not define the term “ vehicle, ” NHTSA’s authority to regulate motor vehicles under its organic statute, the Motor Vehicle Safety

Act (“Safety Act”), does. The Safety Act defines a motor vehicle as “a vehicle driven or drawn by mechanical power and manufactured primaril y for use on public streets, roads, and highway s....” NHTSA clearl y has authority to regulate trailers under this A ct as vehicles that are drawn and has exercised that authority numerous times
. Given the absence of an y apparent contrary intent on the part of Congress in EI SA, NHTSA believes it is reasonable to interpret the ter m “ vehicle ” as used in the EI SA definitions to have a similar meaning that includes trailers
. Furthermore, the general definition of a vehicle is something used to transport goods or persons from one location to another. A tractor
- trailer is designed fo r the purpose of transporting goods. Therefore it is reasonable to consider all of its parts

– the engine, the cab
- chassis, and the trailer

– as parts of a whole. As such they are all parts of a vehicle, and are captured within the definition of vehicle. As EPA describes above, the tractor and trailer are both incomplete without the other. Neither can fulfill the function of the vehicle without the other. For thisPage 76 of 850

reason, and the other reasons stated above, NHTSA interprets its authority to regulate co mmercial medium
- and heav y - dut y on - highway vehicles, including tractor
- trailers, as encompassing both tractors and trailers. (b ) Authority to Regulate Recreational Vehicles NHTSA did not regulate recreational vehicles as part of the Phase 1 medium
- and heav y duty fuel consumption standards, although EPA did regulate them as vocational vehicles for GHG emissions. 72 Inthe Phase 1 NPRM, NHTSA interpreted “commercial medium
- and heav y duty” to mean that recreational vehicles, such as motor homes, were not to be i ncluded within the program because recreational vehicles are not commercial. Oshkosh Corporation submitted a comment on the agency ’s interpretation stating that it did not match the statutory definition of “commercial medium
- and heav y - dut y on - highway veh icle,” which defines the phrase by GVWR and on
- highway

use. In the Phase 1 final rule NHTSA agreed with Oshkosh Corporation that the agency

had effectively

read words into the statutory definition. However, because recreational vehicles were not proposed in the Phase 1 NPRM, they were not within the scope of the rulemaking and were excluded from NHTSA’s standards. 73 NHTSA expressed that it would address recreational vehicles in its next rulemaking. NHTSA is proposing that recreational vehicles be includ ed in the Phase 2 fuel consumption standards. As discussed above, EI SA prescribes that NHTSA shall set average fuel econom y standards for work trucks and commercial medium
- duty or heav y - duty

on - highway vehicles. “Work truck” means a vehicle that is rated between 8,500 and 10,000 pounds GVWR and is not an MDPV. “Commercial medium
- and heav y - dut y on - road highway vehicle” means an on - highway

vehicle with a gross vehicle weight rating of 10,000 pounds or more. 74 Based on the definitions in EI SA, recreational vehicles would be regulated as class 2b
- 8 vocational vehicles. Excluding recreational vehicles from the NHTSA standards in Phase 2 could create illogical results, including treating similar vehicles differentl y. Moreover, including recreational vehicles under NHTSA regulations furthers the agencies’ goal of one national program, as EPA regulations already cover recreational vehicles. NHTSA is proposing that recreational vehicles be included in the Phase 2 fuel consumption standards and that earl y comp liance be allowed for manufacturers who want to certify during the Phase 1 period. 75

72 EPA did not give special consideration to recreational vehicles because the CAA applies to heavy
- duty motor vehicle generally. 73 Motor homes are still subject to EPA’s Phase 1 CO 2 standards for vocational vehicles. 74 49 U.S.C. 3290 1(a)(7). 75 NHTSA did not allow

early compliance for one RV manufacturer in MY 2014 that is currently complying EPA’s GHG standards.Page 77 of 850



### F. **Other Issues** In addition to the standards being proposed, this notice discusses several other issues related to those standards. It also proposes some regulatory provisi ons related to the Phase 1 program, as well as amendments related to other EPA and NHTSA regulations. These other issues are summarized briefly here and discussed in greater detail in later sections. **(1) Issues Related to Phase 2**  (a ) Natural Gas Engines and Vehic les This combined rulemaking b y EPA and NHTSA is designed to regulate two separate characteristics of heav y duty vehicles: GHG s and fuel consumption. In the case of diesel or gasoline powered vehicles, there is a one
- to - one relationship between these two characteristics. 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 efficiency as a diesel powered vehicle would emit 20 percent less CO 2 ; and a natural gas vehicle with the same fuel efficiency as a gasoline vehicle would emit 30 percent less CO 2 . Yet natural gas ve hicles consume no petroleum. In Phase 1, the agencies balanced these facts b y applying the gasoline and diesel CO 2 standards to natural gas engines based on the engine type of the natural gas engine. Fuel consumption for these vehicles is then calculated according to their tailpipe CO 2 emissions. Inessence, this applies a one - to - one relationship between fuel efficiency and tailpipe CO 2 emissions for all vehicles , including natural gas vehicles
. The agencies determined that this approach would likely

create a small balanced incentive for natural gas use. Inother words, it created a small incentive for the use of natural gas engines that appropriately balanced concerns about the climate impact methane emissions against other factors such as th e energy securit y benefits of using domestic natural gas. See 76 FR 5 7123. We propose to maintain this approach for Phase 2 . Note that EPA is also considering natural gas in a broader context of life cycle emissions, as described in Section XI
. (b ) Altern ative Refrigerants In addition to use of leak
- tight components in air conditioning sy stem design, manufacturers could also decrease the global warming impact of refrigerant leakage emissions by adopting s ys tems that use alternative, lower global warming po tential (GWP) refrigerants, to replace the refrigerant most commonly used today , HFC
- 134a (R
- 134a) . HFC
- 134a is a potent greenhouse gas with a GWP 1,430 times greater than that of CO 2 . Under EPA’s Significant New Alternatives Policy (SNAP) Program, 76 EPA has found acceptable, subject to use conditions, three alternative refrigerants that have significantl y lower

76 Section 612(c) of the Clean Air Act requires EPA to review substitutes for class I and class II ozone
- depleting substance s and to determine whether such substitutes pose lower risk than other available alternatives. EPA is also required to publish lists of substitutes that it determines are acceptable and those it determines are unacceptable. See http://www.epa.gov/ozone/snap/refrigerants/lists/index.html , l ast accessed on March 5, 2015.Page 78 of 850

GWPs than HFC
- 134a for use in A/C sy stems in newly manufactured light
- duty

vehicles: HFC
152a, CO 2 (R
- 744) , and HFO
- 1234yf. 77 HFC
- 152a has a GWP of 124, HFO
- 1234yf has a GWP of 4, and CO 2 (by

definition) has a GWP of 1, as compared to HFC
- 134a which has a GWP of 1,430. 78 CO 2 is nonflammable, while HFO
- 1234yf and HFC
- 152a are flammable. All three are subject to use conditions requiring labeling and the use of unique fittings, and where appropriate, mitigating flammability

and toxicity
. Currentl y, the SNAP listing for HFO
- 1234yf is limited to newly manufactured A/C sy stems in LD vehicles, whereas HFC
- 152a and CO 2 have been found acceptable for all mo tor vehicle air conditioning applications, including heavy
- duty vehicles. None of these alternative refrigerants can simply be “dropped” into existing HFC
- 134a air conditioning s ys tems. Inorder to account for the unique properties of each refrigerant and address use conditions required under SNAP, changes to the sy stem s will be necessary
. Ty pically these changes will need to occur during a vehicle redesign cycle but could also occur during a refresh. For example, because CO 2 , when used as a refrig erant, is phy sicall y and thermody namicall y very different from HFC
- 134a and operate s at much higher pressure s , a transition to th is refrigerant would require significant hardware changes. A transition to A/C sy stems designed for HFO
- 1234yf, which is more thermody namicall y similar to HFC
- 134a than is CO 2 , require s less significant hardware changes that ty picall y include installation of a thermal expansion valve and could potentially require resized condensers and evaporators, a s well as changes in other components. Inaddition, vehicle assembly plants require re
- tooling in order to handle new refrigerants safel y. Thus a change in A/C refrigerants requires significant engineering, planning, and manufacturing investments. EPA is not aware of an y significant development of A/C sy stems designed to use alternative refrigerants in heavy
- dut y vehicles ; 79 however, all three lower GWP alternatives are in use or under various stages of development for use in LD vehicles
. Of these three refrigerants, most manufacturers of LD vehicles have identified HFO
- 1234yf as the most likely refrigerant to be used in that application. For that reason, EPA would anticipate that HFO
- 1234yf could be a primary candidate for refrigerant substitution in the HD market in the future if it is listed as an acceptable substitute under SNAP for HD A/C applications . EPA has begun, but has not yet completed , our evaluation of the use of HFO
- 1234yf in HD vehicles . After EPA has conducted a full evaluation based o n the SNAP program’s comparative risk framework, EPA will list this alternative as either a) acceptable subject to use conditions or b) unacceptable if the risk of use in HD A/C sy stems is determined to be greater than that of the other currentl y or potentially available alternatives. EPA is also considering and evaluating additional refrigerant substitutes for use in motor vehicle A/C sy stems under the SNAP program. EPA welcomes comment s related to industry

development of HD A/C sy stems using lower
- GWP refrigerants.

77 Listed at 40 CFR part 82, subpart G. 78 GWP values cited in this proposal are from the IPCC Fourth Assessment Report (AR4) unless stated otherwise. Where no GWP is listed in AR4, GWP values shall be determined consistent with the calculations and analysis presented in AR4 and referenced materia ls. 79 To the extent that some manufacturers produce HD pickups and vans on the same production lines or in the same facilities as LD vehicles, some A/C system technology commonality between the two vehicle classes may be developing.Page 79 of 850

LD vehicle manufacturers are currentl y making investments in sy stems designed for lower
- GWP refrigerants, both domestically and on a global basis. In support of the LD GHG rule, EPA projected a full transition of LD vehicles to lower
- GWP alternatives in the United States by MY 2021. We expect the investment required to transition to ease over time as alternative refrigerants are adopted across all LD vehicles and trucks. This may occur in part due to increased availability

of components and the continuing increases in refrigerant production capacity , as well as knowledge gained through experience. As lower
- GWP alternatives become widely used in LD vehicles, some manufacturers may wish to also transition their HD vehicles. Transitioning c ould be advantageous for a variet y of reasons including platform standardization and compan y environmental stewardship policies. Although manufacturers of HD vehicles may begin to transition to alternative refrigerants in the future, there is great uncer tainty about when significant adoption of alternative refrigerants for HD vehicles might begin , on what timeline adoption might become widespread , and which refrigerants might be involved
. Another factor is that the most likely candidate, HFO
- 1234yf, remains under evaluation and has not yet been listed under SNAP
. For these reasons, EPA has not attempted to project any specific hy

pothetical scenario s of transition for anal yt ical purposes in this proposed rule. Because future introduction of and transiti on to lower
- GWP alternative refrigerants for HD vehicles may

occur, EPA is proposing regulatory provisions that would be in place if and when such alternatives become available and manufacturers of HD vehicles choose to use them. These proposed pro visions would also have the effect of easing the burden associated with complying with the lower
- leakage requirements when a lower
- GWP refrigerant is used instead of HFC
- 134a. These provisions would recognize that leakage of refrigerants would be relative ly less damaging from a climate perspective if one of the lower
- GWP alternatives is used. Specificall y, EPA is proposing to allow a manufacturer to be “deemed to comply” with the leakage standard b y using a lower
- GWP alternative refrigerant. In order to be “deemed to comply” the vehicle manufacturer would need to use a refrigerant other than HFC
- 134a that is listed as an acceptable substitute refrigerant for heavy
- duty A/C sy stems under SNAP, and defined under the LD GHG regulations at 40 CFR 86.1867
- 12( e). The refrigerants currently defined at 40 CFR 86.1867
- 12(e), besides HFC
- 134a, are HFC
- 152a, HFO
- 1234yf, and CO 2 . If a manufacturer chooses to use a lower
- GWP refrigerant that is listed in the future as acceptable in 40 CFR part 82, subpart G, but that is not identified in 40 CFR 86.1867
- 12(e), then the manufacturer could contact EPA about how to appropriatel y determine compliance with the leakage standard. EPA encourages comment on all aspects of our proposed approach to HD vehicle refrigerant leakage and the potential future use of alternative refrigerants for HD applications. We specificall y request comment on whether there should be additional provisions that could prevent or discourage manufacturers that transition to an alternative refrigerant fr om discontinuing existing, low
- leak A/C s ys tem components and instead reverting to higher
- leakage components.Page 80 of 850

Recently , EPA proposed to change the SNAP listing for the refrigerant HFC
- 134a from acceptable ( subject to use conditions ) to unacceptable for us e in A/C sy stems in new LD vehicles. 80 EPA expects to take final action on this proposed change in listing status for HFC
134a for use in new, light
- duty vehicles in 2015 . If the final action changes the status of HFC
134a to unacceptable, it would establish a future compliance date by which HFC
- 134a could no longer be used in A/C s ystems in newly manufactured LD vehicles; instead, all A/C sy stems in new LD vehicles would be required to use HFC
- 152a, HFO
- 1234yf, CO 2 , or an y other alternative listed a s acceptable for this use in the future
. The current proposed rule does not address the use of HFC
- 134a in heav y - dut y vehicles ; however, EPA could consider a change of listing status for HFC
- 134a use in HD vehicles in the future if EPA determines that oth er alternatives are currentl y or potentially available that pose lower overall risk to human health and the environment
. (c) Small Business Issues The Regulatory

Flexibility

Act (RFA) generall y requires an agency to prepare a regulatory

flexibility

analy sis of an y rule subject to notice and comment rulemaking r equirements under the Administrative Procedure Act or an y other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Se e generally 5 USC Sections 601
- 612. The RFA anal ys is is discussed in Section XIV. Pursuant to Section 609(b) of the RFA, as amended by the Small Business Regulatory Enforcement Fairness Act ( SBREFA ) , EPA also conducted outreach to small entities and conve ned a Small Business Advocacy Review Panel to obtain advice and recommendations of representatives of the small entities that potentially would be subject to the rule’s requirements. Consistent with the RFA/SBREFA requirements, the Panel evaluated the asse mbled materials and small
- entity comments on issues related to elements of the IRFA. A copy of the Panel Report is included in the docket for this proposed rule
. The agencies determined that the proposed Phase 2 regulations could have a significant economic impact on small entities. Specifically , the agencies identified four categories of directly regulated small businesses that could be impacted:

 Trailer Manufacturers  Alternative Fuel Converters  Vocational Chassis Manufacturers  Glider Vehicle 81 Asse mblers To minimize these impacts the agencies are proposing certain regulatory flexibilities

– both general and category
- specific. In general, we are proposing to delay new requirements for EPA

80 See 79 FR 46126, August 6, 2014. 81 Vehicles produced by installing a used engine into a new chassis are commonly referred to as “gliders,” “glider kits,” or “glider vehicles,”Page 81 of 850

GHG emission standards by one ye ar and simplify certification requirements for small businesses. For some of the proposed standards, small businesses would be required to compl y with E PA’s standards before NHTSA’s fuel efficiency standards would begin. NHTSA does not believe that providing small businesses with an additional year of delay to comply

with those fuel efficiency

standards would provide beneficial flexibility . For other st andards, NHTSA is proposing to require compliance with its fuel efficiency standards for small businesses in the same timeframe that compliance is required for the EPA standards. This would maintain alignment between EPA’s and NHTSA’s programs for those years in which compliance with both programs is required. The agencies request comment on this decision. We are also proposing the following specific relief:

 Trailers: Proposing simpler requirements for non
- box trailers, which are more likely to be manufac tured by

small businesses; and making third
- part y testing easier for certification
.  Alternative Fuel Converters: Omitting recertification of a converted vehicle when the engine is converted and certified; reduced N 2 O testing; and simplified onboard diagnos tics.  Vocational Chassis: Less stringent standards for certain vehicle categories.  Glider Vehicle Assemblers: 82 Exempt existing small businesses, but limit the small business exemption to a capped level of annual production (production in excess of the capped amount would be allowed, but subject to all otherwise applicable requirements including the Phase 2 standards). These flexibilities are described in more detail in Section XIV and in the Panel Report. The agencies look forward to comments and to feedback from the small business community before finalizing the rule and associated flexibilities to protect small businesses. (d ) Confidentiality of Test Results and GEM Inputs In accordance with Federal statutes, EPA does not rel ease information from certification applications (or other compliance reports) that we determine to be confidential business information (CBI) under 40 CFR part 2. Consistent with the CAA, EPA does not consider emission test results to be CBI after introd uction into commerce of the certified engine or vehicle. (However, we have generall y treated test results as protected before the introduction into commerce date ). For Phase 2, we expect to continue this policy and thus would not treat any test results or other GEM inputs as CBI after the introduction into commerce date as identified by the manufacturer. We request comment on this approach. We consider this issue to be especially relevant for tire rolling resistance measurements. Our understanding is that tire manufacturers typically consider such results as proprietary.

82 EPA is proposing to amend its rules applicable to engines installed in glider kits, a proposal whi ch would affect emission standards not only for GHGs but for criteria pollutants as well. EPA is also proposing to clarify its requirements for certification and revise its definitions for glider manufacturers. NHTSA is also considering including gliders under its Phase 2 standards.Page 82 of 850

However, under EPA’s policy , tire rolling resistance measurements are not considered to be CBI and can be released to the public after the introduction into commerce date identified b y the manufacturer. We request comment on whether EPA should release such data on a regular basis to make it easier for operators to find proper replacement tires for their vehicles. With regard to NHTSA’s treatment of confidential business information, m anufacturers must submit a request for confidentiality with each electronic submission specifying an y part of the information or data in a report that it believes should be withheld from public disclosure as trade secret or other confidential business info rmation. A form will be available through the NHTSA website to request confidentiality . NHTSA does not consider manufacturers to continue to have a business case for protecting pre
- model report data after the vehicles contained within that report have be en introduced into commerce. (e) Delegated Assembly In EPA’s existing regulations (40 CFR 1068.261), we allow engine manufacturers to sell or ship engines that are missing certain emission
- related components if those components will be installed by the vehicle manufacturer. EPA has found this provision to work well for engine manufacturers and is proposing a new provision in 40 CFR 1037.621 that would provide a similar allowance for vehicle manufacturers to sell or ship vehicles that are missing certain emissi on - related components if those components will be installed by a secondary vehicle manufacturer. As conditions of this allowance manufacturers would be required to:

 Have a contractual obligation with the secondary manufacturer to complete the assembly pro perl y and provide instructions about how to do so.  Keep records to demonstrate compliance.  Apply a temporary

label to the incomplete vehicles  Take other reasonable steps to ensure the assembly is completed properl y.  Describe in its application for certific ation how it will use this allowance. We request comment on this allowance. **(2) Proposed Amendments to**  **Phase 1 Program**  T he agencies are proposing revisions to test procedures and compliance provisions used for Phase 1. These changes are described in Section XII. As a drafting matter , EPA notes that we are proposing to mi

j grate the GHG standards for Class 2b and 3 pickups and vans from 40 CFR 1037.104 to 40 CFR 86.1819
. NHTSA is also proposing to amend 49 CFR Part 535 to make technical corrections to its Phase 1 program to better align with EPA’s compliance approach, standards and CO 2 performance results. Ingeneral, these changes are intended to improve the regulatory

e xperience for regulated parties and also reduce agency administrative burden. NHTSA is proposing to amend 49 CFR Part 535 to make technical corrections to its Phase 1 program to better align with EPA’s compliance approach, standards and CO 2 performance res ults. More specificall y, NHTSA proposes to change the rounding of its standards and performance values to have more significant digits. Increasing the number ofPage 83 of 850

significant digits for values used for compliance with NHTSA standards reduces differences in credits generated and overall credit balances for the NHTSA and EPA programs. NHTSA is also proposing to remove the petitioning process for off
- road vehicles, clarify

requirements for the documentation needed for submitting innovative technology requests in accordance with 40 CFR 1037.610 and 49 CFR Part 535.7 , and add further detail to requirements for submitting credit allocation plans as specified in 49 CFR Part 535.9. Finally , NHTSA is adding the same record requirements that EPA currentl y requires t o facilitate in
- use compliance inspections. These changes are intended to improve the regulatory experience for regulated parties and also reduce agency administrative burden. **(3) Other Proposed Amendments to EPA**  **Regulations** EPA is proposing several amendment s to regulations not directly related to the HD Phase 1 or Phase 2 programs, as detailed in Section XIII. For these amendments, there would not be corresponding changes in NHTSA regulations (since there are no such regulations relevant to those programs)
. Some of these relate directly to heavy
- dut y highway engines, but not to the GHG programs. Others relate to nonroad engines. This latter category reflects the regulatory structure EPA uses for its mobile source regulations, in which regulatory provision s applying broadly to different ty

pes of mobile sources are codified in common regulatory parts such as 40 CFR part 1068. This approach creates a broad regulatory structure that regulates highway and nonroad engines, vehicles, and equipment collectively i n a common program. Thus, it is appropriate to include some proposed amendments to nonroad regulations in addition to the changes proposed onl y for highway engines and vehicles. (a ) Standards for Engines Used In Glider Kits EPA regulations currently allow use d pre
- 2013 engines to be installed into new glider kits without meeting currently applicable standards. As described in Section XIV, EPA is proposing to amend our regulations to allow only engines that have been certified to meet current standards to be i nstalled in new glider kits, with two exceptions. First, engines certified to earlier MY standards that were identical to the current model year standards may be used. Second, the small manufacturer allowance described in Section I. F. (1) (c) for glider vehicles would also apply for the engines used in the exempted glider kits. (b ) Re
- proposal of Nonconformance Penalty Process Changes Nonconformance penalties (NCPs) are monetary penalties established by

regulation that allow a vehicle or engine manufacturer to sell engines that do not meet the emission standards. Manufacturers unable to comply with the applicable standard pay penalties, which are assessed on a per - en gine basis. On September 5, 2012, EPA adopted final NCPs for heav y heav y - dut y diesel engines that c ould be used b y manufacturers of heav y - duty diesel engines unable to meet the current oxides of nitrogen (NO X ) emission standard. On December 11, 2013 the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion vacating that Final Rule. It issued its mandate for this decision on April 16, 2014 , ending the availability of the NCPs for the current NO X standard, as well as vacating certain amendments to the NCP regulations due to concerns aboutPage 84 of 850

inadequate notice
. In particular, the amendments revise the text explaining how EPA determines when NCP should be made available. In this action, EPA is re
- proposing most of these amendments to provide fuller notice and additional opportunity for public comment. They are discussed in Section XIV. (c) Updates to Heavy

-Duty Engine Manufacturer In

- use Testing Requirements EPA and manufacturers have gained substantial experience with in
- use testin g over the last four or five ye ars. This has led to important insights in way s that the test protocol can be adjusted to be more effective. We are accordingl y proposing to make changes to the regulations in 40 CFR part 86, subparts N and T. (d ) Extension of Certain 40 CFR part 1068 Provisions to Highway Vehicles and Engines As part of the Phase 1 GHG standards, we applied the exemption and importation provisions from 40 CFR part 1068, subparts C and D, to heav y - dut y highway engines and vehicles. We also spec ified that the defect reporting provisions of 40 CFR 1068.501 were optional. In an earlier rulemaking, we applied the selective enforcement auditing under 40 CFR part 1068, subpart E (75 FR 22896, April 30, 2010). We are proposing in this rule to adopt the rest of 40 CFR part 1068 for heav y - dut y highway engines and vehicles, with certain exceptions and special provisions. As described above, we are proposing to appl y all the general compliance provisions of 40 CFR part 1068 to heavy
- dut y engines and vehi cles. We propose to also apply the recall provisions and the hearing procedures from 40 CFR part 1068 for highway motorcycles and for all vehicles subject to standards under 40 CFR part 86, subpart S. We also request comment on applying the rest of the p rovisions from 40 CFR part 1068 to highway motorcycles and to all vehicles subject to standards under 40 CFR part 86, subpart S. EPA is proposing to update and consolidate the regulations related to formal and informal hearings in 40 CFR part 1068, subpart G. This would allow us to rely on a single set of regulations for all the different categories of vehicles, engines, and equipment that are subject to emission standards. We also made an effort to write these regulations for improved readability. We are also proposing to make a number of changes to part 1068 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory

provisions. (e) Amendments to Engine and Vehicle Test Procedures in 40 CFR parts 1065 and 1066 EPA is proposing several changes to our engine testing procedures specified in 40 CFR part 1065. None of these changes would significantly impact the stringency

of any standards. (f ) Amendments Related to Marine Diesel Engines in 40 CFR part 1042 EPA’s emission standards and certification requirements for marine diesel engines under the Clean Air Act are identified in 40 CFR part 1042. EPA is proposing to amend thesePage 85 of 850

regulations with respect to continuous NO X monitoring and auxiliary engines, as well as making several other minor revisions
. (g ) Amendments Related to Locomotives in 40 CFR part 1033 EPA’s emission standards and certification requirements for locomotives under the Clean Air Act are identified in 40 CFR part 1033. EPA is prop osing to make several minor revisions to these regulations. **(4) Other Proposed Amendments to NHTSA Regulations**  NHTSA is proposing to amend Parts 537 and 512 of title 49 of the CFR in order to allow manufacturers to submit required compliance data for the Corpo rate Average Fuel Economy program electronicall y, rather than submitting some reports to NHTSA via paper and CDs and some reports to EPA through its VERIFY database sy stem. The agencies are coordinating on an information technology

project which will allo w manufacturers to submit pre
- model, mid
- model and final model year reports through a single electronic entry point. The agencies anticipate that this would reduce the reporting burden on manufacturers b y up to fifty percent. The amendments to Part 537 w ould allow reporting to an electronic database (i.e. EPA’s VERIFY sy stem), and the amendments to Part 512 would ensure that manufacturer’s confidential business information would be protected through that process. This proposal is discussed further in Se c tion XIII
.Page 86 of 850



## II. **Ve hicle Simulation, Engine Standards and**  **Te st Procedures**  **A. Introduction and Summary of Phase 1 and Phase 2 Regulatory Structures**  This Section II. A. gives an overview of our vehicle simulation approach in Phase 1 and our proposed approach for Phase 2; our separate engine standards for tractor and vocational chassis in Phase 1 and our proposed separate engine standards in Phase 2; and it describes our engine and vehicle test procedures that are common among the tractor and vo cational chassis standards. Section II. B. discusses in more detail how the Phase 2 proposed regulatory structure would approach vehicle simulation, separate engin e standards, and test procedures. Section II. C. discusses the proposed vehicle simulation computer program, GEM, in further detail and Section II. D. discusses the proposed separate engine standards and engine test procedure. See Sections III through VI for discussions of the proposed test procedures that are unique for tractors, trailers, vocational chassis, and HD pickup trucks and vans. In Phase 1 the agencies adopted a regulatory structure that included a vehicle simulation procedure for certifying tractors and the chassis of vocational vehicles. In contrast, the agencies adopted a full vehicle chassis dy namometer test procedure for certifying co mplete heav y - dut y pickups and van s. The Phase 1 vehicle simulation procedure for tractors and vocational chassis requires regulated entities to use GEM to simulate and certify tractors and vocational vehicle chassis. This program is provided free of char ge for unlimited use and may be downloaded b y anyone from EPA’s Website: http://www.epa.gov/otaq/climate/gem.htm . This computer program mathematically

combines vehicle component test results with oth er pre - determined vehicle attributes to determine a vehicle’s levels of fuel consumption and CO 2 emissions for certification purposes. For Phase 1, the required inputs to this computer program include, for tractors, vehicle aerodyn amics information, tire rolling resistance, and whether or not a vehicle is equipped with certain lightweight high
- strength steel or aluminum components, a tamper
- proof speed limiter, or tamper
- proof idle reduction technologies. The sole input for vocational vehicles, was tire rolling resistance. For Phase 1 the computer program’s inputs did not include engine test results or attributes related to a vehicle’s powertrain, namel y, its transmission, drive axle(s), or tire revolutions per mile. Instead, for Phase 1 the agencies spe cified a generic engine and powertrain within the computer program, and for Phase 1 these cannot be changed b y a program user. 83 The full vehicle chassis dynamometer test procedure for heav y - dut y pickups and vans substantially

mirrors EPA’s existing light
- dut y vehicle test procedure. EPA also set separate engine so
- called cap standards for methane (CH 4 ) and nitrous oxide (N 2 O) (essentially capping current emission levels)
. Compliance with the CH 4 and N 2 O standards is measured b y an engine dy namometer test procedur e, which EPA based on our existing heav y - dut y engine emissions test procedure with small adaptations
. EPA also set hydro
- fluorocarbon refrigerant leakage design standards for cabin air conditioning sy stems in tractors , pickups , and vans, which are evaluated by design rather than a test procedure.

83 These attributes are recognized in Phase 1 innovative technology provisions at 40 CFR 1037.610.Page 87 of 850

In this action the agencies are proposing a similar regulatory structure for Phase 2, along with a number of revisions that are intended to more accuratel y evaluate vehicle and engine technologies’ impact on real
- world fuel efficiency and GHG emissions. Thus, we are proposing to continue the same certification test regime for heav y dut y pickups and vans, and for the CH 4 and N 2 O) standards, as well as tractor and pickup and van air conditioning leakage standards. EPA is also proposing to control vocational vehicle air conditioning leakage and to use that same certification procedure. We are proposing to continue the vehicle simulation procedure for certifying tractors and vocational chas sis, and we are proposing a new regulatory program to regulate some of the trailers hauled b y tractors. The agencies are proposing the use of an equation based on the vehicle simulation procedure for trailer certification. Inaddition, we are proposing a simplified option for trailer certification that would not require testing to be undertaken by manufacturers to generate inputs for the equation . We are also proposing to continue sep arate fuel consumption and CO 2 standards for the engines installed in tractors and vocational chassis, and we are proposing to continue to require a full vehicle chassis dy namometer test procedure for certifying complete heav y - duty

pickups and vans. As de scribed in Section II.B.(2) (b) , the agencies see important advantages to maintaining separate engines standards, such as improved compliance assurance and better control during transient engine operation. The vehicle simulation procedure necessitates some testing of engines and vehicle components to generate the inputs for the simulation tool; that is, to generate the inputs to the model which is used to certify tractors and vocational chassis . For trailers , some testing may be performed in order to generate values that are input into the simulation
- based compliance equations . In addition to the tes ting needed for this purpose for the inputs used in the Phase 1 standards, the agencies are proposing in Phase 2 that manufacturers conduct additional required and optional engine and vehicle component test s, and proposing the additional procedures for con ducting these input tests. These include a new required engine test procedure that provides steady
- state engine fuel consumption and CO 2 inputs to represent the actual engine in a vehicle. In addition, we are seeking comment on a newl y developed engine t est procedure that captures transient engine performance for use in the vehicle simulation computer program. As described in detail in the draft RIA Chapter 4, we are proposing to require entering attributes that describe the vehicle’s transmission ty pe, and its number of gears and gear ratios. We are proposing an optional powertrain test procedure that would provide inputs to override the agencies’ simulated engine and transmission in the vehicle simulation computer program. We are proposing to require entering attributes that describe the vehicle’s drive axle(s) type and axle ratio. We are also seeking comment on an optional axle efficiency test procedure that would override the agencies’ simulated axle in the vehicle simulation computer program. To i mprove the measurement of aerodyn amic components performance, we are proposing a number of improvements to the aerody namic coast
- down test procedure and data analysis, and we are seeking comment on a newly developed constant speed aerody namic test procedure. We are proposing that the aerodynamic test procedures for tractors be applicable to trailers when a regulated entity opts to use the GEM
- based compliance equation. Additional details about all these test procedures are found in the draft RIA Chapter 3. We are further proposing to significantl y expand the number of technologies that are recognized in the vehicle simulation computer program. These include recognizin g lightweightPage 88 of 850

thermoplastic materials, automatic tire inflation systems, advanced cruise control sy stems, workday idle reduction sy stems, and axle configurations that decrease the number of drive axles. We are seeking comment on recognizing additional tec hnologies such as high efficiency glass and low global warming potential air conditioning refrigerants as post
- process adjustments to the simulation results. To better reflect real
- world operation, we are also proposing to revise the vehicle simulation co mputer program’s urban (55 mph) and rural (65 mph) highway duty cycles to include changes in road grade. We are seeking comment on whether or not these duty cycles should also simulate driver behavior in response to varying traffic patterns. We are propo sing a new duty cycle to capture the performance of technologies that reduce the amount of time a vehicle’s engine is at idle during a workday when the vehicle is not moving. And to better recognize that vocational vehicle powertrains are configured for p articular applications, we are proposing to further subdivide the vocational chassis category into three different vehicle speed categories. This is in addition to the Phase 1 subdivision by three weight categories. The result is nine proposed vocational vehicle subcategories for Phase 2. The agencies are also proposing to subdivide the highest weight class of tractors into two separate categories to recognize the unique configurations and technology applicability

to “heavy
- haul” tractors. Even though we are proposing to include engine test results as inputs into the vehicle simulation computer model, we are also proposing to continue the Phase 1 separate engine standard regulatory

structure by

proposing separate engine fuel consumption and CO 2 standards for engines installed in tractors and vocational chassis. For these separate engine standards, we are proposing to continue to use the Phase 1 engine dy namometer test procedur e, which was adapted substantiall y from EPA’s existing heavy
- duty engine emissio ns test procedure. However, we are proposing to modify the weighting factors of the tractor engine’s 13
- point steady
- state duty c ycl e to better reflect real
- world engine operation and to reflect the trend toward operating engines at lower engine speeds during tractor cruise speed operation. Further details on the proposed Phase 2 separate engine standards are provided below in Section II. D. In today ’s action EPA is proposing to continue the separate engine cap standards for methane (CH 4 ) and nitrous oxide (N 2 O) emissions. **(1) Phase 1**  **Vehicle Simulation Computer Program**  **(GEM)** For Phase 1 EPA developed a vehicle simulation computer program called, “ Greenhouse g as Emi ssions Model ” or “ GEM .” GEM was created for Phase 1 for the exclusive purpose of certifying tractors and vocational vehicle chassis . GEM is similar in concept to a number of other commercially

available vehicle simulation computer programs. See 76 FR 57 116, 57146, 57156
- 157. However, GEM is also unique in a number of way s . Similar to other vehicle simulation computer programs, GEM combines various vehicle inputs with known physical laws and justified assumptions to predict vehicle performance for a give n period of vehicle operation. For Phase 1 GEM’s vehicle inputs include vehicle aerodynamics information (for tractors), tire rolling resistance, and whether or not a vehicle is equipped with lightweight materials, a tamper
- proof speed limiter, or tamper
- proof idle reduction technologies. Other vehicle and engine characteristics were fixed as defaults that cannot be altered b y the user. These defaults included tabulated data of engine fuel rate as a function ofPage 89 of 850

engine speed and torque (i.e. “engine fuel maps”), transmissions, axle ratios, and vehicle payloads. For tractors, Phase 1 GEM models the vehicle pulling a standard trailer. For vocational vehicles, Phase 1 GEM includes a fixed aerodynamic drag coefficient and vehicle frontal area. GEM uses the same ph ys ical principles as man y other existing vehicle simulation models to derive governing equations which describe driveline components, engine, and vehicle. These equations are then integrated in time to calculate transient speed and torque. Some of the justified assumptions in GEM include average energy losses due to friction between moving parts of a vehicle’s powertrain; the logical behavior of an average driver shifting from one transmission gear to the next; ad speed limit assumptio ns such as 55 miles per hour for urban highway driving and 65 miles per hour for rural interstate highway driving. The sequence of the GEM vehicle simulation can be visualized b y imagining a human driver initially sitting in a parked running tractor or vo cational vehicle. The driver then proceeds to drive the vehicle over a prescribed route that includes three distinct patterns of driving: stop
- and
- go city driving, urban highway driving, and rural interstate highway driving. The driver then exits the highway and brings the vehicle to a stop. This concludes the vehicle simulation. Over each of the three driving patterns or “duty c ycles,” GEM simulates the driver’s behavior of pressing the accelerator, coasting, or applying the brakes. GEM also simulate s how the engine operates as the gears in the vehicle’s transmission are shifted and how the vehicle’s weight, aerodyn amics, and tires resist the forward motion of the vehicle. GEM combines the driver behavior over the duty cycles with the various vehicle inputs and other assumptions to determine how much fuel must be consumed to move the vehicle forward at each point during the simulation
. For each of the three duty cycles, GEM totals the amount of fuel consumed and then divides that amount by the produc t of the miles travelled and tons of payload carried. The tons of payload carried are specified by the agencies for each vehicle type and weight class. For each regulatory

subcategory

of tractor and vocational vehicle (e.g., sleeper cab tractor, day cab tractor, small vocational vehicle, large vocational vehicle, etc.), GEM applies prescribed weighting factors to each of the three duty cycles to represent the fraction of city , urban highway , and rural highway

driving that would be typical of each subcateg ory . After completing all the cycles, GEM outputs a single composite result for the vehicle, expressed as both fuel consumed in gallon per 1000 ton
- miles (for NHTSA standards) and an equivalent amount of CO 2 emitted in grams per ton
- mile (for EPA standards). These are the vehicle’s GEM results that are used along with other information to demonstrate the vehicle complies with the applicable standards. This other in formation includes the annual sales volume of the vehicle (family) simulated in GEM, plus information on emissions credits that may be generated or used as part of that vehicle family ’s certification. While GEM is similar to other vehicle simulation computer programs, GEM is also unique in a number of way s. First, GEM was designed exclusively for regulated entities to certify tractor and vocational vehicle chassis to the agencies’ respective fuel consumption and CO 2 emissions standards
. For GEM to be effective for this purpose, the inputs to GEM include only information related to vehicle comp onents and attributes that significantly impact vehicle fuel efficiency

and CO 2 emissions. For example, these include vehicle aerody namics, tire rolling resistance, and whether or not a vehicle is equipped with lightweight materials, a tamper
- proof speed limiter, or tamper
- proof idle reduction technologies. On the other hand, other attributesPage 90 of 850

such as those related to a vehicle’s suspension, frame strength, or interior features are not included, where these might be included in other commercially available vehicle simulation programs for other purposes. Furthermore, the simulated driver behavior and the duty cycles cannot be changed in the GEM executable program. This helps to ensure that all vehicles are simulated and certified in the same way , but this does preclude GEM from being of much use as a research tool for exploring the effects of driver behavior and of different duty cycles. To allow for public comment , GEM is available free of charge for unlimited use, and the G EM source code is open source. That is, the programming source code of GEM is freel y available upon request for anyone to examine, manipulate, and generall y use without restriction. In contrast commerciall y available vehicle simulation programs are generally not free and open source. Additional d etails of GEM are included in Chapter 4 of the RIA. As part of Phase 1, the agencies conducted a peer review of GEM version 1.0 , which was the version released for the Phase 1 proposal
. 84 , 85 Inresponse to this pe er review and comments from stakeholders , EPA has made changes to GEM. The current version of GEM is v2.0 .1, which is the version applicable for the Phase 1 standards. 86 **(2) Phase 1 Engine Standards and Engine Test Procedure**  For Phase 1 the agencies set separate engine fuel consumption and CO 2 standards for engines installed in tractors and vocational vehicle chassis. EPA also set separate engine cap standards for methane (CH 4 ) and nitrous oxide (N 2 O) emissions. These Phase 1 engine standards are specif ied in terms of brake
- specific (g/hp
- hr) fuel, CO 2 , CH 4 and N 2 O emissions limits. For these separate engine standards, the agencies adopted an engine dy namometer test procedur e, which was built substantially from EPA’s existing heav y - dut y engine emissions test procedure. Since the test procedure already specified how to measure fuel consumption, CO 2 and CH 4 , few changes were needed to employ the test procedure for purposes of the Phase 1 standards. For Phase 1 the test procedure was modified to specify h ow to measure N 2 O. The duty cycles from EPA’s existing heav y - dut y emissions test procedure were used in a somewhat unique way

for Phase 1. In EPA’s non
- GHG engine emissions standards, heav y - dut y engines must meet brake
- specific standards for emissions of total oxides of nitrogen (NO X ), particulate mass (PM), non
- methane h ydrocarbon (NMHC), and carbon monoxide (CO). These standards must be met b y all engines both over a 13
- mode steady - state duty cycle called the “Supplemental Emissions Test” (SET) and over a composite of a cold
- start and a hot
- start transient duty

cycle called the “Federal Test Procedure” (FTP). In contrast, for Phase 1 the agencies require that engines specificall y installed in tractors meet fuel efficiency and CO 2

84 See 76 FR 57146
- 47. 85 U.S. Environmental Protection Agency. “Peer Revie w of the Greenhouse Gas Emissions Model (GEM) and EPA’s Response to Comments.” EPA
- 420
- R
- 11
- 007. Last access on November 24, 2014 at http://www.epa.gov/otaq/climate/documents/420r11007.pdf. 86 See EPA’s we b site at http://www.epa.gov/otaq/climate/gem.htm for the Phase 1 GEM revision dated May 2013, made to accommodate a revision to 49 CFR 535.6(b)(3).Page 91 of 850

standards over onl y the SET but not the FTP. This requirement was intended to reflect that tractor engines ty

pically operate near steady
- state conditions versus transient conditions. See 76 FR 57159/2
- 3. The agencies adopted the converse for engines installed in vocational vehicles. That is, these engines must meet fuel efficiency and CO 2 standards over only the hot
- start FTP but not the SET. This requirement was intended to reflect that vocational vehicle engines ty picall y operate under transient conditions versus steady
- state conditions (76 FR 57178). For both tractor and vocational vehicle engines in Phase 1, EPA set CH 4 and N 2 O emissions cap standards over the cold
- start and hot
- start FTP only and not over the SET duty cycle . See Section II. D. for details on how we propose to modify the engine test procedure for Phase 2. 

### B. **Phase 2 Proposed Regulatory Structure** For Phase 2, the agencies are proposing to modify the regulatory

structure used for Phase 1. Note that we are not proposing to appl y the new Phase 2 regulatory structure for compliance with the Phase 1 standards. The structure used to demonstrate complia nce with the Phase 1 standards will remain as finalized in the Phase 1 regulation. The modifications we are proposing are consistent with the agencies’ Phase 1 commitments to consider a range of regulatory approaches during the development of future regul atory efforts (76 FR at 57133), especially for vehicles not already subject to full vehicle chassis dynamometer testing. For example, we committed to consider a more sophisticated approach to vehicle testing to more completel y capture the complex interactions within the total vehicle, including the engine and powertrain performance. We also intended to consider the potential for full vehicle certification of complete tractors and vocational chassis using a chassis dynamometer test procedure. We also cons idered chassis dy

namometer testing of complete tractors and vocational chassis as a complementary approach for validating a more complex vehicle simulation approach. We also committed to consider the potential for a regulatory program for some of the trai lers hauled by tractors. After considering these various approaches, the agencies are proposing a structure in which regulated tractor and vocational chassis manufacturers would additionally enter engine and powertrain
related inputs into GEM, which was n ot allowed in Phase 1. For trailer manufacturers, which would be subject to first
- time standards under the proposal, we are also proposing GEM
- based certification. Ho wever, we are proposing a simplified structure that would allow certification without the manufacturers actuall y running GEM . More specificall y, the agencies have developed a simple equation that uses the same trailer inputs as GEM to represent the emission impacts of aerody namic improvements, tire improvements, and weight reduction. As described in Chapter 2.10.6 of the draft RIA, these equations have nearl y perfect correlation with GEM so that they can be u sed instead of GEM without impacting stringency
. We are proposing both required and optional test procedures to provide these additional GEM inputs. We are also proposing to significantly expand the number of technologies recognized in GEM. Further, we are proposing to modify the GEM duty c ycles and to further subdivide the vocational vehicle subcategory to better represent real
- world vehicle operation. In contrast to these changes, we are proposing to maintain essentially the same chassis dy namometer te st procedure for certifying complete heav y - dut y pickups and vans.Page 92 of 850

**(1) Other Structures Considered**  To follow
- up on the commitment to consider other approaches, the agencies spent significant time and resources in evaluating six different options for demonstrati ng compliance with the proposed Phase 2 standards. These six options include full vehicle chassis dy namometer testing, full vehicle simulation, and vehicle simulation in combination with powertrain testing, engine testing, engine electronic controller and /or transmission electronic controller testing. The agencies evaluated these options in terms of the capital investment required of regulated manufacturers to conduct the testing and/or simulation, the cost per test, the accuracy of the simulation, and th e challenges of validating the results. Other considerations included the representativeness to the real world behavior, maintaining existing Phase 1 certification approaches that are known to work well, enhancing the Phase 1 approaches that could use imp rovements, the alignment of test procedures for determining GHG and non
- GHG emissions compliance, and the potential to circumvent the intent of the test procedures. Chassis dy

namometer testing is used extensively in the development and certification of light
- duty vehicles. It also is used in Phase 1 for complete Class 2b/3 pickups and vans, as well as for certain incomplete vehicles (at the manufacturer’s option). The agencies considered chassis dy

namometer testing more broadl y as a heavy
- duty fuel effici ency

and GHG certification option because chassis dynamometer testing has the ability to evaluate a vehicle’s performance in a manner that most closely resembles the vehicle’s in
- use performance. Nearl y all of the fuel efficiency technologies can be evalu ated on a chassis dy namometer, including the vehicle sy stems’ interactions that depend on the behavior of the engine, transmission, and other vehicle electronic controllers. One challenge associated with application of wide
- spread heav y - dut y chassis testi ng is the small number of heav y - dut y chassis test sites that are available in North America. As discussed in draft RIA Chapter 3, the agencies were onl y able to locate 11 heav y duty chassis test sites. However, we have seen an increased interest in build ing new sites since issuing the Phase 1 Final Rule. For example, EPA is currentl y building a heav y - dut y chassis dy namometer with the ability to test up to 80,000 pound vehicles at the National Vehicle and Fuel Emissions L aboratory in Ann Arbor, Michigan. Nevertheless, the agencies continue to be concerned about proposing a chassis test procedure for certifying tractors or vocational chassis due to the initial cost of a new test facility and the large number of heav y dut y tractor and vocational chassis variants that could require testing. We have also concluded that for heav y - duty tractors and vocational chassis, there can be increased test
- to - test variability under chassis dy

namometer test conditions. First, the agencies recognize that such testing requi res expensive, specialized equipment that is not wide ly available . The agencies estimate that it would vary from about $1.3 to $4.0 million per new test site depending on existing facilities. 87 In addition, the large number of heav y - duty vehicle configurations would require significant amounts of testing to cover the sector. For example, for Phase 1 tractor manufacturers typicall y certified several thousand variants of one single tractor model. Finally , EPA’s evaluation of heavy
- duty chassis dy

namometer testing has shown that the

87 03
- 19034 TASK 2 Report
- Paper 03
- Class8_hil_DRAFT, September 30, 2013.Page 93 of 850

variation of chassis test results is greater than light
- duty testing, up to 3 percent worse, based on our sponsored testing at Southwest Research Institute. 88 Although the agencies are not proposing chassis dy

namometer certificat ion of tractors and vocationa l chassis , we believe such an approach could be appropriate in the future for some heav y dut y vehicles if more tes t facilities become available and if the agencies are able to address the large number of vehicle variants that might require testing
. We request comment on whether or not a chassis dynamometer test procedure should be required in lieu of the vehicle simulation approach we are proposing. Note, as discussed in Section II. C. (4) (b) that we are also proposing a modest complete tractor heavy
duty chassis dy

namometer test pro gram only for monitoring complete tractor fuel efficiency trends over the implementation timeframe of the Phase 1 and proposed Phase 2 standards. Another option considered for certification involves testing a vehicle’s powertrain in a modified engine dy

namometer test facility . In this case the engine and transmission are installed in a laboratory

test facility

and a dy namometer is connected to the output shaft of the transmission. GEM or an equivalent vehicle simulation computer program is then used to control the dy

namometer to simulate vehicle speeds and loads. The step
- by
- step test procedure considered for this option was initially developed as an option for hy brid powertrain testing for Phase 1. A key

advantage of the powertrain test approach is that it directl y measures the effectiveness of the engine, the transmission, and the integration of the two. Engines and transmissions are particularly challenging to simulate within a computer program like GEM because engines and transmissions installed in vehicles today are activel y and interactivel y controlled by

their own sophisticated electronic controls. These controls already contain essentially

their own vehicle simulation programs that GEM would then have to otherwise simulate. We believe that the capital investment impact for powertrain testing on manufacturers could be manageable for those that already have heav y - dut y engine dyn amometer test cells. We have found that in general medium
- duty powertrains can be tested in heavy
- duty engine test c ells. EPA has successfully completed such a test facility conversion at the National Vehicle and Fuel Emissions L aboratory in Ann Arbor, Michigan. Southwest Research Institute (SwRI) in San Antonio, Texas has completed a similar test cell conversion. Oak Ridge National L aboratory in Oak Ridge, Tennessee recently completed construction of a new and specialized heavy heavy
duty powertrain dynamometer facility. EPA also contracted SwRI to evaluate North America’s current capabilities for powertrain testing in the heavy
- dut y sector and the cost of installing a new powertrain cell that would meet agency requirements. 89 R esults indicated that one supplier currentl y has this capability . We estimate that the upgrade costs to an existing engine test facility are on the order of $1.2 million, and a new test facility in an existing building are on the order of $1.9 million. We also estimate that current powertrain test cells that c ould be upgraded to measure CO 2 emissions would cost approximately $600,000. For manu facturers or suppliers wishing to contract out such testing, SwRI estimated that a cost of $150,000 would provide about one month of powertrain testing services. Once a powertrain test cell is fully operational, we

88 GEM Validation, Technical Research Workshop, San Antonio, December 10
- 11, 2014 89 03
- 19034 TASK 2 Report
- Paper 03
- Class8_hil_DRAFT, September 30, 2013Page 94 of 850

estimate that for a nominal powertrain family (i.e. one engine family

tested with one transmission family), the cost for powertrain installation, testing, and data analy sis would be $68,972. Since the Phase 1 Final Rule, the agencies and other stakeholders have completed significant new work toward refining the powertrain test procedure itself. The proposed regulations provide details of the refined powertrain test procedure. See 40 CFR 1037.550. Furthermore, the agencies have worked with key transmission suppliers to develop an approach to define transmission families. Coupled with the agencies existing definitions of engine families (40 CFR 1036.230), we are proposing an approach to define a power train famil y in 40 CFR 1037.231
. We request comment on what key attributes should be considered when defining a transmission family
. We believe that a combination of a robust powertrain family definition, a refined powertrain test procedure and a refined GEM could become an optimal certification path that leverages the accuracy

of powertrain testing along with the versatility of GEM, which alleviates the need to test a large number of vehicle or powertrain variants. To balance the potential advantages of this approach with the fact that it has never been used for vehicle certification in the past, we are proposing to allow this approach as an optional certification path, as described in Section II.B.(2) (b)
. To be clear, we are not proposing to require powertrain testing at this time, but becau se this testing would recognize additional technologies that are not recognized directl y in GEM (even as proposed to be amended), we are factoring its use into our stringency considerations for vocational chassis. We request comment on whether the agencie s should consider requiring powertrain testing more broadly. Another regulatory

structure option considered was engine
- onl y testing over the GEM duty cycles over a range of simulated vehicle configurations. This approach would use GEM to generate engine dut y c yc les by simulating a range of transmissions and other vehicle variations. These engine duty cycles then would be programmed into a separate controller of a dy namometer connected to an engine’s output shaft. Unlike the chassis dynamometer or powertrain dyn amometer approaches, which could have significant test facility construction or modification costs, this approach has little capital investment impact on manufacturers because the majority

already have engine test facilities to both develop engines and to certify engines to meet both the non
- GHG standards and the Phase 1 fuel efficiency and GHG standards. The agencies also have been investigating this approach as an alternative way to generate data that could be used to represent an engine in GEM. Because this approach captures engine performance under transient conditions, this approach could be an improvement over our proposed Phase 2 approach of representing an engine in GEM with only steady
- state operating data. Details of this alternative are described in draft RIA
. Because this approach is new and has never been used for vehicle development or certification, we are not proposing requiring its use as part of the Phase 2 certification process. However, we encourage others to investigate this new approach in detail, and we request comment on whether or not the agencies should replace our proposed steady - state operation representation of the engine in GEM with this alternative approach.Page 95 of 850

Additional certification options considered included simulating the engine, transmi ssion, and vehicle using a computer program while having the actual transmission electronic controller connected to the computer running the vehicle simulation program. The output of the simulation would be an engine cycle that would be used to test the e ngine in an engine test facility . Just as in the engine
- onl y test procedure, this procedure would not require significant capital investment in new test facilities. An additional benefit of this approach would be that the actual transmission controller w ould be determining the transmission gear shift points during the test, without a transmission manufacturer having to reveal their proprietary transmission control logic. This approach comes with some technical challenges, however. The model would have t o become more complex and tailored to each transmission and controller to make sure that the controller would operate properl y when it is connected to a computer instead of a transmission. Some examples of the transmission specific requirements would be s imulating all the Controller Area Network (CAN) communication to and from the transmission controller and the specific sensor responses both through simulation and hardware. The vehicle manufacturer would have to be responsible for connecting the transmis sion controller to the computer, which would require a detailed verification process to ensure it is operating properl y. Determining full compliance with this test procedure would be a significant challenge for the regulatory agencies because the agencies would have to be able to replicate each of the manufacturer’s unique interfaces between the transmission controller and computer running GEM. Finally , the agencies considered full vehicle simulation plus separate engine standards, which is the proposed approach for Phase 2. These are discussed in more detail in the following sections. **(2) Proposed Regulatory Structure**  Under the proposed structure, tractor and vocational chassis manufacturers would be required to provide engine, transmission, drive axle(s ) and tire radius inputs into GEM. For Phase 1, GEM used default values for all of these, which limited the ty pes of technologies that could be recognized by

GEM to show compliance with the standards. We are proposing to significantl y expand GEM to acco unt for a wider range of technological improvements that would otherwise need to be recognized through some off
- cycle crediting approach
. Thes e include improvements to the driver controller (i.e., the simulation of the driver), engines, transmissions, and axles. Additional technologies that would now be recognized in GEM also include lightweight thermoplastic materials, automatic tire inflation sy stems, advanced cruise control sy stems, engine stop
- start idle reduction sy stems, and axle configurations that decrease the number of drive axles. The agencies are also proposing to maintain separate engine standards. As described below, we see advantages to having both engine
- based and vehicle
based standards. Moreover, the advantages described here for full v ehicle simulation do not necessarily

correspond to disadvantages for engine testing or vice versa. (a ) Advantages of Full Vehicle Simulation The agencies’ primary

purpose in developing fuel efficiency and GHG emissions standards is to increase the use of veh icle technologies that improve fuel efficiency and decrease GHG emissions. Under the Phase 1 tractor and vocational chassis standards, there is no regulatory incentive for manufacturers to adopt new engine, transmission or axle technologiesPage 96 of 850

because GEM wa s not configured to recognize these technologies uniquel y. By recognizing such technologies in GEM under Phase 2, the agencies would be creating a regulatory incentive to improve engine, transmission, and axle technologies to improve fuel efficiency and d ecrease GHG emissions. In its 2014 report, NAS also recognized the benefits of full vehicle simulation and recommended that Phase 2 incorporate such an approach. We anticipate that the proposed Phase 2 approach would create three new specific regulatory incentives. First, vehicle manufacturers would have an incentive to use the most efficient engines. Since GEM would no longer use the agency default engine in simulation manufacturers would have their own more efficient engines recognized in GEM. Under Phase 1 , engine manufacturers have a regulatory incentive to design efficient engines, but vehicle manufacturers do not have a similar regulatory incentive to use efficient engines in their vehicles. Second, the proposed approach would create incentives f or both engine and vehicle manufacturers to design engines and vehicles to work together to ensure that engines actually operate as much as possible near their most efficient points. This is because Phase 2 GEM would allow the vehicle manufactures to use specific transmission, axle, and tire characteristics as inputs, thus having the ability to directl y recognize many powertrain integration benefits, such as downspeeding , and different transmission architectures and technologies, such as autom ated manual transmissions, automatic transmissions,, and different numbers of transmission gears, transmission gear ratios, axle ratios and tire revolutions per mile. No matter how well designed, all engines have speed and load operation points with diffe ring fuel efficiency and GHG emissions. The speed and load point with the best fuel efficiency (i.e., peak thermal efficiency) is commonly

known as the engine’s “sweet spot”. The more frequentl y an engine operates near its sweet spot, the better the vehi cle’s fuel efficiency will be. In Phase 1, a vehicle manufacturer receives no regulatory

credit for designing its vehicle to operate closer to the sweet spot because Phase 1 GEM does not model the actual engine, transmission, axle, or tire revolutions per mile. Third, the proposed approach would recognize improvements to the overall efficiency of the drivetrain including the axle. The proposed version of GEM would recognize the benefits of different axle technologies including axle lubricants, and reducing axle losses such as b y enabling three
- axle vehicles to deliver power to only one rear axle through the proposed post
simulation adjustment approach (see Chapter 4.5 of the Draft RIA)
. In addition to providing regulatory incentives to use more fuel eff icient technologies, expanding GEM to recognize engine and other powertrain component improvements would also provide important flexibility to vehicle manufacturers. The flexibility to effectivel y trade engine and other component improvements against othe r vehicle improvements would allow vehicle manufacturers to better optimize their vehicles to achieve the lowest cost for specific customers. Vehicle manufacturers could use this flexibility to reduce overall compliance costs and/or address special applic ations where certain vehicle technologies are not practical. The agencies considered in Phase 1 allowing the exchange of emission certification credits generated relative to the separate brake
- specific (g/hp
- hr) engine standards and credits generated relative to the vehicle standards (g/ton
- mile). However, we did not allow this in Phase 1 due in part to concerns about the equivalency of credits generated relative to different standards, with different units of measure and different test procedures. The p roposed approach for Phase 2 would eliminate these concerns because engine and other vehicle component improvements would be evaluated relative to the same vehicle standard in GEM. This also means that under thePage 97 of 850

proposed Phase 2 approach there is no need to consider allowing emissions credit trading between engine
- generated and vehicle
- generated credits because vehicle manufacturers are directly credited by

the combination of engine and vehicle technologies they choose to install in each vehicle . Therefor e, this approach eliminates one of the concerns about continuing separate engine standards, which was that a separate engine standard and a full vehicle standard were somehow mutually exclusive . That is not the case. In fact, in the next section we describe how we propose to continue the separate engine standard along with recognizing engine performance at the vehicle level. The agencies acknowledge that maintaining a separate engine standard would limit flexibility

in cases where a vehicle manufacturer wanted to use less efficient engines and make up for them using more efficient vehicle technologies. However, as described below, we see important advantages to maintaining a separate engine standard, and we believe they more than justify

the reduced flex ibility
. There could be disadvantages to th e proposed approach , however . As is discussed in Section II.B.(2) (b) , some of the disadvantages can be addressed by maintaining separate engine standards , which we are proposing to do
. We request comment on other disadvantages such as those discussed below. One disadvantage of the proposed approach is that it would increase complexity for the vehicle standards. For example, vehicle manufacturers would be required to conduct additional engine tests and track additional GEM inputs for compliance purposes. However, we believe that most of the burden associated with this increased complexity would be an infrequent burden of engine testing and updating information sy stems to track these inputs. Because GEM measures performance over specific duty cycles intende d to represent average operation of vehicles in
- use, the proposed approach might also create an incentive to optimize powertrains and drivetrains for the best GEM performance rather than the best in
- use performance for a particular application. This is alway s a concern when selecting duty cycles for certification. There will alway s be instances, however infrequent, where specific vehicle applications will operate differentl y than the duty cycles used for certification. The question is would these differe nces force manufacturers to optimize vehicles to the certification duty cycles in a way that decreases fuel efficiency and increases GHG emissions in
- use? We believe that the certification duty

cycles would not prevent manufacturers from properl y optimizi ng vehicles for customer fuel efficiency . First, the impact of the certification duty c ycles would be relativel y small because they

affect only

a small fraction of all vehicle technologies. Second, the emission averaging and fleet average provisions mean that the proposed regulations would not require all vehicles to meet the standards. Vehicles exceeding a standard over the duty cycles because they are optimized for different in
- use operation can be offset b y other vehicles that perform better over the certification duty cycles. Third, vehicle manufacturers would also have the abilit y to lower such a vehicle’s measured GHG emissions by adding technology

that would improve fuel efficiency both over the certification duty c ycles and in
- use. The proposed standards are not intended to be at a stringency where manufacturers would be expected to apply all technologies to all vehicles. Thus, there should be technologies available to add to vehicle configurations that initially fail to meet the Phase 2 propose d standards. Fourth, we are proposing further sub
categorization of the vocational vehicle segment, tripling the number of subcategories within this segment from 3 to 9. These 9 subcategories would divide each of the 3 Phase 1 weight categories into 3 additional vehicle speed categories. Each of the 3 speed categories would havePage 98 of 850

unique duty

cycle weighting factors to recognize that different vocational chassis are configured for different vehicle speed applications. Furthermo re, we are proposing 9 unique standards for each of the subcategories. This further subdivision better recognizes technologies’ performance under the conditions for which the vocational chassis was configured to operate. This further decreases the potent ial of the certification duty cycles to encourage manufacturers to configure vocational chassis differently than the optimum configuration for specific customers’ applications. Finall y, as required b y Section 202 (a) (1) and 202 (d) of the CAA, EPA is pro posing specific GHG standards which would have to be met in
- use. One disadvantage of our proposed full vehicle simulation approach is the potential requirement for engine manufacturers to disclose otherwise proprietary information to vehicle manufacturers who install their engines. Under the proposed approach, vehicle manufacturers would need to know details about engine performance long before production, both for compliance planning purposes, as well as for the actual submission of applications for certi fication. Moreover, vehicle manufacturers would need to know details about the engine’s performance that are generall y not publicly available

– specifically the detailed fuel consumption of an engine over man y s teady - state operating points. We request co mment on whether or not such information could be used to “reverse engineer” intellectual property related to the proprietary

design of engines, and what steps the agencies could take to address this. The agencies also generally request comment on the advantages and disadvantages of the proposed structure that would require vehicle manufacturers to provide additional inputs into GEM to represent the engine, transmission, drive axle(s), and loaded tire radius. (b ) Advantages of Separate Engine Standards For engi nes installed in tractors and vocational vehicle chassis, we are proposing to maintain separate engine standards for fuel consumption and GHG emissions in Phase 2 for both SIand CI engines. Moreover, we are proposing new more stringent engine standards f or CI engines. While the vehicle standards alone are intended to provide sufficient incentive for improvements in engine efficiency , we continue to see important advantages to maintaining separate engine standards for both SIand CI engines. The agencies believe the advantages described below are critical to fully achieve the goals of the NHTSA and EPA standards. First, EPA has a robust compliance program based on engine testing. For the Phase 1 standards, we applied the existing criteria pollutant co mpliance program to ensure that engine efficiency in actual use reflected the improvements manufacturers claimed during certification. With engine
- based standards, it is straightforward to hold engine manufacturers accountable b y testing in
- use engines. If the engines exceed the standards, they can be required to correct the problem or perform other remedial actions. Without separate engine standards in Phase 2, addressing in
- use compliance becomes more subjective. Having clearl y defined compliance resp onsibilities is important to both the agencies and to the market. Second, engine standards for CO 2 and fuel efficiency force engine manufacturers to optimize engines for both fuel efficiency and control of non
- CO 2 emissions at the same engine operating poi nts. This is of special concern for NO X emissions, given the strong counter
dependency

between engine
- out NO X emissions and fuel consumption. By requiring enginePage 99 of 850

manufacturers to compl y with both NO X and CO 2 standards using the same test procedures, the agencies ensure that manufacturers include technologies that can be optimized for both rather than alternate calibrations that would trade NO X emissions against fuel consumption depending how the engine or vehicle is tested. In the past, when there was no CO 2 engine standard and no steady
- state NO X standard, some manufacturers chose this dual calibration approach instead of investing in technology

that would allow them to simultaneously reduce both CO 2 and NO X . Third, engine fuel consumption can vary significantly

between transient operation and steady
- state operation, and we are proposing onl y steady
- state engine operating data as the required engine input into GEM for both tractor and vocational chassis certification. Because vocational vehicles can spend significant operation under transient engine operation, the separate engine standard for engines installed in vocational vehicles is a transient test. Therefore, the separate engine standard f or vocational engines provides the only measure of engine fuel consumption and CO 2 emissions under transient conditions. Without a transient engine test we would not be able to ensure control of fuel consumption and CO 2 emissions under transient engine co nditions. It is worth noting that these first three advantages are also beneficial for the marketplace. In these respects, the separate engine standards allow each manufacturer to be confident that its competitors are playing by the same rules. The agenc ies believe that the absence of a separate engine standard would leave open the possibility that a manufacturer might choose to cut corners with respect to in
- use compliance margins, the NO X - CO 2 tradeoff, or transient controls. Concerns that competito rs might take advantage of this can put a manufacturer in a difficult situation. On the other hand knowing that the agencies are ensuring all manufacturers are complying full y can eliminate these concerns. Finally , the existence of meaningful separate eng ine standards allows the agencies to exempt certain vehicles from some or all of the vehicle standards and requirements without forgoing the engine improvements. A good example of this is the off
- road vehicle exemption in 40 CFR 1037.631 and 49 CFR 535.3( g), which exempts vehicles “intended to be used extensively

in off
- road environments” from the vehicle requirements. The engines used in such vehicles must still meet the engine standards of 40 CFR part 1036 and 49 CFR 535.5(d) . The agencies see no reaso n why efficient engines cannot be used in such vehicles. However, without separate engine standards, there would be no way to require them to be efficient. In the past there has been some confusion about the Phase 1 separate engine standards somehow preve nting the recognition of engine
- vehicle optimization that vehicle manufacturers perform to minimize a vehicle’s overall fuel consumption. It was not the existence of separate engine standards that prevented recognition of this optimization. Rather it was that the agencies did not allow manufacturers to enter inputs into GEM that characterized unique engine performance. For Phase 2 we are proposing to require that manufacturers input such data because we intend for GEM to recognize this engine
- vehicle opti mization. The continuation of separate engine standards in Phase 2 does not undermine in any way the recognition of this optimization in GEM. The agencies request comment on the advantages and disadvantages of the proposal to maintain separate engine stan dards and to increase the stringency of the CI engine standards. WePage 100 of 850

would also welcome suggested alternative approaches that would achieve the same goals. It is important to emphasize that the agencies see the advantages of separate engine standards as f undamental to the success of the program and do not expect to adopt alternative approaches that fall short of these goals. Note that commenters opposing separate engine standards should also be careful distinguish between concerns related to the stringen cy of the proposed engine standards, from concerns inherent to an y separate engine standards whatsoever. When meeting with manufacturers prior to this proposal, the agencies heard many concerns about the potential problems with separate engines standards that were actuall y concerns about separate engine standards that are too stringent. However, we see these as two different issues. The agencies do recognize that setting engine standards at a high stringency could increase the cost to comply with the veh icle standard, if lower
- cost vehicle technologies are available. Additionally , the agencies recognize that setting engine standards at a high stringency may promote the use of large
- displacement engines, which have inherent heat transfer and efficiency advantages over smaller displacement engines over the engine test cycles , though a smaller engine may be more efficient for a given vehicle application. Thus we encourage commenters supporting the separate engine standards to address the possibility of unintended consequences such as these
. 

### C. **Proposed Vehicle Simulation Model**

**– Phase**  **2 GEM**  **90** For tractors and vocational vehicle chassis , the agencies propose that manufacturers would be required to meet vehicle
- based standards , and certification to these standards would be facilitated b y the required use of the vehicle simulation computer program called, “ Greenhouse g as Emissions Model ” or “ GEM .” GEM was created for Phase 1 for the exclusive purpose of certifying tractors and vocational chassis
. The agen cies are proposing to modify GEM and to require vehicle manufacturers to provide additional inputs into GEM to represent the engine, transmission, drive axle(s), and loaded tire radius. For Phase 1 , GEM used agency default values for all of these paramete rs. Under the proposed approach for Phase 2 , vehicle manufacturers would be able to use these technologies , plus additional technologies to demonstrate compliance with the applicable standards. The additional technologies include lightweight thermoplasti c materials, automatic tire inflation sy stems, advanced cruise control sy stems, engine stop
- start idle reduction s ys tems, and axle configurations that decrease the number of drive axles to comply with the standards. **(1) Description of the Proposed**  **Modification s to**  **GEM** As explained above, GEM is a computer program that was originally developed by EPA specificall y for manufacturers to use to certify to the Phase 1 tractor and vocational chassis standards. GEM mathematically combines the results of vehicle compon ent test procedures with other vehicle attributes to determine a vehicle’s certified levels of fuel consumption and CO 2

90 The specific version of GEM used to develop the proposed standards, and which we propose to use for compliance purposes is also known as GEM 3.0.Page 101 of 850

emissions . For Phase 1 the required inputs to GEM include vehicle aerodynamics information, tire rolling resistance, and whether or not a vehicle is equipped with certain lightweight high
strength steel or aluminum components, a tamper
- proof speed limiter, or tamper
- proof idle reduction technologies for tractors. The vocational vehicle inputs to GEM for Phase 1 only included tire rolling resistance. For Phase 1 the GEM’s inputs did not include engine test results or attributes related to a vehicle’s powertrain; namely , its transmission, drive axle(s), or loaded tire radius. Instead, for Phase 1 the agencies specified a generic engine an d powertrain within GEM, and for Phase 1 these cannot be changed in GEM. For this proposal GEM has been modified and validated against a set of experimental data that represents over 130 unique vehicle variants. EPA believes this new version of GEM is an accurate and cost
- effective alternative to measuring fuel consumption and CO 2 o ver a chassis dy namometer test procedure
. Some of the key proposed modifications would necessitate required and optional vehicle component test procedures to generate additional GEM inputs. The results of which would provide additional inputs into GEM. These include a new required engine test procedure to provide steady - state engine fuel consumption and CO 2 inputs into GEM. We are also seeking comment on a newl y deve loped engine test procedure that also captures transient engine performance for use in GEM. We are proposing to require inputs that describe the vehicle’s transmission ty pe, and its number of gears and gear ratios. We are proposing an optional powertrain test procedure that would provide inputs to override the agencies’ simulated engine and transmission in GEM. We are proposing to require inputs that describe the vehicle’s drive axle(s) ty

pe (e.g., 6x4 or 6x2) and axle ratio. We are also seeking comment on an optional axle efficiency

test procedure to override the agencies’ simulated axle in GEM. We are proposing to significantly expand the number of technologies that are recognized in GEM. These include recognizing lightweight thermoplastic materials, automatic tire inflation sy stems, advanced cruise control sy stems, engine stop
- start idle reduction s ys tems, and axle configurations that decrease the number of drive axles. We are seeking comment on recognizing (outside of the GEM simulation) additional technologies such as high efficiency glass and low global warming potential air conditioning refrigerant s. To better reflect real
- world operation, we are also proposing to revise the vehicle simulation computer program’s urban and rural highway duty cycle s to include changes in road grade. We are seeking comment on whether or not these duty cycles should also simulate driver behavior in response to varying traffic patterns. We are proposing a new duty c ycle to capture the performance of technologies that reduce the amount of time a vehicle’s engine is at idle during a workday when the vehicle is not moving. And to better recognize that vocational vehicle powertrains are configured for particular applications, we are proposing to further subdivide the voc ational chassis category into three different vehicle speed categories, where GEM weights the individual duty cycles’ results of each of the speed categories differently Section 4.2 of the RIA details all these modifications. This section briefl y describ es some of the key proposed modifications to GEM. (a ) Simulating Engines for Vehicle Certification Before describing the proposed approach for Phase 2, this section first reviews how engines are simulated for vehicle certification in Phase 1. GEM for Phase 1 simulates the same generic engine for any

vehicle in a given regulatory subcategory with a data table of steady
- state engine fuel consumption mass rates (g/s) versus a series of steady - state engine output shaft speeds (revolutions per minute, r pm) and loads (torque, N
- m). This data table is also sometimesPage 102 of 850

called a “fuel map” or an “engine map”, although the term “engine map” can mean other kinds of data in different contexts. The engine speeds in this map range from idle to maximum governed sp eed and the loads range from engine motoring (negative load) to the maximum load of an engine. When GEM runs over a vehicle duty c ycl e, this data table is linearly interpolated to find a corresponding fuel consumption mass rate at each engine speed and lo ad that is demanded by the simulated vehicle operating over the duty c yc le. The fuel c onsumption mass rate of the engine is then integrated over each duty c ycl e in GEM to arrive at the total mass of fuel consumed for the specific vehicle and duty cycle. Under Phase 1, manufacturers were not allowed to input their own engine fuel maps to represent their specific engines in the vehicle being simulated in GEM. Because GEM was programmed with fixed engine fuel maps for Phase 1 that all manufacturers had to u se, interpolation of the tables themselves over each of the three different GEM duty

cycles did not have to closel y represent how an actual engine might operate over these three different duty cycles. In contrast, for Phase 2 we are proposing a new and req uired steady
- state engine dy namometer test procedure for manufacturers to use to generate their own engine fuel maps to represent each of their engine families in GEM. The proposed Phase 2 approach is consistent with the 2014 NAS Phase 2 First Report reco mmendation. 91 To validate this approach we compared the results from 28 individual engine dynamometer tests. Three different engines were used to generate this data, and these engines were produced b y two different engine manufacturers. One engine was te sted at three different power ratings (13 liters at 410, 450 & 475 hp) and one engine was tested at two ratings (6.7 liters at 240 and 300 hp), and other engine with one rating (15 liters 455 hp) service classes. For each engine and rating our proposed steady
- state engine dy

namometer test procedure was conducted to generate an engine fuel map to represent that particular engine in GEM. Next, with GEM we simulated various vehicles in which the engine could be installed. For each of the GEM duty cycles w e are proposing, namely the urban local (ARB Transient), urban highway with road grade (55 mph), and rural highway with road grade (65 mph) duty cycles, we determined the GEM result for each vehicle configuration, and we saved the engine output shaft speed and torque information that GEM created to interpolate the steady
- state engine map for each vehicle configuration We then had this same engine output shaft speed and torque information programmed into an engine dy namometer controller, and we had each eng ine perform the same dut y c ycles that GEM demanded of the simulated version of the engine. We then compared the GEM results based on GEM’s linear interpolation of the engine maps to the measured engine dyn amometer results. We concluded that for the 55 mp h and 65 mph duty cycles, GEM’s interpolation of the steady - state data tables was sufficiently accurate versus the measured results. This is an outcome one would reasonabl y expect because even with changes in road grade, the 55 mph and 65 mph duty cycles do not demand rapid changes in engine speed or load. The 55 mph and 65 mph duty cycles are nearl y steady - state, as far as engine operation is concerned, just like the engine maps themselves. However, for the ARB Transient cycle, we observed a consistent bias, where GEM consistentl y under
- predicted fuel consumption and CO 2 emissions. This low bias over the 28 engine tests

91 National Academy of Science. “Reducing the Fuel Consumption and GHG Emissions of Medium
- and Heavy
Duty Vehicles, Phase T wo , First Report.” 2014. Recommendation 3.8.Page 103 of 850

ranged from 4.2 percent low to 7.8 percent low. The mean was 5.9 percent low and the 90 th percentile value was 7.1 percent low. These observations are consistent with the fact that engines generall y operate less efficientl y under transient conditions than under steady - state conditions. A number of reasons explain this consistent trend. For example, under rapidly changing engine condi tions, it is generall y more challenging to program an engine electronic controller to respond with optimum fuel injection rate and timing, exhaust gas recirculation valve position, variable nozzle turbo
- charger vane position and other set points than it is to do so under steady state conditions. Transient heat and mass transfer within the intake, exhaust, and combu stion chambers also tend to increase turbulence and enhance energy loss to engine coolant during transient operation. Furthermore, because exha ust emissions control is more challenging under transient engine operation, engineering tradeoffs sometimes need to be made between fuel efficiency and transient emissions control. Special calibrations are typically also required to control smoke and mana ge exhaust temperatures during transient operation for a transient cycle. We are confident that this low bias in GEM would continue to exist well into the future if we were to test additional engines. However, with the range of the results that we have g enerated so far we are somewhat less confident in proposing a single numerical value to correct for this effect over the ARB Transient duty cycle. Based on the data we have collected so far, we are conservativel y proposing to apply a 5.0 percent correctio n factor to GEM’s ARB Transient results. Note that adjustment would be applied internal to GEM, and no manufacturer input or action would be needed. This means that for GEM fuel consumption and CO 2 emissions results that were generated using the steady - s tate engine map representation of an engine in GEM, a 1.05 multiplier would be applied to only the ARB Transient result. If a manufacturer chooses to perform the optional powertrain test procedure we are proposing, then this 1.05 multiplier to the ARB Transient would not apply (since we know of no bias in that optional powertrain test)
. For the same reason, if we were to replace the proposed steady - state engine map in GEM with the alternative approach detailed in draft RIA , then this 1.05 multiplier would not apply . We request comment on whether or not this single value multiplier is an appropriate way to correct between steady
- state and transient engine fuel consumption and CO 2 emissions, specifically over the ARB Transient duty

cycle. W e also request comment on the magnitude of the multiplier itself. For example, for the proposal we have chosen a 1.05 multiplier correction value because it is conservative but still near the mean bias we observed. However, for the tests we have conducte d on current technology

engines, a 1.05 multiplier would mean that about one half of these engines would be penalized b y powertrain testing (or if we utilized the alternative engine approach) because the actual measured transient impact would be slightly higher than 5 percent. While these tests were performed on current technology powertrains rather than the kind of optimized powertrains we project for Phase 2, these results raise still some concerns for us. Because we intend to incentivize powertrain testing and not penalize it, and because we also encourage constructive comments on the alternative approach , we also request comment on increasing the magnitude of this ARB Transient multiplier toward the higher end of the biases we observed. For example, we request comment on increasing the proposed multiplier from 1.05 to 1.07, which is close to the 90 th percentile of the results we have collected so far. Using this higher multiplier would imply

that only about 10 percent of en gines powertrain tested or tested under the alternative approach would show worse fuel consumption over the ARB Transient than its respective representation in a steady - state data table in GEM. This would mean that thePage 104 of 850

remaining 90 percent o f engines powertrain tested would receive additional credit in GEM. Using 1.07 would essentially guarantee that any

powertrain that was significantly more efficient than current powertrains would receive meaningful credit for the improvement. However, this value would also provide credits for man y current powertrain designs. We also request comment as to whether or not there might be certain vehicle sub
categories or certain small volume vocational chassis, where using the Phase 1 approach of using a gene ric engine table might be more appropriate. We also request comment as to whether or not the agencies should provide default generic engine maps in GEM for Phase 2 and allow manufacturers to optionally override these generic maps with their own maps, whic h would be generated according to our proposed engine dy namometer steady - state test procedure. (b ) Simulating Human Driver Behavior and Transmissions for Vehicle Certification GEM for Phase 1 simulates the same generic human driver behavior and manual transmi ssion for all vehicles. The simulated driver responds to changes in the target vehicle speed of the duty c yc les by changing the simulated positions of the vehicle’s accelerator pedal, brake pedal, clutch pedal, and gear shift lever. For simplicity in Pha se 1 the GEM driver shifted at ideal points for maximum fuel efficiency and the manual transmission was simulated as an ideal transmission that did not have any delay time (i.e., torque interruption) between gear shifts and did not have an y energy losses a ssociated with clutch slip during gear shifts. In GEM for Phase 2 we are proposing to allow manufacturers to select one of three types of transmissions to represent the transmission in the vehicle they are certifying: manual transmission, automated manual transmission, and automatic transmission. We are currentl y in the process of developing a dual
- clutch transmission ty pe in GEM, but we are not proposing to allow its use in Phase 2 at this time. Because production of heav y - dut y dual clutch transmissions has only begun in the past few months, we do not yet have any experimental data to validate our GEM simulation of this transmission ty pe. Therefore, we are requesting comment on whether or not there is additional data available for such validation. Should such data be provided in comments, we may

finalize GEM for Phase 2 with a fourth transmission ty pes for dual clutch transmissions. We are also considering an option to address dual clutch transmissions through a pos t - simulation adjustment as discussed in Chapter 4 of the draft RIA. In the proposed modifications to GEM, th e driver behavior and the three different transmission ty

pes are simulated in the same basic manner as in Phase 1 , but each transmission ty pe features a unique combination of driver behavior and transmission responses that match both the driver behavior and the transmission responses we measured during vehicle testing of these three transmission ty pes . In general the transmission gear shifting strat egy for all of the transmissions is designed to shift the transmission so that it is alway s in the most efficient gear fo r the current vehicle demand, while staying within certain limits to prevent unrealistically high frequency shifting. Some examples of these limits are torque reserve limits (which vary as function of engine speed), minimum time
- in
- gear and minimum fuel efficiency benefit to shift to the next gear. Some of the differences between the three transmission ty pes include a driver “double
- clutching” during gear shifts of the manual transmission only , and “power shifts” and torque converter torque multiplication, slip, and lock
- up in automatic transmissions only . ReferPage 105 of 850

to Chapter 4 of the draft RIA for a more detailed description of these diff erent simulated driver behaviors and transmission ty pes. We considered an alternative approach where transmission manufacturers would provide vehicle manufacturers with detailed information about their automated transmissions’ proprietary shift strategies for representation in GEM. NAS also recommended this approach
. 92 The advantages of this approach include a more realistic representation of a transmission in GEM and potentially

the recognition of additional fuel efficiency improving strategies to achieve additional fuel consumption and CO 2 emissions reductions. However, there are a number of technical and policy disadvantages of this approach. One disadvantage is that it would require the disclosure of proprietary

information between competing companies because some vehicle manufacturers produce their own transmissions and also use other suppliers’ transmissions. There are technical challenges too. For example, some transmission manufacturers have upwards of 40 different shift strategies programmed int o their transmission controllers. Depending on in
- use driving conditions, some of which are not simulated in GEM (e.g., changing payloads, changing tire traction) a transmission controller can change its shift strategy . Representing dy namic switching between multiple proprietary shift strategies would be extremely complex to simulate in GEM. Furthermore, if the agencies were to propose requiring transmission manufacturers to provide shift strategy

inputs for use in GEM, then the agencies would have to de vise a compliance strategy to monitor in
- use shift strategies, including a driver behavior model that could be implemented as part of an in
- use shift strategy test. This too would be very complex. If manufacturers were subject to in
- use compliance requir ements of their transmission shift strategies, this could lead to restricting the use of certain shift strategies in the heav y - dut y s ector, which would in turn potentially lead to sub
- optimal vehicle configurations that do not improve fuel efficiency

or ad equately

serve the wide range of customer needs; especially in the vocational vehicle segment. For example, if the agencies were to restrict the use of more aggressive and less fuel efficient in
- use shift strategies that are used only under heav y loads an d steep grades, then certain vehicle applications would need to compensate for this loss of capability through the installation of over
- sized and over
- powered engines that are subsequently poorly matched and less efficient under lighter load conditions. T herefore, as a policy consideration to preserve vehicle configuration choice and to preserve the full capability of heav y - duty

vehicles today , the agencies are intentionall y not requiring transmission manufacturers to submit detailed proprietary

shift strategy

information to vehicle manufacturers to input into GEM. This is not unlike Phase 1, where unique transmission and axle attributes were not recognized at all in GEM. Instead, the agencies are proposing that vehicle manufacturers choose from among the three transmission ty

pes that the agencies have already developed, validated, and programmed into GEM. The vehicle manufacturers would then enter into GEM their particular transmission’s number of gears and gear ratios. The agencies recognize that designing GEM like this would

92 Transport ation Research Board 2014. “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium
- and Heavy
- Duty Vehicles, Phase Two.” (“Phase 2 First Report”) Washington, D.C., The National Academies Press. Cooperative Agreement DTNH22
- 12
- 00389. Avail able electronically from the National Academy Press Website at http://www.nap.edu/catalog.php?record_id=12845 (last accessed December 2, 2014). Recommendation 3.7.Page 106 of 850

exclude a potentially

significant reduction from the GEM simulation. However, if a manufacturer chooses to use the optional powertrain test procedure, then the agencies’ transmission ty

pes in GEM would be overridden by the actual data collected during the powertrain test, which would recognize the actual benefit of the transmission. Note that the optional powertrain test procedure is only advantageous to a vehicle manufacturer if an actual transmission is more efficient and has a superior shift strategy compared to its respective transmission ty

pe simulated in GEM. (c) Simulating Axles for Vehicle Certification In GEM for Phase 1 the axle ratio of the primary drive axle and the energy losses assumed in the simulated axle itself were th e same for all vehicles. For Phase 2 we are proposing that the vehicle manufacturer input into GEM the axle ratio of the primary drive axle. This input would recognize the intent to operate the engine at a particular engine speed when the transmission is operating in its highest transmission gear; especiall y for the 55 mph and 65 mph duty cycles in GEM. This input facilitates GEM’s recognition of vehicle designs that take advantage of operating the engine at the lowest possible engine speeds. This is co mmonly known as “engine down
- speeding”, and the general rule
- of
- thumb for heavy
- dut y engines is that for every 100 rpm decrease in engine speed, there can be about a 1 percent decrease in fuel consumption and CO 2 emissions. Therefore, it is important that GEM allow this value to be input by the vehicle manufacturer. Axle ratio is also straightforward to verify during any

in
- use compliance audit. We are proposing a fixed axle ratio energy efficiency

of 95.5 percent at all speeds and loads, but are requesti ng comment on whether this pre
- specified efficiency is reasonable. However, we know that this efficiency actuall y varies as a function of axle speed and axle input torque. Therefore, as an exploratory test we have created a modified version of GEM that h as as an input a data table of axle efficiency as a function of axle speed and axle torque. The modified version of GEM subsequently interpolates this table over each of the duty cycles to represent a more realistic axle efficiency at each point of each d

uty cycle. We have also created a draft axle ratio efficiency

test procedure that requires the use of a dy namometer test facility
. This procedure includes the use of a baseline fuel
- efficient sy nthetic gear lubricant manufactured by BASF. 93 This baseline will be used to gauge improvements in axle design and lubricants. The draft test procedure includes initial feedback that we have received from axle manufacturers and our own engineering judgment. Ref er to 40 CFR 1037.515 of the Phase 2 p roposed regulations, which contain this draft test procedure. This test procedure could be used to generate the results needed to create the axle efficiency data table for input into GEM. However, the agencies have not yet conducted experimental tests of axles using this draft test procedure so we are reluctant to propose this test procedure as either mandatory or even optional at this time. Rather we request comment as to whether or not we should finalize this test procedure and either require its use o r allow its use optionally

to determine an axle efficiency data table as an input to GEM, which would override the fixed axle efficiency we are proposing at this time. We also request comment

93 BASF TI/EVO 0137 e, Emgard ® FE 75W
- 90 Fuel Efficient Synthetic Gear Lubricant.Page 107 of 850

on improving or otherwise refining the test procedure itself. Note that the agencies believe that allowing the GEM default axle efficiency to be replaced by

manufacturer inputs only makes sense if the manufacturer inputs is are the results of a specified test procedure that we could verify by our own independent test ing of the axle. In addition to proposing to require the primary drive axle ratio input into GEM (and potentially

an option to input an actual axle efficiency data table), we are also proposing that the vehicle manufacturer input into GEM whether or not o ne or two drive axles are driven b y the engine. When a heav y - duty vehicle is equipped with two rear axles where both are driven b y the engine, this is called a “6x4” configuration. “6” refers to the total number of wheel hubs on the vehicle. In the 6x4 configuration there are two front wheel hubs for the two steer wheels and tires plus four rear wheel hubs for the four rear wheels and tires (or more commonly four sets of rear dual wheels and tires). “4” refers to the number of wheel hubs driven by the engine. These are the two rear axles that have two wheel hubs each. Compared to a 6x4 configuration a 6x2 configuration decreases axle energy loss due to friction and oil pumping in two driven axles, by driving onl y one axle. The decrease in fuel consump tion and CO 2 emissions associated with a 6x2 versus 6x4 axle configuration is estimated to be 2.5 percent. 94 Therefore, in the proposed Phase 2 version of GEM, if a manufacturer simulates a 6x2 axle configuration, GEM decreases the overall GEM result by 2 .5 percent. Note that GEM will similarly decrease the overall GEM result by 2.5 percent for a 4x2 tractor or Class 8 vocational chassis configuration if it has only two wheel hubs driven. Note that we are not proposing that GEM have an option to increase the overall GEM result by

some percentage b y s electing, say , a 6x6 or 8x8 option if the front axle(s) are driven. Because these configurations are onl y manufactured for specialized vehicles that require extra traction for off
- road applications, they

are very low volume sales and their increased fuel consumption and CO 2 emissions are not significant in comparison to the overall reductions of the proposed Phase 2 program. Note that 40 CFR 1037.631 (for off
- road vocational vehicles), which is being continue d from the Phase 1 program, would likely exempt many of these vehicles from the vehicle standards. Instead of directl y modeling 6x4 or 6x2 axle configuration, we are proposing use of a post - simulation adjustment approach discussed in Chapter 4 of the drat RIA to model benefits of different axle configuration. (d ) Simulating Accessories for Vehicle Certification Phase 1 GEM uses a fixed power consumption value to simulate the fuel consumed for powering accessories such as power steering pumps and alternators. While the agencies are not proposing an y changes to this approach for Phase 2, we are requesting comment on whether or not we should allow some manufacturer input to reflect the installation of accessory components that result in lower accessory loads. For example, we could c onsider an accessory load reduction GEM input based on installing a number of qualifying advanced accessory components that

94 NACFE. Executive Report

– 6x2 (Dead Axle) Tractors. November 2010. See Docket EPA
- HQ
- OAR
- 2014
- 0827.Page 108 of 850

could be in production during Phase 2. We request comment on identifying such advanced accessory components, and we request comment on defining these components in such a way that they can be unambiguously

distinguished from other similar components that do not decrease accessory

loads. We also request comment on how much of a decrease in accessory load should be programmed into GEM if qualifying advanced accessory components are installed. (e) Aerodynamics for Tractor, Vocational Vehicle, and Trailer Certification For GEM in Phase 2 the agencies propose to simulate aerodyn amic drag in largel y the same manner as in Phase 1. For vocational chassis we propose to continue to use the same prescribed products of drag coefficient times vehicle frontal area (Cd*A) that were predefined for each of the vocational subcategories in Phase 1. For tractors we propose to continue to use an aerodyn amic bin approach similar to the one that exists in Phase 1 today. This approach requires tractor manufacturers to conduct a certain amount of coast
- down vehicle testing, although manufacturers have the option to conduct scaled wind tunn el testing and/or computational fluid dy

namics modeling. The results of these tests determine into which bin a vehicle is assigned. Then in GEM the aerodyn amic drag coefficient for each vehicle in the same bin is the same. This approach helps to account for limits in the repeatability of aerody

namic testing and it creates a compliance margin since any test result which keeps the vehicle in the same aerodynamic bin is considered compliant. However, for Phase 2 we are proposing new boundary values for th e bins themselves and we are adding two additional bins in order to recognize further advances in aerodyn amic drag reduction beyond what was recognized in Phase 1. Furthermore, while Phase 1 GEM used predefined frontal areas for tractors while the manufac turers input a Cd value, the agencies propose that manufacturers would use a measured drag area (CdA) value for each tractor configuration for Phase 2. See 40 CFR 1037. 525
. In addition to these proposed changes we are proposing a number of aerody namic drag test procedure improvements. One proposed improvement is to update the so
- called standard trailer that is prescribed for use during aerodynam ic drag testing of a tractor

– that is, the hy pothetical trailer modeled in GEM to represent a trail er paired with the tractor in actual use. In Phase 1 a non
- aerodyn amic 53
- foot long box
- shaped dry van trailer was specified as the standard trailer for tractor aerodyn amic testing (see 40 CFR 1037.501(g)). For Phase 2 we are proposing to modify this standard trailer for tractor testing to make it more similar to the trailers we would require to be produced during the Phase 2 timeframe. More specificall y, we would prescribe the installation of aerodynam ic trailer skirts ( and low rolling resistance tires as applied in Phase 1) on the reference trailer, as discussed in further in Section III.E.2. As explained more full y in Sections III and IV below, the agencies believe that tractor
- trailer pairings will be optimized aerodynamically to a significant extent in
- use (such as using high
- roof cabs when pulling box trailers), and that this real
- world optimization should be reflected in the certification testing. We also request comment on whether or not the Phase 2 standard trailer should include the installatio n of other aerody namic devices such as a nose fairing, an under tray , or a boat tail or trailer tail. Would a standard trailer including these additional components make the tractor program better? Another proposed aerodynamic test procedure improvement i s intended to better account for average wind yaw angle to better reflect the true impact of aerodynamic features on the in
-Page 109 of 850

use fuel consumption and CO 2 emissions of tractors. Refer to the proposed test procedures in 40 CFR 1037. 525 for further details of these aerodyn amic test procedures. For trailer certification, the agencies are proposing to use GEM in a different way than GEM is used for tractor certification in Phase 1 and Phase 2. As described in Section IV, the proposed trailer standards are based on GEM simulation, but trailer manufacturers would not run GEM for certification. Instead, manufacturers would use a simple equation to replicate GEM performance from the inputs. As with GEM , the only technologies recognized by this GEM
based equation for trailer certification are aerodyn amic technologies, tire technologies (including tire rolling resistance and automatic tire inflation systems), and some weight reduction technologies. Note that since the purpose of this equation is to measure GEM performance, it can be considered as simply another form of the model using a different input interface. Thus, for simplicity , the remainder of this Section II. C. sometimes discusses GEM as being used for trailers, without regard to how manufacturers will actuall y input GEM variables. Similar to tractor certification, we propose that tra iler manufacturers may at their option conduct some amount of aerodynamic testing (e.g., coast
- down testing, scale wind tunnel testing, computational fluid dy

namics modeling, or possibly aerodynamic component testing) and use this information with th e equation
. 95 In this case the agencies propose the configuration of a reference tractor for conducting trailer testing. Refer to Section IV of this preamble and to 40 CFR 1037. 501 of the proposed regulations for details on the proposed reference tractor configuration for trailer test procedures. (f ) Tires and Tire Inflation Systems for Truck and Trailer Certification For GEM in Phase 1 vehicle manufacturers input the tire rolling resistance of steer and drive tires directly

into GEM. The agencies prescribed an internationall y recognized tire rolling resistance test procedure, I SO 28580, for determining the tire rolling resistance value that is input into GEM, as described in 40 CFR 1037.520(c). For Phase 2 we are proposing to continue this same approach and the use of ISO 28580, an d we propose to expand these requirements to trailer tires as well. We request comment on whether specific modifications to this test procedure would improve its accuracy , repeatability or its test lab to test lab variability
. In addition to tire rolling resistance, we are proposing that for Phase 2 vehicle manufacturers enter into GEM the tire manufacturer’s specified tire loaded radius for the vehicle’s drive tires. This value is commonly reported by

tire manufacturers already so that vehicle speedomete rs can be adjusted appropriately . This input value is needed so that GEM can accuratel y convert simulated vehicle speed into axle speed, transmission speed, and ultimatel y engine speed. We request comment on whether the proposed test procedure should be modified to measure the tire’s revolutions per distance directly , as opposed to using the loaded radius to calculate the drive axle rotational speed from vehicle speed.

95 The agencies project that more than enough aerodynamic component vendors would take advantage of proposed optional pre
- approval process to make trailer manufacturer testing optional.Page 110 of 850

For tractors and trailers, we propose to allow manufacturers to specify whether or not an automatic tire inflation system is installed. If one is installed, GEM , or in the case of trailers, the equations based on GEM, would assign a 1 percent decrease in the overall fuel consumption and CO 2 emissions simulation results for tractors, and a 1 .5 percent decrease for trailers. This would be done through post
- simulation adjustments discussed in Chapter 4 of the draft RIA. In contrast, we are not proposing to assign an y decrease in fuel consumption and CO 2 emissions for tire pressure monitoring sy stems. We do recognize that some drivers would respond to a warning indication from a tire pressure monitoring s ys tem, but we are unsure how to assign a fixed decrease in fuel consumption and CO 2 emissions for tire pressure monitoring s ys tems. We would estimate that the value would be less than any value we would assign for an automatic tire inflation sy stem. We request comment on whether or not we should assign a fixed decrease in fuel consumpt ion and CO 2 emissions for tire pressure monitoring s ys tems, and if so, we request comment on what would be an appropriate assigned fixed value. (g ) Weight Reduction for Tractor, Vocational Chassis and Trailer Certification We propose for Phase 2 that GEM conti nues the weight reduction recognition approach in Phase 1, where the agencies prescribe fixed weight reductions, or “deltas”, for using certain lightweight materials for certain vehicle components. In Phase 1 the agencies published a list of weight reduct ions for using high
- strength steel and aluminum materials on a part by part basis. For Phase 2 we propose to use these same values for high
- strength steel and aluminum parts for tractors and for trailers and we have scaled these values for use in certifyi ng the different weight classes of vocational chassis. In addition we are proposing a similar part by part weight reduction list for tractor parts made from thermoplastic material. We are also proposing to assign a fixed weight increase to natural gas fu eled vehicles to reflect the weight increase of natural gas fuel tanks versus gasoline or diesel tanks. This increase would be allocated partl y to the chassis and from the payload using the same allocation as weight reducti ons for the given vehicle type. For tractors we are proposing to continue the same mathematical approach in GEM to assign 1/3 of a total weight decrease to a payload increase and 2/3 of the total weight decrease to a vehicle mass decrease. For Phase 1 th ese ratios were based on the average frequency that a tractor operates at its gross combined weight rating. Therefore, we propose to use these ratios for trailers in Phase 2. However, as with the other fuel consumption and GHG reducing technologies manuf

acturers use for compliance, reductions associated with weight reduction would be calculated using the trailer compliance equation rather than GEM. For vocational chassis, for which Phase 1 did not address weight reduction, we propose a 50/50 ratio. In o ther words, for vocational chassis in GEM we propose to assign 1/2 of a total weight decrease to a payload increase and 1/2 of the total weight decrease to a vehicle mass decrease. We request comment on all aspects of applying weight reductions in GEM, in cluding proposed weight increases for alternate fuel vehicles and whether a 50/50 ratio is appropriate for vocational chassis
. (h ) GEM Duty Cycles for Tractor, Vocational Chassis and Trailer Certification In Phase 1, there are three GEM vehicle duty cycles that represented stop - and
- go city driving (ARB Transient), urban highway driving (55 mph), and rural interstate highway driving (65 mph). In Phase 1 these cycles were time
- based. That is, they were specified as a function of simulated time and th e duty cycles ended once the specified time elapsed in simulation. ThePage 111 of 850

agencies propose to use these three drive cycles in Phase 2, but with some revisions. First the agencies propose that GEM would simulate these cycles on a distance
- based specification , rather than on a time
- based specification. A distance
- based specification ensures that even if a vehicle in simulation does not alway s achieve the target vehicle speed, the vehicle will have to continue in simulation for a longer period of time to compl ete the duty cycle. This ensures that vehicles are evaluated over the complete distance of the duty cycle and not just the portion of the duty cycle that a vehicle completes in a given time period. A distance
- based duty cycle specification also facilitat es a straightforward specification of road grade as a function of distance along the duty cycle. For Phase 2 the agencies are proposing to enhance the 55 mph and 65 mph duty cycles by adding representative road grade to exercise the simulated vehicle’s en gine, transmission, axle, and tires in a more realistic way . A flat road grade profile over a constant speed test does not present many opportunities for a transmission to shift gears, and may have the unintended consequence of enabling underpowered vehic les or excessively downsped drivetrains to generate credits. The road grade profile proposed is the same for both the 55 mph and 65 mph duty

cycles, and the profile was based on real over
- the
- road testing the agencies directed under an agency
- funded contr act with Southwest Research Institute. 96 See Section III.E for more details on development of the proposed road grade profile. The agencies are continuing to evaluate alternate road grade profiles including actual sections of restricted access highway with road grades that are statistically similar to the national road grade profile as well as purely sy nthetic road grade profiles. 97 We request comment s on the proposed road grade profile, and would welcome additional statistical evaluations of this road grade profile and other road grade profiles for comparison. We believe that the enhancement of the 55 mph and 65 mph duty cycles with road grade is consistent with the NAS recommendation regarding road grade. 98 We recognize that even with the proposed road grade profile, GEM may continue to under predict the number of transmission shifts of vehicles on restricted access highway s if the model simulates constant speeds. We request comment on other way s in which the proposed 55 mph and 65 mph duty

cycles could b e enhanced. For example, we request comment on whether a more aggressive road grade profile would induce a more realistic and representative number of transmission gear shifts. We also request comment on whether we should consider varying the vehicle tar get speed over the 55 mph and/or 65 mph duty cycles to simulate human driver

96 SwRI road grade testing and GEM validation report, 2014. 97 See National Renewable Energy Laboratory report “EPA GHG Certification of Medium
- and Heavy
- Duty Vehicles: Development of Road Grade Profiles Representative of US Controlled Access Highways” dated May 2015 and EPA memorandum “Development of an Alternative, Nationally Representative, Activity Weighted Road Grade Profile for Use in EPA GHG Certification of Medium
- and He avy - Duty Vehicles” dated May 13, 2015, both available in Docket EPA
- HQ
- OAR
- 2014
- 0827. This docket also includes file NREL_SyntheticAndLocalGradeProfiles.xlsx which contains numerical representations of all road grade profiles described in the NREL report. 98 NAS 2010 Report. Page 189. “ A fundamental concern raised by the committee and those who testified during our public sessions was the tension between the need to set a uniform test cycle for regulatory purposes, and existing industry practices of seekin g to minimize the fuel consumption of medium and heavy
- duty vehicles designed for specific routes that may include grades, loads, work tasks or speeds inconsistent with the regulatory test cycle. This highlights the critical importance of achieving fidelity between certification values and real
- world results to avoid decisions that hurt rather than help real
- world fuel consumption.”Page 112 of 850

behavior reacting to traffic congestion. This would increase the number of shifts during the 55 mph and 65 mph duty

cycles, though it may

be possible for an equivalent effect to be achieved by assigning a greater weighting to the transient cycle in the GEM composite test score. (i ) Workday Idle Operation for Vocational Vehicle Certification In the Phase 1 program, reduction in idle emissions was recognized only for sleeper cab tractors, and onl y with respect to hotel ling idle , where a driver needs power to operate heating, ventilation, air conditioning and other electrical equipment in order to use the sleeper cab to eat, rest, or conduct other business . As described in Section V, the agencies are now proposing to recognize in GEM technologies that reduce workday idle emissions, such as automatic stop
- start sy stems and automatic transmissions that shift to neutral at idle
. Man y vocational vehicle applications operate on pattern s implicating workday idle cycles, and the agencies are proposing test procedures in GEM to account specificall y for these cycles and potential controls. GEM would recognize these idle controls in two way s. For technologies like neutral
- idle that address idle that occurs during the transient cycle (representing the t ype of operation that would occur when the vehicle is stopped at a stop light), GEM would interpolate lower fuel rates from the engine map . For technologies like start - stop and auto - shutdown that eliminate some of the idle that occurs when a vehicle is stopped or parked, GEM would assign a value of zero fuel rate for what we are proposing as an “idle cycle”. This idle cycle would be weighted along with the 65 mph, 55 mph, and ARB Transient duty cycles according to the vocational chassis duty cycle weighting factors that we are proposing for Phase 2. These weighting factors are different for each of the three vocational chassis speed categories that we are proposing for Phase 2. While we are not proposing to apply this idle cycle for tractors, we do request comment on whether or not we should consider a applying this idle cycle to certain tractor types, like day cabs that could experience more significant amounts of time stopped or parked as p art of an urban delivery route . We also request comment on whether or not start
- stop or auto - shutdown technologies are being developed for tractors; especiall y for Class 7 and 8 day cabs that could experience more frequent stops and more time parked for d eliveries. **(2) Validation of the Proposed GEM**  After making the proposed changes to GEM, the agencies validated the model in comparison to over 130 vehicle variants, consistent with the recommendation made by the NAS in their Phase 2
- First Report. 99 As is desc ribed in Chapter 4 of the Draft RIA, good agreement was observed between GEM simulations and test data over a wide range of vehic les . In general, the model simulations agreed with the test results within ±5 percent on an absolute basis
. As pointed out in Chapter 4.3.2 of the RIA, relative accuracy is more relevant to this rulemaking. This is because all of the numeric standards proposed for tractors, trailers and vocational chassis are derived from running GEM first with Phase 1 “baseline” technology pac kages and then with various candidate Phase 2 technology packages. The differences between these GEM results are

99 National Academy of Science. “Reducing the Fuel Consumption and GHG Emissions of Medium
- and Heavy
Duty Vehicles, Phase T wo , First Report.” 2014. Recommendation1.2.Page 113 of 850

examined to select stringencies. In other words, the agencies used the same version of GEM to establish the standards as was used to evaluate baseline performance for this rulemaking. Therefore, it is most important that GEM accurately reflects relative changes in emissions for each added technology . For vehicle certification purposes it is less important that GEM’s absolute value of the fuel consumption or CO 2 emissions are accurate compared to laboratory testing of the same vehicle. The ultimate purpose of this new version of GEM will be to evaluate changes or additions in technology , and compliance is demonstrated on a relative basis to th e numericall y standards that were also derived from GEM. Nevertheless, the agencies concluded that the absolute accuracy of GEM is generally

within ±5 percent, as shown in Figure II
- 1
. Chapter 4.3.2 of the draft RIA shows that relative accuracy is even better, ±2
- 3 percent.Page 114 of 850 **Figure II**  **- 1**  **GEM Validation Data**  

## 2 **4 6**  **8 10**  **12 14**  **16**

**2 4**  **6 8**  **10 12**  **14 16** **G E** **M (** **M P** **G )** 



## Experimental **Te sts (MPG)** 

**Perfect Correlation ±5%** Page 115 of 850

In addition to this successful validation against experimental results, the agencies have also initiated a peer review of the proposed GEM source code. This peer review has been submitted to Docket # EPA
- HQ
- OAR
- 2014
- 0827. **(3) Supplements to GEM Simulation**  As in Phase 1, for most tractors and vocational veh icles, compliance with the Phase 2 g/ton
- mile vehicle standards could be evaluated by directly comparing the GEM result to the standard. However, in Phase 1, manufacturers incorporating innovative or advanced technologies could appl y improvement factors t o lower the GEM result slightly before comparing to the standard. 100 For example, a manufacturer incorporating a launch
- assist mild hy brid that was approved for a 5 percent benefit would apply a 0.95 improvement factor to its GEM results for such vehicles. In this example, a GEM result of 300 g/ton
- mile would be reduced to 285 g/ton
- mile. For Phase 2, the agencies are proposing to largel y continue the existing Phase 1 innovative technology

approach. We are also proposing to create a parallel option specif ically related to innovative powertrain designs. These proposals are discussed below. (a ) Innovative/Off

- Cycle Technology Procedures In Phase 1 the agencies adopted an emissions credit generating opportunity that applied to new and innovative technologies that reduce fuel consumption and CO 2 emissions, that were not in common use with heav y - dut y vehicles before model year 2010 and are not reflected over the test procedures or GEM ( i.e. , the benefits are “off
- cycle”). See 76 FR at 57253. As was the case in th e development of Phase 1, the agencies are proposing to continue this approach for technologies and concepts with CO 2 emissions and fuel consumption reduction potential that might not be adequatel y captured over the proposed Phase 2 duty c ycles or are not proposed inputs to GEM. Note, however, that the agencies are proposing to refer to these technologies as off
- cycle rather than innovative. See Section I for more discussion of innovative and off
- cycle technologies. We recognize that the Phase 1 testi ng burden associated with the innovative technology credit provisions discouraged some manufacturers from appl yi ng. To streamline recognition of many technologies, default values have been integrated directly into GEM. For example, automatic tire inflati on sy stems and 6x2 axles both have fixed default values, recognized through a post - simulation adjustment approach discussed in Chapter 4 of the draft RIA. This is similar to the technology

“pick list” from our light
- dut y programs. See 77 FR at 62833
- 35 ( Oct. 15, 2012). If manufacturers wish to receive additional credit beyond these fixed values, then the innovative/off

- cycle technology

credit provisions would provide the regulatory path toward that additional recognition.

100 40 CFR 1036.610, 1036.615, 1037.610, and 1037.615Page 116 of 850

Be yond the additional technolo gies that the agencies have added to GEM, the agencies also believe there are several emerging technologies that are being developed today , but would not be accounted for in GEM as we are proposing it because we do not have enough information about these t echnologies to assign fixed values to them in GEM. Any credits for these technologies would need to be based on the off
- cy cle technology

credit generation provisions. These require the assessment of real
- world fuel consumption and GHG reductions that can be measured with verifiable test methods using representative operating conditions ty pical of the engine or vehicle application. As in Phase 1, the agencies are proposing to continue to provide two paths for approval of the test procedure to measure the C O 2 emissions and fuel consumption reductions of an off
cycle technology

used in the HD tractor. See 40 CFR 1037.610 and 49 CFR 535.7. The first path would not require a public approval process of the test method. A manufacturer can use “pre
- approved” test methods for HD vehicles including the A
- to - B chassis testing, powerpack testing or on
- road testing. A manufacturer may also use any

developed test procedure which has known quantifiable benefits. A test plan detailing the testing methodology is required to be approved prior to collecting any t est data. The agencies are also proposing to continue the second path which includes a public approval process of any testing method which could have questionable benefits (i.e., an unknown usage rate for a technol ogy). Furthermore, the agencies are proposing to modify

its provisions to better clarify the documentation required to be submitted for approval aligning them with provisions in 40 CFR 86
- 1869
- 12 and NHTSA is separately proposing to prohibit credits from technologies addressed b y an y of its crash avoidance safety rulemakings (i.e., congestion management s ys tems). We welcome recommendations on how to improve or streamline the off
- cycle technology

approval process. Sections III and V describe tractor and vocational vehicle technologies, respectivel y, that the agencies anticipate may qualify for these off

- cycle credit provisions. (b ) Powertrain Testing The agencies are proposing a powertrain test option to allow for a robust way to quantify the benefits of CO 2 reducing technologies that are a part of the powertrain (conventional or hy brid) that are not captured in the GEM simulation. Powertrain testing and certification was included as one of the NAS recommendations in the Phase 2

–First Report. 101 Some of the se improvements are transient fuel control, engine and transmission control integration and hybrid sy stems. To limit the amount of testing, the powertrain would be divided into families and powertrains would be tested in a limited number of simulated vehi cles that cover the range of vehicles in which the powertrain would be installed. The powertrain test results would then be used to override the engine and transmission simulation portion of GEM.

101 National Academy of Science. “Reducing the Fuel Consumption and GHG Emissions of Medium
- and Heavy
Duty Vehicles, Phase T wo , First Report.” 2014. Recommendation 1.6. However, the agencies are not proposing to allow for the use of manufacturer derived and verified models of the powertrain within GEM.Page 117 of 850

The largest proposed change from the Phase 1 powertrain pro cedure is that only the advanced powertrain would need to be tested (as opposed to the Phase 1 requirement where both the advanced powertrain and the conventional powertrain had to be tested). This change is possible because the proposed GEM simulation us es the engine fuel map and torque curve from the actual engine in the vehicle to be certified. For the powertrain results to be used broadl y across all the vehicles that the powertrain would go into, a matrix of 8 to 9 tests would be needed per vehicle cycle. These tests would cover the range of coefficient of drag, coefficient of rolling resistance, vehicle mass and axle ratio of the vehicles that the powertrain will be installed in. The main output of this matrix of tests would be fuel mass as a function of positive work and average transmission output speed over average vehicle speed. This matrix of test results would then be used to calculate the vehicle’s CO 2 emissions by taking the wor

k per ton
- mile from the GEM simulation and multiplying it by the interpolated work specific fuel mass from the powertrain test and mass of CO 2 to mass of fuel ratio
. Along with proposing changes to how the powertrain results are used, the ag encies are also proposing changes to the procedures that describe how to carry out a powertrain test. The changes are to give additional guidance on controlling the temperature of the powertrains intake
air, oil, coolant, block, head , transmission, battery, and power electronics so that they are within their expected ranges for normal operation . The equations that describe the vehicle model are proposed to be changed to allow for input of the axle’s efficiency , driveline rotational inertia, as well as the mechanical and electrical accessory loads. The determine the positive work and average transmission output speed over average vehicle speed in GEM for the vehicle that will be certified, the agencies have defined a generic powertrain for each vehicle category . The agencies are requesting comment on if the generic powertrains should be modified according to specific aspects of the actual powertrain. For example using the engine’s rated power to scale the generic engine’s torque curve. Similarly, the tr ansmission gear ratios could be scaled b y the axle ratio of the drive axle, to make sure the generic engine is operated in GEM at the correct engine speed. **(4) Production Vehicle Testing for Comparison to GEM**  The agencies are is proposing to require tractor and vocational vehicle manufacturers to annually chassis test 5 production vehicles over the GEM cycles to verify that relative reductions simulated in GEM are being achieved in actual production. See 40 CFR 1037.665. We would not expect absolute correlation between GEM results and chassis testing. GEM makes many simplifying assumptions that do not compromise its usefulness for certification, but do cause it to produce emission rates different from what would be measured during a chassis dy namometer test . Given the limits of correlation possible between GEM and chassis testing, we would not expect such testing to accuratel y reflect whether a vehicle was compliant with the GEM standards. Therefore, we are proposing to not apply compliance liability

to su ch testing. Rather, this testing would be for informational purposes only . However, we do expect there to be correlation in a relative sense. Vehicle to vehicle differences showing a 10 percent improvement in GEM should show a similar percent improvement with chassis dy namometer testing. Nevertheless, manufacturers would not be subject to recall or other compliance actions if chassis testing did not agree with the GEM results on a relative basis. Rather, the agencies would continue evaluate in
- use comp liance b y verifying GEM inputs and testing in
- use engines.Page 118 of 850

EPA believes this chassis test program is necessary because of our experience implementing regulations for heav y - duty engines. In the past, manufacturers have designed engines that have much lower emissions on the duty cycles than occur during actual use . By proposing this simple test program, we hope to be able to identify such issues earlier and to dissuade an y attempts to design solel y to the certification test. We also expect the results of this testing to help inform the need for an y further changes to GEM. As already noted in Section II. B. (1) , it can be expensive to build chassis test cells for certification. However, EPA is proposing to structure this pilot
- scale program to minimize the costs. First, we are proposing that this chassis testing would not need to comply with the same requirements as would apply for official certification testing. This would allow testing to be performed in developmental test cells with simple portable anal yz ers. Second, since the proposed program would require onl y 5 tests per year, manufacturers without their own chassis testing facility

would be able to contra ct with a third party to perform the testing. Finall y, EPA proposes to appl y this testing to only those manufacturers with annual production in excess of 20,000 vehicles. We request comment on this proposed testing requirement. Commenters are encouraged to suggest alternate approaches that could achieve the assurance that the projected emissions reductions would occur in actual use. **(5) Use of GEM in Establishing Proposed Numerical Standards**  Just like in Phase 1, the agencies are proposing specific numerical standards against which tractors and vocational vehicles would be evaluated using GEM (We propose that trailers use a simplified equation
- based approach that was derived from GEM). Although the proposed standards are performance
- based standards, which do not specificall y require the use of an y particular technologies, the agencies established the proposed standards b y evaluating specific vehicle technology

packages using a prepublication version of the Phase 2 GEM. This prepublication version was an interm ediate version of the GEM source code, rather than the executable file version of GEM, which is being docketed for this proposal and is available on EPA’s GEM Webpage. Both the GEM source code and the GEM executable file are generall y functionally

equival ent. The agencies determined the proposed numerical standards essentiall y b y evaluating certain specific technology packages representing the packages we are projecting to be feasible in the Phase 2 time frame. For each technology package, GEM was used de termine a cycle
weighted g/ton
- mile emission rate and a gal/1000 ton
- mile fuel consumption rate. These GEM results were then essentially averaged together, weighted by the adoption rates the agencies are projecting for each technology package and for each model year of standards. Consider as an oversimplified example of two technology packages for Class 8 low
- roof sleepers cabs: one package that resulted in 60 g/ton
- mile and a second that resulted in 80 g/ton
- mile. If we project that the first package co uld be applied to 50 percent of the Class 8 low
- roof sleeper cab fleet in MY 2027, and that the rest of the fleet could do no better than the second technology package, then we would set the fleet average standard at 70 g/ton
- mile (0.5 • 60 + 0.5 • 80 = 70 ).Page 119 of 850

Formal external peer review and expert external user review was then conducted on the version of the GEM source code that was used to calculate the numerical values of the proposed standards. It was discovered via these external review processes that the GEM source code contained some minor software “bugs”. These bugs were then corrected by EPA and the Phase 2 proposed GEM executable file was derived from this corrected version of the GEM source code. Moreover, we expect to also receive technical c omments during the comment period that could potentially

identify additional GEM software bugs, which would lead EPA to make additional changes to GEM before the Final Rule. Thus, even without the agencies making an y changes in our projections of technolog y effectiveness or market adoption rates, it is likely that further revisions to GEM could result in us finalizing different numerical values for the standards. It is important to note that the agencies would not necessarily

consider such GEM
- based numeri cal changes b y themselves to be changes in the stringency

of the standards. Rather, we believe that stringency is more appropriatel y evaluated in technological terms; namely , by evaluating technology

effectiveness and the market adoption rates of technolo gies
. 

### D. **Proposed Engine Test Procedures and Engine Standards**  For the most part, the proposed Phase 2 engine standards are a continuation of the Phase 1 program, but with more stringent standards for compression
- ignition engines. Nevertheless, the agencies are proposing important changes related to the test procedures and compliance provisions. These changes are described below. As already discussed in Section II. B. the agencies are proposing a regulatory structure in which engine technologies are evaluated using engine
- specific test procedures as well using GEM, which is vehicle
- based. We are proposing separate standards for each procedure. The proposed engine stan dards described in Section II. D. (2) and the proposed vehicle standards described in Sections III and V are based on the same engine technology , which is described in Section II. D. (2) . We request comment on whether the engine and vehicle standards should be based on the same projected technology
. As described below, wh ile the agencies projected the same engine technology

for engine standards and for vehicle standards, we separately projected the technology

that would be appropriate for:

 Gasoline vocational engines and vehicles  Diesel vocational engines and vehicles  Trac tor engines and vehicles Before addressing the engine standards and engine technology in Section II. D. (2) , the agencies describe the test procedures that would be used to evaluate these technologies in Section II. D. (1) below. We believe that without first understanding the test procedures, the numerical engine standards would not have the proper context. **(1) Engine Test Procedures**  The Phase 1 engine standards relied on the engine test procedures specified in 40 CFR part 1065. These procedures were previously used by EPA to regulate criteria pollutants such asPage 120 of 850

NO X and PM, and few changes were needed to employ them for purposes of the Phase 1 standards. The agencies are proposing significant changes to two areas for Phase 2: (1) cycle weighting; and (2) GEM inputs. (Note that EPA is also proposing some minor chan ges to the basic part 1065 test procedures, as described in Section XIII). The diesel (i.e., compression
- ignition) engine test procedure relies on two separate engine test cycles. The first is the Heav y - dut y Federal Test Procedure (Heav y - duty FTP) that in cludes transient operation ty

pified by frequent accelerations and decelerations , similar to urban or suburban driving
. The second is the Supplemental Engine Test (SET) which includes 13 steady state test points
. The SET was adopted b y EPA to address highway cruise operation and other nominally

steady - state operation. However, it is important to note that it was intended as a supplemental test cycle and not necessarily to replicate precisel y an y specific in
- use operation. The gasoline (i.e., spark
- ignit ion) engine test procedure relies on a single engine test cycle: a gasoline version of Heav y - duty FTP . The agencies are not proposing changes to the gasoline engine test procedures. It is worth noting that EPA sees great value in using the same test proce dures for measuring GHG emissions as is used for measuring criteria pollutants. From the manufacturers’ perspective, using the same procedures minimizes their test burden. However, EPA sees additional benefits. First, as already noted in Section (b) , requiring engine manufacturers to comply with both NO X and CO 2 standards using the same test procedures discourages alternate calibrations that would trade NO X emissions against fuel consumption depending how the engine or vehicle is tested. Second, this approach leverages the work that went into developing the criteria pollutant cycles. Taken together, these factors support our decision to continue to rely on the Part 1065 test procedures with only minor adjustments, such as those described in Section II. D. (1) (a) . Nevertheless, EPA would consider more substantial changes if they were necessary

to incentivize meaningful technology changes, similar to the changes being made to GEM for Phase 2 to addres s additional technologies. (a ) SET Cycle Weighting The SET cycle was adopted by EPA in 2000 and modified in 2005 from a discrete
- mode test to a ramped
- modal cycle to broadl y cover the most significant part of the speed and torque map for heav y - dut y engines, defined b y three non
- idle speeds and three relative torques. The low speed is often called the “A speed”, the intermediate speed is often called the “B speed”, and the high speed is often called the “C speed.” As is shown in Table II
- 1 , the SET weights these three speeds at 23 percent, 39 percent, and 23 percent.Page 121 of 850 **Table II**  **- 1**  **SET Modes Weighting Factor in Phase 1**  **Speed ,**  **% Load Weighting factor in Phase**  **1 (%)**  Idle 15 A, 100 8 B, 50 10 B, 75 10 A, 50 5 A, 75 5 A, 25 5 B, 100 9 B, 25 10 C, 100 8 C, 25 5 C, 75 5 C, 50 5 Total 100 Total A Speed 23 Total B Speed 39 Total C Speed 23
The C speed is ty

picall y in the range of 1800 rpm for current HHD engine designs. However, it is becoming less common for engines to operate often in such a high speed in real world driving condition, and especially not during cruise vehicle speed between 55 a nd 65 mph. The agencies receive confidential business information from a few vehicle manufacturers that support this observation. Thus, although the current SET represents highway operation better than the FTP cycle, it is not an ideal cycle to represent future highway operation. Furthermore, given the recent trend configure drivetrains to operate engines at speeds down to a range of 1150
- 1200 rpm at vehicle speed of 65mph. This trend would make the typi cal highway engine speeds even further away from C speed. To address this issue, the agencies are proposing new weighting factors for the Phase 2 GHG and fuel consumption standards. The proposed new SET mode weightings move most of C weighting to “A” speed, as shown in Table II
- 2 . It would also slightly reduce the weighting factor on the idle speed. The agencies request comment on the proposed reweighting.Page 122 of 850 **Table II**  **- 2**  **Proposed SET Modes Weighting Factor in Phase 2** Speed/% Load Proposed We ighting factor in Phase 2 (%) Idle 12 A, 100 9 B, 50 10 B, 75 10 A, 50 12 A, 75 12 A, 25 12 B, 100 9 B, 25 9 C, 100 2 C, 25 1 C, 75 1 C, 50 1 Total 100 Total A Speed 45 Total B Speed 38 Total C Speed 5 (b ) Measuring GEM Engine Inputs Although GEM does not apply directl y to engine certification, implementing the Phase 2 GEM would impact engine manufacturers. To recognize the contribution of the engine in GEM the engine fuel map, full load torque curve and motoring torque curve have to be input into GEM. To insure the robustness of each of those inputs, a standard procedure has to be followed. Both the full load and motoring torque curve procedures are already defined in 40CFR part 1065 for engine testing. However, the fuel mapping procedure being proposed would be new. The agencies have compared the proposed procedure against other accepted engine mapping procedures with a number of engines at various labs including EPA’s NVFEL , Southwest Research Institute sponsored b y the agencies, and Environment Canada’s laboratory
. 102 The proposed procedure was selected because it proved to be accurate and repeatable, while limiting the test burden to create the fuel map. This proposed provision is consistent with NAS’s recommendation (3.8). One important consideration is the need to correct measured fuel consumption rates for the carbon and energy

content of the test fuel. For engine tests, we propose to continue the Phase

102 U.S. Environmental Protection Agency. Memo to Docket EPA
- HQ
- OAR
- 2014
- 0827.Page 123 of 850

1 approach, which is specified in 40 CFR 1036.530. We propose a simi lar approach to GEM fuel maps in Phase 2. The agencies are proposing that engine manufacturers must certify fuel maps as part of their certification to the engine standards, and that they be required to provide those maps to vehicle manufacturers beginnin g with MY 2020. 103 The one exception to this requirement would be for cases in which the engine manufacturer certifies based on powertrain testing, as described in Section (c) . In such cases, engine manufacturers would not be required to also certify the otherwise applicable fuel maps. We are not proposing that vehicle manufacturers be allowed to develop their own fuel maps for engines they do not manufa cture. The current engine test procedures also require the development of regeneration emission rate and frequency

factors to account for the emission changes for criteria pollutants during a regeneration event
. In Phase 1, the agencies adopted provisio ns to exclude CO 2 emissions and fuel consumption due to regeneration. However, for Phase 2, we propose to in clude CO 2 emissions and fuel consumption due to regeneration over the FTP and RMC cycles as determined using the infrequently regenerating aftertre atment devices (I RAF) provisions in 40 CFR 1065.680. We do not believe this would significantly impact the stringency

of the proposed standards because manufacturers have already made great progress in reducing the impact of regeneration emissions since 2 007. Nevertheless, we believe it would be prudent to begin accounting for regeneration emissions to discourage manufacturers from adopting compliance strategies that would reverse this trend. We request comment on this requirement. We are not proposing, however, to include fuel consumption due to regeneration in the creation of the fuel map used in GEM for vehicle compliance. We believe that the proposed requirements for the duty - cycle standards, along with market forces that already exist , would create sufficient incentives to reduce fuel consumption during regeneration over the entire fuel map . (c) Engine Test Procedures for Replicating Powertrain Tests As described in Section II. B.(2) (b) , the agencies are proposing a powertrain test option to quantify the benefits of CO 2 reducing powertrain technolo gies. These powertrain test results would then be used to override the engine and transmission simulation portion of GEM. The agencies are proposing to require that any manufacturer choosing to use this option also measure engine speed and engine torque during the powertrain test so that the engine’s performance during the powertrain test could be replicated in a non
- powertrain engine test cell. Subsequent engine testing would be conducted using the normal part 1065 engine test procedures, and g/hp
hr CO 2 results would be compared to the levels the manufacturer reported during certification. Such testing would appl y for both confirmatory and selective enforcement audit testing.

103 Current normal vehicle manufac turing processes generally result in many vehicles being produced with prior mo del year engines. For example, we expect that some MY 2021 vehicles will be produced with MY 2020 engines. Thus, we are proposing to require engine manufacturers to begin prov iding fuel maps in 2020 so that vehicle manufacturers could run GEM to certify MY 2021 vehicles with MY 2020 engines.Page 124 of 850

Under the proposed regulations, engine manufacturers certifying powertrain performance (instead of or in addition to the multi
- point fuel maps) would be held responsible for powertrain test results. On the other hand, where the engine manufacturer does not certify powertrain performance and instead certifies onl y the multi
- point fuel maps, it would held responsible for fuel map performance rather than the powertrain test results. Engine manufacturers certifying both would be responsible for both. (d ) CO2 from Urea SCR Systems For diesel engines utilizing urea SCR emission control sy stems for NO X reduction, the agencies are proposing to allow correction of the final engine fuel map and powertrain duty c yc le CO 2 emission results to account for the contribution of CO 2 from the urea injected into the exhaust. This urea could contribute up to 1 percent of the total CO 2 emissions from the engine. Since current urea production methods use gaseous CO 2 captured from the atmosphere (along with NH 3 ), CO 2 from urea consumption does not represent a net carbon emission. This adjustment is necessary

so that fuel maps developed from CO 2 measurements would be consistent with fuel maps from direct measurements of fuel flow rates. Thus, we are only proposing to allow this correction for emis sion tests where CO 2 emissions are determined from direct measurement of CO 2 and not from fuel flow measurement, which would not be impacted by CO 2 from urea. We note that this correction would be voluntary for manufacturers, and expect that some manufacturers may

determine that the correction is too small to be of concern. The agencies will use this correction with any engines for which the engine manufacturer applied the correction for its fuel maps during certification. We are not proposing this correction for engine test results with respect to the engine CO 2 standards. Both the Phase 1 standards and the proposed standards for CO 2 from diesel engines are based on test results that included CO 2 from urea. In other words , these standards are consistent with using a test procedure that does not correct for CO 2 from urea. We request comment on whether it would be appropriate to allow this correction for the Phase 2 engine CO 2 standards, but also adjust the standards to ref lect the correction. At this time, we believe that reducing the numerical value of the CO 2 standards by 1 g/hp
- hr would make the standards consistent with measurement that are corrected for CO 2 from urea. However, we also request comment on the appropriateness of appl yi ng a 2 g/hp
- hr adjustment should we determine it would better reflect the urea contribution for current engines. (e) Potential Alternative Certification Approach In Section II.B.(2) (b) , we explained that although GEM does not appl y directly to engine certification, implementi ng the Phase 2 GEM would impact engine manufacturers by requiring that they measure engine fuel maps. In Section I. A. (1) , the agencies noted that some stakeho lders may

have concerns about the proposed regulatory structure that would require engine manufacturers to provide detailed fuel consumption maps for GEM. Given such concerns, the agencies are requesting comment on an approach that could mitigate the conc ernsPage 125 of 850

by allowing both vehicle and engine to use the same driving cycles for certification. The detailed description of this alternative certification approach can be seen in the draft RIA. We are requesting comment on allowing this approach as an option, or as a replacement to the proposed approach. Commenters supporting this approach should address possible impacts on the stringency

of the proposed standards. This approach utilizes GEM with a default engine fuel map pre
- defined by the agency

to run a number of pre
- defined vehicle configurations over three certification cycles. Engine torque and speed profile would be obtained from the simulations, and would be used to specify engine dy namometer commands for engine testing. The results of this testing would be a CO 2 map as function of the integrated work and the ratio of averaged engine speed (N) to averaged vehicle speed (V) defined as (N/V) over each certification cycle. In vehicle certification, vehicle manufacturers would run GEM w ith the to
- be
- certified vehicle configuration and the agency default engine fuel map separately for each GEM cycle. Appl yi ng the total work and N/V resulted from the GEM simulations to the CO 2 map obtained from engine tests would determine CO 2 consumption for vehicle certification. For engine certification, we are considering allowing the engine to be certified based on one of the points conducted during engine alternative CO 2 map tests mentioned above rather than based on the FTP and SET cycle testing. **(2) Proposed Engine Standards for CO**  **2 and Fuel Consumption**  We are proposing to maintain the existing Phase 1 regulatory structure for engine standards, which had separate standards for spark
- igni tion engines (such as gasoline engines) and compression
- ignit ion engines (such as diesel engines), but we are proposing changes to how these standards would apply to natural gas fueled engines. As discussed in Section II.B.(2) (b) , the agencies see important advantages to maintaining separate engines standards, such as improved compliance assurance and better control during transient engine operation. Phase 1 also applied different test cycles depending on whether the engine is used for tractors, vocational vehicles, or both, and we propose to continue this as well. 104 We assume that CO 2 at the end of Phase 1 is the baseline of Phase 2. Table II
- 3 shows the Phase 1 CO 2 standards for diesel engines, which serve as the baseline for our anal ys is of the proposed Phase 2 standards. **Table II**  **- 3**  **Phase 2 Baseline CO 2**  **Perform ance (g/bhp**  **- hr)** 

104 Engine classification is set forth in 40 CFR 1036.801. Spark
- ignition means relating to a gasoline
- fueled engine or any other type of en gine with a spark plug (or other sparking device) and with operating characteristics similar to the Otto combustion cycle. However, engines that meet the definition of spark
- ignition per 1036.801, but are regulated as diesel engines under 40 CFR part 86 (f or criteria pollutants) are treated as compression
- ignition engines for GHG standards. Compression
- ignition means relating to a type of reciprocating, internal
- com bustion engine that is not a spark
- ignition engine, however, engines that meet the definition of compression
- ignition per 1036.801, but are regulated as Otto
- cycle engines under 40 CFR part 86 are treated as spark
- ignition engines for GHG standards.Page 126 of 850

LHDD
- FTP MHDD
- FTP HHDD
- FTP MHDD
- SET HHDD
- SET 576 576 555 487 460 The gasoline engine baseline CO 2 is 627 (g/bhp
- hr). The agencies used the baseline engine to assess the potential of the technologies described in the following sections. As described below, the agencies are proposing new compression
- ignition engine standards for Phase 2 that would req

uire additional reductions in CO 2 emissions and fuel consumption beyond the baseline. However, as also described below in Section II.B.(2) (b) , we are not proposing more stringent CO 2 or fuel consumption standards for new heav y - dut y gasoline engines. Note, however, that we are projecting some small improvement in gasoline engine performance that would be recognized over the vehicle cycles. For heav y - heavy
- dut y diesel engines to be ins talled in Class 7 and 8 combination tractors, the agencies are proposing the standards shown in Table II
- 4 . 105 The proposed MY 2027 standards for engin es installed in tractors would require engine manufacturers to achieve, on average, a 4.2 percent reduction in fuel consumption and CO 2 emissions beyond the Phase 1 standard. We propose to adopt interim engine standards in MY 2021 and MY 2024 that would r equire diesel engine manufacturers to achieve, on average, 1.5 percent and 3.7 percent reductions in fuel consumption and CO 2 emissions, respectivel y. **Table II**  **- 4**  **Proposed Phase 2 Heavy -**  **duty Tractor Engine Standards for Engines**  **106 over the SET Cycle**  Model Year Standard Medium Heav y Duty Diesel Heav y Heav y Duty Diesel 2021
- 2023 CO 2 (g/bhp
- hr) 479 453

Fuel Consumption (gallon/100 bhp
- hr) 4. 7053 4. 4499 2024
- 2026 CO 2 (g/bhp
- hr) 469 443

Fuel Consumption (gallon/100 bhp
- hr) 4. 6071 4. 3517 2027 and Later CO 2 (g/bhp
- hr) 466 441

Fuel Consumption (gallon/100 bhp
- hr) 4. 5776 4. 3320
For compression
- ignition engines fitted into vocational vehicles, the agencies are proposing MY 2027 standards that would require engine manufacturers to achieve, on average, a 4.0 percent reduction in fuel consumption and CO 2 emissions beyond the Phase 1 standard. We

105 The agencies note that the CO 2 and fuel consumption standards for Class 7 and 8 combination tract ors do not cover gasoline or LHDD engines, as those are not used in Class 7 and 8 combination tractors. 106 Tractor engine standards apply to all engines, without regard to the engine
- cycle classification.Page 127 of 850

propose to adopt interim engine standards in MY 2021 and MY 2024 that would require diesel engine manufacturers to achieve, on average, 2.0 percent and 3.5 percent reductions in fuel consumption and CO 2 emissions, respectively
. Table II
- 5 presents the CO 2 and fuel consumption standards the agencies propose for compression
- ignition engines to be installed in vocational vehicles. The first set of standards would take effect with MY 2021, and the second set would take effect with MY 2024.

**Table II**  **- 5**  **Proposed Vocational Diesel Engine Standards over the Heavy**  **- Duty FTP Cycle**  Model Year Standard Li ght Heav y Duty Diesel Medium

Heav y Duty Diesel Heav y

Heav y Duty Diesel 2021
- 2023 CO 2 Standard (g/bhp
- hr) 565 565 544

Fuel Consumption Standard (gallon/100 bhp
- hr) 5.55 01 5.55 01 5.34 38 2024
- 2026 CO 2 Standard (g/bhp
- hr) 556 556 536

Fuel Consumption (gallon/100 bhp
- hr) 5.46 17 5.46 17 5.26 52 2027 and Later CO 2 Standard (g/bhp
- hr) 553 553 533

Fuel Consumption (gallon/100 bhp
- hr) 5.43 22 5.43 22 5.23 58 Although both EPA and NHTSA are proposing to begin the Phase 2 engine standards, EPA considered proposing Phase 2 standards that would begin before MY 2021

– that is with less lead time. NHTSA is required b y statute to provide four models years of lead ti me, while EPA is required onl y to provid e lead time “necessary to permit the development and application of the requisite technology” (CAA Section 202 (a)(2)). However, as noted in Section I , lead time cannot be separated for other relevant factors such a s costs, reliability , and stringency
. Proposing these standards before 2021 c ould increase the risk of reliability issues in the earl y ye ars. Given the limited number of engine models that each manufacturer produc es, managing that many new standards woul d be problematic (i.e., new Phase 1 standards in 2017, new Phase 2 EPA standards in 2018, 2019, or 2020, new standards in 2021, 2024, and again in 2027). Considering these challenges, EPA determined that earlier model year standards would not be appropri ate, especially

given the value of harmonizing the NHTSA and EPA standards. (a ) F easibility of the Diesel (Compression

-Ignition) Engine Standards In this section, the agencies discuss our assessment of the feasibility of the proposed engine standards and the extent to which they would conform to our respective statutory authority and responsibilities. More details on the technologies discussed here can be found in the Draft RIA Chapter 2.3 . The feasibility of these technologies is further discussed in draft RIA Chapter 2.7 for tractor and v ocational vehicle engines. Note also, that the agencies are considering adopting engine standards with less lead time, and may do so in the Final Rules. These standards are discussed in Section (e)
.Page 128 of 850

Based on the technology

anal ys is described below, the agencies can project a t echnology path exists to allow manufacturers to meet the proposed final Phase 2 standards b y 2027, as well as meeting the intermediate 2021 and 2024 standards. The agencies also project that manufacturers would be able to meet these standards at a reasona ble cost and without adverse impacts on in
- use reliability . Note that the agencies are still evaluating whether these same standards could be met sooner, as was anal yz ed in Alternative 4. In general, engine performance for CO 2 emissions and fuel consumpti on can be improved by improving combustion and reducing energy losses. More specificall y, the agencies have identified the following key areas where fuel efficiency can be improved:

 Combustion optimization  Turbocharging sy stem  Engine friction and other parasitic losses  Exhaust aftertreatment  Engine breathing s ys tem  Engine downsizing  Waste heat recovery  Transient control for vocational engines only The agencies are proposing to phase
- in the standards from 2021 through 2027 so that manufacturers could gradua lly introduce these technologies. For most of these improvements, the agencies project manufacturers could begin applying them to about 45
- 50 percent of their heav y - dut y engines b y 2021, 90
- 95 percent b y 2024, and ultimately appl y them to 100 percent of their heav y - dut y engines by 2027. However, for some of these improvements (such as waste heat recovery

and engine downsizing) we project lower application rates in the Phase 2 time frame. This phase
- in structure is consistent with the normal manner in whi ch manufacturers introduce new technology to manage limited R&D budgets and well as to allow them to work with fleets to fully

evaluate in
- use reliability before a technology

is applied fleet
- wide. The agencies believe the proposed phase
- in schedule would allow manufacturers to complete these normal processes. As described in Section (e) , the agencies are also requesting comment on whether manufacturers could complete these development steps more quickly so that they

could meet these standards sooner. Based on our technology assessment described below, the proposed engine standards appear to be consistent with the agencies’ respective statutory authorities. All of the technologies with high penetration rates above 50 percent have already been demonstrated to some extent in th e field or in research laboratories, although some development work remains to be completed. We note that our feasibility anal ys is for these engine standards is not based on projecting 100 percent application for any technology until 2027. We believe that projecting less than 100 percent application is appropriate and give s us additional confidence that the interim standards would be feasible. Because this anal ys is considers reductions from engines meeting the Phase 1 standards, it assumes manufacturers would continue to include the same compliance margins as Phase 1. In other words, a manufacturer currentl y declaring FCL s 10 g/hp
- hr above its measured emissionPage 129 of 850

rates (in order to account for production and test
- to - test variability) would continue to do the same in Phase 2. We request comment on this assumption. The agencies have carefully considered the costs of applying these technologies, which are summarized in Section II.D.(2) (d) . These costs appear to be reasonable on both a per engine basis, and when considering pay back periods 107

. The engine technologies are discussed in more detail below. Readers are encouraged t o see the draft RIA Chapter 2 for additional details (and underlying references) about our feasibility anal ys is. (i ) Combustion Optimization Although manufacturers are making significant improvements in combustion to meet the Phase 1 engine standards, the ag encies project that even more improvement would be possible after 2018. For example, improvements to fuel injection sy stems would allow more flexible fuel injection capability

with higher injection pressure, which can provide more opportunities to improve engine fuel efficiency . Further optimization of piston bowls and injector tips would also improve engine performance and fuel efficiency . We project that a reduction of up to 1.0 percent is feasible in the 2024 model year through the use of these techno logies, although it would likely

appl y to only 95 percent of engines until 2027. Another important area of potential improvement is advanced engine control incorporating model based calibration to reduce losses of control during transient operation. Impro vements in computing power and speed would make it possible to use much more sophisticated algorithms that are more predictive than today ’s controls. Because such controls are onl y beneficial during transient operation, they would reduce emission over the FTP cycle, and during in
- use operation, they would not reduce emissions over the SET cycle. Thus the agencies are projecting model based control reductions only for vocational engines. Although this control conc ept is not currentl y available, we project model based controls achieving a 2 percent improvement in transient emissions could be in production for some engine models b y 2021. By 202 7 , we project over one
- third of all vocational diesel engines would incorporate model
- based controls. (ii) Turbocharging System Many advanced turboc harger technologies can be potentially added into production in the time frame between 2021 and 2027, and some of them are already in production, such as mechanical or electric turbo
- compound, more efficient variable geometry turbine, and Detroit Diesel’s patented as ymmetric turbocharger. A turbo compound sy stem extracts energy from the exhaust to provide additional power. Mechanical turbo
- compounding includes a power turbine located downstream of the turbine which in turn is c onnected to the crankshaft to supply additional power. On
- highway demonstrations of this technology began in the earl y 1980s. It was used first in heav y duty production by

Detroit Diesel for their DD15 and DD16 engines and reportedl y provided a 3 to 5 pe rcent fuel consumption reduction. Results are duty cycle

107 See Section IX.M for additional information about pay back periods.Page 130 of 850

dependent, and require significant time at high load to see a fuel efficiency improvement. L ight load factor vehicles can expect little or no benefit. Volvo reports two to four percent fuel consumption improvement in line haul applications , which could be in production even b y 2020 (iii) Engine Friction and Parasitic Losses The friction associated with each moving part in an engine results in a small loss of engine power. For example, frictional losses occur at bearings, in the valvetrain , and at the piston
- cylinder interface. Taken together such losses represent a large fraction of all energy lost in an engine. For Phase 1, the agencies projected a 1
- 2 percent reduction in fuel consumption due to friction reduction. However, new information leads us to project that an additional 1.4 percent reduction would be possible for some engines by 2021 and all engines by

2027. These reductions would be possible due to improvements in bearing materials, lubricants, and new accessory designs such as variable
- speed pumps. (iv) Aftertreatment Optimization All diesel engines manufacturers are already using diesel particulate filter (DPF) to reduce particulate matter (PM) and selective catal ytic reduction (SCR) to reduce NO X emissions. The agencies see two areas in which improved aftertreatment sy stems can also result in lower fuel consumption. First, increased SCR efficiency could allow re
- optimization of combustion for better fuel consumption because the SCR would be capable of reducing higher engine
- out NO X emissions. Second, improved designs could reduce backpressure on the engine to lower pumping losses
. The agencies project the combined impact of such improvements could be 0.6 percent or more. (v) Engine Breathing System Various high efficiency

air handlin g (for both intake air and exhaust) processes could be produced in the 2020 and 2024 time frame. To maximize the efficiency of such processes, induction sy stems may

be improved by

manufacturing more efficientl y designed flow paths (including those associated with air cleaners, chambers, conduit, mass air flow sensors and intake manifolds) and b y designing such s ys tems for improved thermal control. Improved turbocharging and air handling s ys tems would likely include higher efficiency EGR sy stems and interc oolers that reduce frictional pressure loss while maximizing the ability to thermall y control induction air and EGR. EGR sy stems that often rely upon an adverse pressure gradient (exhaust manifold pressures greater than intake manifold pressures) must be reconsidered and their adverse pressure gradients minimized. Other components that offer opportunities for improved flow efficiency

include cylinder heads, ports and exhaust manifolds to further reduce pumping losses by about 1 percent. (vi) Engine Downsizing Proper sizing of an engine is an important component of optimizing a vehicle for best fuel consumption. This Phase 2 rule would improve overall vehicle efficiency , which would result in a drop in the vehicle power demand for most operation. This drop m oves the vehicle operating points down to a lower load zone, which can move the engine away from the sweet spot. Engine downsizing combined with engine downspeeding can allow the engine to movePage 131 of 850

back to higher loads and lower speed zone, thus achieving slightly better fuel econom y in the real world. However, because of the way engines are tested, little of the benefit of engine downsizing would be detected during engine testing (if power density remains the same) because the engine test cycles are normalized based on the full torque curve. Thus the current engine test is not the best way

to measure the true effectiveness of engine downsizing. Nevertheless, we project that some small benefit would be measured over the engine test cycles

– perh aps up to a one - quarter percent improvement in fuel consumption. Note that a bigger benefit would be observed during GEM simulation, better reflecting real world improvements. This is factored into the vehicle standards. Thus, the agencies see no reason to fundamentally revise the engine test procedure at this time. (vii) Waste Heat Recovery More than 40 percent of all energy loss in an engine is lost as heat to the exhaust and engine coolant. For many ye ars, manufacturers have been using turbochargers to convert some of the waste heat in the exhaust into usable mechanical power than is used to compress the intake air. Manufacturers have also been working to use a Rankine cycle
- based s ystem to extract additional heat energy

from the engine. Such sy stem s are often called waste heat recovery (WHR) sy stems . The possible sources of energy include the exhaust, recirculated exhaust gases, compressed charge air, and engine coolant. The basic approach with WHR is to use waste heat from one or more of these sourc es to evaporate a working fluid, which is passed through a turbine or equivalent expander to create mechanical or electrical power, then re
- condensed. Prior to the Phase 1 Final Rule, the NAS estimated the potential for WHR to reduce fuel consumption by

up to 10 percent
. 108 However, the agencies do not believe such levels would be achievable within the Phase 2 time frame. There currentl y are no commercially available WHR sy stems for diesel engines, although research prototy pe s ys tems are being tested by som e manufacturers
. The agencies believe it is likely a commerciall y - viable WHR capable of reducing fuel consumption by over three percent would be available in the 2021 to 2024 time frame. Cost and complexity may remain high enough to limit the use of such sy stems in this time frame. Moreover, packaging constraints and transient response challenges would limit the application of WHR sy stems to line
- haul tractors . Refer to RIA Chapter 2 for a detailed description of these s ys tems and their applicability. The agencies project that WHR recovery could be used on 1 percent of all tractor engines by 2021, on 5 percent by

2024, and 15 percent by 2027. The net cost and effectiveness of future WHR sy stems would depend on the sources of waste heat. S ys tems that e xtract heat from EGR gases may provide the side benefit of reducing the size of EGR coolers or eliminating them altogether . To the extent that WHR systems use exhaust heat, they would increase the overall cooling s ys tem heat rejection requirement and like ly require larger radiators. This could have negative impacts on coo ling fan power needs and vehicle aerodynamics
. Limited engine compartment space under hood could leave insufficient

108 See 2010 NAS Report, page 57.Page 132 of 850

room fo r additional radiator size increasing. On the other hand, WHR systems that extract heat from the engine coolant, could actuall y improve overall cooling. (viii) Technology Packages for Diesel Engines Installed in Tractors Ty pical technology

packaged for diesel engines installed in tractors basically includes most technologie s mentioned above, which includes c ombustion optimization , turbocharging sy stem, engine friction and other parasitic losses , e xhaust aftertreatment , e ngine breathing sy stem , and engine downsizing. Depending on the technology maturity of WHR and market de mands, a small number of tractors could install waste heat recovery device with Rankine cycle technology
. During the stringency development, the agencies received strong support from various stakeholders, where they graciousl y provided man y confid ential business information (CBI) includi ng both technology reduction potentials and estimated market penetrations. Combining those CBI data with the agencies’ engineering judgment , Table II
- 4 lists those potential technologies together with the agencies’ estimated market penetration for tractor engine. Those reduction values shown as ”SET reduction” are relative to Phase 1 engine, which is shown in Table II
- 6 . It should be pointed out that the stringency in Table II
- 6 are developed based on the proposed SET reweighting factors l shown in Table II
- 2
. The agencies welcome comment on the market penetration rates listed below. **Table II**  **- 6**  **Projected Tractor Engine Technologies and Reduction** SET Mode SET

weight ed reduction (%) 2020
- 2027 Market

penetration (2021) Market

penetration (2024) Market

penetration (2027) Turbo compound with clutch 1. 8 % 5% 10% 10% WHR (Rankine cycle) 3. 6 % 1% 5% 15% Parasitic/Friction (C yl Kits, pumps, FIE), lubrication 1. 4 % 45% 95% 100% Aftertreatment (lower dP) 0.6% 45% 95% 100% EGR/Intake & exhaust manifolds/Turbo /VVT/Ports 1.1% 45% 95% 100% Combustion/FI/Control 1. 1 % 45% 95% 100% Downsizing 0. 3 % 10% 20% 30% Weighted reduction (%) 1.5% 3. 7 % 4. 2 % (ix) Technology Packages for Diesel Engines Installed in Vocational Vehicles For compression
- ignition engines fitted into vocational vehicles, the agencies are proposing MY 2021 standards that would require engine manufacturers to achieve, on average, a 2.0 percent reduction in fuel consumption and CO 2 emissions beyond the baseline that is the Phase 1 standard
. Beginning in MY 2024, the agencies are propos ing engine standards thatPage 133 of 850

would require diesel engine manufacturers to achieve, on average, a 3.5 percent reduction in fuel consumption and CO 2 emissions beyond the Phase 1 baseline standards for all diesel engines including LHD, MHD, and HHD
. T he agencies are propo sing these standards based on the performance of reduced parasitics and friction, improved aftertreatment, combustion optimization, superchargers with VGT and b yp ass, model
- based controls, improved EGR cooling/transport, and variable valve timing (only in LHD and MHD engines)
. The percent reduction for the MY2021, MY2024, and MY2027 standards is based on the combination of technology

effectiveness and market adoption rate projected. Most of the potential engine related technologies discussed previousl y can be applied here. However, neither the waste heat technologies with the Rankine cycle concept nor turbo
compound would be applied into vocational sector due to the inefficient use of waste heat energy with duty cycles and applications with more transient operation than highway operation. Given the projected cost and complexity of such s ys tems, we believe that for the Phase 2 time frame manufacturers will focus their development work on tractor applications (which would have better pay back for operators) rather than vocational applications. In addition, the benefits due to engine downsizing, which can be seen in tractor engines, may not be clearly

seen in vocational sector , again because this control technology produces few benefits in transient operation
. One of the most effective technologies for vocational engines is the optimization of transient control. It would be expected that more advanced transient control including different levels of model based control and neural network control package cou ld provide substantial benefits in vocational engines due to the extensive transient operation of these vehicles. For this technology , the use of the FTP cycle would drive engine manufacturers to invest more in transient control to improve engine efficien cy . Other effective technologies would be parasitic/friction reduction, as well as improvements to combustion, air handling s ys tems, turbochargers, and aftertreatment sy stems. Table II
- 7 below lists those potential technologies together with the agencies’ projected market penetration for vocational engines. Again, similar to tractor engine, the technology reduction and market penetration are estimated by combining the CBI data together with the agencies’ engineering judgment. Those reduction values shown as “FTP reduction” are relative to a Phase 2 baselin e engine, which is shown in Table II
- 3 . The weighted reductions combine the emission reduction values weighted b y the market penetration of each techno logy).Page 134 of 850 **Table II**  **- 7**  **Projected Vocational Engine Technologies and Reduction** Technology GHG

Emissions Reduction 2020
- 2027 Market

Penetration 2021 Market

Penetration 2024 Market

Penetration 2027 Model based control 2.0% 25% 30% 40% Parasitic /Friction 1.5% 60% 90% 100% EGR/Air/VVT /Turbo 1.0% 50% 90% 100% Improved AT 0.5% 50% 90% 100% Combustion Optimization 1.0% 50% 90% 100% Weighted reduction (%)
- L/M/HHD 2.0% 3.5% 4.0% (x) Summary of the Agencies’ Analysis of the Feasibility of the Proposed Diesel Engine Standards The proposed HD Phase 2 standards are based on adoption rates for technologies that the agencies regard, subject to consideration of public comment, as the maximum feasible for purposes o f EISA Section 32902 (k) and appropriate under CAA Section 202 (a) for the reasons given above. The agencies believe these technologies can be adopted at the estimated rates for these standards within the lead time provided, as discussed in draft RIA Chap ter 2. The 2021 and 2024 MY standards are phase
- in standards on the path to the 2027 MY standards and were developed using less aggressive application rates and therefore have lower technology package costs than the 2027 MY standards. As described in Se ction II. D.(2) (d) below, the cost of the proposed standards is estimated to range from $270 to $1,698 per engine. This is slightly higher than the costs for Phase 1, which were estimated to be $234 to $1,091 per engine. Although the agencies did not separately determine fuel savings or emission reductions due to the engine standards apart from the vehicle program, it is expected that th e fuel savings would be significantly larger than these costs, and the emission reductions would be roughl y proportional to the technology costs when compared to the corresponding vehicle program reductions and costs. Thus, we regard these standards as co st - effective. This is true even without considering pay back period. The proposed phase
- in 2021 and 2024 MY standards are less stringent and less costly than the proposed 2027 MY standards. Given that the agencies believe the proposed standards are technologicall y feasible, are highl y cost effective, and highl y cost effective when accounting for the fuel savings, and have no apparent adverse potential impacts ( e.g. , there are no projected negative impacts on safety or vehicle utility), the prop osed standards appear to represent a reasonable choice under Section 202(a) of the CAA and the maximum feasible under NHTSA’s EI SA authority at 49 U.S.C. 32902(k)(2). (b ) Basis for Continuing the Phase 1 Spark

-Ignited Engine Standard Today most SI
- powered vocational vehicles are sold as incomplete vehicles by a verticall y integrated chassis manufacturer, where the incomplete chassis shares most of the samePage 135 of 850

technology

as equivalent complete pickups or vans, including the powertrain. Th e number of such incomplete SI
- powered vehicles is small compared to the number of completes. Another, even less common way

that SI
- powered vocational vehicles are built is by a non - integrated chassis manufacturer purchasing an engine from a company that also produces complete and/or incomplete HD pickup trucks and vans. The resulting market structure leads manufacturers of heav y - dut y S I engines to have little market incentive to develop separate technology for vocational engines that are engine
- certified . Moreover, the agencies have not identified a single SIengine technology

that we believe belongs on engine
- certified vocational engines that we do not also project to be used on complete heav y - duty pickups and vans. In light of this market structure, wh en the agencies considered the feasibility of more stringent Phase 2 standards for SIvocational engines, we identified the following key questions: 1. Will there be technologies available that could reduce in
- use emissions from vocational SIengines? 2. Would these technologies be applied to complete vehicles and carried
- over to engine certified engines without a new standard? 3. Would these technologies be applied to meet the vehicle
- based standards described in Section V? 4. What are the drawbacks associated with se tting a technology
- forcing Phase 2 standard for SI engines? With respect to the first and second questions, as noted in Chapter 2.6 of the draft RIA, the agencies have identified improved lubricants, friction reduction, and cylinder deactivation as technol ogies that could potentially reduce in
- use emissions from vocational engines; and the agencies have further determined that to the extent these technologies would be viable for complete vehicles, they

would also be applied to engine
- certified engines. Nev ertheless, significant uncertainty remains about how much benefit would be provided by these technologies. It is possible that the combined impact of these technologies would be one percent or less. With respect to the third question, we believe that to the extent these technologies are viable and effective, they would be applied to meet the vehicle
- based standards for vocational vehicles. At this time, it appears the fourth question regarding drawbacks is the most important. The agencies could propose a technology forcing standard for vocational SI engines based on a projection of each of these technologies being effective for these engines. However, as already noted in Section I , the agencies see value in setting the standards at levels that would not require every projected technology

to work as projected. Effectivel y requiring technologies to match our current projections would create the risk that the standards would not be feasible if even a single one of technologies failed to match our projectio ns. This risk is amplified for SI engines because of the very

limited product offerings, which provide far fewer opportunities for averaging than exist for CIengines. Given the relativel y small improvement projected, and the likelihood that most or all of this improvement would result an yw ay from the complete pickup and van standards and the vocational vehicle
- based standards, we do not believe such risk is justified or needed
. The approach the agencies are proposing accomplishes the same objective without the attendant potential risk. With this approach , the Phase 1 SI engine standard for these engines would remain in place, and engine improvements would be reflected in the stringency of thePage 136 of 850

vehicle standard for the vehicle in which the engine would be installed . Nevertheless, we request comment on the merits of adopting a more stringent SIengine standard in the 2024 to 2027 time frame , including comment on technologies, adoption rates, and effectiveness over the engine cycle that could support adoption of a more stringent standard. Please see Section V.C of this preamble for a description of the SIengine technologies that have been considered in developing the proposed vocational vehicle standards. Please see Section VI.C of this preamble for a description of the SI engine technologies that have been considered in developing the proposed HD pickup truck and van standards. (c) Engine Improvements Projected for Vehicles over the GEM Duty Cycles Because we are proposing that tractor and vocational vehicle manufacturers represent their vehicles’ ac tual engines in GEM for vehicle certification, the agencies aligned our engine technology

effectiveness assessments for both the separate engine standards and the tractor and vocational vehicle standards for each of the regulatory alternatives considered. This was an important step because we are proposing to recognize the same engine technologies in both the separate engine standards and the vehicle standards, which each have different test procedures for demonstrating compliance. As explained earlier in Section II. D. (1) , compliance with the tractor separate engine standards is determined from a composite of the Supplemental Engine Test (SET) procedure’s 13 steady
- state operating points. Compliance with the vocational vehicle separate engine standards is determined over the Federal Test Procedure’s (FTP) transient engine duty cycle. In contrast, compliance with the vehicle standards is determined using GEM, which calculates composite results over a combinati on of 55 mph and 65 mph steady
- state vehicle cycles and the ARB Transient vehicle cycle. Note that we are also proposing a new workday idle cycle for vocational vehicles. Each of these duty cycles emphasizes different engine operating points; therefore, they can each recognize certain technologies differentl y. Our first step in aligning our engine technology assessment at both the engine and vehicle levels was to start with an anal ys is of how we project each technology to impact performance at each of the 13 individual test points of the SET steady
- state engine duty cycle. For example, engine friction reduction technology would be expected to have the greatest impact at the highest engine speeds, where frictional energy losses are the greatest. As anothe r example, turbocharger technology

is generally

optimized for best efficiency at steady
- state cruise vehicle speed. For an engine this is near its lower peak
- torque speed and at a moderately high load that still offers sufficient torque reserve to climb m odest road grades without frequent transmission gear shifting. The agencies also considered the combination of certain technologies causing s ynergies and dis
- sy

nergies with respect to engine efficiency at each of these test points. See RIA Chapter 2 for further details. Next we estimated unique brake
- specific fuel consumption values for each of the 13 SET test points for two hy

pothetical MY2018 tractor engines that would be compliant with the Phase 1 standards. These were a 15 liter displacement 455 hors epower engine and an 11 liter 350 horsepower engine. We then added technologies to these engines that we determined were feasible for MY2021, MY2024, and MY 2027, and we determined unique improvements at each of the 13 SET points. We then calculated comp osite SET values for these hy pothetical engines and determined the SET improvements that we could use to propose more stringent separate tractor engine standards for MY2021, MY2024, and MY 2027.Page 137 of 850

To align our engine technology analy sis for vehicles to the S ET engine analy sis described above, we then fit a surface equation through each engine’s SET points versus engine speed and load to approximate their analogous fuel maps that would represent these same engines in GEM. Because the 13 SET test points do not fully cover an engine’s wide range of possible operation, we also determined improvements for an additional 6 points of engine operation to improve the creation of GEM fuel maps for these engines. Then for each of these 8 tractor engines (two each for MY 2018, MY2021, MY2024, and MY2027) we ran GEM simulations to represent low
- , mid
- , and high
- roof sleeper cabs and low
- , mid
- , and high
- roof day cabs. Class 8 tractors were assumed for the 455 horsepower engine and Class 7 tractors (day cabs onl y) were assumed for the 350 horsepower engine. Each GEM simulation calculated results for the 55 mph, 65 mph, and ARB Transient cycles, as well as the composite GEM value associated with each of the tractor types. After factoring in our Alternative 3 projected market penetrations of the engine technologies, we then compared the percent improvements that the same sets of engine technology

caused over the separate engines’ SET composites and the various vehicles’ GEM composites. Compared to their respective MY2018 base line engines, the two engines of different horsepower showed the same percent improvements. All of the tractor cab ty pes showed nearly

the same relative improvements too. For example, for the MY2021 Alternative 3 engine technology

package in a high roof sleeper tractor, the SET engine composites showed a 1.5 percent improvement and the GEM composites a 1.6 percent improvement. For the MY2024 Alternative 3 engine technology packages, the SET engine composites showed a 3.7 percent improvement and the GEM c omposites a 3.7 percent improvement. For MY2027 Alternative 3 engine technology

packages, the SET engine composites showed a 4.2 percent improvement and the GEM compo sites a 4.2 percent improvement. We therefore concluded that tractor engine technologies will improve engines and tractors proportionally , even though the separate engine and vehicle certification test procedures have different duty cycles. We then repeated this same process for the FTP engine transient cycle and the GEM vocational vehicle ty

pes. For the vocational engine anal ys is we investigated four engines: 15 liter displacement engine at 455 horsepower rating, 11 liter displacement engine at 345 horsepower rating, a 7 liter displacement engine at a 200 horsepower rating and a 270 horsepow er rating. These engines were then used in GEM over the light
- heavy , medium
- heavy , and heav y - heavy

vocational vehicle configurations. Because the technologies were assumed to impact each point of the FTP in the same way , the results for all engines and v ehicles were 2.0 percent improvement in MY2021, 3.5 percent improvement in MY2024, and 4.0 percent improvement in MY2027. Therefore, we arrived at the same conclusion that vocational vehicle engine technologies are recognized at the same percent improvement over the FTP as the GEM cycles. We request comment on our approach to arrive at this conclusion. (d ) Engine Technology Package Costs for Tractor and Vocational Engines (and Vehicles) As described in Chapters 2 and 7 of the draft RIA, the agencies estimated costs for each of the engines technologies discussed here. All costs are presented relative to engines projected to comply with the model year 2017 standards

– i.e., relative to our baseline engines . Note that we are not presenting any costs for gasolin e engines (SI engines) because we are not proposing to change the standards.Page 138 of 850

Our engine cost estimates include a separate anal ysis of the incremental part costs, research and development activities, and additional equipment. Our general approach used else where in this action (for HD pickup trucks, gasoline engines, Class 7 and 8 tractors, and Class 2b
- 8 vocational vehicles) estimates a direct manufacturing cost for a part and marks it up based on a factor to account for indirect costs. See also 75 FR 2537 6. We believe that approach is appropriate when compliance with proposed standards is achieved generally by installing new parts and s ys tems purchased from a supplier. In such a case, the supplier is conducting the bulk of the research and development on the new parts and sy stems and including those costs in the purchase price paid by

the original equipment manufacturer. The indirect costs incurred by the original equipment manufacturer need not include much cost to cover research and development since the bulk of that effort is already done. For the MHD and HHD diesel engine segment, however, the agencies believe that OEMs will incur cost s not associated with the purchase of parts or s ys tems from suppliers or even the production of the parts and s ys tems , but rather the development of the new technology by the original equipment manufacturer itself. Therefore, the agencies have directly estimated additional indirect costs to account for these development costs . The agencies used the same approach in the Phase 1 HD rule. EPA commonly uses this approach in cases where significant investments in research and development can lead to an emission control approach that requires no new hardware. For example, combustion optimization may

significantly

reduce emis sions and cost a manufacturer millions of dollars to develop but would lead to an engine that is no more expensive to produce. Using a bill of materials approach would suggest that the cost of the emissions control was zero reflecting no new hardware and ignoring the millions of dollars spent to develop the improved combustion sy stem. Details of the cost analy sis are included in the draft RIA Chapter 2. To reiterate, we have used this different approach because the MHD and HHD diesel engines are expected to comply in part via technology

changes that are not reflected in new hardware but rather reflect knowledge gained through laboratory and real world testing that allows for improvements in control sy stem calibrations

– changes that are more difficult to reflect through direct costs with indirect cost multipliers. Note that these engines are also expected to incur new hardware costs as shown in Table II
- 8 through Table II
- 11
. EPA also developed the incremental piece cost for the components to meet each of the 2021 and 2024 standards. The costs shown in Table II
- 12 include a low complexity I CM of 1.15 and assume the flat
- portion of the learning curve is applicable to each technology
.Page 139 of 850

(i ) Tractor Engine Package Costs **Table II**  **- 8**  **Proposed MY2021 Tractor Diesel Engine Component Cost s Inclusive of Indirect Cost Markups**  **and Adoption Rates (2012$)**

Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $ 7 $ 7 Valve Actuation $ 82 $ 82 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $ 3 $ 3 Turbocharger (improved efficiency) $ 9 $ 9 Turbo Compounding $50 $50 EGR Cooler (improved efficiency) $ 2 $ 2 Water Pump (optimized, variable vane, variable speed) $ 43 $ 43 Oil Pump (optimized) $ 2 $ 2 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $ 2 $ 2 Fuel Rail (higher working pressure) $ 5 $ 5 Fuel Injector (optimized, improved multiple event control, higher working pressure) $ 5 $ 5 Piston (reduced friction skirt, ring and pin) $ 1 $ 1 Valvetrain (reduced friction, roller tappet) $ 39 $ 39 Waste Heat Recovery $ 105 $105 “Right sized” engine
- $40
- $40 Total $ 314 $314 Note: “Right sized” diesel engine is a smaller, less costly engine than the engine it replaces.Page 140 of 850

**Table II**  **- 9**  **Proposed MY2024 Tractor Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption Rates (2012$)** 

Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $ 14 $ 14 Valve Actuation $ 166 $ 166 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $6 $6 Turbocharger (improved efficiency) $ 17 $ 17 Turbo Compounding $92 $92 EGR Cooler (improved efficiency) $3 $3 Water Pump (optimized, variable vane, variable speed) $ 84 $ 84 Oil Pump (optimized) $4 $4 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $4 $4 Fuel Rail (higher working pressure) $9 $9 Fuel Injector (optimized, improved multiple event control, higher working pressure) $10 $10 Piston (reduced friction skirt, ring and pin) $ 3 $ 3 Valvetrain (reduced friction, roller tappet) $ 75 $ 75 Waste Heat Recovery $502 $502 “Right sized” engine
- $85
- $85 Total $ 904 $ 904 Note: “Right sized” diesel engine is a smaller, less costly engine than the engine it replaces.Page 141 of 850

**Table II**  **- 10**  **Proposed MY2027 Tractor Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption Rates (2012$)** 

Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $ 14 $ 14 Valve Actuation $ 169 $ 169 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $6 $6 Turbocharger (improved efficiency) $ 17 $ 17 Turbo Compounding $87 $87 EGR Cooler (improved efficiency) $3 $3 Water Pump (optimized, variable vane, variable speed) $ 84 $ 84 Oil Pump (optimized) $4 $4 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $4 $4
Fuel Rail (higher working pressure) $9 $9 Fuel Injector (optimized, improved multiple event control, higher working pressure) $10 $10 Piston (reduced friction skirt, ring and pin) $ 3 $ 3 Valvetrain (reduced friction, roller tappet) $ 75 $ 75 Waste Heat Recovery $1,340 $1,340 “Right sized” engine
- $127
- $127 Total $ 1,698 $ 1,698 Note: “Right sized” diesel engine is a smaller, less costly engine than the engine it replaces.Page 142 of 850

(ii) Vocational Diesel Engine Package Costs **Table II**  **- 11**  **Proposed MY2021 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption Rates (2012$)** 

Li ght HD Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $ 8 $ 8 $ 8 Valve Actuation $ 9 1 $ 9 1 $ 9 1 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $ 6 $ 3 $ 3 Turbocharger (improved efficiency) $1 0 $1 0 $1 0 EGR Cooler (improved efficiency) $ 2 $ 2 $ 2 Water Pump (optimized, variable vane, variable speed) $ 57 $ 57 $ 57 Oil Pump (optimized) $ 3 $ 3 $ 3 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $ 3 $ 3 $ 3 Fuel Rail (higher working pressure) $ 7 $ 6 $ 6 Fuel Injector (optimized, improved multiple event control, higher working pressure) $ 8 $ 6 $ 6 Piston (reduced friction skirt, ring and pin) $ 1 $ 1 $ 1 Valvetrain (reduced friction, roller tappet) $ 69 $ 52 $ 52 Model Based Controls $ 28 $ 28 $ 28 Total $ 293 $ 270 $ 270Page 143 of 850

**Table II**  **- 12**  **Proposed MY2024 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption Rates (2012$)** 

Li ght HD Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $13 $13 $13 Valve Actuation $157 $157 $157 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $10 $6 $6 Turbocharger (improved efficiency) $16 $16 $16 EGR Cooler (improved efficiency) $3 $3 $3 Water Pump (optimized, variable vane, variable speed) $79 $79 $79 Oil Pump (optimized) $4 $4 $4 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $4 $4 $4 Fuel Rail (higher working pressure) $10 $9 $9 Fuel Injector (optimized, improved multiple event control, higher working pressure) $13 $10 $10 Piston (reduced friction skirt, ring and pin) $2 $2 $2 Valvetrain (reduced friction, roller tappet) $95 $71 $71 Model Based Controls $ 31 $ 31 $ 31 Total $ 437 $ 405 $ 405Page 144 of 850

**Table II**  **- 13**  **Proposed MY2027 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption Rates (2012$)** 

Li ght HD Medium HD Heav y HD Aftertreatment s ys tem (improved effectiveness SCR, dosing, DPF ) $1 4 $1 4 $1 4 Valve Actuation $1 69 $1 69 $1 69 Cylinder Head (flow optimized, increased firing pressure, improved thermal management) $10 $6 $6 Turbocharger (improved efficiency) $1 7 $1 7 $1 7 EGR Cooler (improved efficiency) $3 $3 $3 Water Pump (optimized, variable vane, variable speed) $ 84 $ 84 $ 84 Oil Pump (optimized) $4 $4 $4 Fuel Pump (higher working pressure, increased efficiency , improved pressure regulation) $4 $4 $4 Fuel Rail (higher working pressure) $1 1 $9 $9 Fuel Injector (optimized, improved multiple event control, higher working pressure) $13 $10 $10 Piston (reduced friction skirt, ring and pin) $ 3 $ 3 $ 3 Valvetrain (reduced friction, roller tappet) $ 100 $7 5 $7 5 Model Based Controls $ 39 $ 39 $ 39 Total $471 $437 $437 (e) Feasibility of Phasing In the CO2 and Fuel Consumption Standards Sooner The agencies are requesting comment on accelerated standards for diesel engines that would achieve the same reductions as the proposed standards, but with less lead time. Table II
- 14 and Table II
- 15 below show a technology path that the agencies proj ect could be used to achieve the reductions that would be required within the lead time allowed by the alternative standards. As discussed in Sections Iand X, the agencies are proposing to fully phase in these standards through 2027. The agencies believ e that standards that full y phase in through 2024 have the potential to be the maximum feasible and appropriate option. However, based on the evidence currently

before the agencies, we have outstanding questions (for which we are seeking comment) regardin g relative risks and benefits of that option in the timeframe envisioned.Page 145 of 850

Commenters are encouraged to address how technologies could develop if a shorter lead time is selected. In particular, we request comment on the likelihood that WHR sy stems would be available for tractor engines in this time frame, and that WHR systems would achieve the projected level of reduction and the necessary reliability . We also request comment on whether it would be possible to apply the model based controls described in Section II.D.(2) (a)(i) to this many vocational engines in this time frame. **Table II**  **- 14**  **Projected Tractor Engine Technologies and Reduction for Alternative 4 Standards %**  **- Improvements**  **beyond Phase 1, 2018 engine as baseline**  **SET reduction (%)**  **Market**

**penetration MY 2021**  **Market**

**penetration MY 2024**  Turbo compound 1.82% 5% 10% WHR (Rankine cycle) 3.58% 4% 15% Parasitics/Friction (C yl Kits, pumps, FIE), lubrication 1.41% 60% 100% Aftertreatment 0.61% 60% 100% Exh Manifold Turbo Efficiency EGR Cooler VVT 1.14% 60% 100%

Combustion/FI/Control 1.11% 60% 100% Downsizing 0.29% 20% 30% Market Penetration Weighted Package 2.1% 4.2%Page 146 of 850

**Table II**  **- 15**  **Projected Vocational Engine Technologies and Reduction for More Stringent Alternative Standards**  **% -**  **Improvements beyond Phase 1, 2018 engine as**  **baseline FT**  **P reduction**  **Market**

**Penetration MY 2021**  **Market**

**Penetration MY 2024**  Model based control 2 % 30% 4 0% Parasitics /Friction 1.5 % 70% 10 0% EGR/Air/VVT /Turbo 1 % 70% 10 0% Improved AT 0.5 % 70% 10 0% Combustion Optimization 1 % 70% 10 0% Weighted reduction (%)
- L/MHD/HHD 2.5% 4.0% The projected HDD engine package costs for both tractors and vocational engines in MYs 2021 and 2024 under Alternative 4 are shown in Table II
- 16
. Note that, while the technology

application rates in MY2024 under Alternative 4 are essentially identical to those for MY2027 under the proposal, the costs are about 5 to 11 percent higher under Alternative 4 due to learning effects and markup changes that are estimated to have occurred b y MY2027 under Alternative 3. Note also that the agencies did not include any additional costs for accelerating technology

development or to address potential in
- use durability issues. We request comment on whether such costs would occur if we finalized this alternative. We also request comment on what steps could be taken to mitigate such costs.

**Table II**  **- 16**  **Expected Package Costs for HD Diesel Engines under Alternative 4 (2012 $**  **) a**  Model Year MHDD Tractor HHDD Tractor LHDD Vocational MHDD

Vocational HHDD

Vocational 2021 $656 $656 $372 $345 $345 2024 $1,885 $1,885 $493 $457 $457 Note : a Costs presented here include application rates. The agencies’ anal ys is shows that, in the absence of additional costs for accelerating technology

development or to address potential in
- use durability issues, the costs associated with Alternative 4 would be very similar to those we project for the propos ed standards. Alternative 4 would also have similar pay back times and cost
- effectiveness. In other words, Alternative 4 would achieve some additional reductions for model years 2021 through 2026, with roughl y proportional additional costs unless there were additional costs for accelerating development or for in
- use durability

issues. (Note that reductions and costs for MY 2027 and later would be equivalent for the Alternative 4 and the proposed standards). We request comment on the following issues: whether manufacturers could meet these standards with three ye ars less lead time , what additional expenses would be incurred to meet these standards with less leadPage 147 of 850

time , and how reliable would the engines be if the manufacturers had to bring them to market three ye ars earlier
. **(3) Proposed**  **EP A Engine Standards for N**  **2 O**  EPA is proposing to adopt the MY 2021 N 2 O engine standards that were originall y proposed for Phase 1
. The proposed level for Phase 2 would be 0.05 g/hp
- hr with a default deterioration factor of 0.01 g/hp
- hr, which we believe is technologicall y feasible because a number of engines meet this level today . This lev el of stringency is consistent with the agency ’s Phase 1 approach to set “cap” standards for N 2 O. EPA finalized Phase 1 standards for N 2 O as engine
- based standards at 0.10 g/hp
- hr and a 0.02 g/hp
- hr default deterioration factor because the agency believes that emissions of th is GHG are technologically 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. We continue to believe this approach i s appropriate, but we believe that more stringent standards are appropriate to ensure that N 2 O emissions do not increase in the future. Note that NHTSA did not adopt standards for N 2 O because these emissions do not impact fuel consumption in a significant way , and is not proposing such standards for Phase 2 for the same reason. We are proposing this change at no additional cost and no additional benefit because manufacturers are generally meeting the proposed standard today . The purpose of this standard is to prevent increases in N 2 O emissions absent this proposed increase in stringency . We request comment on whether or not we should be considering additional costs for compliance. Similarly , we request comment on whether or not we should assume N 2 O inc reases in our “No Action” regulatory

Alternatives 1a and 1b described in Section X. Although N 2 O is emitted in very small amounts, it can have a very significant impact on the climate. The global warming potential (GWP) of one molecule of N 2 O is 298 times that of one molecule CO 2 . Because N 2 O and CO 2 coincidentally have the same molar mass, this means that one gram of N 2 O would have the same impact on the climate as 298 grams of CO 2 . To further put this into perspective, the difference between the propos ed N 2 O standard (and deterioration factor) and the current Phase 1 standard is 0.40 g/hp
- hr of N 2 O emissions. This is equivalent to 11.92 g/hp
- hr CO 2 . Over the same certification test cycle (i.e. EPA’s HD FTP ) the Phase 1 engine CO 2 emissions standard ranges from 460 to 576 g/hp
- hr, depending on the service class of the engine. Therefore, absent today’s proposed action, engine N 2 O increases equivalent to 2.1 to 2.6 percent of the Phase 1 CO 2 standard co uld occur
. We are proposing this lower cap because we have determined that manufacturers generall y are meeting this level today but in the future could increase N 2 O emissions up to the current Phase 1 cap standard. Because we do not believe any manufacturer would need to do any thing more than recalibrate their SCR sy stems to comply , the lead time being provided would be sufficient. This section later describes wh y manufacturers may increase N 2 O emissions from SCR
- equipped compression
- ignition engines in the absence of a lower N 2 O cap standard . We reques t comment on this. We also note that, as described in Section XI, EPA does not believe there is a similar opportunity to lower the pickup and van N 2 O standard because it was set at a more stringent level in Phase 1.Page 148 of 850

(a ) N 2 O Formation N 2 O formation in modern diesel engines is a b y - product of the SCR process. It is dependent on the SCR cataly st ty pe, the NO 2 to NO X ratio, the level of NO X reduction required, and the concentration of the reactants in the s ys tem (NH 3 to NO X ratio). Two current engine/af

tertreatment designs are driving N 2 O emission higher. The first is an increase in engine out NO X , which puts a higher NO X reduction burden on the SCR NO X emission control sy stem. The second is an increase in NO 2 formation from the diesel oxidati on catal ys t (DOC) located upstream of the passive cataly zed diesel particulate filter (CDPF). This increase in NO 2 serves two functions: improving passive CDPF regeneration and optimization of faster SCR reaction. 109 There are multiple mechanisms through which N 2 O can form in an SCR system: 1. Low temperature formation of N 2 O over the DOC prior to the SCR cataly st. 2. Low temperature formation of NH 4NO 3 with subsequent decomposition as exhaust temperatures increase, leading to conversion to N 2 O over the SCR catal ys t. 3. Formation of N 2 O from NO 2 over the SCR catalyst at NO 2 to NO ratios greater than 1:1. N 2 O formation increases significantl y at 300 to 350 °C. 4. Formation of N 2 O from NH 3 via partial oxidation over the ammonia slip cataly st. 5. High
- temperature N 2 O formation over the SCR cataly st due to NH 3 oxidation facilitated by high SCR catal ys t surface coverage of NH 3 . Thus, as discussed below, control of N 2 O formation requires precise optimization of SCR controls including thermal management and dosing rates, a s well as cataly st composition. (b ) N 2 O Emission Reduction Thro ugh on
- engine and reactor bench experiments, this same work showed that the ke y to reducing N 2 O emissions lies in intelligent emission control sy stem design and operation, namel y: 1. Selecting the app ropriate DOC and/or CDPF cataly st loadings to maintain NO 2 to NO ratio s at or below 1:1. 2. Avoiding high cataly st surface coverage of NH 3 though urea dosing management when the sy stem is in the ideal N 2 O formation window. 3. Utilizing thermal management to push the SCR inlet temperature outside of the N 2 O low
temperature formation window
. EPA believes that reducing the standard from 0.1 g/hp
- hr to 0.05 g/hp
- hr is feasible because most engines have emission rates that would meet this standard today and the others could meet it with minor calibration changes at no additional cost. Numerous studies have

109 Hallstrom, K., Voss, K., and Shah, S., "The Formation of N 2 O on the SCR Catalyst in a Heavy Duty US 2010 Emission Control System", SAE Technical Paper 2013
- 01
- 2463.Page 149 of 850

shown that diesel engine technologies can be fine
- tuned to meet the current NO X and proposed N 2 O standards while still providing passive CDPF regeneration even with earlier generations of SCR systems. Currentl y model year 2014 s ys tems have already moved on to newer generation sy stems in which the combined CDPF and SCR functions have been further optimized. The result of this is 18 of 24 engines in the EPA 2014 certification database emitting N 2 O at less than half of the 2014 standard, and thus below the proposed standard. 110 Given the discussions in the literature, there are still additional calibration steps that can be taken to further reduce N2 O emissions for the higher emitters to afford an adequate compliance margin and room to account for deterioration, without having an adverse effect on criteria pollutant emissions.

110 http://www.epa.gov/otaq/crttst.htmPage 150 of 850 **Figure II**  **- 2**  **EPA 2014 Certification Database N 2**  **O Em ission Results for 24 Engines.** Page 151 of 850

It is important to note, however, that there is a trade off when trying to optimize SCR sy stems to achieve peak NO X reduction efficiencies. When transitioning from a <93 percent e fficient MY 2011 s ys tem to a 98 percent efficient sy stem of the future, lowering the N 2 O cap to 0.05 g/hp
- hr would put constraints on the techniques that can be applied to improve efficiency
. If s ys tem designers push the NH 3 to NO X ratio higher to try and achieve the maximum possible NO X reduction, it could increase N 2 O emissions. If EPA were to adopt a very low NO X standard (e.g., 0.02 g/hp
- hr) over existing test cycles, some reductions would be needed throughout the hot portion of the cycle (although most of the reductions would have to come from the cold start portion of the test cycle). Thermal management would need to play a key role, and reducing catal ys t light
- off time would move the SCR catalyst through the ammonium nitrate formation and decomposition thermal range quicker, thus lowering N 2 O emissions. An increase in the NH 3 to NO X ratio could also furthe r reduce NO X emissions; however this would also adversel y affect NH 3 slip and N 2 O formation. The inability of NH 3 slip catalysts to handle the increased NH 3 load and the EPA NH 3 slip limit of 10 ppm would guard against this NH 3 to NO X ratio increase , and thus subsequent N 2 O increase. In summary , EPA believes that engine manufacturers would be able to respond with highl y efficient NO X reducing s ys tems that can meet the proposed lower N 2 O cap of 0.05 g/hp
- hr with no additional cost or lead time. When optimizing SCR systems for better NO X reduction efficiency , that optimization includes lowering the emissions of undesirable side reactions, including those that form N 2 O. **(4) EPA Engine Stan**  **dards for Methane** EPA is proposing to apply the Phase 1 methane engine standards to the Phase 2 program. EPA adopted the cap standards for CH 4 (along with N 2 O standards) as engine
- based standards because the agency

believes that emissions of th is GHG are technologically related solel y to the engine, fuel, and emissions aftertreatment s ys tems, and the agency is not aware of any

influence of vehicle
- based technologies on these emissions. Note that NHTSA did not adopt standards for CH 4 (or N 2 O) because these emissions do not impact fuel consumption in a significant way , and is not proposing CH 4 standards for Phase 2 either
. EPA continues to believe that manufacturers of most engine technologies will be able to comply with the Phase 1 CH 4 standard with no te chnological improvements . We note that we are not aware of an y new technologies that would allow us to adopt more stringent standards at this time. We request comment on this. **(5) Compliance Provisions and Flexibilities for Engine Standards**  The agencies are proposing to continue most of the Phase 1 compliance p rovisions and flexibilities for the Phase 2 engine standards. (a ) Averaging, Banking, and Trading The agencies’ general approach to averaging is discussed in Section I. We are not proposing to offer an y special credits to engine manufacturers. Except for early credits andPage 152 of 850

advanced technology

credits , the agencies propose to retain all Phase 1 credit flexibilities and limitations to continue for use in the Phase 2 program. As discussed below , EPA is pro posing to change the useful life for LHD engines for GHG emissions from the current 10 ye ars/110,000 miles to 15 years/150,000 miles to be consistent with the useful life of criteria pollutants recentl y updated in EPA’s Tier 3 rule. In order to ensure that banked credits would maintain their value in the transition from Phase 1 to Phase 2, NHTSA and EPA propose an adjustment factor of 1.36 ( i.e. , 150,000 mile ÷ 110,000 miles) for credits that are carried forward from Phase 1 to the MY 2021 and later Phase 2 standards. Without this adjustment factor the proposed change in useful life would effectivel y result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the change in the useful life. See Secti ons V and VI for additional discussion of similar adjustments of vehicle
- based credits. (b ) Requ est for Comment on Changing Global W arming Potential Values in the Credit Program for CH

4 and N

2 O The P hase 1 rule included a compliance alternative allowing heav y - dut y m anufacturers and conversion companies to comply with the respective methane or nitrous oxide standards by means of over
- compl yi ng with CO 2 standards (40 CFR 1036.705(d) ). The heav y - dut y rules allow averaging onl y between vehicles or engines of the same designated type (referred to as an “averaging set” in the rules)
. Specifically , the phase 1 heavy
- dut y rulemaking added a CO 2 credits program which allowed heav y - duty manufacturers to average and bank pollutant emissions to comply

with the methan e and nitrous oxide requirements after adjusting the CO 2 emission credits based on the relative GHG equivalents. To establish the GHG equivalents used by the CO 2 credits program, the P hase 1 rule incorporated the IPCC Fourth Assessment Report global warm ing potential (GWP) values of 25 for CH 4 and 298 for N 2 O , which are assessed over a 100 year lifetime. Since the Phase 1 rule was finalized, a new IPCC report has been released (the Fifth Assessment Report), with new GWP estimates. This is prompting us t o look again at the relative CO 2 equivalency of methane and nitrous oxide and to seek comment on whether the methane and nitrous oxide GWPs used to esta blish the GHG equivalency value for the CO 2 Credit program should be updated to those established b y IPC C in its Fifth Assessment Report. The Fifth Assessment Report provides four 100 year GWPs for methane ranging from 28 to 36 and two 100 year GWPs for nitrous oxide, either 265 or 298 . Therefore, we not only request comment on whether to update the GWP fo r methane and nitrous oxide to that of the Fifth Assessment Report, but also on which value to use from this report. (c) In
- Use Compliance and Useful Life Consistent with Section 202(a)(1) and 202 (d) of the CAA, f or Phase 1, EPA established in
- use standards for heavy
- dut y engines . Based on our assessment of testing variability and other relevant factors, we established in
- use standards by adding a 3 percent adjustment factor to the full useful life emissions and fuel consumption results measured in the EPA certification process to address measurement variability inherent in comparing results among differentPage 153 of 850

laboratories and different engines. See 40 CFR part 1036. The agencies are not proposing to change this for Phase 2, but request comment on whether this allowance is still necessary
. We note that in Phase 1, we applied these standards to only certain engine configurations in each engine famil y (often called the parent rating). We welcome comment on whether the agencies should set Phase 2 CO 2 and fuel consumption standards for the other ratings (often called the child ratings) within an engine famil y. We are not proposing specific engine standards for child ratings in Phase 2 because we are proposing to include the actual engine’s fuel map in the vehi cle certification. We believe this approach appropriatel y addresses our concern that manufacturers control CO 2 emissions and fuel consumption from all in
- use engine configurations within an engine famil y. In Phase 1, EPA set the useful life for engines an d vehicles with respect to GHG emissions equal to the respective useful life periods for criteria pollutants. In April 2014, as part of the Tier 3 light
- dut y vehicle final rule, EPA extended the regulatory useful life period for criteria pollutants to 150 ,000 miles or 15 years, whichever comes first, for Class 2b and 3 pickup trucks and vans and some light
- dut y trucks (79 FR 23414, April 28, 2014). As described in Section V, EPA is proposing that the Phase 2 GHG standards for vocational vehicles at or bel ow 19,500 pounds GVWR apply over the same useful life of 150,000 miles or 15 years. To be consistent with that proposed change, we are also proposing that the Phase 2 GHG standards for engines used in vocational vehicles at or below 19,500 pounds GVWR app ly over the same useful life of 150,000 miles or 15 years. We are proposing to continue regulatory allowance in 40 CFR 1036.150 (g) that allows engine manufacturers to use assigned deterioration factors (DFs) for most engines without performing their own durability emission tests or engineering anal ys is. However, the engines would still be required to meet the standards in actual use without regard to whether the manufacturer used the assigned DFs. This allowance is being continued as an interim provision and may be discontinued for later phase s of standards as more information becomes known
. Manufacturers are allowed to use an assigned additive DF of 0.0 g/bhp
- hr for CO 2 emissions from an y conventional engine (i.e., an engine not including advance or off
- cycle technologies). Upon request, we could allow the assigned DF for CO 2 emissions from engines including advance or off

- cycle technologies, but only if we determine that it would be consistent with good engineering judgment. We believe that we have eno ugh information about in
- use CO 2 emissions from conventional engines to conclude that they will not increase as the engines age. However, we lack such information about the more advanced technologies. We are also requesting comment on how to apply DFs to low level measurements where test - to - test variability

may be larger than the actual deterioration rates being measured, such as might occur with N 2 O. Should we allow statistical anal ys is to be used to identifying trends rather than basing the DF on the highest measured value? How would we allow this where emission deterioration is not linear, such as saw
- tooth deterioration related to maintenance or other offsetting emission effects causing emissions to peak before the end of the useful life? Finally , EPA requests comment on whether a similar allowance would be appropriate for criteria pollutants as well.Page 154 of 850

(d ) Alternate CO2 Standards In the Phase 1 rulemaking, the agencies proposed provisions to allow certification to alternate CO 2 engine standards in model ye ars 2014 through 2016. This flexibility was intended to address the special case of needed lead time to implement new standards for a previously unregulated pollutant. Since that special case does not apply for Phase 2, we are not proposing a similar f lexibility in this rulemaking. We also request comment on whether this allowance should be eliminated for Phase 1 engines. (e) Proposed Approach to Standards and Compliance Provisions for Natural Gas Engines EPA is also proposing certain clarifying changes to its rules regarding classification of natural gas engines. This proposal relates to standards for all emissions, both greenhouse gases and criteria pollutants. These clarifying changes are intended to reflect the status quo, and therefore should not hav e any associated costs. EPA emission standards have always applied differentl y for gasoline
- fueled and diesel
fueled engines. The regulations in 40 CFR part 86 implement these distinctions by dividing engines into Otto
- cycle and Diesel
- cycle technologies. This approach led EPA to categorize natural gas engines according to their design history . A diesel engine converted to run on natural gas was classified as a diesel
- cycle engine; a gasoline engine converted to run on natural gas was classified as an Otto - cycle engine. The Phase 1 rule described our plan to transition to a different approach, consistent with our nonroad programs, in which we divide engines into compression
- ignition and spark
- ignition technologies based onl y on the operating characteris tics of the engines. 111 However, the Phase 1 rule included a provision allowing us to continue with the historic approach on an interim basis. Under the existing EPA regulatory definitions of “compression
- ignition” and “spark
ignition”, a natural gas engi ne would generally be considered compression
- ignition if it operates with lean air
- fuel mixtures and uses a pilot injection of diesel fuel to initiate combustion, and would generall y be considered spark
- ignition if it operates with stoichiometric air
- fuel mixtures and uses a spark plug to initiate combustion. EPA’s basic premise here is that natural gas engines performing similar in
- use functions should be subject to similar regulatory requirements. The compression
- ignition emission standards and testing r equirements reflect the operating characteristics for the full range of heav y - dut y vehicles, including substantial operation in long
- haul service characteristic of tractors. The spark
- ignition emission standards and testing requirements do not include som e of those provisions related to use in long
- haul service or other applications where diesel engines predominate, such as steady
- state testing, Not
- to - Exceed standards, and extended useful life. We believe it would be inappropriate to appl y the spark
- igni tion standards and requirements to natural gas engines that would be used in applications mostly served by

diesel engines today
.

111 See 40 CFR 1036.108Page 155 of 850

We are therefore proposing to replace the interim provision described above with a differentiated approach to certification of natural gas engines across all of the EPA standards

– for both GHGs and criteria pollutants. Under the proposed clarifying amendment, we would require manufacturers to divide all their natural gas engines into primary intended service classes, as we alre ady require for compression
- ignition engines, whether or not the engine has features that otherwise could (in theory) result in classification as SIunder the current rules. Any natural gas engine qualifying as a medium heavy
- dut y engine (19,500 to 33,000 pounds GVWR) or a heav y heav y - dut y engine (over 33,000 pounds GVWR) would be subject to all the emission standards and other requirements that apply to compression
- ignition engines. Table II
- 17 describes the provisions that would apply differentl y for compression
- ignition and spark
- ignition engines: **Table II**  **- 17**  **Regulatory Provisions that are Different for Com** **pression -**  **Ignition and Spark -**  **Ignition Engines**

**Provision Compression**  **- Ignition**  **Spark -**  **Ignition** Transient duty

cycle 40 CFR part 86, Appendix I ,

paragraph (f)(2) cycle; divide by 1.12 to de
- normalize 40 CFR part 86, Appendix I, paragraph (f)(1) cycle Ramped
- modal test (SET) ye s no NTE standards ye s no Smoke standard ye s no Manufacturer
- run in
- use testing ye s no ABT

– pollutants NO X , PM NO X , NMHC ABT

— transient conversion factor 6.5 6.3 ABT

– averaging set Separate averaging sets for light, medium, and heav y HDDE One averaging set for all SIengines Useful life 110,000 miles for light HDDE 185,000 miles for medium HDDE 435,000 miles for heav y HDDE 110,000 miles

Warranty 50,000 miles for light HDDE 100,000 miles for medium HDDE 100,000 miles for heav y HDDE 50,000 miles Detailed AECD description ye s no Test engine selection highest injected fuel volume most likely to exceed emission standards The onboard diagnostic requirements already differentiate requirements b y fuel ty pe, so there is no need for those provisions to change based on the considerations of this section. We are not aware of an y currentl y certified engines that would change from compression
ignition to spark
- ignition under the proposed clarified approach. Nonetheless, because thesePage 156 of 850

proposed standards implicate rules for criteria pollutants (as well as GHGs), the provisions of CAA section 202 (a)(3) (C) apply (for the criteria pollutants), notably the requirement of four ye ars lead time. We are therefore proposing to continue to apply the existing interim provision through model ye ar 2020. 112 Starting in model year 2021, all the provisions would apply as described above. Manufacturers would not be permitted to certify any engine families using carryover emission data if a part icular engine model switched from compression
- ignition to spark
- ignition, or vice versa. However, as noted above, in practice these vehicles are already being certified as CI engines, so we view these changes as clarifications ratifying the current status quo. We are also proposing that these provisions would apply equall y to engines fueled b y an y fuel other than gasoline or ethanol, should such engines be produced in the future
. Given the current and historic market for vehicles above 19,500 pounds GVWR, EPA believes an y alternative
- fueled vehicles in this weight range would be competing primarily with diesel vehicles and should be subject to the same requirements as them. We request comment on all aspects of classifying natural
- gas and other engines for purposes of appl yi ng emission standards
. See Sections XI and XII for additional discussion of natural gas fueled engines. (f ) Crankcase Emissions from Natural Gas Engines EPA is proposing one fuel
- specific provision for natural gas engines, likewise applicab le to all pollutant emissions, both GHGs and criteria pollutant emissions. Note that we are also proposing other vehicle
- level emissions controls for the natural gas storage tanks and refueling connections. These are presented in Section XIII. EPA is p roposing to require that all natural gas
- fueled engines have closed crankcases, rather than continuing the provision that allows venting to the atmosphere all crankcase emissions from all compression
- ignition engines. This has been allowed as long as thes e vented crankcase emissions are measured and accounted for as part of an engine’s tailpipe emissions. This allowance has historically been in place to address the technical limitations related to recirculating diesel
- fueled engines’ crankcase emissions, which have high PM emissions, back into the engine’s air intake. High PM emissions vented into the intake of an engine can foul turbocharger compressors and aftercooler heat exchangers. In contrast, historically EPA has mandated closed crankcase technolo gy on all gasoline fueled engines and all natural gas spark
ignition engines. 113 The inherentl y low PM emissions from these engines posed no technical barrier to a closed crankcase mandate. Because natural gas
- fueled compression ignition engines also have inherently

low PM emissions, there is no technological limitation that would prevent manufacturers from closing the crankcase and recirculating all crankcase gases into a natural gas - fueled compression ignition engine’s air intake. We are requesting comme nt on the costs and effectiveness of technologies that we have identified to comply with these provisions. In

112 Section 202 (a)(2), applicable to emissions of greenhouse gases, does not mandate a specific period of lead time, but EPA sees no reason for a different compliance date here for GHGs and criteria pollutants. This is also true with r espect to the closed crankcase emission discussed in the following subsection. 113 See 40 CFR 86.008
- 10(c).Page 157 of 850

addition, EPA is proposing that this revised standard not take effect until the 2021 model year, consistent with the requirement of section 202 (a)(3) (C) to provide four years lead time.Page 158 of 850



## III. **Class 7 and 8 Combination Tr**  **actors** Class 7 and 8 combination tractors
- trailers contribute the largest portion of the total GHG emissions and fuel consumption of the heavy
- dut y sector, approximately two
- thirds, due to their large payloads, their high annual miles traveled, and their major role in national freight transport. 114 These vehicles consist of a cab and engine (tractor or combination tractor) and a trailer. 115 Ingeneral, reducing GHG emissions and fuel consumption for these vehicles would involve improvements to all aspects of the vehicle. As we found during the development in Phase 1 and as continues to be true in the industry today , the he av y - duty

combination tractor
- trailer industry consists of separate tractor manufacturers and trailer manufacturers. We are not aware of any manufacturer that typicall y assembles both the finished truck and the trailer and introduces the combination into c ommerce for sale to a buye r. There are also large differences in the kinds of manufacturers involved with producing tractors and trailers. For HD highway tractors and their engines, a relativel y limited number of manufacturers produce the vast majority o f these products. The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relativel y small in size and production volume. Setting standards for the products involved
-- tractors and trailers
-- r equires recognition of the large differences between these manufacturing industries, which can then warrant consideration of different regulatory approaches. Thus, although tractor
- trailers operate essentially as a unit from both a commercial standpoint and for purposes of fuel efficiency and CO 2 emissions, the agencies have developed separate proposed standards for each. Based on these industry characteristics, EPA and NHTSA believe that the most appropriate regulatory

approach for combination tractors and trailers is to establish standards for tractors separatel y from trailers. As discussed below in Section IV, the agencies are also proposing standards for certain ty pes of trailers. 

### A. **Summary of the Phase 1 Tractor Program** The design of each tractor’s cab and drivetrain determines the amount of power that the engine must produce in moving the truck and its payload down the road. As illustrated in Figure III
- 1 , the loads that require additional power from the engine include air resistance (aerodyn amics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the drivetrain). The importance of the en gine design is that it determines the basic GHG emissions and fuel consumption performance for the variety of demands placed on the vehicle , regardless of the characteristics of the cab in which it is installed.

114 The on
- highway Class 7 and 8 combination tractor
- trailers constitute the vast majority of this regulatory category. A small fraction of combination tractors are used in off
- road applications and are regulated differently, as described in Section III.C. 115 “T ractor” is defined in 49 CFR Part 571.3 to mean “a truck designed primarily for drawing other motor vehicles and not so constructed as to carry a load other than a part of the weight of the vehicle and the load so drawn.”Page 159 of 850 **Figure III**  **- 1**  **Combination Tractor and Trailer Loads 116** 

116 Adapted from Figure 4.1. Class 8 Truck Energy Audit, Technology Roadmap for the 21st Century Truck Program: A Government
- Industry Research Partnership, 21CT
- 001, December 20 00.Page 160 of 850

Accordingl y, for Class 7 and 8 combination tractors, the agencies adopted two sets of Phase 1 tractor standards for fuel consumption and CO 2 emissions
. The CO 2 emission and fuel consumption reductions related to engine technologies are recognized in the engine standards. For vehicle
- related emissions and fuel consumption, tractor manufacturers are required to meet vehicle
- based standards. Compliance with the v ehicle standard must be determined using the GEM vehicle simulation tool. The Phase 1 tractor standards were based on several key attributes related to GHG emissions and fuel consumption that reasonabl y represent the man y differences in utility and perfo rmance among these vehicles. Attribute
- based standards in general recognize the variety of functions performed b y vehicles and engines, which in turn can affect the kind of technology that is available to control emissions and reduce fuel consumption, or its effectiveness. Attributes that characterize differences in the design of vehicles, as well as differences in how the vehicles will be employed in
- use, can be key factors in evaluating technological improvements for reducing CO 2 emissions and fuel cons umption. Developing an appropriate attribute
- based standard can also avoid interfering with the ability of the market to offer a variety of products to meet the customer’s demand. The Phase 1 tractor 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 of 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. Based on these attributes, the agencies created nine subcategories within the Class 7 and 8 combinati on tractor category . The Phase 1 rules set standards for each of them. Phase 1 standards began with the 2014 model year and were followed with more stringent standards following in model year 2017. 117 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 year tractor and engine without idle shutdown technology
. Although the EPA and NHTSA standards are expressed differently (grams of CO 2 per ton - mile and gallons per 1,000 ton
- mile respectivel y), the standards are equivalent. In Phase 1, the agencies allowed manufacturers to certify certain types of combination tractors as vocational vehicles. These are tractors that do not ty picall y operate at highway speeds, or would otherwise not benefit from efficiency improvements designed for line
- haul tractors (although standards would still apply to the engines installed in these vehicles). The agencies created a subcategory of “vocational tractors , ” or referred to as “special purpose tractors” in 40 CFR part 1037, because real world operation of these tractors is better represented by our Phase 1 vocational vehicle duty cycle than the tractor duty c yc les. Vocational tractors are subject to the standards for vocational vehicles rather than the combination tractor standards. In addition, specific vocational tractors and heav y - duty vocational vehicles primarily designed to

117 Manufacturers may voluntarily opt
- in to the NHTSA fuel consumption standards in model years 2014 or 2015. Once a manufacturer opts into the NHTSA program it must stay in the program for all optional MYs.Page 161 of 850

perform work off

- road or having tires installed with a maximum speed rating at or below 55 mph are exempted from the Phase 1 standards. In Phase 1 , the agencies also established separate performance standards for the engines manufactured for use in these tr actors . EPA’s engine
- based CO 2 standards and NHTSA’s engine
- based fuel consumption standards are being implemented using EPA’s existing test procedures and regulatory structure for criteria pollutant emissions from medium
- and heav y duty engines. These engine standards vary depending on engine size linked to intended vehicle service class (which are the same service classes used for many ye ars for EPA’s criteria pollutant standards)
. Manufacturers demonstrate compliance with the Phase 1 tractor standa rds using the GEM simulation tool. As explained in Section II above, GEM is a customized vehicle simulation model which is the preferred approach to demonstrating compliance testing for combination tractors rather than chassis dy namometer testing used in light
- dut y vehicle compliance
. As discussed in the development of HD Phase 1 and recommended b y the NAS 2010 study , a simulation tool is the preferred approach for HD tractor compliance because of the extremel y large number of vehicle configurations. 118 Th e GEM compliance tool was developed b y EPA and is an accurate and cost
- effective alternative to measuring emissions and fuel consumption while operating the vehicle on a chassis dynamometer. Instead of using a chassis dynamometer as an indirect way

to eva luate real world operation and performance, various characteristics of the vehicle are measured and these measurements are used as inputs to the model. For HD Phase 1, these characteristics relate to key technologies appropriate for this category 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 ty pical engine in compliance with the separate, applicabl e Phase 1 engine standard. Using these inputs, the model is used to quantify the overall performance of the vehicle in terms of CO 2 emissions and fuel consumption. CO 2 emission reduction and fuel consumption technologies not measured b y the model must be evaluated separately , and the HD Phase 1 rules establish mechanisms allowing credit for such “off
- cycle” technologies. In addition to the final Phase 1 tractor - based standards for CO 2 , EPA adopted 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 HFC leakage standard is independent of the CO 2 tractor standard. Manufacturers can choose technologies from a menu of leak
- reducing technologi es sufficient to compl y with the standard, as opposed to using a test to measure performance. The Phase 1 program also provided several flexibilities to advance the goals of the overall program while providing alternative pathway s to achieve compliance. The primary

118 National Academy of Science. “Technologies and Approaches to Reducing the Fuel Consumption of Medium
and Heavy
- Duty Vehicles.” 2010. Recommendation 8
- 4 stated “Simulation modeling should be used with component test data and additional tested inputs from powertrain tests, which could lower the co st and administrative burden yet achieve the needed accuracy of results.”Page 162 of 850

flexibility is the averaging, banking, and trading program which allows emissions and fuel consumption credits to be averaged within an averaging set, banked for up to five years, or traded among manufacturers. Manufacturers with credit defici ts were allowed to carry - forward credit deficits for up to three model ye ars, similar to the LD GHG and CAFE carry
- back credits
. Phase 1 also included several interim provisions, such as incentives for advanced technologies and provisions to obtain credit s for innovative technologies (called off
- cycle in the Phase 2 program) not accounted for by the HD Phase 1 version of GEM or for certifyingearl y. 

### B. **Overview of the Proposed Phase 2 Tractor**  **Program** The proposed HD Phase 2 program is similar in many respects to the Phase 1 approach. The agencies are proposing to maintain the Phase 1 attribute
- based regulatory structure in terms of dividing the tractor category into the same nine subcategories based o n the tractor’s GVWR, cab configuration, and roof height. This structure is working well in the implementation of Phase 1. The one area where the agencies are proposing to change the regulatory structure is related to heav y - haul tractors. As noted above , the Phase 1 regulations include a set of provisions that allow vocational tractors to be treated as vocational vehicles. However, because the agencies propose to include the powertrain as part of the technology basis for the tractor and vocational vehic le standards in Phase 2, we are proposing to classify a certain set of these vocational tractors as heavy
- haul tractors and subject them to a separate tractor standard that reflects their unique powertrain requirements and limitatio ns in application of technologies to reduce fuel consumption and CO 2 emissions. 119 The agencies propose to also retain much of the certification and compliance structure developed in Phase 1 but to simplify end of the year reporting. The agencies propose th at the Phase 2 tractor CO 2 emissions and fuel consumption standards, as in Phase 1, be aligned. 120 The agencies also propose to continue to have separate engine and vehicle standards to drive technology

improvements in both areas. The reasoning behind the proposal to maintain separate standards is discussed above in Section II.B.2. As in Phase 1, the agencies propose to certify tractors using the GEM simulation tool and to require manufacturers to evaluate the performance of subsy stems through testing (the results of this testing to be used as inputs to the GEM simulation tool). Other aspects of the proposed HD Phase 2 certification and compliance program also mirror the Phase 1 program, such as maintaining a single reporting structure to satisfy both agencies, requiring limited data at the beginning of the model year for certification, and determinin g compliance based on end of ye ar reports. In the Phase 1 program, manufacturers participating in the ABT program provided 90 day and 270 day

reports after the end of the model ye ar. The agencies required two reports for the initial program to help manuf acturers become familiar with the reporting process. For the Phase 2 program, the

119 See 76 FR 57138 for Phase 1 discussion. See 40 CFR 1037.801 for proposed Phase 2 heavy
- haul tractor regulatory definition. 120 Fuel consumption is calculated from CO 2 using the conv ersion factor of 10,180 grams of CO 2 per gallon for diesel fuel.Page 163 of 850

agencies propose that manufacturers would onl y be required to submit one end of the ye ar report, which would simplify

reporting. Even though man y aspects of the proposed H D Phase 2 program are similar to Phase 1, there are some key

differences. While Phase 1 focused on reducing CO 2 emissions and fuel consumption in tractors through the application of existing (“off
- the
- shelf”) technologies, the proposed HD Phase 2 standard s seek additional reductions through increased use of existing technologies and the development and deplo ym ent of more advanced technologies. To evaluate the effectiveness of a more comprehensive set of technologies, the agencies propose several additiona l inputs to GEM. The proposed set of inputs includes the Phase 1 inputs plus parameters to assess the performance of the engine, transmission, and driveline. Specific inputs for, among others, predictive cruise control, automatic tire inflation sy stems, and 6x2 axles would now be required. Manufacturers would conduct component testing to obtain the values for these technologies (should they choose to use them), which testing values would then be input into the GEM simulation tool. See Section III.D.2 be low. To effectively assess performance of the technologies, the agencies also propose to change some aspects of the drive cycle used in certification through the addition of road grade. To reflect the existing trailer market, the agencies are proposing t o refine the aerody namic test procedure for high roof cabs by adding some aerodyn amic improving devices to the reference trailer (used for determining the relative aerodynamic performance of the tractor). The agencies also propose to change the aerodynami c certification test procedure to capture aerodyn amic improvement of trailers and the impact of wind on tractor aerodynamic performance. The agencies are also proposing to change some of the interim provisions developed in Phase 1 to reflect the maturity of the program and reduced need and justification for some of the Phase 1 flexibilities. Further discussions on all of these matters are covered in the following sections. 

### C. **Proposed Phase 2 Tractor**  **Standards** EPA is propos ing CO 2 standards and NHTSA is prop osing fuel consumption standards for new Class 7 an d 8 combination tractors. In addition, EPA is proposing to maintain the HFC standards for the air conditioning sy stems that were adopted in Phase 1. EPA is also seeking comment on new standards to furthe r control emissions of particulate matter (PM) from auxiliary power units (APU) installed in tractors that would prevent an unintended consequence of increasing PM emissions from tractors during long duration idling. This section describes in detail the proposed standards. In addition to describing the proposed alternative (“Alternative 3”), in Section III.D.2.f we also detail another alternative (“Alternative 4”). Alternative 4 provides less lead time than the proposed set of standards but may provide more net benefits in the form of greater emission and fuel consumption reductions (with somewhat higher costs) in the earl y ye ars of the program. The agencies believe Alternative 4 has the potential to be maximum feasible and appropriate as discussed later in this section. The agencies welcome comment on all aspects of the proposed standards and the alternative standards described in Section III.D.2.f. Commenters are encouraged to address all aspects of feasibility

analy sis, including costs, the like lihood of developing the technology to achieve sufficient relaibility within the proposed and alternative lea d
- times, and the extent toPage 164 of 850

which the market could utilize the technology . It would be helpful if comments addressed these issues separately

for ea ch ty

pe of technology
. **(1) Proposed Fuel Consumption and CO**  **2 Standards**  The proposed fuel consumption and CO 2 s tandards for the tractor cab are shown below in Table III
- 1 . T hese proposed standards would achieve reductions of up to 24 perce nt compared to the 201 7 model year basel ine level when full y phased in beginning in the 2027 MY. 121 The proposed standards for Class 7 are described as “Day Cabs” because we are not aware of any Class 7 sleeper cabs in the market today ; however, the agencies propose to require an y Class 7 tractor, regardless of cab configuration, meet the standards described as “Class 7 Day Cab.” We welcome comment on this proposed approach. The agencies' analy ses, as discussed briefl y below and in more detail later in this preamble and in the draft RIA Chapter 2, indicate that these proposed standards , if finalized, would be maximum feasible (within the meaning of 49 USC Section 32902 (k)) and would be a ppropriate under each agency ’s respective statutory authorities. The agencies solicit comment on all aspects of these analy ses.

121 Since the HD Phase 1 tractor standards fully phase
- in by the MY 2017, this is the logical baseline year.Page 165 of 850

**Table III**  **- 1**  **Proposed Phase 2 Heavy -**  **D uty Combination Tractor EPA Emissions Stand**  **ards (g CO 2**  **/ton -**  **mile)**

**and NHTSA Fuel Consumption Standards (gal/1,000 ton -**  **mi le)**  2021 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 97 78 70 Mid Roof 107 84 78 High Roof 109 86 77 2021 Model Year Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 9.5285 7.5639 6.8762 Mid Roof 10.5108 8.2515 7.6621 High Roof 10.7073 8.4479 7.5639 2024 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 90 72 64 Mid Roof 100 78 71 High Roof 101 79 70 2024 Model Year and Later Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 8.8409 7.0727 6.2868 Mid Roof 9.8232 7.5639 6.9745 High Roof 9.9214 7.7603 6.8762 202 7 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 87 70 62 Mid Roof 96 76 69 High Roof 96 76 67 202 7 Model Year and Later Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 8.5462 6.8762 6.0904 Mid Roof 9.4303 7.4656 6.7780 High Roof 9.4303 7.4656 6.5815 It should be noted that the proposed HD Phase 2 CO 2 and fuel consumptions standards are not directly

comparable to the Phase 1 standards . This is because the agencies are proposing several test procedure changes to more accuratel y reflect real world operation of tractors. These changes will result in the following differences. First, the same vehicle evaluated using thePage 166 of 850

proposed HD Phase 2 version of GEM will obtain higher (i.e. less favorable) CO 2 and fuel consumption values because the Phase 2 drive cycles include road grade. Road grade, which (of course) exists in the real
- world, requires the engine to operate at higher horsepower levels to mai ntain speed while climbing a hill. Even though the engine saves fuel on a downhill section, the overall impact increases CO 2 emissions and fuel consumption. The second of the key differences between the CO 2 and fuel consumption values in Phase 1 and Phas e 2 is due to proposed changes in the evaluation of aerody namics. In the real world, vehicles are exposed to wind which increases the drag of the vehicle and in turn increases the power required to move the vehicle down the road. To more appropriately re flect the in
- use aerody

namic performance of tractor - trailers, the agencies are proposing to input into Phase 2 GEM the wind averaged coefficient of drag instead of the no
- wind (zero yaw) value used in Phase 1. The final key difference between Phase 1 and the proposed Phase 2 program includes a more realistic and improved simulation of the transmission in GEM, which could increase CO 2 and fuel consumption relative to Phase 1. The agencies are proposing Phase 2 CO 2 emissions and fuel consumption standards for the combination tractors that reflect reductions that can be achieved through improvements in the tractor’s powertrain, aerody namics, tires, and other vehicle s ys tems. The agencies have anal yz ed the feasibility of achieving the proposed CO 2 and fuel consumption standards, and have identified means of achieving the proposed standards that are technicall y feasible in the lead time afforded, economically

practicable and cost
- effective. EPA and NHTSA present the e stimated costs and benefits of the proposed standards in Section III.D.2
. In developing the proposed standards for Class 7 and 8 tractors, the agencies have evaluated the following:

 the current levels of emissions and fuel consumption  the kinds of techno logies that could be utilized by tr actor and engine manufacturers to reduce emissions and fuel consumption from tractors and associated engines  the necessary

lead time  the associated costs for the industry  fuel savings for the consumer  the magnitude of the CO 2 and fuel savings that may be achieved The technologies on whose performance the proposed tractor standards are predicated include: improvements in the engine, transmission, driveline, aerodynamic design, tire rolling resistance, other accessories of the tractor , and extended idle reduction technologies. These technologies, and other accessories of the tractor, are described in draft RIA Chapter 2. 4 . The agencies’ evaluation shows that some of these technologies are available today , but have very low adoption rates on current vehicles, while others will require some lead time for development. EPA and NHTSA also present the estimated costs and benefits of the proposed Class 7 and 8 combination tractor standards in draft RIA Chapter 2. 8 and 2.12 , expla ining as well the basis for the agencies’ proposed stringency level
. As explained below in Section II I .D , EPA and NHTSA have determined that there would be sufficient lead time to introduce various tractor and engine technologies into the fleet startingPage 167 of 850

in the 20 21 model year and fully phasing in by

the 2027 model year. This is consistent with NHTSA’s statutory

requirement to provide four full model years of regulatory lead time for standards. As was adopted in Phase 1, the agencies are proposing for Phas e 2 that manufacturers may generate and use credits from Class 7 and 8 combination tractors to show compliance with the standards. This is discussed further in Section III.F. Based on our analy sis, the 20 27 model year standards for combination tractors an d engines represent up to a 24 percent reduction in CO 2 emissions and fuel consumption over a 201 7 model year baseline tractor, as detailed in Section III. D.2
. In considering the feasibility of vehicles to comply

with the proposed standards over their useful lives , EPA also considered the potential for CO 2 emissions to increase during the regulatory useful life of the product. As we discuss in Phase 1 and separatel y in the context of deterioration factor (DF) testing, we have concluded that CO 2 emissions are likely to stay the same or actuall y decrease in
- use compared to new certified configurations. In general, engine and vehicle friction decreases as products wear , leading to reduced parasitic losses and consequent lower CO 2 emissions. S imilarly , tire rolling resistance falls as tires wear due to the reduction in tread height. In the case of aerodynamic components, we project no change in performance through the regulatory life of the vehicle since there is essentiall y no change in their phy sical form as vehicles age. Similarly , weight reduction elements such as aluminum wheels are (evidentl y) not projected to increase in mass through time, and hence, we can conclude will not deteriorate with regard to CO 2 performance in
- use. Given all of these considerations, the agencies are confident in project ing that the tractor standards being proposed today would be technical ly feasible throughout the regulatory useful life of the program. **(2) Proposed Non**  **- CO**  **2 GHG Standards for Tractors**  EPA is also proposing standards to control non - CO 2 GHG emissions from Class 7 and 8 combination tractors
. (a ) N 2 O and CH

4 Emissions The proposed heavy
- dut y engine standards for both N 2 O and CH 4 as well as details of the proposed standard s are included in the discussion in Section II. D.3 and II.D.4
. No additional controls for N 2 O or CH 4 emissions beyond those in the proposed HD Phase 2 engine standards are being considered for the tractor category
. (b ) HFC Emissions Manufacturers can reduce hydrofluorocarbon (HFC) emissions from air conditioning (A/C) leakage emissions in two way s. First, they can utilize leak
- tight A/C sy stem components. Second, manufacturers can largel y eliminate the global warming impact of leak age emissions by

adopting s ys tems that use an alternative, low
- Global Warming Potential (GWP) refrigerant, to replace the commonly used R
- 134a refrigerant. EPA proposes to address HFC emissions by

maintaining the A/C leakage standards adopted in HD Phase 1 (see 40 CFR 1037.115(c)). EPA believes the Phase 1 use of leak
- tight components is at an appropriate level of stringency

while maintaining the flexibility to produce the wide variety of A/C sy stem configurations required in the tractor category . In ad dition, there currentl y are not an y low GWP refrigerants approved for the heav y - dut y vehicle sector. Without an alternative refrigerantPage 168 of 850

approved for this sector, it is challenging to demonstrate feasibility to reduce the amount of leakage allowed under th e HFC leakage standard. Please see Section I .F(1)(b) for a discussion related to alternative refrigerants. **(3) PM Emissions from APUs**  Auxiliary power units (APUs) can be used in lieu of operating the main engine during extended idle operations to provide cli mate control and power to the driver. APUs can reduce fuel consumption, NO X , HC, CH 4 , and CO 2 emissions when compared to main engine idling. 122 However, a potential unintended consequence of reducing CO 2 emissions from combination tractors through the u se of APUs during extended idle operation is an increase in PM emissions. Therefore, EPA is seeking comment on the need and appropriateness to further reduce PM emissions from APUs. EPA conducted an anal ysis evaluating the potential impact on PM emissio ns due to an increase in APU adoption rates using MOVES. In this analy sis, EPA assumed that these APUs emit criteria pollutants at the level of the EPA standard for this type of non
- road diesel engines. Under this assumption, an APU would emit 1.8 grams PM per hour, assuming an extended idle load demand of 4.5 kW (6 hp). 123 However, a 2010 model year or newer tractor that uses its main engine to idle emits approximately 0.35 grams PM per hour. 124 The results from these MOVES runs are shown below in Table III
- 2 . These results show that an increase in use of APUs could lead to an overall increase in PM emissions if left uncontrolled. Column three labeled “Proposed Program PM 2.5 Emission Impact with out Further PM Control (tons)” shows the incremental increase in PM 2.5 without further regulation of APU PM 2.5 emissions.

**Table III**  **- 2**  **Projected Im pact of Increased Adoption of APUs in Phase 2**  CY Baseline HD

Vehicle PM 2.5 Emissions (tons) Proposed Program PM 2.5 a

Emission Impact without Further PM Control (tons) 2035 21,452 1, 631 2050 24,675 2, 257 Note : a Positive number s mean emissions would increase from baseline to control case. PM 2.5 from tire wear and brake wear are included.

122 U.S. EPA. Development of Emission Rates for Heavy
- Duty Vehicles in the Motor Ve hicle Emissions Simulator MOVES 2010. EPA
- 420
- B
- 12
- 049. August 2012. 123 Tier 4, less
- than
- 8 kW nonroad compression
- ignition engine exhaust emissions standards assumed for APUs: http://www.epa.gov/otaq/standards/nonroad/nonroadci.htm 124 U.S. EPA . MOVES2014 Reports. Last accessed on May 1, 2015 at http://www.epa.gov/otaq/models/moves/moves
- reports.htm.Page 169 of 850

Since January

1, 2008, California ARB has prohibited the idling of sleeper cab tractors during periods of sleep and rest. 125 The regulations apply additional requirements to diesel
fueled APUs on tractors equip ped with 2007 model year or newer engines. Truck owners in California must either: 1) fit the APU with an ARB verified Level 3 particulate control device that achieves 85 percent reduction in particulate matter; or 2) have the APU exhaust plumbed into the vehicle’s exhaust sy stem upstream of the particulate matter aftertreatment device. 126 Currently ARB includes four control devices that have been verified to meet the Level 3 PM requirements. These devices include HUSS Umwelttechnik GmbH’s FS
- MK Series Die sel Particulate filters, Impco Ecotrans Technologies’ ClearSky Diesel Particulate Filter, Thermo King’s Electric Regenerative Diesel Particulate Filter, and Proventia’s Electronically Heated Diesel Particulate Filter. In addition, ARB has approved a Cummi ns integrated diesel
- fueled APU and several fuel
- fired heaters produced by Espar and Webasto. EPA conducted an evaluation of the impact of potentially requiring further PM control from APUs nationwide. As shown in Table III
- 2 , EPA projects that the HD Phase 2 program as proposed (without additional PM controls) would increase PM 2.5 emissions by 1,631 tons in 2035 and 2,257 tons in 2050. The annual impact of a program to further control PM could lead to a reduction of PM 2.5 emissions nationwide by 3,084 tons in 2035 and by 4,344 tons in 2050, as shown in Table III
- 3 the column labe led “Net Impact on National PM 2.5 Emission with Further PM Control of APUs (tons) .”

**Table III**  **- 3**  **Projected Im pact of Further Control on**  **PM 2.5**  **Emissions a**  CY Baseline

National Heavy
Duty Vehicle PM 2.5 Emissions (tons) Proposed HD Phase

2 Program National PM 2.5 Emission s without Further PM Control (tons) Proposed HD Phase

2 Program National PM 2.5 Emission s with Further PM Control (tons) Net Impact on

National PM 2.5 Emission with Further PM Control of APUs (tons) 2035 21,452 23,083 19,999
- 3,084 2050 24,675 26,932 22,588
- 4,344 Note : a PM 2.5 from tire wear and brake wear are included. EPA developed long
- term cost projections for catalyzed diesel particulate filters (DPF) as part of the Nonroad Diesel Tier 4 rulemaking. In that rulemaking, EPA estimated the DPF costs would add $580 to the cost of 150 horsepower engines (69 FR 39126, Jun e 29, 2004). On the other hand, ARB estimated the cost of retrofitting a diesel powered APU with a PM trap to be

125 California Air Resources Board. Idle Reduction Technologies for Sleeper Berth Trucks. Last viewed on September 19, 2014 at http://www.arb.ca.gov/msprog/cabcomfort/cabcomfort.htm 126 California Air Resources Board. §2485(c)(3)(A)(1)Page 170 of 850

$2,000 in 2005. 127 The costs of a DPF for an APU that provides less than 25 horsepower would be less than the projected cost of a 150 HP engine because the filter volume is in general proportional to the engine
- out emissions and exhaust flow rate. Proventia is charging cu stomers $2,240 for electronicall y heated DPF. 128 EPA welcomes comments on cost estimates associated with DPF sy stems for APUs. EPA requests comments on the technical feasibility of diesel particulate filters ability to reduce PM emissions b y 85 percent from n on - road engines used to power APUs . EPA also requests comments on whether the technology costs outlined above are accurate, and if so, if projecte d reductions are appropriate taking into account cost, noise, safet y, and energy factors. See CAA section 213(a)(4). **(4) Proposed Exclusions from the Phase 2 Tractor Standards**  As noted above, in Phase 1, the agencies adopted provisions to allow tractor manufacturers to reclassify certain tractors as vocational vehicles. 129 The agencies propose in Phase 2 to continu e to allow manufacturers to exclude certain vocational
- ty pe s of tractors from the combination tractor standards and instead be subject to the vocational vehicle standards. However, the agencies propose to set unique standards for tractors used in heav y ha ul applications in Phase 2. Details regarding the proposed heav y - haul standards are included below in Section II.D.3. During the development of Phase 1, the agencies received multiple comments from several stakeholders supporting an approach for an altern ative treatment of a subset of tractors because they

were designed to operate at lower speeds, in stop and go traffic, and sometimes operate at higher weights than the ty pical line
- haul tractor. These t ypes of applications have limited potential for impro vements in aerodyn amic performance to reduce CO 2 emissions and fuel consumption. Consistent with the agencies’ approach in Phase 1, the agencies agree that these vocational tractors are operated differently than line
- haul tractors and therefore fit more a ppropriatel y into the vocational vehicle category . However , we need to continue to ensure that only tractors that are truly vocational tractors are classified as such. 130 A vehicle determined b y the manufacturer to be a HHD vocational tractor would fall into one of the HHD vocational vehicle subcategories and be regulated as a vocational vehicle. Similarly , MHD tractors which the manufacturer chooses to reclassify as vocational tractors w ould be regulated as a MHD vocational vehicle. Specifically , the agencies are proposing to change the provisions in EPA’s

127 California Air Resources Board. Staff Report: Initial Statement of Reasons; Notice of Public Hearing to Consider Requirements to Reduce Idling Emissions From New and In
- Use Trucks, Beginning in 2008. September 1, 2005. Page 38. Last vie we d on October 20, 2014 at http://www.arb.ca.gov/regact/hdvidle/isor.pdf. 128 Proventia. Tripac Filter Kits. Last accessed on October 21, 2014 at http://www.proventiafilters.com/purchase.html 129 See 40 CFR 1037.630. 130 As a part of the end of the year compliance process, EPA and NHTSA verify manufacturer’s production reports to avoid any abuse of the vocational tractor allowance.Page 171 of 850

40 CFR 1037.630 and NHTSA’s regulation at 49 CFR 523.2 and only allow the following two ty pes of vocational tractors to be eligible for r eclassification by the manufacturer: (1) Low
- roof tractors intended for intra
- city pickup and delivery, such as those that deliver bottled beverages to retail stores. (2) Tractors intended for off
- road operation (including mixed service operation), such as those with reinforced frames and increased ground clearance. 131 Because the difference between some vocational tractors and line
- haul tractors is potentially

somewhat subjective, we are also proposing to continue to limit the use of this provision to a roll ing three year sales limit of 21,000 vocational tractors per manufacturer consistent with past production volumes of such vehicles. We propose to carry
- over the existing three ye ar sales limit with the recognition that heavy
- haul tractors would no longer be permitted to be treated as vocational vehicles (suggesting a lower volumetric cap could be appropriate) but that the heav y - dut y market has improved since the development of the HD Phase 1 rule (suggesting the need for a higher sales cap). The agencies welcome comment on whether the proposed sales volume limit is set at an appropriate level looking into the future. Also in Phase 1, EPA determined that manufacturers that met the small business criteria specified in 13 CFR 121.201 for “Heav y Dut y Truck Manufacturing” were not subject to the greenhouse gas emissions standards of 40 CFR 1037.106. 132 The regulations required that qualifying manufacturers must notify the Designated Compliance Officer each model year before introducing the vehicles into commerce. The manufacturers are also required to label the vehicles to identify

them as excluded vehicles. EPA and NHTSA are seeking comments on eliminating this provision for tractor manufacturers in the Phase 2 program. The agencies are aware of two second sta ge manufacturers building custom sleeper cab tractors. We could treat these vehicles in one of two way s. First, the vehicles may be considered as dromedary vehicles and therefore treated as vocational vehicles. 133 Or the agencies could provide provisions that stated if a manufacturer changed the cab, but not the frontal area of the vehicle, then it could retain the aerodynamic bin of the original tractor. We welcome comments on these considerations. EPA is proposing to not exempt glider kits from the Phase 2 GHG emission standards. 134 Gliders and glider kits are exempt from NHTSA’s Phase 1 fuel consumption standards. For EPA purposes, the CO 2 provisions of Phase 1 exempted gliders and glider kits produced b y small

131 See existing 40 CFR 1037.630 (a)(1)(i)
- (iii). 132 See 40 CFR 1037.150(c). 133 A dromedary is a box, deck, or plate mounted behind the tractor cab and forward of the fifth wheel on the frame of the power unit of a tractor
- trailer combination to carry freight. 134 Glider vehicles are new vehicles produced to accept rebuilt engines (or other used engines) along with used axles and/or transmissions. The common commercial term “glider kit” is used here primarily to refer to an assemblage of parts into which the used/rebuilt engine is installed.Page 172 of 850

businesses but did not includ e such a blanket exemption for other glider kits. 135 Thus, some gliders and glider kits are already subject to the requirement to obtain a vehicle certificate prior to introduction into commerce as a new vehicle . However, the agencies believe glider manufa cturers may

not understand how these regulations apply to them, resulting in a number of uncertified vehicles. EPA is concerned about adverse economic impacts on small businesses that assemble glider kits and glider vehicles. Therefore, EPA is proposing an option that would grandfather existing small businesses, but cap annual production based on their recent sales. EPA requests comment on whether an y special provisions would be needed to accommodate glider kits. See Section XIV for additional discussi on of the proposed requirements for glider vehicles. Similarly , NHTSA is considering including glider vehicles under its Phase 2 program. The agencies request comment on their respective considerations
. We believe that the agencies potentially having different policies for glider kits and glider vehicles under the Phase 2 program would not result in problematic disharmony between the NHTSA and EPA programs, because of the small number of vehicles that would be involved. EPA believes that its prop osed changes would result in the glider market returning to the pre
- 2007 levels, in which fewer than 1,000 glider vehicles would be produced in most ye ars. Given that a large fraction of these vehicles would be exempted from EPA regulations because they

would be produced b y qualifying small businesses, they would thus, in practice, be treated the same under EPA and NHTSA regulations. Only non - exempt glider vehicles would be subject to different requirements under the NHTSA and EPA regulations. However, we believe that this is unlikely to exceed a few hundred vehicles in any year, which would be few enough not to result in any meaningful disharmony between the two agencies. With regard to NHTSA’s safety authority over gliders, the agency notes that it has become increasingl y aware of potential noncompliance with its regulations applicable to gliders. NHTSA has learned of manufacturers who are creating glid er vehicles that are new vehicles under 49 CFR 571.7(e) ; however, the manufacturers are not certifyingthem and obtaining a new VIN as required. N HTSA plans to pursue enforcement actions as applicable against noncompliant manufacturers. In addition to enforcement actions, NHTSA may consider amending 49 CFR 571.7(e) and related regulations as necessary
. NHTSA believes manufacturers may

not be using this regulation as originall y intended
. **(5) In**  **- use Standards**  Section 202(a)(1) of the CAA specifies that EPA is to propose emissions standards that are applicable for the useful life of the vehicle. The in
- use Phase 2 standards that EPA is proposing would appl y t o individual vehicles and engines , just as EPA adopted for Phase 1
.

