Subject: Summary of additional interagency working comments received on draft rule under EO 

12866 review 

From: "Achanta, Chandana L." [Chandana_L._Achanta@omb.eop.gov]

To: William Charmley; "'Steve.Wood@dot.gov'" <Steve.Wood@dot.gov>; 

"'Neil.Eisner@dot.gov'" <Neil.Eisner@dot.gov>; "''james.tamm@dot.gov' 

(james.tamm@dot.gov)'" <james.tamm@dot.gov>; "rebecca.yoon@dot.gov" 

<rebecca.yoon@dot.gov>

Sent: 11/07/2011 07:11 PM EST

 

Please find attached additional interagency working comments received on draft NPRM under 

EO 12866 and EO 13563 review. They are for your consideration and are subject to further 

policy review. 

 

Thanks. 

Chandana 

Summary of interagency working comments received on draft rule under EO 12866 review.pdf 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 1 of 770

ENVIRONMENTAL PROTECTION AGENCY 

40 CFR Parts 86 and 600 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety Administration 

49 CFR Parts 523, 531, 533, 536, 537, and 538 

 

[EPA–HQ–OAR–2010–0799; FRL_XXXX-X; NHTSA-2010-0131]

RIN 2060-AQ54; RIN 2127-AK79

2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate 

Average Fuel Economy Standards 

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

Administration (NHTSA). 

ACTION: Proposed Rule. 

SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation, are issuing this 

joint proposal to further reduce greenhouse gas emissions and improve fuel economy for lightduty vehicles for model years 2017-2025. This proposal extends the National Program beyond 

the greenhouse gas and corporate average fuel economy standards set for model years 2012-

2016. On May 21, 2010, President Obama issued a Presidential Memorandum requesting that 

NHTSA and EPA develop through notice and comment rulemaking a coordinated National 

Program to reduce greenhouse gas emissions of light-duty vehicles for model years 2017-2025. 

This proposal, consistent with the President’s request, responds to the country’s critical need to

address global climate change and to reduce oil consumption. NHTSA is proposing Corporate 

Average Fuel Economy standards under the Energy Policy and Conservation Act, as amended by 

the Energy Independence and Security Act, and EPA is proposing greenhouse gas emissions 

standards under the Clean Air Act. These standards apply to passenger cars, light-duty trucks, 

and medium-duty passenger vehicles, and represent a continued harmonized and consistent 

National Program. Under the National Program for model years 2017-2025, automobile 

manufacturers would be able to continue building a single light-duty national fleet that satisfies 

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

vehicle choices. EPA is also proposing a minor change to the regulations applicable to MY 2012-

2016, with respect to air conditioner performance and measurement of nitrous oxides. 

DATES: Comments: Comments must be received on or before [Insert date 60 days after 

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

Register. Under the Paperwork Reduction Act, comments on the information collection 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 2 of 770

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

[Insert date 30 days after publication in the Federal Register], thirty days after date of 

publication in the Federal Register. See the SUPPLEMENTARY INFORMATION section 

on “Public Participation” for more information about written comments. 

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

[Insert Dates], in [Insert Locations]. The hearings will start at 9 a.m. local time and continue 

until everyone has had a chance to speak. See the SUPPLEMENTARY INFORMATION

section on “Public Participation.” for more information about the public hearings. 

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2010-0799

and/or NHTSA-2010-0131, 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 

 Fax: EPA: (202) 566–9744; NHTSA: (202) 493-2251. 

 Mail: 

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

Radiation Docket, Mail Code 28221T, 1200 Pennsylvania Avenue, NW., 

Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-2010-0799. In 

addition, please mail a copy of your comments on the information collection 

provisions to the Office of Information and Regulatory Affairs, Office of 

Management and Budget (OMB), Attn: Desk Officer for EPA, 725 17th St., NW., 

Washington, DC 20503. 

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

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

Washington, DC 20590. 

 Hand Delivery: 

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

Ave., NW., Washington, DC, Attention Docket ID No. EPA-HQ-OAR-2010-

0799. Such deliveries are only accepted during the Docket’s normal hours of 

operation, and special arrangements should be made for deliveries of boxed 

information. 

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

SE, Washington, DC 20590, between 9 a.m. and 4 p.m. Eastern Time, Monday 

through Friday, except Federal Holidays. 

Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-2010-0799 and/or 

NHTSA-2010-0131. See the SUPPLEMENTARY INFORMATION section on “Public 

Participation” for more information about submitting written comments.

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

locations: [Insert Date, Location, & Address]. See the SUPPLEMENTARY 

INFORMATION section on “Public Participation” for more information about the public 

hearings. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 3 of 770

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

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

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

other material, such as copyrighted material, will be publicly available only in hard copy. 

Publicly available docket materials are available either electronically in www.regulations.gov or 

in hard copy at the following locations: EPA: EPA Docket Center, EPA/DC, EPA West, Room 

3334, 1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is open from 

8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number 

for the Public Reading Room is (202) 566–1744. NHTSA: Docket Management Facility, M-30, 

U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 

Jersey Avenue, SE, Washington, DC 20590. The Docket Management Facility is open between 

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

FOR FURTHER INFORMATION CONTACT: EPA: Christopher Lieske, Office of 

Transportation and Air Quality, Assessment and Standards Division, Environmental Protection 

Agency, 2000 Traverwood Drive, Ann Arbor MI 48105; telephone number: 734-214-4584; fax 

number: 734-214-4816; email address: lieske.christopher@epa.gov, or contact the Assessment 

and Standards Division; e-mail address: otaqpublicweb@epa.gov. NHTSA: Rebecca Yoon, 

Office of the Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey 

Avenue, SE, Washington, DC 20590. Telephone: (202) 366-2992. 

SUPPLEMENTARY INFORMATION: 

A. Does this Action Apply to Me?

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

trucks, and medium-duty passenger vehicles, as defined under EPA’s CAA regulations,1

 and 

passenger automobiles (passenger cars) and non-passenger automobiles (light trucks) as defined 

under NHTSA’s CAFE regulations.2

 Regulated categories and entities include: 

 1

 “Light-duty vehicle,” “light-duty truck,” and “medium-duty passenger vehicle” are defined in 40 CFR 86.1803-01. 

Generally, the term “light-duty vehicle” means a passenger car, the term “light-duty truck” means a pick-up truck, 

sport-utility vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating, and “medium-duty passenger 

vehicle” means a sport-utility vehicle or passenger van from 8,500 to 10,000 lbs gross vehicle weight rating. 

Medium-duty passenger vehicles do not include pick-up trucks. 2

 “Passenger car” and “light truck” are defined in 49 CFR Part 523. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 4 of 770

Category NAICS 

CodesA

Examples of Potentially Regulated Entities 

Industry 336111 

336112 

Motor Vehicle Manufacturers 

Industry 811111 

811112 

811198 

423110 

Commercial Importers of Vehicles and Vehicle 

Components 

Industry 335312 

336312 

336399 

811198 

Alternative Fuel Vehicle Converters 

A North American Industry Classification System (NAICS) 

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

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

by this action, you should carefully examine the regulations. You may direct questions regarding 

the applicability of this action to the person listed in FOR FURTHER INFORMATION 

CONTACT. 

B. Public Participation

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

section describes how you can participate in this process. 

How Do I Prepare and Submit Comments? 

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

proposals. For the convenience of all parties, comments submitted to the EPA docket will be 

considered comments submitted to the NHTSA docket, and vice versa. An exception is that 

comments submitted to the NHTSA docket on NHTSA’s Draft Environmental Impact Statement 

(EIS) 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 consideration by one agency should 

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

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

determine whether a comment is submitted on its proposal. 

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

described below.

EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2010-0799. EPA’s policy 

is that all comments received will be included in the public docket without change and may be 

made available online at www.regulations.gov, including any personal information provided, 

unless the comment includes information claimed to be Confidential Business Information (CBI) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 5 of 770

or other information whose disclosure is restricted by statute. Do not submit information that you 

consider to be CBI or otherwise protected through www.regulations.gov or e-mail. The 

www.regulations.gov Web site is an ‘‘anonymous access’’ system, which means EPA will not 

know your identity or contact information unless you provide it in the body of your comment. If 

you send an e-mail comment directly to EPA without going through www.regulations.gov your 

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

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

EPA recommends that you include your name and other contact information in the body of your 

comment and with any disk or CD–ROM you submit. If EPA cannot read your comment due to 

technical difficulties and cannot contact you for clarification, EPA may not be able to consider 

your comment. Electronic files should avoid the use of special characters, any form of 

encryption, and be free of any defects or viruses. For additional information about EPA’s public 

docket visit the EPA Docket Center homepage at http:// www.epa.gov/epahome/dockets.htm. 

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

are correctly filed in the Docket, please include the Docket number NHTSA-2010-0131 in your 

comments. Your comments must not be more than 15 pages long.3

 NHTSA established this 

limit to encourage you to write your primary comments in a concise fashion. However, you may 

attach necessary additional documents to your comments, 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) 

process, thus allowing the agencies to search and copy certain portions of your submissions.4

 

Please note that pursuant to the Data Quality Act, in order for the substantive data to be relied 

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

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

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

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

accessed at http://www.dot.gov/dataquality.htm.

Tips for Preparing Your Comments 

When submitting comments, please remember to: 

• Identify 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 any assumptions and provide any technical information and/or data that 

you used. 

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

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

• Provide specific examples to illustrate your concerns, and suggest alternatives. 

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

personal threats. 

 3

 See 49 CFR 553.21. 

4

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

document or electronic fax file, into computer-editable text. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 6 of 770

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

the DATES section above. 

How Can I Be Sure That My Comments Were Received? 

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

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

envelope containing your comments. Upon receiving your comments, Docket Management will 

return the postcard by mail. 

How Do I Submit Confidential Business Information? 

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

available to the other agency. However, as with all public comments, any CBI information only 

needs to be submitted to either one of the agencies’ dockets and it will be available to the other. 

Following are specific instructions for submitting CBI to either agency. 

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

the part or all of the information that you claim to be CBI. For CBI information in a disk or CD 

ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify 

electronically within the disk or CD ROM the specific information that is claimed as CBI. In 

addition to one complete version of the comment that includes information claimed as CBI, a 

copy of the comment that does not contain the information claimed as CBI must be submitted for 

inclusion in the public docket. Information so marked will not be disclosed except in accordance 

with procedures set forth in 40 CFR Part 2. 

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

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

be confidential business information, to the Chief Counsel, NHTSA, at the address given above 

under FOR FURTHER INFORMATION CONTACT. When you send a comment containing 

confidential business information, you should include a cover letter setting forth the information 

specified in our confidential business information regulation.5

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

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

Will the Agencies Consider Late Comments? 

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

comment closing date indicated above under DATES. To the extent practicable, we will also 

consider comments received after that date. If interested persons believe that any new 

information the agency places in the docket affects their comments, they may submit comments 

after the closing date concerning how the agency should consider that information for the final 

rule. However, the agencies’ ability to consider any such late comments in this rulemaking will 

be limited due to the time frame for issuing a final rule. 

 5

 See 49 CFR Part 512. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 7 of 770

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

we will consider that comment as an informal suggestion for future rulemaking action. 

How Can I Read the Comments Submitted By Other People? 

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

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

http://www.regulations.gov. Follow the online instructions for accessing the dockets. You may 

also read the materials at the EPA Docket Center or NHTSA Docket Management Facility by 

going to the street addresses given above under ADDRESSES. 

How Do I Participate in the Public Hearings?

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

described in the DATES and ADDRESSES sections above. 

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

EPA and NHTSA contact persons listed under FOR FURTHER INFORMATION CONTACT

at least ten days before the hearing. Once EPA and NHTSA learn how many people have 

registered to speak at the public hearing, we will allocate an appropriate amount of time to each 

participant, allowing time for lunch and necessary breaks throughout the day. For planning 

purposes, each speaker should anticipate speaking for approximately ten minutes, although we 

may need to adjust the time for each speaker if there is a large turnout. We suggest that you 

bring copies of your statement or other material for the EPA and NHTSA panels.. It would also 

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

accommodate as many speakers as possible, we prefer that speakers not use technological aids 

(e.g., audio-visuals, computer slideshows). However, if you plan to do so, you must notify the 

contact persons in the FOR FURTHER INFORMATION CONTACT section above. You also 

must make arrangements to provide your presentation or any other aids to NHTSA and EPA in 

advance of the hearing in order to facilitate set-up. In addition, we will reserve a block of time 

for anyone else in the audience who wants to give testimony. 

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

who require accommodations such as sign language interpreters should contact the persons listed 

under FOR FURTHER INFORMATION CONTACT section above no later than ten days 

before the date of the hearing. 

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

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

record of the hearing open for 30 days to allow you to submit supplementary information. You 

may make arrangements for copies of the transcript directly with the court reporter. 

Table of Contents 

[Placeholder] 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 8 of 770

Below is a summary of interagency comments received during EO 12866 and EO 13563 review 

of the draft rule “Joint Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standards”. They are for your consideration 

and subject to further policy review. 

**** 

I. Overview of Joint EPA/NHTSA Proposed 2017-2025 National Program 

Executive Summary 

EPA and NHTSA are each announcing proposed rules that call for strong and 

coordinated Federal greenhouse gas and fuel economy standards for passenger cars, light-duty 

trucks, and medium-duty passenger vehicles (hereafter light-duty vehicles or LDVs). Together, 

these vehicle categories, which include passenger cars, sport utility vehicles, crossover utility 

vehicles, minivans, and pickup trucks, among others, are presently responsible for approximately 

60 percent of all U.S. transportation-related greenhouse gas (GHG) emissions and fuel 

consumption. This proposal would extend the National Program of Federal light-duty vehicle 

GHG emissions and corporate average fuel economy (CAFE) standards to model years (MYs) 

2017-2025. This proposed coordinated program would achieve important reductions in GHG 

emissions and fuel consumption from the light-duty vehicle part of the transportation sector, 

based on technologies that either are commercially available or that the agencies project will be 

commercially available in the rulemaking timeframe and that can be incorporated at a reasonable 

cost. These hHigher initial vehicle costs will be more than offset by significant fuel savings for 

consumers over timethe life of the vehicle. 

This proposal builds on the success of the first phase of the National Program to regulate 

fuel economy and GHG emissions from U.S. light-duty vehicles, which established strong and 

coordinated standards for model years (MY) 2012-2016. As with the first phase of the National 

Program, collaboration with California Air Resources Board (CARB) and with automobile 

manufacturers and other stakeholders has been a key element in developing the agencies’ 

proposed rules. Continuing the National Program would ensure that all manufacturers can build 

a single fleet of U.S. vehicles that would satisfy all requirements under both programs as well as 

under California’s program, helping to reduce costs and regulatory complexity while providing 

significant energy security and environmental benefits. 

Combined with the standards already in effect for MYs 2012-2016, as well as the MY 

2011 CAFE standards, the proposed standards would result in MY 2025 light-duty vehicles with 

nearly double the fuel economy, and approximately one-half of the GHG emissions compared to 

MY 2010 vehicles -- representing the most significant federal action ever taken to reduce GHG 

emissions and improve fuel economy in the U.S. EPA is proposing standards that are projected 

to require, on an average industry fleet wide basis, 163 grams/mile of carbon dioxide (CO2) in 

model year 2025, which is equivalent to 54.5 mpg if this level was achieved solely through 

Comment [A1]: Slightly ambiguous as written 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 9 of 770

improvements in fuel efficiency.6

 NHTSA is proposing two phases of passenger car and light 

truck standards. The first phase, from MYs 2017-2021, includes proposed standards that are 

projected to require, on an average industry fleet wide basis, 40.9 mpg in MY 2021. The second 

phase of the CAFE program, from MYs 2022-2025, represents conditional7

 proposed standards 

that are projected to require, on an average industry fleet wide basis, 49.6 mpg in model year 

2025. Both the EPA and NHTSA standards are projected to be achieved through a range of 

technologies, including improvements in air conditioning efficiency, which reduces both GHG 

emissions and fuel consumption; the EPA standards also are projected to be achieved with the 

use of air conditioning refrigerants with a lower global warming potential (GWP), which reduce 

GHGs (i.e., hydrofluorocarbons) but do not improve fuel economy. The agencies are proposing 

separate standards for passenger cars and trucks, based on a vehicle’s size or “footprint.” For the 

MYs 2022-2025 standards, EPA and NHTSA are proposing a comprehensive mid-term 

evaluation and agency decision-making process, given both the long time frame and NHTSA’s 

obligation to conduct a separate rulemaking in order to establish final standards for vehicles for 

those model years, 

From a societal standpoint, this second phase of the National Program is projected to save 

over 4 billion barrels of oil and over 2 billion metric tons of GHG emissions over the lifetimes of 

those vehicles sold in MY 2017-2025. The agencies estimate that fuel savings will far outweigh 

higher vehicle costs, and that the net benefits to society of the MYs 2017-2025 National Program 

will be in the range of $348 billion to $468 billion (7 and 3 percent discount rates, respectively) 

over the lifetimes of those vehicles sold in MY 2017-2025. 

These proposed standards would have significant savings for consumers at the pump. 

Higher costs for new vehicle technology will add, on average, about $2000 for consumers who 

buy a new vehicle in MY 2025. Those consumers who drive their MY 2025 vehicle for its entire 

lifetime will save, on average, $5200 to $6600 (7 and 3 percent discount rates, respectively) in 

fuel savings, for a net lifetime savings of $3000 to 4400. For those consumers who purchase 

their new MY 2025 vehicle with cash, the discounted fuel savings will offset the higher vehicle 

cost in about 4 years, and fuel savings will continue for as long as the consumer owns the 

vehicle. Those consumers that buy a new vehicle with a typical 5-year loan will benefit from an 

average monthly cash flow savings of about $11 during the loan period, or about $130 per year, 

on average,. So the consumer would benefit immediately as the monthly fuel savings more than 

offsets the higher monthly payment due to the higher incremental vehicle cost.

 6

 Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent lower than the 

CO2 and CAFE compliance values discussed here. The reference to CO2 here refers to CO2 equivalent reductions, 

as this included some degree of reductions in greenhouse gases other than CO2, as one part of the air conditioning 

related reductions. 

7

 By ”conditional,” NHTSA means to say that the proposed standards for MYs 2022-2025 represent the agency’s 

current best estimate of what levels of stringency would be maximum feasible in those model years, but in order for 

the standards for those model years to be legally reviewable a subsequent rulemaking must be undertaken by the 

agency at a later time. See Section IV for more information. 

Comment [A2]: Commenters suggest that 

agencies clarify that the consumer benefits from the 

fuel savings start in the first month. 

Comment [A3]: This is for the average vehicle. 

Is it also true that average monthly cash savings is 

positive for all classes/sizes of vehicle? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 10 of 770

The agencies have designed the proposed standards to preserve consumer choice -- that 

is, the proposed standards should not affect consumers’ opportunity to purchase the size of 

vehicle with the performance, utility and safety features that meets their needs. The standards 

are based on a vehicle’s size, or footprint – that is, larger vehicles have relatively less stringent 

fuel economy/GHG emissions targets and smaller vehicles have more stringent fuel 

economy/GHG emissions targets. Thus, consumers will be able to continue to choose from the 

same mix of vehicles that are currently in the marketplace. 

The agencies’ believe there is a wide range of technologies available for manufacturers to 

consider in reducing GHG emissions and improving fuel economy. The proposals allow for longterm planning by manufacturers and suppliers for the continued development and deployment 

across their fleets of fuel saving and emissions-reducing technologies. The agencies believe that 

advances in gasoline engines and transmissions will continue for the foreseeable future, and that 

there will be continual improvement in other technologies, including vehicle weight reduction, 

lower tire rolling resistance, improvements in vehicle aerodynamics, diesel engines, and more 

efficient vehicle accessories. The agencies also expect to see increased electrification of the fleet 

through the expanded production of stop/start, hybrid, plug-in hybrid and electric vehicles. 

Finally, the agencies expect that vehicle air conditioners will continue to improve by becoming 

more efficient and by increasing the use of alternative refrigerants. Many of these technologies 

are already available today, and manufacturers will be able to meet the standards through 

significant efficiency improvements in these technologies, as well as a significant penetration of 

these and other technologies across the fleet. Auto manufacturers may also introduce new 

technologies that we have not considered for this rulemaking analysis, which could make 

possible alternative, more cost-effective paths to compliance. 

A. Introduction 

1. Continuation of the National Program 

EPA and NHTSA are each announcing proposed rules that call for strong and 

coordinated Federal greenhouse gas and fuel economy standards for passenger cars, light-duty 

trucks, and medium-duty passenger vehicles (hereafter light-duty vehicles or LDVs). Together, 

these vehicle categories, which include passenger cars, sport utility vehicles, crossover utility 

vehicles, minivans, and pickup trucks, are presently responsible for approximately 60 percent of 

all U.S. transportation-related greenhouse gas emissions and fuel consumption. The proposal 

would extend the National Program of Federal light-duty vehicle greenhouse gas (GHG) 

emissions and corporate average fuel economy (CAFE) standards to model years (MYs) 2017-

2025. The coordinated program being proposed would achieve important reductions of 

greenhouse gas (GHG) emissions and fuel consumption from the light-duty vehicle part of the 

transportation sector, based on technologies that either are commercially available or that the 

Comment [A4]: Commenter requests clarity on 

whether they are less stringent on an absolute scale 

as well. This may be true relative to cost, technical 

potential, etc. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 11 of 770

agencies project will be commercially available in the rulemaking timeframe and that can be 

incorporated at a reasonable cost. 

In working together to develop the next round of standards for MYs 2017-2025, NHTSA 

and EPA are building on the success of the first phase of the National Program to regulate fuel 

economy and GHG emissions from U.S. light-duty vehicles, which established the strong and 

coordinated standards for model years (MY) 2012-2016. As for the MYs 2012-2016 rulemaking, 

collaboration with California Air Resources Board (CARB) and with industry and other 

stakeholders has been a key element in developing the agencies’ proposed rules. Continuing the 

National Program would ensure that all manufacturers can build a single fleet of U.S. vehicles 

that would satisfy all requirements under both programs as well as under California’s program, 

helping to reduce costs and regulatory complexity while providing significant energy security 

and environmental benefits. 

The agencies have been developing the basis for these joint proposed standards almost 

since the conclusion of the rulemaking establishing the first phase of the National Program. 

After much research and deliberation by the agencies, along with CARB and other stakeholders, 

President Obama announced plans for these proposed rules on July 29, 2011 and NHTSA and 

EPA issued a Supplemental Notice of Intent (NOI) outlining the agencies’ plans for proposing 

the MY 2017-2025 standards and program.8 The State of California and thirteen auto 

manufacturers representing over 90 percent of U.S. vehicle sales provided letters of support for 

the program concurrent with the Supplemental NOI.9 The United Auto Workers (UAW) also 

supported the announcement.10 As envisioned in the Presidential announcement and 

Supplemental NOI, this proposal sets forth proposed MYs 2017-2025 standards as well as 

detailed supporting analysis for those standards and regulatory alternatives for public review and 

comment. The program that the agencies are proposing will spur the development of a new 

generation of clean cars and trucks through innovative technologies and manufacturing that will, 

in turn, spur economic growth and create high-quality domestic jobs, enhance our energy 

security, and improve our environment. Consistent with Executive Order 13563, this proposal 

was developed with early consultation with stakeholders, employs flexible regulatory approaches 

to reduce burdens, maintains freedom of choice for the public, and helps to harmonize federal 

and state regulations. 

As described below, NHTSA and EPA are proposing a continuation of the National 

Program that the agencies believe represents the appropriate levels of fuel economy and GHG 

emissions standards for model years 2017-2025, given the technologies that the agencies 

 8

 76 FR 48758 (August 9, 2011). 

9

 Commitment letters are available at http://www.epa.gov/otaq/climate/regulations.htm and at 

http://www.nhtsa.gov/fuel-economy (last accessed Aug. 24, 2011). 

10 The UAW’s support was expressed in a statement on July 29, 2011, which can be found at 

http://www.uaw.org/articles/uaw-supports-administration-proposal-light-duty-vehicle-cafe-and-greenhouse-gasemissions-r (last accessed September 19, 2011) 

Comment [A5]: Although this is only a short 

summary of the process, commenter recommends 

agencies to mention the two earlier NOIs as well 

here. 

Comment [A6]: Commenter uggests mentioning 

the support of consumer and enviro groups. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 12 of 770

anticipate will be available for use on these vehicles and the agencies’ understanding of the cost 

and manufacturers’ ability to apply these technologies during that time frame, and consideration 

of other relevant factors. Under this joint rulemaking, EPA is proposing GHG emissions 

standards under the Clean Air Act (CAA), and NHTSA is proposing CAFE standards under 

EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA). This joint 

rulemaking proposal reflects a carefully coordinated and harmonized approach to implementing 

these two statutes, in accordance with all substantive and procedural requirements imposed by 

law.11

The proposed approach allows for long-term planning by manufacturers and suppliers for 

the continued development and deployment across their fleets of fuel saving and emissionsreducing technologies. NHTSA’s and EPA’s technology assessment indicates there is a wide 

range of technologies available for manufacturers to consider in reducing GHG emissions and 

improving fuel economy. The agencies believe that advances in gasoline engines and 

transmissions will continue for the foreseeable future, which is a view that is supported in the 

literature and amongst the vehicle manufacturers and suppliers.12 The agencies also believe that 

there will be continual improvement in other technologies including reductions in vehicle 

weight, lower tire rolling resistance, improvements in vehicle aerodynamics, diesel engines, and 

more efficient vehicle accessories. The agencies also expect to see increased electrification of 

the fleet through the expanded production of stop/start, hybrid, plug-in hybrid and electric 

vehicles.13 Finally, the agencies expect that vehicle air conditioners will continue to improve by 

becoming more efficient and by increasing the use of alternative refrigerants. Many Most of 

these technologies are already available today, and EPA’s and NHTSA’s assessments are that 

manufacturers will be able to meet the standards through significant efficiency improvements in 

these technologies as well as a significant penetration of these and other technologies across the 

fleet. We project that these potential compliance pathways for manufacturers will result in 

significant benefits to consumers and to society, as quantified below. Manufacturers may also 

introduce new technologies that we have not considered for this rulemaking analysis, which 

could make possible alternative, more cost-effective paths to compliance. 

As discussed further below, as with the standards for MYs 2012-2016, the agencies 

believe that the proposed standards would continue to preserve consumer choice, that is, the 

 11 For NHTSA, this includes the requirements of the National Environmental Policy Act (NEPA). 

12 There are a number of competing gasoline engine technologies, with one in particular that the agencies project 

will be common beyond 2016. This is the gasoline direct injection and downsized engines equipped with 

turbochargers and cooled exhaust gas recirculation, which has performance characteristics similar to that of larger, 

less efficient engines. Paired with these engines, the agencies project that advanced transmissions (such as 

automatic and dual clutch transmissions with eight forward speeds) and higher efficiency gearboxes will provide 

significant improvements. Transmissions with eight or more speeds can be found in the fleet today in very limited 

production, and while they are expected to penetrate further by 2016, we anticipate that by 2025 these will be the 

dominant transmissions in new vehicle sales. 

13 For example, while today less than three percent of annual vehicle sales are strong hybrids, plug-in hybrids and all 

electric vehicles, by 2025 we estimate these technologies could represent nearly 15 percent of new sales. 

Comment [A7]: Are most of the technologies are 

already available today? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 13 of 770

proposed standards should not affect consumers’ opportunity to purchase the size of vehicle that 

meets their needs. NHTSA and EPA are proposing to continue standards based on vehicle 

footprint, where smaller vehicles have relatively more stringent standards, and larger vehicles 

have less stringent standards, so there should not be a significant effect on the relative 

availability of different size vehicles in the fleet. Additionally, as with the standards for MYs 

2012-2016, the agencies believe that the proposed standards should not have a negative effect on 

vehicle safety. 

We note that as part of this rulemaking, given the long time frame at issue in setting 

standards for MY 2022-2025 light-duty vehicles, the agencies are discussing a comprehensive 

mid-term evaluation and agency decision-making process. NHTSA has a statutory obligation to 

conduct a separate de novo rulemaking in order to establish final standards for vehicles for the 

2022-2025 model years, and EPA is proposing regulations that address the mid-term evaluation 

The mid-term evaluation will assess the appropriateness of the MY 2022-2025 standards 

considered in this rulemaking, based on an updated assessment of all the factors considered in 

setting the standards and the impacts of those factors on the manufacturers’ ability to comply. 

NHTSA and EPA fully expect to conduct this mid-term evaluation in coordination with the 

California Air Resources Board, given our interest in a maintaining a National Program to 

address GHGs and fuel economy. Further discussion of the mid-term evaluation is found later in 

this section, as well as in Sections III and IV. 

Based on the agencies’ analysis, the National Program standards being proposed are 

currently projected to reduce GHGs by approximately 2 billion metric tons and save 4 billion 

barrels of oil over the lifetime of MYs 2017-2025 vehicles relative to the MY 2016 standard 

curves 14 already in place. The average cost for a MY 2025 vehicle to meet the standards is 

estimated to be about $2,000 compared to a vehicle that would meet the level of the MY 2016 

standards in MY 2025. However, fuel savings for consumers are expected to more than offset 

the higher vehicle costs. The typical driver would save a total of $6,600 in fuel costs over the 

lifetime of a MY 2025 vehicle and, even after accounting for the higher vehicle cost, consumers 

would save a net $4,400 in fuel costs over the vehicle’s lifetime. Further, consumers who buy 

new vehicles with cash would save enough in lower fuel costs after about 4 years of owning a 

MY 2025 vehicle to offset the higher upfront vehicle costs, while consumers who buy with a 5-

year loan would save more each month on fuel than they would spend on the higher monthly 

loan payment, beginning in the first month of ownership. 

Continuing the National Program has both energy security and climate change benefits. 

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

EPA has found that elevated atmospheric concentrations of six greenhouse gases– carbon 

dioxide, methane, nitrous oxide, hydrofluorocarbons, perflurocarbons, and sulfur hexafluoride -- 

 14 The calculation of GHG reductions and oil savings is relative to a future in which the MY 2016 standards remain 

in place for MYs 2017-2025 and manufacturers comply on average at those levels. 

Comment [A8]: Commenters suggest agency 

explain what this belief is based on? Safety studies? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 14 of 770

taken in combination endanger both the public health and the public welfare of current and future 

generations. EPA further found that the combined emissions of these greenhouse gases from 

new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution 

that endangers public health and welfare. 74 FR 66496 (Dec. 15, 2009). As summarized in 

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

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

most of the observed global warming over the last 50 years.15 Mobile sources emitted 31 percent 

of all U.S. GHGs in 2007 (transportation sources, which do not include certain off-highway 

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

1990.16 Mobile sources addressed in the endangerment and contribution findings under CAA 

section 202(a)--light-duty vehicles, heavy-duty trucks, buses, and motorcycles--accounted for 23 

percent of all U.S. GHG in 2007.17 Light-duty vehicles emit CO2, methane, nitrous oxide, and 

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

over 70 percent of Section 202(a) mobile source GHGs. For light-duty vehicles in 2007, CO2

emissions represent about 94 percent of all greenhouse emissions (including HFCs), and the CO2

emissions measured over the EPA tests used for fuel economy compliance represent about 90 

percent of total light-duty vehicle GHG emissions.18,19

Improving our energy and national security by reducing our dependence on foreign oil 

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

accounted for approximately 51 percent of U.S. petroleum consumption in 2009.20 World crude 

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

shocks as the recent unrest in North Africa and the Persian Gulf highlights. Recent tight global oil 

markets led to prices over $100 per barrel, with gasoline reaching as high as $4 per gallon in 

many parts of the U.S., causing financial hardship for many families and businesses. The export 

of U.S. assets for oil imports continues to be an important component of the historically 

unprecedented U.S. trade deficits. Transportation accounted for about 71 percent of U.S. 

 15 74 FR 66,496, - 66,518, December 18, 2009; “Technical Support Document for Endangerment and Cause or 

Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR2009-0472-11292, http://epa.gov/climatechange/endangerment.html. 

16 U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-

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

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

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

Greenhouse Gases under Section 202(a) of the Clean Air Act. Washington, DC. pp. 180-194. Available at 

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

18 U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-

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

http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf 19 U.S. Environmental Protection Agency. RIA, Chapter 2 

20 Energy Information Administration, “How dependent are we on foreign oil?” Available at

http://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm (last accessed August 28, 2011). 

Comment [A9]: Commtners request clarity on 

whether this is on a CO2-equivalent basis. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 15 of 770

petroleum consumption in 2009.21 Light-duty vehicles account for about 60 percent of 

transportation oil use, which means that they alone account for about 40 percent of all U.S. oil 

consumption. 

2. Additional Background on the National Program 

Following the successful adoption of a National Program of federal standards for 

greenhouse gas emissions (GHG) and fuel economy standards for model years (MY) 2012-2016 

light duty vehicles, President Obama issued a Memorandum on May 21, 2010 requesting that the 

National Highway Traffic Safety Administration (NHTSA), on behalf of the Department of 

Transportation, and the Environmental Protection Agency (EPA) work together to develop a 

national program for model years 2017-2025. Specifically, he requested that the agencies 

develop “...a coordinated national program under the CAA [Clean Air Act] and the EISA 

[Energy Independence and Security Act of 2007] to improve fuel efficiency and to reduce 

greenhouse gas emissions of passenger cars and light-duty trucks of model years 2017-2025.”22 

The President recognized that our country could take a leadership role in addressing the global 

challenges of improving energy security and reducing greenhouse gas pollution, stating that 

“America has the opportunity to lead the world in the development of a new generation of clean 

cars and trucks through innovative technologies and manufacturing that will spur economic 

growth and create high-quality domestic jobs, enhance our energy security, and improve our 

environment.” 

The Presidential Memorandum stated “The program should also seek to achieve 

substantial annual progress in reducing transportation sector greenhouse gas emissions and 

fossil fuel consumption, consistent with my Administration's overall energy and climate security 

goals, through the increased domestic production and use of existing, advanced, and emerging 

technologies, and should strengthen the industry and enhance job creation in the United States.” 

Among other things, the agencies were tasked with researching and then developing standards 

for MYs 2017 through 2025 that would be appropriate and consistent with EPA’s and NHTSA’s 

respective statutory authorities, in order to continue to guide the automotive sector along the road 

to reducing its fuel consumption and GHG emissions, thereby ensuring corresponding energy 

security and environmental benefits. During the public comment period for the MY 2012-2016 

proposed rulemaking, many stakeholders encouraged NHTSA and EPA to begin working toward 

standards for MY 2017 and beyond in order to maintain a single nationwide program. Several 

 21 Energy Information Administration, Annual Energy Outlook 2011, “Oil/Liquids.” Available at

http://www.eia.gov/forecasts/aeo/MT_liquidfuels.cfm (last accessed August 28, 2011). 

22 The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidentialmemorandum-regarding-fuel-efficiency-standards. For the reader’s reference, the President also requested the 

Administrators of EPA and NHTSA to issue joint rules under the CAA and EISA to establish fuel efficiency and 

greenhouse gas emissions standards for commercial medium-and heavy-duty on-highway vehicles and work trucks 

beginning with the 2014 model year. The agencies recently promulgated final GHG and fuel efficiency standards 

for heavy duty vehicles and engines for MYs 2014-2018. 76 FR 57106 (September 15, 2011). 

Comment [A10]: Commenters request clarity on 

whether agencies can include automakers. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 16 of 770

major automobile manufacturers and CARB sent letters to EPA and NHTSA in support of a 

MYs 2017 to 2025 rulemaking initiative as outlined in the President’s May 21, 2010 

announcement.23

As a first step in responding to the President’s request, the agencies collaborated with 

CARB to prepare an Interim Joint Technical Assessment Report (TAR) to inform the rulemaking 

process and provide an initial technical assessment for that work. NHTSA, EPA, and CARB 

issued the joint Technical Assessment Report consistent with Section 2(a) of the Presidential 

Memorandum.24 In developing the technical assessment, EPA, NHTSA, and CARB held 

numerous meetings with a wide variety of stakeholders including the automobile original 

equipment manufacturers (OEMs), automotive suppliers, non-governmental organizations, states 

and local governments, infrastructure providers, and labor unions. The Interim Joint TAR 

provided an overview of key stakeholder input, addressed other topics noted in the Presidential 

memorandum, and EPA’s and NHTSA’s initial assessment of benefits and costs of a range of 

stringencies of future standards. 

In accordance with the Presidential Memorandum, NHTSA and EPA also issued a joint 

Notice of Intent to Issue a Proposed Rulemaking (NOI).25 The September 2010 NOI highlighted 

the results of the analyses contained in the Interim Joint TAR, provided an overview of key 

program design elements, and announced plans for initiating the joint rulemaking to improve the 

fuel efficiency and reduce the GHG emissions of passenger cars and light-duty trucks built in 

MYs 2017-2025. The agencies requested comments on the September NOI and accompanying 

Interim Joint TAR. 

The Interim Joint TAR contained an initial fleet-wide analysis of improvements in overall 

average GHG emissions and equivalent fuel economy levels. For purposes of an initial 

assessment, this range was intended to represent a reasonably broad range of stringency increases 

for potential future GHG emissions standards, and was also consistent with the increases 

suggested by CARB in its letter of commitment in response to the President’s memorandum.26,27 

 23 These letters of support in response to the May 21, 2010 Presidential Memorandum are available at 

http://www.epa.gov/otaq/climate/regulations.htm#prez and http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-

+Fuel+Economy/Stakeholder+Commitment+Letters (last accessed August 28, 2011). 24 This Interim Joint Technical Assessment Report (TAR) is available at 

http://www.epa.gov/otaq/climate/regulations/ldv-ghg-tar.pdf and 

http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/2017+CAFE-GHG_Interim_TAR2.pdf 

Section 2(a) of the Presidential Memorandum requested that EPA and NHTSA “Work with the State of California to 

develop by September 1, 2010, a technical assessment to inform the rulemaking process, reflecting input from an 

array of stakeholders on relevant factors, including viable technologies, costs, benefits, lead time to develop and 

deploy new and emerging technologies, incentives and other flexibilities to encourage development and deployment 

of new and emerging technologies, impacts on jobs and the automotive manufacturing base in the United States, and 

infrastructure for advanced vehicle technologies.” 

25 75 FR 62739, October 13, 2010. 

26 75 FR at 62744-45 

Comment [A11]: Commenteres request agencies 

to explain why CA is relevant here. 

Comment [A12]: Commenters request clarity on 

whether this is needed. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 17 of 770

The TAR evaluated a range of potential stringency scenarios through model year 2025, 

representing a 3, 4, 5, and 6 percent per year estimated decrease in GHG levels from a model 

year 2016 fleet-wide average of 250 gram/mile (g/mi). Thus, the model year 2025 scenarios 

analyzed in the Interim Joint TAR ranged from 190 g/mi on an estimated fleet-wide average 

(calculated to be equivalent to 47 miles per gallon, mpg, if all improvements were made with 

fuel economy-improving technologies) under the 3 percent per year reduction scenario, to 143 

g/mi on an estimated fleet-wide average (calculated to be equivalent to 62 mpg, if all 

improvements were made with fuel economy-improving technologies) under the 6 percent per 

year scenario.28 For each of these scenarios, the TAR also evaluated four pre-defined 

“technological pathways” by which these levels could be attained. These pathways were meant 

to represent ways that the industry as a whole could increase fuel economy and reduce 

greenhouse gas emissions, and did not represent ways that individual manufacturers would be 

required to or necessarily would employ in responding to future standards. Each defined 

technology pathway emphasized a different mix of advanced technologies, by assuming various 

degrees of penetration of advanced gasoline technologies, mass reduction, hybrid electric 

vehicles (HEVs), plug-in hybrids (PHEVs), and electric vehicles (EVs). 

Manufacturers and others commented extensively on the NOI and Interim Joint TAR on a 

variety of topics, including the stringency of the standards, program design elements, the effect 

of potential standards on vehicle safety, and the TAR’s discussion of technology costs, 

effectiveness, and feasibility. In response, the agencies and CARB spent the next several months 

continuing to gather information from the industry and others in response to the agencies’ initial 

analytical efforts. To aid the public’s understanding of some of the key issues facing the 

agencies in developing the proposed rule, EPA and NHTSA also issued a follow-on 

Supplemental NOI in November 2010.29 The Supplemental NOI highlighted many of the key 

comments the agencies received in response to the September NOI and Interim Joint TAR, and 

summarized some of the key themes from the comments and the additional stakeholder meetings. 

We note, as highlighted in the November Supplemental NOI, that there continued to be 

widespread stakeholder support for continuing the National Program for improved fuel economy 

and greenhouse gas standards for model years 2017-2025. The November Supplemental NOI 

also provided an overview of many of the key technical analyses the agencies planned in support 

the proposed rule. 

 27 Statement of the California Air Resources Board Regarding Future Passenger Vehicle Greenhouse Gas Emissions 

Standards, California Air Resources Board, May 21, 2010. Available at: 

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

28 These levels correspond to on-road values of 37 to 50 mpg, respectively, recognizing that on-road fuel economy 

tends to be about 20 percent worse than calculated mpg values based on the CAFE test cycle. We note, however, 

that because these mpg values are translated from CO2e values that include reductions in hydrofluorocarbon (HFC) 

leakage due to use of advanced refrigerants and leakage improvements, therefore these numbers are not as 

representative of either CAFE test cycle or real-world mpg. 29 75 FR 76337, December 8, 2010 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 18 of 770

After issuing the November 2010 Supplemental NOI, EPA, NHTSA and CARB 

continued studies on technology cost and effectiveness and more in-depth and comprehensive 

analysis of the issues. In addition to this work, the agencies continued meeting with 

stakeholders, including with manufacturers, manufacturer organizations, automotive suppliers, a 

labor union, environmental groups, consumer interest groups, and investment organizations. As 

discussed above, on July 29, 2011 President Obama announced plans for these proposed rules 

and NHTSA and EPA issued a Supplemental Notice of Intent (NOI) outlining the agencies’ 

plans for proposing the MY 2017-2025 standards and program. 

3. California’s Greenhouse Gas Program 

In 2004, the California Air Resources Board (CARB) approved standards for new lightduty vehicles, regulating the emission of CO2 and other GHGs. Thirteen states and the District 

of Columbia, comprising approximately 40 percent of the light-duty vehicle market, adopted 

California’s standards. On June 30, 2009, EPA granted California’s request for a waiver of 

preemption under the CAA with respect to these standards.30 The granting of the waiver permits 

California and the other states to proceed with implementing the California emission standards 

for MYs 2009-2016. After EPA and NHTSA issued their MYs 2012-2016 standards, CARB 

revised its program such that compliance with the EPA greenhouse gas standards will be deemed 

to be compliance with California’s GHG standards.31 This facilitates the National Program by 

allowing manufacturers to meet all of the standards with a single national fleet. 

As requested by the President and in the interest of maximizing regulatory 

harmonization, NHTSA and EPA have worked closely with CARB throughout the development 

of this proposal. CARB is releasing a proposal for MY 2017-2025 GHG emissions standards 

which are consistent with the standards being proposed by EPA and NHTSA. CARB recognizes 

the benefit for the country of continuing the National Program and plans an approach similar to 

the one taken for MYs 2012-2016. CARB has committed to propose to revise its GHG 

emissions standards for MY 2017 and later such that compliance with EPA GHG emissions 

standards shall be deemed compliance with the California GHG emissions standards, as long as 

EPA’s final GHG standards are substantially as described in the July 2011 Supplemental NOI.32

4. Stakeholder Engagement 

On July 29, 2011, President Obama announced with the support of thirteen major 

automakers for the next phase in the Administration’s national vehicle program, increasing fuel 

 30 74 FR 32744 (July 8, 2009). See also Chamber of Commerce v. EPA, 642 F.3d 192 (D.C. Cir. 2011) (dismissing 

petitions for review challenging EPA’s grant of the waiver). 

31 See “California Exhaust Emission Standards and Test Procedures for 2001 and Subsequent Model Passenger Cars, 

Light-Duty Trucks, and Medium-Duty Vehicles as approved by OAL,” March 29, 2010. Available at

http://www.arb.ca.gov/regact/2010/ghgpv10/oaltp.pdf (last accessed August 28, 2011). 32 See State of California July 28, 2011 letter available at: http://www.epa.gov/otaq/climate/regulations.htm 

Comment [A13]: Commenters suggest more 

planation such as working together to develop a 

common technical basis for rulemaking? 

Comment [A14]: Commenter notes The 

chronology of this section is confusing. Please 

weave the multiple sections together in a way that 

make this easier to follow. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 19 of 770

economy and reducing GHG emissions for passenger cars and light trucks built in MYs 2017-

2025.33 The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land 

Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, which together account for over 90 

percent of all vehicles sold in the United States. The California Air Resources Board (CARB), 

the United Auto Workers (UAW) and a number of environmental and consumer groups, also 

were integral to developing this agreement. 

On the same day as the President’s announcement, the agencies released a second SNOI 

(published in the Federal Register on August 9, 2011) generally describing the joint proposal that 

the EPA and NHTSA expected to issue to establish the National Program for model years 2017–

2025, and which is set forth in this NPRM. The agencies explained that the proposal would be 

developed based on extensive technical analyses, an examination of the factors required under 

their respective statutes and discussions with and input from individual motor vehicle 

manufacturers and other stakeholders (including certain members of the United States Congress). 

The input of stakeholders, which is encouraged by Executive Order 13563, has been invaluable 

to the agencies in developing today’s NPRM. 

For background, as discussed above, after publishing the Supplemental NOI on 

December 8, 2010 (the December 8 SNOI), NHTSA, EPA and CARB continued studies and 

conducted more in-depth and comprehensive rulemaking analyses related to technology cost and 

effectiveness, technological feasibility, reasonable timing for manufacturers to implement 

technologies, and economic factors, and other relevant considerations. In addition to this 

ongoing and more in-depth work, the agencies continued meeting with stakeholders and received 

additional input and feedback to help inform the rulemaking. Meetings were held with and 

relevant information was obtained from manufacturers, manufacturer organizations, suppliers, a 

labor union, environmental groups, consumer interest groups, and investment organizations. 

This section summarizes NHTSA stakeholder engagement between December 2010 and 

July 29, 2011, the date on which President Obama announced the agencies’ plans for proposing 

standards for MY2017-2025, and the support of thirteen major automakers and other 

stakeholders for these plans. A complete list of stakeholder meeting dates and participants can 

be found in a memorandum to the docket.34 Information that the agencies presented to 

stakeholders is posted in the docket and referenced in multiple places in this section. 

The agencies’ engagement with the large and diverse group of stakeholders described 

above between December 2010 and July 29, 2011 shared the single aim of ensuring that the 

agencies possessed the most complete and comprehensive set of information possible to inform 

the proposed rulemaking. 

 33 The President’s remarks are available at http://www.whitehouse.gov/the-press-office/2011/07/29/remarkspresident-fuel-efficiency-standards; see also http://www.nhtsa.gov/fuel-economy for more information from the 

agency about the announcement. 

34 [Memo Name], at NHTSA-2010-0131. 

Comment [A15]: Commenter notes this is 

confusing. Do agencies mean the development of a 

framework for the national program ? Commenters 

note that agreement might not be the right word here.

Comment [A16]: Commenter recommends 

deletion. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 20 of 770

Throughout this period, the stakeholders repeated many of the broad concerns and 

suggestions described in the TAR, NOI, and December 8 SNOI. For example, stakeholders 

uniformly expressed interest in maintaining a harmonized and coordinated national program that 

would be supported by CARB and allow auto makers to build one fleet and preserve consumer 

choice. The stakeholders also raised concerns about potential stringency levels, consumer 

acceptance of some advanced technologies and the potential structure of compliance flexibilities 

available under EPCA (as amended by EISA) and the CAA. In addition, most of the 

stakeholders wanted to discuss issues concerning technology availability, cost and effectiveness 

and economic practicability. The auto manufacturers, in particular, sought to provide the 

agencies with a better understanding of their respective strategies (and associated costs) for 

improving fuel economy while satisfying consumer demand in the coming years. Additionally, 

some stakeholders expressed concern about potential safety impacts associated with the 

standards, consumer costs and consumer acceptance, and potential disparate treatment of cars 

and trucks. Some stakeholders also stressed the importance of investing in infrastructure to 

support more widespread deployment of alternative vehicles and fuels. Many stakeholders also 

asked the agencies to acknowledge prevailing economic uncertainties in developing proposed 

standards. In addition, many stakeholders shared discussed on the number of years to be covered 

by the program and what they considered to be important features of a mid-term review of any 

standards set or proposed for MY 2022-2025. In all of these meetings, NHTSA and EPA sought 

additional data and information from the stakeholders that would allow them to refine their initial 

analyses and determine proposed standards that are consistent with the agencies’ respective 

statutory and regulatory requirements. The general issues raised by those stakeholders are 

addressed in the sections of this NPRM discussing the topics to which the issues pertain (e.g., the 

form of the standards, technology cost and effectiveness, safety impacts, impact on U.S. vehicle 

sales and other economic considerations, costs and benefits). 

The first stage of the meetings occurred between December 2010 and June 20, 2011. 

These meetings covered topics that were generally similar to the meetings that were held prior to 

the publication of the December 8 Supplemental NOI and that were summarized in the 

Supplemental NOI. The manufacturers provided the agencies with additional information related 

to their product plans for vehicle models and fuel efficiency improving technologies and 

associated cost estimates. Detailed product plans generally extend only five or six model years 

into the future. Manufacturers also provided estimates of the amount of improvement in CAFE 

and CO2 emissions they could reasonably achieve in model MYs 2017-2025; feedback on the 

shape of MY 2012-2016 regulatory stringency curves and curve cut points, regulatory program 

flexibilities; recommendations for and on the structure of one or more mid-term reviews of the 

later model year standards; estimates of the cost, effectiveness and availability of some fuel 

efficiency improving technologies; and feedback on some of the cost and effectiveness 

assumptions used in the TAR analysis. In addition, manufacturers provided input on 

manufacturer experience with consumer acceptance of some advanced technologies and raised 

concerns over consumer acceptance if higher penetration of these technologies were needed in 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 21 of 770

the future, consumer’s willingness to pay for improved fuel economy, and ideas on enablers and 

incentives that would increase consumer acceptance. Many manufacturers stated that technology 

is available to significantly improve fuel economy and CO2 emissions; however, they maintained 

that the biggest challenges relate to the cost of the technologies, consumer willingness to pay and 

consumer acceptance. 

During this first phase NHTSA and EPA continued to meet with other stakeholders, who 

provided their own perspectives on issues of importance to them. They also provided data to the 

extent available to them. Information obtained from stakeholders during this phase is contained 

in the docket. 

The second stage of meetings occurred between June 21, 2011 and July 14, 2011, during 

which time EPA, NHTSA, CARB and several White House Officesoffices within the Executive 

Office of the President kicked-off an intensive series of meetings, primarily with manufacturers, 

to share tentative regulatory concepts developed by the agencies, which included concept 

stringency curves and program flexibilities based on the analyses completed by the agencies as 

of June 21,35 and requested feedback.36 In particular, the agencies requested that the 

manufacturers provide detailed and reliable information on how they might comply with the 

concepts and, if they projected they could not comply, information supporting their belief that 

they would be unable to comply. Additionally, EPA and NHTSA sought detailed input from the 

manufacturers regarding potential changes to the concept stringency levels and program 

flexibilities available under EPA’s and NHTSA’s respective authority that might reduce the costs 

of compliance. In addition, manufacturers provided input related to consumer acceptance and 

adoption of some advanced technologies and program costs based on their independent 

assessments or information previously submitted to the agencies. 

In these second stage meetings, the agencies received considerable input from the 

manufacturers. The agencies carefully considered the manufacturer information along with 

information from the agencies’ independent analyses. The agencies used all available 

information to refine their assessment of the range of program concept stringencies and 

provisions that the agencies determined were consistent with their statutory mandates. 

The third stage of meetings occurred between July 15, 2011 and July 28, 2011. During 

this time period the agencies continued to refine concept stringencies and compliance flexibilities 

 35 The agencies consider a range of standards that may satisfy applicable legal criteria, taking into account the 

complete record before them The initial concepts shared with stakeholders were within the range the agencies were 

considering, based on the information then available to the agencies. 36 The agencies prepared materials prior to the meetings to present to the manufacturers which are included in a 

memo to docket. [add reference] 

Comment [A17]: Commenters request clarity on 

why not summarize those perspectives here? As 

written, commenter finds this seems to undervalue 

their perspectives. 

Comment [A18]: Commenter finds this more 

accurate. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 22 of 770

based on further consideration of the information available to them. They also met with 

manufacturers who expressed ongoing interest in engaging with the agencies.37 

Throughout all three stages, EPA and NHTSA continued to engage other stakeholders to 

ensure that the agencies were obtaining the most comprehensive and reliable information 

possible to guide the agencies in developing proposed standards for MY 2017-2025. Many of 

these stakeholders reiterated comments previously presented to the agencies. For instance, 

environmental organizations consistently stated that stringent standards are technically 

achievable and critical to important national interests, such as improving energy independence, 

reducing climate change, and enabling the domestic automobile industry to remain competitive 

in the global market. Labor interests stressed the need to carefully consider economic impacts 

and the opportunity to create and support new jobs, and consumer advocates emphasized the 

economic and practical benefits to consumers of improved fuel economy and the need to 

preserve consumer choice. In addition, a number of stakeholders stated that the standards under 

development should not have an adverse impact on safety. 

On July 29, 2011, EPA and NHTSA the agencies issued a new SNOI with concept 

stringency curves and program provisions based on refined analyses and further consideration of 

the record before the agencies. The agencies have received letters of support for the concepts laid 

out in the SNOI from BMW, Chrysler, Ford, General Motors, Global Automakers, Honda, 

Hyundai, Jaguar Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, Volvo and CARB. 

Numerous other stakeholders, including labor, environmental and consumer groups, have 

expressed their support for the agencies’ plans to move forward. 

The agencies have considered all of this stakeholder input in developing this proposal, 

and look forward to continuing the productive dialogue through the comment period following 

this proposal. 

B. Summary of the Proposed 2017-2025 National Program 

1. Joint Analytical Approach 

This proposed rulemaking continues the collaborative analytical effort between NHTSA 

and EPA, which began with the MYs 2012-2016 rulemaking. NHTSA and EPA have worked 

together, and in close coordination with CARB, on nearly every aspect of the technical analysis 

supporting these joint proposed rules. The results of this collaboration are reflected in the 

elements of the respective NHTSA and EPA proposed rules, as well as in the analytical work 

contained in the Draft Joint NHTSA and EPA Technical Support Document (Joint TSD). The 

agencies have continued to develop and refine supporting analyses since issuing the NOI and 

Interim Joint TAR last September. The Joint TSD, in particular, describes important details of 

 37 The agencies prepared materials prior to the meetings to present to the manufacturers which are included in a 

memo to docket. [add reference] 

Comment [A19]: Commenter notes that it seems 

odd to separate this period from the preceding stage 

of meetings. It seems to suggest that more happened 

in this final stage of meetings than the agencies are 

revealing here. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 23 of 770

the analytical work that are common, as well as highlighting any key differences in approach. 

The joint analyses include the build-up of the baseline and reference fleets, the derivation of the 

shape of the footprint-based attribute curves that define the agencies’ respective standards, a 

detailed description of the estimated costs and effectiveness of the technologies that are available 

to vehicle manufacturers, the economic inputs used to calculate the costs and benefits of the 

proposed rules, a description of air conditioner and other off-cycle technologies, and the 

agencies’ assessment of the effects of the proposed standards on vehicle safety. This 

comprehensive joint analytical approach has provided a sound and consistent technical basis for 

both agencies in developing their proposed standards, which are summarized in the sections 

below. 

2. Level of the Standards 

 EPA and NHTSA are each proposing two separate sets of standards, each under its 

respective statutory authorities. Both the proposed CO2 and CAFE standards for passenger cars 

and light trucks would be footprint-based, similar to the standards currently in effect through 

model year 2016, and would become more stringent on average in each model year from 2017 

through 2025. The basis for measuring performance relative to standards would continue to be 

based predominantly on the EPA city and highway test cycles (2-cycle test). However, EPA is 

proposing optional air conditioning and off-cycle credits for the GHG program and adjustments 

to calculated fuel economy for the CAFE programs that would be based on test procedures other 

than the 2-cycle tests.

EPA is proposing standards that are projected to require, on an average industry fleet 

wide basis, 163 grams/mile of CO2 in model year 2025. This is projected to be achieved through 

improvements in fuel efficiency with some additional reductions achieved through reductions in 

non-CO2 GHG emissions from reduced AC system leakage and the use of lower global warming 

potential (GWP) refrigerants. The level of 163 grams/mile CO2 would be equivalent on a mpg 

basis to 54.5 mpg, if this level was achieved solely through improvements in fuel efficiency.38 

For passenger cars, the CO2 compliance values associated with the footprint curves 

would be reduced on average by 5 percent per year from the model year 2016 projected 

passenger car industry-wide compliance level through model year 2025. In recognition of 

manufacturers’ unique challenges in improving the fuel economy and GHG emissions of fullsize pickup trucks as we transition from the MY 2016 standards to MY 2017 and later, while 

preserving the utility (e.g., towing and payload capabilities) of those vehicles, EPA is proposing 

a lower annual rate of improvement for light-duty trucks in the early years of the program. For 

light-duty trucks, the proposed average annual rate of CO2 emissions reduction in model years 

2017 through 2021 is 3.5 percent per year. EPA is also proposing to change the slopes of the 

CO2-footprint curves for light-duty trucks from those in the 2012-2016 rule, in a manner that 

 38 Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent lower than the 

CO2 and CAFE values discussed here. The reference to CO2 here refers to CO2 equivalent reductions, as this 

included some degree of reductions in greenhouse gases other than CO2, as one part of the AC related reductions. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 24 of 770

effectively means that the annual rate of improvement for smaller light-duty trucks in model 

years 2017 through 2021 would be higher than 3.5 percent, and the annual rate of improvement 

for larger light-duty trucks over the same time period would be lower than 3.5 percent. For 

model years 2022 through 2025, EPA is proposing an average annual rate of CO2 emissions 

reduction for light-duty trucks of 5 percent per year. 

NHTSA is proposing two phases of passenger car and light truck standards in this 

NPRM. The first phase runs from MYs 2017-2021, with proposed standards that are projected to 

require, on an average industry fleet wide basis, 40.9 mpg in MY 2021. For passenger cars, the 

annual increase in the stringency of the target curves between model years 2017 to 2021 is 

expected to average 4.1 percent. In recognition of manufacturers’ unique challenges in 

improving the fuel economy and GHG emissions of full-size pickup trucks as we transition from 

the MY 2016 standards to MY 2017 and later, while preserving the utility (e.g., towing and 

payload capabilities) of those vehicles, NHTSA is also proposing a slower annual rate of 

improvement for light trucks in the first phase of the program. For light trucks, the proposed 

average annual increase in the stringency of the target curves in model years 2017 through 2021 

would be 2.9 percent per year. NHTSA is proposing to change the slopes of the fuel economy 

footprint curves for light trucks from those in the MYs 2012-2016 final rule, which would 

effectively make the annual rate of improvement for smaller light trucks in MYs 2017-2021 

higher than 2.9 percent, and the annual rate of improvement for larger light trucks over that time 

period lower than 2.9 percent. 

The second phase of the CAFE program runs from MYs 2022-2025 and represents 

conditional39 proposed standards that are projected to require, on an average industry fleet wide 

basis, 49.6 mpg in model year 2025. For passenger cars, the annual increase in the stringency of 

the target curves between model years 2022 and 2025 is expected to average 4.3 percent, and for 

light trucks, the annual increase during those model years is expected to average 4.7 percent. For 

the first time, NHTSA is proposing to increase the stringency of standards by the amount (in 

mpg terms) that industry is expected to improve air conditioning system efficiency, and EPA is 

proposing, under EPCA, to allow manufacturers to include air conditioning system efficiency 

improvements in the calculation of fuel economy for CAFE compliance. NHTSA notes that the 

proposed rates of increase in stringency for CAFE standards are lower than EPA’s proposed rates 

of increase in stringency for GHG standards. As in the MYs 2012-2016 rulemaking, this is for 

purposes of harmonization and in reflection of several statutory constraints in EPCA/EISA. As a 

primary example, NHTSA’s proposed standards, unlike EPA’s, do not reflect the inclusion of air 

conditioning system refrigerant and leakage improvements, but EPA’s proposed standards would 

 39 By ”conditional,” NHTSA means to say that the proposed standards for MYs 2022-2025 represent the agency’s 

current best estimate of what levels of stringency would be maximum feasible in those model years, but in order for 

the standards for those model years to be legally reviewable a subsequent rulemaking must be undertaken by the 

agency at a later time. See Section IV for more information. 

Comment [A20]: Commenter notes that the 

annual increase is not constant at 2.9%. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 25 of 770

allow consideration of such A/C refrigerant improvements which reduce GHGs but do not affect 

fuel economy. 

As with the MYs 2012-2016 standards, NHTSA and EPA’s proposed MYs 2017-2025 

passenger car and light truck standards are expressed as mathematical functions depending on 

vehicle footprint.40 Footprint is one measure of vehicle size, and is determined by multiplying 

the vehicle’s wheelbase by the vehicle’s average track width. The standards that must be met by 

each manufacturer's fleet would be determined by computing the production-weighted average of 

the targets applicable to each of the manufacturer’s fleet of passenger cars and light trucks.41 

Under these footprint-based standards, the average levels required of individual manufacturers 

will depend, as noted above, on the mix and volume of vehicles the manufacturer produces. The 

values in the tables below reflect the agencies’ projection of the corresponding average fleet 

levels that will result from these attribute-based curves given the agencies’ current assumptions 

about the mix of vehicles that will be sold in the model years covered by the proposed standards. 

As shown in Table I-1, NHTSA’s fleet-wide required CAFE levels for passenger cars 

under the proposed standards are estimated to increase from 40.0 to 56.0 mpg between MY 2017 

and MY 2025. Fleet-wide required CAFE levels for light trucks, in turn, are estimated to 

increase from 29.4 to 56.0 mpg. For the reader’s reference, Table I-1 also provides the estimated 

average fleet-wide required levels for the combined car and truck fleets, culminating in an 

estimated overall fleet average required CAFE level of 49.6 mpg in MY 2025. Considering 

these combined car and truck increases, the proposed standards together represent approximately 

a 4.0 percent annual rate of increase,42 on average, relative to the MY 2016 required CAFE 

levels. 

Table I-1 Estimated Average Required Fleet-Wide Fuel Economy (mpg) under Proposed 

Footprint-Based CAFE Standards 

2016 

base 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Passenger Cars 37.8 40.0 41.4 443.0 444.7 446.6 448.8 551.0 53.5 56.0 

Light Trucks 28.8 29.4 330.0 330.6 331.2 333.3 334.9 336.6 38.5 40.3 

Combined Cars 

& Trucks 34.1 35.3 336.4 337.5 338.8 440.9 442.9 445.0 47.3 49.6 

The estimated average required mpg levels for cars and trucks under the proposed 

standards shown in Table I-1 above include the use of A/C efficiency improvements, as 

 40 NHTSA is required to set attribute-based CAFE standards for passenger cars and light trucks. 49 U.S.C. 

32902(b)(3). 

41 For CAFE calculations, a harmonic average is used. 42 This estimated average percentage increase includes the effect of changes in standard stringency and changes in 

the forecast fleet sales mix. 

Comment [A21]: Commenter requests clarity on 

whether it should say 40.3? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 26 of 770

discussed above, but do not reflect a number of proposed flexibilities and credits that 

manufacturers could use for compliance that NHTSA cannot consider in establishing standards 

based on EPCA/EISA constraints. These flexibilities would cause the actual achieved fuel 

economy to be lower than the required levels in the table above. The flexibilities and credits that 

NHTSA cannot consider include the ability of manufacturers to pay civil penalties rather than 

achieving required CAFE levels, the ability to use FFV credits, the ability to count electric 

vehicles for compliance, the operation of plug-in hybrid electric vehicles on electricity for 

compliance prior to MY 2020, and the ability to transfer and carry-forward credits. When 

accounting for these flexibilities and credits, NHTSA estimates that the proposed CAFE 

standards would lead to the following average achieved fuel economy levels, based on the 

projections of what each manufacturer’s fleet will comprise in each year of the program:43 

Table I-2 Estimated Average Achieved Fleet-Wide Fuel Economy (mpg) under Proposed 

Footprint-Based CAFE Standards 

2016 

base 2017 2018 2019 2020 2021 2022 2023 2024 2025

Passenger Cars 36.2 39.5 41.7 43.5 45.3 47.1 48.2 49.4 51.3 52.6

Light Trucks 27.5 29.6 30.7 32.5 33.7 35.6 36.5 37.5 38.5 39.5

Combined Cars 

& Trucks 32.7 35.2 36.9 38.8 40.4 42.3 43.4 44.6 46.1 47.4

NHTSA is also required by EISA to set a minimum fuel economy standard for 

domestically manufactured passenger cars in addition to the attribute-based passenger car 

standard. The minimum standard “shall be the greater of (A) 27.5 miles per gallon; or (B) 92 

percent of the average fuel economy projected by the Secretary for the combined domestic and 

non-domestic passenger automobile fleets manufactured for sale in the United States by all 

manufacturers in the model year....” 

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

minimum standards for domestic passenger cars for MYs 2017-2025 are presented below in 

Table I-3. 

Table I-3 Estimated Minimum Standard for Domestically Manufactured Passenger Cars 

(mpg) 

 43 The proposed CAFE program includes incentives for full size pick-up trucks that have mild HEV or strong HEV 

systems, and for full size pick-up trucks that have fuel economy performance that is better than the target curve by 

more than proposed levels. To receive these incentives, manufacturers must produce vehicles with these 

technologies or performance levels at volumes that meet or exceed proposed penetration levels (percentage of full 

size pick-up truck volume). This incentive is described in detail in Section IV.1. The NHTSA estimates in Table I2 do not account for the reduction in estimated average achieved fleet-wide CAFE fuel economy that would occur if 

manufacturers use this incentive. NHTSA has conducted a sensitivity study that estimates the effects for 

manufacturers’ potential use of this flexibility in Chapter X of the PRIA. 

Comment [A22]: Commenter requests clarity on 

whether Minimum standards apply to each OEM’s 

fleet, not each individual vehicle. That is not clear 

from this section. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 27 of 770

2017 2018 2019 2020 2021 2022 2023 2024 2025 

36.8 38.1 39.6 41.1 42.9 44.9 47.0 49.2 51.5

EPA is proposing GHG emissions standards, and Table I-4 provides estimates of the 

projected overall fleet-wide CO2 emission compliance target levels. The values reflected in 

Table I-4 are those that correspond to the manufacturers’ projected CO2 compliance target levels 

from the car and truck footprint curves, but do not account for EPA’s projection of how 

manufactures will implement two of the proposed incentive programs (advanced technology 

vehicle multipliers, and hybrid and performance-based incentives for full-size pickup trucks). 

EPA’s projection of fleet-wide emissions levels that do reflect these incentives is shown in Table 

I-5 below. 

Table I-4 Projected Fleet-Wide CO2 Compliance Targets under the Proposed 

Footprint-Based CO2 Standards (g/mi) 

2016 

base 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Passenger 

Cars 225 213 202 192 182 173 165 158 151 144 

Light Trucks 297 295 285 277 270 250 237 225 214 203 

Combined 

Cars and 

Trucks 

25244 243 232 223 213 200 190 181 172 163 

As shown in Table I-4, projected fleet-wide CO2 emission compliance targets for cars 

increase in stringency from 213 to 144 g/mi between MY 2017 and MY 2025. Similarly, 

projected fleet-wide CO2 equivalent emission compliance targets for trucks increase in 

stringency from 295 to 203 g/mi. As shown, the overall fleet average CO2 level targets are 

projected to increase in stringency from 243 g/mi in MY 2017 to 163 g/mi in MY 2025, which is 

equivalent to 54.5 mpg if all reductions were made with fuel economy improvements. 

EPA anticipates that manufacturers would take advantage of proposed program credits 

and incentives, such as car/truck credit transfers, air conditioning credits, off-cycle credits, 

advanced technology vehicle multipliers, and hybrid and performance-based incentives for full 

size pick-up trucks. Two of these flexibility provisions – advanced technology vehicle 

multipliers and the full size pick-up hybrid/performance incentives – are expected to have an 

 44 The projected fleet compliance levels for 2016 are different for trucks and the fleet than were projected in the 

2012-2016 rule (298 and 250 g/mi respectively). That is because the standards are footprint based and the fleet 

projections, hence the footprint distributions, change slightly with each update of our projections, as described 

below. In addition, the actual target levels for any model year will not be known until the end of that model year 

based on actual vehicle sales. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 28 of 770

impact on the fleet-wide emissions levels that manufacturers will actually achieve. Therefore, 

Table I-5 shows EPA’s projection of the achieved emission levels of the fleet for MY 2017 

through 2025. The differences between the emissions levels shown in Tables I-4 and I-5 reflect 

the impact on stringency due to the advanced technology vehicle multipliers and the full size 

pick-up hybrid/performance incentives, but do not reflect car-truck trading, air conditioning 

credits, or off-cycle credits, because, while those credit provisions should help reduce 

manufacturers’ costs of the program, EPA believes that they will result in real-world emission 

reductions that will not affect the achieved level of emission reductions. These estimates are 

more fully discussed in III.B 

Table I-5 Projected Fleet-Wide Achieved CO2-equivalent Emission Levels under the 

Proposed Footprint-Based CO2 Standards (g/mi) 

2016 

base 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Passenger 

Cars 225 215 205 194 184 174 165 158 151 144 

Light Trucks 297 295 285 278 271 251 238 226 214 204 

Combined 

Cars and 

Trucks 

252 245 234 224 214 201 190 181 172 163.6 

A more detailed description of how the agencies arrived at the year by year progression 

of the stringency of the proposed standards can be found in Sections III and IV of this preamble. 

Both agencies also considered other alternative standards as part of their respective 

Regulatory Impacts Analyses that span a reasonable range of alternative stringencies both more 

and less stringent than the standards being proposed. EPA’s and NHTSA’s analyses of these 

regulatory alternatives (and explanation of why we are proposing the standards proposed and not 

the regulatory alternatives) are contained in Sections III and IV of this preamble, respectively, as 

well as in EPA’s DRIA and NHTSA’s PRIA. 

3. Form of the Standards 

As noted, NHTSA and EPA are proposing to continue attribute-based standards for 

passenger cars and light trucks, as required by EISA and as allowed by the CAA, and continue to 

use vehicle footprint as the attribute. Footprint is defined as a vehicle’s wheelbase multiplied by 

its track width -- in other words, the area enclosed by the points at which the wheels meet the 

ground. NHTSA and EPA adopted an attribute-based approach based on vehicle footprint for 

MYs 2012-2016 light-duty vehicle standards. 45 The agencies continue to believe that footprint 

 45 NHTSA also uses the footprint attribute in its Reformed CAFE program for light trucks for model years 2008-

2011 and passenger car CAFE standards for MY 2011. 

Comment [A23]: Does this include emissions 

from electricity consumption? If not, please include 

a footnote to explain. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 29 of 770

is the most appropriate attribute on which to base the proposed standards, as discussed later in 

this notice and in Chapter 2 of the Joint TSD. 

Under the footprint-based standards, the curve defines a GHG or fuel economy 

performance target for each separate car or truck footprint. Using the curves, each manufacturer 

thus will have a GHG and CAFE average standard that is unique to each of its fleets, depending 

on the footprints and production volumes of the vehicle models produced by that manufacturer. 

A manufacturer will have separate footprint-based standards for cars and for trucks. The curves 

are mostly sloped, so that generally, larger vehicles (i.e., vehicles with larger footprints) will be 

subject to less stringent targets (i.e., higher CO2 grams/mile targets and lower CAFE mpg 

targets) than smaller vehicles. This is because, generally speaking, smaller vehicles are more 

capable of achieving lower levels of CO2 and higher levels of fuel economy than larger vehicles. 

Although a manufacturer’s fleet average standards could be estimated throughout the model year 

based on projected production volume of its vehicle fleet, the standards to which the 

manufacturer must comply will be based on its final model year production figures. A 

manufacturer’s calculation of their fleet average standards as well as their fleets’ average 

performance at the end of the model year will thus be based on the production-weighted average 

target and performance of each model in its fleet.46

While the concept is the same, the proposed curve shapes for MYs 2017-2025 are 

somewhat different from the MYs 2012-2016 footprint curves. The passenger car curves are 

similar in shape to the car curves for MYs 2012-2016. However, the agencies are proposing 

more significant changes to the light trucks curves for MYs 2017-2025 compared to the light 

truck curves for MYs 2012-2016. The agencies are proposing changes to the light-truck curve to 

increase the slope and to extend the large-footprint cutpoint over time to larger footprints, which 

we believe represent an appropriate balance of both technical and policy issues, as discussed in 

Section II below and Chapter 2 of the draft Joint TSD. 

NHTSA is proposing the attribute curves below for assigning a fuel economy target level to an 

individual car or truck’s footprint value, for model years 2017 through 2025. These mpg values 

will be production weighted to determine each manufacturer’s fleet average standard for cars and 

trucks. Although the general model of the target curve equation is the same for each vehicle 

category and each year, the parameters of the curve equation differ for cars and trucks. Each 

parameter also changes on a model year basis, resulting in the yearly increases in stringency. 

Figure I-1 below illustrates the passenger car CAFE standard curves for model years 2017 

through 2025 while Figure I-2 below illustrates the light truck CAFE standard curves for model 

years 2017 through 2025. 

 46 As in the MYs 2012-2016 rule, a manufacturer may have some models that exceed their target, and some that are 

below their target. Compliance with a fleet average standard is determined by comparing the fleet average standard 

(based on the sales weighted average of the target levels for each model) with fleet average performance (based on 

the sales weighted average of the performance for each model). 

Comment [A24]: “Policy’ issues is an 

ambiguous term. Please clarify. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 30 of 770

EPA is proposing the attribute curves shown in Figure I-3 and Figure I-4 below for 

assigning a CO2 target level to an individual vehicle’s footprint value, for model years 2017 

through 2025. These CO2 values would be production weighted to determine each 

manufacturer’s fleet average standard for cars and trucks. As with the CAFE curves, the general 

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

the equation differ for cars and trucks. Again, each parameter also changes on a model year 

basis, resulting in the yearly increases in stringency. Figure I-3 below illustrates the CO2 car 

standard curves for model years 2017 through 2025 while Figure I-4 shows the CO2 truck 

standard curves for model years 2017-2025. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 31 of 770

Figure I-1 CAFE Target Curves for Passenger Cars 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 32 of 770

Figure I-2 CAFE Target Curves for Light Trucks

20304050607080

30 35 40 45 50 55 60 65 70 75 80

Fuel Economy Target (mpg)

Footprint (sf)

20252024202320222021202020192018201720162015201420132012
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 33 of 770
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 34 of 770

Figure I-3 CO2 (g/mile) Car Standards Curves
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 35 of 770

Figure I-4 CO2 (g/mile) Truck Standard Curves
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 36 of 770

NHTSA and EPA are proposing to use the same vehicle category definitions for determining 

which vehicles are subject to the car curve standards versus the truck curve standards as were 

used for MYs 2012-2016 standards. As in the MYs 2012-2016 rulemaking, a vehicle classified 

as a car under the NHTSA CAFE program will also be classified as a car under the EPA GHG 

program, and likewise for trucks.47 This approach of using CAFE definitions allows the CO2

standards and the CAFE standards to continue to be harmonized across all vehicles for the 

National Program. 

As just explained, generally speaking, a smaller footprint vehicle will tend to have higher 

fuel economy and lower CO2 emissions relative to a larger footprint vehicle when both have the 

same level of fuel efficiency improvement technology. Since the proposed standards apply to a 

manufacturer’s overall fleet, not to an individual vehicle, if a manufacturer’s fleet is dominated 

by small footprint vehicles, then that fleet will have a higher fuel economy requirement and a 

lower CO2 requirement than a manufacturer whose fleet is dominated by large footprint vehicles. 

All vehicles, whether smaller or larger, must make improvements to reduce CO2 emissions or 

improve fuel economy, and therefore all vehicles will be relatively more expensive. With this 

footprint-based standard approach, EPA and NHTSA continue to believe that the rules will not 

create significant incentives to produce vehicles of particular sizes, and thus there should be no 

significant effect on the relative availability of different vehicle sizes in the fleet due to the 

proposed standards, which will help to maintain consumer choice during the rulemaking 

timeframe. Consumers should still be able to purchase the size of vehicle that meets their needs. 

Table I-6 helps to illustrate the varying CO2 emissions and fuel economy targets under the 

proposed standards that different vehicle sizes will have, although we emphasize again that these 

targets are not actual standards – the proposed standards are manufacturer-specific, rather than 

vehicle-specific. 

Table I-6 Model Year 2025 CO2 and Fuel Economy Targets for Various MY 2008 

Vehicle Types 

Vehicle 

Type 

Example 

Models 

Example Model 

Footprint (sq. 

ft.) 

CO2 Emissions 

Target (g/mi) 

Fuel Economy 

Target (mpg) 

Example Passenger Cars 

Compact 

car 

Honda Fit 40 131 67.8 

Midsize 

car 

Ford Fusion 46 147 60.5 

Fullsize 

car Chrysler 300 53 170 52.3 

 47 See 49 CFR 523 for NHTSA’s definitions for passenger car and light truck under the CAFE program. 

Comment [A25]: Commenters request clarity on 

this point. Is that accurate that all vehicles must 

make improvements. If Honda wants to keep the 

Accord’s g/mile performance the same and achieve 

fleet improvements elsewhere, can they still do that? 

Please clarify – all vehicle segments? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 37 of 770

Example Light-duty Trucks 

Small SUV 4WD Ford 

Escape 44 170 52.3 

Midsize 

crossover 

Nissan Murano 49 188 47.3 

Minivan Toyota Sienna 55 209 42.5 

Large 

pickup 

truck 

Chevy 

Silverado 67 252 35.3 

4. Program Flexibilities for Achieving Compliance 

a. CO2/CAFE Credits Generated Based on Fleet Average Over-Compliance 

The MYs 2012-2016 rules contain several provisions which provide flexibility to 

manufacturers in meeting standards, many of which the agencies are not proposing to change for 

MYs 2017 and later. For example, the agencies are proposing to continue allowing 

manufacturers to generate credits for over-compliance with the CO2 and CAFE standards.48 

Under the agencies’ footprint-based approach to the standards, a manufacturer’s ultimate 

compliance obligations are determined at the end of each model year, when production of the 

model year is complete. Since the fleet average standards that apply to a manufacturer’s car and 

truck fleets are based on the applicable footprint-based curves, a production volume-weighted 

fleet average requirement will be calculated for each averaging set (cars and trucks) based on the 

mix and volumes of the models manufactured for sale by the manufacturer. If a manufacturer’s 

car and/or truck fleet achieves a fleet average CO2/CAFE level better than the car and/or truck 

standards, then the manufacturer generates credits. Conversely, if the fleet average CO2/CAFE 

level does not meet the standard, the fleet would incur debits (also referred to as a shortfall). As 

in the MY 2011 CAFE program under EPCA/EISA, and also in MYs 2012-2016 for the lightduty vehicle GHG and CAFE program, a manufacturer whose fleet generates credits in a given 

model year would have several options for using those credits, including credit carry-back, credit 

carry-forward, credit transfers, and credit trading. 

Credit “carry-back” means that manufacturers are able to use credits to offset a deficit 

that had accrued in a prior model year, while credit “carry-forward” means that manufacturers 

can bank credits and use them toward compliance in future model years. EPCA, as amended by 

EISA, requires NHTSA to allow manufacturers to carry-back credits for up to three model years, 

and to carry-forward credits for up to five model years. EPA’s MYs 2012-2016 light duty 

vehicle GHG program includes the same limitations and EPA is proposing to continue this 

limitation in the MY 2017-2025 program. To facilitate the transition to the increasingly more 

stringent standards, EPA is proposing under its CAA authority a one-time CO2 carry-forward 

 48 This credit flexibility is required by EPCA/EISA, see 49 U.S.C. 32903, and allowed by the CAA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 38 of 770

beyond 5 years, such that any credits generated from MY 2010 through 2016 will be able to be 

used any time through MY 2021. This provision would not apply to early credits generated in 

MY 2009. NHTSA’s program will continue the 5-year carry-forward and 3-year carry-back, as 

required by statute. 

Credit “transfer” means the ability of manufacturers to move credits from their passenger 

car fleet to their light truck fleet, or vice versa. EISA required NHTSA to establish by regulation 

a CAFE credits transferring program, now codified at 49 CFR Part 536, to allow a manufacturer 

to transfer credits between its car and truck fleets to achieve compliance with the standards. For 

example, credits earned by over-compliance with a manufacturer’s car fleet average standard 

could be used to offset debits incurred due to that manufacturer’s not meeting the truck fleet 

average standard in a given year. However, EISA imposed a cap on the amount by which a 

manufacturer could raise its CAFE through transferred credits: 1 mpg for MYs 2011-2013; 1.5 

mpg for MYs 2014-2017; and 2 mpg for MYs 2018 and beyond.49 Under section 202 (a) of the 

CAA, in contrast, there is no statutory limitation on car-truck credit transfers, and EPA’s GHG 

program allows unlimited credit transfers across a manufacturer’s car-truck fleet to meet the 

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

appropriate GHG standards that manufacturers' can comply with in the lead time provided, and 

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

Therefore, EPA did not constrain car-truck credit transfers, as doing so would reduce the 

flexibility for lead time, and would increase costs with no corresponding environmental benefit. 

EISA also prohibits the use of transferred credits to meet the minimum domestic passenger car 

fleet CAFE standard.50 These statutory limits will necessarily continue to apply to the 

determination of compliance with the CAFE standards. 

Credit “trading” means the ability of manufacturers to sell credits to, or purchase credits 

from, one another. EISA allowed NHTSA to establish by regulation a CAFE credit trading 

program, also now codified at 49 CFR Part 536, to allow credits to be traded between vehicle 

manufacturers. EPA also allows credit trading in the light-duty vehicle GHG program. These 

sorts of exchanges between averaging sets are typically allowed under EPA’s current mobile 

source emission credit programs (as well as EPA’s and NHTSA’s recently promulgated GHG 

and fuel efficiency standards for heavy-duty vehicles and engines), although manufacturers have 

in the past seldom made such exchanges. EISA also prohibits manufacturers from using traded 

credits to meet the minimum domestic passenger car CAFE standard.51

 49 49 U.S.C. 32903(g)(3). 

50 49 U.S.C. 32903(g)(4). 

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

Comment [A26]: Does this mean EPA is not 

proposing to adjust car-truck credit transfers to 

account for VMT (as NHTSA must do to preserve 

oil savings)? This also does not seem to be 

addressed below in EPA’s description of the CO2 

program. 

Comment [A27]: Commenters request clarity on 

why this is needed? Seems unnecessary to possibly 

discourage trading. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 39 of 770

b. Air Conditioning Improvement Credits/Fuel Economy Value Increases 

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

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

(direct A/C emissions). In addition, operation of the A/C system places an additional load on the 

engine which increases fuel consumption and thus results in additional CO2 tailpipe emissions 

(indirect A/C related emissions). In the MYs 2012-2016 program, EPA allows manufacturers to 

generate credits by reducing either or both types of GHG emissions related to A/C systems. The 

expected generation of A/C credits is accounted for in setting the level of the overall CO2 

standard. For the current proposal, as with the MYs 2012-2016 program, manufacturers will be 

able to generate CO2-equivalent credits to use in complying with the CO2 standards for 

improvements in air conditioning (A/C) systems, both for efficiency improvements (reduces 

tailpipe CO2 and improves fuel consumption) and for leakage or alternative, lower GWP (global 

warming potential) refrigerant use (reduces hydrofluorocarbon (HFC) emissions). EPA is 

proposing that the maximum A/C credit available for cars is 18.8 grams/mile CO2 and for trucks 

is 24.4 grams/mile CO2. The proposed test methods used to calculate these direct and indirect 

A/C credits are very similar to those of the MYs 2012-2016 program, though EPA is seeking 

comment on a revised idle test as well as a new test procedure. 

For the first time in the current proposal, the agencies are proposing provisions that 

would account for improvements in air conditioner efficiency in the CAFE program. Improving 

A/C efficiency leads to real-world fuel economy benefits, because as explained above, A/C 

operation represents an additional load on the engine, so more efficient A/C operation imposes 

less of a load and allows the vehicle to go farther on a gallon of gas. Under EPCA, EPA has 

authority to adopt procedures to measure fuel economy and calculate CAFE. Under this 

authority EPA is proposing that manufacturers could generate fuel consumption improvement 

values for purposes of CAFE compliance based on air conditioning system efficiency 

improvements for cars and trucks. This increase in fuel economy would be allowed up to a 

maximum based on 0.000563 gallon/mile for cars and 0.000810 gallon/mile for trucks. This is 

equivalent to the A/C efficiency CO2 credit allowed by EPA under the GHG program. The same 

methods would be used in the CAFE program to calculate the values for air conditioning 

efficiency improvements for cars and trucks as are used in EPA’s GHG program. NHTSA is 

including in its proposed passenger car and light truck CAFE standards an increase in stringency 

in each model year from 2017-2025 by the amount industry is expected to improve air 

conditioning system efficiency in those years, in a manner consistent with EPA’s GHG 

standards. EPA is not proposing to allow generation of fuel consumption improvement values 

for CAFE purposes, nor is NHTSA proposing to increase stringency of the CAFE standard, for 

the use of A/C systems that reduce leakage or employ alternative, lower GWP refrigerant, 

because those changes do not improve fuel economy. 

Comment [A28]: Commenters request clarity on 

whether this should say leakage prevention? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 40 of 770

c. Off- cycle Credits/Fuel Economy Value Increases 

For MYs 2012-2016, EPA provided an option for manufacturers to generate credits for 

employing new and innovative technologies that achieve CO2 reductions that are not reflected on 

current test procedures. EPA noted in the MYs 2012-2016 rulemaking that examples of such 

“off-cycle” technologies might include solar panels on hybrids, adaptive cruise control, and 

active aerodynamics, among other technologies. See generally 75 FR at 25438-39. EPA’s 

current program allows off-cycle credits to be generated through MY 2016. 

EPA is proposing that manufacturers may continue to use off-cycle credits for MY 2017 

and later for the GHG program. As with A/C efficiency, improving efficiency through the use of 

off-cycle technologies leads to real-world fuel economy benefits and allows the vehicle to go 

farther on a gallon of gas. Thus, under its EPCA authority EPA is proposing to allow 

manufacturers to generate fuel consumption improvement values for purposes of CAFE 

compliance based on the use of off-cycle technologies. Increases in fuel economy under the 

CAFE program based on off-cycle technology will be equivalent to the off-cycle credit allowed 

by EPA under the GHG program, and these amounts will be determined using the same 

procedures and test methods as are used in EPA’s GHG program. For the reasons discussed in 

sections III and IV of this proposal, the ability to generate off-cycle credits and increases in fuel 

economy for use in compliance will not affect or change the level of the GHG or CAFE 

standards proposed by each agency. 

Many automakers indicated that they had a strong interest in pursuing off-cycle 

technologies, and encouraged the agencies to refine and simplify the evaluation process to 

provide more certainty as to the types of technologies the agencies would approve for credit 

generation. For 2017 and later, EPA is proposing to expand and streamline the MYs 2012-2016 

off-cycle credit provisions, including an approach by which the agencies would provide specified 

amounts of credit and fuel consumption improvement values for a subset of off-cycle 

technologies whose benefits are readily quantifiable. EPA is proposing a list of technologies and 

credit values, where sufficient data is available, that manufacturers could use without going 

through an advance approval process that would otherwise be required to generate credits. EPA 

believes that our assessment of off-cycle technologies and associated credit values on this 

proposed list is conservative, and automakers may apply for additional off-cycle credits beyond 

the minimum credit value if they have sufficient supporting data. Further, manufacturers may 

also apply for off-cycle technologies beyond those listed, again, if they have sufficient data. 

In addition, EPA is providing additional detail on the process and timing for the 

credit/fuel consumption improvement values application and approval process. EPA is 

proposing a timeline for the approval process, including a 60-day EPA decision process from the 

time a manufacturer submits a complete application. EPA is also proposing a detailed, common, 

step-by-step process, including a specification of the data that manufacturers must submit. For 

off-cycle technologies that are both not covered by the pre-approved off-cycle credit/fuel 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 41 of 770

consumption improvement values list and that are not quantifiable based on the 5-cycle test cycle 

option provided in the 2012-2016 rulemaking, EPA is proposing to retain the public comment 

process from the MYs 2012-2016 rule. 

d. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles, and Fuel Cell 

Vehicles 

To facilitate market penetration of the most advanced vehicle technologies as rapidly as 

possible, EPA is proposing an incentive multiplier for compliance purposes for all electric 

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

MYs 2017 through 2021. This multiplier approach means that each EV/PHEV/FCV would 

count as more than one vehicle in the manufacturer’s compliance calculation. EPA is proposing 

that EVs and FCVs start with a multiplier value of 2.0 in MY 2017, phasing down to a value of 

1.5 in MY 2021. PHEVs would start at a multiplier value of 1.6 in MY 2017 and phase down to 

a value of 1.3 in MY 2021.52 The multiplier would be 1.0 for MYs 2022-2025. 

NHTSA currently interprets EPCA and EISA as precluding the agency from offering 

incentives for EVs, FCVs and PHEVs, except as specified by statute, and thus is not proposing 

incentive multipliers comparable to the EPA incentive multipliers described above. 

For EVs, PHEVs and FCVs, EPA is proposing to set a value of 0 g/mile for the tailpipe 

compliance value for EVs, PHEVs (electricity usage) and FCVs for MY 2017-2021, with no 

limit on the quantity of vehicles eligible for 0 g/mi tailpipe emissions accounting. For MY 2022-

2025, EPA is proposing that 0 g/mi only be allowed up to a per-company cumulative sales cap, 

tiered as follows: 1) 600,000 vehicles for companies that sell 300,000 EV/PHEV/FCVs in MYs 

2019-2021; 2) 200,000 vehicles for all other manufacturers. EPA believes the industry-wide 

impact of such a tiered cap will be approximately 2 million vehicles. EPA proposes to phase-in 

the change in compliance value, from 0 grams per mile to net upstream accounting, for any 

manufacturer that might exceeds its cumulative production cap for EV/PHEV/FCVs. EPA 

proposes that, through MY 2025, the compliance value for EVs, FCVs, and the electric portion 

of PHEVs in excess of individual automaker cumulative production caps would be one-half of 

the value based on net upstream accounting. 

For EVs and other dedicated alternative fuel vehicles, EPA is proposing to calculate fuel 

economy for the CAFE program using the same methodology as in the MYs 2012-2016 

rulemaking, which aligns with EPCA/EISA statutory requirements. For liquid alternative fuels, 

this methodology generally counts 15 percent of the volume of fuel used in determine the mpgequivalent fuel economy. For gaseous alternative fuels, the methodology generally determines a 

gasoline equivalent mpg based on the energy content of the gaseous fuel consumed using a 

 52 The multipliers for EV/FCV would be: 2017-2019 – 2.0, 2020 - 1.75, 2021 – 1.5; for PHEV: 2017-2019 – 1.6, 

2020 – 1.45, 2021 – 1.3. 

Comment [A29]: What is the specific statutory 

limitation? Can this statement be reconciled with 

the statement in the next section regarding “game 

changing” technologies for pick-ups that “EPA’s 

GHG and NHTSA’s CAFE proposed standards are 

set at levels that take into account this flexibility as 

an incentive for the introduction of advanced 

technology”? 

Comment [A30]: Why these two years? Why 

not consider the 2017-2018 period? 

Comment [A31]: When does the phase-in period 

end and full upstream accounting begin? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 42 of 770

petroleum equivalency factor (PEF), and then adjusts the fuel consumption by effectively only 

counting 15 percent of the actual energy consumed. For electricity, the methodology generally 

determines a gasoline equivalent mpg by measuring the electrical energy consumed, and then 

using a petroleum equivalency factor (PEF) to convert to an mpg-equivalent value. The PEF for 

electricity includes an adjustment that effectively only counts 15 percent of the actual energy 

consumed. Counting 15 percent of the volume or energy provides an incentive for alternative 

fuels in the CAFE program. 

The methodology that EPA is proposing to use to calculate fuel economy for the CAFE 

program for dual fueled vehicle is discussed below in subsection I.B.7.a. 

e. Incentives for “Game Changing” Technologies Performance for Full-Size Pickup 

Truck including Hybridization 

The agencies recognize that the standards under consideration for MYs 2017-2025 will 

be challenging for large trucks, including full size pickup trucks. In order to incentivize the 

penetration into the marketplace of “game changing” technologies for these pickups, including 

their hybridization, EPA is proposing a CO2 credit in the GHG program and an equivalent fuel 

consumption improvement value in the CAFE program for manufacturers that employ significant 

quantities of hybridization on full size pickup trucks, by including a per-vehicle CO2 credit and 

fuel consumption improvement value available for mild and strong hybrid electric vehicles 

(HEVs). EPA would provide the incentive for the GHG program under EPA’s CAA authority 

and the incentive for the CAFE program under EPA’s EPCA authority. EPA’s GHG and 

NHTSA’s CAFE proposed standards are set at levels that take into account this flexibility as an 

incentive for the introduction of advanced technology. This provides the opportunity to begin to 

transform the most challenging category of vehicles in terms of the penetration of advanced 

technologies, which, if successful at incentivizing these “game changing technologies,” should 

allow additional opportunities to successfully achieve the higher levels of truck stringencies in 

MYs 2022-2025. 

EPA is proposing that access to this credit and fuel consumption improvement value be 

conditioned on a minimum penetration of the technology in a manufacturer’s full size pickup 

truck fleet, and is proposing criteria for a full size pickup truck (e.g., minimum bed size and 

minimum towing or payload capability). EPA is proposing that mild HEV pickup trucks would 

be eligible for a per vehicle credit of 10 g/mi53 during MYs 2017-2021 if the technology is used 

on a minimum percentage of a company’s full size pickups, beginning with at least 30% of a 

company’s full size pickup production in 2017 and ramping up to at least 80% in MY 2021. 

Strong HEV pickup trucks would be eligible for a 20 g/mi per54 vehicle credit during MYs 2017-

2025 if the technology is used on at least 10% of the company’s full size pickups. These volume 

 53 0.001125 gallon/mile. 

54 0.00225 gallon/mile 

Comment [A32]: And GHG too? 

Comment [A33]: This seems confusing. Is it 

needed? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 43 of 770

thresholds are being proposed in order to encourage rapid penetration of these technologies in 

this vehicle segment. EPA and NHTSA are proposing specific definitions of mild and strong 

HEV pickup trucks. 

In addition to the specific hybridization credits, EPA is also proposing a performancebased incentive CO2 emissions credit and equivalent fuel consumption improvement value for 

full size pickup trucks that achieve a significant CO2 reduction below/fuel economy 

improvement above the applicable target. This would be available for vehicles achieving 

significant CO2 reductions/fuel economy improvements through the use of technologies other 

than hybrid drive systems. EPA is proposing that eligible pickup trucks achieving 15 percent 

below their applicable CO2 target would receive a 10 g/mi credit, and those achieving 20 percent 

below their target would receive a 20 g/mi credit. The 10 g/ mi performance-based credit would 

be available for MYs 2017 to 2021 and a vehicle meeting the requirements would receive the 

credit until MY 2021 unless its CO2 level increases. The 20 g/mi performance-based credit 

would be available for a maximum of 5 years within the model years of 2017 to 2025, provided 

the CO2 level does not increase for those vehicles earning the credit. The credits would begin in 

the MYof the eligible vehicle’s introduction, and could not extend past MY 2021 for the 10 g/mi 

credit and MY 2025 for the 20 g/mi credit. 

 To avoid double-counting, the same vehicle would not receive credit under both the 

HEV and the performance based approaches. 

5. Mid-Term Evaluation 

Given the long time frame at issue in setting standards for MYs 2022-2025, and given 

NHTSA’s obligation to conduct a separate rulemaking in order to establish final standards for 

vehicles for those model years, EPA and NHTSA are proposing a comprehensive mid-term 

evaluation and agency decision-making process. As part of this undertaking, both NHTSA and 

EPA will develop and compile up-to-date information for the evaluation, through a collaborative, 

robust and transparent process, including public notice and comment. The evaluation will be 

based on (1) a holistic assessment of all of the factors considered by the agencies in setting 

standards, including those set forth in the rule and other relevant factors, and (2) the expected 

impact of those factors on the manufacturers’ ability to comply, without placing decisive weight 

on any particular factor or projection. The comprehensive evaluation process will lead to final 

agency action by both agencies. 

Consistent with the agencies’ commitment to maintaining a single national framework for 

regulation of vehicle emissions and fuel economy, the agencies fully expect to conduct the midterm evaluation in close coordination with the California Air Resources Board (CARB). 

Moreover, the agencies fully expect that any adjustments to the GHG standards will be made 

with the participation of CARB and in a manner that ensures continued harmonization of state 

and federal vehicle standards. 

Comment [A34]: Commenters note that it would 

be helpful to provide a clear explanation of why this 

is being done – to promote other “game changing” 

technology options. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 44 of 770

Further discussion of the mid-term evaluation can be found in section III and IV of the 

proposal. 

6. Coordinated Compliance 

The MYs 2012-2016 final rules established detailed and comprehensive regulatory 

provisions for compliance and enforcement under the GHG and CAFE programs. These 

provisions remain in place for model years beyond MY 2016 without additional action by the 

agencies and EPA and NHTSA are not proposing any significant modifications to them. In the 

MYs 2012-2016 final rule, NHTSA and EPA established a program that recognizes, and 

replicates as closely as possible, the compliance protocols associated with the existing CAA Tier 

2 vehicle emission standards, and with earlier model year CAFE standards. The certification, 

testing, reporting, and associated compliance activities established for the GHG program closely 

track those in previously existing programs and are thus familiar to manufacturers. EPA already 

oversees testing, collects and processes test data, and performs calculations to determine 

compliance with both CAFE and CAA standards. Under this coordinated approach, the 

compliance mechanisms for both programs are consistent and non-duplicative. EPA also applies 

the CAA authorities applicable to its separate in-use requirements in this program. 

The compliance approach allows manufacturers to satisfy the GHG program 

requirements in the same general way they comply with previously existing applicable CAA and 

CAFE requirements. Manufacturers will demonstrate compliance on a fleet-average basis at the 

end of each model year, allowing model-level testing to continue throughout the year as is the 

current practice for CAFE determinations. The compliance program design includes a single set 

of manufacturer reporting requirements and relies on a single set of underlying data. This 

approach still allows each agency to assess compliance with its respective program under its 

respective statutory authority. The program also addresses EPA enforcement in cases of 

noncompliance. 

7. Additional Program Elements 

a. Treatment of Compressed Natural Gas (CNG), Plug-in Hybrid Electric Vehicles 

(PHEVs), and Flexible Fuel Vehicles (FFVs) 

EPA is proposing that CO2 credits for plug-in hybrid electric vehicles (PHEVs) and bifuel compressed natural gas (CNG) vehicles will be based on estimated use of the alternative 

fuels, recognizing the recognition that, once a consumer has paid several thousand dollars to be 

able to use a fuel that is considerably cheaper than gasoline, it is very likely that the consumer 

will seek to use the cheaper fuel as much as possible. Accordingly, for CO2 emissions 

compliance, EPA is proposing to use the Society of Automotive Engineers “utility factor” 

methodology (based on vehicle range on the alternative fuel and typical daily travel mileage) to 

determine the assumed percentage of operation on gasoline and percentage of operation on the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 45 of 770

alternative fuel for both PHEVs and bi-fuel CNG vehicles, along with the CO2 emissions test 

values on the alternative fuel and gasoline. 

EPA is proposing to account for E85 use by flexible fuel vehicles (FFVs) as in the MY 

2016 program, based on actual usage of E85 which represents a real-world reduction attributed 

to alternative fuels.not proposing to extend this method to flexible fueled vehicles (FFVs) using 

E-85 and gasoline, since Unlike PHEVs and bi-fuel CNG vehicles, there is not a significant cost 

differential between an FFV and a conventional gasoline vehicle and historically consumers have 

only fueled these vehicles with E85 a very small percentage of the time. Therefore, accounting 

for E85 FFVs will continue as in the MY 2016 program, based on actual usage of E85 which 

represents a real-world reduction attributed to alternative fuels.

In the CAFE program for MYs 2017-2019, EPA is proposing that the fuel economy of 

dual fuel vehicles will be determined in the same manner as specified in the MY 2012-2016 rule, 

and as defined by EISA. Beginning in MY 2020, EISA does not specify how to measure the fuel 

economy of dual fuel vehicles, and EPA is proposing under its EPACA authority to use the EPA 

“utility factor” methodology for PHEV and CNG vehicles described above to determine how to 

proportion the fuel economy when operating on gasoline or diesel fuel and the fuel economy 

when operating on the alternative fuel. For FFVs, EPA is proposing to use the same 

methodology as it uses for the GHG program to determine how to proportion the fuel economy, 

which would be based on actual usage of E85. EPA is proposing to continue to use Petroleum 

Equivalency Factors and the 0.15 divisor used in the MY 2012-2016 rule for the alternative 

fuels, however with no cap on the amount of fuel economy increase allowed. This issue is 

discussed further in Section III.B.10. 

b. Exclusion of Emergency and Police Vehicles 

Under EPCA, manufacturers are allowed to exclude emergency vehicles from their 

CAFE fleet55 and all manufacturers have historically done so. In the MYs 2012-2016 program, 

EPA’s GHG program applies to these vehicles. However, after further consideration of this 

issue, EPA is proposing the same type of exclusion provision for these vehicles for MY 2017 and 

later because of the unique features of vehicles designed specifically for law enforcement and 

emergency purposes, which have the effect of raising their GHG emissions and calling into 

question whether the footprint attribute is suitable. 

c. Small Businesses and Small Volume Manufacturers 

EPA is proposing provisions to address two categories of smaller manufacturers. The 

first category is small businesses as defined by the Small Business Administration (SBA). For 

vehicle manufacturers, SBA’s definition of small business is any firm with less than 1,000 

 55 49 U.S.C. 32902(e) 

Comment [A35]: Suggest rephrasing along these 

lines so that this is not emphasizing what EPA is 

“not proposing” but instead what EPA believes is the 

most appropriate method. 

Comment [A36]: Commenter suggests 

explaining clearly why – because it’s required by 

EISA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 46 of 770

employees. As with the MYs 2012-2016 program, EPA is proposing to continue to exempt small 

businesses from the GHG standards, for any company that meets the SBA’s definition of a small 

business. EPA believes this exemption is appropriate given the unique challenges small 

businesses would face in meeting the GHG standards, and since these businesses make up less 

than 0.1% of total U.S. vehicle sales, and there is no significant impact on emission reductions. 

The second category of small manufacturers addressed in EPA’s proposal are small volume 

manufacturers, which EPA defines as manufacturers with U.S. annual sales of less than 5,000 

vehicles. Under the MYs 2012-2016 program, these small volume manufacturers are eligible 

for an exemption from the CO2 standards. EPA is proposing to bring small volume 

manufacturers into the CO2 program for the first time starting in MY 2017, and allow them to 

petition EPA for alternative standards. 

EPCA provides NHTSA with the authority to exempt from the generally applicable 

CAFE standards manufacturers that produce fewer than 10,000 passenger cars worldwide in the 

model year each of the two years prior to the year in which they seek an exemption.56 If NHTSA 

exempts a manufacturer, it must establish an alternate standard for that manufacturer for that 

model year, at the level that the agency decides is maximum feasible for that manufacturer. The 

exemption and alternative standard apply only if the exempted manufacturer also produces fewer 

than 10,000 passenger cars worldwide in the year for which the exemption was granted. 

Further, the Temporary Lead-time Alternative Standards (TLAAS) provisions included in 

EPA’s MYs 2012-2016 program for manufacturers with MY 2009 U.S. sales of less than 

400,000 vehicles ends after MY 2015 for most eligible manufacturers.57 EPA is not proposing to 

extend or otherwise replace the TLAAS provisions for the proposed MYs 2017-2025 program. 

With the exception of the small businesses and small volume manufacturers discussed above, the 

proposed MYs 2017-2025 standards would apply to all manufacturers. 

C. Summary of Costs and Benefits for the Proposed National Program 

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

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

alternatives considered and provide further confirmation that the proposed standards are 

appropriate under their respective statutory authorities. The costs and benefits projected by 

NHTSA to result from these CAFE standards are presented first, followed by those from EPA’s 

analysis of the GHG emissions standards. 

The agencies recognize that there are uncertainties regarding the benefit and cost values 

presented in this proposal. Some benefits and costs are not quantified. The value of other 

benefits and costs could be too low or too high. 

 56 49 U.S.C. 32902(d). Implementing regulations may be found in 49 CFR Part 525. 

57 TLAAS ends after MY 2016 for manufacturers with MY 2009 U.S. sales of less than 50,000 vehicles 

Comment [A37]: Commenter recommends that 

this section include the costs/benefits of the national 

program, given the title. Please add these here before 

the separate sections on NHTSA and EPA 

cost/benefits. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 47 of 770

For several reasons, the estimates for costs and benefits presented by NHTSA and EPA, 

while consistent, are not directly comparable, and thus should not be expected to be identical. 

Most important, NHTSA and EPA’s standards would require slightly different fuel efficiency 

improvements. EPA’s proposed GHG standard is more stringent in part due to its assumptions 

about manufacturers’ use of air conditioning leakage credits, which result from reductions in air 

conditioning-related emissions of HFCs. NHTSA is proposing standards at levels of stringency 

that assume improvements in the efficiency of air conditioning systems, but that do not account 

for reductions in HFCs, which are not related to fuel economy or energy conservation. In 

addition, the CAFE and GHG standards offer somewhat different program flexibilities and 

provisions, and the agencies’ analyses differ in their accounting for these flexibilities (examples 

include the treatment of EVs, dual-fueled vehicles, and civil penalties), primarily because 

NHTSA is statutorily prohibited from considering some flexibilities when establishing CAFE 

standards,58 while EPA is not. These differences contribute to differences in the agencies’ 

respective estimates of costs and benefits resulting from the new standards. Nevertheless, it is 

important to note that NHTSA and EPA have harmonized the programs as much as possible, and 

this proposal to continue the National Program would result in significant cost and other 

advantages for the automobile industry by allowing them to manufacture one fleet of vehicles 

across the U.S., rather than comply with potentially multiple state standards that may occur in the 

absence of the National Program. 

 In summary, the projected costs and benefits presented by NHTSA and EPA are not 

directly comparable, because the levels being proposed by EPA include air conditioning-related 

improvements in HFC reductions, and because of the projection by EPA of complete compliance 

with the proposed GHG standards, whereas NHTSA projects some manufacturers will pay civil 

penalties as part of their compliance strategy, as allowed by EPCA. It should also be expected 

that overall EPA’s estimates of GHG reductions and fuel savings achieved by the proposed GHG 

standards will be slightly higher than those projected by NHTSA only for the CAFE standards 

because of the same reasons described above. For the same reasons, EPA’s estimates of 

manufacturers’ costs for complying with the proposed passenger car and light truck GHG 

standards are slightly higher than NHTSA’s estimates for complying with the proposed CAFE 

standards. 

1. Summary of Costs and Benefits for the Proposed NHTSA CAFE Standards 

In reading the following section, we note that tables are identified as reflecting “estimated 

required” values and “estimated achieved” values. When establishing standards, EPCA allows 

NHTSA to only consider the fuel economy of dual-fuel vehicles (for example, FFVs and 

PHEVs) when operating on gasoline, and prohibits NHTSA from considering the use of 

dedicated alternative fuel vehicle credits (including for example EVs), credit carry-forward and 

 58 See 49 U.S.C. 32902(h). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 48 of 770

carry-back, and credit transfer and trading. NHTSA’s primary analysis of costs, fuel savings, and 

related benefits from imposing higher CAFE standards does not include them. However, EPCA 

does not prohibit NHTSA from considering the fact that manufacturers may pay civil penalties 

rather than comply with CAFE standards, and NHTSA’s primary analysis accounts for some 

manufacturers’ tendency to do so. The primary analysis is generally identified in tables 

throughout this document by the term “estimated required CAFE levels.” 

To illustrate the effects of the flexibilities and technologies that NHTSA is prohibited 

from including in its primary analysis, NHTSA performed a supplemental analysis of these 

effects on benefits and costs of the proposed CAFE standards that helps to demonstrate the realworld impacts. As an example of one of the effects, including the use of FFV credits reduces 

estimated per-vehicle compliance costs of the program, but does not significantly change the 

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

that manufacturers achieve not only under the proposed standards, but also under the baseline 

MY 2016 CAFE standards. As another example, including the operation of PHEV vehicles on 

both electricity and gasoline, and the expected use of EVs for compliance may raise the fuel 

economy levels that manufacturers achieve under the proposed standards. The supplemental 

analysis is generally identified in tables throughout this document by the term “estimated 

achieved CAFE levels.” 

Thus, NHTSA’s primary analysis shows the estimates the agency considered for purposes 

of establishing new CAFE standards, and its supplemental analysis including manufacturer use 

of flexibilities and advanced technologies currently reflects the agency’s best estimate of the 

potential real-world effects of the proposed CAFE standards. 

Without accounting for the compliance flexibilities and advanced technologies that 

NHTSA is prohibited from considering when determining the maximum feasible level of new 

CAFE standards, since manufacturers’ decisions to use those flexibilities and technologies are 

voluntary, NHTSA estimates that the required fuel economy increases would lead to fuel savings 

totaling 161 billion gallons throughout the lives of vehicles sold in MYs 2017-2025. At a 3 

percent discount rate, the present value of the economic benefits resulting from those fuel 

savings is $420 billion; at a 7 percent private discount rate, the present value of the economic 

benefits resulting from those fuel savings is $334 billion. 

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

corresponding reductions in CO2 emissions totaling 2.0 billion metric tons during the lives of 

vehicles sold in MYs 2017-2025. The present value of the economic benefits from avoiding 

those emissions is $46 billion, based on a global social cost of carbon value of $22 per metric ton 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 49 of 770

(in 2010, and growing thereafter).59 It is important to note that NHTSA’s CAFE standards and 

EPA’s GHG standards will both be in effect, and each will lead to increases in average fuel 

economy and CO2 reductions. The two agencies standards together comprise the National 

Program, and this discussion of the costs and benefits of NHTSA’s CAFE standards does not 

change the fact that both the CAFE and GHG standards, jointly, are the source of the benefits 

and costs of the National Program. 

Table I-7 NHTSA’s Estimated MYs 2017-2025 Costs, Benefits, and Net Benefits 

($Billion) under the CAFE Standards (Estimated Required) 

 3% discount rate 7% discount rate 

Lifetime 

present value 

Annualized 

value 

Lifetime 

present value 

Annualized 

value 

Costs 158 158

Benefits 496 403

Net benefits 338 246

 59 NHTSA also estimated the benefits associated with three more estimates of a one ton GHG reduction in 2009 ($5, 

$36, and $67), which will likewise grow thereafter. See Section II for a more detailed discussion of the social cost 

of carbon. 

Comment [A38]: Are these 2009$? Please 

specify. 

Comment [A39]: Commenters request clarity on 

how the costs using a 3% and 7% discount can be the 

same? Also, these numbers do not appear to be the 

same as the NHTSA RIA Table 1. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 50 of 770

Table I-8 NHTSA’s Estimated Fuel Saved (Billion Gallons and Barrels) and CO2 Emissions Avoided (mmt) under the 

CAFE Standards (Estimated Required) 

 Earlier60 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Passenger Cars 

Fuel (billion gallons) 3 2 5 7 9 11 12 14 16 18 98 

Fuel (billion barrels) CO2 (mmt) 37 23 57 83 111 135 154 179 208 243 1230 

Light Trucks 

Fuel (billion gallons) 1 1 2 4 6 8 9 10 11 12 63 

Fuel (billion barrels) CO2 (mmt) 6 7 22 53 72 96 107 119 128 149 759 

Combined 

Fuel (billion gallons) 4 3 7 11 15 19 21 24 27 30 161 

Fuel (billion barrels) CO2 (mmt) 44 29 79 137 183 231 261 297 337 392 1989 

60 The “Earlier” column shows benefits that NHTSA forecasts manufacturers will implement in model years prior to 2017 that are in response to the proposed 

MY 2017-2025 standards. The CAFE model forecasts that manufactures will implement some technologies, and achieve benefits during vehicle redesigns that occur prior to MY 2017 in order to comply with MY 2017 and later standards in a cost effective manner. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 51 of 770

 Considering manufacturers’ ability to employ compliance flexibilities and advanced 

technologies for meeting the standards, NHTSA estimates the following for fuel savings and 

avoided CO2 emissions, assuming FFV credits would be used toward both the baseline and final 

standards: 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 52 of 770

Table I-9 NHTSA’s Estimated Fuel Saved (Billion Gallons and Barrels) and CO2 Emissions Avoided (mmt) under the 

CAFE Standards (Estimated Achieved) 

 Earlier 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Passenger Cars 

Fuel (billion gallons) 4 2 4 6 8 10 11 14 16 19 94 

Fuel (billion barrels) 2.2 CO2 (mmt) 39 23 42 69 93 130 150 183 217 258 1,205 

Light Trucks 

Fuel (billion gallons) 1 1 2 4 6 8 8 9 10 11 59 

Fuel (billion barrels) 1.4 CO2 (mmt) 6 7 20 44 60 84 94 106 115 123 659 

Combined 

Fuel (billion gallons) 4 3 6 10 14 18 20 23 26 30 153 

Fuel (billion barrels) 3.6 CO2 (mmt) 45 30 62 113 153 215 245 289 332 381 1,864 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 53 of 770

NHTSA estimates that the fuel economy increases resulting from the proposed standards would 

produce other benefits both to drivers (e.g., reduced time spent refueling) and to the U.S. as a 

whole (e.g., reductions in the costs of petroleum imports beyond the direct savings from reduced 

oil purchases), as well as some disbenefits (e.g., increased traffic congestion) caused by drivers’ 

tendency to travel more when the cost of driving declines (as it does when fuel economy 

increases). NHTSA has estimated the total monetary value to society of these benefits and 

disbenefits, and estimates that the proposed standards will produce significant net benefits to 

society. Using a 3 percent discount rate, NHTSA estimates that the present value of these 

benefits would total more than $496 billion over the lives of the vehicles sold during MYs 2017-

2025; using a 7 percent discount rate, more than $403 billion. More discussion regarding 

monetized benefits can be found in Section IV of this notice and in NHTSA’s PRIA. Note that 

the benefit calculation in the following tables includes the benefits of reducing CO2 emissions,61

but not the benefits of reducing other GHG emissions. 

 

 61 CO2 benefits for purposes of these tables are calculated using the $22/ton SCC values. Note that the net present 

value of reduced GHG emissions is calculated differently from other benefits. The same discount rate used to 

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

value of SCC for internal consistency. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 54 of 770

Table I-10 NHTSA’s Discounted Benefits ($Billion) under the CAFE Standards 

Using a 3 and 7 Percent Discount Rate (Estimated Required) 

 Earlier 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

3% discount rate 

Passenger cars 10 6 14 20 27 34 38 44 52 58 302 

Light trucks 2 2 6 13 17 24 28 31 34 38 193 

Combined 11 8 20 33 44 58 66 75 86 95 496 

 

7% discount rate 

Passenger cars 8 5 11 16 22 28 32 36 42 47 248 

Light trucks 1 1 5 10 14 19 22 25 27 30 155 

Combined 9 6 16 27 36 47 54 61 70 78 403 

 Considering manufacturers’ ability to employ compliance flexibilities and advanced 

technologies for meeting the standards, NHTSA estimates the present value of these benefits 

would be reduced by about [XX] percent: 

Table I-11 NHTSA’s Discounted Benefits ($Billion) under the CAFE Standards 

Using a 3 and 7 Percent Discount Rate (Estimated Achieved) 

 Earlier 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

3% discount rate 

Passenger cars 10 6 11 18 25 31 35 42 49 58 287 

Light trucks 1 2 5 12 17 23 26 29 32 35 184 

Combined 12 8 17 31 42 54 61 72 82 93 471 

 

7% discount rate 

Passenger cars 8 5 9 15 20 25 29 35 40 48 235 

Light trucks 1 1 4 10 13 19 21 24 26 28 148 

Combined 10 7 14 25 34 44 50 58 67 76 383 

 NHTSA attributes most of these benefits (about $399 billion at a 3 percent discount rate, 

or about $317 billion at a 7 percent discount rate, excluding consideration of compliance 

flexibilities and advanced technologies for meeting the standards) to reductions in fuel 

consumption, valuing fuel (for societal purposes) at the future pre-tax prices projected in the 

Energy Information Administration’s (EIA) reference case forecast from the Annual Energy 

Outlook (AEO) 2011. NHTSA’s PRIA accompanying this proposal presents a detailed analysis 

of specific benefits of the rule. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 55 of 770

Table I-12 Summary of NHTSA’s Fuel Savings and CO2 Emissions Reduction 

under the CAFE Standards (Estimated Required) 

 Amount 3% discount rate 7% discount rate 

Fuel savings 161 420 334

CO2 emissions 

reductions 1,989 46 46

 NHTSA estimates that the increases in technology application necessary to achieve the 

projected improvements in fuel economy will entail considerable monetary outlays. The agency 

estimates that the incremental costs for achieving the proposed CAFE standards – that is, outlays 

by vehicle manufacturers over and above those required to comply with the MY 2016 CAFE 

standards – will total about $158 billion (i.e., during MYs 2017-2025). 

Table I-13 NHTSA’s Incremental Technology Outlays ($Billion) under the CAFE 

Standards (Estimated Required) 

 Earlier 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Passenger 

cars 

3 2 5 7 9 12 14 17 22 23 115 

Light trucks 0 0 1 2 4 5 6 7 8 9 43 

Combined 4 3 6 9 13 17 20 24 30 32 158 

 However, NHTSA estimates that manufacturers employing compliance flexibilities and 

advanced technologies to meet the standards could significantly reduce these outlays: 

Table I-14 NHTSA’s Incremental Technology Outlays ($Billion) under the CAFE 

Standards (Estimated Achieved) 

 Earlier 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

Passenger 

cars 

1 2 3 6 8 11 12 16 19 22 100 

Light trucks 0 0 1 2 3 5 5 6 7 7 37 

Combined 2 2 4 8 11 15 17 22 26 29 137 

 NHTSA projects that manufacturers will recover most or all of these additional costs 

through higher selling prices for new cars and light trucks. To allow manufacturers to recover 

these increased outlays (and, to a much less extent, the civil penalties that some manufacturers 

are expected to pay for non-compliance), the agency estimates that the standards would lead to 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 56 of 770

increase in average new vehicle prices ranging from $175 per vehicle in MY 2017 to $1975 per 

vehicle in MY 2025: 

Table I-15 NHTSA’s Incremental Increases in Average New Vehicle Costs ($) 

under the CAFE Standards (Estimated Required) 

 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Passenger cars 236 492 690 931 1,237 1,407 1,682 2,062 2,170 

Light trucks 70 208 426 671 924 1,056 1,239 1,399 1,581 

Combined 175 389 596 840 1,127 1,285 1,531 1,840 1,975 

 And as before, NHTSA estimates that manufacturers employing compliance flexibilities 

and advanced technologies to meet the standards could significantly reduce these increases. 

Table I-16 NHTSA’s Incremental Increases in Average New Vehicle Costs ($) 

under the CAFE Standards (Estimated Achieved)

 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Passenger cars 180 366 589 831 1,072 1,217 1,568 1,826 2,049 

Light trucks 62 186 389 580 832 935 1,092 1,220 1,277 

Combined 136 300 517 743 988 1,119 1,406 1,623 1,793 

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

will be more than 2.5 times the magnitude of the corresponding costs. As a consequence, the 

proposed CAFE standards would produce net benefits of $338 billion at a 3 percent discount rate 

(with compliance flexibilities, $334 billion), or $246 billion at a 7 percent discount rate (with 

compliance flexibilities, $246 billion), over the useful lives of the vehicles sold during MYs 

2017-2025. 

2. Summary of Costs and Benefits for the Proposed EPA GHG Standards 

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

I-17 shows EPA’s estimated lifetime discounted cost, fuel savings, and benefits for all vehicles 

projected to be sold in model years 2017-2025. The benefits include impacts such as climaterelated economic benefits from reducing emissions of CO2 (but not other GHGs), reductions in 

energy security externalities caused by U.S. petroleum consumption and imports, the value of 

certain health benefits, the value of additional driving attributed to the rebound effect, the value 

of reduced refueling time needed to fill up a more fuel efficient vehicle. The analysis also 

includes economic impacts stemming from additional vehicle use, such as the economic damages 

caused by accidents, congestion and noise. Note that benefits depend on estimated values for the 

social cost of carbon (SCC), as described in Section III.H. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 57 of 770

Table I-17 EPA’s Estimated 2017-2025 Model Year Lifetime Discounted Costs, 

Benefits, and Net Benefits assuming the 3% discount rate SCC Valuea,b (Billions of 2009 

dollars) 

Lifetime Present Valuec

 – 3% Discount Rate 

Program Costs $133 

Fuel Savings $468 

Benefits $133 

Net Benefitsd $468 

Annualized Valuee – 3% Discount Rate 

Annualized costs $5.89 

Annualized fuel savings $20.8 

Annualized benefits $5.94 

Net benefits $20.9 

Lifetime Present Valuec - 7% Discount Rate 

Program Costs $130 

Fuel Savings $363 

Benefits $115 

Net Benefitsd $348 

Annualized Valuee – 7% Discount Rate 

Annualized costs $9.86 

Annualized fuel savings $27.5 

Annualized benefits $7.19 

Net benefits $24.9 

Notes: a

 The agencies estimated the benefits associated with four different values of a one ton CO2

reduction (model average at 2.5% discount rate, 3%, and 5%; 95th percentile at 3%), which each 

increase over time. For the purposes of this overview presentation of estimated costs and benefits, 

however, we are showing the benefits associated with the marginal value deemed to be central by 

the interagency working group on this topic: the model average at 3% discount rate, in 2009 

dollars. Section III.H provides a complete list of values for the 4 estimates. b

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

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

(SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal 

consistency. Refer to Section III.H for more detail 

c Present value is the total, aggregated amount that a series of monetized costs or benefits that 

occur over time is worth in a given year. For this analysis, lifetime present values are calculated 

for the first year of each model year for MYs 2017-2025 (in year 2009 dollar terms). The lifetime 

present values shown here are the present values of each MY in its first year summed across MYs. d

 Net benefits reflect the fuel savings plus benefits minus costs. 

e The annualized value is the constant annual value through a given time period (the lifetime of 

each MY in this analysis) whose summed present value equals the present value from which it was 

derived. Annualized SCC values are calculated using the same rate as that used to determine the 

SCC value while all other costs and benefits are annualized at either 3% or 7%. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 58 of 770

Table I-18 shows EPA’s estimated lifetime fuel savings and CO2 equivalent emission 

reductions for all vehicles sold in the model years 2017-2025. The values in Table I-18 are 

projected lifetime totals for each model year and are not discounted. As documented in EPA’s 

draft RIA, the potential credit transfer between cars and trucks may change the distribution of the 

fuel savings and GHG emission impacts between cars and trucks. As discussed above with 

respect to NHTSA’s CAFE standards, it is important to note that NHTSA’s CAFE standards and 

EPA’s GHG standards will both be in effect, and each will lead to increases in average fuel 

economy and reductions in CO2 emissions. The two agencies’ standards together comprise the 

National Program, and this discussion of costs and benefits of EPA’s proposed GHG standards 

does not change the fact that both the proposed CAFE and GHG standards, jointly, are the source 

of the benefits and costs of the National Program. In general though, in addition to the added 

GHG benefit of HFC reductions from the EPA program, the fuel savings benefit are also 

somewhat higher than that from CAFE, primarily because of the possibility of paying civil 

penalties in lieu of applying technology in NHTSA’s program, which is required by EPCA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 59 of 770

Table I-18 EPA’s Estimated 2017-2025 Model Year Lifetime Fuel Saved and GHG Emissions Avoided 

2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

MY Total 

Cars 

Fuel (billion gallons) 1.4 3.7 6.1 8.7 11.4 14.2 16.9 19.7 22.5 104.5 

Fuel (billion barrels) 0.03 0.09 0.14 0.21 0.27 0.34 0.40 0.47 0.54 2.49 

CO2 EQ (mmt) 18.6 46.9 75.5 107 140 171 199 229 259 1,246 

Light Trucks 

Fuel (billion gallons) 1.1 2.2 3.0 4.0 7.4 9.8 12.0 14.1 16.3 69.7 

Fuel (billion barrels) 0.03 0.05 0.07 0.10 0.18 0.23 0.28 0.34 0.39 1.66 

CO2 EQ (mmt) 12.2 27.7 39.5 53 92 118 141 164 186 833 

Combined 

Fuel (billion gallons) 2.5 5.9 9.1 12.7 18.7 24.0 28.8 33.8 38.8 174.2 

Fuel (billion barrels) 0.06 0.14 0.22 0.30 0.45 0.57 0.69 0.80 0.92 4.15 

CO2 EQ (mmt) 30.8 74.6 115 160 233 289 340 392 445 2,079 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 60 of 770

Table I-19 shows EPA’s estimated lifetime discounted benefits for all vehicles sold in 

model years 2017-2025. Although EPA estimated the benefits associated with four different 

values of a one ton GHG reduction ($5, $22 $36, $67 in CY 2010 and in 2009 dollars), for the 

purposes of this overview presentation of estimated benefits EPA is showing the benefits 

associated with one of these marginal values, $22 per ton of CO2, in 2009 dollars and 2010 

emissions. Table I-19 presents benefits based on the $22 value. Section III.H presents the four 

marginal values used to estimate monetized benefits of GHG reductions and Section III.H 

presents the program benefits using each of the four marginal values, which represent only a 

partial accounting of total benefits due to omitted climate change impacts and other factors that 

are not readily monetized. The values in the table are discounted values for each model year of 

vehicles throughout their projected lifetimes. The benefits include all benefits considered by 

EPA such as GHG reductions, PM benefits, energy security and other externalities such as 

reduced refueling time and accidents, congestion and noise. The lifetime discounted benefits are 

shown for one of four different social cost of carbon (SCC) values considered by EPA. The 

values in Table I-19 do not include costs associated with new technology required to meet the 

GHG standard and they do not include the fuel savings expected from that technology. 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 61 of 770

Table I-19 EPA’s Estimated 2017-2025 Model Year Lifetime Discounted Benefits 

Assuming the $22/ton SCC Valuea,b,c,d (billions of 2009 dollars) 

Discount 

Rate 

Model Year 

2017 2018 2019 2020 2021 2022 2023 2024 2025 

Sum of 

Present 

Values 

3% $1.67 $4.06 $6.47 $9.32 $14.1 $18.2 $22.1 $26.3 $30.6 $133 

7% $1.44 $3.50 $5.57 $8.04 $12.1 $15.7 $19.1 $22.7 $26.4 $115 a The benefits include all benefits considered by EPA savings in refueling time, climate-related 

economic benefits from reducing emissions of CO2 (but not other GHGs), economic benefits from 

reducing emissions of PM and other air pollutants that contribute to its formation, and reductions in 

energy security externalities caused by U.S. petroleum consumption and imports. The analysis also 

includes disbenefits stemming from additional vehicle use, such as the economic damages caused 

by accidents, congestion and noise. 

b

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

The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 

and 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to 

Section III.H for more detail. 

c Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4

and N2O) expected under this final rule. Although EPA has not monetized the benefits of 

reductions in these non-CO2 emissions, the value of these reductions should not be interpreted as 

zero. Rather, the reductions in non-CO2 GHGs will contribute to this rule’s climate benefits, as 

explained in Section III.F.2. The SCC TSD notes the difference between the social cost of non-CO2

emissions and CO2 emissions, and specifies a goal to develop methods to value non-CO2 emissions 

in future analyses. Also, as noted in Section III.H, SCC increases over time. The $22/ton (2009$) 

value applies to 2010 emissions and grows larger over time. 

d

 Model year values are discounted to the first year of each model year; the “Sum” represents those 

discounted values summed across model years. 

Table I-20 shows EPA’s estimated lifetime fuel savings, lifetime CO2 emission 

reductions, and the monetized net present values of those fuel savings and CO2 emission 

reductions. The fuel savings and CO2 emission reductions are projected lifetime values for all 

vehicles sold in the model years 2017-2025. The estimated fuel savings in billions of gallons 

and the GHG reductions in million metric tons of CO2 shown in Table I-20 are totals for the nine 

model years throughout their projected lifetime and are not discounted. The monetized values 

shown in Table I-20 are the summed values of the discounted monetized fuel savings and 

monetized CO2 reductions for the model years 2017-2025 vehicles throughout their lifetimes. 

The monetized values in Table I-20 reflect both a 3 percent and a 7 percent discount rate as 

noted. 

Table I-20 EPA’s Estimated 2017-2025 Model Year Lifetime Fuel Savings, CO2

Emission Reductions, and Discounted Monetized SCC Benefits using the $22/ton SCC 

Value (monetized values in 2009 dollars) 

Amount $ value 

(billions) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 62 of 770

Fuel savings (3% discount rate) 174 billion gallons 

(4.1 billion barrels) $468 

Fuel savings (7% discount rate) 174 billion gallons 

(4.1 billion barrels) $363 

CO2e emission reductions 

(CO2 portion valued assuming $22/ton 

CO2 in 2010) 

2,079 MMT CO2e $49.1a,b

a

 $49.1 billion for 1,848 MMT of reduced CO2 emissions. As noted in Section III.H, the $22/ton (2009$) value 

applies to 2010 emissions and grows larger over time. Monetized GHG benefits exclude the value of reductions in 

non-CO2 GHG emissions (HFC, CH4 and N2O) expected under this proposed rule. Although EPA has not 

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

interpreted as zero. Rather, the reductions in non-CO2 GHGs will contribute to this rule’s climate benefits, as 

explained in Section III.F.2. The SCC TSD notes the difference between the social cost of non-CO2 emissions and 

CO2 emissions, and specifies a goal to develop methods to value non-CO2 emissions in future analyses. b

 Note that net present value of reduced CO2 emissions is calculated differently than other benefits. The same 

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

calculate net present value of SCC for internal consistency. Refer to Section III.H for more detail. 

Table I-21 shows EPA’s estimated incremental and total technology outlays for cars and 

trucks for each of the model years 2017-2025. The technology outlays shown in Table I-21 are 

for the industry as a whole and do not account for fuel savings associated with the program. 

Table I-22 shows EPA’s estimated incremental cost increase of the average new vehicle for each 

model year 2017-2025. The values shown are incremental to a baseline vehicle and are not 

cumulative. In other words, the estimated increase for 2017 model year cars is $172 relative to a 

2017 model year car meeting the MY 2016 standards. The estimated increase for a 2018 model 

year car is $319 relative to a 2018 model year car meeting the MY 2016 standards (not $172 plus 

$319). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 63 of 770

Table I-21 EPA’s Estimated Incremental Technology Outlays (billions of 2009 

dollars) 

 2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

MY 

Sum of 

Present 

Values 

3% 

discount 

rate

Cars $1.69 $3.11 $4.56 $6.00 $7.48 $11.1 $14.7 $18.4 $22.1 $89.2 

Trucks $0.28 $1.00 $1.61 $2.25 $4.22 $6.00 $7.69 $9.34 $10.9 $43.3 

Combined $1.97 $4.12 $6.16 $8.25 $11.7 $17.1 $22.4 $27.7 $33.1 $133 

7% 

discount 

rate 

Cars $1.66 $3.06 $4.48 $5.89 $7.35 $10.9 $14.4 $18.1 $21.7 $42.9 

Trucks $0.27 $0.99 $1.58 $2.21 $4.14 $5.89 $7.55 $9.17 $10.7 $42.5 

Combined $1.93 $4.04 $6.05 $8.10 $11.5 $16.8 $21.9 $27.2 $32.5 $130 

Model year values are discounted to the first year of each model year; the “Sum” represents those discounted values summed across model years. 

Table I-22 EPA’s Estimated Incremental Increase in Average New Vehicle Cost 

(2009 dollars per unit) 

2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

MY 

Cars $172 $319 $463 $591 $723 $1,051 $1,357 $1,658 $1,947 

Trucks $49 $180 $292 $407 $753 $1,068 $1,373 $1,670 $1,944 

Combined $126 $268 $402 $527 $734 $1,057 $1,362 $1,662 $1,946 

Comment [A40]: Relative to MY 2016 

standards? Please explain in the title or a footnote. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 64 of 770

 

D. Background and Comparison of NHTSA and EPA Statutory Authority 

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

and GHG standards are established. 

1. NHTSA Statutory Authority 

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

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

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

environmental and foreign policy implications of petroleum use by motor vehicles. EPCA 

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

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

for testing, tests vehicles, collects and analyzes manufacturers’ data, and calculates the individual 

and average fuel economy of each manufacturer’s passenger cars and light trucks; and NHTSA 

enforces the standards based on EPA’s calculations. 

a. Standard Setting 

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

as amended by EISA. For each future model year, EPCA requires that NHTSA establish 

separate passenger car and light truck standards at “the maximum feasible average fuel economy 

level that it decides the manufacturers can achieve in that model year,” based on the agency’s 

consideration of four statutory factors: technological feasibility, economic practicability, the 

effect of other standards of the Government on fuel economy, and the need of the nation to 

conserve energy. EPCA does not define these terms or specify what weight to give each concern 

in balancing them; thus, NHTSA defines them and determines the appropriate weighting that 

leads to the maximum feasible standards given the circumstances in each CAFE standard 

rulemaking.62 For MYs 2011–2020, EPCA further requires that separate standards for passenger 

cars and for light trucks be set at levels high enough to ensure that the CAFE of the industrywide combined fleet of new passenger cars and light trucks reaches at least 35 mpg not later than 

MY 2020. For model years after 2020, standards need simply be set at the maximum feasible 

level. 

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

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

factors—as long as NHTSA’s balancing does not undermine the fundamental purpose of the EPCA: energy 

conservation.”)
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 65 of 770

Because EPCA states that standards must be set for “...automobiles manufactured by 

manufacturers,” and because Congress provided specific direction on how small-volume 

manufacturers could obtain exemptions from the passenger car standards, NHTSA has long 

interpreted its authority as pertaining to setting standards for the industry as a whole. Prior to 

this NPRM, some manufacturers raised with NHTSA the possibility of NHTSA and EPA setting 

alternate standards for part of the industry that met certain (relatively low) sales volume criteria – 

specifically, that separate standards be set so that “intermediate-size,” limited-line manufacturers 

do not have to meet the same levels of stringency that larger manufacturers have to meet until 

several years later. NHTSA seeks comment on whether or how EPCA, as amended by EISA, 

could be interpreted to allow such alternate standards for certain parts of the industry. 

i. Factors That Must Be Considered in Deciding the Appropriate Stringency of 

CAFE Standards 

(1) Technological Feasibility 

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

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

being established. Thus, the agency is not limited in determining the level of new standards to 

technology that is already being commercially applied at the time of the rulemaking, a 

consideration which is particularly relevant for a rulemaking with a timeframe as long as the 

present one. For this rulemaking, NHTSA has considered all types of technologies that improve 

real-world fuel economy, including air-conditioner efficiency, due to EPA’s proposal to allow 

generation of fuel consumption improvement values for CAFE purposes based on improvements 

to air-conditioner efficiency that improves fuel efficiency. 

(2) Economic Practicability 

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

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

such as a significant loss of jobs or the unreasonable elimination of consumer choice.”63 The 

agency has explained in the past that this factor can be especially important during rulemakings 

in which the automobile industry is facing significantly adverse economic conditions (with 

corresponding risks to jobs). Consumer acceptability is also an element of economic 

practicability, one which is particularly difficult to gauge during times of uncertain fuel prices.64 

In a rulemaking such as the present one, looking out into the more distant future, economic 

practicability is a way to consider the uncertainty surrounding future market conditions and 

 63 67 FR 77015, 77021 (Dec. 16, 2002). 

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

of market demand as component of economic practicability found to be reasonable); Public Citizen v. NHTSA, 848 

F.2d 256 (Congress established broad guidelines in the fuel economy statute; agency’s decision to set lower standard 

was a reasonable accommodation of conflicting policies). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 66 of 770

consumer demand for fuel economy in addition to other vehicle attributes. In an attempt to 

ensure the economic practicability of attribute-based standards, NHTSA considers a variety of 

factors, including the annual rate at which manufacturers can increase the percentage of their 

fleet that employ a particular type of fuel-saving technology, the specific fleet mixes of different 

manufacturers, and assumptions about the cost of the standards to consumers and consumers’ 

valuation of fuel economy, among other things. 

It is important to note, however, that the law does not preclude a CAFE standard that 

poses considerable challenges to any individual manufacturer. The Conference Report for 

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

feasible average fuel economy should not be keyed to the single manufacturer which might have 

the most difficulty achieving a given level of average fuel economy.”65 Instead, NHTSA is 

compelled “to weigh the benefits to the nation of a higher fuel economy standard against the 

difficulties of individual automobile manufacturers.”66 The law permits CAFE standards 

exceeding the projected capability of any particular manufacturer as long as the standard is 

economically practicable for the industry as a whole. Thus, while a particular CAFE standard 

may pose difficulties for one manufacturer, it may also present opportunities for another. 

NHTSA has long held that the CAFE program is not necessarily intended to maintain the 

competitive positioning of each particular company. Rather, it is intended to enhance the fuel 

economy of the vehicle fleet on American roads, while protecting motor vehicle safety and being 

mindful of the risk to the overall United States economy. 

(3) The Effect of Other Motor Vehicle Standards of the Government on 

Fuel Economy 

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

involves an analysis of the effects of compliance with emission, safety, noise, or damageability 

standards on fuel economy capability and thus on average fuel economy. In previous CAFE 

rulemakings, the agency has said that pursuant to this provision, it considers the adverse effects 

of other motor vehicle standards on fuel economy. It said so because, from the CAFE program’s 

earliest years67 until present, the effects of such compliance on fuel economy capability over the 

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

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

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

In the wake of Massachusetts v. EPA and of EPA’s endangerment finding, granting of a 

waiver to California for its motor vehicle GHG standards, and its own establishment of GHG 

standards, NHTSA is confronted with the issue of how to treat those standards under 

 65 CEI–I, 793 F.2d 1322, 1352 (D.C. Cir. 1986). 66 Id. 67 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534, 33537 (Jun. 30, 1977).
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 67 of 770

EPCA/EISA, such as in the context of the “other motor vehicle standards” provision. To the 

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

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

by manufacturers in complying with the CAFE standards. 

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

standards should be considered under EPCA/EISA, e.g., under the “other motor vehicle 

standards” provision, consistent with NHTSA’s independent obligation under EPCA/EISA to 

issue CAFE standards. The agency has already considered EPA’s proposal and the 

harmonization benefits of the National Program in developing its own proposal. 

(4) The Need of the United States To Conserve Energy 

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

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

quantities of petroleum, especially imported petroleum.”68 Environmental implications 

principally include reductions in emissions of carbon dioxide and criteria pollutants and air 

toxics. Prime examples of foreign policy implications are energy independence and security 

concerns. 

(5) Fuel Prices and the Value of Saving Fuel 

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

alternative CAFE standards, because they determine the value of fuel savings both to new 

vehicle buyers and to society, which is related to the consumer cost (or rather, benefit) of our 

need for large quantities of petroleum. In this rule, NHTSA relies on fuel price projections from 

the U.S. Energy Information Administration’s (EIA) most recent Annual Energy Outlook (AEO) 

for this analysis. Federal government agencies generally use EIA’s projections in their 

assessments of future energy-related policies. 

(6) Petroleum Consumption and Import Externalities 

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

economy that are not reflected in the market price for crude petroleum, or in the prices paid by 

consumers of petroleum products such as gasoline. These costs include (1) higher prices for 

petroleum products resulting from the effect of U.S. oil import demand on the world oil price; (2) 

the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of 

imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure 

imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve 

(SPR) to provide a response option should a disruption in commercial oil supplies threaten the 

 68 42 FR 63184, 63188 (1977). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 68 of 770

U.S. economy, to allow the United States to meet part of its International Energy Agency 

obligation to maintain emergency oil stocks, and to provide a national defense fuel reserve. 

Higher U.S. imports of crude oil or refined petroleum products increase the magnitude of these 

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

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

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

(7) Air Pollutant Emissions 

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

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

with the rebound effect69 from higher fuel economy will increase emissions of these pollutants. 

Thus, the net effect of stricter CAFE standards on emissions of each pollutant depends on the 

relative magnitudes of its reduced emissions in fuel refining and distribution, and increases in its 

emissions from vehicle use. Fuel savings from stricter CAFE standards also result in lower 

emissions of CO2, the main greenhouse gas emitted as a result of refining, distribution, and use 

of transportation fuels. Reducing fuel consumption reduces carbon dioxide emissions directly, 

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

combustion engines. 

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

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

earliest days of the CAFE program. As courts of appeal have noted in three decisions stretching 

over the last 20 years,70 NHTSA defined the “need of the Nation to conserve energy” in the late 

1970s as including “the consumer cost, national balance of payments, environmental, and foreign 

policy implications of our need for large quantities of petroleum, especially imported 

petroleum.”71 In 1988, NHTSA included climate change concepts in its CAFE notices and 

prepared its first environmental assessment addressing that subject.72 It cited concerns about 

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

for MY 1989 passenger cars.73 Since then, NHTSA has considered the benefits of reducing 

tailpipe carbon dioxide emissions in its fuel economy rulemakings pursuant to the statutory 

requirement to consider the nation’s need to conserve energy by reducing fuel consumption. 

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

down, as when fuel economy improves.

70 Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1325 n. 12 (D.C. Cir. 1986); Public Citizen v. NHTSA, 848 F.2d 

256, 262–3 n. 27 (D.C. Cir. 1988) (noting that “NHTSA itself has interpreted the factors it must consider in setting 

CAFE standards as including environmental effects”); and Center for Biological Diversity v. NHTSA, 538 F.3d 1172 

(9th Cir. 2007). 71 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added). 

72 53 FR 33080, 33096 (Aug. 29, 1988). 

73 53 FR 39275, 39302 (Oct. 6, 1988). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 69 of 770

ii. Other Factors Considered by NHTSA 

NHTSA considers the potential for adverse safety consequences when establishing CAFE 

standards. This practice is recognized approvingly in case law.74 Under the universal or “flat” 

CAFE standards that NHTSA was previously authorized to establish, the primary risk to safety 

came from the possibility that manufacturers would respond to higher standards by building 

smaller, less safe vehicles in order to “balance out” the larger, safer vehicles that the public 

generally preferred to buy. Under the attribute-based standards being proposed in this action, 

that risk is reduced because building smaller vehicles tends to raise a manufacturer’s overall 

CAFE obligation, rather than only raising its fleet average CAFE. However, even under 

attribute-based standards, there is still risk that manufacturers will rely on down-weighting to 

improve their fuel economy (for a given vehicle at a given footprint target) in ways that may 

reduce safety.75

iii. Factors That NHTSA Is Statutorily Prohibited From Considering in Setting 

Standards 

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

particular model year, NHTSA may not consider the ability of manufacturers to take advantage 

of several EPCA provisions that facilitate compliance with the CAFE standards and thereby 

reduce the costs of compliance. Specifically, in determining the maximum feasible level of fuel 

economy for passenger cars and light trucks, NHTSA cannot consider the fuel economy benefits 

of “dedicated” alternative fuel vehicles (like battery electric vehicles or natural gas vehicles), 

must consider dual-fueled automobiles to be operated only on gasoline or diesel fuel, and may 

not consider the ability of manufacturers to use, trade, or transfer credits.76 This provision limits, 

to some extent, the fuel economy levels that NHTSA can find to be “maximum feasible” – if 

NHTSA cannot consider the fuel economy of electric vehicles, for example, NHTSA cannot set a 

standards predicated on manufacturers’ usage of electric vehicles to meet the standards. 

 74 As the United States Court of Appeals pointed out in upholding NHTSA’s exercise of judgment in setting the 

1987–1989 passenger car standards, “NHTSA has always examined the safety consequences of the CAFE standards 

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

Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 120 at n.11 (D.C. Cir. 1990). 75 For example, by reducing the mass of the smallest vehicles rather than the largest, or by reducing vehicle 

overhang outside the space measured as “footprint,” which results in less crush space. 76 49 U.S.C. 32902(h). We note, as discussed in greater detail in Section [XX], that NHTSA interprets 32902(h) as 

reflecting Congress’ intent that statutorily-mandated compliance flexibilities remain flexibilities. When a 

compliance flexibility is not statutorily mandated, therefore, or when it ceases to be available under the statute, we 

interpret 32902(h) as no longer binding the agency’s determination of the maximum feasible levels of fuel economy. 

For example, when the manufacturing incentive for dual-fueled automobiles under 49 U.S.C. 32905 and 32906 

expires in MY 2019, there is no longer a flexibility left to protect per 32902(h), so NHTSA considers the calculated 

fuel economy of plug-in hybrid electric vehicles for purposes of determining the maximum feasible standards in 

MYs 2020 and beyond. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 70 of 770

iv. Weighing and Balancing of Factors 

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

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

process of setting * * * fuel economy standards with broad guidelines concerning the factors that 

the agency must consider.” The breadth of those guidelines, the absence of any statutorily 

prescribed formula for balancing the factors, the fact that the relative weight to be given to the 

various factors may change from rulemaking to rulemaking as the underlying facts change, and 

the fact that the factors may often be conflicting with respect to whether they militate toward 

higher or lower standards give NHTSA discretion to decide what weight to give each of the 

competing policies and concerns and then determine how to balance them—as long as NHTSA’s 

balancing does not undermine the fundamental purpose of the EPCA, energy conservation, and 

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

the agency’s care by the statute.” Thus, EPCA does not mandate that any particular number be 

adopted when NHTSA determines the level of CAFE standards. 

v. Other Requirements Related to Standard Setting 

The standards for passenger cars and for light trucks must increase ratably each year 

through MY 2020.77 This statutory requirement is interpreted, in combination with the 

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

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

increases should not be disproportionately large or small in relation to each other.78 Standards 

after 2020 must simply be set at the maximum feasible level.79

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

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

in terms of a mathematical function.80 Fuel economy targets are set for individual vehicles and 

increase as the attribute decreases and vice versa. For example, footprint-based standards assign 

higher fuel economy targets to smaller-footprint vehicles and lower ones to larger footprintvehicles. The fleetwide average fuel economy that a particular manufacturer is required to 

achieve depends on the footprint mix of its fleet, i.e., the proportion of the fleet that is small-, 

medium- or large-footprint. 

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

the fuel economy of a broad range of both passenger cars and light trucks, i.e., the manufacturer 

must improve the fuel economy of all the vehicles in its fleet. Further, this approach can do so 

 77 49 U.S.C. 32902(b)(2)(C). 

78 See 74 Fed. Reg. 14196, 14375-76 (Mar. 30, 2009). 79 49 U.S.C. 32902(b)(2)(B). 

80 49 U.S.C. 32902(b)(3). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 71 of 770

without creating an incentive for manufacturers to make small vehicles smaller or large vehicles 

larger, with attendant implications for safety. 

b. Test Procedures for Measuring Fuel Economy 

EPCA provides EPA with the responsibility for establishing procedures to measure fuel 

economy and to calculate CAFE. Current test procedures measure the effects of nearly all fuel 

saving technologies. EPA is considering revising the procedures for measuring fuel economy 

and calculating average fuel economy for the CAFE program, however, to account for four 

impacts on fuel economy not currently included in these procedures – increases in fuel economy 

because of increases in efficiency of the air conditioning system; increases in fuel economy 

because of technology improvements that achieve “off-cycle” benefits; incentives for use of 

certain hybrid technologies in a significant percentage of pick-up trucks; and incentives for 

achieving fuel economy levels in a significant percentage pick-up trucks that exceeds the target 

curve by specified amounts, in the form of increased values assigned for fuel economy. NHTSA 

has taken these proposed changes into account in determining the proposed fuel economy 

standards. These changes would be the same as program elements that are part of EPA’s 

greenhouse gas performance standards, discussed in Section III.B.10. As discussed below, these 

three elements would be implemented in the same manner as in the EPA’s greenhouse gas 

program – a vehicle manufacturer would have the option to generate these fuel economy values 

for vehicle models that meet the criteria for these elements and to use these values in calculating 

their fleet average fuel economy. This proposed revision to CAFE calculation is discussed in 

more detail in Sections III and IV below. 

c. Enforcement and Compliance Flexibility 

NHTSA determines compliance with the CAFE standards based on measurements of 

automobile manufacturers’ CAFE from EPA. If a manufacturer’s passenger car or light truck 

CAFE level exceeds the applicable standard for that model year, the manufacturer earns credits 

for over-compliance. The amount of credit earned is determined by multiplying the number of 

tenths of a mpg by which a manufacturer exceeds a standard for a particular category of 

automobiles by the total volume of automobiles of that category manufactured by the 

manufacturer for a given model year. As discussed in more detail in Section IV.I, credits can be 

carried forward for 5 model years or back for 3, and can also be transferred between a 

manufacturer’s fleets or traded to another manufacturer. 

If a manufacturer’s passenger car or light truck CAFE level does not meet the applicable 

standard for that model year, NHTSA notifies the manufacturer. The manufacturer may use 

“banked” credits to make up the shortfall, but if there are no (or not enough) credits available, 

then the manufacturer has the option to submit a “carry back plan” to NHTSA. A carry back 

plan describes what the manufacturer plans to do in the following three model years to earn 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 72 of 770

enough credits to make up for the shortfall through future over-compliance. NHTSA must 

examine and determine whether to approve the plan. 

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

consideration of credits, EPCA provides for the assessing of civil penalties.81 The Act specifies 

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

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

average fuel economy falls short of the standard for a given model year multiplied by the total 

volume of those vehicles in the affected fleet (i.e., import or domestic passenger car, or light 

truck), manufactured for that model year. The amount of the penalty may not be reduced except 

under the unusual or extreme circumstances specified in the statute, which have never been 

exercised by NHTSA in the history of the CAFE program. 

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

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

provisions82 in the Safety Act and their absence in EPCA is believed to arise from the difference 

in the application of the safety standards and CAFE standards. A safety standard applies to 

individual vehicles; that is, each vehicle must possess the requisite equipment or feature that 

must provide the requisite type and level of performance. If a vehicle does not, it is 

noncompliant. Typically, a vehicle does not entirely lack an item or equipment or feature. 

Instead, the equipment or features fails to perform adequately. Recalling the vehicle to repair or 

replace the noncompliant equipment or feature can usually be readily accomplished. 

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

does not require that a particular individual vehicle be equipped with any particular equipment or 

feature or meet a particular level of fuel economy. It does require that the manufacturer’s fleet, 

as a whole, comply. Further, although under the attribute-based approach to setting CAFE 

standards fuel economy targets are established for individual vehicles based on their footprints, 

the individual vehicles are not required to meet or exceed those targets. However, as a practical 

matter, if a manufacturer chooses to design some vehicles that fall below their target levels of 

fuel economy, it will need to design other vehicles that exceed their targets if the manufacturer’s 

overall fleet average is to meet the applicable standard. 

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

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

noncompliant than any other vehicle in the fleet. 

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

82 49 U.S.C. 30120, Remedies for defects and noncompliance.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 73 of 770

2. EPA Statutory Authority 

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

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

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

technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the 

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

practicability of potential standards; the impacts of potential standards on emissions reductions 

of both GHGs and non-GHGs; the impacts of standards on oil conservation and energy security; 

the impacts of standards on fuel savings by consumers; the impacts of standards on the auto 

industry; other energy impacts; as well as other relevant factors such as impacts on safety 

Pursuant to Title II of the Clean Air Act, EPA has taken a comprehensive, integrated 

approach to mobile source emission control that has produced benefits well in excess of the costs 

of regulation. In developing the Title II program, the Agency’s historic, initial focus was on 

personal vehicles since that category represented the largest source of mobile source emissions. 

Over time, EPA has established stringent emissions standards for large truck and other heavyduty engines, nonroad engines, and marine and locomotive engines, as well. The Agency’s 

initial focus on personal vehicles has resulted in significant control of emissions from these 

vehicles, and also led to technology transfer to the other mobile source categories that made 

possible the stringent standards for these other categories. 

 As a result of Title II requirements, new cars and SUVs sold today have emissions levels 

of hydrocarbons, oxides of nitrogen, and carbon monoxide that are 98-99% lower than new 

vehicles sold in the 1960s, on a per mile basis. Similarly, standards established for heavy-duty 

highway and nonroad sources require emissions rate reductions on the order of 90% or more for 

particulate matter and oxides of nitrogen. Overall ambient levels of automotive-related 

pollutants are lower now than in 1970, even as economic growth and vehicle miles traveled have 

nearly tripled. These programs have resulted in millions of tons of pollution reduction and major 

reductions in pollution-related deaths (estimated in the tens of thousands per year) and illnesses. 

The net societal benefits of the mobile source programs are large. In its annual reports on federal 

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

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

Follow-up studies show that long-term compliance costs to the industry are typically lower than 

the cost projected by EPA at the time of regulation, which result in even more favorable real 

world benefit-to-cost ratios.83 Pollution reductions attributable to Title II mobile source controls 

are critical components to attainment of primary National Ambient Air Quality Standards, 

significantly reducing the national inventory and ambient concentrations of criteria pollutants, 

especially PM2.5 and ozone. See e.g. 69 FR 38958, 38967-68 (June 29, 2004) (controls on nonroad diesel engines expected to reduce entire national inventory of PM2.5 by 3.3% (86,000 tons) 

 83 OMB, 2011. 2011 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates 

on State, Local, and Tribal Entities. Office of Information and Regulatory Affairs. June. 

http://www.whitehouse.gov/sites/default/files/omb/inforeg/2011_cb/2011_cba_report.pdf. Website accessed on 

October 11, 2011. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 74 of 770

by 2020). Title II controls have also made enormous reductions in air toxics emitted by mobile 

sources. For example, as a result of EPA’s 2007 mobile source air toxics standards, the cancer 

risk attributable to total mobile source air toxics will be reduced by 30% in 2030 and the risk 

from mobile source benzene (a leukemogen) will be reduced by 37% in 2030. (reflecting 

reductions of over three hundred thousand tons of mobile source air toxic emissions) 72 FR 

8428, 8430 (Feb. 26, 2007). 

Title II emission standards have also stimulated the development of a much broader set of 

advanced automotive technologies, such as on-board computers and fuel injection systems, 

which are the building blocks of today’s automotive designs and have yielded not only lower 

pollutant emissions, but improved vehicle performance, reliability, and durability. 

This proposal implements a specific provision from Title II, section 202(a).84 Section 

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

(and from time to time revise)...standards applicable to the emission of any air pollutant from 

any class or classes of new motor vehicles ..., which in his judgment cause, or contribute to, air 

pollution which may reasonably be anticipated to endanger public health or welfare.” If EPA 

makes the appropriate endangerment and cause or contribute findings, then section 202(a) 

authorizes EPA to issue standards applicable to emissions of those pollutants. 

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

their useful life.” Emission standards set by the EPA under CAA section 202(a)(1) are 

technology-based, as the levels chosen must be premised on a finding of technological 

feasibility. Thus, standards promulgated under CAA section 202(a) are to take effect only “after 

providing such period as the Administrator finds necessary to permit the development and 

application of the requisite technology, giving appropriate consideration to the cost of 

compliance within such period” (section 202 (a)(2); see also NRDC v. EPA, 655 F. 2d 318, 322 

(D.C. Cir. 1981)). EPA is afforded considerable discretion under section 202(a) when assessing 

issues of technical feasibility and availability of lead time to implement new technology. Such 

determinations are “subject to the restraints of reasonableness”, which “does not open the door to 

‘crystal ball’ inquiry.” NRDC, 655 F. 2d at 328, quoting International Harvester Co. v. 

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

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

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

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

industry will be able to solve those problems in the time remaining. The EPA is not required to 

rebut all speculation that unspecified factors may hinder ‘real world’ emission control.” NRDC, 

655 F. 2d at 333-34. In developing such technology-based standards, EPA has the discretion to 

consider different standards for appropriate groupings of vehicles (“class or classes of new motor 

 84 42 U.S.C. 7521 (a) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 75 of 770

vehicles”), or a single standard for a larger grouping of motor vehicles (NRDC, 655 F. 2d at 

338). 

Although standards under CAA section 202(a)(1) are technology-based, they are not 

based exclusively on technological capability. EPA has the discretion to consider and weigh 

various factors along with technological feasibility, such as the cost of compliance (see section 

202(a) (2)), lead time necessary for compliance (section 202(a)(2)), safety (see NRDC, 655 F. 2d 

at 336 n. 31) and other impacts on consumers,85 and energy impacts associated with use of the 

technology. See George E. Warren Corp. v. EPA, 159 F.3d 616, 623-624 (D.C. Cir. 1998) 

(ordinarily permissible for EPA to consider factors not specifically enumerated in the Act). 

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

technology forcing when EPA considers that to be appropriate, but is not required to do so (as 

compared to standards set under provisions such as section 202(a)(3) and section 213(a)(3)). 

EPA has interpreted a similar statutory provision, CAA section 231, as follows: 

While the statutory language of section 231 is not identical to other provisions in title II 

of the CAA that direct EPA to establish technology-based standards for various types of 

engines, EPA interprets its authority under section 231 to be somewhat similar to those 

provisions that require us to identify a reasonable balance of specified emissions 

reduction, cost, safety, noise, and other factors. See, e.g., Husqvarna AB v. EPA, 254 

F.3d 195 (DC Cir. 2001) (upholding EPA’s promulgation of technology-based standards 

for small non-road engines under section 213(a)(3) of the CAA). However, EPA is not 

compelled under section 231 to obtain the ‘‘greatest degree of emission reduction 

achievable’’ as per sections 213 and 202 of the CAA, and so EPA does not interpret the 

Act as requiring the agency to give subordinate status to factors such as cost, safety, and 

noise in determining what standards are reasonable for aircraft engines. Rather, EPA has 

greater flexibility under section 231 in determining what standard is most reasonable for 

aircraft engines, and is not required to achieve a ‘‘technology forcing’’ result.86 

This interpretation was upheld as reasonable in NACAA v. EPA, (489 F.3d 1221, 1230 

(D.C. Cir. 2007)). CAA section 202(a) does not specify the degree of weight to apply to each 

factor, and EPA accordingly has discretion in choosing an appropriate balance among factors. 

See Sierra Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) (even where a provision is 

technology-forcing, the provision “does not resolve how the Administrator should weigh all [the 

statutory] factors in the process of finding the 'greatest emission reduction achievable’”). Also 

see Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) (great discretion to balance 

 85 Since its earliest Title II regulations, EPA has considered the safety of pollution control technologies. See 45 

Fed.Reg. 14,496, 14,503 (1980).("EPA would not require a particulate control technology that was known to involve 

serious safety problems. If during the development of the trap-oxidizer safety problems are discovered, EPA would 

reconsider the control requirements implemented by this rulemaking"). 

86 70 FR 69664, 69676, November 17, 2005. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 76 of 770

statutory factors in considering level of technology-based standard, and statutory requirement “to 

[give appropriate] consideration to the cost of applying ... technology” does not mandate a 

specific method of cost analysis); see also Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 

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

a zone of reasonableness, not whether its numbers are precisely right”); Permian Basin Area Rate 

Cases, 390 U.S. 747, 797 (1968) (same); Federal Power Commission v. Conway Corp., 426 U.S. 

271, 278 (1976) (same); Exxon Mobil Gas Marketing Co. v. FERC, 297 F. 3d 1071, 1084 (D.C. 

Cir. 2002) (same). 

a. EPA’s Testing Authority 

Under section 203 of the CAA, sales of vehicles are prohibited unless the vehicle is 

covered by a certificate of conformity. EPA issues certificates of conformity pursuant to section 

206 of the Act, based on (necessarily) pre-sale testing conducted either by EPA or by the 

manufacturer. The Federal Test Procedure (FTP or ‘‘city’’ test) and the Highway Fuel Economy 

Test (HFET or ‘‘highway’’ test) are used for this purpose. Compliance with standards is 

required not only at certification but throughout a vehicle’s useful life, so that testing 

requirements may continue post-certification. Useful life standards may apply an adjustment 

factor to account for vehicle emission control deterioration or variability in use (section 206(a)). 

Pursuant to EPCA, EPA is required to measure fuel economy for each model and to 

calculate each manufacturer’s average fuel economy.87 EPA uses the same tests – the FTP and 

HFET – for fuel economy testing. EPA established the FTP for emissions measurement in the 

early 1970s. In 1976, in response to the Energy Policy and Conservation Act (EPCA) statute, 

EPA extended the use of the FTP to fuel economy measurement and added the HFET.88 The 

provisions in the 1976 regulation, effective with the 1977 model year, established procedures to 

calculate fuel economy values both for labeling and for CAFE purposes. Under EPCA, EPA is 

required to use these procedures (or procedures which yield comparable results) for measuring 

fuel economy for cars for CAFE purposes, but not for labeling purposes.89 EPCA does not pose 

this restriction on CAFE test procedures for light trucks, but EPA does use the FTP and HFET 

for this purpose. EPA determines fuel economy by measuring the amount of CO2 and all other 

carbon compounds (e.g. total hydrocarbons (THC) and carbon monoxide (CO)), and then, by 

mass balance, calculating the amount of fuel consumed. EPA’s proposed changes to the 

procedures for measuring fuel economy and calculating average fuel economy are discussed in 

section III.B.10. 

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

88 See 41 FR 38674 (Sept. 10, 1976), which is codified at 40 CFR Part 600. 89 See 49 U.S.C. 32904(c). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 77 of 770

b. EPA Enforcement Authority 

Section 207 of the CAA grants EPA broad authority to require manufacturers to remedy 

vehicles if EPA determines there are a substantial number of noncomplying vehicles. In 

addition, section 205 of the CAA authorizes EPA to assess penalties of up to $37,500 per vehicle 

for violations of various prohibited acts specified in the CAA. In determining the appropriate 

penalty, EPA must consider a variety of factors such as the gravity of the violation, the economic 

impact of the violation, the violator’s history of compliance, and “such other matters as justice 

may require.” Unlike EPCA, the CAA does not authorize vehicle manufacturers to pay fines in 

lieu of meeting emission standards. 

c. Compliance 

EPA oversees testing, collects and processes test data, and performs calculations to 

determine compliance with both CAA and CAFE standards. CAA standards apply not only at 

the time of certification but also throughout the vehicle’s useful life, and EPA is accordingly is 

proposing in-use standards as well as standards based on testing performed at time of production. 

See section III.E. Both the CAA and EPCA provide for penalties should manufacturers fail to 

comply with their fleet average standards, but, unlike EPCA, there is no option for manufacturers 

to pay fines in lieu of compliance with the standards. Under the CAA, penalties are typically 

determined on a vehicle-specific basis by determining the number of a manufacturer’s highest 

emitting vehicles that cause the fleet average standard violation. Penalties under Title II of the 

CAA are capped at $25,000 per day of violation and apply on a per vehicle basis. CAA section 

205 (a). 

d. Test Procedures 

EPA establishes the test procedures under which compliance with both the CAA GHG 

standards and the EPCA fuel economy standards are measured. EPA’s testing authority under 

the CAA is flexible, but testing for fuel economy for passenger cars is by statute is limited to the 

Federal Test procedure (FTP) or test procedures which provide results which are equivalent to 

the FTP. 49 USC section 32904 and section III.B, below. EPA developed and established the 

FTP in the early 1970s and, after enactment of EPCA in 1976, added the Highway Fuel 

Economy Test to be used in conjunction with the FTP for fuel economy testing. EPA has also 

developed tests with additional cycles (the so-called 5-cycle test) which test is used for purposes 

of fuel economy labeling and is also used in the EPA program for extending off-cycle credits 

under both the light-duty and (along with NHTSA) heavy-duty vehicle GHG programs. See 75 

FR at 25439; 76 FR at 57252. In this rule, EPA is proposing to retain the FTP and HFET for 

purposes of testing the fleetwide average standards, and is further proposing modifications to the 

N2O measurement test procedures and the A/C CO2 efficiency test procedures EPA initially 

adopted in the 2012-2016 rule. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 78 of 770

3. Comparing the Agencies’ Authority 

As the above discussion makes clear, there are both important differences between the 

statutes under which each agency is acting as well as several important areas of similarity. One 

important difference is that EPA’s authority addresses various GHGs, while NHTSA’s authority 

addresses fuel economy as measured under specified test procedures and calculated by EPA. 

This difference is reflected in this rulemaking in the scope of the two standards: EPA’s proposal 

takes into account reductions of direct air conditioning emissions, as well as proposed standards 

for methane and N2O, but NHTSA’s does not, because these things do not relate to fuel 

economy. A second important difference is that EPA is proposing certain compliance 

flexibilities, such as the multiplier for advanced technology vehicles, and takes those flexibilities 

into account in its technical analysis and modeling supporting its proposal. EPCA specifies a 

number of particular compliance flexibilities for CAFE, and expressly prohibits NHTSA from 

considering the impacts of those statutory compliance flexibilities in setting the CAFE standard 

so that the manufacturers’ election to avail themselves of the permitted flexibilities remains 

strictly voluntary.90 The Clean Air Act, on the other hand, contains no such prohibition. These 

considerations result in some differences in the technical analysis and modeling used to support 

EPA’s and NHTSA’s proposed standards. 

Another important area where the two agencies’ authorities are similar but not identical 

involves the transfer of credits between a single firm’s car and truck fleets. EISA revised EPCA 

to allow for such credit transfers, but placed a cap on the amount of CAFE credits which can be 

transferred between the car and truck fleets. 49 U.S.C. 32903(g)(3). Under CAA section 202(a), 

EPA is proposing to continue to allow CO2 credit transfers between a single manufacturer’s car 

and truck fleets, with no corresponding limits on such transfers. In general, the EISA limit on 

CAFE credit transfers is not expected to have the practical effect of limiting the amount of CO2 

emission credits manufacturers may be able to transfer under the CAA program, recognizing that 

manufacturers must comply with both the proposed CAFE standards and the proposed EPA 

standards. However, it is possible that in some specific circumstances the EPCA limit on CAFE 

credit transfers could constrain the ability of a manufacturer to achieve cost savings through 

unlimited use of GHG emissions credit transfers under the CAA program. 

These differences, however, do not change the fact that in many critical ways the two 

agencies are charged with addressing the same basic issue of reducing GHG emissions and 

improving fuel economy. Given the direct relationship between emissions of CO2 and fuel 

economy levels, both agencies are looking at the same set of control technologies (with the 

exception of the air conditioning leakage-related technologies). The standards set by each 

agency will drive the kind and degree of penetration of this set of technologies across the vehicle 

fleet. As a result, each agency is trying to answer the same basic question – what kind and 

degree of technology penetration is necessary to achieve the agencies’ objectives in the 

rulemaking time frame, given the agencies’ respective statutory authorities? 

In making the determination of what standards are appropriate under the CAA and 

EPCA, each agency is to exercise its judgment and balance many similar factors. NHTSA’s 

factors are provided by EPCA: technological feasibility, economic practicability, the effect of 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 79 of 770

other motor vehicle standards of the Government on fuel economy, and the need of the United 

States to conserve energy. EPA has the discretion under the CAA to consider many related 

factors, such as the availability of technologies, the appropriate lead time for introduction of 

technology, and based on this the feasibility and practicability of their standards; the impacts of 

their standards on emissions reductions (of both GHGs and non-GHGs); the impacts of their 

standards on oil conservation; the impacts of their standards on fuel savings by consumers; the 

impacts of their standards on the auto industry; as well as other relevant factors such as impacts 

on safety. Conceptually, therefore, each agency is considering and balancing many of the same 

concerns, and each agency is making a decision that at its core is answering the same basic 

question of what kind and degree of technology penetration is it appropriate to call for in light of 

all of the relevant factors in a given rulemaking, for the model years concerned. Finally, each 

agency has the authority to take into consideration impacts of the standards of the other agency. 

EPCA calls for NHTSA to take into consideration the effects of EPA’s emissions standards on 

fuel economy capability (see 49 U.S.C. 32902 (f)), and EPA has the discretion to take into 

consideration NHTSA’s CAFE standards in determining appropriate action under section 202(a). 

This is consistent with the Supreme Court’s statement that EPA’s mandate to protect public 

health and welfare is wholly independent from NHTSA’s mandate to promote energy efficiency, 

but there is no reason to think the two agencies cannot both administer their obligations and yet 

avoid inconsistency. Massachusetts v. EPA, 549 U.S. 497, 532 (2007). 

In this context, it is in the Nation’s interest for the two agencies to continue to work 

together in developing their respective proposed standards, and they have done so. For example, 

the agencies have committed considerable effort to develop a joint Technical Support Document 

that provides a technical basis underlying each agency’s analyses. The agencies also have 

worked closely together in developing and reviewing their respective modeling, to develop the 

best analysis and to promote technical consistency. The agencies have developed a common set 

of attribute-based curves that each agency supports as appropriate both technically and from a 

policy perspective. The agencies have also worked closely to ensure that their respective 

programs will work in a coordinated fashion, and will provide regulatory compatibility that 

allows auto manufacturers to build a single national light-duty fleet that would comply with both 

the GHG and the CAFE standards. The resulting overall close coordination of the proposed 

GHG and CAFE standards should not be surprising, however, as each agency is using a jointly 

developed technical basis to address the closely intertwined challenges of energy security and 

climate change. 

As set out in detail in Sections III and IV of this notice, both EPA and NHTSA believe 

the agencies’ proposals are fully justified under their respective statutory criteria. The proposed 

standards are feasible in each model year within the lead time provided, based on the agencies’ 

projected increased use of various technologies which in most cases are already in commercial 

application in the fleet to varying degrees. Detailed modeling of the technologies that could be 

employed by each manufacturer supports this initial conclusion. The agencies also carefully 

assessed the costs of the proposed rules, both for the industry as a whole and per manufacturer, 

as well as the costs per vehicle, and consider these costs to be reasonable during the rulemaking 

time frame and recoverable (from fuel savings). The agencies recognize the significant increase 

in the application of technology that the proposed standards would require across a high 

percentage of vehicles, which will require the manufacturers to devote considerable engineering 

and development resources before 2017 laying the critical foundation for the widespread 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 80 of 770

deployment of upgraded technology across a high percentage of the 2017-2025 fleet. This 

clearly will be challenging for automotive manufacturers and their suppliers, especially in the 

current economic climate, and given the stringency of the recently-established MYs 2012-2016 

standards. However, based on all of the analyses performed by the agencies, our judgment is 

that it is a challenge that can reasonably be met. 

The agencies also evaluated the impacts of these standards with respect to the expected 

reductions in GHGs and oil consumption and, found them to be very significant in magnitude. 

The agencies considered other factors such as the impacts on noise, energy, and vehicular 

congestion. The impact on safety was also given careful consideration. Moreover, the agencies 

quantified the various costs and benefits of the proposed standards, to the extent practicable. The 

agencies’ analyses to date indicate that the overall quantified benefits of the proposed standards 

far outweigh the projected costs. All of these factors support the reasonableness of the proposed 

standards. See section III (proposed GHG standards) and section IV (proposed CAFE standards) 

for a detailed discussion of each agency’s basis for its selection of its proposed standards. 

The fact that the benefits are estimated to considerably exceed their costs supports the 

view that the proposed standards represent an appropriate balance of the relevant statutory 

factors. In drawing this conclusion, the agencies acknowledge the uncertainties and limitations 

of the analyses. For example, the analysis of the benefits is highly dependent on the estimated 

price of fuel projected out many years into the future. There is also significant uncertainty in the 

potential range of values that could be assigned to the social cost of carbon. There are a variety 

of impacts that the agencies are unable to quantify, such as non-market damages, extreme 

weather, socially contingent effects, or the potential for longer-term catastrophic events, or the 

impact on consumer choice. The cost-benefit analyses are one of the important things the 

agencies consider in making a judgment as to the appropriate standards to propose under their 

respective statutes. Consideration of the results of the cost-benefit analyses by the agencies, 

however, includes careful consideration of the limitations discussed above. 

II. Joint Technical Work Completed for This Proposal 

E. Introduction 

In this section, NHTSA and EPA discuss several aspects of their joint technical analyses. 

These analyses are common to the development of each agency’s standards. Specifically we 

discuss: the development of the vehicle market forecast used by each agency for assessing costs, 

benefits, and effects, the development of the attribute-based standard curve shapes, the 

technologies the agencies evaluated and their costs and effectiveness, the economic assumptions 

the agencies included in their analyses, a description of the air conditioning and off-cycle 

technology (credit) programs, as well as the effects of the proposed standards on vehicle safety. 

The Joint Technical Support Document (TSD) discusses the agencies’ joint technical work in 

more detail. 

The agencies have based today’s proposal on a very significant body of data and analysis that 

is the best information currently available on the full range of technical inputs utilized in our 

respective analyses. As noted in various places throughout this preamble, the draft Joint TSD, 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 81 of 770

the NHTSA preliminary RIA, and the EPA draft RIA we expect new information will become 

available between the proposal and final rulemaking. This new information will come from a 

range of sources: some is based on work the agencies have underway (e.g., work on technology 

costs and effectiveness, potentially updating our baseline year from model year 2008 to model 

year 2010); other sources are those we expect to be released by others (e.g., the Energy 

Information Agency’s Annual Energy Outlook, which is published each year, and which we 

expect to use the most recent available for the final rule); and other information will likely come 

from the public comment process. The agencies intend to evaluate all such new information as 

it becomes available, and where appropriate to update their analysis for purposes of the final 

rule. In addition, new information or analyses may be made available in the agencies’ respective 

public dockets for this rulemaking prior to the final rule, where that is appropriate. We 

encourage all stakeholders to periodically check the two agencies’ dockets between the proposal 

and final rules for any potential new docket submissions. 

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

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

In order to calculate the impacts of the EPA and NHTSA regulations, it is necessary to 

estimate the composition of the future vehicle fleet absent these regulations, to provide a 

reference point relative to which costs, benefits, and effects of the regulations are assessed. As 

in the 2012-2016 light duty vehicle rulemaking, EPA and NHTSA have developed this 

comparison fleet in two parts. The first step was to develop a baseline fleet based on model year 

2008 data. This baseline includes vehicle sales volumes, GHG/fuel economy performance, and 

contains a listing of the base technologies on every 2008 vehicle sold. The second step was to 

project that baseline fleet volume into model years 2017-2025. The vehicle volumes projected 

out to MY 2025 is referred to as the reference fleet volumes. The third step was to modify that 

MY 2017-2025 reference fleet such that it reflects technology manufacturers could apply if MY 

2016 standards are extended without change through MY 2025.91 Each agency used its 

modeling system to develop a modified or final reference fleet, or adjusted baseline, for use in its 

analysis of regulatory alternatives, as discussed below in Chapter 1 of the EPA draft RIA and 

[insert reference to DOT section], and in the agencies’ respective preliminary regulatory impact 

analyses. All of the agencies’ estimates of emission reductions, fuel economy improvements, 

costs, and societal impacts are developed in relation to the respective reference fleets. This 

section discusses the first two steps, development of the baseline fleet and the reference fleet. 

EPA and NHTSA used a transparent approach to developing the baseline and reference 

fleets, largely working from publicly available data. Because both input and output sheets from 

 91 EPA’s MY 2016 GHG standards under the CAA continue into the future until they are changed. While NHTSA 

must actively promulgate standards in order for CAFE standards to extend past MY 2016, the agency has, as in all 

recent CAFE rulemakings, defined a no-action (i.e., baseline) regulatory alternative as an indefinite extension of the 

last-promulgated CAFE standards for purposes of the main analysis of the standards in this preamble. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 82 of 770

our modeling are public, stakeholders can verify and check EPA’s and NHTSA’s modeling, and 

perform their own analyses with these datasets.92

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

NHTSA and EPA developed a baseline fleet comprised of model year 2008 data gathered 

from EPA’s emission and fuel economy database. This baseline fleet was originally developed 

by EPA and NHTSA for the 2012-2016 final rule, and was updated for this proposal.93 The new 

fleet has the model year 2008 vehicle’s volumes and attributes along with the addition of 

projected volumes from 2017 to 2025. It also has some expanded footprint data for pickup 

trucks that was needed for a more detailed analysis of the truck curve. 

In this proposed rulemaking, the agencies are again choosing to use model year 2008 

vehicle data to be the basis of the baseline fleet, but for different reasons than in the 2012-2016 

final rule. Model year 2008 is now the most recent model year for which the industry had 

normal sales. Model year 2009 data is available, but the agencies believe that model year was 

disrupted by the economic downturn and the bankruptcies of both General Motors and Chrysler 

resulting in a significant reduction in the number of vehicles sold by both companies and the 

industry as a whole. These abnormalities led the agencies to conclude that 2009 data was not 

representative for projecting the future fleet. Model Year 2010 data was not complete because 

not all manufacturers have yet submitted it to EPA, and was thus not available in time for it to be 

used for this proposal. Therefore, the agencies chose to use model year 2008 again as the 

baseline since it was the latest complete representative and transparent data set available. 

However, the agencies will consider using Model Year 2010 for the final rule, based on 

availability and an analysis of the data representativeness. To the extent the MY 2010 data 

becomes available during the comment period the agencies will place a copy of this data in our 

respective dockets. We request comments on the relative merits of using MY 2008 and MY 2010 

data, and whether one provides a better foundation than the other for purposes of using such data 

as the foundation for a market forecast extending through MY 2025. 

The baseline fleet reflects all fuel economy technologies in use on MY 2008 light duty 

vehicles. The 2008 emission and fuel economy database included data on vehicle production 

volume, fuel economy, engine size, number of engine cylinders, transmission type, fuel type, 

etc., however it did not contain complete information on technologies. Thus, the agencies relied 

on publicly available data like the more complete technology descriptions from Ward’s 

 92 EPA’s Omega Model and input sheets are available at http://www.epa.gov/oms/climate/models.htm; 

DOT/NHTSA’s CAFE Compliance and Effects Modeling System (commonly known as the “Volpe Model”) and 

input and output sheets are available at http://www.nhtsa.gov/fuel-economy [we’ll have a more specific cite once we 

get the website settled, making changes right now]. 

93 Further discussion of the development of the 2008 baseline fleet for the MY2012-2016 rule can be found at 75 

Fed. Reg. 25324, 25349 (May 7, 2010). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 83 of 770

Automotive Group.94 In a few instances when required vehicle information (such as vehicle 

footprint) was not available from these two sources, the agencies obtained this information from 

publicly accessible internet sites such as Motortrend.com and Edmunds.com.95 A description of 

all of the technologies used in modeling the 2008 vehicle fleet and how it was constructed are 

available in Chapter 1 of the Joint Draft TSD. 

Footprint data for the baseline fleet came mainly from internet searches, though detailed 

information about the pickup truck footprints with volumes was not available online. Where this 

information was lacking, the agencies used manufacturer product plan data for 2008 model year 

to find out the correct number footprint and distribution of footprints. The footprint data for 

pickup trucks was expanded from the original data used in the previous rulemaking. The 

agencies obtained this footprint data from MY 2008 product plans submitted by the various 

manufacturers, which can be made public at this time because by now all MY 2008 vehicle 

models are already in production, which makes footprint data about them essentially public 

information. A description of exactly how the agencies obtained all the footprints is available in 

Chapter 1 of the TSD. 

3. How Did the Agencies Develop the Projected MY 2017-2025 Vehicle Reference 

Fleet? 

As in the 2012-2016 light duty vehicle rulemaking, EPA and NHTSA have based the 

projection of total car and total light truck sales for MYs 2017-2025 on projections made by the 

Department of Energy’s Energy Information Administration (EIA). See 75 FR at 25349. EIA 

publishes a mid-term projection of national energy use called the Annual Energy Outlook 

(AEO). This projection utilizes a number of technical and econometric models which are 

designed to reflect both economic and regulatory conditions expected to exist in the future. In 

support of its projection of fuel use by light-duty vehicles, EIA projects sales of new cars and 

light trucks. EIA published its Early Annual Energy Outlook for 2011 in December 2010. EIA 

released updated data to NHTSA in February (Interim AEO). The final release of AEO for 2011 

came out in May 2011, but by that time EPA/NHTSA had already prepared modeling runs for 

potential 2017-2025 standards using the interim data release to NHTSA. EPA and NHTSA are 

using the interim data release for this proposal, but intend to use the newest version of AEO 

available for the FRM. 

The agencies used the Energy Information Administration’s (EIA’s) National Energy 

Modeling System (NEMS) to estimate the future relative market shares of passenger cars and 

light trucks. However, NEMS methodology includes shifting vehicle sales volume, starting after 

2007, away from fleets with lower fuel economy (the light-truck fleet) towards vehicles with 

higher fuel economies (the passenger car fleet) in order to facilitate projected compliance with 

 94 Note that WardsAuto.com is a fee-based service, but all information is public to subscribers. 

95 Motortrend.com and Edmunds.com are free, no-fee internet sites. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 84 of 770

CAFE and GHG standards. Because we use our market projection as a baseline relative to which 

we measure the effects of new standards, and we attempt to estimate the industry’s ability to 

comply with new standards without changing product mix (i.e., we analyze the effects of the 

proposed rules assuming manufacturers will not change fleet composition as a compliance 

strategy, as opposed to changes that might happen due to market forces), the Interim AEO 2011-

projected shift in passenger car market share as a result of required fuel economy improvements 

creates a circularity. Therefore, for the current analysis, the agencies developed a new projection 

of passenger car and light truck sales shares by running scenarios from the Interim AEO 2011 

reference case that first deactivate the above-mentioned sales-volume shifting methodology and 

then hold post-2017 CAFE standards constant at MY 2016 levels. As discussed in Chapter 1 of 

the agencies’ joint Technical Support Document, incorporating these changes reduced the 

NEMS-projected passenger car share of the light vehicle market by an average of about 5% 

during 2017-2025. 

In the AEO 2011 Interim data, EIA projects that total light-duty vehicle sales will 

gradually recover from their currently depressed levels by around 2013. In 2017, car sales are 

projected to be 8.4 million (53 percent) and truck sales are projected to be 7.3 million (47 

percent). Although the total level of sales of 15.8 million units is similar to pre-2008 levels, the 

fraction of car sales is projected to be higher than that existing in the 2000-2007 timeframe. This 

projection reflects the impact of assumed higher fuel prices. Sales projections of cars and trucks 

for future model years can be found in Chapter 1 of the joint TSD. 

In addition to a shift towards more car sales, sales of segments within both the car and 

truck markets have been changing and are expected to continue to change. Manufacturers are 

introducing more crossover models which offer much of the utility of SUVs but use more carlike designs. The AEO 2011 report does not, however, distinguish such changes within the car 

and truck classes. In order to reflect these changes in fleet makeup, EPA and NHTSA used CSM 

Worldwide (CSM) as they did in the 2012-2016 rulemaking analysis. EPA and NHTSA believe 

that CSM is the best source available for a long range forecast for 2017-2025, though when EPA 

and NHTSA contacted several forecasting firms none of them offered comparably-detailed 

forecasting for that time frame. NHTSA and EPA decided to use the forecast from CSM for 

several reasons presented in the Joint TSD chapter I. 

The long range forecast from CSM Worldwide is a custom forecast covering the years 

2017-2025 which the agencies purchased from CSM in December of 2009. CSM provides 

quarterly sales forecasts for the automotive industry, and updates their data on the industry 

quarter. For the public’s reference, a copy of CSM’s long range forecast has been placed in the 

docket for this rulemaking.96 EPA and NHTSA hope to purchase and use an updated forecast, 

whether from CSM or other appropriate sources, before the final rulemaking. To the extent that 

 96 The CSM Sales Forecast Excel file (“CSM North America Sales Forecasts 2017-2025 for the Docket”) is 

available in the docket (Docket EPA-HQ-OAR-2010-0799). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 85 of 770

such a forecast becomes available during the comment period the agencies will place a copy in 

our respective dockets. 

The next step was to project the CSM forecasts for relative sales of cars and trucks by 

manufacturer and by market segment onto the total sales estimates of AEO 2011. Table 0-1 and 

Table 0-2 show the resulting projections for the reference 2025 model year and compare these to 

actual sales that occurred in the baseline 2008 model year. Both tables show sales using the 

traditional definition of cars and light trucks. 

Table 0-1 Annual Sales of Light-Duty Vehicles by Manufacturer in 2008 and 

Estimated for 2025 

 Cars Light Trucks Total 

 2008 MY 2025 MY 2008 MY 2025 MY 2008 MY 2025 MY 

Aston 

Martin 1,370 1,182 0 0 1,370 1,182

BMW 291,796 405,256 61,324 145,409 353,120 550,665

Chrysler/Fiat 703,158 436,479 956,792 331,762 1,659,950 768,241

Daimler 208,195 340,719 79,135 101,067 287,330 441,786

Ferrari 1,450 7,658 0 0 1,450 7,658

Ford 956,699 1,540,109 814,194 684,476 1,770,893 2,224,586

Geely/Volvo 65,649 101,107 32,748 42,588 98,397 143,696

GM 1,587,391 1,673,936 1,507,797 1,524,008 3,095,188 3,197,943

Honda 1,006,639 1,340,321 505,140 557,697 1,511,779 1,898,018

Hyundai 337,869 677,250 53,158 168,136 391,027 845,386

Kia 221,980 362,783 59,472 97,653 281,452 460,436

Lotus 252 316 0 0 252 316

Mazda 246,661 306,804 55,885 61,368 302,546 368,172

Mitsubishi 85,358 73,305 15,371 36,387 100,729 109,692

Nissan 717,869 1,014,775 305,546 426,454 1,023,415 1,441,229

Porsche 18,909 40,696 18,797 11,219 37,706 51,915

Spyker/Saab 21,706 23,130 4,250 3,475 25,956 26,605

Subaru 116,035 256,970 82,546 74,722 198,581 331,692

Suzuki 79,339 103,154 35,319 21,374 114,658 124,528

Tata/JLR 9,596 65,418 55,584 56,805 65,180 122,223

Tesla 800 31,974 0 0 800 31,974

Toyota 1,260,364 2,108,053 951,136 1,210,016 2,211,500 3,318,069

Volkswagen 291,483 630,163 26,999 154,284 318,482 784,447

Total 8,230,568 11,541,560 5,621,193 5,708,899 13,851,761 17,250,459
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 86 of 770

Table 0-2 Annual Sales of Light-Duty Vehicles by Market Segment in 2008 and 

Estimated for 2025 

Cars Light Trucks 

 2008 MY 2025 MY 2008 MY 2025 MY

Full-Size Car 829,896 245,355 Full-Size Pickup 1,332,335 1,002,806

Luxury Car 1,048,341 1,637,410 Mid-Size Pickup 452,013 431,272

Mid-Size Car 2,103,108 2,713,078 Full-Size Van 33,384 88,572

Mini Car 617,902 1,606,114 Mid-Size Van 719,529 839,452

Small Car 1,912,736 2,826,190 Mid-Size MAV* 110,353 548,457

Specialty Car 469,324 808,183 Small MAV 231,265 239,065

 Full-Size SUV* 559,160 46,978

 Mid-Size SUV 436,080 338,849

 Small SUV 196,424 71,827

 Full-Size CUV* 264,717 671,665

 Mid-Size CUV 923,165 1,259,483

 Small CUV 1,612,029 1,875,703

Total Sales** 6,981,307 9,836,330 6,870,454 7,414,129

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

**Total Sales are based on the classic Car/Truck definition. 

As mentioned previously, NHTSA has changed the definition of a truck for 2011 model 

year and beyond. The new definition has moved some 2 wheel drive SUVs and CUVs to the car 

category. Table 0-3 shows the different volumes for car and trucks based on the new and old 

NHTSA definition. The table shows the difference in 2008, 2021, and 2025 to give a feel for 

how the change in definition changes the car/truck split. 

Table 0-3 New and Old Car and Truck definition in 2008, 2016, 2021, and 2025 

Vehicle Type 2008 2016 2021 2025

Old Cars 

Definition 

 

6,981,307 8,576,717 8,911,173 9,836,330 

New Cars 

Definition 

 

8,230,568 7,618,459 10,505,165 11,541,560 

 

Old Truck 

Definition 

 

6,870,454 10,140,463 7,277,894 7,414,129 

New Truck 

Definition 

 

5,621,193 6,054,713 5,683,902 5,708,899 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 87 of 770

The CSM forecast provides estimates of car and truck sales by segment and by 

manufacturer separately. The forecast was broken up into two tables. One table with 

manufacturer volumes by year and the other with vehicle segments percentages by year. Table 

0-4 and Table 0-5 are examples of the data received from CSM. The task of estimating future 

sales using these tables is complex. We used the same methodology as in the previous 

rulemaking. A detailed description of how the projection process was done is found in Chapter 1 

of the TSD. 

Table 0-4 CSM Manufacturer Volumes in 2016, 2021, and 2025 

2016 2021 2025

BMW 328,220 325,231 317,178

Chrysler/Fiat 391,165 346,960 316,043

Daimler 298,676 272,049 271,539

Ford* 971,617 893,528 858,215

Subaru 205,486 185,281 181,062

General Motors 1,309,246 1,192,641 1,135,305

Honda 1,088,449 993,318 984,401

Hyundai 429,926 389,368 377,500

Kia 234,246 213,252 205,473

Mazda 215,117 200,003 199,193

Mitsubishi 47,414 42,693 42,227

Spyker/Saab 66 6

Tesla 800 800 800

Aston Martin 1,370 1,370 1,370

Lotus 252 252 252

Porsche 12 12 12

Nissan 803,177 729,723 707,361

Suzuki 88,142 81,042 76,873

Tata/JLR 58,594 53,143 52,069

Toyota 1,751,661 1,576,499 1,564,975

Volkswagen 578,420 530,378 494,596

*Ford volumes include Volvo in this table. 

Table 0-5 CSM Segment Percentages in 2016, 2021, and 2025 

2016 2021 2025

Full-Size CUV 3.66% 8.34% 9.06%

Full-Size Pickup 19.39% 15.42% 13.53%

Full-Size SUV 3.27% 0.90% 0.63%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 88 of 770

Full-Size Van 0.92% 1.29% 1.19%

Mid-Size CUV 19.29% 16.88% 16.99%

Mid-Size MAV 1.63% 5.93% 7.40%

Mid-Size Pickup 4.67% 5.74% 5.82%

Mid-Size SUV 2.28% 4.73% 4.57%

Mid-Size Van 11.80% 11.63% 11.32%

Small CUV 30.67% 25.06% 25.30%

Small MAV 0.88% 2.98% 3.22%

Small Pickup 0.00% 0.00% 0.00%

Small SUV 1.53% 1.12% 0.97%

The overall result was a projection of car and truck sales for model years 2017-2025--the 

reference fleet--which matched the total sales projections of the AEO forecast and the 

manufacturer and segment splits of the CSM forecast. These sales splits are shown in Table 0-6 

below. 

Table 0-6 Car and Truck Volumes and Split Based on NHTSA New Truck 

Definition 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Car Volume* 10,140 9,988 9,905 9,996 10,292 10,505 10,736 10,968 11,258 11,542 

Truck Volume* 6,054 5,819 5,671 5,583 5,604 5,684 5,704 5,687 5,676 5,709 

Car Split 62.6% 63.2% 63.6% 64.2% 64.7% 64.9% 65.3% 65.9% 66.5% 66.9% 

Truck Split 37.4% 36.8% 36.4% 35.8% 35.3% 35.1% 34.7% 34.1% 33.5% 33.1% 

*in thousands 

Given publicly- and commercially-available sources that can be made equally transparent 

to all reviewers, the forecast described above represents the agencies’ best technical judgment 

regarding the likely composition direction of the fleet. EPA and NHTSA recognize that it is 

impossible to predict with certainty how manufacturers’ product offerings and sales volumes will 

evolve through MY 2025 under baseline conditions—that is, without further changes in 

standards after MY 2016. The agencies have not developed alternative market forecasts to 

examine corresponding sensitivity of analytical results discussed below, and have not varied the 

market forecast when conducting probabilistic uncertainty analysis discussed in NHTSA’s 

preliminary Regulatory Impact Analysis. The agencies invite comment regarding alternative 

methods or projections to inform forecasts of the future fleet at the level of specificity and 

technical completeness required by the agencies’ respective modeling systems. 

The final step in the construction of the final reference fleet involves applying additional 

technology to individual vehicle models—that is, technology beyond that already present in MY 

2008——reflecting already-promulgated standards through MY 2016, and reflecting the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 89 of 770

assumption that MY 2016 standards would apply through MY 2025. A description of the 

agencies’ modeling work to develop their respective final reference (or adjusted baseline) fleets 

appear below in Sections III and IV of this preamble. 

C. Development of Attribute-Based Curve Shapes 

1. Why are standards attribute-based and defined by a mathematical function? 

As in the MYs 2012-2016 CAFE/GHG rules, and as NHTSA did in the MY 2011 CAFE 

rule, NHTSA and EPA are proposing to set attribute-based CAFE and CO2 standards that are 

defined by a mathematical function. EPCA, as amended by EISA, expressly requires that CAFE 

standards for passenger cars and light trucks be based on one or more vehicle attributes related to 

fuel economy, and be expressed in the form of a mathematical function.97 The CAA has no such 

requirement, although such an approach is permissible under section 202 (a) and EPA has used 

the attribute-based approach in issuing standards under analogous provisions of the CAA (e.g., 

criteria pollutant standards for non-road diesel engines using engine size as the attribute,98 in the 

recent GHG standards for heavy duty pickups and vans using a work factor attribute,99 and in the 

MYs 2012-2016 GHG rule itself which used vehicle footprint as the attribute). Public comments 

on the MYs 2012-2016 rulemaking widely supported attribute-based standards for both agencies’ 

standards. 

Under an attribute-based standard, every vehicle model has a performance target (fuel 

economy and CO2 emissions for CAFE and CO2 emissions standards, respectively), the level of 

which depends on the vehicle’s attribute (for this proposal, footprint, as discussed below). The 

manufacturers’ fleet average performance is determined by the production-weighted100 average 

(for CAFE, harmonic average) of those targets. 

The agencies believe that an attribute-based standard is preferable to a single-industrywide average standard in the context of CAFE and CO2 standards for several reasons. First, if 

the shape is chosen properly, every manufacturer is more likely to be required to continue adding 

more fuel efficient technology each year across their fleet, because the stringency of the 

compliance obligation will depend on the particular product mix of each manufacturer. 

Therefore a maximum feasible attribute-based standard will tend to require greater fuel savings 

and CO2 emissions reductions overall than would a maximum feasible flat standard (that is, a 

single mpg or CO2 level applicable to every manufacturer). 

 97 49 U.S.C. 32902(a)(3)(A). 

98 69 FR 38958 (June 29, 2004). 

99 76 FR 57106, 57162-64, (Sept. 15, 2011). 

100 Production for sale in the United States. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 90 of 770

 Second, depending on the attribute, attribute-based standards reduce the incentive for 

manufacturers to respond to CAFE and CO2 standards in ways harmful to safety.

101 Because 

each vehicle model has its own target (based on the attribute chosen), properly fitted attributebased standards provide little, if any, incentive to build smaller vehicles simply to meet a fleetwide average, because the smaller vehicles will be subject to more stringent compliance 

targets.102

Third, attribute-based standards provide a more equitable regulatory framework for 

different vehicle manufacturers.103 A single industry-wide average standard imposes 

disproportionate cost burdens and compliance difficulties on the manufacturers that need to 

change their product plans to meet the standards, and puts no obligation on those manufacturers 

that have no need to change their plans. As discussed above, attribute-based standards help to 

spread the regulatory cost burden for fuel economy more broadly across all of the vehicle 

manufacturers within the industry. 

Fourth, attribute-based standards better respect economic conditions and consumer 

choice, as compared to single-value standards. A flat, or single value standard, encourages a 

certain vehicle size fleet mix by creating incentives for manufacturers to use vehicle downsizing 

as a compliance strategy. Under a footprint-based standard, manufacturers are required to invest 

in technologies that improve the fuel economy of the vehicles they sell rather than shifting the 

product mix, because reducing the size of the vehicle is generally a less viable compliance 

strategy given that smaller vehicles have more stringent regulatory targets. 

2. What attribute are the agencies proposing to use, and why? 

As in the MYs 2012-2016 CAFE/GHG rules, and as NHTSA did in the MY 2011 CAFE 

rule, NHTSA and EPA are proposing to set CAFE and CO2 standards that are based on vehicle 

footprint, which has an observable correlation to fuel economy and emissions. There are several 

policy and technical reasons why NHTSA and EPA believe that footprint is the most appropriate 

attribute on which to base the standards, even though some other vehicle attributes (notably curb 

weight) are better correlated to fuel economy and emissions. 

First, in the agencies’ judgment, from the standpoint of vehicle safety, it is important that 

the CAFE and CO2 standards be set in a way that does not encourage manufacturers to respond 

by selling vehicles that are in any way less safe. While NHTSA’s research of historical crash 

data also indicates that reductions in vehicle mass that are accompanied by reductions in vehicle 

 101 The 2002 NAS Report described at length and quantified the potential safety problem with average fuel economy 

standards that specify a single numerical requirement for the entire industry. See 2002 NAS Report at 5, finding 12. 

Ensuing analyses, including by NHTSA, support the fundamental conclusion that standards structured to minimize 

incentives to downsize all but the largest vehicles will tend to produce better safety outcomes than flat standards. 102 Assuming that the attribute is related to vehicle size. 103 Id. at 4-5, finding 10. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 91 of 770

footprint tend to compromise vehicle safety, footprint-based standards provide an incentive to 

use advanced lightweight materials and structures that would be discouraged by weight-based 

standards, because manufacturers can use them to improve a vehicle’s fuel economy and CO2 

emissions without their use necessarily resulting in a change in the vehicle’s fuel economy and 

emissions targets. 

Further, although we recognize that weight is better correlated with fuel economy and 

CO2 emissions than is footprint, we continue to believe that there is less risk of “gaming” 

(changing the attribute(s) to achieve a more favorable target) by increasing footprint under 

footprint-based standards than by increasing vehicle mass under weight-based standards—it is 

relatively easy for a manufacturer to add enough weight to a vehicle to decrease its applicable 

fuel economy target a significant amount, as compared to increasing vehicle footprint. We also 

continue to agree with concerns raised in 2008 by some commenters on the MY 2011 CAFE 

rulemaking that there would be greater potential for gaming under multi-attribute standards, such 

as those that also depend on weight, torque, power, towing capability, and/or off-road capability. 

The agencies agree with the assessment first presented in NHTSA’s MY 2011 CAFE final rule104

that the possibility of gaming is lowest with footprint-based standards, as opposed to weightbased or multi-attribute-based standards. Specifically, standards that incorporate weight, torque, 

power, towing capability, and/or off-road capability in addition to footprint would not only be 

more complex, but by providing degrees of freedom with respect to more easily-adjusted 

attributes, they could make it less certain that the future fleet would actually achieve the average 

fuel economy and CO2 reduction levels projected by the agencies. 

The agencies recognize that based on economic and consumer demand factors that are 

external to this rule, the distribution of footprints in the future may be different (either smaller or 

larger) than what is projected in this rule. However, the agencies continue to believe that there 

will not be significant shifts in this distribution as a direct consequence of this proposed rule. 

The agencies also recognize that some international attribute-based standards use attributes other 

than footprint and that there could be benefits for a number of manufacturers if there was greater 

international harmonization of fuel economy and GHG standards for light-duty vehicles, but this 

is largely a question of how stringent standards are and how they are tested and enforced. It is 

entirely possible that footprint-based and weight-based systems can coexist internationally and 

not present an undue burden for manufacturers if they are carefully crafted. Different countries 

or regions may find different attributes appropriate for basing standards, depending on the 

particular challenges they face—from fuel prices, to family size and land use, to safety concerns, 

to fleet composition and consumer preference, to other environmental challenges besides climate 

change. The agencies anticipate working more closely with other countries and regions in the 

future to consider how to address these issues in a way that least burdens manufacturers while 

respecting each country’s need to meet its own particular challenges. 

 104 See 74 FR at 14359 (Mar. 30, 2009). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 92 of 770

The agencies continue to find that footprint is the most appropriate attribute upon which 

to base the proposed standards, but recognizing strong public interest in this issue, we seek 

comment on whether the agencies should consider setting standards for the final rule based on 

another attribute or another combination of attributes. If commenters suggest that the agencies 

should consider another attribute or another combination of attributes, the agencies specifically 

request that the commenters address the concerns raised in the paragraphs above regarding the 

use of other attributes, and explain how standards should be developed using the other 

attribute(s) in a way that contributes more to fuel savings and CO2 reductions than the footprintbased standards, without compromising safety. 

3. What mathematical functions have the agencies previously used, and why? 

a. NHTSA in MY 2008 and MY 2011 CAFE (constrained logistic) 

For the MY 2011 CAFE rule, NHTSA estimated fuel economy levels after normalization 

for differences in technology, but did not make adjustments to reflect other vehicle attributes 

(e.g., power-to-weight ratios).105 Starting with the technology adjusted passenger car and light 

truck fleets, NHTSA used minimum absolute deviation (MAD) regression without sales 

weighting to fit a logistic form as a starting point to develop mathematical functions defining the 

standards. NHTSA then identified footprints at which to apply minimum and maximum values 

(rather than letting the standards extend without limit) and transposed these functions vertically 

(i.e., on a gpm basis, uniformly downward) to produce the promulgated standards. In the 

preceding rule, for MYs 2008-2011 light truck standards, NHTSA examined a range of potential 

functional forms, and concluded that, compared to other considered forms, the constrained 

logistic form provided the expected and appropriate trend (decreasing fuel economy as footprint 

increases), but avoided creating “kinks” the agency was concerned would provide distortionary 

incentives for vehicles with neighboring footprints.106

b. MYs 2012-2016 Light Duty GHG/CAFE (constrained/piecewise linear) 

For the MYs 2012-2016 rules, NHTSA and EPA re-evaluated potential methods for 

specifying mathematical functions to define fuel economy and GHG standards. The agencies 

concluded that the constrained logistic form, if applied to post-MY 2011 standards, would likely 

contain a steep mid-section that would provide undue incentive to increase the footprint of 

midsize passenger cars.107 The agencies judged that a range of methods to fit the curves would 

 105 See 74 FR 14196, 14363-14370 (Mar. 30, 2009) for NHTSA discussion of curve fitting in the MY 2011 CAFE 

final rule. 

106 See 71 FR 17556, 17609-17613 (Apr. 6, 2006) for NHTSA discussion of “kinks” in the MYs 2008-2011 light 

truck CAFE final rule (there described as “edge effects”). A “kink,” as used here, is a portion of the curve where a 

small change in footprint results in a disproportionally large change in stringency. 107 75 FR at 25362 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 93 of 770

be reasonable, and used a minimum absolute deviation (MAD) regression without sales 

weighting on a technology-adjusted car and light truck fleet to fit a linear equation. This 

equation was used as a starting point to develop mathematical functions defining the standards as 

discussed above. The agencies then identified footprints at which to apply minimum and 

maximum values (rather than letting the standards extend without limit) and transposed these 

constrained/piecewise linear functions vertically (i.e., on a gpm or CO2 basis, uniformly 

downward) to produce the fleetwide fuel economy and CO2 emission levels for cars and light 

trucks described in the final rule.108 

4. How have the agencies changed the mathematical functions for the proposed MYs 

2017-2025 standards, and why?

By requiring NHTSA to set CAFE standards that are attribute-based and defined by a 

mathematical function, Congress appears to have wanted the post-EISA standards to be datadriven – a mathematical function defining the standards, in order to be “attribute-based,” should 

reflect the observed relationship in the data between the attribute chosen and fuel economy.109 

EPA is also proposing to set attribute-based CO2 standards defined by similar mathematical 

functions, for the reasonable technical and policy grounds discussed below and in section II of 

the preamble to the proposed rule, and which supports a harmonization with the CAFE standards. 

The relationship between fuel economy (and GHG emissions) and footprint, though 

directionally clear (i.e., fuel economy tends to decrease and CO2 emissions tend to increase with 

increasing footprint), is theoretically vague and quantitatively uncertain; in other words, not so 

precise as to a priori yield only a single possible curve.110 There is thus a range of legitimate 

options open to the agencies in developing curve shapes. The agencies may of course consider 

statutory objectives in choosing among the many reasonable alternatives. For example, curve 

shapes that might have some theoretical basis could lead to perverse outcomes contrary to the 

intent of the statutes to conserve energy and protect human health and the environment.111 Thus, 

the decision of how to set the target curves cannot always be just about most “clearly” using a 

 108 See generally 74 FR at 49491-96; 75 FR at 25357-62. 109 A mathematical function can be defined, of course, that has nothing to do with the relationship between fuel 

economy and the chosen attribute – the most basic example is an industry-wide standard defined as the mathematical 

function average required fuel economy = X, where X is the single mpg level set by the agency. Yet a standard that 

is simply defined as a mathematical function that is not tied to the attribute(s) would not meet the requirement of 

EISA. 

110 In fact, numerous manufacturers have confidentially shared with the agencies what they describe as “physics 

based” curves, with each OEM showing significantly different shapes, and footprint relationships. The sheer variety 

of curves shown to the agencies further confirm the lack of an underlying principle of “fundamental physics” driving 

the relationship between CO2 emission or fuel consumption and footprint, and the lack of an underlying principle to 

dictate any outcome of the agencies’ establishment of footprint-based standards. 

111 For example, if the agencies set weight-based standards defined by a steep function, the standards might 

encourage manufacturers to keep adding weight to their vehicles to obtain less stringent targets. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 94 of 770

mathematical function to define the relationship between fuel economy and the attribute; it often 

has to have a normative aspect, where the agencies adjust the function that would define the 

relationship in order to avoid perverse results, improve equity of burden across manufacturers, 

preserve consumer choice, etc. This is true both for the decisions that guide the mathematical 

function defining the sloped portion of the target curves, and for the separate decisions that guide 

the agencies’ choice of “cutpoints” (if any) that define the fuel economy/CO2 levels and 

footprints at each end of the curves where the curves become flat. Data informs these decisions, 

but how the agencies define and interpret the relevant data, and then the choice of methodology 

for fitting a curve to the data, must include a consideration of both technical data and policy 

goals. 

The next sections examine the policy concerns that the agencies considered in developing 

the proposed target curves that define the proposed MYs 2017-2025 CAFE and CO2 standards, 

new technical work (expanding on similar analyses performed by NHTSA when the agency 

proposed MY 2011-2015 standards, and by both agencies during consideration of options for 

MY 2012-2016 CAFE and GHG standards) that was completed in the process of reexamining 

potential mathematical functions, how the agencies have defined the data, and how the agencies 

explored statistical curve-fitting methodologies in order to arrive at proposed curves. 

5. What are the agencies proposing for the MYs 2017-2025 curves? 

The proposed mathematical functions for the proposed MYs 2017-2025 standards are 

somewhat changed from the functions for the MYs 2012-2016 standards, in response to 

comments received from stakeholders and in order to address technical concerns and policy 

goals that the agencies judge more significant in this 9-year rulemaking than in the prior one, 

which only included 5 years. This section discusses the methodology the agencies selected as, at 

this time, best addressing those technical concerns and policy goals, given the various technical 

inputs to the agencies’ current analyses. Below the agencies discusses how the agencies 

determined the cutpoints and the flat portions of the MYs 2017-2025 target curves. We also note 

that both of these sections address only how the target curves were fit to fuel consumption and 

CO2 emission values determined using the city and highway test procedures, and that in 

determining respective regulatory alternatives, the agencies made further adjustments to the 

resultant curves in order to account for adjustments for improvements to mobile air conditioners. 

Thus, recognizing that there are many reasonable statistical methods for fitting curves to 

data points that define vehicles in terms of footprint and fuel economy, the agencies have chosen 

for this proposed rule to fit curves using an ordinary least-squares formulation, on sales-weighted 

data, using a fleet that has had technology applied, and after adjusting the data for the effects of 

weight-to-footprint, as described below. This represents a departure from the statistical approach 

for fitting the curves in MYs 2012-2016, as explained in the next section. The agencies 

considered a wide variety of reasonable statistical methods in order to better understand the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 95 of 770

range of uncertainty regarding the relationship between fuel consumption (the inverse of fuel 

economy), CO2 emission rates, and footprint, thereby providing a range within which decisions 

about standards would be potentially supportable. 

a. What concerns were the agencies looking to address that led them to change from 

the approach used for the MYs 2012-2016 curves? 

During the year and a half since the MYs 2012-2016 final rule was issued, NHTSA and 

EPA have received a number of comments from stakeholders on how curves should be fitted to 

the passenger car and light truck fleets. Some limited-line manufacturers have argued that 

curves should generally be flatter in order to avoid discouraging small vehicles, because steeper 

curves tend to result in more stringent targets for smaller vehicles. Most full-line manufacturers 

have argued that a passenger car curve similar in slope to the MY 2016 passenger car curve 

would be appropriate for future model years, but that the light truck curve should be revised to be 

less difficult for manufacturers selling the largest full-size pickup trucks. These manufacturers 

argued that the MY 2016 light truck curve was not “physics-based,” and that in order for future 

tightening of standards to be feasible for full-line manufacturers, the truck curve for later model 

years should be steeper and extended further (i.e., made less stringent) into the larger footprints. 

The agencies also do not agree that the MY 2016 light truck curve was somehow deficient in 

lacking a “physics basis,” or that it was somehow overly stringent for manufacturers selling large 

pickups—manufacturers making these arguments presented no “physics-based” model to explain 

how fuel economy should depend on footprint.112 The same manufacturers indicated that they 

believed that the light truck standard should be somewhat steeper after MY 2016, primarily 

because, after more than ten years of progressive increases in the stringency of applicable CAFE 

standards, large pickups would be less capable of achieving further improvements without 

compromising load carrying and towing capacity. 

In developing the curve shapes for this proposed rule, the agencies were aware of the 

current and prior technical concerns raised by OEMs concerning the effects of the stringency on 

individual manufacturers and their ability to meet the standards with available technologies, 

while producing vehicles at a cost that allowed them to recover the additional costs of the 

technologies being applied. Although we continue to believe that the methodology for fitting 

curves for the MY2012-2016 standards was technically sound, we recognize manufacturers’ 

technical concerns regarding their abilities to comply with a similarly shallow curve after 

MY2016 given the anticipated mix of light trucks in MYs 2017-2025. As in the MYs 2012-2016 

rules, the agencies considered these concerns in the analysis of potential curve shapes. The 

agencies also considered safety concerns which could be raised by curve shapes creating an 

incentive for vehicle downsizing, as well as the potential loss to consumer welfare should vehicle 

upsizing be unduly disincentivized. In addition, the agencies sought to improve the balance of 

 112 See footnote 110 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 96 of 770

compliance burdens among manufacturers. Among the technical concerns and resultant policy 

trade-offs the agencies considered were the following: 

 Flatter standards (i.e., curves) increase the risk that both the weight and size of vehicles 

will be reduced, compromising highway safety. 

 Flatter standards potentially impact the utility of vehicles by providing an incentive for 

vehicle downsizing. 

 Steeper footprint-based standards may incentivize vehicle upsizing, thus increasing the 

risk that fuel economy and greenhouse gas reduction benefits will be less than expected. 

 Given the same industry-wide average required fuel economy or CO2 standard, flatter 

standards tend to place greater compliance burdens on full-line manufacturers 

 Given the same industry-wide average required fuel economy or CO2 standard, steeper 

standards tend to place greater compliance burdens on limited-line manufacturers 

(depending of course, on which vehicles are being produced). 

 If cutpoints are adopted, given the same industry-wide average required fuel economy, 

moving small-vehicle cutpoints to the left (i.e., up in terms of fuel economy, down in 

terms of CO2 emissions) discourages the introduction of small vehicles, and reduces the 

incentive to downsize small vehicles in ways that would compromise highway safety. 

 If cutpoints are adopted, given the same industry-wide average required fuel economy, 

moving large-vehicle cutpoints to the right (i.e., down in terms of fuel economy, up in 

terms of CO2 emissions) better accommodates the unique design requirements of larger 

vehicles—especially large pickups—and extends the size range over which downsizing is 

discouraged. 

All of these were policy goals that required trade-offs, and in determining the curves they 

also required balance against the comments from the OEM comments discussed in the 

introduction to this section. Ultimately, the agencies do not agree that the MY 2017 target 

curves for this proposal, on a relative basis, should be made significantly flatter than the MY 

2016 curve,113 as we believe that this would undo some of the safety-related incentives and 

balancing of compliance burdens among manufacturers—effects that attribute-based standards 

are intended to provide. 

 Nonetheless, the agencies recognize full-line OEM concerns and have tentatively 

concluded that further increases in the stringency of the light truck standards will be more 

feasible if the light truck curve is made steeper than the MY 2016 truck curve and the right (large 

footprint) cut-point is extended over time to larger footprints. This conclusion is supported by 

the agencies’ technical analyses of regulatory alternatives defined using the curves developed in 

the manner described below. 

 113 While “significantly” flatter is subjective, the year over year change in curve shapes is discussed in greater detail 

in Section I.C.7.a. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 97 of 770

b. What methodologies and data did the agencies consider in developing the 2017-

2025 curves? 

In considering how to address the various policy concerns discussed in the previous 

sections, the agencies revisited the data and performed a number of analyses using different 

combinations of the various statistical methods, weighting schemes, adjustments to the data and 

the addition of technologies to make the fleets less technologically heterogeneous. As discussed 

above, in the agencies’ judgment, there is no single “correct” way to estimate the relationship 

between CO2 or fuel consumption and footprint – rather, each statistical result is based on the 

underlying assumptions about the particular functional form, weightings and error structures 

embodied in the representational approach. These assumptions are the subject of the following 

discussion. This process of performing many analyses using combinations of statistical methods 

generates many possible outcomes, each embodying different potentially reasonable 

combinations of assumptions and each thus reflective of the data as viewed through a particular 

lens. The choice of a standard developed by a given combination of these statistical methods is 

consequently a decision based upon the agencies’ determination of how, given the policy 

objectives for this rulemaking and the agencies’ MY 2008-based forecast of the market through 

MY 2025, to appropriately reflect the current understanding of the evolution of automotive 

technology and costs, the future prospects for the vehicle market, and thereby establish curves 

(i.e., standards) for cars and light trucks. 

c. What information did the agencies use to estimate a relationship between fuel 

economy, CO2 and footprint? 

For each fleet, the agencies began with the MY 2008-based market forecast developed to 

support this proposal (i.e., the baseline fleet), with vehicles’ fuel economy levels and 

technological characteristics at MY 2008 levels.114 The development, scope, and content of this 

market forecast is discussed in detail in Chapter 1 of the joint Technical Support Document 

supporting this rulemaking.

d. What adjustments did the agencies evaluate? 

The agencies believe one possible approach is to fit curves to the minimally adjusted data 

shown above (the approach still includes sales mix adjustments, which influence results of salesweighted regressions), much as DOT did when it first began evaluating potential attribute-based 

standards in 2003.115 However, the agencies have found, as in prior rulemakings, that the data 

are so widely spread (i.e., when graphed, they fall in a loose “cloud” rather than tightly around 

an obvious line) that they indicate a relationship between footprint and CO2 and fuel 

consumption that is real but not particularly strong. Therefore, as discussed below, the agencies 

 114 While the agencies jointly conducted this analysis, the coefficients ultimately used in the slope setting analysis 

are from the CAFE model.

115 68 FR 74920-74926. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 98 of 770

also explored possible adjustments that could help to explain and/or reduce the ambiguity of this 

relationship, or could help to produce policy outcomes the agencies judged to be more desirable. 

i. Adjustment to reflect differences in technology 

As in prior rulemakings, the agencies consider technology differences between vehicle 

models to be a significant factor producing uncertainty regarding the relationship between 

CO2/fuel consumption and footprint. Noting that attribute-based standards are intended to 

encourage the application of additional technology to improve fuel efficiency and reduce CO2

emissions, the agencies, in addition to considering approaches based on the unadjusted 

engineering characteristics of MY 2008 vehicle models, therefore also considered approaches in 

which, as for previous rulemakings, technology is added to vehicles for purposes of the curve 

fitting analysis in order to produce fleets that are less varied in technology content. 

The agencies adjusted the baseline fleet for technology by adding all technologies 

considered, except for the most advanced high-BMEP (brake mean effective pressure) gasoline 

engines, diesel engines, strong HEVs, PHEVs, EVs, and FCVs. The agencies included 15 

percent mass reduction on all vehicles. 

ii. Adjustments reflecting differences in performance and “density” 

As discussed in above, during stakeholder meetings the agencies held while developing 

this NPRM, some manufacturers indicated that they believed that the light truck standard should 

be somewhat steeper after MY 2016. As a means to produce a steeper light truck curve, the 

agencies considered adjustments for other differences between vehicle models (i.e., inflating or 

deflating the fuel economy of each vehicle model based on the extent to which one of the 

vehicle’s attributes, such as power, is higher or lower than average). Previously, NHTSA had 

rejected such adjustments because they imply that a multi-attribute standard may be necessary, 

and the agencies judged multi-attribute standard to be more subject to gaming than a footprintonly standard.116,117 Having considered this issue again for purposes of this rulemaking, NHTSA 

and EPA conclude the need to accommodate in the target curves the challenges faced by 

manufacturers of large pickups currently outweighs these prior concerns. Therefore, the 

agencies also evaluated curve fitting approaches through which fuel consumption and CO2 levels 

were adjusted with respect to weight-to-footprint alone, and in combination with power-toweight. While the agencies examined these adjustments for purposes of fitting curves, the 

agencies are not proposing a multi-attribute standard; the proposed fuel economy and CO2

 116 For example, in comments on NHTSA’s 2008 NPRM regarding MY 2011-2015 CAFE standards, Porsche 

recommended that standards be defined in terms of a “Summed Weighted Attribute”, wherein the fuel economy 

target would calculated as follows: target = f(SWA), where target is the fuel economy target applicable to a given 

vehicle model and SWA = footprint + torque1/1.5 + weight1/2.5. (NHTSA-2008-0089-0174). While the standards the 

agencies are proposing for MY 2017-2025 are not multi-attributes, that is the target is only a function of footprint, 

we are proposing curve shapes that were developed considering more than one attribute. 

117 74 FR 14359. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 99 of 770

targets for each vehicle are still functions of footprint alone. No adjustment would be used in the 

compliance process. 

The agencies also examined some differences between the technology-adjusted car and 

truck fleets in order to better understand the relationship between footprint and CO2/fuel 

consumption in the agencies’ MY 2008 based forecast. The agencies investigated the 

relationship between HP/WT and footprint in the agencies’ MY2008-based market forecast. On 

a sales weighted basis, cars tend to become proportionally more powerful as they get larger. In 

contrast, there is a minimally positive relationship between HP/WT and footprint for light trucks, 

indicating that light trucks become only slightly more powerful as they get larger. 

This analysis, presented in chapter 2.4.1.2 of the agencies’ joint TSD, indicated that 

vehicle performance (power-to-weight ratio) and “density” (curb weight divided by footprint) are 

both correlated to fuel consumption (and CO2 emission rate), and that these vehicle attributes are 

also both related to vehicle footprint. Based on these relationships, the agencies explored 

adjusting the fuel economy and CO2 emission rates of individual vehicle models based on 

deviations from “expected” performance or weight/footprint at a given footprint; the agencies 

inflated fuel economy levels of vehicle models with higher performance and/or weight/footprint 

than the average of the fleet would indicate at that footprint, and deflated fuel economy levels 

with lower performance and/or weight. Previously, NHTSA had rejected such adjustments 

because they imply that a multi-attribute standard may be necessary, and the agency judged 

multi-attribute standard to be more subject to gaming than a footprint-only standard.118,119 

While the agencies considered this technique for purposes of fitting curves, the agencies are not 

proposing a multi-attribute standard, as the proposed fuel economy and CO2 targets for each 

vehicle are still functions of footprint alone. No adjustment would be used in the compliance 

process. 

The agencies seek comment on the appropriateness of the adjustments as described in 

Chapter 2 of the joint TSD, particularly regarding whether these adjustments suggest that 

standards should be defined in terms of other attributes in addition to footprint, and whether they 

may encourage changes other than encouraging the application of technology to improve fuel 

economy and reduce CO2 emissions. The agencies also seek comment regarding whether these 

adjustments effectively “lock in” through MY 2025 relationships that were observed in MY 

2008. 

 118 For example, in comments on NHTSA’s 2008 NPRM regarding MY 2011-2015 CAFE standards, Porsche 

recommended that standards be defined in terms of a “Summed Weighted Attribute”, wherein the fuel economy 

target would calculated as follows: target = f(SWA), where target is the fuel economy target applicable to a given 

vehicle model and SWA = footprint + torque1/1.5 + weight1/2.5. (NHTSA-2008-0089-0174). While the standards the 

agencies are proposing for MY 2017-2025 are not multi-attribute standards, that is the target is only a function of 

footprint, we are proposing curve shapes that were developed considering more than one attribute. 

119 74 FR 14359. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 100 of 770

e. What statistical methods did the agencies evaluate? 

The above approaches resulted in three data sets each for (a) vehicles without added 

technology and (b) vehicles with technology added to reduce technology differences, any of 

which may provide a reasonable basis for fitting mathematical functions upon which to base the 

slope of the standard curves: (1) vehicles without any further adjustments; (2) vehicles with 

adjustments reflecting differences in “density” (weight/footprint); and (3) vehicles with 

adjustments reflecting differences in “density,” and adjustments reflecting differences in 

performance (power/weight). Using these data sets, the agencies tested a range of regression 

methodologies, each judged to be possibly reasonable for application to at least some of these 

data sets. 

i. Regression Approach 

In the MYs 2012-2016 final rules, the agencies employed a robust regression approach 

(minimum absolute deviation, or MAD), rather than an ordinary least squares (OLS) 

regression.120 MAD is generally applied to mitigate the effect of outliers in a dataset, and thus 

was employed in that rulemaking as part of our interest in attempting to best represent the 

underlying technology. NHTSA had used OLS in early development of attribute-based CAFE 

standards, but NHTSA (and then NHTSA and EPA) subsequently chose MAD instead of OLS 

for both the MY 2011 and the MYs 2012-2016 rulemakings. These decisions on regression 

technique were made both because OLS gives additional emphasis to outliers121 and because the 

MAD approach helped achieve the agencies’ policy goals with regard to curve slope in those 

rulemakings.122 In the interest of taking a fresh look at appropriate regression methodologies as 

promised in the 2012-2016 light duty rulemaking, in developing this proposal, the agencies gave 

full consideration to both OLS and MAD. The OLS representation, as described, uses squared 

errors, while MAD employs absolute errors and thus weights outliers less. 

As noted, one of the reasons stated for choosing MAD over least square regression in the 

MYs 2012-2016 rulemaking was that MAD reduced the weight placed on outliers in the data. 

However, the agencies have further considered whether it is appropriate to classify these vehicles 

as outliers. Unlike in traditional datasets, these vehicles’ performance is not mischaracterized due 

to errors in their measurement, a common reason for outlier classification. Being certification 

data, the chances of large measurement errors should be near zero, particularly towards high CO2

or fuel consumption. Thus, they can only be outliers in the sense that the vehicle designs are 

unlike those of other vehicles. These outlier vehicles may include performance vehicles, 

vehicles with high ground clearance, 4WD, or boxy designs. Given that these are equally 

 120 See 75 FR at 25359. 121 Id. at 25362-63. 122 Id. at 25363. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 101 of 770

legitimate on-road vehicle designs, the agencies concluded that it would appropriate to 

reconsider the treatment of these vehicles in the regression techniques. 

Based on these considerations as well as the adjustments discussed above, the agencies 

concluded it was not meaningful to run MAD regressions on gpm data that had already been 

adjusted in the manner described above. Normalizing already reduced the variation in the data, 

and brought outliers towards average values. This was the intended effect, so the agencies 

deemed it unnecessary to apply an additional remedy to resolve an issue that had already been 

addressed, but we seek comment on the use of robust regression techniques under such 

circumstances. 

ii. Sales Weighting 

Likewise, the agencies reconsidered employing sales-weighting to represent the data. As 

explained below, the decision to sales weight or not is ultimately based upon a choice about how 

to represent the data, and not by an underlying statistical concern. Sales weighting is used if the 

decision is made to treat each (mass produced) unit sold as a unique physical observation. Doing 

so thereby changes the extent to which different vehicle model types are emphasized as 

compared to a non-sales weighted regression. For example, while total General Motors 

Silverado (332,000) and Ford F-150 (322,000) sales differ by less than 10,000 in MY 2021 

market forecast, 62 F-150s models and 38 Silverado models are reported in the agencies 

baselines. Without sales-weighting, the F-150 models, because there are more of them, are given 

63 percent more weight in the regression despite comprising a similar portion of the marketplace 

and a relatively homogenous set of vehicle technologies. 

 The agencies did not use sales weighting in the 2012-2016 rulemaking analysis of the 

curve shapes. A decision to not perform sales weighting reflects judgment that each vehicle 

model provides an equal amount of information concerning the underlying relationship between 

footprint and fuel economy. Sales-weighted regression gives the highest sales vehicle model 

types vastly more emphasis than the lowest-sales vehicle model types thus driving the regression 

toward the sales-weighted fleet norm. For unweighted regression, vehicle sales do not matter. 

The agencies note that the light truck market forecast shows MY 2025 sales of 218,000 units for 

Toyota’s 2WD Sienna, and shows 66 model configurations with MY 2025 sales of fewer than 

100 units. Similarly, the agencies’ market forecast shows MY 2025 sales of 267,000 for the 

Toyota Prius, and shows 40 model configurations with MY2025 sales of fewer than 100 units. 

Sales-weighted analysis would give the Toyota Sienna and Prius more than a thousand times the 

consideration of many vehicle model configurations. Sales-weighted analysis would, therefore, 

cause a large number of vehicle model configurations to be virtually ignored in the 

regressions.123 

 123 75 FR at 25362 and n. 64 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 102 of 770

However, the agencies did note in the MYs 2012-2016 final rules that, “sales weighted 

regression would allow the difference between other vehicle attributes to be reflected in the 

analysis, and also would reflect consumer demand.” 124 In reexamining the sales-weighting for 

this analysis, the agencies note that there are low-volume model types account for many of the 

passenger car model types (50 percent of passenger car model types account for 3.3 percent of 

sales), and it is unclear whether the engineering characteristics of these model types should 

equally determine the standard for the remainder of the market. 

In the interest of taking a fresh look at appropriate methodologies as promised in the last 

final rule, in developing this proposal, the agencies gave full consideration to both salesweighted and unweighted regressions. 

iii. Analyses Performed 

We performed regressions describing the relationship between a vehicle’s CO2/fuel 

consumption and its footprint, in terms of various combinations of factors: initial (raw) fleets 

with no technology, versus after technology is applied; sales-weighted versus non-sales 

weighted; and with and without two sets of normalizing factors applied to the observations. 

The agencies excluded diesels and dedicated AFVs because the agencies anticipate that advanced 

gasoline-fueled vehicles are likely to be dominant through MY2025. 

Thus, the basic OLS regression on the initial data (with no technology applied) and no 

sales-weighting represents one perspective on the relation between footprint and fuel economy. 

Adding sales weighting changes the interpretation to include the influence of sales volumes, and 

thus steps away from representing vehicle technology alone. Likewise, MAD is an attempt to 

reduce the impact of outliers, but reducing the impact of outliers might perhaps be less 

representative of technical relationships between the variables, although that relationship may 

change over time in reality. Each combination of methods and data reflects a perspective, and 

the regression results simply reflect that perspective in a simple quantifiable manner, expressed 

as the coefficients determining the line through the average (for OLS) or the median (for MAD) 

of the data. It is left to policy makers to determine an appropriate perspective and to interpret the 

consequences of the various alternatives.

We invite comments on the application of the weights as described above, and the 

implications for interpreting the relationship between fuel efficiency (or CO2) and footprint. 

f. What results did the agencies obtain, which methodology did the agencies choose for 

this proposal, and why is it reasonable? 

 124 75 FR at 25632/3. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 103 of 770

Both agencies analyzed the same statistical approaches. For regressions against data 

including technology normalization, NHTSA used the CAFE modeling system, and EPA used 

EPA’s OMEGA model. The agencies obtained similar regression results, and have based 

today’s joint proposal on those obtained by NHTSA. The draft Joint TSD Chapter 2 contains a 

large set of illustrative of figures which show the range of curves determined by the possible 

combinations of regression technique, with and without sales weighting, with and without the 

application of technology, and with various adjustments to the gpm variable prior to running a 

regression. 

The choice among the alternatives presented in the draft Joint TSD Chapter 2 was to use 

the OLS formulation, on sales-weighted data, using a fleet that has had technology applied, and 

after adjusting the data for the effect of weight-to-footprint, as described above. The agencies 

believe that this represents a technically reasonable approach for purposes of developing target 

curves to define the proposed standards, and that it represents a reasonable trade-off among 

various considerations balancing statistical, technical, and policy matters, which include the 

statistical representativeness of the curves considered and the steepness of the curve chosen. The 

agencies judge the application of technology prior to curve fitting to provide a reasonable 

means—one consistent with the rule’s objective of encouraging manufacturers to add technology 

in order to increase fuel economy—of reducing variation in the data and thereby helping to 

estimate a relationship between fuel consumption/CO2 and footprint. 

Similarly, for the agencies’ current MY 2008-based market-forecast and the agencies’ 

current estimates of future technology effectiveness, the inclusion of the weight-to-footprint data 

adjustment prior to running the regression also helps to improve the fit of the curves by reducing 

the variation in the data, and the agencies believe that the benefits of this adjustment for this 

proposed rule likely outweigh the potential that resultant curves might somehow encourage 

reduced load carrying capability or vehicle performance (note that the we are not suggesting that 

we believe these adjustments will reduce load carrying capability or vehicle performance). In 

addition to reducing the variability, the truck curve is also steepened, and the car curve flattened 

compared to curves fitted to sales weighted data that do not include these normalizations. The 

agencies agree with manufacturers of full-size pick-up trucks that in order to maintain towing 

and hauling utility, the engines on pick-up trucks must be more powerful, than their low 

“density” nature would statistically suggest based on the agencies’ current MY2008-based 

market forecast and the agencies’ current estimates of the effectiveness of different fuel-saving 

technologies. Therefore, it may be more equitable (i.e., in terms of relative compliance 

challenges faced by different light truck manufacturers) to adjust the slope of the curve defining 

fuel economy and CO2 targets. 

As described above, however, other approaches are also technically reasonable, and also 

represent a way of expressing the underlying relationships. The agencies plan to revisit the 

analysis for the final rule, after updating the underlying market forecast and estimates of 

technology effectiveness, and based on relevant public comments received. In addition, the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 104 of 770

agencies intend to update the technology cost estimates, which could alter the NPRM analysis 

results and consequently alter the balance of the trade-offs being weighed to determine the final 

curves. 

g. Implications of the proposed slope compared to MY 2012-2016 

The proposed slope has several implications relative to the MY 2016 curves, with the 

majority of changes on the truck curve. With the agencies’ current MY2008-based market 

forecast and the agencies’ current estimates of technology effectiveness, the combination of sales 

weighting and WT/FP normalization produced a car curve slope similar to that finalized in the 

MY 2012-2016 final rulemaking (4.7 g/mile in MY 2016, vs. 4.5 g/mile proposed in MY 2017). 

By contrast, the truck curve is steeper in MY 2017 than in MY 2016 (4.0 g/mile in MY 2016 vs. 

4.9 g/mile in MY 2017). As discussed previously, a steeper slope relaxes the stringency of 

targets for larger vehicles relative to those for smaller vehicles, thereby shifting relative 

compliance burdens among manufacturers based on their respective product mix. 

6. Once the agencies determined the appropriate slope for the sloped part, how did the 

agencies determine the rest of the mathematical function?

The agencies continue to believe that without a limit at the smallest footprints, the 

function—whether logistic or linear—can reach values that would be unfairly burdensome for a 

manufacturer that elects to focus on the market for small vehicles; depending on the underlying 

data, an unconstrained form could result in stringency levels that are technologically infeasible 

and/or economically impracticable for those manufacturers that may elect to focus on the 

smallest vehicles. On the other side of the function, without a limit at the largest footprints, the 

function may provide no floor on required fuel economy. Also, the safety considerations that 

support the provision of a disincentive for downsizing as a compliance strategy apply weakly, if 

at all, to the very largest vehicles. Limiting the function’s value for the largest vehicles thus 

leads to a function with an inherent absolute minimum level of performance, while remaining 

consistent with safety considerations. 

Just as for slope, in determining the appropriate footprint and fuel economy values for the 

“cutpoints,” the places along the curve where the sloped portion becomes flat, the agencies took 

a fresh look for purposes of this proposal, taking into account the updated market forecast and 

new assumptions about the availability of technologies. The next two sections discuss the 

agencies’ approach to cutpoints for the passenger car and light truck curves separately, as the 

policy considerations for each vary somewhat. 

a. Cutpoints for PC curve 

The passenger car fleet upon which the agencies have based the target curves for MYs 

2017-2025 is derived from MY 2008 data, as discussed above. In MY 2008, passenger car 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 105 of 770

footprints ranged from 36.7 square feet, the Lotus Exige 5, to 69.3 square feet, the Daimler 

Maybach 62. In that fleet, several manufacturers offer small, sporty coupes below 41 square 

feet, such as the BMW Z4 and Mini, Honda S2000, Mazda MX-5 Miata, Porsche Carrera and 

911, and Volkswagen New Beetle. Because such vehicles represent a small portion (less than 10 

percent) of the passenger car market, yet often have performance, utility, and/or structural 

characteristics that could make it technologically infeasible and/or economically impracticable 

for manufacturers focusing on such vehicles to achieve the very challenging average 

requirements that could apply in the absence of a constraint, EPA and NHTSA are again 

proposing to cut off the sloped portion of the passenger car function at 41 square feet, consistent 

with the MYs 2012-2016 rulemaking. The agencies recognize that for manufacturers who make 

small vehicles in this size range, putting the cutpoint at 41 square feet creates some incentive to 

downsize (i.e., further reduce the size, and/or increase the production of models currently smaller 

than 41 square feet) to make it easier to meet the target. Putting the cutpoint here may also 

create the incentive for manufacturers who do not currently offer such models to do so in the 

future. However, at the same time, the agencies believe that there is a limit to the market for cars 

smaller than 41 square feet -- most consumers likely have some minimum expectation about 

interior volume, among other things. The agencies thus believe that the number of consumers 

who will want vehicles smaller than 41 square feet (regardless of how they are priced) is small, 

and that the incentive to downsize to less than 41 square feet in response to this proposal, if 

present, will be at best minimal. On the other hand, the agencies note that some manufacturers 

are introducing mini cars not reflected in the agencies MY 2008-based market forecast, such as 

the Fiat 500, to the U.S. market, and that the footprint at which the curve is limited may affect 

the incentive for manufacturers to do so. 

 

Above 56 square feet, the only passenger car models present in the MY 2008 fleet were 

four luxury vehicles with extremely low sales volumes—the Bentley Arnage and three versions 

of the Rolls Royce Phantom. As in the MYs 2012-2016 rulemaking, NHTSA and EPA therefore 

are proposing again to cut off the sloped portion of the passenger car function at 56 square feet. 

While meeting with manufacturers prior to issuing the proposal, the agencies received 

comments from some manufacturers that, combined with slope and overall stringency, using 41 

square feet as the footprint at which to cap the target for small cars would result in unduly 

challenging targets for small cars. The agencies do not agree. No specific vehicle need meet its 

target (because standards apply to fleet average performance), and maintaining a sloped function 

toward the smaller end of the passenger car market is important to discourage unsafe 

downsizing, the agencies are thus proposing to again “cut off” the passenger car curve at 41 

square feet, notwithstanding these comments. 

The agencies seek comment on setting cutpoints for the MYs 2017-2025 passenger car 

curves at 41 square feet and 56 square feet. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 106 of 770

b. Cutpoints for LT curve 

The light truck fleet upon which the agencies have based the target curves for MYs 2017-

2025, like the passenger car fleet, is derived from MY 2008 data, as discussed in Section 2.4 

above. In MY 2008, light truck footprints ranged from 41.0 square feet, the Jeep Wrangler, to 

77.5 square feet, the Toyota Tundra. For consistency with the curve for passenger cars, the 

agencies are proposing to cut off the sloped portion of the light truck function at the same 

footprint, 41 square feet, although we recognize that no light trucks are currently offered below 

41 square feet. With regard to the upper cutpoint, the agencies heard from a number of 

manufacturers during the discussions leading up to this proposal that the location of the cutpoint 

in the MYs 2012-2016 rules, 66 square feet, meant that the same standard applied to all light 

trucks with footprints of 66 square feet or greater, and that in fact the targets for the largest light 

trucks in the later years of that rulemaking were extremely challenging. Those manufacturers 

requested that the agencies extend the cutpoint to a larger footprint, to reduce targets for the 

largest light trucks which represent a significant percentage of those manufacturers light truck 

sales. At the same time, in re-examining the light truck fleet data, the agencies concluded that 

aggregating pickup truck models in the MYs 2012-2016 rule had led the agencies to 

underestimate the impact of the different pickup truck model configurations above 66 square feet 

on manufacturers’ fleet average fuel economy and CO2 levels (as discussed immediately below). 

In disaggregating the pickup truck model data, the impact of setting the cutpoint at 66 square feet 

after model year 2016 became clearer to the agencies. 

In the agencies’ view, there is legitimate basis for these comments. The agencies’ market 

forecast includes about 24 vehicle configurations above 74 square feet with a total volume of 

about 50,000 vehicles or less during any MY in the 2017-2025 time frame. While a relatively 

small portion of the overall truck fleet, for some manufacturers, these vehicles are non-trivial 

portion of sales. As noted above, the very largest light trucks have significant load-carrying and 

towing capabilities that make it particularly challenging for manufacturers to add fuel economyimproving/CO2-reducing technologies in a way that maintains the full functionality of those 

capabilities. 

