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Monday, 

September 28, 2009 

Part II 

Environmental 

Protection Agency 

40 CFR Parts 86 and 600 

Department of 


Transportation 


National Highway Traffic Safety 

Administration 

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

Proposed Rulemaking To Establish LightDuty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel 

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

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 86 and 600 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Parts 531, 533, 537, and 538 

[EPA–HQ–OAR–2009–0472; FRL–8959–4; 

NHTSA–2009–0059] 

RIN 2060–AP58; RIN 2127–AK90 

Proposed Rulemaking To Establish 

Light-Duty Vehicle Greenhouse Gas 

Emission Standards and Corporate 

Average Fuel Economy Standards 

AGENCY: Environmental Protection 

Agency (EPA) and National Highway 

Traffic Safety Administration (NHTSA). 

ACTION: Proposed rule. 

SUMMARY: EPA and NHTSA are issuing 

this joint proposal to establish a 

National Program consisting of new 

standards for light-duty vehicles that 

will reduce greenhouse gas emissions 

and improve fuel economy. This joint 

proposed rulemaking is consistent with 

the National Fuel Efficiency Policy 

announced by President Obama on May 

19, 2009, responding to the country’s 

critical need to address global climate 

change and to reduce oil consumption. 

EPA is proposing greenhouse gas 

emissions standards under the Clean Air 

Act, and NHTSA is proposing Corporate 

Average Fuel Economy standards under 

the Energy Policy and Conservation Act, 

as amended. These standards apply to 

passenger cars, light-duty trucks, and 

medium-duty passenger vehicles, 

covering model years 2012 through 

2016, and represent a harmonized and 

consistent National Program. Under the 

National Program, automobile 

manufacturers would be able to build a 

single light-duty national fleet that 

satisfies all requirements under both 

programs while ensuring that 

consumers still have a full range of 

vehicle choices. 

FOR FURTHER INFORMATION CONTACT: 

Comments: Comments must be received 

on or before November 27, 2009. Under 

the Paperwork Reduction Act, 

comments on the information collection 

provisions must be received by the 

Office of Management and Budget 

(OMB) on or before October 28, 2009. 

See the SUPPLEMENTARY INFORMATION 

section on ‘‘Public Participation’’ for 

more information about written 

comments. 

Hearings: NHTSA and EPA will 

jointly hold three public hearings on the 

following dates: October 21, 2009 in 

Detroit, Michigan; October 23, 2009 in 

New York, New York; and October 27, 

2009 in Los Angeles, California. EPA 

and NHTSA will announce the 

addresses for each hearing location in a 

supplemental Federal Register Notice. 

The hearings will start at 9 a.m. local 

time and continue until everyone has 

had a chance to speak. See the 

SUPPLEMENTARY INFORMATION section on 

‘‘Public Participation’’ for more 

information about the public hearings. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–HQ– 

OAR–2009–0472 and/or NHTSA–2009– 

0059, by one of the following methods: 

• www.regulations.gov: Follow the 

on-line instructions for submitting 

comments. 

• E-mail: a-and-r-Docket@epa.gov. 

• Fax: EPA: (202) 566–1741; NHTSA: 

(202) 493–2251. 

• Mail: 

Æ EPA: Environmental Protection 

Agency, EPA Docket Center (EPA/DC), 

Air and Radiation Docket, Mail Code 

2822T, 1200 Pennsylvania Avenue, 

NW., Washington, DC 20460, Attention 

Docket ID No. EPA–HQ–OAR–2009– 

0472. In addition, please mail a copy of 

your comments on the information 

collection provisions to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

(OMB), Attn: Desk Officer for EPA, 725 

17th St., NW., Washington, DC 20503. 

Æ NHTSA: Docket Management 

Facility, M–30, U.S. Department of 

Transportation, West Building, Ground 

Floor, Rm. W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590. 