135 Rebuilt engines used in glider vehicles are subject to EPA criteria pollutant emission standards applicable for the mo del year of the engine. See 40 CFR 86.004
- 40 for requirements that apply for engine rebuilding. Under ex isting regulations, engines that remain in their certified configuration after rebuilding may continue to be used.Page 173 of 850

NHTSA is also proposing the same approach used in Phase 1 which does not include in
- use standards. EPA is also not proposing an y changes to provisions requiring that the useful life for tractors with respect to CO 2 emissions be equal to the respective useful life periods for criteria p ollutants , as shown below in Table III
- 4 . ( See 40 CFR 1037.10 6(e) ). EPA does not expect degradation of the technologies evaluated for Phase 2 in terms of CO 2 emissions, therefore we propose no changes to the regulations describing compliance with GHG pollutants with regards to deterioration. (See 40 CFR 1037.241). We welcome comments that highlight a need to change this approach. **Table III**  **- 4**  **Tractor Useful Life Periods** Years Miles Class 7 Tractors 10 185,000 Class 8 Tractors 10 435,000


### D. **Feasibility of the Proposed Tractor Standards**  This section describes the agencies’ technical feasibility and cost anal ys is in greater detail. Further detail on all of these technologies can be found in the draft RIA Chapter 2. Class 7 and 8 tractors are used in combination with trailers to transport freight. The variation in the design of these tractors and their ty pical uses drive different technology solutions for each regulatory

subcategory
. As noted above, the agencies are proposing to continue the Phase 1 provisions that treat vocational tractors as vocational vehicles instead of as combination tractors, as noted in Section III. C . The focus of this section is on the feasibility of the proposed standards for combination tractors including the heavy
- haul tractors , but not the vocational tractors. EPA and NHTSA collected information on the cost and effectiveness of fuel consumption and CO 2 emission reducing technologies from several sources. The primary sources of information were the Southwest Research Institute evaluation of heavy
- dut y vehicle fuel efficiency

and costs for NHTSA, 136 the Department of Energy ’s SuperTruck Program, 137 2010 National Academ y of Sciences report of Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - Dut y Vehicles, 138 TIAX’s assessment of

136 Reinhart, T. (2015). Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Techn ology Study

– Report #1. Washington, DC: National Highway Traffic Safety Administration.

. 137 U.S. Department of Energy. SuperTruck Initiative. Information available at http://energy.gov/eere/vehicles/vehicle
- technologies
- office 138 Committee to Assess Fuel E conomy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). Technologies and Approaches to Reducing the Fuel ConsumptionPage 174 of 850

technologies to support the NAS panel report , 139 the anal ys is conducted by the Northeast States Center for a Clean Air Future, International Council on Clean Transportation, Southwest Research Institute and TIAX for reducing fuel consumption of heavy
- duty long haul combination tractors (the NESCCAF/IC CT study), 140 and the technology cost analy sis conducted by I CF for EPA. 141 **(1) What Technologies Did the Agencies Consider to Reduce the CO**  **2 Em**  **issions and Fuel Consumption of Combination Tractors?**  Manufacturers can reduce CO 2 emissions and fuel consumption of c ombination tractors through use of man y technologies , including engine, drivetrain, aerodyn amic, tire, extended idle, and weight reduction technologies. The agencies’ determination of the feasibility of the proposed HD Phase 2 standards is based on our pr ojection of the use of these technologies and an assessment of their effectiveness . We will also discuss other technologies that could potentially

be used, such as vehicle speed limiters, although we are not basing the proposed standards on their use for the model years covered by this proposal , for various reasons discussed below. In this section we discuss generall y the tractor and engine technologies that the agencies considered to improve performance of heav y - dut y tractors , while Section III. D
. 2 disc usses the baseline tractor definition and technology packages the agencies used to determine the proposed standard levels. Engine technologies: As discussed in Section II.D above, there are several engine technologies that can reduce fuel consumption of heav y - dut y tractors. These technologies include friction reduction, combustion sy stem optimization, and Rankine cycle. These engine technologie s would impact the Phase 2 vehicle results because the agencies propose that the manufacturers enter a fuel map into GEM. Aerodynamic technologies: There are opportunities to reduce aerodynamic drag from the tractor, but it is sometimes difficult to ass ess the benefit of individual aerody namic features. Therefore, reducing aerody namic drag requires optimizing of the entire s ys tem. The potential areas to reduce drag include all sides of the truck

– front, sides, top, rear and bottom. The grill, bumper, and hood can be designed to minimize the pressure created b y the front of the truck. Technologies such as aerody namic mirrors and fuel tank fairings can reduce the surface area perpendicular to the wind and provide a smooth surface to minimize disruption s of the air flow. Roof fairings provide a transition to move the air smoothly over the tractor and trailer. Side

of Medium
- and Heavy
- Duty Vehicles. (“The 2010 NAS Report”) Washington, D .C. **,** The National Academies Press. 139 TIAX, LLC. “Assessment of Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles,” Final Report to National Academy of Sciences, November 19, 2009. 140 NESCCAF, ICCT, Southwest Research Institute, and TIAX. Reducing Heavy
- Duty Long Haul Combination Truck Fuel Consumption and CO 2 Emissions. October 2009. 141 ICF International. “Investigation of Costs for Strategies to Reduce Greenhouse Gas Emissions for Heavy
- Duty On
- Road Vehicles.” July 2010. Docket Number EPA
- HQ
- OAR
- 2010
- 0162
- 0283.Page 175 of 850

extenders can minimize the air entrapped in the gap between the tractor and trailer. Lastl y, underbell y treatments can manage the flow of air underneath the tractor. DOE has partnered with the heav y - dut y industry to demonstrate vehicles that achieve a 50 percent improvement in freight efficiency . This SuperTruck program has led to significant advancements in the aerodynamics of combination tractor - trailers. The manufacturers’ SuperTruck demonstration vehicles are achieving approximately 7 percent freight efficiency improvements over a 2010 MY baseline vehicle due to improvements in tractor aerodynamics. 142 The 2010 NAS Report on heav y - dut y tr

ucks found that aerody

namic improvements which yield 3 to 4 percent fuel consumption reduction or 6 to 8 percent reduction in Cd values, beyond technologies used in today ’s SmartWay

trucks are achievable. 143 Lower Rolling Resistance Tires: A tire’s rollin g resistance results from the tread compound material, the architecture and materials of the casing, tread design, the tire manufacturing process, and its operating conditions (surface, inflation pressure, speed, temperature, etc.). Differences in rolling resistance of up to 50 percent have been identified for tires designed to equip the same vehicle. Since 2007, SmartWay designated tr actors have had steer tires with rolling resistance coefficients of less than 6.6 kg/metric ton for the steer tire and les s than 7.0 kg/metric ton for the drive tire. 144 Lo w rolling resistance (LRR) drive tires are currentl y offered in both dual assembly and wide
- based single configurations. Wide based single tires can offer rolling resistance reduction along with improved aerodynamics and weight reduction. The lowest rolling resistance value submitted for 2014MY GHG and fuel efficiency certification was 4. 3 and 5. 0 kg/metric ton for the steer and drive tires respectively
. 145 Weight Reduction: Reductions in vehicle mass lower fuel consumption and GHG emissions by decreasing the overall vehicle mass that is moved down the road
. Weight reductions also increase vehicle payload capability which can allow additional tons to be carried by fewer trucks consuming less fuel and pr oducing lower emissions on a ton
- mile basis. We treated such weight reduction in two way s in Phase 1 to account for the fact that combination tractor - trailers weigh
- out approximately one - third of the time and cube
- out approximately two thirds of the time. Therefore in Phase 1 and also as proposed for Phase 2, one
- third of the weight reduction would be added payload in the denominator while two
- thirds of the weight reduction is subtracted from the overall weight of the vehicle in GEM. See 76 FR 57153. In Phase 1, we reflected mass reductions for specific technology substitutions ( e.g. , installing aluminum wheels instead of steel wheels) . These substitutions were included where we could with confidence verify the mass reduction information provided by the manufacturer. The agencies propose to expand the list of weight reduction components which can be input into GEM in order to provide the manufacturers with additiona l means to comply via GEM with the combination tractor standard s and to further encourage reductions in vehicle weight. As in Phase 1, we recognize that there may be additional potential for weight reduction in new high strength

142 Daimler Tru ck North America. SuperTruck Program Vehicle Project Review . June 19, 2014. 143 See TIAX, Note 139 , Page 4
- 40. 144 Ibid. 145 Memo to D ocket. Coefficient of Rolling Resistance Certification Data. See Docket EPA
- HQ
- OAR
- 2014
- 0827Page 176 of 850

steel components which combine the reduction due to the material substitution along with improvements in redesign, as evidenced b y the studies done for light
- dut y vehicles. 146 Inthe development of the high strength steel component weights, we are onl y assuming a reduction from mate rial substitution and no weight reduction from redesign, since we do not have any data specific to redesign of heavy
- duty components nor do we have a regulatory mechanism to differentiate between material substitution and improved design. Additional weight reduction would be evaluated as a potential off
- cycle credit. Extended I dle Reduction: Auxiliary power units (APU), fuel operated heaters, battery supplied air conditioning, and thermal storage s ys tems are among the technologies available today to reduc e main engine extended idling from sleeper cabs. Each of these technologies reduces fuel consumption during idling from a truck without this equipment (the baseline) from approximately

0.8 gallons per hour (main engine idling fuel consumption rate) to app roximately 0.2 gallons per hour for an APU. 147 EPA and NHTSA agree with the TIAX assessment that a 5 percent reduction in overall fuel consumption reduction is achievable
. 148 Idle Reduction: Day

cab tractors often idle while cargo is loaded or unloaded, as well as during the frequent stops that are inherent with driving in urban traffic conditions near cargo destinations. To recognize idle reduction technologies that reduce workday idling, the agencies have developed a new idle
- only dut y cycle that is prop osed to be used in GEM. As discussed above in Section II.D, this new proposed certification test cycle would measure the amount of fuel saved and CO 2 emissions reduced b y two primary typ es of technologies: neutral idle and stop - start. The proposed rules appl y this test cycle only to vocational vehicles because these ty pes of vehicles spend more time at idle than tractors. However, the agencies request comment on whether we should extend this vocational vehicle idle reduction approach to day cab tractors. Neutral idle would onl y be available for tractors using torque
- converter automatic transmissions, and stop
- start would be available for any tractor. Unlike the fixed numerical value in GEM for automatic engine shutdown sy stems to reduce overnight idling of combination tractors, this new idle reduction approach would result in different numerical values depending on user inputs. The required inputs and other details about this cycle, as it would appl y to vocational vehicles, are described in the draft RIA Chapter 3. If we extended this approach to day cab tractors, we could set a fixed GEM composite cycle weighting factor at a value representative of the time spent at idle for a typical day cab tractor, possibl y five percent. Under this approach, tracto r manufacturers would be able to select GEM inputs that identify the presence of workday idle reduction technologies, and GEM would calculate the associated benefit due to these technologies, using this new idle
- onl y c ycl e as described in the draft RIA Cha pter 3. The agencies have also received a letter from the California Air Resources Board requesting consideration of credits for reducing solar loads. Solar reflective paints and solar

146 American Iron and Steel Institute. “A Cost Benefit Analysis Report to the North American Steel Industry on Im proved Material and Powertrain Architectures for 2 1st Century Trucks. “ 147 See the draft RIA Chapter 2.4.8 for details. 148 See the 2010 NAS Report, Note 138 , above, at 128.Page 177 of 850

control glazing technologies are briefl y discussed in draft RIA Chapter 2.4.9.3. The agencies request comment on the Air Resources Board’s letter and recommendations. 149 Vehicle Speed Limiters: Fuel consumption and GHG emissions increase proportional to the square of vehicle speed. Therefore, lowering vehicle speeds c an significantly reduce fuel consumption and GHG emissions. A vehicle speed limiter (VSL), which limits the vehicle’s maximum speed, is another technology option for compliance that is already utilized today by some fleets (though the ty pical maximum spee d setting is often higher than 65 mph). Downsized Engines and Downspeeding : As tractor manufacturers continue to reduce the losses due to vehicle loads, such as aerodynamic drag and rolling resistance, the amount of power required to move the vehicle de creases. In addition, engine manufacturers continue to improve the power density of heav y - dut y engines through means such as reducing the engine friction due to smaller surface area. These two changes lead to the ability for truck purchasers to select lo wer displacement engines while maintaining the previous level of performance. Engine downsizing could be more effective if it is combined with the downspeeding assuming increased BMEP does not affect durability . The increased efficiency of the vehicle mo ves the operating points down to a lower load zone on a fuel map, which often moves the engine away from its sweet spot to a less efficient zone. In order to compensate for this loss, downspeeding allows the engine to run at a lower engine speed and move back to higher load zones, thus can slightl y improve fuel efficiency . Reducing the engine size allows the vehicle operating points to move back to the sweet spot, thus further improving fuel efficiency . Engine downsizing can be accounted for as a vehicle technology through the use of the engine’s fuel map in GEM. Transmission: As discussed in the 2010 NAS report, automatic (AT) and automated manual transmissions (AMT) may offer the ability

to improve vehicle fuel consumption by optimizing gear selection compared to an average driver. 150 However, as also noted in the report and in the supporting TIAX report, the improvement is very dependent on the driver of the truck, such that reductions ranged from 0 to 8 percent. 151 Well
- trained drivers would be expected to perform as well or even better than an automatic transmission since the driver can see the road ahead and anticipate a changing stoplight or other road condition that neither an automatic nor automated manual transmission can anticipate. However, poorly
- trained drivers that shift too frequentl y or not frequently enough to maintain optimum engine operating conditions could be expected to realize improved in
- use fuel consumption by switching from a manual transmission to an automatic or automated manual transmission. As transmissions continue to evolve, we are now seeing in the European heav y - dut y vehicle market the addition of dual clutch transmissions

149 California Air Resources Board. Letter from Michael Carter to Matthew Spears dated December 3, 2014. Solar Control: Heavy
- Duty Vehicles White Paper. Docket EPA
- HA
- OAR
- 201 4
- 0827. 150 Manual transmissions require the driver to shift the gears and manually engage and disengage the clutch. Automatic transmissions shift gears through computer controls and typically include a torque converter. An AMT operates similar to a manual transmission, except that an automated clutch actuator disengages and engages the drivetrain instead of a human driver. An AMT does not include a clutch pedal controllable by the driver or a torque converter. 151 See TIAX, Note 139 , above at 4
- 70.Page 178 of 850

(DCT). DCTs operate similar to AMTs, but with two clutches so that the transmission can maintain engi ne speed during a shift which improves fuel efficiency
. We believe there may be real benefits in reduced fuel consumption and GHG emissions through the a doption of dual clutch, automatic or automated manual transmission technology
. Low Friction Transmis sion, Axle, and Wheel Bearing Lubricants: The 2010 NAS report assessed low friction lubricants for the drivetrain as providing a 1 percent improvement in fuel consumption based on fleet testing. 152 A field trial of European medium
- duty trucks found an average fuel consumption improvement of 1.8 percent using SAE 5W
- 30 engine oil, SAE 75W90 axle oil and SAE 75W80 transmission oil when compared to SAE 15W40 engine oil and SAE 90W axle oil, and SAE 80W transmission oil. 153 The light
- dut y 2012
- 16 MY vehicle rule and the pickup truck portion of this program estimate that low friction lubricants can have an effectiveness value between 0 and 1 percent compared to traditional lubricants. Drivetrain: Most tractors today have three axles

– a steer axle and two rear drive axles, and are commonly

referred to as 6x4 tractors. Manufacturers offer 6x2 tractors that include one rear drive axle and one rear non
- driving axle. The 6x2 tractors offer three distinct benefits. First, the non
- driving rear axle does not have internal friction and therefore reduces the overall parasitic losses in the drivetrain. In addition, the 6x2 configuration typically weighs approximately

300 to 400 pounds less than a 6x4 configuration. 154 Finally , the 6x2 ty pically costs less or is cost neutral when compared to a 6x4 tractor. Sources cite the effectiveness of 6x2 axles at between 1 and 3 percent. 155 Similarly , with the increased use of double and triple trailers, which reduce the weight on the tractor axles when compared to a single trailer, manufacturers offer 4x2 axle configurations. The 4x2 axle configuration would have as good as or better fuel efficiency

performance than a 6x2. Accessory

Improvements: Parasitic losses from the engine come from many s ys tems, including the water pump, oil pump, and power steering pump. Reductions in parasitic losses are one of the areas being developed under the DOE SuperTruck program. As presented in the DOE Merit reviews, Navistar stated that they demonstrated a 0.45 percent reduction in fuel consumption through water pump improvements and 0.3 percent through oil pump improvements compared to a current engin e . In addition, Navistar showed a 0.9 percent benefit for a variable speed water pump and variable displacement oil pump. Detroit Diesel reports a 0.5 percent coming from improved water pump efficiency
. 156 Itshould be noted that water pump improvements include both pump efficiency improvement and variable speed or on/off controls.

152 See the 2010 NAS Report, Note 138 , pa ge 67. 153 Green, D.A., et. al. “The Effect of Engine, Axle, and Transmission Lubricant, and Operating Conditions on Heavy Duty Diesel Fuel Economy. Part 1: Measurements.” SAE 2011
- 01
- 2129. SAE International Journal of Fuels and Lubricants. January 2012. 154 North American Council for Freight Efficiency. ”Confidence Findings on the Potential of 6x2 Axles.” 2014. Page 16. 155 Reinhart, T. (2015). Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report #1. Washington, DC: National Highway Traffic Safety Administration. 156 See the draft RIA Chapter 2.4 for details.Page 179 of 850

Lube pump improvements are primarily achieved using variable displacement pumps and may also include efficiency

improvement. All of these results shown in this paragraph are d emonstrated through the DOE SuperT ruck program at single operating point on the engine map , and therefore the overall expected reduction of these technologies is less than the single point result. Intelligent Controls: Skilled drivers know how to control a vehicle to obtain maximum fuel efficiency

by , among other things, considering road terrain. For example, the driver may allow the vehicle to slow down below the target speed on an uphill and allow it to go over the target speed when going downhill, to e ssentially smooth out the engine demand. Electronic controls can be developed to essentially mimic this activity . The agencies propose to provide a 2 percent reduction in fuel consumption and CO 2 emissions for vehicles configured with intelligent control s, such as predictive cruise control. Automatic Tire Inflation Sy stems: Proper tire inflation is critical to maintaining proper stress distribution in the tire, which reduces heat loss and rolling resistance. Tires with reduced inflation pressure exhibit a larger footprint on the road, more sidewall flexing and tread shearing, and therefore, have greater rolling resistance than a tire operating at its optimal inflation pressure. Bridgestone tested the effect of inflation pressure and found a 2 percent va riation in fuel consumption over a 40 psi range. 157 Generally , a 10 psi reduction in overall tire inflation results in about a 1 percent reduction in fuel economy
. 158 To achieve the intended fuel efficiency benefits of low rolling resistance tires, it is critical that tires are maintained at the proper inflation pressure. Proper tire inflation pressure can be maintained with a rigorous tire inspection and maintenance program or with the use of tire pressure and inflation s ys tems. According to a study conducted b y FMCSA in 2003, about 1 in 5 tractors/trucks is operating with 1 or more tires underinflated b y at least 20 psi. 159 A 2011 FMCSA study estimated underinflatio n accounts for one service call per year and increases tire procurement costs 10 to 13 percent. The study found that total operating costs can increase b y $600 to $800 per year due to underinflation. 160 A recent study b y The North American Council on Frei ght Efficiency , found that adoption of tire pressure monitoring s ys tems is increasing. It also found that reliability and durability

of commerciall y available tire pressure s ys tems are good and earl y issues with the sy stems have

157 Bridgestone Tires. Real Question s, Real Answers. http://www.bridgestonetrucktires.com/us_eng/real/magazines/ra_special
- edit_4/ra_special4_fuel
- tires.asp 158 “Factors Affecting Truck Fuel Economy,” Goodyear, Radial Truck and Retread Service Manual. Accessed February 16, 2010 at http://www.goodyear.com/truck/pdf/radialretserv/Retread_S9_V.pdf
. 159 American Trucking Association. Tire Pressure Monitoring and Inflation Maintenance. June 2010. Page 3. La st accessed on December 15, 2014 at http://www.trucking.org/AT A%20Docs/About/Organization/TMC/Documents/Position%20Papers/Study%20Group %20Information%20Reports/Tire%20Pressure%20Monitoring%20and%20Inflation%20Maintenance%E2%80%94 TMC%20I.R.%202010
- 2.pdf 160 TMC Future Truck Committee Presentation “FMCSA Tire Pressure Monitoring Field Operational Test Results,” February 8, 2011Page 180 of 850

been addressed. 161 These automatic tire inflation sy stems monitor tire pressure and also automatically

keep tires inflated to a specific level. The agencies propose to provide a 1 percent CO 2 and fuel consumption reduction value for tractors with automatic tire inflation sy stems in stalled. Tire pressure monitoring sy stems notify the operator of tire pressure, but require the operator to manually

inflate the tires to the optimum pressure. Because of the dependence on the operator’s action, the agencies are not proposing to provide a reduction value for tire pressure monitoring sy stems. We request comment on this approach and seek data from those that support a reduction value be assigned to tire pressure monitoring s ys tems. Hy brid: Hy brid powertrain development in Class 7 and 8 tractors has been limited to a few manufacturer demonstration vehicles to date. One of the key benefit opportunities for fuel consumption reduction with hy brids is less fuel consumption when a vehicle is idling, but the standard is already premised on use of extended idle reduction so use of h ybrid technology would duplicate man y of the same emission reductions attributable to extended idle reduction. NAS estimated that hy

brid sy stems would cost approximately $25,000 per tractor in the 2015 through the 202 0 time frame and provide a potential fuel consumption reduction of 10 percent, of which 6 percent is idle reduction which can be achieved (less expensivel y) through the use of other idle reduction technologies. 162 The limited reduction potential outside of idle reduction for Class 8 sleeper cab tractors is due to the mostly highway operation and limited start
- stop operation. Due to the high cost and limited benefit during the model ye ars at issue in this action (as well as issues regarding sufficiency of le ad time (see Section III. D.2 below), the agencies are not including h ybrids in assessing standard stringency (or as an input to GEM). Management: The 2010 NAS report noted man y operational opportunities to reduce fuel consumption, such as driver trainin g and route optimization. The agencies have included discussion of several of these strategies in draft RIA Chapter 2, but are not using these approaches or technologies in the standard setting process. The agencies are looking to other resources, such a s EPA’s SmartWay Transport Partnership and regulations that could potentially be promulgated b y the Federal Highway Administration and the Federal Motor Carrier Safety Administration, to continue to encourage the development and utilization of these approaches. **(2) Projected Technology Effectiveness and Cost**  EPA and NHTSA project that CO 2 emissions and fuel consumption reductions can be feasibl y and cost
- effectively met through technological improvements in several areas. The agencies evaluated each technolo gy and estimated the most appropriate adoption rate of technology

into each tractor subcategory . The next sections describe the baseline vehicle configuration, the effectiveness of the individual technologies, the costs of the technologies, the projected adoption rates of the technologies into the regulatory subcategories, and finall y the derivation of the proposed standards.

161 North American Council for Freight Efficiency , “Tire Pressure Systems,” 2013. 162 See the 2010 NAS Report, Note 138 , page 128.Page 181 of 850

The agencies propose Phase 2 standards that project by 2027, all high
- roof tractors would have aero dy

namic performance equal to or better today ’s SmartWay performance

– which represents the best of today ’s technology . This would equate to having 40 percent of new high roof sleeper cabs in 2027 complying with the current best practices and 6 0 percent of the new high
- roof sleeper cab tractors sold in 2027 having better aerody namic performance than the best tractors available today . For tire rolling resistance, we premised the proposed standards on the assumption that nearly

all tires in 2027 w ould have rolling resistance equal to or superior to tires meeting today ’s SmartWay designation. As discussed in Section II.D, the agencies assume the proposed 2027 MY engines would achieve an additional 4 percent improvement over Phase 1 engines and we p roject would include 15 percent of waste heat recovery (WHR) and man y other advanced engine technologies. In addition, we are proposing standards that project improvements to nearl y all of today’s transmissions, incorporation of extended idle reduction te chnologies on 90 percent of sleeper cabs, and significant adoption of other ty pes of technologies such as predictive cruise control and automatic tire inflation sy stems. In addition to the high cost and limited utility of hy brids for many

tractor driv e cycles noted above, the agencies believe that hy brid powertrains s ys tems for tractors may not be sufficiently

developed and the necessary manufacturing capacity

put in place to base a standard on any significant volume of hy brid tractors. Unlike hy

brids for vocational vehicles and light
duty vehicles, the agencies are not aware of any full hy brid s ys tems currently

developed for long haul tractor applications. To date, h ybrid s ys tems for tractors have been primarily focused on idle shutdown technologies and not on the broader energy storage and recovery

s ys tems necessary to achieve reductions over ty pical vehicle drive cycles. The proposed standards reflect the potential for idle shutdown te chnologies through GEM . Further as highlighted by the 2010 NAS report, the agencies do believe that full h ybrid powertrains may have the potential in the longer term to provide significant improvements in tractor fuel efficiency and to greenhouse gas emission reduction s. However , due to the high cost, limited benefit during highway driving, and lacking an y existing systems or manufacturing base, we cannot conclude with certainty, absent additional information, that such technology w ould be available for tractors in the 2021
- 2027 timeframe. However the agenci es welcome comment from industry and others on their projected timeline for deplo ym ent of hy brid powertrains for tractor applications. (a ) Tractor Baselines for Costs and Effectiveness The fuel efficiency

and CO 2 emissions of combination tractors vary depending on the configuration of the tractor. Man y aspects of the tractor impact its performance, including the engine, transmission, drive axle, aerodynamics, and rolling resistance. For each subcategory , the age ncies selected a theoretical tractor to represent the average 2017 model year tractor that meets the Phase 1 standards (see 76 FR 57212, September 15, 2011)
. These tractors are used as baselines from which to evaluate costs and effectiveness of additional technologies and standards. The specific attributes of each tractor subcategory are listed below in Table III
- 5
. Using these values, the agencies assessed the CO 2 emissions and fuel consumption performance of the proposed baseline tractors using the proposed version of Phase 2 GEM. The results of these simulations are shown below in Table III
- 6
. As noted earlier, the Phase 1 2017 model year tractor standards and the baseline 2017 model year tractor results are not directly comparable. The same set of aerody namic and tirePage 182 of 850

rolling resistance technologies were used in both setting the Phase 1 standards and determining the baseline of the Phase 2 tractors. However, there are several aspects that differ. First, a new version of GEM was developed and validated to provide additional capabilities, including more refined modeling of transmissions and engines. Second, the determination of the proposed HD Phase 2 CdA value takes into account a revised test procedure, a new standard reference trailer, and wind averaged drag as discussed below in Section III.E. In addition, the proposed HD Phase 2 version of GEM includes road grade in the 55 mph and 65 mph highway cycles, as discussed below in Section I II.E. Finally , the agencies assessed the current level of automatic engine shutdown and idle reduction technologies used b y the tractor manufacturers to comply with the 2014 model year CO 2 and fuel consumption standards. To date, the manufacturers are me eting the 2014 model year standards without the use of this technology . Therefore, in this proposal the agencies reverted back to the baseline APU adoption rate of 30 percent, the value used in the Phase 1 baseline. **Table III**  **- 5**  **GEM Inputs for the**  **Baseline Class 7 and 8 Tractor** 

Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 2017 MY 11L Engine 350 HP 2017 MY

11L Engine 350 HP 2017 MY

11L Engine 350 HP 2017 MY

15L Engine 455 HP 2017 MY

15L Engine 455 HP 2017 MY

15L Engine 455 HP 2017 MY

15L Engine 455 HP 2017 MY

15L Engine 455 HP 2017 MY

15L Engine 455 HP **Aerodynam ics (CdA**  **in m 2**  **)** 5.00 6.40 6.42 5.00 6.40 6.42 4.95 6.35 6.22 **Steer Tires (CRR in**  **kg/metric ton)** 6.99 6.99 6.87 6.99 6.99 6.87 6.87 6.87 6.54 **Drive Tires (CRR in**  **kg/ metric ton)**  7.38 7.38 7.26 7.38 7.38 7.26 7.26 7.26 6.92 **Extended Idle Reduction A**  **dop tion Rate**  N/A N/A N/A N/A N/A N/A 30% 30% 30% **Transmission =** 10 Speed Manual Transmission **Gear Ratios =** 12.8 , 9.25 , 6.76 , 4.9 0, 3.58 , 2.61 , 1.89 , 1.38 , 1 .00, 0.73

**Drive Axle Ratio**  = 3. 70Page 183 of 850 **Table III**  **- 6**  **Class 7 and 8 Tractor Baseline CO 2**  **Emissions and Fuel Consumption**

Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid Roof High

Roof Lo w

Roof Mid

Roof High

Roof CO 2 (grams CO 2 /ton
- mile) 10 7 11 8 121 8 6 9 3 95 79 87 88 Fuel Consumption (gal/1,000 ton mile) 10. 5 11. 6 11.9 8. 4 9. 1 9.3 7.8 8.5 8.6

The fuel consumption and CO 2 emissions in the baseline described above remains the same over time with no assumed improvements after 2017, absent a Phase 2 regulation. An alternative baseline was also evaluated b y the agencies in which there is a continuing uptake of technologies in the tractor market that reduce fuel consumption and CO 2 emissions absent a Phase 2 regulation. This alternative baseline, referred to as the more dy namic baseline, was developed to estimate the effect of market pressures and non
- regulatory government ini tiatives to improve tractor fuel consumption. The more dy namic baseline assumes that the significant level of research funded and conducted by the Federal government, industry , academia and other organizations will, in the future, result the adoption of s ome technologies beyond the levels required to compl y with Phase 1 standards. One example of such research is the Department of Energy Super Truck program 163 which has a goal of demonstrating cost - effective measures to improve the efficiency

of Class 8 long
- haul freight trucks by 50 percent by

2015. The more dy namic baseline also assumes that manufacturers will not cease offering fuel efficiency improving technologies that currently have significant market penetration, such as automated manual transmissions . The baselines (one for each of the nine tractor ty pes) are characterized by fuel consumption and CO 2 emissions that gradually decrease between 2019 and 2028. In 2028, the fuel consumption for the alternative tractor baselines is approxi mately 4.0 percent lower than those shown in Table III
- 6 . This results from the assumed introduction of aerody namic technologies such as down exhaust, underbody airflow treatment in addition to tires with lower rolling resistance. The assumed introduction of these technologies reduces the CdA of the baseline tractors and CRR of the tractor tires. To take one example, the CdA for baseline high roof sleeper cabs in Table III
- 5 is 6.22 (m 2 ) in 2018. In 2028, the CdA of a high roof sleeper cab would be assumed to still be 6.22 m 2 in the baseline case outlined above. Alternatively, in the dy namic baseline, the CdA for high roof sleeper cabs is 5.61 (m 2 ) in 2028 due to assumed market penetration of technologies absent the Phase 2 regulation. The dy nam ic baseline anal ys is is discussed in more detail in draft RIA Chapter 11.

163 U.S. Department of Energy. “SuperTruck Making Leaps in Fuel Efficiency.” 2014. Last accessed on May 10,2015 at http://energy.g ov/eere/articles/supertruck
- making
- leaps
- fuel
- efficiencyPage 184 of 850

(b ) Tractor Technology Packages The agencies’ assessment of the proposed technology effectiveness was developed through the use of the GEM in coordination with modeling conducted b y Southwest Research Institute. The agencies developed the proposed standards through a three
- step process, similar to the approach used in Phase 1. First, the agencies developed technology performance characteristics for each technology , as described below. Each technology is associated with an input parameter which in turn would be used as an input to the Phase 2 GEM simulation tool and its effectiveness thereb y modeled . The performance levels for the range of Class 7 and 8 tractor aerodynamic packages and vehicle technologies are described below in Table III
- 7 . Second, the agencies combined the technology performance levels with a projected technology adoption rate to determine the GEM inputs used to set the stringency of the proposed standards. Third, the agencies input the se parameters into Phase 2 GEM and used the output to determine the proposed CO 2 emissions and fuel consumption levels. All percentage improvements noted below are over the 2017 baseline tractor. (i ) Engine Improvements There are several technologies that could be used to improve the efficiency of diesel engines used in tractors. Details of the engine technologies, adoption r ates, and overall fuel consumption and CO 2 emission reductions are included in Section II.D. The proposed heav y duty tractor engine standards would lead to a 1.5 percent reduction in 2021MY, a 3.5 percent reduction in 2024MY, and a 4 percent reduction in 2027MY. These reductions would show up in the fuel map used in GEM. (ii) Aerodynamics The aerodynamic packages are categorized as Bin I, Bin II, Bin III, Bin IV, Bin V, Bin VI , or Bin VII based on the wind averaged drag aerody namic performance determined throu gh testing conducted b y the manufacturer. A more complete description of these aerodynamic packages is included in Chapter 2 of the draft RIA. In general, the proposed CdA values for each package and tractor subcategory were developed through EPA’s coast down testing of tractor
trailer combinations, the 2010 NAS report, and SAE papers. (iii) Tire Rolling Resistance The proposed rolling resistance coefficient target for Phase 2 was developed from SmartWay ’s tire testing to develop the SmartWay certification, testing a selection of tractor tires as part of the Phase 1 and Phase 2 programs , and from 2014 MY certification data
. Even though the coefficient of tire rolling resistanc e comes in a range of values, to anal yze this range, the tire performance was evaluated at four levels for both steer and drive tires, as determined b y the agencies. T he four levels are the baseline (average) from 2010 , Level I and L evel 2 from Phase 1, and Level 3 that achieves an additional 25 percent improvement over Level 2. The Level 1 rolling resistance performance represents the threshold used to develop SmartWay designated tires for long haul tractors. The Level 2 threshold represents an incremental step for improvements beyond today ’s SmartWay level and represents the best in class rolling resistance of the tires we tested. The Level 3 values represent the long
- term rolling resistance value that thePage 185 of 850

agencies predicts could be achieved in the 2025 timeframe. Given the multiple year phase
- in of the standards, the agencies expect that tire manufacturers will continue to respond to demand for more efficient tires and will offer increasing numbers of tire models with rolling resistance values significantly

better than today ’s t ypical low rolling resistance tires. The tire rolling resistance level assumed to meet the 2017 MY Phase 1 standard high roof sleeper cab is conside red to be a weighted average of 10 percent baseline rolling resistance, 70 percent Level 1, and 20 percent Level 2. The tire rolling resistance to meet the 2017MY Phase 1 standards for the high roof day

cab, low roof sleeper cab, and mid roof sleeper cab includes 30 percent baseline, 60 percent Level 1 and 10 percent Level 2. Finally, the low roof day cab 2017MY standard can be met with a weighted average rolling resistance consisting of 40 percent baseline, 50 percent Level 1, and 10 percent Level 2. (iv) Idle Reduction The benefits for the extended idle reductions were developed from literature, SmartWay work, and the 2010 NAS report. Additional details regarding the comments and calculations are included in draft RIA Section 2. 4
. (v) Transmission The benefits f

or automated manual, automatic, and dual clutch transmissions were developed from literature and from simulation modeling conducted b y Southwest Research Institute. The benefit of these transmissions is proposed to be set to a two percent improvement over a manual transmission due to the automation of the gear shifting. (vi) Drivetrain The reduction in friction due to low viscosity axle lubricants is set to 0.5 percent. 6x4 and 4x2 axle configurations lead to a 2.5 percent improvement in vehicle efficiency
. D ownspeeding would be as demonstrated through the Phase 2 GEM inputs of transmission gear ratio, drive axle ratio, and tire diameter. Downspeeding is projected to improve the fuel consumption by

1.8 percent. (vii) Accessories and Other Technologies Compared to 2 017MY air conditioners, air conditioners with improved efficiency compressors will reduce CO 2 emissions by 0.5 percent. Improvements in accessories, such as power steering, can lead to an efficiency improvement of 1 percent over the 2017MY baseline. Base d on literature information, intelligent controls such as predictive cruise control will reduce CO 2 emissions by

2 percent while automatic tire inflation sy stems improve fuel consumption by 1 percent b y keeping tire rolling resistance to its optimum based on inflation pressure. (viii) Weight Reduction The weight reductions were developed from tire manufacturer information, the Aluminum Association, the Department of Energy, SABIC and TIAX, as discussed above in Section II.B.3.e.Page 186 of 850

(ix) Vehicle Speed Limiter The agencies did not consider the availability of vehicle speed limiter technology in setting the Phase 1 stringency levels, and again did not consider the availability of the technology in developing regulatory

alternatives for Phase 2. However, as described in mor e detail above, speed limiters could be an effective means for achieving compliance, if employed on a voluntary basis. (x) Summary of Technology Performance Table III
- 7 describes the performance levels for the range of Class 7 and 8 tractor vehicle technologies.Page 187 of 850 **Table III**  **- 7**  **Proposed Phase 2 Technology Inputs** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **Engine** 20 21 MY 11L Engine 350 HP 20 21 MY

11L Engine 350 HP 20 21 MY

11L Engine 350 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP **Aerodynam ics (CdA**  **in m 2**  **)** Bin I 5.3 6.7 7.6 5.3 6.7 7.6 5.3 6.7 7.4 Bin II 4.8 6.2 7.1 4.8 6.2 7.1 4.8 6.2 6.9 Bin III 4.3 5.7 6.5 4.3 5.7 6.5 4.3 5.7 6.3 Bin IV 4.0 5.4 5.8 4.0 5.4 5.8 4.0 5.4 5.6 Bin V N/A N/A 5.3 N/A N/A 5.3 N/A N/A 5.1 Bin VI N/A N/A 4.9 N/A N/A 4.9 N/A N/A 4.7 Bin VII N/A N/A 4.5 N/A N/A 4.5 N/A N/A 4.3 **Steer Tires (CRR in**  **kg/metric ton)** Base 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 Level 1 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 Level 2 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 5.7 Level 3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 **Drive Tires (CRR in**  **kg/ metric ton)**  Base 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 Level 1 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 Level 2 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 Level 3 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 4.5 **Idle Reduction (% reduction)**  APU N/A N/A N/A N/A N/A N/A 5% 5% 5% Other N/A N/A N/A N/A N/A N/A 7% 7% 7% **Transmission Type (% reduction)**  Manual 0% 0% 0% 0% 0% 0% 0% 0% 0% AMT 2% 2% 2% 2% 2% 2% 2% 2% 2% Auto 2% 2% 2% 2% 2% 2% 2% 2% 2% Dual Clutch 2% 2% 2% 2% 2% 2% 2% 2% 2% **Driveline (% reduction)**  Axle Lubricant 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 6x2 or 4x2 Axle 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Downspeed 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% **Accessory Improvements (% reduction)** A/C 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Electric Access. 1% 1% 1% 1% 1% 1% 1% 1% 1% **Other Technologies (% reduction)** Page 188 of 850

Predictive Cruise Control 2% 2% 2% 2% 2% 2% 2% 2% 2% Automated Tire Inflation Sy stem 1% 1% 1% 1% 1% 1% 1% 1% 1%

(c) Tractor Technology Adoption Rates As explained above, tractor manufacturers often introduce major product changes together, as a package. In this manner the manufacturers can optimize their available resources, including engineering, development, manufacturing and marketing activities to create a product with multiple new features. In addition, manufacturers recognize that a truck design will need to remain competitive over the intended life of the design and meet future regulatory requirements. In some limited cases, manufacturers may implement an individual technology outside of a vehicle’s redesign cycle. With respect to the levels of technology adoption used to develop the proposed HD Phase 2 standards, NHTSA and EPA established technology adoption constraints. The first ty pe of constraint was established based on the application of fuel consumption and CO 2 emission reduction technologies into the different types of tractors. For example, extended idle reduction technologies are limited to Class 8 sleeper cabs using the reasonable assumption that day cabs are not used for overnight hoteling. A second typ e of constraint was applied to most other technologies and limited their adoption based on factors reflecting the real world operating conditions that some combination tractors encounter. This second type of constraint was applied to the aerodynamic, tire, powertrain, and vehicle speed limiter technologies. Table III
- 8 and Table III
- 10 , specif y the adoption rates that EPA and NHTSA used to develop the proposed standards
. The agencies welcome comments on these adoption rates. NHTSA and EPA believe that within each of these individual vehicle categories there are particular applications where the use of the identified technologies would be either ineffective or not techni call y feasible. For example, the agencies are not predicating the proposed standards on the use of full aerodynam ic vehicle treatments on 100 percent of tractors because we know that in many applications (for example gravel truck engaged in local aggregat e delivery) the added weight of the aerodynam ic technologies will increase fuel consumption and hence CO 2 emissions to a greater degree than the reduction that would be accomplished from the more aerodynamic nature of the tractor. (i ) Aerodynamics Adoption R ate The impact of aerodynamics on a tractor
- trailer’s efficiency increases with vehicle speed. Therefore, the usage pattern of the vehicle will determine the benefit of various aerody namic technologies. Sleeper cabs are often used in line haul applications and drive the majority of their miles on the highway

travelling at speeds greater than 55 mph. The industry has focusedPage 189 of 850

aerodynamic tec hnology

development, including SmartWay tractors, on these ty

pes of trucks. Therefore the agencies are proposing the most aggressive aerodynamic technology application to this regulatory

subcategory . All of the major manufacturers today offer at least on e SmartWay sleeper cab tractor model , which is represented as Bin III aerodyn amic performance . The proposed aerodynamic a doption rate for Class 8 high roof sleeper cabs in 2027 ( i.e. , the degree of technology

a doption on which the stringency of the propos ed standard is premised) consists of 20 percent of Bin IV, 35 percent Bin V , 20 percent Bin VI, and 5 percent Bin V II reflecting our assessment of the fraction of tractors in this segment that c ould successfully appl y these aerodynamic packages with this amount of lead time
. We believe that there is sufficient lead time to develop aerodyn amic tractors that can move the entire high roof sleeper cab aerodynamic performance to be as good as or better than today ’s SmartWay designated tractors. The changes required for Bin IV and better performance reflect the kinds of improvements projected in the Department of Energy ’s SuperT ruck program. That program assumes that such sy stems can be demonstrated on vehicles by 2017. In this case, the agencies are projectin g that truck manufacturer s w ould be able to begin implementing these aerody namic technologies as earl y as 2021 MY on a limited scale. Importantl y, our averaging, banking and trading provisions provide manufacturers with the flexibility (and incentive) to implement these technologies over time even though the standard changes in a single step. The aerodynamic adoption rates used to develop the proposed standards for the other tractor regulatory

categories are less aggressive than for the Class 8 sleeper c ab high roof. Aerodynamic improvements through new tractor designs and the development of new aerodynamic components is an inherently slow and iterative process. The agencies recognize that there are tractor applications which require on/off
- road capabil ity

and other truck functions which restrict the type of aerodynamic equipment applicable. We also recognize that these types of trucks spend less time at highway speeds where aerody

namic technologies have the greatest benefit. The 2002 VIUS data ranks trucks by major use. 165 The heav y trucks usage indicates that up to 35 percent of the trucks may be used in on/off

- road applications or heavier applications. The uses include construction (16 percent), agriculture (12 percent), waste management (5 percent), and mining (2 percent). Therefore, the agencies analyzed the technologies to evaluate the potential restrictions that would prevent 100 percent adoption of more advanced aerodyn amic technologies for all of the tractor regulatory subcategories. As discuss ed in Section III.C.2, the agencies propose to increase the number of aerodynamic bins for low and mid roof tractors from the two levels adopted in Phase 1 to four levels in Phase 2. The agencies propose to increase the number of bins for these tractors t o reflect the actual range of aerodynamic technologies effective in low and mid roof tractor applications. The aerodynamic improvements to the bumper, hood, windshield, mirrors, and doors are developed for the high roof tractor application and then carrie d over into the low and mid roof applications.

165 U.S. Department of Energy. Transportation Energy Data Book, Edition 28
- 2009. Table 5.7.Page 190 of 850

(ii) Low Rolling Resistance Tire A dop tion Rate For the tire manufacturers to further reduce tire rolling resistance, the manufacturers must consider several performance criteria that affect tire selection. The c haracteristics of a tire also influence durability , traction control, vehicle handling, comfort, and retreadability . A single performance parameter can easil y be enhanced, but an optimal balance of all the criteria will require improvements in materials and tread design at a higher cost, as estimated by the agencies. Tire design requires balancing performance, since changes in design may change different performance characteristics in opposing directions. Similar to the discussion regarding lesser aerody namic technology

application in tractor segments other than sleeper cab high roof, the agencies believe that the proposed standards should not be premised on 100 percent application of Level 3 tires in all tractor segments given the potential interference with vehicle utility that could result. (iii) Weight Reduction Technology A dop tion Rate Unlike in HD Phase 1, the agencies propose setting the 2021 through 2027 model year tractor standards with out using weight reduction as a technology to demonstrate the feasibility
. However, as described in Section III.C.2 below, the agencies are proposing an expanded list of weight reduction options which c ould be input into the GEM by the manufacturers to re duce their certified CO 2 emission and fuel consumption levels
. The agencies view weight reduction as a technology

with a high cost that offers a small benefit in the tractor sector. For example, our estimate of a 400 pound weight reduction would cost $2, 050 (2012$) in 2021MY, but offers a 0.3 percent reduction in fuel consumption and CO 2 emissions. (iv) Idle Reduction Technology A dop tion Rate Idle reduction technologies provide significant reductions in fuel consumption and CO 2 emissions for Class 8 sleeper cabs and are available on the market today . There are several different technologies available to reduce idling. These include APUs, diesel fired heaters, and battery powered units. Our discussions with manufacturers indicate that idle technologies are sometimes installed in the factory , but it is also a common practice to have the units installed after the sale of the truck. We would like to continue to incentivize this practice and to do so in a manner that the emission reductions associated with idle reduction technology occur in use. Therefore, as adopted in Phase 1 , we are allowing only idle emission reduction technologies which include an automatic engine shutoff (AES) with some override provisions. 166 However, we welcome comment on other approache s that would appropriatel y quantify the reductions that would be experienced in the real world. We propose an overall 9 0 percent a doption rate for this technology for Class 8 sleeper cabs. The agencies are unaware of reasons wh y AES with extended idle reduction technologies

166 The agencies are proposing to continue the HD Phase 1 AES override provis ions included in 40 CFR 1037.660(b) for driver safety.Page 191 of 850

could not be applied to this high fraction of tractors with a sleeper cab, except those deemed a vocational tractor, in the available lead time. The agencies are interested in extend ing the idle reduction benefits beyond Class 8 sleepers, to day

cabs . The agencies reviewed literature to quantify the amount of idling which is conducted outside of hoteling operations. One study , conducted by Argonne National Laboratory , identified several different types of trucks which might idle for extended amounts of time during the work day. 167 Id ling may occur during the delivery process, queuing at loading docks or border crossings, during power take off operations, or to provide comfort during the w ork day . However, the study provided onl y “rough estimates” of the idle time and energy use for these vehicles. The agencies are not able to appropriatel y develop a baseline of workday idling for day

cabs and identify

the percent of this idling which cou ld be reduced through the use of AES. We welcome comment and data on quantifying the effectiveness of AES on day cabs. (v) Vehicle Speed Limiter A dop tion Rate As adopted in Phase 1, we propose to continue the approach where vehicle speed limiters may be use d as a technology

to meet the proposed standard . In setting the proposed standard , however, we assumed a zero percent a doption rate of vehicle speed limiters. Although we believe vehicle speed limiters are a simple, eas y to implement, and inexpensive tec hnology , we want to leave the use of vehicles speed limiters to the truck purchaser. Since truck fleets purchase tr actors today

with owner
- set vehicle speed limiters, we considered not including VSLs in our compliance model. However, we have concluded th at we should allow the use of VSLs that cannot be overridden by the operator as a means of compliance for vehicle manufacturers that wish to offer it and truck purchasers that wish to purchase the technology . In doing so, we are providing another means of meeting that standard that can lower compliance cost and provide a more optimal vehicle solution for some truck fleets or owners . For example, a local beverage distributor may

operate trucks in a distribution network of primaril y local roads. Under thos e conditions, aerodynamic fairings used to reduce aerodynamic drag provide little benefit due to the low vehicle speed while adding additional mass to the vehicle. A vehicle manufacturer could choose to install a VSLset at 55 mph for this vehicle at the request of the customer. The resulting tractor would be optimized for its intended application and would be fully compliant with our program all at a lower cost to the ultimate tractor purchaser. 168 As in Phase 1, we have chosen not to base the proposed s tandards on performance of VSL s because of concerns about how to set a realistic adoption rate that avoids unintended adverse impacts. Although we expect there w ould be some use of VSL, currentl y it is used when the fleet involved decides it is feasible and practicable and increases the overall efficiency of the freight sy stem for that fleet operator. To date, the compliance data provided by manufacturers

167 Gaines, L., A. Vyas, J. Anderson. Estimation of Fuel Use by Idling Commercial Trucks. January 2006. 168 Ibid. 168 The agencies note that because a VSL value can be input into GEM, its benefits can be directly assessed with the mo del and off cycle credit applications therefore are not necessary even though the proposed standard is not based on performance of VSLs ( i.e
. VSL is an on
- cycle technology).Page 192 of 850

indicate that none of the tractor configurations include a tamper
- proof VSLsetting less than 65 mph. At this point the agencies are not in a position to determine in how many additional situations use of a VSLwould result in similar benefits to overall efficiency or how many customers would be willing to accept a tamper
- proof VSLsetting
. As discussed in Section III.E.2.f below, we welcome comment on suggestions to modify the tamper
- proof requirement while maintaining assurance that the speed limiter is used in
- use throughout the life of the vehicle. W e are not able at this time to quantify the potent ial loss in utility due to the use of VSL s , but we welcome comment on whether the use of a VSL would require a fleet to deploy additional tractors
. Absent this information, we cannot make a determination regarding the reasonableness of setting a standard based on a particular VSL level. Therefore, the agencies are not premising the proposed standards on use of VSL , and instead would continue to rely on the industry to select VSL when circumstances are appropriate for its use. The agencies have not includ ed either the cost or benefit due to VSLs in anal ys is of the proposed program’s costs and benefits, therefore it remains a significant flexibility for manufacturers to choose. (vi) Summary of the Adoption Rates used to Determine the Proposed Standards Table III
- 8 through Table III
- 10 provide the adoption rates of each technology broken down by weight class, cab configuration, and roof height.Page 193 of 850

**Table III**  **- 8**  **Technology Adoption Rates for Class 7 and 8 Tractors for Determ** **ining the Proposed 2021 MY Standards**  Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **2021MY Engine**  **Technology Package** 100% 100% 100% 100% 100% 100% 100% 100% 100% **Aerodynam ics**  Bin I 0% 0% 0% 0% 0% 0% 0% 0% 0% Bin II 75% 75% 0% 75% 75% 0% 75% 75% 0% Bin III 25% 25% 40% 25% 25% 40% 25% 25% 40% Bin IV 0% 0% 35% 0% 0% 35% 0% 0% 35% Bin V N/A N/A 20% N/A N/A 20% N/A N/A 20% Bin VI N/A N/A 5% N/A N/A 5% N/A N/A 5% Bin VII N/A N/A 0% N/A N/A 0% N/A N/A 0% **Steer Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 60% 60% 60% 60% 60% 60% 60% 60% 60% Level 2 25% 25% 25% 25% 25% 25% 25% 25% 25% Level 3 10% 10% 10% 10% 10% 10% 10% 10% 10% **Drive Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 60% 60% 60% 60% 60% 60% 60% 60% 60% Level 2 25% 25% 25% 25% 25% 25% 25% 25% 25% Level 3 10% 10% 10% 10% 10% 10% 10% 10% 10% **Extended Idle Reduction**  APU N/A N/A N/A N/A N/A N/A 80% 80% 80% **Transmission Type**  Manual 45% 45% 45% 45% 45% 45% 45% 45% 45% AMT 40% 40% 40% 40% 40% 40% 40% 40% 40% Auto 10% 10% 10% 10% 10% 10% 10% 10% 10% Dual Clutch 5% 5% 5% 5% 5% 5% 5% 5% 5% **Driveline** Axle Lubricant 20% 20% 20% 20% 20% 20% 20% 20% 20% 6x2 or 4x2 Axle 10% 10% 20% 10% 10% 20% Downspeed 20% 20% 20% 20% 20% 20% 20% 20% 20% **Accessory Improvements** A/C 10% 10% 10% 10% 10% 10% 10% 10% 10% Electric Access. 10% 10% 10% 10% 10% 10% 10% 10% 10% **Other Technologies**  Predictive Cruise Control 20% 20% 20% 20% 20% 20% 20% 20% 20%Page 194 of 850

Automated Tire Inflation Sy stem 20% 20% 20% 20% 20% 20% 20% 20% 20%

**Table III**  **- 9**  **Technology Adoption Rates for Class 7 and 8 Tractors**  **for Determ ining the Proposed 2024 MY**  **Standards** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **2024 MY Engine**  **Technology Package** 100% 100% 100% 100% 100% 100% 100% 100% 100% **Aerodynam ics**  Bin I 0% 0% 0% 0% 0% 0% 0% 0% 0% Bin II 60% 60% 0% 60% 60% 0% 60% 60% 0% Bin III 38% 38% 30% 38% 38% 30% 38% 38% 30% Bin IV 2% 2% 30% 2% 2% 30% 2% 2% 30% Bin V N/A N/A 25% N/A N/A 25% N/A N/A 25% Bin VI N/A N/A 13% N/A N/A 13% N/A N/A 13% Bin VII N/A N/A 2% N/A N/A 2% N/A N/A 2% **Steer Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 2 30% 30% 30% 30% 30% 30% 30% 30% 30% Level 3 15% 15% 15% 15% 15% 15% 15% 15% 15% **Drive Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 2 30% 30% 30% 30% 30% 30% 30% 30% 30% Level 3 15% 15% 15% 15% 15% 15% 15% 15% 15% **Extended Idle Reduction**  APU N/A N/A N/A N/A N/A N/A 90% 90% 90% **Transmission Type**  Manual 20% 20% 20% 20% 20% 20% 20% 20% 20% AMT 50% 50% 50% 50% 50% 50% 50% 50% 50% Auto 20% 20% 20% 20% 20% 20% 20% 20% 20% Dual Clutch 10% 10% 10% 10% 10% 10% 10% 10% 10% **Driveline** Axle Lubricant 40% 40% 40% 40% 40% 40% 40% 40% 40% 6x2 or 4x2 Axle 20% 20% 60% 20% 20% 60% Downspeed 40% 40% 40% 40% 40% 40% 40% 40% 40% Direct Drive 50% 50% 50% 50% 50% 50% 50% 50% 50% **Accessory Improvements** A/C 20% 20% 20% 20% 20% 20% 20% 20% 20%Page 195 of 850

Electric Access. 20% 20% 20% 20% 20% 20% 20% 20% 20% **Other Technologies**  Predictive Cruise Control 40% 40% 40% 40% 40% 40% 40% 40% 40% Automated Tire Inflation Sy stem 40% 40% 40% 40% 40% 40% 40% 40% 40%Page 196 of 850

**Table III**  **- 10**  **Technology Adoption Rates for Class 7 and 8 Tractors**  **for Determ ining the Proposed 2027 MY**  **Standards** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **2027 MY Engine**  **Technology Package** 100% 100% 100% 100% 100% 100% 100% 100% 100% **Aerodynam ics**  Bin I 0% 0% 0% 0% 0% 0% 0% 0% 0% Bin II 50% 50% 0% 50% 50% 0% 50% 50% 0% Bin III 40% 40% 20% 40% 40% 20% 40% 40% 20% Bin IV 10% 10% 20% 10% 10% 20% 10% 10% 20% Bin V N/A N/A 35% N/A N/A 35% N/A N/A 35% Bin VI N/A N/A 20% N/A N/A 20% N/A N/A 20% Bin VII N/A N/A 5% N/A N/A 5% N/A N/A 5% **Steer Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 20% 20% 20% 20% 20% 20% 20% 20% 20% Level 2 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 3 25% 25% 25% 25% 25% 25% 25% 25% 25% **Drive Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 20% 20% 20% 20% 20% 20% 20% 20% 20% Level 2 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 3 25% 25% 25% 25% 25% 25% 25% 25% 25% **Extended Idle Reduction**  APU N/A N/A N/A N/A N/A N/A 90% 90% 90% **Transmission Type**  Manual 10% 10% 10% 10% 10% 10% 10% 10% 10% AMT 50% 50% 50% 50% 50% 50% 50% 50% 50% Auto 30% 30% 30% 30% 30% 30% 30% 30% 30% Dual Clutch 10% 10% 10% 10% 10% 10% 10% 10% 10% **Driveline** Axle Lubricant 40% 40% 40% 40% 40% 40% 40% 40% 40% 6x2 Axle 20% 20% 60% 20% 20% 60% Downspeed 60% 60% 60% 60% 60% 60% 6 0% 6 0% 6 0% Direct Drive 50% 50% 50% 50% 50% 50% 50% 50% 50% **Accessory Improvements** A/C 30% 30% 30% 30% 30% 30% 30% 30% 30% Electric Access. 30% 30% 30% 30% 30% 30% 30% 30% 30% **Other Technologies**  Predictive Cruise Control 40% 40% 40% 40% 40% 40% 40% 40% 40%Page 197 of 850

Automated Tire Inflation Sy stem 40% 40% 40% 40% 40% 40% 40% 40% 40%

(d ) Derivation of the Proposed Tractor Standards The agencies used the technology effectiveness inputs and technology adoption rates to develop GEM inputs to de rive the proposed HD Phase 2 fuel consumption and CO 2 emissions standards for each subcategory of Class 7 and 8 combination tractors. Note that we have anal yz ed one technology

pathway for eac h proposed level of stringency , but manufacturers would be free to use an y combination of technology to meet the standards , and with the flexibility of averaging, banking and trading, to meet the standard on average . T he agencies derived a scenario tracto r for each subcategory by weighting the individual GEM input parameters included in Table III
- 7 with the a doption rates in Table III
- 8 through Table III
- 10
. For example, the proposed CdA value for a 2021 MY Class 8 Sleeper Cab High Roof scenario case was derived as 40 percent times 6. 3 plus 35 percent times 5. 6 plus 20 percent times 5. 1 plus 5 percent times 4.7 , which is equal to a CdA of 5. 74 m 2 . Similar calculations were made for tire rolling resistance, transmission ty pes, idle reduction, and other technologies. To account for the proposed engine standards and engine technologies , the agencies assumed a compliant engine fuel map in GEM. 169 The agencies then ran GEM with a single set of vehicle inputs, as shown in Table III
- 11 , to derive the proposed standards for each subcategory . Additional detail is provided in the draft RIA Chapter 2.

169 See Section II.D above explaining the derivation of the proposed engine standards.Page 198 of 850 **Table III**  **- 11**  **GEM Inputs for the Proposed 2021**  **MY Class 7 and 8 Tractor Standard Setting**  Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 20 21 MY 11L Engine 350 HP 20 21 MY

11L Engine 350 HP 20 21 MY

11L Engine 350 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP 20 21 MY

15L Engine 455 HP **Aerodynam ics (CdA**  **in m 2**  **)** 4.68 6.08 5.94 4.68 6.08 5.94 4.68 6.08 5.74 **Steer Tires (CRR in**  **kg/metric ton)** 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 **Drive Tires (CRR in**  **kg/ metric ton)**  6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 6.6 **Extended Idle Reduction**  **Weighted Effectiveness** N/A N/A N/A N/A N/A N/A 2.5% 2.5% 2.5%

**Transmission = 10 speed Autom**  **ated Manual Transmission Gear Ratios =**  12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73

**Drive axle Ratio**  = 3.55 **6x2 Axle Weighted Effectiveness**  N/A N/A N/A 0.3% 0.3% 0.5% 0.3% 0.3% 0.5% **Low Friction Axle Lubrication**  = 0.1% **Transmission benefit**  = 1.1% **Predictive Cruise Control** =0.4% **Accessory Improvements** = 0.1% **Air Conditioner Efficiency Improvements** = 0.1% **Autom atic Tire Inflation Systems**  = 0.2% **Weight Reduction** = 0 poundsPage 199 of 850 **Table III**  **- 12**  **GEM Inputs for the Proposed 202**  **4MY Class 7 and 8 Tractor Standard Setting**  Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 2024MY 11L Engine 350 HP 2024MY

11L Engine 350 HP 2024MY

11L Engine 350 HP 2024MY

15L Engine 455 HP 2024MY

15L Engine 455 HP 2024MY

15L Engine 455 HP 2024MY

15L Engine 455 HP 2024MY

15L Engine 455 HP 2024MY

15L Engine 455 HP **Aerodynam ics**  **(CdA in m 2**  **)** 4.59 5.99 5.74 4.59 5.99 5.74 4.59 5.99 5.54 **Steer Tires (CRR in kg/metric ton)** 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 **Drive Tires (CRR in kg/metric ton)** 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 **Extended Idle Reduction Weighted Effectiveness** N/A N/A N/A N/A N/A N/A 3% 3% 3%

**Transmission = 10 speed Autom ated Manual Transmission**  **Gear Ratios =** 12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73

**Drive axle Ratio** = 3.36 **6x2 Axle Weighted Effectiveness** N/A N/A N/A 0.5% 0.5% 1.5% 0.5% 0.5% 1.5% **Low Friction Axle Lubrication** = 0.2% **Transmission benefit**  = 1. 6 % **Predictive Cruise Control** =0.8% **Accessory Improvements** = 0.2% **Air Conditioner Efficiency Improvements** = 0.1% **Autom atic Tire Inflation Systems**  = 0.4% **Weight Reduction** = 0 pounds **Direct Drive Weighted Efficiency** = 1% for sleeper cabs; 0.8% for day cabsPage 200 of 850 **Table III**  **- 13**  **GEM Inputs for the Proposed 202**  **7MY Class 7 and 8 Tractor Standard Setting**  Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 202 7 MY 11L Engine 350 HP 202 7 MY

11L Engine 350 HP 202 7 MY

11L Engine 350 HP 202 7 MY

15L Engine 455 HP 202 7 MY

15L Engine 455 HP 202 7 MY

15L Engine 455 HP 202 7 MY

15L Engine 455 HP 202 7 MY

15L Engine 455 HP 202 7 MY

15L Engine 455 HP **Aerodynam ics (CdA in m**  **2 )**  4.52 5.92 5.52 4.52 5.92 5.52 4.52 5.92 5.32 **Steer Tires (CRR in kg/metric ton)** 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 **Drive Tires (CRR in kg/metric ton)** 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 **Extended Idle Reduction Weighted Effectiveness** N/A N/A N/A N/A N/A N/A 3% 3% 3%

**Transmission = 10 speed Autom ated Manual Transmission**  **Gear Ratios =** 12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73

**Drive axle Ratio**  = 3.2 **6x2 Axle Weighted Effectiveness** N/A N/A N/A 0.5% 0.5% 1.5% 0.5% 0.5% 1.5% **Low Friction Axle Lubrication** = 0.2 % **Transmission benefit**  = 1.8 % **Predictive Cruise Control** = 0.8 % **Accessory Improvements** = 0.3 % **Air Conditioner Efficiency Improvements**  = 0.2 % **Autom atic Tire Inflation Systems**  = 0.4 % **Weight Reduction** = 0 pounds **Direct Drive Weighted Efficiency** = 1% for sleeper cabs; 0.8% for day cabs
The proposed level of the 2027 model year standards, in addition to the phase
- in standard s in model years 2021 and 2024 for each subcategory is included in Table III
- 14
.Page 201 of 850 **Table III**  **- 14**  **Proposed 2021 ,**  **2024 , and 2027**  **Model Year Tractor Standards**  2021 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 97 78 70 Mid Roof 107 84 78 High Roof 109 86 77 2021 Model Year Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 9.5285 7. 6621 6.8762 Mid Roof 10.5108 8.2515 7.6621 High Roof 10.7073 8.4479 7.5639 2024 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 90 72 64 Mid Roof 100 78 71 High Roof 101 79 70 2024 Model Year and Later Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 8.8409 7.0727 6.2868 Mid Roof 9.8232 7. 6621 6.9745 High Roof 9.9214 7.7603 6.8762 202 7 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 87 70 62 Mid Roof 96 76 69 High Roof 96 76 67 202 7 Model Year and Later Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Low Roof 8.5462 6.8762 6.0904 Mid Roof 9.4303 7.4656 6.7780 High Roof 9.4303 7.4656 6.5815 A summary

of the draft technology

package costs is included in Table III
- 15 through Table III
- 17 for MYs 2021, 2024, and 2027, respectivel y, with additional details available in the draft RIA Chapter 2. 12. We welcome comments on the technology costs.Page 202 of 850 **Table III**  **- 15**  **Class 7 and 8 Tractor Techn ology**  **Increm ental**  **Costs in the 20 21**  **Model Year a**  **,b**

**Preferred Alternative vs. the Less Dynamic Baseline (20**  **12 $**  **per vehicle )** 

Class 7 Class 8 Day Cab Day

Cab Sleeper Cab Low/Mid Roof High

Roof Low/ Mid Roof High

Roof Low

Roof Mid

Roof High Roof Engine c $314 $314 $314 $314 $314 $314 $314 Aerodynamics $687 $511 $687 $511 $656 $656 $535 Tires $49 $9 $81 $15 $59 $59 $15 Tire inflation sy stem $180 $180 $180 $180 $180 $180 $180 Transmission $3,969 $3,969 $3,969 $3,969 $3,969 $3,969 $3,969 Axle & axle lubes $50 $50 $70 $90 $70 $70 $90 Idle reduction with APU $0 $0 $0 $0 $2,449 $2,449 $2,449 Air conditioning $45 $45 $45 $45 $45 $45 $45 Other vehicle technologies $174 $174 $174 $174 $174 $174 $174 Total $5,468 $5,252 $5,520 $5,298 $7,916 $7,916 $7,771 Notes: a Costs shown are for the 20 21 mo del year and are incremental to the costs of a tractor meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicated tractor classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 i n particular). c Engine costs are for a heavy HD diesel engine meant for a combination tractor. The engine costs in this table are equal to the engine costs associated with the separate engine standard because both include the same set of engine technologies (see Section II.D.2.d.i).Page 203 of 850 **Table III**  **- 16**  **Cl ass 7 and 8 Tractor Technology**  **Increm ental**  **Costs in the 20 24**  **Model Year a**  **,b**

**Preferred Alternative vs. the Less Dynamic Baseline (20**  **12 $**  **per vehicle )** 

Class 7 Class 8 Day Cab Day

Cab Sleeper Cab Low/Mid Roof High

Roof Low/ Mid Roof High

Roof Low

Roof Mid

Roof High Roof Engine c $904 $904 $904 $904 $904 $904 $904 Aerodynamics $744 $684 $744 $684 $712 $712 $723 Tires $47 $11 $78 $18 $58 $58 $18 Tire inflation sy stem $330 $330 $330 $330 $330 $330 $330 Transmission $5,883 $5,883 $5,883 $5,883 $5,883 $5,883 $5,883 Axle & axle lubes $92 $92 $128 $200 $128 $128 $200 Idle reduction with APU $0 $0 $0 $0 $2,687 $2,687 $2,687 Air conditioning $82 $82 $82 $82 $82 $82 $82 Other vehicle technologies $318 $318 $318 $318 $318 $318 $318 Total $8,400 $8,304 $8,467 $8,419 $11,102 $11,102 $11,145 Notes: a Costs shown are for the 20 24 mo del year and are incremental to the costs of a tractor meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12). b Note that values in this table include ado ption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicated tractor classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see draft RIA 2 .12). c Engine costs are for a heavy HD diesel engine meant for a combination tractor. The engine costs in this table are equal to the engine costs associated with the separate engine standard because both include the same set of engine technologies (see Section II.D.2.d.i).Page 204 of 850 **Table III**  **- 17**  **Cla ss 7 and 8 Tractor Technology**  **Increm ental**  **Costs in the 20 27**  **Model Year a**  **,b**

**Preferred Alternative vs. the Less Dynamic Baseline (20**  **12 $**  **per vehicle )** 

Class 7 Class 8 Day Cab Day

Cab Sleeper Cab Low/Mid Roof High

Roof Low/ Mid Roof High

Roof Low

Roof Mid

Roof High Roof Engine c $1,698 $1,698 $1,698 $1,698 $1,698 $1,698 $1,698 Aerodynamics $771 $765 $771 $765 $733 $733 $802 Tires $45 $10 $75 $17 $56 $56 $17 Tire inflation sy stem $314 $314 $314 $314 $314 $314 $314 Transmission $6,797 $6,797 $6,797 $6,797 $6,797 $6,797 $6,797 Axle & axle lubes $97 $97 $131 $200 $131 $131 $200 Idle reduction with APU $0 $0 $0 $0 $2,596 $2,596 $2,596 Air conditioning $117 $117 $117 $117 $117 $117 $117 Other vehicle technologies $302 $302 $302 $302 $302 $302 $302 Total $10,140 $10,099 $10,204 $10,209 $12,744 $12,744 $12,842 Notes: a Costs shown are for the 20 27 mo del year and are incremental to the costs of a tractor meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12). b Note that values in this table include ado ption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicated tractor classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see draft RIA 2 .12 in particular). c Engine costs are for a heavy HD diesel engine meant for a combination tractor. The engine costs in this table are equal to the engine costs associated with the separate engine standard because both include the same set of engine techn ologies (see Section II.D.2.d.i). (i ) Proposed Heavy
-Haul Tractor Standards For Phase 2, the agencies propose to add a tenth subcategory to the tractor category

for heav y - haul tractors. The agencies recognize the need for manufacturers to build these ty pes of vehicles for specific applications and believe the appropriate way to p revent penalizing these vehicles is to set separate standards recognizing a heav y - haul vehicle’s unique needs, such as requiring a higher horsepower engine or different transmissions. The agencies are proposing this change in Phase 2 because unlike in Pha se 1 the engine, transmission, and drivetrain technologies are included in the technology packages used to determine the stringency of the proposed tractor standards and are included as manufacturer inputs in GEM. This means that the agencies can adopt a standard reflecting individualized performance of these technologies in particular applications, in this case, heav y - haul tractors, and further, have a means of reliabl y assessing individualized performance of these technology at certification.Page 205 of 850

The ty pic al tractor is designed with a Gross Combined Weight Rating (GCWR) of approximately

80,000 pounds due to the effective weight limit on the federal highway s ys tem, except in states with preexisting higher weight limits. The agencies propose to consider trac tors with a GCWR over 120,000 pounds as heav y - haul tractors. Based on comments received during the development of HD Phase 1 (76 FR 57136
- 8 ) and because we are not proposing a sales limit for heav y - haul like we have for the vocational tractors, the agen cies also believe it would be appropriate to further define the heav y - haul vehicle characteristics to differentiate these vehicles from the vehicles in the other nine tractor subcategories. The two additional requirements would include a total gear reduct ion greater than or equal to 57:1 and a frame Resisting Bending Moment (RBM) greater than or equal to 2,000,000 in
- lbs per rail or rail and liner combination. Heav y - haul tractors typically require the large gear reduction to provide the torque necessary t o start the vehicle moving. These vehicles also ty pically require frame rails with extra strength to ensure the ability

to haul heavy

loads. We welcome comment on the proposed heav y - haul tractor specifications, including whether Gross Vehicle Weight Rati ng (GVWR) or Gross Axle Weight Rating (GAWR) would be a more appropriate metric to differentiate between a heav y haul tractor and a typical tractor. The agencies propose that heavy
- haul tractors demonstrate compliance with the proposed standards using the day

cab drive cycle weightings of 19 percent transient cycle, 17 percent 55 mph cycle, and 64 percent 65 mph cycle. We also propose that GEM simulates the heav y - haul tractors with a payload of 43 tons and a total tractor, trailer, and payload weight of 11 8,500 pounds. In addition, we propose that the engines installed in heavy
- haul tractors meet the proposed tractor engine standards included in 40 CFR 1036.108. We welcome comments on these proposed specifications. The agencies recognize that certain technologies used to determine the stringency of the proposed Phase 2 tractor standards are less applicable to heavy
- haul tractors. Heavy
- haul tractors are not typicall y used in the same manner as long
- haul tractors with extended highway driving, and therefore would experience less benefit from aerodynamics. Aerodynamic technologies are very

effective at reducing the fuel consumption and GHG emissions of tractors, but only when traveling at highway speeds. At lower speeds, the aerody namic technologies may have a detrimental impact due to the potential of added weight. The agencies therefore are not considering the use of aerody namic technologies in the development of the proposed Phase 2 heav y - haul tractor standards. Moreover, because aerody namics would not play

a role in the heav y - haul standards, the agencies propose to combine all of the heavy
- haul tractor cab configurations (day

and sleeper) and roof heights (low, mid, and high) into a single heavy
- haul tractor subcategory
. 170 We welcome comment on this ap proach. Certain powertrain and drivetrain components are also impacted during the design of a heav y - haul tractor, including the transmission, axles, and the engine. Heavy
- haul tractors ty picall y require transmissions with 13 or 18 speeds to provide the ratio spread to ensure that the

170 Since aerodynamic improvements are not part of the technology package, the agencies likewise are not proposing any bin structure for th e heavy
- haul tractor subcategory.Page 206 of 850

tractor is able to start pulling the load from a stop. Downsped powertrains are typicall y not an option for heav y - haul operations because these vehicles require more torque to move the vehicle because of the heavier load. Fi nall y, due to the loading requirements of the vehicle, it is not likely that a 6x2 axle configuration can be used in heavy
- haul applications. The agencies used the following heav y - haul tractor inputs for developing the proposed 2021, 2024, and 2027 MY stan dards, as shown in Table III
- 18 and Table III
- 19
.

**Table III**  **- 18**  **Application Rates for Proposed Heavy -**  **Haul Tractor Standards**

**Heavy -**  **Haul Tractor Application Rates 2021MY**  **2024MY 2027MY**  Engine 2021 MY 15L Engine

with 600 HP 2024 MY 15L Engine with 600 HP 2027 MY 15L Engine with 600 HP Aerodynamics

– 0% Steer Tires Phase 1 Baseline 5% 5% 5% Level I 60% 50% 20% Level 2 25% 30% 50% Level 3 10% 15% 25% Drive Tires Phase 1 Baseline 5% 5% 5% Level I 60% 50% 20% Level 2 25% 30% 50% Level 3 10% 15% 25% Transmission AMT 40% 50% 50% Automatic 10% 20% 30% DCT 5% 10% 10% Other Technologies 6x2 Axle 0% 0% 0% Low Friction Axle Lubrication 20% 40% 40% Predictive Cruise Control 20% 40% 40% Accessory Improvements 10% 20% 30% Air Conditioner Efficiency Improvements 10% 20% 30% Automatic Tire Inflation Systems 20% 40% 40% Weight Reduction 0% 0% 0%Page 207 of 850 **Table III**  **- 19**  **GEM Inputs for Proposed 2021, 2024 and 2027 MY Heavy**  **- Haul Tractor Standards**  **Heavy -**  **Haul Tractor Baseline**  **2021MY 2024MY**  **202 7**  **MY** Engine = 20 17 MY 1 5 L Engine with 600 HP Engine = 202 1 MY 1 5 L Engine with 600 HP Engine = 2024 MY 1 5 L Engine with 600 HP Engine = 202 7 MY 1 5 L Engine with 600 HP Aerodynamics (CdA in m 2 ) = 5.00 Steer Tires (CRR in kg/metric ton) = 7.0 Steer Tires (CRR in kg/metric ton) = 6.2 Steer Tires (CRR in kg/metric ton) = 6.0 Steer Tires (CRR in kg/metric ton) = 5.8 Drive Tires (CRR in kg/metric ton) = 7.4 Drive Tires (CRR in kg/metric ton) = 6. 6 Drive Tires (CRR in kg/metric ton) = 6. 4 Drive Tir es (CRR in kg/metric ton) = 6. 2 Transmission = 1 3 speed Manual Transmission Gear Ratios = 12. 29 , 8.51 , 6. 05 , 4. 38 , 3. 20 , 2. 29 , 1. 95 , 1. 62 , 1. 38 , 1.17, 1.00, 0.86, 0.73 Transmission = 1 3 speed Automated Manual Transmission Gear Ratios = 12. 29 , 8.51 , 6. 05 , 4. 38 , 3. 20 , 2. 29 , 1. 95 , 1. 62 , 1. 38 , 1.17, 1.00, 0.86,

0.73 Transmission = 1 3 speed

Automated Manual Transmission Gear Ratios = 12. 29 , 8.51 , 6. 05 , 4. 38 , 3. 20 , 2. 29 , 1. 95 , 1. 62 , 1. 38 , 1.17, 1.00, 0.86,

0.73 Transmission = 1 3 speed

Automated Manual Transmission Gear Ratios = 12. 29 , 8.51 , 6. 05 , 4. 38 , 3. 20 , 2. 29 , 1. 95 , 1. 62 , 1. 38 , 1.17, 1.00, 0.86,

0.73 Drive axle Ratio = 3. 55 Drive axle Ratio = 3. 55 Drive axle Ratio = 3. 55 Drive axle Ratio = 3. 55 N/A 6x2 Axle Weighted

Effect iveness = 0 % 6x2 Axle Weighted Effectiveness = 0 % 6x2 Axle Weighted Effectiveness = 0 % N/A Lo w Friction Axle

Lubrication = 0. 1 % Lo w Friction Axle Lubrication = 0.2% Lo w Friction Axle Lubrication = 0.2% N/A AMT benefit = 1. 1 % AMT benefit = 1.8% AMT benefit = 1.8% N/A Predictive Cruise Control =0. 4 % Predictive Cruise Control =0.8% Predictive Cruise Control =0.8% N/A Accessory Improvements = 0. 1 % Accessory Improvements = 0.2% Accessory Improvements = 0. 3 % N/A Air Conditioner Efficiency

Im provements = 0.1% Air Conditioner Efficiency Im provements = 0.1% Air Conditioner Efficiency Im provements = 0. 2 % N/A Automatic Tire Inflation

Sy stems = 0. 2 % Automatic Tire Inflation Sy stems = 0.4% Automatic Tire Inflation Sy stems = 0.4% N/A Weight Reduction = 0 poun ds Weight Reduction = 0 pounds Weight Reduction = 0 pounds The baseline 2017 MY heav y - haul tractor would emit 57 grams of CO 2 per ton - mile and consume 5.6 gallons of fuel per 1,000 ton
- mile. The agencies propose the heavy
- haul standards shown in Table III
- 20 . We welcome comment on the heavy
- haul tractor technology path and standards proposed b y the agencies.Page 208 of 850 **Table III**  **- 20**  **Proposed Heavy -**  **Haul Tractor Standards**

**Heavy -**  **Haul Tractor 2021**  **MY 2024**  **MY 2027**  **MY** Gram s of CO 2 per Ton
- Mile Standard 54 52 51 Gallons of Fuel per 1,000 Ton
- Mile 5.3045 5.1081 5.010 The technology

costs associated with the proposed heav y - haul tractor standards are shown below in Table III
- 21
. We welcome comment on the technology costs. **Table III**  **- 21**  **Heavy -**  **Haul Tractor Technology**  **Increm ental**  **Costs in the 2021, 2024, and**  **20 27**  **Model Year a**  **,b**

**Preferred Alternative vs. the Less Dynamic Baseline (20**  **12 $**  **per vehicle )**  2021 MY 2024 MY 2027 MY Engine c $314 $904 $1,698 Tires $81 $78 $75 Tire inflation sy stem $180 $330 $314 Transmission $3,969 $5,883 $6,797 Axle & axle lubes $70 $128 $200 Air conditioning $45 $82 $117 Other vehicle technologies $174 $318 $302 Total $4,833 $7,723 $9,503 Notes: a Costs shown are for the specified mo del year and are incremental to the costs of a tractor meeting the phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12). b Note that values in this table include adoption rates. Therefore, the technology costs shown refl ect the average cost expected for each of the indicated tractor classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 in particular). c Engine costs are for a heavy HD di esel engine meant for a combination tractor. (e) Consistency of the Proposed Tractor Standards with the Agencies’ Legal Authority The proposed HD Phase 2 standards are based on adoption rates for technologies that the agencies regard , subject to consideration of public comment, as the maximum feasible for purposes of EISA S ection 32902 (k) and appropriate under CAA S ection 202 (a) for the reasons given in Section III.D.2 ( b ) through (d) above; see also draft RIA Chapter 2. 4 . The agencies believe the se technologies can be adopted at the estimated rates for these standards within the lead time provided, as discussed in draft RIA Chapter 2. The 2021 and 2024 MY standards are phase
- in standards on the path to the 2027 MY standards and were developed using less aggressive application rates and therefore have lower technology package costs than the 2027 MY standards. Moreover, we project the cost of these technologies would be rapidl y recovered by operators due to the associated fuel savings, as shown in the pay back analy sis included in Section IX below. The cost per tractor to meet the proposed 2027 MY standards is projected toPage 209 of 850

range between $10,000 and $13,000 (much or all of this would be mitigated by the fuel savings during the fi rst two years of ownership). The agencies note that while the projected costs are significantl y greater than the costs projected for Phase 1, we still consider that cost to be reasonable, especially

given the relativel y short payback period. In this regard the agencies note that the estimated pay

back period for tractors of less than two years 171 is itself shorter than the estimated pay

back period for light duty trucks in the 2017
- 2025 light duty greenhouse gas standards. That period was slightly over three ye ars, see 77 FR 62926
- 27, which EPA found to be a highly

reasonable given the usual period of ownership of light trucks is ty picall y five ye ars. 172 The same is true here. Ownership of new tractors is customaril y four to six years, meaning that the greenh ouse gas and fuel consumption technologies pay for themselves earl y on and the purchaser sees overall savings in succeeding ye ars
– while still owning the vehicle. 173 The agencies note further that the costs for each subcategory are relativel y proportionate ; that is, costs of an y single tractor subcategory are not disproportionatel y higher (or lower) than an y other. Although the proposal is technology
- forcing (especially with respect to aerody

namic and tire rolling resistance improvements), the agencies bel ieve that manufacturers retain leeway to develop alternative compliance paths, increasing the likelihood of the standards’ successful implementation. The agencies also regard these reductions as cost
- effective, even without considering pay

back period. Th e agencies estimate the cost per metric ton of CO 2 eq reduction without considering fuel savings to be $20 in 2030, which compares favorably with the cost per ton of $142 per ton (in 2030) the agencies found to be reasonable for light duty trucks. 174 See 77 FR 62922. The proposed phase
- in 2021 and 2024 MY standards are less stringent and less costly than the proposed 2027 MY standards. For these reasons , and because the agencies have carefully considered lead time, EPA believes they are also reasonable un der Section 202(a) of the CAA. Given that the agencies believe the proposed standards are technically feasible, are highl y cost effective , and highl y cost effective when accounting for the fuel savings, and have no apparent adverse potential impacts ( e.g. , there are no projected negative impacts on safety or vehicle utility), the proposed standards appear to represent a reasonable choice under S ection 202(a) of the CAA and the maximum feasible under NHTSA’s EI SA authority at 49 U.S.C. 32902(k)(2). Based on the information before the agencies, we currentl y believe that Alternative 3 would be maximum feasible and reasonable for the tractor segment for the model years in question. The agencies believe Alternative 4 has potential to be the maximum fe asible and reasonable alternative ; however, based on the evidence currently before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned b y the alternative . Alternative 3 is gen erally designed to achieve the levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with several ye ars

171 See Draft RIA Chapter 7.1.3. 172 Auto Remarketing. Length of Ownership Returning to More Normal Levels; New Registrations Continue Slow Climb. April 1, 2013. Last accessed on February 26, 2015 at http://www.autoremarke ting.com/trends/length
ownership
- returning
- more - normal
- levels
- new - registrations
- continue
- slow
- climb 173 North American Council for Freight Efficiency. Barriers to Increased Adoption of Fuel Efficiency Technologies in Freight Trucking. July 2013. Page 24. 174 See Draft RIA Chapter 7.1.4.Page 210 of 850

of additional lead
- time

– i.e., the Alternative 3 standards would end up in the same place as the Alternative 4 standards, but several ye ars later, meaning that manufacturers could, in theory , apply new technology

at a more gradual pace and with greater flexibility
. However, Alternative 4 would provide earlier GHG benefits compared to Alternative 3. (f ) Alternative Tractor Sta ndards Considered The agencies developed and considered other alternative levels of stringency for the Phase 2 program. The results of the analy sis of these alternatives are discussed below in Section X of the preamble. For tractors, the agencies develop ed the following alternatives as shown in Table III
- 22
. **Table III**  **- 22**  **Summary of Alternatives Considered for the Proposed Rulemaking** Alternative 1 No action alternative Alternative 2 Less Stringent than the Proposed Alternative applying off
- the
- shelf technologies Alternative 3 (Proposed Alternative) Proposed Alternative fully phased
- in by 2027 MY Alternative 4 Alternative that pulls ahead the proposed 2027 MY standards to 2024 MY Alternative 5 Alternative based on very high market adoption of advanced technologies When evaluating the alternatives, it is necessary to evaluate the impact of a proposed regulation in terms of CO 2 emission reductions, fuel consumption reductions, and technology costs. However, it is also necessary to consider other aspects, such as manufacturers’ research and development resources , the impact on purchase price, and the impact on purchasers. Manuf acturers are limited in their ability to develop and implement new technologies due to their human resources and budget constraints. This has a direct impact on the amount of lead time that is required to meet any new standards. From the owner/operator p erspective, h eavy- dut y vehicles are a capital investment for firms and individuals so large increases in the upfront cost could impact buying patterns. Though the dollar value of the lifetime fuel savings will far exceed the upfront technology costs, purc hasers often discount future fuel savings for a number of reasons. The purchaser often has uncertainty in the amount of fuel savings that can be expected for their specific operation due to the diversity of the heav y - dut y tractor market. Although a natio nwide perspective that averages out this uncertainty is appropriate for rulemaking anal ys is, individual operators must consider their potentially narrow operation. In addition, purchasers often put a premium on reliability (because downtime is costly in te rms of towing, repair, late deliveries, and lost revenue) and may perceive any

new technology

as a potential risk with respect to reliability . Another factor that purchasers consider is the impact of a new technology

on the resale market, which can also b e impacted b y uncertainty
. T he agencies selected the proposed standards over the more stringent alternatives based on considering the relevant statutory factors
. In 2027, the proposed standards achieve up to a 24 percent reduction in CO 2 e missions and fuel consumption compared to a Phase 1 tractor at a per vehicle cost of approximately $13,000. Alternative 4 achieves the same percent reduction inPage 211 of 850

CO 2 emissions and fuel consumption compared to a Phase 1 tractor, but three years earlier, at a per vehicle cost of approximately $14,000. The alternative standards are projected to result in more emission and fuel consumption reductions from the heav y - dut y tractors built in model ye ars 2021 through 2026. 175 W e project the proposed standards to be achievable within known design cycles, and we believe these standards would allow different paths to compliance in addition to the one we outline and cost here. The agencies solicit comment on all of these issues and again note the possibility of adopting , in a final action , standards that are more accelerated than those proposed in Alternative 3
. The agencies are also assuming that both the proposed standards and Alternative 4 c ould be accomplished with all changes being made during manufacturers ’ normal product design cycles
. However, we note that doing so would be more challenging for Alternative 4 and may require accelerated research and development outside of design cycles with attendant increased costs
. The agencies are especially intereste d in seeking detailed comments on Alternative 4. Therefore, we are including the details of the Alternative 4 analy sis below. The adoption rates considered for the 2021 and 2024 MY standards developed for Alternative 4 are shown below in Table III
- 23 and Table III
- 24
. The inputs to GEM used to develop the Alternative 4 CO 2 and fuel consumption standards are shown below in Table III
- 25 and Table III
- 26 . The standards associated with Alternative 4 are shown below in Table III
- 27
. Commenters are encouraged to address all aspects of feasibility analy sis, including costs, the likelihood of developing the technology

to achieve sufficient relaibility wi thin the proposed lea d time, and the extent to which the market could utilize the technology
. (g ) Derivation ofAlternative 4 Tractor Standards The adoption rates considered for the 2021 and 2024 MY standards developed for Alternative 4 are shown below in Table III
- 23 and Table III
- 24
. The inputs to GEM used to develop the Alternative 4 CO 2 and fuel consumption standards are shown below in Table III
- 25 and Table III
- 26 . The standards associated with Alternative 4 are shown below in Table III
- 27
. Commenters are encouraged to address all aspects of feasibility anal ys is, including costs, the likelihood of developing the technology to achieve sufficient relaibility within the lea d time.

175 See Tables III
- 14 and III
- 27
.Page 212 of 850 **Table III**  **- 23**  **Alternative 4 Adoption Rates for 2021 MY** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **Alternative 4 2021MY**  **Engine Technology Package** 100% 100% 100% 100% 100% 100% 100% 100% 100% **Aerodynam ics**  Bin I 0% 0% 0% 0% 0% 0% 0% 0% 0% Bin II 65% 65% 0% 65% 65% 0% 65% 65% 0% Bin III 30% 30% 35% 30% 30% 35% 30% 30% 35 % Bin IV 5% 5% 30% 5% 5% 30% 5% 5% 3 0 % Bin V N/A N/A 25% N/A N/A 25% N/A N/A 25% Bin VI N/A N/A 10% N/A N/A 10% N/A N/A 10% Bin VII N/A N/A 0% N/A N/A 0% N/A N/A 0% **Steer Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 35% 35% 35% 35% 35% 35% 35% 35% 35% Level 2 45% 45% 45% 45% 45% 45% 45% 45% 45% Level 3 15% 15% 15% 15% 15% 15% 15% 15% 15% **Drive Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 35% 35% 35% 35% 35% 35% 35% 35% 35% Level 2 45% 45% 45% 45% 45% 45% 45% 45% 45% Level 3 15% 15% 15% 15% 15% 15% 15% 15% 15% **Extended Idle Reduction** APU N/A N/A N/A N/A N/A N/A 8 0% 8 0% 8 0% **Transmission Type** Manual 25% 25% 25% 25% 25% 25% 25% 25% 25% AMT 40% 40% 40% 40% 40% 40% 40% 40% 40% Auto 30% 30% 30% 30% 30% 30% 30% 30% 30% Dual Clutch 5% 5% 5% 5% 5% 5% 5% 5% 5% **Driveline** Axle Lubricant 20% 20% 20% 20% 20% 20% 20% 20% 20% 6x2 Axle 10% 10% 20% 10% 10% 30% Downspeed 30% 30% 30% 30% 30% 30% 30% 30% 30% Direct Drive 50% 50% 50% 50% 50% 50% 50% 50% 50% **Accessory Improvements** A/C 20% 20% 20% 20% 20% 20% 20% 20% 20% Electric Access. 20% 20% 20% 20% 20% 20% 20% 20% 20% **Other Technologies**  Predictive Cruise Control 30% 30% 30% 30% 30% 30% 30% 30% 30%Page 213 of 850

Automated Tire Inflation Sy stem 30% 30% 30% 30% 30% 30% 30% 30% 30%Page 214 of 850 **Table III**  **- 24**  **Alternative 4 Adoption Rates for 2024 MY** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof Lo w

Roof Mid

Roof High

Roof **Alternative 4 2024MY Engine**  **Technology Package** 100% 100% 100% 100% 100% 100% 100% 100% 100% **Aerodynam ics**  Bin I 0% 0% 0% 0% 0% 0% 0% 0% 0% Bin II 50% 50% 0% 50% 50% 0% 50% 50% 0% Bin III 40% 40% 20% 40% 40% 20% 40% 40% 20% Bin IV 10% 10% 20% 10% 10% 20% 10% 10% 20% Bin V N/A N/A 35% N/A N/A 35% N/A N/A 35% Bin VI N/A N/A 20% N/A N/A 20% N/A N/A 20% Bin VII N/A N/A 5% N/A N/A 5% N/A N/A 5% **Steer Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 20% 20% 20% 20% 20% 20% 20% 20% 20% Level 2 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 3 25% 25% 25% 25% 25% 25% 25% 25% 25% **Drive Tires** Base 5% 5% 5% 5% 5% 5% 5% 5% 5% Level 1 20% 20% 20% 20% 20% 20% 20% 20% 20% Level 2 50% 50% 50% 50% 50% 50% 50% 50% 50% Level 3 25% 25% 25% 25% 25% 25% 25% 25% 25% **Extended Idle Reduction**  APU N/A N/A N/A N/A N/A N/A 90% 90% 90% **Transmission Type**  Manual 10% 10% 10% 10% 10% 10% 10% 10% 10% AMT 50% 50% 50% 50% 50% 50% 50% 50% 50% Auto 30% 30% 30% 30% 30% 30% 30% 30% 30% Dual Clutch 10% 10% 10% 10% 10% 10% 10% 10% 10% **Driveline** Axle Lubricant 40% 40% 40% 40% 40% 40% 40% 40% 40% 6x2 Axle 20% 20% 60% 20% 20% 60% Downspeed 60% 60% 60% 60% 60% 60% 6 0% 6 0% 6 0% Direct Drive 50% 50% 50% 50% 50% 50% 50% 50% 50% **Accessory Improvements** A/C 30% 30% 30% 30% 30% 30% 30% 30% 30% Electric Access. 30% 30% 30% 30% 30% 30% 30% 30% 30% **Other Technologies**  Predictive Cruise Control 40% 40% 40% 40% 40% 40% 40% 40% 40%Page 215 of 850

Automated Tire Inflation Sy stem 40% 40% 40% 40% 40% 40% 40% 40% 40%

**Table III**  **- 25**  **Alternative 4 GEM Inputs for 2021MY** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 20 21 MY 11L Engine 350 HP

– 2% reduction 2021MY

11L Engine 350 HP

– 2% reduction 2021MY

11L Engine 350 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction 20 21 MY

15L Engine 455 HP

– 2% reduction **Aerodynam ics (CdA**  **in m 2**  **)** 4.61 6.01 5.83 4.61 6.01 5.83 4.61 6.01 5.63 **Steer Tires (CRR in**  **kg/metric ton)** 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 **Drive Tires (CRR in**  **kg/ metric ton)**  6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 **Extended Idle Reduction**  **Weighted Effectiveness** N/A N/A N/A N/A N/A N/A 2.5% 2.5% 2.5%

**Transmission = 10 speed Autom**  **ated Manual Transmission Gear Ratios =**  12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73

**Drive axle Ratio**  = 3.45 **6x2 Axle Weighted Effectiveness**  N/A N/A N/A 0
. 3 % 0
. 3 % 0
. 8 % 0
. 3 % 0.3 % 0.8 % **Low Friction Axle Lubrication**  = 0.1% **Transmission benefit**  = 1.5% **Predictive Cruise Control** =0.6% **Accessory Improvements** = 0.2% **Air Conditioner Efficiency Improvements** = 0.1% **Autom atic Tire Inflation Systems**  = 0.3% **Weight Reduction** = 0 pounds **Direct Drive Weighted Efficiency** = 1% for sleeper cabs; 0.8% for day cabsPage 216 of 850 **Table III**  **- 26**  **Alternative 4 GEM Inputs for 2024MY** Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid

Roof High

Roof Lo w Roof Mid Roof High

Roof Lo w Roof Mid Roof High

Roof **Engine** 20 21 MY 11L Engine 350 HP

– 4% reduction 20 21 MY

11L Engine 350 HP

– 4% reduction 20 21 MY

11L Engine 350 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction 20 21 MY

15L Engine 455 HP

– 4% reduction **Aerodynam ics (CdA**  **in m 2**  **)** 4.52 5.92 5.52 4.52 5.92 5.52 4.52 5.92 5.32 **Steer Tires (CRR in**  **kg/metric ton)** 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 **Drive Tires (CRR in**  **kg/ metric ton)**  5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 5.9 **Extended Idle Reduction**  **Weighted Effectiveness** N/A N/A N/A N/A N/A N/A 3% 3% 3%

**Transmission = 10 speed**  **Autom ated Manual Transmission**  **Gear Ratios =** 12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73

**Drive axle Ratio**  = 3.2 **6x2 Axle Weighted Effectiveness**  N/A N/A N/A 0 .5% 0 .5% 1 .5% 0 .5% 0 .5% 1 .5% **Low Friction Axle Lubrication** = 0.2% **Transmission benefit**  = 1.8% **Predictive Cruise Control** =0.8% **Accessory Improvements** = 0.3% **Air Conditioner Efficiency Improvements** = 0.2% **Autom atic Tire Inflation Systems**  = 0.4% **Weight Reduction** = 0 pounds **Direct Drive Weighted Efficiency** = 1% for sleeper cabs; 0.8% for day cabsPage 217 of 850 **Table III**  **- 27**  **Tractor Standards Associated with Alternative 4**  2021 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Lo w Roof 92 74 66 Mid Roof 102 81 74 High Roof 104 82 73 2021 Model Year Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Lo w Roof 9.0373 7.2692 6.4833 Mid Roof 10.0196 7.9568 7.2692 High Roof 10.2161 8.0550 7.1709 2024 Model Year CO 2 Grams per Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Lo w Roof 87 70 62 Mid Roof 96 76 69 High Roof 96 76 67 2024 Model Year and Later Gallons of Fuel per 1,000 Ton
- Mile

Day Cab Sleeper Cab Class 7 Class 8 Class 8 Lo w Roof 8.5462 6.8762 6.0904 Mid Roof 9.4303 7.4656 6.7780 High Roof 9.4303 7.4656 6.5815 The technology

costs of achieving the reductions projected in Alternative 4 are included below in Table III
- 28 and Table III
- 29
.Page 218 of 850 **Table III**  **- 28**  **Class 7 and 8 Tractor Technology Increm**  **ental Costs in the 20**  **21 Model Year** 

**Alternative 4 vs. the Less Dynamic Baseline a**  **,b**

**(20 12**  **$ per vehicle**  **)** Class 7 Class 8 Day Cab Day

Cab Sleeper Cab Low/Mid Roof High

Roof Low/ Mid Roof High

Roof Low

Roof Mid

Roof High Roof Engine c $656 $656 $656 $656 $656 $656 $656 Aerodynamics $769 $632 $769 $632 $740 $740 $665 Tires $50 $11 $83 $18 $61 $61 $18 Tire inflation sy stem $271 $271 $271 $271 $271 $271 $271 Transmission $6,794 $6,794 $6,794 $6,794 $6,794 $6,794 $6,794 Axle & axle lubes $56 $56 $75 $95 $75 $75 $115 Idle reduction with APU $0 $0 $0 $0 $2,449 $2,449 $2,449 Air conditioning $90 $90 $90 $90 $90 $90 $90 Other vehicle technologies $261 $261 $261 $261 $261 $261 $261 Total $8,946 $8,769 $8,999 $8,816 $11,397 $11,397 $11,318 Notes:

a Costs shown are for the 20 21 mo del year and are incremental to the costs of a tractor meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA ( see draft RIA 2.12). b Note that values in this table include ado ption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicated tractor classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see draft RIA 2 .12 in particular). c Engine costs are for a heavy HD diesel engine meant for a combination tractor. The engine costs in this table are equal to the engine costs associated with the separate engine standard because both include the same set of engine techn ologies (see Section II.D.2.e).Page 219 of 850 **Table III**  **- 29**  **Class 7 and 8 Tractor Technology Increm**  **ental Costs in the 20**  **24 Model Year** 

**Alternative 4 vs. the Less Dynamic Baseline a**  **,b**

**(20 12**  **$ per vehicle**  **)** Class 7 Class 8 Day Cab Day

Cab Sleeper Cab Low/Mid Roof High

Roof Low/ Mid Roof High

Roof Low

Roof Mid

Roof High Roof Engine c $1,885 $1,885 $1,885 $1,885 $1,885 $1,885 $1,885 Aerodynamics $805 $935 $805 $935 $773 $773 $997 Tires $50 $14 $83 $23 $63 $63 $23 Tire inflation sy stem $330 $330 $330 $330 $330 $330 $330 Transmission $7,143 $7,143 $7,143 $7,143 $7,143 $7,143 $7,143 Axle & axle lubes $102 $102 $138 $210 $138 $138 $210 Idle reduction with APU $0 $0 $0 $0 $2,687 $2,687 $2,687 Air conditioning $123 $123 $123 $123 $123 $123 $123 Other vehicle technologies $318 $318 $318 $318 $318 $318 $318 Total $10,757 $10,851 $10,826 $10,968 $13,461 $13,461 $13,717 Notes: a Costs shown are for the 20 24 mo del year and are incremental to the costs of a tractor meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts t echnology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicated tractor c lasses. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA ( see draft RIA 2.12 in particular). c Engine costs are for a heavy HD diesel engine meant for a combination tractor. The engine costs in this table are equal to the engine costs associated with the separate engine standard because both include the same set of engine technologies (see Section II.D.2.e). 

### E. **Proposed Compliance Provisions for Tractors**  In HD Phase 1, the agencies developed an entirel y new program to assess the CO 2 emissions and fuel consumption of tractors. The agencies propose to carry over many

aspects of the Phase 1 compliance approach, but are proposing to enhance several aspects of the compliance program. The sections below highlight the key areas that are the same and those that are different.Page 220 of 850

(1) HD Phase 2 Compliance Provisions That Remain the Same The regulatory

structure considerations for Phase 2 are discussed in more detail above in Section II. We welcome comment on all aspects of the compliance program including where we are not proposing an y changes. (a ) **Application and Certification Process** For the Phase 2 NPRM, the agencies are proposing to keep many aspects of the HD Phase 1 tractor compliance program. For example, the agencies propose to continue to use GEM (as revised for Phase 2), in coordination with additional component testing by manufacturers to determine the inputs, to determine compliance with the proposed fuel efficiency and CO 2 standards. Another aspect that we propose to carry over is the ove rall compliance approach. In Phase 1 and as proposed in Phase 2, the general compliance process in terms of the pre - model year, during the model year, and post model year activities remain unchanged. The manufacturers would continue to be required to appl y for certification through a single source, EPA, with limited sets of data and GEM results (see 40 CFR 1037.205). EPA would issue certificates upon approval based on information submitted through the VERIFY database (see 40 CFR 1037.255). In Phase 1, EP A and NHTSA jointly review and approve innovative technology requests, i.e. performance of an y technology whose performance is not measured b y the GEM simulation tool and is not in widespread use in the 2010 MY. For Phase 2, the agencies are proposing a s imilar process for allowing credits for off
- cycle technologies that are not measured by the GEM simulation tool (see Section I.B.v. for a more detailed discussion of off
- cycle requests). During the model year, the manufacturers would continue to generate certification data and conduct GEM runs on each of the vehicle configurations it builds. After the model ye ar ends, the manufacturers would submit end of year reports to EPA that include the GEM results for all of the configurations it builds, along with credit/deficit balances if applicable (see 40 CFR 1037.250 and 1037.730). EPA and NHTSA would jointly coordinate on any

enforcement action required. (b ) **Compliance Requirements** The agencies are also proposing not to change the following provisions:

 Useful li fe of tractors (40 CFR 1037.105(e) and 1037.106(e))  Emission
- related warranty requirements (40 CFR 1037.120)  Maintenance Instructions, allowable maintenance, and amending maintenance instructions (40 CFR 1037.125 and 137.220)  Deterioration factors (40 CFR 1037.205(l) and 1037.241(c))  Vehicle family , subfamily , and configurations (40 CFR 1037.230) (c) **Drive Cycles and Weightings** In Phase 1, the agencies adopted three drive cycles used in GEM to evaluate the fuel consumption and CO 2 emissions from various vehicle configurations. One of the cycles is the Transient mode of the California ARB Heav y Heavy
- Duty Truck 5 Mode cycle. It is intended toPage 221 of 850

broadly cover urban driving. The other two cycles represent highway driving at 55 mph and 65 mph. The agencies propose to maintain the existing drive cycles and weighting. For sleeper cabs, the weightings would remain 5 percent of the Transient cycle, 9 percent of the 55 mph cycle, and 86 percent of the 65 mph cycle. The day cab results would be weighted based on 19 perc ent of the transient cycle, 17 percent of the 55 mph cycle, and 64 percent of the 65 mph cycle (see 40 CFR 1037.510(c)). One key difference in the proposed drive cycles is the addition of grade, discussed below in Section III.E.2. The 55 mph and 65 mph drive cycles used in GEM assume constant speed operation at nominal vehicle speeds with downshifting occurring if road incline causes a predetermined drop in vehicle speed. In real
- world vehicle operation, traffic conditions and other factors may cause peri odic operation at lower (e.g. creep) or variable vehicle speeds. The agencies therefore request comment on the need to include segments of lower or variable speed operation in the nominally

55 mph and 65 mph drive cycles used in GEM and how this may or may not impact the strategies manufacturers would develop
. We also request data from fleet operators or others that may track vehicle speed operation of heavy
- duty tractors. (d ) **Empty Weight and Payload** The total weight of the tractor
- trailer combination is the sum of the tractor curb weight, the trailer curb weight, and the payload. The total weight of a vehicle is important because it in part determines the impact of technologies, such as rolling resistance, on GHG emissions and fuel consumption. InPhase 2, we are proposing to carry over the total weight of the tractor
trailer combination used in GEM for Phase 1
. The agencies developed the proposed tractor curb weight inputs for Phase 2 from actual tractor weights measured in two of EPA’s Phase 1 test progr ams. The proposed trailer curb weight inputs were derived from actual trailer weight measurements conducted by EPA and from weight data provided to ICF International b y the trailer manufacturers. 176 There is a further issue of what payload weight to assign during compliance testing. In use, trucks operate at different weights at different times during their operations. The greatest freight transport efficiency (the amount of fuel required to move a ton of payload) would be achieved b y operating trucks at the maximum load for which they are designed all of the time. However, this may

not alway s be practicable. Delivery logistics may

dictate partial loading. Some payloads, such as potato chips, may fill the trailer before it reaches the vehicle’s maximum weight limit. Or full loads simply may not be available commerciall y. M.J. Bradley anal yz ed the Truck Inventory

and Use Survey

and found that approximately 9 percent of combination tractor miles travelled empty , 61 percent are “cubed
- out” (the trailer i s full before the weight limit is reached), and 30 percent are “weighed out” (operating weight equal 80,000 pounds which

176 ICF International. Investigation of Costs for Strategies to Reduce Greenhouse Gas Emissions for Heavy
- Duty On
- road Vehicles. July 2010. Pages 4
- 15. Docket Number EPA
- HQ
- OAR
- 2010
- 0162
- 00 44.Page 222 of 850

is the gross vehicle weight limit on the Federal Interstate Highway S ys tem or greater than 80,000 pounds for vehicles traveling on road s outside of the interstate s ys tem). 177 T he amount of payload that a tractor can carry depends on the category

(or GVWR and GCWR) of the vehicle. For example, a typical Class 7 tractor can carry less payload than a Class 8 tractor. For Phase 1 , the agenc ies used the Federal Highway Administration Truck Payload Equivalent Factors using Vehicle Inventory and Use Survey

(VIUS) and Vehicle Travel In formation Sy stem data to determine the payloads. FHWA’s results indicated that the average payload of a Class 8 vehicle ranged from 36,247 to 40,089 pounds, depending on the average distance travelled per day
. 178 The same study shows that Class 7 vehicles carried between 18,674 and 34,210 pounds of payload also depending on average distance travelled per day
. Based on th ese data, the agencies are propos ing to continue to prescribe a fixed payload of 25,000 pounds for Class 7 tractors and 38,000 pounds for Class 8 tractors for certification testing
. The agencies propose to continue to use a common payload for Class 8 day cabs and sleeper cabs as a predefined GEM input because the data available do not distinguish among Class 8 tractor ty

pes . These proposed payload values represent a heavil y loaded trailer, but not maximum GVWR, since as described above the majority of tractors “cube
- out” rather than “weigh
- out.” Details of the proposed individual weight inputs by regulatory

category , as shown in Table III
- 30 , are included in draft RIA Chapter 3
. We welcome comment or new data to support changes to the tractor weights, or refinements to the heav y - haul tractor, trailer, and payload weights.

177 M.J. Bradley & Associates. Setting the Stage for Regulation of Heavy
- Duty Vehicle Fuel Economy and GHG Emissions: Issues and Opportunities. February 2009. Page 35. Analysis based on 1992 Truck Inventory and Use Survey data, where the survey data allowed developing the distribution of loads instead of merely the average loads. 178 The U.S. Federal Highway Administration. Development of Truck Payload Equivalent Factor. Table 11. Last viewed on March 9, 2010 at http://ops.fhwa.dot.gov/freight/freight_analysis/faf/faf2_reports/reports9/s510_11_12_tables.htm.Page 223 of 850 **Table III**  **- 30**  **Proposed Combination Tractor Weight**  **Input s**  Model Type Regulatory

Subcategory Tractor Tare

Weight (lbs) Trailer

Weight (lbs) Payload (lbs) Total Weight (lbs) Class 8 Sleeper Cab

High Roof 19,000 13,500 38,000 70,500 Class 8 Sleeper Cab

Mid Roof 18,750 10,000 38,000 66,750 Class 8 Sleeper Cab

Low Roof 18,500 10,500 38,000 67,000 Class 8 Day Cab

High Roof 17,500 13,500 38,000 69,000 Class 8 Day Cab

Mid Roof 17,100 10,000 38,000 65,100 Class 8 Day Cab

Low Roof 17,000 10,500 38,000 65,500 Class 7 Day Cab

High Roof 11,500 13,500 25,000 50,000 Class 7 Day Cab

Mid Roof 11,100 10,000 25,000 46,100 Class 7 Day Cab

Low Roof 11,000 10,500 25,000 46,500 Class 8 Heavy
- Haul 19,000 13,500 86,000 118,500 (e) **Tire Testing** In Phase 1, the manufacturers are required to input their tire rolling resistance coefficient into GEM. Also in Phase 1, the agencies adopted the provisions in I SO 28580 to determine the rolling resistance of tires. As described in 40 CFR 1037.520(c), the agencies require that at least three tires for each tire design are to be tested at least one time. Our assessment of the Phase 1 program to date indicates that these requirements reasonabl y balance the need for precision, repeatability , and testing burden. Therefore we propose to carry over the Phase 1 testing provisions for tire rolling resistance into Phase 2. We welcome comments regarding the proposed tire testing provisions. In Phase 1, the agencies received comments from stakeholders highlighting a need to develop a reference lab and alignment tires for the HD sector. The agencies discussed the lab
- to lab comparison conducted in the Phase 1 EPA tire test program (76 FR 57184)
. The agencies reviewed the rolling resistance data from the tires that were tested at both the STLand Smithers laboratories to assess inter
- laboratory and test machine variability . The agencies conducted statistical analy sis of the data to gain better understanding of lab
- to - lab correlation and developed an adjustment factor for data measured at each of the test labs. Based on these results, the agencies believe the lab
- to - lab variation for the STLand Smithers laboratories would have very small effect on measured rolling resistance values. Based on the test data, the agencies judge for the HD Phase 2 program to continue to use the current levels of variability , and the agencies therefore propose to allow the use of either Smithers or STLl aboratories for determining the tire rolling resistance value. However, we welcome comment on the need toPage 224 of 850

establish a reference machine for the HD sector and whether tire testing facilities are interested in and willing to commit to developing a reference machine. (2) Key Differences in HD Phase 2 Compliance Provisions We welcome comment on all aspects of the compliance program for which we are proposing changes. (a ) Aerodynamic Assessment In Phase 1, the manufacturers conduct aerodynam ic testing to establish the appropriate bin and GEM input for determining compliance with the CO 2 and fuel consumption standards. The agencies propose to continue this general approach in HD Phase 2, but make several enhancements to the aerody namic assessment of tractors. As discus sed below in this section, we propose some modifications to the aerodynamic test procedures

—the addition of wind averaged yaw in the aerody

namic assessment, the addition of trailer skirts to the standard trailer used to determine aerodynamic performance of tractors and revisions to the aerodynamic bins. (i ) Aerodynamic Test Procedures The aerodynamic drag of a vehicle is determined by the vehicle’s coefficient of drag (Cd), frontal area, air density and speed. Quantifying tractor aerody namics as an input to the GEM presents technical challenges because of the proliferation of tractor c onfigurations, and subtle variations in measured aerodynamic values among various test procedures. In Phase 1, Class 7 and 8 tractor aerody namic results are developed by manufacturers using a range of techniques, including wind tunnel testing, computation al fluid dy namics, and constant speed tests. We continue to believe a broad approach allowing manufacturers to use these multiple test procedures to demonstrate aerodynamic performance of its tractor fleet is appropriate given that no single test procedure is superior in all aspects to other approaches. However, we also recognize the need for consistency and a level playingfield in evaluating aerody namic performance. To address the consistency and level playing field concerns, NHTSA and EPA adopted in P hase 1, while working with industry , an approach that identified a reference aerodynamic test method and a procedure to align results from other aerodynamic test procedures with the reference method. The agencies adopted in Phase 1 an enhanced coastdown procedure as the reference method (see 40 CFR 1066.310) and defined a process for manufacturers to align drag results from each of their own test methods to the reference method results using Falt
- aero (see 40 CFR 1037. 525 ). Manufacturers are able to use an y aerody namic evaluation method in demonstrating a vehicle’s aerodyn amic performance as long as the method is aligned to the reference method. The agencies propose to continue to use this alignment method approach to maintain the testing flexibility th at manufacturers have today . However, the agencies propose to increase the rigor in determining the Falt
- aero for Phase 2. Beginning in 2021 MY, we propose that the manufacturers would be required to determine a new Falt
- aero for each of their tractor mo dels for each aerodynamic test method. In Phase 1, manufacturers are required to determine their Falt
- aero using only

a high roof sleeper cab with a full aerody namics package (see 40 CFRPage 225 of 850

1037. 525 (a)(2)). In Phase 2, we propose that manufacturers would be required to determine a unique Falt
- aero value for each major model of their high roof day cabs and high roof sleeper cabs. In Phase 2, we propose that manufacturers may carry over the Falt
- aero value until a model changeover or based on the agencies’ discretion to require up to six new Falt
- aero determinations each year. We welcome comment on the burden associated with this proposed change to conduct up to six coastdown tests per year per manufacturer
. Based on feedback received during the develop ment of Phase 1, we understand that there is interest from some manufacturers to change the reference method in Phase 2 from coastdown to constant speed testing. EPA has conducted an aerodynamic test program at Southwest Research Institute to evaluate both methods in terms of cost of testing, testing time, testing facility requirements, and repeatability of results. Details of the analy sis and results are included in draft RIA Chapter 3.2. The results showed that the enhanced coastdown test procedures an d anal ys is produced results with acceptable repeatability and at a lower cost than the constant speed testing. Based on the results of this testing, the agencies propose to continue to use the enhanced coastdown procedure for the reference method in Phase 2. 179 However, we welcome comment on the need to change the reference method for the Phase 2 final rule to constant speed testing, including comparisons of aerodynamic test results using both the coastdown and constant speed test procedures. Inaddition, we welcome comments on and suggested revisions to the constant speed test procedure specifications set forth in Chapter 3.2.2.2 of the draft RIA and 40 CFR 1037.533 . If we determine that it is appropriate to make the change, then the aerodynamic b ins in the final rule would be adjusted to take into account the difference in absolute CdA values due to the change in method. The agencies are also considering refinements to the computational fluid dynamics modeling method to determine the aerodynamic p erformance of tractors. Specificall y, we are considering whether the conditions for performing the anal ys is require greater specificity (e.g., wind speed and direction inclusion , turbulence intensity criteria value) or if turbulence model and mesh deformation should be required, rather than “if applicable,” for all CFD anal ys is. 181 The agencies welcome comment on the proposed revisions. In Phase 1, we adopted interim provisions in 40 CFR 1037.150(k) that accounted for coastdown measurement variability by allowing a compliance demonstration based on in
- use test results if the drag area was at or below the maximum drag area allowed for the bin above the bin to which the vehicle was certified. Since ado ption of Phase 1, EPA has conducted in
- use aerodynamic testing and found that uncertainty associated with coastdown testing is less than anticipated. 182 Inaddition, we are proposing additional enhancements in the Phase 2 coastdown procedures to continue to reduce the variability of coastdown results, including the impact of environmental conditions. Therefore, we are proposing to sunset the provision in 40 CFR 1037.150(k) at the end of the Phase 1 program (after the 2020 model ye ar). We request

179 Southwest Research Institute. “Heavy Duty Class 8 Truck Coastdown and Constant Speed Testing .” April 2015
. 181 40 CFR 1037.531 “Computational fluid dynamics (CFD)”. 182 Southwest Research Institute. “Heavy Duty Class 8 Truck Coastdown and Constant Speed Testing .” April 2015
.Page 226 of 850

comment on whether or not we should factor in a test variability compliance margin into the aerodynamic test procedure, and therefore request data on aerodynamic test variability
. (ii) Wind Averaged Drag In Phase 1, EPA and NHTSA recogn ized that wind conditions, most notably wind direction, have a greater impact on real world CO 2 emissions and fuel consumption of heavy
duty trucks than of light
- duty

vehicles. 183 As noted in the NAS report, the wind average drag coefficient is about 15 percent higher than the zero degree coefficient of drag. 184 Inaddition, the agencies received comments in Phase 1 that supported the use of wind averaged drag results for the aero dy

namic determination. The agencies considered adopting the use of a wind averaged drag coefficient in the Phase 1 regulatory program, but ultimately

decided to finalize drag values which represent zero yaw ( i.e., representing wind from directl y in front of the vehicle, not from the side) instead. We took this approach recognizing that the reference method is coastdown testing and it is not capable of determining wind averaged yaw. 185 Wind tunnels and CFD are currentl y the onl y tools to accuratel y assess the influence of wind speed and direction on a truck’s aerodynamic performance. The agencies recognized, as NAS did, that the results of using the zero yaw approach may result in fuel consumption predictions that are offset slightl y from real world perfor

mance levels, not unlike the offset we see today between fuel econom y test results in the CAFE program and actual fuel economy performance observed in
- use. As the tractor manufacturers continue to refine the aerodyn amics of tractors, we believe that conti nuing the zero yaw approach into Phase 2 could potentially impact the overall technology

effectiveness or change the kinds of technology decisions made by

the tractor manufacturers in developing equipment to meet our proposed HD Phase 2 standards. Therefo re, we are proposing aerodynamic test procedures that take into account the wind averaged drag performance of tractors. The agencies propose to account for this change in aerodynamic test procedure b y appropriately adjusting the aerodynamic bins to reflec t a wind averaged drag result instead of a zero yaw result. The agencies propose that beginning in 2021 MY, the manufacturers would be required to adjust their CdA values to represent a zero yaw value from coastdown and add the CdA impact of the wind ave raged drag. The impact of wind averaged drag relative to a zero yaw condition can only

be measured in a wind tunnel or with CFD. We welcome data evaluating the consistency

of wind averaged drag measurements between wind tunnel, CFD, and other potential m ethods such as constant speed or coastdown. The agencies propose that manufacturers would use the following equation to make the necessary adjustments to a coastdown result to obtain the CdAwad value: CdAwad = CdA zero, coastdown + (CdAwad ,wind tunnel – CdA zero ,wind tunnel ) * F alt
- aero

183 See 2010 NAS Report, page 95 184 See 2010 NAS Report, Finding 2
- 4 on page 39. Also see 2014 NAS Report, Recommendation 3.5. 185 See 2010 NAS Report. Page 95.Page 227 of 850

If the manufacturer has a wind averaged CdA value from either a wind tunnel or CFD, then we propose they

would use the following equation to obtain the CdAwad value: CdAwad = CdAwad ,wind tunnel or CFD * F alt
- aero We welcome co mment on whether the wind averaged drag should be determined using a full yaw sweep as specified in Appendix A of the Society of Automotive Engineers (SAE) recommended practice number J1252 “SAE Wind Tunnel Test Procedure for Trucks and Buses” (e.g., zero degree yaw and a six other yaw angles at increments of 3 degrees or greater) or a subset of specific angles as currently allowed in the Phase 1 regulations. 186 To reduce the testing burden the agencies propose that manufacturers have the option of determini ng the offset between zero yaw and wind averaged yaw either through testing or b y using the EPA
- defined default offset. Details regarding the determination of the offset are included in the draft RIA Chapter 3.2. We propose the manufacturers would use th e following equation if they

had a zero yaw coastdown value and choose not to conduct wind averaged measurements. CdAwad = CdA zero, coastdown + 0.80 In addition, we propose the manufacturers would use the following equation if they had a zero yaw wind tunne l or CFD value and choose not to conduct wind averaged measurements. CdAwad = (CdA zero,wind tunnel or CFD * F alt
- aero )+0.8 0 We welcome comments on all aspects of the proposed wind averaged drag provisions. (iii) Standard Trailer Definition Similar to the approac h the agencies adopted in Phase 1, NHTSA and EPA are proposing provisions such that the tractor performance in GEM is judged assuming the tractor is pulling a standardized trailer. 187 The agencies believe that an assessment of the tractor fuel consumption and CO 2 emissions should be conducted using a tractor
- trailer combination , as tractors are invariably

used in combination with trailers and this is their essential commercial purpose
. Trailers, of course, also influence the extent of carbon emissions from the tractor (and vice
versa). We believe that using a standardized trailer b est reflects the impact of the overall weight of the tractor
- trailer and the aerodyn amic technologies in actual use, and consequent real
- world performance, where tractors are designed and used with a trailer. EPA research confirms what one would intuit: tractor
- trailer pairings are almost always optimized. EPA conducted an evaluation of over 4,000 tractor
- trailer combinations using live traffic cameras in 2010. 188 The results showed that approximately 95 percent of the tractors were matched with the standard

186 Proposed 40 CFR 1037. 525(d)(2 ); “Yaw Sweep Corrections”. 187 See 40 CFR 1037.501(g). 188 See Memo to Docket, Amy Kopin. “Truck and Trailer Roof Match Analysis.” August 2010.Page 228 of 850

trailer specified (high roof tractor with box trailer, mid roof tractor with tanker trailer, and low roof with flatbed trailer). Therefore, the agencies propose that Phase 2 GEM continue to use a predefined ty

pical trailer defined in Phase 1 in assessing overall performance for test purposes. As such, the high roof tractors would be paired with a stand ard box trailer; the mid roof tractors would be paired with a tanker trailer; and the low roof tractors would be paired with a flatbed trailer. However, the agencies are proposing to change the definition of the standard box trailer used by tractor manu facturers to determine the aerody namic performance of high roof tractors in Phase 2. We believe this is necessary to reflect the aerodyn amic improvements experienced b y the trailer fleet over the last several ye ars due to influences from the California Ai r Resources Board mandate 189 and EPA’s SmartWay Transport Partnership. The standard box trailer used in Phase 1 to assess the aerody namic performance of high roof tractors is a 53 foot box trailer without any

aerodynamic devices . In the development of Phas e 2, the agencies evaluated the increase in a doption rates of trailer side skirts and boat tails in the market over the last several ye ars and have seen a marked increase. We estimate that approximately 50 percent of the new trailers sold in 201 8 will hav e trailer side skirts. 190 , 191 As the agencies look towards the proposed standards in the 2021 and beyond timeframe, we believe that it is appropriate to update the standard box trailer definition. In2021
- 2027, we believe the trailer fleet will be a mix of trailers with no aero dy

namics , trailers with skirts, and trailers with advanced aero; with the advanced aero being a very

limited subset of the new trailers sold each year. Consequently , overall, we believe a trailer with a skirt will be the most representative of the trailer fleet for the duration of the regulation timeframe , and plausibly beyond. Therefore, we are proposing that the standard box trailer in Phase 2
- the trailer assumed during the certification process to be paired with a high roof tractor
- be updated to include a trailer skirt starting in 2021 model year . Even though the agencies are proposing new box trailer standards beginning in 2018 MY, we are not proposing to update the standard trailer in the tractor certification proces s until 2021 MY, to align with the new tractor standards. If we were to revise the standardized trailer definition for Phase 1, then we would need to revise the Phase 1 tractor standards. The details of the trailer skirt definition are included in 40 CFR 1037.501(g)(1). EPA has conducted extensive aerodyn amic testing to quantify the impact on the coefficient of drag of a high roof tractor due to the addition of a trailer skirt. Details of the test program and the results can be found in the draft RIA Ch apter 3 .2 . The results of the test program indicate that on average, the impact of a trailer skirt matching the definition of the skirt specified in 40 CFR 1037.501(g)(1) is approximately 8 percent improvement in coeffic ient of drag area
. This off

- set was used during the development of the Phase 2 aerody namic bins.

189 California Air Resources Board. Tractor
- Trailer Greenhouse Gas regulation. Last viewed on September 4, 2014 at http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm
. 190 Ben Sharpe (ICCT) and Mike Roeth (North American Council for Freight Efficiency), “Costs and Adoption Rates of Fuel
- S aving Technologies for Trailer in the North American On
- Road Freight Sector”, Feb 2014 191 Frost & Sullivan, “Strategic Analysis of North American Semi
- trailer Advanced Technology Market”, Feb 2013Page 229 of 850

We seek comment on our proposed HD Phase 2 standard trailer configuration. We also welcome comments on suggestions on alternative way s to define the standard trailer, such as developing a certified computer aided drawing (CAD) model. (iv) Aerodynamic Bins The agencies are proposing to continue the approach where the manufacturer would determine a tractor’s aerody namic drag force through testing, determine the app ropriate predefined aerodynamic bin, and then input the predefined CdA value for that bin into the GEM. The agencies proposed Phase 2 aerodynamic bins reflect three changes to the Phase 1 bins

– the incorporation of wind averaged drag, the addition of trailer skirts to the standard box trailer used to determine the aerodyn amic performance of high roof trac tors, and the addition of bins to reflect the continued improvement of tractor aerodynamics in the future. Because of each of these changes, the aerodynamic bins proposed for Phase 2 are not directl y comparable to the Phase 1 bins. HD Phase 1 included fiv e aerodyn amic bins to cover the spectrum of aerody namic performance of high roof tractors. Since the development of the Phase 1 rules, the manufacturers have continued to invest in aerodynamic improvements for tractors. This continued evolution of aerody namic performance, both in production and in the research stage as part of the SuperTruck program, has consequently led the agencies to propose two additional aerody namic technology bins (Bins VI and VII) for high roof tractors. These two new bins would further segment the Phase 1 aerodyn amic Bin V to recognize the difference in advanced aerodynamic technologies and designs. In both HD Phase 1 and as proposed b y the agencies in Phase 2, aerodyn amic Bin I through Bin V represent tractors sharing similar levels of technology . T he first high roof aerodynamic category , Bin I , i s designed to represent tractor bodies which prioritize appearance or special duty capabilities over aerodynamics. These Bin I tractors incorporate few, if any , aerodynamic features and may have several features that detract from aerody namics, such as bug deflectors, custom sunshades, B
- pillar exhaust stacks, and others. The second high roof aerodynamics category

is Bin II which roughl y represents the aerodynamic performance of the average new tractor sold in 2010. The agencies developed this bin to incorporate conventional tractors which capitalize on a generally aerody namic shape and avoid classic features which increase drag. High roof tractors within Bin III build on the basic a erodyn amics of Bin II tractors with added components to reduce drag in the most significant areas on the tractor, such as integral roof fairings, side extending gap reducers, fuel tank fairings, and streamlined grill/hood/mirrors/bumpers, similar to 2013 m odel year SmartWay tr actors . The Bin IV aerodynamic category

for high roof tractors builds upon the Bin III tractor body with additional aerodynamic treatments such as underbody airflow treatment, down exhaust, and lowered ride height, among other technol ogies. HD Phase 1 Bin V tractors incorporate advanced technologies which are currently

in the prototy

pe stage of development, such as advanced gap reduction, rearview cameras to replace mirrors, wheel sy stem streamlining, and advanced body designs. For H D Phase 2, the agencies propose to segment the aerody namic performance of these advanced technologies into Bins V through VII.Page 230 of 850

In Phase 1, the agencies adopted only two aerodynamic bins for low and mid roof tractors. The agencies limited the number of bin s to reflect the actual range of aerodynamic technologies effective in low and mid roof tractor applications. High roof tractors are consistently

paired with box trailer designs, and therefore manufacturers can design the tractor aerodynamics as a tractor
- trailer unit and target specific areas like the gap between the tractor and trailer. In addition, the high roof tractors tend to spend more time at high speed operation which increases the impact of aerodynamics on fuel consumption and GHG emissions. On the other hand, low and mid roof tractors are designed to pull variable trailer loads and shapes. They may pull trailers such as flat bed, low boy , tankers, or bulk carriers. The loads on flat bed trailers can range from rectangular cartons with tarps, to a single roll of steel, to a front loader. Due to these variables, manufacturers do not design unique low and mid roof tractor aerody namics but instead use derivatives from their high roof tractor designs. The aerodynamic improvements to the bumper, h ood, windshield, mirrors, and doors are developed for the high roof tractor application and then carried over into the low and mid roof applications. As mentioned above, the ty pes of designs that would move high roof tractors from a Bin III to Bins IV through VII include features such as gap reducers and integral roof fairings which would not be appropriate on low and mid roof tractors. As Phase 2 looks to further improve the aerodyn amics for high roof sleeper cabs, we believe it is also appropriate to e xpand the number of bins for low and mid roof tractors too. For Phase 2, the agencies are proposing to differentiate the aerodyn amic performance for low and mid roof applications with four bins , instead of two, in response to feedback received from manufa cturers of low and mid roof tractors related to the limited opportunity to incorporate aerodynamic technologies in their compliance plan
. We propose that low and mid roof tractors may determine the aerody

namic bin based on the aerody namic bin of an equiva lent high roof tractor, as shown below in Table III
- 31
.

**Table III**  **- 31**  **Proposed Phase 2 Revisions to 40 CFR 1037.520(b) (3)**  High Roof Bin Low and Mid Roof Bin Bin I Bin I Bin II Bin I Bin III Bin II Bin IV Bin II Bin V Bin III Bin VI Bin III Bin VII Bin IV The agencies developed new high roof tractor aerody namic bins for Phase 2 that reflect the change from zero yaw to wind averaged drag, the more aerodynamic reference trailer, and the addition of two bins. Details regarding the derivation of the proposed h igh roof bins are included in Draft RIA Chapter 3.2.8. The proposed high roof tractor bins are defined in Table III
- 32
. The proposed revisions to the low and mid roo f tractor bins reflect the addition of two new aerodynamic bins and are listed in Table III
- 33
.Page 231 of 850 **Table III**  **- 32**  **Proposed Phase 2 Aerodynam** **ic Input Definitions to GEM for High Roof Tractors** Class 7 Class 8 Day Cab Day

Cab Sleeper Cab High Roof High Roof High Roof Aerodynamic Test Results (CdAwad in m 2 ) Bin I ≥ 7. 5 ≥ 7. 5 ≥ 7. 3 Bin II 6. 8
- 7. 4 6. 8
- 7. 4 6. 6
- 7. 2 Bin III 6.2
- 6. 7 6.2
- 6. 7 6. 0
- 6. 5 Bin IV 5. 6
- 6.1 5. 6
- 6.1 5. 4
- 5.9 Bin V 5. 1
- 5. 5 5. 1
- 5. 5 4.9
- 5. 3 Bin VI 4.7
- 5. 0 4.7
- 5. 0 4. 5
- 4.8 Bin VII ≤ 4.6 ≤ 4.6 ≤ 4. 4 Aerodynamic Input to GEM (CdAwad in m 2 ) Bin I 7. 6 7. 6 7. 4 Bin II 7.1 7.1 6. 9 Bin III 6. 5 6. 5 6. 3 Bin IV 5.8 5.8 5. 6 Bin V 5. 3 5. 3 5. 1 Bin VI 4.9 4.9 4.7 Bin VII 4. 5 4. 5 4. 3
**Table III**  **- 33**  **Proposed Phase 2 Aerodynam ic Input Definitions to GEM for Low and Mid Roof Tractors** 

Class 7 Class 8 Day Cab Day Cab Sleeper Cab Lo w Roof Mid Roof Lo w Roof Mid Roof Lo w Roof Mid Roof Aerodynamic Test Results (CdA in m2 ) Bin I ≥ 5.1 ≥ 6.5 ≥ 5.1 ≥ 6.5 ≥ 5.1 ≥ 6.5 Bin II 4.6
- 5.0 6.0
- 6.4 4.6
- 5.0 6.0
- 6.4 4.6
- 5.0 6.0
- 6.4 Bin III 4.2
- 4.5 5.6
- 5.9 4.2
- 4.5 5.6
- 5.9 4.2
- 4.5 5.6
- 5.9 Bin IV ≤ 4.1 ≤ 5.5 ≤ 4.1 ≤ 5.5 ≤ 4.1 ≤ 5.5 Aerodynamic Input to GEM (CdA in m2 ) Bin I 5.3 6.7 5.3 6.7 5.3 6.7 Bin II 4.8 6.2 4.8 6.2 4.8 6.2 Bin III 4.3 5.7 4.3 5.7 4.3 5.7 Bin IV 4.0 5.4 4.0 5.4 4.0 5.4 (b ) Road Grade in the Drive Cycles Road grade can have a significant impact on the overall fuel economy of a heav y - dut y vehicle. Table III
- 34 shows the results from a real world evaluation of heavy
- dut y tractor -Page 232 of 850

trailer s conducted by

Oak Ridge National Lab
. 192 The study found that the impact of a mild upslope of one to four percent led to a decrease in average fuel econom y from 7.33 mpg to 4.35 mpg. These results are as expected because vehicles consume more fuel while driving on an upslope than driving on a flat road because the vehicle needs to exert additional power to overcome the grade resistance force. 193 The amount of extra fuel increases with increases in road gradient. On downgrades, vehicles consume less fuel than on a flat road. However, as shown i n the fuel consumption results in Table III
- 34 , the amount of increase in fuel consumption on an upslope is greater than the amount of decrease in fuel consumption on a downslope which leads to a net increase in fuel consumption. As an example, the data shows that a vehicle would use 0.3 gallons per mile more fuel in a severe upslope than on flat terrain, but only save 0.1 gallons of fuel per mile on a severe downslope. In another study , Southwest Research Institute m odeling found th at the addition of road grade to a drive cycle h as an 8 to 10 percent negative impact on fuel econom y. 194 **Table III**  **- 34**  **Fuel Consumption Relative to Road Grade**

Ty pe of Terrain Average Fuel Economy (miles per g allon) Average Fuel Consumption (gallons per mile) Severe upslope (>4%) 2.90 0.34 Mild upslope (1% to 4%) 4.35 0.23 Flat terrain (1% to 1%) 7.33 0.14 Mild downslope (
- 4% to
- 1%) 15.11 0.07 Severe downslope (<
- 4%) 23.50 0.04 In Phase 1, the agencies did not include road grade. However, we believe it is important to propose including road grade in Phase 2 to properly assess the value of technologies, such as downspeeding and the integration of the engine and transmission , whic h were not technologies included in the technology basis for Phase 1 and are not directl y assessed b y GEM in its Phase 1 iteration
. The addition of road grade to the drive cycles would be consistent with the NAS recommendation in the 2014 Phase 2 First Report. 195 The U.S. Department of Energy and EPA have partnered to support a project aimed at evaluating, refining and/or developing the appropriate road grade profiles for the 55 mph and 65 mph highway

cruise dut y cycles that would be used in the certification of heav y - dut y vehicles to the Phase 2 GHG emission and fuel efficiency standards. The National Renewable Energy Laboratory

(NREL) was contracted to do this work and has since develop ed two pairs of candi date, activity
- weighted road grade profile s representative of U.S. limited
- access highway s . To this end, NRELused high
- accuracy road grade data and county - specific vehicle miles

192 Oakridge National Laboratory. Transportation Energy Book, Edition 33. Table 5.10 Effect of Terrain on Class 8 Truck Fuel Economy. 2014. Last accessed on September 19, 2014 at http://cta.ornl.gov/data/Chapter5.shtml. 193 Ibid. 194 Reinhart, T. (2015). Commercia l Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report #2. Washington, DC: National Highway Traffic Safety Administration. 195 National Academy of Science. “Reducing the Fuel Consumption and GHG Emissions of Medium
- and Heavy
Duty Vehicles, Phase T wo , First Report.” 2014. Recommendation S.3 (3.6).Page 233 of 850

traveled data
. One pair of the profiles is representative of the nation’s l imited
- access highway s with 55 and 60 mph speed limits, and another is representative of such highway s with speed limits of 65 to 75 mph. The profiles are distance
- based and cover a maximum distance of 12 and 15 miles , respectivel y . A report documenting this NREL work is in the public docket for th e s e proposed rule s , and comments are requested on the recommendations therein. 196 Inaddition to NRELwork, the agencies have independently developed yet another candidate road grade profile for use in the 55 mph and 65 mph highway cruise duty

cycles. While based on the same road grade database generated by NREL for U.S. restricted
- access highway s, its design is predicated on a different approach. The development of this profile is documented in the memorandum t o the docket. 197 The agencies have evaluated all of the candidate road grade profiles and have prepared possible alternative tractor standards based on these profiles. The agencies request comment on this analy sis, which is available in a memorandum to the docket. 198 For the proposal, the agencies developed an interim road grade profile for development of the proposed standards. The agencies are proposing the inclusion of an interim road grade profile, as shown below in Figure III
- 2 , in both the 55 mph and 65 mph cycles . The grade profile was developed b y Southwest Research Institut e on a 12.5 mile stretch of restricted
- access highway during on
- road test s conducted for EPA’s validation of the Phase 2 version of GEM. 199 The minimum grade in the interim cycle is
- 2.1 percent and the maximum grade is 2.4 percent. The cycle spends 30 percent of the distance in grades of +/
- 0.5 percent. Overall, the cycle sp ends approximately

50 percent of the time in relatively flat terrain with road gradients of less than 1 percent. The agencies believe the interim cycle has sufficient representativeness based on a comparison to data from the Department of Transportation us ed in the development of the light
duty Federal Test Procedure cycle (FTP), which found approximately 55 percent of the vehicle miles traveled were on road gradients of less than 1 percent. 200 Consequently , we expect that road grade profiles developed by NREL and b y the agencies will not differ significantl y from the interim profile proposed here. The agencies request data from fleet operators or others that have real world grade profile data.

196 See NREL Report “EPA Road Grade profiles” for DOE
- EPA Interagency Agreement to Refine Drive Cycles for GHG Certification of Medium
- and Heavy
- Duty Vehicles, IA Number DW
- 89
- 92402501 197 Memorandum dated April 2015 on Possible Tractor, Trailer, and Vocational Vehicle Standards Derived from Alternative Road Grade Profiles 198 Ibid. 199 Southwest Research Institute. “GEM Va lidation”, Technical Research Workshop supporting EPA and NHTSA Phase 2 Standards for MD/HD Greenhouse Gas and Fuel Efficiency

— December 10 and 11, 2014. Can be accessed at http://www.epa.gov/otaq/climate/regs
- heavy
- duty.htm 200 U.S. EPA. FTP Preliminary Report. May 14, 1993. Table 5
- 1, page 76. EPA
- 420
- R
- 93
- 007.Page 234 of 850

Figure III
- 2 Proposed Road Grade Profile for 55 mph and 65 mph Drive Cycles - 4 - 2 0 2 4

0 2 4 6 8 10 12 14**G r** **a d** **e (** **% )** 

**Distance (mi)**  **Ro ad**  **Gra de on**  **the 55 m**  **ph and 65 mph**  **Cy cles** Page 235 of 850

(c) Weight Reduction In Phase 1, the agencies adopted regulations that provided manufacturers with the ability to use GEM to measure emission reduction and reductions in fuel consumption resulting from use of high strength steel and aluminum components for weight reduction, , and to do so without the burden of entering the curb weight of every tractor produced. We treated such weight reduction in two way s in Phase 1 to account for the fac t that combination tractor
- trailers weigh
out approximately

one - third of the time and cube
- out approximately two - thirds of the time. Therefore, one
- third of the weight reduction is added payload in the denominator while two
thirds of the weight reduction is subtracted from the overall weight of the vehicle in GEM. See 76 FR 57153. The agencies also allowed manufacturers to petition for off
- cycle credits for components not measured in GEM. NHTSA and EPA propose carrying the Phase 1 treatment of weight red uction into Phase 2. That is, these ty

pes of weight reduction, although not part of the agencies’ technology packages for the proposed (or alternative) standards, can still be recognized in GEM up to a point. In addition, the agencies propose to add addi tional thermoplastic components to the weight reduction table, as shown below in Table III
- 35 . The thermoplastic component weight reduction values were developed in c oordination with SABI C, a thermoplastic component supplier. Also, in Phase 2, we are proposing to recognize the potential weight reduction opportunities in the powertrain and drivetrain s ys tems as part of the vehicle inputs into GEM. Therefore, we believ e it is appropriate to also recognize the weight reduction associated with both smaller engines and 6x2 axles. 201 We propose including the values listed in Table III
- 36 and make them available upon promulgation of the final Phase 2 rule (i.e., available even under Phase 1). We welcome comments on all aspects of weight reduction.

201 North American Council for Fre ight Efficiency. ”Confidence Findings on the Potential of 6x2 Axles.” 2014. Page 16.Page 236 of 850 **Table III**  **- 35**  **Proposed Phase 2 Weight Reducti on Technologies for Tractors**  Weight Reduction Technology Weight Reduction (lb per tire/wheel) Single Wide Drive Tire with ... Steel Wheel 84

Aluminum Wheel 139 Light Weight Aluminum Wheel 147 Steer Tire or Dual Wide Drive Tire with ... High Strength Steel Wheel 8

Aluminum Wheel 21 Light Weight Aluminum Wheel 30 Weight Reduction Technologies Aluminum Weight Reduction (lb.) High Strength

Steel Weight Reduction (lb.) Thermoplastic

Weight Reduction (lb.) Door (per door) 20 6 Roof (per vehicle) 60 18 Cab rear wall (per vehicle) 49 16 Cab floor (per vehicle) 56 18 Hood (per vehicle) 55 17 Hood Support Structure (per vehicle) 15 3 Hood and Front Fender (per vehicle) 65 Day Cab Roof Fairing (per vehicle) 18 Sleeper Cab Roof Fairing (per vehicle) 75 20 40 Aerodynamic Side Extender (per vehicle) 10 Fairing Support Structure (per vehicle) 35 6 Instrument Panel Support Structure (per vehicle) 5 1 Brake Drums

– Drive (per 4) 140 11 Brake Drums

– Non Drive (per 2) 60 8 Frame Rails (per vehicle) 440 87 Crossmember

– Cab (per vehicle) 15 5 Crossmember

– Suspension (per vehicle) 25 6 Crossmember

– Non Suspension ( per 3) 15 5 Fifth Wheel (per vehicle) 100 25 Radiator Support (per vehicle) 20 6 Fuel Tank Support Structure (per vehicle) 40 12 Steps (per vehicle) 35 6 Bum per (per vehicle) 33 10 Shackles (per vehicle) 10 3 Front Axle (per vehicle) 60 15 Suspension Brackets, Hangers (per vehicle) 100 30 Transmission Case (per vehicle) 50 12 Clutch Housing (per vehicle) 40 10 Drive Axle Hubs (per 4) 80 20 Non Drive Front Hubs (per 2) 40 5 Driveshaft (per vehicle) 20 5 Transmission/Clutch Shift Levers (per vehicle) 20 4Page 237 of 850 **Table III**  **- 36**  **Proposed Phase 2 Weight Reduction Values for Other Com** **ponents** Weight Reduction Technology Weight Reduction (lb) 6x2 axle configuration in tractors 300 4x2 axle configuration in Class 8 tractors 300 Tractor engine with displacement less than 14.0L 300 202 CIL iquified Natural Gas tractor
- 600 203 , 204 SICompressed Natural Gas tractor
- 525 CICompressed Natural Gas tractor
- 900 (d ) GEM Inputs The agencies propose to continue to require the Phase 1 GEM inputs for tractors in Phase 2. These inputs include the following:

 Steer tire rolling resistance,  Drive tire rolling resistance,  Coefficient of Drag Area,  Idle Reduction, and  Vehicle Speed Limiter. As discussed above in Section II.C and III.D, there are several additional inputs that are proposed for Phase 2. The new GEM inp uts proposed for Phase 2 include the following:

 Engine information including manufacturer, model, combustion ty pe, fuel ty

pe, family name, and calibration identification  Engine fuel map,  Engine full
- load torque curve,  Engine motoring curve,  Transmission in formation including manufacturer and model  Transmission ty

pe,  Transmission gear ratios,

202 Kenworth. “Kenworth T680 with PACCAR MX
- 13 Engine Lowers Costs for Oregon Open
- Deck Carrier.” Last viewed on December 16, 2014 at http://www.kenworth.com/news/news
- releases/2013/december/t680
- cotc.aspx 203 National Energy Policy Institute. “What Set of Conditions Would Make the Business Case to Convert Heavy Trucks to Natural Gas?

– A Case Study.” May 1, 2012. Last accessed on December 15, 2014 at http://www.tagnaturalgasinfo.com/uploads/1/2/2/3/12232668/natural_gas_for_heavy_trucks.pdf 204 Westport presentation (2013). Last accessed on December 15, 2014 at http://www. westport.com/file_library/files/webinar/2013
- 06
- 19_CNGandLNG.pdfPage 238 of 850  Drive axle ratio,  Loaded tire radius for drive tires, and  Other technology

inputs. The agencies welcome comments on the inclusion of these proposed technol ogies into GEM in Phase 2. (e) Vehicle Speed Limiters and Extended Idle Provisions The agencies received comments during the development of Phase 1 that the Clean Air Act provisions to prevent tampering (Section 203 (a)(3) (A) of the Act; 42 U.S.C. 7522(a)(3)(A)) of vehicle speed limiters and extended idle reduction technologies would prohibit their use for demonstrating compliance with the Phase 1 standards. In Phase 1, the agencies adopted provisions to allow for discounted credits for idle reduction technologies that allowed for override conditions and expiring engine shutdown sy stems (see 40 CFR 1037.660). Similarly , the agencies adopted provisions to allow for “soft top” speeds and expiring vehicle speed limite rs , and we are not proposing to change those provisions (see 40 CFR 1037.640). However, as we develop Phase 2, we understand that the concerns still exist that the ability for a tractor manufacturer to reflect the use of a VSLin its compliance determination may be constrained by the demand for flexibility in the use of VSL s by

the customers.
. The agencies welcome suggestions on how to close the gap between the provisions that would be acceptable to the industry while maintaining our need to ensure that modifications do not violate 42 U.S.C. 7522(a)(3)(A). We request comment on potential approaches which would enable feedback mechanism between the vehicle owner/fleet that would provide the agencies the assurance that the benefits of the VSLs will be see n in use but which also provides the vehicle owner/fleet the flexibility they man y need during in
- use operation. More generall y in our discussions with several trucking fleets and with the American Trucking Associations an interest was expressed by the fl eets if there was a means b y which they could participate in the emissions credit transactions which is currently limited to the directly

regulated truck manufacturers. VSL s and extended idle sy stems were two example technologies which fleets and individu al owners can order for a new build truck, and that from the fleet’s perspective the truck manufacturers receive emission credits for. The agencies do not have a specific proposal or a position on the request from the American Trucking Association and its members, but we request comment on whether or not it is appropriate to allow owners to participate in the overall compliance process for the directly regulated parties, if such a thing is allowed under the two agencies ’ respective statutes, and what regul atory

provisions would be needed to incorporate such an approach
. (f ) Emission Control Labels The agencies consider it crucial that authorized compliance inspectors are able to identify whether a vehicle is certified, and if so whether it is in its certified condition. To facilitate this identification in Phase 1, EPA adopted labeling provisions for tractors that included several items. The Phase 1 tractor label must include the manufacturer, vehicle identifier such as the Vehicle Identif

ication Number (VIN), vehicle family , regulatory subcategory , date of manufacture, compliance statements, and emission control sy stem identifiers (see 40 CFR 1037.135). In Phase 1, the emission control sy stem identifiers are limited to vehicle speedPage 239 of 850

limit ers, idle reduction technology, tire rolling resistance, some aerodynamic components, and other innovative and advanced technologies. The number of proposed emission control sy stems for greenhouse gas emissions in Phase 2 has increased significantly . Fo r example, the engine, transmission, drive axle ratio, accessories, tire radius, wind averaged drag, predictive cruise control, and automatic tire inflation sy stem are controls which can be evaluated on
- cy cle in Phase 2 (i.e. these technologies’ performanc e can now be input to GEM), but could not be in Phase 1. Due to the complexity in determining greenhouse gas emissions as proposed in Phase 2, the agencies do not believe that we can unambiguousl y determine whether or not a vehicle is in a certified condition through simply comparing information that could be made available on an emission control label with the components installed on a vehicle. Therefore, EPA proposes to remove the requirement to include the emission control sy stem identifiers required in 40 CFR 1037.135(b)(6) and in Appendix III to 40 CFR part 1037 from the emission control labels for vehicles certified to the Phase 2 standards. However, the agencies may finalize requirements to maintain so me label content to facilitate a limited visual inspection of key vehicle parameters that can be readil y observed. Such requirements may be very similar to the labeling requirement s from the Phase 1 rulemaking, though we would want to more carefully consi der the list of technologies that would allow for the most effective inspection. We request comment on an appropriate list of candidate technologies that would properl y balance the need to limit label content with the interest in providing the most useful information for inspectors to confirm that vehicles have been properl y built
. We are not proposing to modify the existing emission control labels for tractors certified to the Phase 1 CO 2 standards. Under the agencies’ existing authorities, manufacturers must provide detailed build information for a specific vehicle upon our request . Our expectation is that this information should be available to us via e
- mail or other similar electronic communication on a same
- day basis, or within 24 hours of a request at most. We request comment on an y practical limitations in promptly

providing this information . We also request comment on approaches that would minimize burden for manufacturers to respo nd to requests for vehicle build information and would expedite an authorized compliance inspector’s visual inspection. For example, the agencies have started to explore ideas that would provide inspectors with an electronic method to identify vehicles an d access on
- line databases that would list all of the engine
- specific and vehicle
- specific emissions control sy stem information. We believe that electronic and Internet technology

exists today

for using scan tools to read a bar code or radio frequency ide ntification tag affixed to a vehicle that would then lead to secure on
- line access to a database of manufacturers’ detailed vehicle and engine build information. Our exploratory work on these ideas has raised questions about the level of effort that would be required to develop, implement and maintain an information technology s ys tem to provide inspectors real
- time access to this information. We have also considered questions about privacy and data security . We request comment on the concept of electroni c labels and database access, including any available information on similar systems that exist today and on burden estimates and approaches that could address concerns about privacy and data security . Based on new information that we receive, we may

cons ider initiating a separate rulemaking effort to propose and request comment on implementing such an approach.Page 240 of 850

(g ) End of Year Reports In the Phase 1 program, manufacturers participating in the ABT program provided 90 day and 270 day

reports to EPA and NHTSA after the end of the model ye ar. The agencies adopted two reports for the initial program to help manufacturers become familiar with the reporting process. For the HD Phase 2 program, the agencies propose to simplify reporting such that manufacturers wou ld only be required to submit the final report 90 day s after the end of the model year with the potential to obtain approval for a delay up to 30 day s. We are accordingl y proposing to eliminate the end of ye ar report, which represents a preliminary set of ABT figures for the preceding ye ar. We welcome comment on this proposed revision. (h ) Special Compliance Provisions In Phase 2, the agencies propose to consider the performance of the engine, transmission, and drivetrain in determining compliance with the P hase 2 tractor standards. With the inclusion of the engine’s performance in the vehicle compliance, EPA proposes to modify the prohibition to introducing into U.S. commerce a tractor containing an engine not certified for use in tractor (see 40 CFR 1037.6 01(d)). In Phase 2, we no longer see the need to prohibit the use of vocational engines in tractors because the performance of the engine would be appropriately reflected in GEM. We welcome comment on removing this prohibition. The agencies also propose to change the compliance process for manufacturers seeking to use the off

- road exclusion. During the Phase 1 program, manufacturers realized that contacting the agencies in advance of the model year was necessary to determine whether vehicles would qualif y for exemption and need approved certificates of conformity. The agencies found that the petition process allowed at the end of the model year was not necessary and that an informal approval during the precertification period was more effective. Theref ore, NHTSA is proposing to remove its off

- road petitioning process in 49 CFR 535.8(h) and EPA is proposing to add requirements for informal approvals in 40 CFR 1037.610. (i ) Chassis Dynamometer Testing Requirement The agencies foresee the need to continue to track the progress of the Phase 2 program throughout its implementation. As discussed in Section II, the agencies expect to evaluate the overall performance of tractors with the GEM results provided by manufacturers through the end of year reports. How ever, we also need to continue to have confidence in our simulation tool, GEM, as the vehicle technologies continue to evolve. Therefore, EPA proposes that the manufacturers conduct annual chassis dynamometer testing of three sleeper cabs tractor an d two day cab tractor and provide the data and the GEM result from each of these two tractor configurations to EPA (see 40 CFR 1037.665). We request comment on the costs and efficacy of this data submission requirement. We emphasize that this program would not be used for compliance or enforcement purposes.Page 241 of 850



### F. **Flexibility Provisions** EPA and NHTSA are proposing two flexibility provisions specifically

for heavy
- dut y tractor manufacturers in Phase 2 . These are an averaging, banking and trading program for CO 2 emissions and fuel consumption credits, as well as provisions for credits for off
- cycle technologies which are not included as inputs to the GEM. Credits generated under these provisions can only

be used within the same averaging set which generated the credit. The agencies are also proposing to remove or modify several Phase 1 interim provisions, as described below. **(1) Averaging, Banking, and Trading (ABT) Program**  Averaging, banking, and trading of emission credits have been an important part of many EPA mobile source programs under CAA Title II, and the NHTSA light
- duty CAFE program. The agencies also included this flexibility in the HD Phase 1 program. ABT provisions are useful because they

can help to address many potential issues of technologica l feasibility and lead
- time, as well as considerations of cost. They provide manufacturers flexibilities that assist in the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more aggr essive pace than without ABT. A well
- designed ABT program can also provide important environmental and energy security benefits by increasing the speed at which new technologies can be implemented. Between MYs 2013 and 2014 all four tractor manufacturers are taking advantage of the ABT provisions in the Phase 1 program. NHTSA and EPA propose to carry
- over the Phase 1 ABT provisions for tractors into Phase 2. The agencies propose to continue the five ye ar credit life and three ye ar deficit carry
- over prov isions from Phase 1 (40 CFR 1037.740(c) and 1037.745). Please see additional discussion in Section I .C.1.b. Although we are not proposing any additional restrictions on the use of Phase 1 credits, we are requesting comment on this issue. Earl y indicatio ns suggest that positive market reception to the Phase 1 technologies could lead to manufacturers accumulating credits surpluses that could be quite large at the beginning of the proposed Phase 2 program. This appears especially

likel y for tractors. The agencies are specificall y requesting comment on the likelihood of this happening, and whether an y regulatory changes would be appropriate. For example, should the agencies limit the amount of credits than could be carried over from Phase 1 or limit them t o the first year or two of the Phase 2 program? Also, if we determine that large surpluses are likel y, how should that factor into our decision on the feasibility of more stringent standards in MY 2021?
. We welcome comments on these proposed flexibilities and are interested in information that may indicate doing as proposed could distort the heav y - dut y vehicle market. **(2) Off**  **- Cycle Technology Credits**  In Phase 1, the agencies adopted an emissions and fuel consumption credit generating opportunity

that applied to innovative technologies that reduce fuel consumption and CO 2 emissions . These technologies were required to not be in common use with heav y - dut y vehicles before the 2010MY and not reflected in the GEM simulation tool ( i.e. , the benefits are “off
-Page 242 of 850

cycle”). See 76 FR at 57253. The agencies propose to largel y continue, but redesignate the Phase 1 innovative technology program as part of the off
- cycle program for Phase 2. In other words, beginning in 2021 MY all technologies that are not full y accounted for in the GEM simulation tool, or by compliance dy namometer tes ting c ould be considered off
- cycle, including those technologies that may have been considered innovative technologies in Phase 1 of the program. T he agencies propose to maintain the requirement that, i n order for a manufacturer t o receive credits for Pha se 2, the off
- cycle technology would still need to meet the requirement that it was not in common use prior to MY 2010
. For additional information on the treatment of off
cycle technologies see Section I .C.1.c. The agencies are proposing a split process f or handling off

- cycle technologies in Phase 2. First, there is a set of predefined off
- cycle technologies that are entering the market today , but could be fully
- recognized in our proposed HD Phase 2 certification procedures. Examples of such technologies include predictive cruise control, 6x2 axles, axle lubricants, automated tire inflation sy stems, and air conditioning efficiency improvements. For these technologies, the agencies propose to define the effectiveness value of these technologies similar to the approach taken in the MY2017
- 2025 light
- duty rule (see 77 FR at 62832
- 840 (October 15, 2012)). These default effectiveness values could be used as valid inputs to Phase 2 GEM. The proposed effectiveness value of each technology is discussed above in Section III.D.2. The agencies also recognize that there are emerging technologies today that are being developed, but would not be accounted for in the GEM inputs , therefore would be considered off
- cycle . These technologies could include s ys tems such as efficient steering s ys tems, cooling fan optimization, and further tractor - trailer integration. These off
- cycle technologies could include known, commercialized technologies if they are not yet widel y utilized in a particular heav y - dut y sector subcategory. An y credits for these technologies would need to be based on real
- world fuel consumption and GHG reductions that can be measured with verifiable test methods using representative driving conditions typical of the engine or vehicle application. The agenci es propose that the approval for Phase 1 innovative technology credits (approved prior to 2021 MY) would be carried into the Phase 2 program on a limited basis for those technologies where the benefit is not accounted for in the Phase 2 test procedure. Th erefore, the manufacturers would not be required to request new approval for any innovative credits carried into the off
- cycle program, but would have to demonstrate the new cycle does not account for these improvements beginning in the 2021 MY. The agenc ies believe this is appropriate because technologies, such as those related to the transmission or driveline, may no longer be “off

- cycle” because of the addition of these technologies into the Phase 2 version of GEM. The agencies also seek comments on whe ther off
- cycle technologies in the Phase 2 program should be limited by infrequent common use and by what model years, if an y . We also seek comments on an appropriate penetration rate for a technology not to be considered in common use. As in Phase 1, the agencies are proposing to continue to provide two paths for approval of the test procedure to measure the CO 2 emissions and fuel consumption reductions of an off
cycle technology

used in the HD tractor. See proposed 40 CFR 1037.610 and 49 CFR 535.7. The first path would not require a public approval process of the test method. A manufacturer c ould use “pre
- approved” test methods for HD vehicles including the A
- to - B chassis testing,Page 243 of 850

powerpack testing or on
- road testing. A manufacturer may also use any

developed test procedure that has known quantifiable benefits. A test plan detailing the testing methodology would be required to be approved prior to collecting any t est data. The agencies are also proposing to continue the second path , which includes a public approval process of an y testing method that could have questionable benefits (i.e., an unknown usage rate for a technology). Furthermore, the agencies are proposing to modify their provisions to clarify what documentation must be submitted for approval , which would align th em with provisions in 40 CFR 86. 1869
- 12
. NHTSA and EPA are also proposing to prohibit credits from technologies addressed b y an y of NHTSA’s crash avoidance safety rulemakings (i.e., congestion m anagement sy stems). See 77 FR 62733/2
- 3 (discussing similar issues in the context of the light
- dut y fuel econom y and greenhouse gas reduction standards). We welcome recommendations on how to improve or streamline the off
- cycle technology

approval process
. **(3) Post Useful Life Modifications**  Under 40 CFR part 1037, it is generally prohibited for any

person to remove or render inoperative an y emission control device installed to comply with the requirements of part 1037. However, in 40 CFR 1037.655 EPA clarifies that certain vehicle modificati ons are allowed after a vehicle reaches the end of its regulatory useful life. This section applies for all vehicles subject to 40 CFR part 1037 and would thus apply for trailers regulated in Phase 2
. EPA is proposing to continue this provision and reque sts comment on it. This section states (as examples) that it is generally allowable to remove tractor roof fairings after the end of the vehicle’s useful life if the vehicle will no longer be used primaril y to pull box trailers, or to remove other fairings if the vehicle will no longer be used significantly on highway s with vehicle speed of 55 miles per hour or higher. More generally , this section clarifies that owners may modify a vehicle for the purpose of reducing emissions, provided they have a rea sonable technical basis for knowing that such modification will not increase emissions of an y other pollutant. This essentially requires the owner to have information that would lead an engineer or other person familiar with engine and vehicle design and function to reasonabl y believe that the modifications will not increase emissions of any regulated pollutant. Thus, this provision does not provide a blanket allowance for modifications after the useful life. This section also makes clear that no person m ay ever disable a vehicle speed limiter prior to its expiration point, or remove aerodynam ic fairings from tractors that are used primaril y to pull box trailers on highway s. It is also clear that this allowance does not apply with respect to engine modifi cations or recalibrations. This section does not apply with respect to modifications that occur within the useful life period, other than to note that many such modifications to the vehicle during the useful life and to the engine at an y time are presume d to violate 42 U.S.C 7522(a)(3)(A). EPA notes, however, that this is merely

a presumption, and would not prohibit modifications during the useful life where the owner clearly

has a reasonable technical basis for knowing that the modifications would not c ause the vehicle to exceed any applicable standard.Page 244 of 850

**(4) Other Interim Provisions**  In HD Phase 1, EPA adopted provisions to delay the onboard diagnostics (OBD) requirements for heav y - duty hy brid powertrains (see 40 CFR 86.010
- 18(q ) ). This provision delayed full OBD requirements for hy brids until 2016 and 2017 model years. Indiscussion with manufacturers during the development of Phase 2, the agencies have learned that meeting the on
board diagnostic requirements for criteria pollutant engine certification continues to be a potential impediment to adoption of hy brid sy stems. See Section XIV.A.1 for a discussion of regulatory

changes proposed to reduce the non
- GHG certification burden for engines paired with hy brid powertrain sy st ems. **(5) Phase 1 Flexibilities Not Proposed for Phase 2**  The Phase 1 advanced technology credits were adopted to promote the implementation of advanced technologies, such as h ybrid powertrains, Rankine cycle engines, all
- electric vehicles, and fuel cell vehicl es (see 40 CFR 1037.150(i)). As the agencies stated in the Phase 1 final rule, the Phase 1 standards were not premised on the use of advanced technologies but we expected these advanced technologies to be an important part of the Phase 2 rulemaking (76 FR 57133, September 15, 2011). The proposed HD Phase 2 heav y - dut y engine and tractor standards are premised on the use of Rankine
- cycle engines, therefore the agencies believe it is no longer appropriate to provide extra credit for this technology . While the agencies have not premised the proposed HD Phase 2 tractor standards on h yb rid powertrains, fuel cells, or electric vehicles, we also foresee some limited use of these technologies in 2021 and beyond. Therefore, we propose to not provide advanced techn ology credits in Phase 2 for an y technology , but we welcome comments on the need for such incentive. Also in Phase 1, the agencies adopted earl y credits to create incentives for manufacturers to introduce more efficient engines and vehicles earlier than th ey otherwise would have planned to do (see 40 CFR 1037.150(a)). The agencies are not proposing to extend this flexibility to Phase 2 because the ABT program from Phase 1 will be available to manufacturers in 2020 model year and this would displace the nee d for early credits.Page 245 of 850



## IV. **Tr ailers**  As mentioned in Section III, trailers pulled b y Class 7 and 8 tractors (together considered “tractor
- trailers”) account for approximately two - thirds of the heavy
- duty sector’s total CO 2 emissions and fuel consumption. Because neither trailers nor the tractors that pull them are useful by themselves, it is the combin ation of the tractor and the trailer that forms the useful vehicle. Although trailers do not directly generate exhaust emissions or consume fuels (except for the refrigeration units on refrigerated trailers), their designs and operation nevertheless contribute substantially

to the CO 2 emissions and diesel fuel consumption of the tractors pulling them. See also S ection I. E (1) and (2) above. The agencies are proposing standards for trailers specificall y designed to be drawn by Class 7 and 8 tractors when coupled to the tractor’s fifth wheel
. The agencies are not proposing standards for trailers designed to be drawn by vehicles other than tractors, and those that are coupled to vehicles with pintle hooks or hitches i nstead of a fifth wheel. These proposed standards are expressed as CO 2 and fuel consumption standards, and would apply to each trailer with respect to the emissions and fuel consumption that would be expected for a specific standard type of tractor pullin g such a trailer. Note that this approach is discussed in more detail later. Nevertheless, EPA and NHTSA believe it is appropriate to establish standards for trailers separately from tractors because they are separately

manufactured by

distinct companies ; the agencies are not aware of any manufacturers that currentl y assemble both the finished tractor and the trailer. 

### A. **Summary of Trailer Consideration in Phase 1** In the Phase 1 program, the agencies did not regulate trailers, but discussed how we might do so in the future (see 76 FR 57362). We chose not to regulate trailers at that time, primarily because of the lack of a proposed test procedure, as well as the technical and policy issues at that time. The agencies also noted the large number of small businesses in this industry , the possibility

that regulations would substantially impact these small businesses, and the agencies’ consequent obligations under the Small Business Regulatory Enforcement Fairness Act. 205 However, the agencies did indicate the potential CO 2 and fuel consumption benefits of including trailers in the program and we committed to consider establishing standards for trailers in future rulemakings. In the Phase 1 proposal, the agencies solici ted general comments on controlling CO 2 emissions and fuel consumption through future trailer regulations (see 75 FR at 74345
- 51).

205 The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforceme nt Fairness Act (SBREFA), requires agencies to account for economic impacts of all rules that may have a significant impact on a substantial number of small businesses and in addition contains provisions specially applicable to EPA requiring a multi
- agency pre - proposal process involving outreach and consultation with representatives of potentially affected small businesses. See http://www.epa.gov/rfa/ for more information. Note that for this Phase 2 proposal, EPA h as completed a Small Business Advocacy Review panel process that included small trailer manufacturers, as discussed in XIV.C below.Page 246 of 850

Although we neither proposed nor finalized trailer regulations at that time, the agencies have considered those comments in developing this proposal. This notice proposes the first EPA regulations covering trailer manufacturers for CO 2 emissions (or an y other emissions), and the first fuel consumption regulations b y NHTSA for these manufacturers. The agencies intend for this program to be a unified national program so that when a trailer model complies with EPA’s standards it will also comply with NHTSA’s standards. 

### B. **The Trailer Industry (1)**  **Industry Characterization** The trailer industry

encompasses a wide variet y of trailer ap plications and designs. Among these are box trailers (dry vans and refrigerated vans of all sizes) and “non
- box” trailers, including platform (sometimes called “flatbed”), tanker, container chassis, bulk, dump, grain, and man y specialized typ es of trailer s, such as car carriers, pole trailers, and logging trailers. Most trailers are designed for predominant use on paved streets, roads, and highway s (called “highway trailers” for purposes of this proposed rule). A relatively small number of trailers are d esigned for dedicated use in logging and mining operations or for use in applications that we expect would involve little or no time on paved roadway s. A more detailed description of the characteristics that distinguish these trailers is included in Secti on IV.C.(5). The trailer manufacturing industry is very competitive, and manufacturers are highl y responsive to their customers’ diverse demands. The wide range of trailer designs and features reflects the broad variety of customer needs, chief among them ty pically being the ability

to maximize the amount of freight the trailer can transport. Other design goals reflect the numerous, more specialized customer needs. Box trailers are the most common ty pe of trailer and are made in many different lengths, generall y ranging from 28 feet to 53 feet. While all have a rectangular shape, they can vary widely in basic construction design (internal volume and weight), materials (steel, fiberglass composites, aluminum, and wood) and the number and configuration of axles (usuall y two axles closely spaced, but number and spacing of axles can be greater). Box trailer designs may also include additional features, such as one or more side doors, out
- swinging or roll
- up rear doors, side or rear lift gates, and numerous ty pes of undercarriage accessories. Non
- box trailers are uniquely designed to transport a specific type of freight. Platform trailers carry

cargo that may

not be easil y contained within or loaded and unloaded into a box trailer, such as large, nonunifor m equipment or machine components. Tank trailers are often pressure - tight enclosures designed to carry liquids, gases or bulk, dry solids and semi
- solids. There are also a number of other specialized trailers such as grain, dump, automobile hauler, lives tock trailers, construction and heav y - hauling trailers. Chapter 1 of the Draft RIA includes a more thorough characterization of the trailer industry . The agencies have considered the variety of trailer designs and applications in developing the proposed C O 2 emissions and fuel consumption standards for trailers.Page 247 of 850

**(2) Historical Context for Proposed Trailer Provisions**  (a ) SmartW ay Program EPA’s voluntary

SmartWay

Transport Partnership program encourages businesses to take actions that reduce fuel consumption and CO 2 emissions while cutting costs. (See Section I.A.2.f above). SmartWay

staff work with the shipping, logistics, and carrier communities to identify low carbon strategies and technologies across their transportation supply chains. It is a voluntary , fl eet - targeted program that provides an objective ranking of a fleet’s freight efficiency relative to its competitors. SmartWay Partners commit to adopting fuel
- saving practices and technologies relative to a baseline year as well as tracking their progress
. EPA’s SmartWay

program has accelerated the availability and market penetration of advanced, fuel efficient technologies and operational practices. In conjunction with the SmartWay

Partners Program, EPA established a testing, verification, and designation program, the SmartWay

Technology

Program, to help freight companies identify the equipment, technologies, and strategies that save fuel and lower emissions. SmartWay verifies the performance of aerodynamic equipment and low rolling resistance tires an d maintains a list of verified technologies on its website. The trailer aerody namic technologies verified are grouped in bins that represent one percent, four percent, or five percent fuel savings relative to a typical long
- haul tractor
- trailer at 65
- mph cruise conditions. Historically , use of verified aerody namic devices totaling at least five percent fuel savings, along with verified tires, qualifies a 53
- foot dry van trailer for the “SmartWay Trailer” designation. In 2014, EPA expanded the program to qualify trailers as “SmartWay

Elite” if they

use verified tires and aerody namic equipment providing nine percent or greater fuel savings. The 2014 updates also expanded the SmartWay
designated trailer eligibility to include 53
- foot refrigerated van traile rs in addition to 53
- foot dry van trailers. The SmartWay

Technology

Program continues to improve the technical quality of data that EPA and stakeholders need for verification. EPA bases its SmartWay verifications on common industry

test methods using Sm artWay
- specified testing protocols. Historically , SmartWay ’s aerodynamic equipment verification was performed using the SAE J1321 test procedure, which measures fuel consumption as the test vehicle drives laps around a test track. Under SmartWay ’s 2014 u pdates, EPA expanded its trailer designation and equipment verification programs to allow additional testing options. The updates included a new, more stringent 2014 track test protocol based on SAE’s 2012 update to its SAE J1321 test method, 206 as well as protocols for wind tunnel, coastdown, and possibly computational fluid dy

namics (CFD) approaches. These new protocols are based on stakeholder input, the latest industry standards (i.e., 2012 versions of the SAE fuel consumption and wind tunnel test 207 meth ods), EPA’s own testing and research, and lessons learned from ye ars of implementing technology

206 SAE International, Fuel Consumption Test Procedure
- Ty pe II. SAE Standard J1321. Revised 2012
- 02
- 06. Available at: http://standards.sae.org/j1321_201202/ 207 SAE International. Wind Tunnel Test Procedure for Trucks and Buses. SAE Standard J1252. Revised 2012
- 07
- 16. Available at: http://standards.sae.org/j1252_201207/Page 248 of 850

verification programs. Wind tunnel, coastdown, and CFD testing produce values for aerodynamic drag improvements in terms of coefficient of drag (C D ), which is then related to projected fuel savings using a mathematical curve. 208 SmartWay

verifies tires based on test data submitted by tire manufacturers demonstrating the coefficient of rolling resistance ( C RR) of their tires using either the SAE J1269 or I SO 285 80 test methods. These verified tires have rolling resistance targets for each axle position on the tractor - trailer. SmartWay
- verified trailer tires achieve a C RR of 5.1 kg/metric ton or less on the ISO28580 test method. An operator who replaces the trailer tires with SmartWay
- verified tires can expect fuel consumption savings of one percent or more at a 65
- mph cruise. Operators who apply SmartWay
- verified tires on both the trailer and tractor can achieve three percent fuel consumption savings at 65
- mph. Over the last decade, SmartWay partners have demonstrated measureable fuel consumption benefits by

adding aerodyn amic features and low rolling resistance tires to their 53
- foot dry van trailers. To date, SmartWay has verified over 70 technologies, including nine packages from five manufacturers that have received the Elite designation. The SmartWay Transport program has worked with over 3,000 partners, the majo rit y of which are trucking fleets, and broadly

throughout the suppl y - chain industry , since 2004. These relationships, combined with the Technology Program’s extensive involvement in the HD vehicle technology industry , have provided EPA with significant experience in freight fuel efficiency . Furthermore, the more than 10
- ye ar duration of the voluntary SmartWay

Transport Partnership has resulted in significant fleet and manufacturer experience with innovating and deploying technologies that reduce CO 2 emiss ions and fuel consumption. (b ) California Tractor

- Trailer Greenhouse Gas Regulation The state of California passed the Global Warming Solutions Act of 2006 (Assembly Bill 32, or AB32), enacting the state’s 2020 greenhouse gas emissions reduction goal into l aw. Pursuant to this Act, the California Air Resource Board (CARB) was required to begin developing earl y actions to reduce GHG emissions. As a part of a larger effort to comply with AB32, the California Air Resource Board issued a regulation entitled “H eavy- Duty Greenhouse Gas Emission Reduction Regulation” in December 2008. This regulation reduces GHG emissions by requiring improvement in the efficiency of heav y - dut y tractors and 53 foot or longer dry and refrigerated box trailers that operate in Cali fornia. 209 The program is being phased in between 2010 and 2020. Small fleets have been allowed special compliance opportunities to phase in the retrofits of their existing trailer fleets through 2017. The regulation requires affected trailer fleet owners to either use SmartWay
-

208 McCallen, R., et al. Progress in Reducing Aerodynamic Drag for Higher Efficiency of Heavy Duty Trucks (Class 7
- 8). SAE Technical Paper. 1999
- 01
- 2238. 209 Recently, in December 2013, ARB adopted regulations that establish its own parallel Phase 1 program with standards consistent with the EPA Phase 1 tractor standards. On December 5, 2014 California’s Office of Administrative Law approved ARB’s adoption of the Phase 1 standards, with an effective date of December 5, 2014Page 249 of 850

verified trailers or to retrofit trailers with SmartWay
- verified technologies. The efficiency improvements are achieved through the use of aerody namic equipment and low rolling resistance tires on both the tractor and trailer. EPA has granted a waiver for this California program. 210 (c) NHTSA Safety

-Related Regulations for Trailers and Tires NHTSA regulates new trailer safety through regulations. Table IV
- 1 lists the current regulations in place related to trailers. Trailer manufacturers will continue to be required to meet current safety regulations for the trailers they produce. We welcome any comments on additional regulations th at are not included and particularly those that may

be incompatible with the regulations outlined in this proposal. FMVSS Nos. 223 and 224 211 require installation of rear guard protection on trailers. The definition of rear extremity of the trailer in 223 l imits installation of rear fairings to a specified zone behind the trailer. The agencies request comment on any issues associated with installing potential boat tails or other rear aerodyn amic fairings that would be more effective than current designs, gi ven the current definition of trailer rear extremity in FMVSS 223. **Table IV**  **- 1**  **Current NHTSA Statutes and Regulations Related To Trailers** Reference Title 49 CFR 565 Vehicle Identification Number (VIN) Requirements 49 CFR 566 Manufacturer Identification 49 CFR 567 Certification 49 CFR 568 Vehicles Manufactured in T wo or More Stages 49 CFR 569 Regrooved Tires 49 CFR 571 Federal Motor Vehicle Safety Standards 49 CFR 573 Defect and Noncompliance Responsibility and Reports 49 CFR 574 Tire Identification and Recordkeeping 49 CFR 575 Consumer Information 49 CFR 576 Record Retention (d ) Additional DOT Regulations Rela ted to Trailers In addition to NHTSA’s regulations, DOT’s Federal Highway Administration (FHWA) regulates the weight and dimensions of motor vehicles on the National Network. 212 FHWA’s regulations limit states from setting truck size and weight limits beyo nd certain ranges for vehicles used on the National Network. Specifically , vehicle weight and truck tractor
- semitrailer

210 See EPA’s waiver of CARB’s heavy
- duty tractor - trailer greenhouse gas regulation applicable to new 2011 through 2013 model year Class 8 tractors equipped with integrated sleeper berths (sle eper - cab tractors) and 2011 and subsequent model year dry
- can and refrigerated
- van trailers that are pulled by such tractors on California highways at 79 FR 46256 (August 7, 2014), 211 49 CFR 571.223, 224. 212 23 CFR 658.9.Page 250 of 850

length and width are limited by FHWA. 213 EPA and NHTSA do not anticipate an y conflicts between FHWA’s regulations and those proposed in this rulemaking. **(3) Agencies’ Outreach in Developing This Proposal**  In developing this proposed rule, EPA and NHTSA staff met and consulted with a wide range of organizations that have an interest in trailer regulations. Staff from both agencies met representatives of the Truck Trailer Manufacturers Association, the National Trailer Dealers Association, and the American Trucking Association, including their Fuel Efficiency Advisory Committee and their Technology and Maintenance Council. We also met w ith and visited the facilities of several individual trailer manufacturers, trailer aerodynamic device manufacturing companies, and trailer tire manufacturers, as well as visited an aerodyn amic wind tunnel test facility and two independent tire testing fac ilities. The agencies consulted with representatives from California Air Resources Board, the International Council on Clean Transportation, the North American Council for Freight Efficiency , and several environmental NGOs. In addition to these informal meetings, and as noted above, EPA also conducted several outreach meetings with representatives from small business trailer manufacturers as required under section 609(b) of the Regulatory Flexibility

Act (RFA) and amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). EPA convened a Small Business Advocacy

Review (SBAR) Panel, and additional information regarding the findings and recommendations of the Panel are available in Section XIV below and in the Panel’s final report. 214 EPA worked with NHTSA to propose flexibilities in response to EPA’s SBAR Panel (as outlined in Section IV. F (6) (f) with more detail provided in Chapter 12 of the draft RIA). We welcome comments from all entities and the public to all aspects of this proposal. 

### C. **Proposed Phase 2 Trailer Standards** This NPRM proposes, for the first time, a set of CO 2 emission and fuel consumption standards for manufacturers of new trailers that would phase in over a period of nine years and continue to reduce CO 2 emissions and fuel consumption in the years to follow. The proposed standards are expressed as overall CO 2 emissions and fuel consumption performance standards considering the trailer as an integral part of the tractor
- trailer vehicle. The agencies are proposing trailer standards that we believe well implement our respective statutory

obligations. The agencies believe that a proposed set of standards with similar stringencies, but less lead
- time (referred to as “Alternative 4” and discussed in more detail later) has the potential to be the maximum feasible alternative within the meaning of section 32902 (k) of EI SA, and appropriate under EPA’s CAA authority ( sections 202 (a)(1) and (2) )
. H owever, based on the evidence currently before us, EPA and NHTSA have outs tanding

213 23 CFR 658. 214 Final Report of the Small Business Advocacy Review Panel on EPA’s Planned Proposed Rule: Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium
- and Heavy
- Duty Engines and Vehicles: Phase 2, January 15, 2015Page 251 of 850

questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by that alternative . The proposed alternative (referred to as “Alternative 3” and discussed in more detail later) is generally designed to achieve the levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with several ye ars of additional lead
- time. Put another way , the Alternative 3 standards would result in the same stringency as the Alternative 4 standards, but several ye ars later, meaning that manufacturers could, in theory apply new technology

at a more gradual pace and with greater flexibility . Additional lead
- time will also provide for a more gradual implementation of full compliance program, which c ould be espec iall y helpful for this newly
- regulated trailer industry . It is possible that the agencies could adopt, in full or in part, stringencies from Alternative 4 in the final rule. The agencies seek comment on the lead
- time and market penetration in these alter natives. The agencies are not proposing standards for CO 2 emissions and fuel consumption from the transport refrigeration units (TRUs) used on refrigerated box trailers. Additionally , EPA is not proposing standards for hydrofluorocarbon (HFC) emissions from TRUs. See Section IV. C. (4) It is worth noting that the proposed standards for box trailers are based in part on the expectation that the p roposed program would allow emissions averaging. However, as discussed in Section I. A. below, given the specific structure and competitive nature of the trailer industry , we request comment on the advantages and disadvantages of implementing the proposed standards without an averaging program. Commenters addressing the stringency of the proposed standards are encouraged to address stringency in th e context of compliance programs with and without averaging. **(1) Trailer Designs Covered By This Proposed Rule**  As described previousl y, the trailer industry produces man y different trailer designs for many different applications. The agencies are proposing st andards for a majority of these trailers. Note that these proposed regulations apply to trailers designed for being drawn b y a tractor when coupled to the tractor’s fifth wheel. As described in detail in Section IV.C below, the agencies are proposing standards that would phase in between MY 2018 and 2027; the NHTSA standards would be voluntary until MY 2021. The proposed standards would appl y to most ty pes of trailers. For most box trailers, these standards would be based on the use of various technolog ies to improve aerodynamic performance, and on improved tire efficiency through low rolling resistance tires and use of automatic tire inflation (ATI) sy stems. As discussed below, the agencies have identified some trailers with characteristics that limit the aerodynamics that can be applied, and are proposing reduced the stringencies for those trailer ty pes. As described in Sections IV.D. (1)(d) and (2)(d) below, although manufacturers can reduce trailer weight to reduce fuel costs by reducing trailer wei ght, these standards are not predicated on weight reduction for the industry
. The most comprehensive set of proposed requirements would apply to long box trailers, which include refrigerated and non
- refrigerated (dry) vans. Long box trailers are the large st trailer category

and are ty

pically paired with high roof cab tractors that have high annual vehicle miles traveled (VMT) and high average speeds, and therefore offer the greatest potential for CO 2 and fuel consumption reductions. Many of the aerody

nami c and tire technologies considered forPage 252 of 850

long box trailers in this proposal are similar to those used in EPA’s SmartWay program and required b y California’s Heav y - Duty Greenhouse Gas Emission Reduction Regulation. Many manufacturers and operators of box tra ilers have experience with these CO 2 - and fuel consumption
- reducing technologies. In addition to SmartWay partners and those fleets affected by the California regulation, many operators also seek such technologies in response to high fuel prices and the p rospect of improved fuel efficiency . As a result, more data about the performance of these technologies exist for long box trailers than for other trailer types. Short box vans do not have the benefit of programs such as SmartWay to provide an incentive for development of and a reliable evaluation and promotion of CO 2 - and fuel consumption
- reducing technologies for their trailers. In addition, short box trailers are more frequently used in short
haul and urban operations, which may limit the potential ef

fectiveness of these technologies. As such, EPA is proposing less stringent requirements for manufacturers of short box trailers. Some trailer designs include features that can affect the practicality or the effectiveness of devices that manufacturers m ay consider to lower their CO 2 emissions and fuel consumption. We are proposing to recognize box trailers that are restricted from using aerody namic devices in one location on the trailer as “partial
- aero” box trailers. 215 The proposed standards for these trailers are based on the proposed standards for full
- aero box
- trailers, but would be less stringent than when the program is fully phased in. We propose that box trailers that have work
- performing devices in two locations su ch that they inhibit the use of all practical aerodyn amic devices be considered “non
- aero” box trailers in this proposal. The proposed standards for non
- aero box trailers are predicated on the use of tire technologies
-- lower rolling resistance tires and ATI. We are proposing similar standards for non
- box trailers (including applications such as dump trailers and agricultural trailers that are designed to be used both on and off the highway)
. We are proposing to completely exclude several types of trailers from this trailer program . These excluded trailers would include those designed for dedicated in
- field operations related to logging and mining . In addition, we are proposing to exclude heavy
- haul trailers and trailers the primary

function of which is performed while they are stationary . For all of these excluded trailers, manufacturers would not have any regulatory

requirements under this program, and would not be subject to the proposed trailer compliance requirements. We see k comment on the appropriateness of excluding these typ es of trailers from the proposed trailer program and whether other trailer designs should be excluded. Section IV. C. (5) discusses these trailer typ es we propose to exclude and the phy sical characteristics that would define these trailers. In summary , the agencies are proposing separate standards for ten trailer subcategories:

215 Examples of types of work
- performi ng components, equipment, or designs that the agencies might consider as warranting recognition as partial
- aero or non - aero trailers include side or end lift gates, belly boxes, pull
- out platforms or steps for side door access, and drop
- deck designs. See 40 CFR 1037.107 and 49 CFR 535.5(e).Page 253 of 850

– Long box (longer than 50 feet 216 ) dry vans

– Long box (longer than 50 feet) refrigerated vans

– Short box (50 feet and shorter) dry vans

– Short box (50 feet and shorter) refrigerated vans

– Partial
- aero long box dry vans

– Partial
- aero long box refrigerated vans

– Partial
- aero short bo x dry vans

– Partial
- aero short box refrigerated vans

– Non
- aero box vans (all lengths of dry and refrigerated vans)

– Non
- box trailers (tanker, platform, container chassis, and all other ty pes of highway trai lers that are not box trailers ) As discussed in the next section, partial
- aero box trailers would have the same standards as their corresponding full
- aero trailers in the early phase
- in years, and would have separate, less stringent standards as the program is fully implemented. Section IV. C. (5) introduces these proposed partial
- aero trailer standards and Section IV. D. describes the technologies that could be applied to meet these proposed standards. **(2) Proposed Fuel Consumption and CO**  **2 Standards**  As described in previously, it is the combination of the tractor and the trailer that form the useful vehicle, and trailer designs substantially affect the CO 2 emissions and diesel fuel consumption of the tractors pulling them. Note that although the agencies are proposing new CO 2 and fuel consumption standards for trailers separatel y from tractors , we set the numerical level of the trailer standards (see Section IV.D below) in relation to “standard” reference tractors in recognition of their interrelatedness. In other words, the regulatory standards refer to the simulated emissions and fuel consumption of a standard tractor pulling the trailer being certified. The agencies project that these proposed standards, when fully implemented in MY (model year) 2027, would achieve fuel consumption and CO 2 emissions reductions of three to eight percent, depe nding on trailer subcategory . These projected reductions assume a degree of technology

adoption into the future absent the proposed program and are evaluated on a weighted drive cycle (see Section IV. D. (3) . We expect that the MY 2027 standards would be met with high
- performing aerody namic and tire technologies largel y available in the marketplace today . With a lead
- time of more than 10 years, the agencies believe that both trailer construction and bolt
- on CO 2 - and fuel consumption
- reducing technologies will advance well beyond the performance of their current counterparts that exist today . A description of technologies that the agencies consi dered for this proposal is provided in Section IV. D. The agencies designed this proposed trailer program to ensure a gradual progression of both stringency

and compliance requirements in order to limit the impact on this newly
- regulated

216 Most long trailers are 53 feet in length; we are proposing a cut
- point of 50 feet to avoid an unintended incentive for an OEM to slightly shorten a trailer design in order to avoid the new regulatory requirements.Page 254 of 850

industry . The agencies are proposing progressively more stringent standards in three
- ye ar stages leading up to the MY 2027. 217 The agencies are proposing several op tions to reduce compliance burden (see Section I. A. ) in the earl y ye ars as the industry gains experience with the program. EPA is proposing to in itiate its program in 2018 with modest standards for long box dry and refrigerated vans that can be met with common SmartWay
- verified aerodynamic and tire technologies. In this early stage, we expect that manufacturers of the other trailer subcategories w ould meet those standards by using tire technologies onl y. Standards that we propose for the next stages, which we propose to begin in MY 2021, MY 2024, and MY 2027, would graduall y increase in stringency

for each subcategory , including the introduction o f standards for shorter box vans that we expect would be met by appl yi ng both aerody

namic and tire technologies. NHTSA’s regulations would be voluntary until MY 2021 as described in Section IV. C. (3)
. Table IV
- 2 b elow presents th e CO 2 and fuel consumption phase
- in standards, beginning in MY 2018 that the agencies are proposing for trailers. The standards are expressed in grams of CO 2 per ton - mile an d gallons of fuel per 1000 ton
- miles to reflect the load
- carrying capacity of the trailers. Partial
- aero trailers would be subject to the same standards as their corresponding “full aero” trailers for MY 2018 through MY 2026. In MY 2027 and the years to follow, partial
aero trailers would continue to meet the standards for MY 2024. The agencies are not proposing CO 2 or fuel consumption standards predicated on aerodynamic improvements for non
- box trailers or non
- aero box vans at any stage of this propose d program. Instead, we are proposing design standards that would require manufacturers of these trailers to adopt specific tire technologies and thus to comply without aerody

namic devices. We believe that this approach would significantly limit the compl iance burden for these manufacturers and request comment on this provision
. 218

**Table IV**  **- 2**  **Proposed Trailer CO 2**  **and Fuel Consumption Standards for Box Trailers**

217 These stages are consistent with NHTSA’s stability requirements under EISA. 218 The agencies are not proposing provisions to allow averaging for non
- box trailers, non
- aero box trailers, or partial
- aero box trailers, and this reduced flexibility would likel y have the effect of requiring compliant tire technologies to be used.Page 255 of 850

**MODEL YEAR SUBCATEGORY**  **DRY VAN REFRIGERATED VAN**  **LENGTH LONG**  **SHORT LONG**  **SHORT** 2018
- 2020 EPA Standard 83 144 84 147

(CO 2 Grams per Ton
- Mile) Voluntary NHTSA Standard 8.1532 14.1454 8.2515 14.4401 (Gallons per 1,000 Ton
- Mile) 2021
- 2023 EPA Standard 81 142 82 146

(CO 2 Grams per Ton
- Mile) NHTSA Standard 7.9568 13.9489 8.0550 14.3418 (Gallons per 1,000 Ton
- Mile) 2024
- 2026 EPA Standard 79 141 81 144

(CO 2 Grams per Ton
- Mile) NHTSA Standard 7.7603 13.8507 7.9568 14.1454 (Gallons per 1,000 Ton
- Mile) 2027 + EPA Standard 77 140 80 144

(CO 2 Grams per Ton
- Mile) NHTSA Standard 7.5639 13.7525 7.8585 14.1454 (Gallons per 1,000 Ton
- Mile) Differences in the numerical values of these standards among trailer subcategories are due to differences in the tractor
- trailer characteristics, as well as differences in the default payloads , in the vehicle simulation model we used to develop the proposed standards (as described in Section IV. D. (3) (a) below). Lower numerical values in Table IV
- 2 do no t necessarily

indicate more stringent standards. For instance, the proposed standards for dry and refrigerated vans of the same length have the same stringency through MY 2026, but the standards recognize differences in trailer weight and aerodynamic perf ormance due to the TRU on refrigerated vans. Trailers of the same type but different length differ in weight as well as in the number of axles (and tires), tractor typ e, payload and aerody namic performance. Section IV. D. and Chapter 2.10 of the draft RIA provide more details on the characteristics of the tractor
trailer vehicles, with various technologies, that are the basis for these standards
. In developin g the proposed standards for trailers, the agencies evaluated the current level of CO 2 emissions and fuel consumption, the ty pes and availability

of technologies that could be applied to reduce CO 2 and fuel consumption, and the current adoption rates of th ese technologies. Additionally , we considered the necessary lead
- time and associated costs to the industry to meet these standards, as well as the fuel savings to the consumer and magnitude of CO 2 and fuel savings that we project would be achieved as a re sult of these proposed standards. As discussed in more detail later in this preamble and in Chapter 2.10 of the draft RIA, the anal ys es of trailer aerodynamic and tire technologies that the agencies have conducted appear to show that these proposed standards would be the maximum feasible and appropriate in the lead
time provided under each agency ’s respective statutory authorities. We ask that any comments related to stringency

include data whenever possible indicating the potential effectiveness and cost of adding such devices to these vehicles.Page 256 of 850

The agencies request comment on all aspects of these proposed standards, including trailers to be covered and the proposed 50
- foot demarcation between “long” and “short” box vans, the proposed phase
- in schedule, and the stringency of the standards in relation to their cost, CO 2 and fuel consumption reductions, and on the proposed compliance provisions, as discussed in Section I. A. In addition to these proposed trailer standards, the agencies considered standards both less stringent and more stringent than the proposed standards. We specifically request comment on a set of accelerated standards that we co nsidered, as presented in Section IV. E. This set of standards is predicated on performance and penetration rates of the same technologies as the proposed standards, but would reach full implementation three ye ars sooner. **(3) Lead**  **- time Considerations**  As mentioned earlier, although the agencies did not include standards for trailers in Phase 1, box trailer manufacturers have been gaining experience with CO 2 - and fuel consumption
reducing technologies over the past several ye ars, and the agencies expect that trend to continue, due in part to EPA’s SmartWay program and California’s Tractor
- Trailer Greenhouse Gas Regulation. Most manufacturers of long box trailers have some experience installing these aerodynamic and tire technologies for customers. This experience impacts how much lead
- time is necessary

from a technological perspective. EPA is proposing CO 2 emission standards for long box trailers for M Y 2018 that represent stringency levels similar to those used for SmartWay

verification and required for the California regulation, and thus could be met by adopting off

- the
- shelf aerody

namic and tire technologies available today . The NHTSA program from 2 018 through 2020 would be voluntary
. Manufacturers of trailers other than 53
- foot box vans do not have the benefit of programs such as SmartWay

to provide a reliable evaluation and promotion of these technologies for their trailers and therefore have les s experience with these technologies. As such, EPA is proposing less stringent requirements for manufacturers of other highway trailer subcategories beginning in MY 2018. We expect these manufacturers of short box trailers would adopt some aerodynamic an d tire technologies, and manufacturers of other trailers would adopt tire technologies only , as a means of achieving the proposed standards. Some manufacturers of trailers other than long boxes may

not yet have direct experience with these technologies, b ut the technologies they would need are fairly

simple and can be incorporated into trailer production lines without significant process changes. Also, the NHTSA program for these trailers would be voluntary until MY 2021. The agencies believe that the b urdens of installing and marketing these technologies would not be limiting factors in determining necessary lead
- time for manufacturers of these trailers. Instead, we expect that the proposed first
- time compliance and, in some cases, performance testing requirements, would be the more challenging obstacles for this newl y regulated industry . For these reasons, we are proposing that these standards phase in over a period of nine ye ars, with flexibilities that would minimize the compliance and testing burdens in the earl y ye ars of the proposed program (see Section I. A. ).Page 257 of 850

As mentioned previously, EPA is proposing modest standards and several compli ance options that would allow it to begin its program for MY 2018. However, EISA requires four model years of lead
- time for fuel consumption standards, regardless of the stringency level or availability

of flexibilities. Therefore, NHTSA’s proposed fuel consumption requirements would not become mandatory

until MY 2021. Prior to MY 2021, trailer manufacturers could voluntarily

participate in NHTSA’s program, noting that once they made such a choice, they would need to stay

in the program for all succeedin g model ye ars. 219 The agencies believe that the expected period of seven ye ars or more between the issuing of the final rules and full implementation of the program would provide sufficient lead
- time for all affected trailer manufacturers to adopt CO 2 - an d fuel consumption
- reducing technologies or design trailers to meet the proposed standards. **(4) Non**  **- CO**  **2 GHG Emissions from Trailers**  In addition to the impact of trailer design on the CO 2 emissions of tractor
- trailer vehicles, the agencies recognize that refrigerated trailers can also be a source of emissions of HFCs. Specificall y, HFC refrigerants that are used in transport refrigeration units (TRUs) have the potential to leak into the atmosphere. We do not currentl y believe that HFC leakage is likel y to be come a major problem in the near future, and we are not proposing provisions addressing refrigerant leakage of trailer
- related HFCs in this proposed rulemaking. TRUs differ from the other source categories where EPA has adopted (or proposed) to appl y HFC leakage requirements (i.e., air conditioning). We believe trailer owners have a strong incentive to limit refrigerant leakage in order to maintain the operability of the trailer’s refrigeration unit and avoid financial liability

for damage to perishable f reight due to a failure to maintain the agreed
- upon temperature and humidity conditions. In addition, refrigerated van units represent a relativel y small fraction of new trailers. Nevertheless, we request comment on this issue, including any data on ty pi cal TRU charge capacity, the frequency of HFC refrigerant leakage from these units across the fleet, the magnitude of unaddressed leakage from individual units, and how potential EPA regulations might address this leakage issue. **(5) Exclusions and Less**  **- Strin**  **gent Standards** All trailers built before January 1, 2018 are excluded from the Phase 2 trailer program , and from 40 CFR Part 1037 and 49 CFR Part 535 in general (see 1037.5(g) and 535.3( d))
. Furthermore, the proposed regulations do not apply to trailers designed to be drawn b y vehicles other than tractors, and those that are coupled to vehicles with pintle hooks or hitches instead of a fifth wheel. As stated previously , we are proposing that non
- box trailers that are designed for dedicated use w ith in
- field operations related to logging and mining be completely excluded from this Phase 2 trailer program. The agencies believe that the operational capabilities of trailers designed for these purposes could be compromised by the use of aerody

namic d evices or

219 NHTSA adopted a similar voluntary approach in the first years of Phase 1 (see 76 FR at 57106).Page 258 of 850

tires with lower rolling resistance. Additionally , the agencies are proposing to exclude trailers designed for heav y - haul applications and those that are not intended for highway use, as follow s :

– T railer s shorter than 35 feet in length with three axles , and all trailers with four or more axles (including any lift axles)

– Trailers designed to operate at low speeds such that they are unsuitable for n ormal highway operation

– Trailers designed to perform their primary function while stationary

– Trailers intended for temporary or permanent residence, office space, or other work space, such as campers, mobile homes, and carnival trailers

– Trailers designed to transport livestock

– In complete trailers that are sold to a secondary manufacturer for modification to serve a purpose other than transporting freight, such as for offices or storage 220 Where the criteria for exclusion identified above may be unclear for specific trailer models, manufacturers would be encouraged to ask the agencies to make a de termination before production begins. The agencies seek comments on these and an y other trailer characteristics that might make the trailers incompatible with highway use or would restrict their ty pical operating speeds. Because the agencies are proposin g that these trailers be excluded from the program, we are not proposing to require manufacturers to report to the agencies about these excluded trailers. W e seek comments on whether , i n lieu of the exclusion of trailers from the program, the agencies sh ould instead exempt these trailers from the standards, but still require reporting to the agencies in order to verify

that a manufacturer qualifies for an exemption. Inthat case, exempt trailers would have some regulatory requirements (e.g., reporting); again, excluded trailers would have no regulatory

requirements under this proposal. All other trailers would remain covered b y the proposed standards. As described earlier, the proposed program is based on the expectation that manufacturers would be ab le to appl y aerodynamic devices and tire technologies to the vast majority of box trailers, and these standards would be relativel y stringent. We propose to categorize trailers with functional components or work
- performing equipment, and trailers with certain design elements , that could partiall y interfere with the installation or the effectiveness of some aerodyn amic technologies, as “partial
- aero” box trailers. For example, some trailer equipment by

their placement or their need for operator access might not be compatible with current designs of trailer skirts, but a boat tail could be effective on that trailer in the early ye ars of the program. Similarly , a rear lift gate or roll
- up rear door might not be compatible with a current boat tail design, but skirts could be effective. The proposed requirements for these trailers would the same as their full
- aero counterparts until MY 2027, at which time they would continue to be subject to the MY 2024 standards. See 40 CFR 1037.107.

220 Secondary manufacturers who purchase incomplete trailers and complete their constructi on to serve as trailers are subject to the requirements of 40 CFR 1037.620.Page 259 of 850

For trailers for whi ch no aerodynamic devices are practical, the agencies are proposing design standards requiring LRR tires and ATI s ys tems. Trailers for which neither skirt/under
body devices nor rear
- end devices would be likel y to be feasible fall into two categories: non
box trailers and non
- aero box trailers. We believe that there is limited availability of aerodynamic technologies for non
- box trailers (for example, platform (flatbed) trailers, tank trailers , and container chassis trailers)
. Also, f or container chassis trailers, operational considerations, such as stacking of the chassis trailers, impede introduction of aerodyn amic technologies. In addition, manufacturers of these trailer types have little or no experience with aerodynamic technologies designed for the ir products. Non
- aero box trailers, defined as those with equipment or design features that would preclude both skirt/under
- body and rear - end aerodynamic technologies (e.g., a trailer with both a pull
- out platform for side access and a rear lift gate), wou ld be subject to the same tire
- onl y design standards as would non
- box trailers, based exclusively

on the performance of tire and ATI technologies. 221 We recognize that the shortest short box vans (i.e., less than 35 feet) are often pulled in tandem. Since these trailers make up the majority of trailers in the short box van subcategories, we are not proposing standards for short box dry and refrigerated vans based on the use of rear devices. Thus, work
- performing features on the rear of the trailer (e.g., lift gates) would not impact a trailer’s ability

to meet the full
- aero short
- box trailer standards. As a result, we are proposing that all short box vans only be categorized as partial
- aero vans if they have work
performing side features (e.g., bell y boxes). We expect that partial
- aero short dry van trailers would be able to adopt front
- side devices that would achieve the reduced standards. Furthermore, some short box trailers that are not operated in tandem, such as 40
- or 48
- foot trailers, could also be able to adopt rear
- side devices and achieve even greater reductions. Refrigerated short box vans are a special case in that they have TRUs that limit the ability to apply aerodynamic technologies to the front side of the trai lers. Because of this, we are proposing to classify

the shortest refrigerated box vans (shorter than 35 feet) as non
- aero trailers if they are designed with work
- performing side features. Since these trailers may be pulled in tandem and since they

cannot adopt front
- side aerody namic devices, we propose that they meet standards predicated on tire technologies onl y. Short box refrigerated trailers 35 feet and longer would only

qualify for non
- aero standards if they have work
- performing devices on both the side and rear of the trailer. See 40 CFR 1037.107. We request comment on the se proposed provisions for excluding some trailers from the program , including speed restrictions and ph ys ical characteristics that would generall y make them incompatible for highway use. We also request comment on the proposed approach of applying less
- stringent standards to non
- box, non
- aero box, and partial
- aero box trailers.

221 The agencies are not aware of work
- performing equipment that would prevent the use of gap
- reducing trailer devices on dry vans of any length; thus dry vans with side and rear e quipment could qualify as “non
- aero” trailers, even if the manufacturer could install a gap
- reducing device.Page 260 of 850

**(6) In**  **- Use Standards**  Consistent with Section 202(a)(1) of the CAA, EPA is proposing that the emissions standards appl y for the useful life of the trailers. 222 Aerodynamic devices available today , including trailer skirts, rear fairings, under
- body devices, and gap
- reducing fairings, are designed to maintain their phy sical integrity for the life of the trail er. In the absence of failures like detachment, breakage, or misalignment, we expect that the aerodyn amic performance of the devices will not degrade appreciably over time and that the projected CO 2 and fuel consumption reductions will continue for the li fe of the vehicle with no special maintenance requirements. Because of this, EPA does not see a benefit to establishing separate standards that would apply in
- use for trailers. EPA is proposing a regulatory useful life value for trailers of 10 years, and thus the certification standards would appl y in
- use for that period of time. 223 See Section IV. F. (5) (a) for a discussion of other f actors related to trailer useful life. 

### D. **Feasibility of the Proposed Trailer Standards** As discussed below, the agencies’ initial determination, subject to consideration of public comment, is that the standards presented in the Section IV.C.2, are the maximum feasible and appropriate under the agencies’ respective authorities, considering lead time, cost, and other factors. We summarize our anal ys es in this section, and describe them in more detail in the Draft RIA (Chapter 2.10). Our anal ys is of the feasibility of the proposed CO 2 and fuel consumption standards is based on technology

cost and effectiveness values collected from several sources. Our assessment of the proposed trailer program is based on information from:

– Southwest Research Institute e valuation of heav y - duty vehicle fuel efficiency

and costs for NHTSA, 224

– 2010 National Academ y of Sciences report of Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - Duty Vehicles, 225

– TIAX’s assessment of technologies to suppo rt the NAS panel report, 226

– The anal ys is conducted by the Northeast States Center for a Clean Air Future, International Council on Clean Transportation, Southwest Research Institute and

222 NHTSA does not have in
- use standards 223 EPA may perform in
- use testing of any vehicle subject to the standards of this part, includi ng trailers. For example, we may test trailers to verify drag areas or other GEM inputs. 224 Reinhart, T. (2015). Commercial Medium
- and Heavy
- Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report #1. Washington, DC: National Highway Traffic Safety Administration. 225 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heavy
- Duty Vehicles. (“The NAS Report”) Washington, D.C. **,** The National Academies Press. Available electronically from the National Academy Press Website at http://www.nap.edu/catalog.php?record_id=12845. 226 TIAX, LLC. “Ass essment of Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles,” Final Report to National Academy of Sciences, November 19, 2009.Page 261 of 850 TIAX for reducing fuel consumption of heavy
- duty long haul combination tractors (the NESCCAF/I CCT study), 227

– The technology

cost analy sis conducted by I CF for EPA, 228 and

– Testing conducted b y EP A. As an initial step in our analy sis, we identified the extent to which fuel consumption
- and CO 2 - reducing technologies are in u se today
. The technologies include those that reduce aerodynamic drag at the front, back, and underside of trailers, tires with lower rolling resistance, tire inflation technologies, and weight reduction through component substitution. It should be note d that the agencies need not and did not attempt to predict the exact future pathway of the industry ’s response to the new standards, but rather demonstrated one example of how compliance could reasonabl y occur, taking into account cost of the standards (i ncluding costs of compliance testing and certification), and needed lead time. We are proposing that full
- aero box trailer manufacturers have additional flexibility in meeting the standards through averaging. The less complex standards proposed for parti al
- and non
- aero box and non
- box trailers would still provide a degree of technology choices that would meet their standards. For our feasibility

anal ys is, we identified a set of technologies to represent the range of those likely

to be used in the time fr ame of the rule. We then combined these technologies into packages of increasing effectiveness in reducing CO 2 and fuel consumption and projected reasonable rates at which the evaluated technologies and packages could be adopted across the trailer industry . More details regarding our anal ys is can be found in Chapter 2.10.4.1 of the draft RIA. The agencies develop ed the proposed CO 2 and fuel consumption standards for each stage of the program b y combining the projected effectiveness of trailer technologies and the projected adoption rates for each trailer ty pe. We evaluated these standards with respect to the cost of these technologies, the emission reductions and fuel consumption improvements achieved, and the lead
- time needed to deploy the technology

at a given adoption rate. Unlike the other sectors covered b y this Phase 2 rulemaking, trailer manufacturers do no t have experience certifying under the Phase 1 program. Moreover, a large fraction of the trailer industry is composed of small businesses and very few of the largest trailer manufacturers have the same resources available as manufacturers in the other he av y - dut y sectors. The standards have been developed with this in mind, and we are confident the proposed standards can be achieved b y m anufacturers who lack prior experience implementing such standards.

227 NESCCAF, ICCT, Southwest Research Institute, and TIAX. Reducing Heavy
- Duty Long Haul Combination Truck Fuel Consumption and CO 2 Emissions. October 2009. 228 ICF International. “Investigation of Costs for Strategies to Reduce Greenhouse Gas Emissions for Heavy
- Duty On
- Road Vehicles.” July 2010. Docket Number EPA
- HQ
- OAR
- 2010
- 0162
- 0283.Page 262 of 850

**(1) Available Technologies**  Trailer manufacturers can design a trailer to reduce fuel consumption and CO 2 emissions by addressing the trailer’s aerody namic drag, tire rolling resistance and weight. In this section we outline the general trailer technologies that the agencies considered in evaluating the feas ibility of the proposed standards. (a ) Aerodynamic Drag Reduction Historically , the primary

goal when designing the shape of box trailers has been to maximize usable internal cargo volume, while complying with regulatory size limits and minimizing constructi on costs. This led to standard box trailers being rectangular. This basic shape creates significant aerodynamic drag and makes box trailers strong candidates for aerodynamic improvements. Current bolt
- on aerody namic technologies for box trailers are des igned to create a smooth transition of airflow from the tractor, around the trailer, and beyond the trailer. Table IV
- 3 lists general aerody namic tec hnologies that the EPA SmartWay program has evaluated for use on box trailers and a description of their intended impact. Several versions of each of these technologies are commerciall y available and have seen increased adoption over the past decade. Per formance of these devices varies based on their design, their location and orientation on the trailer, and the vehicle speed. More information regarding the agencies’ initial assessment of these devices, including incremental costs is discussed in Chapter 2.10 of the draft RIA. **Table IV**  **- 3**  **Aerodynamic Technologies for Box Trailers** Location on Trailer Example Technologies Intended Impact on Aerodynamics Front Front fairings and gap
- reducing fairings Reduce cross - flow through gap and smoothly transition airflow from tractor to the trailer Rear Rear fairings, boat tails and flow diffusers Reduce pressure drag induced by the trailer wake Underside Side fairings and skirts, and underbody devices, Manage flow of air under the trailer to reduce turbulence, eddies and wake As mentioned previously, SmartWay
- verified technologies are evaluated on 53
- foot dry vans. However, the CO 2 - and fuel consumption
- reducing potential of some aerodyn amic technologies demonstrated on 53
- foot dry vans can be translated to refrigerated vans and box trailers in lengths different than 53 feet and some fleets have opted to add trailer skirts to their refrigerated vans and 28
- foot trailers (often called “pups”). In addition, s ome side skirts have been adapted for non - box trailers (e.g., tankers, platforms, and container chassis), and have shown potential for large reductions in drag. At this time, however, non
- box trailer aerody namic devices are not widel y available, with many still at the prototy

pe stage. The agencies encourage commenters to provide more information and data related to the effectiveness of technologies applied to trailers other than 53
- foot dry and refrigerated vans. “Boat tail” devices, applied to the re ar of a trailer, are typicall y designed to collapse flat as the trailer rear doors are opened. If the tail structure can remain in the collapsed configurationPage 263 of 850

when the doors are closed, the benefit of the device is lost. The agencies request comment on whether we should require that trailer manufacturers using such devices for compliance with the proposed standards onl y use designs that automatically deploy when the vehicle is in motion. The agencies are aware that phy sical characteristics of some box tra ilers influence the technologies that can be applied. For instance, the TRUs on refrigerated vans are located at the front of the trailer, which prohibits the use of current gap
- reducers. Similarly , drop deck dry vans have lowered floors between the landing gear and the trailer axles that limit the ability to use side skirts. The agencies considered the availability and limitations of aerodynamic technologies for each trailer ty pe evaluated in our feasibility anal ys is of the proposed and alternative stan dards. (b ) Tire Rolling Resistance On a ty pical Class 8 long
- haul tractor
- trailer, over 40 percent of the total energy loss from tires is attributed to rolling resistance from the trailer tires. 229 Trailer tire rolling resistance values collected b y the age ncies for Phase 1 indicate that the average coefficient of rolling resistance (C RR) for new trailer tires was 6.0 kg/ton. This value was applied for the standard trailer used for tractor compliance in the Phase 1 tractor program. For Phase 2, the agencie s consider all trailer tires with C RR values below 6.0 kg/ton to be “lower rolling resistance” (LRR) tires. For reference, a trailer tire that qualifies as a SmartWay
- verified tire must meet a C RR value of 5.1 kg/ton, a 15 percent C RR reduction from the trailer tire identified in Phase 1. Our research of rolling resistance indicates an additional C RR reduction of 15 percent or more from the SmartWay

verification threshold is possible with tires that are available in the commercial market today
. For this p roposal, the agencies are proposing to use the same rolling resistance baseline value of 6.0 kg/ton for all trailer subcategories. We request comment on the appropriateness of 6.0 kg/ton as the proposed C RR threshold for all regulated trailers. Specifically , the agencies would like more information on current adoption rates of and C RR values for models of LRR tires currentl y in use on short box trailers and the various non
- box trailers. Similar to the case of tractor tires, LRR tires are available as eith er dual or as single wide
based tires for trailers. Single wide
- based tires achieve C RR values that are similar to their dual counterparts, but have an added benefit of weight reduction, which can be an attractive option for trailers that frequentl y maxim ize cargo weight. (See Section IV.D.1.d below ). (c) Tire Pressure Systems The inflation pressure of tires also impacts the rolling resistance. Tractor
- trailers operating with all tires under
- inflated b y 10 psi have been shown to increase fuel consumed b y

229 “T ires & Truck Fuel Economy: A New Perspective”, The Tire Topic Magazine, Special Edition Four, 2008, Bridgestone Firestone, North American Tire, LLC. Available online : http://www.trucktires.com/bridgestone/us_eng/brochures/pdf/08
- Tires_and_Truck_Fuel_Economy.pdfPage 264 of 850

up to 1 percent. 230 Tires can graduall y lose pressure from small punctures, leaky valves or simply diffusion through the tire casing. Changes in ambient temperature can also have an effect on tire pressure. Trailers that remain unused for long periods of tim e between hauls may experience an y of these conditions. A 2003 FMCSA report found that nearly 1 in 5 trailers had at least 1 tire under
- inflated by 20 psi or more. If drivers or fleets are not diligent about checking and attending to under
- inflated tires , the trailer may have much higher rolling resistance and much higher CO 2 emissions and fuel consumption. Tire pressure monitoring (TPM) and automatic tire inflation (ATI) s ys tems are designed to address under
- inflated tires. Both s ys tems alert drivers if a tire’s pressure drops below its set point. TPM systems are simpler and merel y monitor tire pressure. Thus, they require user
interaction to re inflate to the appropriate pressure. Today ’s ATI s ys tems, on the other hand, ty picall y take advantage of trailers’ air brake s ys tems to supply air back into the tires (continuously

or on demand) until a selected p ressure is achieved. In the event of a slow leak, ATI s ys tems have the added benefit of maintaining enough pressure to allow the driver to get to a safe stopping area. The agencies believe TPM sy stems cannot sufficiently guarantee the proper inflation of tires due to the inherent user
- interaction required. Therefore, ATI s ys tems are the only pressure s ys tems the agencies are proposing to recognize in Phase 2. Benefits of ATI s ys tems in individual trailers vary depending on the base level of maintenance already performed by the driver or fleet, as well as the number of miles the trailer travels. Trailers that are well maintained or that travel fewer miles will experience less benefits from ATI s ys tems compared to trailers that often drive with poorly in flated tires or log many miles. The agencies believe ATI s ys tems can provide a CO 2 and fuel consumption benefit to most trailers. With ATIuse, trailers that have lower annual vehicle miles traveled (VMT) due to long periods between uses would be less su sceptible to low tire pressures when they resume activity . Trailers with high annual VMT would experience the fuel savings associated with consistent tire pressures. Automatic tire inflation sy stems could provide a CO 2 and fuel consumption savings of 0.5
- 2.0 percent, depending on the degree of under
- inflation in the trailer sy stem. See Section IV.D.3.d below for discussion of our estimates of these factors, as well as estimates of the degree of adoption of ATI s ys tems prior to and at various points in the phase
- in of the proposed program. The use of AT I s ys tems can result in cost savings beyond reducing fuel costs. For example, drivers and fleets that diligently maintain their tires would spend less time and money to inspect each tire. A 2011 FMCSA estim ated under
- inflation accounts for one service call per ye ar and increases tire procurement costs 10 to 13 percent. The study found that total operating costs can increase b y $600 to $800 per year due to under
- inflation. 231

230 “T ire Pressure Systems
- Confidence Report”. North American Council for Freight Efficiency. 2013. Available online: http://nacfe.org/wp
- content/uploads/2014/01/TPS
- Detailed
- Confidence
- Report1.pdf 231 TMC Future Truck Committee Presentation “FMCSA Tire Pressure Monitoring Field Operational Test Results,” February 8, 2011Page 265 of 850

(d ) Weight Reduction Reduction in trailer tare (i.e., empty) weight can lead to fuel efficiency reductions in two way s. For applications where payload is not limited by weight restrictions, the overall weight of the tractor and trailer would be reduced and would lead to improved fuel effic iency . For applications where payload is limited by weight restrictions, the lower trailer weight would allow additional payload to be transported during the truck’s trip, so emissions and fuel consumption on a ton - mile basis would decrease. There are we ight reduction opportunities for trailers in both the structural components and in the wheels/tires. Material substitution (e.g., replacing steel with aluminum or lighter
- weight composites) is feasible for components such as roof bows, side and corner pos ts, cross members, floor joists, floors, and van sidewalls. Similar material substitution is feasible for wheels (e.g., substituting aluminum for steel). Weight can also be reduced through the use of single wide
- based tires replacing two dual tires. Lowe r weight is a desired trailer attribute for many customers, and most trailer manufacturers offer options that reduce weight to some degree. Some of these manufacturers, especiall y box van makers, market trailers with lower
- weight major components, such as light
weight composite van sidewalls or aluminum floors, especiall y to customers that expect to frequentl y reach regulatory weight limits (i.e., “weigh out”) and are willing to pay a premium for the ability

to increase cargo weight without exceeding overall vehicle weight. Alternatively , manufacturers that primarily design trailers for customers that do not have weight limit concerns (i.e., their payloads frequently fill the available trailer cargo space before the weight limit is reached, or “cube out”), or for customers that have smaller budgets, may continue to design trailers based on traditional, heavier materials, such as wood and steel. There is no clear “baseline” for current trailer weight against which lower
- weight designs could be compared for regulatory purposes. For this reason, the agencies do not believe it would be appropriate or fair across the industry to appl y overall weight reductions toward compliance. However, the agencies do believe it would be appropriate to allow a manufacturer to account for weight reductions that involve substituting very specific, traditionally

heavier components with lower
- weight options that are not currentl y widel y adopted in the industry. We discuss how we apply weight reduction in developing the standard s in Section IV . D. (2) (d) below. **(2) Technological Basis of the Standards**  The anal ys is below presents one possible set of technology designs by

which trailer manufacturers could reasonably achieve the goals of the program on average. However, in practice, trailer manufacturers could choose different technologies, versions of te chnologies, and combinations of technologies that meet the business needs of their customers while complying with this proposed program. Much of our anal ys is is performed for box trailers, which have the most stringent proposed standards. As mentioned p reviously , we have separate standards for short and long box vans, and a trailer length of 50 feet is proposed as the cut
- point to distinguish the two length categories. For the purpose of this anal ys is, long trailers are represented by 53
- foot vans and s hort trailers are represented by single, 28
- foot (“pup”) vans. These trailer lengths make up the largest fraction of the vans in the two categories. The agencies recognize that many 28
- footPage 266 of 850

short vans are operated in tandem . However, these trailers are sold individually , and require a “dolly”, often sold by

a separate manufacturer, to connect the trailers for tandem operation. In addition, the other trailer ty pes considered short vans in this proposal (e.g., 40
- foot and 48
- foot) typicall y operate as single tr ailers. To minimize complexity , we are proposing that 28
- foot trailers represent all short refrigerated and dry vans for both compliance and for this feasibility anal ys is. This means that manufacturers would not need to perform tests (or report device manufacturers’ test data) of the performance of devices for each trailer length in the short van category . Although this approach would provide a conservative estimate of actual CO 2 emissions and fuel consumption reductions for the short van category , the a gencies believe that the need to avoid an overly complex compliance program justifies this approach. We request comment on this approach to evaluating short box trailers. (a ) Aerodynamic Packages In order to evaluate performance and cost of the aerody namic te chnologies discussed in the previous section, the agencies identified “packages” of individual or combined technologies that are being sold today

on box trailers. The agencies also identified distinct performance levels (i.e., bins) for these technologies based on EPA’s aerody namic testing. The agencies recognize that there are other technology options that have similar performance. We chose the technologies presented here based on their current adoption rates and effectiveness in reducing CO 2 and fuel c onsumption. Bin I represents a base trailer with no aerodynamic technologies added. There is no cost associated with this bin. Bin II achieves small reductions in CO 2 and fuel consumption. This bin includes a gap reducing fairing added to a long dry v an or a skirt added to a solo short dry van. 232 Bin III includes devices that would achieve SmartWay ’s verification threshold of four percent at cruise speeds. Some basic skirts and boat tails would achieve these levels of reductions for long box trailers. A gap reducer and a basic skirt on a short dry van would meet this level of performance. Bin IV technologies are more effective, single aerodyn amic devices for long box trailers, including advanced skirts or boat tails, that achieve larger reductions in drag than the technologies in Bin III. The combination of an advanced skirt and gap reducer on a short dry van are also expected to achieve this bin. Bin V levels of performance were not observed in EPA’s aerodyn amic testing for short box trailers. It is possible that a gap reducer, skirt , and boat tail could achieve this performance, but boat tails are not feasible for 28
- foot trailers operated in tandem unless the trailer is located in the rear position. For this analy sis, the agencies only evaluate d solo pup trailers and, therefore, did not evaluate an y technologies for short box trailers beyond Bin IV. For this proposed rulemaking, we believe a Bin V level of performance can be achieved for long box trailers b y either highl y effective single devic es or by appl yi ng a combination of basic boat tails

232 The agencies recognize that many 28
- foot pup trailers are often operated in tandem. However, we are regulating and evaluating short dry vans as solo trailers since they are sold individually and the short box regulatory subcategories also include trailer sizes not often operated in tandem (e.g., 40
- foot and 48
- foot trailers).Page 267 of 850

and skirts. We do not currentl y have data for a single aerodyn amic device that fits this bin and we evaluated it as a combination of a basic tail and skirt. Bin VI combines advanced skirts and boat tail technologies on long box trailers. This bin is expected to include many technologies that qualify

for SmartWay ’s “Elite” designation. Bin VII represents an optimized system of technologies that work together to sy nergistically

address each of the main areas of drag and achieves aerody namic improvements greater than SmartWay ’s “Elite” designation. We are representing Bin VII with a gap reducer, and advanced tail and skirt. Bin VIII is designed to represent aerody namic technologies that may become avail able in the future, including aerodyn amic devices yet to be designed or approaches that would incorporate changes to the construction of trailer bodies. We have not anal yz ed this final bin in terms of effectiveness or cost, but are including it to account for future advancements in trailer aerodynamics. For this proposal, aerodynamic performance is evaluated using a vehicle’s aerodynamic drag area, C D A. EPA collected aerodynamic test data for several tractor
- trailer configurations, including 53
- foot dry vans and 28
- foot dry van trailers with many

of these technology

packages. The agencies developed bins, somewhat similar to the aerodyn amic bins in the Phase 1 and proposed Phase 2 tractor programs, based on results from our test program. However, unlike the tractor program, we grouped the technologies b y changes in C D A (or “delta C D A”) rather than b y absolute values. In other words, each bin would comprise aerodyn amic technologies that provide similar improvements in drag. This delta C D A classification methodology , which measures improvement in performance relative to a baseline, is similar to the SmartWay technology

verification program with which most trailer manufacturers are familiar. Table IV
- 4 illustrates the bin structure that the agencies are proposing as the basis for compliance. The table shows example technology packages that might be included in each bin based on EPA’s testi ng of 53
- foot dry vans and solo 28
- foot dry vans. The agencies believe these bins apply

to other box trailers (refrigerated vans and lengths other than 28 and 53 feet), which will be described in more detail in Section IV.D.3.b. These bins cover a wide e nough range of delta C D As to account for the uncertainty seen in EPA’s aerodynamic testing program due to procedure variability , the use of different test methods, or different models of tractors, trailers and devices. A more detailed description of the d evelopment of these bins can be found in the draft RIA, Chapter 2.10. We welcome comments and additional data that may support or suggest changes to these bins.Page 268 of 850 **Table IV**  **- 4**  **Technology Bins used to Evaluate Tr ailer Benefits and Costs**  Bin Delta C dA AVERAGE DELTA C D A Example Technologies

53
- FOOT DRY VAN 28
- FOOT DRY VAN Bin I < 0.09 0.0 No Aero Devices No Aero Devices Bin II 0.10
- 0.19 0.1 Gap Reducer Skirt Bin III 0.20
- 0.39 0.3 Basic Skirt or Basic Tail Skirt + Gap Reducer Bin IV 0.40
- 0.59 0.5 Advanced Skirt or Tail Adv. Skirt + Gap Reducer Bin V 0.60
- 0.79 0.7 Basic Combinations Bin VI 0.80
- 1.19 1.0 Advanced Combinations (including SmartWay Elite) Bin VII 1.20
- 1.59 1.4 Optimized Com binations Bin VIII > 1.6 1.8 Changes to Trailer Construction Note: A blank cell indicates a zero or NA value in this table. The agencies used EPA’s Greenhouse gas Emissions Model (GEM) vehicle simulation tool to conduct this analysis. (See Section F.1 below for more about GEM) Within GEM, the aerodynamic performance of each trailer subcategory is evaluated b y subtracting the delta C D A shown in Table IV
- 4 from the C D A value representing a specific standard tractor pulling a zero
technology

trailer. The agencies chose to model the zero
- technology long box dry

van using a C D A value of 6.2 m 2 (the average C D A from EPA’s coastdown testing). For lon g box refrigerated vans, a two percent reduction in C D A was assumed to account for the aerody namic benefit of the TRU at the front of the trailer. Short box dry vans also received a two percent lower C D A value compared to its 53
- foot counterpart, consiste nt with the reduction observed in EPA’s wind tunnel testing. The C D A value assigned to the refrigerated short box vans was an additional two percent lower than the short box dry van. Non
- aero box trailers are modeled as short box dry

vans. The trailer s ubcategories that have design standards (i.e., non
- box and non
aero box trailers) do not have numerical standards to meet, but they were evaluated in this feasibility anal ys is in order to quantify the benefits of including them in the program. Non
- aero bo x trailers are modeled as short dry vans. Non
- box trailers, which are modeled as flatbed trailers, were assigned a drag area of 4.9 m 2 , as was done in the Phase 1 tractor program for low roof day cabs. Table IV
- 5 illustrates the Bin I drag areas (C D A) associated with each trailer subcategory
. **Table IV**  **- 5**  **Baseline C D**  **A Values Associated with Aerodynam ic Bin**  **I ( Zero Trailer Technologies)**  TRAILER SUBCATEGORY DRY VAN Long Dry Van 6.2 Short Dry Van 6.1 Long Ref. Van 6.1 Short Ref. Van 6.0 Non
- Aero Box 6.1 Non
- Box 4.9 (b ) Tire Rolling Resistance Similar to the proposed Phase 2 tractor and vocational vehicle programs, the agencies are proposing a tire program based on adoption of lower rolling resistance tires. Feedback from several box trailer manufacturers indicates that the standard tires offered on their new trailers arePage 269 of 850

SmartWay
- verified tires (i.e., C RR of 5.1 kg/ton or better). An informal survey of members from the Truck Trailer Manufacturers Association (TTMA) indicates about 35 percent of box trailers sold today

have SmartWay

tires. 233 While some trailers continue to be sold with tires of higher roll ing resistances, the agencies believe most box trailer tires currently achieve the Phase 1 trailer tire C RR of 6.0 kg/ton or better. The agencies evaluated two levels of tire performance for this proposal beyond the baseline trailer tire rolling resistance level (TRRL) of 6.0 kg/ton. The first performance level was set at the criteria for SmartWay
- verification for trailer tires, 5.1 kg/ton, which is a 15 percent reduction in C RR from the baseline . As mentioned previously , several tire models available tod ay achieve rolling resistance values well below the present SmartWay threshold. Given the multiple ye ar phase
- in of the standards, the agencies expect that tire manufacturers will continue to respond to demand for more efficient tires and will offer incre asing numbers of tire models with rolling resistance values significantl y better than today’s typical LRR tires. In this context, we believe it is reasonable to expect a large fraction of the trailer industry could adopt tires with rolling resistances at a second performance level that would achieve an additional eight percent reduction in rolling resistance (a 22 percent reduction from the baseline tire), especially in the later stages of the program. The agencies project the C RR for this second level of performance to be a value of 4.7 kg/ton. The agencies evaluated these three tire rolling resistance levels, summarized in Table IV
- 6 , in the feasibility

analy sis of the following sections. GEM simulations that apply L evel 1 and 2 tires result in CO 2 and fuel consumption reductions of two and three percent from the baselin e tire, respectivel y. It should be noted that these levels are for the feasibility analy sis only . For compliance, manufacturers would have the option to use tires with any rolling resistance and would not be limited to these TRRLs.