Considering manufacturer CBI and our estimates of the impact of the 66 square foot 

cutpoint for future model years, the agencies have initially determined to adopt curves that 

transition to a different cut point. While noting that no specific vehicle need meet its target 

(because standards apply to fleet average performance), we believe that the information provided 

to us by manufacturers and our own analysis supports the gradual extension of the cutpoint for 

large light trucks in this proposal from 66 square feet in MY 2016 out to a larger footprint square 

feet before MY 2025. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 107 of 770

Figure 0-1 Footprint Distribution by Car and Truck* 

*Proposed truck cutpoints for MY 2025 shown in red, car cutpoints shown in green 

The agencies are proposing to phase in the higher cutpoint for the truck curve in order to 

avoid any backsliding from the MY 2016 standard. A target that is feasible in one model year 

should never become less feasible in a subsequent model year—manufacturers should have no 

reason to remove fuel economy-improving/CO2-reducing technology from a vehicle once it has 

been applied. Put another way, the agencies are proposing to not allow “curve crossing” from 

one model year to the next. In proposing MYs 2011-2015 CAFE standards and promulgating 

MY 2011 standards, NHTSA proposed and requested comment on avoiding curve crossing, as an 

“anti-backsliding measure.”125 The MY 2016 2 cycle test curves are therefore a floor for the 

MYs 2017-2025 curves. For passenger cars, which have minimal change in slope from the MY 

2012-2016 rulemakings and no change in cut points, there are no curve crossing issues in the 

proposed standards. 

The minimum stringency determination was done using the two cycle curves. Stringency 

adjustments for air conditioning and other credits were calculated after curves that did not cross 

 125 74 Fed. Reg. at 14370 (Mar. 30, 2009). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 108 of 770

were determined in two cycle space. The year over year increase in these adjustments cause 

neither the GHG nor CAFE curves (with A/C) to contact the 2016 curves when charted. 

7. Once the agencies determined the complete mathematical function shape, how did 

the agencies adjust the curves to develop the proposed standards and regulatory 

alternatives? 

The curves discussed above all reflect the addition of technology to individual vehicle 

models to reduce technology differences between vehicle models before fitting curves. This 

application of technology was conducted not to directly determine the proposed standards, but 

rather for purposes of technology adjustments, and set aside considerations regarding potential 

rates of application (i.e., phase-in caps), and considerations regarding economic implications of 

applying specific technologies to specific vehicle models. The following sections describe 

further adjustments to the curves discussed above, that affect both the shape of the curve, and the 

location of the curve, that helped the agencies determine curves that defined the proposed 

standards. 

a. Adjusting for Year over Year Stringency 

As in the MYs 2012-2016 rules, the agencies developed curves defining regulatory 

alternatives for consideration by “shifting” these curves. For the MYs 2012-2016 rules, the 

agencies did so on an absolute basis, offsetting the fitted curve by the same value (in gpm or 

g/mi) at all footprints. In developing this proposal, the agencies have reconsidered the use of this 

approach, and have concluded that after MY 2016, curves should be offset on a relative basis—

that is, by adjusting the entire gpm-based curve (and, equivalently, the CO2 curve) by the same 

percentage rather than the same absolute value. The agencies’ estimates of the effectiveness of 

these technologies are all expressed in relative terms—that is, each technology (with the 

exception of A/C) is estimated to reduce fuel consumption (the inverse of fuel economy) and 

CO2 emissions by a specific percentage of fuel consumption without the technology. It is, 

therefore, more consistent with the agencies’ estimates of technology effectiveness to develop 

the proposed standards and regulatory alternatives by applying a proportional offset to curves 

expressing fuel consumption or emissions as a function of footprint. In addition, extended 

indefinitely (and without other compensating adjustments), an absolute offset would eventually 

(i.e., at very high average stringencies) produce negative (gpm or g/mi) targets. Relative offsets 

avoid this potential outcome. Relative offsets do cause curves to become, on a fuel consumption 

and CO2 basis, flatter at greater average stringencies; however, as discussed above, this outcome 

remains consistent with the agencies’ estimates of technology effectiveness. In other words, 

given a relative decrease in average required fuel consumption or CO2 emissions, a curve that is 

flatter by the same relative amount should be equally challenging in terms of the potential to 

achieve compliance through the addition of fuel-saving technology. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 109 of 770

On this basis, and considering that the “flattening” occurs gradually for the regulatory 

alternatives the agencies have evaluated, the agencies tentatively conclude that this approach to 

offsetting the curves to develop year-by-year regulatory alternatives neither re-creates a situation 

in which manufacturers are likely to respond to standards in ways that compromise highway 

safety, nor undoes the attribute-based standard’s more equitable balancing of compliance 

burdens among disparate manufacturers. The agencies invite comment on these conclusions, and 

on any other means that might avoid the potential outcomes—in particular, negative fuel 

consumption and CO2 targets—discussed above. 

b. Adjusting for anticipated improvements to mobile air conditioning systems 

The fuel economy values in the agencies’ market forecast are based on the 2-cycle (i.e., 

city and highway) fuel economy test and calculation procedures that do not reflect potential 

improvements in air conditioning system efficiency, refrigerant leakage, or refrigerant Global 

Warming Potential (GWP). Recognizing that there are significant and cost effective potential air 

conditioning system improvements available in the rulemaking timeframe (discussed in detail in 

Chapter 5 of the draft joint TSD), the agencies are increasing the stringency of the target curves 

based on the agencies’ assessment of the capability of manufacturers to implement these 

changes. For the proposed CAFE standards and alternatives, an offset is included based on air 

conditioning system efficiency improvements, as these improvements are the only improvements 

that effect vehicle fuel economy. For the proposed GHG standards and alternatives, a stringency 

increase is included based on air conditioning system efficiency, leakage and refrigerant 

improvements. As discussed above in Chapter 5 of the join TSD, the air conditioning system 

improvements affect a vehicle’s fuel efficiency or CO2 emissions performance as an additive 

stringency increase, as compared to other fuel efficiency improving technologies which are 

multiplicative. Therefore, in adjusting target curves for improvements in the air conditioning 

system performance, the agencies are adjusting the target curves by additive stringency increases 

(or vertical shifts) in the curves. 

For the GHG target curves, the offset for air conditioning system performance is being 

handled in the same manner as for the MY 2012-2016 rules. For the CAFE target curves, 

NHTSA for the first time is proposing to account for potential improvements in air conditioning 

system performance. Using this methodology, the agencies first use a multiplicative stringency 

adjustment for the sloped portion of the curves to reflect the effectiveness on technologies other 

that air conditioning system technologies, creating a series of curve shapes that are “fanned” 

based on two-cycle performance. Then the curves are offset vertically by the air conditioning 

improvement by an equal amount at every point. 

D. Joint Vehicle Technology Assumptions 

For the past four to five years, the agencies have been working together closely to follow 

the development of fuel consumption and GHG reducing technologies. Two major analyses 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 110 of 770

have been published jointly by EPA and NHTSA: the Technical Support Document to support 

the MYs 2012-2016 final rule and the 2010 Technical Analysis Report (which supported the 

2010 Notice of Intent). The latter of these analyses was also done in conjunction with CARB. 

Both of these analyses have both been published within the past 18 months. As a result, much of 

the work is still relevant and we continue to rely heavily on these references. However, some 

technologies -- and what we know about them -- are changing so rapidly that the analysis 

supporting this proposal contains a considerable amount of new work on technologies included 

in this rule, some of which were included in prior rulemakings, and others that were not. 

Notably, we have updated our battery costing methodology significantly since the MYs 

2012-2016 final rule and even relative to the 2010 TAR. We are now using a peer reviewed 

model developed by Argonne National Laboratory for the Department of Energy which provides 

us with more rigorous estimates for battery costs and allows us to estimate future costs specific 

to hybrids, plug-in hybrids and electric vehicles all of which have different battery design 

characteristics. 

We also have new cost data from more recently completed tear down and other cost 

studies by FEV which were not available in either the MYs 2012-2016 final rule or the 2010 

TAR. These new studies analyzed a 8-speed automatic transmission replacing 6-speed automatic 

transmission, a 8-speed dual clutch transmission replacing 6-speed dual clutch transmission, a 

power-split hybrid powertrain with an I4 engine replacing a conventional engine powertrain with 

V6 engine, a mild hybrid with stop-start technology and an I4 engine replacing a conventional I4 

engine, and the Fiat Multi-Air engine technology. We discuss the new tear down studies in 

Section II.D.2 of this preamble. Based on this, we have updated some of the FEV-developed 

costs relative to what we used in the 2012-2016 final rule, although these costs are consistent 

with those used in the 2010 TAR. Furthermore, we have completely re-worked our estimated 

costs associated with mass reduction relative to both the MYs 2012-2016 final rule and the 2010 

TAR. 

As would be expected given that some of our cost estimates were developed several years 

ago, we have also updated all of our base direct manufacturing costs to put them in terms of 

more recent dollars (2009 dollars for this proposal). We have also updated our methodology for 

calculating indirect costs associated with new technologies since both the MYs 2012-2016 final 

rule and the TAR. We continue to use the indirect cost multiplier (ICM) approach used in those 

analyses, but have made important changes to the calculation methodology – changes done in 

response to ongoing staff evaluation and public input. 

Lastly, we have updated many of the technologies’ effectiveness estimates largely based 

on new vehicle simulation work conducted by Ricardo Engineering. This simulation work 

provides the effectiveness estimates for a number of the technologies most heavily relied on in 

the agencies’ analysis of potential standards for MYs 2017-2025. 

The agencies have also reviewed the findings and recommendations in the updated NAS 

report “Assessment of Fuel Economy Technologies for Light-Duty Vehicles” that was completed 

after the MYs 2012-2016 final rule was issued,126 and NHTSA has performed a sensitivity 

 126 “Assessment of Fuel Economy Technologies for Light-Duty Vehicles”, National Research Council of the 

National Academies, June 2010. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 111 of 770

analysis (contained in its PRIA) to examine the impact of using some of the NAS cost and 

effectiveness estimates on the proposed standards. 

Each of these changes is discussed briefly in the remainder of this section and in much 

greater detail in Chapter 3 of the draft joint TSD. First we provide a brief summary of the 

technologies we have considered in this proposal before highlighting the above-mentioned items 

that are new for this proposal. We request comment on all aspects of our analysis as discussed 

here and detailed in the draft joint TSD. 

1. What Technologies did the Agencies Consider? 

For this proposal, the agencies project that manufacturers can add a variety of 

technologies to each of their vehicle models and or platforms in order to improve the vehicles’ 

fuel economy and GHG performance. In order to analyze a variety of regulatory alternative 

scenarios, it is essential to have a thorough understanding of the technologies available to the 

manufacturers. This analysis includes an assessment of the cost, effectiveness, availability, 

development time, and manufacturability of various technologies within the normal redesign and 

refresh periods of a vehicle line (or in the design of a new vehicle). As we describe in the draft 

Joint TSD, when a technology can be applied can affect the cost as well as the technology 

penetration rates (or phase-in caps) that are projected in the analysis. 

The agencies considered dozens of vehicle technologies that manufacturers could use to 

improve the fuel economy and reduce CO2 emissions of their vehicles during the MYs 2017-

2025 timeframe. Many of the technologies considered are available today, are well known, and 

could be incorporated into vehicles once product development decisions are made. These are 

“near-term” technologies and are identical or very similar to those anticipated in the agencies’ 

analyses of compliance strategies for the MYs 2012-2016 final rule. For this rulemaking, given 

its time frame, other technologies are also considered that are not currently in production, but 

that are beyond the initial research phase, and are under development and expected to be in 

production in the next 5-10 years. Examples of these technologies are downsized and 

turbocharged engines operating at combustion pressures even higher than today’s turbocharged 

engines, and an emerging hybrid architecture combined with an 8 speed dual clutch transmission, 

a combination that is not available today. These are technologies which the agencies believe 

can, for the most part, be applied both to cars and trucks, and which are expected to achieve 

significant improvements in fuel economy and reductions in CO2 emissions at reasonable costs 

in the MYs 2017 to 2025 timeframe. The agencies did not consider technologies that are 

currently in an initial stage of research because of the uncertainty involved in the availability and 

feasibility of implementing these technologies with significant penetration rates for this analysis. 

The agencies recognize that due to the relatively long time frame between the date of this 

proposal and 2025, it is very possible that new and innovative technologies will make their way 

into the fleet, perhaps even in significant numbers, that we have not considered in this analysis. 

We expect to reconsider such technologies as part of the mid-term evaluation, as appropriate, and 

possibly could be used to generate credits under a number of the proposed flexibility and 

incentive programs provided in the proposed rules. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 112 of 770

 The technologies considered can be grouped into four broad categories: engine 

technologies; transmission technologies; vehicle technologies (such as mass reduction, tires and 

aerodynamic treatments); and electrification technologies (including hybridization and changing 

to full electric drive).127 The specific technologies within each broad group are discussed below. 

The list of technologies presented below is nearly identical to that presented in both the MYs 

2012-2016 final rule and the 2010 TAR, with the following new technologies added to the list 

since the last final rule: the P2 hybrid, a newly emerging hybridization technology that was also 

considered in the 2010 TAR; continued improvements in gasoline engines, with greater 

efficiencies and downsizing; continued significant efficiency improvements in transmissions; 

and ongoing levels of improvement to some of the seemingly more basic technologies such as 

lower rolling resistance tires and aerodynamic treatments, which are among the most cost 

effective technologies available for reducing fuel consumption and GHGs. Not included in the 

list below are technologies specific to air conditioning system improvements and off-cycle 

controls, which are presented in Section II.F of this NPRM and in Chapter 5 of the draft Joint 

TSD. 

a. Types of Engine Technologies Considered 

Low-friction lubricants including low viscosity and advanced low friction lubricant oils 

are now available with improved performance. If manufacturers choose to make use of 

these lubricants, they may need to make engine changes and conduct durability testing to 

accommodate the lubricants. The costs in our analysis consider these engine changes and 

testing requirements. This level of low friction lubricants is expected to exceed 85 

percent penetration by the 2017 MY. 

Reduction of engine friction losses can be achieved through low-tension piston rings, 

roller cam followers, improved material coatings, more optimal thermal management, 

piston surface treatments, and other improvements in the design of engine components 

and subsystems that improve efficient engine operation. This level of engine friction 

reduction is expected to exceed 85 percent penetration by the 2017 MY. 

Advanced Low Friction Lubricant and Second Level of Engine Friction Reduction are 

new for this analysis. As technologies advance between now and the rulemaking 

timeframe, there will be further development in low friction lubricants and engine friction 

reductions. The agencies grouped the development in these two areas into a single 

technology and applied them for MY 2017 and beyond. 

Cylinder deactivation disables the intake and exhaust valves and prevents fuel injection 

into some cylinders during light-load operation. The engine runs temporarily as though it 

were a smaller engine which substantially reduces pumping losses. 

Variable valve timing alters the timing of the intake valves, exhaust valves, or both, 

primarily to reduce pumping losses, increase specific power, and control residual gases. 

 127 NHTSA’s analysis considers these technologies in five groups rather than four – hybridization is one category, 

and “electrification/accessories” is another. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 113 of 770

Discrete variable valve lift increases efficiency by optimizing air flow over a broader 

range of engine operation which reduces pumping losses. This is accomplished by 

controlled switching between two or more cam profile lobe heights. 

Continuous variable valve lift is an electromechanical or electrohydraulic system in 

which valve timing is changed as lift height is controlled. This yields a wide range of 

performance optimization and volumetric efficiency, including enabling the engine to be 

valve throttled. 

Stoichiometric gasoline direct-injection technology injects fuel at high pressure directly 

into the combustion chamber to improve cooling of the air/fuel charge as well as 

combustion quality within the cylinder, which allows for higher compression ratios and 

increased thermodynamic efficiency. 

Turbo charging and downsizing increases the available airflow and specific power level, 

allowing a reduced engine size while maintaining performance. Engines of this type use 

gasoline direct injection (GDI) and dual cam phasing. This reduces pumping losses at 

lighter loads in comparison to a larger engine. We continue to include an 18 bar brake 

mean effective pressure (BMEP) technology (as in the MYs 2012-2016 final rule) and are 

also including both 24 bar BMEP and 27 bar BMEP technologies. The 24 bar BMEP 

technology would use a single-stage, variable geometry turbocharger which would 

provide a higher intake boost pressure available across a broader range of engine 

operation than conventional 18 bar BMEP engines. The 27 bar BMEP technology 

requires additional boost and thus would use a two-stage turbocharger necessitating use 

of cooled exhaust gas recirculation (EGR) as described below. The18 bar BMEP 

technology is applied with 33 percent engine downsizing, 24 bar BMEP is applied with 

50 percent engine downsizing, and 27 bar BMEP is applied with 56 percent engine 

downsizing. 

Cooled exhaust-gas recirculation (EGR) reduces the incidence of knocking combustion 

with additional charge dilution 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 engine displacement and both pumping and friction losses while maintaining 

performance. Engines of this type use GDI and both dual cam phasing and discrete 

variable valve lift. The EGR systems considered in this assessment would use a dualloop system with both high and low pressure EGR loops and dual EGR coolers. For this 

proposal, cooled EGR is considered to be a technology that can be added to a 24 bar 

BMEP engine and is an enabling technology for 27 bar BMEP engines. 

Diesel engines have several characteristics that give superior fuel efficiency, including 

reduced pumping losses due to lack of (or greatly reduced) throttling, high pressure direct 

injection of fuel, a combustion cycle that operates at a higher compression ratio, and a 

very lean air/fuel mixture relative to an equivalent-performance gasoline engine. This 

technology requires additional enablers, such as a NOx adsorption catalyst system or a 

urea/ammonia selective catalytic reduction system for control of NOx emissions during 

lean (excess air) operation. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 114 of 770

b. Types of Transmission Technologies Considered 

Improved automatic transmission controls optimize the shift schedule to maximize fuel 

efficiency under wide ranging conditions and minimizes losses associated with torque 

converter slip through lock-up or modulation. The first level of controls is expected to 

exceed 85 percent penetration by the 2017 MY. 

Shift optimization is a strategy whereby the engine and/or transmission controller(s) 

emulates a CVT by continuously evaluating all possible gear options that would provide 

the necessary tractive power and select the best gear ratio that lets the engine run in the 

most efficient operating zone. 

Six-, seven-, and eight-speed automatic transmissions are optimized by changing the gear 

ratio span to enable the engine to operate in a more efficient operating range over a 

broader range of vehicle operating conditions. While a six speed transmission 

application was most prevalent for the MYs 2012-2016 final rule, eight speed 

transmissions are expected to be readily available and applied in the MYs 2017 through 

2025 timeframe. 

Dual clutch or automated shift manual transmissions are similar to manual transmissions, 

but the vehicle controls shifting and launch functions. A dual-clutch automated shift 

manual transmission (DCT) uses separate clutches for even-numbered and odd-numbered 

gears, so the next expected gear is pre-selected, which allows for faster and smoother 

shifting. The 2012-2016 final rule limited DCT applications to a maximum of 6-speeds. 

For this proposal we have considered both 6-speed and 8-speed DCT transmissions. 

Continuously variable transmission commonly uses V-shaped pulleys connected by a 

metal belt rather than gears to provide ratios for operation. Unlike manual and automatic 

transmissions with fixed transmission ratios, continuously variable transmissions can 

provide fully variable and an infinite number of transmission ratios that enable the engine 

to operate in a more efficient operating range over a broader range of vehicle operating 

conditions. The CVT is maintained for existing baseline vehicles and not considered for 

future vehicles in this proposal due to the availability of more cost effective transmission 

technologies. 

Manual 6-speed transmission offers an additional gear ratio, often with a higher 

overdrive gear ratio, than a 5-speed manual transmission. 

High Efficiency Gearbox (automatic, DCT or manual) – continuous improvement in 

seals, bearings and clutches, super finishing of gearbox parts, and development in the 

area of lubrication, all aimed at reducing frictional and other parasitic load in the system 

for an automatic or DCT type transmission. 

c. Types of Vehicle Technologies Considered 

Lower-rolling-resistance tires have characteristics that reduce frictional losses associated 

with the energy dissipated mainly in the deformation of the tires under load, thereby 

improving fuel economy and reducing CO2 emissions. New for this proposal (and also 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 115 of 770

marking an advance over low rolling resistance tires considered during the heavy duty 

greenhouse gas rulemaking, see 76 FR at 57207, 57229) is a second level of lower rolling 

resistance tires that reduce frictional losses even further. The first level of low rolling 

resistance tires will have 10 percent rolling resistance reduction while the 2nd level would 

have 20 percent rolling resistance reduction compared to 2008 baseline vehicle. The first 

level of lower rolling resistance tires is expected to exceed 85 percent penetration by the 

2017 MY. 

Low-drag brakes reduce the sliding friction of disc brake pads on rotors when the brakes 

are not engaged because the brake pads are pulled away from the rotors. 

Front or secondary axle disconnect for four-wheel drive systems provides a torque 

distribution disconnect between front and rear axles when torque is not required for the 

non-driving axle. This results in the reduction of associated parasitic energy losses. 

Aerodynamic drag reduction can be achieved via two approaches, either reducing the 

drag coefficients or reducing vehicle frontal area. To reduce the drag coefficient, skirts, 

air dams, underbody covers, and more aerodynamic side view mirrors can be applied. In 

addition to the standard aerodynamic treatments, the agencies have included a second 

level of aerodynamic technologies which could include active grill shutters, rear visors, 

and larger under body panels. The first level of aero dynamic drag improvement is 

estimated to reduce aerodynamic drag by 10 percent relative to the baseline 2008 vehicle 

while the second level would reduce aero dynamic drag by 20 percent relative to 2008 

baseline vehicles. The second level of aerodynamic technologies was not considered in 

the MYs 2012-2016 final rule. 

Mass Reduction can be achieved in many ways, such as material substitution, design 

optimization, part consolidation, improving manufacturing process, etc. The agencies 

applied mass reduction of up to 20 percent relative to MY 2008 levels in this NPRM 

compared to only 10 percent in 2012-2016 final rule. The agencies also determined 

effectiveness values for hybrid, plug-in and electric vehicles based on net mass reduction, 

or the delta between the applied mass reduction (capped at 20 percent) and the added 

mass of electrification components. In assessing compliance strategies and in structuring 

the standards, the agencies only considered amounts of vehicle mass reduction that would 

result in what we estimated to be no adverse effect on overall fleet safety. The agencies 

have an extensive discussion of mass reduction technologies as well as the cost of mass 

reduction in chapter 3 of the draft joint TSD. 

d. Types of Electrification/Accessory and Hybrid Technologies Considered 

Electric power steering (EPS)/ Electro-hydraulic power steering (EHPS) is an 

electrically-assisted steering system that has advantages over traditional hydraulic power 

steering because it replaces a continuously operated hydraulic pump, thereby reducing 

parasitic losses from the accessory drive. Manufacturers have informed the agencies that 

full EPS systems are being developed for all light-duty vehicles, including large trucks. 

However, the agencies have applied the EHPS technology to large trucks and the EPS 

technology to all other light-duty vehicles. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 116 of 770

Improved accessories (IACC) may include high efficiency alternators, electrically driven 

(i.e., on-demand) water pumps and cooling fans. This excludes other electrical 

accessories such as electric oil pumps and electrically driven air conditioner compressors. 

New for this proposal is a second level of IACC (IACC2) which consists of the IACC 

technologies and the addition of a mild regeneration strategy and a higher efficiency 

alternator. The first level of IACC improvements is expected to be at more than 85 

percent penetration by the 2017MY. 

12-volt Stop-Start, sometimes referred to as idle-stop or 12-volt micro hybrid is the most 

basic hybrid system that facilitates idle-stop capability. These systems typically 

incorporate an enhanced performance battery and other features such as electric 

transmission and cooling pumps to maintain vehicle systems during idle-stop. 

Higher Voltage Stop-Start/Belt Integrated Starter Generator (BISG) sometimes referred 

to as a mild hybrid, provides idle-stop capability and uses a higher voltage battery with 

increased energy capacity over typical automotive batteries. The higher system voltage 

allows the use of a smaller, more powerful electric motor. This system replaces a 

standard alternator with an enhanced power, higher voltage, higher efficiency starteralternator, that is belt driven and that can recover braking energy while the vehicle slows 

down (regenerative braking). This mild hybrid technology is not included by either 

agency as an enabling technology in the analysis supporting this proposal, although some 

automakers have expressed interest in possibly using the technology during the 

rulemaking time frame. EPA and NHTSA are providing incentives to encourage this and 

similar hybrid technologies on pick-up trucks in particular, as described in Section II.F, 

and the agencies are in the process of including this technology for the final rule analysis 

as we expand our understanding of the associated costs and limitations. 

Integrated Motor Assist (IMA)/Crank integrated starter generator (CISG) provides idlestop capability and uses a high voltage battery with increased energy capacity over 

typical automotive batteries. The higher system voltage allows the use of a smaller, more 

powerful electric motor and reduces the weight of the wiring harness. This system 

replaces a standard alternator with an enhanced power, higher voltage, higher efficiency 

starter-alternator that is crankshaft mounted and can recover braking energy while the 

vehicle slows down (regenerative braking). The IMA technology is not included by 

either agency as an enabling technology in the analysis supporting this proposal, although 

it is included as a baseline technology because it exists in our 2008 baseline fleet. 

P2 Hybrid is a newly emerging hybrid technology that uses a transmission integrated 

electric motor placed between the engine and a gearbox or CVT, much like the IMA 

system described above except with a wet or dry separation clutch which is used to 

decouple the motor/transmission from the engine. In addition, a P2 hybrid would 

typically be equipped with a larger electric machine. Disengaging the clutch allows allelectric operation and more efficient brake-energy recovery. Engaging the clutch allows 

efficient coupling of the engine and electric motor and, when combined with a DCT 

transmission, reduces gear-train losses relative to power-split or 2-mode hybrid systems. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 117 of 770

2-Mode Hybrid is a hybrid electric drive system that uses an adaptation of a conventional 

stepped-ratio automatic transmission by replacing some of the transmission clutches with 

two electric motors that control the ratio of engine speed to vehicle speed, while clutches 

allow the motors to be bypassed. This improves both the transmission torque capacity for 

heavy-duty applications and reduces fuel consumption and CO2 emissions at highway 

speeds relative to other types of hybrid electric drive systems. The 2-mode hybrid 

technology is not included by either agency as an enabling technology in the analysis 

supporting this proposal, although it is included as a baseline technology because it exists 

in our 2008 baseline fleet. 

Power-split Hybrid is a hybrid electric drive system that replaces the traditional 

transmission with a single planetary gearset and a motor/generator. This motor/generator 

uses the engine to either charge the battery or supply additional power to the drive motor. 

A second, more powerful motor/generator is permanently connected to the vehicle’s final 

drive and always turns with the wheels. The planetary gear splits engine power between 

the first motor/generator and the drive motor to either charge the battery or supply power 

to the wheels. The power-split hybrid technology is not included by either agency as an 

enabling technology in the analysis supporting this proposal, (the agencies evaluate the 

P2 hybrid technology discussed above where power-split hybrids might otherwise have 

been appropriate) although it is included as a baseline technology because it exists in our 

2008 baseline fleet. 

Plug-in hybrid electric vehicles (PHEV) are hybrid electric vehicles with the means to 

charge their battery packs from an outside source of electricity (usually the electric grid). 

These vehicles have larger battery packs with more energy storage and a greater 

capability to be discharged than other hybrid electric vehicles. They also use a control 

system that allows the battery pack to be substantially depleted under electric-only or 

blended mechanical/electric operation and batteries that can be cycled in charge 

sustaining operation at a lower state of charge than is typical of other hybrid electric 

vehicles. These vehicles are sometimes referred to as Range Extended Electric Vehicles 

(REEV). In this MYs 2017-2025 analysis, PHEVs with several all-electric ranges—both 

a 20 mile and a 40 mile all-electric range—have been included as potential technologies. 

Electric vehicles (EV) are equipped with all-electric drive and with systems powered by 

energy-optimized batteries charged primarily from grid electricity. EVs with several 

ranges—75 mile, 100 mile and 150 mile range—have been included as potential 

technologies. 

e. Technologies Considered but Deemed “Not Ready” in the MYs 2017-2025 

Timeframe 

Fuel cell electric vehicles (FCEVs) utilize a full electric drive platform but consume 

electricity generated by an on-board fuel cell and hydrogen fuel. Fuel cells are electrochemical devices that directly convert reactants (hydrogen and oxygen via air) into 

electricity, with the potential of achieving more than twice the efficiency of conventional 

internal combustion engines. High pressure gaseous hydrogen storage tanks are used by 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 118 of 770

most automakers for FCEVs that are currently under development. The high pressure 

tanks are similar to those used for compressed gas storage in more than 10 million CNG 

vehicles worldwide, except that they are designed to operate at a higher pressure (350 bar 

or 700 bar vs. 250 bar for CNG). While we expect there will be some limited 

introduction of FCEVs into the market place in the time frame of this rule, we expect this 

introduction to be relatively small, and thus FCEVs are not considered in the modeling 

analysis conducted for this proposal. 

There are a number of other technologies that the agencies have not considered in their 

analysis, but may be considered for the final rule. These include HCCI, “multi-air”, and camless 

valve actuation, and other advanced engines currently under development. 

2. How did the Agencies Determine the Costs of Each of these Technologies? 

As noted in the introduction to this section, most of the direct cost estimates for 

technologies carried over from the MYs 2012-2016 final rule and subsequently used in this 

proposal are fundamentally unchanged since the MYs 2012-2016 final rule analysis and/or the 

2010 TAR. We say “fundamentally” unchanged since the basis of the direct manufacturing cost 

estimates have not changed; however, the costs have been updated to more recent dollars, the 

learning effects have resulted in further cost reductions for some technologies, the indirect costs 

are calculated using a modified methodology and the impact of long-term ICMs is now present 

during the rulemaking timeframe. Besides these changes, there are also some other notable 

changes to the costs used in previous analyses. We highlight these changes in Section II.D.2.a, 

below. We highlight the changes to the indirect cost methodology and adjustments to more 

recent dollars in Sections II.D.2.b and c. Lastly, we present some updated terminology used for 

our approach to estimating learning effects in an effort to eliminate confusion with our past 

terminology. This is discussed in Section II.D.2.d, below. 

The agencies note that the technology costs included in this proposal take into account 

only those associated with the initial build of the vehicle. Although comments were received to 

the MYs 2012-2016 rulemaking that suggested there could be additional maintenance required 

with some new technologies (e.g., turbocharging, hybrids, etc.), and that additional maintenance 

costs could occur as a result, the agencies believe that it is equally possible that maintenance 

costs could decrease for some vehicles, especially when considering full electric vehicles (which 

lack routine engine maintenance) or the replacement of automatic transmissions with simpler 

dual-clutch transmissions. The agencies request comment on the possible maintenance cost 

impacts associated with this proposal, reminding potential commenters that increased warranty 

costs are already considered as part of the ICMs. 

a. Direct Manufacturing Costs (DMC) 

For direct manufacturing costs (DMC) related to turbocharging, downsizing, gasoline 

direct injection, transmissions, as well as non-battery-related costs on hybrid, plug-in hybrid and 

electric vehicles, the agencies have relied on costs derived from teardown studies. For battery 

related DMC for HEVs, PHEVs and EVs, the agencies have relied on the BatPaC model 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 119 of 770

developed by Argonne National Laboratory for the Department of Energy. For mass reduction 

DMC, the agencies have relied on several studies as described in detail in the draft Joint TSD. 

We discuss each of these briefly here and in more detail in the draft joint TSD. For the majority 

of the other technologies considered in this proposal and described above, the agencies have 

relied on the 2012-2016 final rule and sources described there for estimates of DMC. 

i. Costs from Tear-down Studies 

As a general matter, the agencies believe that the best method to derive technology cost 

estimates is to conduct studies involving tear-down and analysis of actual vehicle components. 

A “tear-down” involves breaking down a technology into its fundamental parts and 

manufacturing processes by completely disassembling actual vehicles and vehicle subsystems 

and precisely determining what is required for its production. The result of the tear-down is a 

“bill of materials” for each and every part of the relevant vehicle systems. This tear-down 

method of costing technologies is often used by manufacturers to benchmark their products 

against competitive products. Historically, vehicle and vehicle component tear-down has not 

been done on a large scale by researchers and regulators due to the expense required for such 

studies. While tear-down studies are highly accurate at costing technologies for the year in 

which the study is intended, their accuracy, like that of all cost projections, may diminish over 

time as costs are extrapolated further into the future because of uncertainties in predicting 

commodities (and raw material) prices, labor rates, and manufacturing practices. The projected 

costs may be higher or lower than predicted. 

Over the past several years, EPA has contracted with FEV, Inc. and its subcontractor 

Munro & Associates, to conduct tear-down cost studies for a number of key technologies 

evaluated by the agencies in assessing the feasibility of future GHG and CAFE standards. The 

analysis methodology included procedures to scale the tear-down results to smaller and larger 

vehicles, and also to different technology configurations. FEV’s methodology was documented 

in a report published as part of the MY 2012-2016 rulemaking, detailing the costing of the first 

tear-down conducted in this work (#1 in the below list).128 This report was peer reviewed by 

experts in the industry and revised by FEV in response to the peer review comments.129 

Subsequent tear-down studies (#2-5 in the below list) were documented in follow-up FEV 

reports made available in the public docket for the MY 2012-2016 rulemaking.130

Since then, FEV’s work under this contract work assignment has continued. Additional 

cost studies have been completed and are available for public review.131 The most extensive 

study, performed after the MY 2012-2016 Final Rule, involved whole-vehicle tear-downs of a 

 128 U.S. EPA, “Light-Duty Technology Cost Analysis Pilot Study,” Contract No. EP-C-07-069, Work Assignment 1-

3, December 2009, EPA-420-R-09-020, Docket EPA-HQ-OAR-2009-0472- 11282 129 FEV pilot study response to peer review document November 6, 2009, is at EPA-HQ-OAR-2009-0472-11285 130 U.S. EPA, “Light-duty Technology Cost Analysis – Report on Additional Case Studies,” EPA-HQ-OAR-2009-

0472-11604 

131 [Compilation of FEV study reports for 8spAT, 8spDCT, mild HEV, and Multi-Air] 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 120 of 770

2010 Ford Fusion powersplit hybrid and a conventional 2010 Ford Fusion. (The latter served as 

a baseline vehicle for comparison.) In addition to providing powersplit HEV costs, the results 

for individual components in these vehicles were subsequently used by FEV/Munro to cost 

another hybrid technology, the P2 hybrid, which employs similar hardware. This approach to 

costing P2 hybrids was undertaken because P2 HEVs were not yet in volume production at the 

time of hardware procurement for tear-down. Finally, an automotive lithium-polymer battery 

was torn down and costed to provide supplemental battery costing information to that associated 

with the NiMH battery in the Fusion. This HEV cost work, including the extension of results to 

P2 HEVs, has been extensively documented in a new report prepared by FEV.132 Because of the 

complexity and comprehensive scope of this HEV analysis, EPA commissioned a separate peer 

review focused exclusively on it. Reviewer comments generally supported FEV’s methodology 

and results, while including a number of suggestions for improvement many of which were 

subsequently incorporated into FEV’s analysis and final report. The peer review comments and 

responses are available in the rulemaking docket.133, 134

Over the course of this work assignment, teardown-based studies have been performed 

thus far on the technologies listed below. These completed studies provide a thorough 

evaluation of the new technologies’ costs relative to their baseline (or replaced) technologies. 

1. Stoichiometric gasoline direct injection (SGDI) and turbocharging with engine 

downsizing (T-DS) on a DOHC (dual overhead cam) I4 engine, replacing a 

conventional DOHC I4 engine. 

2. SGDI and T-DS on a SOHC (single overhead cam) on a V6 engine, replacing a 

conventional 3-valve/cylinder SOHC V8 engine. 

3. SGDI and T-DS on a DOHC I4 engine, replacing a DOHC V6 engine. 

4. 6-speed automatic transmission (AT), replacing a 5-speed AT. 

5. 6-speed wet dual clutch transmission (DCT) replacing a 6-speed AT. 

6. 8-speed AT replacing a 6-speed AT. 

7. 8-speed DCT replacing a 6-speed DCT. 

8. Power-split hybrid (Ford Fusion with I4 engine) compared to a conventional vehicle 

(Ford Fusion with V6). The results from this tear-down were extended to address P2 

hybrids. In addition, costs from individual components in this tear-down study were 

used by the agencies in developing cost estimates for PHEVs and EVs. 

9. Mild hybrid with stop-start technology (Saturn Vue with I4 engine), replacing a 

conventional I4 engine. (Although results from this cost study are included in the 

rulemaking docket, they were not used by the agencies in this rulemaking’s technical 

analyses.) 

 132 FEV, Inc., “Light-Duty Technology Cost Analysis, Power-split and P2 HEV Case Studies”, 133 ICF, “Peer Review of FEV Inc. Report “Light Duty Technology Cost Analysis, Power-Split and P2 Hybrid 

Electric Vehicle Case Studies”, March 31, 2011. 

134 FEV and EPA, Peer Review Report - Response to Comments Document for “Light Duty Technology Cost 

Analysis, Power-Split and P2 Hybrid Electric Vehicle Case Studies”, October 3, 2011. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 121 of 770

10. Fiat Multi-Air engine technology. (Although results from this cost study are included 

in the rulemaking docket, they were not used by the agencies in this rulemaking’s 

technical analyses.) 

Items 6 through 10 in the list above are new since the 2012-2016 final rule. 

In addition, FEV and EPA extrapolated the engine downsizing costs for the following 

scenarios that were based on the above study cases: 

1. Downsizing a SOHC 2 valve/cylinder V8 engine to a DOHC V6. 

2. Downsizing a DOHC V8 to a DOHC V6. 

3. Downsizing a SOHC V6 engine to a DOHC 4 cylinder engine. 

4. Downsizing a DOHC 4 cylinder engine to a DOHC 3 cylinder engine. 

The agencies have relied on the findings of FEV for estimating the cost of the 

technologies covered by the tear-down studies. 

ii. Costs of HEV, EV & PHEV 

The agencies have also reevaluated the costs for HEVs, PHEVs, and EVs since both the 

2012-2016 final rule and the 2010 TAR. First, electrified vehicle technologies are developing 

rapidly and the agencies sought to capture results from the most recent analysis. Second, the 

2012-2016 rule employed a single $/kWhr estimate and did not consider the specific vehicle and 

technology application for the battery when we estimated the cost of the battery. Specifically, 

batteries used in HEVs (high power density applications) versus EVs (high energy density 

applications) need to be considered appropriately to reflect the design differences, the chemical 

material usage differences and differences in $/kWhr as the power to energy ratio of the battery 

changes for different applications. 

To address these issues for this proposal, the agencies have done two things. First, EPA 

has developed a spreadsheet tool that was used to size the motor and battery based on the 

different road load of various vehicle classes. Second, the agencies have used a battery cost 

model developed by Argonne National Laboratory (ANL) for the Vehicle Technologies Program 

of the U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy.135 

The model developed by ANL allows users to estimate unique battery pack costs using user 

customized input sets for different hybridization applications, such as strong hybrid, PHEV and 

EV. The DOE has established long term industry goals and targets for advanced battery systems 

as it does for many energy efficient technologies. ANL was funded by DOE to provide an 

independent assessment of Li-ion battery costs because of ANL’s expertise in the field as one of 

the primary DOE National Laboratories responsible for basic and applied battery energy storage 

technologies for future HEV, PHEV and EV applications. Since publication of the 2010 TAR, 

ANL’s battery cost model has been peer-reviewed and ANL has updated the model and 

 135 Insert cite to ANL BatPac model, if we can. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 122 of 770

documentation to incorporate suggestions from peer-reviewers, such as including a battery 

management system, a battery disconnect unit, a thermal management system, etc.136 In this 

proposal, NHTSA and EPA have used the recently revised version of this updated model. 

The agencies are using the ANL model as the basis for estimating large-format lithiumion batteries for this assessment for the following reasons. The model was developed by 

scientists at ANL who have significant experience in this area. The model uses a bill of 

materials methodology for developing cost estimates. The ANL model appropriately considers 

the vehicle application’s power and energy requirements, which are two of the fundamental 

parameters when designing a lithium-ion battery for an HEV, PHEV, or EV. The ANL model 

can estimate production costs based on user defined inputs for a range of production volumes. 

The ANL model’s cost estimates, while generally lower than the estimates we received from the 

OEMs, are consistent with some of the supplier cost estimates that EPA received from largeformat lithium-ion battery pack manufacturers. This includes data which was received from onsite visits done by the EPA in the 2008-2011 time frame. Finally, the ANL model has been 

described and presented in the public domain and does not rely upon confidential business 

information (which could not be reviewed by the public). 

The potential for future reductions in battery cost and improvements in battery 

performance relative to current batteries will play a major role in determining the overall cost 

and performance of future PHEVs and EVs. The U.S. Department of Energy manages major 

battery-related R&D programs and partnerships, and has done so for many years, including the 

ANL model utilized in this report. DOE has reviewed the battery cost projections underlying 

this proposal and supports the use of the ANL model for the purposes of this rulemaking.137 

We have also estimated cost associated with in-home chargers and installation of in-home 

chargers expected to be necessary for PHEVs and EVs. Charger costs are covered in more detail 

in chapter 3 of the draft Joint TSD. 

iii. Mass Reduction Costs 

The agencies have revised the costs for mass reduction from the MYs 2012-2016 rule and 

the 2010 Technical Assessment Report. For this proposal, the agencies are relying on a wide 

assortment of sources from the literature as well as data provided from a number of OEMs. 

Based on this review, the agencies have estimated a new cost curve such that the costs increase 

as the levels of mass reduction increase. For the final rule the agencies will consider any new 

studies that become available, including two studies that the agencies are sponsoring and expect 

will be completed in time to inform the final rule. These studies are discussed in TSD chapter 3. 

 136 Cite ANL BatPaC peer review report. 137 Cite a DOE memo or email that documents this support? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 123 of 770

b. Indirect Costs (IC) 

i. Markup Factors to Estimate Indirect Costs 

For this analysis, indirect costs are estimated by applying indirect cost multipliers (ICM) 

to direct cost estimates. ICMs were derived by EPA as a basis for estimating the impact on 

indirect costs of individual vehicle technology changes that would result from regulatory actions. 

Separate ICMs were derived for low, medium, and high complexity technologies, thus enabling 

estimates of indirect costs that reflect the variation in research, overhead, and other indirect costs 

that can occur among different technologies. ICMs were also applied in the MYs 2012-2016 

rulemaking. 

Prior to developing the ICM methodology,138 EPA and NHTSA both applied a retail price 

equivalent (RPE) factor to estimate indirect costs. RPEs are estimated by dividing the total 

revenue of a manufacturer by the direct manufacturing costs. As such, it includes all forms of 

indirect costs for a manufacturer and assumes that the ratio applies equally for all technologies. 

ICMs are based on RPE estimates that are then modified to reflect only those elements of 

indirect costs that would be expected to change in response to a regulatory-induced technology 

change. For example, warranty costs would be reflected in both RPE and ICM estimates, while 

marketing costs might only be reflected in an RPE estimate but not an ICM estimate for a 

particular technology, if the new regulatory-induced technology change is not one expected to be 

marketed to consumers. Because ICMs calculated by EPA are for individual technologies, many 

of which are small in scale, they often reflect a subset of RPE costs; as a result, for low 

complexity technologies, the RPE is typically higher than the ICM. This is not always the case, 

as ICM estimates for particularly complex technologies, specifically hybrid technologies (for 

near term ICMs), and plug-in hybrid battery and full electric vehicle technologies ( for near term 

and long term ICMs), reflect higher than average indirect costs, with the resulting ICMs for those 

technologies equaling or exceeding the averaged RPE for the industry. 

There is some level of uncertainty surrounding both the ICM and RPE markup factors. 

The ICM estimates used in this proposed action group all technologies into four broad categories 

and treat them as if individual technologies within each of the categories (“low”, “medium”, 

“high1” and “high2” complexity) will have the same ratio of indirect costs to direct costs. This 

simplification means it is likely that the direct cost for some technologies within a category will 

be higher and some lower than the estimate for the category in general. More importantly, the 

ICM estimates have not been validated through a direct accounting of actual indirect costs for 

individual technologies. Rather, the ICM estimates were developed using adjustment factors 

developed in two separate occasions: the first, a consensus process, was reported in the RTI 

 138 The ICM methodology was developed by RTI International, under contract to EPA. The results of the RTI report 

were published in Alex Rogozhin, Michael Gallaher, Gloria Helfand, and Walter McManus, “Using Indirect Cost 

Multipliers to Estimate the Total Cost of Adding New Technology in the Automobile Industry.” International 

Journal of Production Economics 124 (2010): 360-368. [Docket item #] 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 124 of 770

report; the second, a modified Delphi method, was conducted separately and reported in an EPA 

memo.139 Both these panels were composed of EPA staff members with previous background in 

the automobile industry; the memberships of the two panels overlapped but were not identical.140 

The panels evaluated each element of the industry’s RPE estimates and estimated the degree to 

which those elements would be expected to change in proportion to changes in direct 

manufacturing costs. The method and estimates in the RTI report were peer reviewed by three 

industry experts and subsequently by reviewers for the International Journal of Production 

Economics. RPEs themselves are inherently difficult to estimate because the accounting 

statements of manufacturers do not neatly categorize all cost elements as either direct or indirect 

costs. Hence, each researcher developing an RPE estimate must apply a certain amount of 

judgment to the allocation of the costs. Since empirical estimates of ICMs are ultimately derived 

from the same data used to measure RPEs, this affects both measures. However, the value of 

RPE has not been measured for specific technologies, or for groups of specific technologies. 

Thus applying a single average RPE to any given technology by definition overstates costs for 

very simple technologies, or understates them for advanced technologies. 

In every recent GHG and fuel economy rulemaking proposal, we have requested 

comment on our ICM factors and whether it is most appropriate to use ICMs or RPEs. We have 

generally received little to no comment on the issue specifically, other than basic comments that 

the ICM values are too low. In addition, in the June 2010 NAS report, NAS noted that the under 

the initial ICMs, no technology would be assumed to have indirect costs as high as the average 

RPE. NRC found that “RPE factors certainly do vary depending on the complexity of the task of 

integrating a component into a vehicle system, the extent of the required changes to other 

components, the novelty of the technology, and other factors. However, until empirical data 

derived by means of rigorous estimation methods are available, the committee prefers to use 

average markup factors.”141 The committee also stated that “The EPA (Rogozhin et al., 2009), 

however, has taken the first steps in attempting to analyze this problem in a way that could lead 

to a practical method of estimating technology-specific markup factors” where “this problem” 

spoke to the issue of estimating technology-specific markup factors and indirect cost 

multipliers.142

The agencies note that, since the committee completed their work, EPA has published its 

work in the Journal of Production Economics143 and has also published a memorandum 

 139 Helfand, Gloria, and Sherwood, Todd. “Documentation of the Development of Indirect Cost Multipliers for 

Three Automotive Technologies.” Memorandum, Assessment and Standards Division, Office of Transportation and 

Air Quality, U.S. Environmental Protection Agency, August 2009. [Docket item #] 140 NHTSA staff participated in the development of the process for the second, modified Delphi panel, and reviewed 

the results as they were developed, but did not serve on the panel. 

141 NRC, Finding 3-2 at page 3-23. 142 NRC at page 3-19. 143 Alex Rogozhin, Michael Gallaher, Gloria Helfand, and Walter McManus, “Using Indirect Cost Multipliers to 

Estimate the Total Cost of Adding New Technology in the Automobile Industry.” International Journal of 

Production Economics 124 (2010): 360-368 (Docket item #XX). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 125 of 770

furthering the development of ICMs,144 neither of which the committee had at their disposal. 

Further, having published two final rulemakings—the 2012-2016 light-duty rule (see 75 FR 

25324) and the more recent heavy-duty GHG rule (see 76 FR 57106)—as well as the 2010 TAR 

where ICMs served as the basis for all or most of the indirect costs, EPA believes that ICMs are 

indeed fully developed for regulatory purposes. As thinking has matured, we have adjusted our 

ICM factors such that they are slightly higher and, importantly, we have changed the way in 

which the factors are applied. 

The first change—increased ICM factors—has been done as a result of further thought 

among EPA and NHTSA that the ICM factors presented in the original RTI report for low and 

medium complexity technologies should no longer be used and that we should rely solely on the 

modified-Delphi values for these complexity levels. For that reason, we have eliminated the 

averaging of original RTI values with modified-Delphi values and instead are relying solely on 

the modified-Delphi values for low and medium complexity technologies. The second change—

the way the factors are applied—results in the warranty portion of the indirect costs being 

applied as a multiplicative factor (thereby decreasing going forward as direct manufacturing 

costs decrease due to learning), and the remainder of the indirect costs being applied as an 

additive factor (thereby remaining constant year-over-year and not being reduced due to 

learning). This second change has a comparatively large impact on the resultant technology 

costs and, we believe, more appropriately estimates costs over time. In addition to these 

changes, a secondary-level change was also made as part of this ICM recalculation to ICMs. 

That change was to revise upward the RPE level reported in the original RTI report from an 

original value of 1.46 to 1.5, to reflect the long term average RPE. The original RTI study was 

based on 2008 data. However, an analysis of historical RPE data indicates that, although there is 

year to year variation, the average RPE has remained roughly constant at 1.5. ICMs will be 

applied to future years’ data and, therefore, NHTSA and EPA staffs believe that it would be 

appropriate to base ICMs on the historical average rather than a single year’s result. Therefore, 

ICMs have been adjusted to reflect this average level. These changes to the ICMs and the 

methodology are described in greater detail in Chapter 3 of the draft Joint TSD. 

ii. Stranded Capital 

Because the production of automotive components is capital-intensive, it is possible for 

substantial capital investments in manufacturing equipment and facilities to become “stranded” 

(where their value is lost, or diminished). This would occur when the capital is rendered useless 

(or less useful) by some factor that forces a major change in vehicle design, plant operations, or 

manufacturer’s product mix, such as a shift in consumer demand for certain vehicle types. It can 

also be caused by new standards that phase-in at a rate too rapid to accommodate planned 

 144 Helfand, Gloria, and Sherwood, Todd. “Documentation of the Development of Indirect Cost Multipliers for 

Three Automotive Technologies.” Memorandum, Assessment and Standards Division, Office of Transportation and 

Air Quality, U.S. Environmental Protection Agency, August 2009 (Docket item #XX). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 126 of 770

replacement or redisposition of existing capital to other activities. The lost value of capital 

equipment is then amortized in some way over production of the new technology components. 

It is difficult to quantify accurately any capital stranding associated with new technology 

phase-ins under the proposed standards because of the iterative dynamic involved – that is, the 

new technology phase-in rate strongly affects the potential for additional cost due to stranded 

capital, but that additional cost in turn affects the degree and rate of phase-in for other individual 

competing technologies. In addition, such an analysis is very company-, factory-, and 

manufacturing process-specific, particularly in regard to finding alternative uses for equipment 

and facilities. Nevertheless, in order to account for the possibility of stranded capital costs, the 

agencies asked FEV to perform a separate bounding analysis of potential stranded capital costs 

associated with rapid phase-in of technologies due to new standards, using data from FEV’s 

primary teardown-based cost analyses.145 

The assumptions made in FEV’s stranded capital analysis with potential for major 

impacts on results are: 

• All manufacturing equipment was bought brand new when the old technology started 

production (no carryover of equipment used to make the previous components that 

the old technology itself replaced). 

• 10-year normal production runs: Manufacturing equipment used to make old 

technology components is straight-line depreciated over a 10-year life. 

• Factory managers do not optimize capital equipment phase-outs (that is, they are 

assumed to routinely repair and replace equipment without regard to whether or not it 

will soon be scrapped due to adoption of new vehicle technology). 

• Estimated stranded capital is amortized over 5 years of annual production at 450,000 

units (of the new technology components). This annual production is identical to that 

assumed in FEV’s primary teardown-based cost analyses. The 5-year recovery period 

is chosen to help ensure a conservative analysis; the actual recovery would of course 

vary greatly with market conditions. 

The stranded capital analysis was performed for three transmission technology scenarios, 

two engine technology scenarios, and one hybrid technology scenario. The methodology used 

by EPA in applying the results to the technology costs is described in EPA’s draft RIA section 

[DRIA xx.xx]. The methodology used by NHTSA in applying the results to the technology costs 

is described in NHTSA’s preliminary RIA section V. 

 145 FEV stranded capital report [update with actual title, etc] [xx Kopinski, Docket item #] 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 127 of 770

c. Cost Adjustment to 2009 Dollars 

This simple change is to update any costs presented in earlier analyses to 2009 dollars 

using the GDP price deflator as reported by the Bureau of Economic Analysis on January 27, 

2011. The factors used to update costs from 2007 and 2008 dollars to 2009 dollars are shown 

below. For the final rule, we are considering moving to 2010 dollars but, for this analysis, given 

the timing of conducting modeling runs and developing inputs to those runs, the factors for 

converting to 2010 dollars were not yet available. 

Table 0-7 GDP Price Deflators Used in this Proposal 

 2007 2008 2009 

Price Index for Gross Domestic Product 106.3 108.6 109.6 

Factor applied to convert to 2009 dollars 1.031 1.009 1.00 

Source: Bureau of Economic Analysis, Table 1.1.4. Price Indexes for Gross Domestic Product, 

downloaded 1/27/2011, last revised 12/22/2010. 

d. Cost Effects Due to Learning 

The agencies continue to apply learning effects in the same way as we did in both the 

MYs 2012-2016 final rule and in the 2010 TAR. However, we have employed some new 

terminology in an effort to eliminate some confusion that existed with our old terminology. This 

new terminology was described in the recent heavy-duty GHG final rule (see 76 FR 57320). Our 

old terminology suggested we were accounting for two completely different learning effects—

one based on volume production and the other based on time. This was not the case since, in 

fact, we were actually relying on just one learning phenomenon, that being the learning-by-doing 

phenomenon that results from cumulative production volumes. 

As a result, the agencies have also considered the impacts of manufacturer learning on 

the technology cost estimates by reflecting the phenomenon of volume-based learning curve cost 

reductions in our modeling using two algorithms depending on where in the learning cycle (i.e., 

on what portion of the learning curve) we consider a technology to be – “steep” portion of the 

curve for newer technologies and “flat” portion of the curve for more mature technologies. The 

observed phenomenon in the economic literature which supports manufacturer learning cost 

reductions are based on reductions in costs as production volumes increase with the highest 

absolute cost reduction occurring with the first doubling of production. The agencies use the 

terminology “steep” and “flat” portion of the curve to distinguish among newer technologies and 

more mature technologies, respectively, and how learning cost reductions are applied in cost 

analyses. 

Learning impacts have been considered on most but not all of the technologies expected 

to be used because some of the expected technologies are already used rather widely in the 

industry and, presumably, quantifiable learning impacts have already occurred. The agencies 

have applied the steep learning algorithm for only a handful of technologies considered to be 

new or emerging technologies such as PHEV and EV batteries which are experiencing heavy 

development and, presumably, rapid cost declines in coming years. For most technologies, the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 128 of 770

agencies have considered them to be more established and, hence, the agencies have applied the 

lower flat learning algorithm. For more discussion of the learning approach and the technologies 

to which each type of learning has been applied the reader is directed to Chapter 3 of the draft 

Joint TSD. 

3. How Did the Agencies Determine the Effectiveness of Each of these Technologies? 

 In 2007 EPA conducted a detailed vehicle simulation project to quantify the 

effectiveness of a multitude of technologies for the MYs 2012-2016 rule (as well as the 2010 

NOI). This technical work was conducted by the global engineering consulting firm, Ricardo, 

Inc. and was peer reviewed and then published in 2008. For this current rule, EPA has 

conducted another peer reviewed study with Ricardo to broaden the scope of the original project 

in order to expand the range of vehicle classes and technologies considered, consistent with a 

longer-term outlook through model years MYs 2017-2025. The extent of the project was vast, 

including hundreds of thousands of vehicle simulation runs. The results were, in turn, employed 

to calibrate and update EPA’s lumped parameter model, which is used to quantify the synergies 

and dis-synergies associated with combining technologies together for the purposes of generating 

inputs for the agencies respective OMEGA and CAFE modeling. 

Additionally, there were a number of technologies that Ricardo did not model explicitly. 

For these, the agencies relied on a variety of sources in the literature. A few of the values are 

identical to those presented in the MYs 2012-2016 final rule, while others were updated based on 

the newer version of the lumped parameter model. More details on the Ricardo simulation, 

lumped parameter model, as well as the effectiveness for supplemental technologies are 

described in Chapter 3 of the draft Joint TSD. 

The agencies note that the effectiveness values estimated for the technologies considered 

in the modeling analyses may represent average values, and do not reflect the virtually unlimited 

spectrum of possible values that could result from adding the technology to different vehicles. 

For example, while the agencies have estimated an effectiveness of 0.6 to 0.8 percent, depending 

on the vehicle subclass for low friction lubricants, each vehicle could have a unique effectiveness 

estimate depending on the baseline vehicle’s oil viscosity rating. Similarly, the reduction in 

rolling resistance (and thus the improvement in fuel economy and the reduction in CO2

emissions) due to the application of low rolling resistance tires depends not only on the unique 

characteristics of the tires originally on the vehicle, but on the unique characteristics of the tires 

being applied, characteristics which must be balanced between fuel efficiency, safety, and 

performance. Aerodynamic drag reduction is much the same—it can improve fuel economy and 

reduce CO2 emissions, but it is also highly dependent on vehicle-specific functional objectives. 

For purposes of the proposal, NHTSA and EPA believe that employing average values for 

technology effectiveness estimates, as adjusted depending on vehicle subclass, is an appropriate 

way of recognizing the potential variation in the specific benefits that individual manufacturers 

(and individual vehicles) might obtain from adding a fuel-saving technology. 

E. Joint Economic and Other Assumptions 

The agencies’ analysis of CAFE and GHG standards for the model years covered by this 

proposed rulemaking rely on a range of forecast information, estimates of economic variables, 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 129 of 770

and input parameters. This section briefly describes the agencies’ proposed estimates of each of 

these values. These values play a significant role in assessing the benefits of both CAFE and 

GHG standards. 

In reviewing these variables and the agencies’ estimates of their values for purposes of 

this NPRM, NHTSA and EPA reconsidered comments that the agencies previously received on 

both the Interim Joint TAR and during the MYs 2012-2016 light duty vehicle rulemaking and 

also reviewed newly available literature. As a consequence, for today’s proposal, the agencies 

are proposing to update some economic assumptions and parameter estimates, while retaining a 

majority of values consistent with the Interim Joint TAR and the MYs 2012-2016 final rule. To 

review the parameters and assumptions the agencies used in the 2012-2016 final rule, please 

refer to 75 FR 25378 and Chapter 4 of the Joint Technical Support Document that accompanied 

the final rule.146 The proposed values summarized below are discussed in greater detail in 

Chapter 4 of the joint TSD that accompanies this proposal and elsewhere in the preamble and 

respective RIAs. The agencies seek comment on all of the assumptions discussed below. 

• Costs of fuel economy-improving technologies—These inputs are discussed in 

summary form above and in more detail in the agencies’ respective sections of this 

preamble, in Chapter 3 of the draft joint TSD, and in the agencies’ respective RIAs. 

The technology direct manufacturing cost estimates used in this analysis are intended 

to represent manufacturers’ direct costs for high-volume production of vehicles with 

these technologies in the year for which we state the cost is considered “valid.” 

Technology direct manufacturing cost estimates are fundamentally unchanged from 

those employed by the agencies in the 2012-2016 final rule, the heavy-duty truck rule 

(to the extent relevant), and TAR for most technologies, although revised costs are 

used for batteries, mass reduction, transmissions, and a few other technologies. 

Indirect costs are accounted for by applying near-term indirect cost multipliers 

ranging from 1.24 to 1.77 to the estimates of vehicle manufacturers’ direct costs for 

producing or acquiring each technology, depending on the complexity of the 

technology and the time frame over which costs are estimated. These values are 

reduced to 1.19 to 1.50 over the long run as some aspects of indirect costs decline. 

Indirect cost markup factors have been revised from previous rulemakings and the 

Interim Joint TAR to reflect the agencies current thinking regarding a number of 

issues. These changes are discussed in detail in Section II.D.2 of this preamble and in 

Chapter 3 of the draft joint TSD. Details of the agencies’ technology cost 

assumptions and how they were derived can be found in Chapter 3 of the draft joint 

TSD. 

• Potential opportunity costs of improved fuel economy—This issue addresses the 

possibility that achieving the fuel economy improvements required by alternative 

CAFE or GHG standards would require manufacturers to compromise the 

performance, carrying capacity, safety, or comfort of their vehicle models. If it did so, 

the resulting sacrifice in the value of these attributes to consumers would represent an 

additional cost of achieving the required improvements, and thus of manufacturers’ 

compliance with stricter standards. Currently the agencies project that these vehicle 

 146 See http://www.epa.gov/otaq/climate/regulations/420r10901.pdf. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 130 of 770

attributes will not change as a result of this rule. Section II.C above and Chapter 2 of 

the draft joint TSD describes how the agency carefully selected an attribute-based 

standard to minimize manufacturers’ incentive to reduce vehicle capabilities. While 

manufacturers may choose to do this for other reasons, the agencies continue to 

believe that the rule itself will not result in such changes. Additionally, EPA and 

NHTSA have sought to include the cost of maintaining these attributes as part of the 

cost estimates for technologies that are included in the cost analysis for the proposal. 

For example, downsized engines are assumed to be turbocharged, so that they provide 

the same performance and utility even though they are smaller.147 Nonetheless, it is 

possible that in some cases, the technology cost estimates may not include adequate 

allowance for the necessary efforts by manufacturers to maintain vehicle acceleration 

performance, payload, or utility while improving fuel economy and reducing GHG 

emissions. As described in Section III.D.3 and Section IV.G, there are two possible 

exceptions in cases where some vehicle types are converted to hybrid or full electric 

vehicles (EVs), but, in such cases, we believe that sufficient options would exist for 

consumers concerned about the possible loss of utility (e.g., they would purchase the 

non-hybridized version of the vehicle or not buy an EV) that welfare loss should not 

necessarily be assumed. Although consumer vehicle demand models can measure 

these effects, past analyses using such models have not produced consistent estimates 

of buyers’ willingness-to-pay for higher fuel economy, and it is difficult to decide 

whether one data source, model specification, or estimation procedure is clearly 

preferred over another. Thus, the agencies seek comment on how to estimate 

explicitly the changes in vehicle buyers’ choices and welfare from the combination of 

higher prices for new vehicle models, increases in their fuel economy, and any 

accompanying changes in vehicle attributes such as performance, passenger- and 

cargo-carrying capacity, or other dimensions of utility. 

• The on-road fuel economy “gap” – Actual fuel economy levels achieved by lightduty vehicles in on-road driving fall somewhat short of their levels measured under 

the laboratory test conditions used by EPA to establish compliance with the proposed 

CAFE and GHG standards. The modeling approach in this proposal follows the 

2012-2016 final rule and the Interim Joint TAR. In calculating benefits of the 

program, the agencies estimate that actual on-road fuel economy attained by lightduty vehicles that operate on liquid fuels will be 20 percent lower than published fuel 

economy ratings for vehicles that operate on liquid fuels. For example, if the 

measured CAFE fuel economy value of a light truck is 20 mpg, the on-road fuel 

economy actually achieved by a typical driver of that vehicle is expected to be 16 

mpg (20*.80).148 Based on manufacturer confidential business information, as well as 

data derived from the 2006 EPA fuel economy label rule, the agencies use a 30 

 147 The agencies do not believe that adding fuel-saving technology should preclude future improvements in 

performance, safety, or other attributes, though it is possible that the costs of these additions may be affected by the 

presence of fuel-saving technology. 

148 U.S. Environmental Protection Agency, Final Technical Support Document, Fuel Economy Labeling of Motor 

Vehicle Revisions to Improve Calculation of Fuel Economy Estimates, EPA420-R-06-017, December 2006. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 131 of 770

percent gap for consumption of wall electricity for electric vehicles and plug-in 

hybrid electric vehicles.149

• Fuel prices and the value of saving fuel – Projected future fuel prices are a critical 

input into the preliminary economic analysis of alternative standards, because they 

determine the value of fuel savings both to new vehicle buyers and to society, and 

fuel savings account for the majority of the proposed rule’s estimated benefits. For 

this proposed rule, the agencies are using the most recent fuel price projections from 

the U.S. Energy Information Administration’s (EIA) Annual Energy Outlook (AEO) 

2011 reference case forecast. The forecasts of fuel prices reported in EIA’s AEO 

2011 extend through 2035. Fuel prices beyond the time frame of AEO’s forecast 

were estimated using an average growth rate for the years 2017-2035 to each year 

after 2035. This is the same methodology used by the agencies in the 2012-2016 

rulemaking, in the heavy duty truck and engine rule (76 FR 57106), and in the Interim 

Joint TAR. For example, these forecasts of gasoline fuel prices in 2009$ include 

$3.25 per gallon in 2017, $3.39 in 2021 and $3.71 in 2035. Extrapolating as 

described above, retail gasoline prices reach $4.16 per gallon in 2050 (measured in 

constant 2009 dollars). As discussed in Chapter 4 of the draft Joint TSD, while the 

agencies believe that EIA’s AEO reference case generally represents a reasonable 

forecast of future fuel prices for purposes of use in our analysis of the benefits of this 

rule, we recognize that there is a great deal of uncertainty in any such forecast that 

could affect our estimates. The agencies request comment on how best to account for 

uncertainty in future fuel prices. 

• Consumer valuation of fuel economy and payback period—In estimating the value of 

fuel economy improvements to potential vehicle buyers that would result from 

alternative CAFE and GHG standards, the agencies assume that buyers value the 

resulting fuel savings over only part of the expected lifetimes of the vehicles they 

purchase. Specifically, we assume that buyers value fuel savings over the first five 

years of a new vehicle’s lifetime, and that buyers discount the value of these future 

fuel savings. The five-year figure represents the current average term of consumer 

loans to finance the purchase of new vehicles. 

• Vehicle sales assumptions—The first step in estimating lifetime fuel consumption by 

vehicles produced during a model year is to calculate the number that are expected to 

be produced and sold. The agencies relied on the AEO 2011 Reference Case for 

forecasts of total vehicle sales, while the baseline market forecast developed by the 

agencies (discussed in Section II.B and in Chapter 1 of the TSD) divided total 

projected sales into sales of cars and light trucks. 

 149 See 71 FR at 77887, and U.S. Environmental Protection Agency, Final Technical Support Document, Fuel 

Economy Labeling of Motor Vehicle Revisions to Improve Calculation of Fuel Economy Estimates, EPA420-R-06-

017, December 2006 for general background on the analysis. See also EPA’s Response to Comments (EPA-420-R11-005) to the 2011 labeling rule, page 189, first paragraph, specifically the discussion of the derived five cycle 

equation and the non-linear adjustment with increasing MPG. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 132 of 770

• Vehicle lifetimes and survival rates – As in the 2012-2016 final rule and Interim Joint 

TAR, we apply updated values of age-specific survival rates for cars and light trucks 

to adjusted forecasts of passenger car and light truck sales to determine the number of 

these vehicles expected to remain in use during each year of their lifetimes. These 

values remain unchanged from prior analyses. 

• Vehicle miles traveled – We calculated the total number of miles that cars and light 

trucks produced in each model year will be driven during each year of their lifetimes 

using estimates of annual vehicle use by age tabulated from the Federal Highway 

Administration’s 2001 National Household Travel Survey (NHTS),150 adjusted to 

account for the effects on vehicle use of subsequent increases in fuel prices. In order 

to insure that the resulting mileage schedules imply reasonable estimates of future 

growth in total car and light truck use, we calculated the rate of future growth in 

annual mileage at each age that would be necessary for total car and light truck travel 

to increase at the rates forecast in the AEO 2011 Reference Case. The growth rate in 

average annual car and light truck use produced by this calculation is approximately 1 

percent per year through 2030 and 0.5 percent thereafter. We applied these growth 

rates applied to the mileage figures derived from the 2001 NHTS to estimate annual 

mileage by vehicle age during each year of the expected lifetimes of MY 2017-2025 

vehicles. A similar approach to estimating future vehicle use was used in the 2012-

2016 final rule and Interim Joint TAR, but the future growth rates in average vehicle 

use have been revised for this proposal. 

• Accounting for the rebound effect of higher fuel economy – The rebound effect refers 

to the increase in vehicle use that results if an increase in fuel efficiency lowers the 

cost of driving. For purposes of this NPRM, the agencies elected to continue to use a 

10 percent rebound effect in their analyses of fuel savings and other benefits from 

higher standards, consistent with the 2012-2016 light-duty vehicle rulemaking and the 

Interim Joint TAR. That is, we assume a 10 percent decrease in fuel cost per mile 

resulting from our proposed standards would result in a 1 percent increase in the 

annual number of miles driven at each age over a vehicle’s lifetime. In Chapter 4 of 

the joint TSD, we provide a detailed explanation of the basis for our rebound 

estimate, including a summary of new literature published since the 2012-2016 

rulemaking that lends further support to the 10 percent rebound estimate. We also 

refer the reader to Chapters X and XII of NHTSA’s PRIA that accompanies this 

preamble for sensitivity and uncertainty analyses of alternative rebound assumptions. 

• Benefits from increased vehicle use – The increase in vehicle use from the rebound 

effect provides additional benefits to drivers, who may make more frequent trips or 

travel farther to reach more desirable destinations. This additional travel provides 

benefits to drivers and their passengers by improving their access to social and 

economic opportunities away from home. The analysis estimates the economic 

benefits from increased rebound-effect driving as the sum of the fuel costs they incur 

in that additional travel plus the consumer surplus drivers receive from the improved 

 150 For a description of the Survey, see http://www.bts.gov/programs/national_household_travel_survey/ (last 

accessed Sept. 9, 2011). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 133 of 770

accessibility their travel provides. As in the 2012-2016 final rule we estimate the 

economic value of this consumer surplus using the conventional approximation, 

which is one half of the product of the decline in vehicle operating costs per vehiclemile and the resulting increase in the annual number of miles driven. 

• Added costs from congestion, accidents, and noise – 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 delays by 

increasing traffic volumes on facilities that are already heavily 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 travel also 

increases costs associated with traffic accidents, and increased traffic noise. The 

agencies rely on estimates of congestion, accident, and noise costs caused by 

automobiles and light trucks developed by the Federal Highway Administration to 

estimate these increased external costs caused by added driving.151 This method is 

consistent with the 2012-2016 final rule. 

• Petroleum consumption and import externalities – U.S. consumption of imported 

petroleum products also impose costs on the domestic economy that are not reflected 

in the market price for crude petroleum, or in the prices paid by consumers of 

petroleum products such as gasoline. These costs include (1) higher prices for 

petroleum products resulting from the effect of increased U.S. demand for imported 

oil on the world oil price (“monopsony costs”); (2) the expected costs associated with 

the risk of disruptions to the U.S. economy caused by sudden reductions in the supply 

of imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence 

to secure imported oil supplies from unstable regions, and for maintaining the 

strategic petroleum reserve (SPR) to cushion the U.S. economy against the effects of 

oil supply disruptions.152 Although the reduction in the global price of petroleum and 

refined products due to decreased demand for fuel in the U.S. resulting from this rule 

represents a benefit to the U.S. economy, it simultaneously represents an economic 

loss to other countries that produce and sell oil or petroleum products to the U.S. 

Recognizing the redistributive nature of this “monopsony effect” when viewed from a 

global perspective (which is consistent with the agencies’ use of a global estimate for 

the social cost of carbon to value reductions in CO2 emissions, the energy security 

benefits estimated to result from this program exclude the value of this monopsony 

effect. In contrast, the macroeconomic disruption and adjustment costs that arise 

from sudden reductions in the supply of imported oil to the U.S. do not have 

offsetting impacts outside of the U.S., so the estimated reduction in their expected 

 151 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 Sept. 9, 2011). 152 See, e.g., Bohi, Douglas R. and W. David Montgomery (1982). Oil Prices, Energy Security, and Import Policy 

Washington, DC: Resources for the Future, Johns Hopkins University Press; Bohi, D. R., and M. A. Toman (1993). 

"Energy and Security: Externalities and Policies," Energy Policy 21:1093-1109; and Toman, M. A. (1993). "The 

Economics of Energy Security: Theory, Evidence, Policy," in A. V. Kneese and J. L. Sweeney, eds. (1993). 

Handbook of Natural Resource and Energy Economics, Vol. III. Amsterdam: North-Holland, pp. 1167-1218. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 134 of 770

value stemming from reduced U.S. petroleum imports is included in the energy 

security benefits estimated for this program. U.S. military costs are excluded from 

the analysis because their attribution to particular missions or activities is difficult. 

Also, historical variation in U.S. military costs have not been associated with changes 

in U.S. petroleum imports, although we recognize that more broadly, there may be 

significant (if unquantifiable) benefits in improving national security by reducing oil 

imports. Similarly, since the size or other factors affecting the cost of maintaining the 

SPR historically have not varied in response to changes in U.S. oil import levels, 

changes in the costs of the SPR are excluded from the estimates of the energy security 

benefits of the program. To summarize, the agencies have included only the 

macroeconomic disruption and adjustment costs portion of the energy security 

benefits to estimate the monetary value of the total energy security benefits of this 

program. Based on a recent update of an earlier peer-reviewed Oak Ridge National 

Laboratory study that was used in support of the both the 2012-2016 light duty 

vehicle and the 2014-2018 medium- and heavy-duty vehicle rulemaking, we estimate 

that each gallon of fuel saved will reduce the expected macroeconomic disruption and 

adjustment costs of sudden reductions in the supply of imported oil to the U.S. 

economy by $0.185 (2009$) in 2025. Each gallon of fuel saved as a consequence of 

higher standards is anticipated to reduce total U.S. imports of crude petroleum or 

refined fuel by 0.95 gallons.153 The energy security analysis conducted for this 

proposal also estimates that the world price of oil will fall modestly in response to 

lower U.S. demand for refined fuel.154,155 The energy security methodology used in 

this proposal is the same as that used by the agencies in both the 2012-2016 light duty 

vehicle and 2014-2018 medium- and heavy-duty vehicle rulemakings. In those 

rulemakings, the agencies addressed comments about the magnitude of their energy 

security estimates and methodological issues such as whether to include the 

monopsony benefits in energy security calculations. 

• Air pollutant emissions – 

o Impacts on criteria air pollutant emissions – Criteria air pollutants emitted by 

vehicles and during fuel production and distribution include carbon monoxide 

(CO), hydrocarbon compounds (usually referred to as “volatile organic 

compounds,” or VOC), nitrogen oxides (NOX), fine particulate matter (PM2.5), 

and sulfur oxides (SOX). Although reductions in domestic fuel refining and 

distribution that result from lower fuel consumption will reduce U.S. emissions of 

these pollutants, additional vehicle use associated with the rebound effect will 

increase emissions. Thus the net effect of stricter standards on emissions of each 

criteria pollutant depends on the relative magnitudes of reduced emissions from 

 153 Each gallon of fuel saved is assumed to reduce imports of refined fuel by 0.5 gallons, and the volume of fuel 

refined domestically by 0.5 gallons. Domestic fuel refining is assumed to utilize 90 percent imported crude 

petroleum and 10 percent domestically-produced crude petroleum as feedstocks. Together, these assumptions imply 

that each gallon of fuel saved will reduce imports of refined fuel and crude petroleum by 0.50 gallons + 0.50 

gallons*90 percent = 0.50 gallons + 0.45 gallons = 0.95 gallons. 

154Leiby, Paul. Oak Ridge National Laboratory. “Approach to Estimating the Oil Import Security Premium for the 

MY 2017 -2025 Light Duty Vehicle Proposal” 2011. 

155 Note that this change in world oil price is not reflected in the AEO projections described earlier in this section. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 135 of 770

fuel refining and distribution, and increases in emissions resulting from added 

vehicle use. The agencies’ analysis assumes that the per-mile emission rates for 

cars and light trucks produced during the model years affected by the proposed 

rule will remain constant at the levels resulting from EPA’s Tier 2 light duty 

vehicle emissions standards. The agencies’ approach to estimating criteria air 

pollutant emissions is consistent with the method used in the 2012-2016 final rule 

(where the agencies received no significant adverse comments), although the 

agencies employ a more recent version of the EPA’s MOVES (Motor Vehicle 

Emissions Simulator) model.

.o Economic value of reductions in criteria pollutant emissions - For the purpose of 

the joint technical analysis, EPA and NHTSA estimate the economic value of the 

human health benefits associated with reducing population exposure to PM2.5

using a “benefit-per-ton” method. These PM2.5-related benefit-per-ton estimates 

provide the total monetized benefits to human health (the sum of reductions in 

premature mortality and premature morbidity) that result from eliminating one ton 

of directly emitted PM2.5, or one ton of other pollutants that contribute to 

atmospheric levels of PM2.5 (such as NOX, SOX, and VOCs), from a specified 

source. These unit values remain unchanged from the 2012-2016 final rule, and 

the agencies received no significant adverse comment on the analysis. Note that 

the agencies’ analysis includes no estimates of the direct health or other benefits 

associated with reductions in emissions of criteria pollutants other than PM2.5. 

o Impacts on greenhouse gas (GHG) emissions - NHTSA estimates reductions in 

emissions of carbon dioxide (CO2) from passenger car and light truck use by 

multiplying the estimated reduction in consumption of fuel (gasoline and diesel) 

by the quantity or mass of CO2 emissions released per gallon of fuel consumed. 

EPA directly calculates reductions in total CO2 emissions from the projected 

reductions in CO2 emissions by each vehicle subject to the proposed rule.156 Both 

agencies also calculate the impact on CO2 emissions that occur during fuel 

production and distribution resulting from lower fuel consumption, as well as the 

emission impacts due to changes in electricity production. Although CO2 

emissions account for nearly 95 percent of total GHG emissions that result from 

fuel combustion during vehicle use, emissions of other GHGs are potentially 

significant as well because of their higher “potency” as GHGs than that of CO2

itself. EPA and NHTSA therefore also estimate the change in upstream and 

downstream emissions of non-CO2 GHGs that occur during the aforementioned 

processes due to their respective standards.157 The agencies approach to 

estimating GHG emissions is consistent with the method used in the 2012-2016 

final rule and the Interim Joint TAR. 

 156 The weighted average CO2 content of certification gasoline is estimated to be 8,887 grams per gallon, while that 

of diesel fuel is estimated to be approximately 10,200 grams per gallon. 157 There is, however, an exception. NHTSA does not and cannot claim benefit from reductions in downstream 

emissions of HFCs because they do not relate to fuel economy, while EPA does because all GHGs are relevant for 

purposes of EPA’s Clean Air Act standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 136 of 770

o Economic value of reductions in CO2 emissions – EPA and NHTSA assigned a 

dollar value to reductions in CO2 emissions using recent estimates of the “social 

cost of carbon” (SCC) developed by a federal interagency group that included the 

two agencies. As that group’s report observed, “The SCC is an estimate of the 

monetized damages associated with an incremental increase in carbon emissions 

in a given year. It is intended to include (but is not limited to) changes in net 

agricultural productivity, human health, property damages from increased flood 

risk, and the value of ecosystem services due to climate change.” 158 Published 

estimates of the SCC vary widely as a result of uncertainties about future 

economic growth, climate sensitivity to GHG emissions, procedures used to 

model the economic impacts of climate change, and the choice of discount 

rates.159 The SCC estimates used in this analysis were developed through an 

interagency process that included EPA, DOT/NHTSA, and other executive branch 

entities, and concluded in February 2010. We first used these SCC estimates in 

the benefits analysis for the 2012-2016 light-duty vehicle rulemaking. We have 

continued to use these estimates in other rulemaking analyses, including the 

Greenhouse Gas Emission Standards and Fuel Efficiency Standards for Mediumand Heavy-Duty Engines and Vehicles (76 FR 57106, p. 57332) . The SCC 

Technical Support Document (SCC TSD) provides a complete discussion of the 

methods used to develop these SCC estimates. 

• The value of changes in driving range – By reducing the frequency with which 

drivers typically refuel their vehicles, and by extending the upper limit of the range 

they can travel before requiring refueling, improving fuel economy and reducing 

GHG emissions provides additional benefits to their owners. The primary benefits 

from the reduction in the number of required refueling cycles are the value of time 

saved to drivers and other adult vehicle occupants, as well as the savings to owners in 

terms of the cost of the fuel that would have otherwise been consumed in transit 

during those (now no longer required) refueling trips. Using recent data on vehicle 

owners’ refueling patterns gathered from a survey conducted by the National 

Automotive Sampling System (NASS), NHTSA was able to better estimate 

parameters associated with refueling trips. NASS data provided NHTSA with the 

ability to estimate the average time required for a refueling trip, the average time and 

distance drivers typically travel out of their way to reach fueling stations, the average 

number of adult vehicle occupants, the average quantity of fuel purchased, and the 

distribution of reasons given by drivers for refueling. From these estimates, NHTSA 

constructed an updated set of economic assumptions to update those used in the 2012-

2016 FRM in calculating refueling-related benefits. The 2012-2016 FRM discusses 

NHTSA’s intent to utilize the NASS data on refueling trip characteristics in future 

 158 SCC TSD, see page 2. Docket ID EPA-HQ-OAR-2009-0472-114577, Technical Support Document: Social Cost 

of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social 

Cost of Carbon, with participation by Council of Economic Advisers, Council on Environmental Quality, 

Department of Agriculture, Department of Commerce, Department of Energy, Department of Transportation, 

Environmental Protection Agency, National Economic Council, Office of Energy and Climate Change, Office of 

Management and Budget, Office of Science and Technology Policy, and Department of Treasury (February 2010). 

Also available at http://epa.gov/otaq/climate/regulations.htm 

159 SCC TSD, see pages 6-7. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 137 of 770

rulemakings. While the NASS data improve the precision of the inputs used in the 

analysis of the benefits resulting from fewer refueling cycles, the framework of the 

analysis remains essentially the same as in the 2012-2016 final rule. Note that this 

topic and associated benefits were not covered in the Interim Joint TAR. Detailed 

discussion and examples of the agencies’ approach are provided in Chapter VIII of 

NHTSA’s PRIA and Chapter 8 of EPA’s DRIA. 

• Discounting future benefits and costs – Discounting future fuel savings and other 

benefits is intended to account for the reduction in their value to society when they 

are deferred until some future date, rather than received immediately.160 The 

discount rate expresses the percent decline in the value of these future fuel-savings 

and other benefits—as viewed from today’s perspective—for each year they are 

deferred into the future. In evaluating the non-climate related benefits of the final 

standards, the agencies have employed discount rates of both 3 percent and 7 percent, 

consistent with the 2012-2016 final rule and OMB Circular A-4 guidance. 

For the reader’s reference, Table 0-8 and Table 0-9 below summarize the values used to 

calculate the impacts of each proposed standard. The values presented in this table are 

summaries of the inputs used for the models; specific values used in the agencies’ respective 

analyses may be aggregated, expanded, or have other relevant adjustments. See Joint TSD 4 and 

each agency’s respective RIA for details. The agencies seek comment on the economic 

assumptions presented in the table. 

In addition, the agencies analyzed the sensitivity of their estimates of the benefits and 

costs associated with this proposed rule to variation in the values of many of these economic 

assumptions and other inputs. The values used in these sensitivity analyses and their results are 

presented their agencies’ respective RIAs. A wide range of estimates is available for many of 

the primary inputs that are used in the agencies’ CAFE and GHG emissions models. The 

agencies recognize that each of these values has some degree of uncertainty, which the agencies 

further discuss in the draft Joint TSD. The agencies have tested the sensitivity of their estimates 

of costs and benefits to a range of assumptions about each of these inputs, and present these 

sensitivity analyses in their respective RIAs. For example, NHTSA conducted separate 

sensitivity analyses for, among other things, discount rates, fuel prices, the social cost of carbon, 

the rebound effect, consumers’ valuation of fuel economy benefits, battery costs, mass reduction 

costs, the value of a statistical life, and the indirect cost markup factor. This list is similar in 

scope to the list that was examined in the MY 2012-2016 final rule, but includes battery costs 

and mass reduction costs, while dropping military security and monopsony costs. NHTSA’s 

sensitivity analyses are contained in Chapter X of NHTSA’s PRIA. In addition, NHTSA 

performs a probabilistic uncertainty analysis examining simultaneous variation in the major 

model inputs including technology costs, technology benefits, fuel prices, the rebound effect, and 

military security costs. This information is provided in Chapter XII of NHTSA’s PRIA. These 

uncertainty parameters are consistent with those used in the MY 2012-2016 final rule. The 

 160 Because all costs associated with improving vehicles’ fuel economy and reducing CO2 emissions are assumed to 

be incurred at the time they are produced, these costs are already expressed in their present values as of each model 

year affected by the proposed rule, and require discounting only for the purpose of expressing them as present values 

as of a common year. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 138 of 770

agencies will consider conducting additional sensitivity and uncertainty analyses for the final 

rule as appropriate. 

Table 0-8 Economic Values for Benefits Computations (2009$)

Fuel Economy Rebound Effect 10%

"Gap" between test and on-road MPG for liquidfueled vehicles 20%

“Gap” between test and on-road wall electricity 

consumption for electric and plug-in hybrid 

electric vehicles 30%

Value of refueling time per ($ per vehicle-hour) $21.27 Cars 

$21.62 Truck 

Average tank volume refilled during refueling stop 

65%

Annual growth in average vehicle use 1% through 2030, 

0.5% thereafter

Fuel Prices (2017-50 average, $/gallon) 

Retail gasoline price $3.71

Pre-tax gasoline price $3.35

Economic Benefits from Reducing Oil Imports 

($/gallon) 

"Monopsony" Component $ 0.00

Price Shock Component $ 0.185 in 2025

Military Security Component $ 0.00

Total Economic Costs ($/gallon) $ 0.185 in 2025

Emission Damage Costs (2020, $/short ton) 

Carbon monoxide $ 0

Volatile organic compounds (VOC) $ 1,300

Nitrogen oxides (NOX) – vehicle use $ 5,500

Nitrogen oxides (NOX) – fuel production and 

distribution $ 5,300

Particulate matter (PM2.5) – vehicle use $ 300,000

Particulate matter (PM2.5) – fuel production and 

distribution $ 250,000

Sulfur dioxide (SO2) $ 32,000

Annual CO2 Damage Cost (per metric ton) 

Variable, depending 

on discount rate and 

year (see Table 0-9 

for 2017 estimate)
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 139 of 770

External Costs from Additional Automobile Use 

($/vehicle-mile) 

Congestion $ 0.056

Accidents $ 0.024

Noise $ 0.001

Total External Costs $ 0.080

External Costs from Additional Light Truck Use 

($/vehicle-mile) 

Congestion $0.049

Accidents $0.027

Noise $0.001

Total External Costs $0.077

Discount Rates Applied to Future Benefits 3%, 7%

Table 0-9 Social Cost of CO2 ($/metric ton), 2017 (2009$) 

Discount Rate 5% 3% 2.5% 3% 

Source of 

Estimate Mean of Estimated Values 95th percentile 

estimate 

2017 Estimate $6 $26 $41 $78 

F. Air Conditioning Efficiency CO2 Credits and Fuel Consumption Improvement 

Values, Off-cycle Reductions, and Full-size Pickup Trucks 

For MYs 2012-2016, EPA provided an option for manufacturers to generate credits for 

complying with GHG standards by incorporating efficiency improving vehicle technologies that 

would reduce CO2 and fuel consumption from air conditioning (A/C) operation or from other 

vehicle operation that is not captured by the Federal Test Procedure (FTP) and Highway Fuel 

Economy Test (HFET), also collectively known as the “two-cycle” test procedure. EPA referred 

to these credits as “off-cycle credits.” 

For this proposal, EPA, in coordination with NHTSA, is proposing under their EPCA 

authorities to allow manufacturers to generate fuel consumption improvement values for 

purposes of CAFE compliance based on the use of A/C efficiency and off-cycle technologies. 

This proposed expansion is a change from the 2012-16 final rule where EPA only provided the 

A/C efficiency and off-cycle credits for the GHG program. EPA is not proposing to allow these 

increases for compliance with the CAFE program for MYs 2012-2016, nor to allow any 

compliance with the CAFE program as a result of reductions in direct A/C emissions resulting 

from leakage of HFCs from air conditioning systems, which remains a flexibility unique to the 

GHG program. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 140 of 770

The agencies believe that because of the significant amount of credits and fuel 

consumption improvement values offered under the A/C program (up to 5.0 g/mi for cars and 7.2 

g/mi for trucks which is equivalent to a fuel consumption improvement value of 0.000563 gal/mi 

for cars and 0.000586 gal/mi for trucks) that manufacturers will maximize the benefits these 

credits and fuel consumption improvement values afford. Consistent with the 2012-2016 final 

rule, EPA will continue to adjust the stringency of the two-cycle tailpipe CO2 standards in order 

to account for this projected widespread penetration of A/C credits (as described more fully in 

Section III.C), and NHTSA has also accounted for expected A/C efficiency improvements in 

determining the maximum feasible CAFE standards. The agencies discuss these proposed CO2

credits/fuel consumption improvement values below and in more detail in the Joint TSD 

(Chapter 5). EPA discusses additional proposed GHG A/C leakage credits that are unrelated to 

CO2 and fuel consumption (though they are part of EPA’s CO2 equivalent calculation) in Section 

III.C below. 

EPA, in coordination with NHTSA, is also proposing to add for MYs 2017-2025 a new 

incentive for Advanced Technology for Full Sized Pickup Trucks. Under its EPCA authority for 

CAFE and under its CAA authority for GHGs, EPA is proposing GHG credits and fuel economy 

improvement values for manufacturers that hybridize a significant quantity of their full size 

pickup trucks, or that use other technologies that significantly reduce CO2 emissions and fuel 

consumption. Further discussions of the A/C, off-cycle, and the advanced technology for pickup truck incentive programs are provided below. 

1. Proposed Air Conditioning CO2 Credits and Fuel Consumption Improvement Values 

The credits/fuel consumption improvement values for higher-efficiency air conditioning 

technologies are very similar to those EPA included in the 2012-2016 GHG final rule. The 

proposed credits/fuel consumption improvement values represent an improved understanding of 

the relationships between A/C technologies and CO2 emissions and fuel consumption. Much of 

this understanding results from a new vehicle simulation tool that EPA has developed and the 

agencies are using for this proposal. EPA designed this model to simulate in an integrated way 

the dynamic behavior of the several key systems that affect vehicle efficiency: the engine, 

electrical, transmission, and vehicle systems. The simulation model is supported by data from a 

wide range of sources; the Draft Regulatory Impact Analysis discusses its development in more 

detail. 

The agencies have identified several technologies that are key to the amount of fuel a 

vehicle consumes and thus the amount of CO2 it emits. Most of these technologies already exist 

on current vehicles, but manufacturers can improve the energy efficiency of the technology 

designs and operation. For example, most of the additional air conditioning related load on an 

engine is due to the compressor which pumps the refrigerant around the system loop. The less 

the compressor operates, the less load the compressor places on the engine resulting in less fuel 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 141 of 770

consumption and CO2 emissions. Thus, optimizing compressor operation with cabin demand 

using more sophisticated sensors, controls and control strategies, is one path to improving the 

overall efficiency of the A/C system. Additional components or control strategies are available 

to manufacturers to reduce the air conditioning load on the engine which are discussed in more 

detail in Chapter 5 of the joint TSD. Overall, the agencies have concluded that these improved 

technologies could together reduce A/C-related CO2 and fuel consumption of today’s typical air 

conditioning systems by 42%. The agencies propose to use this level of improvement to 

represent the maximum efficiency credit available to a manufacturer. 

Demonstrating the degree of efficiency improvement that a manufacturer’s air 

conditioning systems achieve – thus quantifying the appropriate amount of GHG credit and 

CAFE fuel consumption improvement value the manufacturer is eligible for -- would ideally 

involve a performance test. That is, a test that would directly measure CO2 (and thus allow 

calculation of fuel consumption) before and after the incorporation of the improved technologies. 

Progress toward such a test continues. As mentioned in the introduction to this section, the 

primary vehicle emissions and fuel consumption test, the Federal Test Procedure (FTP) or “twocycle” testing, does not require or simulate air conditioning usage through the test cycle. The 

SC03 test is designed to identify any effect the air conditioning system has on other emissions 

when it is operating under extreme conditions, but is not designed to measure the small 

differences in CO2 due to different A/C technologies. In order to correct the shortcomings of the 

available tests, EPA has developed a four-part performance test, called the AC17. The test 

includes the SC03 driving cycle, the fuel economy highway cycle, in addition to a preconditioning cycle, and a solar soak period. EPA is proposing that manufacturers may use this 

test to demonstrate that A/C technologies result in efficiency improvements. Since the 

appropriateness of the test to measure the amount of reduction achieved is still being evaluated, 

EPA proposes that manufacturers continue to use a technology lookup table (“menu”) to 

determine credits and fuel consumption improvement values for the GHG and CAFE programs. 

This was also the approach that EPA used for efficiency credits in the MY2012-2016 GHG rule. 

The design approach would assign CO2 credit and fuel consumption improvement value to each 

efficiency-improving air conditioning technology that the manufacturer incorporates in a vehicle 

model. The sum of these values for all technologies would be the amount of CO2 credit 

generated and fuel consumption reduction achieved by that vehicle, up to a maximum of 5.0 g/mi 

for car and 7.2 g/mi for trucks. As stated above, this is equivalent to a fuel consumption value of 

0.000563 gallons /mi for cars and 0.000586 gallons /mi for trucks. EPA will consult with 

NHTSA on the amount of fuel consumption improvement value manufacturers may factor into 

their CAFE calculations if there are adjustments that may be required in the future. Table 0-10 

presents the proposed CO2 credit and CAFE fuel consumption improvement values for each of 

the efficiency-reducing air conditioning technologies considered in this rule. More detail is 

provided on the calculation of indirect A/C CAFE fuel consumption improvement values in 

chapter 5 of the TSD. EPA is proposing very specific definitions of each of the technologies in 

the table below which are discussed in Chapter 5 of the draft joint TSD to ensure that the air 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 142 of 770

conditioner technology used by manufacturers seeking these credits corresponds with the 

technology used to derive the credit/fuel consumption improvement values. 

Table 0-10 A/C Efficiency Credits and Fuel Consumption Improvement Values 

Technology Description

Estimated 

reduction in A/C 

CO2 Emissions 

and Fuel 

Consumption

Car A/C 

Efficiency 

Credit 

(g/mi CO2)

Truck A/C 

Efficiency 

Credit 

(g/mi CO2)

Car A/C 

Efficiency 

Fuel 

Consumption 

Improvement 

(gallon / mi)

Truck A/C 

Efficiency 

Fuel 

Consumption 

Improvement 

(gallon / mi)

Reduced reheat, with externallycontrolled, variable-displacement 

compressor 

30% 1.5 2.2 0.000169 0.000248 

Reduced reheat, with externallycontrolled, fixed-displacement or 

pneumatic variable displacement 

compressor 

20% 1.0 1.4 0.000113 0.000158 

Default to recirculated air with closedloop control of the air supply (sensor 

feedback to control interior air quality) 

whenever the outside ambient 

temperature is 75 °F or higher (although 

deviations from this temperature are 

allowed based on additional analysis) 

30% 1.5 2.2 0.000169 0.000248 

Default to recirculated air with openloop control of the air supply (no sensor 

feedback) whenever the outside ambient 

temperature is 75 °F or higher (although 

deviations from this temperature are 

allowed if accompanied by an 

engineering analysis) 

20% 1.0 1.4 0.000113 0.000158 

Blower motor control which limit 

wasted electrical energy (e.g. pulsewidth 

modulated power controller) 

15% 0.8 1.1 0.000090 0.000124 

Internal heat exchanger (or suction line 

heat exchanger) 20% 1.0 1.4 0.000113 0.000158 

Improved evaporators and condensers 

(with engineering analysis on each 

component indicating a COP 

improvement greater than 10%, when 

compared to previous design) 

20% 1.0 1.4 0.000113 0.000158 

Oil Separator (internal or external to 

compressor) 10% 0.8 0.7 0.000090 0.000079 

At the time of the final rule for the 2012-2016 GHG program, EPA concluded that a 

practical, performance-based test procedure capable of quantifying efficiency credits was not yet 

available. However, EPA introduced a specialized new procedure that it believed would be 

appropriate for the more limited purpose of demonstrating that the design improvements a 

manufacturer was earning credits for produced actual efficiency improvements. EPA’s test is a 

fairly simple test, performed while the vehicle is at idle. Beginning with the 2014 model year, 

the A/C Idle Test was to be used to qualify a manufacturer to be able to use the “menu” approach 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 143 of 770

to quantify credits. That is, a manufacturer would need to achieve a certain CO2 level in order to 

use the “menu” and generate efficiency credits. 

Since that final rule was published, several manufacturers have provided data that raises 

questions about the ability of the Idle Test to fulfill its intended purpose. Especially for small, 

lower-powered vehicles, the data also shows that it is difficult to achieve reasonable test-to-test 

repeatability. The manufacturers have also informed EPA (in meetings subsequent to the 2012-

2016 final rule) that the Idle Test does not accurately capture the improvements from many of 

the technologies listed in the menu. EPA has been aware of all of these issues, and proposing to 

modify the Idle Test such that the threshold is now a function of engine displacement in contrast 

to the flat threshold from the previous rule. EPA continues to consider this Idle Test to be a 

reasonable measure of some A/C CO2 emissions as there is significant real-world driving activity 

at idle, and the Idle Test significantly exercises a number of the A/C technologies from the menu 

As mentioned above, EPA, working with manufacturers and CARB, has made significant 

progress in developing a more robust test that may be capable of measuring differences in A/C 

efficiency. While EPA believes that more testing and development will be necessary before the 

new test could be used directly to quantify efficiency credits and fuel consumption improvement 

values, EPA is proposing the test be used to demonstrate that A/C technologies result in 

reductions in GHG emissions and fuel consumption. EPA is proposing the AC17 test as an 

alternative to the Idle Test as a prerequisite for generating Efficiency Credits and fuel 

consumption improvement values. To demonstrate that a vehicle’s A/C system is delivering the 

efficiency benefits of the new technologies, manufacturers would run the AC17 test procedure on 

a vehicle that incorporates the new technologies, with the A/C system off and then on, and then 

compare that result to the result from a previous model year or baseline vehicle with similar 

vehicle characteristics, except that the comparison vehicle would not have the new technologies. 

If the test result with the new technology demonstrated an emission reduction that is greater than 

or equal to the menu-based credit potential of those technologies, the manufacturer would 

generate the appropriate credit based on the menu. However, if the test result did not 

demonstrate the full menu-based potential of the technology, partial credit could still be earned, 

in proportion to how far away the result was from the mean value. 

EPA discusses the new test in more detail in Section III.C below and in Chapter 5 of the 

joint TSD. Due to the length of time to conduct the test procedure, EPA is also proposing that 

required testing be limited to a subset of vehicles. The agencies request comment on this 

approach to establishing A/C efficiency credits and fuel consumption improvement values and 

the use of the new A/C test. 

2. Off-Cycle CO2 Credits 

For MYs 2012-2016, EPA provided an option for manufacturers to generate adjustments 

(credits) for employing new and innovative technologies that achieve CO2 reductions which are 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 144 of 770

not reflected on current 2-cycle test procedures. For this proposal, EPA, in coordination with 

NHTSA, is proposing to apply the off-cycle credits and equivalent fuel consumption 

improvement values to both the CAFE and GHG programs. This proposed expansion is a change 

from the 2012-16 final rule where only EPA provided the off-cycle credits for the GHG 

program. For MY 2017 and later, EPA is proposing that manufacturers may continue to use offcycle credits for GHG compliance and begin to use fuel consumption improvement values for 

CAFE compliance. In addition, EPA is proposing a set of defined (e.g. default) values for 

identified off-cycle technologies that would apply unless the manufacturer demonstrates to EPA 

that a different value for its technology is appropriate. 

Starting with MY2008, EPA started employing a “five-cycle” test methodology to 

measure fuel economy for the fuel economy label. However, for GHG and CAFE compliance, 

EPA continues to use the established “two-cycle” (city and highway test cycles, also known as 

the FTP and HFET) test methodology. As learned through development of the “five-cycle” 

methodology and researching this proposal, EPA and NHTSA recognize that there are 

technologies that provide real-world GHG emissions and fuel consumption improvements, but 

those improvements are not fully reflected on the “two-cycle” test. 

During meetings with vehicle manufacturers, EPA received comments that the approval 

process for generating off-cycle credits was complicated and did not provide sufficient certainty 

on the amount of credits that might be approved. Commenters also maintained that it is 

impractical to measure small incremental improvements on top of a large tailpipe measurement, 

similar to comments received related to quantifying air conditioner improvements. These same 

manufacturers believed that such a process could stifle innovation and fuel efficient technologies 

from penetrating into the vehicle fleet. 

 In response to these concerns, EPA is proposing a menu with a number of technologies 

that the agency believes will show real-world CO2 and fuel consumption benefits which can be 

reasonably quantified by the agencies at this time. This list of pre-approved technologies 

includes a quantified default value that would apply unless the manufacturer demonstrates to 

EPA that a different value for a technology is appropriate. This list is similar to the menu driven 

approach described in the previous section on A/C efficiency credits. The estimates of these 

credits were largely determined from research, analysis and simulations, rather from full vehicle 

testing, which would have been cost and time prohibitive. These predefined estimates are 

somewhat conservative to avoid the potential for windfall. If manufactures believe their specific 

off-cycle technology achieves larger improvement, they may apply for greater credits and fuel 

consumption improvement values with supporting data. For technologies not listed, EPA is 

proposing a case-by-case approach for approval of off-cycle credits and fuel consumption 

improvement values, similar to the approach in the 2012-2016 rule but with important 

modifications to streamline the approval process. EPA will also consult with NHTSA during the 

review process. See section III.C below; technologies for which EPA is proposing default off-
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 145 of 770

cycle credit values and fuel consumption improvement values are shown in Table II -2 below. 

Fuel consumption improvement values under the CAFE program based on off-cycle technology 

would be equivalent to the off-cycle credit allowed by EPA under the GHG program, and these 

amounts would be determined using the same procedures and test methods as are proposed for 

use in EPA’s GHG program. 

EPA and NHTSA are not proposing to adjust the stringency of the standards based on the 

availability of off-cycle credits and fuel consumption improvement values. There are a number 

of reasons for this. First, the agencies have limited technical information on the cost, 

development time necessary, and manufacturability of many of these technologies. The analysis 

presented below (and in greater detail in Chapter 5 of the joint TSD) is limited to quantifying the 

effectiveness of the technology (for the purposes of quantifying credits and fuel consumption 

improvement values). It is based on a combination of data and engineering analysis for each 

technology. Second, for most of these technologies the agencies have no data on what the rates 

of penetration of these technologies would be during the rule timeframe. Thus, with the 

exception of active grill shutters and stop start technology, the agencies do not have adequate 

information available to consider the technologies on the list when determining the appropriate 

GHG emissions or CAFE standards. The agencies expect to continue to improve their 

understanding of these technologies over time. If further information is obtained during the 

comment period that supports consideration of these technologies in setting the standards, EPA 

and NHTSA will reevaluate their positions. However, given the current lack of detailed 

information about these technologies, the agencies do not expect that it will be able to do more 

for the final rule than estimate some general amount of reasonable projected cost savings from 

generation of off-cycle credits and fuel consumption improvement values. Therefore, effectively 

the off-cycle credits and fuel consumption improvement values allow manufacturers additional 

flexibility in selecting technologies that may be used to comply with GHG emission and CAFE 

standards. 

Two technologies on the list - active grill shutters and stop start – are in a different 

position than the other technologies on the list. Both of these technologies are included in the 

agencies’ modeling analysis of technologies projected to be available for use in achieving the 

reductions needed for the standards. We have information on their effectiveness, cost, and 

availability for purposes of considering them along with the various other technologies we 

consider in determining the appropriate CO2 emissions standard. These technologies are among 

those listed in Chapter 3 of the joint TSD and have measureable benefit on the 2-cycle test. 

However, in the context of off-cycle credits and fuel consumption improvement values, stop start 

is any technology which enables a vehicle to automatically turn off the engine when the vehicle 

comes to a rest and restart the engine when the driver applies pressure to the accelerator or 

releases the brake. This includes HEVs and PHEVs (but not EVs). In addition, active grill 

shutters is just one of various technologies that can be used as part of aerodynamic design 

improvements (as part of the “aero2” technology). The modeling and other analysis developed 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 146 of 770

for determining the appropriate emissions standard includes these technologies, using the 

effectiveness values on the 2-cycle test. This is consistent with our consideration of all of the 

other technologies included in these analyses. Including them on the list for off-cycle credit and 

fuel consumption improvement value generation, for purposes of compliance with the standards, 

would recognize that these technologies have a higher degree of effectiveness than reflected in 

their 2-cycle effectiveness. As discussed in Sections III.C and Chapter 5 of the joint TSD, the 

agencies have taken into account the generation of off-cycle credits and fuel consumption 

improvement values by these two technologies in determining the appropriateness of the 

proposed standards, considering the amount of credit and fuel consumption improvement value, 

the projected degree of penetration of these technologies, and other factors. The proposed 

standards are appropriate recognizing that these technologies would also generate off-cycle 

credits and fuel consumption improvement values. Section III.D has a more detailed discussion 

on the feasibility of the standards within the context of the flexibilities (such as off-cycle credits 

and fuel consumption improvement values) proposed in this rule. 

For these technologies that provide a benefit on five-cycle testing, but show less benefit 

on two cycle testing, in order to quantify the emissions impacts of these technologies, EPA will 

simply subtract the two-cycle benefit from the five-cycle benefit for the purposes of assigning 

credit and fuel consumption improvement values for this pre-approved list. Other technologies, 

such as more efficient lighting show no benefit over any test cycle. In these cases, EPA will 

estimate the average amount of usage using MOVES161 data if possible and use this to calculate a 

duty-cycle-weighted benefit (or credit and fuel consumption improvement value). In the 2012-

2016 rule, EPA stated a technology must have “real world GHG reductions not significantly 

captured on the current 2-cycle tests...” For this proposal, EPA is proposing to modify this 

requirement to allow technologies as long as the incremental benefit in the real-world is 

significantly better than on the 2-cycle test. There are environmental benefits to encouraging 

these kinds of technologies that might not otherwise be employed, beyond the level that the 2-

cycle standards already do, thus we are now allowing credits and fuel consumption improvement 

values to be generated where the technology achieves an incremental benefit that is significantly 

better than on the 2-cycle test, as is the case for the technologies on the list. 

EPA and NHTSA evaluated many more technologies for off-cycle credits and fuel 

consumption improvement values and decided that the following technologies should be eligible 

for off-cycle credits and fuel consumption improvement values. These eleven technologies 

eligible for credits and fuel consumption improvement values are shown in Table 0-11 below. 

Table 0-11 Off-cycle Technologies and Proposed Credits and Fuel Consumption 

Improvement Values for Cars and Light Trucks 

 161 MOVES is EPA’s MOtor Vehicle Emissions Simulator. This model contains (in its database) a wide variety of 

fleet and activity data as well as national ambient temperature conditions. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 147 of 770

Technology Cars Light Trucks 

g/mi gallons/mi g/mi gallons/mi 

High Efficiency Exterior Lighting 1.1 0.000124 1.1 0.000124 

Engine Heat Recovery 0.7 0.000778 0.7 0.000778 

Solar Roof Panels 3.0 0.000338 3.0 0.000338 

Active Grill Shutters and Active 

Aerodynamics 0.6 0.0000675 1.0 0.000113 

Engine Start-Stop 2.9 0.000326 4.5 0.000506 

Electric Heater Circulation Pump 1.0 0.000123 1.5 0.000169 

Active Transmission Warm-Up 1.8 0.000203 1.8 0.000203 

Active Engine Warm-Up 1.8 0.000203 1.8 0.000203 

Solar Control Up to 

3.0 Up to 0.000338 Up to 4.3 Up to 0.000484 

Table 0-11 shows the proposed list of off-cycle technologies and credits and fuel 

consumption improvement values for cars and trucks. The credits and fuel consumption 

improvement values for engine heat recovery and solar roof panels are scalable, depending on 

the amount of energy these systems can generate for the vehicle. The Solar/Thermal control 

technologies are varied and are limited to 3 and 4.3 g/mi (car and truck respectively) total. 

To ensure that the off cycle technology used by manufacturers seeking these credits and 

fuel consumption improvement values corresponds with the technology used to derive the credit 

and fuel consumption improvement values, EPA is proposing very specific definitions of each of 

the technologies in the table of the list of technologies in Chapter 5 of the draft joint TSD. The 

agencies are requesting comment on all aspects of the off-cycle credit and fuel consumption 

improvement value program, and would welcome any data to support an adjustment to this table, 

whether it is to adjust the values or to add or remove technologies. 

Vehicle Simulation Tool 

Chapter 2 of the RIA provides a detailed description of the vehicle simulation tool that 

EPA has been developing. This tool is capable of simulating a wide range of conventional and 

advanced engines, transmissions, and vehicle technologies over various driving cycles. It 

evaluates technology package effectiveness while taking into account synergy (and dis-synergy) 

effects among vehicle components and estimates GHG emissions for various combinations of 

technologies. For the 2017 to 2025 GHG proposal, this simulation tool was used to assist 

estimating the amount of GHG credits for improved A/C systems and off-cycle technologies. 

EPA seeks public comments on this approach of using the tool for directly generating and finetuning some of the credits in order to capture the amount of GHG reductions provided by 

primarily off-cycle technologies. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 148 of 770

There are a number of technologies that could bring additional GHG reductions over the 

5-cycle drive test (or in the real world) compared to the combined FTP/Highway (or two) cycle 

test. These are called off-cycle technologies and are described in chapter 5 of the Joint TSD in 

detail. Among them are technologies related to reducing vehicle’s electrical loads, such as High 

Efficiency Exterior Lights, Engine Heat Recovery, and Solar Roof Panels. In an effort to 

streamline the process for approving off-cycle credits, we have set a relatively conservative 

estimate of the credit based on our efficacy analysis. EPA seeks comment on utilizing the model 

in order to quantify the credits more accurately, if actual data of electrical load reduction and/or 

on-board electricity generation by one or more of these technologies is available through data 

submission from manufacturers. Similarly, there are technologies that would provide additional 

GHG reduction benefits in the 5-cycle test by actively reducing the vehicle’s aerodynamic drag 

forces. These are referred to as active aerodynamic technologies, which include but are not 

limited to Active Grill Shutters and Active Suspension Lowering. Like the electrical load 

reduction technologies, the vehicle simulation tool can be used to more accurately estimate the 

additional GHG reductions (therefore the credits) provided by these active aerodynamic 

technologies over the 5-cycle drive test. EPA seeks comment on using the simulation tool in 

order to quantify these credits. In order to do this properly, manufacturers would be expected to 

submit two sets of coast-down coefficients (with and without the active aerodynamic 

technologies). Or, they could submit two sets of aerodynamic drag coefficient (with and without 

the active aerodynamic technologies) as a function of vehicle speed. 

There are other technologies that would result in additional GHG reduction benefits that 

cannot be fully captured on the combined FTP/Highway cycle test. These technologies typically 

reduce engine loads by utilizing advanced engine controls, and they range from enabling the 

vehicle to turn off the engine at idle, to reducing cabin temperature and thus A/C compressor 

loading when the vehicle is restarted. Examples include Engine Start-Stop, Electric Heater 

Circulation Pump, Active Engine/Transmission Warm-Up, and Solar Control. For these types of 

technologies, the overall GHG reduction largely depends on the control and calibration strategies 

of individual manufacturers and vehicle types. Also, the current vehicle simulation tool does not 

have the capability to properly simulate the vehicle behaviors that depend on thermal conditions 

of the vehicle and its surroundings, such as Active Engine/Transmission Warm-Up and Solar 

Control. Therefore, the vehicle simulation may not provide full benefits of the technologies on 

the GHG reductions. For this reason, the agency is not proposing to use the simulation tool to 

generate the GHG credits for these technologies at this time, though future versions of the model 

may be more capable of quantifying the efficacy of these off-cycle technologies as well. 

3. Advanced Technology Incentives for Full Sized Pickup Trucks 

The agencies recognize that the standards under consideration for MY 2017-2025 will be 

most challenging to large trucks, including full size pickup trucks that are often used for 

commercial purposes and have generally higher payload and towing capabilities, and cargo 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 149 of 770

volumes than other light-duty vehicles. In Section II.C and Chapter 2 of the joint TSD, EPA and 

NHTSA describe the proposal to adjust the slope of the truck curve compared to the 2012-2016 rule. 

In Sections III.B and IV.x, EPA and NHTSA describe the progression of the truck standards. In this 

section, the agencies describe a credit and fuel consumption improvement value for full size pickup 

trucks to incentivize advanced technologies on this class of vehicles. 

The agencies’ goal is to incentivize the penetration into the marketplace of “game 

changing” technologies for these pickups, including their hybridization. For that reason, EPA ,in 

coordination with NHTSA, is proposing credits and fuel consumption improvement values for 

manufacturers that hybridize a significant quantity of their full size pickup trucks, or use other 

technologies that significantly reduce CO2 emissions and fuel consumption. This proposed 

credit fuel consumption improvement value would be available on a per-vehicle basis for mild 

and strong HEVs, as well as other technologies that significantly improve the efficiency of the 

full sized pickup class. The credits and fuel consumption improvement values would apply for 

purposes of compliance with both the GHG emissions standards and the CAFE standards. This 

provides the incentive to begin transforming this most challenging category of vehicles toward 

use of the most advanced technologies. 

Access to this credit and fuel consumption improvement value is conditioned on a 

minimum penetration of the technologies in a manufacturer’s full size pickup truck fleet. To 

ensure its use for only full sized pickup trucks, EPA is proposing a very specific definition for a 

full sized pickup truck based on minimum bed size and minimum towing capability. The 

specifics of this proposed definition can be found in Chapter 5 of the draft joint TSD (see Section 

5.3.1). This proposed definition is meant to ensure that smaller pickup trucks, which are not 

used as often for commercial purposes and do not face the same technical challenges in 

achieving improved fuel efficiency and CO2 performance as larger pickup trucks, such as the 

Ford Ranger or the Honda Ridgeline do not qualify162. For this proposal, a full sized pickup 

truck would be defined as meeting requirements 1 and 2, below, as well as either requirement 3 

or 4, below: 

1. The vehicle must have an open cargo box with a minimum width between the 

wheelhouses of 48 inches measured as the minimum lateral distance between the 

limiting interferences (pass-through) of the wheelhouses. The measurement would 

exclude the transitional arc, local protrusions, and depressions or pockets, if 

present.163 An open cargo box means a vehicle where the cargo bed does not have a 

permanent roof or cover. Vehicles sold with detachable covers are considered “open” 

for the purposes of these criteria. 

 162 As discussed in TSD Section 5.3.1, EPA is seeking comment on expanding the scope of this credit to somewhat 

smaller pickups, provided they have the towing and/or hauling capabilities of the larger full-size trucks. 163 This dimension is also known as dimension W202 as defined in Society of Automotive Engineers Procedure 

J1100. 

Comment [A41]: Commenters request clarity on 

whether the fact that they are less often used as 

commercial vehicles is the main reason why they are 

excluded. Commenters request clarity on whether it 

is about technical challenges unique to larger pickup 

trucks (related to their use as commercial vehicles, 

but not limited to that issue)? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 150 of 770

2. Minimum open cargo box length of 60 inches defined by the lesser of the pickup bed 

length at the top of the body (defined as the longitudinal distance from the inside 

front of the pickup bed to the inside of the closed endgate; this would be measured at 

the height of the top of the open pickup bed along vehicle centerline and the pickup 

bed length at the floor) and the pickup bed length at the floor (defined as the 

longitudinal distance from the inside front of the pickup bed to the inside of the 

closed endgate; this would be measured at the cargo floor surface along vehicle 

centerline).164 

3. Minimum Towing Capability – the vehicle must have a GCWR (gross combined 

weight rating) minus GVWR (gross vehicle weight rating) value of at least 5,000 

pounds.165

4. Minimum Payload Capability – the vehicle must have a GVWR (gross vehicle weight 

rating) minus curb weight value of at least 1,700 pounds. 

The technical basis for these proposed definitions is found in Section III.C below and 

Chapter 5 of the joint TSD. EPA is proposing that mild HEV pickup trucks would be eligible for 

a per-truck 10 g/mi CO2 credit (equal to a 0.001125 gal/mi fuel consumption improvement 

value) during MYs 2017-2021 if the mild HEV technology is used on a minimum percentage of 

a company’s full sized pickups.166 That minimum percentage would be 30 percent of a 

company’s full sized pickup production in MY 2017 with a ramp up to at least 80 percent of 

production in MY 2021. 

EPA is also proposing that strong HEV pickup trucks would be eligible for a per-truck 20 

g/mi CO2 credit (equal to a 0.002250 gal/mi fuel consumption improvement value) during MYs 

2017-2025 if the strong HEV technology is used on a minimum percentage of a company’s full 

sized pickups. That minimum percentage would be 10 percent of a company’s full sized pickup 

production in each year over the model years 2017-2025. 

To ensure that the hybridization technology used by manufacturers seeking one of these 

credits and fuel consumption improvement values meets the intent behind the incentives, EPA is 

proposing very specific definitions of what qualifies as a mild and a strong HEV. These 

definitions are described in detail in Chapter 5 of the draft joint TSD (see section 5.3.3). 

 164 The pickup body length at the top of the body is also known as dimension L506 in Society of Automotive 

Engineers Procedure J1100. The pickup body length at the floor is also known as dimension L505 in Society of 

Automotive Engineers Procedure J1100. 

165 Gross combined weight rating means the value specified by the vehicle manufacturer as the maximum weight of 

a loaded vehicle and trailer, consistent with good engineering judgment. Gross vehicle weight rating means the 

value specified by the vehicle manufacturer as the maximum design loaded weight of a single vehicle, consistent 

with good engineering judgment. Curb weight is defined in 40 CFR 86.1803, consistent with the provisions of 40 

CFR 1037.140. 

166 The corresponding credit for purposes of compliance with CAFE is discussed at XXXXX. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 151 of 770

 For similar reasons, EPA is also proposing a performance-based incentive credit and fuel 

consumption improvement value for full size pickup trucks that achieve an emission level 

significantly below the applicable target and/or fuel consumption performance significantly 

above the CAFE target for that footprint. EPA, in coordination with NHTSA, is proposes this 

credit to be either 10 g/mi CO2(equivalent to 0.001125 gal/mi for the CAFE program) or 20 g/mi 

CO2 (equivalent to 0.002250 gal/mi for the CAFE program) for pickups achieving 15 percent or 

20 percent, respectively, better CO2 or fuel consumption than their footprint based target in a 

given model year. Further details on this performance-based incentive are in Section III.C below 

and in Chapter 5 of the draft joint TSD (see Section 5.3.4). The 10 g/ mi (equivalent to 0.001125 

gal/mi) performance-based credit and fuel consumption improvement value would be available 

for MYs 2017 to 2021 and a vehicle meeting the requirements would receive the credit and fuel 

consumption improvement value until MY 2021 unless its CO2 level increases or fuel economy 

decreases. The 20 g/mi CO2 (equivalent to 0.0023 gal/mi fuel consumption improvement value) 

performance-based credit would be available for a maximum of 5 years within the model years 

of 2017 to 2025, provided its CO2 level and fuel consumption does not increase. The rationale 

for these limits is because of the year over year progression of the stringency of the truck target 

curves. The credits and fuel consumption improvement values would begin in the model year of 

introduction, and could not extend past MY 2021 for the 10 g/mi credit (equivalent to 0.001125 

gal/mi) and MY 2025 for the 20 g/mi credit (equivalent to 0.002250 gal/mi). 

As with the HEV-based credit and fuel consumption improvement value, the 

performance-based credit and fuel consumption improvement value requires that the technology 

be used on a minimum percentage of a manufacturer’s full-size pickup trucks. That minimum 

percentage for the 10 g/mi GHG credit (equivalent to 0.001125 gal/mi fuel consumption 

improvement value) would be 15 percent of a company’s full sized pickup production in MY 

2017 with a ramp up to at least 40 percent of production in MY 2021. The minimum percentage 

for the 20 g/mi credit (equivalent to 0.002250 gal/mi fuel consumption improvement value) 

would be 10 percent of a company’s full sized pickup production in each year over the model 

years 2017-2025. 

Importantly, the same vehicle could not receive credit and fuel consumption 

improvement under both the HEV and the performance-based approaches. EPA and NHTSA 

request comment on all aspects of this proposed pickup truck incentive credit and fuel 

consumption improvement value, including the proposed definitions for full sized pickup truck 

and mild and strong HEV. 

G. Safety Considerations in Establishing CAFE/GHG Standards 

1. Why do the agencies consider safety?

The primary goals of the proposed CAFE and GHG standards are to reduce fuel 

consumption and GHG emissions from the on-road light-duty vehicle fleet, but in addition to 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 152 of 770

these intended effects, the agencies also consider the potential of the standards to affect vehicle 

safety.167 As a safety agency, NHTSA has long considered the potential for adverse safety 

consequences when establishing CAFE standards,168 and under the CAA, EPA considers factors 

related to public health and human welfare, and safety, in regulating emissions of air pollutants 

from mobile sources.169 Safety trade-offs associated with fuel economy increases have occurred 

in the past (particularly before NHTSA CAFE standards were attribute-based), and the agencies 

must be mindful of the possibility of future ones. These past safety trade-offs may have occurred 

because manufacturers chose, at the time, to build smaller and lighter vehicles—partly in 

response to CAFE standards—rather than adding more expensive fuel-saving technologies (and 

maintaining vehicle size and safety), and the smaller and lighter vehicles did not fare as well in 

crashes as larger and heavier vehicles. Historically, as shown in FARS data analyzed by 

NHTSA, the safest cars have been heavy and large, while the cars with the highest fatal-crash 

rates have been light and small. The question, then, is whether past is necessarily prologue when 

it comes to potential changes in vehicle size (both footprint and “overhang”) and mass in 

response to these proposed future CAFE and GHG standards. Manufacturers have stated that 

they will reduce vehicle mass as one of the cost-effective means of increasing fuel economy and 

reducing CO2 emissions in order to meet the proposed standards, and the agencies have 

incorporated this expectation into our modeling analysis supporting the proposed standards. 

Because the agencies discern a historical relationship between vehicle mass and safety, it is 

reasonable to assume that there will also be relationships between vehicle mass and safety in the 

future, although it may have been in the past and possibly the future partially or fully mitigated 

by improvements in vehicle design and advances in vehicle safety features. The question of 

whether vehicle design can mitigate the adverse effects of mass reduction is discussed below. 

Manufacturers are less likely than they were in the past to reduce vehicle footprint in 

order to reduce mass for increased fuel economy. The primary mechanism in this rulemaking for 

mitigating the potential negative effects on safety is the application of footprint-based standards, 

which create a disincentive for manufacturers to produce smaller-footprint vehicles. See section 

II. C.1, above. This is because, as footprint decreases, the corresponding fuel economy/GHG 

emission target becomes more stringent. We also believe that the shape of the footprint curves 

themselves is approximately “footprint-neutral,” that is, that it should neither encourage 

manufacturers to increase the footprint of their fleets, nor to decrease it. Upsizing footprint is 

 167 In this rulemaking document, “vehicle safety” is defined as societal fatality rates which include fatalities to 

occupants of all the vehicles involved in the collisions, plus any pedestrians. 

168 This practice is recognized approvingly in case law. As the United States Court of Appeals for the D.C. Circuit 

stated in upholding NHTSA’s exercise of judgment in setting the 1987-1989 passenger car standards, “NHTSA has 

always examined the safety consequences of the CAFE standards in its overall consideration of relevant factors 

since its earliest rulemaking under the CAFE program.” Competitive Enterprise Institute v. NHTSA (“CEI I”), 901 

F.2d 107, 120 at n. 11 (D.C. Cir. 1990). 

169 See NRDC v. EPA, 655 F. 2d 318, 332 n. 31 (D.C. Cir. 1981).(EPA may consider safety in developing standards 

under section 202 (a) and did so appropriately in the given instance). 

Comment [A42]: Commenters request clarity on 

whether there are sources to include here regarding 

the occurrence of safety tradeoffs because of fuel 

economy. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 153 of 770

also discouraged through the curve “cut-off” at larger footprints.170 However, the footprintbased standards do not discourage downsizing the portions of a vehicle in front of the front axle 

and to the rear of the rear axle, or of other areas of the vehicle outside the wheels. The crush 

space provided by those portions of a vehicle can make important contributions to managing 

crash energy. Additionally, simply because footprint-based standards create no incentive to 

downsize vehicles does not mean that manufacturers will not downsize if doing so makes it 

easier to meet the overall CAFE/GHG standard, as for example if the smaller vehicles are so 

much lighter that they exceed their targets by much greater amounts. On balance, however, we 

believe the target curves and the incentives they provide generally will not encourage downsizing (or up-sizing) in terms of footprint reductions (or increases).171

Given that we expect manufacturers to reduce vehicle mass in response to the proposed 

standards, and do not expect manufacturers to reduce vehicle footprint in response to the 

proposed standards, the agencies must attempt to predict the safety effects, if any, of the 

proposed standards based on the best information currently available. This section explained 

why the agencies consider safety; the following section discusses how the agencies consider 

safety. 

2. How do the agencies consider safety? 

Assessing the effects of vehicle mass reduction and size on societal safety is a complex 

issue. One part of estimating potential safety effects involves trying to understand better the 

relationship between mass and vehicle design. The extent of mass reduction that manufacturers 

may be considering to meet more stringent fuel economy and GHG standards may raise different 

safety concerns from what the industry has previously faced. The principal difference between 

the heavier vehicles, especially truck-based LTVs, and the lighter vehicles, especially passenger 

cars, is that mass reduction has a different effect in collisions with another car or LTV. When 

two vehicles of unequal mass collide, the change in velocity (delta V) is higher in the lighter 

vehicle, similar to the mass ratio proportion. As a result of the higher change in velocity, the 

fatality risk may also increase. Removing more mass from the heavier vehicle than in the lighter 

 170 The agencies recognize that at the other end of the curve, manufacturers who make small cars and trucks below 

41 square feet (the small footprint cut-off point) have some incentive to downsize their vehicles to make it easier to 

meet the constant target. That cut-off may also create some incentive for manufacturers who do not currently offer 

models that size to do so in the future. However, at the same time, the agencies believe that there is a limit to the 

market for cars and trucks smaller than 41 square feet: most consumers likely have some minimum expectation 

about interior volume, for example, among other things. Additionally, vehicles in this segment are the lowest price 

point for the light-duty automotive market, with several models in the $10,000-$15,000 range. Manufacturers who 

find themselves incentivized by the cut-off will also find themselves adding technology to the lowest price segment 

vehicles, which could make it challenging to retain the price advantage. Because of these two reasons, the agencies 

believe that the incentive to increase the sales of vehicles smaller than 41 square feet due to this rulemaking, if any, 

is small. See Section II.C.1 above and Chapter 1 of the draft Joint TSD for more information on the agencies’ 

choice of “cut-off” points for the footprint-based target curves. 

171 This statement makes no prediction of how consumer choices of vehicle size will change in the future, 

independent of this proposal. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 154 of 770

vehicle by amounts that bring the mass ratio closer to 1.0 reduces the delta V in the lighter 

vehicle, possibly resulting to a net societal benefit. 

Another complexity is that if a vehicle is made lighter, it may also need to be made stiffer 

to protect its occupants in a crash to manage the total energy of the crash. A stiffer vehicle 

affects the forces on the vehicle’s occupants in a crash – because the vehicle manages crash 

energy differently, the occupants may have to “ride down” greater crash forces themselves, 

putting more burden on the restraint systems to protect the occupants. Matching the restraint 

system to the vehicle stiffness may help mitigate the effects of increased vehicle stiffness. 

Another factor is that a stiffer vehicle also affects the forces that the stiffer vehicle exerts on the 

vehicles it crashes into – stiffer vehicles can be more aggressive in crashes due to the crash 

energy transfer. 

The agencies must attempt to estimate now, based on the best information currently 

before us, how the assumed levels of mass reduction without additional changes (i.e. footprint, 

performance, functionality) might affect the safety of vehicles, and how lighter vehicles might 

affect the safety of drivers and passengers in the entire on-road fleet, as we are analyzing 

potential future CAFE and GHG standards. The agencies seek to ensure that the standards are 

designed to encourage manufacturers to pursue a path toward compliance that is both costeffective and safe. 

To estimate the possible safety effects of the MY 2017-2025 standards, then, the agencies 

have undertaken research that approaches this question from several angles. First, we are using a 

statistical approach to study the effect of vehicle mass reduction on safety historically, as 

discussed in greater detail in section C below. Statistical analysis is performed using the most 

recent historical crash data available, and is considered as the agencies’ best estimate of potential 

mass-safety effects. The agencies recognize that negative safety effects estimated based on the 

historical relationships could additionally be potentially tempered with safety technology 

advances in the future, and may not represent the current or future fleet. Second, we are using 

an engineering approach to investigate what amount of mass reduction is affordable and feasible 

while maintaining vehicle safety and other major functionalities such as NVH and acceleration 

performance. Third, we are also studying the new challenges these lighter vehicles might bring 

to vehicle safety and potential countermeasures available to manage those challenges effectively. 

The sections below discuss more specifically the state of the research on the mass-safety 

relationship, and how the agencies integrate that research into our assessment of the potential 

safety effects of the MY 2017-2025 CAFE and GHG standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 155 of 770

3. What is the current state of the research on statistical analysis of historical crash 

data? 

a. Background 

Researchers have been using statistical analysis to examine the relationship of vehicle 

mass and safety in historical crash data for many years, and continue to refine their techniques 

over time. In the MY 2012-2016 final rule, the agencies stated that we would conduct further 

study and research into the interaction of mass, size and safety to assist future rulemakings, and 

start to work collaboratively by developing an interagency working group between NHTSA, 

EPA, DOE, and CARB to evaluate all aspects of mass, size and safety. The team would seek to 

coordinate government supported studies and independent research, to the greatest extent 

possible, to help ensure the work is complementary to previous and ongoing research and to 

guide further research in this area. 

The agencies also identified three specific areas to direct research in preparation for 

future CAFE/GHG rulemaking in regards to statistical analysis of historical data. 

First, NHTSA would contract with an independent institution to review the statistical 

methods that NHTSA and DRI have used to analyze historical data related to mass, size and 

safety, and to provide recommendation on whether the existing methods or other methods should 

be used for future statistical analysis of historical data. This study will include a consideration of 

potential near multicollinearity in the historical data and how best to address it in a regression 

analysis. The 2010 NHTSA report was also peer reviewed by two other experts in the safety 

field - Charles Farmer (Insurance Institute for Highway Safety) and Anders Lie (Swedish 

Transport Administration).172 

Second, NHTSA and EPA, in consultation with DOE, would update the MYs 1991–1999 

database on which the safety analyses in the NPRM and final rule are based with newer vehicle 

data, and create a common database that could be made publicly available to help address 

concerns that differences in data were leading to different results in statistical analyses by 

different researchers. 

And third, in order to assess if the design of recent model year vehicles that incorporate 

various mass reduction methods affect the relationships among vehicle mass, size and safety, the 

agencies sought to identify vehicles that are using material substitution and smart design, and to 

try to assess if there is sufficient crash data involving those vehicles for statistical analysis. If 

sufficient data exists, statistical analysis would be conducted to compare the relationship among 

 172 All three of the peer reviews are in docket, NHTSA-2010-0152. You can access the docket at 

http://www.regulations.gov/#!home by typing ‘NHTSA-2010-0152’ where it says “enter keyword or ID” and then 

clicking on “Search.”
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 156 of 770

mass, size and safety of these smart design vehicles to vehicles of similar size and mass with 

more traditional designs. 

Significant progress has been made on these tasks since the MY 2012-2016 final rule, as 

follows: The independent review of recent and updated statistical analyses of the relationship 

between vehicle mass, size, and crash fatality rates has been completed. NHTSA contracted with 

the University of Michigan Transportation Research Institute (UMTRI) to conduct this review, 

and the UMTRI team led by Paul Green evaluated over 20 papers, including studies done by 

NHTSA’s Charles Kahane, Tom Wenzel of Lawrence Berkeley National Laboratories, Dynamic 

Research, Inc., and others. UMTRI’s basic findings will be discussed below. Some commenters 

in recent CAFE rulemakings, including some vehicle manufacturers, suggested that the designs 

and materials of more recent model year vehicles may have weakened the historical statistical 

relationships between mass, size, and safety. The agencies agree that the statistical analysis 

would be improved by using an updated database that reflects more recent safety technologies, 

vehicle designs and materials, and reflects changes in the overall vehicle fleet. The agencies also 

believe, as UMTRI also found, that part of the reason that different past statistical analyses may 

have come up with different results could be due to the lack of a single comprehensive database 

of crash information. In order to try to mitigate this possibility and to support the current 

rulemaking, NHTSA has created a common, updated database for statistical analysis that consists 

of crash data of model years 2000-2007 vehicles in calendar years 2002-2008, as compared to 

the database used in prior NHTSA analyses which was based on model years 1991–1999 

vehicles in calendar years 1995-2000. The new database is the most up-to-date possible, given 

the processing lead time for crash data and the need for enough crash cases to permit statistically 

meaningful analyses. NHTSA has made the new databases available to the public,173 enabling 

other researchers to analyze the same data and hopefully minimizing discrepancies in the results 

that would have been due to inconsistencies across databases.174 The agencies recognize, 

however, that the updated database may not represent the future fleet, because vehicles have 

continued and will continue to change. 

The agencies are aware that several studies have been initiated by using NHTSA’s 2011 

newly established safety database. In addition to a new Kahane study, which is discussed in 

section II.G.4, other on-going studies include one from Wenzel at Lawrence Berkeley National 

Laboratory (LBNL) under contract with the U.S. DOE, and Dynamic Research, Inc. (DRI) 

contracted by the International Council on Clean Transportation (ICCT). These studies may take 

somewhat different approaches to examine the statistical relationship between fatality risk, 

vehicle mass and size. Wenzel’s dual approach is expected to consider the casualty risk effect 

associated with mass reduction, in addition to a detailed assessment of the NHTSA 2011 report. 

Casualty risk includes both fatality risk and serious injuries. DRI’s is expected to investigate a 

 173 The new databases are available at http://www.nhtsa.gov/fuel-economy (look for “Download Crash Databases for 

Statistical Analysis of Relationships Between Vehicles’ Fatality Risk, Mass, and Footprint.” 174 75 Fed. Reg. 25324 (May 7, 2010); the discussion of planned statistical analyses is on pp. 25395-25396. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 157 of 770

two-stage approach to separate the fatality risk effect between crash avoidance and crash 

worthiness explicitly due to mass reduction. The LBNL-Wenzel report on detailed assessment of 

the NHTSA 2011 report will be available in the docket this NPRM.175 The casualty risk effect 

study was not available in time to inform this NPRM. The completed final peer reviewed-report 

on both assessments will be available prior to the final rule. DRI has also indicated that it 

expects its study to be publicly available prior to the final rule. The agencies will consider these 

studies and any others that become available, and the results may influence the safety analysis 

for the final rule. 

Other researchers are free to download the database from NHTSA’s website, and we 

expect to see additional papers in the coming months and as comments to the rulemaking that 

may also inform our consideration of these issues for the final rule. Kahane’s updated study for 

2011 is currently undergoing peer-review, and is available in the docket for this rulemaking for 

review by commenters. 

And finally, EPA and NHTSA with DOT’s Volpe Center, part of the Research and 

Innovative Technology Administration (RITA), attempted to investigate the implications of 

“Smart Design,” by identifying and describing the types of “Smart Design” and methods for 

using “Smart Design” to result in vehicle mass reduction, selecting analytical pairs of vehicles, 

and using the appropriate crash database to analyze vehicle crash data. The analysis identified 

several one-vehicle and two-vehicle crash datasets with the potential to shed light on the issue, 

but the available data for specific crash scenarios was insufficient to produce consistent results 

that could be used to support conclusions regarding historical performance of “smart designs.” 

Undertaking these tasks has helped the agencies come closer to resolving some of the 

ongoing debates in statistical analysis research of historical crash data. We intend to apply these 

conclusions going forward, and we believe that the public discussion of the issues will be 

facilitated by the research conducted. The following sections discuss the findings from these 

studies and others in greater detail, to present a more nuanced picture of the current state of the 

statistical research. 

b. NHTSA workshop on vehicle mass, size and safety 

On February 25, 2011, NHTSA hosted a workshop on mass reduction, vehicle size, and 

fleet safety at the Headquarters of the U.S. Department of Transportation in Washington, DC.176 

The purpose of the workshop was to provide the agencies with a broad understanding of current 

research in the field and provide stakeholders and the public with an opportunity to weigh in on 

 175 Need reference to LBNL study -EPA 176 A video recording, transcript, and the presentations from the NHTSA workshop on mass reduction, vehicle size 

and fleet safety is available at http://www.nhtsa.gov/fuel-economy (look for “NHTSA Workshop on Vehicle MassSize-Safety on Feb. 25”) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 158 of 770

this issue. NHTSA also created a public docket to receive comments from interested parties that 

were unable to attend. 

The speakers included Charles Kahane of NHTSA, Thomas Wenzel of Lawrence 

Berkeley National Library, R. Michael Van Auken of Dynamic Research Inc. (DRI), Jeya 

Padmanaban of JP Research, Inc., Adrian Lund of the Insurance Institute for Highway Safety, 

Paul Green of the University of Michigan Transportation Research Institute (UMTRI), Stephen 

Summers of NHTSA, Gregg Peterson of Lotus Engineering, Koichi Kamiji of Honda, John 

German of the International Council on Clean Transportation (ICCT), Scott Schmidt of the 

Alliance of Automobile Manufacturers, Guy Nusholtz of Chrysler, and Frank Field of the 

Massachusetts Institute of Technology. 

The wide participation of the workshop allowed the agencies to hear from a broad range 

of experts and stakeholders. The contributions were particularly relevant to the agencies’ 

analysis of the effects of weight reduction for this proposed rule. The presentations were divided 

into two sessions that addressed the two expansive sets of issues – statistical evidence of the 

roles of mass and size on safety, and engineering realities – structural crashworthiness, occupant 

injury and advanced vehicle design. 

The first session focused on previous and ongoing statistical studies of crash data that 

attempt to identify the relative effects of vehicle mass and size on fleet safety. There was 

consensus that there is a complicated relationship with many confounding influences in the data. 

Wenzel identified qualitatively similar trends in results for various classes of vehicles (e.g., nonsports car passenger cars, vans, SUVs, crossover SUVs, pickups) regardless of what risk was 

being measured (fatality or casualty) or what exposure metric was used (e.g., registration years, 

police-reported crashes, etc.). In general, most showed trends demonstrated lower risk for 

heavier vehicles. Due to varying reporting criteria in different component databases, results 

were sometimes off by a discernible but consistent factor. Several participants pointed out that 

analyses must control for individual technologies with significant safety effects (e.g., Electronic 

Stability Control, airbags).It was not always conclusive whether a specialty vehicle group (e.g., 

sports cars, two-door cars, early crossover SUVs) were outliers that confound the trend or unique 

datasets that isolate specific vehicle characteristics. Unfortunately, specialty vehicle groups are 

usually adopted by specific driver groups, often with outlying vehicle usage or driver behavior 

patterns. Green, who is conducting an independent review of the current statistical analyses, 

suggested that evaluating residuals will give an indication of whether or not a data subset can be 

legitimately removed. 

It was recognized that the physics of a two-vehicle crash require that the lighter vehicle 

experience a greater change in velocity and often leads to disproportionately more injury risk. 

Lund noted persistent historical trends that, in any time period, occupants of the smallest and 

lightest vehicles had fatality rates approximately twice those of occupants of the largest and 

heaviest vehicles but predicted the sky will not fall as the fleet downsizes, we will not see an 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 159 of 770

increase in absolute injury risk because smaller cars will become increasingly protective of their 

occupants. Padmanaban also noted in her research of the historical trends that mass ratio and 

vehicle stiffness are significant predictors with mass ratio consistently the dominant parameter 

when correlating harm. Reducing the mass of any vehicle may have competing societal effects 

as it increases the injury risk in the lightened vehicle and decreases them in the partner vehicle. 

The separation of key parameters was also discussed as a challenge to the analyses, as 

vehicle size is highly correlated with vehicle mass in the previous historical databases. 

Presenters had varying approaches for acknowledging the importance of and dealing with the 

effects of this variable multicollinearity. Van Auken of DRI stated that there was latitude in the 

value of Variance Inflation Factor (VIF, a measure of multicollinearity) that would call results 

into question and suggested that the large value of VIF for curb weight might imply “perhaps the 

effect of weight is too small in comparison to other factors.” Green, of UMTRI, stated that 

highly correlated variables may not be appropriate for use in a predictive model and that 

“match[ing] on footprint” (i.e., conducting multiple analyses for data subsets with similar 

footprint values) may be the most effective way to resolve the issue. 

There was no consensus on the overall effect of the maneuverability of smaller, lighter 

vehicles. German noted that lighter vehicles should have improved handling and braking 

characteristics and “may be more likely to avoid collisions”. Lund presented crash involvement 

data that implied that, among vehicles of similar function and use rates, crash risk does not go 

down for more “nimble” vehicles. Several presenters noted the difficulties of projecting past 

data into the future as new technologies will be used that were not available when the data were 

collected. The advances in technology through the decades have dramatically improved safety 

for all weight and size classes. A video of IIHS’s 50th anniversary crash test of a 1959 Chevrolet 

Bel Air and 2009 Chevrolet Malibu graphically demonstrated that stark differences in design and 

technology that can possibly mask the discrete mass effects, while videos of compatibility crash 

tests between smaller, lighter vehicles and contemporary larger, heavier vehicles graphically 

showed the significance of vehicle mass and size. 

Kahane’s presented results from his 2010 report177 that found that foreseeable mass 

reductions, which took some mass out of heavier vehicles but little or no mass out of the lightest 

vehicles, did not impact safety in absolute terms. Kahane noted that if the analyses were able to 

consider the mass of both light vehicles in a two-car crash, the results may be more indicative of 

future crashes. There is apparent consistency with other presentations (e.g., Padmanaban, 

Nusholtz) that reducing the overall ranges of masses and mass ratios seems to reduce overall 

societal harm. That is, the effect of mass reduction exclusively does not appear to be a “zero sum 

game” in which any increase in harm to occupants of the lightened vehicle is precisely offset by 

a decrease in harm to the occupants of the partner vehicle. If the mass of the heavier vehicle is 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 160 of 770

reduced by a larger percentage, the changes in velocity from the collision are more nearly equal 

and the injuries suffered in the lighter vehicle are likely to be reduced more than the injuries in 

the heavier vehicle are increased. Alternatively, a fixed mass reduction (say, 100 lbs) in all 

vehicles could increase societal harm whereas a fixed percentage mass reduction is more likely 

to be neutral. 

Padmanaban described a series of studies conducted in recent years. She included 

numerous vehicle parameters including bumper height and several measures of vehicle size and 

stiffness and also commented on previous historic analysis that using weight and wheelbase 

together in a logistic model distorts the estimates, resulting in inflated variance with wrong signs 

and magnitudes in the results. Her results consistently showed that vehicle mass ratio was a more 

important parameter than those describing vehicle geometry or stiffness. Her ultimate 

conclusion was that removing mass (e.g., 100 lbs.) from all passenger cars would cause an 

overall increase in fatalities in truck-to-car crashes while removing the same amount from light 

trucks would cause an overall decrease in fatalities. 

c. Report by Green et al., UMTRI – “Independent Review: Statistical Analyses of 

Relationship Between Vehicle Curb Weight, Track Width, Wheelbase and 

Fatality Rates,” April 2011. 

As explained above, NHTSA contracted with the University of Michigan Transportation 

Research Institute (UMTRI) to conduct an independent review178 of a set of statistical analyses 

of relationships between vehicle curb weight, the footprint variables (track width, wheelbase) 

and fatality rates from vehicle crashes. The purpose of this review was to examine analysis 

methods, data sources, and assumptions in a set of previous statistical studies, with the objective 

of identifying the reasons for the differences in results. Another objective was to examine the 

suitability of the various methods for estimating the fatality risks of future vehicles. 

 UMTRI reviewed a set of papers, reports, and manuscripts provided by NHTSA 

(listed in Appendix A of UMTRI’s report, which is available in the docket to this rulemaking) 

and examined the statistical analyses of relationships between crash or fatality rates and vehicle 

properties such as curb weight, track width, wheelbase and other variables. 

 It is difficult to summarize a study of that length and complexity for purposes of this 

discussion, but fundamentally, the UMTRI team concluded the following: 

 Differences in data may have complicated comparisons of earlier analyses, but if the 

methodology is robust, and the methods were applied in a similar way, small changes in 

data should not lead to different conclusions. The main conclusions and findings should 

be reproducible. The data base created by Kahane appears to be an impressive collection 

 178 The review is independent in the sense that it was conducted by an outside third party without any interest in the 

reported outcome. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 161 of 770

of files from appropriate sources and the best ones available for answering the research 

questions considered in this study. 

 In general, for statistical analysis of historical crash data, simpler models generally lead to 

improved inference, assuming the data and model assumptions are appropriate, and in 

that regard, the disaggregate logistic regression model used by NHTSA in the 2003 

report179 seems to be the most appropriate model, and valid for the analysis of rates in the 

context that it was used – finding general associations between fatality risk and mass – 

and the general directions of the reported associations are correct. 

 The two-stage logistic regression model in combination with the two-step aggregate 

regression used by DRI seems to be more complicated than is necessary based on the data 

being analyzed, and summing regression coefficients from two separate models to arrive 

at conclusions about the effects of reductions in weight or size on fatality rates seems to 

add unneeded complexity to the problem. 

 Discussion of multicollinearity – UMTRI states that one of the biggest issues regarding this 

work is the historical correlation between curb weight, wheelbase, and track width. 

Including three variables that are highly correlated in the same model can have adverse 

effects on the fit of the model, especially with respect to the parameter estimates, as 

discussed by Kahane. UMTRI makes no conclusions about multicollinearity, other than 

to say that inferences made in the presence of multicollinearity should be judged with 

great concern. At the NHTSA workshop on size safety and mass, Paul Green suggested 

that a matched analysis (designed to control confounders) based on footprint could be 

undertaken to make the model more efficient. Kahane has combined wheelbase and track 

width into one variable (footprint) to compare to curb weight. NHTSA believes that the 

2011 Kahane analysis has done all it can to lessen concerns about multicollinearity, but a 

concern still exists. In considering other studies provided by NHTSA for evaluation by 

the UMTRI team: 

o Papers by Wenzel and Wenzel and Ross addressing associations between crash 

risk, weight, and size, mostly focused on certain passenger car and light truck 

model types, contribute to understanding some of the relationships between risk, 

weight, and size, and some describe findings that are generally in the right

direction. However, least squares linear regression models, without modification, 

are not exposure-based risk models and inference drawn from these models tends 

to be weak since they do not account for differences in exposure measures in the 

denominators of the rates. 

o A 2009 J.P. Research paper focused on the difficulties associated with separating 

out the contributions of weight and size variables when analyzing fatality risk 

properly recognized the problem arising from multicollinearity and included a 

clear explanation of why fatality risk is expected to increase with increasing mass 

ratio. UMTRI concluded that the positive fatality rate increases associated with a 

100-pound weight reduction in vehicle weight estimated by Kahane and JP 

Research are broadly more convincing than the 6.7 percent reduction of fatalities 

reported by DRI. 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 162 of 770

o A paper by Nusholtz et al. focused on the question of whether vehicle size can 

reasonably be the dominant vehicle factor for fatality risk, and finding that 

changing the mean mass of the vehicle population (leaving variability unchanged) 

has a stronger influence on fatality risk than corresponding (feasible) changes in 

mean vehicle dimensions, concluded unequivocally that reducing vehicle mass 

while maintaining constant vehicle dimensions will increase fatality risk. UMTRI 

concluded that if one accepts the methodology, this conclusion is robust against 

realistic changes that may be made in the force vs. deflection characteristics of the 

impacting vehicles. 

o Two papers by Robertson, one a commentary paper, and the other a peerreviewed journal paper were reviewed. The commentary paper did not fit 

separate models according to crash type, and included passenger cars, vans, and 

SUVs in the same model. UMTRI concluded that some of the claims in the 

commentary paper appear to be overstated, and intermediate results and more 

documentation would help the reader determine if these claims are valid. The 

second paper focused largely on the effects of electronic stability control (ESC), 

but generally followed on from the first paper except that curb weight is not fit 

and fuel economy is used as a surrogate. 

 

The UMTRI study provided a number of useful suggestions that Kahane considered in 

updating his 2011 analysis, and that have been incorporated into the safety effects estimates for 

the current rulemaking. 

d. Report by Dr. Charles Kahane, NHTSA – “Relationships Between Fatality Risk, 

Mass, and Footprint in Model Year 2000-2007 Passenger Cars and LTVs,” 2011 

The relationship between a vehicle’s mass, size, and fatality risk is complex, and it varies 

in different types of crashes. NHTSA, along with others, has been examining this relationship 

for over a decade. The safety chapter of NHTSA’s April 2010 final regulatory impact analysis 

(FRIA) of CAFE standards for MY 2012-2016 passenger cars and light trucks included a 

statistical analysis of relationships between fatality risk, mass, and footprint in MY 1991-1999 

passenger cars and LTVs (light trucks and vans), based on calendar year (CY) 1995-2000 crash 

and vehicle-registration data.180

The principal findings and conclusions of NHTSA’s 2010 report were that mass 

reduction in the lighter cars, even while holding footprint constant would significantly increase 

fatality risk, whereas mass reduction in the heavier LTVs would significantly reduce societal 

fatality risk, because it would reduce the fatality risk of occupants of lighter vehicles colliding 

 180 Kahane, C. J. (2010). “Relationships Between Fatality Risk, Mass, and Footprint in Model Year 1991-1999 and 

Other Passenger Cars and LTVs,” Final Regulatory Impact Analysis: Corporate Average Fuel Economy for MY 

2012-MY 2016 Passenger Cars and Light Trucks. Washington, DC: National Highway Traffic Safety 

Administration, pp. 464-542, available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/CAFE_2012-

2016_FRIA_04012010.pdf. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 163 of 770

with those heavier LTVs. NHTSA concluded that, as a result, any reasonable combination of 

mass reductions that held footprint constant in MY 2012-2016 vehicles – concentrated, at least to 

some extent, in the heavier LTVs and limited in the lighter cars – would likely be approximately 

safety-neutral; it would not significantly increase fatalities and might well decrease them. 

NHTSA’s 2010 report partially agreed and partially disagreed with analyses published 

during 2003-2005 by Dynamic Research, Inc. (DRI). NHTSA and DRI both found a significant 

protective effect for footprint and that reducing mass and footprint together (downsizing) on 

smaller vehicles was harmful. DRI’s analyses estimated significant overall benefits for mass 

reduction in all passenger cars and LTVs if wheelbase and track width were maintained, whereas 

NHTSA’s report showed an overall benefit only in the heavier LTVs, but for other classes of 

vehicles, benefits only in some types of crashes. Much of NHTSA’s 2010 report as well as 

recent work by DRI involved sensitivity tests on the databases and models and generated a range 

of estimates somewhere between the initial DRI and NHTSA results.181 

Immediately after issuing the final rule for MYs 2012-2016 CAFE and GHG standards in 

May 2010, NHTSA and EPA began work on the next joint rulemaking to develop CAFE and 

GHG standards for MYs 2017 and beyond. The preamble to the 2012-2016 final rule stated that 

NHTSA, working closely with EPA and the Department of Energy (DOE), would perform a new 

statistical analysis of the relationships between fatality rates, mass and footprint, updating the 

crash and exposure databases to the latest available model years, refining the methodology in 

response to peer reviews of the 2010 report and taking into account changes in vehicle 

technologies. The previous databases of MY 1991-1999 vehicles in CY 1995-2000 crashes has 

become outdated as new safety technologies, vehicle designs and materials were introduced. 

The new databases comprising MY 2000-2007 vehicles in CY 2002-2008 crashes with the most 

up-to-date possible, given the processing lead time for crash data and the need for enough crash 

cases to permit statistically meaningful analyses. NHTSA has made the new databases available 

to the public182, enabling other researchers to analyze the same data and hopefully minimizing 

discrepancies in the results that would have been due to inconsistencies across databases.183

 181 Van Auken, R. M., and Zellner, J. W. (2003). A Further Assessment of the Effects of Vehicle Weight and Size 

Parameters on Fatality Risk in Model Year 1985-98 Passenger Cars and 1986-97 Light Trucks. Report No. DRITR-03-01. Torrance, CA: Dynamic Research, Inc.; Van Auken, R. M., and Zellner, J. W. (2005a). An Assessment of 

the Effects of Vehicle Weight and Size on Fatality Risk in 1985 to 1998 Model Year Passenger Cars and 1985 to 

1997 Model Year Light Trucks and Vans. Paper No. 2005-01-1354. Warrendale, PA: Society of Automotive 

Engineers; Van Auken, R. M., and Zellner, J. W. (2005b). Supplemental Results on the Independent Effects of Curb 

Weight, Wheelbase, and Track on Fatality Risk in 1985-1998 Model Year Passenger Cars and 1986-97 Model Year 

LTVs. Report No. DRI-TR-05-01. Torrance, CA: Dynamic Research, Inc.; Van Auken, R.M., and Zellner, J. W. 

(2011). “Updated Analysis of the Effects of Passenger Vehicle Size and Weight on Safety,” NHTSA Workshop on 

Vehicle Mass-Size-Safety, Washington, February 25, 2011, 

http://www.nhtsa.gov/staticfiles/rulemaking/pdf/MSS/MSSworkshop_VanAuken.pdf 182 http://www.nhtsa.gov/fuel-economy 183 75 Fed. Reg. 25324 (May 7, 2010); the discussion of planned statistical analyses is on pp. 25395-25396. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 164 of 770

One way to estimate these effects is via statistical analyses of societal fatality rates per 

vehicle miles traveled (VMT), by vehicles’ mass and footprint, for the current on-road vehicle 

fleet. The basic analytical method used for the 2011 NHTSA report is the same as in NHTSA’s 

2010 report: cross-sectional analyses of the societal fatality rate per billion vehicle miles of travel 

(VMT) by mass and footprint, while controlling for driver age, gender, and other factors, in 

separate logistic regressions by vehicle class and crash type. Societal fatality rates include 

occupants of all vehicles in the crash as well as pedestrians. NHTSA’s 2011 Report184 analyzes 

MY 2000-2007 cars and LTVs in CY 2002-2008 crashes. Fatality rates were derived from 

FARS data, 13 State crash files, and registration and mileage data from R.L. Polk. 

The most noticeable change in MY 2000-2007 vehicles from MY 1991-1999 has been 

the increase in crossover utility vehicles (CUV), which are SUVs of unibody construction, often 

but not always built upon a platform shared with passenger cars. CUVs have blurred the 

distinction between cars and trucks. The new analysis treats CUVs and minivans as a separate 

vehicle class, because they differ in some respects from pickup-truck-based LTVs and in other 

respects from passenger cars. In the 2010 report, the many different types of LTVs were 

combined into a single analysis and NHTSA believes that this may have made the analyses too 

complex and might have contributed to some of the uncertainty in the results. 

The new data has accurate VMT estimates, derived from a file of odometer readings by 

make, model, and model year recently developed by R.L. Polk and purchased by NHTSA.185 For 

the 2011 report, the relative distribution of crash types has been changed to reflect projected 

future crash types during the period from 2017 to 2025 based on the effectiveness of electronic 

stability control (ESC). For example, the percent of rollover crashes has been reduced and two 

vehicle crashes increased. The annual target population of fatalities or the annual fatality 

distribution baseline186 was not decreased in the period between 2017 and 2025 for the safety 

statistics analysis, but is taken into account later in the Volpe model analysis, since all vehicles in 

the future will be equipped with ESC187. 

For the 2011 report, vehicles are now grouped into five classes rather than four: 

passenger cars (including both 2-door and 4-door cars) are split in half by median weight; CUVs 

and minivans; and truck-based LTVs, which are also split in half by median weight of the model 

year 2000-2007 vehicles. Table 0-12 presents the estimated percent increase in societal fatality 

rates per 100-pound mass reduction while holding footprint constant for five classes of vehicles. 

 184 Kahane, C. J. (2011). “Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000-2007 

Passenger Cars and LTVs,”, July 2011. The report is available in the NHTSA docket, NHTSA-2010-0152. You can 

access the docket at http://www.regulations.gov/#!home by typing ‘NHTSA-2010-0152’ where it says “enter 

keyword or ID” and then clicking on “Search.” 

185 In the 1991-1999 data base, VMT was estimated only by vehicle class, based on NASS CDS data. 186 MY 2004 -2007 vehicles with fatal crashes occurred in CY 2004-2008 are selected as the annual fatality 

distribution baseline in the Kahane analysis. 

187 In the Volpe model, NHTSA assumed that the safety trend would result in 12.6 percent reduction between 2007 

and 2020 in the combination of ESC, new safety standard, and behavior changes anticipated. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 165 of 770

Table 0-12 Results of 2011 NHTSA report Fatality Increase (%) per 100-Pound 

Mass Reduction While Holding Footprint Constant 

MY 2000-2007 

CY 2002-2008 

Fatality Increase (%) Per 100-Pound Mass 

Reduction While Holding Footprint Constant 

Point Estimate 95% Confidence Bounds 

Cars < 3,106 pounds 1.44 + .29 to +2.59 

Cars > 3,106 pounds .47 - .58 to +1.52 

CUVs and minivans - .46 -1.75 to + .83 

Truck-based LTVs < 4,594 pounds .52 - .43 to +1.46 

Truck-based LTVs > 4,594 pounds - .39 -1.06 to + .27 

Only the 1.44 percent risk increase in the lighter cars is statistically significant. There are 

non-significant increases in the heavier cars and the lighter truck-based LTVs and nonsignificant societal benefits for mass reduction in CUVs, minivans, and the heavier truck-based 

LTVs. Based on these results, potential combinations of mass reductions that maintain footprint 

and are proportionately somewhat higher for the heavier vehicles may be safety-neutral or better 

as point estimates and, in any case, unlikely to significantly increase fatalities. The primarily 

non-significant results are not due to a paucity of data, but because the societal effect of mass 

reduction while maintaining footprint, if any, is small. 

MY 2000-2007 vehicles of all types are heavier and larger than their MY 1991-1999 

counterparts. The average mass of passenger cars increased by 5 percent from 2000 to 2007 and 

the average mass of pickup trucks increased by 19 percent. Other types of vehicles became 

heavier, on the average, by intermediate amounts. There are several reasons for these increases: 

during this time frame, some of the lighter make-models were discontinued; many models were 

redesigned to be heavier and larger; and consumers more often selected stretched versions such 

as crew cabs in their new-vehicle purchases. 

It is interesting to compare the new results to NHTSA’s 2010 analysis of MY 1991-1999 

vehicles in CY 1995-2000, especially the new point estimate to the “actual regression result 

scenario” in the 2010 report: 

Table 0-13 2010 Report: MY 1991-1999, CY 1995-2000 Fatality Increase (%) per 

100-Pound Mass Reduction While Holding Footprint Constant 

Actual Regression 

Result Scenario 

Upper-Estimate 

Scenario 

Lower-Estimate 

Scenario 

Cars < 2,950 pounds 2.21 2.21 1.02 

Cars > 2,950 pounds 0.90 0.90 0.44 

LTVs < 3,870 pounds 0.17 0.55 0.41 

LTVs > 3,870 pounds -1.90 -0.62 -0.73 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 166 of 770

Table 0-14 Fatality Increase (%) per 100-Pound Mass Reduction While Holding 

Footprint Constant 

NHTSA (2010) NHTSA (2011) 

Lighter cars 2.21% 1.43% 

Heavier cars 0.89% 0.48% 

Lighter LTVs 0.17%* 0.52% 

Heavier LTVs -1.90%* -0.40% 

CUV/ minivan -0.47% 

*Includes CUV/minivan 

The new results are directionally the same as in 2010: fatality increase in the lighter cars, 

safety benefit in the heavier LTVs, but the effects may have become weaker at both ends. (The 

agencies do not consider this conclusion to be definitive because of the relatively wide 

confidence bounds of the estimates.) The fatality increase in the lighter cars tapered off from 

2.21 percent to 1.44 percent while the societal benefit of mass reduction in the heaviest LTVs 

diminished from 1.90 percent to 0.39 percent and is no longer statistically significant. 

The agencies believe that the changes may be due to a combination of “real” factors 

(characteristics of the newer vehicles) and revisions to the analysis. NHTSA believes, above all, 

many cars with poor safety performance, which were often light, small cars, were discontinued 

by 2000 or during 2000-2007. The tendency of light, small vehicles to be driven poorly, while 

still there, is not as strong as it used to be – perhaps in part because safety improvements in 

lighter and smaller vehicles have made some good drivers more willing to buy them. Both 

agencies believe that at the other end of the spectrum, blocker beams and other voluntary 

compatibility improvements in LTVs as well as compatibility-related self-protection 

improvements to cars have made the heavier LTVs somewhat less aggressive in collisions with 

lighter vehicles (although the effect of mass disparity remains). This report’s analysis of CUVs 

and minivans as a separate class of vehicles may have relieved some inaccuracies in the 2010 

regression results for LTVs. Interestingly, the new actual-regression results are quite close to the 

previous report’s “lower-estimate scenario,” which was an attempt to adjust for supposed 

inaccuracies in some regressions and for a seemingly excessive trend toward higher crash rates in 

smaller and lighter cars. 

The principal difference between the heavier vehicles, especially truck-based LTVs, and 

the lighter vehicles, especially passenger cars, is that mass reduction has a different effect in 

collisions with another car or LTV. When two vehicles of unequal mass collide, the delta V is 

higher in the lighter vehicle, in the same proportion as the mass ratio. As a result, the fatality 

risk is also higher. Removing some mass from the heavy vehicle reduces delta V in the lighter 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 167 of 770

vehicle, where fatality risk is high, resulting in a large benefit, offset by a small penalty because 

delta V increases in the heavy vehicle, where fatality risk is low – adding up to a net societal 

benefit. Removing some mass from the lighter vehicle results in a large penalty offset by a 

small benefit – adding up to net harm. These considerations drive the overall result: fatality 

increase in the lighter cars, reduction in the heavier LTVs, and little effect in the intermediate 

groups. However, in some types of crashes that do not involve collisions between cars and 

LTVs, especially 1st-event rollovers and impacts with fixed objects, mass reduction is usually not 

harmful and often beneficial, because the lighter vehicles respond more quickly to braking and 

steering and are often more stable because their center of gravity is lower. Offsetting that benefit 

is the continuing historical tendency of lighter and smaller vehicles to be driven less well – 

although it continues to be unknown why that is so, and to what extent, if any, the lightness or 

smallness of the vehicle contributes to people driving it less safely. 

The estimates of the model are formulated for 100-pound mass reductions. According to 

the regression results, if risk increases or decreases by 1 percent for 100 pounds, it would 

increase or decrease by 2 percent for 200 pounds and 3 percent for 300 pounds (more exactly, 

2.01 percent and 3.03 percent, because the effects work like compound interest). Confidence 

bounds will grow wider by the same proportions. 

The regression results are best suited to predict the effect of a small change in mass, 

leaving all other factors the same as the model was developed (MY 2000-2007 in CY 2002-

2008), including performance, wheelbase and track width. With each additional change from the 

current environment, the model may become somewhat less accurate and it is difficult to assess 

the sensitivity to additional mass reduction greater than 100 pounds. The agencies recognize that 

the light duty vehicle fleet in the 2017-2025 timeframe will be different than the 2000-2007 fleet 

analyzed for this study. Nevertheless, one consideration provides some basis for confidence. 

This is NHTSA’s fourth evaluation of the effects of mass reduction and/or downsizing, 

comprising databases ranging from MY 1985 to 2007. The results of the four studies are not 

identical, but they have been consistent up to a point. During this time period, many makes and 

models have increased substantially in mass, sometimes as much as 30-40 percent.188 If the 

statistical analysis has, over the past years, been able to accommodate mass increases of this 

magnitude, perhaps it will also succeed in modeling the effects of mass reductions on the order 

of 10-20 percent, if they occur in the future. 

 188 For example, one of the most popular models of small 4-door sedans increased in curb weight from 1,939 pounds 

in MY 1985 to 2,766 pounds in MY 2007, a 43 percent increase. A high-sales mid-size sedan grew from 2,385 to 

3,354 pounds (41%); a best-selling pickup truck from 3,390 to 4,742 pounds (40%) in the basic model with 2-door 

cab and rear-wheel drive; and a popular minivan from 2,940 to 3,862 pounds (31%). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 168 of 770

e. Based on this information, what do the agencies consider to be the current state of 

statistical research on vehicle mass and safety? 

The agencies believe that statistical analysis of historical crash data continues to be an 

informative and important tool in assessing the potential safety impacts of the proposed 

standards. The effect of mass reduction (while maintaining footprint) is a complicated topic and 

there are open questions whether future designs may offset the findings of statistical analysis of 

historical data. It is important to note that while the updated database represents more current 

vehicles with technologies more representative of vehicles on the road today, they still do not 

fully represent what vehicles will be on the road in the 2017-2025 timeframe. The vehicles 

manufactured in the 2000-2007 timeframe were not subject to footprint-based fuel economy 

standards. The agencies expect that the attribute-based standards will likely facilitate the design 

of vehicles such that manufacturers may reduce mass while maintaining footprint. Therefore, it is 

possible that the analysis for 2000-2007 vehicles may not be fully representative of the vehicles 

that interact with the existing fleet in 2017 and beyond. 

While we recognize that statistical analysis of historical crash data may not be the only 

way to think about the future relationship between vehicle mass and safety, we also recognize 

that other assessment methods are also subject to uncertainties, which makes statistical analysis 

of historical data an important starting point if employed mindfully and recognized for how it 

can be useful and what its limitations may be. 

NHTSA undertook the independent review of statistical studies and held the mass-safety 

workshop in February 2011 in order to help the agencies sort through the ongoing debates over 

what statistical analysis of historical data is actually telling us. Previously, the agencies have 

assumed that differences in results were due in part to inconsistent databases; by creating the 

updated common database and making it publicly available, we are hopeful that that aspect of the 

problem has been solved, and moreover, the UMTRI review suggested that differences in data 

were probably less significant than the agencies may have thought. The agencies also more 

recently concluded, in the MY 2012-2016 final rule, that multicollinearity was likely a 

significant risk in statistical analysis of historical crash data, that could lead to different results. 

The agencies will continue to monitor issues with multicollinearity in our analyses, and hope that 

outside researchers will do the same. And finally, based on the findings of the independent 

review, the agencies continue to be confident that Kahane’s analysis is the one of the best for 

purposes of analyzing potential safety effects of future CAFE and GHG standards. UMTRI 

concluded that Kahane’s approach is valid, and Kahane has continued and refined that approach 

for the current analysis. The NHTSA 2011 statistical fatality report finds directionally similar but 

less statistically significant relationships between vehicle mass, size, and footprint, as discussed 

above. Based on these findings, the agencies believe that in the future, fatalities due to mass 

reduction will be best reduced if mass reduction is concentrated in the heaviest vehicles. 

NHTSA considers part of the reason that more recent historical data shows a dampened effect in 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 169 of 770

the relationship between mass reduction and safety is that all vehicles, including traditionally 

lighter ones, grew heavier during that timeframe (2000s). As lighter vehicles become more 

prevalent in the fleet again over the next decade, it is possible (although certainly not inevitable) 

that the trend could strengthen again and that future updates to the common database may show 

that. Both agencies agree that there are several identifiable safety trends already in place or 

expected to occur in the foreseeable futures that are not accounted for in the study, since they 

were not in effect at the time that the vehicles in question were built. For example, there are two 

important new safety standards that have already been issued and will be phasing in after MY 

2008. Federal Motor Vehicle Safety Standard No. 126 (49 CFR § 571.126) will require 

electronic stability control in all new vehicles by MY 2012, and the upgrade to Federal Motor 

Vehicle Safety Standard No. 214 (Side Impact Protection, 49 CFR § 571.214) will likely result in 

all new vehicles being equipped with head-curtain air bags by MY 2014. Additionally, we 

anticipate continued improvements in driver (and passenger) behavior, such as higher safety belt 

use rates. All of these may tend to reduce the absolute number of fatalities. On the other hand, as 

crash avoidance technology improves, statistical analysis of (future) historical data may be 

complicated by a lower population of crashes, and different crash effects that may begin to trend 

as those technologies become more widespread in the fleet. In summary, the agencies have relied 

on the coefficients in the Kahane 2011 study for estimating the potential safety effects of the 

proposed CAFE and GHG standards for MYs 2017-2025, based on our assumptions regarding 

the amount mass reduction could be used to meet the standards in a cost-effective way. Section 

E below discusses the methodology used by the agencies in more detail; while the results of the 

safety effects analysis are less significant than the results in the MY 2012-2016 final rule, the 

agencies still believe that any statistically significant results warrant careful consideration of the 

assumptions about appropriate levels of mass reduction on which to base future CAFE and GHG 

standards, and have acted accordingly in developing the proposed standards. 

4. How do the agencies think technological solutions might affect the safety estimates 

indicated by the statistical analysis? 

As mass reduction becomes a more important technology option for manufacturers in 

meeting future CAFE and GHG standards, manufacturers will invest more and more resources in 

developing increasingly lightweight vehicle designs that meet their needs for manufacturability 

and the public’s need for vehicles that are safe, useful, affordable, and enjoyable to drive. There 

are many different ways to reduce mass, as discussed in Chapter 3 of this TSD and in Sections II, 

III, and IV of the preamble, and a considerable amount of information is available today on 

lightweight vehicle designs currently in production and that may be able to be put into 

production in the rulemaking timeframe. Discussion of lightweight material designs from 

NHTSA’s workshop is presented below. 

Besides “lightweighting” technologies themselves, though, there are a number of 

considerations when attempting to evaluate how future technological developments might affect 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 170 of 770

the safety estimates indicated by the statistical analysis. As discussed in the first part of this 

chapter, for example, if reducing mass makes a vehicle less able to protect itself and its 

occupants in crashes, there are ways to redesign the vehicle to help it protect itself better – 

through improved distribution of crash pulse energy, through making the vehicle stiffer, etc. – 

but these techniques can sometimes cause other problems, such as increased crash forces on 

vehicle occupants that have to be mitigated, or greater aggressivity against other vehicles in 

crashes. Manufacturers may develop new and better restraints – air bags, seat belts, etc. – to 

protect occupants in lighter vehicles in crashes, but NHTSA’s current safety standards for 

restraint systems are designed based on the current fleet, not the yet-unknown future fleet. The 

agency will need to monitor trends in the crash data to see whether changes to the safety 

standards (or new safety standards) become necessary. Manufacturers are also increasingly 

employing a variety of crash avoidance technologies – ABS, electronic stability control (ESC), 

lane departure warnings, vehicle-to-vehicle (“V2V”) communications – that, as they become 

more prevalent in the fleet, are expected to reduce the overall population of crashes. Until these 

vehicles are present in the fleet in greater numbers, however, it will be difficult to assess whether 

these technologies can mitigate the observed relationship between vehicle mass and safety in the 

historical data, or whether for the crashes that remain and the relationship also persists. 

The agencies and independent researchers have several vehicle level projects to 

determine the maximum potential for mass reduction in the MY 2017-2021 timeframe by using 

advanced materials and improved designs while continuing to meeting safety regulations and 

maintaining functionality of vehicles, and one study that will investigate the effects of resultant 

designs on fleet safety: 

A. NHTSA has awarded a contract to Electricore, with EDAG and George Washington 

University (GWU) as subcontractors, to study the maximum feasible amount mass 

reduction for a mid-size car – specifically, a Honda Accord. The study tears down a MY 

2011 Honda Accord, studies each component and sub-system, and then redesigns each 

component and sub-system trying to maximize the amount of mass reduction with 

technologies that are considered feasible for 200,000 units per year production volume 

during the time frame of this rulemaking. Electricore and its sub-contractors are 

consulting industry leaders and experts for each component and sub-system when 

deciding which technologies are feasible. Electricore and its sub-contractors are also 

building detailed CAD/CAE/powertrain models to validate vehicle safety, stiffness, NVH, 

durability, drivability and powertrain performance. For OEM-supplied parts, a detailed 

cost model is being built based on a Technical Cost Modeling (TCM) approach developed 

by the Massachusetts Institute of Technology (MIT) Materials Systems Laboratory’s 

research189 for estimating the manufacturing costs of OEM parts. The cost will be broken 

down into each of the operations involved in the manufacturing, such as for a sheet metal 

 189 Frank Field, Randolph Kirchain and Richard Roth, Process cost modeling: Strategic engineering and economic 

evaluation of materials technologies, JOM Journal of the Minerals, Metals and Materials Society, Volume 59, 

Number 10, 21-32. Available at http://msl.mit.edu/pubs/docs/Field_KirchainCM_StratEvalMatls.pdf (last accessed 

Aug. 22, 2011). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 171 of 770

part production by starting from blanking the steel coil, until the final operation to 

fabricate the component. Total costs are then categorized into fixed cost, such as tooling, 

equipment, and facilities; and variable costs such as labor, material, energy, and 

maintenance. These costs will be assessed through an interactive process between the 

product designer, manufacturing engineers and cost analysts. For OEM-purchased parts, 

the cost will be estimated by consultation with experienced cost analysts and Tier 1 

system suppliers. This study will help to inform the agencies about the feasible amount of 

mass reduction and the cost associated with it. NHTSA intends to have this study 

completed and peer reviewed before July 2012, in time for it to play an integral role in 

informing the final rule. 

B. EPA has awarded a contract to FEV, with EDAG and Monroe & Associates, Inc. as 

subcontractors, to study the maximum feasible amount of mass reduction for a mid-size 

CUV (cross over vehicle) specifically, a Toyota Venza. The study tears down a MY 2010 

vehicle, studies each component and sub-system, and then redesigns each component and 

sub-system trying to maximize the amount of mass reduction with technologies that are 

considered feasible for high volume production for a 2017 MY vehicle. FEV in 

coordination with EDAG is building detailed CAD/CAE/powertrain models to validate 

vehicle safety, stiffness, NVH, durability, drivability and powertrain performance to 

assess the safety of this new design. This study builds upon the low development (20% 

mass reduction) design in the 2010 Lotus Engineering study “An Assessment of Mass 

Reduction Opportunities for a 2017-2020 Model Year Vehicle Program”. This study will 

undergo a peer review. EPA intends to have this study completed and peer reviewed 

before July 2012, in time for it to play an integral role in informing the final rule. 

C. California Air Resources Board (CARB) has awarded a contract to Lotus Engineering, to 

study the maximum feasible amount mass reduction for a mid-size CUV (cross over 

vehicle) specifically, a Toyota Venza. The study will concentrate on the Body-in-White 

and closures in the high development design (40% mass reduction) in the Lotus 

Engineering study cited above. The study will provide an updated design with crash 

simulation, detailed costing and manufacturing feasibility of these two systems for a 

MY2020 high volume production vehicle. This study will undergo a peer review. CARB 

intends to have this study completed and peer reviewed before July 2012, in time for it to 

play an integral role in informing the final rule. 

D. NHTSA has contracted with GWU to build a fleet simulation model to study the impact 

and relationship of light-weighted vehicle design and injuries and fatalities. This study 

will also include an evaluation of potential countermeasures to reduce any safety concerns 

associated with lightweight vehicles. NHTSA will include three light-weighted vehicle 

designs in this study: the one from Electricore/EDAG/GWU mentioned above, one from 

Lotus Engineering funded by California Air Resource Board for the second phase of the 

study, evaluating mass reduction levels around 35 percent of total vehicle mass, and two 

funded by EPA and the International Council on Clean Transportation (ICCT). This study 

will help to inform the agencies about the possible safety implications for light-weighted 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 172 of 770

vehicle designs and the appropriate counter-measures,190 if applicable, for these designs, 

as well as the feasible amounts of mass reduction. All of these analyses are expected to be 

finished and peer-reviewed before July 2012, in time to inform the final rule. 

a. NHTSA workshop on vehicle mass, size and safety 

As stated above, in section C.2, on February 25, 2011, NHTSA hosted a workshop on 

mass reduction, vehicle size, and fleet safety at the Headquarters of the US Department of 

Transportation in Washington, DC. The purpose of the workshop was to provide the agencies 

with a broad understanding of current research in the field and provide stakeholders and the 

public with an opportunity to weigh in on this issue. The agencies also created a public docket 

to receive comments from interested parties that were unable to attend. The presentations were 

divided into two sessions that addressed the two expansive sets of issues. The first session 

explored statistical evidence of the roles of mass and size on safety, and is summarized in section 

C.2. The second session explored the engineering realities of structural crashworthiness, 

occupant injury and advanced vehicle design, and is summarized here. The speakers in the 

second session included Stephen Summers of NHTSA, Gregg Peterson of Lotus Engineering, 

Koichi Kamiji of Honda, John German of the International Council on Clean Transportation 

(ICCT), Scott Schmidt of the Alliance of Automobile Manufacturers, Guy Nusholtz of Chrysler, 

and Frank Field of the Massachusetts Institute of Technology. 

The second session explored what degree of weight reduction and occupant protection are 

feasible from technical, economic, and engineering perspectives. Field emphasized that technical 

feasibility alone does not constitute feasibility in the context of vehicle mass reduction. 

Sufficient material production capacity and viable manufacturing processes are essential to 

economic feasibility. Both Kamiji and German noted that both good materials and good designs 

will be necessary to reduce fatalities. For example, German cited the examples of hexagonally 

structured aluminum columns such as used in the Honda Insight can improve crash absorption at 

lower mass and of high-strength steel components can both reduce weight and improve safety. 

Kamiji made the point that widespread mass reduction will reduce the kinetic energy of all 

crashes which should produce some beneficial effect. 

Summers described NHTSA’s plans for a model to estimate fleet wide safety effects 

based on an array of vehicle-to-vehicle computational crash simulations of current and 

anticipated vehicle designs. In particular, three computational models of lightweight vehicles are 

under development. They are based on current vehicles that have been modified by significant 

mass reduction methodologies. The most ambitious was the “high development” derivative of a 

Toyota Venza developed by Lotus Engineering and discussed by Mr. Peterson. Its structure 

currently contains about 75% aluminum, 12% magnesium, 8% steel, and 5% advanced 

 190 Countermeasures could potentially involve improved front end structure, knee bags, seat ramps, buckle 

pretensioners, and others. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 173 of 770

composites. Peterson expressed confidence that the design had the potential to meet federal 

safety standards. Nusholtz emphasized that computational crash simulations involving more 

advanced materials were less reliable than those involving traditional metals such as aluminum 

and steel. 

Nusholtz presented a revised data-based fleet safety model in which important vehicle 

parameters were modeled based on trends from current NCAP crash tests. For example, crash 

pulses and potential intrusion for a particular size vehicle were based on existing distributions. 

Average occupant deceleration was used to estimate injury risk. Through a range of simulations 

of modified vehicle fleets, he was able to estimate the net effects of various design strategies for 

lighter weight vehicles, such as various scaling approaches for vehicle stiffness or intrusion. The 

approaches were selected based on engineering requirements for modified vehicles. Transition 

from the current fleet was considered. He concluded that protocols resulting in safer transitions 

(e.g., removing more mass from heavier vehicles with appropriate stiffness scaling according to a 

3/2 power law) were not generally consistent with those that provide the greatest reduction in 

GHG production. 

German discussed several important points on the future of mass reduction. Similar to 

Kahane’s discussion of the difficulties of isolating the impact of weight reduction, German stated 

that other important variables, such as vehicle design and compatibility factors, must be held 

constant in order for size or weight impacts to be quantified in statistical analyses and presented 

data that compared to driver, driving influences, and vehicle design influences showing safety 

impacts of size and weight are small and difficult to quantify. He noted that several scenarios, 

such as rollovers, greatly favored the occupants of smaller and lighter cars once a crash occurred. 

He pointed out that if size and design are maintained, lower weight should translate into a lower 

total crash force. He thought that advanced material designs have the potential to “decouple” 

vehicle size and weight and felt that design efficiency and driver attributes may start to dominate 

size and weight issues in future vehicle models to the point “that neither size nor weight [will 

have] a whole lot of impact on the overall safety of the overall fleet when you consider all the 

different type of crashes involved.” 

Other presenters noted industry’s perspective of the effect of incentivizing weight 

reduction. Field highlighted the complexity of institutional changes that may be necessitated by 

weight reduction, including redesign of material and component supply chains and 

manufacturing infrastructure. Schmidt described an industry perspective on the complicated 

decisions that must be made in the face of regulatory change, such as evaluating goals, gains, and 

timing. 

Field and Schmidt noted that the introduction of technical innovations is generally an 

innate development process involving both tactical and strategic considerations that balance 

desired vehicle attributes with economic and technical risk. In the absence of challenging 

regulatory requirements, a substantial technology change is often implemented in stages, starting 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 174 of 770

with lower volume pilot production before a commitment is made to the infrastructure and 

supply chain modifications necessary for inclusion on a high-volume production model. Joining, 

damage characterization, durability, repair, and significant uncertainty in final component costs 

are also concerns. Thus, for example, the widespread implementation of high-volume composite 

or magnesium structures might be problematic in the short or medium term when compared to 

relatively transparent aluminum or high strength steel implementations. Regulatory changes will 

affect how these tradeoffs are made and these risks are managed. 

Koichi Kamiji presented data showing in increased use of high strength steel in their 

Honda product line to reduced vehicle mass and increase vehicle safety. He stated that mass 

reduction is clearly a benefit for 42% of all fatal crashes because absolute energy is reduced. He 

followed up with slides showing the application of intelligent design can improve safety even 

when controlling for weight and size. 

A philosophical theme developed that explored the ethics of consciously allowing the 

total societal harm associated with mass reduction to approach the anticipated benefits of 

enhanced safety technologies. Lund conceded that there may eventually be specific fatalities that 

would not have occurred without downsizing, but asserted “Those of us whose mission is 

highway safety will have to adapt our strategies to the reality created by consumer choices,” but 

that “We will be ok if we let data on what works – not wishful thinking – guide our strategies.” 

5. How have the agencies estimated safety effects for the proposed standards? 

a. What was the agencies’ methodology for estimating safety effects for the 

proposed standards? 

As explained above, the agencies consider the 2011 statistical analysis of historical crash 

data by Kahane of NHTSA to represent our best estimates of the potential relationship between 

mass reduction and fatality increases in the future fleet. This section discusses how the agencies 

used NHTSA’s 2011 analysis to calculate specific estimates of safety effects of the proposed 

standards, based on the analysis of how much mass reduction manufacturers might use to meet 

the proposed standards. 

Neither the proposed CAFE/GHG standards nor the agencies’ analysis mandates mass 

reduction, or mandates that mass reduction occur in any specific manner. However, mass 

reduction is one of the technology applications available to the manufacturers and a degree of 

mass reduction is used by the both agencies’ models to determine the capabilities of 

manufacturers and to predict both cost and fuel consumption/emissions impacts of improved 

CAFE/GHG standards. We note that the mass reduction amounts in the agencies’ analysis for 

this rulemaking were chosen based both on our assumptions about how much is technologically 

feasible, and to find a way by which manufacturers could comply with the standards in a safetyneutral manner. While we are confident that manufacturers will build safe vehicles, we cannot 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 175 of 770

predict with certainty that they will choose to reduce mass in exactly the ways that the agencies 

have analyzed in response to the standards. In the event that manufacturers ultimately choose to 

reduce mass and/or footprint in ways not analyzed by the agencies, the safety effects of the 

rulemaking may likely differ from the agencies’ estimates. 

NHTSA utilized the study relationships between weight and safety, expressed as 

percentage increases in fatalities per 100-pound weight reduction, and examined the weight 

effects assumed in this rulemaking analysis. However, as mentioned previously, there are 

several identifiable safety trends already in place or expected to occur in the foreseeable future 

that are not accounted for in the study. For example, the two important new safety standards that 

were discussed above for electronic stability control and head curtain airbags, have already been 

issued and will be phasing in after MY 2008. Additionally, we anticipate continued 

improvements in driver (and passenger) behavior, such as higher safety belt use rates. All of 

these will tend to reduce the absolute number of fatalities. The agency estimated the overall 

change in calculated fatalities by calendar year after adjusting for ESC, Side Impact Protection, 

and other Federal safety standards and behavioral changes projected through this time period. 

Thus, while the percentage increases in NHTSA (2011) were applied, the reduced base has 

resulted in smaller absolute increases than those that were predicted in the 2010 report. 

NHTSA examined the impacts of identifiable safety trends over the lifetime of the 

vehicles produced in each model year. An estimate of these impacts was contained in a previous 

agency report.191 The impacts were estimated on a year-by-year basis, but could be examined in 

a combined fashion. NHTSA assumed that the safety trends will result in a reduction in the 

target population of fatalities from which the weight impacts are derived. Using this method, we 

found a 12.6 percent reduction in fatality levels between 2007 and 2020 for the combination of 

safety standards and behavioral changes anticipated (ESC, head-curtain air bags, and increase 

belt use). Since the same safety standards are taking effect in the same years, the estimates 

derived from applying NHTSA fatality percentages to a baseline of 2007 fatalities were thus 

multiplied by 0.874 to account for changes that NHTSA believes will take place in passenger car 

and light truck safety between the 2007 baseline on-road fleet used for this particular safety 

analysis and year 2025. 

After applying these percentage increases to the estimated weight reductions per vehicle 

size by model year assumed in the Volpe model, Table 0-15 shows the results of NHTSA’s 

 ls technologies, JOM Journal of the Minerals, Metals and Materials Society, Volume 59, Number 10, 21-32. 

Available at http://msl.mit.edu/pubs/docs/Field_KirchainCM_StratEvalMatls.pdf (last accessed Aug. 22, 2011). 191 Countermeasures could potentially involve improved front end structure, knee bags, seat ramps, buckle 

pretensioners, and others. 

191 Blincoe, L. and Shankar, U, “The Impact of Safety Standards and Behavioral Trends on Motor Vehicle Fatality 

Rates,” DOT HS 810 777, January 2007. See Table 4 comparing 2020 to 2007 (37,906/43,363 = 12.6% reduction 

(1-.126 = .874). Since 2008 was a recession year, it does not seem appropriate to use that as a baseline. We believe 

this same ratio should hold for this analysis which should compare 2025 to 2008. Thus, we are inclined to continue 

to use the same ration. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 176 of 770

safety analysis separately for each model year.192 These are estimated increases or decreases in 

fatalities over the lifetime of the model year fleet. A positive number means that fatalities are 

projected to increase, a negative number ( ) means that fatalities are projected to decrease. The 

results are significantly affected by the assumptions put into the Volpe model to take more 

weight out of the heavy LTVs, CUVs, and minivans than out of other vehicles. As the negative 

coefficients only appear for LTVs greater than 4,594 lbs., CUVs, and minivans, a statistically 

improvement in safety can only occur if more weight is taken out of these vehicles than 

passenger cars or smaller light trucks. Combining passenger car and light truck safety estimates 

for the proposed standards results in an increase in fatalities over the lifetime of the nine model 

years of MY 2017-2025 of 76 fatalities, broken up into an increase of 193 fatalities in passenger 

cars and 117 decrease in fatalities in light trucks. NHTSA also analyzed the results for different 

regulatory alternatives in Chapter IX of its PRIA; the difference in the results by alternative 

depends upon how much weight reduction is used in that alternative and the types and sizes of 

vehicles that the weight reduction applies to. 

Table 0-15 NHTSA Calculated Mass-Safety-Related Fatality Impacts of the 

Proposed Standards over the Lifetime of the Vehicles Produced in each Model Year 

MY 

2017

MY 

2018

MY 

2019

MY 

2020

MY 

2021

MY 

2022

MY 

2023

MY 

2024

MY 

2025 Total

Passenger 

cars 

6 11 29 27 26 25 25 21 22 193 

Light 

trucks (5) (14) 2 (23) (17) (22) (18) (13) (7) (117) 

Total 1 (3) 31 (4) 9 3 7 8 15 76 

Using the same coefficients from the 2011 Kahane study, EPA used the OMEGA model 

to conduct a similar analysis. After applying these percentage increases to the estimated weight 

reductions per vehicle size by model year assumed in the Omega model, Table 0-16 shows the 

results of EPA’s safety analysis separately for each model year. These are estimated increases or 

decreases in fatalities over the lifetime of the model year fleet. A positive number means that 

fatalities are projected to increase; a negative number means that fatalities are projected to 

decrease. For details, see the EPA RIA Chapter 3. 

Table 0-16 EPA Calculated Mass-Safety-Related Fatality Impacts of the Proposed 

Standards over the Lifetime of the Vehicles Produced in each Model Year 

 192 NHTSA has changed the definitions of a passenger car and light truck for fuel economy purposes between the 

time of the Kahane 2003 analysis and this final rule. About 1.4 million 2 wheel drive SUVs have been redefined as 

passenger cars instead of light trucks. The Kahane 2011 analysis continues with the definitions used in the Kahane 

2003 analysis. Thus, there are different definitions between Tables IX-1 and IX-2 (which use the old definitions) 

and Table IX-3 (which uses the new definitions). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 177 of 770

MY 

2017

MY 

2018

MY 

2019

MY 

2020

MY 

2021

MY 

2022

MY 

2023

MY 

2024

MY 

2025 Total

Passenger 

cars 

-3 -6 -9 -12 -16 7 31 56 83 131 

Light 

trucks 0 -1 -1 -2 -3 -34 -66 -98 -131 -336 

Total -3 -7 -10 -14 -18 -27 -35 -42 -48 -204 

b. Why might the real-world effects be less than or greater than what the agencies 

have calculated? 

As discussed above the ways in which future technological advances could potentially 

mitigate the safety effects estimated for this rulemaking: lightweight vehicles could be designed 

to be both stronger and not more aggressive; restraint systems could be improved to deal with 

higher crash pulses in lighter vehicles; crash avoidance technologies could reduce the number of 

overall crashes. As also stated above, however, while we are confident that manufacturers will 

build safe vehicles, it will be difficult for both the agencies and the industry to know with 

certainty ahead of time how crash trends will change in the future fleet as lightweighted vehicles 

become more prevalent. We will have to continue to monitor the crash data going forward. 

Additionally, we note that the mass reduction amounts in the agencies’ analysis for this 

rulemaking were chosen based both on our assumptions about how much is technologically 

feasible, and to find a way by which manufacturers could comply with the standards in a safetyneutral manner. Again, while we are confident that manufacturers will build safe vehicles, we 

cannot predict with certainty that they will choose to reduce mass in exactly the ways that the 

agencies have analyzed in response to the standards. In the event that manufacturers ultimately 

choose to reduce mass and/or footprint in ways not analyzed by the agencies, the safety effects of 

the rulemaking may likely differ from the agencies’ estimates. 

c. Do the agencies plan to make any changes in these estimates for the final rule? 

As discussed above, the agencies have based our estimates of safety effects due to the 

proposed standards on Kahane’s 2011 report. That report is currently undergoing peer review 

and is docketed for public review;193 the peer review comments and response to peer review 

comments, along with any revisions to the report in response to that review, will also be 

docketed there. Depending on the results of the peer review, our calculation of safety effects for 

 193 Kahane, C. J. (2011). “Relationships Between Fatality Risk, Mass, and Footprint in Model Year 2000-2007 

Passenger Cars and LTVs,”, July 2011. The report is available in the NHTSA docket, NHTSA-2010-0152. You can 

access the docket at http://www.regulations.gov/#!home by typing ‘NHTSA-2010-0152’ where it says “enter 

keyword or ID” and then clicking on “Search.”
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 178 of 770

the final rule will also be revised accordingly. The agencies will also consider any comments 

received to the proposed rule, and determine at that time whether and how our estimates should 

be changed in response to those comments. Additional studies published by the agencies or 

other independent researchers as previously discussed will also be considered, along with any 

other relevant information. 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 179 of 770

III. EPA Proposal for MYs 2017-2025 Greenhouse Gas Vehicle Standards 

A. Overview of EPA Rule 

1. Introduction 

Soon after the completion of the successful MY 2012-2016 rulemaking in May 2010, the 

President, with support from the auto manufacturers, requested that EPA and NHTSA work to 

extend the National Program to MY 2017-2025 light duty vehicles. The agencies were requested 

to develop “a coordinated national program under the CAA (Clean Air Act) and the EISA 

(Energy Independence and Security Act of 2007) to improve fuel efficiency and to reduce 

greenhouse gas emissions of passenger cars and light-duty trucks of model years 2017-2025.”194 

EPA’s proposal grows directly out of our work with NHTSA and CARB in developing such a 

continuation of the National Program. This proposal provides important benefits to society and 

consumers in the form of reduced emissions of greenhouse gases (GHGs), reduced consumption 

of oil, and fuel savings for consumers, all at reasonable costs. It provides industry with the 

important certainty and leadtime needed to implement the technology changes that will achieve 

these benefits, as part of a harmonized set of federal requirements. Acting now to address the 

standards for MYs 2017-2025 will allow for the important continuation of the National Program 

that started with the 2012-2016 model years. 

EPA is proposing GHG emissions standards for light-duty vehicles, light-duty trucks, and 

medium-duty passenger vehicles (hereafter light vehicles) for model years (MYs) 2017 through 

2025. These vehicle categories, which include cars, sport utility vehicles, minivans, and pickup 

trucks used for personal transportation, are responsible for almost 60% of all U.S. transportation 

related greenhouse gas (GHG) emissions. 

If finalized, this proposal would be the second EPA rule to regulate light vehicle GHG 

emissions under the Clean Air Act (CAA), building upon the GHG emissions standards for MY 

2012-2016 that were established in 2010,195 and the third rule to regulate GHG emissions from 

the transportation sector.196 Combined with the standards already in effect for MY 2012-2016, 

the proposed standards would result in MY 2025 light vehicles emitting approximately one-half 

of the GHG emissions of MY 2011 vehicles and would represent the most significant federal 

action ever taken to reduce GHG emissions (and improve fuel economy) in the U.S. 

From a societal standpoint, the proposed GHG emissions standards are projected to save 

over 2 billion metric tons of GHG emissions and over 4 billion barrels of oil over the lifetimes of 

those vehicles sold in MY 2017-2025. EPA estimates that fuel savings will far outweigh higher 

 194 The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidentialmemorandum-regarding-fuel-efficiency-standards. 

195 75 FR 25324 (May 7, 2010). 196 76 FR 57106 (September 15, 2011) established GHG emission standards for heavy-duty vehicles and engines for 

model years 2014-2018. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 180 of 770

vehicle costs, and that the net benefits to society will be in the range of $348 billion (at 7% 

discount rate) to $468 billion (3% discount) over the lifetimes of those vehicles sold in MY 

2017-2025. Just in calendar year 2040 alone, after the on-road vehicle fleet has largely turned 

over to vehicles sold in MY 2025 and later, EPA projects GHG emissions savings of 486 million 

metric tons, oil savings of 2.77 million barrels per day, and net benefits of $158 billion. 

EPA estimates that these proposed standards will save consumers money. Higher costs 

for new technology, sales taxes, and insurance will add, on average in the first year, about $2100 

for consumers who buy a new vehicle in MY 2025. But those consumers who drive their MY 

2025 vehicle for its entire lifetime will save, on average, $4800 (7% discount rate) to $6200 (3% 

discount) in fuel savings, for a net lifetime savings of $2800-$4100. For those consumers who 

purchase their new MY 2025 vehicle with cash, the discounted fuel savings will offset the higher 

vehicle cost in 4.0-4.4 years, and fuel savings will continue for as long as the consumer owns the 

vehicle. Those consumers that buy a new vehicle with a 5-year loan will benefit from a monthly 

cash flow savings of $12 (or about $140 per year), on average, as the monthly fuel savings more 

than offsets the higher monthly payment due to the higher incremental vehicle cost. 

The proposed standards are designed to allow full consumer choice, in that they are 

footprint-based, i.e., larger vehicles have higher absolute GHG emissions targets and smaller 

vehicles have lower absolute GHG emissions targets. While the GHG emissions targets do 

become more stringent each year, the emissions targets have been selected to allow compliance 

by vehicles of all sizes and with current levels of vehicle attributes such as utility, size, safety, 

and performance. Accordingly, these proposed standards are projected to allow consumers to 

choose from the same mix of vehicles that are currently in the marketplace. 

Section I above provides a comprehensive overview of the joint EPA/NHTSA proposal, 

including the history and rationale for a National Program that allows manufacturers to build a 

single fleet of light vehicles that can satisfy all federal and state requirements for GHG emissions 

and fuel economy, the level and structure of the proposed GHG emissions and corporate average 

fuel economy (CAFE) standards, the compliance flexibilities proposed to be available to 

manufacturers, the mid-term technology review, and a summary of the costs and benefits of the 

GHG and CAFE standards based on a “model year lifetime analysis.” 

In this Section III, EPA provides more detailed information about EPA’s proposed GHG 

emissions standards. After providing an overview of key information in this section (III.A), EPA 

discusses the proposed standards (III.B); the vehicles covered by the standards, various 

compliance flexibilities available to manufacturers, and a mid-term review (III.C); the feasibility 

of the proposed standards (III.D); provisions for certification, compliance, and enforcement 

(III.E); the reductions in GHG emissions projected for the proposed standards and the associated 

effects of these reductions (III.F); the impact of the proposal on non-GHG emissions and their 

associated effects (III.G); the estimated cost, economic, and other impacts of the proposal 

(III.H); and various statutory and executive order issues (III.I). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 181 of 770

2. Why is EPA Proposing this Rule? 

a. Light Duty Vehicle Emissions Contribute to Greenhouse Gases and the Threat of 

Climate Change 

Greenhouse gases (GHGs) are gases in the atmosphere that effectively trap some of the 

Earth’s heat that would otherwise escape to space. GHGs are both naturally occurring and 

anthropogenic. The primary GHGs of concern that are directly emitted by human activities 

include carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and 

sulfur hexafluoride. 

These gases, once emitted, remain in the atmosphere for decades to centuries. They 

become well mixed globally in the atmosphere and their concentrations accumulate when 

emissions exceed the rate at which natural processes remove GHGs from the atmosphere. The 

heating effect caused by the human-induced buildup of GHGs in the atmosphere is very likely 

the cause of most of the observed global warming over the last 50 years. The key effects of 

climate change observed to date and projected to occur in the future include, but are not limited 

to, more frequent and intense heat waves, more severe wildfires, degraded air quality, heavier 

and more frequent downpours and flooding, increased drought, greater sea level rise, more 

intense storms, harm to water resources, continued ocean acidification, harm to agriculture, and 

harm to wildlife and ecosystems. A more in depth explanation of observed and projected changes 

in GHGs and climate change, and the impact of climate change on health, society, and the 

environment is included in Section III.F below. 

Mobile sources represent a large and growing share of U.S. GHG emissions and include 

light-duty vehicles, light-duty trucks, medium duty passenger vehicles, heavy duty trucks, 

airplanes, railroads, marine vessels and a variety of other sources. In 2007, all mobile sources 

emitted 30% of all U.S. GHGs, and have been the source of the largest absolute increase in U.S. 

GHGs since 1990. Transportation sources, which do not include certain off highway sources 

such as farm and construction equipment, account for 27% of U.S. GHG emissions, and motor 

vehicles (CAA section 202(a)), which include light-duty vehicles, light-duty trucks, mediumduty passenger vehicles, heavy-duty trucks, buses, and motorcycles account for 23% of total U.S. 

GHGs. 

Light duty vehicles emit carbon dioxide, methane, nitrous oxide and hydrofluorocarbons. 

Carbon dioxide (CO2) is the end product of fossil fuel combustion. During combustion, the 

carbon stored in the fuels is oxidized and emitted as CO2 and smaller amounts of other carbon 

compounds. Methane (CH4) emissions are a function of the methane content of the motor fuel, 

the amount of hydrocarbons passing uncombusted through the engine, and any post-combustion 

control of hydrocarbon emissions (such as catalytic converters). Nitrous oxide (N2O) (and 

nitrogen oxide (NOX)) emissions from vehicles and their engines are closely related to air-fuel 

ratios, combustion temperatures, and the use of pollution control equipment. For example, some 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 182 of 770

types of catalytic converters installed to reduce motor vehicle NOX, carbon monoxide (CO) and 

hydrocarbon (HC) emissions can promote the formation of N2O. Hydrofluorocarbons (HFC) are 

progressively replacing chlorofluorocarbons (CFC) and hydrochlorofluorocarbons (HCFC) in 

these vehicles’ cooling and refrigeration systems as CFCs and HCFCs are being phased out 

under the Montreal Protocol and Title VI of the CAA. There are multiple emissions pathways for 

HFCs with emissions occurring during charging of cooling and refrigeration systems, during 

operations, and during decommissioning and disposal. 

b. Basis for Action Under the Clean Air Act 

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

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

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

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

health or welfare.’’ The Administrator has found that the elevated concentrations of a group of 

six GHGs in the atmosphere may reasonably be anticipated to endanger public health and 

welfare, and that emissions of GHGs from new motor vehicles and new motor vehicle engines 

contribute to this air pollution. 

 As a result of these findings, section 202(a) requires EPA to issue standards applicable to 

emissions of that air pollutant, and authorizes EPA to revise them from time to time. This 

preamble describes the proposed revisions to the current standards to control emissions of CO2 

and HFCs from new light-duty motor vehicles.197 For further discussion of EPA’s authority 

under section 202(a), see Section I.D. of the preamble. 

c. EPA’s Endangerment and Cause or Contribute Findings for Greenhouse Gases 

Under Section 202(a) of the Clean Air Act 

On December 15, 2009, EPA published its findings that elevated atmospheric 

concentrations of GHGs are reasonably anticipated to endanger the public health and welfare of 

current and future generations, and that emissions of GHGs from new motor vehicles contribute 

to this air pollution. Further information on these findings may be found at 74 FR 66496 

(December 15, 2009) and 75 FR 49566 (Aug. 13, 2010). 

 197 EPA is not proposing to amend the substantive standards adopted in the 2012-2016 light-duty vehicle rule for 

N2O and CH4, but is proposing revisions to the options that manufacturers have in meeting the N2O and CH4 

standards, and to the timeframe for manufacturers to begin measuring N2O emissions. See Section III.B below. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 183 of 770

3. What is EPA Proposing? 

a. Light-Duty Vehicle, Light-Duty Truck, and Medium-Duty Passenger Vehicle 

Greenhouse Gas Emission Standards and Projected Emissions Levels 

EPA is proposing tailpipe carbon dioxide (CO2) standards for cars and light trucks based 

on the CO2 emissions-footprint curves for cars and light trucks that are shown above in Section 

I.B.3 and below in Section III.B. These curves establish different CO2 emissions targets for 

each unique car and truck footprint value. Generally, the larger the vehicle footprint, the higher 

the corresponding vehicle CO2 emissions target. Generally, vehicle CO2 emissions will be 

measured over the EPA city and highway tests. Under this proposal, various incentives and 

credits are available for manufacturers to demonstrate compliance with the standards. See 

Section I.B for a comprehensive overview of both the EPA CO2 emissions-footprint standard 

curves and the various compliance flexibilities that are proposed to be available to the 

manufacturers in meeting the EPA tailpipe CO2 standards. 

EPA projects that the proposed tailpipe CO2 emissions-footprint curves would yield a 

fleetwide average light vehicle CO2 emissions compliance target level in MY 2025 of 163 grams 

per mile, which would represent an average reduction of 35 percent relative to the projected 

average light vehicle CO2 level in MY 2016. On average, car CO2 emissions would be reduced 

by about 5 percent per year, while light truck CO2 emissions would be reduced by about 3.5 

percent per year from MY 2017 through 2021, and by about 5 percent per year from MY 2022 

through 2025. 

The following three tables, Table III-1 through Table III-3, summarize EPA’s projections 

of what the proposed standards would mean in terms of projected CO2 emissions reductions for 

passenger cars, light trucks, and the overall fleet combining passenger cars and light trucks for 

MY 2017-2025. It is important to emphasize that these projections are based on technical 

assumptions by EPA about various matters, including the mix of cars and trucks, as well as the 

mix of vehicle footprint values, in the fleet in varying years. It is possible that the actual CO2 

emissions values will be either higher or lower than the EPA projections. 

In each of these tables, the column “Projected CO2 Compliance Target” represents our 

projected fleetwide average CO2 compliance target value based on the proposed CO2-footprint 

curve standards as well as the projected mixes of cars and trucks and vehicle footprint levels. 

This Compliance Target represents the projected fleetwide average of the projected standards for 

the various manufacturers. 

The column(s) under “Incentives” represents the emissions impact of the proposed 

multiplier incentive for EV/PHEV/FCVs and the proposed pickup truck incentives. These 

incentives allow manufacturers to meet their Compliance Targets with CO2 emissions levels 

slightly higher than they would otherwise have to be, but do not reflect actual real-world CO2 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 184 of 770

emissions reductions. As such they reduce the emissions reductions that the CO2 standards 

would be expected to achieve. 

The column “Projected Achieved CO2” is the sum of the CO2 Compliance Target and 

the value(s) in the “Incentive” columns. This Achieved CO2 value is a better reflection of the 

CO2 emissions benefits of the standards, since it accounts for the incentive programs. One 

incentive that is not reflected in these tables is the 0 gram per mile compliance value for 

EV/PHEV/FCVs. The 0 gram per mile value accurately reflects the tailpipe CO2 gram per mile 

achieved by these vehicles; however, the use of this fuel does impact the overall GHG reductions 

associated with the proposed standards due to fuel production and distribution-related upstream 

GHG emissions which are projected to be greater than the upstream GHG emissions associated 

with gasoline from oil. The combined impact of the 0 gram per mile and multiplier incentive for 

EV/PHEV/FCVs on overall program GHG emissions is discussed in more detail below in 

Section III.C.2. 

The columns under “Credits” quantify the projected CO2 emissions credits that we 

project manufacturers will achieve through improvements in air conditioner refrigerants and 

efficiency. These credits reflect real world emissions reductions, so they do not raise the levels 

of the Achieved CO2 values, but they do allow manufacturers to comply with their compliance 

targets with 2-cycle test CO2 emissions values higher than otherwise. One other credit program 

that could similarly affect the 2-cycle CO2 values is the off-cycle credit program, but it is not 

included in this table due to the uncertainty inherent in projecting the future use of these 

technologies. The off-cycle credits, like A/C credits, reflect real world reductions, so they would 

not change the CO2 Achieved values. 

The column “Projected 2-cycle CO2” is the projected fleetwide 2-cycle CO2 emissions 

values that manufacturers would have to achieve in order to be able to comply with the proposed 

standards. This value is the sum of the projected fleetwide credit, incentive, and Compliance 

Target values.198

 198 For MY 2016, the Temporary Leadtime Allowance Alternative Standards are available to manufacturers. In the 

MY 2012-2016 rule, we estimated the impact of this credit in MY 2016 to be 0.1 gram/mile. Due to the small 

magnitude, we have not included this in the following tables for the MY 2016 base year. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 185 of 770

Table III-1 EPA Projections for Fleetwide Tailpipe Emissions Compliance with Proposed CO2 Standards – Passenger 

Cars (Grams per mile)

Incentives (1) 

Projected 

Achieved 

CO2

Credits (2) 

Model 

Year 

Projected 

CO2 

Compliance 

Target 

EV/PHEV/FCV

Multiplier 

A/C 

Refrigerant 

A/C 

Efficiency 

Projected 

2-cycle 

CO2 (3) 

2016 

(base) 225 -- 225 5.4 4.8 235 

2017 213 2.2 215 7.8 5.0 228 2018 202 2.1 205 9.3 5.0 219 2019 192 2.0 194 10.8 5.0 210 2020 182 1.5 184 12.3 5.0 201 2021 173 1.0 174 13.8 5.0 193 2022 165 -- 165 13.8 5.0 184 2023 158 -- 158 13.8 5.0 177 2024 151 -- 151 13.8 5.0 169 2025 144 -- 144 13.8 5.0 163 

(1) The one incentive not reflected in this table is the 0 gram per mile compliance value for EV/PHEV/FCVs. See text for explanation. 

(2) The one credit not reflected in this table is the off-cycle credit. See text for explanation. 

(3) For a projected 2-cycle fuel economy value, divide 8887 grams of CO2 per gallon by the projected 2-cycle CO2 emission value. EPA projects that 

fleetwide real world CO2 emissions are approximately 25 percent higher, and fleetwide real world fuel economy is about 20 percent lower, than the 2-cycle values reflected in this table. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 186 of 770

Table III-2 EPA Projections for Fleetwide Tailpipe Emissions Compliance with Proposed CO2 Standards – Light 

Trucks (Grams per mile)

(1) The one incentive not reflected in this table is the 0 gram per mile compliance value for EV/PHEV/FCVs. See text for explanation. 

(2) The one credit not reflected in this table is the off-cycle credit. See text for explanation. 

(3) For a projected 2-cycle fuel economy value, divide 8887 grams of CO2 per gallon by the projected 2-cycle CO2 emission value. EPA projects that 

fleetwide real world CO2 emissions are approximately 25 percent higher, and fleetwide real world fuel economy is about 20 percent lower, than the 2-cycle values reflected in this table. 

Incentives (1) 

Projected 

Achieved 

CO2

Credits (2) 

Model 

Year 

Projected 

CO2 

Compliance 

Target 

EV/PHEV/FCV

Multiplier 

Pickup 

Mild 

HEV + Perf 

Pickup 

Strong 

HEV + Perf 

A/C 

Refrigerant 

A/C 

Efficiency 

Projected 

2-cycle 

CO2 (3) 

2016 

(base) 297 -- -- -- 297 6.6 4.8 309 

2017 295 0.0 0.3 0.0 295 7.0 5.0 307 2018 285 0.0 0.4 0.1 285 11.0 6.5 303 2019 277 0.1 0.6 0.2 278 13.4 7.2 299 2020 270 0.1 0.7 0.2 271 15.3 7.2 293 2021 250 0.0 0.8 0.4 251 17.2 7.2 275 2022 237 -- -- 0.5 238 17.2 7.2 262 2023 225 -- -- 0.6 226 17.2 7.2 250 2024 214 -- -- 0.6 214 17.2 7.2 239 2025 203 -- -- 0.7 204 17.2 7.2 228 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 187 of 770

Table III-3 EPA Projections for Fleetwide Tailpipe Emissions Compliance with Proposed CO2 Standards – 

Combined Cars and Trucks (Grams per mile)

Incentives (1) 

Projected 

Achieved 

CO2

Credits (2) 

Model 

Year 

Projected 

CO2 

Compliance 

Target 

EV/PHEV/FCV

Multiplier 

Pickup 

Mild 

HEV + Perf 

Pickup 

Strong 

HEV + Perf 

A/C 

Refrigerant 

A/C 

Efficiency

Projected 

2-cycle 

CO2 (3) 

2016 

(base) 252 -- -- -- 252 5.8 4.8 263 

2017 243 1.4 0.1 0.0 245 7.5 5.0 2572018 232 1.3 0.2 0.0 234 9.9 5.5 2492019 223 1.3 0.2 0.1 224 11.7 5.8 2422020 213 1.0 0.3 0.1 214 13.4 5.8 2342021 200 0.6 0.3 0.1 201 15.0 5.8 2222022 190 -- -- 0.2 190 15.0 5.8 2112023 181 -- -- 0.2 181 15.0 5.8 2022024 172 -- -- 0.2 172 14.9 5.7 1932025 163 -- -- 0.2 163.6 14.9 5.7 184

(1) The one incentive not reflected in this table is the 0 gram per mile compliance value for EV/PHEV/FCVs. See text for 

explanation. 

(2) The one credit not reflected in this table is the off-cycle credit. See text for explanation. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 188 of 770

(3) For a projected 2-cycle fuel economy value, divide 8887 grams of CO2 per gallon by the projected 2-cycle CO2 emission value. 

EPA projects that fleetwide real world CO2 emissions are approximately 25 percent higher, and fleetwide real world fuel economy is about 20 percent lower, than the 2-cycle values reflected in this table.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 189 of 770

As discussed both in Section I and later in this Section III, EPA either already has 

adopted or is proposing provisions for averaging, banking, and trading of credits, that allow 

annual credits for a manufacturer’s over-compliance with its unique fleet-wide average standard, 

carry-forward and carry-backward of credits, the ability to transfer credits between a 

manufacturer’s car and truck fleets, and credit trading between manufacturers. EPA is proposing 

a one-time carry-forward of any credits such that any credits generated in MY 2010-2016 can be 

used through MY 2021. These provisions are not expected to change the emissions reductions 

achieved by the standards, but should significantly reduce the cost of achieving those reductions. 

The Tables above do not reflect the year to year impact of these provisions. For example, EPA 

expects that many manufacturers may generate credits by over complying with the standards for 

cars, and transfer such credits to its truck fleet. Table III-1 (cars) and Table III-2 (trucks) do not 

reflect such transfers. If on an industry wide basis more credits are transferred from cars to 

trucks than vice versa, you would expect to achieve greater reductions from cars than reflected in 

Table III-1 (lower CO2 gm/miles values) and less reductions from trucks than reflected in Table 

III-2 (higher CO2 gm/mile values). Credit transfers between cars and trucks would not be 

expected to change the results for the combined fleet, reflected in Table III-3. 

The proposed rule would also exclude from coverage a limited set of vehicles: emergency 

and police vehicles, and vehicles manufactured by small businesses. As discussed in Section 

III.B below, these exclusions have very limited impact on the total GHG emissions reductions 

from the light-duty vehicle fleet. We also do not anticipate significant impacts on total GHG 

emissions reductions from the proposed provisions allowing small volume manufacturers to 

petition EPA for alternative standards. See Section III.B below. 

b. Environmental and Economic Benefits and Costs of EPA’s Standards 

i. Model Year Lifetime Analysis 

Section I.C provides a comprehensive discussion of the projected benefits and costs 

associated with the proposed MY 2017-2025 GHG and CAFE standards based on a “model year 

lifetime” analysis, i.e., the benefits and costs associated with the lifetime operation of the new 

vehicles sold in these nine model years. It is important to note that while the incremental vehicle 

costs associated with MY 2017 vehicles will in fact occur in calendar year 2017, the benefits 

associated with MY 2017 vehicles will be split among all the calendar years from 2017 through 

the calendar year during which the last MY 2017 vehicle would be retired. 

Table III-4 provides a summary of the GHG emissions and oil savings associated with the 

lifetime operation of all the vehicles sold in each model year. Cumulatively, for the nine model 

years from 2017 through 2025, the proposed standards are projected to save over 2 billion metric 

tons of GHG emissions and over 4 billion barrels of oil. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 190 of 770

Table III-5 provides a summary of the most important projected economic impacts of the 

proposed GHG emissions standards based on this model year lifetime analytical approach. 

These monetized dollar values are all discounted to the first year of each model year, then 

summed up across all model years. With a 3% discount rate, cumulative incremental vehicle 

technology cost for MY 2017-2025 vehicles is $133 billion, fuel savings is $468 billion, other 

monetized benefits are $133 billion, and program net benefits are projected to be $468 billion. 

Using a 7% discount rate, the projected program net benefits are $348 billion. 

As discussed previously, EPA recognizes that some of these same benefits and costs are 

also attributable to the CAFE standard contained in this joint proposal, although the GHG 

program achieves greater reductions of both GHG emissions and petroleum. More details 

associated with this model year lifetime analysis of the proposed GHG standards are presented in 

Sections III.F and III.H.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 191 of 770

Table III-4 Summary of GHG Emissions and Oil Savings for Proposed CO2 Standard Model Year Lifetime Analysis 

MY 

2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

Cumulative 

MY 2017-2025 

GHG Savings (MMT) 31 75 115 160 233 289 340 392 445 2,079 Oil Savings (Billion Barrels) 0.06 0.14 0.22 0.30 0.45 0.57 0.69 0.80 0.92 4.15 

Table III-5 Summary of Key Projected Economic Impacts, on a Lifetime Present Value Basis, for Proposed CO2 

Standard (1) Model Year Lifetime Analysis (Billions of 2009 dollars) 

 3% Discount Rate 7% Discount Rate 

Incremental Vehicle Technology Cost $133 $130 Societal Fuel Savings (2) $468 $363 Other Benefits $133 $115 Program Net Benefits $468 $348 

(1) Present value discounts all values to the first year of each MY, then sums those present values across MYs, in 2009 dollars. (2) All fuel impacts are calculated with pre-tax fuel prices of $2.85 per gallon in calendar year 2017, rising to $3.18 per gallon 

in calendar year 2025, and $3.49 per gallon in calendar year 2040, and electricity prices of $0.10 per kWh in 2017 and 2025, and $0.11 per kWh in 2040, all in 2009 dollars. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 192 of 770

ii. Calendar Year Analysis 

In addition to the model year lifetime analysis projections summarized above, EPA also 

performs a “calendar year” analysis that projects the environmental and economic impacts 

associated with the proposed tailpipe CO2 standards during specific calendar years out to 2050. 

This calendar year approach reflects the timeframe when the benefits would be achieved and the 

costs incurred. Because the EPA tailpipe CO2 emissions standards will remain in effect unless 

and until they are changed, the projected impacts in this calendar year analysis beyond calendar 

year 2025 reflect vehicles sold in model years after 2025 (e.g., most of the benefits in calendar 

year 2040 would be due to vehicles sold after MY 2025). 

Table III-6 provides a summary of the most important projected benefits and costs of the 

proposed EPA GHG emissions standards based on this calendar year analysis. In calendar year 

2025, EPA projects GHG savings of 152 million metric tons and oil savings of 0.83 million 

barrels per day. These would grow to 580 million metric tons of GHG savings and 3.31 million 

barrels of oil per day by calendar year 2050. Program net benefits are projected to be $19.6 

billion in calendar year 2025, growing to $218 billion in calendar year 2050. Program net 

benefits over the 34-year period from 2017 through 2050 are projected to have a net present 

value in 2012 of $654 billion (7% discount rate) to $1.5 trillion (3% discount rate). 

More details associated with this calendar year analysis of the proposed GHG standards 

are presented in Sections III.F and III.H. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 193 of 770

Table III-6 Summary of Key Projected Impacts for Proposed CO2 Standard – 

Calendar Year (CY) Analysis (1) 

CY 

2017 

CY 

2020 

CY 

2025 

CY 

2030 

CY 

2040 

CY 

2050 

CY 2017-2050 

Net Present 

Value in 2012 

GHG Savings (MMT per 

Year) 2.3 28 152 306 486 580 -- -- 

Oil Savings (Million 

Barrels per Year) 4.5 53.1 304 627 1,010 1,208 -- -- 

Oil Savings (Million 

Barrels per Day) 0.012 0.15 0.83 1.72 2.77 3.31 -- -- 

 

Incremental Vehicle 

Technology Cost 

(billions of 2009$) 

$2.0 $8.4 $34 $36 $40 $45 $545 $239 

Societal Fuel Savings 

(billions of 2009$) (2) $0.56 $6.9 $42 $88 $151 $198 $1570 $601 

Other Benefits 

(billions of 2009$) $0.15 $1.9 $12 $26 $47 $65 $485 $292 

Program Net Benefits 

(billions of 2009$) (2) (3) -$1.29 $0.40 $20 $78 $158 $218 $1510 $654 

 

(1) Values in columns 2 through 7 are undiscounted annual values, values in columns 8 and 9 

are discounted to a net present value in 2012. 

(2) All fuel impacts are calculated with pre-tax fuel prices of $2.85 per gallon in calendar 

year 2017, rising to $3.18 per gallon in calendar year 2025, and $3.49 per gallon in 

calendar year 2040, and electricity prices of $0.10 per kWh in 2017 and 2025, and $0.11 

per kWh in 2040, all in 2009 dollars. 

(3) Assuming the 3% average SCC value and other benefits of the proposed program not 

presented in this table. 

iii. Consumer Analysis 

The model year lifetime and calendar year analytical approaches discussed above 

aggregate the environmental and economic impacts across the nationwide light vehicle fleet. 

EPA has also projected the average impact of the proposed GHG standards on individual 

consumers who own and drive MY 2025 light vehicles over their lifetimes. 

Table III-7 shows, on average, several key consumer impacts associated with the 

proposed tailpipe CO2 standard for MY 2025 vehicles. Some of these factors are dependent on 

the assumed discount factors, and this table uses the same 3% and 7% discount factors used 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 194 of 770

throughout this preamble. EPA uses AEO2011 fuel price projections of $3.25 per gallon in 

calendar year 2017, rising to $3.54 per gallon in calendar year 2025 and $3.85 per gallon in 

calendar year 2040. 

EPA projects that the new technology necessary to meet the proposed MY 2025 standard 

would add, on average, an extra $1950 to the sticker price of a new MY 2025 light-duty vehicle. 

Including higher vehicle sales taxes and first-year insurance costs, the projected incremental 

first-year cost to the consumer is about $2100 on average. The projected incremental lifetime 

vehicle cost to the consumer, reflecting higher insurance premiums over the life of the vehicle, 

is, on average, about $2200. For all of the consumers who drive MY 2025 light-duty vehicles, 

the proposed standards are projected to yield a net savings of $3000 (7% discount rate) to $4400 

(3% discount) over the lifetime of the vehicle, as the discounted lifetime fuel savings of $5200-

$6600 is 2.4 to 3 times greater than the $2200 incremental lifetime vehicle cost to the consumer. 

Of course, many vehicles are owned by more than one consumer. The payback period 

and monthly cash flow approaches are two ways to evaluate the economic impact of the MY 

2025 standard on those new car buyers who do not own the vehicle for its entire lifetime. 

Projected payback periods of 3.8-4.0 years means that, for a consumer that buys a new vehicle 

with cash, the discounted fuel savings for that consumer would more than offset the incremental 

lifetime vehicle cost in 4 years. If the consumer owns the vehicle beyond this payback period, 

the vehicle will save money for the consumer. For a consumer that buys a new vehicle with a 5-

year loan, the monthly cash flow savings of $15 (or about $180 per year) shows that the 

consumer would benefit immediately as the monthly fuel savings more than offsets the higher 

monthly payment due to the higher incremental first-year vehicle cost. 

The final entries in Table III-7 show the CO2 and oil savings that would be associated 

with the MY 2025 vehicles on average, both on a lifetime basis and in the first full year of 

operation. On average, a consumer who owns a MY 2025 vehicle for its entire lifetime is 

projected to emit 20 fewer metric tons of CO2 and consume 2200 fewer gallons of gasoline due 

to the proposed standards.

Comment [A43]: Commenter requests clarity on 

whether this is actually an increase in sticker price? 

Does this include a mark-up? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 195 of 770

Table III-7 Summary of Key Projected Consumer Impacts for Proposed MY 2025 CO2 Standard (1) (2) 

 3% Discount Rate 7% Discount Rate 

Incremental Vehicle Technology Cost $1950 Incremental First-Year Vehicle Cost to Consumer (3) $2100 Incremental Lifetime Vehicle Cost to Consumer (4) $2200 $2200 Lifetime Consumer Fuel Savings (5) $6600 $5200 Lifetime Consumer Net Savings (6) $4400 $3000 Payback Period for Cash Purchase (years) 3.8 4.0 Monthly Cash Flow Savings Based on 5-Year Loan $11 Annual Cash Flow Savings Based on 5-Year Loan $130 First Year CO2 Savings (Metric Tons) (7) 1.6 Lifetime CO2 Savings (Metric Tons) (7) 20 First Year Gasoline/Oil Savings (Gallons) (7) 180 Lifetime Gasoline/Oil Savings (Gallons) (7) 2200 

(1) Average impact of all MY 2025 light vehicles, excluding rebound effect. 

(2) Most values have been rounded to two significant digits in this summary table and therefore may be slightly different than 

tables elsewhere that report values to three or four significant digits. 

(3) Incremental First-Year Vehicle Cost to Consumer includes the incremental vehicle technology cost, a 5.3% average 

nationwide sales tax, and a 1.85% increase in first-year insurance premiums. 

(4) Incremental Lifetime Vehicle Cost to Consumer includes the incremental vehicle technology cost, a 5.3% average 

nationwide sales tax, and the discounted cost associated with incremental lifetime insurance premiums. 

(5) All fuel impacts are calculated with fuel prices, including fuel taxes, of $3.25 per gallon in calendar year 2017, rising to 

$3.54 per gallon in calendar year 2025, and $3.85 per gallon in calendar year 2040, and electricity prices of $0.10 per kWh in 2017 and 2025, and $0.11 per kWh in 2040, all in 2009 dollars. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 196 of 770

(6) Lifetime Consumer Fuel Savings minus Incremental Lifetime Vehicle Cost to Consumer. (7) CO2 and gasoline savings reflect vehicle tailpipe-only and do not include CO2 and oil savings associated with fuel 

production and distribution. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 197 of 770

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

EPA has significant discretion under section 202(a) of the Act in how to structure the 

standards that apply to the emission of the air pollutant at issue here, the aggregate group of six 

GHGs, as well as to the content of such standards. See generally 74 FR at 49464-65. EPA 

statutory authority under section 202(a) (1) of the Clean Air Act (CAA) is discussed in more 

detail in Section I.D of the preamble. In this rulemaking, EPA is proposing a CO2 tailpipe 

emissions standard that provides for credits based on reductions of HFCs, as the appropriate way 

to issue standards applicable to emissions of the single air pollutant, the aggregate group of six 

GHGs. EPA is not proposing to change the methane and nitrous oxide standards already in place 

(although EPA is proposing certain changes to the compliance mechanisms for these standards as 

explained in Section III.B below). EPA is not setting any standards for perfluorocarbons or 

sulfur hexafluoride, as they are not emitted by motor vehicles. The following is a summary of 

the basis for the proposed GHG standards under section 202(a), which is discussed in more detail 

in the following portions of Section III. 

With respect to CO2 and HFCs, EPA is proposing attribute-based light-duty car and truck 

standards that achieve large and important emissions reductions of GHGs. EPA has evaluated 

the technological feasibility of the standards, and the information and analysis performed by 

EPA indicates that these standards are feasible in the lead time provided. EPA and NHTSA have 

carefully evaluated the effectiveness of individual technologies as well as the interactions when 

technologies are combined. EPA projects that manufacturers will be able to meet the standards 

by employing a wide variety of technologies that are already commercially available. EPA’s 

analysis also takes into account certain flexibilities that will facilitate compliance. These 

flexibilities include averaging, banking, and trading of various types of credits. For a few very 

small volume manufacturers, EPA is proposing to allow manufacturers to petition for alternative 

standards. 

EPA, as a part of its joint technology analysis with NHTSA, has performed what we 

believe is the most comprehensive federal vehicle technology analysis in history. We carefully 

considered the cost to manufacturers of meeting the standards, estimating piece costs for all 

candidate technologies, direct manufacturing costs, cost markups to account for manufacturers’ 

indirect costs, and manufacturer cost reductions attributable to learning. In estimating 

manufacturer costs, EPA took into account manufacturers’ own practices such as making major 

changes to vehicle technology packages during a planned redesign cycle. EPA then projected 

the average cost across the industry to employ this technology, as well as manufacturer-bymanufacturer costs. EPA considers the per vehicle costs estimated by this analysis to be within a 

reasonable range in light of the emissions reductions and benefits achieved. EPA projects, for 

example, that the fuel savings over the life of the vehicles will more than offset the increase in 

cost associated with the technology used to meet the standards. As explained in Section III.D.6 

below, EPA has also investigated potential standards both more and less stringent than those 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 198 of 770

being proposed and has rejected them. Less stringent standards would forego emission 

reductions which are feasible, cost effective, and cost feasible, with short consumer payback 

periods. More stringent standards would not only be more costly, but would force technology 

penetration rates of certain technologies (such as strong hybrids for vehicles that tow) past a 

point where the technology is feasible in the available lead time (in the early years of the 

standard) or acceptable to consumers. 

EPA has also evaluated the impacts of these standards with respect to reductions in 

GHGs and reductions in oil usage. For the lifetime of the model year 2017-2025 vehicles we 

estimate GHG reductions of approximately 2 billion metric tons and fuel reductions of about 4 

billion barrels of oil. These are important and significant reductions. EPA has also analyzed a 

variety of other impacts of the standards, ranging from the standards’ effects on emissions of 

non-GHG pollutants, impacts on noise, energy, safety and congestion. EPA has also quantified 

the cost and benefits of the standards, to the extent practicable. Our analysis to date indicates 

that the overall quantified benefits of the standards far outweigh the projected costs. We 

estimate the total net social benefits (lifetime present value discounted to the first year of the 

model year) over the life of MY 2017-2025 vehicles to be $468 billion with a 3% discount rate 

and $348 billion with a 7% discount rate. 

Under section 202(a), EPA is called upon to set standards that provide adequate lead-time 

for the development and application of technology to meet the standards. EPA’s standards 

satisfy this requirement given the present existence of the technologies on which the proposed 

rule is predicated and the substantial lead times afforded under the proposal (which by MY2025 

allow for multiple vehicle redesign cycles and so affords opportunities for adding technologies in 

the most cost efficient manner, see 75 FR at 25407). In setting the standards, EPA is called upon 

to weigh and balance various factors, and to exercise judgment in setting standards that are a 

reasonable balance of the relevant factors. In this case, EPA has considered many factors, such 

as cost, impacts on emissions (both GHG and non-GHG), impacts on oil conservation, impacts 

on noise, energy, safety, and other factors, and has where practicable quantified the costs and 

benefits of the proposed rule. In summary, given the technical feasibility of the standard, the 

cost per vehicle in light of the savings in fuel costs over the lifetime of the vehicle, the very 

significant reductions in emissions and in oil usage, and the significantly greater quantified 

benefits compared to quantified costs, EPA is confident that the standards are an appropriate and 

reasonable balance of the factors to consider under section 202(a). See Husqvarna AB v. EPA, 

254 F. 3d 195, 200 (D.C. Cir. 2001) (great discretion to balance statutory factors in considering 

level of technology-based standard, and statutory requirement “to [give appropriate] 

consideration to the cost of applying ... technology” does not mandate a specific method of cost 

analysis); see also Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 1978) (“In reviewing a 

numerical standard we must ask whether the agency’s numbers are within a zone of 

reasonableness, not whether its numbers are precisely right”); Permian Basin Area Rate Cases, 

390 U.S. 747, 797 (1968) (same); Federal Power Commission v. Conway Corp., 426 U.S. 271, 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 199 of 770

278 (1976) (same); Exxon Mobil Gas Marketing Co. v. FERC, 297 F. 3d 1071, 1084 (D.C. Cir. 

2002) (same). 

EPA recognizes that most of the technologies that we are considering for purposes of 

setting standards under section 202(a) are commercially available and already being utilized to a 

limited extent across the fleet, or will soon be commercialized by one or more major 

manufacturers. The vast majority of the emission reductions that would result from this rule 

would result from the increased use of these technologies. EPA also recognizes that this rule 

would enhance the development and commercialization of more advanced technologies, such as 

PHEVs and EVs and strong hybrids as well. In this technological context, there is no clear cut 

line that indicates that only one projection of technology penetration could potentially be 

considered feasible for purposes of section 202(a), or only one standard that could potentially be 

considered a reasonable balancing of the factors relevant under section 202(a). EPA therefore 

evaluated several alternative standards, some more stringent than the promulgated standards and 

some less stringent. 

See Section III.D.6 for EPA’s analysis of alternative GHG emissions standards. 

5. Other Related EPA Motor Vehicle Regulations 

a. EPA’s Recent Heavy-Duty GHG Emissions Rulemaking 

EPA and NHTSA recently conducted a joint rulemaking to establish a comprehensive 

Heavy-Duty National Program that will reduce greenhouse gas emissions and fuel consumption 

for on-road heavy-duty vehicles beginning in MY 2014 (76 FR 57106 (September 15, 2011)). 

EPA’s final carbon dioxide (CO2), nitrous oxide (N2O), and methane (CH4) emissions standards, 

along with NHTSA’s final fuel consumption standards, are tailored to each of three regulatory 

categories of heavy-duty vehicles: (1) Combination Tractors; (2) Heavy-duty Pickup Trucks and 

Vans; and (3) Vocational Vehicles. The rules include separate standards for the engines that 

power combination tractors and vocational vehicles. EPA also set hydrofluorocarbon standards 

to control leakage from air conditioning systems in combination tractors and heavy-duty pickup 

trucks and vans. 

The agencies estimate that the combined standards will reduce CO2 emissions by 

approximately 270 million metric tons and save 530 million barrels of oil over the life of 

vehicles sold during the 2014 through 2018 model years, providing $49 billion in net societal 

benefits when private fuel savings are considered. See 76 FR at 57125-27. 

b. EPA’s Plans for Further Standards for Light Vehicle Criteria Pollutants and 

Gasoline Fuel Quality 

In the May 21, 2010 Presidential Memorandum, in addition to addressing GHGs and fuel 

economy, the President also requested that EPA examine its broader motor vehicle air pollution 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 200 of 770

control program. The President requested that ‘‘[t]he Administrator of the EPA review for 

adequacy the current nongreenhouse gas emissions regulations for new motor vehicles, new 

motor vehicle engines, and motor vehicle fuels, including tailpipe emissions standards for 

nitrogen oxides and air toxics, and sulfur standards for gasoline. If the Administrator of the EPA 

finds that new emissions regulations are required, then I request that the Administrator of the 

EPA promulgate such regulations as part of a comprehensive approach toward regulating motor 

vehicles.’’199 EPA is currently in the process of conducting an assessment of the potential need 

for additional controls on light-duty vehicle non-GHG emissions and gasoline fuel quality. EPA 

has been actively engaging in technical conversations with the automobile industry, the oil 

industry, nongovernmental organizations, the states, and other stakeholders on the potential need 

for new regulatory action, including the areas that are specifically mentioned in the Presidential 

Memorandum. EPA will coordinate all future actions in this area with the State of California. 

Based on this assessment, in the near future, EPA expects to propose a separate but 

related program that would, in general, affect the same set of new vehicles on the same timeline 

as would the proposed light-duty GHG emissions standards. It would be designed to address air 

quality problems with ozone and PM, which continue to be serious problems in many parts of the 

country, and light-duty vehicles continue to play a significant role. 

EPA expects that this related program, called “Tier 3” vehicle and fuel standards, would 

among other things propose tailpipe and evaporative standards to reduce non-GHG pollutants 

from light-duty vehicles, including volatile organic compounds, nitrogen oxides, particulate 

matter, and air toxics. EPA’s intent, based on extensive interaction to date with the automobile 

manufacturers and other stakeholders, is to propose a Tier 3 program that would allow 

manufacturers to proceed with coordinated future product development plans with a full 

understanding of the major regulatory requirements they will be facing over the long term. This 

coordinated regulatory approach would allow manufacturers to design their future vehicles so 

that any technological challenges associated with meeting both the GHG and Tier 3 standards 

could be efficiently addressed. 

It should be noted that under EPA’s current regulations, GHG emissions and CAFE 

compliance testing for gasoline vehicles is conducted using a defined fuel that does not include 

any amount of ethanol.200 If the certification test fuel is changed to some ethanol-based fuel 

through a future rulemaking, EPA would be required under EPCA to address the need for a test 

procedure adjustment to preserve the level of stringency of the CAFE standards.201 EPA is 

 199 The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidentialmemorandum-regarding-fuelefficiency-standards.[Need to update WH web link, or use EPA’s]

200 See 40 CFR § 86.113-94(a). 201 EPCA requires that CAFE tests be determined from the EPA test procedures in place as of 1975, or procedures 

that give comparable results. 49 USC 32904(c). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 201 of 770

committed to doing so in a timely manner to ensure that any change in certification fuel will not 

affect the stringency of future GHG emission standards. 

B. Proposed Model Year 2017-2025 GHG Standards for Light-duty Vehicles, Lightduty Trucks, and Medium duty Passenger Vehicles 

EPA is proposing new emissions standards to control greenhouse gases (GHGs) from 

MY 2017 and later light-duty vehicles. EPA is proposing new emission standards for carbon 

dioxide (CO2) on a gram per mile (g/mile) basis that will apply to a manufacturer’s fleet of cars, 

and a separate standard that will apply to a manufacturer’s fleet of trucks. CO2 is the primary 

greenhouse gas resulting from the combustion of vehicular fuels, and the amount of CO2 emitted 

is directly correlated to the amount of fuel consumed. EPA is proposing to conduct a mid-term 

review of the GHG standards and other requirements for MYs 2022-2025, as further discussed in 

Section III.B.3 below. 

EPA is not proposing changes to the CH4 and N20 emissions standards, but is proposing 

revisions to the options that manufacturers have in meeting the CH4 and N2O standards, and to 

the timeframe for manufacturers to begin measuring N2O emissions. These proposed changes 

are not intended to change the stringency of the CH4 and N2O standards, but are aimed at 

addressing implementation concerns regarding the standards. 

The opportunity to earn credits toward the fleet-wide average CO2 standards for 

improvements to air conditioning systems remains in place for MY 2017 and later, including 

improvements to address both hydrofluorocarbon (HFC) refrigerant losses (i.e., system leakage) 

and indirect CO2 emissions related to the air conditioning efficiency and load on the engine. 

The CO2 standards proposed for cars and trucks take into account EPA’s projection of the 

average amount of credits expected to be generated across the industry. EPA is proposing 

several revisions to the air conditioning credits provisions, as discussed in Section III.C.1. 

The MY 2012-2016 Final Rule established several program elements that remain in 

place, where EPA is not proposing significant changes. The proposed standards described below 

would apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles (MDPVs). 

As an overall group, they are referred to in this preamble as light-duty vehicles or simply as 

vehicles. In this preamble section, passenger cars may be referred to simply as “cars”, and lightduty trucks and MDPVs as “light trucks” or “trucks.” 202

EPA is not proposing changes to the averaging, banking, and trading program elements, 

as discussed in Section III.B.4, with the exception of our proposal for a one-time carry-forward 

of any credits generated in MY 2010-2016 to be used anytime through MY2021. The previous 

rulemaking also established provisions for MY 2016 and later FFVs, where the emissions levels 

 202 GHG emissions standards would use the same vehicle category definitions used for MYs 2012-2016 and as are 

used in the CAFE program. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 202 of 770

of these vehicles are based on tailpipe emissions performance and the amount of alternative fuel 

used. These provisions remain in place without change. 

Several provisions are being proposed that allow manufacturer’s to generate credits for 

use in complying with the standards or that provide additional incentives for use of advanced 

technology. These include credits for technology that reduces CO2 emissions during off-cycle 

operation that is not reasonably accounted for by the 2-cycle tests used for compliance purposes. 

EPA is proposing various changes to this program to streamline its use compared to the MYs 

2012-2016 program. These provisions are discussed in section III.C. In addition, EPA is 

proposing the use of multipliers to provide an incentive for the use of EVs, PHEVs, and FCVs, 

as well as a specified gram/mile credit for full size pick-up trucks that meet various efficiency 

performance criteria and/or include hybrid technology at a minimum level of production 

volumes. These provisions are also discussed in Section III.C. As discussed in those sections, 

while these additional credit provisions do not change the level of the standards proposed for 

cars and trucks, unlike the provisions for AC credits, they all support the reasonableness of the 

standards proposed for MYs 2017-2025. 

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

EPA is proposing standards that are projected to require, on an average industry fleet 

wide basis, 163 grams/mile of CO2 in model year 2025. The level of 163 grams/mile CO2 would 

be equivalent on a mpg basis to 54.5 mpg, if this level was achieved solely through 

improvements in fuel efficiency..203,204 For passenger cars, the proposed footprint curves call for 

reducing CO2 by 5 percent per year on average from the model year 2016 passenger car standard 

through model year 2025. In recognition of manufacturers’ unique challenges in improving the 

GHG emissions of full-size pickup trucks as we transition from the MY 2016 standards to MY 

2017 and later, while preserving the utility (e.g., towing and payload capabilities) of those 

vehicles, EPA is proposing a lower annual rate of improvement for light-duty trucks in the early 

years of the program. For light-duty trucks, the footprint curves call for reducing CO2 by 3.5 

percent per year on average from the model year 2016 truck standard through model year 2021. 

EPA is also proposing to change the slopes of the CO2-footprint curves for light-duty trucks from 

those in the 2012-2016 rule, in a manner that effectively means that the annual rate of 

improvement for smaller light-duty trucks in model years 2017 through 2021 would be higher 

than 3.5 percent, and the annual rate of improvement for larger light-duty trucks over the same 

time period would be lower than 3.5 percent. For model years 2022 through 2025, EPA is 

 203 In comparison, the MY 2016 CO2 standard is projected to achieve a national fleet-wide average, covering both 

cars and trucks, of 250 g/mile 

204 Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent lower than the 

CO2 and CAFE values discussed here. The reference to CO2 here refers to CO2 equivalent reductions, as this level 

includes some reductions in emissions of greenhouse gases other than CO2, from refrigerant leakage, as one part of 

the AC related reductions. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 203 of 770

proposing a reduction of CO2 for light-duty trucks of 5 percent per year on average starting from 

the model year 2021 truck standard. 

EPA’s proposed standards include EPA’s projection of average industry wide CO2-

equivalent emission reductions from A/C improvements, where the proposed footprint curve is 

made more stringent by an amount equivalent to this projection of A/C credits. This projection 

of A/C credits builds on the projections from MYs 2012-2016, with the increases in credits 

mainly due to the full penetration of low GWP alternative refrigerant by MY 2021. The 

proposed car standards would begin with MY 2017, with a generally linear increase in stringency 

from MY 2017 through MY 2025 for cars. The truck standards have a more gradual increase for 

the early years (2017-2020) and is “backloaded” to MY 2021 (i.e the CO2 standards decrease 

more slowly at first, then more rapidly in later years approaching MY 2021). For MYs 2021-

2025, the truck standards increase in stringency generally in a linear fashion. EPA proposes to 

continue to have separate standards for cars and light trucks, and to have identical definitions of 

cars and trucks as NHTSA, in order to harmonize with CAFE standards. The tables in this 

section below provide overall fleet average levels that are projected for both cars and light trucks 

over the phase-in period which is estimated to correspond with the proposed standards. The 

actual fleet-wide average g/mi level that would be achieved in any year for cars and trucks will 

depend on the actual production for that year, as well as the use of the various credit and 

averaging, banking, and trading provisions. For example, in any year, manufacturers would be 

able to generate credits from cars and use them for compliance with the truck standard, or vice 

versa. Such transfer of credits between cars and trucks is not reflected in the table below. In 

Section III.F, EPA discusses the year-by-year estimate of emissions reductions that are projected 

to be achieved by the standards. 

In general, the proposed schedule of standards acts as a phase-in to the MY 2025 

standards, and reflects consideration of the appropriate lead-time and engineering redesign cycles 

for each manufacturer to implement the requisite emission reductions technology across its 

product line. Note that MY 2025 is the final model year in which the standards become more 

stringent. The MY 2025 CO2 standards would remain in place for MY 2025 and later model 

years, until revised by EPA in a future rulemaking. EPA estimates that, on a combined fleetwide national basis, the 2025 MY proposed standards would require a level of 163 g/mile CO2. 

The derivation of the 163 g/mile estimate is described in Section III.B.2. EPA has estimated the 

overall fleet-wide CO2-equivalent emission (target) levels that correspond with the proposed 

attribute-based standards, based on the projections of the composition of each manufacturer’s 

fleet in each year of the program. Tables III-8 and 

III-9 provides these target estimates for each manufacturer. 

III-8 Estimated Fleet CO2-equivalent Levels Corresponding to the Proposed 

Standards (Targets) for Cars (g/mile) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 204 of 770

 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Aston Martin 210 200 190 180 171 163 156 149 142 

BMW 216 205 195 185 175 168 160 153 146 

Chrysler/Fiat 218 207 196 187 176 168 161 153 146 

Daimler 226 215 205 194 184 176 168 161 153 

Ferrari 222 211 201 191 181 173 165 158 150 

Ford 218 207 196 187 177 169 162 154 147 

Geely 220 209 198 188 178 170 163 155 148 

General Motors 217 206 196 186 176 168 161 153 146 

Honda 210 200 189 180 170 163 155 148 142 

Hyundai 211 201 190 181 171 163 156 149 142 

Kia 213 202 192 182 172 165 157 150 143 

Lotus 195 185 175 166 157 150 143 137 131 

Mazda 210 200 190 180 171 163 156 149 142 

Mitsubishi 207 197 187 177 168 160 153 146 139 

Nissan 214 204 193 184 174 166 159 152 145 

PORSCHE 195 185 175 166 157 150 143 137 131 

Spyker 210 199 189 180 170 162 155 148 141 

Subaru 204 194 184 174 165 158 151 144 137 

Suzuki 196 186 177 167 158 151 144 138 132 

Tata 237 225 214 203 193 184 176 168 161 

Tesla 195 185 175 166 157 150 143 137 131 

Toyota 209 199 189 179 169 162 155 148 141 

Volkswagen 207 196 186 177 167 160 153 146 139 

III-9 Estimated Fleet CO2-equivelent Levels Corresponding to the Proposed 

Standards (Targets) for Light Trucks (g/mile) 

 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Aston Martin N/A N/A N/A N/A N/A N/A N/A N/A N/A 

BMW 283 272 264 255 236 225 214 204 194 

Chrysler/Fiat 293 283 275 266 246 234 223 212 201 

Daimler 299 289 280 272 253 241 229 218 208 

Ferrari N/A N/A N/A N/A N/A N/A N/A N/A N/A 

Ford 305 296 288 282 262 250 237 224 213 

Geely 278 266 258 250 231 220 209 199 189 

General Motors 309 299 291 283 262 249 236 224 213 

Honda 279 269 261 252 233 222 211 201 191 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 205 of 770

Hyundai 277 266 258 249 231 219 209 198 188 

Kia 289 279 271 262 243 231 220 209 199 

Lotus N/A N/A N/A N/A N/A N/A N/A N/A N/A 

Mazda 272 259 252 244 226 216 206 195 186 

Mitsubishi 266 254 246 238 220 209 199 189 180 

Nissan 293 282 274 266 248 236 224 212 202 

PORSCHE 286 274 266 257 238 226 215 205 195 

Spyker 278 265 258 249 230 219 208 198 188 

Subaru 263 251 243 235 217 206 196 186 177 

Suzuki 269 257 249 240 222 211 201 191 181 

Tata 270 258 250 241 223 212 202 191 182 

Tesla N/A N/A N/A N/A N/A N/A N/A N/A N/A 

Toyota 292 281 273 266 246 234 222 211 200 

Volkswagen 295 284 276 267 248 236 225 214 203 

Companies with “N/A” do not presently have trucks in their fleet. 

These estimates were aggregated based on projected production volumes into the fleetwide averages for cars, trucks, and the entire fleet, shown in Table III-10. 205 The combined fleet 

estimates are based on the assumption of a fleet mix of cars and trucks that vary over the MY 

2017-2025 timeframe. This fleet mix distribution can be found in Chapter 1 of the join TSD. 

III-10 Estimated Fleet-wide CO2-equivalent Levels Corresponding to the Proposed 

Standards 

 Cars Trucks Fleet 

Model Year CO2 (g/mi) CO2 (g/mi) CO2 (g/mi) 

2017 213 295 243 

2018 202 285 232 

2019 192 277 223 

2020 182 270 213 

2021 173 250 200 

2022 165 237 190 

2023 158 225 181 

2024 151 214 172 

2025 and later 144 203 163 

As shown in Table III-10, fleet-wide CO2-equivalent emission levels for cars under the 

approach are projected to decrease from 213 to 144 grams per mile between MY 2017 and MY 

 205 Due to rounding during calculations, the estimated fleet-wide CO2-equivalent levels may vary by plus or minus 1 

gram. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 206 of 770

2025. Similarly, fleet-wide CO2-equivalent emission levels for trucks are projected to decrease 

from 295 to 203 grams per mile. These numbers do not include the effects of other flexibilities 

and credits in the program206. The estimated achieved values can be found in Chapter x of the 

Regulatory Impact Analysis (RIA). 

As noted above, EPA is proposing standards that would result in increasingly stringent 

levels of CO2 control from MY 2017 though MY 2025. Applying the CO2 footprint curves 

applicable in each model year to the vehicles (and their footprint distributions) expected to be 

sold in each model year produces progressively more stringent estimates of fleet-wide CO2

emission targets. The standards achieve important CO2 emissions reductions through the 

application of feasible control technology at reasonable cost, considering the needed lead time 

for this program and with proper consideration of manufacturer product redesign cycles. EPA 

has analyzed the feasibility of achieving the proposed CO2 standards, based on projections of the 

adoption of technology to reduce emissions of CO2, during the normal redesign process for cars 

and trucks, taking into account the effectiveness and cost of the technology. The results of the 

analysis are discussed in detail in Section III.D below and in the draft RIA. EPA also presents 

the overall estimated costs and benefits of the car and truck proposed CO2 standards in Section 

III.H. In developing the proposal, EPA has evaluated the kinds of technologies that could be 

utilized by the automobile industry, as well as the associated costs for the industry and fuel 

savings for the consumer, the magnitude of the GHG and oil reductions that may be achieved, 

and other factors relevant under the CAA. 

With respect to the lead time and cost of incorporating technology improvements that 

reduce GHG emissions, EPA places important weight on the fact that the proposed rule provides 

a long planning horizon to achieve the very challenging emissions standards being proposed, and 

provides manufacturers with certainty when planning future products. The time-frame and levels 

for the standards are expected to provide manufacturers the time needed to develop and 

incorporate technology that will achieve GHG reductions, and to do this as part of the normal 

vehicle redesign process. Further discussing of lead time, redesigns and feasibility can be found 

in Section III-D and Chapter 3 of the joint TSD. 

In the MY 2012-2016 Final Rule, EPA established several provisions which will continue 

to apply for the proposed MY2017-2025 standards. Consistent with the requirement of CAA 

section 202(a)(1) that standards be applicable to vehicles “for their useful life,” CO2 vehicle 

standards would apply for the useful life of the vehicle. Under section 202(i) of the Act, which 

authorized the Tier 2 standards, EPA established a useful life period of 10 years or 120,000 

miles, whichever first occurs, for all light-duty vehicles and light-duty trucks.207 This useful life 

was applied to the MY 2012-2016 GHG standards and EPA is not proposing any changes to the 

useful life for MYs 2017-2025. Also, as with MYs 2012-2016, EPA proposes that the in-use 

 206 Nor do they reflect ABT 207 See 65 FR 6698 (February 10, 2000). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 207 of 770

emission standard would be 10% higher for a model than the emission levels used for 

certification and compliance with the fleet average that is based on the footprint curves. As with 

the MY2012-2016 standards, this will address issues of production variability and test-to-test 

variability. The in-use standard is discussed in Section III.E. Finally, EPA is not proposing any 

changes to the test procedures over which emissions are measured and weighted to determine 

compliance with the standards. These procedures are the Federal Test Procedure (FTP or ‘‘city’’ 

test) and the Highway Fuel Economy Test (HFET or ‘‘highway’’ test). 

2. What Are the Proposed CO2 Attribute-based Standards? 

As with the MY 2012-2016 standards, EPA is proposing separate car and truck standards, 

that is, vehicles defined as cars have one set of footprint-based curves for MY 2017-2025 and 

vehicles defined as trucks have a different set for MY 2017-2025. In general, for a given 

footprint the CO2 g/mi target for trucks would be less stringent than for a car with the same 

footprint. EPA’s approach for establishing the footprint curves for model years 2017 and later, 

including changes from the approach used for the MY2012-2016 footprint curves, is discussed in 

Section II.C and Chapter 2 of the joint TSD. The curves are described mathematically by a 

family of piecewise linear functions (with respect to vehicle footprint) that gradually and 

continually ramp down from the MY 2016 curve established in the previous rule. As Section 

II.C describes, EPA has modified the curves from 2016, particularly for trucks. To make this 

modification, we wanted to ensure that starting from the 2016 curve, there is a gradual transition 

to the new slopes and cut point (out to 74 sq ft from 66 sq ft). The transition is also designed to 

prevent the curve from one year from crossing the previous year’s curve. 

Written in mathematic notation, the form of the proposed function is as follows:208

Passenger Car Target = min (b,max(a, c * footprint+d)) 

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025 

a 194.7 184.9 175.3 166.1 157.2 150.2 143.3 136.8 130.5 

b 262.7 250.1 238.0 226.2 214.9 205.5 196.5 187.8 179.5 

c 4.53 4.35 4.17 4.01 3.84 3.69 3.54 3.40 3.26 

d 8.9 6.5 4.2 1.9 -0.4 -1.1 -1.8 -2.5 -3.2 

Light Truck Target = min(min (b,max(a, c * footprint+d)),min(f,max(e, g*footprint+h) 

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025 

a 238.1 226.8 219.5 211.9 195.4 185.7 176.4 167.6 159.1 

b 347.2 341.7 338.6 336.7 334.8 320.8 305.6 291.0 277.1 

 208 See proposed Regs xxxx, which are the official coefficients and equation. The information proposed here is a 

summary version. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 208 of 770

c 4.87 4.76 4.68 4.57 4.28 4.09 3.91 3.74 3.58 

d 38.3 31.6 27.7 24.6 19.8 17.8 16.0 14.2 12.5 

e 246.4 240.9 237.8 235.9 234.0 234.0 234.0 234.0 234.0 

f 347.4 341.9 338.8 336.9 335.0 335.0 335.0 335.0 335.0 

g 4.04 4.04 4.04 4.04 4.04 4.04 4.04 4.04 4.04 

h 80.5 75.0 71.9 70.0 68.1 68.1 68.1 68.1 68.1 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 209 of 770

Figure 2 - Car Curves 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 210 of 770
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 211 of 770

Figure 3 –Truck Curves 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 212 of 770
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 213 of 770

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 214 of 770

The car curves are largely similar to 2016 curve in slope. By contrast, the MY 2017 and 

later truck curves are steeper relative to the MY 2016 curve, but gradually flatten as a result of 

the multiplicative increase of the standards. As a further change from the MYs 2012-2016 rule, 

the truck curve does not reach the ultimate cutpoint of 74 sq ft until 2022. The gap between the 

2020 curve and the 2021 curve is indicative of design of the truck standards described earlier, 

where a significant proportion of the increased stringency over the first five years occurs 

between MY 2020 and MY 2021. Finally, the gradual flattening of both the car and the trucks 

curves is noticeable. For further discussion of these topics, please see Section II.C and Chapter 2 

of the joint TSD. 

3. Mid-Term Technology Review 

Given the long time frame at issue in setting standards for MY2022–2025 light-duty 

vehicles, and given NHTSA’s obligation to conduct a separate rulemaking in order to establish 

final standards for vehicles for those model years, EPA and NHTSA will conduct a 

comprehensive mid-term evaluation and agency decision-making as described below. Up to date 

information will be developed and compiled for the evaluation, through a collaborative, robust 

and transparent process, including public notice and comment. The evaluation will be based on 

(1) A holistic assessment of all of the factors considered by the agencies in setting standards, 

including those set forth in the rule and other relevant factors, and (2) the expected impact of 

those factors on the manufacturers’ ability to comply, without placing decisive weight on any 

particular factor or projection. The comprehensive evaluation process will lead to final agency 

action by both agencies. 

Consistent with the agencies’ commitment to maintaining a single national framework for 

regulation of vehicle emissions and fuel economy, the agencies fully expect to conduct the midterm evaluation in close coordination with the California Air Resources Board (CARB). 

Moreover, the agencies fully expect that any adjustments to the standards will be made with the 

participation of CARB and in a manner that ensures continued harmonization of state and 

Federal vehicle standards. 

 EPA will conduct a mid-term evaluation of the later model year light-duty GHG 

standards (MY2022–2025). The evaluation will determine whether those standards are 

appropriate under section 202(a) of the Act. Under the regulations proposed today, EPA would 

be legally bound to make a final decision, by April 1, 2018, on whether the MY 2022–2025 

GHG standards are appropriate under section 202(a), in light of the record then before the 

agency. 

EPA, NHTSA and CARB will jointly prepare a draft Technical Assessment Report 

(TAR) to inform EPA’s determination on the appropriateness of the GHG standards and to 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 215 of 770

inform NHTSA’s rulemaking for the CAFE standards for MYs 2022–2025. The TAR will 

examine the same issues and underlying analyses and projections considered in the original 

rulemaking, including technical and other analyses and projections relevant to each agency’s 

authority to set standards as well as any relevant new issues that may present themselves. There 

will be an opportunity for public comment on the draft TAR, and appropriate peer review will be 

performed of underlying analyses in the TAR. The assumptions and modeling underlying the 

TAR will be available to the public, to the extent consistent with law. 

EPA will also seek public comment on whether the standards are appropriate under 

section 202(a), e.g. comments to affirm or change the GHG standards (either more or less 

stringent). The agencies will carefully consider comments and information received and respond 

to comments in their respective subsequent final actions. 

 EPA and NHTSA will consult and coordinate in developing EPA’s determination on 

whether the MY 2022–2025 GHG standards are appropriate under section 202(a) and NHTSA’s 

NPRM. 

In making its determination, EPA will evaluate and determine whether the MY2022–

2025 GHG standards are appropriate under section 202(a) of the CAA based on a 

comprehensive, integrated assessment of all of the results of the review, as well as any public 

comments received during the evaluation, taken as a whole. The decision making required of the 

Administrator in making that determination is intended to be as robust and comprehensive as that 

in the original setting of the MY2017–2025 standards. 

In making this determination, EPA will consider information on a range of relevant 

factors, including but not limited to those listed in the proposed rule and below: 

1. Development of powertrain improvements to gasoline and diesel powered vehicles. 

2. Impacts on employment, including the auto sector. 

3. Availability and implementation of methods to reduce weight, including any impacts 

on safety. 

4. Actual and projected availability of public and private charging infrastructure for 

electric vehicles, and fueling infrastructure for alternative fueled vehicles. 

5. Costs, availability, and consumer acceptance of technologies to ensure compliance 

with the standards, such as vehicle batteries and power electronics, mass reduction, and 

anticipated trends in these costs. 

6. Payback periods for any incremental vehicle costs associated with meeting the 

standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 216 of 770

7. Costs for gasoline, diesel fuel, and alternative fuels. 

8. Total light-duty vehicle sales and projected fleet mix. 

9. Market penetration across the fleet of fuel efficient technologies. 

10. Any other factors that may be deemed relevant to the review. 

If, based on the evaluation, EPA decides that the GHG standards are appropriate under 

section 202(a), then EPA will announce that final decision and the basis for EPA’s decision. The 

decision will be final agency action which also will be subject to judicial review on its merits. 

EPA will develop an administrative record for that review that will be no less robust than that 

developed for the initial determination to establish the standards. In the midterm evaluation, EPA 

will develop a robust record for judicial review that is the same kind of record that would be 

developed and before a court for judicial review of the adoption of standards. 

Where EPA decides that the standards are not appropriate, EPA will initiate a rulemaking 

to adopt standards that are appropriate under section 202(a), which could result in standards that 

are either less or more stringent. In this rulemaking EPA will evaluate a range of alternative 

standards that are potentially effective and reasonably feasible, and the Administrator will 

propose the alternative that in her judgment is the best choice for a standard that is appropriate 

under section 202(a). In the 2017–2025 rulemaking EPA will formally adopt the interpretation 

that the provisions of section 202(b)(1)(C) are not applicable to any revisions of the greenhouse 

standards adopted in this later rulemaking based on the mid-term evaluation. If EPA initiates a 

rulemaking, it will be a joint rulemaking with NHTSA. Any final action taken by EPA at the end 

of that rulemaking is also judicially reviewable. 

The MY 2022–2025 GHG standards will remain in effect unless and until EPA changes 

them by rulemaking. 

NHTSA intends to issue conditional standards for MYs 2022–2025 in the LDV 

rulemaking being initiated this fall for MY2017 and later model years. The CAFE standards for 

MYs 2022–2025 will be determined with finality in a subsequent, de novo notice and comment 

rulemaking conducted in full compliance with section 32902 of title 49 U.S.C. and other 

applicable law. Accordingly, NHTSA’s development of its proposal in that later rulemaking will 

include the making of economic and technology analyses and estimates that are appropriate for 

those model years and based on then-current information. 

Any rulemaking conducted jointly by the agencies or by NHTSA alone will be timed to 

provide sufficient lead time for industry to make whatever changes to their products that the 

rulemaking analysis deems feasible based on the new information available. At the very latest, 

the three agencies will complete the mid-term evaluation process and subsequent rulemaking on 

Comment [A44]: Commenters note that this 

seems like this needs to be rephrased, since this is 

the 2017-2025 rulemaking. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 217 of 770

the standards that may occur in sufficient time to promulgate final standards for MYs 2022–2025 

with at least 18 months lead time, but additional lead time may be provided. 

EPA understands that California intends to propose a mid-term evaluation in its program 

that is coordinated with EPA and NHTSA and is based on a similar set of factors as outlined in 

this Appendix A. The rules submitted to EPA for a waiver under the CAA will include such a 

mid-term evaluation. EPA understands that California intends to continue promoting harmonized 

state and federal vehicle standards. EPA further understands that California’s 2017–2025 

standards to be submitted to EPA for a waiver under the Clean Air Act will deem compliance 

with EPA greenhouse gas emission standards, even if amended after 2012, as compliant with 

California’s. Therefore, if EPA revises it standards in response to the mid-term review, 

California may need to amend one or more of its 2022–2025 MY standards and would submit 

such amendments to EPA with a request for a waiver, or for confirmation that said amendments 

fall within the scope of an existing waiver, as appropriate. 

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

In the MY 2012-2016 rule, EPA adopted credit provisions for credit carry-back, credit 

carry-forward, credit transfers, and credit trading. For EPA’s purposes, these kinds of provisions 

are collectively termed Averaging, Banking, and Trading (ABT), and have been an important 

part of many mobile source programs under CAA Title II, both for fuels programs as well as for 

engine and vehicle programs.209 As in the MY2012-2016 program, EPA is proposing basically 

the same comprehensive program for averaging, banking, and trading of credits which together 

will help manufacturers in planning and implementing the orderly phase-in of emissions control 

technology in their production, consistent with their typical redesign schedules. ABT is 

important because it can help to address many issues of technological feasibility and lead-time, 

as well as considerations of cost. ABT is an integral part of the standard setting itself, and is not 

just an add-on to help reduce costs. In many cases, ABT resolves issues of cost or technical 

feasibility, allowing EPA to set a standard that is numerically more stringent. The ABT 

provisions are integral to the fleet averaging approach established in the MY 2012-2016 rule. 

EPA is proposing to change the credit carry-forward provisions as described below, but the 

program otherwise would remain in place unchanged for model years 2017 and later. 

As noted above, the ABT provisions consist primarily of credit carry-back, credit carryforward, credit transfers, and credit trading. A manufacturer may have a deficit at the end of a 

model year after averaging across its fleet using credit transfers between cars and trucks – that is, 

a manufacturer’s fleet average level may fail to meet the required fleet average standard. Credit 

carry-back refers to using credits to offset any deficit in meeting the fleet average standards that 

had accrued in a prior model year. A deficit must be offset within 3 model years using credit 

carry-back provisions. After satisfying any needs to offset pre-existing debits within a vehicle 

 209 See 75 FR at 25412-413. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 218 of 770

category, remaining credits may be banked, or saved for use in future years. This is referred to 

as credit carry-forward. The EPCA/EISA statutory framework for the CAFE program includes a 

5-year credit carry-forward provision and a 3-year credit carry-back provision. In the MYs 

2012-2016 program, EPA chose to adopt 5-year credit carry-forward and 3-year credit carryback provisions as a reasonable approach that maintained consistency between the agencies’ 

provisions. EPA is proposing to continue with this approach in this rulemaking. (A further 

discussion of the ABT provisions can be found at 75 FR 25412-14 May 7, 2010). 

Although the credit carry-forward and carry-back provisions would generally remain in 

place for MY 2017 and later, EPA is proposing to allow all unused credits generated in MY 

2010-2016 to be carried forward through MY 2021. This amounts to the normal 5 year carryforward for MY 2016 and later credits but provides additional carry-forward years for credits 

earned in MYs 2010-2015. Extending the life for MY 2010-2015 credits would provide greater 

flexibility for manufacturers in using the credits they have generated. These credits would help 

manufacturers resolve lead-time issues they might face in the model years prior to 2021 as they 

transition from the 2016 standards to the progressively more stringent standards for 2017 and 

later. It also provides an additional incentive to generate credits earlier, for example in MYs 

2014 and 2015, because those credits may be used through 2021, thereby encouraging the earlier 

use of additional CO2 reducing technology. 

While this provision provides greater flexibility in how manufacturers use credits they 

have generated, it would not change the overall CO2 benefits of the National Program, as EPA 

does not expect that any of the credits would have expired as they would be used or traded to 

other manufacturers. EPA believes the proposed approach provides important additional 

flexibility in the early years of the new MY2017 and later standards. EPA requests comments 

on the proposed approach for carrying over MY 2016 and earlier vintage credits into the MY 

2017 and later model years. 

EPA is not proposing to allow MY 2009 early credits to be carried forward beyond the 

normal 5 years due to concerns expressed during the 2012-2016 rulemaking that there may be 

the potential for large numbers of credits that could be generated in MY 2009 for companies that 

are over-achieving on CAFE and that some of these credits could represent windfall credits.210 

In response to these concerns, EPA placed restrictions the use of MY 2009 credits (for example, 

MY 2009 credits may not be traded) and does not believe expanding the use of MY 2009 credits 

would be appropriate. Under the MY 2012-2016 early credits program, manufacturers have until 

the end of MY 2011 (reports must be submitted by April 2012), when the early credits program 

ends, to submit early credit reports. Therefore, EPA does not yet have information on the 

amount of early MY2009 credits actually generated by manufacturers to assess whether or not 

 210 75 FR at 25442. Moreover, as pointed out in the earlier rulemaking, there can be no legitimate expectation that 

these 2009 MY credits could be used as part of a compliance strategy in model years after 2014, and thus no reason 

to carry forward the credits past 5 years due to action in reliance by manufacturers. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 219 of 770

they could be viewed as windfall. Nevertheless, because these concerns continue, EPA is 

proposing not to extend the MY 2009 credit transfers past the existing 5-years limit . 

Transferring credits refers to exchanging credits between the two averaging sets, 

passenger cars and trucks, within a manufacturer. For example, credits accrued by overcompliance with a manufacturer’s car fleet average standard could be used to offset debits 

accrued due to that manufacturer not meeting the truck fleet average standard in a given year. 

Finally, accumulated credits may be traded to another manufacturer. In EPA’s CO2 program, 

there are no limits on the amount of credits that may be transferred or traded. 

The averaging, banking, and trading provisions are generally consistent with those 

included in the CAFE program, with a few notable exceptions. As with EPA’s approach (except 

for the proposal discussed above for a one-time extended carry-forward of MY2010-2016 

credits), CAFE allows five year carry-forward of credits and three year carry-back. CAFE 

transfers of credits across a manufacturer’s car and truck averaging sets are also allowed, but 

with limits established by EISA on the use of transferred credits. The amount of transferred 

credits that can be used in a year is limited under CAFE, and transferred credits may not be used 

to meet the CAFE minimum domestic passenger car standard. CAFE allows credit trading, but 

again, traded credits cannot be used to meet the minimum domestic passenger car standard. 

5. Small Volume Manufacturer Standards 

In adopting the CO2 standards for MY 2012-2016, EPA recognized that for very small 

volume manufacturers, the CO2 standards adopted for MY 2012-2016 would be extremely 

challenging and potentially infeasible absent credits from other manufacturers. EPA therefore 

deferred small volume manufacturers (SVMs) with annual U.S. sales less than 5,000 vehicles 

from having to meet CO2 standards until EPA is able to establish appropriate SVM standards. 

As part of establishing eligibility for the exemption, manufacturers must make a good faith effort 

to secure credits from other manufacturers, if they are reasonably available, to cover the 

emissions reductions they would have otherwise had to achieve under applicable standards. 

These small volume manufacturers face a greater challenge in meeting CO2 standards 

compared to large manufacturers because they only produce a few vehicle models, mostly 

focusing on high performance sports cars and luxury vehicles. These manufacturers have limited 

product lines across which to average emissions, and the few models they produce often have 

very high CO2 levels. As SVMs noted in discussions, SVMs only produce one or two vehicle 

types but must compete directly with brands that are part of larger manufacturer groups that have 

more resources available to them. There is often a time lag in the availability of technologies 

from suppliers between when the technology is supplied to large manufacturers and when it is 

available to small volume manufacturers. Also, incorporating new technologies into vehicle 

designs costs the same or more for small volume manufacturers, yet the costs are spread over 

significantly smaller volumes. Therefore, SVMs typically have longer model life cycles in order 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 220 of 770

to recover their investments. SVMs further noted that despite constraints facing them, SVMs 

need to innovate in order to differentiate themselves in the market and often lead in incorporating 

technological innovations, particularly lightweight materials. 

In the MY 2012-2016 Final Rule, EPA noted that it intended to conduct a follow-on 

rulemaking to establish appropriate standards for these manufacturers. In developing this 

proposal, the agencies held detailed technical discussions with the manufacturers eligible for the 

exemption under the MY 2012-2016 program and reviewed detailed product plans of each 

manufacturer. EPA continues to believe that SVMs would face great difficulty meeting the 

primary CO2 standards and that establishing challenging but less stringent SVM standards is 

appropriate given the limited products offering of SVMs. EPA believes it is important to 

establish standards that will require SVMs to continue to innovate to reduce emissions and do 

their “fair share” under the GHG program. However, selecting a single set of standards that 

would apply to all SVMs is difficult because each manufacturer’s product lines vary 

significantly. EPA is concerned that a standard that would be appropriate for one manufacturer 

may not be feasible for another, potentially driving them from the domestic market. 

Alternatively, a less stringent standard may only cap emissions for some manufacturers, 

providing little incentive to reduce emissions. 

Based on this, rather than conducting a separate rulemaking, as part of this MY 2017-

2025 rulemaking EPA is proposing to allow SVMs to petition EPA for an alternative CO2

standard for these model years. The proposed approach for SVM standards and eligibility 

requirements are described below. EPA is also requesting comments on extending eligibility for 

the proposed SVM standards to very small manufacturers that are owned by large manufacturers 

but are able to establish that they are operationally independent. 

EPA considered a variety of approaches and believes a case-by-case approach for 

establishing SVM standards would be appropriate. EPA is proposing to allow eligible SVMs the 

option to petition EPA for alternative standards. An SVM utilizing this option would be required 

to submit data and information that the agency would use in addition to other available 

information to establish CO2 standards for that specific manufacturer. EPA requests comments 

on all aspects of the proposed approach described in detail below. 

a. Overview of Existing Case-by-Case Approaches 

A case-by-case approach for establishing standards for SVMs has been adopted by 

NHTSA for CAFE, CARB in their 2009-2016 GHG program, and the European Union (EU) for 

European CO2 standards. For the CAFE program, EPCA allows manufacturers making less than 

10,000 vehicles per year worldwide to petition the agency to have an alternative standard set for 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 221 of 770

them.211 NHTSA has adopted alternative standards for some small volume manufacturers under 

these CAFE provisions and continually reviews applications as they are submitted.212 Under the 

CAFE program, petitioners must include projections of the most fuel efficient production mix of 

vehicle configurations for a model year and a discussion demonstrating that the projections are 

reasonable. Petitioners must include, among other items, annual production data, efforts to 

comply with applicable fuel economy standards, and detailed information on vehicle 

technologies and specifications. The petitioner must explain why they have not pursued 

additional means that would allow them to achieve higher average fuel economy. NHTSA 

publishes a proposed decision in the Federal Register and accepts public comments. Petitions 

may be granted for up to three years. Manufacturers are not required to pay fines for the model 

years covered by the petition while their petition is under NHTSA review. 

For the California GHG standards for MYs 2009-2016, CARB established a process that 

would start at the beginning of MY2013, where small volume manufacturers would identify all 

MY 2012 vehicle models certified by large volume manufacturers that are comparable to the 

SVM’s planned MY 2016 vehicle models.213 The comparison vehicles were to be selected on 

the basis of horsepower and power to weight ratio. The SVM was required to demonstrate the 

appropriateness of the comparison models selected. CARB would then provide a target CO2

value based on the emissions performance of the comparison vehicles to the SVM for each of 

their vehicle models to be used to calculate a fleet average standard for each test group for 

MY2016 and later. Since CARB provides that compliance with the National Program for MYs 

2012-2016 will be deemed compliance with the CARB program, it has not taken action to set 

unique SVM standards, but its program nevertheless was a useful model to consider. 

The EU process allows small manufacturers to apply for a derogation from the primary 

CO2 emissions reduction targets.214 Applications for 2012 were required to be submitted by 

manufacturers no later than March 31, 2011, and the Commission will assess the application 

within 9 months of the receipt of a complete application. Applications for derogations for 2012 

have been submitted by several manufacturers and non confidential versions are currently 

available to the public.215 In the EU process, the SVM proposes an alternative emissions target 

supported by detailed information on the applicant’s economic activities and technological 

potential to reduce CO2 emissions. The application also requires information on individual 

vehicle models such as mass and specific CO2 emissions of the vehicles, and information on the 

 211 See 49 U.S.C. 32902(d) and 49 CFR Part 525. Under the CAFE program, manufacturers who manufacture less 

than 10,000 passenger cars worldwide annually may petition for an exemption from generally-applicable CAFE 

standards, in which case NHTSA will determine what level of CAFE would be maximum feasible for that particular 

manufacturer if the agency determines that doing so is appropriate.

212 Alternative CAFE standards are provided in 49 CFR 531.5 (e). 213 13 CCR 1961.1(D). 214 Article 11 of Regulation (EC) No 443/2009 and EU No 63/2011. See also “Frequently asked questions on 

application for derogation pursuant to Aticle 11 of Regulation (EC) 443/2009.” 215 http://ec.europa.eu/clima/documentation/transport/vehicles/cars_en.htm 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 222 of 770

characteristics of the market for the types of vehicles manufactured. The proposed alternative 

emissions standards may be the same numeric standard for multiple years or a declining 

standard, and the alternative standards may be established for a maximum period of five years. 

Where the European Commission is satisfied that the specific emissions target proposed by the 

manufacturer is consistent with its reduction potential, including the economic and technological 

potential to reduce its specific emissions of CO2, and taking into account the characteristics of 

the market for the type of car manufactured, the Commission will grant a derogation to the 

manufacturer. 

b. EPA’s Proposed Framework for Case-by-Case SVM Standards 

EPA proposes that SVMs will become subject to the GHG program beginning with MY 

2017. Starting in MY 2017, an SVM would be required to meet the primary program standards 

unless EPA establishes alternative standards for the manufacturer. EPA proposes that eligible 

manufacturers seeking alternative standards must petition EPA for alternative standards by July 

30, 2013, providing the information described below. If EPA finds that the application is 

incomplete, EPA would notify the manufacturer and provide an additional 30 days for the 

manufacturer to provide all necessary information. EPA would then publish a notice in the 

Federal Register of the manufacturer’s petition and recommendations for an alternative standard, 

as well as EPA’s proposed alternative standard. Non confidential business information portions 

of the petition would be available to the public for review in the docket. After a period for public 

comment, EPA would make a determination on an alternative standard for the manufacturer and 

publish final notice of the determination in the Federal Register for the general public as well as 

the applicant. EPA expects the process to establish the alternative standard to take about 12 

months once a complete application is submitted by the manufacturer. 

EPA proposes that manufacturers would petition for alternative standards for up to 5 

model years (i.e., MYs 2017 – 2021) as long as sufficient information is available on which to 

base the alternative standards (see application discussion below). This initial round of 

establishing case-by-case standards would be followed by one or more additional rounds until 

standards are established for the SVM for all model years up to and including MY 2025. For the 

later round(s) of standard setting, EPA proposes that the SVM must submit their petition 36 

months prior to the start of the first model year for which the standards would apply in order to 

provide sufficient time for EPA to evaluate and set alternative standards (e.g., January 1, 2018 

for MY 2022). The subsequent case-by-case standard setting would follow the same notice and 

comment process as outlined above. 

EPA also proposes that if EPA does not establish SVM standards for a manufacturer at 

least 12 months prior to the start of the model year in cases where the manufacturer provided all 

required information by the established deadline, the manufacturer may request an extension of 

the alternative standards currently in place, on a model year by model year basis. This would 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 223 of 770

provide assurance to manufacturers that they would have at least 12 months lead time to prepare 

for the upcoming model year. 

EPA requests comments on allowing SVMs to comply early with the MY 2017 SVM 

standards established for them. Manufacturers may want to certify to the MY 2017 standards in 

earlier model years (e.g., MY 2015 or MY 2016). Under the MY 2012-2016 program, SVMs are 

eligible for an exemption from the standards as long as they have made a good faith effort to 

purchase credits. By certifying to the SVM standard early in lieu of this exemption, 

manufacturers could avoid having to seek out credits to purchase In order to maintain this 

exemption. EPA would not allow certification for vehicles already produced by the 

manufacturer, so the applicability of this provision would be limited due to the timing of 

establishing the SVM standards. Manufacturers interested in the possibility of early compliance 

would be able to apply for SVM standards earlier than the required July 30, 2013 deadline 

proposed above. An early compliance option also may be beneficial for new manufacturers 

entering the market that qualify as SVMs. 

c. Petition Data and Information Requirements 

As described in detail in section I.D.2, EPA establishes motor vehicle standards under 

section 202(a) that are based on technological feasibility, and considering lead time, safety, costs 

and other impacts on consumers, and other factors such as energy impacts associated with use of 

the technology. EPA proposes to require that SVMs submit the data and information listed 

below which EPA would use, in addition to other relevant information, in determining an 

appropriate alternative standard for the SVM. EPA would also consider data and information 

provided by commenters during the comment process in determining the final level of the 

SVM’s standards. As noted above, other case-by-case standard setting approaches have been 

adopted by NHTSA, the European Union, and CARB and EPA has considered the data 

requirements of those programs in developing the proposed data and information requirements 

detailed below. EPA requests comments on the following proposed data requirements. 

EPA proposes that SVMs would provide the following information as part of their 

petition for SVM standards: 

Vehicle Model and Fleet Information 

• MYs that the application covers – up to 5 MYs. Sufficient information must be provided 

to establish alternative standards for each year 

• Vehicle models and sales projections by model for each MY 

• Description of models (vehicle type, mass, power, footprint, expected pricing) 

• Description of powertrain 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 224 of 770

• Production cycle for each model including new vehicle model introductions 

• Vehicle footprint based targets and projected fleet average standard under primary 

program by model year 

Technology Evaluation 

• CO2 reduction technologies employed or expected to be on the vehicle model(s) for the 

applicable model years, including effectiveness and cost information 

– Including A/C and potential off-cycle technologies 

• Evaluation of similar vehicles certified in MYs 2012-2013 (or latest 2 MYs for later 

applications) for each vehicle model including CO2 results and any A/C credits generated 

by the models 

– Must be selected based on vehicle type, horsepower, mass, power-to-weight, 

vehicle footprint, vehicle price range and other relevant factors as explained by 

the SVM 

• Discussion of CO2 reducing technologies employed on vehicles offered by the 

manufacturer outside of the U.S. market but not in the U.S., including why those 

vehicles/technologies are not being introduced in the U.S. market as a way of reducing 

overall fleet CO2 levels 

• Evaluation of technologies projected by EPA as technologies likely to be used to meet the 

2012-2016 and 2017-2025 standards that are not projected to be fully utilized by 

manufacturer and explanation of reasons for not using the technologies, including 

relevant cost information 

SVM Projected Standards 

• The most stringent CO2 level estimated by the SVM to be feasible and appropriate by 

model and MY and the technological and other basis for the estimate 

• For each MY, projection of the lowest fleet average CO2 production mix of vehicle 

models and discussion demonstrating that these projections are reasonable 

– EPA expects fleet standards would track product plan/projected changes in 

product mix for the individual manufacturers 

• A copy of any applications submitted to NHTSA for MY 2012 and later alternative 

standards 

Eligibility 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 225 of 770

 U.S. sales for previous three model years and projections for production volumes over the 

time period covered by the application 

 Complete information on ownership structure in cases where SVM has ties to other 

manufacturers with U.S. vehicle sales 

 EPA proposes to weigh several factors in determining what CO2 standards are 

appropriate for a given SVMs fleet. These factors would include the level of technology applied 

to date by the manufacturer, the manufacturer’s projections for the application of additional 

technology, CO2 reducing technologies being employed by other manufacturers including on 

vehicles with which the SVM competes directly and the CO2 levels of those vehicles, and the 

technological feasibility and reasonableness of employing additional technology not projected by 

the manufacturer in the time-frame for which standards are being established. EPA would also 

consider opportunities to generate A/C and off-cycle credits that are available to the 

manufacturer. Lead time would be a key consideration both for the initial years of the SVM 

standard, where lead time would be shorter due to the timing of the notice and comment process 

to establish the standards, and for the later years where manufacturers would have more time to 

achieve additional CO2 reductions. 

d. SVM Credits Provisions 

As discussed in Section III.B.4, EPA’s program includes a variety of credit averaging, 

banking, and trading provisions. EPA proposes that these provisions would generally apply to 

SVM standards as well, with the exception that SVMs would not be allowed to trade credits to 

other manufacturers. Because SVMs would be meeting alternative, less stringent standards 

compared to manufacturers in the primary program, EPA proposes that SVM would not be 

allowed to trade (i.e., sell or otherwise provide) CO2 credits that the SVM generates against the 

SVM standards to other manufacturers. SVMs would be able to use credits purchased from other 

manufacturers generated in the primary program. Although EPA does not expect significant 

credits to be generated by SVMs due to the manufacturer-specific standard setting approach 

being proposed, SVMs would be able to generate and use credits internally, under the credit 

carry-forward and carry-back provisions. Under a case-by-case approach, EPA would not view 

such credits as windfall credits and not allowing internal banking could stifle potential 

innovative approaches for SVMs. SVMs would also be able to transfer credits between the car 

and light trucks categories. 

e. SVM Standards Eligibility 

i. Current SVMs 

The MY 2012-2016 rulemaking limited eligibility for the SVM deferment to 

manufacturers in the U.S. market in MY 2008 or MY 2009 with U.S. sales of less than 5,000 

vehicles per year. After initial eligibility has been established, the SVM remains eligible for the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 226 of 770

exemption if the rolling average of three consecutive model years of sales remains below 5,000 

vehicles. Manufacturers going over the 5,000 vehicle rolling average limit would have two 

additional model years to transition to having to meet applicable CO2 standards. Based on these 

eligibility criteria, there are three companies that qualify currently as SVMs under the MY2012-

2016 standards: Aston Martin, Lotus, and McLaren.216 These manufacturers make up much less 

than one percent of total U.S. vehicles sales, so the environmental impact of these alternative 

standards would be very small. EPA continues to believe that the 5,000 vehicle cut-point and 

rolling three year average approach is appropriate and proposes to retain it as a primary criterion 

for SVMs to remain eligible for SVM standards. The 5,000 vehicle threshold allows for some 

sales growth by SVMs, as the SVMs in the market today typically have annual sales of below 

2,000 vehicles. However, EPA wants to ensure that standards for as few vehicles as possible are 

included in the SVM standards to minimize the environmental impact, and therefore believes it is 

appropriate that manufacturers with U.S. sales growing to above 5,000 vehicles per year be 

required to comply with the primary standards. Manufacturers with unusually strong sales in a 

given year would still likely remain eligible, based on the three year rolling average. However, 

if a manufacturer takes steps to expand in the U.S. market on a permanent basis such that they 

consistently sell more than 5,000 vehicles per year, they would no longer be eligible. EPA 

believes a manufacturer will be able to consider these provisions, along with other factors, in its 

planning to significantly expand in the U.S. market. As discussed below, EPA is not proposing 

to continue to tie eligibility to having been in the market in MY 2008 or MY 2009, or any other 

year and is instead proposing eligibility criteria for new SVMs newly entering the U.S. market. 

ii. New SVMs (New Entrants to the U.S. Market) 

As noted above, the SVM deferment under the MY 2012-2016 program included a 

requirement that a manufacturer had to have been in the U.S. vehicle market in MY 2008 or MY 

2009. This provision ensured that a known universe of manufacturers would be eligible for the 

exemption in the short term and manufacturers would not be driven from the market as EPA 

proceeded to develop appropriate SVM standards. EPA is not proposing to include such a 

provision for the SVM standards eligibility criteria for MY 2017-2025. EPA believes that with 

SVM standards in place, tying eligibility to being in the market in a prior year is no longer 

necessary because SVMs will be required to achieve appropriate levels of emissions control. 

Also, it could serve as a potential market barrier to competition by hindering new SVMs from 

entering the U.S. market. 

For new market entrants, EPA proposes that a manufacturer seeking an alternative 

standard for MY2017-2025 must apply and that standards would be established through the 

process described above. The new SVM would not be able to certify their vehicles until the 

standards are established and therefore EPA would expect the manufacturer to submit an 

 216 Under the MY 2012-2016 program, manufacturers must also make a good faith effort to purchase CO2 credits in 

order to maintain eligibility for SVM status. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 227 of 770

application as early as possible but at least 30 months prior to when they expect to begin 

producing vehicles in order to provide enough time for EPA to evaluate standards and to follow 

the notice and comment process to establish the standards and for certification. In addition to the 

information and data described below, EPA proposes to require new market entrants to provide 

evidence that the company intends to enter the U.S. market within the time frame of the 

MY2017-2025 SVM standards. Such evidence would include documentation of work underway 

to establish a dealer network, appropriate financing and marketing plans, and evidence the 

company is working to meet other federal vehicle requirements such as other EPA emissions 

standards and NHTSA vehicle safety standards. EPA is concerned about the administrative 

burden that could be created for the agency by companies with no firm plans to enter the U.S. 

market submitting applications in order to see what standard might be established for them. This 

information, in addition to a complete application with the information and data outlined above, 

would provide evidence of the seriousness of the applicant. As part of this review, EPA reserves 

the right to not undertake its SVM standards development process for companies that do not 

exhibit a serious and documented effort to enter the U.S. market. 

EPA remains concerned about the potential for gaming by a manufacturer that sells less 

than 5,000 vehicles in the first year, but with plans for significantly larger sales volumes in the 

following years. EPA believes that it would not be appropriate to establish SVM standards for a 

new market entrant that plans a steep ramp-up in U.S. vehicle sales. Therefore, EPA proposes 

that for new entrants, U.S. vehicle sales must remain below 5,000 vehicles for the first three 

years in the market, after which the manufacturer must maintain a three year rolling average 

below 5,000 vehicles. If a new market entrant does not comply with these provisions for the first 

five years in the market, vehicles sold above the 5,000 vehicle threshold would be found not to 

be covered by the alternative standards, and EPA expects the fleet average is therefore not in 

compliance with the standards and would be subject to enforcement action and also, the 

manufacturer would lose eligibility for the SVM standards until it has reestablished three 

consecutive years of sales below 5,000 vehicles. 

By not tying the 5,000 vehicle eligibility criteria to a particular model year, it would be 

possible for a manufacturer already in the market to drop below the 5,000 vehicle threshold in a 

future year and attempt to establish eligibility. EPA proposes to treat such manufacturers as new 

entrants to the market for purposes of determining eligibility for SVM standards. However, the 

requirements to demonstrate that the manufacturer intends to enter the U.S. market obviously 

would not be relevant in this case, and therefore would not apply. 

iii. Aggregation Requirements and an Operational Independence Concept 

In determining eligibility for the MY 2012-2016 exemption, sales volumes must be 

aggregated across manufacturers according to the provisions of 40 CFR 86.1838-01(b)(3), which 

requires the sales of different firms to be aggregated in various situations, including where one 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 228 of 770

firm has a 10% or more equity ownership of another firm, or where a third party has a 10% or 

more equity ownership of two or more firms. These are the same aggregation requirements used 

in other EPA small volume manufacturer provisions, such as those for other light-duty emissions 

standards.217 EPA proposes to retain these aggregation provisions as part of the eligibility 

criteria for the SVM standards for MYs 2017-2025. Manufacturers also retain, no matter their 

size, the option to meet the full set of GHG requirements on their own, and do not necessarily 

need to demonstrate compliance as part of a corporate parent company fleet. However, as 

discussed below, EPA is seeking comments on allowing manufacturers that otherwise would not 

be eligible for the SVM standards due to these aggregation provisions, to demonstrate to the 

Administrator that they are “operationally independent” based on the criteria described below. 

Under such a concept, if the Administrator were to determine that a manufacturer was 

operationally independent, that manufacturer would be eligible for SVM standards. 

During the 2012-2016 rule comment period, EPA received comments from Ferrari 

requesting that EPA allow a manufacturer to apply to EPA to establish SVM status based on the 

independence of its research, development, testing, design, and manufacturing from another firm 

that has ownership interest in that manufacturer. Ferrari is majority owned by Fiat and would be 

aggregated with other Fiat brands, including Chrysler, Maserati, and Alfa Romeo, for purposes 

of determining eligibility for SVM standards; therefore Ferrari does not meet the eligibility 

criteria for SVM status. However, Ferrari believes that it would qualify for such an “operational 

independence” concept, if such an option were provided. In the MY 2012-2016 Final Rule, EPA 

noted that it would further consider the issue of operational independence and seek public 

comments on this concept (see 75 FR 25420). In this proposal, EPA is requesting comment on 

the concept of operational independence. Specifically, we are seeking comment on expanding 

eligibility for the SVM standards to manufacturers who would have U.S. annual sales of less 

than 5,000 vehicles and based on a demonstration that they are “operationally independent” of 

other companies. Under such an approach, EPA would be amending the limitation for SVM 

corporate aggregation provisions such that a manufacturer that is more than 10 percent owned by 

a large manufacturer would be allowed to qualify for SVM standards on the basis of its own 

sales, because it operates its research, design, production, and manufacturing independently from 

the parent company. 

In seeking public comment on this concept of operational independence, EPA particularly 

is interested in comments regarding the degree to which this concept could unnecessarily open 

up the SVM standards to several smaller manufacturers that are integrated into large companies – 

smaller companies that may be capable of and planning to meet the CO2 standards as part of the 

larger manufacturer’s fleet. EPA also seeks comment on the concern that manufacturers could 

change their corporate structure to take advantage of such provisions (that is, gaming). EPA is 

therefore requesting comment on approaches, described below, to narrowly define the 

 217 For other programs, the eligibility cut point for SVM flexibility is 15,000 vehicles rather than 5,000 vehicles. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 229 of 770

operational independence criteria to ensure that qualifying companies are truly independent and 

to avoid gaming to meet the criteria. EPA also requests comments on the possible implications 

of this approach on market competition, which we believe should be fully explored through the 

public comment process. EPA acknowledges that regardless of the criteria for operational 

independence, a small manufacturer under the umbrella of a large manufacturer is fundamentally 

different from other SVMs because the large manufacturer has several options under the GHG 

program to bring the smaller subsidiary into compliance, including the use of averaging or credit 

transfer provisions, purchasing credits from another manufacturer, or providing technical and 

financial assistance to the smaller subsidiary. Truly independent SVMs do not have the potential 

access to these options, with the exception of buying credits from another manufacturer. EPA 

requests comments on the need for and appropriateness of allowing companies to apply for less 

stringent SVM standards based on sales that are not aggregated with other companies because of 

operational independence. 

EPA is considering and requesting comments on the operational independence criteria 

listed below. These criteria are meant to establish that a company, though owned by another 

manufacturer, does not benefit operationally or financially from this relationship, and should 

therefore be considered independent for purposes of calculating the sales volume for the SVM 

program. Manufacturers would need to demonstrate compliance with all of these criteria in 

order to be found to be operationally independent. By “related manufacturers” below, EPA 

means all manufacturers that would be aggregated together under the 10 percent ownership 

provisions contained in EPA’s current small volume manufacturer definition (i.e., the parent 

company and all subsidiaries where there is 10 percent or greater ownership). 

EPA would need to determine, based on the information provided by the manufacturer in its 

application, that the manufacturer currently meets the following criteria and has met them for at 

least 24 months preceding the application submittal: 

1. No financial or other support of economic value was provided by related manufacturers 

for purposes of design, parts procurement, R&D and production facilities and operation. 

Any other transactions with related manufacturers must be conducted under normal 

commercial arrangements like those conducted with other parties. Any such transactions 

shall be at competitive pricing rates to the manufacturer. 

2. Maintains separate and independent research and development, testing, and production 

facilities. 

3. Does not use any vehicle powertrains or platforms developed or produced by related 

manufacturers. 

4. Patents are not held jointly with related manufacturers. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 230 of 770

5. Maintains separate business administration, legal, purchasing, sales, and marketing 

departments; maintains autonomous decision making on commercial matters. 

6. Overlap of Board of Directors is limited to 25 percent with no sharing of top operational 

management, including president, chief executive officer (CEO), chief financial officer 

(CFO), and chief operating officer (COO), and provided that no individual overlapping 

director or combination of overlapping directors exercises exclusive management control 

over either or both companies. 

7. Parts or components supply agreements between related companies must be established 

through open market process and to the extent that manufacturer sells parts/components 

to non-related auto manufacturers, it does so through the open market at competitive 

pricing. 

In addition to the criteria listed above, EPA also requests comments on the following 

programmatic elements and framework. EPA requests comments on requiring the manufacturer 

applying for operational independence to provide an attest engagement from an independent 

auditor verifying the accuracy of the information provided in the application.218 EPA foresees 

possible difficulty verifying the information in the application, especially if the company is 

located oversees. The principal purpose of the attest engagement would be to provide an 

independent review and verification of the information provided. EPA also would require that 

the application be signed by the company president or CEO. After EPA approval, the 

manufacturer would be required to report within 60 days any material changes to the information 

provided in the application. A manufacturer would lose eligibility automatically after the 

material change occurs. However, EPA would confirm that the manufacturer no longer meets 

one or more of the criteria and thus is no longer considered operationally independent, and would 

notify the manufacturer. EPA would provide two model years lead time for the manufacturer to 

transition to the primary program. For example, if the manufacturer lost eligibility sometime in 

calendar year 2018 (based on when the material change occurs), the manufacturer would need to 

meet primary program standards in MY 2021. 

In addition, EPA requests comments on whether or not a manufacturer losing eligibility 

should be able to re-establish itself as operationally independent in a future year and over what 

period of time they would need to meet the criteria to again be eligible. EPA requests comments 

on, for example, whether or not a manufacturer meeting the criteria for three to five consecutive 

years should be allowed to again be considered operationally independent. 

 218 EPA has required attest engagements as part of its Reformulated Fuels program. See 40 CFR §80.1164 and 

§80.1464. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 231 of 770

6. Nitrous Oxide, Methane, and CO2-equivalent Approaches 

a. Standards and Flexibility 

For light-duty vehicles, as part of the MY 2012–2016 rulemaking, EPA finalized 

standards for nitrous oxide (N2O) of 0.010 g/mile and methane (CH4) of 0.030 g/mile for MY 

2012 and later vehicles. 75 FR at 25421–24. The light-duty vehicle standards for N2O and CH4

were established to cap emissions, where current levels are generally significantly below the cap. 

The cap would prevent future emissions increases, and were generally not expected to result in 

the application of new technologies or significant costs for the manufacturers for current vehicle 

designs. EPA also finalized an alternative CO2 equivalent standard option, which manufacturers 

may choose to use in lieu of complying with the N2O and CH4 cap standards. The CO2-

equivalent standard option allows manufacturers to fold all 2-cycle weighted N2O and CH4

emissions, on a CO2-equivalent basis, along with CO2 into their CO2 emissions fleet average 

compliance level.219 The applicable CO2 fleet average standard is not adjusted to account for the 

addition of N2O and CH4. For flexible fueled vehicles, the N2O and CH4 standards must be met 

on both fuels (e.g., both gasoline and E–85). 

After the light-duty standards were finalized, manufacturers raised concerns that for a 

few of the vehicle models in their existing fleet they were having difficulty meeting the N2O 

and/or CH4 standards, in the near-term. In such cases, manufacturers would still have the option 

of complying using the CO2 equivalent alternative. On a CO2 equivalent basis, folding in all 

N2O and CH4 emissions could add up to 3–4 g/mile to a manufacturer’s overall fleet-average 

CO2 emissions level because the alternative standard must be used for the entire fleet, not just for 

the problem vehicles. The 3-4 gm/mile assumes all emissions are actually at the level of the cap. 

See 75 FR at 74211. This could be especially challenging in the early years of the program for 

manufacturers with little compliance margin because there is very limited lead time to develop 

strategies to address these additional emissions. Some manufacturers believe that the current 

CO2-equivalent fleet-wide option “penalizes” them by requiring them to fold in both CH4 and 

N2O emissions for their entire fleet, even if they have difficulty meeting the cap on only one 

vehicle model. 

In response to these concerns, as part of the heavy-duty GHG rulemaking, EPA requested 

comment on and finalized provisions allowing manufacturers to use CO2 credits, on a CO2-

 219 The global warming potentials (GWP) used in this rule are consistent with the 100-year time frame values in the 

2007 Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). At this time, the 100-

year GWP values from the 1996 IPCC Second Assessment Report (SAR) are used in the official U.S. greenhouse 

gas inventory submission to the United Nations Framework Convention on Climate Change (per the reporting 

requirements under that international convention, which were last updated in 2006) . N2O has a 100-year GWP of 

298 and CH4 has a 100-year GWP of 25 according to the 2007 IPCC AR4. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 232 of 770

equivalent basis, to meet the light-duty N2O and CH4 standards.220 Manufacturers have the 

option of using CO2 credits to meet N2O and CH4 standards on a test group basis as needed for 

MYs 2012-2016. In their public comments to the proposal in the heavy-duty package, 

manufacturers urged EPA to extend this flexibility indefinitely, as they believed this option was 

more advantageous than the CO2-equivalent fleet wide option (discussed previously) already 

provided in the light-duty program, because it allowed manufacturers to address N2O and CH4

separately and on a test group basis, rather than across their whole fleet. Further, manufacturers 

believed that since this option is allowed under the heavy-duty standards, allowing it indefinitely 

in the light-duty program would make the light- and heavy-duty programs more consistent. In 

the Final Rule for Heavy-Duty Vehicles, EPA noted that it would consider this issue further in 

the context of new standards for MYs 2017-2025 in the planned future light-duty vehicle 

rulemaking. 76 FR at 57194. 

EPA has further considered this issue and is proposing to allow the additional option of 

using CO2 credits to meet the light-duty vehicle N2O and CH4 standards to extend for all model 

years beyond MY 2016. EPA understands manufacturer concerns that if they use the CO2-

equivalent option for meeting the GHG standards, they would be penalized by having to 

incorporate all N2O and CH4 emissions across their entire fleet into their CO2-equivalent fleet 

emissions level determination. EPA continues to believe that allowing CO2 credits to meet CH4

and N2O standards on a CO2 equivalent basis is a reasonable approach to provide additional 

flexibility without diminishing overall GHG emissions reductions. 

EPA is also requesting comments on making an adjustment to the CO2-equivalent 

standard for manufacturers selecting the CO2-equivalent option established in the MY 2012-2016 

rulemaking. Manufacturers would continue to be required to fold in all of their CH4 and N2O 

emissions, along with CO2, into their CO2-equivalent levels. The purpose of this adjustment 

would be to ensure manufacturers do not have to offset the typical N2O and CH4 vehicle 

emissions, while effectively holding manufacturers responsible for higher than average N2O and 

CH4 emissions levels. For example, if the adjustment for CH4 and N2O combined was 1 to 2 

g/mile CO2 equivalent (taking into account the GWP of N2O and CH4), manufacturers would 

determine their CO2 fleet emissions standard and add the 1 to 2 g/mile adjustment factor to it to 

determine their CO2-equivalent standard. EPA continues to believe that it would not be 

appropriate to base the adjustment on the cap standards because such an approach could have the 

effect of undermining the stringency of the CO2 standards, as many vehicles would likely have 

CH4 and N2O levels much lower than the cap standards. EPA believes that if an appropriate 

adjustment could be developed and applied, it would help alleviate manufacturers concerns 

discussed above and make the CO2-equivalent approach a more viable option. 

EPA is not proposing an adjustment, however, due to a current lack of N2O test data on 

which to base the adjustment for N2O. As discussed below, EPA and manufacturers are 

 220 See 76 FR at 57193-94. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 233 of 770

currently evaluating N2O measurement equipment and insufficient data is available on which to 

base an appropriate adjustment. For CH4, manufacturers currently provide data during 

certification, and based on current vehicle data an adjustment for CH4 in the range of 0.14 g/mile 

appears to be appropriate.221 EPA requests comments on this concept and requests city and 

highway cycle N2O data on current Tier 2 vehicles which could help serve as the basis for the 

adjustment. 

b. N2O Measurement 

For the N2O standard, EPA finalized provisions in the MY 2012-2016 rule allowing 

manufacturers to support an application for a certificate by supplying a compliance statement 

based on good engineering judgment, in lieu of N2O test data, through MY 2014. EPA required 

N2O testing starting with MY 2015. See 75 FR at 25423. This flexibility provided 

manufacturers with lead time needed to make necessary facilities changes and install N2O 

measurement equipment. 

Since the final rule, manufacturers have raised concerns that the lead-time provided to 

begin N2O measurement is not sufficient, as their research and evaluation of N2O measurement 

instrumentation has involved a greater level of effort than previously expected. There are several 

analyzers available today for the measurement of N2O. Over the last year since the MY 2012-

2016 standards were finalized, EPA has continued to evaluate instruments for N2O measurement 

and now believes instruments not evaluated during the 2012-2016 rulemaking have the potential 

to provide more precise emissions measurement and believe it would be prudent to provide 

manufacturers with additional time to evaluate, procure, and install equipment in their test 

cells.222 Therefore, EPA believes that the manufacturer’s concerns about the need for additional 

lead-time have merit, and is proposing to extend the ability for manufacturers to use compliance 

statements based on good engineering judgment in lieu of test data through MY 2016. 

Beginning in MY 2017, manufacturers would be required to measure N2O emissions to verify 

compliance with the standard. This approach, if finalized, will provide the manufacturers with 

two additional years of lead-time to evaluate, procure, and install N2O measurement systems 

throughout their certification laboratories. 

7. Small Entity Exemption (Lieske) 

In the MY 2012-2016 rule, EPA exempted entities from the GHG emissions standard, if 

the entity met the Small Business Administration (SBA) size criteria of a small business as 

described in 13 CFR 121.201. 223 This includes both U.S.-based and foreign small entities in 

 221 Average city/highway cycle CH4 emissions based on MY2010-2012 gasoline vehicles certification data is about 

0.0056 g/mile. 

222 “Data from the evaluation of instruments that measure N2O,” Memorandum from Chris Laroo to Docket EPAHQ-OAR-2010-0799. 

223 See final regulations at 40 CFR 86.1801-12(j). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 234 of 770

three distinct categories of businesses for light-duty vehicles: small manufacturers, independent 

commercial importers (ICIs), and alternative fuel vehicle converters. EPA is proposing to 

continue this exemption for the MY 2017-2025 standards. EPA will instead consider appropriate 

GHG standards for these entities as part of a future regulatory action. 

EPA has identified about 17 entities that fit the Small Business Administration (SBA) 

size criterion of a small business. EPA estimates there currently are approximately four small 

manufacturers including three electric vehicle small manufacturers that have recently entered the 

market, eight ICIs, and five alternative fuel vehicle converters in the light-duty vehicle market. 

EPA estimates that these small entities comprise less than 0.1 percent of the total light-duty 

vehicle sales in the U.S., and therefore the exemption will have a negligible impact on the GHG 

emissions reductions from the standards. Further detail regarding EPA’s assessment of small 

businesses is provided in Regulatory Flexibility Act Section III.J.3. 

At least one small business manufacturer, Fisker Automotive, in discussions with EPA, 

has suggested that small businesses should have the option of voluntarily opting-in to the GHG 

standards. This manufacturer sells electric vehicles, and sees a potential market for selling 

credits to other manufacturers. EPA believes that there could be several benefits to this 

approach, as it would allow small businesses an opportunity to generate revenue to offset their 

technology investments and encourage commercialization of the innovative technology, and it 

would benefit any manufacturer seeking those credits to meet their compliance obligations. EPA 

is proposing to allow small businesses to waive their small entity exemption and opt-in to the 

GHG standards. Upon opting in, the manufacturer would be subject to all of the requirements 

that would otherwise be applicable. This would allow small entity manufacturers to earn CO2

credits under the program, which may be an especially attractive option for the new electric 

vehicle manufacturers entering the market. EPA proposes to make the opt-in available starting 

in MY 2014, as the MY 2012, and potentially the MY 2013, certification process will have 

already occurred by the time this rulemaking is finalized. EPA is not proposing to retroactively 

certify vehicles that have already been produced. However, EPA proposes that manufacturers 

certifying to the GHG standards for MY 2014 would be eligible to generate credits for vehicles 

sold in MY 2012 and MY 2013 based on the number of vehicles sold and the manufacturer’s 

footprint-based standard under the primary program that would have otherwise applied to the 

manufacturer if it were a large manufacturer. This approach would be similar to that used by 

EPA for early credits generated in MYs 2009-2011, where manufacturers did not certify vehicles 

to CO2 standards in those years but were able to generate credits. See 75 FR at 25441. EPA 

believes it is appropriate to provide these credits to small entities, as the credits would be 

available to large manufacturers producing similar vehicles, and the credits further encourage 

manufacturers of advanced technology vehicles such as EVs. In addition to benefiting these 

small businesses, this option also has the potential to expand the pool of credits available to be 

purchased by other manufacturers. Note that manufacturers waiving their small entity exemption 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 235 of 770

would be required to meet all aspects of the GHG standards and program requirements across 

their entire product line. 

8. Additional Leadtime Issues 

The 2012-2016 GHG vehicle standards include Temporary Leadtime Allowance 

Alternative Standards (TLAAS) which provide alternative standards to certain intermediate sized 

manufacturers to accommodate two situations: manufacturers which traditionally paid fines 

instead of complying with CAFE standards, and limited line manufacturers facing special 

compliance challenges due to less flexibility afforded by averaging, banking and trading. See 75 

FR at 25414-416. EPA is not proposing to continue this program for MYs 2017-2025. First, the 

allowance was premised on the need to provide adequate lead time, given the (at the time the rule 

was finalized) rapidly approaching MY 2012 deadline, and given that manufacturers were 

transitioning from a CAFE regime that allows fine-paying, to a Clean Air Act regime that does 

not. That concern is no longer applicable, given that there is ample lead time before the MY 

2017 standards. More important, the Temporary Lead Time Allowance was just that – 

temporary – and EPA provided it to allow manufacturers to transition to full compliance in later 

model years. See 75 FR at 25416. EPA is thus not proposing to continue this provision. 

In the context of the increasing stringency of standards in the latter phase of the program 

(e.g., MY 2022-2025), one manufacturer suggested that EPA should consider providing limited 

line, intermediate volume manufacturers additional time to phase into the standards. The 

concern raised is that such limited line manufacturers face unique challenges securing 

competitive supplier contracts for new technologies, and have fewer vehicle lines to allocate the 

necessary upfront investment and risk inherent with new technology introduction. This 

manufacturer believes that as the standards become increasingly stringent in future years 

requiring the investment of new or advanced technologies, intermediate volume limited line 

manufacturers may have to pay a premium to gain access to these technologies which would put 

them at a competitive disadvantage. EPA seeks comment on this issue, and whether there is a 

need to provide some type of additional leadtime for intermediate volume limited line 

manufacturers to meet the latter year standards. 

9. Police and Emergency Vehicle Exemption from CO2 Standards 

Under EPCA, manufacturers are allowed to exclude police and other emergency vehicles 

from their CAFE fleet and all manufacturers that produce emergency vehicles have historically 

done so. EPA received comments in the MY 2012-2016 rulemaking that these vehicles should 

be exempt from the GHG emissions standards and EPA committed to further consider the issue 

in a future rulemaking.224 After further consideration of this issue in the context of the MY 2017-

 224 75 FR 25409 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 236 of 770

2025 standards being proposed, EPA proposes to exempt police and other emergency vehicles 

from the CO2 standards starting in MY 2017. EPA believes it is appropriate to provide an 

exemption for these vehicles because of the unique features of vehicles designed specifically for 

law enforcement and emergency response purposes, which have the effect of raising their GHG 

emissions, as well as for purposes of harmonization with the CAFE program. EPA proposes to 

exempt vehicles that are excluded under EPCA and NHTSA regulations which define emergency 

vehicle as “a motor vehicle manufactured primarily for use as an ambulance or combination 

ambulance-hearse or for use by the United States Government or a State or local government for 

law enforcement, or for other emergency uses as prescribed by regulation by the Secretary of 

Transportation.” 225

While these vehicles are covered by the MY 2012-2016 standards, as the CO2 standards 

become increasingly more stringent, manufacturers of these vehicles would likely begin to face 

significantly greater challenges. The unique features of these vehicles result in significant added 

weight including: heavy-duty suspensions, stabilizer bars, heavy-duty/dual batteries, heavy-duty 

engine cooling systems, heavier glass, bullet-proof side panels, and high strength sub-frame. 

Police pursuit vehicles are often equipped with specialty steel rims and increased rolling 

resistance tires designed for high speeds, and unique engine and transmission calibrations to 

allow high-power, high-speed chases. Police and emergency vehicles also have features that 

tend to reduce aerodynamics, such as emergency lights, increased ground clearance, and heavyduty front suspensions. 

EPA is concerned that manufacturers may not be able to sufficiently reduce the emissions 

from these vehicles, and would be faced with a difficult choice of compromising necessary 

vehicle features or dropping vehicles from their fleets, as they may not have credits necessary to 

cover the excess emissions from these vehicles as standards become more stringent. Without the 

exemption, there could be situations where a manufacturer is more challenged in meeting the 

GHG standards simply due to the inclusion of these higher emitting emergency vehicles. 

Technical feasibility issues go beyond those of other high-performance vehicles and there is a 

clear public need for law enforcement and emergency vehicles that meet these performance 

characteristics as these vehicles must continue to be made available in the market. EPA requests 

comments on its proposal to exempt emergency vehicles from the 2017-2025 standards. 

10. Test Procedures 

EPA is considering revising the procedures for measuring fuel economy and calculating 

average fuel economy for the CAFE program, to account for three impacts on fuel economy not 

currently included in these procedures – increases in fuel economy because of increases in 

efficiency of the air conditioner; increases in fuel economy because of technology improvements 

that achieve “off-cycle” benefits; and incentives for use of certain hybrid technologies in light-

 225 49 U.S.C. 32902(e) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 237 of 770

duty trucks, in the form of increased values assigned for fuel economy. As discussed in section 

IV. of this proposal, NHTSA would take these changes into account in determining the 

applicable fuel economy standard. In this section, EPA discusses the legal framework for 

considering these changes, and the mechanisms by which these changes could be implemented. 

EPA invites comment on all aspects of this concept, and plans to adopt this approach in the final 

rule if it determines the changes are appropriate after consideration of all comments on these 

issues. 

These changes would be the same as program elements that are part of EPA’s greenhouse 

gas performance standards, discussed in section III.B.1 and 2, above. EPA is considering 

adopting these changes for A/C efficiency and off-cycle technology because they are based on 

technology improvements that affect real world fuel economy, and the incentives for light-duty 

trucks will promote greater use of hybrid technology to improve fuel economy in these vehicles. 

In addition, adoption of these changes would lead to greater coordination between the 

greenhouse gas program under the CAA and the fuel economy program under EPCA. As 

discussed below, these three elements would be implemented in the same manner as in the 

EPA’s greenhouse gas program – a vehicle manufacturer would have the option to generate these 

fuel economy values for vehicle models that meet the criteria for these “credits,” and to use these 

values in calculating their fleet average fuel economy. 

a. Legal Framework 

EPCA provides that: 

(c) Testing and calculation procedures. The Administrator [of EPA] shall 

measure fuel economy for each model and calculate average fuel economy for a 

manufacturer under testing and calculation procedures prescribed by the Administrator. 

However ..., the Administrator shall use the same procedures for passenger automobiles 

the Administrator used for model year 1975 ..., or procedures that give comparable 

results. 49 USC 32904(c) 

Thus, EPA is charged with developing and adopting the procedures used to measure fuel 

economy for vehicle models and for calculating average fuel economy across a manufacturer's 

fleet. While this provision provides broad discretion to EPA, it contains an important limitation 

for the measurement and calculation procedures applicable to passenger automobiles. For 

passenger automobiles, EPA has to use the same procedures used for model year 1975 

automobiles, or procedures that give comparable results.226 This limitation does not apply to 

vehicles that are not passenger automobiles. The legislative history explains that: 

 226 For purposes of this discussion, EPA need not determine whether the changes relating to A/C efficiency, offcycle, and light-duty truck hybrids involve changes to procedures that measure fuel economy or procedures for 

calculating a manufacturer’s average fuel economy. The same provisions apply irrespective of which procedure is at 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 238 of 770

Compliance by a manufacturer with applicable average fuel economy standards is 

to be determined in accordance with test procedures established by the EPA 

Administrator. Test procedures so established would be the procedures utilized by the 

EPA Administrator for model year 1975, or procedures which yield comparable results. 

The words “or procedures which yield comparable results” are intended to give EPA 

wide latitude in modifying the 1975 test procedures to achieve procedures that are more 

accurate or easier to administer, so long as the modified procedure does not have the 

effect of substantially changing the average fuel economy standards. H. R. REP. No. 94-

340, at 91-92 (1975). 

EPA measures fuel economy for the CAFE program using two different test procedures – 

the Federal Test Procedure (FTP) and the Highway Fuel Economy Test (HFET). These 

procedures originated in the early 1970’s, and were intended to generally represent city and 

highway driving, respectively. These two tests are commonly referred to as the “2-cycle” test 

procedures for CAFE. The FTP is also used for measuring compliance with CAA emissions 

standards for vehicle exhaust. EPA has made various changes to the city and highway fuel 

economy tests over the years. These have ranged from changes to dynamometers and other 

mechanical elements of testing, changes in test fuel properties, changes in testing conditions, to 

changes made in the 1990s when EPA adopted additional test procedures for exhaust emissions 

testing, called the Supplemental Federal Test Procedures (SFTP). 

When EPA has made changes to the FTP or HFET, we have evaluated whether it is 

appropriate to provide for an adjustment to the measured fuel economy results, to comply with 

the EPCA requirement for passenger cars that the test procedures produce results comparable to 

the 1975 test procedures. These adjustments are typically referred to as a CAFE or fuel economy 

test procedure adjustment or adjustment factor. In 1985 EPA evaluated various test procedure 

changes made since 1975, and applied fuel economy adjustment factors to account for several of 

the test procedure changes that reduced the measured fuel economy, producing a significant 

CAFE impact for vehicle manufacturers. 50 FR 27172 (July 1, 1985). EPA defined this 

significant CAFE impact as any change or group of changes that has at least a one tenth of a mile 

per gallon impact on CAFE results. Id. at 27173. EPA also concluded in this proceeding that no 

adjustments would be provided for changes that removed the manufacturer’s ability to take 

advantage of flexibilities in the test procedure and derive increases in measured fuel economy 

values which were not the result of design improvements or marketing shifts, and which would 

not result in any improvement in real world fuel economy. EPA likewise concluded that test 

procedure changes that provided manufacturers with an improved ability to achieve increases in 

measured fuel economy based on real world fuel economy improvements also would not warrant 

a CAFE adjustment. Id. at 27172, 27174, 27183. EPA adopted retroactive adjustments that had 

the effect of increasing measured fuel economy (to offset test procedure changes that reduced the 

 issue. This discussion generally refers to procedures for measuring fuel economy for purposes of convenience, but 

the same analysis applies whether a measurement or calculation procedure is involved. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 239 of 770

measured fuel economy level) but declined to apply retroactive adjustments that reduced fuel 

economy. 

The D.C. Circuit reviewed two of EPA’s decisions on CAFE test procedure adjustments. 

Center for Auto Safety et al. v. Thomas, 806 F.2d 1071 (1986). First, the Court rejected EPA’s 

decision to apply only positive retroactive adjustments, as the appropriateness of an adjustment 

did not depend on whether it increased or decreased measured fuel economy results. Second, the 

Court upheld EPA’s decision to not apply any adjustment for the change in the test setting for 

road load power. The 1975 test procedure provided a default setting for road load power, as well 

as an optional, alternative method that allowed a manufacturer to develop an alternative road 

load power setting. The road load power setting affected the amount of work that the engine had 

to perform during the test, hence it affected the amount of fuel consumed during the test and the 

measured fuel economy. EPA changed the test procedure by replacing the alternative method in 

the 1975 procedure with a new alternative coast down procedure. Both the original and the 

replacement alternative procedures were designed to allow manufacturers to obtain the benefit of 

vehicle changes, such as changes in aerodynamic design, that improved real world fuel economy 

by reducing the amount of work that the engine needed to perform to move the vehicle. The 

Center for Auto Safety (CAS) argued that EPA was required to provide a test procedure 

adjustment for the new alternative coast down procedure as it increased measured fuel economy 

compared to the values measured for the 1975 fleet. In 1975, almost no manufacturers made use 

of the then available alternative method, while in later years many manufacturers made use of the 

option once it was changed to the coast down procedure. CAS argued this amounted to a change 

in test procedure that did not achieve comparable results, and therefore required a test procedure 

adjustment. CAS did not contest that the coast down method and the prior alternative method 

achieved comparable results. 

The D.C. Circuit rejected CAS’ arguments, stating that: 

The critical fact is that a procedure that credited reductions in a vehicle’s road 

load power requirements achieved through improved aerodynamic design was available 

for MY1975 testing, and those manufacturers, however few in number, that found it 

advantageous to do so, employed that procedure. The manifold intake procedure 

subsequently became obsolete for other reasons, but its basic function, to measure real 

improvements in fuel economy through more aerodynamically efficient designs, lived on 

in the form of the coast down technique for measuring those aerodynamic improvements. 

We credit the EPA's finding that increases in measured fuel economy because of the 

lower road load settings obtainable under the coast down method, were increases "likely 

to be observed on the road," and were not "unrepresentative artifact[s] of the 

dynamometer test procedure." Such real improvements are exactly what Congress meant 

to measure when it afforded the EPA flexibility to change testing and calculating 

procedures. We agree with the EPA that no retroactive adjustment need be made on 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 240 of 770

account of the coast down technique. Center for Auto Safety et al v. EPA, 806 F.2d 

1071, 1077 (D.C. Cir. 1986) 

Some years later, in 1996, EPA adopted a variety of test procedure changes as part of 

updating the emissions test procedures to better reflect real world operation and conditions. 61 

Fed. Reg. 54852 (October 22, 1996). EPA adopted new test procedures to supplement the FTP, 

as well as modifications to the FTP itself. For example, EPA adopted a new supplemental test 

procedure specifically to address the impact of air conditioner use on exhaust emissions. Since 

this new test directly addressed the impact of A/C use on emissions, EPA removed the specified 

A/C horsepower adjustment that had been in the FTP since 1975. Id. at 54864, 54873. Later 

EPA determined that there was no need for CAFE adjustments for the overall set of test 

procedures changes to the FTP, as the net effect of the changes was no significant change in 

CAFE results. 

As evidenced by this regulatory history, EPA’s traditional approach is to consider the 

impact of potential test procedure changes on CAFE results for passenger automobiles and 

determine if a CAFE adjustment factor is warranted to meet the requirement that the test 

procedure produce results comparable to the 1975 test procedure. This involves evaluating the 

magnitude of the impact on measured fuel economy results. It also involves evaluating whether 

the change in measured fuel economy reflects real word fuel economy impacts from changes in 

technology or design, or whether it is an artifact of the test procedure or test procedure 

flexibilities such that the change in measured fuel economy does not reflect a real world fuel 

economy impact. 

In this case, allowing credits for improvements in air conditioner efficiency and off-cycle 

efficiency for passenger cars would lead to an increase (i.e., improvement) in the fuel economy 

results for the vehicle model. The impact on fuel economy and CAFE results clearly could be 

greater than one tenth of a mile per gallon (the level that EPA has previously indicated as having 

a substantial impact). The increase in fuel economy results would reflect real world 

improvements in fuel economy and not changes that are just artifacts of the test procedure or 

changes that come from closing a loophole or removing a flexibility in the current test procedure. 

However, these changes in procedure would not have the “critical fact” that the CAS Court relied 

upon - the existence of a 1975 test provision that was designed to account for the same kind of 

fuel economy improvements from changes in A/C or off-cycle efficiency. Under EPA’s 

traditional approach, these changes would appear to have a significant impact on CAFE results, 

would reflect real world changes in fuel economy, but would not have a comparable precedent in 

the 1975 test procedure addressing the impact of these technology changes on fuel economy. 

EPA’s traditional approach would be expected to lead to a CAFE adjustment factor for passenger 

cars to account for the impact of these changes. 

However, EPA is considering whether a change in approach is appropriate based on the 

existence of similar EPA provisions for the greenhouse gas emissions procedures and standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 241 of 770

In the past, EPA has determined whether a CAFE adjustment factor for passenger cars would be 

appropriate in a context where manufacturers are subject to a CAFE standard under EPCA and 

there is no parallel greenhouse gas standard under the CAA. That is not the case here, as 

MY2017-2025 passenger cars will be subject to both CAFE and greenhouse gas standards. As 

discussed elsewhere in this Notice, there is a close and direct relationship between the 

technology to improve fuel economy and the technology to reduce emissions of CO2. The 

agencies’ joint rulemaking builds upon this technological relationship. As such, EPA is 

considering whether it is appropriate to consider the impact of a CAFE procedure change in this 

broader context standard. 

The term “comparable results” is not defined in section 32904(c), and the legislative 

history indicates that it is intended to address changes in procedure that result in a substantial 

change in the average fuel economy standard. As explained above, EPA has considered a 

change of one-tenth of a mile per gallon as having a substantial impact, based in part on the one 

tenth of a mile per gallon rounding convention in the statute for CAFE calculations. 48 FR 

56526, 56528 fn.14 (December 21, 1983). A change in the procedure that changes fuel economy 

results to this or a larger degree has the effect of changing the stringency of the CAFE standard, 

either making it more or less stringent. A change in stringency of the standard changes the 

burden on the manufacturers, as well as the fuel savings and other benefits to society expected 

from the standard. A CAFE adjustment factor is designed to account for these impacts. 

Here, however, there is a companion EPA standard for greenhouse gas emissions. In this 

case, the changes would have an impact on the fuel economy results and therefore the stringency 

of the CAFE standard, but would not appear to have a real world impact on the burden placed on 

the manufacturers, as the provisions would be the same as provisions in EPA’s greenhouse gas 

standards. Similarly it would not appear to have a real world impact on the fuel savings and 

other benefits of the National Program which would remain identical. If that is the case, then it 

would appear reasonable to interpret section 32904(c) in these circumstances as not restricting 

these changes in procedure for passenger automobiles. The fuel economy results would be 

considered comparable results to the 1975 procedure as there would not be a substantial impact 

on real world CAFE stringency and benefits, given the changes in procedure are the same as 

provisions in EPA’s companion greenhouse gas procedures and standards. EPA invites 

comment on this approach to interpreting section 32904(c), as well as the view that this would 

not have a substantial impact on either the burden on manufacturers or the benefits of the 

National Program. 

An alternative interpretation has also been brought to EPA’s attention. Under this 

interpretation, the change in procedure would be considered within EPA’s broad discretion to 

prescribe reasonable testing and calculation procedures, as these changes reflect real world 

improvements in design and accompanying real world improvements in fuel economy. The 

reference to the 1975 procedures in section 32904(c) would not be seen as a codification of any 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 242 of 770

specific procedures or fuel economy improvement technologies, but instead is best viewed as a 

historic reference point. The changes in procedure would reflect real world fuel economy 

improvements and increase harmonization with EPA’s greenhouse gas program. Since the 

changes in procedure have an impact on fuel economy results and could have an impact on the 

stringency of the CAFE standard, EPA could consider two different approaches to offsetting the 

change in stringency. In one approach EPA could maintain the stringency of the 2-cycle (FTP 

and HFET) CAFE standard by adopting a corresponding adjustment factor, ensuring that the 

stringency in the CAFE standard was not substantially changed by the change in procedure. An 

alternative would be for NHTSA to maintain the stringency of the 2-cycle CAFE standard by 

increasing that standard’s stringency to offset any reduction in stringency associated with 

changes that increase fuel economy values. Under this interpretation, this would maintain the 

level of stringency of the 2-cycle CAFE standard that would be adopted for passenger cars 

absent the changes in procedure. As with the approach discussed above, this alternative 

interpretation would be a major change from EPA’s past interpretation and practice. In this joint 

rulemaking the alternative interpretation would apply to changes in procedure that are the same 

as the companion EPA greenhouse gas program. However, that would not be an important 

element in this alternative interpretation, which would apply irrespective of the similarity with 

EPA’s greenhouse gas procedures and standards. EPA invites comment on this alternative 

interpretation. 

The discussion above focuses on the procedures for passenger cars, as section 32904(c) 

limits changes to the CAFE test and calculation procedures for these automobiles. There is no 

such limitation on the procedures for light-trucks. The credit provisions for improvements in air 

conditioner efficiency and off-cycle performance would apply to light-trucks as well. In 

addition, the limitation in section 32904(c) does not apply to the provisions for credits for use of 

hybrids in light-trucks, if certain criteria are met, as these provisions apply to light-trucks and not 

passenger automobiles. 

b. Implementation of this Approach 

As discussed in section IV, NHTSA would take these changes in procedure into account 

in setting the applicable CAFE standards for passenger cars and light-trucks. As in EPA’s 

greenhouse gas program, the allowance of AC credits for cars and trucks results in a more 

stringent CAFE standard than otherwise would apply (although in the CAFE program the AC 

credits would only be for AC efficiency improvements, since refrigerant improvements do not 

impact fuel economy). The allowance of off-cycle credits has been considered in setting the 

CAFE standards for passenger car and light-trucks and credits for hybrid use in light pick-up 

trucks has been considered in setting the CAFE standards for light-trucks, but does not result in 

any change in the standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 243 of 770

EPA further discusses the criteria and test procedures for determining AC credits, offcycle technology credits, and hybrid/performance-based credits for full size pickup trucks in 

Section III.C below. 

C. Additional Manufacturer Compliance Flexibilities 

1. Air Conditioning Related Credits 

A/C is virtually standard equipment in new cars and trucks today. Over 95% of the new 

cars and light trucks in the United States are equipped with A/C systems. Given the large 

number of vehicles with A/C in use in today’s light duty vehicle fleet, their impact on the amount 

of energy consumed and on the amount of refrigerant leakage that occurs due to their use is 

significant. 

EPA proposes that manufacturers be able to comply with their fleetwide average CO2 

standards described above by generating and using credits for improved (A/C) systems. Because 

such improved A/C technologies tend to be relatively inexpensive compared to other GHGreducing technologies, EPA expects that most manufacturers would choose to generate and use 

such A/C compliance credits as a part of their compliance demonstrations. For this reason, EPA 

has incorporated the projected costs of compliance with A/C related emission reductions into the 

overall cost analysis for the program. As discussed in section II.F, and III.B.10, EPA, in 

coordination with NHTSA, is also proposing that manufacturers be able to include fuel 

consumption reductions resulting from the use of A/C efficiency improvements in their CAFE 

compliance calculations. Manufacturers would generate “fuel consumption improvement 

values” essentially equivalent to EPA CO2 credits, for use in the CAFE program. The proposed 

changes to the CAFE program to incorporate A/C efficiency improvements are discussed below 

in section III.C.1.b. 

As in the 2012-2016 final rule, EPA is structuring the A/C provisions as optional credits 

for achieving compliance, not as separate standards. That is, unlike standards for N20 and CH4, 

there are no separate GHG standards related to AC related emissions. Instead, EPA provides 

manufacturers the option to generate A/C GHG emission reductions that could be used as part of 

their CO2 fleet average compliance demonstrations. As in the 2012-2016 final rule, EPA also 

included projections of A/C credit generation in determining the appropriate level of the 

proposed standards.227 

In the time since the analyses supporting the 2012-2016 FRM were completed, EPA has 

re-assessed its estimates of overall A/C emissions and the fraction of those emissions that might 

be controlled by technologies that are or will be available to manufacturers.228 As discussed in 

 227 See Section II.F above and Section IV below for more information on the use of such credits in the CAFE 

program. 

228 The A/C-related emission inventories presented in this paragraph are discussed in Chapter 4 of the Draft RIA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 244 of 770

more detail in Chapter 5 of the Joint TSD (see Section 5.1.3.2), the revised estimates remain very 

similar to those of the earlier rule. This includes “direct emission” -- the leakage of refrigerant 

during the vehicle’s useful life, as well as the subsequent leakage associated with maintenance 

and servicing, and with disposal at the end of the vehicle’s life. The refrigerant universally used 

today is HFC-134a with a global warming potential (GWP) of 1,430.229 Together these leakage 

emissions are equivalent to CO2 emissions of 13.8 g/mi for cars and 17.2 g/mi for trucks. (Due 

to the high GWP of HFC-134a, a small amount of leakage of the refrigerant has a much greater 

global warming impact than a similar amount of emissions of CO2 or other mobile source 

GHGs.) EPA also estimates that A/C efficiency-related emissions (also called “indirect” A/C 

emissions), account for CO2–equivalent emissions of 11.9 g/mi for cars and 17.1 g/mi for 

trucks.230 Chapter 5 of the Joint TSD (see Section 5.1.3.2) discusses the derivation of these 

estimates. 

EPA believes that it is important to address A/C leakage and efficiency emissions 

because the technologies that manufacturers would otherwise likely employ to reduce vehicle 

exhaust CO2 would have little or no impact on A/C-related emissions. Achieving the reductions 

from the proposed GHG standards in the most cost-effective ways is a primary goal of the 

program, and EPA believes that allowing manufacturers to comply by using credits generated 

from incorporating A/C GHG-reducing technologies is a key factor in meeting that goal.231 EPA 

accounts for these reductions in developing the standards (curve targets), and includes these 

emission reductions in estimating the achieved benefits of the program. See Section II.D above. 

Manufacturers can make very feasible improvements to their A/C systems to reduce 

leakage and increase efficiency. Manufacturers can reduce A/C leakage emissions by using 

components that tend to limit or eliminate refrigerant leakage. Also, manufacturers can largely 

eliminate the global warming impact of leakage emissions by adopting systems that use an 

alternative, low-GWP refrigerant, acceptable under EPA’s SNAP program, as discussed below, 

especially if systems are also designed to minimize leakage.232 Manufacturers can also increase 

the overall efficiency of the A/C system and thus reduce A/C-related CO2 emissions. This is 

because the A/C system contributes to increased CO2 emissions through the additional work 

 229 The global warming potentials (GWP) used in this rule are consistent with the 100-year time frame values in the 

2007 Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). At this time, the 1996 

IPCC Second Assessment Report (SAR) 100-year GWP values are used in the official U.S. greenhouse gas 

inventory submission to the United Nations Framework Convention on Climate Change (per the reporting 

requirements under that international convention, which were last updated in 2006) . 230 Indirect emissions are additional CO2 emitted due to the load of the A/C system on the engine. 231 The recent GHG standards for medium and heavy duty vehicles included separate standards for A/C leakage, 

rather than credits. EPA did so because the quantity of these leakage emissions is small relative to CO2 emissions 

from driving and moving freight, so that a credit does not create sufficient incentive to adopt leakage controls. 76 

FR at 57118; 75 FR at 74211. EPA also did not adopt standards to control A/C leakage from vocational vehicles, 

and did not adopt standards to control indirect emissions from any medium or heavy duty vehicle for reasons 

explained at 75 FR 74211 and 74212. 

232 Refrigerant emissions during service, maintenance, repair, and disposal are also addressed by the CAA Title VI 

stratospheric ozone program, as described below. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 245 of 770

required to operate the compressor, fans, and blowers. This additional work typically is provided 

through the engine’s crankshaft, and delivered via belt drive to the alternator (which provides 

electric energy for powering the fans and blowers) and the A/C compressor (which pressurizes 

the refrigerant during A/C operation). The additional fuel used to supply the power through the 

crankshaft necessary to operate the A/C system is converted into CO2 by the engine during 

combustion. This incremental CO2 produced from A/C operation can thus be reduced by 

increasing the overall efficiency of the vehicle’s A/C system, which in turn will reduce the 

additional load on the engine from A/C operation. 

As with the earlier GHG rule, EPA is proposing two separate credit approaches to 

address leakage reductions and efficiency improvements independently. A leakage reduction 

credit would take into account the various technologies that could be used to reduce the GHG 

impact of refrigerant leakage, including the use of an alternative refrigerant with a lower GWP. 

An efficiency improvement credit would account for the various types of hardware and control 

of that hardware available to increase the A/C system efficiency. To generate credits toward 

compliance with the fleet average CO2 standard, manufacturers would be required to attest to the 

durability of the leakage reduction and the efficiency improvement technologies over the full 

useful life of the vehicle. 

EPA believes that both reducing A/C system leakage and increasing A/C efficiency 

would be highly cost-effective and technologically feasible for light-duty vehicles in the 2017-

2025 timeframe. EPA proposes to maintain much of the existing framework for quantifying, 

generating, and using A/C Leakage Credits and Efficiency Credits. EPA expects that most 

manufacturers would choose to use these A/C credit provisions, although some may choose not 

to do so. Consistent with the 2012-2016 final rule, the proposed standard reflects this projected 

widespread penetration of A/C control technology. 

The following table summarizes the maximum credits the EPA proposes to make 

available in the overall A/C program. 

Table III-11 Summary of Maximum Per-Vehicle Credit for A/C (in g/mi) 

2012-2016 2017-2025

Direct Max Credit Car Leakage 6.3 6.3 

Direct Max Credit Car Alt Refrigerant 13.8 13.8 

Direct Max Credit Truck Leakage 7.8 7.8 

Direct Max Credit Truck Alt 

Refrigerant 17.2 17.2 

Indirect Max Credit Car 5.7 5 

Indirect Max Credit Truck 5.7 7.2 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 246 of 770

The next table shows the credits on a model year basis that EPA projects that 

manufacturers will generate on average (starting with the ending values from the 2012-2016 final 

rule). In the 2012-2016 rule, the total average car and total average truck credits accounted for 

the difference between the GHG and CAFE standards. 

Table III-12 Projected Average Credits 

 

Car 

Credit 

leakage 

avg 

Car 

Credit 

efficiency 

avg 

Total Car 

Credit 

avg 

Truck 

Credit 

leakage 

avg 

Truck 

Credit 

efficiency 

avg 

Total 

Truck 

Credit 

avg 

Fleet Avg 

Combined 

Car & 

Truck 

Credit 

2016 5.4 4.8 10.2 6.6 4.8 11.5 10.6 

2017 7.8 5.0 12.8 7.0 5.0 12.1 12.5 

2018 9.3 5.0 14.3 11.0 6.5 17.5 15.5 

2019 10.8 5.0 15.8 13.4 7.2 20.6 17.5 

2020 12.3 5.0 17.3 15.3 7.2 22.5 19.1 

2021 13.8 5.0 18.8 17.2 7.2 24.4 20.7 

2022 13.8 5.0 18.8 17.2 7.2 24.4 20.7 

2023 13.8 5.0 18.8 17.2 7.2 24.4 20.7 

2024 13.8 5.0 18.8 17.2 7.2 24.4 20.7 

2025 13.8 5.0 18.8 17.2 7.2 24.4 20.7 

The year-on-year progression of credits was determined as follows. The credits are 

assumed to increase starting from their MY 2016 value at a rate approximately commensurate 

with the increasing stringency of the 2017-2025 GHG standards, but never exceeding a 20% 

penetration rate increase in any given year, until the maximum credits are achieved by 2021 at 

the earliest. This 20%/per year limit is consistent with EPA’s expectation that manufacturers 

would be changing over to alternative refrigerants only at the time of complete vehicle redesign, 

which occurs about every 5 years. Given the significant number of credits and benefits of low 

GWP refrigerants, EPA believes that a total phase in of alternative refrigerants is likely by 2021 

(as shown in Table III-12 above). EPA requests comment on our assumptions for the phase-in 

rate for the alternative refrigerant. 

The progression of the average credits (relative to the maximum) also defines the relative 

year-on-year costs as described in Chapter 3 of the Joint TSD. The costs are proportioned by 

the ratio of the average credit in any given year to the maximum credit. This is nearly equivalent 

to proportioning costs to technology penetration rates as is done for all the other technologies. 

However because the maximum efficiency credits for cars and trucks have changed since the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 247 of 770

2012-2016 rule, proportioning to the credits provides a more realistic and smoother year-on-year 

sequencing of costs.233 

EPA seeks comment on all aspects of the A/C credit program, including changes from the 

current A/C credit program and the details in the Joint TSD. 

a. Air Conditioning Leakage (“Direct”) Emissions and Credits 

i. Quantifying A/C Leakage Credits for Today’s Refrigerant 

As previously discussed, EPA proposes to continue the existing leakage credit program, 

with minor modifications. Although in general EPA continues to prefer performance-based 

standards whenever possible, A/C leakage is very difficult to accurately measure in a laboratory 

test, due to the typical slowness of such leaks and the tendency of leakage to develop 

unexpectedly as vehicles age. At this time, no appropriate performance test for refrigerant 

leakage is available. Thus, as in the existing MYs 2012-2016 program, EPA would associate 

each available leakage-reduction technology with associated leakage credit value, which would 

be added together to quantify the overall system credit, up to the maximum available credit. 

EPA’s Leakage Credit method is drawn from the SAE J2727 method (HFC-134a Mobile Air 

Conditioning System Refrigerant Emission Chart, August 2008 version), which in turn was 

based on results from the cooperative “IMAC” study.234 EPA is proposing to incorporate several 

minor modifications that SAE is making to the J2727 method, but these do not affect the 

proposed credit values for the technologies. Chapter 5 of the joint TSD includes a full discussion 

of why EPA is proposing to continue the design-based “menu” approach to quantifying Leakage 

Credits, including definitions of each of the technologies associated with the values in the menu. 

In addition to the above “menu” for vehicles using the current high-GWP refrigerant 

(HFC-134a), EPA also proposes to continue to provide the leakage credit calculation for vehicles 

using an alternative, lower-GWP refrigerant. This provision was also a part of the MYs2012-

2016 rule. As with the earlier rule, the agency is including this provision because shifting to 

lower-GWP alternative refrigerants (such as HFO-1234yf, or CO2 as a refrigerant) would 

eliminate much of the climate-change concern about HFC-134a refrigerant leakage by reducing 

the direct climate impacts. Thus, the credit a manufacturer could generate is a function of the 

degree to which the GWP of an alternative refrigerant is less than that of the current refrigerant 

(HFC-134a). 

In the earlier GHG rule, a manufacturer using an alternative refrigerant would receive no 

credit for leakage-reduction technologies. At that time, EPA believed that from the perspective 

 233 In contrast, the technology penetration rates could have anomalous (and unrealistic) discontinuities that would be 

reflected in the cost progressions. This issue is only specific to A/C credits and costs and not to any other 

technology analysis in this proposal. 

234 [spell out and reference IMAC study.] 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 248 of 770

of primary climate effect, leakage of a very low GWP refrigerant is largely irrelevant. However, 

there is reason to believe that the need for repeated recharging (top-off) of A/C systems with 

what would likely be a more costly refrigerant could lead some consumers and/or repair facilities 

to recharge a system designed for use with HFO-1234yf with either HFC-134a or another high 

GWP refrigerant. Since, as discussed below, EPA believes that systems designed for HFO1234yf could operate feasibly, although not ideally, on HFC-134a, the need for repeated 

recharging in use could slow the transition away from the high-GWP refrigerant even if such 

recharging is not authorized under current regulations.235 

Thus, for alternative refrigerant systems, EPA is proposing to add to the existing credit 

calculation approach for alternative-refrigerant systems a provision that would provide a 

disincentive for manufacturers if systems designed to operate with HFO-1234yf incorporated 

fewer leakage-reduction technologies. A system with higher annual leakage could then be 

recharged with HFC-134a or another refrigerant with a GWP higher than that of HFO-1234yf. 

Some stakeholders have suggested that EPA take precautions to address the potential for HFC134a to replace HFO-1234yf in vehicles designed for use with the new refrigerant (see comment

and response section of EPA’s SNAP rule on HFO-1234yf, 76 FR 17509; March 29, 2011).236 

In EPA’s proposed disincentive provision, manufacturers would avoid some or all of a deduction 

in their Leakage Credit of about 2 g/mi by maintaining the use of low-leak components after a 

transition to an alternative refrigerant. 

ii. Issues Raised by a Potential Broad Transition to an Alternative Refrigerant 

As described previously, use of alternative, lower-GWP refrigerants for mobile use 

reduces the climate effects of leakage or release of refrigerant through the entire life-cycle of the 

A/C system. Because the impact of direct emissions of such refrigerants on climate is 

significantly less than for the current refrigerant HFC-134a, release of these refrigerants into the 

atmosphere through direct leakage, as well as release due to maintenance or vehicle scrappage, is 

predictably less of a concern than with the current refrigerant. As discussed above, there remains 

a concern, even with a low-GWP refrigerant, that some repairs may repeatedly replace the lowerGWP refrigerant from a leaky A/C system with the less-costly high-GWP refrigerant. 

For a number of years, the automotive industry has explored lower-GWP refrigerants and 

the systems required for them to operate effectively and efficiently, taking into account 

refrigerant costs, toxicity, flammability, environmental impacts, and A/C system costs, weight, 

complexity, and efficiency. European Union regulations require a transition to alternative 

refrigerants with a GWP of 150 or less for motor vehicle air conditioning. The European 

Union’s Directive on mobile air-conditioning systems (MAC Directive237) aims at reducing 

 235 See appendix D to 40 CFR part 82, subpart G 236 Regulations in Appendix D to Subpart G of 40 CFR part 82 prohibit topping off the refrigerant in a motor vehicle 

A/C system with a different refrigerant 

237 2006/40/EC 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 249 of 770

emissions of specific fluorinated greenhouse gases in the air-conditioning systems fitted to 

passenger cars (vehicles under EU category M1) and light commercial vehicles (EU category 

N1, class 1). 

The main objectives of the EU MAC Directive are: to control of leakage of fluorinated 

greenhouse gases with a global warming potential (GWP) higher than 150 used in this sector; 

and to prohibit by a specified date the use of higher GWP refrigerants in MACs. The MAC 

Directive is part of the European Union’s overall objectives to meet commitments made under 

the UNFCCC’s Kyoto Protocol. This transition starts with new car models in 2011 and 

continues with a complete transition to manufacturing all new cars with low GWP refrigerant by 

January 1, 2017. 

In recent years, the global industry has given serious attention to HFC-152a and to carbon 

dioxide (R-744) as alternative refrigerants. Work on additional alternatives continues. HFC152a (1,1-difluoroethane) has a GWP of 124 and CO2 has a GWP of 1.238 However, vehicle 

manufacturers have been reluctant to adopt these alternative refrigerants, for several reasons. In 

the case of HFC-152a, the refrigerant is flammable, listed as A2 by ASHRAE.239 Air 

conditioning systems using this refrigerant would require significant redesign or adding complex 

engineering strategies or devices in order to reduce flammability risks to acceptable levels (e.g., 

use of release valves or secondary-loop systems). Air conditioning systems using CO2 would 

also require significant redesign due to higher operating pressures required. In confidential 

meetings EPA has held with manufacturers since the MYs 2012-2016 final rule, no manufacturer 

has indicated to EPA that they are currently planning to introduce either of these alternative 

refrigerants in vehicles for the U.S. market. 

However, one alternative refrigerant has generated significant interest in the automobile 

manufacturing industry and it appears likely to be used broadly in the near future for this 

application. This refrigerant, called HFO-1234yf (2,3,3,3-tetrafluoropropene)240, has a GWP of 

4, an ODP of zero, is slightly flammable, and has been assigned an A2L flammability 

classification by ASHRAE. General Motors announced in 2010 its intent to begin manufacturing 

some car models using HFO-1234yf beginning with model year 2013.241 

 238 IPCC 4th Assessment Report 239 A wide range of concentrations has been reported for HFC–152a flammability where the gas poses a risk of 

ignition and fire (3.7%–20% by volume in air) (Wilson, 2002). EPA finalized a rule in 2008 listing HFC-152a as 

acceptable subject to use conditions in motor vehicle air-conditioning, one of these restricting refrigerant 

concentrations in the passenger compartment resulting from leaks above the lower flammability limit of 3.7% (see 

71 FR 33304; June 12, 2008). 

240 Chemical Abstracts Service Registry Number (CAS Reg. No.) 754-12-1 241 General Motors (2010), GM First to market Greenhouse Gas-friendly Air Conditioning Refrigerant in the U.S. 

July 23, 2010 press release. A copy can be found at: 

http://media.gm.com/content/media/us/en/news/news_detail.brand_gm.html/content/Pages/news/us/en/2010/July/07

23_refrigerant
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 250 of 770

The physical and thermodynamic properties of this refrigerant are similar enough to 

HFC-134a that auto manufacturers need to make relatively minor technological changes to their 

vehicle A/C systems in order to manufacture and market vehicles capable of using HFO-1234yf. 

Both compounds have similar boiling points and similar critical points -- boiling points of -29 °C 

for HFO-1234yf and -26 °C for HFC-134a and critical points242 of 95°C and 102°C respectively 

for HFO-1234yf and HFC-134a.243 The cooling capacity and coefficient of performance of 

HFO-1234yf is generally within 5% of that of HFC-134a.244 Although HFO-1234yf is 

flammable, it requires a high amount of energy to ignite (5,000 mJ to 10,000 mJ), has a low 

flame speed (1.5 cm/s), and is expected to have flammability risks that are not significantly 

different from those of HFC-134a or other refrigerants found acceptable subject to use conditions 

(76 FR 17494-17496, 17507; March 29, 2011). 

There are some drawbacks to the use of HFO-1234yf. Some technological changes are 

necessary to use HFO-1234yf, i.e., addition of an internal heat exchanger in the A/C system. In 

addition, the anticipated cost of HFO-1234yf is several times that of HFC-134a. At the time that 

EPA’s Significant New Alternatives Policy (SNAP) program issued its determination allowing 

the use of HFO-1234yf in motor vehicle A/C systems, the agency cited estimated costs of $40 to 

$60 per pound, and stated that this range was confirmed by an automobile manufacturer (76 FR 

17491; March 29, 2011) and a component supplier.245 By comparison, HFC-134a currently costs 

about $2 to $4 per pound.246 The higher cost of HFO-1234yf is largely because of limited 

global production capability at this time. However, because it is more complicated to produce 

the molecule for HFO-1234yf, it is unlikely that it will ever be as inexpensive as HFC-134a is 

currently. In Chapter 5 of the TSD (see Section 5.1.4), the EPA has accounted for this additional 

cost of both the refrigerant as well as the hardware upgrades. 

(1) Related EPA Actions to Date and Potential Actions Concerning 

Alternative Refrigerants 

EPA is addressing potential environmental and human health concerns of low-GWP 

alternative refrigerants through a number of actions. The SNAP program has issued final rules 

 242 Above the critical point, distinct liquid and gas phases do not exist. 

243 Dupont Frequently Asked Questions about OpteonTMyf Refrigerants: 

http://www2.dupont.com/Refrigerants/en_US/uses_apps/automotive_ac/SmartAutoAC/faqs.html#char ). The vapor 

pressure of the two refrigerants is within a few percentage points of each other in the normal range of temperatures 

for air conditioning (roughly 2% difference at 25 °C-- Dupont Frequently Asked Questions about OpteonTMyf 

Refrigerants 

244 HFO-1234yf Low GWP Refrigerant LCCP Analysis - presentation by Mary Koban, DuPont at SAE 2009 World 

Congress. Available at http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2008-0664-0205 

245 Automotive News, April 18,2011.21. 246 Ibid. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 251 of 770

regulating the use of HFC-152a and HFO-1234yf in order to reduce their potential risks (June 12, 

2008, 73 FR 33304; March 29, 2010, 76 FR 17488). The SNAP rule for HFC-152a allows its 

use in new motor vehicle A/C systems where proper engineering strategies and/or safety devices 

are incorporated into the system. The SNAP rules for both HFC-152a and HFO-1234yf require 

meeting safety requirements of the industry standard SAE J639. With both refrigerants, EPA 

expects that manufacturers conduct and keep on file failure mode and effect analysis for the 

motor vehicle A/C system, as stated in SAE J1739. EPA has also proposed a rule that would 

allow use of carbon dioxide as a refrigerant subject to use conditions for motor vehicle A/C 

systems (September 21, 2006; 71 FR 55140). EPA expects to finalize a rule for use of carbon 

dioxide in motor vehicle A/C systems in 2012, however we are not basing our alternative 

refrigerant analysis on the availability or feasibility of this specific refrigerant. 

Under Section 612(d) of the Clean Air Act, any person may petition EPA to add 

alternatives to or remove them from the list of acceptable substitutes for ozone depleting 

substances. The National Resource Defense Council (NRDC) submitted a petition on behalf of 

NRDC, the Institute for Governance & Sustainable Development (IGSD), and the Environmental 

Investigation Agency-US (EIA-US) to EPA under Clean Air Act Section 612(d), requesting that 

the Agency remove HFC-134a from the list of acceptable substitutes and add it to the list of 

unacceptable (prohibited) substitutes for motor vehicle A/C, among other uses.247 EPA has 

found this petition complete specifically for use of HFC-134a in new motor vehicle A/C systems 

for use in passenger cars and light duty vehicles. EPA intends to initiate a separate notice and 

comment rulemaking in response to this petition in the future. 

 

EPA has also addressed potential toxicity issues with HFO-1234yf through a significant 

new use rule (SNUR) under the Toxic Substances Control Act (TSCA) (October 27, 2010; 75 FR 

65987). Under the SNUR, manufacturers, importers and processors of substances subject to a 

SNUR must notify EPA at least 90 days before beginning any designated significant new use 

through a significant new use notice (SNUN). EPA has 90 days from the date of submission of a 

SNUN to decide whether the new use ``may present an unreasonable risk'' to human health or the 

environment. If the Agency does not determine that the new use ``may present an unreasonable 

risk,'' the submitter would be allowed to engage in the use, with or without certain restrictions. 

The significant new uses identified in the SNUR for HFO-1234yf are: 

(1) use other than as a refrigerant in motor vehicle air conditioning systems in new 

passenger cars and vehicles; 

(2) commercial use other than in new passenger cars and vehicles in which the charging 

of motor vehicle air conditioning systems with HFO-1234yf was done by the motor vehicle 

OEM; and 

 247 NRDC et al. Re: Petition to Remove HFC-134a from the List of Acceptable Substitutes under the Significant 

New Alternatives Policy Program (November 16, 2010) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 252 of 770

(3) distribution in commerce of products intended for use by a consumer for the purposes 

of servicing, maintenance and disposal involving HFO-1234yf.248 

In summary, the SNUR for HFO-1234yf allows its use as an A/C refrigerant for new 

passenger cars and vehicles, and found no significant toxicity issues with that use. 

One of the manufacturers of HFO-1234yf has petitioned EPA to exempt it from the 

definition of “volatile organic compound” (VOC) under CAA regulations (see 40 CFR 

51.100(s)) addressing the development of State Implementation Plans (SIPs) to attain and 

maintain the national ambient air quality standards. VOCs are a class of compounds that can 

contribute to ground level ozone, or smog, in the presence of sunlight. Some organic compounds 

do not react enough with sunlight to create significant amounts of smog. EPA has already 

determined that a number of compounds, including the current automotive refrigerant, HFC134a, are low enough in photochemical reactivity that they do not need to be regulated under 

SIPs. The manufacturer has provided information to EPA, showing that HFO-1234yf, although 

more reactive than HFC-134a, is still low enough in reactivity that it is not likely to contribute 

significantly to local air quality problems from ground-level ozone. EPA has issued a proposed 

rule, proposing to exempt HFO-1234yf from the definition of VOC for purposes of preparing 

State implementation plans (SIPs) to attain the national ambient air quality standards for ozone 

under Title I of the Clean Air Act (insert date, 2011; 76 FR XXXXX). 

Further, EPA has considered a peer-reviewed study by Luecken et al. (2010)249, in which, 

among other things, potential air quality impacts from generation of ground-level ozone were 

modeled using a regional-scale 3-dimensional atmospheric model. This study found that, if 

2,3,3,3-tetrafluoropropene (HFO-1234yf) was only emitted from automobiles and degraded in 

the atmosphere, the incremental amount of ozone formed was only 0.01% of total ozone formed 

during the simulation. Also, while the modeled concentrations of deposited trifluoroacetic acid, 

a product of atmospheric degradation, from the use of 2,3,3,3-tetrafluoropropene in automobiles 

were well below levels of concern for aquatic toxicity, its potential for long-term accumulation 

in water bodies is still somewhat uncertain. Thus, the additional information from this study 

shows that 2,3,3,3-tetrafluoropropene does produce ozone, but the amount will likely not have a 

significant impact on local air quality under current conditions, although some questions remain 

about usage trends and effects in the future. 

 248 The last of these significant new uses is intended to protect against potentially excessively high exposure levels 

that could occur if consumers attempt to service their own car’s A/C system. 

249 D. Luecken, R. Waterland, S. Papasavva, K. Taddonio, W. Hutzell, J. Rugh, and S. Andersen. Ozone and TFA 

Impacts in North America from Degradation of 2,3,3,3-Tetrafluoropropene (HFO-1234yf), A Potential Greenhouse 

Gas Replacement. Environ. Sci. Technol. 44, pp. 343-349. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 253 of 770

(2) Vehicle Technology Requirements for HFO-1234yf 

As described by vehicle manufacturers, A/C systems for use with HFO-1234yf would 

need a limited amount of additional hardware to maintain cooling efficiency compared to HFC134a. In particular, A/C systems would require a different internal heat exchanger to use HFO1234yf. Because HFO-1234yf would be less effective in A/C systems not designed for its use, 

and because EPA’s SNAP ruling allows only for its use in new vehicles, we expect that 

manufacturers will introduce cars using HFO-1234yf only during complete vehicle redesigns or 

when introducing new models.250 The same would be true for other alternative refrigerants that 

are potential candidates (e.g., HFC-152a). This need for complete vehicle redesign limits the 

pace of a transition from HFC-134a to alternative refrigerants. In meetings with the OEMs, the 

manufacturers have informed EPA that their vehicle manufacturing plants must also upgrade 

their refrigerant storage facilities and charging stations on the assembly line. During the 

transition period between the refrigerants, some of these assembly lines may need to have the 

infrastructure for both refrigerants simultaneously since many lines produce multiple vehicle 

models. Moreover, many of these plants may not have the facilities, nor the space for two 

refrigerant infrastructures, thus likely further increasing necessary lead time. EPA took these 

factors into account in estimating the penetration of alternative refrigerant, and the resulting 

estimated average credit rate shown in Table III-12. 

Switching to alternative refrigerants in the U.S. market continues to be attractive to 

automobile manufacturers because vehicles with low GWP refrigerant would qualify for the 

maximum leakage credit. This compliance option is greatly desired or in some cases may be 

needed by some manufacturers for compliance with GHG emission standards as the best 

approach for their fleet in 2017. 

(3) Alternative Refrigerant Supply 

EPA is aware that another practical factor affecting the rate of transition to alternative 

refrigerants is their supply. In particular, for the alternative of greatest interest to automobile 

manufacturers, HFO-1234yf, there are currently two major producers of HFO-1234yf, DuPont 

and Honeywell, that are licensed to produce this chemical for the U.S. market. Currently, both 

companies are providing most of their production from a single overseas facility, as well as some 

production from small pilot plants. The initial emphasis for these companies is to provide HFO1234yf to the European market, where regulatory requirements for low GWP refrigerants are 

already in effect. These same companies have indicated that they plan to construct a new facility 

in the 2014 timeframe and intend to issue a formal announcement about that facility close to the 

 250 Some suppliers and manufacturers have informed us that some vehicles may be able to upgrade A/C systems 

during a refresh of an existing model (between redesign years). However, this is highly dependent on the vehicle, 

space constraints behind the dashboard, and the manufacturing plant, so an upgrade may be feasible for only a select 

few models. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 254 of 770

end of this calendar year. This facility should be designed to provide sufficient production 

volume for a worldwide market in coming years. EPA expects that the speed of the transition in 

the U.S. will depend on how rapidly chemical manufacturers are able to provide the amount of 

alternative refrigerant supply to automobile manufacturers that would allow most or all vehicles 

sold in the U.S. to be built using alternative refrigerant. 

One manufacturer (GM) has announced its intention to begin introducing vehicle models 

using HFO-1234yf as early as MY 2013.251 EPA is not aware of other companies that have 

made a public commitment about early adoption of the new refrigerant. As described above, we 

expect that in most cases a change-over to systems designed for HFO-1234yf will be limited to 

vehicle product redesign cycles, typically about every 5 years. Because of this, the pace of 

introduction is likely to be limited to about 20% of a manufacturer’s fleet per year. In addition, 

the current uncertainty about the availability of supply of the new refrigerant in the early years of 

introduction into vehicles in the U.S. vehicles, also discussed above, means that the change-over 

may not occur at every vehicle redesign point. Thus, even with the announced intention of this 

one manufacturer to begin early introduction of the new refrigerant, EPA’s analysis of the 

overall industry trend will assume minimal penetration of the U.S. vehicle market before MY 

2017. 

Table III-12 shows that, starting from MY 2017, virtually all of the expected increase in 

generated credits would be due to a gradual increase in penetration of HFO-1234yf. In earlier 

model years, EPA attributes the expected increase in Leakage Credits to improvements in lowleak technologies. 

 

(4) Projected Potential Scenarios for Auto Industry Changeover to HFO1234yf 

As discussed above, EPA is planning on issuing a proposed SNAP rulemaking in the 

future requesting comment on whether to move HFC-134a from the list of acceptable substitutes 

to the list of unacceptable (prohibited) substitutes. However, the agency has not determined the 

specific content of that proposal, and the results of any final action are unknowable at this time. 

EPA recognizes that a major element of that proposal will be the evaluation of the time needed 

for a transition for automobile manufacturers away from HFC-134a. Thus, there could be 

multiple scenarios for the timing of a transition considered in that future proposed rulemaking. 

Should EPA finalize a rule under the SNAP program that prohibits the use of HFC-134a in new 

vehicles, the agency plans to evaluate the impacts of such a SNAP rule to determine whether it 

 251 General Motors Press Release, July 23, 2010. “GM First to Market Greenhouse Gas-Friendly Air Conditioning 

Refrigerant in U.S. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 255 of 770

would be necessary to consider revisions to the availability and use of the compliance credit for 

MY 2017-2025. 

For purposes of this proposed GHG rule, EPA is assuming the current status, where there 

are no U.S. regulatory requirements for manufacturers to eliminate the use of HFC-134a for 

newly manufactured vehicles. Thus, the agency would expect that the market penetration of 

alternatives -- presumably HFO-1234yf--will proceed based on supply and demand and the 

strong incentives in this proposal. Given the combination of a clear interest of manufacturers in 

switching to an alternative refrigerant, such as HFO-1234yf, and the interest of the 

manufacturers of the refrigerant to expand their capacity to produce and market the refrigerant, 

EPA believes it is reasonable to project that supply would be adequate to support the orderly rate 

of transition to an alternative refrigerant described above. EPA recognizes that some automobile 

manufacturers will likely use HFO-1234yf in the next several years. For example (as mentioned 

earlier) at least one U.S. manufacturer already has plans to introduce models using HFO-1234yf 

beginning in MY 2013. However, it is not certain how widespread the transition to a new 

refrigerant will be in the U.S., nor how quickly that transition will occur in the absence of 

requirements or strong incentives. 

There are other situations that could lead to an overall fleet changeover from HFC-134a 

to alternative refrigerants. For example, the governments of the U.S., Canada, and Mexico have 

proposed to the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer

that production of HFCs be reduced over time. The North American Proposal to amend the 

Montreal Protocol allows the global community to make near-term progress on climate change 

by addressing this group of potent greenhouse gases. The proposal, would result in lower 

emissions in developed and developing countries through the phase-down of the production and 

consumption of HFCs. If an amendment were adopted by the Parties, then switching from HFC134a to an alternative refrigerant such as HFO-1234yf will likely be an attractive option for 

decreasing the overall use and emissions of high-GWP HFCs. Options for reductions would 

include transition from HFCs, moving from high to lower GWP HFCs, and reducing charge 

sizes. 

EPA requests comment on the implications for the program of the refrigerant transition 

scenario assumed for the analyses supporting this NPRM; that is, where there are no U.S. 

regulatory requirements for manufacturers to eliminate the use of HFC-134a for newly 

manufactured vehicles. EPA requests comment on factors that may affect the industry demand 

for refrigerant and its U.S. and international supply. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 256 of 770

b. Air Conditioning Efficiency (“Indirect”) Emissions and Credits 

In addition to the A/C leakage credits discussed above, EPA is proposing credits for 

improving the efficiency of – and thus reducing the CO2 emissions from -- A/C systems. 

Manufacturers have available a number of very cost-effective technology options that can reduce 

these A/C-related CO2 emissions, which EPA estimates be on average 11.9 g/mi for cars and 

17.1 for trucks nationally.252 When manufacturers incorporate these technologies into vehicles 

that clearly result in reduced CO2 emissions, EPA believes that A/C Efficiency Credits are 

warranted. Based on extensive industry testing and EPA analysis, the agency proposes that 

eligible efficiency-improving technologies be limited to up to a maximum 42% improvement,253

which translates into a maximum credit value of 5.0 g/mi for cars and 7.2 g/mi for trucks. 

As discussed further in Section III.C.1.b.iii below, under its EPCA authority, EPA is 

proposing, in coordination with NHTSA, to allow manufacturers to generate fuel consumption 

improvement values for purposes of CAFE compliance based on the use of A/C efficiency 

technologies. EPA is proposing that both the A/C efficiency credits under EPA’s GHG program 

and the A/C efficiency fuel consumption improvement values under the CAFE program would 

be based on the same methodologies and test procedures, as further described below. 

i. Quantifying A/C Efficiency Credits 

As in the 2012-2016 rule, EPA proposes that A/C Efficiency Credits be calculated based 

on the efficiency-improving technologies included in the vehicle. The design-based approach, 

associating each technology with a specific credit value, is a surrogate for a using a performance 

test to determine credit values. Although EPA generally prefers measuring actual emissions 

performance to a design-based approach, measuring small differences in A/C CO2 emissions is 

very difficult, and an accurate test procedure capable of determining such differences is not 

currently available. 

However, in conjunction with the (menu or) design-based calculation, EPA continues to 

believe it is important to verify that the technologies installed to generate credits are improving 

the efficiency of the A/C system. In the 2012-2016 rule, EPA required that manufacturers 

submit data from an A/C CO2 Idle Test as a prerequisite to accessing the design-based credit 

 252 EPA derived these estimates using a sophisticated new vehicle simulation tool that EPA has developed since the 

completion of the MYs 2012-2016 final rule. Although results are very similar to those in the earlier rule, EPA 

believes they represent more accurate estimates. Chapter 5 of the Joint TSD presents a detailed discussion of the 

development of the simulation tool and the resulting emissions estimates. 

253 The cooperative IMAC study mentioned above concluded that these emissions can be reduced by as much as 

40% through the use of these technologies. In addition, EPA has concluded that improvements in the control 

software for the A/C system, including more precise control of such components as the radiator fan and compressor, 

can add another 2% to the emission reductions. In total, EPA believes that a total maximum improvement of 42% is 

available for A/C systems. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 257 of 770

calculation method. Beginning in MY 2014, manufacturers wishing to generate the A/C 

Efficiency Credits need to meet a CO2 emissions threshold on the Idle Test. 

As manufacturers have begun to evaluate the Idle Test requirements, they have made 

EPA aware of an issue with the test’s original design. In the MYs 2012-2016 rule, EPA received 

comments that the Idle Test did not properly capture the efficiency impact of some of the 

technologies on the Leakage Credit menu list. EPA also received comments that idle operation 

is not typical of real-world driving. EPA acknowledges that both of these comments have merit. 

At the time of the MY 2012-2016 rule, we expected that many manufacturers would be able to 

demonstrate improved efficiency with just a few technologies (e.g. forced cabin air recirculation 

or electronically-controlled, variable-displacement compressors), but under idle conditions, 

testing by manufacturers has shown that the benefits are difficult to quantify. EPA continues to 

believe that there are some technologies that do have their effectiveness demonstrated during idle 

and that idle is a significant fraction of real-world operation. Also, recent data provided by the 

industry shows that some vehicles that incorporate higher-efficiency A/C technologies are not 

able to consistently reach the CO2 threshold on the current Idle Test. The available data also 

indicates that meeting the threshold tends to be more difficult for vehicles with smallerdisplacement engines. 

Although EPA believes some adjustments in the Idle Test are warranted and is proposing 

such adjustments, the agency also believes that a reasonable degree of verification is still 

needed, to demonstrate that that A/C efficiency-improving technologies for which manufacturers 

are basing credits are indeed implemented properly and are reducing A/C-related fuel 

consumption. EPA continues to believe that the Idle Test is a reasonable measure of some A/Crelated CO2 emissions as there is significant real-world driving activity at idle, and it 

significantly exercises a number of the A/C technologies from the menu. Therefore, EPA 

proposes to maintain the use of Idle Test as a prerequisite for generating Efficiency Credits. 

However, in order to provide reasonable verification while encouraging the development and use 

of efficiency-improving technologies, EPA proposes to revise the CO2 threshold. Specifically, 

the agency proposes to scale the magnitude of the threshold to the displacement of the vehicle’s 

engine, with smaller-displacement engines having a higher “grams per minute” threshold than 

larger-displacement engines. Thus, for vehicles with smaller-displacement engines, the 

threshold would be less stringent. The revised threshold would apply beginning with MY 2017, 

thus replacing at that point the flat gram per minute threshold that applies for MYs 2014, 2015, 

and 2016, with the option for manufacturers to use the revised threshold as early as MY 2014.254 

In addition to revising the threshold, EPA proposes to relax the average ambient temperature and 

humidity requirements, due to the difficulty in controlling the year-round humidity in test cells 

designed for FTP testing. EPA requests comment on the proposed continued use of the Idle Test 

 254 The Joint TSD describes the available data relevant to testing on the Idle Test and the design of the revised 

threshold in more detail. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 258 of 770

as a tool to validate the function of a vehicle’s A/C efficiency-improving technologies, and on 

the revised CO2 threshold and ambient requirements. 

 In addition to proposing the revised Idle Test, EPA proposes that manufacturers have the 

option of using a new transient A/C test in place of the Idle Test, beginning as early as MY 2014. 

In the year since the previous GHG rule was finalized, EPA, CARB, and a consortium of auto 

manufacturers (USCAR) have developed a new transient test procedure that can measure the 

effect of the operation of the overall A/C system on CO2 emissions and fuel economy. The new 

test, known as “AC17” (for Air Conditioning, 2017), is essentially a combination of the existing 

SC03 and HWFET test procedures, which, with the proposed modifications, would exercise the 

A/C system (and new technologies) under conditions representing typical U.S. driving and 

climate. 

Some aspects of the AC17 test are still being developed and improved, but the basic 

procedure is sufficiently complete for EPA to propose it as an alternative to the Idle Test as a 

prerequisite for generating Efficiency Credits. To demonstrate that a vehicle’s A/C system is 

delivering the efficiency benefits of the new technologies, manufacturers would run the AC17 

test procedure on a vehicle that incorporates the new technologies, with the A/C system off and 

then on, and then compare that result to the result from a previous model year or baseline vehicle 

with similar vehicle characteristics, except that it does not have the new technologies. If the test 

result with the new technology demonstrated an emission reduction which is greater than or 

equal to the menu-based credit potential of those technologies, the manufacturer would generate 

the appropriate credit based on the menu. However, if the test result did not demonstrate the full 

menu-based potential of the technology, partial credit could still be earned, in proportion to how 

far away the result was from the mean value. 

The AC17 test requires a significant amount of time for each test (nearly 4 hours) and 

must be run in expensive SC03-capable facilities. EPA believes that the purpose of the test – to 

validate that A/C CO2 reductions are indeed occurring and hence that the manufacturer is eligible 

for Efficiency Credits – would be met if the manufacturer performs the new test on a limited 

subset of test vehicles. EPA proposes that manufacturers wishing to use the AC17 test to 

validate a vehicle’s A/C technology be required to test one vehicle from each platform. For this 

purpose, “platform” would be defined as a group of vehicles with common body floorplan, 

chassis, engine, and transmission.255 EPA requests comment on the new test and its use. EPA 

requests comment on the AC17 test and its proposed use as an optional method of validating the 

function of A/C efficiency-improving technologies and in generating A/C Efficiency Credits. 

EPA also seeks comment on eliminating the idle test in favor of using only the AC17 test for 

A/C efficiency credits. 

 255 A single platform may encompass a larger group of fuel economy label classes or car lines (40 CFR §600.002-

93), such as passenger cars, compact utility vehicles, and station wagons The specific vehicle selection 

requirements for manufacturers using this testing are laid out in the regulations associated with this NPRM. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 259 of 770

ii. Potential Future Use of the New A/C Test for Credit Quantification 

As described above, EPA is proposing to use the AC17 test as a prerequisite to generating 

A/C Efficiency Credits. The test is well-suited for this purpose since it can accurately measure 

the difference in the increased CO2 emissions that occur when the A/C system is turned on vs. 

when it is turned off. When the test is done for both a new vehicle and a comparative vehicle 

with less-effective efficiency-improving technologies, this difference in the “off-on” A/C CO2

increase between the two vehicles is enough to show that the vehicle’s A/C technologies are 

generally performing well, relative to an average vehicle. 

However, the test is limited in its ability to accurately quantify the amount of credit that 

would be warranted by an improved A/C systems on a particular vehicle. This is because to 

determine an absolute – rather than a relative – difference in CO2 effect for an individual vehicle 

design would require knowledge of the A/C system CO2 performance for that exact vehicle, but 

without those specific A/C efficiency improvements installed. This would be difficult and 

costly, since two test vehicles (or a single vehicle with the components removed and replaced) 

would be necessary. Even then, the inherent variablility between such tests on such a small 

sample in such an approach might not be statistically robust enough to confidently determine a 

small absolute CO2 emissions impact between the two vehicles. 

In Chapter 5 of the Joint TSD, EPA discusses a potential solution to this dilemma, 

including comparing the efficiencies of individual components outside the vehicles, through 

“bench” testing of components supplemented by vehicle simulation modeling to relate that 

component’s performance to the complete vehicle. EPA believes that such approaches may 

eventually allow the AC17 test to be used as part of a more complicated series of test procedures 

and simulations, to accurately quantify the A/C CO2 effect of an individual vehicle’s A/C 

technology package, but EPA believes that this issue is beyond the scope of this proposed rule. 

However, the agency does encourage comment, including test data, on how the AC17 test could 

be enhanced in order to measure the individual and collective impact of different A/C efficiencyimproving technologies on individual vehicle designs and thus to quantify Efficiency Credits. 

EPA also seeks comment on a more complex procedure, also discussed in Chapter 5 of the Joint 

TSD, that uses a combination of bench testing of components, vehicle simulation models, and 

dynamometer testing to quantify Efficiency Credits. 

iii. A/C Efficiency Fuel Consumption Improvement Values in the CAFE Program 

As described in section II.F, EPA is proposing to continue to use a technology design 

“menu” approach for quantifying A/C efficiency credits, and EPA is proposing, in coordination 

with NHTSA, for the first time under its EPCA authority to allow manufacturers to use this same 

technology design “menu” to generate fuel consumption improvement values for purposes of 

CAFE compliance based on the use of A/C efficiency technologies. For CAFE, the design 

approach would assign a fuel consumption improvement value to each efficiency-improving air 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 260 of 770

conditioning technology that the manufacturer incorporates in a vehicle model. The sum of these 

values for all technologies would be the amount of fuel consumption reduction achieved by that 

vehicle, up to a maximum of 0.000563 gallons/mi fuel consumption improvement value for cars 

and a 0.000586 gallons/mi fuel consumption improvement value for a truck. The table below 

presents the proposed CAFE fuel consumption improvement values for each of the efficiencyreducing air conditioning technologies considered in this proposal. More detail is provided on 

the calculation of indirect A/C CAFE fuel consumption improvement values in chapter 5 of the 

joint TSD. EPA is proposing very specific definitions of each of the technologies in the table 

below which are discussed in Chapter 5 of the draft joint TSD to ensure that the air conditioner 

technology used by manufacturers seeking these values corresponds with the technology used to 

derive the fuel consumption improvement values. EPA is also proposing thresholds based on 

CO2 performance testing for manufacturer wanting to generate CO2 credits. Manufacturers 

would also be required to meet the performance thresholds, which are based on CO2

performance, to be eligible to generate fuel consumption improvement values for CAFE. 

Table III-13 Proposed Fuel Consumption Improvement Values for A/C Efficiency 

Technology Description

Estimated 

reduction in A/C 

CO2 Emissions 

and Fuel 

Consumption

Car A/C 

Efficiency Fuel 

Consumption 

Improvement 

(gallon / mi)

Truck A/C 

Efficiency Fuel 

Consumption 

Improvement 

(gallon / mi)

Reduced reheat, with externallycontrolled, variable-displacement 

compressor 

30% 0.000169 0.000248 

Reduced reheat, with externallycontrolled, fixed-displacement or 

pneumatic variable displacement 

compressor 

20% 0.000113 0.000158 

Default to recirculated air with closedloop control of the air supply (sensor 

feedback to control interior air quality) 

whenever the outside ambient 

temperature is 75 °F or higher (although 

deviations from this temperature are 

allowed based on additional analysis) 

30% 0.000169 0.000248 

Default to recirculated air with openloop control of the air supply (no sensor 

feedback) whenever the outside ambient 

temperature is 75 °F or higher (although 

deviations from this temperature are 

allowed if accompanied by an 

engineering analysis) 

20% 0.000113 0.000158 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 261 of 770

Blower motor control which limit 

wasted electrical energy (e.g. pulsewidth 

modulated power controller) 

15% 0.000090 0.000124 

Internal heat exchanger (or suction line 

heat exchanger) 20% 0.000113 0.000158 

Improved evaporators and condensers 

(with engineering analysis on each 

component indicating a COP 

improvement greater than 10%, when 

compared to previous design) 

20% 0.000113 0.000158 

Oil Separator (internal or external to 

compressor) 10% 0.000090 0.000079 

2. Incentive for Electric Vehicles, Plug-in Hybrid Electric Vehicles, and Fuel Cell 

Vehicles 

a. Rationale for Temporary Regulatory Incentives for Electric Vehicles, Plug-in 

Hybrid Electric Vehicles, and Fuel Cell Vehicles 

EPA has identified two vehicle powertrain-fuel pathways that have the future potential to 

transform the light-duty vehicle sector by achieving near-zero greenhouse gas (GHG) emissions 

and oil consumption in the longer term, but which face major near-term market barriers such as 

vehicle cost, fuel cost, the development of low-GHG fuel production and distribution 

infrastructure, and/or consumer acceptance. 

 Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) which would 

operate exclusively or frequently on grid electricity that could be produced from very 

low GHG emission feedstocks or processes. 

 Fuel cell vehicles (FCVs) which would operate on hydrogen that could be produced 

from very low GHG emissions feedstocks or processes. 

As in the 2012-2016 rule, EPA is proposing temporary regulatory incentives for the 

commercialization of EVs, PHEVs, and FCVs. EPA believes that these advanced technologies 

represent potential game-changers with respect to control of transportation GHG emissions as 

they can combine an efficient vehicle propulsion system with the potential to use motor fuels 

produced from low-GHG emissions feedstocks or from fossil feedstocks with carbon capture 

and sequestration. EPA recognizes that the use of EVs, PHEVs, and FCVs in the 2017-2025 

timeframe, in conjunction with the incentives, will decrease the overall GHG emissions 

reductions associated with the program as the upstream emissions associated with the generation 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 262 of 770

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

and distribution of gasoline. EPA accounts for this difference in projections of the overall 

program’s impacts and benefits (see Section III.F).256 

The tailpipe GHG emissions from EVs, PHEVs operated on grid electricity, and 

hydrogen-fueled FCVs are zero, and traditionally the emissions of the vehicle itself are all that 

EPA takes into account for purposes of compliance with standards set under Clean Air Act 

section 202(a). Focusing on vehicle tailpipe emissions has not raised any issues for criteria 

pollutants, as upstream emissions associated with production and distribution of the fuel are 

addressed by comprehensive regulatory programs focused on the upstream sources of those 

emissions. At this time, however, there is no such comprehensive program addressing upstream 

emissions of GHGs, and the upstream GHG emissions associated with production and 

distribution of electricity are higher, on a national average basis, than the corresponding 

upstream GHG emissions of gasoline or other petroleum based fuels.257 In the future, if there 

were a program to comprehensively control upstream GHG emissions, then the zero tailpipe 

levels from these vehicles have the potential to produce very large GHG reductions, and to 

transform the transportation sector’s contribution to nationwide GHG emissions (as well as oil 

consumption). For a discussion of this issue in the 2012-2016 rule, see 75 FR at 25434-438. 

EVs and FCVs also represent some of the most significant changes in automotive 

technology in the industry’s history.258 For example, EVs face major consumer barriers such as 

significantly higher vehicle cost and lower range. EVs also have attributes that could be 

attractive to some consumers: lower and more predictable fuel price, no need for oil changes or 

spark plugs, and reducing one’s personal contribution to air pollution, climate change, and oil 

dependence.259 

Original equipment manufacturers currently offer two EVs and one PHEV in the U.S. 

market.260 Deliveries of the Nissan Leaf EV, which has a list price of about $33,000 and an EPA 

label range of 73 miles, began in December 2010 in selected areas, and total sales through July 

2011 are about 7000. The luxury Tesla Roadster EV, with a list price of $109,000, has been on 

sale since March 2008 with cumulative sales of approximately 1500. The Chevrolet Volt 

PHEV, with a list price of about $41,000 and an EPA label all-electric range of 35 miles, has 

sold over 4000 vehicles since it entered the market in December 2010 in selected markets. At 

 256 Also see the Regulatory Impact Analysis. 257 There is significant regional variation with upstream GHG emissions associated with electricity production and 

distribution. Based on EPA’s eGRID2010 database, comprised of 26 regions, the average powerplant GHG 

emissions rates per kilowatt-hour for those regions with the highest GHG emissions rates are about 3 times higher 

than those with the lowest GHG emissions rates. See http://www.epa.gov/cleanenergy/energyresources/egrid/index.html. 258 A PHEV is not such a big change since, if the owner so chooses, it can operate on gasoline. 259 PHEVs and FCVs share many of these same challenges and opportunities. 260 Smart has also leased approximately 100 Smart ED vehicles in the U.S. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 263 of 770

this time, no original equipment manufacturer offers FCVs to the general public.261 Currently, 

combined EV, PHEV, and FCV sales represent about 0.1% of overall light-duty vehicle sales. 

Additional models, such as the Ford Focus EV, the Mitsubishi i EV, and the Toyota Prius PHEV, 

are expected to enter the U.S. market in the next few months. 

The agency remains optimistic about consumer acceptance of EVs, PHEVs, and FCVs in 

the long run, but we believe that near-term market acceptance is less certain. One of the most 

successful new automotive powertrain technology—conventional hybrid electric vehicles like 

the Toyota Prius—illustrates the challenges involved in automotive powertrain technology 

changes. Even though conventional hybrids have now been on the U.S. market for over a 

decade, their market share hovers around 3 percent or so even though they offer higher vehicle 

range than their traditional gasoline vehicle counterparts, involve no significant consumer 

tradeoffs (other than cost), and have reduced their incremental cost to a few thousand dollars. 

The cost and consumer tradeoffs associated with EVs, PHEVs, and FCVs are more significant 

than those associated with conventional hybrids. Given the long leadtimes associated with major 

transportation technology shifts, there is value in promoting these potential game-changing 

technologies today if we want to retain the possibility of achieving major environmental and 

energy benefits in the future. 

In terms of the relative relationship between tailpipe and upstream fuel production and 

distribution GHG emissions, EVs, PHEVs, and FCVs are very different than conventional 

gasoline vehicles. Combining vehicle tailpipe and fuel production/distribution sources, gasoline 

vehicles emit about 80 percent of these GHG emissions at the vehicle tailpipe with the remaining 

20 percent associated with “upstream” fuel production and distribution GHG emissions.262 On 

the other hand, vehicles using electricity and hydrogen emit no GHG (or other emissions) at the 

vehicle tailpipe, and therefore all GHG emissions associated with powering the vehicle are due 

to fuel production and distribution.263 Depending on how the electricity and hydrogen fuels are 

produced, these fuels can have very high fuel production/distribution GHG emissions (for 

example, if coal is used with no GHG emissions control) or very low GHG emissions (for 

 261 Cite the small number of leases with the Honda Clarity FCV? 262Fuel production and distribution GHG emissions have received much attention because there is the potential for 

more widespread commercialization of transportation fuels that have very different GHG emissions characteristics 

in terms of the relative contribution of GHG emissions from the vehicle tailpipe and those associated with fuel 

production and distribution. Other GHG emissions source categories include vehicle production, including the raw 

materials used to manufacture vehicle components, and vehicle disposal. These categories have not been included 

in EPA motor vehicle emissions regulations for several reasons: these categories are less important from an 

emissions inventory perspective, they raise complex accounting questions that go well beyond vehicle testing and 

fuel-cycle analysis, and in general there are fewer differences across technologies. 263 The Agency notes that many other fuels currently used in light-duty vehicles, such as diesel from conventional 

oil, ethanol from corn, and compressed natural gas from conventional natural gas, have tailpipe GHG and fuel 

production/distribution GHG emissions characteristics fairly similar to that of gasoline from conventional oil. See 

75 FR at 25437. The Agency recognizes that future transportation fuels may be produced from renewable feedstocks 

with lower fuel production/distribution GHG emissions than gasoline from oil. 

Comment [A45]: The use of this example may 

suggest that hybrids face a consumer acceptance 

problem beyond cost (because it is compared to the 

concern with EV market acceptance). Commenters 

request clarity on whether that is the case or whether 

cost differential is clear factor explaining their 

current market share. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 264 of 770

example, if renewable processes with minimal fossil energy inputs are used, or if carbon capture 

and sequestration is used). 

For example, as shown in the Regulatory Impact Analysis, today’s Nissan Leaf EV 

would have an upstream GHG emissions value of 161 grams per mile based on national average 

electricity, and a value of 84 grams per mile based on the average electricity in California, one of 

the initial markets for the Leaf. 

Because these upstream GHG emissions values are generally higher than the upstream 

GHG emissions values associated with gasoline vehicles, and because there is currently no 

national program in place to reduce GHG emissions from electric powerplants, EPA believes it is 

appropriate to consider the incremental upstream GHG emissions associated with electricity 

production and distribution. But, we also think it is appropriate to encourage the initial 

commercialization of EV/PHEV/FCVs as well, in order to retain the potential for game-changing 

GHG emissions and oil savings in the long term. 

Accordingly, EPA proposes to provide temporary regulatory incentives for EVs, PHEVs 

(when operated on electricity) and FCVs that will be discussed in detail below. EPA recognizes 

that the use of EVs, PHEVs, and FCVs in the 2017-2025 timeframe, in conjunction with the 

incentives, will decrease the overall GHG emissions reductions associated with the program as 

the upstream emissions associated with the generation and distribution of electricity are higher 

than the upstream emissions associated with production and distribution of gasoline. EPA 

accounts for this difference in projections of the overall program’s impacts and benefits (see 

Section III.F). EPA believes that the relatively minor impact on GHG emissions reductions in 

the near term is justified by promoting technologies that have significant transportation GHG 

emissions and oil consumption game-changing potential in the longer run, and that also face 

major market barriers in entering a market that has been dominated by gasoline vehicle 

technology and infrastructure for over 100 years. 

EPA will review all of the issues associated with upstream GHG emissions, including the 

status of EV/PHEV/FCV commercialization, the status of upstream GHG emissions control 

programs, and other relevant factors. 

b. MY 2012-2016 Light-Duty Vehicle Greenhouse Gas Emissions Standards 

The light-duty vehicle greenhouse gas emissions standards for model years 2012-2016 

provide a regulatory incentive for electric vehicles (EVs), fuel cell vehicles (FCVs), and for the 

electric portion of operation of plug-in hybrid electric vehicles (PHEVs). See generally 75 FR at 

25434-438. This is designed to promote advanced technologies that have the potential to provide 

“game changing” GHG emissions reductions in the future. This incentive is a 0 grams per mile 

compliance value (i.e., a compliance value based on measured vehicle tailpipe GHG emissions) 

up to a cumulative EV/PHEV/FCV production cap threshold for individual manufacturers. For 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 265 of 770

manufacturers that exceed the cumulative production cap over MY 2012-2016, compliance 

values for those vehicles in excess of the cap will be based on a full accounting of the net fuel 

production and distribution GHG emissions associated with those vehicles relative to the fuel 

production and distribution GHG emissions associated with comparable gasoline vehicles. For 

an electric vehicle, this accounting is based on the vehicle electricity consumption over the EPA 

compliance tests, eGRID2007 national average powerplant GHG emissions factors, and 

multiplicative factors to account for electricity grid transmission losses and pre-powerplant 

feedstock GHG related emissions.264 The accounting for a hydrogen fuel cell vehicle would be 

done in a comparable manner. There is a two-tier cumulative EV/PHEV/FCV production cap for 

MY 2012-2016: the cap is 300,000 vehicles for those manufacturers that sell at least 25,000 

EVs/PHEVs/FCVs in MY 2012, and the cap is 200,000 vehicles for all other manufacturers. 

Although EPA also proposed a vehicle incentive multiplier for MY 2012-2016, the 

agency did not finalize a multiplier. At that time, the Agency believed that combining the 0 

gram per mile and multiplier incentives would be excessive. 

The 0 grams per mile compliance value decreases the GHG emissions reductions 

associated with the 2012-2016 standards compared to the same standards and no 0 grams per 

mile compliance value. It is impossible to know the precise number of vehicles that will take 

advantage of this incentive in MY 2012-2016. In the preamble to the final rule, EPA projected 

the decrease in GHG emissions reductions that would be associated with a scenario of 500,000 

EVs certified with a compliance value of 0 grams per mile. This scenario would result in a 

projected decrease of 25 million metric tons of GHG emissions reductions, or less than 3 percent 

of the total projected GHG benefits of the program of 962 million metric tons. This GHG 

emissions impact could be smaller or larger, of course, based on the actual number of EVs that 

would certify at 0 grams per mile. 

In the preamble to the final rule, EPA stated that it would reassess this issue for 

rulemakings beginning in MY 2017 based on the status of advanced vehicle technology 

commercialization, the status of upstream GHG control programs, and other relevant factors. 

c. Supplemental Notice of Intent 

In our most recent Supplemental Notice of Intent,265 EPA stated that: “EPA intends to 

propose an incentive multiplier for all electric vehicles (EVs), plug-in hybrid electric vehicles 

(PHEVs), and fuel cell vehicles (FCVs) sold in MYs 2017 through 2021. This multiplier 

approach means that each EV/PHEV/FCV would count as more than one vehicle in the 

manufacturer’s compliance calculation. EPA intends to propose that EVs and FCVs start with a 

multiplier value of 2.0 in MY 2017, phasing down to a value of 1.5 in MY 2021. PHEVs would 

 264 See 40 C.F.R. 600.113-12(m). 265 76 Federal Register 48758 (August 9, 2011). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 266 of 770

start at a multiplier value of 1.6 in MY 2017 and phase down to a value of 1.3 in MY 2021. 

These multipliers would be proposed for incorporation in EPA’s GHG program....As an 

additional incentive for EVs, PHEVs and FCVs, EPA intends to propose allowing a value of 0 

g/mile for the tailpipe compliance value for EVs, PHEVs (electricity usage) and FCVs for MY 

2017–2021, with no limit on the quantity of vehicles eligible for 0 g/mi tailpipe emissions 

accounting. For MY 2022–2025, 0 g/mi will only be allowed up to a per-company cumulative 

sales cap based on significant penetration of these advanced vehicles in the marketplace. EPA 

intends to propose an appropriate cap in the NPRM.” 

d. Proposal for MY 2017-2025 

EPA is proposing the following temporary regulatory incentives for EVs, PHEVs, and 

FCVs consistent with the discussion in the August 2011 Supplemental Notice of Intent. 

For MY 2017 through 2021, EPA is proposing two incentives. The first proposed 

incentive is to allow all EVs, PHEVs (electric operation), and FCVs to use a GHG emissions 

compliance value of 0 grams per mile. There would be no cap on the number of vehicles eligible 

for the 0 grams per mile compliance value for MY 2017 through 2021. 

The second proposed incentive for MY 2017 through 2021 is a multiplier for all EVs, 

PHEVs, and FCVs, which would allow each of these vehicles to “count” as more than one 

vehicle in the manufacturer’s compliance calculation.266 While the Agency rejected a multiplier 

incentive in the MY 2012-2016 final rule, we are proposing a multiplier for MY 2017-2025 

because, while advanced technologies were not necessary for compliance in MY 2012-2016, 

they are necessary, for some manufacturers, in the MY 2022-2025 timeframe. A multiplier for 

MY 2017-2021 can promote the initial commercialization of these advanced technologies. . In 

order for a PHEV to be eligible for the multiplier incentive, EPA proposes that PHEVs be 

required to be able to complete a full EPA highway test (10.2 miles), without using any 

conventional fuel, or alternatively, have a minimum equivalent all-electric range of 10.2 miles as 

measured on the EPA highway cycle. EPA seeks comment on whether this minimum range 

should be lower or higher, or whether the multiplier should vary based on range. The specific 

proposed multipliers are shown in Table III-14. 

Table III-14 Proposed EV, FCV, and PHEV Per-Vehicle Multiplier Incentives for 

MY 2017-2021 

Model Year(s) EVs and FCVs PHEVs 

2017-2019 2.0 1.6 

2020 1.75 1.45 

2021 1.5 1.3 

 266 In the unlikely case where a PHEV with a low electric range might have an overall GHG emissions compliance 

value that is higher than its compliance target, EPA proposes that the automaker can choose not to use the multiplier. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 267 of 770

For MY 2022 through 2025, EPA is proposing one incentive—the 0 grams per mile GHG 

emissions compliance incentive for EVs, PHEVs (electric operation), and FCVs up to a percompany cumulative production cap threshold for those model years. EPA is proposing a twotier, per-company cap based on cumulative production in prior years, consistent with the general 

approach that was adopted in the rulemaking for MY 2012-2016. For manufacturers that sell 

300,000 or more EV/PHEV/FCVs combined in MY 2019-2021, the proposed cumulative 

production cap would be 600,000 EV/PHEV/FCVs for MY 2022-2025. Other automakers would 

have a proposed cumulative production cap of 200,000 EV/PHEV/FCVs in MY 2022-2025. 

This proposed cap design is appropriate as a way to encourage automaker investment in 

potential GHG emissions game-changing technologies that face very significant cost and 

consumer barriers. In addition, as with the rulemaking for MY 2012-2016, EPA believes it is 

important to both recognize the benefit of early leadership in commercialization of these 

technologies, and encourage additional manufacturers to invest over time. As noted above, 

manufacturers are unlikely to do so if vehicles with these technologies are treated for compliance 

purposes to be no more advantageous than the best conventional hybrid vehicles. Finally, we 

believe that the proposed cap design provides a reasonable limit to the overall decrease in 

program GHG emissions reductions associated with the incentives, and EPA is being transparent 

about these GHG emissions impacts (see later in this section and also Section III.F). 

EPA recognizes that a central tension in the design of a proposed cap relates to certainty 

and uncertainty with respect to both individual automaker caps and the overall number of 

vehicles that may fall under the cap, which determines the overall decrease in GHG emissions 

reductions. A per-company cap as described above would provide clear certainty for individual 

manufacturers at the time of the final rule, but would yield uncertainty about how many vehicles 

industry-wide would take advantage of the 0 grams per mile incentive and therefore the overall 

impact on GHG emissions. An alternative approach would be an industry-wide cap where EPA 

would establish a finite limit on the total number of vehicles eligible for the 0 grams per mile 

incentive, with a method for allocating this industry-wide cap to individual automakers. This 

would provide certainty with respect to the maximum number of vehicles and GHG emissions 

impact. If EPA were to make a specific numerical allocation at the time of the final rule, 

automakers would have certainty, but EPA is concerned that we may not have sufficient 

information to make an equitable allocation for a timeframe that is well over a decade away. If 

EPA were to adopt an allocation formula in the final rule that was dependent on future sales (as 

we are proposing above for the per-company cap), automakers would have much less certainty in 

compliance planning as they would not know their individual caps until some point in the future. 

To further assess the merits of an industry-wide cap approach, EPA also seeks comment 

on the following alternative for an industry-wide cap. EPA would place an industry-wide 

cumulative production cap of 2 million EV/PHEV/FCVs eligible for the 0 grams per mile 

Comment [A46]: Commenters recommend that 

agencies also include that another advantage of an 

industry-wide cap is that it encourages first movers. 

In contrast, under a per-company cap, an OEM can 

wait for others to introduce advanced vehicles, then 

take advantage of declining costs, and still reap the 

incentives. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 268 of 770

incentive in MY 2022-2025. EPA has chosen 2 million vehicles because, as shown below, we 

project that this limits the maximum decrease in GHG emissions reductions to about 5 percent of 

total program GHG savings. EPA would allocate this 2 million vehicle cap to individual 

automakers in calendar year 2022 based on cumulative EV/PHEV/FCV sales in MY 2019-2021, 

i.e., if an automaker sold X percent of industry-wide EV/PHEV/FCV sales in MY 2019-2021, 

that automaker would get X percent of the 2 million industry-wide cumulative production cap in 

MY 2022-2025 (or possibly somewhat less than X percent, if EPA were to reserve some small 

volumes for those automakers that sold zero EV/PHEV/FCVs in MY 2019-2021). 

For both the proposed per-company cap and the alternative industry-wide cap, EPA 

proposes that, for production beyond the cumulative vehicle production cap for a given 

manufacturer in MY 2022-2025, compliance values would be calculated according to a 

methodology that accounts for one-half of the net increase in upstream GHG emissions relative 

to that of a comparable gasoline vehicle. 

EPA also seeks comments on whether any changes should be made for MY 2012-2016, 

i.e., whether the compliance value for production beyond the cap should be one-half of the net 

increase in upstream GHG emissions, or whether the current cap for MY 2012-2016 should be 

removed. 

EPA is not proposing any multiplier incentives for MY 2022 through 2025. EPA 

believes that the 0 gram per mile compliance value, with cumulative vehicle production cap, is a 

sufficient incentive for MY 2022-2025. 

One key issue here is the appropriate electricity upstream GHG emissions factor or rate to 

use in future projections of EV/PHEV emissions based on the net upstream approach. In the 

following example, we use a 2025 nationwide average electricity upstream GHG emissions rate 

(powerplant plus feedstock) of 0.574 grams GHG/watt-hour, based on simulations with the EPA 

Office of Atmospheric Program’s Integrated Planning Model (IPM).267 For the example below, 

EPA is using a projected national average value from the IPM model, but EPA recognizes that 

values appropriate for future vehicle use may be higher or lower than this value. EPA is 

considering running the IPM model with a more robust set of vehicle and vehicle chargingspecific assumptions to generate a better electricity upstream GHG emissions factor for EVs and 

PHEVs for our final rulemaking, and, at minimum, intends to account for the likely regional 

sales variation for initial EV/PHEV/FCVs, and different scenarios for the relative frequency of 

daytime and nighttime charging. EPA seeks comment on whether there are additional factors 

that we should try to include in the IPM modeling for the final rulemaking. 

EPA proposes a 5-step methodology for calculating the GHG emissions compliance 

value for vehicle production in excess of the cumulative production cap for an individual 

 267 Technical Support Document, Chapter 4. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 269 of 770

automaker. For example, for an EV in MY 2025, this methodology would include the following 

steps and calculations: 

 Measuring the vehicle electricity consumption in watt-hours/mile over the EPA city and 

highway tests (for example, a midsize EV in 2025 might have a 2-cycle test electricity 

consumption of 230 watt-hours/mile) 

 Adjusting this watt-hours/mile value upward to account for electricity losses during 

electricity transmission (dividing 230 watt-hours/mile by 0.93 to account for 

grid/transmission losses yields a value of 247 watt-hours/mile) 

 Multiplying the adjusted watt-hours/mile value by a 2025 nationwide average electricity 

upstream GHG emissions rate of 0.574 grams/watt-hour at the powerplant (247 watthours/mile multiplied by 0.574 grams GHG/watt-hour yields 142 grams/mile) 

 Subtracting the upstream GHG emissions of a comparable midsize gasoline vehicle of 39 

grams/mile268 to reflect a true net increase in upstream GHG emissions (142 grams/mile 

for the EV minus 39 grams/mile for the gasoline vehicle yields a net increase and EV 

compliance value of 103 grams/mile).269

 To reflect the proposed phase-in from 0 grams per mile to full net upstream accounting, 

the MY 2025 value would be one-half of 103 grams per mile, or 52 grams per mile. 

The full accounting methodology for FCVs and the portion of PHEV operation on grid 

electricity would use this same approach. The proposed regulations contain EPA’s proposed 

method to determine the compliance value for PHEVs, and EPA proposes to develop a similar 

methodology for FCVs if and when the need arises.270 Given the uncertainty about how 

hydrogen would be produced, if and when it were used as a transportation fuel, EPA seeks 

comment on projections for the fuel production and distribution GHG emissions associated with 

hydrogen production for various feedstocks and processes. 

EPA is fully accounting for the upstream GHG emissions associated with all electricity 

used by EVs and PHEVs (and any hydrogen used by FCVs), both in our regulatory projections 

of the impacts and benefits of the program, and in all GHG emissions inventory accounting. 

 268 A midsize gasoline vehicle with a footprint of 46 square feet would have a MY 2025 GHG target of about 140 

grams/mile; dividing 8887 grams CO2/gallon of gasoline by 140 grams/mile yields an equivalent fuel economy level 

of 63.5 mpg; and dividing 2478 grams upstream GHG/gallon of gasoline by 63.5 mpg yields a midsize gasoline 

vehicle upstream GHG value of 39 grams/mile. The 2478 grams upstream GHG/gallon of gasoline is calculated 

from 21,546 grams upstream GHG/million Btu (EPA value for future gasoline based on DOE’s GREET model 

modified by EPA standards and data; see docket memo to MY2012-2016 rulemaking titled “Calculation of 

Upstream Emissions for the GHG Vehicle Rule”) and multiplying by 0.115 million Btu/gallon of gasoline.

269 Manufacturers can utilize alternate calculation methodologies if shown to yield equivalent or superior results and 

if approved in advance by the Administrator. 

270 Cite the regs here for more details. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 270 of 770

EPA seeks public comment on the proposed incentives for EVs, PHEVs, and FCVs 

described above. In addition, EPA seeks public comment on the following additional questions 

related to the design of these incentives: 

e. Projection of Impact on GHG Emissions Reductions Due to Incentives 

EPA believes it is important to project the impact on GHG emissions that will be 

associated with the proposed incentives (both 0 grams per mile and the multiplier) for 

EV/PHEV/FCVs over the MY 2017-2025 timeframe. Since it is impossible to know precisely 

how many EV/PHEV/FCVs will be sold in the MY 2017-2025 timeframe that will utilize the 

proposed incentives, EPA presents projections for two scenarios: 1) the number of 

EV/PHEV/FCVs that EPA's OMEGA technology and cost model predicts based exclusively on 

its projections for the most cost-effective way for the industry to meet the proposed standards, 

and 2) a scenario with a greater number of EV/PHEV/FCVs, based not only on compliance with 

the proposed GHG and CAFE standards, but other factors such as the proposed cumulative 

production caps and manufacturer investments. For this analysis, EPA assumes that EVs and 

PHEVs each account for 50 percent of all EV/PHEV/FCVs. EPA seeks comment on whether 

there are other scenarios which should be evaluated for this purpose in the final rule. 

Table III-15 Projected Impact of EV/PHEV/FCV Incentives on GHG Emissions 

Reductions 

Scenario 

Cumulative 

EV/PHEV/FCV 

Sales 2017-2025 

Cumulative 

EV/PHEV/FCV 

Sales 

2022-2025 

Cumulative 

Decrease in 

GHG Emissions 

Reductions 

2017-2025271

Percentage 

Decrease in 

GHG Emissions 

Reductions 

2017-2025272

EPA OMEGA 

model 

projection 

1.9 million 1.3 million 80 million metric 

tons 3.5% 

EPA 

alternative 

projection 

2.8 million 2.0 million 120 million metric 

tons 5.3% 

 271 The number of metric tons represents the number of additional tons that would be reduced if the standards stayed 

the same and there was no 0 gram per mile compliance value. 

272 The percentage change represents the ratio of the cumulative decrease in GHG emissions reductions from the 

prior column to the total cumulative GHG emissions reductions associated with the proposed standards and the 

proposed 0 gram per mile compliance value. 

Comment [A47]: Please clarify if the two 

incentives are part of these modeled scenario (do 

they affect OEM decisions about how to meet the 

standard). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 271 of 770

EPA projects that the cumulative GHG emissions savings of the proposed MY 2017-2025 

standards, on a model year lifetime basis, is approximately 2 billion metric tons. Table III-15 

projects that the likely decrease in cumulative GHG emissions reductions due to the 

EV/PHEV/FCV incentives for MY 2017-2025 vehicles is in the range of 80 to 120 million 

metric tons, or about 4 to 5 percent. 

It is important to note that the above projection of the impact of the EV/PHEV/FCV 

incentives on the overall program GHG emissions reductions assumes that the EV 0 gram per 

mile incentive is not in effect, and there is no change to the standard, i.e., that EPA would have 

proposed exactly the same standard if the 0 gram per mile compliance value were not allowed for 

any EV/PHEV/FCVs. While EPA has not analyzed such a scenario, it is clear that not allowing 

a 0 gram per mile compliance value would change the technology mix and cost projected for the 

proposed standard. 

It is also important to note that the projected impact on GHG emissions reductions in the 

above table are based on the 2025 nationwide average electricity upstream GHG emissions rate 

(powerplant plus feedstock) of 0.574 grams GHG/watt-hour discussed above (based on 

simulations with the EPA’s Integrated Planning Model (IPM) for powerplants in 2025, and a 

1.06 factor to account for feedstock-related GHG emissions). 

EPA recognizes two factors which could significantly reduce the electricity upstream 

GHG emissions factor by calendar year 2025. First, there is a likelihood that early 

EV/PHEV/FCV sales will be much more concentrated in parts of the country with lower 

electricity GHG emissions rates and much less concentrated in regions with higher electricity 

GHG emissions rates. This has been the case with sales of hybrid vehicles, and is likely to be 

more so with EVs in particular. Second, there is the possibility of a future comprehensive 

program addressing upstream emissions of GHGs from the generation of electricity. Other 

factors which could also help in this regard include technology innovation and lower prices for 

some powerplant fuels such as natural gas. 

On the other hand, EPA also recognizes factors which could increase the appropriate 

electricity upstream GHG emissions factor in the future, such as a consideration of marginal 

electricity demand rather than average demand, high use of high-power charging, and the 

possibility that EVs won't displace gasoline vehicle use on a 1:1 basis (i.e., multi-vehicle 

households may use EVs for more shorter trips and fewer longer trips, which could lead to lower 

overall travel for typical EVs and higher overall travel for gasoline vehicles). 

Comment [A48]: Comments find this is 

confusing. Isn’t this a projection of the potential 

impact of the 0 g/mile incentive plus multipliers? 

Commenters recommend agency providing specifics.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 272 of 770

EPA seeks comment on information relevant to these and other factors which could both 

decrease or increase the proper electricity upstream GHG emissions factor for calendar year 

2025 modeling. 

3. Incentives for “Game-Changing” Technologies Performance for Full-Size Pickup 

Trucks Including Hybridization 

As explained in section II. C above, the agencies recognize that the standards under 

consideration for MY 2017-2025 will be most challenging to large trucks, including full size pickup 

trucks that are often used for commercial purposes and have generally higher payload and towing 

capabilities, and cargo volumes than other light-duty vehicles. In Section II.C and Chapter 2 of 

the joint TSD, EPA and NHTSA describe how the slope of the truck curve has been adjusted 

compared to the 2012-2016 rule to reflect these disproportionate challenges. In Section III.B, and 

IV, EPA describes the progression of the truck standards. In this section, EPA describes a proposed 

incentive for full size pickup trucks, proposed by EPA under both section 202 (a) of the CAA and 

section 32904 (c) of EPCA, to incentivize advanced technologies on this class of vehicles. This 

incentize would be in the form of credits under the EPA GHG program, and fuel consumption 

improvement values (essentially equivalent to EPA’s credits) under the CAFE program. 

The agencies’ goal is to incentivize the penetration into the marketplace of “game 

changing” technologies for these pickups, including their hybridization. For that reason, EPA is 

proposing credits for manufacturers that hybridize a significant quantity of their full size pickup 

trucks, or use other technologies that significantly reduce CO2 emissions and fuel consumption. 

This proposed credit would be available on a per-vehicle basis for mild and strong HEVs, as well 

as for use of other technologies that significantly improve the efficiency of the full sized pickup 

class. As described in section II.F. and III.B.10, EPA, in coordination with NHTSA, is also 

proposing that manufacturers be able to include “fuel consumption improvement values” 

equivalent to EPA CO2 credits in the CAFE program. The proposed gallon per mile values are 

provided below in addition to the proposed CO2 credits. These credits and fuel consumption 

improvement values provide the incentive to begin transforming this most challenged category of 

vehicles toward use of the most advanced technologies. 

Access to this credit is conditioned on a minimum penetration of the technologies in a 

manufacturer’s full size pickup truck fleet. The proposed penetration rates can be found in Table 

5-26 in the TSD. EPA is seeking comment on these penetration rates and how they should be 

applied to a manufacturer’s truck fleet. 

To ensure its use for only full sized pickup trucks, EPA is proposing a specific definition 

for a full sized pickup truck based on minimum bed size and minimum towing capability. The 

specifics of this proposed definition can be found in Chapter 5 of the draft joint TSD (see Section 

5.3.1) and in the draft regulations at [cite]. This proposed definition is meant to ensure that 

smaller pickup trucks, which are not used as often for commercial purposes, such as the Ford 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 273 of 770

Ranger or the Honda Ridgeline do not qualify. 273. For this proposal, a full sized pickup truck 

would be defined as meeting requirements 1 and 2, below, as well as either requirement 3 or 4, 

below: 

1. The vehicle must have an open cargo box with a minimum width between the 

wheelhouses of 48 inches measured as the minimum lateral distance between the 

limiting interferences (pass-through) of the wheelhouses. The measurement would 

exclude the transitional arc, local protrusions, and depressions or pockets, if 

present.274 An open cargo box means a vehicle where the cargo bed does not have a 

permanent roof or cover. Vehicles sold with detachable covers are considered “open” 

for the purposes of these criteria. 

2. Minimum open cargo box length of 60 inches defined by the lesser of the pickup bed 

length at the top of the body (defined as the longitudinal distance from the inside 

front of the pickup bed to the inside of the closed endgate; this would be measured at 

the height of the top of the open pickup bed along vehicle centerline and the pickup 

bed length at the floor) and the pickup bed length at the floor (defined as the 

longitudinal distance from the inside front of the pickup bed to the inside of the 

closed endgate; this would be measured at the cargo floor surface along vehicle 

centerline).275 

3. Minimum Towing Capability – the vehicle must have a GCWR (gross combined 

weight rating) minus GVWR (gross vehicle weight rating) value of at least 5,000 

pounds.276

4. Minimum Payload Capability – the vehicle must have a GVWR (gross vehicle weight 

rating) minus curb weight value of at least 1,700 pounds. 

EPA proposes that mild HEV pickup trucks would be eligible for a per-truck 10 g/mi 

CO2 credit (equal to a 0.0011 gal/mi credit for a 25 mpg truck) during MYs 2017-2021 if the 

mild HEV technology is used on a minimum percentage of a company’s full sized pickups. That 

 273 As discussed in TSD Section 5.3.1, EPA is seeking comment on expanding the scope of this credit to somewhat 

smaller pickups, provided they have the towing and/or hauling capabilities of the larger full-size trucks. 274 This dimension is also known as dimension W202 as defined in Society of Automotive Engineers Procedure 

J1100. 

275 The pickup body length at the top of the body is also known as dimension L506 in Society of Automotive 

Engineers Procedure J1100. The pickup body length at the floor is also known as dimension L505 in Society of 

Automotive Engineers Procedure J1100. 

276 Gross combined weight rating means the value specified by the vehicle manufacturer as the maximum weight of 

a loaded vehicle and trailer, consistent with good engineering judgment. Gross vehicle weight rating means the 

value specified by the vehicle manufacturer as the maximum design loaded weight of a single vehicle, consistent 

with good engineering judgment. Curb weight is defined in 40 CFR 86.1803, consistent with the provisions of 40 

CFR 1037.140. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 274 of 770

minimum percentage would be 30 percent of a company’s full sized pickup production in MY 

2017 with a ramp up to at least 80 percent of production in MY 2021. 

EPA is also proposing that strong HEV pickup trucks would be eligible for a per-truck 20 

g/mi CO2 credit (equal to a 0.0023 gal/mi credit for a 25 mpg truck) during MYs 2017-2025 if 

the strong HEV technology is used on a minimum percentage of a company’s full sized pickups. 

That minimum percentage would be 10 percent of a company’s full sized pickup production in 

each year over the model years 2017-2025. 

To ensure that the hybridization technology used by manufacturers seeking one of these 

credits meets the intent behind the incentives, EPA is proposing very specific definitions of what 

qualifies as a mild and a strong HEV. These definitions are described in detail in Chapter 5 of 

the draft joint TSD (see section 5.3.3). 

 EPA is also proposing performance-based incentive credits, and fuel consumption 

improvement values for CAFE, for full size pickup trucks that achieve an emission level 

significantly below the applicable target and/or fuel economy performance significantly above 

the CAFE target for that footprint. EPA proposes that this credit be either 10 g/mi CO2 

(equivalent to 0.0011 gal/mi for the CAFE program) or 20 g/mi CO2 (equivalent to 0.0023 

gal/mi for the CAFE program) for pickups achieving 15 percent or 20 percent, respectively, 

better CO2 or fuel consumption than their footprint based target in a given model year. EPA 

provides further details on this performance-based incentive in Chapter 5 of the draft joint TSD 

(see Section 5.3.4). The 10 g/ mi (equivalent to 0.0011 gal/mi) performance-based credit/value 

would be available for MYs 2017 to 2021 and a vehicle meeting the requirements would receive 

the credit/value until MY 2021 unless its CO2 level or fuel consumption increases. The 10 g/mi 

credit/value is not available after 2021 because the post-2021 standards quickly overtake a 15% 

overcompliance. Earlier in the program, an overcompliance lasts for more years, making the 

credit/value appropriate for a longer period. The 20 g/mi CO2 (equivalent to 0.0023 gal/mi) 

performance-based credit/value would be available for a maximum of 5 years within the model 

years of 2017 to 2025, provided its CO2 level and fuel consumption does not increase. The 

credits would begin in the model year of introduction, and (as noted) could not extend past MY 

2021 for the 10 g/mi credit (equivalent to 0.0011 gal/mi) and MY 2025 for the 20 g/mi credit 

(equivalent to 0.0023 gal/mi). 

As with the HEV-based credit, the performance-based credit/value requires that the 

technology be used on a minimum percentage of a manufacturer’s full-size pickup trucks. That 

minimum percentage for the 10 g/mi GHG credit (equivalent to 0.0011 gal/mi fuel consumption 

improvement value) would be 15 percent of a company’s full sized pickup production in MY 

2017 with a ramp up to at least 40 percent of production in MY 2021. The minimum percentage 

for the 20 g/mi credit (equivalent to 0.0011 gal/mi fuel consumption improvement value) would 

be 10 percent of a company’s full sized pickup production in each year over the model years 

Comment [A49]: Suggest clarifying why the 

agency is doing this – to promote other potential 

game changing technologies beyond mild and strong 

hybrids. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 275 of 770

2017-2025. These minimum percentages are set to encourage significant penetration of these 

technologies, leading to long-term market acceptance. 

Importantly, the same vehicle could not receive credit/values under both the HEV and the 

performance-based approaches. EPA requests comment on all aspects of this proposed pickup 

truck incentive credit, including the proposed definitions for full sized pickup truck and mild and 

strong HEV. 

4. Treatment of Plug-in Hybrid Electric Vehicles, Dual Fuel Compressed Natural Gas 

Vehicles, and Ethanol Flexible Fuel Vehicles for GHG Emissions Compliance 

a. Greenhouse Gas Emissions 

i. Introduction 

This section addresses proposed approaches for determining the compliance values for 

greenhouse gas (GHG) emissions for those vehicles that can use two different fuels, typically 

referred to as dual fuel vehicles under the CAFE program. Three specific technologies are 

addressed: plug-in hybrid electric vehicles (PHEVs), dual fuel compressed natural gas (CNG) 

vehicles, and ethanol flexible fuel vehicles (FFVs).277 EPA’s underlying principle is to base 

compliance values on demonstrated vehicle tailpipe CO2 emissions performance. The key issue 

with vehicles that can use more than one fuel is how to weight the operation (and therefore GHG 

emissions performance) on the two different fuels. EPA proposes to do this on a technology-bytechnology basis, and the sections below will explain the rationale for choosing a particular 

approach for each vehicle technology. 

EPA is proposing no changes to the tailpipe GHG emissions compliance approach for 

dedicated vehicles, i.e., those vehicles that can use only one fuel. As finalized for MY 2016 and 

later vehicles in the 2012-2016 rule, tailpipe CO2 emissions compliance levels are those values 

measured over the EPA 2-cycle city/highway tests.278 EPA is proposing provisions for how and 

when to also account for the upstream fuel production and distribution related GHG emissions 

associated with electric vehicles, fuel cell vehicles, and the electric portion of plug-in hybrid 

electric vehicles, and these provisions are discussed in Section III.C.2 above. 

ii. Plug-In Hybrid Electric Vehicles 

PHEVs can operate both on an on-board battery that can be charged by wall electricity 

from the grid, and on a conventional liquid fuel such as gasoline. Depending on how these 

vehicles are fueled and operated, PHEVs could operate exclusively on grid electricity, 

exclusively on the conventional fuel, or any combination of both fuels. EPA can determine the 

 277 EPA recognizes that other vehicle technologies may be introduced in the future that can use two (or more) fuels. 278 For dedicated alternative fuel vehicles. See 75 at FR 25434. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 276 of 770

CO2 emissions performance when operated on the battery and on the conventional fuel. But, in 

order to generate a single CO2 emissions compliance value, EPA must adopt an approach for 

determining the appropriate weighting of the CO2 emissions performance on grid electricity and 

the CO2 emissions performance on gasoline. 

EPA is proposing no changes to the Society of Automotive Engineers (SAE) cyclespecific utility factor approach for PHEV compliance and label emissions calculations first 

adopted by EPA in the joint EPA/DOT final rulemaking establishing new fuel economy and 

environment label requirements for MY 2013 and later vehicles.279 This utility factor approach 

is based on several key assumptions. One, PHEVs are designed such that the first mode of 

operation is all-electric drive or electric assist. Every PHEV design with which EPA is familiar 

is consistent with this assumption. Two, PHEVs will be charged once per day. While this 

critical assumption is unlikely to be met by every PHEV driver every day, EPA believes that a 

large majority of PHEV owners will be highly motivated to re-charge as frequently as possible, 

both because the owner has paid a considerably higher initial vehicle cost to be able to operate 

off grid electricity, and because electricity is considerably cheaper, on a per mile basis, than 

gasoline. Three, it is reasonable to assume that future PHEV drivers will retain driving profiles 

similar to those of past drivers on which the utility factors were based. More detailed 

information on the development of this utility factor approach can be obtained from the Society 

of Automotive Engineers.280 EPA will continue to reevaluate the appropriateness of these 

assumptions overtime. 

Based on this approach, and PHEV-specific specifications such as all-electric drive or 

equivalent all-electric range, the cycle-specific utility factor methodology yields PHEV-specific 

values for projected average percent of operation on grid electricity and average percent of 

operation on gasoline over both the city and highway test cycles. For example, the Chevrolet 

Volt PHEV, the only original equipment manufacturer (OEM) PHEV in the U.S. market today, 

which has an all-electric range of 35 miles on EPA’s fuel economy label, has city and highway 

cycle utility factors of about 0.65, meaning that the average Volt driver is projected to drive 

about 65 percent of the miles on grid electricity and about 35 percent of the miles on gasoline. 

Each PHEV will have its own utility factor. 

Based on this utility factor approach, EPA calculates the GHG emissions compliance 

value for an individual PHEV as the sum of 1) the GHG emissions value for electric operation 

(either 0 grams per mile or a non-zero value reflecting net upstream GHG emissions accounting 

depending on whether automaker EV/PHEV/FCV production is below or above its cumulative 

production cap as discussed in Section III.C.2 above) multiplied by the utility factor, and 2) the 

tailpipe CO2 emissions value on gasoline multiplied by (1 minus the utility factor). 

 279 76 FR 39504-39505 (July 6, 2011) and 40 CFR 600.116-12(b). 280 http://www.SAE.org, specifically SAE J2841 “Utility Factor Definitions for Plug-In Hybrid Electric Vehicles 

Using Travel Survey Data,” September 2010. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 277 of 770

iii. Dual Fuel Compressed Natural Gas Vehicles 

Dual fuel CNG vehicles operate on either compressed natural gas or gasoline, but not 

both at the same time, and have separate tanks for the two fuels.281 There are no OEM dual fuel 

CNG vehicles in the U.S. market today, but some manufacturers have expressed interest. Under 

current EPA regulations through MY 2015, GHG emissions compliance values for dual fuel 

CNG vehicles are based on a methodology that provides significant GHG emissions incentives 

equivalent to the “CAFE credit” approach for dual and flexible fuel vehicles. For MY 2016, 

current EPA regulations utilize a methodology based on demonstrated vehicle emissions 

performance and real world fuels usage, similar to that for ethanol flexible fuel vehicles 

discussed below. 

EPA proposes to develop a new approach for dual fuel CNG vehicle GHG emissions 

compliance that is very similar to the utility factor approach developed and described above for 

PHEVs, and for this new approach to take effect with MY 2016. As with PHEVs, EPA believes 

that owners of dual fuel CNG vehicles will preferentially seek to refuel and operate on CNG fuel 

as much as possible, both because the owner paid a much higher price for the dual fuel 

capability, and because CNG fuel is considerably cheaper than gasoline on a per mile basis. 

EPA notes that there are some relevant differences between dual fuel CNG vehicles and PHEVs, 

and some of these differences might weaken the case for using utility factors for dual fuel CNG 

vehicles. For example, a dual fuel CNG vehicle might be able to run on gasoline when both 

fuels are available on board (depending on how the vehicle is designed), it may be much more 

inconvenient for some private dual fuel CNG vehicle owners to fuel every day relative to 

PHEVs, and there are many fewer CNG refueling stations than electrical charging facilities.282 

On the other hand, there are differences that could strengthen the case as well, e.g., many dual 

fuel CNG vehicles will likely have smaller gasoline tanks given the expectation that gasoline will 

be used only as an “emergency” fuel, and it may be easier for a dual fuel CNG vehicle to be 

refueled during the day than a PHEV (which is most conveniently refueled at night with a home 

charging unit). 

Taking all these considerations into account, EPA believes that the merit of using a utility 

factor-based approach for dual fuel CNG vehicles is similar to that of doing so for PHEVs, and 

we propose to develop a similar methodology for dual fuel CNG vehicles. For example, 

applying the current SAE fleet utility factor approach developed for PHEVs to a dual fuel CNG 

vehicle with a 150-mile CNG range would result is a compliance assumption of about 95 percent 

operation on CNG and about 5 percent operation on gasoline. EPA is proposing to directly 

extend the PHEV utility factor methodology to dual fuel CNG vehicles, using the same 

 281 EPA considers “bi-fuel” CNG vehicles to be those vehicles that can operate on a mixture of CNG and gasoline. 

Bi-fuel vehicles would not be eligible for this treatment, since they are not designed to allow the use of CNG only. 282 EPA assumes that most PHEV owners will charge at home with electrical charging equipment that they purchase 

and install for their own use. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 278 of 770

assumptions about daily refueling. EPA invites comment on this proposal, including the 

appropriateness of the assumptions described above for dual fuel CNG vehicles. 

In determining eligibility for the utility factor approach, EPA may consider placing 

additional constraints on the designs of dual fuel CNG vehicles including, but not limited to, 

whether we should place a minimum value on CNG tank size or CNG range, a maximum value 

on gasoline tank size or gasoline range, a minimum ratio of CNG-to-gasoline range, and whether 

we should require an onboard control system so that a dual fuel CNG vehicle is only able to 

access the gasoline fuel tank if the CNG tank is empty. 

iv. Ethanol Flexible Fuel Vehicles 

Ethanol FFVs can operate on E85 (a blend of 15 percent gasoline and 85 percent ethanol, 

by volume), gasoline, or any blend of the two. There are many ethanol FFVs in the market 

today. 

In the final rulemaking for MY 2012-2016, EPA promulgated regulations for MY 2012-

2015 ethanol FFVs that provided significant GHG emissions incentives equivalent to the longstanding “CAFE credits” for ethanol FFVs under the Energy Independence and Security Act of 

2007, since many manufacturers had relied on the availability of these credits in developing their 

compliance strategies.283 Beginning in MY 2016, EPA ended the GHG emissions compliance 

incentives and adopted a methodology based on demonstrated vehicle emissions performance. 

This methodology established a default value assumption where ethanol FFVs are operated 100 

percent of the time on gasoline, but allows manufacturers to use a relative E85 and gasoline 

vehicle emissions performance weighting based either on national average E85 and gasoline 

sales data, or manufacturer-specific data showing the percentage of miles that are driven on E85 

vis-à-vis gasoline for that manufacturer’s ethanol FFVs.284 EPA is not proposing any changes to 

this methodology for MY 2017-2025. 

EPA believes there is a compelling rationale for not adopting a utility factor-based 

approach, as discussed above for PHEVs and dual fuel CNG vehicles, for ethanol FFVs. Unlike 

with PHEVs and dual fuel CNG vehicles, owners of ethanol FFVs do not pay any more for the 

E85 fueling capability. Unlike with PHEVs and dual fuel CNG vehicles, operation on E85 is not 

cheaper than gasoline on a per mile basis, it is typically the same or somewhat more expensive to 

operate on E85. Accordingly, there is no direct economic motivation for the owner of an ethanol 

FFVs to seek E85 refueling, and in some cases there is an economic disincentive. Because E85 

has a lower energy content per gallon than gasoline, an ethanol FFV will have a lower range on 

 283 75 FR at 25432-433. 284 75 FR at 25433-434. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 279 of 770

E85 than on gasoline, which provides an additional disincentive. The data confirm that, on a 

national average basis in 2008, less than one percent of ethanol FFVs used E85 fuel.285

If, in the future, these economic dynamics were to change (e.g., if E85 were less 

expensive, on a per mile basis), then EPA would reconsider its approach to this issue. 

b. Procedures for CAFE Calculations for MY 2020 and Later 

EPCA specifies how the fuel economy of dual fuel vehicles is to be calculated for the 

purposes of CAFE through the 2019 model year. The basic calculation is a 50/50 harmonic 

average of the fuel economy for the alternative fuel and the conventional fuel, irrespective of the 

actual usage of each fuel. In addition, the fuel economy value for the alternative fuel is 

significantly increased by dividing by 0.15 in the case of CNG and ethanol and by using a 

petroleum equivalency factor methodology that yields a similar overall increase in the CAFE 

mpg value for electricity.286 EPCA section 32905. In a related provision, the amount by which a 

manufacturer’s CAFE value (for domestic passenger cars, import passenger cars, or light-duty 

trucks) can be improved by dual fuel vehicles is limited by EPCA to 1.2 mpg through 2014, and 

then gradually reduced until it is phased out entirely starting in model year 2020.287 With the 

expiration of the special calculation procedures in 49 U.S.C. 32905 for dual fueled vehicles, the 

CAFE calculation procedures for model years 2020 and later need to be set under the general 

provisions authorizing EPA to establish testing and calculation procedures.288 

With the expiration of the specific procedures for dual fueled vehicles, there is less need 

to base the procedures on whether a vehicle meets the specific definition of a dual fueled vehicle 

in EPCA. Instead, EPA's focus is on establishing appropriate procedures for the broad range of 

vehicles that can use both alternative and conventional fuels. For convenience, this discussion 

uses the term dual fuel to refer to vehicles that can operate on an alternative fuel and on a 

conventional fuel. 

EPA sees two potential approaches for dual fuel vehicle CAFE calculations for model 

years 2020 and later. EPA requests comment on the two options discussed here, and we 

welcome comments on other potential options as well. 

Determining the fuel economy of the vehicle for purposes of CAFE requires a 

determination on how to weight the fuel economy performance on the alternative fuel and the 

fuel economy performance on the conventional fuel. For PHEVs, dual-fuel CNG vehicles, and 

FFVs, EPA proposes to apply the same weighting for CAFE purposes as for purposes of GHG 

 285 75 FR 14762 (March 26, 2010). 286 49 U.S.C. 32905. 287 49 U.S.C. 32906. NHTSA interprets section 32906(a) as not limiting the impact of duel fueled vehicles on CAFE 

calculations after MY2019. See section IV. XXX. 

288 49 U.S.C. 32904(a), (c). 

Comment [A50]: Commenters request clarity on 

whether this lower range is a significant disincentive. 

Commenters request clarity on whether this is 

necessary here. 

Comment [A51]: Maybe “usage patterns” or 

“usage statistics” is better than the economic 

dynamics? E85 use seems to be more directly 

relevant than E85 economics. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 280 of 770

emissions compliance values. EPA proposes that, for PHEVs and dual-fuel CNG vehicles, the 

fuel economy weightings will be determined using the SAE utility factor methodology, while for 

ethanol FFVs, manufacturers can choose to use a default based on 100% gasoline operation, or 

can choose to base the fuel economy weightings on national average E85 and gasoline use, or on 

manufacturer-specific data showing the percentage of miles that are driven on E85 vis-à-vis 

gasoline for that manufacturer’s ethanol FFVs. Where the two options differ is whether the 0.15 

divisor or similar adjustment factor is retained or not. EPA believes that there are legitimate 

arguments both for and against retaining the 0.15 divisor. 

EPA proposes to continue to use the 0.15 divisor for CNG and ethanol, and the petroleum 

equivalency factor for electricity, both of which are required to be used through 2019, for model 

years 2020 and later. EPA believes there are two primary arguments for retaining the 0.15 

divisor and petroleum equivalency factor. One, this approach is directionally consistent with the 

overall petroleum reduction goals of EPCA and the CAFE program. Two, the 0.15 divisor and 

petroleum equivalency factor are used under EPCA to calculate CAFE compliance values for 

dedicated alternative fuel vehicles, and retaining this approach for dual fuel vehicles would 

maintain consistency, for MY 2020 and later, between the approaches for dedicated alternative 

fuel vehicles and for the alternative fuel portion of dual fuel vehicle operation. 

EPA recognizes that this proposed calculation procedure would continue to provide, 

directionally, an increase in fuel economy values for the vehicles previously covered by the 

special calculation procedures in 49 U.S.C. 32905, and that Congress chose both to end the 

specific calculation procedures in that section and over time to reduce the benefit for CAFE 

purposes of the increase in fuel economy mandated by those special calculation procedures. 

However the proposed provisions differ significantly in important ways from the special 

calculation provisions mandated by EPCA. Most importantly, they are changed to reflect actual 

usage rates of the alternative fuel and do not use the artificial 50/50 weighting previously 

mandated by 49 U.S.C. 32905. In practice this means the primary vehicles to benefit from the 

proposed provision will be PHEVs and dual-fuel CNG vehicles, and not FFVs, while the primary 

source of benefit under 49 U.S.C. 32905 came from FFVs. Changing the weighting to better 

reflect real world usage is a major change from that mandated by 49 U.S.C. 32905, and it orients 

the calculation procedure more to the real world impact on petroleum usage. In addition, as 

noted above, Congress clearly continued the calculation procedures for dedicated alternative fuel 

vehicles that result in increased fuel economy values. This proposed approach is consistent with 

this, as it uses the same approach for calculating fuel economy on the alternative fuel when there 

is real world usage of the alternative fuel. Since the proposed provisions are quite different in 

effect from the specified provisions in 49 U.S.C. 32905, and are consistent with the calculation 

procures for dedicated vehicles that use the same alternative fuel, EPA believes this proposal 

would be an appropriate exercise of discretion under the general authority provided in 49 U.S.C. 

32904. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 281 of 770

An alternative option to the above proposal, and about which EPA seeks comment, is to 

not adopt the 0.15 divisor and petroleum equivalency factor for model years 2020 and later. The 

fuel economy for the CNG portion of a dual fuel CNG vehicle and the electric portion of a 

PHEV would be determined strictly on an energy-equivalent basis, without any adjustment based 

on the 0.15 divisor or petroleum equivalency factor. For E85 FFVs, the manufacturer would 

almost certainly use the gasoline fuel economy value only.289 This approach would place less 

emphasis on conservation of petroleum and more on conservation of energy. It would also place 

more emphasis on Congress' decision to reduce over time the impact on CAFE from the 

increased fuel economy values derived from the specified calculation procedures in 49 U.S.C. 

32905. EPA invites comment on both approaches. 

5. Off-cycle Technology Credits 

For MYs 2012-2016, EPA provided an option for manufacturers to generate credits for 

employing new and innovative technologies that achieve CO2 reductions which are not reflected 

on current 2-cycle test procedures. For this proposal, EPA, in coordination with NHTSA, is 

proposing to apply the off-cycle credits and equivalent fuel consumption improvement values to 

both the CAFE and GHG programs. This proposed expansion is a change from the 2012-16 final 

rule where only EPA provided the off-cycle credits for the GHG program. For MY 2017 and 

later, EPA is proposing that manufacturers may continue to use off-cycle credits for GHG 

compliance and begin to use fuel consumption improvement values (essentially equivalent to 

EPA credits) for CAFE compliance. In addition, EPA is proposing a set of defined (e.g. default) 

values for identified off-cycle technologies that would apply unless the manufacturer 

demonstrates to EPA that a different value for its technologies is appropriate. The proposed 

changes to incorporate off-cycle technologies for the GHG program are described in Section 

III.C.a-b below, and for the CAFE program are described in Section III.C.5.c below. 

a. Off-cycle Credit Program Adopted in MY 2012-2016 Rule 

In the MY 2012-2016 Final Rule, EPA adopted an optional credit opportunity for new 

and innovative technologies that reduce vehicle CO2 emissions, but for which the CO2 reduction 

benefits are not significantly captured over the 2-cycle test procedure used to determine 

compliance with the fleet average standards (i.e., “off-cycle”).290 EPA indicated that eligible 

innovative technologies are those that may be relatively newly introduced in one or more vehicle 

models, but that are not yet implemented in widespread use in the light-duty fleet, and which 

provide novel approaches to reducing greenhouse gas emissions. The technologies must have 

 289 Manufacturers can also can choose to base the fuel economy weightings on national average E85 and gasoline 

use, or on manufacturer-specific data showing the percentage of miles that are driven on E85 vis-à-vis gasoline for 

that manufacturer’s ethanol FFVs, but since E85 fuel economy ratings are based on miles per gallon of E85, not 

adjusted for energy equivalency with gasoline, E85 mpg values are lower than gasoline mpg values, which makes 

this a non-option. 

290 75 FR 25438-440, 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 282 of 770

verifiable and demonstrable real-world GHG reductions.291 EPA adopted the off-cycle credit 

option to provide an incentive to encourage the introduction of these types of technologies, 

believing that bona fide reductions from these technologies should be considered in determining 

a manufacturer’s fleet average, and that a credit mechanism is an effective way to do this. This 

optional credit opportunity is currently available through the 2016 model year. 

EPA finalized a two-tiered process for OEMs to demonstrate that CO2 reductions of an 

innovative and novel technology are verifiable and measureable but are not captured by the 2-

cycle test procedures. First, a manufacturer must determine whether the benefit of the 

technology could be captured using the 5-cycle methodology currently used to determine fuel 

economy label values. EPA established the 5-cycle test methods to better represent real-world 

factors impacting fuel economy, including higher speeds and more aggressive driving, colder 

temperature operation, and the use of air conditioning. If this determination is affirmative, the 

manufacture must follow the 5-cycle procedures. 

If the manufacturer finds that the technology is such that the benefit is not adequately 

captured using the 5-cycle approach, then the manufacturer would have to develop a robust 

methodology, subject to EPA approval, to demonstrate the benefit and determine the appropriate 

CO2 gram per mile credit. This case-by-case, non-5-cycle credits approach includes an 

opportunity for public comment as part of the approval process. The demonstration program 

must be robust, verifiable, and capable of demonstrating the real-world emissions benefit of the 

technology with strong statistical significance. Whether the approach involves on-road testing, 

modeling, or some other analytical approach, the manufacturer is required to present a proposed 

methodology to EPA. EPA will approve the methodology and credits only if certain criteria are 

met. Baseline emissions and control emissions must be clearly demonstrated over a wide range 

of real world driving conditions and over a sufficient number of vehicles to address issues of 

uncertainty with the data. Data must be on a vehicle model-specific basis unless a manufacturer 

demonstrated model specific data was not necessary. See generally 75 FR at 25438-40. 

b. Proposed Changes to the Off-cycle Credits Program 

EPA has been encouraged by automakers’ interest in off-cycle credits since the program 

was finalized. Though it is early in the program, several manufacturers have shown interest in 

introducing off-cycle technologies which are in various stages of development and testing. EPA 

believes that continuing the option for off-cycle credits would further encourage innovative 

strategies for reducing CO2 emissions beyond those measured by the 2-cycle test procedures. 

Continuing the program provides manufacturers with additional flexibility in reducing CO2 to 

meet increasingly stringent CO2 standards and to encourage early penetration of off-cycle 

technologies into the light duty fleet. Furthermore, extending the program may encourage 

automakers to invest in off-cycle technologies that could have the benefit of realizing additional 

 291 See 40 CFR section 1866.12 (d); 75 FR at 25438. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 283 of 770

reductions in the light-duty fleet over the longer-term. Therefore, EPA is proposing to extend 

the off-cycle credits program to 2017 and later model years. 

In implementing the program, some manufacturers have expressed concern that a 

drawback to using the program is uncertainty over which technologies may be eligible for offcycle credits plus uncertainties resulting from a case-by-case approval process. Current EPA 

eligibility criteria require technologies to be new, innovative, and not in widespread use in order 

to qualify for credits. Also, the MY 2012-2016 Final Rule specified that technologies must not 

be significantly measurable on the 2-cycle test procedures. As discussed below, EPA proposes to 

significantly modify the eligibility criteria, as the current criteria are not well defined and have 

been a source of uncertainty for manufacturers, thereby interfering with the goal of providing an 

incentive for the development and use of additional technologies to achieve real world reductions 

in CO2 emissions. The focus will be on whether or not add-on technologies can be demonstrated 

to provide off-cycle CO2 emissions reductions that are not sufficiently reflected on the 2-cycle 

tests. 

In addition, as described below in section III.C.5.b.i, EPA is proposing that 

manufacturers would be able to generate credits by applying technologies listed on an EPA predefined and pre-approved technology list starting with MY 2017. These credits would be 

verified and approved as part of certification with no prior approval process needed. We believe 

this new option would significantly streamline and simplify the program for manufacturers 

choosing to use it and would provide manufacturers with certainty that credits may be generated 

through the use of pre-approved technologies. For credits not based on the pre-defined list, EPA 

is proposing to streamline and better define a step-by-step process for demonstrating emissions 

reductions and applying for credits. EPA is proposing that these procedural changes to the caseby-case approach would be effective for new credit applications for both the remaining years of 

the MY 2012-2016 program as well as for MY 2017 and later credits that are not based on the 

pre-defined list. 

As discussed in section II.F. and III.B.10, EPA, in coordination with NHTSA, is also 

proposing that manufacturers be able to include fuel consumption reductions resulting from the 

use of off-cycle technologies in their CAFE compliance calculations. Manufacturers would 

generate “fuel consumption improvement values” essentially equivalent to EPA credits, for use 

in the CAFE program. The proposed changes to the CAFE program to incorporate off-cycle 

technologies are discussed below in section III.5.c. 

i. Pre-defined Credit List for MY 2017 and Later 

As noted above, EPA proposes to establish a list of off-cycle technologies from which 

manufacturers could select to earn a pre-defined level of CO2 credits in MY 2017 and later. Both 

technologies and credit values based on the list would be pre-approved. The manufacturer 

would demonstrate in the certification process that their technology meets the definition of the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 284 of 770

technology in the list. Table III-16 provides an initial proposed list of the technologies and per 

vehicle credit levels for cars and light trucks. EPA has used a combination of available activity 

data from the MOVES model, vehicle and test data, and vehicle simulation modeling to estimate 

a proposed credit value EPA believes to be appropriate. Chapter 5 of the joint TSD provides a 

detailed description of how these technologies are defined and how the proposed credits levels 

were derived. 

Table III-16 Off-cycle Technologies and Proposed Credits for Cars and Light 

Trucks 

Technology 

Credit for 

Cars 

Credit for Light 

Trucks

g/mi g/mi 

High Efficiency Exterior Lighting 1.1 1.1 

Engine Heat Recovery 0.7 0.7 

Solar Roof Panels 3.0 3.0 

Active Aerodynamic Improvements 0.6 1.0 

Engine Start-Stop 2.9 4.5 

Electric Heater Circulation Pump 1.0 1.5 

Active Transmission Warm-Up 1.8 1.8 

Active Engine Warm-Up 1.8 1.8 

Solar Control Up to 3.0 Up to 4.3 

Two technologies on the list - active aerodynamic improvements and stop start – are in a 

different position than the other technologies on the list. Both of these technologies are included 

in the agencies’ modeling analysis of technologies projected to be available for use in achieving 

the reductions needed for the standards. We have information on their effectiveness, cost, and 

availability for purposes of considering them along with the various other technologies we 

consider in determining the appropriate CO2 emissions standard. These technologies are among 

those listed in Chapter 3 of the joint TSD and have measureable benefit on the 2-cycle test. 

However in the context of off-cycle credits, stop start is any technology which enables a vehicle 

to automatically turn off the engine when the vehicle comes to a rest and restart the engine when 

the driver applies pressure to the accelerator or releases the brake. This includes HEVs and 

PHEVs (but not EVs). In addition, active grill shutters is just one of various technologies that 

can be used as part of aerodynamic design improvements (as part of the “aero2” technology). 

The modeling and other analysis developed for determining the appropriate emissions standard 

includes these technologies, using the effectiveness values on the 2-cycle test. This is consistent 

with our consideration of all of the other technologies included in these analyses. Including them 

on the list for off-cycle credit generation, for purposes of compliance with the standard, would 

recognize that these technologies have a higher degree of effectiveness than reflected in their 2-

cycle effectiveness. The agencies have taken into account the generation of off-cycle credits by 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 285 of 770

these two technologies in determining the appropriateness of the proposed standards, considering 

the amount of credit, the projected degree of penetration of these technologies, and other factors. 

Section III.D has a more detailed discussion on the feasibility of the standards within the context 

of the flexibilities (such as off-cycle credits) proposed in this rule. As discussed in section III.D., 

EPA plans to incorporate the off-cycle credits for these two technologies in the cost analysis for 

the final rule (which EPA anticipates would slightly reduce costs with no change to benefits). 

EPA requests comments on this approach for stop start and active aerodynamic improvements. 

Although EPA believes that there is sufficient information to estimate performance of 

other listed technologies for purposes of a credit program, EPA does not believe it appropriate to 

reflect these technologies in setting the level of standards at this point. There remains significant 

uncertainty as to the extent listed technologies other than stop start and active aerodynamic 

improvements may be used across the light duty fleet and (in some instances) costs of the 

technologies. Including them in the standard setting, as is done with A/C control technology, 

calls for a reasonable projection of the penetration of these technologies across the fleet and over 

time, along with reasonable estimates of their cost. EPA does not have adequate data at this 

point in time to make such fleet wide projections for other technologies on the list, or for other 

technologies addressed by the case-by-case approach. As in the 2012-2016 rule, the use of these 

technologies continues to be not nearly so well developed and understood for purposes of 

consideration in setting the standards. See 75 FR at 25438. Based on this, technologies that are 

considered by EPA in setting the standard, as discussed in section III.D and in Chapter 3 of the 

TSD, may not generate off-cycle credits under this approach, except for active aerodynamic 

improvements and stop start.292 This would amount to the double counting discussed at 75 FR 

25438, as EPA has already considered these technologies and assigned them an emission 

reduction effectiveness for purposes of standard setting, and has enough information on 

effectiveness, cost, and applicability to project their use for purposes of standard setting. EPA 

will reassess the list above for the Final Rule, based on additional information that becomes 

available during the comment period. It may also be appropriate to reconsider this approach as 

part of the mid-term review as information on these technologies’ applicability, costs, and 

performance becomes more robust. 

EPA proposes to cap the amount of credits a manufacturer could generate using the above 

list to 10 g/mile per year on a combined car and truck fleet-wide average basis. The cap would 

not apply on a vehicle model basis, allowing manufacturers the flexibility to focus off-cycle 

technologies on certain vehicle models and generate credits for that vehicle model in excess of 

10 g/mile. EPA is proposing a fleet-wide cap because the proposed credits are based on limited 

data, and also EPA recognizes that some uncertainty is introduced when credits are provided 

based on a general assessment of off-cycle performance as opposed to testing on the individual 

 292 Section III.D provides EPA projected technology penetration rates. Technologies projected to be used to meet 

the standards would not be eligible for off-cycle credits, with the exception of stop start and active aerodynamic 

improvements. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 286 of 770

vehicle models. Also, as discussed in Chapter 5 of the draft TSD, EPA believes the credits 

proposed are based on conservative estimates, providing additional assurance that the list would 

not result in an overall loss of CO2 benefits. EPA proposes that manufacturers wanting to 

generate credits in excess of the 10 g/mile limit for these listed technologies could do so by 

generating necessary data and going through the credit approval process described below in 

Section III.C.5.b.iii and iv. 

As noted above, EPA proposes to make the list available for credit generation starting in 

MY 2017.. Prior to MY 2017, manufacturers would need to demonstrate off-cycle emissions 

reductions in order to generate credits for off-cycle technologies, including those on the list. 

Requirements for demonstrating off-cycle credits not based on the list are described below. 

Manufacturers may also opt to generate data for listed technologies in MY 2017 and later where 

they are able to demonstrate a credit value greater than that provided on the list. 

Prior to MY2017, EPA would continue to evaluate off-cycle technologies. Based on data 

provided by manufacturers for non-listed technologies, and other available data, EPA would 

consider adding technologies to the list through rulemaking or issuing guidance in the future for 

additional off-cycle technologies, indicating the level of credits that EPA expects could be 

approved for any manufacturer through the case-by-case approach, helping to streamline the 

case-by-case approach until a rulemaking was conducted to update the list. If the CO2 reduction 

benefits of a technology have been established through manufacturer data and testing, EPA 

believes that it would be appropriate to list the technology and a conservative associated credit 

value. 

Since one purpose of the off-cycle credits is to encourage market penetration of the 

technologies (see 75 FR at 25438), EPA also proposes to require minimum penetration rates for 

non-hybrid based listed technologies as a condition for generating credit from the list as a way to 

further encourage their widespread adoption by MY 2017 and later. At the end of the model year 

for which the off-cycle credit is claimed, manufacturers would need to demonstrate that 

production of vehicles equipped with the technologies for that model year exceeded the 

percentage thresholds in order to receive the listed credit. EPA proposes to set the threshold at 

10 percent of a manufacturer’s overall combined car and light truck production for all 

technologies not specific to HEVs. EPA believes 10 percent is an appropriate threshold as it 

would encourage manufacturers to develop technologies for use on larger volume models and 

bring the technologies into the mainstream. On the other hand, EPA is not proposing a larger 

value because EPA does not want to discourage the use of technologies. For solar roof panels 

(solar control) and electric heater circulation pumps, which are HEV-specific, EPA is not 

proposing a minimum penetration rate threshold for credit generation. Hybrids may be a small 

subset of a manufacturer’s fleet, less than 10 percent in some cases, and EPA does not believe 

establishing a threshold for hybrid-based technologies would be useful and could unnecessarily 

impede the introduction of these technologies. EPA requests comments on applying this type of 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 287 of 770

threshold, the appropriateness of 10 percent as the threshold for listed technologies that are not 

HEV-specific, and the proposed treatment of hybrid-based technologies. 

ii. Proposed Technology Eligibility Criteria 

EPA proposes to remove the criteria in the 2012-2016 rule that off-cycle technologies 

must be ‘new, innovative, and not widespread’ because these terms are imprecise and have 

created implementation issues and uncertainty in the program. For example, it is unclear if 

technologies developed in the past but not used extensively would be considered new, if only the 

first one or two manufacturers using the technology would be eligible or if all manufacturers 

could use a technology to generate credits, or if credits for a technology would sunset after a 

period of time. It has also been unclear if a technology such as active aerodynamics would be 

eligible since it provides a small measurable reduction on the 2-cycle test but provides additional 

reductions off-cycle, especially during high speed driving. These criteria have interfered with 

the goal of providing an incentive for the development and use of off-cycle technology that 

reduces CO2 emissions. EPA proposes this approach for new MY 2012-2016 credits as well as 

for MY 2017-2025. 

EPA believes it is appropriate to provide credit opportunities for technologies that 

achieve bona fide real world reductions beyond those measured under the two-cycle test without 

further making (somewhat subjective) judgments regarding the newness and innovativeness of 

the technology. Instead, EPA proposes to provide off-cycle credits for any technologies that are 

added to a vehicle model that are demonstrated to provide significant incremental off-cycle CO2

reductions, like those on the list. The proposed technology demonstration and step-by-step 

application process is described in detail below in section III.C.5.b.ii. EPA is proposing to 

clarify that technologies providing small reductions on the 2-cycle tests but additional significant 

reductions off-cycle could be eligible to generate off-cycle credits. EPA thus proposes to 

remove the “not significantly measurable over the 2-cycle test” criteria. EPA proposes that, 

instead, manufacturers must be able to make a demonstration through testing with and without 

the off-cycle technology. 

 As noted above, EPA proposes that technologies included in EPA’s assessment in this 

rulemaking of technology for purposes of developing the standard would not be allowed to 

generate off-cycle credits, as their cost and effectiveness and expected use are already included 

in the assessment of the standard. (As explained above, the agencies have done so with respect to 

stop start and active aerodynamic improvements by including the projected level of credits in 

determining the appropriateness of the proposed standards.) EPA proposes that technologies 

integral or inherent to the basic vehicle design including engine, transmission, mass reduction, 

passive aerodynamic design, and base tires would not be eligible for credits. For example, 

manufacturers would not be able to generate off-cycle credits by moving to an eight-speed 

transmission. EPA believes that it would be difficult to clearly establish an appropriate A/B test 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 288 of 770

(with and without technologies) for technologies so integral to the basic vehicle design. EPA 

proposes to limit the off-cycle program to technologies that can be clearly identified as add-on 

technologies conducive to A/B testing. Further, EPA would not provide credits for a technology 

required to be used by Federal law, such as tire pressure monitoring systems, as EPA would 

consider such credits to be windfall credits (i.e. not generated as a result of the rule). The base 

versions of such technologies would be considered part of the base vehicle. However, if a 

manufacturer demonstrates that an improvement to such technologies provides additional offcycle benefits above and beyond a system meeting minimum Federal requirements, those 

incremental improvements could be eligible for off-cycle credits, assuming an appropriate 

quantification of credits is demonstrated. 

By proposing to remove the “new, innovative, not widespread use” criteria in the present 

rule, EPA is also making clear that once approved, EPA does not intend to sunset a technology’s 

credit eligibility or deny credits to other vehicle applications using the technology, as may have 

been implied by those criteria under the MY 2012-2016 program. EPA believes, at this time, 

that it should encourage the wider use of technologies with legitimate off-cycle emissions 

benefits. Manufacturers demonstrating through the EPA approval process that the technology is 

effective on additional vehicle models would be eligible for credits. Limiting the application of a 

technology or sunsetting the availability of credits during the 2017-2025 time frame would be 

counterproductive because it would remove part of the incentive for manufacturers to invest in 

developing and deploying off-cycle technologies, some of which may be promising but have 

considerable development costs associated with them. Also, approving a technology only to 

later disallow it could lead to a manufacturer discontinuing the use of the technology even if it 

remained a cost effective way to reduce emissions. EPA also believes that this approach 

provides an incentive for manufacturers to continue to improve technologies without concern 

that they will become ineligible for credits at some future time. EPA requests comments on all 

aspects of the above approach for the off-cycle credits program criteria. 

iii. Demonstrating Off-cycle Emissions Reductions 

5-cycle testing 

EPA is retaining a two-tiered process for demonstrating the CO2 reductions of off-cycle 

technologies (in those instances when a manufacturer is not using the default value provided by 

the rule), but is clarifying several of the requirements. The process described below would be 

used for all credits not based on the pre-defined list described in Section III.C.5.i, above. As 

noted above, the proposed approach would replace the requirement in the 2012-2016 rule that 

technology must not be “significantly measurable” over the 2-cycle test. See section 86. 1866-12 

(d) (ii). This criterion has been problematic because several technologies provide some benefit 

on the 2-cycle test but much greater benefits off-cycle. Under today’s proposal, technologies 

would need to be demonstrated to provide significant incremental off-cycle benefits above and 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 289 of 770

beyond those provided over the 2-cycle test. EPA proposes this approach for new MY 2012-

2016 credits as well as for MY 2017-2025. 

The 5-cycle test procedures would remain the starting point for demonstrating off-cycle 

emissions reductions. The MY 2012-2016 rulemaking established general 5-cycle testing 

requirements and EPA is proposing several provisions to delineate what EPA would expect as 

part of a 5-cycle based demonstration. Manufacturers requested clarification on the amount of 5-

cycle testing that would be needed to demonstrate off-cycle credits, and EPA is proposing the 

following as part of the step-by-step methodology manufacturers would follow to generate 

credits. In addition to the general 5-cycle demonstration requirements of the MY 2012-2016 

program, EPA proposes to specifically require model-based verification of 5-cycle results where 

off-cycle reductions are small and could be a product of testing variability. EPA is also 

proposing to specifically require that all applications include an engineering analysis for why the 

technology provides off-cycle emissions reductions. EPA proposes to specify that manufacturers 

would run an initial set of three 5-cycle tests with and without the technology providing the offcycle CO2 reduction. Testing must be conducted on a representative vehicle, selected using good 

engineering judgment, for each vehicle model. EPA proposes that manufacturers could bundle 

off-cycle technologies together for testing in order to reduce testing costs and improve their 

ability to demonstrate consistently measurable reductions over the tests. If these A/B 5-cycle 

tests demonstrate an off-cycle benefit of 3 percent or greater, comparing average test results with 

and without the off-cycle technology, the manufacturer would be able to use the data as the basis 

for credits. EPA has long used 3 percent as a threshold in fuel economy confirmatory testing for 

determining if a manufacturer’s fuel economy test results are comparable to those run by EPA.293 

If the initial three sets of 5-cycle results demonstrate a reduction of less than a 3 percent 

difference in the 5-cycle results with and without the off-cycle technology, the manufacturer 

would have to run an additional two additional 5-cycle tests with and without the off-cycle 

technologies and verify the emission reduction using the EPA Light-duty Simulation Tool 

described below. If the simulation tool supports credits that are less than 3 percent of the 

baseline 2-cycle emissions, then EPA would approve the credits based on the test results. As 

outlined below, credits based on this methodology would be subject to a 60 day EPA review 

period starting when EPA receives a complete application, which would not include a public 

review. 

EPA believes that small off-cycle credit claims (i.e., less than 3 percent of the vehicle 

model 2-cycle CO2 level) should be supported with modeling and engineering analysis. EPA is 

proposing the approach above for a number of reasons. Emissions reductions of only a few 

grams may not be statistically significant and could be the product of gaming. Also, 

manufacturers have raised test-to-test variability as an issue for demonstrating technologies 

through 5-cycle testing. Modeling and engineering analyses can help resolve these questions. 

 293 40 CFR 600.008 (b)(3). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 290 of 770

EPA also requests comments on allowing manufacturers to use the EPA simulation tool and 

engineering analysis in lieu of additional 5-cycle testing. For some technologies providing very 

small incremental benefits, it may not be possible to accurately measure their benefit with 

vehicle testing. 

Demonstrations not based on 5-cycle testing

 In cases where the benefit of a technological approach to reducing CO2 emissions cannot 

be adequately represented using 5-cycle testing, manufacturers will need to develop test 

procedures and analytical approaches to estimate the effectiveness of the technology for the 

purpose of generating credits. See 75 FR at 25440. EPA is not proposing to make significant 

changes to this aspect of the program. If the 5-cycle process is inadequate for the specific 

technology being considered by the manufacturer (i.e., the 5-cycle test does not demonstrate any 

emissions reductions), then an alternative approach may be developed by the manufacturer and 

submitted to EPA for approval. The demonstration program must be robust, verifiable, and 

capable of demonstrating the real-world emissions benefit of the technology with strong 

statistical significance. The methodology developed and submitted to EPA would be subject to 

public review as explained at 75 FR 25440 and in 86.1866 (d) (2)(ii). 

 EPA has identified two general situations where manufacturers would need to develop 

their own demonstration methodology. The first is a situation where the technology is active 

only during certain operating conditions that are not represented by any of the 5-cycle tests. To 

determine the overall emissions reductions, manufacturers must determine not only the emissions 

impacts during operation but also real-world activity data to determine how often the technology 

is utilized during actual, in-use driving on average across the fleet. EPA has identified some of 

these types of technologies and has calculated a default credit for them, including items such as 

high efficiency (e.g., LED) lights and solar panels on hybrids. See Table III-4 above. In their 

demonstrations, manufacturers may be able to apply the same type of methodologies used by 

EPA as a basis for these default values (see TSD Chapter 5). 

 The second type of situation where manufacturers would need to develop their own 

demonstration data would be for technologies that involve action by the driver to make the 

technology effective in reducing CO2 emissions. EPA believes that driver interactive 

technologies face the highest demonstration hurdle because manufacturers would need to provide 

actual real-world usage data on driver response rates. Such technologies would include “eco 

buttons” where the driver has the option of selecting more fuel efficient operating modes, traffic 

avoidance systems, and more advanced tire pressure monitor systems (i.e., technologies that go 

beyond the minimum Federal requirements) notifying the driver to fill their tires more often.294 

EPA proposes that data would need to be from instrumented vehicles and not through driver 

 294 A tire pressure monitor system that also automatically fills the tire without driver interaction would obviously not 

involve driver response data for the automatic system, but the demonstration may involve the driver response rates 

for the baseline system to determine an incremental credit. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 291 of 770

surveys where drivers try to recall their response behavior. Systems such as On-star could be one 

promising way to collect driver response data if they are designed to do so. Manufacturers might 

have to design extensive on-road test programs. Any such on-road testing programs would need 

to be statistically robust and based on average U.S. driving conditions, factoring in differences in 

geography, climate, and driving behavior across the U.S. EPA proposes this approach for new 

MY 2012-2016 credits as well as for MY 2017-2025. 

EPA Light-duty Vehicle Simulation Tool

As explained above and further discussed in Section III.C.5.d below, EPA has developed 

full vehicle simulation capabilities in order to support regulations and vehicle compliance by 

quantifying the effectiveness of different technologies with scientific rigor over a wide range of 

engine and vehicle operating conditions. This in-house simulation tool has been developed for 

modeling a wide variety of light, medium, and heavy duty vehicle applications over various 

driving cycles. In order to ensure transparency of the models and free public access, EPA has 

developed the tool in MATLAB/Simulink environment with a completely open source code. 

EPA’s first application of the vehicle simulation tool was for purposes of heavy-duty vehicle 

compliance and certification. For the model years 2014 to 2017 final rule for medium and heavy 

duty trucks, EPA created the “Greenhouse gas Emissions Model” (GEM), which is used both to 

assess Class 2b-8 vocational vehicle and Class 7/8 combination tractor GHG emissions and fuel 

efficiency and to demonstrate compliance with the vocational vehicle and combination tractor 

standards. See 76 FR at 57146-147.295 EPA will submit the simulation tool for peer review for 

the final rule. Chapter 2 of the Draft RIA has more details of this simulation tool. 

As mentioned previously, the tool is based on MATLAB/Simulink and is a forwardlooking full vehicle model that uses the same physical principles as other commercially available 

vehicle simulation tools (e.g. Autonomie, AVL-CRUISE, GT-Drive, etc.) to derive the 

governing equations. These governing equations describe steady-state and transient behaviors of 

each of electrical, engine, transmission, driveline, and vehicle systems, and they are integrated 

together to provide overall system behavior during transient conditions as well as steady-state 

operations. In the light-duty vehicle simulation tool, there are four key system elements that 

describe the overall vehicle dynamics behavior and the corresponding fuel efficiency: electrical, 

engine, transmission, and vehicle. The electrical system model consists of parasitic electrical 

load and A/C blower fan, both of which were assumed to be constant. The engine system model 

is comprised of engine torque and fueling maps. For the vehicle system, four vehicles were 

modeled: small, mid, large size passenger vehicles, and a light-duty pick-up truck. The engine 

maps, transmission gear ratios and shifting schedules were appropriately sized and adjusted 

 295 See also US EPA, “Final Rule Making to Establish Greenhouse Gas Emissions Standards and Fuel Efficiency 

Standards for Medium- and Heavy-Duty Engines and Vehicles,” Heavy-Duty Regulatory Impact Analysis.give cite 

to where GEM is written up in theheavy duty RIA
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 292 of 770

according to the vehicle type represented by the simulation. Chapter 2 of the Draft Regulatory 

Impact Analysis provides more details on this light-duty vehicle simulation tool. 

As discussed in section III.C.1, EPA has used the light-duty vehicle simulation tool to 

estimate indirect A/C CO2 emissions from conventional (non-hybrid) vehicles, helping to 

quantify the indirect A/C credit. In addition to A/C related CO2 reductions, EPA believes this 

same simulation tool may be useful in estimating CO2 reductions from off-cycle technologies. 

Currently, the model provides A/B relative comparisons with and without technologies that can 

help inform credits estimates. EPA has used it to estimate credits for some of the technologies in 

the proposed pre-defined list, including active aerodynamic improvements. As discussed above, 

EPA is proposing to require this simulation tool be used as an additional way to estimate 

emissions reductions in cases where the 5-cycle test results indicate the potential reductions to be 

small, and EPA is also requesting comments on using the simulation tool as a basis for 

estimating off-cycle credits in lieu of 5-cycle testing. 

iv. In-use Emissions Requirements 

 EPA requires off-cycle components to be durable in-use and continues to believe that this 

is an important aspect of the program. See 86.1866-12 (d)(1)(iii). The technologies upon which 

the credits are based are subject to full useful life compliance provisions, as with other emissions 

controls. Unless the manufacturer can demonstrate that the technology would not be subject to 

in-use deterioration over the useful life of the vehicle, the manufacturer must account for 

deterioration in the estimation of the credits in order to ensure that the credits are based on real 

in-use emissions reductions over the life of the vehicle. In-use requirements would apply to 

technologies generating credits based on the pre-defined list as well as to those based on a 

manufacturer’s demonstration. 

 Manufacturers have requested clarification of these provisions and guidance on how to 

demonstrate in-use performance. EPA is proposing to clarify that off-cycle technologies are 

considered emissions related components and all in-use requirements apply including defect 

reporting, warranty, and recall. OBD requirements do not apply under the MY 2012-2016 

program and EPA is not proposing any OBD requirements at this time for off-cycle technologies. 

Manufacturers may establish maintenance intervals for these components in the same way they 

would for other emissions related components. The performance of these components would be 

considered in determining compliance with the applicable in-use CO2 standards. Manufacturers 

may demonstrate in-use emissions durability at time of certification by submitting an engineering 

analysis describing why the technology is durable and expected to last for the full useful life of 

the vehicle. This demonstration may also include component durability testing or through whole 

vehicle aging if the manufacturer has such data. The demonstration would be subject to EPA 

approval prior to credits being awarded.296 EPA believes these provisions are important to 

 296 Listed technologies are pre-approved assuming the manufacturer demonstrates durability. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 293 of 770

ensure that promised emissions reductions and fuel economy benefit to the consumer are 

delivered in-use. EPA requests comments on the above approach for in-use emissions durability. 

v. Step-by-Step EPA Review Process 

EPA proposes to provide a step-by-step process and timeline for reviewing credit 

applications and providing a decision to manufacturers. EPA requests comments on the process 

described below including comments on how to further improve or streamline it while 

maintaining its effectiveness. EPA proposes these clarifications and further detailed step-b-step 

instructions for new MY 2012-2016 credits as well as for MY 2017-2025. EPA believes these 

additional details are consistent with the general off-cycle requirements adopted in the MY 2012-

2016 rule. Starting in MY 2017, EPA is proposing that manufacturers may generate credits 

using technologies on a pre-defined list, and these technologies would not be required to go 

through the approval process described below. 

Step 1: Manufacturer Conducts Testing and Prepares Application 

 5-cycle - Manufacturers would conduct the testing and/or simulation described 

above 

 Non 5-cycle - Manufacturers would develop a methodology for non 5-cycle based 

demonstration and carry-out necessary testing and analysis

o Manufacturers may opt to meet with EPA to discuss their plans for 

demonstrating technologies and seek EPA input prior to conducting 

testing or analysis

 Manufacturers conduct engineering analysis and/or testing to demonstrate in-use 

durability

Step 2: Manufacturer Submits Application 

The manufacturer application must contain the following: 

 Description of the off-cycle technologies and how they function to reduce offcycle emissions 

 The vehicle models on which the technology will be applied 

 Test vehicles selection and supporting engineering analysis for their selection 

 5-cycle test data, and/or including simulation results using EPA Light-duty 

Simulation Tool, as applicable 

 For credits not based on 5-cycle testing, a complete description of methodology 

used to estimate credits and supporting data (vehicle test data and activity data) 

o Manufacturer may seek EPA input on methodology prior to conducting 

testing or analysis 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 294 of 770

 An estimate of off-cycle credits by vehicle model, and fleetwide based on 

projected vehicle sales 

 Engineering analysis and/or component durability testing or whole vehicle test 

data (as necessary) demonstrating in-use durability of components 

Step 3: EPA Review 

Once EPA receives an application, EPA would do the following: 

 EPA will review the application for completeness and within 30 days will notify 

the manufacturer if additional information is needed 

 EPA will review the data and information provided to determine if the application 

supports the level of credits estimated by manufacturers 

 For applications where the rule specifies public participation in the review 

process, EPA will make the applications available to the public within 60 days of 

receiving a complete application 

o The public review period will be 30 day review of the methodology used 

by the manufacturer to estimate credits, during which time the public may 

submit comments. 

o Manufacturers may submit a written rebuttal of comments for EPA 

consideration or may revise their application in response to comments 

following the end of the public review period. 

Step 4: EPA Decision 

 For applications where the rule does not specify public participation and review, 

EPA will notify the manufacturer of its decision within 60 days of receiving a 

complete application 

 For applications where the rule does specify public participation and review, EPA 

will notify the manufacturer of its decision on the application after reviewing 

public comments.

 EPA will notify manufacturers in writing of its decision to approve or deny the 

credits application, and provide a written explanation for its action (supported by 

the administrative record for the application proceeding) 

c. Off-cycle Technology Fuel Consumption Improvement Values in the CAFE 

Program 

 EPA proposes, in coordination with NHTSA, that manufacturers would be able to 

generate fuel consumption improvement values for use in the CAFE program. The fuel 

consumption improvement values for listed technologies are provided below. For fuel 

consumption improvement values not based on the list, manufacturers would go though the steps 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 295 of 770

described above in Section III.C.5.b. Once a CO2 credits has been determined, the credit would 

be converted to a gallons per mile fuel consumption improvement value using the 8887 

conversion factor for gasoline engines (CO2 credits would be divided by 8887). EPA would 

approve credit generation and corresponding fuel consumption improvement values in 

consultation with NHTSA. 

III-17 Proposed Fuel Consumption Improvement Values 

Technology Cars Light Trucks 

gallons/mi gallons/mi 

High Efficiency Exterior Lighting 0.000124 0.000124 

Engine Heat Recovery 0.000778 0.000778 

Solar Roof Panels 0.000338 0.000338 

Active Aerodynamic Improvements 0.0000675 0.000113 

Engine Start-Stop 0.000326 0.000506 

Electric Heater Circulation Pump 0.000123 0.000169 

Active Transmission Warm-Up 0.000203 0.000203 

Active Engine Warm-Up 0.000203 0.000203 

Solar Control Up to 0.000338 Up to 0.000484 

d. Vehicle Simulation Model 

Chapter 2 of the RIA provides a detailed description of the vehicle simulation tool that 

EPA has been developing. This tool is capable of simulating a wide range of conventional and 

advanced engines, transmissions, and vehicle technologies over various driving cycles. It 

evaluates technology package effectiveness while taking into account synergy (and dis-synergy) 

effects among vehicle components and estimates GHG emissions for various combinations of 

technologies. For the 2017 to 2025 GHG proposal, this simulation tool was used to assist 

estimating the amount of GHG credits for improved A/C systems and off-cycle technologies. 

EPA seeks public comments on this approach of using the tool for directly generating and finetuning some of the credits in order to capture the amount of GHG reductions provided by 

primarily off-cycle technologies. 

There are a number of technologies that could bring additional GHG reductions over the 

5-cycle drive test (or in the real world) compared to the combined FTP/Highway (or two) cycle 

test. These are called off-cycle technologies and are described in chapter 5 of the Joint TSD in 

detail. Among them are technologies related to reducing vehicle’s electrical loads, such as High 

Efficiency Exterior Lights, Engine Heat Recovery, and Solar Roof Panels. In an effort to 

streamline the process for approving off-cycle credits, we have set a relatively conservative 

estimate of the credit based on our efficacy analysis. EPA seeks comment on utilizing the model 

in order to quantify the credits more accurately, if actual data of electrical load reduction and/or 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 296 of 770

on-board electricity generation by one or more of these technologies is available through data 

submission from manufacturers. Similarly, there are technologies that would provide additional 

GHG reduction benefits in the 5-cycle test by actively reducing the vehicle’s aerodynamic drag 

forces. These are referred to as active aerodynamic technologies, which include but are not 

limited to Active Grill Shutters and Active Suspension Lowering. Like the electrical load 

reduction technologies, the vehicle simulation tool can be used to more accurately estimate the 

additional GHG reductions (therefore the credits) provided by these active aerodynamic 

technologies over the 5-cycle drive test. EPA seeks comment on using the simulation tool in 

order to quantify these credits. In order to do this properly, manufacturers would be expected to 

submit two sets of coast-down coefficients (with and without the active aerodynamic 

technologies). Or, they could submit two sets of aerodynamic drag coefficient (with and without 

the active aerodynamic technologies) as a function of vehicle speed. 

There are other technologies that would result in additional GHG reduction benefits that 

cannot be fully captured on the combined FTP/Highway cycle test. These technologies typically 

reduce engine loads by utilizing advanced engine controls, and they range from enabling the 

vehicle to turn off the engine at idle, to reducing cabin temperature and thus A/C compressor 

loading when the vehicle is restarted. Examples include Engine Start-Stop, Electric Heater 

Circulation Pump, Active Engine/Transmission Warm-Up, and Solar Control. For these types of 

technologies, the overall GHG reduction largely depends on the control and calibration strategies 

of individual manufacturers and vehicle types. Also, the current vehicle simulation tool does not 

have the capability to properly simulate the vehicle behaviors that depend on thermal conditions 

of the vehicle and its surroundings, such as Active Engine/Transmission Warm-Up and Solar 

Control. Therefore, the vehicle simulation may not provide full benefits of the technologies on 

the GHG reductions. For this reason, the agency is not proposing to use the simulation tool to 

generate the GHG credits for these technologies at this time, though future versions of the model 

may be more capable of quantifying the efficacy of these off-cycle technologies as well. 

D. Technical Assessment of the Proposed CO2 Standards 

This proposed rule is based on the need to obtain significant GHG emissions reductions 

from the transportation sector, and the recognition that there are cost-effective technologies 

available in this timeframe to achieve such reductions for MY 2017-2025 light duty vehicles. As 

in many prior mobile source rulemakings, the decision on what standard to set is largely based 

on the effectiveness of the emissions control technology, the cost and other impacts of 

implementing the technology, and the lead time needed for manufacturers to employ the control 

technology. The standards derived from assessing these factors are also evaluated in terms of the 

need for reductions of greenhouse gases, the degree of reductions achieved by the standards, and 

the impacts of the standards in terms of costs, quantified benefits, and other impacts of the 

standards. The availability of technology to achieve reductions and the cost and other aspects of 

this technology are therefore a central focus of this rulemaking. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 297 of 770

EPA is taking the same basic approach in this rulemaking as that taken in the MYs 2012-

2016 rulemaking. EPA is evaluating emissions control technologies which reduce CO2 and other 

greenhouse gases. CO2 emissions from automobiles are largely the product of fuel combustion. 

Vehicles combust fuel to perform two basic functions: 1) to transport the vehicle, its passengers 

and its contents (and any towed loads), and 2) to operate various accessories during the operation 

of the vehicle such as the air conditioner. Technology can reduce CO2 emissions by either 

making more efficient use of the energy that is produced through combustion of the fuel or 

reducing the energy needed to perform either of these functions. 

This focus on efficiency calls for looking at the vehicle as an entire system, and as in the 

MYs 2012-2016 rule, the proposed standards reflect this basic paradigm. In addition to fuel 

delivery, combustion, and aftertreatment technology, any aspect of the vehicle that affects the 

need to produce energy must also be considered. For example, the efficiency of the transmission 

system, which takes the energy produced by the engine and transmits it to the wheels, and the 

resistance of the tires to rolling both have major impacts on the amount of fuel that is combusted 

while operating the vehicle. The braking system, the aerodynamics of the vehicle, and the 

efficiency of accessories, such as the air conditioner, all affect how much fuel is combusted as 

well. 

In evaluating vehicle efficiency, we have excluded fundamental changes in vehicles’ 

utility.297 For example, we did not evaluate converting minivans and SUVs to station wagons, 

converting vehicles with four wheel drive to two wheel drive, or reducing headroom in order to 

lower the roofline and reduce aerodynamic drag. We have limited our assessment of technical 

feasibility and resultant vehicle cost to technologies which maintain vehicle utility as much as 

possible (and, in our assessment of the costs of the rule, included the costs to manufacturers of 

preserving vehicle utility). Manufacturers may decide to alter the utility of the vehicles which 

they sell, but this would not be a necessary consequence of the rule but rather a matter of 

automaker choice. 

This need to focus on the efficient use of energy by the vehicle as a system leads to a 

broad focus on a wide variety of technologies that affect vehicle design. As discussed below, 

there are many technologies that are currently available which can reduce vehicle energy 

consumption. Several of these are “game-changing” technologies and are already being 

commercially utilized to a limited degree in the current light-duty fleet. Examples include 

hybrid technologies that use high efficiency batteries and electric motors as the power source in 

combination with or instead of internal combustion engines, plug-in hybrid electric vehicles, and 

battery-electric vehicles. While already commercialized, these technologies continue to be 

developed and offer the potential for even more significant efficiency improvements. There are 

 297 EPA recognizes that electric vehicles, a technology considered in this analysis, have unique attributes and 

discusses these considerations in Section III.H.1.b. There is also a fuller discussion of the utility of Atkinson engine 

hybrid vehicles in EPA DRIA Chapter 1. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 298 of 770

also other advanced technologies under development and not yet on production vehicles, such as 

high BMEP engines with cooled EGR, which offer the potential of improved energy generation 

taking the gasoline combustion process nearly to its thermodynamic limit. In addition, the 

available technologies are not limited to powertrain improvements but also include a number of 

technologies that are expected to continually improve incrementally, such as engine friction 

reduction, rolling resistance reduction, mass reduction, electrical system efficiencies, and 

aerodynamic improvements. 

The large number of possible technologies to consider and the breadth of vehicle systems 

that are affected mean that consideration of the manufacturer’s design, product development and 

manufacturing process plays a major role in developing the final standards. Vehicle 

manufacturers typically develop many different models by basing them on a limited number of 

vehicle platforms. The platform typically consists of a common set of vehicle architecture and 

structural components.298 This allows for efficient use of design and manufacturing resources. 

Given the very large investment put into designing and producing each vehicle model, 

manufacturers typically plan on a major redesign for the models approximately every 5 years. 299

At the redesign stage, the manufacturer will upgrade or add all of the technology and make most 

other changes supporting the manufacturer’s plans for the next several years, including plans to 

comply with emissions, fuel economy, and safety regulations.300 This redesign often involves 

significant engineering, development, manufacturing, and marketing resources to create a new 

product with multiple new features. In order to leverage this significant upfront investment, 

manufacturers plan vehicle redesigns with several model years’ of production in mind. Vehicle 

models are not completely static between redesigns as limited changes are often incorporated for 

each model year. This interim process is called a refresh of the vehicle and generally does not 

allow for major technology changes although more minor ones can be done (e.g., small 

aerodynamic improvements, valve timing improvements, etc). More major technology upgrades 

that affect multiple systems of the vehicle thus occur at the vehicle redesign stage and not in the 

time period between redesigns. 

This proposal affects nine years of vehicle production, model years 2017-2025. Given 

the now-typical five year redesign cycle, many vehicles will be redesigned three times between 

MY 2012 and MY 2025 and are expected to be redesigned twice during the 2017-2025 

timeframe. Due to the relatively long lead time before 2017, there are fewer lead time concerns 

with regard to product redesign in this proposal than with the MYs 2012-2016 rule (or the MY 

2014-2018 rule for heavy duty vehicles and engines). However, there are still some technologies 

that require significant lead time, and are not projected to be heavily utilized in the first years of 

this proposal. An example is the advanced high BMEP, cooled EGR engines. As these engines 

 298 Examples of shared vehicle platforms include the Ford Taurus and Ford Explorer or the Chrysler Sebring and 

Dodge Journey. 

299See TSD Chapter 3 300 TSD 3 discusses redesign schedules in greater detail. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 299 of 770

are not yet in vehicles today, a research and development period is required, even if there are a 

number of demonstration projects complete (as discussed in Chapter 3 of the joint TSD). 

In developing the proposed MY 2021 and 2025 car and truck curves (discussed in Section 

III.B), EPA used the OMEGA model to evaluate technologies that manufacturers could use to 

comply with the targets which those curves would establish. These curves correspond to salesweighted fleetwide CO2 average targets of 200 g/mile in MY 2021 and 163 g/mile in MY 2025. 

As discussed later in this section, we believe that this level of technology application to the lightduty vehicle fleet can be achieved in this time frame, the standards will produce significant 

reductions in GHG emissions, and the costs for both the industry and the costs to the consumer 

are reasonable and that consumer savings due to improved fuel economy will more than pay for 

the increased vehicle cost over the life of the vehicles. EPA also estimated costs for the 

intermediate model years 2017 through 2020 based on the OMEGA analyses in MYs 2016 and 

2021 as well as the intermediate model years 2022-2024 based on the OMEGA analyses in MYs 

2021 and 2025. 

 EPA’s technical assessment of the proposed MY2017-2025 standards is described 

below. EPA has also evaluated a set of alternative standards for these model years two of which 

are more stringent and two of which are less stringent than the standards proposed. The 

technical assessment of these alternative standards in relation to the ones proposed is discussed at 

the end of this section. 