**Table IV**  **- 6**  **Summary of Trailer Tire Rolling Resistance Levels Evaluated**

Tire Rolling Resistance Level C RR (kg/ton) Baseline 6.0 Level 1 5.1 Level 2 4.7 (c) Automatic Tire Inflation Systems NHTSA and EPA recognize the role of proper tire inflation in maintaining optimum tire rolling resistance during normal trailer operation. For this proposal, rather than require performance testing of ATIs ys tems, the agencies are proposing to recognize the benefits of ATI sy stems with a single default reduction for manufacturers that incorporate ATI s ys tems into their trailer designs. Based on information available today , we believe that there is a narrow range of

233 Truck Trailer Manufacturers Association letter to EPA. Rece ived on October 16, 2014. Docket EPA
- HQ
- OAR
2014
- 0827Page 270 of 850

performance among technologies available and among s ys tems in ty pical use. We propose to assign a 1.5 percent reduction in CO 2 and fuel consumption for all trailers that implement ATI sy stems, based on information available today
. 234 We believe the use of these sy stems can consistently

ensure that tire pressure and tire rolling resistance are maintained. We selected the levels of the proposed trailer standards with the expectation that a high rate of adoption of ATI sy stems would oc cur across all on
- highway trailers and during all years of the phase
- in of the program. See Section IV.D.3.d below for discussion of our estimates of these factors, as well as estimates of the degree of adoption of ATI s ys tems prior to and at various points in the phase
- in of the proposed program. The informal survey of members from the Truck Trailer Manufacturers Association (TTMA) indicates about 40 percent of box trailers sold today have ATI s ys tems. 235 (d ) Weight Reduction The agencies are proposing complia nce provisions that would limit the weight
- reduction options to the substitution of specified components that can be clearl y isolated from the trailer as a whole. For this proposal, the agencies have identified several conventional components with availab le lighter
- weight substitutes (e.g., substituting conventional dual tires mounted on steel wheels with wide
- based single tires mounted on aluminum wheels). We are proposing values for the associated weight
- related savings that would be applied with these substitutions for compliance. The proposed component substitutions and their associated weight savings are presented in the draft RIA, Chapter 2.10.2.4 and in proposed 40 CFR 1037.520. We believe that the initial cost of these component substitutions is currentl y substantial enough that onl y a relativel y small segment of the industry has adopted these technologies today. The agencies recognize that when weight reduction is applied to a trailer, some operators will replace that saved weight with addition al payload. To account for this in EPA’s GEM vehicle simulation tool, it is assumed that one
- third of the weight reduction will be applied to the payload. For tractor
- trailers simulated in GEM, it takes a weight reduction of nearl y 1,000 pounds before a one percent fuel savings is achieved. The component substitutions identified by the agencies result in weight reductions of less than 500 pounds, yet can cost over $1,000. The agencies believe that few trailer manufacturers would apply weight reduction s olely

as a means of achieving reduced fuel consumption and CO 2 emissions. Therefore, we are proposing standards that could be met without reducing weight

– that is, the compliance path set out b y the agencies for the proposed standards does not include we ight reduction. However, we are proposing to offer weight reduction as an option for box trailer manufacturers who wish to apply it to some of their trailers as part of their compliance strategy
.

234 See the Chapter 2.10.2.3 of the draft RIA. 235 Truck Trailer Manufacturers Association letter to EPA. Received on October 16, 2014. Docket EPA
- HQ
- OAR
2014
- 0827Page 271 of 850

The agencies have identified 11 common trailer components that have lighter weight options available (see 40 CFR 1037.520 ) 236 , 237 , 238 , 239 Manufacturers that adopt these technologies would sum the associated weight reductions and apply those values in GEM. As mentioned previously , we are restricting the weight reducti on options to those listed in 40 CFR 1037.520. We are requesting comment on the appropriateness of the specified weight reductions from component substitution. In addition, we seek weight and cost data regarding additional components that could be offere d as specific weight reduction options. The agencies request that any such components be applicable to most box trailers, and that the reduced weight option not currentl y be in common use. **(3) Effectiveness, Adoption Rates, and Costs of Technologies for the**  **Proposed Standards**  The agencies evaluated the technologies above as they apply to each of the trailer subcategories. The next sections describe the effectiveness, adoption rates and costs associated with these technologies. The effectiveness and adoption rates are then used to derive the proposed standards. (a ) Zero
- Technology Baseline Tractor

- Trailer Vehicles The regulatory

purpose of EPA’s heavy
- duty vehicle compliance tool, GEM, is to combine the effects of trailer technologies through simulation so that they can be expressed as g/ton
- mile and gal/100 ton
- mile and thus avoid the need for direct testing of each trailer model being certified. The proposed trailer program has separate standards for each trailer subcategory , and a unique tractor
- trailer ve hicle was chosen to represent each subcategory for compliance. In the Phase 2 update to GEM, each trailer subcategory is modeled as a particular trailer being pulled by a standard tractor depending on the phy sical characteristics and use pattern of the tr ailer. Table IV
- 7 highlights the relevant vehicle characteristics for the zero
- technology baseline of each subcategory
. Baseline trailer tires are u sed, and the drag area, which is a function of the aerodynamic characteristics of both the tractor and trailer, is set to the Bin I values shown previousl y in Table IV
- 5 . Weight reduction and ATI s ys tems are not applied in these baselines. Chapter 2.10 of the draft RIA provides a detailed description of the development of these baseline tractor
- trailers. The agencies chose to consistently model a Cla ss 8 tractor across all trailer subcategories. We recognize that Class 7 tractors are sometimes used in certain applications. However, we believe Class 8 tractors are more widely available, which will make it easier for trailer

236 Scarcelli, Jamie. "Fuel Efficiency for Trailers" Presented at ACEEE/ICCT Workshop: Emerging Technologies for Heavy
- Duty Vehicle Fuel Efficiency, Wabash National Corporation. July 22, 2014 237 "Weight Reduction: A Glance at Clean Freight Strategies", EPA SmartWay. EPA420F09
- 043. Available at: http://permanent.access.gpo.gov/gpo38937/EPA420F09
- 043.pdf 238 CBI obtained during SBREFA Panel. 239 Randall Scheps, Aluminum Association, “The Aluminum Advantage: Exploring Commercial Vehicles Applications,” presented in Ann Arbor, Michigan, June 18, 2009Page 272 of 850

manufacturers to obtain a qualified tractor if they choose to perform trailer testing. We request comment on the use of Class 8 tractors as part of the tractor
- trailer vehicles used in the compliance simulation as well as performance testing. We ask that commenters include data, where available, related to the current use and availability of Class 7 and 8 tractors with respect to the trailer types in each trailer subcategory.

**Table IV**  **- 7**  **Characteristics of the Z ero**  **- Technology Baseline Tractor**  **- Trailer Vehicles**  DRY VAN REFRIGERATED VAN NON
AE RO BOX NON
- BOX Trailer Length Long Short Long Short All Lengths All Lengths Tractor Class Class 8 Class 8 Class 8 Class 8 Class 8 Class 8 Tractor Cab Type Sleeper Day Sleeper Day Day Day Tractor Roof Height High High High High High Lo w Engine 2018 MY 15L, 455 HP 2018 MY

15L, 455 HP 2018 MY

15L, 455 HP 2018 MY

15L, 455 HP 2018 MY

15L, 455 HP 2018 MY

15L, 455 HP Frontal Area (m

2 ) 10.4 10.4 10.4 10.4 10.4 6.9 Drag Area, C D A (m2 ) 6.2 6.1 6.1 6.0 6.1 4.9 Steer Tire RR (kg/ton) 6.54 6.54 6.54 6.54 6.54 6.54 Drive Tire RR (kg/ton) 6.92 6.92 6.92 6.92 6.92 6.92 Trailer Tire RR (kg/ton) 6.00 6.00 6.00 6.00 6.00 6.00 Total Weight (kg) 31978 21028 33778 22828 21028 29710 Payload (tons) 19 10 19 10 10 19 AT I System Use 0 0 0 0 0 0 Weight Reduction (lb) 0 0 0 0 0 0 Drive Cycle Weightings 65
- MPH Cruise 86% 64% 86% 64% 64% 64% 55
- MPH Cruise 9% 17% 9% 17% 17% 17% Transient Driving 5% 19% 5% 19% 19% 19% (b ) Effectiveness of Technologies The agencies are proposing to recognize trailer improvements via four performance parameters: aerodynamic drag reduction, tire rolling resistance reduction, the adoption of ATI sy stems, and b y substituting specific weight
- reducing components. Table IV
- 8 summarizes the performance levels for each of these parameters based on the technology characteristics outlined in Section IV
. D. (2)
.Page 273 of 850 **Table IV**  **- 8**  **Perform ance Param**  **eters for the Proposed Trailer Program**

Aerodynamics (Delta C D A, m2 ) Bin I 0.0 Bin II 0.1 Bin III 0.3 Bin IV 0.5 Bin V 0.7 Bin VI 1.0 Bin VII 1.4 Bin VIII 1.8 Tire Rolling Resistance (C RR , kg/ton) Tire Baseline 6.0 Tire Level 1 5.1 Tire Level 2 4.7 Tire Inflation System (% reduction) AT I System 1.5 Weight Reduction (pounds) Weight 1/3 added to payload, remaining

reduces overall vehicle weight These performance parameters have different effects on each trailer subcategory due to differences in the simulated trailer characteristics. Table IV
- 9 shows the agencies’ estimates of the effectiveness of each parameter for the four box trailer subcategories. Each technology was evaluated using the baseline parameter values for the other technology categories. For example, each aerodyn amic bin was evaluated using the baseline t ire (6.0 kg/ton) and the baseline weight reduction option (zero pounds). The table shows that aerodyn amic improvements offer the largest potential for CO 2 emissions and fuel consumption reductio ns, making them relativel y effective technologies.Page 274 of 850

**Table IV**  **- 9**  **Effectiveness (Percent CO 2**  **and Fuel Savings from Baseline) of Technologies for the Proposed**  **Trailer Program** Aerodynamics Delta C D A (m2 ) Dry Van Refrigerated Van Long Short Long Short Bin I 0.0 0% 0% 0% 0% Bin II 0.1
- 1%
- 1%
- 1%
- 1% Bin III 0.3
- 2%
- 2%
- 2%
- 2% Bin IV 0.5
- 3%
- 4%
- 3%
- 3% Bin V 0.7
- 5%
- 5%
- 5%
- 5% Bin VI 1.0
- 7%
- 7%
- 7%
- 7% Bin VII 1.4
- 10%
- 10%
- 9%
- 10% Bin VIII 1.8
- 13%
- 13%
- 12%
- 12% Tire Rolling Resistance C RR (kg/ton) Dry Van Refrigerated Van Long Short Long Short Baseline 6.0 0% 0% 0% 0% Level 1 5.1
- 2%
- 1%
- 2%
- 1% Level 2 4.7
- 3%
- 2%
- 3%
- 2% Weight Reduction Weight (lb) Dry Van Refrigerated Van Long Short Long Short Base line 0.0 0.0% 0.0% 0.0% 0.0% Al. Dual Wheels 168
- 0.2%
- 0.3%
- 0.2%
- 0.3% Upper Coupler 280
- 0.3%
- 1%
- 0.3%
- 1% Suspension 430
- 0.5%
- 1%
- 0.5%
- 1% Al. Single Wide 556
- 1%
- 1%
- 1%
- 1% (c) Reference Tractor

- Trailer to Evaluate Benefits and Costs In order to evaluate the benefits and costs of the proposed standards, it is necessary to establish a reference point for comparison. As mentioned previously , the technologies described in Section IV . D. (2) exist in the market today , and their adoption is driven by available fuel savings as well as b y the voluntary SmartWay Partnership and California’s tractor
- trailer requirements. For this proposal, the agencies identified reference case tractor
- trailers for each trailer subcategory

based on the technology

adoption rates we project would exist if this proposed trailer program was not implemented. We project that by

2018, absent further California regulation, EPA’s SmartWay program and these research programs will result in about 20 percent of 53
- foot dry and refrigerated vans adopting basic SmartWay
- level aerody namic technologies (meeting SmartWay ’s four percent verification level and B in III from Table IV
- 5), 30 percent adopting more advanced aerodyn amic technologies at the five percent SmartWay
- verification level (Bin IV from Table IV
- 5) and five percent adding combinations of technologies (Bin V). 240 , 241 , 242 Inaddition, we project half of

240 Truck Trailer Manufacturers Association letter to EPA. Received on October 16, 2014. Docket EPA
- HQ
- OAR
2014
- 0827Page 275 of 850

these 53’ box trailers will be equipped with SmartWay
- verified tires (i.e., 5.1 kg/ton or better) and ATI s ys tems as well. The agencies project that market forces will drive an additional one percent increase in adoption of the advanced SmartWay and tire technologies each ye ar through 2027. For anal yt ical purposes, the agencies assumed manufacturers of the shorter box trailers and other trailer subcategories would not adopt these technologies in the timeframe considered and a zero
- technology

baseline is assumed. We are not assuming weight reduction for any of the trailer subcategories in the reference cases. Table IV
- 10 summarizes the reference case trailers for each trailer subcategory
. **Table IV**  **- 10**  **Projected Adoption Rates and Average Perform ance Param**  **eters for the Less Dynamic Reference Case Trailers**  TECHNOLOGY LONG BOX DRY & REFRIGERATED

VANS SHORT BOX, NON
- AE RO BOX, & NON
- BOX TRAILERS Model Year 2018 2021 2024 2027 2018
- 2027 Aerodynamics Bin I 45% 41% 38% 35% 100% Bin II Bin III 20% 20% 20% 20% Bin IV 30% 34% 37% 40% Bin V 5% 5% 5% 5% Bin VI Bin VII Bin VIII Average Delta C D A (m 2 ) a 0.2 0.3 0.3 0.3 0.0 Tire Rolling Resistance Baseline tires 50% 47% 43% 40% 100% Level 1 tires 50% 53% 57% 60% Level 2 tires Average C

RR (kg/ton) a 5.55 5.52 5.49 5.46 6.0 Tire Inflation AT I 50% 53% 57% 60% 0% Average % Reduction a 0.8% 0.8% 0.9% 0.9% 0.0% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : Combines adoption rates with performance levels shown in Table IV
- 8 b : Weight reduction was not projected for the reference case trailers Also shown in Table IV
- 10 are average aerodynamic performance (delta C D A), average tire rolling resistance (C RR), and average reductions due to use of ATI and weight reduction for each stage of the proposed program. These values indicate the performance of theoretical

241 Ben Sharpe (ICCT) and Mike Roeth (North American Council for Freight Efficiency), “Costs and Adopt ion Rates of Fuel
- Saving Technologies for Trailer in the North American On
- Road Freight Sector”, Feb 2014 242 Frost & Sullivan, “Strategic Analysis of North American Semi
- trailer Advanced Technology Market”, Feb 2013Page 276 of 850

average tractor - trailers that the agencies project will be in use if no federal regulations were in place for trailer CO 2 and fuel consumption. The average tractor
- trailer vehicles serve as reference ca ses for each trailer subcategory . The agencies provide a detailed description of the development of these reference case vehicles in Chapter 2.10 in the draft RIA. Because the agencies cannot be certain about future trends, we also considered a second ref erence case. This more dy namic reference case reflects the possibility that absent a Phase 2 regulation, there will be continuing adoption of technologies in the trailer market after 2027 that reduce fuel consumption and CO 2 emissions. This case assumes the research funded and conducted b y the federal government, industry, academia and other organizations will, after 2027, result the adoption of some technologies beyond the levels required to comply with existing regulatory

and voluntary

programs. One ex ample of such research is the Department of Energy Super Truck program which has a goal of demonstrating cost
- effective measures to improve the efficiency

of Class 8 long
- haul freight trucks by 50 percent by

2015. 243 This reference case assumes that by 2040 , 75 percent of new trailers will be equipped with SmartWay
- verified aerody namic devices, low rolling resistance tires, and ATI s ys tems. Table IV
- 11 shows the agencies’ projected adoption rates of technologies in the more dy namic reference case.

243 Daimler Truck North America. SuperTruc k Program Vehicle Project Review
. June 19, 2014. Docket EPA
- HQ
OAR
- 2014
- 0827Page 277 of 850

**Table IV**  **- 11**  **Projected Adoption Rates and Average Perform ance Param**  **eters for the More Dynam ic**  **Reference Case** TECHNOLOGY LONG BOX DRY & REFRIGERATED V ANS SHORT BOX, NON
- AE RO BOX, & NON
- BOX TRAILERS Model Year 2018 2021 2024 2027 2040 2018
- 2027 Aerodynamics Bin I 45% 41% 38% 35% 20% 100% Bin II Bin III 20% 20% 20% 20% 20% Bin IV 30% 34% 37% 40% 55% Bin V 5% 5% 5% 5% 5% Bin VI Bin VII Bin VIII Average Delta C D A (m 2 ) a 0.2 0.3 0.3 0.3 0.4 0.0 Tire Rolling Resistance Baseline tires 50% 47% 43% 40% 25% 100% Level 1 tires 50% 53% 57% 60% 75% Level 2 tires Average C

RR (kg/ton) a 5.6 5.5 5.5 5.5 5.3 6.0 Tire Inflation AT I 50% 53% 57% 60% 75% 0% Average % Reduction a 0.8% 0.8% 0.9% 0.9% 1.1% 0.0% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : Combines adoption rates with performance levels shown in Table IV
- 8 b : Weight reduction was not projected for the reference case trailers The agenci es applied the vehicle attributes from Table IV
- 7 and the average performance values from Table IV
- 10 in the proposed Phase 2 GEM vehic le simulation to calculate the CO 2 emissions and fuel consumption performance of the reference tractor
- trailers. The results of these simulations are shown in Table IV
- 12 . We used these CO 2 and fuel consumption values to calculate the relative benefits of the proposed standards. Note that the large difference between the per ton
- mile values for long and short trailers is due primarily to the large dif

ference in assumed payload (19 tons compared to 10 tons) as seen in Table IV
- 7 and discussed further in the Chapter 2.10.3. The alternative reference case shown in Table IV
- 11 impacts the long
- term projections of benefits beyond 2027, which are analyzed in Chapters 5
- 7 of the draft RIA.Page 278 of 850 **Table IV**  **- 12**  **CO 2**  **Emissions and Fuel Consumption Results for the Reference Tractor -**  **Trailers** Dry Van Refrigerated Van Length Long Short Long Short CO 2 Emissions (g/ton
- mile) 85 147 87 151 Fuel Consumption (gal/100 ton - miles) 8.3497 14.4401 8.5462 14.8330
(d ) Projected Technology Adoption Rates for the Proposed Standards As described in Section IV. E. , the agencies evaluated s everal alternatives for the proposed trailer program. Based on our analy sis, and current information, the agencies are proposing the alternative we believe reflects the agencies’ respective statutory authorities. The agencies are also considering an acce lerated alternative with less lead time, requiring the same incremental stringencies for the proposed program, but becoming effective three ye ars earlier. The agencies believe this alternative has the potential to be the maximum feasible alternative. How ever, based on the evidence currentl y before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by that alternative. EPA and NHTSA are seriously considering this accelerated alternative in whole or in part for the trailer segment. In other words, the agencies could determine that less lead
- time is maximum feasible in the final rule. We request comment on these two alternatives, including the proposed lead
- times. Table IV
- 13 and Table IV
- 14 present a set of assumed adoption rates for aerodynamic, tire, and ATI technologies that a manufacturer could apply to meet the proposed standards. These adoption rates begin with 60 percent of long box trailers achieving current SmartWay level aerodyn amics (Bin IV) and p rogress to 90 percent achieving SmartWay Elite (Bin VI) or better over the following nine years. The adoption rates for short box trailers assume adoption of single aero devices in MY 2021 and combinations of devices by MY 2027. Although the shorter lengths of these trailers can restrict the design of aerody namic technologies that fully match the SmartWay
- like performance levels of long boxes, we nevertheless expect that trailer and device manufacturers would continue to innovate skirt, under
- body , rear, and gap
- reducing devices and combinations to achieve improved aerodyn amic performance on these shorter trailers. The assumed adoption rates for aerodyn amic technologies for both long and short refrigerated vans are slightly

less than for dry

vans, reflect ing the more limited number of aerody namic options due to the presence of their TRUs. The gradual increase in assumed adoption of aerody namic technologies throughout the phase
- in to the MY 2027 standards recognizes that even though many of the technologi es are available today

and technologicall y feasible throughout the phase
- period, their adoption on the scale of the proposed program would likely take time. The adoption rates we are assuming in the interim years
– and the standards that we developed from these rates
-- represent steady and ye t reasonable improvement in average aerodynamic performance.Page 279 of 850

The agencies project that nearl y all box trailers will adopt tire technologies to comply with the standards and the agencies projected consistent adoption rates across all lengths of dry and refrigerated vans, with more advanced (Level 2 ) low
- rolling resistance tires assumed to replace Level 1 tire models in the 2024 time frame, as Level 2
- ty pe tires become more available and fleet experience with these tir es develops. As mentioned previously , the agencies did not include weight reduction in their technology adoption projections, but certain ty pes of weight reduction could be used as a compliance pathway , as discussed in Section IV.D.1.d above. The adopti on rates shown in these tables are one set of man y possible combinations that box trailer manufacturers could apply to achieve the same average stringency . If a manufacturer chose these adoption rates, a variety of technology options exist within the aero dy namic bins, and several models of LRR tires exist for the levels shown. Alternativel y, technologies from other aero bins and tire levels could be used to comply . It should be noted that manufacturers are not limited to aerody

namic and tire technologies , since these are performance
- based standards, and manufacturers would not be constrained to adopt any particular way to demonstrate compliance. Certain ty

pes of weight reduction, for example, may be used as a compliance pathway , as discussed in Section IV.D.1.d above. Similar to our analy ses of the reference cases, the agencies derived a single set of performance parameters for each subcategory by weighting the performance levels included in Table IV
- 8 by

the corresponding adoption rates. These performance parameters represent an average compliant vehicle for each trailer subcategory and we present these values in the tables. T he 202 4 MY adoption rates would continue to apply for the partial
- aero box trailers in 202 7 and later model years.Page 280 of 850

**Table IV**  **- 13**  **Projected Adoption Rates and Average Perform ance Param**  **eters for Long Box Trailers** TE CHNOLOGY LONG BOX DRY VANS LONG BOX REFRIGERATED VANS Model Year 2018 2021 2024 2027 2018 2021 2024 2027 Aerodynamic Technologies Bin I 5% 5% Bin II Bin III 30% 5% 30% 5% Bin IV 60% 55% 25% 60% 55% 25% Bin V 5% 10% 10% 10% 5% 10% 10% 20% Bin VI 30% 65% 50% 30% 65% 60% Bin VII 40% 20% Bin VIII Average Delta C D A (m 2 ) a 0.4 0.7 0.8 1.1 0.4 0.7 0.8 1.0 Trailer Tire Rolling Resistance Baseline tires 15% 5% 5% 5% 15% 5% 5% 5% Level 1 tires 85% 95%
- - 85% 95% Level 2 tires 95% 95% 95% 95% Average C

RR (kg/ton) a 5.2 5.1 4.8 4.8 5.2 5.1 4.8 4.8 Tire Inflation System AT I 85% 95% 95% 95% 85% 95% 95% 95% Average ATI Reduction (%) a 1.3% 1.4% 1.4% 1.4% 1.3% 1.4% 1.4% 1.4% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : Combines projected adoption rates with performance levels shown in Table IV
- 8 b : This set of proposed adoption rates did not apply any assumed weight reduction to meet the proposed standards for these trailersPage 281 of 850

**Table IV**  **- 14**  **Projected Adoption Rates and Average Perform ance Param**  **eters for Short Box Trailers** TECHNOLOGY SHORT BOX DRY VANS SHORT BOX REFRIGERATED VANS Model Year 2018 2021 2024 2027 2018 2021 2024 2027 Aerodynamic Technologies a Bin I 100% 5% 100% 5% Bin II 95% 70% 30% 95% 70% 55% Bin III 30% 60% 30% 40% Bin IV 10% 5% Bin V Bin VI Bin VII Bin VIII Average Delta C D A (m 2 ) b 0.4 0.7 0.8 1.1 0.4 0.7 0.8 1.0 Trailer Tire Rolling Resistance Baseline tires 15% 5% 5% 5% 15% 5% 5% 5% Level 1 tires 85% 95% 85% 95% Level 2 tires 95% 95% 95% 95% Average C

RR (kg/ton) b 5.2 5.1 4.8 4.8 5.2 5.1 4.8 4.8 Tire Inflation System AT I 85% 95% 95% 95% 85% 95% 95% 95% Average ATI Reduction (%) c 1.3% 1.4% 1.4% 1.4% 1.3% 1.4% 1.4% 1.4% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : The majority of short box trailers are 28 feet in length. We recognize that they are often operated in tandem, which limits the technologies that can be applied (for example, boat tails). b : Combines projected adoption rates with performance levels shown in Table IV
- 8 c : This set of proposed adoption rates did not apply any assumed weight reduction to meet the proposed standards for these trailers Non
- aero box trailers, with two or more work
- related special components, and non
- box trailers are not shown in the tables above. We are proposing that manufacturers of these trailers meet design
- based (i.e., technology
- based) standards, instead of performance
- based standards that w ould apply

to other trailers. That is, manufacturers of these trailers would not need to use aerodynamic technologies, but they would need to use appropriate lower rolling resistance tires and ATI s ys tems, based on our assessments of the ty pical CO 2 and f

uel consumption performance of this equipment (See Section IV.2.c). Thus, we are projecting 100 percent adoption rates of these technologies at each stage of the program. Compared to manufacturers that needed aerodyn amic technologies to compl y, the approach for non
- aero box trailers and non
box trailers would result in a significantly lower compliance burden for manufacturers by reducing the amount of tracking and eliminating the need to calculate a compliance value (see Section I. A. ) The agencies are proposing these design standards in two stages. In 2018, the proposed standards would require manufacturers to use tire s meeting a rolling resistance of Level 1 or better and to install ATI s ys tems on all non
- box and non
- aero box trailers. In 2024, the proposed standards would require manufacturers to use LRR tires at a Level 2 or better, and to still install ATIs ys tems. We seek comment on all aspects of this design
- based standards concept. We also seek comment on providing manufacturers with the option of adopting Level 2Page 282 of 850

tires in the earl y ye ars of the program (MY 2018
- 2023) and avoiding the use of ATI s ys tems if the y chose. **Table IV**  **- 15**  **Projected Adoption Rates and Average Perform ance Param**  **eters for Non -**  **Aero Box and Non**   ** Box Trailers** TECHNOLOGY NON
- AE RO BOX & NON
- BOX TRAILERS Model Year 2018 2021 2024 2027 Aerodynamic Technologies Bin I 100% 100% 100% 100% Bin II Bin III Bin IV Bin V Bin VI Bin VII Bin VIII Average Delta C D A (m 2 ) a 0.0 0.0 0.0 0.0 Trailer Tire Rolling Resistance Baseline tires Level 1 tires 100% 100% Level 2 tires 100% 100% Average C

RR (kg/ton) a 5.1 5.1 4.7 4.7 Tire Inflation System AT I 100% 100% 100% 100% Average ATI Reduction (%) a 1.5% 1.5% 1.5% 1.5% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : Combines projected adoption rates with performance levels shown in Table IV
- 8 b : This set of adoption rates did not apply weight reduction to meet the proposed standards for these trailers We request comment and any data related to our projections of technology adopti on rates. The following section (d) explains how the agencies combined these adoption rates with the performance values shown previously to calculate the proposed standards. (e) Derivation of the Proposed Standards The average performance parameters from Table IV
- 14 , and Table IV
- 15 were applied as inp ut values to the GEM vehicle simulation to derive the proposed HD Phase 2 fuel consumption and CO 2 emissions standards for each subcategory of trailers. The proposed standards are shown in Table IV
- 16
. The proposed standards for partial
- aero trailers, which are not explicitly shown in Table IV
- 16 , would be the same as their full
- aero counterparts through MY 2026. In MY 2027 and later, partial aero trailers would continue to meet the MY 2024 standards. Over the four stages of the prop osed rule, box trailers longer than 50 feet would, on average, reduce their CO 2 emissions and fuel consumption by two percent, four percent, seven percent and eight percent compared to their reference cases. Box trailers 50
- feet and shorterPage 283 of 850

would achi eve reductions of two percent, three percent and four percent compared to their reference cases. The tire technologies used on non
- box and non
- aero box trailers would provide reductions of two percent in the first two stages and achieve three percent by 2 027. **Table IV**  **- 16**  **Proposed Standards for Box Trailers MODEL**  **YEAR SUBCATEGORY**  **DRY VAN REFRIGERATED VAN**  **LENGTH LONG**  **SHORT LONG**  **SHORT** 2018
- 2020 EPA Standard

(CO 2 Grams per Ton
- Mile) 83 144 84 147 Voluntary NHTSA Standard (Gallons per 1,000 Ton
- Mile) 8.1532 14.1454 8.2515 14.4401 2021
- 2023 EPA Standard

(CO 2 Grams per Ton
- Mile) 81 142 82 146 NHTSA Standard (Gallons per 1,000 Ton
- Mile) 7.9568 13.9489 8.0550 14.3418 2024
- 2026 EPA Standard

(CO 2 Grams per Ton
- Mile) 79 141 81 144 NHTSA Standard (Gallons per 1,000 Ton
- Mile) 7.7603 13.8507 7.9568 14.1454 2027 + EPA Standard

(CO 2 Grams per Ton
- Mile) 77 140 80 144 NHTSA Standard (Gallons per 1,000 Ton
- Mile) 7.5639 13.75 2 5 7.8585 14.1454 It should be noted that the proposed standards are based on highway cruise cycles that include road grade to better reflect real world driving and to help recognize engine and driveline technologies. See Section III.E. The agencies have evaluated some alternate road grade profiles recommended b y the National Renewable Energy L aboratory

(NREL) and have prepared possible alternative trailer vehicle standards based on these profiles. The agencies request comment on this analy sis, which is available in a me morandum to the docket. 244 (f ) Technology Costs for the Proposed Standards The agencies evaluated the technology costs for 53
- foot dry

and refrigerated vans and 28
- foot dry vans, which we believe are representative of the majority of trailers in the 50
- foot and longer and shorter than 50
- foot categories, respectively . We identified costs for each technology package evaluated and projected the costs for each year of the program. A summary of the technology

costs is included in Table IV
- 17 through Table IV
- 20 for MYs 2018 through 2027, with additional deta ils available in the draft RIA Chapter 2.12. Costs shown in the following tables are for the specific model year indicated and are incremental to the average reference case costs, which includes some level of adoption of these technologies as shown in Table IV
- 13
. Therefore, the technology costs in the following tables reflect the average cost expected for each

244 Memorandum dated March 2015 on Analysis of Possible Tractor, Trailer, and Vocational Vehicle Standards Based on Alternative Road Grade Profiles. Docket EPA
- HQ
- OAR
- 2014
- 0827Page 284 of 850

of the indicated trailer classes. Note th at these costs do not represent actual costs for the individual components because some fraction of the component costs has been subtracted to reflect some use of these components in the reference case. For more on the estimated technology

costs exclusive of adoption rates, refer to Chapter 2.12 of the draft RIA. These costs include indirect costs via markups and reflect lower costs over time due to learning impacts. For a description of the markups and learning impacts considered in this anal ys is and ho w technology

costs for other years are thereby affected, refer to Chapter 7 of the draft RIA. We welcome comment on the technology costs, markups, and learning impacts. **Table IV**  **- 17**  **Trailer Technology Increm ental Costs in the 2018 Model Year (2012$)** 

53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $285 $285 $0 $0 Tires $65 $65 $78 $185 Tire inflation system $239 $239 $435 $683 Total $588 $588 $514 $868

**Table IV**  **- 18**  **Trailer Technology Increm ental Costs in the 2021 Model Year (2012$)** 

53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $602 $602 $468 $0 Tires $65 $65 $79 $175 Tire inflation system $234 $234 $426 $632 Total $901 $901 $974 $807

**Table IV**  **- 19**  **Trailer Technology Increm ental Costs in the 2024 Model Year (2012$)** 

53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $836 $836 $608 $0 Tires $61 $61 $76 $160 Tire inflation system $220 $220 $412 $578 Total $1,116 $1,116 $1,097 $739

**Table IV**  **- 20**  **Trailer Technology Increm ental**  **Costs in the 2027 Model Year (2012$)**

53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $1,163 $1,034 $788 $0 Tires $54 $54 $74 $155 Tire inflation system $192 $192 $391 $549 Total $1,409 $1,280 $1,253 $704Page 285 of 850

**(4) Consistency**  **of the Proposed Trailer**  **Standards with the Agencies’ Legal**  **Authority** The agencies’ initial determination, subject to consideration of public comment, is that the standards presented in the Section IV.C.2, are the maximum feasible and appropriate under the agencies’ respective authorities, considering lead time, cost, and other factors
. The agencies’ proposed decisions on the stringency and timing of the proposed standards focused on available technology

and the consequent emission reductions and fuel efficiency improvements associated with use of the technology , while taking into account the circumstances of the trailer manufacturing sector. Trailer manufacturers would be subject to first
- time emission control and fuel consumption regulation under the proposed standards. These manufacturers are in many cases small businesses, with limited resources to master the mechanics of regulatory compliance. Thus, the agencies’ proposal seeks to provide a reasonable time for trailer manufacturers to become familiar with the requirements and the proposed new compliance regime, given the unique circumstances of the industry and the co mpliance flexibilities and optional compliance mechanisms speciall y adapted for this industry segment that we are proposing. The stringency

of the standard is predicated on more widespread deploy ment of aerodynamic and tire technologies that are already in commercial use. The availability , feasibility , and level of effectiveness of these technologies are well
- documented. Thus the agencies do not believe that there is an y issue of techn olog ical feasibility of the proposed standards. Among the issues reflected in the agencies’ proposal are considerations of cost and sufficiency

of lead
- time

– including lead
- time not only to deploy technological improvements, but also this industry

sector to assimilate for the first time the compliance me chanisms of the proposed rule. The highest cost shown in Table IV
- 20 is associated with the long dry vans. We project that the average cost per trai ler to meet the proposed MY 2027 standards for these trailers would be about $1,400, which is less than 10 percent of the cost of a new dry van trailer (estimated to be about $20,000). Other trailer types have lower projected technology costs, and many have higher purchase prices. As a result, we project that the per
- trailer costs for all trailers covered in this regulation will be less than 10 percent of the cost of a new trailer. This trend is consistent with the expected average control costs for Phas e 2 tractors, which are also less than 10 percent of ty pical tractor costs (see Section III). The agencies believe these technologies can be adopted at the rates the standards are predicated on within the proposed lead
- time, as discussed above in Section IV .C.(3). Moreover, we project that most owners would rapidl y recover the initial cost of these technologies due to the associated fuel savings, usuall y in less than two years, as shown in the pay back anal ys is inPage 286 of 850

Section IX. This pay

back period is genera lly

considered reasonable in the trailer industry for investments that reduce fuel consumption. 245 Overall, as discussed above in IV.D.3.c in the context of our assumed technology adoption rates, the gradual increase in stringency of the proposed trailer pro gram over the phase
in period recognizes two important factors that the agencies carefull y considered in developing this proposed rule. One factor is that assumed adoption of technologies many of the aerodynamic technologies that box trailer manufacturers would likely choose are available today and clearly

technologically

feasible throughout the phase
- period. At the same time, we recognize that the adoption of these technologies across the industry scale envisioned by

the proposed program would likely tak e time. The standards we are proposing in the interim years represent steady improvement in average aerody namic performance toward the final MY 2027 standards. 

### E. **Alternative Standards and Feasibility Considered** As discussed in Section X, the agencies evaluated several different regulatory alternatives representing different levels of stringency for the Phase 2 program. The results of the analy sis of these proposed alternatives are discussed below in Section X of the preamble. The agencies believe each alternative is feasible from a technical standpoint. However, each successive alternative increases costs and complexity of compliance for the manufacturers, which can be a prohibitive burden on the large number o f small businesses in the industry
. Table IV
- 21 provides a summary

of the alternatives considered in this proposal. **Table IV**  **- 21**  **Summary of Alternatives Considered for the Proposed Rulemaking** Alternative 1 No action alternative Alternative 2 Expand the use of aerodynamic and tire technologies at SmartWay levels to all 53
- foot box trailers Alternative 3 (Proposed Alternative) Adoption of advanced aerodynamic and tire technologies on all box trailers Adoption of tire technologies on non
- box trailers Alternative 4 Same technology and application assumptions as Alternative 3 with an accelerated intro duction schedule Alternative 5 Aggressive adoption of advance aerodynamic and tire technologies for all box trailers Adoption of aerodynamic and tire technologies for some tank, flatbed, and container chassis trailers Adoption of tire technologies for the remaining non
- box trailers While we welcome comment on any of these alternatives, we are specifically requesting comment on Alternative 4 for the trailer program identified as Alternative 4 above and in Section X. The same general technology effectiv eness values were considered and much of the feasibility anal ys is was the same in this alternative and in the proposed alternative, but

245 Roeth, Mike, et al. “Barriers to Increased Adoption of Fuel Efficiency Technologies in Freight Trucking”. July 2013. International Council for Clean Transportation. Available here: http://www.theicct.org/sites/default/files/publications/ICCT
-NACFE
- CSS_Barriers_Report_Final_20130722.pdfPage 287 of 850

Alternative 4 applies the adoption rates of higher
- performing aerodynamic technologies from Alternative 3 at earlier stages for box trailers. This accelerated alternative achieves the same final fuel consumption and CO 2 reductions as our proposed alternative three years in advance. The following sections detail the adoption rates, reductions and costs projected for this a lternative. **(1) Effectiveness, Adoption Rates, and Technology Costs for Alternative 4**  Alternative 4 includes the same trailer subcategories and same trailer technologies as the proposed alternative. Therefore, the zero
- technology baseline trailers ( Table IV
- 7 ), reference case trailers ( Table IV
- 10 ) and performance levels ( Table IV
- 8 ) described in Section IV . D. apply for this anal ys is as well. The following sections describe the adoption rates of this accelerated alternative and the associated benefits and costs. (a ) Projected Technology Adoption Rates for Alternative 4 The adoption rates and ave rage performance parameters projected by the agencies for Alternative 4 are shown in Table IV
- 22 and Table IV
- 23 . Adoption rates for non
- aero box and non - box trailers remain unchanged from the proposed standards and they are not repeated in this section. From the tables, it can be seen that the 20 18 MY aerodyn amic technology adoption rates and the tire technology adoption rates for all model years are identical to those presented previously

for the proposed standards. The aerody namic projections for MY 2021 and MY 2024 in this accelerated alternat ive are the same as those projected for MY 2024 and MY 2027 of the proposed standards, but are applied three ye ars earlier. In this alternative, the 2021 MY adoption rates would continue to apply for the partial
- aero box trailers in 2024 and later model years.Page 288 of 850 **Table IV**  **- 22**  **Adoption Rates and Average Perform ance Param**  **eters for the Long Box Trailers in Alternative 4**  TECHNOLOGY LONG BOX DRY VANS LONG BOX

REFRIGERATED VANS Model Year 2018 2021 2024 2018 2021 2024 Aerodynamic Technologies a Bin I 5% 5% Bin II Bin III 30% 30% Bin IV 60% 25% 60% 25% Bin V 5% 10% 10% 5% 10% 20% Bin VI 65% 50% 65% 60% Bin VII 40% 20% Bin VIII Average Delta C D A (m 2 ) a 0.4 0.8 1.1 0.4 0.8 1.0 Trailer Tire Rolling Resistance Baseline tires 15% 5% 5% 15% 5% 5% Level 1 tires 85% 95% 85% 95% Level 2 tires 95% 95% Average C

RR (kg/ton) a 5.2 5.1 4.8 5.2 5.1 4.8 Tire Inflation System AT I 85% 95% 95% 85% 95% 95% Average ATI Reduction (%) a 1.3% 1.4% 1.4% 1.3% 1.4% 1.4% Weight Reduction (pounds) We ight b Notes: A blank cell indicates a zero value a : Combines adoption rates with performance levels shown in Table IV
- 8 b : This set of adoption rates did not apply weight reduction to meet the proposed standards for these trailersPage 289 of 850

**Table IV**  **- 23**  **Adoption Rates and Average Perform**  **ance Param eters for the Short Box Trailers in**  **Alternative 4** TECHNOLOGY SHORT BOX DRY VANS SHORT BOX

REFRIGERATED VANS Model Year 2018 2021 2024 2018 2021 2024 Aerodynamic Technologies a Bin I 100% 100% Bin II 70% 30% 70% 55% Bin III 30% 60% 30% 40% Bin IV 10% 5% Bin V Bin VI Bin VII Bin VIII Average Delta C D A (m 2 ) b 0.4 0.8 1.1 0.4 0.8 1.0 Trailer Tire Rolling Resistance Baseline tires 15% 5% 5% 15% 5% 5% Level 1 tires 85% 95% 85% 95% Level 2 tires 95% 95% Average C

RR (kg/ton) b 5.2 5.1 4.8 5.2 5.1 4.8 Tire Inflation System AT I 85% 95% 95% 85% 95% 95% Average ATI Reduction (%) b 1.3% 1.4% 1.4% 1.3% 1.4% 1.4% Weight Reduction (pounds) We ight c Notes: A blank cell indicates a zero value a : The majority of short box trailers are 28 feet in length. We recognize that they are often operated in tandem, which limits the technologies that can be applied (for example, boat tails). b : Combines adoption rates with performance levels shown in Table IV
- 8 c : This set of adoption rates did not apply weight reduction to meet the proposed standards for these trailers (b ) Derivation of the Standards for Alternative 4 Similar to the proposed standards of Section IV. D. (3) (d) , the agencies applied the technology

performance values from Table IV
- 22 and Table IV
- 23 as GEM inputs to derive the proposed standards for each subcategory
. Table IV
- 24 shows the resulting standards for Alternative 4. Over the three phases of the alternative, box trailers longer than 50 feet would, on average, r educe their CO 2 emissions and fuel consumption by

two percent, six percent and eight percent. Box trailers 50
- foot and shorter would achieve reductions of two percent, three percent, and four percent compared to the reference case. Partial
- aero box trail ers would continue to be subject to the 2021 MY standards for MY 2024 and later. The non
- aero box and non
- box trailers would meet the same standards as shown in the proposed Alternative 3 and achieve the same two and three percent benefits as shown in the proposed alternative.Page 290 of 850 **Table IV**  **- 24**  **Trailer CO 2**  **and Fuel Consumption Standards for Box Trailers in Alternative 4 MODEL**  **YEAR SUBCATEGORY**  **DRY VAN REFRIGERATED VAN** 

**LENGTH LONG**  **SHORT LONG**  **SHORT** 2018
- 2020 EPA Standard 83 144 84 147

(CO 2 Grams per Ton
- Mile) Voluntary NHTSA Standard 8.1532 14.1454 8.2515 14.4401 (Gallons per 1,000 Ton
- Mile) 2021
- 2023 EPA Standard 80 142 81 145

(CO 2 Grams per Ton
- Mile) NHTSA Standard 7.8585 13.9489 7.9568 14.2436 (Gallons per 1,000 Ton
- Mile) 2024+ EPA Standard 77 140 80 144

(CO 2 Grams per Ton
- Mile) NHTSA Standard 7.5639 13.7525 7.8585 14.1454 (Gallons per 1,000 Ton
- Mile) (c) Costs Associated with Alternative 4 A summary

of the technology

costs is included in Table IV
- 25 to Table IV
- 27 for MYs 2018, 2021 and 2024, with additional details available in the draft RIA Chapter 2.12. Costs shown in the following tables are for the specific model year indicated and are incremental to the average reference case cos ts, which includes some level of adoption of these technologies as shown in Table IV
- 10 . Therefore, the technology costs in the following tables refle ct the average cost expected for each of the indicated trailer classes. Note that these costs do not represent actual costs for the individual components because some fraction of the component costs has been subtracted to reflect some use of these components in the reference case. For more on the estimated technology costs exclusive of adoption rates, refer to Chapter 2.12 of the draft RIA. These costs include indirect costs via markups and reflect lower costs over time due to learning impacts. For a de scription of the markups and learning impacts considered in this anal ys is and how it impacts technology costs for other years, refer to the draft RIA.Page 291 of 850

**Table IV**  **- 25**  **Trailer Technology Increm ental Costs in the 2018 Model Year for Alternative 4 (2012$)**  53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $285 $285 $0 $0 Tires $65 $65 $78 $185 Tire inflation system $239 $239 $435 $683 Total $588 $588 $514 $868
**Table IV**  **- 26**  **Trailer Technology Increm ental Costs in the 2021 Model Year for Alternative 4 (2012$)**  53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $908 $908 $641 $0 Tires $65 $65 $79 $175 Tire inflation system $234 $234 $426 $632 Total $1,207 $1,207 $1,146 $807
**Table IV**  **- 27**  **Trailer Technology Increm ental Costs in the 2024**  **Model Year for Alternative 4 (2012$)** 53
- foot Dry Van 53
- foot

Refrigerated Van 28
- foot Dry Van Non
- Aero

& Non
- Box Aerodynamics $1,223 $1,090 $816 $0 Tires $61 $61 $76 $160 Tire inflation system $220 $220 $412 $578 Total $1,504 $1,371 $1,304 $739 The agencies believe Alternative 4 has the potential to be the maximum feasible and appropriate alternative. However, based on the evidence currentl y before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned b y that alternative
. As d iscussed earlier, the ability for manufacturers in this industry

to broadl y take the necessary technical steps while becoming familiar with first
time regulatory

responsibilities may be significantly limited with three fewer years of lead
- time. As re inforced in the SBAR Panel Report, this challenge would not be equal across the industry , often falling more heavily on smaller trailer manufacturers. The agencies request comment on the feasibility and costs for trailer manufacturers to achieve the Al ternative 4 standards b y appl yi ng advanced aerodyn amic technologies with three ye ars less lead
- time than Alternative 3 would provide. The agencies also request comment on particular burdens that these aggressive adoption rates c ould have on small business trailer manufacturers. 

### F. **Trailer Standards: Compliance and Flexibilities** Under the proposed structure, trailer manufacturers would be required to obtain a certificate of conformity

from EPA before introducing into commerce new trailers subject to the proposed new trailer CO 2 and fuel consumption standards. See CAA section 206(a). ThePage 292 of 850

certification process the agencies are proposing for trailer manufacturers is very similar in its basic structure to the process for the tractor program. This structure i nvolves pre
- certification activities, the certification application and its approval, and end
- of
- ye ar reporting. In this section, the agencies first describe how we developed compliance equations based on the GEM vehicle simulation tool and the general cer tification process, followed by a discussion of the proposed test procedures for measuring the performance of tires and aerodynamic technologies and how manufacturers would apply test results toward compliance and certification. The section closes with di scussions of several other proposed certification and compliance provisions as well as proposed provisions to provide manufacturers with compliance flexibility
. **(1) Trailer Compliance**  **using a GEM**  **- Based Equation**  The agencies are committed to introducing a compliance program for trailer manufacturers that is straightforward, technicall y robust, transparent, and that minimizes new administrative burdens on the industry
. As described earlier in this section and in Chapter 4 of the draft RIA, GEM is a customized vehicle simulation model that EPA developed for the Phase 1 program to relate meas ured aerodynamic and tire performance values, as well as other parameters, to CO 2 and fuel consumption without performing full
- vehicle testing. As with the Phase 1 and proposed Phase 2 tractor and vocational vehicle programs, the proposed trailer program uses GEM in evaluating emissions and fuel consumption in developing the proposed standards . However, unlike the tractor and vocational vehicle programs, we are not proposing to use GEM directl y to demonstrate compliance with the trailer standard s. Instead, we have developed an equation based on GEM that calculates CO 2 and fuel consumption from performance inputs, but without running the model
. For the proposed trailer program, the trailer characteristics that a manufacturer would supply to the equation are aerodyn amic improvements (i.e., a change in the aerodynamic drag area, delta C D A), tire rolling resistance (i.e., coefficient of rolling resistance, C RR), the presence of an automatic tire inflation (ATI) s ys tem, and the use of light
- weight components from a pre determined list
. The use of the equation would quantify the overall performance of the trailer in terms of CO 2 emissions and fuel consumption on a per ton
- mile basis. Chapter 2.10.6 of the draf t RIA provides a full a description of the development and evaluation of the equation proposed for trailer compliance. Equation IV
- 1 is a single linear regression curve that can be used for all box trailers in this proposal. Unique constant values, C 1 through C 4 , are applied for each of the trailer subcategories as shown in Table IV
- 28 . Constant C 5 is equal to 0.985 for any trailer that installs an ATI s ys tem (ac counting for the 1.5% reduction given for use of ATI) or 1.0 for trailers without ATIs ys tems. This equation was found to accuratel y reproduce the results of GEM for each of the four box van subcategories and the agencies are proposing that trailer manufa cturers use Equation IV
- 1 when calculating CO 2 for compliance. Manufacturers would use a conversion of 10,180 grams of CO 2 per gallon of diesel to calculate the corresponding fuel consumption values for compliance with NHTSA’s regulations. See 40 CFR 10 37.515 and 49 CFR 535.6.Page 293 of 850 = [ + ∙ ( ) + ∙ ( ∆ ) + ∙ ( ) ] ∙ (IV
- 1)

**Table IV**  **- 28**  **Constants for GEM -**  **Based Trailer Compliance Equation** TRAILER SUBCATEGORY C 1 C 2 C 3 C 4 Long Dry Van 77.4 1.7
- 6.1
- 0.001 Long Refrigerated Van 78.3 1.8
- 6.0
- 0.001 Short Dry Van 134.0 2.2
- 10.5
- 0.003 Short Refrigerated Van 136.3 2.4
- 10.3
- 0.003 The constants for long vans apply for all dry

or refrigerated vans longer than 50
- feet and the constants for short vans apply for all dry

or refrigerated vans 50
- feet and shorter. These long and short van constants are based on GEM
- simulated tractors pulling 53
- foot and solo 28
- foot trailers, respectivel y. As a result, we are proposing that aerodynamic testing to obt ain a trailer’s performance parameters for Equation IV
- 1 be performed using consistent trailer sizes (i.e., all lengths of short vans be tested as a solo 28
- foot van, and all lengths of long vans be tested as a 53
- foot van). More information about aerodyn amic testing is provided in Section IV. F. (3) **(2) General Certification Process**  Under the proposed process for certification, trailer manufacturers would be required to apply to EPA for certification and would provide performance test data (see 40 CFR 1037.205) in their applications. 246 A staff member from EPA’s Compliance Division (in the Office of Transportation and Air Quality) would be assigned to each trailer manu facturer to help them through the compliance process. Although not required, we recommend that manufacturers arrange to meet with the agencies to discuss compliance plans and obtain any preliminary approvals (e.g., appropriate test methods) before applyin g for certification. Trailer manufacturers would submit their applications through the EPA VERIFY electronic database, and EPA would issue certificates based on the information provided. At the end of the model ye ar, trailer manufacturers would submit an end
- of
- ye ar report to the agencies to complete their annual obligations. The proposed EPA certification provisions also contain provisions for applying to the NHTSA program. EPA and NHTSA would coordinate on any enforcement action required.

246 As with the tractor program, manufacturers would submit their applications to EPA, which would then share them with NHTSA. Obtaining an approved certificate of conformity from EPA is the first step in complying with the NHTSA program.Page 294 of 850

(a ) Prelimina ry Considerations for Compliance Prior to submitting an application for a certificate, a manufacturer would choose the technologies they

plan to offer their customers, obtain performance information for these technologies, and identify any trailers in thei r production line that qualify for exclusion from the program. 247 Manufacturers that choose to perform aerody namic or tire testing would obtain approval of test methods and perform preliminary testing as needed. During this time, the manufacturer would als o decide the strategy they intend to use for compliance by identifying “families” for the trailers they produce. A famil y is a grouping of similar products that would all be subject to the same standard and covered b y a single certificate. At its simple st, the program would allow all products in each of the trailer subcategories to be certified as separate families. That is, long box dry vans, short box dry

vans, long refrigerated vans, short refrigerated vans, non
- box trailers, partial
- aero trailers (l ong and short box, dry and refrigerated van s ), and non
- aero trailers, could each be certified as separate trailer families. If a manufacturer chooses this approach, all products within a family would need to meet or do better than the standards for that trailer subcategory . This is not to say that, for example, every

long box dry

van model would need to have identical technologies like skirts, tires, and tire inflation s ystems, but that every model in that family

would need to have a combination of tec hnologies that had performance representative of testing demonstrated for that family . (Because the manufacturer would not be using averaging provisions, a trailer that “over
complied” could not offset a trailer that did not me et that famil y’s emission li mit). If a trailer manufacturer wishes to take advantage of the proposed averaging provisions, it could divide the trailer models in each of the standard box trailer categories (i.e., not including the non
- box trailer or non
- aero box trailer categories 248 ) into subfamilies. Each subfamily could be a grouping of trailers that have with similar performance levels, even if they use different technologies. We call the performance levels for each subfamily as “Family

Emission L imits” (FELs). A long box dry van manufacturer could choose, for example, to create two or more subfamilies in its long box dry van famil y. Trailers in one or more of these subfamilies could be allowed to under
- comply with the standard (e.g., if the manufacturer chose not to apply ATI or chose tires with higher rolling resistance levels) as long as the performance of the other subfamilies over
- compl y with the standard (e.g., if the manufacturer applied higher
- performing skirts) such that the average of all of the subfamilies’ FELs met or did better than the stringency for that famil y on a production
- weighted basis. Section IV.F.6.a below further discusses how the proposed averaging program would function for any such trailer subfamilies.

247 Trailers that meet the qualifications for exclusion do not require a certificate of conformity and manufacturers do not have to submit an application to EPA for these trailers. 248 The agencies are proposing that manufacturers implement 100 percent of their non
- box and special purpose box trailers with automatic tire inflation systems and tires meeting the specified ro lling resistance levels. As a result, averaging provisions do not apply to these trailer subcategories.Page 295 of 850

(b ) Submitting a Certification Application and Req uest for a Certificate to EPA Once the preliminary

steps are completed, the manufacturer can prepare and submit applications to EPA for certificate of conformity for each of its trailer families. The contents of the application are specified in 40 CFR 103 7.205, though not all items listed in the regulation are applicable to each trailer manufacturer. For the earl y ye ars of the program (i.e., 2018 through 2020), the application must specify whether the trailer manufacturer is opting into the NHTSA voluntary program to ensure the information is transferred between the agencies. It must also include a description of the emission controls that a manufacturer intends to offer. These emission controls could include aerodynamic features, tire models, tire infl ation systems or components that qualify for weight reduction. Basic information about labeling, warranty , and recommended maintenance should also be included the application (see Section IV.F.5 for more information). The manufacturer would also provide a summary of the plans to comply

with the standard. This information would include a description of the trailer family and subfamilies (if applicable) covered b y the certificate and projected sales of its products. Manufacturers that do not participate in averaging would include information on the lowest level of CO 2 and fuel consumption performance offered in the trailer family . Manufacturers that choose to average within their families would include performance information for the projected highest p roduction trailer configuration, as well as the lowest and the highest performing configurations within that trailer famil y. (c) End

- of

- Year Obligations After the end of each ye ar, all manufacturers would need to submit a report to the agencies presenting production
- related data for that year (see 40 CFR 1037.250 and 49 CFR 535.8). In addition, manufacturers participating in the averaging program would submit an end
of
- year report containing both emissions and fuel consumption information for both agencies. T his report would include the year’s final compliance data ( as calculated using the compliance equation) and actual sales in order to demonstrate that the trailers either met the standards for that year or that the manufacturer generated a deficit to be reconciled within the next three years under the averaging provisions (see 40 CFR 1037. 730 and 1037.745 and 49 CFR 535.7). All certifying manufacturers would need to maintain records of all the data and information required to be suppli ed to EPA and NHTSA for eight ye ars. **(3) Trailer Certification Test Protocols**  The Clean Air Act specifies that compliance with emission standards for motor vehicles be demonstrated using emission test data (see CAA section 206(a) and (b)). The Act does not require the use of specific technologies or designs. T he agencies are proposing that the compliance equation shown in Section IV. F. (1) function as the official “test procedure” for quantifying CO 2 and fuel consumption performance for trailer compliance and certification (as opposed to GEM, which serves this function in the tractor and vocational vehicle programs)
. Manufacturers would insert performance information from the trailer technologies applied into the equation in order to calculate their impact on overall trailer performance. The a gencies arePage 296 of 850

proposing to assign performance levels to ATI s ys tems and specific weight reduction values to pre - determined component substitutions. Aerodynamic and tire rolling resistance performance would be obtained b y the trailer manufacturers. The foll owing sections describe the approved performance tests for tire rolling resistance and aerody namic drag. Non
- box and non
- aero box trailers have tire requirements only . Manufacturers of these trailers will only need to obtain results from the tire perform ance tests. Long and short box trailers are expected to use aerodynamic and tire technologies to meet the proposed standards and will need to obtain test results from both procedures. See generall y proposed 40 CFR part 1037, subpart F for full descriptio n of the proposed performance tests, and see in particular proposed section 1037.5 15
. (a ) Trailer Tire Performance Testing Under Phase 1, tractor and vocational chassis manufacturers are required to input the tire rolling resistance coefficient into GEM and the agencies adopted the provisions in I SO 28580:2009 (E) 249 to determine the rolling resistance of tires. As described in 40 CFR 1037.520(c), this measured value, expressed as C RR , is required to be the resu lt of at least three repeat measurements of three different tires of a given design, giving a total of at least nine data points. Manufacturers specify a C RR value for GEM that may not be lower than the average of these nine results. Tire rolling re sistance may be determined b y either the vehicle or tire manufacturer. In the latter case, the tire manufacturer would provide a signed statement confirming that it conducted testing in accordance with this part. Similar to the tractor program, we propose to extend the Phase 1 testing provisions for tire rolling resistance to apply to the Phase 2 box trailer program , only without requiring the use of GEM . The average rolling resistance value obtained from this test would be used to specify the tire rolling resistance level (TRRL) for the trailer tires in the compliance equation
. Based on the current practice for tractors, we expect the trailer manufacturers to obtain these data from tire manufacturers. We welcome comments regarding the prop osed tire testing provisions as they relate to the proposed trailer program. For non
- box trailers, the agencies are proposing to use the same test methods to evaluate tires, but are proposing to apply a single threshold standard instead of inputting the ro lling resistance value into the GEM equation. Manufacturers of non
- box trailers would comply with the rolling resistance standard b y using tires with rolling resistance below the threshold. From the perspective of the trailer manufacturer, this would be equivalent to a design standard for the trailers, even though the standard would be expressed as a performance standard for the tires. The agencies are considering adopting a program for tire manufacturers similar to the provision described in Section IV . F. (3) (b)(iv) for aerodyn amic device manufacturers. For aerodynamic devices, the agencies are proposing to allow device manufacturers to seek preliminary

approval of the performance of their devices. Device manufacturers would perform the required testing of their device and submit the performance results directly to EPA. We are

249 See http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=44770Page 297 of 850

requesting comment on a similar provision for tires. Tire manufacturers could su bmit their test data directl y to EPA to show they meet the rolling resistance requirements, and t railer manufacturers that choose to use approved tires would merely indicate that in their the certification application s . EPA is also considering adopting regulatory text addressing obligations for tire manufacturers. We note that CAA §207(c)(1) requires “the manufacturer” to remedy certain in
use problems and does not limit this responsibility to certificate holders. The remedy process is generall y called re call, and the regulations for this process are in 40 CFR part 1068, subpart F. In the case of in
- use problems with trailer tires, EPA is requesting comment on adding regulatory text that would explicitly apply these provisions to tire manufacturers. In o ther words, if EPA determines that tires on certified trailers do not conform to the regulations in actual use, should EPA require the tire manufacturer to recall and replace the nonconforming tires? 250 (b ) Trailer Aerodynamic Performance Testing Our proposed trailer aerody namic test procedures are based on the current and proposed tractor procedures for testing aerodynamic control devices, including coastdown, constant speed, wind tunnel, and computational fluid dy namics (CFD) modeling. The purpose of the tes ts is to establish an estimate of the aerodyn amic drag experienced by a tractor - trailer vehicle in real
world operation. In the tractor program, the resulting CdA value represents the aerodyn amic drag of a tested tractor assumed to be pulling a specified s tandard trailer. In the proposed trailer program, the C D A value used in the compliance equation would represent the tested trailer pulled by a standard tractor . To minimize the number of tests required, the agencies are proposing that devices for long trailers be evaluated based on 53
- foot trailers, and that devices for short trailers be evaluated based on 28
- foot trailers. Details of the test procedures can be f ound in 40 CFR 1037. 525 and a discussion of EPA’s aerody namic testing program as it relates to the proposed trailer program are provided in the draft RIA Chapter 3.2. The following sections outline the testing requirements proposed for the long term tr ailer program, as well as simpler testing provisions that would apply in the nearer term. (i ) A to B Testing for Trailer Aerodynamic Performance A key difference between the proposed tractor and trailer programs is that while the tractor procedures provide a direct measurement of an absolute C D A value for each tractor model, the agencies expect a majority of the aerody

namic improvements for trailers will be accomplished b y adding bolt
- on technologies. As a result, we are proposing to evaluate the aerodynami c improvements for trailers by measuring a change in C D A (delta C D A) relative to a

250 The agencies are considering such a requirement for traile r tire manufacturers, but not at this time for manufacturers of other heavy
- duty vehicle components. This is because, for the trailer sector, we believe that the small business trailer manufacturers that make up a large fraction of companies in this indus try could be uniquely challenged if they needed to recall trailers to replace tires.Page 298 of 850

baseline. Specifically , we propose that the trailer tests be performed as “A to B” tests, comparing the aerodynamic performance of a tractor
- trailer without a trailer aerody namic device to one with the device installed. See Draft RIA Chapter 2.10 for more informati on on this approach. As mentioned in Section IV . F. (1) that is consistent with the compliance equations. See 40 CFR 1037.525 and 49 CFR 535.6. We believe that most trailers longer than 50 feet with comparable technologies would perform similarl y in aerodynamic testing. We also recognize that devices used on some lengths of trailers in the short
- van category may perform differently than those dev ices perform when used on a representative 28
- foot test trailer. The agencies are proposing that manufacturers have some flexibility in the devices (or packages of devices) that they use with box vans that have lengths different than those of the trailer s on which the devices/packages were tested (i.e., trailers not 53 or 28 feet long). In such situations, a manufacturer could use devices that they believe would be more appropriate for the length of the trailer they

are producing, consistent with good en gineering judgement. For example, they

could use longer or shorter side skirts than those tested on 53
- or 28
- foot trailers. No additional testing would be required in order to validate the appropriateness of using the alternate devices on these trailers
. On average, we believe that testing of a device on a 28
- foot test trailer would provide a conservative evaluation of the performance of that device on other lengths of short box trailers. We believe that the proposed compliance approach would effectivel y represent the performance of such devices on the majority of short van trailers, yet would limit the number of trailers a manufacturer would need to track and evaluate. We request comment, including data where possible, on additional approaches that cou ld be used to address this issue of varying performance for devices across the range of short van lengths. Commenters supporting an allowance or requirement to test devices on short van trailers of other lengths than 28 feet are encouraged to also address how the agencies should consider such a provision in setting the levels of the standards, as well as how an y additional compliance complexity would be justified. The agencies note that it was relativel y straightforward in Phase 1 to establish a standard trailer with enough specificity to ensure consistent testing of tractors, since there are relativel y small differences in aerody namic performance of base
- model dry van trailers. However, as discussed in Chapter 2.10 of the draft RIA, small differences in tractor design can have a significant impact on overall tractor
- trailer aerodynamic performance. An advantage of an A to B test approach for trailers is that many of the differences in tractor design are canceled
- out, which allows a variety of standard tra ctors to be used in testing without compromising the evaluation of the trailer aerodynamic technology. Thus, the relative approach does not require the agencies to precisel y specify a standard tractor, nor does it require trailer manufacturers to purchase , modify

or retain a specific tractor model in order to evaluate their trailers. In essence, an A to B test is a set of tests: one test of a baseline tractor
- trailer with zero trailer aerodynamic technologies (A), and one test that includes the aerodyn amic devices to be tested (B). However, because an A test would relate to a B test onl y with respect to the test method and the test trailer length, one A test could be used for many different B tests. This ty pe of testing would result in a delta C D A valu e instead of an absolute C D A value. For the trailerPage 299 of 850

program, the vehicle configuration in the A test would include a standard tractor that meets specified characteristics, 251 and a manufacturer’s baseline trailer with no aerody namic improvements. The entity conducting the testing (e.g., the trailer manufacturer or the trailer aerodynamic device manufacturer, as discussed below) would perform the test for this configuration according to the procedures in 40 CFR 1037. 525 and repeat the test for the B confi guration, which includes the trailer aerodyn amic package/device(s) being tested. The delta C D A value for that trailer with that device would be the difference between the C D A values obtained in the A and B tests. In the event that a trailer manufacturer makes major changes to the aerodynamic design of its trailer in lieu of installing add
- on devices, trailer manufacturers would use the same baseline trailer for the A configuration as would be used for bolt
- on features. In both cases, the baseline traile r would be a manufacturer’s standard box trailer. Thus, the manufacturer of a redesigned trailer would get full credit for any aerodynamic improvements it made. We request comment on this issue. In addition, we request comment on how the program could handle a situation where a manufacturer made aerodynamic design changes to a trailer between 28 and 50 feet, which as proposed could only be compared to a 28
- foot standard trailer. The agencies are proposing to determine the delta C D A for trailer aerodyn amics using the zero - yaw (or head
- on wind) values. The agencies are not proposing a reference method (i.e., the coastdown procedure in the tractor program). Instead, we are proposing to allow manufacturers to perform an y of the proposed test procedures t o establish a delta C D A. Since the proposed coastdown and constant speed procedures include wind restrictions, we are proposing to onl y accept the zero
- yaw values from aerodynamic evaluation techniques that are capable of measuring drag at multiple yaw an gles (e.g., wind tunnels and CFD) to allow cross
- method comparison and certification. The agencies welcome comment on the pros and cons of exclusive use of zero
- yaw data from trailer aerody namic compliance testing. We recognize that the benefits of aerodynamic devices can be higher when measured considering wind from other yaw angles. We request comment on the possibility of allowing manufacturers to use wind
- averaged results for compliance if they choose to test using procedures that p rovide wind
- averaged values. Chapter 2.10 of the draft RIA compares zero
- yaw and wind
- averaged results from EPA’s wind tunnel testing. We request that commenters provide test data to support any preference for compliance test results
. We also request co mments on strategies that could be used to maintain consistency

with other methods that cannot provide wind
- averaged results. (ii) Standard Tractor for Aerodynamic Testing in the Proposed Trailer Program We propose that the proposed compliance equation, based on GEM, be used to determine compliance with the trailer standards
. Our discussion of the feasibility of our proposed standards (Section IV. D. (3) (a) ) includes a description of the tractor
- trailer vehicle used in GEM . We recognize the impact of the tractor and want to maintain consistency with GEM, but for th e

251 As explained in Section IV. F. (3) (b)(ii) , the standard tractor in GEM consists of a high roof sleeper cab for box trailers longer than 50 feet and a high roof day cab for box trailers 50 feet and shorter.Page 300 of 850

trailer program it is not necessary to address all aspects (e.g., the engine) of the tractor, because, as explained above, the impact of many of its features will be canceled
- out with the use of an A to B test strategy . However, some aerody namic design features of the tractor can influence the performance of trailer aerody namic technologies and we want to ensure a level of consistency between tests of different trailer manufacturers. The agencies believe the A to B test strategy would reduce the degree of precision with which the standard tractor needs to be specified. Instead of identifying a specific make and model of a tractor to be used over the entire duration of the program, the agencies would instead identify key characteristics of a standard tractor. EPA’s trailer testing program investigated the impact of tractor aerodyn amics on the performance of trailer aerodynamic technologies, as mentioned in Chapter 2.10 of the draft RIA. In order to maintain a minimal level of performance, w e are propos ing that tractors used in trailer aerodynamic tests meet Phase 2 Bin III or better tractor requirements (See Section III. D.). We believe the majority of tractors in the U.S. trucking fleet will be Bin III or better in the timeframe of this rulemaking, and trailer manufacturers have the option to choose higher
- performing tractors in later years as tractor technology

improves. The standard tractor for long
- box trailers is a Class 8 high
- roof sleeper cab. The standard tractor for short box trailers is a Cla ss 8 high roof day cab. Trailer manufacturers are free to choose an y standard tractor that meets these criteria in their aerodynamic performance testing. See 40 CFR 1037.501. (iii) Bins for Aerodynamic Performance As mentioned in Section IV . D. (1) (a) , the agencies are proposing aerody namic bins to account for testing variability and to provide consistency in the performance values used for compliance . These bins were developed in terms of delta C D A ranges, and designed to be broad enough to cover the range of uncertainty seen in our aerodyn amic testing program in terms of test - to - test variability

as well as variability due to differences in test method, tractor models, trailer models and device models. As discussed in Chapter 2.10 of the draft RIA, measured drag coefficients and drag areas vary depending on the test method used. In general, values me asured using wind tunnels and CFD tend to be lower than values measured using the coastdown method. The Phase 1 and proposed Phase 2 tractor program use coastdown testing as the reference test method, and the agencies require tractor manufacturers to perf orm at least one test using that method to establish a correction factor (called “F alt,aero ” ) to appl y to any of the alternative test methods. For simplicity , the agencies are not proposing a similar approach for trailers. We believe that the size of the bins and the use of change in C D A (as opposed to absolute values) would minimize the significance of this variability . However, we recognize that this could be a problem in instances where a manufacturer using a method other than coastdown produces a trailer with performance near the upper end of a bin. In such cases, it is possible that adjusting for methodological differences using an F alt,aero w ould allow the manufacturer to achieve a more stringent bin. We request comment on the proposed approach for evaluating performance of trailers and establishing bins for trailer compliance. We specifically request that commenters address the need for an aerodynamic reference test for trailer performance or additional strategies forPage 301 of 850

normalizing test methods. For example, would it be appropriate to allow all manufacturers using wind tunnel or CFD methods to apply an assigned F alt,aero of 1.10 , or another value, to their results? **Table IV**  **- 29**  **Aerodynam ic Bins Used to Determine**  **Inputs for Trailer Certification** DELTA C D A MEASURED IN TESTING BIN AVERAGE DELTA C D A INPUT FOR GEM 0.09 Bin I 0.0 0.10
- 0.19 Bin II 0.1 0.20
- 0.39 Bin III 0.3 0.40
- 0.59 Bin IV 0.5 0.60
- 0.79 Bin V 0.7 0.80
- 1.19 Bin VI 1.0 1.20
- 1.59 Bin VII 1.4 > 1.6 Bin VIII 1.8 A manufacturer that wished to perform testing would first identify a standard tractor (according to 40 CFR 1037. 525 ) and a representative baseline trailer with no aerodynamic features, then perform the A to B tests with and without aerody namic devices and obtain a delta C D A value. The manufacturer would use Table IV
- 29 to determine the appropriate bin based on their delta C D A. Each bin has a corresponding average delta C D A value which is the value manufacturers insert into the compliance equation
. (iv) Aerodynamic Device Testing Alternative The agencies recognize that much of the trailer manufacturing industry may have little experience with aerodyn amic performance testing. As such, we are proposing an alternative compliance option that we believe will minimize the testing burden for trailer manufacturers, meet the requirements of the Clean Air Act and of EI SA, and provide reasonable assurance that the anticipated CO 2 and fuel consumption benefits of the program will be realized in real
- world operation. The agencies are proposing to allow trailer aerodynamic device manufacturers to seek preliminary

approval of the performance of their devices (or combinations of devices) based on the sam e performance tests described previously in Section IV. F. (3) (b)(i) . Device manufacturers would perform the required A to B testing of their dev ice(s) on a trailer that meets the requirements specified in 40 CFR 1037.211 and 1037. 525 and submit the performance results, in terms of delta C D A, directl y to EPA. 252 Trailer manufacturers could then choose to use these devices and appl y their performance levels in the certification application for their trailer families. This approach would provide an opportunity for trailer manufacturers to choose

252 Note that in the event a device manufacturer chooses to submit such data to EPA, it could incur liability for causing a regulated entity to commit a prohibited act. See 40 CFR section 1068.1(c). This same potential liability exists with respect to information provided by a device manufacturer directly to a trailer manufacturer.Page 302 of 850

technologies with pre
- approved test data for installation on their new trailers without performing their own aerodynamic testing. We note that this proposed testing alternative is consistent with recommendations of the SBAR Panel. The Panel Report is summarized below in Section XV.D. If trailer manufacturers wish to use multiple devices with pre - approved test data , the proposed program provides a process for combining the effects of multiple devices to determine an ap propriate delta C D A value for compliance. More specificall y, such manufacturer s would fully count the technology

with largest delta C D A value, discount the second by 10 percent, and discount each of the remaining additional technologies b y 20 percent
. 253 This discounting would acknowledge the complex interactions among individual aerodynamic devices and would provide a conservative value for the impact of the combined devices. For example, a manufacturer appl yi ng three separately tested devices with delta C D A values of 0.40, 0.30, and 0.10 would calculate the combined delta C D A as: Delta C D A = 0.40 + 0.90*0.30 + 0.80*0.10 = 0.75 m 2 In addition, the agencies believe that discounting the delta C D A values of individually
tested devices used as a combination would provide a modest incentive for trailer or device manufacturers to test and get EPA pre
- approval of the combination as an aerody namic sy stem for compliance. We propose that device manufacturers be allowed to test and receive EPA pre
approval for combinations of devices, and that trailer manufacturers that wish to use those specific combinations be allowed to use the results from the tests of the combined devices. The agencies propose that this alternative testing approach

– whereb y device manufacture rs rather than trailer manufacturers do aerodynamic testing

– be an interim measure, although we are not proposing an end date at this time. Rather we would monitor use of this option and make changes in the future as necessary . The agencies note that many of the largest box trailer manufacturers are already performing aerodynamic test procedures to some extent, and the agencies expect other box trailer manufacturers will increasingl y be capable of performing these tests as the program progresses. The p roposed alternative testing approach is intended to allow trailer manufacturers to focus on and become familiar with the certification process in the earl y ye ars of the program and, if they wish, begin to perform testing in the later years, when it may be more appropriate for their individual companies. This approach would not preclude trailer manufacturers from performing their own testing at an y time, even if the technologies they wish to install are already pre approved. For example, a manufacturer that believed a specific trailer actually performed in a more sy nergistic manner with a given device than the device’s pre
- approved delta C D A value suggested could perform its own testing and submit the results to EPA for certification. The process to obtain approval is outlined in the proposed 40 CFR 1037.150(n) and 1037.211
.

253 A trailer manufacturer wo uld need to use good engineering judgement in combining devices for compliance in order to avoid combinations that are not intended to work together (e.g., both a side skirt and an under
- body device).Page 303 of 850

**(4) Use of**  **the Compliance Equation for Trailer Compliance**  The agencies are proposing standards for non
- box and non
- aero box trailers requiring the use of tires with rolling resis tance levels at or below a threshold, and on ATI s ys tems. As part of their certification application, manufacturers of these trailers would submit their tire rolling resistance levels and a description of their ATI s ys tem(s) to EPA. As long as the traile r manufacturer certifies that they will install the appropriate tires and ATI sy stems on all of their trailers, the agencies do not believe it is necessary to require these trailer manufacturers to use the equation and report the results of the model to the agencies to demonstrate compliance. Box trailer manufacturers who apply more than tire tec hnologies to meet the standards would use the compliance equation to combine the effects of these technologies and quantify the overall performance of the vehicle to demonstrate compliance. Trailer manufacturers would obtain delta C D A and tire rolling resistance values from testing (either from their own testing or testing performed b y another entity as described previously) and note if they installed a qualifying automatic tire inflation sy stem or made a component substitution that qualifies for weight reduction. Manufacturers would directl y apply the delta C D A and TRRLvalues into the equation, which would also recognize the use of an ATI s ys tem, appl yi ng a 1.5 percent reduction in CO 2 and fuel consumption. Qualifying components for weight reduction can be found in 40 CFR 1037. 5 15 ( d). Manufacturers that substitute one or more of these components on their box trailers would sum the weight reductions assigned to each component and enter that total into the equation
. The equation would also account for the use of weight
- reducing components, assign ing one - third of that reduced weight to increase the payload and the remaining weight reduction to reduce the overall weight of the assumed vehicle. For this proposal, we are requiring that the equation be used if the manufacturer is to take advantage of the agencies’ proposed averaging provisions. Prior to submitting a certificate application, manufacturers would decide which technologies to make available for their customers and use the equation to determine the range performance of the packages they will offer. Manufacturers would supply these results from the equation in their certifi cate application and those manufacturers that wish to perform averaging would continue to calculate emissions (and fuel consumption) with the equation throughout the model year and keep records of the results for each trailer package sold. As described in Section IV.F.2.c above, at the end of the ye ar, manufacturers would submit two reports. One report would include their production volumes for each configuration. The second report, required for manufacturers using averaging, would summarize the f

amilies and subfamilies, and CO 2 emissions and fuel consumption results from the equation for all of the trailer configurations they build. 254 Box trailer manufacturers that do not participate in averaging would also use the compliance equation to e nsure that all of the trailer configurations they offer would meet the

254 We are not proposing to allow manufacturers to “bank” credits to the following year if a manufacturer over
complies on average for a given model year. We are proposing to allow manufacturers to generate temporary deficits if they under
- com ply on average. These deficits would need to be resolved within thre e model years. See Section IV.F.7.a below

and 40 CFR 1037.250, 40 CFR 1037.730, and 49 CFR 535.7Page 304 of 850

standard for the given model year. These calculations using the equation could be performed by the manufacturer prior to submitting a certificate application, but it is not necessary for the manufacturer to continue to calculate emissions and fuel consumption throughout the model ye ar unless a new technology

package is offered. These manufacturers would submit a single end
- of
ye ar report that would include their prod uction volumes and confirmation that all of their trailers applied the technology

packages outlined in their application. **(5) Additional Certification and Complian**  **ce Provisions** (a ) Trailer Useful Life Section 202(a)(1) of the CAA specifies that EPA is to propose emission standards that are applicable for the “useful life” of the vehicle. Based on our own research and discussions with trailer manufacturers, EPA and NHTSA are proposing a regulatory useful life value for trailers of 10 years. This useful life represents the average duration of the initial use of trailers, before they are moved into less rigorous (e.g., limited use or storage) dut y. We note that the u seful life value is 10 years for other heavy
- dut y vehicles. However, unlike the other vehicles, we are not proposing to set a mile value for trailers because we do not require odometers for trailers. Thus, we propose that trailer manufacturers be responsi ble for meeting the CO 2 emissions and fuel consumption standards for 10 ye ars after the trailer is produced. We believe that manufacturers would be able to demonstrate at certification that their trailers will comply for the useful life of the trailers wi thout durability testing. The aerody

namic technologies that we expect manufacturers to use to comply with the proposed standards, including side skirts and boat tails, are designed to continue to provide their full potential benefit indefinitely as long a s no serious damage occurs. (See also Section IV.C.6 above describing why we are not propos ing separate in
- use standards). Regarding trailer tires, we recognize that the original lower rolling resistance tires will wear over time and will be replaced several times during the useful life of a trailer, either with new or retreaded tires. As with the Phase 1 tractor program, to help ensure that trailer owners have sufficient knowledge of which replacement tires to purchase in order to retain the as
certified emission and fuel consumption performance of their trailer for its useful life, we are proposing to require that trailer manufacturers supply adequate information in the owner’s manual to allow the trailer owner to purchase replacement tires meeting or exceeding the rolling resistance performance of the original equipment tires. We believe that the favorable fuel consumption benefit of continued use of LRR tires would generall y result in proper replacements throughout the 10
- ye ar useful life. Finall y, we are requiring that AT I systems remain effective for at least the 10 ye ar useful life, although some servicing may be necess ary . (See the maintenance discussion in Section IV.D.4.e). (b ) Emission Control Labels Historically , EPA
- certified vehicles are required to have a permanent emission control label affixed to the vehicle. The label facilitates the identification of the vehi cle as a certified vehicle. For the trailer program, EPA proposes that the labels include the same basicPage 305 of 850

information as we are proposing to require for tractor labels. For trailers, this information would include the manufacturer, a trailer identifier su ch as the Vehicle Identification Number, the trailer famil y and regulatory subcategory , the date of manufacture, and compliance statements. Although the proposed Phase 2 label for tractors would not include emission control sy stem identifiers (as previous ly

required for tractors in the Phase 1 program in 40 CFR 1037.135(b) (6)), we are proposing that these identifiers be included in the trailer labels. As for tractors, we would require manufacturers to maintain records that would allow us to verify that an individual trailer was in its certified configuration. (c) Warranty Section 207 of the CAA requires manufacturers to warrant their products to be free from defects that would otherwise cause non
- compliance with emission standards. For purposes of the propos ed trailer program, EPA would require trailer manufacturers to warrant all components that form the basis of the certification to the CO 2 emission standards. The emission
- related warranty would cover all aerodynamic devices, lower rolling resistance tires , automatic tire inflation sy stems, and other components that may be included in the certification application. The trailer manufacturer would need to warrant that these components and sy stems are designed to remain functional for the warranty period. B ased on the historical practice of requiring emissions warranties to apply for half of the useful life, we propose that the warrant y period for trailers be 5 ye ars for every thing except tires. For trailer tires, we propose to appl y a warranty period of 1 ye ar. Manufacturers could offer a more generous warranty if they chose; however the emissions related warranty may not be shorter than an y other warranty offered without charge for the vehicle. If aftermarket components were installed (unrelated to emiss ions performance) that offer a longer warranty, this would not impact emission related warranty obligations of the vehicle manufacturer. NHTSA is not proposing any warranty requirements relating to its trailer fuel consumption program. At the time of cer

tification, manufacturers would need to supply a copy of the warranty statement that they

would supply

to the end customer. This document would outline what is covered under the GHG emissions related warranty as well as the duration of coverage. Customer s would also have clear access to the terms of the warranty, the repair network, and the process for obtaining warranty service. (d ) Maintenance In general, EPA requires that vehicle manufacturers specify maintenance schedules to keep their product in complian ce with emission standards throughout the useful life of the vehicle (CAA section 207). For trailers, such maintenance could include fairing adjustments or service to AT I s ys tems. However, EPA believes that any such maintenance is likely to be performed by

operators to maintain the fuel savings of the components, and we are not proposing that trailer manufacturers be required submit a maintenance schedule for these components as part of its application for certification. Since low rolling resistance tires are key emission control components under this program, and will likel y require replacement at multiple points within the life of a vehicle, it isPage 306 of 850

important to clarify

how tires would fit into the emission
- related maintenance requirements. Although the agencies encourage the exclusive use of LRR tires throughout the life of trailers vehicles, we do not propose to hold trailer manufacturers responsible for the actions of operators. We do not see this as problematic because we believe that trailer operators have a genuine financial motivation for ensuring their vehicles are as fuel efficient as possible, which includes purchasing LRR replacement tires. Therefore, as mentioned in Section IV.F.5.a above, to help ensure that trailer owners have suff icient knowledge of which replacement tires to purchase in order to retain the as
- certified emission and fuel consumption performance of their trailer, we are proposing to require that trailer manufacturers supply adequate information in the owner’s manual to allow the trailer owner to purchase tires meeting or exceeding the rolling resistance performance of the original equipment tires. We would require that these instructions be submitted to EPA as part of the application for certification. (e) Post
- Us eful Life Modifications Under 40 CFR part 1037, it is generally prohibited for any

person to remove or render inoperative an y emission control device installed to comply with the requirements of part 1037. However, in 40 CFR 1037.655 EPA clarifies that ce rtain vehicle modifications are allowed after a vehicle reaches the end of its regulatory useful life. EPA is proposing for this section to apply trailers, since it applies to all vehicles subject to part 1037, and requests comment on it. Generally , this section clarifies that owners may modify a vehicle for the purpose of reducing emissions, provided they have a reasonable technical basis for knowing that such modification will not increase emissions of any other pollutant. In the case of trailers, this essentially

requires a trailer owner to have information that would lead an engineer or other person familiar with trailer design and function to reasonabl y believe that the modifications will not increase emissions of any regulated pollutant. Thus, this provision does not provide a blanket allowance for modifications after the useful life. This section does not apply with respect to modifications that occur within the useful life period, other than to note that many such modifications to the vehicle d uring the useful life are presumed to violate 42 U.S.C 7522(a)(3)(A). EPA notes, however, that this is merely a presumption, and would not prohibit modifications during the useful life where the owner clearl y has a reasonable technical basis for knowing the modifications would not cause the vehicle to exceed an y applicable standard. **(6) Flexibilities**  The trailer program that the agencies are proposing incorporates a number of provisions that would have the effect of providing flexibility and easing the compliance burden on trailer manufacturers while maintaining the expected CO 2 and fuel consumption benefits of the program. Among these is the basic approach we used in setting the proposed standards, including the staged phase
- in of the standards, which would gradually increase the CO 2 and fuel consumption reductions that manufacturers would need to achieve over time as they also increase their experience with the program. As described in the general certification discussion above (Section IV.F.2), another prop osed provision would allow trailer manufacturers to designate broad trailer families that would aggregate several models with similar technologies orPage 307 of 850

performance, thus potentially limiting the number of families and the associated famil y - level compliance r equirements. In addition to these provisions inherent to the proposed trailer program, the agencies are proposing additional options for certification that we believe would be very valuable to many trailer manufacturers. One of these is the proposed pro cess for component manufacturers to submit test data directly

to EPA for review by

the agencies in advance of formal certification, allowing a trailer manufacturer to reduce the amount of testing needed to demonstrate compliance or avoid it altogether. (S ee Section IV.F.4 above). (a ) Proposed Averaging Provisions The agencies are also proposing a limited averaging program as a part of the trailer compliance process for box trailers. This program would be similar to the Phase 1 averaging program for other sect ors, but would be narrower in scope to reflect the unique competitive aspects of the trailer market. The trailer manufacturing industry is very competitive, and manufacturers must be highl y responsive to their customers’ diverse demands. Compared to othe r industry

sectors, this reality

can limit the value of the flexibility that averaging could provide to trailer manufacturers, since they can have little control over what kinds of trailer models their customers demand and thus limited ability to manage th e mix and volume of different products. In addition, the majority of trailer manufacturers have very few basic trailer models to offer, potentially putting them at a competitive disadvantage to the small number of larger companies that would be in a posit ion to meet market demands that the smaller companies could not. For example, one of the larger, more diverse manufacturers could potentially supply a customer with trailers that had few if an y aerodynamic features, while offsetting this part of their bus iness with over
- complying trailers that they were able to sell to another customer; many smaller companies with limited product offerings might not be able to compete for those customers. Although we recognize that there might be potential negative impac ts on at least some trailer manufacturers of an averag ing program, we believe that there may be overall value to such a program. We propose that full
- aero box trailer manufacturers may optionally

compl y with their standards on average for a trailer family in any given model ye ar. We are not proposing to allow partial
- aero box trailers to average. Instead, all trailers in partial
- aero families would need to meet the standard for that subcategory . We are proposing to allow a trailer manufacturer to combine partial
- aero box trailers with the corresponding full
- aero trailer family and reduce the number of certification applications required. We expect this to be particularly beneficial to manufacturers in the early years of the program, when these tw o trailer categories have identical standards. Although this option should reduce the compliance paperwork, the partial
- aero trailers would not be able to adopt enough technologies to meet the full
- aero standards in the later years, and manufacturers woul d have the option of creating a separate family for these trailers. Additionally , we are proposing to allow refrigerated trailers to combine with the dry vans of the same length and meet the dry van standards and to allow short box vans to combine with th eir long box counterparts to meet the long box standards. Unlike averaging programs in other sectors, including those in this Phase 2 program, we propose that averaging be limited to a single model year, and manufacturer not be allowed toPage 308 of 850

“bank” credits generated from over
- compliance in one year for use in a future year. In other words, a manufacturer that produces some trailers in a family that perform better than required by the applicable standard would be allowed to produce a number of trailers that do not meet the standards, provided the average of the trailers it produces in any given model year is at or below the standards. A trailer family performing better than the standard would not be allowed to bank credits for a future model year. 255 However, as a temporary recourse for unexpected challenges in a given model year, we propose that manufacturers be allowed to generate a deficit that would be resolved within the next three model years, and to allow the manufacturer to use credits they generate from over - compliance in subsequent years to address deficits from prior model years. As discussed below, we are not proposing this allowance for non
- box trailers or non
- aero trailers. We recognize that at each stage of the program, there may be a small frac tion of trailer applications for which the trailer manufacturers cannot easily appl y all of the aerodyn amic and tire technologies. Thus the proposed dry and refrigerated van standards are designed in the form of family average performance, meaning that ea ch trailer manufacturer would comply on average across the trailer families it produces within each subcategory category (or family). The proposed program would allow a manufacturer, for example, to comply without full adoption of aerodynamic devices acro ss 100 percent of its box trailer production in a trailer family , as long as it also produced a sufficient number of trailers within that family that performed better than the standard, such that the overall production
- weighted CO 2 and fuel consumption results of the trailer models in that family complied with the appropriate standard. In addition to the flexibility created b y averaging, the proposed box trailer standards themselves are not predicated on a set adoption rate of any one technology . Manu facturers would be free under the proposed averaging program to choose to appl y the appropriate number and ty pe of technologies that met their customers’ needs and the level of performance required within a particular trailer family . The proposed rules in general do not mandate inclusion of any particular technology

or other means of emission control. The agencies believe that, ordinaril y, averaging would create an incentive for manufacturers to promote high
- performing technologies for some customers, bey ond the requirements for that given ye ar, in order to provide other customers with trailers with fewer aerodyn amic technologies. The agencies also recognize, however, that an averaging program would inherentl y require a higher degree of data management, re cord keeping, and reporting than one without averaging. Recognizing that this could impose burdens, especially on small business manufacturers, the agencies are proposing that the averaging provisions be optional; a box trailer manufacturer could choose whether to use averaging for an y or all of its standard box trailer subcategories (families), or to forego averaging and simply meet the standards with 100 percent of the production within each family . Also, unlike some other regulated motor vehicle sector s, we are not proposing that credits from over
- compliance be able to be “banked” for use in a later

255 Section IV.F.2 describes the process of identifying trailer families and sub
- families based on basic trailer characteristics. Section 1037.710 of the propo sed regulations describes the provisions for establishing subfamilies within a trailer family and the Family Emission Limits that would be averaged among the subfamilies.Page 309 of 850

model year, or to be “traded” among trailer manufacturers, since they would exacerbate the competitive issues, especially for small manufacturers, as discus sed immediately below. However, we are proposing to appl y to trailers the provisions of Phase 1 for tractors that allow for the generation of a compliance deficit that could be resolved over several years. Thus, a manufacturer that chose to use averaging , but by the end of the production year found that a trailer famil y’s CO 2 and fuel consumption values did not reach that ye ar’s standards, could carry a “deficit” that would need to be resolved b y the third year following. The availability

of averaging op tions also has the potential to be a disadvantage to some companies in a competitive market that is highly customer - driven. During the SBREFA process, several manufacturers expressed concern about their ability to manage their credit balances in a highl y competitive market. Many believe that they

would have little ability

to essentiall y force their customers to purchase the technology , especially if other manufacturers that had credits were able to sell trailers without the technology . We see this as esp ecially problematic for non
box trailers, which are much more likel y to be produced b y small businesses, and for which customers may

have less interest in fuel savings technologies since they are less often used long
haul applications than are box trailers . For these reasons, we are proposing averaging onl y for dry and refrigerated vans. The agencies understand that averaging is unfamiliar to many trailer manufacturers and other stakeholders. We have drafted a supplementary document that includes example scenarios to illustrate the concept of averaging for a hypothetical box trailer manufacturer. 256 Example adoption rates are provided for a standard compliance strategy (no averaging ) and a strategy using the proposed averaging provisions. One value of averaging that the agencies have historically cited in several other motor vehicle regulatory

programs is that the availability of averaging provisions made it possible for the agencies to propose and enact more stringent standards than would otherwise have been appropriate, recognizing that the expected flexibility of averaging provisions would ease the path to compliance b y the more challenged members of the in dustry . In the case of trailer manufacturers, however, our decisions on the proposed stringency of the standards is essentially independent of the presence or absence of averaging, since, as discussed above, averaging provisions may

have relatively

less v alue to manufacturers in this customer
- driven industry and we did not speculate about much or how little it might be used. We also request comment on whether the burden of managing an averaging program could be more trouble than the flexibility is worth. Inthe event that averaging were not allowed, the agencies would need to require that all trailers meeting specified characteristics meet a minimum stringency

level without averaging. If we were to finalize such non
- averaging standards, manufacturers woul d still be allowed to select the appropriate technology package that best achieved their emission performance level, but they would not have the ability to

256 Memorandum dated March 2015 on Example Compliance Scenarios for the Proposed GHG Phase 2 Trailer Program. Docket EPA
- HQ
- OAR
- 2014
- 0827Page 310 of 850

accommodate customers that may request trailers that perform less well on an individual trailer basi s. It is also worth noting that the agencies are not proposing to allow any generation of earl y credits before MY 2018. It is clear to us that small businesses would be less prepared to begin complying earl y than larger businesses, and that allowing large manufacturers to generate earl y credits that could be used later could put small businesses at a competitive disadvantage. It does not appear to us that there would be a sufficient broader programmatic benefit from earl y credits to justify such an advers e impact on small businesses. We request comment on this proposed averaging option, including whether the program should allow credit and deficit banking and credit trading, as well as on any other potential provisions that could provide compliance flexibi lity for trailer manufacturers while achieving the goals of the overall program. Comments supporting averaging, banking, or trading should explain how these provisions would be valuable for trailer manufactures across the industry , including how the provi sions would maintain a “level playing field.” (b ) Proposed SmartWay

-Based Certification Since many

manufacturers have some experience with the SmartWay program, the agencies are proposing a gradual transition to the proposed approach that recognizes the parallel SmartWay

Technology

Program. The agencies expect aerody namic device manufacturers to continue to submit test data to SmartWay for verification. Device manufacturers that also wish to have their technology

available for trailer manufacturers to u se in the Phase 2 program could, in parallel, submit their test data to EPA for pre
- approval for Phase 2 (see Section IV.F.4). The information obtained b y EPA from the device manufacturers would include the technology name, a description of its proper ins tallation procedure, and its corresponding delta C D A derived from the approved test procedures. An y manufacturers that attained SmartWay verification prior to January

1, 2018 would be eligible to submit their previous data to EPA’s Compliance Division for pre - approval, provided their test results come from SmartWay ’s 2014 test protocols that measure a delta C D A. The protocols for coastdown, wind tunnel, and computational fluid dy namics anal ys es result in a C D A value. Note that SmartWay ’s 2014 protocols a llow SAE J1321 Ty pe 2 track testing, which generates fuel consumption results, not C D A values. The agencies request comment on whether we should pre
- approve devices tested using SAE J1321 and also seek comment on an appropriate means of converting from th e fuel consumption results of that test to the delta C D A values required for trailer compliance. Beginning on January

1, 2018, EPA would require that device manufacturers that wish to seek approval of new technologies for trailer certification use one of the approved test methods for Phase 2 (i.e., coastdown, constant speed, wind tunnel or CFD) and the test procedures found in 40 CFR 1037. 525 . Technologies that were pre
- approved using SmartWay’s 2014 Protocols would maintain their approved status until CY 2021. After January 1, 2021, we are proposing that all pre
- approved aerody namic trailer technologies be tested using the Phase 2 test procedures.Page 311 of 850

(c) Off

- Cycle Technologies The Phase 1 and proposed Phase 2 programs for tractors include provisions fo r manufacturers to request the use of off cycle technologies that are not recognized in GEM or were not in common use before MY 2010. In the case of trailers, the agencies are not aware of any technologies that could improve CO 2 and fuel consumption performance that would not be captured in the test protocols as proposed. We are therefore not proposing a process to evaluate off
- cycle trailer technologies. (d ) Small Business Regulatory Flexibility Provisions As a part of our small business obligations under the Regulatory Flexibility

Act, EPA and NHTSA have considered additional flexibility provisions aimed at this segment of the trailer manufacturing industry . EPA convened a Small Business Advocacy Review (SBAR) Panel as required b y the Sm all Business Regulatory Enforcement Fairness Act (SBREFA), and much of the information gained and recommendations provided by this process form the basis of the flexibilities proposed. 257 As in previous rulemakings, our justification for including provision s specific to small businesses is that these entities generall y have a greater degree of difficulty in complying with the standards compared to other entities. Thus, as discussed below, we are proposing several regulatory flexibility

provisions for small trailer manufacturers that we believe would reduce the burden on them while achieving the goals of the program. We believe that the small business regulatory flexibilities discussed below and in Section XV.C could provide these entities with reduced compli ance requirements and/or additional time to accumulate capital internall y or to secure capital financing from lenders, and to acquire additional engineering and testing resources. The agencies designed many of the proposed program elements and flexibility provisions available to all trailer manufacturers with the large fraction of small business trailer manufacturers in mind. We believe the option to choose pre
- approved aerody namic devices would significantl y reduce the compliance burden and eliminate the requirement for all manufacturers to perform testing. As noted above, the small trailer manufacturers raised concerns that their businesses could be harmed b y provisions allowing averaging, banking, and trading of emissions and fuel consumption performance, since they would not be able to generate the same volume of credits as large manufacturers. The agencies are proposing not to include banking and trading provisions in any

part of the program, and are limiting the option to average to manufacturers of dry and refrigerated box trailers. Since a majority of non
- box trailer manufacturers are small businesses, we believe a requirement of specific tire technologies for all non
- box trailers would

257 Additional information regarding the findings and recommendations of the Panel are available in Section XIV, Chapter 11 of the draft RIA, and in the Panel’s final report titled “Final Report of the Small Business Advocacy Revie w Panel on EPA’s Planned Proposed Rule Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium
- and Heavy
- Duty Engines and Vehicles: Phase 2 ” ( See Docket EPA
- HQ
- OAR
- 2014
- 0827).Page 312 of 850

create the most uniformity in requirements among manufacturers and would red uce the compliance burden b y eliminating the use of the compliance equation
. In addition to the provisions offered to trailer manufacturers of all sizes, the agencies are proposing or requesting comment on several additional provisions designed specifi call y to ease compliance burdens on small trailer manufacturers. For all small business trailer manufacturers, the agencies propose a one
- year delay in the beginning of implementation of the program, until MY 2019. We believe (subject to consideration of public comment) that this would allow small businesses additional needed lead
- time to make the proper staffing adjustments and process changes, and possibly

add new infrastructure to meet the requirements. We also request comment about where there may be circumstances in later stages of the program, when the stringency

of the standards increase in MY 2021 and 2024, when a similar 1
- ye ar delay in implementation could be warranted for small trailer manufacturers. As mentioned previously, we are proposin g to offer averaging provisions for manufacturers of dry

and refrigerated box trailers only . We recognize that the small box trailer manufacturers may

not be able to full y take advantage of averaging and may be at a competitive disadvantage with larger manufacturers with larger sales volumes and more diverse product lines. We request comment on additional provisions that could ease the potential harm to and/or incentivize small business participation in an averaging program. For small business manufactur ers of box trailers, the agencies propose that if the proposed provisions allowing EPA pre
- approval of aerodyn amic devices (which is proposed as an interim program) were to end, small business trailer manufacturers could continue to use pre
approved device s and avoid independent testing. Furthermore, we are proposing to end the interim design
- based certification option after MY 2023. We request comment on whether this option should be extended beyond MY 2023 for small manufacturers. The agencies also re quest comment on provisions for small manufacturers that might face a situation where the technologies needed for compliance are unavailable. This could be a particular concern for small business non
- box and non
- aero box trailers that require the use of L RR tires and ATI s ys tems. We request that trailer manufacturers as well as tire and aerodynamic technology

manufacturers provide information regarding the current projected availability

of the technologies that trailer manufacturers can use to meet our proposed standards.Page 313 of 850



## V. **Class 2b -**  **8 Vo**  **cational Ve**  **hicles A.**  **Summary of Phase 1 Vocational Vehicle Standards** Class 2b
- 8 vocational vehicles include a wide variety of vehicle types, and serve a wide range of functions. Some examples include service for urban delivery , refuse hauling, utility service, dump, concrete mixing, transit service, shuttle service, school bus, emergency , motor homes, and tow trucks. In the HD Phase 1 Program, the agencies def ined Class 2b
- 8 vocational vehicles as all heav y - duty vehicles that are not included in the Heavy
- dut y Pickup Truck and Van or the Class 7 and 8 Tractor categories. In effect, the rules classify heavy
- dut y vehicles that are not a combination tractor or a pickup truck or van as vocational vehicle s . Class 2b
- 8 vocational vehicles and their engines emit approximately 20 percent of the GHG emissions and burn approximately

21 percent of the fuel consumed by today ’s heavy
- dut y truck sector. 258 Most vocational vehicles are produced in a two
- stage build process, though some are built from the “ground up” by a single entity . In the two
- stage process, the first stage sometimes is completed by

a chassis manufacturer that also builds its own propri etary components such as engines or transmissions. This is known as a vertically integrated manufacturer. The first stage can also be completed b y a chassis manufacturer who procures all components, including the engine and transmission, from separate suppliers. The product completed at the first stage is generall y either a stripped chassis, a cowled chassis, or a cab chassis. A stripped chassis may include a steering column, a cowled chassis may include a hood and dashboard, and a cab chassis may include an enclosed driver compartment. Many of the same companies that build Class 7 and 8 tractors also sell vocational chassis in the medium heavy
- and heav y heav y - dut y weight classes. Similarly , some of the companies that build C lass 2b and 3 pickups and vans also sell vocational chassis in the light heav y - d ut y weight classes. The second stage is ty

pically completed by

a final stage manufacturer or body builder, which installs the primary load carrying device or other work
- related equipment, such as a dump bed, delivery

box, or utility

boom. There are over 200 final stage manuf acturers in the U.S., most of which are small businesses. Even the large final stage manufacturers are specialized, producing a narrow range of vehicle body t yp es. These businesses also tend to be small volume producers. In 2011, the top four producers of truck bodies sold a total of 64,000 units, which is about 31 percent of sales in that year. 259 Inthat same year, 74 percent of final stage manufacturers produced less than 500 units. The businesses that act both as the chassis manufacturer and the final stage manufacturer are those that build the vehicles from the “ground up.” These entities generally produce custom products that are sold in lower volumes than those produced in large commercial processes.

258 See Memorandum to the Docket “Runs pecs and Model Inputs for MOVES for HD GHG Phase 2 Emissions Modeling” Docket Number EPA
- HQ
- OAR
- 2014
- 0827. See also EPA’s MOVES webpage at http://www.epa.gov/otaq/models/moves/index.htm
. 259 Spe cialty Transportation.net, 2012. Truck Body Manufacturing in North AmericaPage 314 of 850

Examples of vehicles produced with this build pr ocess would include fire apparatus and transit buses. The diversity

in the vocational vehicle segment can be primaril y attributed to the variety of customer needs for specialized vehicle bodies and added equipment, rather than to the chassis. For example, a body builder can build either a Class 6 bucket truck or a Class 6 delivery truck from the same Class 6 chassis. The aerodynamic difference between these two vehicles due to their bodies would lead to different in
- use fuel consumption and GHG emissi ons. However, the baseline fuel consumption and emissions due to the components included in the common chassis (such as the engine, drivetrain, frame, and tires) would be the same between these two ty pes of vehicles. Owners of vocational vehicles that are upfitted with high
- priced bodies that are purpose
built for particular applications tend to keep them longer, on average, than owners of vehicles such as pickups, vans, and tractors, which are traded in broad markets that include many potential secondary m arkets. The fact that vocational vehicles also generally accumulate far fewer annual miles than tractors further contributes to lengthy trade cycles among owners of these vehicles. To the extent vocational vehicle owners may be similar to owners of tr actors in terms of business profiles, they would be more likely

to resemble private fleets or owner
operators than for
- hire fleets. A 2013 survey conducted by

NACFE found that the trade cycle of private tractor fleets ranged from seven to 12 years. 260 The Phase 1 standards for this vocational vehicle category generally appl y at the chassis manufacturer level. For the same reasons given in Phase 1, the agencies propose to apply the Phase 2 vocational vehicle standards at the chassis manufacturer level. 261 The Phase 1 regulations prohibit the introduction into commerce of any heavy
- duty vehicle without a valid certificate or exemption. Title 40 CFR §1037.620 allows for a temporary exemption for the chassis manufacturer if it produces the chassis for a sec ondary manufacturer that holds a certificate. Further discussion of temporary exemptions and possible obligations of secondary manufacturers can be found in Section V. E. In Phase 1, the agencies adopted two equivalent sets of standards for Class 2b
- 8 vocational vehicles. For vehicle
- level (chassis) emissions, EPA adopted CO 2 standards expressed in grams per ton
- mile. For fuel efficiency , NHTSA adopted fuel consumption standards expressed in gallons per 1,000 ton
- miles. The Phase 1 engine
- based standards vary based on the expected weight class and usage of the vehicle into which the engine will be installed. We adopte d Phase 1 vehicle
- based standards that vary according to one key

attribute, GVWR, based on the same groupings of vehicle weight classes used for the engine standards
-- light heav y - dut y (LHD, Class 2b
- 5), medium heavy
- dut y (MHD, Class 6
- 7), and heav y heav y duty (HHD, Class 8).

260 See 2013 ICCT Barriers Report at Note 242 , above. 261 See 76 FR 57120.Page 315 of 850

In Phase 1, the agencies defined a special regulatory category called vocational tractor, which generally

operate more like vocational vehicles than line haul tractors. 262 As described above in Section III.C. 4 , under the Phase 1 rule s, a vocational tractor is certified under standards for vocational vehicles, not those for tractors. In Phase 2, the agencies propose to retain the vocational tractor definition, and to allow vocational tractors to certify over any of the proposed vocati onal vehicle duty cycles, following the same decision
- tree as other vocational chassis. Vocational tractors would continue to satisfy the proposed engine standard and vocational vehicle GEM
- based standard, rather than the proposed tractor standard. Manufa cturers are required to use GEM to determine compliance with the Phase 1 vocational vehicle standards, where the primary vocational vehicle manufacturer
- generated input is the measure of tire rolling resistance. The GEM assumes the use of a ty pical repres entative, compliant engine in the simulation, resulting in one overall value for CO 2 emissions and one for fuel consumption. The manufacturers of engines intended for use in vocational vehicles are subject to separate Phase 1 engine
- based standards. Manuf acturers also may demonstrate compliance with the CO 2 standards in whole or in part using credits reflecting CO 2 reductions resulting from technologies not reflected in the GEM testing regime. See 40 CFR Section 1037.610. In Phase 1, EPA and NHTSA also ad opted provisions designed to give manufacturers a degree of flexibility

in complying with the standards. Most significantl y, we adopted an ABT program to allow manufacturers within the same averaging set to compl y on average. See 40 CFR Section 1037 subpart H. These provisions enabled the agencies to adopt overall standards that are more stringent than we could have considered with a less flexible program. 263 

### B. **Proposed Phase 2 Standards for Vocational Vehicles** The agencies have held dozens of meetings with manufacturers, suppliers, non
governmental organizations (NGOs), and other stakeholders to identify and understand the opportunities and challenges involved with regulating vocational vehicles. These meetings have helped us to better understand the perfor mance demands of the customers, the fuel
- saving and GHG reducing technologies that are being investigated, as well as some challenges that are being encountered. In addition, we updated our industry characterization to better understand the vocational veh icle manufacturing process, including the component suppliers and body builders. 264 We believe these information exchanges have enabled us to develop this proposal with an appropriate balance of reasonabl y achievable goals and a reasonably small risk of uni ntended consequences.

262 See EPA’s regulation at 40 CFR 1037.630 and NHTSA’s regulation at 49 CFR 523.2 a
. 263 As noted earlier, 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. 32902(h), which applies to light
- duty CAFE but not to heavy
- duty fuel efficiency under 49 U.S.C. 32902(k). 264 September 2013, Heavy Duty Vocational Vehicle Industry Characterization, EPA Contract No. EP
- C
- 12
- 011.Page 316 of 850

**(1) Proposed Subcategories and Test Cycles**  The proposed Phase 2 vocational vehicle standards are based on the performance of a wider array

of control technologies than the Phase 1 rules. In particular, the agencies are proposing to recognize detailed characteristics of powertrains and drivelines in the proposed Phase 2 vocational vehicle standards. As described below, driveline improvements present a significant opportunity for reducing fuel consumption and CO 2 emissions from vocational vehicles . However, there is no single package of driveline technologies that would be equall y suitable for the majority of vocational vehicles , because there is an extremely broad range of driveline configurations available in the market. This is due in part to the variety of build processes, ranging from a purpose built custom chassis to a commercial chassis that may be intended as a multi
- purpose stock vehicle. Further, the wide range of applications and driving patterns of these vehicles leads manufacturers to offer a variety of drivelines, as each performs differentl y in use
. For example, depending on whether the transmission has an overdrive gear, drive axle ratios for Class 7 and 8 tractors can be found in the range of 2.5:1 to 4.1:1. By contrast, across all ty

pes of vocational vehicles, drive axle ratios can be as low as 3.1:1 (delivery vehicle) and as high as 9.8:1 (transit bus). 265 Other components of the driveline also have a broader range of product in vocational vehicles than in tractors, including transmission gears, tire sizes, and engine speeds. Each of these design features affects the GHG emission rate and fuel consumption of the vehicle. It therefore is reasonable to define more than one baseline configuration of vocational vehicle, to encompass a range of drivelines and recognize that the agencies cannot use a one
- size
- fits
- all approach. A detailed list of the technologies the agencies project c ould be adopted to meet the proposed vocational vehicle standards is described in Section V.C, and in the draft RIA Chapter 2. The agencies have determined that these technologies perform differentl y depending on the drivelines and driving patterns , further supporting the need to subcategorize this segment
. For these reasons, the a gencies are proposing to create additional subcategories of vocational vehicles in Phase 2. By creating additional subcategories we would essentially be setting separate baselines and separate numerical performance standards for different groups of vocati onal vehicle chassis over different test cycles
. This would enable the technologies that perform best at highway

speeds and those that perform best in urban driving to each to be full y recognized over appropriate test cycles, while avoiding the unintended consequence of forcing vocational vehicles that are designed to serve in a wide variety of applications to be measured against a single baseline. The attributes we believe could define these chassis groups are described below
.

265 See Dana Spicer Drive Axle Applicat ion Guidelines, available at http://www.dana.com/wps/wcm/c onnect/133007004bd8422b9ea8be14e7b6dae0/DEXT
daag2012_0712_DriveAxlesAppGuide_LR.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=133007004bd 8422b9ea8be14e7b6dae0 . See also ZF Driveline and Chassis Technology brochure, available at http://www.zf.com/media/media/en/document/corporate_2/downloads_1/flyer_and_brochures/bus_driveline_techno logy_flyer/Busbroschuere_12_DE_final.pdfPage 317 of 850

The agencies are proposing to split groups of chassis into subcategories based generally on vehicle use patterns in which the CO 2 emissions and fuel consumption standards vary as a consequence. Compliance with these standards would be demonstrated through test cycles reflecting the se use patterns, to best assure that actual in
- use benefits occur. An ideal test cycle is one in which the performance improvements achieved b y the adopted technologies are recognized over the cycle. As described in Section V.C and in the draft RIA Chapt er 2. 9 , the agencies have found that most of the technologies considered do perform differently under different driving conditions. F or example , the effectiveness of lower tire rolling resistance is different depending on the degree of highway or transient driving, but the differences are very small compared to the difference in effectiveness for a hy brid drivetrain under different driving conditions. T he agencies have found that the measurable changes in performance of a majorit y of the technologies are significant enough to merit creation of different subcategories with different test cycles. Idle reduction technology is one t ype of technology that is particularl y duty
- cycle dependent. The composite test cycle for vocational vehicles in Phase 1 includes a 42 percent weighting on the ARB Transient test cycle, which comprises nearly 17 percent of idle time. However, no single idle event in this test cycle is longer than 36 seconds, which may not be enough time to adequately recognize the benefits of some idle reduction technologies. 266 For Phase 2, the agencies propose to recognize this important fuel saving technology by evaluating workday idle reduction technologies through a new idle
- only cycle as described in the draft RIA Chapter 3. The agencies are proposing three different composite test cycles for vocational vehicles in Phase 2: Regional, Multi
- Purpose, and Urban. The agencies believe these three cycles balance the competing pressures to recognize the varying performance of technologies, serve the varying needs of customers, and maintain reasonable regulatory simplicity
. Table V
- 1 below presents the nine proposed subcategories of vocational vehicles: three weight class groupings, each with three composite duty c yc les. Each of these proposed compo site duty cycles has a different weighting of the new idle cycle, the highway cruise cycles, and the ARB Transient cycle, as shown in Table V
- 2
. The CAL START HD Truck Fuel Econom y Task Group met in June 2013 to discuss vocational vehicle segmentation, and suggested an approach very similar to this. The task group generally

supporte d a limited number of duty cycles that would be sufficient to cover the basic applications while allowing new technology to demonstrate its worth
. They recognized that a few meaningful duty cycles could “bound” how vocational vehicles are generally used, while recognizing that this approach would not perfectl y match how every vocational vehicle is actuall y used. Their recommendations included three vocational vehicle duty
- cycle
- based subcategories: Urban, Regional, and Work Site. A detailed discussion of the CAL START recommendations, as well as reasoning wh y the agencies selected the proposed composite cycle weightings can be found in the draft RIA Chapter 2 . Continuing the averaging scheme from Phase 1, each manufacturer would be able to average within each vehicle weight class.

266 However, as noted above, emission improvements due to workday idle technology can be r ecognized under Phase 1 as an innovative credit under 40 CFR 1037.610 and 49 CFR Part 535.7
.Page 318 of 850 **Table V**  **- 1**  **Proposed Regulatory Subcategories for Vocational Vehicles** Weight Class Li ght Heav y - Dut y Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Duty C ycle Regional Regional Regional

Multi
- Purpose Multi
- Purpose Multi
- Purpose Urban Urban Urban
**Table V**  **- 2**  **Proposed Composite Test Cycle Weightings (in Percent)**  **for Vocational Vehicles**

ARB Transient 55 mph Cruise

with Road Grade a 65 mph Cruise

with Road Grade a Idle Regional 50 28 22 10 Multi
- Purpose 82 15 3 15 Urban 94 6 0 20 Note: a As described in Section III.E.2.b, the agencies are proposing to add road grade to the highway cruise test cycles. The agencies are proposing criteria for determining the applicability of these subcategories. This is not as straightforward an exercise as with tractors, where attributes such as cab type are obvious physical properties that indicate reasonabl y well how a vehicle is intended to be used. The agencies have identified the final drive ratio of a vocational vehicle as a possible attribute that may indicate how the vehicle is intended to be used. As described in Section V. E. (1) (d) , w e expect that most vocational chassis could be assigned to a duty cycle b y estimating the percent of maximum engine test speed that is achieved over highway cruise cycles, by use of an eq

uation that relates engine speed to vehicle speed. To simplify this assignment process, the agencies propose that a vocational chassis would be presumed to certify using the Multi
- Purpose duty cycle unless some criteria were met that indicated either the Regional or Urban cycle would be more appropriate. Those criteria could include the objective calculation described in Section V.E. , or a mix of phy sical attributes and knowledge of intended use. The agencies are also proposing that chassis manufacturers would be able to request a different duty c yc le. We understand that even within certain vocational vehicle types, vehicle use varies significantl y. By

employing the agencies’ recommended assignment process, it is our expectation that a delivery truck and a dump truck could both be certified over the same duty cycle while still yielding accurate technology effectiveness, if they

had similar chassis and driveline characteristics. Further, while intended service class may help a manufacturer decide how to classify

some vehicles, we do not believe that intended service class would be a sufficient indicator by

itself. An example of this is the refuse service class. A neighborhood collection refuse truck would not need to be assigned to the same subcategory as a roll
- off refuse straight/dump truck that makes daily highway trips to a landfill. The agencies request comment on the method for assigning vocational chassis to regulatory

subcategories. We believe the proposed approach is aligned with the objective toPage 319 of 850

allow manufacturers to certify their chassis over appropriate duty c ycl es, while maintaining the ability of the market to offer a variety of products to meet c u s to mer demand. **(2) Alternative**  **Approach to Sub c**  **ategorization** The U.S. Department of Energy and E PA are partnering to support a project aimed at evaluating, refining and/or developing duty cycles for tractors and vocational vehicles to be used in the certification of heavy
- dut y vehicles to GHG emission standards. This project is underway at the Natio nal Renewable Energy L aboratory

(NREL) and includes a task to develop alternative subcategorization options for vocational vehicles , along with new drive cycles and/or cycle composite weightings
. NRELis continuing to collat e available vehicle activity data and vehicle characteristics, and the public is invited to submit information to the docket in support of this work to identify

possible alternative GEM test cycles and segmentation options for vocational vehicles. Preliminary

work under this project in dicates th at two or three test cycles may adequatel y represent most vocational vehicles. Depending on how many distinct vehicle driving patterns can be identified with correlation to vehicle attributes, the agencies may finalize a vocational subcategorization approach that includes as few as two or as many as five composite GEM duty

cycles. It is also possible that some test cycles may not appl y to all subcategories. It is further possible that the approach to assignment of vocati onal chassis to subcategories in the final rules may

be based on different attributes than those proposed, including different engine and driveline characteristics and different indicators of vehicle purpose. Preliminary work from NREL indicates that in
- u se drive cycles may include more idle operation for all ty pes of vocational vehicles than is represented b y the currently proposed GEM test cycles. D epending on comments and additional information received during the comment period, it may be within the a gencies ’ discretion to adopt one or more alternative vocational vehicle test cycles , or re weight the current test cycles, to better represent real world driving and better reflect performance of the technology packages. **(3) Proposed GHG and Fuel Consumpti**  **on Standards for V**  **ocational V**  **ehicles** EPA is proposing CO 2 standards and NHTSA is proposing fuel consumption standards for manufacturers of chassis for new vocational vehicles. As described in Section s II .C.1 and II.D.1 above, the agencies are proposing test procedures so that engine performance would be evaluated within the GEM simulation tool. These test procedures include corrections for the test fuel, enabling vocational vehicles to be certified with many different types of CIand SI engine s . In addi tion, EPA is proposing to establish HFC leakage standards for air conditioning sy stems in vocational vehicles, as described below and in the draft RIA Chapter s 2 and 5. This section describes the standards and implementation dates that the agencies are pro posing for the nine subcategories of vocational vehicles. The agencies have performed a technology

anal ys is to determine the level of standards that we believe would be available at reasonable cost, and would be cost - effective, techn olog icall y feasible, and appropriate in the lead time provided. More details of this analy sis are described in the draft RIA Chapter 2. This anal ys is considered the following for each of the proposed regulatory sub categories: the level of technology

that is incorpo rated in current new vehicles, forecasts of manufacturers’ product redesign schedules,Page 320 of 850

the available data on CO 2 emissions and fuel consumption for these vehicles, technologies that would reduce CO 2 emissions and fuel consumption and that are judged to b e feasible and appropriate for these vehicles through the 202 7 model year, the effectiveness and cost of these technologies, a projection of the technologicall y feasible application rates of these technologies , in this time frame, and projections of future U.S. sales for different types of vehicles and engines. The propos al described here and throughout the rulemaking documents is the preferred alternative, referred to as Alternative 3 in Section X and the draft RIA Chapter 11 . However, the agencies ar e seriously

considering another alternative for all segments, including vocational vehicles , referred to as Alternative 4. The agencies believe that Alternative 4 has the potential to be the maximum feasible and reasonable alternative. However, based on the evidence currentl y before the agencies, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the time frame envisioned by that alternative
. Alternative 4 is predicated on the same general market adopt ion rates of the same technologies as the proposal, but would provide three years less lead time than the proposal
. Details of Alternative 4 are presented in Section V.D, Section X, and in the draft RIA Chapter 11
. The agencies seek comment on the feasibility of Alternative 4 for vocational vehicles , including empirical data on its appropriateness, cost
- effectiveness, and technological feasibility
. It would be helpful if comments addressed these issues separatel y for each type of technology. Additional information and feedback could further inform our assumptions and, by extension, our analy sis of feasibility . T he agencies believe it is possible that it could be within the agencies’ discretion to determine in the final rule s that Alternative 4 could be maximum feasible and appropriate under CAA section 202 (a)(1) and (2)
. If the agencies receive relevant information supporting the feasibility of Alternative 4, or regarding technology pathway s different than those in Alternatives 3 and 4, the agencies may consider establishing final fuel consumption and GHG emission standards at levels that provide more overall reductions than what we are proposing if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectivel y. (a ) Proposed Fuel Consumption and CO2 Standards T he agencies are proposing standards that would phase in over a period of seven years, beginning in the 2021 model year , consistent with the requirement in EI SA that NHTSA’s standards provide four full model years of regulatory lead time and three full model years of regulatory

stability , and provide sufficient time “to permit the development and application of the requisite technology” for purposes of CAA section 202 (a)(2)
. The proposed Phase 2 program would pro gress in three
- ye ar stages with an intermediate set of standards in MY 2024 and would continue to reduce fuel consumption and CO 2 emissions well beyond the full implementation year of MY 2027. The agencies have identified a technology path for each of the se levels of improvement, as described below.Page 321 of 850

Combining engine and vehicle technologies, vocational vehicles powered by CI engines would be projected to achieve improvements of 16 percent in MY 202 7 over the MY 2017 baseline , as described below and in the draft RIA Chapter 2. The agencies project up to 13 percent improvement in fuel consumption and CO 2 emissions in MY 202 7 from SI
- powered vocational vehicles , as shown in Table V
- 3
. The incremental Phase 2 vocational vehicle standards would ensure steady progress toward the MY2027 standards, with improvements in MY 2021 of up to seven percent and improvements in MY 202 4 of up to 11 percent over the MY 2017 baseline vehicles, as shown in Table V
- 3
. The agencies’ anal ys es, as discussed in this preamble and in the dra ft RIA Chapter 2, show that the proposed standards would be appropriate under each agency ’s respective statutory authority
. **Table V**  **- 3**  **Projected Vocational Vehicle CO 2**  **and Fuel Use Reductions**  **(in Percent) from 2017 Baseline**  Model Year Engine T yp e Heav y Heav y Duty Class 8 Medium Heav y Duty Class 6
- 7 Li ght Heav y - Dut y

Class 2b
- 5 2021 CIEngine 7 7 6

SIEngine 5 5 4 2024 CIEngine 11 11 1 0

SIEngine 7 7 7 2027 CIEngine 16 16 16

SIEngine 12 13 12 Based on our analy sis and research, the agencies believe that the improvements in vocational vehicle fuel consumption and CO 2 emissions can be achieved through deplo ym ent and utilization of a greater set of technologies than formed the technology basis for the Phase 1 standards. In developing the proposed standards, the agencies have evaluated the current levels of fuel consumption and emissions, the kinds of technologies that could be utilized by manufacturers to reduce fuel consumption and emissions , the associated lead time, the associated costs for the industry , fuel savings for the owner/operator , and the magnitude of the CO 2 reductions and fuel savings that may be achieved. After examining the possibilities of vehicle improvements, the agencies are basing the proposed standards on the performance of workday idle reduction technologies, improved transmissions including h ybrid powertrains , axle technologies, weight reduction, and further tire rolling resistance improvements. The EPA
- only air condit ioning standard is based on leakage improvements. The agencies’ evaluation indicates that some of the above vehicle technologies are commerciall y available today, though often in limited volumes. Other technologies would need additional time for developme nt. Those that we believe are available today and may be adopted to a limited extent in some vehicles include improved tire rolling resistance, weight reduction, some ty pes of conventional transmission improvements, neutral idle, and air conditioningPage 322 of 850

leak age improvements. However, EPA is not proposing standards predicated on performance of these technologies until MY 2021. 267 T he agencies consider an y potential benefits that could be achieved b y implementing rules requiring some technologies on vocational vehicles earlier than MY 2021 to be outweighed by several disadvantages . For one, manufacturers would need lead time to develop compliance tracking tools. Also, if the Phase 2 vocational vehicle standards began in a different ye ar than the tractor standards, this could create unnecessary added complexity , and c ould strongl y detract from the fuel savings and GHG emission reductions that could otherwise be achieved. Therefore we anticipate that the Phase 1 standards will continue to apply in model years 20 18 to 2020. Vehicle technologies that we believe w ill become available in the near term include improved axle lubrication and 6x2 axles. Vehicle technologies that we understand would benefit from even more development time include stop
- start idle reductio n and h ybrid powertrains. The agencies have anal yz ed the techn olog ical feasibility of achieving the fuel consumption and CO 2 standards, based on projections of what actions manufacturers would be expected to take to reduce fuel consumption and emissions to achieve the standards, and believe that the standards would be technologicall y feasible throughout the regulatory useful life of the program . EPA and NHTSA estimated vehicle packag e costs are found in Section V. C. (2)
. Table V
- 4 and Table V
- 5 present EPA’s proposed CO 2 standards and NHTSA’s proposed fuel consumption standards, respectivel y, for chassis manufacturers of Class 2b through Class 8 vocational vehicles for the beginning model year of the program, MY 2021
. As in Phase 1, the standards would be in the form of the mass of emissions , or gallons of fuel, associated with carryi ng a ton of cargo over a fixed distance
. The EPA standards would be measured in units of grams CO 2 per ton - mile and the NHTSA standards would be in gallons of fuel per 1,000 ton
miles. With the mass of freight in the denominator of this term, the program is designed to measure improved efficiency in terms of freight efficiency
. As in Phase 1, the Pha se 2 program would assign a fixed default payload in GEM for each vehicle weight class group (heav y heav y duty , medium heav y - duty , and light heavy
- dut y). Even though this simplification does not allow individual vehicle freight efficiencies to be recogniz ed, the general capacity for larger vehicles to carry more payload is represented in the numerical values of the proposed standards for each weight class group. EPA’s proposed vocational vehicle CO 2 standards and NHTSA’s proposed fuel consumption standards for the MY 2024 stage of the program are presented in Table V
- 6 and Table V
- 7 , respectively . These reflect broader adoption rates of vehicle technologies already considered in the technology basis for the MY 2021 standards. The standards for vehicles powered b y CI engine s also reflect that in MY 2024, the separate engine standard would be more stringent, so the vehicle standard keeps pace with the engine standard.

267 NHTSA is unable to adopt mandatory amended standards in those model years since there would be less than the statutorily
- prescribed amount of lead time available. 49 USC section 32902 (k)(3)(A).Page 323 of 850

EPA’s proposed vocational vehicle CO 2 standards and NHTSA’s proposed fuel consumption standards for the fu ll implementation year of MY 2027 are presented in Table V
- 8 and Table V
- 9 , respectively . These reflect even greater ad option rates of the same vehicle technologies considered in the basis for the previous stages of the Phase 2 standards. The proposed MY 2027 standards for vocational vehicles pow ered b y CI engine s reflect additional engine technologies consistent with those on which the separate proposed MY 2027 CIengine standard is based. The proposed MY 2027 standards for vocational vehicles powered b y S I engine s reflect improvements due to additional engine friction reduction technology , which is not among the technologies on which the separate SIengine standard is based. The proposed standards are based on highway cruise cycles that include road grade, to better reflect real world driving and to help recognize engine and driveline technologies. See Section III.E. The agencies have evaluated some alternate road grade profiles, including several recommended by

NREL and two developed independently by the agencies, and have prepared possible alternative vocational vehicle standards based on these profiles. The agencies request comment on this analy sis, which is available in a memorandum to the docket. 268 As described in Section I, the agencies are proposing to continue the Phase 1 approach to averaging, banking and trading (ABT), allowing ABT within vehicle weight classes. For Phase 2, continuing this approach means allowing averaging between CI
- powered vehicles and SI
powered vehicles that belong to the same weight class group and have the s ame regulatory useful life. **Table V**  **- 4**  **Proposed EPA CO 2**  **Standards for MY2021 Class 2b -**  **8 Vocational Vehicles** EPA Standard for Vehicle with CIEngine Effective MY2021 (gram CO 2 /ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 29 6 18 8 19 8 Multi
- Purpose 30 5 1 90 200 Regional 3 18 18 6 1 89 EPA Standard for Vehicle with SIEngine Effective MY2021 (gram CO 2 /ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 320 203 214 Multi
- Purpose 329 20 5 216 Regional 343 201 204

268 See Memorandum dated May 2015 on Possible Tractor, T railer, and Vocational Vehicle Standards Derived from Alternative Road Grade ProfilesPage 324 of 850

**Table V**  **- 5**  **Proposed NHTSA Fuel Consumption Standards for MY2021 Class 2b -**  **8 Vocational Vehicles** NHTSA Standard for Vehicle with CIEngine Effective MY 2021 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 29.0766 18.4676 19.4499 Multi
- Purpose 29.9607 18.6640 19.6464 Regional 31.2377 18.2711 18.5658 NHTSA Standard for Vehicle with SIEngine Effective MY 2021 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 36.0077 22.8424 24.0801 Multi
- Purpose 37.0204 23.0674 24.3052 Regional 38.5957 22.6173 22.9549 **Table V**  **- 6**  **Proposed EPA CO 2**  **Standards for MY2024 Class 2b -**  **8 Vocational Vehicles** EPA Standard for Vehicle with CIEngine Effective MY2024 (gram CO 2 /ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 28 4 1 79 1 90 Multi
- Purpose 29 2 1 81 1 92 Regional 3 04 17 8 1 82 EPA Standard for Vehicle with SIEngine Effective MY2024 (gram CO 2 /ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 3 12 1 97 208 Multi
- Purpose 3 21 19 9 210 Regional 3 34 196 199Page 325 of 850

**Table V**  **- 7**  **Proposed NHTSA Fuel Consumption Standards for MY2024 Class 2b -**  **8 Vocational Vehicles** NHTSA Standard for Vehicle with CIEngine Effective MY 2024 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 27. 8978 17. 5835 18. 6640 Multi
- Purpose 28. 6837 17.7800 18. 8605 Regional 29. 8625 17. 4853 17. 8782 NHTSA Standard for Vehicle with SIEngine Effective MY 2024 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 35.1075 22.1672 23.4050 Multi
- Purpose 36.1202 22.3923 23.6300 Regional 37.5830 22.0547 22.3923

**Table V**  **- 8**  **Proposed EPA CO 2**  **Standards for MY202 7**  **Class 2b -**  **8 Vocational Vehicles** EPA Standard for Vehicle with CIEngine Effective MY202 7 (gram CO 2 /ton
- mile) Duty Cycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 272 172 182 Multi
- Purpose 280 174 183 Regional 292 170 174 EPA Standard for Vehicle with SIEngine Effective MY202 7 (gram CO 2 /ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 299 189 196 Multi
- Purpose 308 191 198 Regional 321 187 188Page 326 of 850

**Table V**  **- 9**  **Proposed NHTSA Fuel Consumption Standards for**  **MY 2027**  **Class 2b -**  **8 Vocational Vehicles** NHTSA Standard for Vehicle with CIEngine Effective MY 202 7 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 26.7191 16.8959 17.8782 Multi
- Purpose 27.5049 17.0923 17.9764 Regional 28.6837 16.6994 17.0923 NHTSA Standard for Vehicle with SIEngine Effective MY 202 7 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 33.6446 21.2670 22.0547 Multi
- Purpose 34.6574 21.4921 22.2797 Regional 36.1202 21.0420 21.1545 As with the other regulatory categories of heavy
- duty vehicles, NHTSA and EPA are proposing standards that apply to Class 2b
- 8 vocational vehicles at the time of production, and EPA is proposing standards for a specified period of time in use (e.g., throughout the regulatory useful life of the vehicle). T he derivation of the st andards for these vehicles, as well as details about the proposed provisions for certification and implementation of these standards, are discussed in more detail later in this notice and in the draft RIA. (b ) Proposed HFC Leakage Standards The Phase 1 GHG standards do not include standards to control direct HFC emissions from air conditioning s ys tems on vocational vehicles. EPA deferred such standards due to “the complexity

in the build process and the potential for different entities besides the chassis manu facturer to be involved in the air conditioning s ys tem production and installation”. 76 FR 57194/3. During our stakeholder outreach conducted for Phase 2 , we learned that the majority of vocational vehicles are sold as cab
- completes with the dashboard
- mo unted air conditioning sy stems installed by

the chassis manufacturer. For those vehicles that have A/C sy stems installed by

a second stage manufacturer, EPA is proposing revisions to our regulations that would resolve the issues identified in Phase 1, in what we believe is a practical and feasible manner, as described below in Section V.E. For the above reasons, in Phase 2, EPA now believes that it is reasonable to propose A/C refrigerant leakage standards for Class 2b
- 8 vocational vehicles, beginning with the 20 2 1 model ye ar. Chassis sold as cab
- completes typicall y have air conditioning s ys tems installed by the chassis manufacturer. For these configurations, the process for certifying that low leakage components are used would follow the sy stem in place currentl y for comparable s ys tems in tractors. In the case where a chassis manufacturer would rel y on a second stage manufacturer to install a compliant air conditioning sy stem, the chassis manufacturer must follow the proposed delegated assembly

provisio ns described below in Section V.E.Page 327 of 850

**(4) Proposed Exemptions and Exclusions**  (a ) Proposed Standards for Emergency Vehicles Emergency

vehicles are covered b y the Phase 1 program at the same level of stringency as an y other vocational vehicle. In discussions with rep resentatives of the Fire Apparatus Manufacturers Association, the agencies have learned that c hassis manufacturers of fire apparatus are currently

able to obtain compliant engines and tires with the coefficient of rolling resistance allowing compliance with the Phase 1 standards. The agencies are proposing in Phase 2 to allow emergency

vehicles to meet less stringent standards than other vocational vehicles. There are two reasons for doing so. First, as the level of complexity of Phase 2 would increase w ith the need for additional technologies aimed to improve driveline efficiency , the compliance burden would be disproportionately high for a company

that manufactures small volumes of specialized chassis. The ability of such a company

to benefit from averaging would be limited, as would be the ability

to spread compliance costs across many vehicles. The second and more important reason is that emergency vehicles, which are necessarily built for high levels of performance and reliability , would likel y sacrifice some levels of function to attain the proposed Phase 2 standards. For example, vehicles with large engines, high
- torque powertrains, and tires designed with deep tread would likely be deficit
- producing vehicles if manufacturers needed to certify an emergency

vehicle family

to the primary proposed standards. In the MY 2017
- 2025 light
- duty rule, the agencies adopted an exclusion for emergency and police vehicles from GHG and fuel econom y s tandards. 269 As described in that rule, the unique features of purpose - built emergency vehicles, such as high rolling resistance tires, reinforced suspensions, and special calibrations of engines and transmissions, have the effect of raising their GHG emissions. The agencies determined in that rule that an exemption wa s appropriate because the t echn olog ical feasibility issues for emergency

vehicles went beyond those of other high
- performance vehicles, and vehicles with these performance characteristics must continue to be made available in the market . The agencies do not believe that non
emergency

vocational vehicles are designed for the severe duty c ycl es that are experienced by emergency

vehicles, and therefore do not face the same potential constraints in terms of vehicle design and the applicatio n of technology
. In conducting an independent technological feasibility assessment for heavy
- dut y emergency

vehicles, the agencies believe that some GHG and fuel saving technologies could reasonabl y be applied without compromising vehicle utility . However, these vehicles are designed, built, and operated so diffe rentl y than other vocational vehicles that we believe keeping them in the same averaging sets as other vocational vehicles in Phase 2 would not be appropriate and thus a separate standard (evaluated from a baseline specific to these vehicles) is warranted.

269 See 77 FR 62653, October 12, 2012.Page 328 of 850

Our feasibility

anal ys is and the available tire data indicate that emergency vehicle manufacturers can reasonably continue to appl y tires with the Phase 1 level tire CRR performance, in the Phase 2 program. We have also learned that a variety of vehi cle
- level technologies are being developed specificall y for emergency vehicles, to maintain on
- board electronics without excessive idling. Modern fire apparatus and ambulances ty picall y have multiple computers and other electronic devices on
- board, each o f which requires power and continues to draw electricity when the vehicle is parked and the crew is responding to an emergency , which could take several hours. Most on
- board batteries and alternators are not capable of sustaining these power demands for a ny length of time, so emergency vehicles must either operate in a high
- idle mode or adopt one of several possible technologies that can assist with electrical load management. Some of these technologies can enable an emergency vehicle to shut down the mai n engine and drastically reduce idle emissions. 270 NHTSA and EPA have not based the proposed emergency vehicle standards on use of idle reduction technologies because we do not believe the regular neutral idle and stop
- start technologies we project for othe r vocational vehicles could apply equall y to emergency vehicles, and we do not have enough information about this subset of idle reduction technologies that is designed for extended electrical load management to either estimate an effectiveness value or de termine an appropriate market adoption rate. The agencies request comment on whether we should include any market adoption rate of idle reduction technologies for emergency vehicles, as part of the basis for the Phase 2 emergency

vocational vehicle standard. To address both the technical feasibility and the compliance burden , the agencies are proposing less stringent standards that also have a simplified compliance method. Because the potential trade
- offs between performance and fuel efficiency appl y equa lly

to any emergency vehicle manufacturer, the agencies propose that these less stringent standards would apply for commercial chassis manufacturers of emergency vehicles, as well as for custom chassis manufacturers. The standard for vehicles identified at the time of certification as being intended for emergency

service would be predicated solel y on the continued use of lower rolling resistance tires, at the Phase 2 baseline level (i.e. compliant with Phase 1). 271 With respect to standards for engines use d in these emergency vehicles, based on what we have learned from discussions with engine manufacturers, we understand that engines designed for heav y - dut y emergency vehicles are generall y higher
- emitting than other engines. However, if we maintain a separate engine standard and regulatory flexibility

such as ABT, fire apparatus manufacturers would be able to obtain engines that, on average, meet the proposed Phase 2 engine standards. The agencies further recognize that the proposed engine map inputs to G EM in the primary

program would pose a difficulty for emergency

vehicle manufacturers. If we required engine
- specific inputs then these manufacturers would have to apply extra vehicle technologies to compensate for the necessary but higher
- emitting engine . The agencies are

270 See “How

to solar power a fire truck or ambulance,” available at http://www.firerescue1.com/fire
products/apparatus
- accessories/articles/1934440
- How
- to - solar
- power - a - fire
- truck
- or - am bulance/ , accessed November 2014 271 See 40 CFR 86.1803
- 01 for t he applicable definition of emergency vehicle.Page 329 of 850

therefore not proposing to recognize engine performance as part of the vehicle standard for emergency

vehicles. Manufacturers of these vehicles would be expected to install an engine that is certified to the applicable separate Phase 2 engine standard. However, under the simplified compliance method we are proposing, emergency vehicle manufacturers would not follow the otherwise applicable Phase 2 proposed approach of entering an engine map in GEM. Instead a Phase 1 style GEM interfac e would be made available, where an EPA default engine specified by rule would be simulated in GEM. The agencies request comments on the merits of using an equation
- based compliance approach for emergency vehicle manufacturers, similar to the approach pro posed for trailer manufacturers and described in Section IV.F. This approach is consistent with the approach recommended by the Small Business Advocacy

Review Panel, which believed it would be feasible for small emergency vehicle manufacturers to install a Phase 2
- compliant engine, but recommended a simplified certification approach to reduce the number of required GEM inputs. Consistent with the recommendations of this panel, the agencies are asking for comments on whether there would be enough fuel cons umption and CO 2 emissions benefits achieved by use of LRR tires in emergency vehicles to justify requiring small business emergency chassis manufacturers to adopt them. We expect some commercial chassis manufacturers that serve the emergency vehicle marke t may

have the ability

to meet the proposed Phase 2 standards of our primary program when including emergency vehicles in their averaging sets. Even so, we are proposing that they have the option to comply with the less stringent standards, because there are fewer opportunities to improve fuel efficiency on emergency vehicles, which (as noted) are designed for high levels of performance and severe duty . The agencies expect that this compliance path would be most needed b y custom chassis manufacturers who serve the emergency vehicle market. Custom chassis manufacturers typically offer a narrow range of products with low sales volumes. Therefore, fleet averaging would provide a lower level of compliance flexibility , and there would be less opportunity

to sp read the costs of developing advanced technologies across a large number of vehicles. Further, man y custom chassis manufacturers do not qualify as small entities under the SBA regulations. Thus, the agencies believe that existence of program - wide ABT doe s not vitiate the need to propose alternative, less stringent standards for emergency vehicles. Table V
- 10 below presents the proposed numerical stand ards to which an emergency vehicle chassis would be certified under this provision. Emergency vehicles certified to these proposed emergency

vehicle standard s would be ineligible to generate credits. The proposed standards shown below were derived b y bui lding a model of three baseline vehicles (LHD, MHD, HHD) using attributes similar to those developed for the primary program as assigned to the Urban drive cycle subcategories. By modeling a 2021
- compliant engine and tires with CRR of 7.7, the MY 2021 standards were derived using GEM. Details of these configurations are provided in the draft RIA Chapter 2.Page 330 of 850 **Table V**  **- 10**  **Proposed Standards for Class 2b -**  **8 Emergency Vehicles for MY 2021 and Later** Proposed EPA Emergency Vehicle Standard (gram CO 2 /ton
- mile) Implementation Year Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 MY2021 312 195 215 Proposed NHTSA Emergency Vehicle Standard (Fuel Consumption gallon per 1,000 ton mile) Implementation Year Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 MY2021 30.6483 19.1552 21.1198 The agencies have estimated the costs of vocational vehicle technology packages, as presented below in Table V
- 20 to Table V
- 22 . The technologies on which the proposed emergency

vehicle standards are based include engines, LRR tires, and leak
- tight air conditioning sy stems. Using the estimated costs of those technol ogies as presented, the agencies estimate that the average cost for a heav y heav y - duty or medium
- heavy
- duty

emergency

vehicle to meet the proposed emergency vehicle standards would be approximately $463 in MY 2027, and the average cost for a light heav y - duty emergency

vehicle would be approximately $497 in MY 2027. To derive these estimates, the agencies have combined the $7 cost of LRR tires that is presented in Table V
- 20 with the engine and air conditioning costs presented in Table V
- 22 . The agencies are not aware of any emergency

vehicle manufacturer that produces engines, thu s most of these costs would be borne b y engine manufacturers. While some of the added engine costs may be passed on to emergency vehicle manufacturers and vehicle owners/operators, the overall costs of these technologies are on the order of the Phase 1 vo cational vehicle program costs, which are highl y cost - effective. To ensure that onl y emergency vehicle chassis would be able to certify to these less stringent standards, the agencies propose that manufacturers identify vehicles using the definition at 40 CFR 86.1803
- 01 , which for Phase 2 purposes would be an ambulance or a fire truck
. Manufacturers have informed us that it is feasible to identify such vehicles using sales codes or the presence of specialty attributes. The agencies request comment on the m erits and drawbacks of aligning the definition of emergency vehicle for purposes of the Phase 2 program with the definition of emergency

vehicle for purposes of the light
- dut y GHG provisions under 40 CFR 86.1818, which includes additional vehicles such as those used b y law enforcement. According to the International Council on Clean Transportation (ICCT), less than one percent of all new heav y - duty truck registrations from 2003 to 2007 were emergency vehicles. 272 On average, the IC CT’s data suggest that approximately 5,700 new emergency

vehicles are sold in the U.S. each ye ar; about 0.8 percent of the 3.4 million new heavy
- duty trucks registered between 2003 and 2007. According to the Fire Apparatus Manufacturers Association, the annual

272 ICCT, May 2009, “Heavy
- Duty Vehicle Market Analysis: Vehicle Characteristics & Fuel Use, Manufacturer Market Shares”Page 331 of 850

VMT of the newest eme rgency vehicles ranges from approximately 2,000 to 8,000 miles, as documented in their 2004 Fire Apparatus Duty C yc le White Paper. 273 Because there are relativel y few of these vehicles and they travel a relatively small number of miles, the agencies believe that setting less stringent GHG and fuel consumptions standards for these vehicles would not detract from the greater benefits of this rulemaking , and such separate standards are warranted in an y case. (b ) Possible Standards for Other Custom Chassis Manufactu rers The agencies request comment on extending the above simplified compliance procedure and less stringent Phase 2 standards to other custom chassis manufacturers

– those who offer such a narrow range of products that averaging is not of practical value a s a compliance flexibility , and for whom there are not large sales volumes over which to distribute technology development costs. Custom chassis manufacturers that are not small businesses must comply with the Phase 1 standards and are generally doing so, by

installing tires with the required coefficient of rolling resistance. We are aware of a handful of U
. S
. chassis manufacturers serving the recreational vehicle and bus markets who we believe would have a disproportionate compliance burden, should we re quire compliance with the primary proposed Phase 2 standards. According to the MOVES model forecast, there will be approximately 1,000 commercial intercity coach buses, 5,000 transit buses, 40,000 school buses, and 90,000 recreational vehicles manufacture d new for MY 2018. 274 In each of these markets, specialty chassis manufacturers compete with large vertically integrated manufacturers. We request comment on the merits of offering less stringent standards to small volume chassis manufacturers, and seek co mment as well as to other factors the agencies should consider to ensure this approach would not have unintended consequences for businesses competing in the vocational vehicle market. If the agencies were to adopt less stringent standards for custom non
- e mergency chassis manufacturers, we would expect to limit this by setting a maximum number of eligible vocational chassis annually for each such manufacturer. The agencies request comment on an appropriate sales volume to qualify for these possible standards, and also request comment as to whether the sales volume thresholds should be different for different markets. We further request comment on whether it would adversel y affect business competitiveness if custom chassis manufacturers were held to a different standard than commercial chassis manufacturers, and whether the agencies should consider allowing commercial chassis manufacturers competing in these markets to sell a limited number of chassis certified to a less stringent standard. As an alternativ e approach, the agencies request comment on providing custom chassis manufacturers with additional lead time to comply. For example, we could allow such

273 Fire Apparatus Manufacturer’s Association, Fire Apparatus Duty Cycle White Paper, August 2004, available at http://www.deepriverct.us/firehousestudy/reports/Apparatus
- Duty
- Cycle.pdf 274 Vehicle populations are estimated using MOVES2014. More information on projecting populations in MOVES is available in the following report: USEPA (2015). Population and Activity of On

- road Vehicles in MOVES2014
. EPA
- 420
- D
- 15
- 001, available at http://www.epa.gov/otaq/models/moves/moves
- reports.htmPage 332 of 850

manufacturers an additional one or two ye ars to meet each level of the primary proposed vocational vehicle standards. If the agencies pursued the approach of less stringent standards, we would likely adopt a simplified compliance procedure similar to the one proposed for emergency vehicles. Custom chassis manufacturers would not follo w the otherwise applicable Phase 2 proposed approach of entering an engine map in GEM. Instead , a Phase 1 style GEM interface would be made available, where an EPA default engine specified by rule would be simulated in GEM. The vehicle
- level standard wou ld be predicated on a simpler set of technologies than the primary proposed Phase 2 standard, most likely lower rolling resistance tires and idle reduction. Because these would not be emergency vehicles, we believe the performance of these vehicles would not be compromised b y requiring improvement in tire CRR beyond that of the Phase 1 level. The agencies request comment on whether we should develop separate standards for different vehicle ty pes such as recreational vehicles and buses. The Small Business Advocacy Review Panel recommended that EPA seek comment on how to design a small business vocational vehicle exemption by means of a custom chassis volume exemption and what sales volume would be an appropriate threshold. The agencies seek comments on al l aspects of an approach for custom vocational vehicle chassis manufacturers that would enable us to adopt a final Phase 2 program that would be consistent with the recommendations of the panel. (c) Off

-Road and Low

- Speed Vocational Vehicle Exemptions The agen cies are proposing to continue the exemptions in Phase 1 for off
- road and low
speed vocational vehicles , with revision . See generally 76 FR 57175. These provisions currentl y apply for vehicles that are defined as “motor vehicles” per 40 CFR 85.1703, but m ay conduct most of their operations off
- road , such as drill rigs, mobile cranes and yard hostlers
. Vehicles qualifying under these provisions must be built with engines certified to meet the applicable engine standard, but need not comply with a vehicle
- l evel GHG or fuel consumption standard. In Phase 1, this ty

picall y means not needing to install tires with a lower coefficient of rolling resistance. Because manufacturers choosing to exempt vehicles (but not engines) based on the criteria for heavy
- dut y off road vehicles at 40 CFR §1037.631 and 49 CFR §5 2 3 .2 will for the first time provide a description to the agencies of how they meet the qualifications for this exemption in their end
- of
- the year reports in the spring of 2015, we do not have information beyond what we knew at the time of the Phase 1 rule s regarding how broadly this provision is being used. Nonetheless, we are proposing to discontinue the criterion for exemption based solely on use of tires with maximum speed rating at or below 55 mph. T he agencies are concerned that tires are so easily replaced that this would be an unreliable way to identify vehicles that trul y need special consideration. We are proposing to retain the qualify ing criteria related to design and use of the vehicle. We i nvite comments on the proposed revisions to the qualifying criteria in the regulations, including whether the rated speed of the tires should be retained, and whether vehicles intended to be covered b y this provision have characteristics that are captured by

the proposed criteria
.Page 333 of 850



### C. **Feasibility of the Proposed Vocational Vehicle Standards** This section describes the agencies’ techn olog ical feasibility and cost anal ysis in greater detail. Further detail on all of these technologies can be found in the draft RIA Chapter 2 .4 and Chapter 2.9. The variation in the design and use of vocational vehicles has led the agencies to project different technology solutions for each regulatory subcategory
. Manufacturers may also find additional means to reduce emissions and lower fuel consumption than the technologies identified by

the agencies, and of course may adopt any

compliance path they

deem most advantageous
. The focus of this section is on the feasibility of the proposed standards for n on emergency

vocational vehicles. Further, the agencies project that these technology packages would also be feasible for vocational tractors. With ty pical driving patterns having limited operation at highway

speeds, vocational tractors would appropriate ly be classified as vocational vehicles, with proposed standards that would not be predicated on the performance of aerodynamic devices. The agencies propose to allow vocational tractors to follow the same subcategory

assignment process as other vocationa l vehicles. For example, a beverage tractor intended for local delivery routes may have a driving pattern that is reasonably represented by the proposed Urban test cycle. The agencies request comment on whether vocational tractors would be deficit
- generating vehicles if certified as vocational vehicles, where performance would be measured against the proposed vocational vehicle baseline configurations. For example, if a tractor were designed with a higher power engine to carry a heavier payload than pres umed in the GEM baseline for that subcategory , would GEM return a value that poorl y represents the real world performance of that vehicle, and if so, would that merit a different certification approach for vocational tractors? NHTSA and EPA collected information on the cost and effectiveness of fuel consumption and CO 2 emission reducing technologies from several sources. The primary sources of information were the Southwest Research Institute evaluation of heavy
- dut y vehicle fuel efficiency and costs for NHTSA, 275 the 2010 National Academ y of Sciences report of Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - Dut y Vehicles, 276 TIAX’s assessment of technologies to support the NAS panel report, 277 the technology

co st anal ys is conducted by I CF for EPA , 278 and the 2009 report from Argonne National Laboratory on Evaluation of Fuel Consumption Potential of Medium and Heavy Dut y Vehicles through Modeling and Simulation. 279

275 Reinhart, T, 2015
. Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Reports #1 and #2
. Washington, DC: National Highway Traffic Safety Administration; and Schubert, R., Chan, M., Law, K . 2015, Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Cost Study. Washington, DC: National Highway Traffic Safety Administration. 276 Se e NAS Report, Note 136 , above. 277 See TIAX 2009, Note 137 , above. 278 See ICF 2010, Note 139 , above. 279 Argonne National Laboratory, “Evaluation of F uel Consumption Potential of Medium and Heavy Duty Vehicles through Modeling and Simulation.” October 2009Page 334 of 850

**(1) What Technologies Are the Agencies Considering**  **to Reduce the CO 2**  **Emissions and Fuel Consumption of vocational vehicles?**  In assessing the feasibility of the proposed Phase 2 vocational vehicle standards, the agencies evaluated a suite of technologies, including workday idle reduction, improved tire roll ing resistance, improved transmissions, improved axles, and weight reduction, as well as their impact on reducing fuel consumption and GHG emissions. The agencies also evaluated aerodynamic technologies and full electric vehicles. As discussed above, voc ational vehicles may be powered b y either SI or CI engines. The technologies and feasibility of the proposed engine standards are discussed in Section II. At the vehicle level, the agencies have considered the same suite of technologies and have applied the same reasoning for including or rejecting these vehicle
- level technologies as part of the basis for the proposed standards, regardless of whether the vehicle is powered by a CIor SI engine. With the exception of the MY 2027 proposed standards , the ana ly sis below does not distinguish between vehicles with different ty pes of engines . T he resulting proposed vehicle standards do reflect the differences arising from the performance of different ty pes of engine s over the GEM cycles
. (a ) Vehicle Technologies Con sidered in Standard

- Setting The agencies note that the effectiveness values estimated for the technologies may represent average values, and do not reflect the potentially
- limitless combination of possible values that could result from adding the technolo gy to different vehicles. For example, while the agencies have estimated an effectiveness of 0.5 percent for low friction axle lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline axle’s oil viscosity rating. For purposes of this proposed rulemaking, NHTSA and EPA believe that employing average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and indivi dual vehicles) might obtain from adding a given technology
. T here may be real world effectiveness that exceeds or falls short of the average, but on
- balance the agencies believe this is the most practicable approach for determining the wide ranging effect iveness of technologies in the diverse vocational vehicle arena. (i ) Transmissions Transmission improvements present a significant opportunity for reducing fuel consumption and CO 2 emissions from vocational vehicles. Transmission efficiency is important f or man y vocational vehicles as their duty c ycl es involve high percentages of driving under transient operation. The three categories of transmission improvements the agencies considered for Phase 2 are driveline optimization, architectural improvements, a nd hybrid powertrain sy stems. The agencies believe an effective way to derive efficiency

improvements from a transmission is by

optimizing it with the engine and other driveline components to balance both performance needs and fuel savings. However, many vocational vehicles today are not operating with such optimized systems. Because customers are able to specify their preferred components in a highl y customized build process, man y vocational vehicles are assembled with componentsPage 335 of 850

that were designed more for compatibility than for optimization. To some extent, vertically integrated manufacturers are able to optimize their drivelines. However, this is not widespread in the vocational vehicle sector, resulting primarily, from the multi
- stage manufacture process. The agencies project transmission and driveline optimization will yield a substantial proportion of vocational vehicle fuel efficiency and GHG emissions reduction improvements for Phase 2. On average, we anticipate that efficiency improvements of about five percent can be achieved from optimization, or deep integration of drivelines. However, we are not assigning a fixed level of improvement; rather we have developed a test procedure, the powertrain test, for manufacturers to use to obtain improve ment factors representative of their systems. See Section V.E and the draft RIA Chapter 3 for a discussion of this proposed test procedure. Depending on the test cycle and level of integration, the agencies believe improvement factors greater than ten percent above the baseline vehicle performance could be achieved. To obtain such benefits across more of the vocational vehicle fleet, the agencies believe there is opportunity for manufacturers to form strategic partnerships and to explore commercial pathways to deeper driveline integration. For example, one partnership of an engine manufacturer and a transmission manufacturer has led to development of driveline components that deliver improved fuel efficiency

based on optimization that could not be realize d without sharing of critical data. 280 The agencies project other related transmission technologies would be recognized over the powertrain test along with driveline optimization. These include improved mechanical gear efficiency , more sophisticated shift strategies, more aggressive torque converter lockups, transmission friction reduction, and reduced parasitic losses , as described in the 2009 TIAX report at 4.5.2. Each of these attributes would be simulated in GEM using default values, unless the powertr ain test were utilized by the certifying manufacturer
. The draft RIA Chapter 4 explains each parameter that would be set as a fixed value in GEM. The expected benefits of improved gear efficiency, shift logic, and torque converter lockup are inc luded in the total projected effectiveness of optimized conventional transmissions using the powertrain test. Transmission efficiency

could also be improved in the time frame of the proposed rules by changes in the architecture of conventional transmission s. Most vocational vehicles currentl y use torque converter automatic transmissions (AT), especiall y in Classes 2b
- 6. According to the 2009 TIAX report, approximately 70 percent of Class 3
- 6 box and bucket trucks use AT, and all refuse trucks, urban buses , and motor coaches use AT. 281 Automatic transmissions offer acceleration benefits over drive cycles with frequent stops, which can enhance productivit y. However, with the diversity of vocational vehicles and drive cycles, other kinds of transmission archi tectures can meet customer needs, including automated manual transmissions (AMT) and even some manual transmissions (MT). 282

280 See Cummins
- Eaton partnership at http://smartadvantagepowertrain.com/ 281 See TIAX 2009 , Note 137 , above. 282 See http://www.truckinginfo. com /channel/equipment/article/story/2014/10/2015
- medium
- duty
- trucks
- the
vehicles
- and
- trends
- to - look
- for/page/3.aspx (dow nloaded November 2014)Page 336 of 850

One ty pe of architectural improvement the agencies project will be developed by manufacturers of all transmission architectures is increased number of gears. The benefit of adding more gears varies depending on whether the gears are added in the range where most operation occurs. The TIAX 2009 report projected that 8
- speed transmissions could incrementall y reduce fuel consumption by 2 to 3 percent over a 6
- speed automatic transmission, for Class 3
- 6 box and bucket trucks, refuse haulers, and transit buses. 283 Although the agencies estimate the improvement could on average be about two percent for the adding of two gears in the range where significant vehicle operation occurs, we are not assigning a fixed improvement based solel y on number of transmission gears. Manufacturers would enter the number of gears and gear ratios into GEM and the model would simulate the efficiency benefit ov er the applicable test cycle. Because a public version of proposed GEM is being released with these proposed rules, stakeholders are free to use this tool to explore the effectiveness of different numbers of gears and gear ratios over the proposed test cycles. The agencies request comment on all aspects of the GEM tool, including how it models transmissions and shifting strategies. More details on GEM are available in the draft RIA Chapter 4. Other architectural changes that the agencies project will off er efficiency

improvements include improved automated manual transmissions (AMT) and introduction of dual clutch transmissions (DCT). Newer versions of AMT are showing significant improvements in reliability , such that the current generation of transmissi ons with this architecture is more likel y to retain resale value and win customer acceptance than early models
. 284 The agencies believe AMT generally

compare favorabl y to manual transmissions in fuel efficiency , and while the degree of improvement is highl y driver
- dependent, it can be two percent or greater, depending on the drive cycle. See Section III for additional discussion of AMT. The agencies are not assigning fixed average performance levels to compare an AMT with a traditional automatic transmissio n. Although the lack of a torque converter offers AMT an efficiency advantage in one respect, the lag in power during shifts is a disadvantage. For Phase 2, the agencies have developed validated models of both AMT and AT, as described in the draft RIA Cha pter 4. Manufacturers installing AMT or AT would enter the relevant inputs to GEM and the simulation would calculate the performance. Dual clutch transmissions (DCT) designed for medium heavy
- dut y vocational vehicles are already in production, and could reasonably be expected to be adapted for other weight classes of vocational vehicle s during the time frame of Phase 2. 285 Based on supplier conversations, manufacturers intend to match varying DCT designs with the diverse needs of the heav y - dut y market. The agencies do not yet have a validated DCT model in GEM, and we are not assigning a fixed performance level for DCT, th ough we expect the per
- vehicle fuel efficiency improvement due to switching from automatic to DCT to be in the range of three

283 See TIAX 2009, Note 137 , Table 4
- 48. 284 See NACFE Confidence Report: Electronically Controlled Transmissions, at http://www.truckingefficiency.org/powertrain/automated
- manual
- transmissions (January 2015). See also http://www.overdriveonline.com/auto
- vs - manual
- transmission
- autos - finding
- solid
- ground
- by
- sharing
- data
- with
engines/ (accessed November 2014) 285 See Eaton Announcement September 2014, available at http://www.ttne ws.com/articles/lmtbase.aspx?storyid=2969&t=Eaton
- Unveils
- Medium
- Duty
- Procision
Transmission
.Page 337 of 850

percent over the GEM vocational vehicle test cycles. Selection of transmission architecture ty pe (Manual, AMT, AT, DCT) would be made b y m anufacturers at the time of certification, and GEM would either use this input information to simulate that transmission using algorithms as described in the draft RIA Chapter 4, or fixed improvements may be assigned. The agencies are assigning f

ixed levels of improvement that vary by test cycle in GEM for AMT when replacing a manual, which for vocational vehicles would be in the HHD Regional subcategory . If a manufacturer elected not to conduct powertrain testing to obtain specific improvements for use of a DCT, GEM would simulate a DCT as if it were an AMT, with no fixed assigned benefit. The draft RIA at Chapter 2.9 describes the projected effectiveness of each ty pe of transmission improvement for each vocational vehicle test cycle. Hy brid pow ertrain sy stems are included under transmission technologies because, depending on the design and degree of h yb ridization, they may either replace a conventional transmission or be deeply integrated with a conventional transmission. Further, these s ys tems are often manufactured by companies that also manufacture conventional transmissions. T he agencies are including hy brid powertrains as a technology on which some of the proposed vocational vehicle standards are predicated. We project a variety of mild an d strong hy brid s ys tems, with a wide range of effectiveness. Mild hy brid sy stems that offer an engine stop - start feature are discussed below under workday idle reduction. For hy

brid powertrains, we are estimating a 22 to 25 percent fuel efficiency improv ement over the powertrain test, depending on the duty c ycle in GEM for the applicable subcategory. The agencies obtained these estimates b y projecting a 27 percent effectiveness over the ARB Transient cycle, and zero percent over the constant
- speed highway cruise cycles. With the proposed cycle weightings, this calculates to a 25 percent improvement over the Urban cycle, and 22 percent over the Multi
Purpose cycle. According to the NREL Final Evaluation of UPS Diesel Hybrid
- Electric Delivery Vans, the improvement of a h ybrid over a conventional diesel in gallons per ton
- mile on a chassis dynamometer over the NYC Composite test cycle was 28 percent. 286 NREL characterizes the NYC Composite cycle as more aggressive than most of the observed field data points from the study, and may represent an ideal hybrid cycle in terms of low average speed, high stops per mile, and high kinetic intensity. NREL noted that most of the observed field data points were reasonably

represented by

the HTUF4 cycle, over which the c hassis dy namometer results showed a 31 percent improvement in gallons per ton
- mile. In units of grams CO 2 per mile, NRELreported these test results as 22 percent improvement over the NYC Composite cycle and 26 percent improvement over the HTUF4 cycle. B ased on these results, and the fact that any improvement from strong h ybrids in Phase 2 would not be simulated in GEM, but rather would be evaluated using the powertrain test, the agencies deemed it reasonable to estimate a conservative 27 percent effectiv eness over the ARB Transient in setting the stringency of the proposed standards.

286 Lammert, M., W alkowivz, K., NREL, Eighteen
- Month Final Evaluation of UPS Second Generation Diesel Hy brid
- Electric Delivery Vans, September 2012, NREL/TP
- 5400
- 55658Page 338 of 850

The Phase 1 standards were not predicated on any adoption of hybrid powertrains in the vocational vehicle sector. Because the first implementation year of Phase 1 came just three ye ars after promulgation, there was insufficient lead time for development and deploy ment of the technology
. 287 In addition, our proposed Phase 2 vocational vehicle GEM test cycles are expected to better recognize hy brid technology

effectiveness than the Phase 1 hy brid test cycle, especiall y in the Urban subcategory. Further, our Phase 2 cost anal ys is shows that hy brid sy stems designed for LHD and MHD vocational vehicles would cost less than the costs we were projecting in Phase 1
. The agencies belie ve the Phase 2 rulemaking timeframes would offer sufficient lead time to develop, demonstrate, and conduct reliability testing for technologies that are still maturing, including these h ybrid technologies. Several types of vocational vehicle s are well suit ed for h ybrid powertrains , and are among the earl y adopters of this technology . Vehicles such as utility or bucket trucks, delivery vehicles, refuse haulers, and buses have operational usage patterns with either a significant amount of stop
- and
- go activity or spend a large portion of their operating hours idling the main engine to operate a PTO unit. T he industry

is currentl y developing man y variations of hybrid powertrain systems. There are a few h ybrid systems in the market today and several more under development. In addition, energy

storage sy stems are improving. 288 Heav y - dut y customers are getting used to these sy stems with the number of demonstration products on the road. Even so, some manufacturers may

be uncertain how much investment to make in this technology without clear signals about future market demand. A list of hy brid manufacturers and their products intended for the vocational market is provided in the draft RIA Chapter 2.9
. Some low cost products on the simple end of the hy brid spectrum are available that minimize battery

demand through the use of u ltracapacitors or onl y provide power assist at low speeds. Our regulations define a h yb rid sy stem as one that has the capacity for energy storage. 289 In the light
- dut y GHG program a mild hybrid is defined as including an integrated starter generator, a high
- voltage battery (above 12v) , and a capacity to recover at least 15 percent of the braking energy
. In such sy stems some accessories are usuall y electrified. Strong hy brids are ty picall y referred to as those that have larger energy recovery and storage c apacity , defined at 65 percent braking energy

recovery in the light
- dut y GHG program. Although integration of a strong h ybrid s ys tem may enable installation of a downsized engine in some cases , the agencies have not projected an y vocational engine downsiz ing for an y h ybrid s ys tems as part of our Phase

287 In addition to concerns over adequacy of lead time, the agencies described concerns over “modest” emission reductions. See 76 FR 57234. Even so, in Phase 1 the agencies adopted provisions for hybrids to generate advanced technology credits. 288 Green Fleet Magazine, The Latest Developments in EV Battery Technology, November 2013, available at http://www.greenfleetmagazine.com/article/story/2013/12/the
- latest
- developments - in
- ev - battery
- technology
grn/page/1.aspx 289 NHTSA’s and EPA’s regulations de fine a hybrid vehicle as one that “includes energy storage features ... in addition to an internal combustion engine or other engine using consumable chemical fuel....” 49 CFR 535.4 and 40 CFR 1037.801.Page 339 of 850

2 technology

assessment . This is in part to be conservative in our cost estimates, and in part because in some applications a smaller engine may not be acceptable if it would risk that performance could be s acrificed during some portion of a work day
. Depending on the drive cycle and units of measurement, strong hy brids developed to date have seen fuel consumption and CO 2 emissions reductions between 20 and 50 percent in the field. 290 The agencies are working to reduce barriers related to hy brid vehicle certification. In Phase 1, there is a significant test burden associated with demonstrating the GHG and fuel efficiency performance of vehicles with hy brid powertrain s ys tems. Manufacturers must obtain a conv entional vehicle that is identical to the hy brid vehicle in every

way except the transmission, test both, and compare the results. 291 In Phase 2, the agencies are proposing that manufacturers would conduct p owertrain testing on the hy brid sy stem , and the re sults of that testing would become inputs to GEM for simulat ion of the non - powertrain features of the hy brid vehicle, removing a significant test burden. In discussion s with manufacturers during the development of Phase 2 , the agencies have learned that meeting the on
- board diagnostic requirements for criteria pollutant engine certification continues to be a potential impediment to adoption of hy brid s ystems. See Section XIV .A.1 for a discussion of regulatory changes proposed to reduce the non
- GHG certif ication burden for engines paired with hy brid powertrain sy stems. The agencies have also received a letter from the California Air Resources Board requesting consideration of supplemental NO X testing of h ybrids. The agencies request comment on the Air Resources Board’s letter and recommendations. 292 (ii) Axles The agencies are considering two axle technologies for the vocational vehicle sector. The first is advanced low friction axle lubricants. S wRI tested improved driveline lubrication and found measurable improvements by switching from current mainstream products to newer formulations focusing on modified viscometric effects. 293 Sy nthetic lubricant formulations can offer superior thermal and oxid ative stability compared to petroleum or mineral based lubricants. The agencies believe that a 0.5 percent improvement in vocational vehicle efficiency (as for tractors) is achievable through the application of low friction axle lubricants, and have inclu ded that value as a fixed value in GEM. Beyond the use of different lubricant formulations, some axle manufacturers are offering products that achieve efficiency improvements by

varying the

290 Van Amburg, Bill, CALSTART, Status Report: Alternative Fuels and High
- Efficiency Vehicles, Presentation to National Association of Fleet Administrators (NAFA) 2014 Institute and Expo, April 8, 2014 291 See test procedures at 40 CFR 1037. 555 292 California Air Resources Board. Letter from Michael Carter to Matthew Spears dated December 29, 2014. CARB Request for Supplemental NO X Emission Check for Hybrid Vehicles. Docket EPA
- HA
- OAR
- 2014
- 0827. 293 Reinhart, T. (2015). Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report # 1
. Washington, DC: National Highway Traffic Safety Administration. See T
- 270 Delivery Truck Vehicle Technology ResultsPage 340 of 850

lubrication levels with vehicle speed, reducing churning losses. The agencies request comment on whether we could accept these s ys tems as qualifying for a fixed GEM improvement value. If a manufacturer wishes to demonstrate the benefit of a specific axle technology , an off
- cycle technology

credit would be necessary
. To support such an application, manufacturers could conduct a rear axle efficiency test , as described in the draft RIA Chapter 3.8. Proposed regulations for this test procedure can be found at 40 CFR 1037.515
. Our estimated axle lubricating costs do not include operational costs such as refreshing lubricants on a periodic basis. Based on supplier information, it is likely that some advanced lubricants may have a longer drain interval than traditional lubricants. We are estimating the axle lubricating c osts for HHD to be the same as for tractors since those vehicles likewise ty pically have three axles. However, for LHD and MHD vocational vehicles, we scaled down the cost of this technology to reflect the presence of a single rear axle. The second axle t echnology the agencies are considering is a design that enables one of the rear axle s to disconnect or otherwise behave as if it’s a non
- driven axle, on vehicles with two rear (drive) axle s , commonly referred to as a 6x2 configuration. The agencies have considered two ty pes of 6x2 configurations for vocational vehicles: those that are engaged full time on a vehicle, and those that may be engaged onl y during some types of vehicle operation, such as onl y when operating at highway cruise s peeds. Some early versions of 6x2 technology offered by manufacturers were not accepted b y vehicle owners. When the second drive axle is no longer powered, traction may

be sacrificed in some cases. Vehicles with earlier versions of this technology

have seen reduced residual values in the secondary market. Over the model years covered b y the Phase 2 rule s , the agencies expect the market to offer significantly improved versions of this technology , with traction control maintained at lower speeds and effic iency gains at highway

cruise speeds. 294 Further information about this technology is provided in the feasibility of the tractor standards, Section III, as well as in draft RIA Chapter 2.4. The efficiency

benefit of a 6x2 axle configuration can be dut y - cycle dependent. Inmany instances, vocational vehicles need to operate off
- highway , such as at a construction site delivering materials or dumping at a refuse collection facility . In these cases, vehicles with two drive axles may

need the full tractive be nefit of both drive axles. The part - time 6x2 axle technology

is not expected to measurabl y improve a vehicle’s efficiency for vehicles whose normal duty

cycle i nvolve s performing significant off
- highway work, but the agencies do expect this technology

to be recognized o ver a highway cruise cycle. Some vocational vehicles in the HHD Regional subcategory may see a 6x2 axle configuration as a reasonable option for improving fuel efficiency. As in Phase 1, our vehicle simulation model assumes that only HHD vehicles have two rear axles, so only these c ould be recognized for adopting this technology . Further, the agencies don’t believe the Multipurpose and Urban subcategories include a significant enough highway cycle weighting in the composite

294 NACFE, Confidence Findings on the Potential of 6x2 Axles, available at http://nacfe.org/wp
content/uploads/2014/01/Trucking
- Efficiency
- 6x2
- Confidence
- Report
- FINAL
- 011314.pdf , January 2014 (downloaded November 2014).Page 341 of 850

cycle for vehicles that operate in this manner to experienc e a benefit from adopting this technology
. T he agencies project this can achieve 2 percent benefit at highway cruise ; 295 thus , we propose to assign a fixed value in GEM for part - time 6x2 technology of 2.5 percent over the highway cruise cycles, wh ere the s pecific improvement would be calculated according to the composite weighting of the applicable vocational vehicle test cycle. We request comment on the best way to recognize this technology in Phase 2, either through a GEM calculation or a fixed assigned value, for vocational vehicles. (iii) Lower Rolling Resistance Tires Tires are the second largest contributor to energy losses of vocational vehicles, as found in the energy

audit conducted by

Argonne National L ab. 296 There is a wide range of rolling resistance of tires used on vocational vehicles today . This is in part due to the fact that the competitive pressure to improve rolling resistance of vocational vehicle tires has been less than that found in the line hau l tire market. In addition, the drive cycles ty pical for these applications often lead vocational vehicle buyers to value tire traction and durability more heavil y than rolling resistance. The agencies acknowledge there can be tradeoffs when designing a tire for reduced rolling resistance. These tradeoffs can include characteristics such as wear resistance, cost and scuff resistance. However, based on input from tire suppliers, the agencies expect that the LRR tires that will be available in the Phase 2 timeframe will not compromise performance parameters such as traction, handling, wear, retreadability , or structural durability. After the Phase 1 rules were promulgated, NHTSA and EPA conducted supplemental tire testing. Other data that have become available to the agencies since Phase 1 include pre
certification data provided to manufacturers b y tire suppliers in preparation for MY 2014 vehicle certification. 297 The agencies categorized the data by tire position and vehicle application, so that we have a representation of the variety of LRR vocational vehicle tires that are available in the market for the drive position, steer and all
- position tires, as well as wide base singles in all positions. Based on our data set that includes results from multipl e laboratories, drive tires that are intended for vocational vehicles have an average CRR of 7.8, and steer and all
- position tires that are intended for vocational vehicles have an average CRR of 6.7. The results also indicate that there are a variety of wide based single tires that are intended for vocational vehicles, with an average CRR of 6.6. Each of these data sets shows several models of commercial tires are available at levels of CRR ranging generally from 20 percent worse than average to 20 perce nt better than average. Further details are presented in the draft RIA Chapter 2. According to the 2014 SwRIreport, vocational vehicles are likel y to see the most benefits from reduced tire rolling resistance when they are driving at 55 mph. 298 This report also found an influence of vehicle weight on the benefits of LRR tires. The study found that both vocational vehicles tested had greater benefits of LRR tires at 100 percent payload than when empt y. Also,

295 See NHTSA Technology Report # 1 , Note 293 , T
- 700 Class 8 Tractor
- Trailer Vehicle Technology Results. 296 See Ar gonne National Laboratory 2009 report, Note 279 , page 91. 297 See memorandum dated M ay 2015 on Vocational Vehicle Tire Rolling Resistance Test Data Evaluation
. 298 See NHTSA Technology Report # 1 , Note 293 , T
- 270 Delivery Truck Vehicle Technology ResultsPage 342 of 850

the T270 delivery

box truck that was 4,000 poun ds heavier when full y loaded saw slightl y greater efficiency

gains from LRR tires than the F650 flatbed tow truck over the same cycles. At higher speeds, aerodyn amic drag grows, which reduces the rolling resistance share of total vehicle power demand. In highl y transient cycles, the power required to accelerate the vehicle inertia overshadows the rolling resistance power demand. In simulation, GEM represents vocational vehicles with fixed vehicle weights, payloads and aerody namic coefficients. Thus, the benefit of LRR tires will be reflected in GEM differentl y for vehicles of different weight classes. There will also be further differences arising from the different test cycles. Based on preliminary

simulations, it appears the vehicles in GEM most like ly to see the greatest fuel efficiency gains from use of LRR tires are those in the MHD weight classes tested over the Regional or Multipurpose duty cycles, where one percent efficiency improvement could be achieved b y reducing CRR by four to five percent. Those seeing the least benefit from LRR tires would likely

be Class 8 vehicles tested over the Urban or Multipurpose cycles, where one percent efficiency

improvement could be achieved by reducing CRR by

seven to eight percent. The agencies propose to continue the light truck (LT) tire CRR adjustment factor that was adopted in Phase 1. See generall y 76 FR 57172
- 74. In Phase 1, the agencies developed this adjustment factor b y dividing the overall vocational test average CRR of 7.7 by the LT vocational ave rage CRR of 8.9. This yielded an adjustment factor of 0.87. After promulgation of the Phase 1 rules, the agencies conducted additional tire CRR testing on a variety of LT tires, most of which were designated as all
- position tires. In addition, manufacturers have submitted to the agencies pre
- certification data that include CRR values provided by tire suppliers. For the small subset of newer test tires that were designated as steer tires, the average CRR was 7.8 kg/ton. For the subset of newer test tire s that were designated as drive tires, the average CRR was 8.6 kg/ton. However all
- position tires had an average CRR of 8.9 kg/ton. 299 Therefore, f or LT vocational vehicle tires, we propose to continue allowing the measured CRR values to be multiplied by a 0.87 adjustment factor before entering the values in the GEM for compliance, b ecause this additional testing has not revealed compelling information that a change is needed
. We request comment on whether the adjustment factor should be retained, as well as data on which to base a possible update of its numerical value. As described above in V. B. (4) (c) , the agencies are proposing to continue the Phase 1 off
- road and low speed exemptions in Phase 2 , with the proposed revision of discontinuing the option to qualify

for this exemption solely if the vehicle is fitted with tires that have a maximum speed rating at or below 55 mph. The agencies welcome comment s on this revision. (iv) Workday Idle Reduction The Phase 2 idle reduction technologies considered for vocational vehicles are those that reduce workday

idling, unlike the overnight idling of combination tractors. There are many potential technologies. The ag encies in particular evaluated neutral idle and stop
- start technologies, and the proposed standards are predicated on projected amounts of penetrations of these technologies, described in Section V. C. (2) . While neutral idle is necessaril y a

299 See tire memo randum, Note 297Page 343 of 850

transmission technology , stop - start could range from an engine technology to one that would be installed by

a secondary

manufacturer under a delegated assembly agreement. T he agencies are aware that for a vocational vehicle’s engine to turn off during workday driving conditions, there must be a reserve source of energy to maintain functions such as power steering, cabin heat, and transmission pressure, among others. Stop
- st art systems can be viewed as having a place on the low
- cost end of the hy bridization continuum. As described in Section V. C. (2) and in the draft RIA Chapter 2. 9 , the agencies are including the cost of energy storage sufficient to maintain critical onboard s ys tems and restart the engine as part of the cost of vocational vehicle stop
- start packages. The technologies to capture this energy could include a sy stem o f photovoltaic cells on the roof of a box truck, or regenerative braking. The technologies to store the captured energy could include a battery

or a h ydraulic pressure bladder. More discussion of stop
- start technologies is found in the draft RIA Chapter 2.4. The agencies intend for the technologies that would qualify to be recognized in GEM as stop - start to be broadl y defined, including those that may be installed at different stages in the manufacturing process. The agencies request comment on an approp riate definition of stop
- start technologies for vocational vehicles. The agencies are also proposing a certification test cycle that measures the amount of fuel saved and CO 2 reduced by these two primary

t ypes of idle reduction technologies: neutral idle and stop
- start. Vocational vehicles frequentl y also idle while cargo is loaded or unloaded, and while operating a PTO such as compacting garbage or operating a bucket. In these rules, the agencies are proposing that the Regional duty cycle have ten perc ent idle, the Multi
- purpose cycle have 15 percent idle, and the Urban cycle have 20 percent idle. These estimates are based on publically

available data published by NREL. 300 To bolster this information, EPA entered into an interagency

agreement with NREL to characterize workday idle among vocational vehicles. One task of this agreement is to estimate the nationall y representative fraction of idle operation for vocational vehicles for each proposed regulatory subcategory including a distinction between idl ing while driving or stopping in gear, and idling while parked
. The preliminary

range of total daily idle operation per vehicle indicated b y this work is about 1 8 percent to 33 percent when combining the data from all available vehicles
. The agencies request comment regarding the nature of vocational workday idle operation, including how much of it is in traffic and how much is while the vehicle is parked. D epending on comments and additional information received during the comment period, it may be within the agencies ’ discretion to adopt different final test cycles , or re - weight the current test cycles, to better represent real world driving and better reflect performance of the technology packages
. An analy sis of possible vocational vehicl e standards derived from alternate characterizations of idle operation has been prepared b y the agencies, and is available for review in the public docket for this rulemaking. 301

300 See NREL data at http://www.nrel.gov/vehic lesandfuels/fleettest/research_fleet_dna.html 301 See memorandum dated May 2015 on Analysis of Possible Vocational Vehicle Standards Based on Alternative Idle Cycle WeightingsPage 344 of 850

Based on GEM simulations using the currentl y proposed vocational vehicle test cycles, the agencies estimate neutral idle for automatic transmissions to provide fuel efficiency improvements ranging from one percent to nearl y four percent, depending on the regulatory subcategory . The agencies estimate stop
- start to provide fuel effic iency improvements ranging from 0. 5 percent to nearly seven percent, depending on the regulatory subcategory
. Because of the higher idle weighting factor in the Urban test cycle, vehicles certified in these subcategories would derive the greatest benefit from appl yi ng idle reduction technologies. Although the primary

program would not simulate vocational vehicles over a test cycle that includes PTO operation, the agencies are proposing to continue, with revisions, the hy brid
PTO test option that was in Pha se 1. See 40 CFR 1037.525 and 76 FR 57247. Recall that we are proposing to regulate vocational vehicles at the incomplete stage when a chassis manufacturer may not know at the time of certification whether a PTO will be installed or how the vehicle will b e used. Based on stakeholder input, chassis manufacturers are expected to know whether a vehicle’s transmission is PTO
- enabled. However, that is very different from knowing whether a PTO will actually be installed and how it will be used. Chassis manufa cturers may rarel y know whether the PTO
- enabled vehicle will use this capability to maneuver a lift gate on a delivery vehicle, to operate a utility boom, or merel y to keep it as a reserve item to add value in the secondary market. In cases where a manufa cturer can certify that a PTO with an idle
- reduction technology

will be installed either by the chassis manufacturer or by a second stage manufacturer, the h yb rid
- PTO test cycle may be utilized by

the certifying manufacturer to measure an improvement facto r over the GEM duty cycle that would otherwise appl y to that vehicle. In addition, the delegated assembly provisions would apply
. See Section V.E for a description of the delegated assembl y provisions. See draft RIA Chapter 3 for a discussion of the pro posed revisions to the PTO test cycle. The agencies have reason to believe there may be a NO X co - benefit to stop
- start idle reduction technologies, e - PTO, and possibly also to neutral idle. For this to be true, the benefits of reduced fuel consumption an d retained aftertreatment temperature would have to outweigh any extra emissions due to re
- starts. In the draft RIA Chapter 2.9 , there is a more detailed discussion of the relationship between idle reduction and NO X co - benefits. The agencies request comments and relevant test data that can help inform this issue. (v) Weight Reduction The agencies believe there is opportunity for weight reduction in some vocational vehicles. According to the 2009 TIAX report, there are freight
- effici ency benefits to reducing weight on vocational vehicles that carry heav y cargo, and tax savings potentially available to vocational vehicles that remain below excise tax weight thresholds. This report also estimates that the cost effectiveness of weight reduction over urban drive cycles is potentially greater than the cost effectiveness of weight reduction for long haul tractors and trailers. O n a city duty cycle, 89 percent of the vehicle’s road load is weight dependent, compared to 38 percent on aPage 345 of 850

steady - state 55 mph duty cycle. 302 The 2014 SwRIreport found that weight reduction provides a greater fuel efficiency

benefit for vehicles driving under transient conditions than for those operating under constant speeds. In simulation, the study found that th e two Class 6 trucks improved fuel efficiency

by over two percent on the ARB transient cycle by removing 1,100 lbs. Further, SwRI observed that the improvements due to weight reduction behaved linearl y. 303 The proposed menu of components available for a vo cational vehicle weight credit in GEM is presented in Section V.E and in the draft RIA Chapter 2. 9 . It includes fewer options than for tractors, but the agencies believe there are a number of feasible material substitution choices at the chassis level, wh ich could add up to weight savings on the order of a few hundred pounds. The agencies project that refuse trucks, construction vehicles, and weight
- limited regional delivery vehicles could reasonabl y appl y material substitution for weight reduction. We d o not expect this to be broadly

applicable across many

ty pes of vocational vehicles. Based on the assumed payload in GEM , and depending on the vocational vehicle subcategory , the agencies believe a reduction of 200 pounds may offer a fuel efficiency

impro vement of approximately 1 to 2 percent. Without more specific data on which to base our assumptions, the agencies are proposing to allocate 50 percent of any mass reduction to increased payload, and 50 percent to reduce the chassis weight. We considered the data on which the tractor weight allocation (1/3:2/3) is based, but determined this would not be valid for vocational vehicles, as the underlying data pertained only to long haul tractor
- trailers. The agencies propose that 50 percent of weight removed from vocational vehicle chassis would be added back as additional payload in GEM. This suggests an equal likelihood that a vehicle would be reducing weight for benefits of being lighter, or reducing weight to carry

more payload. The agencies welcome data that could better inform the fraction of weight reduced for vocational vehicles that is added back as payload. The agencies request comment on whether the HD Phase 2 program should recognize that weight reduction of rotating components provides an enhance d fuel efficiency benefit over weight reduction on static components. In theory , as components such as brake rotors, brake drums, wheels, tires, crankshafts, camshafts, and piston assemblies become lighter, the power consumption to rotate the masses would be directly proportional to the mass decrease. Using phy sical properties of a rotating component such as a wheel, it is relatively straightforward to calculate an equivalent mass. However, we do not have enough information to derive industry average values for equivalent mass, nor have we evaluated the best way for GEM to account for this. (vi) HFC R efrigerant from C abin A ir C

onditioning (A/C) S

ystems Manufacturers can reduce direct A/C leakage emissions by utilizing leak
- tight components. EPA’s proposed HFC direct emission leakage standard would be independent of

302 Helms 2003 as referenced in TIAX 2009. 303 See NHTSA Technology Report # 1 , Note 293 , T
- 270 Delivery Truck Vehicle Technology Results and Vehicle Performance in the F
- 650 TruckPage 346 of 850

the CO 2 vehicle standard. Manufacturers could choose components from a menu of leak
reducing technologies sufficient to compl y with the standard, as opposed to using a test to measure performance. See 76 FR 57194/3. In Phase 1, EPA adopted a HFC leakage standard to assure that high
- quality, low
- leakage components are used in each air conditioning s ys tem installed in HD pickup trucks, vans, and combination tractors (see 40 CFR 1037.115( c)). We did not adopt a HFC leakage standard in Phase 1 for s ys tems installed in vocational vehicles. EPA is proposing in Phase 2 to extend the HFC leakage standard that exists due to Phase 1 requirements to all vocational vehicles. Beginning in the 2 021 model year, EPA proposes that vocational vehicle air conditioning sy stems with a refrigerant capacity of greater than 733 grams meet a leakage rate of 1.50 percent leakage per year and s ys tems with a refrigerant capacit y of 733 grams or lower meet a le akage standard of 11.0 grams per ye ar. EPA believes this proposed approach of having a leak rate standard for lower capacity s ys tems and a percent leakage per ye ar standard for higher capacity s ys tems would result in reduced refrigerant emissions from all air conditioning sy stems, while still allowing manufacturers the ability to produce low
- leak, lower capacity s ys tems in vehicles which require them. EPA believes that reducing A/C s ys tem leakage is both highly cost - effective and technologicall y feasible. The availability of low leakage components is being driven b y the air conditioning program in the light
- dut y GHG rule which began in the 2012 model year and the HD Phase 1 rule that began in the 2014 model year. The cooperative industry and government Improved Mobile Air Conditioning program has demonstrated that new
- vehicle leakage emissions can be reduced by 50 percent b y reducing the number and improving the quality of the components, fittings, seals, and hoses of the A/C sy stem. 304 All of these techn ologies are already in commercial use and exist on some of today’s s ys tems, and EPA does not anticipate any significant improvements in sealing technologies for model years beyond 2021. However, EPA has recognized some manufacturers utilize an improved manufacturing process for air conditioning sy stems, where a helium leak test is performed on 100 percent of all o
- ring fittings and connections after final assembly
. By leak testing each fitting, the manufacturer or supplier is verifying the o
- ring is not d amaged during assembly (which is the primary

source of leakage from o
- ring fittings), and when calculating the yearly leak rate for a sy stem, EPA will allow a relative emission value equivalent to a ‘seal washer’ can be used in place of the value normally used for an o
- ring fitting, when 100 percent helium leak testing is performed on those fittings. The agencies request comment on other possible improvements in the design of air conditioning sy stems that EPA could recognize for the purposes of compliance with this proposed standard. For example, should the agency recognize electrified compressors as having a zero leak rate, and should we allow vehicles fitted with electrified compressors to use a simplified version of the compliance reporting form? Plea se see Section I.F.1 (b) of this preamble for a description of proposed program
- wide revisions to EPA’s HFC leakage standards that would address air conditioning sy stems designed for alternative refrigerants.

304 Team 1
- Refr igerant Leakage Reduction: Final Report to Sponsors, SAE, 2007.Page 347 of 850

The HFC control costs presented in the draft RIA Chapter 2. 9 and 2.12 are applied to all heav y - dut y vocational vehicles. EPA views these costs as minimal and the reductions of potent GHGs to be easily

feasible and reasonable in the lead times provided by the proposed rule s . (b ) Engine Technologies Co nsidered in Vehicle Standard

- Setting Section II explains the technical basis for the agencies’ proposed separate engine standards. The agencies are not proposing to predicate the vocational vehicle standards on different diesel engine technology packages than those presumed for compliance with the separate diesel engine standards. However, for the proposed MY 2027 vocational vehicle standards, the agencies are predicating the SI
- powered vocational vehicle standards on a gasoline engine technology

package that includes additional friction reduction beyond that presumed for compliance with the MY 2016 gasoline engine standard
. Chapter 2 of the draft RIA provides more details on each of the technologies that can be applied to both gasoline and diesel engines. T he vehicle
- level standards would vary depending on whether the engines powering those vehicles are compression
- ignition or spark
- ignition. 305 In Phase 1, this was not the case because GEM used a default engine that was the sam e for every vehicle configuration, regardless of the actual engine being installed. As described above in Section II, the Phase 2 vehicle certification tool, GEM, would require manufacturers to enter specific engine performance data, where emissions and f

uel consumption profiles would differ significantl y depending on the engine’s architecture. 306 As explained in Section II.A.2, engines would continue to be certified over the FTP test cycle. The FTP test cycle that is applicable for bare vocational engines is very different than the proposed test cycles for vocational vehicles in GEM. Th e FTP is a very demanding transient cycle that exercises the engine over its full range of capabilities. In contrast, the cycles evaluated by GEM measure emissions over more frequently used engine operating ranges. The ARB Transient vehicle cycle represents city driving, and the highway cruise cycles measure engine operation that is closer to steady state . Each of these cycles is described in the draft RIA Chapter 3. A consequence of recognizing engine performance at the vehicle level would be that further engine improvements (i.e. improvements measureable b y duty cycles that more precisely represent driving patterns for specific subcategories of vocational vehicl es) could be evaluated as possible components of a technical basis for a vocational vehicle standard. 307 For this reason, the agencies considered whether an y different engine technologies should be included in the feasibility anal ys is for the vehicle standards (and potentially , in the proposed standard stringency)
.

305 Specifically, EPA is proposing CO 2 , N 2 O, and CH 4 emission standards for new heavy
- duty engines over an EPA specified useful life period ( See Section II). 306 See Section II.D.5 for an explanation of which engine architecture would need to meet which standard. 307 As noted in II.B.2 above, manufacturers also have greater flexibility to meet a vehicle standard if engine im provements can be evaluated as part of com pliance testing.Page 348 of 850

One CI engine technology that might be recognized over a vehicle highway cruise cycle would be waste heat recovery (WHR)
. However, the agencies do not consider this to be a feasible techno logy

for vocational engines. As described in Section II of this preamble and Chapter 2.3 of the draft RIA, there currentl y are no commerciall y available WHR systems for diesel engines, although most engine manufacturers are exploring this technology . Whi le it would be possible to capture excess heat from a vocational engine operating at highway speeds, many vocational vehicles spend insufficient time at highway speeds to generate enough excess heat to make this technology worthwhile
. As explained in Sect ion II.D, the agencies are projecting a very

small adoption rate of WHR even in the tractor engine market . Because the research is currentl y being conducted to appl y this technology for tractors, it is logical that future research may

reveal ways to adapt this technology for those vocational engines that are intended for on
- highway

applications. The agencies do not believe this technology will be developed to the point of commercial readiness for vocational vehicles in the time frame of these proposed rul es. The agencies assessed three SIengine technologies for possible inclusion in the vocational vehicle technology packages: cylinder deactivation , variable valve timing , and advanced friction reduction. These might be recognized over the proposed vocati onal vehicle test cycles in GEM through use of the proposed engine mapping procedures. To the extent either cylinder deactivation or variable valve timing would be adopted for complete heav y - duty pickups and vans, they

would be recognized over the complet e chassis test specified for that segment and possibly

over the GEM highway

cruise cycles, however the aggressive bare engine FTP test is unlikely

to put the engine into operating modes that activate either of those technologies . Based on stakeholder input, the agencies project that the SI engines certified over the FTP and fitted into vocational vehicles would most likely be designed as overhead valve engines, for which the only kind of VVT available is dual cam phasing. 308 Dual cam phasing is already included at 100 percent adoption rate in the feasibility and stringency

of the MY 2016 bare engine standard. If manufacturers choose to fit vocational vehicles with coaxial camshaft SI engines, additional VVT options would be feasible and could be recognized over the vocational vehicle test cycles. Based on stakeholder input, the agencies project that some SIengines certified over the FTP and fitted into vocational vehicles may be designed with cylinder deactivation by MY 2021. However, the agencies do not have enough information at this time to quantify the potential fuel efficiency improvements over the vocational vehicle test cycles for engines with cylinder deactivation or various designs implementing VVT. Therefore we are not proposing to predicate the SI
- powered vocational vehicle standards on use of these technologies. In Section II.D, the agencies explain why we are not proposing a more stringent separate SIvocational engine standard in Phase 2 based on additional engine technologies beyond those a ssumed for the Phase 1 MY 2016 standard. The agencies are instead proposing to include adoption and performance of advanced engine friction reduction technology as a basis for the proposed SI
- powered vocational vehicle standards. Based on Volpe model res ults presented in preamble Section VI , the agencies project that manufacturers of some SI engines for complete

308 See preamble Section VI.C. 5 .(a) under Coupled Cam PhasingPage 349 of 850

HD pickups would appl y advanced friction reduction. L evel 2 engine friction reduction is listed in Table VI
- 3, and costs are presented in the dr aft RIA Chapter 2.12. We expect some engines with this technology

would be engine
- certified and sold for use in vocational vehicles. We are projecting an overall effectiveness of 0.6 percent improvement over the GEM cycles for this technology , calculated using a per
- vehicle effectiveness of 1.1 percent and a vocational vehicle adoption rate of 56 percent. We request comment on the merits of setting a SI
- based vocational vehicle standard predicated on adoption of SI engine technologies. (c) Technologies the A gencies Assessed b ut did no t Use In Standard

- Setting (i ) Aerodynamics The Argonne National lab work shows that aerody namics ha s less of an impact on vocational vehicle energy losses than do engines or tires. 309 Further, when a vehicle spends significant time at slower speeds, the disbenefit of the added weight of the aero devices diminishes the benefit obtained when driving at high speeds. In addition, the aerodyn amic performance of a complete vehicle is significantl y inf luenced b y the body of the vehicle. As noted above, the agencies are not proposing to regulate body builders for the reasons discussed in Phase 1
. The NAS 2010 report estimated a one percent fuel efficiency improvement could be achieved from a full aerody namic package on a box truck with an average speed of 30 mph. 310 Both from the NAS 2010 report and from experiences of EPA’s SmartWay team, the agencies expect the potential benefits of aerodyn amics at an average speed of 60 mph would be diminished by

50 pe rcent or more when average speeds are closer to 40 mph. The proposed Regional composite duty cycle in GEM for vocational vehicles (the test cycle with the most highway weighting) has a weighted average speed of 39 mph. The 2014 SwRItechnology assessment simulated a Class 6 box truck with a coefficient of aerodyn amic drag that had been improved b y 15 percent. Over transient test cycles, this produced a one percent fuel efficiency benefit, though this produced results of approximately seven percent improve ment over the 55 mph and eight percent over the 65 mph cycle. SwRI conducted coastdown testing to determine the baseline CdA of the truck, of 5
. 0
. 311 However, it is unknown what aerodynamic technologies could be applied to yi eld a 15 percent improvement in CdA. Using these simulation results and the proposed Regional cycle weightings of 22 percent at 65 mph and 28 percent at 55 mph, the agencies estimate the fuel efficiency benefit of improving the CdA of a Class 6 box truck by 15 percent could be approxim ately four percent. This assumes no penalty

for carrying the weight of the aerody namic devices while operating under transient driving conditions.

309 See Ar gonne National Laboratory 2009 report, Note 279 , above. 310 See Table 5
- 10 of the NAS 2010 report , Note 136
. 311 See NHTSA Technology Report # 1 , Note 293 , Appendix C
.Page 350 of 850

Because we do not have information on specific technologies that could be applied to vocational vehicles to yield a 15 percent improvement in CdA , or their costs , we are not basing any of the proposed standards for vocational vehicles on aerodynamic improvements. Nonetheless, we are working with CARB to incorporate into GEM some data from testing that is being c onducted b y CARB through NREL. A test plan is underway to assess the fuel efficiency benefit of three different devices to improve the aerody namic performance of a Class 6 box truck and one device on a Class 4 box truck
. T he agencies request comment on allowing a manufacturer to obtain an improved GEM result by certifying that a final vehicle configuration will closely

match one of the configurations on which this testing was conducted, where the improvement would be based on installation of specific aerodyn amic devices for which we have pre - defined effectiveness through this testing program
. The amount of improvement would be set by EPA and NHTSA based on NREL’s test results. This credit provision would apply onl y to vocational vehicles certified o ver the Regional duty cycle. Manufacturers wishing to receive credit for other aerodynamic technologies or on other vehicle configurations would be able to seek credit for it as an off
- cycle technology . See Section V.E, for a description of regulatory fle xibilities such as off

- cycle technology

credits. A description of vehicles and aerodyn amic technologies that c ould be eligible for this option , as well as a description of the testing conducted to obtain the assigned GEM improvements due to these technolog ies , can be found in a memorandum to the docket
. 313 The agencies seek comment on this potential approach to providing credits for aerodynamic aids to vocational box trucks. (ii) Full Electric Trucks Some heav y - dut y vehicles can be powered exclusively b y electric motors. Electric motors are efficient and able to produce high torque, giving e
- trucks strong driving characteristics, particularly in stop
- and
- go or urban driving situations, and are well
- suited for moving heav y loads. Electric motors also offer the ab ility to operate with very

low noise, an advantage in certain applications. Currently , e - trucks have some disadvantages over conventional vehicles, primarily in cost, weight and range. Components are relativel y expensive, and storing electricity using currentl y available technology is expensive, bulky, and heav y. The West Coast Collaborative, a public
- private partnership, has estimated the incremental costs for electric Class 3
- 6 trucks in the L os Angeles, CA, area. 314 Compared to a conventional diesel, th e WCC estimates a BEV s ys tem would cost between $70,000 and $90,000 more than a conventional diesel s ys tem. The CalHEAT Technology Roadmap includes an estimate that the incremental cost for a fully
- electric medium
- or heavy
- duty vehicle would be between $ 50,000 and $100,000. This roadmap report also presents several actions that must be taken by

313 See May 2015 memorandum to the docket titled Vocational Vehicle Aerodynamic Testing Program. 314 See http://westcoastcollaborative.org/files/sector
- fleets/WCC
- LA
- BEVBusinessCase2011
- 08
- 15.pdfPage 351 of 850

manufacturers and others, before heavy
- dut y e - trucks can reach what they call Stage 3 Deploy ment. 315 Earl y adopters of electric drivetrain technology are medium
- h eav y - duty vocational vehicles that are not weight
- limited and have drive cycles where they don’t need to go far from a central garage. Examples include Frito
- Lay. CalHEAT has published results of a comprehensive performance evaluation of three battery ele ctric truck models using information and data from in
- use data collection, on road testing and chassis dy namometer testing. 316 Given the high costs and the developing nature of this technology , the agencies do not project full y electric vocational vehicle s to be widely commerciall y available in the time frame of the proposed rules. For this reason, the agencies have not based the proposed Phase 2 standards on adoption of full
- electric vocational vehicles. To the extent this technology is able to be brought to market in the time frame of the Phase 2 program, there is currently a certification path for these chassis from Phase 1, as described in Section V.E and in EPA’s regulations at 40 CFR 1037.150 and NHTSA’s regulations at 49 CFR 535.8. (iii) Electrified Accessories Accessories that are traditionally gear - or belt
- driven by

a vehicle’s engine can be optimized and/or converted to electric power. Examples include the engine water pump, oil pump, fuel injection pump, air compressor, power
- steering pump, coo ling fans, and the vehicle’s air
- conditioning s ys tem. Optimization and improved pressure regulation may significantly reduce the parasitic load of the water, air and fuel pumps. Electrification may result in a reduction in power demand, because electrically
- powered accessories (such as the air compressor or power steering) operate only when needed if they

are electricall y powered, but they impose a parasitic demand all the time if they are engine
- driven. In other cases, such as cooling fans or an engine’ s water pump, electric power allows the accessory to run at speeds independent of engine speed, which can reduce power consumption. Electrification of accessories can individually improve fuel consumption, regardless of whether the drivetrain is a strong hy brid. The TIAX study used 2 to 4 percent fuel consumption improvement for accessory electrification, with the understanding that electrification of accessories will have more effect in short haul/urban applications and less benefit in line
- haul applicat ions. 317 Electric power steering (EPS) or Electroh ydraulic power steering (EHPS) provides a potential reduction in CO 2 emissions and fuel consumption over hydraulic power steering because of reduced overall accessory loads. This eliminates the parasitic los ses associated with belt
- driven power steering pumps which consistently draw load from the engine to pump hydraulic fluid through the steering actuation sy stems even when the wheels are not being

315 Silver, Fred, and Brotherton, Tom. (CalHEAT) Research and Market Transformation Roadmap to 2020 for Medium
- and Heavy
- Duty Trucks. California Energy Commission, June 2013. 316 Gallo, Jean
- Baptiste, and Jasna Tomic (CalHEAT). 2013. Battery Electric Parcel Delivery Truck Testing and Demonstration. California Energy C ommission. 317 TIAX 2009, Note 137 , pp. 3
- 5Page 352 of 850

turned. EPS is an enabler for all vehicle h ybridization tec hnologies since it provides power steering when the engine is off. EPS is feasible for most vehicles with a standard 12V s ys tem. Some heavier vehicles may require a higher voltage s ys tem which may add cost and complexity
. The agencies are projecting that some electrified accessories will be necessary as part of the development of stop
- start idle reduction s ys tems for vocational vehicles. However, the agencies have not developed a pre
- defined credit
- generating option for manufacturers to directl y receive credit in GEM for electrified accessories on vocational vehicles. Manufacturers wishing to conduct independent testing may appl y for off

- cycle credits derived from electrified accessories. (iv) E
-PTO There are products available today that can provide auxiliary power, usually

electric, to a vehicle that need s to work in PTO mode for an extended time, to avoid idling the main engine. There are different designs of electrified PTO sy stems on the market today . Some designs have auxiliary power sources, ty

picall y batteries, with sufficient energy storage to power an onboard tool or device for a short period of time, and are intended to be recharged during the workday by operating the main engine, either while driving between work sites, or b y i dling the engine until a sufficient state of charge is reached that the engine may shut off. Other designs have sufficient energy storage to power an onboard tool or device for many hours, and are intended to be recharged as a plug
- in hybrid at a home garage. T he agencies are proposing to continue the hy brid
- PTO test option that was available in Phase 1, with a few revisions. See the proposed regulations at 40 CFR 1037. 5 40
. The current test procedure is a charge
- sustaining procedure, meaning the test is not complete until the energy storage s ys tem is depleted and brought back to its original state of charge. The agencies request comment and data relating to the population and energy

storage capacity

of plug
- in e
- PTO s ys tems, for which a charge
- depleting test cycle may be more appropriate. For the reasons described above in Section V.C.1.a.iv , the agencies are not basing the proposed vocational vehicle standards on use of electrified PTO or h ybrid PTO technology . Manufacturers wishing to conduct testing as specified may appl y for off
- cycle credits derived from e
- PTO or h ybrid PTO technologies. **(2) Projected Vehicle Technology Package Effectiveness and Cost**  (a ) Baseline Vocational Engine and Vehicle Performance The proposed baseline vocational vehicle configurations for each of the nine proposed regulatory

subcategories are described in draft RIA Chapter 2.9 and Chapter 4.4. The agencies propose to set the baseline rolling resistance coefficient for the 2017 voc ational vehicle fleet at 7.7 kg/metric ton, which assumes 100 percent of tires meet the Phase 1 standard. In the agencies’ proposed baseline configurations, we include torque converter automatics with five forward gears in eight of the nine subcategorie s. In the Regional HHD subcategory , the baseline includes a manual transmission with ten forward gears. No additional vehicle
- level efficiency
- improving technology is included in the baseline vehicles , nor in the agencies’ anal ys es for the no
- action reference case. Specificall y, we have assumed zero adoption rates for other ty pes of transmissions, increased numbers of gears, idle reduction, andPage 353 of 850

technologies other than Phase 1 compliant LRR tires in both the nominally flat baseline and the dy namic bas eline reference cases. Technology adoption rates for Alternative 1a (nominall y flat baseline) can be found in the draft RIA Chapter 2.12. Chapter 2.12.8 presents the adoption rates for tires on vocational vehicles with different levels of rolling resista nce, including the 100 percent adoption rate of tires with Level 1 CRR in the reference case and in model years preceding Phase 2. In this manner, we have defined a reference vocational vehicle fleet that meets the Phase 1 standards and includes reasonabl e representations of vocational vehicle technology

and configurations. Details of the vehicle configurations, including reasons wh y the y are reasonabl y included as baseline technologies, are discussed in the draft RIA Chapter 2.9
. The agencies note that the baseline performance derived for the proposed rules varies between regulatory

subcategories

– as noted above, this is the reason the agencies are proposing the further subcategories
. Th e range of performance at baseline is due to the range of attributes and modeling parameters , such as transmission characteristics, final drive ratio, and vehicle weight, which were selected to represent a range of performance across this diverse segment. The agencies request comment on whether the proposed configurations adequatel y represent a reasonable range of vocational chassis configurations likely to be manufactured in the implementation years of the Phase 2 program
. We especially are interested in comments regarding the following driveline parameters: transmission gear ratios, axle ratios, and tire radii. The baseline engine fuel consumption represents improvements beyond currently available engines to achieve the efficiency of what the agencies believe would be a 2017 model ye ar diesel engine, as described in the draft RIA Chapter 2. Using the values for compression
ignition engines, the baseline performance of vocational vehicles is shown in Table V
- 11
. Different ty

pes of diesel engines are used in vocational vehicles, depending on the application. They

fall into the categories of Light, Medium, and Heavy Heavy
- duty

Diesel engines. The Li ght Heavy
- dut y Diesel engines typically range between 4.7 and 6.7 liters displacement. The Medium Heav y - dut y Diesel engines typicall y have some overlap in displacement with the L ight Heavy
- dut y Diesel engines and range between 6.7 and 9.3 liters. The H eav y Heav y - dut y Diesel engines typicall y are represented b y engines between 10.8 and 16 liters. Because of these differences, the GEM simulation of baseline vocational CIengines includes four engines
- one for LHD, one for MHD, and two for HHD. Detailed descriptions can be seen in Chapter 4 of the draft RIA. These four engine models have been employed in setting the vocational vehicle baselines, as described in the draft RIA Chapter 2 .9
.Page 354 of 850 **Table V**  **- 11**  **Baseli ne**  **Vocational Vehicle Perform**  **ance with CI Engines** Baseline Emissions Performance in CO 2 gram/ton
- mile Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty Class 8 Urban 316 201 212 Multi
- Purpose 325 203 214 Regional 339 199 203 Baseline Fuel Efficiency

Performance in gallon per 1,000 ton
- mile Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty Class 8 Urban 31.0413 19.7446 20.8251 Multi
- Purpose 31.9253 19.9411 21.0216 Regional 33.3006 19.5481 19.9411 The agencies intend to develop a m odel in GEM of a MY 2016
- compliant gasoline engine , but we have been unable to obtain sufficient information to complete this process. The agencies request comments on the process for mapping gasoline en gines for simulation purposes, as well as information about the power rating and displacement that should be considered as a baseline SI engine for vocational vehicle standard
- setting purposes. In lieu of a SI engine map, the agencies have applied a corre ction factor to the GEM CI vocational simulation results, to approximate the baseline performance of a SI
- powered vocational vehicle. The SI
- powered vocational vehicle baseline performance shown in Table V
- 12 was calculated from appl yi ng an adjustment factor to the respective CI
- powered vocational vehicle baseline values
. This CIto SI baseline adjustment factor is derived from the Phase 1 HD pickup and van stringency curves, as described in the draft RIA Chapter 2.9.1. The correction factor approach is not the agencies’ preferred approach, as it has many drawbacks. One key

drawback with this approach is that it does not account for the fact that SIengines operate v ery differently than CI engines at idle. Our current model includes information on CIengine idle performance, and assumes transmissions and torque converters appropriate for CI engines. We expect these driveline parameters would be very different for SI powered vehicles, which would affect performance over all the GEM duty cycles. The baseline performance levels for HHD vocational vehicles powered b y SIengines were derived using the same procedures described above for the MHD and LHD vehicles, adjusting the performance of the HHD CI powered vocational vehicles by the same degree as for the other vehicles. However, we expect that any gasoline Class 8 vocational vehicle would be powered b y a MHD SI engine, as there are no HHD gasoline engines on the marke t. Further, we expect that if we were to develop an engine map for use in simulating heavier SI vocational vehicles in GEM, we could establish a more representative baseline performance level by calculating the work done by the MHD engine to move the heav ier vehicle over the test cycles. The agencies request comments on the merits of developing separate baseline levels and numerical standards for HHD vocational vehicles powered b y S I engines, including an y benefits that could be obtained b y addressing thi s unlikely occurrence and other way s in which the agencies could avoid the instance of an orphaned SIvocational vehicle. Commenters who favor separate numerical standards are encouraged to submit information related to appropriate defaultPage 355 of 850

vehicle charact eristics such as weight and payload. Depending on comments, the agencies could choose to require all Class 8 vocational vehicles to certify to the standards for CIpowered HHD vocational vehicles, or we could require SI powered Class 8 vocational vehicles to certify to the MHD standards for SI vocational vehicles.

**Table V**  **- 12**  **Baseline Vocational Vehicle Perform ance with SI Engines**  Baseline Emissions Performance in CO 2 gram/ton
- mile Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty Class 8 Urban 33 4 2 13 224 Multi
- Purpose 34 4 21 5 226 Regional 358 211 214 Baseline Fuel Efficiency

Performance in gallon per 1,000 ton
- mile Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty Class 8 Urban 37.5830 23.9676 25.2054 Multi
- Purpose 38.7082 24.1926 25.4304 Regional 40.2836 23.7425 24.0801 (b ) Technology Packages for Derivation of Proposed Standards Prior to developing the numerical values for the proposed standards, the agencies projected the mix of new technologies and technology improvements that would be feasible within the proposed lead time. We note that for some technologies, the adoption rate s and effectiveness may

be very similar across subcategories. However, for other technologies, either the adoption rate, effectiveness, or both differ across subcategories. The standards being proposed reflect the technology projected for each service cl ass. Where a technology performs differentl y over different test cycles, these differences are reflected to some extent in the derivation of the stringency of the proposed standard. However, the proposed standard stringency

does reflect, to some extent, the ability of manufacturers to utilize credits. For example, we project that hy brid vehicles would generall y be certified in the Urban subcategory and would generate emission credits that would most likely be used in the other subcategories within the we ight class group . 318 As part of the derivation of the numerical standards, we performed a benchmarking anal ys is to inform our development of standards that would have roughl y equivalent stringency among the dut y - cycle
- based subcategories within each weight class group . To do this, the agencies assessed the performance of broadly applicable technologies, such as low rolling resistance tires , on each of the selected baseline vehicles over each of the duty cycles. We then

318 See averaging sets at 40 CFR 1037.740.Page 356 of 850

evaluated how much improvement could be achieved over the various duty cycles for a vehicle that incorporated all the broadly applicable technologies, but which did not include a hy brid powertrain . We simulated neutral idle for benchmarked vehicles for MY 2021 and MY 2024, and simulated stop - start idle reduction on the benchmarked MY 2027 vehicles
. From this, we learned that a vehicle with neutral idle and a deeply integrated conventional powertrain, with moderatel y low rolling resistance tires and some weight reduction could easily meet the proposed standards in the earl y implementation ye ars of the program, in any weight class or duty cycle. We also learned how the effectiveness of tire rolling resistance and weight reduction vary in GEM (i.e. and therefore likely in actual operation) acros s the different subcategories. We also found that a vehicle with a deepl y integrated conventional powertrain, tires with even lower CRR, some weight reduction, and stop
- start idle reduction could achieve the MY 2027 proposed standards. However, our techn ology feasibility

does not presume that 100 percent of vocational vehicles can reasonabl y apply deep powertrain integration, nor do we project 100 percent adoption of LRR tires or weight reduction. The technolog ies assumed for the benchmark ed vehicles are summarized in Table V
- 13 , Table V
- 14 , and Table V
- 15 . Note that the agencies are not projecting that these are the vehicles that would actuall y be produced. Rather, these theoretical vehicles are being evaluated to compare the relative stri ngency of the standards for each subcategory
. **Table V**  **- 13**  **GEM Inputs**  **for Benchm arked MY 2021 Vocational Vehicles**  Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **Transmission** 100% Deep Transmission Integration for 7% Urban, 6% Multipurpose, 5% Regional 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 10s AMT **CI Engine a**  2021 MY 7L, 200 hp Engine 2021 MY 7L, 270 hp Engine 2021 MY 11L, 345 hp Engine 2021 MY

15L 455hp Engine 100% Idle Reduction = Neutral Idle 100% im proved axle lubrication: 0.5% 100% Steer Tires with CRR 6.9 kg/metric ton 100% Drive Tires with CRR 7.3 kg/metric ton

We ight Reduction 200 lb Note: a SI engines were not simulated in GEMPage 357 of 850 **Table V**  **- 14**  **GEM Inputs for Benchm**  **arked MY 2024 Vocational Vehicles** Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **Transmission** 100% Deep Transmission Integration for 7% Urban, 6% Multipurpose, 5% Regional 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 10s AMT **CI Engine a**  202 4 MY 7L, 200 hp Engine 202 4 MY 7L, 270 hp Engine 202 4 MY 11L, 345 hp Engine 202 4 MY

15L 455hp Engine 100% Idle Reduction = Neutral Idle 100% im proved axle lubrication: 0.5% 100% Steer Tires with CRR 6. 7 kg/metric ton 100% Drive Tires with CRR 7. 1 kg/metric ton

We ight Reduction 200 lb Note: a SI engines were not simulated in GEM

**Table V**  **- 15**  **GEM Inputs for Benchm**  **arked MY 202 7**  **Vocational Vehicles** Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **Transmission** 100% Deep Transmission Integration for 7% Urban, 6% Multipurpose, 5% Regional 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 5s AT 10s AMT **CI Engine a**  202 7 MY 7L, 200 hp Engine 202 7 MY 7L, 270 hp Engine 202 7 MY 11L, 345 hp Engine 202 7 MY

15L 455hp Engine 100% Idle Reduction = Stop - Start 100% Steer Tires with CRR 6.4 kg/metric ton 100% Drive Tires with CRR 7.0 kg/metric ton

We ight Reduction 200 lb Note: a SI engines were not simulated in GEM Next we identified the best performing baseline vehicle in each weight class group (one for HHD, one for MHD and one for LHD) and normalized the baseline GEM results to the performance of that vehicle. A complete description of this normalization process is found in the draft RIA Chapter 2. We then applied our actual projected technology adoption rates, including hy brid powertrains and stop
- start idle reduction, to normalized
- benchmarked vehicles in each of the nine subcategories
. T he proposed standards then wer e calculated b y multiplying the normalized baseline vehicle GEM result b y an average percent improvement for each weight class group. For example, the GEM results from applying the projected technology mix for MY 2021 MHD CIvocational vehicles were a 5 p ercent improvement in the Regional MHD subcategory , 7 percent improvement in the MHD Multipurpose subcategory , and 8 percent improvement in the MHD Urban subcategory . To achieve standards with equivalent stringency ,Page 358 of 850

we multiplied each normalized baseline vehicle’s GEM performance b y the numerical average of those simulated improvements, 6.6 percent. Without comparable stringency across the subcategories, manufacturers could have an incentive to select a subcategory strategicall y to have a less stringent standard, rather than to certify vehicles in the subcategory that best matches the vehicles’ expect ed use patterns. By setting the standards at the same percent reduction from each weight class group of normalized
- benchmark ed vehicles , we would expect to minimize any incentive for a manufacturer to certify a vocational vehicle in an inappropriate subcategory . We request comment on using this approach to normalize the standards. Commenters are encouraged to address both the approach in general and the specific technology assumed for the benchmark vehicles. We are aware that in this approach, s ome of the projected technology packages would not provide a direct path to compliance for manufacturers, such as in the example above of the MHD Regional vehicle. Using the technologies adopted at projected rates, it would fall short of the standard b y 1.5 perce nt. The agencies believe that the Phase 2 program has enough regulatory flexibility (averaging, banking, and trading provisions in particular) to enable such a vehicle to be certified. In the package descriptions that follow, individual technology costs are not presented, rather the se can be found in the draft RIA Chapter 2.9 and 2.12 . Section V. C. (2) (d) includes the costs estimated for packages of technologi es the agencies project would enable vocational vehicles to meet the proposed Phase 2 standards. (i ) Transmission Packages The agencies project that 30 percent of vocational vehicles would have one or more of the transmission technologies identified above in this s ection applied by MY 2021 , increasing to nearl y 60 percent by

MY 2024 and over 80 percent by MY 2027
. Most of this increase is due to a projected increase in adoption of technologies that represent deep driveline integration. The agencies project an adoption rate of 15 percent in MY 2021 and 30 percent in MY 2024 for manufacturers using the powertrain test to be recognized for non
- hardware upgrades such as gear efficiencies, shift strategies, and torque converter lockups, as well as other technologie s that enable driveline optimization. Due to the relatively high efficiency gains available from driveline optimization for relativel y low costs, the agencies are project ing a 70 percent application rate of driveline optimization by MY 2027 across all sub categories
. W e do not have information about the extent to which integration may be deterred by barriers to information
sharing between component suppliers. Therefore we are projecting that major manufacturers would work to overcome these barriers , integrate and optimize their drivelines , and use the powertrain test on all eligible configurations, while smaller manufacturers may not adopt th ese technolog ies at all , or not to a degree that they would find value in this optional test procedure
. For th e technology

of adding two gears, w e are predicat ing the proposed MY 2021 standard on a five percent adoption rate, except zero in the HHD Regional subcategory , which is modeled with a 10
- speed transmission. This adoption rate is projected to essentially remain at this level throughout the program, with an increase to ten percent only for two subcategories (Regional LHD and MHD) in MY 2027. This is because the manufacturers most likely toPage 359 of 850

develop 8
- speed transmissions are those that are also developing tr ansmissions for HD pickups and vans, and the GEM
- certified vocational market share among those manufacturers is relativel y small. T he HHD Regional subcategory is the onl y one where we assume a manual transmission in the baseline configuration. For these vehicles, the agencies project upgrade s to electronic transmissions such as either AMT, DCT, or automatic , at collective adoption rates of 51 percent in MY 2021, 68 percent in MY 2024, and five percent in MY 2027. The decrease in MY 2027 reflects a proje ction that a greater number of deeply integrated HHD powertrains would be used by MY 2027 (one consequence being that fewer HHD powertrains would be directl y simulated in GEM in that year). The larger numbers in the phase
- in years reflect powertrains that have been automated or electrified but not deepl y integrated. The agencies have been careful to account for the cost of both electrifying and deeply integrating the MY 2027 powertrains. In draft RIA Chapter 11, the technology adoption rates for the HHD Regional subcategory presented in Table 11
- 42, Table 11
- 45, and Table 11
- 48 account for the assumption that a manual transmission cannot be deepl y integrated, so there must also be an automation upgrade. These tables are inputs to the agencies’ cost analy sis, thus the costs of both upgrading and integrating HHD powertrains are included. The adoption rates of the upgraded but not integrated transmission architectures represent a projection of three percent of all vocational vehicles in MY 2021 and four percent in MY 2024. This is based on an estimate that seven percent of the vocational vehicles would be in the HHD Regional subcategory . For more information about the assumptions that were made about the populations of vehicles in different subcategories, see the agencies’ inventory

estimates in draft RIA Chapter 5. In the eight subcategories in which automatic transmissions are the base technology , the agencies project that five percent would upgrade to a dual clutch transmission in MY 2021. This projec tion increases to 15 percent in MY 2024 and decreases in MY 2027 to ten percent for two subcategories (Regional LHD and MHD) and five percent for the remaining 6 subcategories. The low projected adoption rate s of DCT reflect the fact that this is a relati vely new technology for the heav y - dut y sector, and it is likely that broader market acceptance would be achieved once fleets have gained experience with the technology
. Similar to the pattern described for the HHD Regional subcategory , the decrease in MY 2027 reflects a projection of greater use of deepl y integrated powertrains. In setting the proposed standard stringency , we have projected that hy brids on vehicles certified in the Multipurpose subcategories would achieve on average 22 percent improvement, and those in the Urban subcategories would see a 25 percent improvement. We have also projected zero h ybrid adoption rate by vehicles in the Regional subcategories , expecting that the benefit of h ybrids for those vehicles would be too low to merit use of that ty pe of technology
. However, there is no fixed hy brid value assigned in GEM and the actual improvement over the applicable test cycle would be determined by powertrain testing. By the full implementation ye ar of MY 2027, the agencies are projecti ng an overall vocational vehicle adoption rate of ten percent h yb rids, which we estimate would be 18 percent of vehicles certified in the Multi
Purpose and Urban subcategories . We are projecting a low adoption rate in the earl y ye ars of the Phase 2 program, just four percent in these subcategories in MY 2021, and seven percent in MY 2024 for vehicles certified in the Multi
- Purpose and Urban subcategories. Based on ourPage 360 of 850

assumptions ab out the populations of vehicles in different subcategories , these h ybrid adoption rates are about two percent overall in MY 2021 and four percent overall in MY 2024. Considering the combination of the above technologies and adoption rates, we project the CO 2 and fuel efficiency

improvements for all transmission upgrades to be a pproximately

seven percent on a fleet basis by MY 202 7
. One subcategory in which we are projecting a very large advanced transmission adoption rate is the HHD Regional subcategory , in which we are projecting 75 percent of the transmissions would be either automated or automatic (upgraded from a manual) with 70 percent of those also being deepl y integrated b y M Y 2027. By comparison, the agencies are projecting that HHD day cab tractors would have 90 percent adoption of automated or automatic transmissions by MY 2027. Although we are not prepared to predict what fraction of these would be upgraded in the absence of Phase 2, the draft RIA Chapter 2.9 explains why the agencies are confident that durable transmissions will be widely available in the Phase 2 ti me frame to support manufacture of HHD vocational vehicles. If the above technologies do not reach the expected level of market adoption, the vocational vehicle Phase 2 program has several other technology options that manufacturers could choose to meet th e proposed standards. (ii) Axle Packages The agencies project that 75 percent of vocational vehicles in all subcategories would adopt advanced axle lubricant formulations in all implementation years of the Phase 2 program. Fuel efficient lubricant formulations are widespread across the heav y - duty market, though advanced sy

nthetic formulations are currentl y less popular. 319 Axle lubricants with improved viscosity and efficiency
- enhancing performance are projected to be widel y adopted b y manufacturers in the time frame of Phase 2. Such formulations are commercially available and the agencies see no reason why they could not be feasible for most vehicles. Nonetheless, we have refrained from projecting full adoption of this technology . The agencies do not have spe cific information regarding reasons wh y axle manufacturers may specify a specific ty

pe of lubricant over another, and whether advanced lubricant formulations may not be recommended in all cases. The agencies request comment on information regarding any vo cational vehicle applications for which use of advanced lubricants would not be feasible. The agencies estimate that 45 percent of HHD Regional vocational vehicles would adopt either full time or part time 6x2 axle technology in MY 2021. This technology i s most likely

to be applied to Class 8 vocational vehicles (with 2 rear axles) that are designed for frequent highway trips. The agencies project a slightl y higher adoption rate of 60 percent combined for both full and part time 6x2 axle technologies in M Y 2024 and MY 2027
. Based on our estimates of vehicle populations, this is about four percent of all vocational vehicles
.

319 Based on conversations with axle suppliers.Page 361 of 850

(iii) Tire Packages The agencies estimate that the per
- vehicle average level of rolling resistance from vocational vehicle tires could be reduced b y 1 1 percent by full implementation of the Phase 2 program in MY 2027 , based on the tire development achievements expected over the next decade. This is estimated by weighting the projected improvements of steer tires and drive tires using an assumed axle load distribution of 30 percent on the steer tires and 70 percent on the drive tires, as explained in the draft RIA Chapter 2.9. The projected a doption rates and expected improvements in CRR are presented in Table V
- 16
. By appl yi ng the assumed axle load distribution, the average vehicle CRR i mprovements projected for the proposed MY 2021 standards would be four percent, which we project would achieve up to one percent reduction in fuel use and CO 2 emissions , depending on the vehicle subcategory
. Using that same method, the agencies estimate th e average vehicle CRR in MY 2024 would be seven percent , yielding reduction s in fuel use and CO 2 emissions of between one and two percent, depending on the vehicle subcategory
. The agencies understand that the vocational vehicle segment has access to a large variety of tires, including some that are designed for tractors, some that are designed for HD pickups and vans, and some with multiple use designations. In spite of the likely availability

of LRR tires during the Phase 2 program, the projected adop tion rates are intended to be conservative. The agencies believe that these tire packages recognize the variety of tire purposes and performance levels in the vocational vehicle market, and maintain choices for manufacturers to use the most efficient tire s (i.e. those with least rolling resistance) onl y where it makes sense given these vehicles’ differing purposes and applications.Page 362 of 850 **Table V**  **- 16**  **Projected LRR Tire Adoption Rates** Tire Position Level of Rolling

Resistance MY 2021 Adoption

Rate MY 2024

Adoption Rate MY 2027

Adoption Rate Drive Baseline CRR (7.7) 50 20 10 Steer Baseline CRR (7.7) 20 10 0 Drive 5% L ower CRR

(7.3) 50 50 25 Steer 10% L ower CRR

(6.9) 80 30 20 Drive 10% L ower CRR

(6.9) 0 30 50 Steer 15% L ower CRR

(6.5) 0 60 30 Drive 15% L ower CRR

(6.5) 0 0 15 Steer 20% L ower CRR

(6.2) 0 0 50 Drive Average

Improvement in CRR 3% 6% 9% Steer Average

Improvement in CRR 8% 12% 17%

For comparison purposes, the reader may note that these levels of tire CRR generall y correspond with levels of tire CRR projected for tractors built for the Phase 1 standards. For example, the baseline level CRR for vocational tires is very similar to the baseline trac tor steer tire CRR. Vocational vehicle tires with 10 percent better CRR have a similar CRR level as tractor tires of Drive Level 1. Vocational vehicle tires with 15 percent better CRR have a similar CRR level as tractor tires of Steer Level 1. Vocational vehicle tires with 20 percent better CRR have a similar CRR level as tractor tires of Drive Level 2 , as described in Section III.D.2
. (iv) Idle Reduction Packages In this proposal, we are project ing a progression of idle reduction technology development that begins with 70 percent adoption rate of neutral idle for the MY 2021 standards , which by MY 2027 is replaced by

a 70 percent adoption rate of stop
- start idle reduction technology . Although it is po ssible that a vehicle could have both neutral idle and stop
- start, we are onl y considering emissions reductions for vehicles with one or the other of these technologies. Also, as the program phases in, we do not see a reduction in the projected adoption r ate of neutral idle to be a concern in terms of stranded investment, because it is a very low cost technology

that could be an enabler for stop
- start sy stems in some cases. We are not projecting any adoption of neutral idle for the HHD Regional subcate gory, b ecause an y vehicle with a manual transmission must shift to neutral when stopped to avoid stalling the engine, so that vehicles in the HHD Regional subcategory would already essentiallyPage 363 of 850

be idling in neutral and no additional technology would be nee ded to achieve this. A similar case can be made for an y vocational vehicle with an automated manual transmission, since these share inherently

similar architectures with manuals. The agencies are not project ing an adoption rate of 85 percent neutral idle until MY 2024, because it may take some additional development time to apply

this technology

to high
- torque automatic transmissions designed for the largest vocational vehicles. Based on stakeholder input, the designs needed to avoid an uncomfortable re - engagement bump when returning to drive from neutral may require some engineering development time as well as some work to enable two
- way communication between engines and transmissions. We are projecting a five percent adoption rate of stop
- start in the s ix MHD and LHD subcategories for MY 2021 and zero for the HHD vehicles , because this technology is still developing for vocational vehicles and is most likely to be feasible in the early years of Phase 2 for vehicles with lower power demands and lower engi ne inertia. Stopping a heav y - dut y engine is not challenging. The real challenge is designing a robust sy stem that can deliver multiple smooth restarts daily

without loss of function while the engine is off. Many current light
- dut y products offer this fe ature, and some heav y - dut y manufacturers are exploring this. 320 The agencies are project ing an adoption rate of 15 percent stop - start across all subcategories in the intermediate ye ar of MY 2024
. The agencies are projecting this technology to have a relati vel y high adoption rate (70 percent as stated above) b y MY 2027 because we see it being technically feasible on the majority of vocational vehicles, and especiall y effective on those with the most time at idle in their workday operation. Although we are n ot prepared to predict what fraction of vehicles would adopt stop
- start in the absence of Phase 2, the draft RIA Chapter 2.9 explains why the agencies are confident that this technology , which is on the entry
- level side of the hy brid and electrification sp ectrum, will be widely available in the Phase 2 time frame. Based on these projected adoption rates and the effectiveness values described above in this section, we expect overall GHG and fuel consumption reductions from workday idle on vocational vehicle s to be approximately three percent in MY 2027. (v) Weight Reduction Packages As described in the draft RIA Chapter 2. 12 , weight reduction is a relativel y costly technology , at approximately $3 to $4 per pound for a 200
- lb package . Even so, for vehicles in service classes where dense, heav y loads are frequently carried, weight reduction can translate directly to additional payload. The agencies project weight reduction would most likely be used for vocational vehicles in the refu se and construction service classes, as well as some regional delivery vehicles. The agencies are predicating the proposed standards on an adoption rate of

320 See Ford announcement December 2013, https://media.ford.com/content/fordmedia/fna/us/en/news/2013/12/12/70
- percent - of
- ford
- lineup
- to - have
- auto - start stop - by
- 2017
-- fuel
- .html . See also Allison
- Cummins announcement July 2014, http://www.oemoffhighway.com/press_release/12000208/allison
- stop start?utm_source=OOH+Industry+News+eNL&utm_medium=email&utm_campaign=RCL140723006Page 364 of 850

five to eight percent , depending on the subcategory , in MY 202 7, with slightly lower adoption rates in MY 2021 and MY 2024. For this technology

package, NHTSA and EPA project manufacturers would use material substitution in the amount of 200 pounds
. An example of how this weight could be reduced would be a complete set of aluminum wheels for a Class 8 vocational vehicle, or an aluminum transmission case plus high strength steel wheels, frame rails, and suspension brackets on a MHD or LHD vocational vehicle. The agencies have limited information about how popular the use of aluminum components is in the vocational vehicle sector. We request comments with information on whether any lightweight vocational vehicle components are in such widespread use that we should exclude them from the list of components for which a GEM improvement value would be availab le. (c) GEM Inputs for Derivation of Proposed Vocational Vehicle Standards To derive the stringency

of the proposed vocational vehicle standards, the agencies developed a suite of fuel consumption map s for use with the GEM : one set of maps that represent eng ines meeting the proposed MY 2021 vocational diesel engine standard s, a second set of maps representing engines meeting the proposed MY 2024 vocational diesel engine standard s, and a third set of maps representing engines meeting the proposed MY 2027 vocat ional diesel engine standards
. 321 By incorporating the engine technology packages projected to be adopted to meet the proposed Phase 2 vocational CI engine standards, the agencies employed GEM engine models in deriving the stringency of the proposed Phase 2 CI
powered vocational vehicle standards. As noted above, because the agencies did not have enough information to develop a robust GEM
- based gasoline engine fuel map, the stringency of the proposed SI
- powered vocational vehicle standards is derived as an adjustment from the CI
powered vocational vehicle standards. See the draft RIA Chapter 2.9 for more details about this adjustment process. Depending on the particular technology , either the effectiveness was assigned by the agencies using an accepted aver age value, or the GEM tool was used to assess the proposed technology

effectiveness , as discussed above. The agencies derived a scenario vehicle for each subcategory

using the adoption rate and assigned or modeled improvement values of transmission, axle, and idle reduction technologies. For example, the MY 2021 CRR values for each subcategory

scenario case were derived as follows: for steer tires
- 20 percent times 7.7 plus 80 percent times 6.9 yi elds an average CRR of 7.1 kg/metric ton; and for drive tires
- 50 percent times 7.7 plus 50 percent times 7.3 yields an average CRR of 7.5 kg/metric ton. Similar calculations were done for weight reduction, transmission improvements, and axle improvements. The set of tire CRR , idl e reduction, weight reduction, engine and transmission input parameters that was modeled in GEM in support of the proposed MY 2021 vocational vehicle standards is shown in Table V
- 17
. The agencies de riv ed the level of the proposed MY 2024 standards b y using the tire, weight reduction, engine and transmission GEM inputs shown

321 See Section II.D.2 of this preamble for the derivation of the engine standards.Page 365 of 850

in Table V
- 18 , below. The agencies de riv ed the level of the proposed MY 202 7 standards b y using the tire, weight reduction, engine and transmission GEM inputs shown in Table V
- 19 , below
. As post
- processing, the respective adoption rate s and assigned improvement values of transmission, axle, and idle reduction technologies were calculated for each subcategory. The agencies have not directl y transferred the GEM results from these inputs as the proposed standards. Rather, the proposed standards are the result of the normalizing and benchmarking anal ys is described above. The proposed standards are presented in Table V
- 4 through Table V
- 9
. Additional detail is provided in the RIA Chapter 2.9
.