Evaluating the appropriateness of these standards includes a core focus on identifying 

available technologies and assessing their effectiveness, cost, and impact on relevant aspects of 

vehicle performance and utility. The wide number of technologies which are available and likely 

to be used in combination requires a sophisticated assessment of their combined cost and 

effectiveness. An important factor is also the degree that these technologies are already being 

used in the current vehicle fleet and thus, unavailable for use to improve energy efficiency 

beyond current levels. Finally, the challenge for manufacturers to design the technology into 

their products within the constraints of the redesign cycles, and the appropriate lead time needed 

to employ the technology over the product line of the industry must be considered. 

Applying these technologies efficiently to the wide range of vehicles produced by various 

manufacturers is a challenging task involving dozens of technologies and hundreds of vehicle 

platforms. In order to assist in this task, EPA is again using a computerized program called the 

Optimization Model for reducing Emissions of Greenhouse gases from Automobiles (OMEGA). 

Broadly, OMEGA starts with a description of the future vehicle fleet (i.e. the ‘reference fleet’; 

see section II.B above), including manufacturer, sales, base CO2 emissions, footprint and the 

extent to which emission control technologies are already employed. For the purpose of this 

analysis, EPA uses OMEGA to analyze over 200 vehicle platforms comprising approximately 

1300 vehicle models in order to capture the important differences in vehicle and engine design 

and utility of future vehicle sales of roughly 16-18 million units annually in the 2017-2025 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 300 of 770

timeframe. The model is then provided with a list of technologies which are applicable to 

various types of vehicles, along with the technologies’ cost and effectiveness and the percentage 

of vehicle sales which can receive each technology during the redesign cycle of interest. The 

model combines this information with economic parameters, such as fuel prices and a discount 

rate, to project how various manufacturers would apply the available technology in order to meet 

increasing levels of emission control. The result is a description of which technologies are added 

to each vehicle platform, along with the resulting cost. While OMEGA can apply technologies 

which reduce CO2 efficiency related emissions and refrigerant leakage emissions associated with 

air conditioner use, this task is currently handled outside of the OMEGA model. A/C 

improvements are relatively cost-effective, and would always be added to vehicles by the model, 

thus they are simply added into the results at the projected penetration levels. The model can 

also be set to account for the various proposed compliance flexibilities (and to accommodate 

compliance flexibilities in general. 

The remainder of this section describes the technical feasibility analysis in greater detail. 

Section III.D.1 describes the development of our reference and control case projections of the 

MY 2017-2025 fleet. Section III.D.2 describes our estimates of the effectiveness and cost of the 

control technologies available for application in the 2017-2025 timeframe. Section 

III.D.3describes how these technologies are combined into packages likely to be applied at the 

same time by a manufacturer. In this section, the overall effectiveness of the technology 

packages vis-à-vis their effectiveness when adopted individually is described. Section III.D.4 

describes EPA’s OMEGA model and its approach to estimating how manufacturers will add 

technology to their vehicles in order to comply with potential CO2 emission standards. Section 

III.D.5 presents the results of the OMEGA modeling, namely the level of technology added to 

manufacturers’ vehicles and the cost of adding that technology. Section III.D.6 discusses the 

appropriateness (or lack of appropriateness) of the alternative standards in relation to those 

proposed. Further technical detail on all of these issues can be found in EPA and NHTSA’s 

Draft Joint Technical Support Document as well as EPA’s Regulatory Impact Analysis. 

1. How did EPA develop a reference and control fleet for evaluating standards? 

In order to calculate the impacts of this proposal, it is necessary to project the GHG 

emissions characteristics of the future vehicle fleet absent the proposed regulation. EPA and 

NHTSA develop this projection using a three step process. (1) Develop a set of detailed vehicle 

characteristics and sales for a specific model year (in this case, 2008).301 This is called the 

baseline fleet. (2) Adjust the sales of this baseline fleet using projections made by the Energy 

Information Administration (EIA) and CSM to account for projected sales volumes in future 

 301 As discussed in TSD Chapter 1, and in Section II.B.2, the agencies will consider using Model Year 2010 for the 

final rule, based on availability and an analysis of the data representativeness. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 301 of 770

MYs absent future regulation.302 (3)Apply fuel saving and emission control technology to these 

vehicles to the extent necessary for manufacturers to comply with the existing 2016 standards 

and the proposed standards. 

Thus, the analyzed fleet differs from the MY 2008 baseline fleet in both the level of 

technology utilized and in terms of the sales of any particular vehicle. A similar method is used 

to analyze both reference and control cases, with the major distinction being the stringency of the 

standards. 

EPA and NHTSA perform steps one and two above in an identical manner. The 

development of the characteristics of the baseline 2008 fleet and the sales adjustment to match 

AEO and CSM forecasts is described in Section II.B above and in greater detail in Chapter 1 of 

the joint TSD. The two agencies perform step three in a conceptually identical manner, but each 

agency utilizes its own vehicle technology and emission model to project the technology needed 

to comply with the reference and proposed standards. Further, each agency evaluates its own 

proposed and MY 2016 standards; neither NHTSA nor EPA evaluated the other agency’s 

standard in this proposal.303 

The use of MY 2008 vehicles in our fleet projections includes vehicle models which 

already have or will be discontinued by the time this rule takes effect and will be replaced by 

more advanced vehicle models. However, we believe that the use of MY 2008 vehicle designs is 

still the most appropriate approach available for this proposal.304 First, as discussed in Section 

II.B above, the designs of these new vehicles at the level of detail required for emission and cost 

modeling are not publically available, and in many cases, do not yet exist. Even the confidential 

descriptions of these vehicle designs are usually not of sufficient detail to facilitate the level of 

technology and emission modeling performed by both agencies. Second, steps two and three of 

the process used to create the reference case fleet adjust both the sales and technology of the 

2008 vehicles. Thus, our reference fleet reflects the extent that completely new vehicles are 

expected to shift the light vehicle market in terms of both segment and manufacturer. Also, by 

adding technology to facilitate compliance with the MY 2016 standards, we account for the vast 

majority of ways in which these new vehicles will differ from their older counterparts. 

a. Reference Fleet Scenario Modeled 

EPA projects that in the absence of the proposed GHG and CAFE standards, the 

reference case fleet in MY 2017-2025 would have fleetwide GHG emissions performance no 

better than that projected to be necessary to meet the MY 2016 standards. While it is not 

possible to know with certainty the future fleetwide GHG emissions performance in the absence 

 302 See generally Chapter 1 of the Joint TSD for details on development of the baseline fleet, and Section III.H.1 for 

a discussion of the potential sales impacts of this proposal. 

303 While the MY 2012-2016 standards are largely similar, some important differences remain. See 75 FR at 25342 304 See section II.B.2 concerning the selection of MY 2008 as the appropriate baseline. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 302 of 770

of more stringent standards, EPA believes that this approach is the most reasonable projection 

for developing the reference case fleet for MY 2017-2025. One important element supporting the 

proposed approach is that AEO2011 projects relatively stable gasoline prices over the next 15 

years, dropping to $3.25 in 2017 (less than the average gasoline price in 2011 to date), and then 

rising slowly to $3.54 per gallon in 2025 (similar to the average gasoline price in 2011). Thus 

the reference fleet for MY2017-2025 should correspond to a time period where there is a stable, 

unchanging GHG standard, and stable gasoline prices. 

EPA looked back at similar periods in history when we had stable fuel economy 

standards and stable gasoline prices. The historical evidence is compelling in this regard. EPA 

maintains, and publishes every year, the seminal reference on new light-duty vehicle CO2

emissions and fuel economy.305 This report contains exhaustive data from MYs 1975-2010. 

There was an extended 18-year period from 1986 through 2003, fully one-half of the entire 36-

year database, where CAFE standards were essentially unchanged,306 and gasoline prices were 

relatively stable and remained below $1.50 per gallon for almost the entire period. The 1975-

1985 and 2004-2010 timeframes are not informative in this regard due to either rising gasoline 

prices, rising CAFE standards, or both. Thus, the 1986-2003 period is an excellent analogue in 

many ways to the period out to MY 2025 during which AEO projects stable gasoline prices. 

EPA staff have analyzed the fuel economy trends data from the 1986-2003 timeframe and there 

are three clear conclusions: 1) there was a small, industry-wide, average over-compliance with 

CAFE on the order of 1-2 mpg or 3-4%, 2) almost all of this industry-wide over-compliance was 

from 3 companies (Toyota, Honda, and Nissan) that produced smaller and lighter vehicles 

relative to the industry average and which therefore naturally and essentially necessarily overcomplied with the universal CAFE standards (standards that did not vary by footprint), and 3) 

full line car and truck manufacturers, such as General Motors, Ford, and Chrysler, which 

produced larger and heavier vehicles relative to the industry average and which were constrained 

by the universal CAFE standards, rarely over-complied during the entire 18-year period.307

Since the MY 2012-2016 standards are footprint-based, every major manufacturer is 

expected to be constrained by the new standards in 2016 and manufacturers of small vehicles 

will not naturally (or consistently) over-comply as they had with a flat standard.308 Thus, the 

historical evidence and the footprint-based design of the 2016 GHG emissions and CAFE 

standards strongly support the use of a reference case fleet where there are no further fuel 

economy improvements beyond those required by the MY 2016 standards. There are additional 

factors here that reinforce the historical evidence. While it is possible that one or two companies 

may over-comply, any voluntary over-compliance by one company would generate credits that 

 305 Light-Duty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 through 2010, 

November 2010, available at www.epa.gov/otaq/fetrends.htm. 

306 There are no EPA LD GHG emissions regulations prior to MY 2012. 307 See Regulatory Impact Analysis, Chapter 3. 308 With the notable exception of manufacturers who only market electric vehicles or other limited product lines. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 303 of 770

other companies may buy and use to substitute for their more expensive compliance 

technologies; this ability to buy and sell credits would tend to eliminate over-compliance for the 

overall fleet.309 A NHTSA analysis of EIA/AEO projections of future fuel economy levels also 

supports a flat, 2016-based reference case fleet. From a consumer market driven perspective, 

while there is considerable evidence that many consumers now care more about fuel economy 

than in past decades, the 2016 compliance level is projected to be several mpg higher than that 

being demanded in the market today.310 On the other hand, some manufacturers have already 

announced plans to introduce technology well beyond that required by the 2016 MY GHG 

standards.311 However, it is difficult, if not impossible, to separate future fuel economy 

improvements made for marketing purposes from those designed to efficiently plan for 

compliance with anticipated future CAFE or CO2 emission standards, i.e., some manufacturers 

may have made public statements about higher mpg levels in the future in part because of the 

expectation of higher future standards. 

All estimates of actual GHG emissions and fuel economy performance in 2016 or any 

other future year are projections, and it is plausible that actual GHG emissions and fuel economy 

performance in 2016 and later years, absent more stringent standards, could be lower than 

projected if there are shifts from car market share to truck market share, or to higher footprint 

levels. This exact situation occurred over the period from 1986-2003, when average fuel 

economy performance levels decreased over time even as car CAFE standards were stable and 

truck CAFE levels rose slightly.312 There is always a possibility that future performance could 

be higher than MY2016 levels. While EPA has not performed a quantified sensitivity 

assessment for this proposal, a reasonable range for a sensitivity analysis would evaluate over or 

under compliance on the order of a few percent which EPA projects would not result in a 

meaningful impact. 

Based on this assessment, the EPA reference case fleet is estimated through the target 

curves defined in the MY 2016 rulemaking applied to the projected 2017-2025 fleet.313 As in the 

previous rulemaking, EPA assumes that manufacturers make use of 10.2 grams of air 

conditioning credits on cars and 11.5 on light trucks, or an average of approximately 11 grams on 

the U.S. fleet and the technology for doing so is included in the reference case (Section III.C). 

 309 Oates, Wallace E., Paul R. Portney, and Albert M. McGartland. “The Net Benefits of Incentive-Based 

Regulation: A Case Study of Environmental Standard Setting." American Economic Review 79(5) (December 

1989): 1233-1242. 

310 The average, fleetwide “laboratory” or “unadjusted” fuel economy value for MY 2010 is 28.3 mpg (see LightDuty Automotive Technology, Carbon Dioxide Emissions, and Fuel Economy Trends: 1975 Through 2010, 

November 2010, available at www.epa.gov/otaq/fetrends.htm), 6-7 mpg less than the 34-35 mpg levels necessary to 

meet the EPA GHG and NHTSA CAFE levels in MY 2016. 

311 For example, Hyundai has made a public commitment to achieve 50 mpg by 2025. 312 See Regulatory Impact Analysis, Chapter 3. 313 75 FR at 25686 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 304 of 770

b. Control Scenarios Modeled 

For the control scenario, EPA modeled the proposed standard curves discussed in Section 

III.B, as well as the alternative scenarios discussed in III.D.6. Other flexibilities are accounted 

for in the analysis. The air conditioning credits modeled are discussed in III.D.2. Air 

conditioning credits (both leakage and efficiency) are included in the cost and technology 

analysis described below. The compliance value of 0 g/mi for PHEVs and EVs are also 

included. However, off-cycle credits, PH/EV multipliers through MY 2021, pickup truck 

credits, flexible fuel, and carry forward/back credits are not included explicitly in the cost 

analysis. These flexibilities will offer the manufacturers more compliance options. Moreover, 

the overall cost analysis includes small volume manufacturers in the fleet, the former of which 

would be excluded from the rule, and the later would have company specific standards 

assuming this part of the proposal is finalized (see section III.XX). As we expect all of these 

flexibilities together to only have a small impact on the fleet compliance costs on average, we 

will re-evaluate including them in the final rule analysis 

c. Vehicle Groupings Used 

In order to create future technology projections and enable compliance with the modeled 

standards, EPA aggregates vehicle sales by a combination of manufacturer, vehicle platform, and 

engine design for the OMEGA model. As discussed above, manufacturers implement major 

design changes at vehicle redesign and tend to implement these changes across a vehicle 

platform (such as large SUV, mid-size SUV, large automobile, etc) at a given manufacturing 

plant. Because the cost of modifying the engine depends on the valve train design (such as 

SOHC, DOHC, etc.), the number of cylinders and in some cases head design, the vehicle sales 

are broken down beyond the platform level to reflect relevant engine differences. The vehicle 

groupings are shown in Table III-18. 

Table III-18 Vehicle Groupings a

Vehicle Description 

Vehicle 

Type Vehicle Description 

Vehicle 

Type 

Large SUV (Car) V8+ OHV 13 Large Pickup V8+ DOHC 19 

Large SUV (Car) V6 4v 16 Large Pickup V8+ SOHC 3v 14

Large SUV (Car) V6 OHV 12 Large Pickup V8+ OHV 13 

Large SUV (Car) V6 2v SOHC 9 Large Pickup V8+ SOHC 10 

Large SUV (Car) I4 and I5 7 Large Pickup V6 DOHC 18 

Large SUV V8+ DOHC 17 Large Pickup V6 OHV 12 

Large SUV V8+ SOHC 3v 14 Large Pickup V6 SOHC 2v 11 

Large SUV V8+ OHV 13 Large Pickup I4 S/DOHC 7 

Large SUV V8+ SOHC 10 Small Pickup V6 OHV 12 

Large SUV V6 S/DOHC 4v 16 Small Pickup V6 2v SOHC 8 

Large SUV V6 OHV 12 Small Pickup I4 7 

Large SUV V6 SOHC 2v 9 Cargo Van V8+ OHV 13 

Large SUV I4/ 7 Cargo Van V8+ SOHC 10 

Midsize SUV (Car) V6 2v SOHC 8 Cargo Van V6 OHV 12 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 305 of 770

Midsize SUV (Car) V6 S/DOHC 4v 5 Minivan V6 S/DOHC 16 

Midsize SUV (Car) I4 7 Minivan V6 OHV 12 

Midsize SUV V6 OHV 12 Minivan I4 7 

Midsize SUV V6 2v SOHC 8 

Midsize SUV V6 S/DOHC 4v 5 

Midsize SUV I4 S/DOHC 7 

Small SUV (Car) V6 OHV 12 

Small SUV (Car) V6 S/DOHC 4 

Small SUV (Car) I4 3 

Small SUV V6 OHV 12 

Vehicle Description 

Vehicle 

Type Vehicle Description 

Vehicle 

Type 

Large Auto V8+ OHV 15 Compact Auto V7+ S/DOHC 6 

Large Auto V8+ SOHC 10 Compact Auto V6 OHV 12 

Large Auto V8+ DOHC, 4v SOHC 6 Compact Auto V6 S/DOHC 4v 4 

Large Auto V6 OHV 12 Compact Auto I5 7 

Large Auto V6 SOHC 2/3v 5 Compact Auto I4 2 

Midsize Auto V8+ OHV 15 Subcompact Auto V8+ OHV 15 

Midsize Auto V8+ SOHC 10 Subcompact Auto V8+ S/DOHC 6 

Midsize Auto V7+ DOHC, 4v SOHC 6 Subcompact Auto V6 2v SOHC 8 

Midsize Auto V6 OHV 12 Subcompact Auto I5/V6 S/DOHC 4v 4 

Midsize Auto V6 2v SOHC 8 Subcompact Auto I4 1 

Midsize Auto V6 S/DOHC 4v 5 

Midsize Auto I4 3 

a

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

overhead cam, SOHC = Single overhead cam, OHV = Overhead valve, v = number of valves per cylinder, “/” = and, “+” = or 

larger.

2. What are the Effectiveness and Costs of CO2-reducing Technologies? 

 EPA and NHTSA worked together to develop information on the effectiveness and cost 

of most CO2-reducing technologies, and fuel economy-improving technologies. This joint work 

is reflected in Chapter 3 of the draft Joint TSD and in Section II.D of this preamble. The work 

on technology cost and effectiveness also includes maximum penetration rates, or “caps” for the 

OMEGA model. These caps are an important input to OMEGA that capture the agencies’ 

analysis concerning the rate at which technologies can be added to the fleet (see Chapter 3.5 of 

the draft joint TSD for more detail). This preamble section, rather than repeating those details, 

focuses upon EPA-only technology assumptions, specifically, those relating to air conditioning 

refrigerant. 

 EPA expects all manufacturers will choose to use AC improvement credit opportunities 

as a strategy for meeting compliance with the CO2 standards, and set the stringency of the 

standard accordingly (see section II.F above). EPA estimates that the level of the credits earned 

will increase from 2017 (13 grams/mile) to 2021 (21 grams/mile) as more vehicles in the fleet 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 306 of 770

convert to use of the new alternative refrigerant.314 By 2021, we project that 100% of the MY 

2021 fleet will be using alternative refrigerants, and that credits will remain constant on a car and 

truck basis until 2025. Note from the table below that costs then decrease from 2021 to 2025 

due to manufacturer learning as discussed in Section II of this preamble and in Chapter 3 of the 

draft joint TSD. A more in-depth discussion of feasibility and availability of low GWP 

alternative refrigerants, can be found in Section III.C of the Preamble. 

Table III-19 Total CO2 Reduction Potential and Costs for A/C Technologies Related 

to Alternative Refrigerants (Costs in 2009 dollars) 

 Technology 2017 2021 2025

Car 

Leakage reduction 

(continued from the 2012-2016 rule) $3 $3 $3

Low GWP refrigerant $17 $57 $49

Low GWP refrigerant hardware $4 $16 $15

Total $23 $76 $67

Truck 

Leakage reduction 

(continued from the 2012-2016 rule) $1 $3 $3

Low GWP refrigerant $0 $57 $49

Low GWP refrigerant hardware $0 $16 $15

Total $1 $76 $67

Fleet Total $24 $76 $67

Note that the costs shown in Table III-19 do not include maintenance savings that 

would be expected from the new AC systems. Further, EPA does not include ACrelated maintenance savings in our cost and benefit analysis presented in Section III.H. 

EPA discusses the likely maintenance savings in Chapter 5 of the draft joint TSD, 

though these savings are not included in our final cost estimates for the final rule. EPA 

requests comment on and information regarding maintenance costs (and savings) due to 

new technologies included in this proposal. 

Additionally, by MY 2019, EPA estimates that 100% of the A/C efficiency 

improvements will by fully phased-in. However 85% of these costs are already in the reference 

fleet, as this is the level of penetration assumed in the 2012-2016 final rule. The penetration of 

A/C costs for this proposal can be found in Chapter 5 of the draft joint TSD. 

3. How were Technologies combined into “Packages” and What is the Cost and 

Effectiveness of Packages? 

Individual technologies can be used by manufacturers to achieve incremental CO2

reductions. However, as discussed extensively in the MYs 2012-2016 Rule, EPA believes that 

manufacturers are more likely to bundle technologies into “packages” to capture synergistic 

aspects and reflect progressively larger CO2 reductions with additions or changes to any given 

 314 See table in III.B 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 307 of 770

package. In this manner, and consistent with the concept of a redesign cycle, manufacturers can 

optimize their available resources, including engineering, development, manufacturing and 

marketing activities to create a product with multiple new features. Therefore, the approach 

taken here is to group technologies into packages of increasing cost and effectiveness. 

 EPA built unique technology packages for each of 19 “vehicle types,” which, as in the 

MYs 2012-2016 rule and the Interim Joint TAR, provides sufficient resolution to represent the 

technology of the entire fleet. This was the result of analyzing the existing light duty fleet with 

respect to vehicle size and powertrain configurations. All vehicles, including cars and trucks, 

were first distributed based on their relative size, starting from compact cars and working upward 

to large trucks. Next, each vehicle was evaluated for powertrain, specifically the engine size (I4, 

V6, and V8) then by valvetrain configuration (DOHC, SOHC, OHV), and finally by the number 

of valves per cylinder. For purposes of calculating some technology costs and effectiveness 

values, each of these 19 vehicle types is mapped into one of seven classes of vehicles: 

Subcompact, Small car, Large car, Minivan, Minivan with towing, Small truck, and Large 

truck.315 We believe that these seven vehicle classes, along with engine cylinder count, provide 

adequate representation for the cost basis associated with most technology application. Note also 

that these 19 vehicle types span the range of vehicle footprints—smaller footprints for smaller 

vehicles and larger footprints for larger vehicles—which served as the basis for the 2012-2016 

GHG standards and the standards in this proposal. A detailed table showing the 19 vehicle types, 

their baseline engines and their descriptions is contained in xx and in Chapter 1 of EPA’s draft 

RIA. 

 Within each of the 19 vehicle types, multiple technology packages were created in 

increasing technology content resulting in increasing effectiveness. As stated earlier, with few 

exceptions, each package is meant to provide equivalent driver-perceived performance to the 

baseline package. Note that we refer throughout this discussion of package building to a 

“baseline” vehicle or a “baseline” package. This should not be confused with the baseline fleet, 

which is the fleet of roughly 16 million 2008MY individual vehicles comprised of over 1,100 

vehicle models. In this discussion, when we refer to “baseline” vehicle we refer to the “baseline” 

configuration of the given vehicle type. So, we have 19 baseline vehicles in the context of 

building packages. Each of those 19 baseline vehicles is equipped with a port fuel injected 

engine and a 4 speed automatic transmission. The valvetrain configuration and the number of 

cylinders changes for each vehicle type in an effort to encompass the diversity in the 2008 

baseline fleet as discussed above. In short, while the baseline vehicle that defines the vehicle 

type is relevant when discussing the package building process, the baseline and reference case 

fleets of real vehicles are not relevant to the discussion here. We describe this in more detail in 

Chapter 1 of EPA’s draft RIA. 

 315 Note that, for the current assessment and representing an update since the 2010 TAR, EPA has created a new 

vehicle class called “minivan with towing” which allows for greater differentiation of costs for this popular class of 

vehicles (such as the Ford Edge, Honda Odyssey, Jeep Grand Cherokee). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 308 of 770

To develop a set of packages as OMEGA inputs, EPA builds packages consisting of 

every legitimate permutation of technology available, subject to constraints. 316 This 

“preliminary-set” of packages consists of roughly 2,000 possible packages of technologies for 

each of 19 vehicle types, or nearly 40,000 packages in all. The cost of each package is 

determined by adding the cost of each individual technology contained in the package for the 

given year of interest. The effectiveness of each package is determined in a more deliberate 

manner; one cannot simply add the effectiveness of individual technologies to arrive at a 

package-level effectiveness because of the synergistic effects of technologies when grouped with 

other technologies that seek to improve the same or similar efficiency loss mechanism. As an 

example, the benefits of the engine and transmission technologies can usually be combined 

multiplicatively,317 but in some cases, the benefit of the transmission-related technologies 

overlaps with the engine technologies. This occurs because the transmission technologies shift 

operation of the engine to more efficient locations on the engine map by incorporating more ratio 

selections and a wider ratio span into the transmissions. Some of the engine technologies have 

the same goal, such as cylinder deactivation, advanced valvetrains, and turbocharging. In order 

to account for this overlap and avoid over-estimating emissions reduction effectiveness, EPA 

uses an engineering approach known as the lumped-parameter technique. The results from this 

approach were then applied directly to the vehicle packages. The lumped-parameter technique is 

well documented in the literature, and the specific approach developed by EPA is detailed in 

Chapter 3 (Section 3.3.2) of the draft joint TSD as well as Chapter 1 of EPA’s draft RIA. 

Table III-20 presents the cost and effectiveness values from a 2025MY master-set of 

packages used in the OMEGA model for EPA’s vehicle type 5, a large car class equipped with a 

V6 engine. Similar packages were generated for each of the 19 vehicle types and the costs and 

effectiveness estimates for each of those packages are discussed in detail in Chapter 1 of EPA’s 

draft RIA. 

As detailed in Chapter 1 of EPA’s draft RIA, this preliminary-set of packages is then 

ranked according to technology application ranking factors (TARFs) to eliminate packages that 

are not as cost-effective as others.318 The result of this TARF ranking process is a “ranked-set” 

of packages for use as OMEGA inputs. EPA prepares a ranked set of packages for any MY in 

which OMEGA is run,319 the initial packages represent what we believe a manufacturer will 

 316 Example constraints include the requirement for stoichiometric gasoline direct injection on every turbocharged 

and downsized engine and/or any 27 bar BMEP turbocharged and downsized engine must also include cooled EGR. 

Some constraints are the result of engineering judgment while others are the result of effectiveness value estimates 

which are tied to specific combinations of technologies. 

317 For example, if an engine technology reduces CO2 emissions by five percent and a transmission technology 

reduces CO2 emissions by four percent, the benefit of applying both technologies is 8.8 percent (100% - (100% – 

4%) * (100% - 5%)). 

318 The Technology Application Ranking Factor (TARF) is discussed further in III.D.5 319 Note that a ranked-set of package is generated for any year for which OMEGA is run due to the changes in costs 

and maximum penetration rates. EPA’s draft RIA chapter 3 contains more details on the OMEGA modeling and 

draft Joint TSD Chapter 3 has more detail on both costs changes over time and the maximum penetration limits of 

certain technologies. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 309 of 770

most likely implement on all vehicles, including lower rolling resistance tires, low friction 

lubricants, engine friction reduction, aggressive shift logic, early torque converter lock-up, 

improved electrical accessories, and low drag brakes (to the extent not reflected in the baseline 

vehicle).320 Subsequent packages include gasoline direct injection, turbocharging and 

downsizing, and more advanced transmission technologies such as six and eight speed dualclutch transmissions and 6 and 8 speed automatic transmissions. The most technologically 

advanced packages within a vehicle type include the hybrids, plug-in hybrids and electric 

vehicles. Note that plug-in hybrid and electric vehicle packages are only modeled for the nontowing vehicle types, in order to better maintain utility. We request comment on this decision 

and whether or not we should perhaps consider plug-in hybrids for towing vehicle types. 

Table III-20 CO2 Reducing Technology Vehicle Packages for a Large Car 

Effectiveness and Costs in the 2025MY (Costs in 2009 dollars) 

Pkg# Engine & Vehicle technologies Trans Electrical 

Mass 

Rdxn Cost Effectiveness 

500 3.3L 4V DOHC V6 4sp AT 12V base $0 0.0% 

501 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC +EPS +Aero1 

+LRRT1 +HEG 

6sp DCTwet 12V 5% $646 27.3% 

502 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC +EPS +Aero1 

+LRRT1 +HEG 

8sp DCTwet 12V 5% $760 30.2% 

503 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC +EPS +Aero1 

+LRRT1 +HEG +DCP +GDI +TDS18 

6sp DCTwet 12V 5% $1,058 37.4% 

504 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC +EPS +Aero1 

+LRRT1 +HEG +DCP +GDI +TDS18 

8sp DCTwet 12V 5% $1,172 39.4% 

505 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS18 

8sp DCTwet 12V 5% $1,386 42.6% 

506 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS18 

8sp DCTwet 12V 10% $1,507 44.2% 

509 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS18 

8sp DCTwet 12V 15% $1,741 45.8% 

507 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS24 

8sp DCTwet 12V 10% $1,719 46.1% 

511 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS18 

8sp DCTwet 12V 20% $2,048 47.4% 

513 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +SAX +TDS18 

8sp DCTwet 12V 20% $2,128 47.7% 

508 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS24 +EGR 

8sp DCTwet 12V 10% $1,966 48.0% 

515 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +SAX +TDS18 

8sp DCTwet 12V 20% $2,259 48.2% 

516 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +SS +SAX +TDS18 

8sp DCTwet 12V 

S-S 20% $2,602 48.7% 

519 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DSL-Adv +SAX 

8sp DCTwet 12V 20% $4,673 49.4% 

510 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS24 +EGR 

8sp DCTwet 12V 15% $2,200 49.5% 

512 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +TDS24 +EGR 

8sp DCTwet 12V 20% $2,507 51.0% 

514 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +SAX +TDS24 +EGR 

8sp DCTwet 12V 20% $2,588 51.3% 

517 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +SS +SAX +TDS24 +EGR 

8sp DCTwet 12V 

S-S 20% $2,931 51.8% 

 320 When making reference to low friction lubricants, the technology being referred to is the engine changes and 

possible durability testing that would be done to accommodate the low friction lubricants, not the lubricants 

themselves. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 310 of 770

518 4V DOHC I4 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +GDI +SS +SAX +TDS27 +EGR 

8sp DCTwet 12V 

S-S 20% $3,356 52.2% 

520 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +ATKCS +HEV 

8sp DCTwet HEV 20% $5,353 59.3% 

521 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +ATKCS +HEV +SAX 

8sp DCTwet HEV 20% $5,433 59.6% 

522 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +ATKCS +REEV20 

8sp DCTwet EV 20% $12,485 75.2% 

523 4V DOHC V6 +EFR2 +LDB +ASL2 +IACC2 +EPS +Aero2 

+LRRT2 +HEG +DCP +DVVL +GDI +ATKCS +REEV40 

8sp DCTwet EV 20% $15,670 84.7% 

524 EV75 mile +IACC2 +Aero2 +LRRT2 +EPS N/A EV 20% $12,908 100% 

525 EV100 mile +IACC2 +Aero2 +LRRT2 +EPS N/A EV 20% $14,643 100% 

526 EV150 mile +IACC2 +Aero2 +LRRT2 +EPS N/A EV 20% $20,280 100% 

Aero=aerodynamic treatments;ASL=aggressive shift logic; AT=auto trans; ATKCS=Atkinson-cycle; DCP=dual 

cam phasing; DCT=dual clutch trans; DSL-Adv=advanced diesel; DOHC=dual overhead cam; EFR=engine friction 

reduction; EGR=exhaust gas recirculation; EPS=electric power steering; EV=electric vehicle; GDI=stoich gasoline 

direct injection; HEG=high efficiency gearbox; HEV=hybrid EV; IACC=improved accessories; LDB=low drag 

brakes; LRRT=lower rolling resistance tires; REEV=range extended EV or plug-in HEV; SAX=secondary axle 

disconnect; S-S=stop-start; TDS18/24/27=turbocharged & downsized 18 bar BMEP/24 bar BMEP/27 bar BMEP. 

“1” and “2” suffixes to certain technologies indicate the first level versus the second level of the technology as 

described in Chapter 3 of the draft joint TSD.

4. How does EPA Project how a Manufacturer Would Decide Between Options to 

Improve CO2 Performance to Meet a Fleet Average Standard? 

As discussed, there are many ways for a manufacturer to reduce CO2-emissions from its 

vehicles. A manufacturer can choose from a myriad of CO2 reducing technologies and can apply 

one or more of these technologies to some or all of its vehicles. Thus, for a variety of levels of 

CO2 emission control, there are an almost infinite number of technology combinations which 

produce a desired CO2 reduction. As noted earlier, EPA used the same model used in the MYs 

2012-2016 Rule, the OMEGA model, in order to make a reasonable estimate of how 

manufacturers will add technologies to vehicles in order to meet a fleet-wide CO2 emissions 

level. EPA has described OMEGA’s specific methodologies and algorithms previously in the 

model documentation,321 makes the model publically available on its website,322 and has 

recently peer reviewed the model.323

 The OMEGA model utilizes four basic sets of input data. The first is a description of the 

vehicle fleet. The key pieces of data required for each vehicle are its manufacturer, CO2

emission level, fuel type, projected sales and footprint. The model also requires that each vehicle 

be assigned to one of the 19 vehicle types, which tells the model which set of technologies can 

be applied to that vehicle. (For a description of how the 19 vehicle types were created, see 

Section III.D.3.) In addition, the degree to which each baseline vehicle already reflects the 

effectiveness and cost of each available technology must also be input. This avoids the situation, 

 321 Previous OMEGA documentation for versions used in MYs 2012-2016 Final Rule (EPA-420-B-09-035), Interim 

Joint TAR (EPA-420-B-10-042) 

322 http://www.epa.gov/oms/climate/models.htm 323 EPA-420-R-09-016, September 2009. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 311 of 770

for example, where the model might try to add a basic engine improvement to a current hybrid 

vehicle. Except for this type of information, the development of the required data regarding the 

reference fleet was described in Section III.D.1 above and in Chapter 1 of the Joint TSD. 

The second type of input data used by the model is a description of the technologies 

available to manufacturers, primarily their cost and effectiveness. This information was 

described above as well as Chapter 3 of the Joint TSD and Chapter 1 of EPA’s draft RIA. In all 

cases, the order of the technologies or technology packages for a particular vehicle type is 

determined by the model user prior to running the model. The third type of input data describes 

vehicle operational data, such as annual vehicle scrappage rates and mileage accumulation rates, 

and economic data, such as fuel prices and discount rates. These estimates are described in 

Section II.E above, Section III.H below and Chapter 4 of the Joint TSD. 

The fourth type of data describes the CO2 emission standards being modeled. These 

include the MY 2016 standards, proposed MY 2021 and proposed MY 2025 standards. As 

described in more detail below, the application of A/C technology is evaluated in a separate 

analysis from those technologies which impact CO2 emissions over the 2-cycle test procedure. 

Thus, for the percent of vehicles that are projected to achieve A/C related reductions, the CO2

credit associated with the projected use of improved A/C systems is used to adjust the final CO2

standard which will be applicable to each manufacturer to develop a target for CO2 emissions 

over the 2-cycle test which is assessed in our OMEGA modeling. As an example, on an industry 

wide basis, EPA projects that manufacturers will generate 11 g/mi of A/C credit in 2016. Thus, 

the 2016 CO2 target in OMEGA was approximately eleven grams less stringent for each 

manufacturer than predicted by the curves. Similar adjustments were made for the control cases 

(i.e. the A/C credits allowed by the rule are accounted for in the standards), but for a larger 

amount of A/C credit (approximately 25 grams). 

As mentioned above for the market data input file utilized by OMEGA, which 

characterizes the vehicle fleet, our modeling accounts for the fact that many 2008 MY vehicles 

are already equipped with one or more of the technologies discussed in Section III.D.2 above. 

Because of the choice to apply technologies in packages, and because 2008 vehicles are 

equipped with individual technologies in a wide variety of combinations, accounting for the 

presence of specific technologies in terms of their proportion of package cost and CO2

effectiveness requires careful, detailed analysis. 

Thus, EPA developed a method to account for the presence of the combinations of 

applied technologies in terms of their proportion of the technology packages. This analysis can 

be broken down into four steps 

The first step in the updated process is to break down the available GHG control 

technologies into five groups: 1) engine-related, 2) transmission-related, 3) hybridization, 4) 

weight reduction and 5) other. Within each group, each individual technology was given a 

ranking which generally followed the degree of complexity, cost and effectiveness of the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 312 of 770

technologies within each group. More specifically, the ranking is based on the premise that a 

technology on a 2008 baseline vehicle with a lower ranking would be replaced by one with a 

higher ranking which was contained in one of the technology packages which we included in our 

OMEGA modeling. The corollary of this premise is that a technology on a 2008 baseline vehicle 

with a higher ranking would be not be replaced by one with an equal or lower ranking which was 

contained in one of the technology packages which we chose to include in our OMEGA 

modeling. This ranking scheme can be seen in an OMEGA pre-processor (the TEB/CEB 

calculation macro), available in the docket. 

In the second step of the process, these rankings were used to estimate the complete list 

of technologies which would be present on each baseline vehicle after the application of a 

technology package. In other words, this step indicates the specific technology on each baseline 

vehicle after a package has been applied to it. EPA then used the lumped parameter model to 

estimate the total percentage CO2 emission reduction associated with the technology present on 

the baseline vehicle (termed package 0), as well as the total percentage reduction after 

application of each package. A similar approach was used to determine the total cost of all of the 

technology present on the baseline vehicle and after the application of each applicable 

technology package. 

 The third step in this process is to account for the degree of each technology package’s 

incremental effectiveness and incremental cost is affected by the technology already present on 

the baseline vehicle. In this step, we calculate the degree to which a technology package’s 

effectiveness is already present on the baseline vehicle, and produce a value for each package 

termed the technology effectiveness basis, or TEB. The degree to which a technology package’s 

incremental cost is reduced by technology already present on the baseline vehicle is termed the 

cost effectiveness basis, or CEB, in the OMEGA model. The equations for calculating these 

values can be seen in RIA chapter 3. 

As described in Section III.D.3 above, technology packages are applied to groups of 

vehicles which generally represent a single vehicle platform and which are equipped with a 

single engine size (e.g., compact cars with four cylinder engine produced by Ford). These 

groupings are described in xx. Thus, the fourth step is to combine the fractions of the CEB and 

TEB of each technology package already present on the individual MY 2008 vehicle models for 

each vehicle grouping. For cost, percentages of each package already present are combined 

using a simple sales-weighting procedure, since the cost of each package is the same for each 

vehicle in a grouping. For effectiveness, the individual percentages are combined by weighting 

them by both sales and base CO2 emission level. This appropriately weights vehicle models with 

either higher sales or CO2 emissions within a grouping. Once again, this process prevents the 

model from adding technology which is already present on vehicles, and thus ensures that the 

model does not double count technology effectiveness and cost associated with complying with 

the modeled standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 313 of 770

Conceptually, the OMEGA model begins by determining the specific CO2 emission 

standard applicable for each manufacturer and its vehicle class (i.e., car or truck). Since the 

proposal allows for averaging across a manufacturer’s cars and trucks, the model determines the 

CO2 emission standard applicable to each manufacturer’s car and truck sales from the two sets of 

coefficients describing the piecewise linear standard functions for cars and trucks (i.e. the 

respective car and truck curves) in the inputs, and creates a combined car-truck standard. This 

combined standard considers the difference in lifetime VMT of cars and trucks, as indicated in 

the proposed regulations which govern credit trading between these two vehicle classes (which 

reflect the final 2012-2016 rules on this point).324 

As noted above, EPA estimated separately the cost of the improved A/C systems required 

to generate the credit. In the reference case fleet that complies with the MY 2016 standards, 

85% of vehicles are modeled with improved A/C efficiency and leakage prevention technology. 

The model then works with one manufacturer at a time to add technologies until that 

manufacturer meets its applicable proposed standard. The OMEGA model can utilize several 

approaches to determining the order in which vehicles receive technologies. For this analysis, 

EPA used a “manufacturer-based net cost-effectiveness factor” to rank the technology packages 

in the order in which a manufacturer is likely to apply them. Conceptually, this approach 

estimates the cost of adding the technology from the manufacturer’s perspective and divides it by 

the mass of CO2 the technology will reduce. One component of the cost of adding a technology 

is its production cost, as discussed above. However, it is expected that new vehicle purchasers 

value improved fuel economy since it reduces the cost of operating the vehicle. Typical vehicle 

purchasers are assumed to value the fuel savings accrued over the period of time which they will 

own the vehicle, which is estimated to be roughly five years. It is also assumed that consumers 

discount these savings at the same rate as that used in the rest of the analysis (3 or 7 percent).325 

Any residual value of the additional technology which might remain when the vehicle is sold is 

not considered. The CO2 emission reduction is the change in CO2 emissions multiplied by the 

percentage of vehicles surviving after each year of use multiplied by the annual miles travelled 

by age. 

Given this definition, the higher priority technologies are those with the lowest 

manufacturer-based net cost-effectiveness value (relatively low technology cost or high fuel 

savings leads to lower values). Because the order of technology application is set for each 

vehicle, the model uses the manufacturer-based net cost-effectiveness primarily to decide which 

vehicle receives the next technology addition. Initially, technology package #1 is the only one 

available to any particular vehicle. However, as soon as a vehicle receives technology package 

 324 The analysis for the control cases in this proposal was run with slightly different lifetime VMT estimates than 

those proposed in the regulation. The impact is on the cost estimates is small and varies by manufacturer. 

325 While our costs and benefits are discounted at 3% or 7%, the decision algorithm (TARF) used in OMEGA was 

run at a discount rate of 3%. Given that manufacturers must comply with the standard regardless of the discount rate 

used in the TARF, this has little impact on the technology projections shown here. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 314 of 770

#1, the model considers the manufacturer-based net cost-effectiveness of technology package #2 

for that vehicle and so on. In general terms, the equation describing the calculation of 

manufacturer-based cost effectiveness is as follows: 

ܵܨ∆ െ ݐݏ݋ܥ݄ܶ݁ܿ∆ ൌ ௧݂ݑܽ݊ܯ݂݂ܧݐݏ݋ܥ

∆ܥܱଶݔ	ܸܯܶ௚௘௥௨௟௔௧௢௥௬

Where: 

CostEffManuft= Manufacturer-Based Cost Effectiveness (in dollars per kilogram CO2), 

TechCost = Marked up cost of the technology (dollars), 

FS = Difference in fuel consumption due to the addition of technology times fuel price 

and discounted over the payback period, or the number of years of vehicle use over which 

consumers value fuel savings when evaluating the value of a new vehicle at time of 

purchase 

dCO2 = Difference in CO2 emissions (g/mile) due to the addition of technology 

VMTregulatory = the statutorily defined VMT 

EPA describes the technology ranking methodology and manufacturer-based cost 

effectiveness metric in greater detail in the OMEGA documentation (XX reference here). 

When calculating the fuel savings in the TARF equation, the full retail price of fuel, 

including taxes is used. While taxes are not generally included when calculating the cost or 

benefits of a regulation, the net cost component of the manufacturer-based net cost-effectiveness 

equation is not a measure of the social cost of this final rule, but a measure of the private cost, 

(i.e., a measure of the vehicle purchaser’s willingness to pay more for a vehicle with higher fuel 

efficiency). Since vehicle operators pay the full price of fuel, including taxes, they value fuel 

costs or savings at this level, and the manufacturers will consider this when choosing among the 

technology options. 326

The values of manufacturer-based net cost-effectiveness for specific technologies will 

vary from vehicle to vehicle, often substantially. This occurs for three reasons. First, both the 

cost and fuel-saving component cost, ownership fuel-savings, and lifetime CO2 effectiveness of a 

specific technology all vary by the type of vehicle or engine to which it is being applied (e.g., 

small car versus large truck, or 4-cylinder versus 8-cylinder engine). Second, the effectiveness 

 326 This definition of manufacturer-based net cost-effectiveness ignores any change in the residual value of the 

vehicle due to the additional technology when the vehicle is five years old. Based on historic used car pricing, 

applicable sales taxes, and insurance, vehicles are worth roughly 23% of their original cost after five years, 

discounted to year of vehicle purchase at 7% per annum. It is reasonable to estimate that the added technology to 

improve CO2 level and fuel economy will retain this same percentage of value when the vehicle is five years old. 

However, it is less clear whether first purchasers, and thus, manufacturers consider this residual value when ranking 

technologies and making vehicle purchases, respectively. For this proposal, this factor was not included in our 

determination of manufacturer-based net cost-effectiveness in the analyses. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 315 of 770

of a specific technology often depends on the presence of other technologies already being used 

on the vehicle (i.e., the dis-synergies). Third, the absolute fuel savings and CO2 reduction of a 

percentage an incremental reduction in fuel consumption depends on the CO2 level of the vehicle 

prior to adding the technology. Chapter 1 of EPA’s draft RIA contains further detail on the 

values of manufacturer-based net cost-effectiveness for the various technology packages. 

5. Projected Compliance Costs and Technology Penetrations 

The following tables present the projected incremental costs and technology penetrations 

for the proposed program. Overall projected cost increases are $734 in MY 2021 and $1946 in 

MY 2025. Relative to the reference fleet complying with of MY 2016 standards, we see 

significant increases in advanced transmission technologies such as the high efficiency gear box 

and 8 speed transmissions, as well as more moderate increase in turbo downsized, cooled EGR 

24 bar BMEP engines. In the control case, 15 percent of the MY 2025 fleet is projected to be a 

strong P2 hybrid as compared to 5% in the 2016 reference case. Similarly, 3 percent of the MY 

2025 fleet are projected to be electric vehicles while less than 1 percent are projected to be 

electric vehicles in the reference case. 

Table III-21 Total Costs per Vehicle by Company, Incremental to the 2016 

Standards (2009$) 

Company 2021 2025 

Cars Trucks Fleet Cars Trucks Fleet

BMW $950 $905 $938 $2,255 $1,949 $2,175

Chrysler/Fiat $575 $843 $696 $1,919 $2,202 $2,041

Daimler $1,954 $945 $1,703 $2,936 $1,942 $2,709

Ferrari327 $6,357 n/a $6,357 $7,114 n/a $7,114

Ford $661 $765 $696 $2,056 $2,453 $2,178

Geely-Volvo $2,041 $1,076 $1,741 $3,233 $2,030 $2,876

GM $508 $669 $588 $2,214 $1,824 $2,028

Honda $473 $746 $557 $1,457 $1,927 $1,595

Hyundai $619 $874 $671 $1,682 $1,978 $1,741

Kia $489 $916 $584 $1,447 $1,665 $1,493

Mazda $930 $887 $922 $2,201 $1,796 $2,134

Mitsubishi $818 $987 $877 $2,119 $2,161 $2,133

Nissan $764 $652 $730 $2,002 $2,202 $2,061

Porsche $5,460 $1,317 $4,484 $5,832 $2,044 $5,013

Spyker-Saab $3,341 $888 $2,990 $4,006 $1,458 $3,673

Subaru $1,023 $912 $996 $2,241 $2,077 $2,204

 327 Note that Ferrari is shown as a separate entity in the table above but could be combined with other Fiat-owned 

companies for purposes of GHG compliance at the manufacturer's discretion. Also, in Section III.B., EPA is 

requesting comment on the concept of allowing companies that are able to demonstrate "operational independence" 

to be eligible for SVM alternative standards. However, the costs shown above are based on Ferrari meeting the 

primary program standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 316 of 770

Suzuki $1,166 $990 $1,135 $2,312 $1,822 $2,228

Tata-JLR $2,226 $1,638 $1,933 $3,260 $2,643 $2,974

Toyota $338 $703 $480 $1,404 $1,621 $1,483

VW $1,630 $786 $1,459 $2,623 $2,038 $2,508

Fleet $723 $753 $734 $1,946 $1,944 $1,946

Costs for Aston Martin, Lotus and Tesla are not included here but can be found in EPA’s draft RIA. 

Costs include stranded capital and A/C-related costs. 

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 317 of 770

Table III-22 Technology Penetrations for the 2021 MY Reference Case – Combined Fleet 

Mass TDS18 TDS24 TDS27 AT6 AT8 DCT6 DCT8 MT HEG EGR HEV EV PHEV SS LRRT2 IACC2 EFR2 GDI DSL 

BMW -8% 51% 15% 0% 28% 8% 36% 19% 9% 0% 15% 15% 0% 0% 57% 0% 30% 0% 77% 13% Chrysler/ Fiat -7% 45% 11% 0% 27% 12% 31% 17% 3% 0% 4% 0% 0% 0% 0% 0% 18% 0% 56% 0% Daimler -8% 48% 14% 0% 16% 19% 39% 21% 5% 0% 14% 15% 0% 0% 57% 0% 30% 0% 69% 16% Ferrari -8% 42% 15% 0% 14% 0% 52% 28% 5% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Ford -7% 52% 12% 0% 30% 12% 29% 16% 6% 0% 10% 2% 0% 0% 0% 0% 21% 0% 63% 0% GeelyVolvo -8% 54% 15% 0% 37% 12% 32% 17% 2% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% GM -7% 37% 8% 0% 38% 18% 20% 11% 3% 0% 6% 0% 0% 0% 0% 0% 21% 0% 46% 0% Honda -3% 6% 0% 0% 24% 6% 41% 19% 8% 0% 0% 2% 0% 0% 0% 0% 8% 0% 6% 0% Hyundai -3% 28% 0% 0% 24% 11% 32% 17% 6% 0% 0% 0% 0% 0% 0% 0% 4% 0% 28% 0% Kia -3% 9% 0% 0% 22% 9% 35% 19% 7% 0% 0% 0% 0% 0% 0% 0% 8% 0% 9% 0% Mazda -5% 26% 11% 0% 22% 7% 34% 19% 14% 0% 4% 0% 0% 0% 0% 0% 24% 0% 37% 0% Mitsubishi -7% 68% 15% 0% 17% 7% 39% 22% 6% 0% 15% 2% 0% 0% 0% 0% 27% 0% 85% 0% Nissan -5% 33% 8% 0% 20% 8% 39% 21% 4% 0% 3% 1% 0% 0% 0% 0% 21% 0% 41% 0% Porsche -5% 48% 15% 0% 20% 7% 19% 10% 43% 0% 15% 15% 0% 0% 57% 0% 30% 0% 78% 13% SpykerSaab -8% 57% 15% 0% 19% 4% 41% 23% 11% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Subaru -7% 46% 5% 0% 6% 2% 39% 22% 22% 0% 3% 0% 0% 0% 0% 0% 17% 0% 50% 0% Suzuki -1% 67% 15% 0% 11% 4% 42% 23% 9% 0% 15% 3% 0% 0% 0% 0% 26% 0% 85% 0% Tata-JLR -8% 48% 15% 0% 33% 10% 37% 20% 0% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Toyota -2% 5% 0% 0% 26% 10% 28% 15% 5% 0% 0% 12% 0% 0% 0% 0% 12% 0% 12% 0% VW -7% 50% 15% 0% 22% 6% 40% 21% 11% 0% 15% 15% 0% 0% 57% 0% 30% 0% 86% 13% Fleet -5% 30% 7% 0% 27% 11% 31% 16% 6% 0% 5% 5% 0% 0% 7% 0% 18% 0% 40% 2% Mass=true mass reduction; TDS18/24/27=turbocharged & downsized at 18/24/27 bar BMEP; AT=automatic transmission; DCT=dual clutch transmission; MT=manual transmission; HEG=high 

efficiency gearbox; EGR=cooled exhaust gas recirculation; HEV=hybrid electric vehicle; EV=full electric vehicle; PHEV=plug-in HEV; SS=12V stop-start; LRRT2=lower rolling resistance tires level 

2; IACC2=Improved accessories level 2; EFR2=engine friction reduction level 2; GDI=stoichiometric gasoline direct injection; DSL=advanced diesel Note that technology penetrations for Aston Martin, Lotus and Tesla are not included here but can be found in EPA’s draft RIA. Negative values for Mass Reduction represent percentage of mass removed. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 318 of 770

Table III-23 Technology Penetrations for the 2025 MY Reference Case – Combined Fleet 

Mass TDS18 TDS24 TDS27 AT6 AT8 DCT6 DCT8 MT HEG EGR HEV EV PHEV SS LRRT2 IACC2 EFR2 GDI DSL 

BMW -8% 51% 15% 0% 31% 10% 33% 18% 9% 0% 15% 15% 0% 0% 57% 0% 30% 0% 76% 13% Chrysler/ Fiat -7% 47% 13% 0% 33% 15% 26% 14% 3% 0% 12% 0% 0% 0% 0% 0% 22% 0% 60% 0% Daimler -8% 51% 14% 0% 22% 23% 32% 18% 6% 0% 14% 15% 0% 0% 57% 0% 30% 0% 68% 18% Ferrari -8% 42% 15% 0% 14% 0% 52% 28% 5% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Ford -7% 46% 12% 0% 28% 12% 29% 16% 5% 0% 7% 2% 0% 0% 0% 0% 23% 0% 57% 0% GeelyVolvo -8% 54% 15% 0% 40% 14% 29% 16% 2% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% GM -8% 35% 12% 0% 39% 19% 18% 10% 3% 0% 11% 0% 0% 0% 0% 0% 22% 0% 48% 0% Honda -3% 17% 0% 0% 27% 7% 38% 21% 7% 0% 0% 2% 0% 0% 0% 0% 5% 0% 17% 0% Hyundai -3% 22% 0% 0% 21% 9% 34% 19% 6% 0% 0% 0% 0% 0% 0% 0% 5% 0% 22% 0% Kia -2% 0% 0% 0% 20% 8% 36% 20% 8% 0% 0% 0% 0% 0% 0% 0% 9% 0% 0% 0% Mazda -5% 24% 11% 0% 19% 5% 37% 20% 14% 0% 3% 0% 0% 0% 0% 0% 24% 0% 35% 0% Mitsubishi -8% 66% 15% 0% 19% 8% 39% 21% 3% 0% 15% 4% 0% 0% 0% 0% 28% 0% 85% 0% Nissan -5% 31% 7% 0% 18% 7% 40% 22% 4% 0% 3% 1% 0% 0% 0% 0% 22% 0% 39% 0% Porsche -6% 50% 15% 0% 29% 11% 16% 9% 36% 0% 15% 15% 0% 0% 57% 0% 30% 0% 79% 13% SpykerSaab -9% 57% 15% 0% 17% 3% 44% 24% 11% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Subaru -7% 40% 5% 0% 6% 2% 40% 22% 22% 0% 3% 0% 0% 0% 0% 0% 19% 0% 44% 0% Suzuki -1% 68% 15% 0% 12% 4% 42% 23% 9% 0% 15% 2% 0% 0% 0% 0% 26% 0% 85% 0% Tata-JLR -8% 48% 15% 0% 30% 8% 40% 22% 0% 0% 15% 15% 0% 0% 57% 0% 30% 0% 72% 13% Toyota -3% 3% 0% 0% 24% 9% 37% 9% 5% 0% 0% 12% 0% 0% 0% 0% 12% 0% 10% 0% VW -7% 50% 15% 0% 22% 6% 40% 21% 11% 0% 15% 15% 0% 0% 57% 0% 30% 0% 86% 13% Fleet -5% 29% 8% 0% 27% 11% 32% 15% 6% 0% 6% 5% 0% 0% 7% 0% 19% 0% 40% 2% Mass=true mass reduction; TDS18/24/27=turbocharged & downsized at 18/24/27 bar BMEP; AT=automatic transmission; DCT=dual clutch transmission; MT=manual transmission; HEG=high 

efficiency gearbox; EGR=cooled exhaust gas recirculation; HEV=hybrid electric vehicle; EV=full electric vehicle; PHEV=plug-in HEV; SS=12V stop-start; LRRT2=lower rolling resistance tires level 

2; IACC2 = improved accessories level 2; EFR2=engine friction reduction level 2; GDI=stoichiometric gasoline direct injection; DSL=advanced diesel 

Note that technology penetrations for Aston Martin, Lotus and Tesla are not included here but can be found in EPA’s draft RIA. Negative values for Mass Reduction represent percentage of mass removed. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 319 of 770

Table III-24 Technology Penetrations for the 2021 MY Control Case – Combined Fleet 

Mass TDS18 TDS24 TDS27 AT6 AT8 DCT6 DCT8 MT HEG EGR HEV EV PHEV SS LRRT2 IACC2 EFR2 GDI DSL 

BMW -9% 49% 25% 2% 5% 21% 13% 52% 8% 59% 28% 30% 1% 0% 0% 75% 80% 59% 99% 0% Chrysler/ Fiat -7% 64% 15% 2% 8% 32% 11% 45% 3% 60% 14% 0% 0% 0% 0% 75% 80% 60% 81% 0% Daimler -10% 48% 20% 4% 5% 20% 13% 52% 4% 57% 24% 30% 6% 0% 0% 75% 80% 57% 91% 3% Ferrari -7% 0% 0% 15% 0% 0% 16% 65% 2% 50% 15% 30% 16% 15% 15% 75% 80% 50% 60% 24% Ford -8% 75% 16% 3% 8% 32% 10% 42% 6% 59% 18% 2% 0% 0% 0% 74% 79% 59% 94% 0% GeelyVolvo -10% 52% 18% 6% 8% 32% 10% 42% 1% 57% 24% 30% 6% 0% 11% 75% 80% 57% 94% 0% GM -8% 41% 14% 3% 12% 49% 7% 29% 3% 60% 14% 0% 0% 0% 0% 75% 80% 60% 58% 0% Honda -5% 33% 0% 0% 4% 15% 14% 56% 8% 59% 0% 2% 0% 0% 0% 73% 78% 59% 33% 0% Hyundai -6% 45% 6% 0% 7% 29% 12% 46% 6% 60% 6% 0% 0% 0% 0% 75% 80% 60% 51% 0% Kia -4% 37% 0% 0% 6% 23% 13% 51% 7% 60% 0% 0% 0% 0% 0% 41% 44% 60% 37% 0% Mazda -6% 78% 22% 0% 5% 19% 12% 50% 14% 60% 11% 0% 0% 0% 0% 75% 80% 60% 100% 0% Mitsubishi -10% 64% 30% 0% 5% 18% 14% 58% 5% 60% 30% 6% 0% 0% 0% 75% 80% 60% 100% 0% Nissan -5% 68% 14% 1% 5% 21% 14% 56% 4% 60% 15% 1% 0% 0% 0% 75% 80% 60% 83% 0% Porsche -5% 24% 25% 4% 5% 19% 9% 36% 21% 54% 29% 30% 11% 11% 16% 75% 80% 54% 86% 3% SpykerSaab -8% 34% 24% 3% 3% 11% 14% 55% 7% 54% 27% 30% 10% 3% 10% 75% 80% 54% 90% 0% Subaru -9% 69% 30% 0% 1% 5% 14% 58% 22% 60% 30% 1% 0% 0% 0% 75% 80% 60% 100% 0% Suzuki -2% 49% 30% 0% 3% 11% 16% 63% 7% 60% 30% 21% 0% 0% 0% 75% 80% 60% 100% 0% Tata-JLR -9% 54% 9% 11% 7% 26% 12% 48% 0% 56% 19% 30% 7% 0% 4% 75% 80% 56% 93% 0% Toyota -3% 40% 0% 1% 7% 26% 10% 41% 5% 53% 1% 12% 0% 0% 0% 38% 40% 53% 41% 0% VW -8% 42% 27% 1% 4% 16% 13% 54% 8% 57% 29% 30% 5% 0% 0% 75% 80% 57% 95% 0% Fleet -6% 50% 11% 2% 7% 28% 11% 44% 6% 58% 12% 7% 1% 0% 0% 66% 71% 58% 65% 0% Mass=true mass reduction; TDS18/24/27=turbocharged & downsized at 18/24/27 bar BMEP; AT=automatic transmission; DCT=dual clutch transmission; MT=manual transmission; HEG=high 

efficiency gearbox; EGR=cooled exhaust gas recirculation; HEV=hybrid electric vehicle; EV=full electric vehicle; PHEV=plug-in HEV; SS=12V stop-start; LRRT2=lower rolling resistance tires level 

2; IACC2=Improved accessories level 2; EFR2=engine friction reduction level 2; GDI=stoichiometric gasoline direct injection; DSL=advanced diesel Note that technology penetrations for Aston Martin, Lotus and Tesla are not included here but can be found in EPA’s draft RIA. Negative values for Mass Reduction represent percentage of mass removed. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 320 of 770

Table III-25 Technology Penetrations for the 2025 MY Control Case – Combined Fleet 

Mass TDS18 TDS24 TDS27 AT6 AT8 DCT6 DCT8 MT HEG EGR HEV EV PHEV SS LRRT2 IACC2 EFR2 GDI DSL 

BMW -10% 8% 58% 6% 0% 26% 0% 59% 7% 92% 64% 34% 8% 0% 0% 100% 100% 92% 92% 0% Chrysler/ Fiat -11% 16% 66% 5% 0% 38% 0% 58% 2% 99% 71% 15% 1% 0% 0% 100% 100% 99% 99% 0% Daimler -11% 11% 41% 11% 0% 23% 0% 62% 4% 88% 53% 36% 12% 0% 0% 100% 100% 88% 86% 2% Ferrari -6% 0% 0% 5% 0% 0% 0% 77% 0% 77% 5% 50% 23% 22% 5% 100% 100% 77% 77% 0% Ford -11% 18% 56% 9% 0% 39% 0% 51% 4% 95% 65% 19% 4% 0% 0% 99% 99% 95% 95% 0% GeelyVolvo -10% 11% 42% 13% 0% 39% 0% 50% 1% 89% 54% 44% 11% 0% 0% 100% 100% 89% 89% 0% GM -11% 21% 60% 8% 0% 59% 0% 37% 2% 98% 68% 10% 2% 0% 0% 100% 100% 98% 98% 0% Honda -8% 24% 73% 0% 0% 18% 0% 71% 8% 98% 73% 3% 0% 0% 0% 98% 98% 98% 98% 0% Hyundai -10% 25% 75% 0% 0% 35% 0% 58% 6% 100% 75% 0% 0% 0% 0% 100% 100% 100% 100% 0% Kia -7% 39% 61% 0% 0% 27% 0% 66% 7% 100% 42% 0% 0% 0% 0% 100% 100% 100% 100% 0% Mazda -8% 6% 73% 0% 0% 23% 0% 65% 11% 98% 73% 19% 2% 0% 0% 100% 100% 98% 98% 0% Mitsubishi -12% 8% 70% 0% 0% 21% 0% 69% 4% 95% 70% 17% 5% 0% 0% 100% 100% 95% 95% 0% Nissan -7% 13% 69% 3% 0% 25% 0% 69% 3% 98% 72% 20% 2% 0% 0% 100% 100% 98% 98% 0% Porsche -5% 8% 35% 7% 0% 21% 0% 42% 19% 83% 41% 34% 17% 10% 1% 100% 100% 83% 83% 0% SpykerSaab -10% 5% 47% 3% 0% 13% 0% 66% 6% 84% 50% 32% 16% 5% 2% 100% 100% 84% 84% 0% Subaru -10% 6% 71% 0% 0% 6% 0% 72% 19% 96% 71% 19% 4% 0% 0% 100% 100% 96% 96% 0% Suzuki -3% 3% 67% 0% 0% 14% 0% 72% 6% 92% 67% 22% 8% 0% 0% 100% 100% 92% 92% 0% Tata-JLR -9% 15% 16% 29% 0% 31% 0% 58% 0% 88% 45% 43% 12% 0% 0% 100% 100% 88% 88% 0% Toyota -7% 23% 60% 4% 0% 30% 0% 53% 5% 88% 64% 13% 0% 0% 0% 88% 88% 88% 88% 0% VW -8% 6% 60% 3% 0% 20% 0% 63% 8% 90% 62% 31% 10% 1% 0% 100% 100% 90% 90% 0% Fleet -9% 19% 62% 5% 0% 34% 0% 55% 5% 94% 66% 15% 3% 0% 0% 97% 97% 94% 94% 0% Mass=true mass reduction; TDS18/24/27=turbocharged & downsized at 18/24/27 bar BMEP; AT=automatic transmission; DCT=dual clutch transmission; MT=manual transmission; HEG=high 

efficiency gearbox; EGR=cooled exhaust gas recirculation; HEV=hybrid electric vehicle; EV=full electric vehicle; PHEV=plug-in HEV; SS=12V stop-start; LRRT2=lower rolling resistance tires level 

2; IACC2=Improved accessories level 2; EFR2=engine friction reduction level 2; GDI=stoichiometric gasoline direct injection; DSL=advanced diesel Note that technology penetrations for Aston Martin, Lotus and Tata are not included here but can be found in EPA’s draft RIA. Negative values for Mass Reduction represent percentage of mass removed. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 321 of 770

6. How does the technical assessment support the proposed CO2 standards as compared 

to the alternatives has EPA considered? 

a. What are the Targets and Achieved Levels for the Fleet in this Proposal? 

In this section EPA analyzes the proposed standards alongside several potential 

alternative GHG standards. 

Table III-26 includes a summary of the proposed standards and the four alternatives 

considered by EPA for this notice. In this table and for the majority of the data presented in this 

section, EPA focuses on two specific model years in the 2017-2025 time frame addressed by this 

proposal. For the purposes of considering alternatives, EPA assessed these two specific years as 

being reasonably separated in time in order to evaluate a range of meaningfully different 

standards, rather than analyzing alternatives for each individual model year. After discussing the 

reasons for selecting the proposed standards rather than any of the alternatives, EPA will 

describe the specific standard phase-in schedule for the proposal. Table III-26 presents the 

projected reference case targets for the fleet in 2021 and 2025, that is the estimated industry wide 

targets that would be required for the projected fleet in those years by the MY 2016 standards.328 

The alternatives, like the proposed standards, account for projected use of A/C related credits. 

They represent the average targets for cars and trucks projected for the proposed standards and 

four alternative standards. They do not represent the manner in which manufacturers are 

projected to achieve compliance with these targets, which includes the ability to transfer credits 

to and from the car and truck fleets. That is discussed later. 

Table III-26 2021 and 2025 Fleet Targets for the Proposal and Alternative 

Standards (grams/mile CO2) 

Car 

Target 

Truck 

Target 

Fleet 

Target 

2021 Proposal 173 249 199 

Alternative 1: 2021 Trucks+20 173 270 207 

Alternative 2: 2021 Trucks-20 173 230 193 

Alternative 3: 2021 Cars+20 193 250 213 

Alternative 4: 2021 Cars-20 153 250 187

2021 Reference Case 225 297 250

2025 Proposal 144 203 163

Alternative 1: 2025 Trucks+20 144 223 170

Alternative 2: 2025 Trucks-20 144 183 157

Alternative 3: 2025 Cars+20 164 203 177

Alternative 4: 2025 Cars-20 124 203 150

 328The reference case targets for 2021 and 2025 may be different even though the footprint based standards are 

identical (the 2016 curves). This is because the fleet distribution of cars and trucks may change in the intervening 

years thus changing the targets in 2021 and 2025. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 322 of 770

2025 Reference Case 225 295 248

Alternative 1 and 2 are focused on changes in the level of stringency for just light-duty 

trucks: Alternative 1 is 20 grams/mile CO2 less stringent (higher) in 2021 and 2025, and 

Alternative 2 is 20 grams/mile CO2 more stringent (lower) in 2021 and 2025. Alternative 3 and 

4 are focused on changes in the level of stringency for just passenger cars: Alternative 3 is 20 

grams/mile CO2 less stringent (higher) in 2021 and 2025, and Alternative 4 is 20 grams/mile CO2

more stringent (lower) in 2021 and 2025. When combined with the sales projections for 2021 

and 2025, these alternatives span fleet wide targets with a range of 187-213 g/mi CO2 in 2021 

(equivalent to a range of 42-48 mpge if all improvements were made with fuel economy 

technologies) and a range of 150-177 g/mi CO2 in 2025 in 2025 (equivalent to a range of 50-59 

mpg if all improvements were made with fuel economy technologies). 

 Using the OMEGA model, EPA evaluated the proposed standards and each of the 

alternatives in 2021 and in 2025. It is worth noting that although Alternatives 1 and 2 consider 

different truck footprint curves compared to the proposal and Alternatives 3 and 4 evaluate 

different car footprint curves compared to the proposal, in all cases EPA evaluated the 

alternatives by modeling both the car and truck footprint curves together (which achieve the fleet 

targets shown in Table III-26) as this is how manufacturers would view the future standards 

given the opportunity to transfer credits between cars and trucks under the GHG program. A 

manufacturer’s ability to transfer GHG credits between its car and truck fleets without limit 

does have the effect of muting the “truck” focused and “car” focused nature of the alternatives 

EPA is evaluating. For example, while Alternative 1 has truck standards projected in 2021 and 

2025 to be 20 grams/mile less stringent than the proposed truck standards and the same car 

standards as the proposed car standards, individual firms may over comply on trucks and undercomply on cars (or vice versa) in order to meet Alternative 1 in a cost effective manner from 

each company’s perspective. EPA’s modeling of single manufacturer fleets reflects this 

flexibility, and appropriately so given that it reflects manufacturers’ expected response. 

Table III-27 shows the projected target and projected achieved levels in 2025 for the 

proposed standards. This accounts for a manufacturer’s ability to transfer credits to and from 

cars and trucks to meet a manufacturer’s car and truck targets. 

Table III-27 2025 Projected Target and Achieved Levels for the Proposal for 

Individual Firms (grams/mile CO2) 

 

Target Achieved 

Car 

TargetAchieved 

 

Truck 

TargetCompany Cars Trucks Fleet Cars Trucks Fleet Achieved 

BMW 146 194 159 145 196 158 1 -2 

Chrysler/Fiat 146 201 170 148 199 170 -2 2 

Daimler 153 208 166 146 230 165 8 -22 

Ferrari 150 n/a 150 159 n/a 159 -9 n/a 

Ford 147 213 167 153 200 167 -6 13 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 323 of 770

Geely-Volvo 148 189 160 141 204 159 8 -15 

GM 146 213 178 146 212 178 0 1 

Honda 142 191 156 143 186 156 -2 5 

Hyundai 142 188 151 145 178 152 -3 11 

Kia 143 199 155 146 189 155 -3 10 

Mazda 142 186 149 145 172 150 -3 14 

Mitsubishi 139 180 153 144 171 153 -5 8 

Nissan 145 202 162 143 204 161 1 -2 

Porsche 131 195 144 119 231 143 12 -36 

Spyker-Saab 141 188 148 133 231 146 8 -43 

Subaru 137 177 146 147 149 147 -10 28 

Suzuki 132 181 140 132 179 140 -1 3 

Tata-JLR 161 182 171 134 208 168 27 -26 

Toyota 141 200 163 140 201 162 1 -1 

VW 139 203 152 133 225 151 6 -22 

Fleet 144 203 163 144 202 163 -0.1 1.6 

Note: This table and the remainder in this section do not include projections for Aston Martin and Lotus. These two 

firms would qualify for consideration of the unique Small Volume Manufacturer alternative standards discussed in 

Section III.XX, and thus while we have included modeling for these companies in the Draft RIA, we do not present 

the results in this section. In addition, we do not present in this section results for the firm Tesla, as our forecast 

assumes they only make all electric vehicles, and thus under any standard we analyzed the firm always complies 

without the addition of any technology. 

Similar tables for each of the alternatives for 2025 and for the alternatives and the 

proposal for 2021 are contained in Chapter 3 of EPA’s draft RIA. With the proposed standards 

and for Alternatives 1 and 2, all companies are projected to be able to comply both in 2021 and 

2025, with the with the exception of Ferrari, which in each case falls 9 g/mi short of its projected 

fleet wide obligation in 2025. 329 In Alternatives 3 and 4, where the car stringency varies, all 

companies are again projected to comply with the exception of Ferrari, which complies under 

Alternative 3, but has a 30 gram shortfall under Alternative 4. This was not the case for the 2016 

standards from the previous rule. The primary reason for this result is the penetration of more 

efficient technologies beyond 2016. As described earlier, many technologies projected as not to 

be available by MY 2016 or whose penetration was limited due to lead time issues are projected 

to be available or available at greater penetration rates in the 2017-2025 timeframe, especially 

given two more redesign cycles. 

 329 Note that Ferrari is shown as a separate entity in the table above but could be combined with other Fiat-owned 

companies for purposes of GHG compliance at the manufacturer's discretion. Also, in Section III.B., EPA is 

requesting comment on the concept of allowing companies that are able to demonstrate "operational independence" 

to be eligible for SVM alternative standards. However, the costs shown above are based on Ferrari meeting the 

primary program standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 324 of 770

b. Why is the Relative Rate of Car Truck Stringency Appropriate? 

Table III-27 illustrates the importance of car-truck credit transfer for individual firms. 

For example, the OMEGA model projects for the proposed standards that in 2025, Daimler 

would under comply for trucks by 22 g/mile but over comply in their car fleet by 8 g/mi in order 

to meet their overall compliance obligation, while for Kia the OMEGA model projects that under 

the proposed standards Kia’s truck fleet would over comply by 10 g/mi and under comply in 

their car fleet by 3 g/mi in order to meet their compliance obligations. However, for the fleet as 

a whole, we project only a relatively small degree of net credit transfers from the truck fleet to 

the car fleet. 

Table III-21 shows that the average costs for cars and trucks are also nearly equivalent 

for 2021 and 2025. For MY 2021, the average cost to comply with the car standards is $723, 

while it is $753 for trucks. For MY 2025, the average cost to comply with the car standards is 

$1,946, while it is $1,944 for trucks. These results are highly consistent with the small degree of 

net projected credit transfer between cars and trucks. 

The average cost for complying with the truck and car standards are similar, even though 

the level of stringency for trucks is increasing at a slower rate than for cars. As described in 

Section I.B.2 of the preamble, the proposed car standards are decreasing (in CO2) at a rate of 5% 

per year from MYs 2017-2025, while the proposed truck standards are decreasing at a rate of 

3.5% per year on average from MYs 2017-2021, then 5% per year thereafter till 2025. Given 

this difference in percentage rates, the close similarity in average cost stems from the fact that it 

is more costly to add the technologies to trucks (in general) than to cars as described in Chapter 1 

of the draft RIA. Moreover, some technologies are not even available for towing trucks. These 

include EVs, PHEVs, Atkinson Cycle engines (matched with HEVs), and dry DCT – the latter 

two are relatively cost effective. Together these result in a decrease in effectiveness potential for 

the heavier towing trucks compared to non-towing trucks and cars. In addition, , there is more 

mass reduction projected for these vehicles, but this comes at higher cost as well, as the cost for 

mass reduction goes up with higher levels of mass reduction. As described in greater detail in 

Chapter 2 of the joint TSD, these factors help explain the reason EPA and NHTSA are proposing 

to make the truck curve steeper relative to the 2016 curve, thus resulting in a truck curve that is 

“more parallel” to cars than the 2016 truck curve. 

Taken together, our analysis shows that under the proposed standards, there is relatively 

little net trading between car and trucks; average costs for compliance with cars is similar to that 

of trucks in MY 2021 as well as MY 2025; and it is more costly to add technologies to trucks 

than to cars. These facts corroborate the reasonableness for increasing the slope of the truck 

curve. These observations also lead us to the conclusion that (at a fleet level) starting from MYs 

2017-2021, the slower rate of increase for trucks compared to cars (3.5% compared to 5% per 

year), and the same rate of increase (5% per year) for both cars and trucks for MY2022-2025 

results in car and truck standards that reflect increases in stringency over time that are 

comparable and consistent. There are no indications that either the truck or car standards are 

leading manufacturers to choose technology paths that lead to significant over or under 

compliance for cars or trucks, on an industry wide level. E.g., there is no indication that on 

average the proposed car standards would lead manufacturers to consistently under or over 

comply with the car standard in light of the truck standard, or vice versa. A consistent pattern 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 325 of 770

across the industry of manufacturers choosing to under or over comply with a car or trucks 

standard could indicate that the car or truck standard should be evaluated further to determine if 

one was more or less stringent than might be appropriate in light of the technology choices 

available to manufacturers and their costs. As shown above, that is not the case for the proposed 

car and truck standards. However, EPA did evaluate a set of alternative standards that reflect 

separately increasing or decreasing the stringency of the car and truck standards, as discussed 

below. 

c. What are the Costs and Advanced Technology Penetration Rates for the 

Alternative Standards in Relation to the Proposed Standards? 

Below we discuss results for the proposed car and truck standards compared to the truck 

alternatives evaluated (Alternatives 1 and 2), and then discuss the proposed car and truck 

standards compared to the car alternatives (Alternatives 3 and 4). 

Table III-28 presents our projected per-vehicle cost for the average car, truck and for the 

fleet in model year 2021 and 2025 for the proposal and for Alternatives 1 and 2. All costs are 

relative to the reference case (i.e. the fleet with technology added to meet the 2016 MY 

standards). As can be seen, even though only the truck standards vary among these three 

scenarios, in each case the projected average car and truck costs vary as a result of car-truck 

credit transfer by individual companies. Table III-28 shows that compared to the proposal, 

Alternative 1 (with a 2021 and 2025 truck target 20 g/mile less stringent, or 20 g/mile greater, 

than the proposal) is $281 per vehicle less than the proposal in 2021 and $430 per vehicle less 

than the proposal in 2025. Alternative 2 (with a 2021 and 2025 truck target 20g/mile more 

stringent, or 20 g/mile less, than the proposal) is $343 per vehicle more than the proposal in 2021 

and $516 per vehicle more than the proposal in 2025. 

Note that while the car and truck costs are nearly equivalent for Alternative 2 in 2021 and 

2025, cars are over complying on average by 7 g/mi, while trucks are under complying by 11 

g/mi, thus indicating significant flow of credits from cars to trucks.330 The situation is reversed 

in Alternative 1, where cars are under complying on average by 9 g/mi and trucks are over 

complying by 16 g/mi, implying significant flow of credits from truck to cars. 

Table III-28 2021 and 2025 Fleet Average Projected Per-Vehicle Costs for Proposal 

and Alternatives 1 and 2 ($/vehicle) 

 Cars Trucks Fleet 

2021 Proposal $723 $753 $734 

Alternative 1: 2021 Trucks+20 $441 $477 $453 

Alternative 2: 2021 Trucks-20 $1,061 $1,110 $1,077 

 

2025 Proposal $1,946 $1,944 $1,946 

Alternative 1: 2025 Trucks+20 $1,489 $1,570 $1,516

Alternative 2: 2025 Trucks-20 $2,448 $2,491 $2,462

 330 These detailed tables are in Chapter 3 of EPA’s draft RIA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 326 of 770

Table III-29 presents the per-vehicle cost estimates in MY2021 by company for the 

proposal, Alternative 1 and Alternative 2. In general, for most of the companies our projected 

results show the same trends as for the industry as a whole. 

Table III-29 : 2021 Projected Per-Vehicle Costs for the Proposal and Alternatives 1 

and 2 by Company (cars & trucks, $/vehicle) 

 Proposal 

Alternative 1 

(trucks+20) 

Alternative 2 

(trucks-20) 

BMW $938 $428 $1,355

Chrysler/Fiat $696 $279 $1,124

Daimler $1,703 $1,257 $2,210

Ferrari $6,357 $6,357 $6,357

Ford $696 $369 $1,132

Geely-Volvo $1,741 $1,191 $2,438

GM $588 $200 $1,121

Honda $557 $411 $759

Hyundai $671 $561 $831

Kia $584 $481 $706

Mazda $922 $766 $1,115

Mitsubishi $877 $508 $1,385

Nissan $730 $463 $986

Porsche $4,484 $4,072 $5,150

Spyker-Saab $2,990 $2,700 $3,345

Subaru $996 $768 $1,321

Suzuki $1,135 $893 $1,373

Tata-JLR $1,933 $1,095 $2,819

Toyota $480 $320 $678

VW $1,459 $1,036 $1,815

Fleet $734 $453 $1,077

Table III-30 presents the per-vehicle cost estimates in MY2025 by company for the 

proposal, Alternative 1 and Alternative 2. In general, for most of the companies our projected 

results show the same trends as for the industry as a whole, with Alternative 1 on the order of 

$200 to $600 per vehicle less expensive then the proposal, and Alternative 2 on the order of $200 

to $800 per vehicle more expensive. For the fleet as a whole, the average cost for Alternative 1 

is $430 less costly, while Alternative 2 is $516 more costly. Thus the incremental average cost is 

higher for the more stringent alternative than for an equally less stringent alternative standard. 

This is not a surprise as more technologies must be added to vehicles to meet tighter standards, 

and these technologies increase in cost in a non-linear fashion. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 327 of 770

Table III-30: 2025 Projected Per-Vehicle Costs for Proposal and Alternatives 1 and 

2 by Company (cars & trucks, $/vehicle) 

 Proposal 

Alternative 1 

(trucks+20) 

Alternative 2 

(trucks-20) 

BMW $2,175 $1,781 $2,608

Chrysler/Fiat $2,041 $1,453 $2,672

Daimler $2,709 $2,346 $3,128

Ferrari $7,114 $7,114 $7,114

Ford $2,178 $1,671 $2,671

Geely-Volvo $2,876 $2,375 $3,547

GM $2,028 $1,352 $2,875

Honda $1,595 $1,328 $1,988

Hyundai $1,741 $1,511 $2,006

Kia $1,493 $1,284 $1,716

Mazda $2,134 $1,897 $2,349

Mitsubishi $2,133 $1,758 $2,574

Nissan $2,061 $1,616 $2,487

Porsche $5,013 $4,556 $5,479

Spyker-Saab $3,673 $3,341 $3,890

Subaru $2,204 $1,926 $2,454

Suzuki $2,228 $2,053 $2,438

Tata-JLR $2,974 $2,335 $3,785

Toyota $1,483 $1,133 $2,014

VW $2,508 $2,170 $2,873

Fleet $1,946 $1,516 $2,462

The previous tables present the costs for the proposal and alternatives 1 and 2 at both the 

industry and company level. In addition to costs, another key is the technology required to meet 

potential future standards. The EPA assessment of the proposal, as well as Alternatives 1 and 2 

predict the penetration into the fleet of a large number of technologies at various rates of 

penetration. A subset of these technologies are discussed below, while EPA’s draft RIA Chapter 

3 includes the details on this much longer list for the passenger car fleet, light-duty truck fleet, 

and the overall fleet at both the industry and individual company level. Table III-31 and Table 

III-32 present only a sub-set of the technologies EPA estimates could be used to meet the 

proposed standards as well as alternative 1 and 2 in MY 2021. Table III-33 and Table III-34 

show the same for 2025. The technologies listed in these tables are those for which there is a 

large difference in penetration rates between the proposal and the alternatives. We have not 

included here, for example, the penetration rates for improved high efficiency gear boxes 

because in 2021 our modeling estimates a 58% penetration of this technology across the total 

fleet for the proposal as well as for alternatives 1 and 2, or 8 speed automatic transmissions 

which in 2021 we estimate at a 28 % penetration rate for the proposed standards as well as for 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 328 of 770

alternatives 1 and 2. There are several other technologies (shown in the Chapter 3 of the DRIA) 

where there is little differentiation between the proposal and alternatives 1 and 2. 

Table III-31 shows that in 2021, for several technologies the proposal requires higher 

levels of penetration for trucks than alternative 1. For example for trucks, compared to the 

proposal, alternative 1 leads to an 8% decrease in the 24 bar turbo-charged/downsized engines, 

a 10% decrease in the penetration of cooled EGR, and a 12% decrease in the penetration of 

gasoline direct injection fuel systems. We also see that due to credit transfer between cars and 

trucks , the lower level of stringency considered for trucks in alternative 1 also impacts the 

penetration of technology to the car fleet – with alternative 1 leading to a 14% decrease in 

penetration of 18 bar turbo-downsized engines, 5% decrease in penetration of 24 bar turbodownsize engines, 8% decrease in penetration of 8 speed dual clutch transmissions, and a 19% 

decrease in penetration of gasoline direct injection fuel systems in the car fleet. For the more 

stringent alternative 2, we see increases in the penetration of many of these technologies 

projected for 2021, for the truck fleet as well as for the car fleet. Table III-32 shows these same 

overall trends but at the sales weighted fleet level in 2021. 

Table III-31: 2021 Projected Technology Penetrations for Proposal and 

Alternatives 1 and 2 for all Cars and Trucks 

 Cars Trucks 

 Technology Proposal Alt. 1 Alt. 2 Proposal Alt. 1 Alt. 2 

Turbo-downsize(18 bar) 45% 31% 50% 59% 57% 66% 

Turbo-downsize (24 bar) 10% 5% 17% 14% 6% 19%

8 speed DCT 61% 53% 61% 13% 12% 13%

Cooled EGR* 9% 6% 18% 17% 7% 23%

Hybrid Electric Vehicle 8% 7% 9% 4% 4% 7%

LRRT2 62% 53% 72% 74% 62% 74%

IACC2 67% 57% 77% 79% 66% 79%

GDI 60% 41% 73% 76% 64% 91%

* In EPA packages TDS27 engines have cooled EGR, nearly all TDS24 engines also have cooled EGR, virtually none of the 

TDS18 bar engines have cooled EGR (See Chapter 1 of the draft RIA) 

Table III-32: 2021 Projected Technology Penetrations for Proposal and 

Alternatives 1 and 2 for Fleet

 Proposal Alt. 1 Alt. 2 

Turbo-downsize (18 bar) 50% 40% 55% 

Turbo-downsize (24 bar) 11% 5% 18% 

8 speed DCT 44% 39% 44%

Cooled EGR 12% 6% 20%

Hybrid Electric Vehicle 7% 6% 8%

LRRT2 66% 56% 73%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 329 of 770

IACC2 71% 60% 78%

GDI 65% 49% 79%

Table III-33 shows that in 2025, there is only a small change in many of these 

technology penetration rates when comparing the proposal to alternative 1 for trucks, and most 

of the change shows up in the car fleet. One important exception is hybrid electric vehicles, 

where the less stringent alternative 1 is projected to be met with a 4% decrease in penetration of 

HEVs compared to the proposal. As in 2021, we see that due to credit transfer between cars and 

trucks, the lower level of stringency considered for trucks in alternative 1 also impacts the car 

fleet penetration – with alternative 1 leading to a 8% decrease in penetration of 24 bar turbodownsized engines, 12% decrease in penetration of cooled EGR, 6% decrease in penetration of 

HEVs, and a 2% decrease in penetration of electric vehicles. For the more stringent alternative 

2, we see only small increases in the penetration of many of these technologies projected for 

2025, with a major exception being a significant 14% increase in the penetration of HEVs for 

trucks compared to the proposal, a 6 % increase in the penetration of HEVs for cars compared to 

the proposal, and a 3% increase in the penetration of EVs for cars compared to the proposal. 

Table III-33: 2025 Projected Technology Penetrations for Proposal and 

Alternatives 1 and 2 for all Cars and Trucks

 Cars Trucks 

 Proposal Alt. 1 Alt. 2 Proposal Alt. 1 Alt. 2 

Turbo-downsize (18 bar) 14% 23% 8% 27% 24% 26% 

Turbo-downsize (24 bar) 65% 57% 63% 57% 57% 56% 

8 speed DCT 75% 76% 73% 15% 16% 15% 

Cooled EGR 66% 54% 64% 67% 68% 67% 

Hybrid Electric Vehicle 15% 9% 21% 13% 9% 27% 

EV 4% 2% 7% 1% 0% 1% 

LRRT2 96% 96% 96% 99% 99% 99% 

IACC2 96% 96% 96% 99% 99% 99% 

GDI 93% 88% 90% 97% 94% 97% 

Table III-34: 2025 Projected Technology Penetrations for Proposal and 

Alternatives 1 and 2 for Fleet 

 Proposal Alt. 1 Alt. 2 

Turbo-downsize (18 bar) 19% 24% 14% 

Turbo-downsize (24 bar) 62% 57% 60% 

8 speed DCT 55% 56% 54% 

Cooled EGR 66% 59% 65% 

Hybrid Electric Vehicle 15% 9% 23% 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 330 of 770

EV 3% 2% 5% 

LRRT2 97% 97% 97% 

IACC2 97% 97% 97% 

GDI 94% 90% 92% 

The results are similar for Alternatives 3 and 4, where the truck standard stays at the 

proposal level and the car stringency varies, +20 g/mi and -20 g/mi respectively. Table III-35 

presents our projected per-vehicle cost for the average car, truck and for the fleet in model year 

2021 and 2025 for the proposal and for Alternatives 3 and 4. Compared to the proposal, 

Alternative 3 (with a 2021 and 2025 car target 20 g/mile less stringent then the proposal) is $442 

per vehicle less on average than the proposal in 2021 and $708 per vehicle less than the proposal 

in 2025. Alternative 4 (with a 2021 and 2025 car target 20g/mile more stringent then the 

proposal) is $635 per vehicle more on average than the proposal in 2021 and $923 per vehicle 

more than the proposal in 2025. These differences are even more pronounced than Alternatives 

1 and 2. As in the analysis above, the costs increases are greater for more stringent alternatives 

than the reduced costs from the less stringent alternatives. 

Note that although the car and truck costs are not too dissimilar for cars and trucks for 

Alternative 3 in 2025, what is not shown is that cars are over complying by 5 g/mi, while trucks 

are under complying by 7 g/mi, thus indicating significant flow of credits from cars to trucks. 

The situation is reversed in Alternative 4, where cars are under complying by 6 g/mi and trucks 

are over complying by 12 g/mi implying significant flow of credits from truck to cars. 

Table III-35: 2021 and 2025 Fleet Average Projected Per-Vehicle Costs for 

Proposal and Alternatives 3 and 4 ($/vehicle) 

 Cars Trucks Fleet 

2021 Proposal $723 $753 $734

Alternative 3: 2021 Cars+20 $249 $379 $292

Alternative 4: 2021 Cars-20 $1,421 $1,265 $1,369

 

2025 Proposal $1,946 $1,944 $1,946

Alternative 3: 2025 Cars+20 $1,166 $1,384 $1,238

Alternative 4: 2025 Cars-20 $2,928 $2,750 $2,869

Table III-36 presents the per-vehicle cost estimates in MY2021 by company for the 

proposal, Alternative 3 and Alternative 4. In general, for most of the companies our projected 

results show the same trends as for the industry as a whole, with Alternative 3 being a several 

hundred dollars per vehicle less expensive then the proposal, and Alternative 4 being several 

hundred dollars per vehicle more expensive (with larger increment for more stringent than less 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 331 of 770

stringent alternatives). In some case the differences exceed $1,000 (e.g. BMW, Daimler, 

Geely/Volvo, Mazda, Spyker/Saab, and Tata). 

Table III-36: 2021 Projected Per-Vehicle Costs for Proposal and Alternatives 3 and 

4 by Company (cars & trucks combined, $/vehicle) 

 Proposal 

Alt. 3 

(cars+20) 

Alt. 4 

(cars-20) 

BMW $938 -$216 $2,144

Chrysler/Fiat $696 $271 $1,141

Daimler $1,703 $569 $3,116

Ferrari $6,357 $6,357 $6,357

Ford $696 $241 $1,501

Geely-Volvo $1,741 $663 $3,216

GM $588 $243 $1,040

Honda $557 $293 $994

Hyundai $671 $320 $1,358

Kia $584 $328 $1,068

Mazda $922 $357 $1,960

Mitsubishi $877 $326 $1,803

Nissan $730 $288 $1,470

Porsche $4,484 $3,134 $5,475

Spyker-Saab $2,990 $1,591 $4,821

Subaru $996 $480 $1,908

Suzuki $1,135 $334 $2,130

Tata-JLR $1,933 $1,095 $2,861

Toyota $480 $298 $758

VW $1,459 $188 $2,857

Fleet $734 $292 $1,369

Table III-37 presents the per-vehicle cost estimates in MY2025 by company for the 

proposal, Alternative 3 and Alternative 4. In general, for most of the companies our projected 

results show the same trends as for the industry as a whole, with Alternative 3 on the order of 

$500 to $1,400 per vehicle less expensive then the proposal, and Alternative 4 on the order of 

$700 to $1,600 per vehicle more expensive. Again these differences are more pronounced for 

the car alternatives than the truck alternatives. 

Table III-37: 2025 Projected Per-Vehicle Costs for Proposal and Alternatives 3 and 

4 by Company (cars & trucks, $/vehicle) 

 NPRM 

Alt. 3 

(cars+20) 

Alt. 4 

(cars-20) 

BMW $2,175 $1,165 $3,429
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 332 of 770

Chrysler/Fiat $2,041 $1,422 $2,756

Daimler $2,709 $1,617 $4,088

Ferrari $7,114 $6,297 $7,114

Ford $2,178 $1,299 $3,215

Geely-Volvo $2,876 $1,790 $4,308

GM $2,028 $1,398 $2,841

Honda $1,595 $1,065 $2,387

Hyundai $1,741 $1,046 $2,773

Kia $1,493 $910 $2,409

Mazda $2,134 $1,231 $3,282

Mitsubishi $2,133 $1,414 $3,050

Nissan $2,061 $1,247 $2,957

Porsche $5,013 $3,687 $6,322

Spyker-Saab $3,673 $2,299 $5,264

Subaru $2,204 $1,402 $3,042

Suzuki $2,228 $1,386 $3,276

Tata-JLR $2,974 $2,244 $3,951

Toyota $1,483 $981 $2,252

VW $2,508 $1,393 $4,003

Fleet $1,946 $1,238 $2,869

Table III-38 shows that in 2021, for several technologies Alternative 3 leads to lower 

levels of penetration for cars as well as trucks compared to the proposal. For example (on cars) 

there is an 13% decrease in the 18 bar turbo-charged/downsized engines, a 5% decrease in the 

penetration of cooled EGR, and a 22% decrease in the penetration of gasoline direct injection 

fuel systems. We also see that due to credit transfer between cars and trucks, the lower level of 

stringency considered for cars in alternative 3 also impacts the penetration of technology to the 

truck fleet – with alternative 3 leading to 12% decrease in penetration of 24 bar turbo-downsized 

engines, 13% decrease in penetration of cooled EGR, and a 17% decrease in penetration of 

gasoline direct injection fuel systems in the car fleet. For the more stringent alternative 4, we see 

increases in the penetration of many of these technologies projected for 2021, for the truck fleet 

as well as for the car fleet. Table III-39 shows these same overall trends but at the sales 

weighted fleet level in 2021. 

Table III-38: 2021 Projected Technology Penetrations for Proposal and 

Alternatives 3 and 4 for all Cars and Trucks 

 

 Technology 

Cars Trucks 

Proposal Alt. 3 Alt. 4 Proposal Alt. 3 Alt. 4 

Turbo-downsize (18 bar) 45% 32% 51% 59% 55% 62% 

Turbo-downsize (24 bar) 10% 4% 21% 14% 2% 22% 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 333 of 770

8 speed DCT 61% 46% 61% 13% 11% 13% 

Cooled EGR 9% 4% 20% 17% 4% 26% 

Hybrid Electric Vehicle 8% 5% 12% 4% 3% 9% 

LRRT2 62% 43% 72% 74% 54% 74% 

IACC2 67% 46% 77% 79% 58% 79% 

GDI 60% 38% 82% 76% 59% 91% 

Table III-39: 2021 Projected Technology Penetrations for Proposal and 

Alternatives 3 and 4 for Fleet 

 Technologies Proposal Alt. 3 Alt. 4 

Turbo-downsize (18 bar) 50% 40% 55% 

Turbo-downsize (24 bar) 11% 3% 21%

8 speed DCT 44% 34% 44%

Cooled EGR 12% 4% 22%

Hybrid Electric Vehicle 7% 4% 11%

LRRT2 66% 47% 73%

IACC2 71% 50% 78%

GDI 65% 46% 85%

Table III-40 shows that in 2025, there is only a small change in many of these technology 

penetration rates when comparing the proposal to alternative 3 for cars, and most of the change 

shows up in the car fleet. There are a few exceptions: there is a 15% decrease in the penetrate 

rate of 24bar bmep engines (made up somewhat by a 4% increase in 18bar engines); there is 20% 

less EGR boost and GDI, and 9% less hybrid electric vehicles compared to the proposal. As in 

2021, we see that due to credit transfer between cars and trucks at the , the lower level of 

stringency considered for cars in alternative 3 also impacts the truck fleet penetration – with 

alternative 3 leading to 7% decrease in penetration of HEVs. For the more stringent alternative 

4, we see only small increases in the penetration of many of these technologies projected for 

2025, with a major exception being a significant 9% increase in the penetration of HEVs for cars 

compared to the proposal (along with drop in advanced engines), and a 20% increase in the 

penetration of HEVs for trucks compared to the proposal. 

Table III-40: 2025 Projected Technology Penetrations for Proposal and 

Alternatives 3 and 4 for all Cars and Trucks 

 Technologies 

Cars Trucks 

Proposal Alt. 3 Alt. 4 Proposal Alt.3 Alt. 4 

Turbo-downsize (18 bar) 14% 18% 6% 27% 25% 26% 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 334 of 770

Turbo-downsize (24 bar) 65% 50% 59% 57% 58% 55% 

8 speed DCT 75% 76% 71% 15% 16% 14% 

Cooled EGR 66% 46% 61% 67% 68% 66% 

Hybrid Electric Vehicle 15% 6% 24% 13% 6% 33% 

EV 4% 1% 9% 1% 0% 2% 

LRRT2 96% 96% 96% 99% 98% 99% 

IACC2 96% 96% 96% 99% 98% 99% 

GDI 93% 73% 88% 97% 94% 97% 

Table III-41: 2025 Projected Technology Penetrations for Proposal and 

Alternatives 3 and 4 for Fleet 

 Technologies Proposal Alt. 3 Alt. 4 

Turbo-downsize (18 bar) 19% 20% 12% 

Turbo-downsize (24 bar) 62% 53% 58% 

8 speed DCT 55% 56% 53% 

Cooled EGR 66% 54% 63% 

Hybrid Electric Vehicle 15% 6% 27% 

EV 3% 1% 7% 

LRRT2 97% 97% 97% 

IACC2 97% 97% 97% 

GDI 94% 80% 91% 

The trend for Alternatives 3 and 4 have thus far been that the impacts have been more 

extreme that Alternatives 1 and 2 compared to the proposal. Thus we will focus the discussion 

of feasibility on Alternatives 1 and 2 (as the same will also then apply to 3 and 4 respectively). 

As stated above, EPA’s OMEGA analysis indicates that there is a technology pathway for 

all manufacturers to build vehicles that would meet the proposed standards as well as the 

alternative standards.331 The differences lie in the per-vehicle costs and the associated 

technology penetrations. With the proposed standards, we estimate that the average per-vehicle 

cost is $734 in 2021 and $1,946 in 2025. We have also shown that the relative rate of increase in 

the stringencies of cars and trucks are at an appropriate level such that there is greater balance 

amongst the manufacturers where the distribution of the burden is relatively evenly spread. In 

Section I.C of the Preamble, we also showed that the benefits of the program are significant, and 

that this cost can be recovered within the first four years of vehicle ownership. 

EPA’s analysis of the four alternatives indicates that under all of the alternatives the 

projected response of the manufacturers is to change both their car and truck fleets. Whether the 

car or truck standard is being changed, and whether it is being made more or less stringent, the 

 331 Except Ferrari. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 335 of 770

response of the manufacturers is to make changes across their fleet, in light of their ability to 

transfer credits between cars and trucks. For example, Alternatives 1 and 3 make either car or 

trucks standard less stringent, and keep the other standard as is. For both alternatives, 

manufacturers increase their projected CO2 g/mile level achieved by their car fleet, and to a 

lesser extent their truck fleet. For alternatives 2 and 4, where either the truck or car fleet is made 

more stringent, and the other standard is kept as is, manufacturers reduce the projected CO2

g/mile level achieved by both their car and trucks fleets, in a generally comparable fashion. This 

is summarized in Table III-42 for MY 2025. 

Table III-42: A Comparison of the Achieved CO2 levels in Relation to the Proposed 

Achieved Levels for all Alternative Scenarios in MY 2025 

Alternative 

Change in car 

achieved level 

compared to 

proposal achieved 

level 

Change in truck 

achieved level 

compared to 

proposal achieved 

level 

1: truck +20 +8 +6 

2: truck -20 -8 -7 

3: car +20 +15 +9 

4: car -20 -14 -10 

 

This demonstrates that the four alternatives are indicative of what would happen if EPA 

increased the stringency of both the car and truck fleet at the same time, or decreased the 

stringency of the car and truck fleet at the same time. E.g., Alternative 4 would be comparable to 

an alternative where EPA made the car standard more stringent by 14 gm/mi and the truck 

standard by 10 gm/mile. Under such an alternative, there would logically be little if any net 

transfer of credits between cars and trucks. In that context, the results from alternatives 1 and 3 

can be considered as indicative of what would be expected if EPA decreased the stringency of 

both the car and truck standards, and alternatives 2 and 4 as indicative of what would happen if 

EPA increased the stringency of both the car and truck standards. In general, it appears that 

decreasing the stringency of the standards would lead the manufacturers to focus more on 

increasing the CO2 gm/mile of cars than trucks (alternatives 1 and 3). Increasing the stringency 

of the car and truck standards would generally lead to comparable increases in gm/mi for both 

cars and trucks. 

 Alternatives 1 and 3 would achieve significantly lower reductions, and would therefore 

forego important benefits that the proposed standards would achieve at reasonable costs and 

penetrations of technology. EPA judges that there is not a good reason to forego such benefits, 

and is not proposing less stringent standards such as alternatives 1 and 3. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 336 of 770

Alternatives 2 and 4 increase the per vehicle estimates to $1,077 and $1,369 respectively 

in 2021 and $2,462 and $2,869 respectively in 2025. This increase in cost from the proposal 

originates from the dramatic increases in the costlier electrification technologies, such as HEVs 

and EVs. The following tables and charts show the technology penetrations by manufacturer in 

greater detail. 

Table III-43 and later tables describe the projected penetration rates for the OEMs of 

some key technologies in MY 2021 and MY2025 under the proposed standards. TDS27, HEV, 

and PHEV+EV technologies represent the most costly technologies added in the package 

generation process, and the OMEGA model generally adds them as one of the last technology 

choices for compliance. They are therefore an indicator of the extent to which the stringency of 

the standard is pushing the manufacturers to the most costly technology. Cost (as shown above) 

is a similar indicator. 

Table III-43 describes technology penetration for MY2021 under the proposal. 

Table III-43: Percent Penetration of Technologies in MY 2021 for the Proposed 

Standards (Ferrari has been removed from this table) 

2021 CAR 2021 TRUCK 2021 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 26% 2% 30% 2% 24% 3% 30% 0% 25% 2% 30% 1%

Chrysler/Fiat 7% 1% 0% 0% 25% 3% 0% 0% 15% 2% 0% 0%

Daimler 21% 4% 30% 8% 14% 6% 30% 0% 20% 4% 30% 6%

Ford 15% 1% 2% 0% 17% 6% 2% 0% 16% 3% 2% 0%

Geely/Volvo 15% 8% 30% 9% 27% 2% 30% 0% 18% 6% 30% 6%

GM 9% 1% 0% 0% 19% 5% 0% 0% 14% 3% 0% 0%

Honda 0% 0% 3% 0% 0% 0% 0% 0% 0% 0% 2% 0%

Hyundai 0% 0% 0% 0% 30% 0% 0% 0% 6% 0% 0% 0%

Kia 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Mazda 20% 0% 0% 0% 30% 0% 0% 0% 22% 0% 0% 0%

Mitsubishi 30% 0% 6% 0% 30% 0% 4% 0% 30% 0% 6% 0%

Nissan 9% 0% 1% 0% 24% 3% 0% 0% 14% 1% 1% 0%

Porsche 25% 3% 30% 29% 24% 8% 30% 0% 25% 4% 30% 22%

Spyker/Saab 25% 3% 30% 16% 19% 6% 30% 0% 24% 3% 30% 13%

Subaru 30% 0% 2% 0% 30% 0% 0% 0% 30% 0% 1% 0%

Suzuki 30% 0% 24% 0% 30% 0% 6% 0% 30% 0% 21% 0%

Tata/JLR 7% 11% 30% 10% 10% 10% 30% 4% 9% 11% 30% 7%

Toyota 0% 0% 15% 0% 0% 3% 5% 0% 0% 1% 12% 0%

VW 29% 1% 30% 6% 23% 3% 30% 0% 27% 1% 30% 5%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 337 of 770

Fleet 10% 1% 8% 1% 14% 4% 4% 0% 11% 2% 7% 1%

TDS24 = 24 bar bmep Turbo downsized GDI Engines, where most of these are EGR boosted, TDS27 = EGR boosted turbo 

downsized GDI 24 bar bmep, HEV= Hybrid Electric Vehicle, EV = Electric Vehicle, PHEV = Plug-in Hybrid Electric Vehicle 

It can be seen from this table that the larger volume manufacturers have levels of 

advanced technologies that are below the phase in caps (described in the next table). On the 

other hand, smaller “luxury” volume manufacturers tend to require higher levels of these 

technologies. BMW, Daimler, Volvo, Porsche, Saab, Jaguar/LandRover, and VW all reach the 

maximum penetration cap for HEVs (30%) in 2021. Suzuki is the only other company with 

greater than 20% penetration of HEVs and only two manufacturers have greater than 10% 

penetration of PH/EVs: Porsche and Saab. Together these seven “luxury” vehicle manufacturer 

represent 12% of vehicle sales and their estimated cost of compliance with 2021 proposed 

standards is $2,178 compared to $744 for the others. 

It is important to review some of the caps or limits on the technology phase in rates 

described in Chapter 3.5.2.3 of the joint TSD as it relates to the remainder of this discussion. 

These are upper limits on the penetration rates allowed under our modeling, and reflect an 

estimate of the physical limits for such penetration. It is not a judgment that rates below that cap 

are practical or reasonable, and is intended to be more of a physical limit of technical capability 

in light of conditions such as supplier capacity, up-front investment capital requirements, 

manufacturability, and other factors. For example, In MY 2010, there are presently 3% HEVs in 

the new vehicle fleet. In MYs 2015, 2021 and 2025 we project that this cap on technology 

penetration rate increases to 15%, 30% and 50% respectively. For PH/EVs in MY 2010, there is 

practically none of these technologies. In MYs 2015, 2021 and 2025 we project that this cap on 

technology penetration rate increases to approximately 5%, 10% and 15% respectively for EVs 

and PHEVs separately. These highly complex technologies also have the slowest penetration 

phase-in rates to reflect the relatively long lead time required to implement into substantial 

fractions of the fleet subject to the manufacturers’ product redesign schedules. In contrast, an 

advanced technology still under development based on an improved engine design, TDS27, has a 

cap on penetration phase in rate in MYs 2015, 2021, and 2025 of 0%, 15%, and 50% indicative 

of a longer lead time to develop the technology, but a relatively faster phase in rate once the 

technology is “ready” (consistent with other “conventional” evolutionary improvements). Table 

III-44 summarizes the caps on the phase in rates of some of the key technologies. A penetration 

rate result from the analysis that approaches the caps for these technologies for a given 

manufacturer is an indication of how much that manufacturer is being “pushed” to technical 

limits by the standards. This will be in direct correlation to the cost of compliance for that same 

manufacturer. 

Table III-44: Phase-in Rates for Some Key Advanced Technologies 

Technology Abbr. 2016 2021 2025

Turbocharging & downsizing with EGR Level 1 

(w/ cooled EGR, 24 bar)

EGRB1 or 

TDS24 15% 30% 75%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 338 of 770

Turbocharging & downsizing with EGR Level 2 

(w/ cooled EGR, 27 bar)

EGRB2 or 

TDS27 0% 15% 50%

Strong Hybrid HEV 15% 30% 50%

Plug-in Hybrid PHEV 5% 10% 14%

Electric Vehicle EV 1 6% 11% 15%

Table III-45 shows the technology penetrations for Alternative 2. Immediately striking is 

the penetration rates of truck HEVs in the fleet: even in 2021, it nearly doubles in comparison to 

the proposal. The Ford truck fleet (to take one of the largest volume manufacturers as an 

example) increases from 2% HEVs in the proposal trucks to 16% in Alternative 2, an eight fold 

increase. 

There are other significant increases in the larger manufacturers and even more dramatic 

increases in the HEV penetration in smaller manufacturers’ fleets. For example, Suzuki cars 

now reach the maximum technology penetration cap of 30% for HEVs and Mitsubishi now has 

20% HEVs. Also, there are now four manufacturers with total fleet PH/EV penetration rates 

equal to 10% or greater. 

The larger volume manufacturers have an estimated per vehicle cost of compliance with 

2021 alternative standards of $1,044, which is $555 higher than the proposed standards. The the 

seven “luxury” vehicle manufacturers now have estimated costs of $2,733, which is $300 higher 

than the proposed standards (See Table III -12 above). 

Table III-45: Percent Penetration of Technologies in MY 2021 for Alternative 2 

2021 CAR 2021 TRUCK 2021 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 26% 2% 30% 6% 24% 3% 30% 0% 25% 2% 30% 4%

Chrysler/Fiat 28% 1% 1% 0% 25% 3% 2% 0% 27% 2% 2% 0%

Daimler 21% 4% 30% 12% 14% 6% 30% 0% 20% 4% 30% 9%

Ford 27% 1% 4% 0% 17% 6% 16% 0% 23% 3% 8% 0%

Geely/Volvo 15% 8% 30% 15% 27% 2% 30% 0% 18% 6% 30% 10%

GM 28% 1% 1% 0% 20% 5% 2% 0% 24% 3% 2% 0%

Honda 0% 0% 3% 0% 22% 0% 0% 0% 7% 0% 2% 0%

Hyundai 7% 0% 0% 0% 30% 0% 0% 0% 12% 0% 0% 0%

Kia 0% 0% 0% 0% 9% 0% 0% 0% 2% 0% 0% 0%

Mazda 30% 0% 1% 0% 30% 0% 1% 0% 30% 0% 1% 0%

Mitsubishi 30% 0% 25% 0% 30% 0% 11% 1% 30% 0% 20% 0%

Nissan 30% 0% 1% 0% 24% 3% 0% 0% 28% 1% 1% 0%

Porsche 25% 3% 30% 31% 27% 8% 30% 0% 25% 4% 30% 24%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 339 of 770

Spyker/Saab 25% 3% 30% 19% 19% 6% 30% 0% 24% 3% 30% 16%

Subaru 30% 0% 17% 0% 30% 0% 0% 0% 30% 0% 13% 0%

Suzuki 30% 0% 30% 0% 30% 0% 6% 1% 30% 0% 26% 0%

Tata/JLR 7% 11% 30% 13% 10% 10% 30% 11% 9% 11% 30% 12%

Toyota 0% 0% 15% 0% 13% 3% 5% 0% 5% 1% 12% 0%

VW 29% 1% 30% 8% 23% 3% 30% 0% 27% 1% 30% 7%

Fleet 17% 1% 9% 2% 19% 4% 7% 0% 18% 2% 8% 1%

Table III-46 shows the technology penetrations for Alternative 4 for MY 2021. The large 

volume manufacturer, Ford now has a 25% penetration rate of truck HEVs (a 23% increase 

compared to the proposed standards) and the fleet penetration has gone up 11 fold for this 

company in comparison to the proposed standards. 

Mitsubishi, and Suzuki cars now reach the maximum technology penetration cap of 30% 

for HEVs and Mazda, Subaru cars as well as Ford trucks now have greater than 20% HEVs. 

Also, there are now six manufacturers with PH/EV penetration rates greater than 10%. 

The larger volume manufacturers now have an estimated per vehicle cost of compliance 

with 2021 alternative standards of $1,428, which is $683 higher than the proposed standards. 

The seven “luxury” vehicle manufacturers now have estimated costs of $3,499, which is $1,320 

higher than the proposed standard (See Table III-30 above). For the seven luxury manufacturers, 

this per vehicle cost exceeds the costs under the proposal for complying with the considerably 

more stringent 2025 standards. 

Table III-46: Percent Penetration of Technologies in MY 2021 for Alternative 4 

2021 CAR 2021 TRUCK 2021 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 26% 2% 30% 12% 24% 3% 30% 0% 25% 2% 30% 9%

Chrysler/Fiat 28% 1% 1% 0% 25% 3% 2% 0% 27% 2% 2% 0%

Daimler 21% 4% 30% 19% 14% 6% 30% 0% 20% 4% 30% 14%

Ford 27% 1% 14% 0% 17% 6% 25% 1% 23% 3% 18% 0%

Geely/Volvo 15% 8% 30% 21% 27% 2% 30% 0% 18% 6% 30% 15%

GM 28% 1% 0% 0% 20% 5% 2% 0% 24% 3% 1% 0%

Honda 14% 0% 3% 0% 30% 0% 0% 0% 19% 0% 2% 0%

Hyundai 30% 0% 3% 0% 30% 0% 3% 0% 30% 0% 3% 0%

Kia 12% 0% 0% 0% 30% 0% 0% 0% 16% 0% 0% 0%

Mazda 30% 0% 26% 1% 30% 0% 11% 1% 30% 0% 23% 1%

Mitsubishi 30% 0% 30% 3% 30% 0% 11% 2% 30% 0% 23% 2%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 340 of 770

Nissan 30% 0% 14% 0% 24% 3% 13% 0% 28% 1% 14% 0%

Porsche 12% 15% 30% 31% 25% 15% 30% 0% 15% 15% 30% 24%

Spyker/Saab 25% 3% 30% 28% 19% 6% 30% 0% 24% 3% 30% 24%

Subaru 30% 0% 27% 1% 30% 0% 23% 0% 30% 0% 26% 1%

Suzuki 30% 0% 30% 7% 30% 0% 6% 2% 30% 0% 26% 6%

Tata/JLR 7% 11% 30% 14% 10% 10% 30% 11% 9% 11% 30% 12%

Toyota 1% 0% 15% 0% 21% 3% 5% 0% 9% 1% 12% 0%

VW 29% 1% 30% 16% 29% 3% 30% 0% 29% 1% 30% 13%

Fleet 21% 1% 12% 3% 22% 4% 9% 0% 21% 2% 11% 2%

 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 341 of 770

Table III-47 shows the technology penetrations for the proposed standards in 2025. The 

larger volume manufacturers have levels of advanced technologies that are below the phase in 

caps (described in the next table), though there are some notably high penetration rates for truck 

HEVs for Ford and Nissan. 332 For the fleet in general, we note a 3% penetration rate of 

PHEV+EVs – it is interesting to note that this is the penetration rate of HEVs today. EPA 

believes that there is sufficient lead time to have this level of penetration of these vehicles by 

2025. Case in point, it has taken approximately 10 years for HEV penetration to get to the levels 

that we see today, and that was without an increase in the stringency of passenger car CAFE 

standards. 

Table III-47: Percent Penetration of Technologies in MY 2025 for the Proposed 

Standards 

2025 CAR 2025 TRUCK 2025 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 56% 5% 28% 10% 61% 10% 50% 0% 58% 6% 34% 8%

Chrysler/Fiat 70% 2% 19% 1% 61% 8% 10% 1% 66% 5% 15% 1%

Daimler 43% 9% 32% 15% 35% 19% 50% 0% 41% 11% 36% 12%

Ford 64% 4% 13% 4% 40% 20% 31% 3% 56% 9% 19% 4%

Geely/Volvo 31% 16% 41% 15% 66% 6% 50% 0% 42% 13% 44% 11%

GM 68% 2% 15% 3% 51% 15% 3% 1% 60% 8% 10% 2%

Honda 73% 0% 3% 0% 75% 0% 2% 0% 73% 0% 3% 0%

Hyundai 75% 0% 0% 0% 74% 0% 2% 1% 75% 0% 0% 0%

Kia 57% 0% 0% 0% 75% 0% 0% 0% 61% 0% 0% 0%

Mazda 73% 0% 21% 2% 74% 0% 8% 0% 73% 0% 19% 2%

Mitsubishi 69% 0% 21% 6% 71% 0% 9% 4% 70% 0% 17% 5%

Nissan 73% 0% 18% 1% 59% 9% 24% 2% 69% 3% 20% 2%

Porsche 35% 1% 29% 35% 34% 28% 50% 0% 35% 7% 34% 27%

Spyker/Saab 47% 1% 29% 23% 46% 19% 50% 0% 47% 3% 32% 20%

Subaru 70% 0% 20% 5% 74% 0% 19% 1% 71% 0% 19% 4%

Suzuki 66% 0% 25% 9% 72% 0% 5% 3% 67% 0% 22% 8%

Tata/JLR 14% 26% 44% 15% 18% 33% 41% 8% 16% 29% 43% 12%

Toyota 61% 1% 17% 0% 59% 8% 7% 0% 60% 4% 13% 0%

VW 60% 1% 26% 13% 58% 11% 50% 0% 60% 3% 31% 11%

Fleet 65% 2% 15% 4% 57% 11% 13% 1% 62% 5% 15% 3%

 332 EPA has not conducted an analysis of pickup truck HEV penetration rates compared to the remainder of the truck 

fleet. This may be conducted for the final rule. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 342 of 770

Six of the seven luxury vehicle manufacturers reach the maximum penetration cap on 

their truck portion of their fleet, however, no company reaches 50% for their combined fleet. 

The seven do have over 30% penetration rate of HEVs, while Suzuki is the only company to 

have between 20 and 30% HEVs. 6 of the 7 luxury vehicle manufacturers also have greater than 

10% penetration of PH/EVs (which has a total cap of 29%). The only company to have large 

penetration rates (>15%) of TDS27 is Jaguar/LandRover at 29%. 

The estimated per vehicle cost of compliance with 2025 proposed standards is $1,943 for 

the larger volume manufacturers and $3,133 for the seven “luxury” vehicle manufacturers. 

Table III-48 shows the technology penetrations for Alternative 2 in 2025. In this 

alternative Chrysler trucks nearly double their penetration rate of HEVs along with dramatic 

increases in car and truck PH/EVs. GM has a very large increase in truck HEVs as well: from 

3% in the proposed to 39% in the alternative standards along with a doubling of PH/EVs. 

Toyota also has double the number of HEVs. In this alternative there are many more companies 

with 20-30% HEVs: Chrysler, Ford, GM, Mitsubishi, Nissan, Subaru, Suzuki, and Toyota. 

Suzuki (in addition to the seven) now also has 10% or greater penetration of PH/EVs. Ford, GM, 

Chrysler, and Nissan now have more than 20% penetration of HEVs in trucks. 

The estimated per vehicle cost of compliance with 2025 alternative 2 standards is $2,354, 

which is $410 higher than the proposed standards. The seven luxury vehicle manufacturers now 

have costs of $3,616, which is $483 higher than the proposed standards. See Table III-30 above. 

Table III-48: Percent Penetration of Technologies in MY 2025 for Alternative 2 

2025 CAR 2025 TRUCK 2025 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 52% 4% 28% 15% 61% 10% 50% 0% 55% 6% 34% 11%

Chrysler/Fiat 64% 2% 20% 8% 59% 8% 21% 3% 62% 5% 20% 6%

Daimler 42% 6% 32% 19% 35% 19% 50% 0% 41% 9% 36% 15%

Ford 61% 4% 19% 7% 38% 20% 38% 5% 54% 9% 25% 7%

Geely/Volvo 30% 11% 41% 21% 66% 6% 50% 0% 41% 10% 44% 15%

GM 64% 2% 20% 7% 51% 15% 39% 1% 58% 8% 29% 4%

Honda 71% 0% 13% 1% 73% 0% 10% 2% 72% 0% 12% 1%

Hyundai 73% 0% 9% 2% 74% 0% 2% 1% 74% 0% 7% 1%

Kia 75% 0% 0% 0% 75% 0% 0% 0% 75% 0% 0% 0%

Mazda 70% 0% 21% 5% 74% 0% 8% 1% 71% 0% 19% 4%

Mitsubishi 64% 0% 25% 11% 71% 0% 9% 4% 66% 0% 20% 9%

Nissan 69% 0% 24% 5% 59% 9% 27% 2% 66% 3% 25% 4%

Porsche 30% 1% 29% 40% 34% 28% 50% 0% 31% 7% 34% 31%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 343 of 770

Spyker/Saab 45% 1% 29% 25% 46% 19% 50% 0% 45% 3% 32% 22%

Subaru 68% 0% 22% 7% 74% 0% 19% 1% 69% 0% 22% 6%

Suzuki 63% 0% 25% 12% 72% 0% 5% 3% 65% 0% 22% 10%

Tata/JLR 14% 22% 44% 19% 10% 33% 41% 15% 13% 27% 43% 18%

Toyota 58% 1% 30% 3% 58% 8% 17% 0% 58% 4% 25% 2%

VW 57% 0% 26% 17% 58% 11% 50% 0% 57% 3% 31% 13%

Fleet 63% 2% 21% 7% 56% 11% 27% 2% 60% 5% 23% 5%

Table III-49 shows the technology penetrations for Alternative 4 in 2025. In this alternative 

every company except Honda, Hyundai, Kia have greater than 20% HEVs. Many of the large 

volume manufacturers have even more dramatic increases in the volumes of P/H/EVs than in 

Alternative 2. Ford, GM, Nissan, and Toyota have greater than 20 or 30% penetration rates of 

HEVs on trucks. Mazda, Mitsubishi, Subaru, Suzuki (in addition to the seven) now also have 

10% or greater penetration of PH/EVs, while Daimler, Volvo, Porsche, Saab, and VW have over 

20%. 

The estimated per vehicle cost of compliance with 2025 alternative standards is $2,853, 

which is $910 higher than the proposed standards. The seven luxury vehicle manufacturers now 

have costs of $4,481, which is $1,348 higher than the proposed standards. Much of this nonlinear increase in cost is due to increased penetration of PHEVs and EVs (more so than HEVs). 

Table III-49: Percent Penetration of Technologies in MY 2025 for Alternative 4 

2025 CAR 2025 TRUCK 2025 Fleet

TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV TDS24 TDS27 HEV

PHEV

+EV

BMW 48% 1% 28% 23% 61% 10% 50% 0% 51% 3% 34% 17%

Chrysler/Fiat 64% 2% 24% 8% 59% 8% 21% 3% 62% 5% 23% 6%

Daimler 38% 2% 32% 28% 35% 19% 50% 0% 37% 6% 36% 22%

Ford 58% 4% 28% 11% 38% 20% 44% 6% 52% 9% 33% 9%

Geely/Volvo 26% 6% 41% 30% 66% 6% 50% 0% 38% 6% 44% 21%

GM 64% 2% 20% 7% 51% 15% 39% 1% 58% 8% 29% 4%

Honda 68% 0% 16% 4% 71% 0% 17% 4% 69% 0% 16% 4%

Hyundai 67% 0% 20% 8% 74% 0% 7% 1% 69% 0% 17% 6%

Kia 71% 0% 20% 4% 75% 0% 0% 0% 72% 0% 16% 3%

Mazda 62% 0% 22% 13% 72% 0% 42% 3% 64% 0% 25% 11%

Mitsubishi 61% 0% 25% 14% 70% 0% 25% 5% 64% 0% 25% 11%

Nissan 66% 0% 25% 9% 57% 9% 39% 4% 63% 3% 29% 7%

Porsche 0% 14% 41% 45% 11% 50% 50% 0% 2% 22% 43% 35%

Spyker/Saab 34% 1% 29% 36% 46% 19% 50% 0% 36% 3% 32% 31%
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 344 of 770

Subaru 63% 0% 25% 12% 69% 0% 25% 6% 65% 0% 25% 10%

Suzuki 55% 0% 25% 20% 72% 0% 45% 3% 58% 0% 28% 17%

Tata/JLR 14% 20% 44% 21% 10% 33% 41% 15% 13% 26% 43% 18%

Toyota 57% 1% 30% 5% 57% 8% 26% 1% 57% 4% 28% 3%

VW 47% 0% 26% 27% 58% 11% 50% 0% 49% 2% 31% 21%

Fleet 59% 1% 24% 10% 55% 11% 33% 2% 58% 4% 27% 8%

d. Summary of the Technology Penetration Rates and Costs from the Alternative 

Scenarios in Relation to the Proposed Standards 

As described above, alternatives 2 and 4 would lead to significant increases in the 

penetration of advanced technologies into the fleet during the time frame of these standards. In 

general, both alternatives would lead to an increase in the average penetration rate for advanced 

technologies in 2021, in effect accelerating some of the technology penetration that would 

otherwise occur in the 2022-2025 timeframe. For the fleet as a whole, in 2021 alternative 2 

would lead to a significant increase in cooled EGR use and a limited increase in HEV use, while 

alternative 4 would lead to an even larger increase in cooled EGR as well as a significant 

increase in HEV use. In 2025 these alternatives would dramatically affect penetration rates of 

HEVs, EVs, and PHEVs, in each case leading to very significant increases on average for the 

fleet. Again, Alternative 4 would lead to greater penetration rates than Alternative 2. When one 

considers the technology penetration rates for individual manufacturers, in 2021 the alternatives 

lead to much higher increases than average for some individual large volume manufacturers. 

Smaller volume manufacturers start out with higher penetration rates and are pushed to even 

higher levels. This result is even more pronounced in 2025. 

This increase in technology penetration rates raises serious concerns about the ability and 

likelihood manufacturers can smoothly implement the increased technology penetration in a fleet 

that has so far seen limited usage of these technologies, especially for trucks – and for towing 

trucks in particular. While this is more pronounced for 2025, there are still concerns for the 2021 

technology penetration rates. Although EPA believes that these penetration rates are, in the 

narrow sense, technically achievable, it is more a question of judgment whether we are 

confident at this time that these increased rates of advanced technology usage can be practically 

and smoothly implemented into the fleet -- a reason the agencies are attempting to encourage 

more utilization of this technology with the proposed HEV pickup truck credits but being 

reasonably prudent in proposing standards that could de facto force high degrees of penetration 

of this technology on towing trucks.333 

 333 See 76 FR at 57220 discussing a similar issue in the context of the standards for heavy duty pickups and vans: 

“Hybrid electric technology likewise could be applied to heavy-duty vehicles, and in fact has already been so 

applied on a limited basis. However, the development, design, and tooling effort needed to apply this technology to 

a vehicle model is quite large, and seems less likely to prove cost-effective in this time frame, due to the small sales 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 345 of 770

EPA notes that the same concerns support the proposed decision to steepen the slope of 

the truck curve in acknowledgement of the special challenges these larger footprint trucks (which 

in many instances are towing vehicles) would face. Without the steepening, the penetration rates 

of these challenging technologies would have been even greater. 

From a cost point of view, the impacts on cost track fairly closely with the technology 

penetration rates discussed above. The average cost increases under Alternatives 2 and 4 are 

significant for 2021 (approximately $300 and $600), and for some manufacturers they result in 

very large cost increases. For 2025 the cost increases are even higher (approximately $500 and 

$900). Alternative 4, as expected, is significantly more costly than alternative 2. From another 

perspective, the average cost of compliance to the industry on average is $23 and $44 billion for 

the 2021 and 2025 proposed standards respectively. Alternative 2 will cost the industry on 

average $7 and $9 billion in excess, while Alternative 4 will cost the industry on average $10 and 

$16 billion in excess of the costs for the proposed standards. These are large increases in 

percentage terms, ranging from approximately 25% to 45% in 2021, and from approximately 

20% to 35% in 2025. 

Per vehicle costs will also increase dramatically including for some of the largest, fullline manufacturers. Under Alternative 2, per vehicle costs for Chrysler, Ford, GM, Honda and 

Nissan increase by an estimated one-third to nearly double (200%) to meet 2021 standards and 

from roughly 25% to 45% to meet 2025 standards (see Table III-29 and Table III-30 above). 

The per-vehicle costs to meet Alternative 4 for these manufacturers is significantly greater and in 

the same proportions, see Table III-36 and Table III-37. 

As noted, these cost increases are associated especially with increased utilization of 

advanced technologies. As shown in Figure below, HEV+PHEV+EV penetration are projected 

to increase in 2025 from 17% in the proposed standards to 28% and to nearly 35% under 

Alternatives 2 and 4 respectively for manufacturers with annual sales above 500,000 vehicles 

(including Chrysler, Ford, GM, Honda, Hyundai, Nissan, Toyota and VW). The differences are 

less pronounced for 2021, but still (in alternative 4) over double the penetration level of the 

proposal. EPA regards these differences as significant, given the factors of expense, consumer 

cost, consumer acceptance, and potentially (for 2021) lead time. 

Figure 4- HEV + PHEV + EV Penetration for Manufacturers above 500,000 Sales

 volumes relative to the light-duty sector. Here again, potential customer acceptance would need to be better 

understood because the smaller engines that facilitate much of a hybrid’s benefit are typically at odds with the 

importance pickup truck buyers place on engine horsepower and torque, whatever the vehicle’s real performance”. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 346 of 770

The Figure below shows the HEV+PHEV+EV penetration for manufacturers with sales 

below 500,000 but exceeding 30,000 (including BMW, Daimler, Volvo, Kia, Mazda, Mitsubishi, 

Porsche, Subaru, Suzuki, and Jaguar/LandRover while excluding Aston Martin, Ferrari, Lotus, 

Saab, and Tesla). While the penetration rates of these advanced technologies also increase, the 

distribution within these are shifting to the higher cost EVs and PHEVs as noted above. 

Figure 5- HEV + PHEV + EV Penetration for Manufacturers below 500,000 (but 

above 30,000 Sales) 

0%

5%

10%

15%

20%

25%

30%

35%

40%

Proposal Trucks+20 Trucks‐20 Cars+20 Cars‐20

1234

HEV+PHEV+EV Penetration

MY 2021

MY 2025
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 347 of 770

EPA did not model a number of flexibilities when conducting the analysis for the NPRM. 

For example, PHEV, EV and fuel cell vehicle incentive multipliers for 2017-2021, full size 

pickup truck HEV incentive credits, full size pickup truck performance based incentive credits, 

and off-cycle credits, were not explicitly captured. We plan on modeling these flexibilities for 

the final rule. For this proposal, while we have not been able to explicitly model the impacts on 

the program costs, the impact will only be to reduce the estimated costs of the program for most 

manufacturers. From an industry wide perspective, EPA expects that their overall impact on 

costs, technology penetration, and emissions reductions and other benefits will be limited. They 

will provide some additional, important flexibility in achieving the proposed levels and 

promoting more advanced technology, on a case by case basis, but their impact is not expected to 

be of enough significance to warrant a change to the standards proposed. Instead they are 

expected to support the reasonableness of the proposed standards. 

Overall, EPA believes that the characteristics and impacts of these and other alternative 

standards generally reflect a continuum in terms of technical feasibility, cost, lead time, 

consumer impacts, emissions reductions and oil savings, and other factors evaluated under 

section 202 (a). In determining the appropriate standard to propose in this context, EPA judges 

that the proposed standards are appropriate and preferable to more stringent alternatives based 

largely on consideration of cost – both to manufacturers and to consumers – and the potential for 

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Proposal Trucks+20 Trucks‐20 Cars+20 Cars‐20

1234

HEV+PHEV+EV Penetration

MY 2021

MY 2025
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 348 of 770

overly aggressive penetration rates for advanced technologies relative to the penetration rates 

seen in the proposed standards, especially in the face of unknown degree of consumer acceptance 

of both the increased costs and the technologies themselves. At the same time, the proposal 

helps to address these issues by providing incentives to promote early and broader deployment of 

advanced technologies, and so provides a means of encouraging their further penetration while 

leaving manufacturers alternative technology choices. EPA thus judges that the increase in 

technology penetration rates and the increase in costs under the increased stringency for the car 

and truck fleets reflected in alternatives 2 and 4 are such that it would not be appropriate to 

propose standards that would increase the stringency of the car and truck fleets in this manner. 

On a year by year basis, EPA believes that the progression of standards are appropriate 

based on cost projections. The table below shows the year on year costs as described in Chapter 

5 of the RIA. These projections show a steady increase in costs from 2017 thru 2025 (as 

interpolated). [placeholder for expanded year on year discussion] 

Table III-50 Costs by Manufacturer by MY– Combined Fleet (2009$) 

Company 2017 2018 2019 2020 2021 2022 2023 2024 2025

BMW $217 $417 $564 $716 $938 $1,406 $1,740 $2,054 $2,175

Chrysler/Fiat $194 $311 $398 $494 $696 $1,170 $1,533 $1,886 $2,041

Daimler $352 $721 $1,014 $1,319 $1,703 $2,220 $2,474 $2,700 $2,709

Ferrari $1,693 $3,124 $4,199 $5,284 $6,357 $7,365 $7,486 $7,597 $7,114

Ford $204 $336 $433 $521 $696 $1,201 $1,608 $1,997 $2,178

Geely-Volvo $406 $792 $1,070 $1,358 $1,741 $2,290 $2,579 $2,853 $2,876

GM $189 $287 $360 $428 $588 $1,070 $1,465 $1,842 $2,028

Honda $117 $229 $314 $402 $557 $915 $1,195 $1,467 $1,595

Hyundai $159 $299 $403 $511 $671 $1,056 $1,343 $1,618 $1,741

Kia $136 $245 $335 $430 $584 $905 $1,150 $1,387 $1,493

Mazda $198 $409 $566 $715 $922 $1,372 $1,693 $2,009 $2,134

Mitsubishi $153 $350 $487 $634 $877 $1,341 $1,680 $2,002 $2,133

Nissan $209 $356 $467 $575 $730 $1,197 $1,559 $1,904 $2,061

Porsche $1,113 $2,123 $2,871 $3,637 $4,484 $5,256 $5,317 $5,373 $5,013

Spyker-Saab $815 $1,476 $1,966 $2,462 $2,990 $3,578 $3,718 $3,849 $3,673

Subaru $238 $456 $613 $773 $996 $1,465 $1,785 $2,092 $2,204

Suzuki $300 $544 $722 $903 $1,135 $1,587 $1,877 $2,149 $2,228

Tata-JLR $242 $691 $1,005 $1,353 $1,933 $2,485 $2,744 $2,987 $2,974

Toyota $128 $217 $283 $342 $480 $812 $1,089 $1,352 $1,483

Volkswagen $377 $691 $930 $1,172 $1,459 $1,941 $2,213 $2,468 $2,508

Fleet $203 $343 $448 $552 $734 $1,169 $1,497 $1,809 $1,946

Table III-51 Industry Average Vehicle Costs Associated with the Proposed 

Standards (2009$) 

Model 

Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 

$/car $172 $319 $463 $591 $723 $1,051 $1,357 $1,658 $1,947 

$/truck $49 $180 $292 $407 $753 $1,068 $1,373 $1,670 $1,944 

Combined $126 $268 $402 $527 $734 $1,057 $1,362 $1,662 $1,946 

Comment [A52]: Based on the explanation here, 

commenters note that it seems like EPA’s reason for 

selecting its preferred level is based on costs 

(including costs of advanced technology vehicles). 

Commenters request clarity on whether unknown 

consumer acceptance of advanced technology was 

also central to reason for selecting this particular 

level of stringency? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 349 of 770

E. Certification, Compliance, and Enforcement 

1. Compliance Program Overview 

This section summarizes EPA's comprehensive program to ensure compliance with 

emission standards for carbon dioxide (CO2), nitrous oxide (N2O), and methane (CH4), as 

described in Section III.B. An effective compliance program is essential to achieving the 

environmental and public health benefits promised by these mobile source GHG standards. 

EPA's GHG compliance program is designed around two overarching priorities: 1) to address 

Clean Air Act (CAA) requirements and policy objectives; and 2) to streamline the compliance 

process for both manufacturers and EPA by building on existing practice wherever possible, and 

by structuring the program such that manufacturers can use a single data set to satisfy both GHG 

and Corporate Average Fuel Economy (CAFE) testing and reporting requirements. The EPA 

and NHTSA programs replicate the compliance protocols established in the MY 2012-2016 

rule.334 The certification, testing, reporting, and associated compliance activities track current 

practices and are thus familiar to manufacturers. As is the case under the 2012-2016 program, 

EPA and NHTSA have designed a coordinated compliance approach for 2017-2025 such that the 

compliance mechanisms for both GHG and CAFE standards are consistent and non-duplicative. 

Readers are encouraged to review the MY 2012-2016 final rule for background and a detailed 

description of these certification, compliance, and enforcement requirements. 

Vehicle emission standards established under the CAA apply throughout a vehicle's full 

useful life. Today’s rule establishes fleet average greenhouse gas standards where compliance 

with the fleet average is determined based on the testing performed at time of production, as with 

the current CAFE fleet average. EPA is also establishing in-use standards that apply throughout 

a vehicle’s useful life, with the in-use standard determined by adding an adjustment factor to the 

emission results used to calculate the fleet average. EPA’s program will thus not only assess 

compliance with the fleet average standards described in Section III.B, but will also assess 

compliance with the in-use standards. As it does now, EPA will use a variety of compliance 

mechanisms to conduct these assessments, including pre-production certification and postproduction, in-use monitoring once vehicles enter customer service. Under this compliance 

program manufacturers will also be afforded numerous flexibilities to help achieve compliance, 

both stemming from the program design itself in the form of a manufacturer-specific CO2 fleet 

average standard, as well as in various credit banking and trading opportunities, as described in 

Section III.C. The compliance program is summarized in further detail below. 

 334 75 FR 25468 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 350 of 770

2. Compliance with Fleet-Average CO2 Standards 

Fleet average emission levels can only be determined when a complete fleet profile 

becomes available at the close of the model year. Therefore, EPA will determine compliance 

with the fleet average CO2 standards when the model year closes out, based on actual production 

figures for each model and on model-level emissions data collected through testing over the 

course of the model year. Manufacturers will submit this information to EPA in an end-of-year 

report which is discussed in detail in Section III.E.5.h of the MY 2012-2016 final rule preamble 

(see 75 FR 25481). 

a. Compliance Determinations 

As described in Section III.B above, the fleet average standards will be determined on a 

manufacturer by manufacturer basis, separately for cars and trucks, using the footprint attribute 

curves. EPA will calculate the fleet average emission level using actual production figures and, 

for each model type, CO2 emission test values generated at the time of a manufacturer's CAFE 

testing. EPA will then compare the actual fleet average to the manufacturer's footprint standard 

to determine compliance, taking into consideration use of averaging and credits. 

Final determination of compliance with fleet average CO2 standards may not occur until 

several years after the close of the model year due to the flexibilities of carry-forward and carryback credits and the remediation of deficits (see Section III.B). A failure to meet the fleet 

average standard after credit opportunities have been exhausted could ultimately result in 

penalties and injunctive orders under the CAA as described in Section III.E.6 below. 

b. Required Minimum Testing For Fleet Average CO2

EPA will require and use the same test data to determine a manufacturer’s compliance 

with both the CAFE standard and the fleet average CO2 emissions standard. Please see Section 

III.E.2.b of the MY 2012-2016 final rule preamble (75 FR 25469) for details. 

3. Vehicle Certification 

CAA section 203(a)(1) prohibits manufacturers from introducing a new motor vehicle 

into commerce unless the vehicle is covered by an EPA-issued certificate of conformity. Section 

206(a)(1) of the CAA describes the requirements for EPA issuance of a certificate of conformity, 

based on a demonstration of compliance with the emission standards established by EPA under 

section 202 of the Act. The certification demonstration requires emission testing, and must be 

done for each model year.335

 335 CAA section 206(a)(1). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 351 of 770

Since compliance with a fleet average standard depends on actual production volumes, it 

is not possible to determine compliance with the fleet average at the time the manufacturer 

applies for and receives a certificate of conformity for a test group. Instead, EPA will continue 

to condition each certificate of conformity for the GHG program upon a manufacturer's 

demonstration of compliance with the manufacturer’s fleet-wide average CO2 standard. Please 

see Section III.E.3 of the MY 2012-2016 final rule preamble (75 FR 25470) for a discussion of 

how EPA will certify vehicles under the GHG standards. 

4. Useful Life Compliance 

Section 202(a)(1) of the CAA requires emission standards to apply to vehicles throughout 

their statutory useful life, as further described in Section III.A. The in-use CO2 standard under 

the greenhouse gas program would apply to individual vehicles and is separate from the fleetaverage standard. The in-use CO2 standard for each model would be the model specific CO2 

level used in calculating the fleet average, adjusted to be 10% higher to account for test-to-test 

and production variability that might affect in-use test results. Please see Section III.E.4 of the 

MY 2012-2016 final rule preamble (75 FR 25473 for a detailed discussion of the in-use standard, 

in-use testing requirements, and deterioration factors for CO2, N2O, and CH4. 

5. Credit Program Implementation 

As described in Section III.C, several credit programs are available under this 

rulemaking. Please see Section III.E.5 of the MY 2012-2016 final rule preamble (75 FR 25477) 

for a detailed explanation of credit program implementation, sample credit and deficit 

calculations, and end-of-year reporting requirements. 

6. Enforcement 

The enforcement structure EPA promulgated under the MY 2012-2016 rulemaking 

remains in place. Please see Section III.E.6 of the MY 2012-2016 final rule preamble (75 FR 

25482) for a discussion of these provisions.

Prohibited Acts in the CAA 

Section 203 of the Clean Air Act describes acts that are prohibited by law. This section 

and associated regulations apply equally to the greenhouse gas standards as to any other 

regulated emission. Acts that are prohibited by section 203 of the Clean Air Act include the 

introduction into commerce or the sale of a vehicle without a certificate of conformity, removing 

or otherwise defeating emission control equipment, the sale or installation of devices designed to 

defeat emission controls, and other actions. This proposal includes a section that details these 

prohibited acts, as did the 2012 greenhouse gas regulations. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 352 of 770

7. Other Certification Issues 

a. Carryover/Carry Across Certification Test Data 

EPA's certification program for vehicles allows manufacturers to carry certification test 

data over and across certification testing from one model year to the next, when no significant 

changes to models are made. EPA would continue to apply this policy to CO2, N2O and CH4

certification test data and would allow manufacturers to use carryover and carry across data to 

demonstrate CO2 fleet average compliance if they have done so for CAFE purposes. 

b. Compliance Fees 

 The CAA allows EPA to collect fees to cover the costs of issuing certificates of 

conformity for the classes of vehicles covered by this rule. 

At this time the extent of any added costs to EPA as a result of this rule is not known. 

EPA will assess its compliance testing and other activities associated with the rule and may 

amend its fees regulations in the future to include any warranted new costs. 

c. Small Entity Exemption 

EPA would exempt small entities, and these entities (necessarily) would not be subject to 

the certification requirements of this rule. 

As discussed in Section III.B.7, businesses meeting the Small Business Administration 

(SBA) criterion of a small business as described in 13 CFR 121.201 would not be subject to the 

GHG requirements, pending future regulatory action. Small entities are currently covered by a 

number of EPA motor vehicle emission regulations, and they routinely submit information and 

data on an annual basis as part of their compliance responsibilities. 

As discussed in detail in Section III.B.5, small volume manufacturers with annual sales 

volumes of less than 5,000 vehicles would be required to meet primary GHG standards or to 

petition the Agency for alternative standards 

d. Onboard Diagnostics (OBD) and CO2 Regulations 

As under the current program, EPA would not require CO2, N2O, and CH4 emissions as 

one of the applicable standards required for the OBD monitoring threshold. 

e. Applicability of Current High Altitude Provisions to Greenhouse Gases 

As under the current program, vehicles covered by this rule would be required to meet the 

CO2, N2O and CH4 standard at altitude but would not normally be required to submit vehicle 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 353 of 770

CO2 test data for high altitude. Instead, they would submit an engineering evaluation indicating 

that common calibration approaches will be utilized at high altitude.. 

f. Applicability of Standards to Aftermarket Conversions 

With the exception of the small entity and small business exemptions, EPA’s emission 

standards, including greenhouse gas standards, will continue to apply as stated in the 

applicability sections of the relevant regulations. EPA expects that some aftermarket conversion 

companies will qualify for and seek the small entity and/or small business exemption, but those 

that do not qualify will be required to meet the applicable emission standards, including the 

greenhouse gas standards to qualify for a tampering exemption under 40 CFR subpart F. Fleet 

average standards are not generally appropriate for fuel conversion manufacturers because the 

“fleet” of vehicles to which a conversion system may be applied has already been accounted for 

under the OEM’s fleet average standard. Therefore, EPA is proposing to retain the process 

promulgated in 40 CFR subpart F anti-tampering regulations whereby conversion manufacturers 

demonstrate compliance at the vehicle rather than the fleet level. Fuel converters will continue to 

show compliance with greenhouse gas standards by submitting data to demonstrate that the 

conversion EDV N2O, CH4 and CREE results are less than or equal to the OEM’s in-use 

standard for that subconfiguration.. EPA is also proposing to continue to allow conversion 

manufacturers, on a test group basis, to convert CO2 overcompliance into CO2 equivalents of 

N20 and/or CH4 that can be subtracted from the CH4 and N20 measured values to demonstrate 

compliance with CH4 and/or N20 standards. 

g. Geographical Location of Greenhouse Gas Fleet Vehicles 

EPA emission certification regulations require emission compliance336 in the 50 states, 

the District of Columbia, the Puerto Rico, the Virgin Islands, Guam, American Samoa and the 

Commonwealth of the Northern Mariana Islands. 

8. Warranty, Defect Reporting, and Other Emission-related Components Provisions 

This rulemaking would retain warranty, defect reporting, and other emission-related 

component provisions promulgated in the MY 2012-2016 rulemaking. Please see Section 

III.E.10 of the MY 2012-2016 final rule preamble (75 FR 25486) for a discussion of these 

provisions. 

 336 Section 216 of the Clean Air Act defines the term commerce to mean “(A) commerce between any place in any 

State and any place outside thereof; and (B) commerce wholly within the District of Columbia.” 

Section 302(d) of the Clean Air Act reads “The term ``State'' means a State, the District of Columbia, the 

Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa and includes the Commonwealth of 

the Northern Mariana Islands.” In addition, 40 CFR 85.1502 (14) regarding the importation of motor vehicles and 

motor vehicle engines defines the United States to include “the States, the District of Columbia, the Commonwealth 

of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, and the U.S. Virgin 

Islands.” 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 354 of 770

9. Miscellaneous Technical Amendments and Corrections 

EPA is proposing a number of noncontroversial amendments and corrections to the 

existing regulations. Because the regulatory provisions for the EPA greenhouse gas program, 

NHTSA’s CAFE program, and the joint fuel economy and environment labeling program are all 

intertwined in 40 CFR Part 600, this proposed rule presents an opportunity to make corrections 

and clarifications to all or any of these programs. Consequently, a number of minor and nonsubstantive corrections are being proposed to the regulations that implement these programs. 

We are also proposing a solution to a situation in which a manufacturer of a clean 

alternative fuel conversion is attempting to comply with the fuel conversion regulations (see 40 

CFR Part 85 subpart F) at a point in time before which certain data is available from the original 

manufacturer of the vehicle. Clean alternative fuel conversions are subject to greenhouse gas 

standards if the vehicle as originally manufactured was subject to greenhouse gas standards, 

unless the conversion manufacturer qualifies for exemption as a small business. Compliance 

with light-duty vehicle greenhouse gas emission standards is demonstrated by complying with 

the N2O and CH4 standards and the in-use CO2 exhaust emission standard set forth in 40 CFR 

86.1818–12(d) as determined by the original manufacturer for the subconfiguration that is 

identical to the fuel conversion emission data vehicle (EDV). However, the subconfiguration 

data may not be available to the fuel conversion manufacturer at the time they are seeking EPA 

certification. Several compliance options are currently provided to fuel conversion 

manufacturers that are consistent with the compliance options for the original equipment 

manufacturers. EPA is proposing to add another option that would be applicable starting with the 

2012 model year. The new option would allow clean alternative fuel conversion manufacturers 

to satisfy the greenhouse gas standards if the sum of CH4 plus N2O plus CREE emissions from 

the vehicle pre-conversion is less than the sum post-conversion, adjusting for the global warming 

potential of the constituents. 

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

This action is an important step towards curbing growth of GHG emissions from cars and 

light trucks. In the absence of control, GHG emissions worldwide and in the U.S. are projected 

to continue steady growth. Table III-52 shows emissions of CO2, methane (CH4), nitrous oxide 

(N2O) and air conditioning refrigerant (HFC-134a) on a CO2-equivalent basis for calendar years 

2010, 2020, 2030, 2040 and 2050. As shown below, U.S. GHGs are estimated to make up 

roughly 15 percent of total worldwide emissions in 2010. Further, the contribution of direct 

emissions from cars and light-trucks to this U.S. share reaches an estimated 17 percent of U.S. 

emissions by 2030 in the absence of control. As discussed later in this section, this steady rise in 

GHG emissions is associated with numerous adverse impacts on human health, food and 

agriculture, air quality, and water and forestry resources. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 355 of 770

Table III-52 GHG Emissions by Calendar Year without the Proposed Standards 

(MMTCO2eq)337

 2010 2020 2030 2040 2050 

All Sectors (Worldwide)a 45,000 53,000 61,000 69,000 76,000

All Sectors (U.S. Only)b 6,800 7,300 7,600 8,000 8,100

U.S. Cars/Light Truck Onlyc 1,300 1,300 1,300 1,500 1,700

a GCAM model338 

b

 ADAGE model,339

c

 OMEGA model, Tailpipe CO2 and HFC134a only (includes impacts of MYs 2012-2016 rule) 

This rule will result in significant reductions as newer, cleaner vehicles come into the 

fleet. As discussed in Section I, this GHG rule is part of a joint National Program such that a 

large part of the projected benefits, but by no means all, would be achieved jointly with 

NHTSA’s CAFE standards, which are described in detail in Section IV. EPA estimates the 

reductions attributable to the GHG program over time assuming the model year 2025 standards 

continue indefinitely post-2025, compared to a reference scenario in which the 2016 model year 

GHG standards continue indefinitely beyond 2016. 

EPA estimated greenhouse impacts from several sources including: (a) the impact of the 

standards on tailpipe CO2 emissions, (b) projected improvements in the efficiency of vehicle air 

conditioning systems, 340 (c) reductions in direct emissions of the refrigerant and potent 

greenhouse gas HFC-134a from air conditioning systems, (d) “upstream” emission reductions 

from gasoline extraction, production and distribution processes as a result of reduced gasoline 

demand associated with this rule, and (e) “upstream” emission increases from power plants as 

electric powertrain vehicles increase in prevalence as a result of this rule. EPA additionally 

accounted for the greenhouse gas impacts of additional vehicle miles travelled (VMT) due to the 

"rebound" effect discussed in Section III.H. 

Using this approach EPA estimates the proposed standards would cut annual fleetwide 

car and light truck tailpipe CO2 emissions by approximately 230 MMT or 18 percent by 2030, 

when 85 percent of car and light truck miles will be travelled by vehicles meeting the MY 2017 

or later standards. An additional 65 MMTCO2eq of reduced emissions are attributable to 

reductions in gasoline production, distribution and transport. 10 MMTCO2eq of additional 

 337 ADAGE and GCAM model projections of worldwide and U.S. GHG emissions are provided for context only. 

The baseline data in these models differ in certain assumptions from the baseline used in this proposal. For 

example, the ADAGE baseline is calibrated to AEO 2010, which includes the EISA 35 MPG by 2020 provision, but 

does not explicitly include the MYs 2012-2016 rule. All emissions data were rounded to two significant digits. 338 Based on the Representative Concentration Pathway scenario in GCAM available at 

www.globalchange.umd.edu/gcamrcp. See section III.F.3 and DRIA Chapter 6.4 for additional information on 

GCAM. 

339 Based on the ADAGE reference case used in U.S. EPA (2010). “EPA Analysis of the American Power Act of 

2010” U.S. Environmental Protection Agency, Washington, DC, USA 

(www.epa.gov/climatechange/economics/economicanalyses.html). 

340 While EPA anticipates that the majority of mobile air conditioning systems will be improved in response to the 

MY 2012-2016 rulemaking, the agency expects that the remainder will be improved as a result of this action. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 356 of 770

emissions will be attributable to increased electricity production. In total, EPA estimates that 

compared to a baseline of indefinite 2016 model year standards, net GHG emission reductions 

from the program would be approximately 310 million metric tons CO2-equivalent 

(MMTCO2eq) annually by 2030, which represents a reduction of 4% percent of total U.S. GHG 

emissions and 0.5% percent of total worldwide GHG emissions projected in that year. These 

GHG savings correspond to approximately 26 billion gallons of petroleum-based gasoline. 

EPA projects the total reduction of the program over the full life of model year 2017-

2025 vehicles to be about 2,060 MMTCO2eq, with fuel savings of 170 billion gallons (4.0 billion 

barrels) of gasoline over the life of these vehicles. 

The impacts on atmospheric CO2 concentrations, global mean surface temperature, sea 

level rise, and ocean pH resulting from these emission reductions are discussed in Section III.F.3. 

1. Impact on GHG Emissions 

The modeling of fuel savings and greenhouse gas emissions is substantially similar to 

that which was conducted in the 2012-2016 Final Rulemaking and the MY 2017-2025 Interim 

Joint Technical Assessment Report (TAR). As detailed in Draft RIA chapter 4, EPA estimated 

calendar year tailpipe CO2 reductions based on pre- and post-control CO2 gram per mile levels 

from EPA’s OMEGA model, coupled with VMT projections derived from AEO 2011 Final 

Release. These estimates reflect the real-world CO2 emissions reductions projected for the entire 

U.S. vehicle fleet in a specified calendar year. EPA also estimated full lifetime reductions for 

model years 2017-2025 using pre- and post-control CO2 levels projected by the OMEGA model, 

coupled with projected vehicle sales and lifetime mileage estimates. These estimates reflect the 

real-world CO2 emissions reductions projected for model years 2017 through 2025 vehicles over 

their entire life. Upstream impacts from power plant emissions came from OMEGA estimates of 

EV/penetration into the fleet (approximately 3%). For both calendar year and model year 

assessments, EPA estimated the environmental impact of the advanced technology multiplier, 

pickup truck hybrid electric vehicle (HEV) and performance based incentives and air 

conditioning credits. The impact of the off-cycle credits were not explicitly estimated, as these 

credits are assumed to be inherently environmentally neutral (Section XX). EPA also did not 

assess the impact of the credit banking carry-forward programs. 

As in the MY 2012-2016 rulemaking, this proposal allows manufacturers to earn credits 

for improvements to controls for both direct and indirect AC emissions.. Since these 

improvements are relatively low cost, EPA again projects that manufacturers will take advantage 

of this flexibility, leading to reductions from emissions associated with vehicle air conditioning 

systems. As explained above, these reductions will come from both direct emissions of air 

conditioning refrigerant over the life of the vehicle and tailpipe CO2 emissions produced by the 

increased load of the A/C system on the engine. In particular, EPA estimates that direct 

emissions of HFC-134a, one of the most potent greenhouse gases, would be fully removed from 

light-duty vehicles through the phase-in of alternative refrigerants. More efficient air 

conditioning systems would also lead to fuel savings and additional reductions in upstream 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 357 of 770

emissions from fuel production and distribution. Our estimated reductions from the A/C credit 

program assume that manufacturers will fully utilize the program by MY 2021. 

Upstream greenhouse gas emission reductions associated with the production and 

distribution of fuel were estimated using emission factors from DOE’s GREET1.8 model, with 

modifications as detailed in Chapter 5 of the DRIA. These estimates include both international 

and domestic emission reductions, since reductions in foreign exports of finished gasoline and/or 

crude would make up a significant share of the fuel savings resulting from the GHG standards. 

Thus, significant portions of the upstream GHG emission reductions will occur outside of the 

U.S.; a breakdown of projected international versus domestic reductions is included in the DRIA. 

Electricity emission factors were derived from EPA’s Integrated Planning Model (IPM). 

EPA uses IPM to analyze the projected impact of environmental policies on the electric power 

sector in the 48 contiguous states and the District of Columbia. IPM is a multi-regional, dynamic, 

deterministic linear programming model of the U.S. electric power sector. It provides forecasts 

of least-cost capacity expansion, electricity dispatch, and emission control strategies for meeting 

energy demand and environmental, transmission, dispatch, and reliability constraints. EPA 

derived average national CO2 emission factors from the IPM version 4.10 base case run for the 

“Proposed Transport Rule.341” As discussed in Draft TSD Chapter 4, for the Final Rulemaking, 

EPA may consider emission factors other than national power generation, such as marginal 

power emission factors, or regional emission factors. 

a. Calendar Year Reductions for Future Years 

 

Table III-53 shows reductions estimated from these GHG standards assuming a precontrol case of 2016 MY standards continuing indefinitely beyond 2016, and a post-control case 

in which 2025 MY GHG standards continue indefinitely beyond 2025. These reductions are 

broken down by upstream and downstream components, including air conditioning 

improvements, and also account for the offset from a 10 percent VMT “rebound” effect as 

discussed in Section III.H. Including the reductions from upstream emissions, total reductions 

are estimated to reach 307 MMTCO2eq annually by 2030, and grow to over 580 MMTCO2eq in 

2050 as cleaner vehicles continue to come into the fleet. 

 

 341 EPA. IPM. http://www.epa.gov/airmarkt/progsregs/epa-ipm/BaseCasev410.html. "Proposed Transport 

Rule/NODA version" of IPM . TR_SB_Limited Trading v.4.10
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 358 of 770

Table III-53 Projected GHG Deltas (MMTCO2eq per year)

Calendar Year: 2020 2030 2040 2050

Net Delta* -28 -306 -486 -580

Net CO2 -24 -276 -442 -529

Net other GHG -4 -30 -44 -52

Downstream -23 -255 -407 -487

CO2 (excluding A/C) -19 -230 -372 -446

A/C – indirect CO2 -1 -3 -5 -5

 A/C – direct HFCs -4 -22 -31 -36

 CH4 (rebound effect) 0 0 0 0

 N2O (rebound effect) 0 0 0 0

Gasoline Upstream -6 -65 -105 -126

CO2 -5 -57 -92 -110

CH4 -1 -8 -13 -16

N2O 0 0 0 -1

Electricity Upstream 1 15 27 32

CO2 1 15 26 32

CH4 0 0 0 0

N2O 0 0 0 0

* includes impacts of 10% VMT rebound rate presented in Table III-55 

The total program emission reductions yield significant emission decreases relative to 

worldwide and national total emissions. 

Table III-54 Projected GHG Deltas (MMTCO2eq per year)

Emission Reduction Relative to: 2020 2030 2040 2050

Worldwide reference -0.1% -0.5% -0.7% -0.8%

U.S. reference (all sectors) -0.4% -4.0% -6.1% -7.2%

U.S. reference (cars + light trucks)* -2.2% -23.5% -32.4% -34.1%

*Note that total emission reductions include sectors (such as fuel refineries) that are not part of this reference. 

b. Lifetime Reductions for 2017-2025 Model Years 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 359 of 770

EPA also analyzed the emission reductions over the full life of the 2017-2025 model year 

cars and light trucks that would be affected by this program.342 These results, including both 

upstream and downstream GHG contributions, are presented in Table III-55, showing lifetime 

reductions of about 2,065 MMTCO2eq. 

Table III-55 Projected Net GHG Deltas (MMTCO2eq per year) 

MY Downstream Upstream 

(Gasoline) Electricity Total CO2e

2017 -25 -6 1 -31

2018 -62 -15 2 -75

2019 -95 -22 3 -115

2020 -132 -31 4 -160

2021 -191 -46 5 -233

2022 -239 -59 9 -289

2023 -282 -71 13 -340

2024 -327 -84 18 -392

2025 -372 -96 23 -445

Total -1,725 -432 78 -2,079

c. Impacts of VMT Rebound Effect 

As noted above and discussed more fully in Section III.H., the effect of a decrease in fuel 

cost per mile on vehicle use (VMT “rebound”) was accounted for in our assessment of economic 

and environmental impacts of this proposed rule. A 10 percent rebound case was used for this 

analysis, meaning that VMT for affected model years is modeled as increasing by 10 percent as 

much as the decrease in fuel cost per mile; i.e., a 10 percent decrease in fuel cost per mile from 

our proposed standards would result in a 1 percent increase in VMT. Results are shown in Table 

Table III-56; using the 10 percent rebound rate results in an overall emission increase of 29 

MMTCO2eq annually in 2030 (this increase is accounted for in the reductions presented in Table 

III-53 and Table III-54). 

Table III-56 Delta GHG Impact Of 10% VMT Rebounda

(MMTCO2eq per year) 

CY Downstream Upstream 

Gasoline Electricity343 Total CO2e

2020 3 1 0 4

 342 As detailed in DRIA Chapter 4 and TSD Chapter 4, for this analysis the full life of the vehicle is represented by 

average lifetime mileages for cars (201,000 miles [MY 2017] and 213,000 miles [MY 2025] ) and trucks (240,000 

miles [MY 2017] and 255,000 miles [MY 2025]). These estimates are a function of how far vehicles are driven per 

year and scrappage rates. 

343 This assessment assumes that owners of grid-electric powered vehicles react similarly to changes in the cost of 

driving as owners of conventional gasoline vehicles. We seek comment on this approach in Section III.H.4c. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 360 of 770

2030 22 6 1 29

2040 34 10 1 45

2050 45 12 1 58 a

 These impacts are included in the reductions shown in Table III-53 and Table III-54. 

d. Analysis of Alternatives 

EPA analyzed four alternative scenarios for this proposal (Table III-57). EPA assumed 

that manufacturers would use air conditioning improvements and the HEV and performance 

based pickup incentives in identical penetrations as in the primary scenario. EPA re-estimated 

the impact of the electric vehicle multiplier under each alternative. Under these assumptions, 

EPA expects achieved fleetwide average emission levels of 150 g/mile CO2 to 177 g/mile 

CO2eq(6%) in 2025. As in the primary scenario, EPA assumed that the fleet complied with the 

standards. For full details on modeling assumptions, please refer to DRIA Chapter 4. EPA’s 

assessment of these alternative standards is discussed in Section III.D.6 

Table III-57 GHG g/mile Targets of Alternative Scenarios

 2021 

CO2 g/mile Targets 

2025 

CO2 g/mile Targets 

Title Cars Trucks Fleet Cars Trucks Fleet

Primary 173 250 200 144 203 164

A - Cars +20 g/mile 193 250 213 164 203 177

B - Cars -20 g/mile 153 250 187 124 203 150

C - Trucks +20 g/mile 173 270 207 144 223 170

D - Trucks -20 g/mile 173 230 193 144 183 157

Table III-58 Calendar Year Impacts of Alternative Scenarios 

GHG Delta 

(MMT2 CO2eq) 

Fuel Savings 

(B. Gallons petroleum gasoline) 

Scenario 2020 2030 2040 2050 2020 2030 2040 2050

Primary -28 -306 -486 -580 -2.2 -26.3 -42.4 -50.7

A - Cars +20 g/mile -19 -255 -417 -500 -1.4 -21.0 -34.8 -41.7

B - Cars -20 g/mile -35 -345 -536 -639 -2.9 -31.7 -50.3 -60.0

C - Trucks +20 g/mile -28 -283 -453 -541 -2.2 -23.7 -38.4 -45.9

D - Trucks -20 g/mile -38 -332 -517 -617 -3.1 -29.4 -46.6 -55.7

Table III-59 Model Year Lifetime Impacts of Alternative Scenarios (Summary of 

MY 2017-MY2025)
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 361 of 770

Total 

CO2e 

Fuel Delta 

 (b gal 

petroleum 

gasoline) 

Fuel Delta 

(b. barrels 

petroleum 

gasoline) 

Primary -2,079 - 174 -4.1

A - Cars +20 g/mile -1,657 -132 -3.2

B - Cars -20 g/mile -2,409 -213 -5.1

C - Trucks +20 g/mile -1,888 -154 -3.7

D - Trucks -20 g/mile -2,382 -205 -4.9

2. Climate Change Impacts from GHG Emissions 

The impact of GHG emissions on the climate has been reviewed in the 2012-2016 lightduty rulemaking and recent heavy-duty GHG rulemaking. See 75 FR at 25491; 76 FR at 57294. 

This section briefly discusses again some of the climate impact context for transportation 

emissions. These previous discussions noted that once emitted, GHGs that are the subject of this 

regulation can remain in the atmosphere for decades to millenia, meaning that 1) their 

concentrations become well-mixed throughout the global atmosphere regardless of emission 

origin, and 2) their effects on climate are long lasting. GHG emissions come mainly from the 

combustion of fossil fuels (coal, oil, and gas), with additional contributions from the clearing of 

forests, agricultural activities, cement production, and some industrial activities. Transportation 

activities, in aggregate, were the second largest contributor to total U.S. GHG emissions in 2009 

(27 percent of total emissions).344 

The Administrator relied on thorough and peer-reviewed assessments of climate change 

science prepared by the Intergovernmental Panel on Climate Change (“IPCC”), the United States 

Global Change Research Program (“USGCRP”), and the National Research Council of the 

National Academies (“NRC”) 345 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 comprehensively 

address the scientific issues the Administrator had to examine, providing her both data and 

information on a wide range of issues pertinent to the Endangerment Finding. These 

assessments have been rigorously reviewed by the expert community, and also by United States 

government agencies and scientists, including by EPA itself. 

Based on these assessments, the Administrator determined, in essence, that greenhouse 

gases cause warming; that levels of greenhouse gases are increasing in the atmosphere due to 

human activity; the climate is warming; recent warming has been attributed to the increase in 

 344 U.S. EPA (2011) Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2009. EPA 430-R-11-005. 345 For a complete list of core references from IPCC, USGCRP/CCSP, NRC and others relied upon for development 

of the TSD for EPA’s Endangerment and Cause or Contribute Findings see section 1(b), specifically, Table 1.1 of 

the TSD. Docket: EPA-HQ-OAR-2009-0171-11645. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 362 of 770

greenhouse gases; and that warming of the climate threatens human health and welfare. The 

Administrator further found that emissions of well-mixed greenhouse gases from new motor 

vehicles and engines contribute to the air pollution for which the endangerment finding was 

made. Specifically, the Administrator found under section 202 (a) of the Act that six greenhouse 

gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur 

hexafluoride) taken in combination endanger both the public health and the public welfare of 

current and future generations, and further found that the combined emissions of these 

greenhouse gases from new motor vehicles and engines contribute to the greenhouse gas air 

pollution that endangers public health and welfare. 

More recent assessments have produced similar conclusions to those of the assessments 

upon which the Administrator relied. In May 2010, the NRC published its comprehensive 

assessment, “Advancing the Science of Climate Change.”346 It concluded that “climate change is 

occurring, is caused largely by human activities, and poses significant risks for—and in many 

cases is already affecting—a broad range of human and natural systems.” Furthermore, the NRC 

stated that this conclusion is based on findings that are “consistent with the conclusions of recent 

assessments by the U.S. Global Change Research Program, the Intergovernmental Panel on 

Climate Change’s Fourth Assessment Report, and other assessments of the state of scientific 

knowledge on climate change.” These are the same assessments that served as the primary 

scientific references underlying the Administrator’s Endangerment Finding. Another NRC 

assessment, “Climate Stabilization Targets: Emissions, Concentrations, and Impacts over 

Decades to Millenia”, was published in 2011. This report found that climate change due to 

carbon dioxide emissions will persist for many centuries. The report also estimates a number of 

specific climate change impacts, finding that every degree Celsius (C) of warming could lead to 

increases in the heaviest 15% of daily rainfalls of 3 to 10%, decreases of 5 to 15% in yields for a 

number of crops (absent adaptation measures that do not presently exist), decreases of Arctic sea 

ice extent of 25% in September and 15% annually averaged, along with changes in precipitation 

and streamflow of 5 to 10% in many regions and river basins (increases in some regions, 

decreases in others). The assessment also found that for an increase of 4 degrees C nearly all land 

areas would experience summers warmer than all but 5% of summers in the 20th century, that for 

an increase of 1 to 2 degrees C the area burnt by wildfires in western North America will likely 

more than double, that coral bleaching and erosion will increase due both to warming and ocean 

acidification, and that sea level will rise 1.6 to 3.3 feet by 2100 in a 3 degree C scenario. The 

assessment notes that many important aspects of climate change are difficult to quantify but that 

the risk of adverse impacts is likely to increase with increasing temperature, and that the risk of 

abrupt climate changes can be expected to increase with the duration and magnitude of the 

warming. 

 346 National Research Council (NRC) (2010). Advancing the Science of Climate Change. National Academy Press. 

Washington, DC. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 363 of 770

In the 2010 report cited above, the NRC stated that some of the largest potential risks 

associated with future climate change may come not from relatively smooth changes that are 

reasonably well understood, but from extreme events, abrupt changes, and surprises that might 

occur when climate or environmental system thresholds are crossed. Examples cited as 

warranting more research include the release of large quantities of GHGs stored in permafrost 

(frozen soils) across the Arctic, rapid disintegration of the major ice sheets, irreversible drying 

and desertification in the subtropics, changes in ocean circulation, and the rapid release of 

destabilized methane hydrates in the oceans. 

On ocean acidification, the same report noted the potential for broad, “catastrophic” 

impacts on marine ecosystems. Ocean acidity has increased 25 percent since pre-industrial 

times, and is projected to continue increasing. By the time atmospheric CO2 content doubles 

over its preindustrial value, there would be virtually no place left in the ocean that can sustain 

coral reef growth. Ocean acidification could have dramatic consequences for polar food webs 

including salmon, the report said. 

 Importantly, these recent NRC assessments represent another independent and critical 

inquiry of the state of climate change science, separate and apart from the previous IPCC and 

USGCRP assessments. 

3. Changes in Global Climate Indicators Associated with the Proposal’s GHG Emissions 

Reductions 

EPA examined347 the reductions in CO2 and other GHGs associated with this rulemaking 

and analyzed the projected effects on atmospheric CO2 concentrations, global mean surface 

temperature, sea level rise, and ocean pH which are common variables used as indicators of 

climate change.348 The analysis projects that the proposed rule, if adopted, will reduce 

atmospheric concentrations of CO2, 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 the total projected climate change, they are quantifiable, directionally 

consistent, and will contribute to reducing the risks associated with climate change. Climate 

change is a global phenomenon and EPA recognizes that this one national action alone will not 

prevent it: EPA notes this would be true for any given GHG mitigation action when taken alone 

or when considered in isolation. EPA also notes that a substantial portion of CO2 emitted into the 

atmosphere is not removed by natural processes for millennia, and therefore each unit of CO2 not 

 347 Using the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGICC) 5.3v2, 

http://www.cgd.ucar.edu/cas/wigley/magicc/), EPA estimated the effects of this rulemaking’s greenhouse gas 

emissions reductions on global mean temperature and sea level. Please refer to Chapter 6.4 of the DRIA for 

additional information. 

348 Due to timing constraints, this analysis was conducted with preliminary estimates of the emissions reductions 

projected from this proposal, which were highly similar to the final estimates. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 364 of 770

emitted into the atmosphere due to this rule avoids essentially permanent climate change on 

centennial time scales. 

EPA determines that the projected reductions in atmospheric CO2, global mean 

temperature and sea level rise are meaningful in the context of this final action. In addition, EPA 

has conducted an analysis to evaluate the projected changes in ocean pH in the context of the 

changes in emissions from this rulemaking. The results of the analysis demonstrate that relative 

to the reference case, projected atmospheric CO2 concentrations are estimated by 2100 to be 

reduced by 3.29 to 3.68 part per million by volume (ppmv), global mean temperature is 

estimated to be reduced by 0.0076 to 0.0184°C, and sea-level rise is projected to be reduced by 

approximately 0.074-0.166 cm, based on a range of climate sensitivities. The analysis also 

demonstrates that ocean pH will increase by 0.0018 pH units by 2100 relative to the reference 

case. 

a. Estimated Reductions in Atmospheric CO2 Concentration, Global Mean Surface 

Temperatures, Sea Level Rise, and Ocean pH 

EPA estimated changes in the atmospheric CO2 concentration, global mean temperature, 

and sea level rise out to 2100 resulting from the emissions reductions in this rulemaking using 

the Global Change Assessment Model (GCAM, formerly MiniCAM), integrated assessment 

model349 coupled with the Model for the Assessment of Greenhouse Gas Induced Climate 

Change (MAGICC, version 5.3v2).350 GCAM was used to create the globally and temporally 

consistent set of climate relevant variables required for running MAGICC. MAGICC was then 

used to estimate the projected change in these variables over time. Given the magnitude of the 

estimated emissions reductions associated with this action, a simple climate model such as 

MAGICC is reasonable for estimating the atmospheric and climate response. This widely-used, 

peer reviewed modeling tool was also used to project temperature and sea level rise under 

different emissions scenarios in the Third and Fourth Assessments of the IPCC. 

The integrated impact of the following pollutant and greenhouse gas emissions changes 

are considered: CO2, CH4, N2O, HFC-134a, NOX, CO, SO2, and volatile organic compounds 

(VOC). For these pollutants an annual time-series of (upstream + downstream) emissions 

reductions estimated from the rulemaking were applied as net reductions to a global reference 

 349 GCAM is a long-term, global integrated assessment model of energy, economy, agriculture and land use, that 

considers the sources of emissions of a suite of GHG’s, 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. 

Brenkert A, S. Smith, S. Kim, and H. Pitcher, 2003: Model Documentation for the MiniCAM. PNNL-14337, Pacific 

Northwest National Laboratory, Richland, Washington. 

350 Wigley, T.M.L. 2008. MAGICC 5.3.v2 User Manual. UCAR – Climate and Global Dynamics Division, Boulder, 

Colorado. http://www.cgd.ucar.edu/cas/wigley/magicc/ 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 365 of 770

case (or baseline) emissions scenario in GCAM to generate an emissions scenario specific to this 

proposed rule.351 The emissions reductions past 2050 for all gases were scaled with total U.S. 

road transportation fuel consumption from the GCAM reference scenario. Road transport fuel 

consumption past 2050 does not change significantly and thus emissions reductions remain 

relatively constant from 2050 through 2100. Specific details about the GCAM reference case 

scenario can be found in Chapter 6.4 of the DRIA that accompanies this proposal . 

MAGICC calculates the forcing response at the global scale from changes in atmospheric 

concentrations of CO2, CH4, N2O, HFCs, and tropospheric ozone (O3). It also includes the 

effects of temperature changes on stratospheric ozone and the effects of CH4 emissions on 

stratospheric water vapor. Changes in CH4, NOx, VOC, and CO emissions affect both O3

concentrations and CH4 concentrations. MAGICC includes the relative climate forcing effects of 

changes in sulfate concentrations due to changing SO2 emissions, including both the direct effect 

of sulfate particles and the indirect effects related to cloud interactions. However, MAGICC does 

not calculate the effect of changes in concentrations of other aerosols such as nitrates, black 

carbon, or organic carbon, making the assumption that the sulfate cooling effect is a proxy for 

the sum of all the aerosol effects. Therefore, the climate effects of changes in PM2.5 emissions 

and precursors (besides SO2) which are presented in the DRIA Chapter 6 were not included in 

the calculations in this chapter. MAGICC also calculates all climate effects at the global scale. 

This global scale captures the climate effects of the long-lived, well-mixed greenhouse gases, but 

does not address the fact that short-lived climate forcers such as aerosols and ozone can have 

effects that vary with location and timing of emissions. Black carbon in particular is known to 

cause a positive forcing or warming effect by absorbing incoming solar radiation, but there are 

uncertainties about the magnitude of that warming effect and the interaction of black carbon (and 

other co-emitted aerosol species) with clouds. While black carbon is likely to be an important 

contributor to climate change, it would be premature to include quantification of black carbon 

climate impacts in an analysis of these proposed standards. See generally, EPA, Response to 

Comments to the Endangerment Finding Vol. 9 section 9.1.6.1 and the discussion of black 

carbon in the endangerment finding at 74 FR at 66520. Additionally, the magnitude of PM2.5 

emissions changes (and therefore, black carbon emission changes) related to these proposed 

standards are small in comparison to the changes in the pollutants which have been included in 

the MAGICC model simulations. 

Changes in atmospheric CO2 concentration, global mean temperature, and sea level rise 

for both the reference case and the emissions scenarios associated with this action were 

computed using MAGICC. To calculate the reductions in the atmospheric CO2 concentrations as 

well as in temperature and sea level resulting from this proposal, the output from the policy 

scenario associated with EPA’s proposed standards was subtracted from an existing Global 

 351 Due to timing constraints, this analysis was conducted with preliminary estimates of the emissions reductions 

projected from this proposal, which were highly similar to the final estimates. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 366 of 770

Change Assessment Model (GCAM, formerly MiniCAM) reference emission scenario. To 

capture some key uncertainties in the climate system with the MAGICC model, changes in 

atmospheric CO2, global mean temperature and sea level rise were projected across the most 

current IPCC range of climate sensitivities, from 1.5°C to 6.0°C.352 This range reflects the 

uncertainty for equilibrium climate sensitivity for how much global mean temperature would rise 

if the concentration of carbon dioxide in the atmosphere were to double. The information for this 

range come from constraints from past climate change on various time scales, and the spread of 

results for climate sensitivity from ensembles of models.353 Details about this modeling analysis 

can be found in the DRIA Chapter 6.4. 

The results of this modeling, summarized in Table III-60, show small, but quantifiable, 

reductions in atmospheric CO2 concentrations, projected global mean temperature and sea level 

resulting from this action, across all climate sensitivities. As a result of the emission reductions 

from the proposed standards, relative to the reference case the atmospheric CO2 concentration is 

projected to be reduced by 3.29-3.68 ppmv by 2100, the global mean temperature is projected to 

be reduced by approximately 0.0076-0.0184°C by 2100, and global mean sea level rise is 

projected to be reduced by approximately 0.074-0.166 cm by 2100. The range of reductions in 

global mean temperature and sea level rise is larger than that for CO2 concentrations because 

CO2 concentrations are only weakly coupled to climate sensitivity through the dependence on 

temperature of the rate of ocean absorption of CO2, whereas the magnitude of temperature 

change response to CO2 changes (and therefore sea level rise) is more tightly coupled to climate 

sensitivity in the MAGICC model. 

Table III-60 Impact of GHG Emissions Reductions on Projected Changes in Global 

Climate Associated with EPA’s Proposed Rulemaking (Based on a range of climate 

sensitivities from 1.5-6°C) 

VARIABLE UNITS YEAR PROJECTED 

CHANGE 

Atmospheric CO2 Concentration ppmv 2100 -3.29 to -3.68 

Global Mean Surface Temperature oC 2100 -0.0076 to -0.0184 

Sea Level Rise cm 2100 -0.074 to -0.166 

 352 In IPCC reports, equilibrium climate sensitivity refers to the equilibrium change in the annual mean global 

surface temperature following a doubling of the atmospheric equivalent carbon dioxide concentration. The IPCC 

states that climate sensitivity is “likely” to be in the range of 2°C to 4.5°C, “very unlikely” to be less than 1.5°C, and 

“values substantially higher than 4.5°C cannot be excluded.” IPCC WGI, 2007, Climate Change 2007 - The 

Physical Science Basis, Contribution of Working Group I to the Fourth Assessment Report of the IPCC, 

http://www.ipcc.ch/ 

353 Meehl, G.A. et al. (2007) Global Climate Projections. In: Climate Change 2007: The Physical Science Basis. 

Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate 

Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (eds.)]. 

Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 367 of 770

Ocean pH pH units 2100 +0.0018a

a The value for projected change in ocean pH is based on a climate sensitivity of 3.0. 

The projected reductions are small relative to the change in temperature (1.8 – 4.8 oC), 

sea level rise (23 – 55 cm), and ocean acidity (-0.30 pH units) from 1990 to 2100 from the 

MAGICC simulations for the GCAM reference case. However, this is to be expected given the 

magnitude of emissions reductions expected from the program in the context of global emissions. 

This uncertainty range does not include the effects of uncertainty in future emissions. It should 

also be noted that the calculations in MAGICC do not include the possible effects of accelerated 

ice flow in Greenland and/or Antarctica: the recent NRC report estimated a likely sea level 

increase for a business-as-usual scenario of 0.5 to 1.0 meters.354 Further discussion of EPA’s 

modeling analysis is found in the DRIA, Chapter 6. 

EPA used the computer program CO2SYS,355 version 1.05, to estimate projected changes 

in ocean pH for tropical waters based on the atmospheric CO2 concentration change (reduction) 

resulting from this proposal. The program performs calculations relating parameters of the CO2

system in seawater. EPA used the program to calculate ocean pH as a function of atmospheric 

CO2 concentrations, among other specified input conditions. Based on the projected atmospheric 

CO2 concentration reductions resulting from this proposal, the program calculates an increase in 

ocean pH of 0.0018 pH units in 2100 relative to the reference case (compared to a decrease of 

0.3 pH units from 1990 to 2100 in the reference case). Thus, this analysis indicates the projected 

decrease in atmospheric CO2 concentrations from the program will result in an increase in ocean 

pH. For additional validation, results were generated using different known constants from the 

literature. A comprehensive discussion of the modeling analysis associated with ocean pH is 

provided in the DRIA, Chapter 6. 

b. Program’s Effect on Climate 

As a substantial portion of CO2 emitted into the atmosphere is not removed by natural 

processes for millennia, each unit of CO2 not emitted into the atmosphere avoids essentially 

permanent climate change on centennial time scales. Reductions in emissions in the near-term 

are important in determining long-term climate stabilization and associated impacts experienced 

not just over the next decades but in the coming centuries and millennia.356 Though the 

magnitude of the avoided climate change projected here is small in comparison to the total 

projected changes, these reductions represent a reduction in the adverse risks associated with 

 354 National Research Council (NRC), 2011. Climate Stabilization Targets: Emissions, Concentrations, and Impacts 

over Decades to Millennia. Washington, DC: National Academies Press. 

355 Lewis, E., and D. W. R. Wallace. 1998. Program Developed for CO2 System Calculations. ORNL/CDIAC-105. 

Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, U.S. Department of Energy, Oak 

Ridge, Tennessee. 

356 National Research Council (NRC) (2011). Climate Stabilization Targets: Emissions, Concentrations, and Impacts 

over Decades to Millennia. National Academy Press. Washington, DC. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 368 of 770

climate change (though these risks were not formally estimated for this action) across a range of 

equilibrium climate sensitivities. 

EPA’s analysis of the program’s impact on global climate conditions is intended to 

quantify these potential reductions using the best available science. EPA’s modeling results 

show repeatable, consistent reductions relative to the reference case in changes of CO2

concentration, temperature, sea-level rise, and ocean pH over the next century. 

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

Effects? 

Although this rule focuses on GHGs, it will also have an impact on non-GHG pollutants. 

Sections G.1 of this preamble details the criteria pollutant and air toxic inventory changes of this 

proposed rule. The following sections, G.2 and G.3, discuss the health and environmental effects 

associated with the criteria and toxic air pollutants that are being impacted by this proposed rule. 

In Section G.4 we discuss the potential impact of this proposal on concentrations of criteria and 

air toxic pollutants in the ambient air. The tools and methodologies used in this analysis are 

substantially similar to those used in the MYs 2012-2016 light duty rulemaking. 

1. Inventory 

a. Impacts 

In addition to reducing the emissions of greenhouse gases, this rule would influence 

“non-GHG” pollutants, i.e., “criteria” air pollutants and their precursors, and air toxics. The 

proposal would affect emissions of carbon monoxide (CO), fine particulate matter (PM2.5), 

sulfur dioxide (SOX), volatile organic compounds (VOC), nitrogen oxides (NOX), benzene, 1,3-

butadiene, formaldehyde, acetaldehyde, and acrolein. Our estimates of these non-GHG emission 

impacts from the GHG program are shown by pollutant in Table III.G-1 and Table III.G-2 both 

in total and broken down by the three drivers of these changes: a) “downstream” emission 

changes, reflecting the estimated effects of VMT rebound (discussed in Sections III.F and III.H) 

and decreased consumption of fuel; b) “upstream” emission reductions due to decreased 

extraction, production and distribution of motor vehicle gasoline; c) “upstream” emission 

increases from power plants as electric powertrain vehicles increase in prevalence as a result of 

this rule. Program impacts on criteria and toxics emissions are discussed below, followed by 

individual discussions of the methodology used to calculate each of these three sources of 

impacts. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 369 of 770

As shown in Table III-61, EPA estimates that the proposed light duty vehicle program 

would result in reductions of NOX, VOC, PM2.5 and SOX, but would increase CO emissions.357 

For NOx, VOC, and PM2.5, we estimate net reductions because the net emissions reductions 

from reduced fuel refining, distribution and transport is larger than the emission increases due to 

increased VMT and increased electricity production. In the case of CO, we estimate slight 

emission increases, because there are relatively small reductions in upstream emissions, and thus 

the projected emission increases due to VMT rebound and electricity production are greater than 

the projected emission decreases due to reduced fuel production. For SOx, downstream 

emissions are roughly proportional to fuel consumption, therefore a decrease is seen in both 

downstream and fuel refining sources. 

 For all criteria pollutants the overall impact of the proposed proposed program would be 

small compared to total U.S. inventories across all sectors. In 2030, EPA estimates that the 

program would reduce total NOX, PM and SOX inventories by 0.1 to 0.8 percent and reduce the 

VOC inventory by 1.1 percent, while increasing the total national CO inventory by 0.5 percent. 

As shown in Table III-62, EPA estimates that the proposed program would result in 

similarly small changes for air toxic emissions compared to total U.S. inventories across all 

sectors. In 2030, EPA estimates the proposed program would increase total 1,3 butadiene and 

acetaldehyde emissions by 0.1 to 0.3 percent. Total acrolein, benzene and formaldehyde 

emissions would decrease by similarly small amounts. 

Table III-61 Annual Criteria Emission Impacts of Program (short tons) 

 CY 2020 CY 2030 

 Pollutant 

 Impacts 

(Short Tons) 

% of Total 

US Inventory 

 Impacts 

(Short Tons) 

% of Total 

US Inventory 

Total 

VOC -12,214 -0.1% -142,293 -1.1% 

CO 20,965 0.0% 287,940 0.5% 

NOX -2,395 0.0% -21,452 -0.2% 

PM2.5 -344 0.0% -3,574 -0.1% 

SOX -1,616 0.0% -10,569 -0.1% 

Downstream 

VOC 374 0.0% 6,111 0.0% 

CO 21,915 0.0% 295,802 0.5% 

NOX 769 0.0% 10,804 0.1% 

PM2.5 62 0.0% 760 0.0% 

SOX -440 0.0% -5,198 -0.1% 

 Fuel Production 

 and Distribution 

VOC -12,602 -0.1% -148,715 -1.2% 

CO -1,204 0.0% -14,212 0.0% 

NOX -3,769 0.0% -44,474 -0.4% 

PM2.5 -514 0.0% -6,061 -0.1% 

SOX -2,306 0.0% -27,214 -0.3% 

Electricity VOC 14 0.0% 311 0.0% 

 357 While estimates for CY 2020 and 2030 are shown here, estimates through 2050 are shown in RIA Ch. 4. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 370 of 770

CO 254 0.0% 6,350 0.0% 

NOX 605 0.0% 12,219 0.1% 

PM2.5 108 0.0% 1,727 0.0% 

SOX 1,131 0.0% 21,843 0.3% 

Table III-62 Annual Air Toxic Emission Impacts of Program (short tons) 

 CY 2020 CY 2030 

 Pollutant 

 Impacts 

(Short Tons) 

% of Total 

US Inventory 

 Impacts 

(Short Tons) 

% of Total 

US Inventory 

Total 

1,3- Butadiene 2 0.02% 33 0.3% 

Acetaldehyde 4 0.00% 76 0.1% 

Acrolein 0 0.01% -8 0.0% 

Benzene -15 -0.01% -118 -0.1% 

Formaldehyde -5 0.00% -34 0.0% 

Downstream 

1,3- Butadiene 2 0.02% 35 0.3% 

Acetaldehyde 6 0.01% 89 0.2% 

Acrolein 0 0.01% 4 0.0% 

Benzene 13 0.01% 203 0.1% 

Formaldehyde 5 0.00% 84 0.1% 

 Fuel Production 

and Distribution 

1,3- Butadiene 0 0.00% -3 0.0% 

Acetaldehyde -1 0.00% -16 0.0% 

Acrolein 0 -0.01% -16 0.0% 

Benzene -27 -0.01% -322 -0.2% 

Formaldehyde -10 0.00% -119 -0.1% 

Electricity 

1,3- Butadiene 0 0.00% 2 0.0% 

Acetaldehyde 0 0.00% 3 0.0% 

Acrolein 0 0.01% 4 0.0% 

Benzene 0 0.00% 2 0.0% 

Formaldehyde 0 0.00% 1 0.0% 

b. Methodology 

As in the MYs 2012-2016 rulemaking, for the downstream analysis, the current version 

of the EPA motor vehicle emission simulator (MOVES2010a) was used to estimate base VOC, 

CO, NOX, PM and air toxics emission rates. Additional emissions from light duty cars and 

trucks attributable to the rebound effect were then calculated using the OMEGA model postprocessor. A more complete discussion of the inputs, methodology, and results is contained in 

RIA Chapter 4. 

This proposal assumes that MY 2017 and later vehicles are compliant with the agency’s 

Tier 2 emission standards. This proposal does not model any future Tier 3 emission standards, 

because these standards have not yet been proposed (see Section III.A). We intend for the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 371 of 770

analysis assessing the impacts of both the final Tier 3 emission standards and the final 2017-

2025 LD GHG to be included in the final Tier 3 rule. For the proposals, we are taking care to 

coordinate the modeling of each rule to properly assess the air quality impact of each action 

independently without double counting. 

As in the MYs 2012-2016 GHG rulemaking, for this analysis we attribute decreased fuel 

consumption from this program to petroleum-based fuels only, while assuming no effect on 

volumes of ethanol and other renewable fuels because they are mandated under the Renewable 

Fuel Standard (RFS2). For the purposes of this emission analysis, we assume that all gasoline in 

the timeframe of the analysis is blended with 10 percent ethanol (E10). However, as a 

consequence of the fixed volume of renewable fuels mandated in the RFS2 rulemaking and the 

decreasing petroleum consumption predicted here, we anticipate that this proposal would in fact 

increase the fraction of the U.S. fuel supply that is made up by renewable fuels. Although we 

are not modeling this effect in our analysis of this proposal, the Tier 3 rulemaking will make 

more refined assumptions about future fuel properties, including (in a final Tier 3 rule) 

accounting for the impacts of the LD GHG rule. In this rulemaking EPA modeled the three 

impacts on criteria pollutant emissions (rebound driving, changes in fuel production, and changes 

in electricity production) discussed above. 

Other factors which may impact downstream non-GHG emissions, but are not estimated 

in this analysis, include: The potential for decreased criteria pollutant emissions due to increased 

air conditioner efficiency; reduced refueling emissions due to less frequent refueling events and 

reduced annual refueling volumes resulting from the GHG standards; and increased hot soak 

evaporative emissions due to the likely increase in number of trips associated with VMT rebound 

modeled in this proposal. In all, these additional analyses would likely result in small changes 

relative to the national inventory. 

To determine the upstream fuel production impacts, EPA estimated the impact of reduced 

petroleum volumes on the extraction and transportation of crude oil as well as the production and 

distribution of finished gasoline. For the purpose of assessing domestic-only emission 

reductions it was necessary to estimate the fraction of fuel savings attributable to domestic 

finished gasoline, and of this gasoline what fraction is produced from domestic crude. For this 

analysis EPA estimated that 50 percent of fuel savings is attributable to domestic finished 

gasoline and that 90 percent of this gasoline originated from imported crude. Emission factors 

for most upstream emission sources are based on the GREET1.8 model, developed by DOE’s 

Argonne National Laboratory,358 but in some cases the GREET values were modified or updated 

by EPA to be consistent with the National Emission Inventory (NEI).359 The primary updates for 

this analysis were to incorporate newer information on gasoline distribution emissions for VOC 

 358 Greenhouse Gas, Regulated Emissions, and Energy Use in Transportation model (GREET), U.S. Department of 

Energy, Argonne National Laboratory, http://www.transportation.anl.gov/modeling_simulation/GREET/ 359 U.S. EPA. 2002 National Emissions Inventory (NEI) Data and Documentation, 

http://www.epa.gov/ttn/chief/net/2002inventory.html . 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 372 of 770

from the NEI, which were significantly higher than GREET estimates; and the incorporation of 

upstream emission factors for the air toxics estimated in this analysis: benzene, 1,3-butadiene, 

acetaldehyde, acrolein, and formaldehyde. The development of these emission factors is detailed 

in a memo to the docket. These emission factors were incorporated into the OMEGA postprocessor. 

As with the GHG emission analysis discussed in section III.F, electricity emission factors 

were derived from EPA’s Integrated Planning Model (IPM). EPA uses IPM to analyze the 

projected impact of environmental policies on the electric power sector in the 48 contiguous 

states and the District of Columbia. IPM is a multi-regional, dynamic, deterministic linear 

programming model of the U.S. electric power sector. It provides forecasts of least-cost capacity 

expansion, electricity dispatch, and emission control strategies for meeting energy demand and 

environmental, transmission, dispatch, and reliability constraints. EPA derived average national 

CO2 emission factors from the IPM version 4.10 run for the “Proposed Transport Rule.360” As 

discussed in Draft TSD Chapter 4, for the Final Rulemaking, EPA may consider emission factors 

other than national power generation, such as marginal power emission factors, or regional 

emission factors. 

 

 

 360 EPA. IPM. http://www.epa.gov/airmarkt/progsregs/epa-ipm/BaseCasev410.html. "Proposed 

Transport Rule/NODA version" of IPM . TR_SB_Limited Trading v.4.10
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 373 of 770

2. Health Effects of Non-GHG Pollutants 

In this section we discuss health effects associated with exposure to some of the criteria 

and air toxic pollutants impacted by the proposed vehicle standards. 

a. Particulate Matter 

i. Background 

Particulate matter is a generic term for a broad class of chemically and physically diverse 

substances. It can be principally characterized as discrete particles that exist in the condensed 

(liquid or solid) phase spanning several orders of magnitude in size. Since 1987, EPA has 

delineated that subset of inhalable particles small enough to penetrate to the thoracic region 

(including the tracheobronchial and alveolar regions) of the respiratory tract (referred to as 

thoracic particles).361 Current National Ambient Air Quality Standards (NAAQS) use PM2.5 as 

the indicator for fine particles (with PM2.5 generally referring to particles with a nominal mean 

aerodynamic diameter less than or equal to 2.5 micrometers (μm), and use PM10 as the indicator 

for purposes of regulating the coarse fraction of PM10 (referred to as thoracic coarse particles or 

coarse-fraction particles; generally including particles with a nominal mean aerodynamic 

diameter greater than 2.5 μm and less than or equal to 10 μm, or PM10-2.5). Ultrafine particles are 

a subset of fine particles, generally less than 100 nanometers (0.1 μm) in diameter. 

Fine particles are produced primarily by combustion processes and by transformations of 

gaseous emissions (e.g., sulfur oxides (SOX), nitrogen oxides (NOX), and volatile organic 

compounds (VOC)) in the atmosphere. The chemical and physical properties of PM2.5 may vary 

greatly with time, region, meteorology, and source category. Thus, PM2.5 may include a 

complex mixture of different components including sulfates, nitrates, organic compounds, 

elemental carbon and metal compounds. These particles can remain in the atmosphere for days 

to weeks and travel hundreds to thousands of kilometers. 

ii. Health Effects of Particulate Matter 

Scientific studies show ambient PM is associated with a series of adverse health effects. 

These health effects are discussed in detail in EPA’s Integrated Science Assessment (ISA) for 

Particulate Matter.362 Further discussion of health effects associated with PM can also be found 

in the draft RIA. The ISA summarizes health effects evidence associated with both short-term 

and long-term exposures to PM2.5, PM10-2.5, and ultrafine particles. 

 361 Regulatory definitions of PM size fractions, and information on reference and equivalent methods for measuring 

PM in ambient air, are provided in 40 CFR Parts 50, 53, and 58. 

362 U.S. EPA (2009) Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental 

Protection Agency, Washington, DC, EPA/600/R-08/139F, Docket EPA-HQ-OAR-2010-0162. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 374 of 770

The ISA concludes that health effects associated with short-term exposures (hours to 

days) to ambient PM2.5 include mortality, cardiovascular effects, such as altered vasomotor 

function and hospital admissions and emergency department visits for ischemic heart disease and 

congestive heart failure, and respiratory effects, such as exacerbation of asthma symptoms in 

children and hospital admissions and emergency department visits for chronic obstructive 

pulmonary disease and respiratory infections.363 The ISA notes that long-term exposure (months 

to years) to PM2.5 is associated with the development/progression of cardiovascular disease, 

premature mortality, and respiratory effects, including reduced lung function growth, increased 

respiratory symptoms, and asthma development.364 The ISA concludes that the currently 

available scientific evidence from epidemiologic, controlled human exposure, and toxicological 

studies supports a causal association between short- and long-term exposures to PM2.5 and 

cardiovascular effects and mortality. Furthermore, the ISA concludes that the collective 

evidence supports likely causal associations between short- and long-term PM2.5 exposures and 

respiratory effects. The ISA also concludes that the scientific evidence is suggestive of a causal 

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

genotoxicity and long-term exposure to PM2.5.

365

For PM10-2.5, the ISA concludes that the current evidence is suggestive of a causal 

relationship between short-term exposures and cardiovascular effects. There is also suggestive 

evidence of a causal relationship between short-term PM10-2.5 exposure and mortality and 

respiratory effects. Data are inadequate to draw conclusions regarding the health effects 

associated with long-term exposure to PM10-2.5.

366

For ultrafine particles, the ISA concludes that there is suggestive evidence of a causal 

relationship between short-term exposures and cardiovascular effects, such as changes in heart 

rhythm and blood vessel function. It also concludes that there is suggestive evidence of 

association between short-term exposure to ultrafine particles and respiratory effects. Data are 

inadequate to draw conclusions regarding the health effects associated with long-term exposure 

to ultrafine particles.367

b. Ozone 

i. Background 

Ground-level ozone pollution is typically formed by the reaction of VOC and NOX in the 

lower atmosphere in the presence of sunlight. These pollutants, often referred to as ozone 

precursors, are emitted by many types of pollution sources, such as highway and nonroad motor 

 363 See U.S. EPA, 2009 Final PM ISA, Note 362, at Section 2.3.1.1. 364 See U.S. EPA 2009 Final PM ISA, Note 362, at page 2-12, Sections 7.3.1.1 and 7.3.2.1. 365 See U.S. EPA 2009 Final PM ISA, Note 362, at Section 2.3.2. 366 See U.S. EPA 2009 Final PM ISA, Note 362, at Section 2.3.4, Table 2-6. 367 See U.S. EPA 2009 Final PM ISA, Note 362, at Section 2.3.5, Table 2-6. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 375 of 770

vehicles and engines, power plants, chemical plants, refineries, makers of consumer and 

commercial products, industrial facilities, and smaller area sources. 

The science of ozone formation, transport, and accumulation is complex. Ground-level 

ozone is produced and destroyed in a cyclical set of chemical reactions, many of which are 

sensitive to temperature and sunlight. When ambient temperatures and sunlight levels remain 

high for several days and the air is relatively stagnant, ozone and its precursors can build up and 

result in more ozone than typically occurs on a single high-temperature day. Ozone can be 

transported hundreds of miles downwind from precursor emissions, resulting in elevated ozone 

levels even in areas with low local VOC or NOX emissions. 

ii. Health Effects of Ozone 

The health and welfare effects of ozone are well documented and are assessed in EPA’s 

2006 Air Quality Criteria Document and 2007 Staff Paper.368,369 People who are more 

susceptible to effects associated with exposure to ozone can include children, the elderly, and 

individuals with respiratory disease such as asthma. Those with greater exposures to ozone, for 

instance due to time spent outdoors (e.g., children and outdoor workers), are of particular 

concern. Ozone can irritate the respiratory system, causing coughing, throat irritation, and 

breathing discomfort. Ozone can reduce lung function and cause pulmonary inflammation in 

healthy individuals. Ozone can also aggravate asthma, leading to more asthma attacks that 

require medical attention and/or the use of additional medication. Thus, ambient ozone may 

cause both healthy and asthmatic individuals to limit their outdoor activities. In addition, there is 

suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and highly 

suggestive evidence that short-term ozone exposure directly or indirectly contributes to nonaccidental and cardiopulmonary-related mortality, but additional research is needed to clarify the 

underlying mechanisms causing these effects. In a report on the estimation of ozone-related 

premature mortality published by NRC, a panel of experts and reviewers concluded that shortterm exposure to ambient ozone is likely to contribute to premature deaths and that ozone-related 

mortality should be included in estimates of the health benefits of reducing ozone exposure.370 

Animal toxicological evidence indicates that with repeated exposure, ozone can inflame and 

damage the lining of the lungs, which may lead to permanent changes in lung tissue and 

irreversible reductions in lung function. The respiratory effects observed in controlled human 

exposure studies and animal studies are coherent with the evidence from epidemiologic studies 

 368 U.S. EPA.(2006). Air Quality Criteria for Ozone and Related Photochemical Oxidants (Final). EPA/600/R05/004aF-cF. Washington, DC: U.S. EPA. Docket EPA-HQ-OAR-2010-0162. 

369 U.S. EPA. (2007). Review of the National Ambient Air Quality Standards for Ozone: Policy Assessment of 

Scientific and Technical Information, OAQPS Staff Paper. EPA-452/R-07-003. Washington, DC, U.S. EPA. Docket 

EPA-HQ-OAR-2010-0162. 

370 National Research Council (NRC), 2008. Estimating Mortality Risk Reduction and Economic Benefits from 

Controlling Ozone Air Pollution. The National Academies Press: Washington, D.C. Docket EPA-HQ-OAR-2010-

0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 376 of 770

supporting a causal relationship between acute ambient ozone exposures and increased 

respiratory-related emergency room visits and hospitalizations in the warm season. In addition, 

there is suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and 

non-accidental and cardiopulmonary mortality. 

c. Nitrogen Oxides and Sulfur Oxides 

i. Background 

Nitrogen dioxide (NO2) is a member of the NOX family of gases. Most NO2 is formed in 

the air through the oxidation of nitric oxide (NO) emitted when fuel is burned at a high 

temperature. Sulfur Dioxide (SO2) a member of the sulfur oxide (SOX) family of gases, is 

formed from burning fuels containing sulfur (e.g., coal or oil derived), extracting gasoline from 

oil, or extracting metals from ore. 

SO2 and NO2 can dissolve in water droplets and further oxidize to form sulfuric and nitric 

acid which react with ammonia to form sulfates and nitrates, both of which are important 

components of ambient PM. The health effects of ambient PM are discussed in Section 

III.G.3.a.ii of this preamble. NOX and NMHC are the two major precursors of ozone. The health 

effects of ozone are covered in Section III.G.3.b.ii. 

ii. Health Effects of NO2

Information on the health effects of NO2 can be found in the EPA Integrated Science 

Assessment (ISA) for Nitrogen Oxides.371 The EPA has concluded that the findings of 

epidemiologic, controlled human exposure, and animal toxicological studies provide evidence 

that is sufficient to infer a likely causal relationship between respiratory effects and short-term 

NO2 exposure. The ISA concludes that the strongest evidence for such a relationship comes from 

epidemiologic studies of respiratory effects including symptoms, emergency department visits, 

and hospital admissions. The ISA also draws two broad conclusions regarding airway 

responsiveness following NO2 exposure. First, the ISA concludes that NO2 exposure may 

enhance the sensitivity to allergen-induced decrements in lung function and increase the 

allergen-induced airway inflammatory response following 30-minute exposures of asthmatics to 

NO2 concentrations as low as 0.26 ppm. Second, exposure to NO2 has been found to enhance the 

inherent responsiveness of the airway to subsequent nonspecific challenges in controlled human 

exposure studies of asthmatic subjects. Small but significant increases in non-specific airway 

hyperresponsiveness were reported following 1-hour exposures of asthmatics to 0.1 ppm NO2. 

Enhanced airway responsiveness could have important clinical implications for asthmatics since 

transient increases in airway responsiveness following NO2 exposure have the potential to 

 371 U.S. EPA (2008). Integrated Science Assessment for Oxides of Nitrogen – Health Criteria (Final Report).

EPA/600/R-08/071. Washington, DC: U.S.EPA. Docket EPA-HQ-OAR-2010-0162 . 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 377 of 770

increase symptoms and worsen asthma control. Together, the epidemiologic and experimental 

data sets form a plausible, consistent, and coherent description of a relationship between NO2

exposures and an array of adverse health effects that range from the onset of respiratory 

symptoms to hospital admission. 

Although the weight of evidence supporting a causal relationship is somewhat less certain 

than that associated with respiratory morbidity, NO2 has also been linked to other health 

endpoints. These include all-cause (nonaccidental) mortality, hospital admissions or emergency 

department visits for cardiovascular disease, and decrements in lung function growth associated 

with chronic exposure. 

iii. Health Effects of SO2

Information on the health effects of SO2 can be found in the EPA Integrated Science 

Assessment for Sulfur Oxides.372 SO2 has long been known to cause adverse respiratory health 

effects, particularly among individuals with asthma. Other potentially sensitive groups include 

children and the elderly. During periods of elevated ventilation, asthmatics may experience 

symptomatic bronchoconstriction within minutes of exposure. Following an extensive 

evaluation of health evidence from epidemiologic and laboratory studies, the EPA has concluded 

that there is a causal relationship between respiratory health effects and short-term exposure to 

SO2. Separately, based on an evaluation of the epidemiologic evidence of associations between 

short-term exposure to SO2 and mortality, the EPA has concluded that the overall evidence is 

suggestive of a causal relationship between short-term exposure to SO2 and mortality. 

d. Carbon Monoxide 

Information on the health effects of CO can be found in the EPA Integrated Science 

Assessment (ISA) for Carbon Monoxide.373 The ISA concludes that ambient concentrations of 

CO are associated with a number of adverse health effects.374 This section provides a summary 

of the health effects associated with exposure to ambient concentrations of CO.375 

 372 U.S. EPA. (2008). Integrated Science Assessment (ISA) for Sulfur Oxides – Health Criteria (Final Report). 

EPA/600/R-08/047F. Washington, DC: U.S. Environmental Protection Agency. Docket EPA-HQ-OAR-2010-0162. 

373 U.S. EPA, 2010. Integrated Science Assessment for Carbon Monoxide (Final Report). U.S. Environmental 

Protection Agency, Washington, DC, EPA/600/R-09/019F, 2010. Available at

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686. Docket EPA-HQ-OAR-2010-0162 374 The ISA evaluates the health evidence associated with different health effects, assigning one of five “weight of 

evidence” determinations: causal relationship, likely to be a causal relationship, suggestive of a causal relationship, 

inadequate to infer a causal relationship, and not likely to be a causal relationship. For definitions of these levels of 

evidence, please refer to Section 1.6 of the ISA. 

375 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. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 378 of 770

Human clinical studies of subjects with coronary artery disease show a decrease in the 

time to onset of exercise-induced angina (chest pain) and electrocardiogram changes following 

CO exposure. In addition, epidemiologic studies show associations between short-term CO 

exposure and cardiovascular morbidity, particularly increased emergency room visits and 

hospital admissions for coronary heart disease (including ischemic heart disease, myocardial 

infarction, and angina). Some epidemiologic evidence is also available for increased hospital 

admissions and emergency room visits for congestive heart failure and cardiovascular disease as 

a whole. The ISA concludes that a causal relationship is likely 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. Controlled 

human exposure studies report inconsistent neural and behavioral effects following low-level CO 

exposures. The ISA concludes the evidence is suggestive of a causal relationship with both 

short- and long-term exposure to CO and central nervous system effects. 

A number of epidemiologic and animal toxicological studies cited in the ISA have 

evaluated associations between CO exposure and birth outcomes such as preterm birth or cardiac 

birth defects. The epidemiologic studies 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 associations between perinatal CO exposure and decrements in 

birth weight, as well as other developmental outcomes. The ISA concludes these studies are 

suggestive of a causal relationship between long-term exposures to CO and developmental 

effects and birth outcomes. 

Epidemiologic studies provide evidence of effects on respiratory morbidity such as 

changes in pulmonary function, respiratory symptoms, and hospital admissions associated with 

ambient CO concentrations. A limited number of epidemiologic studies considered copollutants 

such as ozone, SO2, and PM in two-pollutant models and found that CO risk estimates were 

generally robust, although this limited evidence makes it difficult to disentangle effects attributed 

to CO itself from those of the larger complex air pollution mixture. Controlled human exposure 

studies have not extensively evaluated the effect of CO on respiratory morbidity. Animal studies 

at levels of 50-100 ppm CO show preliminary evidence of altered pulmonary vascular 

remodeling and oxidative injury. The ISA concludes that the evidence is suggestive of a causal 

relationship between short-term CO exposure and respiratory morbidity, and inadequate to 

conclude that a causal relationship exists between long-term exposure and respiratory morbidity. 

Finally, the ISA concludes that the epidemiologic evidence is suggestive of a causal 

relationship between short-term exposures to CO and mortality. Epidemiologic studies provide 

evidence of an association between short-term exposure to CO and mortality, but limited 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 379 of 770

evidence is available to evaluate cause-specific mortality outcomes associated with CO exposure. 

In addition, the attenuation of CO risk estimates which was often observed in copollutant models 

contributes to the uncertainty as to whether CO is acting alone or as an indicator for other 

combustion-related pollutants. The ISA also concludes that there is not likely to be a causal 

relationship between relevant long-term exposures to CO and mortality. 

e. Air Toxics 

Light-duty vehicle emissions contribute to ambient levels of air toxics known or 

suspected as human or animal carcinogens, or that have noncancer health effects. The 

population experiences an elevated risk of cancer and other noncancer health effects from 

exposure to the class of pollutants known collectively as “air toxics.”376 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 

regional risk drivers or contributors in the 2005 National-scale Air Toxics Assessment and have 

significant inventory contributions from mobile sources.377 

i. Benzene 

The EPA’s Integrated Risk Information System (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.378,379,380 EPA states in its IRIS 

database that data indicate a causal relationship between benzene exposure and acute 

lymphocytic leukemia and suggest a relationship between benzene exposure and chronic nonlymphocytic leukemia and chronic lymphocytic leukemia. The International Agency for 

Research on Carcinogens (IARC) has determined that benzene is a human carcinogen and the 

U.S. Department of Health and Human Services (DHHS) has characterized benzene as a known 

human carcinogen.381,382 

 376 U.S. EPA. (2011) Summary of Results for the 2005 National-Scale Assessment. 

www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf. Docket EPA-HQ-OAR-2010-XXXX. 377 U.S. EPA (2011) 2005 National-Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2005. Docket 

EPA-HQ-OAR-2010-XXXX. 

378 U.S. EPA. 2000. Integrated Risk Information System File for Benzene. This material is available electronically 

at http://www.epa.gov/iris/subst/0276.htm. Docket EPA-HQ-OAR-2010-0162. 

379 International Agency for Research on Cancer. 1982. Monographs on the evaluation of carcinogenic risk of 

chemicals to humans, Volume 29. Some industrial chemicals and dyestuffs, World Health Organization, Lyon, 

France, p. 345-389. Docket EPA-HQ-OAR-2010-0162 380 Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, V.A. 1992. Synergistic action of the benzene metabolite 

hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colony-stimulating factor in vitro, 

Proc. Natl. Acad. Sci. 89:3691-3695. Docket EPA-HQ-OAR-2010-0162. 

381 See IARC, Note 379, above. 382 U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens 

available at: http://ntp.niehs.nih.gov/go/16183. Docket EPA-HQ-OAR-2010-0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 380 of 770

A number of adverse noncancer health effects including blood disorders, such as 

preleukemia and aplastic anemia, have also been associated with long-term exposure to 

benzene.383,384 The most sensitive noncancer effect observed in humans, based on current data, 

is the depression of the absolute lymphocyte count in blood.385, 386 In addition, published work, 

including studies sponsored by the Health Effects Institute (HEI), provides evidence that 

biochemical responses are occurring at lower levels of benzene exposure than previously 

known.387,388,389,390 EPA’s IRIS program has not yet evaluated these new data.

ii. 1,3-Butadiene 

EPA has characterized 1,3-butadiene as carcinogenic to humans by inhalation.391,392 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.393,394 There are numerous studies 

consistently demonstrating that 1,3-butadiene is metabolized into genotoxic metabolites by 

experimental animals and humans. The specific mechanisms of 1,3-butadiene-induced 

 383 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193-197. 

Docket EPA-HQ-OAR-2010-0162. 

384 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541-554. Docket 

EPA-HQ-OAR-2010-0162. 

385 Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. 

Smith, N. Titenko-Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996) Hematotoxicity among Chinese 

workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236-246. Docket EPA-HQ-OAR-2010-0162. 

386 U.S. EPA (2002) Toxicological Review of Benzene (Noncancer Effects). 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/0276.htm. Docket EPAHQ-OAR-2010-0162. 

387 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; 

Rupa, D.; Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; Mu, R.; Xu, B.; 

Zhang, X.; Li, K. (2003) HEI Report 115, Validation & Evaluation of Biomarkers in Workers Exposed to Benzene 

in China. Docket EPA-HQ-OAR-2010-0162. 

388 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et al. (2002) Hematological changes among Chinese 

workers with a broad range of benzene exposures. Am. J. Industr. Med. 42: 275-285. Docket EPA-HQ-OAR-2010-

0162. 

389 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004) Hematotoxically in Workers Exposed to Low Levels of 

Benzene. Science 306: 1774-1776. Docket EPA-HQ-OAR-2010-0162. 

390 Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in rodents at doses relevant to human exposure from 

Urban Air. Research Reports Health Effect Inst. Report No.113. Docket EPA-HQ-OAR-2010-0162. 

391 U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office of Research and Development, National Center for 

Environmental Assessment, Washington Office, Washington, DC. Report No. EPA600-P-98-001F. This document 

is available electronically at http://www.epa.gov/iris/supdocs/buta-sup.pdf. Docket EPA-HQ-OAR-2010-0162. 

392 U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN 106-99-0). Environmental Protection Agency, 

Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental 

Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm. Docket EPA-HQ-OAR-2010-0162 

393 International Agency for Research on Cancer (1999) Monographs on the evaluation of carcinogenic risk of 

chemicals to humans, Volume 71, Re-evaluation of some organic chemicals, hydrazine and hydrogen peroxide and 

Volume 97 (in preparation), World Health Organization, Lyon, France. Docket EPA-HQ-OAR-2010-0162 

394 U.S. Department of Health and Human Services (2005) National Toxicology Program 11th Report on 

Carcinogens available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932. 

Docket EPA-HQ-OAR-2010-0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 381 of 770

carcinogenesis are unknown; however, the scientific evidence strongly suggests that the 

carcinogenic effects are mediated by genotoxic metabolites. Animal data suggest that females 

may be more sensitive than males for cancer effects associated with 1,3-butadiene exposure; 

there are insufficient data in humans from which to draw conclusions about sensitive 

subpopulations. 1,3-butadiene also causes a variety of reproductive and developmental effects in 

mice; no human data on these effects are available. The most sensitive effect was ovarian 

atrophy observed in a lifetime bioassay of female mice.395

iii. Formaldehyde 

Since 1987, EPA has classified formaldehyde as a probable human carcinogen based on 

evidence in humans and in rats, mice, hamsters, and monkeys.396 EPA is currently reviewing 

epidemiological data published since that time. For instance, research conducted by the National 

Cancer Institute found an increased risk of nasopharyngeal cancer and lymphohematopoietic 

malignancies such as leukemia among workers exposed to formaldehyde.397, 398 In an analysis of 

the lymphohematopoietic cancer mortality from an extended follow-up of these workers, the 

National Cancer Institute confirmed an association between lymphohematopoietic cancer risk 

and peak exposures.399 A National Institute of Occupational Safety and Health study of garment 

workers also found increased risk of death due to leukemia among workers exposed to 

formaldehyde.400 Extended follow-up of a cohort of British chemical workers did not find 

evidence of an increase in nasopharyngeal or lymphohematopoietic cancers, but a continuing 

statistically significant excess in lung cancers was reported.401 In 2006, the IARC re-classified 

formaldehyde as a human carcinogen (Group 1).402 

Formaldehyde exposure also causes a range of noncancer health effects, including 

irritation of the eyes (burning and watering of the eyes), nose and throat. Effects from repeated 

 395 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996) Subchronic toxicity of 4-vinylcyclohexene in rats and mice by 

inhalation. Fundam. Appl. Toxicol. 32:1-10. Docket EPA-HQ-OAR-2010-0162. 

396 U.S. EPA (1987) Assessment of Health Risks to Garment Workers and Certain Home Residents from Exposure 

to Formaldehyde, Office of Pesticides and Toxic Substances, April 1987. Docket EPA-HQ-OAR-2010-0162. 

397 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from lymphohematopoetic 

malignancies among workers in formaldehyde industries. Journal of the National Cancer Institute 95: 1615-1623. 

Docket EPA-HQ-OAR-2010-0162. 

398 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2004. Mortality from solid cancers among 

workers in formaldehyde industries. American Journal of Epidemiology 159: 1117-1130. Docket EPA-HQ-OAR2010-0162. 

399 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. 

Mortality from lymphohematopoietic malignancies among workers in formaldehyde industries: The National Cancer 

Institute cohort. J. National Cancer Inst. 101: 751-761. Docket EPA-HQ-OAR-2010-0162. 

400 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an update. 

Occup. Environ. Med. 61: 193-200. Docket EPA-HQ-OAR-2010-0162. 

401 Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended follow-up of a cohort of British chemical workers 

exposed to formaldehyde. J National Cancer Inst. 95:1608-1615. Docket EPA-HQ-OAR-2010-0162. 

402 International Agency for Research on Cancer. 2006. Formaldehyde, 2-Butoxyethanol and 1-tert-Butoxypropan-2-

ol. Volume 88. (in preparation), World Health Organization, Lyon, France. Docket EPA-HQ-OAR-2010-0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 382 of 770

exposure in humans include respiratory tract irritation, chronic bronchitis and nasal epithelial 

lesions such as metaplasia and loss of cilia. Animal studies suggest that formaldehyde may also 

cause airway inflammation – including eosinophil infiltration into the airways. There are several 

studies that suggest that formaldehyde may increase the risk of asthma – particularly in the 

young.403,404 

iv. Acetaldehyde 

Acetaldehyde is classified in EPA’s IRIS database as a probable human carcinogen, 

based on nasal tumors in rats, and is considered toxic by the inhalation, oral, and intravenous 

routes.405 Acetaldehyde is reasonably anticipated to be a human carcinogen by the U.S. DHHS 

in the 11th Report on Carcinogens and is classified as possibly carcinogenic to humans (Group 

2B) by the IARC.406,407 EPA is currently conducting a reassessment of cancer risk from 

inhalation exposure to acetaldehyde. 

The primary noncancer effects of exposure to acetaldehyde vapors include irritation of 

the eyes, skin, and respiratory tract.408 In short-term (4 week) rat studies, degeneration of 

olfactory epithelium was observed at various concentration levels of acetaldehyde exposure.409, 

410 Data from these studies were used by EPA to develop an inhalation reference concentration. 

Some asthmatics have been shown to be a sensitive subpopulation to decrements in functional 

expiratory volume (FEV1 test) and bronchoconstriction upon acetaldehyde inhalation.411 The 

 403 Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for Formaldehyde. 

Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. 

http://www.atsdr.cdc.gov/toxprofiles/tp111.html Docket EPA-HQ-OAR-2010-0162. 404 WHO (2002) Concise International Chemical Assessment Document 40: Formaldehyde. Published under the 

joint sponsorship of the United Nations Environment Programme, the International Labour Organization, and the 

World Health Organization, and produced within the framework of the Inter-Organization Programme for the Sound 

Management of Chemicals. Geneva. Docket EPA-HQ-OAR-2010-0162. 

405 U.S. EPA. 1991. Integrated Risk Information System File of Acetaldehyde. Research and Development, National 

Center for Environmental Assessment, Washington, DC. Available at http://www.epa.gov/iris/subst/0290.htm. 

Docket EPA-HQ-OAR-2010-0162. 

406 U.S. Department of Health and Human Services National Toxicology Program 11th Report on Carcinogens 

available at: ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932. Docket EPA-HQOAR-2010-0162. 

407 International Agency for Research on Cancer. 1999. Re-evaluation of some organic chemicals, hydrazine, and 

hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of Chemical to Humans, Vol 71. 

Lyon, France. Docket EPA-HQ-OAR-2010-0162 

408 See Integrated Risk Information System File of Acetaldehyde, Note 405, above. 409 Appleman, L. M., R. A. Woutersen, V. J. Feron, R. N. Hooftman, and W. R. F. Notten. 1986. Effects of the 

variable versus fixed exposure levels on the toxicity of acetaldehyde in rats. J. Appl. Toxicol. 6: 331-336. Docket 

EPA-HQ-OAR-2010-0162 

410 Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982. Inhalation toxicity of acetaldehyde in rats. I. Acute and 

subacute studies. Toxicology. 23: 293-297. Docket EPA-HQ-OAR-2010-0162. 411 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. 1993. Aerosolized acetaldehyde induces 

histamine-mediated bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 940-3. Docket EPA-HQOAR-2010-0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 383 of 770

agency is currently conducting a reassessment of the health hazards from inhalation exposure to 

acetaldehyde. 

v. Acrolein 

Acrolein is extremely acrid and irritating to humans when inhaled, with acute exposure 

resulting in upper respiratory tract irritation, mucus hypersecretion and congestion. The intense 

irritancy of this carbonyl has been demonstrated during controlled tests in human subjects, who 

suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure.412 These 

data and additional studies regarding acute effects of human exposure to acrolein are 

summarized in EPA’s 2003 IRIS Human Health Assessment for acrolein.413 Evidence available 

from studies in humans indicate that levels as low as 0.09 ppm (0.21 mg/m3

) for five minutes 

may elicit subjective complaints of eye irritation with increasing concentrations leading to more 

extensive eye, nose and respiratory symptoms.414 Lesions to the lungs and upper respiratory tract 

of rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein.415 Acute 

exposure effects in animal studies report bronchial hyper-responsiveness.416 In one study, the 

acute respiratory irritant effects of exposure to 1.1 ppm acrolein were more pronounced in mice 

with allergic airway disease by comparison to non-diseased mice which also showed decreases in 

respiratory rate.417 Based on these animal data and demonstration of similar effects in humans 

(e.g., reduction in respiratory rate), individuals with compromised respiratory function (e.g., 

emphysema, asthma) are expected to be at increased risk of developing adverse responses to 

strong respiratory irritants such as acrolein. 

EPA determined in 2003 that the human carcinogenic potential of acrolein could not be 

determined because the available data were inadequate. No information was available on the 

carcinogenic effects of acrolein in humans and the animal data provided inadequate evidence of 

 412 U.S. EPA (U.S. Environmental Protection Agency). (2003) Toxicological review of acrolein in support of 

summary information on Integrated Risk Information System (IRIS) National Center for Environmental Assessment, 

Washington, DC. EPA/635/R-03/003. p. 10. Available online at: 

http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf. Docket EPA-HQ-OAR-2010-0162 413 See U.S. EPA 2003 Toxicological review of acrolein, Note 412, above. 414 See U.S. EPA 2003 Toxicological review of acrolein, Note 412, at p. 11. 415 Integrated Risk Information System File of Acrolein. Office of Research and Development, National Center for 

Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm 

Docket EPA-HQ-OAR-2010-0162. 

416 See U.S. 2003 Toxicological review of acrolein, Note 412, at p. 15. 417 Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate sensory nerve-mediated respiratory responses to 

irritants in healthy and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571. Docket EPA-HQ-OAR2010-0162. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 384 of 770

carcinogenicity.418 The IARC determined in 1995 that acrolein was not classifiable as to its 

carcinogenicity in humans.419

vi. Polycyclic Organic Matter 

The term polycyclic 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.420421 Animal studies have reported 

respiratory tract tumors from inhalation exposure to benzo[a]pyrene and alimentary tract and 

liver tumors from oral exposure to benzo[a]pyrene. In 1997 EPA classified seven PAHs 

(benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene, benzo[k]fluoranthene, 

dibenz[a,h]anthracene, and indeno[1,2,3-cd]pyrene) as Group B2, probable human 

carcinogens.422 Since that time, studies have found that maternal exposures to PAHs in a 

population of pregnant women were associated with several adverse birth outcomes, including 

low birth weight and reduced length at birth, as well as impaired cognitive development in 

preschool children (3 years of age).423,424 EPA has not yet evaluated these studies. 

vii. Naphthalene 

Naphthalene is found in small quantities in gasoline and diesel fuels. Naphthalene 

emissions have been measured in larger quantities in both gasoline and diesel exhaust compared 

with evaporative emissions from mobile sources, indicating it is primarily a product of 

 418 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 Docket EPA-HQ-OAR-2010-0162. 419 International Agency for Research on Cancer. 1995. Monographs on the evaluation of carcinogenic risk of 

chemicals to humans, Volume 63. Dry cleaning, some chlorinated solvents and other industrial chemicals, World 

Health Organization, Lyon, France. Docket EPA-HQ-OAR-2010-0162 420 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. 421 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. Docket 

EPA-HQ-OAR-2010-0162 

422 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. 

423 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. 

424 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, 

D.; Kinney, P. (2006) Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons on 

neurodevelopment in the first 3 years of life among inner-city children. Environ Health Perspect 114: 1287-1292. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 385 of 770

combustion. EPA released an external review draft of a reassessment of the inhalation 

carcinogenicity of naphthalene based on a number of recent animal carcinogenicity studies.425 

The draft reassessment completed external peer review.426 Based on external peer review 

comments received, additional analyses are being undertaken. This external review draft does 

not represent official agency opinion and was released solely for the purposes of external peer 

review and public comment. The National Toxicology Program listed naphthalene as 

"reasonably anticipated to be a human carcinogen" in 2004 on the basis of bioassays reporting 

clear evidence of carcinogenicity in rats and some evidence of carcinogenicity in mice.427 

California EPA has released a new risk assessment for naphthalene, and the IARC has 

reevaluated naphthalene and re-classified it as Group 2B: possibly carcinogenic to humans.428 

Naphthalene also causes a number of chronic non-cancer effects in animals, including abnormal 

cell changes and growth in respiratory and nasal tissues.429

viii. Other Air Toxics 

In addition to the compounds described above, other compounds in gaseous hydrocarbon 

and PM emissions from light-duty vehicles will be affected by this proposal. Mobile source air 

toxic compounds that would potentially be impacted include ethylbenzene, propionaldehyde, 

toluene, and xylene. Information regarding the health effects of these compounds can be found 

in EPA’s IRIS database.430

f. Exposure and Health Effects Associated with Traffic-Related Air Pollution 

Populations who live, work, or attend school near major roads experience elevated 

exposure to a wide range of air pollutants, as well as higher risks for a number of adverse health 

effects. While the previous sections of this preamble have focused on the health effects 

associated with individual criteria pollutants or air toxics, this section discusses the mixture of 

different exposures near major roadways, rather than the effects of any single pollutant. As such, 

 425 U. S. EPA. 2004. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), 

Environmental Protection Agency, Integrated Risk Information System, Research and Development, National 

Center for Environmental Assessment, Washington, DC. This material is available electronically at 

http://www.epa.gov/iris/subst/0436.htm. Docket EPA-HQ-OAR-2010-0162. 426 Oak Ridge Institute for Science and Education. (2004). External Peer Review for the IRIS Reassessment of the 

Inhalation Carcinogenicity of Naphthalene. August 2004. 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403 Docket EPA-HQ-OAR-2010-0162. 427 National Toxicology Program (NTP). (2004). 11th Report on Carcinogens. Public Health Service, U.S. 

Department of Health and Human Services, Research Triangle Park, NC. Available from: http://ntpserver.niehs.nih.gov. Docket EPA-HQ-OAR-2010-0162. 428 International Agency for Research on Cancer. (2002). Monographs on the Evaluation of the Carcinogenic Risk 

of Chemicals for Humans. Vol. 82. Lyon, France. Docket EPA-HQ-OAR-2010-0162. 

429 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 Docket EPA-HQ-OAR-2010-

0162. 

430 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 386 of 770

this section emphasizes traffic-related air pollution, in general, as the relevant indicator of 

exposure rather than any particular pollutant. 

Concentrations of many traffic-generated air pollutants are elevated for up to 300-500 

meters downwind of roads with high traffic volumes.431 Numerous sources on roads contribute 

to elevated roadside concentrations, including exhaust and evaporative emissions, and 

resuspension of road dust and tire and brake wear. Concentrations of several criteria and 

hazardous air pollutants are elevated near major roads. Furthermore, different semi-volatile 

organic compounds and chemical components of particulate matter, including elemental carbon, 

organic material, and trace metals, have been reported at higher concentrations near major roads. 

 Populations near major roads experience greater risk of certain adverse health effects. 

The Health Effects Institute published a report on the health effects of traffic-related air 

pollution.432 It concluded that evidence is “sufficient to infer the presence of a causal 

association” between traffic exposure and exacerbation of childhood asthma symptoms. The 

HEI report also concludes that the evidence is either “sufficient” or “suggestive but not 

sufficient” for a causal association between traffic exposure and new childhood asthma cases. A 

review of asthma studies by Salam et al. (2008) reaches similar conclusions.433 The HEI report 

also concludes that there is “suggestive” evidence for pulmonary function deficits associated 

with traffic exposure, but concluded that there is “inadequate and insufficient” evidence for 

causal associations with respiratory health care utilization, adult-onset asthma, chronic 

obstructive pulmonary disease symptoms, and allergy. A review by Holguin (2008) notes that 

the effects of traffic on asthma may be modified by nutrition status, medication use, and genetic 

factors.434

The HEI report also concludes that evidence is “suggestive” of a causal association 

between traffic exposure and all-cause and cardiovascular mortality. There is also evidence of 

an association between traffic-related air pollutants and cardiovascular effects such as changes in 

heart rhythm, heart attack, and cardiovascular disease. The HEI report characterizes this 

evidence as “suggestive” of a causal association, and an independent epidemiological literature 

 431 Zhou, Y.; Levy, J.I. (2007) Factors influencing the spatial extent of mobile source air pollution impacts: a metaanalysis. BMC Public Health 7: 89. doi:10.1186/1471-2458-7-89 Docket EPA-HQ-OAR-2010-0162. 

432 HEI Panel on the Health Effects of Air Pollution. (2010) Traffic-related air pollution: a critical review of the 

literature on emissions, exposure, and health effects. [Online at www.healtheffects.org] Docket EPA-HQ-OAR2010-0162. 

433 Salam, M.T.; Islam, T.; Gilliland, F.D. (2008) Recent evidence for adverse effects of residential proximity to 

traffic sources on asthma. Current Opin Pulm Med 14: 3-8. Docket EPA-HQ-OAR-2010-0162 

434 Holguin, F. (2008) Traffic, outdoor air pollution, and asthma. Immunol Allergy Clinics North Am 28: 577-588. 

Docket EPA-HQ-OAR-2010-0162. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 387 of 770

review by Adar and Kaufman (2007) concludes that there is “consistent evidence” linking 

traffic-related pollution and adverse cardiovascular health outcomes.435

Some studies have reported associations between traffic exposure and other health 

effects, such as birth outcomes (e.g., low birth weight) and childhood cancer. The HEI report 

concludes that there is currently “inadequate and insufficient” evidence for a causal association 

between these effects and traffic exposure. A review by Raaschou-Nielsen and Reynolds (2006) 

concluded that evidence of an association between childhood cancer and traffic-related air 

pollutants is weak, but noted the inability to draw firm conclusions based on limited evidence.436

There is a large population in the United States living in close proximity of major roads. 

According to the Census Bureau’s American Housing Survey for 2007, approximately 20 million 

residences in the United States, 15.6% of all homes, are located within 300 feet (91 m) of a 

highway with 4+ lanes, a railroad, or an airport.437 Therefore, at current population of 

approximately 309 million, assuming that population and housing are similarly distributed, there 

are over 48 million people in the United States living near such sources. The HEI report also 

notes that in two North American cities, Los Angeles and Toronto, over 40% of each city’s 

population live within 500 meters of a highway or 100 meters of a major road. It also notes that 

about 33% of each city’s population resides within 50 meters of major roads. Together, the 

evidence suggests that a large U.S. population lives in areas with elevated traffic-related air 

pollution. 

People living near roads are often socioeconomically disadvantaged. According to the 

2007 American Housing Survey, a renter-occupied property is over twice as likely as an owneroccupied property to be located near a highway with 4+ lanes, railroad or airport. In the same 

survey, the median household income of rental housing occupants was less than half that of 

owner-occupants ($28,921/$59,886). Numerous studies in individual urban areas report higher 

levels of traffic-related air pollutants in areas with high minority or poor populations.438,439,440

 435 Adar, S.D.; Kaufman, J.D. (2007) Cardiovascular disease and air pollutants: evaluating and improving 

epidemiological data implicating traffic exposure. Inhal Toxicol 19: 135-149. Docket EPA-HQ-OAR-2010-0162. 436 Raaschou-Nielsen, O.; Reynolds, P. (2006) Air pollution and childhood cancer: a review of the epidemiological 

literature. Int J Cancer 118: 2920-2929. Docket EPA-HQ-OAR-2010-0162 

437 U.S. Census Bureau (2008) American Housing Survey for the United States in 2007. Series H-150 (National 

Data), Table 1A-7. [Accessed at http://www.census.gov/hhes/www/housing/ahs/ahs07/ahs07.html on January 22, 

2009] Docket EPA-HQ-OAR-2010-0162. 438 Lena, T.S.; Ochieng, V.; Carter, M.; Holguín-Veras, J.; Kinney, P.L. (2002) Elemental carbon and PM2.5 levels 

in an urban community heavily impacted by truck traffic. Environ Health Perspect 110: 1009-1015. Docket EPAHQ-OAR-2010-0162 

439 Wier, M.; Sciammas, C.; Seto, E.; Bhatia, R.; Rivard, T. (2009) Health, traffic, and environmental justice: 

collaborative research and community action in San Francisco, California. Am J Public Health 99: S499-S504. 

Docket EPA-HQ-OAR-2010-0162 

440 Forkenbrock, D.J. and L.A. Schweitzer, Environmental Justice and Transportation Investment Policy. Iowa 

City: University of Iowa, 1997. Docket EPA-HQ-OAR-2010-0162 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 388 of 770

Students may also be exposed in situations where schools are located near major roads. 

In a study of nine metropolitan areas across the United States, Appatova et al. (2008) found that 

on average greater than 33% of schools were located within 400 m of an Interstate, U.S., or state 

highway, while 12% were located within 100 m.441 The study also found that among the 

metropolitan areas studied, schools in the Eastern United States were more often sited near major 

roadways than schools in the Western United States. 

Demographic studies of students in schools near major roadways suggest that this 

population is more likely than the general student population to be of non-white race or Hispanic 

ethnicity, and more often live in low socioeconomic status locations. 442,443,444 There is some 

inconsistency in the evidence, which may be due to different local development patterns and 

measures of traffic and geographic scale used in the studies.441 

3. Environmental Effects of Non-GHG Pollutants 

In this section we discuss some of the environmental effects of PM and its precursors 

such as visibility impairment, atmospheric deposition, and materials damage and soiling, as well 

as environmental effects associated with the presence of ozone in the ambient air, such as 

impacts on plants, including trees, agronomic crops and urban ornamentals, and environmental 

effects associated with air toxics. 

a. Visibility 

Visibility can be defined as the degree to which the atmosphere is transparent to visible 

light.445 Visibility impairment is caused by light scattering and absorption by suspended 

particles and gases. Visibility is important because it has direct significance to people’s 

enjoyment of daily activities in all parts of the country. Individuals value good visibility for the 

well-being it provides them directly, where they live and work, and in places where they enjoy 

recreational opportunities. Visibility is also highly valued in significant natural areas, such as 

 441 Appatova, A.S.; Ryan, P.H.; LeMasters, G.K.; Grinshpun, S.A. (2008) Proximal exposure of public schools and 

students to major roadways: a nationwide U.S. survey. J Environ Plan Mgmt Docket EPA-HQ-OAR-2010-0162 

442 Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.; Ostro, B. (2004) Proximity of California public schools 

to busy roads. Environ Health Perspect 112: 61-66. Docket EPA-HQ-OAR-2010-0162 

443 Houston, D.; Ong, P.; Wu, J.; Winer, A. (2006) Proximity of licensed child care facilities to near-roadway vehicle 

pollution. Am J Public Health 96: 1611-1617. Docket EPA-HQ-OAR-2010-0162 

444 Wu, Y.; Batterman, S. (2006) Proximity of schools in Detroit, Michigan to automobile and truck traffic. J 

Exposure Sci Environ Epidemiol 16: 457-470. Docket EPA-HQ-OAR-2010-0162 

445 National Research Council, 1993. Protecting Visibility in National Parks and Wilderness Areas. National 

Academy of Sciences Committee on Haze in National Parks and Wilderness Areas. National Academy Press, 

Washington, DC. Docket EPA-HQ-OAR-2010-0162. This book can be viewed on the National Academy Press 

Website at http://www.nap.edu/books/0309048443/html/ 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 389 of 770

national parks and wilderness areas, and special emphasis is given to protecting visibility in these 

areas. For more information on visibility see the final 2009 PM ISA.446

EPA is pursuing a two-part strategy to address visibility impairment. First, EPA 

developed the regional haze program (64 FR 35714) which was put in place in July 1999 to 

protect the visibility in Mandatory Class I Federal areas. There are 156 national parks, forests 

and wilderness areas categorized as Mandatory Class I Federal areas (62 FR 38680-38681, July 

18, 1997). These areas are defined in CAA section 162 as those national parks exceeding 6,000 

acres, wilderness areas and memorial parks exceeding 5,000 acres, and all international parks 

which were in existence on August 7, 1977. Second, EPA has concluded that PM2.5 causes 

adverse effects on visibility in other areas that are not protected by the Regional Haze Rule, 

depending on PM2.5 concentrations and other factors that control their visibility impact 

effectiveness such as dry chemical composition and relative humidity (i.e., an indicator of the 

water composition of the particles), and has set secondary PM2.5 standards to address these areas. 

The existing annual primary and secondary PM2.5 standards have been remanded and are being 

addressed in the currently ongoing PM NAAQS review. 

b. Plant and Ecosystem Effects of Ozone 

Elevated ozone levels contribute to environmental effects, with impacts to plants and 

ecosystems being of most concern. Ozone can produce both acute and chronic injury in sensitive 

species depending on the concentration level and the duration of the exposure. Ozone effects 

also tend to accumulate over the growing season of the plant, so that even low concentrations 

experienced for a longer duration have the potential to create chronic stress on vegetation. 

Ozone damage to plants includes visible injury to leaves and impaired photosynthesis, both of 

which can lead to reduced plant growth and reproduction, resulting in reduced crop yields, 

forestry production, and use of sensitive ornamentals in landscaping. In addition, the impairment 

of photosynthesis, the process by which the plant makes carbohydrates (its source of energy and 

food), can lead to a subsequent reduction in root growth and carbohydrate storage below ground, 

resulting in other, more subtle plant and ecosystems impacts. 

These latter impacts include increased susceptibility of plants to insect attack, disease, 

harsh weather, interspecies competition and overall decreased plant vigor. The adverse effects of 

ozone on forest and other natural vegetation can potentially lead to species shifts and loss from 

the affected ecosystems, resulting in a loss or reduction in associated ecosystem goods and 

services. Lastly, visible ozone injury to leaves can result in a loss of aesthetic value in areas of 

special scenic significance like national parks and wilderness areas. The final 2006 Ozone Air 

Quality Criteria Document presents more detailed information on ozone effects on vegetation 

and ecosystems. 

 446 See U.S. EPA 2009 Final PM ISA, Note 362. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 390 of 770

c. Atmospheric Deposition 

Wet and dry deposition of ambient particulate matter delivers a complex mixture of 

metals (e.g., mercury, zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., 

polycyclic organic matter, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to 

terrestrial and aquatic ecosystems. The chemical form of the compounds deposited depends on a 

variety of factors including ambient conditions (e.g., temperature, humidity, oxidant levels) and 

the sources of the material. Chemical and physical transformations of the compounds occur in 

the atmosphere as well as the media onto which they deposit. These transformations in turn 

influence the fate, bioavailability and potential toxicity of these compounds. Atmospheric 

deposition has been identified as a key component of the environmental and human health hazard 

posed by several pollutants including mercury, dioxin and PCBs.447

Adverse impacts on water quality can occur when atmospheric contaminants deposit to 

the water surface or when material deposited on the land enters a waterbody through runoff. 

Potential impacts of atmospheric deposition to waterbodies include those related to both nutrient 

and toxic inputs. Adverse effects to human health and welfare can occur from the addition of 

excess nitrogen via atmospheric deposition. The nitrogen-nutrient enrichment contributes to 

toxic algae blooms and zones of depleted oxygen, which can lead to fish kills, frequently in 

coastal waters. Deposition of heavy metals or other toxics may lead to the human ingestion of 

contaminated fish, impairment of drinking water, damage to freshwater and marine ecosystem 

components, and limits to recreational uses. Several studies have been conducted in U.S. coastal 

waters and in the Great Lakes Region in which the role of ambient PM deposition and runoff is 

investigated.448,449,450,451,452 

Atmospheric deposition of nitrogen and sulfur contributes to acidification, altering 

biogeochemistry and affecting animal and plant life in terrestrial and aquatic ecosystems across 

the United States. The sensitivity of terrestrial and aquatic ecosystems to acidification from 

nitrogen and sulfur deposition is predominantly governed by geology. Prolonged exposure to 

 447 U.S. EPA (2000) Deposition of Air Pollutants to the Great Waters: Third Report to Congress. Office of Air 

Quality Planning and Standards. EPA-453/R-00-0005. Docket EPA-HQ-OAR-2010-0162. 

448 U.S. EPA (2004) National Coastal Condition Report II. Office of Research and Development/ Office of Water. 

EPA-620/R-03/002. Docket EPA-HQ-OAR-2010-0162. 

449 Gao, Y., E.D. Nelson, M.P. Field, et al. 2002. Characterization of atmospheric trace elements on PM2.5 

particulate matter over the New York-New Jersey harbor estuary. Atmos. Environ. 36: 1077-1086. Docket EPAHQ-OAR-2010-0162. 

450 Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000. Factors influencing the atmospheric depositional 

fluxes of stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79. Docket EPA-HQ-OAR2010-0162. 

451 Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry deposition of airborne trace metals on the Los Angeles 

Basin and adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to 11-24. Docket EPA-HQ-OAR2010-0162. 

452 Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002. Surficial sediment contamination in Lakes Erie and 

Ontario: A comparative analysis. J. Great Lakes Res. 28(3): 437-450. Docket EPA-HQ-OAR-2010-0162. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 391 of 770

excess nitrogen and sulfur deposition in sensitive areas acidifies lakes, rivers and soils. 

Increased acidity in surface waters creates inhospitable conditions for biota and affects the 

abundance and nutritional value of preferred prey species, threatening biodiversity and 

ecosystem function. Over time, acidifying deposition also removes essential nutrients from 

forest soils, depleting the capacity of soils to neutralize future acid loadings and negatively 

affecting forest sustainability. Major effects include a decline in sensitive forest tree species, 

such as red spruce (Picea rubens) and sugar maple (Acer saccharum), and a loss of biodiversity 

of fishes, zooplankton, and macro invertebrates.

In addition to the role nitrogen deposition plays in acidification, nitrogen deposition also 

leads to nutrient enrichment and altered biogeochemical cycling. In aquatic systems increased 

nitrogen can alter species assemblages and cause eutrophication. In terrestrial systems nitrogen 

loading can lead to loss of nitrogen sensitive lichen species, decreased biodiversity of grasslands, 

meadows and other sensitive habitats, and increased potential for invasive species. For a broader 

explanation of the topics treated here, refer to the description in Section 6.1.2.2 of the RIA. 

Adverse impacts on soil chemistry and plant life have been observed for areas heavily 

influenced by atmospheric deposition of nutrients, metals and acid species, resulting in species 

shifts, loss of biodiversity, forest decline, damage to forest productivity and reductions in 

ecosystem services. Potential impacts also include adverse effects to human health through 

ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction 

in crop yield, and limited use of land due to contamination. 

Atmospheric deposition of pollutants can reduce the aesthetic appeal of buildings and 

culturally important articles through soiling, and can contribute directly (or in conjunction with 

other pollutants) to structural damage by means of corrosion or erosion. Atmospheric deposition 

may affect materials principally by promoting and accelerating the corrosion of metals, by 

degrading paints, and by deteriorating building materials such as concrete and limestone. 

Particles contribute to these effects because of their electrolytic, hygroscopic, and acidic 

properties, and their ability to adsorb corrosive gases (principally sulfur dioxide). 

d. 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 vegetation 

damage.453 In laboratory experiments, a wide range of tolerance to VOCs has been observed.454 

 453 U.S. EPA. 1991. Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3-91/001. Docket 

EPA-HQ-OAR-2010-0162. 

454 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects 

of VOCs on herbaceous plants in an open-top chamber experiment. Environ. Pollut. 124:341-343. Docket EPA-HQOAR-2010-0162. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 392 of 770

Decreases in harvested seed pod weight have been reported for the more sensitive plants, and 

some studies have reported effects on seed germination, flowering and fruit ripening. Effects of 

individual VOCs or their role in conjunction with other stressors (e.g., acidification, drought, 

temperature extremes) have not been well studied. In a recent study of a mixture of VOCs 

including ethanol and toluene on herbaceous plants, significant effects on seed production, leaf 

water content and photosynthetic efficiency were reported for some plant species.455 

Research suggests an adverse impact of vehicle exhaust on plants, which has in some 

cases been attributed to aromatic compounds and in other cases to nitrogen oxides.456, 457, 458 The 

impacts of VOCs on plant reproduction may have long-term implications for biodiversity and 

survival of native species near major roadways. Most of the studies of the impacts of VOCs on 

vegetation have focused on short-term exposure and few studies have focused on long-term 

effects of VOCs on vegetation and the potential for metabolites of these compounds to affect 

herbivores or insects. 

4. Air Quality Impacts of Non-GHG Pollutants 

a. Current Levels of Non-GHG Pollutants 

This proposal may have impacts on ambient concentrations of criteria and air toxic 

pollutants. Nationally, levels of PM2.5, ozone, NOX, SOX, CO and air toxics are declining.459 

However, approximately 127 million people lived in counties that exceeded any NAAQS in 

2008.460 These numbers do not include the people living in areas where there is a future risk of 

failing to maintain or attain the NAAQS. It is important to note that these numbers do not 

account for potential ozone, PM2.5, CO, SO2, NO2 or lead nonattainment areas which have not 

yet been designated. Further, the majority of Americans continue to be exposed to ambient 

concentrations of air toxics at levels which have the potential to cause adverse health 

effects.461,462 The levels of air toxics to which people are exposed vary depending on where 

 455 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects 

of VOCs on herbaceous plants in an open-top chamber experiment. Environ. Pollut. 124:341-343. Docket EPA-HQOAR-2010-0162. 

456 Viskari E-L. 2000. Epicuticular wax of Norway spruce needles as indicator of traffic pollutant deposition. Water, 

Air, and Soil Pollut. 121:327-337. Docket EPA-HQ-OAR-2010-0162. 

457 Ugrekhelidze D, F Korte, G Kvesitadze. 1997. Uptake and transformation of benzene and toluene by plant leaves. 

Ecotox. Environ. Safety 37:24-29. Docket EPA-HQ-OAR-2010-0162. 

458 Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D Knoppik, B Hock. 1987. Toxic components of 

motor vehicle emissions for the spruce Picea abies. Environ. Pollut. 48:235-243. Docket EPA-HQ-OAR-2010-

0162. 

459 U. S. EPA (2010) Our Nation’s Air: Status and Trends through 2008. Office of Air Quality Planning and 

Standards, Research Triangle Park, NC. Publication No. EPA 454/R-09-002. http://www.epa.gov/airtrends/2010/. 

Docket EPA-HQ-OAR-2010-0162 

460 See U. S. EPA Trends, Note 459. 461 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile Sources; Final 

Rule. 72 FR 8434, February 26, 2007. 

462 See U. S. EPA 2010, Light-Duty 2012-2016 MY Vehicle Rule. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 393 of 770

people live and work and the kinds of activities in which they engage, as discussed in detail in 

U.S. EPA’s recent mobile source air toxics rule.463 

b. Impacts of Proposed Standards on Future Ambient Concentrations of PM2.5, 

Ozone and Air Toxics 

Full-scale photochemical air quality modeling is necessary to accurately project levels of 

criteria pollutants and air toxics. For the final rulemaking, a national-scale air quality modeling 

analysis will be performed to analyze the impacts of the standards on PM2.5, ozone, and selected 

air toxics (i.e., benzene, formaldehyde, acetaldehyde, acrolein and 1,3-butadiene). The length of 

time needed to prepare the necessary emissions inventories, in addition to the processing time 

associated with the modeling itself, has precluded us from performing air quality modeling for 

this proposal. 

Sections III.G.1 and III.G.2 of the preamble present projections of the changes in criteria 

pollutant and air toxics emissions due to the proposed vehicle standards; the basis for those 

estimates is set out in Chapter 4 of the draft RIA. The atmospheric chemistry related to ambient 

concentrations of PM2.5, ozone and air toxics is very complex, and making predictions based 

solely on emissions changes is extremely difficult. However, based on the magnitude of the 

emissions changes predicted to result from the proposed standards, EPA expects that there will 

be an improvement in ambient air quality, pending a more comprehensive analysis for the final 

rulemaking. 

For the final rulemaking, EPA intends to use a Community Multi-scale Air Quality 

(CMAQ) modeling platform as the tool for the air quality modeling. The CMAQ modeling 

system is a comprehensive three-dimensional grid-based Eulerian air quality model designed to 

estimate the formation and fate of oxidant precursors, primary and secondary PM concentrations 

and deposition, and air toxics, over regional and urban spatial scales (e.g., over the contiguous 

United States).464,465,466,467 The CMAQ model is a well-known and well-established tool and is 

commonly used by EPA for regulatory analyses and by States in developing attainment 

 463 See U. S. EPA 2007, Note 461. 464 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 

465 Byun, D.W., and Schere, K.L., 2006. Review of the Governing Equations, Computational Algorithms, and Other 

Components of the Models-3 Community Multiscale Air Quality (CMAQ) Modeling System, J. Applied Mechanics 

Reviews, 59 (2), 51-77. Docket EPA-HQ-OAR-2010-0162 

466 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-HQOAR-2010-0162 

467 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. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 394 of 770

demonstrations for their State Implementation Plans. The CMAQ model version 4.7 was most 

recently peer-reviewed in February of 2009 for the U.S. EPA.468 

CMAQ includes many science modules that simulate the emission, production, decay, 

deposition and transport of organic and inorganic gas-phase and particle-phase pollutants in the 

atmosphere. EPA intends to use the most recent version of CMAQ, which reflects updates to 

version 4.7 to improve the underlying science. These include aqueous chemistry mass 

conservation improvements, improved vertical convective mixing and lowered CB05 mechanism 

unit yields for acrolein from 1,3-butadiene tracer reactions which were updated to be consistent 

with laboratory measurements. 

5. Other Unquantified Health and Environmental Effects 

In addition, EPA seeks comment on whether there are any other health and environmental 

impacts associated with advancements in vehicle GHG reduction technologies that should be 

considered. For example, the use of technologies and other strategies to reduce GHG emissions 

could have effects on a vehicle’s life-cycle impacts (e.g., materials usage, manufacturing, end of 

life disposal), beyond the issues regarding upstream emissions discussed in Section III.C. EPA 

seeks comment on any studies or research in this area that should be considered in the future to 

assess a fuller range of health and environmental impacts from the light-duty vehicle fleet 

moving to advanced GHG-reducing technologies. 

EPA is aware of some studies examining the lifecycle GHG emissions for advanced 

technology vehicles, with a particular focus on production-related emissions.469 The American 

Iron and Steel Institute (AISI) recommends that EPA transition in the longer-term to an approach 

of basing future standards on lifecycle assessments that include vehicle production, use, and endof-life impacts; AISI is working on related research with the University of California, Davis.470 

At this point, there is very little information about the lifecycle impacts of future advanced 

technologies to conduct such an assessment, but EPA seeks comment on any current or future 

studies and research underway on this topic. 

 468 Allen, D. et al (2009). Report on the Peer Review of the Atmospheric Modeling and Analysis Division, National 

Exposure Research Laboratory, Office of Research and Development, U.S.EPA. 

http://www.epa.gov/asmdnerl/peer/reviewdocs.html Docket EPA-HQ-OAR-2010-0162 

469 Preparing for a Life Cycle CO2 Measure, Jane Patterson, et al, Ricardo Inc. for the Low Carbon Vehicle 

Partnership, August 2011 and Life Cycle Assessment of Greenhouse Gas Emissions from Plug-in Hybrid Vehicles: 

Implications for Policy, C. Samaras and K. Meisterling, Environmental Science & Technology Vol. 42, 3170-3176, 

2008. 

470 See AISI comments on the 2012-2016 rulemaking and Interim Joint TAR: Document ID # EPA-HQ-OAR-2009-

0472-7088 and EPA-HQ-OAR-2010-0799-0313, respectively 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 395 of 770

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

In this section, EPA presents the costs and impacts of the proposed GHG standards. It is 

important to note that NHTSA’s CAFE standards and EPA’s GHG standards will both be in 

effect, and each will lead to average fuel economy increases and CO2 emissions reductions. The 

two agencies’ standards comprise the National Program, and this discussion of costs and benefits 

of EPA’s GHG standard does not change the fact that both the CAFE and GHG standards, 

jointly, will be the source of the benefits and costs of the National Program. These costs and 

benefits are appropriately analyzed separately by each agency and should not be added together. 

This section outlines the basis for assessing the benefits and costs of the GHG standards 

and provides estimates of these costs and benefits. Some of these effects are private, meaning 

that they affect consumers and producers directly in their sales, purchases, and use of vehicles. 

These private effects include the increase in vehicle prices due to costs of the technology, fuel 

savings, and the benefits of additional driving and reduced refueling. Other costs and benefits 

affect people outside the markets for vehicles and their use; these effects are termed external, 

because they affect people in ways other than the effect on the market for and use of new 

vehicles and are generally not taken into account by the purchaser of the vehicle. The external 

effects include the climate impacts, the effects on non-GHG pollutants, energy security impacts, 

and the effects on traffic, accidents, and noise due to additional driving. The sum of the private 

and external benefits and costs is the net social benefits of the standards. 

There is some debate about the behavior of private markets in the context of these 

standards: if consumers optimize their purchases of fuel economy, with full information and 

perfect foresight, in perfectly efficient markets, they should have already considered these 

benefits in their vehicle purchase decisions. If so, then no net private benefits would result from 

the program, because consumers would already buy vehicles with the amount of fuel economy 

that is optimal for them; requiring additional fuel economy would alter both the purchase prices 

of new cars and their lifetime streams of operating costs in ways that will inevitably reduce 

consumers’ well-being. Section III.H.1 discusses this issue more fully. 

The net benefits of EPA’s proposal consist of the effects of the proposed standards on: 

 the vehicle costs; 

 fuel savings associated with reduced fuel usage resulting from the proposed program 

 greenhouse gas emissions; 

 other air pollutants; 

 other impacts, including noise, congestion, accidents, 

 energy security impacts; 

 changes in refueling events; 

 increased driving due to the “rebound” effect. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 396 of 770

EPA also presents the cost per ton of GHG reductions associated with the proposed GHG 

standards on a CO2eq basis, in Section III.H.3 below. 

The total present value of monetized benefits (excluding fuel savings) under the proposed 

standards are projected to be between $334 to $846 billion, using a 3 percent discount rate and 

depending on the value used for the social cost of carbon. With a 7 percent discount rate, the 

total present value of monetized benefits (excluding fuel savings) under the proposed standards 

are projected to be between $147 to $660 billion, depending on the value used for the social cost 

of carbon. These benefits are summarized below in Table III-3. The present value of costs of 

the proposed standards are estimated to be between $239 to $545 billion for new vehicle 

technology (assuming a 7 and 3 percent discount rate, respectively), less $600 to $1,600 billion 

in savings realized by consumers through fewer fuel expenditures (calculated using pre-tax fuel 

prices and using a 7 and 3 percent discount rate, respectively). These costs are summarized 

below in Table III-1 and the fuel savings are summarized in Table III-2. The total net present 

value of benefits under the proposed standards are projected to be between $1.4 and $1.9 trillion, 

using a 3 percent discount rate and depending on the value used for the social cost of carbon. 

With a 7 percent discount rate, the total net present value of benefits under the proposed 

standards are projected to be between $530 billion to $1.0 trillion, depending on the value used 

for the social cost of carbon. The estimates developed here use as a baseline for comparison the 

greenhouse gas performance and fuel economy associated with MY 2016 standards. To the 

extent that greater fuel economy improvements than those assumed to occur under the baseline 

may have occurred due to market forces alone (absent these proposed standards), the analysis 

overestimates private and social net benefits. 

While NHTSA and EPA each modeled their respective regulatory programs, the analyses 

were generally consistent and featured similar parameters. For this proposal, EPA has not 

conducted an overall uncertainty analysis of the impacts associated with its regulatory program, 

though it did conduct sensitivity analyses of individual components of the analysis (e.g., 

alternative SCC estimates. NHTSA, however, conducted a Monte Carlo simulation of the 

uncertainty associated with its regulatory program. The focus of the simulation model was 

variation around the chosen uncertainty parameters and their resulting impact on the key output 

parameters, fuel savings, and net benefits. Because of the similarities between the two analyses, 

EPA references NHTSA RIA Chapters X and XII as indicative of the relative magnitude, 

uncertainty and sensitivities of parameters of the cost/benefit analysis. For the final rule, EPA 

plans to perform sensitivity analyses for a wider variety of parameters. 

EPA has also analyzed the potential impact of this proposed rule on vehicle sales, 

employment, and the overall economy. The results of these analyses were not a factor that EPA 

considered in evaluating the appropriateness of the proposed GHG standards, nor did EPA 

include them in the analysis of overall costs and benefits of the proposed standards. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 397 of 770

Further information on these and other aspects of the economic impacts of EPA’s 

proposed rule are summarized in the following sections and are presented in more detail in the 

DRIA for this rulemaking. EPA requests comment on all aspects of the cost, savings, and 

benefits analysis presented here and in the DRIA. EPA also requests comment on the inputs 

used in these analyses as described in the Draft Joint TSD. 

1. Conceptual Framework for Evaluating Consumer Impacts 

For this proposed rule, EPA projects significant private gains to consumers in three major 

areas: (1) reductions in spending on fuel, (2) for gasoline-fueled vehicles, time saved due to less 

refueling, and (3) additional driving that results from the rebound effect. In combination, these 

private benefits, mostly from fuel savings, appear to outweigh the costs of the standards, even 

without accounting for externalities. 

Admittedly, these findings pose an economic conundrum. On the one hand, consumers 

are expected to gain significantly from the rules, as the increased cost of fuel efficient cars is 

smaller than the fuel savings. Yet many of these technologies are readily available; financially 

savvy consumers could have sought vehicles with improved fuel efficiency, and auto makers 

seeking those customers could have offered them. Assuming full information, perfect foresight, 

perfect competition, and financially rational consumers and producers, standard economic theory 

suggests that normal market operations would have provided the private net gains to consumers, 

and the only benefits of the rule would be due to external benefits. If our analysis projects net 

private benefits that consumers have not realized in this perfectly functioning market, then, with 

the above assumptions, there must be additional costs of these private net benefits that are not 

accounted for. This calculation assumes that consumers accurately predict and act on all the 

fuel-saving benefits they will get from a new vehicle, and that producers market products 

providing those benefits. The existence of large private net benefits from this rule, then, suggests 

either that the assumptions noted above do not hold, or that EPA’s analysis has missed some 

factor(s) tied to improved fuel economy that reduce(s) consumer welfare. 

This subsection discusses the economic principles underlying the assessment of impacts 

on consumer well-being due to the proposed changes in the vehicles. Because conventional 

gasoline- and diesel-fueled vehicles have quite different characteristics from advanced 

technology vehicles (especially electric vehicles), the principles for these different kinds vehicles 

are discussed separately below. 

a. Conventional Vehicles 

For conventional vehicles, the estimates of technology costs developed for this proposed 

rule take into account the cost needed to ensure that vehicle utility (including performance, 

reliability, and size) stay constant, except for fuel economy and vehicle price, with some minor 

exceptions (e.g., see the discussion of the “Atkinson-cycle” engine and towing capacity in 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 398 of 770

III.D.3). For example, using a 4-cylinder engine instead of a 6-cylinder engine reduces fuel 

economy, but also reduces performance; turbocharging the 4-cylinder engine, though, produces 

fuel savings while maintaining performance. The cost estimates assume turbocharging 

accompanies engine downsizing. As a result, if the market for fuel economy is efficient, then the 

existence of large private net benefits implies that there would need to be some other changed 

qualities, missed in the cost estimates, that would reduce the benefits consumers receive from 

their vehicles.471 We seek comments that identify any such changed qualities omitted from the 

analysis. Such comments should describe how changed qualities affect consumer benefits from 

vehicles, and provide cost estimates for eliminating the effects of the changes.

The central conundrum observed in this market, that consumers appear not to purchase 

products that are in their economic self-interest, has been referred to as the Energy Paradox in 

this setting (and in several others).472 There are many possible reasons discussed in academic 

research why this might occur:473 

 Consumers might be “myopic” and hence undervalue future fuel savings in their purchasing 

decisions – either by discounting the value of fuel savings more heavily than this analysis 

assumes or by requiring shorter payback periods to recover technology costs, or both. 

 Consumers might lack the information necessary to estimate the value of fuel savings, or not 

have a full understanding of this information even when it is presented. 

 Consumer may be inaccurately accounting for uncertainty in future fuel savings when 

comparing upfront cost to future returns. 

 Consumers may consider fuel economy after other vehicle attributes and, as such, not utility 

maximize along this attribute (instead “satisficing” or selecting vehicles that have some 

sufficient amount of fuel economy) 

 Consumers might be especially averse to the short-term losses associated with the higher 

prices of energy efficient products relative to the future fuel savings (the behavioral 

phenomenon of “loss aversion”). 

 Consumers might associate higher fuel economy with inexpensive, less well designed 

vehicles. 

 Even if consumers have relevant knowledge, selecting a vehicle is a highly complex 

undertaking, involving many vehicle characteristics. In the face of such a complicated 

choice, consumers may use simplified decision rules. 

 471 It should be noted that adding fuel-saving technology does not preclude future improvements in performance, 

safety, or other attributes, though it is possible that the costs of these additions may be affected by the presence of 

fuel-saving technology. 

472 Jaffe, A. B., and Stavins, R. N. (1994). “The Energy Paradox and the Diffusion of Conservation Technology.” 

Resource and Energy Economics 16(2), 91-122. Docket EPA-HQ-OAR-2009-0472-11415. 

473 For an overview, see Helfand, Gloria and Ann Wolverton, “Evaluating the Consumer Response to Fuel 

Economy: A Review of the Literature.” International Review of Environmental and Resource Economics 5 (2011): 

103-146. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 399 of 770

 In the case of vehicle fuel efficiency, and perhaps as a result of one or more of the foregoing 

factors, consumers may have relatively few choices to purchase vehicles with greater fuel 

economy once other characteristics, such as vehicle class, are chosen.474 

A great deal of work in behavioral economics identifies and elaborates factors of this 

sort, which help account for the Energy Paradox.475 This point holds in the context of fuel 

savings (the main focus here), but it applies equally to the other private benefits, including 

reductions in refueling time and additional driving. For example, it might well be questioned 

whether significant reductions in refueling time, and corresponding private savings, are fully 

internalized when consumers are making purchasing decisions. 

EPA discussed this issue at length in the 2012-2016 light duty rulemaking and in the 

medium- and heavy-duty greenhouse gas rulemaking. See 75 FR at 25510-13; 76 FR 57315-19. 

Considerable research indicates that the Energy Paradox is a real and significant phenomenon, 

although the literature has not reached a consensus about the reasons for its existence. Several 

researchers have found evidence suggesting that consumers do not give full or appropriate 

weight to fuel economy in purchasing decisions. For example, Sanstad and Howarth476 argue 

that consumers make decisions without the benefit of full information by resorting to imprecise 

but convenient rules of thumb. Some studies find that a substantial portion of this 

undervaluation can be explained by inaccurate assessments of energy savings, or by uncertainty 

and irreversibility of energy investments due to fluctuations in energy prices.477 For a number of 

 474 For instance, in MY 2010, the range of fuel economy (combined city and highway) available among all listed 6-

cylinder minivans was 18 to 20 miles per gallon. With a manual-transmission 4-cylinder minivan, it is possible to 

get 24 mpg. See http://www.fueleconomy.gov, which is jointly maintained by the U.S. Department of Energy and 

the EPA. For recent but unpublished evidence, see Allcott, Hunt, and Nathan Wozny, “Gasoline Prices, Fuel 

Economy, and the Energy Paradox” (2010), available at 

http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf . 

475 Jaffe, A. B., and Stavins, R. N. (1994). “The Energy Paradox and the Diffusion of Conservation Technology.” 

Resource and Energy Economics 16(2), 91-122. See also Allcott and Wozny, supra note. 

476 Sanstad, A., and R. Howarth (1994). “’Normal’ Markets, Market Imperfections, and Energy Efficiency.” Energy 

Policy 22(10): 811‐818 (Docket EPA-HQ-OAR-2009-0472-11416). 

477 Greene, D., J. German, and M. Delucchi (2009). “Fuel Economy: The Case for Market Failure” in Reducing 

Climate Impacts in the Transportation Sector, Sperling, D., and J. Cannon, eds. Springer Science (Docket EPA-HQOAR-2009-0472-11538); Dasgupta, S., S. Siddarth, and J. Silva‐Risso (2007). “To Lease or to Buy? A Structural 

Model of a Consumer’s Vehicle and Contract Choice Decisions.” Journal of Marketing Research 44: 490 – 502 

(Docket EPA-HQ-OAR-2009-0472-11539); Metcalf, G., and D. Rosenthal (1995). "The ‘New’ View of Investment 

Decisions and Public Policy Analysis: An Application to Green Lights and Cold Refrigerators,’’ Journal of Policy 

Analysis and Management 14: 517–531(Docket EPA-HQ-OAR-2009-0472-11540); Hassett, K., and G. Metcalf 

(1995), "Energy Tax Credits and Residential Conservation Investment: Evidence from Panel Data," Journal of 

Public Economics 57: 201‐217(Docket EPA-HQ-OAR-2009-0472-11543); Metcalf, G., and K. Hassett (1999), 

"Measuring the Energy Savings from Home Improvement Investments: Evidence from Monthly Billing Data," The 

Review of Economics and Statistics 81(3): 516‐528 (Docket EPA-HQ-OAR-2009-0472-0051); van Soest D., and E. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 400 of 770

reasons, consumers may undervalue future energy savings due to routine mistakes in how they 

evaluate these trade-offs. For instance, the calculation of fuel savings is complex, and 

consumers may not make it correctly.478 The attribute of fuel economy may be insufficiently 

salient, leading to a situation in which consumers are not willing to pay $1 for an expected $1 

benefit in terms of discounted gasoline costs.479 Larrick and Soll (2008) find that consumers do 

not understand how to translate changes in miles-per-gallon into fuel savings (a concern that 

EPA is continuing to attempt to address, for instance, through the recently revised fuel economy 

label).480 In addition, future fuel price (a major component of fuel savings) is highly uncertain. 

Consumer fuel savings also vary across individuals, who travel different amounts and have 

different driving styles. Cost calculations based on the average do not distinguish between those 

that may gain or lose as a result of the policy.481 In addition, it is possible that the level of cost 

savings may be affected by the underlying reasons for the gap: factors such as transactions costs 

and differences in quality may not be adequately measured.482 Studies regularly show that fuel 

economy plays a role in consumers’ vehicle purchases, but modeling that role is still in 

development, and there is no consensus that most consumers make fully informed tradeoffs.483 A 

 

Bulte (2001), “Does the Energy‐Efficiency Paradox Exist? Technological Progress and Uncertainty.” 

Environmental and Resource Economics 18: 101–12 (Docket EPA-HQ-OAR-2009-0472-11542). 

478 Turrentine, T. and K. Kurani (2007). “Car Buyers and Fuel Economy?” Energy Policy 35: 1213-1223 (Docket 

EPA-HQ-OAR-2009-0472); Larrick, R. P., and J.B. Soll (2008). “The MPG illusion.” Science 320: 1593-1594 

(Docket EPA-HQ-OAR-2009-0472-0041). 

479 Allcott, Hunt, and Nathan Wozny, “Gasoline Prices, Fuel Economy, and the Energy Paradox” (2010), available at 

http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf (Docket EPA-HQOAR-2009-0472-11554) . 

480 Sanstad, A., and R. Howarth (1994). “’Normal’ Markets, Market Imperfections, and Energy Efficiency.” Energy 

Policy 22(10): 811-818 (Docket EPA-HQ-OAR-2009-0472-11415); Larrick, R. P., and J.B. Soll (2008). “The MPG 

illusion.” Science 320: 1593-1594 (Docket EPA-HQ-OAR-2009-0472-0043); Environmental Protection Agency and 

Department of Transportation, “Revisions and Additions to Motor Vehicle Fuel Economy Label,” Federal Register 

XX(XX) (XXXX, 2011): XX-XX. 

481 Hausman J., Joskow P. (1982). “Evaluating the Costs and Benefits of Appliance Efficiency Standards.” American 

Economic Review 72: 220–25 (Docket EPA-HQ-OAR-2009-0472-11541). 

482 Jaccard, Mark. “Paradigms of Energy Efficiency’s Cost and their Policy Iplications: Déjà Vu All Over Again.” 

Modeling the Economics of Greenhouse Gas Mitigation: Summary of a Workshop, K. John Holmes, Rapporteur. 

National Academies Press, 2010. http://www.nap.edu/openbook.php?record_id=13023&page=42 

483 E.g., Goldberg, Pinelopi Koujianou, “Product Differentiation and Oligopoly in International Markets: The Case 

of the U.S. Automobile Industry,” Econometrica 63(4) (July 1995): 891-951 (Docket EPA-HQ-OAR-2009-0472-

0021); Goldberg, Pinelopi Koujianou, “The Effects of the Corporate Average Fuel Efficiency Standards in the 

U.S.,” Journal of Industrial Economics 46(1) (March 1998): 1-33 (Docket EPA-HQ-OAR-2009-0472-0017); Busse, 

Meghan R., Christopher R. Knittel, and Florian Zettelmeyer (2009). “Pain at the Pump: How Gasoline Prices Affect 

Automobile Purchasing in New and Used Markets,” Working paper (accessed 6/30/09), available at 

http://www.econ.ucdavis.edu/faculty/knittel/papers/gaspaper_latest.pdf (Docket EPA-HQ-OAR-2009-0472-0044). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 401 of 770

review commissioned by EPA finds great variability in estimates of the role of fuel economy in 

consumers’ vehicle purchase decisions.484 Of 27 studies, significant numbers of them find that 

consumers undervalue, overvalue, or value approximately correctly the fuel savings that they 

will receive from improved fuel economy. The variation in the value of fuel economy in these 

studies is so high that it appears to be inappropriate to identify one central estimate of value from 

the literature. Thus, estimating consumer response to higher vehicle fuel economy is still 

unsettled science. 

If there is a difference between expected fuel savings and consumers’ willingness to pay 

for fuel savings, the next question is, which is the appropriate measure of consumer benefit? 

Fuel savings measure the actual monetary value that consumers will receive after purchasing a 

vehicle; the willingness to pay for fuel economy measures the value that, before a purchase, 

consumers place on additional fuel economy. As noted, there are a number of reasons that 

consumers may incorrectly estimate the benefits that they get from improved fuel economy, 

including risk or loss aversion, and poor ability to calculate savings. Also as noted, fuel 

economy may not be as salient as other vehicle characteristics when a consumer is considering 

vehicles. If these arguments are valid, then there will be significant gains to consumers of the 

government mandating additional fuel economy. 

While acknowledging the conundrum, EPA continues to value fuel savings from the 

proposed standards using the projected market value over the vehicles’ entire lifetimes, and to 

report that value among private benefits of the proposed rule. Improved fuel economy will 

significantly reduce consumer expenditures on fuel, thus benefiting consumers. Real money is 

being saved and accrued by the consumer. In addition, using a measure based on consumer 

consideration at the time of vehicle purchase would involve a very wide range of uncertainty, 

due to the lack of consensus on the value of additional fuel economy in vehicle choice models. 

Due partly to this factor, it is true that limitations in modeling affect our ability to estimate how 

much of these savings would have occurred in the absence of the rule. For example, some of the 

technologies predicted to be adopted in response to the rule may already be developing due to 

shifts in consumer demand for fuel economy, or due to expectations by auto makers of future 

GHG/fuel economy standards. It is not impossible that some of these savings would have 

occurred in the absence of the rule.485 To the extent that greater fuel economy improvements 

than those assumed to occur under the baseline may have occurred due to market forces alone 

(absent the rule), the analysis overestimates private and social benefits and costs. As discussed 

below, limitations in modeling also affect our ability to estimate the effects of the rule on net 

benefits in the market for vehicles. 

 484 Greene, David L. “How Consumers Value Fuel Economy: A Literature Review.” EPA Report EPA-420-R-10-

008, March 2010 (Docket EPA-HQ-OAR-2009-0472-11575). 485 However, as discussed at section III.D above, the assumption of a flat baseline absent this rule rests on strong 

historic evidence of lack of increase in fuel economy absent either regulatory control or sharply rising fuel prices. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 402 of 770

Consumer vehicle choice models estimate what vehicles consumers buy based on vehicle 

and consumer characteristics. In principle, such models could provide a means of understanding 

both the role of fuel economy in consumers’ purchase decisions and the effects of this rule on the 

benefits that consumers will get from vehicles. Helfand and Wolverton discuss the wide 

variation in the structure and results of these models.486 Models or model results have not 

frequently been systematically compared to each other. When they have, the results show large 

variation over, for instance, the value that consumers place on additional fuel economy. 

In order to develop greater understanding of these models, EPA is in the process of 

developing a vehicle choice model. It uses a “nested logit” structure common in the vehicle 

choice modeling literature. “Nesting” refers to the decision-tree structure of buyers’ choices 

among vehicles the model employs, and “logit” refers to the specific pattern by which buyers’ 

choices respond to differences in overall utility that individual vehicle choice model’s 

combinations of attributes provide and the fact that the choices are discrete (i.e., yes/no decisions 

about which vehicles to purchase, instead of continuous values.487 The nesting involves a 

hierarchy of choices. In its current form, at the initial decision node, consumers choose between 

buying a new vehicle or not. Conditional on choosing a new vehicle, consumers then choose 

between passenger vehicles, cargo vehicles, and ultra-luxury vehicles. The next set of choices 

subdivides each of these categories into vehicle type (e.g., standard car, minivan, SUV, etc.). 

Next, the vehicle types are divided into classes (small, medium, and large SUVs, for instance), 

and then, at the bottom, are the individual models. At this bottom level, vehicles that are similar 

to each other (such as standard subcompacts, or prestige large vehicles) end up in the same 

“nest.” Substitution within a nest is considered much more likely than substitution across nests, 

because the vehicles within a nest are more similar to each other than vehicles in different nests. 

For instance, a person is more likely to substitute between a Chevrolet Aveo and a Toyota Yaris 

than between an Aveo and a pickup truck. In addition, substitution is greater at low decision 

nodes (such as individual vehicles) than at higher decision nodes (such as the buy/no buy 

decision), because there are more choices at lower levels than at higher levels. Parameters for 

the model (including demand elasticities and the value of fuel economy in purchase decisions) 

are being selected based on a review of values found in the literature on vehicle choice modeling. 

Additional discussion of this model can be found in Chapter 8.1.2.8 of the DRIA. The model is 

still undergoing development; the agency will seek peer review on it before it is utilized. In 

addition, concerns remain over the ability of any vehicle choice model to make reasonable 

predictions of the response of the total number and composition of new vehicle sales to changes 

in the prices and characteristics of specific vehicle models. EPA seeks comments on the use of 

vehicle choice modeling for predicting changes in sales mix due to policies, and on methods to 

test the ability of a vehicle choice model to produce reasonable estimates of changes in fleet mix. 

 486 Helfand, Gloria and Ann Wolverton, “Evaluating the Consumer Response to Fuel Economy: A Review of the 

Literature.” International Review of Environmental and Resource Economics 5 (2011): 103-146. 487 Logit refers to a statistical analysis method used for analyzing the factors that affect discrete choices (i.e., yes/no 

decisions or the choice among a countable number of options). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 403 of 770

The next issue is the potential for loss in consumer welfare due to the rule. As mentioned 

above (and discussed more thoroughly in Section III.D.3 of this preamble), the technology cost 

estimates developed here for conventional vehicles take into account the costs to hold other 

vehicle attributes, such as size and performance, constant.488 In addition, the analysis assumes 

that the full technology costs are passed along to consumers. With these assumptions, because 

welfare losses are monetary estimates of how much consumers would have to be compensated to 

be made as well off as in the absence of the change,489 the price increase measures the loss to the 

consumer.490 Assuming that the full technology cost gets passed along to the consumer as an 

increase in price, the technology cost thus measures the welfare loss to the consumer. Increasing 

fuel economy would have to lead to other changes in the vehicles that consumers find 

undesirable for there to be additional losses not included in the technology costs. 

b. Electric Vehicles and other Advanced Technology Vehicles 

This proposal finds that electric vehicles (EVs) may form a part (albeit limited) of some 

manufacturers’ compliance strategy. The following discussion will focus on EVs, because they 

are expected to play more of a role in compliance than vehicles with other alternative fuels, but 

related issues may arise for other alternatively fueled vehicles. It should be noted that EPA’s 

projection of the penetration of EVs in the MY 2025 fleet is very small (X%). 

Electric vehicles (EVs), at the time of this rulemaking, have very different refueling 

infrastructures than conventional gasoline- or diesel-fueled vehicles: refueling EVs requires 

either access to electric charging facilities or battery replacement. In addition, because of the 

expense of increased battery capacity, EVs commonly have a smaller driving range than 

conventional vehicles. Because of these differences, the vehicles cannot be considered 

conventional vehicles unmodified except for cost and fuel economy. As a result, the consumer 

welfare arguments presented above need to be modified to account for these differences. 

A first important point to observe is that, although auto makers are required to comply 

with the proposed standards, producing EVs as a compliance strategy is not specifically required. 

 488 If the reference-case vehicles include different vehicle characteristics, such as improved acceleration or towing 

capacity, then the costs for the proposed standards would be, as here, the costs of adding compliance technologies to 

those reference-case vehicles. These costs may differ from those estimated here, due to our lack of information on 

how those vehicle characteristics might change between now and 2025. 

489 This approach describes the economic concept of compensating variation, a payment of money after a change 

that would make a consumer as well off after the change as before it. A related concept, equivalent variation, 

estimates the income change that would be an alternative to the change taking place. The difference between them 

is whether the consumer’s point of reference is her welfare before the change (compensating variation) or after the 

change (equivalent variation). In practice, these two measures are typically very close together for marketed goods. 490 Indeed, it is likely to be an overestimate of the loss to the consumer, because the consumer has choices other than 

buying the same vehicle with a higher price; she could choose a different vehicle, or decide not to buy a new 

vehicle. The consumer would choose one of those options only if the alternative involves less loss than paying the 

higher price. Thus, the increase in price that the consumer faces would be the upper bound of loss of consumer 

welfare, unless there are other changes to the vehicle due to the fuel economy improvements, unaccounted for in the 

costs, that make the vehicle less desirable to consumers. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 404 of 770

Auto makers will choose to provide EVs either if they have few alternative ways to comply, or if 

EVs are, for some range of production, likely to be more profitable (or less unprofitable) than 

other ways of complying. 

From the consumer perspective, it is important to observe that there is no mandate for any 

consumer to choose any particular kind of vehicle. An individual consumer will buy an EV only 

if the price and characteristics of the vehicle make it more attractive to her than other vehicles. If 

the range of vehicles in the conventional fleet does not shrink, the availability of EVs should not 

reduce consumer welfare compared to a fleet with no EVs: increasing options should not reduce 

consumer well-being, because other existing options still are available. On the other hand, if the 

variety of vehicles in the conventional market does change, there may be consumers who are 

forced to substitute to alternative vehicles. The use of the footprint-based standard is intended to 

help maintain the diversity of vehicle sizes and attributes. Because the agencies do not expect 

any vehicle classes to become unavailable, consumers who buy EVs therefore are expected to 

choose them voluntarily, in preference to the other vehicles available to them. 

From a practical perspective, the key issue is whether the consumer demand for EVs is 

large enough to absorb all the EVs that automakers will produce in order to comply with these 

standards, or whether automakers will need to increase consumer purchases by providing 

subsidies to consumers. If enough consumers find EVs more attractive than other vehicles, and 

automakers therefore do not need to subsidize their purchase, then both consumers and producers 

will benefit from the introduction of EVs. On the other hand, it is possible that automakers will 

find EVs to be part of a cost-effective compliance technology but nevertheless need to price 

them below cost them to sell sufficient numbers. If so, then there is a welfare loss associated 

with the sale of EVs beyond those that would be sold in the free market. The deadweight loss 

can be approximated as one-half of the size of the subsidy needed for the marginal purchaser, 

times the number of sales that would need the subsidy. Estimating this value would require 

knowing the number of sales necessary beyond the expected sales level in an unregulated 

market, and the amount of the subsidy that would be necessary to induce the desired number of 

sales. Given the fledgling state of the market for EVs, neither of these values is easily knowable 

for the 2017 to 2025 time frame. 

A number of factors will affect the likelihood of consumer acceptance of EVs. People 

with short commutes may find little obstacle in the relatively short driving range, but others who 

regularly drive long distances may find EVs’ ranges limiting. The reduced tailpipe emissions 

and reduced noise may be attractive features to some consumers.491 Recharging at home could 

be a convenient, desirable feature for people who have garages with electric charging capability, 

but not for people who park on the street. If an infrastructure develops for recharging vehicles 

 491 For instance, Hidrue et al. (Hidrue, Michael K., George R. Parsons, Willett Kempton, and Meryl P. Gardner. 

“Willingness to Pay for Electric Vehicles and their Attributes.” Resource and Energy Economics 33(3) (2011): 

686-705) find that some consumers are willing to pay $5100 for vehicles with 95% lower emissions than the 

vehicles they otherwise aim to purchase. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 405 of 770

with the convenience approaching that of buying gasoline, range or home recharging may 

become less of a barrier to purchase. Of course, other attributes of the marketed EVs, such as 

their performance and their passenger and storage capacity, will also affect the share of 

consumers who will consider them. As infrastructure, EV technology, and costs evolve over 

time, consumer interest in EVs will adjust as well. Thus, modeling consumer response to 

advanced technology vehicles in the 2017-2025 time frame poses even more challenges than 

those associated with modeling consumer response for conventional vehicles. 

Because range is a major factor in EV acceptability, it is starting to draw attention in the 

research community. For instance, several studies have examined consumers’ willingness to pay 

for increased vehicle range. Results vary, depending on when the survey was conducted (studies 

from the early 1990s have much higher values than more recent studies) and on household 

income and other demographic factors; some find range to be statistically indistinguishable from 

zero, while others find the value of increasing range from 150 to 300 miles to be as much as 

$59,000 (2009$) (see RIA Chapter XX for more discussion). 

Other research has examined how the range limitation may affect driving patterns. Pearre 

et al. observed daily driving patterns for 484 vehicles in the Atlanta area over a year.492 In their 

sample, 9 percent of vehicles never exceeded 100 miles in one day, and 21 percent never 

exceeded 150 miles in one day. Lin and Greene compared the cost of reduced range to the cost 

of additional battery capacity for EVs.493 They find that an “optimized” range of about 75 miles 

would be sufficient for 98% of days for “modest” drivers (those who average about 25 miles per 

day); the optimized EV range for “average” drivers (who average about 43 miles per day), close 

to 120 miles, would meet their needs on 97 percent of days. Turrentine et al. studied drivers who 

leased MINI E EVs (a conversion of the MINI Cooper) for a year.494 They found that drivers 

adapted their driving patterns in response to EV ownership: for instance, they modified where 

they shopped and increased their use of regenerative braking in order to reduce range as a 

constraint. These finding suggest that, for some consumers, range may be a limiting factor only 

occasionally. If those consumers are willing to consider alternative ways of driving long 

distances, such as renting a gasoline vehicle or exchanging vehicles within the household, then 

limited range may not be a barrier to adoption for them. These studies also raise the question 

whether analysis of EV use should be based on the driving patterns from conventional vehicles, 

because consumers may use EVs differently than conventional vehicles. 

 492 Pearre, Nathaniel S., Willett Kempton, Randall L. Guensler, and Vetri V. Elango. “Electric vehicles: How much 

range is required for a day’s driving?” Transportation Research Part C (2011), in press. 

493 Lin, Zhenhong, and David Greene. “Rethinking FCV/BEV Vehicle Range: A Consumer Value Trade-off 

Perspective.” The 25th World Battery, Hybrid and Fuel Cell Electric Vehicle Symposium and Exhibition, Shenzhen, 

China, Nov. 5-9, 2010. 

494 Turrentine, Tom, Dahlia Garas, Andy Lentz, and Justin Woodjack. “The UC Davis MINI E Consumer Study.” 

UC Davis Institute of Transportation Research Report UCD-ITS-RR-11-05, May 4, 2011. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 406 of 770

EVs themselves are expected to change over time, as battery technologies and costs 

develop. In addition, consumer interest in EVs is likely to change over time, as early adopters 

share their experiences. The initial research in the area suggests that consumers put a high value 

on increased range, though this value appears to be changing over time. The research also 

suggests that some segments of the driving public may experience little, if any, restriction on 

their driving due to range limitations if they were to purchase EVs. At this time it is not possible 

to estimate whether the number of people who will choose to purchase EVs at private-market 

prices will be more or less than the number that auto makers are expected to produce to comply 

with the standards. We note that our projections of technology penetrations indicate that a very 

small portion (fewer than 3 percent) of new vehicles produced in 2025 will need to be EVs. For 

the purposes of the analysis presented here for this proposal, we assume that the consumer 

market will be sufficient to absorb the number of EVs expected to be used for compliance under 

this rule. We seek comment and further research that might provide evidence on the consumer 

market for EVs in the 2017-2025 period. 

c. Summary 

The Energy Paradox, also known as the efficiency gap, raises the question, why do 

private markets not provide energy savings that engineering, technology cost analyses find are 

cost-effective? Though a number of hypotheses have been raised to explain the paradox, studies 

have not been able at this time to identify the relative importance of different explanations. As a 

result, it is not possible at this point to state with any degree of certainty whether the market for 

fuel efficiency is operating efficiently, or whether the market has failings. 

For conventional vehicles, the key implication is that the there may be two different 

estimates of the value of fuel savings. One value comes from the engineering estimates, based 

on consumers’ expected driving patterns over the vehicle’s lifetime; the other value is what the 

consumer factors into the purchase decision when buying a vehicle. Although economic theory 

suggests that these two values should be the same in a well functioning market, the available 

evidence does not provide support for that theory. The fuel savings estimates presented here are 

based on expected consumers’ in-use fuel consumption rather than the value they estimate at the 

time that they consider purchasing a vehicle. The costs imposed on the consumer are measured 

by the costs of the technologies needed to comply with the standards. Because the cost estimates 

have built into them the costs required to hold other vehicle attributes constant, then, in principle, 

compensating consumers for the increased costs would hold them harmless, even if they paid no 

attention to the fuel efficiency of vehicles when making their purchase decisions. 

For electric vehicles, and perhaps for other advanced-technology vehicles, other vehicle 

attributes are not expected to be held constant. In particular, their ranges and modes of refueling 

will be different from those of conventional vehicles. From a social welfare perspective, the key 

question is whether the number of consumers who will want to buy EVs at their private-market 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 407 of 770

prices will exceed the number that auto makers are expected to produce to comply with the 

standards. If too few consumers are willing to buy them at their private-market prices, then auto 

makers will have to subsidize their prices. Though current research finds that consumers 

typically have a high value for increasing the range of EVs (and thus would consider a shorter 

range a cost of an EV), current research also suggests that consumers may find ways to adapt to 

the shorter range so that it is less constraining. The technologies, prices, infrastructure, and 

consumer experiences associated with EVs are all expected to evolve between the present and 

the period when this rule becomes effective. The analysis in this proposal assumes that the 

consumer market is sufficient to absorb the expected number of EVs without subsidies. 

 We seek comment and further research on the efficiency of the market for fuel economy 

for conventional vehicles and on the likely size of the consumer market for EVs in 2017-2025. 

2. Costs Associated with the Vehicle Standards (Sherwood) 

In this section, EPA presents our estimate of the costs associated with the proposed 

vehicle program. The presentation here summarizes the vehicle level costs associated with the 

new technologies expected to be added to meet the proposed GHG standards, including hardware 

costs to comply with the proposed A/C credit program. The analysis summarized here provides 

our estimate of incremental costs on a per vehicle basis and on an annual total basis. 

The presentation here summarizes the outputs of the OMEGA model that was discussed 

in some detail in Section III.D of this preamble. For details behind the analysis such as the 

OMEGA model inputs and the estimates of costs associated with individual technologies, the 

reader is directed to Chapter 1 of the EPA’s draft RIA and Chapter 3 of the draft Joint TSD. For 

more detail on the outputs of the OMEGA model and the overall vehicle program costs 

summarized here, the reader is directed to Chapters 3 and 5 of EPA’s draft RIA. 

With respect to the aggregate cost estimations presented here, EPA notes that there are a 

number of areas where the results of our analysis may be conservative and, in general, EPA 

believes we have directionally overestimated the costs of compliance with these new standards, 

especially in not accounting for the full range of credit opportunities available to manufacturers. 

For example, some cost saving programs are considered in our analysis, such as full car/truck 

trading, while others are not, such as advanced vehicle technology credits. 

a. Costs per Vehicle 

To develop costs per vehicle, EPA has used the same methodology as that used in the 

recent 2012-2016 final rule and the 2010 TAR. Individual technology direct manufacturing costs 

have been estimated in a variety of ways—vehicle and technology tear down, models developed 

by outside organizations, and literature review—and indirect costs have been estimated using the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 408 of 770

updated and revised indirect cost multiplier (ICM) approach that was first developed for the 

2012-2016 final rule. All of these individual technology costs are described in detail in Chapter 

3 of the draft joint TSD. Also described there are the ICMs used in this proposal and the ways 

the ICMs have been updated and revised since the 2012-2016 final rule which results in 

considerably higher indirect costs in this proposal than estimated in the 2012-2016 final rule. 

Further, we describe in detail the adjustments to technology costs to account for manufacturing 

learning and the cost reductions that result from that learning. We note here that learning 

impacts are applied only to direct manufacturing costs which differs from the 2012-2016 final 

rule which applied learning to both direct and indirect costs. Lastly, we have included costs 

associated with stranded capital (i.e., capital investments that are not fully recaptured by auto 

makers because they would be forced to update vehicles on a more rapid schedule than they may 

have intended absent this proposal). Again, this is detailed in Chapter 3 of the draft joint TSD. 

EPA then used the technology costs to build GHG and fuel consumption reducing packages of 

technologies for each of 19 different vehicle types meant to fully represent the range of baseline 

vehicle technologies in the marketplace (i.e., number of cylinders, valve train configuration, 

vehicle class). This package building process as well as the process we use to determine the 

most cost effective packages for each of the 19 vehicle types is detailed in Chapter 1 of EPA’s 

draft RIA. These packages are then used as inputs to the OMEGA model to estimate the most 

cost effective means of compliance with the proposed standards giving due consideration to the 

timing required for manufacturers to implement the needed technologies. That is, we assume 

that manufacturers cannot add the full suite of needed technologies in the first year of 

implementation. Instead, we expect them to add technologies to vehicles during the typical 4 to 

5 year redesign cycle. As such, we expect that every vehicle can be redesigned to add significant 

levels of new technology every 4 to 5 years. Further, wedo not expect manufacturers to redesign 

or refresh vehicles at a pace more rapid than the industry standard four to five year cycle. 

The results, including costs associated with the air conditioning program and estimates of 

stranded capital as described in Chapter 3 of the draft joint TSD, are shown in Table III-63. 

Table III-63 Industry Average Vehicle Costs Associated with the Proposed Standards (2009 

dollars) 

Model 

Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2030 2040 2050 

$/car $172 $319 $463 $591 $723 $1,051 $1,357 $1,658 $1,947 $1,931 $1,931 $1,931 

$/truck $49 $180 $292 $407 $753 $1,068 $1,373 $1,670 $1,944 $1,928 $1,928 $1,928 

Combined $126 $268 $402 $527 $734 $1,057 $1,362 $1,662 $1,946 $1,930 $1,930 $1,930 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 409 of 770

b. Annual Costs of the Proposed National Program 

The costs presented here represent the incremental costs for newly added technology to 

comply with the proposed program. Together with the projected increases in car and truck sales, 

the increases in per-car and per-truck average costs shown in Table III-63, above result in the 

total annual costs presented in Table III-64 below. Note that the costs presented in Table III-64 

do not include the fuel savings that consumers would experience as a result of driving a vehicle 

with improved fuel economy. Those impacts are presented in Section III.H.4. Note also that the 

costs presented here represent costs estimated to occur presuming that the proposed MY 2025 

standards would continue in perpetuity. Any changes to the proposed standards would be 

considered as part of a future rulemaking. In other words, the proposed standards do not apply 

only to 2017-2025 model year vehicles - they do, in fact, apply to all 2025 and later model year 

vehicles. 

Table III-64 Undiscounted Annual Costs, & Proposed Program Costs Discounted 

back to 2012 (millions of 2009 dollars) 

Calendar 

Year Cars Truck 

Total 

Annual 

Costs 

2017 $1,710 $283 $2,000

2018 $3,160 $1,020 $4,180

2019 $4,630 $1,630 $6,260

2020 $6,090 $2,280 $8,370

2021 $7,600 $4,280 $11,900

2022 $11,300 $6,090 $17,400

2023 $14,900 $7,810 $22,700

2024 $18,700 $9,480 $28,200

2025 $22,500 $11,100 $33,600

2030 $24,200 $11,500 $35,700

2040 $27,200 $12,500 $39,800

2050 $30,600 $14,100 $44,600

NPV, 3% $371,000 $174,000 $545,000
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 410 of 770

NPV, 7% $162,000 $76,600 $239,000

Annual costs represent undiscounted values; net present values 

represent annual costs discounted to 2012. 

3. Cost per Ton of Emissions Reduced (Sherwood) 

EPA has calculated the cost per ton of GHG reductions associated with the proposed 

GHG standards on a CO2eq basis using the costs and the emissions reductions described in 

Section III.F. These values are presented in Table III-65 for cars, trucks and the combined fleet. 

The cost per metric ton of GHG emissions reductions has been calculated in the years 2020, 

2030, 2040, and 2050 using the annual vehicle compliance costs and emission reductions for 

each of those years. The value in 2050 represents the long-term cost per ton of the emissions 

reduced. EPA has also calculated the cost per metric ton of GHG emission reductions including 

the savings associated with reduced fuel consumption (presented below in Section III.H.4). This 

latter calculation does not include the other benefits associated with this program such as those 

associated with energy security benefits as discussed later in Section III. By including the fuel 

savings, the cost per ton is generally less than $0 since the estimated value of fuel savings 

outweighs the program costs. 

Table III-65 Annual Cost per Metric Ton of CO2eq Reduced (2009 dollars) 

Calendar 

Year 

Undiscounted 

Annual Costs 

($millions) 

Undiscounted Annual 

Pre-tax Fuel Savings 

($millions) 

Annual CO2eq 

Reduction 

(mmt) 

$/ton 

(w/o fuel 

savings) 

$/ton 

(w/ fuel 

savings 

Cars 

2020 $6,090 $4,730 19 $323 $72 

2030 $24,200 $55,900 188 $129 -$168 

2040 $27,200 $95,400 297 $91 -$229 

2050 $30,600 $124,000 351 $87 -$266 

Trucks 

2020 $2,280 $2,300 9 $243 -$2 

2030 $11,500 $35,000 118 $98 -$200 

2040 $12,500 $60,700 188 $66 -$256 

2050 $14,100 $80,900 229 $62 -$292 

Combined 

2020 $8,370 $7,030 28 $297 $47 

2030 $35,700 $90,900 306 $117 -$180 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 411 of 770

2040 $39,800 $156,000 486 $82 -$239 

2050 $44,600 $204,000 580 $77 -$275 

4. Reduction in Fuel Consumption and its Impacts 

a. What Are the Projected Changes in Fuel Consumption? 

The proposed CO2 standards will result in significant improvements in the fuel efficiency 

of affected vehicles. Drivers of those vehicles will see corresponding savings associated with 

reduced fuel expenditures. EPA has estimated the impacts on fuel consumption for both the 

tailpipe CO2 standards and the A/C credit program. While gasoline consumption would decrease 

under the proposed GHG standards, electricity consumption would increase slightly due the 

small penetration of EVs and PHEVs (1-3% for the 2021 and 2025 MYs). The fuel savings 

includes both the gasoline consumption reductions and the electricity consumption increases. 

Note that the total number of miles that vehicles are driven each year is different under the 

control case than in the reference case due to the “rebound effect,” which is discussed in Section 

III.H.4.c and in Chapter 4 of the draft joint TSD. EPA also notes that consumers who drive more 

than our average estimates for vehicle miles traveled (VMT) will experience more fuel savings; 

consumers who drive less than our average VMT estimates will experience less fuel savings. 

The expected impacts on fuel consumption are shown in Table III-66. The gallons 

reduced and kilowatt hours increased (kWh) as shown in the tables reflect impacts from the 

proposed CO2 standards, including the A/C credit program, and include increased consumption 

resulting from the rebound effect. 

Table III-66 Fuel Consumption Impacts of the Proposed Standards and A/C Credit 

Programs 

Calendar Year 

Petroleum-based 

Gasoline Reference 

(million gallons) 

Petroleum-based 

Gasoline Reduced

(million gallons) 

Electricity Increased

(kWh) 

2017 133,808 191 113

2018 132,789 626 338

2019 131,894 1,294 680

2020 131,336 2,231 1,154

2021 131,278 3,622 1,766
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 412 of 770

2022 131,370 5,379 2,907

2023 131,898 7,498 4,600

2024 132,569 9,951 6,871

2025 133,612 12,759 9,755

2030 142,185 26,327 24,068

2040 161,688 42,411 42,313

2050 187,307 50,722 51,203

Total 5,158,999 983,847 948,660

b. What are the Fuel Savings to the Consumer? 

Using the fuel consumption estimates presented in Section III.H.4.a, EPA can calculate 

the monetized fuel savings associated with the proposed standards. To do this, we multiply 

reduced fuel consumption in each year by the corresponding estimated average fuel price in that 

year, using the reference case taken from the AEO 2011 Final Release.495 These estimates do 

not account for the significant uncertainty 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. 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 gasoline prices. Since the post-tax gasoline prices are the prices paid at fuel pumps, the 

fuel savings calculated using these prices represent the savings consumers would see. The pretax fuel savings are those savings that society would see. Assuming no change in gasoline tax 

rates, the difference between these two columns represents the reduction in fuel tax revenues that 

will be received by state and federal governments - about $81 million in 2017 and $19 billion by 

2050. These results are shown in Table III-67. Note that in Section III.H.9, the overall benefits 

and costs of the proposal are presented and, for that reason, only the pre-tax fuel savings are 

presented there. 

 495 In the Preface to AEO 2011, the Energy Information Administration describes the reference case. They state 

that, “Projections by EIA are not statements of what will happen but of what might happen, given the assumptions 

and methodologies used for any particular scenario. The Reference case projection is a business-as-usual trend 

estimate, given known technology and technological and demographic trends. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 413 of 770

Table III-67 Undiscounted Annual Fuel Savings, & Proposed Program Fuel Savings 

Discounted back to 2012 (millions of 2009 dollars) 

Calendar 

Year 

Gasoline 

Savings 

(pre-tax) 

Gasoline 

Savings 

(taxed) 

Electricity 

Costs 

Total Fuel 

Savings 

(pre-tax) 

Total Fuel 

Savings 

(taxed) 

2017 $572 $653 $10.9 $561 $642 

2018 $1,910 $2,180 $32.1 $1,870 $2,140 

2019 $4,020 $4,550 $64.6 $3,960 $4,490 

2020 $7,030 $7,940 $111 $6,920 $7,830 

2021 $11,400 $12,900 $170 $11,300 $12,800 

2022 $17,200 $19,600 $282 $17,000 $19,300 

2023 $24,300 $27,400 $451 $23,900 $27,000 

2024 $32,800 $36,900 $680 $32,100 $36,200 

2025 $42,700 $47,600 $985 $41,700 $46,600 

2030 $90,900 $101,000 $2,530 $88,300 $98,400 

2040 $156,000 $172,000 $4,850 $151,000 $167,000 

2050 $204,000 $223,000 $6,360 $198,000 $216,000 

NPV, 3% $1,620,000 $1,790,000 $47,600 $1,570,000 $1,740,000 

NPV, 7% $619,000 $684,000 $17,700 $601,000 $667,000 

Annual values represent undiscounted values; net present values represent annual costs discounted to 2012. 

As shown in Table III-67, the agencies are projecting that consumers would realize very 

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

paragraphs of Section III.H.1, it is a conundrum from an economic perspective that these large 

fuel savings have not been provided by automakers and purchased by consumers. A number of 

behavioral and market phenomena may lead to this disparity between the fuel economy that 

makes financial sense to consumers and the fuel economy they purchase. Regardless how 

consumers make their decisions on how much fuel economy to purchase, EPA expects that, in 

the aggregate, they will gain these fuel savings, which will provide actual money in consumers’ 

pockets. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 414 of 770

c. VMT Rebound Effect 

The rebound effect refers to the increase in vehicle use that results if an increase in fuel 

efficiency lowers the cost per mile of driving. For this proposal, EPA is using an estimate of 10 

percent for the rebound effect (i.e., we assume a 10 percent decrease in fuel cost per mile from 

our proposed standards would result in a 1 percent increase in VMT). 

As we discussed in the 2012-2016 rulemaking and in Chapter 4 of the Joint TSD, this 

value was not derived from a single point estimate from a particular study, but instead represents 

a reasonable compromise between the historical estimates and the projected future estimates. 

This value is consistent with the rebound estimate for the most recent time period analyzed in the 

Small and Van Dender 2007 paper,496 and falls within the range of the larger body of historical 

work on the rebound effect.497 Recent work by David Greene on the rebound effect for lightduty vehicles in the U.S. supports the hypothesis that the rebound effect is decreasing over time, 498 which could mean that rebound estimates based on recent time period data may be more 

reliable than historical estimates that are based on older time period data. New work by Hymel, 

Small, and Van Dender also supports the theory that the rebound effect is declining over time, 

although the Hymel et al. estimates are higher than the 2007 Small and Van Dender estimates.499 

Furthermore, by using an estimate of the future rebound effect, analysis by Small and Greene 

show that the rebound effect could be in the range of 5% or lower.500 

Most studies that estimate the rebound effect use the fuel cost per mile of driving or 

gasoline prices as a surrogate for fuel efficiency. Recent work conducted by Kenneth 

Gillingham, however, provides suggestive evidence that consumers may be less responsive to 

changes in fuel efficiency than to changes in fuel prices.501 While this research pertains 

specifically to California, this finding suggests that the common assumption that consumers 

respond similarly to changes in gasoline prices and changes in fuel efficiency may overstate the 

potential rebound effect. Additional research is needed in this area, and EPA requests comments 

and data on this topic. 

 496 Small, K. and K. Van Dender, 2007. “Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound 

Effect”, The Energy Journal, vol. 28, no. 1, pp. 25-51 (Docket EPA-HQ-OAR-XXX). 497 Sorrell, S. and J. Dimitropoulos, 2007. “UKERC Review of Evidence for the Rebound Effect, Technical Report 

2: Econometric Studies”, UKERC/WP/TPA/2007/010, UK Energy Research Centre, London, October (Docket 

EPA-HQ-OAR-XXX). 

498 Greene, David, “Rebound 2007: Analysis of National Light-Duty Vehicle Travel Statistics,” February 9, 2010 

(Docket EPA-HQ-OAR-2009-0472-0220). This paper has been accepted for an upcoming special issue of Energy 

Policy, although the publication date has not yet been determined. 499 Hymel, Kent M., Kenneth A. Small, and Kurt Van Dender, “Induced demand and rebound effects in road 

transport,” Transportation Research Part B: Methodological, Volume 44, Issue 10, December 2010, Pages 1220-

1241, ISSN 0191-2615, DOI: 10.1016/j.trb.2010.02.007. 

500 Report by Kenneth A. Small of University of California at Irvine to EPA, “The Rebound Effect from Fuel 

Efficiency Standards: Measurement and Projection to 2030”, June 12, 2009 (Docket EPA-HQ-OAR-XXX). See 

also Greene, 2010. 

501 Gillingham, Kenneth. “The Consumer Response to Gasoline Price Changes: Empirical Evidence and Policy 

Implications.” Ph.D. diss., Stanford University, 2011. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 415 of 770

Another factor discussed by Gillingham is whether consumers actually respond the same 

way to an increase in the cost of driving compared to a decrease in the cost of driving. There is 

some evidence in the literature that consumers are more responsive to an increase in prices than 

to a decrease in prices.502,503,504 Furthermore, it is also possible that consumers respond more to a 

large shock than a small, gradual change in prices. Since these proposed standards would 

decrease the cost of driving gradually over time, it is possible that the rebound effect would be 

much smaller than some of the estimates included in the historical literature. More research in 

this area is also important, and EPA invites comment and data on this aspect of the rebound 

effect. 

Finally, for purposes of analyzing the proposed standards, EPA assumes the rebound 

effect will be the same whether a consumer is driving a conventional gasoline vehicle or a 

vehicle powered by grid electricity. We are not aware of any research that has examined 

consumer responses to changes in the cost per mile of driving that result from driving an electricpowered vehicle instead of a conventional gasoline vehicle. EPA requests comment and data on 

this topic. 

Chapter 4.2.5 of the Joint TSD reviews the relevant literature and discusses in more depth 

the reasoning for the rebound value used here. The rebound effect is also discussed in Section 

II.E of the preamble. While EPA has used a weight of evidence approach for determining that 10 

percent is a reasonable value to use for the rebound effect, EPA requests comments on this and 

alternative methodologies for estimating the rebound effect over the period that our proposed 

standards would go into effect. EPA also invites the submission of new data regarding estimates 

of the rebound effect. 

5. CO2 Emission Reduction Benefits 

EPA has assigned a dollar value to reductions in CO2 emissions using global estimates of 

the social cost of carbon (SCC). The SCC is an estimate of the monetized damages associated 

with an incremental increase in carbon emissions in a given year. It is intended to include (but is 

not limited to) changes in net agricultural productivity, human health, property damages from 

increased flood risk, and the value of ecosystem services due to climate change. The SCC 

estimates used in this analysis were developed through an interagency process that included 

EPA, DOT/NHTSA, and other executive branch entities, and concluded in February 2010. We 

first used these SCC estimates in the benefits analysis for the 2012-2016 light-duty GHG 

rulemaking; see 75 FR at 25520. We have continued to use these estimates in other rulemaking 

 502 Dargay, J.M.,Gately,D.,1997. “The demand for transportation fuels: imperfect price-reversibility?” 

Transportation Research Part B 31(1). 

503 Dermot Gately, 1993. "The Imperfect Price-Reversibility of World Oil Demand," The Energy Journal, 

International Association for Energy Economics, vol. 14(4), pages 163-182. 504 Sentenac-Chemin, E. (2010) Is the price effect on fuel consumption symmetric? Some evidence from an 

empirical study, Energy Policy (2010), doi:10.1016/j.enpol.2010.07.016 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 416 of 770

analyses, including the heavy-duty GHG rulemaking; see 76 FR at 57332. The SCC Technical 

Support Document (SCC TSD) provides a complete discussion of the methods used to develop 

these SCC estimates.505 

The interagency group selected four SCC values for use in regulatory analyses, which we 

have applied in this analysis: $5, $22, $36, and $67 per metric ton of CO2 emissions in 2010, in 

2009 dollars.506,507 The first three values are based on the average SCC from three integrated 

assessment models, at discount rates of 5, 3, and 2.5 percent, respectively. SCCs at several 

discount rates are included because the literature shows that the SCC is quite sensitive to 

assumptions about the discount rate, and because no consensus exists on the appropriate rate to 

use in an intergenerational context. The fourth value is the 95th percentile of the SCC from all 

three models at a 3 percent discount rate. It is included to represent higher-than-expected 

impacts from temperature change further out in the tails of the SCC distribution. Low 

probability, high impact events are incorporated into all of the SCC values through explicit 

consideration of their effects in two of the three models as well as the use of a probability density 

function for equilibrium climate sensitivity. Treating climate sensitivity probabilistically results 

in more high temperature outcomes, which in turn lead to higher projections of damages. 

The SCC increases over time because future emissions are expected to produce larger 

incremental damages as physical and economic systems become more stressed in response to 

greater climatic change. Note that the interagency group estimated the growth rate of the SCC 

directly using the three integrated assessment models rather than assuming a constant annual 

growth rate. This helps to ensure that the estimates are internally consistent with other modeling 

assumptions. Table III-68 presents the SCC estimates used in this analysis. 

When attempting to assess the incremental economic impacts of carbon dioxide 

emissions, the analyst faces a number of serious challenges. A recent report from the National 

Academies of Science points out that any assessment will suffer from uncertainty, speculation, 

and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past 

and future emissions on the climate system, (3) the impact of changes in climate on the physical 

 505 Docket ID EPA-HQ-OAR-2009-0472-114577, Technical Support Document: Social Cost of Carbon for 

Regulatory Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, 

with participation by Council of Economic Advisers, Council on Environmental Quality, Department of Agriculture, 

Department of Commerce, Department of Energy, Department of Transportation, Environmental Protection Agency, 

National Economic Council, Office of Energy and Climate Change, Office of Management and Budget, Office of 

Science and Technology Policy, and Department of Treasury (February 2010). Also available at 

http://epa.gov/otaq/climate/regulations.htm [Planning to add to 2017 rule docket; updated reference needed] 506 The interagency group decided that these estimates apply only to CO2 emissions. Given that warming profiles 

and impacts other than temperature change (e.g., ocean acidification) vary across GHGs, the group concluded 

“transforming gases into CO2-equivalents using GWP, and then multiplying the carbon-equivalents by the SCC, 

would not result in accurate estimates of the social costs of non-CO2 gases” (SCC TSD, pg 13). 507 The SCC estimates were converted from 2007 dollars to 2008 dollars using a GDP price deflator (1.021) and 

again to 2009 dollars using a GDP price deflator (1.009) obtained from the Bureau of Economic Analysis, National 

Income and Product Accounts Table 1.1.4, Prices Indexes for Gross Domestic Product. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 417 of 770

and biological environment, and (4) the translation of these environmental impacts into 

economic damages.508 As a result, any effort to quantify and monetize the harms associated with 

climate change will raise serious questions of science, economics, and ethics and should be 

viewed as provisional. 

The interagency group noted a number of limitations to the SCC analysis, including the 

incomplete way in which the integrated assessment models capture catastrophic and noncatastrophic impacts, their incomplete treatment of adaptation and technological change, 

uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk 

aversion. The limited amount of research linking climate impacts to economic damages makes 

the interagency modeling exercise even more difficult. The interagency group hopes that over 

time researchers and modelers will work to fill these gaps and that the SCC estimates used for 

regulatory analysis by the Federal government will continue to evolve with improvements in 

modeling. 

Another limitation of the GHG benefits analysis in this proposed rule is that it does not 

monetize the impacts associated with the non-CO2 GHG reductions expected under the proposed 

standards (in this case, nitrous oxides, methane, and hydorfluorocarbons). The interagency 

group did not estimate the social costs of non-CO2 GHG emissions when it developed the current 

social cost of CO2 values. EPA recently requested comment on a methodology to estimate the 

benefits associated with non-CO2 GHG reductions under the proposed New Source Performance 

Standards (NSPS) for oil and gas exploration (76 FR at 52792). Referred to as the “global 

warming potential (GWP) approach,” the calculation uses the GWP of the non-CO2 gas to 

estimate CO2 equivalents and then multiplies these CO2 equivalent emission reductions by the 

social cost of CO2. 

EPA presented and requested comment on the GWP approach in the NSPS proposal as an 

interim method to produce estimates of the social cost of methane until the Administration 

develops such values. Similarly, we request comments in this proposed rulemaking on using the 

GWPs as an interim approach and more broadly about appropriate methods to monetize the 

climate benefits of non-CO2 GHG reductions. 

In addition, the U.S. government intends to revise the SCC estimates, taking into account 

new research findings that were not included in the first round, and has set a preliminary goal of 

revisiting the SCC values in the next few years or at such time as substantially updated models 

become available, and to continue to support research in this area. In particular, DOE and EPA 

hosted a series of workshops to help motivate and inform this process.509 The first workshop 

 508 National Research Council (2009). Hidden Costs of Energy: Unpriced Consequences of Energy Production and 

Use. National Academies Press. See docket ID EPA-HQ-OAR-2009-0472-11486. 509 Improving the Assessment and Valuation of Climate Change Impacts for Policy and Regulatory Analysis, held 

November 18-19, 2010 and January 27-28, 2011. Materials available at: 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 418 of 770

focused on conceptual and methodological issues related to integrated assessment modeling and 

valuing climate change impacts, along with methods of incorporating these estimates into policy 

analysis. 

Applying the global SCC estimates, shown in Table III-68, to the estimated reductions in 

CO2 emissions under the proposed standards, we estimate the dollar value of the GHG related 

benefits for each analysis year. For internal consistency, the annual benefits are discounted back 

to net present value terms using the same discount rate as each SCC estimate (i.e., 5%, 3%, and 

2.5%) rather than 3% and 7%.510 These estimates are provided in Table III-69. 

Table III-68: Social Cost of CO2, 2017 – 2050a

 (in 2009 dollars per Metric Ton) 

YEAR 

DISCOUNT RATE AND STATISTIC 

5% Average 3% Average 2.5% Average 3% 

95th Percentile 

2017 $6.36 $25.59 $40.94 $78.28

2020 $7.01 $27.10 $42.98 $83.17 

2025 $8.53 $30.43 $47.28 $93.11 

2030 $10.05 $33.75 $51.58 $103.06 

2035 $11.57 $37.08 $55.88 $113.00 

2040 $13.09 $40.40 $60.19 $122.95 

2045 $14.63 $43.34 $63.59 $131.66 

2050 $16.18 $46.27 $66.99 $140.37 a

 The SCC values are dollar-year and emissions-year specific. 

Table III-69: Undiscounted Annual Monetized CO2 Benefits of Proposed Vehicle Program, 

Annual CO2 Emission Reductionsa

 & CO2 Benefits Discounted back to 2012 (dollar values 

in Millions of 2009$) 

YEAR 

CO2

EMISSIONS 

REDUCTION 

(MMT) 

BENEFITS 

Avg SCC at 

5% ($6-$16)a

Avg SCC at 3% 

($26-$46)a

Avg SCC at 

2.5% ($41-$67)a

95th percentile 

SCC at 3% 

($78-$140)a

2017 2.0 $13 $52 $83 $159

2018 6.7 $44 $175 $279 $536

2019 13.9 $94 $369 $587 $1,130

2020 23.9 $168 $649 $1,030 $1,990

2021 38.9 $285 $1,080 $1,710 $3,320

 http://yosemite.epa.gov/ee/epa/eerm.nsf/vwRepNumLookup/EE-0564?OpenDocument and 

http://yosemite.epa.gov/ee/epa/eerm.nsf/vwRepNumLookup/EE-0566?OpenDocument

510 It is possible that other benefits or costs of final regulations unrelated to CO2 emissions will be discounted at rates 

that differ from those used to develop the SCC estimates. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 419 of 770

2022 57.6 $439 $1,640 $2,580 $5,020

2023 80.0 $634 $2,330 $3,640 $7,130

2024 105.7 $869 $3,150 $4,910 $9,630

2025 135.0 $1,150 $4,110 $6,380 $12,600

2030 276.2 $2,770 $9,320 $14,200 $28,500

2040 442.1 $5,790 $17,900 $26,600 $54,400

2050 528.6 $8,550 $24,500 $35,400 $74,200

Net Present 

Valueb $34,200 $179,000 $306,000 $546,000

Notes: 

a Except for the last row (net present value), the SCC values are dollar-year and emissions-year specific. b Net present value of reduced CO2 emissions is calculated differently from other benefits. The same discount rate 

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

present value of SCC for internal consistency. Refer to the SCC TSD for more detail. 

6. Non-Greenhouse Gas Health and Environmental Impacts 

This section presents EPA’s analysis of the non-GHG health and environmental impacts 

that can be expected to occur as a result of the proposed 2017-2025 light-duty vehicle GHG 

standards. CO2 emissions are predominantly the byproduct of fossil fuel combustion processes 

that also produce criteria and hazardous air pollutants. The vehicles that are subject to the 

proposed standards are also significant sources of mobile source air pollution such as direct PM, 

NOX, VOCs and air toxics. The proposed standards would affect exhaust emissions of these 

pollutants from vehicles. They would also affect emissions from upstream sources related to 

changes in fuel consumption. Changes in ambient ozone, PM2.5, and air toxics that would result 

from the proposed standards are expected to affect human health in the form of premature deaths 

and other serious human health effects, as well as other important public health and welfare 

effects. 

It is important to quantify the health and environmental impacts associated with the 

proposed standard because a failure to adequately consider these ancillary co-pollutant impacts 

could lead to an incorrect assessment of their net costs and benefits. Moreover, co-pollutant 

impacts tend to accrue in the near term, while any effects from reduced climate change mostly 

accrue over a time frame of several decades or longer. 

EPA typically quantifies and monetizes the health and environmental impacts related to 

both PM and ozone in its regulatory impact analyses (RIAs) when possible. However, EPA was 

unable to do so in time for this proposal. EPA attempts to make emissions and air quality 

modeling decisions early in the analytical process so that we can complete the photochemical air 

quality modeling and use that data to inform the health and environmental impacts analysis. 

Resource and time constraints precluded the Agency from completing this work in time for the 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 420 of 770

proposal. Instead, EPA is using PM-related benefits-per-ton values as an interim approach to 

estimating the PM-related benefits of the proposal. EPA also provides a characterization of 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 PM-related benefits-perton values used to monetize the PM-related co-benefits associated with the proposal; the second 

explains what PM- and ozone-related health and environmental impacts EPA will quantify and 

monetize in the analysis for the final rule. EPA bases its analyses on peer-reviewed studies of air 

quality and health and welfare effects and peer-reviewed studies of the monetary values of public 

health and welfare improvements, and is generally consistent with benefits analyses performed 

for the analysis of the final Cross-State Air Pollution Rule,511 the final 2014-2018 MY HeavyDuty Vehicle Greenhouse Gas Rule,512 and the final Portland Cement National Emissions 

Standards for Hazardous Air Pollutants (NESHAP) RIA.513 

Though EPA is characterizing the changes in emissions associated with toxic pollutants, 

we will not be able to quantify or monetize the human health effects associated with air toxic 

pollutants for either the proposal or the final rule analyses. Please refer to Section III.G for more 

information about the air toxics emissions impacts associated with the proposed standards. 

a. Economic Value of Reductions in Criteria Pollutants 

As described in Section III.G, the proposed standards would reduce emissions of several 

criteria and toxic pollutants and precursors. In this analysis, EPA estimates the economic value 

of the human health benefits associated with reducing PM2.5 exposure. Due to analytical 

limitations, this analysis does not estimate benefits related to other criteria pollutants (such as 

ozone, NO2 or SO2) or toxics pollutants, nor does it monetize all of the potential health and 

welfare effects associated with PM2.5. 

This analysis uses a “benefit-per-ton” method to estimate a selected suite of PM2.5-related 

health benefits described below. These PM2.5 benefit-per-ton estimates provide the total 

monetized human health benefits (the sum of premature mortality and premature morbidity) of 

reducing one ton of directly emitted PM2.5, or its precursors (such as NOX, SOX, and VOCs), 

from a specified source. Ideally, the human health benefits would be estimated based on changes 

in ambient PM2.5 as determined by full-scale air quality modeling. However, this modeling was 

not possible in the timeframe for this proposal. 

 511 Final Cross-State Air Pollution Rule. (76 FR 48208, August 8, 2011). 512 U.S. Environmental Protection Agency. (2011). Final Rulemaking to Establish Heavy-Duty Vehicle Greenhouse 

Gas Emission Standards and Corporate Average Fuel Economy Standards: Regulatory Impact Analysis, 

Assessment and Standards Division, Office of Transportation and Air Quality, EPA-420-R-10-009, July 2011. 

Available on the internet: http://www.epa.gov/otaq/climate/regulations/420r10009.pdf 513 U.S. Environmental Protection Agency (U.S. EPA). 2010. Regulatory Impact Analysis: National Emission 

Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. Office of Air Quality 

Planning and Standards, Research Triangle Park, NC. Augues. Available on the Internet at < 

http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementfinalria.pdf >. EPA-HQ-OAR-2009-0472-0241 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 421 of 770

The dollar-per-ton estimates used in this analysis are provided in Table III-70. In the 

summary of costs and benefits, Section III.H.9 of this preamble, EPA presents the monetized 

value of PM-related improvements associated with the proposal. 

Table III-70 Benefits-per-ton Values (2009$) Derived Using the American Cancer Society 

Cohort Study for PM-related Premature Mortality (Pope et al., 2002)a

Yearc All Sourcesd Stationary (Non-EGU) 

Sourcese 

Mobile Sources 

SOX VOC NOX Direct PM2.5 NOX Direct PM2.5 

Estimated Using a 3 Percent Discount Rateb

2015 $29,000 $1,200 $4,800 $230,000 $5,000 $280,000 

2020 $32,000 $1,300 $5,300 $250,000 $5,500 $300,000 

2030 $38,000 $1,600 $6,300 $290,000 $6,600 $360,000 

2040 $44,000 $1,900 $7,500 $340,000 $7,900 $430,000 

Estimated Using a 7 Percent Discount Rateb

2015 $27,000 $1,100 $4,400 $210,000 $4,600 $250,000 

2020 $29,000 $1,200 $4,800 $220,000 $5,000 $280,000 

2030 $34,000 $1,400 $5,700 $260,000 $6,000 $330,000 

2040 $40,000 $1,700 $6,800 $310,000 $7,200 $390,000 a The benefit-per-ton estimates presented in this table are based on an estimate of premature mortality derived from 

the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on the Six-Cities study (Laden et al., 

2006), the values would be approximately two-and-a-half times larger. See below for a description of these studies. b

 The benefit-per-ton estimates presented in this table assume either a 3 percent or 7 percent discount rate in the 

valuation of premature mortality to account for a twenty-year segmented cessation lag. 

c

 Benefit-per-ton values were estimated for the years 2015, 2020, and 2030. For intermediate years, such as 2017 

(the year the standards begin), we interpolated exponentially. For years beyond 2030 (including 2040), EPA and 

NHTSA extrapolated exponentially based on the growth between 2020 and 2030. 

d

 Note that the benefit-per-ton value for SOx is based on the value for Stationary (Non-EGU) sources; no SOx value 

was estimated for mobile sources. The benefit-per-ton value for VOCs was estimated across all sources. e

 Non-EGU denotes stationary sources of emissions other than electric generating units. 

The benefit per-ton technique has been used in previous analyses, including EPA’s 2012-

2016 Light-Duty Vehicle Greenhouse Gas Rule,514 515 and the Portland Cement National 

 514 U.S. Environmental Protection Agency (U.S. EPA), 2010. Regulatory Impact Analysis, Final Rulemaking to 

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

Standards. Office of Transportation and Air Quality. April. Available at 

http://www.epa.gov/otaq/climate/regulations/420r10009.pdf. EPA-420-R-10-009 515 U.S. Environmental Protection Agency (U.S. EPA). 2008. Regulatory Impact Analysis, 2008 National Ambient 

Air Quality Standards for Ground-level Ozone, Chapter 6. Office of Air Quality Planning and Standards, Research 

Triangle Park, NC. March. Available at <http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 422 of 770

Emissions Standards for Hazardous Air Pollutants (NESHAP) RIA.516 Table III-71 shows the 

quantified and unquantified PM2.5-related co-benefits captured in those benefit-per-ton estimates. 

Table III-71 Human Health and Welfare Effects of PM2.5

Pollutant / 

Effect 

Quantified and Monetized 

in Primary Estimates 

Unquantified Effects 

Changes in: 

PM2.5 

Adult premature mortality 

Bronchitis: chronic and acute 

Hospital admissions: respiratory and 

cardiovascular 

Emergency room visits for asthma 

Nonfatal heart attacks (myocardial infarction) 

Lower and upper respiratory illness 

Minor restricted-activity days 

Work loss days 

Asthma exacerbations (asthmatic population) 

Infant mortality 

Subchronic bronchitis cases 

Low birth weight 

Pulmonary function 

Chronic respiratory diseases other than chronic 

bronchitis 

Non-asthma respiratory emergency room visits 

Visibility 

Household soiling 

Consistent with the cost-benefit analysis that accompanied the NO2 NAAQS,517,518 the 

benefits estimates utilize the concentration-response functions as reported in the epidemiology 

literature. To calculate the total monetized impacts associated with quantified health impacts, 

EPA applies values derived from a number of sources. For premature mortality, EPA applies a 

value of a statistical life (VSL) derived from the mortality valuation literature. For certain health 

impacts, such as chronic bronchitis and a number of respiratory-related ailments, EPA applies 

willingness-to-pay estimates derived from the valuation literature. For the remaining health 

impacts, EPA applies values derived from current cost-of-illness and/or wage estimates. 

A more detailed description of the benefit-per-ton estimates is provided in Chapter 4 of 

the Draft Joint TSD that accompanies this rulemaking. Readers interested in reviewing the 

complete methodology for creating the benefit-per-ton estimates used in this analysis can consult 

 516 U.S. Environmental Protection Agency (U.S. EPA). 2010. Regulatory Impact Analysis: National Emission 

Standards for Hazardous Air Pollutants from the Portland Cement Manufacturing Industry. Office of Air Quality 

Planning and Standards, Research Triangle Park, NC. Augues. Available on the Internet at < 

http://www.epa.gov/ttn/ecas/regdata/RIAs/portlandcementfinalria.pdf >. EPA-HQ-OAR-2009-0472-0241 517 Although we summarize the main issues in this chapter, we encourage interested readers to see benefits chapter 

of the RIA that accompanied the NO2 NAAQS for a more detailed description of recent changes to the PM benefits 

presentation and preference for the no-threshold model. Note that the cost-benefit analysis was prepared solely for 

purposes of fulfilling analysis requirements under Executive Order 12866 and was not considered, or otherwise 

played any part, in the decision to revise the NO2 NAAQS. 

518 U.S. Environmental Protection Agency (U.S. EPA). 2010. Final NO2 NAAQS Regulatory Impact Analysis 

(RIA). Office of Air Quality Planning and Standards, Research Triangle Park, NC. April. Available on the Internet 

at http://www.epa.gov/ttn/ecas/regdata/RIAs/FinalNO2RIAfulldocument.pdf. Accessed March 15, 2010. EPA-HQOAR-2009-0472-0237U.S. Environmental Protection Agency (U.S. EPA). 2009. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 423 of 770

the Technical Support Document (TSD)519 accompanying the recent final ozone NAAQS RIA 

(U.S. EPA, 2008).520 Readers can also refer to Fann et al. (2009)521 for a detailed description of 

the benefit-per-ton methodology.522 

As described in the documentation for the benefit per-ton estimates cited above, national 

per-ton estimates were developed for selected pollutant/source category combinations. The perton values calculated therefore apply only to tons reduced from those specific pollutant/source 

combinations (e.g., NO2 emitted from mobile sources; direct PM emitted from stationary 

sources). Our estimate of PM2.5 benefits is therefore based on the total direct PM2.5 and PMrelated precursor emissions controlled by sector and multiplied by each per-ton value. 

The benefit-per-ton estimates are subject to a number of assumptions and uncertainties: 

 They do not reflect local variability in population density, meteorology, exposure, 

baseline health incidence rates, or other local factors that might lead to an 

overestimate or underestimate of the actual benefits of controlling fine 

particulates. EPA will conduct full-scale air quality modeling for the final 

rulemaking in an effort to capture this variability. 

 This analysis assumes that all fine particles, regardless of their chemical 

composition, are equally potent in causing premature mortality. This is an 

important assumption, because PM2.5 produced via transported precursors emitted 

from stationary sources may differ significantly from direct PM2.5 released from 

diesel engines and other industrial sources, but no clear scientific grounds exist 

for supporting differential effects estimates by particle type. 

 This analysis assumes that the health impact function for fine particles is linear 

within the range of ambient concentrations under consideration. Thus, the 

estimates include health benefits from reducing fine particles in areas with varied 

concentrations of PM2.5, including both regions that are in attainment with fine 

 519 U.S. Environmental Protection Agency (U.S. EPA). 2008. Technical Support Document: Calculating Benefit 

Per-Ton estimates, Ozone NAAQS Docket #EPA-HQ-OAR-2007-0225-0284. Office of Air Quality Planning and 

Standards, Research Triangle Park, NC. March. Available on the Internet at <http://www.regulations.gov>. 520 U.S. Environmental Protection Agency (U.S. EPA). 2008. Regulatory Impact Analysis, 2008 National Ambient 

Air Quality Standards for Ground-level Ozone, Chapter 6. Office of Air Quality Planning and Standards, Research 

Triangle Park, NC. March. Available at <http://www.epa.gov/ttn/ecas/regdata/RIAs/6-ozoneriachapter6.pdf>. Note 

that the cost-benefit analysis was prepared solely for purposes of fulfilling analysis requirements under Executive 

Order 12866 and was not considered, or otherwise played any part, in the decision to revise the Ozone NAAQS. 521 Fann, N. et al. (2009). The influence of location, source, and emission type in estimates of the human health 

benefits of reducing a ton of air pollution. Air Qual Atmos Health. Published online: 09 June, 2009. 522 The values included in this report are different from those presented in the article cited above. Benefits methods 

change to reflect new information and evaluation of the science. Since publication of the June 2009 article, EPA has 

made two significant changes to its benefits methods: (1) We no longer assume that a threshold exists in PM-related 

models of health impacts; and (2) We have revised the Value of a Statistical Life to equal $6.3 million (year 2000$), 

up from an estimate of $5.5 million (year 2000$) used in the June 2009 report. Please refer to the following website 

for updates to the dollar-per-ton estimates: http://www.epa.gov/air/benmap/bpt.html 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 424 of 770

particle standard and those that do not meet the standard down to the lowest 

modeled concentrations. 

 There are several health benefits categories that EPA was unable to quantify due 

to limitations associated with using benefits-per-ton estimates, several of which 

could be substantial. Because the NOX and VOC emission reductions associated 

with this proposal are also precursors to ozone, reductions in NOX and VOC 

would also reduce ozone formation and the health effects associated with ozone 

exposure. Unfortunately, ozone-related benefits-per-ton estimates do not exist 

due to issues associated with the complexity of the atmospheric air chemistry and 

nonlinearities associated with ozone formation. The PM-related benefits-per-ton 

estimates also do not include any human welfare or ecological benefits. Please 

refer to Chapter 6.3 of the DRIA that accompanies this proposal for a description 

of the agecy’s plan to quantify and monetize the PM- and ozone-related health 

impacts for the FRM and a description of the unquantified co-pollutant benefits 

associated with this rulemaking. 

 There are many uncertainties associated with the health impact functions used in 

this modeling effort. These include: within-study variability (the precision with 

which a given study estimates the relationship between air quality changes and 

health effects); across-study variation (different published studies of the same 

pollutant/health effect relationship typically do not report identical findings and in 

some instances the differences are substantial); the application of concentrationresponse functions nationwide (does not account for any relationship between 

region and health effect, to the extent that such a relationship exists); 

extrapolation of impact functions across population (we assumed that certain 

health impact functions applied to age ranges broader than that considered in the 

original epidemiological study); and various uncertainties in the concentrationresponse function, including causality and thresholds. These uncertainties may 

under- or over-estimate benefits. 

 EPA has investigated methods to characterize uncertainty in the relationship 

between PM2.5 exposure and premature mortality. EPA’s final PM2.5 NAAQS 

analysis provides a more complete picture about the overall uncertainty in PM2.5

benefits estimates. For more information, please consult the PM2.5 NAAQS RIA 

(Table 5.5).523

 The benefit-per-ton estimates used in this analysis incorporate projections of key 

variables, including atmospheric conditions, source level emissions, population, 

health baselines and incomes, technology. These projections introduce some 

uncertainties to the benefit per ton estimates. 

 523 U.S. Environmental Protection Agency. October 2006. Final Regulatory Impact Analysis (RIA) for the Final 

National Ambient Air Quality Standards for Particulate Matter. Prepared by: Office of Air and Radiation. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 425 of 770

 As described above, using the benefit-per-ton value derived from the ACS study 

(Pope et al., 2002) alone provides an incomplete characterization of PM2.5

benefits. When placed in the context of the Expert Elicitation results, this estimate 

falls toward the lower end of the distribution. By contrast, the estimated PM2.5

benefits using the coefficient reported by Laden in that author’s reanalysis of the 

Harvard Six Cities cohort fall toward the upper end of the Expert Elicitation 

distribution results. 

As mentioned above, emissions changes and benefits-per-ton estimates alone are not a 

good indication of local or regional air quality and health impacts, as there may be localized 

impacts associated with the proposed rulemaking. Additionally, the atmospheric chemistry 

related to ambient concentrations of PM2.5, ozone and air toxics is very complex. Full-scale 

photochemical modeling is therefore necessary to provide the needed spatial and temporal detail 

to more completely and accurately estimate the changes in ambient levels of these pollutants and 

their associated health and welfare impacts. As discussed above, timing and resource constraints 

precluded EPA from conducting a full-scale photochemical air quality modeling analysis in time 

for the NPRM. For the final rule, however, a national-scale air quality modeling analysis will be 

performed to analyze the impacts of the standards on PM2.5, ozone, and selected air toxics. The 

benefits analysis plan for the final rulemaking is discussed in the next section. 

b. Human Health and Environmental Benefits for the Final Rule 

i. Human Health and Environmental Impacts 

To model the ozone and PM air quality benefits of the final rule, EPA will use the 

Community Multiscale Air Quality (CMAQ) model (see Section III.G.5. for a description of the 

CMAQ model). The modeled ambient air quality data will serve as an input to the 

Environmental Benefits Mapping and Analysis Program (BenMAP).524 BenMAP is a computer 

program developed by EPA that integrates a number of the modeling elements used in previous 

RIAs (e.g., interpolation functions, population projections, health impact functions, valuation 

functions, analysis and pooling methods) to translate modeled air concentration estimates into 

health effects incidence estimates and monetized benefits estimates. 

Chapter 6.3 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 final light-duty vehicles standard. These include PM- and ozonerelated premature mortality, chronic bronchitis, nonfatal heart attacks, hospital admissions 

(respiratory and cardiovascular), emergency room visits, acute bronchitis, minor restricted 

activity days, and days of work and school lost. 

 524 Information on BenMAP, including downloads of the software, can be found at http://www.epa.gov/ttn/ecas/ 

benmodels.html. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 426 of 770

ii. Monetized Impacts 

To calculate the total monetized impacts associated with quantified health impacts, EPA 

applies values derived from a number of sources. For premature mortality, EPA applies a value 

of a statistical life (VSL) derived from the mortality valuation literature. For certain health 

impacts, such as chronic bronchitis and a number of respiratory-related ailments, EPA applies 

willingness-to-pay estimates derived from the valuation literature. For the remaining health 

impacts, EPA applies values derived from current cost-of-illness and/or wage estimates. Chapter 

6.3 in the DRIA that accompanies this proposal presents the monetary values EPA will apply to 

changes in the incidence of health and welfare effects associated with reductions in non-GHG 

pollutants that will occur when these GHG control strategies are finalized. 

iii. Other Unquantified Health and Environmental Impacts 

In addition to the co-pollutant health and environmental impacts EPA will quantify for 

the analysis of the final standard, there are a number of other health and human welfare 

endpoints that EPA will not be able to quantify or monetize because of current limitations in the 

methods or available data. These impacts are associated with emissions of air toxics (including 

benzene, 1,3-butadiene, formaldehyde, acetaldehyde, acrolein, and ethanol), ambient ozone, and 

ambient PM2.5 exposures. Chapter 6.3 of the DRIA lists these unquantified health and 

environmental impacts. 

While there will be impacts associated with air toxic pollutant emission changes that 

result from the final standard, EPA will not attempt to monetize those impacts. This is primarily 

because currently available tools and methods to assess air toxics risk from mobile sources at the 

national scale are not adequate for extrapolation to incidence estimations or benefits assessment. 

The best suite of tools and methods currently available for assessment at the national scale are 

those used in the National-Scale Air Toxics Assessment (NATA). The EPA Science Advisory 

Board specifically commented in their review of the 1996 NATA that these tools were not yet 

ready for use in a national-scale benefits analysis, because they did not consider the full 

distribution of exposure and risk, or address sub-chronic health effects.525 While EPA has since 

improved the tools, there remain critical limitations for estimating incidence and assessing 

benefits of reducing mobile source air toxics. EPA continues to work to address these 

limitations; however, EPA does not anticipate having methods and tools available for nationalscale application in time for the analysis of the final rules.526 

 525 Science Advisory Board. 2001. NATA – Evaluating the National-Scale Air Toxics Assessment for 1996 – an 

SAB Advisory. http://www.epa.gov/ttn/atw/sab/sabrev.html. 526 In April, 2009, EPA hosted a workshop on estimating the benefits of reducing hazardous air pollutants. This 

workshop built upon the work accomplished in the June 2000 Science Advisory Board/EPA Workshop on the 

Benefits of Reductions in Exposure to Hazardous Air Pollutants, which generated thoughtful discussion on 

approaches to estimating human health benefits from reductions in air toxics exposure, but no consensus was 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 427 of 770

7. Energy Security Impacts 

The proposed GHG standards require improvements in light-duty vehicle fuel efficiency 

which, in turn, will reduce overall fuel consumption and help to reduce U.S. petroleum imports. 

Reducing U.S. petroleum imports lowers both the financial and strategic risks caused by 

potential sudden disruptions in the supply of imported petroleum to the U.S. The economic 

value of reductions in these risks provides a measure of improved U.S. energy security. This 

section summarizes EPA’s estimates of U.S. oil import reductions and energy security benefits 

from this proposal. Additional discussion of this issue can be found in Chapter 4.2.8 of the Joint 

TSD. 

a. Implications of Reduced Petroleum Use on U.S. Imports 

In 2010, U.S. petroleum import expenditures represented 14 percent of total U.S. imports 

of all goods and services.527 These expenditures rose to 18 percent by April of 2011.528 In 2010, 

the United States imported 49 percent of the petroleum it consumed529, and the transportation 

sector accounted for 71 percent of total U.S. petroleum consumption. This compares to 

approximately 37 percent of total U.S. petroleum supplied by imports and 55 percent of U.S. 

petroleum consumption in the transportation sector in 1975.530 

 Requiring vehicle technology that reduces GHGs and fuel consumption in light-duty 

vehicles is expected to lower U.S. oil imports. EPA’s estimates of reductions in fuel 

consumption resulting from the proposed standards are discussed in Section III.H.3 above, and in 

EPA’s draft RIA.531 

The agencies conducted a detailed analysis of future changes in U.S. transportation fuel 

consumption, petroleum imports, and domestic fuel refining projected to occur under alternative 

economic growth and oil price scenarios reported by the EIA in its Annual Energy Outlook 

2011.532 On the basis of this analysis, we estimate that approximately 50 percent of the reduction 

in fuel consumption resulting from adopting improved GHG emission and fuel efficiency 

standards is likely to be reflected in reduced U.S. imports of refined fuel, while the remaining 50 

 reached on methods that could be implemented in the near term for a broad selection of air toxics. Please visit 

http://epa.gov/air/toxicair/2009workshop.html for more information about the workshop and its associated materials. 

527 http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTIMUS2&f=W 528 http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm 529 http://www.eia.gov/dnav/pet/pet_pri_rac2_dcu_nus_m.htm 530 Source: U.S. Department of Energy, Annual Energy Review 2008, Report No. DOE/EIA-0384(2008), Tables 5.1 

and 5.13c, June 26, 2009. 

530 Due to timing constraints, the analysis of energy security impacts was conducted with preliminary estimates of 

the fuel savings projected from this proposal. Relative to the gasoline savings presented in the proposal, the savings 

used for the energy security analysis were roughly 1% lower over the years modeled. 

532 Energy Information Administration, Annual Energy Outlook 2011, Reference Case and other scenarios, available 

at http://www.eia.gov/oiaf/aeo/tablebrowser/ (last accessed October 12, 2011). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 428 of 770

percent is expected to be reflected in reduced domestic fuel refining. Of this latter figure, 90 

percent is anticipated to reduce U.S. imports of crude petroleum for use as a refinery feedstock, 

while the remaining 10 percent is expected to reduce U.S. domestic production of crude 

petroleum. Thus, on balance, each gallon of fuel saved as a consequence of the GHG and fuel 

efficiency standards is anticipated to reduce total U.S. imports of petroleum by 0.95 gallons.533 

Table III-1 below compares EPA’s estimates of the reduction in imports of U.S. crude oil and 

petroleum-based products from this program to projected total U.S. imports for selected years. 

Table III-72 Projected Reductions from this Proposal and Total U.S. PetroleumBased Imports for Selected Years 

(Millions of Barrels per Day, mmbd) 

Year 

U.S. Petroleum-Based 

Reductions from the 

Proposal 

(mmbd) 

U.S. Total PetroleumBased Imports without 

the Proposal 

(mmbb) 

2020 0.138 9.26 

2030 1.63 8.94 

2040 2.63 NA 

2050 3.14 NA 

Note: NA –Not available, (forecasts reported in EIA’s Annual Energy Outlook 2011 extend only to 2035)

b. Energy Security Implications 

In order to understand the energy security implications of reducing U.S. petroleum 

imports, EPA worked with Oak Ridge National Laboratory (ORNL), which has developed 

approaches for evaluating the economic costs and energy security implications of oil use. The 

energy security estimates provided below are based upon a methodology developed in a peerreviewed study entitled, ”The Energy Security Benefits of Reduced Oil Use, 2006-2015,” 

completed in March 2008. This study is included as part of the docket for this proposal.534,535

When conducting its analysis, ORNL considered the full economic cost of importing 

petroleum into the United States. The economic cost of importing petroleum into the U.S. is 

defined to include two components in addition to the purchase price of petroleum itself. These 

are: (1) the higher costs for oil imports resulting from the effect of increasing U.S. import 

demand on the world oil price and on the market power of the Organization of the Petroleum 

 533 This figure is calculated as 0.50 + 0.50*0.9 = 0.50 + 0.45 = 0.95. 534 Leiby, Paul N., "Estimating the Energy Security Benefits of Reduced U.S. Oil Imports" Oak Ridge National 

Laboratory, ORNL/TM-2007/028, Final Report, 2008. (Docket EPA-HQ-OAR-2010-0162) 

535 The ORNL study “The Energy Security Benefits of Reduced Oil Use, 2006-2015," completed in March 2008, is 

an update version of the approach used for estimating the energy security benefits of U.S. oil import reductions 

developed in an ORNL 1997 Report by Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee, 

entitled “Oil Imports: An Assessment of Benefits and Costs." (Docket EPA-HQ-OAR-2010-0162) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 429 of 770

Exporting Countries (i.e., the “demand” or “monopsony” costs); and (2) the risk of reductions in 

U.S. economic output and disruption of the U.S. economy caused by sudden disruptions in the 

supply of imported petroleum to the U.S. (i.e., “macroeconomic disruption/adjustment costs”). 

In its analysis of energy security benefits from reducing U.S. petroleum imports, however, the 

agencies included only the latter component (discussed below). 

ORNL’s analysis of energy security benefits from reducing U.S. oil imports did not 

include an estimate of potential reductions in costs for maintaining a U.S. military presence to 

help secure stable oil supply from potentially vulnerable regions of the world because attributing 

military spending to particular missions or activities is difficult. Attempts to attribute some share 

of U.S. military costs to oil imports are further complicated by the need to estimate how those 

costs vary with incremental variations in U.S. oil imports. Several commenters for the 2012-

2016 light-duty vehicle proposal recommended that the agencies attempt to estimate the avoided 

U.S. military costs associated with reductions in U.S. oil imports. The agencies request comment 

on this issue, including whether there are new studies that credibly estimate the military cost of 

securing stable oil supplies and, if so, how should these new estimates be factored into this 

proposal’s energy security analysis. See Section 4.2.8 of the TSD for a more detailed discussion 

of the national security implications of this proposed rule. 

For this action, ORNL estimated energy security premiums by incorporating the most 

recently available AEO 2011 Reference Case oil price forecasts and market trends. Energy 

security premiums for the years 2020, 2030, 2035, 2040 and 2050 are presented in Table III-73 

as well as a breakdown of the components of the energy security premiums for each of these 

years.536 The components of the energy security premium and their values are discussed in detail 

in the Joint TSD Chapter 4.2.8. 

Table III-73 Energy Security Premiums in Selected Years (2009$/Barrel) 

Year 

(range) 

Monopsony Macroeconomic 

Disruption/Adjustment Costs 

Total Mid-Point 

2020 $11.12 

($3.78 - $21.21) 

$7.10 

($3.40 - $10.96) 

$18.22 

($9.53 - $29.06) 

2030 $10.91 

($3.74 - $20.47) 

$8.32 

($4.09 – $13.34) 

$19.23 

($10.51 - $29.02) 

2035 $10.11 

($3.51 - $18.85) 

$8.60 

($4.41 - $13.62) 

$18.71 

($10.30 – $28.20) 

2040 $10.11 

($3.51 - $18.85) 

$8.60 

($4.41 - $13.62) 

$18.71 

($10.30 – $28.20) 

 536 AEO 2011 forecasts energy market trends and values only to 2035. The energy security premium estimates post2035 were assumed to be the 2035 estimate. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 430 of 770

2050 $10.11 

($3.51 - $18.85) 

$8.60 

($4.41 - $13.62) 

$18.71 

($10.30 – $28.20) 

Note: Values in parentheses represent a 90% confidence interval around the central value. 

The literature on the energy security for the last two decades has routinely combined the 

monopsony and the macroeconomic disruption components when calculating the total value of 

the energy security premium. However, in the context of using a global social cost of carbon 

(SCC) value, the question arises: how should the energy security premium be determined when a 

global perspective is taken? Monopsony benefits represent avoided payments by the United 

States to oil producers in foreign countries that result from a decrease in the world oil price as the 

U.S. decreases its consumption of imported oil. 

Although there is clearly a benefit to the U.S. when considered from a domestic 

perspective, the decrease in price due to decreased demand in the U.S. also represents a loss to 

other countries. Given the redistributive nature of this monopsony effect from a global 

perspective, it is excluded in the energy security benefits calculations for this proposal. In 

contrast, the other portion of the energy security premium, the U.S. macroeconomic disruption 

and adjustment cost that arises from U.S. petroleum imports, does not have offsetting impacts 

outside of the U.S., and, thus, is included in the energy security benefits estimated for this 

proposal. To summarize, EPA has included only the macroeconomic disruption portion of the 

energy security benefits to estimate the monetary value of the total energy security benefits of 

this program. 

For this proposal, using EPA’s fuel consumption analysis in conjunction with ORNL’s 

energy security premium estimates,537,

538 the agencies’ developed estimates of the total energy 

security benefits for the years 2017 through 2050 as shown in Table III-74.539 

Table III-74. Undiscounted Annual Energy Security Benefits, & Proposed Program 

Benefits Discounted back to 2012 (2009$) 

Year Oil Imports 

Reduced 

(mmb) 

Benefits 

($Millions) 

2017 4.3 $29 

2018 14.2 $97 

2019 29.3 $204 

2020 50.5 $358 

 537 AEO 2011 forecasts energy market trends and values only to 2035. The energy security premium estimates post2035 were assumed to be the 2035 estimate. 

538 Due to timing constraints, the analysis of energy security impacts was conducted with preliminary estimates of 

the fuel savings projected from this proposal. Relative to the gasoline savings presented in the proposal, the savings 

used for the energy security analysis were roughly 1% lower over the years modeled. 

539 Estimated reductions in U.S. imports of finished petroleum products and crude oil are 95% of 50.6 million barrels 

(MMB) in 2020, 619 MMB in 2030, 1,000 MMB in 2040, and 1,195 MMB in 2050. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 431 of 770

2021 81.9 $593 

2022 122 $896 

2023 170 $1,270 

2024 225 $1,710 

2025 289 $2,240 

2030 595 $4,950 

2040 959 $8,250 

2050 1,147 $9,870 

NPV, 3% $84,900 

NPV, 7% $32,700 

Note: Annual values represent undiscounted 

benefits; net present values represent annual 

costs discounted to 2012. 

 The energy security analysis conducted for this proposal estimates that the world price of 

oil will fall modestly in response to lower U.S. demand for refined fuel. One potential result of 

this decline in the world price of oil would be an increase in the consumption of petroleum 

products, particularly outside the U.S. In addition, other fuels could be displaced from the 

increasing use of oil worldwide. For example, if a decline in the world oil price causes an 

increase in oil use in China, India, or another country’s industrial sector, this increase in oil 

consumption may displace natural gas usage. Alternatively, the increased oil use could result in a 

decrease in coal used to produce electricity. An increase in the consumption of petroleum 

products particularly outside the U.S., could lead to a modest increase in emissions of 

greenhouse gases, criteria air pollutants, and airborne toxics from their refining and use. 

However, lower usage of, for example, displaced coal would result in a decrease in greenhouse 

gas emissions. Therefore, any assessment of the impacts on GHG emissions from a potential 

increase in world oil demand would need to take into account the impacts on all portions of

global energy sector. The agencies’ analyses have not attempted to estimate these effects. 

Since EPA anticipates that more electric vehicles (EVs) and plug-in hybrid electric 

vehicles (PHEVs) will penetrate the U.S. automobile market over time as a result of this 

proposal, the Agency is considering analyzing the energy security implications of these vehicles 

and the fuels that they consume. These vehicles run on electricity either in whole (EVs), or in 

part (PHEVs), which displaces conventional transportation fuel such as gasoline and diesel. 

EPA does not have sufficient information for this proposal to conduct an analysis of the energy 

security implications of increased use of EVs/PHEVs, but is considering how to conduct this 

type of analysis in the future. The Agency recognizes that the fleet penetration of EV/PHEV’s 

will be relatively small in the time period of these standards (fewer than 3% of new vehicles in 

2025), but views establishing a framework for examining the energy security implications of 

these vehicles as important for longer-term analysis. 

Key questions that arise with increased use of electricity in vehicles in the U.S. include 

whether there is the potential for disruptions in electricity supply in general, or more specifically, 

from increased electrification of the U.S. vehicle fleet. Also, if there is the potential for supply 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 432 of 770

disruptions in electricity markets, how likely would the disruptions be associated with 

disruptions in the supply of oil? In addition, what is the overall expected impact, if any, of 

additional EV/PHEV use on the stability and flexibility of fuel and electricity markets? Finally, 

such analysis may also need to consider the source of electricity used to power EVs/PHEVs. 

EPA solicits comments on how to best conduct this type of analysis, including any studies or 

research that have been published on these issues. 

8. Additional Impacts 

There are other impacts associated with the CO2 emissions standards and associated 

reduced fuel consumption that vary with miles driven. Lower fuel consumption would, 

presumably, result in fewer trips to the filling station to refuel and, thus, time saved. The 

rebound effect, discussed in detail in Section III.H.4.c, produces additional benefits to vehicle 

owners in the form of consumer surplus from the increase in vehicle-miles driven, but may also 

increase the societal costs associated with traffic congestion, motor vehicle crashes, and noise. 

These effects are likely to be relatively small in comparison to the value of fuel saved as a result 

of the standards, but they are nevertheless important to include. Table III.H.8-1 summarizes the 

other economic impacts. Please refer to Preamble Section II.E and the Joint TSD that 

accompanies this rule for more information about these impacts and how EPA and NHTSA use 

them in their analyses. 

Table III.H.8-1 Additional Impacts Associated with the Light-Duty Vehicle GHG 

Program 

 ($Millions of 2007 dollars) 

2017 2020 2030 2040 2050 NPV, 3% NPV, 7%

Accidents, 

Noise, 

Congestion

$66 $848 $7,960 $12,500 $16,300 $136,000 $53,300

Value of 

Increased 

Drivinga

$92 $1,250 $13,700 $23,600 $33,300 $250,000 $95,400 

Value of Less 

Frequent 

Refueling

$24 $295 $3,890 $6,990 $9,320 $71,600 $27,100 

a Calculated using post-tax fuel prices. 

9. Summary of Costs and Benefits 

In this section, the agencies present a summary of costs, benefits, and net benefits of the 

proposed program. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 433 of 770

Table III-75 Undiscounted Annual Costs & Costs of the Proposed Program 

Discounted Back to 2012 at 3% and 7% Discount Rates (Millions, 2009$)a

 shows the estimated annual monetized costs of the proposed program for the indicated 

calendar years. The table also shows the net present values of those costs for the calendar years 

2012-2050 using both 3 percent and 7 percent discount rates.540 Table III-76 shows the 

undiscounted annual monetized fuel savings of the proposed program. The table also shows the 

net present values of those fuel savings for the same calendar years using both 3 percent and 7 

percent discount rates. In this table, the aggregate value of fuel savings is calculated using pretax fuel prices since savings in fuel taxes do not represent a reduction in the value of economic 

resources utilized in producing and consuming fuel. Note that the fuel savings shown here result 

from reductions in fleet-wide fuel use. Thus, fuel savings grow over time as an increasing 

fraction of the fleet meets the proposed standards. 

Table III-75 Undiscounted Annual Costs & Costs of the Proposed Program 

Discounted Back to 2012 at 3% and 7% Discount Rates (Millions, 2009$)a

 2017 2020 2030 2040 2050 

NPV, Years 

2012-2050, 3% 

Discount Rate 

NPV, Years 

2012-2050, 7% 

Discount Rate 

Technology 

Costs $2,000 $8,370 $35,700 $39,800 $44,600 $545,000 $239,000

Note:

a

 Technology costs for separate light-duty vehicle segments can be found in Section III.H.2. Annual costs shown are 

undiscounted values. 

Table III-76: Undiscounted Annual Fuel Savings & Proposed Program Fuel Savings 

Discounted Back to 2012 at 3% and 7% Discount Rates (Millions, 2009$)a

 2017 2020 2030 2040 2050 

NPV, Years 

2012-2050, 3% 

Discount Rate 

NPV, Years 

2012-2050, 7% 

Discount Rate 

Fuel Savings 

(pre-tax) $561 $6,920 $88,300 $151,000 $198,000 $1,570,000 $601,000

Note:

a

 Fuel savings for separate light-duty vehicle segments can be found in Section III.H.3. Annual costs shown are 

undiscounted values. 

Table III-77 presents estimated annual monetized benefits for the indicated calendar 

years. The table also shows the net present values of those benefits for the calendar years 2012-

2050 using both 3 percent and 7 percent discount rates. The table shows the benefits of reduced 

CO2 emissions—and consequently the annual quantified benefits (i.e., total benefits)—for each 

of the four social cost of carbon (SCC) values estimated by the interagency working group. As 

discussed in the RIA Chapter 7.2, there are some limitations to the SCC analysis, including the 

incomplete way in which the integrated assessment models capture catastrophic and non-

 540 For the estimation of the stream of costs and benefits, we assume that after implementation of the proposed MY 

2017-2025 standards, the 2025 standards apply to each year thereafter. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 434 of 770

catastrophic impacts, their incomplete treatment of adaptation and technological change, 

uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk 

aversion. 

In addition, these monetized GHG benefits exclude the value of net reductions in nonCO2 GHG emissions (CH4, N2O, HFC) expected under this action. Although EPA has not 

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

be interpreted as zero. Rather, the net reductions in non-CO2 GHGs will contribute to this 

program’s climate benefits, as explained in Section III.H.5. 

Table III-77: Monetized Undiscounted Annual Benefits & Benefits of the Proposed 

Program Discounted Back to 2012 at 3% and 7% Discount Rates (Millions, 2009$) 

 2017 2020 2030 2040 2050 

NPV, Years 

2012-2050, 

3% 

Discount 

Ratea

NPV, Years 

2012-2050, 

7% Discount 

Ratea

Reduced CO2 Emissions at each assumed SCC value b

5% (avg SCC) $13 $168 $2,770 $5,790 $8,550 $34,200 $34,200 

3% (avg SCC) $52 $649 $9,320 $17,900 $24,500 $179,000 $179,000 

2.5% (avg SCC) $83 $1,030 $14,200 $26,600 $35,400 $306,000 $306,000 

3% (95th %ile) $159 $1,990 $28,500 $54,400 $74,200 $546,000 $546,000 

Energy Security 

Benefits (macrodisruption costs) $29 $358 $4,950 $8,250 $9,870 $84,900 $32,700 

Accidents, 

Congestion, Noise 

Costsg

$66 $848 $7,960 $12,500 $16,300 $136,000 $53,300 

Increased Travel 

Benefits $92 $1,250 $13,700 $23,600 $33,300 $250,000 $95,400 

Refueling Time 

Savings $24 $587 $6,930 $11,200 $13,300 $117,000 $45,500 

PM2.5 Related Impacts c,d,e $11 $147 $1,570 $2,840 $4,050 $29,700 $11,300 

Non-CO2 GHG 

Impactsf n/a n/a n/a n/a n/a n/a 

Total Annual Benefits at each assumed SCC value b

5% (avg SCC) $103 $1,370 $18,900 $34,900 $48,800 $334,000 $147,000 

3% (avg SCC) $142 $1,850 $25,500 $47,000 $64,700 $479,000 $293,000 

2.5% (avg SCC) $173 $2,230 $30,400 $55,700 $75,700 $605,000 $419,000 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 435 of 770

3% (95th %ile) $249 $3,190 $44,600 $83,500 $114,00

0 $846,000 $660,000 

Notes: 

a

 Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate 

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

present value of SCC for internal consistency. Refer to the SCC TSD for more detail. Annual costs shown are 

undiscounted values. 

b

 Section III.H.5 notes that SCC increases over time. For the years 2012-2050, the SCC estimates range as follows: 

for Average SCC at 5%: $5-$16; for Average SCC at 3%: $23-$46; for Average SCC at 2.5%: $38-$67; and for 

95th percentile SCC at 3%: $70-$140. c

 Note that the co-pollutant impacts associated with the standards presented here do not include the full complement 

of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. 

Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only human health impacts 

associated with reductions in PM2.5 exposure. Ideally, human health and environmental benefits would be based on 

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

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the copollutant benefits for the analysis of the final standards. 

d

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of 

premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on 

the Six Cities study (Laden et al., 2006), the values would be nearly two-and-a-half times larger. 

e

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate 

in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate 

had been used, the values would be approximately 9% lower. 

f

 The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions 

expected under this program (See DRIA Chapter 7.1). Although EPA has not monetized changes in non-CO2

GHGs, the value of any increases or reductions should not be interpreted as zero. We seek comment on a method of 

quantifying non-CO2 GHG benefits in Section III.H.5. g Positive values for Accidents, Congestion, and Noise costs represent an increase in costs. Therefore, they are 

treated as negative values when calculating the total benefits. 

Table III-78 presents estimated annual net benefits for the indicated calendar years. The 

table also shows the net present values of those net benefits for the calendar years 2012-2050 

using both 3 percent and 7 percent discount rates. The table includes the benefits of reduced CO2

emissions (and consequently the annual net benefits) for each of the four SCC values considered 

by EPA. 

Table III-78: Undiscounted Annual Monetized Net Benefits & Net Benefits of the Proposed 

Program Discounted Back to 2012 at 3% and 7% Discount Rates (Millions, 2009$) 

2017 2020 2030 2040 2050 NPV, 3%a

 NPV, 7%a

Technology Costs $2,000 $8,370 $35,700 $39,800 $44,600 $545,000 $239,000 

Fuel Savings $561 $6,920 $88,300 $151,000 $198,000 $1,570,000 $601,000 

Total Annual Benefits at each assumed SCC value b
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 436 of 770

5% (avg SCC) $103 $1,710 $22,600 $40,100 $54,200 $390,000 $170,000 

3% (avg SCC) $142 $2,190 $29,100 $52,200 $70,100 $536,000 $315,000 

2.5% (avg SCC) $173 $2,570 $34,100 $60,900 $81,000 $662,000 $442,000 

3% (95th %ile) $249 $3,540 $48,300 $88,700 $120,000 $903,000 $682,000 

Monetized Net Benefits at each assumed SCC value c

5% (avg SCC) -$1,330 $265 $75,200 $152,000 $208,000 $1,420,000 $532,000 

3% (avg SCC) -$1,290 $746 $81,700 $164,000 $224,000 $1,560,000 $677,000 

2.5% (avg SCC) -$1,260 $1,130 $86,700 $172,000 $235,000 $1,690,000 $803,000 

3% (95th %ile) -$1,190 $2,090 $101,000 $200,000 $273,000 $1,930,000 $1,040,000 

Notes: 

a

 Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate 

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

present value of SCC for internal consistency. Refer to the SCC TSD for more detail. Annual costs shown are 

undiscounted values. 

b

 Section VIII.H.5 notes that SCC increases over time. For the years 2012-2050, the SCC estimates range as 

follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $23-$46; for Average SCC at 2.5%: $38-$67; 

and for 95th percentile SCC at 3%: $70-$140 Section VIII.H.5 also presents these SCC estimates. c

 Net Benefits equal Fuel Savings minus Technology Costs plus Benefits. 

EPA also conducted a separate analysis of the total benefits over the model year lifetimes 

of the 2017 through 2025 model year vehicles. In contrast to the calendar year analysis 

presented above in Table III-75 through Table III-78, the model year lifetime analysis below 

shows the impacts of the proposed program on vehicles produced during each of the model years 

2017 through 2025 over the course of their expected lifetimes. The net societal benefits over the 

full lifetimes of vehicles produced during each of the nine model years from 2017 through 2025 

are shown in Table III-79 and Table III-80 at both 3 percent and 7 percent discount rates, 

respectively. 

Table III-79: Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits 

Associated with the Lifetimes of 2017-2025 Model Year Light-Duty Vehicles (Millions, 

2009$; 3% Discount Rate)h

2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

MY Sum 

Technology 

Costs $1,970 $4,120 $6,160 $8,250 $11,700 $17,100 $22,400 $27,700 $33,100 $133,000

Fuel Savings 

(pre-tax) $6,470 $15,300 $23,800 $33,700 $50,100 $64,400 $77,600 $91,400 $105,000

$468,00

0

Energy 

Security 

Benefits 

(macro-

$344 $813 $1,270 $1,810 $2,690 $3,490 $4,240 $5,030 $5,830 $25,500
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 437 of 770

disruption 

costs) 

Accidents, 

Congestion, 

Noise Costs f

$536 $1,300 $2,040 $2,890 $4,170 $5,320 $6,370 $7,480 $8,590 $38,700

Increased 

Travel 

Benefits 

$794 $1,990 $3,210 $4,660 $6,870 $8,980 $11,000 $13,200 $15,400 $66,100

Refueling 

Time Savings $279 $657 $1,030 $1,450 $2,160 $2,800 $3,400 $4,030 $4,680 $20,500

PM2.5 Related 

Impactsc,d,e $147 $372 $588 $843 $1,310 $1,500 $1,640 $1,790 $1,930 $10,100

Non-CO2

GHG 

Impactsg

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 

Reduced CO2 Emissions at each assumed SCC value a, b

5% (avg 

SCC) $152 $367 $587 $851 $1,300 $1,700 $2,090 $2,510 $2,960 $12,500 

3% (avg 

SCC) $640 $1,530 $2,410 $3,450 $5,190 $6,720 $8,170 $9,700 $11,300 $49,100 

2.5% (avg 

SCC) $1,040 $2,470 $3,880 $5,520 $8,300 $10,700 $13,000 $15,400 $17,800 $78,100 

3% (95th 

%ile) $1,960 $4,680 $7,370 $10,500 $15,900 $20,500 $25,000 $29,600 $34,500 $150,00

0 

Monetized Net Benefits at each assumed SCC value a, b

5% (avg 

SCC) $5,680 $14,100 $22,300 $32,200 $48,500 $60,400 $71,300 $82,700 $94,500 $432,000 

3% (avg 

SCC) $6,170 $15,200 $24,100 $34,800 $52,400 $65,400 $77,300 $89,900 $103,00

0 

$468,00

0 

2.5% (avg 

SCC) $6,570 $16,200 $25,600 $36,900 $55,500 $69,400 $82,100 $95,600 $109,00

0 

$497,00

0 

3% (95th 

%ile) $7,490 $18,400 $29,100 $41,900 $63,100 $79,300 $94,100 $110,00

0 

$126,00

0 

$569,00

0 

Notes: 

a

 Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate 

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

present value of SCC for internal consistency. Refer to the SCC TSD for more detail. 

b

 Section III.H.5 notes that SCC increases over time. For the years 2012-2050, the SCC estimates range as follows: 

for Average SCC at 5%: $5-$16; for Average SCC at 3%: $23-$46; for Average SCC at 2.5%: $38-$67; and for 

95th percentile SCC at 3%: $70-$140. Section III.H.5 also presents these SCC estimates. c

 Note that the co-pollutant impacts associated with the standards presented here do not include the full complement 

of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. 

Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only human health impacts 

associated with reductions in PM2.5 exposure. Ideally, human health and environmental benefits would be based on 

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

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the copollutant benefits for the analysis of the final standards. 

d

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of 

premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on 

the Six Cities study (Laden et al., 2006), the values would be nearly two-and-a-half times larger. 

e

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate 

in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate 

had been used, the values would be approximately 9% lower.f

 Positive values for Accidents, Congestion, and Noise 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 438 of 770

costs represent an increase in costs. Therefore, they are treated as negative values when calculating the total 

benefits.g

 The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG 

emissions expected under this action (See DRIA Chapter 7.1). Although EPA has not monetized changes in nonCO2 GHGs, the value of any increases or reductions should not be interpreted as zero. We seek comment on a 

method of quantifying non-CO2 GHG benefits in Section III.H.5. h

 Model year values are discounted to the first year of each model year; the “Sum” represents those discounted 

values summed across model years. 

Table III-80: Monetized Technology Costs, Fuel Savings, Benefits, and Net Benefits 

Associated with the Lifetimes of 2017-2025 Model Year Light-Duty Vehicles (Millions, 

2009$; 7% Discount Rate) h

2017 

MY 

2018 

MY 

2019 

MY 

2020 

MY 

2021 

MY 

2022 

MY 

2023 

MY 

2024 

MY 

2025 

MY Sum 

Technology 

Costs $1,930 $4,040 $6,050 $8,100 $11,50

0 

$16,80

0 

$21,90

0 

$27,20

0 

$32,50

0 

$130,0

00 

Fuel Savings 

(pre-tax) $4,990 $11,80

0 

$18,50

0 

$26,20

0 

$38,80

0 

$49,90

0 

$60,20

0 

$71,00

0 

$81,90

0 

$363,0

00 

Energy 

Security 

Benefits 

(macrodisruption 

costs) 

$264 $627 $984 $1,400 $2,080 $2,700 $3,290 $3,900 $4,530 $19,80

0 

Accidents, 

Congestion, 

Noise Costs f

$434 $1,050 $1,660 $2,350 $3,390 $4,320 $5,180 $6,080 $6,990 $31,40

0 

Increased 

Travel 

Benefits 

$638 $1,600 $2,590 $3,760 $5,550 $7,260 $8,900 $10,70

0 

$12,50

0 

$53,50

0 

Refueling 

Time Savings $215 $508 $794 $1,130 $1,670 $2,160 $2,630 $3,120 $3,620 $15,800 

PM2.5 Related 

Impactsc,d,e $112 $286 $453 $650 $1,010 $1,150 $1,260 $1,370 $1,470 $7,770 

Non-CO2

GHG 

Impactsg

n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 

Reduced CO2 Emissions at each assumed SCC value a, b

5% (avg 

SCC) $152 $367 $587 $851 $1,300 $1,700 $2,090 $2,510 $2,960 $12,50

0 

3% (avg 

SCC) $640 $1,530 $2,410 $3,450 $5,190 $6,720 $8,170 $9,700 $11,30

0 

$49,10

0 

2.5% (avg 

SCC) $1,040 $2,470 $3,880 $5,520 $8,300 $10,70

0 

$13,00

0 

$15,40

0 

$17,80

0 

$78,10

0 

3% (95th 

%ile) $1,960 $4,680 $7,370 $10,50

0 

$15,90

0 

$20,50

0 

$25,00

0 

$29,60

0 

$34,50

0 

$150,0

00 

Monetized Net Benefits at each assumed SCC value a, b

5% (avg 

SCC) $4,000 $10,10

0 

$16,20

0 

$23,50

0 

$35,50

0 

$43,80

0 

$51,30

0 

$59,20

0 

$67,50

0 

$311,0

00 

3% (avg 

SCC) $4,490 $11,30

0 

$18,00

0 

$26,10

0 

$39,40

0 

$48,80

0 

$57,30

0 

$66,40

0 

$75,80

0 

$348,0

00 

2.5% (avg 

SCC) $4,890 $12,20

0 

$19,50

0 

$28,20

0 

$42,50

0 

$52,80

0 

$62,10

0 

$72,10

0 

$82,40

0 

$377,0

00 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 439 of 770

3% (95th 

%ile) $5,810 $14,40

0 

$23,00

0 

$33,20

0 

$50,10

0 

$62,60

0 

$74,10

0 

$86,30

0 

$99,00

0 

$449,0

00 

Notes: 

a

 Net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate 

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

present value of SCC for internal consistency. Refer to the SCC TSD for more detail. 

b

 Section III.H.5 notes that SCC increases over time. For the years 2012-2050, the SCC estimates range as follows: 

for Average SCC at 5%: $5-$16; for Average SCC at 3%: $23-$46; for Average SCC at 2.5%: $38-$67; and for 

95th percentile SCC at 3%: $70-$140. Section III.H.5 also presents these SCC estimates. c

 Note that the co-pollutant impacts associated with the standards presented here do not include the full complement 

of endpoints that, if quantified and monetized, would change the total monetized estimate of rule-related impacts. 

Instead, the co-pollutant benefits are based on benefit-per-ton values that reflect only human health impacts 

associated with reductions in PM2.5 exposure. Ideally, human health and environmental benefits would be based on 

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

conduct a full-scale air quality modeling analysis in time for the proposal. We intend to more fully capture the copollutant benefits for the analysis of the final standards. 

d

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table are based on an estimate of 

premature mortality derived from the ACS study (Pope et al., 2002). If the benefit-per-ton estimates were based on 

the Six Cities study (Laden et al., 2006), the values would be nearly two-and-a-half times larger. 

e

 The PM2.5-related benefits (derived from benefit-per-ton values) presented in this table assume a 3% discount rate 

in the valuation of premature mortality to account for a twenty-year segmented cessation lag. If a 7% discount rate 

had been used, the values would be approximately 9% lower 

.

f

 Positive values for Accidents, Congestion, and Noise costs represent an increase in costs. Therefore, they are 

treated as negative values when calculating the total benefits. 

g

 The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions 

expected under this action (See DRIA Chapter 7.1). Although EPA has not monetized changes in non-CO2 GHGs, 

the value of any increases or reductions should not be interpreted as zero. We seek comment on a method of 

quantifying non-CO2 GHG benefits in Section III.H.5. h

 Model year values are discounted to the first year of each model year; the “Sum” represents those discounted 

values summed across model years. 

10. U.S. Vehicle Sales Impacts and Payback Period 

a. Vehicle Sales Impacts 

Here we present an approximate calculation of the effects of the proposed 2017-2025 

GHG standards on light duty vehicle sales at the aggregate market level. This analysis compares 

two effects. On the one hand, the vehicles designed to meet the proposed standards will become 

more expensive, which would, by itself, discourage sales. On the other hand, the vehicles will 

have improved fuel economy and thus lower operating costs. If consumers do not accurately 

compare the value of fuel savings with the increased cost of fuel economy technology in their 

vehicle purchase decisions, as discussed in Preamble III.H.1, they will continue to behave in this 

way after this rule. If auto makers have accurately gauged how consumers consider fuel 

economy when purchasing vehicles and have provided the amount that consumers want in 

vehicles, then consumers should not be expected to want the more fuel-efficient vehicles. After 

all, auto makers would already have provided as much fuel economy as consumers want. If, on 

the other hand, auto makers underestimated consumer demand for fuel economy, then this rule 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 440 of 770

may lead to production of more desirable vehicles, and vehicle sales may increase. This 

assumption implies that auto makers may have, for various reasons, missed some profit-making 

opportunities. 

The methodology EPA used for estimating the impact on vehicle sales is consistent with 

the approach in the 2012-16 light-duty GHG and CAFE rule, and in several previous CAFE 

rulemakings by NHTSA. It is relatively straightforward, but makes a number of simplifying 

assumptions. According to the literature, the price elasticity of demand for vehicles is commonly 

estimated to be about -1.541 In other words, a one percent increase in the price of a vehicle would 

be expected to decrease sales by one percent, holding all other factors constant. This elasticity is 

generally considered to be a short-run elasticity, reflecting the immediate impacts of an 

immediate price change on vehicle sales. For a durable good such as an auto, the elasticity may 

be smaller in the long run: though people may be able to change the timing of their purchase 

when price changes in the short run, they must eventually make the investment. Using a smaller 

elasticity would reduce the magnitude of the estimates presented here for vehicle sales, but it 

would not change the direction. A short-run elasticity is more valid for initial responses to 

changes in price, but, over time, a long-run elasticity may better reflect behavior; thus, the results 

presented for the initial years of the program may be more appropriate for modeling with the 

short-run elasticity than the later years of the program. A search of the literature has not found 

studies more recent than the 1970s that specifically investigate long-run elasticities.542 We seek 

comments and research on methods and results for estimating the long-run elasticity of demand 

for vehicles. 

For our estimates, EPA calculated the effect of an increase in vehicle costs due to the 

GHG standards and assumes that consumers will face the full increase in costs, not an actual 

(estimated) change in vehicle price. (The estimated increases in vehicle cost due to the rule are 

discussed in Section III.H.2) This is a conservative methodology, since an increase in cost may 

not pass fully into an increase in market price in an oligopolistic industry such as the automotive 

sector.543 EPA also notes that we have not used these estimated sales impacts in the OMEGA 

Model. 

 541 Kleit A.N., 1990. “The Effect of Annual Changes in Automobile Fuel Economy Standards.” Journal of 

Regulatory Economics 2: 151-172 (Docket EPA-HQ-OAR-2009-0472-0015); McCarthy, Patrick S., 1996. “Market 

Price and Income Elasticities of New Vehicle Demands.” Review of Economics and Statistics 78: 543-547 (Docket 

EPA-HQ-OAR-2009-0472-0016); Goldberg, Pinelopi K., 1998. “The Effects of the Corporate Average Fuel 

Efficiency Standards in the U.S.,” Journal of Industrial Economics 46(1): 1-33 (Docket EPA-HQ-OAR-2009-0472-

0017). 

542 E.g., Hymans, Saul H. “Consumer Durable Spending: Explanation and Prediction.” Brookings Papers on 

Economic Activity 1 (1970): 173-206. 

http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/1970_2_bpea_papers/1970b_bpea_hymans_ackley_ju

ster.pdf finds a short-run elasticity of auto expenditures (not sales) with respect to price of 0.78 50 1.17, and a longrun elasticity of 0.3 to 0.46. 

543 See, for instance, Gron, Ann, and Deborah Swenson, 2000. “Cost Pass-Through in the U.S. Automobile 

Market,” Review of Economics and Statistics 82: 316-324 (Docket EPA-HQ-OAR-2009-0472-0007), who found 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 441 of 770

Although EPA uses the price elasticity of demand of -1 for vehicles as the basis for our 

vehicle sales impact estimates, we assumed that the consumer would take into account both the 

higher vehicle purchase costs as well as some of the fuel savings benefits when deciding whether 

to purchase a new vehicle.544 Therefore, the incremental cost increase of a new vehicle would be 

offset by reduced fuel expenditures over a certain period of time (i.e., the “payback period”). For 

the purposes of this rulemaking, EPA used a five-year payback period, which is consistent with 

the length of a typical new light-duty vehicle loan, and is similar to the average time that a new 

vehicle purchaser holds onto the vehicle; it has also been used by NHTSA in previous CAFE 

rulemakings.545 This approach may not accurately reflect the role of fuel savings in consumers’ 

purchase decisions, as the discussion in Section III.H.1 suggests. If consumers consider fuel 

savings in a different fashion than modeled here, then this approach will not accurately reflect 

the impact of this rule on vehicle sales. 

This increase in costs has other effects on consumers as well: if vehicle prices increase, 

consumers will face higher insurance costs and sales tax, and additional finance costs if the 

vehicle is bought on credit. In addition, the resale value of the vehicles will increase. The 

details of the calculations to incorporate these factors are in the DRIA, Chapter 8.1.l. 

Once the cost estimates are adjusted for these additional factors, five years of the fuel 

cost savings associated with the rule, discussed in Section III.H.4, are subtracted to get the net 

effect on consumer expenditures for a new vehicle. With the assumed elasticity of demand of -1, 

the percent change in this “effective price,” estimated as the adjusted increase in cost, is equal to 

the negative of the percent change in vehicle purchases. The net effect of this calculation is in 

Table III-81 and Table III-82. 

The estimates provided in Table III-81 and Table III-82 are meant to be illustrative rather 

than a definitive prediction. When viewed at the industry-wide level, they give a general 

indication of the potential impact of the proposed rule on vehicle sales. As shown below, the 

overall impact is small (less than 5 percent) but positive. Because the fuel savings associated 

with this rule are expected to exceed the technology costs, the effective prices of vehicles (the 

 significantly less than full-cost pass-through using data from 1984-1994. Using full-cost pass-through overstates 

costs and thus contributes to lower vehicle sales than using a lower estimate. To the extent that the auto industry has 

become more competitive over time, full-cost pass-through may be more appropriate than a result based on this 

older study. 

544 PRR, Inc., in a recent literature review (“Environmental Protection Agency Fuel Economy Label Literature 

Review,” EPA-420-R-10-906, August 2010), found that “fuel economy is one of the top factors that consumers 

report influence which vehicles they choose.” This attention seems to be greater when gasoline prices are high or 

greatly fluctuating. 

545 As discussed further in Section III.H.1, there is not a consensus in the literature on how consumers consider fuel 

economy in their vehicle purchases. Results are inconsistent, possibly due to fuel economy not being a major focus 

of many of the studies, and possibly due to sensitivity of results to modeling and data used. A survey by Greene 

(Greene, David L. “How Consumers Value Fuel Economy: A Literature Review.” EPA Report EPA-420-R-10-

008, March 2010 (Docket EPA-HQ-OAR-2009-0472-11575)) finds that estimates in the literature of the value that 

consumers place on fuel economy when buying a vehicle range from negative – consumers would pay to reduce fuel 

economy – to more than 1000 times the value of fuel savings. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 442 of 770

adjusted increase in technology cost less the fuel savings over five years) to consumers will fall, 

and consumers will buy more new vehicles. As a result, the lower net cost of the vehicles is 

projected to lead to an increase in sales for both cars and trucks. 

As discussed above, this result depends on the assumption that more fuel efficient 

vehicles that yield net consumer benefits over five years would not otherwise be offered on the 

vehicle market due to market failures or other barriers on the part of vehicle manufacturers. If 

vehicles that achieve the fuel economy standards prescribed by today’s rulemaking would 

already be available, but consumers chose not to purchase them, then this rulemaking would not 

result in an increase in vehicle sales, because it does not alter how consumers make decisions 

about which vehicles to purchase. In addition, this analysis has not accounted for a number of 

factors that might affect consumer vehicle purchases, such as changing market conditions, 

changes in vehicle characteristics that might accompany improvements in fuel economy, fuel 

prices different than those used here, or consumers considering a different “payback period” for 

their fuel economy purchases. If consumers use a shorter payback period, the sales impacts will 

be less positive, possibly negative; if consumers use a higher payback period, the impacts will be 

more positive. Also, this is an aggregate analysis; some individual consumers (those who drive 

less than estimated here) will face lower net benefits, while others (who drive more than 

estimated here) will have even greater savings. These complications add considerable 

uncertainty to our vehicle sales impact analysis. EPA notes that we have not used these 

estimated sales impacts in the OMEGA model or in our estimate of the costs and benefits of this 

proposal. 

Table III-81 New Vehicle Sales Impacts Using a 3% Discount Rate 

 Change in Car 

Sales 

% Change Change in 

Truck Sales 

% Change 

2017 3,900 0.0% 33,400 0.6%

2018 60,800 0.6% 50,300 0.9%

2019 120,300 1.2% 65,100 1.2%

2020 195,000 1.9% 85,600 1.5%

2021 272,900 2.6% 157,300 2.8%

2022 286,100 2.7% 199,600 3.5%

2023 292,500 2.7% 239,000 4.2%

2024 303,800 2.7% 280,300 4.9%

2025 319,700 2.8% 324,600 5.7%

Table III-81 shows the impacts on new vehicle sales using a 3% discount rate. The fuel 

savings over five years are always higher than the technology costs. Although both cars and 

trucks show very small effects initially, over time vehicle sales become increasingly positive, as 

increased fuel prices make improved fuel economy more desirable. The increases in sales for 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 443 of 770

cars are larger than the increases for trucks (except in 2017) in absolute numbers; in percentage 

terms, the effect on trucks is larger than the effect on cars (except in 2020). 

Table III-82 New Vehicle Sales Impacts Using an 7% Discount Rate 

 Change in Car 

Sales 

% Change Change in 

Truck Sales 

% Change 

2017 3,400 0.0% 31,600 0.5%

2018 57,100 0.6% 47,600 0.8%

2019 113,200 1.1% 61,500 1.1%

2020 183,700 1.8% 80,900 1.4%

2021 257,300 2.4% 148,600 2.6%

2022 269,300 2.5% 188,700 3.3%

2023 274,800 2.5% 225,800 4.0%

2024 284,900 2.5% 264,800 4.7%

2025 299,400 2.6% 306,600 5.4%

Table III-82 shows the impacts on new vehicle sales using a 7% interest rate. While a 

7% interest rate shows slightly lower impacts than using a 3% discount rate, the results are 

qualitatively similar. Sales increase for every year. For both cars and trucks, sales become 

increasingly positive over time, as higher fuel prices make improved fuel economy more 

valuable. The car market grows more than the truck market in absolute numbers (except in 2017 

and 2025), but less on a percentage basis (except in 2020). 

Another method to estimate effects on vehicle sales is to model the market for vehicles. 

Consumer vehicle choice models estimate what vehicles consumers buy based on vehicle and 

consumer characteristics. In principle, such models could provide a means of understanding 

both the role of fuel economy in consumers’ purchase decisions and the effects of this rule on the 

benefits that consumers will get from vehicles. Helfand and Wolverton discuss the wide 

variation in the structure and results of these models.546 Models or model results have not 

frequently been systematically compared to each other. When they have, the results show large 

variation over, for instance, the value that consumers place on additional fuel economy. As 

discussed in Section III.H.1 and in Chapter 8.1.2.8 of the DRIA, EPA is exploring development 

of a consumer vehicle choice model, but the model is not sufficiently developed for use in this 

NPRM. 

The effect of this rule on the use and scrappage of older vehicles will be related to its 

effects on new vehicle prices, the fuel efficiency of new vehicle models, the fuel efficiency of 

used vehicles, and the total sales of new vehicles. If the value of fuel savings resulting from 

improved fuel efficiency to the typical potential buyer of a new vehicle outweighs the average 

 546 Helfand, Gloria, and Ann Wolverton. “Evaluating the Consumer Response to Fuel Economy: A Review of the 

Literature.” International Review of Environmental and Resource Economics 5 (2011): 103-146. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 444 of 770

increase in new models’ prices, sales of new vehicles will rise, while scrappage rates of used 

vehicles will increase slightly. This will cause the “turnover” of the vehicle fleet (i.e., the 

retirement of used vehicles and their replacement by new models) to accelerate slightly, thus 

accentuating the anticipated effect of the rule on fleet-wide fuel consumption and CO2

emissions. However, if potential buyers value future fuel savings resulting from the increased 

fuel efficiency of new models at less than the increase in their average selling price, sales of new 

vehicles will decline, as will the rate at which used vehicles are retired from service. This effect 

will slow the replacement of used vehicles by new models, and thus partly reduce the anticipated 

effects of this rule on fuel use and emissions. 

Because of the uncertainty regarding how the value of projected fuel savings from this 

rule to potential buyers will compare to their estimates of increases in new vehicle prices, we 

have not attempted to estimate explicitly the effects of the rule on scrappage of older vehicles 

and the turnover of the vehicle fleet. 

A detailed discussion of the vehicle sales impacts methodology is provided in the Chapter 

8 of EPA’s DRIA. We seek comment on all aspects of this analysis. 

b. Consumer Payback Period and Lifetime Savings on New Vehicle Purchases 

Another factor of interest is the payback period that consumers would experience on the 

purchase of a new vehicle that meets the proposed standards. In other words, how long would it 

take for the expected fuel savings to outweigh the increased cost of a new vehicle? For example, 

a new 2025 MY vehicle is estimated to cost $1,946 more (on average, and relative to the 

reference case vehicle) due to the addition of new GHG reducing/fuel economy improving 

technology (see Section III.D.6 for details on this cost estimate). This new technology will result 

in lower fuel consumption and, therefore, savings in fuel expenditures (see Section III.H.10 for 

details on fuel savings). But how many months or years would pass before the fuel savings 

exceed the upfront costs? 

Table III-83 provides the answer to this question for a vehicle purchaser who pays for the 

new vehicle upfront in cash (we discuss later in this section the payback period for consumers 

who finance the new vehicle purchase with a loan). The table uses annual miles driven (vehicle 

miles traveled, or VMT) and survival rates consistent with the emission and benefits analyses 

presented in Chapter 4 of the Joint TSD. The control case includes fuel savings associated with 

A/C controls. Not included here are the likely A/C-related maintenance savings as discussed in 

Chapter 2 of EPA’s RIA. Further, this analysis does not include other private impacts, such as 

reduced refueling events, or other societal impacts, such as the potential rebound miles driven or 

the value of driving those rebound miles, or noise, congestion and accidents, since the focus is 

meant to be on those factors consumers think about most while in the showroom considering a 

new car purchase. Car/truck fleet weighting is handled as described in Chapter 1 of the Joint 

TSD. As can be seen in the table, it will take just under four years at a 3% discount rate, and 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 445 of 770

exactly 4 years at a 7% discount rate for the cumulative discounted fuel savings to exceed the 

present value of increased vehicle costs. More detail on this analysis can be found in Chapter 5 

of EPA’s draft RIA. 

Table III-83 Payback Period on a 2025 MY New Vehicle Purchase via Cash (2009 

dollars) 

Year of 

Ownership 

Increased Vehicle 

Costa 

(undiscounted) 

Annual Fuel 

Savingsb 

(undiscounted) 

Cumulative 

Discounted Fuel 

Savings at 3% 

Cumulative 

Discounted Fuel 

Savings at 7% 

1 -$2,087 $626 $617 $606 

2 -$31 $609 $1,200 $1,156 

3 -$26 $615 $1,772 $1,676 

4 -$21 $612 $2,324 $2,160 

5 -$16 $611 $2,859 $2,611 

6 -$11 $587 $3,357 $3,015 

7 -$6 $559 $3,818 $3,375 

8 -$1 $534 $4,246 $3,697 a

 Increased vehicle cost due to the rule is $1,946; the value here includes nationwide average sales tax of 5.32% and 

increased insurance premiums of 1.85% in year one decreasing to 0% by year 9. Both of these percentages are 

discussed in Section 8.1.1 of EPA’s RIA. This results in a present value of increased costs of $2,189 at 3% 

discounting and $2,180 at 7% discounting. These present value costs are used in determining the payback period. 

b Calculated using AEO 2011 reference case fuel prices including taxes. 

However, most people purchase a new vehicle using credit rather than paying cash up 

front. A common car loan today is a five year, 60 month loan. As of June 7, 2011, the national 

average interest rate for a 5 year new car loan was 5.52 percent.547 If the increased vehicle cost 

is spread out over 5 years at 5.52 percent, the analysis would look like that shown in Table 

III-84. As can be seen in this table, the fuel savings immediately outweigh the increased 

payments on the car loan, amounting to $128 in discounted net savings (3% discount rate) in the 

first year and similar savings for the next four years although savings decline some due to 

reduced VMT as the average vehicle ages. Results are similar using a 7% discount rate. This 

means that for every month that the average owner is making a payment for the financing of the 

average new vehicle their monthly fuel savings would be greater than the increase in the loan 

payments. This amounts to a savings on the order of $11 per month throughout the duration of 

the 5 year loan. Note that in year six when the car loan is paid off, the net savings equal the fuel 

savings less the increased insurance premiums (as would be the case for the remaining years of 

ownership). 

Table III-84 Payback Period on a 2025 MY New Vehicle Purchase via Credit (2009 

dollars) 

Year of 

Ownership 

Increased Vehicle 

Costa Annual Fuel 

Savingsb 

Annual Discounted 

Net Savings at 3%c

Annual Discounted 

Net Savings at 7% c

 547 According to www.bankrate.com on June 7, 2011 (docket #XX) 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 446 of 770

(undiscounted) (undiscounted) 

1 -$489 $626 $128 $116 

2 -$488 $609 $109 $94 

3 -$487 $615 $113 $95 

4 -$485 $612 $108 $87 

5 -$484 $611 $105 $81 

6 -$11 $587 $489 $397 

7 -$6 $559 $456 $356 

8 -$1 $534 $427 $321 a This uses the same increased cost as Table III-12 but spreads it out over 5 years assuming a 5 year car loan at 5.52 

percent. 

b

 Calculated using AEO 2011 reference case fuel prices including taxes. 

c

 Note that the cumulative discounted fuel savings are identical to those shown in Table III-12. Here we show 

discounted net savings. 

The lifetime fuel savings and net savings can also be calculated for those who purchase 

the vehicle using cash and for those who purchase the vehicle with credit. This calculation 

applies to the vehicle owner who retains the vehicle for its entire life and drives the vehicle each 

year at the rate equal to the national projected average. The results are shown in Table III-85. In 

either case, the present value of the lifetime net savings is greater than $4,300 at a 3% discount 

rate, or $3,000 at a 7% discount rate. 

Table III-85 Lifetime Discounted Net Savings on a 2025 MY New Vehicle Purchase 

(2009 dollars) 

PURCHASE 

OPTION 

INCREASED 

DISCOUNTED 

VEHICLE COST 

LIFETIME 

DISCOUNTED 

FUEL SAVINGS B

LIFETIME 

DISCOUNTED 

NET SAVINGS 

3% discount rate 

Cash $2,189 $6,639 $4,449 

Credit a $2,310 $6,639 $4,328 

7% discount rate 

Cash $2,180 $5,187 $3,005 

Credit a $2,147 $5,187 $3,037 

a

 Assumes a 5 year loan at 5.52 percent. 

b Fuel savings here were calculated using AEO 2011 reference case fuel prices including taxes.

Note that throughout this consumer payback discussion, the average number of vehicle 

miles traveled per year has been used. Drivers who drive more miles than the average would 

incur fuel-related savings more quickly and, therefore, the payback would come sooner. Drivers 

who drive fewer miles than the average would incur fuel related savings more slowly and, 

therefore, the payback would come later. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 447 of 770

11. Employment Impacts 

a. Introduction 

Although analysis of employment impacts is not part of a cost-benefit analysis (except to 

the extent that labor costs contribute to costs), employment impacts of federal rules are of 

particular concern in the current economic climate of sizeable unemployment. When President 

Obama requested that the agencies develop this program, he sought a program that would 

“strengthen the [auto] industry and enhance job creation in the United States.”548 The recently 

issued Executive Order 13563, “Improving Regulation and Regulatory Review” (January 18, 

2011), states, “Our regulatory system must protect public health, welfare, safety, and our 

environment while promoting economic growth, innovation, competitiveness, and job creation” 

(emphasis added). EPA is accordingly providing estimates of the effects of this proposal on 

domestic employment. 

This proposal is expected to affect employment in the United States through the regulated 

sector – the auto manufacturing industry – and through several related sectors, specifically, 

industries that supply the auto manufacturing industry (e.g., vehicle parts), auto dealers, the fuel 

refining and supply sectors, and the general retail sector. According to the U.S. Bureau of Labor 

Statistics, in 2010, about 677,000 people in the U.S. were employed in Motor Vehicle and Parts 

Manufacturing Sector (NAICS 3361, 3362, and 3363). About 129,000 people in the U.S. were 

employed specifically in the Automobile and Light Truck Manufacturing Sector (NAICS 33611), 

the directly regulated sector, since it encompasses the auto manufacturers that are responsible for 

complying with the proposed standards.549 The employment effects of this rule 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 auto manufacturers themselves, the auto parts manufacturing 

sector also plays a significant role in providing those parts, and will also be affected by changes 

in vehicle sales. Changes in light duty vehicle sales, discussed in Section III.H.10, could affect 

employment for auto dealers. As discussed in Chapter 5.3 of the DRIA, this proposal is expected 

to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery and supply 

industries. Finally, since the net reduction in cost associated with this proposal is expected to 

lead to lower household expenditures on fuel net of vehicle costs, consumers then will have 

additional discretionary income that can be spent on other goods and services. 

When the economy is at full employment, an environmental regulation is unlikely to have 

much impact on net overall U.S. employment; instead, labor would primarily be shifted from one 

sector to another. These shifts in employment impose an opportunity cost on society, 

approximated by the wages of the employees, as regulation diverts workers from other activities 

 548 President Barack Obama. “Presidential Memorandum Regarding Fuel Efficiency Standards. The White House, 

Office of the Press Secretary, May 21, 2010. http://www.whitehouse.gov/the-press-office/presidentialmemorandum-regarding-fuel-efficiency-standards 

549 U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages, as accessed on August 9, 2011. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 448 of 770

in the economy. In this situation, any effects on net employment are likely to be transitory as 

workers change jobs (e.g., some workers may need to be retrained or require time to search for 

new jobs, while shortages in some sectors or regions could bid up wages to attract workers). 

On the other hand, if a regulation comes into effect during a period of high 

unemployment, a change in labor demand due to regulation may affect net overall U.S. 

employment because the labor market is not in equilibrium. Schmalansee and Stavins point out 

that net positive employment effects are possible in the near term when the economy is at less 

than full employment due to the potential hiring of idle labor resources by the regulated sector to 

meet new requirements (e.g., to install new equipment) and new economic activity in sectors 

related to the regulated sector.550 In the longer run, the net effect on employment is more 

difficult to predict and will depend on the way in which the related industries respond to the 

regulatory requirements. As Schmalansee and Stavins note, it is possible that the magnitude of 

the effect on employment could vary over time, region, and sector, and positive effects on 

employment in some regions or sectors could be offset by negative effects in other regions or 

sectors. For this reason, they urge caution in reporting partial employment effects since it can 

“paint an inaccurate picture of net employment impacts if not placed in the broader economic 

context.”

A number of different approaches have been used in published literature to conduct 

employment analysis. All potential methods of estimating employment impacts of a rule have 

advantages and limitations. We seek comment on the analytical approach presented here, other 

appropriate methods for analyzing employment impacts for this rulemaking, and the inputs used 

here for employment analysis. 

b. Approaches to Quantitative Employment Analysis 

Measuring the employment impacts of a policy depend on a number of inputs and 

assumptions. For instance, as discussed, assumptions about the overall state of unemployment in 

the economy play a major role in measured job impacts. The inputs to the models commonly are 

the changes in quantities or expenditures in the affected sectors; model results may vary in 

different studies depending on the assumptions about the levels of those inputs, and which 

sectors receive those changes. Which sectors are included in the study can also affect the results. 

For instance, a study of this program that looks only at employment impacts in the refinery 

sector may find negative effects, because consumers will purchase less gasoline; a study that 

looks only at the auto parts sector, on the other hand, may find positive impacts, because the 

program will require redesigned or additional parts for vehicles. In both instances, these would 

only be partial perspectives on the overall change in national employment due to Federal 

regulation. 

 550 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. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 449 of 770

i. Conceptual Framework for Employment Impacts in the Regulated Sector 

One study by Morgenstern, Pizer, and Shih551 provides a retrospective look at the 

impacts of regulation in employment in the regulated sectors. The paper provides a theoretical 

framework that can be useful for examining the impacts of a regulatory change on the regulated 

sector in the medium to longer term. In particular, it identifies three separate ways that 

employment levels may change in the regulated industry in response to a new (or more stringent) 

regulation. 

 Demand effect: higher production costs due to the regulation will lead to higher 

market prices; higher prices in turn reduce demand for the good, reducing the demand 

for labor to make that good. In the authors’ words, the “extent of this effect depends 

on the cost increase passed on to consumers as well as the demand elasticity of 

industry output.” 

 Cost effect: as costs go up, plants add more capital and labor (holding other factors 

constant), with potentially positive effects on employment. In the authors’ words, as 

“production costs rise, more inputs, including labor, are used to produce the same 

amount of output.” 

 Factor-shift effect: post-regulation production technologies may be more or less 

labor-intensive (i.e., more/less labor is required per dollar of output). In the authors’ 

words, “environmental activities may be more labor intensive than conventional 

production,” meaning that “the amount of labor per dollar of output will rise,” though 

it is also possible that “cleaner operations could involve automation and less 

employment, for example.” 

According to the authors, the “demand effect” is expected to have a negative effect on 

employment,552 the “cost effect” to have a positive effect on employment, and the “factor-shift 

effect” to have an ambiguous effect on employment. Without more information with respect to 

the magnitudes of these competing effects, it is not possible to predict the total effect 

environmental regulation will have on employment levels in a regulated sector. 

Morgenstern et al. estimated the effects on employment of spending on pollution 

abatement for four highly polluting/regulated U.S. industries (pulp and paper, plastics, steel, and 

petroleum refining) using data for six years between 1979 and 1991. The authors conclude that 

increased abatement expenditures generally have not caused a significant change in employment 

in those sectors. More specifically, their results show that, on average across the industries 

 551 Morgenstern, Richard D., William A. Pizer, and Jhih-Shyang Shih. “Jobs Versus the Environment: An IndustryLevel Perspective.” Journal of Environmental Economics and Management 43 (2002): 412-436. 

552 As will be discussed below, the demand effect in this proposal is potentially an exception to this rule. While the 

vehicles become more expensive, they also produce reduced fuel expenditures; the reduced fuel costs provide a 

countervailing impact on vehicle sales. As discussed in Preamble Section III.H.1, this possibility that vehicles may 

become more attractive to consumers after the program poses a conundrum: why have interactions between vehicle 

buyers and producers not provided these benefits without government intervention? 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 450 of 770

studied, each additional $1 million spent on pollution abatement results in a (statistically 

insignificant) net increase of 1.5 jobs. 

This approach to employment analysis has the advantage of carefully controlling for 

many possibly confounding effects in order to separate the effect of changes in regulatory costs 

on employment. It was, however, conducted for only four sectors. It could also be very difficult 

to update the study for other sectors, because one of the databases on which it relies, the 

Pollution Abatement Cost and Expenditure survey, has been conducted infrequently since 1994, 

with the last survey conducted in 2005. In addition, it does not examine the effects of regulation 

on employment in sectors related to but outside of the regulated sector. Nevertheless, the theory 

that Morgenstern et al. developed continues to be useful in this context. 

The following discussion of additional methodologies draws from Berck and Hoffmann’s 

review of employment models.553 

ii. Computable General Equilibrium (CGE) Models 

Computable general equilibrium (CGE) models are often used to assess the impacts of 

policy. These models include a stylized representation of supply and demand curves for all 

major markets in the economy. The labor market is commonly included. CGE models are very 

useful for looking at interaction effects of markets: “they allow for substitution among inputs in 

production and goods in consumption.” Thus, if one market experiences a change, such as a new 

regulation, then the effects can be observed in all other markets. As a result, they can measure 

the employment changes in the economy due to a regulation. Because they usually assume 

equilibrium in all markets, though, they typically lack involuntary unemployment. If the total 

amount of labor changes, it is due to people voluntarily entering or leaving the workforce. As a 

result, these models may not be appropriate for measuring effects of a policy on unemployment, 

because of the assumption that there is no involuntary unemployment. In addition, because of 

the assumptions of equilibrium in all markets and forward-looking consumers and firms, they are 

designed for examining the long-run effects of a policy but may offer little insight into its shortrun effects. 

iii. Input-Output (IO) Models 

Input-output models represent the economy through a matrix of coefficients that describe 

the connections between supplying and consuming sectors. In that sense, like CGE models, they 

describe the interconnections of the economy. These interconnections look at how changes in 

one sector ripple through the rest of the economy. For instance, a requirement for additional 

technology for vehicles requires additional steel, which requires more workers in both the auto 

and steel sectors; the additional workers in those sectors then have more money to spend, which 

 553 Berck, Peter, and Sandra Hoffmann. “Assessing the Employment Impacts of Environmental and Natural 

Resource Policy.” Environmental and Resource Economics 22 (2002): 133-156. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 451 of 770

leads to more employment in retail sectors. These are known as “multiplier” effects, because an 

initial impact in one sector gets multiplied through the economy. Unlike CGE models, inputoutput models have fixed, linear relationships among the sectors (e.g., substitution among inputs 

or goods is not allowed), and quantity supplied need not equal quantity demanded. In particular, 

these models do not allow for price changes – an increase in the demand for labor or capital does 

not result in a change in its price to help reallocate it to its best use. As a result, these models 

cannot capture opportunity costs from using resources in one area of the economy over another. 

The multipliers take an initial impact and can increase it substantially. 

IO models are commonly used for regional analysis of projects. In a regional analysis, 

the markets are commonly considered small enough that wages and prices are determined 

outside the region, and any excess supply or demand is due to exports and imports (or, in the 

case of labor, emigration or immigration). For national-level employment analysis, the use of 

input-output models requires the assumption that workers flow into or out of the labor market 

perfectly freely. Wages do not adjust; instead, people join into or depart from the labor pool as 

production requires them. For other markets as well, there is no substitution of less expensive 

inputs for more expensive ones. As a result, IO models provide an upper bound on employment 

impacts. As Berck and Hoffmann note, “For the same reason, they can be thought of as 

simulating very short-run adjustment,” in contrast to the CGE’s implicit assumption of long-run 

adjustment. Changes in production processes, introduce new technologies, or learning over time 

due to new regulatory requirements are also generally not captured by IO models, as they are 

calibrated to already established relationships between inputs and outputs. 

iv. Hybrid Models 

As Berck and Hoffmann note, input-output models and CGE models “represent a 

continuum of closely related models.” Though not separately discussed by Berck and Hoffmann, 

some hybrid models combine some of the features of CGE models (e.g., prices that can change) 

with input-output relationships. For instance, a hybrid model may include the ability to examine 

disequilibrium phenomena, such as labor being at less than full employment. Hybrid models 

depend on assumptions about how adjustments in the economy occur. CGE models characterize 

equilibria but say little about the pathway between them, while IO models assume that 

adjustments are largely constrained by previously defined relationships; the effectiveness of 

hybrid models depends on their success in overcoming the limitations of each of these 

approaches. Hybrid models could potentially be used to model labor market impacts of various 

vehicle policy options, although a number of judgments need to be made about the appropriate 

assumptions underlying the model as well the empirical basis for the modeling results. 

v. Single Sectors 

It is possible to conduct a bottom-up analysis of the partial effect of regulation on 

employment in a single sector by estimating the change in output or expenditures in a sector and 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 452 of 770

multiplying it by an estimate of the number of workers per unit of output or expenditures, under 

the assumption that labor demand is proportional to output or expenditures. As Berck and 

Hoffmann note, though, “Compliance with regulations may create additional jobs that are not 

accounted for.” While such an analysis can approximate the effects in that one sector in a simple 

way, it also may miss important connections to related sectors. 

vi. Ex-Post Econometric Studies 

A number of ex-post econometric analyses examine the net effect of regulation on 

employment in regulated sectors. Morgenstern, Pizer, and Shih (2002), discussed above, and 

Berman and Bui (2001) are two notable examples that rely on highly disaggregated 

establishment-level time series data to estimate longer-run employment effects.554 While often a 

sophisticated treatment of the issues analyzed, these studies commonly analyze specific scenarios 

or sectors in the past; care needs to be taken in extrapolating their results to other scenarios and 

to the future. For instance, neither of these two studies examines the auto industry and are 

therefore of limited applicability in this context. 

vii. Summary 

All methods of estimating employment impacts of a regulation have advantages and 

limitations. CGE models may be most appropriate for long-term impacts, but the usual 

assumption of equilibrium in the employment market means that it is not useful for looking at 

changes in overall employment: overall levels are likely to be premised on full employment. IO 

models, on the other hand, may be most appropriate for small-scale, short-term effects, because 

they assume fixed relationships across sectors and do not require market equilibria. Hybrid 

models, which combine some features of CGEs with IO models, depend upon key assumptions 

and economic relationships that are built into them. Single-sector models are simple and 

straightforward, but they are often based on the assumptions that labor demand is proportional to 

output, and that other sectors are not affected. Finally, econometric models have been developed 

to evaluate the longer-run net effects of regulation on sector employment, though these are expost analyses commonly of specific sectors or situations, and the results may not have direct 

bearing for the regulation being reviewed. We seek comment on the analytical approaches 

presented here, the inputs used below for employment analysis, and other appropriate methods 

for analyzing employment impacts for this rulemaking. 

 554 Berman, Eli, and Linda T. Bui, (2001) “Environmental Regulation and Labor Demand: Evidence from the South 

Coast Air Basin,” Journal of Public Economics, 79, 265 – 295.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 453 of 770

c. Employment analysis of this proposal 

As mentioned above, this program is expected to affect employment in the regulated 

sector (auto manufacturing) and other sectors directly affected by the proposal: auto parts 

suppliers, auto dealers, the fuel supply market (which will face reduced petroleum production 

due to reduced fuel demand but which may see additional demand for electricity or other fuels), 

and consumers (who will face higher vehicle costs and lower fuel expenditures). In addition, as 

the discussion above suggests, each of these sectors could potentially have ripple effects in the 

rest of the economy. These ripple effects depend much more heavily on the state of the 

macroeconomy than do the direct effects. At the national level, employment may increase in one 

industry or region and decrease in another, with the net effect being smaller than either 

individual-sector effect. EPA does not attempt to quantify the net effects of the regulation on 

overall national employment. 

The discussion that follows provides a partial, bottom-up quantitative estimate of the 

effects of this proposal on the regulated sector (the auto industry; for reasons discussed below, 

we include some quantitative assessment of effects on suppliers to the industry, although they are 

not regulated directly). It also includes qualitative discussion of the effects of the proposal on 

other sectors. Focusing quantification of employment impacts on the regulated sector has some 

advantages over quantifying all impacts. First, the analysis relies on data generated as part of the 

rulemaking process, which focuses on the regulated sector; as a result, what is presented here is 

based on internally consistent assumptions and estimates made in this proposal. Secondly, as 

discussed above, net effects on employment in the economy as a whole depend heavily on the 

overall state of the economy when this rule has its effects. Focusing on the regulated sector 

provides insight into employment effects in that sector without having to make assumptions 

about the state of the economy when this rule has its impacts. We include a qualitative 

discussion of employment effects other sectors to provide a broader perspective on the impacts 

of this rule. 

As noted above, in a full-employment economy, any changes in employment will result 

from people changing jobs or voluntarily entering or exiting the workforce. In a fullemployment economy, employment impacts of this proposal will change employment in specific 

sectors, but it will have small, if any, effect on aggregate employment. This rule would take 

effect in 2017 through 2025; by then, the current high unemployment may be moderated or 

ended. For that reason, this analysis does not include multiplier effects, but instead focuses on 

employment impacts in the most directly affected industries. Those sectors are likely to face the 

most concentrated employment impacts. The agencies seek comment on other sectors that are 

likely to be significantly affected and thus warrant further analysis in the final rulemaking 

analysis. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 454 of 770

i. Employment Impacts in the Auto Industry

Following the Morgenstern et al. conceptual framework for the impacts of regulation on 

employment in the regulated sector, we consider three effects for the auto sector: the demand 

effect, the cost effect, and the factor shift effect. However, we are only able to offer quantitative 

estimates for the demand and cost effects. We note that these estimates, based on extrapolations 

from current data, become more uncertain as time goes on. 

(1) The Demand Effect 

The demand effect depends on the effects of this proposal on vehicle sales. If vehicle 

sales increase, then more people will be required to assemble vehicles and their components. If 

vehicle sales decrease, employment associated with these activities will unambiguously decrease. 

Unlike in Morgenstern et al.’s study, where the demand effect decreased employment, there are 

countervailing effects in the vehicle market due to the fuel savings resulting from this program. 

On one hand, this proposal will increase vehicle costs; by itself, this effect would reduce vehicle 

sales. On the other hand, this proposal will reduce the fuel costs of operating the vehicle; by 

itself, this effect would increase vehicle sales, especially if potential buyers have an expectation 

of higher fuel prices. This issue is discussed further in Sections III.H.1 and III.H.10. 

Our approach here follows a method used by NHTSA in both the MY 2011 and the MY 

2012-16 CAFE rulemakings: we estimate the number of workers required per vehicle and 

multiply that value by the expected change in the number of vehicles. DRIA Chapter 8.2.3.1.1 

provides details about our calculation of the demand effect. We use data from the Bureau of 

Labor Statistics on employment in the Motor Vehicle and Parts sector,555 and from Ward’s 

Automotive Group on data on U.S. production of cars and trucks,556 to estimate an average of 

0.096 workers per vehicle between 2001 and 2010. In addition, as described in DRIA Chapter 

8.2.3.1, we incorporate a factor to reflect productivity improvements over time in the auto 

manufacturing industry of about 4.4 percent per year; this estimate is derived from trends in 

employment requirements from 1993-2008 provided by the Bureau of Labor Statistics. We note 

that BLS has stated that it expects improvements in productivity over time as well.557

Section III.H.10 of this preamble provides estimates of the effects of this proposal on 

vehicle sales. Not all U.S. sales are of domestically produced vehicles, however. To estimate 

the proportion of domestic production affected by the change in sales, we again used data from 

Ward’s Automotive Group for total car and truck production in the U.S. compared to total car 

and truck sales in the U.S. For the period 2001-2010, the proportion is 66.7%. We thus weight 

 555 http://data.bls.gov/timeseries/CEU3133600101?data_tool=XGtable, accessed August 3, 2011. 556 U.S. Vehicle Production by Manufacturer. UsaPr05.xls, accessed July 25, 2011 at 

http://subscribers.wardsauto.com/refcenter/ , ©Copyright 2011, Ward's Automotive Group, a division of Penton 

Media Inc. Redistribution prohibited. 

557 http://www.bls.gov/oco/cg/cgs012.htm#outlook , accessed 10/4/11. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 455 of 770

sales by this factor to get an estimate of the effect on employment in the motor vehicle 

manufacturing sector due to this proposal. 

Table Table III-86 shows the employment effects associated with the change in vehicle 

sales for the two discount rates (3 and 7 percent) used in the vehicle sales analysis. Because, in 

total, we project vehicle sales to increase in all years, employment is also expected to increase in 

order to build these additional vehicles. 

Table III-86 Effects of Changes in Vehicle Sales on Employment in the Motor 

Vehicle Manufacturing Sector 

Year 

Estimated 

change in 

vehicle sales, 

3% discount 

rate 

Estimated 

manufacturing 

employment 

impact 

Estimated 

change in vehicle 

sales, 7% 

discount rate 

Estimated 

manufacturing 

employment 

impact 

2017 37,200 1,400 35,000 1,300 

2018 111,200 4,000 104,700 3,800 

2019 185,400 6,400 174,800 6,100 

2020 280,600 9,300 264,600 8,800 

2021 430,200 13,700 406,000 12,900 

2022 485,700 14,800 458,000 13,900 

2023 531,500 15,500 500,600 14,600 

2024 584,100 16,300 549,800 15,300 

2025 644,400 17,200 606,000 16,100 

(2) The Cost Effect 

The demand effect, discussed above, measures employment changes due to new vehicle 

sales only. The cost effect measures employment impacts due to the new or additional 

technologies needed for vehicles to comply with the proposed standards. As DRIA Chapter 

8.2.3.1.3 explains, we estimate the cost effect by multiplying the costs of rule compliance by 

ratios of workers to each $1 million of expenditures in that sector. The magnitude and relative 

size of these ratios depends on the sectors’ labor intensity of the production process. 

The use of these ratios has both advantages and limitations. It is often possible to 

estimate these ratios for quite specific sectors of the economy; as a result, it is not necessary to 

extrapolate employment ratios from possibly unrelated sectors. On the other hand, these 

estimates are averages for the sectors, covering all the activities in those sectors; they may not be 

representative of the labor required when expenditures are required on specific activities, as the 

factor shift effect (discussed below) indicates. In addition, these estimates do not include 

changes in sectors that supply these sectors, such as steel or electronics producers. They thus 

may best be viewed as the effects on employment in the auto sector due to the changes in 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 456 of 770

expenditures in that sector, rather than as an assessment of all employment changes due to these 

changes in expenditures. 

Some of the costs of this proposal will be spent directly in the auto manufacturing sector, 

but some of the costs will be spent in the auto parts manufacturing sector. Because we do not 

have information on the proportion of expenditures in each sector, we separately present the 

ratios for both the auto manufacturing sector and the auto parts manufacturing sector. These are 

not additive, but should instead be considered as a range of estimates for the cost effect, 

depending on which sector adds technologies to the vehicles to comply with the regulation. 

We use several public sources for estimates of employment per $1 million expenditures: 

the U.S. Bureau of Labor Statistics’ (BLS) Employment Requirements Matrix (ERM);558 the 

Census Bureau’s Annual Survey of Manufactures559 (ASM); and the Census Bureau’s Economic 

Census. DRIA Chapter 8.2.3.1.2 provides details on all these sources. The ASM and the 

Economic Census have more sectoral detail than the ERM; we provide estimates for both Motor 

Vehicle Manufacturing and Light Duty Vehicle Manufacturing sectors for comparison purposes. 

For all of these, we adjust for the ratio of domestic production to domestic sales. The maximum 

value for employment impacts per $1 million expenditures (after accounting for the share of 

domestic production) in 2009 was estimated to be 2.049 if all the additional costs are in the parts 

sector; the minimum value is 0.407, if all the additional costs are in the light-duty vehicle 

manufacturing sector: that is, the range of employment impacts is between 0.4 and 2 additional 

jobs per $1 million expenditures in the sector. The different data sources provide similar 

magnitudes for the estimates for the sectors. Parts manufacturing appears to be more laborintensive than vehicle manufacturing; light-duty vehicle manufacturing appears to be slightly 

less labor-intensive than motor vehicle manufacturing as a whole. As discussed in the DRIA, 

trends in the BLS ERM are used to estimate productivity improvements over time that are used to 

adjust these ratios over time. Table III-87 shows the cost estimates developed for this rule, 

discussed in Section XX.XX. Multiplying those cost estimates by the maximum and minimum 

values for the cost effect (maximum using the ASM ratio if all additional costs are in the parts 

sector, and minimum using the Economic Census ratio for the light-duty sector if all additional 

costs are borne by auto manufacturers) provides the cost effect employment estimates. 

Table III-87 Employment Effects due to Increased Expenditures on Vehicles and 

Parts 

Year

Costs (before 

adjustment for 

domestic 

proportion of 

production) 

Minimum employment 

effect if all expenditures 

are in light duty vehicle 

mfg sector

Maximum employment 

effect if all expenditures 

are in the parts sector 

 558 http://www.bls.gov/emp/ep_data_emp_requirements.htm 559 http://www.census.gov/manufacturing/asm/index.html 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 457 of 770

($Millions)

2017 $ 1,997 500 3,100 

2018 $ 4,179 1,000 6,200 

2019 $ 6,255 1,500 9,000 

2020 $ 8,369 1,900 11,600 

2021 $ 11,875 2,600 15,900 

2022 $ 17,374 3,700 22,500 

2023 $ 22,690 4,600 28,300 

2024 $ 28,151 5,400 33,900

2025 $ 33,566 6,200 39,000 

(3) The Factor Shift Effect 

The factor shift effect looks at the effects on employment due to changes in labor intensity 

associated with a regulation. As noted above, the estimates of the cost effect assume constant 

labor per $1 million in expenditures, though the new technologies may be either more or less 

labor-intensive than the existing ones. An estimate of the factor shift effect would either increase 

or decrease the estimate used for the cost effect.

We are not quantifying the factor shift effect here, for lack of data on the labor intensity 

of all the possible technologies that manufacturers could use to comply with the proposed 

standards. As discussed in DRIA Chapter 8.2.3.1.3, though, for a subset of the technologies, 

EPA-sponsored research (discussed in Chapter 3.2.1.1 of the Joint TSD), which compared new 

technologies to existing ones at the level of individual components, found that labor use for the 

new technologies increased: the new fuel-saving technologies use more labor than the baseline 

technologies. For instance, switching from a conventional mid-size vehicle to a hybrid version 

of that vehicle involves an additional $395.85 in labor costs, which we estimate to require an 

additional 8.6 hours per vehicle. For a subset of the technologies likely to be used to meet the 

standards in this proposal, then, the factor shift effect increases labor demand, at least in the 

short run; in the long run, as with all technologies, the cost structure is likely to change due to 

learning, economies of scale, etc. The technologies examined in this research are, however, only 

a subset of the technologies that auto makers may use to comply with the standards proposed 

here. As a result, these results cannot be considered definitive evidence that the factor-shift 

effect increases employment for this rule. We therefore do not quantify the factor shift effect. 

(4) Summary of Employment Effects in the Auto Sector 

Some challenges arise in adding up the effects of this proposal on employment in the auto 

sector. First, the vehicle sales estimates are not cycled back into the overall rule impacts, due to 

modeling limitations: changing the modeling results due to vehicle sales might require iterating 

the vehicle sales analysis with the technology cost analysis, which the technology cost model is 

not set up to do. Secondly, the costs of the rule, used to estimate the “cost effect,” do not include 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 458 of 770

the effects of changes in vehicle sales. Third, as noted, the “factor shift effect” is not fully 

quantified: though a subset of potential compliance technologies requires increased labor 

compared to the baseline technologies, those represent only a portion of the technologies 

available for complying with this rule. Nevertheless, following Morgenstern et al., we sum the 

demand and cost effects in Table III-88. Though these results are not precisely estimated, they 

show that employment effects in the regulated sector (and, possibly, the parts sector) are 

expected to be positive, and on the order of a few thousand in the initial years of the program. 

As noted above, the motor vehicle and parts manufacturing sectors employed about 677,000 

people in 2010, with automobile and light truck manufacturing accounting for about 129,000 of 

that total. 

Table III-88 Partial Employment Effects in the Auto Manufacturing and Auto Parts 

Manufacturing Sectors due to Changes in Vehicle Sales and Changes in Costs 

Year

Employment 

Effects due to 

Changes in 

Vehicle Sales, 

3% Discount 

Rate

Employment 

Effects due to 

Changes in 

Vehicle Sales, 

7% Discount 

Rate

Employment 

Effects due to 

Cost Changes 

(Minimum – 

Maximum)

Summed, 

Partial 

Employment 

Effects in the 

Motor Vehicle 

Manufacturing 

Sector, 3% 

Discount Rate

Summed, Partial 

Employment 

Effects in the 

Motor Vehicle 

Manufacturing 

Sector, 7% 

Discount Rate

2017 1,400 1,300 500-3,100 1,900-4,500 1,800-4,400

2018 4,000 3,800 1,000-6,200 5,100-10,300 4,800-10,000

2019 6,400 6,100 1,500-9,000 7,900-15,400 7,600-15,100

2020 9,300 8,800 1,900-11,600 11,200-20,900 10,700-20,400

2021 13,700 12,900 2,600-15,900 16,300-29,600 15,500-28,800

2022 14,800 13,900 3,700-22,500 18,400-37,200 17,600-36,400

2023 15,500 14,600 4,600-28,300 20,000-43,800 19,100-42,900

2024 16,300 15,300 5,400-33,900 21,700-50,100 20,700-49,200

2025 17,200 16,100 6,200-39,000 23,400-56,100 22,300-55,100

ii. Effects on Employment for Auto Dealers 

The effects of the proposed standards on employment for auto dealers depend principally 

on the effects of the standards on light duty vehicle sales. As discussed in Section III.H.10, if 

vehicle buyers consider five years’ worth of fuel savings when considering whether to invest in 

additional fuel economy, then this proposal is expected to increase light duty vehicle sales, which 

should be expected to increase employment for those who sell new light duty vehicles. As 

discussed in Section III.H.1.a, the role of fuel economy in consumer vehicle purchase decisions 

is not well understood. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 459 of 770

Although this proposal predicts very small penetration of advanced technology vehicles, 

the uncertainty on consumer acceptance of such technology vehicles is even greater. As 

discussed in Section III.H.1.b, consumers may find some characteristics of electric vehicles and 

plug-in hybrid electric vehicles, such as the ability to fuel with electricity rather than gasoline, 

attractive; they may find other characteristics, such as the limited range for electric vehicles, 

undesirable. Auto dealers may play a major role in explaining the merits and disadvantages of 

these new technologies to vehicle buyers. There may be a temporary need for increased 

employment to train sales staff in the new technologies as the new technologies become 

available. 

iii. Effects on Employment in the Auto Parts Sector 

As discussed in the context of employment in the auto industry, some vehicle parts are 

made in-house by auto manufacturers; others are made by independent suppliers who are not 

directly regulated, but who will be affected by the proposed standards as well. The additional 

expenditures on technologies are expected to have a positive effect on employment in the parts 

sector as well as the manufacturing sector; the breakdown in employment between the two 

sectors is difficult to predict. The effects on the parts sector also depend on the effects of the 

proposed standards on vehicle sales and on the labor intensity of the new technologies, 

qualitatively in the same ways as for the auto manufacturing sector. Because employment in the 

auto parts sector is expected to be affected in the same direction as in the auto manufacturing 

sector, we expect an increase in employment in the parts sector. Note that, under full 

employment, these workers would be pulled from other sectors, which would have an 

opportunity cost associated with it. 

iv. Effects on Employment for Fuel Suppliers 

In addition to the effects on the auto manufacturing and parts sectors, these rules will 

result in changes in fuel use that lower GHG emissions. Fuel saving, principally reductions in 

liquid fuels such as gasoline and diesel, will affect employment in the fuel suppliers industry 

sectors throughout the supply chain, from refineries to gasoline stations. To the extent that the 

proposed standards result in increased use of electricity, natural gas, or other fuels, employment 

effects will result from providing these fuels and developing the infrastructure to supply them to 

consumers. 

Expected petroleum fuel consumption reductions can be found in Section III.H.3. While 

those figures represent fuel savings for purchasers of fuel, it represents a loss in value of output 

for the petroleum refinery industry, fuel distribution, and gasoline stations. The loss of 

expenditures to petroleum fuel suppliers throughout the petroleum fuel supply chain, from the 

petroleum refiners to the gasoline stations, is likely to result in reduced employment in these 

sectors. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 460 of 770

This rule is also expected to lead to increases in electricity consumption by vehicles, as 

discussed in Section XX.XX. This new fuel may require additional infrastructure, such as 

electricity charging locations. Providing this infrastructure will require some increased 

employment. In addition, the generation of electricity will also require some additional labor. 

We have insufficient information at this time to predict whether the increases in labor associated 

with increased infrastructure provision and fuel generation for these newer fuels will be greater 

or less than the employment reductions associated with reduced demand for petroleum fuels. 

v. Effects on Employment due to Impacts on Consumer Expenditures and EconomyWide Impacts 

As a result of these proposed standards, consumers will pay a higher up-front cost for the 

vehicles, but they will recover those costs in a fairly short payback period (see Section 

III.H.10.b); indeed, people who finance their vehicles are expected to find that their fuel savings 

per month exceed the increase in the loan cost. As a result, consumers will have additional 

money to spend on other goods and services, though, for those who do not finance their vehicles, 

it will occur after the initial payback period. These increased expenditures will support 

employment in those sectors where consumers spend their savings. 

These increased expenditures will occur in 2017 and beyond. If the economy returns to 

full employment by that time, any change in consumer expenditures would primarily represent a 

shift in employment among sectors. If, on the other hand, the economy still has substantial 

unemployment, these expenditures would contribute to employment through increased consumer 

demand. 

Economy-wide CGE modeling of this rule provides additional insight into the effects of 

this rule on consumer expenditures, in addition to impacts on the overall market economy.560 

We conducted similar economy-wide impact analyses for both the 2012-2016 light-duty GHG 

final rule and the recent heavy-duty GHG final rule.561 Our analysis focused on two key 

economic measures: U.S Gross Domestic Product (GDP) and consumption.562 We analyzed the 

change in these two economic measures from the proposed rule’s anticipated impacts on vehicle 

 560 We provide general background on CGE models in Section III.H.11. b.ii. 561See Memorandum to Docket, "Economy-Wide Impacts of Proposed Greenhouse Gas Tailpipe Standards for the 

Final Rulemaking," March 4, 2010, Document ID: EPA-HQ-OAR-2009-0472-11467 and Memorandum to Docket, 

“Economy-Wide Impacts of Heavy-Duty Truck Greenhouse Gas Emissions and Fuel Efficiency Standards”, May 

20, 2011, Document ID: EPA-HQ-OAR-2010-0162-3342. 562 GDP is one widely-used measure of overall economic activity. It measures the market value of all goods and 

services produced in a given year and reflects the sum of its four components: consumption, investment, government 

spending, and net exports. Consumption, one component of GDP, may provide a more explicit indicator of 

households’ well being by showing the value of goods and services that households consume in a given year.
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 461 of 770

costs, fuel consumption, U.S. oil imports, and world oil prices.563 Our analysis indicated that 

U.S. GDP would increase over time as a result of the proposed rule. For example, we estimated 

that U.S. GDP would increase by 0.36% in 2020 and 0.88% in 2030. We estimated that overall 

U.S. consumption would decline slightly in the first two years of the proposed program, but 

would increase thereafter as the benefits from fuel savings outweigh higher vehicle costs. For 

example, we estimated that consumption per U.S. household would increase by $30 in 2020 and 

$860 in 2030 (in 2009 dollars). A more detailed discussion of these results and the methodology 

we used to conduct this economy-wide analysis are available in Chapter 8.3 of the DRIA. 

For comparison, a modeling analysis of the TAR scenarios conducted by Management 

Information Services, Inc., for Ceres found that, in 2030, gross economic output would increase 

by $15.5 - $31.2 billion, personal income in the U.S. would increase by $10.2 to $20.5 billion, 

and national employment would increase by 350,000-680,000 jobs, with more stringent 

standards producing higher results.564 Similar to the economy-wide analysis conducted for this 

rule, this study incorporated the effects of both increased vehicle costs and increased fuel 

savings. Unlike the economy-wide analysis here, this study used an input-output model (see 

Section III.H.11.b.iii for further discussion of these models). 

d. Summary 

The primary employment effects of this proposal are expected to be found throughout 

several key sectors: auto manufacturers, auto dealers, auto parts manufacturing, fuel production 

and supply, and consumers. We emphasize that the discussion here is a partial view of these 

effects. Whether the economy is in full employment will determine whether the discussed 

changes in employment in these sectors is offset in other sectors of the economy. The extent to 

which employment in the sectors discussed above responds to this program will also be 

influenced by how consumers consider fuel savings in their vehicle purchase decisions, changes 

in vehicle manufacturing technologies and locations, and other factors. 

This rule initially takes effect in model year 2017, a time period sufficiently far in the 

future that the current sustained high unemployment at the national level may be moderated or 

ended. In an economy with full employment, the primary employment effect of a rulemaking is 

likely to be to move employment from one sector to another, rather than to increase or decrease 

employment. For that reason, we focus our quantitative analysis on employment in the regulated 

 563 Due to time constraints, the economy-wide analysis was based on preliminary fuel savings and vehicle cost 

estimates. Relative to final estimates presented in the proposed rulemaking, vehicle costs and fuels savings used in 

the economy-wide analysis were roughly 3-7% and 1% lower, respectively, over the years modeled. We projected 

the impact on world oil prices using a model developed by the Oak Ridge National Laboratory, which we discuss in 

III.H.7 and Chapter 4 of the Joint TSD. Note that the reduction in world oil prices is not reflected in the projected 

fuel prices that we assume elsewhere in the proposed rule, as described in II.E. 564 Management Information Services, Inc. “More Jobs per Gallon: How Strong Fuel Economy/GHG Standards 

will Fuel American Jobs.” Ceres Report, July 2011, http://www.ceres.org/resources/reports/more-jobs-pergallon/view, accessed 9/29/11. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 462 of 770

sector, to examine the impacts on that sector directly. We discuss the likely direction of impacts 

in other directly related sectors, but we do not quantify those impacts, because employment 

impacts outside the regulated sector are more difficult to quantify with reasonable accuracy, 

particularly so far into the future. 

For the regulated sector, the demand effect is expected to increase employment needs by 

perhaps 1,200 workers in 2017. The cost effect is expected to increase employment by 500 – 

2,900 workers in 2017depending on the share of that employment that is in the auto 

manufacturing sector compared to the auto parts manufacturing sector. Though we do not have 

estimates of the factor shift effect for all potential compliance technologies, the evidence which 

we do have for some technologies suggests that many of the technologies will have increased 

labor needs. 

Increased vehicle sales are expected to lead to increased labor needs in auto dealerships. 

Increased vehicle sales and increased expenditures for auto parts are expected to require 

increased labor to build parts, though this effect also depends on any changes in the labor 

intensity of production; as noted, the subset of potential compliance technologies for which data 

are available show increased labor requirements. Reduced fuel production implies less 

employment in the fuel provision sectors. Finally, net cost savings to consumers are expected to 

increase employment through their increased expenditures in general retail sectors. 

I. Statutory and Executive Order Reviews 

a. Executive Order 12866: “Regulatory Planning and Review and Executive Order 

13563: Improving Regulation and Regulatory Review” 

Under section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this 

action is an "economically significant regulatory action” because it is likely to have an annual 

effect on the economy of $100 million or more. Accordingly, EPA submitted this action to the 

Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 

(76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations 

have been documented in the docket for this action as required by CAA section 307(d)(4)(B)(ii). 

In addition, EPA prepared an analysis of the potential costs and benefits associated with 

this action. This analysis is contained in the Draft Regulatory Impact Analysis, which is 

available in the docket for this rulemaking and at the docket internet address listed under 

ADDRESSES above. 

b. Paperwork Reduction Act 

The information collection requirements in this proposed rule have been submitted for 

approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act, 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 463 of 770

44 U.S.C. 3501 et seq. The Information Collection Request (ICR) document prepared by EPA 

has been assigned EPA ICR number 0783.61. 

The Agency proposes to collect information to ensure compliance with the provisions in 

this rule. This includes a variety of requirements for vehicle manufacturers. Section 208(a) of 

the Clean Air Act requires that vehicle manufacturers provide information the Administrator may 

reasonably require to determine compliance with the regulations; submission of the information 

is therefore mandatory. We will consider confidential all information meeting the requirements 

of section 208(c) of the Clean Air Act. 

As shown in Table III-89, the total annual reporting burden associated with this proposal 

is about xx hours and $x million, based on a projection of xx respondents. The estimated burden 

for vehicle manufacturers is a total estimate for both new and existing reporting requirements. 

Burden means the total time, effort, or financial resources expended by persons to generate, 

maintain, retain, or disclose or provide information to or for a Federal agency. This includes the 

time needed to review instructions; develop, acquire, install, and utilize technology and systems 

for the purposes of collecting, validating, and verifying information, processing and maintaining 

information, and disclosing and providing information; adjust the existing ways to comply with 

any previously applicable instructions and requirements; train personnel to be able to respond to 

a collection of information; search data sources; complete and review the collection of 

information; and transmit or otherwise disclose the information. 

 

Table III-89 Estimated Burden for Reporting and Recordkeeping Requirements 

Number of 

respondents 

Annual burden 

hours Annual costs 

xx xx $xx

An agency may not conduct or sponsor, and a person is not required to respond to a 

collection of information unless it displays a currently valid OMB control number. The OMB 

control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. 

To comment on the Agency's need for this information, the accuracy of the provided 

burden estimates, and any suggested methods for minimizing respondent burden, including the 

use of automated collection techniques, EPA has established a public docket for this rule, which 

includes this ICR, under Docket ID number EPA-HQ-OAR-2010-0799. Submit any comments 

related to the ICR for this proposed rule to EPA and OMB. See ‘Addresses’ section at the 

beginning of this notice for where to submit comments to EPA. Send comments to OMB at the 

Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th 

Street, NW, Washington, DC 20503, Attention: Desk Office for EPA. Since OMB is required to 

make a decision concerning the ICR between 30 and 60 days after [Insert date of publication in 

the FEDERAL REGISTER], a comment to OMB is best assured of having its full effect if OMB 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 464 of 770

receives it by [Insert date 30 days after publication in the FEDERAL REGISTER]. The final 

rule will respond to any OMB or public comments on the information collection requirements 

contained in this proposal. 

c. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a 

regulatory flexibility analysis of any rule subject to notice and comment rulemaking 

requirements under the Administrative Procedure Act or any other statute unless the agency 

certifies that the rule will not have a significant economic impact on a substantial number of 

small entities. Small entities include small businesses, small organizations, and small 

governmental jurisdictions. 

For purposes of assessing the impacts of this rule on small entities, small entity is defined 

as: (1) a small business as defined by the Small Business Administration’s (SBA) regulations at 

13 CFR 121.201 (see table below); (2) a small governmental jurisdiction that is a government of 

a city, county, town, school district or special district with a population of less than 50,000; and 

(3) a small organization that is any not-for-profit enterprise which is independently owned and 

operated and is not dominant in its field. 

Table III-90 provides an overview of the primary SBA small business categories included 

in the light-duty vehicle sector: 

Table III-90 Primary SBA Small Business Categories in the Light-Duty Vehicle 

Sector 

Industry a

Defined as Small Entity 

by SBA if Less Than or 

Equal to: 

NAICS Codes b

Vehicle manufacturers (including 

small volume manufacturers) 1,000 employees 336111, 336112 

Independent commercial importers 

$7 million annual sales

$23 million annual sales

100 employees

811111, 811112, 811198 

441120 

423110 

Alternative Fuel Vehicle 

Converters 

750 employees

1,000 employees

$7 million annual sales

336312, 336322, 336399 

335312 

811198 a. Light-duty vehicle entities that qualify as small businesses would not be subject to this proposed rule. We are 

proposing to exempt small business entities from the proposed standards. b. North American Industrial Classification System 

After considering the economic impacts of today’s proposal on small entities, EPA 

certifies that this action will not have a significant economic impact on a substantial number of 

small entities. As with the MY 2012-2016 GHG standards, EPA is proposing to exempt 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 465 of 770

manufacturers meeting SBA’s definition of small business as described in 13 CFR 121.201 due 

to unique issues involved with establishing appropriate GHG standards for these small 

businesses and the potential need to develop a program that would be structured differently for 

them (which would require more time), and the extremely small emissions contribution of these 

entities. EPA would instead consider appropriate GHG standards for these entities as part of a 

future regulatory action. 

Potentially affected small entities fall into three distinct categories of businesses for lightduty vehicles: small volume manufacturers (SVMs), independent commercial importers (ICIs), 

and alternative fuel vehicle converters. Based on our preliminary assessment, EPA has identified 

a total of about 17 entities that fit the Small Business Administration (SBA) criterion of a small 

business. There are about 4 small manufacturers, including three electric vehicle manufacturers, 

8 ICIs, and 5 alternative fuel vehicle converters in the light-duty vehicle market which are small 

businesses (no major vehicle manufacturers meet the small-entity criteria as defined by SBA). 

EPA estimates that these small entities comprise less than 0.1 percent of the total light-duty 

vehicle sales in the U.S., and therefore the proposed exemption will have a negligible impact on 

the GHG emissions reductions from the proposed standards. 

As discussed in Section III.B.7, EPA is proposing to allow small businesses to waive 

their small entity exemption and optionally certify to the GHG standards. This would allow 

small entity manufacturers to earn CO2 credits under the GHG program, if their actual fleetwide 

CO2 performance was better than their fleetwide CO2 target standard. EPA proposes to make the 

GHG program opt-in available starting in MY 2014, as the MY 2012, and potentially the MY 

2013, certification process will have already occurred by the time this rulemaking is finalized. 

EPA is also proposing that manufacturers certifying to the GHG standards for MY 2014 would 

be eligible to generate early credits for vehicles sold in MY 2012 and MY 2013. Manufacturers 

waiving their small entity exemption would be required to meet all aspects of the GHG standards 

and program requirements across their entire product line. However, the exemption waiver 

would be optional for small entities and presumably manufacturers would only opt into the GHG 

program if it is economically advantageous for them to do so, for example through the generation 

and sale of CO2 credits. Therefore, EPA believes adding this voluntary option does not affect 

EPA’s determination that the proposed standards would impose no significant adverse impact on 

small entities. 

Some commenters to the 2012-2016 light duty vehicle GHG rulemaking argued that EPA 

is obligated under the RFA to consider indirect impacts of the rules in assessing impacts on small 

businesses, in particular potential impacts on stationary sources that would not be directly 

regulated by the rule. EPA disagrees. When considering whether a rule should be certified, the 

RFA requires an agency to look only at the small entities to which the proposed rule will apply 

and which will be subject to the requirement of the specific rule in question. 5 USC section 603, 

605 (b); Mid-Tex Elec. Coop. v. FERC, 773 F.3d 327, 342 (D.C. Cir. 1985). Reading section 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 466 of 770

605 in light of section 603, we conclude that an agency may properly certify that no regulatory 

flexibility analysis is necessary when it determines that the rule will not have a significant 

economic impact on a substantial number of small entities that are subject to the requirements of 

the rule; see also Cement Kiln Recycling Coalition, v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001). 

D.C. Circuit has consistently rejected the contention that the RFA applies to small businesses 

indirectly affected by the regulation of other entities.565

Since the proposal would regulate exclusively large motor vehicle manufacturers and 

small vehicle manufacturers are exempted from the standards, EPA is properly certifying that the 

2017-2025 standards would not have a significant economic impact on a substantial number of 

small entities directly subject to the rule or otherwise would have a positive economic effect on 

all of the small entities opting in to the rule. 

We continue to be interested in the potential impacts of the proposed rule on small 

entities and welcome comments on issues related to such impacts. 

d. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 104-4, establishes 

requirements for Federal agencies to assess the effects of their regulatory actions on State, local, 

and tribal governments and the private sector. 

This proposal contains no Federal mandates (under the regulatory provisions of Title II of 

the UMRA) for State, local, or tribal governments. The rule imposes no enforceable duty on any 

State, local or tribal governments. This action is also not subject to the requirements of section 

203 of UMRA because EPA has determined that this rule contains no regulatory requirements 

that might significantly or uniquely affect small governments. EPA has determined that this 

proposal contains a Federal mandate that may result in expenditures of $100 million or more for 

the private sector in any one year. EPA believes that the proposal represents the least costly, 

most cost-effective approach to revise the light duty vehicle standards as authorized by section 

202(a)(1). See Section III.A.2.a above. The costs and benefits associated with the proposal are 

discussed above and in the Draft Regulatory Impact Analysis, as required by the UMRA. 

e. Executive Order 13132: “Federalism” 

 This proposed action would not have federalism implications. It will not have substantial 

direct effects on the States, on the relationship between the national government and the States, 

or on the distribution of power and responsibilities among the various levels of government, as 

specified in Executive Order 13132. This rulemaking would apply to manufacturers of motor 

 565 In any case, any impacts on stationary sources arise because of express statutory requirements in the CAA, not as 

a result of vehicle GHG regulation. Moreover, GHGs have become subject to regulation under the CAA by virtue of 

other regulatory actions taken by EPA before this proposal. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 467 of 770

vehicles and not to state or local governments; state and local governments that purchase new 

model year 2017 and later vehicles will enjoy substantial fuel savings from these more fuel 

efficient vehicles. Thus, Executive Order 13132 does not apply to this action. Although section 

6 of Executive Order 13132 does not apply to this action, EPA did consult with representatives 

of state and local governments in developing this action. 

In the spirit of Executive Order 13132, and consistent with EPA policy to promote 

communications between EPA and State and local governments, EPA specifically solicits 

comment on this proposed action from State and local officials. 

f. Executive Order 13175: “Consultation and Coordination with Indian Tribal 

Governments” 

 This proposed rule does not have tribal implications, as specified in Executive Order 

13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the Federal level and 

impose compliance costs only on vehicle manufacturers. Tribal governments would be affected 

only to the extent they purchase and use regulated vehicles; tribal governments that purchase 

new model year 2017 and later vehicles will enjoy substantial fuel savings from these more fuel 

efficient vehicles. Thus, Executive Order 13175 does not apply to this rule. EPA specifically 

solicits additional comment on this proposed rule from tribal officials. 

g. Executive Order 13045: “Protection of Children from Environmental Health 

Risks and Safety Risks” 

This action is subject to EO 13045 (62 FR 19885, April 23, 1997) because it is an 

economically significant regulatory action as defined by EO 12866, and EPA believes that the 

environmental health or safety risk addressed by this action may have a disproportionate effect 

on children. Climate change impacts, and in particular the determinations of the Administrator in 

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), are summarized in Section III.F.2. In 

making those Findings, the Administrator placed weight on the fact that certain groups, including 

children, are particularly vulnerable to climate-related health effects. In those Findings, the 

Administrator 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 

intense 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 elderly, and the poor. In 

addition, the occurrence of wildfires in North America have increased and are likely to intensify 

in a warmer future. PM emissions from these wildfires can contribute to acute and chronic 

illnesses of the respiratory system, including pneumonia, upper respiratory diseases, asthma, and 

chronic obstructive pulmonary disease, especially in children. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 468 of 770

EPA has estimated reductions in projected global mean surface temperature and sea level 

rise as a result of reductions in GHG emissions associated with the standards proposed in this 

action (Section III.F.3). Due to their vulnerability, children may receive disproportionate 

benefits from these reductions in temperature and the subsequent reduction of increased ozone 

and severity of weather events. 

The public is invited to submit comments or identify peer-reviewed studies and data that 

assess effects of early life exposure to the pollutants addressed by this proposed rule. 

2. Executive Order 13211: “Energy Effects” (Coe, Shelby) 

Executive Order 13211566 applies to any rule that: (1) Is determined to be economically 

significant as defined under E.O. 12866, and is likely to have a significant adverse effect on the 

supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office 

of Information and Regulatory Affairs as a significant energy action. If the regulatory action 

meets either criterion, we must evaluate the adverse energy effects of the proposed rule and 

explain why the proposed regulation is preferable to other potentially effective and reasonably 

feasible alternatives considered by us. 

The proposed rule seeks to establish passenger car and light truck fuel economy standards 

that would significantly reduce the consumption of petroleum, would achieve energy security 

benefits, and would not have any adverse energy effects (Section III.H.7). In fact, this rule has a 

positive effect on energy supply and use. Because the GHG emission standards finalized today 

result in significant fuel savings, this rule encourages more efficient use of fuels. Accordingly, 

this proposed rulemaking action is not designated as a significant energy action as defined by 

E.O. 13211. 

a. National Technology Transfer Advancement Act 

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 

(“NTTAA”), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary 

consensus standards in its regulatory activities unless to do so would be inconsistent with 

applicable law or otherwise impractical. Voluntary consensus standards are technical standards 

(e.g., materials, specifications, test methods, sampling procedures, and business practices) that 

are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to 

provide Congress, through OMB, explanations when the Agency decides not to use available and 

applicable voluntary consensus standards. 

For CO2 emissions, EPA is proposing to collect data over the same tests that are used for 

the MY 2012-2016 CO2 standards and for the CAFE program. This will minimize the amount of 

testing done by manufacturers, since manufacturers are already required to run these tests. For 

 566 66 FR 28355 (May 18, 2001). 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 469 of 770

A/C credits, EPA is proposing to use a consensus methodology developed by the Society of 

Automotive Engineers (SAE) and also a new A/C idle test. EPA knows of no consensus 

standard available for the A/C idle test. 

b. Executive Order 12898: “Federal Actions to Address Environmental Justice in 

Minority Populations and Low-Income Populations” 

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive 

policy on environmental justice. Its main provision directs federal agencies, to the greatest 

extent practicable and permitted by law, to make environmental justice part of their mission by 

identifying and addressing, as appropriate, disproportionately high and adverse human health or 

environmental effects of their programs, policies, and activities on minority populations and lowincome populations in the United States. 

With respect to GHG emissions, EPA has determined that this proposed rule will not 

have disproportionately high and adverse human health or environmental effects on minority or 

low-income populations because it increases the level of environmental protection for all 

affected populations without having any disproportionately high and adverse human health or 

environmental effects on any population, including any minority or low-income population. The 

reductions in CO2 and other GHGs associated with the proposed standards will affect climate 

change projections, and EPA has estimated reductions in projected global mean surface 

temperatures and sea-level rise (Section III.F.3). Within settlements experiencing climate 

change, certain parts of the population may be especially vulnerable; these include the poor, the 

elderly, those already in poor health, the disabled, those living alone, and/or indigenous 

populations dependent on one or a few resources.567 Therefore, these populations may receive 

disproportionate benefits from reductions in GHGs. 

For non-GHG co-pollutants such as ozone, PM2.5, and toxics, EPA has concluded that it 

is not practicable to determine whether there would be disproportionately high and adverse 

human health or environmental effects on minority and/or low income populations from this 

proposed rule. 

J. Statutory Provisions and Legal Authority 

Statutory authority for the vehicle controls proposed today is found in section 202 (a) 

(which authorizes standards for emissions of pollutants from new motor vehicles which 

emissions cause or contribute to air pollution which may reasonably be anticipated to endanger 

public health or welfare), 202 (d), 203-209, 216, and 301 of the Clean Air Act, 42 U.S.C. 7521 

(a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 7601. Statutory authority for 

 567 U.S. EPA. (2009). Technical Support Document for Endangerment or Cause or Contribute Findings for 

Greenhouse Gases under Section 202(a) of the Clean Air Act. Washington, D.C.: U.S. EPA. Retrieved on April 21, 

2009 from http://epa.gov/climatechange/endangerment/downloads/TSD_Endangerment.pdf. 
Summary of Interagency Working Comments Received on Draft rule under EO 12866 review. Subject to

further policy review.

Page 470 of 770

EPA to establish CAFE test procedures is found in section 32904 (c) of the Energy Policy and 

Conservation Act, 49 USC section 32904 (c). 

[Placeholder: Section IV – NHTSA’s CAFE Proposal] 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 471 of 770

Environmental Protection Agency 

40 CFR Chapter I 

For the reasons set forth in the preamble, the Environmental Protection Agency amends 

parts 85, 86, and 600 of title 40, Chapter I of the Code of Federal Regulations as follows: 

PART 85—CONTROL OF AIR POLLUTION FROM MOBILE SOURCES 

1. The authority citation for part 86 continues to read as follows: 

Authority: 42 U.S.C. 7401–7671q.

Subpart F—[Amended] 

2. Section 85.525 is amended by adding paragraph (a)(2)(i)(D), to read as follows: 

§ 85.525 Applicable standards. 

* * * * * 

(a) * * * 

(2) * * * 

(i) * * * 

(D) Optionally, compliance with greenhouse gas emission requirements may be 

demonstrated by comparing the sum of CH4 plus N2O plus CO2 emissions from the before fuel 

conversion FTP results to the after fuel conversion FTP results. This comparison is based on test 

results from the emission data vehicle (EDV) from the conversion test group at issue. The 

summation of the post fuel conversion test results must be lower than the summation of the 

before conversion greenhouse gas emission results. CO2 emissions are calculated as specified in 

40 CFR 600.113-12. CH4 and N2O emissions, before and after fuel conversion, are adjusted by 

applying multiplicative factors of 25 and 298, respectively, to account for their increased global 

warming potential. If statements of compliance are applicable and accepted in lieu of measuring 

N2O, as permitted by EPA regulation, the comparison of the greenhouse gas results also need not 

measure or include N2O in the before and after emission comparisons. 

* * * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 472 of 770

PART 86—CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY 

VEHICLES AND ENGINES 

3. The authority citation for part 86 continues to read as follows: 

Authority: 42 U.S.C. 7401–7671q. 

4. Section 86.1 is amended to read as follows: 

§ 86.1 Reference materials. 

(a) Certain material is incorporated by reference into this part with the approval of the 

Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any 

edition other than that specified in this section, the Environmental Protection Agency must 

publish a notice of the change in the Federal Register and the material must be available to the 

public. All approved material is available for inspection at U.S. EPA, Air and Radiation Docket 

and Information Center, 1301 Constitution Ave., NW., Room B102, EPA West Building, 

Washington, DC 20460, (202) 202–1744, and is available from the sources listed below. It is 

also available for inspection at the National Archives and Records Administration (NARA). For 

information on the availability of this material at NARA, call 202–741–6030, or go to: 

http://www.archives.gov/ federal_register/ code_of_federal_regulations/ ibr_locations.html and 

is available from the sources listed below: 

(b) American Society for Testing and Materials, 100 Barr Harbor Drive, P.O. Box C700, 

West Conshohocken, PA, 19428–2959, (610) 832–9585, http:// www.astm.org/. 

(1) ASTM D 975–04c, Standard Specification for Diesel Fuel Oils, IBR approved for 

§§86.1910, 86.213–11. 

(2) ASTM D1945–91, Standard Test Method for Analysis of Natural Gas by Gas 

Chromatography, IBR approved for §§86.113–94, 86.513–94, 86.1213–94, 86.1313–94. 

(3) ASTM D2163–91, Standard Test Method for Analysis of Liquefied Petroleum (LP) 

Gases and Propane Concentrates by Gas Chromatography, IBR approved for §§86.113–94, 

86.1213–94, 86.1313–94. 

(4) ASTM D2986–95a, Reapproved 1999, Standard Practice for Evaluation of Air Assay 

Media by the Monodisperse DOP (Dioctyl Phthalate) Smoke Test, IBR approved for §§86.1310–

2007. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 473 of 770

(5) ASTM D5186–91, Standard Test Method for Determination of Aromatic Content of 

Diesel Fuels by Supercritical Fluid Chromatography, IBR approved for §§86.113–07, 86.1313–

91, 86.1313–94, 86.1313–98, 1313–2007. 

(6) ASTM E29–67, Reapproved 1980, Standard Recommended Practice for Indicating 

Which Places of Figures Are To Be Considered Significant in Specified Limiting Values, IBR 

approved for §86.1105–87. 

(7) ASTM E29–90, Standard Practice for Using Significant Digits in Test Data to 

Determine Conformance with Specifications, IBR approved for §§86.609–84, 86.609–96, 

86.609–97, 86.609–98, 86.1009–84, 86.1009–96, 86.1442, 86.1708–99, 86.1709–99, 86.1710–

99, 86.1728–99. 

(8) ASTM E29–93a, Standard Practice for Using Significant Digits in Test Data to 

Determine Conformance with Specifications, IBR approved for §§86.098–15, 86.004–15, 

86.007–11, 86.007–15, 86.1803–01, 86.1823–01, 86.1824–01, 86.1825–01, 86.1837–01. 

(9) ASTM F1471–93, Standard Test Method for Air Cleaning Performance of a HighEfficiency Particulate Air-Filter System, IBR approved §86.1310–2007. 

(10) ASTM E903-96, Standard Test Method for Solar Absorptance, Reflectance, and 

Transmittance of Materials Using Integrating Spheres (Withdrawn 2005), IBR approved for 

§86.1866-12. 

(11) ASTM E1918-06, Standard Test Method for Measuring Solar Reflectance of 

Horizontal and Low-Sloped Surfaces in the Field, IBR approved for §86.1866-12. 

(12) ASTM C1549-09, Standard Test Method for Determination of Solar Reflectance 

Near Ambient Temperature Using a Portable Solar Reflectometer (2009) IBR approved for 

§86.1866-12. 

(c) Society of Automotive Engineers, 400 Commonwealth Dr., Warrendale, PA 15096–

0001, (877) 606–7323 (U.S. and Canada) or (724) 776–4970 (outside the U.S. and Canada), 

http://www.sae.org. 

(1) SAE J1151, December 1991, Methane Measurement Using Gas Chromatography, 

1994 SAE Handbook—SAE International Cooperative Engineering Program, Volume 1: 

Materials, Fuels, Emissions, and Noise; Section 13 and page 170 (13.170), IBR approved for 

§§86.111–94; 86.1311–94. 

(2) SAE J1349, June 1990, Engine Power Test Code—Spark Ignition and Compression 

Ignition, IBR approved for §§86.094–8, 86.096–8. 

(3) SAE J1850, July 1995, Class B Data Communication Network Interface, IBR 

approved for §§86.099–17, 86.1806–01. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 474 of 770

(4) SAE J1850, Revised May 2001, Class B Data Communication Network Interface, 

IBR approved for §§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(5) SAE J1877, July 1994, Recommended Practice for Bar-Coded Vehicle Identification 

Number Label, IBR approved for §§86.095–35, 86.1806–01. 

(6) SAE J1892, October 1993, Recommended Practice for Bar-Coded Vehicle Emission 

Configuration Label, IBR approved for §§86.095–35, 86.1806–01. 

(7) SAE J1930, Revised May 1998, Electrical/Electronic Systems Diagnostic Terms, 

Definitions, Abbreviations, and Acronyms, IBR approved for §§86.096–38, 86.004–38, 86.007–

38, 86.010–38, 86.1808–01, 86.1808–07. 

(8) SAE J1930, Revised April 2002, Electrical/Electronic Systems Diagnostic Terms, 

Definitions, Abbreviations, and Acronyms—Equivalent to ISO/TR 15031–2: April 30, 2002, 

IBR approved for §§86.005–17, 86.007–17, 86.010–18, 86.1806–04, 86.1806–05. 

(9) SAE J1937, November 1989, Engine Testing with Low Temperature Charge Air 

Cooler Systems in a Dynamometer Test Cell, IBR approved for §§86.1330–84, 86.1330–90. 

(10) SAE J1939, Revised October 2007, Recommended Practice for a Serial Control and 

Communications Vehicle Network, IBR approved for §§86.010–18. 

(11) SAE J1939–11, December 1994, Physical Layer—250K bits/s, Shielded Twisted 

Pair, IBR approved for §§86.005–17, 86.1806–05. 

(12) SAE J1939–11, Revised October 1999, Physical Layer—250K bits/s, Shielded 

Twisted Pair, IBR approved for §§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(13) SAE J1939–13, July 1999, Off-Board Diagnostic Connector, IBR approved for 

§§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(14) SAE J1939–13, Revised March 2004, Off-Board Diagnostic Connector, IBR 

approved for §86.010–18. 

(15) SAE J1939–21, July 1994, Data Link Layer, IBR approved for §§86.005–17, 

86.1806–05. 

(16) SAE J1939–21, Revised April 2001, Data Link Layer, IBR approved for §§86.005–

17, 86.007–17, 86.1806–04, 86.1806–05. 

(17) SAE J1939–31, Revised December 1997, Network Layer, IBR approved for 

§§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(18) SAE J1939–71, May 1996, Vehicle Application Layer, IBR approved for §§86.005–

17, 86.1806–05. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 475 of 770

(19) SAE J1939–71, Revised August 2002, Vehicle Application Layer—J1939–71 

(through 1999), IBR approved for §§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(20) SAE J1939–71, Revised January 2008, Vehicle Application Layer (Through 

February 2007), IBR approved for §86.010–38. 

(21) SAE J1939–73, February 1996, Application Layer—Diagnostics, IBR approved for 

§§86.005–17, 86.1806–05. 

(22) SAE J1939–73, Revised June 2001, Application Layer—Diagnostics, IBR approved 

for §§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(23) SAE J1939–73, Revised September 2006, Application Layer—Diagnostics, IBR 

approved for §§86.010–18, 86.010–38. 

(24) SAE J1939–81, July 1997, Recommended Practice for Serial Control and 

Communications Vehicle Network Part 81—Network Management, IBR approved for 

§§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(25) SAE J1939–81, Revised May 2003, Network Management, IBR approved for 

§86.010–38. 

(26) SAE J1962, January 1995, Diagnostic Connector, IBR approved for §§86.099–17, 

86.1806–01. 

(27) SAE J1962, Revised April 2002, Diagnostic Connector Equivalent to ISO/DIS 

15031–3; December 14, 2001, IBR approved for §§86.005–17, 86.007–17, 86.010–18, 86.1806–

04, 86.1806–05. 

(28) SAE J1978, Revised April 2002, OBD II Scan Tool—Equivalent to ISO/DIS 15031–

4; December 14, 2001, IBR approved for §§86.005–17, 86.007–17, 86.010–18, 86.1806–04, 

86.1806–05. 

(29) SAE J1979, July 1996, E/E Diagnostic Test Modes, IBR approved for §§86.099–17, 

86.1806–01. 

(30) SAE J1979, Revised September 1997, E/E Diagnostic Test Modes, IBR approved 

for §§86.096–38, 86.004–38, 86.007–38, 86.010–38, 86.1808–01, 86.1808–07. 

(31) SAE J1979, Revised April 2002, E/E Diagnostic Test Modes—Equivalent to 

ISO/DIS 15031–5; April 30, 2002, IBR approved for §§86.099–17, 86.005–17, 86.007–17, 

86.1806–01, 86.1806–04, 86.1806–05. 

(32) SAE J1979, Revised May 2007, (R) E/E Diagnostic Test Modes, IBR approved for 

§86.010–18, 86.010–38. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 476 of 770

(33) SAE J2012, July 1996, Recommended Practice for Diagnostic Trouble Code 

Definitions, IBR approved for §§86.099–17, 86.1806–01. 

(34) SAE J2012, Revised April 2002, (R) Diagnostic Trouble Code Definitions 

Equivalent to ISO/DIS 15031–6: April 30, 2002, IBR approved for §§86.005–17, 86.007–17, 

86.010–18, 86.1806–04, 86.1806–05. 

(35) SAE J2284–3, May 2001, High Speed CAN (HSC) for Vehicle Applications at 500 

KBPS, IBR approved for §§86.096–38, 86.004–38, 86.007–38, 86.010–38, 86.1808–01, 

86.1808–07. 

(36) SAE J2403, Revised August 2007, Medium/Heavy-Duty E/E Systems Diagnosis 

Nomenclature—Truck and Bus, IBR approved for §§86.007–17, 86.010–18, 86.010–38, 

86.1806–05. 

(37) SAE J2534, February 2002, Recommended Practice for Pass-Thru Vehicle 

Programming, IBR approved for §§86.096–38, 86.004–38, 86.007–38, 86.010–38, 86.1808–01, 

86.1808–07. 

(38) SAE J2534–1, Revised December 2004, (R) Recommended Practice for Pass-Thru 

Vehicle Programming, IBR approved for §86.010–38. 

(39) SAE J2064, Revised December 2005, R134a Refrigerant Automotive AirConditioned Hose, IBR approved for §86.166–12. 

(40) SAE J2765, October, 2008, Procedure for Measuring System COP [Coefficient of 

Performance] of a Mobile Air Conditioning System on a Test Bench, IBR approved for 

§86.1866–12. 

(41) SAE J1711, Recommended Practice for Measuring the Exhaust Emissions and Fuel 

Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid Vehicles, June 2010, IBR 

approved for § 86.1811-04(n). 

(42) SAE J1634, Electric Vehicle Energy Consumption and Range Test Procedure, 

Cancelled October 2002, IBR approved for § 86.1811-04(n). 

(43) SAE J1100, November, 2009, Motor Vehicle Dimensions, IBR approved for 

§86.1866–12(d). 

(44) SAE J2064, Revised December 2005, R134a Refrigerant Automotive AirConditioned Hose, IBR approved for §86.166-12(d). 

(d) American National Standards Institute, 25 W 43rd Street, 4th Floor, New York, NY 

10036, (212) 642–4900, http://www.ansi.org. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 477 of 770

(1) ANSI/AGA NGV1–1994, Standard for Compressed Natural Gas Vehicle (NGV) 

Fueling Connection Devices, IBR approved for §§86.001–9, 86.004–9, 86.098–8, 86.099–8, 

86.099–9, 86.1810–01. 

(2) [Reserved] 

(e) California Air Resources Board, (916) 322–2884, http://www.arb.ca.gov . 

(1) California Regulatory Requirements Applicable to the “LEV II” Program, including: 

(i) [Reserved] 

(ii) California Non-Methane Organic Gas Test Procedures, August 5, 1999, IBR 

approved for §§86.1803–01, 86.1810–01, 86.1811–04. 

(2) California Regulatory Requirements Applicable to the National Low Emission 

Vehicle Program, October 1996, IBR approved for §§86.113–04, 86.612–97, 86.1012–97, 

86.1702–99, 86.1708–99, 86.1709–99, 86.1717–99, 86.1735–99, 86.1771–99, 86.1775–99, 

86.1776–99, 86.1777–99, Appendix XVI, Appendix XVII. 

(3) California Regulatory Requirements known as On-board Diagnostics II (OBD–II), 

Approved on April 21, 2003, Title 13, California Code Regulations, Section 1968.2, Malfunction 

and Diagnostic System Requirements for 2004 and Subsequent Model-Year Passenger Cars, 

Light-Duty Trucks, and Medium-Duty Vehicles and Engines (OBD–II), IBR approved for 

§86.1806–05. 

(4) California Regulatory Requirements known as On-board Diagnostics II (OBD–II), 

Approved on November 9, 2007, Title 13, California Code Regulations, Section 1968.2, 

Malfunction and Diagnostic System Requirements for 2004 and Subsequent Model-Year 

Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and Engines (OBD–II), IBR 

approved for §§86.007–17, 86.1806–05. 

(f) International Organization for Standardization, Case Postale 56, CH–1211 Geneva 20, 

Switzerland, 41–22–749–01–11, http://www.iso.org . 

(1) ISO 9141–2, February 1, 1994, Road vehicles—Diagnostic systems—Part 2: CARB 

requirements for interchange of digital information, IBR approved for §§86.099–17, 86.005–17, 

86.007–17, 86.1806–01, 86.1806–04, 86.1806–05. 

(2) ISO 14230–4:2000(E), June 1, 2000, Road vehicles—Diagnostic systems—KWP 

2000 requirements for Emission-related systems, IBR approved for §§86.099–17, 86.005–17, 

86.007–17, 86.1806–01, 86.1806–04, 86.1806–05. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 478 of 770

(3) ISO 15765–4.3:2001, December 14, 2001, Road Vehicles—Diagnostics on Controller 

Area Networks (CAN)—Part 4: Requirements for emissions-related systems, IBR approved for 

§§86.005–17, 86.007–17, 86.1806–04, 86.1806–05. 

(4) ISO 15765–4:2005(E), January 15, 2005, Road Vehicles—Diagnostics on Controller 

Area Networks (CAN)—Part 4: Requirements for emissions-related systems, IBR approved for 

§§86.007–17, 86.010–18, 86.1806–05. 

(5) ISO 13837:2008, May 30, 2008, Road Vehicles—Safety glazing materials. Method 

for the determination of solar transmittance, IBR approved for §86.1866-12. 

(g) Government Printing Office, Washington, DC 20402, (202) 512–1800 

http://www.nist.gov. . 

(1) NIST Special Publication 811, 1995 Edition, Guide for the Use of the International 

System of Units (SI), IBR approved for §86.1901. 

(2) [Reserved] 

(h) Truck and Maintenance Council, 950 North Glebe Road, Suite 210, Arlington, VA 

22203–4181, (703) 838–1754. 

(1) TMC RP 1210B, Revised June 2007, WINDOWSTMCOMMUNICATION API, IBR 

approved for §86.010–38. 

(2) [Reserved] 

Subpart B – [Amended] 

5. Section 86.111-94 is amended by revising paragraph (b) introductory text to read 

as follows:

§ 86.111-94 Exhaust gas analytical system. 

* * * * * 

(b) Major component description. The exhaust gas analytical system, Figure B94–7, 

consists of a flame ionization detector (FID) (heated, 235 °±15 °F (113 °±8 °C) for methanolfueled vehicles) for the determination of THC, a methane analyzer (consisting of a gas 

chromatograph combined with a FID) for the determination of CH4,non-dispersive infrared 

analyzers (NDIR) for the determination of CO and CO2, a chemiluminescence analyzer (CL) for 

the determination of NOX, and an analyzer meeting the requirements specified in 40 CFR 

1065.275 for the determination of N2O. A heated flame ionization detector (HFID) is used for 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 479 of 770

the continuous determination of THC from petroleum-fueled diesel-cycle vehicles (may also be 

used with methanol-fueled diesel-cycle vehicles), Figure B94–5 (or B94–6). The analytical 

system for methanol consists of a gas chromatograph (GC) equipped with a flame ionization 

detector. The analysis for formaldehyde is performed using high-pressure liquid chromatography 

(HPLC) of 2,4-dinitrophenylhydrazine (DNPH) derivatives using ultraviolet (UV) detection. The 

exhaust gas analytical system shall conform to the following requirements: 

* * * * * 

6. Section 86.135-12 is amended by revising paragraph (a) to read as follows:

§ 86.135-12 Dynamometer procedure.

(a) Overview. The dynamometer run consists of two tests, a “cold” start test, after a 

minimum 12-hour and a maximum 36-hour soak according to the provisions of §§86.132 and 

86.133, and a “hot” start test following the “cold” start by 10 minutes. Engine startup (with all 

accessories turned off), operation over the UDDS, and engine shutdown make a complete cold 

start test. Engine startup and operation over the first 505 seconds of the driving schedule 

complete the hot start test. The exhaust emissions are diluted with ambient air in the dilution 

tunnel as shown in Figure B94–5 and Figure B94–6. A dilution tunnel is not required for testing 

vehicles waived from the requirement to measure particulates. Six particulate samples are 

collected on filters for weighing; the first sample plus backup is collected during the first 505 

seconds of the cold start test; the second sample plus backup is collected during the remainder of 

the cold start test (including shutdown); the third sample plus backup is collected during the hot 

start test. Continuous proportional samples of gaseous emissions are collected for analysis during 

each test phase. For gasoline-fueled, natural gas-fueled and liquefied petroleum gas-fueled Ottocycle vehicles, the composite samples collected in bags are analyzed for THC, CO, CO2, CH4, 

NOX, and N2O. For petroleum-fueled diesel-cycle vehicles (optional for natural gas-fueled, 

liquefied petroleum gas-fueled and methanol-fueled diesel-cycle vehicles), THC is sampled and 

analyzed continuously according to the provisions of §86.110–94. Parallel samples of the 

dilution air are similarly analyzed for THC, CO, CO2, CH4, NOX, and N2O. For natural gasfueled, liquefied petroleum gas-fueled and methanol-fueled vehicles, bag samples are collected 

and analyzed for THC (if not sampled continuously), CO, CO2, CH4, NOX, and N2O. For 

methanol-fueled vehicles, methanol and formaldehyde samples are taken for both exhaust 

emissions and dilution air (a single dilution air formaldehyde sample, covering the total test 

period may be collected). For ethanol-fueled vehicles, methanol, ethanol, acetaldehyde, and 

formaldehyde samples are taken for both exhaust emissions and dilution air (a single dilution air 

formaldehyde sample, covering the total test period may be collected). Parallel bag samples of 

dilution air are analyzed for THC, CO, CO2, CH4, NOX, and N2O. 

* * * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 480 of 770

7. Section 86.165-12 is amended by revising paragraphs (c)(1) and (c)(2) to read as 

follows: 

§ 86.165-12 Air conditioning idle test procedure. 

* * * * * 

(c) * * * 

(1) Ambient humidity within the test cell during all phases of the test sequence shall be 

controlled to an average of 40 – 60 grains of water/pound of dry air. 

(2) Ambient air temperature within the test cell during all phases of the test sequence 

shall be controlled to 73 - 80 °F on average and 75 ± 5 °F as an instantaneous measurement. Air 

temperature shall be recorded continuously at a minimum of 30 second intervals. 

* * * * * 

8. Section 86.166-12 is amended by revising paragraphs (b) and (d) to read as 

follows:

§ 86.166-12 Method for calculating emissions due to air conditioning leakage. 

* * * * * 

(b) Rigid pipe connections. For 2017 and later model years, manufacturers may test the 

leakage of system connections by pressurizing the system with Helium and using a mass 

spectrometer to measure the leakage of the connections within the system. Connections that are 

demonstrated to be free of leaks using Helium mass spectrometry are considered to have a 

relative emission factor of 10 and are accounted for separately in the equation in paragraph (b)(2) 

of this section. The equation in paragraph (b)(1) of this section shall be used for the 2012 through 

2016 model years, and for 2017 and later model years in cases where the connections are not 

demonstrated to be leak-free using Helium mass spectrometry. 

(1) Determine the grams per year emission rate for rigid pipe connections using the 

following equation: 

Grams/YRRP = 0.00522 × [(125 × SO) + (75 × SCO) + (50 × MO) + (10 × SW) + (5 × 

SWO) + (MG)] 

Where: 

Grams/YRRP = Total emission rate for rigid pipe connections in grams per year. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 481 of 770

SO = The number of single O-ring connections. 

SCO = The number of single captured O-ring connections. 

MO = The number of multiple O-ring connections. 

SW = The number of seal washer connections. 

SWO = The number of seal washer with O-ring connections. 

MG = The number of metal gasket connections. 

(2) For 2017 and later model years, manufacturers may test the leakage of system 

connections by pressurizing the system with Helium and using a mass spectrometer to measure 

the leakage of the connections within the system. Connections that are demonstrated to be free of 

leaks using Helium mass spectrometry are considered to have a relative emission factor of 10 

and are accounted for separately in the following equation: 

Grams/YRRP = 0.00522 × [(125 × SO) + (75 × SCO) + (50 × MO) + (10 × SW) + (10 × 

LTO) + (5 × SWO) + (MG)] 

Where: 

Grams/YRRP = Total emission rate for rigid pipe connections in grams per year. 

SO = The number of single O-ring connections. 

SCO = The number of single captured O-ring connections. 

MO = The number of multiple O-ring connections. 

SW = The number of seal washer connections. 

LTO = The total number of O-ring connections (single, single captured, and multiple) 

that have demonstrated no leakage using Helium mass spectrometry. Connections included here 

should not be counted elsewhere in the equation, and all connections counted here must be tested 

using Helium mass spectrometry and demonstrated as free of leaks. 

SWO = The number of seal washer with O-ring connections. 

MG = The number of metal gasket connections. 

* * * * * 

(d) Flexible hoses. Determine the permeation emission rate in grams per year for each 

segment of flexible hose using the following equation, and then sum the values for all hoses in 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 482 of 770

the system to calculate a total flexible hose emission rate for the system. Hose end connections 

shall be included in the calculations in paragraph (b) of this section. 

Grams/YRFH = 0.00522 × (3.14159 × ID × L × ER) 

Where: 

Grams/YRFH = Emission rate for a segment of flexible hose in grams per year. 

ID = Inner diameter of hose, in millimeters. 

L = Length of hose, in millimeters. 

ER = Emission rate per unit internal surface area of the hose, in g/mm2

, selected from the 

following table, or, for 2017 and later model years, calculated according to SAE J2064 “R134a 

Refrigerant Automotive Air-Conditioned Hose” (incorporated by reference; see 86.1): 

Material/configuration 

ER 

Highpressure sideLowpressure side

All rubber hose 0.0216 0.0144

Standard barrier or veneer hose 0.0054 0.0036

Ultra-low permeation barrier or 

veneer hose 0.00225 0.00167

* * * * * 

9. A new section 86.167-17 is added to read as follows: 

§ 86.167-17 AC17 Air Conditioning Efficiency Test Procedure. 

(a) Overview. The dynamometer operation consists of four elements: a pre-conditioning 

cycle, a 30-minute soak period under simulated solar heat, an SC03 drive cycle, and a Highway 

Fuel Economy Test (HFET) drive cycle. The vehicle is preconditioned with the UDDS to bring 

the vehicle to a warmed-up stabilized condition. This preconditioning is followed by a 30 minute 

vehicle soak (engine off) that proceeds directly into the SC03 driving schedule, during which 

continuous proportional samples of gaseous emissions are collected for analysis. The SC03 

driving schedule is followed immediately by the HFET cycle, during which continuous 

proportional samples of gaseous emissions are collected for analysis. The entire test, including 

the preconditioning driving, vehicle soak, and SC03 and HFET official test cycles, is conducted 

in an environmental test facility. The environmental test facility must be capable of providing the 

following nominal ambient test conditions of: 77 °F air temperature, 50 percent relative 

humidity, a solar heat load intensity of 850 W/m2

, and vehicle cooling air flow proportional to 

vehicle speed. Section 86.161–00 discusses the minimum facility requirements and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 483 of 770

corresponding control tolerances for air conditioning ambient test conditions. The entire test 

sequence is run twice; with and without the vehicle's air conditioner operating during the SC03 

and HFET test cycles. For gasoline-fueled Otto-cycle vehicles, the composite samples collected 

in bags are analyzed for THC, CO, CO2, and CH4. For petroleum-fueled diesel-cycle vehicles, 

THC is sampled and analyzed continuously according to the provisions of §86.110. Parallel bag 

samples of dilution air are analyzed for THC, CO, CO2, and CH4. The following figure shows 

the basic sequence of the test procedure. 

(b) Dynamometer requirements. (1) Tests shall be run on a large single roll electric 

dynamometer or an equivalent dynamometer configuration that satisfies the requirements of 

§86.108–00. 

Time [min]

4 Hours

45

23

30

10

13

15

23

30

10

13

30

Drain and Fill

Preperation Cycle

Soak for 12 to 36 Hours

Preconditioning - EPA 74

Solar Soak

Bag 1 - SC03 - A/C ON

Vehicle/Site Preperation

Bag 2 - HWY - A/C ON

Soak

Preconditioning - EPA 74

Soak

Bag 3 - SC03 - A/C OFF

Bag 4 - HWY - A/C OFF

Analyze Data
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 484 of 770

(2) Position (vehicle can be driven) the test vehicle on the dynamometer and restrain. 

(3) Required dynamometer inertia weight class selections are determined by the test 

vehicle’s test weight basis and corresponding equivalent weight as listed in the tabular 

information of §86.129–00(a) and discussed in §86.129–00 (e) and (f). 

(4) Set the dynamometer test inertia weight and roadload horsepower requirements for 

the test vehicle (see §86.129–00 (e) and (f)). The dynamometer's horsepower adjustment settings 

shall be set such that the force imposed during dynamometer operation matches actual road load 

force at all speeds. 

(5) The vehicle speed as measured from the dynamometer rolls shall be used. A speed vs. 

time recording, as evidence of dynamometer test validity, shall be supplied at request of the 

Administrator. 

(6) The drive wheel tires may be inflated up to a gauge pressure of 45 psi (310 kPa), or 

the manufacturer's recommended pressure if higher than 45 psi, in order to prevent tire damage. 

The drive wheel tire pressure shall be reported with the test results. 

(7) The driving distance, as measured by counting the number of dynamometer roll or 

shaft revolutions, shall be determined for the test. 

(8) Four-wheel drive and all-wheel drive vehicles may be tested either in a four-wheel 

drive or a two-wheel drive mode of operation. In order to test in the two-wheel drive mode, fourwheel drive and all-wheel drive vehicles may have one set of drive wheels disengaged; fourwheel and all-wheel drive vehicles which can be shifted to a two-wheel mode by the driver may 

be tested in a two-wheel drive mode of operation. 

(c) Test cell ambient conditions. 

(1) Ambient air temperature. (i) Ambient air temperature is controlled, within the test 

cell, during all phases of the test sequence to 77 ±2 °F on average and 77 ±5 °F as an 

instantaneous measurement. 

(ii) Air temperature is recorded continuously at a minimum of 30 second intervals. 

Records of cell air temperatures and values of average test temperatures are maintained by the 

manufacturer for all certification related programs. 

(2) Ambient humidity. (i) Ambient humidity is controlled, within the test cell, during all 

phases of the test sequence to an average of 69 ±5 grains of water/pound of dry air. 