**Table V**  **- 17**  **GEM Inputs**  **Used to Derive Proposed**  **MY 2021 Vocational Vehicle Standard**  **s** Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **CI Engine a**  202 1 MY 7L, 200 hp Engine 202 1 MY 7L, 270 hp Engine 202 1 MY 11L, 345 hp Engine 202 1 MY

15L 455hp Engine **Transmission (improvement factor)**  0.023 0.021 0.008 0.023 0.021 0.009 0.023 0.022 0.022 **Axle (improvement factor)**  0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.012 **Stop -**  **Start (adoption rate)**  5% 5% 5% 5% 5% 5% 0% 0% 0% **Neutral Idle (adoption rate)**  70% 70% 70% 70% 70% 70% 70% 70% 0% **Steer Tires (CRR kg/metric ton)** 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 **Drive Tires (CRR kg/metric ton)** 7. 5 7. 5 7. 5 7. 5 7. 5 7. 5 7. 5 7. 5 7. 5 **Weight Reduction (lb)** 8 8 14 8 8 12 8 8 1 0 Note: a SI engines were not simulated in GEM, rather a gas/diesel adjustment factor was applied to the resultsPage 366 of 850 **Table V**  **- 18**  **GEM Inputs**  **Used to Derive**  **Proposed MY 2024 Vocational Vehicle**  **Standard s**  Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **CI Engine a**  2024 MY 7L, 200 hp Engine 2024 MY 7L, 270 hp Engine 2024 MY 11L, 345 hp Engine 2024 MY

15L 455hp Engine **Transmission (improvement factor)**  0.045 0.04 0.017 0.045 0.041 0.018 0.045 0.042 0.035 **Axle (improvement factor)**  0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.014 **Stop -**  **Start (adoption rate)**  15% 15% 15% 15% 15% 15% 15% 15% 15% **Neutral Idle (adoption rate)**  85% 85% 85% 85% 85% 85% 85% 85% 0% **Steer Tires (CRR kg/metric ton)** 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 6.8 **Drive Tires (CRR kg/metric ton)** 7. 3 7. 3 7. 3 7. 3 7. 3 7. 3 7. 3 7. 3 7. 3 **Weight Reduction (lb)** 8 8 14 8 8 12 8 8 1 0 Note: a SI engines were not simulated in GEM, rather a gas/diesel adjustment factor was applied to the resultsPage 367 of 850 **Table V**  **- 19**  **GEM Inputs**  **Used to Derive Proposed**  **MY 202 7**  **Vocational Vehicle Standard**  **s** Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **CI Engine a**  202 7 MY 7L, 200 hp Engine 202 7 MY 7L, 270 hp Engine 202 7 MY 11L, 345 hp Engine 202 7 MY

15L 455hp Engine **Transmission (improvement factor)**  0.096 0.085 0.034 0.096 0.088 0.037 0.097 0.089 0.036 **Axle (improvement factor)**  0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.014 **Stop -**  **Start (adoption rate)**  75% 70% 70% 75% 70% 70% 70% 70% 70% **Neutral Idle (adoption rate)**  25% 30% 30% 25% 30% 30% 30% 30% 0% **Steer Tires (CRR kg/metric ton)** 6.4 6.4 6.4 6.4 6.4 6.4 6.4 6.4 6.4 **Drive Tires (CRR kg/metric ton)** 7. 0 7. 0 7. 0 7. 0 7. 0 7. 0 7. 0 7. 0 7. 0 **Weight Reduction (lb)** 10 1 0 16 10 10 14 10 1 0 12 Note: a SI engines were not simulated in GEM, rather a gas/diesel adjustment factor was applied to the results (d ) Technology Package Costs The agencies have estimated the costs of the technologies that could be used to comply with the proposed standards. The estimated costs are shown in Table V
- 20 for MY2021 , in Table V
- 21 for MY2024 , and Table V
- 22 for MY 2027
. Fleet average c osts are shown for light, medium and heav y HD vocational vehicles in each duty
- cycle
- based subcategory

– Urban, Multi
- Purpose, and Regional. As shown in Table V
- 20 , in MY 2021 these range from approximately

$600 for MHD and LHD Regional vehicles, up to $3,400 for HHD Regional vehicles. Those two lower
- cost packages reflect zero hy brids, and the higher
- cost package reflects significant adoption of automated transmis sions. Inthe draft RIA Chapter 2.13.2, the agencies present vocational vehicle technology package costs differentiated by MOVES vehicle ty pe. For example, intercity buses are estimated to have an average package cost of $2,900 and gasoline motor homes are estimated to have an average package cost of $450 in MY 2021. These costs do not indicate the per
- vehicle cost that may be incurred for any

individual technology . For more specific information about the agencies’ estimates of per
- vehicle costs, pleas e see the draft RIA Chapter 2.12. For example, Chapter 2.12.7 describes why a complex technology

such as hy

bridization is estimated to range between $15,000 and $40,000 per vehicle for vocational vehicles in MY 2021. The engine costs listed represent the cost of an average package of diesel engine technologies as set out in Section II. Individual technology adoption rates for engine packages are described in Section II.D. The details behind all these costs are presented in draft RIA Chapter 2 .12 , inclu ding the markups and learning effects applied and howPage 368 of 850

the costs shown here are weighted to generate an overall cost for the vocational segment. We welcome comments on our technology cost assessments. **Table V**  **- 20**  **Vocational Vehicle Technology Incremental Costs for the Proposal in the 2021 Model Year a,b**  **(2012$)** Light HD Medium HD Heavy HD Urban Multi
purpose Regiona

l Urba n Multi
purpose Regiona

l Urba n Multi
purpose Regional Engine c $293 $293 $293 $270 $270 $270 $270 $270 $270 Tires $7 $7 $7 $7 $7 $7 $7 $7 $7 Transmission $81 $81 $81 $81 $81 $81 $81 $81 $2,852 Axle related $99 $99 $99 $99 $99 $99 $148 $148 $219 Weight Reduction $27 $27 $48 $27 $27 $41 $27 $27 $34 Idle reduction $49 $49 $49 $51 $51 $51 $6 $6 $0 Electrification & hybridization $547 $547 $0 $861 $861 $0 $1,43 7 $1,437 $0 Air Conditioning d $22 $22 $22 $22 $22 $22 $22 $22 $22 Total $1,125 $1,125 $598 $1,41 8 $1,418 $571 $1,99 8 $1,998 $3,404 Notes: a Costs shown are for the 2021 model year and are incremental to the costs of a vehicle meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts conside red in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 ). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost exp ected for each of the indicated vehicle classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see RIA 2.9 in particular). c Engine costs are for a light HD, medium HD or heavy HD diesel engine. We are projecting no additional costs beyond Phase 1 for gasoline vocational engines
. d EPA’s air conditioning standards are presented in Section V.C above. The estimated fleet average vocational vehicle package costs are shown in Table V
- 21 for MY2024. As shown, these range from approximately $800 for MHD and LHD Regional vehicles, up to $4,800 for HHD Regional vehicles. The increased costs above the MY 2021 values reflect increased adoption rates of individual technologies, while the individual technology

costs are generall y expected to remain the same or decrease, as explained in the draft RIA Chapter 2.12. For example, Chapter 2.12.7 presents MY 2024 hy bridization costs that range from $13,000 to $33,000 per vehicle for vocational vehicles. The engine costs listed represent the average costs associated with the proposed MY 2024 vocational diesel engine standard described in Section II.D.Page 369 of 850

**Table V**  **- 21**  **Vocational Vehicle Technology Incremental Costs for the Proposal in the 2024 Model Year a**  **,b (2012$)**  Light HD Medium HD Heavy HD Urban Multi
purpose Regiona

l Urba n Multi
purpose Regiona

l Urban Multi
purpose Regional Engine c $437 $437 $437 $405 $405 $405 $405 $405 $405 Tires $17 $17 $17 $17 $17 $17 $23 $23 $23 Transmission $123 $123 $123 $123 $123 $123 $123 $123 $3,915 Axle related $90 $90 $90 $90 $90 $90 $136 $136 $224 Weight Reduction $24 $24 $43 $24 $24 $37 $24 $24 $30 Idle reduction $119 $119 $119 $125 $125 $125 $224 $224 $217 Electrification & hybridization $906 $906 $0 $1,42 3 $1,423 $0 $2,377 $2,377 $0 Air Conditioning d $20 $20 $20 $20 $20 $20 $20 $20 $20 Total $1,737 $1,737 $849 $2,22 8 $2,228 $817 $3,332 $3,332 $4,834 Notes: a Costs shown are for the 2024 model year and are incremental to the costs of a vehicle meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts conside red in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 ). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost exp ected for each of the indicated vehicle classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see RIA 2.9 in particular). c Engine costs are for a light HD, medium HD or heavy HD diesel eng ine. We are projecting no additional costs beyond Phase 1 for gasoline vocational engines
. d EPA’s air conditioning standards are presented in Section V.C above. The estimated fleet average vocational vehicle package costs are shown in Table V
- 22 for MY202 7
. As shown, these range from approximately $1,400 for MHD and LHD Regional vehicles, up to $7,400 for HHD Urban and Multipurpose vehicles. Thes e two subcategories are projected to have the higher
- cost packages in MY 2027 due to an estimated 18 percent adoption of HHD h ybrids, which are estimated to cost $31,000 per vehicle in MY 2027, as shown in Chapter 2.12.7 of the draft RIA. These per
- vehic le technology package costs were averaged using our projections of vehicle populations in the nine regulatory subcategories and do not correspond to the MOVES vehicle ty pes. The engine costs shown represent the average costs associated with the proposed M Y 2027 vocational diesel engine standard described in Section II.D. For gasoline vocational vehicles, the agencies are projecting adoption of Level 2 engine friction reduction with an estimated $68 added to the average SI vocational vehicle package cost i n MY 2027, which represents about 56 percent of those vehicles upgrading beyond Level 1 engine friction reduction. Further details on how these SI vocational vehicle costs were estimated are provided in the draft RIA Chapter 2.9. Purchase prices of vo cational vehicles can range from $60,000 for a stake
- bed landscape truck to over $400,000 for some transit buses. The costs of the vocational vehicle standards canPage 370 of 850

be put into perspective by considering package costs estimated using MOVES vehicle ty pes al ong with typical prices for those vehicles. For example, a package cost of $4,000 on a $60,000 short haul straight truck would represent an incremental increase of about six percent of the vehicle purchase price. Similarly , a package cost of $7,000 on a $200,000 refuse truck would represent an incremental increase of less than four percent of the vehicle purchase price. The vocational vehicle industry characterization report in the docket includes additional examples of vehicle prices for a variety of vo cational applications. 322 **Table V**  **- 22**  **Vocational Vehicle Technology Incremental Costs for the Proposal in the 202 7**  **Model Year a**  **,b (2012$)**  Light HD Medium HD Heavy HD Urba n Multi
purpose Region

al Urban Multi
purpose Regiona

l Urban Multi
purpose Regional Engine c $471 $471 $471 $437 $437 $437 $437 $437 $437 Tires $20 $20 $20 $20 $20 $20 $29 $29 $29 Transmission $244 $244 $267 $244 $244 $267 $244 $244 $2,986 Axle related $86 $86 $86 $86 $86 $86 $129 $129 $215 Weight Reduction $29 $29 $46 $29 $29 $40 $29 $29 $35 Idle reduction $498 $499 $499 $526 $526 $526 $964 $964 $962 Electrification & hybridization $2,12

2 $2,122 $0 $3,336 $3,336 $0 $5,571 $5,571 $0 Air Conditioning d $19 $19 $19 $19 $19 $19 $19 $19 $19 Total $3,48

9 $3,490 $1,407 $4,696 $4,696 $1,395 $7,422 $7,422 $4,682 Notes: a Costs shown are for the 202 7 mo del year and are incremental to the costs of a vehicle meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts considered in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 ). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost expected for each of the indicat ed vehicle classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see RIA 2.9 in particular). c Engine costs are shown for a light HD, medium HD or heavy HD diesel engine. For gasoline
- power ed vocational vehicles w e are projecting $68 of additional engine
- based costs beyond Phase 1
. d EPA’s air conditioning standards are presented in Section V.C above. **(3)** Consistency **of the Proposed Vocational Vehicle Standards with the Agencies’**  **Legal Authority** NHTSA and EPA project the proposed standards to be achievable within known design cycles, and we believe these standards, although technology
- forcing, would allow many different paths to compliance in addition to the example outlined in this section. The proposed standards

322 See industry characterization, Note 264 , above.Page 371 of 850

are predicated on manufacturers implementing technologies that we expect will be available in the time frame of these proposed rules, although in some instances these technologies are still under devel opment or not widely deplo ye d in the current vocational vehicle fleet. Under the proposal, manufacturers would need to appl y a range of technologies to their vocational chassis, which the agencies believe would be consistent with the agencies’ respective statutory authorities. We are projecting that most vehicles could adopt certain of the technologies. For example, we project a 70 to 75 percent application rate for stop
- start idle reduction and advanced axle lubrication
. However, for other technologies , such as strong h ybrids and weight reduction, we are projecting adoption rates of ten percent or less overall, with individual subcategories having adoption rates greater or less than this. The proposed standards offer manufacturers the flexibility to ap ply the technologies that make sense for their business and customer needs. As discussed above, average per - vehicle cost s associated with the proposed 2027 MY standards are projected to be generally less than s ix percent of the overall price of a new veh icle. The cost
- effectiveness of these proposed vocational vehicle standards in dollars per ton is similar to the cost effectiveness estimated for light
- duty trucks in the 2017
- 2025 light duty greenhouse gas standards, which the agencies have found to be highl y cost effective
. 323 In addition, the vocational vehicle standards are clearly effective from a net benefits perspective (see draft RIA Chapter 11.2). Therefore , the agencies regard the cost of the proposed standards as reasonable. The agencies note that while the projected costs are significantly greater than the costs projected for Phase 1, we still consider th ese cost s to be reasonable, especially given that the first vehicle owner may

see the technologies pay

for themselves in many

cases. As discu ssed above, the usual period of ownership for a vocational vehicle reflects a lengthy trade cycle that may often exceed seven ye ars. For most vehicle types evaluated, the cost of these technologies, if passed on full y to customers, would be recovered with in five years or less due to the associated fuel savings, as shown in the pay back anal ys is included in Section IXand in the draft RIA Chapter 7.1
. Specifically, in Table 7
- 30 of the draft RIA Chapter 7.1.3, a summary is presented with estimated pay

back p eriods for each of the MOVES vocational vehicle ty pes, using the annual vehicle miles traveled from the MOVES model for each vehicle typ e. As shown, the vocational vehicle type with the shortest payback would be intercity buses (less than one ye ar), while most other vehicles (with the exception of school buses and motor homes) are projected to see pay backs in the fifth year or sooner. The agencies note further that although the proposal is technology
- forcing (especiall y with respect to driveline improvements) and the estimated costs for each subcategory vary considerabl y (b y a factor of five in some cases), these costs represent onl y one of man y possible pathway s to compliance for manufacturers. M anufacturers retain leeway to develop alternative compliance paths, increasing the likelihood of the standards’ successful implementation. Based on available information, the agencies believe the proposed standards are technicall y feasible within the lead time provided , are cost effective while accounting for the fuel savings (see draft

323 See Chapter 5.3 of the final RIA for the MY 2017
- 2025 Light
- Duty GHG Rule, available at http://www.epa.gov/otaq/climate/documents/420r12016.pdf
.Page 372 of 850

RIA Chapter 7.1.4) , and have no apparent adverse collateral potential impacts ( e.g. , there are no projected negative impacts on safety or vehicle utility)
. T he proposed standards thus appear to represent a reasonable choice under S e ction 202(a) of the CAA and the maximum feasible under NHTSA’s EI SA authority at 49 U.S.C. 32902(k)(2). T he agencies believe that the proposed standards are consistent with their respective authorities. Based on the information currentl y before the agenc ies , we believe that the preferred alternative wo uld be maximum feasible and reasonable for the vocational segment with a progression of standards reaching full implementation in MY 2027
. Nevertheless, as discussed in Section 0 and in Section X (Alternatives), the agencies seek comment on the feasibility of A lternative 4 , which the agencies may determine is maximum feasible and reasonable depending on comments and information received during the comment period
. This alternative is discussed in detail below because it may be possible for manufacturers to accelerate product development cycles enough to reach the required levels by the 2024 model year. T hus, the agencies may conclude in the final rule s that A lternative 4, or some elements of this alternative, w ould be maximum feasible and appropriate under CAA section 202 (a)(1) and (2), depending on information and comments received
. The agencies seek comment s to assist us in making that determination. 

### D. **Alternative Vocational**  **Vehicle Standards Considered** The agencies have anal yzed vocational vehicle standards other than the proposed standards. These alternatives, listed in Table III
- 22 , are described in detail in Section X of this preamble and the draft RIA Chapter 11.

**Table V**  **- 23**  **Summary of Alternatives Considered for the Proposed Rulemaking** Alternative 1 No action alternative Alternative 2 Less s tringent than the p roposed a lternative , applying of f
- the
- shelf technologies Alternative 3 (Proposed Alternative) Proposed a lternative fully phased
- in by MY 2027 Alternative 4 Same stringency as proposed alternative, except phasing in faster, by MY 2024 Alternative 5 More stringent alternative, based on higher adoption rates of advanced technologies NHTSA and EPA are considering an Alternative 4 that achieves the same level of stringency

as the preferred alternative, except it would provide less lead time, reaching its mos t stringent level three ye ars earlier than the preferred alternative, that is in MY 2024. The agencies project that the same selection of technology options would be available to manufacturers regardless of what alternative is chosen. The preferred a lter n ative would allow greater lead time to manufacturers to select and develop technologies for their vehicles. The agencies have outstanding questions regarding relative risks and benefits of Alternative 4 due to the time frame envisioned by that alternativ e . If the agencies receive relevant information supporting the feasibility of Alternative 4, the agencies may consider establishing vocational vehicle standards that provide more overall reductions than what we are propos ing if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectivel y . See the draft RIA Chapter 11.2.2 for a summary of costs and benefits thatPage 373 of 850

compares the proposed Phase 2 vocational vehicle program with the costs and benefits of other vocational vehicle alternatives considered. In the paragraphs that follow, the agen cies present the derivation of the Alternative 4 vocational vehicle standards. For currently developing technologies where we project an adoption rate that could present potential risks or challenges, we seek comment on the cost and effectiveness of such technology . Further, the agencies seek comment on the potential for adoption of developing technologies into the vocational vehicle fleet, as well as the extent to which the more accelerated alternative vocational vehicle standards may depend on such technology
. **(1) Adoption Rates for**  **Derivation of Alternative 4 Vocational Vehicle**  **Standards** In developing the Alternative 4 standards, the agencies are projecting a set of technology packages in MY 2024 that is identical to those projected for the final phase
- in year of the preferred alternative. Because these are the same for each subcategory , the GEM inputs modeled to derive the level of the MY 2024 Alternative 4 standards can be found in Table V
- 19 , which presents the GEM inputs used to de rive the level of the MY 2027 proposed standards. In the package descriptions below, the agencies outline technology
- specific adoption rates in MY 2021 for Alternative 4 and offer insights on what market conditions could enable reaching adoption rates that would achieve the full implementation levels of stringency with less lead time. For transmissions including h ybrids, the agencies project for Alternative 4 that 50 percent of vocational vehicles would have one or more of the transmission technologies id entified above in this s ection applied by MY 2021. This includes 25 percent deepl y integrated conventional transmissions that would be recognized over the powertrain test, 10 percent DCT, 11 percent adding two gears (except zero for HHD Regional), and nin e percent h ybrids for vehicles certified in the Multi
- Purpose and Urban subcategories, which we estimate would be five percent overall. In this alternative, the agencies project 21 percent of the vocational vehicles with manual transmissions in the HHD Re gional subcategory would upgrade to either an AMT, DCT, or automatic transmission. The increased projection of driveline integration would mean that more manufacturers would need to overcome data
- sharing barriers. In this alternative, we project that manufacturers would need to conduct additional research and development to achieve overall application of five percent hy brids. In the draft RIA Chapter 7.1, the agencies have estimated costs for this additional accelerated research. Comments are requested on the expected costs to accelerate h ybrid development to meet the projected adoption rates of this alternative. For advanced axle lubricants, the agencies are projecting the same 75 percent adoption rate in MY 2021 as in the proposed program. For part ti me or full time 6x2 axles, the agencies project the HHD Regional vocational vehicles could apply this at the 60 percent adoption rate in MY 2021, where this level wouldn’t be reached until MY 2024 in the proposed program. One action that could enable this to be achieved is if information on the reliability of these s ys tems were to be disseminated to more fleet owners b y trustworthy sources. For lower rolling resistance t ires i n this alternative, the agencies project the same adoption rates of LRR tire s as in the proposed program for MY 2021, because we don’t expect tire suppliers would be able to make greater improvements for the models that are fitted onPage 374 of 850

vocational vehicles in that time frame . The tire research that is being conducted currentl y is foc used on models for tractors and trailers, and we project further improved LRR tires would not be commercially

available for vocational vehicles in the earl y implementation years of Phase 2. For the adoption rate of LRR tire s in MY 2024 to reach the level p rojected for MY 2027 in the proposed program, tire suppliers could promote their most efficient products to vocational vehicle manufacturers to achieve equivalent improvements with less lead time. Depending on how tire manufacturers focus their research a nd product development, it is possible that more of the LRR tire advancements being applied for tractors and trailers could be a pplied to vocational vehicles. To see the specific projected adoption rates of different levels of LRR tires for Alternative 4, see columns three and five of Table V
- 16 above
. For workday

idle technologies, the agencies project an adoption rate of 12 percent stop start in the s ix MHD and LHD subcategories for MY 2021 and zero for the HHD vehicles , on the expectation that manufacturers would have fewer challenges in the short term in bringing this technology

to market for v ehicles with lower power demands and lower engine inertia . In this alternative, the agencies project the overall workday idle adoption rate would approach 100 percent, such that an y vehicle without stop
- start (except HHD Regional) would apply neutral idle in MY 202 1. These adoption raters consider a more aggre ssive investment by manufacturers in developing th e s e technolog ies
. Estimates of research and development costs for this alternative are presented in the draft RIA Chapter 7.1. For weight reduction, in this alternative, the agencies project the same adoption rates of a 200
- lb lightweighting package as in the proposal for each subcategory in MY 2021, which is four to seven percent. Table V
- 24 shows the GEM input s used to derive the level of the Alternative 4 MY 2021 standards.Page 375 of 850 **Table V**  **- 24**  **GEM Inputs**  **Used to Derive Alternative 4**  **MY 2021 Vocational Vehicle Standard**  **s** Class 2b - 5 Class 6 - 7 Class 8 Urban Multi Purpose Regional Urban Multi Purpose Regional Urban Multi Purpose Regional **Al ternative 4**  **CI Engine a**  202 1 MY 7L, 200 hp Engine 202 1 MY 7L, 270 hp Engine 202 1 MY 11L, 345 hp Engine 202 1 MY

15L 455hp Engine **Transmission (improvement factor)**  0.045 0.04 0.014 0.045 0.041 0.015 0.045 0.041 0.018 **Axle (improvement factor)**  0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.004 0.015 **Stop -**  **Start (adoption rate)**  12% 12% 12% 12% 12% 12% 0% 0% 0% **Neutral Idle (adoption rate)**  88% 88% 88% 88% 88% 88% 90% 90% 0% **Steer Tires (CRR kg/metric ton)**  7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 7.1 **Drive Tires (CRR kg/metric ton)** 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 **Weight Reduction (lb)** 8 8 14 8 8 12 8 8 1 0 Note: a SI engines were not simulated in GEM, rather a gas/diesel adjustment factor was applied to the results. **(2) Possible**  **Alternative 4 Standards**  Because the MY 2024 Alternative 4 standards are the same as the proposed standards for MY 2027 for each subcategory , these numerical standards can be found in Table V
- 8 and Table V
- 9 , which present EPA’s and NHTSA’s proposed MY 2027 standards, respectively
. Table V
- 25 and Table V
- 26 present the Alternative 4 vocational vehicle standards for the initial year of MY 2021. These represent incremental improvements over the MY 2017 baseline of six to seven percent for SI
- powered vocational vehicles and nine percent for CI
- powered vocational vehicles.Page 376 of 850 **Table V**  **- 25**  **Alternative 4**  **EPA CO**  **2 Standards for MY2021 Class 2b**  **- 8 Vocational Vehicles**  Alternative EPA Standard for Vehicle with CIEngine Effective MY2021 (gram CO 2 /ton
mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 2 88 18 3 19 3 Multi
- Purpose 297 1 85 1 96 Regional 3 09 18 1 1 85 Alternative EPA Standard for Vehicle with SIEngine Effective MY2021 (gram CO 2 /ton
mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 313 199 210 Multi
- Purpose 323 20 1 212 Regional 336 197 201

**Table V**  **- 26**  **Alternative 4 NHTSA Fuel Consumption Standards for MY2021 Class 2b**  **- 8 Vocational Vehicles**  Alternative NHTSA Standard for Vehicle with CIEngine Effective MY 2021 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 28.2908 17.9764 18.9587 Multi
- Purpose 29.1749 18.1729 19.2534 Regional 30.3536 17.7800 18.1729 Alternative NHTSA Standard for Vehicle with SIEngine Effective MY 2021 (Fuel Consumption gallon per 1,000 ton
- mile) Duty C ycle Li ght Heav y - Dut y

Class 2b
- 5 Medium Heav y - Dut y

Class 6
- 7 Heav y Heav y - Duty

Class 8 Urban 35.2200 22.3923 23.6300 Multi
- Purpose 36.3452 22.6173 23.8551 Regional 37.8080 22.1672 22.6173 **(3) Costs Associated with**  **Alternative 4 Standards**  The agencies have estimated the costs of the technologies expected to be used to comply with the Alternative 4 standards , as shown in Table V
- 27 for MY2021. Fleet average c osts are shown for light, medium and heav y HD vocational vehicles in each duty
- cy cle
- based subcategory

– Urban, Multi
- Purpose, and Regional. As shown in Table V
- 27 , in MY 2021 these range from approximately $800 for MHD and LHD Regional vehicles, to $4,300 for HHD Urban and Multipurpose vehicles . Those two subcategories are projected to have the higher
- cost packages in MY 2021 due to an estimated 9 percent adoption o f HHD h ybrids, which are estimated to cost $40,000 per vehicle in MY 2021, as shown in Chapter 2.12.7 of the draft RIA
.Page 377 of 850

For more specific information about the agencies’ estimates of per
- vehicle costs, please see the draft RIA Chapter 2.12. The engine cos ts listed represent the cost of an average package of diesel engine technologies with Alternative 4 adoption rates described in Section II.D.2(e). The details behind all these costs are presented in draft RIA Chapter 2 .12 , including the markups and learni ng effects applied and how the costs shown here are weighted to generate an overall cost for the vocational segment. **Table V**  **- 27**  **Vocational Vehicle Technology Incremental Costs for Alternative 4**  **Standards in th e 2021 Model**  **Year a,b**  **(2012$)** Light HD Medium HD Heavy HD Urban Multi
purpose Regional Urban Multi
purpose Regional Urban Multi
purpose Regional Engine c $372 $372 $372 $345 $345 $345 $345 $345 $345 Tires $7 $7 $7 $7 $7 $7 $7 $7 $7 Transmission $148 $148 $148 $148 $148 $148 $148 $148 $2,042 Axle related $99 $99 $99 $99 $99 $99 $148 $148 $243 Weight Reduction $27 $27 $48 $27 $27 $41 $27 $27 $34 Idle reduction $110 $110 $110 $116 $116 $116 $8 $8 $0 Electrification & hybridization $1,384 $1,384 $0 $2,175 $2,175 $0 $3,633 $3,633 $0 Air Conditioning d $22 $22 $22 $22 $22 $22 $22 $22 $22 Total $2,169 $2,169 $805 $2,938 $2,938 $777 $4,337 $4,337 $2,693 Notes: a Costs shown are for the 2021 model year and are incremental to the costs of a vehicle meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts conside red in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 ). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost exp ected for each of the indicated vehicle classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see RIA 2.9 in particular). c Engine costs are for a light HD, medium HD or heavy HD diesel eng ine. We are projecting no additional costs beyond Phase 1 for gasoline vocational engines
. d EPA’s air conditioning standards are presented in Section V.C above. The estimated costs of the technologies expected to be used to comply with the Alternative 4 standards for MY202 4 are shown in Table V
- 28
. As shown, these range from approximately

$1,500 for MHD and LHD Regional vehicles to $7,900 for HHD Urban and Multipurp ose vehicles. These two subcategories are projected to have the higher
- cost packages in MY 2024 due to an estimated 18 percent adoption of HHD h ybrids, which are estimated to cost $33,000 per vehicle in MY 2024, as shown in Chapter 2.12.7 of the draft RIA
. The engine costs listed represent the cost of an average package of diesel engine technologies with Alternative 4 adoption rates described in Section II.D.2(e). For gasoline vocational vehicles, the agencies are projecting adoption of L evel 2 engine friction reduction with an estimated $74 added to the average SI vocational vehicle package cost in MY 2024, which represents about 56 percent of those vehicles upgrading beyond Level 1 engine friction reduction. Further details on how these SI vocational v ehicle costs were estimated are provided in the draft RIA Chapter 2.9
.Page 378 of 850

**Table V**  **- 28**  **Vocational Vehicle Technology Incremental Costs for Alternative 4**  **Standards in the 2024 Model Year**  **a (2012$)**  Light HD Medium HD Heavy HD Urban Multi
purpose Regional Urban Multi
purpose Regional Urban Multi
purpose Regional Engine c $493 $493 $493 $457 $457 $457 $457 $457 $457 Tires $26 $26 $26 $26 $26 $26 $40 $40 $40 Transmission $256 $256 $280 $256 $256 $280 $256 $256 $3,123 Axle related $90 $90 $90 $90 $90 $90 $136 $136 $224 Weight Reduction $30 $30 $49 $30 $30 $43 $30 $30 $37 Idle reduction $561 $524 $524 $592 $553 $553 $1,014 $1,014 $1,011 Electrification & hybridization $2,264 $2,264 $0 $3,559 $3,559 $0 $5,943 $5,943 $0 Air Conditioning d $20 $20 $20 $20 $20 $20 $20 $20 $20 Total $3,741 $3,704 $1,482 $5,030 $4,992 $1,469 $7,895 $7,895 $4,912 Notes: a Costs shown are for the 2024 model year and are incremental to the costs of a vehicle meeting the Phase 1 standards. These costs include indirect costs via markups along with learning impacts. For a description of the markups and learning impacts consider ed in this analysis and how it im pacts technology costs for other years, refer to Chapter 2 of the draft RIA (see draft RIA 2.12 ). b Note that values in this table include adoption rates. Therefore, the technology costs shown reflect the average cost expec ted for each of the indicated vehicle classes. To see the actual estimated technology costs exclusive of adoption rates, refer to Chapter 2 of the draft RIA (see RIA 2.9 in particular). c Engine costs shown are for a light HD, medium HD or heavy HD diesel engine. F or gasoline
- powered vocational vehicles w e are projecting $74 of additional engine
- based costs beyond Phase 1
. d EPA’s air conditioning standards are presented in Section V.C above. 

### E. **Compliance Provisions for Vocational Vehicles We**  welcome comment on all aspects of the compliance program, including those where we would adopt a provision without change in Phase 2
. **(1) Application and Certification Process**  The agencies propose to continue to use GEM to determine compliance with the proposed vehic le fuel efficiency and CO 2 standards. Because the agencies are proposing to modify GEM to recognize inputs in addition to those recognized under Phase 1, there is a consequent proposed requirement that manufacturers or component suppliers conduct component testing to generate those input values. S ee Section II for details of engine testing and GEM inputs for engines. As described above in Section I , the agencies propose to continue the Phase 1 compliance process in terms of the manufacturer requirements prior to the effective model year, during the model year, and after the model year. The information that would be required to be submitted by manufacturers is set forth in 40 CFR 1037.205 and 49 CFR 537.6
- 537.7 . EPA would continue to issue certificates u

pon approval based on information submitted through the VERIFY database (see 40 CFR 1037.255). End of year reports would continue to include the GEM results for all of the configurations built, along with credit/deficit balances, if applicable (see 40 CFR 1037.250 and 1037.730).Page 379 of 850

(a ) GEM Inputs In Phase 1, there were two inputs to GEM for vocational vehicles :
 Steer tire coefficient of rolling resistance, and  Drive tire coefficient of rolling resistance As discussed above in Section II and III.D, there are seve ral additional inputs that are proposed for Phase 2. In addition to the steer and drive tire CRR, the proposed inputs include the following:

 Engine fuel map,

 Engine full
- load torque curve,  Engine motoring curve,  Transmission ty

pe,  Transmission gear ratios ,  Drive axle ratio,  Loaded tire radius for drive and steer tires,  Idle Reduction,  Weight Reduction, and  Other pre
- defined off
- cy cle technologies. (i ) Driveline Inputs As with tractors, for each engine famil y, an engine fuel map, full load torque curve, and motoring curve would be generated b y engine manufacturers as inputs to GEM. The test procedures for the torque and motoring curves are found in proposed 40 CFR part 1065. Section II.D.1.b describes these proposed procedures as well as the proposed new procedure for generating the engine fuel map. Also similar to tractors, transmission specifications would be input to GEM. Any

number of gears could be entered with a numerical ratio for each, and transmission ty

pe would be selectable as either a Manual, Automated Manual, Automatic, or Dual Clutch transmission. As part of the driveline information needed to run GEM, drive axle ratio would be a user input. I f a configuration has a two
- speed axle, the agencies propose that a manufacturer may enter the ratio that is expected to be engaged most often. We request comment on whether the agencies should allow this choice. Two
- speed axles are typically specified for heav y - h aul vocational vehicles, where the higher numerical ratio axle would be engaged during transient driving conditions and to deliver performance needed on work sites, while the lower numerical ratio axle would be engaged during highway driving. The agencies request comment on whether we should require GEM to be run twice, once with each axle ratio, where the output over the highway cycles would be used from the run with the lower axle ratio, and the output over the transient cycle would be used from the run with the higher axle ratio. Tire size would be a new input to GEM that is necessary for the model to simulate the performance of the vehicle. The draft RIA Chapter 3 includes a description of how to measurePage 380 of 850

tire size. For each model and nominal size of a tire, there are numerous possible sizes that could be measured, depending on whether the tire is new or “grown,” meaning whether it has been broken in for at least 200 miles. Size could also vary based on load and inflation levels, air temperature, and tread depth. The agencies request comment on aspects of measuring and reporting tire size that could be specified b y rule, to avoid an y unnecess ary compliance burden of the Phase 2 program. (ii) Idle Reduction Inputs Based on user inputs derived from engine testing described in Section II and draft RIA Chapter 3, GEM would calculate CO 2 emissions and fuel consumption at both zero torque (neutral idl e) and with torque set to Curb
- Idle Transmission Torque for automatic transmissions in “drive” (as defined in 40 CFR 1065.510(f)(4) for variable speed engines) for use in the CO 2 emission calculation in 40 CFR 1037.510(b). The proposed regulations at 40 C FR part 1065 specify that that there must be two consecutive reference zero load idle points to establish periods of zero load idle for purposes of calculating total work over an engine test cycle. These two idle points from the engine test would be used in GEM for purposes of calculating emissions during vehicle idling over the vocational vehicle test cycles. The agencies welcome comments on the inclusion of these technologies into GEM in Phase 2. (iii) Weight Reduction Inputs In Phase 1, the agencies adopted tractor regulations that provided manufacturers with the ability to utilize high strength steel and aluminum components for weight reduction without the burden of entering the curb weight of every tractor produced. In Phase 2, the agencies propose to appl y relevant weights from the tractor lookup table to vocational vehicles. As noted above, the agencies are proposing to recognize weight reduction by allocating one half of the weight reduction to payload in the denominator, while one half of the weight re duction would be subtracted from the overall weight of the vehicle in GEM. To adapt the tractor table for vocational vehicles, the agencies propose to add lookup values for vehicles in lower weight classes. We believe it is appropriate to also recognize the weight reduction associated with 6x2 axles. 324 Components available for vocational vehicle manufacturers to select for weight reduction are shown below in Table V
- 29 , below. We are also proposing to assign a fixed weight increase to natural gas fueled vehicles to reflect the weight increase of natural gas fuel tanks versus gasoline or diesel tanks. These ar e shown as negative values in Table V
- 29 to indicate that GEM would internally compute these values in an inverse manner as would be computed for a weight reduction, for which the GEM input is a positive numerical value. We welcome comments on all aspects of weight reduction approaches and potential weight increases as a b yproduct of technology application
.

324 See NACFE Confidence Findings on the Potential of 6x2 Axles, Note 152 above
.Page 381 of 850 **Table V**  **- 29**  **Proposed Phase 2 Weight Reduction Technologies for Vocational Vehic les**  COMPONENT MATERIAL V OCATIONAL VEHICLE CLASS Class 2b
- 5 Class 6
- 7 Class 8 Axle Hubs
- Non
- Drive Aluminum 40 40 Axle Hubs
- Non
- Drive High Strength Steel 5 5 Axle
- Non
- Drive Aluminum 60 60 Axle
- Non
- Drive High Strength Steel 15 15 Brake Drums
- Non
- Drive Aluminum 60 60 Brake Drums
- Non
- Drive High Strength Steel 8 8 Axle Hubs
- Drive Aluminum 40 80 Axle Hubs
- Drive High Strength Steel 10 20 Brake Drums
- Drive Aluminum 70 140 Brake Drums
- Drive High Strength Steel 5.5 11 Clutch Housing Aluminum 34 40 Clutch Housing High Strength Steel 9 10 Suspension Brackets, Hangers Aluminum 67 100 Suspension Brackets, Hangers High Strength Steel 20 30 Transmission Case Aluminum 45 50 Transmission Case High Strength Steel 11 12 Crossmember

– Cab Aluminum 10 14 15 Crossmember

– Cab High Strength Steel 2 4 5 Crossmember
- Non
Suspension Aluminum 15 18 21 Crossmember
- Non
Suspension High Strength Steel 5 6 7 Crossmember
- Suspension Aluminum 15 20 25 Crossmember
- Suspension High Strength Steel 4 5 6 Driveshaft Aluminum 12 40 50 Driveshaft High Strength Steel 5 10 12 Frame Rails Aluminum 120 300 440 Frame Rails High Strength Steel 24 40 87 Wheels
- Dual Aluminum 126 126 210 Wheels
- Dual High Strength Steel 48 48 8 0 Wheels
- Dual Lightweight Aluminum 180 180 30 0 Wheels
- Wide Base Single Aluminum 278 278 556 Wheels
- Wide Base Single High Strength Steel 168 168 336Page 382 of 850

Wheels
- Wide Base Single Lightweight Aluminum 294 294 588 P ermanent 6x2 Axle Configuration Multi N/A N/A 300 CI Liquified Natural Gas Vocational Vehicle Multi

- 600 325 , 326 SI Compressed Natural Gas Vocational Vehicle Multi
- 525 CI Compressed Natural Gas Vocational Vehicle Multi
- 900 (b ) Test Procedures Powertrain families are defined in Section II.C.3.b, and powertrain test procedures are discussed in the draft RIA Chapter 3. The agencies propose that the results from testing a powertrain configuration using the matrix of tests described in draft RIA Chapter 3.6 could be applied broa dl y across all vocational vehicles in which that powertrain would be installed. As in Phase 1, the rolling resistance of each tire would be measured using the I SO 28850 test method for drive tires and steer tires planned for fitment to the vehicle being certified. Once the test CRR values are obtained, a manufacturer would input the CRR values for the drive and steer tires separately

into the GEM. For vocational vehicles in Phase 2, the agencies propose that the vehicle load would be distributed with 3 0 percent of the load over the steer tires and 70 percent of the load over the drive tires. With these data entered, the amount of GHG reduction attributed to tire rolling resistance would be incorporated into the overall vehicle compliance value. (c) Useful Life and In

- Use Standards Section 202(a)(1) of the CAA specifies that emission standards are to be applicable for the useful life of the vehicle. The standards that EPA is proposing would apply to individual vehicles and engines at production and in use . NHTSA is not proposing in
- use standards for vehicles and engines. Manufacturers may

be required to submit, as part of the application for certification, an engineering anal ys is showing that emission control performance will not deteriorate duri ng the useful life, with proper maintenance. If maintenance will be required to prevent or minimize deterioration, a demonstration may be required that this maintenance will be performed in use. (See 40 CFR 1037.241).

325 See National Energy Policy Institute (2012), Note 199 above. 326 See Westport presentation (2013), Note 200 , above.Page 383 of 850

EPA is proposing to continue the Phas e 1 approach to adjustment factors and deterioration factors. The technologies on which the Phase 1 vocational vehicle standards were predicated were not expected to have any deterioration of GHG effectiveness in use. However, the regulations provided a process for manufacturers to develop deterioration factors (DF) if they needed. We anticipate that some hy brid powertrain sy stems may experience some deterioration of effectiveness with age of the energy storage device. We believe the regulations in place currentl y provide adequate instructions to manufacturers for developing DF where needed. We request comment on whether an y changes to the DF process are needed. As with engine certification, a manufacturer must provide evidence of compliance through the regulatory

useful life of the vehicle. Factors influencing vehicle
- level GHG performance over the life of the vehicle fall into two basic categories: vehicle attributes and maintenance items. Each category merits different treatment from the perspective of assessing useful life compliance, as each has varying degrees of manufacturer versus owner/operator responsibility
. For vocational vehicles, attributes generally refers to components that are installed by the manufacturer to meet the standard, whose red uction properties are assessed at the time of certification, and which are expected to last the full life of the vehicle with effectiveness maintained as new for the life of the vehicle with no special maintenance requirements. To assess useful life compl iance, we are proposing to follow a design
- based approach that would ensure that the manufacturer has robustly designed these features so they can reasonabl y be expected to last the useful life of the vehicle. For vocational vehicles, maintenance items gen erally refers to items that are replaced, renewed, cleaned, inspected, or otherwise addressed in the preventative maintenance schedule specified b y the vehicle manufacturer. Replacement items that have a direct influence on GHG emissions are primaril y tir es and lubricants, but may also include hy

brid s ystem batteries. Sy nthetic engine oil may

be used by

vehicle manufacturers to reduce the GHG emissions of their vehicles. Manufacturers may specify that these fluids be changed throughout the useful life of the vehicle. If this is the case, the manufacturer should have a reasonable basis that the owner/operator will use fluids having the same properties. This may be accomplished by requiring (in service documentation, labeling, etc.) that only these fluids c an be used as replacements. In this proposal, the only maintenance costs we have quantified are those for tire replacement, as described in Section IX.C.3 and the draft RIA Chapter 7.1. The agencies invite comments with information related to maintenance costs that the agencies should quantify for the final rules. For current non
- hy

brid technologies, i f the vehicle remains in its original certified condition throughout its useful life, it is not believed that GHG emissions would increase as a result of se rvice accumulation. As in Phase 1, the agencies propose allowing the use of an assigned deterioration factor of zero where appropriate in Phase 2 ; however this does not negate the responsibility

of the manufacturer to ensure compliance with the e mission standards throughout the useful life. The vehicle manufacturer would be primaril y responsible for providing engineering analy sis demonstrating that vehicle attributes will last for the full useful life of the vehicle. We anticipate this demonstration would show that components arePage 384 of 850

constructed of sufficiently robust materials and design practices so as not to become dy sfunctional under normal operating conditions. In Phase 1, EPA set the useful life for engines and vehicles with respect to GHG emis sions equal to the respective useful life periods for criteria pollutants. InApril 2014, as part of the Tier 3 light
- dut y vehicle final rule, EPA extended the regulatory useful life period for criteria pollutants to 150,000 miles or 15 years, whichever c omes first, for Class 2b and 3 pickup trucks and vans and some light
- dut y trucks (79 FR 23414, April 28, 2014). Class 2 through Class 5 heav y - dut y vehicles subject to the GHG standards described in this section for vocational applications generally

use th e same kinds of engines, transmissions, and emission controls as the Class 2b and 3 vehicles that are chassis
- certified to the criteria standards under 40 CFR part 86, subpart S. EPA is therefore proposing that the Phase 2 GHG standards for vocational veh icles at or below 19,500 pounds GVWR apply over the same useful life of 150,000 miles or 15 years. In many cases, this will result in aligned useful
- life values for criteria and GHG standards. Where this longer useful life is not aligned with the useful life that applies for criteria standards (generally in the case of engine
- based certification under 40 CFR part 86, subpart A), EPA may revisit the useful
- life values for both criteria and GHG standards in a future rulemaking. For medium heav y - dut y vehicl es (19,500 to 33,000 pounds GVWR) and heav y heav y - dut y vehicles (above 33,000 pounds GVWR) EPA is proposing to keep the useful
- life values from Phase 1, which are 185,000 miles (or 10 years) and 435,000 miles (or 10 years), respectivel y. EPA requests comm ent on this approach, including the proposed values and the overall process envisioned for achieving the long
- term goal of adopting harmonized useful
- life specifications for criteria and GHG standards that properl y represent the manufacturers’ obligation t o meet emission standards over the expected service life of the vehicles. EPA may also revisit the useful
- life values that apply for medium heav y - duty

vehicles and heavy

heavy
- duty

vehicles. One technology

option for vocational vehicle manufacturers to re duce GHG emissions is to use a smaller engine, perhaps in conjunction with a hy brid powertrain. This could lead to a situation where the engine and the vehicle are subject to emission standards over different useful
life periods. For example, an urban bu s (heavy heavy
- duty

vehicle), might be able to use a medium heav y - dut y engine, or even a light heav y - duty engine. While such a mismatch in useful life values could be confusing, we don’t believe it poses any particular policy problem that we need to addre ss. EPA requests comment on the possibility of mismatched engine and vehicle useful
- life values and on any possible implications this may have for manufacturers’ ability to design, certify , produce, and sell their engines and vehicles. While NHTSA would u se useful life considerations as described above for establishing fuel consumption performance for initial compliance and for ABT, NHTSA does not intend to implement an in
- use compliance program for fuel consumption, because it is not required under EI SA and because it is not currentl y anticipated there would be notable deterioration of fuel consumption over the engines’ useful life. (d ) **Assigning Vehicles to Test Cycles**  The agencies propose the following logic for deciding which chassis configurations would be assigned to each of the three proposed vocational duty cycles and thus regulatory subcategories:Page 385 of 850

 A vehicle would be certified over the Multipurpose Duty C ycl e, unless one of the following conditions warrants certifyi ng over either the Regional or Urban cycle.  If the vehicle is powered by a CI engine, u se the Regional Duty C ycl e if the resulting value from the calculation described in Equation V
- 1 is less than 75 percent.  If the vehicle is powered by a SI engine, u se the Regional Duty C ycl e if the resulting value from the calculation described in Equation V
- 1 is less than 45 percent. **Equation V**  **- 1**  **Proposed Regional Duty Cycle Cutpoint**

= 65 h ∗ 100 Where CutpointRegional is the p ercent of maximum engine test speed that is achieved at a vehicle speed of 65 mph , SLR is the static loaded tire radius entered into GEM as specified in the regulations, Axle ratio is the drive axle ratio that entered into GEM as specified in the regulations, Trans ratio is the ratio of the top transmission gear that is not permanently locked out, f ntest is the maximum engine test speed as defined at 40 CFR 1065.610, and C is a constant equal to 5280 12 . 0254 60 h 2

 If a vehicle is powered by a CI engine, use the Urban Duty C ycl e if the resulting value from the calculation described in Equation V
- 2 is greate r than 90 percent.  If a vehicle is powered by a SI engine, use the Urban Duty C ycl e if the resulting value from the calculation described in Equation V
- 2 is greater th an 50 percent.

**Equation V**  **- 2**  **Proposed Urban Duty Cycle Cutpoint**

= 55 h ∗ 100 Where CutpointUrban is the p ercent of maximum engine test speed that is achieved at a vehicle speed of 5 5 mph ,Page 386 of 850

SLR is the static loaded tire radius entered into GEM as specified in the regulations, Axle ratio is the drive axle ratio that is entered into GEM as specified in the regulations, Trans ratio is the ratio of the top transmission gear that is not permanently locked out, f ntest is the maximum engine test speed as defined at 40 CFR 1065.610, and C is a constant equal to 5280 12 . 0254 60 h 2 Th e agencies ran GEM with many vocational vehicle configurations to develop a data set with which we could assess appropriate cutpoints for the above equations. The configurations varied primaril y b y the engine model, fuel type, and axle ratio. See the dra ft RIA Chapter 2.9.2 for further details on the assessment process for these proposed cutpoints. The agencies realize that there are vocational vehicles for which the above logic may not result in an appropriate assignment of test cycle. Therefore we are proposing an exception that would enable an y vehicle with a hy brid drivetrain to certify

over the Urban test cycle. Further, we are proposing that the following vehicles must be certified using the Regional cycle: intercity coach buses, recreational vehic les, and vehicles whose engine is exclusively certified over the SET. We are also proposing to allow manufacturers to request a different duty cycle. We request comment on this approach, and whether we should allow manufacturers to have complete freedom to select a test cycle without any need for EPA or NHTSA approval. **(2) Other**  **Compliance Provisions** (a ) Emission Control Labels The agencies consider it crucial that authorized compliance inspectors are able to identify whether a vehicle is cert ified, and if so whether it is in its certified condition. To facilitate this identification in Phase 1, EPA adopted labeling provisions for vocational vehicles that included several items. The Phase 1 vocational vehicle label must include the manufac turer, vehicle identifier such as the Vehicle Identification Number, vehicle family , regulatory subcategory , date of manufacture, compliance statements, and emission control sy stem identifiers (see 40 CFR 1037.135). In Phase 1, the vocational vehicle emis sion control sy stem identifier is tire rolling resistance, plus an y innovative and advanced technologies. The number of proposed emission control sy stems for greenhouse gas emissions in Phase 2 has increased significantly . For example, the engine, trans mission, axle configuration, tire radius, and idle reduction sy stem are control s ys tems that can be evaluated on
- cycle in Phase 2 (i.e. these technologies’ performance can now be input to GEM), but could not be evaluated in Phase 1 . Due to the complexity in determining greenhouse gas emissions as proposed in Phase 2, the agencies do not believe that we can unambiguously determine whether or not a vehicle is in a certified condition through simpl y comparing inf ormation that could be made available onPage 387 of 850

an emission control label with the components installed on a vehicle. Therefore, EPA proposes to remove the requirement to include the emission control sy stem identifiers required in 40 CFR 1037.135(b)(6) and in Ap pendix III to 40 CFR part 1037 from the emission control labels for vocational vehicles certified to the primary Phase 2 standards. However, the agencies may finalize requirements to maintain some label content to facilitate a limited visual inspection of key vehicle parameters that can be readil y observed. Such requirements may be very similar to the labeling requirement s from the Phase 1 rulemaking, though we would want to more carefull y consider the list of technologies that would allow for the most effective inspection. We request comment on an appropriate list of candidate technologies that would properly balance the need to limit label content with the interest in providing the most useful information for inspectors to confirm that vehicles have been properl y built. EPA is not proposing to modify the existing emission control labels for vocational vehicles certified to the Phase 1 CO 2 standards. Under the agencies’ existing authorities, manufacturers must provide detailed build information for a specific vehicle upon our request . Our expectation is that this information should be available to us via e
- mail or other similar electronic communication on a same
- day basis, or within 24 hours of a request at most. We request comment on an y practical limitations in promptly

providing this information . We also request comment on approaches that would minimize burden for manufacturers to respond to requests for vehicle build information and would expedite an authorized compliance inspector’s visual inspection. For example, the agencies have started to explore ideas that would provide inspectors with an electronic method to identify vehicles and access on
- line databases that would list all of the engine
- specific and vehicle
- specific emissions control sy stem information. We believe that e lectronic and Internet technology

exists today

for using scan tools to read a bar code or radio frequency identification tag affixed to a vehicle that would then lead to secure on
- line access to a database of manufacturers’ detailed vehicle and engine buil d information. Our exploratory work on these ideas has raised questions about the level of effort that would be required to develop, implement and maintain an information technology s ys tem to provide inspectors real
- time access to this information. We have also considered questions about privacy and data security . We request comment on the concept of electronic labels and database access, including any available information on similar systems that exist today and on burden estimates and approaches that c ould address concerns about privacy and data security . Based on new information that we receive, we may

consider initiating a separate rulemaking effort to propose and request comment on implementing such an approach. (b ) End of Year Reports In the Phase 1 p rogram, manufacturers participating in the ABT program provided 90 day and 270 day

reports to EPA and NHTSA after the end of the model ye ar. The agencies adopted two reports for the initial program to help manufacturers become familiar with the reporting process. For the HD Phase 2 program, the agencies propose to simplify reporting such that manufacturers would only be required to submit one end of the year report 120 day s after the end of the model year with the potential to obtain approval for a delay up to 30 day s. We welcome comment on this proposed revision.Page 388 of 850

(c) Delegated Assembly The proposed standards for vocational vehicles are based on the application of a wide range of technologies. Certifying v ehicle manufacturers manage their compliance demonstration to reflect this range of technologies b y describing their certified configurations in the application for certification. In many cases, these technologies are designed and assembled (or installed) directly by the certifying vehicle manufacturer , wh ich is ty picall y the chassis manufacturer . In these cases, it is straightforward to assign the responsibility to the certifying vehicle manufacturer for ensuring that vehicles are in their proper certified configuration when sold to the ultimate user. In Phase 1, the only vehicle technology

available for certified vocational vehicles was LRR tires. Because these are generally installed by

the chassis manufacturer, there would have been no need to rely on a second stage manufacturer for purposes of certif ication. In Phase 2, the agencies are considering certain technologies where the certifying vehicle manufacturer may

want or need to rely

on a downstream manufacturing company (a secondary vehicle manufacturer) to take steps to assemble or install certain components or technologies to bring the vehicle into a certified configuration. A similar relationship between manufacturers applies with aftertreatment devices for certified engines. EPA has adopted “delegated assembl y” provisions for engines at 40 CFR 1068.261 to describe how manufacturers can share compliance responsibilities through these cooperative assembly procedures. We are proposing to take a similar approach for vehicle
- based GHG standards in 40 CFR part 1037. The delegated assembly provisio ns as proposed for GHG standards are focused on add
- on features to reduce aerodynamic drag, and on air conditioning s ys tems. This may occur, for example, if the certifyingmanufacturer sells a cab
- complete chassis to a secondary vehicle manufacturer, whic h in turn installs a box with the appropriate aerody namic accessories to reduce drag losses. To the extent certifying manufacturers rel y on secondary vehicle manufacturers to bring the vehicle into a certified configuration, the following provisions would apply :
 The certifying manufacturer would describe their approach to delegated assembly

in the application for certification.  The certifying manufacturer would create installation instructions to describe how the secondary

vehicle manufacturer would bring the vehicle into a certified configuration.  The certifying manufacturer would have a contractual agreement with each affected secondary

vehicle manufacturer obligating the secondary vehicle manufacturer to build each vehicle into a certified configuration and to provide affidavits confirming proper assembl y procedures, and to provide information regarding deploy

ment of each type of technology (if there are technology options that relate to different GEM input values). The delegated assembl y provisions are most relevant to vocational vehicles, but we are not proposing to limit these provisions to vocational vehicles. Similarly , we expect that aerodynamic devices and air conditioning s ys tems are the most likel y technologies for which delegated assembly

is appropriate, but we are not proposing to limit the use of delegated assembly to these technologies.Page 389 of 850

Secondary

manufacturers (such as body builders) that build complete vehicles from certified chassis are obligated to comply with the emission
- related installation instructions provided b y the certifying m anufacturer. Secondary manufacturers that build complete vehicles from exempted chassis are obligated to comply with all of the regulations. The draft regulations at §1037.621 describe further detailed provisions related to delegated assembly . We request comment on all aspects of these provisions. In particular, we request comment on how the procedures should be applied more broadly or more narrowl y for specific technologies. We also request comment on any further modifications that should be made to th e delegated assembly provisions to reflect the nature of manufacturing relationships or technologies that are specific to greenhouse gas standards for heav y - dut y highway vehicles. (d ) Demonstrating Compliance with Proposed HFC Leakage Standards EPA is proposin g requirements for vocational chassis manufacturers to demonstrate reductions in direct emissions of HFC in their A/C sy stems and components through a design
based method. The method for calculating A/C leakage is the same as was adopted in Phase 1 for tractors and HD pickups and vans. It is based closely on an industry
- consensus leakage scoring method, described below. This leakage scoring method is correlated to experime ntally
measured leakage rates from a number of vehicles using the different available A/C components. As is done currently

for other HD vehicles, vocational chassis manufacturers would choose from a menu of A/C equipment and components used in their vehic les in order to establish leakage scores, to characterize their A/C sy stem leakage performance. The percent leakage per year would then be calculated as this score divided b y the sy stem refrigerant capacity
. Consistent with the light
- duty rule and the P hase 1 program for other HD vehicles, EPA is proposing a requirement that vocational chassis manufacturers compare the components of a vehicle’s A/C s ys tem with a set of leakage
- reduction technologies and actions that is based closely on that developed through the Improved Mobile Air Conditioning program and SAE International (as SAE Surface Vehicle Standard J2727, “HFC
- 134a, Mobile Air Conditioning Sy stem Refrigerant Emission Chart,” August 2008 version). See generall y 75 FR 25426. The SAE J2727 approa ch was developed from laboratory testing of a variety

of A/C related components, and EPA believes that the J2727 leakage scoring s ys tem generally represents a reasonable correlation with average real
- world leakage in new vehicles. This approach associate s each component with a specific leakage rate in grams per year that is identical to the values in J2727 and then sums together the component leakage values to develop the total A/C sy stem leakage. Unlike the light
- dut y program, in the heav y - dut y vehicle program, the total A/C leakage score is divided by the value of the total refrigerant s ys tem capacity to develop a percent leakage per ye ar. EPA believes that the design
- based approach results in estimates of likely leakage emissions reductions that are c omparable to those that would result from performance
based testing. Consistent with HD GHG Phase 1, EPA is not proposing a specific in
- use standard for leakage, as neither test procedures nor facilities exist to measure refrigerant leakage from a vehicle’ s air conditioning sy stem. However, consistent with the HD Phase 1 program and the light
- duty rule, where we propose to require that manufacturers attest to the durability of components and s ys tems used to meet the CO 2 standards (see 75 FR 25689), we prop ose toPage 390 of 850

require that manufacturers of heav y - dut y vocational vehicles attest to the durability of these sy stems, and provide an engineering anal ys is that demonstrates component and sy stem durability
. (e) Glider Vehicles EPA is proposing to not exempt glider vehi cles from the Phase 2 GHG emission and fuel consumption standards. 327 Gliders and glider kits are exempt from NHTSA’s Phase 1 fuel consumption standards. EPA’s interim provisions of Phase 1 exempted glider vehicles produced by small businesses from th e Phase 1 CO 2 emission standards but did not include such a blanket exemption for other glider vehicles. 328 Thus, some glider vehicles are already subject to the requirement to obtain a vehicle certificate prior to introduction into commerce as a new vehicl e . However, the agencies believe glider manufacturers may not understand how these regulations apply to them, resulting in a number of uncertified vehicles
. EPA is concerned about adverse economic impacts on small businesses that assemble glider kits and glider vehicles. Therefore, EPA is proposing a new provision that would grandfather existing small businesses, but cap annual production based on recent sales. This approach is consistent with the approach recommended by the Small Business Advocacy Revie w Panel, which believed there should be an allowance to produce some glider vehicles for legitimate purposes. EPA requests comment on whether an y special provisions would be needed to accommodate glider vehicles. See Section XIV. B for additional discu ssion of the proposed requirements for glider vehicles. Similarly , NHTSA is considering including gliders under its Phase 2 program. The agencies request comment on their respective considerations
. We believe that the agencies potentially

having different policies for glider kits and glider vehicles under the Phase 2 program would not result in problematic disharm ony between the NHTSA and EPA programs, because of the small number of vehicles that would be involved. EPA believes that its proposed changes would result in the glider market returning to the pre
- 2007 levels, in which fewer than 1,000 glider vehicles w ould be produced in most years. Given that a large fraction of these vehicles would be exempted from EPA regulations because they would be produced by

qualifying small businesses, they

would thus, in practice, be treated the same under EPA and NHTSA regu lations. Only

non - exempt glider vehicles would be subject to different requirements under the NHTSA and EPA regulations. However, we believe that this is unlikely to exceed a few hundred vehicles in an y ye ar, which would be few enough not to result in any meaningful disharmony

between the two agencies.

327 Glider vehicles are new vehicles produced to accept rebuilt engines (or other used engines) along with used axles and/or transmissions. The common term “glider kit” is used here primarily to refer to an assemblage of parts into which the used/r ebuilt engine is installed. 328 Rebuilt engines used in glider vehicles are subject to EPA criteria pollutant emission standards applicable for the mo del year of the engine. See 40 CFR 86.004
- 40 for requirements that apply for engine rebuilding. Under exis ting regulations, engines that remain in their certified configuration after rebuilding may continue to be used.Page 391 of 850

With regard to NHTSA’s safety authority over gliders, the agency notes that it has become increasingl y aware of potential noncompliance with its regulations applicable to gliders. NHTSA has learned of manufacturers who are creating glider vehicles that are new vehicles under 49 CFR 571.7(e) ; however, the manufacturers are not certifyingthem and obtaining a new VIN as required. NHTSA plans to pursue enforcement actions as applicable against noncompliant manufacturers. In addition to enforcement actions, NHTSA may consider amending 49 CFR 571.7(e) and related regulations as necessary in the future. NHTSA believes manufacturers may

not be using this regulation as originall y intended. **(3) Proposed Complia**  **nce Flexibility Provisions** EPA and NHTSA are proposing three flexibility provisions specifically

for vocational vehicle manu facturers in Phase 2 . These are an averaging, banking and trading program for CO 2 emissions and fuel consumption credits, provisions for off
- cycle credits for technologies that are not included as inputs to the GEM , and optional chassis certification
. The agencies are also proposing to remove or modify several Phase 1 interim provisions, as described below. Program
- wide compliance flexibilities are discussed in Section I .B.3 to I.C.1. (a ) Averaging, Banking, and Trading (ABT) Program Averaging, banking, and trading of emission credits have been an important part of many EPA mobile source programs under CAA Title II. ABT provisio ns provide manufacturers flexibilities that assist in the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more aggressive pace than without ABT. NHTSA and EPA propose to carry - over the Phase 1 ABT provisions for vocational vehicles into Phase 2, as it is an important way to achieve each agency ’s programmatic goals. ABT is also discussed in Section Iand Section III. F.1. Consistent with the Phase 1 averaging sets, the agencies propo se that chassis manufacturers may

average SI
- powered vocational vehicle chassis with CI
- powered vocational vehicle chassis, within the same vehicle weight class group. In Phase 1, all vocational and tractor chassis within a vehicle weight class group were able to average with each other, regardless of whether they were powered b y a CI or SIengine. The proposed Phase 2 approach would continue this. The only difference is that in Phase 2, there would be different numerical standards set for the SI
- powered and CI
- powered vehicles, but that would not need to alter the basis for averaging. This is consistent with the Phase 1 approach where, for example, Class 8 day cab tractors, Class 8 sleeper cab tractors and Class 8 vocational vehicles each have different numerical standards, while they all belong to the same averaging set. As discussed in V. E. (1) (c) , EPA is proposing to change the useful life for LH D vocationa l vehicles for GHG emissions from the current 1 0 ye ars/ 1 1 0 ,000 miles to 15 ye ars/150,000 miles to be consistent with the useful life of criteria po llutants recentl y updated in EPA’s Tier 3 rule. For the same reasons, EPA is also proposing a useful life adjustment for HD pickups and vans, as described in Section VI.E.(1). According to the credits calculation formula at 40 CFR 1037.705 and 49 CFR 535.7, useful life in miles is a multiplicative factor included in the calculation of CO 2 and fue l consumption credits. In order to ensure that banked credits would maintain their value in the transition from Phase 1 to Phase 2, NHTSA and EPA proposePage 392 of 850

an interim vocational vehicle adjustment factor of 1. 36 for credits that are carried forward from P hase 1 to the MY 2021 and later Phase 2 standards. 329 Without this adjustment factor the proposed change in useful life would effectivel y result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the change in the useful life. The agencies do not believe that this proposed adjustment would result in a loss of program benefits because there is little or no deterioration anticipated for CO 2 emissions and fuel consumption over the life of the vehicles. Also, the carry
- forward of credits is an integral part of the program, helping to smoothing the transition to the new Phase 2 standards. The agencies believe that effectivel y discounting carry
- forward credits from Phase 1 to Phase 2 would be unnecessary and could negativel y impact the feasibility of the proposed Phase 2 standards. EPA and NHTSA request comment on all aspects of the averaging, banking, and trading program. (b ) Innovative and Off

- Cycle Technology Credits In Phase 1, the agencies adopted an emi ssions and fuel consumption credit generating opportunity

that applied to innovative technologies that reduce fuel consumption and CO 2 emissions
. These technologies were required to not be in common use with heav y - dut y vehicles before the 2010MY and not r eflected in the GEM simulation tool ( i.e. , the benefits are “off
cycle”). See 76 FR at 57253. The agencies propose to largel y continue the Phase 1 innovative technology

program but to redesignate it as an off
- cycle program for Phase 2
. T he agencies propose to maintain that, i n order for a manufacturer t o receive credits for Phase 2, the off
- cycle technology would still need to meet the requirement that it was not in common use prior to MY 2010
. The agencies recognize that there are emerging technolog ies today that are being developed, but would not be accounted for in the GEM tool, and therefore would be considered off
- cycle . These technologies could include s ys tems such as e lectrified accessories, air conditioning sy stem efficiency , and aerodynamics for vocational vehicles beyond those tested and pre
- approved in the HD Phase 2 program
. Such off
- cycle technologies could include known, commercialized technologies if they are not yet widely

utilized in a particular heavy
- dut y sector subcategory . An y c redits for these technologies would need to be based on real
- world fuel consumption and GHG reductions that can be measured with verifiable test methods using representative driving conditions ty pical of the engine or vehicle application. More information about off
- cycle technology

credits can be found at Section I .C.1.c. As in Phase 1, the agencies are proposing to continue to provide two paths for approval of the test procedure to measure the CO 2 emissions and fuel consumption reductions of an off
cycle technology

used in vocational vehicles . See 40 CFR 1037.610 and 49 CFR 535.7. The first path would not require a public approval process of the test method. A manufacturer c ould use “pre
- approved” test methods for HD vehicles including the A
- to - B chass is testing, powerpack testing or on
- road testing. A manufacturer may also use any

developed test procedure that has known quantifiable benefits. A test plan detailing the testing methodology

329 See 40 CFR 1037.150(s) and 49 CFR 535.7Page 393 of 850

would be required to be approved prior to collecting any t est data. The agencies are also proposing to continue the second path , which includes a public approval process of an y testing method that could have questionable benefits (i.e., an unknown usage rate for a technology). Furthermore, the agencies are proposing to modify their provisions to clarify what documentation must be submitted for approval , which would align th em with provisions in 40 CFR 86. 1869
- 12
. NHTSA is separatel y proposing to prohibit credits from technologies addressed b y an y of its crash avoidance safety rulemakings (i.e., congestion management sy stems). See also 77 FR at 62733 (discussion of similar issue in the light duty greenhouse gas/fuel econom y regulations). We welcome recommendatio ns on how to improve or streamline the off
- cycle technology

approval process
. There are some technologies that are entering the market today , and although our model does not have the capability to simulate the effectiveness over the test cycles, there are reliable estimates of effectiveness available to the agencies. These are proposed to be recognized in our HD Phase 2 certification procedures as pre
- defined technologies, and would not be considered off
- cycle. Examples of such technologies for vocationa l vehicles include 6x2 axles and axle lubricants. These default effectiveness values would be used as valid inputs to GEM. The projected effectiveness of each vocational vehicle technology is discussed in the draft RIA Chapter 2.9. The agencies propose that the approval for Phase 1 innovative technology credits (approved prior to 2021 MY) would be carried into the Phase 2 program on a limited basis for those technologies where the benefit is not accounted for in the Phase 2 test procedure. Therefore, the manufacturers would not be required to request new approval for any innovative credits carried into the off
- cycle program, but would have to demonstrate the new cycle does not account for these improvements beginning in the 2021 MY. The agencies believe this is appropriate because technologies, such as those related to the transmission or driveline, may no longer be “off

- cycle” because of the addition of these technologies into the Phase 2 version of GEM. The agencies also seek comments on whether off
- cyc le technologies in the Phase 2 program should be limited by infrequent common use and by what model years, if an y . We also seek comments on an appropriate penetration rate for a technology not to be considered in common use. (c) Optional Chassis Certification In Phase 2, the agencies are proposing to continue the Phase 1 provisions allowing the optional chassis certification of vehicles over 14,000 pounds GVWR. In Phase 1 the agencies allowed manufacturers the option to choose to comply with heav y - dut y pickup or van standards, for incomplete vehicles that were identical to those on complete pickup truck or van counterparts, with respect to most components that affect GHG emissions and fuel consumption, such as engines, cabs, frames, transmissions, axles, and wheels. The incomplete vehicles would ty picall y be produced as cab
- complete vehicles. For example, a manufacturer could certify under this allowance an incomplete pickup truck that includes the cab, but not the bed. ThePage 394 of 850

Phase 1 program also includes prov isions that allow manufacturers to include some Class 4 and Class 5 vehicles in averaging sets subject to the chassis
- based HD pickup and van standards, rather than the vocational vehicle program. 330 This optional chassis certification of vehicles over 14,00 0 pounds applie s for greenhouse gas emission standards in Phase 1, but not for criteria pollutant emission standards. We revisited this issue in the recent Tier 3 final rule, where we revised the regulation to allow this same flexibility relative to exhau st emission standards for criteria pollutants. However, EPA is now seeking comment on the proper approach for certifying vehicles above 14,000 lbs GVWR, because there are lingering questions about how best to align the certification processes for GHG emis sions and for criteria pollutants. The agencies are requesting comment on several issues on this topic, including whether there should be an upper weight limit to this allowance. See Section XIV .A. 2 for the issues on which the agencies seek comment with respect to chassis and engine certification for GHG and criteria pollutants for vehicles opting into the HD pickup and van program. (d ) Phase 1 Flexibilities Not Proposed for Phase 2 As described above in Section I , the agencies are not proposing to provide advanced technology

credits in Phase 2. These technologies had been defined in Phase 1 as hy brid powertrains, R ankine cycle engines, all
- electric vehicles, and fuel cell vehicles (see 40 CFR 1037.150(i )), at a 1.5 credit value with the purpose to promote the earl y implementation of advanced technologies that were not expected to be widel y adopted in the market in the 2014 to 2018 time frame. Our feasibility assessment for the proposed Phase 2 vocationa l vehicle standards includes a projection of the use of h yb rid powertrains as described earlier in this section ; therefore the agencies believe it would no longer be appropriate to provide extra credit for this technology . As noted above, waste heat recov ery is not projected to be utilized for vocational vehicles within the time frame of Phase 2. While the agencies are not proposing to premise the Phase 2 vocational vehicle standards on fuel cells or electric vehicles, we expect that any vehicle certified with this technology would provide such a large credit to a manufacturer that an additional incentive credit would not be necessary . We welcome comments on the need for such incentives, including information on wh y an incentive for specific technologies in this time frame may

be warranted, recognizing that the incentive would result in reduc ed benefits in terms of CO 2 emissions and fuel use due to the Phase 2 program. T he agencies are not proposing to extend earl y credits to manufacturers who comply earl y with Phase 2 standards, because the ABT program from Phase 1 will be available to manufacturers and this displaces the need for earl y credits (see 40 CFR 1037.150(a)). Please see the more complete discussion of this above in Section I
. Another Phase 1 interim flexibility that the agencies are not proposing to continue in Phase 2 is the flexibility

known as the “loose engine” provision, whereb y SIengines sold to

330 See 76 FR 57259
- 57260, September 15, 2011 and 78 FR 36374, June 17, 2013Page 395 of 850

chassis manufacturers and intended for use in vocational vehicles need not me et the separate S I engine standard ( see preamble Section II and draft RIA Chapter 2.6) , and instead may be averag ed with the manufacturer’s HD pickup and van fleet . We believe the benefits this particular flexibility

offers for manufacturers in the interim between Phas e 1 and Phase 2 would diminish considerably

in Phase 2. The agencies are proposing a Phase 2 SI engine standard that is no more stringent than the MY 2016 SIengine standard adopted in Phase 1, while the proposed Phase 2 standards for the HD pickup and van fleet would be progressively more stringent through MY 2027. The primary certification path designed in the Phase 1 program for both CIand SI engin es sold separatel y and intended for use in vocational vehicles was that they be engine certified while th e vehicle would be GEM certified under the GHG rules. In Phase 2 the agencies propose to continue this as the certification path for such engines intended for vocational vehicles. See the draft RIA Chapter 2.6 for further discussion of the separate engin e standard for SI engines intended for vocational vehicles. (e) Other Phase 1 Interim Provisions In HD Phase 1, EPA adopted provisions to delay the onboard diagnostics (OBD) requirements for heav y - duty hy brid powertrains (see 40 CFR 86.010
- 18(q ) ). This provi sion delayed full OBD requirements for hy brids until MY 2016 and MY 2017. Indiscussion with manufacturers during the development of Phase 2, the agencies have learned that meeting the on
board diagnostic requirements for criteria pollutant engine certification continues to be a potential impediment to adoption of hy brid sy stems. See Section XIII.A.1 for a di scussion of regulatory

changes proposed to reduce the non
- GHG certification burden for engines paired with hy brid powertrain sy stems. Also in Phase 1, EPA adopted provisions that reinforced the fact that we were setting GHG emissions from the tailpipe of heav y - dut y vehicles. Therefore, we treated all electric vehicles as having zero emissions of CO 2 , CH 4 , and N 2 O (see 40 CFR 1037.150(f)). Similarly , NHTSA adopted regulations in Phase 1 that set the fuel consumption standards based on the fuel consumed b y the vehicle. The agencies also did not require emission testing for electric vehicles in Phase 1. The agencies considered the potential unintended consequence of ignoring upstream emissions from the charging of heav y - dut y battery
- electric vehicles. In our assessment, we have observed that the few all
- electric heav y - dut y vocational vehicles that have been certified are being produced in very

small volumes in MY2014. As we look to the future, we project very limited adoption of electric vocational vehicl es into the market; therefore, we believe that this provision is still appropriate. Unlike the MY2012
- 2016 light
- dut y rule, which adopted a cap whereb y upstream emissions would be counted after a certain volume of sales (see 75 FR 25434
- 25436), we believe there is no need to propose a cap for vocational vehicles because of the infrequent projected use of EV technologies in the Phase 2 timeframe. In Phase 2, we propose to continue to deem electric vehicles as having zero CO 2 , CH 4 , and N2 O emissions as well as zero fuel consumption. We welcome comments on this approach.Page 396 of 850



## VI. **Heavy -**  **duty Pickups and Va**  **ns A.**  **Introduction and Summary of Phase 1 HD Pickup and Van Standards** In the Phase 1 rule, EPA and NHTSA established GHG and fuel consumption standards and a program structure for complete Class 2b and 3 heav y - dut y vehicles (referred to in these rules as “HD pickups and vans”), as described below. The Phase 1 standards began to be phased
- in in MY 2014 and the agencies believe the program is working well. The agencies are proposing to retain most elements from the structure of the program established in the Phase 1 rule for the Phase 2 program while proposing more stringent Phase 2 standards for MY 2027, phased in over MYs 2021
- 2027, that would require additional GHG reductions and fuel consumption improvements. The MY 2027 standards would remain in place unless and until amended b y the agencies. Heav y - dut y vehicles with GVW R between 8,501 and 10,000 lb are classified in the industry as Class 2b motor vehicles. Class 2b includes vehicles classified as medium
- duty passenger vehicles (MDPVs) such as very large SUVs. Because MDPVs are frequentl y used like li ght
- duty

passenger vehicles, they

are regulated by

the agencies under the light
- dut y vehicle rules. Thus the agencies did not adopt additional requirements for MDPVs in the Phase 1 rule and are not proposing additional requirements for MDPVs in this rulemaking. Heav y - dut y vehicles with GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles. Class 2b and Class 3 heavy
- dut y vehicles together emit about 15 percent of today’s GHG emissions from the heavy
- dut y 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 vehicles, with no secondary

manufacturer making substantial modifications prior to registration and use. Most of these vehicles are produced b y companies with major light
- dut y markets in the United States, primarily

Ford, General Motors, and Chry sler. Often, the technologies available to reduce fuel consumption and GHG emissions from this segment are similar to the technologies used for the same purpose on light
- dut y pickup trucks and vans, including both engine efficiency improvements (for gasoline and diesel engines) and vehicle efficiency improvements. In the Phase 1 rule EPA adopted GHG standards for HD pickup s and vans based on the whole vehicle (including the engine), expressed as grams of CO 2 per mile, consistent with the way these vehicles are regulated b y EPA today for criteria pollutants. NHTSA adopted corresponding gallons per 100 mile fuel consumption standards that are likewise based on the whole vehicle. This complete vehicle approach adopted by both agencies for HD pickups and vans was consistent with the recommendations of the NAS Committee in its 2010 Report. EPA and NHTSA adopted a structure for the Phase 1 HD pickup and van standards that in many respects paralleled long
- standing NHTSA CAFE standards and more recent coordinated EPA GHG standards for manufacturers’ fleets of new light
- dut y vehicles. These commonalities include a new vehicle flee t average standard for each manufacturer in each model year 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 testing f or both the HD and light
- duty vehicle programs is conducted on chassis dynamometers using thePage 397 of 850

drive cycles from the EPA Federal Test Procedure (Light
- duty FTP or “city” test) and Highway Fuel Econom y Test (HFET or “highway” test). 331 For the light
- dut y GHG and fuel econom y 332 standards, the agencies factored in vehicle size by basing the emissions and fuel economy targets on vehicle footprint (the wheelbase times the average track width). 333 For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel econom y target levels in acknowledgement of their inherent tendency

to consume more fuel and emit more GHGs per mile. EI SA requires that NHTSA study

“the appropriate metric for measuring and expressing commercial medium
- and heav y - dut y vehicle and work truck fuel efficiency performance, taking into consideration, among other things, the work performed b y such on
- highway vehicles and work trucks...” 49 U.S.C. 32902 (k) (1)(B). 334 For HD pickups and vans, the agencie s also set standards based on vehicle attributes, but used a work
- based metric as the attribute rather than the footprint attribute utilized in the light
- duty

vehicle rulemaking. Work
- based measures such as payload and towing capability are key among the p arameters that characterize differences 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 HD pickup or van. EPA and NHTSA therefore finalized Pha se 1 standards for HD pickups and vans based on a “work factor” attribute that combines the vehicle’s payload and towing capabilities, with an added adjustment for 4
- wheel drive vehicles. See generally 76 FR 57161
- 62. For Phase 1, the agencies adopted provisions such that each manufacturer’s fleet average standard is 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 (mathe matical functions). The Phase 1 curves are shown in the figures below for reference and are described in detail in the Phase 1 final rule. 335 The agencies established separate curves for diesel and gasoline HD pickups and vans. The agencies are proposing to continue to use the work
- based attribute and graduall y declining standards approach for the Phase 2 standards, as discussed in Section VI.B. below. Note that this approach does not create an incentive to reduce the capabilities of these vehicles becaus e less capable vehicles are required to have proportionally

lower emissions and fuel consumption targets .

331 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 fo r certifying heavy
- duty engines (with separate cycles specified for diesel and spark
- ignition engines). 332 Light duty fuel economy standards are expressed as miles per gallon (mpg), which is inverse to the HD fuel consumption standards w hich are expressed a s gallons per 100 miles. 333 EISA requires CAFE standards for passenger cars and light trucks to be attribute
- based; See 49 U.S.C. 32902(b)(3)(A). 334 The NAS 2010 report likewise recommended standards recognizing the work function of HD vehicles. See 76 FR 57161/2. 335 The Phase 1 Final Rule provides a full discussion of the standard curves including the equations and coefficients. See 76 FR 57162
- 5716 5, September 15 2011. The standards are also provided in the regulations at 40 CFR 1037.104.Page 398 of 850

**Figure VI**  **- 1**  **EPA Phase 1 CO 2**  **Target Standards and NHTSA Fuel Consumption Target Standards for Dies el**  **HD Pickups and Vans 336** 

336 The NHTSA program provides voluntary standards for model years 2014 and 2015. Target line functions for 2016
- 2018 are for the second NHTSA alternative described in the Phase 1 preamble Section II.C (d)(ii).

300 350 400 450 500 550 600 650 700 750 800

0 1000 2000 3000 400 0 5000 6000 7000 80 00 9000 10000 **Wor k**  **Fa cto**  **r (p ou**  **nds) C** **O 2** **( g** **r a** **m s** **p e** **r m** **i l** **e )** 

2. 95 3. 95 4. 95 5. 95 6. 95**F u** **e l** **C o** **n s** **u m** **p t** **i o** **n (** **g a** **l l** **o n** **s p** **e r** **1 0** **0 m** **i l** **e s** **)**
Di es el Veh ic le s

20 18 20 17 20 15 20 14

20 16

300 350 400 450 500 550 600 650 700 750 800

0 1000 2000 3000 400 0 5000 6000 7000 80 00 9000 10000 **Wor k**  **Fa cto**  **r (p ou**  **nds) C** **O 2** **( g** **r a** **m s** **p e** **r m** **i l** **e )** 

2. 95 3. 95 4. 95 5. 95 6. 95**F u** **e l** **C o** **n s** **u m** **p t** **i o** **n (** **g a** **l l** **o n** **s p** **e r** **1 0** **0 m** **i l** **e s** **)**
Di es el Veh ic le s

20 18 20 17 20 15 20 14

20 16Page 399 of 850

**Figure VI**  **- 2**  **EPA Phase 1 CO 2**  **Target Standards and NHTSA Fuel Consumption Target Standards for Gasoline HD Pickups and Vans**  300 350 400 450 500 550 600 650 700 750 800

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 **Work Fact**  **or (**  **pou nds)** **C O** **2 (** **g r** **a m** **s p** **e r** **m i** **l e** **)**

3.3 8 4.3 8 5.3 8 6.3 8 7.3 8 8.3 8**F u** **e l** **C o** **n s** **u m** **p t** **i o** **n (** **g a** **l l** **o n** **s p** **e r** **1 0** **0 m** **i l** **e s** **)** Gas ol in e Veh ic le s

201 8 20 17 201 5 20 14

20 16

300 350 400 450 500 550 600 650 700 750 800

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 **Work Fact**  **or (**  **pou nds)** **C O** **2 (** **g r** **a m** **s p** **e r** **m i** **l e** **)**

3.3 8 4.3 8 5.3 8 6.3 8 7.3 8 8.3 8**F u** **e l** **C o** **n s** **u m** **p t** **i o** **n (** **g a** **l l** **o n** **s p** **e r** **1 0** **0 m** **i l** **e s** **)** Gas ol in e Veh ic le s

201 8 20 17 201 5 20 14

20 16Page 400 of 850

EPA phased in its CO 2 standards graduall y starting in the 2014 model ye ar, at 15
- 20
- 40
- 60
- 100 percent of the model year 2018 standards stringency level in model years 2014
- 2015
- 2016
- 2017
- 2018, respectively . The phase
- in takes the form of the set of target standard curves shown above, with increasing stringency in each model year. The final EPA Phase 1 standards for 2018 (including a separate standard to control air conditioning s ys tem leakage) represent an average per - vehicle reduction in GHGs of 17 percent for diesel vehicle s and 12 percent for gasoline vehicles, compared to a common MY 2010 baseline. EPA also finalized a compliance alternative whereb y m anufacturers can phase in different percentages: 15
- 20
- 67
- 67
- 67
- 100 percent of the model ye ar 2019 standards stringency lev el in model years 2014
- 2015
- 2016
- 2017
- 2018
- 2019, respectively . This compliance alternative parallels and is equivalent to NHTSA’s first alternative described below. NHTSA’s Phase 1 program allows manufacturers to select one of two fuel consumption standard alternatives for model years 2016 and later. The first alternative defines individual gasoline vehicle and diesel vehicle fuel consumption target curves that will not change for model ye ars 2016
- 2018, and are equivalent to EPA’s 67
- 67
- 67
- 100 percent tar get curves in model years 2016
- 2017
- 2018
- 2019, respectivel y. This option is consistent with EI SA requirements that NHTSA provide 4 ye ars lead
- time and 3 ye ars of stability for standards. 49 U.S.C. Section 32902 (k)(3). The second alternative uses target curves that are equivalent to EPA’s 40
- 60
- 100 percent target curves in model years 2016
- 2017
- 2018, respectivel y. Stringency for the alternatives in Phase 1 was selected b y the agencies to allow a manufacturer, through the use of the credit carry
- forward and carry
- back provisions that the agencies also finalized, to meet both NHTSA fuel efficiency

and EPA GHG emission standards using a single compliance strategy . If a manufacturer cannot meet an applicable standard in a given model year, it may make up it s shortfall by

over - complying in a subsequent year. NHTSA also allows manufacturers to voluntarily

opt into the NHTSA HD pickup and van program in model years 2014 or 2015. For these model years, NHTSA’s fuel consumption target curves are equivalent to E PA’s target curves. The Phase 1 phase
- in options are summarized in Table VI
- 1
. **Table VI**  **- 1**  **Phase 1 Sta ndards Phase**  **- in Options** 

2014 2015 2016 2017 2018 2019 EPA Primary

Phase
- in 15% 20% 40% 60% 100% 100% EPA Compliance Option 15% 20% 67% 67% 67% 100% NHTSA First Option 0% 0% 67% 67% 67% 100% NHTSA Second Option 0% 0% 40% 60% 100% 100% The form and stringency

of the Phase 1 standards curves are based on the performance of a set of vehicle, engine, and transmission technologies expected (although not required) to be used to meet the GHG emissions and fuel economy standards for model year 2012
- 2016 light
duty vehicles, with full consideration of how these 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 and vans as well. The technologies include: advanced 8
- speed automatic transmissions aerodynamic improvementsPage 401 of 850

electro
- hydraulic power steering engine friction reductions improved accessories low friction lu

bricants in powertrain components lower rolling resistance tires lightweighting gasoline direct injection diesel aftertreatment optimization air conditioning s ys tem leakage reduction (for EPA program onl y)


### B. **Proposed HD Pick up and Van Standards**  As describe d in this section, NHTSA and EPA are proposing more stringent MY 2027 and later Phase 2 standards that would be phased in over model years 2021
- 202 7 . The agencies are proposing standards based on a ye ar - over - ye ar increase in stringency of 2.5 percent over MYs 2021
- 2027 for a total increase in stringency for the Phase 2 program of about 1 6 percent compared to the MY 2018 Phase 1 standard
. Note that an individual manufacturer’s fleet
- wide target may

differ from this stringency increase due to changes in vehicle sales mix and changes in work factor. The agencies have anal yz ed several alternatives which are discussed in this section below an d in Section X. In particular, we are requesting comment not only on the proposed standards but also particularl y on the Alternative 4 standard which would result in approximately

the same Phase 2 program stringency increase of about 16 percent compared to Phase 1 but would do so two years earlier, in MY 2025 rather than in MY 2027. The Alternative 4 phase in from 2021
- 2025 would be based on a year - over - ye ar increase in stringency of 3.5 percent , as discussed below. While we believe the propo sed preferred alternative is feasible in the time frame of this rule, and that Alternative 4 could potentially be feasible , the two phase
- in schedules differ in the required adoption rate of advanced technologies for certain high volume vehicle segments
. The agencies’ anal ys is essentially shows that the additional lead
- time provided b y the preferred alternative would allow manufacturers to more fully utilize lower cost technologies thereb y reducing the adoption rate of more advanced higher cost technologie s such as strong h yb rids. As discussed in more detail in C.8 below , both of the considered phase
- ins require comparable penetration rates of several non - hy brid technolog ies with some approaching 100 percent penetration
. H owever , as discussed below, the a dditional lead
- time provided by Alternative 3 would allow manufacturers more flexibility to full y utilize these non
- hy brid technologies to reduce the number of h yb rids needed compared to Alternative 4. A lternative 4 would additionally

require significant penetration of strong h yb ridization. We request comments, additional information, data, and feedback to determine the extent to which such adoption would be realistic within the MY 2025 timeframe. When considering potential Phase 2 standards, the agencies anticipate that the technologies listed above that were considered in Phase 1 will continue to be available in the future if not already applied under Phase 1 standards and that additional technologies will also be available:Page 402 of 850

 advanced engine improvements for friction reduction and low friction lubricants  improved engine parasitics, including fuel pumps, oil pumps, and coolant pumps  valvetrain variable lift and timing  cylinder deactivation  direct gasoline injection  cooled exhaust gas recirculation  turbo downsizing of gasoline engines  Diesel engine efficiency improvements  downsizing of diesel engines  8
- speed automatic transmissions  electric power steering  high efficiency

transmission gear boxes and driveline  further improvements in accessory loads  addition al improvements in aerodynamics and tire rolling resistance  low drag brakes  mass reduction  mild hy

bridization  strong h ybridization Sections VI .C. and D below and Section 2 of the Draft RIA provide a detailed anal ys is of these and other potential technologi es for Phase 2, including their feasibility, costs, and effectiveness and projected application rates for reducing fuel consumption and CO 2 emissions when utilized in HD pickups and vans. Section s VI .C and D and Section X also discuss the selection of the proposed standards and the alternatives considered. In addition to EPA’s CO 2 emission standards and NHTSA’s fuel consumption standards for HD pickups and vans, EPA in Phase 1 also finalized st andards for two additional GHGs

— N 2 O and CH 4 , as well as standards for air conditioning
- related HFC emissions in the Phase 1 rule. EPA is proposing to continue these standards in Phase 2. Also, consistent with CAA S ection 202(a)(1), EPA finalized Phase 1 standards that apply to HD pickups and vans in use and EPA is proposing in
- use standards for these vehicles in Phase 2. All of the proposed standards for these HD pickups and vans are discussed in more detail below. Program flexibilities and compliance provisions related to the standards for HD pickups and vans are discussed in Section VI
. E
. A relativel y small number of HD pickups and vans are sold b y vehicle manufacturers as incomplete vehicles, without the primary load
- carrying device or container att ached. A sizeable subset of these incomplete vehicles, often called cab
- chassis vehicles, are sold by the vehicle manufacturers in configurations with complete cabs and many of the components that affect GHG emissions and fuel consumption identical to tho se on complete pickup truck or van counterparts

— including engines, cabs, frames, transmissions, axles, and wheels. T he Phase 1 program includes provisions that allow manufacturers to include these incomplete vehicles asPage 403 of 850

well as some Class 4 through 6 ve hicles to be regulated under the chassis
- based HD pickup and van program ( i.e. subject to the standards for HD pickups and vans), rather than the vocational vehicle program. 337 The agencies are proposing to continue allowing such incomplete vehicles the opt ion of certifying under either the heavy duty pickup and van standards or the standards for vocational vehicles. Phase 1 also includes optional compliance paths for spark
- ignition engines identical to engines used in heav y - duty pickups and vans to comply with 2b/3 standards . See 40 CFR 1037.150(m) and 49 CFR 535.5(a)(7). Manufacturers sell such engines as “ loose engines ” or install these engines in incomplete vehicles that are not cab
- complete vehicles. The agencies are not proposing to retain the loos e engine provisions for Phase 2. These program elements are discussed above in Section V .E. on vocational vehicles and XIV.A.2 on engines
. NHTSA and EPA request comment on all aspects of the proposed HD pickup and van standards and program elements described below and the alternatives discussed in Section X. **(1) Vehicle**  **- Based Standards**  For Phase 1, EPA and NHTSA chose to set vehicle
- based standards whereby the entire vehicle is chassis
- tested. The agencies propose to retain this approach for Phase 2. About 9 0 percent of Class 2b and 3 vehicles are pickup trucks, passenger vans, and work vans that are sold by the original equipment manufacturers as complete vehicles, ready for use on the road. In addition, most of these complete HD pickups and vans are covere d by CAA vehicle emissions standards for criteria pollutants ( i.e. , they are chassis tested similar to light
- duty), expressed in grams per mile. This distinguishes this category from other, larger heav y - duty vehicles that ty picall y have engines covered b y CAA engine emission standards for criteria pollutants, expressed in grams per brake horsepower
- hour. As a result, Class 2b and 3 complete vehicles share both substantive elements and a regulatory structure much more in common with light
- duty trucks than with the other heav y - dut y vehicles. Three of these features in common are especiall y significant: (1) over 95 percent of the HD pickups and vans sold in the United States are produced b y Ford, General Motors, and Chry sler

– three companies with large light - duty vehicle and light
- dut y truck sales in the United States; (2) these companies ty pically base their HD pickup and van designs on higher sales volume light
- duty

truck platforms and technologies, often incorporating new light
- dut y truck design features into HD pickups and vans at their next design cycle, and (3) at this time most complete HD pickups and vans are certified to vehicle
- based rather than engine
- based EPA criteria pollutant and GHG standards. There is also the potential for substantial GHG and fuel consumption reductions from vehicle design improvements beyond engine changes (such as through optimizing aerody namics, weight, tires, and accessories), and a single manufacturer is generall y responsible for both engine and vehicle design. All of these factors together suggest that it is still appropriate and reasonable to base standards on performance of the vehicle as a whole, rather than to establish separate engine and vehicle GHG and fuel consumption standards,

337 See 76 FR 57259
- 57260, September 15, 2011 and 78 FR 36374, June 17, 2013.Page 404 of 850

as is being done for the other h eav y - duty categories. The chassis
- based standards approach for complete vehicles was also consistent with NAS recommendations and there was consensus in the public comments on the Phase 1 proposal supporting this approach. For all of these reasons, the a gencies continue to believe that establishing chassis
- based standards for Class 2b and 3 complete vehicles is appropriate for Phase 2. (a ) Work

-Based Attributes In developing the Phase 1 HD rulemaking, the agencies emphasized creating a program structure that would achieve reductions in fuel consumption and GHGs based on how vehicles are used and on the work they perform in the real world. Work
- based measures suc h as payload and towing capability are key among the things that characterize differences in the design of vehicles, as well as differences in how the vehicles will be used. Vehicles in the 2b and 3 categories have a wide range of payload and towing capac ities. These work
- based differences in design and in
- use operation are key factors in evaluating technological improvements for reducing CO 2 emissions and fuel consumption. Payload has a particularl y important impact on the test results for HD pickup and van emissions and fuel consumption, because testing under existing EPA procedures for criteria pollutants and the Phase 1 standards is conducted with the vehicle loaded to half of its payload capacity (rather than to a flat 300 lb as in the light
- duty pro gram), and the correlation between test weight and fuel use is strong. Towing, on the other hand, does not directl y factor into test weight as nothing is towed during the test. Hence, setting aside an y interdependence between towing capacity and payload , only the higher curb weight caused by an y heavier truck components would play a role in affecting measured test results. However towing capacity can be a significant factor to consider because HD pickup truck towing capacities can be quite large, with a correspondingl y large effect on vehicle design. We note too that, from a purchaser perspective, payload and towing capability ty picall y play a greater role than phy sical dimensions in influencing purchaser decisions on which heavy
duty vehicle to buy . Fo r passenger vans, seating capacity is of course a major consideration, but this correlates closely

with payload weight. For these reasons, EPA and NHTSA set Phase 1 standards for HD pickups and vans based on a “work factor” attribute that combines vehicle payload capacity and vehicle towing capacity , in lbs, with an additional fixed adjustment for four
- wheel drive (4wd) vehicles. This adjustment accounts for the fact that 4wd, critical to enabling many off
- road heav y - dut y work applications, adds roughly 50 0 lb to the vehicle weight. The work factor is calculated as follows: 75 percent maximum payload + 25 percent of maximum towing + 375 lbs if 4wd. Under this approach, target GHG and fuel consumption standards are determined for each vehicle with a unique work factor (analogous to a target for each discrete vehicle footprint in the light
- duty vehicle rules). These targets will then be production weighted and summed to derive a manufacturer’s annual fleet average standard for its heavy
- dut y pickups and van s. There was widespread support (and no opposition) for the work factor
- based approach to standards and fleet average approach to compliance expressed in the comments we received on the Phase 1 rule. The agencies are proposing to continue using the work factor attribute for the Phase 2 standards and request comments on continuing this approach.Page 405 of 850

Recognizing that towing is not reflected in the certification test for these vehicles, however, the agencies are requesting comment with respect to the treatment o f towing in the work factor, especiall y for diesel vehicles. More specificall y, does using the existing work factor equation create an inappropriate incentive for manufacturers to provide more towing capability than needed for some operators, or a disincentive for manufacturers to develop vehicles with intermediate capability . In other words, does it encourage “surplus” towing capability that has no value to vehicle owners and operators? We recognize that some owners and operators do actuall y use their v ehicles to tow very heavy loads, and that some owners and operators who rarel y use their vehicles to tow heav y loads nonetheless prefer to own vehicles capable of doing so. However, others may never tow such heav y loads and purchase their vehicles for oth er reasons, such as cargo capacity or off
- road capability . Some of these less demanding (in terms of towing) users may

choose to purchase gasoline
- powered vehicles that are ty picall y less expensive and have lower GCWR values, an indicator of towing capabi lity . However, others could prefer a diesel engine more powerful than today ’s gasoline engines but less powerful than the ty pical diesel engines found in 2b and 3 pickups today . In this context, the agencies are considering (but have not yet evaluated) f our possible changes to the work factor and how it is applied. First, the agencies are considering revising the work factor to weight payload b y 80 percent and towing b y 20 percent. Second, we are considering capping the amount of towing that could be cr edited in the work factor. For example, the work factors for all vehicles with towing ratings above 15,000 lbs could be calculated based on a towing rating of 15,000 lbs. It is important to be clear that such a provision would not limit the towing capabi lity manufacturers could provide, but would only impact the extent to which the work factor would “reward” towing capability . Third, the agencies are considering changing the shape of the standard curve for diesel vehicles to become more flat at very high work factors. A flatter curve would mean that vehicles with very

high work factors would be more similar to vehicles with lower work factors than is the case for the proposed curve. Thus, conceptuall y, flattening the curves at the high end might be appropriate if we were to determine that these high work factor vehicles actuall y operate in a manner more like the vehicles with lower work factors . For example, when not towing and when not hauling a full payload, heavy
- duty pickup trucks with very

different work factors may

actuall y be performing the same amount of work. Finall y, we are considering having different work factor formulas for pickups and vans, and are also further considering whether an y of other changes should be applied differently to picku ps than to vans. We welcome comments on both the extent to which surplus towing may be an issue and whether any of the potential changes discussed above would be appropriate. Commenters supporting such changes are encouraged to also address an y potential accompan yi ng changes. For example, if we reweight the work factor, would other changes to the coefficients defining the target curves be important to ensure that standards remain at the maximum feasible levels. (Commenters should, however, recognize that average requirements will, in any event, depend on fleet mix, and the agencies expect to update estimates of future fleet mix before issuing a final rule )
. As noted in the Phase 1 rule, the attribute
- based CO 2 and fuel consumption standards are meant to be as consistent as practicable from a stringency perspective. Vehicles across the entire range of the HD pickup and van segment have their respective target values for CO 2 emissions and fuel consumption, and therefore all HD pickups and vans will be affected by the standard. With this attribute
- based standards approach, EPA and NHTSA believe there should be noPage 406 of 850

significant effect on the relative distribution of vehicles with differing capabilities in the fleet, which means that buye rs should still be able to purchase the vehicle that meets their needs. (b ) Standards The agencies are proposing Phase 2 standards based on anal ys is performed to determine the appropriate HD pickup and van Phase 2 standards and the most appropriate phase in of those standards . This anal ys is, described below and in the Draft RIA, considered: projections of future U.S. sales for HD pickup and vans the estimates of corresponding CO 2 emissions and fuel consumption for these vehicles forecast s of manufacturers’ product redesign schedules the technology

available in new MY 2014 HD pickups and vans to specify preexisting technology

content to be included in the anal ys is fleet (the fleet of vehicles used as a starting point for anal ys is) extendin g through MY 2030 the estimated effectiveness, cost, applicability , and availability of technologies for HD pickup and vans manufacturers’ ability

to use credit carry
- forward the levels of technology

that are projected to be added to the anal ys is fleet through MY 2030 considering improvements needed in order to achieve compliance with the Phase 1 standards (thus defining the reference fleet

– i.e. , under the No
- Action Alternative

—

relative to which to measure incremental impacts of Phase 2 standards), and the levels of technology

that are projected to be added to the anal ys is fleet through MY2030 considering further improvements needed in order to achieve compliance with standards defining each regulatory (action) alternative for Phase 2. Based on this analy sis , EPA is proposing CO 2 attribute
- based target standards shown in Figure VI
- 3 and Figure V I
- 4 , and NHTSA is proposing the equivalent attribute
- based fuel consumption target standards, also shown in Figure VI
- 3 and Figure V I
- 4 , applicable in model ye ar 20 21
- 202 7
. As shown in these tables, these standards would be phased in year
- by
- ye ar commencing in MY 2021. The agencies are not proposing to change the standards for 2018
- 2020 and therefore the standards would remain stable at the MY 2018 Phase 1 levels for MYs 2019 and 2020. EI SA requires four years of lead
- time and three ye ars stability for NHTSA standards and this perio d of lead
- time and stability for 2018
- 2020 is consistent with the EI SA requirements
. For MYs 2021
- 202 7 , the agencies are proposing annual reductions in the standards as the primary

phase
- in of the Phase 2 standards. The proposed standards become 1 6 perce nt more stringent overall between MY 2020 and MY 202 7 . This approach to the Phase 2 standards as a whole can be considered a phase
- in or implementation schedule of the proposed MY 202 7 standards (which , as noted, would appl y thereafter unless and until am ended). For EPA, Section 202(a) provides the Administrator with the authority to establish standards, and to revise those standards “from time to time,” thus providing the Administrator with considerable discretion in deciding when to revise the Phase 1 MY 2018 standards. EI SA requires that NHTSA provide four full model years of regulatory lead time and three full modelPage 407 of 850

ye ars of regulatory

stability for its fuel econom y s tandards. 49 U.S.C. 32902(k)(3). Consistent with these authorities, the agencies are proposing more stringent standards beginning with MY 2021 that consider the level of technology we predict can be applied to new vehicles in the 2021 MY. EPA believes the proposed Phase 2 standards are consistent with CAA requirements regarding lead
- time , reasonable cost, and feasibility , and safet y . NHTSA believes the proposed Phase 2 standards are the maximum feasible under EI SA. Manufacturers in the HD pickup and van market segment have relativel y few vehicle lines and redesign cycles are typically l onger compared to light
- dut y vehicles. Also, the timing of vehicle redesigns differs among manufacturers. To provide lead time needed to accommodate these longer redesign cycles, the proposed Phase 2 GHG standards would not reach their highest stringency until 202 7 . Although the proposed standards would become more stringent over time between MYs 2021 and 202 7 , the agencies expect manufacturers will likely strive to make improvements as part of planned redesigns, such that some model years will likely involve significant advances, while other model years will likely

involve little change. The agencies also expect manufacturers to use program flexibilities (e.g., credit carry
- forward provisions and averaging, banking, and trading provisions) to help balan ce compliance costs over time (including b y allowing needed changes to align with redesign schedules) . The agencies are proposing to provide stable standards in MYs 2019
- 2020 in order to provide necessary lead time for Phase 2. However, for some manufacturers, the transition to the Phase 2 standards may begin earlier (e.g., as soon as MY 2017) depending on their vehicle redesign cycles. Although standards are not proposed to change in MYs 2019
- 2020, manufacturers may introduce additional technologies in order to carry forward corresponding improvements and perhaps generate credits under the 5 year credit carry - forward provisions established in Phase 1 and proposed to continue for Phase 2. Section s VI .C. and D below provides additional discussion of vehic le redesign cycles and the feasibility of the proposed standards. While it is unlikely

that there is a phase
- in approach that would equall y fit with all manufacturers’ unique product redesign schedules, the agencies recognize that there are other way s the Phase 2 standards could be phased in and request comments on other possible approaches. One alternative approach would be to phase in the standards in a few step changes, for example in MYs 2021, 2024 and 2027. Under this example, if the step changes on the order of 5 percent, 10 percent, and 16 percent improvements from the MY 2020 baseline in MYs 2021, 2024 and 2027 respectively , the program would provide CO 2 reductions and fuel improvements roughl y equivalent to the proposed approach. Among the factor s the agencies would consider in assessing a different phase
- in than that proposed would be impacts on lead time, feasibility , cost, CO 2 reductions and fuel consumption improvements. The agencies request that commenters consider all of these factors in th eir recommendations on phase
- in. As in Phase 1, the proposed Phase 2 standards would be met on a production
- weighted fleet average basis. No individual vehicle would have to meet a particular fleet average standard. Nor would all manufacturers have t o meet numerically identical fleet average requirement. Rather, each manufacturer would have its own unique fleet average requirement based on the production
- weighted average of the heav y dut y pickups and vans it chooses to produce. Moreover, averaging, banking, and trading provisions, just alluded to and discussed further below, would provide significant additional compliance flexibility in implementing the standards. It is important to note, however, that while the standards would differ numericall yPage 408 of 850

f rom manufacture r to manufacturer, effective stringency should be essentially

the same for each manufacturer. Also , as with the Phase 1 standards, the agencies are proposing separate Phase 2 targets for gasoline
- fueled (and any other Otto
- cycle) vehicles and diesel
- fueled (and an y other diesel
cycle) vehicles. The targets would be used to determine the production
- weighted fleet average standards that appl y to the combined diesel and gasoline fleet of HD pickups and vans produced by a manufacturer in each m odel year. The above
- proposed stringency increase for Phase 2 applies equall y to the separate gasoline and diesel targets. The agencies considered different rates of increase for the gasoline and diesel targets in order to more equally balance compliance burdens across manufacturers with varying gasoline/diesel fleet mixes. However, at least among major HD pickup and van manufacturers, our analy sis suggests limited potential for such optimization, especially

considering uncertainties involved with manufa cturers’ future fleet mix. The agencies have thus maintained the equivalent rates of stringency increase. The agencies invite comment on this element.Page 409 of 850

**Figure VI**  **- 3**  **EPA Proposed CO 2**  **Target Standards and NHTSA Proposed**  **Fuel Consumption Target Standards for**  **Diesel HD Pickups and Vans**  3. 44 3. 94 4. 44 4. 94 5. 44 5. 94 6. 44 6. 94

350 400 450 500 550 600 650 700 750

3000 3500 4000 4500 5000 5500 6000 6500 7000 Work Factor Die sel S tandardsCO2(gramspermile)Page 410 of 850

**Figure V**  **I -**  **4 EPA Proposed CO**  **2 Target Standards and NHTSA**  **Proposed Fuel Consumption Target**  **Standards f**

**or Gasoline HD Pickups and Vans** 3. 94 4. 44 4. 94 5. 44 5. 94 6. 44 6. 94 7. 44 7. 94 8. 44

350 400 450 500 550 600 650 700 750

3000 3500 4000 4500 5000 5500 6000 6500 7000 Wo rk Factor Ga sol in e StandardsFuelConsumption(gallonsper100miles)CO2(gramspermile)Page 411 of 850

Described mathematically , EPA’s and NHTSA’s proposed target standards are defined by the following formulas: EPA CO **2** Target (g/mile) = [a x WF] + b NHTSA Fuel Consumption Target (gallons/100 miles) = [c x WF] + d Where: WF = Work Factor = [0.75 x (Payload Capacity + xwd)] + [0.25 x Towing Capacity] Payload Capacity = GVWR (lb)

– Curb Weight (lb) xwd = 500 lb if the vehicle is equipped with 4wd, otherwise equals 0 lb. Towing Capacity = GCWR (lb)

– GVWR (lb) Coefficients a, b, c, and d are taken from Table VI
- 2
. **Table VI**  **- 2**  **Proposed Phase 2 Coefficients for HD Pickup and V an Target Standards**  **Diesel Vehicles** Model Year a b c d 2018
- 2020 a 0.0416 320 0.00040 86 3.14 3 2021 0.0406 312 0.00039 88 3.06 5 2022 0.0395 304 0.00038 80 2.98 6 2023 0.0386 297 0.000379 2 2.91 7 2024 0.0376 289 0.0003 694 2.8 39 2025 0.0367 282 0.000360 5 2.77 0 2026 0.0357 275 0.00035 07 2.70 1 202 7 and later 0.0348 268 0.00034 18 2.63 3 **Gasoline Vehicles** Model Year a b c d 2018
- 2020 a 0.044 339 0.000495 1 3.81 5 2021 0.0429 331 0.00048 27 3.7 25 2022 0.0418 322 0.00047 03 3.62 3 2023 0.0408 314 0.000459 1 3.53 3 2024 0.0398 306 0.000447 8 3.44 3 2025 0.0388 299 0.000436 6 3.36 4 2026 0.0378 291 0.000425 3 3.27 4 202 7 and later 0.0369 284 0.000415 2 3.19 6 Note : a Phase 1 primary phase

- in coefficients. Alternative phase

- in coefficients are different in MY2018 only.Page 412 of 850

As noted above, the standards are not proposed to change from the final Phase 1 standards for MYs 2018
- 2020. The MY 2018
- 2020 standards are shown in the Figures and tables above for reference. NHTSA and EPA have also analyzed regulatory alternati ves to the proposed standards, as discussed in Section s VI .C and D and Section X. below. The agencies request comments on all of the alternatives anal yz ed for the proposal, but request comments on Alternative 4 in particular. The agencies believe Alternative 4 has the potential to be the maximum feasible alternative; however, based on the evidence currentl y before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by that alt ernative. Alternative 4 would provide less lead time for the complete phase
- in of the proposed Phase 2 standards based on an annual improvement of 3.5 percent per year in MYs 2021
- 2025 compared to the proposed Alternative 3 per year improvement of 2. 5 percent in MYs 2021
- 2027
. The CO 2 and fuel consumption attribute
- based target standards for the Alternative 4 phase
- in are shown in Figure VI
- 5 and Figure VI
- 6 below. As the target curves for Alternative 4 show in comparison to the target curves shown above for the proposed Alternative 3, the final Phase 2 standards would result in essentially the same level of stringency under either alternative. However, the Phase 2 standards would be fully implemented two years earlier, in MY 2025, under Alternative 4. The agencies are seriously considering whether this Alternative 4 (i.e., the proposed standards but with two years less lead
- time) would be realistic and fea sible, as described in Section s VI .C and D, Section X, and in the Draft RIA Chapter 11
. Alternative 4 is predicated on shortened lead time that would result in accelerated and in some cases higher adoption rates of the same technologies on which the propo sed Alternative 3 is predicated
. The agencies request comments, data , and information that would help inform determination of the maximum feasible (for NHTSA) and appropriate (for EPA) stringency for HD pickups and vans and are particularly

interested in information and data related to the expected adoption rates of different emerging technologies, such as mild and strong h ybridization.Page 413 of 850

**Figure VI**  **- 5**  **Alternative 4 EPA**  **CO 2**  **Target Standards and NHTSA Fuel Consumption Target Standards for Diesel**  **HD Pickups and Vans** 3. 44 3. 94 4. 44 4. 94 5. 44 5. 94 6. 44 6. 94

350 400 450 500 550 600 650 700 750

3000 3500 4000 4500 5000 5500 6000 6500 7000 Work Fa ctorCO2(gramspermile) Die se l StandardsPage 414 of 850

**Figure VI**  **- 6**  **Alternative 4 EPA**  **CO 2**  **Target Standards and NHTSA Fuel Consumption Target Standards for Gasoline**  **HD Pickups and Vans** 3.94 4.44 4.94 5.44 5.94 6.44 6.94 7.44 7.94 8.44

350 400 450 500 550 600 650 700 750

3000 3500 4000 4500 5000 5500 6000 6500 7000 Work FactorFuelConsumption(gallonsper100miles)CO2(gramspermile) Ga sol ine S tandardsPage 415 of 850

As with Phase 1 standards, to calculate a manufacturer’s HD pickup and van fleet average standard, the agencies are proposing that separate target curves be used for gasoline and diesel vehicles. The agencies ’ proposed standards resu lt in approximately 1 6 percent reductions in CO 2 and fuel consumption for both diesel and gasoline vehicles relative to the MY 2018 Phase 1 standards for HD pickup trucks and vans. These target reductions are based on the agencies’ assessment of the feasibility of incorporating technologies (which differ for gasoline and diesel powertrains) in the 2021
- 202 7 model years, and on the differences in relative efficiency in the current gasoline and diesel vehicles. The agencies generall y prefer to set standard s that do not distinguish between fuel types where technological or market
- based reasons do not strongl y argue otherwise. However, as with Phase 1, we continue to believe that fundamental differences between spark ignition and compression ignition engines warrant unique fuel standards, which is also important in ensuring that our program maintains product choices available to vehicle buyers. In fact, gasoline and diesel fuel behave so differentl y in the internal combustion engine that they have historical ly required unique test procedures, emission control technologies and emission standards. These technological differences between gasoline and diesel engines for GHGs and fuel consumption exist presently

and will continue to exist after Phase 1 and through Phase 2 until advanced research evolves the gasoline fueled engine to diesel
- like efficiencies. This will require significant technological breakthroughs currently in earl y stages of research such as homogeneous charge compression ignition (HCCI) or sim ilar concepts. Because these technologies are still in the earl y research stages, we believe the proposed separate fuel type standards are appropriate in the timeframe of this rule to protect for the availability of both gasoline and diesel engines and wi ll result in roughly equivalent redesign burdens for engines of both fuel ty

pes as eviden ced by

feasibility

and cost analy sis in RIA Chapter 10
. The agencies request comment on the level of stringency of the proposed standards, the continued separate targ ets for gasoline and diesel HD pickups and vans, and the continued use of the work
- based attribute approach described above. The proposed NHTSA fuel consumption target curves and EPA GHG target curves are equivalent. The agencies established the targe t curves using the direct relationship between fuel consumption and CO 2 using conversion factors of 8,887 g CO 2 /gallon for gasoline and 10,180 g CO 2 /gallon for diesel fuel. It is expected that measured performance values for CO 2 will generally be equivalent to fuel consumption. However, Phase 1 established a provision that EPA is not proposing to change for Phase 2 that allows manufacturers, if they choose, to use CO 2 credits to help demonstrate compliance with N 2 O and CH 4 emissions standards, by expressing an y N 2 O and CH 4 under compliance in terms of their CO 2 - equivalent and appl yi ng CO 2 credits as needed . For test families that do not use this compliance alternative, the measured performance values for CO 2 and fuel consumption will be equivalent because the same test runs and measurement data will be used to determine both values, and calculated fuel consumption will be based on the same conversion factors that are used to establish the relationship between the CO 2 and fu el consumption target curves (8,887 g CO 2 /gallon for gasoline and 10,180 g CO 2 /gallon for diesel fuel). For manufacturers that choose to use EPA provision for CO 2 credit use in demonstrating N 2 O and CH 4 compliance, compliance with the CO 2 standard wil l not be directly equivalent to compliance with the NHTSA fuel consumption standard.Page 416 of 850

**(2) What Are the HD Pickup and Van Test Cycles and Procedures**  The Phase 1 program established testing procedures for HD pickups and vans and NHTSA and EPA are not proposing t o change these testing protocols. The vehicles would continue to be tested using the same heav y - dut y chassis test procedures currently used b y EPA for measuring criteria pollutant emissions from these vehicles, but with the addition of the highway fuel ec onomy

test cycle (HFET). These test procedures are used by manufacturers for certification and emissions compliance demonstrations and by the agencies for compliance verification and enforcement. Although the highway cycle driving pattern is identical to that of the light
- dut y test, other test parameters for running the HFET, such as test vehicle loaded weight, are identical to those used in running the current EPA Federal Test Procedure for complete heav y - duty

vehicles. Please see Section II.C (2) of th e Phase 1 preamble (76 FR 57166) for a discussion of how HD pickups and vans would be tested. One item that the agencies are considering to change is how vehicles are categorized into test weight bins. Under the current test procedures, vehicles are tes ted at 500 lb increments of inertial weight classes when testing at or above 5500 lbs test weight. For example, all vehicles having a calculated test weight basis of 11 , 251 to 11 , 750 pounds would be tested 11,500 pounds (i.e., the midpoint of the range). However, for some vehicles, the existence of these bins and the large intervals between bins may reduce or eliminate the incentive for mass reduction for some vehicles, as a vehicle may require significant mass reduction before it could switch from one te st weight bin to the next lower bin. For other vehicles, these bins may unduly reward relativel y small reductions of vehicle mass, as a vehicle’s mass may be onl y slightl y greater than that needed to be assigned a 500
- pound lighter inertia weight class. For example, for a vehicle with a calculated test weight basis of 11,700 pounds, a manufacturer would receive no regulatory benefit for reducing the vehicle weight b y 400 pounds, because the vehicle would stay within the same weight bracket. The agencies do recognize that the test weight bins allow for some reduction in testing burden as man y vehicles can be grouped together under a single test. For Phase 2, the agencies seek comment on whether the test weight bins should be changed in order to allow for more realistic testing of HD pickups and vans and better capture of the improvements due to mass reduction. Some example changes could include reducing the five hundred pound interval between bins to smaller intervals similar to those allowed for vehicles tested below 5 , 500 lbs. test weight, or allowing any test weight value that is not fixed to a particular test weight bin. The latter scenario would still allow some grouping of vehicles to reduce test burden, and the agencies also seek comment on how veh icles would be grouped and how the test weight of this group of vehicles should be selected. We further seek comment as to whether there may be a more appropriate method such as allowing anal yt ical adjustment of the CO 2 levels and fuel consumption within a vehicle weight class to more precisel y account for the individual vehicle models performance. For example, could an equation like the one specified in 40 CFR 1037.104(g) for anal yt ically adjusting CO 2 emissions be used. The agencies are specificall y c onsidering an approach in which vehicles are tested in the same way

with the same test weights, but manufacturers have the option to either accept the emission results as provided under the current regulations, or choose to adjust the emissions based on th e actual test weight basis (actual curb plus half payload) instead of the equivalent test weight for the 500 test weight interval. Should the agencies finalize this as anPage 417 of 850

option, manufacturers choosing to adjust their emissions would be required to do so for all of their vehicles, and not just for those with test weights below the midpoint of the range. **(3) Fleet Average Standards**  NHTSA and EPA are proposing to retain the fleet average standards approach finalized in the Phase 1 rule and structurall y similar to light
- duty Corporate Average Fuel Econom y (CAFE) and GHG standards. The fleet average standard for a manufacturer is a production
weighted average of the work factor
- based targets assigned to unique vehicle configurations within each model type produce d by the manufacturer in a model ye ar. Each manufacturer would continue to have an average GHG requirement and an average fuel consumption requirement unique to its new HD pickup and van fleet in each model year, depending on the characteristics (payload, towing, and drive ty pe) of the vehicle models produced by that manufacturer, and on the U.S.
- directed production volume of each of those models in that model ye ar. Vehicle models with larger payload/towing capacities and/or four
- wheel drive have individu al targets at numericall y higher CO 2 and fuel consumption levels than less capable vehicles, as discussed in Section VI.B(1). The fleet average standard with which the manufacturer must compl y would continue to be based on its final production figures for the model year, and thus a final assessment of compliance would occur after production for the model year ends. The assessment of compliance also must consider the manufacturer’s use of carry
- forward and carry
- back credit provisions included in the avera ging, banking, and trading program. Because compliance with the fleet average standards depends on actual test group production volumes, it is not possible to determine compliance at the time the manufacturer applies for and receives an (initial) EPA cert ificate of conformity

for a test group. Instead, at certification the manufacturer would demonstrate a level of performance for vehicles in the test group, and make a good faith demonstration that its fleet, regrouped b y unique vehicle configurations with in each model type, is expected to comply

with its fleet average standard when the model ye ar is over. EPA will issue a certificate for the vehicles covered b y the test group based on this demonstration, and will include a condition in the certificate that if the manufacturer does not comply with the fleet average, then production vehicles from that test group will be treated as not covered b y the certificate to the extent needed to bring the manufacturer’s fleet average into compliance. As in the paralle l program for light
- dut y vehicles, additional “model type” testing will be conducted b y the manufacturer over the course of the model ye ar to supplement the initial test group data. The emissions and fuel consumption levels of the test vehicles will be us ed to calculate the production
- weighted fleet averages for the manufacturer, after application of the appropriate deterioration factor to each result to obtain a full useful life value. Please see Section II.C (3)(a) of the Phase 1 preamble (76 FR 57167) for further discussion of the fleet average approach for HD pickups and vans. **(4) In**  **- use Standards**  Section 202(a)(1) of the CAA specifies that EPA set emissions standards that are applicable for the useful life of the vehicle. EPA is proposing to continue the in
- use standards approach for individual vehicles that EPA finalized for the Phase 1 program. NHTSA did not adopt Phase 1 in
- use standards and is not proposing in
- use standards for Phase 2. For the EPAPage 418 of 850

program, compliance with the in
- use standard for individual vehicles and vehicle models does not impact compliance with the fleet average standard, which will be based on the production
weighted average of the new vehicles. Vehicles that fail to meet their in
- use emission standards would be subject to recall to correct the noncompliance. As with Phase 1, EPA proposes that the in
- use Phase 2 standards for HD pickups and vans be established b y adding an adjustment factor to the full useful life emissions used to calculate the GHG fleet average. EPA propos es that each model’s in
- use CO 2 standard be the model
- specific level used in calculating the fleet average, plus 10 percent. No adverse comments were received on this provision during the Phase 1 rulemaking. Please see Section II.C (3)(b) of the Phase 1 preamble (76 FR 57167) for further discussion of in
- use standards for HD pickups and vans. For Phase 1, EPA aligned the useful life for GHG emissions with the useful life that was in place for criteria pollutants: 11 years or 120,000 miles, whichever occ urs first (40 CFR 86.1805
- 04(a)). Since the Phase 1 rule was finalized, EPA updated the useful life for criteria pollutants as part of the Tier 3 rulemaking. 338 The new useful life implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs first . EPA proposes that the useful life for GHG emissions also be updated to 150,000 miles/15 years starting in MY 2021 when the Phase 2 standards begin so that the useful life remains aligned for GHG and criteria pollutant standards long term. With the relatively flat deterioration generall y associated with CO 2 and the proposed in
- use standard adjustment factor discussed above, EPA does not believe the proposed change in useful life would significantly affect the feasibility

of the proposed Phase 2 standards
. 339 EPA requests comments on the proposed change to useful life. **(5) Other GHG Standards for HD Pickups and Vans**  This section addresses greenhouse gases other than CO 2 . Note that since these are greenhouse gases not directly related to fuel consumption, NHTSA does not have equivalent standards. (a ) Nitrous Oxide (N 2 O) and Methane (CH 4 ) In the Phase 1 rule, EPA established emissions standards for HD pickups and vans for both nitrous oxide (N 2 O) and methane (CH 4 ). Similar to the CO 2 standard approach, the N 2 O and CH 4 emission level s of a vehicle are based on a composite of the light
- duty FTP and HFET cycles with the same 55 percent city weighting and 45 percent highway weighting. The N 2 O and CH 4 standards were both set by EPA at 0.05 g/mile. Unlike the CO 2 standards, averaging between vehicles is not allowed. The standards are designed to prevent increases in N 2 O and

338 79 FR 23492, April 28, 2014 and 40 CFR 86.1805
- 17. 339 As discussed below

in Section VI.D.1., EPA and NHTSA are proposing an adjustment factor of 1.25 for banked credits that are carried over from Phase 1 to Phase 2. The useful life is factored into the credits calculation and without the adjustment factor the change in useful life would effectively result in a discount of those carry
- over credits.Page 419 of 850

CH 4 emissions from current levels, i.e., a no - backsliding standard. EPA is not proposing to change the N 2 O or CH 4 standards or related provision s established in the Phase 1 rule. Please see Phase 1 preamble Section II.E. (76 FR 57188
- 57193) for additional discussion of N 2 O and CH 4 emissions and standards. Across both current gasoline
- and diesel
- fueled heavy
- duty vehicle designs, emissions of CH 4 and N 2 O are relatively low and the intent of the cap standards is to ensure that future vehicle technologies or fuels do not result in an increase in these emissions. Given the global warning potential (GWP) of CH 4 , the 0.05 g/mile cap standard is equival ent to about 1.25 g/mile CO 2 , which is much less than 1 percent of the overall GHG emissions of most HD pickups and vans. 340 The effectiveness of oxidation of CH 4 using a three
- way or diesel oxidation catalyst is limited by

the activation energy , which tend s to be higher where the number of carbon atoms in the hydrocarbon molecule is low and thus CH 4 is very stable. At this time we are not aware of any technologies beyond the already present catal yst sy stems which are highly effective at oxidizing most hydrocarbon species for gasoline and diesel fueled engines that would further lower the activation energy across the catal ys t or increase the energy content of the exhaust (without further increasing fuel consumption and CO 2 emissions) to further reduce CH 4 em issions at the tailpipe. We note that we are not aware of any new technologies that would allow us to adopt more stringent CH 4 and N 2 O standards at this time. The CH 4 standard remains an important backstop to prevent future increases in CH 4 emissions. N 2 O is emitted from gasoline and diesel vehicles mainly during specific cataly st temperature conditions conducive to N 2 O formation. The 0.05 g/mile standard, which translates to a CO 2 - equivalent value of 14.9 g/mile, ensures that sy stems are not designed in a way that emphasizes efficient NO X control while allowing the formation of significant quantities of N 2 O. The Phase 1 N 2 O standard of 0.05 g/mile for pickups and vans was finalized knowing that it is more stringent than the Phase 1 N 2 O engine stand ard of 0.10 g/hp
- hr, currently being revaluated as discussed in Section II.D.3 . EPA continues to believe that the 0.05 g/mile standard provides the necessary

assurance that N 2 O will not significantly increase, given the mix of gasoline and diesel fueled e ngines in this market and the upcoming implementation of the light
- dut y and heav y - dut y (up to 14,000 lbs. GVWR) Tier 3 NO X standards. EPA knows of no technologies that would lower N 2 O emissions beyond the control provided by the precise emissions control sy stems already

being implemented to meet EPA’s criteria pollutant standards. Therefore, EPA continues to believe the 0.05 g/mile N 2 O standard remains appropriate. If a manufacturer is unable to meet the N 2 O or CH 4 cap standards, the EPA program all ows the manufacturer to comply using CO 2 credits. Inother words, a manufacturer may offset any N 2 O or CH 4 emissions above the standard by taking steps to further reduce CO 2 . A manufacturer choosing this option would use GWPs to convert its measured N 2 O and CH 4 test results that are in excess of the applicable standards into CO 2 eq to determine the amount of CO 2 credits required. For example, a manufacturer would use 25 Mg of positive CO 2 credits to offset 1 Mg of negative CH 4 credits or use 298 Mg of positive CO 2 credits to offset 1 Mg of negative

340 N 2 O has a GWP of 298 and CH 4 has a GWP of 25 according to the IPCC AR4.Page 420 of 850

N 2 O credits. 341 By

using the GWP of N 2 O and CH 4 , the approach recognizes the inter
correlation of these compounds in impacting global warming and is environmentally neutral for demons trating compliance with the individual emissions caps. Because fuel conversion manufacturers certifying under 40 CFR Part 85, subpart F do not participate in ABT programs, EPA included in the Phase 1 rule a compliance option for fuel conversion manufacturers to comply with the N 2 O and CH 4 standards that is similar to the credit program described above. See 76 FR 57192/3. The compliance option will allow conversion manufacturers, on an individual engine family

basis, to convert CO 2 over compliance into CO 2 equivalents ( CO 2 eq) of N 2 O and/or CH 4 that can be subtracted from the CH 4 and N 2 O measured values to demonstrate compliance with CH 4 and/or N 2 O standards. EPA did not include similar provisions allowing over compliance with the N 2 O or CH 4 standards to serve as a means to generate CO 2 credits because the CH 4 and N 2 O standards are cap standards representing levels that all but the worst vehicles should already be well below. Allowing credit generation against such cap standard would provide a windfall credit without an y true GHG reduction. EPA proposes to maintain these provisions for Phase 2 as they provide important flexibility without reducing the overall GHG benefits of the program. EPA is requesting comment on updating GWPs used in the calculation of credits discussed above. Please see the full discussion of this issue and request for comments provided in Sections II.D and XI.D. (b ) Air Conditioning Related Emissions Air conditioning s ys tems contribute to GHG emissions in two way s
– direct emissions through refrigerant leakage and indirect exhaust emissions due to the extra load on the vehicle’s engine to provide power to the air conditioning s ystem. HFC refrigerants, which are powerful GHG pollutants, can leak from the A/C sy stem. This includes th e direct leakage of refrigerant as well as the subsequent leakage associated with maintenance and servicing, and with disposal at the end of the vehicle’s life. 342 Currently , the most commonly used refrigerant in automotive applications

– R134a, has a high GWP. Due to the high GWP of R134a, a small leakage of the refrigerant has a much greater global warming impact than a similar amount of emissions of CO 2 or other mobile source GHGs. In Phase 1, EPA finalized low leakage requirement for all air conditioning sy stems installed in 2014 model year and later HDVs, with the exception of Class 2b
- 8 vocational vehicles. As discussed in Section V.B.3, EPA is proposing to extend leakage standards to vocational vehicles for Phase 2. For air conditioning s ys tems with a refrigerant capacity greater than 733 grams, EPA finalized a leakage standard which is a “percent refrigerant leakage per ye ar” to assure that high
- quality , low
- leakage components are used in each air conditioning sy stem design. EPA finalized a standard of 1.50 percent leakage per ye ar for heav y - dut y pickup

341 N 2 O h as a GWP of 298 and CH 4 has a GWP of 25 according to the IPCC AR4. 342 The U.S. EPA has reclamation requirements for refrigerants in place under Title VI of the Clean Air Act.Page 421 of 850

trucks and vans and Class 7 and 8 tractors. See Section II.E.5. of Phase 1 preamble (76 FR 57194
- 57195) for further discussion of the A/C leakage standard. In addition to use of leak
- tight comp onents in air conditioning sy stem design, manufacturers could also decrease the global warming impact of leakage emissions by adopting sy stems that use alternative, lower global warming potential (GWP) refrigerants, to replace the refrigerant most commonly used today , HFC
- 134a (R
- 134a). The potential use of alternative refrigerants in HD vehicles and EPA’s proposed revisions to 40 CFR 1037.115 so that use of certain lower GWP refrigerant s would cause an air conditioning sy stem in a HD vehicle to be deemed to compl y with the low leakage standard is discussed in Section I .F. above. In addition to direct emissions from refrigerant leakage, air conditioning s ystems also create indirect exhaust emissions due to the extra load on the vehicle’s engine to provide p ower to the air conditioning s ystem. These indirect emissions are in the form of the additional CO 2 emitted from the engine when A/C is being used due to the added loads. Unlike direct emissions which tend to be a set annual leak rate not directl y tied t o usage, indirect emissions are fully a function of A/C usage. These indirect CO 2 emissions are associated with air conditioner efficiency , since (as just noted) air conditioners create load on the engine. See 74 FR 49529. In Phase 1, the agencies did n ot set air conditioning efficiency standards for vocational vehicles, combination tractors, or heav y - dut y pickup trucks and vans. The CO 2 emissions due to air conditioning sy stems in these heavy
- dut y vehicles were estimated to be minimal compared to their overall emissions of CO 2 . This continues to be the case. For this reason, EPA is not proposing to establish standards for A/C efficiency for Phase 2. NHTSA and EPA request comments on all aspects of the proposed HD pickup and van standards and program e lements described in this section. 

### C. **Feasibility of Pick up and Van Standards**  EPCA and EI SA require NHTSA to “implement a commercial medium
- and heav y - dut y on - highway

vehicle and work truck fuel efficiency improvement program designed to achieve the maximum f

easible improvement” and to establish corresponding fuel consumption standards “that are appropriate, cost
- effective, and technologically feasible.” 343 Section 202 (a) (1) and (2) of the Clean Air Act require EPA to establish standards for emissions of pollutants from new motor vehicles and engines which emissions cause or contribute to air pollution which may reasonabl y be anticipated to endanger public health or welfare , which include GHGs. See section I.E. above. Under section 202 (a) (1) and (2), EPA c onsiders such issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the lead time necessary to implement the technology , and based on this the feasibility and practicability of potential standards; the impacts of potential standards on emissions reductions of both GHGs and non - GHG emissions; the impacts of standards on oil conservation and energy security; the

343 49 USC 32902(k)(2).Page 422 of 850

impacts of standards on fuel savings b y customers; the impacts of standards on the truck industry ; oth er energy

impacts; as well as other relevant factors such as impacts on safety. As part of the feasibility

anal ys is of potential standards for HD pickups and vans, the agencies have applied DOT’s CAFE Compliance and Effects Modeling S ystem (sometimes ref erred to as “the CAFE model” or “the Volpe model”), which DOT’s Volpe National Transportation Sy stems Center (Volpe Center) developed, maintains, and applies to support NHTSA CAFE anal ys es and rulemakings. 344 The agencies used this model to determine the range of stringencies that might be achievable through the use of technology that is projected to be available in the Phase 2 time frame. From these runs, the agencies identified the stringency level that would be technology
- forcing (i.e. reflect levels of stringency based on performance of merging as well as currently available control technologies) , but leave manufacturers the flexibility to adopt varying technology paths for compliance and allow adequate lead time to develop, test, and deplo y the range of technologies
. As noted in Section Iand discussed further below, the anal ys is considers two reference cases for HD pickups and vans, a flat baseline (designated Alternative 1a) where no improvements are modeled beyond those needed to meet Phase 1 standards and a dynamic baseline (designated Alternative 1b) where certain cost
- effective technologies (i.e., those that pay back within a 6 month period) are assumed to be applied by manufacturers to improve fuel efficiency beyond the Phase 1 requirements in the absence of new Phase 2 standards. NHTSA considered its primary

analy sis to be based on the more dy namic baseline whereas EPA considered both reference cases. As shown below and in Sections VII through X, using the two different reference cases has little impact on the results of the analy sis and would not lead to a different conclusion regarding the appropriateness of the proposed standards. As such, the use of different reference cases corroborates the results of the overall anal ys is. The propose d phase
- in schedule of reduction of 2. 5 percent per year in fuel consumption and CO 2 levels relative to the 2018 MY Phase 1 standard level, starting in MY 2021 and extending through MY 202 7, was chosen to strike a balance between meaningful reductions in the earl y ye ars and providing manufacturers with needed lead time via a gradually accelerating ramp - up of technology

penetration. By

expressing the phase
- in in terms of increasing year to ye ar stringency

for each manufacturer, while also providing for credit generation and use (including averaging, carry
- forward, and carry
- back), we believe our proposed program would afford manufacturers substantial flexibility to satisfy the proposed phase
- in through a variety of pathway s: the gradual application of techno logies across the fleet, greater application levels on only a portion of the fleet, and a sufficiently broad set of available technologies to account for

344 The CAFE model has been under ongoing development, application, review, and refinement since 2002. In five rulemakings subject to public review and comment, DOT has used the model to estimate the potential impacts of new CAFE standards. The model has also been subject to formal review outside the rulemak ing process, and DOT anticipates comments on the model in mid
- 2015 as part of a broader report under development by the National Academy of Sciences (NAS). The model, underlying source code, inputs, and outputs are available at NHTSA’s web site, and some outside organizations are making use of the model. The agency anticipates that stakeholders will have comments on recent model changes made to accommodate standards for HD pickups and vans.Page 423 of 850

the variety of current technology deplo ym ent among manufacturers and the lowest
- cost compliance paths available to each. We decided to propose a phased implementation schedule that would be appropriate to accommodate manufacturers’ redesign workload and product schedules, especiall y in light of this sector’s limited product offerings 345 and long product cycl es. We did not estimate the cost of implementing the proposed standards immediately in 2021 without a phase
- in, but we qualitatively

assessed it to be somewhat higher than the cost of the phase
- in we are proposing, due to the workload and product cycle di sruptions it could cause, and also due to manufacturers’ resulting need to develop some of these technologies for heav y - dut y applications sooner than or simultaneously

with light
- duty

development efforts. See 75 FR 25451/3 (May 7, 2010) (documenting typ es of drastic cost increases associated with trying to accelerate redesign schedules and concluding that “[w]e believe that it would be an inefficient use of societal resources to incur such costs when they can be obtained much more cost effectivel y just one ye ar later”). On the other hand, waiting until 202 7 before appl yi ng an y new standards could miss the opportunity

to achieve meaningful and cost
- effective earl y reductions not requiring a major product redesign. The agencies believe that Alternative 4 has the potential to be the maximum feasible alternative, however, the agencies are uncertain that the potential technologies and market penetration rates included in Alternative 4 are currently technologicall y feasible. Alternative 4 would ultimately

reach the same levels of stringency as Alternative 3, but would do so with less lead time. This c ould require the application of a somewhat different (and possibly broader) application of the pro

jected technologies depending on product redesign cycles . We expe ct, in fact, that some of these technologies may well prove feasible and cost
- effective in this timeframe, and may

even become technologies of choice for individual manufacturers. Additionally , Alternative 3 provides two more ye ars of phase
- in than Alt ernative 4, which eases compliance burden b y having more vehicle redesigns and lower stringency during the phase
- in period
. Historically , the vehicles in this segment are typicall y only redesigned every 6
- 10 years, so man y of the vehicles may not even be redesigned during the timeframe of the stringency

increase. In this case, a manufacturer must either make up for any vehicle that falls short of its target through some combination of early compliance, overcompliance, credit carry
forward and carry
- back, and redesigning vehicles more frequently
. Each of these will increase technology

costs to the manufacturers and vehicle purchasers, and earl y redesigns will significantl y increases capital costs and product development costs. Also, the longer phase
- in ti me for Alternative 3 means that an y manufacturer will have a slightly lower target to meet from 2021
- 2026 than for the shorter phase
- in of Alternative 4, though b y 2027 the manufacturers will have the sam e target in either alternative. Alternative 4 is pro

jected to be met using a significantly higher degree of hy

bridization including the use of more strong h ybrids, compared to the proposed preferred Alternative 3. In

345 Manufacturers generally have only one pickup platform and one v an platform in this segment.Page 424 of 850

order to compl y with a 3.5 percent per ye ar increase in stringency over MYs 2021
- 2025, manufacturers would need to adopt more technology compared to the 2.5 percent per ye ar increase in stringency

over MYs 2021
- 2027. The two years of additional lead time provided by Alternative 3 to achieve the proposed final standards reduces the potential number of strong hy brids projected to be used by allowing for other more cost effective technologies to be more fully utilized across the fleet
. Alternative 4 is also projected to result in higher costs and risks than the proposed Alternative 3 due to the p rojected higher technology adoption rates with the additional emission reductions and fuel savings predominately occurring only

during the program phase
- in period
. The agencies’ anal ys is is discussed in detail below. In some cases, the model selects strong hy brids as a more cost effective technology over certain other technologies including stop
- start and mild hy brid. In other words, strong h yb rids are not a technology

of last resort in the anal ys is. The agencies believe it is technologicall y feasible to appl y h ybridization to HD pickups and vans in the lead time provided. However, strong h ybrids present challenges in this market segment compared to light
- duty where there are several strong h yb rids already available. T he agencies do not believe that at this stage there is enough information about the viability of strong hy

brid technology in this vehicle segment to assume that they

can be a part of large
- volume deploy ment strategies for regulated manufacturers. For example, we believe that hybrid electric technology could provide significant GHG and fuel consumption benefits, but we recognize that there is uncertainty at this time over the real world effectiveness of these s ys tems in HD pickups and vans , and over custome r acceptance of the technology for vehicles with high GCWR towing large loads. Further, the development, design, and tooling effort needed to appl y this technology to a vehicle model is quite large, and might not be cost - effective due to the small sales v olumes relative to the light
- dut y sector. Additionally , the anal ys is does not project that engines would be down
sized in conjunction with hy bridization for HD pickups and vans due to the importance pickup trucks buyers place on engine horsepower and torque necessary to meet towing objectives
. Therefore, with no change projected for engine size, the strong hy brid costs do not include costs for engine changes. In light
- dut y, the use of smaller engines facilitate s much of a hy brid’s benefit. Due t o these considerations, the agencies have conducted a sensitivity anal ysis that is based on the use of no strong h ybrids. The results of the anal ys is are also discussed below. The anal ys is indicates that there would be a technology pathway that would all ow manufacturers to meet both the proposed preferred Alternatives 3 and Alternative 4 without the use of strong hy brids. However, the analy sis indicates that costs would be higher and the cost effectiveness would be lower under the no strong h ybrid approa ch, especially for Alternative 4, which provides less lead time to manufacturers. We also considered proposing less stringent standards under which manufacturers could comply by deplo yi ng a more limited set of technologies. However, our assessment conclu ded with a high degree of confidence that the technologies on which the proposed standards are premised would be available at reasonable cost in the 2021
- 202 7 timeframe, and that the phase
in and other flexibility

provisions allow for their application in a very cost - effective manner, as discussed in this section below.Page 425 of 850

More difficult to characterize is the degree to which more or less stringent standards might be appropriate because of under
- or over - estimating the costs or effectiveness of the technologies whose performance is the basis of the proposed standards. For the most part, these technologies have not yetbeen applied to HD pickups and vans, even on a limited basis . We are therefore relying to some degree on engineering judgment in pre dicting their effectiveness. Even so, we believe that we have applied this judgment using the best information available, primarily from a NHTSA contracted study at SwRI 346 and our recent rulemaking on light
- duty vehicle GHGs and fuel econom y, and have gene rated a robust set of effectiveness values. Chapter 10 of the draft RIA provides a detailed description of the CAFE Model and the analy sis performed for the proposal. **(1) Regulatory Alternatives Considered by the Agencies**  As discussed above, the agencies are p roposing standards defined b y fuel consumption and GHG targets that continue through model ye ar 2020 unchanged from model year 2018, and then increase in stringency at an annual rate of 2. 5 percent through model year 202 7 . In addition to this regulatory

a lternative, the agencies also considered a no
- action alternative under which standards remain unchanged after model year 2018, as well as three other alternatives, defined b y annual stringency

increases of 2.0 percent, 3.5 percent, and 4.0 percent during 2 021
- 2025. For each of the “action alternatives” (i.e., those involving stringency increases beyond the no
- action alternative), the annual stringency increases are applied as follows: An annual stringency increase of r is applied by multiplying the model ye ar 2020 target functions (identical to those applicable to model year 2018) by 1

– r to define the model year 2021 target functions, multiplying the model year 2021 target functions by 1

– r to define the model year 2022 target functions, continuing thro ugh 2025 for all alternatives except for the preferred Alternative 3 which extends through 2027 . In summary , the agencies have considered the following five regulatory

alternatives in Table VI
- 3
. **Table VI**  **- 3**  **Regulatory Alternatives** Regulatory Alternative Annual Stringency Increase 2019
- 2020 2021
- 2025 2026
- 2027 1: No Action None None None 2: 2.0%/y None 2.0% None 3: 2. 5 %/y None 2. 5 % 2.5% 4: 3.5%/y None 3.5% None 5: 4.0%/y None 4.0% None

346 Reinhart, T. (2015). Commercial Medium

- and Heavy

-Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report #1. Washington, DC: National Highway Traffic Safety Administration.Page 426 of 850

**(2) DOT CAFE Model**  DOT developed the CAFE model in 2002 to support the 2003 issuance of CAFE standards for MYs 2005
- 2007 light trucks. DOT has since significantl y expanded and refined the model, and has applied the model to support eve ry ensuing CAFE rulemaking for both light
duty and heav y - dut y. For this analysis, the model was reconfigured to use the work based attribute metric of “work factor” established in the Phase 1 rule instead of the light duty “footprint” attribute metric. A lthough the CAFE model can also be used for more aggregated anal ys is (e.g., involving “representative vehicles”, single
- ye ar snapshots, etc.), NHTSA designed the model with a view toward (a) detailed simulation of manufacturers’ potential actions given a d efined set of standards, followed b y (b) calculation of resultant impacts and economic costs and benefits. The model is intended to describe actions manufacturers could take in light of defined standards and other input assumptions and estimates, not to p redict actions manufacturers will take in light of competing product and market interests (e.g. engine power, customer features, technology acceptance, etc.). For th ese rule s , the agencies conducted coordinated and complementary analy ses using two anal yt ical methods for the heavy
- duty pickup and van segment b y employing both DOT’s CAFE model and EPA’s MOVES model. The agencies used EPA’s MOVES model to estimate fuel co nsumption and emissions impacts for tractor
- trailers (including the engine that powers the tractor), and vocational vehicles (including the engine that powers the vehicle). Additional calculations were performed to determine corresponding monetized program costs and benefits. For heav y - dut y pickups and vans, the agencies performed complementary analyses, which we refer to as “Method A” and “Method B”. In Method A, the CAFE model was used to project a pathway the industry

could use to comply

with each regulatory

alternative and the estimated effects on fuel consumption, emissions, benefits and costs. In Method B, the CAFE model was used to project a pathway the industry could use to comply

with each regulatory

alternative, along with resultant impacts on per vehicle costs, and the MOVES model was used to calculate corresponding changes in total fuel consumption and annual emissions. Additional calculations were performed to determine corresponding monetized program costs and benefits. NHTSA considered Me thod A as its central anal ys is and Method B as a supplemental analy sis. EPA considered the results of both methods. The agencies concluded that both methods led the agencies to the same conclusions and the same selection of the proposed standards. See S ection VII for additional discussion of these two methods. As a starting point, the model makes use of an input file defining the anal ys is fleet

—that is, a set of specific vehicle models (e.g., Ford F250) and model configurations (e.g., Ford F250 with 6.2
- liter V8 engine, 4WD, and 6
- speed manual transmission) estimated or assumed to be produced b y each manufacturer in each model ye ar to be included in the analy sis. The anal ys is fleet includes key

engineering attributes (e.g., curb weight, payload and towin g capacities, dimensions, presence of various fuel
- saving technologies) of each vehicle model, engine, and transmissions, along with estimates or assumptions of future production volumes. It also specifies the extent to which specific vehicle models share engines, transmissions, and vehicle platforms, and describes each manufacturer’s estimated or assumed product cadence ( i.e. , timing for freshening and redesigning different vehicles and platforms). This input file also specifies aPage 427 of 850

pay back period used to estimate the potential that each manufacturer might apply technology

to improve fuel economy

beyond levels required by standards. The file used for this anal ys is was created from 2014 manufacturer compliance reports for the base sales and technology infor mation, and a future fleet projection created from a combination of data from a sales forecast that the agencies purchased from IHS Automotive and total volumes class 2b and 3 fleet volumes from 2014 AEO Reference Case. A complete description of the futur e fleet is available in Draft RIA Chapter 10
. A second input file to the model contains a variety of contextual estimates and assumptions. Some of these inputs, such as future fuel prices and vehicle survival and mileage accumulation (versus vehicle age), are relevant to estimating manufacturers’ potential application of fuel
- saving technologies. Some others, such as fuel densit y and carbon content, vehicular and upstream emission factors, the social cost of carbon dioxide emissions, and the discount rate , are relevant to calculating ph ys ical and economic impacts of manufacturers’ application of fuel
- saving technologies. A third input file contains estimates and assumptions regarding the future applicability , availability , efficacy , and cost of various fuel
- saving technologies. Efficacy is expressed in terms of the percentage reduction in fuel consumption, cost is expressed in dollars, and both efficacy and cost are expressed on an incremental basis (i.e., estimates for more advanced technologies are sp ecified as increments beyond less advanced technologies). The input file also includes “s ynergy factors” used to make adjustments accounting for the potential that some combinations of technologies may result fuel savings or costs different from those ind icated b y incremental values. Finally , a fourth model input file specifies standards to be evaluated. Standards are defined on a ye ar - by
- ye ar basis separatel y for each regulatory class (passenger cars, light trucks, and heav y - dut y pickups and vans). Regu latory alternatives are specified as discrete scenarios, with one scenario defining the no
- action alternative or “baseline”, all other scenarios defining regulatory

alternatives to be evaluated relative to that no
- action alternative. Given these inputs, th e model estimates each manufacturer’s potential ye ar - by
- ye ar application of fuel
- saving technologies to each engine, transmission, and vehicle. Subject to a range of engineering and planning
- related constraints (e.g., secondary axle disconnect can’t be ap plied to 2
- wheel drive vehicles, many major technologies can only be applied practicabl y as part of a vehicle redesign, and applied technologies carry forward between model years), the model attempts to apply

technology

to each manufacturer ’ s fleet in a manner that minimizes “effective costs” (accounting, in particular, for technology costs and avoided fuel outlay s), continuing to add improvements as long as doing so would help toward compliance with specified standards or would produce fuel savings that “p ay back” at least as quickly

as specified in the input file mentioned above. After estimating the extent to which each manufacturer might add fuel
- saving technologies under each specified regulatory alternative, the model calculates a range of phy sical imp acts, such as changes in highway travel (i.e., VMT), changes in fleetwide fuel consumption, changes in highway

fatalities, and changes in vehicular and upstream greenhouse gas and criteria pollutant emissions. The model also applies a variety of input est imates and assumptions toPage 428 of 850

calculate economic costs and benefits to vehicle owners and society, based on these ph ys ical impacts. Since the manufacturers of HD pickups and vans generall y onl y have one basic pickup truck and van with different versions (( i.e. , different wheelbases, cab sizes, two
- wheel drive, four
- wheel drive, etc.) there exists less flexibility than in the light
- dut y fleet to coordinate model improvements over several years . As such , the CAFE model allows changes to the HD pickups and vans to meet new standards according to predefined redesign cycle s included as a model input
. As noted above, the opportunities for large
- scale changes ( e.g. , new engines, transmission, vehicle body and mass) thus occur less frequentl y than in the light
- dut y fleet, ty picall y at spans of eight or more years for this analy sis . However, opportunities for gradual improvements not necessarily linked to large scale changes can occur between the redesign cycles (i.e., model refresh) . Examples of such improveme nts are upgrades to an existing vehicle model’s engine, transmission and aftertreatment sy stems. Given th e long redesign cycle used in this analy sis and the understanding with respect to where the different manufacturers are in that cycle, the agencies have initially determined that the full implementation of the proposed standards would be feasible and appropriate b y the 202 7 model year. This analy sis reflects several changes made to the model since 2012, when NHTSA used the model to estimate the effects, costs, and benefits of final CAFE standards for light
- dut y vehicles produced during MYs 2017
- 2021, and augural standards for MYs 2022
- 2025. Some of these changes specifically enable anal ys is of potential fuel consumption standards (and, hence, CO 2 emissi ons standards harmonized with fuel consumption standards) for heav y - dut y pickups and vans; other changes implement more general improvements to the model. Key changes include the following:

 Changes to accommodate standards for heav y - duty pickups and vans, including attribute
based standards involving targets that vary with “work factor”.  Explicit calculation of test weight, taking into account test weight “bins” and differences in the definition of test weight for light
- dut y vehicles (curb weight plus 300 pound) and heav y - dut y pickups and vans (average of GVWR and curb weight).  Procedures to estimate increases in payload when curb weight is reduced, increases in towing capacity if GVWR is reduced, and calculation procedures to correspondingl y update calculated work factors.  In clusion of technologies not included in prior analy ses.  Changes to enable more explicit accounting for shared vehicle platforms and adoption and “inheritance” of major engine changes.  Expansion of the Monte Carlo simulation procedures u sed to perform probabilistic uncertainty analysis. In addition to the inputs summarized above, the agencies’ anal ys is of potential standards for HD pickups and vans makes use of a range of other estimates and assumptions specified as inputs to the CAFE mod eling s ys tem. Some significant inputs (e.g., estimates of future fuel prices) also applicable to other HD segments are discussed below in Section IX. Others morePage 429 of 850

specific to the anal ys is of HD pickups and vans are listed as follows, with additional detai ls in section D:

 Vehicle survival and mileage accumulation  VMT rebound  On
- road “gap” in fuel consumption  Fleet population profile  Past fuel consumption levels  Long
- term fuel consumption levels  Pay back period  Coefficients for fatality calculations  Compliance credits carried
- forward  Emission factors for non
- CO 2 emissions  Refueling time benefits  External Costs of travel  Ownership and operating costs The CAFE model and its modifications for this rulemaking are described in more detail in Section I. below as well as the D raft RIA Chapter 10
. **(3) How Did the Agencies Develop the Analysis Fleet**  In order to more accurately estimate the impacts of potential stand ards, the agencies are estimating the composition of the future vehicle fleet. Projections of the future vehicle fleet are also done for both vocational vehicles and tractors. The procedure for pickups and vans is more detailed, though, in order to show the differences for each manufacturer in the segment
. Doing so enables estimation of the extent to which each manufacturer may need to add technology

in response to a given series of attribute
- based standards, accounting for the mix and fuel consumption o f vehicles in each manufacturer’s regulated fleet. The agencies create an anal ys is fleet in order to track the volumes and ty pes of fuel economy
- improving and CO 2 - reducing technologies that are already present in the existing fleet of Class 2b and 3 vehi cles
. This aspect of the anal ys is fleet helps to keep the CAFE model from adding technologies to vehicles that already have these technologies, which would result in “double counting” of technologies’ costs and benefits. An additional step involved proje cting the fleet sales into MYs 2019
- 2030 . This represents the fleet volumes that the agencies believe would exist in MYs 2019
- 2030. T he CAFE model considers the actual redesign ye ars of each vehicle platform for each manufacturer. Due to credit banking, some manufacturers may not need to add technology to comply

with the standards until later model years, which may be after the rulemaking period. Therefore, it is necessary to run the model until all of the vehicle technology changes have stabilized
. Mos t of the information about the vehicles that make up the 2014 anal ys is fleet was gathered from the 2014 Pre
- Model Year Reports submitted to EPA by the manufacturers under Phase 1 of Fuel Efficiency and GHG Emission Program for Medium
- and Heav y - Dut y Trucks , MYs 2014
- 2018. The major manufacturers of class 2b and class 3 trucks (Chry sler, Ford and GM) were asked to voluntarily submit updates to their Pre
- Model Year Reports. Updated dataPage 430 of 850

were provided b y Chrys ler and GM. The agencies used these updated data in constructing the anal ys is fleet for these manufacturers. The agencies agreed to treat this information as Confidential Business Information (CBI) until the publication of the NPRM. This information can be made public at this time because b y now all M Y2014 vehicle models have been produced, which makes data about them essentially public information. In addition to information about each vehicle, the agencies need additional information about the fuel economy
- improving/CO 2 - reducing technologies already on those vehicles in order to assess how much and which technologies to apply to determine a path toward future compliance
. To correctly account for the cost and effectiveness of adding technologies, it is necessary to know the technology

penetration in the existing vehicle fleet. Otherwise, “double
counting” of technology

could occur. Thus, the agencies augmented this information with publicly
- available data that include more complete technology descriptions, e.g. for specific engines and transmissions. The anal ys is fleet also requires projections of sales volumes for the years of the rulemaking anal ys is. The agencies relied on the MY 2014 pre
- model
- ye ar compliance submissions from manufacturers to provide sales volumes at the model level based on the level of disaggregation in which the models appear in the compliance data. However, the agencies only use these reported volumes without adjustment for MY 2014. For all future model years, we combine the manufacturer submissions with sales projections from the 2014 Annual Energy Outlook Reference Case and IHS Automotive to determine model variant level sales volumes in future ye ars. For more detail on how the anal ys is fleet and sales volume projections were developed, please see Section D below as well as the draft RIA Chapter 10
. **(4) What Technologies Did the Agencies Consider**  The agencies considered over 35 vehicle technologies that manufacturers could use to improve the fuel consumption and reduce CO 2 emissions of their vehicles during MYs 2021
- 202 7 . The m ajority

of the technologies described in this section are readily available, well known and proven in other vehicle sectors, and could be incorporated into vehicles once production decisions are made. Other technologies considered may not currently

be in production, but are beyond the research phase and under development, and are expected to be in production in highway

vehicles over the next few years. These are technologies that are capable of achieving significant improvements in fuel economy and reduct ions in CO 2 emissions, at reasonable costs. The agencies did not consider technologies in the research stage because there is insufficient time for such technologies to move from research to production during the model ye ars covered b y this proposed actio n. However, we are considering and seek comment on advanced technology

credits to encourage the development of such technologies , as discussed below in Section VI. E
. The technologies considered in the agencies’ anal ysis are briefl y described below. The y fall into five broad categories: e ngine technologies, transmission technologies, vehicle technologies, electrification/accessory technologies, and hy

brid technologies
.Page 431 of 850

In this class of trucks and vans, diesel engines are installed in about half of all vehicles. The buyer’s decision to purchase a diesel versus gasoline engine depends on several factors including initial purchase price, fuel operating costs, durability , to wing capability and payload capacity amongst other reasons. As discussed in IV.B. above, the agencies generall y prefer to set standards that do not distinguish between fuel ty pes where technological or market
- based reasons do not strongl y argue otherwise. However, as with Phase 1, we continue to believe that fundamental differences between spark ignition and compression ignition engines warrant unique fuel standards, which is also important in ensuring that our program maintains product choices available to vehicle buye rs. Therefore, we are proposing separate standards for gasoline and diesel vehicles and in the context of our technology discussion for heavy
- duty pickups and vans, we are treating gasoline and diesel engines separately so each has a set of baseline technologies. We discuss performance improvements in terms of changes to those baseline engines. Our cost and inventory

estimates contained elsewhere reflect the current fleet baseline with an appropriate mix of gasoline and diesel engines. No te that we are not basing the proposed standards on a targeted switch in the mix of diesel and gasoline vehicles. We believe our proposed standards require similar levels of technology development and cost for both diesel and gasoline vehicles. Hence the proposed program is not intended to force, nor discourage, changes in a manufacturer’s fleet mix between gasoline and diesel vehicles. Ty pes of engine technologies that improve fuel efficiency and reduce CO 2 emissions include the following:

 Low
- friction lubricants

– low viscosity and advanced low friction lubricant oils are now available with improved performance and better lubrication. If manufacturers choose to make use of these lubricants, they would need to make engine changes and possibly conduct d urability testing to accommodate the low
- friction lubricants.

 Reduction of engine friction losses

– can be achieved through low
- tension piston rings, roller cam followers, improved material coatings, more optimal thermal management, piston surface treatments, and other improvements in the design of engine components and subsy stems that improve engine operation.

 Reduction of engine parasitic demand

– mechanical engine load reduction can be achieved b y variable
- displacement oil pumps, higher
- efficiency d irect injection fuel pumps, and variable speed/displacement coolant pumps.

 Cylinder deactivation

– deactivates the intake and exhaust valves and prevents fuel injection into some cylinders during light
- load operation. The engine runs temporaril y as though it were a smaller engine which substantially reduces pumping losses.

 Variable valve timing

– alters the timing of the intake valve, exhaust valve, or both, primarily to reduce pumping losses, increase specific power, and control residual gases.

 Varia ble valve lift

– alters the intake valve lift in order to reduce pumping losses and more efficiently

ingest air.

 Stoichiometric gasoline direct

- injection technology

– injects fuel at high pressure directly into the combustion chamber to improve cooling of the air/fuel charge within thePage 432 of 850

cylinder, which allows for higher compression ratios and increased thermody namic efficiency
.

 Cooled exhaust gas recirculation

– technology that conceptuall y involves utilizing EGR as a charge diluent for controlling combustion temperatures and cooling the EGR prior to its introduction to the combustion system.

• Turbocharging and downsizing

– technology approach that conceptuall y involves decreasing the displacement and cylinder count to improve efficiency when not demanding regular high loads and adding a turbocharger to recover any loss to the original larger engine peak operating power. This technology was limited in this anal ys is to vehicles that are not expected to operate at high trailer towing levels and instead are more akin to duty

cycles of light duty

(i.e. V6 vans).

• Lean
- burn combustion

– concept that gasoline engines that are normally stoichiometric mainly for emissi on reason s can run lean over a range of operating conditions and utilize diesel like aftertreatment sy stems to control NO X . For this anal ys is, we determined that the modal operation nature of this technology to currentl y only be beneficial at light loa ds would not be appropriate for a heav y dut y application purchased specifically for its high work and load capability
.

 Diesel engine improvements and diesel aftertreatment improvements

– improved turbocharger, EGR s ys tems, and advanced timing can provide m ore efficient combustion and, hence, lower fuel consumption. Aftertreatment sy stems are a relatively new technology

on diesel vehicles and, as such, improvements are expected in coming years that allow the effectiveness of these s ys tems to improve while r educing the fuel and reductant demands of current sy stems. Ty pes of transmission technologies considered include:

 Eight

-speed automatic transmissions

– the gear span, gear ratios, and control sy stem are optimized for a broader range of efficient engine operating conditions.

 High efficiency transmission

– significant reduction of internal parasitic losses such as pumps gear bands, etc.

 Driveline friction reduction

– reduction in the driveline friction from improvements to bearings, seals and other machi ning tolerances in the axles and transfer cases.

 Secondary axle disconnect

– disconnecting of some rotating components in the front axle on 4wd vehicles when the secondary axle is not needed for traction. Ty pes of vehicle technologies considered include :Page 433 of 850  Low
- rolling

- resistance tires

– have characteristics that reduce frictional losses associated with the energy

dissipated in the deformation of the tires under load, therefore improving fuel efficiency and reducing CO 2 emissions.

 Aerodynamic drag reduction

– is achieved b y changing vehicle shape or reducing frontal area, including skirts, air dams, underbody covers, and more aerodynamic side view mirrors.

 Mass reduction and material substitution

– Mass reduction encompasses a variety of techniques ranging from improved design and better component integration to application of lighter and higher
- strength materials. Mass reduction is further compounded by reductions in engine power and ancillary s ys tems (transmission, steering, brakes, suspension, e tc.). The agencies recognize there is a range of diversity and complexity for mass reduction and material substitution technologies and there are many techniques that automotive suppliers and manufacturers are using to achieve the levels of this technolog y that the agencies have modeled in our anal ys is for this program. Ty pes of electrification/accessory and hy brid technologies considered include:

 Electric power steering

– are electrically
- assisted steering s ys tems that have advantages over traditional hydraulic power steering because it replaces a continuously operated hydraulic pump, thereb y reducing parasitic losses from the accessory drive.

 Improved accessories

– may include high efficiency

alternators, electrically

driven (i.e., on - demand) water p umps and cooling fans. This excludes other electrical accessories such as electric oil pumps and electrically driven air conditioner compressors.

 Mild hybrid

– a small, engine
- driven (through a belt or other mechanism) electric motor/generator/battery

co mbination to enable features such as start
- stop, energy recovery , and launch assist.

 Strong hybrid

– a powerful electric motor/generator/battery s ys tem coupled to the powertrain to enable features such as start
- stop, and significant levels of launch assis t, electric operation, and brake energy recovery . For HD pickups and vans, the engine coupled with the strong hy brid sy stem would remain unchanged in power and torque to ensure vehicle performance at all times, even if the hy brid battery

is depleted.

 Air Conditioner Systems

– These technologies include improved hoses, connectors and seals for leakage control. They also include improved compressors, expansion valves, heat exchangers and the control of these components for the purposes of improving tailpipe CO 2 emissions as a result of A/C use. 347

347 See Draft RI A Chapter 2.3 for more detailed technology descriptions.Page 434 of 850

**(5) How Did the Agencies Determine the Costs and Effectiveness of Each of These**  **Technologies** Building on the technical anal ys is underl yi ng the 2017
- 2025 MY light
- duty vehicle rule, the 2014
- 2018 MY heavy
- dut y vehicle rule, and the 2014 SwRIreport, the agencies took a fresh look at technology

cost and effectiveness values for purposes of this proposal. For costs, the agencies reconsidered both the direct (or “piece”) costs and indirect costs of individual components o f technologies. For the direct costs, the agencies followed a bill of materials (BOM) approach emplo yed by the agencies in the light
- duty rule as well as referencing costs from the 2014
- 2018 MY heavy
- dut y vehicle rule and a new cost survey performed b y Te tra Tech in 2014. For two technologies, stoichiometric gasoline direct injection (SGDI) and turbocharging with engine downsizing, the agencies relied to the extent possible on the available tear
- down data and scaling methodologies used in EPA’s ongoing study with FEV, Incorporated. This study consists of complete sy stem tear - down to evaluate technologies down to the nuts and bolts to arrive at very

detailed estimates of the costs associated with manufacturing them. 348 For the other technologies, considering all sources of information and using the BOM approach, the agencies worked together intensively to determine component costs for each of the technologies and build up the costs accordingl y. Where estimates differ between sources, we have used engineering judgment to arrive at what we believe to be the best cost estimate available today , and explained the basis for that exercise of judgment. Once costs were determined, they were adjusted to ensure that they were all expressed in 2012 dollars (see Secti on IX.B.1.e of this preamble), and indirect costs were accounted for using a methodology

consistent with the new ICM approach developed by EPA and used in the Phase 1 rule, and the 2012
- 2016 and 2017
- 2025 light
- duty rules. NHTSA and EPA also reconsidered how costs should be adjusted by modifying or scaling content assumptions to account for differences across the range of vehicle sizes and functional requirements, and adjusted the associated material cost impacts to account for the revised content. We pre sent the individual technology

costs used in this analy sis in Chapter 2.12 of the Draft RIA. Regarding estimates for technology effectiveness, the agencies used the estimates from the 2014 Southwest Research Institute study as a baseline, which was design ed specifically to inform this rulemaking. In addition, the agencies used 2017
- 2025 light
- dut y rule as a reference, and adjusted these estimates as appropriate, taking into account the unique requirement of the heav y - dut y test cycles to test at curb weight plus half payload versus the light
- duty requirement of curb plus 300 lb. The adjustments were made on an individual technology basis b y assessing

348 U.S. Environmental Protection Agency, “Draft Report

– Light
- Duty Technology Cost Analysis Pilot Study,” Contract No. EP
- C
- 07
- 069, Work Assignment 1
- 3, September 3, 2009.Page 435 of 850

the specific impact of the added load on each technology when compared to the use of the technology

on a light
- duty

vehicle. The agencies also considered other sources such as the 2010 NAS Report, recent CAFE compliance data, and confidential manufacturer estimates of technology

effectiveness. The agencies reviewed effectiveness information from the multiple s ources for each technology and ensured that such effectiveness estimates were based on technology

hardware consistent with the BOM components used to estimate costs. Together, the agencies compared the multiple estimates and assessed their validity , takin g care to ensure that common BOM definitions and other vehicle attributes such as performance and drivability were taken into account. The agencies note that the effectiveness values estimated for the technologies may represent average values applied to the baseline fleet described earlier, and do not reflect the potentially limitless spectrum of possible values that could result from adding the technology to different vehicles. For example, while the agencies have estimated an effectiveness of 0.5 pe rcent for low friction lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle’s oil viscosity rating. Similarly, the reduction in rolling resistance (and thus the improvement in fuel efficiency and the reduct ion in CO 2 emissions) due to the application of LRR tires depends not only on the unique characteristics of the tires originall y on the vehicle, but on the unique characteristics of the tires being applied, characteristics which must be balanced between fu el efficiency , safet y, and performance. Aerodynamic drag reduction is much the same

—it can improve fuel efficiency and reduce CO 2 emissions, but it is also highl y dependent on vehicle
- specific functional objectives. For purposes of this NPRM, the agencie s believe that emplo yi ng average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and individual vehicles) might obtain from adding a fuel
- sav ing technology
. The following contains a description of technologies the agencies considered in the anal ys is for this proposal. (a ) Engine Technologies The agencies reviewed the engine technology estimates used in the 2017
- 2025 light
- duty rule, the 2014
- 2018 heavy
- dut y rule, and the 2014 SwRIreport. In doing so the agencies reconsidered all available sources and updated the estimates as appropriate. The section below describes both diesel and gasoline engine technologies considered for this program. (i) Lo w Friction Lubricants One of the most basic methods of reducing fuel consumption in both gasoline and diesel engines is the use of lower viscosity engine lubricants. More advanced multi
- viscosity engine oils are available today

with improved performance i n a wider temperature band and with better lubricating properties. This can be accomplished by changes to the oil base stock ( e.g. , switching engine lubricants from a Group I base oils to lower
- friction, lower viscosity Group III sy nthetic) and through changes to lubricant additive packages ( e.g. , friction modifiers and viscosity improvers). The use of 5W
- 30 motor oil is now widespread and auto manufacturers are introducing the use of even lower viscosity oils, such as 5W
- 20 and 0W
- 20, to improve cold
-Page 436 of 850

f low properties and reduce cold start friction. However, in some cases, changes to the crankshaft, rod and main bearings and changes to the mechanical tolerances of engine components may

be required. In all cases, durability testing would be required to e nsure that durability is not compromised. The shift to lower viscosity and lower friction lubricants will also improve the effectiveness of valvetrain technologies such as cylinder deactivation, which rel y on a minimum oil temperature (viscosity) for oper ation. (ii) Engine Friction Reduction In addition to low friction lubricants, manufacturers can also reduce friction and improve fuel consumption by

improving the design of both diesel and gasoline engine components and subsy stems. Approximately 10 percent of the energy

consumed by

a vehicle is lost to friction, and just over half is due to frictional losses within the engine. 349 Examples include improvements in low
- tension piston rings, piston skirt design, roller cam followers, improved crankshaft design and b earings, material coatings, material substitution, more optimal thermal management, and piston and cylinder surface treatments. Additionally , as computer - aided modeling software continues to improve, more opportunities for evolutionary friction reductions may become available. All reciprocating and rotating components in the engine are potential candidates for friction reduction, and minute improvements in several components can add up to a measurable fuel efficiency improvement. (iii) Engine Parasitic Demand Reduction In addition to phy sical engine friction reduction, manufacturers can reduce the mechanical load on the engine from parasitics, such as oil, fuel, and coolant pumps. The high
pressure fuel pumps of direct
- injection gasoline and diesel engines have particularly high demand. Example improvements include variable speed or variable displacement water pumps, variable displacement oil pumps, more efficient high pressure fuel pumps, valvetrain upgrades and shutting off piston cooling when no t needed. (iv) Coupled Cam Phasing Valvetrains with coupled (or coordinated) cam phasing can modify the timing of both the inlet valves and the exhaust valves an equal amount by phasing the camshaft of an overhead valve engine. 350 For overhead valve engines, whi ch have onl y one camshaft to actuate both inlet

349 “I mp act of Friction Reduc tion Technologies on Fuel Economy,” Fenske, G. Presented at the March 2009 Chicago Chapter Meeting of the ‘Society of Tribologists and Lubricated Engineers’ Meeting, March 18th, 2009. Available at: http://www.chicagostle.org/program/2008
- 2009/Impact%20of

%20Friction%20Reduction%20Technologies%20on%20Fuel%20Economy%20
- %20with%20VGs%20removed.pdf (last accessed July 9, 2009). 350 Although couple cam phasing appears only in the single overhead cam and overhead valve branches of the decision tree, it is noted that a single phaser with a secondary chain drive would allow couple cam phasing to be applied to direct overhead cam engines. Since this would potentially be adopted on a limited number of direct overhead cam engines NHTSA did not include it in that bran ch of the decision tree.Page 437 of 850

and exhaust valves, couple cam phasing is the only variable valve timing implementation option available and requires only one cam phaser. 351 (v) Cylinder Deactivation In conventional spark
- ignited engines throttling the airflow controls engine torque output. At partial loads, efficiency can be improved b y using cylinder deactivation instead of throttling. Cylinder deactivation can improve engine efficiency by disabling or deactivating (usuall y) half of th e cylinders when the load is less than half of the engine’s total torque capability

– the valves are kept closed, and no fuel is injected

– as a result, the trapped air within the deactivated cylinders is simply

compressed and expanded as an air spring, wi th reduced friction and heat losses. The active cylinders combust at almost double the load required if all of the cylinders were operating. Pumping losses are significantl y reduced as long as the engine is operated in this “part
- cylinder” mode. Cylinde r deactivation control strategy relies on setting maximum manifold absolute pressures or predicted torque within a range in which it can deactivate the cylinders. Noise and vibration issues reduce the operating range to which cylinder deactivation is allo wed, although manufacturers are exploring vehicle changes that enable increasing the amount of time that cylinder deactivation might be suitable. Some manufacturers may choose to adopt active engine mounts and/or active noise cancellations sy stems to addr ess Noise Vibration and Harshness (NVH) concerns and to allow a greater operating range of activation. Cylinder deactivation has seen a recent resurgence thanks to better valvetrain designs and engine controls. General Motors and Chry sler Group have inc orporated cylinder deactivation across a substantial portion of their V8
- powered lineups. (vi) Stoichiometric Gasoline Direct Injection SGDIengines inject fuel at high pressure directl y into the combustion chamber (rather than the intake port in port fuel inj ection). SGDI requires changes to the injector design, an additional high pressure fuel pump, new fuel rails to handle the higher fuel pressures and changes to the cylinder head and piston crown design. Direct injection of the fuel into the cylinder improves cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency without the onset of combustion knock. Recent injector design advances, improved electronic engine management sy stem s and the introduction of multiple injection events per cylinder firing cycle promote better mixing of the air and fuel, enhance combustion rates, increase residual exhaust gas tolerance and improve cold start emissions. SGDI engines achieve higher power density and match well with other technologies, such as boosting and variable valvetrain designs.

351 It is also noted that coaxial camshaft developments would allow other variable valve timing options to be applied to overhead valve engines. However, since they would potentially be adopted on a limited number of overhead valve e ngines, NHTSA did not include them in the decision tree.Page 438 of 850

Several manufacturers have recently introduced vehicles with SGDIengines, including GM and Ford and have announced their plans to increase dramaticall y the number of SGDI engines in their portfolios. (vii) Turbocharging and Downsizing The specific power of a naturally aspirated engine is primarily limited by

the rate at which the engine is able to draw air into the combustion chambers. Turbocharging and superchargi ng (grouped together here as boosting) are two methods to increase the intake manifold pressure and cylinder charge
- air mass above naturall y aspirated levels. Boosting increases the airflow into the engine, thus increasing the specific power level, and wi th it the ability to reduce engine displacement while maintaining performance. This effectivel y reduces the pumping losses at lighter loads in comparison to a larger, naturall y aspirated engine. Almost every

major manufacturer currentl y markets a vehicle with some form of boosting. While boosting has been a common practice for increasing performance for several decades, turbocharging has considerable potential to improve fuel econom y and reduce CO 2 emissions when the engine displacement is also reduced. Specific power levels for a boosted engine often exceed 100 hp/L , compared to average naturall y aspirated engine power densities of roughl y 70 hp/L. As a result, engines can be downsized roughl y 30 percent or higher while maintaining similar peak output l evels. In the last decade, improvements to turbocharger turbine and compressor design have improved their reliability and performance across the entire engine operating range. New variable geometry turbines and ball
- bearing center cartridges allow faster turbocharger spool
- up (virtually eliminating the once
- common “turbo lag”) while maintaining high flow rates for increased boost at high engine speeds. Low speed torque output has been dramaticall y improved for modern turbocharged engines. However, even with turbocharger improvements, maximum engine torque at very low engine speed conditions, for example launch from standstill, is increased less than at mid and high engine speed conditions. The potential to downsize engines may

be less on vehicles with l ow displacement to vehicle mass ratios for example a very

small displacement engine in a vehicle with significant curb weight, in order to provide adequate acceleration from standstill, particularly up grades or at high altitudes. The use of GDI in combi nation with turbocharging and charge air cooling reduces the fuel octane requirements for knock limited combustion enabling the use of higher compression ratios and boosting pressures. Recentl y published data with advanced spray
- guided injection sy stems and more aggressive engine downsizing targeted towards reduced fuel consumption and CO 2 emissions reductions indicate that the potential for reducing CO 2 emissions for turbocharged, downsized GDI engines may be as much as 15 to 30 percent relative to port
- f uel
injected engines. 14,15,16,17,18 Confidential manufacturer data suggests an incremental range of fuel consumption and CO 2 emission reduction of 4.8 to 7.5 percent for turbocharging and downsizing. Other publicly
- available sources suggest a fuel consumption and CO 2 emission reduction of 8 to 13 percent compared to current
- production naturall y - aspirated engines without friction reduction or other fuel economy technologies: a joint technical paper by Bosch and Ricardo suggesting fuel economy gain of 8 to 10 percent for downsizing from a 5.7 liter port injection V8 to a 3.6 liter V6 with direct injection using a wall
- guided direct injection sy stem; a Renault report suggesting a 11.9 percent NEDC fuel consumption gain for downsizing from a 1.4 liter port in

jection in
- line 4
- cylinder engine to a 1.0 liter in
- line 4
- cylinder engine, also withPage 439 of 850

wall
- guided direct injection; and a Robert Bosch paper suggesting a 13 percent NEDC gain for downsizing to a turbocharged DI engine, again with wall
- guided injection. T hese reported fuel econom y benefits show a wide range depending on the SGDI technology employed. Note that for this anal ys is we determined that this technology path is only

applicable to heav y dut y applications that have operating conditions more closely a ssociated with light duty vehicles. This includes vans designed mainl y for cargo volume or modest payloads having similar GCWR to light duty applications. These vans cannot tow trailers heavier than similar light duty vehicles and are largel y al ready sharing engines of significantl y s maller displacement and cylinder count compared to heav y duty vehicles designed mainl y for trailer towing. (viii) Cooled Exhaust

- Gas Recirculation Cooled exhaust gas recirculation or Boosted EGR is a combustion concept that involves utilizing EGR as a charge diluent for controlling combustion temperatures and cooling the EGR prior to its introduction to the combustion sy stem. Higher exhaust gas residual levels at part load conditions reduce pumping losses for increased fuel econom y. The additional charge dilution enabled b y cooled EGR reduces the incidence of knocking combustion and obviates the need for fuel enrichment at high engine power. This allows for higher boost pressure and/or compression ratio and further reduction in eng ine displacement and both pumping and friction losses while maintaining performance. Engines of this ty pe use GDI and both dual cam phasing and discrete variable valve lift. The EGR sy stems considered in this proposed rule, consistent with the proposal, would use a dual
- loop sy stem with both high and low pressure EGR loops and dual EGR coolers. The engines would also use single
- stage, variable geometry turbocharging with higher intake boost pressure available across a broader range of engine operation th an conventional turbocharged SIengines. Such a s ys tem is estimated to be capable of an additional 3 to 5 percent effectiveness relative to a turbocharged, downsized GDI engine without cooled
EGR. The agencies have also considered a more advanced version of such a cooled EGR s ys tem that employ s very

high combustion pressures by using dual stage turbocharging. (b ) Diesel Engine Technologies Diesel engines have several characteristics that give them superior fuel efficiency compared to conventional gasoline, s park
- ignited engines. Pumping losses are much lower due to lack of (or greatl y reduced) throttling. The diesel combustion cycle operates at a higher compression ratio, with a very lean air/fuel mixture, and turbocharged light
- duty diesels ty pically achie ve much higher torque levels at lower engine speeds than equivalent
- displacement naturally
- aspirated gasoline engines. Additionally, diesel fuel has a higher energy content per gallon. 352 However, diesel fuel also has a higher carbon to hydrogen ratio, wh ich increases the amount of CO 2 emitted per gallon of fuel used b y approximately 15 percent over a gallon of gasoline.

352 Burning one gallon of diesel fuel produces about 15 percent more carbon dioxide than gasoline due to the higher density and carbon to hydrogen ratio.Page 440 of 850

Based on confidential business information and the 2010 NAS Report, two major areas of diesel engine design could be improved during the timeframe of this proposed rule . These areas include aftertreatment improvements and a broad range of engine improvements. (i ) Aftertreatment Improvements The HD diesel pickup and van segment has largely adopted the SCR ty

pe of aftertreatment s ys tem to comply with criteria pollutant emission standards. As the experience base for SCR expands over the next few ye ars, many improvements in this aftertreatment s ys tem such as construction of the catal ys t, thermal management, and reductant optimization may result in a reduction in the amount of fuel used in the process. However, due to uncertainties with these improvements regarding the extent of current optimization and future criteria emissions obligations, the agencies are not considering aftertreatment improvements as a fuel
- saving technology

in the rulemaking analy sis. (ii) Engine Improvements Diesel engines in the HD pickup and van segment are expected to have several improvements in their base design in the 2021
- 202 7 timeframe. These improvements include items suc h as improved combustion management, optimal turbocharger design, and improved thermal management. (c) Transmission Technologies The agencies have also reviewed the transmission technology estimates used in the 2017
- 2015 light
- duty

and 2014
- 2018 heav y - dut y fi nal rules. In doing so, NHTSA and EPA considered or reconsidered all available sources including the 2014 SwRI report and updated the estimates as appropriate. The section below describes each of the transmission technologies considered for the proposal. (i ) Automatic 8
- Speed Transmissions Manufacturers can also choose to replace 6
- speed automatic transmissions with 8
- speed automatic transmissions. Additional ratios allow for further optimization of engine operation over a wider range of conditions, but this is subject to diminishing return s as the number of speeds increases. As additional gear sets are added, additional weight and friction are introduced requiring additional countermeasures to offset these losses. Some manufacturers are replacing 6
- speed automatics already, and 7
- and 8
- s peed automatics have entered production. (ii) High Efficiency Transmission For this proposal, a high efficiency transmission refers to some or all of a suite of incremental transmission improvement technologies that should be available within the 2019 to 202 7 timeframe. The majority of these improvements address mechanical friction within the transmission. These improvements include but are not limited to: shifting clutch technology improvements, improved kinematic design, dry sump lubrication sy stems, more e fficient seals, bearings and clutches (reducing drag), component superfinishing and improved transmission lubricants.Page 441 of 850

(d ) Electrification/Accessory Technologies (i ) Electrical Power Steering or Electrohydraulic Power Steering Electric power steering (EPS) or Electroh ydraulic power steering (EHPS) provides a potential reduction in CO 2 emissions and fuel consumption over hydraulic power steering because of reduced overall accessory loads. This eliminates the parasitic losses associated with belt
- driven power steerin g pumps which consistently draw load from the engine to pump hydraulic fluid through the steering actuation sy stems even when the wheels are not being turned. EPS is an enabler for all vehicle h ybridization technologies since it provides power steering wh en the engine is off. EPS may be implemented on most vehicles with a standard 12V sy stem. Some heavier vehicles may require a higher voltage s ys tem which may add cost and complexity
. (ii) Improved Accessories The accessories on an engine, including the altern ator, coolant and oil pumps are traditionally

mechanically
- driven. A reduction in CO 2 emissions and fuel consumption can be realized by

driving them electrically , and only when needed (“on
- demand”). Electric water pumps and electric fans can provide better control of engine cooling. For example, coolant flow from an electric water pump can be reduced and the radiator fan can be shut off during engine warm
- up or cold ambient temperature conditions which will reduce warm
up time, reduce warm
- up fuel enric hment, and reduce parasitic losses. Indirect benefit may

be obtained by

reducing the flow from the water pump electrically during the engine warm
- up period, allowing the engine to heat more rapidly and thereb y reducing the fuel enrichment needed during co ld operation and warm
- up of the engine. Faster oil warm - up may

also result from better management of the coolant warm
- up period. Further benefit may be obtained when electrification is combined with an improved, higher efficiency engine alternator used to suppl y power to the electrified accessories. Intelligent cooling can more easil y be applied to vehicles that do not ty pically carry heav y payl oads, so larger vehicles with towing capacity present a challenge, as these vehicles have high cooling fan loa ds. 353 However, towing vehicles tend to have large cooling s ys tem capacity and flow scaled to required heat rejection levels when under full load situations such as towing at GCWR in extreme ambient conditions. During almost all other situations, this design characteristic may

result in unnecessary

energy usage for coolant pumping and heat rejection to the radiator. The agencies considered whether to include electric oil pump technology for the rulemaking. Because it is necessary to operate the oil pump any time the engine is running,

353 In the CAFE model, improved accessories refer s solely to improved engine cooling. However, EPA has included a high efficiency alternator in this category, as well as improvements to the cooling system.Page 442 of 850

electric oil pump technology has insignificant effect on efficiency . Therefore, the agencies decided to not include electric oil pump technology
. (iii) Mild Hybrid Mild hy brid s ys tems offer idle
- stop functionality and a limited level of regenerative braking and power assist. These s ys tems replace the conventional alternator with a belt or crank driven starter/alternator and may add high voltage electrical accessories (which may include electric power steering and an auxiliary automat ic transmission pump). The limited electrical requirements of these s ys tems allow the use of lead
- acid batteries or supercapacitors for energy storage, or the use of a small lithium
- ion battery pack. (iv) Strong Hybrid A hy brid vehicle is a vehicle that combin es two significant sources of propulsion energy , where one uses a consumable fuel (like gasoline), and one is rechargeable (during operation, or by another energy

source). Hy

brid technology

is well established in the U.S. light
- duty market and more manufa cturers are adding h yb rid models to their lineups. Hy brids reduce fuel consumption through three major mechanisms:

 The internal combustion engine can be optimized (through downsizing, modifying the operating cycle, or other control techniques) to operate at or near its most efficient point more of the time. Power loss from engine downsizing can be mitigated by employing power assist from the secondary power source.

 A significant amount of the energy normall y lost as heat while braking can be captured and stored in the energy storage s ys tem for later use.

 The engine is turned off when it is not needed, such as when the vehicle is coasting or when stopped. Hy brid vehicles utilize some combination of the three above mechanisms to reduce fuel consumption and CO 2 emissions. The effectiveness of fuel consumption and CO 2 reduction depends on the utilization of the above mechanisms and how aggressivel y they are p ursued. One area where this variation is particularl y prevalent is in the choice of engine size and its effect on balancing fuel econom y and performance. Some manufacturers choose not to downsize the engine when applying hybrid technologies. In these ca ses, overall performance (acceleration) is ty picall y improved beyond the conventional engine
. H owever , fuel efficiency improves less than if the engine was downsized to maintain the same performance as the conventional version. The non - downsizing approach is used for vehicles like trucks where towing and/or hauling are an integral part of their performance requirements. In these cases, if the engine is downsized, the battery can be quickl y drained during a long hill climb with a heavy load, leaving only a downsized engine to carry the entire load. Because towing capability is currently a heavil y marketed truck attribute, manufacturers are hesitant to offer a truck with downsized engine which can lead to a significantly diminished towing performance when the battery state of charge level is low, and therefore engines are traditionally not downsized for these vehicles.Page 443 of 850

Strong Hy

brid technology

utilizes an axial electric motor connected to the transmission input shaft and connected to the engine crankshaft through a clutch. The axial motor is a motor/generator that can provide sufficient torque for launch assist, all electric operation, and the ability to recover significant levels of braking energy
. (e) Vehicle Technologies (i ) Mass Reduction Mass reduction is a tec hnology that can be used in a manufacturer’s strategy to meet the Heav y Dut y Greenhouse Gas Phase 2 standards. Vehicle mass reduction (also referred to as “down
- w eighting” or ‘light
- weighting”), decreases fuel consumption and GHG emissions by reducing the energy

demand needed to overcome inertia forces, and rolling resistance. Automotive companies have worked with mass reduction technologies for many ye ars and a lot of these technologies have been used in production vehicles. The weight savings achieved by

adopting mass reduction technologies offset weight gains due to increased vehicle size, larger powertrains, and increased feature content (sound insulation, entertainment sy stems, improved climate control, panoramic roof, etc.). Sometimes mass reductio n has been used to increase vehicle towing and payload capabilities. Manufacturers emplo y a systematic approach to mass reduction, where the net mass reduction is the addition of a direct component or sy stem mass reduction, also referred to as primary mass reduction, plus the additional mass reduction taken from indirect ancillary s ys tems and components, also referred to as secondary mass reduction or mass compounding. There are more secondary

mass reductions achievable for light
- duty vehicles compared to heav y - dut y vehicles, which are limited due to the higher towing and payload requirements for these vehicles. M ass reduction can be achieved through a number of approaches, even while maintaining other vehicle functionalities
. As summarized by NAS in its 2011 light duty vehicle report, 354 there are two key

strategies for primary

mass reduction: 1) changing the design to use less material ; 2) substituting lighter materials for heavier materials. The first key

strategy of using less material compared to the b aseline component can be achieved b y optimizing the design and structure of vehicle component s , system s and vehicle structure. Vehicle manufacturers have long used these continuall y - improving CAE tools to optimize vehicle designs. For example, the Future Steel Vehicle (FSV) project 355 sponsored by WorldAutoSteel used three levels of optimization: topology optimization, low fidelity 3G (Geometry

Grade and Gauge) optimization, and subsy stem optimization, to achieve 30 percent mass reduction in the body structure of a vehicle with a mild steel unibody structure
. Using less

354 Committee on the Assessment of Technologies for Improving Light
- Duty Vehicle Fuel Economy; Natio nal Research Council, “Assessment of Fuel Economy Technologies for Light
- Duty Vehicles”, 2011. Available at http://www.nap.edu/catalog.php?record_id=12924 (last accessed Jun 27, 2012). 355 SAE World Congress, “Focus B
- pillar ‘tailor rolled’ to 8 different th icknesses,” Feb. 24, 2010. Available at http://www.sae.org/mags/AEI/7695 (last accessed Jun. 10, 2012).Page 444 of 850

material can also be achieved through improving the manufacturing process, such as b y using improved joining technologies and parts consolidation. This method is often used in combination with applying new materials. The second key

strategy to reduce mass of an assembly or component involves the substitution of lower density and/or higher strength materials. Material substitution includes replacing materials, such as mild steel, with higher - strength and advanced steels, aluminum, magnesium, and composite materials. In practice, material substitution tends to be quite specific to the manufacturer and situation. Some materials work better than others for particular vehicle components, and a manufacturer may invest more heavily

in adjusting to a particular type of advanced material, thus complicating its ability to consider others. The agencies recognize that like any t yp e of mass reduction, material substitution has to be conducted not only with consideration to maintaining equivalent component strength, but also to maintaining all the other attributes of that component, sy stem or vehicle, such as crashworthiness, durability , and noise, vibration and harshness (NVH). If vehicle mass is reduc ed sufficiently through application of the two primary strategies of using less material and material substitution described above, secondary mass reduction options may

become available. Secondary mass reduction is enabled when the load requirements of a component are reduced as a result of primary mass reduction. If the primary mass reduction reaches a sufficient level, a manufacturer may use a smaller, lighter, and potentially more efficient powertrain while maintaining vehicle acceleration performance. If a powertrain is downsized, a portion of the mass reduction may be attributed to the reduced torque requirement which results from the lower vehicle mass. The lower torque requirement enables a reduction in engine displacement, changes to transmission torque converter and gear ratios, and changes to final drive gear ratio. The reduced powertrain torque enables the downsizing and/or mass reduction of powertrain components and accompanying reduced rotating mass (e.g., for transmission, driveshafts/halfs hafts, wheels, and tires) without sacrificing powertrain durability
. Likewise, the combined mass reductions of the engine, drivetrain, and body in turn reduce stresses on the suspension components, steering components, wheels, tires, and brakes, which can allow further reductions in the mass of these subsy stems. Reducing the unsprung masses such as the brakes, control arms, wheels, and tires further reduce stresses in the suspension mounting points, which will allow for further optimization and potential mass reduction. However, pickup trucks have towing and hauling requirements which must be taken into account when determining the amount of secondary mass reduction that is possible and so it is less than that of passenger cars. Ford’s MY 2015 F
- 150 is on e example of a light duty manufacturer who has begun producing high volume vehicles with a significant amount of mass reduction identified, specificall y 250 to 750 lb per vehicle 356 . The vehicle is an aluminum intensive design and includes an aluminum cab s tructure, body panels, and suspension components, as well as a high

356 “2008/9 Blueprint for Sustainability,” Ford Motor Company. Available at: http:// www.ford.com/g o/sustainability (last accessed February 8, 2010).Page 445 of 850

strength steel frame and a smaller, lighter and more efficient engine. The Executive Summary to Ducker Worldwide’s 2014 report 357 states that state that the MY 2015 F
- 150 contains 1080 pounds of aluminum with at least half of this being aluminum sheet and extrusions for body and closures. Ford engine range for its light duty truck fleet includes a 2.7L EcoBoost V
- 6. It is possible that the strategy

of aluminum body

panels will be applied to the heavy dut y F
- 250 and F
- 350 versions when they are redesigned. 358 EPA recentl y completed a multi
- ye ar study with FEV North America, Inc. on the lightweighting of a light
- duty pickup truck, a 2011 GMC Silverado, titled “Mass Reduction and Cost Ana ly sis

–Li ght
- Duty Pickup Trucks Model Years 2020
- 2025” 359 . Results contain a cost curve for various mass reduction percentages with the main solution being evaluated for a 21.4 percent (511 kg/1124 lb) mass reduction resulting in an increased direct incremental manufacturing cost of $2228. In addition, the report outlines the compounding effect that occurs in a vehicle with performance requirements including hauling and towing
. Secondary mass evaluation was performed on a component level based on an overall 20 percent vehicle mass reduction. Results revealed 84 kg of the 511 kg, or 20 percent, were from secondary mass reduction. Information on this study is summarized in SAE paper 2015
- 01
- 0559. DOT has also sponsored an on
- going pickup truck lightweightin g project. This project uses a more recent baseline vehicle, a MY 2014 GMC Silverado, and the project will be finished by earl y 2016. Both projects will be utilized for the light
- dut y GHG and CAFE Midterm Evaluation mass reduction baseline characterizatio n and may be used to update assumptions of mass reduction for HD pickups and vans for the final Phase 2 rulemaking. In order to determine if technologies identified on light duty trucks are applicable to heav y - dut y pickups, EPA also contracted with FEV North America, Inc. to perform a scaling study in order to evaluate the technologies identified for the light
- dut y truck would be applicable for a heav y - dut y pickup truck, in this study a Silverado 2500, a Mercedes Sprinter and a Renault Master . This rep ort is currentl y being drafted and will be peer reviewed and finalized between the NPRM and FRM. The specific results will be presented in the final rulemaking and may be used to update assumptions of mass reduction for the FRM. The RIA for this rulemakin g shows that mass reduction is assumed to be part of the strategy for compliance for HD pickups and vans. The assumptions of mass reduction for HD pickups and vans as used in this analy sis were taken from the recent light
- duty fuel econom y/ GHG rulemaking for light
- dut y pickup trucks, though they may be updated for the FRM based upon the on
- going EPA and NHTSA lightweighting studies as well as other

357 “2015 North American Light Vehicle Aluminum Content Study

– Executive Summary”, June 2014, http://www. drivealuminum.org/research
- resources/PDF/Research/2014/2014
- ducker
- report (last accessed February 26, 2015) 358 http://www.foxnews.com/leisure/2014/09/30/ford
- confirms
- increased
- aluminum
- use - on - next - gen - super - duty
pickups/ 359 “Mass Reduction and Cost Analysis

– Light
- Duty Pickup Trucks Model Years 2020
- 2025”, FEV, North America, Inc., April 2015, Document no. EPA
- 420
- R
- 15
- 006.Page 446 of 850

information received in the interim. The cost and effectiveness assumptions for mass reduction technology

are described in the RIA. (ii) Low Rolling Resistance Tires Tire rolling resistance is the frictional loss associated mainly with the energy

dissipated in the deformation of the tires under load and thus influences fuel efficiency and CO 2 emissions. Other tire design characteristics ( e.g. , materials, construction, and tread design) influence durability , traction (both wet and dry grip), vehicle handling, and ride comfort in addition to rolling resistance. A t ypical LRR tire’s attributes would include: increas ed tire inflation pressure, material changes, and tire construction with less hy steresis, geometry changes ( e.g. , reduced aspect ratios), and reduction in sidewall and tread deflection. These changes would generall y be accompanied with additional changes to suspension tuning and/or suspension design. (iii) Aerodynamic Drag Reduction Many factors affect a vehicle’s aerody namic drag and the resulting power required to move it through the air. While these factors change with air density and the square and cube of vehicle speed, respectively , the overall drag effect is determined by the product of its frontal area and drag coefficient, Cd. Reductions in these quantities can therefore reduce fuel consumption and CO 2 emissions. Although frontal areas tend to be rel ativel y similar within a vehicle class (mostly due to market
- competitive size requirements), significant variations in drag coefficient can be observed. Significant changes to a vehicle’s aerodyn amic performance may need to be implemented during a redesign ( e.g. , changes in vehicle shape). However, shorter
- term aerodynamic reductions, with a somewhat lower effectiveness, may be achieved through the use of revised exterior components (ty pically at a model refresh in mid
- cycle) and add
- on devices that curre ntl y being applied. The latter list would include revised front and rear fascias, modified front air dams and rear valances, addition of rear deck lips and underbody panels, and lower aerodynamic drag exterior mirrors. **(6) What Are the Projected Technology Ef**  **fectiveness Values and Costs** The assessment of the technology effectiveness and costs was determined from a combination of sources. First an assessment was performed b y SwRI under contract with the agencies to determine the effectiveness and costs on several technologies that were generall y not considered in the Phase 1 GHG rule time frame. Some of the technologies were common with the light
- dut y assessment but the effectiveness and costs of individual technologies were appropriatel y adjusted to match the expected effectiveness and costs when implemented in a heav y - dut y application. Finally , the agencies performed extensive outreach to suppliers of engine, transmission and vehicle technologies applicable to heav y - duty applications to get industry input on cost and effectiveness of potential GHG and fuel consumption reducing technologies. To achieve the levels of the proposed standards for gasoline and diesel powered heav y duty vehicles, a combination of the technologies previously discussed would be requir ed respective to unique gasoline and diesel technologies and their challenges. Although some of the technologies may

already be implemented in a portion of heav y - dut y vehicles, none of the technologies discussed are considered ubiquitous in the heav y - dut y fleet. Also, as would bePage 447 of 850

expected, the available test data show that some vehicle models would not need the full complement of available technologies to achieve the proposed standards. Furthermore, many technologies can be further improved (e.g., aerodynamic improvements) from today ’s best levels, and so allow for compliance without needing to appl y a technology that a manufacturer might deem less desirable. Technology

costs for HD pickups and vans are shown in Table VI
- 4 . These costs reflect direct and indirect costs to the vehicle manufacturer for the 2021 model year. See Chapter 2 of the Draft RIA for a more complete description of the basis of these costs. **Table VI**  **- 4**  **Technology Costs for HD Pickups & Vans Inclusive of Indirect Cost Markups for MY2021 (2012$)**  Technology Gasoline Diesel Engine changes to accommodate low friction lubes $6 $6 Engine friction reduction

– level 1 $116 $116 Engine friction reduction

– level 2 $254 $254 Dual cam phasing $183 $183 Cylinder deactivation $196 N/A Stoichiometric gasoline direct injection $451 N/A Turbo improvements N/A $16 Cooled EGR $373 $373 Turbocharging & downsizing a $671 N/A “Right
- sized” diesel from larger diesel N/A $0 8s automatic transmission (increment to 6s automatic transmission) $457 $457 Improved accessories

– level 1 $82 $82 Improved accessories

– level 2 $132 $132 Low rolling resistance tires

– level 1 $10 $10 Passive aerodyn amic improvements (aero 1) $51 $51 Passive plus Active aerody namic improvements (aero2) $230 $230 Electric (or electro/hydraulic) power steering $151 $151 Mass reduction (10% on a 6500 lb vehicle) $318 $318 Driveline friction reduction $139 $139 Stop
- start (no regenerative braking) $539 $539 Mild HEV $2730 $2730 Strong HEV without inclusion of any engine changes $6779 $6779 Note : a Cost to dow

nsize from a V8 OHC to a V6 OHC engine with twin turbos. As noted above, the CAFE model works by adding technologies in an incremental fashion to each particular vehicle in a manufacturer’s fleet until that fleet complies with the imposed st andards. It does this by following a predefined set of decision trees whereby the particular vehicle is placed on the appropriate decision tree and it follows the predefined progression of technology available on that tree. At each step along the tree, a decision is made regarding the cost of a given technology relative to what already exists on the vehicle along withPage 448 of 850

the fuel consumption improvement it provides relative to the fuel consumption at the current location on the tree, prior to deciding whether to take that next step on the tree or remain in the current location. Because the model works in this way , the input files must be structured to provide costs and effectiveness values for each technology relative to whatever technologies have been added in earlier steps along the tree. Table VI
- 5 presents the cost and effectiveness values used in the CAFE model input files.Page 449 of 850 **Table VI**  **- 5**  **CAFE Model Input Values for Cost & Effectiveness for Given Technologies a**  **Technology FC Savings**  **Incremental Cost (2012$) a,b**  **2021 2025**  **2027** Improved Lubricants and Engine Friction Reduction 1.60% 24 24 23 Coupled Cam Phasing (SOHC) 3.82% 48 43 39 Dual Variable Valve Li ft (SOHC) 2.47% 42 37 34 Cylinder Deactivation (SOHC) 3.70% 34 30 27 Intake Cam Phasing (DOHC) 0.00% 48 43 39 Dual Cam Phasing (DOHC) 3.82% 46 40 37 Dual Variable Valve Li ft (DOHC) 2.47% 42 37 34 Cylinder Deactivation (DOHC) 3.70% 34 30 27 Stoichiometric Gasoline Direct Injection (OHC) 0.50% 71 61 56 Cylinder Deactivation (OHV) 3.90% 216 188 172 Variable Valve Actuation (OHV) 6.10% 54 47 43 Stoichiometric Gasoline Direct Injection (OHV) 0.50% 71 61 56 Engine Turbocharging and Downsizing Small Gasoline Engines 8.00% 518 441 407 Medium Gasoline Engines 8.00%
- 12
- 62
- 44 Large Gasoline Engines 8.00% 623 522 456 Cooled Exhaust Gas Recirculation 3.04% 382 332 303 Cylinder Deactivation on Turbo/downsized Eng. 1.70% 33 29 26 Lean
- Burn Gasoline Direct Injection 4.30% 1,758 1,485 1,282 Improved Diesel Engine Turbocharging 2.51% 22 19 18 Engine Friction & Parasitic Reduction Small Diesel Engines 3.50% 269 253 213 Medium Diesel Engines 3.50% 345 325 273 Large Diesel Engines 3.50% 421 397 334 Downsizing of Diesel Engines (V6 to I
- 4) 11.10% 0 0 0 8
- Speed Automatic Transmission c 5.00% 482 419 382Page 450 of 850

Electric Power Steering 1.00% 160 144 130 Improved Accessories (Level 1) 0.93% 93 83 75 Improved Accessories (Level 2) 0.93% 57 54 46 Stop
- Start System 1.10% 612 517 446 Integrated Starter
- Generator 3.20% 1,040 969 760 Strong Hy

brid Electric Vehicle 17.20% 3,038 2,393 2,133 Mass Reduction (5%) 1.50% 0.28 0.24 0.21 Mass Reduction (additional 5%) 1.50% 0.87 0.75 0.66 Reduced Rolling Resistance Tires 1.10% 10 9 9 Low
- Drag Brakes 0.40% 106 102 102 Driveline Friction Reduction 0.50% 153 137 124 Aerodynamic Improvements (10%) 0.70% 58 52 47 Aerodynamic Improvements (add’l 10%) 0.70% 193 182 153 Notes: a Values for other model years available in CAFE model input files available at NHTSA web site. b For mass reduction, cost reported on mass basis (per pound of curb w eight reduction). c 8 speed automatic transmission costs include costs for high efficiency gearbox and aggressive shift logic whereas those costs were kept separate in prior analyses. **(7) Summary of Alternatives Analysis**  The major outputs of the CAFE model anal ys is are summarize d in Table VI
- 6 and Table VI
- 7 below for the flat and dy namic baselines, respectively . For a more detailed anal ys is of the alternatives, please refer to S ection D below as well as the draft RIA.Page 451 of 850

**Table VI**  **- 6**  **Summary of HD Pickup and Van Alternatives’ Analysis**

**– Method A using the**  **Flat Baseline**  **a Alternative**  **2 3**  **4 5**  Annual Standard In crease 2.0%/y 2. 5 %/y 3.5%/y 4.0%/y Stringency In crease through MY 2025 2027 2025 2025 Total Stringency In crease 9.6% 16.2% 16.3% 18.5%

Average Fuel Econom y (miles per gallon) Required 19.05 20.58 20.58 21.14 Achieved 19.12 20.58 20.83 21.32

Average Fuel Consumption (gallons /100 mi.) Required 5.25 4.86 4.86 4.73 Achieved 5.23 4.86 4.80 4.69

Average Greenhouse Gas Emissions (g/mi) Required 495 458 458 446 Achieved 493 458 453 442

In cremental Technology

Cost (vs. No
- Action) Average ($ /vehicle ) b 700 1,324 1,804 2,135 Pay back period (m) b 24 26 34 36 Total ($m) 529 1,001 1,363 1,614

Benefit
- Cost Summary , MYs 2021
- 2030 ($billion) c Fuel Savings (bil. gall.) 6.1 10.1 11.9 13.3 CO 2 Reduction (mmt) 73 118 139 155 Total Social Cost 3.3 5.6 8.7 10.2 Total Social Benefit 18.4 29.0 34.4 37.9 Net Social Benefit 15.1 23.4 25.7 27.7 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Values also used in Method B c at a 3% discount rate
.Page 452 of 850

**Table VI**  **- 7**  **Summary of HD Pickup and Van Alternatives’ Analysis -**  **Method A using the Dynam** **ic Baseline**  **a Alternative**  **2 3**  **4 5**  Annual Standard In crease 2.0%/y 2. 5 %/y 3.5%/y 4.0%/y Stringency In crease through MY 2025 2027 2025 2025 Total Stringency In crease 9.6% 16.2% 16.3% 18.5%

Average Fuel Econom y (miles per gallon) Required 19.04 20.57 20.57 21.14 Achieved 19.14 20. 61 20.83 21.27

Average Fuel Consumption (gallons /100 mi.) Required 5.25 4.86 4.86 4.73 Achieved 5.22 4.85 4.80 4.70

Average Greenhouse Gas Emissions (g/mi) Required 495 458 458 446 Achieved 491 458 453 444

In cremental Technology

Cost (vs. No
- Action) Average ($ /vehicle ) b 578 1, 348 1,655 2,080 Pay back period (m) b 25 31 34 38 Total ($m) 437 1,019 1,251 1,572

Benefit
- Cost Summary , MYs 2021
- 2030 ($billion) c Fuel Savings (bil. gall.) 5.0 8.9 10.5 11.9 CO 2 Reduction (mmt) 59 104 122 139 Total Social Cost 3.3 6 .8 9.5 13.0 Total Social Benefit 14.3 23.6 28.2 32.8 Net Social Benefit 11.0 16.8 18.7 19.8 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Values also used in Method B c at a 3% discount rate
.Page 453 of 850

In general, the proposed standards are projected to cause manufacturers to produce HD pickups and vans that are lighter, more aerodynam ic, and more technologically complex across all the alternatives, while social benefits continue to increase across all alternatives. As shown, there is a major differ ence between the relatively small i mprovements in required fuel consumption and average incremental technology cost between the alternatives, suggesting that the challenge of improving fuel consumption and CO 2 emissions accelerates as stringency increases (i.e., that there may be a “knee” in the dependence of the challenge and on the stringency). Despite the fact that the required average fuel consumption level only changes b y 3 percent between Alternative 4 and Alternative 5, average technology cost incre ases by

more than 25 percent. Note further that the difference in estimated costs, effectiveness, degree of technology penetration required, and overall benefits do not vary significantl y under either the flat or dy namic baseline assumptions. The agenci es view these results as corroborative of the basic reasonableness of the approach proposed. **(8) Consistency of the Proposed Standards with the Agencies’ Respective Legal**  **Authorities** Based on the information currentl y before the agencies, we believe that Alternative 3 would be maximum feasible and appropriate for this segment for the model years in question
. EPA believes this reflect s a reasonable consideration o f the statutory factors of technology effectiveness, feasibility , cost, lead time, and safety for purposes of CAA sections 202 (a)(1) and (2). NHTSA believes this proposal is maximum feasible under EI SA. The agencies have projected a compliance path for the proposed standards showing aggressive implement ation of technologies that the agencies consider to be available in the time frame of these rule s . Under this approach, manufacturers are expected to implement these technologies at aggressive ad option rates on essentially all vehicles across this sector by 202 7 model year. In the case of several of these technologies, adoption rates are projected to approach 100 percent . This includes a combination of engine, transmission and vehicle technologi es as described in this section across every

vehicle. The proposal also is premised on less aggressive penetration of particular advanced technologies, including strong hybrid electric vehicles. We project the proposed standards to be achievable within kn own design cycles, and we believe these standards would allow different paths to compliance in addition to the one we outline and cost here. As discussed below and throughout this anal ys is, our proposal places a higher value on maintaining functionality and capability of vehicles designed for work (versus light
- duty), and on the assurance of in use reliability and market acceptance of new technology , particularl y in initial model years of the program
. Nevertheless, it may be possible to have additional ad option rates of the technologies than we project so that further reductions could be available at reasonable cost and cost
- effectiveness. Alternative 4 is also discussed in detail below because the agencies believe it has the potential to be the maximum feasible alternative, and otherwise appropriate. The agencies could decide to adopt Alternative 4 , in whole or in part, in the final rule. In particular, the agencies believe Alternative 4, which would achieve the same stringency as the proposed standards with two years less lead time, merits serious consideration. However, the agencies are uncertainPage 454 of 850

whether the projected technologies and m arket penetration rates that could be necessary to meet the stringencies would be practicable within the lead time provided in Alternative 4. The proposed standards are generall y designed to achieve the levels of fuel consumption and GHG stringency

that A lternative 4 would achieve, but with several years of additional lead time, meaning that manufacturers could, in theory , apply new technology

at a more gradual pace and with greater flexibility . The agencies seek comment on these alternatives, including their corresponding lead times. Alternative 4 is based on a year - over - ye ar increase in stringency of 3.5 percent in MYs 2021
- 2025 whereas the proposed preferred Alternative 3 is based on a 2.5 percent ye ar - over - year increase in stringency

in MY 2021
- 2027. The agencies project that the higher rate of increase in stringency

associated with Alternative 4 and the shorter lead time would necessitate the use of a different technology

mix under Alternative 4 compared to Alternative 3. Alternative 3 would achiev e the same final stringency increase as Alternative 4 at about 8 0 percent of the average per - vehicle cost increase , and without the expected deploy ment of more advanced technology at high penetration levels . In particular, under the agencies’ primary analy sis that includes the use of strong h yb rids manufacturers are estimated to deploy strong hy brids in approximately

8 percent of new vehicles (in MY 202 7 ) under Alternative 3, compared to 12 percent under Alternative 4 (in MY 2025) . Less aggressive electrific ation technologies also appear on 33 percent of new vehicles simulated to be produced in MY 202 7 under Alternative 4, but are not necessary under Alternative 3. Additionally , it is important to note that due to the shorter lead time of Alternative 4, there are fewer vehicle refreshes and redesigns during the phase
- in period of MY 2021
- 2025. While the CAFE model’s algorithm accounts for manufacturers’ consideration of upcoming stringency changes and credit carry
- forward, the steeper ramp
- up of the standard in Alternative 4, coupled with the five
- ye ar credit life, results in a prediction that manufacturers would take less cost
- effective means to comply with the standards compared with the proposed alternative 3 phase
- in period of MY 2021
- 2027. For example, the model predicts that some manufacturers would not implement any amount of strong h yb rids on their vans during the 2021
- 2025 timeframe and instead would implement less effective technologies such as mild hy

brids at higher rates than what would otherwise have been required if they had implemented a small percentage of strong h ybrids. Whereas for Alternative 3, the longer, shallower phase
- in of the standards allows for more compliance flexibility and closer matching with the vehicle redesign cycles, which (as noted above) can be up to ten years for HD vans. There is also a high degree of sensitivity to the estimated effectiveness levels of individual technologies. At high penetration rates of all technologies on a vehicle, the result of a reduced effectiv eness of even a single technology could be non
- compliance with the standards. If the standards do not account for this uncertainty, there would be a real possibility that a manufacturer who followed the exact technology path we project would not meet thei r target because a technology performed slightl y different ly in their application. NHTSA has explored th is uncertainty , among others, in the uncertainty analy sis described in S ection D below. As discussed above, the proposed Alternative 3 standards and the Alternative 4 standards are based on the application of the technologies described in this section. These technologies are projected to be available within the lead time provided under Alternative 3

– i.e., by MY 2027 , as discussed in Draft RIA Ch apter 2.6. The proposed standards and Alternative 4 would require a relativel y aggressive implementation schedule of most of these technologies during thePage 455 of 850

program phase
- in. Heavy
- duty pickups and vans would need to have a combination of many individual technologies to achieve the proposed standards. The proposed standards are projected to yield significant emission and fuel consumption reductions without requiring a large segment transition to strong h ybrids, a technology that while successful in light
- duty passenger cars, cross - over vehicles and SUVs, may impact vehicle work capabilities 360 and have questionable customer acceptance in a large portion of this segment dedicated to towing 361

. Table VI
- 8 below shows that the agencies’ anal ys is estimates that the most cost
- effective way to meet the requirements of Alternative 3 would be to use strong hyb rids in up to 9.9 percent of pickups and 5.5 percent of vans on an indus try - wide basis whereas Alternative 4 shows strong hy brids on up to 19 percent of pickups. The anal ysis shows that the two years of additional lead time provided by

the proposed Alternative 3 would provide manufacturers with a better opportunity

to maximiz e the use of more cost effective technologies over time thereb y reducing the need for strong h ybrids which may be particularly

challenging for this market segment. The agencies seek comment on the potential use of technologies in response to Alternatives 3 and 4, as well as the corresponding lead times proposed in each alternative.

360 Hy brid batteries, motors and electronics generally add weight to a vehicle and require more space which can result in conflicts with payload weight and volume objectives. 361 Hy brid electric systems are not sized for situations when vehicles are required to do trailer towing where the combined weight of vehicle and trailer is 2 to 4 times that of the vehicle alone. During these conditions, the hybrid system will have reduced e ffectiveness. Sizing the system for trailer towing is prohibitive with respect to hybrid component required sizes and the availability of locations to place larger components like batteries.Page 456 of 850

**Table VI**  **- 8**  **CAFE Model Technology Adoption Rates for Proposal and Alternative 4 Summary** 

**– Flat**  **Baseline Proposal (2.**  **5 % per**  **year) 2021 to 2027**  **Alternative 4 (3.5% per year) 2021 to 2025**  **Technology Pickup Trucks**  **Vans Pickup**  **Trucks Vans**  Low friction lubricants 100% 100% 100% 100% Engine friction reduction 100% 100% 100% 100% Cylinder deactivation 22% 19% 22% 19% Variable valve timing 22% 82% 22% 82% Gasoline direct injection 0% 63% 0% 80% Diesel engine improvements 60% 3.6% 60% 3.6% Turbo downsized engine 0% 63% 0% 63% 8 speed transmission 98% 92% 98% 92% Low rolling resistance tires 100% 92% 100% 59% Aerodynamic drag reduction 100% 100% 100% 100% Mass reduction and materials 100% 100% 100% 100% Electric power steering 100% 49% 100% 46% Improved accessories 100% 87% 100% 36% Low drag brakes 100% 45% 100% 45% Stop/start engine s ys tems 0% 0% 15% 1.5% Mild hy brid 0% 0% 29% 15% Strong h ybrid 9.9% 5.5% 19% 0% As discussed earlier, the agencies also conducted a sensitivity anal ys is to determine a compliance pathway

where no strong h ybrids would be selected. Although the agencies project that strong h ybrids may be the most cost effective approach, manufacturers may select another compliance path. This no strong h ybrid anal ys is included the use of downsized turbocharged engine in vans currentl y equipped with large V
- 8 engines. Turbo
- downsized engines were not allowed on 6+ liter gasoline vans in the primary anal ys is because the agencies sought to preserve consumer choice with respect to vans that have large V
- 8s for towing. However, given the recent introduction of vans with considerable towing capacity and turbo
- downsized engines, the agencies believe it would be feasible for vans in the time
- frame of these proposed rules
. Table VI
- 9 below reflects the difference in penetration rates of technologies for the proposal and Alternative 4 if strong h ybridization is not chosen as a technology pathway. For simplicity, pickup tr ucks and vans are combined into a single industry wide penetration rate. While strong hy bridization may

provide the most cost effective path for a manufacturer to comply with the Proposal or Alternative 4, there are other means to comply with the requirem ents, mainly a 20 percent penetration rate of mild hy brids for the Proposal or a 66 percent penetration of mild hy brids for Alternative 4. The modeling of both alternatives predicts a 1 to 4 percent penetration of stop/start engine sy stems.Page 457 of 850

The table also shows that when strong hy brids are used as a pathway to compliance, penetration rates of all h ybrid technologies increase substantially between the proposal and Alternative 4. The anal ysis predicts an increase in strong h ybrid penetration from 8 perce nt to 12 percent, a 23 percent penetration of mild hy brids and a 10 percent penetration stop/start engine sy stems for Alternative 4 compared with the proposal. Also, by having the final standards appl y in MY2027 instead of MY2025, the proposal is not prem ised on use of any mild hy brids or stop/start engine s ys tems to achieve the same level of stringency as Alternative 4. **Table VI**  **- 9**  **CAFE Model Technology Adoption Rates for Proposal and Alternative 4 Combined Fleet and**  **Fuels Summary**

**– Flat Baseline**  **Proposal (2. 5**  **% per year) 2021 to 2027**  **Alternative 4 (3.5% per year) 2021 to 2025**  **Technology With strong**  **hybrids Without** 

**strong hybrids**  **With strong**

**hybrids Without strong** 

**hybrids** Low friction lubricants 100% 100% 100% 100% Engine friction reduction 100% 100% 100% 100% Cylinder deactivation 21% 22% 21 % 14 % Variable valve timing 46% 46% 46% 46% Gasoline direct injection 25% 45% 31% 45% Diesel engine improvements 38% 38% 38% 38 % Turbo downsized engine a 25% 31% 25% 31% 8 speed transmission 96% 96% 96% 96% Low rolling resistance tires 97% 97% 84% 84% Aerodynamic drag reduction 100% 100% 100% 100% Mass reduction and materials 100% 100% 100% 100% Electric power steering 80% 92% 79% 79% Improved accessories 67% 77% 75% 75% Low drag brakes 78% 93% 78% 78% Stop/start engine s ys tems 0% 1 % 10% 4% Mild hy brid 0% 20% 23% 66% Strong h ybrid 8% 0% 12% 0% Note : a The 6+ liter V8 vans were allowed to convert to turbocharged and downsized engines in the “without strong hybrid” analysis for both the Proposal and the Alternative 4 to provide a compliance path
. Table VI
- 10 and Table VI
- 11 below provide a further breakdown of projected technology adoption rates specifically for gasoline
- fueled p ickups and vans which shows potential adoption rates of strong h ybrids for each vehicle type. Strong h ybrids are not projected to be used in diesel applications. The Alternative 4 analy sis shows the use of strong h ybrids in up to 48 percent of gasoline p ickups , depending on the mix of strong and mild hy brids , and stop/start engine sy stems in 20 percent of gasoline pickups (the largest gasoline HD segment). It is important to note that this analy sis onl y shows one pathway to compliance, and the manufacture rs may

make other decisions, e.g., changing the mix of strong vs. mild hy brids, or applying electrification technologies to HD vans instead. The technology adoption ratesPage 458 of 850

projected for gasoline pickups and gasoline vans due to the propos ed Alternative 3 and Alternative 4 are shown in Table VI
- 10 and Table VI
- 11 , respectivel y . **Table VI**  **- 10**  **CAFE Model Technology Adoption Rates for Proposal and Alternative 4 on Gasoline Pickup Trucks** 
**– Flat Baseline**  **Pro posal (2.**  **5 % per year)**  **2021 to 2027 Alternative 4 (3.5% per year)**  **2021 to 2025 Technology**  **With strong**

**hybrids Without strong** 

**hybrids With strong** 

**hybrids Without strong** 

**hybrids** Low friction lubricants 100% 100% 100% 100% Engine friction reduction 100% 100% 100% 100% Cylinder deactivation 56% 56% 56% 56% Variable valve timing 56% 56% 56% 56% Gasoline direct injection 0% 56 % 0% 56% 8 speed transmission 100 % 100 % 100% 100% Low rolling resistance tires 100% 100% 100% 100% Aerodynamic drag reduction 100 % 100 % 100% 100% Mass reduction and materials 100 % 100 % 100% 100% Electric power steering 100 % 100 % 100% 100% Improved accessories 100 % 100 % 100 % 100 % Low drag brakes 100% 100% 100% 100% Driveline friction reduction 44% 68% 68% 68% Stop/start engine sy stems 0% 0 % 20% 0% Mild hy brid Up to 42% a 0 % 18
- 86 % a 86% Strong h ybrid Up to 25%
- Up to 48%
- Note : a Depending on extent of strong hybrid adoption as hybrid technologies can replace each other, however they will have different effectiveness and costs.Page 459 of 850

**Table VI**  **- 11**  **CAFE Model Technology Adoption Rates for Pro posal and Alternative 4 on Gasoline**  **Vans**
**– Flat Baseline**  **Proposal (2. 5**  **% per year) 2021 to 2027**  **Alternative 4 (3.5% per year) 2021 to 2025**  **Technology With strong** 

**hybrids Without strong** 

**hybrids With strong** 

**hybrids Without strong** 

**hybrids** Low friction lubricants 100% 100% 100% 100% Engine friction reduction 100% 100% 100% 100% Cylinder deactivation 23 % 3 % 23 % 3 % Variable valve timing 100 % 100 % 100 % 100 % Gasoline direct injection 57 % 97 % 97 % 97 % Turbo downsized engine a 77% 97% 77% 97% 8 speed transmission 97 % 97 % 97 % 97 % Low rolling resistance tires 100% 100% 60 % 60 % Aerodynamic drag reduction 100 % 100 % 100% 100% Mass reduction and materials 100 % 100 % 100% 100% Electric power steering 55 % 85 % 53 % 53 % Improved accessories 23 % 38 % 43 % 43 % Low drag brakes 53% 89% 53% 100% Stop/start engine sy stems 0% 0 % 2 % 0% Mild hy brid Up to 13% b 13 % 18% 40 % Strong h ybrid Up to 7%
- 0 %
- Notes: a The 6+ liter V8 vans were allowed to convert to turbocharged and downsized engines in the “without strong hybrid” analysis for both the Proposal and the Alternative 4 to provide a compliance path. b Depending on extent of strong hybrid adoption as hybrid technologies can replace each other, however they will have different effectiveness and costs. The tables above show that many technologies would be at or potentially approach 100 percent adoption rates according to the anal ys is. If certain technologies turn out to be not well suited for certain vehicle models or less effective that projected, other technology pathway s would be needed. The additional lead time provided by the proposed Alternative 3 reduces these concerns because manufacturers would have m ore flexibility to implement their compliance strategy and are more likely

to contain a product redesign cycle necessary for many new technologies to be implemented.Page 460 of 850

GM may have a particular challenge meeting new standards compared to other manufacture rs because their production consists of a larger portion of gasoline
- powered vehicles and because they

continue to offer a traditional st yle HD van equipped only with a V
- 8 engine. Under the strong h ybrid anal ys is for Alternative 3, GM is projected to app ly strong hy

brids to 46 percent of their HD gasoline pickups and 17 percent their HD gasoline vans. Under Alternative 4, GM is projected to apply a combination of 53 percent strong and 43 percent mild hy brids to their HD gasoline pickups and 44 percent mi ld hybrids to their HD vans. The no strong hy brid anal ys is shows that GM could comply without strong hy

brids based on the use of turbo downsizing on all of their HD gasoline vans to fully compl y with either Alternative 3 or Alternative 4. As modeled, Alt ernative 4 would also require GM to additionally utilize several other technologies such as higher penetration of mild hy bridization. I f GM were to choose to maintain a V
- 8 version of their current HD van and not fully utilize turbo downsizing, another co mpliance path such as some use of strong hy brids would be needed. This would also be the case if GM chose not to fully utilize some other technologies under Alterative 4 as well. In addition to the possibility of an increased level of hy bridization, the a gencies are also requesting comment on other possible outcomes associated especially with Alternative 4; in particular, the possibility of traditional van designs or other products being discontinued. Several manufacturers now offer or are moving to Europ ean styl e HD vans. Ford, for example, ha s discontinu ed its E
- series body on frame HD van and has replaced it with the unibody Transit van for MY 2015. While other manufacturers have replaced their traditional style vans with new European styl e van designs , GM continues to offer the traditional full frame style van with eight cylinder gasoline engines for higher towing capability (up to 16,000 lb GCWR) . Ty picall y, the European styl e vans are equipped with smaller engines offering better fuel consumption an d lower CO 2 emissions but with reduced towing capability , similar to light
- duty trucks (though Ford offers a Transit van with a GCWR of 15,000 lb)
. The agencies request comment on the potential for Alternative 4 in particular to incentivize GM to discont inue its current traditional style van and replace it with an as yet to be designed European style van similar to its competitor’s products. See Bluewater Network v. EPA , 370 F. 3d 1, 22 (D.C. Cir. 2004) (standard implementing technology
- forcing provision of CAA remanded to EPA for an explanation of wh y the standard was not based on discontinuation of a particular model); International Harvester v. Ruckelshaus , 478 F. 2d 615, 640
- 41 (D.C. Cir. 1973) (“We are inclined to agree with the Administrator that as long as feasible technology permits the demand for new passenger automobiles to be generally met, the basic requirements of the Act would be satisfied, even though this might occasion fewer models and a more limited choice of engine types”). Such an outc ome c ould limit consumer choice both on the style of van available in the marketplace and on the range of capabilities of the vehicles available. The agencies have not attempted to cost out this possible compliance path. The agencies request comments on the likelihood of this ty pe of redesign as a possible outcome of Alternative 3 and Alternative 4, and whether it would be appropriate. We are especially interested in comments on the potential impact on consumer choice and the costs associated with this typ e of wholesale vehicle model replacement. In addition, another potential outcome of Alternative 4 would be that manufacturers could change the product utility . For example, although GM’s traditional van discussed above currentl y offers similar towing ca pacity as gasoline pickups , GM could choose to replace enginesPage 461 of 850

designed for those towing capacities with small gas or diesel engines. The agencies request comment on the potential for Alternative 4 to lead to this ty pe of compliance approach. The agencies also request comment on the possibility that Alternative 4 could lead to increased dieselization of the HD pickup and van fleet. Dieselization is not a technology path the agencies included in the anal ys is for the Phase 1 rule or the Phase 2 prop osal but it is something the agencies could consider as a technology path under Alternative 4. As discussed earlier, diesel engines are fundamentall y more efficient than gasoline engines providing the same power (even gasoline engines with the technologie s discussed above). Alternative 4 could result in manufacturers switching from gasoline engines to diesel engines in certain challenging segments. However, while technologicall y feasible, this pathway could cause a distortion in consumer choices and sign ificantly increase the cost of those vehicles, particularly considering Alternative 4 is projected to require penetration of some form of hybridization . Also, if dieselization occurs by

manufacturers equipping vehicles with larger diesel engines rather th an “right
- sized” engines, the towing capability of the vehicles could increase resulting in higher work factors for the vehicles, higher target s, and reduced program benefits. The issue of surplus towing capability

is also discussed above in VI.B. (1). The technologies associated with meeting the proposed standards are estimated to add costs to heav y - dut y pickups and vans as shown in Table VI
- 12 and Table VI
- 13 for the flat baseline and dynamic baseline, respectively . These costs are the average fleet
- wide incremental vehicle costs relative to a vehicle meeting the MY2018 standard in each of the model years shown. Reductions associated with these costs and technologies are considerable, estimated at a 13.6 percent reduction of fuel consumption and CO 2 eq emissions from the MY 2018 baseline for gasoline and diese l engine equipped vehicles. 362 A detailed cost and cost effectiveness anal ys is for both the proposed preferred Alternative 3 are provided in Section IX and Chapter 7.1 of the draft RIA. As shown b y the anal ys is, the long
- term cost effectiveness of the prop osal is similar to that of the Phase 1 HD pickup and van standards and also falls within the range of the cost effectiveness for Phase 2 standards proposed for the other HD sectors. 363 The cost of controls would be fully

recovered by

the operator due to th e associated fuel savings, with a pay back period somewhere in the third year of ownership, as shown in Section IX.L of this preamble. Consistent with the agencies’ respective statutory authorities under CAA Section 202 (a) and 49 U.S.C. 32902(k)(2)
. , and based on the agencies’ analy sis, EPA and NHTSA are proposing Alternative 3. The agencies seek comment on Alternative 4, as we may seek to adopt it in whole or in part in the final rule. We also show the costs for the potential Alternative 4 standards i n Table VI
- 14 and Table VI
- 15
. As shown, the costs under Alternative 4 would be significantly higher compared to Al ternative 3.