(ii) Humidity is recorded continuously at a minimum of 30 second intervals. Records of 

cell humidity and values of average test humidity are maintained by the manufacturer for all 

certification related programs. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 485 of 770

(3) Solar heat loading. The requirements of 86.161-00(d) regarding solar heat loading 

specifications shall apply. The solar load of 850 W/m2

 is applied only during specified portions 

of the test sequence. 

(d) Interior temperature measurement. The interior temperature of the vehicle shall be 

measured during the emission sampling phases of the test(s). 

(1) Interior temperatures shall be measured by placement of thermocouples at the 

following locations: 

(i) The outlet of the center duct on the dash. 

(ii) Behind the driver and passenger seat headrests. The location of the temperature 

measuring devices shall be 30 mm behind each headrest and 330 mm below the roof. 

(2) The temperature at each location shall be recorded a minimum of every 5 seconds. 

(e) Air conditioning system settings. For the portion of the test where the air conditioner 

is required to be operating the settings shall be as follows: 

(1) Automatic systems shall be set to automatic and the temperature control set to 72 deg 

F. 

(2) Manual systems shall be set at the start of the SC03 drive cycle to full cool with the 

fan on the highest setting and the airflow setting to “recirculation.” Within the first idle period of 

the SC03 drive cycle (186 to 204 seconds) the fan speed shall be reduced to the setting closest to 

6 volts at the motor, the temperature setting shall be adjusted to provide 55 deg F at the center 

dash air outlet, and the airflow setting changed to “outside air.” 

(f) Vehicle and test activities. The AC17 air conditioning test in an environmental test 

cell is composed of the following sequence of activities. 

(1) Drain and fill the vehicle's fuel tank to 40 percent capacity with test fuel. If a vehicle 

has gone through the drain and fuel sequence less than 72 hours previously and has remained 

under laboratory ambient temperature conditions, this drain and fill operation can be omitted (see 

§86.132–00(c)(2)(ii)). 

(2)(i) Position the variable speed cooling fan in front of the test vehicle with the vehicle's 

hood down. This air flow should provide representative cooling at the front of the test vehicle 

(air conditioning condenser and engine) during the driving cycles. See §86.161–00(e) for a 

discussion of cooling fan specifications. 

(ii) In the case of vehicles with rear engine compartments (or if this front location 

provides inadequate engine cooling), an additional cooling fan shall be placed in a position to 

provide sufficient air to maintain vehicle cooling. The fan capacity shall normally not exceed 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 486 of 770

5300 cfm (2.50 m3

/s). If, however, it can be demonstrated that during road operation the vehicle 

receives additional cooling, and that such additional cooling is needed to provide a representative 

test, the fan capacity may be increased or additional fans used if approved in advance by the 

Administrator. 

(3) Open all vehicle windows. 

(4) Connect the emission test sampling system to the vehicle's exhaust tail pipe(s). 

(5) Set the environmental test cell ambient test conditions to the conditions defined in 

paragraph (c) of this section, except that the solar heat shall be off. 

(6) Set the air conditioning system controls to off. 

(7) Start the vehicle (with air conditioning system off) and conduct a preconditioning 

EPA urban dynamometer driving cycle (§86.115). 

(i) If engine stalling should occur during any air conditioning test cycle operation, follow 

the provisions of §86.136–90 (Engine starting and restarting). 

(ii) For manual transmission vehicles, the vehicle shall be shifted according the 

provisions of §86.128–00. 

(8) Following the preconditioning cycle, the test vehicle and cooling fan(s) are turned off, 

all windows are rolled up, and the vehicle is allowed to soak in the ambient conditions of 

paragraph (c)(1) of this section for 30 ±1 minutes. The solar heat system must be turned on and 

generating 850 W/m2

 within 1 minute of turning the engine off. 

(9) Air conditioning on test. 

(i) Start engine (with air conditioning system also running). Fifteen seconds after the 

engine starts, place vehicle in gear. 

(ii) Eighteen seconds after the engine starts, begin the initial vehicle acceleration of the 

SC03 driving schedule. 

(iii) Operate the vehicle according to the SC03 driving schedule, as described in appendix 

I, paragraph (h), of this part, while sampling the exhaust gas. 

(iv) At the end of the deceleration which is scheduled to occur at 594 seconds, 

simultaneously switch the sample flows from the SC03 bags and samples to the “HFET” bags 

and samples, switch off gas flow measuring device No. 1, switch off the No. 1 petroleum-fueled 

diesel hydrocarbon integrator, mark the petroleum-fueled diesel hydrocarbon recorder chart, and 

start gas flow measuring device No. 2, and start the petroleum-fueled diesel hydrocarbon 

integrator No. 2. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 487 of 770

(v) Allow the vehicle to idle for 14-16 seconds. Before the end of this idle period, record 

the measured roll or shaft revolutions and reset the counter or switch to a second counter. As 

soon as possible transfer the SC03 exhaust and dilution air samples to the analytical system and 

process the samples according to §86.140 obtaining a stabilized reading of the bag exhaust 

sample on all analyzers within 20 minutes of the end of the sample collection phase of the test. 

Obtain methanol and formaldehyde sample analyses, if applicable, within 24 hours of the end of 

the sample collection phase of the test. 

(vi) Operate the vehicle according to the HFET driving schedule, as described in 40 CFR 

600.109-08, while sampling the exhaust gas. 

(vii) Turn the engine off 2 seconds after the end of the last deceleration. 

(viii) Five seconds after the engine stops running, simultaneously turn off gas flow 

measuring device No. 2 and if applicable, turn off the petroleum-fueled diesel hydrocarbon 

integrator No. 2, mark the hydrocarbon recorder chart, and position the sample selector valves to 

the “standby” position. Record the measured roll or shaft revolutions (both gas meter or flow 

measurement instrumentation readings), and re-set the counter. As soon as possible, transfer the 

HFET” exhaust and dilution air samples to the analytical system and process the samples 

according to §86.140, obtaining a stabilized reading of the exhaust bag sample on all analyzers 

within 20 minutes of the end of the sample collection phase of the test. Obtain methanol and 

formaldehyde sample analyses, if applicable, within 24 hours of the end of the sample period. 

(10) Air conditioning off test. The air conditioning off test is identical to the steps 

identified in paragraphs (d)(1) through (9) of this section, except that the air conditioning system 

and fan speeds are set to complete off or the lowest. It is preferred that the air conditioning off 

test be conducted sequentially after the air conditioning on test, following a 10-15 minute soak. 

Subpart S – [Amended] 

10. Section 86.1801-12 is amended by revising paragraphs (b), (j), and (k) 

introductory text to read as follows: 

§ 86.1801-12 Applicability. 

* * * * * 

(b) Clean alternative fuel conversions. The provisions of this subpart apply to clean 

alternative fuel conversions as defined in 40 CFR 85.502, of all model year light-duty vehicles, 

light-duty trucks, medium duty passenger vehicles, and complete Otto-cycle heavy-duty 

vehicles. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 488 of 770

* * * * * 

 (j) Exemption from greenhouse gas emission standards for small businesses. (1) 

Manufacturers that qualify as a small business under the Small Business Administration 

regulations in 13 CFR part 121 are exempt from the greenhouse gas emission standards specified 

in §86.1818–12 and in associated provisions in this part and in part 600 of this chapter. This 

exemption applies to both U.S.-based and non-U.S.-based businesses. The following categories 

of businesses (with their associated NAICS codes) may be eligible for exemption based on the 

Small Business Administration size standards in 13 CFR 121.201. 

(i) Vehicle manufacturers (NAICS code 336111). 

(ii) Independent commercial importers (NAICS codes 811111, 811112, 811198, 423110, 

424990, and 441120). 

(iii) Alternate fuel vehicle converters (NAICS codes 335312, 336312, 336322, 336399, 

454312, 485310, and 811198). 

(2) Effective for the 2014 and later model years, manufacturers that are otherwise exempt 

under the provisions of paragraph (j)(1) of this section may optionally comply with the 

greenhouse gas emission standards specified in §86.1818. A manufacturer making this choice is 

required to comply with all the applicable standards and provisions in §86.1818 and in associated 

provisions in this part and in part 600 of this chapter. Manufacturers may optionally earn early 

credits in the 2012 and/or 2013 model years by demonstrating compliance with the fleet average 

CO2 standard applicable in those model years. Manufacturers electing to earn these early credits 

must comply with the model year reporting requirements in §600.512-12 for each model year. 

(k) Conditional exemption from greenhouse gas emission standards. Manufacturers 

meeting the eligibility requirements described in paragraphs (k)(1) and (2) of this section may 

request a conditional exemption from compliance with the emission standards described in 

§86.1818–12 paragraphs (c) through (e) and associated provisions in this part and in part 600 of 

this chapter. A conditional exemption under this paragraph (k) may be requested for the 2012 

through 2016 model years. The terms “sales” and “sold” as used in this paragraph (k) shall mean 

vehicles produced and delivered for sale (or sold) in the states and territories of the United 

States. For the purpose of determining eligibility the sales of related companies shall be 

aggregated according to the provisions of §86.1838–01(b)(3). 

* * * * * 

11. Section 86.1803-01 is amended by revising the definitions for Footprint and Gross 

vehicle weight rating and adding definitions for Good engineering judgment, 

Gross combination weight rating, and Platform to read as follows: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 489 of 770

§ 86.1803-01 Definitions. 

* * * * * 

Footprint is the product of average track width (rounded to the nearest tenth of an inch) 

and wheelbase (measured in inches and rounded to the nearest tenth of an inch), divided by 144 

and then rounded to the nearest tenth of a square foot, where the average track width is the 

average of the front and rear track widths, where each is measured in inches and rounded to the 

nearest tenth of an inch. 

* * * * * 

Good engineering judgment has the meaning given in 40 CFR 1068.30. See 40 CFR 

1068.5 for the administrative process we use to evaluate good engineering judgment. 

Gross combination weight rating (GCWR) means the value specified by the vehicle 

manufacturer as the maximum weight of a loaded vehicle and trailer, consistent with good 

engineering judgment. 

* * * * * 

Gross vehicle weight rating (GVWR) means the value specified by the manufacturer as 

the maximum design loaded weight of a single vehicle, consistent with good engineering 

judgment. 

* * * * * 

Platform means a group of vehicles with common body floor plan, chassis, engine, and 

transmission. A single platform may include multiple fuel economy label classes or car lines. 

* * * * * 

12. Section 86.1818-12 is amended by adding paragraphs (b)(4), (c)(3)(i)(D), (c)(4), 

(g), and (h), and by revising paragraphs (c)(2)(i)(A) through (C), (c)(3)(i)(A) 

through (C), (f) introductory text, and (f)(3), to read as follows: 

§ 86.1818-12 Greenhouse gas emission standards for light-duty vehicles, light-duty 

trucks, and medium-duty passenger vehicles. 

* * * * * 

 (b) * * * 

(4) Emergency vehicle means a motor vehicle manufactured primarily for use as an 

ambulance or combination ambulance-hearse or for use by the United States Government or a 

State or local government for law enforcement. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 490 of 770

(c) * * * 

(2) * * * 

(i) * * * 

(A) For passenger automobiles with a footprint of less than or equal to 41 square feet, the 

gram/mile CO2 target value shall be selected for the appropriate model year from the following 

table: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 491 of 770

Model year 

CO2 target value 

(grams/mile) 

2012 244.0 

2013 237.0 

2014 228.0 

2015 217.0 

2016 206.0 

2017 195.0 

2018 185.0 

2019 175.0 

2020 166.0 

2021 157.0 

2022 150.0 

2023 143.0 

2024 137.0 

2025 and later 131.0 

(B) For passenger automobiles with a footprint of greater than 56 square feet, the 

gram/mile CO2 target value shall be selected for the appropriate model year from the following 

table: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 492 of 770

Model year 

CO2 target value 

(grams/mile) 

2012 315.0 

2013 307.0 

2014 299.0 

2015 288.0 

2016 277.0 

2017 263.0 

2018 250.0 

2019 238.0 

2020 226.0 

2021 215.0 

2022 205.0 

2023 196.0 

2024 188.0 

2025 and later 179.0 

(C) For passenger automobiles with a footprint that is greater than 41 square feet and less 

than or equal to 56 square feet, the gram/mile CO2 target value shall be calculated using the 

following equation and rounded to the nearest 0.1 grams/mile: 

Target CO2 = [a × f ] + b 

Where: 

f is the vehicle footprint, as defined in §86.1803; and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 493 of 770

a and b are selected from the following table for the appropriate model year: 

Model year a b 

2012 4.72 50.5 

2013 4.72 43.3 

2014 4.72 34.8 

2015 4.72 23.4 

2016 4.72 12.7 

2017 4.53 8.9 

2018 4.35 6.5 

2019 4.17 4.2 

2020 4.01 1.9 

2021 3.84 -0.4 

2022 3.69 -1.1 

2023 3.54 -1.8 

2024 3.4 -2.5 

2025 and later 3.26 -3.2 

* * * * * 

(3) * * *

(i) * * * 

(A) For light trucks with a footprint of less than or equal to 41 square feet, the gram/mile 

CO2 target value shall be selected for the appropriate model year from the following table: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 494 of 770

Model year 

CO2 target value 

(grams/mile) 

2012 294.0 

2013 284.0 

2014 275.0 

2015 261.0 

2016 247.0 

2017 238.0 

2018 227.0 

2019 220.0 

2020 212.0 

2021 195.0 

2022 186.0 

2023 176.0 

2024 168.0 

2025 and later 159.0 

(B) For light trucks with a footprint that is greater than 41 square feet and less than or 

equal to the maximum footprint value specified in the table below for each model year, the 

gram/mile CO2 target value shall be calculated using the following equation and rounded to the 

nearest 0.1 grams/mile: 

Target CO2 = (a × f ) + b 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 495 of 770

Where: 

f is the footprint, as defined in §86.1803; and 

a and b are selected from the following table for the appropriate model year: 

Model year 

Maximum 

Footprint a b 

2012 66.0 4.04 128.6 

2013 66.0 4.04 118.7 

2014 66.0 4.04 109.4 

2015 66.0 4.04 95.1 

2016 66.0 4.04 81.1 

2017 50.7 4.87 38.3 

2018 60.2 4.76 31.6 

2019 66.4 4.68 27.7 

2020 68.3 4.57 24.6 

2021 73.5 4.28 19.8 

2022 74.0 4.09 17.8 

2023 74.0 3.91 16.0 

2024 74.0 3.74 14.2 

2025 and later 74.0 3.58 12.5 

(C) For light trucks with a footprint that is greater than the minimum footprint value 

specified in the table below and less than or equal to the maximum footprint value specified in 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 496 of 770

the table below for each model year, the gram/mile CO2 target value shall be calculated using the 

following equation and rounded to the nearest 0.1 grams/mile: 

Target CO2 = (a × f ) + b 

Where: 

f is the footprint, as defined in §86.1803; and 

a and b are selected from the following table for the appropriate model year: 

Model year 

Minimum Footprint Maximum 

Footprint a b 

2017 50.7 66.0 4.04 80.5 

2018 60.2 66.0 4.04 75.0 

(D) For light trucks with a footprint greater than the minimum value specified in the table 

below for each model year, the gram/mile CO2 target value shall be selected for the appropriate 

model year from the following table: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 497 of 770

Model year 

Minimum Footprint CO2 target value 

(grams/mile) 

2012 66.0 395.0 

2013 66.0 385.0 

2014 66.0 376.0 

2015 66.0 362.0 

2016 66.0 348.0 

2017 66.0 347.0 

2018 66.0 342.0 

2019 66.4 339.0 

2020 68.3 337.0 

2021 73.5 335.0 

2022 74.0 321.0 

2023 74.0 306.0 

2024 74.0 291.0 

2025 and later 74.0 277.0 

 * * * * * 

(4) Emergency vehicles. Model year 2017 and later emergency vehicles may be excluded 

from the fleet average CO2 exhaust emission standards described in paragraph (c) of this section. 

The manufacturer should notify the Administrator that they are making such an election in the 

model year reports required under §600.512 of this chapter. Such vehicles should be excluded 

from both the calculation of the fleet average standard for a manufacturer under this paragraph 

(c) and from the calculation of the fleet average carbon-related exhaust emissions in 86.510-12. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 498 of 770

* * * * * 

(f) Nitrous oxide (N2O) and methane (CH4) exhaust emission standards for passenger 

automobiles and light trucks. Each manufacturer's fleet of combined passenger automobile and 

light trucks must comply with N2O and CH4 standards using either the provisions of paragraph 

(f)(1), (f)(2), or (f)(3) of this section. Except with prior EPA approval, a manufacturer may not 

use the provisions of both paragraphs (f)(1) and (f)(2) of this section in a model year. For 

example, a manufacturer may not use the provisions of paragraph (f)(1) of this section for their 

passenger automobile fleet and the provisions of paragraph (f)(2) for their light truck fleet in the 

same model year. The manufacturer may use the provisions of both paragraphs (f)(1) and (f)(3) 

of this section in a model year. For example, a manufacturer may meet the N2O standard in 

paragraph (f)(1)(i) of this section and an alternative CH4 standard determined under paragraph 

(f)(3) of this section. 

* * * * * 

(3) Optional use of alternative N2O and/or CH4 standards. Manufacturers may select an 

alternative standard applicable to a test group, for either N2O or CH4, or both. For example, a 

manufacturer may choose to meet the N2O standard in paragraph (f)(1)(i) of this section and an 

alternative CH4 standard in lieu of the standard in paragraph (f)(1)(ii) of this section. The 

alternative standard for each pollutant must be greater than the applicable exhaust emission 

standard specified in paragraph (f)(1) of this section. Alternative N2O and CH4 standards apply 

to emissions measured according to the Federal Test Procedure (FTP) described in Subpart B of 

this part for the full useful life, and become the applicable certification and in-use emission 

standard(s) for the test group. Manufacturers using an alternative standard for N2O and/or CH4

must calculate emission debits according to the provisions of paragraph (f)(4) of this section for 

each test group/alternative standard combination. Debits must be included in the calculation of 

total credits or debits generated in a model year as required under § 86.1865-12(k)(5). For 

flexible fuel vehicles (or other vehicles certified for multiple fuels) you must meet these 

alternative standards when tested on any applicable test fuel type. 

* * * * * 

(g) Alternative fleet average standards for manufacturers with limited U.S. sales. 

Manufacturers meeting the criteria in this paragraph (g) may request that the Administrator 

establish alternative fleet average CO2 standards that would apply instead of the standards in 

paragraph (c) of this section. The provisions of this paragraph (g) are applicable only to the 2017 

and later model years. 

(1) Eligibility for alternative standards. Eligibility as determined in this paragraph (g) 

shall be based on the total sales of combined passenger automobiles and light trucks. The terms 

“sales” and “sold” as used in this paragraph (g) shall mean vehicles produced and delivered for 

sale (or sold) in the states and territories of the United States. For the purpose of determining 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 499 of 770

eligibility the sales of related companies shall be aggregated according to the provisions of 

§86.1838–01(b)(3). To be eligible for alternative standards established under this paragraph (g), 

the manufacturer's average sales for the three most recent consecutive model years must remain 

below 5,000. If a manufacturer's average sales for the three most recent consecutive model years 

exceeds 4999, the manufacturer will no longer be eligible for exemption and must meet 

applicable emission standards starting with the model year according to the provisions in this 

paragraph (g)(1). 

(i) If a manufacturer's average sales for three consecutive model years exceeds 4999, and 

if the increase in sales is the result of corporate acquisitions, mergers, or purchase by another 

manufacturer, the manufacturer shall comply with the emission standards described in §86.1818–

12 paragraphs (c) through (d), as applicable, beginning with the first model year after the last 

year of the three consecutive model years. 

(ii) If a manufacturer's average sales for three consecutive model years exceeds 4999 and 

is less than 50,000, and if the increase in sales is solely the result of the manufacturer's expansion 

in vehicle production (not the result of corporate acquisitions, mergers, or purchase by another 

manufacturer), the manufacturer shall comply with the emission standards described in 

§86.1818–12 paragraphs (c) through (e), as applicable, beginning with the second model year 

after the last year of the three consecutive model years. 

(2) Requirements for new entrants into the U.S. market. New entrants are those 

manufacturers without a prior record of automobile sales in the United States and without prior 

certification to (or exemption from, under §86.1801-12(k)) greenhouse gas emission standards in 

§86.1818-12. In addition to the eligibility requirements stated in paragraph (g)(1) of this section, 

new entrants must meet the following requirements: 

(i) In addition to the information required under paragraph (g)(4) of this section, new 

entrants must provide documentation that shows a clear intent by the company to actually enter 

the U.S. market in the years for which alternative standards are requested. Demonstrating such 

intent could include providing documentation that shows the establishment of a U.S. dealer 

network, documentation of work underway to meet other U.S. requirements (e.g., safety 

standards), or other information that reasonably establishes intent to the satisfaction of the 

Administrator. 

(ii) Sales of vehicles in the U.S. by new entrants must remain below 5,000 vehicles for the first 

two model years in the U.S. market and the average sales for any three consecutive years within 

the first five years of entering the U.S. market must remain below 5,000 vehicles. Vehicles sold 

in violation of these limits will be considered not covered by the certificate of conformity and the 

manufacturer will be subject to penalties on an individual-vehicle basis for sale of vehicles not 

covered by a certificate. In addition, violation of these limits will result in loss of eligibility for 

alternative standards until such point as the manufacturer demonstrates two consecutive model 

years of sales below 5,000 automobiles. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 500 of 770

(iii) A manufacturer with sales in the most recent model year of less than 5,000 automobiles, but 

where prior model year sales were not less than 5,000 automobiles, is eligible to request 

alternative standards under this paragraph (g). However, such a manufacturer will be considered 

a new entrant and subject to the provisions regarding new entrants in this paragraph (g), except 

that the requirement to demonstrate an intent to enter the U.S. market it paragraph (g)(2)(i) of 

this section shall not apply. 

(3) How to request alternative fleet average standards. Eligible manufacturers may petition for 

alternative standards for up to five consecutive model years if sufficient information is available 

on which to base such standards. 

(i) To request alternative standards starting with the 2017 model year, eligible manufacturers 

must submit a completed application no later than July 30, 2013. 

(ii) To request alternative standards starting with a model after 2017, eligible manufacturers must 

submit a completed request no later than 36 months prior to the start of the first model year to 

which the alternative standards would apply. 

(iii) The request must contain all the information required in paragraph (g)(4) of this section, and 

must be signed by a chief officer of the company. If the Administrator determines that the 

content of the request is incomplete or insufficient, the manufacturer will be notified and given 

an additional 30 days to amend the request. 

(4) Data and information submittal requirements. Eligible manufacturers requesting alternative 

standards under this paragraph (g) must submit the following information to the Environmental 

Protection Agency. The Administrator may request additional information as she deems 

appropriate. The completed request must be sent to the Environmental Protection Agency at the 

following address: Director, Compliance and Innovative Strategies Division, U.S. Environmental 

Protection Agency, 2000 Traverwood Drive, Ann Arbor, Michigan 48105. 

(i) Vehicle model and fleet information. 

(A) The model years to which the requested alternative standards would apply, limited to five 

consecutive model years. 

(B) Vehicle models and projections of production volumes for each model year. 

(C) Detailed description of each model, including the vehicle type, vehicle mass, power, 

footprint, and expected pricing. 

(D) The expected production cycle for each model, including new model introductions and 

redesign or refresh cycles. 

(ii) Technology evaluation information. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 501 of 770

(A) The CO2 reduction technologies employed by the manufacturer on each vehicle model, 

including information regarding the cost and CO2 -reducing effectiveness. Include technologies 

that improve air conditioning efficiency and reduce air conditioning system leakage, and any 

“off-cycle” technologies that potentially provide benefits outside the operation represented by 

the Federal Test Procedure and the Highway Fuel Economy Test. 

(B) An evaluation of comparable models from other manufacturers, including CO2 results and air 

conditioning credits generated by the models. Comparable vehicles should be similar, but not 

necessarily identical, in the following respects: vehicle type, horsepower, mass, power-to-weight 

ratio, footprint, retail price, and any other relevant factors. For manufacturers requesting 

alternative standards starting with the 2017 model year, the analysis of comparable vehicles 

should include vehicles from the 2012 and 2013 model years, otherwise the analysis should at a 

minimum include vehicles from the most recent two model years. 

(C) A discussion of the CO2-reducing technologies employed on vehicles offered outside of the 

U.S. market but not available in the U.S., including a discussion as to why those vehicles and/or 

technologies are not being used to achieve CO2 reductions for vehicles in the U.S. market. 

(D) An evaluation, at a minimum, of the technologies projected by the Environmental Protection 

Agency in a final rulemaking as those technologies likely to be used to meet greenhouse gas 

emission standards and the extent to which those technologies are employed or projected to be 

employed by the manufacturer. For any technology that is not projected to be fully employed, 

explain why this is the case. 

(iii) Alternative fleet average CO2 standards. 

(A) The most stringent CO2 level estimated to be feasible for each model, in each model year, 

and the technological basis for this estimate. 

(B) For each model year, a projection of the lowest feasible sales-weighted fleet average CO2

value, separately for passenger automobiles and light trucks, and an explanation demonstrating 

that these projections are reasonable. 

(C) A copy of any application, data, and related information submitted to NHTSA in support of a 

request for alternative Corporate Average Fuel Economy standards filed under 49 CFR Part 525. 

(iv) Information supporting eligibility. 

(A) U.S. sales for the three previous model years and projected sales for the model years for 

which the manufacturer is seeking alternative standards. 

(B) Information regarding ownership relationships with other manufacturers, including 

details regarding the application of the provisions of §86.1838–01(b)(3) regarding the 

aggregation of sales of related companies, 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 502 of 770

(4) Alternative standards. Upon receiving a complete application, the Administrator will review 

the application and determine whether an alternative standard is warranted. If the Administrator 

judges that an alternative standard is warranted, the Administrator will publish a proposed 

determination in the Federal Register to establish alternative standards for the manufacturer that 

the Administrator judges are appropriate. Following a 30 day public comment period, the 

Administrator will issue a final determination establishing alternative standards for the 

manufacturer. If the Administrator does not establish alternative standards for an eligible 

manufacturer prior to 12 months before the first model year to which the alternative standards 

would apply, the manufacturer may request an extension of the exemption under 86.1801-12(k) 

or an extension of previously approved alternative standards, whichever may apply. 

(5) Restrictions on credit trading. Manufacturers subject to alternative standards approved by 

the Administrator under this paragraph (g) may not trade credits to another manufacturer. 

Transfers between car and truck fleets within the manufacturer are allowed. 

(h) Mid-term review of standards. No later than April 1, 2018, the Administrator shall 

determine whether the standards established in paragraph (c) of this section for the 2022 through 

2025 model years are appropriate under section 202(a) of the Clean Air Act, in light of the record 

then before the Administrator. An opportunity for public comment shall be provided before 

making such determination. If the Administrator determines they are not appropriate, the 

Administrator shall initiate a rulemaking to revise the standards, to be either more or less 

stringent as appropriate. 

(1) In making the determination required by paragraph (h) of this section, the 

Administrator shall consider the information available on the factors relevant to setting 

greenhouse gas emission standards under section 202(a) of the Clean Air Act for model years 

2022 through 2025, including but not limited to: 

(i) The availability and effectiveness of technology, and the appropriate lead time for 

introduction of technology; 

(ii) The cost on the producers or purchasers of new motor vehicles or new motor vehicle 

engines; 

(iii) The feasibility and practicability of the standards; 

(iv) The impact of the standards on reduction of emissions, oil conservation, energy 

security, and fuel savings by consumers; 

(v) The impact of the standards on the automobile industry; 

(vi) The impacts of the standards on automobile safety; 

(vii) The impact of the greenhouse gas emission standards on the Corporate Average Fuel 

Economy standards and a national harmonized program; and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 503 of 770

(viii) The impact of the standards on other relevant factors. 

(2) The Administrator shall make the determination required by this paragraph (h) based 

upon a record that includes the following: 

(i) A draft Technical Assessment Report addressing issues relevant to the standard for the 

2022 through 2025 model years; 

(ii) Public comment on the draft Technical Assessment Report; 

(iii) Public comment on whether the standards established for the 2022 through 2025 

model years are appropriate under section 202(a) of the Clean Air Act; and 

(iv) Such other materials the Administrator deems appropriate. 

(3) No later than November 15, 2017, the Administrator shall issue a draft Technical 

Assessment Report addressing issues relevant to the standards for the 2022 through 2025 model 

years. 

(4) The Administrator will set forth in detail the bases for the determination required by 

this paragraph (h), including the Administrator’s assessment of each of the factors listed in 

paragraph (h)(1) of this section. 

13. Section 86.1823 is amended by revising paragraph (m)(2)(iii) to read as follows: 

§ 86.1823-08 Durability demonstration procedures for exhaust emissions. 

* * * * * 

(m) * * * 

(2) * * * 

(iii) For the 2012 through 2016 model years only, manufacturers may use alternative 

deterioration factors. For N2O, the alternative deterioration factor to be used to adjust FTP and 

HFET emissions is the deterioration factor determined for (or derived from, using good 

engineering judgment) NOX emissions according to the provisions of this section. For CH4, the 

alternative deterioration factor to be used to adjust FTP and HFET emissions is the deterioration 

factor determined for (or derived from, using good engineering judgment) NMOG or NMHC 

emissions according to the provisions of this section. 

* * * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 504 of 770

14. Section 86.1829 is amended by revising paragraph (b)(1)(iii) to read as follows: 

§ 86.1829-01 Durability and emission testing requirements; waivers. 

* * * * * 

(b) * * * 

(1) * * * 

(iii) Data submittal waivers. (A) In lieu of testing a methanol-fueled diesel-cycle light 

truck for particulate emissions a manufacturer may provide a statement in its application for 

certification that such light trucks comply with the applicable standards. Such a statement shall 

be based on previous emission tests, development tests, or other appropriate information and 

good engineering judgment. 

(B) In lieu of testing an Otto-cycle light-duty vehicle, light-duty truck, or heavy-duty 

vehicle for particulate emissions for certification, a manufacturer may provide a statement in its 

application for certification that such vehicles comply with the applicable standards. Such a 

statement must be based on previous emission tests, development tests, or other appropriate 

information and good engineering judgment. 

(C) A manufacturer may petition the Administrator for a waiver of the requirement to 

submit total hydrocarbon emission data. If the waiver is granted, then in lieu of testing a 

certification light-duty vehicle or light-duty truck for total hydrocarbon emissions the 

manufacturer may provide a statement in its application for certification that such vehicles 

comply with the applicable standards. Such a statement shall be based on previous emission 

tests, development tests, or other appropriate information and good engineering judgment. 

(D) A manufacturer may petition the Administrator to waive the requirement to measure 

particulate emissions when conducting Selective Enforcement Audit testing of Otto-cycle 

vehicles. 

(E) In lieu of testing a gasoline, diesel, natural gas, liquefied petroleum gas, or hydrogen 

fueled Tier 2 or interim non-Tier 2 vehicle for formaldehyde emissions when such vehicles are 

certified based upon NMHC emissions, a manufacturer may provide a statement in its 

application for certification that such vehicles comply with the applicable standards. Such a 

statement must be based on previous emission tests, development tests, or other appropriate 

information and good engineering judgment. 

(F) In lieu of testing a petroleum-, natural gas-, liquefied petroleum gas-, or hydrogenfueled heavy-duty vehicle for formaldehyde emissions for certification, a manufacturer may 

provide a statement in its application for certification that such vehicles comply with the 

applicable standards. Such a statement must be based on previous emission tests, development 

tests, or other appropriate information and good engineering judgment. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 505 of 770

(G) For the 2012 through 2016 model years only, in lieu of testing a vehicle for N2O 

emissions, a manufacturer may provide a statement in its application for certification that such 

vehicles comply with the applicable standards. Such a statement must be based on previous 

emission tests, development tests, or other appropriate information and good engineering 

judgment. 

* * * * * 

15. Section 86.1865-12 is amended by adding paragraph (k)(5)(iv) and by revising 

paragraphs (k)(5) introductory text, (k)(6), (k)(7)(i), (k)(8)(iv)(A), (l)(1)(ii) 

introductory text, (l)(1)(ii)(F) to read as follows: 

§ 86.1865-12 How to comply with the fleet average CO2 standards. 

* * * * * 

(k) * * *

(5) Total credits or debits generated in a model year, maintained and reported separately for 

passenger automobiles and light trucks, shall be the sum of the credits or debits calculated in 

paragraph (k)(4) of this section and any of the following credits, if applicable, minus any N2O 

and/or CH4 CO2-equivalent debits calculated according to the provisions of § 86.1818-12(f)(4): 

* * * * * 

(iv) Full size pickup truck credits earned according to the provisions of §86.1866–12(e). 

(6) The expiration date of unused CO2 credits is based on the model year in which the credits are 

earned, as follows: 

(i) Unused CO2 credits from the 2009 model year shall retain their full value through the 2014 

model year. Credits remaining at the end of the 2014 model year shall expire. 

(ii) Unused CO2 credits from the 2010 through 2015 model years shall retain their full value 

through the 2021 model year. Credits remaining at the end of the 2021 model year shall expire. 

(iii) Unused CO2 credits from the 2016 and later model years shall retain their full value through 

the five subsequent model years after the model year in which they were generated. Credits 

remaining at the end of the fifth model year after the model year in which they were generated 

shall expire. 

(7) * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 506 of 770

(i) Credits generated and calculated according to the method in paragraphs (k)(4) and (5) of this 

section may not be used to offset deficits other than those deficits accrued with respect to the 

standard in §86.1818. Credits may be banked and used in a future model year in which a 

manufacturer's average CO2 level exceeds the applicable standard. Credits may be transferred 

between the passenger automobile and light truck fleets of a given manufacturer. Credits may 

also be traded to another manufacturer according to the provisions in paragraph (k)(8) of this 

section. Before trading or carrying over credits to the next model year, a manufacturer must 

apply available credits to offset any deficit, where the deadline to offset that credit deficit has not 

yet passed. 

* * * * * 

(8) * * * 

(iv)(A) If a manufacturer ceases production of passenger automobiles and light trucks, the 

manufacturer continues to be responsible for offsetting any debits outstanding within the 

required time period. Any failure to offset the debits will be considered a violation of paragraph 

(k)(8)(i) of this section and may subject the manufacturer to an enforcement action for sale of 

vehicles not covered by a certificate, pursuant to paragraphs (k)(8)(ii) and (iii) of this section. 

* * * * * 

(l) * * * 

(1) * * * 

(ii) Manufacturers producing any passenger automobiles or light trucks subject to the provisions 

in this subpart must establish, maintain, and retain all the following information in adequately 

organized records for each passenger automobile or light truck subject to this subpart: 

* * * * * 

(F) Carbon-related exhaust emission standard, N2O emission standard, and CH4 emission 

standard to which the passenger automobile or light truck is certified. 

* * * * * 

16. Section 86.1866-12 is amended by revising the heading, by adding paragraphs 

(c)(5)(v) and (e), and by revising paragraphs (a), (b), (c) introductory text, (c)(2), 

(c)(3), (c)(5)(i), (c)(5)(iii) introductory text, (c)(5)(iv), and (d) to read as follows: 

§ 86.1866-12 CO2 fleet average credit and incentive programs. 

(a) Advanced technology vehicles. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 507 of 770

(1) Electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles, as those 

terms are defined in §86.1803–01, that are certified and produced and delivered for sale in the 

United States in the 2012 through 2025 model years may use a value of zero (0) grams/mile of 

CO2 to represent the proportion of electric operation of a vehicle that is derived from electricity 

that is generated from sources that are not onboard the vehicle. 

(i) Model years 2012 through 2016: The use of zero (0) grams/mile CO2 is limited to the 

first 200,000 combined electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles 

produced and delivered for sale by a manufacturer in the 2012 through 2016 model years, except 

that a manufacturer that produces and delivers for sale 25,000 or more such vehicles in the 2012 

model year shall be subject to a limitation on the use of zero (0) grams/mile CO2 to the first 

300,000 combined electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles 

produced and delivered for sale by a manufacturer in the 2012 through 2016 model years. 

(ii) Model years 2017 through 2021: For electric vehicles, plug-in hybrid electric 

vehicles, and fuel cell vehicles produced and delivered for sale in the 2017 through 2021 model 

years, such use of zero (0) grams/mile CO2 is unrestricted. 

(iii) Model years 2022 through 2025: The use of zero (0) grams/mile CO2 is limited to the 

first 200,000 combined electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles 

produced and delivered for sale by a manufacturer in the 2022 through 2025 model years, except 

that a manufacturer that produces and delivers for sale 300,000 or more such vehicles in the 2019 

through 2021 model years shall be subject to a limitation on the use of zero (0) grams/mile CO2

to the first 600,000 combined electric vehicles, plug-in hybrid electric vehicles, and fuel cell 

vehicles produced and delivered for sale by a manufacturer in the 2022 through 2025 model 

years. 

(2) For electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles, as those 

terms are defined in §86.1803–01, that are certified and produced and delivered for sale in the 

United States in the 2017 through 2021 model years and that meet the additional specifications in 

this section, the manufacturer may use the production multipliers in this paragraph (a)(2) when 

determining the manufacturer’s fleet average carbon-related exhaust emissions under §600.512 

of this chapter. 

(i) The production multipliers, by model year, for electric vehicles and fuel cell vehicles, 

are as follows: 

Model year Production multiplier 

2017 2.0

2018 2.0

2019 2.0

2020 1.75

2021 1.5
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 508 of 770

(ii)(A) The production multipliers, by model year, for plug-in hybrid electric vehicles, are 

as follows: 

Model year Production multiplier 

2017 1.6

2018 1.6

2019 1.6

2020 1.45

2021 1.3

(B) The minimum all-electric driving range that a plug-in hybrid electric vehicle must 

have in order to qualify for use of a production multiplier is 10.2 miles on its nominal storage 

capacity of electricity when operated on the highway fuel economy test cycle. Alternatively, a 

plug-in hybrid electric vehicle may qualify for use of a production multiplier by having an 

equivalent all-electric driving range greater than or equal to 10.2 miles during its actual chargedepleting range as measured on the highway fuel economy test cycle and tested according to the 

requirements of SAE J1711, Recommended Practice for Measuring the Exhaust Emissions and 

Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid Vehicles (incorporated by 

reference, see §86.1). The equivalent all-electric range of a PHEV is determined from the 

following formula: 

ܧܣܧܴ ൌ ܴ஼஽஺ ൈ

ሺܥܱ2஼ௌ െ ܥܱ2஽஼ሻ

ௌ஼ܱ2ܥ

Where: 

EAER = the equivalent all-electric range attributed to charge-depleting operation of a 

plug-in hybrid electric vehicle on the highway fuel economy test cycle. 

RCDA = The actual charge-depleting range determined according to SAE J1711, 

Recommended Practice for Measuring the Exhaust Emissions and Fuel Economy of HybridElectric Vehicles, Including Plug-In Hybrid Vehicles (incorporated by reference, see §86.1). 

CO2CS = The charge-sustaining CO2 emissions in grams per mile on the highway fuel 

economy test determined according to SAE J1711, Recommended Practice for Measuring the 

Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid 

Vehicles (incorporated by reference, see §86.1). 

CO2CD = The charge-depleting CO2 emissions in grams per mile on the highway fuel 

economy test determined according to SAE J1711, Recommended Practice for Measuring the 

Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid 

Vehicles (incorporated by reference, see §86.1). 

(iii) The actual production of qualifying vehicles may be multiplied by the applicable 

value according to the model year, and the result, rounded to the nearest whole number, may be 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 509 of 770

used to represent the production of qualifying vehicles when calculating average carbon-related 

exhaust emissions under §600.512 of this chapter. 

(b) Credits for reduction of air conditioning refrigerant leakage. Manufacturers may 

generate credits applicable to the CO2 fleet average program described in §86.1865–12 by 

implementing specific air conditioning system technologies designed to reduce air conditioning 

refrigerant leakage over the useful life of their passenger automobiles and/or light trucks. Credits 

shall be calculated according to this paragraph (b) for each air conditioning system that the 

manufacturer is using to generate CO2 credits. Manufacturers may also generate early air 

conditioning refrigerant leakage credits under this paragraph (b) for the 2009 through 2011 

model years according to the provisions of §86.1867–12(b). 

(1) The manufacturer shall calculate an annual rate of refrigerant leakage from an air 

conditioning system in grams per year according to the provisions of §86.166–12. 

(2) The CO2-equivalent gram per mile leakage reduction to be used to calculate the total 

leakage credits generated by the air conditioning system shall be determined according to the 

following formulae, rounded to the nearest tenth of a gram per mile: 

 (i) Passenger automobiles: 

൬ െ 1 ൤ൈ ݐ݁݀݅ݎܥݔܽܯ ൌ ݐ݁݀݅ݎܥ	݁ܽ݇ܽ݃݁ܮ

݁ݎ݋݁ܽ݇ܵܿܮ

16.6 ൰൨ ൈ ൬ ܩܹܲோாி

ܩܹܲுி஼ଵଷସ௔

ݏ݅ܦ݁ܽ݇ܮ݅ܪ െ ൰

Where: 

HiLeakDis means the high leak disincentive, which is zero for model years 2012 through 

2016, and for 2017 and later model years is determined using the following equation, except that 

if GWPREF is greater than 150 or if the result is less than zero HiLeakDis shall be set equal to 

zero and if the result is greater than 1.8 g/mi HiLeakDis shall be set to 1.8 g/mi: 

ቂ ൈ 1.8 ൌ ݏ݅ܦ݁ܽ݇ܮ݅ܪ

ሺ௅௘௔௞ௌ௖௢௥௘ିெ௜௡ௌ௖௢௥௘

ሺଵ଺.଺ିெ௜௡ௌ௖௢௥௘ሻ ቃ 

MaxCredit is 12.6 (grams CO2-equivalent/mile) for air conditioning systems using HFC–

134a, and 13.8 (grams CO2-equivalent/mile) for air conditioning systems using a refrigerant with 

a lower global warming potential. 

LeakScore means the annual refrigerant leakage rate determined according to the 

provisions of §86.166–12(a), except if the calculated rate is less than 8.3 grams/year (4.1 

grams/year for systems using only electric compressors), the rate for the purpose of this formula 

shall be 8.3 grams/year (4.1 grams/year for systems using only electric compressors). 

 The constant 16.6 is the average passenger automobile impact of air conditioning 

leakage in units of grams/year; 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 510 of 770

GWPREF means the global warming potential of the refrigerant as indicated in paragraph 

(b)(5) of this section or as otherwise determined by the Administrator; 

GWPHFC134a means the global warming potential of HFC–134a as indicated in paragraph 

(b)(5) of this section or as otherwise determined by the Administrator. 

MinScore is 8.3 grams/year, except that for systems using only electric compressors it is 

4.1 grams/year. 

(ii) Light trucks: 

݁ݎ݋݁ܽ݇ܵܿܮ൬ െ 1 ൤ൈ ݐ݁݀݅ݎܥݔܽܯ ൌ ݐ݁݀݅ݎܥ	݁ܽ݇ܽ݃݁ܮ

20.7 ൰൨ ൈ ൬ ܩܹܲோாி

ܩܹܲுி஼ଵଷସ௔

ݏ݅ܦ݁ܽ݇ܮ݅ܪ െ ൰

Where: 

HiLeakDis means the high leak disincentive, which is zero for model years 2012 through 

2016, and for 2017 and later model years is determined using the following equation, except that 

if GWPREF is greater than 150 or if the result is less than zero HiLeakDis shall be set equal to 

zero and if the result is greater than 2.1 g/mi HiLeakDis shall be set to 2.1g/mi: 

ቂ ൈ 2.1 ൌ ݏ݅ܦ݁ܽ݇ܮ݅ܪ

ሺ௅௘௔௞ௌ௖௢௥௘ିெ௜௡ௌ௖௢௥௘

ሺଶ଴.଻ିெ௜௡ௌ௖௢௥௘ሻ ቃ 

MaxCredit is 15.6 (grams CO2-equivalent/mile) for air conditioning systems using HFC–

134a, and 17.2 (grams CO2-equivalent/mile) for air conditioning systems using a refrigerant with 

a lower global warming potential. 

Leakage means the annual refrigerant leakage rate determined according to the provisions 

of §86.166–12(a), except if the calculated rate is less than 10.4 grams/year (5.2 grams/year for 

systems using only electric compressors), the rate for the purpose of this formula shall be 10.4 

grams/year (5.2 grams/year for systems using only electric compressors). 

The constant 20.7 is the average light truck impact of air conditioning leakage in units of 

grams/year. 

GWPREF means the global warming potential of the refrigerant as indicated in paragraph 

(b)(5) of this section or as otherwise determined by the Administrator; 

GWPR134a means the global warming potential of HFC–134a as indicated in paragraph 

(b)(5) of this section or as otherwise determined by the Administrator. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 511 of 770

MinScore is 10.4 grams/year, except that for systems using only electric compressors it is 

5.2 grams/year. 

(3) The total leakage reduction credits generated by the air conditioning system shall be 

calculated separately for passenger automobiles and light trucks according to the following 

formula: 

Total Credits (megagrams) = (Leakage × Production × VLM) ÷ 1,000,000 

Where: 

Leakage = the CO2-equivalent leakage credit value in grams per mile determined in 

paragraph (b)(2) of this section. 

Production = The total number of passenger automobiles or light trucks, whichever is 

applicable, produced with the air conditioning system to which to the leakage credit value from 

paragraph (b)(2) of this section applies. 

VLM = vehicle lifetime miles, which for passenger automobiles shall be 195,264 and for 

light trucks shall be 225,865. 

(4) The results of paragraph (b)(3) of this section, rounded to the nearest whole number, 

shall be included in the manufacturer's credit/debit totals calculated in §86.1865–12(k)(5). 

(5) The following values for refrigerant global warming potential (GWPREF), or 

alternative values as determined by the Administrator, shall be used in the calculations of this 

paragraph (b). The Administrator will determine values for refrigerants not included in this 

paragraph (b)(5) upon request by a manufacturer. 

(i) For HFC–134a, GWPREF = 1430; 

(ii) For HFC–152a, GWPREF = 124; 

(iii) For HFO–1234yf, GWPREF = 4; 

(iv) For CO2, GWPREF = 1. 

(c) Credits for improving air conditioning system efficiency. Manufacturers may generate 

credits applicable to the CO2 fleet average program described in §86.1865–12 by implementing 

specific air conditioning system technologies designed to reduce air conditioning-related CO2

emissions over the useful life of their passenger automobiles and/or light trucks. Credits shall be 

calculated according to this paragraph (c) for each air conditioning system that the manufacturer 

is using to generate CO2 credits. Manufacturers may also generate early air conditioning 

efficiency credits under this paragraph (c) for the 2009 through 2011 model years according to 

the provisions of §86.1867–12(b). For model years 2012 and 2013 the manufacturer may 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 512 of 770

determine air conditioning efficiency credits using the requirements in paragraphs (c)(1) through 

(4) of this section. For model years 2014 and later the eligibility requirements specified in 

paragraph (c)(5) of this section must be met before an air conditioning system is allowed to 

generate credits. 

* * * * * 

(2) Air conditioning efficiency credits are determined on an air conditioning system 

basis. For each air conditioning system that is eligible for a credit based on the use of one or 

more of the items listed in paragraph (c)(1) of this section, the total credit value is the sum of the 

gram per mile values listed in paragraph (c)(1) of this section for each item that applies to the air 

conditioning system. 

(i) In the 2012 through 2016 model years the total credit value for an air conditioning 

system may not be greater than 5.7 grams per mile. 

(ii) In the 2017 and later model years the total credit value for an air conditioning system 

may not be greater than 5.0 grams per mile for any passenger automobile or 7.2 grams per mile 

for any light truck. 

(3) The total efficiency credits generated by an air conditioning system shall be 

calculated separately for passenger automobiles and light trucks according to the following 

formula: 

Total Credits (Megagrams) = (Credit × Production × VLM) ÷ 1,000,000 

Where: 

Credit = the CO2 efficiency credit value in grams per mile determined in paragraph (c)(2) 

or (c)(5) of this section, whichever is applicable. 

Production = The total number of passenger automobiles or light trucks, whichever is 

applicable, produced with the air conditioning system to which to the efficiency credit value 

from paragraph (c)(2) of this section applies. 

VLM = vehicle lifetime miles, which for passenger automobiles shall be 195,264 and for 

light trucks shall be 225,865. 

* * * * * 

(5) * * * 

(i) After the 2013 model year, for each air conditioning system selected by the 

manufacturer to generate air conditioning efficiency credits, the manufacturer shall perform the 

Air Conditioning Idle Test Procedure specified in §86.165–12 of this part. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 513 of 770

* * * * * 

(iii) For an air conditioning system to be eligible to generate credits in the 2014 through 

2016 model years the increased CO2 emissions as a result of the operation of that air 

conditioning system determined according to the Idle Test Procedure in §86.165–14 must be less 

than 21.3 grams per minute. In lieu of using 21.3 grams per minute, manufacturers may 

optionally use the procedures in paragraph (c)(5)(iv) of this section to determine an alternative 

value. 

* * * * * 

(iv) For an air conditioning system to be eligible to generate credits in the 2017 and later 

model years, the increased CO2 emissions as a result of the operation of that air conditioning 

system determined according to the Idle Test Procedure in §86.165–14 must be less than the 

value calculated by the following equation and rounded to the nearest tenth of gram per minute: 

ሻݐ݈ܽܿ݉݁݊݌ݏ݅ܦ ൈ 1.58ሺ െ 20.5 ൌ ݈݀݋݄ݏ݁ݎ݄ܶ	ݐݏܶ݁	݈݀݁ܫ

(A) If the increased CO2 emissions determined from the Idle Test Procedure in §86.165–

14 is less than or equal to the Idle Test Threshold, the total credit value for use in paragraph 

(c)(3) of this section shall be as determined in paragraph (c)(2) of this section. 

(B) If the increased CO2 emissions determined from the Idle Test Procedure in §86.165–

12 is greater than the Idle Test Threshold and less than the Idle Test Threshold plus 6.4, the total 

credit value for use in paragraph (c)(3) of this section shall be as determined according to the 

following formula: 

ܶܥܸ ൌ ܶܥܸଵ ൈ ൤1 െ ൬

ܶܶܫ െ ܶܲܫ

6.4 ൰൨

Where: 

TCV = The total credit value for use in paragraph (c)(3) of this section; 

TCV1 = The total credit value determined according to paragraph (c)(2) of this section; 

and 

ITP = the increased CO2 emissions determined from the Idle Test Procedure in §86.165–

14. 

ITT = the Idle Test Threshold from paragraph (c)(5)(iii) or (c)(5)(iv) of this section, 

whichever is applicable. 

(v) Air conditioning systems with compressors that are solely powered by electricity shall 

submit Air Conditioning Idle Test Procedure data to be eligible to generate credits in the 2014 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 514 of 770

and later model years, but such systems are not required to meet a specific threshold to be 

eligible to generate such credits, as long as the engine remains off for a period of at least 2 

minutes during the air conditioning on portion of the Idle Test Procedure in §86.165–12(d). 

* * * * * 

(d) Off-cycle credits. Manufacturers may generate credits for CO2-reducing technologies 

where the CO2 reduction benefit of the technology is not adequately captured on the Federal Test 

Procedure and/or the Highway Fuel Economy Test. These technologies must have a measurable, 

demonstrable, and verifiable real-world CO2 reduction that occurs outside the conditions of the 

Federal Test Procedure and the Highway Fuel Economy Test. These optional credits are referred 

to as “off-cycle” credits. Off-cycle technologies used to generate emission credits are considered 

emission-related components subject to applicable requirements, and must be demonstrated to be 

effective for the full useful life of the vehicle. Unless the manufacturer demonstrates that the 

technology is not subject to in-use deterioration, the manufacturer must account for the 

deterioration in their analysis. The manufacturer must use one of the three options specified in 

this paragraph (d) to determine the CO2 gram per mile credit applicable to an off-cycle 

technology. Note that the option provided in paragraph (d)(1) of this section applies only to the 

2017 and later model years. The manufacturer should notify EPA in their pre-model year report 

of their intention to generate any credits under this paragraph (d). 

(1) Credit available for certain off-cycle technologies. The provisions of this paragraph 

(d)(1) are applicable only to 2017 and later model year vehicles. 

(i) The manufacturer may generate a CO2 gram/mile credit for certain technologies as 

specified in the following table, provided that each technology is applied to the minimum 

percentage of the manufacturer’s total U.S. production of passenger automobiles and light trucks 

specified in the table in each model year for which credit is claimed. Technology definitions are 

in paragraph (d)(1)(iv) of this section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 515 of 770

Off-Cycle 

Technology

Credit value: 

Passenger Automobiles 

(g/mi)

Credit Value: Light 

Trucks (g/mi)

Minimum 

percent of 

U.S. 

production

Active aerodynamics 0.6 1.0 10 

High efficiency 

exterior lighting 1.1 1.1 10 

Engine heat recovery 0.7 per 100W of 

capacity 

0.7 per 100W of 

capacity 10

Engine start-stop (idleoff) 2.9 4.5 10 

Active transmission 

warm-up 

1.8 1.8 10 

Active engine warmup 

1.8 1.8 10 

Electric heater 

circulation pump 1.0 1.5 n/a 

Solar roof panels 3.0 3.0 n/a 

Thermal control ≤3.0 ≤4.3 n/a 

(A) Credits may also be accrued for thermal control technologies as defined in paragraph 

(d)(1)(iv) of this section in the amounts shown in the following table: 

Thermal Control 

Technology

Credit value: 

Passenger Automobiles 

(g/mi)

Credit Value: Light 

Trucks (g/mi)

Glass or glazing ≤3.0 ≤4.3 

Active seat ventilation 1.0 1.0 

Solar reflective paint 0.3 0.4 

Passive cabin 

ventilation 2.1 3.0 

Active cabin 

ventilation 2.3 3.0 

(B) The maximum credit allowed for thermal control technologies is limited to 3.0 g/mi 

for passenger automobiles and to 4.3 g/mi for light trucks. The maximum credit allowed for glass 

or glazing is limited to 3.0 g/mi for passenger automobiles and to 4.3 g/mi for light trucks. 

(C) Glass or glazing credits are calculated using the following equation: 

Credit ൌ െ ൥ܼ ൈ ෍ܶ௜ ൈ ܩ௜

ܩ

௡

௜ୀଵ

൩

Where: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 516 of 770

Credit = the total glass or glazing credits, in grams per mile, for a vehicle, which may not 

exceed 3.0 g/mi for passenger automobiles or 4.3 g/mi for light trucks; 

Z = 0.3 for passenger automobiles and 0.4 for light trucks; 

Gi = the measured glass area of window i, in square meters and rounded to the nearest 

tenth; 

G = the total glass area of the vehicle, in square meters and rounded to the nearest tenth; 

Ti = the estimated temperature reduction for the glass area of window i, determined using 

the following formula: 

ܶ௜ ൌ 0.3987 ൈ ሺܶݏݐ௔௕௦௘െܶݏݐ௘௡௪ሻ 

Where: 

Ttsnew = the total solar transmittance of the glass, measured according to ISO 13837, 

“Safety glazing materials – Method for determination of solar transmittance” (incorporated by 

reference; see §86.1). 

Ttsbase = 62 for the windshield, side-front, side-rear, rear-quarter, and backlite locations, 

and 40 for rooflite locations. 

(ii) The maximum allowable decrease in the manufacturer’s combined passenger 

automobile and light truck fleet average CO2 emissions attributable to use of the default credit 

values in paragraph (d)(1)(i) of this section is 10 grams per mile. If the total of the CO2 g/mi 

credit values from the table in paragraph (d)(1)(i) of this section does not exceed 10 g/mi for any 

passenger automobile or light truck in a manufacturer’s fleet, then the total off-cycle credits may 

be calculated according to paragraph (d)(5) of this section. If the total of the CO2 g/mi credit 

values from the table in paragraph (d)(1)(i) of this section exceeds 10 g/mi for any passenger 

automobile or light truck in a manufacturer’s fleet, then the gram per mile decrease for the 

combined passenger automobile and light truck fleet must be determined according to paragraph 

(d)(1)(ii)(A) of this section to determine whether the 10 g/mi limitation has been exceeded. 

(A) Determine the gram per mile decrease for the combined passenger automobile and 

light truck fleet using the following formula: 

Decrease ൌ ݎܥ݁݀݅ݏݐ ൈ 1,000,000

ሾሺProdେ ൈ 195,264ሻ ൅ ሺProd୘ ൈ 225,865ሻሿ

Where: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 517 of 770

Credits = The total of passenger automobile and light truck credits, in Megagrams, 

determined according to paragraph (d)(5) of this section and limited to those credits accrued by 

using the default gram per mile values in paragraph (d)(1)(i) of this section. 

ProdC = The number of passenger automobiles produced by the manufacturer and 

delivered for sale in the U.S. 

ProdT = The number of light trucks produced by the manufacturer and delivered for sale 

in the U.S. 

(B) If the value determined in paragraph (d)(1)(ii)(A) of this section is greater than 10 

grams per mile, the total credits, in Megagrams, that may be accrued by a manufacturer using the 

default gram per mile values in paragraph (d)(1)(i) of this section shall be determined using the 

following formula: 

Credit	ሺMegagramsሻ ൌ ൣ10 ൈ ൫ሺProdେ ൈ 195,264ሻ ൅ ሺProd୘ ൈ 225,865ሻ൯൧

1,000,000

Where: 

ProdC = The number of passenger automobiles produced by the manufacturer and 

delivered for sale in the U.S. 

ProdT = The number of light trucks produced by the manufacturer and delivered for sale 

in the U.S. 

(C) If the value determined in paragraph (d)(1)(ii)(A) of this section is not greater than 10 

grams per mile, then the credits that may be accrued by a manufacturer using the default gram 

per mile values in paragraph (d)(1)(i) of this section do not exceed the allowable limit, and total 

credits may be determined for each category of vehicles according to paragraph (d)(5) of this 

section. 

(D) If the value determined in paragraph (d)(1)(ii)(A) of this section is greater than 10 

grams per mile, then the combined passenger automobile and light truck credits, in Megagrams, 

that may be accrued using the calculations in paragraph (d)(5) of this section must not exceed the 

value determined in paragraph (d)(1)(ii)(B) of this section. This limitation should generally be 

done by reducing the amount of credits attributable to the vehicle category that caused the limit 

to be exceeded such that the total value does not exceed the value determined in paragraph 

(d)(1)(ii)(B) of this section. 

(iii) In lieu of using the default gram per mile values specified in paragraph (d)(1)(i) of 

this section for specific technologies, a manufacturer may determine an alternative value for any 

of the specified technologies. An alternative value must be determined using one of the methods 

specified in paragraph (d)(2) or (d)(3) of this section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 518 of 770

(iv) Definitions for the purposes of this paragraph (d)(1) are as follows: 

(A) Active aerodynamic improvements means technologies that are activated only at 

certain speeds to improve aerodynamic efficiency by a minimum of three percent, while 

preserving other vehicle attributes or functions. 

(B) Electric heater circulation pump means a pump system installed in a stop-start 

equipped vehicle or in a hybrid electric vehicle or plug-in hybrid electric vehicle that continues 

to circulate hot coolant through the heater core when the engine is stopped during a stop-start 

event. This system must be calibrated to keep the engine off for 1 minute or more when the 

external ambient temperature is 30 deg F. 

(C) High efficiency exterior lighting means a lighting technology that, when installed on 

the vehicle, is expected to reduce the total electrical demand of the exterior lighting system by a 

minimum of 60 watts when compared to conventional lighting systems. To be eligible for this 

credit the high efficiency lighting must be installed in the following components: 

parking/position, front and rear turn signals, front and rear side markers, stop/brake lights 

(including the center-mounted location), taillights, backup/reverse lights, and license plate 

lighting. 

 (D) Engine start-stop means a technology which enables a vehicle to automatically turn 

off the engine when the vehicle comes to a rest and restart the engine when the driver applies 

pressure to the accelerator or releases the brake. 

(E) Solar roof panels means the installation of solar panels on an electric vehicle or a 

plug-in hybrid electric vehicle such that the solar energy is used to provide energy to the electric 

drive system of the vehicle by charging the battery or directly providing power to the electric 

motor with the equivalent of at least 50 Watts of rated electricity output. 

(F) Active transmission warmup means a system that uses waste heat from the exhaust 

system to warm the transmission fluid to an operating temperature range quickly using a heat 

exchanger in the exhaust system, increasing the overall transmission efficiency by reducing 

parasitic losses associated with the transmission fluid, such as losses related to friction and fluid 

viscosity. 

(G) Active engine warmup means a system using waste heat from the exhaust system to 

warm up targeted parts of the engine so that it reduces engine friction losses and enables the 

closed-loop fuel control more quickly. It would allow a faster transition from cold operation to 

warm operation, decreasing CO2 emissions, and increasing fuel economy. 

(H) Engine heat recovery means a system that captures heat that would otherwise be lost 

through the exhaust system or through the radiator and converting that heat to electrical energy 

that is used to meet the electrical requirements of the vehicle. Such a system must have a 

capacity of at least 100W to achieve 0.7 g/mi of credit. Every additional 100W of capacity will 

result in an additional 0.7 g/mi of credit. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 519 of 770

(I) Active seat ventilation means a device which draws air from the seating surface which 

is in contact with the occupant and exhausts it to a location away from the seat. 

(J) Solar reflective paint means a vehicle paint or surface coating which reflects at least 

65 percent of the impinging infrared solar energy, as determined using ASTM standards E903, 

E1918-06, or C1549-09. These ASTM standards are incorporated by reference; see §86.1. 

(K) Passive cabin ventilation means ducts or devices which utilize convective airflow to 

move heated air from the cabin interior to the exterior of the vehicle. 

(L) Active cabin ventilation means devices which mechanically move heated air from the 

cabin interior to the exterior of the vehicle. 

(2) Technology demonstration using EPA 5-cycle methodology. To demonstrate an offcycle technology and to determine a CO2 credit using the EPA 5-cycle methodology, the 

manufacturer shall determine the off-cycle city/highway combined carbon-related exhaust 

emissions benefit by using the EPA 5-cycle methodology described in 40 CFR Part 600. Testing 

shall be performed on a representative vehicle, selected using good engineering judgment, for 

each model type for which the credit is being demonstrated. The emission benefit of a 

technology is determined by testing both with and without the off-cycle technology operating. 

Multiple off-cycle technologies may be demonstrated on a test vehicle. The manufacturer shall 

conduct the following steps and submit all test data to the EPA. 

(i) Testing without the off-cycle technology installed and/or operating. Determine 

carbon-related exhaust emissions over the FTP, the HFET, the US06, the SC03, and the cold 

temperature FTP test procedures according to the test procedure provisions specified in 40 CFR 

part 600 subpart B and using the calculation procedures specified in §600.113–08 of this chapter. 

Run each of these tests a minimum of three times without the off-cycle technology installed and 

operating and average the per phase (bag) results for each test procedure. Calculate the 5-cycle 

weighted city/highway combined carbon-related exhaust emissions from the averaged per phase 

results, where the 5-cycle city value is weighted 55% and the 5-cycle highway value is weighted 

45%. The resulting combined city/highway value is the baseline 5-cycle carbon-related exhaust 

emission value for the vehicle. 

(ii)Testing with the off-cycle technology installed and/or operating. Determine carbonrelated exhaust emissions over the US06, the SC03, and the cold temperature FTP test 

procedures according to the test procedure provisions specified in 40 CFR part 600 subpart B 

and using the calculation procedures specified in §600.113–08 of this chapter. Run each of these 

tests a minimum of three times with the off-cycle technology installed and operating and average 

the per phase (bag) results for each test procedure. Calculate the 5-cycle weighted city/highway 

combined carbon-related exhaust emissions from the averaged per phase results, where the 5-

cycle city value is weighted 55% and the 5-cycle highway value is weighted 44%. Use the 

averaged per phase results for the FTP and HFET determined in paragraph (d)(ii)(i)(A) of this 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 520 of 770

section for operation without the off-cycle technology in this calculation. The resulting 

combined city/highway value is the 5-cycle carbon-related exhaust emission value showing the 

off-cycle benefit of the technology but excluding any benefit of the technology on the FRP and 

HFET. 

(iii) Subtract the combined city/highway value determined in paragraph (d)(2)(i) of this 

section from the value determined in paragraph (d)(2)(ii) of this section. The result is the offcycle benefit of the technology or technologies being evaluated. If this benefit is greater than or 

equal to three percent of the value determined in paragraph (d)(2)(i) of this section then the 

manufacturer may use this value, rounded to the nearest tenth of a gram per mile, to determine 

credits under paragraph (d)(4) of this section. 

(iv) If the value calculated in paragraph (d)(ii)(i)(C) of this section is less than two 

percent of the value determined in paragraph (d)(ii)(i)(A) of this section, then the manufacturer 

must repeat the testing required under paragraphs d)(ii)(i)(A) and (B) of this section, except 

instead of running each test three times they shall run each test two additional times. The offcycle benefit of the technology or technologies being evaluated shall be calculated as in 

paragraph (d)(ii)(i)(C) of this section using all the tests conducted under paragraphs (d)(ii)(i)(A), 

(B), and (D) of this section. If the value calculated in paragraph (d)(ii)(i)(C) of this section is less 

than two percent of the value determined in paragraph (d)(ii)(i)(A) of this section, then the 

manufacturer must verify the emission reduction potential of the off-cycle technology or 

technologies using the [EPA Light-duty Simulation Tool/Model], and if the results support a 

credit value that is less than two percent of the value determined in paragraph (d)(ii)(i)(A) of this 

section then the manufacturer may use the off-cycle benefit of the technology or technologies 

calculated as in paragraph (d)(ii)(i)(C) of this section using all the tests conducted under 

paragraphs (d)(ii)(i)(A), (B), and (D) of this section, rounded to the nearest tenth of a gram per 

mile, to determine credits under paragraph (d)(4) of this section. 

(3) Technology demonstration using alternative EPA-approved methodology. (i) This 

option may be used only with EPA approval, and the manufacturer must be able to justify to the 

Administrator why the 5-cycle option described in paragraph (d)(2) of this section insufficiently 

characterizes the effectiveness of the off-cycle technology. In cases where the EPA 5-cycle 

methodology described in paragraph (d)(2) of this section cannot adequately measure the 

emission reduction attributable to an innovative off-cycle technology, the manufacturer may 

develop an alternative approach. Prior to a model year in which a manufacturer intends to seek 

these credits, the manufacturer must submit a detailed analytical plan to EPA. The manufacturer 

may seek EPA input on the proposed methodology prior to conducting testing or analytical work, 

and EPA will provide input on the manufacturer’s analytical plan The alternative demonstration 

program must be approved in advance by the Administrator and should: 

(A) Use modeling, on-road testing, on-road data collection, or other approved analytical 

or engineering methods; 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 521 of 770

(B) Be robust, verifiable, and capable of demonstrating the real-world emissions benefit 

with strong statistical significance; 

(C) Result in a demonstration of baseline and controlled emissions over a wide range of 

driving conditions and number of vehicles such that issues of data uncertainty are minimized; 

(D) Result in data on a model type basis unless the manufacturer demonstrates that 

another basis is appropriate and adequate. 

(ii) Notice and opportunity for public comment. The Administrator will publish a notice 

of availability in the Federal Register notifying the public of a manufacturer's proposed 

alternative off-cycle credit calculation methodology. The notice will include details regarding the 

proposed methodology, but will not include any Confidential Business Information. The notice 

will include instructions on how to comment on the methodology. The Administrator will take 

public comments into consideration in the final determination, and will notify the public of the 

final determination. Credits may not be accrued using an approved methodology until the first 

model year for which the Administrator has issued a final approval. 

(4) Review and approval process for off-cycle credits. 

(i) Initial steps required. 

(A) A manufacturer requesting off-cycle credits under the provisions of paragraph (d)(2) 

of this section must conduct the testing and/or simulation described in that paragraph. 

(B) A manufacturer requesting off-cycle credits under the provisions of paragraph (d)(3) 

of this section must develop a methodology for demonstrating and determining the benefit of the 

off-cycle technology, and carry out any necessary testing and analysis required to support that 

methodology. 

(C) A manufacturer requesting off-cycle credits under paragraph (d) of this section must 

conduct testing and/or prepare engineering analyses that demonstrate the in-use durability of the 

technology for the full useful life of the vehicle. 

(ii) Data and information requirements. The manufacturer seeking off-cycle credits must 

submit an application for off-cycle credits determined under paragraphs (d)(2) and (d)(3) of this 

section. The application must contain the following: 

(A) A detailed description of the off-cycle technology and how it functions to reduce CO2

emissions under conditions not represented on the FTP and HFET. 

(B) A list of the vehicle model(s) which will be equipped with the technology. 

(C) A detailed description of the test vehicles selected and an engineering analysis that 

supports the selection of those vehicles for testing. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 522 of 770

(D) All testing and/or simulation data required under paragraph (d)(2) or (d)(3) of this 

section, as applicable, plus any other data the manufacturer has considered in the analysis. 

(E) For credits under paragraph (d)(3) of this section, a complete description of the 

methodology used to estimate the off-cycle benefit of the technology and all supporting data, 

including vehicle testing and in-use activity data. 

(F) An estimate of the off-cycle benefit by vehicle model and the fleetwide benefit based 

on projected sales of vehicle models equipped with the technology. 

(G) An engineering analysis and/or component durability testing data or whole vehicle 

testing data demonstrating the in-use durability of the off-cycle technology components. 

(iii) EPA review of the off-cycle credit application. Upon receipt of an application from a 

manufacturer, EPA will do the following: 

(A) Review the application for completeness and notify the manufacturer within 30 days 

if additional information is required. 

(B) Review the data and information provided in the application to determine if the 

application supports the level of credits estimated by the manufacturer. 

(C) For credits under paragraph (d)(3) of this section, EPA will make the application 

available to the public for comment, as described in paragraph (d)(3)(ii) of this section, within 60 

days of receiving a complete application. The public review period will be specified as 30 days, 

during which time the public may submit comments. Manufacturers may submit a written 

rebuttal of comments for EPA consideration or may revise their application in response to 

comments. A revised application should be submitted after the end of the public review period, 

and EPA will review the application as if it was a new application submitted under this 

paragraph (d)(4)(iii). 

(iv) EPA decision. 

(A) For credits under paragraph (d)(2) of this section, EPA will notify the manufacturer 

of its decision within 60 days of receiving a complete application. 

(B) For credits under paragraph (d)(3) of this section, EPA will notify the manufacturer 

of its decision after reviewing and evaluating the public comments. 

(C) EPA will notify the manufacturer in writing of its decision to approve or deny the 

application, and if denied, EPA will provide the reasons for the denial. 

(5) Calculation of total off-cycle credits. Total off-cycle credits in Megagrams of CO2

(rounded to the nearest whole number) shall be calculated separately for passenger automobiles 

and light trucks according to the following formula: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 523 of 770

Total Credits (Megagrams) = (Credit × Production × VLM) ÷ 1,000,000 

Where: 

Credit = the credit value in grams per mile determined in paragraph (d)(1), (d)(2) or 

(d)(3) of this section. 

Production = The total number of passenger automobiles or light trucks, whichever is 

applicable, produced with the off-cycle technology to which to the credit value determined in 

paragraph (d)(1), (d)(2), or (d)(3) of this section applies. 

VLM = vehicle lifetime miles, which for passenger automobiles shall be 195,264 and for 

light trucks shall be 225,865. 

(e) Credits for certain full-size pickup trucks. Full-size pickup trucks may be eligible for 

additional credits based on the implementation of hybrid technologies or on exhaust emission 

performance, as described in this paragraph (e). Credits may be generated under either paragraph 

(e)(2) or (e)(3) of this section for a qualifying pickup truck, but not both. 

(1) The following definitions apply for the purposes of this paragraph (e). 

(i) Full size pickup truck means a light truck which has a passenger compartment and an 

open cargo box and which meets the following specifications: 

(A) A minimum cargo bed width between the wheelhouses of 48 inches, measured as the 

minimum lateral distance between the limiting interferences (pass-through) of the wheelhouses. 

The measurement shall exclude the transitional arc, local protrusions, and depressions or 

pockets, if present. An open cargo box means a vehicle where the cargo box does not have a 

permanent roof. Vehicles sold with detachable covers are considered “open” for the purposes of 

these criteria. 

(B) A minimum open cargo box length of 60 inches, where the length is defined by the 

lesser of the pickup bed length at the top of the body and the pickup bed length at the floor, 

where the length at the top of the body is defined as the longitudinal distance from the inside 

front of the pickup bed to the inside of the closed endgate as measured at the cargo floor surface 

along vehicle centerline, and the length at the floor is defined as the longitudinal distance from 

the inside front of the pickup bed to the inside of the closed endgate as measured at the cargo 

floor surface along vehicle centerline. 

(C) A minimum towing capability of 5,000 pounds, where minimum towing capability is 

determined by subtracting the gross vehicle weight rating from the gross combined weight rating, 

or a minimum payload capability of 1,700 pounds, where minimum payload capability is 

determined by subtracting the curb weight from the gross vehicle weight rating. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 524 of 770

(ii) Mild hybrid gasoline-electric vehicle means a vehicle that has start/stop capability 

and regenerative braking capability, where the recaptured braking energy over the Federal Test 

Procedure is at least 15 percent but less than 75 percent of the total braking energy, where the 

percent of recaptured braking energy is measured and calculated according to §600.108(g). 

(iii) Strong hybrid gasoline-electric vehicle means a vehicle that has start/stop capability 

and regenerative braking capability, where the recaptured braking energy over the Federal Test 

Procedure is at least 75 percent of the total braking energy, where the percent of recaptured 

braking energy is measured and calculated according to §600.108(g). 

(2) Credits for implementation of gasoline-electric hybrid technology. Full size pickup 

trucks that implement hybrid gasoline-electric technologies may be eligible for an additional 

credit under this paragraph (e)(2). Pickup trucks using the credits under this paragraph (e)(2) 

may not use the credits described in paragraph (e)(3) of this section. 

(i) Full size pickup trucks that are mild hybrid gasoline-electric vehicles and that are 

produced in the 2017 through 2021 model years are eligible for a credit of 10 grams/mile. To 

receive this credit, the manufacturer must produce a quantity of mild hybrid full size pickup 

trucks such that the proportion of production of such vehicles, when compared to the 

manufacturer’s total production of full size pickup trucks, is not less than the amount specified in 

the table below for each model year. 

Model year Required minimum percent of 

full size pickup trucks 

2017 30%

2018 40%

2019 55%

2020 70%

2021 80%

(ii) Full size pickup trucks that are strong hybrid gasoline-electric vehicles and that are 

produced in the 2017 through 2025 model years are eligible for a credit of 20 grams/mile. To 

receive this credit, the manufacturer must produce a quantity of strong hybrid full size pickup 

trucks such that the proportion of production of such vehicles, when compared to the 

manufacturer’s total production of full size pickup trucks, is not less than 10 percent for each 

model year. 

(3) Credits for emission reduction performance. Full size pickup trucks that achieve 

carbon-related exhaust emission values below the applicable target value determined in 86.1818-

12(c)(3) may be eligible for an additional credit. Pickup trucks using the credits under this 

paragraph (e)(3) may not use the credits described in paragraph (e)(2) of this section. 

(i) Full size pickup trucks that achieve carbon-related exhaust emissions less than or 

equal to the applicable target value determined in 86.1818-12(c)(3) multiplied by 0.85 (rounded 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 525 of 770

to the nearest gram/mile) and greater than the applicable target value determined in 86.1818-

12(c)(3) multiplied by 0.80 (rounded to the nearest gram/mile) in a model year are eligible for a 

credit of 10 grams/mile. A pickup truck that qualifies for this credit in a model year may claim 

this credit for subsequent model years through the 2021 model year if the carbon-related exhaust 

emissions of that pickup truck do not increase relative to the emissions in the model year in 

which the pickup truck qualified for the credit. To qualify for this credit in each model year, the 

manufacturer must produce a quantity of full size pickup trucks that meet the emission 

requirements of this paragraph (e)(3)(i) such that the proportion of production of such vehicles, 

when compared to the manufacturer’s total production of full size pickup trucks, is not less than 

the amount specified in the table below for each model year. 

Model year Required minimum percent of 

full size pickup trucks 

2017 15%

2018 20%

2019 28%

2020 35%

2021 40%

(ii) Full size pickup trucks that achieve carbon-related exhaust emissions less than or 

equal to the applicable target value determined in 86.1818-12(c)(3) multiplied by 0.80 (rounded 

to the nearest gram/mile) in a model year are eligible for a credit of 20 grams/mile. A pickup 

truck that qualifies for this credit in a model year may claim this credit for a maximum of five 

subsequent model years if the carbon-related exhaust emissions of that pickup truck do not 

increase relative to the emissions in the model year in which the pickup truck first qualified for 

the credit. This credit may not be claimed in any model year after 2025. To qualify for this 

credit, the manufacturer must produce a quantity of full size pickup trucks that meet the emission 

requirements of this paragraph (e)(3)(i) such that the proportion of production of such vehicles, 

when compared to the manufacturer’s total production of full size pickup trucks, is not less than 

10 percent in each model year. 

(4) Calculation of total full size pickup truck credits. Total credits in Megagrams of CO2

(rounded to the nearest whole number) shall be calculated for qualifying full size pickup trucks 

according to the following formula: 

Total Credits (Megagrams) = ([(10 × Production10) + (20 x Production20)] × 225,865) ÷ 

1,000,000 

Where: 

Production10 = The total number of full size pickup trucks produced with a credit value of 

10 grams per mile from paragraphs (e)(2) and (e)(3). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 526 of 770

Production20 = The total number of full size pickup trucks produced with a credit value of 

20 grams per mile from paragraphs (e)(2) and (e)(3). 

17. Section 86.1867-12 is amended by revising paragraph (a)(2)(i) to read as follows: 

§ 86.1867-12 Optional early CO2 credit programs. 

* * * * * 

(i) Credits under this pathway shall be calculated according to the provisions of 

paragraph (a)(1) of this section, except credits may only be generated by vehicles sold in a model 

year in California and in states with a section 177 program in effect in that model year. For the 

purposes of this section, “section 177 program” means State regulations or other laws that apply 

to vehicle emissions from any of the following categories of motor vehicles: Passenger 

automobiles, light-duty trucks up through 6,000 pounds GVWR, and medium-duty vehicles from 

6,001 to 14,000 pounds GVWR, as these categories of motor vehicles are defined in the 

California Code of Regulations, Title 13, Division 3, Chapter 1, Article 1, Section 1900. 

* * * * * 

PART 600— FUEL ECONOMY AND GREENHOUSE GAS EXHAUST 

EMISSIONS OF MOTOR VEHICLES 

18. The authority citation for part 600 continues to read as follows: 

Authority: 49 U.S.C. 32901—23919q, Pub. L. 109–58. 

Subpart B—[Amended] 

19. Section 600.113-12 is amended by revising paragraph (g)(2)(iv)(C), (j), (k), (l), 

and (m) to read as follows: 

§ 600.113-12 Fuel economy, CO2 emissions, and carbon-related exhaust emission 

calculations for FTP, HFET, US06, SC03 and cold temperature FTP tests. 

* * * * * 

(g) * * * 

(2) * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 527 of 770

(iv) * * * 

(C) For the 2012 through 2016 model years only, manufacturers may use an assigned 

value of 0.010 g/mi for N2O FTP and HFET test values. This value is not required to be adjusted 

by a deterioration factor. 

* * * * * 

(j)(1) For methanol-fueled automobiles and automobiles designed to operate on mixtures 

of gasoline and methanol, the fuel economy in miles per gallon of methanol is to be calculated 

using the following equation: 

mpg = (CWF × SG × 3781.8)/((CWFexHC × HC) + (0.429 × CO) + (0.273 × CO2) + 

(0.375 × CH3OH) + (0.400 × HCHO)) 

Where: 

CWF = Carbon weight fraction of the fuel as determined in paragraph (f)(2)(ii) of this 

section and rounded according to paragraph (g)(3) of this section. 

SG = Specific gravity of the fuel as determined in paragraph (f)(2)(i) of this section and 

rounded according to paragraph (g)(3) of this section. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(2)(ii) of this section and rounded according to paragraph (g)(3) of this section (for 

M100 fuel, CWFexHC = 0.866). 

HC = Grams/mile HC as obtained in paragraph (g)(1) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(1) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(1) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(1) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(1) of this 

section. 

(2)(i) For 2012 and later model year methanol-fueled automobiles and automobiles 

designed to operate on mixtures of gasoline and methanol, the carbon-related exhaust emissions 

in grams per mile while operating on methanol is to be calculated using the following equation 

and rounded to the nearest 1 gram per mile: 

CREE = (CWFexHC/0.273 × HC) + (1.571 × CO) + (1.374 × CH3OH) + (1.466 × HCHO) 

+ CO2
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 528 of 770

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(2)(ii) of this section and rounded according to paragraph (g)(3) of this section (for 

M100 fuel, CWFexHC = 0.866). 

HC = Grams/mile HC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(2) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(2) of this 

section. 

(ii) For manufacturers complying with the fleet averaging option for N2O and CH4 as 

allowed under §86.1818 of this chapter, the carbon-related exhaust emissions in grams per mile 

for 2012 and later model year methanol-fueled automobiles and automobiles designed to operate 

on mixtures of gasoline and methanol while operating on methanol is to be calculated using the 

following equation and rounded to the nearest 1 gram per mile: 

CREE = [(CWFexHC/0.273) × NMHC] + (1.571 × CO) + (1.374 × CH3OH) + (1.466 × 

HCHO) + CO2 + (298 × N2O) + (25 × CH4) 

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(2)(ii) of this section and rounded according to paragraph (g)(3) of this section (for 

M100 fuel, CWFexHC = 0.866). 

NMHC = Grams/mile HC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(2) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(2) of this 

section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 529 of 770

N2O = Grams/mile N2O as obtained in paragraph (g)(2) of this section. 

CH4 = Grams/mile CH4 as obtained in paragraph (g)(2) of this section. 

(k)(1) For automobiles fueled with natural gas and automobiles designed to operate on 

gasoline and natural gas, the fuel economy in miles per gallon of natural gas is to be calculated 

using the following equation: 

Where: 

mpge = miles per gasoline gallon equivalent of natural gas. 

CWFHC/NG = carbon weight fraction based on the hydrocarbon constituents in the natural 

gas fuel as obtained in paragraph (f)(3) of this section and rounded according to paragraph (g)(3) 

of this section. 

DNG = density of the natural gas fuel [grams/ft3

 at 68 °F (20 °C) and 760 mm Hg (101.3 

kPa)] pressure as obtained in paragraph (g)(3) of this section. 

CH4, NMHC, CO, and CO2 = weighted mass exhaust emissions [grams/mile] for 

methane, non-methane HC, carbon monoxide, and carbon dioxide as obtained in paragraph 

(g)(2) of this section. 

CWFNMHC = carbon weight fraction of the non-methane HC constituents in the fuel as 

determined from the speciated fuel composition per paragraph (f)(3) of this section and rounded 

according to paragraph (g)(3) of this section. 

CO2NG = grams of carbon dioxide in the natural gas fuel consumed per mile of travel. 

CO2NG = FCNG× DNG× WFCO2

Where: 

= cubic feet of natural gas fuel consumed per mile 

Where: 

CWFNG = the carbon weight fraction of the natural gas fuel as calculated in paragraph 

(f)(3) of this section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 530 of 770

WFCO2 = weight fraction carbon dioxide of the natural gas fuel calculated using the mole 

fractions and molecular weights of the natural gas fuel constituents per ASTM D 1945 

(incorporated by reference in §600.011). 

(2)(i) For automobiles fueled with natural gas and automobiles designed to operate on 

gasoline and natural gas, the carbon-related exhaust emissions in grams per mile while operating 

on natural gas is to be calculated for 2012 and later model year vehicles using the following 

equation and rounded to the nearest 1 gram per mile: 

CREE = 2.743 × CH4 + CWFNMHC/0.273 × NMHC + 1.571 × CO + CO2

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CH4 = Grams/mile CH4 as obtained in paragraph (g)(2) of this section. 

NMHC = Grams/mile NMHC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 

CWFNMHC = carbon weight fraction of the non-methane HC constituents in the fuel as 

determined from the speciated fuel composition per paragraph (f)(3) of this section and rounded 

according to paragraph (f)(3) of this section. 

(ii) For manufacturers complying with the fleet averaging option for N2O and CH4 as 

allowed under §86.1818 of this chapter, the carbon-related exhaust emissions in grams per mile 

for 2012 and later model year automobiles fueled with natural gas and automobiles designed to 

operate on gasoline and natural gas while operating on natural gas is to be calculated using the 

following equation and rounded to the nearest 1 gram per mile: 

CREE = (25 × CH4) + [(CWFNMHC/0.273) × NMHC] + (1.571 × CO) + CO2 + (298 × 

N2O) 

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CH4 = Grams/mile CH4as obtained in paragraph (g)(2) of this section. 

NMHC = Grams/mile NMHC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 531 of 770

CWFNMHC = carbon weight fraction of the non-methane HC constituents in the fuel as 

determined from the speciated fuel composition per paragraph (f)(3) of this section and rounded 

according to paragraph (f)(3) of this section. 

N2O = Grams/mile N2O as obtained in paragraph (g)(2) of this section. 

(l)(1) For ethanol-fueled automobiles and automobiles designed to operate on mixtures of 

gasoline and ethanol, the fuel economy in miles per gallon of ethanol is to be calculated using the 

following equation: 

mpg = (CWF × SG × 3781.8)/((CWFexHC× HC) + (0.429 × CO) + (0.273 × CO2) + (0.375 

× CH3OH) + (0.400 × HCHO) + (0.521 × C2H5OH) + (0.545 × C2H4O)) 

Where: 

CWF = Carbon weight fraction of the fuel as determined in paragraph (f)(4) of this 

section and rounded according to paragraph (f)(3) of this section. 

SG = Specific gravity of the fuel as determined in paragraph (f)(4) of this section and 

rounded according to paragraph (f)(3) of this section. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(4) of this section and rounded according to paragraph (f)(3) of this section. 

HC = Grams/mile HC as obtained in paragraph (g)(1) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(1) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(1) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(1) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(1) of this 

section. 

C2H5OH = Grams/mile C2H5OH (ethanol) as obtained in paragraph (g)(1) of this section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (g)(1) of this 

section. 

(2)(i) For 2012 and later model year ethanol-fueled automobiles and automobiles 

designed to operate on mixtures of gasoline and ethanol, the carbon-related exhaust emissions in 

grams per mile while operating on ethanol is to be calculated using the following equation and 

rounded to the nearest 1 gram per mile: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 532 of 770

CREE = (CWFexHC/0.273 × HC) + (1.571 × CO) + (1.374 × CH3OH) + (1.466 × HCHO) 

+ (1.911 × C2H5OH) + (1.998 × C2H4O) + CO2

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(4) of this section and rounded according to paragraph (f)(3) of this section. 

HC = Grams/mile HC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(2) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(2) of this 

section. 

C2H5OH = Grams/mile C2H5OH (ethanol) as obtained in paragraph (g)(2) of this section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (g)(2) of this 

section. 

(ii) For manufacturers complying with the fleet averaging option for N2O and CH4 as 

allowed under §86.1818 of this chapter, the carbon-related exhaust emissions in grams per mile 

for 2012 and later model year ethanol-fueled automobiles and automobiles designed to operate 

on mixtures of gasoline and ethanol while operating on ethanol is to be calculated using the 

following equation and rounded to the nearest 1 gram per mile: 

CREE = [(CWFexHC/0.273) × NMHC] + (1.571 × CO) + (1.374 × CH3OH) + (1.466 × 

HCHO) + (1.911 × C2H5OH) + (1.998 × C2H4O) + CO2 + (298 × N2O) + (25 × CH4) 

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002. 

CWFexHC = Carbon weight fraction of exhaust hydrocarbons = CWF as determined in 

paragraph (f)(4) of this section and rounded according to paragraph (f)(3) of this section. 

NMHC = Grams/mile HC as obtained in paragraph (g)(2) of this section. 

CO = Grams/mile CO as obtained in paragraph (g)(2) of this section. 

CO2 = Grams/mile CO2 as obtained in paragraph (g)(2) of this section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 533 of 770

CH3OH = Grams/mile CH3OH (methanol) as obtained in paragraph (g)(2) of this section. 

HCHO = Grams/mile HCHO (formaldehyde) as obtained in paragraph (g)(2) of this 

section. 

C2H5OH = Grams/mile C2H5OH (ethanol) as obtained in paragraph (g)(2) of this section. 

C2H4O = Grams/mile C2H4O (acetaldehyde) as obtained in paragraph (g)(2) of this 

section. 

N2O = Grams/mile N2O as obtained in paragraph (g)(2) of this section. 

CH4 = Grams/mile CH4 as obtained in paragraph (g)(2) of this section. 

(m) Manufacturers shall determine CO2 emissions and carbon-related exhaust emissions 

for electric vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles according to the 

provisions of this paragraph (m). Subject to the limitations on the number of vehicles produced 

and delivered for sale as described in §86.1866 of this chapter, the manufacturer may be allowed 

to use a value of 0 grams/mile to represent the emissions of fuel cell vehicles and the proportion 

of electric operation of a electric vehicles and plug-in hybrid electric vehicles that is derived 

from electricity that is generated from sources that are not onboard the vehicle, as described in 

paragraphs (m)(1) through (3) of this section. For purposes of labeling under this part, the CO2

emissions for electric vehicles shall be 0 grams per mile. Similarly, for purposes of labeling 

under this part, the CO2 emissions for plug-in hybrid electric vehicles shall be 0 grams per mile 

for the proportion of electric operation that is derived from electricity that is generated from 

sources that are not onboard the vehicle. 

(1) For 2012 and later model year electric vehicles, but not including fuel cell vehicles, 

the carbon-related exhaust emissions in grams per mile is to be calculated using the following 

equation and rounded to the nearest one gram per mile: 

CREE = CREEUP − CREEGAS

Where: 

CREE means the carbon-related exhaust emission value as defined in §600.002, which 

may be set equal to zero for eligible 2012 through 2025 model year electric vehicles for a certain 

number of vehicles produced and delivered for sale as described in §86.1866–12(a) of this 

chapter. 

Where: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 534 of 770

EC = The vehicle energy consumption in watt-hours per mile, determined according to 

procedures established by the Administrator under §600.111–08(f). 

GRIDLOSS = 0.93 (to account for grid transmission losses). 

AVGUSUP = 0.628 (the nationwide average electricity greenhouse gas emission rate at 

the powerplant, in grams per watt-hour). 

TargetCO2 = The CO2Target Value determined according to §86.1818 of this chapter for 

passenger automobiles and light trucks, respectively. 

(2) For 2012 and later model year plug-in hybrid electric vehicles, the carbon-related 

exhaust emissions in grams per mile is to be calculated according to the provisions of §600.116. 

(3) For 2012 and later model year fuel cell vehicles, the carbon-related exhaust emissions 

in grams per mile shall be calculated using the method specified in paragraph (m)(1) of this 

section, except that CREEUP shall be determined according to procedures established by the 

Administrator under §600.111–08(f). As described in §86.1866 of this chapter the value of 

CREE may be set equal to zero for a certain number of 2012 through 2025 model year fuel cell 

vehicles. 

* * * * * 

Section 600.116-12 is amended by revising paragraph (a) introductory text to read as 

follows: 

§ 600.116-12 Special procedures related to electric vehicles and plug-in hybrid electric 

vehicles. 

(a) Determine fuel economy values for electric vehicles as specified in §§600.210 and 

600.311 using the procedures of SAE J1634 (incorporated by reference in §600.011), with the 

following clarifications and modifications: 

* * * * * 

20. Section 600.303-12 is amended by revising the introductory text, paragraphs (b) 

introductory text, (b)(6), and (c) to read as follows: 

§ 600.303-12 Fuel economy label—special requirements for flexible-fuel vehicles. 

Fuel economy labels for flexible-fuel vehicles must meet the specifications described in 

§600.302, with the modifications described in this section. This section describes how to label 

flexible-fuel vehicles equipped with gasoline engines. If the vehicle has a diesel engine, all the 

references to “gas” or “gasoline” in this section are understood to refer to “diesel” or “diesel 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 535 of 770

fuel”, respectively. All values described in this section are based on gasoline operation, unless 

otherwise specifically noted. 

* * * * * 

(b) Include the following elements instead of the information identified in §600.302–

12(c)(1): 

* * * * * 

(6) Add the following statement after the statements described in §600.302–12(c)(2): 

“Values are based on gasoline and do not reflect performance and ratings based on E85.” Adjust 

this statement as appropriate for vehicles designed to operate on different fuels. 

(c) You may include the sub-heading “Driving Range” below the combined fuel economy 

value, with range bars below this sub-heading as follows: 

(1) Insert a horizontal range bar nominally 80 mm long to show how far the vehicle can 

drive from a full tank of gasoline. Include a vehicle logo at the right end of the range bar. Include 

the following left-justified expression inside the range bar: “Gasoline: x miles”. Complete the 

expression by identifying the appropriate value for total driving range from §600.311. 

(2) Insert a second horizontal range bar as described in paragraph (c)(1) of this section 

that shows how far the vehicle can drive from a full tank with the second fuel. Establish the 

length of the line based on the proportion of driving ranges for the different fuels. Identify the 

appropriate fuel in the range bar. 

21. Section 600.510-12 is amended by reserving paragraph (b)(3)(iii), by adding 

paragraph (b)(4), and by revising paragraphs (b)(4), (c), (g)(1) introductory text, 

(g)(3), (h) introductory text, (j)(2)(vii), and (k) to read as follows: 

§ 600.510-12 Calculation of average fuel economy and average carbon-related exhaust 

emissions. 

* * * * * 

(b) * * * 

(3) * * * 

(iii) [Reserved] 

(4) Model year 2017 and later emergency vehicles may be excluded from the fleet 

average carbon-related exhaust emission calculations described in paragraph (j) of this section. 

The manufacturer should notify the Administrator that they are making such an election in the 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 536 of 770

model year reports required under §600.512 of this chapter. Such vehicles should be excluded 

from both the calculation of the fleet average standard for a manufacturer under 40 CFR 

86.1818-12(c)(4) and from the calculation of the fleet average carbon-related exhaust emissions 

in paragraph (j) of this section. 

(c)(1) Except as permitted in paragraph (d) of this section, the average fuel economy will 

be calculated individually for each category identified in paragraph (a)(1) of this section using 

the following equation: 

Average	MPG ൌ

1

ቂ 1

ሻቃܷܲ ൅ ܥܱ ൅ ܥܣሺ െ ܩܲܯ

Where: 

Average MPG = the fleet average fuel economy for a category of vehicles; 

MPG = the average fuel economy for a category of vehicles determined according to 

paragraph (c)(2) of this section; 

AC = Air conditioning fuel economy credits for a category of vehicles, in gallons per 

mile, determined according to paragraph (c)(3)(i) of this section; 

OC = Off-cycle technology fuel economy credits for a category of vehicles, in gallons per 

mile, determined according to paragraph (c)(3)(ii) of this section; and 

PU = Pickup truck fuel economy credits for the light truck category, in gallons per mile, 

determined according to paragraph (c)(3)(iii) of this section. 

(2) Divide the total production volume of that category of automobiles by a sum of terms, 

each of which corresponds to a model type within that category of automobiles and is a fraction 

determined by dividing the number of automobiles of that model type produced by the 

manufacturer in the model year by: 

(i) For gasoline-fueled and diesel-fueled model types, the fuel economy calculated for 

that model type in accordance with paragraph (b)(2) of this section; or 

(ii) For alcohol-fueled model types, the fuel economy value calculated for that model 

type in accordance with paragraph (b)(2) of this section divided by 0.15 and rounded to the 

nearest 0.1 mpg; or 

(iii) For natural gas-fueled model types, the fuel economy value calculated for that model 

type in accordance with paragraph (b)(2) of this section divided by 0.15 and rounded to the 

nearest 0.1 mpg; or 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 537 of 770

(iv) For alcohol dual fuel model types, for model years 1993 through 2019, the harmonic 

average of the following two terms; the result rounded to the nearest 0.1 mpg: 

(A) The combined model type fuel economy value for operation on gasoline or diesel fuel 

as determined in §600.208–12(b)(5)(i); and 

(B) The combined model type fuel economy value for operation on alcohol fuel as 

determined in §600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) 

of this section are met; or 

(v) For alcohol dual fuel model types, for model years after 2019, the combined model 

type fuel economy determined according to the following equation and rounded to the nearest 

0.1 mpg: 

ܨ ቆ ൌ ܩܲܯ

஺ܩܲܯ

൅ ሺ1െܨሻ

ீܩܲܯ

ቇ

ିଵ

Where: 

F = 0.00 unless otherwise approved by the Administrator according to the provisions of 

paragraph (k) of this section; 

MPGA = The combined model type fuel economy for operation on alcohol fuel as 

determined in §600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) 

of this section are met; and 

MPGG = The combined model type fuel economy for operation on gasoline or diesel fuel 

as determined in §600.208–12(b)(5)(i). 

(vi) For natural gas dual fuel model types, for model years 1993 through 2019, the 

harmonic average of the following two terms; the result rounded to the nearest 0.1 mpg: 

(A) The combined model type fuel economy value for operation on gasoline or diesel as 

determined in §600.208–12(b)(5)(i); and 

(B) The combined model type fuel economy value for operation on natural gas as 

determined in §600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) 

of this section are met; or 

(vii) For natural gas dual fuel model types, for model years after 2019, the combined 

model type fuel economy determined according to the following formula and rounded to the 

nearest 0.1 mpg: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 538 of 770

ܨܷ ቆ ൌ ܩܲܯ

ீே஼ܩܲܯ

൅ ሺ1 െ ܷܨሻ

ீܩܲܯ

ቇ

ିଵ

Where: 

MPGCNG = The combined model type fuel economy for operation on natural gas as 

determined in §600.208–12(b)(5)(ii) divided by 0.15 provided the requirements of paragraph (g) 

of this section are met; and 

MPGG = The combined model type fuel economy for operation on gasoline or diesel fuel 

as determined in §600.208–12(b)(5)(i). 

UF = A Utility Factor (UF) value selected from the following table based on the driving 

range of the vehicle while operating on natural gas. Determine the vehicle’s driving range in 

miles by multiplying the combined fuel economy as determined in §600.208–12(b)(5)(ii) by the 

vehicle’s usable fuel storage capacity (as defined at §600.002 and expressed in gasoline gallon 

equivalents), and rounding to the nearest 10 miles. 

Driving Range 

(miles) UF

10 0.228 

20 0.397 

30 0.523 

40 0.617 

50 0.689 

60 0.743 

70 0.785 

80 0.818 

90 0.844 

100 0.865 

110 0.882 

120 0.896 

130 0.907 

140 0.917 

150 0.925

160 0.932 

170 0.939 

180 0.944 

190 0.949 

200 0.954 

210 0.958 

220 0.962 

230 0.965 

240 0.968 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 539 of 770

250 0.971 

260 0.973 

270 0.976 

280 0.978 

290 0.980 

300 0.981 

(3) Fuel consumption improvement. Calculate the separate air conditioning, off-cycle, 

and pickup truck fuel consumption improvement as follows: 

(i) Air conditioning fuel consumption improvements are calculated separately for each 

category identified in paragraph (a)(1) of this section using the following equation: 

AC	Credit	ሺgal/miሻ ൌ ሺݎܥܥܣ݁݀݅ݐ ൈ 1,000,000ሻ

ሻ8887 ൈ ݊݋݅ݐܿݑ݀݋ݎܲ ൈ ܯܮܸሺ

Where: 

FE Credit = the fleet production-weighted total value of air conditioning efficiency 

credits for all air conditioning systems in the applicable fleet, expressed in gallons per mile; 

ACCredit = the total of all air conditioning efficiency credits for the vehicle category, in 

megagrams, from 40 CFR 86.1866-12(c)(3); 

VLM = vehicle lifetime miles, which for passenger automobiles shall be 195,264 and for 

light trucks shall be 225,865; and 

Production = the total production volume for the category of vehicles (either passenger 

automobiles or light trucks). 

(ii) Off-cycle technology fuel consumption improvements are calculated separately for 

each category identified in paragraph (a)(1) of this section using the following equation: 

Off‐Cycle	Credit	ሺgal/miሻ ൌ ሺܱݎܥܥ݁݀݅ݐ ൈ 1,000,000ሻ

ሻ8887 ൈ ݊݋݅ݐܿݑ݀݋ݎܲ ൈ ܯܮܸሺ

Where: 

FE Credit = the fleet production-weighted total value of off-cycle technology credits for 

all off-cycle technologies in the applicable fleet, expressed in gallons per mile; 

OCCredit = the total of all off-cycle technology credits for the vehicle category, in 

megagrams, from 40 CFR 86.1866-12(d)(5); 

VLM = vehicle lifetime miles, which for passenger automobiles shall be 195,264 and for 

light trucks shall be 225,865; and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 540 of 770

Production = the total production volume for the category of vehicles (either passenger 

automobiles or light trucks). 

(iii) Full size pickup truck fuel consumption improvements are calculated for the light 

truck category identified in paragraph (a)(1) of this section using the following equation: 

Pickup	Truck	Credit	ሺgal/miሻ ൌ ሺܷܲݎܥ݁݀݅ݐ ൈ 1,000,000ሻ

ሻ8887 ൈ ݊݋݅ݐܿݑ݀݋ݎܲ ൈ ܯܮܸሺ

Where: 

FE Credit = the fleet production-weighted total value of full size pickup truck credits for 

the light truck fleet, expressed in gallons per mile; 

PUCredit = the total of all full size pickup truck credits, in megagrams, from 40 CFR 

86.1866-12(e)(4); and 

Production = the total production volume for the light truck category. 

* * * * * 

(g)(1) Dual fuel automobiles must provide equal or greater energy efficiency while 

operating on the alternative fuel as while operating on gasoline or diesel fuel to obtain the CAFE 

credit determined in paragraphs (c)(2)(iv) and (v) of this section or to obtain the carbon-related 

exhaust emissions credit determined in paragraphs (j)(2)(ii) and (iii) of this section. The 

following equation must hold true: 

Ealt/Epet ≥ 1 

Where: 

Ealt = [FEalt/(NHValt× Dalt)] × 106

 = energy efficiency while operating on alternative fuel 

rounded to the nearest 0.01 miles/million BTU. 

Epet = [FEpet/(NHVpet× Dpet)] × 106

 = energy efficiency while operating on gasoline or 

diesel (petroleum) fuel rounded to the nearest 0.01 miles/million BTU. 

FEalt is the fuel economy [miles/gallon for liquid fuels or miles/100 standard cubic feet 

for gaseous fuels] while operated on the alternative fuel as determined in §600.113–12(a) and 

(b). 

FEpet is the fuel economy [miles/gallon] while operated on petroleum fuel (gasoline or 

diesel) as determined in §600.113–12(a) and (b). 

NHValt is the net (lower) heating value [BTU/lb] of the alternative fuel. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 541 of 770

NHVpet is the net (lower) heating value [BTU/lb] of the petroleum fuel. 

Dalt is the density [lb/gallon for liquid fuels or lb/100 standard cubic feet for gaseous 

fuels] of the alternative fuel. 

Dpet is the density [lb/gallon] of the petroleum fuel. 

* * * * * 

(3) Dual fuel passenger automobiles manufactured during model years 1993 through 

2019 must meet the minimum driving range requirements established by the Secretary of 

Transportation (49 CFR part 538) to obtain the CAFE credit determined in paragraphs (c)(2)(iv) 

and (v) of this section. 

(h) For model years 1993 and later, and for each category of automobile identified in 

paragraph (a)(1) of this section, the maximum increase in average fuel economy determined in 

paragraph (c) of this section attributable to dual fuel automobiles, except where the alternative 

fuel is electricity, shall be as follows: 

Model year 

Maximum increase 

(mpg) 

1993–2014 1.2 

2015 1.0 

2016 0.8 

2017 0.6 

2018 0.4 

2019 0.2 

2020 and later 0.0 

* * * * * 

(j) * * * 

(2) * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 542 of 770

(vii) For natural gas dual fuel model types, for model years 2016 and later, the combined 

model type carbon-related exhaust emissions value determined according to the following 

formula and rounded to the nearest gram per mile: 

ܥܴܧܧ ൌ ሾܥܴܧܧ஼ேீ ൈ ܷܨሿ ൅ ሾܥܴܧܧீ஺ௌ ൈ ሺ1 െ ܷܨሻሿ

Where: 

CREECNG = The combined model type carbon-related exhaust emissions value for 

operation on natural gas as determined in §600.208–12(b)(5)(ii); and 

CREEGAS = The combined model type carbon-related exhaust emissions value for 

operation on gasoline or diesel fuel as determined in §600.208–12(b)(5)(i). 

UF = A Utility Factor (UF) value selected from the following table based on the driving 

range of the vehicle while operating on natural gas. Determine the vehicle’s driving range in 

miles by multiplying the combined fuel economy as determined in §600.208–12(b)(5)(ii) by the 

vehicle’s usable fuel storage capacity (as defined at §600.002 and expressed in gasoline gallon 

equivalents), and rounding to the nearest 10 miles. 

Driving Range 

(miles) UF

10 0.228 

20 0.397 

30 0.523 

40 0.617 

50 0.689 

60 0.743 

70 0.785 

80 0.818 

90 0.844 

100 0.865 

110 0.882 

120 0.896 

130 0.907 

140 0.917 

150 0.925 

160 0.932 

170 0.939 

180 0.944 

190 0.949 

200 0.954 

210 0.958 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 543 of 770

220 0.962 

230 0.965 

240 0.968 

250 0.971 

260 0.973 

270 0.976 

280 0.978 

290 0.980 

300 0.981

(k) Alternative in-use weighting factors for dual fuel model types. Using one of the 

methods in either paragraph (k)(1) or (2) of this section, manufacturers may request the use of 

alternative values for the weighting factor F in the equations in paragraphs (c)(2)(v) and (j)(2)(vi) 

of this section. Unless otherwise approved by the Administrator, the manufacturer must use the 

value of F that is in effect in paragraphs (c)(2)(v) and (j)(2)(vi) of this section. 

(1) Upon written request from a manufacturer, the Administrator will determine and 

publish by written guidance an appropriate value of F for each requested alternative fuel based 

on the Administrator's assessment of real-world use of the alternative fuel. Such published values 

would be available for any manufacturer to use. The Administrator will periodically update these 

values upon written request from a manufacturer. 

(2) The manufacturer may optionally submit to the Administrator its own demonstration 

regarding the real-world use of the alternative fuel in their vehicles and its own estimate of the 

appropriate value of F in the equations in paragraphs (c)(2)(v) and (j)(2)(vi) of this section. 

Depending on the nature of the analytical approach, the manufacturer could provide estimates of 

F that are model type specific or that are generally applicable to the manufacturer's dual fuel 

fleet. The manufacturer's analysis could include use of data gathered from on-board sensors and 

computers, from dual fuel vehicles in fleets that are centrally fueled, or from other sources. The 

analysis must be based on sound statistical methodology and must account for analytical 

uncertainty. Any approval by the Administrator will pertain to the use of values of F for the 

model types specified by the manufacturer. 

22. Section 600.514-12 is amended by revising paragraphs (b)(1)(v) and (b)(1)(vii) to 

read as follows: 

§ 600.514-12 Reports to the Environmental Protection Agency. 

* * * * * 

(b) * * * 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 544 of 770

 (1) * * * 

(v) A description of the various credit, transfer and trading options that will be used to 

comply with each applicable standard category, including the amount of credit the manufacturer 

intends to generate for air conditioning leakage, air conditioning efficiency, off-cycle 

technology, advanced technology vehicles, hybrid or low emission full size pickup trucks, and 

various early credit programs; 

 (vii) A summary by model year (beginning with the 2009 model year) of the number of 

electric vehicles, fuel cell vehicles and plug-in hybrid vehicles using (or projected to use) the 

advanced technology vehicle credit and incentives program; 

* * * * * 

 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 545 of 770

IV. NHTSA Proposed Rule for Passenger Car and Light Truck CAFE standards for 

Model Years 2017-2025 

A. Executive Overview of NHTSA Proposed Rule 

 1. Introduction 

2. Why does NHTSA set CAFE standards for passenger cars and light 

trucks?

3. Why is NHTSA proposing CAFE standards for MYs 2017-2025 now?

 a. President’s memorandum

 b. Benefits of continuing the National Program

B. Background

1. Chronology of events since the MY 2012-2016 final rule was issued 

a. Manufacturers call for continuing National Program, and 

President’s Obama’s Memorandum 

b. Meetings and September 2010 Notice of Intent and Interim 

Joint Technical Assessment Report

c. Meetings and November 2010 Supplemental Notice of Intent 

d. Meetings and more analysis; President Obama’s 

announcement of the forthcoming proposed standards for MYs 

2017-2025; and second Supplemental Notice of Intent 

2. How has NHTSA developed the proposed CAFE standards since the 

President’s announcement? 

 C. Development and feasibility of the proposed standards

 1. How was the baseline vehicle fleet developed?

a. Why do the agencies establish a baseline and reference vehicle 

fleet? 

b. What data did the agencies use to construct the baseline, and 

how did they do so? 

c. How is the development of the baseline fleet for this rule 

different from the baseline fleet that NHTSA used for the MY 

2012-2016 (May 2010) final rule? 

d. How is this baseline different quantitatively from the baseline 

that NHTSA used for the MY 2012-2016 (May 2010) final rule? 

e. How does manufacturer product plan data factor into the 

baseline used in this rule? 

 f. What sensitivity analyses is NHTSA conducting on the 

baseline? 

g. How else is NHTSA considering looking at the baseline for the 

final rule?

2. How were the technology inputs developed? 

a. What technologies does NHTSA consider? 

b. How did NHTSA determine the costs and effectiveness of each 

of these technologies for use in its modeling analysis?

c. How does NHTSA use these assumptions in its modeling 

analysis? 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 546 of 770

d. Where can readers find more detailed information about 

NHTSA’s technology analysis? 

3. How did NHTSA develop its economic assumptions? 

a. Costs of Fuel Economy-Improving Technologies 

 b. Potential Opportunity Costs of Improved Fuel Economy

 

c. The On-Road Fuel Economy “Gap” 

d. Fuel Prices and the Value of Saving Fuel 

e. Consumer Valuation of Fuel Economy and Payback Period 

f. Vehicle Survival and Use Assumptions 

g. Accounting for the Fuel Economy Rebound Effect 

h. Benefits From Increased Vehicle Use 

i. The Value of Increased Driving Range 

j. Added Costs From Congestion, Crashes and Noise 

k. Petroleum Consumption and Import Externalities 

i. Changes in Petroleum Imports 

ii. Benefits from Reducing U.S. Petroleum Imports 

l. Air Pollutant Emissions 

i. Changes in Criteria Air Pollutant Emissions 

ii. Reductions in CO2 Emissions 

iii. Economic Value of Reductions in CO2 Emissions 

m. Discounting Future Benefits and Costs 

n. Accounting for Uncertainty in Benefits and Costs 

o. Where can readers find more information about the economic 

assumptions? 

4. How does NHTSA use the assumptions in its modeling analysis? 

a. How does the model operate? 

b. Has NHTSA considered other models? 

c. What changes has DOT made to the model? 

d. Does the model set the standards? 

e. How does NHTSA make the model available and transparent? 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

a. Standard Setting 

i. Statutory Factors Considered in Determining the 

Achievable Level of Average Fuel Economy 

(1) Technological Feasibility 

(2) Economic Practicability 

(3) The Effect of Other Motor Vehicle Standards of 

the Government on Fuel Economy 

(4) The Need of the United States To Conserve 

Energy 

(a) Fuel Prices and the Value of Saving Fuel 

(b) Petroleum Consumption and Import 

Externalities 

(c) Air Pollutant Emissions 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 547 of 770

ii. Other Factors Considered by NHTSA 

iii. Factors that NHTSA is Prohibited from 

Considering 

iv. Determining the Level of the Standards by Balancing 

the Factors 

v. Other Standards 

(1) Minimum Domestic Passenger Car Standard 

(2) Alternative standards for certain manufacturers 

2. Administrative Procedure Act 

3. National Environmental Policy Act 

E. What are the proposed CAFE standards? 

1. Form of the Standards 

2. Passenger Car Standards for MYs 2017–2025 

3. Minimum Domestic Passenger Car Standards 

4. Light Truck Standards 

F. How do the proposed standards fulfill NHTSA’s statutory obligations?

 1. What are NHTSA’s statutory obligations? 

 2. How did the agency balance the factors for this NPRM? 

G. Impacts of the Proposed CAFE Standards 

1. How will these standards improve fuel economy and reduce GHG 

emissions for MY 2017–2025 vehicles? 

2. How will these standards improve fleet-wide fuel economy and reduce 

GHG emissions beyond MY 2025? 

3. How will these proposed standards impact non-GHG emissions and 

their associated effects? 

4. What are the estimated costs and benefits of these proposed 

standards? 

5. How would these proposed standards impact vehicle sales? 

6. Potential Unquantified Consumer Welfare Impacts of the Proposed 

Standards 

7. What other impacts (quantitative and unquantifiable) will these 

proposed standards have? 

H. Vehicle Classification 

I. Compliance and Enforcement 

1. Overview 

2. How does NHTSA determine compliance? 

a. Manufacturer Submission of Data and CAFE Testing by EPA 

b. NHTSA Then Analyzes EPA-Certified CAFE Values for 

Compliance 

3. What compliance flexibilities are available under the CAFE program 

and how do manufacturers use them? 

a. Dual- and Alternative-Fueled Vehicles 

b. Credit Trading and Transfer 

c. Payment of Civil Penalties 

4. What new incentives are being added to the CAFE program 

for MYs 2017-2025? 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 548 of 770

a. “Game Changing” technologies for full size pick-up trucks 

i. Pickup Truck Hybridization 

ii. Performance-based incentive for full-size pickups 

b. A/C efficiency-improving technologies 

i. What are the proposed testing approaches? 

ii. How are fuel consumption improvement values then 

estimated? 

c. Off-cycle technologies and adjustments 

 5. Other CAFE enforcement issues

a. Electronic Reporting 

b. Reporting of how a vehicle is classified as a light truck 

c. Base Tire Definition 

d. Confirming Target and Fleet Standards 

J. Regulatory notices and analyses

1. Executive Order 12866, Executive Order 13563, and DOT Regulatory 

Policies and Procedures

2. National Environmental Policy Act

3. Regulatory Flexibility Act

4. Executive Order 13132 (Federalism)

5. Executive Order 12988 (Civil Justice Reform)

6. Unfunded Mandates Reform Act

7. Regulation Identifier Number

8. Executive Order 13045

9. National Technology Transfer and Advancement Act

10. Executive Order 13211

11. Department of Energy Review

12. Plain Language

13. Privacy Act

IV. NHTSA Proposed Rule for Passenger Car and Light Truck CAFE standards for 

Model Years 2017-2025 

A. Executive Overview of NHTSA Proposed Rule 

 1. Introduction 

 The National Highway Traffic Safety Administration (NHTSA) is proposing 

Corporate Average Fuel Economy (CAFE) standards for passenger automobiles (passenger cars) 

and nonpassenger automobiles (light trucks) for model years (MY) 2017–2025. NHTSA’s 

proposed CAFE standards would require passenger cars and light trucks to meet an estimated 

combined average of 49.6 mpg in MY 2025. This represents an average annual increase of 4 

percent from the estimated 34.4 mpg combined fuel economy level expected in MY 2016. Due 

to these proposed standards, we project total fuel savings of approximately 161 billion gallons 

over the lifetimes of the vehicles sold in model years 2017–2025, with corresponding net societal 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 549 of 770

benefits of over $335 billion using a 3 percent discount rate.568

While NHTSA has been setting fuel economy standards since the 1970s, as discussed in 

Section I, NHTSA’s proposed MYs 2017–2025 CAFE standards are part of a National Program 

made up of complementary regulations by NHTSA and the Environmental Protection Agency. 

Today’s proposed standards build upon the success of the first phase of the National Program, 

finalized on May 7, 2010, in which NHTSA and EPA set coordinated CAFE and greenhouse gas 

(GHG) standards for MYs 2012-2016 passenger cars and light trucks. Because of the very direct 

and close relationship between improving fuel economy and reducing carbon dioxide (CO2) 

tailpipe emissions, a large majority of the projected benefits are achieved jointly with EPA’s 

GHG rule, described in detail above in Section III of this preamble. These proposed CAFE 

standards are consistent with the President’s National Fuel Efficiency Policy announcement of 

May 19, 2009, which called for harmonized rules for all automakers, instead of three overlapping 

and potentially inconsistent requirements from DOT, EPA, and the California Air Resources 

Board. And finally, the proposed CAFE standards and the analysis supporting them also respond 

to President’s Obama’s May 2010 memorandum requesting the agencies to develop, through 

notice and comment rulemaking, a coordinated National Program for passenger cars and light 

trucks for MYs 2017 to 2025. 

2. Why does NHTSA set CAFE standards for passenger cars and light 

trucks?

 Improving vehicle fuel economy has been long and widely recognized as one of 

the key ways of achieving energy independence, energy security, and a low carbon economy.569 

 568 This value is based on what NHTSA refers to as “Reference Case” inputs, which are based on the assumptions 

that NHTSA has employed for its main analysis (as opposed to sensitivity analyses to examine the effect of 

variations in the assumptions on costs and benefits). The Reference Case inputs include fuel prices based on the 

AEO 2011 Reference Case, a 3 percent and a 7 percent discount rate, a 10 percent rebound effect, a value for the 

social cost of carbon (SCC) of $22/metric ton CO2 (in 2010, rising to $45/metric ton in 2050, at a 3 percent discount 

rate), etc. For a full listing of the Reference Case input assumptions, see Section IV.C.3 below. 569 Among the reports and studies noting this point are the following: 

John Podesta, Todd Stern and Kim Batten, “Capturing the Energy Opportunity; Creating a Low- Carbon 

Economy,” Center for American Progress (November 2007), pp. 2, 6, 8, and 24–29, available at: 

http://www.americanprogress.org/issues/2007/11/pdf/energy_chapter.pdf (last accessed Sept. 24, 2011). 

Sarah Ladislaw, Kathryn Zyla, Jonathan Pershing, Frank Verrastro, Jenna Goodward, David Pumphrey, 

and Britt Staley, “A Roadmap for a Secure, Low- Carbon Energy Economy; Balancing Energy Security and Climate 

Change,” World Resources Institute and Center for Strategic and International Studies (January 2009), pp. 21–22; 

available at: http://pdf.wri.org/secure_low_carbon_energy_economy_roadmap.pdf (last accessed Sept. 24, 2011). 

Alliance to Save Energy et al., “Reducing the Cost of Addressing Climate Change Through Energy 

Efficiency” (2009), available at: http://www.aceee.org/files/pdf/whitepaper/ReducingtheCostofAddressingClimateChange_synopsis.pdf (last accessed Sept. 24, 2011). 

John DeCicco and Freda Fung, “Global Warming on the Road; The Climate Impact of America’s 

Automobiles,” Environmental Defense (2006) pp. iv- vii; available at: 

http://www.edf.org/sites/default/files/5301_Globalwarmingontheroad_0.pdf (last accessed Sept. 24, 2011). 

Comment [A53]: Please verify that this wording 

is consistent with the position the agencies have 

taken related to the specific EPCA preemption 

language that also uses the words “related to”. (This 

phrase is used elsewhere in the this section too.) 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 550 of 770

The significance accorded to improving fuel economy reflects several factors. Conserving 

energy, especially reducing the nation’s dependence on petroleum, benefits the U.S. in several 

ways. Improving energy efficiency has benefits for economic growth and the environment, as 

well as other benefits, such as reducing pollution and improving security of energy supply. More 

specifically, reducing total petroleum use decreases our economy’s vulnerability to oil price 

shocks. Reducing dependence on oil imports from regions with uncertain conditions enhances 

our energy security. Additionally, the emission of CO2 from the tailpipes of cars and light trucks 

due to the combustion of petroleum is one of the largest sources of U.S. CO2 emissions.570 Using 

vehicle technology to improve fuel economy, and thereby reducing tailpipe emissions of CO2, is 

one of the three main measures of reducing those tailpipe emissions of CO2.

571 The two other 

measures for reducing the tailpipe emissions of CO2 are switching to vehicle fuels with lower 

carbon content and changing driver behavior, i.e., inducing people to drive less. 

Reducing petroleum consumption to improve energy security and save the U.S. money 

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

that NHTSA establish and implement a regulatory program for motor vehicle fuel economy to 

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

independence and security, environmental, and foreign policy implications. The need to reduce 

energy consumption is even more crucial today than it was when EPCA was enacted. U.S. 

energy consumption has been outstripping U.S. energy production at an increasing rate. 

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

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

accounted for approximately 51 percent of U.S. petroleum consumption in 2009.572 World crude 

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

shocks as the recent unrest in North Africa and the Persian Gulf highlights. The export of U.S. 

assets for oil imports continues to be an important component of the historically unprecedented 

U.S. trade deficits. Transportation accounted for about 71 percent of U.S. petroleum 

consumption in 2009.573 Light-duty vehicles account for about 60 percent of transportation oil 

use, which means that they alone account for about 40 percent of all U.S. oil consumption. 

 “Why is Fuel Economy Important?,” a Web page maintained by the Department of Energy and 

Environmental Protection Agency, available at http://www.fueleconomy.gov/feg/why.shtml (last accessed Sept. 24, 

2011); 

Robert Socolow, Roberta Hotinski, Jeffery B. Greenblatt, and Stephen Pacala, “Solving The Climate 

Problem: Technologies Available to Curb CO2 Emissions,” Environment, volume 46, no. 10, 2004. pages 8–19, 

available at: http://www.princeton.edu/mae/people/faculty/socolow/ENVIRONMENTDec2004issue.pdf (last 

accessed Sept. 24, 2011). 

570 EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2008 (April 2010), pp. ES–5, ES-8, and 2–

17. Available at http://www.epa.gov/climatechange/emissions/usgginv_archive.html (last accessed Sept. 25, 2011). 571 Podesta et al., p. 25; Ladislaw et al. p. 21; DeCicco et al. p. vii; “Reduce Climate Change, a Web page maintained 

by the Department of Energy and Environmental Protection Agency at http:// 

www.fueleconomy.gov/feg/climate.shtml (last accessed Sept. 24, 2011). 

572 Energy Information Administration, “How dependent are we on foreign oil?” Available at

http://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm (last accessed August 28, 2011). 573 Energy Information Administration, Annual Energy Outlook 2011, “Oil/Liquids.” Available at

http://www.eia.gov/forecasts/aeo/MT_liquidfuels.cfm (last accessed August 28, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 551 of 770

Gasoline consumption in the U.S. has historically been relatively insensitive to 

fluctuations in both price and consumer income, and people in most parts of the country tend to 

view gasoline consumption as a non-discretionary expense. Thus, when gasoline’s share in 

consumer expenditures rises, the public experiences fiscal distress. Recent tight global oil 

markets led to prices over $100 per barrel, with gasoline reaching as high as $4 per gallon in 

many parts of the U.S., causing financial hardship for many families and businesses. This fiscal 

distress can, in some cases, have macroeconomic consequences for the economy at large. 

Additionally, since U.S. oil production is only affected by fluctuations in prices over a 

period of years, any changes in petroleum consumption (as through increased fuel economy 

levels for the on-road fleet) largely flow into changes in the quantity of imports. Since 

petroleum imports account for about 2 percent of GDP, increases in oil imports can create a 

discernible fiscal drag. As a consequence, measures that reduce petroleum consumption, like 

fuel economy standards, will directly benefit the balance-of-payments account, and strengthen 

the U.S. economy to some degree. And finally, U.S. foreign policy has been affected by decades 

by rising U.S. and world dependency on crude oil as the basis for modern transportation systems, 

although fuel economy standards have at best an indirect impact on U.S. foreign policy. 

Reducing petroleum consumption to reduce climate change impacts

CO2 is the natural by-product of the combustion of fuel to power motor vehicles. The 

more fuel-efficient a vehicle is, the less fuel it needs to burn to travel a given distance. The less 

fuel it burns, the less CO2 it emits in traveling that distance.574 Since the amount of CO2

emissions is essentially constant per gallon combusted of a given type of fuel, the amount of fuel 

consumption per mile is directly related to the amount of CO2 emissions per mile. Motor 

vehicles are the second largest GHG-emitting sector in the U.S. after electricity generation, and 

accounted for 27 percent of total U.S. GHG emissions in 2008.575 Concentrations of greenhouse 

gases are at unprecedented levels compared to the recent and distant past, which means that fuel 

economy improvements to reduce those emissions are a crucial step toward addressing the risks 

of global climate change. These risks are well documented in Section III of this notice, and in 

NHTSA’s draft Environmental Impact Statement (DEIS) accompanying these proposed 

standards. 

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

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

In December 2007, Congress enacted the Energy Independence and Security Act (EISA), 

amending EPCA to require substantial, continuing increases in fuel economy. NHTSA thus sets 

CAFE standards today under EPCA, as amended by EISA, in order to help the U.S. passenger 

car and light truck fleet save fuel to promote energy independence, energy security, and a low 

carbon economy. 

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

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

Science Base,” National Academies Press, 1992, at 287. Available at

http://www.nap.edu/catalog.php?record_id=1605 (last accessed Sept. 25, 2011). 575 EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990–2008 (April 2010), p. 2-17. Available at 

http://www.epa.gov/climatechange/emissions/usgginv_archive.html (last accessed Sept. 25, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 552 of 770

3. Why is NHTSA proposing CAFE standards for MYs 2017-2025 now?

 a. President’s memorandum

During the public comment period for the MY 2012-2016 proposed rulemaking, many 

stakeholders encouraged NHTSA and EPA to begin working toward standards for MY 2017 and 

beyond in order to maintain a single nationwide program. After the publication of the final rule 

establishing MYs 2012-2016 CAFE and GHG standards, President Obama issued a 

Memorandum on May 21, 2010 requesting that NHTSA, on behalf of the Department of 

Transportation, and EPA work together to develop a national program for model years 2017-

2025.576 Specifically, he requested that the agencies develop “...a coordinated national program 

under the CAA [Clean Air Act] and the EISA [Energy Independence and Security Act of 2007] to 

improve fuel efficiency and to reduce greenhouse gas emissions of passenger cars and light-duty 

trucks of model years 2017-2025.” The President recognized that our country could take a 

leadership role in addressing the global challenges of improving energy security and reducing 

greenhouse gas pollution, stating that “America has the opportunity to lead the world in the 

development of a new generation of clean cars and trucks through innovative technologies and 

manufacturing that will spur economic growth and create high-quality domestic jobs, enhance 

our energy security, and improve our environment.” 

The Presidential Memorandum stated “The program should also seek to achieve 

substantial annual progress in reducing transportation sector greenhouse gas emissions and 

fossil fuel consumption, consistent with my Administration's overall energy and climate security 

goals, through the increased domestic production and use of existing, advanced, and emerging 

technologies, and should strengthen the industry and enhance job creation in the United States.” 

Among other things, the agencies were tasked with researching and then developing standards 

for MYs 2017 through 2025 that would be appropriate and consistent with EPA’s and NHTSA’s 

respective statutory authorities, in order to continue to guide the automotive sector along the road 

to reducing its fuel consumption and GHG emissions, thereby ensuring corresponding energy 

security and environmental benefits. Several major automobile manufacturers and CARB sent 

letters to EPA and NHTSA in support of a MYs 2017 to 2025 rulemaking initiative as outlined in 

the President’s May 21, 2010 announcement.577 The agencies began working immediately on the 

next phase of the National Program, work which has culminated in the standards proposed in this 

notice for MYs 2017-2025.

 b. Benefits of continuing the National Program

 576 The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidentialmemorandum-regarding-fuel-efficiency-standards. For the reader’s reference, the President also requested the 

Administrators of EPA and NHTSA to issue joint rules under the CAA and EISA to establish fuel efficiency and 

greenhouse gas emissions standards for commercial medium-and heavy-duty on-highway vehicles and work trucks 

beginning with the 2014 model year. The agencies recently promulgated final GHG and fuel efficiency standards 

for heavy duty vehicles and engines for MYs 2014-2018. 76 FR 57106 (September 15, 2011). 

577 These commitment letters in response to the May 21, 2010 Presidential Memorandum are available at 

http://www.epa.gov/otaq/climate/proposedregs.htm#cl; and http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-

+Fuel+Economy/Stakeholder+Commitment+Letters (last accessed August 28, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 553 of 770

The National Program is both needed and possible because the relationship between 

improving fuel economy and reducing CO2 tailpipe emissions is a very direct and close one. In 

the real world, there is a single pool of technologies for reducing fuel consumption and CO2

emissions. Using these technologies in the way that minimizes fuel consumption also minimizes 

CO2 emissions. While there are emission control technologies that can capture or destroy the 

pollutants that are produced by imperfect combustion of fuel (e.g., carbon monoxide), there are 

at present no such technologies for CO2. In fact, the only way at present to reduce tailpipe 

emissions of CO2 is by reducing fuel consumption. The National Program thus has dual benefits: 

it conserves energy by improving fuel economy, as required of NHTSA by EPCA and EISA; in 

the process, it necessarily reduces tailpipe CO2 emissions consonant with EPA’s purposes and 

responsibilities under the Clean Air Act. 

Additionally, by setting harmonized Federal standards to regulate both fuel economy and 

greenhouse gas emissions, the agencies are able to provide a predictable regulatory framework 

for the automotive industry while preserving the legal authorities of NHTSA, EPA, and the State 

of California. Consistent, harmonized, and streamlined requirements under the National 

Program, both for MYs 2012-2016 and for MYs 2017-2025, hold out the promise of continuing 

to deliver energy and environmental benefits, cost savings, and administrative efficiencies on a 

nationwide basis that might not be available under a less coordinated approach. The National 

Program makes it possible for the standards of two different Federal agencies and the standards 

of California and other “Section 177” states to act in a unified fashion in providing these 

benefits. A harmonized approach to regulating passenger car and light truck fuel economy and 

GHG emissions is critically important given the interdependent goals of addressing climate 

change and ensuring energy independence and security. Additionally, a harmonized approach 

would help to mitigate the cost to manufacturers of having to comply with multiple sets of 

Federal and State standards. 

One aspect of this phase of the National Program that is unique for NHTSA, however, is 

that the passenger car and light truck CAFE standards for MYs 2022-2025 must be conditional, 

while EPA’s standards for those model years will be legally binding when adopted in this round. 

EISA requires NHTSA to issue CAFE standards for “at least 1, but not more than 5, model 

years.”578 To maintain the harmonization benefits of the National Program, NHTSA will 

therefore propose and adopt standards for all 9 model years from 2017-2025, but the last 4 years 

of standards will be conditional. The passenger car and light truck CAFE standards for MYs 

2022-2025 will be determined with finality in a subsequent, de novo notice and comment 

rulemaking conducted in full compliance with EPCA/EISA and other applicable law – beyond 

simply reviewing the analysis and findings in the present rulemaking to see whether they are still 

accurate and applicable, and taking a fresh look at all relevant factors based on the best and most 

current information available at that future time. 

To facilitate that future effort, NHTSA and EPA will conduct a comprehensive mid-term 

evaluation. Up to date information will be developed and compiled for the evaluation, through a 

collaborative, robust, and transparent process, including notice and comment. The agencies fully 

expect to conduct the mid-term evaluation in close coordination with the California Air 

Resources Board (CARB), consistent with the agencies’ commitment to maintaining a single 

 578 49 U.S.C. 32902(b)(3)(B). 

Comment [A54]: See comment above. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 554 of 770

national framework for regulation of fuel economy and GHG emissions.579 Prior to beginning 

NHTSA’s rulemaking process and EPA’s mid-term evaluation, the agencies will jointly prepare 

a draft Technical Assessment Report (TAR) to examine afresh the issues and, in doing so, 

conduct similar analyses and projections as those considered in the current rulemaking, including 

technical and other analyses and projections relevant to each agency’s authority to set standards 

as well as any relevant new issues that may present themselves. The agencies will provide an 

opportunity for public comment on the draft TAR, and appropriate peer review will be 

performed of underlying analyses in the TAR. The assumptions and modeling underlying the 

TAR will be available to the public, to the extent consistent with law. The draft TAR is expected 

to be issued no later than November 15, 2017. After the draft TAR and public comment, the 

agencies will consult and coordinate as NHTSA develops its NPRM. NHTSA will ensure that 

the subsequent final rule will be timed to provide sufficient lead time for industry to make 

whatever changes to their products that the rulemaking analysis deems maximum feasible based 

on the new information available. At the very latest, NHTSA will complete its subsequent 

rulemaking on the standards with at least 18 months lead time as required by EPCA,580 but 

additional lead time may be provided. 

B. Background

1. Chronology of events since the MY 2012-2016 final rule was issued 

a. Manufacturers call for continuing National Program, and 

President’s Obama’s Memorandum 

As explained above, after many stakeholders (including many industry stakeholders) 

called on the agencies to continue a single National Program for MYs 2017 and beyond, 

President Obama issued the May 21, 2010 memorandum requesting the agencies to do just that 

for MYs 2017-2025. The President requested that the agencies 

(a) Work with the State of California to develop by September 1, 2010, a 

technical assessment to inform the rulemaking process, reflecting input from an array of 

stakeholders on relevant factors, including viable technologies, costs, benefits, lead time 

to develop and deploy new and emerging technologies, incentives and other flexibilities 

to encourage development and deployment of new and emerging technologies, impacts 

on jobs and the automotive manufacturing base in the United States, and infrastructure 

for advanced vehicle technologies; and 

(b) Take all measures consistent with law to issue by September 30, 2010, a 

Notice of Intent to Issue a Proposed Rule that announces plans for setting stringent fuel 

economy and greenhouse gas emissions standards for light-duty vehicles of model year 

 579 The agencies also fully expect that any adjustments to the standards as a result of the mid-term evaluation process 

from the levels enumerated in the current rulemaking will be made with the participation of CARB and in a manner 

that continues the harmonization of state and Federal vehicle standards. 580 49 U.S.C. 32902(a). 

Comment [A55]: This section is highly repetitive 

of the joint EPA/NHTSA section of the preamble. 

Commenters request whether this is needed. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 555 of 770

2017 and beyond, including plans for initiating joint rulemaking and gathering any 

additional information needed to support regulatory action.581 

The President stated that the Notice of Intent should describe the key elements of the 

program that the EPA and the NHTSA intend jointly to propose, under their respective statutory 

authorities, including potential standards that could be practicably implemented nationally for the 

2017–2025 model years and a schedule for setting those standards as expeditiously as possible, 

consistent with providing sufficient lead time to vehicle manufacturers.582

The President’s memorandum thus began the process that led to today’s joint proposal; 

the agencies began working immediately on the next phase of the National Program.

b. Meetings and September 2010 Notice of Intent and Interim 

Joint Technical Assessment Report

During June through August 2010, NHTSA, EPA, and CARB held numerous meetings 

with a wide variety of stakeholders to gather input to consider in developing the Notice of Intent 

and technical assessment requested by the President, and to ensure that the agencies had 

available to them the most recent technical information. These stakeholders included the 

automobile original equipment manufacturers (OEMs), automotive suppliers, non-governmental 

organizations, states and state organizations, infrastructure providers, and labor unions. The 

agencies sought these stakeholders’ technical input and perspectives, consistent with the 

President’s request, on the key issues that should be considered in assessing a continued National 

Program to reduce greenhouse gas emissions and improve fuel economy for light-duty vehicles 

in model years 2017–2025. 

In response to the agencies’ request, OEMs provided detailed and confidential input 

regarding several key areas including technology development, key regulatory design elements, 

infrastructure issues, perspective on the impacts on the U.S. manufacturing base and jobs, costs, 

and potential regulatory incentives and flexibilities. A common theme across the auto firms was 

that they are all heavily investing in advanced technologies including hybrids (HEVs), plug-in 

hybrid electric vehicles (PHEVs), electric vehicles (EVs), next generation internal combustion 

engines, and mass reduction technologies, and companies expect to increase their offerings and 

sales of these technologies significantly in the future. The companies generally stated, however, 

that the degree to which these advanced technologies will penetrate the U.S. market in the MYs 

2017–2025 timeframe is dependent upon a number of challenges and factors, including future 

gasoline fuel prices, future decreases in battery costs, future regulatory fuel economy/GHG 

requirements, and government incentives for vehicle purchasers and owners such as the existing 

tax credits for EVs and PHEVs. EPA, NHTSA and CARB also met with a cross section of 

automotive suppliers as well as advanced technology infrastructure providers. 

The agencies also requested input from numerous non-governmental organizations, 

including environmental organizations and labor organizations, and from state and local 

governments and their organizations. These stakeholders strongly supported the President’s call 

 581 75 Fed. Reg. 29399, 29400 (May 26, 2010). 582 Id. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 556 of 770

for continuing the National Program approach and setting new fuel economy and greenhouse gas 

standards for light-duty vehicles for the 2017–2025 model years. 

The agencies released the NOI and an Interim Joint Technical Assessment Report (TAR) 

at the end of September 2010, and posted both documents on their websites;583 the NOI was later 

published in the Federal Register.584 The NOI discussed the President’s memorandum; discussed 

stakeholder outreach conducted in developing the Interim Joint TAR; provided an overview of 

the agencies’ initial assessment of available technologies for improving fuel economy and 

reducing GHG emissions in MYs 2017-2025 and the costs, effectiveness, and lead time needed 

to implement those technologies based on our analysis of four different potential rates of increase 

in standard stringency (3%/year, 4%/year, 5%/year, and 6%/year)585 and four “technology 

pathways” (one that focused on hybrids, one that focused on advanced gasoline vehicles and 

mass reduction, one that focused on both hybrids and advanced gasoline vehicles, and one that 

focused on electrification technologies)586; presented initial assessments of the range of costs and 

benefits of potential standards for MYs 2017-2025 based on that analysis; discussed the potential 

form of the future standards, potential flexibilities, the need for a mid-term evaluation; and 

discussed next steps. 

In addition to the analysis of the technology pathways and the different rates of standard 

stringency increase and the initial assessment of costs and benefits mentioned above, the Interim 

Joint TAR also discussed in much more detail technical input received from stakeholders; an 

assessment of infrastructure needs to support the analyzed potential standards; incentives and 

flexibilities that might be part of the upcoming rulemaking; and other key factors in the 

rulemaking decision such as impacts on vehicle sales, employment, and upstream GHG 

emissions.587

The agencies opened rulemaking dockets and sought comment on the NOI and Interim 

Joint TAR, and explained that the agencies planned to issue a Supplemental Notice of Intent 

(SNOI) by November 30, 2010 that would describe plans for the National Program, including an 

 583 See http://www.nhtsa.gov/fuel-economy 584 75 FR 62739 (Oct. 13, 2010). 585 Specifically, the TAR analyzed four potential GHG targets, representing a 3, 4, 5, and 6 percent per year decrease 

in GHG levels from the MY 2016 fleet-wide average of 250 gram/mile (g/mi). For purposes of an initial 

assessment, this range represented a reasonably broad range of stringency increases for potential future GHG 

emissions standards, and was also consistent with the increases suggested by CARB in its letter of commitment in 

response to the President’s memorandum.

586 For each of these levels of stringency, the agencies analyzed these four “technological pathways” as different 

ways by which they could be met. This approach was chosen for the NOI and TAR to capture both the diversity in 

strategies expressed by OEMs in the stakeholder meetings over Summer 2010, and uncertainties in forecasting 10–

15 years into the future the potential costs and use of various advanced technologies in the light-duty vehicle fleet. 

Each of these technology pathways was defined to emphasize a different mix of advanced technologies, by assuming 

various degrees of penetration of advanced gasoline technologies, mass reduction, hybrids, plug-in hybrids, and 

electric vehicles. The NOI and TAR emphasized that these pathways were meant to represent ways that 

manufacturers could respond to eventual standards, and did not represent ways that they must or necessarily will 

respond to those standards. 

587 The TAR is available at http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/2017+CAFEGHG_Interim_TAR2.pdf 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 557 of 770

updated analysis of potential GHG and fuel economy standards for model years 2017–2025. 

Comments on the NOI and Interim Joint TAR would inform both that SNOI and the upcoming 

rulemaking. 

c. Meetings and November 2010 Supplemental Notice of Intent 

In response to our request for comment on the initial assessments contained in the 

September NOI and the TAR, the agencies received comments from more than 30 organizations 

and more than 100,000 individuals. In addition to the public comments, NHTSA, EPA, and 

CARB met individually with the ten largest automobile original equipment manufacturers 

(OEMs),588 as well as environmental non-governmental organizations (NGOs),589 and 

representatives of State and local governments.590

The SNOI, issued at the end of November 2010,591 represented a further step in the 

process to develop a proposed rulemaking to establish fuel economy and GHG standards for 

passenger cars and light trucks for MYs 2017–2025. The agencies explained that the SNOI was 

meant to aid the public’s understanding of some of the key issues facing the agencies in 

developing the upcoming rulemaking, by highlighting many of the key comments that the 

agencies received in response to the initial NOI and to the Interim Joint TAR, and by discussing 

the agencies’ plans for some of the key technical work and analyses that will be undertaken in 

developing the upcoming proposed rulemaking. Although the original purpose of the November 

SNOI was to narrow the range of potential stringencies for the future proposed standards, as 

well as to reflect new technical data and information and, as appropriate, further analysis 

supplementing the Interim Joint TAR, the agencies explained that given the short amount of time 

between the issuance of the September NOI/TAR and the SNOI, the agencies were unable to 

complete several additional pieces of technical research in time for inclusion in analysis to 

support the SNOI, and that based on the stakeholder input between the NOI/TAR and the SNOI 

and on public comments, the agencies concluded that narrowing the range of potential 

stringencies would not be appropriate at that time, and that a more complete analysis will need to 

be done. The agencies stated that they would continue to conduct analyses for purposes of 

developing the proposal, as supported by comments to the NOI and TAR, and continue to work 

with California in our technical assessments of potential standards, and continue extensive 

dialogue with stakeholders. 

As mentioned, the SNOI highlights many of the key comments that the agencies received 

in response to the NOI and Interim Joint TAR, concerning issues such as the benefits of 

continuing the National Program; appropriate levels for the standards for MYs 2017-2025; the 

 588 NHTSA, EPA, and CARB met with the representatives of the following OEMs: Chrysler, Ford, General Motors, 

Honda, Toyota, Hyundai, Nissan, BMW, Daimler, and Volkswagen.

589 NHTSA, EPA, and CARB met with representatives from several environmental NGOs, including the Natural 

Resources Defense Council, Union of Concerned Scientists, Sierra Club, National Wildlife Federation, ACEEE, 

Environment America, Safe Climate Campaign, and Environmental Defense Fund.

590 NHTSA, EPA and CARB met with representatives of the National Association of Clean Air Agencies (NACAA) 

and the Northeast States for Coordinated Air Use Management (NESCAUM), and several representatives of 

individual State and local governments.

591 The SNOI was published in the Federal Register on December 8, 2010. See 75 FR 76337 (Dec. 8, 2010). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 558 of 770

availability, cost, and effectiveness of different technologies; a mid-term evaluation; safety 

effects of the proposed standards; program design elements, credits and flexibilities, and 

treatment of upstream CO2 emissions; and other areas. The SNOI does not present a 

comprehensive summary of comments received at that time, but by highlighting the key 

comments, it helps interested parties understand the landscape at that point in the rulemaking 

process. In the interest of brevity, we will not summarize those comments here, but we refer 

readers to the SNOI for more details.592

d. Meetings and more analysis; President Obama’s 

announcement of the forthcoming proposed standards for MYs 

2017-2025; and second Supplemental Notice of Intent 

On July 29, 2011, President Obama announced with the support of thirteen major 

automakers for the next phase in the Administration’s national vehicle program, increasing fuel 

economy and reducing GHG emissions for passenger cars and light trucks built in MYs 2017-

2025.593 The President was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land 

Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, which together account for over 90 

percent of all vehicles sold in the United States. The California Air Resources Board (CARB), 

the United Auto Workers (UAW) and a number of environmental and consumer groups, also 

were integral to developing this agreement. 

On the same day as the President’s announcement, the agencies released a second SNOI 

(published in the Federal Register on August 9, 2011) generally describing the joint proposal that 

the EPA and NHTSA expected to issue to establish the National Program for model years 2017–

2025, and which is set forth in this NPRM. The agencies explained that the proposal would be 

developed based on extensive technical analyses, an examination of the factors required under 

their respective statutes and discussions with and input from individual motor vehicle 

manufacturers and other stakeholders (including certain members of the United States Congress). 

The input of stakeholders, which is encouraged by Executive Order 13563, has been invaluable 

to the agencies in developing today’s NPRM. 

For background, as discussed above, after publishing the Supplemental NOI on 

December 8, 2010 (the December 8 SNOI), NHTSA, EPA and CARB continued studies and 

conducted more in-depth and comprehensive rulemaking analyses related to technology cost and 

effectiveness, technological feasibility, reasonable timing for manufacturers to implement 

technologies, and economic factors, and other relevant considerations. In addition to this 

ongoing and more in-depth work, the agencies continued meeting with stakeholders and received 

additional input and feedback to help inform the rulemaking. Meetings were held with and 

relevant information was obtained from manufacturers, manufacturer organizations, suppliers, a 

labor union, environmental groups, consumer interest groups, and investment organizations. 

 592 The SNOI is also available on NHTSA’s website at http://www.nhtsa.gov/fuel-economy. 593 The President’s remarks are available at http://www.whitehouse.gov/the-press-office/2011/07/29/remarkspresident-fuel-efficiency-standards; see also http://www.nhtsa.gov/fuel-economy for more information from the 

agency about the announcement. 

Comment [A56]: This is confusing and 

“agreement” seems to mischaracterize the 

framework announced by the President that was 

developed by the agencies drawing on input and data 

from each of these stakeholders. Commenters 

suggestion agencies to revise. 

Comment [A57]: See comment above in the joint 

section of the preamble. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 559 of 770

This section summarizes NHTSA stakeholder engagement between December 2010 and 

July 29, 2011, the date on which President Obama announced the agencies’ plans for proposing 

standards for MY2017-2025, and the support of thirteen major automakers and other 

stakeholders for these plans. A complete list of stakeholder meeting dates and participants can 

be found in a memorandum to the docket.594 Information that the agencies presented to 

stakeholders is posted in the docket and referenced in multiple places in this section. 

The agencies’ engagement with the large and diverse group of stakeholders described 

above between December 2010 and July 29, 2011 shared the single aim of ensuring that the 

agencies possessed the most complete and comprehensive set of information possible to inform 

the proposed rulemaking. 

Throughout this period, the stakeholders repeated many of the broad concerns and 

suggestions described in the TAR, NOI, and December 8 SNOI. For example, stakeholders 

uniformly expressed interest in maintaining a harmonized and coordinated national program that 

would be supported by CARB and allow auto makers to build one fleet and preserve consumer 

choice. The stakeholders also raised concerns about potential stringency levels, consumer 

acceptance of some advanced technologies and the potential structure of compliance flexibilities 

available under EPCA (as amended by EISA) and the CAA. In addition, most of the 

stakeholders wanted to discuss issues concerning technology availability, cost and effectiveness 

and economic practicability. The auto manufacturers, in particular, sought to provide the 

agencies with a better understanding of their respective strategies (and associated costs) for 

improving fuel economy while satisfying consumer demand in the coming years. Additionally, 

some stakeholders expressed concern about potential safety impacts associated with the 

standards, consumer costs and consumer acceptance, and potential disparate treatment of cars 

and trucks. Some stakeholders also stressed the importance of investing in infrastructure to 

support more widespread deployment of alternative vehicles and fuels. Many stakeholders also 

asked the agencies to acknowledge prevailing economic uncertainties in developing proposed 

standards. In addition, many stakeholders shared on the number of years to be covered by the 

program and what they considered to be important features of a mid-term review of any 

standards set or proposed for MY 2022-2025. In all of these meetings, NHTSA and EPA sought 

additional data and information from the stakeholders that would allow them to refine their initial 

analyses and determine proposed standards that are consistent with the agencies’ respective 

statutory and regulatory requirements. The general issues raised by those stakeholders are 

addressed in the sections of this NPRM discussing the topics to which the issues pertain (e.g., the 

form of the standards, technology cost and effectiveness, safety impacts, impact on U.S. vehicle 

sales and other economic considerations, costs and benefits). 

The first stage of the meetings occurred between December 2010 and June 20, 2011. 

These meetings covered topics that were generally similar to the meetings that were held prior to 

the publication of the December 8 Supplemental NOI and that were summarized in the 

Supplemental NOI. The manufacturers provided the agencies with additional information related 

to their product plans for vehicle models and fuel efficiency improving technologies and 

associated cost estimates. Detailed product plans generally extend only five or six model years 

into the future. Manufacturers also provided estimates of the amount of improvement in CAFE 

 594 [Memo Name], at NHTSA-2010-0131. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 560 of 770

and CO2 emissions they could reasonably achieve in model MYs 2017-2025; feedback on the 

shape of MY 2012-2016 regulatory stringency curves and curve cut points, regulatory program 

flexibilities; recommendations for and on the structure of one or more mid-term reviews of the 

later model year standards; estimates of the cost, effectiveness and availability of some fuel 

efficiency improving technologies; and feedback on some of the cost and effectiveness 

assumptions used in the TAR analysis. In addition, manufacturers provided input on 

manufacturer experience with consumer acceptance of some advanced technologies and raised 

concerns over consumer acceptance if higher penetration of these technologies were needed in 

the future, consumer’s willingness to pay for improved fuel economy, and ideas on enablers and 

incentives that would increase consumer acceptance. Many manufacturers stated that technology 

is available to significantly improve fuel economy and CO2 emissions; however, they maintained 

that the biggest challenges relate to the cost of the technologies, consumer willingness to pay and 

consumer acceptance. 

During this first phase NHTSA and EPA continued to meet with other stakeholders, who 

provided their own perspectives on issues of importance to them. They also provided data to the 

extent available to them. Information obtained from stakeholders during this phase is contained 

in the docket. 

The second stage of meetings occurred between June 21, 2011 and July 14, 2011, during 

which time EPA, NHTSA, CARB and several White House Officesoffices within the Execuitive 

Office of the President kicked-off an intensive series of meetings, primarily with manufacturers, 

to share tentative regulatory concepts developed by the agencies, which included concept 

stringency curves and program flexibilities based on the analyses completed by the agencies as 

of June 21,595 and requested feedback.596 In particular, the agencies requested that the 

manufacturers provide detailed and reliable information on how they might comply with the 

concepts and, if they projected they could not comply, information supporting their belief that 

they would be unable to comply. Additionally, EPA and NHTSA sought detailed input from the 

manufacturers regarding potential changes to the concept stringency levels and program 

flexibilities available under EPA’s and NHTSA’s respective authority that might reduce the costs 

of compliance. In addition, manufacturers provided input related to consumer acceptance and 

adoption of some advanced technologies and program costs based on their independent 

assessments or information previously submitted to the agencies. 

In these second stage meetings, the agencies received considerable input from the 

manufacturers. The agencies carefully considered the manufacturer information along with 

information from the agencies’ independent analyses. The agencies used all available 

information to refine their assessment of the range of program concept stringencies and 

provisions that the agencies determined were consistent with their statutory mandates. 

 595 The agencies consider a range of standards that may satisfy applicable legal criteria, taking into account the 

complete record before them. The initial concepts shared with stakeholders were within the range the agencies were 

considering, based on the information then available to the agencies. 596 The agencies prepared materials prior to the meetings to present to the manufacturers which are included in a 

memo to docket. [add reference] 

Comment [A58]: Why not summarize those 

perspectives here? As written, this seems to 

undervalue their perspectives. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 561 of 770

The third stage of meetings occurred between July 15, 2011 and July 28, 2011. During 

this time period the agencies continued to refine concept stringencies and compliance flexibilities 

based on further consideration of the information available to them. They also met with 

manufacturers who expressed ongoing interest in engaging with the agencies.597 

Throughout all three stages, EPA and NHTSA continued to engage other stakeholders to 

ensure that the agencies were obtaining the most comprehensive and reliable information 

possible to guide the agencies in developing proposed standards for MY 2017-2025. Many of 

these stakeholders reiterated comments previously presented to the agencies. For instance, 

environmental organizations consistently stated that stringent standards are technically 

achievable and critical to important national interests, such as improving energy independence, 

reducing climate change, and enabling the domestic automobile industry to remain competitive 

in the global market. Labor interests stressed the need to carefully consider economic impacts 

and the opportunity to create and support new jobs, and consumer advocates emphasized the 

economic and practical benefits to consumers of improved fuel economy and the need to 

preserve consumer choice. In addition, a number of stakeholders stated that the standards under 

development should not have an adverse impact on safety. 

On July 29, 2011, EPA and NHTSA the agencies issued a new SNOI with concept 

stringency curves and program provisions based on refined analyses and further consideration of 

the record before the agencies. The agencies have received letters of support for the concepts laid 

out in the SNOI from BMW, Chrysler, Ford, General Motors, Global Automakers, Honda, 

Hyundai, Jaguar Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, Volvo and CARB. 

Numerous other stakeholders, including labor, environmental and consumer groups, have 

expressed their support for the agencies’ plans to move forward. 

The agencies have considered all of this stakeholder input in developing this proposal, 

and look forward to continuing the productive dialogue through the comment period following 

this proposal. 

2. How has NHTSA developed the proposed CAFE standards since the 

President’s announcement? 

The CAFE standards proposed in this NPRM are based on much more analysis conducted 

by the agencies since July 29, including in-depth modeling analysis by DOT/NHTSA to support 

the proposed CAFE standards, and further refinement of a number of our baseline, technology, 

and economic assumptions used to evaluate the proposed standards and their impacts. This 

NPRM, the draft joint TSD, and NHTSA’s PRIA and EPA’s DRIA contain much more 

information about the analysis underlying these proposed standards. The following sections 

provide the basis for NHTSA’s proposed passenger car and light truck CAFE standards for MYs 

2017-2025, the standards themselves, the estimated impacts of the proposed standards, and much 

more information about the CAFE program relevant to the 2017-2025 timeframe. 

 C. Development and feasibility of the proposed standards

 597 The agencies prepared materials prior to the meetings to present to the manufacturers which are included in a 

memo to docket. [add reference] 

Comment [A59]: Commenters note that it seems 

odd to separate this period from the preceding stage 

of meetings. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 562 of 770

 1. How was the baseline vehicle fleet developed?

a. Why do the agencies establish a baseline and reference vehicle 

fleet? 

As also discussed in Section II.B above, in order to determine what levels of stringency 

are feasible in future model years, the agencies must project what vehicles will exist in those 

model years, and then evaluate what technologies can feasibly be applied to those vehicles in 

order to raise their fuel economy and lower their CO2 emissions. The agencies therefore 

established a “baseline” vehicle fleet representing those vehicles, based on the best available 

transparent information. The agencies then developed a “reference” fleet, projecting the baseline 

fleet sales into MYs 2017-2025 and accounting for the effect that the MY 2012-2016 CAFE 

standards have on the baseline fleet.598 This reference fleet is then used for comparisons of 

technologies’ incremental cost and effectiveness, as well as for other relevant comparisons in the 

rule. 

b. What data did the agencies use to construct the baseline, and 

how did they do so? 

As explained in the draft joint TSD, both agencies used a baseline vehicle fleet 

constructed beginning with EPA fuel economy certification data for the 2008 model year, the 

most recent model year for which final data is currently available from manufacturers. These 

data were used as the source for MY 2008 production volumes and some vehicle engineering 

characteristics, such as fuel economy compliance ratings, engine sizes, numbers of cylinders, and 

transmission types. 

For this NPRM, NHTSA and EPA chose again to use MY 2008 vehicle data as the basis 

of the baseline fleet. MY 2008 is now the most recent model year for which the industry had 

 598 In order to calculate the impacts of the proposed future GHG and CAFE standards, it is necessary to estimate the 

composition of the future vehicle fleet absent those proposed standards in order to conduct comparisons. The first 

step in this process was to develop a baseline fleet based on model year 2008 data. NHTSA and EPA create a 

baseline fleet in order to track the volumes and types of fuel economy-improving and CO2-reducing technologies 

which are already present in the existing vehicle fleet. The second step was to project the baseline fleet sales into 

MYs 2017-2025. This is called the reference fleet, and it represents the fleet volumes (but, until later steps, not 

levels of technology) that the NHTSA and EPA expect would exist in MYs 2017-2025 absent any change due to 

regulation in 2017-2025. 

After determining the reference fleet, a third step is needed to account for technologies (and corresponding 

increases in cost and reductions in fuel consumption and CO2 emissions) that could be added to MY 2008-

technology vehicles in the future, taking into previously-promulgated standards, and assuming MY 2016 standards 

are extended through MY2025. NHTSA accomplished this by using the Volpe model to add technologies to that 

MY 2008-based market forecast such that each manufacturer’s car and truck CAFE and average CO2 levels reflect 

baseline standards. The model’s output, the reference case (or adjusted baseline, or no-action alternative), is the 

light-duty fleet estimated to exist in MYs 2017-2025 without new GHG/CAFE standards covering MYs 2017-2025. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 563 of 770

what the agencies would consider to be “normal” sales. Complete MY 2009 data is now 

available for the industry, but the agencies believe that the model year was disrupted by the 

economic downturn and the bankruptcies of both General Motors and Chrysler. CAFE 

compliance data shows that there was a significant reduction in the number of vehicles sold by 

both companies and by the industry as a whole. These abnormalities led the agencies to 

conclude that MY 2009 data was likely not representative for projecting the future fleet for 

purposes of this analysis. While MY 2010 data is likely more representative for projecting the 

future fleet, it was not complete and available in time for it to be used for the NPRM analysis. 

Therefore, for purposes of the NPRM analysis, NHTSA and EPA chose to use MY 2008 CAFE 

compliance data for the baseline since it was the latest, most representative transparent data set 

that we had available. However, the agencies plan to use the MY 2010 data, if available, to 

develop an updated market forecast for use in the final rule. If and when the MY 2010 data 

becomes available, NHTSA will place a copy of this data into its rulemaking docket. 

Additionally, time and resources permitting, NHTSA may also docket an impacts analysis 

following the NPRM, to allow the public to see and comment on the difference in results using 

baselines developed using the MY 2010 data rather than the MY 2008 data. 

Some information important for analyzing new CAFE standards is not contained in the 

EPA fuel economy certification data. EPA staff estimated vehicle wheelbase and track widths 

using data from Motortrend.com and Edmunds.com. This information is necessary for 

estimating vehicle footprint, which is required for the analysis of footprint-based standards. 

Considerable additional information regarding vehicle engineering characteristics is also 

important for estimating the potential to add new technologies in response to new CAFE 

standards. In general, such information helps to avoid “adding” technologies to vehicles that 

already have the same or a more advanced technology. Examples include valvetrain 

configuration (e.g., OHV, SOHC, DOHC), presence of cylinder deactivation, and fuel delivery 

(e.g., MPFI, SIDI). To the extent that such engineering characteristics were not available 

in certification data, EPA staff relied on data published by Ward’s Automotive, supplementing 

this with information from Internet sites such as Motortrend.com and Edmunds.com. NHTSA 

staff also added some more detailed engineering characteristics (e.g., type of variable valve 

timing) using data available from ALLDATA® Online. Combined with the certification data, 

all of this information yielded the MY 2008 baseline vehicle fleet. 

After the baseline was created the next step was to project the sales volumes for 2017–

2025 model years. EPA used projected car and truck volumes for this period from Energy 

Information Administration’s (EIA’s) 2011 Interim Annual Energy Outlook (AEO).599 

However, AEO projects sales only at the car and truck level, not at the manufacturer and modelspecific level, which are needed in order to estimate the effects new standards will have on 

individual manufacturers. Therefore, EPA purchased data from CSM–Worldwide and used their 

projections of the number of vehicles of each type predicted to be sold by manufacturers in 

 599 Department of Energy, Energy Information Administration, Annual Energy Outlook (AEO) 2011, Early Release. 

Available at http://www.eia.gov/forecasts/aeo/. Both agencies regard AEO a credible source not only of such 

forecasts, but also of many underlying forecasts, including forecasts of the size of the future light vehicle market. 

The agencies used the early release version of AEO 2011 and confirmed later that changes reflected in the final 

version were insignificant with respect to the relative volumes of passenger cars and light trucks.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 564 of 770

2017–2025. This provided the year-by-year percentages of cars and trucks sold by each 

manufacturer as well as the percentages of each vehicle segment. Using these percentages 

normalized to the AEO projected volumes then provided the manufacturer-specific market share 

and model-specific sales for model years 2011–2016. 

The processes for constructing the MY 2008 baseline vehicle fleet and subsequently 

adjusting sales volumes to construct the MY 2017–2025 baseline vehicle fleet are presented in 

detail in Chapter 1 of the Joint Technical Support Document accompanying today’s proposed 

rule. 

NHTSA invites comment on the process used to develop the market forecast, and on 

whether the agencies should consider alternative approaches to producing a forecast at the level 

of detail we need for modeling. If commenters wish to offer alternatives, we ask that they 

address how manufacturers’ future fleets would be defined in terms of specific products, and the 

sales volumes and technical characteristics (e.g., fuel economy, technology content, vehicle 

weight, and other engineering characteristics) of those products. The agency also invites 

comment regarding what sensitivity analyses—if any—we should do related to the market 

forecast. For example, should the agency evaluate the extent to which its analysis is sensitive to 

projections of the size of the market, manufacturers’ respective market shares, the relative 

growth of different market segments, and or the relative growth of the passenger car and light 

truck markets? If so, how would commenters suggest that we do that? 

c. How is the development of the baseline fleet for this rule 

different from the baseline fleet that NHTSA used for the MY 

2012-2016 (May 2010) final rule? 

The development of the baseline fleet for this rulemaking utilizes the same procedures 

used in the development of the baseline fleet for the MY 2012-2016 rulemaking. Compared to 

that rulemaking, the change in the baseline is much less dramatic – the MY 2012-2016 

rulemaking was the first rulemaking in which NHTSA did not use manufacturer product plan 

data to develop the baseline fleet,600 so evaluating the difference between the baseline fleet used 

in the MY 2011 final rule and in the MY 2012-2016 rulemaking was informative at that time 

regarding some of the major impacts of that switch. In this proposal, we are using basically the 

same MY 2008 based file as the starting point in the MY 2012-2016 analysis, and simply using 

an updated AEO forecast and an updated CSM forecast. Of those, most differences are in input 

assumptions rather than the basic approach and methodology. These include changes in various 

macroeconomic assumptions underlying the AEO and CSM forecasts and the use of results 

obtained by using DOE’s National Energy Modeling System (NEMS) to repeat the AEO 2011 

 600 The agencies’ reasons for not relying on product plan data for the development of the baseline fleet were 

discussed in the Regulatory Impact Analysis for the MYs 2012-2016 rulemaking and at 74 Fed. Reg. 49487-89. 

While a baseline developed using publicly and commercially available sources has both advantages and 

disadvantages relative to a baseline developed using manufacturers’ product plans, NHTSA currently concludes, as 

it did in the course of that prior rulemaking, that the advantages outweigh the disadvantages. Commenters generally 

supported the more transparent approach employed in the MYs 2012-2016 rulemaking.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 565 of 770

analysis without forcing increased passenger car volumes, and without assuming post-MY 2016 

increases in the stringency of CAFE standards.601

Another change in the baseline fleet from the last rulemaking involved our redefinition of 

the list of manufacturers to account for realignment and ownership changes taking place within 

the industry. The reported results supporting this rulemaking recognize that Volvo vehicles are 

no longer a part of Ford, but are reported as a separate company, Geely; that Saab vehicles are no 

longer part of GM, but are reported as part of Spyker which purchased Saab from GM in 2010; 

and that Chrysler, along with Ferrari and Maserati, are reported as Fiat. 

In addition, low volume specialty manufacturers omitted from the analysis supporting the 

MY 2012-2016 rulemaking have been included in the analysis supporting this rulemaking. 

These include Aston Martin, Lotus, and Tesla. 

d. How is this baseline different quantitatively from the baseline 

that NHTSA used for the MY 2012-2016 (May 2010) final rule? 

As discussed above, the current baseline was developed from adjusted MY 2008 

compliance data and covers MY 2017-2025. This section describes, for the reader’s comparison, 

some of the differences between the current baseline and the MY 2012-2016 CAFE rule 

baseline. This comparison provides a basis for understanding general characteristics and 

measures of the difference between the two baselines. The current baseline, while developed 

using the same methods as the baseline used for MY 2012-2016 rulemaking, reflects updates to 

the underlying commercially-available forecast of manufacturer and market segment shares of 

the future passenger car and light truck market. Again, the differences are in input assumptions 

rather than the basic approach and methodology. It also includes changes in various 

macroeconomic assumptions underlying the AEO forecasts and the use of the AEO Unforced 

Reference Case. Another change in the market input data from the last rulemaking involved our 

redefinition of the list of manufacturers to account for realignment taking place within the 

industry. 

 601 Similar to the analyses supporting the MYs 2012-2016 rulemaking, the agencies have used the Energy 

Information Administration’s (EIA’s) National Energy Modeling System (NEMS) to estimate the future relative 

market shares of passenger cars and light trucks. However, NEMS methodology includes shifting vehicle sales 

volume, starting after 2007, away from fleets with lower fuel economy (the light-truck fleet) towards vehicles with 

higher fuel economies (the passenger car fleet) in order to facilitate compliance with CAFE and GHG MYs 2012-

2016 standards. Because we use our market projection as a baseline relative to which we measure the effects of new 

standards, and we attempt to estimate the industry’s ability to comply with new standards without changing product 

mix, the Interim AEO 2011-projected shift in passenger car market share as a result of required fuel economy 

improvements creates a circularity. Therefore, for the current analysis, the agencies developed a new projection of 

passenger car and light truck sales shares by running scenarios from the Interim AEO 2011 reference case that first 

deactivate the above-mentioned sales-volume shifting methodology and then hold post-2017 CAFE standards 

constant at MY 2016 levels. Incorporating these changes reduced the projected passenger car share of the light 

vehicle market by an average of about 5 percent during 2017-2025. NHTSA and EPA refer to this as the “Unforced 

Reference Case.”
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 566 of 770

Estimated vehicle sales: 

The sales forecasts, based on the Energy Information Administration’s (EIA’s) Early 

Annual Energy Outlook for 2011 (Interim AEO 2011), used in the current baseline indicate that 

the total number of light vehicles expected to be sold during MYs 2012-2016 is 79 million, or 

about 15.8 million vehicles annually. NHTSA’s MY 2012-2016 final rule forecast, based on 

AEO 2010, of the total number of light vehicles likely to be sold during MY 2012 through MY 

2016 was 80 million, or about 16 million vehicles annually. Light trucks are expected to make 

up 37 percent of the MY 2016 baseline market forecast in the current baseline, compared to 34 

percent of the baseline market forecast in the MY 2012-2016 final rule. These changes in both 

the overall size of the light vehicle market and the relative market shares of passenger cars and 

light trucks reflect changes in the economic forecast underlying AEO, changes in AEO’s forecast 

of future fuel prices, and use of the Unforced Reference Case. 

Estimated manufacturer market shares: 

These changes are reflected below in Table IV.C.1-1, which shows the agency’s sales 

forecasts for passenger cars and light trucks under the current baseline and the MY 2012-2016 

final rule. There has been a general decrease in MY 2016 forecast overall sales (from AEO) and 

for all manufacturers (reflecting CSM’s forecast of manufacturers’ market shares), with the 

exception of Chrysler, when the current baseline is compared to that used in the MY 2012-2016 

rulemaking. There were no significant shifts in manufacturers’ market shares between the two 

baselines. The effect of including the low volume specialty manufacturers and accounting for 

known corporate realignments in the current baseline appear to be negligible. For individual 

manufacturers, there have been shifts in the shares of passenger car and light trucks, as would be 

expected given that the agency is relying on different underlying assumptions as discussed above 

and in Chapter 1 of the joint TSD. 

TABLE IV.C.1–1—SALES FORECASTS 

[Production for U.S. sale in MY 2016, thousand units]

 

MY 2012-2016 Final 

Rule602 Current Baseline 

Manufacturer Passenger Nonpassenger Passenger Nonpassenger 

Aston Martin 1 

BMW 423 171 383 184

Daimler 271 126 245 136

Fiat/Chrysler 400 462 392 498

Ford 1,559 911 1,393 930

Geely/Volvo 94 50

 602 Again, Aston Martin, Alfa Romeo, Ferrari, Maserati, Lotus and Tesla were not included in the baseline of the 

MY 2012-2016 rulemaking; Volvo vehicles were reported under Ford and Saab vehicles were reported under GM; 

and Chrysler was reported as a separate company whereas now it is reported as part of Fiat and includes Alfa 

Romeo, Ferrari, and Maserati. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 567 of 770

General 

Motors 1,514 1,342 1,391 1,444

Honda 930 545 862 588

Hyundai 518 92 489 99

Kia 548 115 512 124

Lotus 0.3 

Mazda 420 72 393 78

Mitsubishi 83 55 80 60

Nissan 946 381 869 410

Porsche 33 17 30 18

Spyker/Saab 18 2

Subaru 207 117 236 74

Suzuki 103 20 94 21

Tata 65 42 59 46

Tesla 27 

Toyota 2,226 1,077 2,043 1,159

Volkswagen 583 124 528 134

Total 10,832 5,669 10,139 6,055

Estimated achieved fuel economy levels: 

The current baseline market forecast shows industry-wide average fuel economy levels 

somewhat lower in MY 2016 than shown in the baseline market forecast for the MY 2012-2016 

rulemaking. Under the current baseline, average fuel economy for MY 2016 is 27.0 mpg, versus 

27.3 mpg under the baseline in the MY 2012-2016 rulemaking. The 0.3 mpg change relative to 

the MY 2012-2016 rulemaking’s baseline is the result of changes in the shares of passenger car 

and light trucks in the MY 2016 market as noted above – more light trucks generally equals 

lower average fuel economy – and not the result of changes in the capabilities of the car and 

truck fleets. 

These differences are shown in greater detail below in Table III.A.3-5, which shows 

manufacturer-specific CAFE levels (not counting FFV credits that some manufacturers expect to 

earn) from the current baseline versus the MY 2012-2016 rulemaking baseline for passenger cars 

and light trucks. Table III.A.3-6 shows the combined averages of these planned CAFE levels in 

the respective baseline fleets. These tables demonstrate that there are no significant differences 

in CAFE for either passenger cars or light trucks at the manufacturer level between the current 

baseline and the MY 2012-2016 rulemaking baseline. The differences become more significant 

at the manufacturer level when combined CAFE levels are considered. Here we see a general 

decline in CAFE at the manufacturer level due to the increased share of light trucks. Because the 

agencies have, as for the MY 2012-2016 rulemaking, based this market forecast on vehicles in 

the MY 2008 fleet, these changes in CAFE levels reflect changes in vehicle mix, not changes in 

the fuel economy achieved by individual vehicle models. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 568 of 770

TABLE IV.C.1–2— CURRENT BASELINE CAFE LEVELS IN MY 2016 VERSUS 

MY 2012-2016 RULEMAKING CAFE LEVELS 

 

MY 2012-2016 Final Rule 603 Current Baseline 

Manufacturer Passenger Non passenger Passenger Non passenger 

Aston Martin 18.83 

BMW 27.19 23.04 27.19 23.03

Daimler 25.25 21.12 25.50 21.13

Fiat/Chrysler 28.69 22.19 27.74 22.19

Ford 28.14 21.31 28.24 21.32

Geely/Volvo 25.89 21.08

General Motors 28.42 21.45 28.38 21.45

Honda 33.98 25.05 33.83 25.02

Hyundai 32.02 24.30 31.74 24.29

Kia 32.98 23.74 32.70 23.74

Lotus 29.66 

Mazda 30.94 26.41 30.77 26.40

Mitsubishi 28.94 23.59 28.86 23.57

Nissan 32.04 22.11 31.98 22.10

Porsche 26.22 19.98 26.22 19.98

Spyker/Saab 26.54 19.79

Subaru 29.44 26.91 29.59 27.37

Suzuki 30.84 23.29 30.77 23.29

Tata 24.58 19.74 24.58 19.71

Tesla 244.00 

Toyota 35.33 24.25 35.22 24.26

Volkswagen 28.99 20.23 28.90 20.24

Total/Average 30.73 22.59 30.65 22.56

TABLE IV.C.1–3— CURRENT BASELINE CAFE LEVELS IN MY 2016 VERSUS 

MY 2012-2016 RULE MAKING CAFE LEVELS (COMBINED) 

Manufacturer MY 2012-2016 Final Current Baseline 

 603 Again, Aston Martin, Alfa Romeo, Ferrari, Maserati, Lotus and Tesla were not included in the baseline of the 

MY 2012-2016 rulemaking; Volvo vehicles were reported under Ford and Saab vehicles were reported under GM; 

and Chrysler was reported as a separate company whereas now it is reported as part of Fiat and includes Alfa 

Romeo, Ferrari, and Maserati. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 569 of 770

Rule 604

Aston Martin 18.83

BMW 25.85 25.68

Daimler 23.77 23.75

Fiat/Chrysler 24.79 24.33

Ford 25.17 24.99

Geely/Volvo 23.99

General 

Motors 24.66 24.37

Honda 30.03 29.61

Hyundai 30.56 30.18

Kia 30.89 30.46

Lotus 29.66

Mazda 30.18 29.95

Mitsubishi 26.53 26.33

Nissan 28.38 27.97

Porsche 23.74 23.48

Spyker/Saab 25.70

Subaru 28.47 29.03

Suzuki 29.30 29.04

Tata 22.42 22.19

Tesla 244.00

Toyota 30.75 30.27

Volkswagen 26.94 26.60

Total/Average 27.34 27.03

e. How does manufacturer product plan data factor into the 

baseline used in this rule? 

In December 2010, NHTSA requested that manufacturers provide information regarding 

future product plans, as well as information regarding the context for those plans (e.g., estimates 

of future fuel prices), and estimates of the future availability, cost, and efficacy of fuel-saving 

technologies.605 The purpose of this request was to acquire updated information regarding 

vehicle manufacturers’ future product plans to assist the agency in assessing what corporate 

 604 Again, Aston Martin, Alfa Romeo, Ferrari, Maserati, Lotus and Tesla were not included in the baseline of the 

MY 2012-2016 rulemaking; Volvo vehicles were reported under Ford and Saab vehicles were reported under GM; 

and Chrysler was reported as a separate company whereas now it is reported as part of Fiat and includes Alfa 

Romeo, Ferrari, and Maserati. 

605 75 FR 80430 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 570 of 770

CAFE standards should be established for passenger cars and light trucks manufactured in model 

years 2017 and beyond. The request was being issued in preparation for today’s joint NPRM. 

NHTSA indicated that it requested information for MYs 2010-2025 primarily as a basis 

for subsequent discussions with individual manufacturers regarding their capabilities for the 

MYs 2017-2025 time frame as it worked to develop today’s NPRM. NHTSA indicated that the 

information received would supplement other information to be used by NHTSA to develop a 

realistic forecast of the vehicle market in MY 2017 and beyond, and to evaluate what 

technologies may feasibly be applied by manufacturers to achieve compliance with potential 

future standards. NHTSA further indicated that information regarding later model years could 

help the agency gain a better understanding of how manufacturers' plans through MY 2025 relate 

to their longer-term expectations regarding foreseeable regulatory requirements, market trends, 

and prospects for more advanced technologies. 

NHTSA also indicated that it would consider information regarding the model years 

requested when considering manufacturers' planned schedules for redesigning and freshening 

their products, in order to examine how manufacturers anticipate tying technology introduction 

to product design schedules. In addition, the agency requested information regarding 

manufacturers' estimates of the future vehicle population, and fuel economy improvements and 

incremental costs attributed to technologies reflected in those plans. 

Given the importance that responses to this request for comment may have in informing 

NHTSA's proposed CAFE rulemaking, whether as part of the basis for the standards or as an 

independent check on them, NHTSA requested that commenters fully respond to each question, 

particularly by providing information regarding the basis for technology costs and effectiveness 

estimates. 

 

We have already noted that in past CAFE rulemakings, NHTSA used manufacturers’ 

product plans—and other information—to build market forecasts providing the foundation for 

the agency’s rulemaking analysis. This issue has been the subject of much debate over the past 

several rulemakings since NHTSA began actively working on CAFE again following the lifting 

of the appropriations riders in 2001. The agency continues to believe that these market forecasts 

reflected the most technically sound forecasts the agency could have then developed for this 

purpose. Because the agency could not disclose confidential business information in 

manufacturers’ product plans, NHTSA provided summarized information, such as planned 

CAFE levels and technology application rates, rather than the fuel economy levels and 

technology content of specific vehicle model types. 

 

In preparing the MY 2012-2016 rule jointly with EPA, however, NHTSA revisited this 

practice, and concluded that for that rulemaking, it was important that all reviewers have equal 

access to all details of NHTSA’s analysis. NHTSA provided this level of transparency by 

releasing not only the agency’s CAFE modeling system, but also by releasing all model inputs 

and outputs for the agency’s analysis, all of which are available on NHTSA’s website at 

http://www.nhtsa.gov/fuel-economy. Therefore, NHTSA worked with EPA, as it did in 

preparing for analysis supporting today’s proposal, to build a market forecast based on publiclyand commercially-available sources. NHTSA continues to believe that the potential technical 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 571 of 770

benefits of relying on manufacturers’ plans for future products are outweighed by the 

transparency gained in building a market forecast that does not rely on confidential business 

information, but also continues to find product plan information to be an important point of 

reference for meetings with individual manufacturers. We seek comment on what value 

manufacturer product plan might have in the future, and whether it continues to be useful to 

request manufacturer product plans to inform rulemaking analyses, specifically the baseline 

forecast used in rulemaking analyses. 

 f. What sensitivity analyses is NHTSA conducting on the 

baseline? 

 As discussed below in Section IV.G, when evaluating the potential impacts of 

new CAFE standards, NHTSA considered the potential that, depending on how the cost and 

effectiveness of available technologies compare to the price of fuel, manufacturers would add 

more fuel-saving technology than might be required solely for purposes of complying with 

CAFE standards. This reflects that agency’s consideration that there could, in the future, be at 

least some market for fuel economy improvements beyond the required MY 2016 CAFE levels. 

In this sensitivity analysis, this causes some additional technology to applied, more so under 

baseline standards than under the more stringent standards proposed today by the agency. 

Results of this sensitivity analysis are summarized in Section IV.G and in NHTSA’s PRIA 

accompanying today’s notice. 

g. How else is NHTSA considering looking at the baseline for the 

final rule?

 Beyond the sensitivity analysis discussed above, NHTSA is also considering 

developing and using a vehicle choice model to estimate the extent to which sales volumes 

would shift in response to changes in vehicle prices and fuel economy levels. As discussed 

IV.C.4, the agency is currently sponsoring research directed toward developing such a model. If 

that effort is successful, the agency will consider integrating the model into the CAFE modeling 

system and using the integrated system for future analysis of potential CAFE standards. If the 

agency does so, we expect that the vehicle choice model would impact estimated fleet 

composition not just under new CAFE standards, but also under baseline CAFE standards. 

2. How were the technology inputs developed? 

As discussed above in Section II.E, for developing the technology inputs for these 

proposed MYs 2017–2025 CAFE and GHG standards, the agencies primarily began with the 

technology inputs used in the MYs 2012-2016 CAFE final rule and in the2010 TAR.. The 

agencies have also updated information based on newly completed FEV tear down studies and 

new vehicle simulation work conducted by Ricardo Engineering, both of which were contracted 

by EPA. Additionally, the agencies relied on a model developed by Argonne National 

Laboratory to estimate hybrid, plug-in hybrid and electric vehicle battery costs. More detail is 

available regarding how the agencies developed the technology inputs for this proposal above in 

Section II.E, in Chapter 3 of the Joint TSD, and in Section V of NHTSA’s PRIA. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 572 of 770

a. What technologies does NHTSA consider? 

Section II.E.1 above describes the fuel-saving technologies considered by the agencies 

that manufacturers could use to improve the fuel economy of their vehicles during MYs 2017-

2025. Many of the technologies described in this section are readily available, well known, and 

could be incorporated into vehicles once production decisions are made. Other technologies, 

added for this rulemaking analysis, are considered that are not currently in production, but are 

beyond the initial research phase, under development and are expected to be in production in the 

next 5-10 years. As discussed, the technologies considered fall into five broad categories: engine 

technologies, transmission technologies, vehicle technologies, electrification/accessory 

technologies, and hybrid technologies. Table IV.C.2–1 below lists all the technologies 

considered and provides the abbreviations used for them in the CAFE model,606 as well as their 

year of availability, which for purposes of NHTSA’s analysis means the first model year in the 

rulemaking period that the Volpe model is allowed to apply a technology to a manufacturer’s 

fleet.607 Year of availability recognizes that technologies must achieve a level of technical 

viability before they can be implemented in the Volpe model, and are thus a means of 

constraining technology use until such time as it is considered to be technologically feasible. For 

a more detailed description of each technology and their costs and effectiveness, we refer the 

reader to Chapter 3 of the Joint TSD and Section V of NHTSA’s PRIA. 

TABLE IV.C.2-1. LIST OF TECHNOLOGIES IN NHTSA’S ANALYSIS

Technology Model abbreviation Year available 

Low Friction Lubricants - Level 1 LUB1 2007 

Engine Friction Reduction - Level 1 EFR1 2007 

Low Friction Lubricants and Engine Friction 

Reduction - Level 2 LUB2_EFR2 2017 

Variable Valve Timing (VVT) - Coupled Cam 

Phasing (CCP) on SOHC CCPS 2007 

Discrete Variable Valve Lift (DVVL) on SOHC DVVLS 2007 

Cylinder Deactivation on SOHC DEACS 2007 

Variable Valve Timing (VVT) - Intake Cam 

Phasing (ICP) ICP 2007 

Variable Valve Timing (VVT) - Dual Cam 

Phasing (DCP) DCP 2007 

Discrete Variable Valve Lift (DVVL) on DOHC DVVLD 2007 

Continuously Variable Valve Lift (CVVL) CVVL 2007 

Cylinder Deactivation on DOHC DEACD 2007 

Stoichiometric Gasoline Direct Injection (GDI) SGDI 2007 

Cylinder Deactivation on OHV DEACO 2007 

Variable Valve Actuation - CCP and DVVL on VVA 2007 

 606 The abbreviations are used in this section both for brevity and for the reader’s reference if they wish to refer to 

the expanded decision trees and the model input and output sheets, which are available in Docket No. NHTSA–

2011–[xxxx] and on NHTSA’s website.

607 A date of 2012 means the technology can be applied in all model years, while a date of 2020 means the 

technology can only be applied in model years 2020 through 2025.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 573 of 770

OHV 

Stoichiometric Gasoline Direct Injection (GDI) on 

OHV SGDIO 2007 

Turbocharging and Downsizing - Level 1 (18 bar 

BMEP) - Small Displacement TRBDS1_SD 2007 

Turbocharging and Downsizing - Level 1 (18 bar 

BMEP) - Medium Displacement TRBDS1_MD 2007 

Turbocharging and Downsizing - Level 1 (18 bar 

BMEP) - Large Displacement TRBDS1_LD 2007 

Turbocharging and Downsizing - Level 2 (24 bar 

BMEP) - Small Displacement TRBDS2_SD 2012 

Turbocharging and Downsizing - Level 2 (24 bar 

BMEP) - Medium Displacement TRBDS2_MD 2012 

Turbocharging and Downsizing - Level 2 (24 bar 

BMEP) - Large Displacement TRBDS2_LD 2012 

Cooled Exhaust Gas Recirculation (EGR) - Level 

1 (24 bar BMEP) - Small Displacement CEGR1_SD 2012 

Cooled Exhaust Gas Recirculation (EGR) - Level 

1 (24 bar BMEP) - Medium Displacement CEGR1_MD 2012 

Cooled Exhaust Gas Recirculation (EGR) - Level 

1 (24 bar BMEP) - Large Displacement CEGR1_LD 2012 

Cooled Exhaust Gas Recirculation (EGR) - Level 

2 (27 bar BMEP) - Small Displacement CEGR2_SD 2017 

Cooled Exhaust Gas Recirculation (EGR) - Level 

2 (27 bar BMEP) - Medium Displacement CEGR2_MD 2017 

Cooled Exhaust Gas Recirculation (EGR) - Level 

2 (27 bar BMEP) - Large Displacement CEGR2_LD 2017 

Advanced Diesel - Small Displacement ADSL_SD 2017 

Advanced Diesel - Medium Displacement ADSL_MD 2017 

Advanced Diesel - Large Displacement ADSL_LD 2017 

6-Speed Manual/Improved Internals 6MAN 2007 

High Efficiency Gearbox (Manual) HETRANSM 2017 

Improved Auto. Trans. Controls/Externals IATC 2007 

6-Speed Trans with Improved Internals (Auto) NAUTO 2007 

6-speed DCT DCT 2007 

8-Speed Trans (Auto or DCT) 8SPD 2014 

High Efficiency Gearbox (Auto or DCT) HETRANS 2017 

Shift Optimizer SHFTOPT 2017 

Electric Power Steering EPS 2007 

Improved Accessories - Level 1 IACC1 2007 

Improved Accessories - Level 2 (w/ Alternator 

Regen and 70% efficient alternator) IACC2 2014 

12V Micro-Hybrid (Stop-Start) MHEV 2007

Strong Hybrid - Level 1 SHEV1 2012 

Strong Hybrid - Level 2 SHEV2 2017 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 574 of 770

Plug-in Hybrid - 30 mi range PHEV1 2020 

Electric Vehicle (Early Adopter) - 75 mile range EV1 2017 

Electric Vehicle (Broad Market) - 150 mile range EV4 2017 

Mass Reduction - Level 1 MR1 2007 

Mass Reduction - Level 2 MR2 2007 

Mass Reduction - Level 3 MR3 2007 

Mass Reduction - Level 4 MR4 2011 

Mass Reduction - Level 5 MR5 2016 

Low Rolling Resistance Tires - Level 1 ROLL1 2007

Low Rolling Resistance Tires - Level 2 ROLL2 2017 

Low Drag Brakes LDB 2007 

Secondary Axle Disconnect SAX 2007 

Aero Drag Reduction, Level 1 AERO1 2007 

Aero Drag Reduction, Level 2 AERO2 2011 

For purposes of this proposal and as discussed in greater detail in the Joint TSD, NHTSA 

and EPA built upon the list of technologies used by agencies for the MYs 2017-2025 CAFE and 

GHG standards. NHTSA and EPA had additional technologies to the list that that the agencies 

expect to be in production during the MYs 2017-2025 timeframe. These new technologies 

included higher BMEP turbocharged and downsized engines, advanced diesel engines, higher 

efficiency transmissions, additional mass reduction levels, PHEVs, EVs, etc. 

b. How did NHTSA determine the costs and effectiveness of each 

of these technologies for use in its modeling analysis?

Building on cost estimates developed for the MYs 2012-2016 CAFE and GHG final rule 

and the 2010 TAR, the agencies incorporated new cost and effectiveness estimates for the new 

technologies being considered and some of the technologies carried over from the MYs 2012-

2016 final rule and 2010 TAR. This joint work is reflected in Chapter 3 of the Joint TSD and in 

Section II of this preamble, as summarized below. For more detailed information on the 

effectiveness and cost of fuel-saving technologies, please refer to Chapter 3 of the Joint TSD and 

Section V of NHTSA’s PRIA. 

For this proposal the FEV tear down work was expanded to include an 8-speed DCT, a 

power-split hybrid, which was used to determine a P2 hybrid cost, and a mild hybrid with stopstart technology. Additionally, battery costs have been revised using Argonne National 

Laboratory’s battery cost model. The model developed by ANL allows users to estimate unique 

battery pack cost using user customized input sets for different hybridization applications, such 

as strong hybrid, PHEV and EV. Based on staff input and public feedback EPA and NHTSA 

have modified how the indirect costs, using ICMs, were derived and applied. The updates are 

discussed at length in Chapter 3 of the Joint TSD and in Chapter 5 of NHTSA’s PRIA. 

Some of the effectiveness estimates for technologies applied in MYs 2012-2016 and 2010 

TAR have remained the same. However, nearly all of the effectiveness estimates for carryover 

technologies have been updated based on a newer version of EPA’s lumped parameter model, 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 575 of 770

which was calibrated by the vehicle simulation work performed Ricardo Engineering. The 

Ricardo simulation study was also used to estimate the effectiveness for the technologies newly 

considered for this proposal like higher BMEP turbocharged and downsized engine, advanced 

transmission technologies and P2 Hybrids. While NHTSA and EPA apply technologies 

differently, the agencies have sought to ensure that the resultant effectiveness of applying 

technologies is consistent between the two agencies. 

NHTSA notes that, in developing technology cost and effectiveness estimates, the 

agencies have made every effort to hold constant aspects of vehicle performance and utility 

typically valued by consumers, such as horsepower, carrying capacity, drivability, durability, 

noise, vibration and harshness (NVH) and towing and hauling capacity. For example, NHTSA 

includes in its analysis technology cost and effectiveness estimates that are specific to 

performance passenger cars (i.e., sports cars), as compared to nonperformance passenger cars. 

NHTSA seeks comment on the extent to which commenters believe that the agencies have been 

successful in holding constant these elements of vehicle performance and utility in developing 

the technology cost and effectiveness estimates. 

The agency notes that the technology costs included in this proposal take into account 

only those associated with the initial build of the vehicle. Although comments were received to 

the MYs 2012-2016 rulemaking that suggested there could be additional maintenance required 

with some new technologies (e.g., turbocharging, hybrids, etc.), and that additional maintenance 

costs could occur as a result. The agency requests comments on this topic and will undertake a 

more detailed review of these potential costs for the final rule. 

The tables below provide examples of the incremental cost and effectiveness estimates 

employed by the agency in developing this final rule, according to the decision trees used in the 

Volpe modeling analysis. Thus, the effectiveness and cost estimates are not absolute to a single 

reference vehicle, but are incremental to the technology or technologies that precede it. 

 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

576 

TABLE IV.C.2-2.

TECHNOLOGY 

EFFECTIVENESS 

ESTIMATES 

EMPLOYED IN THE 

VOLPE 

MODEL FOR 

CERTAIN 

TECHNOLOGIES

Subcom

p. Car 

Compac

t Car 

Midsize 

Car 

Large 

Car 

Perform

. 

Subcom

p. Car 

Perform

. 

Compac

t Car 

Perform

. 

Midsize 

Car 

Perform

. Large 

Car 

Minivan 

LT 

Small 

LT 

Midsize 

LT 

Large 

LT 

VEHICLE TECHNOLOGY INCREMENTAL FUEL CONSUMPTION REDUCTION (-%) 

Low friction lubricants (level 1) 0.5 0.5 0.7 0.8 0.5 0.5 0.7 0.8 0.7 0.6 0.7 0.7Engine friction reduction (level 1) 2.0 2.0 2.6 2.7 2.0 2.0 2.6 2.7 2.6 2.0 2.6 2.4VVT—Dual cam phasing (DCP) 2.0 2.0 2.5 2.7 2.0 2.0 2.5 2.7 2.6 2.0 2.6 2.4Discrete variable valve lift (DVVL) on DOHC 2.8 2.8 3.6 3.9 2.8 2.8 3.6 3.9 3.5 2.8 3.5 3.4Cylinder deactivation on OHV 4.7 4.7 5.9 6.3 4.7 4.7 5.9 6.3 5.9 4.7 5.9 5.5Stoichiometric gasoline direct injection 1.6 1.6 1.5 1.5 1.6 1.6 1.5 1.5 1.5 1.6 1.5 1.5Turbocharging and downsizing (level 1) 7.2 7.2 8.3 7.8 7.2 6.7 7.5 7.8 7.9 7.1 7.9 7.3Turbocharging and downsizing (level 2) 2.9 2.9 3.5 3.7 2.9 2.9 3.5 3.7 3.4 2.9 3.4 3.4Cooled exhaust gas 3.6 3.6 3.5 3.5 3.6 3.6 3.5 3.5 3.6 3.6 3.6 3.6
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

577 

recirculation (EGR) – (level 1) Cooled exhaust gas recirculation (EGR) – (level 2) 1.0 1.0 1.4 1.4 1.0 1.0 1.4 1.4 1.1 1.0 1.1 1.2Advanced Diesel 5.5 5.5 2.8 2.9 5.5 5.5 2.8 2.9 3.4 5.3 3.4 3.56-speed auto. trans. with improved internals 1.9 1.9 2.0 2.0 1.9 1.9 2.0 2.0 2.0 2.0 2.0 2.16-speed DCT 4.0 4.0 4.1 3.8 4.0 3.4 4.1 3.8 n/a 3.8 n/a n/aHigh Efficiency Gearbox 2.2 2.2 2.7 2.6 2.2 2.2 2.7 2.6 3.1 2.5 3.1 3.7Shift Optimizer 3.3 3.3 4.1 4.3 3.3 3.3 4.1 4.3 4.1 3.3 4.1 3.9Electric power steering 1.5 1.5 1.3 1.1 1.5 1.5 1.3 1.1 1.0 1.2 1.0 0.812V microhybrid 1.7 1.7 2.1 2.2 1.7 1.7 2.1 2.2 2.09 1.8 2.1 2.1Strong Hybrid (level 2) 10.1 10.1 6.5 6.9 10.1 9.7 6.5 6.8 5.2 10.0 8.2 7.3Plug-in Hybrid 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7 40.7Electric Vehicle (Early Adopter) 68.5 68.5 68.5 68.5 68.5 68.5 68.5 68.5 68.5 68.5 68.5 68.5Low Rolling Resistance Tires (level 1) 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9Low Rolling Resistance 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

578 

Tires (level 2) Aero Drag Reduction (level 1) 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3 2.3Aero Drag Reduction (level 2) 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5

TABLE IV.C.2-3.

TECHNOLOGY 

COST 

ESTIMATES 

EMPLOYED IN THE 

VOLPE 

MODEL FOR 

CERTAIN 

TECHNOLOGIES

Subcom

p. Car 

Compac

t Car 

Midsize 

Car 

Large 

Car 

Perform

. 

Subcom

p. Car 

Perform

. 

Compac

t Car 

Perform

. 

Midsize 

Car 

Perform

. Large 

Car 

Minivan 

LT 

Small 

LT 

Midsize 

LT 

Large 

LT 

VEHICLE TECHNOLOGY ICM COSTS PER VEHICLE ($) 

Nominal baseline engine (for cost purposes) Inline 4 Inline 4 Inline 4 V6 Inline 4 V6 V6 V8 V6 Inline 4 V6 V8Low friction lubricants (level 1) 16 16 16 24 16 24 24 32 24 16 24 32Engine friction reduction (level 1) 60 60 60 90 60 90 90 120 90 60 90 120VVT—Dual cam phasing (DCP) 44 44 44 88 44 88 88 88 88 44 88 88Discrete variable valve lift (DVVL) on DOHC 160 160 160 240 160 240 240 320 240 160 240 320Cylinder deactivation on OHV 204 204 204 204 204 204 204 204 204 204 204 204
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

579 

Stoichiometric gasoline direct injection 268 268 268 402 268 402 5402 536 402 268 402 536Turbocharging and downsizing (level 1) 490 490 490 20 490 20 20 639 20 490 20 639Turbocharging and downsizing (level 2) 26 26 26 260 26 260 260 439 260 26 260 439Cooled exhaust gas recirculation (EGR) – (level 1) 303 303 303 303 303 303 303 303 303 303 303 303Cooled exhaust gas recirculation (EGR) – (level 2) 520 520 520 (296) 520 (296) (296) (296) (296) 520 (296) (296)Advanced Diesel 873 873 873 844 873 844 844 1693 844 873 844 16936-speed auto. trans. with improved internals (39) (39) (39) (39) (39) (39) (39) (39) (39) (39) (39) (39)6-speed DCT (107) (107) (107) (73) (107) (73) (73) (73) n/a (107) n/a n/aHigh Efficiency Gearbox 248 248 248 248 248 248 248 248 248 248 248 248Shift Optimizer 2 2 2 2 2 2 2 2 2 2 2 2Electric power steering 108 108 108 108 108 108 108 108 108 108 108 10812V micro- 322 322 382 411 322 322 382 411 410 363 421 476
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

580 

hybrid Strong Hybrid (level 2) 3526 3526 3705 4261 3526 3526 3705 4261 4677 4057 4332 4464Plug-in Hybrid 10,686 10,686 11,864 15,514 10,686 10,686 11,864 15,514 n/a 14,055 n/a n/aElectric Vehicle (Early Adopter) 3,001 3,001 3.719 3,998 3,001 3,001 3.719 3,998 n/a 4,580 n/a n/aLow Rolling Resistance Tires (level 1) 7 7 7 7 7 7 7 7 7 7 7 7Low Rolling Resistance Tires (level 2) 72 72 72 72 72 72 72 72 72 72 72 72Aero Drag Reduction (level 1) 48 48 48 48 48 48 48 48 48 48 48 48Aero Drag Reduction (level 2) 162 162 162 162 162 162 162 162 162 162 162 162
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

581 

c. How does NHTSA use these assumptions in its modeling 

analysis? 

NHTSA relies on several inputs and data files to conduct the compliance analysis using 

the Volpe model, as discussed further below and in Chapter 5 of the PRIA. For the purposes of 

applying technologies, the Volpe model primarily uses three data files, one that contains data on 

the vehicles expected to be manufactured in the model years covered by the rulemaking and 

identifies the appropriate stage within the vehicle’s life-cycle for the technology to be applied, 

one that contains data/parameters regarding the available technologies the model can apply, and 

one that contains economic assumption inputs for calculating the costs and benefits of the 

standards. The inputs for the first two data files are discussed below. 

As discussed above, the Volpe model begins with an initial state of the domestic vehicle 

market, which in this case is the market for passenger cars and light trucks to be sold during the 

period covered by the proposed standards. The vehicle market is defined on a year-by-year, 

model-by-model, engine-by-engine, and transmission-by-transmission basis, such that each 

defined vehicle model refers to a separately defined engine and a separately defined 

transmission. Comparatively, EPA’s OMEGA model defines the vehicle market using 

representative vehicles at the vehicle platform level, which are binned into 5 year timeframes 

instead of year-by-year. 

For the current standards, which cover MYs 2017–2025, the light-duty vehicle (passenger 

car and light truck) market forecast was developed jointly by NHTSA and EPA staff using MY 

2008 CAFE compliance data. The MY 2008 compliance data includes about 1,100 vehicle 

models, about 400 specific engines, and about 200 specific transmissions, which is a somewhat 

lower level of detail in the representation of the vehicle market than that used by NHTSA in 

prior CAFE analyses—previous analyses would count a vehicle as “new” in any year when 

significant technology differences are made, such as at a redesign.608 However, within the 

limitations of information that can be made available to the public, it provides the foundation for 

a reasonable analysis of manufacturer-specific costs and the analysis of attribute-based CAFE 

standards, and is much greater than the level of detail used by many other models and analyses 

relevant to light-duty vehicle fuel economy.609 

In addition to containing data about each vehicle, engine, and transmission, this file 

contains information for each technology under consideration as it pertains to the specific vehicle 

(whether the vehicle is equipped with it or not), the estimated model year the vehicle is 

undergoing a refresh or redesign, and information about the vehicle’s subclass for purposes of 

technology application. In essence, the model considers whether it is appropriate to apply a 

technology to a vehicle. 

 608 The market file for the MY 2011 final rule, which included data for MYs 2011–2015, had 5500 vehicles, about 5 

times what we are using in this analysis of the MY 2008 certification data.

609 Because CAFE standards apply to the average performance of each manufacturer’s fleet of cars and light trucks, 

the impact of potential standards on individual manufacturers cannot be credibly estimated without analysis of the 

fleets that manufacturers can be expected to produce in the future. Furthermore, because required CAFE levels 

under an attribute-based CAFE standard depend on manufacturers’ fleet composition, the stringency of an attributebased standard cannot be predicted without performing analysis at this level of detail. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

582 

Is a vehicle already equipped, or can it not be equipped, with a particular technology? 

The market forecast file provides NHTSA the ability to identify, on a technology-bytechnology basis, which technologies may already be present (manufactured) on a particular 

vehicle, engine, or transmission, or which technologies are not applicable (due to technical 

considerations or engineering constraints) to a particular vehicle, engine, or transmission. These 

identifications are made on a model-by-model, engine-by-engine, and transmission-bytransmission basis. For example, if the market forecast file indicates that Manufacturer X’s 

Vehicle Y is manufactured with Technology Z, then for this vehicle Technology Z will be shown 

as used. Additionally, NHTSA has determined that some technologies are only suitable or 

unsuitable when certain vehicle, engine, or transmission conditions exist. For example, 

secondary axle disconnect is only suitable for 4WD vehicles and cylinder deactivation is 

unsuitable for any engine with fewer than 6 cylinders. Similarly, comments received to the 2008 

NPRM indicated that cylinder deactivation could not likely be applied to vehicles equipped with 

manual transmissions during the rulemaking timeframe, due primarily to the cylinder 

deactivation system not being able to anticipate gear shifts. The Volpe model employs 

“engineering constraints” to address issues like these, which are a programmatic method of 

controlling technology application that is independent of other constraints. Thus, the market 

forecast file would indicate that the technology in question should not be applied to the particular 

vehicle/engine/transmission (i.e., is unavailable). Since multiple vehicle models may be 

equipped with an engine or transmission, this may affect multiple models. In using this aspect of 

the market forecast file, NHTSA ensures the Volpe model only applies technologies in an 

appropriate manner, since before any application of a technology can occur, the model checks 

the market forecast to see if it is either already present or unavailable. NHTSA seeks comment 

on the continued appropriateness of the engineering constraints used by the model, and 

specifically whether many of the technical constraints will be resolved (and therefore the 

engineering constraints should be changed) given the increased focus of engineering resources 

that will be working to solve these technical challenges. 

Whether a vehicle can be equipped with a particular technology could also theoretically 

depend on certain technical considerations related to incorporating the technology into particular 

vehicles. For example, GM commented on the MY 2012-2016 NPRM that there are certain 

issues in implementing turbocharging and downsizing technologies on full-size trucks, like 

concerns related to engine knock, drivability, control of boost pressure, packaging complexity, 

enhanced cooling for vehicles that are designed for towing or hauling, and noise, vibration and 

harshness. NHTSA stated in response that we believed that such technical considerations are 

well recognized within the industry and it is standard industry practice to address each during the 

design and development phases of applying turbocharging and downsizing technologies. The 

cost and effectiveness estimates used in the final rule for MYs 2012-2016, as well as the cost and 

effectiveness estimates employed in this NPRM, are based on analysis that assumes each of these 

factors is addressed prior to production implementation of the technologies. NHTSA continues 

to believe that these issues are accounted for by industry, but we seek comment on whether the 

engineering constraints should be used to address concerns like these (and if so, how), or 

alternatively, whether some of the things that the agency currently treats as engineering 

constraints should be (or actually are) accounted for in the cost and effectiveness estimates 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

583 

through assumptions like those described above, and whether the agency might be doubleconstraining the application of technology. 

Is a vehicle being redesigned or refreshed? 

Manufacturers typically plan vehicle changes to coincide with certain stages of a 

vehicle’s life cycle that are appropriate for the change, or in this case the technology being 

applied. In the automobile industry there are two terms that describe when technology changes 

to vehicles occur: Redesign and refresh (i.e., freshening). Vehicle redesign usually refers to 

significant changes to a vehicle’s appearance, shape, dimensions, and powertrain. Redesign is 

traditionally associated with the introduction of “new” vehicles into the market, often 

characterized as the “next generation” of a vehicle, or a new platform. Vehicle refresh usually 

refers to less extensive vehicle modifications, such as minor changes to a vehicle’s appearance, a 

moderate upgrade to a powertrain system, or small changes to the vehicle’s feature or safety 

equipment content. Refresh is traditionally associated with mid-cycle cosmetic changes to a 

vehicle, within its current generation, to make it appear “fresh.” Vehicle refresh generally occurs 

no earlier than two years after a vehicle redesign, or at least two years before a scheduled 

redesign. To be clear, this is a general description of how manufacturers manage their product 

lines and refresh and redesign cycles but in some cases the timeframes could be shorter and 

others longer depending on market factors, regulations, etc. For the majority of technologies 

discussed today, manufacturers will only be able to apply them at a refresh or redesign, because 

their application would be significant enough to involve some level of engineering, testing, and 

calibration work.610

Some technologies (e.g., those that require significant revision) are nearly always applied 

only when the vehicle is expected to be redesigned, like turbocharging and engine downsizing, or 

conversion to diesel or hybridization. Other technologies, like cylinder deactivation, electric 

power steering, and low rolling resistance tires can be applied either when the vehicle is expected 

to be refreshed or when it is expected to be redesigned, while low friction lubricants, can be 

applied at any time, regardless of whether a refresh or redesign event is conducted. Accordingly, 

the model will only apply a technology at the particular point deemed suitable. These constraints 

are intended to produce results consistent with how we assume manufacturers will apply 

technologies in the future based on how they have historically implemented new technologies. 

For each technology under consideration, NHTSA specifies whether it can be applied any time, 

at refresh/redesign, or only at redesign. The data forms another input to the Volpe model. 

NHTSA develops redesign and refresh schedules for each of a manufacturer’s vehicles included 

in the analysis, essentially based on the last known redesign year for each vehicle and projected 

forward using a 5 to 8-year redesign and a 2–3 year refresh cycle, and this data is also stored in 

the market forecast file. While most vehicles are projected to follow a 5-year redesign a few of 

the niche market or small-volume manufacturer vehicles (i.e. luxury and performance vehicles) 

and large trucks are assumed to have 6- to 8-year redesigns based on historic redesign schedules 

 610 For example, applying material substitution through weight reduction, or even something as simple as low 

rolling-resistance tires, to a vehicle will likely require some level of validation and testing to ensure that the vehicle 

may continue to be certified as compliant with NHTSA’s Federal Motor Vehicle Safety Standards (FMVSS). 

Weight reduction might affect a vehicle’s crashworthiness; low rolling-resistance tires might change a vehicle’s 

braking characteristics or how it performs in crash avoidance tests. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

584 

and the agency’s understanding of manufacturers’ intentions moving forward. This approach is 

used because of the nature of the current baseline, which as a single year of data does not contain 

its own refresh and redesign cycle cues for future model years, and to ensure the complete 

transparency of the agency’s analysis. We note that this approach is different from what NHTSA 

has employed previously for determining redesign and refresh schedules, where NHTSA 

included the redesign and refresh dates in the market forecast file as provided by manufacturers 

in confidential product plans. Vehicle redesign/refresh assumptions are discussed in more detail 

in Chapter 5 of the PRIA and in Chapter 3 of the TSD. 

NHTSA has previously received comments stating that manufacturers do not necessarily 

adhere to strict five-year redesign cycles, and may add significant technologies by redesigning 

vehicles at more frequent intervals, albeit at higher costs. Conversely, other comments received 

stated that as compared to full-line manufacturers, small-volume manufacturers in fact may have 

7 to 8-year redesign cycles.611 The agency believes that manufacturers can and will accomplish 

much improvement in fuel economy and GHG reductions while applying technology consistent 

with their redesign schedules. 

Once the model indicates that a technology should be applied to a vehicle, the model 

must evaluate which technology should be applied. This will depend on the vehicle subclass to 

which the vehicle is assigned; what technologies have already been applied to the vehicle (i.e., 

where in the “decision tree” the vehicle is); when the technology is first available (i.e., year of 

availability); whether the technology is still available (i.e., “phase-in caps”); and the costs and 

effectiveness of the technologies being considered. Technology costs may be reduced, in turn, 

by learning effects and short- vs. long-term ICMs, while technology effectiveness may be 

increased or reduced by synergistic effects between technologies. In the technology input file, 

NHTSA has developed a separate set of technology data variables for each of the twelve vehicle 

subclasses. Each set of variables is referred to as an “input sheet,” so for example, the 

 611 In the MY 2011 final rule, NHTSA noted that the CAR report submitted by the Alliance, prepared by the Center 

for Automotive Research and EDF, stated that “For a given vehicle line, the time from conception to first production 

may span two and one-half to five years,” but that “The time from first production (“Job#1”) to the last vehicle off 

the line (‘‘Balance Out’’) may span from four to five years to eight to ten years or more, depending on the dynamics 

of the market segment.” The CAR report then stated that “At the point of final production of the current vehicle 

line, a new model with the same badge and similar characteristics may be ready to take its place, continuing the 

cycle, or the old model may be dropped in favor of a different product.” See NHTSA–2008–0089–0170.1, 

Attachment 16, at 8 (393 of pdf). NHTSA explained that this description, which states that a vehicle model will be 

redesigned or dropped after 4–10 years, was consistent with other characterizations of the redesign and freshening 

process, and supported the 5-year redesign and 2–3 year refresh cycle assumptions used in the MY 2011 final rule. 

See id., at 9 (394 of pdf). Given that the situation faced by the auto industry today is not so wholly different from 

that in March 2009, when the MY 2011 final rule was published, and given that the commenters did not present 

information to suggest that these assumptions are unreasonable (but rather simply that different manufacturers may 

redesign their vehicles more or less frequently, as the range of cycles above indicates), NHTSA believes that the 

assumptions remain reasonable for purposes of this final rule analysis. See also “Car Wars 2009–2012, The U.S. 

automotive product pipeline,” John Murphy, Research Analyst, Merrill Lynch research paper, May 14, 2008 and 

“Car Wars 2010–2013, The U.S. automotive product pipeline,” John Murphy, Research Analyst, Bank of 

America/Merrill Lynch research paper, July 15, 2009. Available at 

http://www.autonews.com/assets/PDF/CA66116716.PDF (last accessed October 11, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

585 

subcompact passenger car input sheet holds the technology data that is appropriate for the 

subcompact subclass. Each input sheet contains a list of technologies available for members of 

the particular vehicle subclass. The following items are provided for each technology: The name 

of the technology, its abbreviation, the decision tree with which it is associated, the (first) year in 

which it is available, the year-by-year cost estimates and effectiveness (fuel consumption 

reduction) estimates, its applicability and the consumer value loss. The phase-in values and the 

potential stranded capital costs are common for all vehicle subclasses and are thus listed in a 

separate input sheet that is referenced for all vehicle subclasses. 

To which vehicle subclass is the vehicle assigned? 

As part of its consideration of technological feasibility, the agency evaluates whether 

each technology could be implemented on all types and sizes of vehicles, and whether some 

differentiation is necessary in applying certain technologies to certain types and sizes of vehicles, 

and with respect to the cost incurred and fuel consumption and CO2 emissions reduction 

achieved when doing so. The 2010 NAS Report differentiated technology application using 

eight vehicle “classes” (4 car classes and 4 truck classes).612NAS’s purpose in separating 

vehicles into these classes was to create groups of “like” vehicles, i.e., vehicles similar in size, 

powertrain configuration, weight, and consumer use, and for which similar technologies are 

applicable. NAS also used these vehicle classes along with powertrain configurations (e.g..4 

cylinder, 6 cylinder or 8 cylinder engines) to determine unique cost and effectiveness estimates 

for each class of vehicles. 

NHTSA similarly differentiates vehicles by “subclass” for the purpose of applying 

technologies to “like” vehicles and assessing their incremental costs and effectiveness. NHTSA 

assigns each vehicle manufactured in the rulemaking period to one of 12 subclasses: for 

passenger cars, Subcompact, Subcompact Performance, Compact, Compact Performance, 

Midsize, Midsize Performance, Large, and Large Performance; and for light trucks, Small 

SUV/Pickup/Van, Midsize SUV/Pickup/Van, Large SUV/Pickup/Van, and Minivan. The 

agency seeks comment on the appropriateness of these 12 subclasses for the MYs 2017-2025 

timeframe. The agency is also seeking comment on the continued appropriateness of 

maintaining separate “performance” vehicle classes or if as fuel economy stringency increases 

the market for performance vehicles will decrease. 

For this NPRM, NHTSA divides the vehicle fleet into subclasses based on model inputs, 

and applies subclass-specific estimates, also from model inputs, of the applicability, cost, and 

effectiveness of each fuel-saving technology. The model’s estimates of the cost to improve the 

fuel economy of each vehicle model thus depend upon the subclass to which the vehicle model is 

assigned. Each vehicle’s subclass is stored in the market forecast file. When conducting a 

compliance analysis, if the Volpe model seeks to apply technology to a particular vehicle, it 

checks the market forecast to see if the technology is available and if the refresh/redesign criteria 

are met. If these conditions are satisfied, the model determines the vehicle’s subclass from the 

 612 The NAS classes included two-seater convertibles and coupes; small cars; intermediate and large cars; highperformance sedans; unit-body standard trucks; unit-body high-performance trucks; body-on-frame small and 

midsize trucks; and body 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

586 

market data file, which it then uses to reference another input called the technology input file. 

NHTSA reviewed its methodology for dividing vehicles into subclasses for purposes of 

technology application that it used in the MY 2011 final rule and for the MYs 2012-2016 

rulemaking, and concluded that the same methodology would be appropriate for this NPRM for 

MYs 2017–2025. Vehicle subclasses are discussed in more detail in Chapter 5 of the PRIA and 

in Chapter 3 of the TSD. 

For the reader’s reference, the subclasses and example vehicles from the market forecast 

file are provided in the tables below. 

PASSENGER CAR SUBCLASSES EXAMPLE (MY 2008) VEHICLES

Class Example vehicles 

Subcompact Chevy Aveo, Hyundai Accent 

Subcompact performance Mazda MX-5, BMW Z4 

Compact Chevy Cobalt, Nissan Sentra and Altima 

Compact performance Audi S4, Mazda RX-8 

Mid-size Chevy Impala, Toyota Camry, Honda Accord, Hyundai Azera 

Mid-size performance Chevy Corvette, Ford Mustang (V8), Nissan G37 Coupe 

Large Audi A8, Cadillac CTS and DTS 

Large performance Bentley Arnage, Daimler CL600 

LIGHT TRUCK SUBCLASSES EXAMPLE (MY 2008) VEHICLES

Class Example vehicles 

Minivans Dodge Caravan, Toyota Sienna 

Small SUV/Pickup/Van Ford Escape and Ranger, Nissan Rogue 

Mid-size SUV/Pickup/Van Chevy Colorado, Jeep Wrangler, Toyota Tacoma 

Large SUV/Pickup/Van Chevy Silverado, Ford E-Series, Toyota Sequoia 

What technologies have already been applied to the vehicle (i.e., where in the “decision 

trees” is it)? 

NHTSA’s methodology for technology analysis evaluates the application of individual 

technologies and their incremental costs and effectiveness. Individual technologies are assessed 

relative to the prior technology state, which means that it is crucial to understand what 

technologies are already present on a vehicle in order to determine correct incremental cost and 

effectiveness values. The benefit of the incremental approach is transparency in accounting, 

insofar as when individual technologies are added incrementally to individual vehicles, it is clear 

and easy to determine how costs and effectiveness add up as technology levels increase and 

explicitly accounting for any synergies that exist between technologies which are already present 

on the vehicle and new technologies being applied. 

To keep track of incremental costs and effectiveness and to know which technology to 

apply and in which order, the Volpe model’s architecture uses a logical sequence, which NHTSA 

refers to as “decision trees,” for applying fuel economy-improving technologies to individual 

vehicles. For purposes of this proposal, NHTSA reviewed the MYs 2012-2016 final rule’s 

technology sequencing architecture, which was based on the MY 2011 final rule’s decision trees 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

587 

that were jointly developed by NHTSA and Ricardo, and, as appropriate, updated the decision 

trees to include new technologies that have been defined for the MYs 2017-2025 timeframe. 

In general, and as described in great detail in Chapter 5 of the current PRIA,613 each 

technology is assigned to one of the five following categories based on the system it affects or 

impacts: engine, transmission, electrification/accessory, hybrid or vehicle. Each of these 

categories has its own decision tree that the Volpe model uses to apply technologies sequentially 

during the compliance analysis. The decision trees were designed and configured to allow the 

Volpe model to apply technologies in a cost-effective, logical order that also considers ease of 

implementation. For example, software or control logic changes are implemented before 

replacing a component or system with a completely redesigned one, which is typically a much 

more expensive and integration intensive option. In some cases, and as appropriate, the model 

may combine the sequential technologies shown on a decision tree and apply them 

simultaneously, effectively developing dynamic technology packages on an as-needed basis. For 

example, if compliance demands indicate, the model may elect to apply LUB, EFR, and ICP on a 

dual overhead cam engine, if they are not already present, in one single step. An example 

simplified decision tree for engine technologies is provided below; the other simplified decision 

trees may be found in Chapter 5 of the PRIA. Expanded decision trees are available in the 

docket for this NPRM. 

[Current simplified engine tree forthcoming] 

Each technology within the decision trees has an incremental cost and an incremental 

effectiveness estimate associated with it, and estimates are specific to a particular vehicle 

subclass (see the tables in Chapter 5 of the PRIA). Each technology’s incremental estimate takes 

into account its position in the decision tree path. If a technology is located further down the 

decision tree, the estimates for the costs and effectiveness values attributed to that technology are 

influenced by the incremental estimates of costs and effectiveness values for prior technology 

applications. In essence, this approach accounts for “in-path” effectiveness synergies, as well as 

cost effects that occur between the technologies in the same path. When comparing cost and 

effectiveness estimates from various sources and those provided by commenters in this and the 

previous CAFE rulemakings, it is important that the estimates evaluated are analyzed in the 

proper context, especially as concerns their likely position in the decision trees and other 

technologies that may be present or missing. Not all estimates available in the public domain or 

that have been (or will be) offered for the agencies’ consideration can be evaluated in an “applesto-apples” comparison with those used by the Volpe model, since in some cases the order of 

application, or included technology content, is inconsistent with that assumed in the decision 

tree. 

The MY 2011 final rule discussed in detail the revisions and improvements made to the 

Volpe model and decision trees during that rulemaking process, including the improved handling 

and accuracy of valve train technology application and the development and implementation of a 

method for accounting path-dependent correction factors in order to ensure that technologies are 

evaluated within the proper context. The reader should consult the MY 2011 final rule 

documents for further information on these modeling techniques, all of which continued to be 

 613 Additional details about technologies are categorized can be found in the MY 2011 final rule. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

588 

utilized in developing this final rule.614 To the extent that the decision trees have changed for 

purposes of the MYs 2012-2016 final rule and this NPRM, it was due not to revisions in the 

order of technology application, but rather to redefinitions of technologies or addition or 

subtraction of technologies. 

Is the next technology available in this model year? 

Some of technologies considered are available on vehicles today, and thus will be 

available for application (albeit in varying degrees) in the model starting in MY 2017. Other 

technologies, however, will not become available for purposes of NHTSA’s analysis until later 

in the rulemaking time frame. When the model is considering whether to add a technology to a 

vehicle, it checks its year of availability—if the technology is available, it may be added; if it is 

not available, the model will consider whether to switch to a different decision tree to look for 

another technology, or will skip to the next vehicle in a manufacturer’s fleet. The year of 

availability for each technology is provided above in Table IV.C.2–1. 

The agency has received comments previously stating that if a technology is currently 

available or available prior to the rulemaking timeframe that it should be immediately made 

available in the model. . In response, as discussed above, technology ‘‘availability’’ is not 

determined based simply on whether the technology exists, but depends also on whether the 

technology has achieved a level of technical viability that makes it appropriate for widespread 

application. This depends in turn on component supplier constraints, capital investment and 

engineering constraints, and manufacturer product cycles, among other things. Moreover, even if 

a technology is available for application, it may not be available for every vehicle. Some 

technologies may have considerable fuel economy benefits, but cannot be applied to some 

vehicles due to technological constraints—for example, cylinder deactivation cannot be applied 

to vehicles with current 4-cylinder engines (because not enough cylinders are present to 

deactivate some and continue moving the vehicle) or on vehicles with manual transmissions 

within the rulemaking timeframe. The agencies have provided for increases over time to reach 

the mpg level of the MY 2025 standards precisely because of these types of constraints, because 

they have a real effect on how quickly manufacturers can apply technology to vehicles in their 

fleets. NHTSA seeks comment on the appropriateness of the assumed years of availability. 

Has the technology reached the phase-in cap for this model year? 

Besides the refresh/redesign cycles used in the Volpe model, which constrain the rate of 

technology application at the vehicle level so as to ensure a period of stability following any 

modeled technology applications, the other constraint on technology application employed in 

NHTSA’s analysis is “phase-in caps.” Unlike vehicle-level cycle settings, phase-in caps 

constrain technology application at the vehicle manufacturer level.615 They are intended to 

 614 See, e.g., 74 FR 14238–46 (Mar. 30, 2009) for a full discussion of the decision trees in NHTSA’s MY 2011 final 

rule, and Docket No. NHTSA–2009–0062–0003.1 for an expanded decision tree used in that rulemaking. 615 While phase-in caps are expressed as specific percentages of a manufacturer’s fleet to which a technology may be 

applied in a given model year, phase-in caps cannot always be applied as precise limits, and the Volpe model in fact 

allows “override” of a cap in certain circumstances. When only a small portion of a phase-in cap limit remains, or 

when the cap is set to a very low value, or when a manufacturer has a very limited product line, the cap might 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

589 

reflect a manufacturer’s overall resource capacity available for implementing new technologies 

(such as engineering and development personnel and financial resources), thereby ensuring that 

resource capacity is accounted for in the modeling process. At a high level, phase-in caps and 

refresh/redesign cycles work in conjunction with one another to avoid the modeling process outpacing an OEM’s limited pool of available resources during the rulemaking time frame and the 

years leading up to the rulemaking time frame, especially in years where many models may be 

scheduled for refresh or redesign. Even though this rulemaking is being proposed 5 years before 

it takes effect, OEM’s will still be utilizing their limited resources to meet the MYs 2012-2016 

CAFE standards. This helps to ensure technological feasibility and economic practicability in 

determining the stringency of the standards. 

NHTSA has been developing the concept of phase-in caps for purposes of the agency’s 

modeling analysis over the course of the last several CAFE rulemakings, as discussed in greater 

detail in the MY 2011 final rule,616 in the MY 2012-2016 final rule and in Chapter 5 of the PRIA 

and Chapter 3 of the Joint TSD. The MYs 2012-2016 final rule like the MY 2011 final rule 

employed non-linear phase-in caps (that is, caps that varied from year to year) that were designed 

to respond to previously received comments on technology deployment. 

For purposes of this NPRM for MYs 2017–2025, as in the MY 2011 and MYs 2012-2016 

final rules, NHTSA combines phase-in caps for some groups of similar technologies, such as 

valve phasing technologies that are applicable to different forms of engine design (SOHC, 

DOHC, OHV), since they are very similar from an engineering and implementation standpoint. 

When the phase-in caps for two technologies are combined, the maximum total application of 

either or both to any manufacturer’s fleet is limited to the value of the cap.617 

In developing phase-in cap values for purposes of this NPRM, NHTSA reviewed the 

MYs 2012-2016 final rule’s phase-in caps, which for the majority of technologies were set to 

reach 85 or 100 percent by MY 2016, although more advanced technologies like diesels and 

strong hybrids reach only 15 percent by MY 2016. The phase-in caps used in the MYs 2012-

2016 final were developed to harmonize with EPA’s proposal and consider the fact that 

manufacturers, as part of the agreements supporting the National Program, appeared to be 

anticipating higher technology application rates than assumed in prior rules. NHTSA determined 

that these phase-in caps for MY 2016 were still reasonable and thus used those caps as the 

starting point for the MYs 2017-2025 phase-in caps. For many of the carryover technologies this 

means that for MYs 2017-2025 the phase-in caps are assumed to be 100 percent. NHTSA along 

with EPA used confidential OEM submissions, trade press articles, company publications and 

press releases to estimate the phase-in caps for the newly defined technologies that will be 

entering the market just before or during the MYs 2017-2025 time frame. For example, 

advanced cooled EGR engines have a phase-in cap of 3 percent per year through MY 2021 and 

 prevent the technology from being applied at all since any application would cause the cap to be exceeded. 

Therefore, the Volpe model evaluates and enforces each phase-in cap constraint after it has been exceeded by the 

application of the technology (as opposed to evaluating it before application), which can result in the described 

overriding of the cap. 

617 See 74 FR at 14270 (Mar. 30, 2009) for further discussion and examples. 

Comment [A60]: Should this say “letters 

supporting the National Program”? 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

590 

then 10 percent per year through 2025. The agency seeks comment on the appropriateness of 

both the carryover phase-in caps and the newly defined ones proposed in this NPRM. 

Is the technology less expensive due to learning effects? 

In the past two rulemakings NHTSA has explicitly accounted for the cost reductions a 

manufacturer might realize through learning achieved from experience in actually applying a 

technology. These cost reductions, due to learning effects, were taken into account through two 

kinds of mutually exclusive learning, “volume-based” and “time-based.” NHTSA and EPA 

included a detailed description of the learning effect in the MYs 2012-2016 final rule and the 

more recent heavy-duty rule.618 

Most studies of the effect of experience or learning on production costs appear to assume 

that cost reductions begin only after some initial volume threshold has been reached, but not all 

of these studies specify this threshold volume. The rate at which costs decline beyond the initial 

threshold is usually expressed as the percent reduction in average unit cost that results from each 

successive doubling of cumulative production volume, sometimes referred to as the learning rate. 

Many estimates of experience curves do not specify a cumulative production volume beyond 

which cost reductions would no longer occur, instead depending on the asymptotic behavior of 

the effect for learning rates below 100 percent to establish a floor on costs. 

In past rulemaking analyses, as noted above, both agencies have used a learning curve 

algorithm that applied a learning factor of 20 percent for each doubling of production volume. 

NHTSA has used this approach in analyses supporting recent CAFE rules. In its analyses, EPA 

has simplified the approach by using an “every two years” based learning progression rather than 

a pure production volume progression (i.e., after two years of production it was assumed that 

production volumes would have doubled and, therefore, costs would be reduced by 20 

percent).619 

In the MYs 2012-2016 light-duty rule, the agencies employed an additional learning 

algorithm to reflect the volume-based learning cost reductions that occur further along on the 

learning curve. This additional learning algorithm was termed “time-based” learning simply as a 

means of distinguishing this algorithm from the volume-based algorithm mentioned above, 

although both of the algorithms reflect the volume-based learning curve supported in the 

literature. To avoid confusion, we are now referring to this learning algorithm as the “flat 

 618 76 FR 57106, 57320 (Sept. 15, 2011). 619 To clarify, EPA has simplified the steep portion of the volume learning curve by assuming that production 

volumes of a given technology will have doubled within two years time. This has been done largely to allow for a 

presentation of estimated costs during the years of implementation, without the need to conduct a feedback loop that 

ensures that production volumes have indeed doubled. If we were to attempt such a feedback loop, we would need 

to estimate first year costs, feed those into OMEGA, review the resultant technology penetration rate and volume 

increase, calculate the learned costs, feed those into OMEGA (since lower costs would result in higher penetration 

rates, review the resultant technology penetration rate and volume increase, etc., until an equilibrium was reached. 

To do this for the dozens of technologies considered in our analysis is simply not feasible. Instead, we have 

estimated the effects of learning on costs, fed those costs into OMEGA, and reviewed the resultant penetration rates. 

The assumption that volumes have doubled after two years is based solely on the assumption that year two sales are 

of equal or greater number than year one sales and, therefore, have resulted in a doubling of production. This could 

be done on a daily basis, a monthly basis, or a yearly basis as we have done. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

591 

portion” of the learning curve. This way, we maintain the clarity that all learning is, in fact, 

volume-based learning, and that the level of cost reductions depend only on where on the 

learning curve a technology’s learning progression is. We distinguish the flat portion of the 

curve from the “steep portion” of the curve to indicate the level of learning taking place in the 

years following implementation of the technology. The agencies have applied the steep portion 

learning algorithm for those technologies considered to be newer technologies likely to 

experience rapid cost reductions through manufacturer learning, and the flat portion learning 

algorithm for those technologies considered to be mature technologies likely to experience only 

minor cost reductions through manufacturer learning. As noted above, the steep portion learning 

algorithm results in 20 percent lower costs after two full years of implementation (i.e., the MY 

2016 costs are 20 percent lower than the MYs 2014 and 2015 costs). Once two steep portion 

learning steps have occurred (for technologies having the steep portion learning algorithm 

applied while flat portion learning would begin in year 2 for technologies having the flat portion 

learning algorithm applied), flat portion learning at 3 percent per year becomes effective for 5 

years. Beyond 5 years of learning at 3 percent per year, 5 years of learning at 2 percent per year, 

then 5 at 1 percent per year become effective. 

Technologies assumed to be on the steep portion of the learning curve are hybrids and 

electric vehicles , while no learning is applied to technologies likely to be affected by commodity 

costs (LUB, ROLL) or that have loosely-defined BOMs (EFR, LDB), as was the case in the MY 

2012-2016 final rule. Chapter 3 of the Joint TSD and the PRIA shows the specific learning 

factors that NHTSA has applied in this analysis for each technology, and discusses learning 

factors and each agency’s use of them further. 

Is the technology more or less effective due to synergistic effects? 

When two or more technologies are added to a particular vehicle model to improve its 

fuel efficiency and reduce CO2 emissions, the resultant fuel consumption reduction may 

sometimes be higher or lower than the product of the individual effectiveness values for those 

items.620 This may occur because one or more technologies applied to the same vehicle partially 

address the same source (or sources) of engine, drivetrain or vehicle losses. Alternately, this 

effect may be seen when one technology shifts the engine operating points, and therefore 

increases or reduces the fuel consumption reduction achieved by another technology or set of 

technologies. The difference between the observed fuel consumption reduction associated with a 

set of technologies and the product of the individual effectiveness values in that set is referred to 

for purposes of this rulemaking as a “synergy.” Synergies may be positive (increased fuel 

consumption reduction compared to the product of the individual effects) or negative (decreased 

fuel consumption reduction). An example of a positive synergy might be a vehicle technology 

that reduces road loads at highway speeds (e.g., lower aerodynamic drag or low rolling resistance 

 620 More specifically, the products of the differences between one and the technology-specific levels of effectiveness 

in reducing fuel consumption. For example, not accounting for interactions, if technologies A and B are estimated to 

reduce fuel consumption by 10 percent (i.e., 0.1) and 20 percent (i.e., 0.2) respectively, the “product of the 

individual effectiveness values” would be 1–0.1 times 1–0.2, or 0.9 times 0.8, which equals 0.72, corresponding to a 

combined effectiveness of 28 percent rather than the 30 percent obtained by adding 10 percent to 20 percent. The 

“synergy factors” discussed in this section further adjust these multiplicatively combined effectiveness values. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

592 

tires), that could extend the vehicle operating range over which cylinder deactivation may be 

employed. An example of a negative synergy might be a variable valvetrain system technology, 

which reduces pumping losses by altering the profile of the engine speed/load map, and a sixspeed automatic transmission, which shifts the engine operating points to a portion of the engine 

speed/load map where pumping losses are less significant. 

As the complexity of the technology combinations is increased, and the number of 

interacting technologies grows accordingly, it becomes increasingly important to account for 

these synergies. NHTSA and EPA determined synergistic impacts for this proposed rule using 

EPA’s “lumped parameter” analysis tool, which EPA describes at length in Chapter 3 of the 

TSD. The lumped parameter tool is a spreadsheet model that represents energy consumption in 

terms of average performance over the fuel economy test procedure, rather than explicitly 

analyzing specific drive cycles. The tool begins with an apportionment of fuel consumption 

across several loss mechanisms and accounts for the average extent to which different 

technologies affect these loss mechanisms using estimates of engine, drivetrain and vehicle 

characteristics that are averaged over the 2-cycle CAFE drive cycle. Results of this analysis 

were generally consistent with those of full-scale vehicle simulation modeling performed in 

2010-2011 for EPA by Ricardo, Inc. 

For the current rulemaking, NHTSA is using an updated version of lumped parameter 

tool that incorporates results from simulation modeling performed in 2010-2011 by Ricardo, Inc. 

NHTSA and EPA incorporate synergistic impacts in their analyses in slightly different manners. 

Because NHTSA applies technologies individually in its modeling analysis, NHTSA 

incorporates synergistic effects between pairings of individual technologies. The use of discrete 

technology pair incremental synergies is similar to that in DOE’s National Energy Modeling 

System (NEMS).621 Inputs to the Volpe model incorporate NEMS-identified pairs, as well as 

additional pairs from the set of technologies considered in the Volpe model. 

NHTSA notes that synergies that occur within a decision tree are already addressed 

within the incremental values assigned and therefore do not require a synergy pair to address. 

For example, all engine technologies take into account incremental synergy factors of preceding 

engine technologies, and all transmission technologies take into account incremental synergy 

factors of preceding transmission technologies. These factors are expressed in the fuel 

consumption improvement factors in the input files used by the Volpe model. 

For applying incremental synergy factors in separate path technologies, the Volpe model 

uses an input table (see the tables in Chapter 3 of the TSD and in the PRIA) which lists 

technology pairings and incremental synergy factors associated with those pairings, most of 

which are between engine technologies and transmission/electrification/hybrid technologies. 

When a technology is applied to a vehicle by the Volpe model, all instances of that technology in 

the incremental synergy table which match technologies already applied to the vehicle (either 

pre-existing or previously applied by the Volpe model) are summed and applied to the fuel 

 621 U.S. Department of Energy, Energy Information Administration, Transportation Sector Module of the National 

Energy Modeling System: Model Documentation 2007, May 2007, Washington, DC, DOE/EIAM070(2007), at 29–

30. Available at http://tonto.eia.doe.gov/ftproot/modeldoc/m070(2007).pdf (last accessed Sept. 25, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

593 

consumption improvement factor of the technology being applied. Many of the synergies for the 

strong hybrid technology fuel consumption reductions are included in the incremental value for 

the specific hybrid technology block since the model applies all available electrification, engine 

and transmission technologies before applying strong hybrid technologies. 

The U.S. DOT Volpe Center has entered into a contract with Argonne National 

Laboratory (ANL) to provide full vehicle simulation modeling support for this MYs 2017-2025 

rulemaking. While this modeling was not completed in time for use in this NPRM, NHTSA 

intends to use this modeling to validate/update technology effectiveness estimates and synergy 

factors for the final rulemaking analysis. This simulation modeling will be accomplished using 

ANL’s full vehicle simulation tool called “Autonomie,” which is the successor to ANL’s 

Powertrain System Analysis Toolkit (PSAT) simulation tool, and ANL’s expertise with 

advanced vehicle technologies. 

d. Where can readers find more detailed information about 

NHTSA’s technology analysis? 

Much more detailed information is provided in Chapter 5 of the PRIA, and a discussion 

of how NHTSA and EPA jointly reviewed and updated technology assumptions for purposes of 

this NPRM is available in Chapter 3 of the TSD. Additionally, all of NHTSA’s model input and 

output files are now public and available for the reader’s review and consideration. The 

technology input files can be found in the docket for this NPRM, Docket No. NHTSA–2011–

xxxx, and on NHTSA’s website. And finally, because much of NHTSA’s technology analysis 

for purposes of this final rule builds on the work that was done for the MY 2011 and MYs 2012-

2016 final rules, we refer readers to those documents as well for background information 

concerning how NHTSA’s methodology for technology application analysis has evolved over 

the past several rulemakings, both in response to comments and as a result of the agency’s 

growing experience with this type of analysis.622

3. How did NHTSA develop its economic assumptions? 

NHTSA’s analysis of alternative CAFE standards for the model years covered by this 

rulemaking relies on a range of forecast variables, economic assumptions, and parameter values. 

This section describes the sources of these forecasts, the rationale underlying each assumption, 

and the agency’s choices of specific parameter values. These economic values play a significant 

role in determining the benefits of alternative CAFE standards, as they have for the last several 

CAFE rulemakings. Under those alternatives where standards would be established by reference 

to their costs and benefits, these economic values also affect the levels of the CAFE standards 

themselves. Some of these variables have more important effects on the level of CAFE 

standards and the benefits from requiring alternative increases in fuel economy than do others, 

and the following discussion places more emphasis on these inputs. 

In reviewing these variables and the agency’s estimates of their values for purposes of 

this proposed rule, NHTSA reconsidered comments it had previously received on the NPRM for 

MYs 2012-16 CAFE standards and to the NOI/Interim Joint TAR, and also reviewed newly 

 622 74 FR 14233–308 (Mar. 30, 2009). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

594 

available literature. The agency elected to revise some of its economic assumptions and 

parameter estimates for this rulemaking, while retaining others. For the reader’s reference, Table 

IV.C.3–1 below summarizes the values used to calculate the economic benefits from each 

alternative. 

TABLE IV.C.3-1. ECONOMIC VALUES FOR ESTIMATING BENEFITS (2009$) 

Fuel Economy Rebound Effect 10%

"Gap" between test and on-road MPG for liquid-fueled vehicles 20%

“Gap” between test and on-road wall electricity consumption for 

electric and plug-in hybrid electric vehicles 30%

Value of refueling time per ($ per vehicle-hour) $21.43

Average tank volume refilled during refueling stop 65%

Annual annual growth in average vehicle use 2001-30: 

1.0%

2031-50: 0.5%

Fuel Prices (2017-50 average, $/gallon)

Retail gasoline price $3.71

Pre-tax gasoline price $3.35

Economic Benefits from Reducing Oil Imports ($/gallon)

"Monopsony" Component $ 0.00

Price Shock Component $ 0.185 in 

2025

Military Security Component $ 0.00

Total Economic Costs ($/gallon) $ 0.185 in 

2025

Emission Damage Costs (2020, $/short ton)

Carbon monoxide $ 0

Volatile organic compounds (VOC) $ 1,300

Nitrogen oxides (NOX) – vehicle use $ 5,500

Nitrogen oxides (NOX) – fuel production and distribution $ 5,300

Particulate matter (PM2.5) – vehicle use $ 300,000

Particulate matter (PM2.5) – fuel production and distribution $ 250,000

Sulfur dioxide (SO2) $ 32,000

Annual CO2 Damage Cost (per metric ton)

variable 

depending on 

discount rate 

and year (see 

Table II-9 

above for 

2017 

estimates)

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

Congestion $ 0.056

Accidents $ 0.024

Noise $ 0.001
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

595 

Total External Costs $ 0.080

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

Congestion $0.049

Accidents $0.027

Noise $0.001

Total External Costs $0.077

Discount Rates Applied to Future Benefits 3%, 7%

a. Costs of Fuel Economy-Improving Technologies 

Building on cost estimates developed for the MYs 2012-2016 CAFE and GHG final rule 

and the 2010 TAR, the agencies incorporated new cost estimates for the new technologies being 

considered and some of the technologies carried over from the MYs 2012-2016 final rule and 

2010 TAR. This joint work is reflected in Chapter 3 of the Joint TSD and in Section II of this 

preamble, as summarized below. For more detailed information on cost of fuel-saving 

technologies, please refer to Chapter 3 of the Joint TSD and Section V of NHTSA’s PRIA. 