362 See Table VI
- 5. 363 Analysis using the MOVES model indicates that the cost effectiveness of these standards is $95 per ton CO 2 eq removed in MY 2030 (Draft RIA Table 7
- 31), almost identical to the $90 per ton CO 2 eq removed (MY 2030) which the agencies found to be highly cost effective for these same vehicles in Phase 1. See 76 FR 57228.Page 462 of 850 **Table VI**  **- 12**  **HD Pickups and Vans Incre mental Technology Costs per Vehicle** 

**Preferred Alternative vs. Flat Baseline (2012$)**  2021 2022 2023 2024 2025 2026 2027 HD Pickups & Vans $516 $508 $791 $948 $1,161 $1,224 $1,342

**Table VI**  **- 13**  **HD Pickups and Vans Incre mental Technology Costs per Vehicle** 

**Preferred Alternative vs Dynamic Baseline (2012$)**  2021 2022 2023 2024 2025 2026 2027 HD Pickups & Vans $493 $485 $766 $896 $1,149 $1,248 $1,366
**Table VI**  **- 14**  **HD Pickups and Vans Incre mental Technology Costs per Vehicle** 

**Alternative 4 vs. Flat Baseline (2012$)**  2021 2022 2023 2024 2025 2026 2027 HD Pickups & Vans $1,050 $1,033 $1,621 $1,734 $1,825 $1,808 $1,841
**Table VI**  **- 15**  **HD Pickups and Vans Incre mental Technology Costs per Vehicle** 

**Alternative 4 vs. Dynam ic Baseline**  **(2012$)** 2021 2022 2023 2024 2025 2026 2027 HD Pickups & Vans $909 $894 $1,415 $1,532 $1,627 $1,649 $1,684 

### D. **DOT CAFE Model Analysis of the Regulatory Alternatives for HD**  **Pick ups and Vans**  Considering the establishment of potential HD pickup and van fuel consumption and GHG standards to follow those already in place through model year 2018, the agencies evaluated a range of potential regulatory alternatives. The agencies estimated the exte nt to which manufacturers might add fuel
- saving and CO 2 - avoiding technologies under each regulatory alternative, including the no
- action alternative described in Section X. of this proposal. For HD pickups and vans both agencies analyzed two no
- action al ternatives, where one no
- action alternative could be described as a “flat baseline” and the other as a “dyn amic baseline”. Please refer to Section X. of this proposal for a complete discussion of the assumptions that underlie these baselines. The agenc ies then estimated the extent to which additional technology that would be implemented to meet each regulatory alternative would incrementally (compared to the no - action alternative) impact costs to manufacturers and vehicle buye rs, phy sical outcomes such as highway

travel, fuel consumption, and greenhouse gas emissions, and economic benefits and costs to vehicle owners and society
. The remainder of this section and portions of Sections VII through X present the regulatory alternatives the agencies have c onsidered, summarize the agencies’ anal ys es, and explain the agencies’ selection of the HD pickup and van preferred alternative defined b y today’s proposed standards.Page 463 of 850

The agencies conducted coordinated and complementary anal ys es by

employing both DOT’s CAF E model and EPA’s MOVES model and other anal yt ical tools to project fuel consumption and GHG emissions impacts resulting from the proposed standards for HD pickups and vans, against both the flat and dynamic baselines. In addition to running the DOT CAFE model to provide per vehicle cost and technology values, NHTSA also used the model to estimate the full range of impacts for pickups and vans, including fuel consumption and GHG emissions, including downstream vehicular emissions as well as emissions from upstream processes related to fuel production, distribution, and delivery
. The CAFE model applies fuel properties (density

and carbon content) to estimated fuel consumption in order to calculate vehicular CO 2 emissions, applies per
- mile emission factors (in this anal ys is, from MOVES) to estimated VMT in order to calculate vehicular CH 4 and N 2 O emissions (as well, as discussed below, of non
- GHG pollutants), and applies per
- gallon upstream emission factors (in this anal ys is, from GREET) in order to calculate upstream GHG (and non
- GHG) emissions. EPA also ran its MOVES model for all HD categories, namely tractors and trailers, vocational vehicles and HD pickups and vans, to develop a consistent set of fuel consumption and CO 2 reductions for all HD categories. The MOVES runs followed largel y the procedures described above, with some differences. MOVES used the same technology application rates and costs that are part of the inputs, and used cost per vehicle outp uts of the CAFE model to evaluate the proposed standards for HD pickup trucks and vans. The agencies note that these two independent analy ses of aggregate costs and benefits both support the proposed standards. While both agencies fully anal yz ed the regul atory alternatives against both baselines, NHTSA considered its primary anal ys is to be based on the dy namic baseline, where certain cost
effective technologies are assumed to be applied by manufacturers to improve fuel efficiency beyond the Phase 1 require ments in the absence of new Phase 2 standards. On the other hand, EPA considered both baselines and EPA’s less dynamic or flat baseline analysis is presented in Sections VII through X of this proposal as well as the draft Regulatory Impact Anal ys is accomp an yi ng this proposal. In Section X both the flat and dy namic baseline anal ys es are presented for all of the regulatory alternatives. This section provides a discussion of the CAFE model, followed by the comprehensive results of the CAFE model against th e dynamic baseline to show costs, benefits, and environmental impacts of the regulatory alternatives for HD pickups and vans. This presentation of regulatory

anal ys is is consistent with NHTSA’s presentation of similar anal ys es conducted in support of the agencies joint light
- duty vehicle fuel econom y and GHG regulations. The CAFE anal ys is against the flat baseline as well as EPA’s complementary anal ys is of GHG impacts, non - GHG impacts, and economic and other impacts using MOVES is presented in Sections V II through IX of this proposal, as well as in the draft Regulatory Impact Analysis accompanying this proposal. These are presented side
- by
- side with the agencies’ joint analy ses of the other heav y - dut y sectors (i.e., tractors, trailers, vocational vehicle s). The presentation of the EPA anal ys es of HD pickups and vans in these sections is consistent with the agencies’ presentation of similar anal ys es conducted as part of the agencies’ joint HD Phase 1 regulations and with EPA’s presentation of similar analy ses conducted in support of the agencies’ joint light
- duty vehicle fuel econom y and GHG regulations. The agencies’ intention for presenting both of these complementary

and coordinated anal ys es is to offer interested readers the opportunity toPage 464 of 850

compare the regulatory

alternatives considered for Phase 2 in both the context of our Phase 1 anal yt ical approaches and our light
- dut y vehicle analytical approaches. **(1) Evaluation of**  **Regulatory Alternatives** As discussed in S ection C above, the agencies used DOT’s CAFE model to conduct an anal ys is of potential standards for HD pickups and vans. The basic operation of the CAFE model was described in section VI .C.2, so will not be repeated here. However, this section provides additional detail on the model operation, inputs, assumptions, and outputs. DOT developed the CAFE model in 2002 to support the 2003 issuance of CAFE standards for MYs 2005
- 2007 light trucks. DOT has since significantl y expanded and refined the model, an d has applied the model to support every ensuing CAFE rulemaking ;
 2006: MYs 2008
- 2011 light trucks  2008: MYs 2011
- 2015 passenger cars and light trucks (final rule prepared but withheld)  2009: MY 2011 passenger cars and light trucks  2010: MYs 2012
- 2016 passenger cars and light trucks (joint rulemaking with EPA)  2012: MYs 2017
- 2021 passenger cars and light trucks (joint rulemaking with EPA) Past analy ses conducted using the CAFE model have been subjected to extensive and detailed review and comment, much of which has informed the model’s expansion and refinement. NHTSA’s use of the model was considered and supported in Center for Biological Diversity v. National Highway Traffic Safety Admin., 538 F.3d 1172, 1194 (9th Cir. 2008). For further discussion s ee 76 FR 57198 , and the model has been subjected to formal peer review and review b y the General Accounting Office (GAO) and National Research Council (NRC). NHTSA makes public the model, source code, and

— except insofar as doing so would compromise confid ential business information (CBI) manufacturers have provided to NHTSA

— all model inputs and outputs underlying published rulemaking anal ys es. This analy sis reflects several changes made to the model since 2012, when NHTSA used the model to estimate the ef fects, costs, and benefits of final CAFE standards for light
- dut y vehicles produced during MYs 2017
- 2021, and augural standards for MYs 2022
- 2025. Some of these changes specifically enable anal ys is of potential fuel consumption standards (and, hence, related CO 2 emissions standards harmonized with fuel consumption standards) for heavy
- dut y pickups and vans; other changes implement more general improvements to the model. Key changes include the following:

 Expansion and restructuring of model inputs, compli ance calculations, and reporting to accommodate standards for heav y - dut y pickups and vans, including attribute
- based standards involving targets that vary with “work factor”.Page 465 of 850

 Explicit calculation of test weight, taking into account test weight “bins” and differences in the definition of test weight for light
- dut y vehicles (curb weight plus 300 pound) and heav y - dut y pickups and vans (average of GVWR and curb weight).

 Procedures to estimate increases in payload when curb weight is reduced, increases in towing capacity if GVWR is reduced, and calculation procedures to correspondingl y update calculated work factors.

 Expansion of model inputs, procedures, and outputs to accommodate technologies not included in prior anal ys es.
 Changes to the algorithm used to appl y technologies, enabling more explicit accounting for shared vehicle platforms and adoption and “inheritance” of major engine changes.

 Expansion of the Monte Carlo simulation procedures used to perform probabilistic uncertainty analysis. These changes are reflected in updated model documentation available at NHTSA’s web site, the documentation also providing more information about the model’s purpose, scope, structure, design, inputs, operation, and outputs. DOT invites comment on the updated model, and in particular, on the updated handling of shared vehicle platforms, engines, and transmissions, and on the new procedures to estimate changes to test weight, GVWR, and GCWR as vehicle curb weight is reduced. (a ) Product Cadence Past comments on the CAFE model have stressed the importance of product cadence

— i.e., the development and periodic redesign and freshening of vehicles

—in terms of involving technical, financial, and other practical constraints on applying new technologies, and DOT has steadily made changes to the model with a view toward accounting for these considerations. For example, earl y versions of the model added explicit “carrying forward” of applied technologies between model ye ars, subsequent versions applied assumptions that most technologies wo uld be applied when vehicles are freshened or redesigned, and more recent versions applied assumptions that manufacturers would sometimes apply technology

earlier than “necessary” in order to facilitate compliance with standards in ensuing model years. Thus, for example, if a manufacturer is expected to redesign many of its products in model years 2018 and 2023, and the standard’s stringency

increases significantly

in model year 2021, the CAFE model will estimate the potential that the manufacturer will add more technology than necessary

for compliance in MY 2018, in order to carry those product changes forward through the next redesign and contribute to compliance with the MY 2021 standard. The model also accommodates estimates of overall limits (express ed as “phase
- in caps” in model inputs) on the rates at which manufacturers’ may practicably

add technology

to their respective fleets. So, for example, even if a manufacturer is expected to redesign half of its production in MY 2016, if the manufacturer i s not already producing any

strong hy brid electric vehicles (SHEVs), a phase
- in cap can be specified in order to assume that manufacturer will stopPage 466 of 850

applying SHEVs in MY 2016 once it has done so to at least 3 percent of its production in that model year. Af ter the light
- dut y rulemaking anal ys is accompanying the 2012 final rule regarding post - 2016 CAFE standards and related GHG emissions standards, DOT staff began work on CAFE model changes expected to better reflect additional considerations involved with product planning and cadence. These changes, summarized below, interact with preexisting model characteristics discussed above. (b ) Platforms and Technology The term “platform” is used loosely in industry , but generall y refers to a common structure shared b y a group of vehicle variants. The degree of commonality varies, with some platform variants exhibiting traditional “badge engineering” where two products are differentiated b y little more than insignias, while other platforms be used to produce a broad suite of vehicles that bear little outer resemblance to one another. Given the degree of commonality between variants of a single platform, manufacturers do not have complete freedom to apply technology

to a vehicle: while some technologies (e.g. low rolling re sistance tires) are very nearl y “bolt
- on” technologies, others involve substantial changes to the structure and design of the vehicle, and therefore necessaril y are constant between vehicles that share a common platform. DOT staff has, therefore, modified the CAFE model such that all mass reduction and aero technologies are forced to be constant between variants of a platform. The agencies request comment on the suitability of this viewpoint, and which technologies can deviate from one platform variant to another. Within the analysis fleet, each vehicle is associated with a specific platform. As the CAFE model applies technology , it first defines a platform “leader” as the vehicle variant of a platform with the highest technology utilization vehicle of ma ss reduction and aerody namic technologies. As the vehicle applies technologies, it effectivel y harmonizes to the highest common denominator of the platform. If there is a tie, the CAFE model begins applying aerodynamic and mass reduction technology to th e vehicle with the lowest average sales across all available model ye ars. If there remains a tie, the model begins by choosing the vehicle with the highest average MSRP across all available model years. The model follows this formulation due to previous market trends suggesting that many technologies begin deploy ment at the high
end, low
- volume end of the market as manufacturers build their confidence and capability in a technology , and later expand the technology across more mainstream product lines. In the HD pickup and van market, there is a relatively small amount of diversity in platforms produced b y m anufacturers: typicall y 1
- 2 truck platforms and 1
- 2 van platforms. However, accounting for platforms will take on greater significance in future anal ys es involving the light
- dut y fleet, and the agency requests comments on the general use of platforms within CAFE rulemaking.Page 467 of 850

(c) Engine and Transmission Inheritance In practice, manufacturers are limited in the number of engines and transmissions that they produce. T ypi call y a manufacturer produces a number of engines

— perhaps six or eight engines for a large manufacturer

— and tunes them for slight variants in output for a variety of car and truck applications. Manufacturers limit complexity in their engine port folio for much the same reason as they

limit complexity

in vehicle variants: they

face engineering manpower limitations, and supplier, production and service costs that scale with the number of parts produced. In previous usage of the CAFE model, engines and transmissions in individual models were allowed relative freedom in technology application, potentially

leading to solutions that would, if followed, involve unaccounted
- for costs associated with increased complexity in the product portfolio. The lack of a constraint in this area allowed the model to apply different levels of technology

to the engine in each vehicle at the time of redesign or refresh, independent of what was done to other vehicles using a previously identical engine. In the current vers ion of the CAFE model, engines and transmissions that are shared between vehicles must apply the same levels of technology in all technologies dictated by engine or transmission inheritance. This forced adoption is referred to as “engine inheritance” in t he model documentation. As with platform
- shared technologies, the model first chooses an “engine leader” among vehicles sharing the same engine. The leader is selected first by the vehicle with the lowest average sales across all available model years. I f there is a tie, the vehicle with the highest average MSRP across model years is chosen. The model applies the same logic with respect to the application of transmission changes. As with platforms, this is driven by the concept that vehicle manufacturer s t ypically deploy new technologies in small numbers prior to deploying widely across their product lines. (d ) Interactions between Regulatory Classes Like earlier versions, the current CAFE model provides for integrated anal ysis spanning different regulatory classes, accounting both for standards that appl y separately to different classes and for interactions between regulatory classes. L ight vehicle CAFE standards are specified separately

for passenger cars and light trucks. However, there is considerable sharing between these two regulatory classes. Some specific engines and transmissions are used in both passenger cars and light trucks, and some vehicle platforms span these regulatory classes. For example, some sport
- utility vehicles are offered in 2WD versions classified as passenger cars and 4WD versions classified as light trucks. Integrated anal ys is of manufacturers’ passenger car and light truck fleets provides the ability to account for such sharing and reduce the likelihood of finding solutions that could involve impractical levels of complexity in manufacturers’ product lines. In addition, integrated anal ys is provides the ability to simulate the potential that manufactures could earn CAFE credits by over complying with one standard and use those credits toward compliance with the other standard (i.e., to simulate credit transfers between regulatory

classes).Page 468 of 850

HD pickups and vans are regulated separately from light
- duty

vehicles. While manufacturers cannot transfer credits between light
- duty and M DHD classes, there is some sharing of engineering and technology between light
- duty

vehicles and HD pickups and vans. For example, some passenger vans with GVWR over 8,500 pounds are classified as medium
duty passenger vehicles (MDPVs) and thus included i n manufacturers’ light
- duty truck fleets, while cargo vans sharing the same nameplate are classified as HD vans. While today ’s analy sis examines the HD pickup and van fleet in isolation, as a basis for anal ys is supporting the planned final rule, the agenci es intend to develop an overall anal ys is fleet spanning both the light
- duty and HD pickup and van fleets. Doing so could show some technology

“spilling over” to HD pickups and vans due, for example, to the application of technology

in response to current light
- dut y standards. More generally, modeling the two fleets together should tend to more realistically limit the scope and complexity of estimated compliance pathway s. The agencies anticipate that the impact of modeling a combined fleet will primarily arise from engine
- transmission inheritance. While platform sharing between the light
- duty and MD pickup and van fleets is relatively small (MDPVs aside), there are a number of instances of engine and transmission sharing across the two fleets. When the fl eets are modeled together, the agencies anticipate that engine inheritance will be implemented across the combined fleet, and therefore onl y one engine
- transmission leader can be defined across the combined fleet. As with the fleets separatel y, all vehicl es using a shared engine/transmission would automatically adopt technologies adopted b y the engine
- transmission leader. The agencies request comment on plans to analyze the light
- duty and MD pickup and van fleets jointly

in support of planning for the fina l rule. (e) Phase

-In Caps The CAFE model retains the ability to use phase
- in caps (specified in model inputs) as proxies for a variety of practical restrictions on technology application. Unlike vehicle
- specific restrictions related to redesign, refreshes or platforms/engines, phase
- in caps constrain technology

application at the vehicle manufacturer level. They are intended to reflect a manufacturer's overall resource capacity available for implementing new technologies (such as engineering and development pe rsonnel and financial resources), thereb y ensuring that resource capacity is accounted for in the modeling process. In previous CAFE rulemakings, redesign/refresh schedules and phase
- in caps were the primary mechanisms to reflect an OEM's limited pool of available resources during the rulemaking time frame and the years leading up to the rulemaking time frame, especiall y in ye ars where man y models may be scheduled for refresh or redesign. The newl y - introduced representation platform
- , engine
- , and transmis sion
- related considerations discussed above augment the model’s preexisting representation of redesign cycles and accommodation of phase
in caps. Considering these new constraints, inputs for today ’s anal ys is de
- emphasize reliance on phase
- in caps.Page 469 of 850

In thi s application of the CAFE model, phase
- in caps are used onl y for the most advanced technologies included in the anal ys is, i.e., SHEVs and lean
- burn GDI engines, considering that these technologies are most likely to involve implementation costs and risks n ot otherwise accounted for in corresponding input estimates of technology cost. For these two technologies, the agencies have applied caps that begin at 3 percent (i.e., 3 percent of the manufacturer’s production) in MY 2017, increase at 3 percent annuall y during the ensuing nine years (reaching 30 percent in the MY 2026), and subsequentl y increasing at 5 percent annually for four ye ars (reaching 50 percent in MY 2030). Note that the agencies did not feel that lean
- burn engines were feasible in the timeframe of this rulemaking, so decided to reject any model runs where they were selected. Due to the cost ineffectiveness of this technology , it was never chosen. The agencies request comment on the appropriateness of these phase
- in caps as proxies for constraints that, though not monetized by the agencies, nonetheless limit rates at which these two technologies can practicably be deployed, and on the appropriateness of setting inputs to stop applying phase
- in caps to other technologies in this analy sis. Comme nts on this issue should provide information supporting any alternative recommended inputs. (f ) Impact of Vehicle Technology Application Requirements Compared to prior analy ses of light
- dut y standards, these model changes, along with characteristics of the HD pickup and van fleet result in some changes in the broad characteristics of the model’s application of technology to manufacturers’ fleets. First, since the number of HD pickup and van platforms in a portfolio is ty picall y small, compliance with standards may appear especiall y “lump y” (compared to previous applications of the CAFE model to the more highl y segmented light
- dut y fleet), with significant over compliance when widespread redesigns precede stringency

increases, and/or significant application of c arried
- forward (aka “banked”) credits. Second, since the use of phase
- in caps has been de
- emphasized and manufacturer technology

deploy ment remains tied strongl y to estimated product redesign and freshening schedules, technology

penetration rates may

jump more quickly

as manufacturers appl y technology

to high
- volume products in their portfolio. By design, restrictions that enforce commonality of mass reduction and aerody namic technologies on variants of a platform, and those that enforce engine inheritance, will result in fewer vehicle
- technology combinations in a manufacturer’s future modeled fleet. These restrictions are expected to more accuratel y capture the true costs associated with producing and maintaining a product portfolio. (g ) Accounting for Test We ight, Payload, and Towing Capacity As mentioned above, NHTSA has also revised the CAFE model to explicitly account for the regulatory

“binning” of test weights used to certify light
- dut y fuel economy and HD pickup and van fuel consumption for purposes of e valuating fleet
- level compliance with fuel econom y and fuel consumption standards. For HD pickups and vans, test weight (TW) is based on adjusted loaded vehicle weight (ALVW), which is defined as the average of gross vehicle weight rating (GVWR) and curb weight (CW). TW values are then rounded, resulting in TW “bins”:Page 470 of 850 ALVW ≤ 4,000 lb.: TW rounded to nearest 125 lb. 4000 lb. < ALVW ≤ 5,500 lb.: TW rounded to nearest 250 lb. ALVW > 5,500 lb.: TW rounded to nearest 500 lb. This “binning” of TW is relevant to calculation of fuel consumption reductions accompan yi ng mass reduction. Model inputs for mass reduction (as an applied technology) are expressed in terms of a percentage reduction of curb weight and an accompanying estimate of the percentage reduction in fuel consumption, setting aside rounding of test weight. Therefore, to account for rounding of test weight, NHTSA has modified these calculations as follows: ∆

_ = ∆ × ∆

_ ∆ where: ∆CW = % change in curb weight (from model input), ∆FC unrounded_TW = % change in fuel consumption (from model input), without TW rounding, ∆TW = % change in test weight (calculated), and ∆FC rounded_TW = % change in fuel consumption (calculated), with TW rounding. As a result , some applications of vehicle mass reduction will produce no compliance benefit at all, in cases where the changes in ALVW are too small to change test weight when rounding is taken into account. On the other hand, some other applications of vehicle mass reduction will produce significantly more compliance benefit than when rounding is not taken into account, in cases where even small changes in ALVW are sufficient to cause vehicles’ test weights to increase b y, e.g., 500 pounds when rounding is accounted for. Model outputs now include initial and final TW, GVWR, and GCWR (and, as before, CW) for each vehicle model in each model ye ar, and the agencies invite comment on the extent to which these changes to account explicitly

for changes in TW are likely to produce more realistic estimates of the compliance impacts of reductions in vehicle mass. In addition, considering that the regulatory alternatives in the agencies’ analy sis all involve attribute
- based standards in which underl ying fuel consumption target s vary with “work factor” (defined b y the agencies as the sum of three quarters of payload, one quarter of towing capacity , and 500 lb. for vehicles with 4WD), NHTSA has modified the CAFE model to appl y inputs defining shares of curb weight reduction to be “returned” to payload and shares of GVWR reduction to be returned to towing capacity. The standards’ dependence on work factor provides some incentive to increase payload and towing capacity , both of which are buyer - facing measures of vehicle utility. In the agencies’ judgment, this provides reason to assume that if vehicle mass is reduced, manufacturers are likel y to “return” some of the change to payload and/or towing capacity . For this anal ys is, the agencies have applied the following assumptions:Page 471 of 850

 GVWR will be reduced by half the amount by

which curb weight is reduced. In other words, 50 percent of the curb weight reduction will be returned to payload.  GCWR will not be reduced. In other words, 100 percent of any GVWR reduction will be returned to to wing capacity
.  GVWR/CW and GCWR/GVWR will not increase beyond levels observed among the majority of similar vehicles (or, for outlier vehicles, initial values): **Table VI**  **- 16**  **Ratios for Modifying GVW and GCW as a Function of Mass Reduction**  **Maximum Ratios Assumed Enabled by**

**Mass Reduction Group**  **GVWR/CW GCWR/GVWR**  Unibody 1.75 1.50 Gasoline pickups > 13k GVWR 2.00 1.50 Other gasoline pickups 1.75 2.25 Diesel SRW pickups 1.75 2.50 All other 1.75 2.25 The first of two of these inputs are specified along with standards for each regulatory alternative, and the GVWR/CW and GCWR/GVWR “caps” are specified separately for each vehicle model in the analysis fleet. In addition, DOT has changed the model to prevent H D pickup and van GVWR from falling below 8,500 pounds when mass reduction is applied (because doing so would cause vehicles to be reclassified as light
- dut y vehicles), and to treat an y additional mass for hy brid electric vehicles as reducing payload b y the same amount (e.g., if adding a strong HEV package to a vehicle involves a 350 pound penalty , GVWR is assumed to remain unchanged, such that payload is also reduced by 350 pounds). The agencies invite comment on these methods for estimating how changes in vehicle mass may impact fuel consumption, GVWR, and GCWR, and on corresponding inputs to today ’s anal ys is. **(2) Development of the Analysis Fleet**  As discussed above, both agencies used DOT’s CAFE modeling s ys tem to estimate technology

costs and application rate s under each regulatory alternative, including the no action alternative (which reflects continuation of previously
- promulgated standards). Impacts under each of the “action” alternatives are calculated on an incremental basis relative to impacts under th e no action alternative. The modeling s ys tem relies on many inputs, including an anal ys is fleet. In order to estimate the impacts of potential standards, it is necessary to estimate the composition of the future vehicle fleet. Doing so enables estimatio n of the extent to which each manufacturer may

need to add technology

in response to a given series of attribute
- based standards, accounting for the mix and fuel consumption of vehicles in each manufacturer’s regulated fleet. The agencies create an anal ys is fleet in order to track the volumes and ty pes of fuel econom y - improving and CO 2 - reducing technologies that are already present in the existing vehicle fleet. This aspect of the anal ys is fleet helps to keep the CAFE model from addingPage 472 of 850

technologies to veh icles that already have these technologies, which would result in “double counting” of technologies’ costs and benefits. An additional step involved projecting the fleet sales into MYs 2019
- 2030. This represents the fleet volumes that the agencies believ e would exist in MYs 2019
- 2030. The following presents an overview of the information and methods applied to develop the analy sis fleet, and some basic characteristics of that fleet. The resultant analy sis fleet is provided in detail at NHTSA’s web site , along with all other inputs to and outputs from today ’s anal ys is. The agencies invite comment on this analy sis fleet and, in particular, on any other information that should be reflected in an anal ys is fleet used to update the agencies’ analy sis for the final rule. Also, the agencies also invites comment on the potential expansion of this analy sis fleet such that the impacts of new HD pickup and van standards can be estimated within the context of an integrated analy sis of light
- dut y vehicles and HD pic kups and vans, accounting for interactions between the fleets. (a ) Data S ources Most of the information about the vehicles that make up the 2014 anal ys is fleet was gathered from the 2014 Pre
- Model Year Reports submitted to EPA by the manufacturers under Phase 1 of Fuel Efficiency and GHG Emission Program for Medium
- and Heav y - Dut y Trucks, MYs 2014
- 2018. The major manufacturers of class 2b and class 3 trucks (Chry sler, Ford and GM) were asked to voluntarily

submit updates to their Pre
- Model Year Reports. Updat ed data were provided b y Chrys ler and GM. These updated data were used in constructing the anal ys is fleet for these manufacturers. The agencies agreed to treat this information as Confidential Business Information (CBI) until the publication of the NPRM. This information can be made public at this time because b y now all MY2014 vehicle models have been produced, which makes data about them essentially public information. These data (b y individual vehicle configuration produced in MY2014) include: Projected Production Volume/MY2014 Sales, Drive Ty pe, Axle Ratio, Work Factor, Curb Weight, Test Weight 364 , GVWR, GCWR, Fuel Consumption (gal/100 mile), engine ty pe (gasoline or diesel), engine displacement, transmission ty pe and number of gears. The column “Engine” of the Pre
- Model Year report for each OEM was copied to the column “Engine Code” of the vehicle sheet of the CAFE model market data input file. Values of “Engine” were changed to Engine Codes for use in the CAFE model. The codes indicated on the vehicle sheet map the detailed engine data on the engine sheet to the appropriate vehicle on the vehicle sheet of the CAFE model input file.

364 Chrysler and GM did not provide test weights in their submittals. Test weights were calculated as the average of GVWR and curb weight rounded up to the nearest 100 lb.Page 473 of 850

The column “Trans Class” of the Pre
- Model Year report for each OEM was copied to the column “Transmission Code” of the vehicle sheet of the market data input file. Values of “Trans Class” were changed to Transmission Codes for use in the CAFE mod el. The codes indicated on the vehicle sheet map the detailed transmission data on the transmission sheet to the appropriate vehicle on the vehicle sheet of the CAFE model input file. In addition to information about each vehicle, the agencies need additi onal information about the fuel economy
- improving/CO 2 - reducing technologies already on those vehicles in order to assess how much and which technologies to apply to determine a path toward future compliance. Thus, the agencies augmented this information w ith publicly
- available data that includes more complete technology descriptions. Specific engines and transmissions associated with each manufacturer’s trucks were identified using their respective internet sites. Detailed technical data on individual en gines and transmissions indicated on the engine sheet and transmission sheet of the CAFE model input file were then obtained from manufacturer internet sites, spec sheets and product literature, Ward’s Automotive Group and other commercial internet sites s uch as cars.com, edmunds.com, and motortrend.com. Specific additional information included:

 “Fuel Economy

on Secondary

Fuel” was calculated as E85 = .74 gasoline fuel econom y, or B20 = .98 diesel fuel economy. These values were duplicated in the columns “Fuel Economy

(Ethanol
- 85)” and “Fuel Economy (Biodiesel
- 20)” of the CAFE market data input file.

 Values in the columns “Fuel Share (Gasoline)”, “Fuel Share (Ethanol
- 85)”, “Fuel Share (Diesel),” and “Fuel Share (Biodiesel
- 20)” are Volpe assumptions.

 The CAFE model also requires that values of Origin, Regulatory Class, Technology Class, Safety

Class, and Seating (Max) be present in the file in order for the model to run. Placeholder values were added in these columns.

 In addition to the data taken from the OEM Pre Model Year submittals, NHTSA added additional data for use by the CAFE model. These included Platform, Refresh Years, Redesign Years, MSRP, Style, Structure and Fuel Capacity
.
 MSRP was obtained from web2carz.com and the OEM web sites.

 Fu el capacity was obtained from OEM spec sheets and product literature.

 The Structure values (Ladder, Unibody) used b y the CAFE model were added. These were determined from OEM product literature and the automotive press. It should be noted that the new v ans such as the Transit in fact utilize a ladder/unibody structure. Ford product literature uses the term “Uniladder” to describe the structure. Vans based on this structure are noted in the Vehicle Notes column of the NHTSA input file.Page 474 of 850

 Style values use d by

the CAFE model were also added: Chassis Cab, Cutaway , Pickup and Van. (b ) Vehicle Redesign Schedules and Platforms Product cadence in the Class 2b and 3 pickup market has historically ranged from 7
- 9 ye ars between major redesigns. However, due to increasing competitive pressures and consumer demands the agency

anticipates that manufacturers will generall y shift to shorter design cycles resembling those of the light duty market. Pickup truck manufacturers in the Class 2b and 3 segments are shown to adopt redesign cycles of six years, allowing two redesigns prior to the end of the regulatory

period in 2025. The agencies request comment on the anticipated future use of redesign cycles in this product segment. The Class 2b and 3 van market has changed markedly from five years ago. Ford, Nissan, Ram and Daimler have adopted vans of “Euro Van” appearance, and in many cases now use smaller turbocharged gasoline or diesel engines in the place of larger, naturally
- aspirated V8s. The 2014 Model Year used in this analy sis represents a period where most manufacturers, with the exception of General Motors, have recentl y introduce d a completel y redesigned product after many years. The van segment has historically been one of the slowest to be redesigned of any product segment, with some products going two decades or more between redesigns. Due to new entrants in the field and increased competition, the agencies anticipate that most manufacturers will increase the pace of product redesigns in the van segment, but that they will continue to trail other segments. The cycle time used in this analy sis is approximately ten ye ars between major redesigns, allowing manufacturers onl y one major redesign during the regulatory

period. The agencies request comment on this anticipated product design cycle. Additional detail on product cadence assumptions for specific manufacturers is located i n Chapter 10 of the draft RIA. (c) Sales Volume Forecast Since each manufacturer’s required average fuel consumption and GHG levels are sales
weighted averages of the fuel econom y/ GHG targets across all model offerings, sales volumes play a critical role in es timating that burden. The CAFE model requires a forecast of sales volumes, at the vehicle model
- variant level, in order to simulate the technology application necessary for a manufacturer to achieve compliance in each model year for which outcomes are simulated. For today ’s anal ys is, the agencies relied on the MY 2014 pre
- model
- year compliance submissions from manufacturers to provide sales volumes at the model level based on the level of disaggregation in which the models appear in the compliance data. H owever, the agencies only use these reported volumes without adjustment for MY 2014. For all future model years,Page 475 of 850

we combine the manufacturer submissions with sales projections from the 2014 Annual Energy Outlook Reference Case and IHS Automotive to determ ine model variant level sales volumes in future ye ars. 368 The projected sales volumes by class that appear in the 2014 Annual Energy Outlook as a result of a collection of assumptions about economic conditions, demand for commercial miles traveled, and tec hnology migration from light
- dut y pickup trucks in response to the concurrent light
- duty CAFE/GHG standards. These are shown in Chapter 2 of the draft RIA. For this anal ys is, the agencies have limited this analy sis fleet to class 2b and 3 HD pickups and vans. However, especiall y considering interactions between the light
- dut y and HD pickup and van fleets (e.g., MDPVs being included in the light
- duty fleet), the agencies are evaluating the potential to anal yz e the fleets in an integrated fashion for the fin al rule, and invite comment on the extent to which doing so could provide more realistic estimates of the incremental impacts of new standards applicable HD pickups and vans. The projection of total sales volumes for the Class 2b and 3 market segment was b ased on the total volumes in the 2014 AEO Reference Case. For the purposes of this analy sis, the AEO2014 calendar ye ar volumes have been used to represent the corresponding model
- ye ar volumes. While AEO2014 provides enough resolution in its projections t o separate the volumes for the Class 2b and 3 segments, the agencies deferred to the vehicle manufacturers and chose to rely on the relative shares present in the pre
- model
- ye ar compliance data. The relative sales share by vehicle t ype (van or pickup truck , in this case) was derived from a sales forecast that the agencies purchased from IHS Automotive, and applied to the total volumes in the AEO2014 projection. Table VI
- 17 shows the implied shares of the total new 2b/3 vehicle market broken down by manufacturer and vehicle t ype.

368 Ta bles from AEO’s forecast are available at http://www.eia.gov/oiaf/aeo/tablebrow ser/. The agencies also made use of the IHS Automotive Light Vehicle Production Forecast (August 2014).Page 476 of 850 **Table VI**  **- 17**  **IHS Autom otive Market Share Forecast for 2b/3 vehicles**  **Model Year Market Share**  **Manufacturer Style**  **2015 2016**  **2017 2018**  **2019 2020**  **2021** Daimler Van 3% 3% 3% 3% 3% 3% 3% Fiat Van 2% 2% 2% 2% 2% 2% 3% Ford Van 16% 17% 17% 17% 18% 18% 18% General Motors Van 12% 12% 11% 12% 13% 13% 13% Nissan Van 2% 2% 2% 2% 2% 2% 2% Daimler Pickup 0% 0% 0% 0% 0% 0% 0% Fiat Pickup 14% 14% 14% 14% 11% 12% 12% Ford Pickup 28% 27% 30% 30% 30% 27% 26% General Motors Pickup 23% 23% 21% 21% 21% 22% 23% Nissan Pickup 0% 0% 0% 0% 0% 0% 0% Within those broadly

defined market shares, volumes at the manufacturer/model
- variant level were constructed by appl yi ng the model
- variant’s share of manufacturer sales in the pre
model
- ye ar compliance data for the relevant vehicle style, and multiplied by the total volume estimated for that manufacturer and that styl e. After building out a set of initial future sales volumes based on the sources described above, the agencies attempted to incorporate new information about changes in sales mix that would not be captured b y either the e xisting sales forecasts or the simulated technology changes in vehicle platforms. In particular, Ford has announced intentions to phase out their existing Econoline vans, gradually shifting volumes to the new Transit platform for some model variants (nota bly chassis cabs and cutaway s variants) and eliminating offerings outright for complete Econoline vans as earl y as model year 2015. In the case of complete Econoline vans, the volumes for those vehicles were allocated to MY2015 Transit vehicles based on a ssumptions about likely

production splits for the powertrains of the new Transit platform. The volumes for complete Econoline vans were shifted at ratios of 50 percent , 35 percent , and 15 percent for 3.7 L, 3.5 L Eco
- boost, and 3.2 Ldiesel, respectivel y. Within each powertrain, sales were allocated based on the percentage shares present in the pre
- model
- ye ar compliance data. The chassis cab and cutaway

variants of the Econoline s were phased out linearl y between MY2015 and MY2020, at which time the Econolines cease to exist in any form and all corresponding volume resides with the Transits. **(3) Additional Technology Cost and Effectiveness Inputs**  In addition to the base technology cost and effectiveness inputs described in I. of this preamble, the CAFE model has some additional cost and effectiveness inputs, described as follows. The CAFE model accommodates inputs to adjust accumulated effectiveness under circumstances when combining multiple technologies could result in underestimation orPage 477 of 850

overestimation of total incremental effectiveness relative to an “unevolved” baseline vehicle
. These so
- called s ynergy factors may be positive, where the combination of the technologies results in greater improvement than the additive improvement of each technology , or negative, where the combination of the technologies is lower than the additive improvement of each technology
. The sy

nergy factors used in this anal ysis are described in VI
- 18
. **Table VI**  **- 18**  **Technology Pair Effectiveness Synergy Factors for HD Pickups and Vans Technology**  **Pair Adjustment**  **Technology Pair Adjustment**  8SPD/CCPS
- 4.60% IA TC/CCPS
- 1.30% 8SPD/DEACO
- 4.60% IA TC/DEACO
- 1.30% 8SPD/I CP
- 4.60% IA TC/I CP
- 1.30% 8SPD/TRBDS1 4.60% IA TC/TRBDS1 1.30% AERO2/SHEV1 1.40% MR1/CCPS 0.40% CCPS/IACC1
- 0.40% MR1/DCP 0.40% CCPS/IACC2
- 0.60% MR1/VVA 0.40% DCP/IACC1
- 0.40% MR2/ROLL1
- 0.10% DCP/IACC2
- 0.60% MR2/SHEV1
- 0.40% DEACD/IATC
- 0.10% NAUTO/CCPS
- 1.70% DEACO/IACC2
- 0.80% NAUTO/DEACO
- 1.70% DEACO/MHEV
- 0.70% NAUTO/ICP
- 1.70% DEACS/IATC
- 0.10% NAUTO/SAX
- 0.40% DTURB/IATC 1.00% NAUTO/TRBDS1 1.70% DTURB/MHEV
- 0.60% ROLL1/AERO1 0.10% DTURB/SHEV1
- 1.00% ROLL1/SHEV1 1.10% DVVLD/8SPD
- 0.60% ROLL2/AERO2 0.20% DVVLD/IACC2
- 0.80% SHFTOPT/MHEV
- 0.30% DVVLD/IATC
- 0.60% TRBDS1/MHEV 0.80% DVVLD/MHEV
- 0.70% TRBDS1/SHEV1
- 3.30% DVVL S/8SPD
- 0.60% TRBDS1/VVA
- 8.00% DVVL S/IACC2
- 0.80% TRBDS2/EPS
- 0.30% DVVL S/IATC
- 0.50% TRBDS2/IACC2
- 0.30% DVVL S/MHEV
- 0.70% TRBDS2/NAUTO
- 0.50% VVA/IACC1
- 0.40% VVA/IACC2
- 0.60% VVA/IATC
- 0.60% The CAFE model also accommodates inputs to adjust accumulated incremental costs under circumstances when the application sequence could result in underestimation or overestimation of total incremental costs relative to an “unevolved” baseline vehicle. ForPage 478 of 850

today ’s anal ys is, the agencies have applied one such adjustment, increasing the cost of medium
sized gasoline engines b y $513 in cases where turbocharging and engin e downsizing is applied with variable valve actuation. The anal ys is performed using Method A also applied cost inputs to address some costs encompassed neither b y the agencies’ estimates of the direct cost to appl y these technologies, nor by the agencies’ methods for “marking up” these costs to arrive at increases in the new vehicle purchase costs. To account for the additional costs that could be incurred if a technology is applied and then quickl y replaced, the CAFE model accommodates inputs specifying a “stranded capital cost” specific to each technology . For this anal ys is, the model was run with inputs to apply about $78 of additional cost (per engine) if gasoline engine turbocharging and downsizing (separatel y for each “level” considered) is applied a nd then immediately

replaced, declining steadily to zero by

the tenth model year following initial application of the technology . The model also accommodates inputs specifying an y additional changes owners might incur in maintenance and post
- warranty repair costs. For this analy sis, the model was run with inputs indicating that vehicles equipped with less rolling
- resistant tires could incur additional tire replacement costs equivalent to $21
- $23 (depending on model ye ar) in additional costs to purchase th e new vehicle. The agencies did not, however, include inputs specifying an y potential changes repair costs that might accompany application of any

of the above technologies. A sensitivity analy sis using Method A , discussed below, includes a case in which repair costs are estimated using factors consistent with those underlying the indirect cost multipliers used to mark up direct costs for the agencies’ central anal ys is. The agencies invite comment on all efficacy and cost inputs involved in today ’s anal ys is and request that commenters provide an y additional data or forward
- looking estimates that could be used to support alternative inputs, including those related to costs beyond those reflected in the cost to purchase new vehicles. **(4) Other Analysis Inputs**  In addition to the inputs summarized above, the analy sis of potential standards for HD pickups and vans makes use of a range of other estimates and assumptions specified as inputs to the CAFE modeling s ys tem. Some significant inputs (e.g., estimates of future fuel prices) also applicable to other MDHD segments are discussed below in Section IX. Others more specific to the anal ys is of HD pickups and vans are as follows: (a ) Vehicle Survival and Mileage Accumulation: Today ’s anal ys is estimates the travel, fuel consumption, and emissions over the useful lives of vehicles produced during model ye ars 2014
- 2030. Doing so requires initial estimates of these vehicles’ survival rates (i.e., shares expected to remain in service) and mileage accumulation rates (i.e., anticipated annual travel by vehicles remaining in service), both as a function of vehicle vintage (i.e., age). The se estimates are based on an empirical anal ys is of changes in the fleet of registered vehicles over time, in the case of survival rates, and usage data collected as part of the last Vehicle In Use Survey (the 2002 VIUS), in the case of mileage accumulation.Page 479 of 850

(b ) Rebound Effect Expressed as an elasticity of mileage accumulation with respect to the fuel cost per mile of operation, the agencies have applied a rebound effect of 10 percent for today ’s anal ys is. (c) On
-Road "Gap" The model was run with a 20 percent adjustme nt to reflect differences between on
- road and laboratory

performance. (d ) Fleet Population Profile Though not reported here, cumulative fuel consumption and CO 2 emissions are presented in the accompan yi ng draft EI S, and these calculations utilize estimates of the numbers of vehicles produced in each model year remaining in service in calendar year 2014. The initial age distribution of the registered vehicle population in 2014 is based on vehicle registration data acquired b y NHTSA from R.L . Polk Company
. (e) Pas t Fuel Consumption Levels Though not reported here, cumulative fuel consumption and CO 2 emissions are presented in the accompan yi ng draft EI S, and these calculations require estimates of the performance of vehicles produced prior to model year 2014. Consi stent with AEO 2014, the model was run with the assumption that gasoline and diesel HD pickups and vans averaged 14.9 mpg and 18.6 mpg, respectivel y, with gasoline versions averaging about 48 percent of production. (f ) Long
- Term Fuel Consumption Levels Though not reported here, longer
- term estimates of fuel consumption and emissions are presented in the accompanying draft EIS. These estimates include calculations involving vehicle produced after MY 2030 and, consistent with AEO 2014, the model was run with the assumption that fuel consumption and CO 2 emission levels will continue to decline at 0.05 percent annuall y (compounded) after MY 2030. (g ) Payback Period To estimate in what sequence and to what degree manufacturers might add fuel
- saving technologies to their respective fleets, the CAFE model iteratively ranks remaining opportunities (i.e., applications of specific technologies to specific vehicles) in terms of effective cost, primary components of which are the technology cost and the avoided fuel outlay s, attempting to minimize effective costs incurred. 369 Depending on inputs, the model also assumes manufacturers may

improve fuel consumption beyond requirements insofar as doing so will involve applications of technology at negative effective cost

—i.e., technol ogy

application for

369 Volpe CAFE Model, available at http://www.nhtsa.gov/fuel
- economyPage 480 of 850

which buyers’ up
- front costs are quickl y paid back through avoided fuel outlays. This calculation includes onl y fuel outlays occurring within a specified pay back period. For this anal ys is, a pay

back period of 6 months was applied for the dynamic baseline case, or Alternative 1b . Thus, for example, a manufacturer already in compliance with standards is projected to apply a fuel consumption improvement projected to cost $250 (i.e., as a cost that could be charged to the buye r at normal profit to the manufacturer) and reduce fuel costs by $500 in the first year of vehicle operation. The agencies have conducted the same analy sis appl yi ng a pay back period of 0 months for the flat baseline case, or Alternative 1a
. (h ) Civil Penalties EPCA and EI SA require that a manufacturer pay civil penalties if it does not have enough credits to cover a shortfall with one or both of the light
- dut y CAFE standards in a model year. While these provisions do not apply to HD pickups and vans, at this time, the C AFE model will show civil penalties owed in cases where available technologies and credits are estimated to be insufficient for a manufacturer to achieve compliance with a standard. T hese model
- reported estimates have been excluded from this anal ys is. (i ) Coe fficients for Fatality Calculations Today ’s anal ys is considered the potential effects on crash safet y of the technologies manufacturers may

apply to their vehicles to meet each of the regulatory alternatives. NHTSA research has shown that vehicle mass reduction affects overall societal fatalities associated with crashes 370 and, most relevant to this proposal, mass reduction in heavier light
- and medium
- dut y vehicles has an overall beneficial effect on societal fatalities. Reducing the mass of a heavier vehicle involved in a crash with another vehicle(s) makes it less likel y there will be fatalities among the occupants of the other vehicles. In addition to the effects of mass reduction, the anal ys is anticipates that the proposed standards, by reducing the cost of driving HD pickups and vans, would lead to increased travel by these vehicles and, therefore, more crashes involving these vehicles. The Method A anal ys is considers overall impacts considering both of these factors, using a methodology similar to NHTSA’s anal ys es for the MYs 2017

– 2025 CAFE and GHG emission standards. The Method A analy sis includes estimates of the extent to which HD pickups and vans produced during MYs 2014
- 2030 may be involved in fatal crashes, considering the mass, survival, and mileage accumulation of these vehicles, taking into account changes in mass and mileage accumulation under each regulatory alternative. These calculations make use of the same coefficients applied to light trucks in the MYs 2017
- 2025 CAFE rulemaking anal ys is
. Baseline rates of involvement in fatal crashes are 13.03 and 13.24 fatalities per billion miles for vehicles with initial curb weights above and below 4,594 pounds, respectively . Considering that the data underl yi ng the corresponding statistical analy sis included observations through calendar

370 U.S. DOT/NHTSA, Relationships Between Fatality Risk Mass and Footprint in MY 2000

- 2007 PC and LTVs , ID: NHTSA
- 2010
- 0131
- 0336, Posted August 21, 2012.Page 481 of 850

ye ar 2010, these rates are reduced b y 9.6 percent to account for subsequent impacts of recent Federal Motor Vehicle Safety Standards (FMVSS) and anticipated behavioral changes (e.g., continued increases in seat belt use) . For vehicles above 4,594 pounds

—i.e., the majority of the HD pickup and van fleet

— mass reduction is estimated to reduce the net incidence of highway fatalities by

0.34 percent per 100 pounds of removed curb weight
. For the few HD pickups and vans below 4,594 pounds, mass reduction is estimated to increase the net incidence of highway fatalities by

0.52 percent per 100 pounds. Consistent with DOT guidance, the social cost of highway fatalities is estimated using a value of statistical life (VSL ) of $9.36m in 2014, increasing thereafter at 1.18 percent annuall y. (j ) Compliance Credit Provisions Today ’s anal ys is accounts for the potential to over comply with standards and thereby earn compliance credits, applying these credits to ensuring compliance requirements. In doing so, the agencies treat an y unused carried
- forward credits as expiring after five model years, consistent with current and proposed standards. For today ’s anal ys is, the agencies are not estimating the potential to “borrow”

—i.e., to carry credits back to past mode l ye ars. (k) Emission Factors While CAFE model calculates vehicular CO 2 emissions directly on a per - gallon basis using fuel consumption and fuel properties (density and carbon content), the model calculates emissions of other pollutants (methane, nitrogen oxides, ozone precursors, carbon monoxide, sulfur dioxide, particulate matter, and air toxics) on a per
- mile basis. In doing so, the Method A anal ys is used corresponding emission factors estimated using EPA’s MOVES model. 373 To estimate emissions (including CO 2 ) from upstream processes involved in producing, distributing, and delivering fuel, NHTSA has applied emission fa ctors

— all specified on a gram per gallon basis

—derived from Argonne National Laboratory ’s GREET model. 374 (l ) Refueling Time Benefits To estimate the value of time savings associated with vehicle refueling, the Method A anal ys is used estimates that an average refueling event involves refilling 60 percent of the tank’s capacity over the course of 3.5 minutes, at an hourly cost of $27.22
. (m) External Costs of Travel Changes in vehicle travel will entail economic externalities. To estimate these costs, the Method A anal ys is used estimates that congestion
- , accident
- , and noise
- related externalities will total 5.1 ¢/mi., 2.8 ¢/mi., and 0.1 ¢/mi., respectivel y.

373 EPA MOVES model available at http://www.epa.gov/otaq/models/moves/index.htm (last accessed Feb 23, 2015). 374 GREET (Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation) Model, Argonne National Laboratory, https://greet.es.anl.gov/.Page 482 of 850

(n ) Ownershi

p and Operating Costs Method A results predict that the total cost of vehicle ownership and operation will change not just due to changes in vehicle price and fuel outlays, but also due to some other costs likely to vary with vehicle price. To estimate th ese costs, NHTSA has applied factors of 5.5 percent (of price) for taxes and fees, 15.3 percent for financing, 19.2 percent for insurance, 1.9 percent for relative value loss. The Method A anal ys is also estimate s that average vehicle resale value will inc rease b y 25 percent of any increase in new vehicle price. **(5) DOT CAFE Model Analysis of**  **Impacts of Regulatory Alternatives for HD**  **Pickups and Vans** (a ) Industry Impacts The agencies’ anal ys is fleet provides a starting point for estimating the extent to which manuf acturers might add fuel
- saving (and, therefore, CO 2 - avoiding) technologies under various regulatory

alternatives, including the no
- action alternative that defines a baseline against which to measure estimated impacts of new standards. The anal ys is fleet i s a forward
- looking projection of production of new HD pickups and vans, holding vehicle characteristics (e.g., technology

content and fuel consumption levels) constant at model year 2014 levels, and adjusting production volumes based on recent DOE and commerciall y - available forecasts. This anal ys is fleet includes some significant changes relative to the market characterization that was used to develop the Phase 1 standards applicable starting in model year 2014; in particular, the anal ys is fleet includes some new HD vans (e.g., Ford’s Transit and Fiat/Chry sler’s Promaster) that are considerabl y more fuel
- efficient than HD vans these manufacturers have previousl y produced for the U.S. market. While the proposed standards are scheduled to begin in model year 2021, the requirements they

define are likel y to influence manufacturers’ planning decisions several years in advance . This is true in light
- duty planning, but accentuated by the comparativel y long redesign cycles and small number of models and platforms offered for sale in the 2b/3 market segment. Additionally , manufacturers will respond to the cost and efficacy of available fuel consumption improvements, the price of fuel, and the requirements of the Phase 1 standards that specify maximum allowable ave rage fuel consumption and GHG levels for MY2014
- MY2018 HD pickups and vans (the final standard for MY2018 is held constant for model years 2019 and 2020). The forward
- looking nature of product plans that determine which vehicle models will be offered in the model years affected b y the proposed standards lead to additional technology application to vehicles in the anal ys is fleet that occurs in the years prior to the start of the proposed standards. From the industry perspective, this means that manufacture rs will incur costs to comply

with the proposed standards in the baseline and that the total cost of the proposed regulations will include some costs that occur prior to their start, and represent incremental changes over a world in which manufacturers wil l have already modified their vehicle offerings compared to today
.Page 483 of 850

**Table VI**  **- 19**  **MY 2021 Baseline Costs**  **f or Manufacturers**  **i n 2b/3 Market Segment**  **in the Dynamic Baseline, or Alternative 1b**  **Manufacturer Average** 

**Technology Cost Total Cost** 

**Increase ($m)** Chry sler/Fiat 275 27 Daimler 18 0 Ford 258 78 General Motors 782 191 Nissan 282 3 Industry 442 300 As Table VI
- 19 shows, the industry as a whole is expected to add about $440 of new technology

to each new vehicle model by 2021 under the no
- action alternative defined b y the Phase 1 standards. Reflecting differences in projected product offerings in the anal ys is fleet, some manufacturers (notably Daimler) are significantly less constrained by

the Phase 1 standards than others and face lower cost increases as a result. General Motors (GM) shows the largest increase in average vehicle cost, but results for GM’s closest competitors (Ford and Chry sler/Fiat) do not include the costs of their recent van redesigns, which are already present in the anal ys is fleet (discussed in greater detail below). The above resu lts reflect the assumption that manufacturers having achieved compliance with standards might act as if buyers are willing to pay for further fuel consumption improvements that “pay

back” within 6 months (i.e., those improvements whose incremental costs ar e exceeded b y savings on fuel within the first six months of ownership) . It is also possible that manufacturers will choose not to migrate cost
- effective technologies to the 2b/3 market segment from similar vehicles in the light
- duty market. To examine this possibility , all regulatory

alternatives were also anal yz ed using the DOT CAFE model (Method A) with a 0
- month pay

back period in lieu of the 6
- month pay back period discussed above. ( A sensitivity anal ys is using Method A , discussed below, also explores longer pay back periods, as well as the combined effect of pay

back period and fuel price on vehicle design decisions )
. Resultant technology

costs in model year 2021 results for the no
- action alternative, summarized in Table VI
- 20 below, are quite similar to those shown above for the 6
- month pay back period . Due to the similarity between the two baseline characterizati ons, results in the following discussion represent differences relative to only the 6
- month pay

back baseline.Page 484 of 850

**Table VI**  **- 20**  **MY 2021 Baseline Costs**  **for HD Pickups and Vans in the Flat Baseline, or Alternative 1a**

**Manufacturer Average Technology**  **Cost ($) Total Cost Increase**  **($m)** Chry sler/Fiat 268 27 Daimler 0 0 Ford 248 75 General Motors 767 188 Nissan 257 3 Industry 431 292 The results below represent the impacts of several regulatory alternatives, including those defined b y the proposed standards, as incremental changes over the baseline, where the baseline is defined as the state of the world in the absence of the proposed regulatory action. Large
- scale, macroeconomic conditions like fuel prices are constant across all alternatives, including the baseline, as are the fuel economy improvements under the no
- action alternative defined b y the Phase 1 MDHD rulemaking that covers model ye ars 2014

– 2018 and is constant from model ye ar 2018 through 2020. In the baseline scenario, the Phase 1 standards are assumed to remain in place and at 2018 levels throughout the analy sis (i.e. MY 2030). The only difference between the definitions of the alternatives is the stringency of the proposed standards starting in MY 2021 and continuing through either MY 2025 or MY 2027 , and all of the differences in outcomes across alternatives are attributable to differences in the standards. The standards vary

in stringency

across regulatory alternat ives (1

– 5), but as discussed above, all of the standards are based on the curve developed in the Phase 1 standards that relate fuel econom y and GHG emissions to a vehicle’s work factor. The alternatives considered here represent different rates of annual increase in the curve defined for model year 2018, growing from a 0 percent annual increase (Alternative 1, the baseline or “no
- action” alternative) up to a 4 percent annual increase (Alternative 5). Table VI
- 21 shows a summary 375 of outcomes by alternative incremental to the baseline (Alternative 1 b ) for Model Year 2030 376 , with the exception of technology

penetration rates, which are absolute. The technologies applied by the CAFE model have been grouped (in most cases) to give readers a general sense of which types of technology are applied more frequently than others, and are more likel y to be offered in new class 2b/3 vehicles once manufacturers are full y compliant with the standards in the alternative. Model year 2030 was chosen to account for

375 NHTSA generated hundreds of outputs related to economic an d environmental impacts, each available technology, and the costs associated with the rule. A more comprehensive treatment of these outputs appears in Chapter 10 of the draft RIA. 376 The DOT CAFE model estimates that redesign schedules will “straddle” model year 2027, the latest year for which the agencies are proposing increases in the stringency of fuel consumption and GHG standards. Considering also that today’s analysis estimates some earning and application of “carried forward” compliance credits, the mo del wa s run extending the analysis through model year 2030.Page 485 of 850

technology

application that occurs once the standards have stabilized, but manufacturers are still redesigning products to achieve compliance

– generat ing technology costs and benefits in those model years. The summaries of technology penetration are also intended to reflect the relationship between technology application and cost increases across the alternatives. The table rows present the degree to which specific technologies will be present in new class 2b and class 3 vehicles in 2030, and correspond to: Variable valve timing (VVT) and/or variable valve lift (VVL), cylinder deactivation, direct injection, engine turbocharging, 8
- speed automatic tran smissions, electric power
- steering and accessory improvements, micro
- hy bridization (which reduces engine idle, but does not assist propulsion), full hy bridization (integrated starter generator or strong h ybrid that assists propulsion and recaptures braking energy), and aerodynamic improvements to the vehicle shape. In addition to the technologies in the following tables, there are some lower
- complexity technologies that have high market penetration across all the alternatives and manufacturers; low rolling
- resistance tires, low friction lubricants, and reduced engine friction, for example.Page 486 of 850

**Table VI**  **- 21**  **Summary of HD Pickups and Vans**  **Alternatives’ I**  **mpact on I**  **ndustry versus the Dynamic**  **Baseline, Alternative 1b Alternative**  **2 3**  **4 5**  Annual Stringency

Increase 2.0%/y 2.5 %/y 3.5%/y 4.0%/y Stringency

Increase Through MY 2025 2027 2025 2025 Total Stringency

Increase 9.6% 16.2% 16.3% 18.5% Average Fuel Econom y (miles per gallon) Required 19.04 20.57 20.57 21.14 Achieved 19.14 20. 61 20.83 21.27 Average Fuel Consumption (gallons /100 mi.) Required 5.25 4.86 4.86 4.73 Achieved 5.22 4.85 4.80 4.70 Average Greenhouse Gas Emissions (g/mi) Required 495 458 458 446 Achieved 491 458 453 444

Technology

Penetration (%) VVT and/or VVL 46 46 46 46 Cylinder Deac. 29 21 21 21 Direct Injection 17 25 31 32 Turbocharging 55 63 63 63 8
- Speed AT 67 9 6 96 97 EPS, Accessories 54 80 79 79 Stop Start 0 0 10 13 Hy bridization a 0 8 35 51 Aero. Improvements 36 78 78 78

Mass Reduction (vs. No
- Action) CW (lb.) 239 243 325 313 CW (%) 3.7 3 .7 5.0 4.8

Technology

Cost (vs. No
- Action) Average ($) b 578 1, 348 1,655 2,080 Total ($m) c 437 1,019 1,251 1,572 Pay back period (m) c 25 31 34 38 Notes: a Includes mild hybrids (ISG) and strong HEVs. b Values used in Methods A & B c Values used in Method A, calculated using a 3% discount rate
. In general, the model projects that the standards would cause manufacturers to produce HD pickups and vans that are lighter, more aerodynamic, and more technologically complex across all the alternatives. As Table VI
- 21 shows, there is a difference between the relativel y small increases in required fuel econom y and average incremental technology cost between the alternatives, suggesting that the challenge of improving fuel consumption and CO 2 emissions accelerates as stringency

increases (i.e., that there may be a “knee” in the relationship betweenPage 487 of 850

technology

cost and reductions in fuel consumption/GHG emissions). Despite the fact that the required average fuel consumption level changes by about 3 percent between Alternative 4 and Alternative 5, average technology cost increases by

more than 25 percent. These differences help illustrate the clustered character of this market segment, where relatively small increases in fuel econom y can lead to much larger cost increases if entire platforms must be changed in response to the standards. The c ontrast between alternatives 3 and 4 is even more prominent, with an identical required fuel econom y i mprovement leading t o price increases greater than 2 0 percent based on the more rapid rate of increase and shorter time span of Alternative 4, which achie ves all of its increases by

MY 2025 while Alternative 3 continues to increase at a slower rate until MY 2027
. Despite these differences, the increase in average payback period when moving from Alternative 3 to Alternative 4 to Alternative 5 is fairl y cons tant at around an additional three months for each jump in stringency
. Manufacturers offer few models, ty picall y onl y a pickup truck and/or a cargo van, and while there are a large number of variants of each model, the degree of component sharing across th e variants can make diversified technology application either economically impractical or impossible. This forces manufacturers to appl y s ome technologies more broadly in order to achieve compliance than they might do in other market segments (passenger c ars, for example). This difference between broad and narrow application

– where some technologies must be applied to entire platforms, while some can be applied to individual model variants

– also explains why

certain technology

penetration rates decrease between alternatives of increasing stringency

( cylinder deactivation or mass reductions in Table VI
- 21 , for example). For those cases, narrowl y appl yi ng a more advanced (and costly) technology can be a more cost effective path to compliance and lead to reductions in the amount of lower
- complexity technology

that is applied. One driver of the change in te chnology cost between Alternative 3 and Alternative 4 is the amount of hy

bridization projected to result from the implementation of the standards. While only about 5 percent full hy

bridization (defined as either integrated starter
- generator or strong hy brid) is expected to be needed to compl y with Alternative 3, the higher rate of increase and compressed schedule moving from Alternative 3 to Alternative 4 is enough to increase the percentage of the fleet adopting full hy bridization by

a factor of two . To the extent that manufacturers are concerned about introducing hybrid vehicles in the 2b and 3 market, it is worth noting that new vehicles subject to Alternative 3 ach ieve the same fuel econom y as new vehicle subject to Alternative 4 by 2030, with less hy

b ridization required to achieve the improvement
. The alternatives also lead to important differences in outcomes at the manufacturer level, both from the industry

average and from each other. General Motors, Ford, and Chry sler (Fiat), are expected to have approximately 95 percent of the 2b/3 new vehicle market during the ye ars that the proposed standards are being phased in . Due to their importance to this market and the similarities between their model offerings, these three manufacturers are discussed to gether and a summary of the way

each is impacted by

the standards appears below in Table VI
- 22 , Table VI
- 23 , and Table VI
- 24 for General Motors, Ford, and Chry sler/Fiat, respectively
.Page 488 of 850

**Table VI**  **- 22**  **Summary of impacts on General Motors by 2030 in the HD Pickup and Van Market versus the**  **Dynam ic Baseline, Alternative 1b**  **Alternative 2**  **3 4**  **5** Annual Stringency In crease 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency In crease Through MY 2025 2027 2025 2025

Average Fuel Econom y (miles per gallon) Required 18.38 19. 96 20 20.53 Achieved 18.43 19. 95 20.24 20.51

Average Fuel Consumption (gallons /100 mi.) Required 5.44 5. 0 1 5 4.87 Achieved 5.42 5. 0 1 4.94 4.87

Average Greenhouse Gas Emissions (g/mi) Required 507 4 67 467 455 Achieved 505 4 68 461 455

Technology

Penetration (%) VVT and/or VVL 64 64 64 64 Cylinder Deac. 47 47 47 47 Direct Injection 18 18 36 36 Turbocharging 53 53 53 53 8
- Speed AT 36 100 100 100 EPS, Accessories 100 100 100 100 Stop Start 0 0 2 0 Hy bridization 0 1 9 79 100 Aero. Improvements 100 100 100 100

Mass Reduction (vs. No
- Action) CW (lb.) 325 161 158 164 CW (%) 5.3 2.6 2.6 2.7

Technology

Cost (vs. No
- Action) Average ($) a 785 1,706 2,244 2,736 Total ($m , undiscounted) b 214 465 611 746 Notes: a Values used in Methods A & B b Values used in Method A , calculated at a 3% discount ratePage 489 of 850

**Table VI**  **- 23**  **Summary of I**  **mpacts on Ford by 2030 in the HD Pickup and Van Market versus the Dynamic**  **Baseline, Alternative 1b Alternative**  **2 3**  **4 5**  Annual Stringency In crease 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency In crease Through MY 2025 2027 2025 2025

Average Fuel Econom y (miles per gallon) Required 19.42 20. 96 20.92 21.51 Achieved 19.5 21.04 21.28 21.8

Average Fuel Consumption (gallons /100 mi.) Required 5.15 4. 77 4.78 4.65 Achieved 5.13 4. 75 4.7 0 4.59

Average Greenhouse Gas Emissions (g/mi) Required 485 449 450 438 Achieved 482 447 443 433

Technology

Penetration (%) VVT and/or VVL 34 34 34 34 Cylinder Deac. 18 0 0 0 Direct Injection 16 34 34 34 Turbocharging 51 69 69 69 8
- Speed AT 100 100 100 100 EPS, Accessories 41 62 59 59 Stop Start 0 0 20 29 Hy bridization 0 2 14 30 Aero. Improvements 0 59 59 59

Mass Reduction (vs. No
- Action) CW (lb.) 210 202 379 356 CW (%) 3.2 3 5.7 5.3

Technology

Cost (vs. No
- Action) Average ($) a 506 1,110 1,353 1,801 Total ($m , undiscounted) b 170 372 454 604 Notes:Page 490 of 850 a Values used in Methods A & B b Values used in Method A , calculated at a 3% discount rate
**Table VI**  **- 24**  **Summary of Impacts on Fiat/Chrysler by 2030 in the HD Pickup and Van Market versus the**  **Dynam ic Baseline, Alternative 1b**  **Alternative 2**  **3 4**  **5** Annual Stringency In crease 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency In crease Through MY 2025 2027 2025 2025

Average Fuel Econom y (miles per gallon) Required 18.73 20.08 20.12 20.70 Achieved 18.83 20.06 20.10 20.70

Average Fuel Consumption (gallons /100 mi.) Required 5.34 4.98 4.97 4.83 Achieved 5.31 4.99 4.97 4.83

Average Greenhouse Gas Emissions (g/mi) Required 515 480 479 466 Achieved 512 481 480 467 Technology

Penetration (%) VVT and/or VVL 40 40 40 40 Cylinder Deac. 23 23 23 23 Direct Injection 17 17 17 17 Turbocharging 74 74 74 74 8
- Speed AT 65 88 88 88 EPS, Accessories 0 100 100 100 Stop
- Start 0 0 0 0 Hy bridization 0 3 3 10 Aero. Improvements 0 100 100 100

Mass Reduction (vs. No
- Action) CW (lb.) 196 649 648 617 CW (%) 2.8 9.1 9.1 8.7

Technology

Cost (vs. No
- Action) Average ($) a 434 1,469 1,486 1,700 Total ($m , undiscounted) b 48 163 164 188 Notes:Page 491 of 850 a Values used in Methods A & B b Values used in Method A , calculated at a 3% discount rate The fuel consumption and GHG standards require manufacturers to achieve an average level of compliance, represented b y a sales
- weighted average across the specific targets of all vehicles offered for sale in a given model year, such that each manufacturer will have a unique required consumption/emissions level determined by the composition of its fleet, as illustrated above. However, there are more interesting differences than the small differences in required fuel econom y levels among manufacturers. In p articular, the average incremental technology cost increases with the stringency of the alternative for each manufacturer, but the size of the cost increase from one alternative to the next varies among them, with General Motors showing considerabl y larger increases in cost moving from Alternative 3 to Alternative 4, than from either Alternative 2 to Alternative 3 or Alternative 4 to Alternative 5 . Ford is estimated to have more uniform cost increases from each alternative to the next, in increasing stringency , though still benefits from the reduced pace and longer period of increase associated with Alternative 3 compared to Alternative 4
. The simulation results show all three manufacturers facing cost increases when the stringency

of the standards move f

rom 2.5 percent annual increases over the period from MY 2021

– 2027 to 3.5 percent annual increases from MY 2021
- 2025 , but General Motors has the largest at 7 5 percent more than the industry average price increase for Alternative 4. GM also faces highe r cost increases in Alternative 2 about 50 percent more than either Ford or Fiat/Chry sler
. And for the most stringent alternative considered, the agencies estimate that General Motors would face average cost increases of more than $2,700, in addition to the more than $700 increase in the baseline

– approaching nearl y $3,500 per vehicle over today’s prices. Technology

choices also differ by

manufacturer, and some of those decisions are directly responsible for the largest cost discrepancies. For example, GM is estimated to engage in the least amount of mass reduction among the Big 3 after Phase 1, and much less than Chry sler/Fiat, but reduces average vehicle mass b y over 300 pounds in the baseline

– suggesting that some of GM’s easiest Phase 1 compliance op portunities can be found in lightweighting technologies. Similarly , Chry sler/Fiat is projected to appl y less hy bridization than the others, and much less than General Motors, which is simulated to have full hy brids (either integrated starter generator or complete h ybrid s ys tem) on all of its fleet by 2030, nearl y 20 percent of which will be strong hy brids, in Alternative 4 and the strong hy brid share decreases to about 18 percent in Alternative 5, as some lower level technologies are applied more broadl y. Because the anal ys is applies the same technology

inputs and the same logic for selecting among available opportunities to apply technology , the unique situation of each manufacturer determined which technology path is projected as the most cost
- effective. In order to understand the differences in incremental technology costs and fuel econom y achievement across manufacturers in this market segment, it is important to understand the differences in their starting position relative to the proposed standards. One important factor, made more obvious in the following figures, is the difference between the fuel economy and performance of the recently redesigned vans offered by Fiat/Chry sler and Ford (the Promaster and Transit, respectivel y) , and the more traditi onally
- st yl ed vans that continue to be offered b y General Motors (the Express/Savannah). In MY 2014, Ford began the phase
- out of thePage 492 of 850

Econoline van platform, moving those volumes to the Euro
- st yl e Transit vans (discussed in more detail in Section I. D.2 ). The Transit platform represents a significant improvement over the existing Econoline platform from the perspective of fuel economy , and for the purpose of complying with the standards, the relationship between the Transit’s work factor and fuel econom y is a more favorable one than the Econoline vans it replaces. Since the redesign of van offerings from both Chrysler/Fiat and Ford occur in (or pri or to) the 2014 model year, the costs, fuel consumption improvements, and reductions of vehicle mass associated with those redesigns are included in the anal ys is fleet, meaning they are not carried as part of the compliance modeling exercise. By

contrast, General Motors is simulated to redesign their van offerings after 2014, such that there is a greater potential for these vehicles to incur additional costs attributable to new standards, unlike the costs associated with the recent redesigns of their compe titors. The inclusion of these new Ford and Chry sler/Fiat products in the anal ys is fleet is the primary driver of the cost discrepancy

between GM and its competitors in both the baseline and Alternative 2, when Ford and Chry sler/Fiat have to apply conside rabl y less technology to achieve compliance. The remaining 5 percent of the 2b/3 market is attributed to two manufacturers, Daimler and Nissan, which, unlike the other manufacturers in this market segment, only produce vans. The vans offered b y both manu facturers currentl y utilize two engines and two transmissions, although both Nissan engines are gasoline engines and both Daimler engines are diesels. Despite the logical grouping, these two manufacturers are impacted much differently by the proposed stan dards. For the least stringent alternative considered, Daimler adds no technology and incurs no incremental cost in order to comply with the standards. At stringency increases greater than or equal to 3.5 percent per year, Daimler onl y really improves so me of their transmissions and improves the electrical accessories of its Sprinter vans. By contrast, Nissan’s starting position is much weaker and their compliance costs closer to the industry average in Table VI
- 21 . This difference could increase if the anal ys is fleet supporting the final rule includes forthcoming Nissan HD pickups.Page 493 of 850

**Table VI**  **- 25**  **Summary of Impacts on Daimler by 2030**  **in the HD Pickup and Van Market versus the Dynam** **ic Baseline, Alternative 1b Alternative**  **2 3**  **4 5**  Annual Stringency In crease 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency In crease Through MY 2025 2027 2025 2025

Average Fuel Econom y (miles per gallon) Required 23.36 25.19 25.25 25.91 Achieved 25.23 25.79 25.79 26.53

Average Fuel Consumption (gallons /100 mi.) Required 4.28 3.97 3.96 3.86 Achieved 3.96 3. 88 3.88 3.77

Average Greenhouse Gas Emissions (g/mi) Required 436 404 404 393 Achieved 404 395 395 384 Technology

Penetration (%) VVT and/or VVL 0 0 0 0 Cylinder Deac. 0 0 0 0 Direct Injection 0 0 0 0 Turbocharging 44 44 44 44 8
- Speed AT 0 44 44 100 EPS, Accessories 0 0 0 0 Stop
- Start 0 0 0 0 Hy bridization 0 0 0 0 Aero. Improvements 0 0 0 0

Mass Reduction (vs. No
- Action) CW (lb.) 0 0 0 0 CW (%) 0 0 0 0

Technology

Cost (vs. No
- Action) Average ($) a 0 165 165 374 Total ($m , undiscounted) b 0 4 4 9 Notes: a Values used in Methods A & B b Values used in Method A , calculated at a 3% discount ratePage 494 of 850

**Table VI**  **- 26**  **Summary of Impacts on Nissan by 2030 in the HD Pickup and Van Market versus the Dynamic**  **Baseline, Alternative 1b Alternative**  **2 3**  **4 5**  Annual Stringency In crease 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency

Increase Through MY 2025 2027 2025 2025

Average Fuel Econom y (miles per gallon) Required 19.64 21.19 20.92 21.46 Achieved 19.84 21.17 21.19 21.51

Average Fuel Consumption (gallons /100 mi.) Required 5.09 44.72 4.78 4.66 Achieved 5.04 4.72 4.72 4.65

Average Greenhouse Gas Emissions (g/mi) Required 452 419 425 414 Achieved 448 419 419 413 Technology

Penetration (%) VVT and/or VVL 100 100 100 100 Cylinder Deac. 49 49 49 49 Direct Injection 51 51 51 100 Turbocharging 51 51 51 50 8
- Speed AT 0 51 51 51 EPS, Accessories 0 100 100 100 Stop
- Start 0 0 0 0 Hy bridization 0 0 0 28 Aero. Improvements 0 100 100 100

Mass Reduction (vs. No
- Action) CW (lb.) 0 0 307 303 CW (%) 0 0 5 4.9

Technology

Cost (vs. No
- Action) Average ($) a 378 1,150 1,347 1,935 Total ($m , undiscounted) b 5 15.1 17.7 25.4 Notes: a Values used in Methods A & B b Values used in Method A , calculated at a 3% discount ratePage 495 of 850

As Table VI
- 25 and Table VI
- 26 show, Nissan applies more technology than Daimler in the less stringe nt alternatives and significantly more technology

with increasing stringency . The Euro
- style Sprinter vans that comprise all of Daimler’s model offerings in this segment put Daimler in a favorable position. However, those vans are already advanced

– cont aining downsized diesel engines and advanced aerodynamic profiles. Much like the Ford Transit vans, the recent improvements to the Sprinter vans occurred outside the scope of the compliance modeling so the costs of the improvements are not captured in the anal ys is. Although Daimler’s required fuel econom y level is much higher than Nissan’s (in miles per gallon), Nissan starts from a much weaker position than Daimler and must incorporate additional engine, transmission, platform
- level technologies (e.g. mas s reduction and aerodynamic improvements) in order to achieve compliance. In fact, more than 25 percent of Nissan’s van offerings are projected to contain integrated starter generators by 2030 in Alternative 5. While the agencies do not allow sales volumes for any manufacturer (or model) to vary across regulatory

alternatives in the anal ys is, it is conceivable that under the most stringent alternatives individual manufacturers could lose market share to their competitors if the prices of their new vehicl es rise more than the industry average without compensating fuel savings and/or changes to other features. (b ) Estimated Owner/operator Impacts with Respect to HD Pickups and Vans Using Method A The owner/operator impacts of the proposed rule s are more straightforward. Table VI
- 27 shows the impact on the average owner/operator who buy s a new class 2b or 3 vehicle in model ye ar 2030 using the worst case assumption that manufacturers pass through the entire cost of technology

to the purchaser
. (All dollar values are discounted at a rate of 7 percent per ye ar from the time of purchase , except the average price increase, which occurs at the time of purchase). The additional costs associated with increases in taxes, registration fees, and financing costs are also captured in the table
.Page 496 of 850

**Table VI**  **- 27**  **Summary of Individual Owner/o**  **perator Impacts in MY 2030**  **in the HD Pickup and Van Market Segment using Method A and versus the Dynamic Baseline, Alternative 1b**  **a Alternative**  **2 3**  **4 5**  Annual Stringency In crease In creases 2.0%/y 2.5%/y 3.5%/y 4.0%/y Stringency In crease Through MY 2025 2027 2025 2025 Value of Lifetime Fuel Savings (discounted 2012 dollars) Pretax 2,068 3, 924 4,180 4,676 Tax 210 409 438 491 Total 2,278 4,334 4,618 5,168

Economic Benefits (discounted 2012 dollars) Mobility Benefit 244 437 472 525 Avoided Refueling Time 86 164 172 193

New Vehicle Purchase (vs. No
- Action Alternative) Avg. Price In crease ($) 578 1, 348 1,655 2,080 Avg. Pay back (years) 2 .5 3 3.4 3.9 Additional costs ($) 120 280 344 432

Net L ifetime Owner/operator Benefits (discounted $) Total Net Benefits 1,910 3,307 3,263 3,374 Notes: * All dollar values are discounted at a rate of 7 percent per year from the time of purchase, except the average price increase, which occurs at the time of purchase). a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. As expected, an owner/operator ’s lifetime fuel savings increase monotonically across the alternatives. The mobility benefit in Table VI
- 27 refers to the value of additional miles that an individual owner/operator travels as a result of reduced per
- mile travel costs. The additional miles result in additional fuel consumption and represent foregone fuel savings, but are valued by owner/operator s at the cost of the addi tional fuel plus the owner/operator surplus (a measure of the increase in welfare that owner/operator s achieve by having more mobility

). The refueling benefit measures the value of time saved through reduced refueling events, the result o f improved fuel economy

and range in vehicles that have been modified in response to the standards.Page 497 of 850

There are some limitations to using pay back period as a measure, as it accounts for fuel expenditures and incremental costs associated with taxes, registration fees and financing, and increased maintenance costs, but not the cost of potential repairs or replacements, which may or may not be more expensive with more advanced technology
. Overall, the average owner/operator is likely to see discount ed lifetime benefits that are multiples of the price increases faced when purchasing the new vehicle in MY 2030 (or the few model years preceding 2030). In particular, the net present value of future benefits at the time of purchase are estimated to be 3. 5, 3.0, 2.2, and 1.8 times the price increase of the average new MY2030 vehicle for Alternatives 2

– 5, respectively
. As Table VI
- 27 illustrates, the preferred altern ative has the highest ratio of discounted future owner/operator benefits to owner/operator costs. (c) Estimated Social and Environmental Impacts for HD Pickups and Vans S ocial benefits increase with the increasing stringency of the alternatives
. A s in the owner/operator analy sis, the net benefits continue to increase with increasing stringency

– suggesting that benefits are still increasing faster than costs for even the most stringent alternative.Page 498 of 850

**Table VI**  **- 28**  **Summary of Total Social Costs a**  **nd Benefits Through MY202**  **9 in the HD Pickup and Van** 

**Market Segment using Method A and versus the Dynamic Baseline, Alternative 1b a**  **Alternative 2**  **3 4**  **5** Annual Stringency In crease 2.0% 2.5% 3.5% 4.0% Stringency

Increase Through MY 2025 2027 2025 2025

Fuel Purchases ($billion) Pretax Savings 9.6 15.9 19.1 22.2

Fuel Externalities ($billion) Energy Security 0.5 0.9 1.1 1.3 CO 2 emissions b 1.9 3.2 3.8 4.4

VMT
- Related Externalities ($billion) Driving Surplus 1.1 1.8 2.1 2.4 Refueling Surplus 0.4 0.7 0.8 0.9 Congestion
- 0.2
- 0.4
- 0.4
- 0.5 Accidents
- 0.1
- 0.2
- 0.2
- 0.3 Noise 0 0 0 0 Fatalities 0.1
- 0.2
- 0.2
- 0.5 Criteria Emissions 0.6 1.1 1.3 1.6

Technology

Costs vs. No
- Action ($billion) In cremental Cost 2.5 5.0 7.2 9.7 Additional Costs 0.5 1.0 1.5 2.0

Benefit Cost Summary

($billion) Total Social Cost 3.3 6 .8 9.5 13.0 Total Social Benefit 13.9 22.7 27.4 31.7 Net Social Benefit 10.6 15.9 17.9 18.7 Notes: * All dollar valu es are discounted at a rate of 3 percent per year from the time of purchase
. a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Using the 3% average social cost of CO 2 value. There are four distinct social cost of CO 2 values presented in the Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866 (2010 and 2013) . The CO 2 emissions presented here would be valued lower with one of those other three values and higher at the other two values. Table VI
- 28 provides a summary of benefits and costs, cumulative from MY2015

– MY202 9 (although the early years of the series typically have no incremental costs and benefits over the baseline), for each alternative. In the social perspective, fuel savings are considered net of fuel taxes, which are a transfer from purchasers of fuel to society at large. The energy security component represents the risk premium associated with exposure to oil price spikes and thePage 499 of 850

economic consequences of adapting to them. This externality is monetiz ed on a per
- gallon basis, just as the social cost of carbon is used in this analy sis. Just as the previous two externalities are caused b y fuel consumption, others are caused b y travel itself. The additional VMT resulting from the increase in travel demand that occurs when the price of driving decreases (i.e. the rebound effect), not only

leads to increased mobility (which is a benefit to drivers), but also to increases in congestion, noise, accidents, and per
- mile emissions of criteria pollutants like carbon monoxide and diesel particulates. Although increases in VMT lead to increases in tailpipe emissions of criteria pollutants, the proposed regulations decrease overall consumption enough that the emissions reductions associated with the remainder of th e fuel cycle (extraction, refining, transportation and distribution) are large enough to create a net reduction in the emissions of criteria pollutants (shown below in Table VI
- 29 and VI
- 30 ). 377 A full presentation of the costs and benefits, and the considerations that have gone into each cost and ben efit category

— such as how energy

securit y premiums were developed, how the social costs of carbon and co
- pollutant benefits were developed, etc.

—is presented in Section IX of this preamble and in Chapters 7 and 8 of the draft RIA for each regulated segment (engines, HD pickups and vans, vocational vehicles, tractors and trailers). Another side effect of increased VMT is the likely increase in crashes , which is a function of the total vehicle travel in each ye ar. Although additional crashes could involve additional fatalities, we estimate that this potential could be partiall y offset by the application of mass reduction to HD pickup trucks and vans, which could make fatalities less likely in some crashes involving these vehicles. As Table VI
- 28 illustrates, the social cost associated with traffic fatalities is the result of an additional
- 10 ( Alternative 2 leads to a reduction in fatalities over the baseline, due to the application of mass reduction technologies), 35 , 36 , and 66 fatalities for Alternatives 2
- 5, respectivel y. T he baseline contain s nearl y 2 5 ,000 fatalities involving 2b/3 vehicles over the same period. The incremental fatalities associated with Alternative 2
- 5 are
- 0.4, 0.1, 0.1, and 0. 3 percent relative to the MY s 2015
- 202 9 baseline, respectively
. The CAFE model was used to estimate the emissions impacts of the various alternativ es that are the result of lower fuel consumption, but increased vehicle miles traveled for vehicle produced in model ye ars subject to the standards in the alternatives. Criteria pollutants are largel y the result of vehicle use, and accrue on a per
- mile
- of
- travel basis, but the alternatives still generall y lead to emissions reductions. Although vehicle use increases under each of the alternatives, upstream emissions associated with fuel refining, transportation and distribution are reduced for each gallon of fuel saved and that savings is larger than the incremental increase in emissions associated with increased travel. The net of the two factors is a savings of criteria (and other) pollutant emissions.

377 For a more detailed discussion of the results from the CAFE Model on the proposed heavy duty pickups and vans regulation’s impact on emissions of CO 2 and criteria pollutants, see NHTSA’s acco mp anying Draft Environmental Im pact Statement.Page 500 of 850

**Table VI**  **- 29**  **Summary of Environmental Impacts Through MY202 9**  **in the HD Pickup and Van Market**

**Segm ent**  **, using Method A and versus the**  **Dynamic Baseline , Alternative 1b**  **a Alternative**  **2 3**  **4 5**  Annual Stringency In crease 2.0% 2.5% 3.5% 4.0% Stringency

Increase Through MY 2025 2027 2025 2025

Greenhouse Gas Emissions vs. No
- Action Alternative CO 2 (MMT) 54 91 110 127 CH4 and N 2 O (tons) 65,6 00 111,400 133,700 155,300

Other Emissions vs. No
- Action Alternative (tons) CO 10,400 20,700 25,800 30,400 VOC and NO X 23,800 43,600 53,500 62,200 PM 1,470 2,550 3,090 3,590 SO 2 11,400 19,900 24,100 28,000 Air Toxics 44 47 49 55 Diesel PM10 2,470 4,350 5,300 6,160

Other Emissions vs. No
- Action Alternative (% reduction) CO 0.1 0.3 0.4 0.4 VOC and NO X 1.1 2.1 2.6 3.0 PM 1.7 3.0 3.6 4.2 SO 2 2.9 5.1 6.2 7.2 Air Toxics 0.1 0.1 0.1 0.2 Diesel PM10 2.7 4.8 5.9 6.8 Note : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. In addition to comparing environmental impacts of the alternatives against a dy namic baseline that shows some improvement over time, compared to today ’s fleet, even in the absence of the alternatives, the environmental impacts from the Method A anal ys is were compared against a flat baseline. This other comparison is summarized below, but both comparisons are discussed in greater detail in the Draft EI S.Page 501 of 850

**Table VI**  **- 30**  **Summary of Environmental Impacts Through MY202 9**  **in the HD Pickup and Van Market**

**Segm ent**  **, using Method A and versus the**  **Flat Baseline , Alternative 1a**  **a Alternative**  **2 3**  **4 5**  Annual Stringency In crease 2.0% 2.5% 3.5% 4.0% Stringency

Increase Through MY 2025 2027 2025 2025

Greenhouse Gas Emissions vs. No
- Action Alternative CO 2 (MMT) 66 105 127 142 CH 4 and N 2 O (tons) 79,700 127,400 154,800 172,800

Other Emissions vs. No
- Action Alternative (tons) CO 11,630 22,160 28,030 32,370 VOC and NO X 28,280 48,770 60,180 68,050 PM 1,780 2,900 3,550 3,980 SO 2 13,780 22,580 27,660 31,020 Air Toxics 60 65 72 73 Diesel PM10 2,980 4,930 6,060 6,810

Other Emissions vs. No
- Action Alternative (% reduction) CO 0.2 0.3 0.4 0.4 VOC and NO X 1.4 2.3 2.9 3.3 PM 2.1 3.4 4.2 4.7 SO 2 3.5 5.7 7.0 7.9 Air Toxics 0.2 0.2 0.2 0.2 Diesel PM10 3.3 5.4 6.7 7.5 Note : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. **(6) Sensitivity Analysis**  **Evaluating Different Inputs**  **to the DOT CAFE Model** This section describes some of the principal sensitivity results, obtained by

running the various scenarios describing the policy alternatives with alt ernative inputs. OMB Circular A
- 4 indicates that “it is usually necessary to provide a sensitivity

anal ys is to reveal whether, and to what extent, the results of the anal ys is are sensitive to plausible changes in the main assumptions and numeric inputs.” 378 Considering this guidance, a number of sensitivity analy ses were performed using anal ys is Method A to examine important assumptions and inputs, including the following, all of which are discussed in greater detail in the accompanyi ng RIA: 1. Pay back Period : In addition to the 0 and 6 month pay back periods discussed above , also evaluated cases involving pay back periods of 12, 18, and 24 months.

378 Available at http://www.whitehouse.gov/omb/circulars_a004_a
- 4/
.Page 502 of 850

2. Fuel Prices : E valuated cases involving fuel prices from the AEO 2014 low and high oil price scenarios. (See AEO
- Low and AEO
- High in the tables
. ) 3. Fuel Prices and Pay

back Period : E valuated one side case involving a 0 month pay back period combined with fuel prices from the AEO 2014 low oil price scenario, and one side case with a 24 month payback period combined with fuel prices from the AEO 2014 high oil price scenario. 4. Benefits to Vehicle Buye rs : The main Method A anal ys is assumes there is no loss in value to owner/operators resulting from vehicles that have an increase in price and higher fuel econom y. NHTSA performed this sensitivity anal ys is assum ing that there is a 25, or 50 percent loss in value to owner/operators

– equivalent to the assumption that owner/operators will only value the calculated benefits they will achieve at 75, or 50 percent, respectively , of the main anal ys is estimates. (These are labeled as 75pct Owner/operatorBenefit and 50pctOwner/operato rBenefit
. ) 5. Value of Avoided GHG Emissions : E valuated side cases involving lower and higher valuation of avoided CO 2 emissions, expressed as the social cost of carbon (SCC). 6. Rebound Effect : E valuated side cases involving rebound effect values of 5 percent , 15 percent , and 20 percent . (These are labeled as 05PctReboundEffect, 15PctReboundEffect and 20PctReboundEffect )
. 7. RPE
- based Markup : E valuated a side case using a retail price equivalent (RPE) markup factor of 1.5 for non
- electrification technologies, which is consistent with the NAS estimation for technologies manufactured b y suppliers, and a RPE markup factor of 1.33 for electrification technolog ies (mild and strong HEV). 8. ICM
- based Post
- Warranty Repair Costs : NHTSA e valuated a side case that scaled the frequency of repair b y vehicle survival rates, assumes that per
- vehicle repair costs during the post
- warranty period are the same as in the in
- war ranty period, and that repair costs are proportional to incremental direct costs (therefore vehicles with additional components will have increased repair costs). 9. Mass
- Safety Effect : E valuated side cases with the mass
- safety impact coefficient at the valu es defining the 5 th and 95 th percent points of the confidence interval estimated in the underlying statistical analy sis. (These are labeled MassFatalityC oeff05 pct and MassFatalityC oeff95pct
. ) 10. Strong HEVs : E valuated a side case in which strong HEVs were ex cluded from the set of technology

estimated to be available for HD pickups and vans through model year 2030. As in Section VI
. **Error! Reference source not found.** , this “no SHEV” case allowed turbocharging and downsizing on all GM vans to provide a lower
- cost path for compliance. 11. Diesel Downsizing : E valuated a side case in which downsizing of diesel engines was estimated to be more widely available to HD pickups and vans. 12. Technology

Effectivenes s : E valuated side cases involving inputs reflecting lower and higher impacts of technologies on fuel consumption. 13. Technology

Direct Costs : E valuated side cases involving inputs reflecting lower and higher direct incremental costs for fuel
- saving technolo gies. 14. Fleet Mix : E valuated a side case in which the shares of individual vehicle models and configurations were kept constant at estimated current levels.Page 503 of 850

Table VI
- 31 Table VI
- 31 below, summarizes key metrics for each of the cases included in the sensitivity

anal ys is using Method A for the proposed alternative
. The table reflects the percent change in the metrics (columns) relative to the main anal ys is, due to the particular sensitivity

case (rows) for the proposed alternative 3. For each sensit ivity run, the change in the metric can we described as the difference between the baseline and the preferred alternative for the sensitivity

case, minus the difference between the preferred alternative and the baseline in the main anal ys is, divided by the difference between the preferred alternative and the baseline in the main anal ys is. Or,

= ∆
− ∆ ∆ ∙ 100
Each metric represents the sum of the impacts of the preferred alternative over the model ye ars 2018
- 2029, and the percent changes in the table represent percent changes to those sums. More detailed results for all alternatives are available in the accompanying RIA Chapter 10
.Page 504 of 850

**Table VI**  **- 31**  **Sensitivity Analysis Results from CAFE Model**  **in the HD Pickup and Van Market Segm ent**  **using Method A and versus the D ynamic Baseline, Alternative 1b**  **(2 .5**  **% growth in stringency: Cells are percent change from** **base case) a**  Sensitivity Case Fuel

Savings (gallons) CO2

savings (MMT) Fuel Savings

($) Social

Costs Social

Benefits Social

Net Benefits 0 Month Payback 14.0 % 14.5 % 15.1 % 5.6 % 15.1 % 18 .2% 12 Month Payback
- 4.8 %
- 4 .7%
- 4.5 %
- 2.5 %
- 4 .7 %
- 5.4 % 18 Month Payback
- 29.2 %
- 28.1 %
- 26.5 %
- 14 .1%
- 26.8 %
- 31.1 % 24 Month Payback
- 42.9 %
- 42.4 %
- 41.9 %
- 23.2 %
- 42 .1%
- 48.4 % AEO
- Lo w 3.3 % 3.5 %
- 27.9 %
- 10.8 %
- 22.2 %
- 26.1 % AEO
- High
- 7 .0 %
- 7.2 % 23.3 % 1 .4 % 19.5 % 25.6 % AEO
- Lo w, 0 Month Payback 18.6 % 19.3 %
- 16.5 %
- 3.4 %
- 10.1 %
- 12.3 % AEO
- High, 24 Month Payback - 63.8 %
- 64 .6%
- 54 .4%
- 49.9 %
- 55 .7%
- 57.7 % 50pct Owner/operator Benefit 0.0 % 0.0 %
- 50.0 % 0.0 %
- 34.6 %
- 46 .2% 75pct Owner/operator Benefit 0.0 % 0.0 %
- 25.0 % 0.0 %
- 17.3 %
- 23.1 %
Lo w SCC 0 .0% 0.0 % 0.0 % 0.0 %
- 10.6 %
- 14.1 % Lo w SCC, 0 Month Payback 14.0 % 14.5 % 15.1 % 5.6 % 2 .9% 2 .0 % High SCC 0.0 % 0 .0% 0.0 % 0.0 % 7. 8% 10.4 % High SCC, 0 Month Payback 14. 0 % 14.5 % 15.1 % 5.6 % 24.0 % 30.1 % Very High SCC 0.0 % 0 .0% 0.0 % 0.0 % 28.7 % 38.4 % Very High SCC, 0 Month Payback 14.0 % 14.5 % 15.1 % 5.6 % 48.0 % 62.2 % 05 Pct Rebound Effect 4.6 % 4.6 % 4 .6%
- 12.9 % 0.4 % 4.8 % 15 Pct Rebound Effect - 4.6 %
- 4.6 %
- 4 .6 % 12.9 %
- 0. 4%
- 4.8 % 20 Pct Rebound Effect - 9.1 %
- 9.2 %
- 9.2 % 25.7 %
- 0.8 %
- 9 .7% RPE
- Based Markup
- 3.2 %
- 1.5 % 0.3 % 31.4 %
- 0 .1%
- 10. 6% Mass Fatality Coeff 05pct 0.0 % 0.0 % 0.0 %
- 23
. 6 % 0.0 % 7.9 % Mass Fatality Coeff 95pct 0 .0% 0.0 % 0.0 % 23.9 % 0.0 %
- 8 .0 % NoSHEVs
- 6 .7%
- 5.8 %
- 5.0 % 2.3 %
- 5.1 %
- 7. 6 % NoSHEVs, 0 Month Payback 8.2 % 9.8 % 11.5 %
- 1 .2 % 11 .3% 15.4 % Lo wer Effectiveness
- 7.8%
- 7.8%
- 8.1% 39.5%
- 8.0%
- 23.9% Higher Effectiveness
- 10.6 %
- 10.3 %
- 10.0 %
- 23.3 %
- 10 .2%
- 5. 8 % Lo wer Direct Costs 0.9 % 2 .7 % 4.8 % 18.4 % 4.3 %
- 0.4 % Higher Direct Costs
- 4.1%
- 3.8%
- 3.5% 75.3%
- 3.8%
- 30.3%Page 505 of 850

Wider Diesel Downsizing - 1.5 %
- 1.0 %
- 0.6 %
- 10.3 %
- 0.8 % 2.4 % 07 Pct Discount Rate 0.0% 0.0%
- 100.0%
- 41.7%
- 100.0%
- 119.5% 07 Pct DR, 0 Month Payback 14.0 % 14 .5%
- 37.9 %
- 30.7 %
- 30 .7%
- 30.7 % Allow Gas To Diesel 15.5% 5.3%
- 100.0% 16.8%
- 100.0%
- 139.1% Allow Gas To Diesel, 0 Month Payback 32.1 % 22.6 % 14. 5 % 46.8 % 17.0 % 7.0 % flat mix after 2016 1.1 % 0.9 % 0.7 % 2.6 % 0.8 % 0.2 % Note a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. For some of the cases for which results are presented above, the sensitivity of results to changes in inputs is simple, direct, and easil y observed. For example, changes to valuation of avoided GHG emissions impact only this portion of the estimated econo mic benefits; manufacturers’ responses and corresponding costs are not impacted. Similarly , a higher discount rate does not affect ph ys ical quantities saved (gallons of fuel and metric tons of CO2 in the table), but reduces the value of the costs and bene fits attributable to the proposed standards in an intuitive way
. Some other cases warrant closer consideration: First, cases involving alternatives to the reference six
- month pay back period involve different degrees of fuel consumption improvement, and th ese differences are greatest in the no
action alternative defining the baseline. Because all estimated impacts of the proposed standards are shown as incremental values relative to this baseline, longer pay back periods correspond to smaller estimates of i ncremental impacts , as fuel econom y increasingly improves in the absence of the rule and manufacturers are compelled to add less technology in order to comply

with the standards
. Second, cases involving different fuel prices similarly involve different degrees of fuel econom y improvement in the absence of the standard, as more, or less, improvement occurs as a result of more, or fewer, technologies appearing cost effective to owner/ operators. Lower fuel prices correspond to increases in fuel savings on a volumetric basis, as the standard is responsible for a greater amount of the fuel economy improvement, but the value of fuel savin gs decreases because each gallon saved is worth less when fuel prices are low. Higher fuel prices correspond to reductions in the volumetric fuel savings attributable to the proposed standards, but lead to increases in the value of fuel saved because each gallon saved is worth more when fuel prices are high
. Third, because the pay

back period and fuel price inputs work in opposing directions, the relative magnitude of each is important to consider for the combined sensitivity cases . While the low price and 0
- month pay back case leads to significant volumetric savings compared to the ma in anal ys is, the low fuel price is still sufficient to produce a negative change in net benefits. Similarly , the high price and 24
- month pay back case results in large reductions to volumetric savings that can be attributed to the proposed standards, but the presence of high fuel prices is not sufficient to lead to increases in either the dollar value of fuel savings or net social benefits
.Page 506 of 850

Fourth, the cases involving different inputs defining the availability of some technologies do not impact equally

the estimated impacts across all manufacturers. Section C.8 above provides a discus sion of a sensitivity anal ys is that excludes strong hy brids and includes the use of downsized turbocharged engines in vans currently equipped with large V
- 8 engines. The modeling results for this anal ys is are provided in Section C.8 and in the table above. The no strong h ybrid anal ys is shows that GM could comply with the proposed preferred Alternative 3 without strong h ybrids based on the use of turbo downsizing on all of their HD gasoline vans. Alternativel y, when the analysis is modified to allow for wider application of diesel engines, strong HEV application for GM drops slightl y (from 19 percent to 17 percent) in MY2030, average per - vehicle costs drop slightly (by about $50), but MY2030 additional penetration rates of diesel engines increase b y about 10 percent. Manufacturer
- specific model results accompan yi ng today ’s rules show the extent to which individual manufacturers’ potential responses to the standards vary with these alternative assumptions regarding the availability and applica bility of fuel
- saving technologies. However, across all of these sensitivity cases, the model projects that social costs increase (as a result of increases in technology costs) when manufacturers choose to comply with the proposed regulations without the use of strong h ybrids. Fifth, the cases that vary

the effectiveness and direct cost of available technologies produce nuanced results in the context of even the 0
- month pay back case. In the case of effectiveness changes, both sensitivity cases result in r eductions to the volumetric fuel savings attributable to the proposal; lower effectiveness because the technologies applied in response to the standards save less fuel, and higher effectiveness because more of the increase in fuel econom y occurs in the bas eline. However, for both cases, social costs (a strong prox y for technology

costs) move in the intuitive direction. The cases that vary

direct costs show volumetric fuel savings increasing under lower direct technology

costs despite additional fuel econo my improvements in the baseline, as more aggressive technology

becomes cost effective. Higher direct costs lead to decreases in volumetric fuel savings, as more of the fuel economy improvement can be attributed to the rule. In both cases, social costs (a s a result of technology costs) move in the intuitive direction. If, instead of using the values in the main anal ys is, each sensitivity case were itself the main anal ys is, the costs and benefits attributable to the proposed rule would be as they appear in Table VI
- 32 , below.

**Table VI**  **- 32**  **Costs and Benefits of Proposed Standards for HD Pickups and Vans Under Alternative Assu**  **mptions**Page 507 of 850

Sensitivity Case Fuel Savings (billion gallons) CO2

Reduction (MMT) Fuel

Savings ($billion) Social

Costs ($billion) Social

Benefits ($billion) Net Social

Benefits ($billion) 6 Month Payback (main) 7.8 94.1 15.9 5.5 23.5 18 0 Month Payback 8.9 107.7 18.3 5.8 27.0 21.3 12 Month Payback 7.4 87.2 151.8 56.2 218.8 162.7 18 Month Payback 5.5 65.8 116.9 49.5 168.0 118.5 24 Month Payback 4.5 52.7 92.4 44.2 132.9 88.6 AEO
- Lo w 8.1 94.7 114.7 51.4 178.5 127.1 AEO
- High 7.3 84.9 196.0 58.4 274.3 215.9 AEO
- Lo w, 0 Month Payback 9.3 109.1 132.8 55.6 206.4 150.7 AEO
- High, 24 Month Payback 2.8 32.4 72.5 28.9 101.7 72.8 50pct Owner/operator Benefit 7.8 91.5 79.5 57.6 150.0 92.4 75pct Owner/operator Benefit 7.8 91.5 119.3 57.6 189.8 132.2 Lo w SCC 7.8 91.5 159.0 57.6 205.2 147.6 Lo w SCC, 0 Month Payback 8.9 104.7 183.0 60.8 236.2 175.4 High SCC 7.8 91.5 159.0 57.6 247.4 189.8 High SCC, 0 Month Payback 8.9 104.7 183.0 60.8 284.5 223.7 Very High SCC 7.8 91.5 159.0 57.6 295.5 237.9 Very High SCC, 0 Month Payback 8.9 104.7 183.0 60.8 339.6 278.8 05 Pct Rebound Effect 8.2 95.7 166.3 50.2 230.4 180.3 15 Pct Rebound Effect 7.5 87.2 151.7 65.0 228.6 163.6 20 Pct Rebound Effect 7.1 83.0 144.4 72.4 227.7 155.3 RPE
- Based Markup 7.6 90.1 159.5 75.7 229.4 153.7 Mass Fatality Coeff 05pct 7.8 91.5 159.0 44.0 229.5 185.5 Mass Fatality Coeff 95pct 7.8 91.5 159.0 71.4 229.5 158.1 NoSHEVs 7.3 85.8 150.6 68.6 217.0 148.4 NoSHEVs, 0 Month Payback 8.4 99.8 176.0 74.3 253.5 179.2 Lo wer Effectiveness 7.2 84.3 146.1 80.4 211.2 130.8 Higher Effectiveness 7.0 82.0 143.1 44.2 206.2 162.0 Lo wer Direct Costs 7.9 94.0 166.6 68.2 239.4 171.3 Higher Direct Costs 7.5 88.0 153.4 100.9 220.8 119.9 Wider Diesel Downsizing 7.7 90.5 158.1 51.7 227.7 176.1 07 Pct Discount Rate 7.8 91.5 85.4 37.7 138.0 100.3 07 Pct DR, 0 Month Payback 8.9 104.7 98.7 39.9 159.1 119.2Page 508 of 850

Allow Gas To Diesel 9.0 96.3 152.8 71.6 226.9 155.3 Allow Gas To Diesel, 0 Month Payback 10.3 112.2 182.0 84.6 268.6 184.0 Flat mix after 2016 7.9 92.3 160.1 59.1 231.3 172.2
**(7) Uncertainty Analysis**  As in previous rules, NHTSA has conducted an uncertainty analysis to determine the extent to which uncertainty about input assumptions could impact the costs and benefits attributable to the proposed rule. Unlike the preceding sensitivity anal ys is, which is useful for understanding how alternative values of a single inp ut assumption may influence the estimated impacts of the proposed standards, the uncertainty anal ys is considers multiple states of the world, characterized by

a distribution of specific values of all relevant inputs, based on their relative probability

of occurrence. A sensitivity analy sis varies a single parameter of interest, holding all others constant at whatever nominal values are used to generate the single point estimate in the main analy sis, and measures the resulting deviation. However, the uncertainty anal ys is allows all of those parameters to vary simultaneously

– relaxing the assumption that “all else is equal”. Each trial, of which there are 14,000 in this anal ys is, represents a different state of the world in which the standards are implemented. To gauge the robustness of the estimates of impacts in the proposal, NHTSA varied technology costs and effectiveness, fuel prices, market demand for fuel economy improvements in the absence of the rule, the amount of additional driving associated with fuel econom y improvements (the rebound effect), and the on
- road gaps between realized fuel economy and laboratory

test values for gasoline and diesel vehicles. The shapes and types of the probability distributions used in the anal ys is vary by uncertaint y parameter, though the costs and effectiveness values for technologies are sampled as groups to minimize issues associated with interdependence. The most important input to the uncertainty anal ys is, fuel prices (which drive the majority of benefits from the proposed standards), are drawn from a range of fuel prices characterized b y permutations of the Low, Reference, and High fuel price cases in the Annual Energy Outlook 2014.Page 509 of 850 **Figure VI**  **- 7**  **Distribution of Net Benefits from Proposed Standards for HD Pickups and Vans** Page 510 of 850

Figure VI
- 7 display s the distribution of net benefits estimated by the ensemble of si mulation runs. As Figure VI
- 7 indicates, the analy sis produces a wide distribution of possible outcomes that are much broader than the range of estimates characteriz ed by onl y the difference between the more and less dy namic baselines. While the expected value, the probability
weighted average outcome, is only about 70 percent of the net benefits estimated in the main anal ys is, almost all of the trials produce positi ve net benefits. In fact, the distribution suggests there is only

a one percent chance of the proposal producing negative net benefits for HD pickups and vans. So while the estimated net benefits in the main analy sis may be higher than the expected value when uncertainty is considered, net benefits at least as high as those estimated in the main anal ys is are still 20 times as likely as an outcome that results in net costs. Figure VI
- 8 shows the distribution of pay back periods (in years) for Model Year 2029 trucks across 14,000 simulation runs. The “pay back period” t ypically refers to the number of ye ars of vehicle use that occur before the savings on fuel expenditures offset the additional technology

cost associated with improved fuel economy . As Figure VI
- 8 illustrates, the expected incremental technology cost of both Phase 1 and Phase 2 is eclipsed by the value of fuel savings b y year three of ownership in most casesPage 511 of 850

**Figure VI**  **- 8**  **Average Payback Period for MY 2029 HP Pickup or Van Based on Expected Phase 1 and Phase 2 (combined)**  **Technology Costs**Page 512 of 850

This is an important metric for owner/operator acceptability and, though Figure VI
- 8 illustrates the long right tail of the pay back distribution (where pay back periods are likel y to be unacceptabl y long), fewer than ten percent of the trials result in payback p eriods longer than four ye ars. This suggests that, even in the face of uncertainty about future fuel prices and fuel econom y in real
- world driving conditions, buyers of the vehicles that are modified to comply with the requirements of the proposal will still see fuel savings greater than their additional vehicle cost in a relatively short period of time. As one would expect, the technologies used in Phase 1 of the MDHD program are likely to be more cost effective and serve to lower the expected pay

back period, even comp ared to the main anal ys is of Phase 2. 

### E. **Compliance and Flexibility for HD Pickup and Van Standards (1)**  **Averaging, Banking, and Trading** The Phase 1 program established substantial flexibility in how manufacturers can choose to implement EPA and NHTSA standards wh ile preserving the benefits for the environment and for energy

consumption and security. Primary among these flexibilities are the gradual phase
- in schedule, and the corporate fleet average approach which encompasses averaging, banking and trading describ ed below. See Section IV.A. of the Phase 1 preamble (76 FR 57238) for additional discussion of the Phase 1 averaging, banking, and trading and Section IV.A (3) of the Phase 1 preamble (76 FR 57243) for a discussion of the credit calculation methodology
. M anufacturers in this category ty picall y offer gasoline and diesel versions of HD pickup and van vehicle models. The agencies established chassis
- based Phase 1 standards that are equivalent in terms of stringency for gasoline and diesel vehicles and are pr oposing the same approach to stringency

for Phase 2. In Phase 1, the agencies established that HD pickups and vans are treated as one large averaging set that includes both gasoline and diesel vehicles 379 and the agencies are proposing to maintain this aver aging set approach for Phase 2. As explained in Section II.C(3) of the Phase 1 preamble (76 FR 57167), and in Section VI .B (3) above, the program is structured so that final compliance is determined at the end of each model ye ar, when production for the mo del year is complete. At that point, each manufacturer calculates production
- weighted fleet average CO 2 emission and fuel consumption rates along with its production
- weighted fleet average standard. Under this approach, a manufacturer’s HD pickup and van fleet that achieves a fleet average CO 2 or fuel consumption level better than its standard would be allowed to generate credits. Conversely , if the fleet average CO 2 or fuel consumption level does not meet its standard, the fleet would incur debits (also referred to as a shortfall). A manufacturer whose fleet generates credits in a given model ye ar will have several options for using those credits to offset emissions from other HD pickups and vans. These options include credit carry
- back, credit carry
- forward, and credit trading within the HD pickup

379 See 40 CFR Section 1037.104 (d). C redits may not be transferred or traded between this vehicle averaging set and loose engines or other heavy
- duty categories, as discussed in Section I.Page 513 of 850

and van averaging set. These ty pes of credit provisions also exist in the light
- duty 2012
- 2016 and 2017
- 2025 MY vehicle rules, as well as man y other mobile source standards issued b y EPA under the CAA. The manufacturer will be able to carry back credits to offset a deficit that had accrued in a prior model year and was subsequently carried over to the current model year, with a limitation on the carry
- back of credits to three model years. After satisfying an y need to offset pre - existing deficits, a manufacturer may bank remaining credits for use in future years, with a limitation on the carry
- forward of credits to five model years. Averaging vehicle credits with engine credits or between vehicle weight cla sses is not allowed, as discussed in Section I . The agencies are not proposing changes to an y of these provisions for the Phase 2 program. While the agencies are proposing to retain 5 ye ar carry- forward of credits for all HD sectors, the agencies reques t comment on the merits of a temporary credit carry
- forward period of longer than 5 ye ars for HD pickups and vans, allowing Phase 1 credits generated in MYs 2014
- 2019 to be used through MY 202 7 . EPA included a similar provision in the MY 2017
- 2025 light
- duty

vehicle rule, which allows a one
- time credit carry
- forward of MY 2010
- 2015 credits to be carried forward through MY 2021. 380 Such a credit carry
- forward extension for HD pickups and vans may

provide manufacturers with additional flexibi lity during the transition to the proposed Phase 2 standards. A temporary credit carry
- forward period of longer than five ye ars for Phase 1 credits may help manufacturers resolve lead
- time issues they might face as the proposed more stringent Phase 2 stan dards phase
- in and help avoid negative impacts to their product redesign cycles which tend to be longer than those for light
- dut y vehicles. As discussed in Section VI.B.4., EPA is proposing to change the HD pickup and van useful life for GHG emissions from the current 11 years/120,000 miles to 15 years/150,000 miles to make the useful life for GHG emissions consistent with the useful life of criteria pollutants recentl y updated in the Tier 3 rule. As shown in the Equation VI
- 1 credits calculation formula below, established b y the Phase 1 rule, useful life in miles is a multiplicative factor included in the calculation of CO 2 and fuel consumption credits. In order to ensure banked credits maintain their value in the transition from Phase 1 to Phase 2, NHTSA and EPA propose an adjustment factor of 1.25 (i.e, 150,000÷120,000) for credits that are carried forward from Phase 1 to the MY 2021 and later Phase 2 standards. Without this adjustment factor the proposed change in useful life would effectivel y result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the change in the useful life. Consider, for example, a vehicle configuration with annual sales of 1,000 vehicles that was 10 g/mile below the standard. Under Phase 1, those vehicles would generate 1,200 Mg of credit (10×1,000×120,000÷1,000,000). Under Phase 2, the same vehicles would generate 1,500 Mg of credit (10×1,000×150,000÷1,000,000). The agencies do not believe that this proposed adjustment results in a loss of program benefits because there is little or no deterioration anticipated for CO 2 emissions and fue l consumption over the life of the vehicles. Also, as described in the standards and feasibility sections above, the carry
- forward of credits is an integral part of the program, helping to smoothing the transition to the new Phase 2 standards. The agenci es believe that effectivel y discounting carry
- forward credits from Phase 1 to Phase 2

380 77 FR 62788, October 15, 2012.Page 514 of 850

would be unnecessary

and could negativel y impact the feasibility of the proposed Phase 2 standards. EPA and NHTSA request comment on all aspects of the averaging, bankin g, and trading program. **Equation VI**  **- 1**  **Total Model Year Credit (Debit) Calculation** CO 2 Credits (Mg) = [(CO 2 Std

– CO 2 Act) × Volume × UL ] ÷ 1,000,000 Fuel Consumption Credits (gallons) = (FC Std

– FC Act) × Volume × UL × 100 Where: CO 2 Std = Fleet average CO 2 standard (g/mi) FC Std = Fleet average fuel consumption standard (gal/100 mile) CO 2 Act = Fleet average actual CO 2 value (g/mi) FC Act = Fleet average actual fuel consumption value (gal/100 mile) Volume = the total production of vehicles in the regulatory category UL= the useful life for the regulatory category (miles) **(2) Advanced Technology Credits**  The Phase 1 program included on an interim basis advanced technology credits for MYs 2014 and later in the form of a multiplier of 1.5 for the following technologies:

 Hy brid powertrain designs that include energy storage s ys tems

 Waste heat recovery

 All
- el ectric vehicles

 Fuel cell vehicles The advanced technology credit program is intended to encourage earl y development of technologies that are not yet commerciall y available. This multiplier approach means that each advanced technology

vehicle would count as 1.5 vehicles in a manufacturer’s compliance calculation. A manufacturer also has the option to subtract these vehicles out of its fleet and determine their performance as a separate fleet calculating advanced technology credits that can be used for a ll other HD vehicle categories, but these credits would, of course, not then be reflected in the manufacturer’s conventional pickup and van category credit balance. The credits are thus ‘special’ in that they can be applied across the entire heavy
- dut y se ctor, unlike the ABT and earl y credits discussed above and the proposed off
- cycle technology

credits discussed in the following subsection. The agencies also capped the amount of advanced credits that can bePage 515 of 850

transferred into an y averaging set into an y mod el year at 60,000 Mg to prevent market distortions. The advanced technology multipliers were included on an interim basis in the Phase 1 program and the agencies are proposing to end the incentive multipliers beginning in MY 2021, when the more stringent Phase 2 standards are proposed to begin phase
- in. The agencies are proposing a similar approach for the other HD sectors as discussed in Section I .C. (1). The advanced technology

incentives are intended to promote the commercialization of technologies th at have the potential to provide substantially better GHG emissions and fuel consumption if they were able to overcome major near
- term market barriers. However, the incentives are not intended to be a permanent part of the program as they result in a decr ease in overall GHG emissions and fuel consumption benefits associated with the program when used. More importantly , as explained in Section I . above, the agencies are already predicating the stringency of the proposed standards on development and deploy m ent of two of these Phase 1 advanced technologies (waste heat recovery and strong h yb rid technology), so that it would be inappropriate (and essentially a windfall) to include credits for use of these technologies in Phase 2. 381 As discussed in Section I, the agencies request comment on the proposed approach for the advanced technology

multipliers for HD pickups and vans as well as the other HD sectors , including comments on whether or not the credits should be extended to later model years for more advanc ed technologies such as EVs and fuel cell vehicles. These technologies are not projected to be part of the technology path used by

manufacturer to meet the proposed Phase 2 standards for HD pickups and vans. Waste heat recovery is also not projected to b e used for HD pickups and vans in the time frame of the proposed rules
. EV and fuel cell technologies would presumabl y need to overcome the highest hurdles to commercialization for HD pickups and vans in the time frame of the proposed rules , and also have the potential to provide the highest level of benefit. We welcome comments on the need for such incentives, including information on why an incentive for specific technologies in this time frame may be warranted, recognizing that the incentive would result in reduc ed benefits in terms of CO 2 emissions and fuel use due to the Phase 2 program. NHTSA and EPA established that for Phase 1, EVs and other zero tailpipe emission vehicles be factored into the fleet average GHG and fuel consumption calculations based on the diesel standards targets for their model year and work factor. The agencies also established for electric and zero emission vehicles that in the credits equation the actual emissions and fuel consumption performance be set to zero ( i.e. that emissions be considered on a tailpipe basis exclusively) rather than including upstream emissions or energy consumption associated with electricity generation. As we look to the future, we are not projecting the adoption of electric

381 EPA and NHTSA similarly included temporary advanced technology multipliers in the light
- duty 2017
- 2025 program, believing it was worthwhile to forego modest additional emissions reductions and fuel consumption im provements in the near
- term in order to lay the foundation for the potential for much larger “game
- changing” GHG and oil consumption reductions in the lo nger term. The incentives in the light
- duty vehicle program are available through the 2021 model year. See 77 FR 62811, October 15, 2012.Page 516 of 850

HD pickup s and vans into the market; therefore, we believe that this provision is still appropriate. Unlike the MY2012
- 2016 light
- dut y rule, which adopted a cap whereb y upstream emissions would be counted after a certain volume of sales (see 75 FR 25434
- 25436), we believe there is no need to propose a cap for HD pickups and vans because of the infrequent projected use of EV technologies in the Phase 2 timeframe. In Phase 2, we propose to continue to deem electric vehicles as having zero CO 2 , CH 4 , and N 2 O emissions as well as zero fuel consumption. We welcome comments on this approach. See also Section Ifor a discussion of the treatment of lifecycle emissions for alternative fuel vehicles and Section XI for the treatment of lifecycle emissions for natural gas spe cificall y. **(3) Off**  **- cycle**  **Technology Credits** The Phase 1 program established an opportunity for manufacturers to generate credits by applying innovative technologies whose CO 2 and fuel consumption benefits are not captured on the 2
- cycle test procedure (i.e., o ff
- cycle). 382 As discussed in Sections III.F. and V.E.3., the agencies are proposing approaches for Phase 2 off
- cycle technology

credits for tractors and vocational vehicles with proposed provisions tailored for those sectors. For HD pickups and vans, the approach for off
- cycle technologies established in Phase 1 is similar to that established for light
- dut y vehicles due to the use of the same basic chassis test procedures. The agencies are proposing to retain this approach for Phase 2. To generate credit s, manufacturers are required to submit data and a methodology for determining the level of credits for the off
- cycle technology subject to EPA and NHTSA review and approval. The application for off
- cycle technology credits is also subject to a public evaluation process and comment period. EPA and NHTSA would approve the methodology and credits onl y if certain criteria were met. Baseline emissions and fuel consumption 383 and control emissions and fuel consumption need to be clearly demonstrated over a wide range of real world driving conditions and over a sufficient number of vehicles to address issues of uncertainty with the data. Data must be on a vehicle model
- specific basis unless a manufacturer demonstrated model
- specific data were not necessary . Onc e a complete application is submitted by the manufacturer, the regulations require that the agencies publish a notice of availability in the Federal Register notifying the public of a manufacturer’s proposed off

- cycle credit calculation methodology and pro vide opportunity for comment. As noted above, the approach finalized for HD pickups and vans paralleled provisions for off
- cycle credits in the MY 2012
- 2016 light
- dut y vehicle GHG program. 384 In the MY 2017
- 2025 light
- duty

vehicle program, EPA revised the off
- cycle credits program for light
- dut y vehicles to streamline the credits process. In addition to the process established in the MY 2012
- 2016 rule, EPA added a list or “menu” of pre
- approved off
- cycle technologies and associated credit levels. 385 Manufa cturers may use the pre
- defined off

- cycle technology menu to generate light
- duty vehicle credits by

demonstrating at time of certification that the vehicles are equipped

382 See 76 FR 57251, September 15, 2011 and 40 CFR 1037.104(d)(13). 383 Fuel consumption is derived from measured CO 2 emissions using conversion factors of 8,887 g CO 2 /gallon for gasoline and 10,180 g CO 2 /gallon for diesel fuel. 384 See 75 FR 25440, May 7, 2010 and 40 CFR 86.1869(d). 385 77 FR 62832
- 62839, October 15, 2012.Page 517 of 850

with the technology

without providing additional test data. Different levels of credi ts are provided for cars and light trucks in the light
- dut y program. NHTSA also included these credits in the CAFE program (in gallons/mile equivalent) starting with MY 2017. The list of pre
approved off

- cycle technologies for light
- dut y vehicles is shown below. **Table VI**  **- 33**  **Pre -**  **Approved Off -**  **Cycle Technologies f** 

**or Light -**  **Duty Vehicles** Pre
- approved technologies High Efficiency

Exterior Lighting (at 100W) Waste Heat Recovery

(at 100W; scalable) Solar Roof Panels (for 75 W, battery charging only) Solar Roof Panels (for 75 W, active cabin ventilation plus battery

charging) Active Aerodyn amic Improvements (scalable) Engine Idle Start
- Stop w/ heater circulation sy stem Engine Idle Start
- Stop without/ he ater circulation s ys tem Active Transmission Warm
- Up Active Engine Warm
- Up Solar/Thermal Control The agencies initially

note that where vehicles are not chassis
- certified, but rather evaluate compliance using the GEM simulation tool, with the proposed modifications to GEM, many more technologies (especially those related to engine and transmission imp rovements) will now be ‘on
- cycle’

– evaluated directl y b y the GEM compliance tool. However, with respect to the proposed standards which would be chassis
- certified

– namel y, the standards for heav y dut y pickups and vans, the effectiveness of some technolo gies will be onl y partially captured (or not captured at all). EPA and NHTSA are requesting comment on establishing a pre
- defined technology

menu list for HD pickups and vans. The list for HD pickups and vans could include some or all of the technologies listed in Table VI
- 33 . As with the light
- dut y program, the pre
defined list may

simplify the process for generating off
- cycle credits and may

furthe r encourage the introduction of these technologies. However, the appropriate default level of credits for the heavier vehicles would need to be established. The agencies request comments with supporting HD pickup and van specific data and anal ys is that w ould provide a substantive basis for appropriate adjustments to the credits levels for the HD pickup and van category . The data and anal ys is would need to demonstrate that the pre
- defined credit level represents real
- world emissions reductions and fuel co nsumption improvements not captured b y the 2
- cycle test procedures.Page 518 of 850

As with the light
- dut y vehicle program, the agencies would also consider including a cap on credits generated from a pre
- defined list established for HD pickups and vans. The cap for th e light
- dut y vehicle program is 10 g/mile (and gallons/mi equivalent) applied on a manufacturer fleet
- wide basis. 386 The 10 g/mile cap limits the total off
- cycle credits allowed based on the pre
- defined list across the manufacturer’s light
- dut y vehicle flee t. The agencies adopted the cap on credits to address issues of uncertainty regarding the level of credits automatically

assigned to each technology . Manufacturers able to demonstrate that a technology provides improvements beyond the menu credit level w ould be able to apply for additional credits through the individual demonstration process noted above. Credits based on the individual manufacturer demonstration would not count against the credit cap. If a menu list of credits is developed to be included in the HD pickup and van program, a cap may also be appropriate depending on the technology list and credit levels. The agencies request comments on all aspects of the off

- cycle credits program for HD trucks and vans. **(4) Demonstrating Compliance for Heavy**  **- d**  **uty Pickup Trucks and Vans** The Phase 1 rule established a comprehensive compliance program for HD pickups and vans that NHTSA and EPA are generall y retaining for Phase 2. The compliance provisions cover details regarding the implementation of the fleet av erage standards including vehicle certification, demonstrating compliance at the end of the model year, in
- use standards and testing, carryover of certification test data, and reporting requirements. Please see Section V.B (1) of the Phase 1 rule preamble (76 FR 57256
- 57263) for a detailed discussion of these provisions. The Phase 1 rule contains special provisions regarding loose engines and optional chassis certification of certain vocational vehicles over 14,000 lbs. GVWR. The agencies are prop osing to extend the optional chassis certification provisions to Phase 2 and are not proposing to extend the loose engine provisions. See the vocational vehicle Section V .E. and XIV.A.2 for a detailed discussion of the proposal for optional chassis certif ication and II.D. for the discussion of loose engines
.

386 See 40 CFR 86.1869
- 12(b).Page 519 of 850



## VII. **Aggr egate GHG, Fuel Consumption, and Climate Impacts**  Given that the purpose of setting these Phase 2 standards is to reduce fuel consumption and greenhouse gas (GHG) emissions from heav y - duty vehicles, it is necessary

for the agencies to analyze the extent to which the proposed standards would accomplish that purpose. This section describes the agencies’ methodologies for projecting the reduction s in greenhouse gas (GHG) emissions and fuel consumption, and the methodologies the agencies used to quantify the impacts associated with the proposed standards , as well as the impacts of Alternative 4 . In addition, EPA’s analy ses of the projected change in atmospheric carbon dioxide (CO 2 ) concentration and consequent climate change impacts are discussed. Because of NHTSA’s obligations under EPCA/EI SA and NEPA , NHTSA further anal yz es , for each regulatory alternative, the projected environmental impac ts related to fuel consumption, GHG emissions, and climate change . Detailed documentation of this analy sis is provided in Chapters 3 and 5 of NHTSA’s DEIS accompanying today ’s notice
. 

### A. **What Methodologies Did the Agencies Use to Project GHG Emissions and Fuel Consumption Impacts?**  Different tools exist for estimating potential fuel consumption and GHG emissions impacts associated with fu el efficiency and GHG emission standards. One such tool is EPA’s official mobile source emissions inventory model named Motor Vehicle Emissions Simulator (MOVES)
. 387 The agencies used the most current version of the model, MOVES2014, to quantify the impacts of the proposed standards for vocational vehicles and combination tractor
trailers on GHG emissions and fuel consumption for each regulatory alternative . MOVES w as run with user input databases, described in more detail below, that reflected the projected technological improvements resulting from the proposed rules, such as the improvements in engine and vehicle efficiency , aerodynamic drag, and tire rolling resis tance. Another such tool is DOT’s CAFE model, which estimates how manufacturers could potentially

appl y technology improvements in response to new standards, and then calculates, among other things, resultant changes in national fuel consumption and GHG em issions. For today ’s anal ys is of potential new standards for HD pickups and vans, the model was reconfigured to use the work
- based attribute metric of “work factor” established in the Phase 1 rule for heav y - dut y pickups and vans instead of the light
- dut y “footprint” attribute metric. The CAFE model takes user
- specified inputs on, among other things, vehicles that will be produced in a given model year, technologies available to improve fuel efficiency on those vehicles, potential regulatory

standards that would drive improvements in fuel efficiency , and economic assumptions. The CAFE model takes every vehicle in each manufacturer’s fleet and decides what technologies to add to those vehicles in order to allow each manufacturer to compl y with the standards in the most cost
- effective way . Based on the resulting improved vehicle fleet, the CAFE model then calculates total fuel consumption and GHG emissions impacts based on those

387 MOVES homepage: http://www.epa.gov/otaq/models/moves/index.htm (last accessed Feb 23, 2015).Page 520 of 850

inputs, along with economic costs and benefits. The DOT ’s CAFE model is further described in detail in Section VI .C of the preamble and Chapter 2 of the draft RIA. For th ese rule s , the agencies conducted coordinated and complementary analy ses b y using two analy

tical methods for the heavy
- dut y pickup and van segment employi ng both DOT’s CAFE model and EPA’s MOVES model. The agencies used EPA’s MOVES model to estimate fuel consumption and emissions impacts for tractor - trailers (including the engine that power s the tractor), and vocational vehicles (including the engine that powers the vehicle). For heav y - dut y pickups and vans, the agencies performed complementary analyses , which we refer to as “Method A” and “Method B”. In Method A, the CAFE model was used to project a pathway

the industry

could use to comply

with each regulatory

alternative and the estimated effects on fuel consumption, emissions, benefit s and costs. In Method B, the MOVES model was used to estimate fuel consumption and emissions from these vehicles. NHTSA considered Method A as its central anal ys is. EPA considered the results of both methods. The agencies concluded that bo th methods led the agencies to the same conclusions and the same selection of the proposed standards. See Chapter 5 of the draft RIA for additional discussions of these two methods. For both methods, the agencies analyzed the impact of the proposed rules and Alternative 4 , relative to two different reference cases

– less dy namic and more dy

namic. The less dy

namic baseline projects very

little improvement in new vehicles in the absence of new Phase 2 standards. In contrast, the more dynamic baseline proje cts more improvements in vehicle fuel efficiency . The agencies considered both reference cases (for additional details, see Chapter 11 of the draft RIA). The results for all of the regulatory alternatives relative to both reference cases, derived via the same methodologies discussed in this section, are presented in Section X of the preamble
. For brevity , a subset of these anal ys es are presented in this section , and the reader is referred to both the RIA Chapter 11 and NHTSA’s DEI S Chapters 3 and 5 fo r complete sets of these anal ys es . In this section, Method A is presented for both the proposed standards (i.e., Alternative 3

—the agencies’ preferred alternative) and for the standards the agencies considered in Alternative 4, relative to both the more dyn amic baseline (Alternative 1b) and the less dy namic baseline (Alternative 1a). Method B is presented also for the proposed standards and Alternative 4, but relative only to the less dy

namic baseline. The agencies’ intention for presenting both of these complementary and coordinated anal ys es is to offer interested readers the opportunity

to compare the regulatory alternatives considered for Phase 2 in both the context of our HD Phase 1 anal yt ical approaches and our light
- dut y vehicle anal yt ical approaches. The agencies view these analy ses as corroborative and reinforcing: both support agencies’ conclusion that the proposed standards are appropriate and at the maximum feasible le vels. Because reducing fuel consumption also affects emissions that occur as a result of fuel production and distribution (including renewable fuels), the agencies also calculated those “upstream” changes using the “downstream” fuel consumption reductions predicted b y the CAFE model and the MOVES model. As described in Section VI, Method A use s the CAFE model to estimate vehicular fuel consumption and emissions impacts for HD pickups and vans and to calculate upstream impacts
. For vocational vehicles and combination tractor
- trailers, bothPage 521 of 850

Method A and Method B use the same upstream tools originall y created for the Renewable Fuel Standard 2 (RFS2) rulemaking anal ys is, 388 used in the LD GHG rulemakings, 389 HD GHG Phase 1, 390 and updated for the current analy sis. The estimate of emissions associated with production and distribution of gasoline and diesel from crude oil is based on emission factors in the “Greenhouse Gases, Regulated Emissions, and Energy Use in Transportat ion” model (GREET) developed b y DOE's Argonne National Lab. In some cases, the GREET values were modified or updated b y the agencies to be consistent with the National Emission Inventory (NEI) and emission factors from MOVES
. Method B uses the same tool described above to estimate the upstream impacts for HD pickups and vans. For additional details, see Chapter 5 of the draft RIA. The upstream tool used for the Method B can be found in the docket. 391 As noted in Section VI above, these analy ses corroborate each other’s results. The agencies analyzed the anticipated emissions impacts of the proposed rules and Alternative 4 on carbon dioxide (CO 2 ), methane (CH 4 ), nitrous oxide (N 2 O), and hydrofluorocarbons (HFCs) for a number of calendar years (for purpos es of the discussion in th ese proposed rule s , only 2025, 2035 and 2050 will be shown) by comparing to both reference cases. 392 Additional runs were performed for just the three of the greenhouse gases (CO 2 , CH 4 , and N 2 O) and for fuel consumption for every calendar year from 2014 to 2050, inclusive, which fed the economy
- wide modeling, monetized greenhouse gas benefits estimation, and climate impacts anal ys es, discussed in sections below. 393 

### B. **Analysis of Fuel Consumption and GHG Emissions Impacts Resulti**  **ng from Proposed Standards and Alternative 4**  The following sections describe the model inputs and assumptions for both the less dy namic and more dyn amic reference cases and the control case representing the agencies’ proposed fuel efficiency

and GHG standards. The agencies request comment on the model inputs, projected reductions in energy rates and fuel consumption rates presented in this section, as well as in Chapter 5 of the draft RIA. The details of all the MOVES runs, and input data

388 U.S. EPA. Draft Regulatory Impact Analysis: Changes to Renewable Fuel Standard Program. Chapters 2 and 3. May 26, 2009. Docket ID: EPA
- HQ
- OAR
- 2009
- 0472
- 0119 389 2017 and Later Model Year Light
- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fu el Economy Standards (77 FR 62623, October 15, 2012) 390 Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Medium
- and Heavy
- Duty Engines and Vehicles (76 FR 57106, September 15, 2011) 391 Memorandum to the Docket “ Upstream Em issions Modeling Files for HDGHG Phase 2 NPRM ” Docket No. EPA
- HQ
- OAR
- 2014
- 0827 392 The emissions impacts of the proposed rules on non
- GHGs, including air toxics, were also estimated using MOVES. See Section VIII of the preamble f or more information. 393 The CAFE model estimates, among other things, manufacturers’ potential multiyear planning decisions within the context of an estimated year
- by
- year product cadence (i.e., schedule for redesigning and freshening vehicles). The agenci es included earlier model years in the analysis in order to account for the potential that manufacturers might take anticipatory actions in model years preceding those covered by today’s proposal.Page 522 of 850

tables , as well as the MOVES code and database, can be found in the docket. 394 See Section VI .C for the discussion of the model inputs and assumptions for the anal ys is of the HD pickups and vans using DOT’s CAFE Model. **(1) Model Inputs and Assumptions for the Less Dynamic Reference Case**  The l ess dynamic reference case (identified as Alternative 1a in Section X), includes the impact of Phase 1 , but generall y assumes that fuel efficiency and GHG emission standards are not improved beyond the required 2018 model ye ar levels. Alternative 1a functions as one of the baselines against which the impacts of the proposed standards can be evaluated. This case projects some improvements in the efficiency of the box trailers pulled by combination tractors due to increased penetration of aerodyn am ic technologies and low rolling resistance tires attributed to both EPA’s SmartWay Transport Partnership and California Air Resources Board’s Tractor
- Trailer Greenhouse Gas regulation, as described in Section IV of the preamble. For other HD vehicle secto rs, no market
- driven improvement in fuel efficiency was assumed. For HD pickups and vans, the CAFE model was applied in a manner that assumes manufacturers would only

add fuel
- saving technology as needed to continue complying with Phase 1 standards. MOVE S2014 defaults were used for all other parameters to estimate the emissions inventories for this case. The less dynamic reference case assumed the MOVES2014 default vehicle population and miles traveled estimates. The growth in vehicle populations and mi les traveled in MOVES2014 is based on the relative annual VMT growth from AEO2014 Earl y Release for model years 2012 and later. 395 **(2) Model Inputs and Assumptions for the More Dynamic Reference Case**  The more dynamic reference case (identified as Alternative 1b in Section X), also includes the impact of Phase 1 and generally assumes that fuel efficiency and GHG emission standards are not improved beyond the required 2018 model year levels. However, for this case, the agencies assume market forces would lead to additional fuel efficiency improvements for HD pickups and vans and tractor
- trailers. These additional assumed improvements are described in Section X of the preamble. No additional fuel efficiency improvements due to market forces were assumed f

or vocational vehicles. For HD pickups and vans, the agencies applied the CAFE model using the input assumption that manufacturers having achieved compliance with Phase 1 standards would continue to apply technologies for which increased purchase costs wo uld be “paid back” through corresponding fuel savings within the first six months of vehicle operation. T he agencies conducted the MOVES anal ys is of this case in the same manner as for the less dy namic reference case.

394 Memorandum to the Docket “Runspecs , Model Inputs , MOVES Code and Database for HD GHG Phase 2 NPRM Emissions Modeling” Docket No. EPA
- HQ
- OAR
- 2014
- 0827 395 MOVES2014 assumes the population and VMT growth based on the early release version of AEO2014 because it was the only version that was available at the t ime of MOVES2014 development. Annual Energy Outlook 2014. http://www.eia.gov/forecasts/aeo/er/ (last accessed Feb 23, 2015).Page 523 of 850

**(3) Model Inputs and Assumptions for “Con**  **trol” Case** (a ) Vocational Vehicles and Tractor

- Trailers The “control” case represents the agencies’ proposed fuel efficiency and GHG standards. The agencies developed additional user input data for MOVES runs to estimate the control case inventories. The inp uts to MOVES for the control case account for improvements of engine and vehicle efficiency

in vocational vehicles and combination tractor
- trailers. The agencies used the percent reduction in aerody namic drag and tire rolling resistance coefficients and a bsolute changes in average total running weight (gross combined weight) expected from the proposed rules to develop the road load inputs for the control case, based on the GEM anal ys is. The agencies also used the percent reduction in CO 2 emissions expecte d from the powertrain and other vehicle technologies not accounted for in the aerodynamic drag and tire rolling resistance in the proposed rules to develop energy inputs for the control case runs. Table VII
- 1 and Table VII
- 2 describe the proposed improvements in engine and vehicle efficiency from the proposed rules for vocational vehicles and combination tractor
- trailers that were input into MOVES for estimating the control case emissions inventories. Additional details regarding the MOVES inputs are included in the Chapter 5 of the draft RIA.Page 524 of 850 **Table VII**  **- 1**  **Estimated Reductions in Energy Rates for the Proposed Standards** VEHICLE TYPE FUEL MODEL YEARS REDUCTION FROM

REFERENCE CASE Long
- haul Tractor
- Trailers and HHD Vocational Diesel 2018
- 2020 1.3% 2021
- 2023 5.2% 2024
- 2026 9.7% 2027+ 10.4% Short
- haul Tractor
- Trailers and HHD Vocational Diesel 2018
- 2020 0.9% 2021
- 2023 5.0% 2024
- 2026 9.5% 2027+ 10.4% Single
- Frame Vocational 396 Diesel and

CNG 2021
- 2023 5.3%

2024
- 2026 8.9% 2027+ 13.3% Gasoline 2021
- 2023 3.3%

2024
- 2026 5.4% 2027+ 10.3%

396 Vocational vehicles modeled in MOVES include heavy heavy
- duty , medium heavy
- duty, and light heavy
- duty vehicles. However, for light heavy
- duty vocational vehicles, class 2b and 3 vehicles are not included in the inventories for the vocational sector. Instead, all vocational vehicles with GVWR of less than 14,000 lbs were mo dele d using the energy rate reductions described below for HD pickup trucks and vans. In practice, many manufacturers of these vehicles choose to average the lightest vocational vehicles into chassis
- certified families (i.e., heavy
- duty pickups and vans).Page 525 of 850 **Table VII**  **- 2**  **Estimated Reductions in Road Load Factors for the Proposed Standards** VEHICLE TYPE MODEL

YEARS REDUCTION IN

TIRE ROLLING RESISTANCE COEFFICIENT REDUCTION IN

AERODYNAMIC DRAG COEFFICIENT WEIGHT

REDUCTION (LB) i Combination Long
- haul Tractor
Trailers 2018
-

2020 5.5% 5.1%
- 131 2021
- 2023 9.8% 15.3%
- 199 2024
- 2026 15.7% 20.5%
- 246 2027+ 17.9% 26.9%
- 304 Combination Short
- haul Tractor
Trailers 397 2018
-

2020 4.0% 1.6%
- 41 2021
- 2023 10.5% 9.3%
- 79 2024
- 2026 13.9% 12.3%
- 100 2027+ 17.6% 15.9%
- 127 Intercity Buses 2021
-

2023 6.5% 0% 0 2024
- 2026 9.2% 0% 0 2027+ 16.5% 0% 0 Transit Buses 2021
-

2023 0% 0% 0 2024
- 2026 2.9% 0% 0 2027+ 3.0% 0% 0 School Buses 2021
-

2023 0% 0% 0 2024
- 2026 2.9% 0% 0 2027+ 4.0% 0% 0 Refuse Trucks 2021
-

2023 0% 0% 20 2024
- 2026 2.9% 0% 20 2027+ 3.0% 0% 25 Single Unit Short
- haul Trucks 2021
-

2023 4.8% 0% 5.8 2024
- 2026 8.3% 0% 5.8

397 Vocational tractors are included in the short
- haul tractor segment.Page 526 of 850 2027+ 13.0% 0% 7 Single Unit Long
- haul Trucks 2021
-

2023 6.5% 0% 20 2024
- 2026 9.2% 0% 20 2027+ 16.5% 0% 25 Motor Homes 2021
-

2023 3.0% 0% 0 2024
- 2026 6.2% 0% 0 2027+ 7.4% 0% 0 Note: i Negative weight reductions reflect an expected weight increase as a byproduct of other vehicle and engine im provements, as described in Chapter 5 of the draft RIA. In addition, the proposed CO 2 standard for tractors reflecting the use of auxiliary power units (APU) during extended idling, as discussed in Section III.D of the preamble, was included in the modeling for the long
- haul combination tractor
- trailers, as shown below in Table VII
- 3
. **Table VII**  **- 3**  **Assu med APU Use during Extended Idling for Com** **bination Long -**  **haul Tractor -**  **Trailers**

VEHICLE TYPE MODEL

YEAR APU PENETRATION i Combination Long
Haul Trucks 2010
- 2020 30%

2021
- 2023 80% 2024+ 90% Note: i The assumed APU penetration remains constant for model years 2024 and later. To account for the potential increase in vehicle use expected to result from improvements in fuel efficiency

for vocational vehicles and combination tractor
- trailers due to the proposed rules (also known as the “rebound effect” and described in more detail in Chapter 5 of the draft RIA), the control case assumed an increase in VMT from the reference levels by 1.83 percent for the vocational vehicles and 0.79 percent for the combination tractor
- trailers. (b ) Heavy
-Duty Pickups and Vans As explained above and as also discussed in the draft RIA, the agencies used both DOT’s CAFE model and EPA’s MOVES model, for Method A and B, respectively, to proj ect fuel consumption and GHG emissions impacts resulting from the proposed standards for HD pickups and vans, including downstream vehicular emissions as well as emissions from upstream processes related to fuel production, distribution, and delivery
. (i ) Me thod A for HD Pickups and Vans For Method A, the agencies used the CAFE model which applies fuel properties (density and carbon content) to estimated fuel consumption in order to calculate vehicular CO 2 emissions,Page 527 of 850

applies per
- mile emission factors from MOVES to estimated VMT (for each regulatory alternative, adjusted to account for the rebound effect) in order to calculate vehicular CH 4 and N 2 O emissions (as well, as discussed below, of non
- GHG pollutants), and applies per
- gallon upstream emission factors from GREET in order to calculate upstream GHG (and non
- GHG) emissions. As discussed above in Section VI , the proposed standards for HD pickups and vans

—that is, the functions defining fuel consumption and GHG targets that each depend work factor

— increase in stringency

by 2.5 percent annuall y during model ye ars 2021
- 2027. The standards define targets specific to each vehicle model, but no vehicle is required to meet its target; instead, the production
- weighted averages of the vehicle
- specific targets define average fuel consumption and CO 2 emission rates that a given manufacturer’s overall fleet of produced vehicles is required to achiev e. The standards are specified separately for gasoline and diesel vehicles, and vary with work factor. Work factors could change, and today’s anal ys is assumes that some applications of mass reduction could enable increased work factor in cases where manu facturers could increase a vehicle’s rated payload and/or towing capacity . Therefore, average required levels will depend on the mix of vehicles and work factors of the vehicles produced for sale in the U.S., and since these can onl y be estimated at this time, average required and achieved fuel consumption and CO 2 emission rates are subject to uncertainty. Between today ’s notice and issuance of the ensuing final rule, the agencies intend to update the market forecast (and other inputs) used to anal yz e HD pickup and van standards, and expect that doing so will lead to different estimates of required and achieved fuel consumption and CO 2 emission rates (as well as different estimates of impacts, costs, and benefits). The following four tables present string ency increases and estimated required and achieved fuel consumption and CO 2 emission rates for the two No Action Alternatives (Alternative 1a and 1b) and the proposed standards defining the Preferred Alternative. Stringency

increases are shown relative to standards applicable in model year 2018 (and through model year 2020). As mathematical functions, the standards themselves are not subject to uncertainty. By

2027, they

are 16.2 percent more stringent (i.e., lower) than those applicable during 2018
- 2020
. NHTSA estimates that, by model 2027, the proposed standards could reduce average required fuel consumption and CO 2 emission rates to about 4.86 gallons/100 miles and about 458 grams/mile, respectively
. NHTSA further estimat es that average achieved fuel consumption and CO 2 emission rates could correspondingl y be reduced to about the same levels. If, as rep resented b y Alternative 1b, manufacturers would, even absent today’s proposed standards, voluntaril y make improvements th at pay back within six months, these model year 2027 levels are about 13.5 percent lower than the agencies estimate could be achieved under the Phase 1 standards defining the No Action Alternative. If, as represented b y Alternative 1a, manufacturers would , absent today ’s proposed standards, only appl y technology as required to achieve compliance, these model year 2027 levels are about 15 percent lower than the agencies estimate could be achieved under the Phase 1 standards. As indicated below, the agencie s estimate that these improvements in fuel consumption and CO 2 emission rates would build from model year to model year, beginning as soon as model year 2017 (insofar as manufacturers may make anticipatory

improvements if warranted given planned produce ca dence).Page 528 of 850

**Table VII -**  **VII -**  **4 Stringency of HD Pickup and Van Standards, Estim**  **ated Average Required and Achieved**

**Fuel Consumption Rates for Method A, Relative to Alternative**  **1b a**  Model Year Stringency

(vs. 2018) Ave. Required Fuel Cons. (gal./100 mi.) Ave. Achieved Fuel Cons. (gal./100 mi.)

No Action Proposed Reduction No Action Proposed Reduction 2014 MYs 2014
-

2020 Subject to Phase 1 Standards 6.41 6.41 0.0% 6.21 6.21 0.0% 2015 6.41 6.41 0.0% 6.12 6.12 0.0% 2016 6.27 6.27 0.0% 6.15 6.15 0.0% 2017 6.11 6.11 0.0% 5.89 5.88 0.2% 2018 5.80 5.80 0.0% 5.75 5.70 0.8% 2019 5.78 5.78 0.0% 5.72 5.68 0.7% 2020 5.78 5.78 0.0% 5.69 5.64 0.8% 2021 2.5% 5.77 5.64 2.2% 5.63 5.42 3.8% 2022 4.9% 5.77 5.50 4.7% 5.63 5.42 3.8% 2023 7.3% 5.77 5.38 6.8% 5.63 5.28 6.3% 2024 9.6% 5.77 5.25 9.0% 5.63 5.23 7.1% 2025 11.9% 5.77 5.12 11.4% 5.63 4.99 11.5% 2026 14.1% 5.77 4.98 13.7% 5.63 4.93 12.5% 2027 16.2% 5.77 4.86 15.8% 5.62 4.86 13.7% 2028* 16.2% 5.77 4.86 15.8% 5.62 4.86 13.7% 2029* 16.2% 5.77 4.86 15.8% 5.62 4.85 13.7% 2030* 16.2% 5.77 4.86 15.8% 5.62 4.85 13.7% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. *Absent further action, standards assumed to continue unchanged after model year 2027.Page 529 of 850

**Table VII -**  **VII -**  **5 Stringency of HD Pickup and Van Standards, Estim**  **ated Average Required and Achieved**

**CO 2**  **Emission Rates for Method A, Relative to Alternative**  **1b a**  Model Year Stringency

(vs. 2018) Ave. Required CO 2 Rate (g./mi.) Ave. Achieved CO 2 Rate (g./mi.)

No Action Proposed Reduction No Action Proposed Reduction 2014 MYs 2014
-

2020 Subject to Phase 1 Standards 602 602 0.0% 581 581 0.0% 2015 608 608 0.0% 578 578 0.0% 2016 593 593 0.0% 580 580 0.0% 2017 578 578 0.0% 556 554 0.2% 2018 548 548 0.0% 543 538 0.8% 2019 545 545 0.0% 539 535 0.7% 2020 545 545 0.0% 536 532 0.8% 2021 2.5% 544 532 2.2% 530 510 3.8% 2022 4.9% 544 519 4.7% 530 510 3.8% 2023 7.3% 544 507 6.8% 530 496 6.4% 2024 9.6% 544 495 9.1% 530 492 7.2% 2025 11.9% 544 482 11.3% 530 470 11.3% 2026 14.1% 544 470 13.6% 530 465 12.3% 2027 16.2% 544 458 15.8% 529 458 13.4% 2028* 16.2% 544 458 15.8% 529 458 13.4% 2029* 16.2% 544 458 15.8% 529 458 13.5% 2030* 16.2% 544 458 15.8% 529 458 13.5% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. *Absent further action, standards assumed to continue unchanged a fter model year 2027.Page 530 of 850

**Table VII -**  **VII -**  **6 Stringency of HD Pickup and Van Standards, Estim**  **ated Average Required and Achieved**

**Fuel Consumption Rates for Method A, Relative to Alternative**  **1a a**  Model Year Stringency

(vs. 2018) Ave. Required Fuel Cons. (gal./100 mi.) Ave. Achieved Fuel Cons. (gal./100 mi.)

No Action Proposed Reduction No Action Proposed Reduction 2014 MYs 2014
-

2020 Subject to Phase 1 Standards 6.41 6.41 0.0% 6.21 6.21 0.0% 2015 6.41 6.41 0.0% 6.12 6.12 0.0% 2016 6.27 6.27 0.0% 6.15 6.15 0.0% 2017 6.11 6.11 0.0% 5.89 5.87 0.3% 2018 5.80 5.80
- 0.1%** 5.75 5.70 0.9% 2019 5.78 5.78 0.0% 5.73 5.68 0.8% 2020 5.78 5.78 0.0% 5.73 5.68 0.8% 2021 2.5% 5.77 5.64 2.3% 5.72 5.44 4.8% 2022 4.9% 5.77 5.50 4.7% 5.72 5.44 4.8% 2023 7.3% 5.77 5.38 6.8% 5.72 5.29 7.6% 2024 9.6% 5.77 5.25 9.1% 5.72 5.23 8.5% 2025 11.9% 5.77 5.12 11.4% 5.72 4.98 12.9% 2026 14.1% 5.77 4.98 13.7% 5.72 4.94 13.6% 2027 16.2% 5.77 4.86 15.8% 5.72 4.87 14.9% 2028* 16.2% 5.77 4.86 15.8% 5.72 4.87 14.9% 2029* 16.2% 5.77 4.86 15.8% 5.72 4.86 15.0% 2030* 16.2% 5.77 4.86 15.8% 5.72 4.86 15.0% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.* Ab sent further action, stand ards assumed to continue unchanged after model year 2027. **Increased work factor for some vehicles produces a slight increase in average required fuel consumption.Page 531 of 850

**Table VII -**  **VII -**  **7 Stringency of HD Pickup and Van Standards, Estim**  **ated Average Required and Achieved**

**CO 2**  **Emission Rates for Method A, Relative to Alternative**  **1a a**  Model Year Stringency

(vs. 2018) Ave. Required CO 2 Rate (g./mi.) Ave. Achieved CO 2 Rate (g./mi.)

No Action Proposed Reduction No Action Proposed Reduction 2014 MYs 2014
-

2020 Subject to Phase 1 Standards 602 602 0.0% 581 581 0.0% 2015 608 608 0.0% 578 578 0.0% 2016 593 593 0.0% 580 580 0.0% 2017 578 578 0.0% 556 554 0.3% 2018 548 548
- 0.1%** 543 538 0.9% 2019 545 546
- 0.1%** 539 535 0.8% 2020 545 545
- 0.1%** 539 535 0.8% 2021 2.5% 544 532 2.2% 538 512 4.9% 2022 4.9% 544 519 4.7% 538 512 4.9% 2023 7.3% 544 507 6.8% 538 497 7.7% 2024 9.6% 544 495 9.1% 538 492 8.6% 2025 11.9% 544 482 11.4% 538 470 12.7% 2026 14.1% 544 470 13.6% 538 466 13.4% 2027 16.2% 544 458 15.8% 538 459 14.7% 2028* 16.2% 544 458 15.8% 538 459 14.7% 2029* 16.2% 544 458 15.8% 538 459 14.8% 2030* 16.2% 544 458 15.8% 538 459 14.8% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.* Ab sent further action, standards assumed to continue unchanged after mo del year 2027. **Increased work factor for some vehicles produces a slight increase in the average required CO 2 emission rate. While the above tables show the agencies’ estimates of average fuel consumption and CO 2 emission rates manufacturers might achiev e under today ’s proposed standards, total U.S. fuel consumption and GHG emissions from HD pickups and vans will also depend on how many of these vehicles are produced, and how they are operated over their useful lives. Relevant to estimating these outcome s, the CAFE model applies vintage
- specific estimates of vehicle survival and mileage accumulation, and adjusts the latter to account for the rebound effect. This impact of the rebound effect is specific to each model year (and, underlying, to each vehicle model in each model ye ar), varying with changes in achieved fuel consumption rates. (ii) Method B for HD Pickups and Vans For Method B, the MOVES model was used to estimate fuel consumption and GHG emissions for HD pickups and vans. MOVES evaluated the proposed standards for HD pickup trucks and vans in terms of grams of CO 2 per mile or gallons of fuel per 100 miles. Since nearl y all HD pickup trucks and vans are certified on a chassis dy namometer, the CO 2 reductions for these vehicles were not represented as engine and road load reduction components, but rather as total vehicle CO 2 reductions. The control case for HD pickups and vans assumed an increase in VMT from the reference levels by 1.18 percent for HD pickups and vans.Page 532 of 850

**Table VII**  **- 8**  **Estimated Total Vehicle CO 2**  **Reductions for the Proposed Standards and In**  **- Use Emissions**  **for HD Pickup Trucks and Vans**  **in Method B a**  VEHICLE TYPE FUEL MODEL YEAR CO 2 REDUCT ION

FROM REFERENCE CASE HD pickup trucks and vans Gasoline

and Diesel 2021 2.50%

2022 4.94% 2023 7.31% 2024 9.63% 2025 11.89% 2026 14.09% 2027+ 16.24% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.


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

– fuel consumption reductions from more efficient vehicles, emission reductions from both downstream (tailpipe) and upstream (fuel production and d istribution) sources, and HFC emissions from the proposed air conditioning leakage standards. The following subsections summarize two slightly different analy ses of the annual GHG emissions and fuel consumption reductions expected from these proposed rule s, as well as the reductions in GHG emissions and fuel consumption expected over the lifetime of each heavy
- duty vehicle categories. In addition, because the agencies are carefull y considering Alternative 4 along with Alternative 3, the preferred alternative, the results from both are presented here for the reader’s reference. Section VII. C. (1) shows the impacts of the proposed rules and Alternative 4 on fuel co nsumption and GHG emissions using the MOVES model for tractor
- trailers and vocational vehicles, and the DOT’s CAFE model for HD pickups and vans (Method A), relative to two different reference cases

– less dy namic and more dy

namic. Section VII. C. (2) sho ws the impacts of the proposed standards and Alternative 4, relative to the less dyn amic reference case only , using the MOVES model for all heav y - d uty vehicle categories. NHTSA also anal yz es these impacts resulting from the proposed rule s and reasonable alternatives in Chapters 3 and 5 of its DEI S.Page 533 of 850

**(1) Impacts of the Proposed Rules**  **and Alternative 4 using Analysis Method A**  (a ) Calendar Year Analysis (i ) Downstream (Tailpipe) Emissions Projections As described in Section VII. A, for the analy sis using Method A , the agencies used MOVES to estimate downstream GHG inventories from the proposed rules for vocational vehicles and tractor
- trailers. For HD pickup s and vans, DOT’s CAFE model was used
. The following two tables summarize the agencies’ estimates of HD pickup and van fuel consumption and GHG emissions under the current and proposed standards defining the No
Action and Preferred alternatives, respecti vel y , using Method A
. Table VII
- VII
- 9 shows results assuming manufacturers would voluntarily make improvements that pay back within six months (i.e., Alternative 1b). Table VII
- VII
- 10 shows results assuming manufacturers would onl y make improvements as needed to achieve compliance with standards (i.e., Alternative 1 a). While underlying calculations are all performed for each calendar year during each vehicle’s useful life, presentation of outcomes on a model year basis aligns more clearly with consideration of cost impacts in each model ye ar, and with consideration of standards specified on a model year basis. In addition, Method A analyzes manufacturers’ potential responses to HD pickup and van standards on a model ye ar basis through 2030, and any longer
- term costs present ed in today ’s notice represent extrapolation of these results absent any underl yi ng analysis of longer
- term technology

prospects and manufacturers’ longer
- term product offerings.Page 534 of 850

**Table VII -**  **VII -**  **9 Estimated Fuel Consumption and GHG Emissions over Useful Life of**  **HD Pickups and Vans**

**Produced in Each Model Y**  **ear for Method A, Relative to Alternative 1b**  **a** Model Year Fuel Consumption (b. gal.) over Fleet’s Useful Life GHG Emissions ( MMT CO 2 eq) over Fleet’s Useful Life No Action Proposed Reduction No Action Proposed Reduction 2014 9.41 9.41 0.0% 115 115 0.0% 2015 9.53 9.53 0.0% 117 117 0.0% 2016 9.72 9.72 0.0% 119 119 0.0% 2017 9.49 9.47 0.2% 116 116 0.2% 2018 9.26 9.19 0.7% 113 113 0.7% 2019 9.20 9.14 0.7% 113 112 0.7% 2020 9.19 9.12 0.7% 112 112 0.7% 2021 9.10 8.79 3.4% 111 107 3.4% 2022 9.13 8.82 3.4% 112 108 3.4% 2023 9.11 8.59 5.7% 111 105 5.7% 2024 9.32 8.72 6.4% 114 107 6.4% 2025 9.49 8.49 10.5% 116 104 10.4% 2026 9.67 8.56 11.5% 118 105 11.3% 2027 9.78 8.55 12.6% 120 105 12.3% 2028 9.90 8.66 12.6% 121 106 12.3% 2029 10.02 8.75 12.6% 122 107 12.4% 2030 10.03 8.76 12.6% 123 107 12.4% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 535 of 850

**Table VII -**  **VII -**  **10 Esti**  **ma ted Fuel Consumption and GHG Emissions over Useful Life of**  **HD Pickups and**

**Vans Produced in Each Model**  **Y ear**  **for Method A, Relative to Alternative 1a a**  Model Year Fuel Consumption (b. gal.) over Fleet’s Useful Life GHG Emissions ( MMT CO 2 eq) over Fleet’s Useful Life No Action Proposed Reduction No Action Proposed Reduction 2014 9.41 9.41 0.0% 115 115 0.0% 2015 9.53 9.53 0.0% 117 117 0.0% 2016 9.72 9.72 0.0% 119 119 0.0% 2017 9.49 9.46 0.3% 116 116 0.3% 2018 9.27 9.19 0.8% 114 113 0.8% 2019 9.20 9.14 0.7% 113 112 0.7% 2020 9.25 9.18 0.7% 113 112 0.8% 2021 9.23 8.82 4.4% 113 108 4.4% 2022 9.26 8.85 4.4% 113 108 4.4% 2023 9.23 8.60 6.9% 113 105 6.9% 2024 9.45 8.72 7.7% 116 107 7.7% 2025 9.62 8.48 11.8% 118 104 11.7% 2026 9.81 8.58 12.5% 120 105 12.3% 2027 9.93 8.57 13.7% 121 105 13.5% 2028 10.05 8.68 13.7% 123 106 13.5% 2029 10.17 8.77 13.7% 124 108 13.5% 2030 10.18 8.78 13.7% 124 108 13.5% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. To more clearl y communicate these trends visually, the following two ch arts present the above results graphicall y for Method A, relative to Alternative 1b. As shown, fuel consumption and GHG emissions follow parallel though not precisely identical paths. Though not presented, the charts for Alternative 1a would appear suffi ciently similar that differences between Alternative 1a and Alternative 1b remain best communicated b y comparing values in the above tables.Page 536 of 850

**Figure VII -**  **9 Fuel Consumption (b. gal.) over Useful Life of HD Pickups and Vans Produced in Each Model**  **Year for Method A** Page 537 of 850

**Figure VII -**  **10 GHG Emissions (**  **MMT CO**  **2 eq) over Useful Life of HD Pickups and Vans Produced in Each**  **Model Year for**  **Method A**Page 538 of 850

**Table VII**  **- 11**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**–**

**Preferred Alternative vs. Alt 1b**  **using Analysis Method A a**  CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) 9 TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 26.9
- 0.4 0
- 27.2 2035
- 86 .0
- 1 .0 0
- 86.9 2050
- 121.6
- 1.4 0
- 123 .0 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 12**  **Annual Fu el Savings in Calendar Years 2025, 2035 and 2050** 

**– Preferred Alternative vs. Alt 1b**  **using Analysis Method A a**  CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 2.5 0.2 2035 7.6 0.9 2050 10.8 1.2 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 13**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**–**

**Preferred Alternative vs. Alt 1**  **a using Analysis Method A**  **a** CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) 9 TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 27.7
- 0.4 0
- 28.1 2035
- 93.6
- 1 .0 0
- 94.6 2050
- 133.5
- 1.4 0
- 134.9 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 14**  **Annual Fuel Savings in Calendar Years 2025, 2035 and 2050**

**– Preferred Alternative vs. Alt 1a**  **using Analysis Method A a**  CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 2.5 0.2 2035 8.3 1 .0 2050 11.9 1.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 539 of 850

**Table VII**  **- 15**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4**  **vs. Alt 1b using Analysis Method A**  **a** CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) 9 TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 33.2
- 0.4 0
- 33.5 2035
- 89.9
- 1 .0 0
- 90.9 2050
- 122.6
- 1.4 0
- 124 .0 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 16**  **Annual Fuel Savings in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1b**  **using Analysis Method A**  **a** CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 3 .0 0.3 2035 7.9 1 .0 2050 10.8 1.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 17**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4**  **vs. Alt 1 a**  **using Analysis Method A a**  CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) 9 TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 34.3
- 0.4 0
- 34.6 2035
- 97.7
- 1 .0 0
- 98.7 2050
- 134.6
- 1.4 0
- 136 .0 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 18**  **Annual Fuel Savings in Calendar Years 2025, 2035 and 2050**

**– Alternative 4 vs. Alt 1a**  **using Analysis Method A**  **a** CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 3.1 0.3 2035 8.6 1.1 2050 12 .0 1.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 540 of 850

(ii) Upstream (Fuel Production and Distribution) Emissions Projections (iii) **Table VII**  **- 19**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Preferred**  **Alternative vs. Alt 1b using**  **Analysis Method A a**  CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 8.4
- 0.9
- 0.1
- 9.3 2035
- 26.6
- 2.8
- 0.2
- 29.7 2050
- 37.7
- 4 .0
- 0.3
- 42 .0 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 20**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Preferred**  **Alternative vs. Alt 1a using Analysis Method A**  **a** CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 8.6
- 0.9
- 0.1
- 9.6 2035
- 29 .0
- 3.1
- 0.2
- 32.3 2050
- 41.4
- 4.4
- 0.3
- 46.1 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 21**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1b**  **using Analysis Method A a**  CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 10.3
- 1.1
- 0.1
- 11.5 2035
- 27.8
- 3 .0
- 0.2
- 31 .0 2050
- 38 .0
- 4 .0
- 0.3
- 42.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 22**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1a**  **using Analysis Method A a**  CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 10.6
- 1.1
- 0.1
- 11.8 2035
- 30.2
- 3.2
- 0.2
- 33.7 2050
- 41.7
- 4.4
- 0.3
- 46.5 Note:Page 541 of 850 a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. (iv) HFC Emissions Projections The projected HFC emission reductions due to the proposed AC leakage standards are 93,272 metric tons of CO 2 eq in 2025, 253,118 metric tons of CO 2 eq in 2035, and 299,590 metric tons CO 2 eq in 2050. (v) Total (Downstream + Upstream + HFC) Emissions Projections **Table VII**  **- 23**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050**

**– Preferred**  **Alternative vs. Alt 1b using Analysis Method A**  **a** CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 27.2
- 86.9
- 123.0 Upstream
- 9.3
- 29.7
- 42 .0 HFC
- 0.09
- 0.25
- 0.3 Total
- 36.4
- 116.4
- 164.7 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 24**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050 2050**

**–**

**Preferred Alternative vs. Alt 1a using Analysis Method A**  **a** CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 28.1
- 94.6
- 134.9 Upstream
- 9.6
- 32.3
- 46.1 HFC
- 0.09
- 0.25
- 0.3 Total
- 37.6
- 126.4
- 180.7 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 25**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050**

**– Alternative 4**  **vs. Alt 1b using Analysis Method A**  **a** CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 33.5
- 90.9
- 124.0 Upstream
- 11.5
- 31 .0
- 42.3 HFC
- 0.09
- 0.25
- 0.3 Total
- 44.9
- 121.7
- 166.0 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 542 of 850

**Table VII**  **- 26**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050 2050**

**– Alternative 4 vs. Alt 1a**  **using Analysis Method A a**  CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 34.6
- 98.7
- 136.0 Upstream
- 11.8
- 33.7
- 46.5 HFC
- 0.09
- 0.25
- 0.3 Total
- 46.3
- 132.2
- 182.2 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. (b ) Model Year Lifetime Analysis **Table VII**  **- 27**  **Lifetim e GHG Reductions and Fuel Savings**  **using Analysis Method A**

**– Summary for Model**  **Years 2018 -**  **2029 a**  ALTERNATIVE 3 (PROPOSED) ALTERNATIVE 4 NO
- ACT ION ALTERNATIVE (BASELINE) 1b (More Dynamic) 1a (Less

Dynamic) 1b (More

Dynamic) 1a (Less

Dynamic) Fuel Savings (Billion Gallons) 72.2 76.7 81. 9 86.7 Total GHG Reductions (MMT CO 2 eq) 986.6 1,047.4 1,114.8 1,181.1 Downstream (MMT CO 2 eq) 735.3 780.8 830.9 880.9 Upstream (MMT CO 2 eq) 251.3 266.6 283.9 300.2 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. **(2) Impacts of the Proposed Rules**  **and Alternative 4 using Analysis Method**  **B** (a ) Calendar Year Analysis (i ) Downstream (Tailpipe) Emissions Projections As described in Section VII. A., the Method B used MOVES to estimate downstream GHG inventories from the proposed rules and Alternative 4 relative to Alternative 1a for all heav y - dut y veh icle categories (including the engines associated with tractor
- trailer combinations and vocational vehicles). The agencies expect reductions in CO 2 emissions from all heav y - dut y vehicle categories due to engine and vehicle improvements. We expect N 2 O emi ssions to increase very

slightly because of a rebound in vehicle miles traveled (VMT). However, since N 2 O is produced as a b yp roduct of fuel combustion, the increase in N 2 O emissions is expected toPage 543 of 850

be more than offset b y the improvements in fuel efficienc y from the proposed rules. 398 We expect methane emissions to decrease primaril y due to reduced refueling from improved fuel efficiency and the differences in hydrocarbon emission characteristics between on
- road diesel engines and APUs. The amount of methan e emitted as a fraction of total hydrocarbons is expected to be significantly less for APUs than for on
- road diesel engines during extended idling. Overall, the downstream GHG emissions would be reduced significantly and are described in the following sub sections. Since fuel consumption is not directly modeled in MOVES, the total energy consumption was run as a surrogate in MOVES. Then, the total energy consumption was converted to fuel consumption based on the fuel heating values assumed in the Renewab le Fuels Standard rulemaking 399 and used in the development of MOVES emission and energy rates. 400 Table VII
- 28 an d Table VII
- 29 show the impacts on downstream GHG emissions and fuel savings in 2025, 2035 and 2050 , relative to Alternative 1a , for the preferred alternative and Alternative 4, respectively
. Note : a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
Table VII
- 30 and Table VII
- 31 show the estimated fuel savings from the preferred alternative and Alternative 4 in 2025, 2035, and 2050, relative to Alternative 1a. For both GHG emissions and fuel savings, the annual impacts are greater for Alternative 4 than the preferred alternative in earlier ye ars, but the differences become indistinguishable by 2050. The result s from the comparable analy ses relative to Alternative 1b are presented in Section VII. C. (1). **Table VII**  **- 28**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**–**

**Preferred Alternative vs. Alt 1a using Analysis Method B**  **a** CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 27.0
- 0.4 0.002
- 27.4 2035
- 93.7
- 1.0 0.004
- 94.7 2050
- 135.1
- 1.4 0.005
- 136.5 Note:

398 MOVES is not capable of modeling the changes in exhaust N 2 O emissions from the improvements in fuel efficiency. Due to this limitation, a conservative approach was taken to only model the VMT rebound in estimating the emissions impact on N 2 O from the proposed rules, resulting in a slight increase in downstream N 2 O inventory. 399 Renewable Fuels Standards assumptions of 115,000 BTU/gallon gasoline (E0) and 76,330 BTU/gallon ethanol (E100) were weighted 90% and 10%, respectively, for E10 and 85% and 15%, respectively, for E15 and converted to kJ at 1.055 kJ/BTU. The conversion factors are 117,245 kJ/gallon for gasoline blended with ten percent ethanol (E10) and 115,205 kJ/gallon for gasoline blended with fifteen percent ethanol (E15). 400 The conversion factor for diesel is 138,451 kJ/gallon. See MOVES2004 Energy and Emission Inputs. EPA420
- P
- 05
- 003, March 2005. http://www.epa.gov/otaq/models/ngm/420p05003.pdf (last accessed Feb 23, 2015).Page 544 of 850 a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 29**  **Annual Downstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1a**  **using Analysis Method B a**  CY CO 2 (MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL DOWNSTREAM

(MMT CO 2 eq) 2025
- 33.3
- 0.4 0.002
- 33.7 2035
- 97.3
- 1.0 0.004
- 98.3 2050
- 135.5
- 1.4 0.005
- 136.9 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 30**  **Annual Fuel Savings in Calendar Years 2025, 2035 and 2050**

**– Preferred Alternative vs. Alt 1a**  **using Analysis Method B a**  CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 2.5 0.2 2035 8.5 0.8 2050 12.3 1.1 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. **Table VII**  **- 31**  **Annual Fuel Savings in Calendar Years 2025, 2035 and 2050**

**– Alternative 4 vs. Alt 1a**  **using Analysis Method B**  **a** CY DI ESEL SAVINGS

(Billion Gallons) GASOLINE SAVINGS (Billion Gallons) 2025 3.1 0.3 2035 8.8 0.9 2050 12. 3 1.1 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. (ii) Upstream (Fuel Production and Distribution) Emissions Projections (iii) The upstream GHG emission reductions associated with the production and distribution of gasoline and diesel from crude oil were based on emission factors from DOE’s “ Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation” (GREET) model. In some cases, the GREET values were modified or updated by the agencies to be consistent with EPA’s National Emissions Inventory (NEI), and emission factors from MOVE S. More informationPage 545 of 850

regarding these modifications can be found in Chapter 5 of the draft RIA. These estimates show the impacts for domestic emission reductions only. Additionally , since this rulemaking is not expected to impact biofuel volumes mandated by the Annual Renewable Fuel Standards (RFS) regulations 401 , the impacts on upstream emissions from changes in biofuel feedstock (i.e., agricultural sources such as fertilizer, fugitive dust, and livestock) are not shown. GHG emission reductions from upstream sources can be found in Table VII
- 32 and Table VII
- 33 for preferred alternative and Alternative 4, respectivel y . **Table VII**  **- 32**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Preferred**  **Alternative vs. Alt 1a using Analysis Method B**  **a** CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 8. 4
- 0.9
- 0.04
- 9. 3 2035
- 29.1
- 3.0
- 0.14
- 32.2 2050
- 4 1.9
- 4.4
- 0.2 0
- 46. 5 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 33**  **Annual Upstream GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1a**  **using Analysis Method B a**  CY CO 2

(MMT) CH 4

(MMT CO 2 eq) N 2 O

(MMT CO 2 eq) TO TAL UPSTREAM (MMT CO 2 eq) 2025
- 10.4
- 1.0
- 0.1
- 11.5 2035
- 30.1
- 3.2
- 0.1
- 33.4 2050
- 42.0
- 4.4
- 0.2
- 46.6 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. (iv) HFC Emissions Projections Based on projected HFC emission reductions due to the proposed AC leakage standards, EPA estimates the HFC reductions to be 93,272 metric tons of CO 2 eq in 2025, 253,118 metric tons of CO 2 eq in 2035, and 299,590 metric tons CO 2 eq in 2050, as detailed in Chapters 5.3.4 of the draft RIA. EPA welcomes comments on the methodology used to quantify

the HFC emissions benefits, as detailed in Chapter 5 of the draft RIA. (v) Total (Downstream + Upstream + HFC) Emissions Projections Table VII
- 34 combines the impacts of the preferred alternative from downstream ( Table VII
- 28 ), upstr eam ( Table VII
- 32 ), and HFC to summarize the total GHG reductions in calendar

401 U.S. EPA. 2014 Standards for the Renewable Fuel Standard Program. 40 CFR Part 90. EPA
- HQ
- OAR
- 2013
- 0479; FRL
- 9900
- 90
- OAR, RIN 2060
- AR76.Page 546 of 850

ye ars 2025, 2035 and 2050, relative to Alternative 1a. The combined impact of Alternative 4 on total GHG emissions are shown in Table VII
- 35
. Because of the differences in lead time, as expected, Alternative 4 shows greater annual GHG reductions in earlier years (i.e., calendar ye ar 2025), but by 2050, the preferred alternative and Alternative 4 show the same magnitude of reductions in annual GHG emissions. **Table VII**  **- 34**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050**

**– Preferred**  **Alternative vs. Alt 1a using Analysis Method B**  **a** CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 27.4
- 94.7
- 136.5 Upstream
- 9. 3
- 32.2
- 46. 5 HFC
- 0.1
- 0.25
- 0.3 Total
- 36. 8
- 127.2
- 183. 3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
**Table VII**  **- 35**  **Annual Total GHG Emissions Impacts in Calendar Years 2025, 2035 and 2050** 

**– Alternative 4**  **vs. Alt 1a using Analysis Method B**  **a** CY 2025 (MMT CO 2 eq) 2035 (MMT CO 2 eq) 2050 (MMT CO 2 eq) Downstream
- 33.7
- 98. 3
- 136. 9 Upstream
- 11.5
- 33. 4
- 46.6 HFC
- 0.1
- 0.25
- 0.3 Total
- 45.3
- 132.0
- 183. 8 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. (b ) Model Year Lifetime Analysis In addition to the annual GHG emissions and fuel consumption reductions expected from the proposed rules and Alternative 4 , the combined ( downstream and upstream) GHG and fuel consumption impacts for the lifetime of the impacted vehicles were estimated. Table VI I
- 36 show s the fleet
- wide GHG reductions and fuel savings from the preferred alternative and Alternative 4, relative to A lternative 1a , through the lifetime 402 of heav y - dut y vehicles. Compared to the preferred alternative, Alternative 4 shows greater lifetime GHG reductions and fuels savings by

12 percent and 13 percent, respectively . For the lifetime GHG reductions and fuel savings b y vehicle categories, see Chapter 5 of the draft RIA.

402 A lifetime of 30 years is assumed in MOVES.Page 547 of 850

**Table VII**  **- 36**  **Lifetim e GHG Reductions and Fuel Savings**  **using Analysis Method B**

**– Summary for Model**  **Years 2018 -**  **2029 a**  MODEL YEARS ALTERNATIVE 3 (PROPOSED) ALTERNATIVE 4 NO
- ACT ION ALTERNATIVE (BASELINE) 1a (Less Dynamic ) 1a (Less Dynamic ) Fuel Savings (Billion Gallons) 75.8 85.4 Total GHG Reductions (MMT CO 2 eq) 1,036.4 1,163.1 Downstream (MMT CO 2 eq) 772.6 867.3 Upstream (MMT CO 2 eq) 263.8 295.8 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. 

### D. **Climate Impacts and Indicators (1)**  **Climate Change Impacts from GHG Emissions** The impact of GHG emissions on the climate has been reviewed in the 2009 Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, the 2012
- 2016 light
- dut y vehicle rulemaking, the 2014
- 2018 heavy
- dut y vehicle GHG and Fuel Efficiency rulemaking, and the 2017
- 2025 light
- dut y vehicle rulemaking, and the proposed standards f or new electricity utility

generating units. See 74 FR at 66496; 75 FR at 25491; 76 FR at 57294; 77 FR at 62894; 79 FR at 1456
- 59 (Jan.8, 2014). This section briefl y discusses again some of the climate impact of EPA’s proposed actions in context of trans portation emissions. NHTSA has anal yz ed the climate impacts of its specific proposed actions (i.e., excluding EPA’s HFC regulatory provisions) as well as reasonable alternative in its DEI S that accompanies this NPRM. DOT has considered the potential clim ate impacts documented in the DEIS as part of the rulemaking process. Once emitted, GHGs that are the subject of this proposed regulation can remain in the atmosphere for decades to millennia, meaning that 1) their concentrations become well
- mixed througho ut the global atmosphere regardless of emission origin, and 2) their effects on climate are long lasting. GHG emissions come mainly from the combustion of fossil fuels (coal, oil, and gas), with additional contributions from the clearing of forests, agric ultural activities, cement production, and some industrial activities. Transportation activities, in aggregate, were the second largest contributor to total U.S. GHG emissions in 2010 (27 percent of total emissions). 403 The EPA Administrator relied on thorough and peer
- reviewed assessments of climate change science prepared by the Intergovernmental Panel on Climate Change (“IPCC”), the

403 U.S. EPA (2012) Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990

–2010. EPA 430
- R
- 12
- 001. Available at http://epa.gov/climatechange/emissions/downloads12/US
- GHG
- Inventory
- 2012
- Main
- Text.pdfPage 548 of 850

United States Global Change Research Program (“USGCRP”), and the National Research Council of the National Academies (“NRC” ) 404 as the primary scientific and technical basis for the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act (74 FR 66496, December 15, 2009). These assessments comprehensivel y address the scienti fic issues the EPA Administrator had to examine, providing her data and information on a wide range of issues pertinent to the Endangerment Finding. These assessments have been rigorousl y reviewed b y the expert community , and also by United States governm ent agencies and scientists, including by EPA itself. Based on these assessments, the EPA Administrator determined that the emissions from new motor vehicles and engines contributes to elevated concentrations of greenhouse gases, that these greenhouse gase s cause warming; that the recent warming has been attributed to the increase in greenhouse gases; and that warming of the climate endangers the public health and welfare of current and future generations. See Coalition for Responsible Regulation v. EPA , 6 84 F. 3d 102, 121 (D.C. Cir. 2012) (upholding all of EPA’s findings and stating “EPA had before it substantial record evidence that anthropogenic emissions of greenhouse gases ‘very likel y’ caused warming of the climate over the last several decades. EPA further had evidence of current and future effects of this warming on public health and welfare. Relyingagain upon substantial scientific evidence, EPA determined that anthropogenically induced climate change threatens both public health and public welfare. It found that extreme weather events, changes in air quality , increases in food
- and water
- borne pathogens, and increases in temperatures are likely to have adverse health effects. The record also supports EPA’s conclusion that climate change endange rs human welfare b y creating risk to food production and agriculture, forestry, energy , infrastructure, ecosy stems, and wildlife. Substantial evidence further supported EPA’s conclusion that the warming resulting from the greenhouse gas emissions could be expected to create risks to water resources and in general to coastal areas as a result of expected increase in sea level.”) A number of major peer
- reviewed scientific assessments have been released since the administrative record concerning the Endanger ment Finding closed following EPA’s 2010 Reconsideration Denial 405 . These assessments include the “Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation” 406 , the 2013
- 14 Fifth Assessment Report (AR5), 407 the 2 014 National Climate Assessment report, 408 the “Ocean

404 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
- 2010
- 0799 ) 405 “EPA’s Denial of the Petitions to Reconsider the Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air A ct”, 75 Fed. Reg. 49,556 (Aug. 13, 2010) (“Reconsideration Denial”). 406 Intergovernmental Panel on Climate Change (IPCC). 2012: Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation. A Special Report of Working Groups I and II of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, UK, and New York, NY, USA. 407 Intergovernmental Panel on Climate Change (IPCC). 2013. Climate Change 2013: The Physical Science Basis. Contribution of Working Gr oup I to the Fifth Assessment Report of the Intergovernmental Panel on ClimatePage 549 of 850

Acidification: A National Strategy to Meet the Challenges of a Changing Ocean,” 409 “Report on Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia,” 410 “National Sec urity Implications for U.S. Naval Forces” (National Security Implications), 411 “Understanding Earth’s Deep Past: Lessons for Our Climate Future,” 412 “Sea Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future,” 413 “Climate an d Social Stress: Implications for Security Anal ys is,” 414 and “Abrupt Impacts of Climate Change” (Abrupt Impacts) assessments. 415 EPA has reviewed these assessments and finds that in general, the improved understanding of the climate sy stem they present are consistent with the assessments underlying the 2009 Endangerment Finding. The most recent assessments released were the IPCC AR5 assessments between September 2013 and April 2014, the NRC Abrupt Impacts assessment in December of 2013, and the U.S. National Climate Assessment in May of 2014. The NRC Abrupt Impacts report examines the potential for tipping points, thresholds beyond which major and rapid changes occur in the Earth’s climate sy stem or other s ys tems impacted by the climate. The Abrupt Impacts report did find less cause for concern than some previous assessments regarding some abrupt events within the next century such as disruption of the Atlantic Meridional Overturning Circulation (AMOC) and sudden releases of high
- latitude methane from hydrat es and permafrost, but found that the potential for abrupt changes in ecos ys tems, weather and climate extremes, and groundwater supplies critical for agriculture now seem more likely , severe, and imminent. The assessment found that some abrupt changes were already underway (Arctic sea
Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA , Intergovernmental Panel on Climate Change (IPCC). 2014. Climate Change 2014: Impacts, Adap tation, and Vulnerability. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA , Intergovernmental Panel on Climate C hange (IPCC). 2014. Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY , USA. 408 Melillo, Jerry M., Terese (T.C.) Richmond, and Gary W. Yohe, Eds. 2014. Climate Change Impacts in the United States: The Third National Climate Assessment. U.S. Global Change Research Program. Available at <http://nca2014.globalchange.gov> 409 Natio nal Research Council (NRC). 2010. Ocean Acidification: A National Strategy to Meet the Challenges of a Changing Ocean. National Academies Press. Washington, DC. 410 National Research Council (NRC). 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia. National Academies Press, Washington, DC. 411 National Research Council (NRC) 2011. National Security Implications of Cli mate Change for U.S. Naval Forces. National Academies Press. Washington, DC. 412 National Research Council (NRC). 2012. Sea
- Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future. National Academies Press. Washington, DC. 413 National Research Council (NRC). 2012. Sea
- Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future. National Academies Press. Washington, DC. 414 National Research Council (NRC). 2013. Climate and Social Stress: Implicati ons for Security Analysis. National Academies Press. Washington, DC. 415 National Research Council (NRC). 2013. Abrupt Impacts of Climate Change: Anticipating Surprises. National Academies Press. Washington, DC.Page 550 of 850

ice retreat and increases in extinction risk due to the speed of climate change), but cautioned that even abrupt changes such as the AMOC disruption that are not expected in this century can have severe impacts when they happ en. The IPCC AR5 assessments are also generall y consistent with the underlying science supporting the 2009 Endangerment Finding. For example, confidence in attributing recent warming to human causes has increased: the IPCC stated that it is extremely like ly (>95 percent confidence) that human influences have been the dominant cause of recent warming. Moreover, the IPCC found that the last 30 years were likel y (>66 percent confidence) the warmest 30 ye ar period in the Northern Hemisphere of the past 1400 ye ars, that the rate of ice loss of worldwide glaciers and the Greenland and Antarctic ice sheets has likely increased, that there is medium confidence that the recent summer sea ice retreat in the Arctic is larger than it has been in 1450 ye ars, and that co ncentrations of carbon dioxide and several other of the major greenhouse gases are higher than they

have been in at least 800,000 years. Climate
- change induced impacts have been observed in changing precipitation patterns, melting snow and ice, species mi gration, negative impacts on crops, increased heat and decreased cold mortality , and altered ranges for water - borne illnesses and disease vectors. Additional risks from future changes include death, injury , and disrupted livelihoods in coastal zones and r egions vulnerable to inland flooding, food insecurity linked to warming, drought, and flooding, especiall y for poor populations, reduced access to drinking and irrigation water for those with minimal capital in semi
- arid regions, and decreased biodiversity in marine ecos ys tems, especially in the Arctic and tropics, with implications for coastal livelihoods. The IPCC determined that “[c]ontinued emissions of greenhouse gases will cause further warming and changes in all components of the climate sy stem. Li miting climate change will require substantial and sustained reductions of greenhouse gases emissions.” Finally , the recentl y released National Climate Assessment stated, “Climate change is already affecting the American people in far reaching way s. Certa in ty pes of extreme weather events with links to climate change have become more frequent and/or intense, including prolonged periods of heat, heav y downpours, and, in some regions, floods and droughts. In addition, warming is causing sea level to rise an d glaciers and Arctic sea ice to melt, and oceans are becoming more acidic as they absorb carbon dioxide. These and other aspects of climate change are disrupting people’s lives and damaging some sectors of our economy .” Assessments from these bodies represent the current state of knowledge, comprehensivel y cover and sy nthesize thousands of individual studies to obtain the majority conclusions from the body of scientific literature and undergo a rigorous and exacting standard of review b y the peer expert c ommunity and U.S. government. Based on modeling anal ysis performed b y the agencies, reductions in CO 2 and other GHG emissions associated with th ese proposed rule s will affect future climate change. Since GHGs are well
- mixed in the atmosphere and h ave long atmospheric lifetimes, changes in GHG emissions will affect atmospheric concentrations of greenhouse gases and future climate for decades to millennia, depending on the gas. This section provides estimates of the projected change in atmospheric C O 2 concentrations based on the emission reductions estimated for th ese proposed rule s , compared to the reference case. In addition, this section analyzes the response toPage 551 of 850

the changes in GHG concentrations of the following climate
- related variables: global mean temperature, sea level rise, and ocean pH. **(2) Projected Change in Atmospheric CO**  **2 Concentrations, Global Mean Surface**  **Temperature and Sea Level Rise** To assess the impact of the emissions reductions from the proposed rule s , EPA estimated changes in projected atmospheric CO 2 concentrations, global mean surface temperature and sea
level rise to 2100 using the GCAM (Global Change Assessment Model, formerl y MiniCAM), integrated assessment model 416 coupled with the MAGI CC (Model for the Assessment of Greenhouse
- gas Induced Climate Change) simple climate model. 417 GCAM was used to create the globall y and temporally consistent set of climate relevant emissions required for running MAGI CC. MAGI CC was then used to estimate the projected change in rele vant climate variables over time. Given the magnitude of the estimated emissions reductions associated with th ese rule s , a simple climate model such as MAGICC is appropriate for estimating the atmospheric and climate response. The anal ys is projec ts that the proposed rule s would reduce atmospheric concentrations of CO 2 , global climate warming, ocean acidification, and sea level rise relative to the reference case. Although the projected reductions and improvements are small in comparison to th e total projected climate change, they are quantifiable, directionall y 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 or when considered in isolation. EPA also notes that a substantial portion of CO 2 emitted into the atmosphere is not removed b y natural processes for millenni a, and therefore each unit of CO 2 not emitted into the atmosphere due to this rule s avoids essentially permanent climate change on centennial time scales. EPA determines that the projected reductions in atmospheric CO 2 , global mean temperature, se a level rise, and ocean pH are meaningful in the context of this action. The results of the anal ys is, summarized in Table VII
- 3 7 , demonstrate that relative to the reference case, b y 2100 projected atmospheric CO 2 concentrations are estimated to be reduced b y 1.1 to

416 GCAM is a long
- term , global integrated asses sment model of energy, economy, agriculture and land use that considers the sources of emissions of a suite of greenhouse gases (GHG's), emitted 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 in turn shape global emissions
. 417 MAGICC consists of a suite of coupled gas
- cycle, climate and ice
- melt models integrated into a single framework. The framework allow s the user to determine changes in greenhouse
- gas concentrations, global
- mean surface air temperature and sea
- level resulting from anthropogenic emissions of carbon dioxide ( CO 2 ), methane (CH4), nitrous oxide (N2O), reactive gases (CO, NOx, VOCs), the halocarbons (e.g. HCFCs, HFCs, PFCs) and sulfur dioxide ( SO 2 ). MAGICC emulates the global
- mean temperature responses of more sophisticated coupled Atmosphere/Ocean General Circulation Models (AOGCMs) with high accuracy.Page 552 of 850

1.2 part per million by

volume (ppmv), global mean temperature is estimated to be reduced b y 0.0026 to 0.0065 °C, and sea
- level rise is projected to be reduced by approximately 0.023 to 0.057 cm, based on a range of climate sensitivities (described below). Details about this modeling analy sis can be found in the draft RIA Chapter 6.3. **Table VII**  **- 3**  **7 Impact**  **of GHG Emissions Reductions on Projected Changes in Global Clim ate Associated with**  **Proposed Phase 2 Standards for MY 2018 -**  **2024 (Based on a range of clim ate sensitivities from**  **1.5 -**  **6°C)** Variable Units Year Projected Change Atmospheric CO 2 CONCENTRATION ppmv 2100
- 1.1 to
- 1.2 Global Mean Surface Temperature oC 2100
- 0.0026 to
- 0.0065 Sea Level Rise cm 2100
- 0.023 to
- 0.057 Ocean pH pH units 2100 +0. 0006 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), CO 2 concentration (404 to 470 ppm), sea level rise (23

– 56 cm), and ocean acidity (
- 0.30 pH units) from 1990 to 2100 from the MAGICC simulations for the GCAM reference ca se. However, this is to be expected given the magnitude of emissions reductions expected from the program in the context of global emissions. Moreover, these effects are occurring every where around the globe, so benefits that appear to be marginal for any one location, such as a reduction in seal level rise of half a millimeter, can be sizable when the effects are summed along thousands of miles of coastline. This uncertainty range does not include the effects of uncertainty in future emissions. It shoul d also be noted that the calculations in MAGI CC do not include the possible effects of accelerated ice flow in Greenland and/or Antarctica: estimates of sea level rise from the recent NRC, IPCC, and NCA assessments range from 26 cm to 2 meters depending on the emissions scenario, the processes included, and the likelihood range assessed ; inclusion of these effects would lead to correspondingl y larger benefits of mitigation
. Further discussion of EPA’s modeling anal ys is is found in the RIA, Chapter 6.3. Ba sed on the projected atmospheric CO 2 concentration reductions resulting from th ese proposed rule s , EPA calculates an increase in ocean pH of 0.000 6 pH units in 2100 relative to the baseline case (this is a reduction in the expected acidification of the ocean of a decrease of 0.3 pH units from 1990 to 2100 in the baseline case). Thus, this anal ys is indicates the projected decrease in atmospheric CO 2 concentrations from the proposed Phase 2 standards would result in an increase in ocean pH (i.e., a reduction in the expected acidification of the ocean in the reference case). A more detailed discussion of the modeling analy sis associated with ocean pH is provided in the draft RIA, Chapter 6.3. The 2011 NRC assessment on "Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia" determined how a number of climate impacts
- such as heaviest dail y rainfalls, crop yields, and Arctic sea ice extent
- would change with a temperature change of 1 degree Celsius (C) of war ming. These relationships of impacts with temperature change could be combined with the calculated reductions in warming in Table VII
- 3 7 to estimate changes in these impacts associated with this proposed rulemaking.Page 553 of 850

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 some degree of effectivel y permanent climate change. Therefore, reductions in emissions in the near
- term are important in determining climate impacts experienced not just over the next decades but over thousands of years. 418 Though the magnitude of the avoided clim ate change projected here in isolation 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 formally estimated for this action) across a range of equilibrium climate sensitivities. EPA’s anal ys is of this proposed rule’s impact on global climate conditions is intended to quantify these potential reductions using the best available science. EPA’s modeling results show consistent reduction s relative to the baseline case in changes of CO 2 concentration, temperature, sea - level rise, and ocean pH over the next century
.

418 National Research Council (NRC) (2011). Climat e Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia. National Academy Press. Washington, DC. (Docket EPA
- HQ
- OAR
- 2010
- 079 9 )Page 554 of 850



## VIII. **How Wi**  **ll This Pr**  **oposed Action Impact Non**  **- GHG Emissions**  **and Their** 

**A ssociated Effects?**  The proposed heav y - dut y vehicle standards are expected to influence the emissions of criteria air pollutants and several air toxics. This section describes the projected impacts of the proposed rules and Alternative 4 on non
- GHG emissions and air quality , and the health and environmental effects associated with these pollutants. NHTSA further analyzes these projected health and environmental effects resulting from its proposed rules and reasonable alternatives in Chapter 4 of its DEIS. 

### A. **Emissions Inventory Impacts** As described in Section VII, the agencies conducted coordinated and complementary anal ys es for these rules by employing both DOT’s CAFE model and EPA’s MOVES model, relative to different reference cases (i.e., different baselines). The agencies use d EPA’s MOVES model to estimate the non
- GHG impacts for tractor
- trailers (including the engine that power s the vehicle), and vocational vehicles (including the engine that powers the vehicle). For heavy
- duty pickups and vans, the agencies performed complementary anal ys es using the CAFE model (“Method A”) and the MOVES model (“Method B”) to estimate non - GHG emissions from these vehicles. For both methods, the agencies anal yz ed the impact of the proposed rules, relative to two different reference cases

– less dy namic and more dy

namic. The less dy

namic baseline projects very

little improvement in new vehicles in the absence of new Phase 2 standards. In contrast, the more dy

namic baseline projects more improvements in vehicle fuel efficiency . The agencies considered both reference cases. The results for all of the regulatory alternatives relative to both reference cases, derived via the same methodologies discussed in S ecti on VII of the Preamble , are presented in Section X of the P reamble
. For brevity , a subset of these anal ys es are presented in this section and the reader is referred to both the RIA Chapter 11 and NHTSA’s DEI S Chapters 3 and 5 for complete sets of these anal ys es . In this section, Method A is presented for both the proposed standards (i.e., Alternative 3

—the agencies’ preferred alternative) and for the standards the agencies considered in Alternative 4, relative to both the more dy namic baseline (Alternati ve 1b) and the less dy namic baseline (Alternative 1a). Method B is presented also for the proposed standards and Alternative 4, but relative only to the less dy

namic baseline. The agencies’ intention for presenting both of these complementary and coordin ated anal ys es is to offer interested readers the opportunity

to compare the regulatory alternatives considered for Phase 2 in both the context of our HD Phase 1 anal yt ical approaches and our light
- dut y vehicle anal yt ical approaches. The agencies view thes e analy ses as corroborative and reinforcing: both support agencies’ conclusion that the proposed standards are appropriate and at the maximum feasible levels. T he following subsections summarize two slightly different anal ys es of the annual non GHG emissio ns reductions exp ected from the proposed standards and Alternative 4 . Section VIII. A. (1) presents the impacts of the proposed rules and Alternative 4 on non - GHG emissions using the analy

tical Method A, relative to two different reference cases

– less dy namic and more dy namic. Section VIII. A. (2) presents the impacts of th e proposed standards and Alternative 4,Page 555 of 850

relative to the less dynam ic reference case onl y, using the MOVES model for all heav y - dut y vehicle categories. **(1) Impacts of the Proposed Rules**  **and Alternative 4 using Analysis Method A**  (a ) Calendar Year Analysis (i ) Upstream Impacts of the Proposed Program and Alternative 4 In creasing efficiency

in heavy
- dut y vehicles would result in reduced fuel demand , and therefore , reductions in the emissions associated with all processes involved in getting petroleum to the pump
. Both Method A and Method B project these impacts for fuel consumed by vocational vehicles and combination tractor
- trailers , using the same methods. See Section VIII. A. (2) (a)(i) for the description of this methodology
. To project these impacts for fuel consumed by HD pickups and vans, Method A used similar calculations and inputs applicable to the CAFE model, as discussed above in Section VI. More information on the development of the emission factors used in this anal ysis can be found in Chapter 5 of the draft RIA
. The following four tables summarize the projected upstream emission impacts of the preferred alternative and Alternative 4 on both criteria pollutants and air toxics from the heav y duty sector, relative to Alternative 1b (more dy namic baseline conditions under the No
- Action Alternative) and Alternative 1a (less dynamic baseline conditions under the No
- Action Alternative)
. **Table VIII**  **- 1**  **Annual U**  **pstream I**  **mpacts on C**  **riteria P**  **ollutants and Air Toxics from Heavy**  **- Duty Sector in**  **C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Preferred Alternative vs. Alt 1b using Analysis Method A**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 5%
- 3
- 14%
- 5
- 17% Acetaldehyde
- 3
- 3%
- 10
- 11%
- 15
- 13% Acrolein 0
- 4%
- 1
- 12%
- 2
- 15% Benzene
- 21
- 4%
- 74
- 13%
- 104
- 15% CO
- 3,798
- 5%
- 12,087
- 14%
- 17,120
- 17% Formaldehyde
- 19
- 5%
- 59
- 14%
- 84
- 17% NO X - 9,472
- 5%
- 30,333
- 14%
- 42,839
- 17% PM 2.5 - 1,019
- 5%
- 3,257
- 14%
- 4,609
- 17% SO X - 5,983
- 5%
- 19,190
- 14%
- 27,074
- 17% VOC
- 3,066
- 4%
- 11,029
- 13%
- 15,386
- 15% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.Page 556 of 850

**Table VIII**  **- 2**  **Annual U**  **p stream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy -**  **Duty Sector in C**  **alendar Y**  **ears 2025,**  **203 5**  **and 2050**

**– Alternative 4 vs. Alt 1b using Analysis Method A**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 6%
- 3
- 15%
- 5
- 17% Acetaldehyde
- 4
- 5%
- 11
- 12%
- 15
- 14% Acrolein
- 1
- 5%
- 1
- 13%
- 2
- 15% Benzene
- 28
- 5%
- 78
- 13%
- 105
- 16% CO
- 4,679
- 6%
- 12,640
- 15%
- 17,263
- 17% Formaldehyde
- 23
- 6%
- 62
- 15%
- 85
- 17% NO X - 11,708
- 6%
- 31,769
- 15%
- 43,263
- 17% PM 2.5 - 1,259
- 6%
- 3,408
- 15%
- 4,649
- 17% SO X - 7,402
- 6%
- 20,107
- 15%
- 27,356
- 17% VOC
- 4,081
- 5%
- 11,717
- 13%
- 15,645
- 15% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.
**Table VIII**  **- 3**  **Annual U**  **p stream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy -**  **Duty Sector in C**  **alendar Y**  **ears 2025,**  **203 5**  **and 2050**

**– Preferred Alternative vs. Alt 1a using Analysis Method A**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 5%
- 4
- 15%
- 5
- 18% Acetaldehyde
- 3
- 3%
- 11
- 12%
- 16
- 14% Acrolein 0
- 4%
- 1
- 13%
- 2
- 15% Benzene
- 22
- 4%
- 80
- 14%
- 113
- 16% CO
- 3,911
- 5%
- 13,153
- 15%
- 18,794
- 18% Formaldehyde
- 19
- 5%
- 65
- 15%
- 92
- 18% NO X - 9,787
- 5%
- 33,021
- 15%
- 47,028
- 18% PM 2.5 - 1,051
- 5%
- 3,545
- 15%
- 5,058
- 18% SO X - 6,189
- 5%
- 20,896
- 15%
- 29,726
- 18% VOC
- 3,193
- 4%
- 11,848
- 13%
- 16,625
- 16% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.Page 557 of 850

**Table VIII**  **- 4**  **Annual U**  **pstream I**  **mpacts on C**  **riteria P**  **ollutants and Air Toxics from Heavy**  **- Duty Sector in**  **C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Alternative 4 vs. Alt 1a using**  **Analysis Method A a**  Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 6%
- 4
- 16%
- 5
- 18% Acetaldehyde
- 4
- 5%
- 12
- 12%
- 16
- 14% Acrolein
- 1
- 5%
- 1
- 13%
- 2
- 16% Benzene
- 29
- 5%
- 84
- 14%
- 114
- 17% CO
- 4,816
- 6%
- 13,720
- 16%
- 18,945
- 18% Formaldehyde
- 24
- 6%
- 67
- 16%
- 93
- 18% NO X - 12,098
- 6%
- 34,501
- 16%
- 47,477
- 18% PM 2.5 - 1,298
- 6%
- 3,700
- 16%
- 5,101
- 18% SO X - 7,658
- 6%
- 21,843
- 16%
- 30,024
- 18% VOC
- 4,251
- 5%
- 12,541
- 14%
- 16,870
- 16% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. (ii) Downstream Impacts of the Proposed Program and Alternative 4 For vocat ional vehicles and tractor
- trailers, the agencies used the MOVES model to determine non
- GHG emissions inventories. The improvements in engine efficiency and road load, the increased use of APUs, and VMT rebound were included in the MOVES anal ys is
. For th e anal ys is presented in this section, the DOT CAFE model was used for HD pickups and vans
. Further information about DOT’s CAFE model is available in Section VI .C and Chapter 10 of the draft RIA
. The following four tables summarize the projected downstream emission impacts of the preferred alternative and Alternative 4 on both criteria pollutants and air toxics from the heav y - dut y sector, relative to Alternative 1b and Alternative 1a
. Table VIII
- 5 Annual Downstream Impacts on C riteria P ollutants and Air Toxics from Heav y Duty Sector in C alendar Y ears 2025, 203 5 and 2050

– Preferred Alternative vs. Alt 1b using Analy sis Method APage 558 of 850 **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 3%
- 21
- 12%
- 30
- 16% Acetaldehyde
- 669
- 10%
- 1,882
- 31%
- 2,667
- 36% Acrolein
- 97
- 10%
- 272
- 31%
- 385
- 37% Benzene
- 123
- 6%
- 347
- 19%
- 490
- 24% CO
- 26,485
- 3%
- 75,199
- 8%
- 106,756
- 9% Formaldehyde
- 2,100
- 12%
- 5,910
- 32%
- 8,376
- 37% NO X - 92,444
- 7%
- 260,949
- 28%
- 370,663
- 34% PM 2.5 b 643 2% 1,722 8% 2,410 10% SO X - 229
- 4%
- 715
- 13%
- 1,026
- 15% VOC
- 13,161
- 6%
- 38,051
- 21%
- 54,139
- 26% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference to control case. PM 2.5 from tire wear and brake wear are included.
**Table VIII**  **- 6**  **Annual Downstream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy -**  **Duty Sector in**

**C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Alternative 4 vs. Alt 1b using Analysis Method A**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 2%
- 21
- 12%
- 30
- 16% Acetaldehyde
- 669
- 10%
- 1,882
- 31%
- 2,667
- 36% Acrolein
- 97
- 10%
- 271
- 31%
- 385
- 37% Benzene
- 124
- 6%
- 347
- 19%
- 490
- 24% CO
- 26,705
- 3%
- 75,407
- 8%
- 106,874
- 9% Formaldehyde
- 2,100
- 12%
- 5,908
- 32%
- 8,375
- 37% NO X - 93,984
- 8%
- 262,150
- 28%
- 370,704
- 34% PM 2.5 b 619 2% 1,705 8% 2,412 10% SO X - 280
- 5%
- 742
- 13%
- 1,029
- 15% VOC
- 13,925
- 7%
- 38,472
- 22%
- 54,150
- 26% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference to control case. PM 2.5 from tire wear and brake wear are included. Table VIII
- 7 Annual Downstream Impacts on C riteria P ollutants and Air Toxics from Heav y Duty Sector in C alendar Y ears 2025, 203 5 and 2050

– Preferred Alternative vs. Alt 1a using Analy sis Method APage 559 of 850 **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 3%
- 21
- 12%
- 30
- 16% Acetaldehyde
- 669
- 10%
- 1,880
- 31%
- 2,664
- 36% Acrolein
- 97
- 10%
- 271
- 31%
- 384
- 37% Benzene
- 123
- 6%
- 346
- 19%
- 490
- 24% CO
- 26,576
- 3%
- 75,571
- 8%
- 107,287
- 9% Formaldehyde
- 2,100
- 12%
- 5,904
- 32%
- 8,369
- 37% NO X - 93,197
- 8%
- 266,890
- 29%
- 380,303
- 35% PM 2.5 b 632 2% 1,635 8% 2,267 9% SO X - 232
- 4%
- 776
- 14%
- 1,125
- 16% VOC
- 13,210
- 6%
- 38,964
- 22%
- 55,628
- 26% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference to contr ol case. PM 2.5 from tire wear and brake wear are included.
**Table VIII**  **- 8**  **Annual Downstream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy -**  **Duty Sector in**

**C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Alternative 4 vs. Alt 1a using**  **Analysis Method A a**  Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 2%
- 21
- 12%
- 29
- 16% Acetaldehyde
- 668
- 10%
- 1,880
- 31%
- 2,664
- 36% Acrolein
- 97
- 10%
- 271
- 31%
- 384
- 37% Benzene
- 124
- 6%
- 346
- 19%
- 489
- 24% CO
- 26,821
- 3%
- 75,795
- 8%
- 107,414
- 9% Formaldehyde
- 2,099
- 12%
- 5,902
- 32%
- 8,367
- 37% NO X - 94,724
- 8%
- 268,075
- 29%
- 380,328
- 35% PM 2.5 b 609 2% 1,618 8% 2,269 9% SO X - 282
- 5%
- 803
- 14%
- 1,127
- 16% VOC
- 13,971
- 7%
- 39,383
- 22%
- 55,638
- 26% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference to control case. PM 2.5 from tire wear and brake wear are included. (iii) Total Im

pacts of the Proposed Program and Alternative 4 The following four tables summarize the projected upstream emission impacts of the preferred alternative and Alternative 4 on both criteria pollutants and air toxics from the heav y duty sector, relative to Alternative 1b and Alternative 1a
.Page 560 of 850

**Table VIII**  **- 9**  **Annual Total**  **Impacts (Upstream**  **and Downstream** **) o f**  **Criteria Pollutants and Air Toxics from**  **Heavy -**  **Duty Sector in Calendar Years**  **2025, 2035 and 2050** 

**– Preferred Alternative vs. Alt 1b using Analysis**  **Me thod A**  **a** Pollutant CY202 5 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 3%
- 25
- 13%
- 34
- 16% Acetaldehyde
- 672
- 10%
- 1,893
- 30%
- 2,682
- 36% Acrolein
- 97
- 10%
- 273
- 31%
- 387
- 37% Benzene
- 145
- 5%
- 421
- 18%
- 595
- 22% CO
- 30,282
- 3%
- 87,286
- 8%
- 123,876
- 10% Formaldehyde
- 2,119
- 11%
- 5,969
- 32%
- 8,460
- 37% NO X - 101,916
- 7%
- 291,282
- 26%
- 413,501
- 31% PM 2.5 - 376
- 1%
- 1,535
- 3%
- 2,199
- 4% SO X - 6,213
- 5%
- 19,905
- 14%
- 28,101
- 17% VOC
- 16,227
- 6%
- 49,080
- 18%
- 69,525
- 22% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. **Table VIII**  **- 10**  **Annual Total**  **Impacts (Upstream**  **and Downstream** **) o f**  **Criteria Pollutants and Air Toxics**  **from Heavy**  **- Duty Sector in**  **Calendar Years 2025,**  **2035 and 2050**

**– Alternative 4 vs. Alt 1b using Analysis**  **Me thod A**  **a** Pollutant CY202 5 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 3%
- 25
- 13%
- 34
- 16% Acetaldehyde
- 673
- 10%
- 1,893
- 30%
- 2,682
- 36% Acrolein
- 97
- 10%
- 273
- 31%
- 387
- 37% Benzene
- 152
- 6%
- 426
- 18%
- 595
- 22% CO
- 31,383
- 3%
- 88,047
- 8%
- 124,137
- 10% Formaldehyde
- 2,123
- 11%
- 5,970
- 32%
- 8,460
- 37% NO X - 105,693
- 7%
- 293,918
- 26%
- 413,967
- 31% PM 2.5 - 639
- 1%
- 1,703
- 4%
- 2,237
- 4% SO X - 7,682
- 6%
- 20,849
- 15%
- 28,385
- 17% VOC
- 18,006
- 6%
- 50,189
- 19%
- 69,796
- 22% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.Page 561 of 850

**Table VIII**  **- 11**  **Annual Total**  **Impacts (Upstream**  **and Downstream** **) o f**  **Criteria Pollutants and Air Toxics**  **from Heavy**  **- Duty Sector in**  **Calendar Years 2025,**  **2035 and 2050**

**– Preferred Alternative vs. Alt 1a using**  **Analysis Method A a**  Pollutant CY202 5 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 3%
- 25
- 13%
- 35
- 16% Acetaldehyde
- 672
- 10%
- 1,891
- 30%
- 2,680
- 36% Acrolein
- 97
- 10%
- 273
- 31%
- 386
- 37% Benzene
- 145
- 5%
- 425
- 18%
- 603
- 22% CO
- 30,487
- 3%
- 88,724
- 8%
- 126,081
- 10% Formaldehyde
- 2,119
- 11%
- 5,969
- 32%
- 8,461
- 37% NO X - 102,983
- 7%
- 299,911
- 26%
- 427,332
- 32% PM 2.5 - 419
- 1%
- 1,910
- 4%
- 2,791
- 5% SO X - 6,421
- 5%
- 21,672
- 15%
- 30,850
- 18% VOC
- 16,403
- 6%
- 50,812
- 19%
- 72,253
- 23% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. **Table VIII**  **- 12**  **Annual T**  **otal Impacts**  **(Upstream and**  **Downstream ) o**  **f Criteria Pollutants**  **and Air Toxics from** **Heavy -**  **Duty Sector in Calendar Years**  **2025, 2035 and 2050** 

**– Alternative 4 vs. Alt 1a using Analysis**  **Me thod A**  **a** Pollutant CY202 5 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 3%
- 25
- 13%
- 35
- 16% Acetaldehyde
- 672
- 10%
- 1,891
- 30%
- 2,679
- 36% Acrolein
- 97
- 10%
- 273
- 31%
- 386
- 37% Benzene
- 153
- 6%
- 430
- 18%
- 603
- 22% CO
- 31,637
- 3%
- 89,514
- 8%
- 126,360
- 10% Formaldehyde
- 2,123
- 11%
- 5,969
- 32%
- 8,460
- 37% NO X - 106,822
- 7%
- 302,575
- 26%
- 427,805
- 32% PM 2.5 - 689
- 1%
- 2,082
- 5%
- 2,833
- 5% SO X - 7,941
- 6%
- 22,646
- 16%
- 31,151
- 18% VOC
- 18,222
- 6%
- 51,924
- 19%
- 72,509
- 23% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.Page 562 of 850

(b ) Model Year Lifetime Analysis **Table VIII**  **- 13**  **Lifetime Non**  **- GHG Reductions using Analysis Method A** 

**– Summary for Model Years 2018**  **- 2029 (US Short Tons)**  **a** ALTERNATIVE 3 (PROPOSED) ALTERNATIVE 4 NO
- ACT ION ALTERNATIVE (BASELINE) 1b (More Dynamic) 1a (Less

Dynamic) 1b (More

Dynamic) 1a (Less

Dynamic) NO X 2,359,548 2,409,738 2,420,931 2,472,021 Downstream 2,103,163 2,137,232 2,130,659 2,164,458 Upstream 256,385 272,506 290,272 307,563 PM 2.5 13,496 15,706 17,524 19,839 Downstream

b

- 14,051
- 13,546
- 13,649
- 13,153 Upstream 27,547 29,252 31,173 32,992 SO X 167,415 177,948 189,670 200,992 Downstream 5,326 5,562 6,079 6,311 Upstream 162,089 172,386 183,591 194,681 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Negative num

ber means emissions would increase from reference to control case. PM 2.5 from tire wear and brake wear are included. **(2) Impacts of the Proposed Rules**  **and Alternative 4 using Analysis Method B**  (a ) Calendar Year Analysis (i ) Upstream Impacts of the Proposed Program and Alternative 4 In creasing efficiency

in heavy
- dut y vehicles would result in reduced fuel demand , and therefore , reductions in the emissions associated with all processes involved in getting petroleum to the pump. To project these impacts, Method B estimated the impact o f 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 reductions , it was necessary to estimate the frac tion of fuel savings attributable to domestic finished gasoline and diesel, and of this fuel , what fraction is produced from domestic crude. Method B estimate d the emissions associated with production and distribution of gasoline and diesel from crude oil based on emission factors in the “Greenhouse Gases, Regulated Emissions, and Energy u se d in Transportation” model ( GREET ) developed b y DOE's Argonne National Laboratory . In some cases, the GREET values were modified or updated by the agencies to be consi stent with the National Emission Inventory (NEI) and emission factors from MOVES
. Method B estimated the projected corresponding changes in upstream emissions using the samePage 563 of 850

tools originally

created for the Renewable Fuel Standard 2 (RFS2) rulemaking anal ys is, 419 used in the LD GHG rulemakings, 420 HD GHG Phase 1, 421 and updated for the current analy sis. More information on the development of the emission factors used in this anal ys is can be found in Chapter 5 of the draft RIA
. Table VIII
- 14 and Table VIII
- 15 summarizes the projected upstream emission impacts of the Preferred Alternative and Alternative 4 on both criteria pollutants and air toxics from the heav y - dut y sector, relative to Alternative 1a
. The comparable estimates relative to Alternative 1b are presented in Section VIII. A. (1). **Table VIII**  **- 14**  **Annual U**  **pstream I**  **mpacts on C**  **riteria P**  **ollutants and Air Toxics from Heavy**  **- Duty Sector in**  **C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Preferred Alternative vs. Alt 1a using Analysis Method B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 5.0 %
- 4
- 15.3 %
- 5
- 18.4 % Acetaldehyde
- 4
- 3.0 %
- 18
- 11.9 %
- 26
- 14.6 % Acrolein
- 0.5
- 3.4 %
- 2
- 12.7 %
- 3
- 15.5 % Benzene
- 24
- 3.8 %
- 92
- 13.4 %
- 132
- 16.3 % CO
- 3,798
- 4.9 %
- 13,001
- 15.3 %
- 18,772
- 18.4 % Formaldehyde
- 19
- 4.7 %
- 67
- 14.9 %
- 98
- 18 .0% NO X - 9,282
- 4.9 %
- 31,782
- 15.3 %
- 45,888
- 18.4 % PM 2.5 - 1,020
- 4.9 %
- 3,514
- 15.2 %
- 5,072
- 18.2 % SO X - 5,817
- 4.9 %
- 19,902
- 15.3 %
- 28,736
- 18.4 % VOC
- 3,283
- 3.7 %
- 12,724
- 13.2 %
- 18,214
- 16.1 % Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.

419 U.S. EPA. Draft Regulatory Impact Analysis: Changes to Renewable Fuel Standard Program. Chapters 2 and 3. May 26, 2009. Docket ID: EPA
- HQ
- OAR
- 2009
- 0472
- 0119 420 2017 and Later Model Year Light
- Duty Vehicle Greenhouse Gas Emissions and Corporate Averag e Fuel Economy Standards (77 FR 62623, October 15, 2012) 421 Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Medium
- and Heavy
- Duty Engines and Vehicles (76 FR 57106, September 15, 2011)Page 564 of 850

**Table VIII**  **- 15**  **Annual U**  **pstream I**  **mpacts on C**  **riteria P**  **ollutants and Air Toxics from Heavy**  **- Duty Sector in**  **C alendar**  **Y ears**  **2025, 203**  **5 and 2050** 

**– Alternative 4 vs. Alt 1a using Analysis Method B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 1
- 6.1%
- 4
- 15.9%
- 5
- 18.4 % Acetaldehyde
- 6
- 4.3%
- 20
- 12.6%
- 26
- 14.7% Acrolein
- 1
- 4.7%
- 2
- 13.3%
- 3
- 15.5% Benzene
- 32
- 5.0%
- 97
- 14.0%
- 133
- 16.3% CO
- 4,661
- 6.1%
- 13,485
- 15.9%
- 18,812
- 18.4% Formaldehyde
- 24
- 5.9%
- 70
- 15.5%
- 97
- 18.0% NO X - 11,393
- 6.1%
- 32,965
- 15.9%
- 45,986
- 18.4% PM 2.5 - 1,256
- 6.0%
- 3,647
- 15.7%
- 5,083
- 18.3% SO X - 7,137
- 6.1%
- 20,641
- 15.9%
- 28,797
- 18.4% VOC
- 4,342
- 4.9%
- 13,326
- 13.8%
- 18,273
- 16.1% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. (ii) Downstream Impacts of the Proposed Program and Alternative 4 Both the proposed program and Alternative 4 would impact the downstream emissions of non - GHG pollutants. These pollutants include oxides of nitrogen (NO X) , oxides of sulfur ( SO X), volatile organic compounds (V OC ) , carbo n monoxide ( CO ) , fine particulate matter ( PM 2.5 ), and air toxics
. The agencies are expecting reductions in downstream emissions of NO X, VOC, SO X , CO , and air toxics. Much of the se estimated net reductions are a result of the agenc ies ’ anticipation of inc reased use of auxiliary power units ( APUs ) in combination tractors during extended idling ; APUs emit these pollutants at a lower rate than on
- road engines d uring extended idle operation, with the exception of PM 2.5 . Additional reductions in tailpipe emissions of NO X and CO and refueling emissions of VOC would be achieved through improvements in engine efficiency and reduced road load (improved aerody namics and tire rolling resistance), which reduces the amount of work required to travel a given distance and increases fuel econom y. For vehicle types not affected by road load improvements , such as HD pickups and vans 422 , non GHG emissions would increase very slightl y due to VMT rebound. In addition, brake wear and tire wear emissions of PM 2.5 would also increase very slightl y due to VMT rebound. The agencies estimate that downstream emissions of SO X would be reduced, because they are roughl y proportional to fuel consumption. Alternative 4 would have directionally similar effects as the preferred alternative.

422 HD pickups and vans are subject to gram per mile (distance) emission standards, as opposed to larger heavy
- duty vehicles which are certified to a gram per brake horsepower (work) standard.Page 565 of 850

For vocational vehicles and tractor
- trailers, agencies used MOVES to determine non
GHG emissions impacts of the proposed rules and Alternative 4, relative to the less dy namic baseline (Alternative 1a). The improvements in engine ef ficiency and road load, the increased use of APUs, and VMT rebound were included in the MOVES anal ys is
. For this analy sis, Method B also used the MOVES model for HD pickups and vans. (Note that for the comparable anal ys is as described in Section VIII. A. (1), Method A used DOT’s CAFE model). Further information about the modeling using DOT’s CAFE and MOVES model is available in Section VI I and Chapter 5 of the draft RIA
. T he downstream criteria pollutant and air toxics impacts of the Preferred Alternative and Alternative 4, relative to Alternative 1a, are presented in Table VIII
- 16 and Table VIII
- 17 , respectivel y. **Table VIII**  **- 16**  **Annual Downstream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy**  **- Duty Sector**  **in C**  **alendar Y**  **ears 2025,**  **203 5**  **and 2050**

**– Preferred Alternative vs. Alt 1a using Analysis Method B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 2.6 %
- 22
- 15.1 %
- 31
- 19.6 % Acetaldehyde
- 670
- 10.3 %
- 1,884
- 31.0 %
- 2,671
- 36.5 % Acrolein
- 97
- 9.9 %
- 272
- 31.6 %
- 385
- 37.3 % Benzene
- 125
- 5.9 %
- 353
- 21.0 %
- 501
- 25.7 % CO
- 25,824
- 1.7 %
- 72,960
- 6.0 %
- 103,887
- 7.6 % Formaldehyde
- 2,102
- 11.5 %
- 5,911
- 32.1 %
- 8,379
- 37.5 % NO X - 93,220
- 7.5 %
- 267,125
- 29.1 %
- 380,721
- 35.2 % PM 2.5 b 634 1.6 % 1,631 7.6 % 2,257 9.1 % SO X - 254
- 4.8 %
- 876
- 15.0 %
- 1,264
- 18.1 % VOC
- 13,440
- 6.4 %
- 40,148
- 21.7 %
- 57,308
- 26.1 % Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference t o control case. PM 2.5 from tire wear and brake wear are included.Page 566 of 850

**Table VIII**  **- 17**  **Annual Downstream**  **I mpacts on**  **C riteria**  **P ollutants**  **and Air Toxics from Heavy**  **- Duty Sector**  **in C**  **alendar Y**  **ears 2025,**  **203 5**  **and 2050**

**– Alternative 4 vs. Alt 1a using Analysis Method B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 8
- 2.6%
- 22
- 15.1%
- 31
- 19.6% Acetaldehyde
- 670
- 10.3%
- 1,884
- 31.0%
- 2,671
- 36.5% Acrolein
- 97
- 9.9%
- 272
- 31.6%
- 385
- 37.3% Benzene
- 126
- 5.9%
- 354
- 21.0%
- 501
- 25.7% CO
- 25,919
- 1.7%
- 73,041
- 6.0%
- 103,891
- 7.6% Formaldehyde
- 2,101
- 11.5%
- 5,910
- 32.1%
- 8,378
- 37.5% NO X - 94,787
- 7.6%
- 268,373
- 29.2%
- 380,810
- 35.2% PM 2.5 b 610 1.5% 1,611 7.5% 2,256 9.1% SO X - 313
- 5.9%
- 909
- 15.6%
- 1,267
- 18.1% VOC
- 14,310
- 6.8%
- 40,640
- 22.0%
- 57,348
- 26.1% Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number means emissions would increase from reference t o control case. PM 2.5 from tire wear and brake wear are included. As shown in Table VIII
- 16 , a net increase in downstream PM 2.5 emissions is expected. Although the improvements in engine efficiency and road load are expected to reduce tailpipe emissions of PM 2.5 , the projected incr eased use 423 of APUs would lead to higher PM 2.5 emissions that more than offset the reductions from the tailpipe, since engines powering APUs are currentl y required to meet less stringent PM standards than on
- road engines
. Therefore, EPA conducted an evaluation of a program that would reduce the unintended consequence of increase in PM 2.5 emissions from increased APU use by fitting the APU with a diesel particulate filter or having the APU exhaust plumbed into the vehicle’s exhaust sy stem upstream of the par ticulate matter aftertreatment device. Such program requiring additional PM 2.5 controls on APU could significantl y reduce PM 2.5 emissions, as shown in Table VIII
- 18 below. For additional details, see Section III.C.3 of the preamble.

423 The projected use of APU during extended idling is presented in Table VII
- 3 of the preamble.Page 567 of 850

**Table VIII**  **- 18**  **Projected Impact on PM 2.5**  **Em issions of Further PM**  **2.5 Con**  **trol on APUs**

**– Preferred** 

**Alternative vs. Alt 1a using Analysis Method B (US Short Tons)**  **a** CY Proposed program

inventory without further PM 2.5 control on APUs Proposed program

inventory with further PM 2.5 control on APUs Net impact of further

PM 2.5 control on APUs 2035 23,083 19,999
- 3,084 2050 26,932 22,588
- 4,344 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. It is worth noting that the emission reductions shown in Table VIII
- 16 are not incremental to the emissions reductions projected in the Phase 1 rulemaking. This is because, as described in Sections III. D.2.a of the preamble, the agencies have revised their assumptions about the adoption rate of APUs. This proposal assumes that without the proposed Phase 2 program (i.e., in the Phase 2 reference case), the APU adoption rate will be 30 percent for model ye ars 2010 and later, which is the value used in the Phase 1 reference case. EPA conducted an anal ys is to estimate the combined emissions impacts of the Phase 1 and the proposed Phase 2 programs for NO X , VOC, SO X and PM 2.5 in calendar year 2050 using MOVES2014. The results are shown in Table VIII
- 19 . For additional details, see Chapter 5 of the draft RIA. **Table VIII**  **- 19**  **Com bined Phase 1 and Phase 2 Annual**  **Downstream Im**  **pacts on Criteria Pollutants**  **from Heavy**  **- Duty Sector in Calendar Year 2050** 

**– Preferred Alternative vs. Alt 1a using Analysis Method B**  **( US**  **S hort**  **T ons)**  **a** CY NO X VOC SO X PM 2.5 b 2050
- 403,915
- 69,415
- 2,111 1,890 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Positive number reflects an increase in emissions
. (iii) Total Im

pacts of the Proposed Program and Alternative 4 As shown in Table VIII
- 20 and Table VI II
- 21 , agencies estimate that both the proposed program and Alternative 4 would result in overall net reductions of NO X , VOC, SO X , CO, PM 2.5 , and air toxics emissions . The downstream increase in PM 2.5 due to APU use is expected to bePage 568 of 850

more than offset by

reductions in PM 2.5 from upstream. 424 The results are shown both in changes in absolute ton s and in percent reductions from the less dy namic reference to the alternatives for the heav y - dut y sector. By 2050, the total impacts of the proposed program and Alternative 4 on criteria pollutants and air toxics are indistinguishable. **Table VIII**  **- 20**  **Annual Total**  **Impacts (Upstream**  **and Downstream** **) o f**  **Criteria Pollutants and Air Toxics**  **from Heavy**  **- Duty Sector in**  **Calendar Years 2025,**  **2035 and 2050**

**– Preferred Alternative vs. Alt 1a using**  **Analysis Me thod B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 2.7 %
- 25
- 15.1 %
- 36
- 19.4 % Acetaldehyde
- 674
- 10.1 %
- 1,902
- 30.5 %
- 2,697
- 36.0 % Acrolein
- 97
- 9.8 %
- 274
- 31.3 %
- 388
- 36.9 % Benzene
- 149
- 5.4 %
- 445
- 18.8 %
- 633
- 22.9 % CO
- 29,622
- 1.9 %
- 85,961
- 6.6 %
- 122,659
- 8.4 % Formaldehyde
- 2,121
- 11.4 %
- 5,978
- 31.7 %
- 8,475
- 37.0 % NO X - 102,502
- 7.2 %
- 298,907
- 26.6 %
- 426,610
- 32.1 % PM 2.5 - 386
- 0.6 %
- 1,883
- 4.2 %
- 2,815
- 5.4 % SO X - 6,070
- 4.9 %
- 20,777
- 15.3 %
- 30,000
- 18.4 % VOC
- 16,724
- 5.6 %
- 52,872
- 18.8 %
- 75,521
- 22.7 % Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.

424 Although net reduction in PM 2.5 is expected at 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. For further details, see S ection VIII.D of this preamble and in Chapter 8 of the draft RIA.Page 569 of 850

**Table VIII**  **- 21**  **Annual Total**  **Impacts (Upstream**  **and Downstream** **) o f**  **Criteria Pollutants and Air Toxics**  **from Heavy**  **- Duty Sector in**  **Calendar Years 2025,**  **2035 and 2050**

**– Alternative 4 vs. Alt 1a using Analysis**  **Me thod B**  **a** Pollutant CY2025 CY2035 CY2050

US Short Tons %

Reduction US Short

Tons %

Reduction US Short

Tons %

Reduction 1,3
- Butadiene
- 9
- 2.8%
- 26
- 15.2%
- 36
- 19.4% Acetaldehyde
- 676
- 10.1%
- 1,903
- 30.6%
- 2,697
- 36.0% Acrolein
- 97
- 9.8%
- 274
- 31.3%
- 388
- 36.9% Benzene
- 157
- 5.7%
- 450
- 18.9%
- 634
- 22.9% CO
- 30,580
- 1.9%
- 86,526
- 6.6%
- 122,703
- 8.4% Formaldehyde
- 2,125
- 11.4%
- 5,980
- 31.7%
- 8,476
- 37.0% NO X - 106,180
- 7.4%
- 301,339
- 26.8%
- 426,796
- 32.1% PM 2.5 - 646
- 1.1%
- 2,036
- 4.6%
- 2,827
- 5.4% SO X - 7,450
- 6.1%
- 21,550
- 15.9%
- 30,064
- 18.4% VOC
- 18,652
- 6.2%
- 53,966
- 19.2%
- 75,621
- 22.7% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. (b ) Model Year Lifetime Analysis In addition to the annual non - GHG emissions reductions expected from the proposed rules and Alternative 4 , the combined ( downstream and upstream) non
- GHG impacts for the lifetime of the impacted vehicles were estimated. Table VIII
- 22 show s the fleet
- wide reductions of NO X , PM 2.5 and SO X from the preferred alternative and Alternative 4, relative to A lternative 1a , through the lifetime 425 of heav y - dut y v ehicles. For the lifetime non
- GHG reductions b y vehicle categories, see Chapter 5 of the draft RIA.