The technology cost estimates used in this analysis are intended to represent 

manufacturers’ direct costs for high-volume production of vehicles with these technologies. 

NHTSA explicitly accounts for the cost reductions a manufacturer might realize through learning 

achieved from experience in actually applying a technology, which means that technologies 

become cheaper over the rulemaking time frame; learning effects are described above and in 

Chapter 3 of the draft joint TSD and Chapter V of NHTSA’s PRIA. NHTSA notes that, in 

developing technology cost estimates, the agencies have made every effort to hold constant 

aspects of vehicle performance and utility typically valued by consumers, such as horsepower, 

carrying capacity, drivability, durability, noise, vibration and harshness (NVH) and towing and 

hauling capacity. For example, NHTSA includes in its analysis technology cost estimates that 

are specific to performance passenger cars (i.e., sports cars), as compared to nonperformance 

passenger cars. NHTSA seeks comment on the extent to which commenters believe that the 

agencies have been successful in holding constant these elements of vehicle performance and 

utility in developing the technology cost estimates. Additionally, the agency notes that the 

technology costs included in this proposal take into account only those associated with the initial 

build of the vehicle. Although comments were received to the MYs 2012-2016 rulemaking that 

suggested there could be additional maintenance required with some new technologies (e.g., 

turbocharging, hybrids, etc.), and that additional maintenance costs could occur as a result. The 

agency requests comments on this topic and will undertake a more detailed review of these 

potential costs for the final rule. 

Additionally, NHTSA recognizes that manufacturers’ actual costs for employing these 

technologies include additional outlays for accompanying design or engineering changes to 

models that use them, development and testing of prototype versions, recalibrating engine 

operating parameters, and integrating the technology with other attributes of the vehicle. 

Manufacturers’ indirect costs for employing these technologies also include expenses for product 

development and integration, modifying assembly processes and training assembly workers to 

install them, increased expenses for operation and maintaining assembly lines, higher initial 

warranty costs for new technologies, any added expenses for selling and distributing vehicles 

that use these technologies, and manufacturer and dealer profit. These indirect costs have been 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

596 

accounted for in this rulemaking through use of ICMs, which have been revised for this 

rulemaking as discussed above, in Chapter 3 of the draft joint TSD, and in Chapter V of 

NHTSA’s PRIA. 

 b. Potential Opportunity Costs of Improved Fuel Economy 

An important concern is whether achieving the fuel economy improvements required by 

the proposed CAFE standards will require manufacturers to modify the performance, carrying 

capacity, safety, or comfort of some vehicle models. To the extent that it does so, the resulting 

sacrifice in the value of those models represents an additional cost of achieving the required 

improvements in fuel economy. (This possibility is addressed in detail in Section IV.G.6.) 

Although exact dollar values that potential buyers attach to specific vehicle attributes are 

difficult to infer, differences in vehicle purchase prices and buyers’ choices among competing 

models that feature varying combinations of these characteristics clearly demonstrate that 

changes in these attributes affect the utility and economic value they offer to potential buyers.623

NHTSA and EPA have approached this potential problem by developing cost estimates 

for fuel economy-improving technologies that include any additional manufacturing costs that 

would be necessary to maintain the originally planned levels of performance, comfort, carrying 

capacity, and safety of any light-duty vehicle model to which those technologies are applied. In 

doing so, the agencies followed the precedent established by the 2002 NAS Report, which 

estimated “constant performance and utility” costs for fuel economy technologies. NHTSA has 

followed this precedent in its efforts to refine the technology costs it uses to analyze alternative 

passenger car and light truck CAFE standards for MYs 2017–2025. Although the agency has 

reduced its estimates of manufacturers’ costs for most technologies for use in this rulemaking, 

these revised estimates are still intended to represent costs that would allow manufacturers to 

maintain the performance, carrying capacity, and utility of vehicle models while improving their 

fuel economy. 

While we believe that our cost estimates for fuel economy-improving technologies 

include adequate provisions for accompanying costs that are necessary to prevent any 

degradation in other vehicle attributes, it is possible that they do not include adequate allowance 

to prevent sacrifices in these attributes on all vehicle models. If this is the case, the true 

economic costs of achieving higher fuel economy should include the opportunity costs to vehicle 

owners of any accompanying reductions vehicles’ performance, carrying capacity, and utility, 

and omitting these will cause the agency’s estimated technology costs to underestimate the true 

economic costs of improving fuel economy. 

It would be desirable to estimate explicitly the changes in vehicle buyers’ welfare from 

the combination of higher prices for new vehicle models, increases in their fuel economy, and 

any accompanying changes in other vehicle attributes. The net change in buyer’s welfare that 

 623 See, e.g., Kleit A.N., 1990. “The Effect of Annual Changes in Automobile Fuel Economy Standards.” Journal of 

Regulatory Economics 2: 151–172 (Docket EPA–HQ–OAR–2009–0472–0015); Berry, Steven, James Levinsohn, 

and Ariel Pakes, 1995. “Automobile Prices in Market Equilibrium,” Econometrica 63(4): 841–940 (Docket 

NHTSA–2009–0059–0031); McCarthy, Patrick S., 1996.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

597 

results from the combination of these changes would provide a more accurate estimate of the true 

economic costs for improving fuel economy. The agency is in the process of developing a model 

of potential vehicle buyers’ decisions about whether to purchase a new car or light truck and 

their choices from among the available models, which will allow it to conduct such an analysis. 

This process is expected to be completed for use in analyzing final CAFE standards for MY 

2017-25; in the meantime, Section IV.G.6 below includes a detailed analysis and discussion of 

how omitting possible changes in vehicle attributes other than their prices and fuel economy 

might affect its estimates of benefits and costs resulting from the standards proposed in this 

NPRM. 

c. The On-Road Fuel Economy “Gap” 

Actual fuel economy levels achieved by light-duty vehicles in on-road driving fall 

somewhat short of their levels measured under the laboratory-like test conditions used by EPA to 

establish its published fuel economy ratings for different models. In analyzing the fuel savings 

from alternative CAFE standards, NHTSA has previously adjusted the actual fuel economy 

performance of each light truck model downward from its rated value to reflect the expected size 

of this on-road fuel economy “gap.” On December 27, 2006, EPA adopted changes to its 

regulations on fuel economy labeling, which were intended to bring vehicles’ rated fuel economy 

levels closer to their actual on-road fuel economy levels.624 

In its Final Rule, however, EPA estimated that actual on-road fuel economy for light-duty 

vehicles averages approximately 20 percent lower than published fuel economy levels, somewhat 

larger than the 15 percent shortfall it had previously assumed. For example, if the overall EPA 

fuel economy rating of a light truck is 20 mpg, EPA estimated that the on-road fuel economy 

actually achieved by a typical driver of that vehicle is expected to be only 80 percent of that 

figure, or 16 mpg (20*.80). NHTSA employed EPA’s revised estimate of this on-road fuel 

economy gap in its analysis of the fuel savings resulting from alternative CAFE standards 

evaluated in the MY 2011 final rule. 

In the course of developing its CAFE standards for MY 2012-16, NHTSA conducted 

additional analysis of this issue. The agency used data on the number of passenger cars and light 

trucks of each model year that were registered for use during calendar years 2000 through 2006, 

average rated fuel economy for passenger cars and light trucks produced during each model year, 

and estimates of average miles driven per year by cars and light trucks of different ages. These 

data were combined to develop estimates of the average fuel economy that the U.S. passenger 

vehicle fleet would have achieved from 2000 through 2006 if cars and light trucks of each model 

year achieved the same fuel economy levels in actual on-road driving as they did under test 

conditions when new. 

Table IV.C.3-2 compares NHTSA’s estimates of fleet-wide average fuel economy under 

test conditions for 2000 through 2006 to the Federal Highway Administration’s (FHWA) 

published estimates of actual on-road fuel economy achieved by passenger cars and light trucks 

 624 71 FR 77871 (Dec. 27, 2006). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

598 

during each of those years.625 As it shows, FHWA’s estimates of actual fuel economy for 

passenger cars ranged from 21-23 percent lower than NHTSA’s estimates of its fleet-wide 

average value under test conditions over this period, and FHWA’s estimates of actual fuel 

economy for light trucks ranged from 16-18 percent lower than NHTSA’s estimates of its fleetwide average value under test conditions. Thus, these results appear to confirm that the 20 

percent on-road fuel economy gap represents a reasonable estimate for use in evaluating the fuel 

savings likely to result from more stringent fuel economy and CO2 standards in MYs 2017-2025. 

Table IV.C.3-2 Estimated Fleet-Wide Fuel Economy of Passenger Cars and Light Trucks 

Compared to Reported Fuel Economy 

YEAR 

PASSENGER CARS LIGHT-DUTY TRUCKS 

NHTSA 

Estimated 

Test MPG 

FHWA 

Reported 

Actual MPG 

Percent 

Difference 

NHTSA 

Estimated 

Test MPG 

FHWA 

Reported 

Actual MPG

Percent 

Difference 

2000 28.2 21.9 -22.2% 20.8 17.4 -16.3% 

2001 28.2 22.1 -21.7% 20.8 17.6 -15.5% 

2002 28.3 22.0 -22.3% 20.9 17.5 -16.2% 

2003 28.4 22.2 -21.9% 21.0 17.2 -18.0% 

2004 28.5 22.5 -21.1% 21.0 17.2 -18.3% 

2005 28.6 22.1 -22.8% 21.1 17.7 -16.3% 

2006 28.8 22.5 -21.8% 21.2 17.8 -16.2% 

Avg., 

2000-

2006 

28.4 22.2 -22.0% 21.0 17.5 -16.7% 

The comparisons reported in this table must be interpreted with some caution, however, 

because the estimates of annual car and truck use used to develop these estimates are submitted 

to FHWA by individual states, which use differing definitions of passenger cars and light trucks. 

(For example, some states classify minivans as cars, while others define them as light trucks.) 

At the same time, while total gasoline consumption can be reasonably estimated from excise tax 

receipts, separate estimates of gasoline consumption by cars and trucks are not available. For 

these reasons, NHTSA has chosen not to rely on its separate estimates of the on-road fuel 

economy gap for cars and light trucks. However, the agency does believe that these results 

confirm that the 20 percent on-road fuel economy discount represents a reasonable estimate for 

use in evaluating the fuel savings likely to result from CAFE standards for both cars and light 

trucks. NHTSA employs this value for vehicles operating on liquid fuels (gasoline, diesel, and 

gasoline/alcohol blends), and uses it to analyze the impacts of proposed CAFE standards for 

model years 2017-25 on the use of these fuels. 

 

In their recent TAR, EPA and NHTSA assumed that the overall energy shortfall for the 

vehicles employing electric drivetrains, including plug-in hybrid and battery-powered electric 

 625 Federal Highway Administration, Highway Statistics, 2000 through 2006 editions, Table VM–1; See 

http://www.fhwa.dot.gov/policy/ohpi/hss/hsspubs.cfm (last accessed March 1, 2010). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

599 

vehicles, is 30 percent. This value was derived from the agencies’ engineering judgment based 

on the limited available information. During the stakeholder meetings conducted prior to the 

technical assessment, confidential business information (CBI) was supplied by several 

manufacturers which indicated that electrically powered vehicles had greater variability in their 

on-road energy consumption than vehicles powered by internal combustion engines, although 

other manufacturers suggested that the on-road/laboratory differential attributable to electric 

operation should approach that of liquid fuel operation in the future. Second, data from EPA’s 

2006 analysis of the “five cycle” fuel economy label as part of the rulemaking discussed above 

supported a larger on-road shortfall for vehicles with hybrid-electric drivetrains, partly because 

real-world driving tends to have higher acceleration/deceleration rates than are employed on the 

2-cycle test. This diminishes the fuel economy benefits of regenerative braking, which can result 

in a higher test fuel economy for hybrids than is achieved under normal on-road conditions.626 

Finally, heavy accessory load, extremely high or low temperatures, and aggressive driving have 

deleterious impacts of unknown magnitudes on battery performance. Consequently, the agencies 

judged that 30 percent was a reasonable estimate for use in the TAR, and NHTSA believes that it 

continues to represent the most reliable estimate for use in the current analysis. 

One of the most significant factors responsible for the difference between test and onroad fuel economy is the use of air conditioning. While the air conditioner is turned off during 

the FTP and HFET tests, drivers often use air conditioning under warm, humid conditions. The 

air conditioning compressor can also be engaged during “defrost” operation of the heating 

system.627 In the MYs 2012-2016 rulemaking, EPA estimated the impact of an air conditioning 

system at approximately 14.3 grams CO2/mile for an average vehicle without any of the 

improved air conditioning technologies discussed in that rulemaking. For a 27 mpg (330 g 

CO2/mile) vehicle, this would account for is approximately 20 percent of the total estimated onroad gap (or about 4 percent of total fuel consumption). 

In the MY 2012-2016 rule, EPA estimated that 85 percent of MY 2016 vehicles would 

reduce their tailpipe CO2 emissions attributable to air conditioner efficiency by 40 percent 

through the use of advanced air conditioning technologies, and that incorporating this change 

would reduce the average on-road gap by about 2 percent.628 However, air conditioning-related 

fuel consumption does not decrease proportionally as engine efficiency improves, because the 

engine load due attributable to air conditioner operation is approximately constant across engine 

efficiency and technology. As a consequence, air conditioning operation represents an 

increasing percentage of vehicular fuel consumption as engine efficiency increases.629 Because 

these two effects are expected approximately to counterbalance each other, NHTSA has elected 

not to adjust its estimate of the on-road gap for use in this proposal. 

 626 EPA, Fuel Economy Labeling of Motor Vehicles: Revisions To Improve Calculation of Fuel Economy 

Estimates; Final Rule, 40 CFR Parts 86 and 600, 71 Fed. Reg. 77872, 77879 (Dec. 27, 2006). Available at

http://www.epa.gov/fedrgstr/EPA-AIR/2006/December/Day-27/a9749.pdf. 627 EPA, Final Technical Support Document: Fuel Economy Labeling of Motor Vehicle Revisions to Improve 

Calculation of Fuel Economy Estimates, at 70. Office of Transportation and Air Quality EPA420-R-06-017 

December 2006, Chapter II, http://www.epa.gov/fueleconomy/420r06017.pdf. 628 4% of the on-road gap x 40% reduction in air conditioning fuel consumption x 85% of the fleet = ~2%. 629 As an example, the air conditioning load of 14.3 g/mile of CO2 is a smaller percentage (4.3%) of 330 g/mile than 

260 (5.4%). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

600 

d. Fuel Prices and the Value of Saving Fuel 

Future fuel prices are the single most important input into the economic analysis of the 

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

which account for approximately 90% of total economic benefits from requiring higher fuel 

economy. NHTSA relies on the most recent fuel price projections from the U.S. Energy 

Information Administration’s (EIA) Annual Energy Outlook (AEO) 2011 Reference Case to 

estimate the economic value of fuel savings projected to result from alternative CAFE standards 

for MY 2017-25. The AEO 2011 Reference Case forecasts of gasoline and diesel fuel prices 

represents EIA’s most up-to-date estimate of the most likely course of future prices for 

petroleum products. EIA is widely recognized as an impartial and authoritative source of 

analysis and forecasts of U.S. energy production, consumption, and prices, and its forecasts are 

widely relied upon by federal agencies for use in regulatory analysis and for other purposes. Its 

forecasts are derived using EIA’s National Energy Modeling System (NEMS), which includes 

detailed representations of supply pathways, sources of demand, and their interaction to 

determine prices for different forms of energy. 

As compared to the gasoline prices used in NHTSA’s Final Rule establishing CAFE 

standards for MY 2012-2016 (which relied on forecasts from AEO 2010), the AEO 2011 

Reference Case fuel prices are slightly higher through the year 2020, but slightly lower for most 

years thereafter. Expressed in constant 2009 dollars, the AEO 2011 Reference Case forecast of 

retail gasoline prices (which include federal, state, and local taxes) during 2017 is $3.25 per 

gallon, rising gradually to $3.71 by the year 2035. However, valuing fuel savings over the full 

lifetimes of passenger cars and light trucks affected by the standards proposed for MYs 2017-25 

requires fuel price forecasts that extend through 2060, approximately the last year during which a 

significant number of MY 2025 vehicles will remain in service.630 To obtain fuel price forecasts 

for the years 2036 through 2060, the agency assumes that retail fuel prices will continue to 

increase after 2035 at the average annual rate (0.7%) projected for 2017-2035 in the AEO 2011 

Reference Case. This assumption results in a projected retail price of gasoline that reaches $4.16 

in 2050. Over the entire period from 2017-2050, retail gasoline prices are projected to average 

$3.67, as Table IV.C.3-1 reported previously. 

The value of fuel savings resulting from improved fuel economy to buyers of light-duty 

vehicles is determined by the retail price of fuel, which includes Federal, State, and any local 

taxes imposed on fuel sales. Because fuel taxes represent transfers of resources from fuel buyers 

to government agencies, however, rather than real resources that are consumed in the process of 

supplying or using fuel, NHTSA deducts their value from retail fuel prices to determine the value 

of fuel savings resulting from more stringent CAFE standards to the U.S. economy. 

NHTSA follows the assumptions used by EIA in AEO 2011 that State and local gasoline 

taxes will keep pace with inflation in nominal terms, and thus remain constant when expressed in 

constant dollars. In contrast, EIA assumes that Federal gasoline taxes will remain unchanged in 

nominal terms, and thus decline throughout the forecast period when expressed in constant 

 630 The agency defines the maximum lifetime of vehicles as the highest age at which more than 2 percent of those 

originally produced during a model year remain in service. In the case of light trucks, for example, this age has 

typically been 36 years for recent model years. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

601 

dollars. These differing assumptions about the likely future behavior of Federal and State/local 

fuel taxes are consistent with recent historical experience, which reflects the fact that Federal as 

well as most State motor fuel taxes are specified on a cents-per-gallon rather than an ad valorem 

basis, and typically require legislation to change. Subtracting fuel taxes from the retail prices 

forecast in AEO 2011 results in projected values for saving gasoline of $3.29 per gallon during 

2017, rising to $3.48 per gallon by the year 2035, and to $3.65 by the year 2050. Over this 

entire period, pre-tax gasoline prices are projected to average $3.32 per gallon. 

EIA also includes forecasts reflecting high and low global oil prices in each year’s 

complete AEO, which reflect uncertainties regarding OPEC behavior as well as future levels of 

oil production and demand. These alternative scenarios project retail gasoline prices that range 

from a low of $2.30 to a high of $4.85 per gallon during 2020, and from $2.12 to $5.36 per 

gallon during 2035 (all figures in 2009 dollars). In conjunction with our assumption that fuel 

taxes will remain constant in real or inflation-adjusted terms over this period, these forecasts 

imply pre-tax values of saving fuel ranging from $1.91 to $4.46 per gallon during 2020, and 

from $1.77 to $5.01 per gallon in 2035 (again, all figures are in constant 2009 dollars). In 

conducting the analysis of uncertainty in benefits and costs from alternative CAFE standards 

required by OMB, NHTSA evaluated the sensitivity of its benefits estimates to these alternative 

forecasts of future fuel prices; detailed results and discussion of this sensitivity analysis can be 

found in the agency’s PRIA. Generally, this analysis confirms that the primary economic benefit 

resulting from the rule—the value of fuel savings—is extremely sensitive to alternative forecasts 

of future fuel prices. 

e. Consumer Valuation of Fuel Economy and Payback Period 

In estimating the impacts on vehicle sales that would result from requiring higher fuel 

economy, NHTSA continues to assume (as it has done in analyzing previous CAFE standards) 

that potential vehicle buyers value the resulting fuel savings over only part of the expected 

lifetime of the vehicles they purchase. The agency uses slightly different assumptions about the 

length of time over which potential vehicle buyers consider fuel savings from higher fuel 

economy, and about how they discount those future fuel savings, in different aspects of its 

analysis. For most purposes, the agency assumes that buyers value fuel savings over the first 

five years of a new vehicle’s lifetime; the five-year figure represents approximately the current 

average term of consumer loans to finance the purchase of new vehicles. . 

To simulate manufacturers’ assessment of the net change in the value of an individual 

vehicle model to prospective buyers from improving its fuel economy, NHTSA discounts fuel 

savings over the first five years of its lifetime using a 7 percent rate. The resulting value is 

deducted from the technology costs that would be incurred by its manufacturer to improve that 

model’s fuel economy, in order to determine the change in its value to potential buyers. Since 

this is also the additional amount its manufacturer could expect to receive when selling the 

vehicle after improving its fuel economy, this can also be viewed as the “effective cost” of the 

improvement from its manufacturers’ perspective. The CAFE model uses these estimates of 

effective costs to identify the sequence in which manufacturers are likely to select individual 

models for improvements in fuel economy, as well as to identify the most cost-effective 

technologies for doing so. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

602 

The average of effective cost to its manufacturer for increasing the fuel economy of a 

model also represents the change in its value from the perspective of potential buyers. Under the 

assumption that manufacturers change the selling price of each model by this amount, its average 

value also represents the average change in its net or effective price to would-be buyers. 

NHTSA uses these estimates of the average price increases for new cars and light trucks 

produced in each model year to estimate the resulting changes in their total sales. The agency 

also tests the sensitivity of its estimates of changes in effective prices and total sales of new cars 

and light trucks to the assumptions that buyers discount future fuel savings using a 3 percent 

rather than a 7 percent discount rate, and that buyers value fuel savings over only a two-year 

period instead of over five years. Finally, as part of our sensitivity case analyzing the potential 

for manufacturers to over-comply with CAFE standards – that is, to produce a lineup of vehicle 

models whose sales-weighted average fuel economy exceeds that required by prevailing 

standards – NHTSA used the extreme assumption that potential buyers value fuel savings only 

during the first year they expect to own a new vehicle. 

The agency notes that these varying assumptions about future time horizons and discount 

rates for valuing fuel savings are used only to analyze manufacturers’ responses to requiring 

higher fuel economy and buyers’ behavior in response to manufacturers’ compliance strategies. 

When estimating the aggregate value to the U.S. economy of fuel savings resulting from 

alternative increases in CAFE standards—or the “social” value of fuel savings—the agency 

includes fuel savings over the entire expected lifetimes of vehicles that would be subject to 

higher standards, rather than over the shorter periods we assume manufacturers employ to 

represent the preferences of vehicle buyers, or that buyers use to assess changes in the net price 

or new vehicles. 

Valuing fuel savings over vehicles’ entire lifetimes recognizes the savings in fuel costs 

that subsequent owners of vehicles will experience forom higher fuel economy, even if their 

initial purchasers do not expect to recover the remaining value of fuel savings when they re-sell 

those vehicles, or for other reasons do not value fuel savings beyond the assumed five-year time 

horizon. The agency acknowledges that it has not accounted for any effects of increased costs 

for financing, insuring, or maintaining vehicles with higher fuel economy, over either this limited 

payback period or the full lifetimes of vehicles. 

The procedure the agency uses for calculating lifetime fuel savings is discussed in detail 

in the following section, while alternative assumptions about the time horizon over which 

potential buyers consider fuel savings in their vehicle purchasing decisions are discussed in more 

detail in Section IV.G.6 below. 

f. Vehicle Survival and Use Assumptions 

NHTSA’s analysis of fuel savings and related benefits from adopting more stringent fuel 

economy standards for MYs 2017-2025 passenger cars and light trucks begins by estimating the 

resulting changes in fuel use over the entire lifetimes of the affected vehicles. The change in 

total fuel consumption by vehicles produced during each model year is calculated as the 

difference between their total fuel use over their lifetimes with a higher CAFE standard in effect, 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

603 

and their total lifetime fuel consumption under a baseline in which CAFE standards remained at 

their 2016 levels. The first step in estimating lifetime fuel consumption by vehicles produced 

during a model year is to calculate the number expected to remain in service during each year 

following their production and sale.631 This is calculated by multiplying the number of vehicles 

originally produced during a model year by the proportion typically expected to remain in 

service at their age during each later year, often referred to as a “survival rate.” 

As discussed in more detail in Section II.B.3 above and in Chapter 1 of the TSD, to 

estimate production volumes of passenger cars and light trucks for individual manufacturers, 

NHTSA relied on a baseline market forecast constructed by EPA staff beginning with MY 2008 

CAFE certification data. After constructing a MY 2008 baseline, EPA and NHTSA used 

projected car and truck volumes for this period from Energy Information Administration’s 

(EIA’s) Annual Energy Outlook (AEO) 2011 in the NPRM analysis.632 However, Annual 

Energy Outlook forecasts only total car and light truck sales, rather than sales at the 

manufacturer and model-specific level, which the agencies require in order to estimate the effects 

new standards will have on individual manufacturers.633

To estimate sales of individual car and light truck models produced by each 

manufacturer, EPA purchased data from CSM Worldwide and used its projections of the number 

of vehicles of each type (car or truck) that will be produced and sold by manufacturers in model 

years 2011 through 2015.634 This provided year-by-year estimates of the percentage of cars and 

trucks sold by each manufacturer, as well as the sales percentages accounted for by each vehicle 

market segment. (The distributions of car and truck sales by manufacturer and by market 

segment for the 2016 model year and beyond were assumed to be the same as CSM’s forecast for 

the 2015 calendar year.) Normalizing these percentages to the total car and light truck sales 

volumes projected for 2017 through 2025 in AEO 2011 provided manufacturer-specific market 

 631 Vehicles are defined to be of age 1 during the calendar year corresponding to the model year in which they are 

produced; thus for example, model year 2000 vehicles are considered to be of age 1 during calendar year 2000, age 

2 during calendar year 2001, and to reach their maximum age of 26 years during calendar year 2025. NHTSA 

considers the maximum lifetime of vehicles to be the age after which less than 2 percent of the vehicles originally 

produced during a model year remain in service. Applying these conventions to vehicle registration data indicates 

that passenger cars have a maximum age of 26 years, while light trucks have a maximum lifetime of 36 years. See

Lu, S., NHTSA, Regulatory Analysis and Evaluation Division, “Vehicle Survivability and Travel Mileage 

Schedules,” DOT HS 809 952, 8–11 (January 2006). Available at http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf 

(last accessed Sept. 26, 2011).

632 Available at http://www.eia.gov/forecasts/aeo/index.cfm (last accessed Sept. 26, 2011). NHTSA and EPA made 

the simplifying assumption that projected sales of cars and light trucks during each calendar year from 2012 through 

2016 represented the likely production volumes for the corresponding model year. The agency did not attempt to 

establish the exact correspondence between projected sales during individual calendar years and production volumes 

for specific model years.

633 Because AEO 2011’s “car” and “truck” classes did not reflect NHTSA’s recent reclassification (in March 2009 

for enforcement beginning MY 2011) of many two wheel drive SUVs from the non-passenger (i.e., light truck) fleet 

to the passenger car fleet, EPA staff made adjustments to account for such vehicles in the baseline. 634 EPA also considered other sources of similar information, such as J.D. Powers, and concluded that CSM was 

better able to provide forecasts at the requisite level of detail for most of the model years of interest.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

604 

share and model-specific sales estimates for those model years. The volumes were then scaled to 

AEO 2011 total volume for each year. 

To estimate the number of passenger cars and light trucks originally produced during 

model years 2017 through 2025 that will remain in use during subsequent years, the agency 

applied age-specific survival rates for cars and light trucks to its forecasts of passenger car and 

light truck sales for each of those model years. In 2008, NHTSA updated its previous estimates 

of car and light truck survival rates using the most current registration data for vehicles produced 

during recent model years, in order to ensure that they reflected recent increases in the durability 

and expected life spans of cars and light trucks.635 However, the agency does not attempt to 

forecast changes in those survival rates over the future. 

The next step in estimating fuel use is to calculate the total number of miles that cars and 

light trucks remaining in use will be driven each year. To estimate the total number of miles 

driven by cars or light trucks produced in a model year during each subsequent year, the number 

projected to remain in use during that year is multiplied by the average number of miles those 

vehicles are expected to be driven at the age they will have reached in that year. The agency 

estimated annual usage of cars and light trucks of each age using data from the Federal Highway 

Administration’s 2001 National Household Transportation Survey (NHTS).636 Because these 

estimates reflect the historically low gasoline prices that prevailed at the time the 2001 NHTS 

was conducted, however, NHTSA adjusted them to account for the effect on vehicle use of the 

higher fuel prices projected over the lifetimes of model year 2017-25 cars and light trucks. 

Details of this adjustment are provided in Chapter VIII of the FRIA and Chapter 4 of the Joint 

TSD. 

The estimates of annual miles driven at different vehicle ages derived from the 2001 

NHTS were also adjusted to reflect projected future growth in average use for vehicles at every 

age over their lifetimes. Increases in average annual use of cars and light trucks, which have 

averaged approximately 1 percent annually over the past two decades, have been an important 

source of historical growth in the total number of miles they are driven each year. To estimate 

future growth in their average annual use for purposes of this rulemaking, NHTSA calculated the 

rate of growth in the adjusted mileage schedules derived from the 2001 NHTS that would be 

necessary for total car and light truck travel to increase at the rate forecast in the AEO 2011 

Reference Case.637 This rate was calculated to be consistent with future changes in the overall 

size and age distributions of the U.S. passenger car and light truck fleets that result from the 

agency’s forecasts of total car and light truck sales and updated survival rates. The resulting 

growth rate in average annual car and light truck use is approximately 1.0 percent from 2017 

 635 Lu, S., NHTSA, Regulatory Analysis and Evaluation Division, “Vehicle Survivability and Travel Mileage 

Schedules,” DOT HS 809 952, 8–11 (January 2006). Available at http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf 

(last accessed Sept. 26, 2011). These updated survival rates suggest that the expected lifetimes of recent-model 

passenger cars and light trucks are 13.8 and 14.5 years.

636 For a description of the Survey, see http://nhts.ornl.gov/introduction.shtml#2001 (last accessed September 26, 

2011). 

637 This approach differs from that used in the MY 2011 final rule, where it was assumed that future growth in the 

total number of cars and light trucks in use resulting from projected sales of new vehicles was adequate by itself to 

account for growth in total vehicle use, without assuming continuing growth in average vehicle use. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

605 

through 2035, and declines to 0.5 percent per year thereafter. 638 While the adjustment for future 

fuel prices reduces average annual mileage at each age from the values derived using the 2001 

NHTS, the adjustment for expected future growth in average vehicle use increases it. The net 

effect of these two adjustments is to increase expected lifetime mileage for MY 2017-25 

passenger cars and light trucks by about 22 percent from the estimates originally derived from 

the 2001 NHTS. 

Finally, the agency estimated total fuel consumption by passenger cars and light trucks 

remaining in use each year by dividing the total number of miles surviving vehicles are driven by 

the fuel economy they are expected to achieve under each alternative CAFE standard. Each 

model year’s total lifetime fuel consumption is the sum of fuel use by the cars or light trucks 

produced during that model year over its life span. In turn, the savings in lifetime fuel use by 

cars or light trucks produced during each model year affected by this proposed rule that will 

result from each alternative CAFE standard is the difference between its lifetime fuel use at the 

fuel economy level it attains under the Baseline alternative, and its lifetime fuel use at the higher 

fuel economy level it is projected to achieve under that alternative standard.639

g. Accounting for the Fuel Economy Rebound Effect 

The fuel economy rebound effect refers to the fact that some of the fuel savings expected 

to result from higher fuel economy, such as an increase in fuel economy required by the adoption 

of higher CAFE standards, may be offset by additional vehicle use. The increase in vehicle use 

occurs because higher fuel economy reduces the fuel cost of driving, which is typically the 

largest single component of the monetary cost of operating a vehicle, and vehicle owners 

respond to this reduction in operating costs by driving more. Even with their higher fuel 

economy, this additional driving consumes some fuel, so this effect reduces the fuel savings that 

result when raising CAFE standards requires manufacturers to improve fuel economy. The 

rebound effect refers to the fraction of fuel savings expected to result from increased fuel 

economy that is offset by additional driving.640 

 638 While the adjustment for future fuel prices reduces average mileage at each age from the values derived from the 

2001 NHTS, the adjustment for expected future growth in average vehicle use increases it. The net effect of these 

two adjustments is to increase expected lifetime mileage by about 18 percent significantly for both passenger cars 

and about 16 percent for light trucks.

639 To illustrate these calculations, the agency’s adjustment of the AEO 2009 Revised Reference Case forecast 

indicates that 9.26 million passenger cars will be produced during 2012, and the agency’s updated survival rates 

show that 83 percent of these vehicles, or 7.64 million, are projected to remain in service during the year 2022, when 

they will have reached an age of 10 years. At that age, passenger achieving the fuel economy level they are 

projected to achieve under the Baseline alternative are driven an average of about 800 miles, so surviving model 

year 2012 passenger cars will be driven a total of 82.5 billion miles (= 7.64 million surviving vehicles × 10,800 

miles per vehicle) during 2022. Summing the results of similar calculations for each year of their 26-year maximum 

lifetime, model year 2012 passenger cars will be driven a total of 1,395 billion miles under the Baseline alternative. 

Under that alternative, they are projected to achieve a test fuel economy level of 32.4 mpg, which corresponds to 

actual on-road fuel economy of 25.9 mpg (= 32.4 mpg × 80 percent). Thus their lifetime fuel use under the Baseline 

alternative is projected to be 53.9 billion gallons (= 1,395 billion miles divided by 25.9 miles per gallon). 640 Formally, the rebound effect is often expressed as the elasticity of vehicle use with respect to the cost per mile 

driven. Additionally, it is consistently expressed as a positive percentage (rather than as a negative decimal fraction, 

as this elasticity is normally expressed). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

606 

The magnitude of the rebound effect is an important determinant of the actual fuel 

savings that are likely to result from adopting stricter CAFE standards. Research on the 

magnitude of the rebound effect in light-duty vehicle use dates to the early 1980s, and generally 

concludes that a significant rebound effect occurs when vehicle fuel efficiency improves.641 The 

most common approach to estimating its magnitude has been to analyze survey data on 

household vehicle use, fuel consumption, fuel prices, and other factors affecting household travel 

behavior to estimate the response of vehicle use to differences in the fuel efficiency of individual 

vehicles. Because this approach most closely matches the definition of the rebound effect, which 

is the response of vehicle use to differences in fuel economy, the agency regards these studies as 

likely to produce the most reliable estimates of the rebound effect. Other studies have relied on 

econometric analysis of annual U.S. data on vehicle use, fuel efficiency, fuel prices, and other 

variables to estimate the response of total or average vehicle use to changes in fleet-wide average 

fuel economy and its effect on fuel cost per mile driven. More recent studies have analyzed 

yearly variation in vehicle ownership and use, fuel prices, and fuel economy among states over 

an extended time period in order to measure the response of vehicle use to changing fuel costs 

per mile.642 

Another important distinction among studies of the rebound effect is whether they 

assume that the effect is constant, or allow it to vary in response to changes in fuel costs, 

personal income, or vehicle ownership. Most studies using aggregate annual data for the U.S. 

assume a constant rebound effect, although some of these studies test whether the effect varies as 

changes in retail fuel prices or average fuel efficiency alter fuel cost per mile driven. Studies 

using household survey data estimate significantly different rebound effects for households 

owning varying numbers of vehicles, with most concluding that the rebound effect is larger 

among households that own more vehicles. Finally, recent studies using state-level data 

conclude that the rebound effect varies directly in response to changes in personal income, the 

degree of urbanization of U.S. cities, and differences in traffic congestion levels, as well as fuel 

costs. Some studies conclude that the long-run rebound effect is significantly larger than the 

immediate response of vehicle use to increased fuel efficiency. Although their estimates of the 

time required for the rebound effect to reach its long-run magnitude vary, this long-run effect is 

probably more appropriate for evaluating the fuel savings likely to result from adopting stricter 

CAFE standards for future model years. 

In order to provide a more comprehensive overview of previous estimates of the rebound 

effect, NHTSA has updated its previous review of published studies of the rebound effect to 

include those conducted as recently as 2010. The agency performed a detailed analysis of 

several dozen separate estimates of the long-run rebound effect reported in these studies, which 

 641 Some studies estimate that the long-run rebound effect is significantly larger than the immediate response to 

increased fuel efficiency. Although their estimates of the adjustment period required for the rebound effect to reach 

its long-run magnitude vary, this long-run effect is probably more appropriate for evaluating the fuel savings and 

emissions reductions resulting from stricter standards that would apply to future model years. 642 In effect, these studies treat U.S. states as a data “panel” by applying appropriate estimation procedures to data 

consisting of each year’s average values of these variables for the separate states. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

607 

is summarized in Error! Reference source not found. below.643 As the table indicates, these 

estimates range from as low as 7 percent to as high as 75 percent, with a mean value of 23% 

percent. Both the type of data used and authors’ assumption about whether the rebound effect 

varies over time have important effects on its estimated magnitude. The 34 estimates derived 

from analysis of U.S. annual time-series data produce a mean estimate of 18 percent for the longrun rebound effect, while the mean of 23 estimates based on household survey data is 

considerably larger (31 percent), and the mean of 15 estimates based on pooled state data (23 

percent) is close to that for the entire sample. The 37 estimates assuming a constant rebound 

effect produce a mean of 23 percent, identical to the mean of the 29 estimates reported in studies 

that allowed the rebound effect to vary in response to fuel prices and fuel economy levels, 

vehicle ownership, or household income. Updated to reflect the most recent available 

information on these variables, the mean of these estimates is 19 percent, as Table IV.C.3-3 

reports. 

TABLE IV.C.3-3. SUMMARY OF PUBLISHED ESTIMATES OF THE REBOUND EFFECT

Some recent studies provide evidence that the rebound effect has been declining over 

time. This result appears plausible for two reasons: first, the responsiveness of vehicle use to 

variation in fuel costs would be expected to decline as they account for a smaller proportion of 

the total monetary cost of driving, which has been the case until recently. Second, rising 

personal incomes would be expected to reduce the sensitivity of vehicle use to fuel costs as the 

time component of driving costs—which is likely to be related to income levels—accounts for a 

larger fraction the total cost of automobile travel. At the same time, however, rising incomes are 

strongly associated with higher auto ownership levels, which increase households’ opportunities 

to substitute among vehicles in response to varying fuel prices and differences in their fuel 

economy levels. This is likely to increase the sensitivity of households’ overall vehicle use to 

differences in the fuel economy levels of individual vehicles. 

 643 In some cases, NHTSA derived estimates of the overall rebound effect from more detailed results reported in the 

studies. For example, where studies estimated different rebound effects for households owning different numbers 

of vehicles but did not report an overall value, the agency computed a weighted average of the reported values using 

the distribution of households among vehicle ownership categories. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

608 

Small and Van Dender combined time series data for states to estimate the rebound 

effect, allowing its magnitude to vary in response to fuel prices, fleet-wide average fuel 

economy, the degree of urbanization of U.S. cities, and personal income levels.644 The authors 

employ a model that allows the effect of fuel cost per mile on vehicle use to vary in response to 

changes in personal income levels and increasing urbanization of U.S. cities. For the time period 

1966-2001, their analysis implied a long-run rebound effect of 22 percent, which is consistent 

with previously published studies. Continued growth in personal incomes over this period 

reduces their estimate of the long-run rebound effect during its last five years (1997-2001) to 11 

percent, and an unpublished update through 2004 prepared by the authors reduced their estimate 

of the long-run rebound effect for the period 2000-2004 to 6 percent.645 

More recently, Hymel, Small and Van Dender extended the previous analysis to include 

traffic congestion levels in urbanized areas.646 Although controlling for the effect of congestion 

on vehicle use increased their estimates of the rebound effect, these authors also found that the 

rebound effect appeared to be declining over time. For the time period 1966-2004, their estimate 

of the long-run rebound effect was 24 percent, while for the last year of that period their estimate 

was 13 percent, significantly above the previous Small and Van Dender estimate of a 6 percent 

rebound effect for the period 2000-2004. 

Recent research by Greene (under contract to EPA) using U.S. national time-series data 

for the period 1966-2007 lends further support to the hypothesis that the rebound effect is 

declining over time.647 Greene found that fuel prices had a statistically significant impact on 

VMT, yet fuel efficiency did not, and statistical testing rejected the hypothesis of equal 

elasticities of vehicle use with respect to gasoline prices and fuel efficiency. Greene also tested 

model formulations that allowed the effect of fuel cost per mile on vehicle use to decline with 

rising per capita income; his preferred form of this model produced estimates of the rebound 

effect that declined from [XX] percent in [XX] to 12 percent in 2007. 

In light of findings from recent research, the agency’s judgment is that the apparent 

decline over time in the magnitude of the rebound effect justifies using a value for future analysis 

that is lower than many historical estimates, which average 15–25 percent. Because the lifetimes 

of vehicles affected by the alternative CAFE standards considered in this rulemaking will extend 

from 2017 until 2060, a value that is at the low end of historical estimates appears to be 

appropriate. Thus as it elected to do in its previous analysis of the effects of raising CAFE 

standards for MY 2012-16 cars and light trucks, NHTSA uses a 10 percent rebound effect in its 

analysis of fuel savings and other benefits from higher CAFE standards for MY 2017-25 

 644 Small, K. and K. Van Dender, 2007a. “Fuel Efficiency and Motor Vehicle Travel: The Declining Rebound 

Effect”, The Energy Journal, vol. 28, no. 1, pp. 25-51. 

645 Small, K. and K. Van Dender, 2007b. "Long Run Trends in Transport Demand, Fuel Price Elasticities and 

Implications of the Oil Outlook for Transport Policy," OECD/ITF Joint Transport Research Centre Discussion 

Papers 2007/16, OECD, International Transport Forum. 

646 Hymel, Kent M., Kenneth A. Small, and Kurt Van Dender, “Induced demand and rebound effects in road 

transport,” Transportation Research Part B: Methodological, Volume 44, Issue 10, December 2010, Pages 1220-

1241, ISSN 0191-2615, DOI: 10.1016/j.trb.2010.02.007. 

647 Greene, David, “Rebound 2007: Analysis of National Light-Duty Vehicle Travel Statistics,” February 9, 2010. 

This paper has been accepted for an upcoming special issue of Energy Policy, although the publication date has not 

yet been determined. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

609 

vehicles. Recognizing the wide range of uncertainty surrounding its correct value, however, the 

agency also employs estimates of the rebound effect ranging from 5 to 15 percent in its 

sensitivity testing. The 10 percent figure is at the low end of those reported in almost all 

previous research, and it is also below most estimates of the historical and current magnitude of 

the rebound effect developed by NHTSA. However, other recent research—particularly that 

conducted by Small and Van Dender and by Greene—suggests that the magnitude of the rebound 

effect has declined over time, and is likely to continue to do so. As a consequence, NHTSA 

concluded that a value at the low end of the historical estimates reported here is likely to provide 

a more reliable estimate of its magnitude during the future period spanned by NHTSA’s analysis 

of the impacts of this rule. The 10 percent estimate lies between the 10–30 percent range of 

estimates for the historical rebound effect reported in most previous research, and is at the upper 

end of the 5–10 percent range of estimates for the future rebound effect reported in recent 

studies. In summary, the 10 percent value was not derived from a single estimate or particular 

study, but instead represents a compromise between historical estimates and projected future 

estimates. Chapter 4.2.5 of the Joint TSD reviews the relevant literature and discusses in more 

depth the reasoning for the rebound value used here. 

h. Benefits From Increased Vehicle Use 

The increase in vehicle use from the rebound effect provides additional benefits to their 

users, who make more frequent trips or travel farther to reach more desirable destinations. This 

additional travel provides benefits to drivers and their passengers by improving their access to 

social and economic opportunities away from home. As evidenced by their decisions to make 

more frequent or longer trips when improved fuel economy reduces their costs for driving, the 

benefits from this additional travel exceed the costs drivers and passengers incur in traveling 

these additional distances. 

The agency’s analysis estimates the economic benefits from increased rebound-effect 

driving as the sum of fuel costs drivers incur plus the consumer surplus they receive from the 

additional accessibility it provides.648 NHTSA estimates the value of the consumer surplus 

provided by added travel as one-half of the product of the decline in fuel cost per mile and the 

resulting increase in the annual number of miles driven, a standard approximation for changes in 

consumer surplus resulting from small changes in prices. Because the increase in travel depends 

on the extent of improvement in fuel economy, the value of benefits it provides differs among 

model years and alternative CAFE standards. 

i. The Value of Increased Driving Range 

Improving vehicles’ fuel economy may also increase their driving range before they 

require refueling. By extending the upper limit of the range vehicles can travel before refueling 

 648 The consumer surplus provided by added travel is estimated as one-half of the product of the decline in fuel cost 

per mile and the resulting increase in the annual number of miles driven.

Comment [A61]: Commenter recommends 

mentioning the 20% sensivitity case as well. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

610 

is needed, the per-vehicle average number of refueling trips per year is expected to decline. This 

reduction in refueling frequency provides a time savings benefit to owners.649 

NHTSA estimated a number of parameters regarding consumers’ refueling habits using 

newly-available observational and interview data from a 2010-2011 NASS study conducted at 

fueling stations throughout the nation. A (non-exhaustive) list of key parameters derived from 

this study is as follows: average number of gallons of fuel purchased, length of time to refuel and 

pay, length of time to drive to the fueling station, primary reason for refueling, and number of 

adult vehicle occupants. 

Using these and other parameters (detailed explanation of parameters and methodology 

provided in Chapter VIII of NHTSA’s PRIA), NHTSA estimated the decrease in number of 

refueling cycles for each model year’s fleet attributable to improvements in actual on-road MPG 

resulting from the proposed CAFE standards. NHTSA acknowledges – and adjusts for – the fact 

that many refueling trips occur for reasons other than a low reading on the gas gauge (for 

example, many consumers refuel on a fixed schedule). NHTSA separately estimated the value of 

vehicle-hour refueling time and applied this to the projected decrease in number of refueling 

cycles to estimate the aggregate fleet-wide value of refueling time savings for each year that a 

given model year’s vehicles are expected to remain in service. 

j. Added Costs From Congestion, Crashes and Noise 

Increased vehicle use associated with the rebound effect also contributes to increased 

traffic congestion, motor vehicle accidents, and highway noise. To estimate the economic costs 

associated with these consequences of added driving, NHTSA applies estimates of per-mile 

congestion, accident, and noise costs caused by increased use of automobiles and light trucks 

developed previously by the Federal Highway Administration.650 These values are intended to 

measure the increased costs resulting from added congestion and the delays it causes to other 

drivers and passengers, property damages and injuries in traffic accidents, and noise levels 

contributed by automobiles and light trucks. NHTSA previously employed these estimates in its 

analysis accompanying the MY 2011 final CAFE rule, as well as in its analysis of the effects of 

higher CAFE standards for MY 2012-16. After reviewing the procedures used by FHWA to 

develop them and considering other available estimates of these values, the agency continues to 

find them appropriate for use in this final rule. The agency multiplies FHWA’s estimates of permile costs by the annual increases in automobile and light truck use from the rebound effect to 

yield the estimated increases in congestion, accident, and noise externality costs during each 

future year. 

k. Petroleum Consumption and Import Externalities 

i. Changes in Petroleum Imports 

 649 If manufacturers respond to improved fuel economy by reducing the size of fuel tanks to maintain a constant 

driving range, the resulting cost saving will presumably be reflected in lower vehicle sales prices.

650 These estimates were developed by FHWA for use in its 1997 Federal Highway Cost Allocation Study; See 

http://www.fhwa.dot.gov/policy/hcas/final/index.htm (last accessed March 1, 2010).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

611 

Based on a detailed analysis of differences in fuel consumption, petroleum imports, and 

imports of refined petroleum products among alternative scenarios presented in AEO 2011, 

NHTSA estimates that approximately 50 percent of the reduction in fuel consumption resulting 

from adopting higher CAFE standards is likely to be reflected in reduced U.S. imports of refined 

fuel, while the remaining 50 percent would reduce domestic fuel refining.651 Of this latter figure, 

90 percent is anticipated to reduce U.S. imports of crude petroleum for use as a refinery 

feedstock, while the remaining 10 percent is expected to reduce U.S. domestic production of 

crude petroleum.652 Thus on balance, each 100 gallons of fuel saved as a consequence of higher 

CAFE standards is anticipated to reduce total U.S. imports of crude petroleum or refined fuel by 

95 gallons.653

ii. Benefits from Reducing U.S. Petroleum Imports 

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

economy that are not reflected in the market price for crude petroleum, or in the prices paid by 

consumers of petroleum products such as gasoline. These costs include (1) higher prices for 

petroleum products resulting from the effect of U.S. petroleum demand on the world oil price;(2) 

the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of 

imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure 

imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve 

(SPR) to cushion against resulting price increases.654 Reducing these costs by lowering U.S. 

petroleum imports represents another source of benefits from stricter CAFE standards and the 

savings in consumption of petroleum-based fuels that would result from higher fuel economy. 

Higher U.S. imports of crude oil or refined petroleum products increase the magnitude of these 

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

above their market prices. Conversely, lowering U.S. imports of crude petroleum or refined 

fuels by reducing domestic fuel consumption can reduce these external costs, and any reduction 

in their total value that results from improved fuel economy represents an economic benefit of 

more stringent CAFE standards, in addition to the value of saving fuel itself. 

 651 Differences in forecast annual U.S. imports of crude petroleum and refined products among the Reference, High 

Oil Price, and Low Oil Price scenarios analyzed in EIA’s Annual Energy Outlook 2011 range from 35-74percent of 

differences in projected annual gasoline and diesel fuel consumption in the U.S. These differences average 

53percent over the forecast period spanned by AEO 2011. 652 Differences in forecast annual U.S. imports of crude petroleum among the Reference, High Oil Price, and Low 

Oil Price scenarios analyzed in EIA’s Annual Energy Outlook 2011 ( range from 67-104 percent of differences in 

total U.S. refining of crude petroleum, and average 90 percent over the forecast period spanned by AEO 2011. 653 This figure is calculated as 50 gallons + 50 gallons*90% = 50 gallons + 45 gallons = 95 gallons. 654 See, e.g., Bohi, Douglas R. and W. David Montgomery (1982). Oil Prices, Energy Security, and Import Policy 

Washington, DC: Resources for the Future, Johns Hopkins University Press; Bohi, D.R., and M.A. Toman (1993). 

“Energy and Security: Externalities and Policies,” Energy Policy 21:1093– 1109 (Docket NHTSA–2009–0062–24); 

and Toman, M.A. (1993). “The Economics of Energy Security: Theory, Evidence, Policy,” in A.V. Kneese and J.L. 

Sweeney, eds. (1993) (Docket NHTSA–2009–0062–23). Handbook of Natural Resource and Energy Economics, 

Vol. III. Amsterdam: North-Holland, pp. 1167–1218. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

612 

The first component of the external costs imposed by U.S. petroleum consumption and 

imports (often termed the “monopsony cost” of U.S. oil imports), measures the increase in 

payments from domestic oil consumers to foreign oil suppliers beyond the increased purchase 

price of petroleum itself that results when increased U.S. import demand raises the world price of 

petroleum.655 However, this monopsony cost or premium represents a financial transfer from 

consumers of petroleum products to oil producers, and does not entail the consumption of real 

economic resources. Thus the decline in its value that occurs when reduced U.S. demand for 

petroleum products causes a decline in global petroleum prices produces no savings in economic 

resources globally or domestically, although it does reduce the value of the financial transfer 

from U.S. consumers of petroleum products to foreign suppliers of petroleum. Accordingly, 

NHTSA’s analysis of the benefits from adopting proposed CAFE standards for MY 2017–2025 

cars and light trucks excludes the reduced value of monopsony payments by U.S. oil consumers 

that would result from lower fuel consumption. 

The second component of external costs imposed by U.S. petroleum consumption and 

imports reflects the potential costs to the U.S. economy from disruptions in the supply of 

imported petroleum. These costs arise because interruptions in the supply of petroleum products 

reduces U.S. economic output, as well as because firms are unable to adjust prices, output levels, 

and their use of energy, labor and other inputs smoothly and rapidly in response to the sudden 

changes in prices for petroleum products that are caused by interruptions in their supply. 

Reducing U.S. petroleum consumption and imports lowers these potential costs, and the amount 

by which it does so represents an economic benefit in addition to the savings in fuel costs that 

result from higher fuel economy. NHTSA estimates and includes this value in its analysis of the 

economic benefits from adopting higher CAFE standards for MY 2017–2025 cars and light 

trucks. 

The third component of external costs imposed by U.S. petroleum consumption and 

imports includes expenses for maintaining a U.S. military presence to secure imported oil 

supplies from unstable regions, and for maintaining the strategic petroleum reserve (SPR) to 

cushion against resulting price increases. NHTSA recognizes that potential national and energy 

security risks exist due to the possibility of tension over oil supplies. Much of the world’s oil 

and gas supplies are located in countries facing social, economic, and demographic challenges, 

thus making them even more vulnerable to potential local instability. Because of U.S. 

dependence on oil, the military could be called on to protect energy resources through such 

measures as securing shipping lanes from foreign oil fields. Thus, to the degree to which the 

proposed rules reduce reliance upon imported energy supplies or promotes the development of 

technologies that can be deployed by either consumers or the nation’s defense forces, the United 

States could expect benefits related to national security, reduced energy costs, and increased 

energy supply. Although NHTSA recognizes that there clearly is a benefit to the United States 

from reducing dependence on foreign oil, we have been unable to calculate the monetary benefit 

that the United States will receive from the improvements in national security expected to result 

from this program. We have therefore included only the macroeconomic disruption portion of 

the energy security benefits to estimate the monetary value of the total energy security benefits 

of this program. We have calculated energy security in very specific terms, as the reduction of 

 655 The reduction in payments from U.S. oil purchasers to domestic petroleum producers is not included as a benefit, 

since it represents a transfer that occurs entirely within the U.S. economy.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

613 

both financial and strategic risks caused by potential sudden disruptions in the supply of 

imported petroleum to the U.S. Reducing the amount of oil imported reduces those risks, and 

thus increases the nation’s energy security. 

Similarly, while the costs for building and maintaining the SPR are more clearly 

attributable to U.S. petroleum consumption and imports, these costs have not varied historically 

in response to changes in U.S. oil import levels. Thus the agency has not attempted to estimate 

the potential reduction in the cost for maintaining the SPR that might result from lower U.S. 

petroleum imports, or to include an estimate of this value among the benefits of reducing 

petroleum consumption through higher CAFE standards. 

In analyzing benefits from its recent actions to increase light truck CAFE standards for 

model years 2005–07 and 2008–11, NHTSA relied on a 1997 study by Oak Ridge National 

Laboratory (ORNL) to estimate the value of reduced economic externalities from petroleum 

consumption and imports.656 More recently, ORNL updated its estimates of the value of these 

externalities, using the analytic framework developed in its original 1997 study in conjunction 

with recent estimates of the variables and parameters that determine their value.657 The updated 

ORNL study was subjected to a detailed peer review commissioned by EPA, and ORNL’s 

estimates of the value of oil import externalities were subsequently revised to reflect their 

comments and recommendations of the peer reviewers.658 Finally, at the request of 

EPA, ORNL has repeatedly revised its estimates of external costs from U.S. oil imports 

to reflect changes in the outlook for world petroleum prices, as well as continuing changes in the 

structure and characteristics of global petroleum supply and demand. 

 

As the preceding discussion indicates, NHTSA’s analysis of benefits from adopting 

higher CAFE standards includes only the reduction in economic disruption costs that is 

anticipated to result from reduced consumption of petroleum-based fuels and the associated 

decline in U.S. petroleum imports. ORNL’s updated analysis reports that this benefit, which is 

in addition to the savings in costs for producing fuel itself, is most likely to amount to $0.185 per 

gallon of fuel saved by requiring MY 2017-25 cars and light trucks to achieve higher fuel 

economy. However, considerable uncertainty surrounds this estimate, and ORNL’s updated 

analysis also indicates that a range of values extending from a low of $0.091 per gallon to a high 

of $0.293 per gallon should be used to reflect this uncertainty. 

l. Air Pollutant Emissions 

 656 Leiby, Paul N., Donald W. Jones, T. Randall Curlee, and Russell Lee, Oil Imports: An Assessment of Benefits 

and Costs, ORNL–6851, Oak Ridge National Laboratory, November 1, 1997. Available at 

http://www.esd.ornl.gov/eess/energy_analysis/files/ORNL6851.pdf (last accessed October 11, 2011). 657 Leiby, Paul N. “Estimating the Energy Security Benefits of Reduced U.S. Oil Imports,” Oak Ridge National 

Laboratory, ORNL/TM–2007/028, Revised July 23, 2007. Available at 

http://www.esd.ornl.gov/eess/energy_analysis/files/Leiby2007%20Estimating%20the%20Energy%20Security%20B

enefits%20of%20Reduced%20U.S.%20Oil%20Imports%20ornl-tm-2007-028%20rev2007Jul25.pdf (last accessed 

October 11, 2011).

658Peer Review Report Summary: Estimating the Energy Security Benefits of Reduced U.S. Oil Imports, ICF, Inc., 

September 2007. Available at Docket No. NHTSA–2009–0059–0160. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

614 

i. Changes in Criteria Air Pollutant Emissions 

Criteria air pollutants include carbon monoxide (CO), hydrocarbon compounds (usually 

referred to as “volatile organic compounds,” or VOC), nitrogen oxides (NOX), fine particulate 

matter (PM2.5), and sulfur oxides (SOX). These pollutants are emitted during vehicle storage and 

use, as well as throughout the fuel production and distribution system. While reductions in 

domestic fuel refining, storage, and distribution that result from lower fuel consumption will 

reduce emissions of these pollutants, additional vehicle use associated with the fuel economy 

rebound effect will increase their emissions. The net effect of stricter CAFE standards on total 

emissions of each criteria pollutant depends on the relative magnitudes of reductions in its 

emissions during fuel refining and distribution, and increases in its emissions resulting from 

additional vehicle use. Because the relationship between emissions in fuel refining and vehicle 

use is different for each criteria pollutant, the net effect of fuel savings from the proposed 

standards on total emissions of each pollutant is likely to differ. 

With the exception of SO2, NHTSA calculated annual emissions of each criteria pollutant 

resulting from vehicle use by multiplying its estimates of car and light truck use during each year 

over their expected lifetimes by per-mile emission rates for each vehicle class, fuel type, model 

year, and age. These emission rates were developed by U.S. EPA using its Motor Vehicle 

Emission Simulator (MOVES 2010a).659 Emission rates for SO2 were calculated by NHTSA 

using average fuel sulfur content estimates supplied by EPA, together with the assumption that 

the entire sulfur content of fuel is emitted in the form of SO2.

660 Total SO2 emissions under each 

alternative CAFE standard were calculated by applying the resulting emission rates directly to 

estimated annual gasoline and diesel fuel use by cars and light trucks. 

Changes in emissions of criteria air pollutants resulting from alternative increases in 

CAFE standards for MY 2017–2025 cars and light trucks are calculated from the differences 

between emissions under each alternative increase in CAFE standards, and emissions under the 

baseline alternative. 

Emissions of criteria air pollutants also occur during each phase of fuel production and 

distribution, including crude oil extraction and transportation, fuel refining, and fuel storage and 

transportation. NHTSA estimates the reductions in criteria pollutant emissions from producing 

and distributing fuel that would occur under alternative CAFE standards using emission rates 

obtained by EPA from Argonne National Laboratories’ Greenhouse Gases and Regulated 

Emissions in Transportation (GREET) model, which provides estimates of air pollutant 

emissions that occur in different phases of fuel production and distribution 661, 662 EPA modified 

 659 The MOVES model assumes that the per-mile rates at which these pollutants are emitted are determined by EPA 

regulations and the effectiveness of catalytic after-treatment of engine exhaust emissions, and are thus unaffected by 

changes in car and light truck fuel economy.

660 These are 30 and 15 parts per million (ppm, measured on a mass basis) for gasoline and diesel respectively, 

which produces emission rates of 0.17 grams of SO2 per gallon of gasoline and 0.10 grams per gallon of diesel. 661 Argonne National Laboratories, The Greenhouse Gas and Regulated Emissions from Transportation (GREET) 

Model, Version 1.8, June 2007, available at 

http://www.transportation.anl.gov/modeling_simulation/GREET/index.html (last accessed October 11, 2011).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

615 

the GREET model to change certain assumptions about emissions during crude petroleum 

extraction and transportation, as well as to update its emission rates to reflect adopted and 

pending EPA emission standards. 

The resulting emission rates were applied to the agency’s estimates of fuel consumption 

under alternative CAFE standards to develop estimates of total emissions of each criteria 

pollutant during fuel production and distribution. The agency then employed the estimates of the 

effects of changes in fuel consumption on domestic and imported sources of fuel supply 

discussed previously to calculate the effects of reductions in fuel use on changes in imports of 

refined fuel and domestic refining. NHTSA’s analysis assumes that reductions in imports of 

refined fuel would reduce criteria pollutant emissions during fuel storage and distribution only. 

Reductions in domestic fuel refining using imported crude oil as a feedstock are assumed to 

reduce emissions during fuel refining, storage, and distribution. Finally, reduced domestic fuel 

refining using domestically-produced crude oil is assumed to reduce emissions during all four 

phases of fuel production and distribution.663 

Finally, NHTSA calculated the net changes in domestic emissions of each criteria 

pollutant by summing the increases in emissions projected to result from increased vehicle use, 

and the reductions anticipated to result from lower domestic fuel refining and distribution.664 As 

indicated previously, the effect of adopting higher CAFE standards on total emissions of each 

criteria pollutant depends on the relative magnitudes of the resulting reduction in emissions from 

fuel refining and distribution, and the increase in emissions from additional vehicle use. 

Although these net changes vary significantly among individual criteria pollutants, the agency 

projects that on balance, adopting higher CAFE standards for MY 2017-25 cars and light trucks 

would reduce emissions of all criteria air pollutants except carbon monoxide (CO). 

The net changes in direct emissions of fine particulates (PM2.5) and other criteria 

pollutants that contribute to the formation of “secondary” fine particulates in the atmosphere 

(such as NOX, SOX, and VOCs) are converted to economic values using estimates of the 

reductions in health damage costs per ton of emissions of each pollutant that is avoided, which 

were developed by EPA. These savings represent the estimated reductions in the value of 

damages to human health resulting from lower atmospheric concentrations and population 

exposure to air pollution that occur when emissions of each pollutant that contributes to 

 662 Emissions that occur during vehicle refueling at retail gasoline stations (primarily evaporative emissions of 

volatile organic compounds, or VOCs) are already accounted for in the “tailpipe” emission factors used to estimate 

the emissions generated by increased light truck use. GREET estimates emissions in each phase of gasoline 

production and distribution in mass per unit of gasoline energy content; these factors are then converted to mass per 

gallon of gasoline using the average energy content of gasoline. 

663 In effect, this assumes that the distances crude oil travels to U.S. refineries are approximately the same regardless 

of whether it travels from domestic oilfields or import terminals, and that the distances that gasoline travels from 

refineries to retail stations are approximately the same as those from import terminals to gasoline stations. We note 

that while assuming that all changes in upstream emissions result from a decrease in petroleum production and 

transport, our analysis of downstream criteria pollutant impacts assumes no change in the composition of the 

gasoline fuel supply.

664 All emissions from increased vehicle use are assumed to occur within the U.S., since CAFE standards would 

apply only to vehicles produced for sale in the U.S.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

616 

atmospheric PM2.5 concentrations are reduced. The value of reductions in the risk of premature 

death due to exposure to fine particulate pollution (PM2.5) account for a majority of EPA’s 

estimated values of reducing criteria pollutant emissions, although the value of avoiding other 

health impacts is also included in these estimates. 

These values do not include a number of unquantified benefits, such as reduction in the 

welfare and environmental impacts of PM2.5 pollution, or reductions in health and welfare 

impacts related to other criteria air pollutants (ozone, NO2, and SO2) and air toxics. EPA 

estimates different per-ton values for reducing emissions of PM and other criteria pollutants from 

vehicle use than for reductions in emissions of those same pollutants during fuel production and 

distribution.665 NHTSA applies these separate values to its estimates of changes in emissions 

from vehicle use and from fuel production and distribution to determine the net change in total 

economic damages from emissions of these pollutants. 

EPA projects that the per-ton values for reducing emissions of criteria pollutants from 

both mobile sources (including motor vehicles) and stationary sources such as fuel refineries and 

storage facilities will increase over time. These projected increases reflect rising income levels, 

which are assumed to increase affected individuals’ willingness to pay for reduced exposure to 

health threats from air pollution, as well as future population growth, which increases population 

exposure to future levels of air pollution. 

ii. Reductions in CO2 Emissions 

Emissions of carbon dioxide and other greenhouse gases (GHGs) occur throughout the 

process of producing and distributing transportation fuels, as well as from fuel combustion itself. 

Emissions of GHGs also occur in generating electricity, which NHTSA’s analysis anticipates 

will account for an increasing share of energy consumption by cars and light trucks produced in 

the model years that would be subject to their proposed rules. By reducing the volume of fuel 

consumed by passenger cars and light trucks, higher CAFE standards will reduce GHG 

emissions generated by fuel use, as well as throughout the fuel supply system. Lowering these 

emissions is likely to slow the projected pace and reduce the ultimate extent of future changes in 

the global climate, thus reducing future economic damages that changes in the global climate are 

expected to cause. By reducing the probability that climate changes with potentially catastrophic 

economic or environmental impacts will occur, lowering GHG emissions may also result in 

economic benefits that exceed the resulting reduction in the expected future economic costs 

caused by more gradual changes in the earth’s climatic systems. 

Quantifying and monetizing benefits from reducing GHG emissions is thus an important 

step in estimating the total economic benefits likely to result from establishing higher CAFE 

standards. Because carbon dioxide emissions account for nearly 95 percent of total GHG 

emissions that result from fuel combustion during vehicle use, NHTSA’s analysis of the effect of 

higher CAFE standards on GHG emissions focuses mainly on estimating changes in emissions of 

CO2. The agency estimates emissions of CO2 from passenger car and light truck use by 

 665 These reflect differences in the typical geographic distributions of emissions of each pollutant, their contributions 

to ambient PM2.5 concentrations, pollution levels (predominantly those of PM2.5), and resulting changes in 

population exposure.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

617 

multiplying the number of gallons of each type of fuel (gasoline and diesel) they are projected to 

consume under alternative CAFE standards by the quantity or mass of CO2 emissions released 

per gallon of fuel consumed. This calculation assumes that the entire carbon content of each fuel 

is converted to CO2 emissions during the combustion process. 

NHTSA estimates emissions of CO2 that occur during fuel production and distribution 

using emission rates for each stage of this process (feedstock production and transportation, fuel 

refining and fuel storage and distribution) derived from Argonne National Laboratories’ 

Greenhouse Gases and Regulated Emissions in Transportation (GREET) model. For liquid fuels, 

NHTSA converts these rates to a per-gallon basis using the energy content of each fuel, and 

multiplies them by the number of gallons of each type of fuel produced and consumed under 

alternative standards to estimate total CO2 emissions from fuel production and distribution. 

GREET supplies emission rates for electricity generation that are expressed as grams of CO2 per 

unit of energy, so these rates are simply multiplied by the estimates of electrical energy used to 

charge the on-board storage batteries of plug-in hybrid and battery electric vehicles. As with all 

other effects of alternative CAFE standards, the reduction in CO2 emissions resulting from each 

alternative increase in standards is measured by the difference in total emissions from producing 

and consuming fuel energy used by MY 2017-25 cars and light trucks with those higher CAFE 

standards in effect, and total CO2 emissions from supplying and using fuel energy consumed 

under the baseline alternative. Unlike criteria pollutants, the agency’s estimates of CO2

emissions include those occurring in domestic fuel production and consumption, as well as in 

overseas production of petroleum and refined fuel for export to the U.S. Overseas emissions are 

included because GHG emissions throughout the world contribute equally to the potential for 

changes in the global climate. 

 

iii. Economic Value of Reductions in CO2 Emissions 

NHTSA takes the economic benefits from reducing CO2 emissions into account in 

developing and analyzing the alternative CAFE standards it has considered for MY 2017-25. 

Because research on the impacts of climate change does not produce direct estimates of the 

economic benefits from reducing CO2 or other GHG emissions, these benefits are assumed to be 

the “mirror image” of the estimated incremental costs resulting from increases in emissions. 

Thus the benefits from reducing CO2 emissions are usually measured by the savings in estimated 

economic damages that an equivalent increase in emissions would otherwise have caused. The 

agency does not include estimates of the economic benefits from reducing GHGs other than CO2

in its analysis of alternative CAFE standards. 

NHTSA estimates the value of the reductions in emissions of CO2 resulting from 

adopting alternative CAFE standards using a measure referred to as the “social cost of carbon,” 

abbreviated SCC. The SCC is intended to provide a monetary measure of the additional 

economic impacts likely to result from changes in the global climate that would result from an 

incremental increase in CO2 emissions. These potential effects include changes in agricultural 

productivity, the economic damages caused by adverse effects on human health, property losses 

and damages resulting from rising sea levels, and the value of ecosystem services. The SCC is 

expressed in constant dollars per additional metric ton of CO2 emissions occurring during a 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

618 

specific year, and is higher for more distant future years because the damages caused by an 

additional ton of emissions increase with larger concentrations of CO2 in the earth’s atmosphere. 

 Reductions in CO2 emissions that are projected to result from lower fuel production and 

consumption during each year over the lifetimes of MY 2017-25 cars and light trucks are 

multiplied by the estimated SCC appropriate for that year to determine the economic benefit 

from reducing emissions during that year. The net present value of these annual benefits is 

calculated using a discount rate that is consistent with that used to develop the estimate of each 

SCC estimate. This calculation is repeated for the reductions in CO2 emissions projected to 

result from each alternative increase in CAFE standards. 

NHTSA’s evaluates the economic benefits from reducing CO2 emissions using estimates 

of the SCC developed by an interagency working group convened for the specific purpose of 

developing new estimates for use by U.S. Federal agencies in regulatory evaluations. The 

group’s purpose in developing new estimates of the SCC was to allow Federal agencies to 

incorporate the social benefits of reducing CO2 emissions into cost-benefit analyses of regulatory 

actions that have relatively modest impacts on cumulative global emissions, as most Federal 

regulatory actions can be expected to have. NHTSA previously relied on the SCC estimates 

developed by this interagency group to analyze the alternative CAFE standards it considered for 

MY 2012-16 cars and light trucks, as well as the fuel efficiency standards it adopted for MY 

014-18 heavy-duty vehicles. 

The interagency group convened on a regular basis over the period from June 2009 

through February 2010, to explore technical literature in relevant fields and develop key inputs 

and assumptions necessary to generate estimates of the SCC. Agencies participating in the 

interagency process included the Environmental Protection Agency and the Departments of 

Agriculture, Commerce, Energy, Transportation, and Treasury. This process was convened by 

the Council of Economic Advisers and the Office of Management and Budget, with active 

participation and regular input from the Council on Environmental Quality, National Economic 

Council, Office of Energy and Climate Change, and Office of Science and Technology Policy. 

The interagency group’s main objective was to develop a range of SCC values using 

clearly articulated input assumptions grounded in the existing scientific and economic literatures, 

in conjunction with a range of models that employ different representations of climate change 

and its economic impacts. The group clearly acknowledged the many uncertainties that its 

process identified, and recommended that its estimates of the SCC should be updated 

periodically to incorporate developing knowledge of the science and economics of climate 

impacts. Specifically, it set a preliminary goal to revisit the SCC values within two years, or as 

substantial improvements in understanding of the science and economics of climate impacts and 

updated models for estimating and valuing these impacts become available. The group ultimately 

selected four SCC values for use in federal regulatory analyses. Three values were based on the 

average of SCC estimates developed using three different climate economic models (referred to 

as integrated assessment models), using discount rates of 2.5, 3, and 5 percent. The fourth value, 

which represents the 95th percentile SCC estimate from the combined distribution of values 

generated by the three models at a 3 percent discount rate, represents the possibility of possibility 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

619 

of higher-than-expected impacts from the accumulation of GHGs in the earth’s atmosphere, and 

the consequently larger economic damages. 

Table IV.C.3–2 summarizes the interagency group’s estimates of the SCC during various 

future years, which the agency has updated to 2009 dollars to correspond to the other values it 

uses to estimate economic benefits from the alternative CAFE standards considered in this 

NPRM.666 

TABLE IV.C.3-2. SOCIAL COST OF CO2 EMISSIONS FOR SELECTED FUTURE YEARS (2009$

PER METRIC TON) 

Discount Rate 5% 3% 2.5% 3% 

Source Average of estimates 95th

 percentile 

estimate 

2012 $5.28 $23.06 $37.53 $70.14

2015 $5.93 $24. 58 $39.57 $74.03

2020 $7.01 $27.10 $42.98 $83.17

2025 $8. 53 $30.43 $47.28 $93.11

2030 $10.05 $33.75 $51.58 $103.06

2035 $11.57 $37.08 $55.88 $113.00

2040 $13.09 $40.40 $60.19 $122.95

2045 $14.63 $43. 34 $63.59 $131.66

2050 $16.18 $46.27 $66.99 $140.37

As Table IV.C.3–2 shows, the four SCC estimates selected by the interagency group for 

use in regulatory analyses are $5, $23, $38, and $70 per metric ton (in 2009 dollars) for 

emissions occurring in the year 2012. The value that the interagency group centered its attention 

on is the average SCC estimate developed using different models and a 3 percent discount rate, 

or $23 per metric ton in 2012. To capture the uncertainties involved in regulatory impact 

analysis, however, the group emphasized the importance of considering the full range of 

estimated SCC values. As the table also shows, the SCC estimates also rise over time; for 

example, the average SCC at the 3 percent discount rate increases to $27 per metric ton of CO2

by 2020 and reaches $46 per metric ton of CO2 in 2050. 

Details of the process used by the interagency group to develop its SCC estimates, 

complete results including year-by-year estimates of each of the four values, and a thorough 

discussion of their intended use and limitations is provided in the document Social Cost of 

Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working 

Group on Social Cost of Carbon, United States Government, February 2010.667

 666 The SCC estimates reported in the table assume that the damages resulting from increased emissions are constant 

for small departures from the baseline emissions forecast incorporated in each estimate, an approximation that is 

reasonable for policies with projected effects on CO2 emissions that are small relative to cumulative global 

emissions. 

667 This document is available in the docket for this rulemaking (NHTSA–2009–0059). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

620 

m. Discounting Future Benefits and Costs 

Discounting future fuel savings and other benefits accounts for the reduction in their 

value when they are deferred until some future date, rather than received immediately. The 

value of benefits that are not expected to occur until the future is lower partly because people 

value current consumption more highly than equivalent consumption at some future date – stated 

simply, they are impatient – and partly because they expect their living standards to be higher in 

the future, so additional consumption will improve their well-being by more today than it will in 

the future. The discount rate expresses the percent decline in the value of these benefits—as 

viewed from today’s perspective—for each year they are deferred into the future. In evaluating 

the benefits from alternative increases in CAFE standards for MY 2017–2025 passenger cars and 

light trucks, NHTSA primarily employs a discount rate of 3 percent per year, but in accordance 

with OMB guidance, also presents these benefit and cost estimates using a 7 percent discount 

rate. 

While it presents results that reflect both discount rates, NHTSA believes that the 3 

percent rate is more appropriate for discounting future benefits from increased CAFE standards, 

because the agency expects that most or all of vehicle manufacturers’ costs for complying with 

higher CAFE standards will ultimately be reflected in higher selling prices for their new vehicle 

models. By increasing sales prices for new cars and light trucks, CAFE regulations will thus 

primarily affect vehicle purchases and other private consumption decisions. Both economic 

theory and OMB guidance on discounting indicate that the future benefits and costs of 

regulations that mainly affect private consumption should be discounted at consumers’ rate of 

time preference.668

Current OMB guidance also indicates that savers appear to discount future consumption 

at an average real (that is, adjusted to remove the effect of inflation) rate of about 3 percent when 

they face little risk about the future. Since the real interest rate that savers require to persuade 

them to defer consumption into the future represents a reasonable estimate of consumers’ rate of 

time preference, NHTSA believes that the 3 percent rate is appropriate for discounting projected 

future benefits and costs resulting from higher CAFE standards. 

Because there is some uncertainty about whether vehicle manufacturers will completely 

recover their costs for complying with higher CAFE standards by increasing vehicle sales prices, 

however, NHTSA also presents benefit and cost estimates discounted using a higher rate. To the 

extent that manufacturers are unable to recover their costs for meeting higher CAFE standards by 

increasing new vehicle prices, these costs are likely to displace other investment opportunities 

available to them. OMB guidance indicates that the real economy-wide opportunity cost of 

capital is the appropriate discount rate to apply to future benefits and costs when the primary 

effect of a regulation is “...to displace or alter the use of capital in the private sector,” and OMB 

estimates that this rate currently averages about 7 percent.669 Thus the agency’s analysis of 

alternative increases in CAFE standards for MY 2017-25 cars and light trucks also reports 

benefits and costs discounted at a 7 percent rate. 

 668 Id. 669 Office of Management and Budget, Circular A–4, “Regulatory Analysis,” September 17, 2003, 33. Available at 

http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf (last accessed Sept. 26, 2011).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

621 

One important exception to the agency’s use of 3 percent and 7 percent discount rates is 

arises in discounting benefits from reducing CO2 emissions over the lifetimes of MY 2017–2025 

cars and light trucks to their present values. In order to ensure consistency in the derivation and 

use of the interagency group’s estimates of the unit values of reducing CO2 emissions (or SCC), 

the benefits from reducing CO2 emissions during each future year are discounted using the same 

“intergenerational” discount rates that were used to derive each of the alternative values. . As 

indicated in Table IV.C.3–4 above, these rates are 2.5 percent, 3 percent, and 5 percent 

depending on which estimate of the SCC is being employed.670

n. Accounting for Uncertainty in Benefits and Costs 

In analyzing the uncertainty surrounding its estimates of benefits and costs from 

alternative CAFE standards, NHTSA considers alternative estimates of those assumptions and 

parameters likely to have the largest effect. These include the projected costs of fuel economyimproving technologies and their anticipated effectiveness in reducing fuel consumption, 

forecasts of future fuel prices, the magnitude of the rebound effect, the reduction in external 

economic costs resulting from lower U.S. oil imports, and the discount rate applied to future 

benefits and costs. The range for each of these variables employed in the uncertainty analysis 

was previously identified in the sections of this notice discussing each variable. 

The uncertainty analysis was conducted by assuming either independent normal or beta 

probability distributions for each of these variables, using the low and high estimates for each 

variable as the values between which 90 percent of observed values are expected to fall. Each 

trial of the uncertainty analysis employed a set of values randomly drawn from these probability 

distributions, under the assumption that the value of each variable is independent from those of 

the others. In cases where the data on the possible distribution of parameters was relatively 

sparse, making a choice of distributions difficult, a beta distribution is commonly employed to 

give more weight to both tails than would be the case had a normal distribution been employed. 

Benefits and costs of each alternative standard were estimated using each combination of 

variables, and a total of nearly 40,000 trials were used to estimate the likely range of estimated 

benefits and costs for each alternative standard. 

o. Where can readers find more information about the economic 

assumptions? 

Much more detailed information is provided in Chapter VIII of the PRIA, and a 

discussion of how NHTSA and EPA jointly reviewed and updated economic assumptions for 

purposes of this final rule is available in Chapter 4 of the draft Joint TSD. In addition, all of 

NHTSA’s model input and output files are now public and available for the reader’s review and 

 670 The fact that the 3 percent discount rate used by the interagency group to derive its central estimate of the SCC is 

identical to the 3 percent short-term or “intra-generational” discount rate used by NHTSA to discount future benefits 

other than reductions in CO2 emissions is coincidental, and should not be interpreted as a required condition that 

must be satisfied in future rulemakings.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

622 

consideration. The economic input files can be found in the docket for this proposed rule, 

NHTSA–2011–[xxxx], and on NHTSA’s website.671

Finally, because much of NHTSA’s economic analysis for purposes of this final rule 

builds on the work that was done for the final rule establishing CAFE standards for MYs 2012-

16, we refer readers to that document as well. It contains valuable background information 

concerning how NHTSA’s assumptions regarding economic inputs for CAFE analysis have 

evolved over the past several rulemakings, both in response to comments and as a result of the 

agency’s growing experience with this type of analysis.672

4. How does NHTSA use the assumptions in its modeling analysis? 

In developing today’s proposed CAFE standards, NHTSA has made significant use of 

results produced by the CAFE Compliance and Effects Model (commonly referred to as “the 

CAFE Model” or “the Volpe model”), which DOT’s Volpe National Transportation Systems 

Center developed specifically to support NHTSA’s CAFE rulemakings. The model, which has 

been constructed specifically for the purpose of analyzing potential CAFE standards, integrates 

the following core capabilities: 

(1) Estimating how manufacturers could apply technologies in response to new 

fuel economy standards, 

(2) Estimating the costs that would be incurred in applying these technologies, 

(3) Estimating the physical effects resulting from the application of these 

technologies, such as changes in travel demand, fuel consumption, and emissions of 

carbon dioxide and criteria pollutants, and 

(4) Estimating the monetized societal benefits of these physical effects. 

An overview of the model follows below. Separate model documentation provides a 

detailed explanation of the functions the model performs, the calculations it performs in doing 

so, and how to install the model, construct inputs to the model, and interpret the model’s outputs. 

Documentation of the model, along with model installation files, source code, and sample inputs 

are available at NHTSA’s Web site. The model documentation is also available in the docket for 

today’s proposed rule, as are inputs for and outputs from analysis of today’s proposed CAFE 

standards. 

a. How does the model operate? 

As discussed above, the agency uses the Volpe model to estimate how manufacturers 

could attempt to comply with a given CAFE standard by adding technology to fleets that the 

agency anticipates they will produce in future model years. This exercise constitutes a 

simulation of manufacturers’ decisions regarding compliance with CAFE standards. 

This compliance simulation begins with the following inputs: (a) the baseline and 

reference market forecast discussed above in Section IV.C.1 and Chapter 1 of the TSD, (b) 

 671 See http://www.nhtsa.gov/fuel-economy 672 74 FR 14308–14358 (Mar. 30, 2009). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

623 

technology-related estimates discussed above in Section IV.C.2 and Chapter 3 of the TSD, (c) 

economic inputs discussed above in Section IV.C.3 and Chapter 4 of the TSD, and (d) inputs 

defining baseline and potential new CAFE standards. For each manufacturer, the model applies 

technologies in a sequence that follows a defined engineering logic (“decision trees” discussed in 

the MY 2011 final rule and in the model documentation) and a cost-minimizing strategy in order 

to identify a set of technologies the manufacturer could apply in response to new CAFE 

standards.673 The model applies technologies to each of the projected individual vehicles in a 

manufacturer’s fleet, considering the combined effect of regulatory and market incentives. 

Depending on how the model is exercised, it will apply technology until one of the following 

occurs: 

(1) The manufacturer’s fleet achieves compliance674 with the applicable standard, and 

continuing to add technology in the current model year would be attractive neither in 

terms of stand-alone (i.e., absent regulatory need) cost effectiveness nor in terms of 

facilitating compliance in future model years;675 

(2) The manufacturer “exhausts”676 available technologies; or 

(3) For manufacturers estimated to be willing to pay civil penalties, the 

manufacturer reaches the point at which doing so would be more cost-effective (from the 

manufacturer’s perspective) than adding further technology.677

 673 NHTSA does its best to remain scrupulously neutral in the application of technologies through the modeling 

analysis, to avoid picking technology “winners.” The technology application methodology has been reviewed by the 

agency over the course of several rulemakings, and commenters have been generally supportive of the agency’s 

approach. See, e.g., 74 FR 14238–14246 (Mar. 30, 2009). 674 The model has been modified to provide the ability—as an option—to account for credit mechanisms (i.e., carryforward, carry-back, transfers, and trades) when determining whether compliance has been achieved. For purposes 

of determining maximum feasible CAFE standards, NHTSA cannot consider these mechanisms, and exercises the 

CAFE model without enabling these options. 

675 In preparation for the MY2012-2016 rulemaking, the model was modified in order to apply additional technology 

in early model years if doing so will facilitate compliance in later model years. This is designed to simulate a 

manufacturer’s decision to plan for CAFE obligations several years in advance, which NHTSA believes better 

replicates manufacturers’ actual behavior as compared to the year-by-year evaluation which EPCA would otherwise 

require. 

676 In a given model year, the model makes additional technologies available to each vehicle model within several 

constraints, including (a) whether or not the technology is applicable to the vehicle model’s technology class, (b) 

whether the vehicle is undergoing a redesign or freshening in the given model year, (c) whether engineering aspects 

of the vehicle make the technology unavailable (e.g., secondary axle disconnect cannot be applied to two-wheel 

drive vehicles), and (d) whether technology application remains within “phase in caps” constraining the overall 

share of a manufacturer’s fleet to which the technology can be added in a given model year. Once enough 

technology is added to a given manufacturer’s fleet in a given model year that these constraints make further 

technology application unavailable, technologies are “exhausted” for that manufacturer in that model year. 677 This possibility was added to the model to account for the fact that under EPCA/EISA, manufacturers must pay 

fines if they do not achieve compliance with applicable CAFE standards. 49 U.S.C. 32912(b). NHTSA recognizes 

that some manufacturers will find it more cost-effective to pay fines than to achieve compliance, and believes that to 

assume these manufacturers would exhaust available technologies before paying fines would cause unrealistically 

high estimates of market penetration of expensive technologies such as diesel engines and strong hybrid electric 

vehicles, as well as correspondingly inflated estimates of both the costs and benefits of any potential CAFE 

standards. NHTSA thus includes the possibility of manufacturers choosing to pay fines in its modeling analysis in 

order to achieve what the agency believes is a more realistic simulation of manufacturer decision-making. Unlike 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

624 

As discussed below, the model has also been modified in order to—as an option—apply 

more technology than may be necessary to achieve compliance in a given model year, or to 

facilitate compliance in later model years. This ability to simulate “voluntary overcompliance” 

reflects the potential that manufacturers will apply some technologies to some vehicles if doing 

so would be sufficiently inexpensive compared to the expected reduction in owners’ outlays for 

fuel. 

The model accounts explicitly for each model year, applying most technologies when 

vehicles are scheduled to be redesigned or freshened, and carrying forward technologies between 

model years. The CAFE model accounts explicitly for each model year because EPCA requires 

that NHTSA make a year-by-year determination of the appropriate level of stringency and then 

set the standard at that level, while ensuring ratable increases in average fuel economy.678 The 

multiyear planning capability and (optional) simulation of “voluntary overcompliance” and 

EPCA credit mechanisms increase the model’s ability to simulate manufacturers’ real-world 

behavior, accounting for the fact that manufacturers will seek out compliance paths for several 

model years at a time, while accommodating the year-by-year requirement. 

The model also calculates the costs, effects, and benefits of technologies that it estimates 

could be added in response to a given CAFE standard.679 It calculates costs by applying the cost 

estimation techniques discussed above in Section IV.C.2, and by accounting for the number of 

affected vehicles. It accounts for effects such as changes in vehicle travel, changes in fuel 

consumption, and changes in greenhouse gas and criteria pollutant emissions. It does so by 

applying the fuel consumption estimation techniques also discussed in Section IV.C.2, and the 

vehicle survival and mileage accumulation forecasts, the rebound effect estimate and the fuel 

properties and emission factors discussed in Section IV.C.3. Considering changes in travel 

demand and fuel consumption, the model estimates the monetized value of accompanying 

benefits to society, as discussed in Section IV.C.3. The model calculates both the undiscounted 

and discounted value of benefits that accrue over time in the future. 

The Volpe model has other capabilities that facilitate the development of a CAFE 

standard. The integration of (a) compliance simulation and (b) the calculation of costs, effects, 

and benefits facilitates analysis of sensitivity of results to model inputs. The model can also be 

used to evaluate many (e.g., 200 per model year) potential levels of stringency sequentially, and 

 flex-fuel and other credits, NHTSA is not barred by statute from considering fine-payment in determining maximum 

feasible standards under EPCA/EISA. 49 U.S.C. 32902(h). 

678 49 U.S.C. 32902(a) states that at least 18 months before the beginning of each model year, the Secretary of 

Transportation shall prescribe by regulation average fuel economy standards for automobiles manufactured by a 

manufacturer in that model year, and that each standard shall be the maximum feasible average fuel economy level 

that the Secretary decides the manufacturers can achieve in that year. NHTSA has long interpreted this statutory 

language to require year-by-year assessment of manufacturer capabilities. 49 U.S.C. 32902(b)(2)(C) also requires 

that standards increase ratably between MY 2011 and MY 2020. 

679 As for all of its other rulemakings, NHTSA is required by Executive Order 12866 (as amended by Executive 

Order 13563) and DOT regulations to analyze the costs and benefits of CAFE standards. Executive Order 12866, 58 

FR 51735 (Oct. 4, 1993); DOT Order 2100.5, “Regulatory Policies and Procedures,” 1979, available at 

http://regs.dot.gov/rulemakingrequirements.htm (last accessed February 21, 2010). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

625 

identify the stringency at which specific criteria are met. For example, it can identify the 

stringency at which net benefits to society are maximized, the stringency at which a specified 

total cost is reached, or the stringency at which a given average required fuel economy level is 

attained. This allows the agency to compare more easily the impacts in terms of fuel savings, 

emissions reductions, and costs and benefits of achieving different levels of stringency according 

to different criteria. The model can also be used to perform uncertainty analysis (i.e., Monte 

Carlo simulation), in which input estimates are varied randomly according to specified 

probability distributions, such that the uncertainty of key measures (e.g., fuel consumption, costs, 

benefits) can be evaluated. 

b. Has NHTSA considered other models? 

As discussed in the most recent CAFE rulemaking, while nothing in EPCA requires 

NHTSA to use the Volpe model, and in principle, NHTSA could perform all of these tasks 

through other means, the model’s capabilities have greatly increased the agency’s ability to 

rapidly, systematically, and reproducibly conduct key analyses relevant to the formulation and 

evaluation of new CAFE standards.680

NHTSA notes that the Volpe model not only has been formally peer-reviewed and tested 

and reviewed through three rulemakings, but also has some features especially important for the 

analysis of CAFE standards under EPCA/EISA. Among these are the ability to perform year-byyear analysis, and the ability to account for engineering differences between specific vehicle 

models. 

EPCA requires that NHTSA set CAFE standards for each model year at the level that 

would be “maximum feasible” for that year.681 Doing so requires the ability to analyze each 

model year and, when developing regulations covering multiple model years, to account for the 

interdependency of model years in terms of the appropriate levels of stringency for each one. 

Also, as part of the evaluation of the economic practicability of the standards, as required by 

EPCA, NHTSA has traditionally assessed the annual costs and benefits of the standards. In 

response to comments regarding an early version of the CAFE model, DOT modified the CAFE 

model in order to account for dependencies between model years and to better represent 

manufacturers’ planning cycles, in a way that still allowed NHTSA to comply with the statutory 

requirement to determine the appropriate level of the standards for each model year. 

 

The Volpe model is also able to account for important engineering differences between 

specific vehicle models, and to thereby reduce the risk of applying technologies that may be 

incompatible with or already present on a given vehicle model. By combining technologies 

incrementally and on a model-by-model basis, the CAFE model is able to account for important 

engineering differences between vehicle models and avoid unlikely technology combinations 

 

The Volpe model also produces a single vehicle-level output file that, for each vehicle 

model, shows which technologies were present at the outset of modeling, which technologies 

were superseded by other technologies, and which technologies were ultimately present at the 

 680 75 FR 25598-25599. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

626 

conclusion of modeling. For each vehicle, the same file shows resultant changes in vehicle 

weight, fuel economy, and cost. This provides for efficient identification, analysis, and 

correction of errors, a task with which the public can now assist the agency, since all inputs and 

outputs are public. 

Such considerations, as well as those related to the efficiency with which the Volpe 

model is able to analyze attribute-based CAFE standards and changes in vehicle classification, 

and to perform higher-level analysis such as stringency estimation (to meet predetermined 

criteria), sensitivity analysis, and uncertainty analysis, lead the agency to conclude that the model 

remains the best available to the agency for the purposes of analyzing potential new CAFE 

standards. 

c. What changes has DOT made to the model? 

Between promulgation of the MY 2012-2016 CAFE standards and today’s proposal 

regarding MY 2017-2025 standards, the Volpe model has been revised to make some minor 

improvements, and to add some significant new capabilities: (1) accounting for electricity used 

to charge electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs), (2) accounting 

for use of ethanol blends in flexible-fuel vehicles (FFVs), (3) accounting for costs (i.e., “stranded 

capital”) related to early replacement of technologies, (4) accounting for previously-applied 

technology when determining the extent to which a manufacturer could expand use of the 

technology, (5) applying technology-specific estimates of changes in consumer value, (6) 

simulating the extent to which manufacturers might utilize EPCA’s provisions regarding 

generation and use of CAFE credits, (7) applying estimates of fuel economy adjustments (and 

accompanying costs) reflecting increases in air conditioner efficiency, (8) reporting privatelyvalued benefits, (9) simulating the extent to which manufacturers might voluntarily apply 

technology beyond levels needed for compliance with CAFE standards, and (10) estimating 

changes in highway fatalities attributable to any applied reductions in vehicle mass. These 

capabilities are described below, and in greater detail in the CAFE model documentation.682

To support evaluation of the effects electric vehicles (EVs) and plug-in hybrid vehicles 

(PHEVs) could have on energy consumption and associated costs and environmental effects, 

DOT has expanded the Volpe model to estimate the amount of electricity that would be required 

to charge these vehicles (accounting for the potential that PHEVs can also run on gasoline). The 

model calculates the cost of this electricity, as well as the accompanying upstream criteria 

pollutant and greenhouse gas emissions. 

 

Similar to this expansion to account for the potential the PHEVs can be refueled with 

gasoline or recharged with electricity, DOT has expanded the Volpe model to account for the 

potential that other flexible-fuel vehicles can be operated on multiple fuels. In particular, the 

model can account for ethanol FFVs consuming E85 or gasoline, and to report consumption of 

both fuels, as well as corresponding costs and upstream emissions. 

Among the concerns raised in the past regarding how technology costs are estimated has 

been one that stranded capital costs be considered. Capital becomes “stranded” when capital 

 682 [Add reference to model documentation.] 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

627 

equipment is retired or its use is discontinued before the equipment has been fully depreciated 

and the equipment still retains some value or usefulness. DOT has modified the CAFE model to, 

if specified for a given technology, when that technology is replaced by a newly applied 

technology, apply a stream of costs representing the stranded capital cost of the replaced 

technology. This cost is in addition to the cost for producing the newly applied technology in the 

first year of production. 

As documented in prior CAFE rulemakings, the CAFE model applies “phase-in caps” to 

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 personnel and financial resources), thereby ensuring that resource 

capacity is accounted for in the modeling process. This helps to ensure technological feasibility 

and economic practicability in determining the stringency of the standards. When the MY 2012-

2016 rulemaking analysis was completed, the model performed the relevant test by comparing a 

given phase-in cap to the amount (i.e., the share of the manufacturer’s fleet) to which the 

technology had been added by the model. DOT has since modified the CAFE model to take into 

account the extent to which a given manufacturer has already applied the technology (i.e., as 

reflected in the market forecast specified as a model inputs), and to apply the relevant test based 

on the total application of the technology. 

The CAFE model requires inputs defining the technology-specific cost and efficacy (i.e., 

percentage reduction of fuel consumption), and has, to date, effectively assumed that these input 

values reflect application of the technology in a manner that holds vehicle performance and 

utility constant. Considering that some technologies may, nonetheless, offer owners greater or 

lesser value (beyond that related to fuel outlays, which the model calculates internally based on 

vehicle fuel type and fuel economy), DOT has modified the CAFE model to accept and apply 

technology-specific estimates of any value gain realized or loss incurred by vehicle 

purchasers.683

For the MY 2012-2016 CAFE rulemaking analysis, DOT modified the CAFE model to 

accommodate specification and accounting for credits a manufacturer is assumed to earn by 

producing flexible fuel vehicles (FFVs). Although NHTSA cannot consider such credits when 

determining maximum feasible CAFE standards, the agency presented an analysis that included 

FFV credits, in order to communicate the extent to which use of such credits might cause actual 

costs, effects, and benefits to be lower than estimated in NHTSA’s formal analysis. As DOT 

explained at the time, it was unable to account for other EPCA credit mechanisms, because 

attempts to do so had been limited by complex interactions between those mechanisms and the 

multiyear planning aspects of the CAFE model. DOT has since modified the CAFE model to 

provide the ability to account for any or all of the following flexibilities provided by EPCA: 

FFV credits, credit carry-forward and carry-back (between model years), credit transfers 

(between passenger car and light truck fleets), and credit trades (between manufacturers). The 

model accounts for EPCA-specified limitations applicable to these flexibilities (e.g., limits on the 

amount of credit that can be transferred between passenger car and light truck fleets). These 

capabilities in the model provide a basis for more accurately estimating costs, effects, and 

 683 For example, a value gain could be specified for a technology expected to improve ride quality, and a value loss 

could be specified for a technology expected to reduce vehicle range. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

628 

benefits that may actually result from new CAFE standards. Insofar as some manufacturers 

actually do earn and use CAFE credits, this provides NHTSA with the ability to examine 

outcomes more realistically than EPCA allows for purposes of setting new CAFE standards. 

NHTSA is today proposing CAFE standards reflecting EPA’s proposal to change fuel 

economy calculation procedures such that a vehicle’s fuel consumption improvement will be 

accounted for if the vehicle has technologies that reduce the amount of energy needed to power 

the air conditioner. To facilitate analysis of these standards, DOT has modified the CAFE model 

to account for these adjustments, based on inputs specifying the average amount of improvement 

anticipated, and the estimated average cost to apply the underlying technology. 

Considering that past CAFE rulemakings indicate that most of the benefits of CAFE 

standards are realized by vehicle owners, DOT has modified the CAFE model to estimate not 

just social benefits, but also private benefits. The model accommodates separate discount rates 

for these two valuation methods (e.g., a 3% rate for social benefits with a 7% rate for private 

benefits). When calculating private benefits, the model includes changes in outlays for fuel taxes 

(which, as economic transfers, are excluded from social benefits) and excludes changes in 

economic externalities (e.g., monetized criteria pollutant and greenhouse gas emissions). 

Since 2003, the CAFE model (and its predecessors) have provided the ability to estimate 

the extent to which a manufacturer with a history of paying civil penalties allowed under EPCA 

might decide to add some fuel-saving technology, but not enough to comply with CAFE 

standards. In simulating this decision-making, the model considers the cost to add the 

technology, the calculated reduction in civil penalties, and the calculated present value (at the 

time of vehicle purchase) of the change in fuel outlays over a specified “payback period” (e.g., 5 

years). For a manufacturer assumed to be willing to pay civil penalties, the model stops adding 

technology once paying fines becomes more attractive than continuing to add technology, 

considering these three factors. As an extension of this simulation approach, DOT has modified 

the CAFE model to, if specified, simulate the potential that a manufacturer would add more 

technology than required for purposes of compliance with CAFE standards. When set to operate 

in this manner, the model will continue to apply technology to a manufacturer’s CAFEcompliant fleet until applying further technology will incur more in cost than it will yield in 

calculated fuel savings over a specified “payback period” that is set separately from the payback 

period applicable until compliance is achieved. In its analysis supporting MY 2012-2016 

standards adopted in 2010, NHTSA estimated the extent to which reductions in vehicle mass 

might lead to changes in the number of highway fatalities occurring over the useful life of the 

MY 2012-2016 fleet. NHTSA performed these calculations outside the CAFE model (using 

vehicle-specific mass reduction calculations from the model), based on agency analysis of 

relevant highway safety data. DOT has since modified the CAFE model to perform these 

calculations, using an analytical structure indicated by an update to the underlying safety 

analysis. The model also applies an input value indicating the economic value of a statistical 

life, and includes resultant benefits (or disbenefits) in the calculation of total social benefits. 

In comments on recent NHTSA rulemakings, some reviewers have suggested that the 

Volpe model should be modified to estimate the extent to which new CAFE standards would 

induce changes in the mix of vehicles in the new vehicle fleet. NHTSA agrees that a “market 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

629 

shift” model, also called a consumer vehicle choice model, could provide useful information 

regarding the possible effects of potential new CAFE standards. NHTSA has contracted with the 

Brookings Institution (which has subcontracted with researchers at U.C. Davis, U.C. Irvine) to 

develop a vehicle choice model estimated at the vehicle configuration level that can be 

implemented as part of DOT’s CAFE model. As discussed further in Section V of the PRIA, 

past efforts by DOT staff demonstrated that a vehicle could be added to the CAFE model, but did 

not yield credible coefficients specifying such a model. If a suitable and credibly calibrated 

vehicle choice model becomes available in time—whether through the Brookings-led research or 

from other sources, DOT may integrate a vehicle choice model into the CAFE model, and may 

also docket an impacts analysis following the NPRM (ideally during the designated comment 

period), to allow the public to see and comment on the difference in results with and without 

simulation of vehicle choice impacts. 

NHTSA anticipates this integration of a vehicle choice model would be structurally and 

operationally similar to the integration we implemented previously. As under the version applied 

in support of today’s announcement, the CAFE model would begin with an agency-estimated 

market forecast, estimate to what extent manufacturers might apply additional fuel-saving 

technology to each vehicle model in consideration of future fuel prices and baseline or 

alternative CAFE standards and fuel prices, and calculate resultant changes in the fuel economy 

(and possibly fuel type) and price of individual vehicle models. With an integrated market share 

model, the CAFE model would then estimate how the sales volumes of individual vehicle 

models would change in response to changes in fuel economy levels and prices throughout the 

light vehicle market, possibly taking into account interactions with the used vehicle 

market. Having done so, the model would replace the sales estimates in the original market 

forecast with those reflecting these model-estimated shifts, repeating the entire modeling cycle 

until converging on a stable solution. 

Based on past experience, we anticipate that this recursive simulation will be necessary to 

ensure consistency between sales volumes and modeled fuel economy standards, because 

achieved CAFE levels depend on sales mix and, under attribute-based CAFE standards, required 

CAFE levels also depend on sales mix. NHTSA anticipates, therefore, that application of a 

market share model would impact estimates of all of the following for a given schedule of CAFE 

standards: overall market volume, manufacturer market shares and product mix, required and 

achieved CAFE levels, technology application rates and corresponding incurred costs, fuel 

consumption, greenhouse gas and criteria pollutant emissions, changes in highway fatalities, and 

economic benefits. 

Past testing by DOT/NHTSA staff did not indicate major shifts in broad measures (e.g., 

in total costs or total benefits), but that testing emphasized shorter modeling periods (e.g., 1-5 

model years) and less stringent standards than reflected in today’s proposal. Especially without 

knowing the characteristics of a future vehicle choice model, it is difficult to anticipate the 

potential degree to which its inclusion would impact analytical outcomes. 

NHTSA invites comment on the above changes to the CAFE model. The agency’s 

consideration of any alternative approaches will be facilitated by specific recommendations 

regarding implementation within the model’s overall structure. NHTSA also invites comment 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

630 

regarding above-mentioned prospects for inclusion of a vehicle choice model. The agency’s 

consideration will be facilitated by specific information demonstrating that inclusion of such a 

model would lead to more realistic estimates of costs, effects, and benefits, or that inclusion of 

such a model would lead to less realistic estimates. 

d. Does the model set the standards? 

Since NHTSA began using the Volpe model in CAFE analysis, some commenters have 

interpreted the agency’s use of the model as the way by which the agency chooses the maximum 

feasible fuel economy standards. As the agency explained in its most recent CAFE rulemaking, 

this is incorrect.684 Although NHTSA currently uses the Volpe model as a tool to inform its 

consideration of potential CAFE standards, the Volpe model does not determine the CAFE 

standards that NHTSA proposes or promulgates as final regulations. The results it produces are 

completely dependent on inputs selected by NHTSA, based on the best available information and 

data available in the agency’s estimation at the time standards are set. Ultimately, NHTSA’s 

selection of appropriate CAFE standards is governed and guided by the statutory requirements of 

EPCA, as amended by EISA: NHTSA sets the standard at the maximum feasible average fuel 

economy level that it determines is achievable during a particular model year, considering 

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

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

e. How does NHTSA make the model available and transparent? 

Model documentation, which is publicly available in the rulemaking docket and on 

NHTSA’s website, explains how the model is installed, how the model inputs (all of which are 

available to the public)685 and outputs are structured, and how the model is used. The model can 

be used on any Windows-based personal computer with Microsoft Office 2003 or 2007 and the 

Microsoft .NET framework installed (the latter available without charge from Microsoft). The 

executable version of the model and the underlying source code are also available at NHTSA’s 

Web site. The input files used to conduct the core analysis documented in this final rule are 

available in the public docket. With the model and these input files, anyone is capable of 

independently running the model to repeat, evaluate, and/or modify the agency’s analysis. 

Because the model is available on NHTSA’s web site, the agency has no way of knowing 

how widely the model has been used. The agency is, however, aware that the model has been 

used by other federal agencies, vehicle manufacturers, private consultants, academic researchers, 

and foreign governments. Some of these individuals have found the model complex and 

challenging to use. Insofar as the model’s sole purpose is to help DOT staff efficiently analyze 

potential CAFE standards, DOT has not expended significant resources trying to make the model 

as “user friendly” as commercial software intended for wide use. However, DOT wishes to 

facilitate informed comment on the proposed standards, and encourages reviewers to contact the 

agency promptly if any difficulties using the model are encountered. 

 684 75 FR 25600. 685 We note, however, that files from any supplemental analysis conducted that relied in part on confidential 

manufacturer product plans cannot be made public, as prohibited under 49 CFR part 512. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

631 

NHTSA arranged for a formal peer review of an older version of the model, has 

responded to reviewers’ comments, and has considered and responded to model-related 

comments received over the course of four CAFE rulemakings. In the agency’s view, this steady 

and expanding outside review over the course of nearly a decade of model development has 

helped DOT to significantly strengthen the model’s capabilities and technical quality, and has 

greatly increased transparency, such that all model code is publicly available, and all model 

inputs and outputs are publicly available in a form that should allow reviewers to reproduce the 

agency’s analysis. NHTSA is currently preparing arrangements for a formal peer review of the 

current CAFE model. Depending on the schedule for that review, DOT will consider possible 

model revisions and, as feasible, attempt to make any appropriate revisions before performing 

analysis supporting final CAFE standards for MY 2017 and beyond. Depending on timing and 

resources, NHTSA may also docket an impacts analysis following the NPRM, to allow the 

public to see and comment on the difference in model results when revisions to the model are 

implemented. 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

a. Standard Setting 

EPCA, as amended by EISA, contains a number of provisions regarding how NHTSA 

must set CAFE standards. NHTSA must establish separate CAFE standards for passenger cars 

and light trucks686 for each model year,687 and each standard must be the maximum feasible that 

NHTSA believes the manufacturers can achieve in that model year.688 When determining the 

maximum feasible level achievable by the manufacturers, EPCA requires that the agency 

consider the four statutory factors of technological feasibility, economic practicability, the effect 

of other motor vehicle standards of the Government on fuel economy, and the need of the United 

States to conserve energy.689 In addition, the agency has the authority to and traditionally does 

consider other relevant factors, such as the effect of the CAFE standards on motor vehicle safety. 

The ultimate determination of what standards can be considered maximum feasible involves a 

weighing and balancing of these factors, and the balance may shift depending on the information 

before the agency about the expected circumstances in the model years covered by the 

rulemaking. Always in conducting that balancing, however, the implication of the “maximum 

feasible” requirement is that it calls for setting a standard that exceeds what might be the 

minimum requirement if the agency determines that the manufacturers can achieve a higher 

level, and that the agency’s decision support the overarching purpose of EPCA, energy 

conservation.690 

 686 49 U.S.C. 32902(b)(1). 687 49 U.S.C. 32902(a). 688 Id. 689 49 U.S.C. 32902(f). 690 Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1197 (9th Cir. 2008) (“Whatever method it uses, 

NHTSA cannot set fuel economy standards that are contrary to Congress’ purpose in enacting the EPCA – energy 

conservation.”). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

632 

Besides the requirement that standards be maximum feasible for the fleet in question, 

EPCA/EISA also contains several other requirements. The standards must be attribute-based and 

expressed in the form of a mathematical function – NHTSA has thus far based standards on 

vehicle footprint, and for this rulemaking has expressed them in the form of a constrained linear 

function that generally sets higher (more stringent) mpg targets for smaller-footprint vehicles and 

lower (less stringent) mpg targets for larger-footprint vehicles. Second, the standards are subject 

to a minimum requirement regarding stringency: they must be set at levels high enough to 

ensure that the combined U.S. passenger car and light truck fleet achieves an average fuel 

economy level of not less than 35 mpg not later than MY 2020.691 Third, between MY 2011 and 

MY 2020, the standards must “increase ratably” in each model year.692 This requirement does 

not have a precise mathematical meaning, particularly because it must be interpreted in 

conjunction with the requirement to set the standards for each model year at the level determined 

to be the maximum feasible level for that model year. Generally speaking, the requirement for 

ratable increases means that the annual increases should not be disproportionately large or small 

in relation to each other. The second and third requirements no longer apply after MY 2020, at 

which point standards must simply be maximum feasible. And fourth, EISA requires NHTSA to 

issue CAFE standards for “at least 1, but not more than 5, model years.”693 This issue is 

discussed in section IV.B. above. 

The following sections discuss the statutory factors behind “maximum feasible” in more 

detail. 

i. Statutory Factors Considered in Determining the 

Achievable Level of Average Fuel Economy 

As none of the four factors is defined in EPCA and each remains interpreted only to a 

limited degree by case law, NHTSA has considerable latitude in interpreting them. NHTSA 

interprets the four statutory factors as set forth below. 

(1) Technological Feasibility 

“Technological feasibility” refers to whether a particular technology for improving fuel 

economy is available or can become available for commercial application in the model year for 

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

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

rulemaking. It can, instead, set technology-forcing standards, i.e., ones that make it necessary 

for manufacturers to engage in research and development in order to bring a new technology to 

market. There are certain technologies that the agency has considered for this rulemaking, for 

example, that we know to be in the research phase now but which we are fairly confident can be 

commercially applied by the rulemaking timeframe, and very confident by the end of the 

rulemaking timeframe. It is important to remember, however, that while the technological 

feasibility factor may encourage the agency to look toward more technology-forcing standards, 

and while this could certainly be appropriate given EPCA’s overarching purpose of energy 

 691 49 U.S.C. 32902(b)(2)(A). 692 49 U.S.C. 32902(b)(2)(C). 693 49 U.S.C. 32902(b)(3)(B). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

633 

conservation depending on the rulemaking, that factor must also be balanced with the other of 

the four statutory factors. Thus, while “technological feasibility” can drive standards higher by 

assuming the use of technologies that are not yet commercial, “maximum feasible” is still also 

defined in terms of economic practicability, for example, which might caution the agency against 

basing standards (even fairly distant future standards) entirely on such technologies. By setting 

standards at levels consistent with an analysis that assumes the use of these nascent technologies 

at levels that seem reasonable, the agency believes a more reasonable balance is ensured. 

Nevertheless, as the “maximum feasible” balancing may vary depending on the circumstances at 

hand for the model years in which the standards are set, the extent to which technological 

feasibility is simply met or plays a more dynamic role may also shift. 

(2) Economic Practicability 

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

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

such as a significant loss of jobs or the unreasonable elimination of consumer choice.”694 The 

agency has explained in the past that this factor can be especially important during rulemakings 

in which the automobile industry is facing significantly adverse economic conditions (with 

corresponding risks to jobs). Consumer acceptability is also an element of economic 

practicability, one which is particularly difficult to gauge during times of uncertain fuel prices.695 

In a rulemaking such as the present one, looking out into the more distant future, economic 

practicability is a way to consider the uncertainty surrounding future market conditions and 

consumer demand for fuel economy in addition to other vehicle attributes. In an attempt to 

ensure the economic practicability of attribute-based standards, NHTSA considers a variety of 

factors, including the annual rate at which manufacturers can increase the percentage of their 

fleet that employ a particular type of fuel-saving technology, the specific fleet mixes of different 

manufacturers, and assumptions about the cost of the standards to consumers and consumers’ 

valuation of fuel economy, among other things. 

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

considerable challenges to any individual manufacturer. The Conference Report for EPCA, as 

enacted in 1975, makes clear, and the case law affirms, “(A) determination of maximum feasible 

average fuel economy should not be keyed to the single manufacturer which might have the most 

difficulty achieving a given level of average fuel economy.”696 Instead, the agency is compelled 

“to weigh the benefits to the nation of a higher fuel economy standard against the difficulties of 

individual automobile manufacturers.”697 The law permits CAFE standards exceeding the 

projected capability of any particular manufacturer as long as the standard is economically 

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

difficulties for one manufacturer, it may also present opportunities for another. NHTSA has long 

held that the CAFE program is not necessarily intended to maintain the competitive positioning 

 694 67 FR 77015, 77021 (Dec. 16, 2002). 695 See, e.g., Center for Auto Safety v. NHTSA (CAS), 793 F.2d 1322 (D.C. Cir. 1986) (Administrator’s consideration 

of market demand as component of economic practicability found to be reasonable); Public Citizen v. NHTSA, 848 

F.2d 256 (Congress established broad guidelines in the fuel economy statute; agency’s decision to set lower standard 

was a reasonable accommodation of conflicting policies). 

696 CEI–I, 793 F.2d 1322, 1352 (DC Cir. 1986). 697 Id. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

634 

of each particular company. Rather, it is intended to enhance the fuel economy of the vehicle 

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

the overall United States economy. 

Consequently, “economic practicability” must be considered in the context of the 

competing concerns associated with different levels of standards. Prior to the MY 2005–2007 

rulemaking, the agency generally sought to ensure the economic practicability of standards in 

part by setting them at or near the capability of the “least capable manufacturer” with a 

significant share of the market, i.e., typically the manufacturer whose vehicles are, on average, 

the heaviest and largest. In the first several rulemakings establishing attribute-based standards, 

the agency applied marginal cost benefit analysis. This ensured that the agency’s application of 

technologies was limited to those that would pay for themselves and thus should have significant 

appeal to consumers. We note that for this rulemaking, the agency can and has limited its 

application of technologies to those that are projected to be cost-effective within the rulemaking 

time frame, with or without the use of such analysis. 

Whether the standards maximize net benefits has thus been a touchstone, albeit a 

controversial one, in the past for NHTSA’s consideration of economic practicability. Executive 

Order 12866, as amended by Executive Order 13563, states that agencies should “select, in 

choosing among alternative regulatory approaches, those approaches that maximize net 

benefits...,” but NHTSA does not interpret this guideline as mandating that the agency choose 

standards that maximize net benefits, according to our analysis, if the agency determines that the 

maximum feasible balancing for a particular rulemaking points to another level.698 Moreover, 

while the agency’s consideration of economic practicability has previously been informed by 

marginal cost benefit analysis, the fact that standards are cost-beneficial is not the only 

consideration for economic practicability. Expected availability of capital to make investments 

in new technologies matters; manufacturers’ expected ability to sell vehicles with new 

technologies matters; and so forth. Economic practicability is a complex factor, and like the 

other factors must also be considered in the context of the overall balancing and EPCA’s 

overarching purpose of energy conservation. Depending on the conditions of the industry and 

the assumptions used in the agency’s analysis of alternative stringencies, NHTSA could well find 

that standards that maximize net benefits, or that are higher or lower, could be economically 

practicable, and thus maximum feasible. 

(3) The Effect of Other Motor Vehicle Standards of 

the Government on Fuel Economy 

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

involves an analysis of the effects of compliance with emission, safety, noise, or damageability 

standards on fuel economy capability and thus on average fuel economy. In previous CAFE 

rulemakings, the agency has said that pursuant to this provision, it considers the adverse effects 

of other motor vehicle standards on fuel economy. It said so because, from the CAFE program’s 

earliest years699 until present, the effects of such compliance on fuel economy capability over the 

 698 See 70 Fed. Reg. at 51435 (Aug. 30, 2005); CBD v. NHTSA, 538 F.3d at 1197 (9th Cir. 2008). 699 42 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534, 33537 (Jun. 30, 1977).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

635 

history of the CAFE program have been negative ones. In those instances in which the effects 

are negative, NHTSA has said that it is called upon to “mak[e] a straightforward adjustment to 

the fuel economy improvement projections to account for the impacts of other Federal standards, 

principally those in the areas of emission control, occupant safety, vehicle damageability, and 

vehicle noise. However, only the unavoidable consequences should be accounted for. The 

automobile manufacturers must be expected to adopt those feasible methods of achieving 

compliance with other Federal standards which minimize any adverse fuel economy effects of 

those standards.”700 For example, safety standards that have the effect of increasing vehicle 

weight lower vehicle fuel economy capability and thus decrease the level of average fuel 

economy that the agency can determine to be feasible. 

The “other motor vehicle standards” consideration has thus in practice functioned in a 

fashion similar to the provision in EPCA, as originally enacted, for adjusting the statutorilyspecified CAFE standards for MY 1978–1980 passengers cars.701 EPCA did not permit NHTSA 

to amend those standards based on a finding that the maximum feasible level of average fuel 

economy for any of those three years was greater or less than the standard specified for that year. 

Instead, it provided that the agency could only reduce the standards and only on one basis: if the 

agency found that there had been a Federal standards fuel economy reduction, i.e., a reduction in 

fuel economy due to changes in the Federal vehicle standards, e.g., emissions and safety, relative 

to the year of enactment, 1975. 

The “other motor vehicle standards” provision is broader than the Federal standards fuel 

economy reduction provision. Although the effects analyzed to date under the “other motor 

vehicle standards” provision have been negative, there could be circumstances in which the 

effects are positive. In the event that the agency encountered such circumstances, it would be 

required to consider those positive effects. For example, if changes in vehicle safety technology 

led to NHTSA’s amending a safety standard in a way that permits manufacturers to reduce the 

weight added in complying with that standard, that weight reduction would increase vehicle fuel 

economy capability and thus increase the level of average fuel economy that could be determined 

to be feasible. 

In the wake of Massachusetts v. EPA and of EPA’s endangerment finding, granting of a 

waiver to California for its motor vehicle GHG standards, and its own establishment of GHG 

standards, NHTSA is confronted with the issue of how to treat those standards under 

EPCA/EISA, such as in the context of the “other motor vehicle standards” provision. To the 

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

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

by manufacturers in complying with the CAFE standards. 

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

standards should be considered under EPCA/EISA, e.g., under the “other motor vehicle 

standards” provision, consistent with NHTSA’s independent obligation under EPCA/EISA to 

 700 42 FR 33534, 33537 (Jun. 30, 1977). 701 That provision was deleted as obsolete when EPCA was codified in 1994.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

636 

issue CAFE standards. The agency has already considered EPA’s proposal and the 

harmonization benefits of the National Program in developing its own proposal. 

(4) The Need of the United States To Conserve 

Energy 

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

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

quantities of petroleum, especially imported petroleum.”702 Environmental implications 

principally include those associated with reductions in emissions of criteria pollutants and CO2. 

A prime example of foreign policy implications are energy independence and energy security 

concerns. 

(a) Fuel Prices and the Value of Saving Fuel 

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

alternative CAFE standards, because they determine the value of fuel savings both to new 

vehicle buyers and to society, which is related to the consumer cost (or rather, benefit) of our 

need for large quantities of petroleum. In this rule, NHTSA relies on fuel price projections from 

the U.S. Energy Information Administration’s (EIA) most recent Annual Energy Outlook (AEO) 

for this analysis. Federal government agencies generally use EIA’s projections in their 

assessments of future energy-related policies. 

(b) Petroleum Consumption and Import 

Externalities 

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

economy that are not reflected in the market price for crude petroleum, or in the prices paid by 

consumers of petroleum products such as gasoline. These costs include (1) higher prices for 

petroleum products resulting from the effect of U.S. oil import demand on the world oil price; (2) 

the risk of disruptions to the U.S. economy caused by sudden reductions in the supply of 

imported oil to the U.S.; and (3) expenses for maintaining a U.S. military presence to secure 

imported oil supplies from unstable regions, and for maintaining the strategic petroleum reserve 

(SPR) to provide a response option should a disruption in commercial oil supplies threaten the 

U.S. economy, to allow the United States to meet part of its International Energy Agency 

obligation to maintain emergency oil stocks, and to provide a national defense fuel reserve. 

Higher U.S. imports of crude oil or refined petroleum products increase the magnitude of these 

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

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

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

(c) Air Pollutant Emissions 

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

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

 702 42 FR 63184, 63188 (1977). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

637 

with the rebound effect703 from higher fuel economy will increase emissions of these pollutants. 

Thus, the net effect of stricter CAFE standards on emissions of each pollutant depends on the 

relative magnitudes of its reduced emissions in fuel refining and distribution, and increases in its 

emissions from vehicle use.704 Fuel savings from stricter CAFE standards also result in lower 

emissions of CO2, the main greenhouse gas emitted as a result of refining, distribution, and use 

of transportation fuels. Reducing fuel consumption reduces carbon dioxide emissions directly, 

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

combustion engines. 

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

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

earliest days of the CAFE program. As courts of appeal have noted in three decisions stretching 

over the last 20 years,705 NHTSA defined the “need of the Nation to conserve energy” in the late 

1970s as including “the consumer cost, national balance of payments, environmental, and foreign 

policy implications of our need for large quantities of petroleum, especially imported 

petroleum.”706 In 1988, NHTSA included climate change concepts in its CAFE notices and 

prepared its first environmental assessment addressing that subject.707 It cited concerns about 

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

for MY 1989 passenger cars.708 Since then, NHTSA has considered the benefits of reducing 

tailpipe carbon dioxide emissions in its fuel economy rulemakings pursuant to the statutory 

requirement to consider the nation’s need to conserve energy by reducing fuel consumption. 

ii. Other Factors Considered by NHTSA 

The agency historically has considered the potential for adverse safety consequences in 

setting CAFE standards. This practice is recognized approvingly in case law. As the courts have 

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

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

Competitive Enterprise Institute v. NHTSA, 901 F.2d 107, 120 n. 11 (DC Cir. 1990) (“CEI I”) 

(citing 42 FR 33534, 33551 (June 30, 1977)). The courts have consistently upheld NHTSA’s 

implementation of EPCA in this manner. See, e.g., Competitive Enterprise Institute v. NHTSA, 

956 F.2d 321, 322 (DC Cir. 1992) (“CEI II”) (in determining the maximum feasible fuel 

economy standard, “NHTSA has always taken passenger safety into account.”) (citing CEI I, 901 

F.2d at 120 n. 11); Competitive Enterprise Institute v. NHTSA, 45 F.3d 481, 482–83 (DC Cir. 

1995) (“CEI III”) (same); Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1203–04 

(9th Cir. 2008) (upholding NHTSA’s analysis of vehicle safety issues associated with weight in 

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

down, as when fuel economy improves.

704 See Section IV.G below for NHTSA’s evaluation of this effect. 705 Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1325 n. 12 (D.C. Cir. 1986); Public Citizen v. NHTSA, 848 

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

setting CAFE standards as including environmental effects”); and Center for Biological Diversity v. NHTSA, 538 

F.3d 1172 (9th Cir. 2007). 706 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added). 707 53 FR 33080, 33096 (Aug. 29, 1988). 708 53 FR 39275, 39302 (Oct. 6, 1988). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

638 

connection with the MY 2008–11 light truck CAFE rule). Thus, in evaluating what levels of 

stringency would result in maximum feasible standards, NHTSA assesses the potential safety 

impacts and considers them in balancing the statutory considerations and to determine the 

maximum feasible level of the standards. 

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

establish, manufacturers were encouraged to respond to higher standards by building smaller, 

less safe vehicles in order to “balance out” the larger, safer vehicles that the public generally 

preferred to buy, which resulted in a higher mass differential between the smallest and the largest 

vehicles, with a correspondingly greater risk to safety. Under the attribute-based standards being 

proposed today, that risk is reduced because building smaller vehicles would tend to raise a 

manufacturer’s overall CAFE obligation, rather than only raising its fleet average CAFE, and 

because all vehicles are required to continue improving their fuel economy. In prior 

rulemakings, NHTSA limited the application of mass reduction in our modeling analysis to 

vehicles over 5,000 lbs GVWR,709 but for purposes of today’s proposed standards, NHTSA has 

revised its modeling analysis to allow some application of mass reduction for most types of 

vehicles, although it is concentrated in the largest and heaviest vehicles, because we believe that 

this is more consistent with how manufacturers will actually respond to the standards. However, 

as discussed above, NHTSA does not mandate the use of any particular technology by 

manufacturers in meeting the standards. More information on the approach to modeling 

manufacturer use of mass reduction is available in Chapter 3 of the draft Joint TSD and in 

Section V of the PRIA; and the estimated safety impacts that may be due to the proposed MY 

2017-2025 CAFE standards are described in section IV.G below. 

iii. Factors that NHTSA is Prohibited from 

Considering 

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

for a particular model year, NHTSA may not consider the ability of manufacturers to take 

advantage of several EPCA provisions that facilitate compliance with the CAFE standards and 

thereby reduce the costs of compliance.710 As discussed further below, manufacturers can earn 

compliance credits by exceeding the CAFE standards and then use those credits to achieve 

compliance in years in which their measured average fuel economy falls below the standards. 

Manufacturers can also increase their CAFE levels through MY 2019 by producing alternative 

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

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

vehicles being assigned a high fuel economy level. 

The effect of the prohibitions against considering these statutory flexibilities in setting the 

CAFE standards is that the flexibilities remain voluntarily-employed measures. If the agency 

were instead to assume manufacturer use of those flexibilities in setting new standards, that 

assumption would result in higher standards and thus tend to require manufacturers to use those 

flexibilities. By keeping NHTSA from including them in our stringency determination, the 

 709 See 74 FR 14396–14407 (Mar. 30, 2009). 710 49 U.S.C. 32902(h). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

639 

provision ensures that the statutory credits remain described above remain true compliance 

flexibilities. 

On the other hand, NHTSA does not believe that flexibilities other than those expressly 

identified in EPCA are similarly prohibited from being included in the agency’s determination of 

what standards would be maximum feasible. In order to better meet EPCA’s overarching 

purpose of energy conservation, the agency is therefore considering manufacturers’ ability to 

increase the calculated fuel economy levels of their vehicles through A/C efficiency 

improvements, as proposed by EPA, in the proposed CAFE stringency levels for passenger cars 

and light trucks for MYs 2017-2025. NHTSA would similarly consider manufacturers’ ability to 

raise their fuel economy using off-cycle technologies as potentially relevant to our determination 

of maximum feasible CAFE standards, but because we and EPA do not believe that we can yet 

reasonably predict an average amount by which manufacturers will take advantage of this 

opportunity, it did not seem reasonable for the proposed standards to include it in our stringency 

determination at this time. We expect to re-evaluate whether and how to include off-cycle 

credits in determining maximum feasible standards as the off-cycle technologies and how 

manufacturers may be expected to employ them become better defined in the future. 

Additionally, because we interpret the prohibition against including the defined statutory 

credits in our determination of maximum feasible standards as applying only to the flexibilities 

expressly identified in 49 U.S.C. 32902(h), NHTSA must, for the first time in this rulemaking, 

determine how to consider the fuel economy of dual-fueled automobiles after the statutory credit 

sunsets in MY 2019. Once there is no statutory credit to protect as a compliance flexibility, it 

does not seem reasonable to NHTSA to continue to interpret the statute as prohibiting the agency 

from setting maximum feasible levels at a higher standard, if possible, by considering the fuel 

economy of dual-fueled automobiles as measured by EPA. The overarching purpose of EPCA is 

better served by interpreting 32902(h)(2) as moot once the statutory credits provided for in 49 

U.S.C. 32905 and 32906 have expired. 

49 U.S.C. 32905(b) and (d) states that the special fuel economy measurement prescribed 

by Congress for dual-fueled automobiles applies only “in model years 1993 through 2019.” 49 

U.S.C. 32906(a) also provides that the section 32905 calculation will sunset in 2019, as 

evidenced by the phase-out of the allowable increase due to that credit; it is clear that the phaseout of the allowable increase in a manufacturer’s CAFE levels due to use of dual-fueled 

automobiles relates only to the special statutory calculation (and not to other ways of 

incorporating the fuel economy of dual-fueled automobiles into the manufacturer’s fleet 

calculation) by virtue of language in section 32906(b), which states that “in applying subsection 

(a) [i.e., the phasing out maximum increase], the Administrator of the Environmental Protection 

Agency shall determine the increase in a manufacturer’s average fuel economy attributable to 

dual fueled automobiles by subtracting from the manufacturer’s average fuel economy calculated 

under section 32905(e) the number equal to what the manufacturer’s average fuel economy 

would be if it were calculated by the formula under section 32904(a)(1)....” By referring back to 

the special statutory calculation, Congress makes clear that the phase-out applies only to 

increases in fuel economy attributable to dual-fueled automobiles due to the special statutory 

calculation in sections 32905(b) and (d). Similarly, we interpret Congress’ statement in section 

32906(a)(7) that the maximum increase in fuel economy attributable to dual-fueled automobiles 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

640 

is “0 miles per gallon for model years after 2019” within the context of the introductory language 

of section 32906(a) and the language of section 32906(b), which, again, refers clearly to the 

statutory credit, and not to dual-fueled automobiles generally. It would be an absurd result if the 

phase-out of the credit meant that manufacturers would be effectively penalized, in CAFE 

compliance, for building dual-fueled automobiles like plug-in hybrid electric vehicles, which 

may be important “bridge” vehicles in helping consumers move toward full electric vehicles. 

NHTSA has therefore considered the fuel economy of plug-in hybrid electric vehicles 

(the only dual-fueled automobiles that we predict in significant numbers in MY 2020 and 

beyond; E85-capable FFVs are not predicted in great numbers after the statutory credit sunsets, 

and we do not have sufficient information about potential dual-fueled CNG/gasoline vehicles to 

make reasonable estimates now of their numbers in that time frame in determining the maximum 

feasible level of the MY 2020-2025 CAFE standards for passenger cars and light trucks. 

iv. Determining the Level of the Standards by Balancing 

the Factors 

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

appropriate levels of average fuel economy at which to set the CAFE standards for each model 

year. Congress “specifically delegated the process of setting * * * fuel economy standards with 

broad guidelines concerning the factors that the agency must consider.”711 The breadth of those 

guidelines, the absence of any statutorily prescribed formula for balancing the factors and other 

considerations, the fact that the relative weight to be given to the various factors may change 

from rulemaking to rulemaking as the underlying facts change, and the fact that the factors may 

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

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

concerns and then determine how to balance them. The exercise of that discretion is subject to 

the necessity of ensuring that NHTSA’s balancing does not undermine the fundamental purpose 

of EPCA, energy conservation,712 and as long as that balancing reasonably accommodates 

“conflicting policies that were committed to the agency’s care by the statute.”713 The balancing 

of the factors in any given rulemaking is highly dependent on the factual and policy context of 

that rulemaking and the agency’s assumptions about the factual and policy context during the 

time frame covered by the standards at issue. Given the changes over time in facts bearing on 

assessment of the various factors, such as those relating to economic conditions, fuel prices, and 

the state of climate change science, the agency recognizes that what was a reasonable balancing 

of competing statutory priorities in one rulemaking may or may not be a reasonable balancing of 

those priorities in another rulemaking.714 Nevertheless, the agency retains substantial discretion 

under EPCA to choose among reasonable alternatives. 

EPCA neither requires nor precludes the use of any type of cost-benefit analysis as a tool 

to help inform the balancing process. As discussed above, while NHTSA used marginal costbenefit analysis in the first two rulemakings to establish attribute-based CAFE standards, it was 

 711 Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1341 (C.A.D.C. 1986). 712 Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1195 (9th Cir. 2008). 713 CAS, 1338 (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 845). 714 CBD v. NHTSA, 538 F.3d 1172, 1198 (9th Cir. 2008).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

641 

not required to do so and is not required to continue to do so. Regardless of what type of 

analysis is or is not used, considerations relating to costs and benefits remain an important part of 

CAFE standard setting. 

Because the relevant considerations and factors can reasonably be balanced in a variety 

of ways under EPCA, and because of uncertainties associated with the many technological and 

cost inputs, NHTSA considers a wide variety of alternative sets of standards, each reflecting 

different balancing of those policies and concerns, to aid it in discerning reasonable outcomes. 

Among the alternatives providing for an increase in the standards in this rulemaking, the 

alternatives range in stringency from a set of standards that increase, on average, 2 percent 

annually to a set of standards that increase, on average, 7 percent annually. 

v. Other Standards 

(1) Minimum Domestic Passenger Car Standard 

The minimum domestic passenger car standard was added to the CAFE program through 

EISA, when Congress gave NHTSA explicit authority to set universal standards for 

domestically-manufactured passenger cars at the level of 27.5 mpg or 92 percent of the average 

fuel economy of the combined domestic and import passenger car fleets in that model year, 

whichever was greater.715 This minimum standard was intended to act as a “backstop,” ensuring 

that domestically-manufactured passenger cars reached a given mpg level even if the market 

shifted in ways likely to reduce overall fleet mpg. Congress was silent as to whether the agency 

could or should develop similar backstop standards for imported passenger cars and light trucks. 

NHTSA has struggled with this question since EISA was enacted. 

NHTSA has proposed minimum standards for domestically-manufactured passenger cars 

in Section IV.E below, but we also seek comment on whether to consider, for the final rule, the 

possibility of minimum standards for imported passenger cars and light trucks. Although we are 

not proposing such standards, we believe it may be prudent to explore this concept again given 

the considerable amount of time between now and 2017-2025 (particularly the later years), and 

the accompanying uncertainty in our market forecast and other assumptions, that might make 

such minimum standards relevant to help ensure that currently-expected fuel economy 

improvements occur during that time frame. To help commenters’ consideration of this 

question, Section IV.E presents illustrative levels of minimum standards for those other fleets. 

The minimum domestic passenger car standard was added to the CAFE program through 

EISA, when Congress gave NHTSA explicit authority to set universal standards for 

domestically-manufactured passenger cars at the level explained above. This minimum standard 

was intended to act as a “backstop,” ensuring that domestically-manufactured passenger cars 

reached a given mpg level even if the market shifted in ways likely to reduce overall fleet mpg. 

Congress was silent as to whether the agency could or should develop similar backstop standards 

for imported passenger cars and light trucks. NHTSA has struggled with this question since 

EISA was enacted. 

 715 49 U.S.C. 32902(b)(4). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

642 

In the MY 2011 final rule, facing comments split fairly evenly between support and 

opposition to additional backstop standards, NHTSA noted Congress’ silence with respect to 

minimum standards for imported passenger cars and light trucks and “accept[ed] at least the 

possibility that . . . [it] could be reasonably interpreted as permissive rather than restrictive,” but 

concluded based on the record for that rulemaking as a whole that additional minimum standards 

were not necessary for MY 2011, given the lack of leadtime for manufacturers to change their 

MY 2011 vehicles, the apparently-growing public preference for smaller vehicles, and the antibacksliding characteristics of the footprint-based curves.716

In the MYs 2012-2016 final rule where NHTSA declined to set minimum standards for 

imported passenger cars and light trucks, the agency did so not because we believed that we did 

not have authority to do so, but because we believed that our assumptions about the future fleet 

mix were reliable within the rulemaking time frame, and that backsliding was very unlikely and 

would not be sufficient to warrant the regulatory burden of additional minimum standards for 

those fleets.717 NHTSA also expressed concern about the possibility of additional minimum 

standards imposing inequitable regulatory burdens of the kind that attribute-based standards 

sought to avoid, stating that: 

Unless the backstop was at a very weak level, above the high end of this range, 

then some percentage of manufacturers would be above the backstop even if the 

performance of the entire industry remains fully consistent with the emissions and fuel 

economy levels projected for the final standards. For these manufacturers and any other 

manufacturers who were above the backstop, the objectives of an attribute-based standard 

would be compromised and unnecessary costs would be imposed. This could 

directionally impose increased costs for some manufacturers. It would be difficult if not 

impossible to establish the level of a backstop standard such that costs are likely to be 

imposed on manufacturers only when there is a failure to achieve the projected reductions 

across the industry as a whole. An example of this kind of industry-wide situation could 

be when there is a significant shift to larger vehicles across the industry as a whole, or if 

there is a general market shift from cars to trucks. The problem the agencies are 

concerned about in those circumstances is not with respect to any single manufacturer, 

but rather is based on concerns over shifts across the fleet as a whole, as compared to 

shifts in one manufacturer’s fleet that may be more than offset by shifts the other way in 

another manufacturer’s fleet. However, in this respect, a traditional backstop acts as a 

manufacturer-specific standard.718

NHTSA continues to believe that the risk of additional minimum standards imposing 

inequitable regulatory burdens on certain manufacturers is real, but at the same time, we 

recognize that given the time frame of the current rulemaking, the agency cannot be as certain 

about the unlikelihood of future market changes. Depending on the price of fuel and consumer 

preferences, the “kind of industry-wide situation” described in the MYs 2012-2016 rule is 

possible in the 2017-2025 time frame, particularly in the later years. 

 

 716 74 FR at 14412 (Mar. 30, 2009). 717 75 Fed. Reg. 25324, at 25368-70 (May 7, 2010). 718 Id. at 25369. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

643 

Because the agency does not have sufficient information at this time regarding what 

tradeoffs might be associated with additional minimum standards, specifically, whether the risk 

of backsliding during MYs 2017-2025 sufficiently outweighs the possibility of imposing 

inequitable regulatory burdens on certain manufacturers, we are seeking comment in this NPRM 

on these issues but not proposing additional minimum standards at this time. We also seek 

comment on how to structure additional minimum standards (e.g., whether they should be flat or 

attribute-based, and if the latter, how that would work), and at what level additional minimum 

standards should potentially be set. The tables in Section IV.E provide an illustration of what 

levels the additional minimum standards would require if the agency followed the same 92 

percent guideline required by EISA for domestically-manufactured passenger cars. 

 

(2) Alternative standards for certain manufacturers 

Because EPCA states that standards must be set for “...automobiles manufactured by 

manufacturers,” and because Congress provided specific direction on how small-volume 

manufacturers could obtain exemptions from the passenger car standards, NHTSA has long 

interpreted its authority as pertaining to setting standards for the industry as a whole. Prior to 

this NPRM, some manufacturers raised with NHTSA the possibility of NHTSA and EPA setting 

alternate standards for part of the industry that met certain (relatively low) sales volume criteria – 

specifically, that separate standards be set so that “intermediate-size,” limited-line manufacturers 

do not have to meet the same levels of stringency that larger manufacturers have to meet until 

several years later. These manufacturers argued that the same level of standards would not be 

technologically feasible or economically practicable in the same time frame for them, due to 

their inability to spread compliance burden across a larger product lineup, and difficulty in 

obtaining fuel economy-improving technologies quickly from suppliers. NHTSA seeks 

comment on whether or how EPCA, as amended by EISA, could be interpreted to allow such 

alternate standards for certain parts of the industry. 

2. Administrative Procedure Act 

To be upheld under the “arbitrary and capricious” standard of judicial review in the APA, 

an agency rule must be rational, based on consideration of the relevant factors, and within the 

scope of the authority delegated to the agency by the statute. The agency must examine the 

relevant data and articulate a satisfactory explanation for its action including a “rational 

connection between the facts found and the choice made.” Burlington Truck Lines, Inc. v. 

United States, 371 U.S. 156, 168 (1962). 

Statutory interpretations included in an agency’s rule are subjected to the two-step 

analysis of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 

2778, 81 L.Ed.2d 694 (1984). Under step one, where a statute “has directly spoken to the precise 

question at issue,” id. at 842, 104 S.Ct. 2778, the court and the agency “must give effect to the 

unambiguously expressed intent of Congress,” id. at 843, 104 S.Ct. 2778. If the statute is silent 

or ambiguous regarding the specific question, the court proceeds to step two and asks “whether 

the agency’s answer is based on a permissible construction of the statute.” Id. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

644 

If an agency’s interpretation differs from the one that it has previously adopted, the 

agency need not demonstrate that the prior position was wrong or even less desirable. Rather, 

the agency would need only to demonstrate that its new position is consistent with the statute and 

supported by the record, and acknowledge that this is a departure from past positions. The 

Supreme Court emphasized this recently in FCC v. Fox Television, 129 S.Ct. 1800 (2009). 

When an agency changes course from earlier regulations, “the requirement that an agency 

provide reasoned explanation for its action would ordinarily demand that it display awareness 

that it is changing position,” but “need not demonstrate to a court’s satisfaction that the reasons 

for the new policy are better than the reasons for the old one; it suffices that the new policy is 

permissible under the statute, that there are good reasons for it, and that the agency believes it to 

be better, which the conscious change of course adequately indicates.”719 The APA also requires 

that agencies provide notice and comment to the public when proposing regulations,720 as we are 

doing here today. 

3. National Environmental Policy Act 

As discussed above, EPCA requires the agency to determine what level at which to set 

the CAFE standards for each model year by considering the four factors of technological 

feasibility, economic practicability, the effect of other motor vehicle standards of the 

Government on fuel economy, and the need of the United States to conserve energy. NEPA 

directs that environmental considerations be integrated into that process. To accomplish that 

purpose, NEPA requires an agency to compare the potential environmental impacts of its 

proposed action to those of a reasonable range of alternatives. 

To explore the environmental consequences in depth, NHTSA has prepared a draft 

environmental impact statement (“EIS”). The purpose of an EIS is to “provide full and fair 

discussion of significant environmental impacts and [to] inform decisionmakers and the public of 

the reasonable alternatives which would avoid or minimize adverse impacts or enhance the 

quality of the human environment.” 40 CFR 1502.1. 

NEPA is “a procedural statute that mandates a process rather than a particular result.” 

Stewart Park & Reserve Coal., Inc. v. Slater, 352 F.3d at 557. The agency’s overall EIS-related 

obligation is to “take a ‘hard look’ at the environmental consequences before taking a major 

action.” Baltimore Gas & Elec. Co. v. Natural Res. Def. Council, Inc., 462 U.S. 87, 97, 103 

S.Ct. 2246, 76 L.Ed.2d 437 (1983). Significantly, “[i]f the adverse environmental effects of the 

proposed action are adequately identified and evaluated, the agency is not constrained by NEPA 

from deciding that other values outweigh the environmental costs.” Robertson v. Methow Valley 

Citizens Council, 490 U.S. 332, 350, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989). 

The agency must identify the “environmentally preferable” alternative, but need not 

adopt it. “Congress in enacting NEPA * * * did not require agencies to elevate environmental 

concerns over other appropriate considerations.” Baltimore Gas and Elec. Co. v. Natural 

Resources Defense Council, Inc., 462 U.S. 87, 97 (1983). Instead, NEPA requires an agency to 

develop alternatives to the proposed action in preparing an EIS. 42 U.S.C. 4332(2)(C)(iii). The 

 719 Ibid., 1181. 720 5 U.S.C. 553. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

645 

statute does not command the agency to favor an environmentally preferable course of action, 

only that it make its decision to proceed with the action after taking a hard look at environmental 

consequences. 

E. What are the proposed CAFE standards? 

1. Form of the Standards 

Each of the CAFE standards that NHTSA is proposing today for passenger cars and light 

trucks is expressed as a mathematical function that defines a fuel economy target applicable to 

each vehicle model and, for each fleet, establishes a required CAFE level determined by 

computing the sales-weighted harmonic average of those targets.721

As discussed above in Section II.C, NHTSA has determined passenger car fuel economy 

targets using a constrained linear function defined according to the following formula: 

1

1 1

, ,

TARGET

MIN MAX c FOOTPRINT d

a b

              

Here, TARGET is the fuel economy target (in mpg) applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), b and a are the function’s lower and upper asymptotes 

(also in mpg), respectively, c is the slope (in gallons per mile per square foot) of the sloped 

portion of the function, and d is the intercept (in gallons per mile) of the sloped portion of the 

function (that is, the value the sloped portion would take if extended to a footprint of 0 square 

feet. The MIN and MAX functions take the minimum and maximum, respectively of the 

included values. 

NHTSA is proposing, consistent with the standards for MYs 2011-2016, that the CAFE 

level required of any given manufacturer be determined by calculating the production-weighted 

harmonic average of the fuel economy targets applicable to each vehicle model: 

௜ܱܰܫܶܥܷܦܴܱܲ ௜∑ ൌ ௗ௜௥௘௨௥௘௤ܧܨܣܥ

௜ܱܰܫܶܥܷܦܴܱܲ ∑

௜ ௜ܶܧܩܴܣܶ

PRODUCTIONi is the number of units produced for sale in the United States of each i

th

unique footprint within each model type, produced for sale in the United States, and TARGETi is 

the corresponding fuel economy target (according to the equation shown above and based on the 

 721 Required CAFE levels shown here are estimated required levels based on NHTSA’s current projection of 

manufacturers’ vehicle fleets in MYs 2017–2025. Actual required levels are not determined until the end of each 

model year, when all of the vehicles produced by a manufacturer in that model year are known and their compliance 

obligation can be determined with certainty. The target curves, as defined by the constrained linear function, and as 

embedded in the function for the sales-weighted harmonic average, are the real “standards” being proposed today. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

646 

corresponding footprint), and the summations in the numerator and denominator are both 

performed over all unique footprint and model type combinations in the fleet in question. 

The proposed standards for passenger cars are, therefore, specified by the four 

coefficients defining fuel economy targets: 

a = upper limit (mpg) 

b = lower limit (mpg) 

c = slope (gallon per mile per square foot) 

d = intercept (gallon per mile) 

For light trucks, NHTSA is proposing to define fuel economy targets in terms of a 

mathematical function under which the target is the maximum of values determined under each 

of two constrained linear functions. The second of these establishes a “floor” reflecting the MY 

2016 standard, after accounting for estimated adjustments reflecting increased air conditioner 

efficiency. This prevents the target at any footprint from declining between model years. The 

resultant mathematical function is as follows: 

ܶܧܩܴܣܶ

ൌ ܣܯܺ ൮ 1

1 ݀, ൅ ܰܶܫܱܱܴܶܲܨ ൈ ܿቀ ܺܣܯቂ ܰܫܯ

ܽቁ ,

1

ܾቃ

, 1

1 ݄, ൅ ܰܶܫܱܱܴܶܲܨ ൈ ݃ቀ ܺܣܯ൤ ܰܫܯ

݁ቁ ,

1

݂൨

൲

The proposed standards for light trucks are, therefore, specified by the eight coefficients 

defining fuel economy targets: 

a = upper limit (mpg) 

b = lower limit (mpg) 

c = slope (gallon per mile per square foot) 

d = intercept (gallon per mile) 

e = upper limit (mpg) of “floor” 

f = lower limit (mpg) of “floor” 

g = slope (gallon per mile per square foot) of “floor” 

h = intercept (gallon per mile) of “floor” 

2. Passenger Car Standards for MYs 2017–2025 

For passenger cars, NHTSA is proposing CAFE standards defined by the following 

coefficients during MYs 2017–2025: 

TABLE IV.E.2–1—COEFFICIENTS DEFINING PROPOSED MYS 2017–2025 FUEL ECONOMY 

TARGETS FOR PASSENGER CARS

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025

a (mpg) 42.50 42.94 43.39 43.84 44.29 44.75 45.21 45.68 46.16
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

647 

b (mpg) 31.83 32.16 32.49 32.82 33.16 33.50 33.84 34.19 34.55

c (gpm/sf) 0.00053 0.00052 0.00052 0.00051 0.00051 0.00050 0.00050 0.00049 0.00049

d (gpm) 0.00196 0.00193 0.00191 0.00188 0.00186 0.00183 0.00181 0.00179 0.00176

For reference, the coefficients defining the MYs 2012-2016 passenger car standards are 

also provided below: 

TABLE IV.E.2–2—COEFFICIENTS DEFINING FINAL MYS 2012–2016 FUEL ECONOMY 

TARGETS FOR PASSENGER CARS

Coefficient 2012 2013 2014 2015 2016 

a (mpg) 36.18 37.16 38.31 40.06 42.03

b (mpg) 28.09 28.67 29.35 30.37 31.49

c (gpm/sf) 0.00053 0.00053 0.00053 0.00053 0.00053

d (gpm) 0.00588 0.00515 0.00434 0.00320 0.00203

Also for reference, the following table presents the coefficients based on 2-cycle CAFE 

only for easier comparison to the MYs 2012-2016 coefficients presented above. We emphasize, 

again, that the coefficients in Table IV.E.2-1 define the proposed standards. 

TABLE IV.E.2–3—COEFFICIENTS BASED ONLY ON 2-CYCLE CAFE FOR MYS 2017–2025

PASSENGER CARS

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025 

a (mpg) 42.57 44.09 45.66 47.44 49.42 51.66 54.01 56.47 59.04 

b (mpg) 32.06 33.21 34.39 35.73 37.22 38.92 40.69 42.54 44.47 

c (gpm/sf) 0.00051 0.00050 0.00048 0.00046 0.00044 0.00042 0.00040 0.00039 0.00037 

d (gpm) 0.00246 0.00237 0.00229 0.00221 0.00212 0.00203 0.00194 0.00185 0.00177 

Section II.C above and Chapter 2 of the draft Joint TSD discusses how the coefficients in 

Table IV.E.2-1 were developed for this proposed rule. The proposed coefficients result in the 

footprint-dependent targets shown graphically below for MYs 2017-2025. The MY 2012-2016 

final standards are also shown for comparison. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

648 

FIGURE IV.E.1—FUEL 

ECONOMY 

TARGETS FOR MYS 2012–2016 AND 2017–2025

PASSENGER 

CARS

20253035404550556065

30 35 40 45 50 55 60 65 70 75 80

Fuel Economy Target (mpg)

Footprint (sf)

20252024202320222021202020192018201720162015201420132012
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

649 

As discussed, the CAFE levels ultimately required of individual manufacturers will 

depend on the mix of vehicles they produce for sale in the United States. Based on the market 

forecast of future sales that NHTSA has used to examine today’s proposed CAFE standards, the 

agency currently estimates that the target curves shown above will result in the following 

average required fuel economy levels for individual manufacturers during MYs 2017–2025 (an 

updated estimate of the average required fuel economy level under the final MY 2016 standard is 

also shown for comparison):722

TABLE IV.E.2–4—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY

2016 AND PROPOSED MYS 2017–2025 CAFE STANDARDS FOR PASSENGER CARS

Manufacturer 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Aston Martin 38.2 40.5 41.9 43.5 45.2 47.2 49.4 51.7 54.1 56.6 

BMW 37.3 39.4 40.9 42.4 44.1 46.0 48.1 50.4 52.7 55.2 

Daimler 35.9 37.8 39.1 40.5 42.2 44.0 46.1 48.2 50.4 52.8 

Chrysler/Fiat723 36.6 39.2 40.7 42.2 43.7 45.7 48.0 50.2 52.7 55.1 

Ford 37.1 39.1 40.6 42.1 43.7 45.6 47.7 49.9 52.3 54.7 

Geely (Volvo) 36.6 38.8 40.3 41.7 43.4 45.3 47.4 49.6 51.9 54.4 

General Motors 36.9 39.3 40.7 42.3 43.9 45.8 48.0 50.2 52.6 55.1 

Honda 38.3 40.5 42.0 43.6 45.3 47.3 49.5 51.7 54.2 56.7 

Hyundai 38.2 40.3 41.8 43.4 45.1 47.1 49.3 51.5 54.0 56.5 

Kia 37.9 40.0 41.5 43.1 44.8 46.7 48.9 51.2 53.6 56.1 

Lotus 41.1 43.6 45.2 46.9 48.7 50.8 53.2 55.7 58.3 61.1 

Mazda 38.3 40.5 41.9 43.5 45.2 47.1 49.2 51.5 54.0 56.6 

Mitsubishi 38.7 41.1 42.6 44.2 45.9 47.9 50.1 52.5 54.9 57.5 

Nissan 37.7 39.7 41.2 42.7 44.4 46.3 48.4 50.7 53.1 55.5 

Porsche 41.1 43.6 45.2 46.9 48.7 50.8 53.2 55.7 58.3 61.1 

Spyker (Saab) 38.3 40.6 42.1 43.6 45.3 47.3 49.5 51.8 54.2 56.8 

Subaru 39.3 41.7 43.2 44.8 46.6 48.6 50.9 53.3 55.8 58.4 

Suzuki 40.8 43.3 44.9 46.5 48.4 50.5 52.8 55.3 57.9 60.6 

Tata (Jaguar, Rover) 34.7 36.8 38.1 39.6 41.1 42.9 44.9 47.0 49.2 51.5 

Tesla 41.1 43.6 45.2 46.9 48.7 50.8 53.2 55.7 58.3 61.1 

Toyota 38.4 40.7 42.2 43.8 45.5 47.5 49.7 52.0 54.4 57.0 

VW724 38.9 41.2 42.7 44.2 46.0 48.0 50.2 52.6 55.0 57.6 

Average 37.8 40.0 41.4 43.0 44.7 46.6 48.8 51.0 53.5 56.0 

Because a manufacturer’s required average fuel economy level for a model year under 

 722 In the May 2010 final rule establishing MY 2016 standards for passenger cars and light trucks, NHTSA estimated 

that the required fuel economy levels for passenger cars would average 37.8 mpg under the MY 2016 passenger car 

standard. Based on the agency’s current forecast of the MY 2016 passenger car market, NHTSA again estimates 

that the average required fuel economy level for passenger cars will be 37.8 mpg in MY 2016. 723 For purposes of CAFE compliance, “Chrysler/Fiat” is assumed to include Ferrari and Maserati in addition to the 

larger-volume Chrysler and Fiat brands. 

724 For purposes of CAFE compliance, VW is assumed to include Audi-Bentley, Bugatti, and Lamborghini, along 

with the larger-volume VW brand. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

650 

the final standards will be based on its actual production numbers in that model year, its official 

required fuel economy level will not be known until the end of that model year. However, 

because the targets for each vehicle footprint will be established in advance of the model year, a 

manufacturer should be able to estimate its required level accurately. Readers should remember 

that the mpg levels describing the “estimated required standards” shown throughout this section 

are not necessarily the ultimate mpg level with which manufacturers will have to comply, for the 

reasons explained above, and that the mpg level designated as “estimated required” is exactly 

that, an estimate. 

 Additionally, again for reference, the following table presents estimated mpg 

levels based on 2-cycle CAFE for easier comparison to the MYs 2012-2016 standards. 

 

TABLE IV.E.2–5—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY

2016 AND USING 2-CYCLE CAFE FOR MYS 2017-2025 FOR PASSENGER CARS

Manufacturer 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Aston Martin 38.2 39.6 41.0 42.4 44.1 45.9 48.0 50.2 52.5 54.9 

BMW 37.3 38.6 40.0 41.4 43.0 44.8 46.8 49.0 51.2 53.5 

Daimler 35.9 37.0 38.2 39.6 41.2 42.9 44.9 46.9 49.0 51.2 

Chrysler/Fiat725 36.6 38.3 39.7 41.2 42.7 44.6 46.7 48.8 51.2 53.5 

Ford 37.1 38.3 39.7 41.1 42.7 44.4 46.5 48.6 50.8 53.1 

Geely (Volvo) 36.6 38.0 39.4 40.8 42.4 44.1 46.1 48.2 50.5 52.8 

General Motors 36.9 38.4 39.8 41.3 42.9 44.7 46.7 48.8 51.1 53.4 

Honda 38.3 39.6 41.1 42.5 44.2 46.0 48.1 50.3 52.6 55.0 

Hyundai 38.2 39.5 40.9 42.3 44.0 45.8 47.9 50.1 52.4 54.8 

Kia 37.9 39.2 40.6 42.0 43.7 45.5 47.6 49.7 52.0 54.4 

Lotus 41.1 42.6 44.1 45.7 47.4 49.4 51.7 54.0 56.5 59.0 

Mazda 38.3 39.6 41.0 42.5 44.1 45.9 47.9 50.1 52.4 54.8 

Mitsubishi 38.7 40.1 41.6 43.1 44.8 46.6 48.8 51.0 53.3 55.7 

Nissan 37.7 38.9 40.3 41.7 43.3 45.1 47.2 49.3 51.5 53.9 

Porsche 41.1 42.6 44.1 45.7 47.4 49.4 51.7 54.0 56.5 59.0 

Spyker (Saab) 38.3 39.7 41.1 42.6 44.2 46.1 48.2 50.3 52.6 55.0 

Subaru 39.3 40.7 42.2 43.7 45.4 47.3 49.5 51.7 54.1 56.5 

Suzuki 40.8 42.2 43.8 45.3 47.1 49.1 51.3 53.6 56.1 58.6 

Tata (Jaguar, Rover) 34.7 36.0 37.3 38.6 40.1 41.8 43.7 45.7 47.7 49.9 

Tesla 41.1 42.6 44.1 45.7 47.4 49.4 51.7 54.0 56.5 59.0 

Toyota 38.4 39.8 41.2 42.7 44.4 46.2 48.3 50.5 52.8 55.2 

VW726 38.9 40.2 41.7 43.1 44.8 46.7 48.9 51.1 53.4 55.8 

Average 37.8 39.1 40.5 42.0 43.6 45.4 47.5 49.6 51.9 54.3 

 

 725 For purposes of CAFE compliance, “Chrysler/Fiat” is assumed to include Ferrari and Maserati in addition to the 

larger-volume Chrysler and Fiat brands. 

726 For purposes of CAFE compliance, VW is assumed to include Audi-Bentley, Bugatti, and Lamborghini, along 

with the larger-volume VW brand. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

651 

3. Minimum Domestic Passenger Car Standards 

EISA expressly requires each manufacturer to meet a minimum fuel economy standard 

for domestically manufactured passenger cars in addition to meeting the standards set by 

NHTSA. According to the statute (49 U.S.C. 32902(b)(4)), the minimum standard shall be the 

greater of (A) 27.5 miles per gallon; or (B) 92 percent of the average fuel economy projected by 

the Secretary for the combined domestic and nondomestic passenger automobile fleets 

manufactured for sale in the United States by all manufacturers in the model year. The agency 

must publish the projected minimum standards in the Federal Register when the passenger car 

standards for the model year in question are promulgated. As a practical matter, as standards for 

both cars and trucks continue to rise over time, 49 U.S.C. 32902(b)(4)(A) will likely eventually 

cease to be relevant. 

As discussed in the final rule establishing the MYs 2012-2016 CAFE standards, because 

49 U.S.C. 32902(b)(4)(B) states that the minimum domestic passenger car standard shall be 92 

percent of the projected average fuel economy for the passenger car fleet, “which projection shall 

be published in the Federal Register when the standard for that model year is promulgated in 

accordance with this section,” NHTSA interprets EISA as indicating that the minimum domestic 

passenger car standard should be based on the agency’s fleet assumptions when the passenger car 

standard for that year is promulgated. 

However, we note that we do not read this language to preclude any change, ever, in the 

minimum standard after it is first promulgated for a model year. As long as the 18-month leadtime requirement of 49 U.S.C. 32902(a) is respected, NHTSA believes that the language of the 

statute suggests that the 92 percent should be determined anew any time the passenger car 

standards are revised. This issue will be particularly relevant for the current rulemaking, given 

the considerable leadtime involved and the necessity of a mid-term review for the MYs 2022-

2025 standards. We seek comment on this interpretation, and on whether or not the agency 

should consider instead for MYs 2017-2025 designating the minimum domestic passenger car 

standards proposed here as “estimated,” just as the passenger car standards are “estimated,” and 

waiting until the end of each model year to finalize the 92 percent mpg value. 

We note also that in the MYs 2012-2016 final rule, we interpreted EISA as indicating that 

the 92 percent minimum standard should be based on the estimated required CAFE level rather 

than, as suggested by the Alliance, the estimated achieved CAFE level (which would likely be 

lower than the estimated required level if it reflected manufacturers’ use of dual-fuel vehicle 

credits under 49 U.S.C. 32905, at least in the context of the MYs 2012-2016 standards). NHTSA 

continues to believe that this interpretation is appropriate. 

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

standards under the proposed MYs 2017-2025 CAFE standards (and, for comparison, the final 

MY 2016 minimum domestic passenger car standard) are summarized below in Table IV.E.3–1. 

TABLE IV.E.3–1—ESTIMATED MINIMUM STANDARD FOR DOMESTICALLY 

MANUFACTURED PASSENGER CARS UNDER FINAL MY 2016 AND PROPOSED MYS 2017–2025
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

652 

CAFE STANDARDS FOR PASSENGER CARS

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

34.7 36.8 38.1 39.6 41.1 42.9 44.9 47.0 49.2 51.5

Again, for the reader’s reference, the following table the following table presents 

estimated mpg levels based on 2-cycle CAFE for easier comparison to the MYs 2012-2016 

standards. 

TABLE IV.E.3–2—ESTIMATED MINIMUM STANDARD FOR DOMESTICALLY 

MANUFACTURED PASSENGER CARS UNDER FINAL MY 2016 AND USING 2-CYCLE CAFE ONLY 

FOR MYS 2017–2025 PASSENGER CARS

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

34.7 35.9 37.2 38.6 40.1 41.7 43.7 45.6 47.7 49.9

As discussed in Section IV.D above, NHTSA is also seeking comment on whether to 

consider, for the final rule, the possibility of minimum standards for imported passenger cars and 

light trucks. Although we are not proposing such standards, we believe it may be prudent to 

explore this concept again given the considerable amount of time between now and 2017-2025 

(particularly the later years), and the accompanying uncertainty in our market forecast and other 

assumptions, that might make such minimum standards relevant to help ensure that currentlyexpected fuel economy improvements occur during that time frame. To help commenters’ 

consideration of this question, illustrative levels of minimum standards for those other fleets are 

presented below. 

TABLE IV.E.3–3—ILLUSTRATIVE ESTIMATED MINIMUM STANDARD FOR IMPORTED 

PASSENGER CARS UNDER PROPOSED MYS 2017–2025 CAFE STANDARDS FOR PASSENGER CARS

2017 2018 2019 2020 2021 2022 2023 2024 2025 

36.8 38.1 39.6 41.1 42.9 44.9 47.0 49.2 51.5

TABLE IV.E.3–4—ILLUSTRATIVE ESTIMATED MINIMUM STANDARD FOR LIGHT TRUCKS 

UNDER PROPOSED MYS 2017–2025 CAFE STANDARDS FOR LIGHT TRUCKS

2017 2018 2019 2020 2021 2022 2023 2024 2025 

27.1 27.6 28.1 28.7 30.7 32.1 33.7 35.4 37.1

NHTSA emphasizes again that we are not proposing additional minimum standards for 

imported passenger cars and light trucks at this time, but we may consider including them in the 

final rule if it seems reasonable and appropriate to do so based on the information provided by 

commenters and the agency’s analysis. NHTSA also may wait until we are able to observe 

potential market changes during the implementation of the MYs 2012-2016 standards and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

653 

consider additional minimum standards in a future rulemaking action. Any additional minimum 

standards for MYs 2022-2025 that may be set in the future would, like the primary standards, be 

subject to the mid-term review discussed in Section IV.B above, and potentially revised at that 

time. 

4. Light Truck Standards 

For light trucks, NHTSA is proposing CAFE standards defined by the following 

coefficients during MYs 2017–2025: 

TABLE IV.E.4–1—COEFFICIENTS DEFINING PROPOSED MYS 2017–2025 FUEL ECONOMY 

TARGETS FOR LIGHT TRUCKS

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025 

a (mpg) 43.61 45.21 46.87 48.74 50.83 53.21 55.71 58.32 61.07

b (mpg) 32.65 33.84 35.07 36.47 38.02 39.79 41.64 43.58 45.61

c (gpm/sf) 0.00051 0.00050 0.00048 0.00046 0.00044 0.00042 0.00040 0.00039 0.00037

d (gpm) 0.00190 0.00181 0.00173 0.00164 0.00155 0.00146 0.00137 0.00129 0.00121

e (mpg) 42.06 42.06 42.06 42.06 42.06 42.06 42.06 42.06 42.06

f (mpg) 31.51 31.51 31.51 31.51 31.51 31.51 31.51 31.51 31.51

g (gpm/sf) 0.00053 0.00053 0.00053 0.00053 0.00053 0.00053 0.00053 0.00053 0.00053

h (gpm) 0.00201 0.00201 0.00201 0.00201 0.00201 0.00201 0.00201 0.00201 0.00201

For reference, the coefficients defining the MYs 2012-2016 light truck standards (which 

did not include a “floor” term defined by coefficients e, f, g, and h) are also provided below: 

TABLE IV.E.4–2—COEFFICIENTS DEFINING FINAL MYS 2012–2016 FUEL ECONOMY 

TARGETS FOR LIGHT TRUCKS

Coefficient 2012 2013 2014 2015 2016 

a (mpg) 36.18 37.16 38.31 40.06 42.03

b (mpg) 28.09 28.67 29.35 30.37 31.49

c (gpm/sf) 0.00053 0.00053 0.00053 0.00053 0.00053

d (gpm) 0.00588 0.00515 0.00434 0.00320 0.00203

The proposed coefficients result in the footprint-dependent targets shown graphically 

below for MYs 2017-2025. MYs 2012-2016 final standards are shown for comparison. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

654 

FIGURE IV.E.1—FUEL 

ECONOMY 

TARGETS FOR MYS 2012–2016 AND 2017–2025

LIGHT 

TRUCKS

20253035404550556065

30 35 40 45 50 55 60 65 70 75 80

Fuel Economy Target (mpg)

Footprint (sf)

20252024202320222021202020192018201720162015201420132012
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 655 of 770

Also for reference, the following table presents the coefficients based on 2-cycle CAFE 

only for easier comparison to the MYs 2012-2016 coefficients presented above. We emphasize, 

again, that the coefficients in Table IV.E.2-1 define the proposed standards. 

TABLE IV.E.4–3—COEFFICIENTS BASED ONLY ON 2-CYCLE CAFE FOR MYS 2017–2025

LIGHT TRUCKS

Coefficient 2017 2018 2019 2020 2021 2022 2023 2024 2025 

a (mpg) 35.53 36.37 37.01 37.91 40.43 42.29 44.24 46.28 48.42

b (mpg) 24.74 24.74 24.74 24.74 24.74 25.74 26.93 28.17 29.47

c (gpm/sf) 0.00055 0.00054 0.00053 0.00051 0.00048 0.00046 0.00044 0.00042 0.00040

d (gpm) 0.00566 0.00553 0.00543 0.00530 0.00497 0.00475 0.00454 0.00434 0.00415

Again, given these targets, the CAFE levels required of individual manufacturers will 

depend on the mix of vehicles they produce for sale in the United States. Based on the market 

forecast NHTSA has used to examine today’s proposed CAFE standards, the agency currently 

estimates that the targets shown above will result in the following average required fuel economy 

levels for individual manufacturers during MYs 2017–2025 (an updated estimate of the average 

required fuel economy level under the final MY 2016 standard is shown for comparison):727

TABLE IV.E.4–4—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY

2016 AND PROPOSED MYS 2017–2025 CAFE STANDARDS FOR LIGHT TRUCKS

Manufacture

r 

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Aston Martin - - - - - - - - - -

BMW 30.2 30.6 31.4 32.1 32.9 35.1 36.7 38.4 40.2 42.1

Daimler 29.1 29.1 29.6 30.2 30.9 32.9 34.5 36.1 37.8 39.5

Chrysler/Fiat

728 29.0 29.6 30.2 30.8 31.6 33.7 35.3 37.0 38.8 40.7

Ford 28.0 28.4 29.0 29.4 29.9 31.8 33.3 35.0 36.8 38.6

Geely (Volvo) 30.5 31.1 32.1 32.7 33.5 35.8 37.5 39.3 41.2 43.1

General 27.4 28.1 28.7 29.2 29.8 31.9 33.4 35.1 36.8 38.6

 727 In the May 2010 final rule establishing MYs 2012-2016 standards for passenger cars and light trucks, NHTSA 

estimated that the required fuel economy levels for light trucks would average 28.8 mpg under the MY 2016 light 

truck standard. Based on the agency’s current forecast of the MY 2016 light truck market, NHTSA again estimates 

that the required fuel economy levels will average 28.8 mpg in MY 2016. However, the agency’s market forecast 

reflects less of a future market shift away from light trucks than reflected in the agency’s prior market forecast; as a 

result, NHTSA currently estimates that the combined (i.e., passenger car and light truck) average required fuel 

economy in MY 2016 will be 33.8 mpg, 0.3 mpg lower than the agency’s earlier estimate of 34.1 mpg. The agency 

has made no changes to MY 2016 standards and projects no changes in fleet-specific average requirements 

(although within-fleet market shifts could, under an attribute-based standard, produced such changes). 

728 For purposes of CAFE compliance, “Chrysler/Fiat” is assumed to include Ferrari and Maserati in addition to the 

larger-volume Chrysler and Fiat brands. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 656 of 770

Motors 

Honda 30.4 31.0 31.8 32.4 33.2 35.5 37.1 38.9 40.8 42.7

Hyundai 30.7 31.3 32.1 32.8 33.6 35.9 37.6 39.4 41.3 43.2

Kia 29.5 30.0 30.6 31.2 32.0 34.2 35.8 37.5 39.3 41.1

Lotus - - - - - - - - - -

Mazda 31.5 31.9 32.9 33.5 34.3 36.5 38.1 39.8 41.8 43.8

Mitsubishi 31.7 32.6 33.5 34.2 35.1 37.5 39.3 41.1 43.1 45.2

Nissan 29.1 29.6 30.3 30.9 31.6 33.5 35.1 36.9 38.7 40.6

Porsche 29.8 30.3 31.2 31.8 32.6 34.8 36.5 38.2 40.0 41.9

Spyker (Saab) 30.5 31.2 32.1 32.8 33.6 35.9 37.6 39.4 41.3 43.3

Subaru 31.9 33.0 34.0 34.7 35.5 38.0 39.8 41.7 43.6 45.7

Suzuki 31.4 32.2 33.2 33.9 34.7 37.1 38.9 40.7 42.7 44.7

Tata (Jaguar, 

Rover) 31.3 32.1 33.1 33.8 34.6 37.0 38.8 40.6 42.6 44.6

Tesla - - - - - - - - - -

Toyota 29.1 29.7 30.4 31.0 31.6 33.8 35.4 37.1 39.0 40.9

VW729 29.2 29.5 30.1 30.8 31.5 33.5 35.1 36.7 38.5 40.3

Average 28.8 29.4 30.0 30.6 31.2 33.3 34.9 36.6 38.5 40.3

As discussed above with respect to the proposed passenger cars standards, we note that a 

manufacturer’s required light truck fuel economy level for a model year under the ultimate final 

standards will be based on its actual production numbers in that model year. 

Additionally, again for reference, the following table presents estimated mpg levels based 

on 2-cycle CAFE for easier comparison to the MYs 2012-2016 standards. 

TABLE IV.E.4–5—ESTIMATED AVERAGE FUEL ECONOMY REQUIRED UNDER FINAL MY

2016 AND USING 2-CYCLE CAFE FOR MYS 2017-2025 FOR LIGHT TRUCKS

Manufacturer 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Aston Martin - - - - - - - - - - 

BMW 30.2 30.1 30.7 31.3 32.0 34.1 35.7 37.3 39.0 40.8 

Daimler 29.1 28.6 29.0 29.5 30.2 32.1 33.5 35.0 36.6 38.3 

Chrysler/Fiat730 29.0 29.1 29.6 30.0 30.8 32.8 34.3 35.9 37.6 39.4 

Ford 28.0 28.0 28.4 28.8 29.2 31.0 32.4 34.0 35.7 37.4 

Geely (Volvo) 30.5 30.6 31.3 31.9 32.6 34.8 36.4 38.1 39.9 41.7 

General Motors 27.4 27.7 28.1 28.5 29.1 31.1 32.5 34.1 35.7 37.4 

Honda 30.4 30.5 31.0 31.6 32.3 34.5 36.1 37.7 39.5 41.3 

Hyundai 30.7 30.8 31.4 31.9 32.7 34.9 36.5 38.1 39.9 41.8 

Kia 29.5 29.5 29.9 30.4 31.2 33.3 34.8 36.4 38.1 39.8 

Lotus - - - - - - - - - - 

 729 For purposes of CAFE compliance, VW is assumed to include Audi-Bentley, Bugatti, and Lamborghini, along 

with the larger-volume VW brand. 

730 For purposes of CAFE compliance, “Chrysler/Fiat” is assumed to include Ferrari and Maserati in addition to the 

larger-volume Chrysler and Fiat brands. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 657 of 770

Mazda 31.5 31.3 32.1 32.7 33.4 35.4 37.0 38.6 40.4 42.3 

Mitsubishi 31.7 32.0 32.7 33.3 34.1 36.4 38.1 39.8 41.6 43.6 

Nissan 29.1 29.2 29.7 30.2 30.8 32.7 34.1 35.8 37.6 39.3 

Porsche 29.8 29.8 30.5 31.0 31.8 33.9 35.4 37.1 38.8 40.6 

Spyker (Saab) 30.5 30.7 31.4 32.0 32.7 34.9 36.5 38.2 40.0 41.8 

Subaru 31.9 32.4 33.1 33.7 34.5 36.8 38.5 40.3 42.2 44.1 

Suzuki 31.4 31.7 32.4 33.0 33.8 36.0 37.7 39.4 41.3 43.2 

Tata (Jaguar, Rover) 31.3 31.5 32.3 32.9 33.7 35.9 37.6 39.3 41.2 43.1 

Tesla - - - - - - - - - - 

Toyota 29.1 29.2 29.8 30.3 30.8 32.9 34.4 36.0 37.8 39.5 

VW731 29.2 29.0 29.5 30.0 30.7 32.7 34.1 35.7 37.3 39.1 

Average 28.8 29.0 29.4 29.9 30.4 32.5 33.9 35.6 37.3 39.0 

F. How do the proposed standards fulfill NHTSA’s statutory obligations?

1. What are NHTSA’s statutory obligations? 

As discussed above in Section IV.D, NHTSA sets CAFE standards under EPCA, as 

amended by EISA, and is also subject to the APA and NEPA in developing and promulgating 

CAFE standards. 

NEPA requires the agency to develop and consider the findings of an Environmental 

Impact Statement (EIS) for “major Federal actions significantly affecting the quality of the 

human environment.” NHTSA has determined that this action is such an action and therefore 

that an EIS is necessary, and has accordingly prepared a Draft EIS to inform its development and 

consideration of the proposed standards. The agency has evaluated the environmental impacts of 

a range of regulatory alternatives in our proposal, and integrated the results of that consideration 

into our balancing of the EPCA/EISA factors, as discussed below. 

The APA and relevant case law requires our rulemaking decision to be rational, based on 

consideration of the relevant factors, and within the scope of the authority delegated to the 

agency by EPCA/EISA. The relevant factors are those required by EPCA/EISA and the 

additional factors approved in case law as ones historically considered by the agency in 

determining the maximum feasible CAFE standards, such as safety. The statute requires us to 

set standards at the maximum feasible level for passenger cars and light trucks for each model 

year, and the agency tentatively concludes that the standards, if adopted as proposed, would 

satisfy this requirement. NHTSA has carefully examined the relevant data and other 

considerations, as discussed below in our explanation of our tentative conclusion that the 

proposed standards are the maximum feasible levels for those model years based on our 

evaluation of the information before us for this NPRM. 

 731 For purposes of CAFE compliance, VW is assumed to include Audi-Bentley, Bugatti, and Lamborghini, along 

with the larger-volume VW brand. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 658 of 770

As discussed in Section IV.D, EPCA/EISA requires that NHTSA establish separate 

passenger car and light truck standards at “the maximum feasible average fuel economy level 

that it decides the manufacturers can achieve in that model year,” based on the agency’s 

consideration of four statutory factors: technological feasibility, economic practicability, the 

effect of other standards of the Government on fuel economy, and the need of the nation to 

conserve energy.732 NHTSA has developed definitions for these terms over the course of 

multiple CAFE rulemakings733 and determines the appropriate weight and balancing of the terms 

given the circumstances in each CAFE rulemaking. For MYs 2011–2020, EPCA further requires 

that separate standards for passenger cars and for light trucks be set at levels high enough to 

ensure that the CAFE of the industry-wide combined fleet of new passenger cars and light trucks 

reaches at least 35 mpg not later than MY 2020. For model years after 2020, standards need 

simply be set at the maximum feasible level. 

The agency thus balances the relevant factors to determine the maximum feasible level of 

the CAFE standards for each fleet, in each model year. The next section discusses how the 

agency balanced the factors for this proposal, and why we believe the proposed standards are the 

maximum feasible. 

2. How did the agency balance the factors for this NPRM? 

There are numerous ways that the relevant factors can be balanced (and thus weight given 

to each factor) depending on the agency’s policy priorities and on the information before the 

agency regarding any given model year, and the agency therefore considered a range of 

alternatives that represent different regulatory options that we thought were potentially 

reasonable for purposes of this rulemaking. For this proposal, the regulatory alternatives 

considered in the agency’s analysis include several alternatives for fuel economy levels that 

increase annually, on average, at set rates – specifically, 2 %/year, 3 %/year, 4 %/year, 5 %/year, 

6 %/year, and 7 %/year.734 Analysis of these various rates of increase effectively encompasses 

the entire range of fuel economy improvements that, based on information currently available to 

 732 As explained in Section IV.D, EPCA also provides that in determining the level at which it should set CAFE 

standards for a particular model year, NHTSA may not consider the ability of manufacturers to take advantage of 

several statutory provisions that facilitate compliance with the CAFE standards and thereby reduce the costs of 

compliance. Specifically, in determining the maximum feasible level of fuel economy for passenger cars and light 

trucks, NHTSA cannot consider the fuel economy benefits of “dedicated” alternative fuel vehicles (like battery 

electric vehicles or natural gas vehicles), must consider dual-fueled automobiles to be operated only on gasoline or 

diesel fuel (at least through MY 2020), and may not consider the ability of manufacturers to use, trade, or transfer 

credits. This provision limits, to some extent, the fuel economy levels that NHTSA can find to be “maximum 

feasible” – if NHTSA cannot consider the fuel economy of electric vehicles, for example, NHTSA cannot set 

standards predicated on manufacturers’ usage of electric vehicles to meet the standards. 733 These factors are defined in Section IV.D; for brevity, we do not repeat those definitions here. 734 This is an approach similar to that used by the agency in the MY 2012-2016 rulemaking, in which we also 

considered several alternatives that increased annually, on average, at 3%, 4 %, 5 %, 6 % and 7 %/year. The 

“percent-per-year” alternatives in this proposal are somewhat different from those considered in the MY 2012-2016 

rulemaking, however, in terms of how the annual rate of increase is applied. For this proposal, the stringency curves 

are themselves advanced directly by the annual increase amount, without reference to any yearly changes in the fleet 

mix. In the 2012-2016 rule, the annual increases for the stringency alternatives reflected the estimated required fuel 

economy of the fleet which accounted for both the changes in the target curves and changes in the fleet mix. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 659 of 770

the agency, could conceivably fall within the statutory boundary of “maximum feasible” 

standards. The regulatory alternatives also include two alternatives based on benefit-cost 

criteria, one in which standards would be set at the point where net benefits would be maximized 

for each fleet in each year (MNB), and another in which standards would be set at the point at 

which total costs would be most nearly equal to total benefits for each fleet in each year 

(TC=TB),735 as well as the preferred alternative, which is within the range of the other 

alternatives. These alternatives are discussed in more detail in Chapter III of the PRIA 

accompanying this NPRM, which also contains an extensive analysis of the relative impacts of 

the alternatives in terms of fuel savings, costs (both per-vehicle and aggregate), carbon dioxide 

emissions avoided, and many other metrics. Because the agency could conceivably select any of 

the regulatory alternatives above, all of which fall between 2 %/year and 7 %/year, inclusive, the 

Draft EIS that accompanies this proposal analyzes these lower and upper bounds as well as the 

preferred alternative. Additionally, the Draft EIS analyzes a “No Action Alternative,” which 

assumes that, for MYs 2017 and beyond, NHTSA would set standards at the same level as MY 

2016. The No Action Alternative provides a baseline for comparing the environmental impacts 

of the other alternatives. 

NHTSA believes that this approach clearly communicates the level of stringency of each 

alternative and allows us to identify alternatives that represent different ways to balance 

NHTSA’s statutory factors under EPCA/EISA. Each of the listed alternatives represents, in part, 

a different way in which NHTSA could conceivably balance different policies and considerations 

in setting the standards that achieve the maximum feasible levels. For example, the 2% 

Alternative, the least stringent alternative, would represent a balancing in which economic 

practicability – which include concerns about availability of technology, capital, and consumer 

preferences for vehicles built to meet the future standards – weighs more heavily in the agency’s 

consideration, and the need of the nation to conserve energy would weigh less heavily. In 

contrast, under the 7% Alternative, one of the most stringent, the need of the nation to conserve 

energy – which includes energy conservation and climate change considerations – would weigh 

more heavily in the agency’s consideration, and technological feasibility and economic 

practicability would weigh less heavily. Balancing and assessing the feasibility of different 

alternative can also be influenced by differences and uncertainties in the way in which key 

economic factors (e.g., the price of fuel and the social cost of carbon) and technological inputs 

could be assessed and estimated or valued. While NHTSA believes that our analysis conducted 

in support of this NPRM uses the best and most transparent technology-related inputs and 

economic assumption inputs that the agencies could derive for MYs 2017-2025, we recognize 

that there is uncertainty in these inputs, and the balancing could be different if, for example, the 

inputs are adjusted in response to new information. 

This is the first CAFE rulemaking in which the agency has looked this far into the future, 

which makes our traditional approach to balancing more challenging than in past (even recent 

past) rulemakings. NHTSA does not presently believe, for example, that technological 

feasibility as the agency defines it is as constraining in this rulemaking as it has been in the past 

 735 We included the MNB and TC=TB alternatives in part for the reference of commenters familiar with NHTSA’s 

past several CAFE rulemakings – these alternatives represent balancings carefully considered by the agency in past 

rulemaking actions as potentially maximum feasible – and because Executive Orders 12866 and 13563 focus 

attention on an approach that maximizes net benefits. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 660 of 770

in light of the time frame of this rulemaking. “Technological feasibility” refers to whether a 

particular method of improving fuel economy can be available for commercial application in the 

model year for which a standard is being established. In nearer-term rulemakings like many of 

the previous CAFE rulemakings, it has been more difficult for the agency to say that the most 

advanced technologies would be available for commercial application in the model years for 

which standards were being established. For this rulemaking, which is longer term, NHTSA has 

considered all types of technologies that improve real-world fuel economy, including airconditioner efficiency and other off-cycle technology, PHEVs, EVs, and highly-advanced 

internal combustion engines not yet in production, but all of which the agencies’ expect to be 

commercially applicable by the rulemaking time frame. On the one hand, we recognize that 

some technologies that currently have limited commercial use cannot be deployed on every 

vehicle model in MY 2017, or even necessarily in MY 2025, but require a realistic schedule for 

widespread commercialization to be feasible. On the other hand, however, the agency expects, 

based on our analysis, that all of the alternatives could narrowly be considered as technologically

feasible, in that they could be achieved based on the existence or projected future existence of 

technologies that could be incorporated on future vehicles, and enable any of the alternatives to 

be achieved on a technical basis alone if the level of resources that might be required practically 

to implement the technologies is not considered. If all alternatives are at least theoretically 

technologically feasible in the MY 2017-2025 timeframe, and the need of the nation is best 

served by pushing standards as stringent as possible, then the agency might be inclined to select 

the alternative that results in the very most stringent standards considered. 

However, the agency must also consider what is required to practically implement 

technologies, which is part of economic practicability, and to which the most stringent 

alternatives give little weight. “Economic practicability” refers to whether a standard is one 

“within the financial capability of the industry, but not so stringent as to lead to “adverse 

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

consumer choice.” Consumer acceptability is also an element of economic practicability, one 

which is particularly difficult to gauge during times of uncertain fuel prices.736 In a rulemaking 

such as the present one, determining economic practicability requires consideration of the 

uncertainty surrounding relatively distant future market conditions and consumer demand for 

fuel economy in addition to other vehicle attributes. In an attempt to evaluate the economic 

practicability of attribute-based standards, NHTSA includes a variety of factors in its analysis, 

including the annual rate at which manufacturers can increase the percentage of their fleet that 

employ a particular type of fuel-saving technology, the specific fleet mixes of different 

manufacturers, and assumptions about the cost of the standards to consumers and consumers’ 

valuation of fuel economy, among other things. Ensuring that a reasonable amount of lead time 

exists to make capital investments and to devote the resources and time to design and prepare for 

commercial production of a more fuel efficient fleet is also relevant to the agency’s consideration 

of economic practicability. Yet there are some aspects of economic practicability that the 

agency’s analysis is not able to capture at this time – the computer model that we use to analyze 

alternative standards does not account for all aspects of uncertainty, in part because the agency 

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

of market demand as component of economic practicability found to be reasonable); Public Citizen v. NHTSA, 848 

F.2d 256 (Congress established broad guidelines in the fuel economy statute; agency’s decision to set lower standard 

was a reasonable accommodation of conflicting policies). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 661 of 770

cannot know what we cannot know. The agency must thus account for uncertainty in the context 

of economic practicability as best as we can based on the entire record before us. 

Both technological feasibility and economic practicability enter into the agency’s 

determination of the maximum feasible levels of stringency, and economic practicability 

concerns may cause the agency to decide that standards that might be technologically feasible 

are, in fact, beyond maximum feasible. Standards that require aggressive application of and 

widespread deployment of advanced technologies could raise serious issues with the adequacy of 

time to coordinate such significant changes with manufacturers’ redesign cycles, as well as with 

the availability of engineering resources to develop and integrate the technologies into products, 

and the pace at which capital costs can be incurred to acquire and integrate the manufacturing 

and production equipment necessary to increase the production volume of the technologies. 

Moreover, the agency must consider whether consumers would be likely to accept a specific 

technological change under consideration, and how the cost to the consumer of making that 

change might affect their acceptance of it. The agency maintains, as it has in prior CAFE 

rulemakings, that there is an important distinction between considerations of technological 

feasibility and economic practicability. As explained above, a given level of performance may 

be technologically feasible (i.e., setting aside economic constraints) for a given vehicle model. 

However, it would not be economically practicable to require a level of fleet average 

performance that assumes every vehicle will in the first year of the standards perform at the 

highest technologically feasible level, because manufacturers do not have unlimited access to the 

financial resources or may not practically be able to hire enough engineers, build enough 

facilities, and install enough tooling. 

NHTSA therefore believes, based on the information currently before us, that economic 

practicability concerns render certain standards that might otherwise be technologically feasible 

to be beyond maximum feasible within the meaning of the statute for the 2017-2025 standards. 

Our analysis indicated that technologies seem to exist to meet the stringency levels required by 

future standards under [all, or many? Still evaluating] of the regulatory alternatives; but it also 

indicated that manufacturers would not be able to apply those technologies quickly enough, 

given their redesign cycles, and the level of the resources that would be required to implement 

those technologies widely across their products, to meet all applicable standards in every model 

year under some of the alternatives. 

Another consideration for economic practicability is incremental per-vehicle increases in 

technology cost. In looking at the incremental technology cost results from our modeling 

analysis, the agency saw that in progressing from alternatives with lower stringencies to 

alternatives with higher stringencies, technology cost increases (perhaps predictably) at a 

progressively higher rate, until the model projects that manufacturers are unable to comply with 

the increasing standards and enter (or deepen) non-compliance. Table IV.F.1 and Table IV.F.2 

show estimated cumulative lifetime fuel savings and estimated average vehicle cost increase for 

passenger cars and light trucks. The results show that there is a significant increase in 

technology cost between the 4% alternatives and the 5% alternatives. 

TABLE IV.F.1. ESTIMATED PASSENGER CAR CUMULATIVE LIFETIME FUEL SAVINGS AND 

AVERAGE VEHICLE COST INCREASE
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 662 of 770

 

Cumulative 

Lifetime 

Fuel 

Savings 

2017-2021 

(billion 

gallons) 

Average 

Vehicle 

Cost 

Increase in 

2021 

(2009 $) 

Cumulative 

Lifetime 

Fuel 

Savings 

2017-2025 

(billion 

gallons) 

Average 

Vehicle 

Cost 

Increase in 

2025 

(2009 $) 

2% 20 $446 54 $690 

3% 29 $764 79 $1,343 

MNB 51 $1,067 103 $1,391 

Preferred 

Alternative 37 $1,171 98 $2,015 

4% 39 $1,214 103 $2,190 

TC=TB 58 $1,615 129 $2,559 

5% 48 $1,601 123 $2,924 

6% 54 $1,804 133 $3,152 

7% 57 $1,877 137 $3,279 

TABLE IV.F.2. ESTIMATED LIGHT TRUCK CUMULATIVE LIFETIME FUEL SAVINGS AND 

AVERAGE VEHICLE COST INCREASE

 

Cumulative 

Lifetime 

Fuel 

Savings 

2017-2021 

(billion 

gallons) 

Average 

Vehicle 

Cost 

Increase in 

2021 

(2009 $) 

Cumulative 

Lifetime 

Fuel 

Savings 

2017-2025 

(billion 

gallons) 

Average 

Vehicle 

Cost 

Increase in 

2025 

(2009 $) 

2% 20 $523 49 $720 

3% 29 $961 70 $1,309 

Preferred 

Alternative 21 $910 63 $1,544 

4% 37 $1,570 88 $2,384 

MNB 56 $2,222 114 $3,327 

TC=TB 57 $2,238 115 $3,563 

5% 46 $2,154 106 $3,445 

6% 51 $2,329 112 $3,555 

7% 53 $2,442 115 $3,677 

 Thus, if technological feasibility and the need of the nation are not particularly limiting 

in a given rulemaking, then maximum feasible standards would be represented by the mpg levels 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 663 of 770

that we could require of the industry to improve fuel economy before we reach a tipping point 

that presents risk of significantly adverse economic consequences. Standards that are lower than 

that point would likely not be maximum feasible, because such standards would leave fuelsaving technologies on the table unnecessarily; standards that are higher than that point would 

likely be beyond what the agency would consider economically practicable, and therefore 

beyond what we would consider maximum feasible, even if they might be technologically 

feasible or better meet the need of the nation to conserve energy. The agency does not believe 

that standards are balanced if they weight one or two factors so heavily as to ignore another. 

We explained above that part of the way that we try to evaluate economic practicability is 

through a variety of model inputs, such as phase-in caps (the annual rate at which manufacturers 

can increase the percentage of their fleet that employ a particular type of fuel-saving technology) 

and redesign schedules to account for needed lead time. These inputs limit how much 

technology can be applied to a manufacturer’s fleet in the agency’s analysis attempting to 

simulate a way for the manufacturer to comply with standards set under different regulatory 

alternatives. If the limits (and technology cost-effectiveness) prevent enough manufacturers 

from meeting the required levels of stringency, the agency may decide that the standards under 

consideration may not be economically practicable. The difference between the required fuel 

economy level that applies to a manufacturer’s fleet and the level of fuel economy that the 

agency projects the manufacturer would achieve in that year, based on our analysis, is called a 

“compliance shortfall.”737 

We underscore again that the modeling analysis does not dictate the “answer,” it is 

merely one source of information among others that aids the agency’s balancing of the standards. 

These considerations, shortfalls and increases in incremental technology costs, do not entirely 

define economic practicability, but we believe they are symptomatic of it. In looking at the 

projected compliance shortfall results from our modeling analysis, the agency preliminarily 

concluded, based on the information before us at the time, that for both passenger car and for 

light trucks, the MNB and TC=TB alternatives, and the 5%, 6% and 7% alternatives did not 

appear to be economically practicable, and were thus likely beyond maximum feasible levels for 

MYs 2017-2025. In other words, despite the theoretical technological feasibility of achieving 

these levels, various manufacturers would likely lack the financial and engineering resources and 

sufficient lead time to do so. The analysis showed for the passenger car 5% alternative, there 

were significant compliance shortfalls for Chrysler in MY 2025, Ford in MYs 2021 and 2023-

2025, GM in MYs 2022 and 2024-2025, Mazda in MYs 2021 and 2024-2025, and Nissan in MY 

2025. For light trucks, the analysis showed the 5% alternative had significant compliance 

shortfalls for Chrysler in MYs 2022-2025, Ford in MY 2025, GM in MYs 2023-2025, Kia in 

MY 2025, Mazda in MYs 2022 and 2025, and Nissan in MYs 2023-2025. However, the 4%, 3% 

and 2% alternatives did not appear, based on shortfalls, to be beyond the level of economic 

practicability, and thus appeared potentially to be within the range of alternatives that might yet 

be maximum feasible. 

 737 The agency’s modeling estimates how the application of technologies could increase vehicle costs, reduce fuel 

consumption, and reduce CO2 emissions, and affect other factors. As CAFE standards are performance-based, 

NHTSA does not mandate that specific technologies be used for compliance. CAFE modeling, therefore projects 

one way that manufacturers could comply. Manufacturers may choose a different mix of technologies based on 

their unique circumstances and products. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 664 of 770

TABLE IV.F.3. ESTIMATED PASSENGER CAR COMPLIANCE SHORTFALL FOR THE 5%/YEAR 

ALTERNATIVE (MPG) 

Estimated Compliance Shortfall for Passenger Car (mpg) 

 2017 2018 2019 2020 2021 2022 2023 2024 2025

Chrysler - - - - - - - 0.6 2.8 

Ford - - - 0.3 2.4 0.6 2.2 3.9 6.6 

General Motors - - - - - 2.3 0.3 1.7 3.7 

Honda - - - - - - - - 0.3 

Hyundai - - - - - - - - - 

Kia - - - - - - - - - 

Mazda - - - - 1.9 - - 1.6 1.9 

Nissan - - - - - - - - 1.4 

Toyota - - - - - - - - - 

TABLE IV.F.4. ESTIMATED LIGHT TRUCK COMPLIANCE SHORTFALL FOR THE 5%/YEAR 

ALTERNATIVE (MPG) 

Estimated Compliance Shortfall for Light Truck (mpg) 

 2017 2018 2019 2020 2021 2022 2023 2024 2025

Chrysler - - - - - 1.7 1.0 3.2 1.0 

Ford - - - - - - - 0.6 2.3 

General Motors - - - - - 0.2 1.8 2.6 2.7 

Honda - - - - - - - - 0.2 

Hyundai - - - - - - 0.6 - - 

Kia - - - - - - - - 2.1 

Mazda - - - - - 1.0 - - 2.1 

Nissan - - - - - - 1.1 2.1 4.6 

Toyota - - - - - - - - - 

The preliminary analysis referred to above, in which the agency tentatively concluded 

that the 5%, 6%, 7%, MNB, and TC=TB alternatives were likely beyond the level of economic 

practicability based on the information available to the agency at the time, was conducted 

following the first SNOI and prior to the second SNOI – thus, between the end of 2010 and July 

2011. The agencies stated in the first SNOI that we had not conducted sufficient analysis at the 

time to narrow the range of potential stringencies that had been discussed in the initial NOI and 

in the Interim Joint TAR, and that we would be conducting more analyses and continuing 

extensive dialogue with stakeholders in the coming months to refine our proposal. Based on our 

initial consideration of how the factors might be balanced to determine the maximum feasible 

standards to propose for MYs 2017-2025 (i.e., where technological feasibility did not appear to 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 665 of 770

be particularly limiting and the need of the nation would counsel for choosing more stringent 

alternatives, but economic practicability posed significant limitations), NHTSA’s preliminary 

analysis indicated that the alternatives including up to 4% per year for cars and 4% per year for 

trucks should reasonably remain under consideration. 

With that preliminary estimate of 4%/year for cars and trucks as the upper end of the 

range of alternatives that should reasonably remain under consideration for MYs 2017-2025, the 

agencies began meeting again intensely with stakeholders, including many individual 

manufacturers, between June 21, 2011 and July 27, 2011 to determine whether additional 

information would aid NHTSA in further consideration. Beginning in the June 21, 2011 

meeting, NHTSA and EPA presented the 4% alternative target curves as a potential concept 

along with preliminary program flexibilities and provisions, in order to get feedback from the 

manufacturer stakeholders. Manufacturer stakeholders provided comments, much of which was 

confidential business information, which included projections of how they might comply with 

concept standards, the challenges that they expected, and their recommendations on program 

stringency and provisions.738 

Regarding passenger cars, several manufacturers shared projections that they would be 

capable of meeting stringency levels similar to NHTSA’s preliminary CAFE modeling 

projections for the 4% alternative in MY 2020 or in 2021, with some of those arguing that they 

faced challenges in the earlier years of that period with meeting a constant 4% rate throughout 

the entire period. Some manufacturers shared projections that they could comply with 

stringencies that ramped up, increasing more slowly in MY 2017 and then progressively 

increasing through MY 2021. Most manufacturers provided limited projections beyond MY 

2021, although some stated that they could meet the agency’s concept stringency targets in MY 

2025. Manufacturers generally suggested that the most significant challenges to meeting a 

constant 4% (or faster) year-over-year increase in the passenger car standards related to their 

ability to implement the new technologies quickly enough to achieve the required levels, given 

their need to implement fuel economy improvements in both the passenger car and light truck 

fleets concurrently; challenges related to the cadence of redesign and refresh schedules; the pace 

at which new technology can be implemented considering economic factors such as availability 

of engineering resources to develop and integrate the technologies into products; and the pace at 

which capital costs can be incurred to acquire and integrate the manufacturing and production 

equipment necessary to increase the production volume of the technologies. Manufacturers often 

expressed concern that the 4% levels could require greater numbers of advanced technology 

vehicles than they thought they would be able to sell in that time frame, given their belief that the 

cost of some technologies was much higher than the agencies had estimated and their 

observations of current consumer acceptance of and willingness to pay for advanced technology 

vehicles that are available now in the marketplace. A number of manufacturers argued that they 

did not believe that they could create a sustainable business case under passenger car standards 

that increased at the rate required by the 4% alternative. 

Regarding light trucks, most manufacturers expressed significantly greater concerns over 

the 4% alternative for light trucks than for passenger cars. Many manufacturers argued that 

 738 Feedback from these stakeholder meetings is summarized in section IV.B and documents that are referenced in 

that section. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 666 of 770

increases in light truck standard stringency should be slower than increases in passenger car 

standard stringency, based on, among other things, the greater payload, cargo capacity and 

towing utility requirements of light trucks, and what they perceived to be lower consumer 

acceptance of certain (albeit not all) advanced technologies on light trucks. Many manufacturers 

also commented that redesign cycles are longer on trucks than they are on passenger cars, which 

reduces the frequency at which significant changes can be made cost-effectively to comply with 

increasing standards, and that the significant increases in stringency in the MY 2012-2016 

program739 in combination with redesign schedules would not make it possible to comply with 

the 4% alternative in the earliest years of the MY 2017-2025 program, such that only 

significantly lower stringencies in those years would be feasible in their estimation. As for cars, 

most manufacturers provided limited projections beyond MY 2021. Manufacturers generally 

stated that the most significant challenges to meeting a constant 4% (or faster) year-over-year 

increase in the light truck standards were similar to what they had described for passenger cars as 

enumerated in the paragraph above, but were compounded by concerns that applying 

technologies to meet the 4% alternative standards would result in trucks that were more 

expensive and provided less utility to consumers. As was the case for cars, manufacturers 

argued that their technology cost estimates were higher than the agencies’ and consumers are less 

willing to accept/pay for some advanced technologies in trucks, but manufacturers argued that 

these concerns were more significant for trucks than for cars, and that they were not optimistic 

that they could recoup the costs through higher prices for vehicles with the technologies that 

would be needed to comply with the 4% alternative. Given their concerns about having to 

reduce utility and raise truck prices, and about their ability to apply technologies quickly enough 

given the longer redesign periods for trucks, a number of manufacturers argued that they did not 

believe that they could create a sustainable business case under light truck standards that 

increased at the rate required by the 4% alternative. 

Other stakeholders, such as environmental and consumer groups, consistently stated that 

stringent standards are technically achievable and critical to important national interests, such as 

improving energy independence, reducing climate change, and enabling the domestic automobile 

industry to remain competitive in the global market. Labor interests stressed the need to 

carefully consider economic impacts and the opportunity to create and support new jobs, and 

consumer advocates emphasized the economic and practical benefits to consumers of improved 

fuel economy and the need to preserve consumer choice. In addition, a number of stakeholders 

stated that the standards under development should not have an adverse impact on safety. 

NHTSA, in collaboration with EPA and in coordination with CARB, carefully considered 

the inputs received from all stakeholders, conducted additional independent analyses, and 

deliberated over the feedback received on the agencies’ analyses. NHTSA considered individual 

manufacturers’ redesign cycles and, where available, the level of technologies planned for their 

future products that improve fuel economy, as well as some estimation of the resources that 

would likely be needed to support those plans and the potential future standards. The agency 

also considered whether we agreed that there could conceivably be compromises to vehicle 

utility depending on the technologies chosen to meet the potential new standards, and whether a 

 739 Some manufacturers indicated that their light truck fleet fuel economy would be below what they anticipated 

their required fuel economy level would be in MY 2016, and that they currently expect that they will need to employ 

available flexibilities to comply with that standard. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 667 of 770

change in the cadence of the rate at which standards increase could provide additional 

opportunity for industry to develop and implement technologies that would not adversely affect 

utility. NHTSA considered feedback on consumer acceptance of some advanced technologies 

and consumers’ willingness to pay for improved fuel economy. In addition, the agency carefully 

considered whether manufacturer assertions about potential uncertainties in the agency’s 

technical, economic, and consumer acceptance assumptions and estimates were potentially valid, 

and if so, what the potential effects of these uncertainties might be on economic practicability. 

Regarding passenger cars, after considering this feedback from stakeholders, the agency 

considered further how it thought the factors should be balanced to determine the maximum 

feasible passenger car standards for MYs 2017-2025. Based on that reconsideration of the 

information before the agency and how it informs our balancing of the factors, NHTSA 

tentatively concludes that the points raised may indicate that the agency’s preliminary analysis 

supporting consideration of standards that increased up to 4%/year may not have captured fully 

the level of uncertainty that surrounds economic practicability in these future model years. 

Nevertheless, while we believe there may be some uncertainty, we do not agree that it is nearly 

as significant as a number of manufacturers maintained, especially for passenger cars. The most 

persuasive information received from stakeholders for passenger cars concerned practicability 

issues in the first phase of the MY 2017-2025 standards. We therefore tentatively conclude that 

the maximum feasible stringency levels for passenger cars are only slightly different from the 

4%/year levels suggested as the high end preliminarily considered by the agency; increasing on 

average 3.7%/year in MYs 2017-2021, and on average 4.5%/year in MYs 2022-2025. For the 

overall MY 2017-2025 period, the maximum feasible stringency curves increase on average at 

4.1%/year, and our analysis indicates that the costs and benefits attributable to the 4% alternative 

and the preferred alternative for passenger cars are very similar: the preferred alternative is 4.4 

percent less expensive for manufacturers than the 4% alternative (estimated total costs are $115 

billion for the preferred alternative and $122 billion for the 4% alternative), and achieves only 

$14 billion less in total benefits than the 4% alternative (estimated total benefits are $302 billion 

for the preferred alternative and $316 billion for the 4% alternative), a very small difference 

given that benefits are spread across the entire lifetimes of all vehicles subject to the standards. 

The analysis also shows that the lifetime cumulative fuel savings is only 5 percent higher for the 

4% alternative than the preferred alternative (the estimated fuel savings is 98 billion gallons for 

the preferred alternative, and 103 billion gallons for the 4% alternative). At the same time, the 

increase in average vehicle cost in MY 2025 is 8 percent higher for the 4% alternative (the 

estimated cost increase for the average vehicle is $2,015 for the preferred alternative, and $2,190 

for the 4% alternative). The rates of increase in stringency for each model year are summarized 

in Table IV.F.3 and Table IV.F.4. NHTSA emphasizes that under 49 U.S.C. 32902(b), the 

standards must be maximum feasible in each model year without reference to other model years, 

but we believe that the small amount of progressiveness in the proposed standards for MYs 

2017-2021, which has very little effect on total benefits attributable to the proposed passenger 

car standards, will help to enable the continuation of, or increases in, research and development 

into the more advanced technologies that will enable greater stringency increases in MYs 2022-

2025, and help to capture the considerable fuel savings and environmental benefits similar to the 

4% alternative beginning in MY 2025. We are concerned that requiring manufacturers to invest 

that capital to meet higher standards in MYs 2017-2021, rather than allowing them to increase 

fuel economy in those years slightly more slowly, would reduce the levels that would be feasible 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 668 of 770

in the second phase of the program by diverting research and development resources to those 

earlier model years. Thus, after considerable deliberation with EPA and consultation with 

CARB, NHTSA selected the preferred alternative as the maximum feasible alternative for MYs 

2017-2025 passenger cars based on consideration of inputs from manufacturers and the agency’s 

independent analysis, which reaches the stringency levels of the 4% alternative in MY 2025, but 

has a slightly slower ramp up rate in the earlier years. 

TABLE IV.F.5. ANNUAL RATE OF INCREASE IN THE STRINGENCY OF THE PREFERRED 

ALTERNATIVE FOR EACH MODEL YEAR

Model Year Passenger Car Light Truck 

2017 3.6% 0.6% 

2018 3.6% 2.1% 

2019 3.6% 1.7% 

2020 3.7% 2.0% 

2021 4.2% 6.4% 

2022 4.5% 4.5% 

2023 4.4% 4.7% 

2024 4.5% 4.7% 

2025 4.5% 4.6% 

TABLE IV.F.6. ANNUAL RATE OF INCREASE IN THE STRINGENCY OF THE PREFERRED 

ALTERNATIVE OVER VARIOUS PERIODS

Model Years Passenger Car Light Truck 

2017-2021 3.7% 2.6% 

2022-2025 4.5% 4.6% 

2017-2025 4.1% 3.5% 

Regarding light trucks, while NHTSA does not agree with the manufacturer’s overall cost 

assessments and believe that our technology cost and effectiveness assumptions should allow the 

most capable manufacturers to preserve all necessary vehicle utility, the agencies do believe 

there is merit to some of the concerns raised in stakeholder feedback. Specifically, concerns 

about longer redesign schedules for trucks, compounded by the need to invest simultaneously in 

raising passenger car fuel economy, may not have been fully captured in our preliminary 

analysis. This could lead manufacturers to implement technologies that do not maintain vehicle 

utility, based on the cadence of the standards under the 4% alternative. A number of 

manufacturers repeatedly stated, in providing feedback, that the MYs 2012-2016 standards for 

trucks, while feasible, required significant investment to reach the required levels, and that given 

the redesign schedule for trucks, that level of investment throughout the entire MYs 2012-2025 

time period was not sustainable. Based on the confidential business information that 

manufacturers provided to us, we believe that this point may be valid. If the agency pushes 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 669 of 770

CAFE increases that require considerable sustained investment at a faster rate than industry 

redesign cycles, adverse economic consequences could ensue. The best information that the 

agency has at this time, therefore, indicates that requiring light truck fuel economy 

improvements at the 4% annual rate could create potentially severe economic consequences. 

Thus, evaluating the inputs from stakeholders and the agency’s independent analysis, the 

agency also considered further how it thought the factors should be balanced to determine the 

maximum feasible light truck standards for MYs 2017-2025. Based on that consideration of the 

information before the agency and how it informs our balancing of the factors, NHTSA 

tentatively concludes that 4%/year CAFE stringency increases for light trucks in MYs 2017-2021 

are likely beyond maximum feasible, and in fact, in the earliest model years of the MY 2017-

2021 period, that the 3%/year and 2%/year alternatives for trucks are also likely beyond 

maximum feasible. NHTSA therefore tentatively concludes that the preferred alternative, which 

would in MYs 2017-2021 increase on average 2.6%/year, and in MYs 2022-2025 would increase 

on average 4.6%/year, is the maximum feasible level that the industry can reach in those model 

years. For the overall MY 2017-2025 period, the maximum feasible stringency curves would 

increase on average 3.5%/year. The rates of increase in stringency for each model year are 

summarized in Table IV.F.3 and Table IV.F.4. Our analysis indicates that the preferred 

alternative has 48 percent lower cost than the 4% alternative (estimated total costs are $43 billion 

for the preferred alternative and $82 billion for the 4% alternative), and the total benefits of the 

preferred alternative are 28 percent lower ($76 billion lower) than the 4% alternative (estimated 

total benefits are $193 billion for the preferred alternative and $269 billion for the 4% 

alternative), spread across the entire lifetimes of all vehicles subject to the standards. The 

analysis also shows that the lifetime cumulative fuel savings is 28 percent higher for the 4% 

alternative than the preferred alternative (the estimated fuel savings is 63 billion gallons for the 

preferred alternative, and 88 billion gallons for the 4% alternative). At the same time, the 

increase in average vehicle cost in MY 2025 is 35 percent higher for the 4% alternative (the 

estimated cost increase for the average vehicle is $1,544 for the preferred alternative, and $2,384 

for the 4% alternative). While these differences are larger than for passenger cars, NHTSA 

believes that standards set at these levels for these model years will help address concerns raised 

by manufacturer stakeholders and reduce the risk for adverse economic consequences, while at 

the same time ensuring most of the substantial improvements in fuel efficiency initially 

envisioned over the entire period and supported by other stakeholders. NHTSA believes that 

these stringency levels, along with the provisions for incentives for advanced technologies to 

encourage their development and implementation, and the agencies’ expectation that some of the 

uncertainties surrounding consumer acceptance of new technologies in light trucks should have 

resolved themselves by that time frame based on consumers’ experience with the advanced 

technologies, will enable these increases in stringency over the entire MY 2017-2025 period. 

Although, as stated above, the light truck standards must be maximum feasible in each model 

year without reference to other model years, we believe that standards set at the stated levels for 

MYs 2017-2021 and the incentives for advanced technologies for pickup trucks will create the 

best opportunity to ensure that the MY 2022-2025 standards are economically practicable, and 

avoid adverse consequences. The first phase of light truck standards, in that respect, acts as a 

kind of bridge to the second phase, in which industry should be able to realize considerable 

additional improvements in fuel economy. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 670 of 770

The proposed standards also account for the effect of EPA’s standards, in light of the 

agencies’ close coordination and the fact that both sets of standards were developed together to 

harmonize as part of the National Program. Given the close relationship between fuel economy 

and CO2 emissions, and the efforts NHTSA and EPA have made to conduct joint analysis and 

jointly deliberate on information and tentative conclusions,740 the agencies have sought to 

harmonize and align their proposed standards to the greatest extent possible, consistent with their 

respective statutory authorities. In comparing the proposed standards, the agencies’ stringency 

curves are equivalent, except for the fact that the stringency of EPA’s proposed passenger car 

standards reflect the ability to improve GHG emissions through reductions in A/C system 

refrigerant leakage and the use of lower GWP refrigerants (direct A/C improvements),741 and that 

EPA provides incentives for PHEV, EV and FCV vehicles, which NHTSA does not provide 

because statutory incentives have already been defined for these technologies. The stringency of 

NHTSA’s proposed standards for passenger cars for MYs 2017-2025 align with the stringency of 

EPA’s equivalent standards when these differences are considered.742 NHTSA is proposing the 

preferred alternative based on the tentative determination of maximum feasibility as described 

earlier in the section, but, based on efforts NHTSA and EPA have made to conduct joint analysis 

and jointly deliberate on information and tentative conclusions, NHTSA has also aligned the 

proposed CAFE standards with EPA’s proposed standards. 

Thus, consistent with President Obama’s announcement on July 29, 2011, and with the 

August 9, 2011 SNOI, NHTSA has tentatively concluded that the standards represented by the 

preferred alternative are the maximum feasible standards for passenger cars and light trucks in 

MYs 2017-2025. We recognize that higher standards would help the need of the nation to 

conserve more energy and might potentially be technologically feasible (in the narrowest sense) 

during those model years, but based on our analysis and the evidence presented by the industry, 

we tentatively conclude that higher standards would not represent the proper balancing for MYs 

2017-2025 cars and trucks. We tentatively conclude that the correct balancing recognizes 

economic practicability concerns and the inevitable uncertainty in setting standards farther in the 

future than in past rulemakings, and sets standards at the levels that the agency is proposing in 

this NPRM.743 In the same vein, lower standards might be less burdensome on the industry, but 

considering the environmental impacts of the different regulatory alternatives as required under 

 740 NHTSA and EPA conducted joint analysis and jointly deliberated on information and tentative conclusions 

related to technology cost, effectiveness, manufacturers’ capability to implement technologies, the cadence at which 

manufacturers might support the implementation of technologies, economic factors, and the assessment of 

comments from manufacturers. 

741 As these A/C system improvements do not influence fuel economy, the stringency of NHTSA’s preferred 

alternatives do not reflect the availability of these technologies. 742 We note, however, that the alignment is based on the assumption that manufacturers implement the same level of 

direct A/C system improvements as EPA currently forecasts for those model years, and on the assumption of PHEV, 

EV, and FCV penetration at specific levels. If a manufacturer implements a higher level of direct A/C improvement 

technology and/or a higher penetration of PHEVs, EVs and FCVs, then NHTSA’s proposed standards would 

effectively be more stringent than EPA’s. Conversely, if a manufacturer implements a lower level of direct A/C 

improvement technology and/or a lower penetration of PHEVs, EVs and FCVs, then EPA’s proposed standards 

would effectively be more stringent than NHTSA’s. 

743 We underscore that the agency’s tentative decision regarding what standards would be maximum feasible for 

MYs 2017-2025 is made with reference to the rulemaking time frame and circumstances of this proposal. Each 

CAFE rulemaking (indeed, each stage of any given CAFE rulemaking) presents the agency with new information 

that may affect how we balance the relevant actors. 

Comment [A62]: See comment above about 

consistency with the phrase “relationship” and 

“related to.” 

Comment [A63]: Commeter notes this might not 

be relevant and suggests that consistency with the 

announcement was a factor in the agency’s 

regulatory decision making. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 671 of 770

NEPA and the need of the nation to conserve energy, we do not believe they would have 

represented the appropriate balancing of the relevant factors, because they would have left 

technology, fuel savings, and emissions reductions on the table unnecessarily, and not 

contributed as much as possible to reducing our nation’s energy security and climate change 

concerns. Standards set at the proposed levels for MYs 2017-2021 will help to enable further 

research and development into the more advanced fuel economy-improving technologies to 

provide a bridge to more stringent standards in MYs 2022-2025, and enable significant fuel 

savings and environmental benefits throughout the program, and particularly substantial benefits 

in the later years of the program and beyond. In full consideration of all of the information 

currently before the agency, we have weighed the statutory factors carefully and selected 

proposed passenger car and light truck standards that we believe are the maximum feasible for 

MYs 2017-2025. 

G. Impacts of the Proposed CAFE Standards 

1. How will these standards improve fuel economy and reduce GHG 

emissions for MY 2017–2025 vehicles? 

As discussed above, the CAFE level required under an attribute-based standard depends 

on the mix of vehicles produced for sale in the U.S. Based on the market forecast that NHTSA 

and EPA have used to develop and analyze the proposed CAFE and CO2 emissions standards, 

NHTSA estimates that the proposed new CAFE standards would lead average required fuel 

consumption (fuel consumption is the inverse of fuel economy) levels to increase by an average 

of 4.0 percent annually through MY 2025, reaching a combined average fuel economy 

requirement of 49.6 mpg in that model year: 

TABLE IV.G.1-1. ESTIMATED REQUIRED AVERAGE FUEL ECONOMY (MPG) UNDER THE 

PROPOSED STANDARDS – MYS 2017-2021 

Model Year 2017 2018 2019 2020 2021 

Passenger cars 40.0 41.4 43.0 44.7 46.6 

Light trucks 29.4 30.0 30.6 31.2 33.3 

Combined 35.3 36.4 37.5 38.8 40.9 

TABLE IV.G.1-2. ESTIMATED REQUIRED AVERAGE FUEL ECONOMY (MPG) UNDER THE 

PROPOSED STANDARDS – MYS 2022-2025 

Model Year 2022 2023 2024 2025 

Passenger cars 48.8 51.0 53.5 56.0 

Light trucks 34.9 36.6 38.5 40.3 

Combined 42.9 45.0 47.3 49.6 

If manufacturers apply technology only as far as necessary to comply with CAFE 

standards, NHTSA estimates that, setting aside factors the agency cannot consider for purposes 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 672 of 770

of determining maximum feasible CAFE standards,744 average achieved fuel economy levels 

would correspondingly increase through MY 2025, but that manufacturers would, on average, 

under-comply745 in some model years and over-comply746 in others, reaching a combined 

average fuel economy of 47.4 mpg (taking into account estimated adjustments reflecting 

improved air conditioner efficiency) in MY 2025: 

TABLE IV.G.1-3. ESTIMATED ACHIEVED AVERAGE FUEL ECONOMY (MPG) UNDER THE 

PROPOSED STANDARDS – MYS 2017-2021 

Model Year 2017 2018 2019 2020 2021 

Passenger cars 39.5 41.7 43.5 45.3 47.1 

Light trucks 29.6 30.7 32.5 33.7 35.6 

Combined 35.2 36.9 38.8 40.4 42.3 

TABLE IV.G.1-4. ESTIMATED ACHIEVED AVERAGE FUEL ECONOMY (MPG) UNDER THE 

PROPOSED STANDARDS – MYS 2022-2025 

Model Year 2022 2023 2024 2025 

Passenger cars 48.2 49.4 51.3 52.6 

Light trucks 36.5 37.5 38.5 39.5 

Combined 43.4 44.6 46.1 47.4 

 Setting aside the potential to produce additional EVs (or, prior to MY 2020, 

PHEVs) or take advantage of EPCA’s provisions regarding CAFE credits, NHTSA estimates 

that today’s proposed standards could increase achieved fuel economy levels by average amounts 

of up to 0.5 mpg during the few model years leading into MY 2017, as manufacturers apply 

technology during redesigns leading into model years covered by today’s new standards.747 As 

 744 49 U.S.C. 32902(h) states that NHTSA may not consider the fuel economy of dedicated alternative fuel vehicles, 

the alternative-fuel portion of dual-fueled automobile fuel economy, or the ability of manufacturers to earn and use 

credits for over-compliance, in determining the maximum feasible stringency of CAFE standards. 745 “Under-compliance” with CAFE standards can be mitigated either through use of FFV credits, use of existing or 

“banked” credits, or through fine payment. Although, as mentioned above, NHTSA cannot consider availability of 

statutorily-provided credits in setting standards, NHTSA is not prohibited from considering fine payment. 

Therefore, the estimated achieved CAFE levels presented here include the assumption that Aston Martin, BMW, 

Daimler (i.e., Mercedes), Geely (i.e., Volvo), Lotus, Porsche, Spyker (i.e., Saab), and, Tata (i.e., Jaguar and Rover), 

and Volkswagen will only apply technology up to the point that it would be less expensive to pay civil penalties. 746 In NHTSA’s analysis, “over-compliance” occurs through multi-year planning: manufacturers apply some “extra” 

technology in early model years (e.g., MY 2014) in order to carry that technology forward and thereby facilitate 

compliance in later model years (e.g., MY 2016). 747 This outcome is a direct result of revisions, made to DOT’s CAFE model in preparation for the MY 2012-2016 

rule, to simulate “multiyear planning” effects—that is, the potential that manufacturers will apply “extra” 

technology in one model year if doing so will be sufficiently advantageous with respect to the ability to comply with 

CAFE standards in later model years. For example, for today’s rulemaking analysis, NHTSA has estimated that 

Ford will redesign the F-150 pickup truck in MY 2015, and again in MY 2021. As explained in Chapter V of the 

PRIA, NHTSA’s expects that many technologies would be applied as part of a vehicle redesign. Therefore, in 

NHTSA’s analysis, if Ford does not anticipate ensuing standards when redesigning the MY 2015 F-150, Ford may 

find it more difficult to comply with light truck standard during MY 2016-2020. Through simulation of multiyear 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 673 of 770

shown below, these “early” fuel economy increases yield corresponding reductions in fuel 

consumption and greenhouse gas emissions, and incur corresponding increases in technology 

outlays. 

Within the context EPCA requires NHTSA to apply for purposes of determining 

maximum feasible stringency of CAFE standards (i.e., setting aside EVs, pre-MY 2020 PHEVs, 

and all statutory CAFE credit provisions), NHTSA estimates that these fuel economy increases 

would lead to fuel savings totaling 161 billion gallons during the useful lives of vehicles 

manufactured in MYs 2017–2025 and the few MYs preceding MY 2017: 

TABLE IV.G.1-5. ESTIMATED FUEL SAVED (BILLION GALLONS) UNDER THE PROPOSED 

STANDARDS

Model 

year 

Pre2017 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

PC 3 2 5 7 9 11 12 14 16 18 98 

LT 1 1 2 4 6 8 9 10 11 12 63 

Combined 4 3 7 11 15 19 21 24 27 30 161 

 The agency also estimates that these new CAFE standards would lead to corresponding 

reductions of CO2 emissions totaling 1,989 million metric tons (mmt) during the useful lives of 

vehicles sold in MYs 2017–2025 and the few MYs preceding MY 2017: 

TABLE IV.G.1-6. CARBON DIOXIDE EMISSIONS AVOIDED (MMT) UNDER THE PROPOSED 

STANDARDS

Model 

year 

Pre2017 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total 

PC 37 23 57 83 111 135 154 179 208 243 1,230 

LT 6 7 22 53 72 96 107 119 128 149 759 

Combined 44 29 79 137 183 231 261 297 337 392 1,989 

2. How will these standards improve fleet-wide fuel economy and reduce 

GHG emissions beyond MY 2025? 

Under the assumption that CAFE standards at least as stringent as those being proposed 

today for MY 2025 would be established for subsequent model years, the effects of the proposed 

standards on fuel consumption and GHG emissions will continue to increase for many years. 

This will occur because over time, a growing fraction of the U.S. light-duty vehicle fleet will be 

comprised of cars and light trucks that meet at least the MY 2025 standard. The impact of the 

new standards on fuel use and GHG emissions would therefore continue to grow through 

 planning effects, NHTSA’s analysis indicates that Ford could apply more technology to the MY 2015 F-150 if 

standards continue to increase after MY 2016 than Ford need apply if standards remain unchanged after MY 2016, 

and that this additional technology would yield further fuel economy improvements of up to 1.3 mpg, depending on 

pickup configuration. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 674 of 770

approximately 2060, when virtually all cars and light trucks in service will have met standards as 

stringent as those established for MY 2025. 

As Table IV.G.2–1 shows, NHTSA estimates that the fuel economy increases resulting 

from the proposed standards will lead to reductions in total fuel consumption by cars and light 

trucks of 3 billion gallons during 2020, increasing to 41 billion gallons by 2060. Over the period 

from 2017, when the proposed standards would begin to take effect, through 2050, cumulative 

fuel savings would total 1,112 billion gallons, as Table IV.G.2–1 also indicates. 

TABLE IV.G.2-1. REDUCTION IN FLEET-WIDE FUEL USE (BILLION GASOLINE GALLON 

EQUIVALENTS) UNDER THE PROPOSED STANDARDS

Calendar 

year 

2020 2030 2040 2050 2060 Total, 

2017-2060 

PC 1.5 11.8 19.4 22.8 25.9 691.9 

LT 1.4 8.8 11.4 13.1 14.8 428.1 

Combined 2.9 20.5 30.7 35.8 40.7 1,112.0 

The energy security analysis conducted for this rule estimates that the world price of oil 

will fall modestly in response to lower U.S. demand for refined fuel. One potential result of this 

decline in the world price of oil would be an increase in the consumption of petroleum products 

outside the U.S., which would in turn lead to a modest increase in emissions of greenhouse 

gases, criteria air pollutants, and airborne toxics from their refining and use. While additional 

information would be needed to analyze this “leakage effect” in detail, NHTSA provides a 

sample estimate of its potential magnitude in its Draft EIS.748 This analysis indicates that the 

leakage effect is likely to offset only a very small fraction of the reductions in fuel use and 

emissions projected to result from the rule. 

As a consequence of these reductions in fleet-wide fuel consumption, the agency also 

estimates that the new CAFE standards for MYs 2017–2025 would lead to corresponding 

reductions in CO2 emissions from the U.S. light-duty vehicle fleet. Specifically, NHTSA 

estimates that total annual CO2 emissions associated with passenger car and light truck use in the 

U.S. use would decline by 26 million metric tons (mmt) in 2020 as a consequence of the new 

CAFE standards, as Table IV.G.2–2 reports. The table also shows that the this annual reduction 

is estimated to grow to nearly 362 million metric tons by the year 2060, and will total nearly 10 

billion metric tons over the period from 2017, when the proposed standards would take effect, 

through 2060. 

TABLE IV.G.2-2. REDUCTION IN FLEET-WIDE CARBON DIOXIDE EMISSIONS (MMT) FROM 

PASSENGER CAR AND LIGHT TRUCK USE UNDER THE PROPOSED STANDARDS

Calendar 

year 

2020 2030 2040 2050 2060 Total, 

2017-2060 

PC 13.6 104.3 171.9 202.3 229.9 6,147.9 

 748 [cite DEIS] 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 675 of 770

LT 12.1 78.0 101.2 116.3 132.0 3813.7 

Combined 25.6 182.2 273.2 318.6 361.9 9,961.7 

These reductions in fleet-wide CO2 emissions, together with corresponding reductions in 

other GHG emissions from fuel production and use, would lead to small but significant 

reductions in projected changes in the future global climate. These changes, based on analysis 

documented in the draft Environmental Impact Statement (EIS) that informed the agency’s 

decisions regarding this proposal, are summarized in Table IV.G.2–3 below. 

TABLE IV.G.2-2. EFFECTS OF REDUCTION IN FLEET-WIDE CARBON DIOXIDE EMISSIONS 

(MMT) ON PROJECTED CHANGES IN GLOBAL CLIMATE [TO BE COMPLETED] 

Measure Units Date 

Projected change in measure 

No action 

With 

proposed 

standards 

Difference 

Atmospheric CO2 

concentration Ppm 2100 

Increase in global 

mean surface 

temperature 

°C 2100 

Sea level rise Cm 2100 

Global mean 

precipitation 

% change from 

1980-1999 avg. 2090 

3. How will these proposed standards impact non-GHG emissions and 

their associated effects? 

Under the assumption that CAFE standards at least as stringent as those proposed for MY 

2025 would be established for subsequent model years, the effects of the new standards on air 

quality and its associated health effects will continue to be felt over the foreseeable future. This 

will occur because over time a growing fraction of the U.S. light-duty vehicle fleet will be 

comprised of cars and light trucks that meet the MY 2025 standard, and this growth will continue 

until approximately 2060. 

Increases in the fuel economy of light-duty vehicles required by the new CAFE standards 

will cause a slight increase in the number of miles they are driven, through the fuel economy 

“rebound effect.” In turn, this increase in vehicle use will lead to increases in emissions of 

criteria air pollutants and some airborne toxics, since these are products of the number of miles 

vehicles are driven. 

At the same time, however, the projected reductions in fuel production and use reported 

in Table IV.G.2–1 and 2-2 above will lead to corresponding reductions in emissions of these 

pollutants that occur during fuel production and distribution (“upstream” emissions). For most 

of these pollutants, the reduction in upstream emissions resulting from lower fuel production and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 676 of 770

distribution will outweigh the increase in emissions from vehicle use, resulting in a net decline in 

their total emissions.749

Tables IV.G.3–1a and 3–1b report estimated reductions in emissions of selected criteria 

air pollutants (or their chemical precursors) and airborne toxics expected to result from the 

proposed standards during calendar year 2030. By that date, cars and light trucks meeting the 

MY 2025 CAFE standards will account for the majority of light-duty vehicle use, so these 

reductions provide a useful index of the long-term impact of the final standards on air pollution 

and its consequences for human health. In the tables below, positive values indicate increases in 

emissions, while negative values indicate reductions. 

TABLE IV.G.3-1A. PROJECTED CHANGES IN EMISSIONS OF CRITERIA AIR POLLUTANTS 

FROM PASSENGER CAR AND LIGHT TRUCK USE (CALENDAR YEAR 2030; TONS) 

Vehicle class Source of emissions 

Criteria air pollutant 

Nitrogen 

oxides 

(NOX) 

Particulat

e matter 

(PM2.5) 

Sulfur 

oxides 

(SOX) 

Volatile 

organic 

compounds 

(VOC) 

Passenger cars 

Vehicle use

Fuel production and distribution

All sources

13,163 

-19.133 

-5971 

-284 

-2,101 

-2,386 

-2,601 

-7,995 

-10,597 

-1,080 

-42,354 

-43,434 

Light trucks 

Vehicle use

Fuel production and distribution

All sources

2,437 

-14,794 

-12,357 

80 

-1,633 

-1,553 

-1,674 

-7,432 

-9,106 

859 

-24,807 

-23,948 

Total 

Vehicle use

Fuel production and distribution

All sources

15,600 

-33,928 

-18,328 

-204 

-3,735 

-3,939 

-4,275 

-15,427 

-19,702 

-221 

-67,161 

-67,381 

TABLE IV.G.3-1B. PROJECTED CHANGES IN EMISSIONS OF AIRBORNE TOXICS FROM 

PASSENGER CAR AND LIGHT TRUCK USE (CALENDAR YEAR 2030; TONS) 

Vehicle class Source of emissions 

Toxic air pollutant 

Benzene 1,3-

Butadiene Formaldehyde 

Passenger 

cars 

Vehicle use

Fuel production and distribution

All sources

-166 

-186 

-352 

-3 

-1.6 

-4.6 

373 

-55 

319 

Light trucks Vehicle use 19 5 38 

 749 As stated elsewhere, while the agency’s analysis assumes that all changes in upstream emissions result from a 

decrease in petroleum production and transport, the analysis of non-GHG emissions in future calendar years also 

assumes that retail gasoline composition is unaffected by this rule; as a result, the impacts of this rule on 

downstream non-GHG emissions (more specifically, on air toxics) may be underestimated. See also Section III.G 

above for more information. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 677 of 770

Fuel production and distribution

All sources

-110 

-91 

-1.2 

3.9 

-40 

-2 

Total 

Vehicle use

Fuel production and distribution

All sources

-147 

-296 

-443 

2.1 

-2.8 

-0.7 

412 

-95 

317 

In turn, the reductions in emissions reported in Tables IV.G.3–1a and 3–1b are projected 

to result in significant declines in the adverse health effects that result from population exposure 

to these pollutants. Table IV.G.3–2 reports the estimated reductions in selected PM2.5-related 

human health impacts that are expected to result from reduced population exposure to 

unhealthful atmospheric concentrations of PM2.5. The estimates reported in Table IV.G.3–2, 

based on analysis documented in the draft Environmental Impact Statement (EIS) that informed 

the agency’s decisions regarding this proposed rule, are derived from PM2.5-related dollar-perton estimates that reflect the quantifiable reductions in health impacts likely to result from 

reduced population exposure to particular matter (PM2.5). They do not include all health impacts 

related to reduced exposure to PM, nor do they include any reductions in health impacts resulting 

from lower population exposure to other criteria air pollutants (particularly ozone) and air toxics. 

However, emissions changes and dollar-per-ton estimates alone are not necessarily a 

good indication of local or regional air quality and health impacts, as there may be localized 

impacts associated with this rulemaking, because the atmospheric chemistry related to ambient 

concentrations of PM2.5, ozone, and air toxics is very complex. Full-scale photochemical 

modeling would provide the necessary spatial and temporal detail to more completely and 

accurately estimate the changes in ambient levels of these pollutants and their associated health 

and welfare impacts. EPA intends to conduct such modeling for purposes of the final rule, but it 

was not available in time to inform these proposed standards or to be included in the DEIS. See 

Section III.G above for EPA’s description of the air quality modeling it conducted for calendar 

year 203? to capture this variability. 

TABLE IV.G.3-2. PROJECTED REDUCTIONS IN HEALTH IMPACTS FROM EXPOSURE TO 

CRITERIA AIR POLLUTANTS DUE TO PROPOSED STANDARDS (CALENDAR YEAR 2030) [TO BE 

COMPLETED] 

Health impact Measure Projected 

reduction (2030) 

Mortality (ages 30 and older) premature deaths per year 

Chronic bronchitis cases per year 

Emergency room visits for asthma number per year 

Work loss workdays per year 

4. What are the estimated costs and benefits of these proposed 

standards? 

NHTSA estimates that the proposed standards could entail significant additional 

technology beyond the levels that could be applied under baseline CAFE standards (i.e., the 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 678 of 770

application of MY 2016 CAFE standards to MYs 2017-2025). This additional technology will 

lead to increases in costs to manufacturers and vehicle buyers, as well as fuel savings to vehicle 

buyers. Also, as discussed above, NHTSA estimates that today’s proposed standards could 

induce manufacturers to apply technology during redesigns leading into model years covered by 

today’s new standards, and to incur corresponding increases in technology outlays. 