425 A lifetime of 30 years is assumed in MOVES.Page 570 of 850

**Table VIII**  **- 22**  **Lifetime Non**  **- GHG Reductions using Analysis Method**  **B**
**– Summ**  **ary for Model Years 2018 -**  **2029 (US Short Tons) a**  ALTERNATIVE 3 (PROPOSED) ALTERNATIVE 4 NO
- ACT ION ALTERNATIVE (BASELINE) 1a (Less Dynamic) 1a (Less Dynamic) NO X 2,399,990 2,459,497 Downstream 2,139,331 2,167,512 Upstream 260,659 291,986 PM 2.5 15,206 19,151 Downstream

b

- 13,528
- 13,089 Upstream 28,733 32,240 SO X 169,436 189,904 Downstream 6,158 7,035 Upstream 163,278 182,869 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. b Negative num

ber means emissions would increase from reference to control case. PM 2.5 from tire wear and brake wear are included. 

### 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 b y the proposed and alternative heavy
- duty vehicle standards. **(1) Particulate Matter**  (a ) Background Particulate matter is a highly complex mixture of solid particles and liquid droplets distributed among numerous atmospheric gases which interact with solid and liquid phases. Particles range in size from those smaller than 1 nanometer (10 - 9 meter) to over 100 micrometer (μm, or 10 - 6 meter) in diameter (for reference, a typical strand of human hair is 70 μ m in diameter and a grain of salt is about 100 μm). Atmospheric particles can be grouped into several classes according to their aerodynamic and ph ys ical sizes . Generall y, the three broad classes of particles considered b y EPA includ e ultrafine particles (UFP, aerodyn amic diameter <0.1 μm), “ fine ” particles (PM 2.5 ; particles wi th a nominal mean aerodynamic diam e ter less than or equal to 2.5 μm), and “thoracic” particles (PM 10 ; particles with a nominal mean aerody namic diam e ter less than or equal to 10 μm). 426 Particles that fall within the size range between PM 2.5 and PM 10 , are r eferred to as “thoracic coarse particles” (PM 10
- 2.5 , particles with a nominal mean

426 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. Figure 3
- 1.Page 571 of 850

aerodynamic diameter less than or equal to 10 μm and greater than 2.5 μm). EPA currentl y has standards that regulate PM 2.5 and PM 10 . 427 Particles span man y sizes and shapes and may consist of hundreds of different chemicals. Particles are emitted directly from sources and are also formed through atmospheric chemical reactions; the former are often referred to as “primary” particles, and the latter as “secondary” particles. Particle concentration and composition varies b y time of ye ar and location , and in addition to differences in source emissions, is affected by several weather
- related factors, such as temperature, clouds, humidity , and wind. A further layer of complexity comes from particles’ ability to shift between solid/liquid and gaseous phases, which is influenced by concentration and meteorology , especially

temperature. Fine particles are produced primaril y b y combustion processes and by transformations of gaseous emissions (e.g., sulfur oxides (SO X), oxides of nitrogen, and volatile organic compounds (VOC)) in the atmosphere. The chemical and ph ysical properties of PM 2.5 may vary greatl y with time, region, meteorology , and source cate gory . Thus, PM 2.5 may include a complex mixture of different components including sulfates, nitrates, organic compounds, elemental carbon and metal compounds. 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 broad range of health effects. These health effects are discussed in detail in the December 2009 Integrated Science Assessment for Particulate Matter (PM I SA). 428 T he PM I SA summarizes health effects evidence associated with both short
- and long
- term exposures to PM 2.5 , PM 10
- 2.5 , and ultrafine particles. The PM I SA concludes that human exposures to ambient PM 2.5 concentrations are associated with a number of adverse health effects and characterizes the weight of evidence for these health outcomes. 429 The discussion below highlights the PM I SA’s conclusions pertaining to health effects associated with both short
- and long
- term PM exposures. Further discussion of health effects associated

427 Regulatory definitions of PM size fractions, and information on reference and e quivalent methods for measuring PM in ambient air, are provided in 40 CFR Parts 50, 53, and 58. With regard to national ambient air quality standards (NAAQS) which provide protection against health and welfare effects, the 24
- hour PM 10 standard provides p rotection against effects associated with short
- term exposure to thoracic coarse particles (i.e., PM 10
- 2.5 ). 428 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. 429 The causal framework draws upon the assessment and integration of evidence from across epidemiological, controlled human exposure, and toxicological studies, and the related uncertainties that ultimately influence our understanding of th e evidence. This framework employs a five
- level hierarchy that classifies the overall weight of evidence and causality using the following categorizations: causal relationship, likely to be causal relationship, suggestive of a causal relationship, inadequ ate to infer a causal relationship, and not likely to be a causal relationship (U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, Table 1

– 3).Page 572 of 850

with PM 2.5 can also be found in the rulemaking documents for the most recent review of the PM NAAQS completed in 2012. 430 , 431 EPA has conclude d that a causal relationship exists between both long
- and short
- term exposures to PM 2.5 and prem ature mortality and cardiovascular effects and a likely causal relationship exists between long
- and short
- term PM 2.5 exposures and respiratory effects. Further, there is evidence suggestive of a causal relationship between long
- term PM 2.5 exposures and o ther health effects, including developmental and reproductive effects (e.g., low birth weight, infant mortality) and carcinogenic, mutagenic, and genotoxic effects (e.g., lung cancer mortality). 432 As summarized in the Final PM NAAQS rule, and discussed exte nsively in the 2009 PM ISA, the available scientific evidence significantl y strengthens the link between long
- and short
term exposure to PM 2.5 and premature mortality, while providing indications that the magnitude of the PM 2.5 - mortality

association with long
- term exposures may be larger than previously estimated. 433 , 434 The strongest evidence comes from recent studies investigating long
- term exposure to PM 2.5 and cardiovascular
- related mortality . The evidence supporting a causal relationship between long
- term PM 2.5 exposure and mortality also includes consideration of new studies that demonstrated an improvement in community health following reductions in ambient fine particles. Several studies evaluated in the 2009 PM I SA have examined the association between cardiovascular effects and long
- term PM 2.5 exposures in multi
- city epidemiological studies conducted in the U.S. and Europe. Thes e studies have provided new evidence linking long
- term exposure to PM 2.5 with an array of cardiovascular effects such as heart attacks, congestive heart failure, stroke, and mortality . This evidence is coherent with studies of effects associated with short
- term exposure to PM 2.5 that have observed associations with a continuum of effects ranging from subtle changes in indicators of cardiovascular health to serious clinical events, such as increased hospitalizations and emergency department visits due to cardiovascular disease and cardiovascular mortality. 435 As detailed in the 2 009 PM I SA, extended anal ys es of seminal epidemiological studies , as well as more recent epidemiological studies conducted in the U.S. and abroad , provide strong evidence of respiratory
- related morbidity effects associated with long
- term PM 2.5 exposure. T he strongest evidence for respiratory
- related effects is from studies that evaluated decrements in

430 78 FR 3086 (January 15, 2013), pages 3103
- 3104. 431 77 FR 38890 (June 29, 2012), pages 38906
- 38911. 432 These causal inferences are based not only on the more expansive epidemiological evidence available in this review but also reflect consideration of import ant progress that has been made to advance our understanding of a number of potential biologic modes of action or pathways for PM
- related cardiovascular and respiratory effects (U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, Chapter 5). 433 78 FR 3103
- 3104 (January 15, 2013). 434 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Ag ency , Washington, DC, EPA/600/R
- 08/139F, Chapter 6 (Section 6.5) and Chapter 7 (Section 7.6). 435 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, Chapter 2 (Section 2.3.1 and 2.3.2) and Chapter 6.Page 573 of 850

lung function growth (in children), increased respiratory s ymptoms, and asthma development. The strongest evidence from short
- term PM 2.5 exposure studies ha s been observed for increased respiratory
- related emergency department visits and hospital admissions for chronic obstructive pulmonary

disease (COPD) and respiratory infections. 436 The body of scientific evidence detailed in the 2009 PM I SA is still limited with respect to associations between long
- term PM 2.5 exposures and developmental and reproductive effects as well as cancer, mutagenic, and genotoxic effects. The strongest evidence for an association between PM 2.5 and developmental and reproductive effe cts comes from epidemiological studies of low birth weight and infant mortality , especially due to respiratory

causes during the post
neonatal period (i.e., 1 month to 12 months of age). 437 With regard to cancer effects, ‘‘[m]ultiple epidemiologic studies have shown a consistent positive association between PM 2.5 and lung cancer mortality , but studies have generally not reported associations between PM 2.5 and lung cancer incidence.’’ 438 Specific groups within the general population are at increased risk for experiencing adverse health effects related to PM exposures. 439 , 440 , 441 , 442 The evidence detailed in the 2009 PM I SA expands our understanding of previously identified at
- risk populations and lifestages (i.e., children, older adults, and individuals with pre
- exi sting heart and lung disease) and supports the identification of additional at
- risk populations (e.g., persons with lower socioeconomic status, genetic differences). Additionally , there is emerging, though still limited, evidence for additional potentiall y at - risk populations and lifestages, such as those with diabetes, people who are obese, pregnant women, and the developing fetus. 443 For PM 10
- 2.5 , the 2009 PM I SA concluded that available evidence was suggestive of a causal relationship between short
- term exposures to PM 10
- 2.5 and cardiovascular effects (e.g., hospital admissions and ED visits, changes in cardiovascular function), respiratory effects (e.g., ED visits and hospital admissions, increase in markers of pulmonary inflammation), and premature mort ality . Data were inadequate to draw conclusions regarding the relationships between long
- term exposure to PM 10
- 2.5 and various health effects. 444 , 445 , 446

436 U.S. EPA. (2009). Integrated Science Ass essment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, Chapter 2 (Section 2.3.1 and 2.3.2) and Chapter 6. 437 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Repo rt). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, Chapter 2 (Section 2.3.1 and 2.3.2) and Chapter 7. 438 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. pg 2
- 13 439 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. Chapter 8 and Chapter 2. 440 77 FR 38890 (June 29, 2012). 441 78 FR 3104 (January 15, 2013). 442 U.S. EPA. (2011). Policy Assessment for the Revie w of the PM NAAQS. U.S. Environmental P rotection Agency, Washington, DC, EPA/452/R
- 11
- 003. Section 2.2.1. 443 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. Chapter 8 and Chapter 2 (S ection 2.4.1). 444 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. Section 2.3.4 and Table 2
- 6. 445 78 FR 3167
- 8 (January 15, 2013).Page 574 of 850

For ultrafine particles, the 2009 PM I SA concluded that the evidence was suggestive of a causal relationsh ip between short
- term exposures and cardiovascular effects, including changes in heart rh ythm and vasomotor function (the ability of blood vessels to expand and contract). It also concluded that there was evidence suggestive of a causal relationship betwe en short
- term exposure to ultrafine particles and respiratory effects, including lung function and pulmonary inflammation, with limited and inconsistent evidence for increases in ED visits and hospital admissions. Data were inadequate to draw conclusions regarding the relationship between short
term exposure to ultrafine particle and additional health effects including premature mortality as well as long
- term exposure to ultrafine particles and all health outcomes evaluated. 447 , 448 **(2) Ozone**  (a ) Background Ground
- lev el ozone pollution is ty pically formed through reactions involving VOC and NO X in the lower atmosphere in the presence of sunlight. These pollutants, often referred to as ozone precursors, are emitted by man y t ypes of pollution sources, such as highway an d 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
- le vel 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 and its precursors 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 This section provides a summary of the health effects associated with exposure to ambient concentrations of ozone. 449 The information in this section is based on the information and conclusions in the February 2013 Integrated Science Assessment for Ozone (Ozone I SA). 450 The Ozone I SA concludes that human exposures to ambient concentrations of ozone are associated with a number of adverse health effects and characterizes the weight of evidence for

446 77 FR 38947
- 51 (June 29, 2012). 447 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. Section 2.3.5 and Table 2
- 6. 448 78 FR 3121 (January 15, 2013). 449 Human exposure to ozone varies over time due to changes in ambient ozone concentration and because people mo ve between locations which have notable different ozone concentrations. Also, the amount of ozone delivered to the lung is not only influenced by the ambie nt concentrations but also by the individuals breathing route and rate. 450 U.S. EPA. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 10/076F, 2013. T he ISA is available at http://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=247492#Dow nloadPage 575 of 850

th ese health effects. 451 The discussion below highlights the Ozone I SA’s conclusions pertaining to health effects associated with both short
- term and long
- term periods of exposure to ozone. For short
- term exposure to ozone, the Ozone I SA concludes that respi ratory effects, including lung function decrements, pulmonary inflammation, exacerbation of asthma, respiratory
- related hospital admissions, and mortality , are causally associated with ozone exposure. It also concludes that cardiovascular effects, includi ng decreased cardiac function and increased vascular disease, and total mortality are likely to be causall y associated with short
- term exposure to ozone and that evidence is suggestive of a causal relationship between central nervous s ys tem effects and sho rt - term exposure to ozone. For long
- term exposure to ozone, the Ozone I SA concludes that respiratory effects, including new onset asthma, pulmonary inflammation and injury , are likel y to be causall y related with ozone exposure. The Ozone I SA characteriz es the evidence as suggestive of a causal relationship for associations between long
- term ozone exposure and cardiovascular effects, reproductive and developmental effects, central nervous sy stem effects and total mortality . The evidence is inadequate to infer a causal relationship between chronic ozone exposure and increased risk of lung cancer. Finally , interindividual variation in human responses to ozone exposure can result in some groups being at increased risk for detrimental effects in response to e xposure. The Ozone ISA identified several groups that are at increased risk for ozone
- related health effects. These groups are people with asthma, children and older adults, individuals with reduced intake of certain nutrients (i.e., Vitamins C and E), o utdoor workers, and individuals having certain genetic variants related to oxidative metabolism or inflammation. Ozone exposure during childhood can have lasting effects through adulthood. Such effects include altered function of the respiratory

and immune sy stems. Children absorb higher doses (normalized to lung surface area) of ambient ozone, compared to adults, due to their increased time spent outdoors, higher ventilation rates relative to body size, and a tendency

to breathe a greater fraction of ai r through the mouth. Children also have a higher asthma prevalence compared to adults. Additional children’s vulnerability

and susceptibility

factors are listed in S ection XIV
. **(3) Nitrogen 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. NO 2 and its gas phase oxidation products can dissolve in water droplets and further oxidize to form nitric acid whi ch react s with ammonia to form nitrates, which are important

451 The ISA evaluates evidence and draw s conclusions on the causal relationship between relevant pollutant exposures and 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 more information on these levels of evid ence, please refer to Table II in the Preamble of the ISA.Page 576 of 850

components of ambient PM. The health effects of ambient PM are discussed in Section VIII.B.1 .b of this preamble. NO X and VOC are the two major precursors of ozone. The health effects of ozone are covered in Section VIII.B.2 .b. (b ) Health Effects of Nitrogen Oxides The most recent review of the health effects of oxides of nitrogen completed by EPA can be found in the 2008 Integrated Science Assessment for Oxides of Nitrogen
- Health Criteria (Oxides of Nitrogen IS A)
. 452 EPA concluded that the findings of epidemiologic al , controlled human exposure, and animal toxicological studies provide d evidence that wa s sufficient to infer a likely causal relationship between respiratory effects and short
- term NO 2 exposure. The 2008 ISA for Oxides of Nitrogen conclude d that the strongest evidence for such a relationship comes from epidemiologic al studies of respiratory effects including increased respiratory sy mptoms, emergency

department visits, and hospital admis sions. Based on both short
- and long
- term exposure studies, the 2008 IS A for Oxides of Nitrogen conclude d that individuals with preexisting pulmonary

conditions (e.g., asthma or COPD), children , and older adults are potentially

at greater risk of NO 2 - related respiratory effects. Based on findings from controlled human exposure studies , the 2008 IS A for Oxides of Nitrogen also dr ew two broad conclusions regarding airway

responsiveness following NO 2 exposure. First, the I SA conclude d 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 asthmatic adult s to NO 2 concentrations as low as 26 0 pp b
. 453 Second, exposure to NO 2 wa s found to enhance the inherent responsiveness of the airway to subsequent nonspecific challenges in controlled human exposure studies of healthy and asthmatic adult s. Statistically significant increases in nonspecific airway responsiveness we re reported for asthmatic adults following 30
- minute exposures to 200
- 300 ppb NO 2 and following 1
- hour exposures to 1 00 pp b NO 2 . 454 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 sy

mptoms and worsen asthma control. Together, the epidemiologic al and experimental data sets form ed a plausible, consistent, and coherent description of a relationship between NO 2 exposures and an array

of adverse health effects that range from the onset of respiratory sy mptoms to hospital admission s and emergency department visits for respiratory causes, especiall y asthma
. 455 In evaluating a broader range of health effects, the 2008 I SA for Oxides of Nitrogen concluded evidence was “suggestive but not sufficient to infer a causal relationship” between

452 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. 453 U.S. EPA (2008). Integrated Science Assessm ent for Oxides of Nitrogen

– Health Criteria (Final Report). EPA/600/R
- 08/071. Washington, DC: U.S.EPA, Section 3.1.3.1. 454 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, Section 3.1.3.2. 455 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, Section 3.1.7.Page 577 of 850

short
- term NO 2 exposure and premature mortality and between long
- term NO 2 exposure and respiratory

effects. The latter was based largel y on associations observed between long
- term NO 2 exposure and decreases in lung function growth in children. Furthermore, the 2008 ISA for Oxides of Nitrogen concluded that evidence was “inadequate to infer the presence or absence of a causal relationship” between short
- term NO 2 exposure and cardiovascular effects as well as between long
- term NO 2 exposure and cardiovascular effects, reproductive and developmental effects, premature mortality , and cancer. 456 The conclusions for these health effect categories w ere informed b y uncertainties in the evidence base such as the independent effects of NO 2 exposure within the broader mixture of traffic
- related pollutants, limited evidence from experimental studies, and/or an overall limited literature base. **(4) Sulfur Oxide**  **s** (a ) Background Sulfur dioxide (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 derived), extracting gasoline from oil, or extracting metals from ore. SO 2 and its g as phase oxidation products can dissolve in water droplets and further oxidize to form sulfuric acid which react s with ammonia to form sulfates, which are important components of ambient PM. The health effects of ambient PM are discussed in Section VIII.B.1 .b of this preamble. (b ) Health Effects of SO2 In formation on the health effects of SO 2 can be found in the 2008 Integrated Science Assessment for Sulfur Oxides

– Health Criteria (SO X IS A)
. 457 Short
- term peaks of SO 2 have long been known to cause adverse respiratory health e ffects, particularl y among individuals with asthma. In addition to those with asthma (both children and adults), potentially sensitive groups include all 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, EPA concluded that there is a causal relationship between respiratory health effects and short
- term exposur e to SO 2 . Separately, based on an evaluation of the epidemiologic evidence of associations between short
- term exposure to SO 2 and mortality , EPA concluded that the overall evidence is suggestive of a causal relationship between short
- term exposure to SO 2 and mortality . Additional information on the health effects of SO2 is available in Chapter 6.1.1.4.2 of the RIA.

456 U.S. EPA (2008). Integrated Science Assessment for Oxides o f Nitrogen

– Health Criteria (Final Report). EPA/600/R
- 08/071. Washington, DC: U.S.EPA. 457 U.S. EPA. (2008). Integrated Science Assessment (ISA) for Sulfur Oxides

– Health Criteria (Final Report)
. EPA/600/R
- 08/047F. Washington, DC: U.S. Environmental Protec tion Agency.Page 578 of 850

**(5) Carbon Monoxide**  (a ) Background Carbon monoxide (CO) is a colorless, odorless gas emitted from combustion processes. Nationally

and, particularly

in urban areas, the majority of CO emissions to ambient air come from mobile sources. (b ) Health Effects of Carbon Monoxide In formation on the health effects of CO can be found in the January 2010 Integrated Science Assessment for Carbon Monoxide (CO ISA)
. 458 The CO IS A concludes that ambient concentrations of CO are associated with a number of adverse health effects. 459 This section provides a summary

of the health effects associated with exposure to ambient concentrations of CO. 460 Controlled human exposure studies of subjects with coronary artery disease show a decrease in the time to onset of exercise
- induced angina (chest pain) and electrocardiogram changes following CO exposure. In addition, epidemiologic studies show associations between short
- term CO exposure and cardiovascular morbidity , 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 avai lable for increased hospital admissions and emergency room visits for congestive heart failure and cardiovascular disease as a whole. The CO IS A concludes that a causal relationship is likely to exist between short
- term exposures to CO and cardiovascular morbidity . 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. Co ntrolled human exposure studies report central nervous s ys tem and behavioral effects following low
- level CO exposures , although the findings have not been consistent across all studies . The CO IS A concludes the evidence is suggestive of a causal relations hip with both short
- and long
- term exposure to CO and central nervous s ys tem effects.

458 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. 459 T he 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 c ausal 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. 460 Personal exposure includes contributions from many sources, and in many different environments. Total personal exposure to CO includes both ambient and nonambient components; and both components may contribute to adverse health effects.Page 579 of 850

A number of studies cited in the CO IS A have evaluated the role of CO exposure in birth outcomes such as preterm birth or cardiac birth defects. The epidemiologic studie s provide limited evidence 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 perinatal CO exposure to affect birth weight, as well as other developmental outcomes. The CO ISA concludes the evidence is suggestive of a causal relationship between long
- term exposures to CO and developmental effects and birth outcomes. Epidemiologic studies provide evidence of associations between ambient CO concentrations and respiratory morbidity

such as changes in pulmonary function, respiratory sy mptoms, and hospital admissions. A limited number of epidemiologic studies considered copollutants such as ozone, SO 2 , and PM in two
- pollutant models and found that CO risk estimates were generall y 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 effect of CO on respiratory morbidity . Animal studies at levels of 50
- 100 ppm CO show preliminary evidence of altered pulmonary

vascular remodeling and oxidative injury . The CO ISA concludes that the evidence is suggestive of a causal relationship between shor t - term CO exposure and respiratory morbidity, and inadequate to conclude that a causal relationship exists between long
- term exposure and respiratory

morbidity. Finally , the CO IS A concludes that the epidemiologic evidence is suggestive of a causal relat ionship between short
- term concentrations of CO and mortality . Epidemiologic studies provide evidence of an association between short
- term exposure to CO and mortality , but limited evidence is available to evaluate cause
- specific mortality outcomes associ ated 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 CO IS A also concludes that there is not likely to be a causal relationship between relevant long
- term exposures to CO and mortality
. **(6) Diesel Exhaust**  (a ) Background Diesel exhaust consists of a complex mixture composed of carbon dioxide, oxygen, nitrogen, water vapor, carbon monoxide, nitrogen compounds, sulfur compounds and numerous low
- molecular
- weight h ydrocarbons. A number of these gaseous h ydrocarbon components are individually

known to be toxic, including aldehydes, benzene and 1,3
- butadiene. The diesel particulate matter present in diesel exhaust consists mostly of fine particles (< 2.5 μm), of which a significant fraction is ultrafine particles (< 0.1 μm). These particles have a large 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 types (heav y - dut y, light
- duty), engine operating conditions (id le, accelerate,Page 580 of 850

decelerate), and fuel formulations (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 well as chemical and ph ys ical changes in the atmosphere. The lifetime for some of the compounds present in diesel exhaust ranges from hours to days. (b ) Health Effects of Diesel Exhaust In EPA’s 2002 Diesel Health Assessm ent Document (Diesel HAD), 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. 461 , 462 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) had made similar hazard classifications prior to 2002
. EPA also concluded in the 2002 Diesel HAD that it was not possible to calculate a cancer unit risk for diesel exhaust due to limitations in the exposure data for the occupational groups or the absence of a dose
- response relationship. In the absence of a cancer unit risk, the Diesel HAD sought to provide additional insight into the significance of the diesel exhaust cancer hazard by estimating possible ranges of risk that might be present in the population. An exploratory analysis was used to characteri ze a range of possible lung cancer risk. The outcome was that environmental risks of cancer from long
- term diesel exhaust exposure s could plausibly range from a s low as 10 - 5 to as high as 10 - 3 . Because of uncertainties, the anal ys is acknowledged that the risks could be lower than 10 - 5 , and a zero risk from diesel exh aust exposure could not be ruled out. Non
- cancer health effects of acute and chronic exposure to diesel exhaust emissions are also of concern to EPA. EPA derived a diesel exhaust reference co ncentration (RfC) from consideration of four well
- conducted chronic rat inhalation studies showing adverse pulmonary effects. The RfC is 5 μg/m 3 for diesel exhaust measured as diesel particulate matter. This RfC does not consider allergenic effects such as those associated with asthma or immunologic or the potential for cardiac effects. There was emerging evidence in 2002, discussed in the Diesel HAD, that exposure to diesel exhaust can exacerbate these effects, but the exposure
- response data were lackin g at that time to derive an RfC based on these then emerging considerations. 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] n oncancer database to identify all of the pertinent [diesel exhaust]
- caused noncancer health hazards.” The Diesel HAD also notes “that acute exposure to [diesel exhaust] has been associated with irritation of the eye, nose, and throat, respiratory s ymptoms (cough and phlegm),

461 U.S. EPA. (1999). Guidelines for Carcinogen Risk Assessment . Review Draft. NCEA
- F
- 0644, July. Washington, DC: U.S. EP A. Retrieved on March 19, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=54932
. 462 U.S. EPA (2002). Health Assessment Document for Diesel Engine Exhaust. EPA/600/8
- 9 0/057F Office of Research and Development, Washington DC. Retrieved on March 17, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060
. pp. 1
- 1 1
- 2.Page 581 of 850

and neuroph ys iological sy mptoms such as headache, lightheadedness, nausea, vomiting, and numbness or tingling of the extremities.” The Diesel HAD noted that the cancer and noncancer hazard conclusions applied to the general use of die sel engines then on the market and as cleaner engines replace a substantial number of existing ones, the applicability of the conclusions would need to be reevaluated. It is important to note that the Diesel HAD also briefly summarizes health effects ass ociated with ambient PM and discusses EPA’s then
- annual PM 2.5 NAAQS of 15 μg/m 3

. In 2012, EPA revised the annual PM 2.5 NAAQS to 12 μg/m 3

. There is a large and 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 provide protection from the noncancer health effects and premature mortality attributed to exposure to PM 2.5 . The contribution of diesel PM to total ambient PM varies in different regions of the country and also, within a region, from one area to another. The contribution can be high in near
- roadway enviro nments , for example , or in other locations where diesel engine use is concentrated. Since 2002, several new studies have been published which continue to report increased lung cancer risk with occupational exposure to diesel exhaust from older engine s . Of particular note since 2011 are three new epidemiology studies which have examined lung cancer in occupation al populations, for example, truck drivers, underground nonmetal miners and other diesel motor related occupations. These studies reported increa sed ris k of lung cancer with exposure to diesel exhaust with evidence of positive exposure
- response relationships to varying degrees. 463 , 464 , 465 These newer studies (along with others that have appeared in the scientific literature) add to the evidence EPA evaluated in the 2002 Diesel HAD and further reinforce s the concern that diesel exhaust exposure likely poses a lung cancer hazard. The findings from these newer studies do not necessarily appl y to newer technology diesel engines since the newer engines have large reductions in the emission constituents compared to older technology diesel engines
. In light of the growing body of scientific literature evaluating the health effects of exposure to diesel exhaust, i n June 2012 the World Health Organization’s International Agency for Research on Cancer (IARC) , a recognized international authority on the carcinogenic potential of chemicals and other agents , evaluated the full range of cancer related health effects data for diesel engine exhaust . IARC concluded that diesel exhaust should be regarded as

463 Garshick, Eric, Francine Laden, Jaime E. Hart, Mary E. Davis, Ellen A. Eisen, and Thomas J. Smith. 2012. Lung cancer and elemental carbon exposure in trucking industry workers. Environmental Health Perspectives 120(9): 1301
- 1306. 464 Silverman, D. T., Samanic, C. M., Lubin, J. H., Blair, A. E., Stewart, P. A., Vermeulen, R., & Attfield, M. D. (2012). The diesel exhaust in miners study: a nested case

– control study of lung cancer and diesel exhaust. Journal of the National Cancer Instit ute. 465 Olsson, Ann C., et al. "Exposure to diesel motor exhaust and lung cancer risk in a pooled analysis from case
control studies in Europe and Canada." American journal of respiratory and critical care medicine 183.7 (2011): 941
- 948.Page 582 of 850

“carcinogenic to humans.” 466 This designation was an update from its 1988 evaluation that considered the evidence to be indicative of a “probable human carcinogen.” **(7) Air Toxics**  (a ) Background 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 po llutants known collectively as “air toxics.” 467 These compounds include, but are not limited to, benzene, 1, 3
- butadiene, formaldehyde, acetaldehyde, acrolein, polycyclic organic matter, and naphthalene. These compounds were identified as national or regio nal risk drivers or contributors in the 2005 National
- scale Air Toxics Assessment and have significant inventory

contributions from mobile sources. 468 (b ) Benzene EPA’s Integrated Risk Information Sy stem (IRIS) database lists benzene as a known human carcinogen (causing leukemia) by all routes of exposure, and concludes that exposure is associated with additional health effects, including genetic changes in both humans and animals and increased proliferation of bone marrow cells in mice. 469 , 470 , 471 EPA states in its IRI S database that data indicate a causal relationship between benzene exposure and acute ly mphocy tic leukemia and suggest a relationship between benzene exposure and chronic non
ly mphocy tic leukemia and chronic l ymphocy tic leukemia. EPA’s IRI S documentati on for benzene also lists a range of 2.2 x 10 - 6 to 7.8 x 10 - 6 as the unit risk estimate (URE) for benzene. 472 , 473 The International Agency for Research on Carcinogens (IARC) has determined

466 IARC [Internatio nal Agency for Research on Cancer]. (2013). Diesel and gasoline engine exhausts and some nitroarenes. IARC Monographs Volume 105. [Online at http://monographs.iarc.fr/ENG/Monographs/vol105/index.php] 467 U.S. EPA. (2011) Summary of Results for the 2005 Nat ional
- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf. 468 U.S. EPA (2011) 2005 National
- Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2005. 469 U.S. EPA. (2000). Integrated Risk Information System File for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/0276.htm
. 470 International Agency for Research on Cancer, IARC monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, some industrial chemicals and dyestuffs, International Agency for Research on Cancer, World Health Organization, Lyon, France 1982. 471 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. 472 A unit risk estimate is defined as the increase in the lifetime risk of an individual who is exposed for a lifetime to 1 μg/m3 benzene in air. 473 U.S. EPA. (2000). Integrated Risk Information System File for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/ 0276.htm
.Page 583 of 850

that benzene is a human carcinogen and the U.S. Department of Health a nd Human Services (DHHS) has characterized benzene as a known human carcinogen. 474 , 475 A number of adverse noncancer health effects including blood disorders, such as pre leukemia and aplastic anemia, have also been associated with long
- term exposure to benzene. 476 , 477 The most sensitive noncancer effect observed in humans, based on current data, is the depression of the absolute ly mphocy te count in blood. 478 , 479 EPA’s inhalation reference concentration (RfC) for benzene is 30 μg/m 3 . The RfC is based on suppre ssed absolute ly mphocy te counts seen in humans under occupational exposure conditions. In addition, recent work, including studies sponsored b y the Health Effects Institute, provides evidence that biochemical responses are occurring at lower levels of benzene exposure than previousl y known. 480 , 481 , 482 , 483 EPA’s IRI S program has not yet evaluated these new data. EPA does not currentl y have an acute reference concentration for benzene. The Agency for Toxic Substances and Disease Registry

(ATSDR) Minimal Risk L ev el (MRL) for acute exposure to benzene is 29 μg/m 3 for 1
- 14 day s exposure. 484 , 485

474 International Agency for Research on Cancer (IARC). (1987). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, Supplement 7, Some industrial chemicals and dyestuffs, World Health Organization, Lyon, France. 475 NTP. (2014). 13 th Report on Carcinogens. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program. 476 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193
- 197. 477 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541
- 554
. 478 Rothman, N., G.L. Li, M. Dosemeci, W. E. Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko
- Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes. (1996). Hematotoxicity among Chinese workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236
- 246. 479 U.S . EPA . (2002). Toxicological Revie w of Benzene (Noncancer Effects). Environmental Protection Agency , Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington DC. This material is available el ectronically at http://www.epa.gov/iris/subst/0276.htm
. 480 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 115, Validation & Evaluation of Biomarkers in Workers Exposed to Benzene in China. 481 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohe n, et al. (2002). Hematological changes among Chinese workers with a broad range of benzene exposures. Am. J. Industr. Med. 42: 275
- 285. 482 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004). Hematotoxically in Workers Exposed to Low Levels of B enzene. Science 306: 1774
- 1776. 483 Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism in rodents at doses relevant to human exposure from Urban Air. Research Reports Health Effect Inst. Report No.113. 484 U.S. Agency for Toxic Substances and Disease Registry (ATSDR). (2007). Toxicological profile for benzene. Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. http://www.atsdr.cdc.gov/ToxProfiles/tp3.pdf. 485 A minimal risk leve l (MRL) is defined as an estimate of the daily human exposure to a hazardous substance that is likely to be without appreciable risk of adverse noncancer health effects over a specified duration of exposure.Page 584 of 850

(c) 1,3
-Butadiene EPA has characterized 1,3
- butadiene as carcinogenic to humans by inhalation. 486 , 487 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. 488 , 489 , 490 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
- butadi ene - induced carcinogenesis 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 exposure; there are insufficient data in humans from which to draw conclusions about sensitive subpopulations. The URE for 1,3
- butadiene is 3 × 10 - 5 per μg/m 3

. 491 1,3
- butadiene also causes a variety of reproductive and developmental eff ects in mice; no human data on these effects are available. The most sensitive effect was ovarian atrophy observed in a lifetime bioassay of female mice. 492 Based on this critical effect and the benchmark concentration methodology , an RfC for chronic health effects was calculated at 0.9 ppb (approximately 2 μg/m 3 ). (d ) Formaldehyde In 1991, EPA concluded that formaldeh yde is a carcinogen based on nasal tumors in animal bioassays. 493 An Inhalation URE for cancer and a Reference Dose for oral noncancer effects wer e developed by the a genc y and posted on the IRI S database. Since that time, the

486 U.S. EPA. (2002). Health Assessment of 1,3
- But adiene. 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
. 487 U.S. EP A. (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/sub st/0139.htm. 488 International Agency for Research on Cancer (IARC). (1999). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 71, Re
- evaluation of some organic chemicals, hydrazine and hydrogen peroxide and Volume 97 (in prep aration), World Health Organization, Lyon, France. 489 International Agency for Research on Cancer (IARC). (2008). Monographs on the evaluation of carcinogenic risk of chemicals to humans, 1,3
- Butadiene, Ethylene Oxide and Vinyl Halides (Vinyl Fluoride, Vinyl Chloride and Vinyl Bromide) Volume 97, World Health Organization, Lyon, France. 490 NTP. (2014). 13 th Report on Carcinogens. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program. 491 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/ir is/subst/0139.htm. 492 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. 493 EPA. Integrated Risk Information System. Formaldehyde (CASRN 50
- 00
- 0) http://www.epa.gov/iris/subst/0419/htmPage 585 of 850

National Toxicology

Program (NTP) and International Agency for Research on Cancer (IARC) have concluded that formaldeh yde is a known human carcinogen. 494 , 495 The conclusions b y IAR C and NTP reflect the results of epidemiologic research published since 1991 in combination with previous animal, human and mechanistic evidence. Research conducted b y the National Cancer Institute reported an increased risk of nasophary

ngeal cancer an d specific l ymph hematopoietic malignancies among workers exposed to formaldeh yde. 496 , 497 , 498 A National Institute of Occupational Safety and Health study

of garment workers also reported increased risk of death due to leukemia among workers exposed to formalde hyde. 499 Extended follow
- up of a cohort of British chemical workers did not report evidence of an increase in nasophary ngeal or l ymph hematopoietic cancers, but a continuing statistically

significant excess in lung cancers was reported. 500 Finall y, a study o f embalmers reported formaldeh yd e exposures to be associated with an increased risk of myeloid leukemia but not brain cancer. 501 Health effects of formaldehyde in addition to cancer were reviewed b y the Agency for Toxics Substances and Disease Registry in 1999 502 and supplemented in 2010, 503 and by the World Health Organization. 504 These organizations reviewed the scientific literature concerning health effects linked to formaldehyde exposure to evaluate hazards and dose response relationships and defined exposure concentrations for minimal risk levels (MRL s). The health endpoints reviewed included sensory irritation of eyes and respiratory tract, pulmonary

function, nasal histopathology , and immune sy stem effects. In addition, research on reproductive and deve lopmental effects and neurological effects were discussed along with several studies that suggest that formaldeh yd e may increase the risk of asthma

– particularl y in the young.

494 NTP. (2014). 13 th Report on Carcinogens. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, Natio nal Toxicology Program. 495 IARC Monographs on the Evaluation of Carcinogenic Risks to Humans Volume 100F (2012): Formaldehyde 496 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from lymphohematopoetic malignancies amon g workers in formaldehyde industries. Journal of the National Cancer Institute 95: 1615
- 1623. 497 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. 498 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. Mortality from lymph hematopoietic malignancies among workers in formaldehyde industries: The Nation al Cancer Institute cohort. J. National Cancer Inst. 101: 751
- 761. 499 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 193
- 200. 500 Coggon, D, EC Harris, J Poole, KT Palmer. 20 03. Extended follow
- up of a cohort of British chemical workers exposed to formaldehyde. J National Cancer Inst. 95:1608
- 1615. 501 Hauptmann, M,; Stewart P. A.; Lubin J. H.; Beane Freeman, L. E.; Hornung, R. W.; Herrick, R. F.; Hoover, R. N.; Fraumeni, J. F.; Hayes, R. B. 2009. Mortality from lymph hematopoietic malignancies and brain cancer among em balmers exposed to formaldehyde. Journal of the National Cancer Institute 101:1696
- 1708. 502 AT SDR. 1999. Toxicological Profile for Formaldehyde, U.S. Department of Health and Human Services (HHS), July 1999. 503 AT SDR. 2010. Addendum to the Toxicological Profile for Formaldehyde. U.S. Department of Health and Human Services (HHS), October 2010. 504 IPCS. 2002. Concise International Chemical Assessment Document 40. Formal dehyde. World Health Organization.Page 586 of 850

EPA released a draft Toxicological Review of Formaldehyde

– Inhalation Assess ment through the IR IS program for peer review by the National Research Council (NRC) and public comment in June 2010. 505 The draft assessment reviewed more recent research from animal and human studies on cancer and other health effects. The NRC released their review report in April 2011. 506 EPA is currentl y developing a new draft assessm ent in response to this review. (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 considere d toxic by the inhalation, oral, and intravenous routes. 507 The URE in IRIS for acetaldeh yd e is 2.2 × 10 - 6 per μg/m 3

. 508 Acetaldehyde is reasonabl y anticipated to be a human carcinogen by the U.S. DHHS in the 1 3 th Report on Carcinogens and is classified as possibly carcinogenic to humans (Group 2B) b y the IARC. 509 , 510 EPA is currentl y conducting a reassessment of cancer risk from inhalation exposure to acetaldeh yde. The primary

noncancer effects of exposure to acetaldehyde vapors include irritation of the eyes, skin, and respiratory tract. 511 Inshort
- term (4 week) rat studies, degeneration of olfactory epithelium was observed at various concentration levels of acetaldehyde exposure. 512 , 513 Data from these studies were used b y EPA to develop an inhalation reference concentration of 9 μg/m 3 . Some asthmatics have been shown to be a sensitive subpopulation to decrements in functional expiratory volume (FEV1 test) and bronchoconstriction upon

505 EPA (U.S. Environmental Protection Agency). 2010. Toxicological Review of Formaldehyde (CAS No. 50
- 00
- 0)

– Inhalation Assessment: In Support of Summary Information on the Integrated Risk Information System (IRIS). Exte rnal Review Draft. EPA/635/R
- 10/002A. U.S. Environmental Protection Agency, Washington DC [online]. Available: http://cfpub.epa.gov/ncea/irs_drats/recordisplay.cfm?deid=223614 506 NRC (National Research Council). 2011. Review of the Environmental Protectio n Agency’s Draft IRIS Assessment of Formaldehyde. Washington DC: National Academies Press. http://books.nap.edu/openbook.php?record_id=13142 507 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. Research and Development, National Ce nter for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. 508 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. 509 NTP. (2014). 13 th Report on Carcinogens. Research Triangle Park, NC: U.S. Department of Hea lth and Human Services, Public Health Service, National Toxicology Program. 510 International Agency for Research on Cancer (IARC). (1999). Re
- evaluation of some organic chemicals, hydrazine, and hydrogen peroxide. IARC Monographs on the Evaluation of Carc inogenic Risk of Chemical to Humans, Vol 71. Lyon, France. 511 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. 512 U.S. EPA. (2003). Integrated Ri sk Information System File of Acrolein. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0364.htm
. 513 Appleman, L.M., R.A. Woutersen, and V.J . Feron. (1982). Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute studies. Toxicology. 23: 293
- 297.Page 587 of 850

acetaldeh yde inhalation. 514 The agency is currently

conducting a reassessment of the health hazards from inhalation exposure to acetaldeh yde. (f ) Acrolein EPA most recently

evaluated the toxicological and health effects literature related to acrolein in 2003 an d concluded that the human carcinogenic potential of acrolein could not be determined because the available data were inadequate. No information was available on the carcinogenic effects of acrolein in humans and the animal data provided inadequate eviden ce of carcinogenicity
. 515 The IARC determined in 1995 that acrolein was not classifiable as to its carcinogenicity

in humans. 516 Lesions to the lungs and upper respiratory tract of rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein. 517 The a gency has developed an RfC for acrolein of 0.02 μg/m 3 and an RfD of 0.5 μg/kg
- day
. 518 EPA is considering updating the acrolein assessment with data that have become available since the 2003 assessment was completed. Acrolein is extrem ely

acrid and irritating to humans when inhaled, with acute exposure resulting in upper respiratory tract irritation, mucus hy persecretion and congestion. The intense irritancy of this carbonyl has been demonstrated during controlled tests in human subjec ts, who suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure. 519 These data and additional studies regarding acute effects of human exposure to acrolein are summarized in EPA’s 2003 IRI S Human Health Assessment for acrolein. 520 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. Acute exposures in animal studies report bronchial hy per responsiveness. Based on animal data (more pronounced respiratory irritancy in mice with

514 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. (1993) Aerosolized acetaldehyde induces histamine
- mediated bronchoconstric tion in asthmatics. Am. Rev. Respir. Dis. 148(4 Pt 1): 940
- 943. 515 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm
. 516 International Agency for Research on Cancer (IARC). (1995). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 63. Dry cleaning, some chlorinated solvents and other industrial che micals, World Health Organization, Lyon, France. 517 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Office of Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at htt p://www.epa.gov/iris/subst/0364.htm. 518 U.S. EPA. (2003). 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. 519 U.S. EPA. (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 on line at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf
. 520 U.S. EPA. (2003) Toxicological review of acrolein in support of summary information on Integrated Risk Information System (IRIS) National Center for Environmental Assessment, Washington, DC. EPA/635/R
- 03/003. Available online at: http://www.epa.gov/ncea/ir is/toxreviews/0364tr.pdf
.Page 588 of 850

allergic airway

disease in comparison to non
- diseased mice 521 ) and demonstration of similar effects in humans (e.g., reduction in respiratory rate), individuals 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 does not currently have an acute refer ence concentration for acrolein. The available health effect reference values for acrolein have been summarized by EPA and include an ATSDR MRLfor acute exposure to acrolein of 7 μg/m 3 for 1
- 14 day s exposure; and Reference Exposure L evel (REL) values fro m the California Office of Environmental Health Hazard Assessment (OEHHA) for one
- hour and 8
- hour exposures of 2.5 μg/m 3 and 0.7 μg/m 3 , respectively. 522 (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 reported 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. 523 , 524 Animal studies have reported respiratory

tract tumors from inhalation exposure to benzo[a]py rene and alimentary

tract and liver tumors from oral exposure to benzo[a]py rene. 525 In1997 EPA 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 carcinogens. 526 Since that time, studies have found that maternal exposures to PAHs in a population of pregnant women were associate d with several adverse birth outcomes, including low birth weight and reduced length at birth, as well as impaired cognitive development in preschool children (3 ye ars of age). 527 , 528 These and similar studies are being evaluated as a part of the ongoing IR I S assessment of health effects associated with exposure to benzo[a]py rene.

521 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. 522 U.S. EPA. (2009). Graphical Arrays of Chemical
- Specific Health Effect Reference Values for Inhalation Exposures (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 09/061, 2009. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?de id=211003 523 Agency for Toxic Substances and Disease Registry (ATSDR). (1995). 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. 524 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.gov/ncea/cfm/recordisplay.cfm?deid=29060
. 525 International Agency for Research on Cancer (IARC). (2012). Monographs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans, Chemical Agents and Related Occu pations. Vol. 100F. Lyon, France. 526 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. 527 Perera , F.P.; Rauh, V.; Tsai, W
- Y.; et al. (2002). Effect of transplacental exposure to environmental pollutants on birth outcomes in a multiethnic population. Environ Health Perspect. 111: 201
- 205.Page 589 of 850

(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 primaril y a product of combustion. Acute (short
- term) exposure of humans to naphthalene b y inhalation, ingestion, or dermal contact is associated with hemoly tic anemia and damage t o the liver and the nervous sy stem. 529 Chronic (long term) exposure of workers and rodents to naphthalene has been reported to cause cataracts and retinal damage. 530 EPA released an external review draft of a reassessment of the inhalation carcinogenicity of naphthalene based on a number of recent animal carcinogenicity studies. 531 The draft reassessment completed external peer review. 532 Based on external peer review comments received, a revised draft assessment that considers all routes of exposure, as well a s cancer and noncancer effects, is under development. The 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 naphtha lene as "reasonably anticipated to be a human carcinogen" in 2004 on the basis of bioassay s reporting clear evidence of carcinogenicity in rats and some evidence of carcinogenicity

in mice. 533 California EPA has released a new risk assessment for naphthalen e, and the IARC has reevaluated naphthalene and re
- classified it as Group 2B: possibly carcinogenic to humans. 534

528 Perer a, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, P. (2006). Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons on neurodevelopment in the first 3 years of life among inner
- city children. Environ Health Perspect 114: 1287
- 1292. 529 U. S. EPA. 1998. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm
. 530 U. S. EPA. 1998. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm
. 531 U. S. EPA. (1998). Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, D C. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm
. 532 Oak Ridge Institute for Science and Education. (2004). External Peer Review for the IRIS Reassessment of the Inhalation Carcinogenicity of Naphthalene. August 20 04. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403
. 533 NTP. (2014). 13 th Report on Carcinogens. U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program. 534 International Agency for Research on Cancer (IA RC). (2002). Monographs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France.Page 590 of 850

Naphthalene also causes a number of chronic non
- cancer effects in animals, including abnormal cell changes and growth in respiratory and nasal tissues. 535 The current EPA IRI S assessment includes noncancer data on h yperplasia and metaplasia in nasal tissue that form the basis of the inhalation RfC of 3 μg/m 3

. 536 The ATSDR MRLfor acute exposure t o naphthalene is 0.6 mg/kg/day
. (i ) Other Air Toxics In addition to the compounds described above, other compounds in gaseous hydrocarbon and PM emissions from motor vehicles will be affected b y this action. Mobile source air toxic compounds that will potentially be impacted include eth ylbenzene, propionaldehyde, toluene, and x yl ene. Information regarding the health effects of these compounds can be found in EPA’s IR IS database. 537 **(8) Exposure and Health Effects Associated with Traffic**  Locations in close proximity to major roadway s generall y have elevated concentrations of many air pollutants emitted from motor vehicles. Hundreds of such studies have been published in peer
- reviewed journals, concluding that concentrations of CO, NO, NO 2 , benzene, aldeh ydes, particulate matter, black carbon, and many other compounds are elevated in ambient air within approximately

300
- 600 meters (about 1,000
- 2,000 feet) of major roadway s. Highest concentrations of most pollutants emitted directly by motor vehicles are found at locations within 50 meters (about 165 feet) of the edge of a roadway ’s traffic lanes. A recent large
- scale review of air quality measurements in vicinity of major roadway s between 1978 and 2008 concluded that the pollutants with the steepest concentration gradients in vicinities of roadway s were CO, ultrafine p articles, metals, elemental carbon (EC), NO, NO X , and several VOCs. 538 These pollutants showed a large reduction in concentrations within 100 meters downwind of the roadway . Pollutants that showed more gradual reductions with distance from roadway s include d benzene, NO 2 , PM 2.5 , and PM 10 . In the review article, results varied based on the method of statistical analy sis used to determine the trend. For pollutants with relatively high background concentrations relative to near
- road concentrations, detecting c oncentration gradients can be difficult. For example, many aldehydes have high background concentrations as a result of photochemical breakdown of precursors from many different organic compounds. This can make detection of gradients around roadway s and other primary

emission sources difficult. However, several studies have measured aldehydes in

535 U. S. EPA. (1998). Toxicological Review of Naphthalene, Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm 536 U.S. EPA. (1998). Toxicological Review of Naphthalene. Environmental Protection Agency, I ntegrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0436.htm. 537 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.ep a.gov/iris 538 Karner, A.A.; Eisinger, D.S.; Niemeier, D.A. (2010). Near
- roadway air quality: synthesizing the findings from real
- wo rld data. Environ Sci Technol 44: 5334
- 5344.Page 591 of 850

multiple weather conditions, and found higher concentrations of many carbonyls downwind of roadway s. 539 , 540 These findings suggest a substantial roadway source of these carbonyls. In the past 15 years, many studies have been published with results reporting that populations who live, work, or go to school near high
- traffic roadway s experience higher rates of numerous adverse health effects, compared to populations far away from major roads. 541 In addition, numerous studies have found adverse health effects associated with spending time in traffic, such as commuting or walking along high
- traffic roadway s. 542 , 543 , 544 , 545 The health outcomes with the strongest evidence linking them with traffic
- associated air pollutants are respiratory

effects, particularly

in asthmatic children, and cardiovascular effects. Numerous reviews of this body of health literature have been published as well. In 2010, an expert panel of the Health Effe cts Institute (HEI) published a review of hundreds of exposure, epidemiology , and toxicology studies. 546 The panel rated how the evidence for each typ e of health outcome supported a conclusion of a causal association with traffic
- associated air pollution as either “sufficient,” “suggestive but not sufficient,” or “inadequate and insufficient.” The panel categorized evidence of a causal association for exacerbation of childhood asthma as “sufficient.” The panel categorized evidence of a causal association f or new onset asthma as between “sufficient” and as “suggestive but not sufficient.” “Suggestive of a causal association” was how the panel categorized evidence linking traffic
- associated air pollutants with exacerbation of adult respiratory s ymptoms and l ung function decrement. It categorized as “inadequate and insufficient” evidence of a causal relationship between traffic
- related air pollution and health care utilization for respiratory problems, new onset adult asthma, chronic obstructive pulmonary

dis ease (COPD), nonasthmatic respiratory allergy , and cancer in adults and children. Other literature reviews have been published with conclusions generall y similar to

539 Liu, W.; Zhang, J.; Kwon, J.l; et l. (2006). Concentrations and source characteristics of airborne carbonyl compounds measured outside urban residences. J Air Waste Manage Assoc 56: 1196
- 1204. 540 Cahill, T.M.; Charles, M.J.; Seaman, V.Y. (2010). Development and application of a sensitive method to determine concentrations of acrolein and other carbonyls in ambient air. Health Effects Institute Research Report 149.Available at http://dx.doi.org 541 In the widely
- used PubMed database of health publications, between January 1, 1990 and August 18, 2011, 605 publications contained the keywords “traffic, pollution, epidemiology,” with approximately half the studies published after 2007. 542 Laden, F.; Hart, J.E.; Smith, T.J.; Davis, M.E.; Garshick, E. (2007) Cause
- specific mortality in the unionized U.S. trucking industry. Environme ntal Health Perspect 115:1192
- 1196. 543 Peters, A.; von Klot, S.; Heier, M.; Trentinaglia, I.; Hörmann, A.; Wichmann, H.E.; Löwel, H. (2004) Exposure to traffic and the onset of myocardial infarction. New England J Med 351: 1721
- 1730. 544 Zanobetti, A.; Ston e, P.H.; Spelzer, F.E.; Schwartz, J.D.; Coull, B.A.; Suh, H.H.; Nearling, B.D.; Mittleman, M.A.; Verrier, R.L.; Gold, D.R. (2009) T
- wave alternans, air pollution and traffic in high
- risk subjects. Am J Cardiol 104: 665
- 670. 545 Dubowsky Adar, S.; Adamkiewi cz, G.; Gold, D.R.; Schwartz, J.; Coull, B.A.; Suh, H. (2007) Ambient and microenvironmental particles and exhaled nitric oxide before and after a group bus trip. Environ Health Perspect 115: 507
- 512. 546 Health Effects Institute Panel on the Health Effects of Traffic
- Related Air Pollution. (2010). Traffic
- related air pollution: a critical revie w of the literature on emissions, exposure, and health effects. HEI Special Report 17. Available at http://www.healtheffects.orgPage 592 of 850

the HEI panel’s. 547 , 548 , 549 , 550 However, researchers from the U.S. Centers for Disease Control and Prevention (CDC) recently published a s ys tematic review and meta
- anal ys is of studies evaluating the risk of childhood leukemia associated with traffic exposure, and reported positive associations between “postnatal” proximity to traffic and leukemia ri sks, but no such association for “prenatal” exposures. 551 Health outcomes with few publications suggest the possibility of other effects still lacking sufficient evidence to draw definitive conclusions. Among these outcomes with a small number of positive studies are neurological impacts (e.g., autism and reduced cognitive function) and reproductive outcomes (e.g., preterm birth, low birth weight). 552 , 553 , 554 , 555 In addition to health outcomes, particularl y cardiopulmonary effects, conclusions of numerous studies suggest mechanisms by which traffic
- related air pollution affects health. Numerous studies indicate that near
- roadway exposures may

increase s ys temic inflammation, affecting organ s ys tems, including blood vessels and lungs. 556 , 557 , 558 , 559 Lo ng - term exposures in

547 Boothe, V.L.; Shendell, D.G. (2 008). Potential health effects associated with residential proximity to freeways and primary roads: review of scientific literature, 1999
- 2006. J Environ Health 70: 33
- 41. 548 Salam, M.T.; Islam, T.; Gilliland, F.D. (2008). Recent evidence for adver se effects of residential proximity to traffic sources on asthma. Curr Opin Pulm Med 14: 3
- 8. 549 Sun, X.; Zhang, S.; Ma, X. (2014) No association between traffic density and risk of childhood leukemia: a meta - analysis. Asia Pac J Cancer Prev 15: 5229
- 5232 550 Raaschou
-Nielsen, O.; Reynolds, P. (2006). Air pollution and childhood cancer: a review of the epidemiological literature. Int J Cancer 118: 2920
- 9. 551 Boothe, VL.; Boehmer, T.K.; Wendel, A.M.; Yip, F.Y. (2014) Residential traffic exposure and childhood leukemia: a systematic review and meta
- analysis. Am J Prev Med 46: 413
- 422. 552 Volk, H.E. ; Hertz
- Picciotto, I.; Delwiche, L.; et al. (2011). Residential proximity to freeways and autism in the CHARGE study. Environ Health Perspect 119: 873
- 877. 553 Franco
- Suglia, S.; Gryparis, A.; Wright, R.O.; et al. (2007). Association of black carbon with c ognition among children in a prospective birth cohort study. Am J Epidemiol. doi: 10.1093/aje/kwm308. [Online at http://dx.doi.org] 554 Power, M.C.; Weisskopf, M.G.; Alexeef, S.E.; et al. (2011). Traffic
- related air pollution and cognitive function in a co hort of older men. Environ Health Perspect 2011: 682
- 687. 555 Wu, J.; Wilhelm, M.; Chung, J.; et al. (2011). Comparing exposure assessment methods for traffic
- related air pollution in and adverse pregnancy outcome study. Environ Res 111: 685
- 6692. 556 Riedi ker, M. (2007). Cardiovascular effects of fine particulate matter components in highway patrol officers. Inhal Toxicol 19: 99
- 105. doi: 10.1080/08958370701495238 Available at http://dx.doi.org 557 Alexeef, S.E.; Coull, B.A.; Gryparis, A.; et al. (2011). Medium
- term exposure to traffic
- related air pollution and markers of inflammation and endothelial function. Environ Health Perspect 119: 481
- 486. doi:10.1289/ehp.1002560 Available at http://dx.doi.org 558 Eckel. S.P.; Berhane, K.; Salam, M.T.; et al. (2011 ). Traffic
- related pollution exposure and exhaled nitric oxide in the Children’s Health Study. Environ Health Perspect (IN PRESS). doi:10.1289/ehp.1103516. Available at http://dx.doi.org 559 Zhang, J.; McCreanor, J.E.; Cullinan, P.; et al. (2009). Health e ffects of real
- world exposure diesel exhaust in persons with asthma. Res Rep Health Effects Inst 138. [Online at http://www.healtheffects.org]Page 593 of 850

near - road environments have been associated with inflammation
- associated conditions, such as atherosclerosis and asthma. 560 , 561 , 562 Several studies suggest that some factors may increase susceptibility

to the effects of traffic
- associated air pollution. Several studies have found stronger respiratory associations in children experiencing chronic social stress, such as in violent neighborhoods or in homes with high famil y stress. 563 , 564 , 565 The risks associated with residence, workplace, or schools near major roads are of potentially

high public health significance due to the large population in such locations. According to the 2009 American Housing Survey , over 22 million homes (17.0 percent of all U.S. housing units) were located within 300 feet of an airport, railroad, or highway with four or more lanes. This corresponds to a population of more than 50 million U.S. residents in close proximity to high
- traffic roadway s or other transportation sources. Based on 2010 Census data, a 2013 publication estimated that 19 percent of the U.S. population (over 59 million people) lived within 500 meters of roads with at least 25,000 annual average dail y traffic (AADT), while about 3.2 percent of the population lived within 100 meters (about 300 feet) of such roads. 566 Anothe r 2013 study

estimated that 3.7 percent of the U.S. population (about 11.3 million people) lived within 150 meters (about 500 feet) of interstate highway s, or other freeways and expressway s. 567 As discussed in Section VIII. B. (9), on average, populations n ear major roads have higher fractions of minority residents and lower socioeconomic status. Furthermore, on average, Americans spend more than an hour traveling each day , bringing nearl y all residents into a high
exposure microenvironment for part of the day
. In light of these concerns, EPA has required and is working with states to ensure that air quality monitors be placed near high
- traffic roadway s for determining NAAQS compliance for CO, NO 2 , and PM 2.5 (in addition to those existing monitors located in neighborhoods and other locations farther away

from pollution sources). Near
- roadway monitors for NO 2 begin operation between 2014 and 2017 in Core Based Statistical Areas (CBSAs) with population of at least

560 Adar, S.D.; Klein, R.; Klein, E.K.; et al. (2010). Air pollution and the microvasculatory: a cross
- sectional assessment of in vivo retinal images in the population
- based Multi
- Ethnic Study of Atherosclerosis. PLoS Med 7(11): E1000372. doi:10.1371/journal.pmed.1000372. Available at http://dx.doi.org 561 Kan, H.; Heiss, G.; Rose, K.M.; et al. (2008). Proxpective analysis of traffic exposure as a risk factor for incident coronary heart disease: the Atherosclerosis Risk in Communities (ARIC) study. Environ Health Perspect 116: 1463
- 1468. doi:10.1289/ehp.11290. Available at http://dx.doi.org 562 McConnell, R.; Isl am, T.; Shankardass, K.; et al. (2010). Childhood incident asthma and traffic
- related air pollution at home and school. Environ Health Perspect 1021
- 1026. 563 Islam, T.; Urban, R.; Gauderman, W.J.; et al. (2011). Parental stress increases the detrimental ef fect of traffic exposure on children’s lung function. Am J Respir Crit Care Med (In press) 564 Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; et al. (2007). Synergistic effects of traffic
- related air pollution and exposure to violence on urban asthma etiol ogy. Environ Health Perspect 115: 1140
- 1146. 565 Chen, E.; Schrier, H.M.; Strunk, R.C.; et al. (2008). Chronic traffic
- related air pollution and stress interact to predict biologic and clinical outcomes in asthma. Environ Health Perspect 116: 970
- 5. 566 Rowangould, G.M. (2013) A census of the U.S. near
- roadway population: public health and environmental justice considerations. Transportation Research Part D 25: 59
- 67. 567 Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren
- Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major highways

– United States, 2010. Morbidity and Mortality Weekly Report 62(3); 46
- 50.Page 594 of 850

500,000. Monitors for CO and PM 2.5 begin operation between 2015 and 2017. These monitors will further our understanding of exposure in these locations. EPA and DOT continue to research near
- road air quality , including the ty pes of pollutants found in high concentrations near major roads and health p roblems associated with the mixture of pollutants near roads. **(9) Environmental Justice**  Environmental justice (EJ) is a principle asserting that all people deserve fair treatment and meaningful involvement with respect to environmental laws, regulations, and policies. EPA seeks to provide the same degree of protection from environmental health hazards for all people. DOT shares this goal and is informed about the potential environmental impacts of its rulemakings through its NEPA process (see NHTSA’s DEI S). As referenced below, numerous studies have found that some environmental hazards are more prevalent in areas where racial/ethnic minorities and people with lo w socioeconomic status (SES ), represent a higher fraction of the population compared with the general population
. As discussed in Section VIII. B. (8) of this document and NHTSA’s DE IS , concentrations of man y air pollutants are elevated near high
- traffic roadways. If minority populations and low
- income populations disproportionately live near such roads, then an issue of EJ may

be present. W e reviewed existing scholarly literature examining the potential for disproportionate exposure among minorities and people with low SES and we conducted our own evaluation of two national datasets: the U.S . Census Bureau’s American Housing Survey for calendar ye ar 2009 and the U.S. Department of Education’s database of school locations. P ublications that address EJ issues generall y report that populations living near major roadway s (and other typ es of trans portation infrastructure) tend to be composed of larger fractions of nonwhite residents. People living in neighborhoods near such sources of air pollution also tend to be lower in income than people living elsewhere. Numerous studies evaluating the demographics and socioeconomic status of populations or schools near roadway s have found that they

include a greater percentage of minority residents, as well as lower SES (indicated b y variables such as median household income). Locations in these studies inc lude L os Angeles, CA ; Seattle, WA ; Way ne County , MI ; Orange Count y, FL ; and the State of California 568 , 569 , 570 , 571 , 572 , 573 Such disparities may be due to multiple factors. 574

568 Marshall, J.D. (2008) Environmental inequality: air pollution exposures in California’s South Coast Air Basin. 569 Su, J.G.; Larson, T.; Gould, T.; Cohen, M.; Buzzelli, M. (2010) Transboundary air pollution and environmental justice: Vancouver and Seattle compared. GeoJournal 57: 595
- 608. doi:10.1007/s10708
- 009
- 9269
- 6 [Online at http://dx.doi.org] 570 Chakraborty, J.; Zandbergen, P.A. (2007) Children at risk: measuring racial/ethnic disparities in potential exposure to air pollution at school and home. J Epidemiol Community Health 61: 1074
- 1079. doi: 10.1136/jech.2006.054130 [Online at http://dx.do i.org] 571 Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.; Ostro, B. (2003) Proximity of California public schools to busy roads. Environ Health Perspect 112: 61
- 66. doi:10.1289/ehp.6566 [http://dx.doi.org]Page 595 of 850

People with low SES often live in neighborhoods with multiple stressors and health risk facto rs, including reduced health insurance coverage rates, higher smoking and drug use rates, limited access to fresh food, visible neighborhood violence, and elevated rates of obesity and some diseases such as asthma, diabetes, and ischemic heart disease. Al though questions remain, several studies find stronger associations between air pollution and health in locations with such chronic neighborhood stress, suggesting that populations in these areas may be more susceptible to the effects of air pollution. 575 , 576 , 577 , 578 Household
- level stressors such as parental smoking and relationship stress also may increase susceptibility

to the adverse effects of air pollution. 579 , 580 More recentl y, three publications report nationwide anal ys es that compare the demographic patterns of people who do or do not live near major roadway s. 581 , 582 , 583 All three of these studies found that people living near major roadway s are more likely to be minorities or low in SES. They

also found that the outcomes of their anal ys es varied between regions w ithin the U.S. However, only

one such study

looked at whether such conclusions were confounded by living in a location with higher population density and how demographics differ between locations nationwide. In general, it found that higher density areas have higher proportions of low income and minority residents.

572 Wu, Y; Batterman, S.A. (2006) Proximity of schools in Detroit, Michigan to automobile and truck traffic. J Exposure Sci & Environ Epidemiol. doi:10.1038/sj.jes.7500484 [Online at http://dx.doi.org] 573 Su, J.G.; Jerrett, M.; de Nazelle, A.; Wolch, J. (2011) Does exposure to air pollution in urban parks have socioeconomic, racial, or ethnic gradients? Environ Res 111: 319
- 328. 574 Depro, B.; Timmins, C. (2008) Mobility and environmental equity: do housing choices determine exposure to air pollution? North Caroline State University Center for Environmental and Resource Economic Policy 575 Clougherty, J.E.; Kubzansky, L.D. (2009) A framework for examining social stress and susceptibility to air pollution in respiratory health. Environ Health Perspect 117: 1351
- 1358. Doi:10.1289/ehp.0900612 [Onl ine at http://dx.doi.org] 576 Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; Ryan, P.B.; Franco Suglia, S.; Jacobson Canner, M.; Wright, R.J. (2007) Synergistic effects of traffic
- related air pollution and exposure to violence on urban asthma etiology. Envi ron Health Perspect 115: 1140
- 1146. doi:10.1289/ehp.9863 [Online at http://dx.doi.org] 577 Finkelstein, M.M.; Jerrett, M.; DeLuca, P.; Finkelstein, N.; Verma, D.K.; Chapman, K.; Sears, M.R. (2003) Relation between income, air pollution and mortality: a co hort study. Canadian Med Assn J 169: 397
- 402. 578 Shankardass, K.; McConnell, R.; Jerrett, M.; Milam, J.; Richardson, J.; Berhane, K. (2009) Parental stress increases the effect of traffic
- related air pollution on childhood asthma incidence. Proc Natl Acad Sci 106: 12406
- 12411. doi:10.1073/pnas.0812910 106 [Online at http://dx.doi.org] 579 Lewis, A.S.; Sax, S.N.; Wason, S.C.; Campleman, S.L (2011) Non
- chemical stressors and cumulative risk assessment: an overview of current initiatives and potential air pollutant interactions. Int J Environ Res Public He alth 8: 2020
- 2073. Doi:10.3390/ijerph8062020 [Online at http://dx.doi.org] 580 Rosa, M.J.; Jung, K.H.; Perzanowski, M.S.; Kelvin, E.A.; Darling, K.W.; Camann, D.E.; Chillrud, S.N.; Whyatt, R.M.; Kinney, P.L.; Perera, F.P.; Miller, R.L (2010) Prenatal expos ure to polycyclic aromatic hydrocarbons, environmental tobacco smoke and asthma. Respir Med (In press). doi:10.1016/j.rmed.2010.11.022 [Online at http://dx.doi.org] 581 Rowangould, G.M. (2013) A census of the U.S. near
- roadway population: public health an d environmental justice considerations. Transportation Research Part D; 59
- 67. 582 Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluating socioeconomic and racial differences in traffic
- related metrics in the United States using a GIS approach. J Exposure Sci E nviron Epidemiol 23: 215
- 222. 583 Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren
- Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major highways

– United States, 2010. Morbidity and Mortality Weekly Report 62(3): 46
- 50.Page 596 of 850

We analyzed two national databases that allowed us to evaluate whether homes and schools were located near a major road and whether disparities in exposure may be occurring in these environment s . T he American Housing Survey (AHS) includes descriptive statistics of over 70,000 housing units across the nation. The study survey is conducted every two years by the U.S. Census Bureau. The second database we anal yz ed was the U.S. Department of Educ ation’s Common Core of Data, which includes enrollment and location information for schools across the U.S. In anal yz ing the 2009 AHS, we focused on whether or not a housing unit was located within 300 feet of “4
- or - more lane highway , railroad, or airport. ” 584 We analyzed whether there were differences between households in such locations compared with those in locations farther from these transportation facilities
. 585 We include d other variables, such as land use category , region of country , and housing t ype. We found that ho m es with a nonwhite householder were 22
- 34 percent more likely to be located within 300 feet of these large transportation facilities than homes with white householders. H o mes with a Hispanic householder were 17
- 33 percent more likely to be located within 300 feet of these large transportation facilities than homes with non - Hispanic householders . Households near large transportation facilities were, on aver age, lower in income and educational attainment, more likely to be a rental property

and located in an urban area compared with households more distant from transportation facilities
. In examining schools near major roadway s, we examined the Common Core of Data (CCD) from the U.S. Department of Education, which includes information on all public elementary

and secondary

schools and school districts nationwide. 586 To determine school proximities to major roadway s, we used a geographic information sy stem (GI S) to map each school and roadway s based on the U.S. Census’s TIGER roadway file. 587 We found that minority students were overrepresented at schools within 200 meters of the largest roadway s, and that schools within 200 meters of the largest roadway s also had higher than expected numbers of students eligible for free or reduced
- price lunches. For example, Black students represent 2 2 percent of students at schools located within 200 meters of a primary road, whereas Black students represent 1 7 percent of stude nts in all U.S. schools. Hispanic students represent 30 percent of students at schools located within 200 meters of a primary road, whereas Hispanic students represent 2 2 percent of students in all U.S. schools. Overall, there is substantial evidence that people who live or attend school near major roadway s are more likel y to be of a minority race, Hispanic ethnicity, and/or low SES. The emission reductions from these proposed rules would likely result in widespread air quality

584 This variable pri marily represents roadway proximity. According to the Central Intelligence Agency’s World Factbook, in 2010, the United States had 6,506,204 km or roadways, 224,792 km of railways, and 15,079 airports. Highways thus represent the overwhelming majority of transportation facilities described by this factor in the AHS. 585 Bailey, C. (2011) Demographic and Social Patterns in Housing Units Near Large Highways and other Transportation Sources. Memorandum to docket. 586 http://nces.ed.gov/ccd/ 587 Pedde, M.; Bailey, C. (2011) Identification of Schools within 200 Meters of U.S. Primary and Secondary Roads. Memorandum to the docket.Page 597 of 850

improvements, but the impact on pollution levels in close proximity to roadway s would be most direct. Thus, these proposed rules would likely help in mitigating th e disparity in racial, ethnic, and economically
- based exposures. 

### C. **Environmental Effects of Non -**  **GHG Po llutants**  **(1) Visibility**  Visibility can be defined as the degree to which the atmosphere is transparent to visible light. 588 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 enjo y recreational opportunit ies. Visibility is also highly

valued in significant natural areas, such as national parks and wilderness areas, and special emphasis is given to protecting visibility in these areas. For more information on visibility see the final 2009 PM I SA. 589 EPA is working to address visibility impairment. Reductions in air pollution from implementation of various programs associated with the Clean Air Act Amendments of 1990 (CAAA) provisions have resulted in substantial improvements in visibility, and will continue to do so in the future. Because trends in haze are closely associated with trends in particulate sulfate and nitrate due to the simple relationship between their concentration and light extinction, visibility trends have improved as emissions of SO 2 and NO x have decreased over time due to air pollution regulations such as the Acid Rain Program. 590 In the Clean Air Act Amendments of 1977, Congress recognized visibility ’s value to society by establishing a national goal to protect national parks and wilderne ss areas from visibility impairment caused by

manmade pollution. 591 In1999 , EPA finalized the regional haze program to protect the visibility in Mandatory

Class IFederal areas. 592 There are 156 national parks, forests and wilderness areas categorized as Mandatory Class I Federal areas. 593 These areas are defined in CAA S ection 162 as those national parks exceeding 6,000 acres, wilderness

588 National Research Council, (1993). Protecting Visibility in National Parks and Wilderness Areas. National Academy of Sciences Committ ee on Haze in National Parks and Wilderness Areas. National Academy Press, Washington, DC. This book can be viewed on the National Academy Press Website at http://www.nap.edu/books/0309048443/html/ 589 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F. 590 U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report). EPA
- 600
- R
- 08
- 139F. N ational Center for Environmental Assessment

—RTP Division. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>. 591 See Section 169(a) of the Clean Air Act. 592 64 FR 35714 (July 1, 1999). 593 62 FR 38680
- 38681 ( July 18, 1997).Page 598 of 850

areas and memorial parks exceeding 5,000 acres, and all international parks which were in existence on August 7, 1977. E PA has also 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 such as dry

chemical composition and relative humidity (i.e., an indi cator of the water composition of the particles). EPA revised the PM 2.5 standards in December 2012 and established a target level of protection that is expected to be met through attainment of the existing secondary

standards for PM 2.5 . **(2) Plant and Ecosys**  **tem Effects of Ozone** The welfare effects of ozone can be observed across a variety of scales, i.e. subcellular, cellular, leaf, whole plant, population and ecos ys tem. Ozone effects that begin at small spatial scales, such as the leaf of an individual plant, when they occur at sufficient magnitudes (or to a sufficient degree) can result in effects being propagated along a continuum to larger and larger spatial scales. For example, effects at the individual plant level, such as altered rates of leaf gas exc hange, growth and reproduction can, when widespread, result in broad changes in ecos ys tems, such as productivity , carbon storage, water cycling, nutrient cycling, and community composition. Ozone can produce both acute and chronic injury in sensitive speci es depending on the concentration level and the duration of the exposure. 594 Inthose sensitive species , 595 effects from repeated exposure to ozone throughout the growing season of the plant tend to accumulate, so that even low concentrations experienced for a longer duration have the potential to create chronic stress on vegetation. 596 Ozone damage to sensitive species includes impaired photosy nthesis and visible injury to leaves. The impairment of photosy nthesis, the process by which the plant makes carbohydrates (its source of energy and food), can lead to reduced crop yi elds, timber production, and plant pro ductivity and growth. Impaired photosy nthesis can also lead to a reduction in root growth and carbohydrate storage below ground, resulting in other, more subtle plant and ecosy stems impacts. 597 These latter impacts include increased susceptibility

of plant s to insect attack, disease, harsh weather, interspecies competition and overall decreased plant vigor. The adverse effects of ozone on areas with sensitive species could potentially

lead to species shifts and loss from the affected ecos ys tems, 598 resulting in a loss or

594 73 FR 16486 (March 27, 2008). 595 73 FR 16491 (March 27, 2008). Only a small percentage of all the plant species growing within the U.S. (over 43,000 species have been catalogued in the USDA PLANTS database) have been studied with respect t o ozone sensitivity. 596 The concentration at which ozone levels overwhelm a plant’s ability to detoxify or compensate for oxidant exposure varies. Thus, whether a plant is classified as sensitive or tolerant depends in part on the exposure levels being con sidered. Chapter 9, Section 9.3.4 of U.S. EPA, 2013 Integrated Science Assessment for Ozone and Related Photochemical Oxidants. Office of Research and Development/National Center for Environmental Assessment. U.S. Environmental Protection Agency. EPA 6 00/R
- 10/076F. 597 73 FR 16492 (March 27, 2008). 598 73 FR 16493/16494 (March 27, 2008), Per footnote 175 above, ozone impacts could be occurring in areas where plant species sensitive to ozone have not yet been studied or identified.Page 599 of 850

reduction in associated ecosy stem goods and services. Additionally , visible ozone injury to leaves can result in a loss of aesthetic value in areas of special scenic significance like national parks and wilderness areas and reduced use of se nsitive ornamentals in landscaping. 599 The Integrated Science Assessment (I SA) for Ozone presents more detailed information on how ozone effects vegetation and ecos ys tems. 600 The I SA concludes that ambient concentrations of ozone are associated with a number of adverse welfare effects and characterizes the weight of evidence for different effects associated with ozone. 601 The I SA concludes that visible foliar injury effects on vegetation, reduced vegetation growth, reduced productivity

in terrestrial ecos ys te ms, reduced yi eld and quality of agricultural crops, and alteration of below
- ground biogeochemical cycles are causall y associated with exposure to ozone. It also concludes that reduced carbon sequestration in terrestrial ecosy stems, alteration of terrestrial ecos ys tem water cycling, and alteration of terrestrial community composition are likely to be causall y associated with exposure to ozone. **(3) Atmospheric Deposition**  Wet and dry

deposition of ambient particulate matter delivers a complex mixture of metals (e.g., mercury , zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., polycyclic organic matter, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic ecosy stems. The chemical form of the compounds deposit ed depends on a variety of factors including ambient conditions (e.g., temperature, humidity, oxidant levels) and the sources of the material. Chemical and ph ys ical 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. Adverse impacts to human health and the environment can occur when particulate matter is deposited to soils, water, and biota. 602 Deposition of heav y metals or other toxics may lead to the human ingestion of contaminated fish, impairment of drinking water, damage to terrestrial, freshwater and marine ecosy stem components, and limits to recreational uses. Atmospheric deposition has bee n identified as a key component of the environmental and human health hazard posed by several pollutants including mercury , dioxin and PCBs. 603

599 73 FR 16490/ 16497 (Marc h 27, 2008). 600 U.S. EPA. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 10/076F, 2013. The ISA is available at http://cfpub.epa.gov/ncea/isa/recordi splay.cfm?deid=247492#Dow nload 601 The Ozone ISA evaluates the evidence associated with different ozone related health and welfare effects, assigning one of five “weight of evidence” determinations: causal relationship, likely to be a causal relationship, s uggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship. For more information on these levels of evidence, please refer to Table II of the ISA. 602 U.S. EPA. Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R
- 08/139F, 2009. 603 U.S. EPA. (2000). Deposition of Air Pollutants to the Great Waters: Third Report to Congress. O ffice of Air Quality Planning and Standards. EPA
- 453/R
- 00
- 0005.Page 600 of 850

The ecological effects of acidifying deposition and nutrient enrichment are detailed in the Integrated Science Assessment for Oxides of Nitrogen and Sulfur
- Ecological Criteria. 604 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 Uni ted States. The sensitivity of terrestrial and aquatic ecosy stems to acidification from nitrogen and sulfur deposition is predominantly governed b y geology
. Prolonged exposure to excess nitrogen and sulfur deposition in sensitive areas acidifies lakes, rivers and soils. In creased acidity

in surface waters creates inhospitable conditions for biota and affects the abundance and biodiversity of fishes, zooplankton and macroinvertebrates and ecos ys tem function. Over time, acidifying deposition also removes essential nutrients from forest soils, depleting the capacity

of soils to neutralize future acid loadings and negatively affecting forest sustainability . Major effects in forests include a decline in sensitive tree species, such as red spruce ( Picea ruben s ) and sugar maple ( Acer saccharum )
. In addition to the role nitrogen deposition play s in acidification, nitrogen deposition also leads to nutrient enrichment and altered biogeochemical cycling. In aquatic s ys tems increased nitrogen can alter species ass emblages and cause eutrophication. In terrestrial sy stems nitrogen loading can lead to loss of nitrogen sensitive lichen species, decreased biodiversity of grasslands, meadows and other sensitive habitats, and increased potential for invasive species. Fo r a broader explanation of the topics treated here, refer to the description in Chapter 8
. 1.2.3 of the RIA. Building materials including metals, stones, cements, and paints undergo natural weathering processes from exposure to environmental elements (e.g., wind, moisture, temperature fluctuations, sunlight, etc.). Pollution can worsen and accelerate these effec ts. Deposition of PM is associated with both phy sical damage (materials damage effects) and impaired aesthetic qualities (soiling effects). Wet and dry deposition of PM can ph ys icall y affect materials, adding to the effects of natural weathering processes , by potentially

promoting or accelerating the corrosion of metals, by degrading paints and by

deteriorating building materials such as stone, concrete and marble. 605 The effects of PM are exacerbated b y the presence of acidic gases and can be additive or s ynergistic due to the complex mixture of pollutants in the air and surface characteristics of the material. Acidic deposition has been shown to have an effect on materials including zinc/galvanized steel and other metal, carbonate stone (as monuments and building facings), and surface coatings (p aints)
. 606 The effects on historic buildings and outdoor works of art are of particular concern because of the uniqueness and irreplaceability of many of these objects.

604 NO X and SO X secondary ISA 604 U.S. EPA. Integrated Science Assessment (ISA) for Oxides of Nitrogen and Sulfur Ecological Criteria (Final Report). U.S. Environmental Protection Agency, W ashington, DC, EPA/600/R
08/082F, 2008. 605 U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report). EPA
- 600
- R
- 08
- 139F. National Center for Environmental Assessment

—RTP Division. December. Av ailable on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>. 606 Irving, P.M., e.d. 1991. Acid Deposition: State of Science and Technology, Volume III, Terrestrial, Materials, Health, and Visibility Effects, The U.S. National Acid Precipitation Assessment Program, Chapter 24, page 24

–76.Page 601 of 850

**(4) Environmental Effects of Air Toxics**  Emissions from producing, transporting and combusting fuel 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 v egetation damage. 607 Inlaboratory experiments, a wide range of tolerance to VOCs has been observed. 608 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. 609 Research suggests an adverse impact of vehicle exhaust on plants, which has in some cases been attributed t o aromatic compounds and in other cases to nitrogen oxides. 610 , 611 , 612 

### D. **Air Quality Impacts of Non -**  **GHG Pollutants (1)**  **Current Concentration**  **s of Non**  **- GHG Pollutants**  Nationally , levels of PM 2.5 , ozone, NO X , SO X , CO and air toxics are declining. 613 However, as of July

2, 2014 approximately

147 million people lived in counties designated nonattainment for one or more of the NAAQS, and this figure does not include the people living in areas with a risk of ex ceeding the NAAQS in the future. 614 The most recent available data indicate that 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. 615 In addition,

607 U.S. EPA. (1991). Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3
- 91/001. 608 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. 609 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. 610 Viskari E
- L. (2000). Epicuticular wax of Norway spruce needles as indicator of traffic pollutant dep osition. Water, Air, and Soil Pollut. 121:327
- 337. 611 Ugrekhelidze D, F Korte, G Kvesitadze. (1997). Uptake and transformation of benzene and toluene by plant leaves. Ecotox. Environ. Safety 37:24
- 29. 612 Kammerbauer H, H Selinger, R Rommelt, A Ziegler
- Jo ns, D Knoppik, B Hock. (1987). Toxic components of mo tor vehicle emissions for the spruce Picea abies. Environ. Pollut. 48:235
- 243. 613 U.S. EPA, 2011. Our Nation’s Air: Status and Trends through 2010. EPA
- 454/R
- 12
- 001. February 2012. Available at: http: //www.epa.gov/airtrends/2011/. 614 Data come from Summary Nonattainment Area Population Exposure Report, current as of July 2, 2014 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA
- HQ
- OAR
- 2014
- 0827. 615 U.S. EPA. (2011) Summary o f Results for the 2005 National
- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.Page 602 of 850

populations who live, work, or attend school near major roads experience elevated exposure concentrations to a wide range of air pollutants. 616 EPA recognizes that states and local areas are particularly concerned about the challenges of reducing NO X and attain ing as well as maintaining the ozone NAAQS . S tates and local areas are required to adopt emission control measures to attain the NAAQS . States may then choose to seek redesignation to attainment and if they do so they

must d emonstrate that control measures are in place sufficient to maintain the NAAQS for ten years (and eight years later, a similar demonstration is required for another ten
- ye ar period). The most recent revision to the ozone standards was in 2008 ; the p revious 8
- hour ozone standards were set in 1997. Attaining and m aintaining the NAAQS ha s been challenging for some areas in the past, and EPA has recently issued a proposal that would strengthen the ozone NAAQS (79 Fed. Reg 75,234, Dec. 17, 2014)
. **(2) Impacts of Proposed Standards on Future Ambient Concentrations of Non**  **- GHG**  **Pollutants** Full
- scale photochemical air quality modeling is necessary

to accurately

project levels of criteria pollutants and air toxics
. For the final rule making , national
- scale air quality modeling anal ys e s will be performed to anal yz e the impacts of the standards on PM 2.5 , ozone, NO 2 , and selected air toxics (i.e., benzene, formaldehyde, acetaldeh yde, naphthalene, acrolein and 1,3
- butadiene). The length of time needed to prepare the necessary emissions inventories, in addition to the processing time associated wi th the modeling itself, has precluded us from performing air quality

modeling for this proposal. Section VII I .A of the preamble present s projections of the changes in criteria pollutant and air toxics emissions due to the proposed vehicle standards; the ba sis for those e stimates is set out in Chapter 5 of the draft RIA. NHTSA also provides its projections in Chapter 4 of its DEIS. The atmospheric chemistry related to ambient concentrations of PM 2.5 , ozone and air toxics is very complex, and making predict ions based solely on emissions changes is extremely difficult. However, based on the magnitude of the emissions changes predicted to result from the proposed standards, the agencies expect that there will be improvements in ambient air quality , pending mo re comprehensive analy s e s for the final rule making
. For the final rule making national
- scale a ir quality modeling analy ses will be performed to estimate future ye ar ambient ozone , NO 2 , and PM 2. 5 concentrations , air toxics concentrations, visibility levels and nitrogen and sulfur deposition levels for 2040
. The agencies intend to use a 20 11
- based Community

Multi
- scale Air Quality (CMAQ) modeling platform as the tool for the air quality

modeling. The CMAQ modeling s ys tem is a comprehensive three
- dimensional grid
based Eulerian air quality model designed to estimate the formation and fate of oxidant

616 Health Effects Institute Panel on the Health Effects of Traffic
- Related Air Pollution. (2010) Traffic
- related air pollution: a critical revie w o f the literature on emissions, exposure, and health effects. HEI Special Report 17. Available at http://www.healtheffects.org]Page 603 of 850

precursors, primary

and secondary

PM concentrations and deposition, and air toxics, over regional and urban spatial scales (e.g., over the conti guous United States ). 617 , 618 , 619 , 620 The CMAQ model is a well
- known and well
- established tool and is commonly used by EPA for regulatory

anal ys es, b y States in developing attainment demonstrations for their State Implementation Plans , and in numerous other nation al and international applications
. 621 , 622 , 623 , 624 The CMAQ model version 5.0 was most recently peer - reviewed in September of 20 11 for the U.S. EPA. 625 CMAQ includes numerous science modules that simulate the emission, production, decay , deposition and transport of organic and inorganic gas
- phase and particle
phase pollutants in the atmosphere. This 2011 multi
- pollutant modeling platform used the most recent multi
- pollutant CMAQ code available at the time of air quality modeling (CMAQ v ersion 5.0.2; multipollutant version). 626 CMAQ v5.0.2 reflects updates to version 5.0 to improve the underlying science algorithms as well as include new diagnostic/scientific modules which are detailed at http://www.cmascenter.org. 627 , 628 , 629

617 U.S. Environmental Protection Agency, Byun, D.W., and Ching, J.K.S., Eds, 1999. Science algorithms of EPA Models
- 3 Community Multiscale Air Quality (CMAQ modeling system, EPA/600/R
- 99/030, Office of Research and Development). Docket EPA
- HQ
- OAR
- 2010
- 0162 618 By un, D.W., and Schere, K.L., 2006. Review of the Governing Equations, Computational Algorithms, and Other Com ponents of the Models
- 3 Community Multiscale Air Quality (CMAQ) Modeling System, J. Applied Mechanics Revie ws, 59 (2), 51
- 77. Docket EPA
- HQ
- OAR
- 2010
- 0162 619 Dennis, R.L., Byun, D.W., Novak, J.H., Galluppi, K.J., Coats, C.J., and Vouk, M.A., 1996. The next generation of integrated air quality modeling: EPA’s Models
- 3, Atmospheric Environment, 30, 1925
- 1938. Docket EPA
- HQ
OAR
- 2010
- 0162 620 Carlton, A., Bhave, P., Napelnok, S., Edney, E., Sarwar, G., Pinder, R., Pouliot, G., and Houyoux, M. Model Representation of Secondary Organic Aerosol in CMAQv4.7. Ahead of Print in Environmental Science and Technology. Accessed at: http://pubs.acs.org/doi/abs/10.1021/es100636q?prevSearch=CMAQ &searchHistoryKey Docket EPA
- HQ
- OAR
- 2010
- 0162. 621 U.S. EPA (2007). Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality Standards for Ground
- Level Ozone. EPA document number 442/R
- 07
- 008, July 2007. Docket EPA
- HQ
- OAR
201 0
- 0162 622 Hogrefe, C., Biswas, J., Lynn, B., Civerolo, K., Ku, J.Y., Rosenthal, J., et al. (2004). Simulating regional
- scale ozone climatology over the eastern United States: model evaluation results. Atmospheric Environment, 38(17), 2627
- 2638. 623 United States Environmental Protection Agency. (2008). Technical support document for the final locomotive/marine rule: Air quality modeling analyses. Research Triangle Park, N.C.: U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, A ir Quality Assessment Division. 624 Lin, M., Oki, T., Holloway , T., Streets, D.G., Bengtsson, M., Kanae, S., (2008). Long range transport of acidifying substances in East Asia Part I: Model evaluation and sensitivity studies. Atmospheric Environment, 42(24), 5939
- 5955. 625 Brown, N., Allen, D., Amar, P., Kallos, G., McNider, R., Russell, A., Stockwell, W. (September 2011). Final Report: Fourth Peer Review of the CMAQ Model, NERL/ORD/EPA. U.S. EPA, Research Triangle Park, NC. http://www.epa.gov/asmdnerl/Revie ws/2011_CMAQ_Review_FinalReport.pdf . It is available from the Community Modeling and Analysis System (CMAS) as well as previous peer
- review reports at: http://www.cmasce nter.org. 626 CMAQ version 5.0.2 was released in April 2014. It is available from the Community Modeling and Analysis Sy stem (CMAS) website: http://www.cmascenter.org. 627 Community Modeling and Analysis System (CMAS) website: http://www.cmascenter.org , RELEASE_NOTES for CMAQv5.0
- February 2012. 628 Community Modeling and Analysis System (CMAS) website: http://www.cmascenter.org , RELEASE_NOTES for CMAQv5.0.1
- July 2012.Page 604 of 850 629 Community Modeling and Analysis System (CMAS) website: http://www.cmascenter.org . CMAQ version 5.0.2 (April 2014 release) Technical Documentation.
- May 2014.Page 605 of 850



## IX. **Econom ic and Other**  **Impacts** This section presents the costs, benefits and other economic impacts of the proposed Phase 2 standards. It is important to note that NHTSA’s proposed fuel consumption standards and EPA’s proposed GHG standards would both be in effect, and each would lead to average fuel efficiency

increases and GHG emission reductions. The net benefits of the proposed Phase 2 standards consist of the effects of the program on:
 the vehicle program costs (costs of compl yi ng with the vehicle CO 2 and fuel

consumption standards),  changes in fuel expenditure s associated with reduced fuel use resulting from more efficient vehicles and increased fuel use associated with the “rebound” effect, both of which result from the pro gram,  the economic value of reductions in GHGs,  the economic value of reductions in non
- GHG pollutants,  costs associated with increases in noise, congestion, and accidents resulting from increased vehicle use,  savings in drivers’ time from less frequent refueling,  benefits of increased vehicle use associated with the “rebound” effect,  the economic value of improvements in U.S. energy security . The benefits and costs of these rules are anal yz ed using 3 percent and 7 percent discount rates , consistent with current OMB guidance. 630 These rates are intended to represent consumers’ preference for current over future consumption (3 percent), and the real rate of return on private investme nt (7 percent) which indicates the opportunity cost of capital. However, neither of these rates necessarily represents the discount rate that individual decision
- makers use. The program may

also have other economic effects that are not included here. The agencies seek comment on whether an y costs or benefits are omitted from this analy sis, so that they can be explicitly

recognized in the final rules. In particular, as discussed in Sections III through VI of this preamble and in Chapter 2 of the draft RIA , the technology cost estimates developed here take into account the costs to hold other vehicle attributes, such as size and performance, constant. With these assumptions, and because welfare losses represent monetary estimates of how much buyers would h ave to be compensated to be made as well off as they would have been in the absence of this regulation, 631 price increases for new vehicles measure

630 The range of Social Cost of Carbon (SC
- CO 2 ) values u ses several discount rates because the literature shows that the SC
- CO 2 is quite sensitive to assumptions about the discount rate, and because no consensus exists on the appropriate rate to use in an intergenerational context (where costs and benefits are incurred by different generations). Refer to Section F.1 for more information. 631 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,Page 606 of 850

the welfare losses to the vehicle buyers. 632 If the full technology cost gets passed along to the buyer as an i ncrease in price, the technology cost thus measures the primary welfare loss of the standards, including impacts on buyers. Increasing fuel efficiency would have to lead to other changes in the vehicles that buyers find undesirable for there to be additio nal welfare losses that are not included in the technology costs. As the 2012
- 2016 and 2017
- 2025 light
- dut y GHG/CAFE rules discussed, if other vehicle attributes are not held constant, then the technology cost estimates do not capture the losses to vehic le buyers associated with these changes. 633 The light
- duty rules also discussed other potential issues that could affect the calculation of the welfare impacts of these ty pes of changes, such as aspects of buyers’ behavior that might affect the demand for t echnology investments, uncertainty in buyers’ investment horizons, and the rate at which truck owner’s trade off higher vehicle purchase price against future fuel savings. The agencies seek comments, including supporting data and quantitative analy ses, of an y additional impacts of the proposed standards on vehicle attributes and performance, or other potential aspects that could positively or negatively affect the welfare implications of this proposed rulemaking. Where possible, we identify the uncertain aspects of these economic impacts and attempt to quantify

them (e.g., sensitivity

ranges associated with quantified and monetized GHG impacts; range of dollar
- per - ton values to monetize non
- GHG health benefits; uncertainty with respect to learning and mar

kups ). For HD pickups and vans, the agencies explicitly analyzed the uncertainty surrounding its estimates of the economic impacts from requiring higher fuel efficiency in Preamble Section VI. The agencies have also examined the sensitivity of oil prices on fuel expenditures; results of this sensitivity analy sis can be found in Chapter 8 of the RIA. NHTSA’s draft EI S also characterizes the uncertainty in economic impacts associated with the HD national program . For other impacts, however, there is inade quate information to inform a thorough, quantitative assessment of uncertainty . EPA and NHTSA continue to work toward developing a comprehensive strategy for characterizing the aggregate impact of uncertainty in key elements of its anal yses and we will co ntinue to work to refine these uncertaint y analyses in the future as time and resources permit. The agencies seek comments on the methods and

estimates the income change that would be an alternative to the change taking place. The difference between them is whether the consumer’s point of reference is her welfare before the change (compensating variat ion) or after the change (equivalent variation). In practice, these two measures are typically very close together. 632 Indeed, it is likely to be an overestimate of the loss to the consumer, because the buyer has choices other than buying the same vehicl e with a higher price; she could choose a different vehicle, or decide not to buy a new vehicle. The buyer would choose one of those options only if the alternative involves less loss than paying the higher price. Thus, the increase in price that the buy er faces would be the upper bound of loss of consumer welfare, unless there are other changes to the vehicle due to the fuel efficiency improvements that make the vehicle less desirable to consumers. 633 Environmental Protection Agency and Department of Tran sportation, “Light
- Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule,” 75 FR 25324, May 7, 2010, especially Sections III.H.1 (pp. 25510
- 25513) and IV.G.6 (pp. 25651
- 25657); Environmental Protec tion Agency and Department of Transportation, ”2017 and Later Model Year Light
- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule,” 77 FR 62624, October 15, 2012, especially Sections III.H.1 (pp. 62913
- 62919) and IV.G.5.a (pp. 63102
- 63104).Page 607 of 850

assumptions used to quantify uncertainty in this analysis, as well as comments on methods and data that might inf

orm relevant uncertainty

anal ys es not quantified in this analy sis. This and other sections of the preamble address Se ction 317 of the Clean Air Act on economic analy sis. Section IX.L addresses Section 321 of the Clean Air Act on employ ment anal ys is. The total monetized benefits and costs of the program are summarized in Section IX.K for the preferred alternative and in Section X for all alternatives. 

### A. **Conceptual Framework** The HD Phase 2 proposed standards would implement both the 2007 Ene rgy Independence and Security Act requirement that NHTSA establish fuel efficiency standards for medium
- and heav y - duty vehicles and the Clean Air Act requirement that EPA adopt technology
- based standards to control pollutant emissions from motor vehicles and engines contributing to air pollution that endangers public health and welfare . NHTSA’s statutory mandate is intended to further the agency ’s long
- standing goals of reducing U.S. consumption and imports of petroleum energy to improve the nation’s energy securit y . From an economics perspective, g overnment actions to improve our nation’s energy security and to protect our nation from the potential threats of climate change address “externalities,” or economic consequences of decisions by individuals and businesses that extend beyond those who make these decisions. For example, u sers of transportation fuels increase the entire U.S. econom y’s risk of having to make costly adjustments due to rapid increases in oil prices, but these users generall y do not consider such costs when they decide to consume more fuel
. Simi larly , consuming transportation fuel a lso increase s emissions of greenhouse gases and other more localized air pollutants that occur when fuel is refined, distributed, and consumed. Some of these emissions increase the likelihood and severity of potential climate
related economic damages , and others cause economic damages by adverse ly a ffect ing human health. The need to address these e xternal costs and other adverse effects provide s a well
established economic rationale that supports the statutory directi on given to government agencies to establish regulatory

programs that reduce the magnitude of these adverse effects at reasonable costs . The proposed Phase 2 standards would require manufacturers of new heavy - duty vehicles , including trailers (HDVs), to improve the fuel efficiency of the products that they produce . As HDV users purchase and operate these new vehicles, they would consume significantl y less fuel, in turn reducing U.S. petroleum consumption and imports as well as emissions of GHGs and other air pollutants. Thus , as a consequence of the agencies’ efforts to meet our statutory

obligations to improve U.S. energy securit y and EPA’s obligation to issue standards “to regulate emissions of the deleterious pollutant... from motor vehicles” thatPage 608 of 850

endangers public health and welfare, 634 the proposed fuel efficiency and GHG emission standards w ould also reduce HDV operators’ outlay s for fuel purchases. These fuel savings are one measure of the proposed rule’s effectiven ess in promoting NHTSA’s statutory goal of conserving energy , as well as EPA’s obligation to assess the cost of standards under section 202 (a) (1) and (2) of the Clean Air Act. Although the se savings are not th e agenc ies’ primary motivation for adopting higher fuel efficiency standards, these substantial fuel savings represent significant additional economic benefits of this proposal
. Potential savings in fuel costs would appear to offer HDV buyers strong incentives to pay higher prices for vehicles that feature technology or equipment that reduces fuel consumption
. These potential savings would also appear to offer HDV manufacturers similarly strong incentives to produce more fuel
- efficient vehicles. Economic theory suggests that interactions between v ehicle buye rs and sellers in a normall y - functioning competitive market would lead HDV manufacturers to incorporate all technolog ies that contribute to lower net costs into the vehicles they

offer , and buyers to purchase them willingly . Nevertheless, many readil y available technologies that appear to offer cost
- effective increases in HDV fuel efficiency (when evaluated over their expected lifetimes using conventional discount rates) have not been widel y adopted, despite their potential to repay buyers ’ initial investments rapidly
. This economic situation is commonly known as the “energy

efficiency

gap” or “energy paradox.” This situation is perhaps more challenging to understand with respect to the heav y duty sector versus the light
- duty vehicle sector
. Unlike light
- duty vehicles

– which are purchased and used mainly by individuals and households

– the vast majority of HDVs are purchased and operated by profit
- seeking businesses for which fuel costs represent a substantial operating expense. Nevertheless, on the basis of evidence reviewed below, the agencies believe that a significant number of fuel efficiency improving technologies would remain far less widel y adopted in the absence of these proposed standards. Economic research offers several possible explanations for why the prospect of these apparent savings might not lead HDV manufacturers and buye rs to adopt technologies that would be expected to reduce HDV operating costs . Some of these explanations involve failures of the HDV market for reasons other than the externalities caused by producing and consuming fuel . These include situations where information about the performance of fuel econom y technologies is incomplete, costly to obtain, or available only to one part y to a transaction (or “as ymmetrical”), as well as behavioral rigidities in either the HDV manufacturing or HDV
operating industries , such as standardized or inflexibly administered operating procedures , or requirements of other regulations on HDVs. Other explan ations for the limited use of apparentl y cost - effective technologies that do not involve market failures include HDV operators’ concerns about the performance, reliability , or maintenance requirements of new technology under the demands of everyday

use, un certainty about the fuel savings they will actually realize , and questions about possible effects on carrying capacity or other aspects of HDVs’ utility
.

634 State of Massachusetts v. EPA , 549 U.S. at 533.Page 609 of 850

In the HD Phase 1 rulemaking (which, in contrast to these proposed standards, did not apply to trailers), the agencies raised five hy potheses that might explain this energy efficiency gap or paradox:

 Imperfect information in the new vehicle market: information available to prospective buyers about the effectiveness of some fuel
- saving technologies for new vehicles may be inadequate or unreliable. If reliable information on their effectiveness in reduc ing fuel consumption is unavailable or difficult to obtain, HDV buyers will understandabl y be reluctant to pay higher prices to purchase vehicles equipped with unproven technologies.

 Imperfect information in the resale market: buye rs in the used vehicle market may not be willing to pay

adequate premiums for more fuel efficient vehicles when they are offered for resale to ensure that buyers of new vehicles can recover the remaining value of their original investment in higher fuel efficiency . The prospect o f an inadequate return on their original owners’ investments in higher fuel efficiency may contribute to the short pay back periods that buyers of new vehicles appear to demand. 635

 Principal
- agent problems causing split incentives: an HDV bu ye r may not be d irectl y responsible for its future fuel costs, or the individual who will be responsible for fuel costs may not participate in the HDV purchase decision. In these cases, the signal to invest in higher fuel efficiency normall y provided by savings in fuel c osts may not be transmitted effectively to HDV buyers , and the incentives of HDV buye rs and fuel buyers will diverge, or be “split.” The trailers towed b y heav y - dut y tractors, which are typicall y not supplied by the tractor manufacturer or seller, present an obvious potential situation of split incentives that was not addressed in the HD Phase 1 rulemaking, but it may

apply in this rulemaking. If there is inadequate pass
- through of price signals from trailer users to their buye rs, then low adoption of fue l
- saving technologies may

result.

 Uncertainty about future fuel cost savings: HDV buyers may be uncertain about future fuel prices, or about maintenance costs and reliability of some fuel efficiency technologies
. Bu ye rs may react to this uncertainty by implicitly discount ing potential future savings at rates above discount rates used in this analy sis . In contrast, the costs of fuel
- saving or maintenance
- reducing technologies are immediate and thus not subject to discounting
. In this situation, p otential variability about buye rs’ expected return s on capital investments to achieve higher fuel efficiency may shorten the

635 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). “Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heavy
- Duty Vehicles,” (hereaft er, “NAS 2010”). 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 (accessed September 10, 2010).Page 610 of 850 pay back period

– the time required to repay those investments

– they demand in order to make them.

 Adjustment and transactions cost s: potential resistance to new technologies

– stemming, for example, from drivers’ reluctance or slowness to adjust to changes in the way vehicles operate

– may

slow or inhibit new technology adoption. If a conservative approach to new technologies leads HDV bu yers to adopt them slowly, then successful new technologies would be adopted over time without market intervention, but only

with potentially

significant delays in achieving the fuel saving, environmental, and energy security benefits they offer. Th ere also may be costs associated with training drivers to realize potential fuel savings enabled b y new technologies, or with accelerating fleet operators’ scheduled fleet turnover and replacement to hasten their acquisition of vehicles equipped with these technologies. Some of these explanations imply failures in the private market for fuel
- saving technology

beyond the externalities caused by producing and consuming fuel, while others suggest that complications in valuing or adapting to technologies that reduce fuel consumption may partly explain buyers’ hesitance to purchase more fuel
- efficient vehicles. In either case, adopting this proposed rule would provide regulatory certainty and generate important economic benefits in addition to reducing extern alities. Since the HD Phase 1 rulemaking, new research has provided further insight into potential barriers to adoption of fuel
- saving technologies. Several studies utilized focus groups and interviews involving small numbers of participants, who were p eople with time and inclination to join such studies, rather than selected at random. 636 As a result, the information from these groups is not necessarily representative of the industry as a whole. While these studies cannot provide conclusive evidence abo ut how all HDV buyers make their decisions, they do describe issues that arise for those that participated. One common theme that emerges from these studies is the inability of HDV buyers to obtain reliable information about the fuel savings, reliability , and maintenance costs of technologies that improve fuel efficiency . In many product markets, such as consumer electronics, credible reviews and tests of product performance are readil y available to potential buyers. In the trucking industry , however, the performance of fuel
- saving technology is likely to depend on man y firm
- specific attributes, including the intensit y of HDV use, the ty pical distance and routing of HDV trips , driver characteristics, road conditions, regional geograph y and traffic patterns .

636 Klemick, Heather, Elizabeth Kopits, Keith Sargent, and Ann Wolverton (2014). “Heavy
- Duty Trucking and the Energy Efficiency Paradox.” US EPA NCEE Working Paper Series. Working Paper 14
- 02; Roeth, Mike, Dave Kircher, Joel Smith, and Rob Swim (2013). “Barriers to the Increased Adoption of Fuel Eff iciency Technologies in the North American On
- Road Freight Sector.” NACFE report for the International Council on Clean Transportation; Aarnink, Sanne, Jasper Faber, and Eelco den Boer (2012). “Market Barriers to Increased Efficiency in the European On
- roa d Freight Sector.” CE Delft report for the International Council on Clean Transportation.Page 611 of 850

As a result, businesses that operate HDVs have strong preferences for testing fuel
- saving technologies “in
- house” because they are concerned that their patterns of vehicle use may lead to different results from those reported in published information. Businesses with less capability to do in
- house testing often seek information from peers, yet often remain skeptical of its applicability

due to differences in the nature of their operations. One source of imperfect information is the lack of availability of certain technologies from preferred suppliers. HDV buyers often prefer to have technology or equipment installed by their favored original equipment manufacturers. However, some technologies may not be available through these preferred sources, or m ay be available onl y as after
- market installations from third parties (Aarnink et al. 2012, Roeth et al. 2013). Although these studies appear to show that information in the new HDV market is often limited or viewed as unreliable, the evidence for imperfec t information in the market for used HDVs is mixed. On the one hand, some studies noted that fuel
- saving technology is often not valued or demanded in the used vehicle market, because of imperfect information about its benefits, or greater mistrust of its performance among buye rs in the used vehicle market than among buye rs of new vehicles. The lack of demand might also be due to the intended use of the used HDV, which may

not require or reward the presence of certain fuel
- saving technologies. In other c ases, however, fuel
- saving technology can lead to a premium in the used market, as for instance to meet the more stringent requirements for HDVs operating in California. All of the recent research identifies split incentives, or principal
- agent problems, a s a potential barrier to technology adoption. These occur when those responsible for investment decisions are different from the main beneficiaries of the technology . For instance, businesses that own and lease trailers to HDV operators may not have an i ncentive to invest in trailer
specific fuel
- saving technology , since they do not collect the savings from the lower fuel costs that result. Vernon and Meier (2012) estimate that 23 percent of trailers may be exposed to this kind of principal
- agent problem , although they do not quantify

its financial significance. 637 Split incentives can also exist when the HDV driver is not responsible for paying fuel costs. Some technologies require additional effort, training, or changes in driving behavior to achieve the ir promised fuel savings; drivers who do not pay for fuel may

be reluctant to undertake those changes, thus reducing the fuel
- saving benefits from the perspective of the individual or company

paying for the fuel. For instance, drivers might not consistent ly deplo y boat
- tails equipped on trailers to improve vehicle aerodynamics. 638 Vernon and Meier also calculate that 91 percent of HDV fuel use is subject to this form of principal
- agent problem, although they

do not estimate how much it might reduce fuel savings to those who are paying for the fuel.

637 Vernon, David and Alan Meier (2012). “Identification and quantification of principal
- agent problems affecting energy efficiency investments and use decisions in th e trucking industry.” Energy Policy, 49(C), pp. 266
- 273. 638 Some boat
- tails are being developed with technology to open them automatically when the trailer reaches a suitable speed, to reduce this problem.Page 612 of 850

The studies based on focus group s and interviews (Klemick et al. 2013, Aarnink et al. 2012, Roeth et al. 2013) provide mixed evidence on the severity of the split
- incentive problem. Focus groups often do identify diverging incentives between drivers and the decision
- makers responsible f

or purchasing vehicles, and economics literature recognizes that this split incentive can be a barrier to adopting new technology . Aarnink et al. (2012) and Roeth et al. (2013) cite examples of split incentives involving trailers and fuel surcharges, alth ough the latter also cites other examples where these same issues do not lead to split incentives. In an effort to minimize problems that c an arise form split incentives , many businesses that operate HDVs also train drivers in the use of specific technolo gi es or to modify their driving behavior in order to improve fuel efficiency , while some also offer financial incentives to their drivers to conserve fuel. All of these options can help to reduce the split incentive problem, although they

may not be effec tive where it arises from different ownership of co mbination tractors and trailers
. Uncertainty about future costs for fuel and maintenance, or about the reliability of new technology , also appears to be a significant obstacle that can slow the adoption of fuel
- saving technologies. These examples illustrate the problem of uncertain or unreliable information about the actual performance of fuel efficiency technology

discussed above. In addition, businesses that operate HDVs may

be concerned about how rel iable new technologies will prove to be on the road, and whether significant additional maintenance costs or equipment malfunctions that result in costly

downtime could occur. Roeth et al. (2013) and Klemick et al. (2013) both document the short pay

back p eriods that HDV buyers require on their investments
-- usually about 2 years -- which may be partl y attributable to these uncertainties. These studies also provide some support for the view that adjustment and transactions costs may impede HDV buyers from investing in higher fuel efficiency . As discussed above, several studies note that HDV buyers are less likely to select new technology when it is not available from their preferred manufacturers. Some technologies are onl y available as after
market addi tions, which can add other costs to adopting them. Some studies also cite driver acceptance of new equipment or technologies as a barrier to their adoption. HDV driver turnover is high in the U.S., and businesses that operate HDVs are concerned about retaining their best drivers. Therefore, they may avoid technologies that require significant new training or adjustments in driver behavior. For some technologies that can be used to meet the proposed standards, such as automatic tire inflation sy stems, tra ining costs are likely to be minimal. Other technologies such as stop
- start sy stems, however, may require drivers to adjust their expectations about vehicle operation, and it is difficult for the agencies to anticipate how drivers will respond to such cha nges. 639

639 The distinction between simply requiring drivers (or mechanics) to adjust their expectations and compromises in vehicle performance or utility is subtle. While the former may not impose significant compliance costs in the long run, the latter would represent additional economic costs of complying with the standard.Page 613 of 850

In addition to these factors, the studies considered other possible explanations for HDV buyers’ apparent reluctance or slowness to invest in fuel
- saving equipment or technology
. Financial constraints

– access to lending sources willing to financ e purchases of more expensive vehicles

– do not appear to be a problem for the medium
- and large
- sized businesses participating in Klemick et al.’s (2013) study. However, Roeth et al. (2013) noted that access to capital can be a significant challenge to s maller or independent businesses, and that price is alway s a concern to buyers. In general, businesses that operate HDVs face a range of competing uses for available capital other than investing in fuel
- saving technologies, and may assign higher priority to these other uses, even when investing in higher fuel efficiency HDVs appears to promise adequate financial returns. Other potentially

important barriers to the adoption of measures that improve fuel efficiency may arise from “network externalities,” wh ere the benefits to new users of a technology

depend on how many

others have already

adopted it. One example where network externalities seem likely

to arise is the market for natural gas
- fueled HDVs: the limited availability

of refueling stations may red uce potential buyers’ willingness to purchase natural gas - fueled HDVs, while the small number of such HDVs in
- use does not provide sufficient economic incentive to construct more natural gas refueling stations. Some businesses that operate HDVs may also be concerned about the difficulty in locating repair facilities or replacement parts, such as single
- wide tires, wherever their vehicles operate. When a technology has been widely

adopted, then it is likely

to be serviceable even in remote or rural places , but until it becomes widely available, its earl y adopters may face difficulties with repairs or replacements. By accelerating the widespread adoption of these technologies, the proposed standards may assist in overcoming these difficulties. As discusse d previousl y, the lack of availability of fuel
- saving technologies from preferred manufactures can also be a significant barrier to adoption (Roeth et al. 2013). Manufacturers may

be hesitant to offer technologies for which there is not strong demand, esp eciall y if the technologies require significant research and development expenses and other costs of bringing the technology to a market of uncertain demand. Roeth et al. (2013) also noted that it can take ye ars, and sometimes as much as a decade, for a s pecific technology

to become available from all manufacturers. Many manufacturers prefer to observe the market and follow other manufacturers rather than be the first to market with a specific technology . The “first
- mover disadvantage” has been recognize d in other research where the “first
- mover” pay s a higher proportion of the costs of developing technology , but loses the long
- term advantage when other businesses follow quickly
. 640 In this way , there

640 Blumstein, Carl and Margaret Taylor (2013). “Rethinking the Energy
- Efficiency Gap: Producers, Intermediaries, and Innovation,” Energy Institute at Haas Working Paper 243, University of California at Berkeley; Tirole, Jean (1998). The Theory of Industrial Organization. Cambridge, MA: MIT Press, pp.400, 402. This first
- mo ver disadvantage must large enough to overcome the incentive normally offered by the potential to for first movers to earn unusually high (but temporary) profit levels.Page 614 of 850

may be barriers to innovation on the supply side that r esult in lower adoption rates of fuel
efficiency technology

than would be optimal. In summary , the agencies recognize that businesses that operate HDVs are under competitive pressure to reduce operating costs, which should compel HDV buyers to identify an d rapidly adopt cost
- effective fuel
- saving technologies. Outlays for labor and fuel generall y constitute the two largest shares of HDV operating costs, depending on the price of fuel , distance traveled, type of HDV , and commodity transported (if an y), so businesses that operate HDVs face strong incentives to reduce these costs. 641 , 642 However, the short pay

back periods that buye rs of new HDVs appear to require suggest that some combination of uncertainty about future cost savings, transactions costs, and imper fectl y functioning markets impedes this process. M arket s for both new and used HDVs may face these problems , although it is difficult to assess empiricall y the degree to which they actuall y do. Even if the benefits from widespread adoption of fuel
- saving technologies exceed their costs, their use may

remain limited or spread slowly because their early

adopters bear a disproportionate share of those costs. In this case, the proposed standards may help to overcome such barriers b y ensuring that these measures would be widely adopted. Providing information about fuel
- saving technologies, offering incentives for their adoption, and sharing HDV operators’ real
- world experiences with their performance through voluntary programs such as EPA’s SmartWay Transport Partnership should assist in the adoption of new cost
- saving technologies. Nevertheless, other barriers that impede the diffusion of new technologies are likely

to remain. Buye rs who are willing to experiment with new technologies expect to find cost sav ings, but those savings may be difficult to verify

or replicate. As noted previously , because benefits from employing these technologies are likel y to vary with the characteristics of individual routes and traffic patterns, buyers of new HDVs may find it difficult to identify

or verify the effects of fuel
- saving technologies in their operations. Risk
- averse buyers may

also avoid new technologies out of concerns over the possibility of inadequate returns on their investments, or with other possible adverse impacts. Some HDV manufacturers may delay in investing in the development and production of new technologies, instead waiting for other manufacturers to bear the risks of those investments first. Competitive pressures in the HDV freight transport indus try can provide a strong incentive to reduce fuel consumption and improve environmental performance. However, not every HDV operator has the requisite ability or interest to access and utilize the technical information, or the resources necessary to evaluate this information within the context of his or her own operations. As discussed previousl y, whether the technologies available to improve HDVs’ fuel efficiency would be adopted widely in the absence of the program is challenging to assess. To

641 American Transportation Research Institute, An Analysis of the Operational Costs of Trucking , September 2013 (Docket ID: EPA
- HQ
- OAR
- 2014
- 0827). 642 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
- 2014
- 0827).Page 615 of 850

the exte nt that these technologies would be adopted in its absence, neither their costs nor their benefits would be attributed to the program. To account for this possibility , the agencies anal yz ed the proposed standards and the regulatory alternatives against tw o reference cases , or baselines, as described in Section X. The first case uses a baseline that projects some improvement in fuel efficiency for new trailers, but no improvement in fuel efficiency for other vehicle segments in the absence of new Phase 2 standards. This first case is referred to as the less dy namic baseline, or Alternative 1a. The second case uses a baseline that projects some improvement in vehicle fuel efficiency for tractors, trailers, pickup trucks, and vans but not for vocational vehicles. This second case is referred to as the more dynamic baseline, or Alternative 1b
. The agencies will continue to explore reasons for the slow adoption of readily available and apparently

cost - effective technologies for improving fuel efficiency . We also seek comments on our hy

potheses about its causes, as well as data or other informati on that can inform our understanding of wh y this situation seems to persist.


### B. **Vehicle -**  **Related Costs Associated with the Program (1)**  **Technology Cost Methodology** (a ) Direct Manufacturing Costs The direct manufacturing costs (DMCs) used throughout this anal ys is are derived from several sources. Man y of the tractor, vocational and trailer DMCs can be sourced to the Phase 1 rule which, in turn, were sourced largel y from a contracted study b y ICF International for EPA. 643 We have updated those costs by converting them to 2012 dollars, as described in Section IX .B.1.e below, and b y continuing the learning effects described in the Phase 1 rule and in Section IX.B.1.c below. The new tractor, vocational and trailer costs can be sourced to a more recent study conducted by Southwest Research In stitute (SwRI) under contract to NHTSA. 644 The cost methodology

used by SwRI was to estimate retail costs and work backward from there to derive a DMC for each technology
. The agencies did not agree with the approach used by SwRIto move from retail cost to DMC as the approach was to simply divide retail costs b y 2 and use the result as a DMC. Our research, discussed below, suggests that a divisor of 2 is too high. Therefore, where we have used a SwRI derived retail estimate, we have divi ded by our researched markups to arrive at many of the DMCs used in this analysis. In this way, the agencies have used an approach consistent with past GHG/CAFE/fuel consumption rules by

643 ICF International. Investigation of Costs for Strategies to Reduce Gr eenhouse Gas Emissions for Heavy
- Duty On
- Road Vehicles. July 2010. 644 Schubert, R., Chan, M., Law, K. (2015). Commercial Medium
- and Heavy
- Duty (MD/HD) Truck Fuel Efficiency Cost Study. Washington, DC: National Highw ay Traffic Safety Administration.Page 616 of 850

dividing estimated retail prices b y our estimated retail price equiv alent (RPE) markups to derive an appropriate DMC for each technology . We describe our RPEs in Section IX.B.1.b, below. For HD pickups and vans, we have relied primarily on the Phase 1 rule and the recent light
- duty 2017
- 2025 model year rule since most te chnologies expected on these vehicles are, in effect, the same as those used on light
- dut y pickups. Many of those technology DMCs are based on cost teardown studies which the agencies consider to be the most robust method of cost estimation. However, bec ause most of the HD versions of those technologies are expected to be more costly

than their light
- duty

counterparts, we have scaled upward most of the light
- dut y DMCs for this analy sis. We have also used some costs developed under contract to NHTSA by SwRI
. 645 Importantly , in our methodology , all technologies are treated as being sourced from a supplier rather than being developed and produced in
- house. As a result, some portion of the total indirect costs of making a technology or s ys tem

—those costs incurred by the supplier for research, development, transportation, marketing etc.

— are contained in the sales price to the engine and/or vehicle/trailer manufacturer (i.e., the original equipment manufacturer (OEM)). That sale price paid b y the OEM to the supp lier is the DMC we estimate. We present the details

— sources, DMC values, scaling from light
- dut y values, markups, learning effects, adoption rates

— behind all our costs in Chapter 2 of the draft RIA. (b ) Indirect Costs To produce a unit of output, engine and truck manufacturers incur direct and indirect costs. Direct costs include cost of materials and labor costs. Indirect costs are all the costs associated with producing the unit of output that are not direct costs

– for example, they may be related to production (such as research and development [R&D]), corporate operations (such as salaries, pensions, and health care costs for corporate staff), or selling (such as transportation, dealer support, and marketing). Indirect costs are generall y recovered b y allocating a share of the costs to each unit of good sold. Although it is possible to account for direct costs allocated to each unit of good sold, it is more challenging to account for indirect costs allocated to a unit of goods sold. To make a cost analy sis process more feasible, markup factors, which relate total indirect costs to total direct costs, have been developed. These factors are often referred to as retail price equivalent (RPE) multipliers. While the agencies have traditionally used RPE mul tipliers to estimate indirect costs, in recent GHG/CAFE/fuel consumption rules RPEs have been replaced in the primary anal ys is with indirect cost multipliers (ICMs). ICMs differ from RPEs in that they attempt to estimate not all indirect costs incurred to bring a product to point of sale, but only those indirect costs that change as a result of a government action or regulatory requirement. As such, some indirect costs, notably

health and retirement benefits of retired employees, among other indirect cost s,

645 Schubert, R., Chan, M., Law, K. (2015). Commercial Medium
- and Heavy
- Duty (MD/HD) Truck Fuel Efficiency Cost Study. Washington, DC: National Highway Traffic Safety Administration.Page 617 of 850

would not be expected to change due to a government action and, therefore, the portion of the RPE that covered those costs does not change. Further, the ICM is not a “one
- size
- fits
- all” markup as is the traditional RPE. With ICMs, higher complexity te chnologies like hy

bridization or moving from a manual to automatic transmission may

require higher indirect costs

— more research and development, more integration work, etc.

— suggesting a higher markup. Conversel y, lower complexity technologies like reducin g friction or adding passive aero features may require fewer indirect costs thereb y suggesting a lower markup. Notably , I CMs are also not a simple multiplier as are traditional RPEs. The I CM is broken into two parts

—warranty related and non
- warranty relat ed costs. The warranty related portion of the I CM is relatively small while the non
- warranty portion represents typically over 95 percent of indirect costs. These two portions are applied to different DMC values to arrive at total costs (TC). The warranty portion of the markup is applied to a DMC that decreases year over - ye ar due to learning effects (described below in Section IX.B.1.c). 646 As learning effects decrease the DMC with production volumes, it makes sense that warranty costs would decrease sin ce those parts replaced under warranty should be less costly. In contrast, the non
- warranty portion of the markup is applied to a static DMC year
- over - ye ar resulting in static indirect costs. This is logical since the production plants and transportation networks and general overhead required to build parts, market them, deliver them and integrate them into vehicles do not necessarily

decrease in cost year - over - ye ar. Because the warranty and non
- warranty portions of the I CM are applied differently , one cannot compare the markup itself to the RPE to determine which markup would result in higher indirect cost estimates, at least in the time periods ty pically considered in our rules (four to ten years). The agencies are concerned that some potential costs ass ociated with this rulemaking may not be adequatel y captured by our ICMs. IC Ms are estimated based on a few specific technologies and these technologies may not be representative of the changes actuall y made to meet the proposed requirements. Specificall y , we may not have adequatel y estimated the costs for accelerated R&D or potential reliability issues with advanced technologies required by Alternative 4. There is a great deal of uncertainty regarding these costs, and this makes estimates for this altern ative of particular concern. We request comment on that aspect of our estimates and on all aspects of our indirect cost estimation approach
. We provide more details on our I CM approach and the markups used for each technology in Chapter 2.12 of the draft RIA.

646 We note that the labor portion of warranty repairs does not decrease due to learning. However, we do not have data to separate this portion and so we apply learning to the entire warranty cost. Because warranty costs are a small portion of overall indirect costs, this has only a minor impact on the analysis.Page 618 of 850

(c) Learning Effects on Direct and Indirect Costs For some of the technologies considered in this analy sis, manufacturer learning effects would be expected to play a role in the actual end costs. The “learning curve” or “experience curve” describes the r eduction in unit production costs as a function of accumulated production volume. In theory , the cost behavior it describes applies to cumulative production volume measured at the level of an individual manufacturer, although it is often assumed

— as both a gencies have done in past regulatory anal ys es
—to apply

at the industry
- wide level, particularly in industries that utilize many common technologies and component supply sources. Both agencies believe there are indeed man y factors that cause costs to decre ase over time. Research in the costs of manufacturing has consistently shown that, as manufacturers gain experience in production, they

are able to apply

innovations to simplify

machining and assembly operations, use lower cost materials, and reduce the number or complexity of component parts. All of these factors allow manufacturers to lower the per
- unit cost of production ( i.e. , the manufacturing learning curve). 647 In this analy sis, the agencies are using the same approach to learning as done in past GHG/CAFE/fuel consumption rules. In short, learning effects result in rapid cost reductions in the earl y ye ars following introduction of a new technology . The agencies have estimated those cost reductions as resulting in 20 percent lower costs for every doub ling of production volume. As production volumes increase, learning rates continue at the same pace but flatten asy mptoticall y due to the nature of the persistent doubling of production required to realize that cost reduction. As such, the cost reductions flatten out as production volumes continue to increase. Consistent with the Phase 1 rule, we refer to these two distinct portions of the “learning cost reduction curve” or “learning curve” as the steeper and flatter portions of the curve. On that steep portion of the curve, costs are estimated to decrease by 20 percent for each double of production or, by prox y, in the third and then fifth year of production following introduction. On the flat portion of the curve, costs are estimated to decrease by 3 p ercent per ye ar for 5 years, then 2 percent per ye ar for 5 years, then 1 percent per ye ar for 5 years. Also consistent with the Phase 1 rule, the majority of the technologies we expect would be adopted are considered to be on the flat portion of the learn ing curve meaning that the 20 percent cost reductions are rarel y applied. The agencies request comment on this approach to estimating these effects, and request that commenters provide data and forward
- looking information to support any

alternative method s or specific estimates. We provide more details on the concept of learning
- by
- doing and the learning effects applied in this analy sis in Chapter 2 of the draft RIA.

647 See “Learning C urves in Manufacturing”, L. Argote and D. Epple, Science, Volume 247; “Toward Cost Buy dow n Via Learning
- by
- Doing for Environmental Energy Technologies, R. Williams, Princeton University, Workshop on Learning
- by
- Doing in Energy Technologies, June 2003; “In dustry Learning Environmental and the Heterogeneity of Firm Performance, N. Balasubramanian and M. Lieberman, UCLA Anderson School of Management, December 2006, Discussion Papers, Center for Economic Studies, Washington DC.Page 619 of 850

(d ) Technology Adoption Rates and Developing Package Costs Determining the stringency of the p roposed standards involves a balancing of relevant factors

– chiefl y technology feasibility and effectiveness, costs, and lead time. For vocational vehicles, tractors and trailers, the agencies have projected a technology path to achieve the proposed stan dards reflecting an application rate of those technologies the agencies consider to be available at reasonable cost in the lead times provided. The agencies do not expect each of the technologies for which costs have been developed to be employed b y al l trucks and trailers across the board. Further, many of today ’s vehicles are already equipped with some of the technologies and/or are expected to adopt them by MY2018 to comply with the HD Phase 1 standards. Estimated adoption rates in both the reference a nd control cases are necessary for each vehicle/trailer category . The adoption rates for most technologies are zero in the reference case; however, for some technologies

— notabl y aero and tire technologies

—the adoption rate is not zero in the reference cas e. These reference and control case adoption rates are then applied to the technology

costs with the result being a package cost for each vehicle/trailer category
. For HD pickups and vans, the CAFE model determines the technology adoption rates that most cost effectivel y meet the standards being proposed. Similar to vocational vehicles, tractors and trailers, package costs are rarel y if ever a simple sum of all the technology costs since each technology

would be expected to be adopted at different rates. The methods for estimating technology

adoption rates and resultant costs (and other impacts) for HD pickups and vans are discussed above in Section 6. We provide details of expected adoption rates in Chapter 2 of the draft RIA. We present package costs b oth in Sections III through VI of this preamble and in more detail in Chapter 2 of the draft RIA. (e) Conversion of Technology Costs to 2012 US Dollars As noted above in Section IX.B.1, the agencies are using technology costs from many different sources. Thes e sources, having been published in different years, present costs in different ye ar dollars (i.e., 2009 dollars or 2010 dollars). For this analy sis, the agencies sought to have all costs in terms of 2012 dollars to be consistent with the dollars used by A EO in its 2014 Annual Energy

Outlook. 648 The agencies have used the GDP Implicit Price Deflator for Gross Domestic Product as the converter, with the actual factors used as shown in Table IX
- 1
. 649

648 U.S. Energy Information Admini stration, Annual Energy Outlook 2014, Early Release; Report Number DOE/EIA
- 0383ER (2014), December 16, 2013. 649 Bureau of Economic Analysis, Table 1.1.9 Implicit Price Deflators for Gross Domestic Product; as revised on March 27, 2014.Page 620 of 850 **Table IX**  **- 1**  **Implicit Price Deflators and Conversion Factors for Conversion to 2012$**

2006 2007 2008 2009 2010 2011 2012 2013 Price index for GDP 94.818 97.335 99.236 100 101.211 103.199 105.002 106.588 Factor applied for 2012$ 1.107 1.079 1.058 1.050 1.037 1.017 1.000 0.985 **(2) Compliance Program Costs**  The agencies have also estimated additional and/or new compliance costs associated with the proposed standards. Normally , compliance program costs would be considered part of the indirect costs and, therefore, would be accounted for via the markup applied to direct manufacturing costs. However, since the agencies are proposing new compliance elements that were not present during development of the indirect cost markups used in this analy sis, additional compliance program costs are being accounted for via a separate “line
- item.” New research and development costs (see below) are being handled in the same way
. The new compliance program elements included in this proposal are new powertrain testing within the vocational vehicle program, and an all
- new compl iance program where none has existed to date within the trailer program. Note that for HD pickups and vans, HD engines, vocational vehicles and tractors, the Phase 1 rule included analogous compliance program costs meant to account for costs incurred in the all
- new compliance program placed on the regulated firms by that rule. Compliance program costs cover costs associated with any necessary compliance testing and reporting to the agencies and differ somewhat b y al ternative since, for example, more manuf

acturers are expected to conduct powertrain testing under alternative 4 than under alternative 3, etc. The details behind the estimated compliance program costs are provided in Chapter 7 of the draft RIA. We request comment on our estimated compliance cos ts. **(3) Research and Development Costs**  Much like the compliance program costs described above, we have estimated additional HDD engine, vocational vehicle and tractor R&D associated with the proposed standards that is not accounted for via the indirect cost markups used for these segments. Much like the Phase 1 rule, EPA is estimating these additional R&D costs will occur over a 4
- ye ar timeframe as the proposed standards come into force and industry works on means to comply . After that period, the additional R&D costs go to $0 as R&D expenditures return to their normal levels and R&D costs are accounted for via the ICMs

— and the RPEs behind them

— used for these segments. Note that, due to the accelerated implementation of some technologies, alternative 4 has higher R&D costs than does alternative 3. The details behind the estimated R&D costs are provided in Chapter 7 of the draft RIA. We request comment on our estimated R&D costs. **(4) Summary of Costs of the Proposed Vehicle Programs**  The agencies have estimated the costs of the proposed vehicle standards on an annual basis for the ye ars 2018 through 2050, and have also estimated costs for the full model year lifetimes of MY2018 through MY2029 vehicles. Table IX
- 2 shows the annual costs of the proposed standards along with net present values using both 3 percent and 7 percent discountPage 621 of 850

rates. Table IX
- 3 shows the discounted model year lifetime costs of the proposed standards at both 3 percent and 7 percent discount rates along with sums across applicable model years. **Table IX**  **- 2**  **Annual Costs of the Preferred Alternative and Net Present Values at 3% and 7% Discount Rates using Method B and Relative to the Less Dynamic Baseline** 

**($Millions of 2012$) a**  Calendar Year New

Technology Com

pliance R&D Sum 2018 $116 $0 $0 $116 2019 $113 $0 $0 $113 2020 $112 $0 $0 $112 2021 $2,173 $18 $240 $2,432 2022 $2,161 $6 $240 $2,407 2023 $2,224 $6 $240 $2,470 2024 $3,455 $6 $240 $3,701 2025 $3,647 $6 $0 $3,653 2026 $3,736 $6 $0 $3,742 2027 $5,309 $6 $0 $5,315 2028 $5,334 $6 $0 $5,340 2029 $5,376 $6 $0 $5,381 2030 $5,399 $6 $0 $5,405 2035 $5,856 $6 $0 $5,862 2040 $6,316 $6 $0 $6,322 2050 $6,987 $6 $0 $6,992 NPV , 3% $85,926 $104 $759 $86,789 NPV, 7% $40,516 $56 $561 $41,133 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 3**  **Discounted MY Lifetime Costs of the Preferred Alternative using Method B and Relative to the Less Dyna**  **mic Baseline ($Millions of 2012$) a**  Model Year Discounted at 3% Discounted at 7%

New Technology Com

pliance R&D Sum New Technology Com

pliance R&D Sum 2018 $104 $0 $0 $104 $91 $0 $0 $91 2019 $99 $0 $0 $99 $84 $0 $0 $84 2020 $95 $0 $0 $95 $77 $0 $0 $77 2021 $1,794 $15 $198 $2,007 $1,401 $12 $155 $1,567 2022 $1,731 $5 $193 $1,928 $1,302 $3 $145 $1,450 2023 $1,730 $4 $187 $1,921 $1,252 $3 $135 $1,390 2024 $2,610 $4 $181 $2,795 $1,818 $3 $126 $1,947 2025 $2,674 $4 $0 $2,678 $1,793 $3 $0 $1,796 2026 $2,660 $4 $0 $2,664 $1,717 $3 $0 $1,719 2027 $3,670 $4 $0 $3,673 $2,280 $2 $0 $2,283 2028 $3,580 $4 $0 $3,583 $2,141 $2 $0 $2,143 2029 $3,502 $4 $0 $3,506 $2,017 $2 $0 $2,019 Sum $24,248 $48 $759 $25,055 $15,973 $33 $561 $16,568 Note:Page 622 of 850

a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. New technology

costs begin in MY2018 as trailers begin to add new technology
. Compliance costs begin with the new standards with capital cost expenditure in that year for building and upgrading test facilities to conduct the proposed pow ertrain testing in the vocational program. Research and development costs begin in 2021 and last for 4 years as engine, tractor and vocational vehicle manufacturers conduct research and development testing to integrate new technologies into their engines and vehicles. We request comment on all aspects of our technology

costs, both individual technology costs and package costs, as detailed in Chapter 2 of the draft RIA. 

### C. **Changes in Fuel Consumption and Expenditures (1)**  **Changes in Fuel Consumption** The new GHG and fuel consumption standards would result in significant improvements in the fuel efficiency

of affected vehicles, and drivers of those vehicles would see corresponding savings associated with reduced fuel expenditures. The agencies have estimated the im pacts on fuel consumption for the proposed standards. Details behind how these changes in fuel consumption were calculated are presented in Section VII of this preamble and in Chapter 5 of the draft RIA. The total number of miles that vehicles are driven each ye ar is different under the regulatory

alternatives than in the reference case due to the “rebound effect” (discussed below in Section IX.E), so the changes in fuel consumption associated with each alternative are not strictly proportional to differe nces in the fuel economy levels they

require. The expected annual impacts on fuel consumption are shown in Table IX
- 4
. Table IX
- 5 shows the MY lifetime changes in fuel consumption. The gallons shown in these tables as reductions in fuel consumption reflect reductions due to the proposed standards and include any increa sed consumption resulting from the rebound effect (discussed below in Section IX.E).Page 623 of 850

**Table IX**  **- 4**  **Annual Fuel Consumption Reductions due to the Preferred Alternative using Method B and**

**Relative to the Less Dy namic Baseline (Millions of gallons)**  **a** Calendar Year Gasoline Diesel Reference Case Fuel

Consumption Reduction %

Reduction Reference

Case Fuel

Consumption Reduction %

Reduction 2018 6,781 0 0% 45,999 74 0% 2019 6,799 0 0% 46,362 150 0% 2020 6,832 0 0% 46,768 227 0% 2021 6,884 10 0% 47,236 523 1% 2022 6,944 29 0% 47,761 894 2% 2023 7,005 57 1% 48,309 1,276 3% 2024 7,054 99 1% 48,807 1,895 4% 2025 7,113 151 2% 49,400 2,523 5% 2026 7,169 210 3% 49,967 3,152 6% 2027 7,221 291 4% 50,420 3,890 8% 2028 7,273 369 5% 50,821 4,600 9% 2029 7,332 445 6% 51,262 5,278 10% 2030 7,396 516 7% 51,792 5,924 11% 2035 7,732 801 10% 54,602 8,517 16% 2040 8,075 968 12% 58,082 10,209 18% 2050 8,806 1,127 13% 65,937 12,310 19% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 5**  **Model Year Lifetim e Fuel Consumpti**  **on Reductions due to the Preferred Alternative using**

**Me thod B and Relative to the Less Dynamic Baseline (Millions of gallons)**  **a** Model Year Gasoline Diesel Reference Fuel

Consumption Reduction %

Reduction Reference Fuel Consumption Reduction %

Reduction 2018 0 0 0% 33,384 754 2% 2019 0 0 0% 33,922 745 2% 2020 0 0 0% 34,575 738 2% 2021 7,128 113 2% 47,792 4,424 9% 2022 7,118 216 3% 48,112 4,568 9% 2023 7,106 317 4% 48,366 4,703 10% 2024 7,225 493 7% 49,577 7,628 15% 2025 7,376 602 8% 51,050 7,967 16% 2026 7,535 714 9% 52,420 8,289 16% 2027 7,628 982 13% 53,532 9,984 19% 2028 7,711 992 13% 54,524 10,181 19% 2029 7,769 999 13% 55,421 10,360 19% Sum 66,596 5,430 8% 562,673 70,342 13% Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 624 of 850

**(2) Fuel Savings**  We have also estimated the changes in fuel expenditures, or the fuel savings, using fuel prices estimated in the Energy and Information Administration’s 2014 Annual Energy Outlook. 650 As the AEO fuel price projections go through 2040 and not beyond, fuel prices beyond 2040 were set equal to the 2040 values. These estimates do not account for the significant unce rtainty in future fuel prices; the monetized fuel savings would be understated if actual fuel prices are higher (or overstated if fuel prices are lower) than estimated. The Annual Energy Outlook (AEO) is a standard reference used by NHTSA and EPA and many 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 repre sent the changes fuel purchasers would see. The pre
- tax fuel savings measure the value to society of the resources saved when less fuel is refined and consumed . Assuming no change in fuel tax rates, the difference between these two columns represents the reduction in fuel tax revenues that would be received by state and federal governments, or about $240 million in 2021 and $5.2 billion by 2050 as shown in Table IX
- 6 where annual changes in monetized fuel savings are shown along with net present values using 3 percent and 7 percent discount rates. Table IX
- 7 and Note:

a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.
Table IX
- 8 show the discounted model year lifetime fuel savings using 3 percent and 7 percent discount rates, respectively
.

650 U.S. Energy Information Administration, Annual Energy Outlook 2014, Early Release; Report Number DOE/EIA
- 0383ER (2014), December 16, 2013.Page 625 of 850

**Table IX**  **- 6**  **Annual Fuel Saving s and Net Present Values at 3% and 7% Discount Rates using Method B for**  **the Preferred Alternative and Relative to the Less Dynamic Baseline ($Millions of 2012$) a**  Calendar Year Fuel Savings
- Retail Fuel Savings

– Untaxed Change in Transfer Gasoline Diesel Sum Gasoline Diesel Sum 2018 $0 $261 $261 $0 $227 $227 $34 2019 $0 $540 $540 $0 $472 $472 $68 2020 $0 $834 $834 $0 $731 $731 $103 2021 $31 $1,958 $1,989 $27 $1,723 $1,750 $239 2022 $92 $3,413 $3,505 $80 $3,015 $3,095 $410 2023 $183 $4,936 $5,119 $160 $4,372 $4,532 $587 2024 $324 $7,426 $7,750 $285 $6,594 $6,879 $871 2025 $496 $10,035 $10,531 $436 $8,937 $9,372 $1,158 2026 $695 $12,683 $13,378 $613 $11,321 $11,934 $1,445 2027 $976 $15,883 $16,859 $861 $14,215 $15,076 $1,782 2028 $1,243 $18,938 $20,181 $1,099 $16,980 $18,079 $2,102 2029 $1,511 $21,974 $23,485 $1,338 $19,745 $21,083 $2,402 2030 $1,770 $24,905 $26,675 $1,571 $22,422 $23,993 $2,682 2035 $2,921 $38,047 $40,968 $2,621 $34,621 $37,242 $3,726 2040 $3,778 $48,300 $52,078 $3,427 $44,357 $47,783 $4,295 2050 $4,397 $58,241 $62,638 $3,988 $53,486 $57,474 $5,164 NPV , 3% $37,319 $506,971 $544,290 $33,603 $461,992 $495,595 $48,695 NPR, 7% $15,211 $212,373 $227,584 $13,663 $192,984 $206,646 $20,937 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 7**  **Discounted Model Year Lifetim e Fuel Savings, 3% Discount Rate using Method B for the**  **Preferred Alternative and Relative to the Less Dynamic Baseline ($Millions of 2012$) a**  Model Year Fuel Savings
- Retail Fuel Savings

– Untaxed Change in Transfer Gasoline Diesel Sum Gasoline Diesel Sum 2018 $0 $2,183 $2,183 $0 $1,937 $1,937 $246 2019 $0 $2,123 $2,123 $0 $1,890 $1,890 $234 2020 $0 $2,066 $2,066 $0 $1,844 $1,844 $222 2021 $258 $12,178 $12,436 $228 $10,898 $11,126 $1,310 2022 $487 $12,369 $12,856 $431 $11,094 $11,525 $1,331 2023 $700 $12,513 $13,212 $620 $11,247 $11,867 $1,346 2024 $1,067 $19,934 $21,001 $947 $17,953 $18,901 $2,100 2025 $1,277 $20,435 $21,712 $1,136 $18,441 $19,577 $2,135 2026 $1,484 $20,858 $22,342 $1,323 $18,858 $20,180 $2,161 2027 $2,001 $24,642 $26,643 $1,787 $22,319 $24,106 $2,537 2028 $1,981 $24,610 $26,592 $1,772 $22,329 $24,101 $2,491 2029 $1,957 $24,536 $26,493 $1,754 $22,298 $24,052 $2,441 Sum $11,211 $178,448 $189,659 $9,997 $161,107 $171,105 $18,554 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 626 of 850

**Table IX**  **- 8**  **Discounted Model Year Lifetim e Fuel Savings, 7% Discount Rate using Method B for the**  **Preferred Alternative and Relative to the Less Dynamic Baseline ($Millions of 2012$) a**  Model Year Fuel Savings
- Retail Fuel Savings

– Untaxed Change in Transfer Gasoline Diesel Sum Gasoline Diesel Sum 2018 $0 $1,529 $1,529 $0 $1,352 $1,352 $176 2019 $0 $1,428 $1,428 $0 $1,267 $1,267 $161 2020 $0 $1,331 $1,331 $0 $1,185 $1,185 $146 2021 $163 $7,538 $7,701 $143 $6,731 $6,874 $827 2022 $295 $7,383 $7,678 $260 $6,608 $6,869 $810 2023 $408 $7,200 $7,607 $361 $6,458 $6,819 $789 2024 $599 $11,055 $11,654 $531 $9,938 $10,469 $1,186 2025 $690 $10,917 $11,607 $613 $9,834 $10,447 $1,160 2026 $772 $10,734 $11,505 $687 $9,688 $10,374 $1,131 2027 $1,003 $12,215 $13,218 $894 $11,046 $11,940 $1,278 2028 $956 $11,741 $12,697 $854 $10,636 $11,490 $1,206 2029 $909 $11,269 $12,179 $814 $10,228 $11,041 $1,137 Sum $5,794 $94,339 $100,134 $5,157 $84,971 $90,128 $10,005 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. 

### D. **Maintenance Expenditures** The agencies expect minimal increases in maintenance costs under the proposed standards, having estimated increased maintenance costs associated onl y with installation of lower rolling resistance tires. We expect that, when replaced, the lower rolling resistance tires would be replaced b y equivalent performing tires throughout the vehicle lifetime. As such, the incremental increases in costs for lower rolling resistance tires would be incurred throughout the vehicle lifetime at intervals consistent with current tire replacement intervals. Those intervals are difficult to quantify given the variety of vehicles and operating modes within the HD industry
. We detail the inputs used to estimate maintenance impacts in Chapter 7.3.3 of the draft RIA. We request comment on all aspects of the maintenance estimates. Specificall y, for elec trified vehicles (mild/strong hy brids) which are expected in alternatives 3 and 4 and in each vehicle category , we have not estimated any increased maintenance costs. We have heard from at least one source 651 that strong h yb rid maintenance can be higher in some way s, including possible battery

replacement, but may

also be much lower for some vehicle sy stems like brakes and general engine wear. Given the uncertainty , we have not estimated maintenance costs specificall y for these electrified vehicles but requ est comment so that we might be able to include potential costs in the final rule. We also request comment on any other maintenance costs that should be considered along with supporting data.

651 Allison Transmission’s Responses to EPA’s Hybrid Questions, November 6 , 2014.Page 627 of 850

Table IX
- 9 shows the annual increased maintenance costs of the preferred alternative along with net present values using both 3 percent and 7 percent discount rates. Table IX
- 10 shows the discounted model year lifetime increased maintenance costs of the preferred alternative at both 3 percent and 7 percent discount rates along with sums across applicable model years. **Table IX**  **- 9**  **Annual Maintenance Expenditure Increase due to the Proposal and Net Present Values at 3% and 7% Discount Rates using Method B and Relative to the Less Dynamic Baseline**  **($Millions of 2012$) a**  Calendar Year Maintenance

Expenditure Increase 2018 $6 2019 $11 2020 $16 2021 $28 2022 $39 2023 $50 2024 $64 2025 $78 2026 $90 2027 $104 2028 $116 2029 $127 2030 $127 2035 $127 2040 $127 2050 $127 NPV , 3% $1,796 NPV, 7% $860 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 628 of 850

**Table IX**  **- 10**  **Discounted MY Lifetime Maintenanc e Expenditure Increase due to the Proposal using Method** 

**B and Relative to the Less Dynam ic Baseline**  **($Millions of 2012$) a** 

Model Year 3% Discount

Rate 7% Discount

Rate 2018 $51 $36 2019 $49 $33 2020 $47 $31 2021 $90 $57 2022 $89 $54 2023 $89 $52 2024 $112 $63 2025 $113 $61 2026 $102 $53 2027 $116 $58 2028 $111 $54 2029 $101 $47 Sum $1,071 $600 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. 

### E. **Analysis of the Rebound Effect** The “ rebound effect ” has been defined a number of way s in the literature, and one common definition states that the rebound effect is the increase in demand for an energy servi ce when the cost of the energy service is reduced due to efficiency improvements
. 652 , 653 , 654 Inthe context of heavy
- dut y vehicles (HDVs), this can be interpreted as an increase in HDV fuel consumption resulting from more intensive vehicle use in response to in creased vehicle fuel efficiency
. 655 Although much of this vehicle use increase is likel y to take the form of increases in the number of miles vehicles are driven, it can also take the form of increases in the loaded weight at which vehicles operate or changes in traffic and road conditions vehicles encounter as operators alter their routes and schedules in response to improved fuel efficiency
. Because this more intensive use consumes fuel and generates emissions, it reduces the fuel savings and

652 Winebrake, J.J., Green, E. H., Comer, B., Corbett, J.J., Froman, S., 2012. Estimating the direct rebound effect for on - road freight transportation. Energy Policy 48, 252
- 259. 653 Greene, D.L., Kahn, J.R., Gibson, R.C., 1999, “Fuel economy rebound effect for U.S. household vehicles”, T he Energy Journal, 20. 654 For a discussion of the wide range of definitions found in the literature, see Appendix D: Discrepancy in Rebound Effect Definitions, in EERA (2014), “Research to Inform Analysis of the Heavy
- Duty vehicle Rebound Effect”, Excerpts of Draft Final Report of Phase 1 under EPA contract EP
- C
- 13
- 025. (Docket ID: EPA
- HQ
- OAR
2014
- 0827). See also Greening, L.A., Greene, D.L., Difiglio, C., 2000, “Energy efficiency and consumption

— the rebound effect

— a survey”, Energy Policy, 28, 389
- 40 1. 655 We discuss other potential rebound effects in section IX.D.3, such as the indirect and economy
- wide rebound effects. Note also that there is more than one way to measure HDV energy services and vehicle use . The agencies’ analyses use VMT as a measur e (as discussed below) ; other potential measures include ton
- miles, cube
- miles, and fuel consumption.Page 629 of 850

avoided emissions that would otherwise be expected to result from the increases in fuel efficiency this rulemaking proposes. Unlike the light
- dut y vehicle (LDV) rebound effect, the HDV rebound effect has not been extensively

studied. According to a 2010 HDV report published by the National Research Council of the National Academ ies (NRC) 656 , it is “not possible to provide a confident measure of the rebound effect,” yet N RC concluded that a HDV rebound effect probably exists and that , “estimates of fuel savings from regulatory standards will be somewhat misestimated if the rebound effect is not considered.” Although we believe the HDV rebound effect needs to be studied in more detail, we have nevertheless attempted to capture its potential effect i n our anal ys is of th ese proposed rule s , rather than to await further study. We have elected to do so because the magnitude of th e rebound effect is an important determinant of the actual fuel savings and emission reductions that are likel y to result from adopting stricter fuel efficiency and GHG emission standards. In our anal ys is and discussion below, we focus on one widel y - used metric to estimate the rebound effect associated with all ty pes of more intensive vehicle us e, the increase in vehicle miles traveled (VMT) that results from improved fuel efficiency . VMT can often provide a reasonable approximation for all ty pes of more intensive vehicle use. For simplicity , we refer to this as “the VMT rebound effect” or “VMT rebound” throughout this section, although we acknowledge that it is an approximation to the rebound effect associated with all ty pes of more intensive vehicle use . The agencies use our VMT rebound estimates to generate VMT inputs that are then entered into the EPA MOVES national emissions inventory model and the Volpe Center’s HD CAFE model . B oth of these models use these inputs along with many others to generate projected emissions and fuel consumption changes resulting from each of the regulatory alt ernatives analyzed. Using VMT rebound to approximate the fuel consumption impact from all ty pes of more intensive vehicle use may not be completel y accurate. Man y factors other than distance traveled

– for example, a vehicle’s loaded weight

– play a role in determining its fuel consumption, so it is also important to consider how changes in these factors are correlated with variation in vehicle miles traveled. Empirical estimates of the effect of weight on HDV fuel consumption vary , but universally

show that loaded weight has some effect on fuel consumption that is independent of distance traveled. Therefore, the product of vehicle payload and miles traveled, which ty picall y is expressed in units of “ ton - miles ” or “ ton - kilometers ”, has also been considere d as a metric to approximate the rebound effect. Because this metric’s value depend s on both payload and distance , it is important to note that changes in these two variables can have different impact s on HDV fuel consumption. This is because the fuel co nsumed by HDV freight transport is determined b y several vehicle attributes including engine and accessory efficiencies,

656 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). “Tec hnologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heavy
- Duty Vehicles,” 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).Page 630 of 850

aerodynamic characteristics, tire rolling resistance and total vehicle mass

— including payload carried, if an y. Other factors such as ve hicle route and traffic patterns can also affect how each of the se vehicle attributes contribute s to the overall fuel consumption of a vehicle. While it seems intuitive that if all of these other conditions remain constant , a vehicle driving the same rout e and distance twice will consume twice as much fuel as driving that same route once . However, because of the other vehicle attributes, it is less intuitive how a change in vehicle payload would affect vehicle fuel consumption. We request comment on how the agencies should consider the relationship between changes in vehicle miles traveled, changes in vehicle ton
- miles achieved, and overall fuel consumption when considering how best to measure the rebound effect. Because the factors influencing HDV VMT reb ound are generally different from those affecting LDV VMT rebound, much of the research on the LDV sector is likely to not appl y to the HDV sector. For example, the owners and operators of LDVs would likely view the costs and benefits associated with chan ges in their personal vehicle’s fuel efficiency very differently than a HDV fleet owner or operator would view the costs and benefits (e.g., profits, offering more competitive prices for services) associated with changes in their HDVs’ fuel efficiency
. The potential exception is HD pickups and vans, which share some similarities with LDVs . As discussed in the 2010 N RC HD report, one difference from the LDV case is that when calculating the change in HDV costs that causes the rebound effect, it is more important to consider all components of HDV operating costs
. The costs of labor and fuel generally constitute the two largest shares of HDV operating costs, depending on the price of petroleum, distance traveled, type of vehicle , and commodity tr ansported (if an y). 657 , 658 Equipment depreciation costs associated with the purchase or lease of an HDV are another significant component of total operating costs. Even when HDV purchases involve upfront, one
- time pay ments, HDV operators must recover the dep reciation in the value of their vehicles resulting from their use, so this is likely to be considered as an operating cost they will attempt to pass on to final consumers of HDV operator services. Estimates of the impact of fuel efficiency standards on H DV VMT , and hence fuel consumption, should account for changes in all of these components of HDV operating costs
. The higher the net savings in total operating costs is , the higher the expected rebound effect would be. Conversel y, if higher HDV purchase costs outweigh future cost savings and total operating costs increase, HDV costs could rise, which would likely result in a decrease in HDV VMT. In theory , other cost changes resulting from any requirement to achieve higher fuel efficiency , such as change s in maintenance costs or insurance rates, should also be taken into account, although information on these elements of HDV operating costs is extremely limited. In this analy sis, the agencies adapt estimates of the VMT rebound effect to project the response of HDV use to the estimated changes in total operating costs that result from the proposed Phase

657 American Transportation Research Institute, An Analysis of the Operational Costs of Trucking , September 2013
. 658 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
.Page 631 of 850

2 standards. We seek comment and data on how our proposed standards could impact these and other ty pes of HDV operating costs , as well as on our procedure for adapting the VMT rebound effect to estimate the response of HDV use to changes in total operating costs
. Since businesses are profit
- driven, one would expect their decisions to be based on the costs and benefits of different operating decisions, both in the near
- term and long
- term. Specificall y, one would expect commercial HDV operators to take into account changes in overall operating costs per mile when making decisions about HDV use and setting rates they charge for their services. If demand for those services is sensitive to the rates HDV operators charge, HDV VMT could change in response to the effect of higher fuel efficiency on the rates HDV operators charge . I f demand for HDV services is insensitive to price (e.g., due to lack of good substitutes), however, or if changes in HDV operating costs due to the proposed standards are not passed on to final consumers of HDV operator service s , the proposed standards may have a limited impact on HDV VMT. The following sections describe the factors affecting the magnitude of HDV VMT rebound ; review the econometric and o th er e vidence related to HDV VMT r ebound ; and summarize h ow we e stimate d the HDV rebound effect for this p roposal
. **(1) Factors Affecting the Magnitude of HDV**  **VMT Rebound**  The magnitude and timing of HDV VMT rebound result from the interaction of many different factors. 659 Fuel savings resulting from fuel efficiency standards may cause HDV operators and their customers to change their patterns of HDV use and fuel consumption in a variety of way s. For example, HDV operators may pass on the fuel cost savings to their customers b y decreasing prices for shipping products or providing services, which in turn could stimulate more demand for those products and services (e.g., increases in freight output), and result in h igher VMT. Alternatively , HDV operators could simply use fuel savings to spend more on other costs such as driver labor or vehicle capital (e.g., holding freight output constant), which may

not result in higher VMT. As discussed later in this section, HDV VMT rebound estimates determined via other prox y elasticities vary widel y, but in no case has there been an estimate that fully offsets the fuel saved due to efficiency improvements (i.e., no rebound effect greater than or equal to 100 percent). If fuel cost savings are passed on to the HDV operators’ customers (e.g., logistics businesses , manufacturers, retailers , municipalities, utilities consumers ), those customers m ight reorganize their logistics and distribution networks over time to take advantage of lower operating costs. For example, customers m ight demand more frequent shipments, ship products or materials over longer distances, or shift traffic to HDVs from other shipping modes such as rail, barge or air. In addition, customers m ight c hoose to reduce the ir number of warehouses,

659 These factors are discussed more fully in a report to EPA from EERA , which illustrates in a series of diagrams the complex system of decisions and decision
- makers that could influence the magnitude and timing of the rebound effect. See Sections 2.2.2, 2.2.3, 2.2.4, and 2.3 in EERA (2014), “Research to Inform Analysis of the Heavy
- Duty Vehicle Rebound Effect”, Excerpts of Draft Final Report of Phase 1 under EPA contract EP
- C
- 13
- 025.Page 632 of 850

reduce shipment rates or make smaller but more frequent shipments, all of which could lead to an increase in HDV VMT. Ultimately , fuel cost savings could ripple through the entire econom y, thus increasing demand for goods and services shipped b y trucks, and therefore increase HDV VMT due to increased gross domestic product (GDP)
. Conversel y, if fuel efficiency standards lead to net increases in the total cost s of HDV operation because fuel cost savings do not ful ly offset the increase in HDV purchase prices and associated depreciation costs, then the price of HDV services could rise . This is likely to spur a decrease in HDV VMT , and perhaps a shift to alternative shipping modes. These effects could also ripple through the economy and affect GDP
. It is also important to note that an y increase in HDV VMT resulting from our proposed standards may

be offset, to some extent, by a decrease in VMT by

older HDVs. This may

occur if lower fuel costs resulting from our st andards cause multi
- vehicle fleet operators to shift VMT to newer, more efficient HDVs in their fleet or cause operators with newer, more efficient HDVs to be more successful at winning contracts than operators with older HDVs
. Also, as discussed in Chapte r 8 .3.3 of the Draft RIA, the magnitude of the rebound effect is likely to be influenced by

the extent of any

market failures that affect the demand for more fuel efficient HD Vs , as well as by HDV operators’ responses to the ir perception of the tradeoff between higher upfront HDV purchase costs versus lower but uncertain future expenditures on fuel. **(2) Econometric and Other Evidence Related to HDV**  **VMT Rebound**  As discussed above, HDV VMT rebound is defined as the change in HDV VMT that occurs in response to an increase in HDV fuel efficiency . We are not aware of any studies that directly estimate this elasticity 660 for the U.S. This section discusses econometric anal ys es of other related elasticities that could potentially be used as a prox y for m easuring HDV VMT rebound , as well as other anal ys es that may provide insight into the magnitude of HDV VMT rebound . We seek comment on the applicability of the findings from these anal ys es, as well as additional data and research on the topic of HDV VMT r ebound
. One of the challenges t o developing robust econometric anal ys es of HDV VMT reboun d in the U.S. is data limitations. For example, the main source of time
- series HDV fuel efficiency data in the U.S. is derived from aggregate fuel consumption and HD V VMT data
. This may introduce interdependence or “simultaneity” between measures of HD V VMT and HDV fuel efficiency , because estimates of HDV fuel efficiency are derived partl y from HDV VMT . This mutual interdependence makes it difficult to isolate the causal effect of HDV fuel efficiency on HD V VMT and to measure the response of HDV VMT to changes in HDV fuel efficiency
.

660 E lasticity is the measurement of how responsive an economic variable is to a change in another. For example: price elasticity of demand is a measure used in economics to show the responsiveness, or elastic ity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price
.Page 633 of 850

Data on other important determinants of HDV VMT , such as freight shipping rates, shipment sizes , HDV payloads, and congestion levels on key HDV routes is also limited, of questionable reliability , or unavailable. Additionally , data on HDVs and their use is usually onl y available at an aggregate level, making it difficult to evaluate potential differences in determinants of VMT for different types of HDV operations (e.g., long
- haul freight vs. regional delivery operations) or vehicle sub
- classes (e.g., utility vehicles vs. school buses). Another challenge inherent in using econometric techniques to measu re the response of HDV VMT to HDV fuel efficiency is developing model specifications that incorporate the mathematical form and range of explanatory variables necessary

to produce reliable estimates of HDV VMT rebound
. Many different factors can influence HDV VMT, and the complex relationships among those factors should be considered when measuring the rebound effect. 661 In practice, however, most studies have employed simpl ified models. Many use price variables (e.g., price per gallon of fuel, or fuel cost per mile driven) and some measure of aggregate economic activity , such as GDP
. However, some of these studies exclude potentially important variables such as the amount of road capacity (which affects travel speeds and may be related to other important characteristics of highway infrastructure), or the price or availability of competing forms of freight transport such as rail or barge (i.e., characteristics of the overall freight transport network). (a ) Fuel Price and Fuel Cost Elasticities This sub
- sec tion reviews econometric anal ys es of the change in HDV use (measured in VMT, ton
- mile, or fuel consumption) in response to change s in fuel price ($/gallon) or fuel cost ($/mile or $/ton
- mile). The studies presented below attempt to estimate these elastici ties in the HDV sector using varying approaches and data sources. Gatel y (1990) employed an econometric anal ys is of U.S. data for the years 1966

– 1988 to examine the relationship between HDV VMT and average fuel cost per mile, real Gross National Produc t ( GNP ) , and variables capturing the effects of fuel shortages in 1974 and 1979. 662 The study

found no statistically

significant relationship between HDV VMT and fuel cost per mile. Gatel y’s estimates of the elasticity of HD V VMT with respect to fuel cost per mile were
- 0.035 with and
- 0.029 without the fuel shortage variables , but both estimates had

661 A useful framework for understanding how various responses int eract to determine the rebound effect is presented in Section 2 and Appendix B of De Borger, B. and Mulalic, I. (2012), “The determinants of fuel use in the trucking industry

– volume, fleet characteristics and the rebound effect”, Transportation Policy, V olume 24, pp. 284

–295. See also Section 3.4 of EERA (2014), “Research to Inform Analysis of the Heavy
- Duty vehicle Rebound Effect”, Excerpts of Draft Final Report of Phase 1 under EPA contract EP
- C
- 13
- 025. 662 Gately, D., The U.S. Demand for Highway Travel and Motor Fuels, The Energy Journal, Volume 11, No. 3, July 1990, pp.59
- 73.Page 634 of 850

large standard errors
. However, Gatel y’s study was beset by numerous statistical problems, which raise serious questions about the reliability of its results. 663 More recentl y, Matos and Silva (2011) anal yz ed road freight transportation sector data for the ye ars 1987

– 2006 in Portugal to identify the determinant s of demand for HDV freight transportation
. 664 Using a reduced
- form equ ation relating HDV use ( measured in ton
- km ) to economic activity

(GDP) and the energy

cost of HDV use (measured in fuel cost per ton
- km carried) , these authors estimated the elasticity of HDV ton
- km with respect to energy costs to be

- 0.24 1 . An important strength of Matos and Silva’s study is that it also estimated this same elasticity using a procedure that accounted for the effect of potential mutual causality between HDV ton
- km and energy

costs , and arrived at an identical value. Differences between HDV use and the level of highway service in Portugal and in the U.S. might limit the applicability of Matos and Silva’s result to the U.S. The volume and mix of commodities could differ between the two nations , as could the levels of congestion on their respective highway

networks, transport distances, the extent of intermodal competition, and the characteristics of HDVs themselves. HDVs also operate over a more limited highway network in Portugal than in the United States. Unfortunately , it is difficult to anticipate how these differences might cause Matos and Silva’s elasticity estimate s to differ from what we might find in the U.S. Finally , their anal ys is focused on HDV freight transport and did not consider non
freight uses of HDVs , wh ich somewhat limits its usefulness in th e anal ys is of this proposed rulemaking
. De Borger and Mulalic (2012) examined the determinants of fuel use in the Denmark HDV freight transport sector for the ye ars 1980

– 2007. The authors developed a sy stem of equation s that capture linkages among the demand for HDV freight transport , HDV fleet characteristics, and HDV fuel consumption. 665 As De Borger and Mulalic state, “we precisely define and estimate a rebound effect of improvements in fuel efficiency in the tr ucking industry : behavioral adjustments in the industry imply that an exogenous improvement in fuel efficiency reduces fuel use less than proportionatel y. Our best estimate of this effect is approximately 10 percent in the short run and 17 perc ent in the long run, so that a 1 percent improvement in fuel efficiency reduces fuel use by

0.90 percent (short
- run) to 0.83 percent (long
- run). ” While De Borger and Mulalic capture a number of important responses that contribute to the rebound effect , so me caution is appropriate when using their results to estimate the VMT rebound effect for this proposal. L ike the Matos and Silva study , this study examined HDV

663 The most important of these problems

– similar historical time trends in the model’s dependent variable and the measures used to e xplain its historical variation

– can lead to “spurious regressions,” or the appearance of behavioral relationships that are simply artifacts of the similarity (or correlation) in historical trends among the model’s variables. 664 Matos, F. J. F., and Silva, F. J. F., “The Rebound Effect on Road Freight Transport: Empirical Evidence from Portugal,” Energy Policy , 39, 2011, pp. 2833

–2841. 665 De Borger, B. and Mulalic, I., “The determinates of fuel use in the trucking industry

– volume, fleet characteristics and the rebound effect”, Transportation Policy, Volume 24, November 2012, pp. 284

–295.Page 635 of 850

activity in another country , Denmark, which has a less
- developed highway sy stem, lower levels of freight railroad service than the U.S., and is also likely to have a different composition of freight shipping activity
. Although the effect of some of these differences i s unclear, greater competition from rail shipping in the U.S. and the resulting potential for lower trucking costs to divert some rail freight to truck could cause the VMT rebound effect to be larger in the U.S. than De Borger and Mulalic’s estimate for Denmark. On the other hand, if freight networks are denser and commodity ty pes are more homogenous in Denmark than the U.S. , then shippers may have wider freight trucking options
. If this is the case, shippers in Denmark might be more sensitive to changes i n freight costs, which could cause the rebound effect in Denmark to be larger than the U.S. L ike the Matos and Silva study , this analy sis also focuses on freight trucking and does not consider non
- freight HDVs (e.g. vocational vehicles). We have been un able to identify adequate data to empl oy De Borger and Mulalic’s model for the U.S. (mainl y because time
- series data on freight carriage by trucks, driver wages, and vehicle prices in the U.S. are limited). The Volpe National Transportation Sy stems Center previousl y has developed a series of travel forecasting models for the Federal Highway Administration (FHWA). 666 Work conducted by the Volpe Center during 2009
- 2011 to develop the original version of FHWA’s forecasting model was presented in the Regulatory Impact Analy sis for the HD GHG Phase 1 rule (see Table 9
- 2 in that document , which is reproduced below as Table IX
- 11 ). 668 Inthe analy sis for the Phase 1 rule, Volpe estimated both state
- level and national aggregate models to forecast HDV single unit and combination truck VMT that i ncluded fuel cost per mile as an explanatory variable. This analy sis used data from 1970

– 20 08 for its national aggregate model, and data for the 50 individual states from 199 4

– 20 08 for its state
- level model. 669 , 670

666 FHWA Travel Analysis Framework Development of VMT Forecasting Models for Use by the Federal Highway Administration May 12, 2014 http://www.fhwa.dot.gov/policyinformation/tables/vmt/vmt_model_dev.pdf . Volpe’s work was advised by a panel of approximately 20 experts in the measurement, analysis, and forecasting of travel, including academi c researchers, transportation consultants, and members of local, state, and federal government transportation agencies. It was also summarized in the paper “Developing a Multi
- Level Vehicle Miles of Travel Forecasting Model,” November, 2011, which was pre sented to the Transportation Research Board’s 91 st Annual Meeting in January, 2012. 668 EPA/NHTSA, August 2011. Chapter 9.3.3, Final Rulemaking to Establish Greenhouse gas Emission Standards & Fuel Efficiency Standards for Medium
- and Heavy
- Duty Engines and Vehicles, Regulatory Impact Analysis. EPA
420
- R
- 11
- 901. ( http://www.epa.gov/otaq/climate/documents/420r11901.pdf ) 669 Com bination trucks are defined as “all [Class 7/8] trucks designed to be used in combination with one or more trailers with a gross vehicle weight rating over 26,000 lbs.” (AFDC, 2014; ORNL, 2013c). Single
- unit trucks are defined as “single frame trucks that have 2

– axles and at least 6 tires or a gross vehicle weight rating exceeding 10,000 lbs.” (FHWA, 2013). 670 The national
- level and functional class VMT forecasting models utilize aggregate time
- series data for the nation as a whole, so that only a single measure of each variable is available during each time period (i.e., year). In contrast, the state
- level VMT models have an additional data dimension, si nce both their dependent variable (VMT) and most explanatory variables have 51 separate observations available for each time period (one for each of the 50 states as well as Washington, DC). In this context, the states represent a “cross
- section,” and a co ntinuous annual sequence of these cross
- sections is available.Page 636 of 850

Volpe anal ys ts tested a large number of different specifications for its national and state level models that incorporated the effects of factors such a s aggregate economic activity and its composition, the volume of U.S. exports and imports, and factors a ffecting the cost of producing trucking services (e.g., driver wage rates, truck purchase prices, and fuel costs), and the extent and capacity of the U.S. and states’ highway networks. Table IX
- 11 summarizes Volpe’s Phase 1 estimates of the elasticity of truck VMT with respect to fuel cost per mile. 672 As it indicates, these estimates vary widel y, and the estimates based on state
- level and national data differ substantially
. **Table IX**  **- 11**  **Summary of Volpe Center Estim ates of Elasticity of Truck VMT with Respect to Fuel Cost per**  **Mile** Truck T ype 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% Volpe staff conducted addit ional analy sis of the models that yielded the estimates of the elasticity of truck VMT with respect to fuel cost per mile reported in Table IX
- 11 , using updated information on fuel costs and other variables appearing in these models, together with revised historical data on truck VMT provided b y DOT’s Federal Highway Administration. The newl y available data, statistical procedures emplo yed in condu cting this additional analy sis, and its results are summarized in materials that can be found in the docket for this rulemaking. This new Volpe anal ys is was not available at the time the agencies selected the values of the rebound effect for this proposal , but the agencies will consider this work and any other work in the anal ys is supporting the final rule
. Finally , EPA has contracted with Energy and Environmental Research Associates (EERA), LLC to anal yz e the HDV rebound eff ect for regulatory

assessment purposes. Ex c erpts of EERA’s initial report to EPA are included in the docket and contain detailed qualitative discussions of the rebound effect as well as data sources that could be used in quantitative anal ys is. 674 EERA also conducted follow
- on quantitative anal ys es focused on estimating the impact of fuel prices on VMT and fuel consumption . W e have included a working paper in the

672 One draw

back of the fuel cost measure employed in Volpe’s models is that it is based on estimates of fuel economy derived from truck VMT and fuel consumption, which introduces the potential for mutual causality (or “simultaneity”) between VMT and the fuel cost measure and makes the effect of the latter difficult to isolate. This may cause their estimates of the sensitivity of truck VMT to fuel costs to be inaccurate, although the direction of any resulting bias is difficult to anticipate. 674 EERA (2014), “Research to Inform Analysis of the Heavy
- Duty vehicle Rebound Effect”, Excerpts of Draft Final Report of Phase 1 under EPA contract EP
- C
- 13
- 025.Page 637 of 850

docket on this work, and we seek comment on this work. 675 Note that EERA’s working paper was not available at the time the agencies conducted the anal ys is of the rebound effect for this proposal, but the agencies will consider this work and any other work in the anal ys is supporting the final rule. There are reasons to be cautious about interpreting the elasticities from the studies reviewed in this section as a measure of VMT rebound resulting from our proposed standards. For example, vehicle capacity and loaded weight can vary dy namically in the HDV sector

– possibly in response to changes in fuel price and fuel efficiency

– and data on these measures are limited. This makes it difficult to confidentl y infer a direct relationship between trucking output ( e.g., ton - miles carried) and VMT assuming a constant average payload. In addition, fuel cost per mile

– calculated b y multiplying fuel price per g allon by fuel efficiency in gallons per mile

– and fuel price may be imprecise prox ies for an improvement in fuel efficiency , because the response of VMT to these variables may differ. For example, if truck operators are more attentive to variation in fuel prices than to changes in fuel efficiency , then fuel price or fuel cost elasticities may overstate the true magnitude of the rebound effect. Similarly , there is some evidence in the literature that demand for fuel is more responsive to fuel price increases than to decreases. 676 Since improved fuel efficiency t ypically causes fuel costs for HDVs to fall (and as suming fuel costs are not fully offset by increases in vehicle purchase prices), fuel price or cost elasticities derived from historical periods when fuel prices were increasing or fuel efficiency was declining may

also overstate the magnitude of the rebound effect . An additional unknown is that HDV operators may factor fuel prices and fuel costs into their decision
- making about rates to charge for their service differentl y from the way they incorporate initial vehicle purchase costs. Despite these limit ations, elasticities with respect to fuel price and fuel cost can provide some insight into the magnitude of the HDV VMT rebound effect. The agencies request comment on all of the studies presented in this section. (b ) Freight Price Elasticities Freight pric e elasticit ies measure the percent change in demand for freight in response to a percent change in freight prices, controlling for other variables that may influence freight demand such as GDP, the extent that goods are traded internationall y, and road sup ply and capacity . This t ype of elasticity is only applicable to the HDV subcategory of freight trucks (i.e.,

675 EERA (2015), “Working Paper on Fuel Price Elasticities for Heavy Duty Vehicles”, Draft Final Report of Phase 2 under EPA contract EP
- C
- 11
- 046. 676 Gately, D. 1993. The Imperfect Price
- Reversibility of World Oil Demand. T he Energy Journal, International Association for Energy Economics, vol. 14 (4), pp. 163
- 182; Dargay, J.M., Gately, D. 1997. The demand for transportation fuels: imperfect price
- reversibility? Transportation Research Part B 31(1); and Sentenac
- Chemin, E., 2 012. Is the price effect on fuel consumption symmetric? Some evidence from an empirical study. Energy Policy, vol. 41, pp. 59
- 65.Page 638 of 850

combination tractors and vocational vehicles that transport freight). One desirable attribute of such measures for purposes of this anal ys is is that they show the response of freight trucking activity to changes to trucking rates, including changes that result from fuel cost savings as well as increases in HDV technology costs. 677 Freight price elasticities, however, are imperfect proxies for the rebound effect in freight trucks for a number of reasons. 678 For example, in order to appl y these elasticities we must assume that our proposed rule’s impact on fuel and vehicle costs is fully reflected in freight rates. This may not be the case if truck o perators adjust their profit margins or other operational practices (e.g., loading practices, truck driver’s wages) instead of freight rates. Itis not well understood how trucking firms respond to different ty pes of cost changes (e.g., changes to fuel co sts versus labor costs). Freight price elasticity e stimates in the literature ty pically measure freight activity in tons or ton - miles, rather than VMT
. As discussed in the previous section, average truck capacit y and payload in the HDV sector varies dy nam ically

– possibly

in response to changes in fuel price and fuel efficiency

– and data on these measures are limited. This makes it difficult to confidently infer a direct relationship between ton - miles and VMT by assuming a constant average payload
. In ferring a direct relationship between tons and VMT is even less straightforward. Additionall y , there are significant limitations on national freight rate and freight truck ton
- mile data in the U.S., making it difficult to confidently measure the impact of a change in freight rates on ton
miles. 679 Finally , freight price elasticity estimates in the literature vary significantl y based on commodity

ty pe, length of haul, region, availability of alternative modes (discussed further in Section IX.E.b.iii below), an d functional form of the model (i.e., log
- linear, linear, translog) making it difficult to confidently appl y an y single estimate reported in the literature to nationwide freight activity . For example, elasticity estimates for longer trips tend to be large r in magnitude than those for shorter trips, while demand to ship bulk commodities tends to be less elastic than for non
- bulk commodities. Although these factors explain some of the difference s among reported estimates, much of the observed variation cannot be explained quantitatively . For example, one study that controlled for mode, commodity class, demand elasticity

measure (i.e., tons or ton
- miles), model

677 Note however that a percent change in freight activity in response to a percent change in freight rates should theoreticall y be larger than a percent change in freight activity in response to a percent change in fuel efficiency because fuel efficiency only impacts a portion of freight operating costs (e.g., fuel and vehicle costs, but not likely driver wages or highway tolls). 678 Winebrake, J.J., Green, E.H., Comer, B., Corbett, J.J., Froman, S., 2012. Estimating the direct rebound effect for on - road freight transportation. Energy Policy 48, 252
- 259. 679 See, for example, Appendix E in EERA (2014), “Research to Inform Analysis of the Heavy
- Duty Vehicle Rebound Effect”, Draft Final Report of Phase 1 under EPA contract EP
- C
- 13
- 025.Page 639 of 850

estimation form, country , and temporal nature of data only accounted for about half of the observ ed variation. 680 (c) Mode Shift Case Study Although the total demand for freight transport is generall y determined b y economic activity , there is often the choice of shipping freight on modes other than HDVs . This is because the United States has extensive rail, waterway and air transport networks in addition to an extensive highway

network; these networks often closely parallel each other and are often viable choices for freight transport for man y long
- distance shipping routes within the continental U.S. I f rates for one mode decline, demand for that mode is likely to increase, and some of this new demand could represent shifts from other modes. 681 The “cross
- price elasticity of demand,” which measures the percentage change in demand for shipping b y another mode ( e.g. , rail) given a percentage change in the price of HDV freight transport services , provides a measure of the importance of such mode shifting. Aggregate estimates of cross
- price elasticities vary widel y 682 , and there is no general consensus on the most appropriate value to use for anal yt ical purposes. When considering intermodal shift, one of the most relevant kinds of shipments are those that are competitive between rail and HDV modes. These trips generall y include long
- haul shipments greater th an 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 HDV and rail modes, so they would not be expected to shift modes except under an extreme price change. However, to the best of our knowledge, the total amount of freight that could potentially be subject to mode shifting has not been studied extensively
. In order t o explore the potential for HD V fuel efficiency standards to produce economic conditions that favor a mode shift from rail to HDVs , EPA commissioned GIFT Solutions, LLC to perform case studies on the HD GHG Phase 1 rule using a number of data sources, including the Commodity

Flow Survey , interviews with trucking firms, and the Geospatial Intermodal Freight Transportation (GIFT) model developed by Winebrake and Corbett, which includes information on infrastructure and other route characteristics in the U.S. 683 , 684

680 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. 681 Rail lines in parts of the U.S. are thought to be currently oversubscribed. If that is the case, and new freight demand is already being satisfied by trucks, then this would limit the potential for intermodal freight shifts between trucks and rail as the result of this proposed rule. 682 Winebrake, J.J., Green, E.H., Comer, B., Corbett, J.J., Froman, S., 2012. Estimating the direct rebound effect for on - road freight transportation. Energy Policy 48, 252
- 259. 683 Winebrake, James and James J. Corbett (2010). “Improving the Energy Efficiency and Environmental Performance of Goods Movement,” in Sperling, Daniel and James S. Cannon (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.pdfPage 640 of 850

A central assumption in the case studies was that economic conditions would favor a shift from rail to HDVs if either the price per ton
- mile to ship a commodity by HDV , or the price to ship a given quantity

of a commodity

by HDV , became lower relative to rail transport options post - regulation. The results of the case studies indicate that the HD Phase 1 rule would not seem to create obvious economic conditions that lead to a mode shift from rail to truck, but there are a number of limitations and cav eats to this analy sis, which are discussed in the final report to EPA by GI FT. 685 , 686 For example, even if trucking did not become less expensive than rail post
regulation, a relative decrease in the truck versus rail rates might be enough to produce a shift, given that other factors could influence shippers’ decisions on modal choice. The study did not, however, consider these other factors such as time
- of
- delivery and modal capacity. As another example, the anal ys is assumes all fuel cost savings and increm ental vehicle costs from the HD Phase 1 rule would be passed on to shippers via changes in freight rates, even though the anal ys is found some evidence that this might not occur (in two cases, the charges for shipping a truckload over a given route and dist ance were the same despite differences in payloads that should have been reflected in their fuel costs). Given these limitations, more work is needed in this area to explore the potential for mode shift in response to HD fuel efficiency standards. (d ) Case Study Using Freight Price Elasticities Cambridge S ys te matics, Inc. (CSI) employed a case study approach using freight price elasticity estimates in the literature to show several examples of the magnitude of the HDV rebound effect. 687 In their unpublished p aper commissioned by the National Research Council of the National Academ ies in support of its 2010 HDV report, CSI estimated the effect on HDV VMT from a net decrease in operating costs associated with fuel efficiency improvements, using two different tec hnology

cost and fuel savings scenarios for Class 8 combination tractors. Scenario 1 increased average fuel efficiency of the tractor from 5.59 miles per gallon to 6.8 miles per gallon , with an additional cost of $22,930 for purchasing the improved tracto r . Scenario 2 increased the average fuel efficiency to 9.1 miles per gallon , at an incremental cost of $71,630 per tractor . Both of these scenari os were based on the technologies and targets from a report authored b y the Northeast States Center for a Cle an Air Future (NESCCAF) and International Council on Clean Transportation (I CCT). 688

684 Winebrake, J. J.; Corbett, J. J.; Falzarano, A.; Ha wker, J. S.; Korfmacher, K.; Ketha, S.; Zilora, S., Assessing Energy, Environmental, and Economic Tradeoffs in Intermodal Freight Transportation, Journal of the Air &W aste Management Association , 58(8), 2008 (Docket ID: EPA
- HQ
- OAR
- 2010
- 0162
- 0008). 685 See GIFT Solutions, LLC, “Potential for Mode Shift due to Heavy Duty Vehicle Fuel Efficiency Improvements”. February, 2012. 686 Winebrake, James, J. Corbett, J. Silberman, E. Erin, & B. Comer, 2012. Potential f or Mode Shift due to Heavy Duty Vehicle Fuel Efficiency Improvements: A Case Study Approach. GIFT Solutions, LLC. 687 Cambridge Systematics, Inc., Assessment of Fuel Economy Technologies for Medium and Heavy Duty Vehicle s: Commissioned Paper on Indirect Costs and Alternative Approaches, 2009. 688 Northeast States Center for a Clean Air Future, Southeast Research Institute, TIAX, LLC., and International Council on Clean Transportation, Reducing Heavy

-Duty Long Haul Truck Fu el Consumption and CO2 Emissions, September 2009. See http://www.nescaum.org/documents/heavy
- duty
- truck
- ghg_report_final
- 200910.pdfPage 641 of 850

The CSIestimates were based on a range of direct (or “own
- price”) freight elasticities (
- 0.5 to
- 1.5) 689 and cross
- price freight elasticities (0.35 to 0.59) 690 obtained from the literature. 691 In their calculations, CSI assumed 142,706 million miles of tractor VMT and 1,852 billion ton
miles were affected. The tractor VMT was based on the Bureau of Transportation Statistics’ (BTS) estimate of highway miles for combination trac tors in 2006, and the rail ton
- miles were based on the BTS estimate of total railroad miles during 2006. This assumption is likely to overstate the rebound effect, since not all freight shipments occur on routes where tractors and rail service shipments c ompete directl y. Nevertheless, this assumption appears to be reasonable in the absence of more detailed information on the percentage of total miles and ton
- miles that are subject to potential mode shifting. For CSI’s calculations, all costs except fue l costs and vehicle costs were taken from a 2008 ATRIstudy
. 692 Itis not clear from the report how the new vehicle costs were incorporated into CSI’s calculations of per
- mile tractor operating costs. For example, neither the ATRI report nor the CSIreport discusses assumptions about depreciation, useful lifetimes of tractors , and the opportunity

cost of capital
. Based on these two scenarios, CSIestimated the change in tractor VMT in response to a net decrease in operating costs (i.e., accounting for fue l cost and changes in tractor purchase costs) associated with fuel efficiency improvement of 11
- 31 percent for Scenario 1 and 5
- 16 percent for Scenario 2, without accounting for any fuel savings from reduced rail service. When the fuel savings from reduce d rail usage were included in the calculations, they estimated the change in tractor VMT in response to a net decrease in operating costs associated with fuel efficiency improvement would be 9
- 30 percent for Scenario 1, and 3
- 15 percent for Scenario 2. N ote that these estimates reflect changes to tractor VMT with respect to total operating costs, so they

should theoreticall y be larger than a percent change in tractor VMT with respect to a percent change in fuel efficiency because fuel efficiency

onl y impa cts a portion of truck operating costs (e.g., fuel and vehicle costs, but not likely driver wages or highway tolls). CSIincluded caveats associated with these calculations. For example, their report states that freight price elasticity estimates derived from the literature are “heavil y reliant on factors including the type of demand measures anal yz ed (vehicle
- miles of travel, ton
- miles, or tons), geograph y, trip lengths, markets served, and commodities transported.” These factors can increase variability in the results. Also, estimates in CSI’s study have the limitation of using

689 Graham and Glaister, “Road Traffic Demand Elasticity Estimates: A Review,” Transport Revie ws Volume 24, 3, pp. 261
- 274, 2004. 690 Based upon a study for the National Cooperative Highway Research Program by Cambridge Systematics, Inc., Characteristics and Changes in Freight Transportation Demand: A Guidebook for Planners and Policy Analysts Phase II Report, National Cooperative Highway Research Program Project 8
- 30, June 1995. 691 The own (i.e., self) price elasticity provides a measure for describing how the volume of truck shipping (demand) changes with its price while the cross
- price elasticity provides a measure for describing how the volume of rail shipping changes with truck p rice. In general, an elasticity describes the percent change in one variable (e.g. demand for trucking) in response to a percent
- change in another (e.g. price of truck operations). 692 American Transportation Research Institute , “ An Analysis of the Operation al Costs of Trucking ” , October 2008.Page 642 of 850

freight price elasticities to estimate the HDV rebound effect discussed previously in Section IV .D.2.b. (e) Simulation Model Study Using Freight Price Elasticities Guerrero (2014) constructs a freight simulation model of the California trucking sector to measure the impact of fuel saving investments and fleet management on GHG emissions. 693 Rather than es timating these impacts using econometric anal ys is of raw data, the study uses values from the existing literature. Guerrero determines that “...improving the performance of trucking also increases the number of trips demanded because the market price also decreases. This ‘rebound’ effect offsets around 40
- 50 percent of these vehicle ef ficiency emission reductions, with 9
- 14 percent of the effect coming from increased pavement deterioration and 31
- 36 percent coming from increased fuel combustion.” Note that to the extent that trip lengths also vary in response to improvements in HDV fue l efficiency , changes in the number of HDV trips may not exactl y reflect changes in the total number of miles the vehicles are operated
. However, these findings are based on freight price elasticities, which

– as we discuss in Section IV.D.2.b and in the context of the CSIstudy above

– have significant limitations. The study also simulates only one state’s freight network (California), which may not be a good representation of national activity
. **(3) How the Agencies**  **Estimate d**  **the HDV**  **Rebound Effect**  **for this**  **Proposal** (a ) Values Used in the Phase 1 Analysis At the time the agencies conducted their anal ys is of the Phase 1 fuel efficiency and GHG emissions standards, the only evidence on the HD V rebound effect were the previousl y described studies from CSI and the Volpe Center. 694 On the basis of this evidence, the agencies chose rebound effects of 15 percent for vocational vehicles and 5 percent for comb ination tractors , both of which were toward the lower end of the range of values f ro m these studies. The agencies found no evidence on the rebound effect for HD pickup trucks and vans, but concluded it would be inappropriate to use the values selected for vocational vehicles or combination tr actors for those vehicles. Because the usage patterns of HD pickup trucks and vans can more closel y resemble those of large light
- dut y veh icles, the agencies used the 10 percent rebound effect we had employed in our m ost recent light
- dut y rulemaking to anal yz e the Phase 1 standards for 2b/3 vehicles. (b ) How the Agencies Analyzed VMT Rebound in this Proposal After considering the new evidence that has become available since the HD Phase 1 final rule , the agencies elected t o continue using the rebound effect estimates we used previousl y in

693 Guerrero, Sebastian. Modeling fuel saving investments and fleet management in the trucking industry: The im pact of shipment performance on GHG emissions. Transportation Research Part E, May 2014. 694 The Gately study wa s also available, however, the agencies were not aware of the work at the time.Page 643 of 850

the HD Phase 1 rule in our anal ys is of Phase 2 proposed standards. In arriving at this decision, the agencies considered the shortcomin gs and limitations of the newl y - available studies described previously , particularly the limited applicability

of the two published studies using data from European nations to the U.S. context. After weighing these attributes of the more recent studies, the agencies concluded that we had insufficient evidence to justify revising the rebound effect values that were used in the Phase 1 anal ys is
. In our assessment , we do not discern between short
- run and long
- run rebound effects, although these effects may differ. The vocational and combination truck estimates are based on the Volpe Center anal ys is presented in the HD Phase 1 rule and the case study from CSI
. As with the HD Phase 1 rule, we did not find an y literature specificall y examini ng the HD pickup and truck sector. Since these vehicles are used for very different purposes than combination tractors and vocational vehicles , and they are more similar in use to large light
- dut y vehicles, we have chosen the light
- duty rebound effect of 10 percent used in the final rule establishing fuel econom y and GHG standards for MYs 2017
- 2025 light
- duty vehicles in our anal ys is of HD pickup trucks and vans. While for this proposal, the agencies have selected to use these rebound effect values, we ac knowledge the literature shows a wide range of rebound effect estimates. Therefore, w e will review and consider revising these estimates in the final rule, taking into consideration all available data and analy sis, including submissions from public commenters and new research on the rebound effect
. It should be noted that the rebound estimates we have selected for our analy sis represent the VMT impact from our proposed standards with respect to changes in the fuel cost per mile driven. As described previ ously , the HDV rebound effect should ideally be a measure of the change in fuel consumed with respect to the change in overall operating costs due to a change in HDV fuel efficiency . Such a measure would incorporate all impacts from our proposal, including those from incremental increases in vehicle prices that reflect costs for improving their fuel efficiency . Therefore, VMT rebound estimates with respect to fuel costs per mile mu st be “scaled” to appl y to total operating costs, b y dividing them b y the fraction of total operating costs accounted for b y fuel
. The agencies made simplifying assumptions in the VMT rebound anal ys is for this proposal, similar to the approach taken duri ng the development of the HD GHG Phase 1 final rule
. However, f

or the HD Phase 2 final rulemaking, we plan to use a more comprehensive approach. Due to timing constraints during the development of this proposal, the agencies did not have the technology

p ackage costs for each of the alternatives prior to the need to conduct the inventory

anal ys is , except for the pickup truck and van category in analy sis Method A
. Therefore, the same "overall" VMT rebound values were used for Alternatives 2 through 5 (as d iscussed in Chapter 8. 3 .3 of the Draft RIA and analyzed in Chapter 6 of the Draft RIA) , despite the fact that each alternative results in a different change in incremental technology and fuel costs . For the final rulemaking, we plan to determine VMT rebound separatel y for each HDV catego ry and for each alternative. Tables 64 through 66 in Chapter 7 of the Draft RIA present VMT rebound for each HDV sector that we estimated for the preferred alternative. These VMT impacts are reflected in the estimates of total fuel savings and reductions in emissions of GHG and other air pollutants presented in Section VI and VII of this preamble for all categories
.Page 644 of 850

Section 9.3.3 in the draft RIA provides more details on our assessment of HDV VMT rebound. We invite comment on our approach, the rebound estimates, and the related assumptions we made. In particular, we invite comment on the most appropriate methodology for factoring new vehicle purchase or leasing costs into the per
- mile operating costs. F or the purposes of this proposal, we have not taken into account any potential fuel savings or GHG emission reductions from the rail sector due to mode shift because estimates of this effect seem too speculative at this time
. We invite comment on this assumption, as well as suggestions on alternative modeling frameworks that could be used to assess mode shifting implications of our proposed regulations
. Similarly , we have not taken into account any fuel savings or GHG emissions red

uctions from the potential shift in VMT from older HDVs to newer, more efficient HDVs because we have found no evidence of this potential effect from fuel efficiency standards
. We invite comment on suggested modeling frameworks or data that could be used to assess the potential for activity

to shift from older to newer, more efficient HDVs in response to our proposed standards
. Note that while we focus on the VMT rebound effect in our anal ys is of this proposed rule, there are at least two other ty pes of rebound effects discussed in the economics literature. In addition to VMT rebound effects, there are “indirect” rebound effects, which refers to the purchase of other goods or services (that consume energy) with the costs savings from energy efficiency imp rovements; and “econom y - wide” rebound effects, which refers to the increased demand for energy

throughout the econom y in response to the reduced market price of energy that happens as a result of energy efficiency

improvements. Research on indirect and econom y - wide rebound effects is nascent, and we have not identified an y that attempts to quantify indirect or econom y - wide rebound effects for HD Vs . In particular, the agencies are not aware of an y data to indicate that the magnitude of indirect or econom y - wide rebound effects, if any , would be significant for this proposed rule. 696 Therefore, we rel y the same analy sis of vehicle miles traveled to estimate the rebound e ffect in this proposal that we did for the HD Phase 1 rule, where we attempt ed to quantif y onl y rebound effects from our rule that impact HD V VMT. We welcome comments and any new work in this area that helps to assess and quantify different rebound effects that could result from improvements in HD V efficiency , including different types of mor e intensive truck usage that affect fuel consumption but not VMT such as loaded weight, truck routing , and scheduling. In order to test the effect of alternative assumptions about the rebound effect, NHTSA examined the sensitivity

of its estimates of benef

its and costs of the Phase 2 Preferred Alternative for HD pickups and vans to alternative assumptions about the rebound effect. While

696 One entity sought reconsideration of the Phase 1 rule on the grounds that indirect rebound effects had not been considered by the agencies and could negate all of the benefits of the standards. This assertion rested on an unsupported affidavit lacking any peer review or other indicia of obj ectivity. This affidavit cited only one published study. The study cited did not deal with vehicle efficiency, has methodological limitations (many of them acknowledged), and otherwise was not pertinent. EPA and NHTSA thus declined to reconsider the Phas e 1 rule based on these speculative assertions. See generally 77 FR 51703
- 04 (Aug. 27, 2012) and 77 FR 51502
- 03 (Aug. 24, 2012).Page 645 of 850

the main anal ys is for pickups and vans assumes a 10 percent rebound effect, the sensitivity anal ys is estimates the benefit s and costs of the proposed standards under the assumptions of 5, 15, and 20 percent rebound effects. Alternative values of the rebound effect change the estimates of benefits and costs from the proposed standards in three way s. First, higher values of the rebound effect increase the amount of additional VMT that results from improved fuel efficiency ; thi s increases costs associated with additional congestion, accidents, and noise, thus increasing total costs associated with the proposed standards. Conversel y, smaller values of the rebound effect reduce costs from additional congestion, accidents, and noi se, so they reduce total costs of the proposed standards. Larger increases in VMT associated with higher values of the rebound effect reduce the value of fuel savings and related benefits (such as reductions in GHG emissions) by progressivel y larger amounts, while smaller values of the rebound effect cause smaller reductions in these benefits. At the same time, however, a higher rebound effect generates larger benefits from increased vehicle use, while a smaller rebound effect reduces these benefits. Thus the impact of alternative values of the rebound effect on total benefits from the proposed standards depends on the exact magnitudes of these latter two effects. On balance, these three effects can cause net benefits to increase or decrease for alternati ve values of the rebound effect. **Table IX**  **- 12**  **Sensitivity of Preferred Alternative Impacts under Different Assumptions about Rebound Effect for Pickups and Vans, using 3% Discount Rate**  HD Pickups and Vans Re bound Effect Main Analysis Sensitivity Cases Using

Alternative Rebound Assumptions 10 % 5 % 15 % 20 % Fuel Reductions (Billion Gallons) 7.8 8.2 7.5 7.1 GHG Reductions (MMT CO 2 eq) 94.1 95.7 87.2 83.0 Total Costs ($ billion) 5.5 5.0 6.5 7.2 Total Benefits ($ billion) 23.5 23.0 22.9 22.8 Net Benefits ($ billion) 18.0 18.0 16.4 15.5 Table IX
- 12 summarizes the impact of these alternative assumptions on fuel and GHG emissions savings, total costs, total benefits, and net benefits. As it indicates, using a 5% value for the rebound eff

ect reduces benefits and costs of the proposed standards by identical amounts, leaving net benefits unaffected. As the table also shows, rebound effect s of 15 percent and 20 percent increase costs and reduce benefits compared to their values in the main anal ys is, thus reducing net benefits of the proposed standards. Nevertheless, the preferred alternative has significant net benefits under each alternative assumption about the magnitude of the rebound effect for HD pickups and vans. Thus, these alternative values of the rebound effect would not have affected the agencies’ selection of the preferred alternative, as that selection is based on NHTSA’s assessment of the maximum feasible fuel efficiency standards and EPA’s selection o f appropriate GHG standards to address energy security and the environment
.Page 646 of 850



### F. **Impact on Class Shifting, Fleet Turnover, and Sales** The agencies considered two additional potential indirect effects 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 discussions 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 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 compan y to pul l a trailer carrying lawnmowers. The purchaser makes decisions based on man y attributes of the vehicle, including the gross vehicle weight rating of the vehicle, which in part determines the amount of freight or equipment that can be carried. If the propo sed Phase 2 standards impact 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 fu el 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. 697 NHTSA and EPA qualitatively evaluated the proposed rules in light of potential cla ss shifting. The agencies looked at four potential cases of shifting:
- from light
- duty pickup trucks to heavy
- 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 currently regulated under the existing GHG/CAFE Phase 1 program and will meet GHG/CAFE Phase 2 emission standards beginning in 2017. The increased stringency of the light
- duty 2017
- 2 025 MY vehicle rule has led some to speculate that vehicle consumers may choose to purchase heav y - dut y pickup trucks that are currentl y regulated under the HD Phase 1 program if the cost of the light
- dut y regulation is high relative to the cost to buy the larger heavy
- dut y pickup trucks. Since fuel consumption and GHG emissions rise significantly with vehicle mass, a shift from light
- duty trucks to heavy
- dut y 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 - dut y 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. These proposed rules would conti nue to diminish any

incentive for such a class shift because they would narrow the GHG and fuel efficiency

performance gap between light
- duty and heav y - duty

pickup trucks. The proposed regulations for the HD pickup trucks, and similarly for vans, are based on similar 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
- dut y trucks to HD trucks. To the extent that our proposed regulation of heavy
-

697 See 2010 NAS Report, page 152.Page 647 of 850

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 smal ler light
- dut y pickups have significantly better fuel economy ratings than heav y - dut y pickup trucks. The projected cost increases for this proposed action differ between Class 8 day cabs and Class 8 sleeper cabs, reflecting our expectation that compliance with the proposed standards would lead truck consumers to specify sleeper cabs equipped with APUs while day cab consumers would not. Since Class 8 day cab and sleeper cab trucks perform essentially the same function when hauling a trailer, this raises the possibility that the higher cost for an APU equipped sleeper cab could lead to a shift from sleeper cab to day cab trucks. We do not believe that such an intended consequence would occur for the following reasons. The addition of a sleeper berth to a tr actor cab is not a consumer
- 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 compl y with federall y mandated 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. 698 A day cab simpl y cannot provide this utility with a single driver . The need for this utility would not be changed even if the additional costs to reduce greenhouse gas emissions from sleeper cabs exceed th ose for reducing greenhouse gas emissions from day cabs. 699 A trucking fleet could instead 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 fo r 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 likel y be little difference to the environment for any switching that might occur. Further, while our p rojected costs assume the purchase of an APU for compliance, in fact our proposed regulatory structure would allow compliance using a near zero cost software utility

that eliminates tractor idling after five minutes. Using this compliance approach, the co st difference between a Class 8 sleeper cab and day cab due to our proposed regulations is small. We are proposing 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 since the tractor is continuall y being driven when occupied. When it is parked, it would automatically eliminate an y additional idling through the shutdown software. If trucking businesses choose this option, then costs based on purchase of APUs may

overestimate the costs of this program to this sector.

698 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 Heavy
- Duty On
- Road Vehicles”, July 2010. Page 3. Docket Identification Number EPA
- HQ
- OAR
- 2014
-- 0827. 699 The average marginal cost difference between sleeper cabs and day cabs in the proposal is roughly $2,500.Page 648 of 850

Class shifting from combination tractors to vocational vehicles may occur if a customer deems the additional marginal cost of tractors due to the re gulation to be greater than the utility provided b y 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 if these vehicles were treated significantly differently

from the Class 8 tractors, then they could be easily substituted for Class 8 tractors. Therefore, the agencies are proposing to continue to include both classes in the tractor category . The agencies believe that 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 b y vocational v ehicles. The agencies do not envision that the proposed regulatory program would cause class shifting within the vocational vehicle class. The marginal cost difference due to the regulation of vocational vehicles is minimal. The cost of LRR tires on a pe r 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 carrying capabilit y of the additional axle wo uld outweigh the additional cost for heavier vehicles. 700 In conclusion, NHTSA and EPA believe that the proposed regulatory structure for HD trucks would not significantly change the current competitive and market factors that determine purchaser preferences among truck ty pes. Furthermore, even if a small amount of shifting would occur, an y resulting GHG impacts would likely to be negligible because any 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 th e vehicle populations used to assess the benefits of the proposed program. **(2) Fleet Turnover**  **and Sales Effect**  **s** A regulation that affects the cost to purchase and/or operate trucks could affect whether a consumer decides to purchase a new truck and the timi ng 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 o pt to keep their existing truck rather than purchase a new truck due to the incremental cost of the regulation. The 2010 NAS HD Report discussed the topics associated with HD truck fleet turnover. NAS noted that there is some empirical evidence of pre
- b uy behavior in response to the 2004 and 2007 heav y - dut y engine emission standards, with larger impacts occurring in response to higher

700 The proposed rule projects the difference in costs between the HHD and MHD vocational vehicle technologies is approximately $30.Page 649 of 850

costs. 701 However, those regulations increased upfront costs to firms without any offsetting future cost savings from redu ced 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 simply elect to keep their current equipment on the road longer, all the more likely 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 comes to efficiency investments, most heav y - dut y fleet operators require relativel y quick payback periods, on the order of two to three years. 702 Th e proposed regulations are projected to return fuel savings to the truck owners that offset the cost of the regulation within a few years. The effects of the regulation on purchasing behavior and sales will depend on the nature of the market failures and the extent to which 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 IX. A. this scenario may occur if this proposed program reduces uncer tainty 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, primarily in the original vehicle market, but possibly in the resale market as well. In addition, the proposed standards are expected to lead manufacturers to install more fuel
- saving technologies and promote their purchase; the increased availability

and promotion may

encourage sales. 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 uncertaint y about fuel prices. Another explanation is that the resale 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

— s ee Section IX. A. ) between truck purchasers (who may emphasize the up
- front costs of the trucks) and truck operators, who would like the fuel savings, can also lea d to pre
- buy or delayed purchasing behavior. If these market failures prevent firms from fully internalizing fuel savings when

701 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). “Technologies and Approaches to Reducing the Fuel Consumption o f 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., pp. 150
- 151 702 See NAS Rep ort, Note 701 , page 151.Page 650 of 850

deciding on vehicle purchases, then pre
- buy and delayed purchase could occur and could result in a slight decrease in the GHG be nefits 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 behaviors of purchasers in that market. Without additional information about which scenario is more like ly to be prevalent, the agencies are not projecting a change in fleet turnover characteristics due to this regulation. Whether vehicle sales appear to be affected b y the HD Phase 1 standards could provide some insight into the impacts of the proposed standards. At the time of this NPRM, sales data are not yet available for 2014 model year, the first year of the Phase 1 standards. In addition, any trends in sales are likely

to be affected b y m acroeconomic conditions, which have been recovering since 200 9
- 2010. As a result, it is unlikely to be possible, even when vehicle sales data are available, to separate the effects of the existing standards from other confounding factors. 

### G. **Monetized GHG Impacts (1)**  **Monetized CO 2**  **Impacts**
**– The Social Cost of Carbon (S**  **C -**  **CO 2**  **)** We estimate the global social benefits of CO 2 emission reductions expected from the proposed heav y - dut y GHG and fuel efficiency standards using the social cost of carbon (SC
CO 2 ) estimates presented in the 2013 Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (2013 SCC TSD). 703 (The SC
- CO 2 estimates are presented in Table IX
- 11). We refer to these estimates, which were developed by the U.S. government, as “SC
- CO 2 estimates.” The SC
- CO 2 is a metric that estimates the monetary value of impacts associated with marginal changes in CO 2 emissions in a given ye ar. It includes a wide range of anticipat ed climate impacts, such as net changes in agricultural productivity

and human health, property damage from increased flood risk, and changes in energy

s ys tem costs, such as reduced costs for heating and increased costs for air conditioning. It is used in regulatory impact anal ys es to quantify the benefits of reducing CO 2 emissions, or the disbenefit from increasing emissions
. The SC
- CO 2 estimates used in this analy sis were developed ove r man y ye ars, using the best science available, and with input from the public. Specificall y, an interagency working

703 Docket ID EPA

–HQ

– OAR

–2014
- 0827, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulato ry 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 Commerce, Department of Energ y, 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 (May 2013, Revised Novemb er 2013). Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical
- update
- social
- cost of
- carbon
- for
- regulator
- impact
- analysis.pdf.Page 651 of 850

group (IWG) that included EPA , DOT, and other executive branch agencies and offices used three integrated asse ssment models (IAMs) to develop the SC
- CO 2 estimates and recommended four global values for use in regulatory analy ses. The SC
- CO 2 estimates were first released in February 2010 705 and updated in 2013 using new versions of each IA M. These estimates were published in the 2013 SCC TSD
. The 2013 update did not revisit the 2010 modeling decisions (e.g., with regard to the discount rate, reference case socioeconomic and emission scenarios or equilibrium climate sensitivity ). Rath er, improvements in the way damages are modeled are confined to those that have be en incorporated into the latest versions of the models by the developers themselves and used for anal ys es in peer
- reviewed publications
. The 2010 SCC Technical Support Docum ent (2010 SCC TSD) provides a complete discussion of the methods used to develop these estimates and the 2013 SCC TSD presents and discusses the updated estimates.
The 2010 SCC TSD noted a number of limitations to the SC
- CO 2 analysis, including the incomplete way

in which the IAMs capture catastrophic and non
- catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumption s regarding risk aversion. Current IAMs do not assign value to all of the important phy sical, ecological, and economic impacts of climate change recognized in the climate change literature due to a lack of precise information on the nature of damages and because the science incorporated into these models understandably lags behind the most recent research. Nonetheless, these estimates and the discussion of their limitations represent the best available information about the social benefits of CO 2 reductio ns to inform benefit
- cost anal ys is ; see RIA of this rule and the SCC TSDs for additional details. The new versions of the models used to estimate the values presented below offer some improvements in these areas, although further work is warranted. Accordingl y, EPA and other agencies continue to engage in research on modeling and valuation of climate impacts with the goal to improve these estimates. The EPA and other federal agencies have considered the extensive public comments on way s to improve SC
- CO 2 estimation received via the notice and comment periods that were part of numerous rulemakings. In addition, OMB’s Office of Information and Regulatory Affairs sought public comment on the approach used to develop the SC
- CO 2 estimates (78 FR 70586; November 26, 2013). The comment period ended on February 26, 2014, and OMB is reviewing the comments received.

705 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 the Council of Economic Advisers, Council on Environmental Quality, Department of Agriculture, Department of Commerce, Department of Energy, Department o f 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 (February 2010). Also available at: http ://www. whitehouse.gov/sites/default/files/omb/inforeg/for
- agencies/Social
- Cost
- of
- Carbon
- for
- RIA.pdf.Page 652 of 850

OMB also responded in January 2014 to concerns submitted in a Request for Correction on the SCC TSDs. 706 The four global SC
- CO 2 estimates, updated in 2013, are as follows: $13, $46, $68, and $ 140 per metric ton of CO 2 emissions in the year 2020 (2012$). 707 The first three values are based on the average SC
- CO 2 from the three IAMs, at discount rates of 5, 3, and 2.5 percent, respectivel y. SC
- CO 2 est imates for several discount rates are included because the literature shows that the SC
- CO 2 is quite sensitive to assumptions about the discount rate, and because no consensus exists on the appropriate rate to use in an intergenerational context (where cos ts and benefits are incurred b y different generations). The fourth value is the 95th percentile of the SC
CO 2 from all three models at a 3 percent discount rate. It is included to represent higher
- than
expected impacts from temperature change further out in the tails of the SC
- CO 2 distribution (representing less likely , but potentially catastrophic, outcomes)
. The SC
- CO 2 increases over time because future emissions are expected to produce larger incremental damages as economies grow and ph ys ical and economic sy stems become more stressed in response to greater climate change. The SC
- CO 2 values are presented in Table IX
- 11. Applying the global SC
- CO 2 estimates, shown in Table IX
- 13 , to the est imated reductions in domestic CO 2 emissions for the proposed program, yi elds estimates of the dollar value of the climate related benefits for each analysis year. These estimates are then discounted back to the analy sis year using the same discount rate u sed to estimate the SC
- CO 2 . For internal consistency , the annual benefits are discounted back to net present value terms using the same discount rate as each SC
- CO 2 estimate ( i.e. 5 percent, 3 percent, and 2.5 percent) rather than the discount rates of 3 percent and 7 percent used to derive the net present value of other streams of costs and benefits of the proposed rule. 708 The SC
- CO 2 benefit estimates for each calendar ye ar are sh own in Table IX
- 14
. The SC
- CO 2 benefit estimates for each model year are shown in Table IX
- 15
.

706 OMB’s 1/24/14 response to the petition is available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/ssc
- rfc
- under
- iqa
- response.pdf 707 The 2013 SCC TSD presents the SC
- CO 2 estimates in $2007. These estimates were adjusted to 2012$ using the GDP Implicit Price Deflator. Bureau of Economic Analysis, Table 1.1.9 Implicit Price Deflators for Gross Domestic Product; last revised on March 27, 2014. 708 See more discussion on the appropriate discounting of climate benefits using SC
- CO 2 in the 2010 SCC TSD. Other benefits and costs of proposed re gulations unrelated to CO 2 emissions are discounted at the 3% and 7% rates specified in OMB guidance for regulatory analysis.Page 653 of 850 **Table IX**  **- 13**  **Social Cost of CO 2**  **, 2012**

**– 2050**  **a (in 2012$ per Metric Ton)**  Calendar Year 5% Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2012 $12 $37 $58 $100 2015 $12 $40 $61 $120 2020 $13 $46 $69 $140 2025 $15 $51 $74 $150 2030 $17 $56 $81 $170 2035 $20 $60 $86 $190 2040 $23 $66 $93 $210 2045 $26 $71 $99 $220 2050 $28 $77 $100 $240 Note: a The SC
- CO 2 values are dollar
- year and emissions
- year specific and have been rounded to two significant digits. Unrounded numbers from the 2013 SCC TSD were used to calculate the CO 2 benefits. **Table IX**  **- 14**  **Upstream and Downstream Annual**  **CO 2**  **Benefits for the Given SC -**  **C O**  **2 Value**  **a using Method B** 

**and Relative to the Less Dynam ic Baseline (Millions of 2012$**  **) b**  Calendar Year 5%

Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $13 $43 $65 $130 2019 $26 $91 $130 $270 2020 $40 $140 $210 $420 2021 $92 $330 $500 $1,000 2022 $170 $590 $880 $1,800 2023 $250 $860 $1,300 $2,600 2024 $400 $1,300 $1,900 $4,000 2025 $540 $1,800 $2,600 $5,500 2026 $720 $2,300 $3,400 $7,000 2027 $890 $2,900 $4,200 $8,900 2028 $1,100 $3,500 $5,100 $11,000 2029 $1,300 $4,200 $5,900 $13,000 2030 $1,500 $4,800 $6,900 $15,000 2035 $2,500 $7,400 $11,000 $23,000 2040 $3,300 $9,700 $14,000 $30,000 2050 $5,000 $14,000 $19,000 $42,000 NPV $22,000 $100,000 $160,000 $320,000 Note s : a The SC
- CO 2 values are dollar
- year and emissions
- year specific. b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 654 of 850

**Table IX**  **- 15**  **Upstream and Downstream Discounted Model Year Lifetime CO**  **2 Benefits for the Given SC**  **** **C O**  **2 Value**  **using Method B and Relative to the Less Dynam ic Baseline**  **(Millions of 2012$) a**  **, b**  Model Year 5%

Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $93 $380 $580 $1,100 2019 $90 $370 $570 $1,100 2020 $87 $360 $560 $1,100 2021 $520 $2,200 $3,400 $6,600 2022 $540 $2,300 $3,500 $6,900 2023 $550 $2,300 $3,600 $7,200 2024 $870 $3,700 $5,800 $11,000 2025 $900 $3,900 $6,100 $12,000 2026 $920 $4,000 $6,300 $12,000 2027 $1,100 $4,800 $7,600 $15,000 2028 $1,100 $4,800 $7,600 $15,000 2029 $1,100 $4,900 $7,700 $15,000 Sum $7,800 $34,000 $53,000 $100,000 Notes: a The SC
- CO 2 values are dollar
- year and emissions
- year specific. b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. **(2) Sensitivity Analysis**  **- Monetized Non**  **- CO**  **2 GHG Impacts**  One limitation of the primary benefits anal ys is is that it does not include the valuation of non - CO 2 GHG impacts (e.g., CH 4 , N 2 O , HFC
- 134a). Specifically , the 2010 and 2013 SCC TSDs do not include estimate s of the social costs of non
- CO 2 GHG emissions using an approach analogous to the one used to estimate the SC
- C O 2 . However, EPA recognizes that non
- CO 2 GHG impacts associated with this rulemaking (e.g., net reductions in CH 4 , N 2 O , and HFC
- 134a ) would provide additional benefits to society. To understand the potential implication of omitting these benefits, EPA has conducted sensitivity analy sis using two approaches: 1) an approximation approac h based on the global warming potential s (GWP) of non
- CO 2 GHGs, which has been used in previous rulemakings, and 2) a set of recently published SC
- CH 4 and SC
N 2 O estimates that are consistent with the modeling assumptions underl yi ng the SC
- C O 2 estimates (M arten et al. 2014). This section presents estimates of the non
- CO 2 benefits of the proposed rulemaking using both approaches
. Other unquantified non
- CO 2 benefits are discussed in this section as well. Additional details are provided in the RIA of these rules
. Currently , EPA is undertaking a peer review of the application of the Marten et al. (2014) non - CO 2 social cost estimates in regulatory anal ysis
. Pending a favorable peer review, EPA plans to include monetized benefits of CH 4 and N 2 O emission reductions in the main benefit
- cost anal ys is of the RIA for the final rule , using the directly modeled estimates of SC
- CH 4 and SC
N 2 O from Marten et al. EPA seeks comments on the use of directly modeled estimates for the social cost of non
- CO 2 GHGs.Page 655 of 850

(a) Non
- CO2 GHG Benefits Based on the GWP Approximation Approach In the absence of directl y modeled estimates, one potential method for approximating the value of marginal non
- CO 2 GHG emission reductions is to convert non
- CO 2 emissions reductions to CO 2 - equivalents that may then be valued using the SC
- C O 2 . Conversion to CO 2 - equivalents is ty

pically based on the global warming potentials (GWPs) for the non
- CO 2 gases. This approach, henceforth referred to as the “GWP approach,” has been used in sensitivity anal ys es to estimate the non
- CO 2 benefits in previous EPA rulemakings (see U.S. EPA 2012, 2013). 709 EPA has not presented these estimates in a main benefit
- cost anal ys is due to the limitations associated with using the GWP approach to value changes in non
- CO 2 GHG emissions, and considered the GWP approach as an interim method of analy sis until social cost estimates for non
- CO 2 GHGs, consistent with the SC
- C O 2 estimates, were developed. The GWP is a simple, transparent, and well
- established metric for assessing the relative impacts of non
- CO 2 emissions compared to CO 2 on a purel y ph ys ical basis. However, as discussed both in the 2010 SCC TSD and previous rulemakings (e.g., U.S. EPA 2012, 2013), the GWP approximation approach to measuring non
- CO 2 GHG be nefits has several well
documented limitations
. The se metrics are not ideally suited for use in benefit
- cost anal ys es to approximate the social cost of non
- CO 2 GHGs because the approach would assume all subsequent linkages leading to damages are linear in radiative forcing, which would be inconsistent with the most recent scientific literature. Detailed discussion of limitations of the GWP approach can be found in the RIA. Similar to the approach used in the RIA of the Final Rulemaking for 2017

- 2025 Light

Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards (U
. S
. EPA, 2013), EPA applies the GWP approach to estimate the benefits associated with reductions of CH 4 , N 2 O and HFCs in each calendar ye ar. Under the GWP App roach, EPA converted CH 4 , N 2 O and HFC
- 134a to CO 2 equivalents using the AR4 100
- ye ar GWP for each gas: CH 4 (25), N 2 O (298), and HFC
- 134a (1,430). 710 These CO 2 - equivalent emission reductions are multiplied by

the SC
- C O 2 estimate corresponding to each ye ar of emission reductions. As with the calculation of annual benefits of CO 2 emission reductions, the annual benefits of non
CO 2 emission reductions based on the GWP approach are discounted back to net present value terms using the same discount rate as each SC
- CO 2 estimate. The estimated non
- CO 2 GHG benefits using the GWP approach are presented in Table IX
- 16 through Table IX
- 18 . The total net present value of the GHG benefits for this proposed rulemaking would increase by about

709 U.S. EPA. (2012). “Regulatory impact analysis supporting the 2012 U.S. Environmental Protection Agency final new source performance standards and amendments to the national emission standards for hazardous air pollutants for the oil and natural gas industry.” Retrieved from http://www.epa.gov/ttn/ecas/regdata/RIAs/oil_natural_gas_final_neshap_nsps_ria.pdf U.S. EPA. (2013). “Regulatory impact analysis: Final rulemaking for 2017

–2025 light
- duty vehicle greenhouse gas emission standards and corporate average fuel economy standards.” Retrieved from http://www.epa.gov/otaq/climate/documents/420r12016.pdf 710 Sourc e: Table 2.14 (Errata). Lifetimes, radiative efficiencies and direct (except for CH 4 ) GWPs relative to CO 2 . IPCC Fourth Assessment Report "Climate Change 2007: Working Group I: The Physical Science Basis."Page 656 of 850

$ 760 m illion to $ 11 billion (2012$) , depending on discount rate, or roughly 3 percent if these non - CO 2 estimates were included. **Table IX**  **- 16**  **Annual Upstream** **and Downstream CH**  **4 Benefits for the Given SC**  **- C**  **O 2**  **Value using Method B**  **and Relative to the Less Dynam** **ic Baseline ,**  **Using the GWP Approach a**  **,b (Millions of 2012$**  **) b**  CH 4 Calendar Year 5% Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $0.3 $1.1 $1.6 $3.2 2019 $0.6 $2.2 $3.3 $6.6 2020 $1.0 $3.5 $5.2 $10 2021 $3.1 $11 $17 $33 2022 $6.0 $20 $30 $62 2023 $8.8 $30 $45 $93 2024 $14 $46 $68 $140 2025 $19 $62 $91 $190 2026 $25 $79 $120 $240 2027 $30 $99 $140 $300 2028 $36 $120 $170 $360 2029 $43 $140 $200 $420 2030 $49 $160 $230 $480 2035 $82 $240 $350 $760 2040 $110 $320 $440 $990 2050 $160 $440 $600 $1,400 NPV $730 $3,400 $5,400 $11,000 Notes: a The SC
- CO 2 values are dollar
- year and emissions
- year specific b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

.Page 657 of 850

**Table IX**  **- 17**  **Annual Upstream** **and Downstream N**  **2 O**  **Benefits for the Given SC**  **- C**  **O 2**  **Value using Method B**  **and Relative to the Less Dynam ic Baseline**  **, Using the GWP Approach**  **a ,b**  **(Millions of 2012$ )**  **b** N 2 O Calendar Year 5% Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $0.0 $0.0 $0.1 $0.2 2019 $0.0 $0.1 $0.2 $0.3 2020 $0.0 $0.2 $0.2 $0.5 2021 $0.1 $0.4 $0.5 $1.1 2022 $0.2 $0.6 $1.0 $1.9 2023 $0.3 $0.9 $1.4 $2.8 2024 $0.4 $1.4 $2.1 $4.4 2025 $0.6 $2.0 $2.9 $6.0 2026 $0.8 $2.6 $3.7 $7.8 2027 $1.0 $3.2 $4.7 $10 2028 $1.2 $3.9 $5.7 $12 2029 $1.5 $4.6 $6.6 $14 2030 $1.6 $5.3 $7.7 $16 2035 $2.8 $8.3 $12 $26 2040 $3.8 $11 $15 $34 2050 $5.6 $15 $21 $47 NPV $25 $120 $180 $360 Notes: a The SC
- CO 2 values are dollar
- year and emissions
- year specific. b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 658 of 850

**Table IX**  **- 18**  **Annual Upstream** **and Downstream HFC**  **- 134a**  **Benefits for the Given SC**  **- C**  **O 2**  **Value using**  **Me thod B and Relative to the Less Dynamic Baseline**  **, Using the GWP Approach**  **a ,b**  **(Millions of 2012$ )**  **b** HFC
- 134a Calendar Year 5% Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $0.0 $0.0 $0.0 $0.0 2019 $0.0 $0.0 $0.0 $0.0 2020 $0.0 $0.0 $0.0 $0.0 2021 $0.2 $0.8 $1.3 $2.6 2022 $0.5 $1.7 $2.6 $5.3 2023 $0.8 $2.7 $4.0 $8.1 2024 $1.1 $3.7 $5.4 $11 2025 $1.4 $4.7 $6.9 $14 2026 $1.8 $5.9 $8.6 $18 2027 $2.2 $7.1 $10 $22 2028 $2.5 $8.3 $12 $25 2029 $3.0 $10 $14 $29 2030 $3.4 $11 $16 $34 2035 $5.2 $15 $22 $48 2040 $6.1 $18 $25 $56 2050 $8.4 $23 $31 $71 NPV $44 $200 $320 $630 Notes: a The SC
- CO 2 values are dollar
- year and emissions
- year specific. b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. (b ) Non
- CO2 GHG Benefits Based on Directly Modeled Estimates Several researchers have directly estimated the social cost of non
- CO 2 emissions using integrated assessment models (IAMs), though the number of such estimates is small compared to the large number of SC
- C O 2 estimates available in the literature. As discussed in previous RIAs (e.g., EPA 2012), there is considerable variation among these published estimates in the models and input assumptions they employ
. These studies differ in the emission perturbation year, employ a wide range of constant and variable discount rate specifications, and consider a range of baseline socioeconomic and emissions scenarios that have been developed over the last 20 ye ars. However, none of the other published estimates of the social cost of non
- CO 2 GHG are consistent with the SC
- C O 2 estimates, and most are likely underestimates due to changes in the underlying science since their publication.Page 659 of 850

Recently , a paper by

Marten et al. (2014) provided the first set of published SC
- CH 4 and SC
-N 2 O estimates that are consistent with the modeling assumptions underlying the SC
- C O 2 . 711 Specificall y, the estimation approach of Marten et al. (2014) used the same set of three IAMs, five socioeconomic
- emissions scenarios, equilibrium climate sensitivity distribution, three constant discount rates , and aggregation approach used to develop the SC
- C O 2 estimates. The resulting SC
- CH 4 and SC
-N 2 O estimates are presented in Table IX
- 19
. More detailed discussion of their methodology , results and a comparison to other published estimates can be found in the RIA and in Marten et al. (2014). The tables do not include HFC
- 134a because EPA is unaware of analogous estimates. **Table IX**  **- 19**  **Social Cost of CH 4**  **and N 2**  **O, 2012**

**– 2050**  **a [in 2012$ per m**  **etric ton] (Source: Marten et al., 2014) Year**  **SC -**  **CH 4**  **SC -**  **N 2**  **O**

**5% Average**  **3%**

**Average 2.5%** 

**Average 3%** 

**95 th**  **percentile 5%** 

**Average 3%** 

**Average 2.5%** 

**Average 3%** 

**95 th**  **percentile 2012**  $440 $1000 $1400 $2800 $4000 $14000 $2 0 000 $37000 **2015** 500 1200 1500 3100 4400 15000 22000 39000 **2020** 590 1300 1700 3500 5200 16000 24000 44000 **2025** 710 1500 19000 4100 6000 18000 27000 50000 **2030** 840 1700 2300 4600 7000 20000 29000 55000 **2035** 990 2000 2500 5400 8100 23000 32000 61000 **2040** 1200 2300 2800 6000 9300 25000 35000 67000 **2045** 1300 2500 3100 6800 11000 27000 38000 73000 **2050** 1500 2700 3300 7400 12000 290000 41000 80000 Notes: a The values are emissions
- ye ar specific and have been rounded to two significant digits. Unrounded num bers we re used to calculate the GHG benefits. The application of directly modeled estimates from Marten et al. (2014) to benefit
- cost anal ys is of a regulatory

action is analogous to the use of the SC
- C O 2 estimates. Specifically , the SC
- CH 4 and SC
-N2 O estimates in Table IX
- 19 are used to monetize the benefits of changes in CH 4 and N 2 O emissions expected as a result of the proposed rulemaking. Forecast changes in CH 4 and N 2 O emissions in a given year resulting fro m the regulatory action are multiplied by

the SC
- CH 4 and SC
-N2 O estimate for that ye ar, respectively
. To obtain a present value estimate, the monetized stream of future non
- CO 2 benefits are discounted back to the analy sis year using the same discount rate used to estimate the social cost of the non
- CO 2 GHG emission changes. The CH 4 and N 2 O benefits based on Marten et al. (2014) are presented for each calendar ye ar in Table IX
- 20
. Including these benefits would increase the total net present value of the GHG benefits for this proposed rulemaking b y about $ 1.5 billion to $ 12 billion (2012$) , or roughl y 4 to 7 percent, depending on discount rate.

711 Marten, A. L., E. A. Kopits, C. W. Griffiths, S. C. Newbold & A. Wolverton (2014). Incremental CH 4 and N 2 O mitigation benefits consistent with the U.S. Government's SC
- CO 2 estimates, Climate Policy , DOI: 10.1080/14693062.2014.912981.Page 660 of 850

**Table IX**  **- 20**  **Annual Upstream** **and Downstream non**  **- CO**  **2 GHG**  **Benefits for the Given SC -**  **non -**  **C O**  **2 Value**  **using Method B and Relative to the Less Dynamic Baseline ,**  **Using the Directly Modeled Approach a**  **,b (Millions**  **of 2012$ )**  **c** CH 4 N 2 O Calendar Year 5% Average 3%

Average 2.5%

Average 3%,

95 th Percentile 5%

Average 3%

Average 2.5%

Average 3%,

95 th Percentile 2018 $0.6 $1.3 $1.6 $3.3 $0.0 $0.1 $0.1 $0.2 2019 $1.1 $2.6 $3.4 $6.8 $0.0 $0.1 $0.2 $0.3 2020 $1.8 $3.9 $5.2 $10 $0.1 $0.2 $0.3 $0.5 2021 $5.8 $13 $17 $35 $0.1 $0.4 $0.6 $1.2 2022 $11 $24 $31 $65 $0.3 $0.8 $1.1 $2.1 2023 $17 $35 $49 $97 $0.4 $1.1 $1.7 $3.1 2024 $26 $56 $72 $150 $0.6 $1.8 $2.5 $4.7 2025 $35 $74 $95 $200 $0.8 $2.4 $3.5 $6.5 2026 $46 $99 $130 $260 $1.0 $3.0 $4.5 $8.4 2027 $57 $120 $150 $320 $1.3 $4.0 $5.8 $11 2028 $69 $140 $190 $390 $1.6 $4.8 $6.9 $13 2029 $82 $170 $220 $460 $1.9 $5.8 $8.2 $15 2030 $95 $190 $260 $520 $2.2 $6.5 $9.3 $18 2035 $160 $330 $400 $870 $3.7 $10 $15 $28 2040 $230 $430 $540 $1,200 $5.2 $14 $19 $37 2050 $350 $620 $770 $1,700 $7.9 $20 $27 $53 NPV $1,500 $4,600 $6,400 $12,000 $34 $150 $230 $400 Notes: a The SC
- CH4 and SC
-N 2 O values are dollar
- year and emissions
- year specific. b Note that net present discounted values of reduced GHG emissions is are calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SC
- CH4 and SC
N 2 O at 5, 3, and 2.5 percent) is used to calculate net present value discounted values of SC
- CH4 and SC
- N 2 O for internal consistency. Refer to SCC TSD for more detail. c For an explanation of analytical Methods A and B, please see Section I.D; for an explan ation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. As illustrated above, compared to the use of directly modeled estimates the GWP
- based approximation approach underestimates the climate benefits of the CH 4 em ission reductions by 12 percent to 52 percent and the climate benefits of N 2 O reductions b y 10 percent to 26 percent , depending on the discount rate assumption. (c) Additional non

- CO2 GHGs Co
- benefits In determining the relative social costs of the different gases, the Marten et al. (2014) anal ys is accounts for differences in lifetime and radiative efficiency between the non
- CO 2 GHGs and CO 2 . The anal ys is also accounts for radiative forcing resulting from methane’s effects on tropospheric ozone and stratospheric water vapor, and for at least some of the fertilization effects of elevated carbon dioxide concentrations. However, there exist several other differences between these gases that have not yet been captured in this analysis, namel y the non
- ra diative effects of methane
- driven elevated tropospheric ozone levels on human health, agriculture, and ecos ys tems, and the effects of carbon dioxide on ocean acidification. In clusion of thesePage 661 of 850

additional non
- radiative effects would potentially change both the absolute and relative value of the various gases. Of these effects, the human health effect of elevated tropospheric ozone levels resulting from methane emissions is the closest to being monetized in a way that would be comparable to the SCC. Prematur e ozone - related cardiopulmonary deaths resulting from global increases in tropospheric ozone concentrations produced b y the methane oxidation process have been the focus of a number of studies over the past decade (e.g., West et al. 2006 712 ). Recent studies have produced an estimate of a monetized benefit of methane emissions reductions, with results on the order of $1000 per metric ton of CH 4 emissions reduced (Anenberg et al. 2012 713 ; Shindell et al. 2012 714 ), an estimate similar in magnitude to the climate benefits of CH 4 reductions estimated by the Marten et al. or GWP methods. However, though EPA is continuing to monitor this area of research as it evolves, EPA is not applying them for benefit estimates at this time. 

### H. **Monetized Non -**  **GHG Health Impacts** Thi s section anal yz es the economic benefits from reductions in health and environmental impacts resulting from non
- GHG emission reductions that can be expected to occur as a result of the proposed Phase 2 standards. CO 2 emissions are predominantl y the b yp rod uct of fossil fuel combustion processes that also produce criteria and hazardous air pollutant emissions . The vehicles that are subject to the proposed standards are also significant sources of mobile source air pollution such as direct PM, NO X , VOCs and air toxics. The proposed standards would affect exhaust emissions of these pollutants from vehicles and would also affect emissions from upstream sources that occur during the refining and distribution of fuel . Changes in ambient concentrations of ozone, PM 2.5 , and air toxics that would result from the proposed standards are expected to affect human health by reducing premature deaths and other serious human health effects, as well as other important improvements in public health and welfare. It is imp ortant to quantify the health and environmental impacts associated with the proposed standard s because a failure to adequately consider these ancillary impacts could lead to an incorrect assessment of their costs and benefits. Moreover, the health and oth er impacts of exposure to criteria air pollutants and airborne toxics tend to occur in the near term, while most effects from reduced climate change are likely to occur onl y over a time frame of several decades or longer.

712 West JJ, Fiore AM, Horowitz LW, Mauzerall DL (2006) Global health be nefits of mitigating ozone pollution with methane emission controls. Proc Natl Acad Sci USA 103 (11):3988
- 3993. doi:10.1073/pnas.0600201103 713 Anenberg SC, Schwartz J, Shindell D, Amann M, Faluvegi G, Klimont Z, ..., Vignati E (2012) Global air quality and h ealth co
- benefits of mitigating near
- term climate change through methane and black carbon emission controls. Environ Health Perspect 120 (6):831. doi:10.1289/ehp.1104301 714 Shindell D, Kuylenstierna JCI, Vignati E, van Dingenen R, Amann M, Klimont Z, ..., Fow ler D (2012) Simultaneously Mitigating Near
- Term Climate Change and Improving Human Health and Food Security. Science 335 (6065):183
- 189. doi:10.1126/science.1210026Page 662 of 850

Although EPA t ypicall y quantifie s and monetizes the health and environmental impacts related to both PM and ozone in its regulatory impact anal ys es (RIAs) , it was unable to do so in time for this proposal. Instead, EPA has applied PM
- related “benefits per
- ton” values to its estimated em ission reductions as an interim approach to estimating the PM
- related benefits of the proposal. 715 , 716 EPA also characterizes the health and environmental impacts that will be quantified and monetized for the final rulemaking. This section is split into two sub
- sections: the first presents the benefits
- per - ton values used to monetize the benefits from reducing population exposure to PM associated with the propos ed standards ; the second explains what PM
- and ozone
- related health and environmental impacts EPA will quantify and monetize in the analy sis for the final rule. EPA bases its anal ys es on peer - reviewed studies of air quality and health and welfare effects and peer
- reviewed studies of the monetary

values of public health and welfare improvements, and is generall y consistent with benefits anal ys es performed for the analy sis of the final Tier 3 Vehicle Rule, 717 the final 2012 PM NAAQS Revision, 718 and the final 2017
- 2025 L ight Dut y Vehicle GHG Rule. 719 Though EPA is characterizing the changes in emissions ass ociated with toxic pollutants, we are not able to quantify or monetize the human health effects associated with air toxic pollutants for either the proposal or the final rule analy ses (see Section VIII.G .1 .b.iii for more information). Please refer to Section VIII for more information about the air toxics emissions impacts associated with the proposed standards. **(1) Economic Value of Reductions in Criteria Pollutants**  As described in Section VIII , the proposed standards would reduce emissions of several criteria and toxic pollutants and their precursors. In this analy sis, EPA estimates the economic value of the human health benefits associated with the resulting reductions in PM 2.5 exposure. Due to anal yt ical limitations with the benefit per ton method, this analy sis does not estimate

715 Fann, N., Baker, K.R., and Fulcher, C.M. (2012). Characterizing the PM 2.5 - related health benefits of emission reductions for 17 industrial, area and mobile emission sectors across the U.S. , Environment International, 49, 241
- 151, published online September 28, 2012. 716 See also: http://www.epa.gov/airquality/benmap/sabpt.html . The current values available on the webpage have been updated since the publication of the Fann et al., 2012 paper. For more information regarding the updated values, see: http://www.epa.gov/airquality/benmap/models/Source_Apportionment_BPT_TSD_1_31_13.pdf (accessed September 9, 2014). 717 U.S. Environmental Protection Agency. (2014). Control of Air Pollution f rom Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards Final Rule: Regulatory Impact Analysis , Assessment and Standards Division, Office of Transportation and Air Quality, EPA
- 420
- R
- 14
- 005, March 2014. Available on the internet: http://www.e pa.gov/otaq/documents/tier3/420r14005.pdf 718 U.S. Environmental Protection Agency. (2012). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter , Health and Environmental Impacts Division, O ffice of Air Quality Planning and Standards, EPA
- 452
- R
- 12
- 005, December 2012. Available on the internet: http://www.epa.gov/ttnecas1/regdata/RIAs/finalria.pdf 719 U.S. Environmental Protection Agency (U.S. EPA). (2012). Regulatory Impact Analysis: Final Ru lemaking for 2017
- 2025 Light

-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards , Assessment and Standards Division, Office of Transportation and Air Quality, EPA
- 420
- R
- 12
- 016, August 2012. Available on the Internet at: http://www.epa.gov/otaq/climate/documents/420r12016.pdfPage 663 of 850

benefits resulting from reductions in population exposure to other criteria pollutants such as ozone. 720 Furthermore, the benefits per
- ton method, like all air quality i mpact analy ses, does not monetize all of the potential health and welfare effects associated with reduced concentrations of PM 2.5 . This analy sis uses estimates of the benefits from reducing the incidence of the specific PM 2.5 - related health impacts described below. These estimates, which are expressed per ton of PM 2.5 - related emissions eliminated by the proposed rules , represent the monetized value of human health benefits ( including reductions in both premature mortality and premature morbidity) from reducing each ton of directl y emitted PM 2.5 or its precursors (SO 2 and NO x ), from a specified source. Ideall y, the human health benefits would be estimated based on changes in ambient PM 2.5 as determined b y full
- scale air quality modeling. However, the length of time needed to prepare the necessary emissions inventories, in addition to the processing time associated with the modelin g itself, has precluded us from performing air quality modeling for this proposal. We will conduct this modeling for the final rule. The dollar
- per - ton estimates used in this analy sis are provided in Table IX
- 21
. As the table indicates, these values differ among pollutants, and also depend on their original source, because emissions from different sources can result in different degrees of population exposure and resulting health impacts. Inthe summary of costs and benefits, Section IX. K of this preamble, EPA presents the monetized value of PM
- related improvements associated with the proposal.

720 The air quality modeling that underlies the PM
- related benefit per ton values also produced estimates of ozone levels attributable to each sector. However, the complex non
- linear chemistry gove rning ozone formation prevented EPA from developing a complementary array of ozone benefit per ton values. This limitation notwithstanding, we anticipate that the ozone
- related benefits associated with reducing emissions of NO X and VOC could be substant ial.Page 664 of 850 **Table IX**  **- 21**  **Benefits -**  **per -**  **ton Values (Thousands, 2012$) a**  Year c On
- road Mobile Sources Upstream Sources d

Direct PM 2.5 SO 2 NO X Direct PM 2.5 SO 2 NO X

Estimated Using a 3 Percent Discount Rate b 2016 $380
- $850 $20
- $45 $7.7
- $18 $330
- $750 $69
- $160 $6.8
- $16 2020 $400
- $910 $22
- $49 $8.1
- $18 $350
- $790 $75
- $170 $7.4
- $17 2025 $440
- $1,000 $24
- $55 $8.8
- $20 $390
- $870 $83
- $190 $8.1
- $18 2030 $480
- $1,100 $27
- $61 $9.6
- $22 $420
- $950 $91
- $200 $8.7
- $20 Estimated Using a 7 Percent Discount Rate b 2016 $340
- $770 $18
- $41 $6.9
- $16 $290
- $670 $63
- $140 $6.2
- $14 2020 $370
- $820 $20
- $44 $7.4
- $17 $320
- $720 $67
- $150 $6.6
- $15 2025 $400
- $910 $22
- $49 $8.0
- $18 $350
- $790 $75
- $170 $7.3
- $17 2030 $430
- $980 $24
- $55 $8.6
- $20 $380
- $850 $81
- $180 $7.9
- $18 Notes: a The benefit
- per - ton estimates presented in this table are based on a range of premature mortality estimates derived from the ACS study (Krewski et al., 2009) and the Six
- Cities study (Lepeule et al., 2012). See Chapter VIII of the RIA for a description of these studies. b The benefit
- p er - ton estimates presented in this table assume either a 3 percent or 7 percent discount rate in the valuation of premature mortality to account for a twenty - year segmented premature mortality cessation lag. c Benefit
- per - ton values were estimated for the years 2016, 2020, 2025 and 2030. We hold values constant for intervening years (e.g., the 2016 values are assumed to apply to years 2017
- 2019; 2020 values for years 2021
- 2024; 2030 values for years 2031 and beyond). d We assume for the purpose of this analysis that total “upstream emissions” are most appropriately monetized using the refinery sector benefit per
- ton values. The majority of upstream emission reductions associated with the NPRM are related to domestic onsite refinery emissions and domestic crude production. While total upstream emissions also include storage and transport sources, as well as sources upstream from the refinery, we have chosen to simply apply the refinery values. Full
- scale air quality modeling, and the associated benefits analysis, will include upstream emissions from all sources in the FRM. The benefit
- per - ton technique has been used in previous analy ses, including EPA’s 2017
- 2025 L ight
- Dut y Vehicle Greenhouse Gas Rule, 721 the Reciprocating Internal Combustion Engine rules, 722 , 723 and the Residential Wood Heaters NSPS. 724 Table IX
- 22 shows the

721 U.S. Environmental Protection Agency (U.S. EPA). (2012 ). Regulatory Impact Analysis: Final Rulemaking for 2017
- 2025 Light

-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards , Assessment and Standards Division , Office of Transportation and Air Quality, EPA
- 420
- R
- 12
- 016, August 2012. Available on the Internet at: http://www.epa.gov/otaq/climate/documents/420r12016.pdf 722 U.S. Environmental Protection Agency (U.S. EPA). (2013). Regulatory Impact Analysis for the Reconsideration of the Existing Stationary Compression Ignition (CI) Engines NESHAP , Office of Air Quality Planning and Standards, Research Triangle Park, NC. January. EPA
- 452/R
- 13
- 001. Available at <http://www.epa.gov/ttnecas1/regdata/RIAs/RICE_NESHAPre consideration_Compression_Ignition_Engines_RIA_ final2013_EPA.pdf> 723 U.S. Environmental Protection Agency (U.S. EPA). (2013). Regulatory Impact Analysis for Reconsideration of Existing Stationary Spark Ignition (SI) RICE NESHAP , Office of Air Quality Planning and Standards, Research Triangle Park, NC. January. EPA
- 452/R
- 13
- 002. Available at <http://www.epa.gov/ttnecas1/regdata/RIAs/NESHAP_RICE_Spark_Ignition_RIA_finalreconsideration2013_EPA. pdf> 724 U.S. Environmental Protection Agency (U.S. EPA). (2015). R egulatory Impact Analysis for Residential Wood Heaters NSPS Revision . Office of Air Quality Planning and Standards, Research Triangle Park, NC. February.Page 665 of 850

quantified PM 2.5 - related co
- benefits captured in those benefit per - ton estimates , as well as unquantified effects the benefit per
- ton estimates are unable to capture
. **Table IX**  **- 22**  **Hum an Health and Welfare Effects of PM**  **2.5** Pollutant / Effect Quantified and Monetized

in Primary Estimates Unquantified Effects Changes in: PM 2.5 Adult premature mortality

Ac ute bronchitis Hospital admissions: respiratory and cardiovascular Emergency room visits for asthma Nonfatal heart attacks (myocardial infarction) Lo wer and upper respiratory illness Minor restricted
- activity days Work loss days Asthma exacerbations (asthmatic population) Infant mo rtality Chronic and subchronic bronchitis cases Strokes and cerebrovascular disease Lo w birth weight Pulmonary function Chronic respiratory diseases other than chronic bronchitis Non
- asthma respiratory emergency room visits Visibility Household soiling
A more detailed description of the benefit
- per - ton estimates is provided in Chapter VIII of the Draft RIA that accompanies this rulemaking. Readers interested in reviewing the complete methodology

for creating the benefit
- per - ton estimates used in this analy sis can consult EPA’s “Technical Support Document: Estimating the Benefit per Ton of Reducing PM 2.5 Precursors from 17 Sectors.” 725 Readers can also refer to Fann et al. (2012) 726 for a detailed description of the benefit
- per - ton methodology
. As Table IX
- 20 indicates, EPA projects that the per
- ton values for reducing emissions of non - GHG pollutants from both vehicle use and upstream sources such as fuel refi neries will increase over time
. 727 These projected increases reflect rising income levels, which increase affected individuals’ willingness to pay for reduced exposure to health threats from air pollution. 728 They

also reflect future population growth and increased life expectancy , which

EPA
- 452/R
- 15
- 001. Available at <http://www2.epa.gov/sites/production/files/2015
- 02/documents/201502 04
- residential
- wood
- heaters
- ria.pdf> 725 For more information regarding the updated values, see: http://www.epa.gov/airquality/benmap/models/Source_Apportionment_BPT_TSD_1_31_13.pdf (accessed September 9, 2014). 726 Fann, N., Baker, K.R., and Fulcher, C.M. (20 12). Characterizing the PM2.5

- related health benefits of emission reductions for 17 industrial, area and mobile emission sectors across the U.S. , Environment International, 49, 241
- 151, published online September 28, 2012. 727 As we discuss in the emissions chapter of the DRIA (Chapter V), the rule would yield emission reductions from upstream refining and fuel distribution due to decreased petroleum consumption. 728 The issue is discussed in more detail in the 2012 PM NAAQS RIA, Section 5.6.8. See U.S. Enviro nmental Protection Agency. (2012). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter , Health and Environmental Impacts Division, Office of Air Quality Planning and Standards, EPA
- 452
- R
- 12
- 005, December 2012. Available on the internet: http://www.epa.gov/ttnecas1/regdata/RIAs/finalria.pdfPage 666 of 850

expands the size of the population exposed to air pollution in both urban and rural areas, especiall y among older age groups with the highest mortality risk. 729 **(2) Human Health**  **and Environmental Benefits for the Final Rule** (a ) Human Health and Environmental Impacts To model the ozone and PM air quality benefits of the final rule, EPA will use the Community

Multiscale Air Quality

(CMAQ) model (see Section VIII for a description of the CMAQ model). The modeled ambient air quality data will serve as an input to the Environmental Benefits Mapping and Anal ys is Program

– Community Edition (BenMAP CE). 730 BenMAP CE is a computer program developed b y EPA that integrates a number of the mode ling elements used in previous RIAs (e.g., interpolation functions, population projections, health impact functions, valuation functions, anal ys is and pooling methods) to translate modeled air concentration estimates into health effects incidence estimates and monetized benefits estimates. Chapter VIII in the DRIA that accompanies this proposal lists the co
- pollutant health effect concentration
- response functions EPA will use to quantify the non
- GHG incidence impacts associated with the proposed heavy
- dut y vehicle standard s . These include PM
- and ozone - related premature mortality , nonfatal heart attacks, hospital admissions (respiratory and cardiovascular), emergency room visits, acute bronchitis, minor restricted activity day s, and day s of work and schoo l lost. (b ) Monetized Impacts To calculate the total monetized impacts associated with quantified health impacts, EPA applies values derived from a number of sources. For premature mortality , EPA applies a value of a statistical life (VSL) derived from the mo rtality valuation literature. For certain health impacts, such as a number of respiratory
- related ailments, EPA applies willingness
- to - pay estimates derived from the valuation literature. For the remaining health impacts, EPA applies values derived from current cost - of
- illness and/or wage estimates. Chapter VIII in the DRIA that accompanies this proposal presents the monetary values EPA will apply

to changes in the incidence of health and welfare effects associated with reductions in non
- GHG pollutants that will occur when these GHG control strategies are finalized. (c) Other Unquantified Health and Environmental Impacts In addition to the co
- pollutant health and environmental impacts EPA will quantify for the anal ys is of the final standard, there are a numbe r of other health and human welfare endpoints that EPA will not be able to quantify or monetize because of current limitations in the methods or available data. These impacts are associated with emissions of air toxics (including

729 For more information about EPA’s population projections, please refer to the following: http://www.epa.gov/air/benmap/models/BenMAPManualAppendicesAu gust2010.pdf (See Appendix K) 730 Information on BenMAP, including downloads of the software, can be found at http://www.epa.gov/air/benmap/Page 667 of 850

benzene, 1,3
- butadiene, f ormaldeh yde, acetaldeh yde, acrolein, nap hthalene and ethanol), ambient ozone, and ambient PM 2.5 exposures. Chapter VIII of the DRIA lists these unquantified health and environmental impacts. While there will be impacts associated with air toxic pollutant emission changes that result from the final standard, EPA will not attempt to monetize those impacts. This is primarily because currently

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

commented in their review of the 1996 NATA that these tools were not yet ready for use in a national
- scale benefits anal ys is, because they did not consider the full distribution of exposure and risk, or address sub
- chronic health effects. 731 While EPA has since improved the tools, there remain critical limitations for estimating incidence and assessing benefits of reducing mobile source air toxics. 732 EPA continues to work to address these limitations; however, EPA does not anticipate having methods and tools available for national
scale application in time for the analy sis of the final rules. 733 

### I. **Energy Security Impacts** The Phase 2 standards are designed to require improvements in the fuel efficiency of medium
- and heav y - duty vehicles and, thereb y, reduce fuel consumption and GHG emissions. In turn, the Phase 2 standards 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., thus increasing U.S. energy securit y. This section summarizes the agency ’s estimates of U.S. oil import reductions and energy securit y benefits of the proposed Ph ase 2 standards
. Additional discussion of this issue can be found in Chapter 8 of the draft RIA.

731 Science Advisory Board. 2001. NATA

– Evaluating the National
- Scale Air Toxics Assessment for 1996

– an SAB Adviso ry . http://www.epa.gov/ttn/atw/sab/sabrev.html. 732 Examples include gaps in toxicological data, uncertainties in extrapolating results from high
- dose animal experiments to estimate human effects at lower does, limited ambient and personal exposure monitori ng data, and insufficient economic research to support valuation of the health impacts often associated with exposure to individual air toxics. See Gwinn et al., 2011. Meeting Report: Estimating the Benefits of Reducing Hazardous Air Pollutants

– Summary of 2009 Workshop and Future Considerations. Environ Health Perspect. Jan 2011; 119(1): 125
- 130. 733 In April, 2009, EPA hosted a workshop on estimating the benefits of reducing hazardous air pollutants. This workshop built upon the work accom plished in the June 2000 in an earlier (2000) Science Advisory Board/EPA Workshop on the Benefits of Reductions in Exposure to Hazardous Air Pollutants, which generated thoughtful discussion on approaches to estimating human health benefits from reductions in air toxi cs exposure, but no consensus was reached on methods that could be implemented in the near term for a broad selection of air toxics. Please visit http://epa.gov/air/toxicair/2009workshop.html for more information about the workshop and its associated mate rials.Page 668 of 850

**(1) Implications of Reduced Petroleum Use on U.S. Imports**  U.S. energy

securit y is broadly defined as the continued availability of energy

sources at an acceptable price. Most discussion of U.S. energy securit y revolves around the topic of the economic costs of U.S. dependence on oil imports. However, it is not imports alone, but both imports and consumption of petroleum from all sources and their role in economic activity , that expose the U.S. to risk from price shocks in the world oil price. The relative significance of petroleum consumption and import levels f or the macroeconomic disturbances that follow from oil price shocks is not fully understood. Recognizing that changing petroleum consumption will change U.S. imports, this assessment of oil costs focuses on those incremental social costs that follow from the resulting changes in imports, employing the usual oil import premium measure. The agencies request comment on how to incorporate the impact of changes in oil consumption, rather than imports exclusively , into our energy security anal ys is. While the U. S. has reduced its consumption and increased its production of oil in recent ye ars, it still relies on oil from potentially unstable sources. In addition, oil exporters with a large share of global production have the ability to raise the price of oil b y exerting the monopoly

power associated with a cartel, the Organization of Petroleum Exporting Countries (OPEC), to restrict oil supply relative to demand. These factors contribute to the vulnerability of the U.S. econom y to episodic oil supply shocks and price spikes. In 2012, U.S. net expenditures for imports of crude oil and petroleum products were $290 billion and expenditures on both imported oil and domestic petroleum and refined products totaled $634 billion ( see Figure IX
1). 734 Import costs have dec lined since 2011 but total oil expenditures (domestic and imported) remain near historical highs, at roughl y triple the inflation
- adjusted levels experienced b y the U.S. from 1986 to 2002. In 2010 , just over 4 0 percent of world oil supply came from OPEC n ations and the A EO 2014 (Earl y Release) 735 projects that this share will rise graduall y to over 45 percent b y 2040. Approximately 31 percent of global suppl y is from Middle East and North African countries alone , a share that is also expected to grow . Meas ured in terms of the share of world oil resources or the share of global oil export supply , rather than oil production, the concentration of global petroleum resources i n OPEC nations is even larger. As another measure of concentration, of the 137 countri es/principalities that export either crude or refined product s , the top 12 have recentl y accounted for over 55 percent of exports. 736 Eight of these countries are members of OPEC, and a ninth is Russia. 737 Ina market where even a 1
- 2 percent supply loss can raise prices noticeably , and where a 10 percent supply loss could lead to an unprecedented

734 See EIA Annual Energy Review , various editions. For data 2011
- 2013, and projected data: EIA Annual Energy Outlook (AEO) 2014 (Reference Case). See Table 11, file "aeotab_11.xls" 735 The agencies used the AEO 2014 (Early Release) since this version of AEO was available at the time that fuel savings from the rule were being estimated. The AEO 2014 (Early Release) and the AEO 2014 have very similar energy market and economic projections. For example, world oil prices are the same between the two foreca sts. 736 Based on data from the CIA, combining various recent years, https://www.cia.gov/library/publications/the
- world
factbook/rankorder/2242rank.html 737 The other three are Norway, Canada, and the EU, an exporter of product
.Page 669 of 850

price shock, this regional concentration is of concern. 738 Historically , the countries of the Middl e East have been the source of eight of the ten major world oil di sruptions 739 , with the ninth originating in Venezuela, an OPEC country , and the tenth being Hurricanes Katrina and Rita.

738 For example, the 2005 Hurricanes Katrina/Rita and the 2011 Libyan conflict both led to a 1.8 percent reduction in global crude supply. While the price impact of the latter is not easily distinguished given the rapidly rising post
recession prices, the former event was associated with a 10
- 15 percent world oil price increase. There are a range of smaller events with smaller but noticeable impacts. Somewhat larger events, such as the 2002/3 Venezuelan Strike and the War in Iraq, corresponded to about a 2 .9 percent sustained loss of supply, and was associated with a 28 percent world oil price increase. Com piled from EIA oil price data, IEA2012 [IEA Response System for Oil Supply Emergencies ( http://www.iea.org/publications/freepublications/publication/EPPD_Brochure_English_2012_02.pdf ) See table on P. 11.and Hamilton 2011 "Historical Oil Shocks,"( http://econweb.ucsd.edu/~jhamilto/oil_history.pdf ) in *Routledge Handbook of Major Events in Economic History*, pp. 239
- 265, edited by Randall E. Parker and Robert Whaples, New York: Routledge Taylor and Francis Group, 2013). 739 IEA 2011 “IEA Response System for Oil Supply Emergencies.”Page 670 of 850 **Figure IX**  **- 1**  **U.S. Expenditures on**  **Crude Oil from 1970 through 2015**  **740**

740 For historical data: EIA Annual Energy Review, various editions. For data 2011
- 2013, and projected data: EIA Annual Energy Outlook (AEO) 2014 (Reference Case). See Table 11, file "aeotab_11.xls"Page 671 of 850

The agencies used EPA’s MOVES model to estimate the reductions in U.S. fuel consumption due to this proposed rule for vocational vehicles and tractors
. For HD pickups and vans, the agencies used both DOT’s CAFE model and EPA’s MOVES model to estimate the fuel consumption impacts. ( Detailed explanations of the MOVES and CAFE models can be found in Chapters 5 and 10 of the draft RIA
. See IX.C of the preamble for estimates of reduced fuel consumption from the proposed rule). Based on a detailed anal y sis of differences in U.S. fuel consumption, petroleum imports, and imports of petroleum products , the agencies estimate that approximately 90 percent of the reduction in fuel consumption resulting from adopting improved GHG emission standards an d fuel efficiency standards is likely

to be reflected in reduced U.S. imports of crude oil and net imported petroleum products. 741 Thus , on balance, each gallon of fuel saved as a consequence of the HD GHG and fuel efficiency standards is anticipated to red uce total U.S. imports of petroleum by 0.9 0 gallons. 742 Based upon the fuel savings estimated by the MOVES/CAFE models and the 90 percent oil import factor, the reduction in U.S. oil imports from th ese proposed rules are estimated for the years 2020, 2025, 2030, 2040, and 2050 (in millions of barrels per day (MMBD)) in Table IX
- 25 below. For comparison purposes, Table IX
- 25 also shows U.S. imports of crude oil in 2020, 2025, 2030 and 2040 as projected b y DOE in the Annual Energy

Outlook 2014 (Early

Release) Reference Case. U.S. Gross Domestic Product (GDP) is projected to grow b y roughl y 59 percent over the same time frame (e.g., from 2020 to 2040) in the same AEO projections.

741 We looked at changes in crude oil imports and net petroleum products in the Reference Case in comparison to two cases from the AEO 2014. The two cases are the Low (i.e., Economic Growth) Demand and Low V MT cases. See the spreadsheet “Impacts on Fuel Demands and ImportsJan9.xlsx” comparing the AEO 2014 Reference Case to the Low Demand Case. See the spreadsheet “Impact of Fuel Demand and Impacts January20VMT.xlsl” for a comparison of AEO 2014 Reference Case and the Low VMT Case. We also considered a paper entitled “Effect of a U.S. Demand Reduction on Imports and Domestic Supply Levels” by Paul Leiby, 4/16/2013. This paper suggests that “Given a particular reduction in oil demand stemming from a policy or si gnificant technology change, the fraction of oil use savings that shows up as reduced U.S. imports, rather than reduced U.S. supply, is actually quite close to 90 percent, and probably close to 95 percent”. 742 The NHTSA analysis uses a slightly different va lue that was estimated using unique runs of the National Energy Modeling System (NEMS) that forms the foundation of the Annual Energy Outlook. NHTSA ran a version of NEMS from 2012 (w

hich would have been used in the 2013 AEO) and computed the change in imp orts of petroleum products with and without the Phase 1 MDHD program to estimate the relationship between changes in fuel consumption and oil imports. The analysis found that reducing gasoline consumption by 1 gallon reduces im ports of refined gasoline by 0.06 gallons and domestic refining from imported crude by 0.94 gallons. Similarly, one gallon of diesel saved by the Phase 1 rule was estimated to reduce imports of refined diesel by 0.26 gallons and domestic refining of imported crude by 0.74 gallons. The agencies will update this analysis for the Final Rule using the model associated with AEO2014, modeling the Phase 2 Preferred Alternative explicitly.Page 672 of 850

**Table IX**  **- 23**  **Projected U.S. Imports of Crude Oil and U.S. Oil Import Reductions Resulting from** **the Proposed Phase**  **2 Heavy** **- Duty Vehicle Rule in 2020, 2025, 2030, 2040 and**  **2050 using Method B and Relative**  **to the Less Dynamic Baseline (M**  **illions of barrels per day (MMBD) b**  Year U.S. Oil

Imports Reductions from

Propo sed HD Rule 2020 4.93 0.01 2025 5.04 0.16 2030 5.35 0.37 2040 5.92 0.65 2050 * 0.78 Notes: * The AEO 2014 (Early Release) only projects energy market and economic trends through 2040. b For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. **(2) Energy Security Implications**  In order to understand the energy securit y implications of reducing U.S. oil imports, EPA has worked wi th Oak Ridge National Laboratory (ORNL), which has developed approaches for evaluating the social costs and energy securit y implications of oil use. The energy securit y estimates provide d below are based upon a methodology developed in a peer
- reviewed stu dy entitled, “ The Energy Security Benefits of Reduced Oil Use, 2006

- 2015 , ” completed in March 2008. Th is ORNLstudy

is an update d version of the approach used for estimating the energy security benefits of U.S. oil import reductions developed in a 1997 ORNL Report
. 743 For EPA and NHTSA rulemakings, the ORNLmethodology is updated periodicall y t o account for forecasts of future energy market and economic trends reported in the U.S. Energy Information Administration’s Annual Energy Outlook
. When conductin g this analy sis, OR NL considered the full cost of importing petroleum into the U.S. The f

ull economic cost is defined to include two components in addition to the purchase price of petroleum itself. These are: (1) the higher costs for oil imports resulti ng from the effect of U.S. demand on the world oil price ( i.e
. , the “ demand ” or “ monopsony” costs); and (2) the risk of reductions in U.S. economic output and disruption to the U.S. econom y caused b y sudden disruptions in the supply of imported oil to the U.S. ( i.e
. , macroeconomic disruption/adjustment costs).

743 Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee, Oil Imports: An Assessment of Bene fits and Costs , ORNL
- 6851, Oak Ridge National Laboratory, November, 1997.Page 673 of 850

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 value for the Social Cost of Carbon (SCC) the question arises: how should the energy securit y premium be used when some benefits from the rule, such as the benefits of reducing greenhouse gas emissions, are calculated from a global perspective ? Monopsony benefits represent avoided pay ments by U.S. consumers to oil producers that result from a decrease in the world oil price as the U.S. decreases its demand for oil. Although there is clearl y an overall benefit to the U.S. when considered from a domestic perspective, the decrease in price due to decreased demand in the U.S. also represents a loss to oil producing countries , one of which is the United States . Given the redistributive nature of this monops ony effect from a global perspective, and the fact that an increasing fraction of it represents a transfer between U.S. consumers and producers , it is excluded in the energy security benefits calculations for th ese p roposed rules
. In contrast, the other portion of the energy securit y premium, the avoided U.S. macroeconomic disruption and adjustment cost that arises from reductions in U.S. petroleum imports, does not have offsetting impa cts outside of the U.S., and, thus, is included in the energy security benefits estimated for th ese p roposed rules . To summarize, the agencies have included only the avoided macroeconomic disruption portion of the energy security benefits to estimate the monetary

value of the total energy

security benefits of th ese proposed rules
. For this rulemaking , ORNLupdated the energy securit y premium s by

incorporating the most recent oil price forecast and energy market trends , particularl y regional oil supplies and demands, from the AEO 2014 (Earl y Release) into its model. 744 O RNL developed energy security premium estimates for a number of different years
. Table IX
- 24 provides estimates for energy securit y premium s for the years 2020, 20 25, 2030 and 20 40 , 745 as well as a breakdown of the components of the energy security premium s for each ye ar. The components of the energy security premium s and their values are discussed below.

744 Leiby, P., Factors Influencing Estimate of Energy Security Premium for Heavy
- Duty Phase 2 Proposed Rule **,** 11 /1 /2014, Oak Ridge National Laboratory. 745 AEO 2014 (Early Release) foreca sts energy market trends and values only to 2040. The post
- 2040 energy security premium values are assumed to be equal to the 2040 estimate.Page 674 of 850 **Table IX**  **- 24**  **Energy Security Prem ium**  **s in 2020, 2025, 2030 and 2040 (2012$/Barrel)*** Year (range) Monopsony

(Range) Avoided Macroecono mic

Disruption/Adjustment Costs

(Range) Total Mid
- Point (Range) 2020 $4.91

(1.63

– 9.15) $6.3 5 (3.07

– 10.15) $11.25 (6.67

– 16.53) 20 25 $5.46

(1.81

– 10.47) $7.29 (3.57

– 11.67) $12.75 (7.58

– 18.65) 20 30 $6.0 4

(2.00

– 11.67) $8.39 (4.12

– 13.41) $14.43 (8.54

– 21.13) 2040 $7.17

(2.32

– 14.03) $10.74 (5.36

– 17.22) $17.91

– 26.14) Note: * Top values in each cell are the midpoints, the values in parentheses are the 90 percent confidence intervals. (a ) Effect of Oil Use on the Long

-Run Oil Price The first component of the full economic costs of importing petroleum into the U.S. follows from the effect of U.S. import demand on the world oil price over the long
- run. B ecause the U.S. is a sufficientl y large purchaser of global oil supplies , it s purchases can affect the world oil price. This monopsony power means that increases in U.S. petroleum demand can cause the world price of crude oil to rise, and conversel y , that reduced U.S. petroleum demand can reduce the world price of crude oil. Thu s , one benefit of decreasing U.S. oil purchases , due to improvements in the fuel efficiency of medium
- and heav y - dut y vehicles, is the potential decrease in the crude oil price paid for all crude oil purchased
. A variety of oil market and economic factors have contributed to lowering the estimated monopsony

premium compared to monopsony premiums cited in recent EPA/NHTSA rulemakings. Three principal factors contribute to lowering the monopsony premium: lower world oil prices, lower U.S. oil imports and les s responsiveness of world oil prices to changes in U.S. oil demand. For example, between 2012 (using the AEO 2012 (Early Release)) and 2014 (using the AEO 2014 (Early Release)), there has been a general downward revision in world oil price projections in the near term (e.g. 19 percent in 2020) and a sharp reduction in projected U.S. oil imports in the near term, due to increased U.S. supply (i.e. , a 41 percent reduction in U.S. oil imports by

2017 and a 36 percent reduction in 2020)
. Over the longer term , oil ’s share of total U.S. imports is projected to gradually increase after 2020 but still remain 27 percent below the AEO2012 (Early Release) projected level in 2035
. Another factor influencing the monopsony premium is that U.S. demand on the global oil m arket is projected to decline, suggesting diminished overall influence and some reduction in the influence of U.S. oil demand on the world price of oil. Outside of the U.S., projected OPEC supply remains roughly

steady as a share of world oil supply compared to the AEO2012 (Earl y Release). OPEC’s share of world oil supply outside of the U.S. actually increases slightl y. Since OPEC supply

is estimated to be more price sensitive than non
- OPEC supply , this means that under AEO2014 (Earl y Release) world oil supply is slightl y more responsive to changes in U.S.Page 675 of 850

oil demand. Together, these factors suggest that changes in U.S. oil import reductions have a somewhat smaller effect on the long
- run world oil price than changes based on 2012 estimates. These change s in oil price and import levels lower the monopsony portion of energy security premium since this portion of the security premium is related to the change in total U.S. oil import cost s that is achieved b y a marginal reduction in U.S oil imports. Since b oth the price and the quantity

of oil imports are lower, the monopsony premium component is 46

– 57 percent lower over the years 2017

– 2025 than the estimates based upon the AEO 2012 (Earl y Release) projections. There is disagreement in the literature a bout the magnitude of the monopsony component, and its relevance for policy analy sis. Brown and Huntington (2013) , 746 for example, argue that the United States’ refusal to exercise its market power to reduce the world oil price does not represent a proper externality , and that the monopsony component should not be considered in calculations of the energy security externa lity
. However, they also note in their earlier discussion paper (Brown and Huntington 2010) 747 that this is a departure from the traditional energy

security literature, which includes sustained wealth transfers associated with stable but higher
- price oil markets. On the other hand, Greene (2010) 748 and others in prior literature (e.g., Toman 1993) 749 have emphasized that the monopsony cost component is policy
relevant because the world oil market is non
- competitive and strongl y influenced b y cartelized and gove rnment - controlled supply decisions. Thus, while sometimes couched as an externalit y, Greene notes that the monopsony component is best viewed as stemming from a completel y different market failure than an externality (Ledyard 2008), 750 yet still implying marginal social costs to importers. There is also a question about the ability of gradual, long
- term reductions, such as those resulting from this proposed rule, to reduce the world oil price in the presence of OPEC’s monopoly

power. OPEC is currentl y the w orld’s marginal petroleum supplier, and could conceivabl y respond to gradual reductions in U.S. demand with gradual reductions in supply over the course of several years as the fuel savings resulting from this rule grow. However, if OPEC opts for a long
- t erm strategy to preserve its market share, rather than maintain a particular price level (as they

have done recently

in response to increasing U.S. petroleum production), reduced demand would create downward pressure on the global price. The Oak Ridge analy sis assumes that OPEC does respond to demand reductions over the long run, but there is still a price effect in the model. Under the mid
- case behavioral assumption used in the premium

746 Brown, Stephen P.A. and Hillard G. Huntington. 2013. Assessing the U.S. Oil Security Premium. Energy Economics, vol. 38, pp 118
- 127. 747 Reassessing the Oil Security Premium. RFF Discussion Paper Series, (RFF DP 10
- 05). doi: RFF DP 10
- 05 748 Greene, D. L. 2010. Measuring energy security: Can the United States achieve oil independence? Energy Policy , 38(4), 1614

– 1621. doi:10.1016/j.enpol.2009.01.041 749 Reassessing the Oil Security Premium. RFF Discussion Paper Series, (RFF DP 10
- 05). doi:RFF DP 10
- 05 750 Ledyard, John O. "Market Failure." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008Page 676 of 850

calculations, OPEC responds by graduall y reducing suppl y to maintain market share (consistent with the long
- term self

- interested strategy

suggested by

Gatel y (2004, 2007)). 751 It is important to note that the decrease in global petroleum prices resulting from this rulemaking could spur increased consumption of petroleum in other sectors and countries, leading to a modest uptick in GHG emissions outside of the United States. Thi s increase in global fuel consumption could offset some portion of the GHG reduction benefits associated with th ese proposed rule s . The agencies have not quantified this increase in global GHG emissions. We request comments, data sources and metho dologies for how global rebound effects may

be quantified. (b ) Macroeconomic Disruption Adjustment Costs The second component of the oil import premium, “avoided macroeconomic disruption/adjustment costs ”, arises from the effect of oil imports on the expected cost of suppl y disruptions and accompanying price increases. A sudden increase in oil prices triggered b y a disruption in world oil supplies has two main effects: (1) it increases the costs of oil i mports in the short
- run and (2) it can lead to macroeconomic contraction, dislocation and Gross Domestic Product (GDP) losses. For example, ORNLestimates the combined value of these two factors to be $ 6. 34 /barrel when U.S. oil imports are reduced in 2020 , with a range from $ 3.0 7 /barrel to $ 10. 15 /barrel of imported oil reduced. Since future disruptions in foreign oil supplies are an uncertain prospect, each of the disruption cost components must be weighted b y the probability that the supply

of petroleum t o the U.S. will actually

be disrupted. Thus, the “expected value” of these costs

– the product of the probability

that a suppl y disruption will occur and the sum of costs from reduced economic output and the econom y’ s abrupt adjustment to sharply higher p etroleum prices

– is the relevant measure of their magnitude. Further, when assessing the energy securit y value of a policy to reduce oil use, it is only

the change in the expected costs of disruption that results from the policy that is relevant. The expected costs of disruption may change from lowering the normal ( i.e. , pre - disruption) level of domestic petroleum use and imports, from any induced alteration in the likelihood or size of disruption, or from altering the short
- run flexibility ( e.g. , elasti city) of petroleum use. With updated oil market and economic factors, the avoided macroeconomic disruption component of the energy

securit y premiums is slightly lower in comparison to avoided macroeconomic disruption premiums used in previous rulemakings. Factors that contribute to moderatel y lowering the avoided m acro economic disruption c omponent are lower projected GDP, moderatel y lower oil prices and slightl y smaller price increases during prospective shocks. For example, oil price levels are 5

– 19 pe rcent lower over the 2020

– 2035 period, and the likel y increase in oil prices in the event of an oil shock are somewhat smaller, given small increases in

751 Gately, Dermot 2004. “OPEC's Incentives for Faster Output Growth ”, The Energy Journal , 25 (2):75
- 96; Gately, Dermot 2007. "What Oil Export Levels Should We Expect From OPEC ?", The Energy Journal, 28(2):151
- 173.Page 677 of 850

the responsiveness of oil supply to changes in the world price of oil. Overall, the avoided macroeco nomic disruption component estimates for the oil security premium s are 2

– 19 percent lower over the period from 2020

– 2035 based upon different projected oil market and economic trends in the AEO2014 (Earl y Release) compared to the AEO2012 (Early Release ). There are several reasons why the avoided macroeconomic disruption premiums change only moderatel y. One reason is that the macroeco nomic sensitivity to oil price shocks is assumed unchanged in recent years since U.S. oil consumption levels and the value share of oil in the U.S. economy

remain at high levels. For example, Figure IX
- 2 below shows that under AEO2014 (Early

Release), projected U.S. real annual oil expenditures continue to rise after 2015 to over $800 billion (2012$) by 2030. The value share of oil use in the U.S. econom y remains between three and four percent, well above the levels observed from 1985 to 2005. A second factor is that oil disruption risks are little changed . The two factors influencing disruption risks are the probabil ity

of global supply

interruptions and the world oil supply share from OPEC. Both factors are not significantly different from previous forecasts of oil market trends. The energy

security costs estimated here follow the oil sec urit y premium framework, whic h is well established in the energy economics literature. T he oil import premium gained attention as a guiding concept for energy policy around the time of the second and third major post - war oil shocks ( Bohi and Montgomery 198 2 , EMF 1982)
. 752 Plummer ( 198 2 ) 753 provided valuable discussion of many of the key

issues related to the oil import premium as well as the analogous oil stockpiling premium. Bohi and Montgomery ( 1982) 754 detailed the theoretical foundations of the oil import premium established many of the critical analy

tic relationships through their thoughtful anal ys is. Hogan (1981 ) 755 and Broadman and Hogan (1986, 1988) 756 revised and extended the established anal yt ical f ramework to estimate optimal oil import premia with a more detailed accounting of macroeconomic effects. Since the original work on energy securit y was undertaken in the 1980’s, there have been several reviews on this topic. For example, Leib y, Jones, C urlee and Lee (1997) 757 provided an extended review of the literature and issues regarding the estimation of the premium. Parry and

752 Bohi, Douglas R. And W. David Montgomery 1982. Social Cost of Imported and U.S. Imp ort Policy , Annual Revie w of

Energy, 7:37
- 60 . Energy Modeling Forum, 1981. World Oil, EMF Report 6 (Stanford University Press: Stanford 39 CA. https//emf.stanford.edu/publications/ emf
- 6
- world
- oil. 753 Plummer, James L. (Ed.) 1982. Energy Vulnerability , “Basic Concepts, Assumptions and Numerical Results”, pp. 13
- 36, (Cambridge MA: Ballinger Publishing Co.) 754 Bohi, Douglas R. And W. David Montgomery 1982. Social Cost of Imported and U.S. Import Policy , Annual Revie w of

Energy , 7:37
- 60. 755 Hogan, William W., 1981. “Import Management and Oil Emergencies”, Chapter 9 in Deese, 5 David and Joseph Nye, eds. Energy and Security. Cambridge, MA: Ballinger Publishing Co. 756 Broadman, H. G. 1986. “The Social Cost of Imported Oil,” Energy Policy 14(3):242
- 252. Broadman H.G. and W.W. Hogan, 1988. “Is an Oil Import Tariff Justified ? An American Debate: The Numbers Say ‘Yes’.” The Energy Journal 9: 7
- 29. 757 Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee, Oil Imports: An Assessment of Benefits and Costs, ORNL
- 6851, Oak Ridge National Laboratory, November 1, 1997.Page 678 of 850

Darmstadter (2004) 758 also provided an overview of extant oil security premium estimates and estimated of some premium components. The recent economics literature on whether oil shocks are a threat to economic stability that they once were is mixed. Some of the current literature asserts that the macroeconomic component of the energy

securit y externality is small. For example, the National Research Council (2009) argue d that the non
- environmental externalities associated with dependence on foreign oil are small, and potentially trivial. 759 Analyses b y Nordhaus (2007) and Blanchard and Gali (2010) question the impact of more rece nt oil price shocks on the economy
. 760 They were motivated by

attempts to explain why

the economy

actuall y expanded immediatel y after the last shocks, and wh y there was no evidence of higher energy prices being passed on through higher wage inflation. Usin g different methodologies, they conclude that the economy has largel y gotten over its concern with dramatic swings in oil prices. One reason, according to Nordhaus, is that monetary policy has become more accommodating to the price impacts of oil shocks. Another is that consumers have simpl y decided that such movements are temporary , and have noted that price impacts are not passed on as inflation in other parts of the econom y. He also notes that real changes to productivity due to oil price increases are incredibly modest , 761 and that the general direction of the econom y matters a great deal regarding how the econom y responds to a shock. Estimates of the impact of a price shock on aggregate demand are insignificantl y different from zero. Blanchard and Gali (2010) contend that improvements in monetary policy (as noted above), more flexible labor markets, and lessening of energy intensity in the econom y, combined with an absence of concurrent shocks, all contributed to lessen the impact of oil shocks after 19 80. They

find “... the effects of oil price shocks have changed over time, with steadily smaller effects on prices and wages, as well as on output and employ ment.” 762 In a comment at the chapter’s end, this work is summarized as follows: “The message of thi s chapter is thus optimistic in that it suggests a transformation in U.S. institutions has inoculated the economy against the responses that we saw in the past.”

758 Parry, Ian W.H. and Joel Darmstadter 2004. “The Costs of U.S. Oil Dependency,” Resources for the Future, November 17, 2004 (also published as NCEP Technical Appendix Chapter 1: Enhancing Oil Security, the National Commission on Energy Policy 2004 Ending the Energy Stalemate
- A Bipartisan Strategy to Meet America’s Energy Challenges
. ) 759 National Research Council, 2009. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academy of Science, Washington, DC. 760 See, William Nor dhaus, “Who’s Afraid of a Big Bad Oil Shock?,” available at http://aida.econ.yale.edu/~nordhaus/homepage/Big_Bad_Oil_Shock_Meeting.pdf , and Olivier Blanchard and Jordi Gali, “The macroeconomic Effects of Oil price Shocks: Why are the 2000s so different from the 1970s?,” pp. 373
- 421, in The International Dimensions of Monetary Policy , Jordi Gali and Mark Gertler, editors, University of Chicago Press, February 2010, available at http://www.nber.org/chapters/c0517.pdf 761 In fact, “... energy
- price changes have no effect on multifactor productivity and very little effect on labor producti vity.” Page 19. He calculates the productivity effect of a doubling of oil prices as a decrease of 0.11 percent for one year and 0.04 percent a year for ten years. Page 5. (The doubling reflects the historical experience of the post - war shocks, as descr ibed in Table 7.1 in Blanchard and Gali, p. 380
. ) 762 Blanchard and Gali, p. 414.Page 679 of 850

At the same time, the implications of the “Shale Oil Revolution” are now being felt in the int ernational markets, with current prices at four year lows. Analysts generally attribute this result in part to the significant increase in supply resulting from U
. S
. production, which has put liquid petroleum production on par with Saudi Arabia. The price decline is also attributed to the sustained reductions in U.S. consumption and global demand growth from fuel efficiency policies and high oil prices. The resulting decrease in foreign imports, down to about one
- third of domestic consumption ( from 60 percent in 2005, for example 763 ), effectively permits U
. S
. supply to act as a buffer against artificial or other supply restrictions (the latter due to conflict or natural disaster, for example). However, other papers suggest that oil shocks , particu larly sudden supply

shocks, remain a concern. Both Blanchard and Gali’s and Nordh aus work were based on data and anal ys is through 2006, ending with a period of strong global economic growth and growing global oil demand. The Nordhaus work particularly stressed the effects of the price increase from 2002
- 2006 that were comparatively gradual (about half the growth rate of the 1973 event and one
- third that of the 1990 event). The Nordhaus study emphasizes the robustness of the U.S. econom y during a time period through 2006. This time period was just before rapid further increases in the price of oil and other commodities with oil prices more
- than
- doubling to over $130/barrel by mid
- 2008, only

to drop after the onset of the largest recession since the Great Depression. Hamilton (2012) reviewed the empirical literature on oil shocks and suggested that the results are mixed, noting that some work (e.g. Rasmussen and Roitman (2011) finds less evidence for economic effects of oil shocks, or declining effects of shocks (Blanchard and Gali 2010), while other work continues to find evidence regarding the economic importance of oil shocks. For example, Baumeister and Peersman (2011) found that an oil price increase of a given size seems to have a decreasing e ff ect o ver time, but noted that the declining price
elasticity of demand meant that a given ph ys ical disruption had a bigger e ff ect on price and turned out to have a similar e ff ect on output as in the earlier data.” 764 Hamilton observes that “a negative effect of oi l prices on real output has also been reported for a number of other countries, particularl y when nonlinear functional forms have been employed” (citing as recent examples Kim 2012, Engemann, Kliesen, and Owyang 2011 and Daniel, et. al. 2011). Alternative ly , r ather than a declining e ffect, Ramey and Vine (2010) found “remarkable stability in the response of aggregate real variables to oil shocks once we account for the extra costs imposed on the econom y in the 1970s by price controls and a complex system o f entitlements that led to some rationing and shortages.” 765 Some of the recent literature on oil price shocks has emphasized that economic impacts

763 See, Oil Price Drops on Oversupply, http://www.oil
- price.net/en/articles/oil
- price
- drops
- on - oversupply.php , 10/6/2014. 764 Hamilton, J. D. (2012). Oil Prices, Exhaustible Resources, and Economic Growth. In Handbook of Energy and Climate Change. Retrieved from http://econweb .ucsd.edu/~jhamilto/handbook_climate.pdf 765 Ramey, V. A., & Vine, D. J. (2010). “ Oil, Automobiles, and the U.S. Economy: How Much have Things Really Changed ?”, National Bureau of Economic Research Working Papers, WP 16067 (June). Retrieved from http://www. nber.org/papers/w16067.pdfPage 680 of 850

depend on the nature of the oil shock, with differences between price increases caused by sudden supply loss and those caused by rapidl y growing demand. Most recent analyses of oil price shocks have confirmed that “ demand
- driven ” oil price shocks have greater effects on oil prices and tend to have positive effects on the econom y while “ supply
- driven ” oil shocks still have negati ve economic impacts (Baumeister , Peersman and Robays, 2010). A recent paper by Kilian and Vigfusson (2014) , for example, assigned a more prominent role to the effects of price increases that are unusual, in the sense of being beyond range of recent experience. Kilian and Vigfussen also conclude that the difference in response to oil shocks may well stem from the different effects of demand
- and supply
- based price increases: “One explanation is that oil price shocks are associ ated with a range of oil demand and oil supply shocks, some of which stimulate the U.S. econom y in the short run and some of which slow down U.S. growth (see Kilian 2009a). How recessionary

the response to an oil price shock is thus depends on the average composition of oil demand and oil supply shocks over the sample period.” The general conclusion that oil supply
- driven shocks reduce economic output is also reached in a recently published paper by Cashin et al. (2014) for 38 countries from 1979
- 2011. “ The results indicate that the economic consequences of a suppl y - driven oil
- price shock are very different from those of an oil
- demand shock driven by global economic activity , and vary for oil
importing countries compared to energy exporters,” and “oil imp orters [including the U.S.] ty picall y face a long
- lived fall in economic activity in response to a suppl y - driven surge in oil prices” but almost all countries see an increase in real output for an oil
- demand disturbance. Note that the energy

security prem ium calculation in this analy sis is based on price shocks from potential future supply

events only
. Finally , d espite continuing uncertainty about oil market behavior and outcomes and the sensitivity

of the U.S. economy

to oil shocks, it is generall y agreed that it is beneficial to reduce petroleum fuel consumption from an energy security standpoint. Reducing fuel consumption reduces the amount of domestic economic activity associated with a commodity whose price depends on volatile international markets. A lso, reducing U.S. oil import levels reduces the likelihood and significance of suppl y disruptions.Page 681 of 850

**Figure IX**  **- 2**  **Projected and Historical U.S. Expenditures, and Expenditure Share, on Crude Oil 766** 

766 Historical data are from EIA Annual Energy Review, various editions. For data since 2011 and projected data: source is EIA Annual Energy Outlook (AEO) 2014 (Reference Case). See Table 11, file "aeotab_11.xlsx" and Table 20 (Macroeconomic Indicators,” (fil e “aeotab_20.xlsx”).Page 682 of 850

(c) Cost of Existing U.S. Energy Security Policies The last often
- identified component of the full economic costs of U.S. oil import s are the costs to the U.S. taxpayers of existing U.S. energy securit y policies. The two primary examples are maintaining the Strategic Petroleum Reserve ( SPR) and maintaining a military presence to help secure a stable oil supply from potentiall y vulnerable regions of the world. The SPR is the largest stockpile of government
- owned emergency crude oil in the world. Establish ed in the aftermath of the 1973/ 19 74 oil embargo, the SPR provid es the U.S. with a response option should a disruption in commercial oil supplies threaten the U.S. eco nom y. It also allows the U.S. to meet part of its International Energy Agency obligation to maintain emergency oil stock s, and it provides a national defense fuel reserve. While the costs for building and maintaining the SPR are more clearl y related to U.S. oil use and imports , historically these costs have not varied in response to changes in U.S. oil import levels. Thus , while the effect of the SPR in moderating price shocks is factored into the ORNLanal ys is, the cost of maintaining the SPR is excluded. U.S. military

costs are excluded from the anal ys is performed b y ORNL because their attribution to particular missions or activities is difficult, and because it is not clear that these outlay s would decline in response to incremental reductions in U.S. oil imports. Most military forces serve a broad range of security and foreign policy

objectives. The agencies also reco gnize that attempts to attribute some share of U.S. military costs to oil imports are further challenged by the need to estimate how those costs might vary with incremental variations in U.S. oil imports. **(3) Energy Security Benefits of this Program**  Usi ng the ORNL “oil premium” methodology , updating world oil price values and energy trends using AEO 2014 (Earl y Release) and using the estimated fuel savings from the proposed rules estimated from the MOVES/CAFE models, the agencies has calculated the annual energy

security benefits of this proposed rule through 2050. 767 Since the agencies are taking a global perspective with respect to valuing greenhouse gas benefits from the rul es , onl y the avoided macroeconomic adjustment/disruption portion of the energy security premium is used in the energy

security benefits estimates present below. These results are shown below in Table IX
- 25
. The agencies have also calculated the net present value at 3 percent and 7 percent discount rates of model year lifetime benefits associated with energy security ; these values are presented in Table IX
- 26
.

767 In order to determine the energy security benefits beyond 2040, we use the 2040 energy security premium multiplied by the estimate fuel savings from the proposed rule. Since the AEO 2014 (Early Release) only goes to 2040, we only cal culate energy security premiums to 2040.Page 683 of 850

**Table IX**  **- 25**  **Annual U.S. Energy Security Benefits of the Preferred Alternative**  **and Net Present Values at 3% and 7% Disco**  **unt Rates using Method B and Relative to the Less Dynamic Baseline**  **( In Millions**  **of 2012$) a**  YEAR BENEFIT

S (2012$) 2018 $10 2019 $20 2020 $31 2021 $77 2022 $140 2023 $211 2024 $328 2025 $456 2026 $596 2027 $770 2028 $947 2029 $1,126 2030 $1,306 2035 $2,156 2040 $2,920 2050 $3,498 NPV, 3% $28,947 NPV, 7% $11,857 **Note:** a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. **Table IX**  **- 26**  **Discounted Model Year Lifetime Energy Security Benefits due to the Preferred Alternative**  **at 3% and 7% Discount Rates**  **using Method B and Relative to the Less Dynamic Baseline (Millions of 2012$)**  **a** Calendar Year 3% Discount Rate 7%

Discount Rate 2018 $86 $60 2019 $85 $56 2020 $84 $53 2021 $534 $326 2022 $579 $341 2023 $621 $353 2024 $996 $546 2025 $1,060 $560 2026 $1,121 $571 2027 $1,375 $676 2028 $1,388 $657 2029 $1,397 $637 Sum $9,325 $4,837 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 684 of 850



### J. **Other Impacts (1)**  **Costs of Noise, Congestion and Accidents Associated with Additional (Rebound) Driving**  Although it provides benefits to drivers as described above, increased vehicle use associated with the rebound effect also contributes to increased traffic congestion, motor vehicle accidents, and highway

noise. Depending on how the additional travel is distributed over the day and where it takes place, additional vehicle use can contribute to traffic congestion and delay s by incr easing the number of vehicles using facilities that are already heavil y traveled. These added delays impose higher costs on drivers and other vehicle occupants in the form of increased travel time and operating expenses. At the same time, this additional travel also increases costs associated with traffic accidents and vehicle noise. The agencies estimate these costs using the same methodology as used in the two light
duty and the HD Phase 1 rule anal ys e s, which relies on estimates of congestion, accident, and noise costs imposed by

automobiles and light trucks developed by the Federal Highway Administration to estimate these increased external costs caused b y added driving. 768 We provide the details behind the estimates in Chapter 8.7 of the draft RIA. T he agencies request comment on all input metrics used in the anal ys is of accidents, congestion and noise and on the calculation methodology
. Table IX
- 27 presents th e estimated annual impacts associated with accidents, congestion and noise along with net present values at both 3 percent and 7 percent discount rates. Table IX
- 28 presents the estimated discounted model year lifetime impacts associated with accidents, congestion and noise.

768 These estimates were developed by FHWA for use in its 1997 Federal Highway Cost Allocation Study; http://www.fhwa.dot.gov/policy/hcas/final/index.htm (last accessed July 8, 2012).Page 685 of 850

**Table IX**  **- 27**  **Annual Costs Asso ciated with Accidents, Congestion and Noise and Net Present Values at 3%**  **and 7% Discount Rates using Method B and Relative to the Less Dynamic Baseline (Millions of 2012$) a**  Calendar Year Costs of

Accidents, Congestion, And Noise 2018 $0 2019 $0 2020 $0 2021 $117 2022 $172 2023 $226 2024 $279 2025 $330 2026 $379 2027 $425 2028 $467 2029 $506 2030 $542 2035 $676 2040 $758 2050 $871 NPV, 3% $9,334 NPV, 7% $4,202 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 28**  **Discounted Model Year Lifetime Costs of Accidents, Congestion and Noise at 3% and 7% Discount Rates using Method B and Relative to the Less Dynam** **ic Baseline (Millions of 2012$) a**  Calendar Year 3% Discount Rate 7%

Discount Rate 2018 $132 $85 2019 $146 $94 2020 $162 $103 2021 $450 $284 2022 $438 $266 2023 $427 $250 2024 $424 $239 2025 $422 $229 2026 $420 $219 2027 $415 $209 2028 $409 $198 2029 $402 $187 Sum $4,247 $2,362 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 686 of 850

**(2) Benefits Associated with Reduced Refueling Time**  By reducing the frequency

with which drivers t ypically refuel their vehicles and by extending the upper limit of the range that can be traveled before requiring refueling ( i.e., future fuel tank sizes remain constant), savings would be realized associated with less time spent refueling vehicles. Alternatively , refill intervals may remain the same ( i.e., future fuel tank sizes get smaller), resulting in the same number of refills as today but less time spent per refill because there would be less fuel to refill. The agencies have estimated this impact using the former approach

— by assuming that future tank sizes remain constant. The savings in refueling time are calculated as the total amount of time the driver of a ty pical truck in each class would save each year as a consequence of pumping less fuel into the vehicle’s tank. The calculati on does not include any reduction in time spent searching for a fueling station or other time spent at the station; it is assumed that time savings occur onl y when truck operators are actually refueling their vehicles. The calculation uses the reduced number of gallons consumed by truck type and divides that value b y the tank volume and refill amount to get the number of refills, then multiplies that by the time per refill to determine the number of hours saved in a given year. The calculation then app lies DOT
- recommended values of travel time savings to convert the resulting time savings to their economic value, including a 1.2 percent growth rate in those time savings going forward. 769 The input metrics used in the anal ys is are presented in greater det ail in draft RIA Chapter 9.7. The annual benefits associated with reduced refueling time are shown in Table IX
- 29 along with net present values at both 3 percent and 7 percent discount rates. The discounted model year lifetime benefits are shown in Table IX
- 30

769 U.S. Department of Transportation, Valuation of Travel Guidance, July 9, 2014, at page 14.Page 687 of 850

**Table IX**  **- 29**  **Annual Refueling Benefits and Net Present Values at 3% and 7% Discount Rates using Method**

**B and Relative to the Less Dynam ic Baseline (Millions of 2012$)**  **a**

Calendar Year Refueling

Benefits 2018 $3 2019 $6 2020 $9 2021 $25 2022 $47 2023 $72 2024 $113 2025 $157 2026 $205 2027 $266 2028 $327 2029 $386 2030 $444 2035 $698 2040 $890 2050 $1,195 NPV, 3% $9,410 NPV, 7% $3,868 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 30**  **Discounted Model Year Lifetime Refueling Benefits using Method B and relative to the Less Dynam** **ic Baseline (Millions of 2012$) a**  Model Year 3% Discount Rate 7%

Discount Rate 2018 $23 $16 2019 $22 $15 2020 $21 $14 2021 $163 $101 2022 $184 $110 2023 $203 $117 2024 $325 $181 2025 $349 $187 2026 $372 $191 2027 $466 $231 2028 $465 $222 2029 $463 $213 Sum $3,055 $1,597 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.Page 688 of 850

**(3) Benefits of Increased Travel Associated with Rebound Driving**  The increase in travel associated with the rebound effect produces additional benefits to vehicle owners and operators, which refle ct the value of the added (or more desirable) social and economic opportunities that become accessible with additional travel. The anal ys is estimates the economic benefits from increased rebound
- effect driving as the sum of fuel expenditures incurred plus the consumer surplus from the additional accessibility it provides. As evidenced by the fact that vehicles make more frequent or longer trips when the cost of driving declines, the benefits from this added travel exceed added expenditures for the fuel co nsumed. The amount by which the benefits from this increased driving exceed its increased fuel costs measures the net benefits from the additional travel, usuall y referred to as increased consumer surplus. The agencies’ anal ys is estimates the economic v alue of the increased consumer surplus provided b y added driving using the conventional approximation, which is one half of the product of the decline in vehicle operating costs per vehicle
- mile and the resulting increase in the annual number of miles driv en. Because it depends on the extent of improvement in fuel econom y, the value of benefits from increased vehicle use changes b y model year and varies among alternative standards. Under even those alternatives that would impose the highest standards, how ever, the magnitude of the consumer surplus from additional vehicle use represents a small fraction of this benefit. The annual benefits associated with increased travel are shown in Table IX
- 31 along with net present values at both 3 percent and 7 percent discount rates. The discounted model year lifetime benefits are shown in Table IX
- 32
. **Table IX**  **- 31**  **Annual Value of Increased Travel and Net Present Values at 3% and 7% Discount Rates using** 

**Me thod B and Relative to the Less Dyna**  **mi c Baseline(Millions of 2012**  **$ a** **)**

Calendar Year Benefits of

Increased Travel 2018 $0 2019 $0 2020 $0 2021 $445 2022 $636 2023 $821 2024 $1,001 2025 $1,179 2026 $1,346 2027 $1,506 2028 $1,647 2029 $1,783 2030 $1,909 2035 $2,445 2040 $2,873 2050 $3,286 NPV, 3% $34,240 NPV, 7% $15,316 Note:Page 689 of 850 a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

**Table IX**  **- 32**  **Discounted Model Year Lifetime Value of Increased Travel at 3% and 7% Discount Rates using**

**Me thod B and Relative to the Less Dynamic Baseline (Millions of 2012$)**  **a**

Calendar Year 3% Discount Rate 7%

Discount Rate 2018 $554 $353 2019 $618 $390 2020 $686 $429 2021 $1,510 $942 2022 $1,488 $894 2023 $1,463 $847 2024 $1,434 $799 2025 $1,442 $774 2026 $1,447 $748 2027 $1,421 $708 2028 $1,415 $678 2029 $1,406 $649 Sum $14,884 $8,211 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.


### K. **Summary of Benefits and Costs** This section presents the costs , benefits , and other economic impacts of the proposed Phase 2 standards. It is important to note that NHTSA’s proposed fuel consumption standards and EPA’s proposed GHG standards would both be in effect, and would jointly lead to increased fuel efficiency

and reductions in GHG and non
- GHG emissions. The individual categories of benefits and costs presented in the tables below are defined more full y and presented in more detail in Chapter 8 o f the draft RIA. These include:

• the vehicle program costs (costs of compl yi ng with the vehicle CO 2 and fuel consumption standards),
• changes in fuel expenditures associated with reduced fuel use by more efficient vehicles and increased fuel ue associated with the “rebound” effect, both of which result from the program, • the global economic value of reductions in GHGs,
• the economic value of reductions in non
- GHG pollutants,
• costs associated with in creases in noise, congestion, and accidents resulting from increased vehicle use,
• savings in drivers’ time from less frequent refueling,
• benefits of increased vehicle use associated with the “rebound” effect, and
• the economic value of improvements in U.S . energy security impacts.Page 690 of 850

For a discussion of the cost of ownership and the agencies’ pay back analy sis of vehicles covered by this proposal, please see Section IX.M. The agencies conducted coordinated and complementary anal ys es using two anal yt ical method s referred to as Method A and Method B. For an explanation of these m ethods, please see Section I.D . And as discussed in Section X.A.1, the agencies present estimates of benefits and costs that are measured against two different assumptions about improve ments in fuel efficiency that might occur in the absence of the Phase 2 standards. The first case (Alternative 1a) uses a baseline that projects very little improvement in new vehicles in the absence of new Phase 2 standards, and the second (Alternative 1 b) uses a more dy namic baseline that projects more significant improvements in vehicle fuel efficiency
. Table IX
- 33 show s benefits and costs for the proposed standards from the perspective of a program designed to improve the n ation’s energy security and conserve energy by improving fuel efficiency . From this viewpoint, technology costs occur when the vehicle is purchased. F uel savings are counted as benefits that occur over the lifetimes of the vehicles produced during the model years subject to the Phase 2 standards as they consume less fuel . The table shows that benefits far outweigh the costs, and the preferred alternative is anticipated to result in large net benefits to the U.S economy
.Page 691 of 850

**Table IX**  **- 33**  **Lifetime Benefits & Costs of the Preferred Alternative for Model Years 2018 -**  **2029 Vehicles**

**Using Analysis Method A (Billio ns of 2012$ discounted at 3% and 7%)**  **Category Baseline 1a**  **Baseline 1b 3%**  **7% 3%**  **7%** Vehicle Program: Technology and Indirect Costs, Normal Profit on Additional Investments 25.4 17.1 25.0 16.8
Additional Routine Maintenance 1.1 0.6 1.0 0.6 Congestion, Accidents, and Noise from Increased Vehicle Use 4.7 2.8 4.5 2.6 **Total Costs 31.1**  **20.5 30.5**  **20.0** Fuel Savings (valued at pre
- tax prices) 175.1 94.2 165.1 89.2 Savings from Less Frequent Refueling 3.1 1.6 2.9 1.5 Economic Benefits from Additional Vehicle Use 15.1 8.4 14.7 8.2 Reduced Climate Damages from GHG Emissions a 27.4 27.4 25.7 25.7 Reduced Health Damages from Non
GHG Emissions 12.7 6.6 12.4 6.6 Increased U.S. Energy Security 8.9 4.7 8.1 4.3 **Total Benefits 242.2**  **143.0 229.0**  **135.6 Net**  **Benefits 211.1**  **122.5 198.5**  **115.6**

a Benefits and net benefits use the 3 percent average global SCC value applied only to CO 2 emissions; GHG reductions include CO 2 , CH 4 , N 2 O and HFC reductions , and include benefits to other nations as well as the U.S
. See Draft RIA Chapter 8.5 and Preamble Section IX.G for further discussion. Table IX
- 34 , Table IX
- 35 , and Table IX
- 36 report benefits and cost from the perspective of reducing GHG. Table IX
- 34 shows the annual impacts and net benefits of the preferred alternative for selected future years, together with the net present values of cumulative annual impacts from 2018 through 2050, discounted at 3 percent and 7 percent rates. Table IX
- 35 and Table IX
- 36 show the discounted lifetime costs and benefits for each model year affected by the Phase 2 standards at 3 percent and 7 percent discount rates, respectivel y.Page 692 of 850

**Table IX**  **- 34**  **Annual Benefits & Costs of the Preferred Alternative and Net Present Values at 3% and 7% Discount Rates using Method B and Relative to the Less Dynam** **ic Baseline (Billions of 2012$) a**  **, b** 

2018 2021 2024 2030 2035 2040 2050 NPV, 3% NPV ,

7% Vehicle program
- $0.1
- $2.4
- $3.7
- $5.4
- $5.9
- $6.3
- $7.0
- $86.8
- $41.1 Maintenance $0.0 $0.0
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $1.8
- $0.9 Pre
- tax fuel $0.2 $1.7 $6.9 $24.0 $37.2 $47.8 $57.5 $495.6 $206.7 Energy security $0.0 $0.1 $0.3 $1.3 $2.2 $2.9 $3.5 $28.9 $11.9 Accidents/Congestion/Noise $0.0
- $0.1
- $0.3
- $0.5
- $0.7
- $0.8
- $0.9
- $9.3
- $4.2 Refueling impacts $0.0 $0.0 $0.1 $0.4 $0.7 $0.9 $1.2 $9.4 $3.9 Travel value $0.0 $0.4 $1.0 $1.9 $2.4 $2.9 $3.3 $34.2 $15.3 Non
- GHG im

pacts $0.0

to $0.1 $0.4

to $0.9 $1.0

to $2.4 $3.3

to $8.3 $4.8

to $12.1 $5.7

to $14.3 $7.0 to

$17.5 $69.7

to $157.0 $26.6

to $60.4 SCC b,c SCC_CO 2 ; 5% Avg $0.0 $0.1 $0.4 $1.5 $2.5 $3.3 $5.0 $22.1 $22.1 SCC_CO 2 ; 3% Avg $0.0 $0.3 $1.3 $4.8 $7.4 $9.7 $13.6 $103.1 $103.1 SCC_CO 2 ; 2.5% Avg $0.1 $0.5 $1.9 $6.9 $10.6 $13.7 $18.5 $164.1 $164.1 SCC_CO 2 ; 3% 95th $0.1 $1.0 $4.0 $14.6 $23.2 $30.3 $42.0 $320.5 $320.5 Net benefits d SCC_CO 2 ; 5% Avg $0.2 $0.4 $6.4 $28.8 $46.8 $60.6 $74.6 $605.8 $257.1 SCC_CO 2 ; 3% Avg $0.2 $0.7 $7.3 $32.1 $51.7 $66.9 $83.2 $686.8 $338.1 SCC_CO 2 ; 2.5% Avg $0.2 $0.8 $7.9 $34.2 $54.9 $70.9 $88.2 $747.8 $399.1 SCC_CO 2 ; 3% 95th $0.3 $1.3 $10.0 $41.9 $67.5 $87.6 $111.7 $904.1 $555.5 Notes: a Positive values denote decreased social costs (benefits ); negative values denote increased social costs. For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. c 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 (SC
- CO 2 at 5, 3, 2.5 perc ent) is used to calculate net present value of SC
- CO 2 for internal consistency. Refer to the SCC TSD for more detail. d Section IX.G notes that SC CO 2 increases over time. For the years 2012
- 2050, the SC
- CO 2 estimates range as follows: for Average SC
- CO 2 at 5%: $12
- $28; for Average SC
- CO 2 at 3%: $37
- $77; for Average SC
- CO 2 at 2.5%: $58
- $105; and for 95th percentile SC
- CO 2 at 3%: $105
- $237. Section IX.G also presents these SC
- CO 2 estimates. e Net impacts are the summation of results within columns of the table with the exception that the net impacts at each SC
- CO 2 value include only the SC
- CO 2 im pacts at that value.Page 693 of 850

**Table IX**  **- 35**  **Discounted Model Year Lifetime Benefits & Costs of the Preferred Alternative using Method B** 

**and Relative to the Less Dynam ic Baseline (Billions of 2012$ discounted at 3%)**  **a ,**  **b** 2018 20 19 20 20 20 21 20 22 20 23 20 24 2025 2026 2027 2028 2029 Sum Vehicle program -

$0.1 - $0.1 - $0.1 - $2.0
- $1.9
- $1.9
- $2.8
- $2.7
- $2.7
- $3.7
- $3.6
- $3.5
- $25.1 Maintenance
-

$0.1 $0.0 $0.0
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $1.1 Pre
- tax fuel $1.9 $1.9 $1.8 $11.1 $11.5 $11.9 $18.9 $19.6 $20.2 $24.1 $24.1 $24.1 $171.1 Energy security $0.1 $0.1 $0.1 $0.5 $0.6 $0.6 $1.0 $1.1 $1.1 $1.4 $1.4 $1.4 $9.3 Accidents/ Congestion/ Noise -

$0.1 - $0.1 - $0.2 - $0.4
- $0.4
- $0.4
- $0.4
- $0.4
- $0.4
- $0.4
- $0.4
- $0.4
- $4.2 Refueling $0.0 $0.0 $0.0 $0.2 $0.2 $0.2 $0.3 $0.3 $0.4 $0.5 $0.5 $0.5 $3.1 Travel value $0.6 $0.6 $0.7 $1.5 $1.5 $1.5 $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 $14.9 Non
- GHG $0.2

to $0.5 $0.2

to $0.4 $0.2

to $0.4 $2.0

to $4.5 $2.0

to $4.5 $2.0

to $4.5 $2.9

to $6.6 $3.0

to $6.8 $2.6

to $5.9 $3.1

to $6.9 $3.1

to $6.9 $3.1

to $7.0 $24.4

to $55.0 SCC b,c SCC_CO 2 ; 5% Avg $0.1 $0.1 $0.1 $0.5 $0.5 $0.5 $0.9 $0.9 $0.9 $1.1 $1.1 $1.1 $7.8 SCC_CO 2 ; 3% Avg $0.4 $0.4 $0.4 $2.2 $2.3 $2.3 $3.7 $3.9 $4.0 $4.8 $4.8 $4.9 $34.0 SCC_CO 2 ; 2.5% Avg $0.6 $0.6 $0.6 $3.4 $3.5 $3.6 $5.8 $6.1 $6.3 $7.6 $7.6 $7.7 $53.4 SCC_CO 2 ; 3% 95th $1.1 $1.1 $1.1 $6.6 $6.9 $7.2 $11.5 $12.0 $12.4 $14.9 $15.0 $15.1 $105.0 Net benefits d SCC_CO 2 ; 5% Avg $2.8 $2.7 $2.7 $14.6 $15.1 $15.5 $23.9 $25.0 $25.1 $29.2 $29.4 $29.4 $215.5 SCC_CO 2 ; 3% Avg $3.0 $3.0 $3.0 $16.2 $16.8 $17.3 $26.8 $28.0 $28.2 $33.0 $33.1 $33.2 $241.7 SCC_CO 2 ; 2 .5% Avg $3.2 $3.2 $3.2 $17.4 $18.1 $18.6 $28.9 $30.2 $30.5 $35.7 $35.9 $36.0 $261.1 SCC_CO 2 ; 3% 95th $3.8 $3.8 $3.7 $20.7 $21.5 $22.1 $34.5 $36.0 $36.6 $43.1 $43.3 $43.5 $312.7 Notes: a Positive values denote decreased social costs (benefits); negative values denote increased social costs. For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic base line, 1b, please see Section X.A.1.c 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 (SC
- CO 2 at 5, 3, 2.5 percent) is used to calculate net present value of SC
- CO 2 fo r internal consistency. Refer to the SCC TSD for more detail. d Section IX.G notes that SCC increases over time. For the years 2012
- 2050, the SCC estimates range as follows: for Average SC
- CO 2 at 5%: $12
- $28; for Average SC
- CO 2 at 3%: $37
- $77; for Average SC
- CO 2 at 2.5%: $58
- $105; and for 95th percentile SC
- CO 2 at 3%: $105
- $237. Section IX.G also presents these SCC estimates. e Net impacts are the summation of results within columns of the table with the exception that the net impacts at each SC
- CO 2 value include only the SC CO 2 impacts at that value.Page 694 of 850

**Table IX**  **- 36**  **Discounted Model Year Lifetime Benefits & Costs of the Preferred Alternative using Method B** 

**and Relative to the Less Dynam ic Baseline (Billions of 2012$ discounted at 7%)**  **a ,b**  2018 20 19 20 20 20 21 20 22 20 23 20 24 2025 2026 2027 2028 2029 Sum Vehicle program -

$0.1 - $0.1 - $0.1 - $1.6
- $1.4
- $1.4
- $1.9
- $1.8
- $1.7
- $2.3
- $2.1
- $2.0
- $16.6 Maintenance $0.0 $0.0 $0.0
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1
- $0.1 $0.0
- $0.6 Pre
- tax fuel $1.4 $1.3 $1.2 $6.9 $6.9 $6.8 $10.5 $10.4 $10.4 $11.9 $11.5 $11.0 $90.1 Energy security $0.1 $0.1 $0.1 $0.3 $0.3 $0.4 $0.5 $0.6 $0.6 $0.7 $0.7 $0.6 $4.8 Accidents/ Congestion/ Noise -

$0.1 - $0.1 - $0.1 - $0.3
- $0.3
- $0.2
- $0.2
- $0.2
- $0.2
- $0.2
- $0.2
- $0.2
- $2.4 Refueling $0.0 $0.0 $0.0 $0.1 $0.1 $0.1 $0.2 $0.2 $0.2 $0.2 $0.2 $0.2 $1.6 Travel value $0.4 $0.4 $0.4 $0.9 $0.9 $0.8 $0.8 $0.8 $0.7 $0.7 $0.7 $0.6 $8.2 Non
- GHG $0.1

to $0.3 $0.1

to $0.3 $0.1

to $0.3 $1.1

to $2.5 $1.1

to $2.4 $1.0

to $2.3 $1.4

to $3.3 $1.4

to $3.2 $1.2

to $2.7 $1.3

to $3.0 $1.3

to $2.9 $1.3

to $2.8 $11.5

to $26.0 SCC b,c SCC_CO 2 ; 5% Avg $0.1 $0.1 $0.1 $0.5 $0.5 $0.5 $0.9 $0.9 $0.9 $1.1 $1.1 $1.1 $7.8 SCC_CO 2 ; 3% Avg $0.4 $0.4 $0.4 $2.2 $2.3 $2.3 $3.7 $3.9 $4.0 $4.8 $4.8 $4.9 $34.0 SCC_CO 2 ; 2.5% Avg $0.6 $0.6 $0.6 $3.4 $3.5 $3.6 $5.8 $6.1 $6.3 $7.6 $7.6 $7.7 $53.4 SCC_CO 2 ; 3% 95th $1.1 $1.1 $1.1 $6.6 $6.9 $7.2 $11.5 $12.0 $12.4 $14.9 $15.0 $15.1 $105.0 Net benefits d SCC_CO 2 ; 5% Avg $1.9 $1.8 $1.7 $8.7 $8.7 $8.7 $13.0 $13.1 $12.7 $14.3 $13.8 $13.4 $111.8 SCC_CO 2 ; 3% Avg $2.2 $2.1 $2.0 $10.3 $10.4 $10.5 $15.8 $16.1 $15.8 $18.0 $17.6 $17.2 $138.0 SCC_CO 2 ; 2 .5% Avg $2.4 $2.3 $2.2 $11.5 $11.7 $11.8 $17.9 $18.3 $18.1 $20.7 $20.4 $20.0 $157.4 SCC_CO 2 ; 3% 95th $2.9 $2.8 $2.8 $14.8 $15.1 $15.3 $23.6 $24.2 $24.2 $28.1 $27.8 $27.4 $209.0 Notes: a Positive values denote decreased social costs (benefits ); negative values denote increased social costs. For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Net present value of reduced CO 2 emissions i s calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SC
- CO 2 at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to the SCC TSD fo r more detail. c Section IX.G notes that SC
- CO 2 increases over time. For the years 2012
- 2050, the SC
- CO 2 estimates range as follows: for Average SC
- CO 2 at 5%: $12
- $28; for Average SC
- CO 2 at 3%: $37
- $77; for Average SC
- CO 2 at 2.5%: $58
- $105; and for 9 5th percentile SC CO 2 at 3%: $105
- $237. Section IX.G also presents these SC
- CO 2 estimates. d Net impacts are the summation of results within columns of the table with the exception that the net impacts at each SC
- CO 2 value include only the SC
- CO 2 im pacts at that value.Page 695 of 850



### L. **Employment Impacts** Executive Order 13563 (January 18, 2011) directs federal agencies to consider regulatory impacts on, among other criteria, job creation. 770 According to the Executive Order “ Our regulatory

s ys tem must protect public h ealth, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation
. It must be based on the best available science. ” Anal ys is of employ ment impacts of a regulation is not part of a standard benefit
- cost analy sis (except to the extent that labor costs contribute to costs)
. E mploy ment impacts of federal rules are of general interest, however, and have been particularly so, historically , in the auto sector during periods of challenging labor market con ditions
. For this reason, we are describing the connections of these proposed standards t o employ ment in the regulated sector, the motor vehicle manufacturing sector , as well as the motor vehicle body and trailer and motor vehicle parts manufacturing sect or s . The overall effect of the proposed rules on motor vehicle sector employ ment depends on the relative magnitude of output and substitution effects, described below. Because we do not have quantitative estimates of the output effect, and only a part ial estimate of the substitution effect, we cannot reach a quantitative estimate of the overall emplo ym ent effects of the proposed rules on motor vehicle sector employ ment or even whether the total effect will be positive or negative. According to th e U.S. Bureau of Labor Statistics, in 201 4 , about 850 ,000 people in the U.S. were employed in the Motor Vehicle and Parts Manufacturing Sector (NAI CS 3361, 3362, and 3363) , 771 the directly regulated sector. The employ ment effects of th ese proposed rule s are expected to expand beyond the regulated sector. Though some of the parts used to achieve the proposed standards are likely to be built by motor vehicle manufacturers (including trailer manufacturers) themselves, the motor vehicle parts manufacturing sector also play s a significant role in providing those parts, and will also be affected b y changes in vehicle sales. Changes in truck sales, discussed in Section IX. F. (2) , could also affect emplo ym ent for truck and trailer vendors . As discussed in Section IX. C. , this proposed rule is expected to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery and supply

industries as well
. Finally , since the net reduction in cost associated with th e s e proposed rule s is expected to lead to lower transportation and shipping costs, in a competitiv e 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). The proposed rule s are not expected to have an y notable inflationary or recessionary

effect. The employ

ment effects of environmental regulation are difficult to disentangle from other economic changes and business decisions that affect emplo ym ent, over time and across regions and industries. In light of these difficulties, we lean on economic theory to provide a

770 Available at http://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo13563_01182011.pdf 771 U.S. Department of Labor, Bureau of Labor Statistics. “Automotive Industry; Employment, Earnings, and Hours.” http://www.bls.gov/iag/tgs/iagauto.htm , accessed 8/18/14.Page 696 of 850

constructive framework for approaching these assessments and for better understanding the inherent complexities in such assessments. Neo classical microeconomic theory describes how profit
- maximizing firms adjust their use of productive inputs in response to changes in their economic conditions. 772 Berman and Bui (2001, pp. 274
- 75) model two components that drive changes in firm
- level labor demand: output effects and substitution effects. 773 Regulation can affect the profit
- maximizing quantity of output by changing the marginal cost of production. If regulation causes marginal cost to increase, it will place upward pressure on output prices, leading to a decrease in the quantity

demanded, and resulting in a decrease in production. The output effect describes how, holding labor intensity constant, a decrease in production causes a decrease in labor demand. As noted by Berman and Bui, although many assume that regulation increases marginal cost, it need not be the case. A regulation could induce a firm to upgrade to less polluting and more efficient equipment that lowers marginal production costs, or it may induce use of technologies that may prove popular with buyers or provide positive network externalities (see Section IX. A. for discussion of this effect). In such a case, output could increase. The substitution effect describes how, holding output constant, regulation affects labor intensity of production. Although increased environmental regulation may increase use of pollution control equipment and energy to operate that equipment, the impact on labor demand is ambiguous. For example, equipment inspection requirements, specialized waste handling, or pollution technologies that alter the production process may affect the number of workers necessary to produce a unit of output. Berman and Bui (200 1) model the substitution effect as the effect of regulation on pollution control equipment and expenditures required by the regulation and the corresponding change in labor intensity of production. In summary , as output and substitution effects may be po sitive or negative, theory alone cannot predict the direction of the net effect of regulation on labor demand at the level of the regulated firm. Operating within the bounds of standard economic theory , empirical estimation of net employ

ment effects on re gulated firms is possible when data and methods of sufficient detail and quality

are available. The literature, however, illustrates difficulties with empirical estimation. For example, studies sometimes rely on confidential plant
- level employ ment data f rom the U.S. Census Bureau, possibl y combined with pollution abatement expenditure data that are too dated to be reliably informative. In addition, the most commonly used empirical methods do not permit estimation of net effects.

772 See Layard, P.R.G., and A. A. Walters (1978), Microeconomic Theory (McGraw
- Hill, Inc.), Chapter 9 (Docket ID EPA
- HQ
- OA R
- 2014
- 0827 ) , a standard microeconomic theory textbook treatment, for a discussion. 773 Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin.” Journal of Public Economics 79(2): 265
- 295 (Doc ket EPA
- HQ
- OAR
- 2014
- 0827) . The authors also discuss a third component, the impact of regulation on factor prices, but conclude that this effect is unlikely to be important for large competitive factor markets, such as labor and capital. Morgenstern, Pizer and Shih (Morgenstern, Richard D., William A. Pizer, and Jhih
- Shyang Shih (2002). “Jobs versus the Environment: An Industry
- Level Perspective.” Journal of Environmental Economics and Management 43: 412
- 436) use a similar mo del, but they break the employm ent effect into three parts: 1) a demand effect; 2) a cost effect; and 3) a factor
shift effect.Page 697 of 850

The conceptual framework described thus far focused on regulatory effects on plant
- level decisions within a regulated industry
. Employ ment impacts at an individual plant do not necessarily

represent impacts for the sector as a whole. The approach must be modified when applied at the industry

level. At the industry

level, labor demand is more responsive if: (1) the price elasticity of demand for the product is high, (2) other factors of production can be easily substituted for labor, (3) the suppl y of other factors is highl y ela stic, or (4) labor costs are a large share of total production costs. 774 For example, if all firms in an industry are faced with the same regulatory compliance costs and product demand is inelastic, then industry output may not change much, and output of in dividual firms may change slightly. 775 Inthis case, the output effect may be small, while the substitution effect depends on input substitutability
. Suppose, for example, that new equipment for fuel efficiency improvements requires labor to install and op erate. In this case, the substitution effect may be positive, and with a small output effect, the total effect may be positive. As with potential effects for an individual firm, theory cannot determine the sign or magnitude of industry
- level regulatory ef fects on labor demand. Determining these signs and magnitudes requires additional sector
- specific empirical study
. For environmental rules, much of the data needed for these empirical studies is not publicly available, would require significant time and resources in order to access confidential U.S. Census data for research, and also would not be necessary

for other components of a typical RIA. In addition to changes to labor demand in the regulated industry , net employ ment impacts encompass changes in other related sectors. For example, the proposed standards are expected to increase demand for fuel
- saving technologies. This increased demand may increase revenue and employ ment in the firms providing these technologies. At the same time, the regulated industry is purchasing the equipment, and these costs may impact labor demand at regulated firms. Therefore, it is important to consider the net effect of compliance actions on employ ment across multiple sectors or industri es. If the U.S. econom y is at full employ ment, even a large
- scale environmental regulation is unlikely to have a noticeable impact on aggregate net employ ment. 776 In stead, labor would primarily be reallocated from one productive use to another, and net national employ ment effects from environmental regulation would be small and transitory (e.g., as workers move from one job to another). 777

774 See Ehrenberg, Ronald G., and Robert S. Smith (2000), Modern Labor Economics: Theory and Public Policy (Addison Wesley Longman, Inc.), p. 108. 775 This dis cussion draws from Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin.” Journal of Public Economics 79(2): 265
- 295 (Docket EPA
- HQ
- OAR
2014
- 0827), p. 293. 776 Full employment is a conceptu al target for the economy where everyone who wants to work and is available to do so at prevailing wages is actively employed. The unemployment rate at full employment is not zero. 777 Arrow et al. (1996). “Benefit
- Cost Analysis in Environmental, Health, and Safety Regulation: A Statement of Principles.” American Enterprise Institute, the Annapolis Center, and Resources for the Future. See discussion onPage 698 of 850

Affected sectors may

experience transitory

effects as workers change jobs. Some workers may retrain or relocate in anticipation of new requirements or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers. These adjustment costs can lead to local labor disruptions. Although the net change in the national workf orce is expected to be small, localized reductions in employ ment may adversel y impact individuals and communities just as localized increases may have positive impacts. If the economy

is operating at less than full employ ment, economic theory

does not clearl y indicate the direction or magnitude of the net impact of environmental regulation on employ ment; it could cause either a short
- run net increase or short
- run net decr ease. 778 An important research question is how to accommodate unemploy ment as a structural feature in economic models. This feature may be important in assessing large
- scale regulatory impacts on employ ment. 779 Environmental regulation may also affect labo r supply
. In particular, pollution and other environmental risks may

impact labor productivity or employees’ ability to work. 780 While the theoretical framework for anal yz ing labor supply effects is analogous to that for labor demand, it is more difficult to study

empirically
. There is a small emerging literature described in the next section that uses detailed labor and environmental data to assess these impacts. To summarize, economic theory provides a framework for anal yz ing the impacts of environmental regulation on employ ment. The net employ

ment effect incorporates expected employ ment changes (both positive and negative) in the regulated sector and elsewhere. Labor demand impacts for regulated firms, and also for the regulated industry , can be decomposed into output and substitution effects which may be either negative or positive. Estimation of net employ ment effects for regulated sectors is possible when data of sufficient detail and quality are available. Finally , economic theory suggests that l abor supply effects are also possible. In the next section, we discuss the empirical literature. **(1)** Current State of Knowledge Based on the Peer
- Reviewed Literature In the labor economics literature there is an extensive body of peer
- reviewed empirical work anal yz ing various aspects of labor demand, relying on the above theoretical framework. 781 This work focuses primarily on the effects of employ

ment policies, e.g. labor taxes, minimum

bottom of p. 6. In practice, distributional impacts on individual workers can be important, as discusse d later in this section. 778 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. 779 Klaiber, H. Allen, and V. Kerry Smith (2012). “Developing General Equilibrium Benefit Analyses for Social Programs: An Introduction and Example.” Journal of Benefit
- Cost Analysis 3(2). 780 E.g. Graff Zivin, J., and M. Neidell (2012). “The Impact of Pollution on Worker Productivity.” American Economic Review 102: 3652
- 3673. 781 See Hamermesh (1993), Labor Demand (Princeton, NJ: Princeton University Press), Chapter 2 (Docket EPA
HQ
- OAR
- 2014
- 0827) for a detailed treatment.Page 699 of 850

wage, etc. 782 Incontrast, the peer
- reviewed empirical literature specificall y estimating employ ment effects of environmental regulations is very limited. Several empirical studies 783 suggest that net employment impacts may be zero or slightly positive but small even in the regulated sector. Other research suggests that more highl y regulated counties may generate fewer jobs than less regulated ones. 784 However, since these latter studies compare more regulated to less regulated counties , they overstate the net national impact of regulation to the extent that regulation causes plants to locate in one area of the country rather than another. List et al . (2003) 785 find some evidence that this ty pe of geographic relocation may be occurring. Overall , the peer
- reviewed literatur e does not contain evidence that environmental regulation has a large impact on net employ ment (either negative or positive) in the long run across the whole econom y. Analy tic challenges make it very difficult to accurately

produce net employment estimates for the whole economy that would appropriately capture the way in which costs, compliance spending, and environmental benefits propagate through the macro
- econom y. Quantitative estimates are further complicated b y the fact that macroeconomic models often have very little sectoral detail and usually assume that the econom y is at full employ ment. EPA is currentl y in the process of seeking input from an independent expert panel on modeling econom y - wide impacts, including emplo ym ent effects. For more inform ation, see: https://federalregister.gov/a/2014
- 02471
. **(2) Employment**  **Im pacts in the**  **Motor Vehicle and Parts Manufacturing Sector**  This section describes changes in employ ment in the motor vehicle, trailer, and parts (hence, motor vehicle) manufacturing sectors due to these proposed rules . We focus on the motor vehicle manufacturing sector because it is directly regulated, an d because it is likely to bear a substantial share of changes in employ ment due to these proposed rules . We include discussion of effects on the parts manufacturing sector, because the motor vehicle manufacturing sector can either produce parts internall y or bu y them from an external supplier, and we do not have estimates of the likely breakdown of effort between the two sectors.

782 See Ehrenberg, Ronald G., and Robert S. Smith (2000), Modern Labor Economics: Theory and Public Policy (Addison Wesley Longman, Inc.), Chapter 4 (Docket EPA
- HQ
- OAR
- 2014
- 0827) , for a concise overview. 783 Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin.” Journal of Public Economics 79(2): 265
- 295 (Docket EPA
- HQ
- OAR2014
- 0827) . Morgenstern, Richard D., William A. Pizer, and Jhih
- Shyang Shih. “Jobs Versus the Environment: An Industry
- Level Perspective.” Journal of Environmental Economics and Management 43 (2002): 412
- 436; Gray et al (2014), and Ferris, Shadbegian and Wolverton (2014). 784 Greenstone, M. (2002). “The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures,” Journal of Political Economy 110(6): 1175
- 1219 (Docket EPA
- HQ
- OAR
- 2014
- 0827) ; Walker, Reed. (2011). “Environmental Regulation and Labor Reallocation." American Economic Review: Papers and Proceedings 101(3): 442
- 447 (Docket EPA
- HQ
- OAR
2014
- 0827)
. 785 List, J. A., D. L. Millimet, P. G. Fredriksson, and W. W. McHone (2003). “Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Est imator.” The Review of Economics and Statistics 85 (4): 944
- 952 (Docket EPA
- HQ
- OAR2014
- 0827)
.Page 700 of 850

We follow the theoretical structure of Berman and Bui 786 of the impacts of regulation in employ ment in the regulated sect ors. In Berman and Bui’s (2001, p. 274
- 75) theoretical model, as described above, the change in a firm’s labor demand arising from a change in regulation is decomposed into two main components: output and substitution effects. 787 As the output and substitution effects may be both positive, both negative, or some combination, standard neoclassical theory

alone does not point to a definitive net effect of regulation on labor demand at regulated firms. Following the Berman and Bui framework for the impacts o f regulation on employ ment in the regulated sector, we consider two effects for the motor vehicle sector: the output effect and the substitution effect. 

### (a) The Output Effect If truck or trailer sales increase, then more people will be required to assemble trucks , trailers, and their components. If truck or trailer sales decrease, employ ment associated with these activities will decrease. The effects of this proposed rulemaking on HD vehicle sales thus depend on the perceived desirability of the new vehicl es. On one hand, this proposed rulemaking will increase truck and trailer costs; by itself, this effect would reduce truck and trailer sales. In addition, while decreases in truck performance would also decrease sales , this program is not expected to have an y negative effect on truck performance
. On the other hand, this proposed rulemaking will reduce the fuel costs of operating the trucks; by itself, this effect would increase truck 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 truck or trailer sales. However , as discussed in IX. E. , the agencies have estimated an increase in vehicle miles traveled ( i.e. , VMT rebound) due to the reduced operating costs of trucks meeting these proposed standards. Since increased VMT is most likely to be met with more drivers and more trucks, our projection of VMT rebound is s uggestive of an increase in vehicle sales and truck driver employ ment (recognizing that these increases may be partiall y offset by a decrease in manufacturing and sales for equipment of other modes of transportation such as rail cars or barges). 

### (b) The Sub stitution Effect The output effect, above, measures the effect due to new truck and trailer sales only . The substitution effect includes the impacts due to the changes in technologies needed for vehicles to

786 Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin.” Journal of Public Economics 79 (2): 265
- 2 95 (Docket EPA
- HQ
- OAR2014
- 0827)
. 787 The authors also discuss a third component, the impact of regulation on factor prices, but conclude that this effect is unlikely to be important for large competitive factor markets, such as labor and capital. Morgenstern, Pizer and Shih (2002) use a similar model, but they break the employment effect into three parts: 1) the demand effect; 2) the cost effect; and 3) the factor
- shift effect. See Morgenstern, Richard D., William A. Pizer, and Jhih
- Shyang Shih. “Jobs Vers us the Environment: An Industry
- Level Perspective.” Journal of Environmental Economics and Management 43 (2002): 412
- 436 (Docket EPA
- HQ
- OAR
- 2014
- 0827)
.Page 701 of 850

meet the proposed standards , separate from the e ffect on output (that is, as though holding output constant)
. This effect includes both changes in employ ment due to incorporation of abatement technologies and overall changes in the labor intensity of manufacturing. We present estimates for this effect to provide a sense of the order of magnitude of expected impacts on employ ment, which we expect to be small in the automotive sector, and to repeat that regulations may have positive as well as negative effects on emplo ym ent. One way to estimate th i s effe ct, given the cost estimates for compl yi ng with the proposed rule , is to use the ratio of workers to each $1 million of expenditures in that sector. The use of these ratios has both advantages and limitations. It is often possible to estimate these ratio s for quite specific sectors of the econom y: for instance, it is possible to estimate the average number of workers in the motor vehicle body and trailer manufacturing sector per $1 million spent in the sector, rather than use the ratio from another, more aggregated sector, such as motor vehicle manufacturing. As a result, it is not necessary to extrapolate employ

ment ratios from possibly unrelated sectors. On the other hand, these estimates are averages for the sectors, covering all the activities in th ose sectors; they may not be representative of the labor required when expenditures are required on specific activities, or when manufacturing processes change sufficiently

that labor intensity

changes . For instance, the ratio for the motor vehicle manufa cturing sector represents the ratio for all vehicle manufacturing, not just for emissions reductions associated with compliance activities . In addition, these estimates do not include changes in sectors that supply these sectors, such as steel or electron ics producers. They thus may best be viewed as the effects on employ ment in the motor vehicle sector due to the changes in expenditures in that sector, rather than as an assessment of all employ ment changes due to these changes in expenditures. In additi on, this approach estimates the effects of increased expenditures while holding constant the labor intensity of manufacturing; it does not take into account changes in labor intensity due to changes in the nature of production. This latter effect could ei ther increase or decrease the employ ment impacts estimated here. 788 Some of the costs of these proposed rules will be spent directl y in the motor vehicle manufacturing sector, but it is also likely that some of the costs will be spent in the motor vehicle body and trailer and motor vehicle parts manufacturing sector s . The anal ysis here draws on estimates of workers per $1 million of expenditures for each of these sectors. There are several public sources for estimates of employ ment per $1 mil lion expenditures. The U.S. Bureau of Labor Statistics (BLS) provides its Employ ment Requirements Matrix (ERM), 789 which provides direct estimates of the employ ment per $1 million in sales of goods in 202 sectors. The values considered here are for Motor V ehicle Manufacturing (NAICS 3361) , Motor V ehicle B ody and T railer M anufacturing (NAICS 3362), and Motor Vehicle Parts Manufacturing (NAICS 3363) for 2012
.

788 As noted above, Morgenstern et al. (2002) separate the effect of holding output constant into two eff ects: the cost effect, which holds labor intensity constant, and the factor shift effect, which estimates those changes in labor intensity. 789 http://www.bls.gov/emp/ep_data_emp_requirements.htm.Page 702 of 850

The Census Bureau provides the Annual Survey of Manufacture r s 790 (ASM) , a subset of the Economic Census , based on a sample of establishments; though the Census itself is more complete, it is conducted only every 5 years, while the ASM is annual. Both include more sectoral detail than the BLS ERM: for instance, while the ERM includes the Motor Vehicl e Manufacturing sector, the ASM and Economic Census have detail at the 6
- digit NAICS code level (e.g., light truck and utility vehicle manufacturing). While the ERM provides direct estimates of employees/$1 million in expenditures, the ASM and Economic Ce nsus separately provide number of employees and value of shipments; the direct employ ment estimates here are the ratio of those values. At this time, the Economic Census values for 2012 (the most recent ye ar) are not fully

available; we therefore do not r eport them, and instead provide the 2011 ASM results (the most recent available). The values reported are for Motor Vehicle Manufacturing (NAICS 3361), Light Truck and Utility Vehicle Manufacturing (NAICS 33611 2 ), Heav y Duty Truck Manufacturing (33612), M otor Vehicle Body and Trailer manufacturing (3362), and Motor Vehicle Parts Manufacturing (NAICS 3363)
. 

### Draft RIA Chapter 9.9 provides the details on the values of workers per $1 million in expenditures for the sectors mentioned above. In 2012$, these range from 0.4 workers per $1 million for light truck & utility vehicle manufacturing in the ASM, to 

### 2.8 workers per $1 million in expenditures for Motor Vehicle Body and Trailer Manufacturing in the ASM. The se values are then adjusted to remove the employ ment effects of imports through use of a ratio of domestic production to domestic sales of 0. 78
. 791 

### Over time, the amount of labor needed in the motor vehicle industry has changed: automation and improved methods have led to s ignificant productivity increases. The BLS ERM, for instance, provided estimates that, in 1993, 1. 33 workers in the Motor Vehicle Manufacturing sector were needed per $1 million, but only 0.46 workers b y 2012 (in 20 12 $)


### . 792 

### Because the ERM is available ann ually for 1993

- 2012, we used these data to estimate productivity improvements over time. We then used these productivity estimates to project the ERM through 2027, and to adjust the ASM values for 2011. RIA Chapter 9.9.2.2 provides detail on these calculations. Finally, to simplify the presentation and give a range of estimates, we compared the projected employment among the 3 sectors for the ERM and ASM,

790 http://www.census.gov/manufacturing/asm/index.html. 791 To e stimate the proportion of domestic production affected by the change in sales, we use data from Ward’s Automotive Group for total truck production in the U.S. compared to total truck sales in the U.S. For the period 2004
- 2013, the proportion is 78 percent (Docket EPA
- HQ
- OAR
- 2014
- 0827 ), ranging from 68 percent (2009) to 83 percent (2012) over that time
. 792 http://www.bls.gov/emp/ep_data_emp_requirements.htm; this analysis used data for sectors 81 (Motor Vehicle Manufacturing), 82 (Motor Vehicle Body and Tr ailer Manufacturing), and 83 (Motor Vehicle Parts Manufacturing) from “Chain
- weighted (2005 dollars) real domestic employment requirements tables.”Page 703 of 850



### and we provide only the maximum and minimum employment effects estimated for the ERM and the ASM. We provide the range rather than a point estimate because of the inherent difficulties in estimating employment impacts; the range gives an estimate of the expected magnitude. The ERM estimates in the Motor Vehicle Parts Manufacturing Sector are consistentl y the maximum values. The ERM estimates in the Motor Vehicle Body and Trailer Manufacturing Sector are the minimum values for all years but 2018

- 2019, when the ASM values for Li ght T ruck and Utility V ehicle M anufacturing provide the minimum values


### . Section 0 of the Preamble discusses the vehicle cost estimates developed for these proposed rules


### . The final step in estimating employment impacts is to m ultiply costs (in $ millions) by workers per $1 million in costs, to estimate employment impacts in the regulated and parts manufacturing sectors. Increased costs of vehicles and parts would, by itself, and holding labor intensity constant, be expected to increase employment between 2018 and 2027 from none to a few thousand jobs each year. While we estimate employment impacts, measured in job

- years, beginning with program implementation , some of these employment gains may occur earlier as motor vehicle ma nufacturers and parts suppliers hire staff in anticipation of compliance with the standard s . A job
- ye ar is a way

to calculate the amount of work needed to complete a specific task. For example, a job
- ye ar is one year of work for one person. **Table IX**  **- 37**  **Employment Effects due to Increased Costs of Vehicles and Parts (Substitution Effect)**  **, in Job**  **** **Y ears**  Year Costs (Millions

of 201 2 $) Minimum Employment Due to

Substitution Effect (

ERM estimates, expenditures in the Parts Sector

a ) Maximum Employment Due to

Substitution Effect (

ERM estimates, expenditures in the Body and Trailer Mfg Sector) 2018 $ 116 0 100 2019 $ 113 0 100 2020 $ 112 0 100 2021 $ 2,173 300 2,300 2022 $ 2,161 300 2,200 2023 $ 2,224 200 2,100 2024 $ 3,455 300 3,200 2025 $ 3,647 200 3,200 2026 $ 3,736 200 3,100 2027 $ 5,309 200 4,200 Note: a For 2018 and 2019, the minimum employment effects are associated with the ASM’s Light Truck and Utility Vehicle Manufacturing sector.Page 704 of 850



### (c) Summary of Employment Effects in the Motor Vehicle Sector The overall effect of these proposed rules on motor vehicle sector emplo ym ent depends on the relative magnitude of the output effect and the substitution effect. Because we do not have quantitative estimates of the output effect, and only a partial estimate of the substitution effect, we cannot reach a quantitative estimate of the overall employ ment effects of these proposed rules on motor vehicle sector employ ment or even whether the total effect will be positive or negative. T he proposed standards are not expected to provide incent ives for manufacturers to shift employ ment between domestic and foreign production. This is because the proposed standards will apply

to vehicles sold in the U.S. regardless of where they are produced. If foreign manufacturers already have increased expe rtise in satisfying the requirements of the standards , there may be some initial incentive for foreign production, but the opportunity for domestic manufacturers to sell in other markets might increase. To the extent that the requirements of these pro posed rules might lead to installation and use of technologies that other countries may seek now or in the future, developing this capacity for domestic production now may provide some additional ability

to serve those markets. **(3) Employment Impacts in**  **Other Affected Sectors** (a ) Transport and Shipping Sectors Although not directl y regulated by these proposed rule s, 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 purchasing costs), in a perfectly competitive industry some of these costs savings , depending on the relative elasticities of supply and demand, will be passe d 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 by other modes ( e.g. , rail or barge), then employ ment in the truck transport industry is likely to increase. If 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. 793 , 794 Such a shift would, however, be at the expense of employ

ment in the sectors that are losing business to trucking. The first e ffect

– 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 employment in trucking, but decrease employ ment in other shipping sectors (e.g., rail or barge), with the net effects dependent on the labor
- intensity of the sectors and the volumes.

793 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
. 794 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.ashxPage 705 of 850 (b ) Fuel Suppliers In addition to the effects on the trucking industry and related truck parts sector, these proposed rule s will result in reductions in fuel use that lower GHG emissions. Fuel saving, principally

reductions in liquid fuels such as diesel and gasoline, will affect employ ment in the fuel suppliers industry

sectors, principall y the Petroleum Refinery sector. Section IX. C. of this Preamble provides estimates of the effects of these proposed standards on e xpected fuel consumption. While reduced fuel consumption represe nt s savings for purchasers of fuel, it also represents a loss in value of output for the petroleum refinery industry , which will result in reduced sectoral employ ment. Because this sector is material
- intensive, the employ ment effect is not expected to be large. 795 (c) Fuel Savings As a result of this proposed rule making, it is anticipated that trucking firms will experience fuel savings. Fuel savings lower the costs of transportation goods and services. In a competitive market, some of the fuel saving s that in itially 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. Some of the savings might also be retained b y firms for investments or for distributions to firm owners. Again, how much accrues to customers versus firm owners will depend on the relative elasticities of supply and demand
. Regardless , the savings will accrue to some segment of consumers: either owners of trucking firms or the general publi c, and 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 industries. As described in Section IX. C. (2) the value of fuel savings from this proposed rule making is projected to be $ 15.1 billion (20 12 $) in 20 27 , according to Table IX
- 6 . If all those savings are spent, the fuel savings will stimulate increased employ ment in the economy through those expenditures. If the fuel savings accrue primaril y to firm owners, they may either reinvest the money or take it as profit. Reinvesting the money in firm operations c ould increase employ ment 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 employment impacts would be smaller than if the savings went to the public. Thus, while fuel savings are expected to decrease employ

ment in the refinery

sector, they

are expected to increase employ ment through increased consumer expenditures. **(4) Summary**  **of Em**  **ploym ent**  **Impacts** The primary

employ ment effects of th ese rule s are expected to be found through out several key

sectors: truck and engine manufacturers, the trucking industry , truck parts manufacturing, fuel production, and consumers. Th ese ru le s initially takes effect in model year

795 In the 2012 BLS ERM cited above, the Petroleum and Coal Products Manufacturing sector has a ratio of workers per $1 million of 0.242, lower than all but two of the 181 sectors with non
- zero employment per $1 million.Page 706 of 850

2018 , a time period sufficiently far in the future that the unemploy ment rate at that time is unknowable . In an economy with full employ

ment, the primary

employ ment effect of a rulemaking is likel y to be to move employ ment from one sector to another, rather than to increase or decrease employ ment. For that reason, we focus our partial quantitative analy sis on employ ment in the regulated sector, to examine the impacts on that sector directly . We discuss the likel y direction of other impacts in the regulated sector as well as in other directly related sectors, but we do not quantify those impacts, because they are more difficult to quantify with reasonable accuracy , particularly so far into the future. For the regu lated sector, we have not quantified the output effect. The substitution effect is associated with potential increase d employ ment from none to a few thousand jobs per ye ar between 2018 and 2027, depending on the share of employ ment imp acts in the affected sector s (Motor Vehicle Manufacturing, Motor Vehicle Body and Trailer Manufacturing, and Motor Vehicle Parts Manufacturing)
. These estimates do not include potential changes, either greater or less, in labor intensity

of production. A s mentioned above, some of these job gains may occur earlier as auto manufacturers and parts suppliers hire staff to prepare to comply with the standard. Lower prices for shipping are expected to lead to an increase in demand for truck shipping services and, therefore, an increase in employ ment in that sector , though this effect may be offset somewhat b y changes in employment in other shipping sectors. Reduced fuel production implies less employ ment in the fuel provision sectors. Finall y, any net cost s avings 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
. Under conditions of full employ ment, any changes in employ

ment levels in the regulated sector due to this program are mostly expected to be offset b y changes in employment in other sectors. 

### M. **Cost of Ownership and Payback Analysis** This section examines the economic impacts of the Phase 2 proposed standards from the perspective of buyers, operators, and subsequent owners of new HD vehicles, first in the aggregate and then at the level of individual purchasers of different ty pes of vehicles. In each case, the anal ys is assumes that HD vehicle manufacturers are able to recover their costs for improving fuel efficiency

– including direct technology outlay s, indirect costs, and normal profits o n an y additional capital investments

– by charging higher prices to HD vehicle buyers. As summarized below, HDV buyers in the aggregate would experience substantial savings in fuel costs that would more than offset higher initial outlay s to buy more fuel
- efficient new vehicles. Table IX
- 38 report s aggregate benefits and costs to buyers and operators of new HD vehicles for the Preferred Alternative using Method A . The table reports economic impacts on buyers using onl y the 7 percent discount rate, since that rate is intended to represent the opportunity

cost of capital that HD vehicle buyers and users must divert fr om other investment opportunities to purchase more costly vehicles. As it show s , fuel savings and the other benefits from increased fuel efficiency

– savings from less frequent refueling and benefits from additional truck use

– far outweigh the higher costs to buyers of new HD vehicles. A s a consequence,Page 707 of 850

buyers, operators, and subsequent owners of HD vehic les subject to the Phase 2 standards are together projected to experience large economic gains under the Preferred Alternative
. It should be noted that, because the original buyers may not hold the vehicles for their lifetimes, and b ecause those who own or operate the vehicles may not pay for the fuel, these benefits and costs do not necessarily

represent benefits and costs to identifiable individuals. As Table IX
- 38 shows, the agencies have estimated the increased costs for maintenance of the new technologies that HD vehicle manufacturers would emplo y to decrease fuel consumption, and these costs are inc luded together with those for purchasing more fuel
- efficient vehicles. Manufacturers’ efforts to compl y with the Phase 2 standards could also result in changes to vehicle performance and capacity for certain vehicles. For example, reducing the mass of HD vehicles in order to improve fuel efficiency could be used to improve their load
carryi ng capabilities, while some engine technologies and aerody namic modifications could reduce payload capacity . The agencies request comment on possible changes to vehicl e performance and load
- carrying capacity as a result of the proposal along with supporting information. **Table IX**  **- 38**  **MY 2018**  **- 2029 Lifetime Aggregate Im** **pacts of the Preferred Alternative on All HD Vehicle**

**Buye rs and Operators using Method A (billions of 2012$, discounted at 7%)**  **a** Baseline 1a Baseline 1b Vehicle costs 17.1 16.8 Maintenance costs 0.6 0.6 **Total costs to HD vehicle buyers**  17.7 17.4 Fuel savings b (valued at retail prices) 104.6 99.1 Refueling benefits 1.6 1.5 In creased travel benefits 8.4 8.2 **Total benefits to HD vehicle buyers/operators**  114.7 108.9 **Net benefits to HD vehicle buyers/operators**  **c** 97.0 91.5 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Fuel savings includes fuel consumed during additional rebound driving. c Net benefits shown do not include benefits associated with carbon or other co
- pollutant emission reductions, accidents/congestion/noise impacts, energy security, etc. Table IX
- 38 shows aggregate benefits and costs to buyers and operators of new HD vehicle s for the Preferred Alternative using Method B, again for onl y the 7 percent discount rate. As it shows, fuel savings and the other benefits outweigh the higher prices and added maintenance costs that buyers and operators of new HD vehicle s pay , so they are again expected to experience large economic gains from the Preferred Alternative. Again, because the original buyers may

not hold the vehicles for their lifetimes, and because those who own or operate the vehicles may

not pay for the fuel, these benefi ts and costs do not necessarily represent benefits and costs to identifiable individuals.Page 708 of 850

**Table IX**  **- 39**  **MY 2018**  **- 2029 Lifetime Aggregate Im** **pacts of the Preferred Alternative on All HD Vehicle**

**Buyers and Operators using Method B (billions of 2012$, discounted at 7%) a**  Baseline 1b Vehicle costs $16.6 Maintenance costs $0.6 **Total costs to HD vehicle buyers**  $17.2 Fuel savings b (valued at retail prices) $100.1 Refueling benefits $1.6 In creased travel benefits $8.2 **Total benefits to HD vehicle buyers/operators**  $109.9 **Net benefits to HD vehicle buyers/operators**  **c** $92.7 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Fuel savings includes fuel consumed during additional rebound driving. c Net benefits shown do not include benefits associated with carbon or other co - pollutant emission reductions, accidents/congestion/noise impacts, energy security, etc. It is also useful to examine the cost of purchasing and owning a new vehicle that complies with the Phase 2 standards and its pay back period

– the point at which cumulative savings from lower fuel expenditures outpace increased vehicle costs. Fo r example, a new MY2027 tractor is estimated to cost roughl y $11,684 more (on average, or roughl y 12 percent of a ty pical $100,000 reference case tractor) due to the addition of new GHG reducing/fuel consumption improving technology . This new technology w ould result in lower fuel consumption and, therefore, reduced fuel expenditures. But how many months or years would pass before the reduced fuel expenditures would surpass the increased upfront costs? Table IX
- 40 presents the discounted annual increased vehicle costs and fuel savings associated with owning a new MY2027 HD pickup or van using both 3 percent and 7 percent discount rates. Table IX
- 41 and Table IX
- 42 show the same information for a MY2027 vocational vehicle and a tractor/trailer, respectively
. These comparisons include sales taxes, excise taxes (for vocational and tractor/trailer) and increased insurance expenditures on the higher value vehicles , as well as mainte nance costs associated with replacement of lower rolling resistance tires throughout the lifetimes of affected vehicles. Importantl y, the values behind the tables in this pay

back analy sis do not include rebound miles driven and/or rebound gallons consumed . Instead, the tables use reference case miles driven combined with policy case fuel consumption. We detail these input metrics in Chapter 7 of the draft RIA.Page 709 of 850

The fuel expenditure column uses retail fuel prices specific to gasoline and diesel fuel as pro jected in AEO2014. 796 This pay back anal ys is does not include other impacts, such as reduced refueling events, the value of driving potential rebound miles, or noise, congestion and accidents. We use retail fuel prices and exclude these other private and so cial impacts because the anal ys is is intended to focus on those factors that are most important to buyers when considering a new vehicle purchase , and to include only those factors that have clear dollar impacts on HD vehicle buyers . As shown, pay

back would occur in the 3 rd year of ownership for HD pickups and vans (the first year where cumulative net costs turn negative), in the 5 th year for vocational vehicles (at a 3 percent discount rate, 6 th ye ar at a 7 percent discount rate) and earl y in the 2 nd ye ar for tractor/trailers. Note that each table reflects the average vehicle and reflects proper weighting of fuel consumption/costs (gasoline vs. diesel). We request comment and supporting data on all aspects of our pay

back analy sis. **Table IX**  **- 40**  **Discounted Annual Incre mental Expenditures for a MY2027 HD Pickup or Van using Method B**  **and Relative to the Less Dynam ic Baseline (201**  **2$) a**  Age in years 3% Discount Rate 7% Discount Rate

Vehicle b Maint c Fuel d Cumulative Net Vehicle b Maint c Fuel d Cumulati ve Net 1 $1,587 $4
- $759 $832 $1,558 $3
- $745 $817 2 $25 $3
- $734 $126 $23 $3
- $694 $150 3 $23 $3
- $714
- $561 $21 $3
- $649
- $476 4 $22 $3
- $693
- $1,229 $19 $3
- $606
- $1,060 5 $20 $3
- $651
- $1,857 $17 $2
- $549
- $1,590 6 $19 $3
- $611
- $2,446 $15 $2
- $496
- $2,067 7 $18 $2
- $571
- $2,997 $14 $2
- $446
- $2,497 8 $16 $2
- $536
- $3,514 $12 $2
- $403
- $2,886 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Includes ne w technology costs, insurance costs and sales taxes. c Maintenanc e costs. d Uses AEO2014 retail fuel prices.

796 U.S. Energy Information Administration, Annual Energy Outlook 2014, Early Release; Report Number DOE/EIA
- 0383ER(2014), December 16, 2013.Page 710 of 850

**Table IX**  **- 41**  **Discounted Annual Incre mental Expenditures for a MY2027 Vocational Vehicle using Method B**  **and Relative to the Less Dynam ic Baseline (2012$)**  **a** Age in years 3% Discount Rate 7% Discount Rate

Vehicle b Maint c Fuel d Cumulative Net Vehicle b Maint c Fue l c Cumulati ve Net 1 $3,998 $10
- $965 $3,043 $3,924 $10
- $947 $2,987 2 $63 $9
- $937 $2,178 $59 $9
- $885 $2,169 3 $59 $9
- $914 $1,331 $53 $8
- $832 $1,399 4 $55 $9
- $891 $504 $48 $8
- $780 $675 5 $51 $8
- $829
- $265 $43 $7
- $699 $27 6 $48 $7
- $771
- $981 $39 $6
- $625
- $554 7 $45 $7
- $716
- $1,645 $35 $5
- $559
- $1,073 8 $42 $6
- $667
- $2,264 $31 $5
- $501
- $1,538 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Includes ne w technology costs, insurance costs, excise and sales taxes. c Maintenance costs. d Uses AEO2014 retail fuel prices.
**Table IX**  **- 42**  **Discounted Annual Incre mental Expenditures for a MY2027 Tractor/Trailer using Method B**  **and Relative to the Less Dynam ic Baseline (2012**  **$ a** **)** Age in years 3% Discount Rate 7% Discount Rate

Vehicle b Maint c Fuel d Cumulative Net Vehicle b Maint c Fuel d Cumulati ve Net 1 $15,194 $48
- $14,649 $593 $14,914 $47
- $14,379 $582 2 $238 $46
- $14,204
- $13,327 $225 $43
- $13,421
- $12,571 3 $223 $44
- $13,809
- $26,869 $203 $40
- $12,561
- $24,889 4 $209 $42
- $13,416
- $40,034 $183 $37
- $11,746
- $36,415 5 $195 $39
- $12,391
- $52,191 $164 $33
- $10,443
- $46,661 6 $182 $35
- $11,411
- $63,385 $148 $29
- $9,258
- $55,743 7 $170 $32
- $10,511
- $73,694 $133 $25
- $8,209
- $63,794 8 $158 $29
- $9,704
- $83,211 $119 $22
- $7,295
- $70,949 Notes: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1. b Includes ne w technology costs, insurance costs, excise and sales taxes. c Maintenance costs. d Uses AEO2014 retail fuel prices. 

### N. **Safety Impacts (1)**  **Summary of Supporting HD Vehicle Safety Research** NHTSA and EPA considered the potential safety i mpact of technologies that improve HD vehicle fuel efficiency

and GHG emissions as part of the assessment of regulatory alternatives. The safety assessment of the technologies in this proposal was informed by two NAS reports, an anal ys is of safety

effects of HD pickups and vans using estimates from the DOT report on thePage 711 of 850

effect of mass reduction and vehicle size on safety, and agency
- sponsored safety testing and research. A summary

of the literature and work c onsidered b y the agencies follows. **(2) National Academy of Sciences HD Phase 1 and Phase 2 Reports**  As required b y E IS A, the National Research Council has conducted two studies of the technologies and approaches for reducing the fuel consumption of medium
- an d heav y - dut y vehicles. The first was documented in a report issued in 2010, “Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - Duty Vehicles’’ (“NAS Report”). The second was documented in a report issued in 2014, “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium
- and Heavy
- Duty Vehicles, Phase Two
- First Report” (“NAS HD Phase 2 First Report”). While the reports primarily focused on reducing vehicle fuel consumption and emissions through technology appli cation, and examined potential regulatory frameworks, both reports additionally contain findings and recommendations on safety. In developing this proposal, the agencies carefull y considered both of the reports’ findings related to safety. Some of the re ports’ key findings related to safet y follow. NAS commented that idle reduction strategies in actual can be sophisticated to provide for the safety of the driver in hot and cold weather
. 797 The agencies considered this comment in our approach for idle reduction technologies and allow override provisions, as discussed in Section III. Override is allowed i f the external ambient temperature reaches a level below which or above which the cabin temperature cannot be maintained within reasonable heat or cold exposure threshold limit values for the health and safety of the operator (not merely comfort).NAS commented extensively

on the recent emergence of natural gas (NG) as a viable technology opt ion for commercial vehicles, but alluded to the existence of uncertainties regarding its safety. The committee found that while the public crash databases do not contain information on vehicle fuel ty pe, the existing information indicates that the crash
- re lated safet y risk for NG storage on vehicles does not appear to be appreciabl y different from diesel fuel risks. The committee also found that while there are two existing SAE
- recommended practice standards for NG
- powered HD vehicles, the industry could benefit from best practice directives to minimize crash risks for NG fuel tanks, such as on shielding to prevent punctures during crashes. As a final point, NAS stated that manufacturers and operators have a great incentive to prevent possible NG leakage f rom a vehicle fuel s ys tem because it would be a significant safety concern and reduce vehicle range. No recommendations were made for additional Federal safety regulations for these vehicles. In response, the agencies have reviewed and discuss the existi ng NG vehicle standards and best practices cited by NAS in Section XI. In the NAS Committee’s Phase 1 report, the Committee commented that aerodynamic fairings detaching from trucks on the road was a potential safety issue. However, the Phase 2 interim rep ort stated that “Anecdotal information gained during the observations of on
- road trailers

797 Id. , p. 33.Page 712 of 850

indicates a few skirts badly damaged or missing from one side. The skirt manufacturers report no safety concerns (such as side skirts falling off) and little maintena nce needed.” The NAS report also identified the link between tire inflation and condition and vehicle stopping distance and handling, which impacts overall safety . The committee found that tire pressure monitoring sy stems and automatic tire inflation sy stems are being adopted by fleets at an increasing rate. However, the committee noted that there are no standards for performance, display , and s ys tem validation. The committee recommended that NHTSA issue a white paper on the minimum performance of tir e pressure s ys tems from a safet y perspective. The agencies considered the safety findings in both NAS reports in developing this proposal and conducted additional research on safety to further examine information and findings of the reports. **(3) DOT CAFE Mode**  **l HD Pickup and Van Safety Analysis** This analy sis considered the potential effects on crash safety of the technologies manufacturers may apply to their HD pickups and vans to meet each of the regulatory alternatives evaluated. NHTSA research has shown that vehicle mass reduction affects overall societal fatalities associated with crashes and, most relevant to this proposal, that mass reduction in heavier light
and medium
- duty

vehicles has an overall beneficial effect on societal fatalities. Reducing the mass of a heavier vehicle involved in a crash with another vehicle(s) makes it less likely that there will be fatalities among the occupants of the other vehicles. In addition to the effects of mass reduction, the analysis anticipates that the proposed standards, b y reducing the cost of driving HD pickups and vans, would lead to increased travel by these vehicles and, therefore, more crashes involving these vehicles. The Method A anal ys is considers overall impacts from both of these factors, using a method ology similar to NHTSA’s anal ys es for the MYs 2017

– 2025 CAFE and GHG emission standards. The Method A analy sis includes estimates of the extent to which HD pickups and vans produced during MYs 2014
- 2030 may be involved in fatal crashes, considering the m ass, survival, and mileage accumulation of these vehicles, taking into account changes in mass and mileage accumulation under each regulatory alternative. These calculations make use of the same coefficients applied to light trucks in the MYs 2017
- 2025 CAFE rulemaking anal ys is. As discussed above, vehicle miles traveled may increase due to the fuel economy rebound effect, resulting from improvements in vehicle fuel efficiency and cost of fuel, as well as the assumed future growth in average vehicle use. In creases in total lifetime mileage increase exposure to vehicle crashes, including those that result in fatalities. Consequently , the modeling s ys tem computes total fatalities attributed to vehicle use for vehicles of a given model year based on safety clas s and weight threshold. These calculations also include a term that accounts for the fact that vehicles involved in future crashes will be certified to more stringent safety standards than those involved with past crashes upon which the base rates of involvement in fatal crashes were estimated. Since the use of mass reducing technology is present within the model, safety impacts may

also be observed whenever a vehicle’s base weight decreases. Thus, in addition to computing total fatalities related to vehic le use, the modeling s ys tem also estimates changes in fatalities due to reduction in a vehicle’s curb weight.Page 713 of 850

The total fatalities attributed to vehicle use and vehicle weight change for vehicles of a given model year are then summed. Lastly , total fatal ities occurring within the industry in a given model year are accumulated across all vehicles. In addition to using inputs to estimate the future involvement of modeled vehicles in crashes involving fatalities, the model also applies inputs defining other accident
- related externalities estimated on a dollar per mile basis. For vehicles above 4,594 pounds

—i.e., the majority of the HD pickup and van fleet

— mass reduction is estimated to reduce the net incidence of highway fatalities by

0.34 percent per 100 pounds of removed curb weight. For the few HD pickups and vans below 4,594 pounds, mass reduction is estimated to increase the net incidence of highway fatalities by 0.52 percent per 100 pounds. Because there are man y more HD pickups and vans above 4,594 po unds than below 4,594 pounds, the overall effect of mass reduction in the segment is estimated to reduce the incidence of highway

fatalities. The estimated increase in vehicle miles traveled due to the fuel economy rebound effect is estimated to increase e xposure to vehicle crashes and offset these reductions. **(4) Volpe Research on MD/HD Fuel Efficiency Technologies**  The 2010 National Research Council report “Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heav y - Dut y Vehicles” rec ommended that NHTSA perform a thorough safety analysis to identify and evaluate potential safety issues with fuel efficiency
improving technologies. The Department of Transportation Volpe Center’s 2015 report titled “Review and Anal ys is of Potential Safety Impacts and Regulatory Barriers to Fuel Efficiency Technologies and Alternative Fuels in Medium
- and Heav y - Duty Vehicles” summarizes research and anal ys is findings on potential safety issues associated with both the diverse alternative fuels (natural gas
- CNG and LNG, propane, biodiesel, and power train electrification), and the specific FE technologies recently

adopted by

the MD/HDV fleets. These include Intelligent Transportation Sy stems (ITS) and telematics, speed limiters, idle reduction devices, tire technologies (single
- wide tires, and tire pressure monitoring sy stems - TPMS and Automated Tire In flation Sy stems - AT IS ), aerodynamic components, vehicle light
- weighting materials, and Long Combination Vehicles (LCVs). Chapter 1 provides an overview of the s tudy ’s rationale, background, and key objective, namely , to identify

the technical and operational/behavioral safety benefits and disbenefits of MD/HDVs equipped with FE technologies and using emerging alternative fuels (AFs). Recent MD/HDV national fleet crash safety statistical averages are also provided for context, although no information exists in crash reports relating to specific vehicle FE technologies and fuels. (NHTSA/FARS and FMCSA/CSA databases do not include detailed information on vehicle fuel econom y technologies, since the state crash report forms are not coded down to an individual fuel econom y technology level). Chapters 2 and 3 are organized by clusters of functionally
- related FE technologies for vehicles and trailers (e.g., tire s ys tems, IT S, light
- weighting materials, and aerody namic sy stems) and alternative fuels, which are described and their respective associated potential safety issues are discussed. Chapter 2 summarizes the findings from a comprehensive review of available technical and trade literature and Internet sources regarding the benefits, potential safety hazards, and the applicable safety regulations and standards for deplo yed FE technologies and alternative fuels. Chapter 2 safety - relevant fuel
- specific findings include:Page 714 of 850

• Both CNG
- and LNG
- powered vehicles present potential hazards, and call for well
- known engineering and process controls to assure safe operability and crashworthiness. However, based on the reported incident rates of NGVs and the experiences of adopting f leets, it appears that NGVs can be operated at least as safely as diesel MD/HDVs.

• There are no safety contraindications to the large scale fleet adoption of CNG or LNG fueled heav y duty trucks and buses, and there is ample experience with the safe operation of large public transit fleets. Voluntary industry standards and best practices suffice for safety assurance, though improved training of CMV operators and maintenance staff in natural gas safety of equipment and operating procedures is needed.

• Ob serving CNG and LNG fuel s ys tem and maintenance facility standards, coupled with sound design, manufacture, and inspection of natural gas storage tanks will further reduce the potential for leaks, tank ruptures, fires, and explosions.

• Biodiesel blends us ed as drop
- in fuels have presented some operational safety concerns dependent on blending fraction, such as material compatibility , bio
- fouling sludge accumulation, or cold
- weather gelling. However, best practices for biodiesel storage, and improved gaske ts and seals that are biodiesel resistant, combined with regular maintenance and leak inspection schedules for the fuel lines and components enable the safe use of biodiesel in newer MD/HDVs.

• Propane (LPG, or autogas) presents well
- known hazards includin g ignition (due to leaks or crash) that are preventable by using Overfill Prevention Devices (OPDs), which supplement the automatic stop
- fill sy stem on the fueling station side, and pressure release devices (PRDs). Established best practices and safety cod es (e.g., NFPA) have proven that propane fueled MD/HDVs can be as operationally safe as the conventionally
- fueled counterparts.

• As the market penetration of hy brid and electric drivetrain accelerates, and as the capacit y and reliability

of lithium ion batteries used in Rechargeable Energy Storage Sy stems (RESS) improve, associated potential safety hazards (e.g., electrocution from stranded energy , thermal runaway

leading to battery

fire) have become well understood, preventable, and manageable. Existing and emerging industry technical and safety voluntary standards, applicable NHTSA regulations and guidance, and the growing experience with the operation of hy brid and electric MD/HDVs will enable the safe operation and large
- scale adoption of safer and mo re efficient power
- train electrification technologies. The safety findings from literature review pertaining to the specific FE technologies implemented to date in the MD/HDV fleet include:

• Telematics

—integrating on
- board sensors, video, and audio aler ts for MD/HDV drivers

— offer potential improvements in both driver safety performance and fuel efficiency . Both camera and non
- camera based telematics setups are currentl y integrated with available crash avoidance s ys tems (such as ESC, RSC, LDWS, etc.) and appear to be well accepted by MD/HDV fleet drivers.Page 715 of 850

• Both experience abroad and the cited US studies of trucks equipped with active speed limiters indicated a safety benefit, as measured b y up to 50% reduced crash rates, in addition to fuel savings and other benefits, with good CMV driver acceptance. Any negative aspects were small and avoidable if all the speed limitation devices were set to the same speed, so there would be less need for overtaking at highway speeds.

• No literature reports of adverse safet y impacts were found regarding implementation of on
board idle
- reduction technologies in MD/HDVs (such as automatic start
- stop, direct
- fired heaters, and APUs).

• There was no clear consensus from the literature regarding the relative crash rates and highway safet y impacts of L CVs, due to lack of sufficient data and controls and inconsistent study

methodologies. Recent safety evaluations of L CVs and ongoing MAP
- 21 mandated studies will clarify and quantify

this issue.

• Tire technologies for FE (inclu ding AT IS , TPMS, LRR and single
- wide tires) literature raised potential safety concerns regarding lower stability or loss of control, e.g., when tire pressure is uneven or a single wide tire blows out on the highway . However, sy stems such as automated tire monitoring s ys tems and stability enhancing electronic s ys tems (ABS, ESC, RSC) may

compensate and mitigate any adverse safety impacts.

• Aerodynamic technologies that offer significant fuel savings have raised potential concerns about vehicle damage or in jury in case of detached fairings or skirts, although there were no documented incidents of this ty pe in the literature.

• Some light weighting materials may pose some fire safety and crashworthiness hazards, depending on their performance in structural or other vehicle subs ys tem applications (chassis, power
- train, crash box or safety cage). Some composites (fiberglass, plastics, CFRC, foams) may

become brittle on impact or due to weathering from UV exposure or extreme cold. Industry

has developed advance d, high performance lightweight material options tailored to their automotive applications, e.g., thermoplastics resistant to UV and weathering. No examples of such lightweight material failures on MD/HDVs were identified in the literature. Chapter 3 provides complementary inputs on the potential safet y issues associated with FE technologies and alternative fuels obtained from Subject Matter Experts (SMEs). The broad cross - section of SMEs consulted had experience with the operation of “green” truck and bus fleets, were Federal program managers, or were industry developers of FE sy stems for MD/HDVs. Safet y concerns raised b y the SMEs can be prevented or mitigated b y compl yi ng with applicable regulations and safety standards and best practices, and are being addressed by evolving technologies, such as electronic collision prevention devices. Although SMEs raised some safety concerns, their experience indicates that system
- or fuel
- specific hazards can be prevented or mitigated by observing appl icable industry standards, and b y training managers, operators and maintenance staff in safety best practices. Specific safety concerns raised b y SMEs based on their experience included:Page 716 of 850

• Alternative fuels did not raise major safety concerns, but generall y required better education and training of staff and operators. There was a concern expressed regarding high pressure (4000 psi) CNG cylinders that could potentially explode in a crash scenario or if otherwise ruptured. However, aging CNG fuel tank safety can be assured b y enforcing regulations such as FMVSS No. 304, and by periodic inspection and end
- of
- life disposal and replacement. A propane truck fleet manager stated that the fuel was as safe as or safer than gasoline, and reported no safety issues wi th the company ’s propane, nor with hy brid gasoline
- electric trucks. OEMs of drivetrain hy bridization and electrification sy stems, including advanced Lithium I on batteries for RESS, indicated that they undergo multiple safety

tests and are designed with fa il
- safes for various misuse and abuse scenarios. Integration of hy brid components downstream by body builders in retrofits, as opposed to new vehicles, was deemed a potential safety risk. Another potential safety concern raised was the uncertain battery li fetime due to variability of climate, duty
- cycles, and aging. Without state
- of
- charge indicators, this could conceivably leave vehicles underpowered or stranded if the battery degrades and is not serviced or replaced in a timel y manner.

• ITS and telemat ics raised no safet y concerns; on the contrary , fleet managers stated that “efficient drivers are safer drivers.” Monitoring and recording of driver behavior, combined with coaching, appeared to reduce distracted and aggressive driving and provided signifi cant FE and safety benefits.

• A wide
- base single tire safety concern was the decrease in tire redundancy in case of a tire blowout at highway

speeds. For LRRs, a concern was that they could negatively

affect truck stopping distance and stability contro l.

• A speed
- limiter safet y concern was related to scenarios when such trucks pass other vehicles on the highway

instead of staying in the right
- hand lane behind other vehicles. By combining speed limiters with driver training programs, overall truck safe ty could actuall y improve, as shown b y international practice.

• Aerodynamic s ys tems’ safety performance to date was satisfactory, with no instances of on - road detaching. However, covering underside or other components with aerodynamic fairings can make them harder to inspect, such as worn lugs, CNG relief valve shrouds, wheel covers, and certain fairings. Drivers and inspectors need to be able to see through wheel covers and to be able to access lug nuts through them. These covers must also be durable to withstand frequent road abuse.

• For lightweighting materials, the safety concern raised was lower crashworthiness (debonding or brittle fracture on impact) and the potential for decreased survivability in vehicle fires depending on the specific material choice and its application. The key finding from the literature review and SME interviews is that there appear to be no major safety hazards preventing the adoption of FE technologies, or the increased use of alternative fuels and vehicle electrification. In view of the scarcit y of hard data currentl y available on actual highway crashes that can be directly or causally

attributed to adoption of FE technologies and/or alternative fuels b y MD/HDVs, and the limited experience with commercialPage 717 of 850

truck and transit bus fleets operations equipped with these technologies, it was not possible to perform a quantitative, probabilistic risk assessment, or even a semi
- quantitative preliminary hazard anal ys is (PHA). Chapter 4 employ s a deterministic scenario
- based hazard anal ys is of potential crash or other safety concerns identified from the literature review or raised b y subject matter experts (SMEs) interviewed (e.g., interfaces with charging or refueling infrastructure). For each specific hazard scenario discussed, the recommended prevention or mitigation options, including compliance with applicable NHTSA or FMCSA regulations, and voluntary industry standards and best practices are identified, along with FE technology or fuel
- specific operator training. SMEs safety concerns identified in Sec 3.3 were complemented with actual incidents, and developed into the hazard scenarios anal yz ed in Chapter 4. The scenario
- based deterministic hazard analy sis reflected not onl y the literature findings and SMEs’ safety concerns, but also real truck or bus mishaps that have occurred in the past. Key hazard anal ys is scenarios included: CNG
- fueled truck and bus vehicle fires or explosions due to tank rupture, when pressurized fuel tanks were degraded due to aging or when PRDs failed; LNG truck crashes leading to fires, or LNG refueling
- related mishaps; the flammability or brittle fracture issues related to lightweighting materials in crashes; reduced safety performance for either LRR or wide
- base tires; highway pile
- ups when L CVs attemp t to pass at highway speeds; aerodynamic components detaching while the vehicle traveled on a bus y highway or urban roadway ; and fires resulting in overheated lithium ion batteries in electric or hy brid buses. These hy pothetical worst case scenarios appear to be preventable or able to be mitigated b y observing safety regulations and voluntary standards, or with engineering and operational best practices. Chapter 5 reviews and discusses the existing federal and state regulatory framework for safel y operatin g MD/HDVs equipped with FE technologies or powered b y alternative fuels. The review identifies potential regulatory barriers to their large
- scale deploy ment in the national fleet that could delay

achievement of desired fuel consumption and environmental b enefits, while ensuring equal or better safety performance. Chapter 6 summarizes the major findings and recommendations of this preliminary safet y anal ys is of fuel efficiency technologies and alternative fuels adopted by MD/HDVs. The scenario
- based hazard analy sis, based on the literature review and experts’ inputs, indicates that MD/HDVs equipped with advanced FE technologies and/or using alternative fuels have manageable potentially

adverse safet y impacts. The findings suggest that the potential safety hazards identified during operation, maintenance, and crash scenarios can be prevented or mitigated b y compl yi ng with safet y regulations and voluntary standards and industry best practices. The study also did not identify an y major regulatory barriers to rap id adoption of FE technologies and alternative fuels b y the MD/HDV fleet. **(5) Oak Ridge National Laboratory (ORNL) Research on Low Rolling Resistance**  **Truck Tires** DOT’s Federal Motor Carrier Safety Administration and NHTSA sponsored a test program conducted b y Oak Ridge National Laboratory to explore the effects of tire rolling resistance levels on Class 8 tractor
- trailer stopping distance performance over a range of loading and surface conditions. The objective was to determine whether there is a relationship between tire rolling resistance and stopping distance for vehicles of this ty pe. The overall results of thisPage 718 of 850

research suggest that tire rolling resistance is not a reliable indicator of Class 8 tractor
- trailer stopping distance. The correlation coefficients (R2 values) for linear regressions of wet and dry stopping distance versus overall vehicle rolling resistance values did not meet the minimum threshold for statistical significance for any of the test conditions. Correlation between CRR and stopping dis tance was found to be negligible for the dry tests for both loading conditions. While correlation was higher for the wet testing (showing a slight trend in which lower CRRs correspond to longer stopping distances), it still did not meet the minimum thresh old for statistical significance. In terms of compliance with Federal safety standards, it was found that the stopping distance performance of the vehicle with the four tire sets studied in this research (with estimated tractor CRRs which varied b y 33%), were well under the FMVSS No. 121 stopping distance requirements. **(6) The Agencies’ Assessment of Potential Safety Impacts**  NHTSA and EPA considered the potential safety i mpact of technologies that improve HD vehicle fuel efficiency

and GHG emissions as part o f the assessment of regulatory alternatives. The safety assessment of the technologies in this proposal was informed by two NAS reports, an anal ys is of safety

effects of HD pickups and vans using estimates from the DOT report on the effect of mass reducti on and vehicle size on safety , and agency
- sponsored safety testing and research. The agencies considered safety from the perspective of both direct effects and indirect effects. In terms of direct effects on vehicle safety, research from NAS and Volpe, an d direct testing of technologies like the ORNLtire work, indicate that there are no major safety hazards associated with the adoption of technologies that improve HD vehicle fuel efficiency and GHG emissions or the increased use of alternative fuels and v ehicle electrification. The findings suggest that the potential safety hazards identified during operation, maintenance, and crash scenarios can be prevented or mitigated by compl yi ng with safety regulations and voluntary standards and industry best practi ces. Tire testing showed tire rolling resistance did not impact of Class 8 tractor - trailer stopping distance for the tires tested. Also, because the majority of HD pickup and van fleet are above 4,594 pounds, the vehicle mass reduction in HD pickup and vans is estimated to reduce the net incidence of highway fatalities. Taken together, these studies suggest that the fuel efficiency

improving technologies assessed in the studies can be implemented with no degradation in overall safety
. However, anal ys is anticipates that the indirect effect of the proposed standards, by reducing the operating costs, would lead to increased travel b y tractor - trailers and HD pickups and vans and, therefore, more crashes involving these vehicles.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 719 of 850 

## X. **Analysis of the Alternatives**  As discussed throughout this preamble, in developing this proposal the agencies considered a number of regulatory alternatives that could result in potentially fewer or greater GHG emission and fuel consumption reductions than the program we are proposing. This section summarizes the alternatives we considered and presents estimates of technology costs, CO 2 reductions, fuel savings, and other costs and benefits associated with each alternative. The agencies request comment on each of these alternatives, as well as other potential levels of stringency and implementation timing . Note that since the impacts of these alternatives differ among the various heav y - duty vehicle categories, commenters are encouraged to address the alternatives separatel y for each vehicle category
. In developing alternatives, both agencies must consider a rang e of stringency . NHTSA must consider EI SA' s requirement for the MD/HD fuel efficiency program. In particular, 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) Th e 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 years of lead time and three model ye ars of regulatory stability . In considering these various requirements, NHTSA will also account for relevant environmental and safety considerations. As explained in the Phase 1 r ule, NHTSA has broad discretion in balancing the above factors in determining the improvement that the manufacturers can achieve. The fact that the factors may

often be conflicting gives NHTSA significant discretion to decide what weight to give each of the competing policies and concerns and then determine how to balance them

— as long as NHTSA’s balancing does not undermine the fundamental purpose of the EISA: energy conservation, and as long as that balancing reasonably accommodates ‘‘conflicting policies that were committed to the agency ’s care b y the statute.” 798 EPA also has significant discretion in considering a range of stringency . Section 202(a)(2) of the Clean Air Act requires onl y that the standards “take effect after such period as the Administrat or finds necessary to permit the development and application of the requisite technology , giving appropriate consideration to the cost of compliance within such period.” This language affords EPA considerable discretion in how to weight the critical statutory factors of emission reductions, cost, and lead time. See 76 FR 57129
- 130. As discussed in this Preamble’s Sections II (engines), III (tractors), IV (trailers), V (vocational vehicles), and VI (pickups and vans), although NHTSA and EPA are proposing A lternative 3 for each vehicle category , we have also closely examined the potential feasibility

798 Center for Biolog ical Diversity v. National Highway Traffic Safety Admin., 538 F.3d 1172, 1194 (9th Cir. 2008). For further discussion see 76 FR 57198.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 720 of 850 of Alternative 4 for each category , and specifically direct commenters’ attention to the analy sis and discussions contained in those sections for both Alternati ves 3 and 4. As discussed in those sections, if we reanal yz e relevant existing information or receive relevant comments or new information between the proposal and final rule that supports a more accelerated implementation of the proposed standards, the a gencies may consider establishing final fuel consumption and GHG standards at the Alternative 4 levels and timing if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectively. This Section X describes all of the alternatives consi dered, and provides context for the relative stringency , costs , and benefits associated with Alternatives 3 and 4, as compared to the other alternatives. The agencies seek comment on all of the alternatives, as well as whether we should consider more, few er or different alternatives for the final rule anal ys is. 

### A. **What Are the Alternatives that the Agencies Considered?** The five alternatives below represent a broad range of potential stringency levels, and thus a broad range of associated technologies, costs and benefits for a HD vehicle fuel efficiency and GHG emissions program. All of the alternatives were modeled using the same methodologies described in Chapter 5 of the draft RIA. The alternatives in order of increasing fuel efficiency

and GHG emissions reductions are as follows: **(1) Alternative 1: No Action (the Baseline for Phase 2)**  OMB guidance regarding regulatory anal ys is indicates that proper evaluation of the benefits and costs of regulations and their alternatives requires agencies to identify a basel ine: “You need to measure the benefits and costs of a rule against a baseline. This baseline should be the best assessment of the way the world would look absent the proposed action. The choice of an appropriate baseline may require consideration of a wi de range of potential factors, including: • evolution of the market, • changes in external factors affecting expected benefits and costs, • changes in regulations promulgated by the agency or other government entities, and • the degree of compliance by regulated entities with other regulations. It may be reasonable to forecast that the world absent the regulation will resemble the present. If this is the case, however, your baseline should reflect the future effect of current government programs and polici es. For review of an existing regulation, a baseline assuming no change in the regulatory program generally provides an appropriate basis for evaluating regulatory alternatives. Wh en more than one baseline is reasonable and the choice of baseline will sig nificantly affect estimated benefits and costs, you should consider measuring benefits and costs against alternative baselines. In doing so you can analyze the*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 721 of 850 effects on benefits and costs of making different assumptions about other agencies ’ regulations, or the degree of compliance with your own existing rules. In all cases, you must evaluate benefits and costs against the same baseline. You should also discuss the reasonableness of the baselines used in the sensitivity analyses. For each baseline you use, you should identify the key uncertainties in your forecast.” 799 A no
- action alternative is also required as a baseline against which to measure environmental impacts of the proposed standards and alternatives. NHTSA, as required b y the National Environmental Policy Act, is documenting these estimated impacts in the draft EI S published with this NPRM. 800 As discussed later in this section, the a gencies are requesting comment on Alternative 1 in order to ensure an appropriate anal yt ical baseline (also termed ‘reference case’) for the Phase 2 rulemaking. Alternative 1 is an anal yt ical tool, but, as discussed below, no new standards beyond Phase 1 is not a potential outcome of the Phase 2 rulemaking, as th at outcome would not meet the requirements of either EI SA or the CAA. The No Action Alternative for today ’s anal ys is, alternatively referred to as the “baseline” or “reference case,” assumes that the agencies would not issue new rules regarding MD/HD fuel efficiency and GHG emissions. That is , this alternative assumes that the Phase 1 MD/HD fuel efficiency and GHG emissions program’s model year 2018 standards would be extended indefinitely

and without change. The agencies recognize that there are a number of fact ors that create uncertainty in projecting a baseline against which to compare the future effects of the proposed action and the remaining alternatives. The composition of the future fleet

— such as the relative position of individual manufacturers and the m ix of products they each offer

—cannot be predicted with certainty at this time. As reflected, in part, b y the market forecast underl yi ng the agencies’ anal ys is, we anticipate that the baseline market for medium
- and heav y - duty vehicles will continue to ev olve within a competitive market that responds to a range of factors. Additionally , the heav y - dut y vehicle market is diverse, as is the range of vehicle purchasers. Heav y - dut y vehicle manufacturers have reported that their customers’ purchasing decisio ns are influenced by their customers’ own determinations of minimum total cost of

799 OMB Circular A
- 4, September 17, 2003. Available at http://www.whitehouse.gov/omb/circulars_a004_a
- 4
. 800 NEPA requires agencies to consider a “no action” alternative in their NEPA analyses and to compare the effects of not taking action with the effects of the reasonable action alternatives to demonstrate the different environmental effects of the action alt ernatives. 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 d ecision makers to compare 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) (em phasis added).*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 722 of 850 ownership, which can be unique to a particular customer’s circumstances. For example, some customers (e.g., less
- than
- truckload or package delivery operators) operate their vehicles within a limited geographic region and ty pically own their own vehicle maintenance and repair centers within that region. These operators tend to own their vehicles for long time periods, and sometimes for the entire service life of the vehicle. Their total cost of ownership is influenced b y their ability

to better control their own maintenance costs, and thus they can afford to consider fuel efficiency

technologies that have longer pay back periods, outside of the vehicle manufacturer’s warranty period. Other customers (e.g. truckload or long
- haul operators) tend to operate cross - country , and thus must depend upon truck dealer service centers for repair and maintenance. Some of these customers tend to own their vehicles for about four to seven ye ars, so that they

t ypicall y do not have to pay for repair and maintenance costs outside of either the manufacturer’s warranty period or some other extended warranty period
. Many of these customers tend to require seeing evidence of fuel efficiency techn ology payback periods on the order of 18 to 24 months before seriousl y considering evaluating a new technology for potential adoption within their fleet (NAS 2010, Roeth et al. 2013, Klemick et al. 2014)
. Purchasing decisions, however, are not based exclu sively on pay back period, but also include the considerations discussed in this section. For the baseline anal ys is, the agencies use pay back period as a prox y for all of these considerations, and therefore the payback period for the baseline anal ys is is s horter than the pay back period industry

uses as a threshold for the further consideration of a technology
. Purchasers of HD pickups and vans wanting better fuel efficiency will demand that fuel consumption improvements pay back within approximately one t o three years, but not all purchasers fall into this category
. S ome HD pickup and van owners accrue relativel y few vehicle miles traveled per year, such that they may be less likely

to adopt new fuel efficiency technologies , while other owners who use the ir vehicle(s) with greater intensity may be even more willing to pay

for fuel efficiency

improvements . Regardless of the type of customer, their determination of minimum total cost of ownership involves the customer balancing their own unique circumstance s with a heav y - dut y vehicle’s initial purchase price, availability of credit and lease options, expectations of vehicle reliability , resale value and fuel efficiency technology pay back periods. Th e degree of the incentive to adopt additional fuel efficiency technologies also depends on customer expectations of future fuel prices, which directly impacts customer expectations of the pay

back period. Another factor the agencies considered is that other federal and state
- level policies and programs are specificall y aimed at stimulating fuel efficiency technology

development and deploy ment. Particularl y relevant to this sector are DOE’s 21 st Century Truck Partnership, EPA’s voluntary

SmartWay

Tr ansport program, and California’s AB32 fleet requirements. 801 , 802 , 803 The future availability of more cost
- effective technologies to reduce fuel consumption could provide manufacturers an incentive to produce more fuel
- efficient medium
-

801 http://energy.gov/eere/vehicles/vehicle
- technologies
- office
- 21st
- century - truck 802 http://www.epa.gov/smartway/ 803 State of California Global Warming Solutions Act of 2006 (Assembly Bill 32, or AB32)*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 723 of 850 and heav y - dut y vehicles, which in turn could provide customers an incentive to purchase these vehicles. The availability of more cost
- effective technologies to reduce fuel consumption could also lead to a substitution of less cost
- effective technologies, where overall fuel effic iency could remain fairl y flat if buyers are less interested in fuel consumption improvements than in reduced vehicle purchase prices and/or improved vehicle performance and/or utility. Although we have estimated the cost and efficacy of fuel
- saving techno logies assuming performance and utility

will be held constant, some uncertainty remains regarding whether these conditions will actually

be observed. In particular, we have assumed payload will be preserved (and possibly

improved via reduced vehicle curb weight); however, some fuel
- saving technologies , such as natural gas fueled vehicles and hy brid electric vehicles, could reduce payload via increased curb weight due to the fuel tanks or added electrical machine, batteries and controls. Itis also possibl e that under extended high power demand resulting from a vehicle towing up a road grade, certain ty pes of hy brid powertrains could experience a temporary loss of towing capacity if the capacity of the h ybrid’s energy storage device (e.g., batteries, h ydrau lic accumulator) is insufficient for the extended power demand
. We have also assumed that fuel
saving technologies will be no more or less reliable than technologies already in production. However, if manufacturers pursue risky techno lo gies or if the agencies provide insufficient lead
time to fully

develop new technologies, they could prove to be less reliable, perhaps leading to increased repair costs and out - of
- service time. This was observed as an unintended consequence of certain manufacturers ’ initial introduction of certain emissions control technologies to meet EPA’s most stringent heavy
- dut y engine standards. If the fuel
- saving technologies considered here ultimatel y involve similar reliability problems, overall costs will be greater than we have estimated. We have assumed drivers will be as accepting of new fuel
- saving technologies as they are of technologies already in service. However, drivers could be less accepting of newer technologies
-- particularly an y that must be deployed manually . Except for increased costs to replace more efficient tires, we have assumed that routine maintenance costs will not increase or decrease . However, maintenance of new technologies could involve unique tools and parts. Therefore, maintenance costs cou ld increase, and maintenance could involve increased vehicle out - of
- service time. On the other hand new technologies can sometimes prove to be more reliable and require less maintenance than the technologies they replace. One example of this is the auxil iary

power unit (APU) frequently installed on heavy
- dut y sleeper cab tractors. In the past these have been typi cally powered by

small nonroad diesel engines that can require more frequent maintenance than the main engine of the tractor itself. However, m ore recentl y, as electric battery

technology

has advanced, some tractor manufacturers have introduced battery APUs instead of engine
- driven APUs. A comparison of recent sales of small engine driven APUs versus battery

APUs suggests that customers may pref er battery APUs 804 , and some operators and tractor dealerships have also told the agencies that the decrease in routine maintenance was an important factor in purchase decisions in favor of battery APUs. Again, insofar as these unaccounted
- for costs or savi ngs actuall y occur, overall costs could be larger or smaller than we have estimated. We have also applied the EIA’s AEO estimates of future fuel

804 Confidence Report: Idle
- Reduction Solutions, North American Council for Freight Effic iency, Lee, Tessa, 2014, p. 13.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 724 of 850 prices; however, heav y - duty vehicle customers could have different expectations about future fuel prices , and could therefore be more inclined or less inclined to apply new technology to reduce fuel consumption than might be expected based on EIA’s forecast. We expect that vehicle customers w ill be uncertain about future fuel prices, and that this uncertainty will be reflected in the degree of enthusiasm to apply new technology to reduce fuel consumption
. Considering all of these factors, the agencies have approached the definition of the No Action Alternative separately for each vehicle and engine category covered by

today ’s proposal. For trailers, the agencies considered two No Action alternatives to cover a nominal range of unce rtainty . The trailer category is unique in the context of this rulemaking because it is the only heavy
- dut y category not regulated under Phase 1. In both No Action cases , the agencies projected that the combination of EPA’s voluntary SmartWay program, DOE ’s 21 st Century Truck Partnership, California’s AB32 trailer requirements for fleets, and the potential for significantl y reduced operating costs should result in continuing improvement to new trailers. Taking this into account, the agencies project that in 2018, 50 percent of new 53’ dry van and reefer trailers would have technologies qualifying for the SmartWay label (5 percent aerodynamic improvements and lower rolling resistance tires) and 50 percent would have automatic tire inflation systems to maint ain optimal tire pressure. We also project that adoption of those same technologies would increase 1 percent per ye ar until each technology is being used on 60 percent of new trailers. In the first case, Alternative 1a, this means that the agencies proje ct that in the absence of new standards, the new trailer fleet technology would stabilize in 2027 to a level of 60 percent adoption in 2027 for the No Action alternative. In the second case, Alternative 1b, the agencies projected that the fraction of the in
- use fleet qualifying for SmartWay

would continue to increase beyond 2027 as older trailers are replaced by newer trailers. We projected that these improvements would continue until 2040 when 75 percent of new trailers would be assumed to include skirts
. For vocational vehicles, the agencies considered one No Action alternative. For the vocational vehicle category the agencies recognized that these vehicles tend to operate over fewer vehicle miles travelled per year. Therefore, the projected pay back peri ods for fuel efficiency technologies available for vocational vehicles are generally longer than the pay

back periods the agencies consider likely to lead to their adoption based solel y on market forces. This is especiall y true for vehicles used in applications in which the vehicle operation is secondary to the primary

business of the company using the vehicle. For example, since the fuel consumption of vehicles used b y utility companies to repair power lines would generally be a smaller cost relative to the other costs of repairing lines, fuel saving technologies would generall y not be as strongl y demanded for such vehicles. Thus, the agencies project that fuel
- saving technologies would either not be applied or onl y be applied as a substitute for more exp ensive fuel efficiency technologies, except as necessitated b y the Phase 1 fuel consumption and GHG standards. For tractors, the agencies considered two No Action alternatives to cover a nominal range of uncertainty . For Alternative 1a the agencies proje ct that fuel
- saving technologies would either not be applied or onl y be applied as a substitute for more expensive fuel efficiency technologies to tractors (thereb y enabling manufacturers to offer tractors that are less expensive to purchase) , except as ne cessitated b y the Phase 1 fuel consumption and GHG standards. InAlternative 1b the agencies estimated that some available technologies would save enough fuel to pay back*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 725 of 850 fairl y quickl y – within the first six months of ownership. The agencies considered a range of information to formulate these two baselines for tractors. Both public 805 and confidential historical information shows that tractor trailer fuel efficiency improved steadily

through improvements in engine efficiency and vehicle aero dy namics over the past 40 years, except for engine efficiency which decreased or was flat between 2000 and approximately 2007 as a consequence of incorporating technologies to meet engine emission regulations. Today v ehicle manufacturers, the Federal Government, academia and others continue to invest in research to develop fuel efficiency improving technologies for the future. There is also evidence that manufacturers have, in the past, applied technologies to improve fuel efficiency

absent a regulatory

require ment to do so. Some manufacturers have even taken regulatory risk in order to increase fuel efficiency ; in the 1990s, when fuel was comparativel y inexpensive, some tractor manufacturers designed tractor engine controls to determine when the vehicle was no t being emissions tested and, under such conditions, shift to more fuel
- efficient operation even though doing so caused the vehicles to violate federal standards for NOx emissions. Also, some manufacturers have recentl y expressed concern that the Phase 1 tractor standards do not credit them for fuel
- saving technologies they had already implemented before the Phase 1 standards were adopted. In public meetings and in meetings with the agencies, the trucking industry stated that fuel cost for tractors is the number one or number two expense for many operators, and therefore is a very important factor for their business. However, the pre
- Phase 1 market suggests that, tractor manufacturers and operators could be slow to adopt some new technologies, even where the agencies have estimated that the technology would have paid for itself within a few months of operation. Tractor operators have told the agencies they generall y require technologies to be demonstrated in their fleet before widespread adoption so the y can assess the actual fuel savings for their fleet and an y increase in cost associated with effects on vehicle operation, maintenance, reliability , mechanic training, maintenance and repair equipment, stocking unique parts and driver acceptance, as well as effects on vehicle resale value. Tractor operators have publicl y stated they

would consider conducting an assessment of technologies when provided with data that show the technologies may pay back costs through fuel savings within 18 to 24 months, based on their assumptions about future fuel costs. In these cases, an operator may first conduct a detailed paper study of anticipated costs and benefits. If that study shows likely pay back in 18 to 24 months for their business, the fleet may acquire one or several tractors with the technology to directly

measure fuel savings, costs and driver acceptance for their fleet. Small fleets may not have resources to conduct assessments to this degree and may rel y on information from larger fleets or observations of widespread acceptance of the technology within the industry

before

805 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). “ Technologies and Approaches to Reducing the Fuel Consumption of Medium
- and Heavy
- Duty Vehicles,” (hereafter, “NAS 2010”). Washington, D.C. The National Academies Press. Available electronically from the National Academies Press Website at http://www.nap.e du/catalog.php?record_id=12845 (last accessed September 10, 2010)
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 726 of 850 adopting a technology . This uncertainty over the actual fuel savings and costs and the length y process to assess technologies significantl y slows the pace at which fuel efficiency technol ogies are adopted. The agencies believe that using the two baselines addresses the uncertainties we have identified for tractors . The six
- month pay back period of Alternative 1b reflects the agencies’ consideration of factors, discussed above, that could limit

—ye t not eliminate

—

manufacturers’ tendencies to voluntaril y improve fuel consumption. In contrast, Alternative 1a reflects a baseline for vehicles other than trailers wherein manufacturers either do not apply fuel efficiency technologies or onl y app ly them as a substitute for more expensive fuel efficiency technologies, except as necessitated b y the Phase 1 fuel consumption and GHG standards. For HD pickups and vans, the agencies considered two No Action alternatives to cover a nominal range of uncer

tainty
. In Alternative 1b the agencies considered additional technology application, which involved the explicit estimation of the potential to add specific fuel
- saving technologies to each specific vehicle model included in the agencies’ HD pickup and v an fleet anal ys is, as discussed in Chapter VI. Estimated technology application and corresponding impacts depend on the modeled inputs. Also, under this approach a manufacturer that has improved fuel consumption and GHG emissions enough to achieve compli ance with the standards is assumed to apply further improvements, provided those improvements reduce fuel outlay s by

enough (within a specified amount of time, the pay back period) to offset the additional costs to purchase the new vehicle. These calculati ons explicitly account for and respond to fuel prices, vehicle survival and mileage accumulation, and the cost and efficacy of available fuel
- saving technologies. Therefore, all else being equal, more technology is applied when fuel prices are higher and/ or technology is more cost
- effective. Manufacturers of HD pickups and vans have reported to the agencies that buyers of these vehicles consider the total cost of vehicle ownership, not just new vehicle price, and that manufacturers plan as if buyers will expect fuel consumption improvements to “pay back” within periods ranging from approximately

one to three years. For example, some manufacturers made decisions to introduce more efficient HD vans and HD pickup transmissions before such vehicles were subje ct to fuel consumption and/or GHG standards. However, considering factors discussed above that could limit manufacturers’ tendency to voluntarily

improve HD pickup and van fuel consumption, Alternative 1b applies a 6
- month pay back period. In contrast for Alternative 1a the agencies project that fuel
- saving technologies would either not be applied or onl y be applied as a substitute for more expensive fuel efficiency technologies, except as necessitated by the Phase 1 fuel consumption and GHG standards. Th e Method A sensitivity anal ys is presented above in Section VI also examines other pay back periods
. In terms of impacts under reference case fuel prices, the pay

back period input play s a more significant role under the No
- Action Alternatives (defined b y a continuation of model year 2018 standards) than under the more stringent regulatory

alternatives described next. **(2) Alternative 2: Less Stringent than the Preferred Alternative**  For vocational vehicles and combination tractor
- trailers, A lternative 2 represents a stringency

level which is approximately half as stringent overall as the preferred alternative. The agencies developed Alternative 2 to consider a continuation of the Phase 1 approach of appl yi ng off
- the
- shelf technologies rather than requiring the dev elopment of new technologies or*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 727 of 850 fundamental improvements to existing technologies. For tractors and vocational vehicles, this also involved less integrated optimization of the vehicles and engines. Put another way , Alternative 2 is not technology
- forcing . See, e.g., Sierra Club v. EPA , 325 F. 3d 374, 378 (D.C. Cir. 2003) (under a technology
- forcing provision, EPA “must consider future advances in pollution control capability”); see also similar discussion in Husqvarna AB v. EPA, 254 F. 3d 195, 201 (D.C. Cir. 2001). The agencies’ decisions regarding which technologies could be applied to comply with Alternative 2 considered not only the use of off
- the shelf technologies, but also considered other factors as well, such as how broadl y certain technologies fit in
- use applications and regulatory structure. The resulting Alternative 2 could be met with most of the same technologies the agencies project could be used to meet the proposed standards, although at lower application rates. Alternativ e 2 is estimated to be achievable without the application of some technologies, at an y level. These and other differences are described below b y category. The agencies project that Alternative 2 combination tractor standards could be met by applying lower adoption rates of the projected technologies for Alternative 3. This includes a projection of slightl y lower per
- technology effectiveness for Alternative 2 versus 3. Alternative 2 also assumes that there would be little optimization of combination trac tor powertrains. The agencies project that the Alternative 2 vocational vehicle standard could be met without any

use of strong hy

brids. Rather, it could be met with lower adoption rates of the other technologies that could be used to meet Alternative 3 , our proposed standards. This includes a projection of slightl y lower per
- technology effectiveness for Alternative 2 versus 3 and little optimization of vocational vehicle powertrains
. The Alternative 2 trailer standards would appl y to only 53
- foot dry and refrigerated box trailers and could be met through the use of less effective aerody namic technologies and higher rolling resistance tires versus what the agencies projected could be used to meet Alternative 3. As discussed above in Section VI .D. , the HD pickup truck and van alternatives are characterized b y an annual required percentage change (decrease) in the functions defining attribute
- based targets for per
- mile fuel consumption and GHG emissions. Under the standards in each alternative, a manufac turer’s fleet would, setting aside any changes in production mix, be required to achieve average fuel consumption/GHG levels that increase in stringency every year relative to the standard defined for MY2018 (and held constant through 2020) that establishe s fuel consumption/GHG targets for individual vehicles. A manufacturer’s specific fuel consumption/GHG requirement is the sales
- weighted average of the targets defined by the work
factor curve in each ye ar. Therefore, although the alternatives involve steady increases in the functions defining the targets, stringency increases faced b y an y individual manufacturer may not be steady if changes in the manufacturer’s product mix cause fluctuations in the average fuel consumption and GHG levels required of the manufacturer. See Section VI .D. for additional discussion of this topic. Alternative 2 represents a 2.0 percent annual improvement through 2025 in fuel consumption/GHG emissions relative to the work
- factor curve in 2020. This would be 0.5 percent les s stringent per year compared to the proposed standards of Alternative 3.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 728 of 850 For HD pickups and vans the agencies project that most manufacturers could comply with the standards defining Alternative 2 b y appl ying technologies similar to those that could be applied in order to comply with the proposed standards, but at lower application rates than could be necessitated b y the proposed standards. The biggest technology difference the agencies project between Alternative 2 and the proposed standards of Alternative 3 would be that we project that most manufacturers could meet the Alternative 2 standards without any use of stop
start or other mild or strong h ybrid technologies. Of course, these estimates depend not only on the stringency

of the standards defining this regulatory

alternative, but also on other input estimates, in particular the detailed composition of the agencies’ HD pickup and van market forecast; the agencies’ estimates of the future availability , cost, and efficacy of fuel
- saving HD pickup and van technologies; and the agencies’ estimates of future fuel prices. Even without changes to the standards defining this regulatory

alternative, changes to anal ys is inputs would lead to different estimates of the extent to which various technologies might be applied under this regulatory alternative. The agencies are not proposing Alternative 2 as a matter of both policy and law. Based on our current anal ys is for each of the subcategories, it presently appears that technicall y feasible alternate standards are available that provide for greater emission reductions and reduced fuel consumption, including the proposed standards. Such alternative standards, including the proposed standards and potentially Alternative 4, are feasible at reasonable cost, consid ering both per
- vehicle and per
- engine cost, cost
- effectiveness, and lead time. Consequently , at this point the agencies do not believe that the modest improvements in Alternative 2 would be appropriate or otherwise reasonable under Section 202 (a) (1) and (2) of the Clean Air Act, or represent the “maximum feasible improvement” within the meaning of 49 U.S.C. Section 32902(k)(2). **(3) Alternative 3: Preferred Alternative and Proposed Standards**  The agencies are proposing Alternative 3 for HD engines, HD pickup trucks and vans, Class 2b through Class 8 vocational vehicles, Class 7 and 8 combination tractors, and most categories of trailers. Details regarding modeling of this alternative are included in Chapter 5 of the draft RIA. Unlike the Phase 1 standards where the agencies projected that manufacturers could meet the Phase 1 standards with off
- the
- shelf technologies only , the agencies project that Alternative 3 standards could be met through a combination of off
- the
- shelf technologies applied at higher mark et penetration rates and new technologies that are still in various stages of development and not yet in production. Although this alternative is technology
- forcing, it must be kept in mind that the standards themselves are performance
- based and thus do n ot mandate an y particular technology

be used to meet the standards. The agencies recognize that there is some uncertainty in projecting costs and effectiveness for those technologies not yet available on the market, but we do not believe, as discussed comprehensivel y in Sections II, III, IV, V, and VI, that such uncertainty is not sufficient to render Alternative 3 beyond the reasonable or maximum feasible level of stringency

for each of the vehicle categories covered by this program. Given that all of th e proposed standards are performance
- based rather than mandates of specific technologies, and given that the lead time for the most stringent standards in Alternative 3 is greater than 10 years,*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 729 of 850 the agencies believe that the performance that would be requi red b y the se stringency levels of Alternative 3 would allow each manufacturer to choose to develop technology and appl y it to their vehicles in a way

that balances their unique business constraints and reflects their specific market position and customers’ needs. We have described in detail above, and also in Chapter 2 of the draft RIA, the precise bases for each of the proposed standards (that is, for each segment covered under the program). For HD pickups and vans, Alternative 3 represents a 2.5 percent c ompounded annual improvement through 2027 in fuel consumption/GHG emissions relative to the work
- factor curve in 2020. Sections II through VI of this notice provide comprehensive explanations of the consideration that the agencies gave to proposing stand ards that are more accelerated than Alternative 3, based on the agencies’ projection of how such standards could be met through the accelerated application of technologies and our reasons for concluding that the identified technologies for each of the vehi cle and engine standards that constitute Alternative 3 represent the maximum feasible (within the meaning of 49 USC 32902 (k)) and reasonable (for purposes of CAA section 202 (a)) based on all of the information available to the agencies at the time of thi s proposal. **(4) Alternative 4: More Accelerated than the Preferred Alternative**  As indicated b y its description in the title above, Alternative 4 represents standards that are effective on a more accelerated timeline in comparison to the timeline of the propos ed standards in Alternative 3. The agencies believe that Alternative 4 could potentially be maximum feasible and appropriate, but at this time the agencies have identified sufficient uncertainty in the information that the agencies have considered with re spect to the technologies’ readiness, effectiveness and costs such that the agencies cannot yet conclude that Alternative 4 represents maximum feasible and appropriate standards. Accordingl y, although we are not proposing Alternative 4, we are requesting comment on adopting some or all of Alternative 4 in the final rule. The agencies would especiall y welcome data on the projected readiness, effectiveness, and costs of technologies the agencies consider for compliance with Alternative 4 standards , which in man y cases are identical to the technologies considered for the Alternative 3 standards . It would be especiall y helpful if commenters addressed each category separatel y; namely , tractors and vocational vehicles and their engines; trailers, and pickups an d vans. The agencies would consider adopting Alternative 4’s stringencies and lead time for the final rule, depending on the information and comments received in response to this notice and based on additional consideration of the information we already h ave in
- hand
. Alternatives 3 and 4 were both designed to achieve similar fuel efficiency and GHG emission levels in the long term but with Alternative 4 being accelerated in its implementation timeline. Specifically , alternative 4 reflects the same or simi lar standard stringency levels as alternative 3, but 3 ye ars sooner (2 ye ars for heav y - duty pickups and vans), so that the final phase of the standards would occur in MY 2024, or (for heav y dut y pickups and vans) 2025. As discussed above and in the feasibility discussions in Sections II
- VI , we are not proposing Alternative 4. By accelerating the adoption schedule, this option would result in*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 730 of 850 several model ye ars of incrementall y greater fuel consumption and GHG emission reductions than Alternative 3, but it does raise concerns about adequacy of lead time. The agencies have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by

that al ternative. The agencies recognize the potential for larger net benefits if Alternative 4 were selected, and we therefore welcome comments addressing the feasibility and availability

of relevant technologies in the identified lead time. Commenters are pa rticularl y encouraged to address all aspects of feasibility

analy sis, including effectiveness and costs, the likelihood of developing available technologies to achieve sufficient reliability within the proposed lead time, and the extent to which the heavy
- dut y vehicle market would accept and utilize the technology
. Comments should ideally address these issues separatel y for each typ e of technology , especiall y with respect to advanced technologies like waste heat recovery s ys tems and hy

brid powertrains. Although we summarize the specific differences below, readers are encouraged to see Sections II through VI for more detailed descriptions of how the agencies projected how manufacturers could implement certain technologies in order to meet the standards of Alternative 4. The agencies project that Alternative 4 combination tractor standards could be met by applying initially

higher adoption rates of the projected technologies for Alternative 3. This includes a projection of slightly higher per
- technology

e ffectiveness for Alternative 4 versus 3. Alternative 4 also assumes that there would be more optimization of combination tractor powertrains and earlier market penetration of engine waste heat recovery sy stems. The agencies project that the Alternative 4 vocational vehicle standard could be met through earlier adoption rates of the same technology packages projected for Alternative 3. This includes a projection of slightly higher per
- technology

effectiveness for Alternative 4 versus 3. The Alternativ e 4 trailer standards could be met through earlier implementation of more effective aerodynamic technologies, including the use of aerodynamic skirts and boat tails. This would be in addition to implementing lower rolling resistance tires for nearly all trailers. HD pickup truck and van standards defining Alternative 4 represent a 3.5 percent annual improvement in fuel consumption and GHG emissions through 2025 relative to the work
- factor curves in 2020. Of course, this finding depends not only on the stringency

of the standards defining this regulatory

alternative, but also on other input estimates, in particular the detailed composition of the agencies’ HD pickup and van market forecast; the agencies’ estimates of the future availability , cost, and effi cacy of fuel
- saving HD pickup and van technologies; and the agencies’ estimates of future fuel prices. Even without changes to the standards defining this regulatory

alternative, changes to anal ys is inputs will lead to different estimates of the extent to which various technologies might be applied under this regulatory alternative
. **(5) Alternative 5: Even More Stringent Standards with No Additional Lead**  **- time**  Alternative 5 represents even more stringent standards compared to Alternatives 3 and 4, as well as the same implementation timeline as Alternative 4. As discussed above and in the feasibility discussions in Sections II
- VI , we are not proposing Alternative 5 because we cannot project that manufacturers can develop and introduce in sufficient quantities the technologies that*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 731 of 850 could be used to meet Alternative 5 standards. We believe that for some or all of the categories, the Alternative 5 standards are technicall y infeasible within the lead time allowed. We have not fully estimated costs for this altern ative for tractors and vocational vehicles because we believe that there would be such substantial additional costs related to pulling ahead the development of so many additional technologies that we cannot accuratel y predict these costs. We also believe this alternative could result in a decrease in the in
- use reliability and durability

of new heavy
duty vehicles and that we do not have the ability to accuratel y quantify the costs that would be associated with such problems. Instead we merel y note that co sts would be significantl y greater than the estimated costs for Alternative s 3 and 4. 

### B. **How Do These Alternatives Compare in Overall Fuel Consumption and GHG Emissions Reductions and in Benefits and Costs?**  The following tables compare the overall fuel consumption and GHG emissions reductions and benefits and costs of each of the regulatory alternatives the agencies considered. Note that for tractors, trailers, pickups and vans the agencies compared overall fuel consumption and GHG emissions reductions and ben efits and costs relative to two different baselines, described above in the section on the No Action alternative. Therefore, for tractors, trailers, pickups and vans two results are listed; one relative to each baseline, namel y Alternative 1a and Alternat ive 1b. Also note that the agencies anal yz ed pickup and van overall fuel consumption and emissions reductions and benefits and costs using the NHTSA's CAFE model ( Method A). In addition, the agencies used EPA’s MOVES model to estimate pic kup and van fuel consumption and emissions and a cost methodology that applied vehicle costs in different model years ( Method B). In both cases, the agencies used the CAFE model to estimate average per vehicle cost , and this anal ys is extended through model year 2030. 806 The agencies concluded that in these instances the choice of baseline and the choice of modeling approach (Method A versus Method B) did not impact the agencies’ decision to propose Alternative 3 as the preferred alte rnative and hence the proposed standards for HD pickups and vans. Table X
- 1 compares fuel savings, technology costs, avoided emissions, total costs, and benefits for the above regulatory alternatives as estimated under Method A. Table X
- 2 provides the same comparisons for Method B. Subsequent tables summarize segment - specific results and projections for longer
- term impacts . The regulatory impact anal ys is (RIA) accompan yi ng today ’s notice presents more detailed results of the agencies’ anal ys is.

806 Although the agencies have considered regulatory alternatives involving standards increasing in stringency through, at the latest, 2027, the agencies extended the CAFE modeling analysis through model year 2030 rather than mo del year 2027 in order to obtain more fully stabilized results given projected product cadence, multiyear planning, and application of earned credits.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 732 of 850 **(1) Method A Tables**  **Table X**  **- 1**  **Summary of Costs And Benefits through MY 2029 by Alternative, Discounted at 3% (Relative to**  **Baseline 1a), Me**  **thod A**  **a** Vehicle segment Alt 2 Alt 3 Alt 4 Alt 5 Discounted pre

- tax fuel savings ($billion) HD pickups and Vans 11.7 18.3 22.3 24.8 Vocational Vehicles 5.6 18.4 24.3 38.5 Tractors/Trailers 88.1 138.4 151.7 196.8 Total 105.4 175.1 198.3 260.2 Discounted Total technology costs ($billion) HD pickups and Vans 3.0 5.0 8.2 9.9 Vocational Vehicles 1.2 7.6 10.8 26.0 Tractors/Trailers 9.2 12.8 15.3 34.8 Total 13.4 25.4 34.3 70.6 Discounted value of emissions reductions ($billon) HD pickups and Vans 3.0 4.8 5.9 6.6 Vocational Vehicles 1.7 6.1 8.1 13.1 Tractors/Trailers 40.7 62.7 67.9 87.7 Total 45.4 73.7 82.0 107.4 Total costs($billion) HD pickups and Vans 3.5 5.7 9.1 15.2 Vocational Vehicles 3.0 9.5 12.8 28.1 Tractors/Trailers 11.5 15.5 18.1 37.5 Total 18.0 30.8 40.0 80.8 Total benefits($billion) HD pickups and Vans 17.2 27.0 33.0 36.7 Vocational Vehicles 12.7 31.2 39.7 60.2 Tractors/Trailers 142.5 217.5 236.7 304.2 Total 172.4 275.8 309.4 401.1 Net benefits($billion) HD pickups and Vans 13.7 21.3 23.9 21.5 Vocational Vehicles 9.6 21.7 26.9 32.1 Tractors/Trailers 131.0 202.0 218.7 266.7 Total 154.3 245.0 269.4 320.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 733 of 850 **Table X**  **- 2**  **Summary of Program Benefits and Costs through MY 2029, Discounted at 3% (Relative**  **to Baseline**  **1b )**  **, Method A a**  Vehicle segment Alt 2 Alt 3 Alt 4 Alt 5 Discounted pre

- tax fuel savings ($billion) HD pickups and Vans 9.6 15.9 19.1 22.2 Vocational Vehicles 5.6 18.4 24.3 38.5 Tractors/Trailers 80.5 130.8 144.0 189.2 Total 95.6 165.1 187.4 250.0 Discounted Total technology costs ($billion) HD pickups and Vans 2.5 5.0 7.2 9.7 Vocational Vehicles 1.2 7.6 10.8 25.9 Tractors/Trailers 8.9 12.5 15.0 34.4 Total 12.5 25.0 32.9 70.0 Discounted value of emissions reductions ($billon) HD pickups and Vans 2.8 4.5 5.4 6.3 Vocational Vehicles 1.7 6.1 8.1 13.1 Tractors/Trailers 37.5 59.4 64.6 84.4 Total 41.9 70.1 78.2 103.8 Total costs($billion) HD pickups and Vans 2.8 5.5 7.8 10.4 Vocational Vehicles 3.0 9.5 12.8 28.0 Tractors/Trailers 11.2 15.2 17.7 37.2 Total 17.0 30.3 38.4 75.7 Total benefits($billion) HD pickups and Vans 14.1 23.5 28.3 32.9 Vocational Vehicles 12.7 31.2 39.7 60.2 Tractors/Trailers 131.1 206.2 225.4 292.8 Total 157.9 260.9 293.3 385.9 Net benefits($billion) HD pickups and Vans 11.3 18.0 20.4 22.5 Vocational Vehicles 9.6 21.7 26.9 32.1 Tractors/Trailers 119.9 191.0 207.6 255.6 Total 140.9 230.7 254.9 310.3 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. The following two tables summarize results for each of the segments co vered by today ’s proposal , discounted at 7 percent
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 734 of 850 **Table X**  **- 3**  **Summary of Program Benefits**  **and Costs**  **through MY 2029, discounted at 7% (Relative**  **to Baseline**  **1a )**  **, Method A a**  Vehicle segment Alt 2 Alt 3 Alt 4 Alt 5 Discounted pre

- tax fuel savings ($billion) HD pickups and Vans 6.4 9.9 12.2 13.6 Vocational Vehicles 2.9 9.7 13.0 20.9 Tractors/Trailers 47.7 74.6 82.3 107.3 Total 57.0 94.2 107.5 141.8 Discounted Total technology costs ($billion) HD pickups and Vans 2.1 3.4 5.7 6.9 Vocational Vehicles 0.8 5.0 7.3 17.8 Tractors/Trailers 6.3 8.7 10.5 23.9 Total 9.1 17.1 23.5 48.6 Discounted value of emissions reductions ($billon) HD pickups and Vans 2.7 4.3 5.3 5.9 Vocational Vehicles 1.4 5.0 6.6 10.6 Tractors/Trailers 29.9 46.3 50.4 65.4 Total 34.0 55.6 62.3 81.8 Total costs($billion) HD pickups and Vans 2.4 3.8 6.2 10.1 Vocational Vehicles 1.8 6.1 8.4 19.0 Tractors/Trailers 7.6 10.3 12.1 25.5 Total 11.8 20.2 26.7 54.6 Total benefits($billion) HD pickups and Vans 10.4 16.3 20.1 22.3 Vocational Vehicles 7.3 18.3 23.6 36.2 Tractors/Trailers 85.1 130.0 142.2 183.5 Total 102.9 164.6 185.8 242.1 Net benefits($billion) HD pickups and Vans 8.1 12.4 13.9 12.2 Vocational Vehicles 5.5 12.2 15.2 17.2 Tractors/Trailers 77.5 119.7 130.1 158.0 Total 91.1 144.4 159.1 187.5 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 735 of 850 **Table X**  **- 4**  **Summary of Program Benefits and**  **Costs through MY 2029, discounted at 7% (Relative**  **to Baseline 1b**  **) , Method A**  **a** Vehicle segment Alt 2 Alt 3 Alt 4 Alt 5 Discounted pre

- tax fuel savings ($billion) HD pickups and Vans 5.2 8.5 10.4 12.2 Vocational Vehicles 2.9 9.7 13.0 20.9 Tractors/Trailers 44.0 71.0 78.6 103.7 Total 52.2 89.2 102.0 136.8 Discounted Total technology costs ($billion) HD pickups and Vans 1.7 3.4 4.9 6.7 Vocational Vehicles 0.8 5.0 7.3 17.8 Tractors/Trailers 6.0 8.4 10.3 23.7 Total 8.5 16.8 22.5 48.2 Discounted value of emissions reductions ($billon) HD pickups and Vans 2.5 4.0 4.8 5.5 Vocational Vehicles 1.4 5.0 6.6 10.6 Tractors/Trailers 27.5 43.9 48.0 63.0 Total 31.4 52.9 59.4 79.1 Total costs($billion) HD pickups and Vans 1.9 3.7 5.3 7.1 Vocational Vehicles 1.8 6.1 8.4 19.0 Tractors/Trailers 7.3 10.0 11.9 25.3 Total 11.1 19.8 25.6 51.4 Total benefits($billion) HD pickups and Vans 8.6 14.1 17.1 20.0 Vocational Vehicles 7.3 18.3 23.6 36.2 Tractors/Trailers 78.9 123.7 135.9 177.3 Total 94.8 156.2 176.6 233.5 Net benefits($billion) HD pickups and Vans 6.7 10.5 11.9 12.9 Vocational Vehicles 5.5 12.2 15.2 17.2 Tractors/Trailers 71.5 113.7 124.0 152.0 Total 83.7 136.4 151.1 182.2 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 736 of 850 While the agencies’ explicit anal ys is of manufacturers’ potential resp onses to today ’s proposed standards extends through model ye ar 2030, the resulting fuel savings and avoided emissions summarized in the following two tables occur as those vehicles
. **Table X**  **- 5**  **Fuel Savings**  **and GHG Emissions Reductions by Vehicle Segment**  **, Relative to**  **Baseline 1a , Method**  **A a**  MY 2018
- 2029 Total Fuel Reductions Upstream &

Downstream GHG reductions (billion gallons) (MMT) Alternative 2 HD Pickup Trucks/Vans 5.5 67.5 Vocational Vehicles 2.5 33.6 Tractors and Trailers 37.8 518.8 Total 45.8 619.9

Alt. 3
- Preferred Alternative HD Pickup Trucks/Vans 8.8 107.6 Vocational Vehicles 8.3 110.3 Tractors and Trailers 59.5 816.4 Total 76.7 1,034.3

Alt. 4 HD Pickup Trucks/Vans 10.7 130.5 Vocational Vehicles 10.9 143.8 Tractors and Trailers 65.0 892.1 Total 86.7 1,166.4

Alt. 5 HD Pickup Trucks/Vans 12.0 145.4 Vocational Vehicles 17.3 226.9 Tractors and Trailers 84.2 1,155.1 Total 113.4 1,527.4 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. **Table X**  **- 6**  **Fuel Savings**  **and GHG Emissions Reductions**  **by Vehicle Segment, Relative**  **to Baseline 1b, Method**  **A a** *** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 737 of 850 MY 2018
- 2029 Total Fuel Reductions Upstream &

Downstream GHG reductions (billion gallons) (MMT) Alternative 2 HD Pickup Trucks/Vans 4.5 55.5 Vocational Vehicles 2.5 33.6 Tractors and Trailers 34.4 471.9 Total 41.4 561.0

Alt. 3
- Preferred Alternative HD Pickup Trucks/Vans 7.8 94.1 Vocational Vehicles 8.3 110.3 Tractors and Trailers 56.1 769.4 Total 72.2 973.8 Alt. 4 HD Pickup Trucks/Vans 9.3 112.8 Vocational Vehicles 10.9 143.8 Tractors and Trailers 61.6 845.2 Total 81.8 1,101.8 Alt. 5 HD Pickup Trucks/Vans 10.8 130.5 Vocational Vehicles 17.3 226.9 Tractors and Trailers 80.7 1,108.2 Total 108.8 1,465.6 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1. Results presented above are cumulative, spanning model years 2018
- 2029. Underl yi ng these results are estimates of impacts for each specific model year. As an example, Table X
- 7 shows costs, benefits, and net benefits specific to model year 2029. **Table X**  **- 7**  **Summary of Costs And Benefits for**  **MY 2029 by Alternative, Discounted at 3% (Relative to**  **Baseline 1b), Method A**  **a***** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 738 of 850 Vehicle segment Alt 2 Alt 3 Alt 4 Alt 5 Total Costs ($billion) HD pickups and Vans 0.3 0.8 0.9 1.1 Vocational Vehicles 0.3 1.5 1.5 2.9 Tractors/Trailers 1.2 1.9 1.9 3.9 Total 1.9 4.1 4.3 7.9 Total Benefits ($billion) HD pickups and Vans 1.9 3.6 3.8 4.2 Vocational Vehicles 1.8 5.2 5.2 7.3 Tractors/Trailers 14.4 25.4 25.4 32.0 Total 18.0 34.1 34.4 43.6 Net Benefits ($billon) HD pickups and Vans 1.5 2.8 2.9 3.1 Vocational Vehicles 1.4 3.7 3.7 4.4 Tractors/Trailers 13.2 23.5 23.5 28.1 Total 16.1 30.0 30.1 35.6 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 739 of 850 **(2) Method B Tables**  **Table X**  **- 8**  **Annual GHG and Fuel Reductions in 2035 and 2050 using Method B and Relative to the**  **Less Dyna mic Baseline**  **a** UPSTREAM & DOWNSTREAM GHG REDUCTIONS (MMT) FUEL REDUCTIONS

(BILLION GALLONS)
2035 2050 2035 2050 Alt. 2 Less Stringent
- Total 72 101 5.2 7.3

Tractors and Trailers 59 84 4.2 6.0 HD Pickup Trucks 8 11 0.7 0.9 Vocational Vehicles 5 7 0.3 0.5 Alt. 3 Preferred

– Total 127 183 9.3 13.4

Tractors and Trailers 97 141 7.0 10.1 HD Pickup Trucks 14 19 1.1 1.6 Vocational Vehicles 16 23 1.2 1.7 Alt. 4 More Stringent

– Total 132 184 9.7 13.5

Tractors and Trailers 100 141 7.2 10.1 HD Pickup Trucks 15 19 1.2 1.6 Vocational Vehicles 17 23 1.3 1.7 Alt. 5 More Stringent

– Total 168 232 12.4 17.0

Tractors and Trailers 126 176 9.0 12.6 HD Pickup Trucks 17 22 1.4 1.8 Vocational Vehicles 26 34 1.9 2.5 Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 740 of 850 **Table X**  **- 9**  **Benefit & Cost Com** **parison for each Alternative using Method B and Relative to Less Dynamic Baseline**  **(M onetary Values in Billions of 2012$, GHG Reductions in Million Metric Tons)**  **a**

Benefit
- Cost Category Alt 2 Alt 3 Alt 4 Alt 5 2035 Vehicle program
- $2.6
- $5.9
- $6.2 N/A

Maintenance
- $0.06
- $0.13
- $0.14 N/A Fuel (pre
- tax) $20.9 $37.2 $38.7 $49.4 Benefits $12.8 $20.5 $21.1 $26.3 Net benefits $31.1 $51.7 $53.5 N/A GHG reductions (MMT) 71.9 127.1 132.0 168.3 2050 Vehicle program
- $3.1
- $7.0
- $7.4 N/A

Maintenance
- $0.06
- $0.13
- $0.14 N/A Fuel (pre
- tax) $31.5 $57.5 $57.6 $72.7 Benefits $19.9 $32.9 $32.9 $40.6 Net benefits $48.3 $83.2 $83.0 N/A GHG reductions (MMT) 101.2 183.4 183.8 231.8 NPV, 3% Vehicle program
- $39.8
- $86.8
- $98.6 N/A

Maintenance
- $0.88
- $1.80
- $1.91 N/A Fuel (pre
- tax) $280.0 $495.6 $517.6 $664.3 Benefits $175.2 $279.7 $289.7 $361.5 Net benefits $414.5 $686.8 $706.8 N/A NPV, 7% Vehicle program
- $19.3
- $41.1
- $48.4 N/A

Maintenance
- $0.42
- $0.86
- $0.92 N/A Fuel (pre
- tax) $118.1 $206.7 $219.0 $283.0 Benefits $105.5 $173.5 $180.7 $228.0 Net benefits $203.8 $338.1 $350.5 N/A Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of

the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 741 of 850 **Table X**  **- 10**  **Benefit & Co st Comparison for each Alternative using Method B and Relative to Less Dynamic**  **Baseline HD Pickup and Vans only**  **(M onetary Values in Billions of 2012$, GHG Reductions in Million Metric Tons)**  **a**

Benefit
- Cost Category Alt 2 Alt 3 Alt 4 Alt 5 2035 Vehicle program - $0.5
- $0.9
- $1.2 N/A

Maintenance
- $0.01
- $0.01
- $0.01 N/A Fuel (pre
- tax) $2.5 $4.2 $4.4 $5.0 Benefits $1.4 $2.2 $2.3 $2.6 Net benefits $3.4 $5.5 $5.5 N/A GHG reductions (MMT) 8.1 13.9 14.6 16.6 2050 Vehicle program
- $0.5
- $1.0
- $1.4 N/A

Maintenance
- $0.01
- $0.01
- $0.01 N/A Fuel (pre
- tax) $3.5 $6.3 $6.3 $7.2 Benefits $2.1 $3.5 $3.5 $4.0 Net benefits $5.1 $8.7 $8.4 N/A GHG reductions (MMT) 10.8 19.3 19.4 22.1 NPV, 3% Vehicle program
- $7.5
- $13.5
- $19.6 N/A

Maintenance
- $0.18
- $0.18
- $0.18 N/A Fuel (pre
- tax) $31.4 $53.5 $56.8 $64.9 Benefits $18.7 $29.2 $30.7 $34.6 Net benefits $42.4 $69.1 $67.7 N/A NPV, 7% Vehicle program
- $3.7
- $6.5
- $9.7 N/A

Maintenance
- $0.08
- $0.08
- $0.08 N/A Fuel (pre
- tax) $13.1 $21.9 $23.7 $27.1 Benefits $11.4 $18.2 $19.3 $21.8 Net benefits $20.7 $33.5 $33.2 N/A Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of

the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 742 of 850 **Table X**  **- 11**  **Benefit & Cost Comparison for each Alternative using Method B and Relative to Less Dynamic Baseline**  **Vocational Vehicles only (M**  **onetary Values in Billions of 2012$, GHG Reductions in Million Metric Tons)**  **a**

Benefit
- Cost Category Alt 2 Alt 3 Alt 4 Alt 5 2035 Vehicle program
- $0.2
- $2.1
- $2.1 N/A

Maintenance
- $0.02
- $0.03
- $0.04 N/A Fuel (pre
- tax) $1.3 $4.7 $5.1 $7.6 Benefits $1.1 $2.6 $2.8 $3.9 Net benefits $2.2 $5.2 $5.8 GHG reductions (MMT) 4.7 16.1 17.4 25.8 2050 Vehicle program
- $0.3
- $2.4
- $2.4 N/A

Maintenance
- $0.02
- $0.03
- $0.04 N/A Fuel (pre
- tax) $2.0 $7.3 $7.3 $10.7 Benefits $1.7 $4.2 $4.2 $5.9 Net benefits $3.4 $9.0 $9.1 N/A GHG reductions (MMT) 6.5 23.2 23.3 33.9 NPV, 3% Vehicle program
- $3.6
- $29.6
- $32.8 N/A

Maintenance
- $0.22
- $0.42
- $0.52 N/A Fuel (pre
- tax) $16.9 $60.6 $66.3 $99.9 Benefits $14.8 $34.8 $37.4 $52.7 Net benefits $27.9 $65.4 $70.3 N/A NPV, 7% Vehicle program - $1.7
- $13.8
- $16.0 N/A

Maintenance
- $0.10
- $0.19
- $0.24 N/A Fuel (pre
- tax) $6.9 $24.7 $27.9 $42.5 Benefits $8.3 $21.5 $23.4 $33.8 Net benefits $13.4 $32.2 $35.0 N/A Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of

the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 743 of 850 **Table X**  **- 12**  **Benefit & Cost Comparison for each Alternative using Method B and Relative to Less Dynamic**  **Baseline Tractor/Trailers only**  **(M onetary Values in Billions of 2012$, GHG Reductions in Million Metric Tons)**  **a**

Benefit
- Cost Category Alt 2 Alt 3 Alt 4 Alt 5 2035 Vehicle program - $1.9
- $2.9
- $2.9 N/A

Maintenance
- $0.03
- $0.08
- $0.08 N/A Fuel (pre
- tax) $17.2 $28.4 $29.2 $36.8 Benefits $10.3 $15.7 $16.0 $19.7 Net benefits $25.6 $41.0 $42.2 N/A GHG reductions (MMT) 59.1 97.2 100.0 125.9 2050 Vehicle program
- $2.3
- $3.6
- $3.6 N/A

Maintenance
- $0.03
- $0.08
- $0.08 N/A Fuel (pre
- tax) $26.1 $44.0 $44.0 $54.8 Benefits $16.1 $25.2 $25.2 $30.7 Net benefits $39.9 $65.5 $65.6 N/A GHG reductions (MMT) 83.8 140.9 141.1 175.7 NPV, 3% Vehicle program
- $28.8
- $43.7
- $46.2 N/A

Maintenance
- $0.47
- $1.19
- $1.22 N/A Fuel (pre
- tax) $231.7 $381.5 $394.5 $499.5 Benefits $141.7 $215.7 $221.6 $274.2 Net benefits $344.1 $552.3 $568.8 N/A NPV, 7% Vehicle program
- $13.9
- $20.9
- $22.7 N/A

Maintenance
- $0.23
- $0.59
- $0.60 N/A Fuel (pre
- tax) $98.1 $160.1 $167.5 $213.4 Benefits $85.8 $133.8 $138.1 $172.4 Net benefits $169.8 $272.4 $282.3 N/A Note: a For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of

the less dynamic baseline, 1a, and more dynamic baseline , 1b, please see Section X.A.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 744 of 850 

## XI **. Natural Gas**  **Ve hicles and Engines**  Both gasoline and diesel vehicles can be designed or modified to use natural gas. NGV America estimates that approximately 0.5 percent of the heavy
- duty vehicle fleet use natural gas. A small but growing number of medium and heavy
- dut y natural gas vehicles have been produ ced and are in current use. Although these natural gas versions are similar in many way s to their petroleum counterparts, there are significant differences. There are also both similarities and differences in the production and distribution of natural ga s relative to gasoline and diesel fuel. This combined rulemaking b y EPA and NHTSA is designed to regulate two separate characteristics of heav y duty vehicles: emissions of GHG s and fuel consumption. The use of natural gas as a heav y - duty fuel can impact both of these. In the case of diesel or gasoline powered vehicles, there is a close relationship between these two characteristics. For natural gas fueled vehicles, which reduce or eliminate the use of petroleum, the situation is different. For example, a natural gas vehicle that achieves approximately the same fuel efficiency as a diesel powered vehicle would emit about 20 percent less CO 2 when operating on natural gas ; and a natural gas vehicle with the same fuel efficiency as a gasoline vehicle would emit about 30 percent less CO 2 . In Phase 1, the agencies balanced these facts b y appl yi ng the gasoline and diesel CO 2 standards to natural gas engines based on the engine type of the natural gas engine. Fuel consumption for these vehicles is then calculated according to their tailpipe CO 2 emissions. In essence, this applies a one - to - one relationship between fuel efficiency and tailpipe CO 2 emissions for all vehicles , including natural gas vehicles
. The agencies determined that this approach would likely create a small balanced incentive for natural gas use. See 76 FR 57123; see also 77 FR at 51705 (Aug. 24. 2012) and 77 FR at 51500 (Aug. 27, 2012) (EPA and NHTSA, respectivel y, further elaborating on basis for having Phase 1 appl y at the tailpipe only, i ncluding for alternative fueled vehicles ); see also Delta Const. Co. v. EPA , . 2015 U.S. App. LEXI S 6780, F.3d (D.C. Cir. April 24, 2015) (dismissing challenge to Phase 1 GHG standards as being arbitrary for appl yi ng only

on a tailpipe basis )
. For Phase 2, the agencies have reevaluated the potential use of natural gas in the heavy
duty sector and the impacts of such use. As discussed below, based on our review of the literature and external projections we believe that the use of natural gas is unli kely to become a major fuel source for medium and heav y - dut y vehicles during the Phase 2 time frame. Thus, since we project natural gas vehicles to have little impact on both overall GHG emissions and fuel consumption during the Phase 2 time frame, the ag encies see no need to propose fundamental changes to the Phase 1 approach for natural gas engines and vehicles. In the following sections, we present a lifecycle analy sis of natural gas used by the heav y - dut y truck sector. We also present the results of an anal ys is by the Energy

Information Administration projecting the future use of natural gas b y heav y - dut y trucks. Finally, we list a number of potential technologies and discuss the approaches that could be pursued help to reduce the methane emissions fr om natural gas trucks. A more detailed discussion of these analy ses and issues can be found in the draft RIA.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 745 of 850 

### A. **Natural Gas Engine and Vehicle Technology** Several engine parameters and characteristics come into play in comparing engines powered b y natural g as with engines powered by conventional fuels. Gasoline
- fueled engines are typicall y spark
- ignition engines that rel y on stoichiometric combustion, which means that essentially all the oxygen from the engine’s intake air is consumed in the combustion pro cess. Converting a gasoline
- fueled engine to run on natural gas involves changing the hardware used to store and deliver fuel to the engine, but the combustion strategy remains largel y unchanged. The engine must be recalibrated for the different fuel pro perties, but combustion remains stoichiometric. In addition, the catal ys ts may require significant changes to enable the heav y - dut y engine to comply with the emission standards. Diesel
- fueled engines are compression
- ignition engines that rel y on lean
- burn combustion, which means that the engine takes in a substantial quantity of excess air (ox ygen) that is not consumed in the combustion process. Engines usually have turbochargers to compress the intake air, which allows for greater power output and ther mody namic efficiency . Converting a diesel
- fueled engine to run on natural gas may involve a minimal set of changes to engine calibrations to maintain lean
- burn operation and the overall operating characteristics of a compression
- ignition engine, although there would be substantial changes to the fuel storage and delivery s ys tems. This could require the use of a pilot injection of a small amount of diesel fuel to initiate the combustion event, or more commonly, a mixture (never more than 50 percent natural gas) of natural gas and diesel fuel is combusted. It is also possible to convert a diesel
fueled engine to run on natural gas b y adding a spark plug and changing the calibration strategy to rely on stoichiometric combustion. This allows for simpler engi ne design and operation, but comes at a cost of higher fuel consumption and CO 2 emissions. Engines running on natural gas are capable of meeting the same criteria and GHG emission standards that apply for gasoline and diesel engines. In the case of redu cing PM and CO 2 emissions, there is an inherent advantage for natural gas. In contrast, engines must be properl y calibrated and maintained to avoid high emission rates for NO X , HC, and CO. On
- vehicle fuel storage for natural gas is also an important de sign parameter. The most common method today

is compressed natural gas (CNG), which involves storing the fuel as a gas at very high pressure (up to ~3500 psi) to increase the density of the fuel. This increases vehicle weight and generall y reduces the range relative to gasoline or diesel vehicles, but the technology is readily available and does not involve big changes for operators. The alternative is to cool the fuel so that it can be stored as liquefied natural gas (LNG), which involves more extensive hardware changes for managing the fuel as a cryogenic liquid. L NG fuel storage also involves a substantial weight increase, but L NG has a higher density

than CNG so LNG vehicles can store much more fuel than CNG vehicles in the same volume. L NG technolo gy is available for a limited number of truck models, mostly for line
- haul service where range is a paramount consideration. The cryogenic fuel requires substantial changes in hardware and procedures for refueling stations and operators. An additional fa ctor in considering LNG technology is that a parked vehicle could vent the fuel as it takes on heat from the surrounding environment over a period of several day s.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 746 of 850 

### B. **GHG Lifecycle Analysis for Natural Gas Vehicles** This section is organized into three sections. The first section summarizes the upstream emissions. The second section summarizes the downstream emissions. The last section summarizes the results of the lifecycle emissions and provides a comparison betw een natural gas lifecycle and diesel fuel lifecycle emissions. Only the overall results of the lifecycle emissions comparison between natural gas and diesel fuel are presented here, much more detail is provided in Chapter 13 of the DRIA. **(1) Upstream**  **Em issions**  Upstream methane emissions , occurring in the natural gas production, natural gas processing, transmission, storage and distribution stages of natural gas production, are estimated and summarized in the annual EPA report Inventory of U.S. Greenhou se Gas Emissions and Sinks (GHG Inventory) for the United Nations Framework Convention on Climate Change (UNFCCC). As a basis for estimating the life
- cycle impact of natural gas use by heavy
- dut y trucks, we used the year 2012 methane emission estimates in the most recent GHG Inventory , published in 2014. The GHG Inventory also includes the quantity of carbon dioxide which is coproduced with methane throughout the natural gas s ys tem and emitted to the atmosphere through venting, flaring, and as fugitive em issions. The GHG Inventory

is updated annuall y to account for new emission source s ( e.g., new natural gas wells ), updated data, emission factors and/or methodologies, and to account for changes in emissions due to policy changes, regulatory changes and changes in industry practices
. The GHG Inventory reflects emission reductions due to existing state regulations, National Emission Standards for Hazardous Air Pollutants (NESHAP) promulgated b y EPA in 1999, the New Source Performance Standards (NSPS) pro mulgated b y EPA in 2012, 807 and Natural Gas Star ( a flexible, voluntary partnership that encourages oil and natural gas companies to adopt proven, cost
- effective technologies and practices that improve operational efficiency and reduce methane emissions). 808 E mission estimates in the GHG Inventory are generally bottom
- up estimates which are per - unit (compressor, pneumatic valve, etc.) emission estimates based on measured or calculated emission rates from such emission sources
. In addition to the national
- le vel data available through the GHG Inventory , facility
- level petroleum and natural gas sy stems data are also available through EPA’s Greenhouse Gas Reporting Program (GHGRP). Th is data represent s a significant step forward in understanding G HG emissions from this sector and EPA expects that th is data will be an important tool for the a gency and the public to anal yz e emissions, and understand emission trends. For some sources,

807 Oil and Natural Gas Sector: New Source Performance Standards and National Emission Standards for Hazardous Air Pollutants Reviews; Final Rule, 40 CFR Parts 60 and 63, Environmental protection Agency, August 16, 2012. 808 www.epa.gov/gasstar/*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 747 of 850 EPA has already used GHGRP data to update emission estimates in the GHG inventory , and EPA plans to continue to leverage GHGRP data to update future GHG Inventories. The EPA
- promulgated 2012 New Source Performance Standards (NSPS) will reduce emissions of ozone precursors from natural gas facilities and h ave methane and hazardous air pollutant reduction co
- benefits . The NSPS standards require that natural gas wells which are hydraulicall y fractured control emissions using flaring or reduced emission completion (REC) technology

from completions and workove rs starting in 2012. RECs used by natural gas well drillers capture the natural gas emissions that occur during well completion , instead of venting or flaring the emissions. Starting January 2015, REC s are required for natural gas well completions and wo rkovers. T he NSPS also regulates the emissions from certain new natural gas production equipment, including dehydrator vents and condensate tanks. In the 2013 Climate Action Plan, EPA projects future emissions of methane to increase modestly, b y about 4 percent between now and 2025. As estimated for the recent power plant proposed rulemaking, natural gas production is expected to increase by about 20 percent during this timeframe, thus, methane emissions in 2025 are expected to be 14 percent lower than i n 2012 based on an equivalent volume of natural gas being produced
. As announced b y the White House, EPA will further regulate methane emissions from new natural gas production facilities. 809 , 810 In the GHG Inventory , emissions associated with powering the un its or equipment (i.e., compressors, pumps) used in natural gas production, processing, transmission and distribution are aggregated with all the other fossil fuel combustion activities. Rather than attempt to disaggregate those specific GHG emissions fro m the rest of the process emissions in the GHG Inventory , we instead use d the estimated emissions for these sources provided by GREET. **(2) Downstream Emissions**  Natural gas can be used by vehicles either as a compressed gas (CNG) or as liquefied natural gas (LN G). We discuss the emissions of both below. (a ) Compressed Natural Gas ( CNG ) The natural gas that comprises CNG is ty pically off
- loaded from the natural gas s ys tem where the vehicles using CNG are refueled. This is because the natural gas used as CNG is compressed at the retail stations that sell the CNG and the fleet facilities which fuel the CNG fleet vehicles. To get the natural gas to the CNG retail facilities which are mostly located in or near urban areas, the natural gas is expected to be shipped through the distribution system downstream of the natural gas transmission sy stem. CNG trucks are then refueled at the retail stations providing CNG. Each time a CNG refueling event occurs, a small amount of natural gas is released to the environment. Beca use of a lack of data or an estimate b y GREET or CARB,

809 FACT SHEET: Administration Takes Steps Forward on Climate Action Plan Announc ing Actions to Cut Methane Emissions, The White House, January 14, 2015. 810 FACT SHEET; EPA’s Strategy for Reducing Methane and Ozone
- Forming Pollution from the Oil and Natural Gas Industry; Environmental Protection Agency, January 14, 2015.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 748 of 850 this small amount of natural gas has not been estimated and therefore are not included in the lifecycle anal ys is presented here. Since these s ys tems are designed to have no leaks, the CNG could remain stored in the CNG tanks indefinitel y. However, the very high pressure at which CNG is stored dramatically increases fugitive emissions if a fitting were to develop a leak. The level of fugitive emissions for a certain sized hole is directly proportional to the pressure. We do not have an y data on the fugitive emissions from CNG trucks. In our lifecycle anal ys is, we assume that CNG fugitive emissions are zero, which likely underestimates the methane emissions. When CNG is stored at high pressure (i.e., 3600 psi) it contains only about 25 percent the energy density of diesel fuel. This low fuel storage density is a disincentive for using CNG in long haul trucks. An adsorbent for natural gas (ANG), 811 called metal organic framework (MOF) for storing CNG, h as been invented and is being tested for large scale use. The technology involves filling the CNG tank with a speciall y designed substance that looks similar to a pelletized cataly st. The substance establishes a matrix which causes the methane molecules to become better organized and store the same quantity of natural gas in a smaller volume at the same pressure (about 60 percent of the energy density of diesel fuel), or store the same density of natural gas at a lower pressure. This MOF could improve th e energy density of CNG which would make it a better candidate for natural gas storage for long range combination trucks. Or, if used to store CNG at the same density , could reduce the compression energy required to compress the CNG since it could be stor ed at a lower pressure. (b ) Liquified Natural Gas ( LNG ) A primary

reason for liquefying natural gas is that it allows storing the natural gas at about 60 percent of the density of diesel fuel. For this reason, LNG is a primary fuel being considered b y long ha

ul trucks. The first step downstream of the natural gas production, processing and distribution sy stem for making LNG available to trucks is the liquefaction step. This step involves the removal of heat from the natural gas until it undergoes a phase chan ge from a gas to a liquid at a low pressure. LNG plants are configured depending on their ultimate capacity . World class LNG plants produce 5 million metric tons, or more, per year of LNG and the econom y of scale of these large plants supports the signif icant addition of capital to reduce their operating costs and energy

use. An LNG plant solely producing LNG for truck fuel is expected to be significantl y smaller than the world class LNG export plants with a poorer economy of scale. Their energy

efficien cy

would be expected to be much lower on a percentage basis. The California Air Resources Board estimates the liquefaction plants used for producing truck LNG fuel are 80 percent efficient, compared to 90 percent efficient for world class L NG plants. 812 In

811 Menon, V.C. , Komarneni, S. 1998 “Porous Adsorbents for Vehicular Natural Gas Storage: A Revie w”, Journal of Porous Materials 5, 43
- 58 (1998); Burchell, T “Carbon Fiber Composite Adsorbent Media for Low Pressure Natural Gas Storage” Oak Ridge National Laboratory 812 Det ailed California
- Modified GREET Pathway for Liquid Natural Gas (LNG) from North American and Remote Natural Gas Sources, Version 1.0, California Air Resources Board, July 20, 2009.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 749 of 850 our lifecycle anal ys is of LNG as a truck fuel, we also assumed that LNG plants are 80 percent efficient. The LNG producer is not only responsible for the LNG fugitive emissions at the plant, but it is also responsible for the GHG and other process emissi ons emitted when liquefying the natural gas. Because LNG plants are located separate from the retail facilities, they can be located to access the lowest cost feedstock. This means the natural gas for L NG can be sourced from the larger natural gas transm ission pipelines which are upstream of the distribution pipelines. Once the natural gas is liquefied at the liquefaction plant, it is stored in an insulated storage tank to keep the LNG liquefied. To transport the LNG to the retail station, the LNG is l oaded into an insulated horizontal trailer designed specifically for transporting LNG. If the LNG in the truck trailer were to warm sufficiently

to cause the LNG to reach the pressure relief valve venting pressure, there would be boil
- off emissions from the truck trailer. However, since the LNG is super cooled, boil off events are likely

to be rare. We did not have access to any specific data to estimate these emissions so we used a CARB estimate of boil
- off emissions for L NG transportation by

the tanker truck between the LNG plant and retail outlets. 813 LNG is stored in an insulated storage tank at the retail facility. Heat gain in the storage tank could eventuall y lead to boil
- off emissions. Service stations with little LNG demand are at a higher risk o f boil
- off emissions compared to service stations which have a significant throughput volume. LNG stations could be configured to avoid boil
- off events to the atmosphere, such as venting to a co
- located CNG facility , or venting to a nearby natural gas pip eline. We did not have access to an y specific data to estimate these emissions so we used a CARB emission estimates for the boil
- off emissions from LNG retail facilities. 814 Vehicles requiring LNG fuel drive up to an LNG retail outlet or fleet refueling fac ility and fill up with L

NG fuel. When the refueling nozzle is disconnected from the L NG tank nozzle, a small amount of methane is released to the environment. In addition, it may be necessary prior to refueling, due to high pressure in the truck’s LNG tank, to reduce the pressure in the truck’s LNG tank to speed up the refueling process. In some cases the retail station is equipped with another hose and associated piping to vent the excess gas to the retail stations’ storage tank where it would usually c ondense back to a liquid due to the lower temperature of that tank, or perhaps be vented to a natural gas pipeline. However, for those retail outlets without such vent lines to the storage tank, the truck driver may simpl y vent the truck’s storage tank to the atmosphere. As part of a sensitivity analy sis for our lifecycle analy sis, we estimate the emissions for venting an LNG tank prior to refueling. (c) Comparing CNG to LNG There is an important difference in providing CNG and LNG which is important to hi ghlight. For making CNG available to trucks, only a single facility , the retail outlet, is required

813 Ibid. 814 Ibid.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 750 of 850 for distributing CNG, while L NG requires both a liquefaction plant and a retail outlet and a means for transporting the LNG from the liquefaction plant to retail. Relying on a single facilit y simplifies the logistics of providing CNG and reduces the opportunity for methane leakage to the environment. However, this emissions disadvantage of LNG compared to CNG is offset somewhat because LNG is expected to a ccess the lower priced natural gas from the upstream transmission system, therefore, the methane emissions associated with the downstream natural gas distribution sy stem are avoided. (d ) Vehicle Emissions There are several different way s that diesel heav y duty engines can be configured to use natural gas as a fuel. The first is a spark ignition natural gas (SING), Otto cycle SING heavy duty engine burns the fuel stoichiometric al ly and uses a three
- way

catal ys t , and some also add an oxidation catalyst to provide the greatest emissions reduction
. In this case the e ngine compression ratio is reduced similar to that of a gasoline engine and thus its thermal efficiency is lower than a diesel
- like engine b y about 10
- 15 percent . The second is a direct injecti on natural gas (DING), d iesel cycle. The DING engine uses a small quantity

of diesel fuel (pilot injection) or a glow plug as ignition sources. As the injection sy stem for the diesel fuel does not have the capability of greater injection quantities, this option has no dual
- fuel properties. On the other hand, an optimization of the pilot injection can be made to achieve lower emissions. An advanced high pressure direct injection (HPDI) fuel sy stem combining the injection of both diesel fuel and natural g as can be used for lean burn combustion. This enables the engine to maintain the efficiency advantage of a compression ignition engine while running mainly CNG/LNG. The third is a mixed
- fuel natural gas (MFNG), d iesel cycle. In a mixed
- fuel engine, natural gas is mixed with intake air before induction to the cylinder and diesel fuel is used as ignition source. Mixed
- fuel vehicle/engine means any vehicle/engine engineered and designed to be operated on the original fuel(s), o r a mixture of two or more fuels that are combusted together. Engine results showed that the efficiency of the engine could decrease by about 2
- 5 percent in mixed
- fuel mode compared to diesel mode and that the diesel replacement was approx imately 40
- 60 pe rcent . Each of these natural gas engine ty pes has its merits. The SI NG engine is less costly , but is less fuel efficient and because of the lower compression ratio it has less torque than the two diesel cycle engines. The DING engine is likely the most e xpensive because of the special natural gas/diesel fuel injection sy stem and large required amount of natural gas (LNG or CNG) storage since the truck must run on natural gas. However, because the truck can run almost completely

on natural gas, the DING e ngine has the potential to more quickly pay down the higher investment cost of the natural gas truck. The MFNG engine provides the truck owner the flexibility to operate on natural gas or diesel fuel, but at the expense of a slower natural gas investment paydown rate because it can operate at most 50 percent of the time on natural gas. When assessing the methane emissions from both CNG and LNG trucks, it is important to separate those trucks built or converted before 2014 to those built or converted in 20 14 and later. The trucks built before 2014 onl y needed to meet a nonmethane h ydrocarbon (NMHC)*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 751 of 850 standard, which means that the methane emissions from these trucks are unregulated. Our certification data show that the methane tailpipe emissions from these trucks/buses ranges from 2

– 5 g/bhp
- hr for both spark ignition (gasoline type) and compression ignition (diesel type) engines. For 2014 and later OEM compression ignition natural gas trucks or natural gas conversions of 2014 and later diesel trucks, the trucks must meet a 0.1 g/bhp
- hr methane emission standard in the case of a larger truck engine tested with an engine dy namometer, and a 0.05 g/mile methane emission standard in the case of smaller trucks tested on a chassis dy namometer. For spark ignitio n (gasoline style) engines, the standards take effect in 2016. 815 Natural gas truck manufacturers are allowed to offset methane emissions exceeding the methane emission standard by

converting the methane emission exceedances into CO 2 equivalent emissions an d using CO 2 credits. For the initial natural gas engine certifications that EPA received for 2014, the truck manufactures chose to continue to emit high levels of methane (around 2 g/bhp
- hr) and use carbon dioxide credits to offset those emissions. We do n’t know if this practice of will continue in the future, however, for evaluating the lifecycle impacts of natural gas heav y - dut y trucks, the 2014 and later natural gas heav y - dut y trucks may in fact have an emissions profile more like the pre
- 2014 trucks and not like the 2014 and later trucks as depicted below in the figures. It is worth noting that the potential exists for deterioration or malfunction of the engines, fuel supplies, or associated emission control devices on these trucks to occur in such a manner to result in higher methane emissions in actual use. We have not specificall y accounted for the potential for increased methane emissions caused from high emitter natural gas trucks. See generally Section II above. The crankcase of these engines r eceives leakage from across the piston rings, which can contain methane. The crankcase of the spark ignition engines is normall y vented into the intake of the engines, thus, an y methane emissions from the crankcase which is not combusted in the engine wou ld be accounted for in the tailpipe emissions. For compression ignition engines, however, the crankcase emissions are allowed to be vented into the exhaust pipe downstream of the aftertreatment devices, and therefore the crankcase emissions are released to the atmosphere even though they

are included in the emissions test for the Methane standard that was introduced in Phase 1 on the rule. Another potential source of methane emissions from CNG and LNG trucks is fugitive emissions from the engine and the p iping which routes the fuel to the engine. Thus, either while parked or operated, this part of the vehicle fuel and engine sy stems could leak methane to the environment (which is different from boil
- off emissions from L NG trucks discussed below). We do n ot have data nor did we develop an estimate for these potential fugitive emissions from these ty pes of in
- use leaks. If the natural gas vehicles are well maintained, these emissions are likel y to be very low. The thermal efficiency

(the ratio of energy

converted to work versus energy consumed) of the natural gas engine also play s a role in the lifecycle emissions of the truck. Natural gas engines are generall y less efficient than their gasoline and diesel counterparts. Furthermore,

815 See 40 CFR sections 1036.108(a)(2) and 1037.104(c) and 7 6 FR 57192.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 752 of 850 manufacturers choose to produce spark
- ignition stoichiometric natural gas engines for use in diesel applications. Spark
- ignition natural gas engines can be as much as 15 percent less efficient than compressed ignition engines which operate on diesel fuel. In our lifecycle anal ys is, we provide two different sensitivities for natural gas vehicles assuming that they may be 5 percent and 15 percent less efficient. An important difference between CNG and LNG is way in which the fuels are stored on the vehicle. The CNG is contained in a sealed s ys tem while the LNG s ys tem is ultimately open to the environment. Providing that there are no leaks in the storage s ys tem, the CNG truck is inherently

low (zero) emitting and a parked truck would contain the CNG indefinitely . An LNG truck is inherentl y high emitting since if the truck were to be parked long enough its entire contents would be emitted to the environment. Thus, a major GHG issue for LNG trucks is boil
- off emissions from the truck ’s fuel storage s ys tems. When the liquefied natural gas is pumped into the truck LNG tanks, it is “supercooled,” meaning that the pressure of the LNG is well below the pressure at which the natural gas vent valve would relieve the LNG pressure. If the tr uck is driven extensively , the drawdown of liquid level will cause a vacuum which will cause some of the fuel to boil off and the heat of vaporization would thus cool the rest of the liquid in the L NG storage tank. It is possible that the fuel would maint ain its supercooled temperature, or possibly even cool further below its supercooled temperature, the entire time until the L NG is completely

consumed. If the truck is not driven at all or is driven very little, the very

low temperature and low pressure LNG warms due to the ambient temperature gradient through the tank wall, and vaporizes, causing the temperature and pressure of the LNG to rise. When the pressure reaches a maximum of 230 psi a safety release valve releases the methane gas to vent excess pressure. There are two industry

standards used to design tanks to reduce the temperature increase, one for a 3 day hold time 816 and one for a 5 day hold time. 817 Hold time is the time elapsed between the LNG refueling and venting. If there is a boil
- off ev ent, a large amount of methane would be released. If aware of the impending boil
- off, such as when the truck is being maintained, the truck driver could hook up the L NG tank to a hose which would vent the natural gas emissions to a CNG sy stem which could reuse the boil
- off natural gas as CNG, or vent the natural gas emission to a natural gas pipeline. Otherwise the boil
- off emission would simply vent to the atmosphere. If the truck had 200 gallons of LNG storage capacity, the estimated quantity of boil
- o ff emissions would range from 3 to 9 gallons of LNG for each boil off event depending on the fill level of the LNG tank. Each boil off event has the potential to release on the order of 5,300

– 15,800 grams of CH 4 which equates to 132

– 400K grams of CO 2 equivalent emissions, assuming that methane has a global warming potential (GWP) of 25 (assessed over 100 years). If the vehicle continues to sit

816 National Fire Protection Association 52, Compressed Natural Gas (CNG) Vehicular Fuel System Code, 2002 Edition. 817 SAE International (2008) SAE J2343: Recommended Practice for LNG Medium and Heavy
- Duty Powered Vehicles. Warrendale, Pennsylvania.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 753 of 850 for five more day s and boil
- off events occur each day to several times per day

as the tank vents and rebuilds in pressure, the sum total of the boil
- off events can result in over a million grams of CO 2 - equivalent emissions. **(3) Results of**  **Life Cycle Analysis** To estimate the lifecycle impact of natural gas used by heavy
- dut y trucks, we totaled the carbon dioxide, methane (CH 4 ) and the nitrous oxide (N 2 O ) emissions for the upstream and downstream portions of the natural gas s ys tem. The methane and nitrous oxide emissions are converted to carbon dioxide
- equivalent emissions using the appropriate GWP conversion factor s . The GWP conversion factor s EPA currentl y us es are for a 100
- ye ar timeframe, are 25 and 298 for methane and nitrous oxide , respectively. 818 To establish the impacts of natural gas use in the heav y - dut y fleet, it was necessary to compare the lifecycle impa cts of natural gas against the base fuel it is replac ing , which is diesel fuel. The lifecycle impact of diesel fuel was estimated by the National Energy Technology Laboratory (NETL) for the production and use of diesel fuel in 2005. EPA used this lifecyc le assessment for the 2010 Renewable Fuel Standard Rulemaking and we are using this NETL diesel fuel lifecycle estimate as the reference for comparison with the natural gas lifecycle assessment. NETL is in the process of revising its lifecycle anal ys is of diesel fuel to 2009, which should be available sometime in 2015. According to the lead anal ys t, the 2009 lifecycle anal ys is appears to be similar in magnitude to the 2005 anal ys is. 819 However, the 2009 anal ys is will not capture the lifecycle effects of th e large increase in h ydraulically fractured crude oil (i.e., Bakken, Eagle Ford) which has occurred in the U.S. during the first part of this decade. To illustrate the relative full lifecycle impact of natural gas
- fueled heavy
- duty vehicles compared to diesel fueled heav y - dut y vehicles, we assessed several different scenarios. The first is a conversion of a diesel engine to use compressed natural gas. Of the tens of thousands of heav y - dut y natural gas trucks currently in use, over 90 percent are of th is ty pe. These are conversions of older trucks so they are not regulated by

the 2014 methane standard. For future ye ar heavy
- dut y trucks, we also estimated the lifecycle emissions if the trucks were meeting a 0.1 g/bhp
- hr or a 0.05 g/mile methane tailpip e standard. We provide two sensitivities to capture the lower thermal efficiencies of natural gas trucks: 5 percent less thermally efficient (thermal low) and 15 percent less energy efficient (thermal high, which is 10 percent worse thermal efficiency th an the 5 percent less thermally efficient case). The relative life cycle assessment is shown in Figure XI
- 1.

818 These global warming potential values are based on the Fourth Assessment Report authored by the Intergovernmental Panel o n Climate Change. 819 Conversation with Timothy J. Skone P.E., National Energy Technology Laboratory, Department of Energy, June 2014.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 754 of 850 **Figure XI**  **- 1**  **Full Lifecycle Analysis (except tailpipe only em issions) of a CNG Truck**  **(Projected Upstream Methane Emissions in 2025, m**  **ethane GWP of 25)** 0 20,000 40,000 60,000 80,000 100,000 120,000

Diesel

Tailpipe CNG

Tailpipe Diesel CNG pre2014 CNG 2014 and later**E m** **i s** **s i** **o n** **s (** **g C** **O 2** **e q** **/ m** **m B** **t u** **)** Thermal High

Thermal Low CH4:&N2O CO2*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 755 of 850 The first two bars of Figure XI
- 1 show that based solely on CO 2 tailpipe emissions (with and without thermal efficiency adjustments and assuming no increased methane emissions at the truck), CNG trucks are estimated to emit about 20 percent less GHG emissions than diesel engines. But this advantage decreases if the natural gas engine is less thermally efficient. The three full lifecycle anal ys es represented b y the right three bars in the figure show that pre
- 2014 CNG trucks are estimated to emit less GHG emissions as diesel trucks, although if their thermal efficiency is much lower (15 percent less than the diesel fueled engine) they could emit about the same GHG emissions. When such trucks are complying with the 2014 and later methane emission standards, their methane emissions are much lower and these trucks are expected to be lower emitting than die sels, even if they are less thermally

efficient. The second scenario presented in Figure X1
- 2 is a combination LNG truck which in one case is assumed to be emitting methane at pre
- 2014 emission standards and in another case is assumed to comply

with the 2 014 methane standard. It is an OEM natural gas truck with a high pressure direct injection engine, and because of the extensive mileage, the truck most realistically would use LNG as a fuel to provide the necessary range for the dedicated natural gas engi ne. We make two different assumptions with respect to refueling and boil off emissions. In the L NG average case, we assume a modest quantity of refueling and boil
- off methane emissions which is estimated by

GREET. The second boil
- off emission estimate ( assumed to be complying with the 2014 methane emission standard) is based on venting the LNG storage tank to the atmosphere each time the driver refills his tank, and one LNG boil
- off event between each time the driver must refuel his tank. As discussed a bove, we do not expect such high refueling and boil
- off emissions to be common practices for newer trucks that are operated regularl y. However, as the use of these trucks decreases as they age and are sold into the secondary market, the risk for refueling and boil
- off emission events increases

– this estimate provides a simple sensitivity

emission estimate. The lifecycle assessment is shown in Figure XI
- 2.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 756 of 850 **Figure XI**  **- 2**  **Full Life Cycle Analysis (except**  **tailpipe only em issions) o**  **f an**  **LNG Truck (Projected Upstream** **Methane Emissions in 2025, Low and High Refueling and Boil -**  **Off Em issions,**  **Me thane GWP of 25)**  0 20,000 40,000 60,000 80,000 100,000 120,000 140,000**E m** **i s** **s i** **o n** **s (** **g C** **O 2** **e q** **/ m** **m B** **t u** **)**

Thermal High Thermal Low CH4:&N2O CO2*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 757 of 850 Figure XI
- 2 shows that LNG trucks have about the same greenhouse gas footprint as diesel trucks providing that they are complying with the methane emission standard and providing we assume a low quantity of refueling and boil
- off emissions. In comparing CNG to LNG, the LNG trucks appear higher emitting than CNG trucks because of the low thermal efficiency of the small liquefaction facilities. If these LNG trucks emit high levels of methane when refu eling and b y experiencing boil
- off events or if they emit methane at pre
- 2014 emission standard levels, their GHG emissions can potentially be much greater than that from diesel trucks. It is important to point out the uncertainties associated with the lif ecycle estimates provided in the above figures. As discussed above, there is uncertainty in both the upstream and downstream methane emission estimates for natural gas facilities and equipment, and the trucks that consume natural gas. There is also uncer tainty in the diesel fuel lifecycle anal ys is conducted by NETL. As new information becomes available, we can update our lifecycle emission estimates which would reduce the uncertainty of this analysis. A number of studies are being conducted to quantify the methane emissions (upstream and downstream) and life cycle impacts of natural gas b y the Environmental Defense Fund (EDF). The final reports for these studies have not yet been released but we will review them once they are available. Finally, the li fecycle anal ys is is sensitive to the GWP factor used to assess methane and nitrous oxide, and if a different GWP value were to be used, it would affect the relative lifecycle impact of natural gas relative to diesel in heavy
- dut y trucks (see Chapter 13 of the draft RIA for sensitivity anal ys es regarding upstream methane emissions and the use of different GWP factors). We compared our lifecycle emission estimates for natural gas, relative to diesel fuel, with the estimates provided by the California Air Reso urces Board (CARB) for its L ow Carbon Fuel Standard (LCFS). For our emissions estimate used in the comparison we used the carbon dioxide
- equivalent ( CO 2 eq) emissions estimated for 2014 and later engines, which must comply with a methane tailpipe emissions standard, and assumed that the engine was 5 percent less thermally efficient than a comparable diesel engine. For the CARB emissions estimates, we used the estimates made for illustrative purposes using the 2013 version of the CARB GREET model a s published in August, 2014. 820 821 CARB estimates that CNG engines emit 76 percent of the CO 2 eq emissions as a diesel truck, while our analysis estimates that CNG engines emit 81 percent of the CO 2 eq emissions as a diesel truck. The most likely e xplanation for CARB’s lower estimated CO 2 eq emissions for CNG engines is that a much larger portion of the electricity used to compress natural gas is renewable in California than the rest of the country.