In order to pay for this additional technology (and, for some manufacturers, civil 

penalties), NHTSA estimates that the cost of an average passenger car and light truck will 

increase relative to levels resulting from compliance with baseline (MY 2016) standards by 

$236–$2,170 and $70–$1,581, respectively, during MYs 2017–2025. The following tables 

summarize the agency’s estimates of average cost increases for each manufacturer’s passenger 

car, light truck, and overall fleets (with corresponding averages for the industry): 

TABLE IV.G.4-1A. AVERAGE PASSENGER CAR INCREMENTAL COST INCREASES ($) UNDER 

PROPOSED STANDARDS – MYS 2017-2021 

Manufacturer MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Average 236 492 690 931 1,237 

Aston Martin 84 161 249 343 453 

BMW 79 158 238 332 427 

Daimler (Mercedes) 73 150 226 330 429 

Fiat (Chrysler) 341 860 857 1,454 1,560 

Ford 461 813 964 1,221 1,901 

Geely (Volvo) 79 158 238 331 476 

General Motors 280 681 893 1,368 1,740 

Honda 135 452 527 559 1,156 

Hyundai 314 354 674 703 965 

Kia 166 242 533 1,044 1,389 

Lotus 90 178 266 365 480 

Mazda 636 909 876 1,343 1,320 

Mitsubishi 79 485 571 809 1,111 

Nissan 249 403 895 1,039 1,151 

Porsche 93 175 269 362 479 

Spyker (Saab) 84 161 244 337 440 

Subaru 84 156 490 976 1,052 

Suzuki 624 612 1,920 1,951 1,907 

Tata (Jaguar, Rover) 104 175 254 331 477 

Tesla 2 2 2 2 2 

Toyota 131 409 618 835 1,033 

Volkswagen 79 162 244 311 408 

TABLE IV.G.4-1B. AVERAGE PASSENGER CAR INCREMENTAL COST INCREASES ($) UNDER 

PROPOSED STANDARDS – MYS 2022-2025 

Manufacturer MY 2022 MY 2023 MY 2024 MY 2025 

Average 1,407 1,682 2,062 2,170
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 679 of 770

Aston Martin 574 700 832 970

BMW 552 679 903 1,024

Daimler (Mercedes) 532 770 888 1,351

Fiat (Chrysler) 1,614 2,268 2,870 2,725

Ford 2,115 2,814 3,319 3,063

Geely (Volvo) 591 795 1,169 1,290

General Motors 1,734 2,197 2,562 2,874

Honda 1,265 1,523 1,607 1,754

Hyundai 1,518 1,598 2,205 2,095

Kia 1,505 1,687 1,671 1,839

Lotus 612 738 881 1,035

Mazda 1,843 2,147 2,529 2,503

Mitsubishi 1,196 1,303 1,748 3,869

Nissan 1,628 1,774 2,292 2,324

Porsche 583 721 870 1,027

Spyker (Saab) 566 694 832 975

Subaru 1,164 1,280 2,067 3,261

Suzuki 1,895 2,002 3,857 3,368

Tata (Jaguar, Rover) 753 1,025 1,138 1,258

Tesla 2 2 2 2

Toyota 1,115 1,102 1,528 1,599

Volkswagen 588 729 897 1,189

TABLE IV.G.4-2A. AVERAGE LIGHT TRUCK INCREMENTAL COST INCREASES ($) UNDER 

PROPOSED STANDARDS – MYS 2017-2021 

Manufacturer MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Average 70 208 426 671 924 

Aston Martin - - - - - 

BMW 36 81 149 285 474 

Daimler (Mercedes) 44 61 93 218 324 

Fiat (Chrysler) 295 294 336 1,179 1,300 

Ford 28 305 308 420 1,296 

Geely (Volvo) 7 63 101 144 271 

General Motors (4) 185 549 1,091 1,111 

Honda 308 313 484 538 871 

Hyundai 188 196 714 712 696 

Kia 60 73 176 306 1,005 

Lotus - - - - - 

Mazda 1 472 452 487 496 

Mitsubishi 262 286 279 314 2,464 

Nissan 26 41 337 486 835 

Porsche 1 84 109 153 274 

Spyker (Saab) 7 105 148 192 320 

Subaru 114 454 1,015 993 1,018 

Suzuki 293 301 1,667 1,638 1,860 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 680 of 770

Tata (Jaguar, Rover) 18 74 117 161 290 

Tesla - - - - - 

Toyota 1 191 396 413 601 

Volkswagen 7 69 350 358 492 

TABLE IV.G.4-2B. AVERAGE LIGHT TRUCK INCREMENTAL COST INCREASES ($) UNDER 

PROPOSED STANDARDS – MYS 2022-2025 

Manufacturer MY 2022 MY 2023 MY 2024 MY 2025 

Average 1,056 1,239 1,399 1,581

Aston Martin - - - -

BMW 867 958 1,095 1,148

Daimler (Mercedes) 1,181 1,264 1,318 1,352

Fiat (Chrysler) 1,339 1,631 1,705 1,994

Ford 1,335 1,823 1,853 1,935

Geely (Volvo) 551 1,001 1,095 1,147

General Motors 1,175 1,335 1,409 1,787

Honda 1,285 1,312 1,328 1,384

Hyundai 1,201 1,185 1,688 1,665

Kia 988 1,174 1,158 1,205

Lotus - - - -

Mazda 479 977 1,430 1,365

Mitsubishi 2,417 2,366 2,330 2,262

Nissan 1,194 1,258 1,455 1,664

Porsche 372 744 835 900

Spyker (Saab) 413 556 660 765

Subaru 1,055 1,044 1,850 1,753

Suzuki 1,946 1,916 1,995 2,274

Tata (Jaguar, Rover) 389 489 593 703

Tesla - - - -

Toyota 603 764 1,092 1,240

Volkswagen 580 769 1,179 1,203

TABLE IV.G.4-3A. AVERAGE INCREMENTAL COST INCREASES ($) BY MANUFACTURER 

UNDER PROPOSED STANDARDS – MYS 2017-2021 

Manufacturer MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Average 175 389 596 840 1,127

Aston Martin 84 161 249 343 453

BMW 66 135 214 319 439

Daimler (Mercedes) 66 130 195 303 403

Fiat (Chrysler) 319 583 608 1,327 1,443

Ford 301 628 735 947 1,697

Geely (Volvo) 56 127 194 272 412

General Motors 143 436 721 1,230 1,429

Honda 194 407 513 553 1,068

Hyundai 288 322 683 705 910
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 681 of 770

Kia 141 201 447 874 1,303

Lotus 90 178 266 365 480

Mazda 528 830 801 1,191 1,174

Mitsubishi 146 413 467 636 1,583

Nissan 173 285 717 867 1,054

Porsche 68 152 230 313 430

Spyker (Saab) 75 153 228 316 423

Subaru 92 232 622 980 1,044

Suzuki 559 552 1,873 1,894 1,898

Tata (Jaguar, Rover) 60 124 185 247 384

Tesla 2 2 2 2 2

Toyota 77 322 532 675 864

Volkswagen 65 142 267 321 425

TABLE IV.G.4-3B. AVERAGE INCREMENTAL COST INCREASES ($) BY MANUFACTURER 

UNDER PROPOSED STANDARDS – MYS 2022-2025 

Manufacturer MY 2022 MY 2023 MY 2024 MY 2025 

Average 1,285 1,531 1,840 1,975

Aston Martin 574 700 832 970

BMW 635 752 956 1,057

Daimler (Mercedes) 693 894 993 1,351

Fiat (Chrysler) 1,488 1,978 2,354 2,412

Ford 1,853 2,495 2,859 2,716

Geely (Volvo) 578 857 1,147 1,248

General Motors 1,461 1,782 2,012 2,356

Honda 1,271 1,460 1,526 1,645

Hyundai 1,454 1,514 2,101 2,010

Kia 1,392 1,575 1,561 1,705

Lotus 612 738 881 1,035

Mazda 1,602 1,945 2,341 2,313

Mitsubishi 1,615 1,669 1,944 3,336

Nissan 1,496 1,617 2,040 2,129

Porsche 533 726 862 1,000

Spyker (Saab) 545 676 809 947

Subaru 1,138 1,225 2,017 2,921

Suzuki 1,904 1,987 3,533 3,180

Tata (Jaguar, Rover) 572 761 879 1,000

Tesla 2 2 2 2

Toyota 919 975 1,368 1,468

Volkswagen 586 737 955 1,192

These cost estimates reflect the potential that a given manufacturer’s efforts to minimize 

overall regulatory costs could focus technology where the most fuel can be saved at the least 

cost, and not necessarily, for example, where the cost to add technology would be smallest 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 682 of 770

relative to baseline production costs. Therefore, if average incremental vehicle cost increases 

(including any civil penalties) are measured as increases relative to baseline prices (estimated by 

adding baseline costs to MY 2008 prices), the agency’s analysis shows relative cost increases 

declining as baseline vehicle price increases. Figure IV.G.4-1 shows the trend for MY 2025, for 

vehicles with estimated baseline prices up to $100,000: 

FIGURE IV.G.4-1. ESTIMATED INCREMENTAL COST INCREASES IN MY 2025 

If manufacturers pass along these costs rather than reducing profits, and pass these costs 

along where they are incurred rather than “cross-subsidizing” among products, the quantity of 

vehicles produced at different price levels would change. Figure IV.G.4-2 illustrates these 

effects for the MY 2025 passenger car fleet. In the MY 2008-based market forecast developed 

jointly by EPA and NHTSA, production (i.e., as shares of the market) of vehicles offered in the 

$17,500-$25,000 price range declines somewhat by MY2 025, and production of less expensive 

vehicles increases. Under the no-action alternative (i.e., continuation of the baseline MY 2016 

standards), the agency’s analysis shows modest production declines in the $15,000-$17,500 price 

range, modest production increases in the $22,500-$25,000 and $30,000-$35,000 ranges, and 

smaller production changes in other price ranges. However, under the proposed standards, the 

agency’s analysis shows production of passenger cars under $15,000 falling to less than 1% of 

the market (versus 6% of the market under the baseline standards), and shows production of 

vehicles in the $15,000-$17,500 range declining considerably: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 683 of 770

FIGURE IV.G.4-2. ESTIMATED PASSENGER CAR PRICE DISTRIBUTION IN MY 2025 

Figure IV.G.4-3 illustrates corresponding effects for the MY 2025 light truck fleet, for 

which MY 2008 vehicle prices were distributed in a manner notably different from those of 

passenger cars (relative to that of passenger cars, production of light trucks is far lower at the 

lowest and highest price levels, and is more concentrated in the “upper middle” price bands). In 

the MY 2008-based market forecast developed jointly by EPA and NHTSA, production (i.e., as 

shares of the market) of vehicles offered in MY2025 declines relative to MY 2008 production in 

the $20,000-$22,500 and $25,000-$27,500 ranges, and increases in the $30,000-$35,000 range. 

Under the no-action alternative (i.e., continuation of the baseline MY 2016 standards), the 

agency’s analysis shows modest production declines in some price ranges ($20,000-$25,000 and 

$27,500-$30,000), modest production increases other ranges ($25,500-$27,500, $30,000-

$35,000, and $45,000-$55,000 ranges, and smaller production changes in other price ranges. 

However, under the proposed standards, the agency’s analysis shows production of light trucks 

under $25,000 falling to about 8% of the market (versus 22% of the market under the baseline 

standards): 

FIGURE IV.G.4-3. ESTIMATED LIGHT TRUCK PRICE DISTRIBUTION IN MY 2025 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 684 of 770

Figure IV.G.4-4 illustrates resultant effects for the overall MY 2025 light vehicle fleet. 

In the MY 2008-based market forecast developed jointly by EPA and NHTSA, production (i.e., 

as shares of the market) of vehicles offered in MY 2025 increases somewhat relative to MY 2008 

production in the $12,500-$17,500 range, declines somewhat in the $25,000-$27,500 range, and 

changes more slightly in other price ranges. Under the no-action alternative (i.e., continuation of 

the baseline MY 2016 standards), the agency’s analysis shows small production decreases in the 

$15,000-$17,500 range, small increases in the $30,000-$35,000 range, and slight changes in 

other price ranges. However, under the proposed standards, the agency’s analysis shows 

production of light vehicles under $17,500 falling by about half: 

FIGURE IV.G.4-4. ESTIMATED FLEET-WIDE PRICE DISTRIBUTION IN MY 2025 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 685 of 770

This shift in production, away from the lowest priced segments of the new vehicle 

market, may create marketing challenges for manufacturers that are active in those segments. We 

recognize, of course, that many manufacturers do in fact cross-subsidize to some extent, and take 

losses on some vehicles while continuing to make profits from others. NHTSA has no evidence 

to indicate that manufacturers will shift production plans in the manner described above, but 

nevertheless believes that this issue is worth monitoring in the market going forward. 

As mentioned above, these estimated costs derive primarily from the additional 

application of technology under the proposed standards. The following three tables summarize 

the incremental extent to which the agency estimates technologies could be added to the 

passenger car, light truck, and overall fleets in each model year in response to the proposed 

standards. Percentages reflect the technology’s additional application in the market, relative to 

the estimated application under baseline standards (i.e., application of MY 2016 standards 

through MY 2025), and are negative in cases where one technology is superseded (i.e., 

displaced) by another. For example, the agency estimates that manufacturers could apply many 

improvements to transmissions (e.g., dual clutch transmissions, denoted below by “DCT”) 

through MY 2025 under baseline standards. However, the agency also estimates that 

manufacturers could apply even more advanced high efficiency transmissions (denoted below by 

“HETRANS”) under the proposed standards, and that these transmissions would supersede 

DCTs and other transmission advances. Therefore, as shown in the following three tables, the 

incremental application of DCTs under the proposed standards is negative. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 686 of 770

TABLE IV.G.4-4. INCREMENTAL APPLICATION OF TECHNOLOGIES TO PASSENGER CAR 

FLEET UNDER PROPOSED STANDARDS – MYS 2017-2025 

Technology 2017 2018 2019 2020 2021 2022 2023 2024 2025 

LUB1 7% 16% 16% 16% 16% 16% 16% 16% 16% 

EFR1 22% 28% 28% 28% 27% 28% 28% 28% 28% 

LUB2_EFR2 1% 11% 22% 31% 40% 42% 44% 47% 50% 

CCPS 0% 2% 6% 6% 6% 6% 6% 6% 6% 

DVVLS 0% 0% 0% 0% 0% 0% 0% 0% 0% 

DEACS 0% 0% 0% (0%) (0%) (0%) (1%) (1%) (1%) 

ICP (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

DCP 8% 9% 9% 11% 19% 19% 18% 18% 17% 

DVVLD 8% 14% 19% 24% 28% 34% 33% 33% 33% 

DEACD 0% 0% 0% (0%) (0%) (0%) (0%) (0%) (0%) 

SGDI 10% 15% 22% 27% 35% 42% 45% 55% 56% 

DEACO (0%) (0%) (1%) (2%) (2%) (2%) (2%) (2%) (2%) 

VVA 0% 0% 0% 0% 0% 0% 

SGDIO 0% 0% 1% 2% 2% 2% 2% 2% 2% 

TRBDS1_SD 6% 8% 9% 11% 15% 12% 9% 6% 2% 

TRBDS1_MD 2% 2% 3% 3% 3% 2% (1%) (6%) (7%) 

TRBDS1_LD (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

TRBDS2_SD 0% 0% 2% 2% 1% 2% 2% 0% (0%) 

TRBDS2_MD (2%) (2%) (2%) (3%) (2%) (2%) (2%) (3%) (3%) 

TRBDS2_LD 

CEGR1_SD 1% 2% 2% 4% 8% 16% 18% 29% 35% 

CEGR1_MD 3% 5% 7% 9% 6% 8% 9% 11% 11% 

CEGR1_LD 0% 0% 0% 0% (0%) (0%) (0%) (0%) (0%) 

CEGR2_SD 0% 0% 0% 1% 2% 4% 4% 

CEGR2_MD 2% 4% 4% 6% 7% 5% 

CEGR2_LD 0% 1% 1% 2% 2% 2% 2% 2% 1% 

ADSL_SD 0% 1% 2% 2% 2% 2% 2% 3% 

ADSL_MD 1% 1% 1% 1% 1% 2% 3% 4% 

ADSL_LD 0% 0% 

6MAN 1% 1% 0% (1%) (1%) (1%) (1%) (1%) (1%) 

HETRANSM 0% 1% 2% 4% 5% 6% 6% 6% 7% 

IATC (1%) (1%) (1%) (1%) (1%) (1%) (1%) (1%) 

NAUTO (3%) (4%) (5%) (6%) (6%) (6%) (6%) (6%) (6%) 

DCT (7%) (18%) (29%) (34%) (42%) (44%) (45%) (46%) (47%)

8SPD 1% 1% (2%) (8%) (10%) (12%) (12%) (14%) (16%)

HETRANS 7% 21% 31% 41% 47% 53% 52% 50% 51% 

SHFTOPT 11% 27% 42% 53% 64% 67% 65% 62% 59% 

EPS 8% 10% 14% 19% 30% 32% 35% 34% 34% 

IACC1 12% 14% 16% 24% 37% 40% 42% 48% 48% 

IACC2 10% 15% 21% 31% 50% 53% 60% 65% 65% 

MHEV 3% 7% 12% 22% 29% 35% 36% 38% 36% 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 687 of 770

SHEV1 

SHEV1_2 0% 0% 0% 0% 0% 0% 0% 1% 

SHEV2 0% 0% 0% 0% 3% 6% 8% 

PHEV1 1% 1% 2% 3% 4% 

MR1 8% 14% 14% 14% 14% 14% 15% 14% 14% 

MR2 0% 13% 25% 28% 28% 30% 30% 30% 29% 

MR3 1% 4% 6% 8% 8% 8% 9% 9% 10% 

MR4 2% 4% 4% 6% 6% 7% 8% 10% 10% 

MR5 0% 2% 2% 3% 4% 4% 5% 6% 7%

ROLL1 2% 2% 2% 2% 2% 2% 2% 2% 

ROLL2 5% 23% 34% 44% 57% 66% 67% 68% 68% 

LDB 1% 2% 2% 2% 2% 3% 3% 3% 3% 

SAX (0%) (0%) (0%) (0%) 0% 0% 0% 

AERO1 3% 3% 3% 3% 3% 3% 3% 3% 

AERO2 5% 14% 27% 34% 45% 52% 52% 52% 51% 

TABLE IV.G.4-5. INCREMENTAL APPLICATION OF TECHNOLOGIES TO LIGHT TRUCK FLEET 

UNDER PROPOSED STANDARDS – MYS 2017-2025 

Technology 2017 2018 2019 2020 2021 2022 2023 2024 2025 

LUB1 

EFR1 0% 0% 0% 0% 0% 0% 

LUB2_EFR2 2% 6% 16% 29% 43% 58% 79% 88% 89% 

CCPS (0%) (0%) (0%) (1%) (1%) (1%) 

DVVLS 1% 1% 1% 0% 1% 1% 1% 1% 1% 

DEACS 0% 0% 0% 0% (2%) (3%) (3%) (3%) (3%) 

ICP 

DCP 1% 1% 1% 1% 1% 4% 5% 5% 3% 

DVVLD 0% 1% 3% 3% 9% 10% 11% 16% 14% 

 DEACD (1%) (1%) (2%) (2%) (2%) (2%) (2%) 

SGDI 1% 1% 5% 5% 18% 24% 26% 33% 33% 

DEACO (1%) (6%) (7%) (6%) (8%) (8%) (9%) 

VVA 2% 2% 2% 2% 2% 2% 2% 

SGDIO 0% 0% 0% 5% 6% 6% 7% 7% 8% 

TRBDS1_SD (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

TRBDS1_MD 1% (2%) 1% (4%) 2% 1% (5%) (8%) (13%)

TRBDS1_LD 0% 0% 0% 0% 0% 0% (0%) 

TRBDS2_SD (0%) (0%) (0%) 2% 2% 4% 4% 

TRBDS2_MD 

TRBDS2_LD 

CEGR1_SD 0% 0% 0% 0% 1% 2% 4% 

CEGR1_MD 0% 3% 4% 13% 17% 20% 27% 34% 38% 

CEGR1_LD 

CEGR2_SD 

CEGR2_MD 0% 0% 0% 0% 0% 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 688 of 770

CEGR2_LD 0% 0% 1% 1% 4% 7% 8% 8% 8% 

ADSL_SD 0% 0% 0% 0% 0% 

ADSL_MD 2% 2% 2% 2% 2% 2% 4% 

ADSL_LD 0% 

6MAN (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

HETRANSM 0% 1% 1% 1% 2% 2% 2% 2% 2% 

IATC (1%) (1%) (1%) (1%) (1%) (1%) (1%) 

NAUTO (5%) (10%) (19%) (20%) (26%) (26%) (26%) (25%) (25%)

DCT (3%) (9%) (10%) (11%) (11%) (12%) (12%) (12%) (12%)

8SPD 4% 1% (10%) (16%) (27%) (27%) (29%) (30%) (34%)

HETRANS 1% 19% 36% 53% 61% 61% 62% 62% 67% 

SHFTOPT 6% 18% 37% 49% 73% 79% 80% 81% 81% 

EPS 2% 4% 14% 26% 32% 45% 57% 62% 62% 

IACC1 2% 3% 7% 14% 19% 23% 30% 38% 41% 

IACC2 1% 7% 17% 32% 41% 52% 65% 72% 75% 

MHEV 0% 0% 0% 7% 8% 8% 13% 17% 18% 

SHEV1_2 0% 0% 0% 0% 1% 1% 

SHEV2 

PHEV1 

MR1 5% 5% 10% 12% 14% 14% 14% 14% 14% 

MR2 1% 12% 33% 42% 51% 56% 58% 58% 59% 

MR3 1% 4% 6% 16% 28% 39% 51% 68% 81% 

MR4 1% 1% 1% 3% 10% 12% 16% 22% 41% 

MR5 0% 0% 1% 5% 7% 24% 

ROLL1 0% 0% 0% 0% 0% 0% 0% 

ROLL2 2% 14% 32% 49% 61% 72% 76% 82% 82% 

ROLL3 

LDB (0%) 1% 2% 8% 15% 23% 29% 32% 40% 

SAX 1% 4% 4% 5% 6% 9% 13% 19% 29% 

AERO1 

AERO2 10% 15% 32% 37% 37% 39% 39% 40% 40% 

TABLE IV.G.4-6. INCREMENTAL APPLICATION OF TECHNOLOGIES TO OVERALL FLEET 

UNDER PROPOSED STANDARDS – MYS 2017-2025 

Technology 2017 2018 2019 2020 2021 2022 2023 2024 2025 

LUB1 4% 10% 10% 10% 10% 10% 11% 11% 10% 

EFR1 14% 18% 18% 18% 18% 18% 18% 19% 19% 

LUB2_EFR2 2% 9% 20% 30% 41% 48% 56% 61% 63% 

CCPS 0% 1% 4% 4% 4% 4% 4% 4% 4% 

DVVLS 0% 0% 0% 0% 1% 1% 1% 1% 1% 

DEACS 0% 0% 0% (0%) (1%) (1%) (1%) (1%) (1%) 

ICP (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

DCP 5% 6% 6% 7% 13% 14% 14% 14% 12% 

DVVLD 5% 9% 13% 17% 21% 26% 26% 27% 27% 

DEACD 0% 0% (0%) (0%) (1%) (1%) (1%) (1%) (1%) 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 689 of 770

SGDI 7% 10% 15% 19% 29% 36% 38% 47% 49% 

DEACO (0%) (0%) (1%) (3%) (4%) (4%) (4%) (4%) (4%) 

VVA 1% 1% 1% 1% 1% 1% 1% 

SGDIO 0% 0% 1% 3% 4% 3% 4% 4% 4% 

TRBDS1_SD 4% 5% 6% 7% 10% 8% 6% 4% 1% 

TRBDS1_MD 2% 1% 2% 0% 3% 2% (3%) (6%) (9%) 

TRBDS1_LD (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) (0%) 

TRBDS2_SD 0% 0% 1% 1% 1% 2% 2% 2% 1% 

TRBDS2_MD (1%) (1%) (1%) (2%) (2%) (2%) (2%) (2%) (2%)

CEGR1_SD 1% 1% 2% 3% 6% 10% 12% 20% 25% 

CEGR1_MD 2% 4% 6% 10% 10% 12% 15% 19% 20% 

CEGR1_LD 0% 0% 0% 0% (0%) (0%) (0%) (0%) (0%) 

CEGR2_SD 0% 0% 0% 1% 1% 3% 3% 

CEGR2_MD 1% 3% 3% 4% 5% 4% 

CEGR2_LD 0% 1% 1% 2% 3% 4% 4% 4% 4% 

ADSL_SD 0% 1% 1% 1% 2% 2% 2% 2% 

ADSL_MD 1% 1% 1% 1% 1% 2% 2% 4% 

ADSL_LD 0% 0% 

6MAN 0% 0% 0% (0%) (0%) (1%) (1%) (1%) (1%) 

HETRANSM 0% 1% 2% 3% 4% 4% 5% 5% 5% 

IATC (1%) (1%) (1%) (1%) (1%) (1%) (1%) (1%) 

NAUTO (4%) (6%) (10%) (11%) (13%) (13%) (13%) (13%) (12%)

DCT (5%) (15%) (22%) (26%) (31%) (33%) (33%) (35%) (35%)

8SPD 2% 1% (5%) (11%) (16%) (17%) (18%) (19%) (22%)

HETRANS 5% 20% 33% 45% 52% 56% 55% 54% 56% 

SHFTOPT 9% 24% 40% 52% 67% 71% 70% 69% 66% 

EPS 6% 8% 14% 21% 31% 37% 42% 43% 43% 

IACC1 8% 10% 13% 20% 31% 34% 38% 44% 46% 

IACC2 7% 12% 20% 31% 47% 53% 62% 68% 69% 

MHEV 2% 4% 8% 17% 21% 25% 28% 31% 30% 

SHEV1_2 0% 0% 0% 0% 0% 0% 1% 1% 

SHEV2 0% 0% 0% 0% 2% 4% 6% 

PHEV1 0% 1% 1% 2% 3% 

MR1 7% 11% 13% 14% 14% 14% 14% 14% 14% 

MR2 0% 13% 28% 33% 36% 39% 40% 39% 39% 

MR3 1% 4% 6% 11% 15% 19% 23% 29% 33% 

MR4 2% 3% 3% 5% 8% 9% 11% 14% 20% 

MR5 0% 1% 1% 2% 3% 3% 5% 6% 13% 

ROLL1 1% 1% 2% 2% 2% 2% 2% 2% 

ROLL2 4% 20% 33% 46% 59% 68% 70% 73% 73% 

LDB 1% 1% 2% 4% 7% 10% 12% 13% 15% 

SAX 0% 2% 1% 2% 2% 3% 5% 7% 10% 

AERO1 2% 2% 2% 2% 2% 2% 2% 2% 

AERO2 7% 15% 29% 35% 42% 47% 47% 48% 48% 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 690 of 770

Based on the agencies’ estimates of manufacturers’ future sales volumes, and taking into 

account early outlays attributable to multiyear planning effects (discussed above), the cost 

increases associated with this additional application of technology will lead to a total of nearly 

$158 billion in incremental outlays during MYs 2017–2025 (and model years leading up to MY 

2017) for additional technology attributable to the proposed standards: 

TABLE IV.G.4-7A. INCREMENTAL TECHNOLOGY OUTLAYS ($M) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 

 Earlier MY2017 MY2018 MY2019 MY2020 MY2021 

Total 3,860 2,634 5,805 8,893 12,819 17,476 

Aston Martin - 0 0 0 0 0 

BMW - 6 6 11 27 37 

Daimler (Mercedes) - 4 5 6 21 21 

Fiat (Chrysler) 496 266 462 465 1,039 1,121 

Ford 760 621 1,294 1,506 1,984 3,591 

Geely (Volvo) - 0 1 2 2 8 

General Motors 1,008 403 1,270 2,161 3,784 4,421 

Honda 195 340 685 858 933 1,852 

Hyundai 158 214 235 504 530 701 

Kia 107 59 83 186 367 556 

Lotus - 0 0 0 0 0 

Mazda 355 161 266 260 391 392 

Mitsubishi 26 10 40 39 57 158 

Nissan 184 228 360 899 1,111 1,391 

Porsche - 0 1 1 0 1 

Spyker (Saab) - 0 0 0 0 0 

Subaru 38 9 42 147 280 281 

Suzuki 233 63 61 208 216 221 

Tata (Jaguar, Rover) 3 3 3 3 3 8 

Tesla - 0 0 0 0 0 

Toyota 297 244 984 1,586 2,051 2,697 

Volkswagen 0 1 7 52 21 18 

 

Passenger cars 3,426 2,231 4,640 6,536 9,087 12,302 

Light trucks 434 403 1,165 2,357 3,733 5,175 

Combined 3,860 2,634 5,805 8,893 12,819 17,476 

TABLE IV.G.4-7B. INCREMENTAL TECHNOLOGY OUTLAYS ($M) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (AND TOTAL THROUGH MY 2025) 

 MY2022 MY2023 MY2024 MY2025 Total 

Total 20,146 24,248 29,582 32,072 157,537 

Aston Martin 0 0 0 0 0 

BMW 95 93 163 152 589 

Daimler (Mercedes) 115 170 171 307 821 

Fiat (Chrysler) 1,182 1,567 1,832 1,872 10,302 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 691 of 770

Ford 3,946 5,418 6,218 5,838 31,176 

Geely (Volvo) 20 51 88 86 259 

General Motors 4,509 5,529 6,298 7,534 36,917 

Honda 2,258 2,632 2,814 3,122 15,690 

Hyundai 1,142 1,204 1,731 1,699 8,119 

Kia 604 691 699 785 4,137 

Lotus 0 (0) (0) (0) (0) 

Mazda 547 698 827 793 4,690 

Mitsubishi 156 153 183 363 1,185 

Nissan 2,018 2,218 2,867 2,984 14,260 

Porsche (1) 3 3 3 11 

Spyker (Saab) 0 1 1 1 3 

Subaru 287 286 534 917 2,821 

Suzuki 225 225 428 396 2,277 

Tata (Jaguar, Rover) 21 34 35 36 149 

Tesla 0 0 0 0 0 

Toyota 2,959 3,182 4,498 4,872 23,370 

Volkswagen 62 94 191 314 761 

 

Passenger cars 14,205 17,318 21,804 23,257 114,805 

Light trucks 5,941 6,930 7,778 8,815 42,731 

Combined 20,146 24,248 29,582 32,072 157,537 

NHTSA notes that these estimates of the economic costs for meeting higher CAFE 

standards omit certain potentially important categories of costs, and may also reflect 

underestimation (or possibly overestimation) of some costs that are included. For example, 

although the agency’s analysis is intended—with very limited exceptions750—to hold vehicle 

performance, capacity, and utility constant when applying fuel-saving technologies to vehicles, 

the analysis imputes no cost to any actual reductions in vehicle performance, capacity, and utility 

that may result from manufacturers’ efforts to comply with the proposed CAFE standards. 

Although these costs are difficult to estimate accurately, they nonetheless represent a notable 

category of omitted costs if they have not been adequately accounted for in the cost estimates. 

Similarly, the agency’s estimates of net benefits for meeting higher CAFE standards includes 

estimates of the economic value of potential changes in motor vehicle fatalities that could result 

from reductions in the size or weight of vehicles, but not of changes in non-fatal injuries that 

could result from reductions in vehicle size and/or weight. 

Finally, while NHTSA is confident that the cost estimates are the best available and 

appropriate for purposes of this proposed rule, it is possible that the agency may have 

underestimated or overestimated manufacturers’ direct costs for applying some fuel economy 

technologies, or the increases in manufacturer’s indirect costs associated with higher vehicle 

 750 For example, the agencies have assumed no cost changes due to our assumption that HEV towing capability is 

not maintained; due to potential drivability issues with the P2 HEV; and due to potential drivability and NVH issues 

with the shift optimizer. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 692 of 770

manufacturing costs. In either case, the technology outlays reported here will not correctly 

represent the costs of meeting higher CAFE standards. Similarly, NHTSA’s estimates of 

increased costs of congestion, accidents, and noise associated with added vehicle use are drawn 

from a 1997 study, and the correct magnitude of these values may have changed since they were 

developed. If this is the case, the costs of increased vehicle use associated with the fuel economy 

rebound effect will differ from the agency’s estimates in this analysis. Thus, like the agency’s 

estimates of economic benefits, estimates of total compliance costs reported here may 

underestimate or overestimate the true economic costs of the proposed standards. 

However, offsetting these costs, the achieved increases in fuel economy will also produce 

significant benefits to society. Most of these benefits are attributable to reductions in fuel 

consumption; fuel savings are valued using forecasts of pretax prices in EIA’s reference case 

forecast from AEO 2011. The total benefits also include other benefits and dis-benefits, 

examples of which include the social values of reductions in CO2 and criteria pollutant 

emissions, the value of additional travel (induced by the rebound effect), and the social costs of 

additional congestion, accidents, and noise attributable to that additional travel. The PRIA 

accompanying today’s proposed rule presents a detailed analysis of the rule’s specific benefits. 

As Tables IV.G.4–8a and 8b show, NHTSA estimates that at the discount rates of 3 

percent prescribed in OMB guidance for regulatory analysis, the present value of total benefits 

from the proposed CAFE standards over the lifetimes of MY 2017–2025 (and, accounting for 

multiyear planning effects discussed above, model years leading up to MY 2017) passenger cars 

and light trucks will be $496 billion. 

TABLE IV.G.4-8A. PRESENT VALUE OF BENEFITS ($B) UNDER PROPOSED STANDARDS 

USING 3 PERCENT DISCOUNT RATE – MYS 2017-2021751

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 10 6 14 20 27 34 

LT 1 2 6 13 17 24 

Combined 10 8 20 33 44 58 

TABLE IV.G.4-8B. PRESENT VALUE OF BENEFITS ($B) UNDER PROPOSED STANDARDS 

USING 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (AND TOTAL THROUGH MY 2025) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 38 44 52 58 302 

LT 28 31 34 38 193 

Combined 66 75 86 95 496 

Tables IV.G.4–9a and 9b report that the present value of total benefits from requiring cars 

and light trucks to achieve the fuel economy levels specified in the proposed CAFE standards for 

 751 Unless otherwise indicated, all tables in Section IV report benefits calculated using the Reference Case input 

assumptions, with future benefits resulting from reductions in carbon dioxide emissions discounted at the 3 percent 

rate prescribed in the interagency guidance on the social cost of carbon. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 693 of 770

MYs 2017–25 will be $403 billion when discounted at the 7 percent rate also required by OMB 

guidance. Thus the present value of fuel savings and other benefits over the lifetimes of the 

vehicles covered by the proposed standards is $93 billion—or about 19 percent—lower when 

discounted at a 7 percent annual rate than when discounted using the 3 percent annual rate.752

TABLE IV.G.4-9A. PRESENT VALUE OF BENEFITS ($B) UNDER PROPOSED STANDARDS 

USING 7 PERCENT DISCOUNT RATE – MYS 2017-2021 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 8 5 11 16 22 28 

LT 1 1 5 10 14 19 

Combined 10 6 16 27 36 47 

TABLE IV.G.4-9B. PRESENT VALUE OF BENEFITS ($B) UNDER PROPOSED STANDARDS 

USING 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (AND TOTAL THROUGH MY2025) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 32 36 42 47 248 

LT 22 25 27 30 155 

Combined 54 61 70 78 403 

For both the passenger car and light truck fleets, NHTSA estimates that the benefits of 

today’s proposed standards will exceed the corresponding costs in every model year, so that the 

net social benefits from requiring higher fuel economy—the difference between the total benefits 

that result from higher fuel economy and the technology outlays required to achieve it—will be 

substantial. Because the technology outlays required to achieve the fuel economy levels required 

by the proposed standards are incurred during the model years when the vehicles are produced 

and sold, however, they are not subject to discounting, so that their present value does not 

depend on the discount rate used. Thus the net benefits of the proposed standards differ 

depending on whether the 3 percent or 7 percent discount rate is used, but only because the 

choice of discount rates affects the present value of total benefits, and not that of technology 

costs. 

As Tables IV.G.4–10a and 10b show, over the lifetimes of the affected (MY 2017–2025, 

and MYs leading up to MY 2017) vehicles, the agency estimates that when the benefits of the 

proposed standards are discounted at a 3 percent rate, they will exceed the costs of the proposed 

standards by $338 billion: 

TABLE IV.G.4-10A. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 3 PERCENT DISCOUNT RATE – MYS 2017-2021 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 6 4 9 14 18 21 

LT 1 1 5 10 14 19 

Combined 7 5 14 24 32 40 

 752 For tables that report total or net benefits using a 7 percent discount rate, future benefits from reducing carbon 

dioxide emissions are discounted at 3 percent in order to maintain consistency with the discount rate used to develop 

the reference case estimate of the social cost of carbon. All other future benefits reported in these tables are 

discounted using the 7 percent rate. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 694 of 770

TABLE IV.G.4-10B. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (AND TOTAL THROUGH MY

2025) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 24 26 30 35 188 

LT 22 24 26 29 151 

Combined 46 50 56 63 338 

As indicated previously, when fuel savings and other future benefits resulting from the 

proposed standards are discounted at the 7 percent rate prescribed in OMB guidance, they are 

$93 billion lower than when the 3 percent discount rate is applied. Because technology costs are 

not subject to discounting, using the higher 7 percent discount rate reduces net benefits by 

exactly this same amount. Nevertheless, Tables IV.G.4–11a and 11b show that the net benefits 

from requiring passenger cars and light trucks to achieve higher fuel economy are still substantial 

even when future benefits are discounted at the higher rate, totaling $246 billion over MYs 

2017–25. Net benefits are thus about 28 percent lower when future benefits are discounted at a 7 

percent annual rate than at a 3 percent rate. 

TABLE IV.G.4-11A. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 7 PERCENT DISCOUNT RATE – MYS 2017-2021 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 5 3 7 10 13 15 

LT 0 1 4 8 10 14 

Combined 5 4 10 18 23 29 

TABLE IV.G.4-11B. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (AND TOTAL THROUGH MY

2025) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 17 19 21 24 133 

LT 16 18 19 21 113 

Combined 34 36 40 46 246 

NHTSA’s estimates of economic benefits from establishing higher CAFE standards are 

subject to considerable uncertainty. Most important, the agency’s estimates of the fuel savings 

likely to result from adopting higher CAFE standards depend critically on the accuracy of the 

estimated fuel economy levels that will be achieved under both the baseline scenario, which 

assumes that manufacturers will continue to comply with the MY 2016 CAFE standards, and 

under alternative increases in the standards that apply to MYs 2017–25 passenger cars and light 

trucks. Specifically, if the agency has underestimated the fuel economy levels that 

manufacturers would have achieved under the baseline scenario—or is too optimistic about the 

fuel economy levels that manufacturers will actually achieve under the proposed standards—its 

estimates of fuel savings and the resulting economic benefits attributable to this rule will be too 

large. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 695 of 770

Another major source of potential overestimation in the agency’s estimates of benefits 

from requiring higher fuel economy stems from its reliance on the Reference Case fuel price 

forecasts reported in AEO 2011. Although NHTSA believes that these forecasts are the most 

reliable that are available, they are nevertheless significantly higher than the fuel price 

projections reported in most previous editions of EIA’s Annual Energy Outlook, and reflect 

projections of world oil prices that are well above forecasts issued by other firms and 

government agencies. If the future fuel prices projected in AEO 2011 prove to be too high, the 

agency’s estimates of the value of future fuel savings—the major component of benefits from 

this rule—will also be too high. 

However, it is also possible that NHTSA’s estimates of economic benefits from 

establishing higher CAFE standards underestimate the true economic benefits of the fuel savings 

those standards would produce. If the AEO 2011 forecast of fuel prices proves to be too low, for 

example, NHTSA will have underestimated the value of fuel savings that will result from 

adopting higher CAFE standards for MY 2017–25. As another example, the agency’s estimate 

of benefits from reducing the threat of economic damages from disruptions in the supply of 

imported petroleum to the U.S. applies to calendar year 2020. If the magnitude of this estimate 

would be expected to grow after 2015 in response to increases in U.S. petroleum imports, growth 

in the level of U.S. economic activity, or increases in the likelihood of disruptions in the supply 

of imported petroleum, the agency may have underestimated the benefits from the reduction in 

petroleum imports expected to result from adopting higher CAFE standards. 

NHTSA’s benefit estimates could also be too low because they exclude or understate the 

economic value of certain potentially significant categories of benefits from reducing fuel 

consumption. As one example, EPA’s estimates of the economic value of reduced damages to 

human health resulting from lower exposure to criteria air pollutants includes only the effects of 

reducing population exposure to PM2.5 emissions. Although this is likely to be the most 

significant component of health benefits from reduced emissions of criteria air pollutants, it 

excludes the value of reduced damages to human health and other impacts resulting from lower 

emissions and reduced population exposure to other criteria air pollutants, including ozone and 

nitrous oxide (N2O), as well as to airborne toxics. EPA’s estimates exclude these benefits 

because no reliable dollar-per-ton estimates of the health impacts of criteria pollutants other than 

PM2.5 or of the health impacts of airborne toxics were available to use in developing estimates of 

these benefits. 

Similarly, the agency’s estimate of the value of reduced climate-related economic 

damages from lower emissions of GHGs excludes many sources of potential benefits from 

reducing the pace and extent of global climate change.753 For example, none of the three models 

used to value climate-related economic damages includes those resulting from ocean 

acidification or loss of species and wildlife. The models also may not adequately capture certain 

other impacts, including potentially abrupt changes in climate associated with thresholds that 

 753 Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, Interagency Working 

Group on Social Cost of Carbon, United States Government, February 2010. Available in Docket No. NHTSA–

2009–0059. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 696 of 770

govern climate system responses, interregional interactions such as global security impacts of 

extreme warming, or limited near-term substitutability between damage to natural systems and 

increased consumption. Including monetized estimates of benefits from reducing the extent of 

climate change and these associated impacts would increase the agency’s estimates of benefits 

from adopting higher CAFE standards. 

The following tables present itemized costs and benefits for the combined passenger car 

and light truck fleets for each model year affected by the proposed standards and for all model 

years combined, using both discount rates prescribed by OMB regulatory guidance. Tables 

IV.G.4–12a and 12b report technology outlays, each separate component of benefits (including 

costs associated with additional driving due to the rebound effect, labeled “dis-benefits”), the 

total value of benefits, and net benefits using the 3 percent discount rate. (Numbers in 

parentheses represent negative values.) 

TABLE IV.G.4-12A. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 3 PERCENT DISCOUNT RATE – MYS 2017-2021 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Costs 

Technology costs 3.9 2.6 5.8 8.9 12.8 17.5 

Benefits 

Savings in lifetime 

fuel expenditures 9.8 6.8 16.8 28.0 37.7 49.0 

Consumer surplus 

from additional 

driving 

0.0 0.0 0.1 0.3 0.4 0.6 

Value of savings in 

refueling time 0.5 0.4 0.7 1.0 1.4 1.9 

Reduction in 

petroleum market 

externalities 

0.5 0.4 0.9 1.5 2.0 2.6 

Reduction in 

climate-related 

damages from lower 

CO2 emissions754

1.0 0.7 1.8 3.0 4.0 5.3 

Reduction in 

highway fatalities 

from changes in 

vehicle mass 

(0.6) (0.0) 0.0 (0.1) (0.1) (0.1) 

Reduction in health 

damage costs from 

 754 Using the central value of $22 per metric ton for the SCC, and discounting future benefits from reduced CO2

emissions at a 3 percent annual rate. Additionally, we note that the $22 per metric ton value for the SCC applies to 

calendar year 2010, and increases over time. See the interagency guidance on SCC for more information. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 697 of 770

lower emissions of 

criteria air 

pollutants: 

CO - - - - - - 

VOC 0.0 0.0 0.0 0.0 0.1 0.1 

NOX 0.0 0.0 0.0 0.0 0.1 0.1 

PM 0.2 0.1 0.3 0.5 0.7 0.9 

SOX 0.1 0.1 0.3 0.4 0.6 0.7 

Dis-benefits from 

increased driving: 

Congestion costs (0.6) (0.4) (0.8) (1.2) (1.7) (2.2) 

Noise costs (0.0) (0.0) (0.0) (0.0) (0.0) (0) 

Crash costs (0.3) (0.2) (0.4) (0.6) (0.8) (1.0) 

Total benefits 11.0 7.9 19.7 33.0 44.4 57.9 

Net benefits 6.7 5.3 13.9 23.9 31.6 40.4 

TABLE IV.G.4-12B. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 3 PERCENT DISCOUNT RATE – MYS 2022-2025 AND TOTAL FOR ALL MYS

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Costs 

Technology costs 20.1 24.3 21.8 29.6 158 

Benefits 

Savings in lifetime fuel 

expenditures 56.1 63.1 72.2 80.5 420 

Consumer surplus from 

additional driving 0.7 0.9 1.1 1.3 5.6 

Value of savings in 

refueling time 2.1 2.3 2.7 2.7 15.7 

Reduction in petroleum 

market externalities 2.9 3.2 3.7 4.1 21.7 

Reduction in climaterelated damages from 

lower CO2 emissions 

6.1 7.0 8.1 9.1 46.0 

Reduction in highway 

fatalities from changes 

in vehicle mass 

(0.0) (0.0) (0.0) (0.0) (0.4) 

Reduction in health 

damage costs from 

lower emissions of 

criteria air pollutants: 

CO - - - - - 

VOC 0.1 0.1 0.1 0.1 0.6 

NOX 0.1 0.1 0.1 0.1 0.7 

PM 1.0 1.2 1.3 1.5 7.7 

SOX 0.8 0.9 0.9 1.0 5.8 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 698 of 770

Dis-benefits from 

increased driving: 

Congestion costs (2.5) (2.7) (3.2) (3.4) (18.6) 

Noise costs (0.1) (0.1) (0.1) (0.1) (0.4) 

Crash costs (1.2) (1.3) (1.5) (1.6) (8.7) 

Total benefits 66.1 74.4 85.4 95.3 495.7 

Net benefits 46.0 50.4 63.6 65.7 337.7 

Similarly, Tables IV.G.4–13a and 13b below report technology outlays, the individual 

components of benefits (including “dis-benefits” resulting from additional driving) and their 

total, and net benefits, using the 7 percent discount rate. (Again, numbers in parentheses 

represent negative values.) 

TABLE IV.G.4-13A. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 7 PERCENT DISCOUNT RATE – MYS 2017-2021 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Costs 

Technology costs 3.9 2.6 5.8 8.9 12.8 17.5 

Benefits 

Savings in lifetime 

fuel expenditures 7.8 5.4 13.3 22.2 29.9 38.9 

Consumer surplus 

from additional 

driving 

0.0 0.0 0.1 0.2 0.3 0.5 

Value of savings in 

refueling time 0.4 0.3 0.6 0.8 1.1 1.5 

Reduction in 

petroleum market 

externalities 

0.4 0.3 0.7 1.2 1.6 2.0 

Reduction in 

climate-related 

damages from lower 

CO2 emissions755

1.0 0.7 1.8 2.9 4.0 5.3 

Reduction in 

highway fatalities 

from changes in 

vehicle mass 

(0.1) (0.0) 0.0 (0.1) (0.0) (0.1) 

Reduction in health 

damage costs from 

lower emissions of 

criteria air 

 755 Using the central value of $22 per metric ton for the SCC, and discounting future benefits from reduced CO2

emissions at a 3 percent annual rate. Additionally, we note that the $22 per metric ton value for the SCC applies to 

calendar year 2010, and increases over time. See the interagency guidance on SCC for more information. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 699 of 770

pollutants: 

CO - - - - - - 

VOC 0.0 0.0 0.0 0.0 0.0 0.1 

NOX 0.0 0.0 0.0 0.0 0.1 0.1 

PM 0.1 0.1 0.2 0.4 0.6 0.7 

SOX 0.1 0.1 0.2 0.3 0.5 0.6 

Dis-benefits from 

increased driving: 

Congestion costs (0.4) (0.3) (0.6) (1.0) (1.3) (1.8) 

Noise costs (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) 

Crash costs (0.2) (0.1) (0.3) (0.5) (0.6) (0.8) 

Total benefits 9.1 6.5 16.0 26.4 36.2 47.0 

Net benefits 5.2 3.9 10.2 17.5 23.4 29.5 

TABLE IV.G.4-13B. PRESENT VALUE OF NET BENEFITS ($B) UNDER PROPOSED 

STANDARDS USING 7 PERCENT DISCOUNT RATE – MYS 2022-2025 AND TOTAL FOR ALL MYS

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Costs 

Technology costs 20.1 24.2 29.6 32.1 158.0 

Benefits 

Savings in lifetime fuel 

expenditures 44.5 50.1 57.5 64.1 333.5 

Consumer surplus from 

additional driving 0.6 0.7 0.9 1.0 4.4 

Value of savings in 

refueling time 1.7 1.8 2.2 2.2 12.6 

Reduction in petroleum 

market externalities 2.3 2.6 3.0 3.3 17.4 

Reduction in climaterelated damages from 

lower CO2 emissions 

6.1 7.0 8.1 9.1 45.9 

Reduction in highway 

fatalities from changes 

in vehicle mass 

(0.0) (0.0) (0.0) (0.0) (0.4) 

Reduction in health 

damage costs from 

lower emissions of 

criteria air pollutants: 

 

CO - - - - - 

VOC 0.1 0.1 0.1 0.1 0.5 

NOX 0.1 0.1 0.1 0.1 0.6 

PM 0.8 0.9 1.0 1.2 6.2 

SOX 0.6 0.7 0.7 0.8 4.6 

Dis-benefits from 

increased driving: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 700 of 770

Congestion costs (2.0) (2.2) (2.5) (2.7) (14.9) 

Noise costs (0.0) (0.0) (0.0) (0.0) (0.3) 

Crash costs (0.9) (1.0) (1.2) (1.3) (7.0) 

Total benefits 53.9 60.8 69.9 77.9 403.1 

Net benefits 33.8 36.6 40.3 45.8 245.1 

These benefit and cost estimates do not reflect the availability and use of certain 

flexibility mechanisms, such as compliance credits and credit trading, because EPCA prohibits 

NHTSA from considering the effects of those mechanisms in setting CAFE standards. However, 

the agency noted that, in reality, manufacturers were likely to rely to some extent on flexibility 

mechanisms and would thereby reduce the cost of complying with the proposed standards to a 

meaningful extent. 

As discussed in the PRIA, NHTSA has performed an analysis to estimate costs and 

benefits taking into account EPCA’s provisions regarding EVs, PHEVs produced before MY 

2020, FFV credits, and other CAFE credit provisions. Accounting for these provisions indicates 

that achieved fuel economies would be 0.5–1.6 mpg lower than when these provisions are not 

considered (for comparison, see Table IV.G.1–2 above): 

TABLE IV.G.4-14A. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 38.8 40.5 42.6 44.5 46.1 

Light trucks 29.0 30.1 31.9 33.1 35.0 

Combined 34.5 36.0 38.0 39.7 41.5 

TABLE IV.G.4-14B. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 MY 2022 MY 2023 MY 2024 MY 2025 

Passenger cars 47.2 48.9 50.5 52.8 

Light trucks 35.7 36.7 37.6 38.3 

Combined 42.5 43.9 45.3 46.9 

As a result, NHTSA estimates that, when EPCA AFV and credit provisions are taken into 

account, fuel savings will total 153 billion gallons—5.6 percent less than the 161.0 billion 

gallons estimated when these flexibilities are not considered: 

TABLE IV.G.4-15A. FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS –

MYS 2017-2021 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 3 2 4 6 8 10 

LT 0 1 2 4 6 8 

Combined 4 3 6 10 14 18 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 701 of 770

TABLE IV.G.4-15B. FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS –

MYS 2022-2025 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 11 14 16 19 94 

LT 8 9 10 11 59 

Combined 20 23 26 30 153 

The agency similarly estimates CO2 emissions reductions will total 1,833 million metric 

tons (mmt), 8.0 percent less than the 1,993 mmt estimated when these EPCA provisions are not 

considered:756

TABLE IV.G.4-16A. AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 39 23 42 69 93 130 

LT 6 7 20 44 60 84 

Combined 45 30 62 113 153 215 

TABLE IV.G.4-16B. AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 150 183 217 258 1,205 

LT 94 106 115 123 659 

Combined 245 289 332 381 1,864 

 

This analysis further indicates that significant reductions in outlays for additional 

technology will result when EPCA’s AFV and credit provisions are taken into account. Tables 

IV.G.4–17a and 17b below show that, total technology costs are estimated to decline to $138 

billion as a result of manufacturers’ use of these provisions, or about 14 percent less than the 

$161 billion estimated when excluding these flexibilities: 

TABLE IV.G.4-17A. INCREMENTAL TECHNOLOGY OUTLAYS ($ BILLION) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 1 2 3 6 8 11 

LT 0 0 1 2 3 5 

Combined 2 2 4 8 11 15 

TABLE IV.G.4-17B. INCREMENTAL TECHNOLOGY OUTLAYS ($ BILLION) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (WITH EPCA AFV AND CREDIT PROVISIONS) 

 756 Differences in the application of diesel engines and plug-in hybrid electric vehicles lead to differences in the 

percentage changes in fuel consumption and carbon dioxide emissions between the with- and without-credit cases. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 702 of 770

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 12 16 19 22 100 

LT 5 6 7 7 37 

Combined 17 22 26 29 138 

Because NHTSA’s analysis indicated that these EPCA provisions will modestly reduce 

fuel savings and related benefits, the agency’s estimate of the present value of total benefits will 

be $471 billion when discounted at a 3 percent annual rate, as Tables IV.G.4–18a and 18b below 

report. This estimate of total benefits is $30 billion, or 6.0 percent, lower than the $497 billion 

reported previously for the analysis that excluded these provisions: 

TABLE IV.G.4-18A. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2017-2021 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 10 6 11 18 25 31 

LT 1 2 5 12 17 23 

Combined 11 8 17 31 42 54 

TABLE IV.G.4-18B. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 35 42 49 58 287 

LT 26 29 32 35 184 

Combined 61 72 82 93 471 

Similarly, NHTSA estimates that the present value of total benefits will decline modestly 

from its previous estimate when future fuel savings and other benefits are discounted at the 

higher 7 percent rate. Tables IV.G.4–19a and 19b report that the present value of benefits from 

requiring higher fuel economy for MY 2017–25 cars and light trucks will total $383 billion when 

discounted using a 7 percent rate, about $24 billion (5.9 percent) below the previous $404 billion 

estimate of total benefits when FFV credits were not permitted: 

TABLE IV.G.4-19A. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2017-2021 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 8 5 9 15 20 25 

LT 0 1 4 10 13 19 

Combined 9 7 14 25 34 44 

TABLE IV.G.4-19B. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 703 of 770

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 29 35 40 48 2235 

LT 21 24 26 28 148 

Combined 50 58 67 76 383 

Although the discounted present value of total benefits will be modestly lower when 

EPCA AFV and credit provisions are taken into account, the agency estimates that these 

provisions will reduce net benefits by a smaller proportion. As Tables IV.G.4–20a and 20b 

show, the agency estimates that these will reduce net benefits from the proposed CAFE standards 

to $334 billion from the previously-reported estimate of $335 billion without those credits, or by 

only about 2.1 percent. 

TABLE IV.G.4-20A. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2017-2021 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 10 5 8 13 17 20 

LT 0 1 4 10 14 19 

Combined 10 6 13 23 30 39 

TABLE IV.G.4-20B. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (WITH EPCA AFV AND 

CREDIT PROVISIONS) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 23 26 30 36 187 

LT 21 23 26 28 147 

Combined 44 50 56 64 334 

Similarly, Tables IV.G.4–21a and 21b immediately below show that NHTSA estimates 

manufacturers’ use of EPCA AFV and credit provisions will reduce net benefits from requiring 

higher fuel economy for MY 2017–25 cars and light trucks only very slightly—to $241 billion—

if a 7 percent discount rate is applied to future benefits. This estimate is $1 billion—or 0.4 

percent—lower than the previously-reported $242 billion estimate of net benefits without the 

availability of EPCA AFV and credit provisions using that same discount rate. 

TABLE IV.G.4-21A. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2017-2021 (WITH EPCA AFV and credit 

provisions) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 7 3 6 10 12 15 

LT 1 1 3 8 10 14 

Combined 8 5 9 17 23 29 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 704 of 770

TABLE IV.G.4-21B. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (WITH EPCA AFV and credit 

provisions) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

PC 17 19 21 26 135 

LT 16 18 19 21 111 

Combined 32 36 41 47 246 

The agency has performed several sensitivity analyses to examine important assumptions. 

We examine sensitivity with respect to the following economic parameters: 

1) The price of gasoline: The main analysis (i.e., the Reference Case) uses the AEO 2011 

Reference Case estimate for the price of gasoline. In this sensitivity analysis we examine the 

effect of using the AEO 2011 High Price Case or Low Price Case forecast estimates instead. 

2) The rebound effect: The main analysis uses a rebound effect of 10 percent to project 

increased miles traveled as the cost per mile driven decreases. In the sensitivity analysis, 

we examine the effect of using a 5, 15, or 20 percent rebound effect instead. 

3) The value of CO2 benefits: The main analysis uses $22.00 per ton discounted at a 3 

percent discount rate to quantify the benefits of reducing CO2 emissions and $0.174 per 

gallon to quantify the benefits of reducing fuel consumption. In the sensitivity analysis, 

we examine the following values and discount rates applied only to the social cost of 

carbon to value carbon benefits, considering low, high, and very high valuations of 

approximately $5, $36, and $67 per ton, respectively with regard to the benefits of 

reducing CO2 emissions.757 These are the 2010 values, which increase over time. These 

values can be translated into cents per gallon by multiplying by 0.0089,758 giving the 

following values: 

($4.86 per ton CO2) x 0.0089 = $0.043 per gallon discounted at 5% 

($22.00 per ton CO2) x 0.0089 = $0.196 per gallon discounted at 3% (used in the main 

analysis) 

($36.13 per ton CO2) x 0.0089 = $0.322 per gallon discounted at 2.5% 

And a 95th percentile estimate of 

($66.88 per ton CO2) x 0.0089 = $0.595 per gallon discounted at 3% 

4) Military security: The main analysis does not assign a value to the military security 

benefits of reducing fuel consumption. In the sensitivity analysis, we examine the impact 

of using a value of 12 cents per gallon instead. 

 757 The low, high, and very high valuations of $5, $36, and $67 are rounded for brevity; the exact values are $4.86, 

$36.13, and $66.88, respectively. 

758 The molecular weight of Carbon (C) is 12, the molecular weight of Oxygen (O) is 16, thus the molecular weight 

of CO2 is 44. 1 gallon of gas weighs 2,819 grams, of that 2,433 grams are carbon. One ton of CO2/One ton of C 

(44/12)* 2433grams C/gallon *1 ton/1000kg * 1 kg/1000g = (44 * 2433*1*1) / (12*1*1000 * 1000) = 

0.0089. Thus, one ton of CO2*0.0089 = 1 gallon of gasoline. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 705 of 770

5) Consumer Benefit: The main analysis assumes there is no loss in consumer surplus with 

vehicles that have an increase in price and higher fuel economy. This sensitivity analysis 

assumes that there is a 25, or 50 percent loss in consumer surplus – equivalent to the 

assumption that consumers will only value the calculated benefits they will achieve at 75, 

or 50 percent, respectively, of their main analysis estimates. 

6) Battery cost: The agency conducted a sensitivity analysis of battery costs in relation to 

HEV, PHEV, and EV batteries. For HEV batteries, sensitivity analysis was performed 

with a +/- 10 percent variation in cost per kWh, while sensitivity analyses involving 

PHEV and EV batteries utilized alternate ranges contingent on the type of battery cathode 

(see chapter X for additional detail). PHEV and EV battery costs ranged between -20 

percent and +35 percent in this sensitivity analysis. 

7) Mass reduction cost: A sensitivity analysis was performed examining the impact of 

vehicle mass reduction that could feasibly be accomplished with a +/- 40 percent impact 

on vehicle cost. 

8) Market-driven baseline: The baseline for the central analysis is based on the MY 2016 

CAFE standards and assumes that manufacturers will make no changes in the fuel 

economy from that level through MY 2025. A sensitivity analysis was performed to 

simulate potential increases in fuel economy over the compliance level required if MY 

2016 standards were to remain in place. The assumption is that the market would drive 

manufacturers to put technologies into their vehicles that they believe consumers would 

value and be willing to pay for. Using parameter values consistent with the central 

analysis, the agency simulated the market-driven baseline by applying a payback period 

of one year for purposes of calculating the value of future fuel savings when simulating 

whether manufacturers would apply additional technology to an already CAFE-compliant 

fleet. In other words we assumed that manufacturers that were above their MY 2016 

CAFE level would compare the cost to consumers to the fuel savings in the first year of 

operation and decide to voluntarily apply those technologies to their vehicles when 

benefits for the first year exceeded costs for the consumer. For a manufacturer’s fleet 

that that has not yet achieved compliance with CAFE standards, the agency continued to 

apply a five-year payback period. In other words, for this sensitivity analysis the agency 

assumed that manufacturers that have not yet met CAFE standards for future model years 

will apply technology as if buyers were willing to pay for the technologies as long as the 

fuel savings throughout the first five years of vehicle ownership exceeded their costs. 

Once having complied with those standards, however, manufacturers are assumed to 

consider making further improvements in fuel economy as if buyers were only willing to 

pay for fuel savings to be realized during the first year of vehicle ownership. 

9) [Cost reduction based on learning: A sensitivity analysis will be performed on the cost 

impact should increased manufacturing volume of proposed fuel economy related 

technologies lead to a decrease in manufacturers’ per-item costs. This sensitivity analysis 

will look at both high and low learning rates.] 

 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 706 of 770

Varying each of these four parameters in isolation results in 9 additional economic 

scenarios, in addition to the Reference case. These are listed in Table IV.G.4–22 below, together 

with two additional scenarios that use combinations of these parameters that together produce the 

lowest and highest benefits. 

TABLE IV.G.4-22. SENSITIVITY ANALYSES EVALUATED IN NHTSA’S PRIA 

Name Fuel 

Price

Discount 

Rate

Rebound 

Effect SCC Military Security

Reference Reference 3% 10% $22 0¢/gal

High Fuel Price High 3% 10% $22 0¢/gal

Low Fuel Price Low 3% 10% $22 0¢/gal

5% Rebound Effect Reference 3% 5% $22 0¢/gal

15% Rebound Effect Reference 3% 15% $22 0¢/gal

20% Rebound Effect Reference 3% 20% $22 0¢/gal

12¢/gal Military Security 

Value Reference 3% 10% $22 12¢/gal

$5/ton CO2 Value Reference 3% 10% $5 0¢/gal

$36/ton CO2 Value Reference 3% 10% $36 0¢/gal

$67/ton CO2 Value Reference 3% 10% $67 0¢/gal

50% Consumer Benefit Reference 3% 10% $22 0¢/gal

75% Consumer Benefit Reference 3% 10% $22 0¢/gal

Low Battery Cost Reference 3% 10% $22 0¢/gal

High Battery Cost Reference 3% 10% $22 0¢/gal

Low Mass Reduction Reference 3% 10% $22 0¢/gal

High Mass Reduction Reference 3% 10% $22 0¢/gal

Market-Driven 

Baseline Reference 3% 10% $22 0¢/gal

Low Learning Rate Reference 3% 10% $22 0¢/gal

High Learning Rate Reference 3% 10% $22 0¢/gal

The basic results of this sensitivity analysis are contained in Chapter X of the PRIA, but 

several selected findings are as follows: 

1) Varying the economic assumptions has almost no impact on achieved mpg. High mass 

reduction cost and a market-based baseline are the only parameters that impact achieved 

mpg. None of these alter the outcome by more than 0.1 mpg for either fleet. 

2) Varying the economic assumptions has, at most, a small impact on per-vehicle costs, fuel 

saved, and CO2 emissions reductions, with none of the variations impacting the outcomes 

by more than 10 percent from their central analysis levels with the exception being the 

sensitivity involving a 20 percent rebound effect. 

3) The largest change resulting from varying economic parameters is on net benefits. 

Changing the fuel price forecast to the AEO 2011 High Price Case forecast impacts net 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 707 of 770

benefits by a combined +43.3%, while the AEO 2011 Low Price Case forecast reduces 

net benefits by -48.8%. Other large impacts on net benefits occurred with the 20 percent 

rebound effect (-31.2%), valuing benefits at 50 and 75 percent (-61.8% and -30.9%, 

respectively), and valuing the reduction in CO2 emissions at $67/ton (+27.9%). 

4) Even if consumers value the benefits achieved at 50% of the main analysis assumptions, 

total benefits still exceed costs. 

Regarding the lower fuel savings and CO2 emissions reductions predicted by the 

sensitivity analysis as fuel price increases, which initially may seem counterintuitive, we note 

that there are some counterbalancing factors occurring. As fuel price increases, people will drive 

less and so fuel savings and CO2 emissions reductions may decrease. 

In addition, the agency analyzed the impact that having a retail price equivalent (RPE) 

factor of 1.5 for all technologies would have on the various alternatives instead of using the 

indirect cost methodology (ICM) resulting in an overall price increase multiplier from variable 

cost of 1.2 to 1.25, with special attention being paid to the preferred alternative and the 

maximum net benefit alternative. Table IV.G.4-23a shows the impact on the MY 2025 achieved 

mpg level for passenger cars and light trucks by changing the cost markup factors used in the 

Volpe model. Having a higher cost for technologies limits how many technologies are cost 

effective. Table IV.G.4-23b shows the impact on the MY 2025 achieved mpg level for 

passenger cars and light trucks if NAS cost estimates are used in conjunction with the ICM 

method in place of the cost estimates used in the main analysis. Table IV.G.4-24 shows the 

impact on per-vehicle technology cost, total net benefits, total fuel savings, and total CO2

reduction for the preferred alternative comparing the preferred alternative using the ICM method 

with main analysis cost estimates to the RPE method, as well as the ICM method using main 

analysis cost estimates to the ICM method using NAS cost estimates. 

TABLE IV.G.4-23A. ACHIEVED MPG LEVEL, MY 2025, COMPARING DIFFERENT COST 

MARK-UP METHODOLOGIES (3% DISCOUNT RATE) 

ICM Method 

(Main 

Analysis 

Costs)

RPE Method 

(Main 

Analysis 

Costs)

Difference 

(mpg)

Passenger Cars

Preferred Alternative 52.6 52.3 -0.3

Max Net Benefits 49.6 48.9 -0.7

Light trucks

Preferred Alternative 39.5 39.4 -0.1

Max Net Benefits 44.1 43.6 -0.5

 

TABLE IV.G.4-23B. ACHIEVED MPG LEVEL, MY 2025, COMPARING ICM METHOD WITH 

MAIN ANALYSIS COSTS VS. NAS COSTS (3% DISCOUNT RATE) 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 708 of 770

ICM Method 

(Main 

Analysis 

Costs)

ICM Method 

(NAS Cost 

Estimates)

Difference 

(mpg)

Passenger Cars

Preferred Alternative 52.6 52.2 -0.4

Max Net Benefits 49.6 48.7 0.9

Light trucks

Preferred Alternative 39.5 39.0 -0.5

Max Net Benefits 44.1 43.5 -0.6

TABLE IV.G.4-24. SENSITIVITY ANALYSES

(ACHIEVED MPG, PER-VEHICLE COST, NET BENEFITS, FUEL SAVED, & CO2 EMISSIONS 

REDUCED) 

Cost Method and Set of 

Cost Estimates

MY 2025 

Achieved 

mpg

Average 

MY 2025 

Per-Vehicle 

Technology 

Cost

MY 2017-

2025 Net 

Benefits, 

Discounted 

3%, in 

Billions of 

$

MY 2017-

2025 Fuel 

Saved, in 

Billions 

of 

Gallons

MY 2017-

2025 CO2 

Emissions 

Reduced, 

in mmT

Passenger Cars

ICM w/Main Analysis 

Costs 52.6 $2,170 $181 95 1,193

RPE w/Main Analysis 

Costs 52.3 $2,665 $160 95 1,215

ICM w/NAS Costs 52.2 $2,989 $142 96 1,228

Light trucks

ICM w/Main Analysis 

Costs 39.5 $1,585 $149 62 753

RPE w/Main Analysis 

Costs 39.4 $2,056 $136 62 799

ICM w/NAS Costs 39.0 $2,455 $124 60 660

For today’s rulemaking analysis, the agency has also performed a sensitivity analysis 

where manufacturers are allowed to voluntarily apply more technology than would be required to 

comply with CAFE standards for each model year. Manufacturers are assumed to do so as long 

as applying each additional technology would increase vehicle production costs (including 

markup) by less than it would reduce buyers’ fuel costs during the first year they own the 

vehicle. This analysis makes use of the “voluntary overcompliance” simulation capability DOT 

has recently added to its CAFE model. This capability, which is discussed further above in 

section IV.C.4.c and in the CAFE model documentation, is a logical extension of the model’s 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 709 of 770

simulation of some manufacturers’ decisions to respond to EPCA by paying civil penalties once 

additional technology becomes economically unattractive. It attempts to simulate 

manufacturers’ responses to buyers’ demands for higher fuel economy levels than prevailing 

CAFE standards would require when fuel costs are sufficiently high, and technologies that 

manufacturers have not yet fully utilized are available to improve fuel economy at relatively low 

costs. 

NHTSA performed this analysis because some stakeholders commenting on the recentlypromulgated standards for medium- and heavy-duty vehicles indicated that it would be 

unrealistic for the agency to assume that in the absence of new regulations, technology and fuel 

economy would not improve at all in the future. In other words, these stakeholders argued that 

market forces are likely to result in some fuel economy improvements over time, as potential 

vehicle buyers and manufacturers respond to changes in fuel prices and in the availability and 

costs of technologies to increase fuel economy. NHTSA agrees that, in principle, its analysis 

should estimate a potential that manufacturers will apply technology as if buyers place some

value on fuel economy improvements. Considering current uncertainties discussed below 

regarding the degree to which manufacturers will do so, the agency currently judges it 

appropriate to conduct its central rulemaking analysis without attempting to simulate these 

effects. Nonetheless, the agency believes that voluntary overcompliance is sufficiently plausible 

that corresponding sensitivity analysis is warranted. 

NHTSA performed this analysis by simulating potential overcompliance under the noaction alternative, the preferred alternative, and other regulatory alternatives. In doing so, the 

agency used all the same parameter values as in the agency’s central analysis, but applied a 

payback period of one year for purposes of calculating the value of future fuel savings when 

simulating whether a manufacturer would apply additional technology to an already CAFEcompliant fleet. For technologies applied to a manufacturer’s fleet that has not yet achieved 

compliance with CAFE standards, the agency continued to apply a five-year payback period. 

In other words, for this sensitivity analysis the agency assumed that manufacturers that 

have not yet met CAFE standards for future model years will apply technology as if buyers were 

willing to pay for fuel savings throughout the first five years of vehicle ownership. Once having 

complied with those standards, however, manufacturers are assumed to consider making further 

improvements in fuel economy as if buyers were only willing to pay for fuel savings to be 

realized during the first year of vehicle ownership. This reflects the agency’s assumptions for 

this sensitivity analysis, that (1) civil penalties, though legally available, carry a stigma that 

manufacturers will strive to avoid, and that (2) having achieved compliance with CAFE 

standards, manufacturers will avoid competitive risks entailed in charging higher prices for 

vehicles that offer additional fuel economy, rather than offering additional performance or utility. 

Since CAFE standards were first introduced, some manufacturers have consistently 

exceeded those standards, and the industry as a whole has consistently overcomplied with both 

the passenger car and light truck standards. Although the combined average fuel economy of 

cars and light trucks declined in some years, this resulted from buyers shifting their purchases 

from passenger cars to light trucks, not from undercompliance with either standard. Even with 

those declines, the industry still overcomplied with both passenger car and light truck standards. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 710 of 770

In recent years, between MYs 1999 and 2009, fuel economy overcompliance has been increasing 

on average for both the passenger car and the light truck fleets. NHTSA considers it impossible 

to say with certainty why past fuel economy levels have followed their observed path . If the 

agency could say with certainty how fuel economy would have changed in the absence of CAFE 

standards, it might be able to answer this question; however, NHTSA regards this 

“counterfactual” case as simply unknowable. 

NHTSA has, however, considered other relevant indications regarding manufacturers’ 

potential future decisions. Published research regarding how vehicle buyers have previously 

viewed fuel economy suggests that they have only a weak quantitative understanding of the 

relationship between fuel economy and future fuel outlays, and that potential buyers value fuel 

economy improvements by less than theoretical present-value calculations of lifetime fuel 

savings would suggest. These findings are generally consistent with manufacturers’ confidential 

and, in some cases, public statements. Manufacturers have tended to communicate not that 

buyers absolutely “don’t care” about fuel economy, but that buyers have, in the past, not been 

willing to pay the full cost of most fuel economy improvements. Manufacturers have also tended 

to indicate that sustained high fuel prices would provide a powerful incentive for increased fuel 

economy; this implies that manufacturers believe buyers are willing to pay for some fuel 

economy increases, but that buyers’ willingness to do so depends on their expectations for future 

fuel prices. In their confidential statements to the agency, manufacturers have also tended to 

indicate that in their past product planning processes, they have assumed buyers would only be 

willing to pay for technologies that "break even” within a relatively short time—generally the 

first two to four years of vehicle ownership. 

NHTSA considers it not only feasible but appropriate to simulate such effects by 

calculating the present value of fuel savings over some “payback period.” The agency also 

believes it is appropriate to assume that specific improvements in fuel economy will be 

implemented voluntarily if manufacturers’ costs for adding the technology necessary to 

implement them to specific models would be lower than potential buyers’ willingness to pay for 

the resulting fuel savings. This approach takes fuel costs directly into account, and is therefore 

responsive to manufacturers’ statements regarding the role that fuel prices play in influencing 

buyers’ demands and manufacturers’ planning processes. Under this approach, a short payback 

period can be employed if manufacturers are expected to act as if buyers place little value on fuel 

economy. Conversely, a longer payback period can be used if manufacturers are expected to act 

as if buyers will place comparatively greater value on fuel economy. 

NHTSA cannot be certain to what extent vehicle buyers will, in the future, be willing to 

pay for fuel economy improvements, or to what extent manufacturers would, in the future, 

voluntarily apply more technology than needed to comply with fuel economy standards. The 

agency is similarly hopeful that future vehicle buyers will be more willing to pay for fuel 

economy improvements than has historically been the case. In meetings preceding today’s 

proposed standards, two manufacturers stated they expected fuel economy to increase two 

percent to three percent per year after MY 2016, absent more stringent regulations. And in 

August 2010, one manufacturer stated its combined fleet would achieve 50 mpg by MY 2025, 

supporting that at a minimum some manufacturers believe that exceeding fuel economy 

standards will provide them a competitive advantage. The agency is hopeful that future vehicle 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 711 of 770

buyers will be better-informed than has historically been the case, in part because recentlypromulgated requirements regarding vehicle labels will provide clearer information regarding 

fuel economy and the dollar value of resulting fuel savings. The agency is similarly hopeful that 

future vehicle buyers will be more willing to pay for fuel economy improvements than past 

buyers. In meetings preceding today’s proposed standards, many manufacturers indicated 

significant shifts in their product plans—shifts consistent with expectations that compared to past 

buyers, future buyers will “care more” about fuel economy. 

Nevertheless, considering the uncertainties mentioned above, NHTSA continues to 

consider it appropriate to conduct its central rulemaking analysis in a manner that ignores the 

possibility that in the future, manufacturers will voluntarily apply more technology than the 

minimum necessary to comply with CAFE standards. Also, in conducting its sensitivity analysis 

to simulate voluntary overcompliance with the proposed standards, the agency has applied the 

extremely conservative assumption that when considering whether to employ “extra” 

technology, manufacturers will act as if buyers’ value the resulting savings in fuel costs only 

during their first year of ownership (i.e., as if a 1-year payback period applies). 

Results of the agency’s analysis simulating this potential for voluntary overcompliance 

are summarized below. Compared to results from the agencies’ central analysis presented above, 

differences are greatest for the baseline scenario (i.e., the No-Action Alternative), under which 

CAFE standards remain unchanged after MY 2016. These results also suggest, as the agency 

would expect, that because increasingly stringent standards require progressively more 

technology than the market will demand, the likelihood of voluntary overcompliance will decline 

with increasing stringency. Achieved fuel economy levels under baseline standards are as 

follows: 

TABLE IV.G.4-23A. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER BASELINE 

STANDARDS – MYS 2017-2021 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

PC 37.2 37.6 37.9 38.1 38.2 

LT 28.8 29.1 29.3 29.3 29.4 

Combined 33.6 34.0 34.3 34.4 34.6 

TABLE IV.G.4-23B. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER BASELINE 

STANDARDS – MYS 2022-2025 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 

PC 38.2 38.3 38.4 38.5 

LT 29.5 29.7 29.8 30.3 

Combined 34.6 34.8 35.0 35.3 

With no change in standards after MY 2016, while combined average fuel economy is the 

same in MY 2017 both with and without simulated voluntary overcompliance, differences grow 

over time, reaching 0.9 mpg in MY 2025. In other words, without simulating voluntary 

overcompliance, the agency estimated that combined average achieved fuel economy would 

reach 35.0 mpg in MY 2025, whereas the agency estimates that it would reach 35.9 mpg in that 

year if voluntary overcompliance occurred.. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 712 of 770

In contrast, the effect on achieved fuel economy levels of allowing voluntary 

overcompliance with the proposed standards was minimal. Allowing manufacturers to 

overcomply with the proposed standards for MY 2025 led to combined average achieved fuel 

economy levels within 0.1 mpg of levels of values obtained without simulating voluntary 

overcompliance (see tables IV.G.1-1 AND IV.G.1-2): 

TABLE IV.G.4-24A. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 38.7 40.7 42.6 44.3 45.8 

Light trucks 29.5 30.7 32.6 33.8 35.6 

Combined 35.1 36.9 38.9 40.5 42.3 

TABLE IV.G.4-24B. AVERAGE ACHIEVED FUEL ECONOMY (MPG) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 

Passenger cars 48.3 49.5 51.4 52.8 

Light trucks 36.6 37.7 38.6 39.6 

Combined 43.5 44.7 46.3 47.6 

As a result, NHTSA estimates that, when the potential for voluntary overcompliance is 

taken into account, fuel savings attributable to more stringent standards will total 151 billion 

gallons—5.6 percent less than the 161 billion gallons estimated when potential voluntary 

overcompliance is not taken into account, 

TABLE IV.G.4-25A. FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS –

MYS 2017-2021 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 3 2 4 6 8 10 

Light trucks 0 0 2 4 5 7 

Combined 3 3 6 10 14 18 

TABLE IV.G.4-25B. FUEL SAVED (BILLION GALLONS) UNDER PROPOSED STANDARDS –

MYS 2022-2025 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 12 13 16 18 94 

Light trucks 8 9 10 10 57 

Combined 20 23 26 28 151 

The agency is not projecting, however, that fuel consumption will be greater when 

voluntary overcompliance is taken into account. Rather, under today’s proposed standards, the 

agency’s analysis shows virtually identical fuel consumption (0.2 percent less over the useful 

lives of MY 2017-2025 vehicles) when potential voluntary overcompliance is taken into account. 

Simulation of voluntary overcompliance, therefore, does not reduce the agency’s estimate of 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 713 of 770

future fuel savings. Rather it changes the attribution of those fuel savings to the proposed 

standards, because voluntary overcompliance attributes some of the fuel savings to the market. 

The same holds for the attribution of costs, other effects, and monetized benefits—inclusion of 

voluntary overcompliance does not necessarily change their amounts, but it does attribute some 

of each cost, effect, or benefit to the workings of the market, rather than to the proposed 

standards. 

The agency similarly estimates CO2 emissions reductions attributable to today’s proposed 

standards will total 1,849 million metric tons (mmt), 6.6 percent less than the 1,993 mmt 

estimated when potential voluntary overcompliance is not taken into account:759

TABLE IV.G.4-26A. AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 38 24 54 80 105 126 

Light trucks 6 4 19 44 61 84 

Combined 43 28 73 124 167 211 

TABLE IV.G.4-26B. AVOIDED CARBON DIOXIDE EMISSIONS (MMT) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 145 174 205 239 1,190 

Light trucks 96 106 113 126 659 

Combined 242 280 318 364 1,849 

Conversely, this analysis indicates slightly greater outlays for additional technology 

under the proposed standards when potential voluntary overcompliance is taken into account. 

This increase is attributable to slight increases in technology application when potential 

voluntary overcompliance is taken into account. Tables IV.G.4–27a and 27b below show that 

total technology costs attributable to today’s proposed standards are estimated to increase? to 

$164 billion, or 1.2 percent more than the $160 billion estimated when potential voluntary 

overcompliance was not taken into account: 

TABLE IV.G.4-27A. INCREMENTAL TECHNOLOGY OUTLAYS ($ BILLION) UNDER PROPOSED 

STANDARDS – MYS 2017-2021 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 3 2 5 7 9 12 

Light trucks 0 0 1 2 4 5 

Combined 4 3 6 9 13 18 

TABLE IV.G.4-27B. INCREMENTAL TECHNOLOGY OUTLAYS ($ BILLION) UNDER PROPOSED 

STANDARDS – MYS 2022-2025 (INCLUDING VOLUNTARY OVERCOMPLIANCE) 

 759 Differences in the application of diesel engines and plug-in hybrid electric vehicles lead to differences in the 

incremental percentage changes in fuel consumption and carbon dioxide emissions.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 714 of 770

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 14 18 22 24 117 

Light trucks 6 7 8 9 43 

Combined 20 25 30 33 160 

Because NHTSA’s analysis indicated that voluntary overcompliance with baseline 

standards will slightly reduce the share of fuel savings attributable to today’s standards, the 

agency’s estimate of the present value of total benefits will be $465 billion when discounted at a 

3 percent annual rate, as Tables IV.G.4–28a and 28b following report. This estimate of total 

benefits is $28 billion, or about 5.6 percent, lower than the $497 billion reported previously for 

the analysis in which potential voluntary overcompliance was not taken into account: 

TABLE IV.G.4-28A. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2017-2021 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 10 7 13 20 26 32 

Light trucks 1 1 5 12 16 22 

Combined 11 8 18 31 42 54 

TABLE IV.G.4-28B. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 37 42 49 55 290 

Light trucks 26 29 31 32 176 

Combined 62 70 80 88 465 

Similarly, when accounting for potential voluntary overcompliance, NHTSA estimates 

that the present value of total benefits will decline from its previous estimate when future fuel 

savings and other benefits are discounted at the higher 7 percent rate. Tables IV.G.4–29a and 

29b report that the present value of benefits from requiring higher fuel economy for MY 2017–

25 cars and light trucks will total $379 billion when discounted using a 7 percent rate, about $22 

billion (or 5.4 percent) below the previous $404 billion estimate of total benefits when potential 

voluntary overcompliance is not taken into account: 

TABLE IV.G.4-29A. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2017-2021 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 8 5 11 16 21 26 

Light trucks 1 1 4 9 13 18 

Combined 9 6 15 25 34 44 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 715 of 770

TABLE IV.G.4-29B. PRESENT VALUE OF BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 30 34 41 46 237 

Light trucks 21 23 25 26 141 

Combined 51 57 65 72 379 

Based primarily on the reduction of benefits attributable to the proposed standards when 

voluntary overcompliance is taken into account, the agency estimates, as shown in tables 

IV.G.4–30a and 30b, that net benefits from the proposed CAFE standards will be $305 billion—

or 8.7 percent -- less than the previously-reported estimate of $335 billion, which did not 

incorporate the potential for voluntary overcompliance. 

TABLE IV.G.4-30A. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2017-2021 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 6 4 8 13 16 20 

Light trucks 1 1 4 9 13 17 

Combined 7 5 12 22 29 37 

TABLE IV.G.4-30B. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 3 PERCENT DISCOUNT RATE – MYS 2022-2025 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 22 24 27 31 172 

Light trucks 20 21 23 23 133 

Combined 42 46 50 55 305 

Similarly, Tables IV.G.4–31a and 31b immediately below show that NHTSA estimates 

voluntary overcompliance could reduce net benefits attributable to today’s proposed standards to 

$219 billion if a 7 percent discount rate is applied to future benefits. This estimate is $24 

billion—or 9.9 percent—lower than the previously-reported $242 billion estimate of net benefits 

when potential voluntary overcompliance is not taken into account, using that same discount 

rate. 

TABLE IV.G.4-31A. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2017-2021 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 Earlier MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 8 3 6 9 12 14 

Light trucks 1 1 3 7 9 13 

Combined 5 4 9 16 21 26 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 716 of 770

TABLE IV.G.4-31B. PRESENT VALUE OF NET BENEFITS ($ BILLION) UNDER PROPOSED 

STANDARDS USING A 7 PERCENT DISCOUNT RATE – MYS 2022-2025 (INCLUDING VOLUNTARY 

OVERCOMPLIANCE) 

 MY 2022 MY 2023 MY 2024 MY 2025 Total 

Passenger cars 16 17 18 22 120 

Light trucks 15 16 17 17 98 

Combined 30 33 35 39 219 

 As discussed above, these reductions in fuel savings and avoided CO2 emissions 

(and correspondingly, in total and net benefits) attributable to today’s proposed standards, do not 

indicate that fuel consumption and CO2 emissions will be higher when potential voluntary 

overcompliance with standards is taken into account than when it is set aside. Rather, these 

reductions reflect differences in attribution; when potential voluntary overcompliance is taken 

into account, portions of the avoided fuel consumption and CO2 emissions (and, 

correspondingly, in total and net benefits) are effectively attributed to the actions of the market, 

rather than to the proposed CAFE standards. 

NHTSA invites comment on this sensitivity analysis, in particular regarding the 

following questions: 

 Is it reasonable to assume that, having achieved compliance with CAFE standards, a 

manufacturer might consider further fuel economy improvements, depending on 

technology costs and fuel prices? 

 If so, does the agency’s approach—comparing technology costs to the present value of 

fuel savings over some payback period—provide a reasonable means to simulate 

manufacturers’ decisions? DOT’s consideration of any alternative methods will be 

facilitated by specific suggestions regarding their integration into DOT’s CAFE model. 

 Is it appropriate to assume different effective payback periods before and after 

compliance has been achieved? Why, or why not? 

 What payback period is (or, if more than one, are) most likely to reflect manufacturers’ 

decisions regarding technology application through MY2025? 

For more detailed information regarding NHTSA’s sensitivity analyses for this proposed 

rule, please see Chapter X of NHTSA’s PRIA. 

5. How would these proposed standards impact vehicle sales? 

The effect of this rule on sales of new vehicles depends partly on how potential buyers 

evaluate and respond to its effects on vehicle prices and fuel economy. The rule will make new 

cars and light trucks more expensive, as manufacturers attempt to recover their costs for 

complying with the rule by raising vehicle prices, which by itself would discourage sales. At the 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 717 of 770

same time, the rule will require manufacturers to improve the fuel economy of at least some of 

their models, which will lower their operating costs. 

However, this rule will not change the way that potential buyers evaluate improved fuel 

economy. If some consumers find it difficult to estimate the value of future fuel savings and to 

correctly compare it with the increased cost of purchasing higher fuel economy (possibilities 

discussed below in Section IV.G.6)—or if they simply have low values of saving fuel—this rule 

will not change that situation, so it is unlikely to lead them to purchase more fuel-efficient 

models that they do now. To the extent that other consumers more completely or correctly 

account for the value of fuel savings and the costs of acquiring higher fuel economy in their 

purchasing decisions, they will also continue to do so, and they are likely to view models with 

improved fuel economy as more attractive purchases than those manufacturers currently offer. 

The effect of this rule on sales of new vehicles will depend on which form of behavior is more 

widespread. 

If consumers are satisfied with the combinations of fuel economy levels and prices that 

current models offer, we would expect some to decide that the higher prices of new models no 

longer justify purchasing them, even though they offer higher fuel economy. Other potential 

buyers may decide to purchase the same vehicles they would have before the rule took effect, or 

if manufacturers no longer offer those models, to shift their purchases to models offering other 

attributes. Thus, if consumer preferences determine the amount of fuel economy offered in 

vehicles, sales of new models would decline, regardless of whether “consumer-side” failures in 

the market for fuel economy currently lead buyers to under-invest in fuel economy, because this 

rule will not remedy the sources of that behavior. 

In general, the agency expects that the net effect of this rule will be to reduce sales of 

new vehicles, or leave them unchanged. If consumers are satisfied with the combinations of fuel 

economy levels and prices that current models offer, we would expect some to decide that the 

higher prices of those models no longer justify purchasing them, even though they offer higher 

fuel economy. Other potential buyers may decide to purchase the same vehicle they would have 

before the rule took effect, or to shift their purchases to models offering other attributes. Thus 

sales of new models would decline, regardless of whether “consumer-side” failures in the market 

for fuel economy currently lead buyers to under-invest in fuel economy, because this rule will 

not remedy the sources of that behavior. 

However, if some market failure on the producer or supply side currently inhibits 

manufacturers from offering increases in fuel economy that would increase their sales or 

profits—for example, if producers have underestimated the demand for fuel economy, or do not 

compete vigorously to provide as much fuel economy as buyers would prefer—then the new 

standards would make vehicles more attractive to many buyers, and their sales should increase 

(potential explanations for such producer market failures are discussed in Section IV.G.6 below). 

The methodology NHTSA used to estimate the impact of the proposed rule on vehicle sales in 

effect assumes that this latter situation prevails. That is, the agency implicitly assumes that some 

market failure leads manufacturers not to supply vehicles with higher fuel economy, despite 

potential buyers’ willingness to pay sufficiently higher prices for them to make it profitable for 

manufacturers to produce them. This assumption implies that by requiring manufacturers to 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 718 of 770

produce vehicles featuring higher fuel economy than they otherwise would, the proposed rule 

will lead to increases in sales of MY 2017-25 cars and light trucks. 

NHTSA examined the potential impact of higher vehicle prices on sales on an industrywide basis for passenger cars and light trucks separately. However, the analysis conducted for 

this rule does not have the precision to examine effects on individual manufacturers or different 

vehicle classes. Although it is relatively straightforward, the agency’s analysis relies on a 

number of simplifying assumptions, which are detailed below. 

There is broad consensus in the economic literature that the price elasticity for demand 

for new automobiles is approximately -1.0.760 Thus, every one percent increase in the average 

price of a new vehicle will reduce their sales by one percent. Estimates of price elasticities 

typically assume no perceived changes in the quality of the product, but in this case, vehicle 

price increases result from adding technologies that improve fuel economy. If consumers did not 

attach any value to improved fuel economy and considered only the increase in price in their 

purchasing decisions, then the estimated impact of higher prices on sales could be estimated 

directly using this price elasticity. However, NHTSA believes that consumers do attach some 

value to improved fuel economy, because it reduces the operating costs of the vehicles. NHTSA 

also believes that the proposed standards are likely to affect their costs for purchasing, owning, 

and operating vehicles in ways other than simply reducing their fuel costs. The agency has 

attempted to estimate the changes in these other cost components that would result from the 

proposed standards, and to include these in its analysis of changes in vehicle sales. 

One critical question is how much of their costs for improving fuel economy to meet the 

proposed standards manufacturers will be able to recover from vehicle buyers through higher 

prices. The ability of manufacturers to pass their compliance costs on to consumers depends 

upon the extent of competition among manufacturers, and the sensitivity of demand for new 

vehicles to changes in their prices.761 NHTSA’s analysis of sales impacts assumes that 

manufacturers will be able to pass all of their costs to improve fuel economy on to consumers. 

To the extent that NHTSA has accurately predicted the price of gasoline and consumers’ 

reactions, and manufacturers are able to pass on all of these costs to consumers, then the 

agency’s sales and employment impact analyses are reasonable. 

On the other hand, if manufacturers’ ability to increase prices is limited by competitive 

conditions in the new car market, then the impact on sales would be limited, although 

manufacturers’ profit levels would fall as they absorbed part of their costs for increasing fuel 

economy. Losses in sales would be predicted to occur only if consumers fail to value fuel 

economy improvements by as much as they would be required to pay for higher fuel economy in 

the form of higher vehicle prices. Conversely, if fuel prices rise beyond the projected levels used 

 760 Kleit, A.N. (1990). “The Effect of Annual Changes in Automobile Fuel Economy Standards,” Journal of 

Regulatory Economics, vol. 2, pp 151–172 (Docket EPA–HQ–OAR–2009–0472–0015); Bordley, R. (1994). “An 

Overlapping Choice Set Model of Automotive Price Elasticities,” Transportation Research B, vol 28B, no 6, pp 

401–408 (Docket NHTSA–2009–0059–0153); McCarthy, P.S. (1996). “Market Price and Income Elasticities of 

New Vehicle Demands,” The Review of Economics and Statistics, vol. LXXVII, no. 3, pp. 543–547 (Docket 

NHTSA–2009–0059–0039). 

761 Gron, Ann and Swenson, Deborah, 2000, “Cost Pass-Through in the U.S. Automobile Market,” The Review of 

Economics and Statistics, 82: 316–324. (Docket EPA–HQ–OAR–2009–0472–0007).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 719 of 770

in this analysis, consumers’ valuation of improved fuel economy could potentially increase 

beyond that estimated here, which could result in higher sales levels than the agency projects. 

To estimate the average value consumers place on fuel savings at the time they consider 

purchasing a vehicle, NHTSA assumes that the average buyer considers the fuel savings they 

would receive from higher fuel economy over a 5 year time frame. NHTSA chose 5 years 

because this is the average length of time of a financing agreement.762 The present value of these 

savings was calculated using a 3 percent discount rate. NHTSA used the AEO 2011 Reference 

Case forecast of retail fuel prices, since these reflect the prices that buyers of MY 2017-25 cars 

and light trucks are expected to pay. For example, buyers of MY 2020 cars and light trucks are 

expected to value fuel savings from the higher fuel economy levels this rule would require those 

vehicles to achieve at retail prices over the five years from 2020 through 2024. Fuel savings 

were calculated over the first 5 years of each model years’ lifetime and discounted back to their 

present values as of the year they would be purchased. 

NHTSA believes that consumers may consider several other factors over the 5 year 

horizon when contemplating the purchase of a new vehicle, and the agency incorporated these 

factors into its calculations to represent how increases in technology costs and vehicle purchase 

prices might affect consumers’ buying considerations. First, consumers are likely to consider the 

additional sales taxes they will be required to pay when they purchase a more expensive vehicle. 

NHTSA examined individual states’ sales tax rates on new vehicle purchases during 2007, and 

weighted them by each state’s population to arrive at a national weighted-average sales tax rate 

of 5.5 percent. 

Second, NHTSA considered additional insurance costs over the 5 year period. More 

expensive vehicles will require more expensive collision and comprehensive (e.g., theft) car 

insurance. Collision and comprehensive insurance are the components of insurance costs that 

depend on the insured vehicle’s value. The increase in insurance costs is estimated from the 

average value of collision plus comprehensive insurance as a proportion of the average new 

vehicle price. The Insurance Information Institute provides the average value of collision plus 

comprehensive insurance in 2006 as $448.763 This is compared to an average purchase price for 

new light vehicles of $24,033 during 2006.764 Dividing the insurance cost by the average price 

of a new vehicle gives the proportion of comprehensive plus collision insurance as 1.86 percent 

of the price of a vehicle. If we assume that this premium is proportional to the new vehicle’s 

price, then purchasers pay about 1.86 percent of the new vehicle’s for insurance each year over 

the five year period we are considering. Discounting those insurance costs back to its present 

value using a 3 percent rate indicates that the present value of the component of insurance costs 

that vary with vehicle price is equal to 8.5 percent of the vehicle’s initial purchase price. 

 762 National average financing terms for automobile loans are available from the Board of Governors of the Federal 

Reserve System G.19 “Consumer Finance” release. See http://www.federalreserve.gov/releases/g19/ (last accessed 

October 11, 2011). 

763 Insurance Information Institute, 2008, “Average Expenditures for Auto Insurance By State, 2004–2008.” 

Available at http://www.iii.org/media/facts/statsbyissue/auto/ (last accessed October 12, 2011). 764 $29,678/$26,201 = 1.1327 * $22,651 = $25,657 average price for light trucks. In 2006, passenger cars were 54 

percent of the on-road fleet and light trucks were 46 percent of the on-road fleet, resulting in an average light vehicle 

price for 2006 of $24,033.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 720 of 770

Third, NHTSA considered the fact that approximately 70 percent of new vehicle buyers 

take out loans to finance their purchases. Currently, the average new vehicle loan is for 

approximately 5 years at a 6 percent rate.765 At these terms, the average person taking a loan will 

pay 16 percent more for their vehicle over the first 5 years of ownership than will a consumer 

paying cash to purchase the same vehicle.766 Discounting the additional 3.2 percent (16 

percent/5 years) annual financing expense over the 5 years using a 3 percent mid-year discount 

rate767 results in a discounted present value of 14.87 percent higher for those taking a loan. 

Multiplying that by the proportion (70 percent) of consumers who use loans to finance their 

purchases means that the average consumer would pay 10.2 percent more than the vehicle’s 

retail price. 

Fourth, NHTSA considered the residual value (or resale value) of the vehicle after 5 

years and expressed this as a percentage of its price when purchased new. In other words, if the 

price of the vehicle increases to reflect its manufacturer’s costs for improving its fuel economy, 

its resale value is assumed to increase proportionately. The average resale price of a vehicle after 

5 years is about 35 percent of its original purchase price.768 Discounting its residual value after 5 

years back to the date of purchase using a 3 percent discount rate gives a present value of its 

expected residual value that is equal to 30.6 percent of the vehicle’s price when purchased new. 

NHTSA then adds these four components of increased costs together. At a 3 percent 

discount rate, the buyer expects to recover 30.6 percent of the vehicle’s initial price upon resale, 

but in the meantime will pay 5.5 percent more for taxes, 8.5 percent more in insurance, and 10.2 

percent more to finance its purchase at current terms. Summing these components indicates that 

the buyer of a new vehicle expects on balance to recover an amount having a present value equal 

to 6.48 percent of the higher price for purchasing a more fuel-efficient new vehicle. Thus, the 

increase in the vehicle’s purchase price is multiplied by 0.9352 (=1-0.0648) to determine the 

“effective” increase in its initial cost that results when higher CAFE standards require its 

manufacturer to increase its fuel economy. Subtracting the present value of fuel savings over the 

first five years of its lifetime from its higher initial cost determines the overall net change in its 

value to potential buyers. Applying the elasticity of demand for new vehicle purchases to the 

average net change in new vehicles’ values provides an estimate of the resulting change in their 

total sales during each model year affected by the proposed standards. 

The following tables show the estimated impacts on sales of passenger cars and light 

trucks expected to result from the proposed standards, using a 3 percent discount rate and a 7 

percent discount rate. For all model years except MY 2012, NHTSA anticipates an increase in 

sales, because it anticipates that potential buyers will value the increases in fuel economy the 

standards require for these model years by more than the effective increase in the average new 

vehicle’s price. 

 765 New car loan rates in 2007 averaged about 7.8 percent at commercial banks and 4.5 percent at auto finance 

companies, so their average is close to 7 percent. 766 Based on http://www.bankrate.com auto loan calculator for a 5 year loan at 6 percent. 767 For a 3 percent discount rate, the summation of 3.2 percent × 0.9853 in year one, 3.2 × 0.9566 in year two, 3.2 × 

0.9288 in year three, 3.2 × 0.9017 in year 4, and 3.2 × 0.8755 in year five.

768 Consumer Reports, August 2008, “What That Car Really Costs to Own.” Available at 

http://www.consumerreports.org/cro/cars/car-prices/what-that-car-really-costs-to-own-4-08/overview/what-that-carreally-costs-to-own-ov.htm (last accessed October 12, 2011). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 721 of 770

TABLE IV.G.5-1A. POTENTIAL IMPACT ON SALES, PASSENGER CARS, LIGHT TRUCKS, AND 

COMBINED, 3 PERCENT DISCOUNT RATE – MYS 2017-2021 

 MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 57,308 91,938 145,078 172,188 186,766 

Light trucks 18,849 57,496 134,079 178,355 245,520 

Combined 76,157 149,433 279,157 350,544 432,286 

TABLE IV.G.5-1B. POTENTIAL IMPACT ON SALES, PASSENGER CARS, LIGHT TRUCKS, AND 

COMBINED, 3 PERCENT DISCOUNT RATE – MYS 2022-2025 

 MY 2022 MY 2023 MY 2024 MY 2025 

Passenger cars 213,300 196,883 208,579 278,324 

Light trucks 275,012 306,096 335,477 369,023 

Combined 488,312 502,979 544,056 647,347 

TABLE IV.G.5-2A. POTENTIAL IMPACT ON SALES, PASSENGER CARS, LIGHT TRUCKS, AND 

COMBINED, 7 PERCENT DISCOUNT RATE – MYS 2017-2021 

 MY 2017 MY 2018 MY 2019 MY 2020 MY 2021 

Passenger cars 37,213 58,255 91,398 100,771 107,688 

Light trucks 11,722 45,442 111,856 147,745 202,114 

Combined 48,935 103,697 203,254 248,515 309,803 

TABLE IV.G.5-2B. POTENTIAL IMPACT ON SALES, PASSENGER CARS, LIGHT TRUCKS, AND 

COMBINED, 7 PERCENT DISCOUNT RATE – MYS 2022-2025 

 MY 2022 MY 2023 MY 2024 MY 2025 

Passenger cars 118,358 86,293 69,875 161,321

Light trucks 226,933 259,752 280,561 305,213 

Combined 345,291 346,046 350,435 466,534 

The estimates provided in the tables above are meant to be illustrative, rather than to 

provide a definitive prediction. When viewed at the industry-wide level, they give a general 

indication of the potential impact on vehicle sales. As the sales projections show, the overall 

impact of the rule on new car and light truck sales is expected to be positive, and to grow over 

the model years subject to the rule. Because the fuel savings associated with this rule are 

expected to exceed the technology costs, the effective prices of vehicles (the adjusted increase in 

technology cost less the present value of fuel savings over five years) to consumers will fall, and 

consumers are expected to buy more new vehicles. In other words, the lower net cost of the 

vehicles is projected to lead to an increase in sales for both cars and trucks. 

As discussed above, this result depends on the assumption that more fuel efficient 

vehicles yielding net consumer benefits over their first five years would not otherwise be offered, 

due to market failures on the part of vehicle manufacturers. However, vehicle models that 

achieve the fuel economy targets prescribed by today’s proposal are already available, and 

consumers do not currently purchase a combination of them that meets the fuel economy levels 

this rule requires. This suggests that the rule may not result in an increase in vehicle sales, 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 722 of 770

because it does not alter how consumers currently make decisions about which models to 

purchase. Under the previous uniform standard, however, vehicles achieving higher fuel 

economy were typically smaller than other models, and manufacturers’ efforts to comply with 

uniform standards could leave consumers who wanted larger vehicles without satisfactory 

options. The footprint-based standard used in more recent rulemakings provides different targets 

for different sizes of vehicles. 

In addition, this analysis has not accounted for a number of factors that might affect 

consumer vehicle purchases, such as changing market conditions, changes in vehicle 

characteristics that might accompany improvements in fuel economy, or consumers considering 

a shorter “payback period” for fuel economy than the five years assumed in this analysis. If 

consumers use a shorter payback period, sales will increase by less than estimated here, and 

could even decline, while the increase in sales is likely to be larger than reported here if 

consumers use longer payback periods. Because this is an aggregate analysis, some individual 

consumers—particularly those who drive less than the average values used in this analysis—will 

receive lower net benefits from the increases in fuel economy this rule requires, while others 

(including those who drive more than estimated here) will realize even greater savings. These 

complications, which have not been taken into account in our analysis, add considerable 

uncertainty to our estimates of changes in vehicle sales resulting from this rule. 

6. Potential Unquantified Consumer Welfare Impacts of the Proposed 

Standards 

There are two viewpoints for evaluating the costs and benefits of the increase in CAFE 

standards: the private perspective of vehicle buyers themselves on the higher fuel economy 

levels that the rule would require, and the economy-wide or “social” perspective on the costs and 

benefits of requiring higher fuel economy. In order to appreciate how these viewpoints may 

diverge, it is important to distinguish between costs and benefits that are “private” and costs and 

benefits that are “social,” The agency’s analysis of benefits and costs from requiring higher fuel 

efficiency, presented above, includes several categories of benefits (identified as “social 

benefits”) that are not limited to automobile purchasers, and that extend throughout the U.S. 

economy. Examples of these benefits include reductions in the energy security costs associated 

with U.S. petroleum imports, and in the economic damages expected to result from climate 

change. In contrast, other categories of benefits—principally future fuel savings projected to 

result from higher fuel economy —will be experienced exclusively by the initial purchasers and 

subsequent owners of vehicle models whose fuel economy manufacturers elect to improve 

(“private benefits”). 

Although the economy-wide or “social” benefits from requiring higher fuel economy 

represent an important share of the total economic benefits from raising CAFE standards, 

NHTSA estimates that benefits to vehicle buyers themselves will significantly exceed vehicle 

manufacturers’ costs for complying with the stricter fuel economy standards this rule establishes. 

Since the agency also assumes that the costs of new technologies manufacturers will employ to 

improve fuel economy will ultimately be borne by vehicle buyers in the form of higher purchase 

prices, NHTSA concludes that the benefits to potential vehicle buyers from requiring higher fuel 

efficiency will far outweigh the costs they will be required to pay to obtain it. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 723 of 770

As an illustration, Tables IV.G.6–1a and 1b report the agency’s estimates of the average 

lifetime values of fuel savings for MY 2017–2025 passenger cars and light trucks calculated 

using projected future retail fuel prices. The table compares NHTSA’s estimates of the average 

lifetime value of fuel savings for cars and light trucks to the price increases it expects to occur as 

manufacturers attempt to recover their costs for complying with increased CAFE standards. As 

the table shows, the agency’s estimates of the present value of lifetime fuel savings (discounted 

using the OMB-recommended 3% rate) substantially outweigh projected vehicle price increases 

for both cars and light trucks in every model year, even under the assumption that all of 

manufacturers’ technology outlays are passed on to buyers in the form of higher selling prices 

for new cars and light trucks. By model year 2025, NHTSA projects that average lifetime fuel 

savings will exceed the average price increase by more than $2,800 for cars, and by more than 

$4,400 for light trucks. 

TABLE IV.G.6-1A. VALUE OF LIFETIME FUEL SAVINGS VS. VEHICLE PRICE INCREASES –

MYS 2017-2021 

Fleet Measure Model year 

2017 2018 2019 2020 2021 

Passenger cars 

Value of fuel savings $601 $1,106 $1,758 $2,300 $2,775 

Average price increase $168 $342 $551 $783 $1,005 

Difference $433 $764 $1,207 $1,517 $1,770 

Light trucks 

Value of fuel savings $289 $905 $2,066 $2,802 $3,835 

Average price increase $62 $184 $386 $576 $820 

Difference $228 $721 $1,680 $2,226 $3,015 

TABLE IV.G.6-1B. VALUE OF LIFETIME FUEL SAVINGS VS. VEHICLE PRICE INCREASES –

MYS 2022-2025 

Fleet Measure Model year 

2022 2023 2024 2025 

Passenger cars 

Value of fuel savings $3,124 $3,669 $4,148 $4,794 

Average price increase $1,135 $1,468 $1,708 $1,929 

Difference $1,989 $2,201 $2,440 $2,865 

Light trucks 

Value of fuel savings $4,263 $4,829 $5,319 $5,687 

Average price increase $921 $1,071 $1,193 $1,241 

Difference $3,341 $3,759 $4,126 $4,446 

The comparisons above immediately raise the question of why current vehicle purchasing 

patterns do not already result in average fuel economy levels approaching those that this rule 

would require, and why raising CAFE standards should be necessary to increase the fuel 

economy of new cars and light trucks. They also raise the question of whether it is appropriate 

to assume that manufacturers would not elect to provide higher fuel economy even in the 

absence of increases in CAFE standards, since the comparisons in Tables IV.G.6–1a and 1b 

suggest that doing so would increase the market value (and thus the selling prices) of many new 

vehicle models by far more than it would raise the cost of producing them. Thus, increasing fuel 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 724 of 770

economy would be expected to increase sales of new vehicles and manufacturers’ profits. More 

specifically, why would potential buyers of new vehicles hesitate to purchase models offering 

higher fuel economy, when doing so would produce the substantial economic returns illustrated 

by the comparisons presented in Tables IV.G.6–1a and 1b? And why would manufacturers 

voluntarily forego opportunities to increase the attractiveness, value, and competitive positioning 

of their car and light truck models—and thus their own profits—by improving their fuel 

economy? 

One explanation for why this situation might persist is that the market for vehicle fuel 

economy does not appear to work perfectly, in which case properly designed CAFE standards 

would be expected to increase consumer welfare. Some of these imperfections might stem from 

standard market failures, such as limited availability of information to consumers about the value 

of higher fuel economy. In contrast, others might reflect phenomena observed elsewhere in the 

field of behavioral economics, including inadequate consumer attention to long-term savings, or 

a lack of salience of relevant benefits (such as fuel savings, or time savings associated with 

refueling) to consumers at the time they make purchasing decisions. Both theoretical and 

empirical research suggests that many consumers are unwilling to make energy-efficient 

investments even when those investments appear to pay off in the relatively short-term.769 This 

research is in line with related findings that consumers may undervalue benefits or costs that are 

less salient, or that they will realize only in the future.770

Previous research provides some support for the agency’s conclusion that the benefits 

buyers will receive from requiring manufacturers to increase fuel economy outweigh the costs 

they will pay to acquire those benefits, even if private markets have not provided that amount of 

fuel economy. This research identifies aspects of normal behavior that may explain the market 

not providing vehicles whose higher fuel economy appears to offer an attractive economic return. 

For example, consumers’ understandable aversion to the prospect of losses (“loss aversion”) may 

exaggerate their sense of uncertainty about the value of future fuel savings. This heightened 

sense of uncertainty may make purchasing a more fuel-efficient vehicle seem unattractive to 

some potential buyers, even when doing so is likely to be a sound economic decision. As an 

illustration, Greene et al. (2009) calculate that the expected net present value of increasing the 

fuel economy of a passenger car from 28 to 35 miles per gallon falls from $405 when calculated 

using standard net present value calculations, to nearly zero when uncertainty regarding future 

cost savings and buyers’ reluctance to accept the risk of losses are taken into account.771

 769 Jaffe, A. B., and Stavins, R. N. (1994). The Energy Paradox and the Diffusion of Conservation Technology. 

Resource and Energy Economics, 16(2); see Hunt Alcott and Nathan Wozny, Gasoline Prices, Fuel Economy, and 

the Energy Paradox (2009), available at http://web.mit.edu/allcott/www/Allcott%20and%20Wozny%202010%20-

%20Gasoline%20Prices,%20Fuel%20Economy,%20and%20the%20Energy%20Paradox.pdf (last accessed Sept. 26, 

2011). 

770 Hossain, Janjim, and John Morgan (2009). “ * * * Plus Shipping and Handling: Revenue (Non)Equivalence in 

Field Experiments on eBay,” Advances in Economic Analysis and Policy vol. 6; Barber, Brad, Terrence Odean, and 

Lu Zheng (2005). “Out of Sight, Out of Mind: The Effects of Expenses on Mutual Fund Flows,” Journal of Business 

vol. 78, no. 6, pp. 2095–2020. 

771 Greene, D., J. German, and M. Delucchi (2009). “Fuel Economy: The Case for Market Failure” in Reducing 

Climate Impacts in the Transportation Sector, Sperling, D., and J. Cannon, eds. Springer Science. Surprisingly, the 

authors find that uncertainty regarding the future price of gasoline appears to be less important than uncertainty 

surrounding the expected lifetimes of new vehicles. (Docket NHTSA–2009–0059–0154). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 725 of 770

The well-known finding that as gas prices rise, consumers show more willingness to pay 

for fuel-efficient vehicles is not necessarily inconsistent with the possibility that many consumers 

undervalue potential savings in gasoline costs and fuel economy when purchasing new vehicles. 

In ordinary circumstances, such costs may be a relatively “shrouded” attribute in consumers’ 

decisions, in part because the savings from purchasing a more fuel efficient vehicle are 

cumulative and extend over a significant period of time. At the same time, it may be difficult for 

potential buyers to disentangle the cost of purchasing a more fuel-efficient vehicle from its 

overall purchase price, or to isolate the value of higher fuel economy form accompanying 

differences in other vehicle attributes. This possibility is consistent with recent evidence to the 

effect that many consumers are willing to pay less than $1 upfront to obtain a $1 reduction in the 

discounted present value of future gasoline costs.772

Some research suggests that the market’s apparent unwillingness to provide more fuel 

efficient vehicles stems from consumers’ inability to value future fuel savings correctly. For 

example, Larrick and Soll (2008) find evidence that consumers do not understand how to 

translate changes in fuel economy, which is denominated in miles per gallon, into resulting 

changes in fuel consumption, measured for example in gallons per month or year.773 Sanstad and 

Howarth (1994) argue that consumers often resort to imprecise but convenient rules of thumb to 

compare vehicles that offer different fuel economy ratings, and that this can cause many buyers 

to underestimate the value of fuel savings, particularly from significant increases in fuel 

economy.774 If the behavior identified in these studies is widespread, then the agency’s estimates 

suggesting that the benefits to vehicle owners from requiring higher fuel economy significantly 

exceed the costs of providing it may be consistent with private markets not providing that fuel 

economy level. 

Another possible factor in the observation that the average vehicle buyer will experience 

large fuel savings from the proposed higher CAFE standards even though the average fuel 

economy of vehicles currently purchased falls well short of the new standards is that the values 

of future savings from higher fuel economy vary widely among potential vehicle buyers, but on 

average are lower than those the agency estimates. The expected savings from purchasing a 

vehicle with higher fuel economy vary widely among individuals, because their uses of vehicles 

differ widely, differences in their driving styles affect the fuel economy they expect to achieve, 

or they simply have varying expectations about future fuel prices and the value of saving fuel. 

These potential differences suggest that buyers with high valuations of increased fuel economy 

may already purchase vehicle models that offer it, while those with lower values of fuel 

economy emphasize other vehicle attributes in their purchasing decisions. If these differences 

cause the average buyer to value the fuel savings resulting from the higher fuel economy levels 

this rule would require at less than the average figure incorporated in the agency’s analysis, they 

may partly explain why the average fuel economy of new vehicles currently falls short of the 

proposed standards. 

 772 See, e.g., Alcott and Wozny. 773 Larrick, R. P., and J.B. Soll (2008). “The MPG illusion” Science 320: 1593–1594. 774 Sanstad, A., and R. Howarth (1994). “ ‘Normal’ Markets, Market Imperfections, and Energy Efficiency.” 

Energy Policy 22(10): 811–818.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 726 of 770

Unless the agency has overestimated their average value, however, the fact that the value 

of fuel savings varies among potential buyers cannot explain why typical buyers do not currently 

purchase what appear to be cost- saving increases in fuel economy. A possible explanation for 

this situation is that the effects of differing fuel economy levels are relatively modest when 

compared to those provided by other, more prominent features of new vehicles, such as 

passenger and cargo-carrying capacity, performance, or safety. In this situation, it may simply 

not be in many shoppers’ interest to spend the time and effort necessary to determine the 

economic value of higher fuel economy, to isolate the component of a new vehicle’s selling price 

that is related to its fuel economy, and compare these two. (This possibility is consistent with the 

view that fuel economy is a relatively “shrouded” attribute, and one that is often bundled with 

other attributes in ways that make it difficult to isolate.) In this case, the agency’s estimates of 

the average value of fuel savings that will result from requiring cars and light trucks to achieve 

higher fuel economy may be correct, yet those savings may not be large enough to lead a 

sufficient number of buyers to purchase vehicles with higher fuel economy to raise average fuel 

economy above its current levels. 

Defects in the market for cars and light trucks could also lead manufacturers to 

undersupply fuel economy, even in cases where many buyers were willing to pay the increased 

prices necessary to compensate manufacturers for providing it. To be sure, the market for new 

automobiles as a whole exhibits a great deal of competition. But this apparently vigorous 

competition among manufacturers may not extend to the provision of some individual vehicle 

attributes. Incomplete or “asymmetric” access to information about vehicle attributes such as 

fuel economy—whereby manufacturers of new cars and light trucks or sellers of used models 

have more complete knowledge about vehicles’ actual fuel economy performance than is 

available to their potential buyers—may also prevent sellers of new or used vehicles from being 

able to capture its full value. In this situation, the level of fuel efficiency provided in the markets 

for new or used vehicles might remain persistently lower than that demanded by well-informed 

potential buyers. 

Constraints on the combinations of fuel economy, carrying capacity, and performance 

that manufacturers can offer in individual vehicle models using current technologies undoubtedly 

limit the range of fuel economy available within certain vehicle classes, particularly those 

including larger vehicles. However, it is also possible that deliberate decisions by manufacturers 

of cars and light trucks further limit the range of fuel economy available to buyers within 

individual vehicle market segments, such as large automobiles, SUVs, or minivans. 

Manufacturers may deliberately limit the range of fuel economy levels they offer in those market 

segments (by choosing not to invest in fuel economy and investing instead in providing a range 

of other vehicle attributes) because they underestimate the premiums that prospective buyers of 

those models are willing to pay for improved fuel economy, and thus mistakenly believe it will 

be unprofitable for them to offer more fuel-efficient models within those segments. Of course, 

this possibility is most realistic if it is also assumed that buyers are imperfectly informed, or if 

fuel economy savings are not sufficiently salient to shoppers in those particular market segments. 

As an illustration, once a potential buyer has decided to purchase a minivan, the range of 

highway fuel economy ratings among current models extends from 22 to 28 mpg, while their 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 727 of 770

combined city and highway ratings extend only from 18 to 20 mpg.775 If this phenomenon is 

widespread, the average fuel efficiency of their entire new vehicle fleet could remain below the 

levels that potential buyers demand and are willing to pay for. 

Another possible explanation for the paradox posed by buyers’ apparent unwillingness to 

invest in higher fuel economy when it appears to offer such large financial returns is that 

NHTSA’s estimates of benefits and costs from requiring manufacturers to improve fuel 

efficiency do not match potential buyers’ assessment of the likely benefits and costs from 

purchasing models with higher fuel economy ratings. This could occur because the agency’s 

underlying assumptions about some of the factors that affect the value of fuel savings differ from 

those made by potential buyers, because NHTSA has used different estimates for some 

components of the benefits from saving fuel than do buyers, or simply because the agency has 

failed to account for some potential costs of achieving higher fuel economy. 

For example, buyers may not value increased fuel economy as highly as the agency’s 

calculations suggest, because they have shorter time horizons than the full vehicle lifetimes 

NHTSA uses in these calculations, or because they discount future fuel savings using higher 

rates than those prescribed by OMB for evaluating Federal regulations. Potential buyers may 

also anticipate lower fuel prices in the future than those forecast by the Energy Information 

Administration, or may expect larger differences between vehicles’ MPG ratings and their own 

actual on-road fuel economy than the 20 percent gap (30 percent for HEVs) the agency 

estimates. 

To illustrate the first of these possibilities, Table IV.G.6–2 shows the effect of differing 

assumptions about vehicle buyers’ time horizons on their assessment of the value of future fuel 

savings. Specifically, the table reports the value of fuel savings consumers might consider when 

purchasing a MY 2025 car or light truck that features the higher fuel economy levels required by 

the proposed rule, when those fuel savings are evaluated over different time horizons. The table 

then compares these values to the agency’s estimates of the increases in these vehicles’ prices 

that are likely to result from the standards proposed for MY 2025. This table shows that when 

fuel savings are evaluated over the average lifetime of a MY 2025 car (approximately 14 years) 

or light truck (about 16 years), their present value (discounted at 3 percent) exceeds the estimated 

average price increase by more than $2,500 for cars and by almost $3,900 for light trucks. 

If buyers are instead assumed to consider fuel savings over only a 10-year time horizon, 

Table IV.G.6-2 shows that this reduces the difference between the present value of fuel savings 

and the projected price increase for a MY 2025 car to about $1,800, and to about $2,900 for a 

MY 2025 light truck. Finally, Table VI.G.6–2 shows that if buyers consider fuel savings only 

over the length of time for which they typically finance new car purchases (slightly more than 5 

years during 2011), the value of fuel savings exceeds the estimated increase in the price of a MY 

2025 car by only about $200, while the corresponding difference is reduced to slightly more than 

$1,200 for a MY 2025 light truck. 

 775 This is the range of combined city and highway fuel economy levels from lowest (Toyota Sienna AWD) to 

highest (Honda Odyssey) available for model year 2010; http://www.fueleconomy.gov/feg/bestworstEPAtrucks.htm

(last accessed September 26, 2011).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 728 of 770

TABLE IV.G.6-2. VALUE OF FUEL SAVINGS CONSIDERED BY BUYERS VS. VEHICLE PRICE 

INCREASES WITH ALTERNATIVE ASSUMPTIONS ABOUT VEHICLE BUYER TIME HORIZONS

Vehicle Measure 

Value Over Alternative Time Horizons

(3% Discount Rate) 

Average 

Lifetime 10 Years Average Loan 

Term 

MY 2025 

Passenger 

Car 

Fuel Savings $4,431 $3,707 $2,149 

Price Increase $1,929 $1,929 $1,929 

Difference $2,502 $1,778 $220 

MY 2025 

Light 

Truck 

Fuel Savings $5,114 $4,107 $2,451 

Price Increase $1,241 $1,241 $1,241 

Difference $3,873 $2,866 $1,210 

Potential vehicle buyers may also discount future fuel future savings using higher rates 

than those typically used to evaluate Federal regulations. OMB guidance prescribes that future 

benefits and costs of regulations that mainly affect private consumption decisions, as will be the 

case if manufacturers’ costs for complying with higher fuel economy standards are passed on to 

vehicle buyers, should be discounted using a consumption rate of time preference.776 OMB 

estimates that savers currently discount future consumption at an average real or inflationadjusted rate of about 3 percent when they face little risk about its likely level, which makes it a 

reasonable estimate of the consumption rate of time preference. 

However, vehicle buyers may view the value of future fuel savings that results from 

purchasing a vehicle with higher fuel economy as risky or uncertain, or they may instead 

discount future consumption at rates reflecting their costs for financing the higher capital outlays 

required to purchase more fuel-efficient models. In either case, buyers comparing models with 

different fuel economy ratings are likely to discount the future fuel savings from purchasing one 

that offers higher fuel economy at rates well above the 3% assumed in NHTSA’s evaluation. 

Table IV.G.6–3 shows the effects of higher discount rates on vehicle buyers’ evaluation 

of the fuel savings projected to result from the CAFE standards proposed in this NPRM, again 

using MY 2025 passenger cars and light trucks as an example. As Table IV.G.6–2 showed 

previously, average future fuel savings discounted at the OMB 3 percent consumer rate exceed 

the agency’s estimated price increases by more than $2,500 for MY 2025 passenger cars and by 

almost $3,900 for MY 2025 light trucks. If vehicle buyers instead discount future fuel savings at 

the typical new-car loan rate prevailing during 2010 (approximately 5.2 percent), however, these 

differences decline to slightly more than $2,000 for cars and $3,200 for light trucks, as Table 

IV.G.6–3 illustrates. This is a plausible alternative assumption, because buyers are likely to 

finance the increases in purchase prices resulting from compliance with higher CAFE standards 

as part of the process of financing the vehicle purchase itself. 

 776 Office of Management and Budget, Circular A–4, “Regulatory Analysis,” September 17, 2003, 33. Available at 

http://www.whitehouse.gov/omb/assets/regulatory_matters_pdf/a-4.pdf (last accessed Sept. 26, 2010).
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 729 of 770

Finally, as the table also shows, discounting future fuel savings using a consumer credit 

card rate (which averaged almost 14 percent during 2010) reduces these differences to less than 

$800 for a MY 2025 passenger car and about $1,700 for the typical MY 2025 light truck. Even 

at these significantly higher discount rates, however, the table shows that the private net benefits 

from purchasing new vehicles with the levels of fuel economy this rule would require—rather 

than those that would result from simply extending the MY 2016 CAFE standards to apply to 

future model years—remain large. 

TABLE IV.G.6-3. VALUE OF FUEL SAVINGS CONSIDERED BY BUYERS VS. VEHICLE PRICE 

INCREASES WITH ALTERNATIVE ASSUMPTIONS ABOUT CONSUMER DISCOUNT RATES

Vehicle Measure 

Value at Alternative Discount Rates 

OMB 

consumer 

rate (3%) 

New car 

loan rate 

(5.2%)777

OMB 

investment 

rate (7%) 

Consumer 

credit 

card rate 

(13.8%)778

MY 2025 

passenger car 

Fuel savings $4,431 $3,952 $3,660 $2,709

Price increase $1,929 $1,929 $1,929 $1,929

Difference $2,502 $2,023 $1,731 $780

MY 2025 light 

truck 

Fuel savings $5,114 $4,455 $3,998 $2,952

Price increase $1,241 $1,241 $1,241 $1,241

Difference $3,873 $3,214 $2,757 $1,711

Some evidence also suggests directly that vehicle buyers may employ combinations of 

high discount rates and short time horizons in their purchase decisions. For example, consumers 

surveyed by Kubik (2006) reported that fuel savings would have to be adequate to pay back the 

additional purchase price of a more fuel-efficient vehicle in less than 3 years to persuade them to 

purchase it, and that even over this short time horizon they were likely to discount fuel savings 

using credit card-like rates.779 Combinations of a shorter time horizon and a higher discount rate 

could further reduce—or potentially even eliminate—the difference between the value of fuel 

savings and the agency’s estimates of increases in vehicle prices. One plausible combination 

would be for buyers to discount fuel savings over the term of a new car loan, using the interest 

rate on that loan as a discount rate. Doing so would reduce the amount by which future fuel 

savings exceed the estimated increase in the prices of MY 2025 vehicles considerably further, to 

about $130 for passenger cars and $1,400 for light trucks. 

As these comparisons illustrate, reasonable alternative assumptions about how consumers 

might evaluate future fuel savings, the major private benefit from requiring higher fuel economy, 

 777 Interest rates on 48-month new vehicle loans made by commercial banks during 2010 averaged 6.21%, while 

new car loan rates at auto finance companies averaged 4,26%; See Board of Governors of the Federal Reserve 

System, Federal Reserve Statistical Release G.19, Consumer Credit. Available at 

http://www.federalreserve.gov/releases/g19/Current (last accessed September 27, 2011). 778 The average rate on consumer credit card accounts at commercial banks during 2010 was 13.78%; See Board of 

Governors of the Federal Reserve System, Federal Reserve Statistical Release G.19, Consumer Credit. Available at 

http://www.federalreserve.gov/releases/g19/Current (last accessed September 27, 2011). 779 Kubik, M. (2006). Consumer Views on Transportation and Energy. Second Edition. Technical Report: National 

Renewable Energy Laboratory. Available at Docket No. NHTSA–2009–0059–0038.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 730 of 770

can significantly affect the benefits they consider when deciding whether to purchase more fuelefficient vehicles. Readily imaginable combinations of shorter time horizons, higher discount 

rates, and lower expectations about future fuel prices or annual vehicle use and fuel savings 

could make potential buyers hesitant—or perhaps even unwilling—to purchase vehicles offering 

the increased fuel economy levels this proposed rule would require manufacturers to provide in 

future model years. Thus, vehicle buyers’ assessment of the benefits and costs of this proposal in 

their purchase decisions may differ markedly from NHTSA’s estimates. 

If consumers’ views about critical variables such as future fuel prices or the appropriate 

discount rate differ sufficiently from the assumptions used by the agency, some or perhaps many 

potential vehicle buyers might conclude that the value of fuel savings and other benefits from 

higher fuel economy they are considering are not sufficient to justify the increase in purchase 

prices they expect to pay. In conjunction with the possibility that manufacturers misinterpret 

potential buyers’ willingness to pay for improved fuel economy, this might explain why the 

current choices among available models do not result in average fuel economy levels 

approaching those this rule would require. 

Another possibility is that achieving the fuel economy improvements required by stricter 

fuel economy standards might lead manufacturers to forego planned future improvements in 

performance, carrying capacity, safety, or other features of their vehicle models that provide 

important sources of utility to their owners, even if it is technologically feasible to have both 

improvements in those other features and improved fuel economy. Although the specific 

economic values that vehicle buyers attach to individual vehicle attributes such as fuel economy, 

performance, passenger- and cargo-carrying capacity, or other features are difficult to infer from 

vehicle prices or buyers’ choices among competing models, changes in vehicle attributes can 

significantly affect the overall utility that vehicles offer to potential buyers. Thus if requiring 

manufacturers to provide higher fuel economy leads them to sacrifice improvements in these or 

other highly-valued attributes, potential buyers are likely to view these sacrifices as an additional 

cost of improving fuel economy. If those attributes are of sufficient value, or if the range of 

vehicles offered ensures that vehicles with those attributes will continue to be offered, then 

vehicle buyers will still have the opportunity to choose those attributes, though at increased cost 

compared to models without the fuel economy improvements. 

As indicated in its previous discussion of technology costs, NHTSA has approached this 

potential problem by attempting to develop cost estimates for fuel economy-improving 

technologies that include allowances for any additional costs that would be necessary to maintain 

the reference fleet (or baseline) levels of performance, comfort, capacity, or safety of light-duty 

vehicle models to which those technologies are applied. In doing so, the agency followed the 

precedent established by the 2002 NAS Report on improving fuel economy, which estimated 

“constant performance and utility” costs for technologies that manufacturers could employ to 

increase the fuel efficiency of cars or light trucks. Although NHTSA has revised its estimates of 

manufacturers’ costs for some technologies significantly for use in this rulemaking, these revised 

estimates are still intended to represent costs that would allow manufacturers to maintain the 

performance, safety, carrying capacity, and utility of vehicle models while improving their fuel 

economy, in the majority of cases. The agency’s continued specification of footprint-based 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 731 of 770

CAFE standards also addresses this concern, by establishing less demanding fuel economy 

targets for larger cars and light trucks. 

Finally, vehicle buyers may simply prefer the choices of vehicle models they now have 

available to the combinations of price, fuel economy, and other attributes that manufacturers are 

likely to offer when required to achieve the higher overall fuel economy levels proposed in this 

NPRM. This explanation assumes that auto makers decide to change vehicle attributes other 

than price and fuel economy in response to this rule. If this is the case, their choices among 

models—and even some buyers’ decisions about whether to purchase a new vehicle—will 

respond accordingly, and their responses to these new choices will reduce their overall welfare. 

Some may buy models with combinations of price, fuel efficiency, and other attributes that they 

consider less desirable than those they would otherwise have purchased, while others may simply 

postpone buying a new vehicle. It leaves open the question, though, why auto makers would 

change those other vehicle characteristics if consumers liked them as they were; as noted, the 

assumption of “constant performance and utility” built into the cost estimates means that these 

changes are not necessary. 

As the foregoing discussion makes clear, the agency cannot offer a complete answer to 

the question of why the apparently large differences between its estimates of private benefits 

from requiring higher fuel economy and the costs of supplying it would not result in higher fuel 

economy for new cars and light trucks in the absence of this rule. One explanation is that these 

estimates are reasonable, but that for the reasons outlined above, the market for fuel economy is 

not operating efficiently. NHTSA believes the existing literature offers some support for the 

view that various failures in the market for fuel economy prevent it from providing an 

economically desirable outcome, which implies that on balance there are likely to be substantial 

private gains from the proposed rule. The agency will continue to investigate new empirical 

literature addressing this question as it becomes available, and seeks comment on this issue. 

NHTSA acknowledges the possibility that it has incorrectly characterized the impact on 

the market of the CAFE standards this rule proposes, and that this could cause its estimates of 

benefits and costs to misrepresent the effects of the proposed rule. To recognize this possibility, 

this section presents an alternative accounting of the benefits and costs of CAFE standards for 

MYs 2017–2025 passenger cars and light trucks and discusses its implications. Table IV.G.6–4 

displays the economic impacts of the rule as viewed from the perspective of potential buyers. 

As the table shows, the proposed rule’s total benefits to vehicle buyers (line 4) consist of 

the value of fuel savings over vehicles’ full lifetimes at retail fuel prices (line 1), the economic 

value of vehicle occupants’ savings in refueling time (line 2), and the economic benefits from 

added rebound-effect driving (line 3). As the zero entries in line 5 of the table suggest, no losses 

in consumer welfare from changes in vehicle attributes (other than those from increases in 

vehicle prices) are assumed to occur. Thus there is no reduction in the total private benefits to 

vehicle owners, so that net private benefits to vehicle buyers (line 6) are equal to total private 

benefits (reported previously in line 4). 

As Table IV.G.6–4 also shows, the decline in fuel tax revenues (line 7) that results from 

reduced fuel purchases is a transfer of funds between consumers and government and is thus not 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 732 of 770

a social cost.780 (Thus the sum of lines 1 and 7 equals the savings in fuel production costs that 

was reported previously as the value of fuel savings at pre-tax prices in the agency’s previous 

accounting of benefits and costs.) Lines 8 and 9 of Table IV.G.6–4 report the value of reductions 

in air pollution and climate-related externalities resulting from lower emissions of criteria air 

pollutants and GHGs during fuel production and consumption, while line 10 reports the savings 

in energy security externalities to the U.S. economy from reduced consumption and imports of 

petroleum and refined fuel. Line 12 reports the costs of increased congestion delays, accidents, 

and noise that result from additional driving due to the fuel economy rebound effect. Net 

external benefits from the proposed CAFE standards (line 13) are thus the sum of the change in 

fuel tax revenues, the reduction in environmental and energy security externalities, and increased 

external costs from added driving. 

Line 14 of Table IV.G.6–4 shows manufacturers’ technology outlays for meeting higher 

CAFE standards for passenger cars and light trucks, which represent the principal private and 

social cost of requiring higher fuel economy. The net social benefits (line 15 of the table) 

resulting from the proposed rule consist of the sum of private (line 6) and external (line 13) 

benefits, minus technology costs (line 14). As expected, the figures reported in line 15 of the 

table are identical to those reported previously in Table IV.G.4-10. 

Table IV.G.6–4 highlights several important features of this rule’s economic impacts. 

First, comparing the rule’s net private (line 6) and external (line 13) benefits makes it clear that a 

very large proportion of the proposed rule’s benefits would be experienced by vehicle buyers, 

while the small remaining fraction would be experienced throughout the remainder of the U.S. 

economy. In turn, the vast majority of private benefits resulting from the higher fuel economy 

levels the proposed rule would require stem from fuel savings to vehicle buyers. Net external 

benefits from the proposed rule are expected to be small, because the value of reductions in 

environmental and energy security externalities is likely almost exactly offset by the increased 

costs associated with added vehicle use. As a consequence, the net social benefits of the rule 

mirror almost exactly its net private benefits to vehicle buyers, under the assumption that 

manufacturers will recover their technology outlays for achieving higher fuel economy by raising 

new car and light truck prices. Once again, this result highlights the extreme importance of 

accounting for any other effects of the rule on the economic welfare of vehicle buyers. 

TABLE IV.G.6-4A. PRIVATE, SOCIAL, AND TOTAL BENEFITS AND COSTS OF MYS 2017-

2021 CAFE STANDARDS – PASSENGER CARS PLUS LIGHT TRUCKS (3% DISCOUNT RATE) 

Entry Model Year 

2017 2018 2019 2020 2021 

1. Value of fuel savings (at retail prices) $7.7 $16.1 $29.1 $39.4 $50.9 

2. Savings in refueling time $0.4 $0.7 $1.1 $1.5 $1.8 

3. Consumer surplus from added driving $0.0 $0.1 $0.3 $0.4 $0.5 

 780 Strictly speaking, fuel taxes represent a transfer of resources from consumers of fuel to government agencies and 

not a use of economic resources. Reducing the volume of fuel purchases simply reduces the value of this transfer, 

and thus cannot produce a real economic cost or benefit. Representing the change in fuel tax revenues in effect as 

an economy-wide cost is necessary to offset the portion of fuel savings included in line 1 that represents savings in 

fuel tax payments by consumers. This prevents the savings in tax revenues from being counted as a benefit from the 

economy-wide perspective. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 733 of 770

4. Total private benefits (= 1 + 2 + 3) $8.1 $16.9 $30.5 $41.3 $53.2 

5. Reduction in private benefits from 

changes in other vehicle attributes $0.0 $0.0 $0.0 $0.0 $0.0 

6. Net private benefits (= 4 + 5) $8.1 $16.9 $30.5 $41.3 $53.2 

7. Change in fuel tax revenues ($0.8) ($1.7) ($3.1) ($4.1) ($5.2) 

8. Reduced health damages from criteria 

emissions $0.2 $0.5 $0.9 $1.2 $1.6 

9. Reduced climate damages from CO2

emissions $0.7 $1.5 $2.8 $3.8 $4.9 

10. Reduced energy security externalities $0.4 $0.8 $1.4 $1.8 $2.4 

11. Reduction in externalities (= 8 + 9 + 10) $1.3 $2.8 $5.1 $6.9 $8.9 

12. Increased costs of congestion, etc. ($0.5) ($1.0) ($1.9) ($2.4) ($3.0) 

13. Net external benefits (= 7 + 11 + 12) ($0.0) $0.1 $0.1 $0.3 $0.7 

14. Technology costs ($2.0) ($4.4) ($7.7) ($11.3) ($15.2) 

15. Net social benefits (= 6 + 13 – 14) $6.0 $12.5 $22.9 $30.3 $38.7 

TABLE IV.G.6-4B. PRIVATE, SOCIAL, AND TOTAL BENEFITS AND COSTS OF MYS 2022-

2025 AND TOTAL MYS 2017-2025 CAFE STANDARDS – PASSENGER CARS PLUS LIGHT TRUCKS

Entry 

Model Year 

2022 2023 2024 2025 Total,2017-

2025 

1. Value of fuel savings (at retail fuel 

prices) $57.9 $67.7 $76.9 $87.8 $433.4 

2. Savings in refueling time $2.0 $2.1 $2.3 $2.5 $14.3 

3. Consumer surplus from added driving $0.6 $1.0 $1.3 $1.8 $6.1 

4. Total private benefits (= 1 + 2 + 3) $60.5 $70.9 $80.5 $92.1 $453.8 

5. Reduction in private benefits from 

changes in other vehicle attributes $0.0 $0.0 $0.0 $0.0 $0.0 

6. Net private benefits (= 4 +52) $60.5 $70.9 $80.5 $92.1 $453.8 

7. Change in fuel tax revenues ($5.9) ($6.8) ($7.7) ($8.7) ($44.2) 

8. Reduced health damages from criteria 

emissions $1.8 $2.1 $2.3 $2.5 $13.2 

9. Reduced climate damages from CO2

emissions $5.7 $6.7 $7.7 $8.9 $42.6 

10. Reduced energy security externalities $2.7 $3.1 $3.5 $4.1 $20.1 

11. Reduction in externalities (= 8 + 9 + 

10) $10.2 $11.9 $13.6 $15.4 $76.0 

12. Increased costs of congestion, etc. ($3.4) ($4.1) ($4.6) ($5.5) ($26.5) 

13. Net external benefits (= 7 + 11 + 12) $0.9 $0.9 $1.3 $1.1 $5.3 

14. Technology costs ($17.4) ($22.2) ($26.0) ($29.4) ($135.6) 

15. Net social benefits (= 6 + 13 – 14) $43.9 $49.6 $55.7 $63.8 $323.5 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 734 of 770

As discussed in detail previously, NHTSA believes that the aggregate benefits from this 

proposed rule amply justify its total costs, but it remains possible that the agency has 

overestimated the role of fuel savings to buyers and subsequent owners of the cars and light 

trucks to which the higher CAFE standards it proposes would apply. It is also possible that the 

agency has failed to develop cost estimates that do not require manufacturers to make changes in 

vehicle attributes as part of their efforts to achieve higher fuel economy. To acknowledge these 

possibilities, NHTSA has examined their potential impact on its estimates of the proposed rule’s 

benefits and costs. This analysis, which appears in Chapter VIII of the Preliminary RIA 

accompanying this proposed rule, shows the rule’s economic impacts under alternative 

assumptions about the private benefits from higher fuel economy, and the value of potential 

changes in other vehicle attributes. We seek comment on that analysis and the discussion above. 

7. What other impacts (quantitative and unquantifiable) will these 

proposed standards have? 

In addition to the quantified benefits and costs of fuel economy standards, the final 

standards will have other impacts that we have not quantified in monetary terms. The decision on 

whether or not to quantify a particular impact depends on several considerations: 

• How likely is it to occur, and can the magnitude of the impact reasonably be attributed 

to the outcome of this rulemaking? 

• Would quantification of its physical magnitude or economic value help NHTSA and the 

public evaluate the CAFE standards that may be set in rulemaking? 

• Is the impact readily quantifiable in physical terms? 

• If so, can it readily be translated into an economic value? 

• Is this economic value likely to be material? 

• Can the impact be quantified with a sufficiently narrow range of uncertainty so that the 

estimate is useful? 

NHTSA expects that this rulemaking will have a number of genuine, material impacts 

that have not been quantified due to one or more of these considerations. In some cases, further 

research may yield estimates that are useful for future rulemakings. 

Technology Forcing 

The proposed rule will improve the fuel economy of the U.S. new vehicle fleet, but it will 

also increase the cost (and presumably, the price) of new passenger cars and light trucks built 

during MYs 2017–2025. We anticipate that the cost, scope, and duration of this rule, as well as 

the steadily rising standards it requires, will cause automakers and suppliers to devote increased 

attention to methods of improving vehicle fuel economy. 

This increased attention will stimulate additional research and engineering, and we 

anticipate that, over time, innovative approaches to reducing the fuel consumption of light duty 

vehicles will emerge. These innovative approaches may reduce the cost of the proposed rule in 

its later years, and also increase the set of feasible technologies in future years. We have 

attempted to estimate the effect of learning effects on the costs of producing known technologies 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 735 of 770

within the period of the rulemaking, which is one way that technologies become cheaper over 

time, and may reflect innovations in application and use of existing technologies to meet the 

proposed future. However, we have not attempted to estimate the extent to which not-yetinvented technologies will appear, either within the time period of the current rulemaking or that 

might be available after MY 2016. NHTSA seeks comment on whether there are quantifiable 

costs and benefits associated with the potential technology forcing effects of the proposed 

standards, and if so, how the agency should consider attempting to account for them in the final 

rule analysis. 

Effects on Vehicle Maintenance, Operation, and Insurance Costs 

Any action that increases the cost of new vehicles will subsequently make such vehicles 

more costly to maintain, repair, and insure. In general, this effect can be expected to be a 

positive linear function of vehicle costs. The proposed rule is estimated to raise vehicle costs by 

over $900 by 2025, and for some manufacturers costs will increase by as much as $1,000–

$1,800. Depending on the retail price of the vehicle, this could represent a significant increase in 

the overall vehicle cost and subsequently increase insurance rates, operation costs, and 

maintenance costs. Comprehensive insurance costs are likely to be directly related to price 

increases, but liability premiums will go up by a smaller proportion because the bulk of liability 

coverage reflects the cost of personal injury. The impact on operation and maintenance costs is 

less clear, because the maintenance burden and useful life of each technology are not known. 

However, one of the common consequences of using more complex or innovative technologies is 

a decline in vehicle reliability and an increase in maintenance costs. These costs are borne in 

part by vehicle manufacturers (through warranty costs, which are included in the indirect costs of 

production), and in part by vehicle owners. NHTSA believes that this effect is difficult to 

quantify for purposes of this proposed rule, but we seek comment on how we might attempt to do 

so for the final rule. 

Effects on Vehicle Miles Traveled (VMT) 

While NHTSA has estimated the impact of the rebound effect on the use of MY 2017-25 

vehicles, we have not estimated how a change in new vehicle sales would impact aggregate 

vehicle use. Changes in new vehicle sales may be accompanied by complex but difficult-toquantify effects on overall vehicle use and its composition by vehicle type and age, because the 

same factors affecting sales of new vehicles are also likely to influence their use, as well as how 

intensively older vehicles are used and when they are retired from service. These changes may 

have important consequences for total fleet-wide fuel consumption. NHTSA believes that this 

effect is difficult to quantify for purposes of this proposed rule, but we seek comment on how we 

might attempt to do so for the final rule, if commenters agree that attempting quantification of 

this effect could be informative. 

Effect on Composition of Passenger Car and Light Truck Sales 

To the extent that manufacturers pass on costs to buyers by raising prices for new vehicle 

models, they may distribute these price increases across their model lineups in ways that affect 

the composition of their total sales. . To the extent that changes in the composition of sales occur, 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 736 of 770

this could affect fuel savings to some degree. However, NHTSA’s view is that the scope for 

such effects is relatively small, since most vehicles will to some extent be impacted by the 

standards. Compositional effects might be important with respect to compliance costs for 

individual manufacturers, but are unlikely to be material for the rule as a whole. 

NHTSA is continuing to develop methods of estimating the effects of these proposed 

standards on the sales of individual vehicle models, and plans to apply these methods in 

analyzing the impacts of its final CAFE standards for MY 2017-25. In the meantime, the agency 

seeks comment on the possibility that significant shifts in the composition of new vehicle sales 

by type or model could occur, the potential effects of such shifts on fuel consumption and fuel 

savings from the proposed standards, and methods for analyzing the potential extent and patterns 

of shifts in sales. 

Effects on the Used Vehicle Market 

The effect of this rule on the lifetimes, use, and retirement dates of older vehicles will be 

related to its effects on new vehicle prices, the fuel efficiency of new vehicle models, and total 

sales of new vehicles. Elsewhere in this analysis, NHTSA estimates that vehicle sales will 

increase, because the value of fuel savings resulting from improved fuel efficiency to the typical 

potential buyer of a new vehicle will outweigh the average increase in new models’ costs. Under 

these circumstances, sales of new vehicles will rise, while retirement rates of used vehicles are 

likely to increase slightly. This will cause the “turnover” of the vehicle fleet—that is, the 

retirement of used vehicles and their replacement by new models—to accelerate slightly, thus 

accentuating the anticipated effect of the rule on fleet-wide fuel consumption and CO2 emissions. 

However, if potential buyers value future fuel savings resulting from the increased fuel 

efficiency of new models at less than the increase in their average selling price, sales of new 

vehicles would decline, as would the rate at which used vehicles are retired from service. This 

effect will slow the replacement of used vehicles by new models, and thus partly offset the 

anticipated effects of the proposed rules on fuel use and emissions. NHTSA believes that this 

effect is difficult to quantify for purposes of this proposed rule, but we seek comment on 

methods for analyzing the effects on the use and retirement of older vehicles resulting from 

changes in new vehicle prices, fuel economy, fuel prices, etc., and how the agency could 

consider analyzing this issue for the final rule. 

Impacts of Changing Fuel Composition on Costs, Benefits, and Emissions 

EPAct, as amended by EISA, creates a Renewable Fuels Standard that sets targets for 

greatly increased usage of renewable fuels over the next decade. The law requires fixed volumes 

of renewable fuels to be used—volumes that are not linked to actual usage of transportation 

fuels. 

Ethanol and biodiesel (in the required volumes) may increase or decrease the cost of 

blended gasoline and diesel, depending on crude oil prices and tax subsidies offered for 

renewable fuels. The potential extra cost of renewable fuels would be borne through a crosssubsidy: the price of every gallon of blended gasoline could rise sufficiently to pay for any extra 

cost of using renewable fuels in these blends. However, if the price of gasoline or diesel 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 737 of 770

increases enough, the consumer could actually realize a savings through the increased usage of 

renewable fuels. By reducing total fuel consumption, the CAFE standards proposed in this rule 

could tend to increase any necessary cross-subsidy per gallon of fuel, and hence raise the market 

price of transportation fuels, while there would be no change in the volume or cost of renewable 

fuels used. 

These effects are indirectly incorporated in NHTSA’s analysis of the proposed CAFE 

rule because they are reflected in EIA’s projections of future gasoline and diesel prices in the 

Annual Energy Outlook, which incorporates in its baseline both a Renewable Fuel Standard and 

an CAFE standards. 

The net effect of incorporating an RFS then might be to slightly reduce the benefits of the 

rule because affected vehicles might be driven slightly less if the RFS makes blended gasoline 

relatively more expensive, and because fuels blended with more ethanol emit slightly fewer 

greenhouse gas emissions per gallon. In addition, there might be corresponding benefit losses 

from the induced reduction in VMT. All of these effects are difficult to estimate, because of 

uncertainty in future crude oil prices, uncertainty in future tax policy, and uncertainty about how 

petroleum marketers will actually comply with the RFS, but they are likely to be small, because 

the cumulative deviation from baseline fuel consumption induced by the final rule will itself be 

small. 

Distributional Effects 

The agency’s analysis of the proposed rule reports impacts only as nationwide aggregate 

or per-vehicle average values. NHTSA also shows the effects of the EIA high and low fuel price 

forecasts on the aggregate benefits in its sensitivity analysis. Generally, this proposed rule would 

have its largest effects on individuals who purchase new vehicles produced during the model 

years it would affect (2017-25). New vehicle buyers who drive more than the agency’s estimates 

of average vehicle use will experience larger fuel savings and economic benefits than the average 

values reported in this NPRM, while those who drive less than our average estimates will 

experience smaller fuel savings and benefits. NHTSA believes that this effect is difficult to 

quantify for purposes of this proposed rule, but we seek comment on how we might attempt to do 

so for the final rule, if commenters agree that attempting quantification of this effect could be 

informative. 

H. Vehicle Classification 

Vehicle classification, for purposes of the CAFE program, refers to whether NHTSA 

considers a vehicle to be a passenger car or a light truck, and thus subject to either the passenger 

car or the light truck standards.781 As NHTSA explained in the MY 2011 rulemaking and in the 

MYs 2012-2016 rulemaking, vehicle classification is based in part on EPCA/EISA, and in part 

on NHTSA’s regulations. EPCA categorizes some light 4-wheeled vehicles as “passenger 

automobiles” (cars) and the balance as “non-passenger automobiles” (light trucks). EPCA 

 781 For the purpose of the MYs 2012-2016 standards and this NPRM for the MYs 2017–2025 standards, EPA has 

agreed to use NHTSA’s regulatory definitions for determining which vehicles would be subject to which CO2

standards. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 738 of 770

defines passenger automobiles as any automobile (other than an automobile capable of offhighway operation) which NHTSA decides by rule is manufactured primarily for use in the 

transportation of not more than 10 individuals.782 NHTSA created regulatory definitions for 

passenger automobiles and light trucks, found at 49 CFR Part 523, to guide the agency and 

manufacturers in classifying vehicles. 

Under EPCA, there are two general groups of automobiles that qualify as non-passenger 

automobiles or light trucks: (1) those defined by NHTSA in its regulations as other than 

passenger automobiles due to their having design features that indicate they were not 

manufactured “primarily” for transporting up to ten individuals; and (2) those expressly excluded 

from the passenger category by statute due to their capability for off-highway operation, 

regardless of whether they might have been manufactured primarily for passenger 

transportation.783 49 CFR 523 directly tracks those two broad groups of non-passenger 

automobiles in subsections (a) and (b), respectively. We note that NHTSA tightened the 

definition of light truck in the MY 2011 rulemaking to ensure that only vehicles that actually 

have 4WD will be classified as off-highway vehicles by reason of having 4WD (to prevent 2WD 

SUVs that also come in a 4WD “version” from qualifying automatically as “off-road capable” 

simply by reason of the existence of the 4WD version), which resulted in the reclassification of 

over 1 million vehicles from the truck fleet to the car fleet. 

Since the original passage of EPCA, and consistently through the passage of EISA, 

Congress has expressed its intent that different vehicles with different characteristics and 

capabilities should be subject to different CAFE standards in two ways: first, through whether a 

vehicle is classified as a passenger car or as a light truck, and second, by requiring NHTSA to set 

separate standards for passenger cars and for light trucks.784 Creating two categories of vehicles 

and requiring separate standards for each, however, can lead to two issues which may either 

detract from the fuel savings that the program is able to achieve, or increase regulatory burden 

for manufacturers simply because they are trying to meet market demand. Specifically, 

1) If the stringency of the standards that NHTSA establishes seems to favor 

either cars or trucks, manufacturers may have incentive to change their 

vehicles’ characteristics in order to reclassify them and average them into the 

“easier” fleet; and 

2) “Like” vehicles, such as the 2WD and 4WD versions of the same CUV, may 

have generally similar fuel economy-achieving capabilities, but different 

targets due to differences in the car and truck curves. 

 782 EPCA 501(2), 89 Stat. 901, codified at 49 U.S.C. 32901(a). 783 49 U.S.C. 32901(a)(18). The statute refers both to vehicles that are 4WD and to vehicles over 6,000 lbs GVWR 

as potential candidates for off-road capability, if they also meet the “significant feature . . . designed for off-highway 

operation” as defined by the Secretary. We note that we consider “AWD” vehicles as 4WD for purposes of this 

determination—they send power to all wheels of the vehicle all the time, while 4WD vehicles may only do so part of 

the time, which appears to make them equal candidates for off-road capability given other necessary characteristics. 

We also underscore, as we have in the past, that despite comments in prior rulemakings suggesting that any vehicle 

that appears to be manufactured “primarily” for transporting passengers must be classified as a passenger car, the 

statute as currently written clearly provides that vehicles that are off-highway capable are not passenger cars. 784 See, e.g., discussion of legislative history in 42 Fed. Reg. 38362, 38365-66 (Jul. 28, 1977). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 739 of 770

NHTSA recognizes that manufacturers may have an incentive to classify vehicles as light 

trucks if the fuel economy target for light trucks with a given footprint is less stringent than the 

target for passenger cars with the same footprint. This is often the case given the current fleet. 

Because of characteristics like 4WD and towing and hauling capacity (and correspondingly, 

although not necessarily, heavier weight), the vehicles in the current light truck fleet are 

generally less capable of achieving higher fuel economy levels as compared to the vehicles in the 

passenger car fleet. 2WD SUVs are the vehicles that could be most readily redesigned so that 

they can be “moved” from the passenger car to the light truck fleet. A manufacturer could do 

this by adding a third row of seats, for example, or boosting GVWR over 6,000 lbs for a 2WD 

SUV that already meets the ground clearance requirements for “off-road capability.” A change 

like this may only be possible during a vehicle redesign, but since vehicles are redesigned, on 

average, every 5 years, at least some manufacturers could possibly choose to make such changes 

before or during the model years covered by this rulemaking, either because of market demands 

or because of interest in changing the vehicle’s classification. 

NHTSA continues to believe that the definitions as they currently exist are consistent 

with the text of EISA and with Congress’ original intent. However, the time frame of this 

rulemaking is longer than any CAFE rulemaking that NHTSA has previously undertaken, and no 

one can predict with certainty how the market will change between now and 2025. The agency 

therefore has less assurance than in prior rulemakings that manufacturers will not have greater 

incentives and opportunities during that time frame to make more deliberate redesign efforts to 

move vehicles out of the car fleet and into the truck fleet in order to obtain the lower target, and 

potentially reducing overall fuel savings. Recognizing this possibility, we seek comment on how 

best to avoid it while still classifying vehicles appropriately based on their characteristics and 

capabilities. 

One of the potential options that we explored in the MYs 2012-2016 rulemaking for MYs 

2017 and beyond was changing the definition of light truck to remove paragraph (5) of 49 CFR 

523.5(a), which allows vehicles to be classified as light trucks if they have three or more rows of 

seats that can either be removed or folded flat to allow greater cargo-carrying capacity. NHTSA 

has received comments in the past arguing that vehicles with three or more rows of seats, unless 

they are capable of transporting more than 10 individuals, should be classified as passenger cars 

rather than as light trucks because they would not need to have so many seats if they were not 

intended primarily to carry passengers. 

NHTSA recognizes that there are arguments both for and against maintaining the 

definition as currently written for MYs 2017 and beyond. The agency continues to believe that 

three or more rows of seats that can be removed or folded flat is a reasonable proxy for a 

vehicle’s ability to provide expanded cargo space, consistent with the agency’s original intent in 

developing the light truck definitions that expanded cargo space is a fundamentally “truck-like” 

characteristic. Much of the public reaction to this definition, which is mixed, tends to be visceral 

and anecdotal – for example, for parents with minivans and multiple children, the ability of seats 

to fold flat to provide more room for child-related cargo may have been a paramount 

consideration in purchasing the vehicle, while for CUV owners with cramped and largely unused 

third rows, those extra seats may seem to have sprung up entirely in response to the regulation, 

rather than in response to the consumer’s need for utility. If we believe, for the sake of 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 740 of 770

argument, that the agency’s decision might be reasonable from both a policy and a legal 

perspective whether we decided to change the definition or to leave it alone, the most important 

questions in making the decision become (1) whether removing 523.5(a)(5), and thus causing 

vehicles with three or more rows to be classified as passenger cars in the future, will save more 

fuel, and (2) if more fuel will be saved, at what cost. 

In considering these questions in the MYs 2012-2016 rulemaking, NHTSA conducted an 

analysis in the final rule to attempt to consider the impact of moving these vehicles. We 

identified all of the 3-row vehicles in the baseline (MY 2008) fleet,785 and then considered 

whether any could be properly classified as a light truck under a different provision of 49 CFR 

523.5—about 40 vehicles were classifiable under § 523.5(b) as off-highway capable. We then 

transferred those remaining 3-row vehicles from the light truck to the passenger car input sheets 

for the Volpe model, re-estimated the relative stringency of the passenger car and light truck 

standards, shifted the curves to obtain the same overall average required fuel economy as under 

the final standards, and ran the model to evaluate potential impacts (in terms of costs, fuel 

savings, etc.) of moving these vehicles. The agency’s hypothesis had been that moving 3-row 

vehicles from the truck to the car fleet would tend to bring the achieved fuel economy levels 

down in both fleets—the car fleet achieved levels could theoretically fall due to the introduction 

of many more vehicles that are relatively heavy for their footprint and thus comparatively less 

fuel economy-capable, while the truck fleet achieved levels could theoretically fall due to the 

characteristics of the vehicles remaining in the fleet (4WDs and pickups, mainly) that are often 

comparatively less fuel economy-capable than 3-row vehicles, although more vehicles would be 

subject to the relatively more stringent passenger car standards, assuming the curves were not 

refit to the data. 

As the agency found, however, moving the vehicles reduced the stringency of the 

passenger car standards by approximately 0.8 mpg on average for the five years of the rule, and 

reduced the stringency of the light truck standards by approximately 0.2 mpg on average for the 

five years of the rule, but it also resulted in approximately 676 million fewer gallons of fuel 

consumed (equivalent to about 1 percent of the reduction in fuel consumption under the final 

standards) and 7.1 mmt fewer CO2 emissions (equivalent to about 1 percent of the reduction in 

CO2 emissions under the final standards) over the lifetime of the MYs 2012–2016 vehicles. This 

result was attributable to slight differences (due to rounding precision) in the overall average 

required fuel economy levels in MYs 2012–2014, and to the retention of the relatively high 

lifetime mileage accumulation (compared to “traditional” passenger cars) of the vehicles moved 

from the light truck fleet to the passenger car fleet. The net effect on technology costs was 

approximately $200 million additional spending on technology each year (equivalent to about 2 

percent of the average increase in annual technology outlays under the final standards). 

Assuming manufacturers would pass that cost forward to consumers by increasing vehicle costs, 

NHTSA estimated that vehicle prices would increase by an average of approximately $13 during 

MYs 2012–2016. With less fuel savings and higher costs, and a substantial disruption to the 

industry, removing 523.5(a)(5) did not seem advisable in the context of the MYs 2012-2016 

rulemaking. 

 785 Of the 430 light trucks models in the fleet, 175 of these had 3 rows.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 741 of 770

Looking forward, however, and given the considerable uncertainty regarding the 

incentive to reclassify vehicles in the MYs 2017 and beyond timeframe, the agency believes that 

a fresh look at this question is warranted. One important point to note in the comparative 

analysis in the MYs 2012-2016 rulemaking is that, due to time constraints, the agency did not 

attempt to refit the respective fleet target curves or to change the intended required stringency in 

MY 2016 of 34.1 mpg for the combined fleets. If we had refitted curves, considering the 

vehicles in question, we might have obtained a somewhat steeper passenger car curve, and a 

somewhat flatter light truck curve, which could have affected the agency’s findings. 

There are several ways to analyze the impact of removing 523.5(a)(5) and moving 

vehicles accordingly from the light truck fleet to the passenger car fleet. The agency could: 

[analysis forthcoming, but could include:] 

1) Move the vehicles and not refit curves or change stringency 

2) Move the vehicles and refit curves, but not change stringency 

3) Move the vehicles and refit curves and change stringency 

The results from any of these methods would be somewhat speculative; for example, the 

agencies continue to use the same MY 2008 baseline used in the MYs 2012-2016 rulemaking, 

which may have limited utility for predicting relatively small changes (moving only 40 vehicles, 

as noted above) in the fleet makeup during the rulemaking timeframe. 

[Results forthcoming] 

The agency emphasizes that we are not proposing to remove 523.5(a)(5) at this time, but 

are simply seeking comment on the analysis above. We expect to update this analysis for the 

final rule, and based on the results we may consider making this change for the final rule, or at 

some point in a future rulemaking. 

Another potential option that we explored in the MYs 2012-2016 rulemaking for MYs 

2017 and beyond was classifying “like” vehicles together. Many commenters objected in the 

rulemaking for the MY 2011 standards to NHTSA’s regulatory separation of “like” vehicles. 

Industry commenters argued that it was technologically inappropriate for NHTSA to place 4WD 

and 2WD versions of the same SUV in separate classes. They argued that the vehicles are the 

same, except for their drivetrain features, thus giving them similar fuel economy improvement 

potential. They further argued that all SUVs should be classified as light trucks. Environmental 

and consumer group commenters, on the other hand, argued that 4WD SUVs and 2WD SUVs 

that are “off-highway capable” by virtue of a GVWR above 6,000 pounds should be classified as 

passenger cars, since they are primarily used to transport passengers. In the MY 2011 

rulemaking, NHTSA rejected both of these sets of arguments. NHTSA concluded that 2WD 

SUVs that were neither “off-highway capable” nor possessed “truck-like” functional 

characteristics were appropriately classified as passenger cars. At the same time, NHTSA also 

concluded that because Congress explicitly designated vehicles with GVWRs over 6,000 pounds 

as “off-highway capable” (if they meet the ground clearance requirements established by the 

agency), NHTSA did not have authority to move these vehicles to the passenger car fleet. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 742 of 770

NHTSA continues to believe that this would not be an appropriate solution for addressing 

either the risk of gaming or perceived regulatory inequity going forward. As explained in the 

MYs 2012-2016 final rule, with regard to the first argument, that “like” vehicles should be 

classified similarly (i.e., that 2WD SUVs should be classified as light trucks because, besides 

their drivetrain, they are “like” the 4WD version that qualifies as a light truck), NHTSA 

continues to believe that 2WD SUVs that do not meet any part of the existing regulatory 

definition for light trucks should be classified as passenger cars. However, NHTSA recognizes 

the additional point raised by industry commenters in the MY 2011 rulemaking that 

manufacturers may respond to this tighter classification by ceasing to build 2WD versions of 

SUVs, which could reduce fuel savings. In response to that point, NHTSA stated in the MY 

2011 final rule that it expects that manufacturer decisions about whether to continue building 

2WD SUVs will be driven in much greater measure by consumer demand than by NHTSA’s 

regulatory definitions. If it appears, in the course of the next several model years, that 

manufacturers are indeed responding to the CAFE regulatory definitions in a way that reduces 

overall fuel savings from expected levels, it may be appropriate for NHTSA to review this 

question again. At this time, however, since so little time has passed since our last rulemaking 

action, we do not believe that we have enough information about changes in the fleet to ascertain 

whether this is yet ripe for consideration. We seek comment on how the agency might go about 

reviewing this question as more information about manufacturer behavior is accumulated over 

time. 

I. Compliance and Enforcement 

1. Overview 

NHTSA’s CAFE enforcement program is largely established by statute—unlike the 

CAA, EPCA, as amended by EISA, is very prescriptive with regard to enforcement. EPCA and 

EISA also clearly specify a number of flexibilities that are available to manufacturers to help 

them comply with the CAFE standards. Some of those flexibilities are constrained by statute – 

for example, while Congress required that NHTSA allow manufacturers to transfer credits 

earned for over-compliance from their car fleet to their truck fleet and vice versa, Congress also 

limited the amount by which manufacturers could increase their CAFE levels using those 

transfers.786 NHTSA believes Congress balanced the energy-saving purposes of the statute 

against the benefits of certain flexibilities and incentives and intentionally placed some limits on 

certain statutory flexibilities and incentives. With that goal in mind, of maximizing compliance 

flexibility while also implementing EPCA/EISA’s overarching purpose of energy conservation 

as fully as possible, NHTSA has done its best in crafting the credit transfer and trading 

regulations authorized by EISA to ensure that total fuel savings are preserved when 

manufacturers exercise their statutorily-provided compliance flexibilities. 

Furthermore, to achieve the level of standards described in this proposal for the 2017–

2025 program, NHTSA expects automakers to continue increasing the use of innovative and 

advanced technologies as they evolve. Additional incentive programs may encourage early 

adoption of these innovative and advanced technologies and help to maximize both compliance 

flexibility and energy conservation. These incentive programs for CAFE compliance would not 

 786 See 49 U.S.C. 32903(g). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 743 of 770

be under NHTSA’s EPCA/EISA authority, but under EPA’s EPCA authority – as discussed in 

more detail below and in Section III of this preamble, EPA measures and calculates 

manufacturer compliance with the CAFE standards, and it would be in the calculation of fuel 

economy levels that additional incentives would most appropriately be applied, as a practical 

matter. Specifically, to be included in the CAFE program, EPA is proposing: 1) fuel economy 

performance adjustments due to improvements in air conditioning system efficiency; 2) 

utilization of “game changing” technologies installed on full size pick-up trucks including 

hybridization; and 3) installation of “off-cycle” technologies. In addition, for model years 2020 

and later, EPA is proposing calculation methods for dual-fueled vehicles, to fill the gap left in 

EPCA/EISA by the expiration of the dual-fuel incentive. A more thorough description of the 

basis for the new incentive programs can be found in Section III. 

The following sections explain how NHTSA determines whether manufacturers are in 

compliance with the CAFE standards for each model year, and how manufacturers may address 

potential non-compliance situations through the use of compliance flexibilities or fine payment. 

The following sections also explain, for the reader’s reference, the proposed new incentives and 

calculations, but we also refer readers to Section III.C for EPA’s explanation of its authority and 

more specific detail regarding these proposed changes to the CAFE program. 

2. How does NHTSA determine compliance? 

a. Manufacturer Submission of Data and CAFE Testing by EPA 

NHTSA begins to determine CAFE compliance by reviewing projected estimates in preand mid-model year reports submitted by manufacturers pursuant to 49 CFR part 537, 

Automotive Fuel Economy Reports.787 Those reports for each compliance model year are 

submitted to NHTSA by December of the calendar year prior to the corresponding subsequent 

model year (for the pre-model year report) and in July of the given model year (for the midmodel year report). NHTSA has already received pre-and mid-model year reports from 

manufacturers for MY 2011. NHTSA uses these reports for reference to help the agency, and the 

manufacturers who prepare them, anticipate potential compliance issues as early as possible, and 

help manufacturers plan compliance strategies. NHTSA also uses the reports for auditing and 

testing purposes, which helps manufacturers correct errors prior to the end of the model year and 

facilitates acceptance of their final CAFE report by EPA. In addition, NHTSA issues reports to 

the public twice a year that provide a summary of manufacturers’ fleet fuel economy projected 

performances using pre- and mid model year data. Currently, NHTSA receives manufacturers’ 

CAFE reports in paper form. In order to facilitate submission by manufacturers, NHTSA 

amended part 537 to allow for electronic submission of the pre- and mid-model year CAFE 

reports in 2010 (see 75 FR 25324). Electronic reports are optional and must be submitted in a 

pdf format. NHTSA proposes to modify these provisions in this NPRM, as described below, in 

order to eliminate hardcopy submissions and help the agency more readily process and utilize the 

electronically-submitted data. 

 787 49 CFR part 537 is authorized by 49 U.S.C. 32907. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 744 of 770

Throughout the model year, NHTSA audits manufacturers’ reports and conducts vehicle 

testing to confirm the accuracy of track width and wheelbase measurements as a part of its 

footprint validation program,788 which helps the agency understand better how manufacturers 

may adjust vehicle characteristics to change a vehicle’s footprint measurement, and thus its fuel 

economy target. NHTSA resolve discrepancies with the manufacturer prior to the end of the 

calendar year corresponding to the respective model year with the primary goal of manufacturers 

submitting accurate final reports to EPA. NHTSA makes its ultimate determination of a 

manufacturer’s CAFE compliance obligation based on official reported and verified CAFE data 

received from EPA. Pursuant to 49 U.S.C. 32904(e), EPA is responsible for calculating 

manufacturers’ CAFE values so that NHTSA can determine compliance with its CAFE 

standards. The EPA-verified data is based on any considerations from NHTSA testing, its own 

vehicle testing, and final model year data submitted by manufacturers to EPA pursuant to 40 

CFR 600.512. A manufacturer’s final model year report must be submitted to EPA no later than 

90 days after December 31st of the model year. EPA test procedures including those used to 

establish the new incentive fuel economy performance values for model year 2017 to 2025 

vehicles are contained in sections 40 CFR Part 600 and 40 CFR Part 86. 

b. NHTSA Then Analyzes EPA-Certified CAFE Values for 

Compliance 

NHTSA’s determination of CAFE compliance is fairly straightforward: after testing, 

EPA verifies the data submitted by manufacturers and issues final CAFE reports sent to 

manufacturers and to NHTSA in a pdf format between April and October of each year (for the 

previous model year), and NHTSA then identifies the manufacturers’ compliance categories 

(fleets) that do not meet the applicable CAFE fleet standards. NHTSA plans to construct a new, 

more automated database system in the near future to store manufacturer data and the EPA 

data. The new database is expected to simplify data submissions to NHTSA, improve the quality 

of the agency’s data, expedite public reporting, improve audit verifications and testing, and 

enable more efficient tracking of manufacturers’ CAFE credits with greater transparency. 

NHTSA uses the verified data from EPA to compare fleet average standards with 

performance. A manufacturer complies with NHTSA’s fuel economy standard if its fleet 

average performance is greater than or equal to its required standard, or if it is able to use 

available compliance flexibilities to resolve its non-compliance difference. NHTSA calculates a 

cumulative credit status for each of a manufacturer’s vehicle compliance categories according to 

49 U.S.C. 32903. If a manufacturer’s compliance category exceeds the applicable fuel economy 

standard, NHTSA adds credits to the account for that compliance category. The amount of 

credits earned in a given year are determined by multiplying the number of tenths of an mpg by 

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

volume of automobiles of that category manufactured by the manufacturer for that model year. 

Credits may be used to offset shortfalls in other model years, subject to the three year “carryback” and five-year “carry-forward” limitations specified in 49 U.S.C. 32903(a); NHTSA does 

not have authority to allow credits to be carried forward or back for periods longer than that 

specified in the statute. A manufacturer may also transfer credits to another compliance 

 788 See http://www.nhtsa.gov/DOT/NHTSA/Vehicle%20Safety/Test%20Procedures/Associated%20Files/TP-537-

01.pdf 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 745 of 770

category, subject to the limitations specified in 49 U.S.C. 32903(g)(3), or trade them to another 

manufacturer. The value of each credit received via trade or transfer, when used for compliance, 

is adjusted using the adjustment factor described in 49 CFR 536.4, pursuant to 49 U.S.C. 

32903(f)(1). 

If a manufacturer’s vehicles in a particular compliance category fall below the standard 

fuel economy value, NHTSA will provide written notification to the manufacturer that it has not 

met a particular fleet standard. The manufacturer will be required to confirm the shortfall and 

must either submit a plan indicating it will allocate existing credits, or if it does not have 

sufficient credits available in that fleet, how it will earn, transfer and/or acquire credits, or pay 

the appropriate civil penalty. The manufacturer must submit a plan or payment within 60 days of 

receiving agency notification. Credit allocation plans received from the manufacturer will be 

reviewed and approved by NHTSA. NHTSA will approve a credit allocation plan unless it finds 

the proposed credits are unavailable or that it is unlikely that the plan will result in the 

manufacturer earning sufficient credits to offset the subject credit shortfall. If a plan is 

approved, NHTSA will revise the manufacturer’s credit account accordingly. If a plan is 

rejected, NHTSA will notify the manufacturer and request a revised plan or payment of the 

appropriate fine. 

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

consideration of credits, EPCA provides for the assessment of civil penalties. The Act specifies 

a precise formula for determining the amount of civil penalties for noncompliance.789 The 

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

average fuel economy falls short of the standard for a given model year multiplied by the total 

volume of those vehicles in the affected fleet (i.e., import or domestic passenger car, or light 

truck), manufactured for that model year. The amount of the penalty may not be reduced except 

under the unusual or extreme circumstances specified in the statute. All penalties are paid to the 

U.S. Treasury and not to NHTSA itself. 

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

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

provisions790 in the Safety Act and their absence in EPCA is believed to arise from the difference 

in the application of the safety standards and CAFE standards. A safety standard applies to 

individual vehicles; that is, each vehicle must possess the requisite equipment or feature that 

must provide the requisite type and level of performance. If a vehicle does not, it is 

noncompliant. Typically, a vehicle does not entirely lack an item or equipment or feature. 

Instead, the equipment or features fails to perform adequately. Recalling the vehicle to repair or 

replace the noncompliant equipment or feature can usually be readily accomplished. 

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

does not require that a particular individual vehicle be equipped with any particular equipment or 

feature or meet a particular level of fuel economy. It does require that the manufacturer’s fleet, 

as a whole, comply. Further, although under the attribute-based approach to setting CAFE 

standards fuel economy targets are established for individual vehicles based on their footprints, 

 789 See 49 U.S.C. 32912. 790 49 U.S.C. 30120, Remedies for defects and noncompliance. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 746 of 770

the vehicles are not required to comply with those targets on a model-by-model or vehicle-byvehicle basis. However, as a practical matter, if a manufacturer chooses to design some vehicles 

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

exceed their targets if the manufacturer’s overall fleet average is to meet the applicable standard. 

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

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

noncompliant than any other vehicle in the fleet. 

After enforcement letters are sent, NHTSA continues to monitor receipt of credit 

allocation plans or civil penalty payments that are due within 60 days from the date of receipt of 

the letter by the vehicle manufacturer, and takes further action if the manufacturer is delinquent 

in responding. If NHTSA receives and approves a manufacturer’s carryback plan to earn future 

credits within the following three years in order to comply with current regulatory obligations, 

NHTSA will defer levying fines for non-compliance until the date(s) when the manufacturer’s 

approved plan indicates that credits will be earned or acquired to achieve compliance, and upon 

receiving confirmed CAFE data from EPA. If the manufacturer fails to acquire or earn sufficient 

credits by the plan dates, NHTSA will initiate compliance proceedings. 49 CFR part 536 

contains the detailed regulations governing the use and application of CAFE credits authorized 

by 49 U.S.C. 32903. 

3. What compliance flexibilities are available under the CAFE program 

and how do manufacturers use them? 

There are three basic flexibilities outlined by EPCA/EISA that manufacturers can 

currently use to achieve compliance with CAFE standards beyond applying fuel economyimproving technologies: (1) Building dual- and alternative-fueled vehicles; (2) banking (carryforward and carry-back), trading, and transferring credits earned for exceeding fuel economy 

standards; and (3) paying civil penalties. We note that while these flexibility mechanisms will 

reduce compliance costs to some degree for most manufacturers, 49 U.S.C. 32902(h) expressly 

prohibits NHTSA from considering the availability of statutorily-established credits (either for 

building dual- or alternative-fueled vehicles or from accumulated transfers or trades) in 

determining the level of the standards. Thus, NHTSA may not raise CAFE standards because 

manufacturers have enough of those credits to meet higher standards. This is an important 

difference from EPA’s authority under the CAA, which does not contain such a restriction, and 

which allows EPA to set higher standards as a result. 

a. Dual- and Alternative-Fueled Vehicles 

As discussed at length in prior rulemakings, EPCA encourages manufacturers to build 

alternative-fueled and dual- (or flexible-) fueled vehicles by providing special fuel economy 

calculations for “dedicated” (that is, 100 percent) alternative fueled vehicles and “dual-fueled” 

(that is, capable of running on either the alternative fuel or gasoline/diesel) vehicles. Consistent 

with the overarching purpose of EPCA/EISA, these statutory incentives help to reduce petroleum 

usage and thus improve our nation’s energy security. Per EPCA, the fuel economy of a 

dedicated alternative fuel vehicle is determined by dividing its fuel economy in equivalent miles 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 747 of 770

per gallon of gasoline or diesel fuel by 0.15.791 Thus, a 15 mpg dedicated alternative fuel vehicle 

would be rated as 100 mpg. 

For dual-fueled vehicles, EPA measures the vehicle’s fuel economy rating by 

determining the average of the fuel economy on gasoline or diesel and the fuel economy on the 

alternative fuel vehicle divided by 0.15.792 This calculation procedure, provided in EPCA, turns 

a dual-fueled vehicle that averages 25 mpg on gasoline or diesel into a 40 mpg vehicle for CAFE 

purposes. This assumes that (1) the vehicle operates on gasoline or diesel 50 percent of the time 

and on alternative fuel 50 percent of the time; (2) fuel economy while operating on alternative 

fuel is 15 mpg (15/.15 = 100 mpg); and (3) fuel economy while operating on gas or diesel is 25 

mpg. Thus: 

CAFE FE = 1/{0.5/(mpg gas) + 0.5/(mpg alt fuel)} = 1/{0.5/25 + 0.5/100} = 40 mpg 

In the case of natural gas, EPA’s calculation is performed in a similar manner. The fuel 

economy is the weighted average while operating on natural gas and operating on gas or diesel. 

The statute specifies that 100 cubic feet (ft3

) of natural gas is equivalent to 0.823 gallons of 

gasoline. The CAFE fuel economy while operating on the natural gas is determined by dividing 

its fuel economy in equivalent miles per gallon of gasoline by 0.15.793 Thus, if a vehicle 

averages 25 miles per 100 ft3

 of natural gas, then: 

CAFE FE = (25/100) * (100/.823)*(1/0.15) = 203 mpg 

Congress extended the dual-fueled vehicle incentive in EISA for dual-fueled automobiles 

through MY 2019, but provided for its phase-out between MYs 2015 and 2019.794 The 

maximum fleet fuel economy increase attributable to this statutory incentive is thus as follows: 

Model year mpg increase 

MYs 1993-2014..................................... 1.2 

MY 2015............................................. 1.0 

MY 2016............................................. 0.8 

MY 2017............................................. 0.6 

MY 2018............................................. 0.4 

MY 2019............................................. 0.2 

 791 49 U.S.C. 32905(a). 792 49 U.S.C. 32905(b). 793 49 U.S.C. 32905(c). 794 49 U.S.C. 32906(a). NHTSA notes that the incentive for dedicated alternative-fuel automobiles, automobiles that 

run exclusively on an alternative fuel, at 49 U.S.C. 32905(a), was not phased-out by EISA. 

 We note additionally and for the reader’s reference that EPA will be treating dual- and alternative-fueled 

vehicles under its GHG program similarly to the way EPCA/EISA provides for CAFE through MY 2015, but for 

MY 2016, EPA established CO2 emission levels for alternative fuel vehicles based on measurement of actual CO2 

emissions during testing, plus a manufacturer demonstration that the vehicles are actually being run on the 

alternative fuel. The manufacturer would then be allowed to weight the gasoline and alternative fuel test results 

based on the proportion of actual usage of both fuels. Because EPCA/EISA provides the explicit CAFE 

measurement methodology for EPA to use for dedicated vehicles and dual-fueled vehicles through MY 2019, we 

explained in the MYs 2012-2016 final rule that the CAFE program would not require that vehicles manufactured for 

the purpose of obtaining the credit actually be run on the alternative fuel.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 748 of 770

After MY 2019....................................... 0 

49 CFR part 538 codifies in regulation the statutory alternative-fueled and dual-fueled 

automobile manufacturing incentive. For purposes of consistency with the statute and to 

implement our intent in the MYs 2012-2016 rule, NHTSA is updating 49 CFR 538.9 to 

incorporate the 49 U.S.C. 32906(a) phase-out of the statutory incentive described above. 

Given that the statutory incentive for dual-fueled vehicles in 49 U.S.C. 32906 and the 

measurement methodology specified in 49 U.S.C. 32905(b) and (d) expire in MY 2019, the 

question becomes, how should the fuel economy of dual-fueled vehicles be determined for 

CAFE compliance in MYs 2020 and beyond? NHTSA and EPA believe that the expiration of 

the dual-fueled vehicle measurement methodology in the statute leaves a gap to be filled, to 

avoid the absurd result of dual-fueled vehicles’ fuel economy being measured like that of 

conventional gasoline vehicles. If the overarching purpose of the statute is energy conservation 

and reducing petroleum usage, the agencies believe that that goal is best met by continuing to 

reflect through CAFE calculations the reduced petroleum usage that dual-fueled vehicles 

achieve. 

As discussed in more detail in Section III.B.10, for MYs 2020 and beyond, to fill the gap 

left by the expiration of the statutory CAFE measurement methodology for dual-fueled vehicles, 

EPA is proposing to harmonize with the approach it uses under the GHG program to measure the 

emissions of dual-fueled vehicles, to reflect the real-world percentage of usage of alternative 

fuels by dual-fueled vehicles, but also to continue to incentivize the use of certain alternative 

fuels in dual-fueled vehicles as appropriate under EPCA/EISA to reduce petroleum usage. 

Specifically, for MYs 2020 and beyond, EPA will calculate the fuel economy test values for a 

plug-in hybrid electric vehicle (PHEV, that runs on both gasoline and electricity) and for CNGgasoline vehicles on both the alternative fuel and on gasoline, but rather than assuming that the 

dual-fueled vehicle runs on the alternative fuel 50 percent of the time as the current statutory 

measurement methodology requires, EPA will instead use the Society of Automotive Engineers 

(SAE) “utility factor” methodology (based on vehicle range on the alternative fuel and typical 

daily travel mileage) to determine the assumed percentage of operation on gasoline/diesel and 

percentage of operation on the alternative fuel for those vehicles. Using the utility factor, rather 

than making an a priori assumption about the amount of alternative fuel used by dual-fueled 

vehicles, recognizes that once a consumer has paid several thousand dollars to be able to use a 

fuel that is considerably cheaper than gasoline or diesel, it is very likely that the consumer will 

seek to use the cheaper fuel as much as possible. Consistent with this approach, however, EPA 

is not proposing to extend the utility factor method to flexible fueled vehicles (FFVs) that use E–

85 and gasoline, since there is not a significant cost differential between an FFV and 

conventional gasoline vehicle and historically consumers have only fueled these vehicles with 

E85 a very small percentage of the time. Therefore, EPA is proposing for CAFE compliance in 

MYs 2020 and beyond to continue treatment of E85 and other FFVs as finalized in the MY 2016 

GHG program, based on actual usage of the alternative fuel which represents a real-world 

reduction attributed to alternative fuels. 

 

Additionally, to avoid manufacturers building only dedicated alternative fuel vehicles 

(which may be harder to refuel in some instances) because of the continued statutory 0.15 CAFE 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 749 of 770

divisor under 49 U.S.C. 32905(a) and the calculation for EV fuel economy under 49 U.S.C. 

32904, and declining to build dual-fueled vehicles which might not get a similar bonus, EPA is 

proposing to use the Petroleum Equivalency Factor (PEF) and a 0.15 divisor for calculating the 

fuel economy of PHEVs’ electrical operation and for natural gas operation of CNG-gasoline 

vehicles. This is consistent with the statutory approach for dedicated alternative fuel vehicles, 

and continues to incentivize the usage of alternative fuels and reduction of petroleum usage, but 

when combined with the utility factor approach described above, does not needlessly overincentivize their usage – it gives credit for what is used, and does not give credit for what is not 

used. Because it does not give credit for what is not used, EPA would propose that 

manufacturers may increase their calculated fleet fuel economy for dual-fueled vehicles by an 

unlimited amount using these flexibilities. 

As an example, for MYs 2020 and beyond, the calculation procedure for a dual-fueled 

vehicle that uses both gasoline and CNG could result in a combined fuel economy value of 150 

mpg for CAFE purposes. This assumes that (1) the “utility factor” for the alternative fuel is 

found to be 95 percent, and so the vehicle operates on gasoline for the remaining 5 percent of the 

time; (2) fuel economy while operating on natural gas is 203 mpg [(25/100) * 

(100/.823)*(1/0.15)] as shown above utilizing the PEF and the .15 incentive factor; and (3) fuel 

economy while operating on gasoline is 25 mpg. Thus: 

CAFE FE = 1/{0.05/(mpg gas) + 0.95/(mpg CNG)} = 1/{0.05/25 + 0.95/203} = 150 mpg 

 

The agencies seek comment on this approach. 

b. Credit Trading and Transfer 

As part of the MY 2011 final rule, NHTSA created 49 CFR part 536 for credit trading 

and transfer. Part 536 implements the provisions in EISA authorizing NHTSA to establish by 

regulation a credit trading program and directing it to establish by regulation a credit transfer 

program.795 Since its enactment, EPCA has permitted manufacturers to earn credits for 

exceeding the standards and to carry those credits backward or forward. EISA extended the 

“carry-forward” period from three to five model years, and left the “carry-back” period at three 

model years. Under part 536, credit holders (including, but not limited to, manufacturers) will 

have credit accounts with NHTSA, and will be able to hold credits, use them to achieve 

compliance with CAFE standards, transfer them between compliance categories, or trade them. 

A credit may also be cancelled before its expiration date, if the credit holder so chooses. Traded 

and transferred credits are subject to an “adjustment factor” to ensure total oil savings are 

preserved, as required by EISA.796 EISA also prohibits credits earned before MY 2011 from 

being transferred, so NHTSA has developed several regulatory restrictions on trading and 

transferring to facilitate Congress’ intent in this regard. As discussed above, EISA establishes a 

 795 Congress required that DOT establish a credit “transferring” regulation, to allow individual manufacturers to 

move credits from one of their fleets to another (e.g., using a credit earned for exceeding the light truck standard for 

compliance with the domestic passenger car standard). Congress allowed DOT to establish a credit “trading” 

regulation, so that credits may be bought and sold between manufacturers and other parties.

796 NHTSA is proposing to revise the VMT estimates used in the credit adjustment factor for consistency with EPA 

starting in 2017.
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 750 of 770

“cap” for the maximum increase in any compliance category attributable to transferred credits: 

for MYs 2011–2013, transferred credits can only be used to increase a manufacturer’s CAFE 

level in a given compliance category by 1.0 mpg; for MYs 2014–2017, by 1.5 mpg; and for MYs 

2018 and beyond, by 2.0 mpg. No changes are proposed for these Part 536 provisions. 

c. Payment of Civil Penalties 

If a manufacturer’s average miles per gallon for a given compliance category (domestic 

passenger car, imported passenger car, light truck) falls below the applicable standard, and the 

manufacturer cannot make up the difference by using credits earned or acquired, the 

manufacturer is subject to penalties. The penalty, as mentioned, is $5.50 for each tenth of a mpg 

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

multiplied by the total volume of those vehicles in the affected fleet, manufactured for that model 

year. NHTSA has collected $794,921,139.50 to date in CAFE penalties, the largest ever being 

paid by DaimlerChrysler for its MY 2006 import passenger car fleet, $30,257,920.00. For their 

MY 2009 fleets, six manufacturers paid CAFE fines for not meeting an applicable standard—

Fiat, which included Ferrari, Maserati, and Alfa Romeo; Daimler (Mercedes-Benz); Porsche; and 

Tata (Jaguar Land Rover)—for a total of $9,148,425.00. As mentioned above, civil penalties 

paid for CAFE non-compliance go to the U.S. Treasury, and not to DOT or NHTSA. 

NHTSA recognizes that some manufacturers may use the option to pay civil penalties as 

a CAFE compliance flexibility—presumably, when paying civil penalties is deemed more costeffective than applying additional fuel economy-improving technology, or when adding fuel 

economy-improving technology would fundamentally change the characteristics of the vehicle in 

ways that the manufacturer believes its target consumers would not accept. NHTSA has no 

authority under EPCA/EISA to prevent manufacturers from turning to payment of civil penalties 

if they choose to do so. This is another important difference from EPA’s authority under the 

CAA, which allows EPA to revoke a manufacturer’s certificate of conformity that permits it to 

sell vehicles if EPA determines that the manufacturer is in non-compliance, and does not permit 

manufacturers to pay fines in lieu of compliance with applicable standards. 

NHTSA has grappled repeatedly with the issue of whether civil penalties are motivational 

for manufacturers, and whether raising them would increase manufacturers’ compliance with the 

standards. EPCA authorizes increasing the civil penalty very slightly up to $10.00, exclusive of 

inflationary adjustments, if NHTSA decides that the increase in the penalty “will result in, or 

substantially further, substantial energy conservation for automobiles in the model years in 

which the increased penalty may be imposed; and will not have a substantial deleterious impact 

on the economy of the United States, a State, or a region of a State.” 49 U.S.C. 32912(c). 

To support a decision that increasing the penalty would result in “substantial energy 

conservation” without having “a substantial deleterious impact on the economy,” NHTSA would 

likely need to provide some reasonably certain quantitative estimates of the fuel that would be 

saved, and the impact on the economy, if the penalty were raised. Comments received on this 

issue in the past have not explained in clear quantitative terms what the benefits and drawbacks 

to raising the penalty might be. Additionally, it may be that the range of possible increase that 

the statute provides, i.e., up to $10 per tenth of a mpg, is insufficient to result in substantial 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 751 of 770

energy conservation, although changing this would require an amendment to the statute by 

Congress. NHTSA continues to seek to gain information on this issue and requests that 

commenters wishing to address this issue please provide, as specifically as possible, estimates of 

how raising or not raising the penalty amount will or will not substantially raise energy 

conservation and impact the economy. 

4. What new incentives are being added to the CAFE program for MYs 2017-

2025? 

All of the CAFE compliance incentives discussed below are being proposed by EPA 

under its EPCA authority to calculate fuel economy levels for individual vehicles and for fleets. 

Because they are EPA proposals, we refer the reader to Section III for more details, as well as 

Chapter 5 of the draft Joint TSD for more information on the precise mechanics of the 

incentives, but we present them here in summary form so that the reader may understand more 

comprehensively what compliance options are proposed to be available for manufacturers for 

meeting the MYs 2017-2025 CAFE standards. 

 

a. “Game Changing” technologies for full size pick-up trucks 

EPA is proposing to adopt two new types of incentives for improving the fuel economy 

performance of full size pickup trucks. The first incentive would provide a credit to 

manufacturers that employ significant quantities of hybridization on full size pickup trucks. The 

second incentive would provide a performance-based incentive for full size pickup trucks that 

achieve a significant reduction in fuel consumption as compared to the applicable fuel economy 

target for the vehicle in question. These incentives are proposed due to the significant difficulty 

of large trucks, including full size pickup trucks, in meeting CAFE standards while still 

maintaining the levels of utility to which consumers have become accustomed, which require 

higher payload and towing capabilities and greater cargo volumes than other light-duty vehicles. 

Technologies that provide substantial fuel economy benefits are often not attractive to 

manufacturers of large trucks due to these tradeoffs in utility purposes, and therefore have not 

been taken advantage of to the same extent as they have in other vehicle classes. The goal of 

these incentives is to facilitate the application of these “game changing” technologies for large 

pickups, both to save more fuel and to help provide a bridge for industry to more stringent light 

truck standards in MYs 2022-2025 – as manufacturers gain experience with applying more fuelsaving technology for these vehicles and consumers become more accustomed to certain 

advanced technologies in pickup trucks, the agencies anticipate that higher CAFE levels will be 

more feasible for the fleet as a whole.797 In the context of the CAFE program, these incentives 

would be used as an adjustment to a full size pickup truck’s fuel economy performance. The 

same vehicle would not be allowed to receive an adjustment to its calculated fuel economy for 

both the hybridization incentive and the performance-based incentive, to avoid double-counting. 

To accommodate the proposed changes to the CAFE program, NHTSA is proposing to 

adopt new definitions into regulation, 49 CFR 523, “Vehicle Classification.” Part 523 was 

 797 NHTSA is not prohibited from considering this availability of this incentive in determining the maximum 

feasible levels of stringency for the light truck standards, because it is not one of the statutory flexibilities 

enumerated in 49 U.S.C. 32902(h). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 752 of 770

established by NHTSA to include its regulatory definitions for passenger automobiles and trucks 

and to guide the agency and manufacturers in classifying vehicles. NHTSA proposes to add a 

definition in Part 523.2 defining the characteristics that identify full size pickup trucks. NHTSA 

believes that the definition is needed to help explain to readers which characteristics of full size 

pickup truck make them eligible to gain fuel economy improvement values allowed after a 

manufacturer meets either a minimum penetration of hybridized technologies or has other 

technologies that significantly reduce fuel consumption. The proposed improvement would be 

available on a per-vehicle basis for mild and strong HEVs, as well as for other technologies that 

significantly improve the efficiency of full sized pickup trucks. The proposed definition would 

specify that trucks meeting an overall bed width and length as well as a minimum towing or 

payload capacity could be qualified as full size pickup trucks. NHTSA is also proposing to 

modify Part 523 to include definitions for mild and strong hybrid electric full size pickup trucks. 

i. Pickup Truck Hybridization 

One proposed incentive would provide an adjustment to the fuel economy of a 

manufacturer’s full size pickup trucks if the manufacturer employs certain defined hybrid 

technologies on defined significant quantities of its full size pickup trucks. After meeting the 

minimum production percentages, manufacturers would gain an adjustment to the fuel economy 

performance for each “mild” or “strong” hybrid full size pickup truck it produces. 

Manufacturers producing mild hybrid pickup trucks, as defined in Chapter 5 of the draft Joint 

TSD, would gain the incentive by applying mild hybrid technology to at least 30 percent of the 

company’s full sized pickups produced in MY 2017, which would increase each year up to at 

least 80 percent of the company’s full size pickups produced in MY 2021, after which point the 

adjustment is no longer applicable. For strong hybrids, also defined in Chapter 5 of the draft 

Joint TSD, the strong hybrid technology must be applied to at least 10 percent of a company’s 

full sized pickup production in each year for model years 2017-2025. The fuel economy 

adjustment for each mild hybrid full size pickup would be a decrease in measured fuel 

consumption of 0.0011gal/mi; for each strong hybrid full size pickup, the decrease in measured 

fuel consumption would be 0.0023 gal/mi. These adjustments are consistent with the GHG 

credits under EPA’s program of 10 g/mi CO2 for mild hybrid pickups and 20 g/mi CO2 for strong 

hybrid pickups. The specified adjustment in the fuel consumption performance would then be 

subtracted from the fuel consumption performance test result of each applicable hybrid vehicle, 

and the resultant then reciprocated to determine the improved adjusted fuel economy 

performance of each vehicle. EPA would use the adjusted fuel economy of each hybrid vehicle 

weighted to its production sales volume to determine the harmonic average fuel economy 

performance of the manufacturer’s fleet. 

ii. Performance-based incentive for full-size pickups 

Another proposed incentive for full size pickup trucks would provide an adjustment to 

the fuel economy of a manufacturer’s full sized pickup truck if it achieves a fuel economy 

performance level significantly above the CAFE target for that footprint. This incentive 

recognizes that not all manufacturers may wish to pursue hybridization for their pickup trucks, 

but still rewards them for applying fuel-saving technologies above and beyond what they might 

otherwise do. The fuel economy adjustment for each full size pickup that exceeds its applicable 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 753 of 770

footprint curve target by 15 percent would be a decrease in measured fuel consumption of 

0.0011gal/mi; for each full size pickup that exceeds its applicable footprint curve target by 20 

percent, the decrease in measured fuel consumption would be 0.0023 gal/mi. These adjustments 

are consistent with the GHG credits under EPA’s program of 10 g/mi CO2 and 20 g/mi CO2, 

respectively, for beating the applicable CO2 targets by 15 and 20 percent, respectively. 

The 0.0011 gal/mi performance-based adjustment would be available for MYs 2017 to 

2021, and a vehicle meeting the requirement in a given model year would continue to receive the 

credit until MY 2021 – that is, the credit remains applicable to that vehicle model if the target is 

exceeded in only one model year – unless its fuel consumption increases. The 0.0023 gal/mi 

adjustment would be available for a maximum of 5 years within model years 2017-2025, 

provided the vehicle model’s fuel consumption does not increase. As explained above for the 

hybrid incentive, the decrease in each vehicle’s fuel consumption performance would be 

converted to an adjusted fuel economy performance and then averaged to determine the 

manufacturer’s CAFE fleet average value. 

b. A/C efficiency-improving technologies 

Air conditioning (A/C) use places excess load on an engine, which results in additional 

fuel consumption. A number of methods related to the A/C system components and their 

controls can be used to improve A/C system efficiencies. Starting in MY 2017, EPA is 

proposing to allow manufacturers to include fuel consumption reductions resulting from the use 

of improved A/C systems in their CAFE calculations. This will more accurately account for 

achieved real-world fuel economy improvements due to improved A/C technologies, and better 

fulfill EPCA’s overarching purpose of energy conservation. EPA is not proposing to allow 

manufacturers to claim CAFE-related benefits for reducing A/C leakage or switching to an A/C 

refrigerant with a lower global warming potential, because while these improvements reduce 

GHGs consistent with the purpose of the CAA, they do not improve fuel economy and thus are 

not relevant to the CAFE program. 

The improvements that manufacturers would likely use to increase A/C efficiency would 

focus primarily, but not exclusively, on the compressor, electric motor controls, and system 

controls which reduce load on the A/C system (such as reduced “reheat” of the cooled air and 

increased of use re-circulated cabin air). 

Fuel consumption improvement values for CAFE resulting from A/C efficiency 

improvements would be quantified using a two-step process, the same as for the related CO2

credits for EPA’s GHG program. First, the vehicle with the improved A/C system would be 

tested in accordance with EPA testing guidelines, and compared with the baseline fuel 

consumption value for that vehicle. Second, the difference between the baseline fuel 

consumption value and the value for the vehicle with improved A/C technologies would be 

calculated, which would determine the fuel consumption improvement value. A maximum fuel 

consumption improvement value of 0.000563 gal/mi for cars and 0.000586 gal/mi for trucks 

would be available to manufacturers.798 Throughout this section, we discuss these values in 

 798 The maximum credit and fuel consumption improvement values represent the full 42 percent improvement in 

A/C emissions that the agencies estimate is feasible through the use of improved A/C technologies. The credits and 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 754 of 770

terms of fuel consumption, even though ultimate CAFE compliance is determined in miles per 

gallon rather than in gallons per mile. Converting to miles per gallon might assist the reader 

accustomed to thinking in those terms, but would actually complicate the discussion since fuel 

economy, unlike CO2/fuel consumption, is not linear, and fuel economy values would be 

inversely related to CO2 reductions. 

EPA is proposing three different test approaches: (1) an idle test; (2) an idle test with 

displacement weighting; and (3) the “A/C 17 test.” Manufacturers would be allowed to use any 

of those three tests to measure A/C-related CO2 emissions from vehicles with improved A/C 

systems, which would be translated to fuel consumption to establish the ratio between the 

baseline vehicle and the improved-A/C vehicle to determine the value of the fuel consumption 

improvement. The three test procedures are described briefly below. 

i. What are the proposed testing approaches? 

The first test, the “idle test,” is the same as the test that EPA finalized for A/C efficiency 

improvements under the GHG program in the MYs 2012-2016 final rule. The idle test method 

measures CO2 in grams per minute (g/min) while the vehicle is stationary and idling. In the idle 

test method, baseline vehicle emissions are not tested. Emissions of the vehicle with improved 

A/C are compared to a pre-determined baseline emissions level.799 The fuel consumption 

performance is determined using the following equation: grams CO2/mi = 1/mpg * 8,887. 

The second test, the “modified idle test,” uses the same test method as is used in the idle 

test, but includes a correction factor for engine displacement. Engine displacement is not 

accounted for in the idle only test described above. This alternative is being proposed because a 

study conducted by EPA in which 29 vehicles were tested on the idle test showed that vehicles 

with smaller displacement engines have a higher idle test result (in CO2 g/min) than those with 

larger displacement engines. Having the option of taking displacement into account will help 

manufacturers account more accurately for improvements in A/C systems. 

The third test, the “A/C 17 test,” is a more extensive test than the idle test and has four 

elements. Unlike the idle test, it includes two drive cycles, US03 and the highway fuel economy 

cycle, which capture steady state and transient operating conditions. It also includes a solar soak 

period to measure the energy required to cool down a car that has been sitting in the sun, as well 

as a pre-conditioning cycle. The A/C 17 test cycle will be able to capture improvements in all 

areas related to efficient operation of a vehicle’s A/C system. Unlike the other tests, the AC 17 

test cycle measures CO2 emissions in grams per mile (g/mi), and requires that baseline emissions 

be measured in addition to emissions from vehicles with improved A/C systems, unlike the idle 

test where baseline emissions are pre-determined by EPA. 

 fuel consumption improvement values in Table IV.I.1 add up to more than the maximum allowable credit and fuel 

consumption improvement value. This is because some technologies act on the same inefficiencies in the A/C 

system and thus using two such technologies together would not yield additive fuel consumption reductions. 799 EPA conducted idle tests on 29 vehicles to establish fleet average A/C related CO2 emissions. In testing, average 

car and truck A/C CO2 emissions equaled 21.3 grams per minute. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 755 of 770

Manufacturers then use the results of the testing approaches described above to determine 

the total available fuel consumption improvement value they can receive. The following section 

describes how that value is estimated. 

ii. How are fuel consumption improvement values then 

estimated? 

Using idle test results: 

Taking the measured test results in CO2 g/min, if the idle test result is 14.9 g/min or 

lower, manufactures may claim a pre-defined maximum fuel consumption improvement value. 

Manufacturers look up the technologies they have installed on their vehicles (shown in column 1 

of Table IV.I.1) and take the corresponding pre-defined improvement value (columns 3 and 4 for 

cars and trucks, respectively). If a manufacturer uses more than one technology for a given 

vehicle model, the A/C fuel consumption improvement value for each technology can be added, 

but the maximum improvement value possible is limited to 0.000563 gal/mi for cars, and 

0.000586-gal/mi for trucks.800

For vehicles with an idle test result between 14.9 g/min and 21.3 g/min, manufacturers 

are eligible for a partial fuel consumption improvement value, using the following formula: 

Where: 

TCV = the total CO2 credit value that can be claimed by the manufacturer 

TCV1 = the maximum CO2 credit value available, equal to the sum of the reduction for 

the A/C technologies used, and 

ITP = the increase in CO2 emissions shown on the idle test. 

 

Finally, if the vehicle has a test result higher than 21.3 g/min, it would receive zero fuel 

consumption improvement value. 

Using results from the displacement-weighted idle test: 

 800 The maximum credit and fuel consumption improvement values represent the full 42% improvement in A/C 

emissions that the agencies estimate is feasible through the use of improved A/C technologies. The credits and fuel 

consumption improvement values in Table IV.I.1 add up to more than the maximum allowable credit and fuel 

consumption improvement value. This is because some technologies act on the same inefficiencies in the A/C 

system and thus using two such technologies together would not yield additive C02 and fuel consumption 

reductions. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 756 of 770

For an air conditioning system to be eligible to generate fuel consumption improvement 

values, the increased CO2 emissions as a result of the operation of that air conditioning system 

determined according to the idle test procedure must be less than the value calculated by the 

following equation and rounded to the nearest tenth of gram per minute: 

ሻݐ݈ܽܿ݉݁݊݌ݏ݅ܦ ൈ 1.58ሺ െ 20.5 ൌ ݈݀݋݄ݏ݁ݎ݄ܶ	ݐݏܶ݁	݈݀݁ܫ

If the increased CO2 emissions determined from the idle test procedure is less than or 

equal to the Idle Test Threshold, the total fuel consumption improvement value that can be 

claimed by the manufacturer shall be determined by summing the maximum value in Table 

IV.I.1. If the increased CO2 emissions determined from the idle test procedure is greater than the 

Idle Test Threshold but less than the Idle Test Threshold plus 6.4, the total fuel consumption 

improvement value that can be claimed by the manufacturer shall be as determined according to 

the following formula: 

ܶܥܸ ൌ ܶܥܸଵ ൈ ൤1 െ ൬

ܶܶܫ െ ܶܲܫ

6.4 ൰൨

Where: 

TCV = the total CO2 credit value that can be claimed; 

TCV1 = the sum of the CO2 credits for the technologies used in the A/C system; 

ITP = the increased CO2 emissions determined from the idle test procedure in 40 CFR 

86.165–14; and 

ITT = the Idle Test Threshold resulting from the use of the idle test threshold equation. 

TABLE IV.I.1. EFFICIENCY IMPROVING A/C TECHNOLOGIES AND IMPROVEMENT VALUES 

[STILL TO BE FINALIZED] 

Technology Description 

A/C Fuel 

Consumption 

Reduction (% 

of total A/C 

improvement) 

Car A/C 

Fuel 

Efficiency 

Improvement 

Value 

(gals/mi) 

Truck A/C 

Fuel 

Efficiency 

Improvement 

Value 

(gals/mi) 

Reduced reheat, with externallycontrolled, variable-displacement 

compressor 

30% 0.000169 

(30% of 5.0 

g/mi impact) 

0.000248 

(30% of 7.2 

g/mi impact) 

Reduced reheat, with externallycontrolled, fixed-displacement or 

pneumatic variable displacement 

compressor 

20% 0.000113 0.000158 

Default to recirculated air with 30% 0.000169 0.000248 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 757 of 770

closed-loop control of the air supply 

(sensor feedback to control interior 

air quality) whenever the outside 

ambient temperature is 75 °F or 

higher801

Default to recirculated air with openloop control of the air supply (no 

sensor feedback) whenever the 

outside ambient temperature is 75 °F 

or higher802

20% 0.000113 0.000156 

Blower motor control which limit 

wasted electrical energy (e.g. 

pulsewidth modulated power 

controller) 

15% 0.000090 0.000124 

Internal heat exchanger (or suction 

line heat exchanger) 

20% 0.000113 0.000156 

Using results from the A/C 17 test: 

Manufacturers would take the A/C 17 test result on the new vehicle and compare that 

with the result from a baseline vehicle without A/C efficiency-improving technologies to 

demonstrate that less fuel is consumed from A/C operation with the improved A/C system. The 

fuel consumption improvement value is calculated in a same way as it is in the idle test. 

Fuel consumption improvement values due to the improved A/C technologies are derived 

using the approaches described above. Under the NHTSA CAFE program the fuel consumption 

improvement values are subtracted from the subject vehicle’s fuel consumption performance 

value determined from the required CAFE program 2-cycle test results. The resultant would 

then be reciprocated to determine the improved adjusted fuel economy performance value for the 

subject vehicle. EPA would use the adjusted fuel economy value of each vehicle weighted to its 

production sales volume to determine the harmonic average fuel economy performance, CAFE 

value, of the manufacturer’s fleet. Although the form of the NHTSA program standard is in 

miles per gallon, in Table IV.I.1 values are presented in terms of gallons per mile for 

transparency to the reader. 

The agencies seek comment on the proposal to allow manufacturers to estimate fuel 

consumption reductions from the use of A/C efficiency-improving technologies and to apply 

these reductions to their CAFE calculations. 

c. Off-cycle technologies and adjustments 

For MYs 2012-2016, EPA provided an optional credit for new and innovative “off-cycle” 

technologies that reduce vehicle CO2 emissions, but for which the CO2 reduction benefits are not 

 801 Deviations from this temperature are allowed if accompanied by an engineering analysis. 802 Deviations from this temperature are allowed if accompanied by an engineering analysis. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 758 of 770

recognized under the 2-cycle test procedure used to determine compliance with the fleet average 

standards. The off-cycle credit option was intended to encourage the introduction of off-cycle 

technologies that achieve real-world benefits. The off-cycle credits were to be determined using 

the 5-cycle methodology currently used to determine fuel economy label values, which EPA 

established to better represent real-world factors impacting fuel economy, including higher 

speeds and more aggressive driving, colder temperature operation, and the use of air 

conditioning. A manufacturer must determine whether the benefit of the technology could be 

captured using the 5-cycle test; if this determination is affirmative, the manufacture must follow 

the 5-cycle procedures to determine the CO2 reductions. If the manufacturer finds that the 

technology is such that the benefit is not adequately captured using the 5-cycle approach, then 

the manufacturer would have to develop a robust methodology, subject to EPA approval, to 

demonstrate the benefit and determine the appropriate CO2 gram per mile credit. The 

demonstration program must be robust, verifiable, and capable of demonstrating the real-world 

emissions benefit of the technology with strong statistical significance. The non-5-cycle 

approach includes an opportunity for public comment as part of the approval process. 

EPA has been encouraged by automakers’ interest in off-cycle credits since the program 

was finalized and believes that extending the program to MY 2017 and beyond may continue to 

encourage automakers to invest in off-cycle technologies that could have the benefit of realizing 

additional reductions in the light-duty fleet over the longer-term. Therefore, EPA is proposing to 

extend the off-cycle credits program to 2017 and later model years. EPA is also proposing, 

under its EPCA authority, to make available a comparable off-cycle technology incentive under 

the CAFE program beginning in MY 2017. However, instead of manufacturers gaining credits 

as done under the GHG program, a direct adjustment would be made to the manufacturer’s fuel 

economy performance value. 

Starting with MY 2017, manufacturers may generate fuel economy improvements by 

applying technologies listed on the pre-defined and pre-approved technology list provided in 

Table IV.I.2. These credits would be verified and approved as part of certification, with no prior 

approval process needed. This new option should significantly simplify the program for 

manufacturers and provide certainty that improvement values may be generated through the use 

of pre-approved technologies. For improvements from technologies not on the pre-defined list, 

EPA is proposing to clarify the step-by-step application process for demonstration of fuel 

consumption reductions and approval. 

TABLE IV.I.2. OFF-CYCLE TECHNOLOGIES AND PROPOSED IMPROVEMENT VALUES FOR 

PASSENGER CARS AND LIGHT TRUCKS 

Technology Improvement value for 

passenger cars(gal/mi)

Improvement value 

for light trucks 

(gal/mi) 

High Efficiency Exterior Lighting 0.000124 0.000124 

Engine Heat Recovery 0.000778 0.000778 

Solar Roof Panels 0.000338 0.000338 

Active Grill Shutters 0.000113 0.000113 

Active Suspension Lowering 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 759 of 770

Engine Start-Stop 0.000326 0.000506 

Electric Heater Circulation Pump 0.000123 0.000169 

Active Transmission Warm-Up 0.000203 0.000203 

Active Engine Warm-Up 0.000203 0.000203 

Solar Control 0.000338 0.000338 

High Efficiency Exterior Lighting 0.0001 0.0001 

Engine Heat Recovery 0.0001 0.0001 

Solar Roof Panels 0.0003 0.0003 

Active Grill Shutters 0.0001 0.0001 

Active Suspension Lowering 

Engine Start-Stop 0.0003 0.0005 

Electric Heater Circulation Pump 0.0001 0.0002 

Active Transmission Warm-Up 0.0002 0.0002 

Active Engine Warm-Up 

Solar Control 0.0002 0.0002 

An example of technologies that could be used to generate off-cycle improvements are 

those that reduce electrical load and as a result, fuel consumption. The 2-cycle test does not 

require that all electrical components be turned on during testing. Headlights, for example, are 

always turned off during testing. Turning the headlights on during normal driving will add an 

additional load on the vehicle’s electrical system and will affect fuel economy. More efficient 

electrical systems or technologies that offset electrical loads will have a real-world impact on 

fuel economy but are not captured in the 2-cycle test. Therefore, technologies that reduce or 

offset electrical loads related to the operation or safety of the vehicle should merit consideration 

for off-cycle improvements. Reducing the electrical load on a vehicle by 100W will result in an 

average of 0.000337 gallons/mile reduction in fuel consumption over the course of a 2-cycle test, 

or 0.00042 gallons/mile over a 5-cycle test. To determine the off-cycle benefit of certain 100W 

electrical load reduction technologies, the benefit of the technology on the 2-cycle test is 

subtracted from the benefit of the technology on the 5-cycle test. This determines the actual 

benefit of the technology not realized in the 2-cycle test methodology, which in this case is 

0.000416 gal/mi minus 0.000337 gal/mi, or 0.000078 gal/mi. This method will avoid doublecounting the benefit of the electrical load reduction, which is already counted on the 2-cycle test. 

 

Regardless of whether the off-cycle technology fuel consumption benefit is obtained 

from the table (columns 2 or 3) above or is based on an approved testing protocol as indicated in 

the preceding example, under the CAFE program the benefit or credit is treated as an adjustment 

and subtracted from the subject vehicle’s fuel consumption performance value determined from 

the required CAFE program 2-cycle test results. The resultant would then be reciprocated to 

determine the improved adjusted fuel economy performance value for the subject vehicle. EPA 

would use the adjusted fuel economy value of each vehicle weighted to its production sales 

volume to determine the harmonic average fuel economy performance, CAFE value, of the 

manufacturer’s fleet. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 760 of 770

Since one purpose of the off-cycle improvement incentive is to encourage market 

penetration of the technologies (see 75 FR at 25438), EPA is proposing to require minimum 

penetration rates for non-hybrid based listed technologies as a condition for generating 

improvements from the list as a way to further encourage their widespread adoption by MY 2017 

and later. At the end of the model year for which the off-cycle improvement is claimed, 

manufacturers would need to demonstrate that production of vehicles equipped with the 

technologies for that model year exceeded the percentage thresholds in order to receive the listed 

improvement. EPA proposes to set the threshold at 10 percent of a manufacturer’s overall 

combined car and light truck production for all technologies not specific to HEVs. 10 percent 

would seem to be an appropriate threshold as it would encourage manufacturers to develop 

technologies for use on larger volume models and bring the technologies into the mainstream. 

For solar roof panels and electric heat circulation pumps, which are HEV-specific, EPA is not 

proposing a minimum penetration rate threshold for credit generation. Hybrids may be a small 

subset of a manufacturer’s fleet, less than 10 percent in some cases, and EPA does not believe 

that establishing a threshold for hybrid-based technologies would be useful and could 

unnecessarily complicate the introduction of these technologies. The agencies request comments 

on applying this type of threshold, the appropriateness of 10 percent as the threshold for listed 

technologies that are not HEV-specific, and the proposed treatment of hybrid-based 

technologies. 

Because the proposed improvements are based on limited data, however, and because 

some uncertainty is introduced when credits are provided based on a general assessment of offcycle performance as opposed to testing on the individual vehicle models, as part of the incentive 

EPA is proposing to cap the amount of improvement a manufacturer could generate using the 

above list to 0.001125 gal/mile per year on a combined car and truck fleet-wide average basis. 

The cap would not apply on a vehicle model basis, allowing manufacturers the flexibility to 

focus off-cycle technologies on certain vehicle models and generate improvements for that 

vehicle model in excess of 0.001125 gal/mile. If manufacturers wish to generate improvements 

in excess of the 0.001125 gal/mile limit using listed technologies, they could do so by generating 

necessary data and going through the approval process. 

For more details on the testing protocols used for determining off-cycle technology 

benefits and the step-by-step EPA review and approval process refer to Section III.C.5.b.iii and 

v.

5. Other CAFE enforcement issues

e. Electronic Reporting 

Pursuant to 49 CFR part 537, manufacturers submit pre-model year fuel economy reports 

to NHTSA by December 31st prior to the model year, and mid-model year reports by July 31st of 

the model year. Manufacturers may also provide supplemental reports whenever changes are 

needed to a previously submitted CAFE report. NHTSA receives both non-confidential and 

confidential versions of reports, the basic difference being the inclusion of projected upcoming 

production sales volumes in reports seeking confidentiality. Manufacturers must include a 

request for confidentiality, in accordance with 49 CFR part 512, along with the report for which 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 761 of 770

confidential treatment is sought.803 Manufacturers may submit reports either in paper form or 

electronically to a secure e-mail address, cafe@dot.gov, that allows for the safe handling of 

confidential materials. All electronic submissions submitted to the CAFE email must be 

provided in a pdf format. NHTSA added electronic reporting to the 2012-2016 CAFE rule as an 

approach to simplify reporting for manufacturers and NHTSA alike. Currently, most 

manufacturers submit both electronic and paper reports.804 

NHTSA is proposing to modify its reporting requirements to receive all CAFE reports in 

electronic format, thereby eliminating the requirement for paper submissions. In the revised 

requirements, a manufacturer could either submit its reports on a CD-ROM or through the 

existing email procedures. Under the proposal, the contents of the CD must include the 

manufacturer’s request for confidentiality, the cover letter, and any other supporting documents 

in a pdf format. Any data included in the report must be provided in a Microsoft Excel 

spreadsheet format. The same approach is also proposed for submitting information by email. 

NHTSA emphasizes that submitting reports to the CAFE email address is completely voluntary, 

but if the option is selected, the manufacturer must follow the normal deadline dates as specified 

in 49 CFR 537.5. NHTSA believes that receiving CAFE data through electronic reports would 

be a significant improvement, improving the quality of its CAFE data, simplifying enforcement 

activities (e.g., auditing the data), and helping to expedite the tracking and reporting of CAFE 

credits. The agency also plans to eventually develop an XML schema for submitting CAFE 

reports electronically that will available through its website. Ultimately, the XML schema would 

be used as part of the new database system NHTSA plans to construct in the future to store its 

CAFE data. NHTSA seeks comments on the appropriateness of ending paper submissions, as 

well as information on any other electronic formats that should be considered for submissions. 

f. Reporting of how a vehicle is classified as a light truck 

As part of the reporting provisions in 49 CFR part 537, NHTSA requires manufacturers 

to provide information on some, but not all, of the functions and features that a manufacturer 

uses to classify an automobile as a light truck. The required data is distributed throughout the 

report, making it difficult for the agency to clearly and easily determine exactly what functions 

or features a manufacturer is actually using to make this determination. For example, related to 

the functions specified in 49 CFR 523.5(a) and discussed in Section IV.H above, manufacturers 

must provide the vehicles’ passenger and cargo carrying volumes,805 and identify whether their 

vehicles are equipped with three rows of seats that can be removed or folded flat for expanded 

cargo carrying purposes or if the vehicle includes temporary living quarters.806 Manufacturers 

are not required to identify whether the vehicles can transport more than 10 persons or if the 

vehicles are equipped with an open cargo bed. Related to the functions specified in Section 

523.5(b), for each model type classified as an automobile capable of off-highway operation, 

manufacturers are required to provide the five suspension parameter measurements and indicate 

 803 Pursuant to Part 537.12, NHTSA’s Office of Chief Counsel normally grants confidentiality to reports with 

projected production sales volumes until after the model year ends. 

804 For model year 2011, NHTSA received electronic mid-model year reports from 12 manufacturers. Each of the 

manufacturers also provided hardcopy reports.

805 49 CFR 537.7(c)(4)(xvi)(B). 806 49 CFR 537.7(c)(4)(xvii) and (xviii). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 762 of 770

the existence of 4-wheel drive,807 but they are not required to identify a vehicle’s GVWR, which 

is necessary for off-road determination when the vehicle is not equipped with 4-wheel drive. 

NHTSA proposes to eliminate the language requesting vehicle attribute information in Sections 

537.7(c)(4)(xvi)(A)(3) to (6) and (B)(3) to (6) and to relocate that language into a revised Section 

537.7(c)(5) to include identification of all the functions and features that can be used by a 

manufacturer for making a light truck classification determination. By incorporating all the 

requirements into one section, the agency believes the classification process will become 

significantly more accurate and efficient. NHTSA seeks comment on this proposed change. 

g. Base Tire Definition 

Beginning in model year 2011, manufacturers of light trucks and passenger cars are 

required to use vehicle footprint to determine the CAFE standards applicable to each of their 

vehicle fleets. To determine the appropriate footprint-based standards, a manufacturer must 

calculate each vehicle’s footprint value, which is the product of the vehicle track width and 

wheelbase dimensions. Vehicle track width dimensions are determined with a vehicle equipped 

with “base tires,”808 which NHTSA defines as the tire specified as standard equipment by a 

manufacturer on each vehicle configuration of a model type. 

NHTSA is concerned that the definition for “base tire” is insufficiently descriptive, and 

may lead to inconsistencies among manufacturers and a possible avenue for gaming of the 

required standards. In meetings relating to CAFE enforcement, manufacturers have stated that 

various approaches in selecting base tires exist due to differences in the tires considered as 

standard equipment.809 Standard equipment is defined by EPA regulation as those features or 

equipment which are marketed on a vehicle over which the purchaser can exercise no choice, 810

but NHTSA regulations have no comparable definition. NHTSA considered whether adding a 

definition for “standard equipment” would clarify and strengthen the NHTSA regulations, but 

manufactures indicated that the definition of standard equipment provided by EPA does not 

effectively prevent differences in their interpretations. Some manufacturers, for example, view 

the base tire as the tire equipped as standard equipment for each trim level of a model type, as 

each trim level has standard equipment over which the purchaser cannot exercise a choice. This 

view can allow multiple base tires and footprint values within each model type: a manufacturer 

may have two vehicle configurations for a particular model type, with each configuration having 

three trim levels with different standard tires sizes. In that scenario, the model type could have 6 

different trim level vehicle configurations, each having three or more unique footprint values 

with slightly different targets. The additional target fuel economy values could allow the 

manufacturer to reduce its required fleet standard despite a vehicle model type not having any 

inherent differences in physical feature between vehicle configurations other than the tire sizes. 

Other manufacturers, in contrast, avoid designating multiple base tires and choose the standard 

tire equipped on the most basic vehicle configuration of a model type, even if the most basic 

 807 49 CFR 537.7(c)(5). 808 See 49 CFR 523.2. 809 NHTSA has confirmed these differences in approach for the designating base tire exist through review of 

manufacturer-submitted CAFE reports. 

810 In the EPA regulation 40 CFR 600.002-08, standard equipment means those features or equipment which are 

marketed on a vehicle over which the purchaser can exercise no choice. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 763 of 770

vehicle is rarely or never actually sold. In this scenario, the tires being used to derive a 

manufacturer fleet standard are not the same size tire equipped on the representative number of 

vehicles being sold. Yet others designate the base tire as the tire most commonly installed on a 

model type having the highest production volume. This approach most realistically reflects the 

manufacturer’s sales production fleet and eliminates the gaming that can occur from selecting 

multiple base tires. 

To attempt to reconcile the varied approaches for designation and avoid gaming, NHTSA 

is proposing to modify its definition for base tire in 49 CFR 523.2. The proposed modification 

changes the definition of the base tire by dropping the reference to “standard equipment” and 

adding a reference to the “the tire installed by the vehicle manufacturer that is used on the 

highest production sales volume of vehicles within the configuration.” This modification should 

ensure that the tires installed on the vehicle most commonly sold within a vehicle configuration 

become the basis for setting a manufacturer’s fuel economy standards, thereby reducing a 

manufacturer’s ability to game the classification of its vehicles. Specifying one approach will 

also reduce inconsistencies and confusion for both the agency and the manufacturers. NHTSA 

seeks comments on this approach, as well as other approaches that could be used for selecting 

the base tire(s). 

h. Confirming Target and Fleet Standards 

NHTSA requires manufacturers to provide reports containing fleet and model type CAFE 

standards and projections of expected performance results for each model year.811 The footprint, 

track width and wheelbase values are provided for each vehicle configuration within the model 

types making up the manufacturer’s fleets, along with other model type-specific information. 

Because this information is organized by vehicle configuration, instead of by each vehicle with a 

unique model type and footprint combination, it is not in the format needed to calculate 

performance standards. EPA, in contrast, requires manufacturers to provide all of the 

information necessary to calculate footprint values and CAFE standards. EPA provides an 

additional calculator (in the form of an Excel spreadsheet), which all manufacturers use and 

submit as part of their end-of-the-year reports, which includes the appropriate breakdown of 

footprint values for calculating standards. 

Since NHTSA only requires a breakdown of footprint values by vehicle configurations, 

instead of by each unique model type and footprint combination, NHTSA is currently unable to 

verify manufacturers’ reported target standards. By standardizing with EPA’s requirements for 

reported data, NHTSA would both simplify manufacturer reporting efforts and gain the 

necessary information for calculating attribute-based CAFE standards. Therefore, NHTSA is 

proposing to eliminate the language requesting information in Sections 537.7(c)(4)((xvi)(A)(3)-

(6) and (B)(3)-(6), and to relocate that language into a revised Section 537.7(b)(3). 

NHTSA requests comment on this proposed change. 

J. Regulatory notices and analyses

 811 49 CFR 537. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 764 of 770

1. Executive Order 12866, Executive Order 13563, and DOT Regulatory 

Policies and Procedures

Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, Oct. 4, 1993), 

as amended by Executive Order 13563, “Improving Regulation and Regulatory Review” (76 FR 

3821, Jan. 21, 2011), provides for making determinations whether a regulatory action is 

“significant” and therefore subject to OMB review and to the requirements of the Executive 

Order. The Order defines a “significant regulatory action” as one that is likely to result in a rule 

that may: 

1) Have an annual effect on the economy of $100 million or more or adversely affect 

in a material way the economy, a sector of the economy, productivity, 

competition, jobs, the environment, public health or safety, or State, local, or 

Tribal governments or communities; 

2) Create a serious inconsistency or otherwise interfere with an action taken or 

planned by another agency; 

3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan 

programs or the rights and obligations of recipients thereof; or 

4) Raise novel legal or policy issues arising out of legal mandates, the President’s 

priorities, or the principles set forth in the Executive Order. 

The rulemaking proposed in this NPRM will be economically significant if adopted. 

Accordingly, OMB reviewed it under Executive Order 12866. The rule, if adopted, would also 

be significant within the meaning of the Department of Transportation’s Regulatory Policies and 

Procedures. 

The benefits and costs of this proposal are described above. Because the proposed rule 

would, if adopted, be economically significant under both the Department of Transportation’s 

procedures and OMB guidelines, the agency has prepared a Preliminary Regulatory Impact 

Analysis (PRIA) and placed it in the docket and on the agency’s website. Further, pursuant to 

Circular A-4, we have prepared a formal probabilistic uncertainty analysis for this proposal. The 

circular requires such an analysis for complex rules where there are large, multiple uncertainties 

whose analysis raises technical challenges or where effects cascade and where the impacts of the 

rule exceed $1 billion. This proposal meets these criteria on all counts. 

2. National Environmental Policy Act

NHTSA has initiated the Environmental Impact Statement (EIS) process under the 

National Environmental Policy Act (NEPA), 42 U.S.C. 4321-4347, and implementing 

regulations issued by the Council on Environmental Quality (CEQ), 40 CFR part 1500, and 

NHTSA, 49 CFR part 520. On May 10, 2011, NHTSA published a notice of intent to prepare an 

EIS for this rulemaking and requested scoping comments. (76 FR 26996). The notice invited 

Federal, State, and local agencies, Indian tribes, and the public to participate in the scoping 

process and to help identify the environmental issues and reasonable alternatives to be examined 

in the EIS. The scoping notice also provided information about the proposed standards, the 

alternatives NHTSA expects to consider its NEPA analysis, and the scoping process. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 765 of 770

Concurrently with this NPRM, NHTSA is releasing a Draft Environmental Impact 

Statement (DEIS). NHTSA prepared the DEIS to analyze and disclose the potential 

environmental impacts of the proposed MY 2017-2025 CAFE standards for the total fleet of 

passenger cars and light trucks and reasonable alternative standards for the NHTSA CAFE 

program pursuant to the CEQ regulations implementing NEPA, DOT Order 5610.1C, and 

NHTSA regulations. The DEIS compares the potential environmental impacts of alternative 

mile per gallon (mpg) levels that will be considered by NHTSA for the final rule. It also 

analyzes direct, indirect, and cumulative impacts and analyzes impacts in proportion to their 

significance. 

 The DEIS also describes potential environmental impacts to a variety of resources. 

Resources that may be affected by the proposed action and alternatives include water resources, 

biological resources, land use and development, safety, hazardous materials and regulated 

wastes, noise, socioeconomics, and environmental justice. These resource areas were assessed 

qualitatively in the DEIS. 

Throughout the DEIS, NHTSA has relied extensively on findings of the United Nations 

Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change Science Program 

(CCSP), and EPA. Our discussion relies heavily on the most recent, thoroughly peer-reviewed, 

and credible assessments of global and U.S. climate change: the IPCC Fourth Assessment 

Report (Climate Change 2007), EPA’s Endangerment and Cause or Contribute Findings for 

Greenhouse Gases under Section 202(a) of the Clean Air Act and the accompanying Technical 

Support Document (TSD), and CCSP and National Science and Technology Council reports that 

include the Scientific Assessment of the Effects of Global Change on the United States and 

Synthesis and Assessment Products. The DEIS cites these sources and the studies they review 

frequently. 

Because of the link between the transportation sector and GHG emissions, NHTSA 

recognizes the need to consider the possible impacts on climate and global climate change in the 

analysis of the effects of these fuel economy standards. NHTSA also recognizes the difficulties 

and uncertainties involved in such an impact analysis. Accordingly, consistent with CEQ 

regulations on addressing incomplete or unavailable information in environmental impact 

analyses, NHTSA has reviewed existing credible scientific evidence that is relevant to this 

analysis and summarized it in the DEIS. NHTSA has also employed and summarized the results 

of research models generally accepted in the scientific community. 

Although the alternatives have the potential to decrease GHG emissions substantially, 

they do not prevent climate change, but only result in reductions in the anticipated increases in 

CO2 concentrations, temperature, precipitation, and sea level. They would also, to a small 

degree, delay the point at which certain temperature increases and other physical effects 

stemming from increased GHG emissions would occur. As discussed below, NHTSA presumes 

that these reductions in climate effects will be reflected in reduced impacts on affected resources. 

The main direct and indirect effects resulting from the different alternatives analyzed in 

the DEIS are as follows: 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 766 of 770

[to be filled in] 

3. Regulatory Flexibility Act

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by the Small 

Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever an agency is 

required to publish a notice of rulemaking for any proposed or final rule, it must prepare and 

make available for public comment a regulatory flexibility analysis that describes the effect of 

the rule on small entities (i.e., small businesses, small organizations, and small governmental 

jurisdictions). The Small Business Administration’s regulations at 13 CFR part 121 define a 

small business, in part, as a business entity “which operates primarily within the United States.” 

13 CFR 121.105(a). No regulatory flexibility analysis is required if the head of an agency 

certifies the rule will not have a significant economic impact of a substantial number of small 

entities. 

I certify that the proposed rule would not have a significant economic impact on a 

substantial number of small entities. The following is NHTSA’s statement providing the factual 

basis for the certification (5 U.S.C. 605(b)). 

If adopted, the proposal would directly affect nineteen large single stage motor vehicle 

manufacturers.812 The proposal would also affect [how many?] small domestic single stage 

motor vehicle manufacturers, [Saleen and Tesla and perhaps others].813 According to the Small 

Business Administration’s small business size standards (see 13 CFR 121.201), a single stage 

automobile or light truck manufacturer (NAICS code 336111, Automobile Manufacturing; 

336112, Light Truck and Utility Vehicle Manufacturing) must have 1,000 or fewer employees to 

qualify as a small business. [All companies] have fewer than 1,000 employees and make fewer 

than 1,000 vehicles per year. We believe that the rulemaking would not have a significant 

economic impact on these small vehicle manufacturers because under 49 CFR part 525, 

passenger car manufacturers making fewer than 10,000 vehicles per year can petition NHTSA to 

have alternative standards set for those manufacturers. Tesla [and other EV mfrs, possibly VIA, 

Amp, Coda, Fisker, Wheego] produces only electric vehicles with fuel economy values far 

beyond those proposed today, so we would not expect them to need a petition for relief. Saleen 

[and other companies if applicable] modifies a very small number of vehicles produced by one of 

the large single-scale manufacturers, and currently does not meet the generally-applicable 

passenger car CAFE standards, nor is it anticipated to be able to meet the standards proposed 

today. However, Saleen [and other mfrs, need to check Mosler, Panoz, Shelby American Inc., 

Carbon Motors (police cars, therefore already exempted)] already petitions the agency for relief 

under Part 525. If the standard is raised, it has no meaningful impact on Saleen [and other mfrs], 

because it must still go through the same process to petition for relief. Given that there is already 

 812 BMW, Daimler (Mercedes), Fiat/Chrysler (which also includes Ferrari and Maserati for CAFE compliance 

purposes), Ford, Geely (Volvo), General Motors, Honda, Hyundai, Kia, Lotus, Mazda, Mitsubishi, Nissan, Porsche, 

Subaru, Suzuki, Tata (Jaguar Land Rover), Toyota, and Volkswagen/Audi. 

813 The Regulatory Flexibility Act only requires analysis of small domestic manufacturers. These are the only 

passenger car manufacturers we know of, [fill in], and no light truck manufacturers. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 767 of 770

a mechanism for handling small businesses, which is the purpose of the Regulatory Flexibility 

Act, a regulatory flexibility analysis was not prepared. 

4. Executive Order 13132 (Federalism)

Executive Order 13132 requires NHTSA to develop an accountable process to ensure 

“meaningful and timely input by State and local officials in the development of regulatory 

policies that have federalism implications.”814 The Order defines the term “Policies that have 

federalism implications” to include regulations that have “substantial direct effects on the States, 

on the relationship between the national government and the States, or on the distribution of 

power and responsibilities among the various levels of government.” Under the Order, NHTSA 

may not issue a regulation that has federalism implications, that imposes substantial direct 

compliance costs, and that is not required by statute, unless the Federal government provides the 

funds necessary to pay the direct compliance costs incurred by State and local governments, or 

NHTSA consults with State and local officials early in the process of developing the proposed 

regulation. 

NHTSA solicits comment on this proposed action from State and local officials. The 

agency believes that it is unnecessary to address the question of preemption further at this time 

because of the consistent and coordinated Federal standards that would apply nationally under 

the proposed National Program. 

5. Executive Order 12988 (Civil Justice Reform)

Pursuant to Executive Order 12988, “Civil Justice Reform,”815 NHTSA has considered 

whether this rulemaking would have any retroactive effect. This proposed rule does not have 

any retroactive effect. 

6. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal 

agencies to prepare a written assessment of the costs, benefits, and other effects of a proposed or 

final rule that includes a Federal mandate likely to result in the expenditure by State, local, or 

tribal governments, in the aggregate, or by the private sector, of more than $100 million in any 

one year (adjusted for inflation with base year of 1995). Adjusting this amount by the implicit 

gross domestic product price deflator for 2009 results in $134 million (109.729/81.606 = 1.34). 

Before promulgating a rule for which a written statement is needed, section 205 of UMRA 

generally requires NHTSA to identify and consider a reasonable number of regulatory 

alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that 

achieves the objectives of the rule. The provisions of section 205 do not apply when they are 

inconsistent with applicable law. Moreover, section 205 allows NHTSA to adopt an alternative 

other than the least costly, most cost-effective, or least burdensome alternative if the agency 

publishes with the final rule an explanation of why that alternative was not adopted. 

 814 64 FR 43255 (Aug. 10, 1999). 815 61 FR 4729 (Feb. 7, 1996). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 768 of 770

This proposed rule will not result in the expenditure by State, local, or tribal 

governments, in the aggregate, of more than $134 million annually, but it will result in the 

expenditure of that magnitude by vehicle manufacturers and/or their suppliers. In developing 

this proposal, NHTSA considered a variety of alternative average fuel economy standards lower 

and higher than those proposed. NHTSA is statutorily required to set standards at the maximum 

feasible level achievable by manufacturers based on its consideration and balancing of relevant 

factors, and has tentatively concluded that the proposed fuel economy standards are the 

maximum feasible standards for the passenger car and light truck fleets for MYs 2017-2025 in 

light of the statutory considerations. 

7. Regulation Identifier Number

The Department of Transportation assigns a regulation identifier number (RIN) to each 

regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory 

Information Service Center publishes the Unified Agenda in April and October of each year. 

You may use the RIN contained in the heading at the beginning of this document to find this 

action in the Unified Agenda. 

8. Executive Order 13045

Executive Order 13045816 applies to any rule that: (1) is determined to be economically 

significant as defined under E.O. 12866, and (2) concerns an environmental, health, or safety risk 

that NHTSA has reason to believe may have a disproportionate effect on children. If the 

regulatory action meets both criteria, we must evaluate the environmental, health, or safety 

effects of the proposed rule on children, and explain why the proposed regulation is preferable to 

other potentially effective and reasonably foreseeable alternatives considered by us. 

Chapter 5 of NHTSA’s DEIS notes that breathing PM can cause respiratory ailments, 

heart attack, and arrhythmias (Dockery et al. 1993, Samet et al. 2000, Pope et al. 1995, 2002, 

2004, Pope and Dockery 2006, Dominici et al. 2006, Laden et al. 2006, all in Ebi et al. 2008). 

Populations at greatest risk could include children, the elderly, and those with heart and lung 

disease, diabetes (Ebi et al. 2008), and high blood pressure (Künzli et al. 2005, in Ebi et al. 

2008). Chronic exposure to PM could decrease lifespan by 1 to 3 years (Pope 2000, in American 

Lung Association 2008). Increasing PM concentrations are expected to have a measurable 

adverse impact on human health (Confalonieri et al. 2007). 

Additionally, the DEIS notes that substantial morbidity and childhood mortality has been 

linked to water- and food-borne diseases. Climate change is projected to alter temperature and 

the hydrologic cycle through changes in precipitation, evaporation, transpiration, and water 

storage. These changes, in turn, potentially affect water-borne and food-borne diseases, such as 

salmonellosis, campylobacter, leptospirosis, and pathogenic species of vibrio. They also have a 

direct impact on surface water availability and water quality. It has been estimated that more 

than 1 billion people in 2002 did not have access to adequate clean water (McMichael et al. 

2003, in Epstein et al. 2006). Increased temperatures, greater evaporation, and heavy rain events 

have been associated with adverse impacts on drinking water through increased waterborne 

 816 62 FR 19885 (Apr. 23, 1997). 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 769 of 770

diseases, algal blooms, and toxins (Chorus and Bartram 1999, Levin et al. 2002, Johnson and 

Murphy 2004, all in Epstein et al. 2006). A seasonal signature has been associated with waterborne disease outbreaks (EPA 2009b). In the United States, 68 percent of all water-borne 

diseases between 1948 and 1994 were observed after heavy rainfall events (Curriero et al. 2001a, 

in Epstein et al. 2006). 

Climate change could further impact a pathogen by directly affecting its lifecycle (Ebi et 

al. 2008). The global increase in the frequency, intensity, and duration of red tides could be 

linked to local impacts already associated with climate change (Harvell et al. 1999, in Epstein et 

al. 2006); toxins associated with red tide directly affect the nervous system (Epstein et al. 2006). 

Many people do not report or seek medical attention for their ailments of water-borne or 

food-borne diseases; hence, the number of actual cases with these diseases is greater than clinical 

records demonstrate (Mead et al. 1999, in Ebi et al. 2008). Many of the gastrointestinal diseases 

associated with water-borne and food-borne diseases can be self-limiting; however, vulnerable 

populations include young children, those with a compromised immune system, and the elderly. 

Thus, as detailed in the DEIS, NHTSA has evaluated the environmental, health, and 

safety effects of the proposed rule on children. The DEIS also explains why the proposed 

regulation is preferable to other potentially effective and reasonably foreseeable alternatives 

considered by the agency. 

9. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) 

requires NHTSA to evaluate and use existing voluntary consensus standards in its regulatory 

activities unless doing so would be inconsistent with applicable law (e.g., the statutory provisions 

regarding NHTSA’s vehicle safety authority) or otherwise impractical.817

Voluntary consensus standards are technical standards developed or adopted by voluntary 

consensus standards bodies. Technical standards are defined by the NTTAA as “performancebased or design-specific technical specification and related management systems practices.” 

They pertain to “products and processes, such as size, strength, or technical performance of a 

product, process or material.” 

Examples of organizations generally regarded as voluntary consensus standards bodies 

include the American Society for Testing and Materials (ASTM), the Society of Automotive 

Engineers (SAE), and the American National Standards Institute (ANSI). If NHTSA does not 

use available and potentially applicable voluntary consensus standards, we are required by the 

Act to provide Congress, through OMB, an explanation of the reasons for not using such 

standards. 

There are currently no voluntary consensus standards relevant to today’s proposed CAFE 

standards. 

 817 15 U.S.C. 272. 
DRAFT – DELIBERATIVE – PRIVILEGED AND CONFIDENTIAL 

Page 770 of 770

10. Executive Order 13211

Executive Order 13211818 applies to any rule that: (1) is determined to be economically 

significant as defined under E.O. 12866, and is likely to have a significant adverse effect on the 

supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office 

of Information and Regulatory Affairs (OIRA) as a significant regulatory action. If the 

regulatory action meets either criterion, we must evaluate the adverse energy effects of the 

proposed rule and explain why the proposed regulation is preferable to other potentially effective 

and reasonably foreseeable alternatives considered by us. 

The proposed rule seeks to establish passenger car and light truck fuel economy standards 

that will reduce the consumption of petroleum and will not have any adverse energy effects. 

Accordingly, this proposed rulemaking action is not designated as a significant energy action. 

11. Department of Energy Review

In accordance with 49 U.S.C. 32902(j)(1), we submitted this proposed rule to the 

Department of Energy for review. That Department did not make any comments that we have 

not addressed. [Pending conclusion of review, of course] 

12. Plain Language

Executive Order 12866 requires each agency to write all rules in plain language. 

Application of the principles of plain language includes consideration of the following questions: 

 Have we organized the material to suit the public’s needs? 

 Are the requirements in the rule clearly stated? 

 Does the rule contain technical jargon that isn’t clear? 

 Would a different format (grouping and order of sections, use of headings, paragraphing) 

make the rule easier to understand? 

 Would more (but shorter) sections be better? 

 Could we improve clarity by adding tables, lists, or diagrams? 

 What else could we do to make the rule easier to understand? 

If you have any responses to these questions, please include them in your comments on 

this proposal. 

13. Privacy Act

Anyone is able to search the electronic form of all comments received into any of our 

dockets by the name of the individual submitting the comment (or signing the comment, if 

submitted on behalf of an organization, business, labor union, etc.). You may review DOT’s 

complete Privacy Act statement in the Federal Register (65 FR 19477-78, April 11, 2000) or you 

may visit http://www.dot.gov/privacy.html. 

 818 66 FR 28355 (May 18, 2001).