820 Lo w Carbon Fuel Standard Reconsideration: CA
- GREET Model Update, California Air Resources Board, August 22, 2014. 821 Per Anthy Alexiades of CARB: CARB is planning to propose a new draft lifecycle analysis for CNG and LNG trucks at an April 2015 public meeting. While the CNG lifecycle GHG emissions are expected to be about the same, the LNG lifecycle emissions are expected to be lower based on using a 90% efficiency for liquefaction plants instead of the 80% efficiency that CARB was using previously. Lifecycle emissions for both CNG and LNG trucks will be adjusted to be 10% higher if using a spark ignition engine to account for their lower thermal efficiency. These estimates are solely for hypothetical analyses. LCFS credits are awarded based on GHG emissions for each specific application.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 758 of 850 CARB estimates LNG engines emit 94.5 percent of the CO 2 eq emissions as a diesel truck while our anal ys is estimates LNG trucks emit 96 percent of the CO 2 eq emissions as a diesel truck. CARB assumes no boil
- off or venting emissions for LNG trucks and for this comparison, we used our more modest boil
- off and venting assumption, as described above, which is close to CARB’s. Overall, our estimates are very similar to those estimated by CARB and when there are differences, the differences are as expected. A UC Davis report recently released e stimated that CNG and LNG trucks using spark ignition engines (SING) emit about the same amount of CO 2 - equivalent emissions, and these emissions are slightl y higher than that of diesel engines. 822 The HPDI engines (DING) fueled b y LNG are estimated to be the lowest emitting of the several scenarios anal yz ed by the study
. Because the study did not discuss vehicle boil
- off emissions, it is likely that the study

either assumed that these emissions are zero or assumed the default vehicle boil
- off emission esti mates made b y GREET. It is likely that the study assumed that the liquefaction plants are 90 percent efficient as this is the default assumption in GREET, which leads to lower GHG emissions by LNG trucks. 

### C. **Projected Use of LNG and CNG** We reviewed several s ources to estimate how much natural gas is currentl y being used and is projected to be used by heavy
- dut y trucks. Projections for this emerging technology range from 7 percent of new heavy
- duty vehicle sales to over 40 percent by 2040. L arge uncertaintie s exist even since the 2014 NAS First Report was written. 823 Among the range of projections we assessed, that produced by the Energy Information Administration (EIA) seemed the most credible for capturing recent trends, and for projecting future natural gas use by heavy
- dut y trucks. There are several factors that support this assessment. First, i n its 2014 Annual Energy Outlook, EIA estimates that natural gas fueled 0.4 percent of the energy

use of heav y - dut y trucks in 2014. This estimate is consistent with the fraction of the heavy
- duty fleet which is fueled by natural gas as estimated by the industry
. 824 Conversel y, other studies referenced b y the NAS report assume that current use is already about 2 percent (the DRIA contains more discussion about these other projections). Second, the EIA projection is based on an economic anal ys is which considers the increased cost of manufacturing a natural gas truck over a diesel truck, the fuel savings for using natural gas instead of diesel fuel, and whether the pay back time of the fuel savings against the increased truck cost would result in purchases of natural gas trucks. As part of this analy sis, EIA assumes that lighter heavy
- dut y trucks would use CNG , which is a lower cost technology suited for the shorter driving distances for these trucks. The long haul trucks, however, require larger

822 Jaffe, Amy Myers, Exploring the role of Natural Gas in U.S. Trucking, NextSTEPS Program, UC Davis Institute of Transportation Studies, February 18, 2015. 823 B. Tita, Slow

Going for Natural
- Gas Powered Trucks; Wall Street Journal, 8/26/2014 824 NGV America estimates that there are 62,000 natural gas fueled heavy
- duty trucks and buses oper ating in the U.S. out of a total of 12.3million heavy
- duty trucks and buses operating in the U.S., which equates to 0.5%.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 759 of 850 on - board stores of fuel to extend the driving range which is satisfied by storing the natural gas as a liquid. L

NG has about 60 percent of the energy density of diesel fuel, compared to CNG which has only 25 percent of the energy

density of diesel fuel. To satisfy the long driving range of the long haul trucks, EIA assumed that they would use LNG as a fuel. The assumptions used by EIA for conducting its economic anal ys is all seem reasonable. Third, EIA is one of the several organizations in the world which collects fuel pricing data and projects future fuel prices using a sophisticated modeling platform. One of the most important assumption s in projecting the future use of natural gas in the transportation sector is the relative price of natural gas to the price of diesel fuel. In 2014, the natural gas price purchased b y industrial users was about $6 per million BTU. The price of crude oil has been volatile during 2014 as the Brent crude oil price started at about $110 per barrel, but decreased to under $ 5 0 per barrel. From EIA’s website, the average retail diesel fuel price in the first part of 2014 was about $3.80 cents per gallon . When comparing the natural gas spot market price on a diesel equivalent basis to the diesel fuel price, it appears that natural gas is priced about one quarter of the diesel fuel price. However, if used as compressed natural gas, the natural gas must be distributed through smaller distribution pipeline sy stem that exist s in cities, which increases the price of the natural gas. Then the natural gas must be compressed and stored at a retail outlet, and then dispensed to CNG trucks. The estimated r etail price of CNG is $2.35 on a diesel gallon equivalent (DGE) basis, or about $1.45 DGE less than diesel fuel . LNG plants are assumed to be located close to large transmission pipelines away from cities, thus, it is sourced from lower cost natural gas. However, for producing LNG, the natural gas must be liquefied, shipped to retail outlets, stored and then dispensed to L NG trucks. These steps add substantially to the price of the LNG and the estimated retail price of LNG is $2.65 DGE, or $1.15 DGE less than diesel fuel. In its 2014 AEO projections, EIA estimates that crude oil prices in the upcoming years will decline modestly until after 2020 when they start increasing until they reach $140/bbl in 2040. Natural gas prices are expected to onl y slightly increase over this period. Fifth, the assumptions regarding pay back used b y EIA seemed reasonable. EIA projects that natural gas trucks begin to be purchased when the pay back times are 4 years or less based on a survey conducted by

the American Truckin g Association. This is consistent with conversations the agencies have had with some fleet owners. Since EIA does not report the pay back times as an output of its projections, it is useful to understand pay back times. The 2014 NAS Phase 2 First Report c ites the payback for the extra cost of natural gas trucks as 2 years, but other sources report a longer return closer to 4 years. 825 EPA assessed the time required for the lower fuel cost of CNG and LNG to payback the incremental truck cost of using LNG an d CNG. The CNG tank plus fuel weighs on the order of four times as much as the diesel counterpart, and typically adds $40,000
- $50,000 to the cost of a heav y - dut y truck. In 2014, we estimated the payback time to be over 5 years when we assessed

825 Early LNG Adopters Experience Mixed Results; Truck News, October 1, 2013*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 760 of 850 the pay b ack at the higher crude oil prices at the beginning of the ye ar . The pay back rates would be even higher if we would have assessed the pay back rates at the end of the year when the crude oil prices were much lower. However, for man y fleets, even the pay ba ck rates at the higher crude oil prices would not be sufficientl y attractive, and generall y explains the low penetration of natural gas in the heav y - duty sector today . It appears that when the payoff time is longer than 4 ye ars, few fleets are interest ed in purchasing natural gas trucks without subsidies to compensate for the higher purchase price of natural gas trucks. According to EIA, half the natural gas consumption by

cars and trucks is in California , a state that subsidizes the purchase price of natural gas vehicles, and also subsidizes the cost of natural gas dispensing stations. The L ow C arbon F uel S tandard in place in California also incentivizes natural gas use because natural gas is considered to cause less of an impact on the climate than petroleum
- based gasoline and diesel fuel. 826 The majority of the other half of the NG fleet resides in states which subsidize the cost of using natural gas b y m otor vehicles. Based on the EIA projections for crude oil and natural gas p rices , the payoff time of LNG trucks is expected to remain long (more than 5 ye ars) until sometime after 2020 when crude oil prices are projected to begin increasing. T hus, natural gas use b y heav y - duty trucks is not projected by

EIA to increase above 1 p ercent of the heav y - dut y fuel demand until after 2025
. If the apparent pay

back time for CNG and LNG trucks use is favorable to fleet owners, fuel availability could still slow the transition to CNG and LNG. This is because CNG and LNG availability

at serv ice stations is currently 1 percent or less of the availability of gasoline and diesel fuel and therefore not available for most fleets . L NG availability is particularl y challenging because in addition to an L NG service station, a LNG liquefaction plant w ould be needed as well. To the extent that natural gas displaces diesel fuel and impacts truck greenhouse gas emissions, either positive or negative, there would be little impact on overall greenhouse gas emissions because of the low natural gas truck sales that are expected to occur over the next decade. The low natural gas use b y the heav y - duty sector during the Phase 2 timeframe will give us time to learn more about both upstream and downstream methane emissions to gain a better understanding of the l ifecycle impacts of natural gas use by heav y - dut y trucks. It will allow us more time to consider the best additional steps to take to further reduce upstream and downstream methane emissions to improve the lifecycle impacts of natural gas use b y heav y duty trucks should the heavy duty truck fleet begin consuming natural gas in much larger quantities.

826 CARB currently estimates for the LCFS that CNG and LNG trucks reduce GHG
- equivalent emissions by 32% and 17%, respectively, compared to gasoline and diesel fuel. In August 2014, CARB proposed reducing the GHG
equivalent benefit of CNG and LNG trucks to 22% and 3%, respectively, compared to gasoline and diesel fuel.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 761 of 850 

### D. **Natural Gas Emission Control Measures** As interest in the potential use of natural gas as a heav y - dut y fuel has increased, industry has begun to investigate h ow to improve the overall emission performance of natural gas vehicles, especiall y with respect to reducing methane leaks. EPA is proposing two control measures which are discussed in Section XI. There are additional items discussed in Section XI
. D. (2) on which we request comment. Included in this list are several control options. **(1) Proposed Control Measures**  As is discussed earlier in this preamble in Sections II an d XIII. EPA is proposing some control measures to reduce potential methane emissions from natural gas vehicles. These are summarized here. Note that since these controls are being proposed to address GHG emissions rather than fuel consumption, NHTSA is n ot proposing equivalent requirements. (a ) Proposed Closed Crankcase Requirement for NG Fueled Engines and Vehicles EPA is proposing to require that all natural gas engines have closed crankcases, rather than continuing the provision that allows compression
- ignition engines to separately measure and account for crankcase emissions that are vented to the atmosphere. This allowance has historically

been in place to account for the technical limitations related to recirculating crankcase gases with high PM emissi ons back into the engine’s air intake. Natural gas engines have inherently

low PM emissions, so there is no technological limitation that would prevent manufacturers from closing the crankcase and recirculating all crankcase gases into the engine’s air intake. The methane standard that was introduced in Phase 1 of this rule accounts for crankcase emissions, but when the s ys tem is sealed and emissions are routed to the engine intake, those emissions will be considered in determining the deterioration facto r. See the Preamble Section II. D. for a description of the proposed closed crankcase requirement for natural gas fueled engines. This requirement would apply to the manufacturer responsible for criteria emission compliance: the vehicle manufacturer for complete pickups and vans, and the engine manufacturers for all other vehicles. (b ) Proposal to Require 5 Day Hold Time for LNG vehicles Boil
- off emissions from LNG vehicles were not addressed in the Phase 1 rulemaking. As more testing has been done in this area since that time for this rising issue, a s described in the Preamble Section XII , EPA is proposing to require manufacturers to follow current industry recommended practice , SAE J2343 for five day hold time to limit boil
- off emissions from L NG vehicles
. The specifications of this safety related standard has an effect which helps new LNG vehicl es prevent boil
- off

. This SAE standard will only affect new LNG vehicles. It will not*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 762 of 850 address aging vehicles as their insulating properties diminish such as loosing vacuum over time and may eventually

result in much shorter hold times
. 827 EPA proposes to r equire the certificate holder for the chassis to also compl y with the proposed requirements for LNG fuel sy stems, but to apply the delegated assembly

and secondary manufacturer allowances for these requirements. We request comment on this approach general ly , as well as on:

 The need for additional requirements for manufacturers not holding certificates, such as requiring that fuel sy stem manufacturers participate in recalls for defects in their components.  The appropriateness of requiring or allowing sep arate certification of fuel systems (or similar provisions) where they are installed by manufacturers not holding the certificate for the chassis with respect to CO 2 and fuel consumption. **(2) Additional Natural Gas Topics for Comment**  In this section we request comment on several additional areas related to potential regulatory

requirements for natural gas fueled vehicles. See Chapter 13 of the Draft RIA for additional details on these topics
. (a ) Requ est for Comment on Changing Global W arming Potential Values in the Credit Program for CH 4 (see also Preamble Section II.(D)(5)(b)) T he phase 1 heav y - dut y vehicle rulemaking establishing greenhouse gas emission standards included a compliance alternative allowing heavy
- dut y manufacturers and conversion companies to comply

with the respective methane or nitrous oxide standards by means of over
complying with CO 2 standards (40 CFR 85.525 (ii)). The heav y - dut y rules allow averaging only between vehicles or engines of the same designated ty pe (referred to as an “averaging set” in the rules)
. Specifically , the phase 1 heavy
- duty rulemaking added a CO 2 credits program which allowed heav y - duty manufacturers to average and bank pollutant emissions to comply with the methane and nitrous oxide requirements after adju sting the CO 2 emission credits (generated from the same averaging set) based on the relative GHG equivalents. To establish the GHG equivalents used by the CO 2 credits program, the phase 1 heav y - duty vehicle rulemaking incorporated the IPCC Fourth Assessm ent Report global warming potential (GWP) values of 25 for CH 4 and 298 for N 2 O , which are assessed over a 100 year lifetime. Since the Phase 1 rule was finalized, a new IPCC report has been released (the Fifth Assessment Report), with new GWP estimates. This is prompting us to look again at the relative CO 2 equivalency of methane and to seek comment on whether the methane GWP u sed to esta blish the GHG equivalency value for the CO 2 Credit program should be updated to those

827 The LNG storage tanks achieve some of their insulating properties due to a vacuum created between the two walls of the double
- wa lled LNG storage tank.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 763 of 850 established by

IPCC in its Fifth Assessment Report. The Fifth Assessment Report provides four 100 year GWPs for methane ranging from 28 to 36 . Therefore, we not only request comment on whether to update the GWP for methane to that of the Fifth Assessment Report, but also on which value to use from this report. (b ) Request for Comment on Appropriate Deterioration Factors for NG Tailpipe Emissions The current assi gned deterioration factors for CO 2 , N 2 O , and CH 4 are based on diesel technology . While EPA still believes this is likely appropriate, we would welcome data to support this policy

or other comments on how appropriate these factors are applied to NG engines and vehicles. (c) Request for Comment on LNG Vehicle Boil

- Off Warning System A simple means to help limit boil
- off emissions would be to require that natural gas truck drivers be alerted to expected near
- future boil
- off events. Such an alert could be in the form of a warning light and associated audible alarm that would indicate that the LNG storage tank is approaching a pressure which would require the tank to vent. Knowing this, the truck driver could take action to prevent such a release, such as startin g to drive the vehicle, which likely would reduce the pressure in the tank, or connecting the vent line to either a LNG storage tank or natural gas pipeline for venting. EPA requests comment on the feasibility and appropriateness of a regulatory requirement that LNG fueled vehicles include a warning s ys tem that would notify

the driver of a pending boil
- off event as one means reduce the frequency of such events and thus limit the release of methane
. (d ) Request for Comment on Extending the 5 Day Hold Time for LNG Vehicles The specifications of the proposed 5 Day Hold Time SAE 2343 safet y related standard will only affect new LNG vehicles to prevent boil
- off initially and does not address aging vehicles as their insulating properti es diminish such as loosing vacuum over time that may eventuall y result in much shorter hold times
. LN G tank manufacturers are further developing their technologies for improvement of hold times and reducing boil
- off from L NG storage tanks on trucks. Thes e improvements can be incorporated by requiring longer hold times. EPA is soliciting comment on the ability of these emerging technologies to address an extension of 5 day s to a longer period of time such as 10 day s and the ability to achieve the hold times for the duration of the vehicle’s useful life. (e) Capturing and/or Converting M ethane R efueling or B oil

- off E missions We would like input on how effective and feasible the following potential emissions control technologies are for achieving longer hold times in L NG vehicles. A methane canister using adsorbents such as ANG (adsorbed natural gas) c ould be added to capture the methane which otherwise would be released to the environment during a refueling or boil
- off event. Once captured, steps could be taken to route the methane to the engine intake once the vehicle is operating again, or to take s teps to converting the methane to less GHG
potent CO 2 .*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 764 of 850 Instead of discharging methane to the environment, the methane potentially could be burned to CO 2 using a burner. Another potential option would be to convert the methane capture in a canister to CO 2 over a catal ys t. (f ) Request for Comment on Reducing Refueling Emissions When refueling a natural gas vehicle, methane is vented to the atmosphere. As of Tier 3 it is required b y EPA to use the ANSI
-NGV1
- 206 standard practice to meet the evaporative emissio ns refueling requirement. Small puffs of up to 200 cc/hr (which equates to 72 grams of methane per hour) of leakage are allowed with these tests. Often there is a vent line which carries these puffs away

from the nozzle interface for safety reasons but is then vented to the atmosphere. EPA is requesting comment on way s to eliminate or reduce these losses. If there must be allowances for losses, then how can this methane gas be captured during refueling using sy stems that route methane emissions back to the fuel storage tank, whether it is a CNG tank, a CNG pipeline or re
- liquefying s ys tem for LNG. For LNG, i n addition to the boil
- off issue is the recurrence of manual venting at refueling b y truck operators. Under high pressure circumstances, such as when the vehicle has been sitting for some time period in warmer temperatures, i t is necessary to decrease the pressure in the fuel tank before new fuel can enter the tank. The recommended practice is to transfer the extra vaporized fuel to the gas station or natural gas pipeline, but this can take extra time. In some areas i t has turned into common practice to just vent to the atmosphere to keep the down time at the refueling station to a minimum. In other areas there is an incentive to reroute the gas into the station storage tank or natural gas pipeline with credit towards the fuel purchase. EPA is requesting comment on approaches to reduce refueling emissions for LNG vehicles. (g ) On
- board Monitoring Requirements for Boil

- Off Events and Venting at Refueling Onboard diagnostics for engines used in vehicle applications greater than 14,000 lbs GVWR are already required to detect and provide a warning for when methane leaks occur due to wear of connections and components of the CNG or LNG fuel s ys tem (74 FR 8310 February 24, 2009). We are requesting comments on requiring on
- board monitoring to track boil
- off events as well as whether the excess vapors were properl y vented to the station storage tanks or NG pipeline, or whether the gaseous methane emissions were vented to atmosphere during refueling events. Each boil off event has the potential to release on the order of 5,300

– 15,800 grams of CH 4 which translates to 132K

– 400K grams CO 2 equivalent with a GWP of 25 for 100 ye ars. (h ) Separate Standards for Natural Gas Vehicles As described above, the climate impact of leaks and other methane emissions that occur upstream of the vehicle can potentially be large enough to more than offset the CO 2 benefit of natural gas vehicles as measured at the vehicle tailpipe. EP A is considering separate action to control these upstream emissions. Nevertheless, we have some concern that the impact of upstream emissions for natural gas much higher than for gasoline or diesel fuel because of the high Global Warming Potential (GWP) for methane that makes even small leaks of natural gas of concern. In this way , natural gas is very different than other alternative fuels.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 765 of 850 While we are not proposing an y provisions to address this, we may consider adopting such provisions in the final rule and are asking for comments on this topic. Would it be appropriate to adjust the tailpipe GHG emission standard for natural gas vehicles by a factor to reflect the life cycle emissions of natural gas vehicles relative to diesel vehicles? For example , if we were to determine that the life
- cycle climate impacts of natural gas vehicles were 150 percent of the tailpipe GHG emissions, while the life
- cycle climate impacts of diesel vehicles were 135 percent of the tailpipe GHG emissions, we could approximate the relative climate impacts by setting the natural gas tailpipe emission standard 10 percent lower than the diesel tailpipe standard. We recognize that there is significant uncertainty is assessing these relative climate impacts, and that they

could c hange as new production methods and/or regulations go into effect. Thus commenters supporting making such an adjustment are encouraged to address this uncertainty. Commenters are also encouraged to address how such an adjustment for GHG emissions would i mpact the closel y coordinated EPA and NHTSA heav y - duty Phase 2 program including how a potential adjustment for upstream methane emissions for natural gas fueled vehicles would impact the coordination of EPA GHG regulations with the NHTSA fuel consumption regulations. 

### E. **Dimethyl Ether** Although NAS (2014) focused its recommendations on natural gas, it also discussed dimethyl ether (DME), which is a potential heav y - duty truck fuel sourced from natural gas. Dimethyl ether has a high cetane number (more than 55) , although its energy density is about 60 percent of that of diesel fuel. Dimethyl ether is a volatile fuel, like liquid petroleum gas, that can be stored as a liquid at normal ambient temperatures under moderate pressure. Ty pical DME fuel tanks would be designed to prevent an y significant evaporative emissions. A DME fueled truck is only modestly more expensive than a diesel fuel truck. The fuel tank is more expensive than a diesel fuel tank, but much less expensive than an LNG tank since it does not ne ed to be heavily insulated. The engine modifications to enable using DME are also modest. Because DME does not have carbon
- carbon bonds that form particulate matter particles during combustion, the particulate filter, which is standard equipment on new diesel trucks, can be eliminated. This offsets some of the engine and fuel tank costs. Although DME is sourced from cheap natural gas, the conversion of natural gas to DME and moving the fuel to retail outlets greatly increases the cost of the fuel. DME i s more expensive than L

NG, but still lower in cost than diesel fuel based on the fuel prices in earl y 2014. DME is estimated to cost $3.50/ DGE, or $0.30 DGE less than diesel fuel. Because there is very

little DME use in the U.S. (there is onl y a very s mall fleet of trucks in California), we did not conduct a lifecycle assessment of DME, but note here a few aspects of a lifecycle anal ys is for DME. First, since DME is sourced from natural gas, the upstream methane emissions from the natural gas industry would still be allocated to DME. Second, there are not venting issues associated with DME as with L NG or CNG refueling. Third, DME itself has a much lower global warming potential than methane. DME ’s global warming potential is estimated to be 0.3 when assessed over a 100 ye ar lifetime, which is about 1 percent of methane’s GWP
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 766 of 850*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 767 of 850 

## XII. **Agencies’**

**Response to Recommendations fr om** **the National Academ** **y of Sciences**  **A. Overview**  As part of the Phase 1 standards, the agencies were informed b y a report generated b y the National Academ y of Sciences (NAS), as required by Congress in EISA. 828 In addition to that initial report, Section 107 of EI SA requires that the rep ort be updated in five year intervals through 2025. 829 On September 24, 2016, NAS will release its updated report under Congress’ quinquennial update requirement. However, because the Phase 2 rule s will be completed prior to the issuance of the first update, NAS issued an interim report in the form of a First Report (NAS HD Phase 2 First Report) published on April 3, 2014. 830 The agencies have consulted the report and considered its findings in creat ing this proposal. The National Research Council formed the Committee on Technologies and Approaches for Reducing the Fuel Consumption of Medium
and Heav y - Dut y Vehicles, Phase Two (the Committee or NAS Committee) in order to prepare the NAS HD Phase 2 Fi rst Report. In its Phase 2 First Report, the Committee seeks to advise NHTSA on the HD Phase 2 rule s while meeting the agencies’ objectives of:

 Reducing in
- use emissions of carbon dioxide from medium
- and heav y - duty vehicles  Reducing in
- use emissions of other GHGs from medium
- and heav y - duty vehicles  Improving the in
- use efficiency of fuel use in medium
- and heav y - dut y vehicles

— by driving innovation, advancement, adoption, and in
- use balance of technology through regulation In providing the First Repo rt recommendations, the committee acknowledged the following constraints:

 Holding life
- cycle cost of technology change or technology

addition to an acceptable level  Holding capital cost of acquiring required new technology to an acceptable level  Acknowledg ing the importance of employing a balance of energy resources that offers national security  Avoiding near
- term, precipitous regulatory changes that are disruptive to commercial planning

828 Energy Independence and Security Act of 2007, Pub. L. No. 110
- 140, §108(a). 829 EISA further states that the NAS must submit the report to DOT, the Senate Committee on Commerce, Science, and Transportation, and the House Committee on Energy and Commerce not later than one year after the date on which the Secretary executed the agreem ent with the NAS. 830 Transportation Research Board 2014. “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium
- and Heavy
- Duty Vehicles, Phase Two.” (“Phase 2 First Report”) Washington, D.C., The National Academies Press. Cooperative Agre ement DTNH22
- 12
- 00389. Available electronically from the National Academy Press Website at http://www.nap.edu/catalog.php?record_id=12845 (last accessed December 2, 2014).*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 768 of 850  Ensuring that the vehicles offered for sale remain suited to their int ended purposes and meet user requirements  Ensuring that the process used to demonstrate compliance is accurate, efficient, and not excessively

burdensome  Not eroding control of criteria pollutants or unregulated species that may have health effects Although the Phase 2 First Report was developed and written in terms of reducing fuel consumption, its findings and recommendations in general apply equall y to a program that reduces GHG emissions, given the close relationship between the two. 

### B. **Major Findings a nd Recommendations of the NAS Phase 2 First Report**  While the agencies have addressed many NAS recommendations as they pertain to individual areas of the Phase 2 standards, this section consolidates all of the recommendations from the NAS HD Phase 2 First R eport and discusses the extent to which the agencies’ proposed program is consistent with them. The NAS HD Phase 2 First Report contains more than 40 recommendations to the agencies. All of the Committee’s recommendations have been considered, and man y o f them have been incorporated in the Phase 2 standards. In some instances, the agencies have chosen a different course from the one charted by the NAS Committee’s recommendations. Instead of discussing the NAS report findings and recommendations in the order presented in the Phase 2 First Report itself, this section divides the NAS findings and recommendations in three categories: findings and recommendations with which (1) the Phase 2 standards are consistent; (2) the Phase 2 Standards are significantl y inconsistent; and (3) the Phase 2 standards are less
- significantly inconsistent. **(1) NAS Findings and Recommendations with which Phase 2 Standards**  **a re**  **Consistent** (a ) How Should the Agencies Address Standards for Trailers in the Phase 2 Rulemaking? Given the exclusion of trailers from the Phase 1 standards, the Committee focused on a wide array

of opportunities by

which the agencies could reduce fuel consumption and GHG emissions. The Committee evaluated potential fuel consumption
- and GHG
- reducing technolog ies that can be incorporated on a trailer as well as components of a trailer, such as tire
related technologies. The Committee found that many opportunities exist for trailers to reduce fuel consumption and GHG emissions of the pulling tractor. More spe cifically , the Committee evaluated trailer aerodyn amics, tire rolling resistance, and tire pressure monitoring s ys tems.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 769 of 850 Despite the fuel consumption
- and GHG
- reducing possibilities of the trailer technologies the Committee evaluated, a survey it conducte d found that only 40 percent of new van trailers came equipped with fuel
- saving aerodyn amic devices. 831 Further, the Committee found that most trailer devices on average, within one year, saved enough in fuel cost to pay for the added cost of the device. T he Committee observed that when a trailer is not owned by the tractor operator, there is no incentive for the trailer owner to purchase fuel
- saving devices. Moreover, the Committee stated that in absence of regulation, many trailer owners do not choose to employ fuel saving devices. The Committee recommended that NHTSA, in coordination with EPA, adopt a regulation requiring that all 53 foot and longer dry van and refrigerated van trailers meet performance standards that reduce fuel consumption and GHG em issions. 832 Italso recommended that NHTSA assess the benefit of using GEM to address all tractors in combination with trailers. 833 The Committee also recommended the agencies collect real
- world data on fleet use of aerodynamic trailers to help inform standards. 834 As discussed in more detail in Section IV, the agencies are proposing to adopt Phase 2 standards for all new dry

van and refrigerated van trailers, including both those above and below 53 feet in length. The agencies have carefull y evaluated the lead time for implementation of this potential program to take into consideration factors such as existing market conditions and the fact that a regulation of new trailers will include companies that have not previously been regulated for fuel consumption and GHG e missions. To the degree that it is available, the agencies are gathering data on real world fleet use of aerodyn amic devices, both to understand the overall context of the rule s and for specific analy tical purposes such as the appropriate role of aero dy namic devices on the reference trailer used for tractor aerody namic assessment. The agencies have also assessed the benefit of using GEM to address all tractors in combination with trailers and are proposing that, for the long
- term program, GEM be used to demonstrate compliance with both the tractor and the trailer requirements of the Phase 2 program. In addition to the Committee’s recommendation that NHTSA and EPA regulate 53 foot and longer box trailers, the Committee recommended that NHTSA and EPA ass ess the practicability and cost
- effectiveness of including pups, flat
- beds, and container chassis. 835 The Committee found that pups, flat
- beds, and container chassis demonstrated fuel savings, however, factors such as average speed, mileage, and practical c oncerns such as access to equipment underneath the trailer needed to be assessed. 836 The agencies have evaluated whether it would be practical and cost effective to include pups (in tandem or separately), other box trailers of lengths between that of pups and standard

831 See Note [2] at 38. 832 Id. , Recommendation 6.1. 833 Id ., Recommendation 3.12. 834 Id ., Recommendation 6.1. 835 Id ., 6.2. 836 Id. at 83.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 770 of 850 53
- foot trailers, flatbeds, container chassis (with and without containers attached), tankers, and other trailer types in the Phase 2 regulation. As a result of this anal ys is, the agencies are proposing to include pups as well as box vans be tween 28 feet and 53 feet long in Phase 2. With regard to other ty

pes of trailers, such as tankers, flatbeds, and container chassis, the agencies have evaluated issues such as trailer plumbing, flat bed ground clearance, chassis stacking, trailer duty cyc les, cost of technologies, and other issues. The agencies are proposing that these and other non
- box trailers be included in Phase 2 requirements. However the agencies are assuming compliance with the Phase 2 program for these non
- box trailers will be li mited to tire technologies. Finally , the Committee examined the use of GEM for tractor and trailer compliance. It asserted that tractors and trailers are fundamentally inseparable when addressing aerodynamic drag and design. As applied to GEM simulat ion, the Committee opined that considering tractors and trailers separately

for simulation purposes might prove counterproductive, because components on a tractor and trailer might compromise aerodynamic optimization. The Committee recommended that NHTSA assess the benefit of using GEM to address all tractors in combination with trailers. 837 As stated above, the agencies have assessed the benefit of using GEM to address all tractors in combination with trailers and are proposing to use GEM for both tractors and trailers for the Phase 2 program for tractors and trailers, similar to what was done in Phase 1. In Phase 1, which did not regulate trailers, this meant simulating each tractor being certified as being used in combination with a standard reference trailer. For th ese rule s , we are proposing to simulate each trailer being certified as being used in combination with a standard reference tractor. (b ) Have the Agencies Revisited Dieselization of Class 2b Through 7 Vehicles? The Committee reiterated a recommendation from its Phase 1 report regarding the study of dieselization of Class 2b through 7 vehicles. 838 The Committee stated that diesel engines present an opportunity

for incremental fuel efficiency gains. The NAS Committee recommended that NHTSA conduct a study of Class 2b to 7 vehicles to consider the incremental fuel consumption reduction of diesels, the price of diesel versus gasoline, and the diesel advantage in durability
. 839 As part of the Phase 2 NPRM analy sis, the agencies evaluated many potential fuel efficiency and greenhouse gas reduction (FE/GHG) technologies for both gasoline and diesel fueled vehicles. As will be discussed in detail in later responses, NHTSA sponsored research at Southwest Research Institute (SwRI) included simul ations of baseline and projected Phase 2

837 Id . at 38, Recommendation 3.12. 838 Id . at 14
- 15. 839 Id
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 771 of 850 FE/GHG technologies for Class 2b through 7 vehicles over a range of appropriate duty cycles. 840 A HD pickup truck (Class 2b), the Dodge Ram 2500, was modeled using a 385
- hp 6.7
- liter diesel engine as the baseline. Th e vehicle’s baseline performance and the effectiveness of FE/GHG technologies with the diesel engine were compared over identical duty cycles to two gasoline engines, a 6.2
- liter naturall y aspirated gasoline V
- 8 and 3.5
- liter turbocharged direct injection V
- 6, with their corresponding engine technologies. Similarly , two medium
- duty trucks (Class 6), the Ford F
- 650 and Kenworth T
- 270, were modeled using a 300
- hp 6.7
- liter diesel engine as the baseline and compared to the two aforementioned medium
- duty V
- 8 and V
- 6 gasoline engines. Many of the diesel engine technologies evaluated in supporting Phase 2 research are currentl y available, proven, and on the path to increased penetration across the fleet. Other technologies are still in development and looking f or the opportunity

to enter the mainstream production lifecycle. For the latter, the agencies believe, as informed through the NPRM development research, that costs, reliability , durability , and clear user benefits are important when determining potential future technology applications to achieve attainable standards resulting in real
- world reductions. As identified in the proposal, the agencies considered these important factors when developing the proposed standards and, included in the anal ys is, are te chnologies that recognize the value of the current and future fleet dieselization. However, the agencies recognize that there are valid reasons for why medium and heavy
duty vehicle purchasers sometimes choose gasoline engines over diesels. Gasoline engin es are generall y lighter and less expensive than diesels, although they t ypicall y do not last as long in heav y - service. For applications in which the vehicle is not expected to travel many miles each ye ar, gasoline engines may be the best choice. On the other hand, for applications in which the vehicle is expected to travel many miles each year, diesels can be a more appropriate choice. (c) What Kind of Analyses are the Agencies Doing on Upstream Emissions Related to Natural Gas? The NAS Committee discussed the potential natural gas presents for reducing fuel consumption and GHG emissions in medium
- and heav y - dut y vehicles. The Committee stated that while tailpipe emissions are often the most observable instance of fuel consumption and tailpipe emissions, th e fuel production, distribution, and processing components of obtaining natural gas for use in vehicles also factors into any calculation of overall benefits derived from natural gas vehicles. 841 The Committee recommended that NHTSA, in coordination with EP A, begin to consider the well
- to - wheel, life
- cycle energy consumption and greenhouse emissions associated with different vehicle and energy technologies to ensure future rulemakings best accomplish their overall goals. 842

840 Reinhart, Thomas. (2015 , XXXXXX ). Commercial Medium
- and Heavy
- Duty (MD/HD) Truck Fuel Efficiency Technology Study

– Report #1. (Report No. DOT HS 8XX XXX). Program Reference: DOT Contract DTNH22
- 12
- F
- 00428. Contract Prime: Southwest Research Institute (SwRI). 841 Id . at 19
- 20. 842 Id . at 20, Recommendation 1.10.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 772 of 850 The agencies recognize that understanding the life
- cycle implications of vehicle and energy technologies is important to ensure that the rulemaking accomplishes its overall goals. In the Draft and Final Environmental Impact Statement (EI S) prepared for the 2017 and Later Model Year Light
- Duty

Vehicle GHG Emissions and CAFE Standards rulemaking, NHTSA introduced a literature s ynthesis of life
- cycle environmental impacts of certain vehicle materials and technologies. Consistent with that approach, in the Draft EI S for Phase 2, NHTSA has again provided a literature s ynthesis of life
- cycle environmental impacts, focusing on the unique vehicle technologies for the HD sector and incorporating b y reference the literature s ynthesis prepared for the MY 2017 and beyond CAFE Final EI S. The Draft EI S a lso uses the GREET fuel
- cycle model to assess upstream emissions from extraction, refining, and transportation of medium
- and heav y - duty vehicle fuels. This information in the Draft EIS informs both the agency and the public about the potential life
- cycle implications of the various technologies under consideration in this rulemaking. NHTSA invites comments on the Draft EIS and its literature s ynthesis of life
- cycle environmental impacts. EPA has also evaluated the lifecycle impact of heavy
- duty trucks be ing fueled with natural gas in comparison to other heav y - dut y trucks. This anal ys is is presented in Section XI along with a discussion of projections for future use of natural gas b y heav y - duty trucks. (d ) How Have the Agencies Evaluated Aerodynamic Testing Methods for the Phase 2 Program? With regard to aerodyn amic devices, the NAS Committee reviewed aerodynamic test procedures related to evaluating aerodynamic effectiveness. The Committee found that industry testing procedures can vary widely because of the precision of the standards themselves. 843 Further, the Committee found that fidelity of test results from coastdown procedures versus results from a powered on
- track test is not known. The Committee recommended that NHTSA and EPA evaluate the relati ve fidelities of the coast
- down procedure and candidate powered procedures to define and optimum prescribed full
- vehicle test procedure and process and validate the improved procedure against real world vehicle testing. 844 Italso recommended that NHTSA and EPA assess whether adding yaw loads provides significantly increased value to the Cd result. The Committee recommended providing updated test data to manufacturers to increase consumer confidence in the accuracy (and real
- world applicability) of the test ing measures as related to aerodynamic devices. 845 , 846 The agencies have undertaken a coordinated research program to inform the Phase 2 certification test procedure for aerodyn amic drag and tire rolling resistance. The U.S. EPA and its contractors have evaluated coastdown , constant speed, CFD, and scale wind tunnel testing for tractors and trailers. The goals of this research effort were to: assess variability between test methods; assess how yaw impacts aerody namic performance; evaluate correlat ion of different

843 Id . at 83
- 84. 844 Id
. at 84, Recommendation 6.3. 845 Id . at 36, Recommendation 3.5. 846 Id . at 84, Recommendation 6.3.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 773 of 850 test methods one to another; assess the impact of different tractor/trailer design attributes on the test results; examine how differences between manufacturers’ products impact aerody namics; and measure Cd improvements from a variety of a erodynamic devices in combination and alone. NHTSA and its contractors conducted simulation modeling to: evaluate aerody namic drag and tire rolling resistance improvements in combination with other vehicle and engine technologies, and determine the impact of different duty cycles on aerodynamic drag performance. Finall y, EPA has conducted an analy sis to determine whether or not adding yaw adjustments to the certification process improves the Cd result. As a result, the agencies are proposing to add yaw a djustments to the certification process for tractors. The agencies are disseminating the results of these test programs and conclusions at association meetings and public meetings such as SAE COMVEC. Through the research programs described above, the a gencies have evaluated aerodynamic data that better reflects real
- world experience. And, to the extent available, the agencies have collected aerodynamic performance data that reflect real
- world experience. This information has informed the Phase 2 propo sal. For example, in addition to the agencies are proposing to account for yaw in the aerodynamic assessment for Cd, we are also proposing changes to vehicle speeds used in the aerodyn amic reference test procedure to facilitate improved estimation of Cd. (e) What Kind of New Modeling Research has Been Conducted to Inform Phase 2? With a wide range of potential fuel consumption
- and GHG emissions reducing technologies, the NAS Committee found that it is proper to assess the various combinations of technologi es in real
- world testing and in modeling. The Committee recommended that NHTSA conduct detailed simulation modeling in addition to phy sical testing. 847 In September 2012, NHTSA contracted with the Southwest Research Institute (SwRI) to conduct research in support of the next phase of Federal fuel efficiency (FE) and GHG standards. 848 Tasks included determining the baseline fuel efficiency and emissions levels and technologies of current model year commercial medium
- and heav y - duty on
- highway vehicles and wo rk trucks, as well as projections of Phase 2 fuel efficiency and emission reduction technologies for diesel and gasoline powered vehicles. The scope encompassed technologies for chassis and final
- stage manufacturer vehicles and trailers, maintenance cost, material application, future design, capital investment, retail cost/pay back and an y other applicable advanced technologies. Estimates of the costs, fuel savings effectiveness, availability, and applicability of technologies were done for each individual vehicle class category (e.g., segment). Selection of FE/GHG technologies, engines, vehicles, drive
- cycles, etc. for the simulation modeling at SwRI was done in coordination with EPA, which had complimentary HD research programs involving vehicle road tes ting and engine dy namometer testing that informed the

847 Id . at 24, Recommendation 2.1. 848 Id.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 774 of 850 simulation efforts. The SwRIanal ys is relied on a technology list that was developed from recent NAS HD vehicle fuel consumption reports as well as an extensive literature review. Four base engines an d four vehicles spanning the class 2b to class 8 vehicle segments were selected for simulation. Experimental data was available from other projects for all of the vehicles and engines simulated, and full use of experimental data was made to calibrate the models before additional technologies were evaluated. SwRIused a vehicle simulation tool developed in
- house to model vehicle performance over a range of drive cycles. The commercial software GT
- POWER (Gamma Technologies, In c.) was used to model engine p erformance, fuel consumption, and CO 2 emissions over the full speed
- load range. Results of the agency
- sponsored simulation modeling at SwRIwill be issued in peer
- reviewed research reports. (f ) How has GEM been Modified by EPA? In its report, the NAS Committ ee focused man y of its recommendations on EPA’s GEM
. The Committee concentrated on what features could be incorporated into GEM in order to improve the model’s ability to provide outputs representative of real
- world use. More specificall y, the Co mmittee found that GEM output was unaffected by the actual use of a smaller or larger engine in the same subcategory because the engine map used by GEM is predefined. 849 The NAS Committee recommended that the agencies should assess whether a single steady - s tate speed
- torque map is sufficient for GEM accuracy in engine efficiency prediction. 850 EPA has evaluated this question and is modifying GEM to allow for different maps as an input. Additionally , the Committee emphasized that a certification test must be highl y accurate and repeatable. Itstated that the need to account for the close interaction of the engine with other components, including the aftertreatment subsy stem and transmission. 851 NAS recommended that the agencies allow powertrain testin g for certification. 852 As described in Section II, the agencies are doing so in conjunction with GEM. See the proposed provisions in 40 CFR1037.550 , which further discusses powertrain testing and certification
. More generall y, the NAS Committee recommended revising GEM to reflect the benefit of integrating an engines, aftertreatment, and transmissions and to cover as large a fraction of over - the
- road tractor operation as possible without becoming overl y cumbersome. 853 As described in Section II an d in Chapter 4 of the draft RIA, the agencies believe the proposed revisions to GEM reflect this.

849 Id . at 37. 850 Id
. , Recommendation 3.8. 851 Id . at 14. 852 Id, Recommendation 1.6. 853 Id . at 37, Recommendations 3.10, 3.11.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 775 of 850 (g ) What have the Agencies Done to Validate GEM Testing? The NAS Committee expressed concern over GEM’s ability to translate to real world reductions in fuel co nsumption and GHG emissions. In particular, the Committee found that GEM’s current certification procedures have limited unbound variables that can be user
specified and do not allow for s ynergy between components. 854 Moreover, the NAS Committee found that GEM does not allow for the operation of components in the most efficient way or efficiency that could be gained by

the operation of a component at a higher relative load, concluding that vehicle designs that are optimized for the conditions of the simulat ion might not be optimized in real world operation. 855 The Committee recommended that NHTSA conduct a real world evaluation to validate GEM inputs with the fuel consumption outputs. 856 Additionally , it recommended that EPA and NHTSA should assess whether a steady - state torque map is sufficient for GEM accuracy in engine efficiency

prediction. 857 Recently , EPA and NHTSA sponsored a technical workshop at the Southwest Research Institute (SwRI). At this workshop, SwRIpresented a multi
- ye ar research effort spo nsored by EPA to validate GEM . The development version of GEM incorporates several engine, transmission, driveline, and vehicle technologies being considered to meet FE and GHG standards for MD/HD vehicles. GEM (including the steady - state fuel map approach) was validated b y the agencies against over 130 test cases (multiple runs) of different size vehicles. See Section II of this notice and Chapter 4 of the draft RIA for further information about this validation work. (h ) Has NHTSA Considered No n - Vehicular Strategies to Reduce Fuel Consumption? In e xamining the broader picture of reducing fuel consumption, the NAS Committee found that there are opportunities to reduce fuel consumption in way s that that exceed NHTSA’s statutory authority. 858 The Co mmittee recommended that NHTSA work with and encourage EPA, DOE, and FHWA to reduce fuel consumption and GHG emissions by exploring non
vehicle approaches. 859 NHTSA is jointly

releasing this rulemaking with EPA, and has involved EPA as a co
drafter throu ghout the development of these rules . NHTSA has also worked with DOE, and has been in touch with FHWA about medium
- and heavy dut y fuel efficiency . While the majority of NHTSA’s work with these agencies has been vehicle
- related, NHTSA supports r esearch and development on nonvehicle methods to reduce fuel consumption.

854 Id . at 11. 855 Id
. 856 Id ., Recommendation 1.2. 857 Id . at 37, Recommendation 3.8. 858 Id . at 15. 859 Id ., Recommendation 1.9.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 776 of 850 **(2) NAS Findings and Recommendations with Which the Phase 2 Standards Are**  **Significantly Inconsistent and Why the Agencies Chose a Different Course** (a ) Should the Agencies Propose Separate Standards for Natural Gas Vehicles? The NAS Committee found that natural gas is a viable option to reduce fuel consumption and can also contribute to a reduction in GHG emissions, “unless additional findings of methane leakage alter this vision.” 860 Itnot ed that natural gas engines are well
- developed and are ready for use for medium
- and heav y - dut y vehicles, including Class 8 trucks. The Committee stated that while the load
- specific CO 2 emissions from natural gas engines are less than a comparable diesel engine, that benefit is partially negated by

lower engine efficiency

and methane emissions. 861 The NAS Committee recommended that NHTSA and EPA develop a separate standard for natural gas vehicles, similar to that in diesel
- and gasoline
- fueled engines. 862 We interpret this to mean standards that require natural gas
- fueled engines to achieve similar thermal efficiency to diesel
- and gasoline
- fueled engines; in other words more stringent standards than would apply

under a continuation of the Phase 1 approach. Further, the Committee recommended the agencies do this without disrupting commercial transportation business models, though the Committee did not provide specific recommendations for how to achieve this goal. 863 Itrecommended that GEM certification tool s need to include natural gas engine maps to accuratel y quantify the emissions and fuel economy of natural gas vehicles. The Committee also requested that EPA and NHTSA assemble a best estimate of well
- to - tank GHG emissions to be used for developing future rulemakings. 864 The agencies closel y evaluated the recommendation for NHTSA and EPA to develop a separate natural gas standard for HD vehicles. The agencies are not proposing a separate standard for natural gas engines or for natural gas powered ve hicles for the Phase 2 program primarily , because the current market share is still at or below one percent of the total heavy
- dut y fleet and we do not project a significant increase i n natural gas use during the Phase 2 timeframe. Given its current status, we do not want to inhibit the adoption of this potentially promising alternative fuel through more stringent standards. Other reasons to hold back on potentiall y establishing separate natural gas fuel standards at this time include the fact that ther e is uncertainty in the quantification of methane emissions, both upstream emissions as well as potential leakage on a vehicle, particularl y the LNG vehicle boil
- off emissions, which makes it very difficult to perform a rigorous anal ys is regarding the pote ntial impacts of a separate natural gas standard; the industry itself is in the process of developing its technology and as it matures there is potential for self

- correction to address methane leaks in recognition of environmental concerns that might affec t its status as a potential green alternative fuel.

860 Id . at 65. 861 Id
. 862 Id. at 65, Recommendation 5.2. 863 Id . at 65, Recommendation 5.3. 864 Id . at 65, Recommendation 5.1.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 777 of 850 With regard to well
- to - tank or upstream emissions, the medium
- and heav y - duty fuel efficiency program focuses on the tailpipe emissions of these vehicles for multiple reasons, including test measurement capabilities and the use of simulated output tools calibrated to test lab measurements. The agencies continues to evaluate the potential impacts and the benefits of a holistic approach for incorporating well
- to - tank emissions into future rulemakings. A s data comes available a better estimate can be made on the emissions impact from any potential regulations. The agencies will closel y monitor developments in natural gas adoption over the course of the rulemaking timeframe and determine if additional action may be necessary to prevent methane emissions increases. See Section XI of this preamble for additional discussion regarding the treatment of natural gas fuel, engines and vehicles in this proposal, as well as for a detailed discussion of lifecycle em issions. (b ) How are the Agencies Handling Uniformity and Accuracy Regarding Tire Rolling Resistance Characteristics? The NAS Committee expressed concern about the process b y which rolling resistance values are established. 865 Specificall y, the Committee note d that the process for determining tire rolling resistance is new and variability is not as well known. The Committee recommended that the agencies implement a mechanism for obtaining accurate tire rolling resistance factors, including establishing a tire alignment laboratory
. 866 , 867 Additionally , the Committee recommended that this data be available in the through the Uniform Tire Quality Grading sy stem. 868 In Phase 1, the agencies received comments from stakeholders highlighting a need to develop a referen ce lab and alignment tires for the HD sector. The agencies noted the lab
- to - lab comparison conducted in the Phase 1 EPA tire test program. The agencies reviewed the rolling resistance data from the tires that were tested at both the STL and Smithers labo ratories to assess inter
- laboratory

and test machine variability . The agencies conducted statistical anal ys is of the data to gain better understanding of lab
- to - lab correlation and developed an adjustment factor for data measured at each of the test labs. Based on these results, the agencies believe the lab
- to - lab variation for the STL and Smithers laboratories would have very small effect on measured rolling resistance values. Based on the test data, the agencies judge that it is reasonable to continue the HD Phase 2 program with current levels of variability , and consider the use of either Smithers or STLlaboratories to be acceptable for determining the tire rolling resistance value in Phase 2. Note that the agencies have not made similar findings for other laboratories. However, we welcome comment on the need to establish a reference machine for the HD sector and interest from tire testing facilities to commit to developing a reference machine.

865 Id . at 35
- 36. 866 Id . at 36, Recommendation 3.4, 6.6 p 84. 867 Id . at 84, Recommendation 6.6. 868 Id . at 36, Recommendation 3.4.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 778 of 850 In the final rule for the Phase 1 program, the agencies s tated that compliance values submitted to the agencies should be derived using the I SO 28580 test method for drive tires and steer tires planned for fitment to the vehicle being certified. 869 The agencies believe that following a defined, standardized test procedure will provide levels of consistency in submitted compliance values. The agencies conducted substantive testing to develop the final tire Crr standards in the Phase 1 rule at two different testing laboratories for comparison to test for variability. The agencies concluded that although laboratory
- to - laboratory and test machine
- to test machine measurement variability exists, the level observed is not excessive relative to the distribution of absolute measured Crr performance values and relative to the proposed standards. Based on this, the agencies concluded that the test protocol and the proposed standards are reasonable for this program. The agencies are considering publishing the tire Crr levels from fuel efficiency and GHG emission program comp liance data. Because compliance data are submitted by vehicle manufacturers rather than directly from the tire manufacturers or agency directed testing they could vary

for a given tire model among vehicle manufacturer submissions, or lag when tires are re designed. Based on considerations such as this, the agencies are not proposing to establish a public database for heavy
- dut y vehicle tire rolling resistance information at this time. (c) Have the Agencies Considered Industry Standards for Medium

- and Heavy

-D uty Tire Pressure Systems (TPS)? The NAS Committee found that tire pressure monitoring s ys tems and automatic tire inflation sy stems are being adopted by fleets at an increasing rate. 870 However, the Committee noted that there are no standards for performan ce, display , and s ys tem validation. The Committee recommended that NHTSA issue a white paper to clarify the minimum performance needed from these s ys tems from a safety perspective. 871 This recommendation addresses the effects of tire pressure s ystems on ve hicle safety . Because the recommendation for a white paper relates to safety, and is not directed at fuel efficiency or GHG emissions effects, the agencies are not responding to the NAS recommendation in this proposal. Nevertheless, the agencies note that automatic tire inflation sy stems can improve fuel efficiency and greenhouse gas emissions (see Preamble Section III / draft RIA Chapter 2) b y maintaining tire pressure close to the tire pressure specification. The agencies are proposing to recognize auto matic tire inflation sy stems as a technology that improves fuel efficiency for tractors, trailers and vocational vehicles in the GEM vehicle compliance model.

869 76 FR 57182
- 85. 870 Phase 2 First Report at 84. 871 Id ., Recommendation 6.4.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 779 of 850 (d ) Will NHTSA Survey Private Fleets or Leverage Government Fleets to Gather Information for the Phase 2 Rulemaking? In its report, the NAS Committee found that there are many additional methods by which NHTSA could gather fleet information to inform the Phase 2 rulemaking. The Committee recommended that NHTSA gather data from private fleets, and work with the General Services Administration or United States Postal Service to evaluate the fleet of vehicles they possess. 872 , 873 NHTSA understands that additional fleet information could be helpful for purposes of formulating medium
- and heav y - dut y fuel effici ency standards. Due to the length of time necessary to capture useful, relevant data from fleets, NHTSA was unable to conduct public or private fleet studies to inform this rulemaking. NHTSA will take these recommendations under advisement to inform the agency in the future. For the time being, the agencies have utilized data from FHWA, EPA’s SmartWay program, Polk, and other sources of fleet information. (e) GEM Inputs and Outputs The NAS Committee found that GEM Version 2.0.1 is not compatible with automated order entry

s ys tems of OEMs. 874 It recommended that the GEM programmers configure GEM to be compatible with existing OEM order entry s ys tems 875 and provide a more useful output that includes graphs and other presentation methods. 876 However, EPA believe s these recommendations are beyond the scope of this rulemaking. (f ) OEM
- Specific Code The NAS committee stated models should be capable of simulating real
- world component behavior, and should not be oversimplified. 877 It recommended allowing OEMs to substitute OEM
- specific models or code for the fixed models in the current GEM, including substituting a power pack (the engine, aftertreatment, transmission). 878 However, as described in Section II, we are not proposing to allo w this for a number of reason s . NAS explained that its goal was to reflect real
- world operation accuratel y. We believe the powertrain test option could be used to achieve this goal.

872 Id. at 43, Recommendation 4.2, 4.3, and 4.4. 873 Id
. at 11, Recommendation 1.3. 874 Id . at 35. 875 Id ., Recommendation 3.2. 876 Id ., Recommendation 3.3. 877 Id . at 37. 878 Id ., Recommendation 3.7.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 780 of 850 **(3) NAS Findings and Recommendations with Which the Phase 2 Standard**  **s Are Less**  **- Significantly Inconsistent**  (a ) What are the Agencies Doing with Respect to Fuel Specifications for Natural Gas? The Committee found that natural gas provides a potential long
- term price advantage backed b y an abundant supply
. 879 Inaddition to its o ther natural gas (NG)
- specific recommendations, the Committee recommended government and the private sector should support further technical improvements in engine efficiency and operating costs, reduction of storage costs, and emission controls (as is do ne for diesel engines). 880 Further, it recommended that NHTSA and EPA should also evaluate the need for and benefits and costs of an in
- use NG fuel specification for motor vehicle use. The agencies recognize the value in evaluating an in
- use NG fuel specif ication for motor vehicle use. EPA has developed and promulgated fuel specifications for other motor vehicle fuel ty pes, both for test fuels and for in
- use fuels. Such fuel specifications established by EPA usually complement fuel specifications establis hed by third party

organizations such as ASTM. EPA has established fuel specifications for natural gas used as test fuels for emissions testing, 881 but has not adopted specifications for in
- use natural gas used as a motor vehicle or off
- highway fuel. How ever, states have set natural gas quality limits on the natural gas sold within the state, and natural gas pipelines have established specifications for the natural gas either for their own purposes or to ensure that the natural gas being transported by it s pipeline will be usable within the states to which the pipeline transports the natural gas. These specifications would apply to natural gas used as a motor vehicle fuel. EPA may consider establishing in
- use specifications for natural gas used as a motor vehicle or off

- highway fuel in the future. However, because natural gas use within the transportation sector is currentl y so small (less than 1 percent of total natural gas demand and less than 1 percent of heavy
- dut y fuel demand), its use for transportation would not have a separate fuel suppl y s ys tem, and it would not make sense that such a small user segment should dictate fuel quality for the overall fuel supply. Like other potential regulations that EPA might consider, EPA will consider establishing fuel quality regulations on natural gas if and when its use increases as a fuel for the transportation sector. (b ) Have the Agencies Considered Low Rolling Resistance Standards for All New Tires? With regard to low rolling resistance tires, the NAS Committee found that 70 percent of new tires sold in 2012 were for replacement of existing tires. 882 It found that although most new

879 Id . at 65. 880 Id ., Recommendation 5.4. 881 EPA set natural gas test fuel quality for light
- duty and heavy
- duty engines in 1994 (40CFR 86.113
- 94 and 86.1313
- 94, respectively), and for nonroad engines in 2002 (40CFR 1065.715). 882 Id . at 84.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 781 of 850 tractors and trailers come equipped with SmartWay verified tires, onl y 42 percent of replacement tires are SmartWay

verified. 883 The C ommittee recommended that NHTSA and EPA evaluate rolling resistance of new tires, especiall y those sold as replacements. 884 Itrecommended that NHTSA adopt a regulation establishing a low rolling resistance standard for all new tires designed for tractor an d trailer use. 885 The agencies are proposing to include low rolling resistance tires as a technology that may be used for compliance for fuel efficiency and GHG standards. The agencies conducted tire rolling resistance testing and considered confidential business information data provided b y several tire manufacturers, which is discussed in Preamble Sections III, IV, and V and draft RIA Chapter 2. The agencies have focused our resources and attention to develop standards for new vehicles and engines. NHT SA has not conducted work to consider a rolling resistance performance standard for replacement tires at this time and will take the Committee’s recommendation under advisement. **(c)** Have the Agencies Considered A Protocol for Measuring And Reporting the Coef ficient of Rolling Resistance to Aid In Consumer Selection? The Committee recommended that the agencies consider establishing a protocol for measuring and reporting the coefficient of rolling resistance to aid in consumer selection, similar to passenger car tires. 886 At this time, the agencies are taking the Committee’s recommendation under advisement. (d ) What Other Revisions Are the Agencies Making to GEM? Consistent with the NAS Committee’s recommendations, the agencies are proposing to make the following revisions to GEM, as also detailed Preamble Section II: Allowing manufacturers to input parameters related to engines, transmissions, and axles

 Basing GEM on a steady - state fuel map  Allowing separate fuel maps for alternative fuels  In clu ding real
- world road grade to highway cycles  Use of wind
- average drag coefficients for aerodynamic inputs However, the agencies are not making other changes recommended b y NAS. We are not making the user interface changes recommended b y the Committee on behalf of manufacturers. Our recent discussions with manufacturers indicate that they have adopted ordering s ys tems that are consistent with the current interface. We are also not revising GEM to allow manufacturers to

883 Id
. 884 Id ., Recommendation 6.5. 885 Id
. 886 Id. at 14, Recommendation 1.8.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 782 of 850 input their own shift strategie s. Instead, we are proposing a powertrain test option that would serve the same purpose. The NAS Committee also recommended that we broaden GEM to allow for additional duty
- cycles and actual vehicle weights. W e believe that such changes would not significantl y improve the overall program, but would add significant complexity
. (e) Vehicle Weight and Payload In GEM The NAS Committee recommended that NHTSA evaluate the load specific fuel consumption (L SFC) at more than one payload to ensure there is not an undesirable acute sensitivity

to payload by

a particular truck power train and to reflect the fact that some states allow vehicles to operate with gross combination vehicle weight ratings well in excess of the values adopted for the simulation. NAS also recommended that GEM allow manufacturers to input actual vehicle weights. 887 As described in Section III, the agencies are proposing to modify GEM to allow heav y haul vehicles to be certified separatel y, to reflect their unique weight and payload attributes. However, are not proposing to allow for other payloads or weights to minimize complexity during the compliance process. (f ) Is NHTSA Conducting Any Campaigns Related to Fuel Efficient Driving Behaviors? Inthe NAS Committee’s Phase 1 report, 888 the Committee concluded that fuel saving opportunities exist if drivers are educated about fuel efficient driving techniques. 889 The Phase 2 reiterated this finding, and recommended NHTSA encourage and incentivize the dissemination of information related to the re lationship between driver behavior and fuel savings. 890 Based on NHTSA’s understanding of the medium
- and heav y - dut y s egments, a large portion of the vehicles are driven professionally . Professional drivers operate these vehicles as independent drivers and in trucking fleets. In some instances, particularl y l arger fleet operations, management will track and encourage driver fuel efficiency . It is not uncommon for professional drivers across all ty pes of trucking operations to undergo private fuel effi ciency training. For these reasons, NHTSA has not yet undertaken dissemination of information related to the relationship between driver behavior and fuel savings.

887 Id . at 9, Recommendation 1.1. 888 Committee to Assess Fuel Economy Technologies for Medium
- and Heavy
- Duty Vehicles; National Research Council; Transportation Research Board (2010). ‘‘Technologies and Approaches to Reducing the Fuel Consumption of Medium - and Heavy
- Duty Vehicles,’’ (‘‘NAS Report’’), at page 9. Washington, DC, The National Academies Press. Contract DTNH22

– 08

–H

– 00222. Available electronically from the National Academy Press Web site at http://www.nap.edu/catalog.php?record id=12845 (last a ccessed September 10, 2014). 889 Id . at 177. 890 Phase 2 First Report at 14, Recommendation 1.8.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 783 of 850 

## XIII. **Amendments to Phase 1 Standards** T he agencies are proposing revisions to the regulatory text specifying test procedures and compliance provisions used for Phase 1 . For the most part, these amendments would apply exclusivel y to the Phase 2 rules. In a few limited instances, the agencies are proposing to apply some of these changes to Phase 1. These limited changes to the Phase 1 program are largel y conforming amendments, and are described below, along with other proposed m inor changes to the Phase 1 compliance program. We note, however, that we are not reopening the Phase 1 rules in a general sense, nor are we requesting comment on the stringency of the Phase 1 standards or other fundamental aspects of the Phase 1 program. 

### A. **EPA Amendments (1)**  **Pickups and Vans** EPA is proposing to relocate the GHG standards and other regulatory provisions for chassis
- certified HD pickups and vans in the Code of Federal Regulations from 40 CFR 1037.104 to 40 CFR 86.1819. Accordingl y, NHTSA will mo dify any of EPA ’s references in 49 CFR 523 and 535 to accommodate the migration. EPA is making this change largel y to address ambiguities regarding the application of additional provisions from 40 CFR part 86, subpart S, for these vehicles. The approach in 40 CFR 1037.104 was to state that all of 40 CFR part 86, subpart S, applies except as specified in 40 CFR 1037.104; however, the recent standards adopted for light
- dut y vehicles and light
- dut y trucks included several changes to 40 CFR part 86, subpart S , that should not apply for chassis
- certified HD pickups and vans. Based on our experience implementing the Phase 1 program, we believe it is appropriate to include the GHG standards for chassis
- certified HD pickups and vans in the same part as light
- duty vehicles (40 CFR part 86, subpart S). All other certification requirements for these heavy
- dut y vehicles

— criteria exhaust standards, evaporative and refueling standards, provisions for onboard diagnostics, and the range of certification and compliance provisions

— are in that subpart. We note that we have not experienced the same challenges for other heavy
- duty vehicles, and are therefore not proposing to relocate the other provisions of 40 CFR part 1037. This migration has highlighted a few areas where we need to clarify how the regulations apply for chassis
- certified HD pickups and vans. In particular, EPA is proposing to make the following changes:

 Clarify

that the GHG standards appl y at high
- altitude conditions  State that fleet
- average calculation of c arbon
- related exhaust emissions (CREE) is not required for chassis
- certified HD pickups and vans  Clarify

that requirements related to model t ypes and production
- weighted average calculation appl y on an y passenger automobiles and light trucks  State that the credit and debit provisions of 40 CFR 86.1865
- 12(k)(5) do not apply for chassis
- certified HD pickups and vans  Clarify

that the Temporary

L ead T ime Allowance Alternative Standards in 40 CFR 86.1865
- 12(k)(7) do not apply for chassis
- certified HD pickups and vans*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 784 of 850  State that the earl y credit provisions of 40 CFR 86.1866
- 12, 86.1867
- 12, 86.1868
- 12, 86.1869
- 12, 86.1870
- 12, and 86.1871
- 12 do not apply for chassis
- certified HD pickups and vans **(2) Heavy**  **- Duty Engines**  As described in Section II, EPA is proposing to revise the approach to classifying gaseous - fuel engines with respect to both GHG and criteria emission standards. This does not affect the vehicle
- based standards that appl y under 40 CFR part 1037. The gene ral approach would be to continue to divide these engines into spark
- ignition and compression
- ignition categories, but we propose to alway s appl y the compression
- ignition standards to gaseous
- fuel engines that qualify

as medium heavy
- dut y or heavy heav y - duty engines. Currently , any gaseous - fuel engine derived from a gasoline engine would be subject to the spark
- ignition standards no matter the weight class of the vehicle. As described in Section II, EPA now believes this approach does not reflect the real ity that gaseous
- fuel engines used in Class 6, 7, or 8 vehicles compete with diesel engines rather than gasoline engines. Such engines compete directly with diesel engines, and we believe they should be required to meet the same emission standards. Becau se all current gaseous
- fuel engines for these large vehicles are already being certified to the compression
- ignition engine standards we can propose to also apply this approach to engines subject to the HD GHG Phase 1 standards without adverse impacts on any manufacturers EPA is also proposing to revise the regulation to spell out how to apply enforcement liability for a situation in which the engine manufacturer uses deficit credits for one or more model years. Simply

put, any time an engine manufacturer is allowed to carry a deficit to the next year, all enforcement liability for the engines that generated the deficit are extended for another ye ar. These provisions are the same as what we have already adopted for heavy
- dut y vehicles subject to GHG stand ards under 40 CFR part 1037. **(3) Evaporative Emission Testing for LNG Vehicles**  Heav y - dut y vehicles fueled by natural gas have for many ye ars been subject to evaporative emission standards and test procedures. While fuel sy stems containing gasoline require ext ensive design features to handle vented fuel, fuel s ys tems containing natural gas generall y prevent evaporative losses by remaining sealed. In the case of compressed natural gas, there is a voluntary

consensus standard, ANSI NGV1
- 2006, that is designed to ensure that there are no leaks or losses during a refueling event. Since compressed natural gas sy stems remain sealed indefinitel y once the refueling event is complete, we understand that complying with the ANSIrefueling standard is sufficient to demons trate that the vehicle also complies with all applicable evaporative emission standards. The Light
- Dut y Tier 3 final rule included provisions to clarify that compressed natural gas s ys tems meeting the applicable ANSI standard are deemed to comply

with EPA ’s evaporative emission standards. Sy stems using liquefied natural gas (LNG) behave similarly , except that the cryo genically

stored fuel needs to be vented to prevent an over
- pressure situation if the vehicle is not used for an extended time, as described in Section XI . Such vehicles are currently subject to evaporative emission standards and test procedures, though there are some substantial questions*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 785 of 850 about how one can best apply the procedures to these s ys tems; not all of the instructions about precondit ioning the vehicle are straightforward for cryogenic fuel s ys tems with no evaporative canister. EPA is interested in pursuing an approach that is similar to what applies for compressed natural gas systems, which would need some additional attention to address boil
- off emissions. There are two voluntary consensus standards that specify recommended practices to lengthen the time before boil
- off starts to occur for LNG s ys tems. SAE J2343 specifies a minimum five
- day

hold time and NFPA 52 specifies a minimum three
- day hold time. EPA is proposing to require that manufacturers of LNG vehicles meet the SAE J2343 standard as a means of demonstrating compliance with the evaporative emission standards. While the hold
- time requirements of SAE J2343 and NFPA 52 ar e clear, there appears to be very little description of the procedure to determine how much time passes between a refueling event and initial venting. To ensure that all manufacturers are subject to the same set of requirements, we are proposing to includ e a minimal set of specifications corresponding to the demonstration under SAE J2343. In particular, EPA proposes to specify that the vehicle must remain parked throughout the measurement procedure, ambient temperatures must remain between 20 and 30 °C, the refueling event must follow conventional procedures corresponding to the vehicle’s hardware, and no stabilization step is allowed after the refueling event. The proposed rules provides for relying on compliance with SAE J2343 as a means of demonstrating compliance with evaporative emission standards immediately upon completion of the final rule. EPA is proposing to make this mandatory for vehicles produced on or after January 1, 2020. EPA requests comment on all aspects of the proposed provisions fo r LNG vehicles. **(4) Compliance and Other General Provisions**  EPA proposes the following changes that appl y broadly for different types of vehicles or engines:

 Add a requirement for vehicle manufacturers that sell incomplete vehicles to secondary vehicle manufac turers to provide emission
- related assembly instructions to ensure that the completed vehicle will be in a certified configuration.  Specify

parameters for determining a vehicle’s curb weight, consistent with current practice for vehicles certified under 40 CFR part 86, subpart S.  Revise the recordkeeping requirement to specify a uniform eight
- ye ar retention period for all data supporting an application for certification. The provision allowing for one
- year retention for “routine data” is no longer necessary now that data collection is all recorded in electronic format. EPA is also clarifying that the eight
- ye ar retention period is calculated relative to the latest associated application for certification, not from the date the data were generated.  Change the rounding for anal yt ically derived CO 2 emission rates and target values from the nearest 0.1 g/mile to the nearest 1 g/mile.  Clarify

that manufacturers may

not amend an application for certification after the end of the model year, other than to revise m aintenance instructions or family emission limits, as*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 786 of 850 allowed under the regulations. Remove the general recordkeeping provisions from 40 CFR 1037.735 that are already described in 40 CFR 1037.825.  Require a different equation with a ratio of 0. 8330 i n 40 CFR 1037. 525 (f) when full yaw sweep measurements are used to determine wind averaged drag correction to establish an equivalent method to the equation using +/
- 6 degree measurements. This proposed change woul d not impact stringency because manufacturers are already subject to compliance using both methods

– full yaw sweep and +/
- 6 degree measurements. In addition, this Phase 1 flexibility was not used in setting the level of the Phase 1 standards.  Clarify

ho w EPA would conduct selective enforcement audits (SEAs) for engines (in 40 CFR 1036.301) and vehicles (in 40 CFR 1037.301) with respect to GHG emissions
. 

### B. **Other Compliance Provisions for NHTSA (1)**  **Standards and Credit Alignment** In Phase 1, the agencies intended GHG and fuel consumption standards for segments of the National Program to be in alignment so that manufacturers would not be required to build vehicles to meet in equivalent standards. Despite the intent, NHTSA and EPA have identified several scenarios where credits and compliance to both sets of standards are not aligned. This misalignment can have various impacts on compliance with the National Program. For example, a manufacturer of tractors could have two vehicle families that with same number of vehicles but with opposite and equal compliance margins with standards. In this scenario, the first famil y would over
- compl y with the GHG standard while the second family would under
- compl y with the GHG standard b y the same amount of grams CO 2 /ton
- mile. In calculating credits, the manufacturer would have a net of zero GHG credits and exactly meet compliance; however, based on conversions and rounding of the standard and performance results that manufacturer could end up earning credits or having a credit deficit under NHTSA’s fuel efficiency

program. In order to correct this misalignment, NHTSA is proposing to amend the existing fuel consumption standards and the method for calculating performance values for all compliance categories b y increasing the sign ificant digits in these conversion values. Increasing the significant digits in these values will result in more precise alignment when converting from GHG consumption standards to fuel consumption standards. The rounding approach differs for heav y - dut y pickup trucks and vans set apart from other vehicle and engine compliance categories. Heav y Duty Pickup Trucks and Vans (HD PUV) use the same approach for calculating standards and performance values as the LD CAFE and GHG programs. As such, NHTSA prop oses to increase the required significant values for each components used in these calculations. More specificall y, NHTSA proposes to increase the number of decimal places for sub
- configuration target standards, the sub
- configuration fuel consumptions, th e fleet average target standard and the fleet average fuel consumption values from two fixed values and increases them by one additional significant digit. The regulation currentl y specifies rounding to these values nearest 0.01 and under the proposed app roach the values would be rounded to the nearest 0.001.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 787 of 850 NHTSA is also proposing to modify the c and d target coefficients used for deriving HD PUV target standards. These values are directl y convertible from the EPA a and b target coefficients, respectiv el y. Currently, the c target coefficient contains six decimal places and the d target coefficient contains two decimal places. Each coefficient would be increased b y one decimal

—

meaning the c target coefficient would have seven decimal places, with the l ast four being significant digits

— and the d target coefficient would be increased to three decimal places, with there being a total of four significant digits. The modifications to the rounding and level of precision of these six values will not entirely eliminate the misalignment of the credits being calculated for EPA and NHTSA but will reduce it to an insignificant variance. For other compliance categories, a similar approach can be used to address the misalignment of calculated credits as it pertains to vocational vehicles, tractors, and heav y dut y engines. NHTSA proposes to increase the number of significant digits b y i ncre asing the decimal places contained in the standards and the FEL for the vocational vehicle and tractor segments and the FCL for the engine segments to four decimal places. Currently , the vocational vehicle and tractor standards and FELs contain one decimal place while engines standards and FELs contain two decimal places. The standards will be identified directl y in the regulation while the FEL and FCL will be a calculated value rounded to the nearest 0.0001. The modifications to the rounding and level o f precision of these values should eliminate the misalignment of the credits being calculated. These changes are planned for implementation retroactivel y starting for the model year 2013 standard. However, because the stringency of the Phase 1 fuel consumption standards may be adversel y impacted for certain manufacturers who have already developed engineering plans considering previous credit balance, we propose to seek comments on whether optional compliance should be allowed. **(2) Off**  **- road Exclusion Petiti**  **on Process for Tractors and Vocational Vehicles** In the Phase 1 final rule, the agencies added provisions for certain types of vocational tractors and vocational vehicles that operate off
- road to be exempt from standards, although standards would still app ly to the engines installed in these vehicles. An exemption was warranted because these vehicles operate in a manner essentiall y making them incompatible with fuel saving and emission reduction technologies, such as performing work in an off
- road environm ent, being speed restricted, or having off
- road components or other features making them incompatible for roadway s. For the Phase 1 program, off
- road vehicle manufacturers meeting the exemption provisions are required to provide EPA and NHTSA, through the EPA database, a report within 90 day s after the end of each model year identifying its off
- road vehicles. The report must provide a description of each excluded vehicle configuration, including an explanation of wh y it qualifies for the exclusion and the production volume. A manufacturer having an off
- road vehicle failing to meet the criteria under the agencies’ off
- road exemptions explained in 40 CFR 1037.631 and 49 CFR 523 is allowed to submit a petition as required in 49 CFR 535.8(h)(6) describing how and why its vehicles should qualify for exclusion.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 788 of 850 Under Phase 1 compliance processes, manufacturers have not been using the petitioning process when seeking clarification on off
- road vehicles not meeting the strict interpretation of the provision. In stead, manufacturers are submitting information to EPA in advance of the end of the model year to determine whether or not these vehicles are exempted and to determine whether it is necessary

to submit any

applications for certificates of conformity as required b y 40 CFR 1037.201. EPA and NHTSA collaborativel y determine whether manufacturers are exempted and EPA shares the decision with the manufacturer. The current process followed b y the agencies makes it unnecessary to use the petitioning process and has the added advantage of providing a joint determine earl y enough in the model year whereas disapproved manufacturer have adequate enough time to submit applications for certificates of conformity
. For the Phase 1 standards, the agencies are proposi ng to delete the petitioning process and add provisions for manufacturers seeking clarification on the qualifications of an off
- road vehicle exemption to send information to the agencies through EPA in advance of the model ye ar in order for us to make an a ppropriate determination. EPA plans to add these provisions into its regulations as a part of 40 CFR 1037.210. Removal of the formal petition process is intended to minimize the impact on manufacturers that are seeking an off
- road exemption while allowin g the agencies to be proactive in making a determination based on the criteria and individual merits of the vehicles being requested for an exemption. Collaboration between the agencies in making a decision about exemptions outside a formal petition proce ss should streamline the timing for a response and reduce the burden upon the agencies and manufacturers. **(3) Innovative Technology Request Documentation Specifications**  For vehicle and engine technologies that can reduce GHG and fuel consumption, but for whi ch there is not yet an established method for quantifying reductions, the agencies encourage the development of such technologies through providing “innovative technology” credits. Manufacturers seeking innovative technology credits must quantify

the reduc tions in fuel consumption and GHG emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures. Manufacturers submitting innovative technology requests must send a detailed description of the technol ogy and a recommended test plan to EPA as detailed in 40 CFR 1036.610 and 40 CFR 1037.610. The test plan must include whether the manufacturer is applying for credits using the improvement factor method or the separate
- credit method. It is recommended th at manufacturers not conduct testing until the agencies can collaborativel y approve the test plan in which a determination is made on the qualification of the technology as innovative. EPA and NHTSA also make the decision at that time whether to seek pub lic comments on the test plan if there are unknown factors in the test methodology
. Under the current regulations, EPA and NHTSA have reviewed several test plans from manufacturers seeking innovative technology credits. The agencies have received feedba ck from manufacturers that the final approval process is not clearl y defined, which has caused a substantial time commitment from manufacturers. To address this feedback, the agencies are proposing to add further clarification in 40 CFR 1036.610 and 40 CF R 1037.610 defining the steps manufacturers must follow after an approval is granted for a test plan. This includes specifications for submitting the final documentation to the agencies for final approval and for*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 789 of 850 determining credit amounts. The agencies are adding the same level of detail as required for the final documentation required in EPA’s light duty off
- cycle program in 40 CFR 86.1869
- 12(e)(2). These specifications should provide manufacturers with a clear understanding of the required documentati on and approval process to reduce the time burden placed on manufacturers. NHTSA also proposes to add similar provisions from its light duty CAFE program specified in 49 CFR 531.6(b)(2) and 533(c)(2) for limiting the approval of innovative technologies under its program for those technologies related to crash
- avoidance technologies, safety critical systems or systems affecting safety - critical functions, or technologies designed for the purpose of reducing the frequency of vehicle crashes. NHTSA prohibite d credits for these technologies under an y circumstances in its CAFE program (see 77 FR 62730). NHTSA believes a similar strategy is warranted for heav y - duty vehicle as well. Further, the evaluation of crash avoidance technologies is better addressed und er NHTSA’s vehicle safety authority than under a case
- by
- case innovative technology credit process. **(4) Credit Acquisition Plan Requirements**  The National Program was designed to provide manufacturers with averaging, banking and trading (ABT) flexibilities for meeting the GHG and fuel efficiency standards to optimize the effectiveness of the program. As a part of these flexibilities, manufacturers generating a shortfall in fuel consumption credits for a given model year must submit a credit plan to NHTSA describing how it plans to resolve its deficits within 3 models year. To assist manufacturers, NHTSA is proposing to modify 49 CFR 535.9(a)(6) of its regulation to clarify and provide guidance to manufacturers on the requirements for a credit allocation plan wh ich contains provisions to acquire credits from another manufacturer which will be earned in future model ye ars. The current regulations do not specify if future credit acquisition is permitted or not and the revision is intended to clarity that it is, wi th respect to the limitation a credit shortfall can only be carried forward three ye ars. Providing this clarification is intended to increase transparency

within the program and ensure all manufacturers are aware of its available flexibilities. In additio n to providing this clarification, the regulation is also being amended to outline the requirement that in order for a credit allocation plan containing this provision to be reviewed for approval, NHTSA will require an agreement signed b y both manufacturer s. This requirement will assist NHTSA with its determination that the credits will become available to the acquiring manufacturer given they

are earned. **(5) New Vehicle Field Inspections and Recordkeeping Requirements**  Previously , NHTSA decided not to include recordkeeping provisions in its regulations for the Phase 1 program. EPA regulations include recordkeeping requirements in 40 CFR 103 6 .250 , 1036.735, 1036.835, 1037.250, 1037.735 and 1037.835. For the Phase 2 program, NHTSA is proposing to add recordkeep ing provisions to facilitate its compliance validation program. For the Phase 1 program, manufacturers test and conduct modeling to determine GHG emissions and fuel consumption performance, and EPA and NHTSA perform validation testing. EPA uses the*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 790 of 850 resul ts of the validation tests to create a finalized report that confirms the manufacturer’s final model year GHG emissions and fuel consumption results. Each agency will use this report to enforce compliance with its standards. NHTSA assesses compliance wi th fuel consumption standards each year, based upon EPA final verified data submitted to NHTSA for its heavy
- dut y vehicle fuel efficiency program established pursuant to 49 U.S.C. 32902(k). NHTSA may also conduct verification testing throughout a given mo del year in order to validate data received from manufacturers and will discuss any

potential issues with EPA and the manufacturer. See 49 CFR 535.9. After the end of the model year, NHTSA may also decide to conduct field inspections in order to confirm whether or not a new vehicle was manufactured as originall y certified. NHTSA may conduct field inspections separately or in coordination with EPA. To facilitate inspections, the agencies propose to add additional provisions to the EPA recordkeeping provi sions to require manufacturers to keep build documents for each manufactured tractor or vocational vehicle. Each build document would be required to contain specific information on the design, manufacturing, equipment and certified components for a vehicl e. NHTSA would request build documents through EPA and the agencies would collaborate on the finding of all field inspections. Manufacturers would be required to keep records of build documents for a period of 8 calendar years.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 791 of 850 

## XIV. **Other Proposed Regulatory Provisions** In addition to the new GHG standards proposed in these rules , EPA and NHTSA are proposing to amend various aspects of the regulations as part of the HD GHG Phase 1 standards for heav y - dut y highway engines and vehicles. EPA is also taking the opportunity to propose to amend regulatory

provisions for other requireme nts that apply for heav y - duty

highway engines, and for certain types of nonroad engines and equipment. 

### A. **Proposed Amendments Related to Heavy -**  **Duty Highway Engines and Vehicles**  This section describes a range of proposed regulatory amendments for heavy
- dut y h ighway engines and vehicles that are not directl y related to GHG emission standards. Section XIV.D describes additional changes related to test procedures that affect heavy
- dut y highway engines. **(1) Alternate Emission Standards for Specialty Heavy**  **- Duty Vehicl**  **es** Motor vehicles conventionally comprise a familiar set of vehicles within a relatively narrow set of parameters

— motorcycles, cars, light trucks, heavy trucks, buses, etc. The definition of “motor vehicle;” however, is written broadly to include a very wide range of vehicles. Almost an y vehicle that can be safel y operated on streets and highway s is considered a motor vehicle. Development of EPA’s emission control programs is generally focused on a consideration of the technology , characteristics, and operating parameters of conventional vehicles, and typicall y includes efforts to address concerns for special cases. For example, the driving schedule for light
- duty vehicles includes a variation for vehicles that are not capable of reaching the maximum speeds specified in the Federal Test Procedure. Industry innovation in some cases leads to some configurations that make it particularl y challenging to meet regulatory requirements. We are aware that plug
- in hybrid
- electric heav y duty vehicles are an example of this. An engine for such a vehicle would be expected to have a much lower power rating and duty cycle of engine speeds and loads than a conventional heav y duty engine. The costs of regulatory compliance and the mismatch to the specified duty c ycl e can make it cost
- prohibitive for engine manufacturers to certify such an engine under the heavy
duty highway engine program. EPA’s nonroad emission standards have reached a point that involves near parity

with the level of emission control represented b y the emission standards for heav y - dut y highway engines. To address concerns about certifying heav y - duty engines to highway

standards for use in hy brid vehicles, we are therefore proposing to allow manufacturers of heavy
- dut y highway vehicles the option to install limited numbers of engines certified to alternate standards. Qualifying engines would be considered motor vehicle engines, but they would be certified to standards that are equivalent to those adopted for comparable nonroad engines. Vehicles with hy brid powertrains would be a focus of this allowance. EPA believes the same principles appl y for amphibious vehicles and for vehicles with maximum speed at or below 45 miles per hour and we are therefore proposing to appl y the same provisions to thes e additional vehicles.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 792 of 850 Under this approach, compression
- ignition engines could be certified to alternate standards that are equivalent to the emission standards under 40 CFR part 1039, and spark
ignition engines could be certified to alternate standards th at are equivalent to the Blue Sky emission standards under 40 CFR part 1048. Engines meeting these alternate emission standards would generall y be expected to use the same technologies to control emissions as engines certified to the applicable emission s tandards for heav y - dut y highway engines. EPA would disallow this approach for compression
- ignition engines below 56 kW since the nonroad standards for those engines are substantiall y less stringent than the standards that apply for heav y - dut y highway engi nes. Also, since the nonroad duty cycles would generall y better represent the in
- use operating characteristics of these vehicles, we would expect the nonroad test procedures to be at least as effective in achieving effective in
- use emission control. The regulations at 40 CFR part 1048 include a simplified form of diagnostic controls, and we are proposing in these rules to include simplified diagnostic controls for 40 CFR part 1039. These engine
- based diagnostic controls would substitute for the diagnostic requirements that would otherwise appl y under 40 CFR part 86.010
- 18. It may also be appropriate to allow manufacturers of such heavy
- dut y vehicles to use an engine from a smaller vehicle that is already covered b y chassis
- based certification under 40 CFR part 86, subpart S. Many of the heavy
- dut y vehicles described under this section would be adequatel y powered b y l ower - displacement automotive engines, and the level of emission control would clearly

be expected to match or exceed that of engi nes certified to the heav y - dut y standards that would otherwise appl y. However, engines used in chassis
- certified vehicles involve some degree of calibration that relates engine operation to vehicle parameters. Adapting these engines to heav y - duty vehicle s would therefore require some recalibration, which could involve changing the effectiveness of emission controls. It is also unclear how the heavy
- duty vehicle would be designed for onboard diagnostic controls. EPA requests comment on the technical and regulatory

issues surrounding the use of engines from chassis
- certified vehicles in certain heav y - dut y vehicles. These alternate standards relate onl y to the engine certification
- based emission standards and certification requirements. All vehicle
- based r equirements for evaporative and greenhouse gas emissions would continue to apply as specified in the regulation. This allowance is intended to lower the barrier to introducing innovative technology for motor vehicles. It is not intended to provide a full alternative compliance path to avoid certifying to the emission standards and control requirements for highway engines and vehicles. To accomplish this, EPA is proposing to allow a manufacturer to produce no more than 1,000 hy brid vehicles in a single mod el year under this program, and no more than 200 amphibious vehicles or speed
- limited vehicles. California ARB is in the process of developing similar provisions for a reduced compliance burden for a limited number of highway vehicles toward the goal of incentivizing hy brid vehicles and other advanced technology . EPA expects to be involved in that policy development and would be interested in aligning programs as much as possible. It may be necessary or appropriate for the final rule to include a reference to any new policy

that has been adopted b y California ARB in the meantime.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 793 of 850 EPA requests comment on all aspects of this program to create alternate motor
- vehicle emission standards that allow certified nonroad engines to be used in the identified ty pes of heav y - dut y highway vehicles. **(2) Chassis Certification of Class 4 Heavy**  **- Duty Vehicles**  In the HD Phase 1 rule, the agencies included a provision allowing manufacturers to certify Class 4 and larger heavy
- dut y vehicles to the chassis
- based emission standards in 40 CFR part 86, subpart S. This applied for greenhouse gas emission standards, but not criteria emission standards. EPA revisited this issue in the recent Tier 3 final rule, where we revised the regulation to allow this same flexibility relative to e xhaust emission standards for criteria pollutants. However, this change to the regulation conflicted with our response to a comment in that rulemaking that EPA should not change the certification arrangement for criteria pollutants. Manufacturers have t aken opposing views of the proper approach for vehicles above 14,000 lbs GVWR. EPA requests comment on how best to address this issue in a way that resolves the various and competing concerns. In particular, EPA requests comment on the following specific areas of interest:

 Should EPA treat 14,000 lbs as a bright line to disallow any certification of larger vehicles to the chassis
- based exhaust emission standards?  Should EPA allow for certifying the larger vehicles to the chassis
- based standards, but ident ify

certain criteria to narrow the scope of this allowance? For example, EPA could limit this to compression
- ignition or spark
- ignition engines, we could identify

a maximum GVWR value above which chassis
- based certification is not allowed, or EPA could li mit this allowance to vehicles that share design characteristics with chassis
- certified vehicles below 14,000 lbs GVWR (as California ARB has done).  If EPA allows for certifying the larger vehicles to the chassis
- based standards, what additional amendments are needed to clarify how to apply the requirements of 40 CFR part 86, subpart S? For example, some further specification may be needed to identify

how to apply

requirements related to emission standards, driving schedule, and emission credits? **(3) On**  **- Board**  **Diagnostics for Heavy -**  **Duty Vehicles** EPA defines the onboard diagnostic requirements for heav y - dut y vehicles above 14,000 lbs GVWR in 40 CFR 86.010
- 18, but we allow manufacturers to meet OBD requirements based on the requirements adopted by the California A ir Resources Board. Manufacturers in almost all cases certify

based on the California procedures instead of EPA procedures. Certification based on EPA procedures is limited to certain spark
- ignition engine families whose certification is limited to state s other than California. EPA requests comment on a change to EPA regulation that simply

requires that manufacturers meet the California requirements. EPA has taken a similar approach for vehicles at or below 14,000 lbs GVWR, as described in 40 CFR 86.180 6
- 17. Under this approach, EPA would recognize California ARB’s approval as valid for EPA certification. EPA requests comment on this approach. In particular, EPA requests comment on the need to preserve EPA specifications for on
- board diagnostics for any special situations, and*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 794 of 850 on the need to make an y adjustments or allowances from the California ARB regulations to work for EPA implementation. **(4) Nonconformance Penalties (NCPs)**  The Clean Air Act requires that heav y - dut y standards for criteria pollutants su ch as NO X must reflect the greatest degree of emission reduction achievable through the application of technology

that EPA determines will be available. Such “technology
- forcing” standards create the risk that one or more manufacturers may lag behind i n the development of their technology to meet the standard and, thus, be forced out of the marketplace. Recognizing this risk, Congress enacted CAA section 206(g) (42 U.S.C. 7525(g)), which requires EPA to establish “nonconformance penalties” to protect these technological laggards b y allowing them to pay a penalty for engines that temporaril y are unable to meet the applicable emission standard, while removing an y competitive advantage those technological laggards may have. On September 5, 2012, EPA a dopted final NCPs for heav y heav y - dut y diesel engines that could be used b y manufacturers of heav y - duty diesel engines unable to meet the current oxides of nitrogen (NO X ) emission standard. On December 11, 2013, the U.S. Court of Appeals for the Distri ct of Columbia Circuit issued an opinion vacating that Final Rule. It issued its mandate for this decision on April 16, 2014, ending the availability of the NCPs for the current NO X standard, as well as vacating certain amendments to the NCP regulation s due to concerns about inadequate notice. In particular, the amendments revise the text explaining how EPA determines when NCP should be made available. EPA is proposing to remove the vacated regulatory text specifying penalties, and re
- proposing most o f the other vacated amendments to provide fuller notice. Finall y, EPA is proposing a new 40 CFR 86.1103
- 2016 to replace the existing 40 CFR 86.1103
- 87. (a ) Vacated Penalties In EPA’s regulations, NCP penalties are calculated from inputs specific to the st andards for which NCPs are available. The input values are specified in 40 CFR 86.1105
- 87. EPA is proposing to remove paragraph (j) of this section which specifies the vacated inputs for the 2010 NO X emission standard. EPA does not request comment on this change because this text has already been vacated b y the Court. Since all manufacturers are currentl y complying with these standards, the text also no longer has an y purpose. (b ) Re
- proposed Text The 2012 rule made amendments to four different sections in 40 CFR part 86. The amendments to 40 CFR 86.1104
- 91 and 86.1113
- 87 were supported during the rulemaking and were not questioned in the Court’s decision. Nevertheless, these revisions were vacated along with the rest of the rule. EPA is re
- proposing these changes. Since we are proposing to vacate and restore the regulatory text, the proposal consists of leaving these sections of the regulations unchanged.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 795 of 850 (i ) Upper Limits The changes to 40 CFR 86.1104
- 91 affected the upper limit. The upper limit (UL) is the emission level established by regulation above which NCPs are not available. A heav y dut y engine cannot use NCPs to be certified for a level above the upper limit. CAA section 206(g)(2) refers to the upper limit as a percentage above the emission stan dard, set by regulation, that corresponds to an emission level EPA determines to be “practicable.” The upper limit is an important aspect of the NCP regulations not only because it establishes an emission level above which no engine may

be certified using NCPs, but it is also a critical component of the cost anal ys is used to develop the penalt y rates. The regulations specify that the relevant costs for determining the COC50 and the COC90 factors are the difference between an engine at the upper limit and one that meets the applicable standards (see 40 CFR 86.1113
- 87). The regulatory

approach adopted under the prior NCP rules sets the upper limit at the prior emission standard when a prior emission standard exists and is then changed to become more stri ngent. EPA concluded that this upper limit should be reasonabl y achievable b y all manufacturers with engines or vehicles in the relevant class. It should be within reach of all manufacturers of HD engines or HD vehicles that are currentl y allowed so that they can continue to sell their engines and vehicles while finishing their development of fully complying engines. A manufacturer of a previously certified engine or vehicle should not be forced to immediately remove a HD engine or vehicle from the marke t when an emission standard becomes more stringent. The prior emission standard generall y meets these goals because manufactures have already certified their vehicles to that standard. EPA proposes to revise the regulations in 40 CFR 86.1104
- 91 to clari fy that EPA may

set the upper limit at a level below the previous standard if we determine that the lower level is achievable b y all engines or vehicles in the relevant subclass. This was the case for the vacated NCP rule. EPA also proposes that we may s et the upper limit at a level above the previous standard in unusual circumstances, such as where a new standard for a different pollutant or other requirement effectively increases the stringency

of the standard for which NCPs would apply . This occurred for heav y heav y - dut y engines with the 2004 standards. (ii) Payment of Penalties The proposed changes to 40 CFR 86.1113
- 87 correct EPA organizational units and mail code s to which manufacturers must send information. The previous information is no longer valid. (c) Criteria for the Availability of NCPs Since the promulgation of the first NCP rule in 1985, subsequent NCP rules generall y have been described as continuing “phases” of the initial NCP rule. The first NCP rule (Phase I), sometimes referred to as the “gen eric” NCP rule, established three basic criteria for determining the eligibility

of emission standards for nonconformance penalties in any given model year (50 FR 35374, August 30, 1985). (For regulatory language, see 40 CFR 86.1103
- 87). The first criterion is that the emission standard in question must become more difficult to meet. This can occur in two ways, either by the emission standard itself becoming more stringent, or due to its*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 796 of 850 interaction with another emission standard that has become more stringent. Second, substantial work must be required in order to meet the emission standard. EPA considers “substantial work” to mean the application of technology not previously

used in that vehicle or engine class/subclass, or a significant modification o f existing technology , in order to bring that vehicle/engine into compliance. EPA does not consider minor modifications or calibration changes to be classified as substantial work. Third, EPA must find that a manufacturer is likel y to be noncomplying for technological reasons (referred to in earlier rules as a “technological laggard”). Prior NCP rules have considered such a technological laggard to be a manufacturer who cannot meet a particular emission standard due to technological (not economic) difficulties and who, in the absence of NCPs, might be forced from the marketplace. During the 2012 rulemaking, some commenters raised issues relating to EPA’s interpretation of these criteria:

 The extent to which the criteria are intended to constrain EPA’s ab ility to set NCPs  The timing for evaluating the criteria  The meaning of technological laggard (i ) Constraints on EPA Several commenters argued (implicitly or explicitly) that EPA cannot establish NCPs unless all of the regulatory criteria for NCPs (in 40 CFR 8 6.1103
- 87) are met. Some went further to argue that EPA must demonstrate that the criteria are met. However, the actual regulatory

text has never stated that EPA may establish NCPs only

if all criteria are met, but rather that EPA shall establish NCPs “p rovided that EPA finds” the criteria are met. These criteria were included in the regulations to clarify that manufacturers should not expect EPA to initiate a rulemaking to establish NCPs where these criteria were not met. Moreover, the regulations clearly

defer to EPA’s judgment for finding that the criteria are met. While EPA must explain the basis of our finding, the regulatory language does not require us to prove or demonstrate that the criteria are met. This interpretation is consistent with the t ext of the Clean Air Act, which places no explicit restrictions on when EPA can set NCPs. In fact, it seems to create a presumption that NCPs will be available. The Act actually requires EPA to allow certification of engines that do not meet the standard unless EPA determines the practicable upper limit to be equal to the new emission standard. To address this confusion, the new proposed regulatory text would explicitly

state that where EPA cannot determine if all of the criteria have been met, we may pre sume that they

have. In other words, EPA does not have the burden to prove they have been met. (ii) Timing for Evaluating Criteria In order to properl y understand the appropriate timing for evaluating each of the NCP criteria, it is necessary

to understand the purpose of each. When considered together, these criteria evaluate the likelihood that a manufacturer will be technologically unable to meet a standard on time. However, when EPA initially proposed the NCP criteria, we noted that the first two criteria addressed whether there was a possibility for a technological laggard to develop.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 797 of 850 When the first criterion is met, it creates the possibility for a technological laggard to exist. When manufacturers must perform substantial work, it is possible that at least one will be unsuccessful and will become a laggard. Thus, when evaluating these first two criteria, the purpose is to determine whether the standard created the possibility for a laggard to exist. The third criterion is different because it asks wh ether that possibility has turned into a likelihood that a technological laggard has developed. For example, a standard may become significantly

more stringent and substantial effort might be required for compliance, but all manufacturers may be meeting the applicable standard. In that situation, a technological laggard is not likely and penalties would be unnecessary
. In this context, it becomes clear that since the first two of these criteria are intended to address the question of whether a given stand ard creates the possibility for this to occur, they

are evaluated before the third criterion that addresses the likelihood that the possibility will actuall y happen. In most cases, it is possible to evaluate these criteria at the point a new standard is a dopted. This is the value of these criteria, that they can usuall y be evaluated long before there is enough information to know whether a technological laggard is actuall y likely. For example, where EPA adopts a new standard that is not technology
- forcin g, but rather merel y an anti
backsliding standard, EPA could determine at the time it is adopted that the second criterion is not met so that manufacturers would know in advance that no NCPs will be made available for that standard. One question that arose in the 2012 rule involved how to evaluate the second criterion if significant time has passed and some work toward meeting the standard has already been completed. To address this question, the proposed regulations would clarify that this criterion is to be evaluated based on actual work needed to go from meeting the previous standard to meeting the current standard, regardless of the timing of such changes. EPA looks at whether “substantial work” is or was required to meet the revised standard at any ti me after the standard was issued

– the important question is whether manufacturers who were using technology that met the previous standard would need to build upon that technology to meet the revised standard. Other interpretations would seem to be direc tly contrary to the purpose of the statute, which is designed to allow technological laggards to be able to certify engines even if other manufacturers have met the standard. (iii) Technological Laggards Questions also arose in 2012 about the meaning of the te rm “technological laggard”. While the regulations do not define “technological laggard”, EPA has previously interpreted this as meaning a manufacturer who cannot meet the emission standard due to technological difficulties, not merel y economic difficultie s (67 FR 51464
- 51465, Aug. 8, 2002). Some have interpreted this to mean that NCPs cannot be made available where a manufacturer tries and fails to meet a standard with one technology but knew that another technology would have allowed them to meet the s tandard. In other words, that it made a bad business decision. However, EPA’s reference to “economic difficulties” applies where a technological path exists

– at the time EPA is evaluating the third criterion

– that would allow the manufacturer to meet the standard on time, but the manufacturer chooses not to use it for economic reasons. The key question is whether or not the technological path exists at the time of the evaluation. To address this confusion, the proposed regulations would clarify that where there is uncertainty about*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 798 of 850 whether a failure to meet the standards is a technological failure, EPA may presume that it was. Note that this does not mean that EPA might declare any failure to meet standards as a technological failure. It would only a ppl y where it is not clear. **(5) In**  **- use Testing**  EPA and manufacturers have gained substantial experience with in
- use testing over the last four or five ye ars. This has led to important insights in way s that the test protocol can be adjusted to be more effectiv e. EPA is accordingl y proposing to make the following changes to the regulations in 40 CFR part 86, subparts N and T:

 Revise the NTE exclusion based on aftertreatment temperature to associate the exclusion with the specific aftertreatment device that does not meet the temperature criterion. For example, there should be no NO X exclusion if a diesel oxidation cataly st is below the temperature threshold. EPA is also proposing to revise the exclusion to include accommodation of CO emissions when there is a problem with low temperatures in the exhaust.  Clarify

that exhaust temperatures should be measured continuously to evaluate whether those temperatures stay

above the 250 °C threshold.  Add specifications to describe where to measure temperatures for exha ust sy stems with multiple aftertreatment devices.  In clude a provision to add 0.00042 g/hp
- hr to the PM measurement to account for PM emissions vented to the atmosphere through the crankcase vent.  In crease the time allowed for submitting quarterly reports from 30 to 45 day s after the end of the quarter. **(6) Miscellaneous Amendments to 40 CFR Part 86**  As described elsewhere, EPA is proposing to make several changes to 40 CFR part 86. This includes primarily

the GHG standards for Class 2b and 3 heavy
- dut y vehicles in subpart S. EPA is also proposing changes related to hearing procedures, adjustment factors for infrequent regeneration of aftertreatment devices, and the testing program for heav y - duty in
- use vehicles. EPA is proposing to make several minor amendments to 40 CFR part 86, subpart A , including the following:  Revise 40 CFR 86.1823 to extend the default c ataly st thermal reactivity coefficient for Tier 2 vehicles to also appl y for Tier 3 vehicles. This change was inadvertentl y omitted from the recent Tier 3 rulemaking. EPA is also interested in a broader review of the appropriate default value for the cataly st thermal re activity coefficient. EPA would be interested in reviewing an y available data related to this issue. In any case, EPA would plan to revisit this question in the future.  Establish a minimum maintenance interval of 1500 hours for DEF filters for heav y - duty engines. This reflects the technical capabilities for filter durability and the expected maintenance in the field.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 799 of 850  Remove the idle CO standard from 40 CFR 86.007
- 11 and 40 CFR 86.008
- 10. This standard no longer applies, since all engines are now sub ject to diagnostic requirements instead of the idle CO standard. EPA is also proposing several amendments to remove obsolete text, update cross references, and streamline redundant regulatory text. For example, paragraph (f)(3) of Appendix I includes a duty

cycle for heavy
- dut y spark
- ignition engines that is no longer specified as part of the certification process. **(7) Applying 40 CFR Part 1068 to Heavy**  **- duty Highway Engines and Vehicles**  As part of the Phase 1 standards, EPA applied the exemption and importatio n provisions from 40 CFR part 1068, subparts C and D, to heavy
- dut y highway engines and vehicles. EPA also specified that the defect reporting provisions of 40 CFR 1068.501 were optional. In an earlier rulemaking, EPA applied the selective enforcement au diting under 40 CFR part 1068, subpart E (75 FR 22896, April 30, 2010). EPA is proposing in this rule to adopt the rest of 40 CFR part 1068 for heav y - duty highway engines and vehicles, with certain exceptions and special provisions. 40 CFR part 1068 captures a range of compliance provisions that are common across our engine and vehicle programs. These regulatory provisions generally

provide the legal framework for implementing a certification
- based program. 40 CFR part 1068 works in tandem with the stand ard
- setting part for each t ype of engine/equipment. This allows EPA to adopt program - specific provisions for emission standards and certification requirements for each typ e of engine/equipment while taking a uniform approach to the compliance provisions that apply generall y. Many of the provisions in 40 CFR part 1068 were originall y written to align with the procedures established in 40 CFR part 85 and part 86. EPA expects the following provisions from 40 CFR part 1068 to not involve a substantive chang e for heav y - dut y highway engines and vehicles:

 Part 1068, subpart A, describes how EPA handles confidential information, how the Administrator may

delegate decision
- making within the agency , how EPA may enter manufacturers’ facilities for inspections, what information manufacturers must submit to EPA, and how EPA may

require testing or perform testing. There is also a description of labeling requirements that apply uniforml y for different types of engines/equipment.  The prohibited acts, penalties, injuncti on provisions, and related requirements of 40 CFR 1068.101 and 1068.125 correspond to what is specified in Clean Air Act sections 203 through 207 (also see section 213(d)).  40 CFR 1068.103 describes how a certificate of conformity applies on a model
- ye ar b asis. With the exception of the stockpiling provisions in paragraph (f), as described below, these provisions generall y mirror what already applies for heav y - dut y highway engines.  40 CFR 1068.115 describes manufacturers’ warranty obligations. EPA is prop osing to amend this section to more carefull y conform to the warranty provisions in Clean Air Act section 207, as described below. Note that EPA also includes a provision identifying the*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 800 of 850 warranty requirements from Clean Air Act section 203(a)(4), which are specific to motor vehicles.  40 CFR 1068.120 describes requirements that apply for rebuilding engines. This includes more detailed provisions describing how the rebuild requirements appl y for cases involving a used engine to replace a certified engine.  40 CFR part 1068, subpart F, describes procedural requirements for voluntary and mandatory recalls. As noted below, EPA is proposing to modify these regulations to eliminate a few instances where the part 1068 provisions differ from what is specified in 4 0 CFR part 86, subpart S.  40 CFR part 1068, subpart G, describes how EPA would hold a hearing to consider a manufacturer’s appeal of an adverse compliance decision from EPA. These procedures apply for penalties associated with violations of the prohibited acts, recall, nonconformance penalties, and generall y for decisions related to certification. As noted below, EPA is proposing to migrate these procedures from 40 CFR part 86, including an effort to align with EPA
- wide regulations that apply in the case of a formal hearing. Manufacturers are already required to use good engineering judgment in many cases related to certifying engines under 40 CFR part 86, Section 1068.5. As noted above, the exemption provisions of 40 CFR part 86, subpart C, already apply for heav y - dut y highway engines. EPA is proposing to add a clarification that the exemption from the tampering prohibition for competition purposes does not appl y to heav y - dut y highway vehicles. This aligns with the statutory provisions for the racing exe mption. EPA is proposing to require that manufacturers comply with the defect
- reporting provisions in 40 CFR 1068.501. Defect reporting under 40 CFR 1068.501 involves a more detailed approach for manufacturers to track possible defects and establishes thresholds to define when manufacturers must perform an investigation to determine an actual rate of emission
related defects. These thresholds are scaled according to production volumes, which allows us to adopt a uniform protocol for every thing from loco motives to lawn and garden equipment. Manufacturers that also produce nonroad engines have already been following this protocol for several ye ars. These defect
- reporting requirements are also similar to the rules that apply in California. 40 CFR part 1 068 includes a definition of “engine” to clarify that an engine becomes subject to certification requirements when a crankshaft is installed in an engine block. At that point, a manufacturer may not ship the engine unless it is covered b y a certificate of conformity or an exemption. Most manufacturers have opted into this definition of “engine” as part of the replacement engine exemption as specified in 40 CFR 85.1714. We are proposing to make this mandatory

for all manufacturers. A related provision is the definition of “date of manufacture”, which we use to establish that an engine’s model year is also based on the date of crankshaft installation. To address the concern that engine manufacturers would install a large number of crankshafts before new e mission standards start to apply as a means of circumventing those standards, we state in 40 CFR 1068.103(f) that manufacturers must follow their normal production plans and schedules for building engines in anticipation of new emission standards. In addi tion to that broad principle, we state that we will consider engines to be subject to the standards for the new model year if engine assembly is not complete within 30 day s after the end*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 801 of 850 of the model year with the less stringent standards (a longer time fr ame applies for engines with per - cylinder displacement above 2.5 liters). 40 CFR part 1068 also includes provisions related to vehicle manufacturers that install certified engines. EPA states in 40 CFR 1068.105(b) that vehicle manufacturers are in violation of the tampering prohibition if they do not follow the engine manufacturers’ emission
- related installation instructions, we approve as part of the certification process. 40 CFR part 1068 also establishes that vehicles have a model ye ar and that instal ling certified engines includes a requirement that the engine be certified to emission standards corresponding to the vehicle’s model ye ar. An exception to allow for normal production and build schedules is described in 40 CFR 1068.105(a). This “normal
- i nventory” allowance is intended to allow for installation of previous
- tier engines that are produced under a valid certificate b y the engine manufacturer shortl y before the new emission standards start to appl y. Stockpiling such engines would be considere d an unlawful circumvention of the new emission standards. The range of companies and production practices is much narrower for heavy - duty highway engines and vehicles than for nonroad engines and equipment. EPA is therefore proposing a further set of sp ecifications to define or constrain engine
- installation schedules that would be considered to fall within normal
- inventory practices. In particular, vehicle manufacturers are limited to three months of production, once new emission standards start to appl y, to install previous
- tier engines without EPA approval. For an y subsequent installation of previous
- tier engines, EPA is proposing to require that vehicle manufacturers get EPA approval based on a demonstration that the excess inventory was a result of unforeseeable circumstances rather than circumvention of emission standards. EPA is proposing that approval in those circumstances would be limited to a maximum of 50 engines to be installed for up to three additional months for a single vehicle manufacturer. The existing prohibitions and exemptions in 40 CFR part 1068 related to competition engines and vehicles need to be amended to account for differing policies for nonroad and motor vehicle applications. In particular, we generall y consider nonroad e ngines and vehicles to be “used solel y for competition” based on usage characteristics. This allows EPA to set up an administrative process to approve competition exemptions, and to create an exemption from the tampering prohibition for products that are modified for competition purposes. There is no comparable allowance for motor vehicles. A motor vehicle qualifies for a competition exclusion based on the ph ys ical characteristics of the vehicle, not on its use. Also, if a motor vehicle is covered b y a certificate of conformity at an y point, there is no exemption from the tampering and defeat
- device prohibitions that would allow for converting the engine or vehicle for competition use. There is no prohibition against actual use of certified motor vehicl es or motor vehicle engines for competition purposes; however, it is not permissible to remove a motor vehicle or motor vehicle engine from its certified configuration regardless of the purpose for doing so. It is relatively

straightforward to appl y the provisions of 40 CFR part 1068 to all engines subject to the criteria emission standards in 40 CFR part 86, subpart A, and the associated vehicles. Manufacturers of comparable nonroad engines are already subject to all these provisions. Class 2b and 3 heav y - dut y vehicles subject to criteria emission standards under 40 CFR part 86, subpart S, are covered b y a somewhat different compliance program. EPA is therefore proposing to apply the provisions of 40 CFR part 1068 only as described in the next*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 802 of 850 section fo r light
- duty

vehicles, light
- dut y trucks, medium
- duty passenger vehicles, and chassis
certified Class 2b and 3 heav y - dut y vehicles. 

### B. **Amendments Affecting Gliders and Glider Kits**  As noted in Section s III, and V the agencies are proposing not to exempt glid er kits from the Phase 2 GHG emission and fuel consumption standards. 891 Gliders and glider kits are exempt from NHTSA’s Phase 1 fuel consumption standards. The EPA Phase 1 rules exempted gliders and glider kits produced b y small businesses from CO2 standards (see 40 CFR 1037.150 (c)) but did not include such a blanket exemption for other gliders and glider kits. EPA is proposing to amend its rules applicable to engines installed in glider kits, a proposal which would affect emission standards not only for GHGs but for criteria pollutants as well. NHTSA is also considering including gliders under its Phase 2 standards. Finally , EPA believes glider manufacturers may

not understand how existing EPA regulations apply to them or otherwise are not complying with existing requirements , resulting in a number of uncertified vehicles. Therefore, EPA is also proposing to clarify its requirements for certification and to revise its definiti ons for glider manufacturers as described below. It is important to emphasize that EPA is not proposing to ban gliders. Rather, as is described below, EPA proposing to restrict the number of gliders that may be produced using engines not meeting current s tandards. EPA requests comment on its proposed amendments and clarifications regarding gliders. Commenters are encouraged to include technological information and production data for the current glider market, as well as for past practices. Commenters op posing the proposed provisions are also encouraged to suggest alternate approaches that would prevent glider kits from being used to circumvent the current emission standards. **(1) Background**  **under the Clean Air Act** EPA notes that under the anti
- tampering provi sions of the Clean Air Act, and under EPA’s regulatory

requirements applicable to rebuilding engines (see 40 CFR 86.004
- 40), rebuilt engines must continue to comply with emission standards applicable to the model year for which they were originall y certified. These regulations specificall y appl y to rebuilt engines independent of the vehicle into which they are installed or reinstalled. As a general matter, EPA has consider ed the question of whether the vehicle into which the rebuilt engine is ins talled is a “new motor vehicle” separatel y from the status of the engine. The use of a rebuilt or other previously

used engine in an otherwise newl y manufactured vehicle (such as a glider kit) does not keep the vehicle from being “new” under the Clean Air Act. (Or, phrased positively , a newl y manufactured vehicle remains “new” even if a rebuilt engine is installed in it
. ) This issue became of increased practical import with the advent of separate vehicle (i.e. non
- engine)

891 Glider vehicles are motor vehicles produced to accept rebuilt engines (or other used engines) along with used axles and/or transmissions. The common commerc ial term “glider kit” is used here primarily to refer to a chassis into which the used/rebuilt engine is installed.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 803 of 850 standards for GHGs in the Phase 1 rule. Thus, before MY 2014, EPA did not have separate standards for vehicles over 14,000 pounds GVWR. However, EPA Phase 1 GHG vehicle standards appl y for new MY 2014 and later vehicles over 14,000 pounds. Thus, EPA generally considers glider kits to be subject to the Phase 1 vehicle standards , and to have been subject to them from the advent of the Phase 1 program
. However, with respect to engines installed in glider kits, an EPA Phase 1 provision in 40 CFR 1037.150(j) provided an exception allowing the use of used or rebuilt engines 892 that were certified to model ye ar 2013 or earlier (or model year 2015 or earlier for spark ignition engines). The effect of this transition provisi on during Phase 1 was to allow glider kits to use engines not certified to meet the engine GHG or fuel consumption standards, although the glider kits were still required to have an EPA vehicle certificate with respect to GHG emissions. In addition, anoth er provision of Phase 1 in 40 CFR 1037.150(c) exempted gliders and glider kits produced by small businesses from the need to obtain a vehicle certificate, but did not include such a blanket exemption for non - small business gliders and glider kits. Thus, depending on the size of the business producing the glider kit, gliders and glider kits may currentl y be subject to the requirement to obtain a vehicle certificate prior to introduction into commerce as a new vehicle. **(2) P**  **roposed Amendment**  **to EPA**  **Vehicle Standards**  **.** EPA is proposing to end both 40 CFR 1037.150 provisions. EPA’s proposed program would generall y treat glider vehicles the same as other new vehicles. As a result, glider vehicles would have to be certified to the Phase 2 vehicle standards, which (among other things) would require a fuel map for the actual engine in order to run GEM. In other words, manufacturers producing glider kits would need to meet the applicable GHG vehicle standards and, as part of its compliance demonstration , would need to have a fuel map for each engine that would be used. EPA is proposing this provision because we believe there has been adequate time for glider manufacturers to transition to a compliance regime. Moreover, as noted more full y below, with increase d numbers of glider kits being produced, perpetuation of the interim exemption from P hase 1 would turn a transition provision into an on
- going loophole. Nevertheless, EPA is proposing to replace this provision with a limited allowance for small business manufacturers as described in the proposed 40 CFR 1037.635. EPA is also proposing new definitions of “glider vehicle” and “glider kit” in 40 CFR 1037.801 that are generally consistent with the common understanding of these terms as meaning new chassis with a used engine or designed to accept a used engine. **(3) Proposed Change to**  **EPA Engine Standards**  EPA is also proposing to amend its rules to require that engines used in glider vehicles must be certified to the standards applicable to the calendar year in which assembly of the glider vehicle is completed. This requirement would apply to all pollutants, and thus would encompass

892 Most glider vehicles being produced today are assembled with rebuilt engines. However, it is also possible to use previously used en gines that are not rebuilt.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 804 of 850 criteria pollutant standards as well as GHG standards. Used or rebuilt engines could be used, as long as they

had been certified to the same standards as apply for the calendar year of glider vehicle assembl y. For example, if assembl y of a glider vehicle was completed in calendar year 2020, the engine standards applicable to MY 2020 engines would have to be satisfied. (If the engine standards for model year 2020 were the same as for model years 2017 through 2019, then any model year 2017 or later engine could be used
. ) EPA is proposing to amend these rules because, with the advent in MY 2007 of more stringent HD diese l engine criteria pollutant standards, continuation of provisions allowing rebuilt and reused engines to meet earlier MY criteria pollutant standards results in unnecessaril y high in
- use emissions. GHG emissions from these engines also are controllable. As more glider kits are produced, EPA believes that these emissions should be controlled to the same levels as other new engines
. Since EPA has already justified the criteria pollutant emission standards for heav y dut y diesel engines pursuant to CAA section 202 (a)(3)(C), it is not clear that any further justification for appl yi ng those standards to engines used in glider kits is nee ded. The GHG engine standards for Phase 1 have likewise already been justified, and the proposed P hase 2 engine standards’ justification is set out in Section II above. If an y further justification is required, EPA notes that the emission benefits of app lying current criteria pollutant standards would be substantial, and at low cost. Glider vehicle production is not being reported to EPA, and we cannot determine precisel y how much of an emission impact these vehicles are having. Nevertheless, since the current standards for NO X and PM are at least 90 percent lower than the most stringent previously

applicable standards, we can be certain that the NO X and PM emissions of any glider vehicles using pre
- 2007 engines are at least ten times as high as emissions from equivalent vehicles being produced with brand new engines. 893 Thus, each glider vehicle that is purchased instead of a new vehicle with a current MY engine results in significantly higher in
- use emissions. EPA recognizes that the environmental impacts of gliders using 2010 and later engines would be much smaller, and requests comment on whether we should treat such gliders differentl y than glider s using older engines. These emission impacts are being compounded by the increasing sales of these vehicles. Estimates provided to EPA indicate that production of glider vehicles has increased b y an order of magnitude from what it was in the 2004
- 2006 tim e frame

– from a few hundred each ye ar to thousands. 894 While the few hundred glider vehicles produced annually in the 2004
- 2006 timeframe may

have been produced for arguabl y legitimate purposes such as salvaging powertrains from vehicles otherwise destro ye d in accidents, EPA believes the tenfold increase in glider kit production since the MY 2007 criteria pollutant emission standards took effect reflects an attempt to circumvent these more stringent standards and (ultimatel y) the Clean Air Act.

893 The NO X and PM standards for MY 2007 and later engines are 0.20 g/hp
- hr and 0.01 g/hp
- hr, respectively. The standards for MY 2004 through 2006 engines were ten times these levels, and earlier standards were even higher. 894 “Industry Characterization of Heavy Duty Glider Kits”, MacKay & Company, September 30, 2013.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 805 of 850 The cost f or manufacturers to comply with the vehicle
- based GHG standards is similar for glider s as for other new vehicles. Similar to EPA’s anal ys is of emissions above, although we cannot precisel y quantify the cost of compl yi ng with the proposed engine requirements for criteria pollutant standards because it is dependent on which engines would be used and which would have otherwise been used , EPA n evertheless believe s that cost
- effectiveness (dollars per ton) of the proposed requirement relative to any pre - 2007 en gine would be similar to the cost
effectiveness of the NO X and PM standards for current model year engines, which EPA has already found to be cost effective. The agencies (as well as the broader SBAR Panel) are, however, concerned about adverse economic impacts on small businesses that assemble gliders and build glider kits , and we recognize that production of a smaller number of glider s by these small manufacturer s may be appropriate for salvaged engines or other non - circumvention purposes. Therefore, EPA is proposing a new provision that would preserve its regulatory status quo for existing small businesses, but cap annual production based on recent sales. Thus, a limited number of glider kits produced b y small busine sses would not have to meet the GHG vehicle standards, and could use rebuilt or used engines provided those engines we re certified to the ye ar of the engine’s manufacture. For example, an existing small business that produced between 100 and 200 glider ve hicles per ye ar would be allowed to produce up to 200 glider vehicles per year under without having to certify

them to the GHG standards, or re
- certifying the engines to the now
- applicable EPA standards for criteria pollutants and GHGs (so long as the engi ne is certified to criteria pollutant standards for the year of its manufacture)
. To be eligible for this provision, EPA is also proposing that no small entity could produce more than 300 glider vehicles in any given model ye ar without certifying (or rece rtifying) to an y EPA standards . EPA believes that this level reflects the upper end of the range of production that occurred before significant circumvention of the 2007 criteria pollutant standards began. We request comment on the appropriate caps (inc luding the appropriate magnitude of the caps) and on whether an y other special provisions would be needed to accommodate glider kits. EPA also requests comment on whether we should allow larger manufacturers to produce some limited number of glider kits. **(4) Lead Time for Amended Standards**  EPA is proposing that this requirement for gliders to meet engine and vehicle standards applicable to other new vehicles and engines take effect on January 1, 2018. EPA believes this provides sufficient time to “permit the development and application of the requisite control measures” (CAA section 202 (a)(3)(D)) because compliant engines are available today , although manufacturers would need several months to change business practices to comply
. EPA also solicits comment on whether an earlier or later compliance date would be appropriate. We also request comment on whether we should include a production limit if we provide additional lead time in the Final Ru le. **(5) Legal authority**  **and Definitions under the Clean Air Act** With respect to statutory

authority under the Clean Air Act, EPA notes first that it has broad authority to control all pollutant emissions from “any” rebuilt heav y duty engines (including engines beyond their statutory useful life). See CAA section 202 (a)(3)(D). EPA is to give “appropriate” consideration to issues of cost, energy , and safety in developing such*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 806 of 850 standards, and to provide necessary lead time to implement those standards. As noted above, if a used engine is placed in a glider kit, the engine would be considered a “new motor vehicle engine” because it is being used in a new motor vehicle (as explained in the following paragraph). See CAA section 216 (3). With respect to the vehicl e - based GHG standards, there is no question that the completed glider is a “motor vehicle” under the Clean Air Act (as well as under NHTSA’s safet y provisions)
. Some in the trucking industry have questioned whether a glider kit (without an engine) is a motor vehicle. However, EPA considers glider kits to be incomplete motor vehicles, and EPA ha s the authority to regulate incomplete motor vehicles, including unmotorized chassis. Under the CAA, it is also important that “new” is determined based on lega l title and does not consider prior use. Thus, glider kits that have a new vehicle identification number (VIN) and new title are considered to be “new motor vehicles” even if they incorporate previously

used components. Note that under the Clean Air Act , EPA would not consider the fact that a vehicle retained the VIN of the donor vehicle from which the engine was obtained determinative of whether or not the vehicle is new
. The CAA also defines “manufacturer” to include any person who assembles new m otor vehicles. EPA is proposing to revise its regulatory definitions of these terms in 40 CFR 1036.801 and 1037.801 to more clearl y reflect these aspects of the CAA definitions

– that glider kits are “new motor vehicles”, previously used engines (whether rebuilt or not) installed into glider kits are “new motor vehicle engines”, and any person who completes assembly of a glider is a “manufacturer”. EPA also notes that under the existing 40 CFR 1037.620, glider kit assemblers would generally be considered to be secondary vehicle manufacturers. Th at section, which EPA is proposing to redesignate as 40 CFR 1037.622, allows secondary vehicle manufacturers that have a valid certificate or exemption to receive incomplete vehicles (such as glider kits) from OEMs
. ). To further clarify

that EPA considers both glider kits and completed glider vehicles to be motor vehicles, EPA is proposing to add a clarification to our definition of “motor vehicle” in 40 CFR 85.1703 regarding vehicles such as gliders that clearl y are intended for use on highway s, consistent with the CAA definition of “motor vehicle” in CAA section 216 (2). The regulatory definition presently

contains a provision stating that vehicles lacking certain safety features required b y state or federal law are not “motor vehicles”. This caveat needs a proper context: is the safety feature one that would prevent operation on highways. If not, absence of that feature does not result in the vehicle being other than a motor vehicle. The proposed amendment w ould consequentl y make clear that vehicles that are clearly intended for operation on highway s are motor vehicles, even if they do not have every

safety feature. (EPA is also considering whether to simply eliminate the clause “or safet y features required by state and/or federal law” from the regulatory

definition
. ) This clarifying provision would take effect upon promulgation
. We note that NHTSA and EPA have separate definitions for motor vehicles under their separate statutory

authorities. As such, EPA's determination of how its statute and regulations apply to glider kits and glider vehicles has no bearing on how NHTSA may apply its safety authority with regard to them. S ee Section XIV. B. (6) for additional discussion of NHTSA’s consideration of glider vehicles.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 807 of 850 **(6) Relation to NHTSA Fuel Efficiency Program**  **and Safety Regulations** NHTSA does not consider glider kits to be motor vehicles , but it does consider ass embled glider vehicles to be motor vehicles
. As stated above, NHTSA is considering including glider vehicles under its Phase 2 standards. NHTSA seeks comments from glider manufacturers on this consideration. We believe that the agencies potentially having different policies for glider kits and glider vehicles under the Phase 2 program would not resul t in problematic disharmony between the NHTSA and EPA programs , because of the small number of vehicles that would be involved. EPA believes that its proposed changes would result in the glider market returning to the pre
- 2007 levels , in which fewer than 1,000 glider ve hicles would be produced in most ye ars. Given that a large fraction of these vehicles would be exempted from EPA regulations because they

would be produced b y qualifying small businesses, they would thus , in practice, be treated the same under EPA and NHTSA regulations. Only non - exempt glider vehicles would be subject to different requirements under the NHTSA and EPA regulations. However, we believe that this is unlikely to exceed a few hundred vehicles in any year, which would be few enough not to result in any meaningful disharmony

between the two agencies. With regard to NHTSA’s safety authority over gliders, the agency notes that it has become increasingl y aware of potential noncompliances with its regulations applicable to gliders. NH TSA has learned of manufacturers who are creating glider vehicles that are new vehicles under 49 CFR 571.7(e), however, the manufacturers are not certifyingthem and obtaining a new VIN as required. NHTSA plans to pursue enforcement actions as applicable against noncompliant manufacturers. In addition to enforcement actions, NHTSA may consider amending 49 CFR 571.7(e) and related regulations as necessary
. NHTSA believes manufacturers may

not be using this regulation as originall y intended
. 

### C. **Applying t he General Compliance Provisions of 40 CFR Part 1068 to**  **Light -**  **Duty Vehicles, Light -**  **Duty Trucks, C hassis**  **- certified Class 2**  **B** 

### and 3 **H eavy**  **- D**  **uty V**  **ehicles and Highway Motorcycles**  As described above, EPA is proposing to appl y all the general compliance provisions of 40 CFR part 1068 to heavy
- dut y engines and vehicles. EPA proposes to also apply the recall provisions and the hearing procedures from 40 CFR part 1068 for highway motorcycles and for all vehicles subject to standards under 40 CFR part 86, subpart S. See the preceding section for a description of how the provisions from 40 CFR part 1068 compare to those in 40 CFR part 85 and part 86. EPA also requests comment on applying the rest of the provisions from 40 CFR part 1068 to highway

motorcycles and to all vehicles subject to standards under 40 CFR part 86, subpart S. EPA particularly requests comment on applying the defect
- reporting provisions in 40 CFR 1068.501 to these vehicles. The general approach is to replace a fixed threshold of 25 defects as the basis for defect reporting with a scaled approach that would require defect reporting only

after the manufacturer finds some larger number of actual emission
- related defects. The regulation calls for manufacturers to monitor possible emission
- related defe cts as*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 808 of 850 evidenced b y warranty cl aims, in
- use testing, and other indicators, and to start investigating for actual defects once possible defects exceed an established threshold. The existing regulation in 40 CFR 1068.501 generally calls for investigating on ce possible defects exceed 5 to 10 percent of production, with a requirement to report defects if confirmed defects exceed a rate of 1 to 2 percent of production. The percentage thresholds that apply for a given engine/vehicle model decrease with increasi ng production volumes. This approach is similar to defect
- reporting requirements that already apply in California. Manufacturers may be interested in complying with a single set of defect
- reporting provisions nationwide; EPA therefore also requests comme nt on simply requiring manufacturers to follow the California defect
- reporting scheme for their EPA
- certified vehicles. Note that EPA is proposing to amend 40 CFR 85.1701 to specify that the exemption provisions apply

to heavy
- dut y engines subject to regul ation under 40 CFR part 86, subpart A. This is intended to limit the scope of this provision so that it does not apply for Class 2b and 3 heav y - dut y vehicles subject to standards under 40 CFR part 86, subpart S. This change corrects and inadvertentl y bro ad reference to heav y - dut y vehicles in 40 CFR 85.1701. 

### D. **Amendments to General Compliance Provisions in 40 CFR Part 1068** The general compliance provisions in 40 CFR part 1068 apply broadly too many different ty pes of engines and equipment. This section desc ribes how EPA is proposing to amend these procedures to make various corrections and adjustments. **(1) Hearing Procedures**  EPA is proposing to update and consolidate its regulations related to formal and informal hearings in 40 CFR part 1068, subpart G. This will allow us to rely on a single set of regulations for all the different categories of vehicles, engines, and equipment that are subject to emission standards. EPA also made an effort to write these regulations for improved readability. The hearing procedures specified in 40 CFR part 1068 apply to the various categories of nonroad engines and equipment (along with the other provisions of part 1068). EPA is proposing in these rules to apply these hearing procedures also to heavy
- duty highway engines, light
- duty motor vehicles, and highway motorcycles. EPA believes there is no reason to treat any of these sectors differently regarding hearing procedures. EPA is proposing an introduc tory section that provides an overview of requesting a hearing for all cases where a person or a compan y objects to an adverse decision by the agency. In certain circumstances, as spelled out in the regulations, a person or a company can request a hearing before a Presiding Officer. Statutory provisions require formal hearing procedures for administrative enforcement actions seeking civil penalties. The Clean Air Act does not require a formal hearing for other agency decisions; EPA is therefore proposing to specify that informal hearing procedures appl y for all such decisions. The introductory

section also adds detailed provisions describing the requirements for submitting information to the agency in a timely

manner. These provisions accommodate curre nt practices for electronic submission, distinguish between postal and courier delivery and*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 809 of 850 provide separate requirements for shipments made from inside and outside the United States. The specified deadlines are generall y based on the traditional approach of a postmark determining whether a submission is timely or not. Fax, e
- mail and courier shipments are similarly specified as needing to be sent by close of business on the day of the deadline. A different approach applies for shipments originating from outside the United States. Because time in transit can vary

dramaticall y, we are proposing to specify that foreign shipments need to be received in our office by the specified deadline to be considered timel y. Given the option to send documents b y e - mai l or by fax, EPA expects this approach would not pose any disadvantage to an yone making an appeal from outside the United States. EPA is proposing to replace the current reference to 40 CFR 86.1853
- 01 for informal hearings with a full
- text approach that ca ptures this same material. EPA attempted to write these proposed regulations in a way that would not change the underl yi ng hearing protocol. The regulations currentl y reference the formal hearing procedures in 40 CFR 85.1807, which were originall y draft ed to appl y to light
- duty motor vehicles. After we adopted the hearing procedures in 40 CFR 85.1807, EPA’s Office of Administrative Law Judges finalized a set of regulations defining formal hearing procedures that were intended to apply broadl y across the agency

for appeals under every

applicable statute. See 40 CFR part 22, “Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties and the Revocation/Termination or Suspension of Permits.” EPA is therefore revising the regulations in 40 CFR part 1068 to simply refer to these formal hearing procedures in 40 CFR part 22. **(2) Additional**  **Changes to General Compliance Provisions**  EPA is also proposing to make numerous changes across 40 CFR part 1068 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory

provisions. This includes the following proposed changes:

 §1068.1: Clarify

applicability

of part 1068 with respect to legacy parts ( such as 40 CFR part s 89 through 94)
.  §1068.20: Clarify

that EPA’s inspection activities do not depend on having a warrant or a court order. As noted in the standard
- setting parts, EPA may deny certification or suspend or revoke certificates if a manufacturer denies EPA entry for an attempted inspection or other entry .  §1068.27: Clarify

that EPA confirmatory

testing may

properl y be performed before issuance of a certificate of conformity . We are also making an addition to state that we may require manufacturers to give us any special components that are needed for EPA testing.  §1068.30: Add definitions of “affiliated companies”, “parent company” , and “subsidiaries” to clarify how small
- business provisions apply for a range of business relationships.  §1068.30: Clarify

that a manufacturer can be considered a certificate holder based on the current or previous model year (to avoid problems from having a gap between model years).  §1068.30: Spell out contact information for the “Designated Compliance Officer” to clarify how manuf

acturers should submit information to the agency . This includes e
- mail addresses for the various sectors.  §1068.32: Add discussion to establish the meaning of various terms and phrases for EPA regulations; for example, we distinguish between standards, re quirements, allowances,*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 810 of 850 prohibitions, and provisions. EPA is also clarifying terminology with respect to singular/plural, inclusive lists, notes and examples in the regulatory text, and references to “general” or “typical” circumstances. EPA also describ es some of the approach to determining when “unusual circumstances” appl y.  §1068.45: Allow manufacturers to use coded dates on engine labels; allow EPA to require the manufacturer to share information to read the coded information.  §1068.45: Clarify

that engine labels are information submissions to EPA.  §§1068.101 and 1068.125: Update penalty amounts to reflect changes to 40 CFR part 19.  §1068.101: Revise the penalty associated with the tampering prohibition to be an engine
based penalty, as opposed to as sessing penalties per day of engine operation. This correction aligns with Clean Air Act section 205.  §1068.103: Clarify

the process for reinstating certificates after suspending, revoking, or voiding.  §1068.103: Clarify

that the prohibition against “offe ring for sale” uncertified engines applies only for engines already produced. It is not a violation to invite customers to buy engines as part of an effort to establish the economic viability of producing engines, as would be expected for market research.  §1068.105: Require documentation related to “normal inventory” for stockpiling provision. EPA is also clarifying that there is no specific deadline associated with producing “normal
inventory” engines under this section, but emphasizing that vehicle/equipment manufacturers may not delay engine installation beyond their normal production schedules. EPA is also clarifying that the allowance related to building vehicles/equipment in the early part of a model year, before the start of a new calendar ye ar cor responding to new emission standards, applies only

in cases where vehicle/equipment assembly is complete before the start of the new calendar ye ar. This is intended to prevent manufacturers from circumventing new standards b y initiating production of larg e numbers of vehicles/equipment for eventual completion after new standards have started to apply
.  §1068.115: Clarify

warranty provisions to align with statute.  §1068.120: Describe how the rebuilding provisions apply in the case of engine replacements whe re the new and old engines are subject to standards under different standard
- setting parts (such as switching from spark
- ignition to compression
- ignition nonroad engines).  §1068.201: Describe how someone may sell an engine under a different exemption than was originall y intended or used.  §1068.210: Remove the requirement for companies getting approval for a testing exemption to send us written confirmation that they meet the terms and conditions of the exemption. We do not believe this submission is neces sary for implementing the testing exemption.  §1068.220: Add description of how we might approve engine operation under the display exemption. This is intended to more carefull y address circumstances in which engine operation is part of the display functio n in question. We would want to consider a wide range of factors in considering such a request; for example, we could be more inclined to approve a request for a display exemption if the extent of operation is very limited, or if the engine/equipment has emission rates that are comparable to what would apply absent the exemption. EPA is also removing the specific prohibition against generating revenue with exempted engines/equipment, since this has an unclear meaning and we can take any possible*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 811 of 850 revenue g eneration into account in considering whether to approve the exemption on its merits.  §1068.230: Add provision allowing for engine operation under the export exemption only as needed to prepare it for export (this has already been in place in part 85, and in part 1068 for engines/equipment imported for export).  §1068.235: Clarify

that the standard
- setting part may set conditions on an exemption for competition engines/equipment.  §1068.240: Describe the logistics for identifying the disposition of engines be ing replaced under the replacement engine exemption. In particular, manufacturers would need to identify the disposition of each engine b y the due date for the report under §1068.240(c) to avoid counting them toward the production limit for untracked repl acement engines. We are proposing to delay

the due date for the report until September 30 following the production ye ar to allow more time for manufacturers to make these determinations.  §1068.240: Clarify

the relationship between paragraphs (d) and (e).  §1068.250: Simplify

the deadline for requesting small
- volume hardship.  §1068.255: Clarify

that hardship provisions for equipment manufacturers are not limited to small businesses, and that a hardship approval is generall y limited to a single instance of producing exempt equipment for up to 12 months.  §1068.260: State that manufacturers shipping engines without certain emission
- related components need to identify the unshipped components either with a performance specification (where applicable) or with spec ific part numbers. We are also listing exhaust piping before and after aftertreatment devices as not being emission
- related components for purposes of shipping engines in a certified configuration.  §§1068.260 and 1068.262: Revise the text to clarify that provisions related to partially complete engines have limited applicability in the case of equipment subject to equipment
based exhaust emission standards (such as recreational vehicles). These provisions are not intended to prevent the sale of partially complete equipment with respect to evaporative emission standards. We intend to address this in the future b y changing the regulation in 40 CFR part 1060 to address this more carefully
.  §1068.262: Revise text to align with the terminology and description adopted for similar circumstances related to shipment of incomplete heav y - dut y vehicles under 40 CFR part 1037.  §1068.301: Revise text to explicitly allow for electronic submission of EPA declaration forms and other importation documents.  §1068.305: Remove the provision specifying that individuals may need to submit taxpayer identification numbers as part of a request for an exemption or exclusion for imported engines/equipment. We do not believe this information is necessary for implementing the exemption and exclusion provisions.  §1068.315: Allow for destroying engines/equipment instead of exporting them un der the exemption for importing engines/equipment for repairs or alterations.  §1068.315: Remove the time constraints on approving extensions to a display exemption for imported engines/equipment. EPA would continue to expect the default time frame of one ye ar to be appropriate, and extension of one to three years is sufficient for most cases; however, we are aware that there are occasional circumstances calling for a longer
- term*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 812 of 850 exemption. For example, an engine on display in a museum might appropriately be exempted indefinitely

once its place in a standing exhibition is well established.  §1068.315: Specify

that engines under the ancient engine exemption must be substantially in the original configuration.  §1068.360: Clarify

the provisions related to model ye ar for imported products by removing a circularity regarding “new” engines and “new” equipment.  §1068.401: Add explicit statement that SEA testing is at manufacturer’s expense. This is consistent with current practice and the rest of the regulatory tex t.  §1068.401: Allow for requiring manufacturers other than the certificate holder to perform selective enforcement audits in cases where multiple manufacturers are cooperativel y producing certified engines.  §1068.401: State that SEA non
- cooperation may lea d to suspended or revoked certificate (like production
- line testing).  §1068.415: Set up new criteria for lower SEA testing rate based on engine power to allow for a reduced testing rate of one engine per day onl y for engines with maximum engine power above 560 kW, but keep the allowance to approve a lower testing rate; that may be needed, for example, if engine break
- in (stabilization) and testing are performed on the same dy namometer. EPA believes it is more appropriate to base reduced testing rates on en gine characteristics rather than sales volumes, as has been done in the past.  §1068.415: Revise the service accumulation requirement to specify a maximum of eight day s for stabilizing a test engine. This is necessary to address a situation where an engine operates only six hours per day

to achieve stabilization after well over 50 hours. For such cases, we would expect manufacturers to be able to run engines much more than six hours per day . As with testing rates, manufacturers may ask for our approval to use a longer stabilization period if circumstances don’t allow them to meet the specified service accumulation targets.  §1068.501, and Appendix I : Clarify that “emission
- related components” include components whose failure would commonly increase emissio ns (not might increase), and whose primary purpose is to reduce emissions (not sole purpose); current regulations are not consistent.  §1068.501: Add “in
- use testing” to list of things to consider for investigating potential defects.  §1068.505: Clarify

that manufacturers subject to a mandatory recall must remedy noncompliant target vehicles without regard to their age or mileage at the time of repair, consistent with provisions that already apply under 40 CFR part 85.  §1068.505: Revise the requirement for su bmitting a remedial report from a 60
- day maximum to a 45
- day

minimum (or 30
- day

minimum in the event of a hearing). This adjusted approach already applies to motor vehicles under 40 CFR part 85.  §1068.515: Clarify

an ambiguity

to require that manufacturers identify the facility where repairs or inspections are performed.  §1068.530: Specify

that recall records must be kept for five years, rather than three ye ars. This is consistent with longstanding recall policy for motor vehicles and motor vehicle engines under 40 CFR part 85. Manufacturers and equipment operators have raised an additional question about how the regulations appl y for replacement engines where the replacement engine is of a different type than the engine being replaced. For example, someon e operating a piece of industrial equipment may want to replace an old spark
- ignition engine with a compression
- ignition engine (or vice*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 813 of 850 versa). The replacement engine could be freshl y manufactured, or it may have already

been placed into service. The tampering prohibition would generall y disallow “disabling emission controls,” but regulations do not directly address how this applies relative to the multiple emission standards that apply . It is important to note that the standard
- setting part often speci fies that a used replacement engine becomes new (and subject to certification requirements) if it is installed in a piece of equipment from a different category
. For example, installing a used heav y - dut y highway engine in land
- based nonroad equipment woul d make the engine “new” and subject to certification requirements as a nonroad engine. This does not apply for spark
- ignition engines and compression
- ignition engines installed in heavy
- dut y highway vehicles, or for spark
ignition engines and compression
- ignition engines installed in land
- based nonroad equipment. We request comment on the best approach to delineating how the tampering prohibition should apply for these scenarios. 

### E. **Amendments to Light -**  **Duty Greenhouse Gas Program Requirements** EPA is proposi ng to make minor changes to correct errors and clarify regulations in 40 CFR part 86, subpart S, and part 600 relating to EPA’s light
- dut y greenhouse gas emission standards. This includes the following proposed changes:

 §86.1818
- 12: Correct a reference in paragraph (c)(4) and clarify that CO 2 - equivalent debits for N 2 O and CH 4 are calculated in Megagrams and rounded to the nearest whole Megagram.  §86.1838
- 01: Correct re ferences in paragraph (d)(3)(iii).  §86.1866
- 12: Correct a reference in paragraph (b).  §86.1868
- 12: Clarify

language in the introductory paragraph explaining the model years of applicability

of different provisions for air conditioning efficiency credits. In paragraph (e)(5) clarify that the engine
- off specification of 2 minutes is intended to be cumulative time. In paragraphs (f)(1), (g)(1), and (g)(3), clarify language b y pointing to the definitions in §86.1803
- 01.  §86.1869
- 12: Make corrections to the language for readability in paragraph (b)(2). In paragraph (b)(4)(ii) delete the phrase “b ackup/reverse lights” because these lights were not intended to be part of the stated eligibility criteria for high
- efficiency lighting credits. Correct references in paragraph (f).  §86.1870
- 12: Add language that clarifies that a manufacturer that meets the minimum production volume thresholds with a combination of mild and strong hybrid electric pickup trucks is eligible for credits.  §86.1871
- 12: Clarify

that credits from model years 2010
- 2015 are not limited to a life of 5 model years. A recent rule extended the life of 2010
- 2015 credits to model year 2021 ; thus , language referring to a 5
- ye ar life for emission credits generated in these model years is being removed or revised.  §600.113
- 12: Correct language in paragraph (m)(1), which relates to vehicl es operating on LPG, that erroneousl y refers to methanol and methanol
- fueled.  §600.113
- 12: Correct references in paragraph (n) and add a new paragraph (m) that reinstates language mistakenl y dropped by a previous regulation.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 814 of 850  §600.116
- 12: Correct descrip tion of phy sical quantity to refer to “energy” rather than “current”, and correct various paragraph references.  §600.208
- 12: Correct a reference in paragraph (a)(2)(iii).  §600.210
- 12: Correct a reference and text in paragraph (c)(2)(iv)(C). 

### F. **Amendments to Highway and Nonroad Test Procedures and Certification**  **Requirements (1)**  **Testing with Aftertreatment Devices Involving Infrequent Regeneration** Manufacturers generally

rely on selective catal yt ic reaction and diesel particulate filters to meet EPA’s emission standards for highway and nonroad compression
- ignition engines. These emission control devices typicall y involve infrequent regeneration, which can have a significant effect on emission rates. EPA has addressed that for each engine ty pe by provisions for in frequent regeneration factors; this is a calculation methodology that allows manufacturers to incorporate the effect of infrequent regeneration into reported emission values whether or not that regeneration occurs during an emission test. EPA adopted separate provisions for highway , locomotive, marine, and land
- based nonroad compression
- ignition engines. EPA is proposing to harmonize the common elements of these procedures in 40 CFR part 1065, and to add clarifying specifications in each of the standard
- s etting parts for sector
- specific provisions. **(2) Mapping for Constant**  **- Speed Engines under 40 CFR Part 1065**  EPA is proposing to revise this section as it applies to the two
- point mapping method for certain constant
- speed engines. The regulations currentl y cite a performance parameter in I SO 8528
- 5 that does not apply for the design of these engines. Common practice for engines that produce electric power is to use an isochronous governor for stand
- alone generator sets. In some parallel operations of multiple g enerator sets, droop is added as a method for load sharing. The amount of droop can be tuned by the generator set manufacturer or the site sy stem integrator. Such engines are commonly tested on an engine dy namometer with the isochronous governor. Mapping with just two points works well for the case of 0 percent droop (i.e. isochronous governor). For this case, a persistent speed error is forced on the engine governor on the second point and this will cause the governor to wind up to its maximum command. The second point is effectivel y operating on the torque curve instead of the isochronous governor. So, the second point captures the full fueling torque (plus a small amount due to any rising torque curve). This measured torque is used as the maximum te st torque for computing the emission test points. Since there is no designed
- in droop, some target amount of speed error is needed for the second point. The regulation at 40 CFR 1065.510(d)(5)(iii) currentl y has a default target speed on the second point of 97.5 percent of the no
- load speed measured on the first point. This results in a persistent speed error of 2.5 percent of the no
- load speed. For an 1800 rpm no
- load speed, this would give a target speed of 1755 rpm and a 45 rpm speed error on an isoc hronous governor. If the engine has a torque rise of 20 percent from 1800 to 1200 rpm (0.0333 percent torque rise per rpm), this 45 rpm error will cause a 1.5 percent of point error in the determination of the intended*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 815 of 850 maximum test torque. This error is larger than desired for this ty pe of testing. Fortunatel y, engines and test cells have sufficient speed resolution to select a lower speed error, which reduces this error in maximum test torque. In practice, testing with a speed error at or below 0.5 percent is more than adequate to cause the isochronous governor to wind up to maximum fueling. Using a target speed of 99.5 percent on the second point gives a target speed of 1791 rpm for an 1800 rpm no
- load speed and will reduce the error on the maximum te st torque to a reasonable 0.3 percent of point for the 20 percent torque rise case described above. For governors with droop, if we attempt the two
- point method, we would have to calculate a target speed for the second point based on a designed amount of d roop. Unfortunatel y, the actual governor may not have the same amount of droop as the design droop, which may

cause error in the measured torque versus the maximum test torque associated with a complete torque map. Also, the design droop may be based on a torque value that is different from the intended maximum test torque. Thus, the two
- point method is not sufficient to yield a maximum test torque equivalent to the value that would be obtained using a multi
- point map. Also the allowed speed error on the second point is 20 percent of the speed droop, which allows an unacceptabl y large error in the maximum test torque. Thus, for the reasons listed, we are proposing to limit the two
- point mapping method to any isochronous governed engines, not just engines used to generate electric power. **(3) Calculating Maximum and Intermediate Test Speeds under 40 CFR Part 1065**  EPA is proposing to improve the method for calculating maximum and intermediate test speeds b y appl yi ng a more robust calculation method. The new calculation method would be consistent with the methodology used for the maximum test torque determination, which we revised in our light
- duty

Tier 3 rulemaking. Under the current regulations, the result is a measured maximum test torque at one of the map poi nts. The proposed calculation method involves interpolation to determine the measured maximum test torque, yielding a more representative maximum test torque lbs. **(4) Additional Test Procedure Amendments**  EPA is proposing the following additional changes to test procedures in 40 CFR part 1065 and part 1066:

 § 1065.15: Allow manufacturers to use NMOG measurements to demonstrate compliance with NMHC standards. We also request comment on whether other forms of hydrocarbon standards (such as VOC) should be allowed for alternative fuels.  § 1066.210: Revise the dynamometer force equation to incorporate grade, consistent with the coastdown procedures being proposed for heav y - duty vehicles. For operation at a level grade, the additional parameters cancel out of the calculation.  §1066.605: Adding an equation to the regulations to spell out how to calculate emission rates in grams per mile. This calculation is generally assumed, but we want to include the equation to remove an y uncertainty about calculating emission rates from mass emission measurements and driving distance.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 816 of 850  § 1066.815: Create an exception to the maximum value for overall residence time for PM samplin g methods that involve PM samples collected for combined bags over a duty c ycl e. This is needed to accommodate the reduced sample flow rates associated with these procedures. 

### G. **Amendments Related to Nonroad Diesel Engines in 40 CFR Part 1039**  EPA is proposin g two changes to 40 CFR 1039.5 to clarify the scope and applicability of standards under 40 CFR part 1039. First, EPA is stating that engines using the provisions of 40 CFR 1033.625 for non
- locomotive
- specific engines remain subject to certification requirements as nonroad diesel engines under 40 CFR part 1039. Such engines would need to be certified as both locomotive engines and as nonroad diesel engines. Second, EPA is proposing to revise the statement about how manufacturers may certify under 40 CFR part 1051 for engines installed in recreational vehicles (such as all
- terrain vehicles or snowmobiles). EPA is proposing to remove text that might be interpreted to mean that there are circumstances in which certification under neither part is required. The proper understanding of EPA’s policy in that regard is that certification under one part is a necessary condition for being exempted from the other part. In 2008, EPA adopted a requirement in 40 CFR part 1042 for manufacturers to design marine diesel engines using selective catal yt ic reduction with basic diagnostic functions to ensure that these s ys tems were working as intended (73 FR 37096, June 30, 2008). EPA is proposing to appl y those same diagnostic control requirements to nonroad diesel engines regulated under 40 CFR part 1039. This addresses the same fundamental concern that engines would not be controlling emissions consistent with the certified configuration if the engine is lacking the appropriate quantity and quality

of reductant. While s ome lead time would be needed to make the necessary modifications, we believe it will be straightforward to appl y the same designs from marine diesel engines to land
- based nonroad diesel engines. EPA is accordingl y proposing that manufacturers meet the proposed diagnostic specifications starting with model year 2018. These diagnostic controls would not affect the current policy related to adjustable parameters and inducements related to selective catal yt ic reduction. EPA request s comment on adding thes e diagnostic requirements for nonroad diesel engines. EPA is proposing to make numerous changes across 40 CFR part 1039 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory

provisions. This includes the following proposed changes:

 §1039.2: Add a clarifying note to say that something other than a conventional “manufacturer” may

need to certify

engines that become new after being placed into service (such as engines converted from highway or stationary use). This is intended to address a possible assumption that only conventional manufacturers can certify engines.  §§1039.30, 1039.730, and 1039.825: Consolidate information
- collection provisions into a single section.  §1039.107: Remove the reference to deterioration factors for evaporative emissions, since there are no deterioration factors for demonstrating compliance with evaporative emission standards.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 817 of 850  §1039.104(g): Correct the specified FEL cap for an example scenario illustrating how alternate FEL caps work.  §1039.120: Reduce extended
- warranty requirements to warranties that are actually provided to the consumer, rather than to any published warranties that are offered. The principle is that the emission
- related warranty should not b e less effective for emission
- related items than for items that are not emission
- related.  §1039.125: Allow for special maintenance procedures that address low
- use engines. For example, owners of recreational marine vessels may need to perform engine maint enance after a smaller number of hours than would otherwise apply based on the limited engine operation over time.  §1039.125: Establish a minimum maintenance interval of 1500 hours for DEF filters. This reflects the technical capabilities for filter durab ility and the expected maintenance in the field.  §1039.125: Add fuel
- water separator cartridges as an example of a maintenance item that is not emission
- related.  §1039.135: Allow for including optional label content only if the manufacturer does not opt to omit other information based on limited availability of space on the label, and identify counterfeit protection as an additional item that manufacturers may include on the label.  §1039.201: Clarify

that manufacturers may

amend their application for certification after the end of the model ye ar in certain circumstances, but they may not produce engines for a given model year after December 31 of the named year.  §1039.201: Establish that manufacturers may deliver to EPA for testing an engine that is ident ical to the test engine used for certification. This may be necessary

if the test engine has accumulated too man y hours, or if it is unavailable for any reason.  §1039.205: Replace the requirement to submit data from invalid tests with a requirement to simply notify EPA in the application for certification if test was invalidated.  §1039.205: Add a requirement for manufacturers to include in their application for certification a description of their practice for importing engines, if applicable. Note that where a manufacturers’ engines are imported through a wide variety of means, EPA would not require this description to be comprehensive. In such cases, a short description of the predominant practices would generall y be sufficient. We are also proposing to require manufacturers of engines below 560 kW to name a test lab in the United States for the possibility

of us requiring tests under a selective enforcement audit. We have adopted these same requirements in many of our other nonroad programs
.  §1039.225: Clarify

that manufacturers may

amend the application for certification after the end of the model ye ar only in certain circumstances, and not to add a new or modified engine configuration.  §1039.235: Add an explicit allowance for carryover eng ine families to include the same kind of within
- family

running changes that are currently allowed over the course of a model year. The original text may

have been understood to require that such running changes be made separate from certifying the engine family for the new model year.  §§10 39 .235, 10 39 .240, and 10 39 .601: Describe how to demonstrate compliance with dual
fuel and flexible
- fuel engines. This generall y involves testing with each separate fuel, or with a worst
- case fuel blend.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 818 of 850  §1039.240: Add instructions for calculating deterioration factors for sawtooth deterioration patterns, such as might be expected for periodic maintenance, such as cleaning or replacing diesel particulate filters.  §1039.240: Remove the instruction related to calculating NMHC emissions from measured THC results, since this is addressed in 40 CFR part 1065.  §1039.250: Remove references to routine and standard tests, and remove the shorter recordkeeping requirement for routine data (or data from routine tests). All test reco rds must be kept for eight ye ars. With electronic recording of test data, there should be no advantage to keeping the shorter recordkeeping requirement for a subset of test data. EPA also notes that the eight
- ye ar period restarts with certification for a new model year if the manufacturer uses carryover data.  §1039.255: Clarify

that rendering information false or incomplete after submitting it is the same as submitting false or incomplete information. For example, if there is a change to any corporate in formation or engine parameters described in the manufacturer’s application for certification, the manufacturer must amend the application to include the new information.  §1039.255: Clarify

that voiding certificates for a recordkeeping or reporting violatio n would be lim ited to certificates that relate to the particular recordkeeping or reporting failure.  §1039.505: Correct the reference to the I SO C1 duty cycle for engines below 19 kW.  §10 39.515: Correct the cite to 40 CFR 86.1370.  §§1039.605 and 1039.610: Revise the reporting requirement to require detailed information about the previous ye ar, rather than requiring a detailed projection for the year ahead. The information required in advance would be limited to a notification of plans to use the provisions of these sections.  §10 39 .640: Migrate engine branding to §1068.45.  §1039.701 1039.730: Describe the process for retiring emission credits. This may be referred to as donating credits to the environment.  §1039.705: Change terminology for counting engines from “point of first retail sale” to “U.S.
- direction production volume.” This conforms to the usual approach for calculating emission credits for nonroad engines.  §1039.710: Clarify

that it is not permissible to show a proper balance of credits for a gi ven model by using emission credits from a future model year.  §1039.730: Clarify

terminology

for ABT reports.  §1039.740: Clarify

that the averaging
- set provisions apply for credits generated by

Tier 4 engines, not for credits generated from engines subject to earlier standards that are used with Tier 4 engines.  §1039.801: Update the contact information for the Designated Compliance Officer.  §1039.801: Revise the definition of “model year” to clarify that the calendar year relates to the time that engines are produced under a certificate of conformity
.  §1039.815: Migrate provisions related to confidential information to 40 CFR part 1068. EPA requests comment on removing regulatory provisions for Independent Commercial Importers in 40 CFR part 1039. These pro visions, copied from highway regulations many

years ago, generally

allow for small businesses to modify small numbers of uncertified products to be in a certified configuration using alternative demonstration procedures. We are not aware of anyone using these provisions for nonroad engines in the last 15 years or more. We are therefore*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 819 of 850 interested in considering these provisions to be obsolete, in which case they can be removed without consequence. 

### H. **Amendments Related to Marine Diesel Engines in 40 CFR**  **Parts 1042**  **and 1043**  EPA’s emission standards and certification requirements for marine diesel engines under the Clean Air Act are identified in 40 CFR part 1042. **(1) Continuous**  **NO X**  **Monitoring and On -**  **off Controls** Manufacturers may

produce certain marine diesel engines with on
- off features that disable NO X controls when the ship is operating outside of a designated Emission Control Area (ECA) as long as certain conditions are met (§1042.115(g)). This provision, which applies to Category 3 engines meeting EPA Tier 3 standards, is intended to address the special operating conditions posed by

an ECA and allows a ship that operates in and out of designated ECAs to downgrade engine NO X emission controls while the s hip is operating outside of a designated ECA. This provision also applies for Tier 4 NO X standards for those Category 1 and Category

2 auxiliary engines on Category

3 vessels covered by

§1042.650(d); this provision does not apply to any other auxiliary engines or to any non - Category

3 propulsion engines. Engines with allowable on
- off controls must be certified to meet the previous tier of NO X standards when the advanced NO X control strategies are disabled (note that this would be Tier 2 for auxiliary engines as well as Category

3 engines, pursuant to § 1042.650(d)). Engines with on
- off NO X controls are required to be equipped to continuously monitor NO X concentrations i n the exhaust (§1042.110(d)). EPA has been asked to clarify what "continuous" means in the context of this requirement. Because the purpose of this requirement is to show that the engine complies with the NO X emission limits on a continuous basis, continuous monitoring must be frequent enough to demonstrate that the NO X controls are on and are properl y functioning from the time the ship enters the ECA until it leaves, which, depending on the ECA and the ship's itinerary , could be a matter of hours o r days. Since many manufacturers equip their emission control sy stems with NO X sensors to monitoring and log the performance of the combined engine and emission control sy stem, we are proposing that continuous monitoring means measuring NO X emission s at least every 60 seconds. EPA is also proposing that a manufacturer may request approval of an alternative measurement period if that is necessary

for sufficiently

accurate measurements. With regard to the functioning of continuous NO X monitoring, the continuous emission measurement device would be required to be included as part of the engine s ys tem for EPA certification. Continuous NO X monitoring would be required to be engaged before the ship enters an ECA and continue until after it exits th e ECA. Verification of operation of the s ys tem would be included in required periodic vessel survey s and certification that cover nearl y all commercial U.S. vessels. Enforcement is expected to be performed on a periodic basis by appropriate authorities wh en a ship is in port. It should be noted that the above provisions with respect to on
- off controls and continuous emission monitoring do not appl y for the 40 CFR part 1042 PM standards. Engines certified to standards under 40 CFR part 1042 must meet the P M limits at all times, except when the operator has applied for and received permission to disable Tier 4 PM controls while*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 820 of 850 operating outside the United States pursuant to any of the provisions of 40 CFR 1042.650 (a) through (c). **(2) Category**  **1 and Category 2**  **Auxiliary Engines on Category 3 V**  **essels** The regulation at 40 CFR 1042.650(d) exempts auxiliary Category 1 and Category

2 engines installed on U.S.
- flag Category 3 vessels from the part 1042 standards if those auxiliary engines meet certain conditions. This is intended to allow operators of qualified vessels engaged in international trade to manage all their installed engines to meet international requirements without additional constraints related to any difference s in EPA’s regulatory specifications, and to simplify

compliance demonstrations while those vessels are operating in foreign ports and foreign waters
. EPA is proposing to revise the regulations to clarify that the urea reporting requirements in § 1042.660(b) (which requires an owner or operator of an y vessel equipped with SCR to report to EPA within 30 day s of any operation of such vessel without the appropriate reductant) also apply

to Category

1 and Category

2 auxiliary

engines on Category

3 vessels that are covered by § 1042.650(d). This will extend the urea reporting requirements to engines between 130 and 600 kW if they

rel y on SCR to meet the Annex VI Tier III NO X limits. Engines covered by §1043.650(d) would be subject to emission standards and testing requirements under MARPOL Annex VIand the NO X Technical Code. EPA is also proposing to revise 40 CFR 1042.650(d) to clarify th at, while these Category 1 and Category

2 auxiliary

engines may

be designed with on
- off NO X controls, they must be certified to meet IMO Tier II NO X standards an yt ime the IMO Tier III NO X configuration is disabled. In addition, EPA has become aware that there is some uncertainty about how the scope of EPA’s implementation of Annex VIthrough 40 CFR part 1043 relates to engines with a power output of 130 kW or less. The existing regulations at §1043.30 state that an EIAPP certificate is required for engines with a power output above 130 kW, but the standards described in §1043.60 might be interpreted to apply to engines of all sizes. EPA did not intend to create additional requirements or authority under part 1043 that is not contained in Annex VI or its implementing legislation (the Act to Prevent Pollution from Ships). EPA is therefore proposing to add clarifying language to §1043.60, consistent with Regulation 13 of Annex VI and APPS, to indicate that the inter

national NO X limits do not apply to engines with a power output of 130 kW or less. Note that EPA will therefore not issue EIAPP certificates for engines with a power output of 130 kW or less e ven if manufacturers request it. **(3) Natural Gas Marine Engines**  EPA is also proposing to expand provisions that apply for marine engines designed to operate on both diesel fuel and natural gas. Test requirements appl y separately for each “fuel ty pe”. EPA generall y considers an engine with a single calibration strategy that combines an initial pilot injection of diesel fuel to burn natural gas to be a single fuel typ e. This applies even if the natural gas portion must be substantially reduced or eliminated to maintain proper engine operation at light
- load conditions. I f the engine has a different calibration allowing it to run only on diesel fuel, or on continuous mixtures of diesel fuel and natural gas, we would consider it to*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 821 of 850 be a dual
- fuel engine or a flexible
- fuel engine, respectivel y. These terms are used consistently across EPA programs for highway and nonroad applications. There is an effort underway to revise the definition of “dual
- fuel” in MARPOL Annex VI , which may be different than EPA’s definition. It should be noted that the 40 CFR part 1042 certification testing requirement differs from that specified in MARPOLAnnex VI and the NO X Technical Code. While the international protocol involves testing onl y on the engine calibration with the greatest degree of diesel fuel, EPA certification requires manufac turers to perform testing on each separate fuel ty pe. This would involve one set of tests with natural gas (with or without a diesel pilot fuel, as appropriate), and an additional set of tests with diesel fuel alone. This has been required since we first adopted standards, and this is the same policy that applies across all our emission control programs. EPA also proposes to include amended regulatory language to more carefull y describe these testing requirements, and to specify how this applies differently for dual
- fuel and flexible
- fuel engines. **(4) Additional Marine Diesel**  **Am endments**  EPA is proposing to make numerous changes across 40 CFR part 1042 to correct errors, to add clarification, and to make adjustments based on lessons learned from i mplementing these regulatory

provisions. This includes the following proposed changes:

 §1042.1: Correct the tabulated applicability date for engines with per
- cylinder displacement between 7 and 15 liters; this should refer to engines “at or above” 7 liter s, rather than “above 7 liters”.  §1042.1: Replace an incorrect reference to 40 CFR part 89 with a reference to 40 CFR part 94 for marine engines above 37 kW.  §1042.2: Add a clarifying note to say that something other than a conventional “manufacturer” may need to certify engines that become new after being placed into service (such as engines converted from highway or stationary

use). This is intended to address a possible assumption that only conventional manufacturers can certify engines.  §§1042.30, 1042.730, and 1042.825: Consolidate information
- collection provisions into a single section.  §1042.101: Revise the text to more carefully identify engine subcategories and better describe the transition between Tier 3 and Tier 4 standards. These changes are intended to clarify which standards apply

and are not intended to change the emission standards for any particular size or type of engine.  §1042.101 and Appendix III: More precisel y define applicability of specific NTE standards for different types of engines and pollutants; correct formulas defining NTE zones and subzones; and add clarifying information to identify subzone points that could otherwise be derived from existing formulas. None of these changes are intended to change the standards, test procedures, or other policies for implementing the NTE standards.  §1042.101: Clarify

the FELcaps for certain engines above 3700 kW.  §1042.101: Add a specification to define “continuous monitor” for parameters requiring repeated discrete measurements, as des cribed above. The proposal also includes further clarification on the relationship between on
- off NO X controls and engine diagnostic s ys tems.  §1042.110: Remove the requirement to notify operators regarding an unsafe operating condition, since we can mo re generall y rel y on the broader provision in §1042.115 that*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 822 of 850 prohibits manufacturers from incorporating design strategies that introduce an unreasonable safety risk during engine operation.  §1042.120: Reduce extended
- warranty requirements to warranties th at are actually provided to the consumer, rather than to any published warranties that are offered. The principle is that the emission
- related warranty should not be less effective for emission
- related items than for items that are not emission
- related.  § 1042.125: Allow for special maintenance procedures that address low
- use engines. For example, owners of recreational marine vessels may need to perform engine maintenance after a smaller number of hours than would otherwise apply based on the limited engi ne operation over time.  §1042.125: Establish a minimum maintenance interval of 1500 hours for DEF filters. This reflects the technical capabilities for filter durability and the expected maintenance in the field.  §1042.135: Clarify

that UL SD labeling is required only for engines that use sulfur
- sensitive technology . If an engine can meet applicable emission standards without depending on the use of ULSD, the manufacturer should not be required to state on the engine that UL SD is required.  §1042.135: Allow for including optional label content only if the manufacturer does not opt to omit other information based on limited availability of space on the label.  §1042.201: Clarify

that manufacturers may

amend their application for certification after the en d of the model ye ar in certain circumstances, but they may not produce engines for a given model year after December 31 of the named year.  §1042.201: Establish that manufacturers may deliver to EPA for testing an engine that is identical to the test engine used for certification. This may be necessary

if the test engine has accumulated too man y hours, or if it is unavailable for any reason.  §§1042.205 and 1042.840: Replace the requirement to submit data from invalid tests with a requirement to simply

notif y EPA in the application for certification if test was invalidated.  §1042.225: Clarify

that manufacturers may

amend the application for certification after the end of the model ye ar only in certain circumstances, and not to add a new or modified engine c onfiguration.  §1042.235: Add an explicit allowance for carryover engine families to include the same kind of within
- family

running changes that are currently allowed over the course of a model year. The original text may

have been understood to require th at such running changes be made separate from certifying the engine family for the new model year.  §§1042.235, 1042.240, and 1042.601: Describe how to demonstrate compliance with dual
fuel and flexible
- fuel engines. This generall y involves testing with ea ch separate fuel, or with a worst
- case fuel blend.  §1042.240: Add instructions for calculating deterioration factors for sawtooth deterioration patterns, such as might be expected for periodic maintenance, such as cleaning or replacing diesel particulate filters.  §1042.250: Remove references to routine and standard tests, and remove the shorter recordkeeping requirement for routine data (or data from routine tests). All test records must be kept for eight ye ars. With electronic recording of test data, there should be no advantage to keeping the shorter recordkeeping requirement for a subset of test data. EPA also notes*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 823 of 850 that the eight
- ye ar period restarts with certification for a new model year if the manufacturer uses carryover data.  §1042.255: Clarify that rendering information false or incomplete after submitting it is the same as submitting false or incomplete information. For example, if there is a change to any corporate information or engine parameters described in the manufacturer’s application f or certification, the manufacturer must amend the application to include the new information.  §1042.255: Clarify

that voiding certificates for a recordkeeping or reporting violation would be limited to certificates that relate to the particular recordkeeping or reporting failure.  §1042.302: Clarify

that manufacturers may

fulfill the requirement to test each Category 3 production engine b y performing the test before or after the engine is installed in the vessel. The largest Category

3 engines are assembled in the vessel, but some smaller Category 3 engines are assembled at a manufacturing facility where they

can be more easily

tested. Manufacturers must perform such testing on full y assembled production engines rather than relying on test results from test bed engines.  §1042.501: Remove test procedure specifications that are already covered in 40 CFR part 1065.  §1042.505: Correct the reference to the I SO C1 duty cycle in 40 CFR part 1039.  §1042.515: Remove an incorrect cite.  §§1042.605 and 1042.610: Revise the reporting requirement to require detailed information about the previous ye ar, rather than requiring a detailed projection for the year ahead. The information required in advance would be limited to a notification of plans to use the provisions of th ese sections.  §1042.630: Clarify

that dockside examinations are not inspections. Vessels subject to Coast Guard inspection are identified in 46 U.S.C. 3301.  §1042.640: Migrate engine branding to §1068.45.  §1042.650: Clarify

that vessel operators may modif y certified engines if they will be operated for an extended period outside the United States where UL SD will be unavailable. This does not preclude the possibility of vessel operators restoring engines to a certified configuration in anticipation of brin g the vessel back to the United States.  §1042.660: I dentify

the contact information for submitting reports related to operation without SCR reductant.  §1042.670: Specify

that gas turbine engines are presumed to have an equivalent power density below 35 kW per liter of engine displacement; this is needed to identify which Tier 3 standards appl y.  §1042.701: Clarify

that emission credits generated under 40 CFR part 94 may be used for demonstrating compliance with the Tier 3 and Tier 4 standards in 40 CFR part 1042.  §§1042.701 and 1042.730: Describe the process for retiring emission credits. This may be referred to as donating credits to the environment.  §1042.705: Change terminology for counting engines from “point of first retail sale” to “U.S.
- direction prod

uction volume.” This conforms to the usual approach for calculating emission credits for nonroad engines.  §1042.710: Clarify

that it is not permissible to show a proper balance of credits for a given model by using emission credits from a future model year.  §1042.730: Clarify

terminology

for ABT reports.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 824 of 850  §1042.810: Clarify

that it is only

the remanufacturing standards of subpart I, not the certification standards that are the subject of the applicability determination in §1042.810.  §1042.830: Add a provision to specificall y allow voluntary labeling for engines that are not subject to remanufacturing standards, and to clarify that the label is required for engines that are subject to remanufacturing standards.  §1042.901: Update the contact information for the Designated Compliance Officer.  §1042.901: Revise the definition of “model year” to correct cites and clarify that the calendar ye ar relates to the time that engines are produced under a certificate of conformity
.  §§ 1042.901 and 1042.910 : Update the reference documents for Annex VIand NO X Technical Code to include recent changes from the International Maritime Organization.  §1042.915: Migrate provisions related to confidential information to 40 CFR part 1068. 

### I. **Amendments Related to Locomotives**  **in 40 CFR Part 1033** EPA’s emission standards and certification requirements for locomotives and locomotive engines under the Clean Air Act are identified in 40 CFR part 1033. EPA is proposing to revise the engine mapping provisions in 40 CFR part 1033 fo r locomotive testing to denote that manufacturers do not have to meet the cycle limit values in 40 CFR 1065.514 when testing complete locomotives. Also, for engine testing with a dy namometer, while the validation criteria of CFR 1065.514 apply , EPA propos es to allow manufacturers the option to check validation using manufacturer
- declared values for maximum torque, power, and speed. This option would allow them to omit engine map ping under 40 CFR 1065.510, which is already not required . These provisions w ould reduce test burden and cost for the manufacturer, while preserving the integrity of the certification requirements. EPA is also proposing text that describes the alternate ramped
- model cycle provisions in 40 CFR part 1033 as some of the notch setting and durations are inconsistent with the description of the duty

cycle in Table 1 of 40 CFR 1033.520. EPA has determined that the t able is correct as published and the error lies in the text describing how to carry out the ramped
- modal test. We are also p roposing to clarify that locomotives operating on a combination of diesel fuel and gaseous fuel are subject to NMHC standards, which is the same as if the locomotives operated onl y on gaseous fuel. With respect to in
- use fuels, we are proposing a clarific ation in 40 CFR 1033.815 regarding allowable fuels for certain Tier 4 and later locomotives. Specificall y, we would note that locomotives certified on ultra
- low sulfur diesel fuel, but that do not include sulfur sensitive emission controls, could use low sulfur diesel fuel instead of ultra
low sulfur diesel fuel, consistent with good engineering judgment. For example, an obvious case where this would be appropriate (but not the onl y possible case), would be if a railroad had emission data showing the loco motive still met the applicable standards/FELs while operating on the higher sulfur fuel. EPA is requesting comment on four additional locomotive provisions. The first is the allowance in 40 CFR 1033.101(g)(3) for shorter useful lives for non
- lo comotive
- specific engines

– that is, engines not specificall y designed for use in locomotives. For normal locomotive engines, the minimum useful life is specified in terms of MW
- hrs as the product of the rated*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 825 of 850 horsepower multiplied by 7.50. However, the regulations allow m anufacturers/remanufacturers of locomotives with non
- locomotive
- specific engines to ask for a shorter useful life if the locomotives will rarel y operate longer than the shorter useful life. Second, we request comment regarding the nee d for additional guidance on applyingthis provision. For example, would it be helpful if we specified that the default alternative minimum useful life under this provision would be 6.00 (instead of 7.50) times the rated horsepower? Third, we requ est comment on whether EPA should consider notch
- specific engine/alternator efficiencies to be confidential business information, and whether we need to update the URL listed in 40 CFR 1033.150(a)(4). Fourth, we request comment on extending the provisions of 40 CFR 1033.101(i) to Tier 4 locomotives. This generally involves a less stringent CO standard in tandem with over
complying with the PM standard. Specificall y, this option, which currentl y appl ies for Tier 2 and earlier locomotives, requires PM emissions be at least 50 percent below the normally applicable PM standard. The existing provisions were developed to provide a compliance path for natural gas locomotives that reflected both the technol ogical capabilities of natural gas locomotives and the relative environmental significance of CO and PM emissions. This provision was not applied to Tier 4 locomotives, because the applicable Tier 4 PM standard is already very low (0.03 g/hp
- hr). If we w ere to apply a similar provision corresponding to Tier 4 standards, we would need to select PM and CO levels that are properl y paired to manage this tradeoff. We request comment on whether it is appropriate to pursue such alternate standards, and on the s pecific numerical standards for PM and CO that would represent an equivalent level of stringency

relative to the published standards. EPA is proposing to make numerous additional changes across 40 CFR part 1033 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory provisions. This includes the following proposed changes:

 §§1033.30, 1033.730, and 1033.925: Consolidate information
- collection provisions into a single section.  §1033.101: A llow manufacturers to certify Tier 4 and later locomotives us ing Low Sulfur Diesel fuel instead of Ultra
- Low Sulfur Diesel fuel
. Manufacturers may wish to do this to show that their locomotives do not include sulfur sensitive technology .§ 1033.120: Reduce extended
- warranty requirements to warranties that are actuall y provided to customers, rather than to any

published warranties that are offered. The principle is that the emission
- related warranty should not be less effective for emission
- related items than for items that are not emission
- related.  §1033.201: Clarify

that manufacturers may

amend their application for certification after the end of the model ye ar in certain circumstances, but they may not produce locomotives for a given model ye ar after December 31 of the named year.  §1033.201: Establish that manufacturers may deliver to EPA for testing a locomotive/engine that is identical to the test locomotive/engine used for certification. This may be necessary if the test locomotive/engine has accumulate d too many hours, or if it is unavailable for any reason.  §1033.225: Clarify

that manufacturers may

amend the application for certification after the end of the model ye ar only in certain circumstances, and not to add a new or modified locomotive configuration.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 826 of 850  §1033.235: Add an explicit allowance for carryover engine families to include the same kind of within
- family

running changes that are currently allowed over the course of a model year. The original text may

have been understood to require that such running changes be made separate from certifying the engine family for the new model year.  §§10 33 .235, 10 33 .24 5 , and 10 33 .601: Describe how to demonstrate compliance with dual
fuel and flexible
- fuel locomotives . This generall y involves testing with each s eparate fuel, or with a worst
- case fuel blend.  §1033.245: Add instructions for calculating deterioration factors for sawtooth deterioration patterns, such as might be expected for periodic maintenance, such as cleaning or replacing diesel particulate fil ters.  §1033.250: Remove references to routine and standard tests, and remove the shorter recordkeeping requirement for routine data (or data from routine tests). All test records must be kept for eight ye ars. With electronic recording of test data, there should be no advantage to keeping the shorter recordkeeping requirement for a subset of test data. EPA also notes that the eight
- ye ar period restarts with certification for a new model year if the manufacturer uses carryover data.  §1033.255: Clarify

that rendering information false or incomplete after submitting it is the same as submitting false or incomplete information. For example, if there is a change to any corporate information or engine parameters described in the manufacturer’s application for c ertification, the manufacturer must amend the application to include the new information.  §1033.255: Clarify

that voiding certificates for a recordkeeping or reporting violation would be limited to certificates that relate to the particular recordkeeping or reporting failure.  §1033.501: Clarify

how testing requirements apply differentl y for locomotive engines and for complete locomotives.  §1033.501: Add paragraph (a)(4) to remove proportionality verification for discrete
- mode tests if a single batch fuel measurement is used to determine raw exhaust flow rate. This verification involves statistical assessment that is not valid for the single data point. Requiring manufacturers instead to simply ensure constant sample flow should adequatel y address the co ncern,  §§1033.515 and 1033.520: Update terminology by referring to “test intervals” instead of “phases”. This allows us to be consistent with terminology used in 40 CFR part 1065.  §1033.520: Correct the example given to describe the testing transition aft er the second test interval.  §§1033.701 and 1033.730: Describe the process for retiring emission credits. This may be referred to as donating credits to the environment.  §1033.710: Clarify

that it is not permissible to show a proper balance of credits f or a given model by using emission credits from a future model year.  §1033.730: Clarify

terminology

for ABT reports.  §1033.815: Add consideration of periodic locomotive inspections in 184
- day intervals.  §1033.901: Update the contact information for the Des ignated Compliance Officer.  §1033.915: Migrate provisions related to confidential information to 40 CFR part 1068.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 827 of 850 

### J. **Miscellaneous EPA Amendments** EPA is proposing to revise 40 CFR 85.1511 to allow companies other than certificate holders to import motor veh icles that are exempted because they are more than 20 years old. This aligns with the prevailing practice and Customs regulations at 19 CFR 12.73. EPA is proposing to clarify that the cold NMHC standards specified in 40 CFR 86.1811
- 17 do not apply

at high altitude. We intended in recent amendments to state that the cold CO standards appl y at both low and high altitude, but inadvertentl y placed that statement where it also covered cold NMHC standards, which contradicts existing regulatory provisions that c learl y describe the cold NMHC standards as appl yi ng only for low
- altitude testing. The proposed change would simply

move the new clarifying language to appl y onl y to cold CO standards. We are also proposing to restore the cold NMHC standards in paragraph (g)(2), which were inadvertentl y removed as part of the earlier amendments. EPA is proposing to revise the specifications for Class 2b and Class 3 vehicles certifying earl y to the Tier 3 exhaust emission standards under 40 CFR 86.1816
- 18 to clarify that c arryover values for PM and formaldehyde appl y. The preamble to the earlier final rule described these standards properl y, but the regulations inadvertently pointed to the Tier 3 values for PM and formaldeh yde for these vehicles. EPA is proposing to make a minor correction to the In
- Use Compliance Program under 40 CFR 86.1846
- 01. A recent amendment describing how to use SFTP test results in the compliance determination inadvertentl y removed a reference to low
- mileage SFTP testing. We are proposing to re store the removed text. EPA is proposing to revise the instruction for creating road
- load coefficients for cold temperature testing in 40 CFR 1066.710 to simply refer back to 40 CFR 1066.305 where this is described more generall y. The text orig inally adopted in 40 CFR 1066.710 incorrectly describes the calculation for determining those coefficients. EPA is also proposing two minor amendments related to highway motorcycles. First, we are proposing to correct an error related to the small
- volume provisions for highway motorcycles. The regulation includes an inadvertent reference to a small
- volume threshold based on an annual volume of 3,000 motorcycles produced in the United States. As written, this would not consider an y foreign motorcycle prod uction for importation into the United States. This error is corrected b y simply revising the text to refer to an annual production volume of motorcycles produced “for” the United States. This would properl y reflect small
- volume production as it relates to compliance with EPA standards. Second, we are proposing to clarify the language describing how to manage the precision of emission results, both for measured values and for calculating values when applying a deterioration factor. This involves a new r eference to the rounding procedures in 40 CFR part 1065 to replace the references to outdated ASTM procedures. EPA is proposing in 40 CFR 1037.601(a)(3) to clarify that the Clean Air Act does not allow an y person to disable , remove, or render inoperative ( i.e., tamper with) emission controls on a certified motor vehicle for purposes of competition. An existing provision in 40 CFR 1068.235 provides an exemption for nonroad engines converted for competition use. This provision reflects the explicit exclusio n of engines used solely for competition from the CAA*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 828 of 850 definition of “nonroad engine”. The proposed amendment clarifies that this part 1068 exemption does not apply

for motor vehicles.


### K. **Amending 49 CFR Parts 512 and 537 to Allow Electronic Submissions and Defining Data Formats for Light**  **- Duty Vehicle Corporate Average Fuel**  **Economy (CAFE) Reports** To improve efficiency

and reduce the burden to manufacturers and the agencies, NHTSA is proposing to modify

49 CFR part 537 eliminat ing the option for manufacturers to submit pre
model, mid
- model and supplemental reports on CD
- ROMS and require only one electronic submission (for each report) electronicall y via a method proscribed b y NHTSA
. NHTSA is introducing a new electronic format to standardize the method for collecting manufacturer’s information. NHTSA also proposes to modify 49 CFR p art 512 to include and protect submitted CAFE data elements that need to be treated as confidential business information. 49 CFR p art 537 currently requires manufactur ers to provide reports to NHTSA containing projected estimates of how manufacturers plan to compl y with NHTSA standards. In the CAFE final rule for vehicles manufactured for model years 2017
- 2025, NHTSA modified its reporting requirements at 49 CFR 537.5( c)(4) to eliminate the option for manufacturers to mail hardcop y submission s of CAFE reports to NHTSA and required all reports to be submitted electronically by

CD
- ROM (CBI and non
- CBI versions) or by email (non
- CBI version). 895 Currently , any

data provided in the manufacturer’s report is required in MS
- Excel spreadsheet format. Supporting documentat ion such as cover letters or requests for confidentiality is required to be provided in a pdf format. NHTSA is proposing to change the required format for CAFE data required under 49 CFR 537.7(b) and (c) in order to standardize submissions and better align with data provided to EPA. For model ye ar 2013 through 2015 most manufacturer reports received b y NHTSA lacked the required format adopted in the 2017
- 2025 final rule. NHTSA is therefore adopting a standardized template for manufacturers to report model ty pe level data. The template organizes the required data in a consistent manner, adopts formats for values consistent with those provided to EPA for similar values and calculates manufacturer’s target standard. Calculating target standards is preferred because it reduces errors in manufacturer’s determinations. However, NHTSA’s long
- term goal is t o standardize the required data for incorporation into an electronic database s ys tem and this first step facilities a structure for coding the electronic data which will ultimately

reduce manufacturer’s and the government’s burden for reporting. NHTSA rationalizes that establishing a required format is necessary because manufacturers may

not understand how to provide the required CAFE data. Inthe 2017 to 2025 final rule, NHTSA modified its base tire definition to better align with the approach

895 77 FR 62624 (Oct. 15, 2012).*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 829 of 850 manufa cturers use to determine model ty pe target standards. CAFE standards are attribute based, and thus each manufacturer has its own “ standard, ” or compliance obligation, defined b y the vehicles it produces for sale in each fleet in a given model ye ar. A manufacturer calculates its fleet standard from the attribute based target curve standards derived from the unique footprint values, which are the products of the average front and rear vehicle track width and wheelbase dimensions, of the vehicles in each mod el ty pe. Vehicle track width dimensions are determined with a vehicle equipped with “base tires, ” which NHTSA currently defines in 49 CFR p art 523 as (for passenger automobiles, light trucks, and medium duty passenger vehicles) the tire size specified as standard equipment by the manufacturer on each unique combination of a vehicle’s footprint and model ty pe. Standard equipment is defined in 40 CFR 86.1803

– 01. NHTSA made these changes to provide a clear definition for footprint calculations and, thus, f leet compliance projections, calculations, finalizations and enforcement efforts. Beginning in model year 2013, as modified in 49 CFR 537.7(b), manufacturers were to provide attribute characteristics and standards in consideration of the change in the bas e tire definition for each unique model ty

pe and footprint combination of the manufacturer’s automobiles. Manufacturers were required to provide the data listed by model ty pes in order of increasing average inertia weight from top to bottom down the left side of the table and list the information categories in the order specified in 49 CFR 537.7 (b)(3)(i) and (ii) from left to right across the top of the table
. Manufacturers could also provide the data using any format required by

EPA, which contains all o f the required information in a readil y identifiable format. In the 2017
- 2025 final rule, a dditional changes to NHTSA’s reporting requirements also included a modification to 49 CFR 537.7(b) to restructure and clarify how manufacturers report information used to make the determination that an automobile can be classified as a light truck for CAFE purposes. The agency felt that this proposed change was necessary because the previous requirements in 49 CFR p art 537 specified that manufacturers must provide information on some, but not all, of the functions and features used to classify an automobile as a light truck, and it is important for compliance reasons to understand and be able to readily verify the methods used to ens ure manufacturers are classifyingvehicles correctl y. Furthermore, the previous regulation required that the information be distributed in different locations throughout a manufacturer’s report, making it difficult for the agency to clearl y determine exac tly what functions or features a manufacturer is using to classify a vehicle as a light truck. Therefore, NHTSA streamlined the location of all its provisions for defining vehicle classifications into one consolidate section. With these changes, manufacturers can provide the agency with all the necessary data in a simpler format that allows the agency , and perhaps also the manufacturer, to understand quickl y and easily how light truck vehicle classification determination decisions are made. In reviewing manufacturers current reporting, most manufacturers are still failing to provide the required information for classifying light trucks. For the model year 2015 pre
- model ye ar reports, onl y a few manufacturers provided the required information and many pro vided the information incorrectly . Therefore, NHTSA is also proposing to incorporate an additional template for collecting vehicle configuration level data which includes vehicle classification information. Similarly , the template will standardize the fo rmat of the data with values required by EPA and structure s the data for future incorporation into a database sy stem. Finall y, the template also simplifies reporting b y not having manufacturer s report all vehicle classification*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 830 of 850 characteristic s but onl y th ose used b y the manufacturer in qualifying a vehicle as a light truck. NHTSA is adopting this provision to better align with EPA current database structure which uses a similar approach in accepting light truck level data.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 831 of 850 

## XV. **Statutory and Executive Order Reviews A.**  **Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving R** **egulation and Regulatory Review** This action is an economically significant regulatory

action that was submitted to the Office of Manageme nt and Budget (OMB) for review. An y changes made in response to OMB recommendations have been documented in the docket. The agencies prepared an anal ys is of the potential costs and benefits associated with this action. This analy sis, the draft “Regulatory Impact Anal ys is
- Heavy
- Duty GHG and Fuel Efficiency Standards NPRM,” is available in the docket. The anal ys es contained in this document are also summarized in S ections VII, VIII, and IXof this preamble. 

### B. **National En vironmental Policy**  **Act** NHTSA has initiated the Environmental Impact Statement (EIS) process under the National Environmental Policy Act (NEPA), 42 U.S.C. 4321

–4347, and implementing regulations issued by

the Council on Environmental Quality (CEQ), 40 CFR p art 1500, and NHTSA, 49 CFR part 520. On July 9, 2014, NHTSA published a notice of intent to prepare an EI S for this rulemaking and requested scoping comments (79 FR 38842). The notice invited Federal, State, and local agencies, Indian tribes, stakeholde rs, and the public to participate in the scoping process and to help identify the environmental issues and reasonable alternatives to be examined in the EI S. Concurrentl y with this NPRM, NHTSA is releasing a Draft Environmental Impact Statement (DEI S). NH TSA prepared the DEIS to anal yz e and disclose the potential environmental impacts of the proposed HD fuel consumption standards and reasonable alternatives. Environmental impacts anal yz ed in the DEIS include those related to fuel and energy use, air quali ty , and climate change. The DEI S also describes potential environmental impacts to a variety of resource areas, including water resources, biological resources, land use and development, safety, hazardous materials and regulated wastes, noise, socioeconom ics, and environmental justice. These resource areas are assessed qualitatively in the DEIS. The DEIS anal yz es five alternative approaches to regulating HD vehicle fuel consumption, including a “preferred alternative” and a “no action alternative.” The D EI S evaluates a reasonable range of alternatives under NEPA, and anal yz es the direct, indirect, and cumulative impacts of those alternatives in proportion to their significance. Because of the link between the transportation sector and GHG emissions, NHTSA recognizes the need to consider the possible impacts on climate and global climate change in the anal ys is of the effects of these fuel consumption standards. NHTSA also recognizes the difficulties and uncertainties involved in such an impact anal ys is. A ccordingl y, consistent with CEQ regulations on addressing incomplete or unavailable information in environmental impact anal ys es, NHTSA has reviewed existing credible scientific evidence that is relevant to this anal ys is and summarized it in the DEI S. NHT SA has also employed and summarized the results of research models generally accepted in the scientific community
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 832 of 850 Although the alternatives have the potential to decrease GHG emissions substantially , they do not prevent climate change, but onl y result in reductions in the anticipated increases in CO 2 concentrations, temperature, precipitation, and sea level. They would also, to a small degree, delay

the point at which certain temperature increases and other phy sical effects stemming from increased GHG emi ssions would occur. As discussed in the EI S, NHTSA presumes that these reductions in climate effects will be reflected in reduced impacts on affected resources. The DEIS has informed NHTSA decision makers in their preparation of this NPRM and in the ongoi ng rulemaking process. NHTSA invites comments on the DEIS from Federal, State, and local agencies, Indian tribes, stakeholders, and the public. Instructions for submission of such comments are included in the DEIS. For additional information on NHTSA’s N EPA analy sis, please see the DEIS
. 

### C. **Paperwork Reduction Act** The information collection activities in th ese proposed rule s have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. The Information Collection Reque st (I CR) document that EPA prepared has been assigned EPA I CR number 2394.04
. You can find a copy of the ICR in the docket for th ese proposed rule s , and it is briefly summarized here. The agencies propose to collect information to ensure compliance with the provisions in this proposal. This includes a variety of testing, reporting and recordkeeping requirements for vehicle and engine manufacturers. Section 208(a) of the CAA requires that manufacturers provide inform ation the Administrator may reasonably

require to determine compliance with the regulations; submission of the information is therefore mandatory
. We will consider confidential all information meeting the requirements of Section 208(c) of the CAA. Respondents/affected entities : Respondents are manufacturers of engines and vehicles within the North American Industry Classification Sy stem (NAI CS) and use the coding structure as defined b y NAICS. 336111, 336112, 333618, 336120, 541514, 811112, 811198, 336111, 336112, 422720, 45431 2, 541514, 541690, 811198, 333618, 336510, for Motor Vehicle Manufacturers, Engine and Truck Manufacturers, Truck Trailer Manufacturers, Commercial Importers of Vehicles and Vehicle Components, and Alternative Fuel Vehicle Converters and Manufacturers
. Respondent’s obligation to respond : 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 con formity before a vehicle or engine can be introduced into commerce. Estimated number of respondents : Itis estimated that this collection affects approximately

155 engine and vehicle manufacturers. Frequency of response : Annually*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 833 of 850 Total estimated burden : The burden to the manufacturers affected b y these rule s has a range based on the number of engines and vehicles a manufacturer produces. The estimated average annual respondent burden associated with the first three implementation years of the Phase 2 program is 62,400 hours (See Table XV
- 1 ). T h is estimated burden for engine and vehicle manufacturers is an average estimate for both new and existing reporting requirements for calendar ye ars 2017, 2018 and 2019, in which trailer manufacturers will prepare for and begin certifying for Phase 2 while Phase 1 will continue for the other affected manufacturers
. Burden is defined at 5 CFR 1320.3(b). Burden means the total time, effort, or financial resources expended by

persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency . This includes the time needed to review instructions; develop, acquire, install, and utilize technology

and s ys tems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing way s to comply with an y previously

applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information
.

**Table XV**  **- 1**  **Bu rden for Reporting and Recordkeeping Requirements**  Number of Affected Vehicle Manufacturers 155 Annual Labor Hours for Each Manufacturer to Prepare and Submit Required Information Varies Total Annual Information Collection Burden 62,400 Hours Total estimated cost : The estimated average annual cost associated with the first three i mplementation years of the Phase 2 program is approximately $8 million. This includes approximately

$3.3 million in capital and operation & maintenance costs. This estimated cost for engine and vehicle manufacturers is an average estimate for both new and existing testing, recordkeeping, and reporting requirements for calendar ye ars 2017, 2018 and 2019, in which trailer manufacturers will prepare for and begin certifying for Phase 2 while Phase 1 will continue for the other affected manufacturers
. An agency may

not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR part 9. Submit your comments on the a genc ies ’ need for this information, the accuracy of the provided burden estimates and an y suggested methods for minimizing respondent burden to EPA and NHTSA using the docket identified at the beginning of th ese proposed rule s . You may also send your ICR
- related comments to OMB’s Office of Information and Regulatory Affairs via email to o ir a_submissions@omb.eop.gov, Attention: Desk Officer for EPA. Since OMB is required to make a decision concerning the IC R between 30 and 60 day s after receipt, OMB must receive comments no later than **[insert date 30 days after publication in the Federal Register]** 
. The agencies will respond to any I CR
- related comments in the final rule s . NHTSA also separatel y s ub mitted a request to OMB for approv al of a change to an information collection activity that is proposed in this rulemaking. The information collection*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 834 of 850 request was previousl y assigned ICR No. 2127
- 0019 for 49 CFR Part 537, “ Automotive Fuel Economy Reports .” The existing collection involves vehicle manufacturers submitting reports to the Secretary of Transportation with preliminary estimates demonstrating their ability to comply

with corporate average fuel economy standard s (CAFE) established b y 4 9 USC 32902 for each model ye ar . To improve efficiency and reduce manufacturers’ and the government’s burden , NHTSA is proposing to modify

49 CFR Part 537 to requir e CAFE reports to be submitted electronicall y via an electronic database using a standardize d data format. T he total estimated amount of paperwork burden resulting from this action that the federal government is imposing on private businesses and citizens is summarized below. Respondents: Automobile manufacturers. Estimated Number of Respondents: 30. Estimated Number of Responses: 54. S ome manufacturers have multiple fleets (domestic passenger car, import passenger car, light truck) and 49 CFR part 537 requires a separate report for each fleet. Estimated Total Annual Burden: Thirty a utomotive manufacturers must comply with 49 CFR 537. For each current model year, each manufacturer is required to submit semi
- annual reports: A pre
- model year report and a mid
- model year report. The pre
- model ye ar report must be submitted during the month of December, and the m id
- model ye ar report must be submitted during the month of July . The total number of responses s ubmitted by automotive manufacturers is 54. We currently

have a clearance based on reports being received from 22 manufacturers with an e stimated total annual burden of 2,339 hours. In cluding 8 additional manufacturers, results in an additional reporting burden of 850 hours. Adding that burden to the existing burden of 2,339 hours, results in a total of 3,189 hours. Estimated Frequency: A pre - model report and a mid
- model report are required to be submitted by manufacturers once per model year for each applicable fleet (domestic passenger car, imported p assenger car and light trucks). A cop y of the 60 day

notice for this ICR containing the proposed changes is included in the docket for this rule. NHTSA seeks public comments on all aspects of this information collection, including (a) whether the proposed collection of information is necessary for the Department’s performance, (b) the accuracy of the estimated burden, (c) way s for the Department to enhance the quality , utility and clarity

of the information collection and (d) ways that the burden could be minimized without reducing the quality of the collected information.


### D. **Re gulatory Flexibility Act**  Pursuant to section 603 of the RFA, the agencies prepared an initial regulatory flexibility anal ys is (IRFA) that examines the impact of the proposed rule s on small entities along with*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 835 of 850 regulatory

alternatives that could minimize that impact. The complete IRFA is available for review in the docket and is summarized here. As required b y section 609(b) of the RFA, EPA convened a Small Business Advocacy Review (SBAR) Panel to obtain advice and recommendations from small entity representatives that potentially would be subject to the rule's requirements. The SBAR Panel evaluated the assembled materials and small
- entity comments on issues related to elements of an IRFA. A cop y of the full SBAR Panel Report is available in the ru lemaking docket. **(1) Overview**  The Regulatory

Flexibility

Act (RFA) generall y requires an agency to prepare a regulatory

flexibility

analy sis of any rule subject to notice and comment rulemaking r equirements under the Administrative Procedure Act or an y other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today ’s rule s on small entities, small entity is defined as: (1) a small business as defined b y the Small Business Administration’s (SBA) regulations at 13 CFR 121.201 (see table below); (2) a small governmental jurisdiction th at 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 independentl y owned and operated and is not dominant in its f ield. Table XV
- 2 provides an overview of the primary SBA small business categories potentially

affected by

this regulation. **Table XV**  **- 2**  **Prim ary Small Business**  **Categories Potentially Affected by this Regulation** Industry Expected in Rulemaking Industry NAICS a Code NAICS Description Defined as small entity by SBA if less than or equal to: Alternative Fuel Engine Converters 333999 Misc. General Purpose Machinery 500 employees 811198 All Other Automotive Repair &

Maintenance $7.0 million (annual receipts) Voc. Vehicle Chassis Manufacturers 336120 Heavy
- Duty Truck Manufacturing 1,000 employees HD Trailer Manufacturers 336212 Truck Trailer Manufacturing 500 employees 333924 Industrial Truck, Trailer & Stacker

Machinery 750 employees Note: a North American Industrial Classification System **(2) Legal Basis for Agency Action**  Heav y - dut y vehicles are classified as those with gross vehicle weight ratings (GVWR) of greater than 8,500 lb. Section 202(a) of the Clean Air Act (CAA) allows EPA to regulate new vehicles and new engines by prescribing emission standards for pollutants wh ich the*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 836 of 850 Administrator finds “may reasonabl y be anticipated to endanger public health or welfare.” In 2009, EPA found that six greenhouse gases (GHGs) were anticipated to endanger public health or welfare, and new motor vehicles and new motor vehicle engin es contribute to that pollution. This finding was upheld by the unanimous court in Coalition for Responsible Regulation v. EPA , 684 F. 3d 102 (D.C. Cir. 2012). Acting under the authority of the CAA, EPA set the first phase of heav y - dut y vehicle GHG stand ards (Phase 1) and specified certification requirements for emissions of four GHGs emitted by mobile sources: carbon dioxide (CO 2 ), nitrous oxide (N 2 O), methane (CH 4 ), and h ydrofluorocarbons (HFC). **(3) Summary of Potentially Affected Small Entities**  Table XV
- 2 above lists industries/sectors potentially affected by

the proposed rules . EPA is not aware of an y small businesses who manufacture complete heav y - dut y pickup trucks and vans, heav y - dut y engines, or Class 7 and 8 tractors. EPA used the criteria for small entities developed by the Small Business Administration under the North American Industry Classification Sy stem (NAI CS) as a guide. Information about these entities comes from sources including EPA’s certification data, trade association databases, and previous rulemakings that have affected these industries. EPA then found employ ment information for these companies using the business information database Hoover’s Online (a subsidiary

of Dan and Bradstreet). These entities fall under the categories listed in the table. **(4) Potential Reporting, Recordkeeping and Compliance Burd**  **ens** For an y emission control program, EPA must have assurances that the regulated products will meet the standards. The program that EPA is considering for manufacturers subject to this proposal will include testing, reporting, and recordkeeping requirements. Testing requirements for these manufacturers could include use of EPA’s Greenhouse gas Emissions Model (GEM) vehicle simulation tool to obtain the overall CO 2 emissions rate for certification of vocational chassis and trailers, aerody namic testing to obtain aerody namic inputs to GEM for some trailer manufacturers and engine dy namometer testing for alternative fuel engine converters to ensure their conversions meet the proposed CO 2 , CH 4 and N 2 O engine standards. Reporting requirements would likely in clude emissions test data or model inputs and results, technical data related to the vehicles, and end
- of
- ye ar sales information. Manufacturers would have to keep records of this information. **(5) Related Federal Rules**  The primary

federal rule that is related to the proposed Phase 2 rules under consideration is the 2011 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium
- and Heav y Duty Engines and Vehicles (76 FR 57106). This Phase 1 rulemaking would continue to be in effect in the absence o f th ese proposed rule s . Several Federal rules relate to heavy
- dut y vehicles and to the proposed Phase 2 rules under consideration. The Department of Transportation, through NHTSA, has several safety requirements for these vehicles. Californi a adopted its own greenhouse gas initiative, which places aerodyn amic requirements on trailers used in long
- haul*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 837 of 850 applications. None of these existing regulations were found to conflict with the proposed rulemaking. **(6) Summary of SBREFA Panel Process and Pane**  **l Outreach** (a ) Significant Panel Findings The Small Business Advocacy Review Panel (SBAR Panel, or the Panel) considered regulatory

options and flexibilities to help mitigate potential adverse effects on small businesses as a result of these rules. During the SBREFA Panel process, the Panel sought out and received comments on the regulatory options and flexibilities that were presented to SERs and Panel members. The recommendations of the Panel are described below and are also located in Section XX of the SBREFA Final Panel Report, which is available in the public docket. (b ) Panel Process As required b y Section 609(b) of the RFA, as amended by SBREFA, we also conducted outreach to small entities and convened an SBAR Panel to obtain advice and recommendations of representatives of the small entities that potentially would be subject to the rule’s requirements. On October 22, 2014, EPA’s Small Business Advocacy Chairperson convened a Panel under Section 609(b) of the RFA. In addition to the Chair, the Panel consisted of the Division Director of the Assessment and Standards Division of EPA’s Office of Transportation and Air Quality, the Chief Counsel for Advocacy of the Small Business Administration, and the Administrator of the Office of Information and R egulatory Affairs within the Office of Management and Budget. As part of the SBAR Panel process, we conducted outreach with representatives of small businesses that would potentially be affected b y the proposed rulemaking. We met with these Small Entity

Representatives (SERs) to discuss the potential rulemaking approaches and potential options to decrease the impact of the rulemaking on their industries. We distributed outreach materials to the SERs; these materials include d background on the rulemaking, possible regulatory

approaches, and possible rulemaking alternatives. The Panel met with SERs from the industries that would be directly affected by

the Phase 2 rules on November 5, 2014 (trailer manufacturers) and Nove mber 6, 2014 (engine converters and vocational vehicle chassis manufacturers) to discuss the outreach materials and receive feedback on the approaches and alternatives detailed in the outreach packet. The Panel also met with SERs on July 19, 2014 for an i nitial, introductory

outreach meeting, and held a supplementary outreach meeting with the trailer manufacturer SERs on October 28, 2014. The Panel received written comments from the SERs following each meeting in response to discussions had at the meeting and the questions posed to the SERs by

the a gency . The SERs were specificall y asked to provide comment on regulatory

alternatives that could help to minimize the rule’s impact on small businesses. The Panel’s findings and discussions were based on the information that was available during the term of the Panel and issues that were raised by the SERs during the outreach meetings and in their comments. It was agreed that EPA should consider the issues raised by the SERs and discussions had by the Panel itself, and that EPA should consider comments on*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 838 of 850 flexibility alternatives that would help to mitigate negative impacts on small businesses to the extent legally

allowable by

the Clean Air Act. Alternatives discussed throughout the Panel process include d those offered in previous or current EPA rulemakings, as well as alternatives suggested b y SERs and Panel members. A summary of these recommendations is detailed below, and a full discussion of the regulatory alternatives and hardship provisions discuss ed and recommended b y the Panel can be found in the SBREFA Final Panel Report. A complete discussion of the provisions for which we are requesting comment and/or proposing in this action can be found in Sections IV.E and V.D of this preamble. Also, the P anel Report includes all comments received from SERs (Appendix B of the Report) and summaries of the two outreach meetings that were held with the SERs. In accordance with the RFA/SBREFA requirements, the Panel evaluated the aforementioned materials and SE R comments on issues related to the IRFA. The Panel’s recommendations from the Final Panel Report are discussed below. (c) Panel Recommendations (i ) Small Business Trailer Manufacturers Comments from trailer manufacturer SERs indicated that these companies are familiar with most of the technologies described in the materials, but have no experience with EPA certification and do not anticipate they could manage the accounting and reporting requirements without additional staff and extensive training. Performance t esting, which is a common requirement for man y of EPA’s regulatory programs, is largel y unfamiliar to these small business manufacturers and the SERs believed the cost of testing would be a significant burden on their companies. In light of this feedback, the Panel recommended a combination of streamlined compliance and targeted exemptions for these small businesses based on the specific trailer types that they manufacture. The Panel believed these strategies would achieve many of the benefits for the env ironment by driving adoption of CO 2 - reducing technologies, while significantl y reducing the burden that these new regulations would introduce on small businesses. (ii) Box Trailer Manufacturers Box trailer manufacturers have the benefit of relying on the aerody namic technology development initiated through EPA’s voluntary SmartWay

program. The Panel was aware that EPA was planning to propose a simplified compliance program for all manufacturers, in which aerodynamic device manufacturers have the opportunity to test and certify

their devices with EPA as technologies that can be used b y trailer manufacturers in their trailer certification. This pre - approved technology strategy was intended to provide all trailer manufactures a means of complying with the standard s without the burden of testing. In the event that this strategy is limited to the early

years of the trailer program for all manufactures, the Panel recommended that small manufacturers continue to be given the option to use pre
- approved devices in lieu of testing. In the event that small trailer manufacturers adopt pre
- approved aerodyn amic technologies and the appropriate tire technologies for compliance, the Panel recommended an*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 839 of 850 alternative compliance pathway in which small business trailer manufactur ers could simply report to EPA that all of their trailers include approved technologies in lieu of collecting all of the required inputs for the GEM vehicle simulation. (iii) Non
-Box Trailer Manufacturers The Panel recommended no aerodynamic requirements for n on - box trailers. The non
- box trailer SERs indicated that they had no experience installing aerody namic devices and had only seen them in prototy

pe - level demonstrations. In terms of the aerody namic devices in use today , most non - box trailer SERs identifie d unique operations in which their trailers are used that preclude the use of those technologies. Some non
- box trailer manufacturers had experience with LRR tires and ATIs ys tems. However, the non
- box trailer manufacturer SERs indicated that LRR tires are not currentl y available for some of their trailer types. The SERs noted that tire manufacturers are currentl y focused on box trailer applications and there are only a few LRR tire models that meet the needs of their customers. The Panel recommended EP A ensure appropriate availability of these tires in order for it to be deemed a feasible means of achieving these standards and recommended a streamlined compliance process based on the availability of technologies. The Panel suggested the best compliance option from a small business perspective would be for EPA to pre
- approve tires, similar to the approach being proposed for aerody namic technologies, and to maintain a list that could be used to exempt small businesses when no suitable tires are available. However, the Panel recognized the difficulties of maintaining an up
- to - date list of certified technologies. The Panel recommended that, if EPA did not adopt the list
- based approach, the agency consider a simplified letter
- based compliance option that al lows manufacturers to petition EPA for an exemption if they

are unable to identify

tires that meet the LRR performance requirements on a trailer famil y basis. (iv) Non
-Highway Trailer Manufacturers The Panel recommended excluding all trailers that spend a significant amount of time in off
- road applications. These trailers may not spend much time at highway speeds and aerodynamic devices may interfere with the vehicle’s intended purpose. Additionally , tires with lower rolling resistance may not provide the ty

pe of traction needed in off
- road applications. (v) Compliance Provisions for All Small Trailer Manufacturers Due to the potential for reducing a small business’s competitiveness compared to the larger manufacturers, as well as the ABT record
- keeping burden , the Panel recommended that EPA consider small business flexibilities to allow small entities to opt out of ABT without placing themselves at a competitive disadvantage to larger firms that adopt ABT, such as a low volume exemption or requiring onl y LRR where appropriate. EPA was asked to consider flexibilities for small businesses that would ease and incentivize their participation in ABT, such as streamlined the tracking requirements for small businesses. Inaddition, the Panel recommended that EPA r equest comment on the feasibility and consequences of ABT for the trailer program and additional flexibilities that will promote small business participation.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 840 of 850 (vi) Lead Time Provisions for All Small Trailer Manufacturers For all trailer ty

pes that will be inc luded in the proposal, the Panel recommended a 1
- ye ar delay in implementation for small trailer manufacturers at the start of the proposed rulemaking to allow them additional lead time to make the proper staffing adjustments and process changes and possibl y add new infrastructure to meet these requirements. In the event that EPA is unable to provide pre
- approved technologies for manufacturers to choose for compliance, the Panel recommended that EPA provide small business trailer manufacturers an additional 1
- ye ar delay for each subsequent increase in stringency . This additional lead time will allow these small businesses to research and market the technologies required b y the new standards. (vii) Small Business Alternative Fuel Engine Converters To reduce the co mpliance burden of small business engine converters who convert engines in previously
- certified complete vehicles, the Panel recommended allowing engine compliance to be sufficient for certification. This would mean the converted vehicle would not need to be recertified as a vehicle. This flexibility would eliminate the need for these small manufacturers to gather all of the additional component
- level information in addition to the engine CO 2 performance necessary to properly

certify a vehicle with GEM (e .g., transmission data, aerodynamic performance, tire rolling resistance, etc.). In addition, the Panel recommended that small engine converters be able to submit an engineering anal ys is, in lieu of measurement, to show that their converted engines do not increase N 2 O emissions. Many of the small engine converters are converting SI
- engines, and the cataly sts in these engines are not expected to substantially

impact N 2 O production. Small engine converters that convert CI
engines could likely

certify by ens uring that their controls require changes to the SCR dosing strategies. The Panel did not recommend separate standards for small business natural gas engine manufacturers. The Panel believes this would discourage entrance for small manufactures into this emerging market b y adding unnecessary costs to a technology

that has the potential to reduce CO 2 tailpipe emissions. In addition, the Panel noted that additional leakage requirements beyond a sealed crankcase for small business natural gas
- fueled CI engin es and requirements to follow industry

standards for leakage could be waived for small businesses with minimal impact on overall GHG emissions. Finally , the Panel recommended that small engine converters receive a one
- year delay in implementation for eac h increase in stringency throughout the proposed rules . This flexibility will provide small converters additional lead time to obtain the necessary equipment and perform calibration testing if needed. (viii) Emergency Vehicle Chassis Manufacturers Fire tru cks, and man y other emergency vehicles, are built for high level of performance and reliability

in severe
- duty

applications. Some of the CO 2 - reducing technologies listed in the materials could compromise the fire truck’s ability to perform its duties and many of the other technologies simply

provide no benefit in real
- world emergency applications. The Panel recommended proposing less stringent standards for emergency vehicle chassis manufactured by*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 841 of 850 small businesses. The Panel suggested that feasible stan dards could include adoption of LRR tires at the baseline Phase 2 level and installation of a Phase 2
- compliant engine. In addition, the Panel recommended a simplified certification approach for small manufacturers who make chassis for emergency

vehicles that reduces the number of inputs these manufacturers must obtain for GEM. (ix) Off

-Road Vocational Vehicle Chassis Manufacturers EPA is planning to propose to continue the exemptions in Phase 1 for off
- road and low
speed vocational vehicles (s ee generall y 76 FR 57175 ) . These provisions currentl y appl y for vehicles that are defined as “motor vehicles” per 40 CFR 85.1703, but may conduct most of their operations off

- road. Vehicles qualifying under these provisions must comply with the applicable engine standard, but need not comply with a vehicle
- level GHG standard . The Panel concluded this exemption is sufficient to cover the small business chassis manufacturers who design chassis for off
- road vocational vehicles. (x) Custom Chassis Manufacturers The Panel concluded that chassis designed for specialty operations often have limited ability to adopt CO 2 - and fuel consumption
- reducing technologies due to their unique use patterns. In addition, the manufacturers of these chassis have very small annual sales volumes. The Panel recommended that EPA propose a low volume exemption for these custom chassis manufacturers. The Panel did not receive sufficient information to recommend a specific sales volume, but recommended that EPA request comment on how to design a small business exemption by

means of a volume exemption, and an appropriate annual sales volume threshold. (xi) Glider Manufacturers The Panel was aware that EPA would like to reduce the use of glider kits, which have higher emissions of criteria pollutants like NO X than current engines, and which could have higher GHG emissions than Phase 2 engines. However, the Panel estimates that the number of vehicles produced b y the small businesses who manufacturer glider kits is too small to have a substantial impact on the total heav y - dut y inventory and recommended that existing small businesses be allowed to continue assembling glider vehicles without having to compl y with the GHG requirements. The Panel recommended that EPA establish an allowance for existing small business glider manufacturers to produce some number of glider kits for legitimate purposes, such as for newer vehicles badly damaged in crashes. The Panel recommended that any other limitations on small business glider production be flexible enough to allow sales levels as high as the peak levels in the 2010
- 2012 timeframe. **(7) Summary of Project**  **ed Impact on Small Businesses** EPA has chosen to propose the Panel’s recommended regulatory flexibility

provisions for small business alternative fuel converters and vocational vehicle chassis manufacturers and we believe that all of the small businesses in these industries will be impacted by less than one percent of their annual sales. EPA is also proposing many of the Panel’s recommendations for small business trailer manufacturers, including seeking comment on the possibility of a small volume exemption . A majority of the small trailer manufacturers produce non
- box trailers, and*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 842 of 850 are not required to adopt aerodynamic devices in this proposal. Additionally, many of the smallest trailer manufacturers produce specialty trailers that are candidates for exemption under the proposed off

- highway or heavy
- haul provisions described in Section IV C. (5). At this time, EPA believes the additional flexibilities offered for small business trailer manufacturers will reduce their burden below three percent of their annual sales. A more detailed description of the anal ys is to quantify

the impact on small businesses in each affected industry sector is included in the IRFA as presented in Chapter 12 of the draft RIA for this rulemaking
. EPA invites comment on all aspects of the proposal and its impacts on small entities. 

### E. **Unfunded Mandates Reform Act** This action contains a federal mandate under UMRA, 2 U.S.C. 1531

– 1538, that may result in expenditures of $100 million or more for state, local and tribal governments, in the aggregate, or the private sector in an y one ye ar. Accordingl y, the agencies have prepared a statement required under s ection 202 of UMRA . The statement is included in the docket for this action and briefly

summarized here. The agencies have prepared a s tatement of the cost
- benefit anal ys is as required by S ection 202 of the UMRA; this discussion can be found in this preamble, and in the draft RIA. The agencies believe that the proposal represents the least costl y, most cost - effective approach to achieve the statutory

requirements of the rules. Section IX explains why the agencies believe that the fuel savings that would result from this proposal would lead to lower prices econom y wide, improving U.S. international competitiveness. The costs and benefits associated with the proposal are discussed in more detail above in Section IX and in the Draft Regulatory Impact Analy sis, as required by

the UMRA. This action is not subject to the requirements of Section 203 of UMRA because it contains no regulatory

requirements that might significantly or uniquel y affect small governments. 

### F. **Exe cutive Order 13132: Federalism**  This action does not have federalism implications. Itwill 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. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicits comment on this proposed rule s from State and local officials. NHTSA notes that EPCA contains a provision (49 U.S.C. 32919(a)) that expressly preempts an y State or local government from adopting or enforcing a law or regulation related to fuel econom y standards or average fuel econom y standards for automobiles covered by an average fuel econom y standard under 49 U.S.C. Chapter 329. However, commercial medium
and heav y - dut y on - highway vehicles and work trucks are not “automobiles,” as defined in 49 U.S.C. 32901(a)(3). In Phase 1 NHTSA concluded that EPCA’s express pr eemption provision would not reach the fuel efficiency standards to be established in this rulemaking. NHTSA is reiterating that conclusion here for the proposed Phase 2 standards.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 843 of 850 NHTSA also considered the issue of implied or conflict preemption. T he possibility of such preemption is dependent upon there being an actual conflict between a standard established by NHTSA in this rulemaking and a State or local law or regulation. See Spriestma v. Mercury Marine , 537 U.S. 51, 64
- 65 (2002). At present, NHTSA has no knowledge of an y State or local law or regulation that would actually conflict with one of the fuel efficiency standards to be established in this rulemaking. NHTSA seeks public comment on this issue. 

### G. **Executive Order 13175: Consultation and Coordination**  **with Indian Tribal Governments**  This action does not have tribal implications as specified in Executive Order 13175. This proposal will be implemented at the Federal level and impose compliance costs only on vehicle and engine 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 this action. The agencies specificall y solicit comment on this proposal from Tribal officials. 

### H. **Executive Ord er 13045: Protection of Children from Environmenta**  **l Health Risks and Safety Risks**  This action is subject to Executive Order 13045 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 b y this action may have a disproportionate effect on children. Accordingly , we have evaluated the environmental health or safety effects of these risks on children. The results of this evaluation are dis cussed below. A sy nthesis of the science and research regarding how climate change may affect children and other vulnerable subpopulations is contained in the Technical Support Document for Endangerment or Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, which can be found in the public docket for this proposal. Inmaking those f indings , EPA Administrator placed weight on the fact that certain groups, including children, are particularl y vulnerable to cli mate - related health effects. In those f indings , EPA Administrator also determined that the health effects of climate change linked to observed and projected elevated concentrations of GHGs include the increased likelihood of more frequent and int ense heat waves, increases in ozone concentrations over broad areas of the country , an increase of the severity of extreme weather events such as hurricanes and floods, and increasing severity of coastal storms due to rising sea levels. These effects can all increase mortality and morbidity , especially

in vulnerable populations such as children, the elderl y, and the poor. In addition, the occurrence of wildfires in North America have increased and are likel y to intensify in a warmer future. PM emissions f rom these wildfires can contribute to acute and chronic illnesses of the respiratory sy stem, including pneumonia, upper respiratory diseases, asthma, and chronic obstructive pulmonary disease, especially

in children. The agencies have estimated reductions in projected global mean surface temperature and sea level rise as a result of reductions in GHG emissions associated with the standards finalized*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 844 of 850 in this action (Section VII and NHTSA’s DEIS ). Due to their vulnerability, children may receive disproporti onate benefits from these reductions in temperature and the subsequent reduction of increased ozone and severity of weather events. As discussed in Section VIII.D.2, based on the magnitude of the non - GHG co
- pollutant emissions changes predicted to result from the proposed standards, the agencies expect that there will be improvements in ambient air quality , pending a more comprehensive anal ys is for the final rule making
. Due to their vulnerability , children may receive disproportionate benefits from these reductions , as well. Children are also more susceptible than adults to many air pollutants because of differences in ph ys iology, higher per body weight breathing rates and consumption, rapid development of the brain and bodily s ys tems, and behaviors that increase chances for exposure. Even before birth, the developing fetus may be exposed to air pollutants through the mother that affect development and permanentl y harm the individual. In fants and children breathe at much higher rates per body weight than adults, with infants under one ye ar of age having a breathing rate up to five times that of adults. 896 In addition, children breathe through their mouths more than adults and their nasal passages are less effective at removing pollutants, which leads to a higher deposition fraction in their lungs. 897 Certain motor vehicle emissions present greater risks to children as well. Early lifestages (e.g., children) are thought to be more susceptible to tumor development than adu lts when exposed to carcinogenic chemicals that act through a mutagenic mode of action. 898 Exposure at a yo ung age to these carcinogens could lead to a higher risk of developing cancer later in life. The adverse effects of individual air pollutants may be more severe for children, particularl y the youngest age groups, than adults. The Integrated Science Assessments and Criteria Documents for a number of pollutants affected by th ese rule s , including those for NO 2 , SO 2 , PM, ozone and CO, describe ch ildren as a group with greater susceptibility
. Section VI II.B. 7 discusses a number of childhood health outcomes associated with prox imity to roadway s, including evidence for exacerbation of asthma sy mptoms and suggestive evidence for new onset asthma. In general, these studies do not identify the specific contaminants associated with adverse effects, instead addressing the near
- roadway environment as one containing numerous exposures potentially associated with adverse health effects.

896 U.S. Environmental Protection Agency. (2009). Metabolically
- derived ventilation rates: a revised approach based upon oxygen cons um ption rates. Washington, DC: Office of Research and Development. EPA/600/R

– 06/129F. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=202543. 897 Foos, B.; Marty, M.; Schwartz, J.; Bennet, W.; Moya, J.; Jarabek, A.M.; Salmon, A.G. (2008) Focusing on chil dren’s inhalation dosimetry and health effects for risk assessment: an introduction. J Toxicol Environ Health 71A: 149

– 165. 898 U.S. Environmental Protection Agency. (2005). Supplemental guidance for assessing susceptibility from early
life exposure to carci nogens. Washington, DC: Risk Assessment Forum. EPA/630/ R
- 03/003F. http://www.epa.gov/raf/publications/pdfs/childrens_supplement_final.pdf*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 845 of 850 T here is substantia l evidence that people who live or attend school near major roadway s are more likely

to be of a minority

race, Hispanic ethnicity , and/or low SES. Within these highly exposed groups, children’s exposure and susceptibility to health effects is greater than adults due to school
- related and seasonal activities, behavior, and phy siological factors. Section VIII.D.2 describes the expected ambient air quality changes for non
- GHG co
pollutants resulting from the proposed standards, which represent levels to which the general population is exposed. Children are not expected to experience greater ambient concentrations of air pollutants than the general population. However, because of their greater susceptibility to air pollution and their increased time spent out doors, it is likely that the proposed standards would have particular benefits for children’s health. 

### I. **Executive Order 13211: Actions Concerning Regulations That Significantly Affect Ener**  **gy Supply, Distribution, or Use** This action is not a “significant ene rgy action” because it is not likely to have a significant adverse effect on the supply , distribution or use of energy
. In fact, this proposal has a positive effect on energy

supply and use. Because the combination of the proposed fuel econom y standards and the proposed GHG emission standards would result in significant fuel savings, this proposal encourages more efficient use of fuels. Therefore, we have concluded that this proposal is not likely to have an y adverse energy effects. Our energy effects analy sis is described above in S ection IX. 

### J. **National Technolo gy Transfer and Advancement Act**  **and 1 CFR P**  **art 51** This action involves technical standards. The agencies propose to use the following voluntary consensus standards from SAE International :
 SAE J1263 ( March 2010 ) and SAE J2263 ( December 2008 ) are voluntary consensus standards that together establish a test protocol to determine road
- load coefficients for properly testing vehicles on a chassis dynamometer to simulate in
-use operating conditions. Heavy
- duty vehicle testing already relies on these reference standards under 40 CFR part 1066.  SAE J2343 ( July 2008 ). This voluntary consensus standard establishes a minimum hold time for LNG
- fueled vehicles following a refueling event before the tank vents to relieve pressure. This is described further in Section XIII.A.3. We are also aware that updated standards are pending for three SAE standards that are already incorporated b y reference in the regulations

— SAE J2263, SAE J1526, and SAE J2071. We will consider referencing these updated standards if they are adopted before completion of the final rule. All SAE documents are available from the publisher’s website at www.sae.org . We are proposing to adopt updated versions of two ASTM standards that already appl y under 40 CFR part 1036. This applies for ASTM D240

– 14 and ASTM D4809
- 13 , both of which specify t est m ethod s for determining the h eat of c ombustion of l iquid hydrocarbon f uels.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 846 of 850 This action also involves technical standards for which there is no available voluntary consensus standard. First, the agencies are proposing greenhouse gas emission standards for heav y - dut y vehicles that depend on computer modeling to predict and emission rate based on various engine and vehicle characteristics. Such a model is not available from other sources, so EPA has developed the Greenhouse Gas Emission Model as a simulation tool for demonstrating compliance with emission standards. See Section II for a detailed description of the model. A working version of this software is available for download at http://www.epa.gov/otaq/climate/gem.htm
. Second, we need to define a benchmark gear oil for establish ing a reference point for establishing improvements in axle efficiency . There is no voluntary consensus standard for this purpose. As described in Section II.C.1.c, we are instead proposing to identify the technical specifications for a commonly used c ommercial product from BASF Corporation. These technical specifications have been placed in the docket for this rulemaking. Third, 40 CFR part 1037 includes several test procedures involving calculation with numerous phy sical quantities. We are incorporating by reference NIST Special Publication 811 to allow for standardization and consistency of units and nomenclature. This standard, which already applies for 40 CFR parts 1065 and 1066, is published by the National Institute of Standards and Technology (Department of Commerce) and is available at no charge at www.nist.gov. Fourth , the amendments for marine diesel engines involve technical standards related to the requirements that apply internationall y . There are no voluntary consensus documents that address these technical standards. In earlier rulemakings, EPA has adopted an incorporatio n by reference for MARPOLAnnex VIand the NO X Technical code in 40 CFR parts 1042 and 1043. The International Maritime Organization adopted changes to these documents in 2013 and 2014, which need to be reflected in 40 CFR par ts 1042 and 1043. EPA recentl y adopted the updated reference documents in 40 CFR part 1043. As noted in Section XIV.H.4, this proposal includes the remaining step of incorporating the updated IMO documents by reference in 4 0 CFR part 1042. All these documents are available at www.imo.org
. 

### K. **Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Population**  **s and Low -**  **Income Populations** The agencies believe the human health or environmental risk addressed b y this action will not have potential disproportionately high and adverse human health or environmental effects on minority , low
- income or indigenous populations. The results of this evaluation are discussed below. With respect to GHG emissions, the agencies have determined that th ese proposed rule s would not have disproportionately high and adverse human health or environmental effects on minority , low
- in come or indigenous populations because they increase the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minorit y , low
- income or indigenous population. The reductions in CO 2 and other GHGs assoc iated with the standards would affect climate change projections, and the agencies have estimated*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 847 of 850 reductions in projected global mean surface temperatures (Section VII ). Within communities experiencing adverse impacts related to climate change, certain parts of the population may be especiall y vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, and/or indigen ous populations dependent on one or a few resources. 899 For non
- GHG co
- pollutants such as ozone, PM 2.5 , and toxics, the agencies have concluded that it is not practicable to determine whether there would be disproportionatel y high and adverse human health or environmental effects on minority , low income and/or indigenous populations from these rules
. As discussed in Section VIII.D.2, however, based on the magnitude of the non - GHG co
- pollutant emissions changes predicted to result from the proposed standard s, EPA and NHTSA expect that there will be improvements in ambient air quality that would likely

help in mitigating the disparity in racial, ethnic, and economically
- based exposures , pending a more comprehensive anal ys is for the final rule making.

899 See Endangerment TSD, Note 10, above.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 848 of 850 

## XVI. **EP A**  **and NHTSA**

**Statutory Authorities**  As described below, the proposed regulations are authorized separately for EPA and NHTSA under the agencies’ respective statutory authorities. See Section Ifor a discussion of these authorities. 

### A. **EPA** Statutory authority for the vehicle controls proposed today is found in S ection 202 (a) (which authorizes standards for emissions of pollutants from new motor vehicles which emissions cause or contribute to air pollution which may reasonably

be anticipated to endanger public health or welfare), 202 (d), 203
- 209, 216, and 301 of the Clean Air Act, 42 U.S.C. 7521 (a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 7601. Pursuant to 42 U.S.C. S ection 4365, EPA must make certain proposed rules available to the Science Advisory

Board (SAB) for revi ew. EPA may also voluntaril y choose to make other rules available to the SAB. EPA notified the SAB of its plans for this rulemaking and on June 11, 2014, the chartered SAB discussed the recommendations of its work group on the planned action and agreed that no further SAB consideration of the supporting science was merited
. 

### B. **NHTSA** Statutory authority for the fuel consumption standards proposed today is found in Section 103 of the Energy

Independence and Security Act of 2007, 49 U.S.C. 32902(k). EISA 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 implement appropriate test methods, measurement metrics, fuel ec onomy standards, and compliance and enforcement protocols that are appropriate, cost
- effective and technologicall y feasible. To the extent motor vehicle safety is implicated, NHTSA’s authority to regulate it is also derived from the National Traffic and M otor Vehicle Safety Act, 49 U.S.C. §§ 30101 et. seq. 

### C. **List of Subjects** 40 CFR Part 85 Confidential Business Information, Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Research, Warranties. 40 CFR Part 86 Administrative practice and procedure, C onfidential 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.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 849 of 850 40 CFR Part 1033 Administrative practice and procedure, Air pollution control. 40 CFR Parts 1036 and 1037 Environmental protection, Administrative practice and procedure, Air pollution control, confidential business information, 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 Part 10 43 Environmental protection, Administrative practice and procedure, Air pollution co ntrol, Imports, Incorporation by reference, Vessels, Reporting and recordkeeping requirements. 40 CFR Parts 1065 and 1066 Administrative practice and procedure, Air pollution control, Incorporation by reference, Reporting and recordkeeping requirements, Research. 40 CFR Part 1068 Environmental protection, Administrative practice and procedure, C onfidential business information, Imports, Incorporation by reference, Motor vehicle pollution, Penalties, Reporting and recordkeeping requirements, Warranties. 49 CFR Parts 523, 534, 535, and 537 Fuel economy , Reporting and recordkeeping requirements
. 49 CFR Part 512 Administrative practice and procedure , Confidential business information , Freedom of information , Motor vehi cle safety , Reporting and recordkeeping requirements
.*** E. O. 12866 Review

– DRAFT 05
- 29
- 15

– Do Not Cite, Qu ote or Release During Review **

Page 850 of 850 

## = ( ± ° ) × . ( ) ̅ ,



## ̅ , 

## = ⎩ ⎨ ⎧ + ̅ − 2 ̅ cos ̅ , = 1 + ̅ + 2 ̅ cos ̅ , = 2 h ̅ ̅ ,



## = ⎩ ⎨ ⎧ + ̅ − 2 ̅ cos ̅ , = 1 + ̅ + 2 ̅ cos ̅ , = 2 h ̅ ̅ ,



## = ⎩ ⎨ ⎧ + ̅ − 2 ̅ cos ̅ , = 1 + ̅ + 2 ̅ cos ̅ , = 2 ̅
,



## = ⎩ ⎨ ⎧ + ̅ − 2 ̅ cos ̅ , = 1 + ̅ + 2 ̅ cos ̅ , = 2 ̅
,



## = ⎩ ⎨ ⎧

− s in

̅ sin ̅ , = 1 sin

̅ sin ̅ , = 2

= ⎩ ⎨ ⎧

− s in

̅ sin ̅ , = 1 sin

̅ sin ̅ , = 2