• Hand Delivery: 

Æ EPA: Docket Center, (EPA/DC) EPA 

West, Room B102, 1301 Constitution 

Ave., NW., Washington, DC, Attention 

Docket ID No. EPA–HQ–OAR–2009– 

0472. Such deliveries are only accepted 

during the Docket’s normal hours of 

operation, and special arrangements 

should be made for deliveries of boxed 

information. 

Æ NHTSA: West Building, Ground 

Floor, Rm. W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590, 

between 9 a.m. and 5 p.m. Eastern Time, 

Monday through Friday, except Federal 

Holidays. 

Instructions: Direct your comments to 

Docket ID No. EPA–HQ–OAR–2009– 

0472 and/or NHTSA–2009–0059. See 

the SUPPLEMENTARY INFORMATION section 

on ‘‘Public Participation’’ for more 

information about submitting written 

comments. 

Public Hearing: NHTSA and EPA will 

jointly hold three public hearings on the 

following dates: October 21, 2009 in 

Detroit, Michigan; October 23, 2009 in 

New York, New York; and October 27, 

2009 in Los Angeles, California. EPA 

and NHTSA will announce the 

addresses for each hearing location in a 

supplemental Federal Register Notice. 

See the SUPPLEMENTARY INFORMATION 

section on ‘‘Public Participation’’ for 

more information about the public 

hearings. 

Docket: All documents in the dockets 

are listed in the www.regulations.gov 

index. Although listed in the index, 

some information is not publicly 

available, e.g., confidential business 

information (CBI) or other information 

whose disclosure is restricted by statute. 

Certain other material, such as 

copyrighted material, will be publicly 

available only in hard copy. Publicly 

available docket materials are available 

either electronically in 

www.regulations.gov or in hard copy at 

the following locations: EPA: EPA 

Docket Center, EPA/DC, EPA West, 

Room 3334, 1301 Constitution Ave., 

NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744. NHTSA: Docket 

Management Facility, M–30, U.S. 

Department of Transportation, West 

Building, Ground Floor, Rm. W12–140, 

1200 New Jersey Avenue, SE, 

Washington, DC 20590. The Docket 

Management Facility is open between 9 

a.m. and 5 p.m. Eastern Time, Monday 

through Friday, except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: 

EPA: Tad Wysor, Office of 

Transportation and Air Quality, 

Assessment and Standards Division, 

Environmental Protection Agency, 2000 

Traverwood Drive, Ann Arbor MI 

48105; telephone number: 734–214– 

4332; fax number: 734–214–4816; e-mail 

address: wysor.tad@epa.gov, or 

Assessment and Standards Division 

Hotline; telephone number (734) 214– 

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

NHTSA: Rebecca Yoon, Office of Chief 

Counsel, National Highway Traffic 

Safety Administration, 1200 New Jersey 

Avenue, SE., Washington, DC 20590. 

Telephone: (202) 366–2992. 

SUPPLEMENTARY INFORMATION: 

A. Does This Action Apply to Me? 

This action affects companies that 

manufacture or sell new light-duty 

vehicles, light-duty trucks, and 

medium-duty passenger vehicles, as 

defined under EPA’s CAA regulations,1 

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

and passenger automobiles (passenger CAFE regulations.2 Regulated categories 

cars) and non-passenger automobiles and entities include: 

(light trucks) as defined under NHTSA’s 

Category NAICS 

codes A Examples of potentially regulated entities 

Industry ...................................................................... 

Industry ...................................................................... 

336111 

336112 

811112 

811198 

541514 

Motor vehicle manufacturers. 

Commercial Importers of Vehicles and Vehicle Components. 

A North American Industry Classification System (NAICS). 

This list is not intended to be 

exhaustive, but rather provides a guide 

regarding entities likely to be regulated 

by this action. To determine whether 

particular activities may be regulated by 

this action, you should carefully 

examine the regulations. You may direct 

questions regarding the applicability of 

this action to the person listed in FOR 

FURTHER INFORMATION CONTACT. 

B. Public Participation 

NHTSA and EPA request comment on 

all aspects of this joint proposed rule. 

This section describes how you can 

participate in this process. 

How Do I Prepare and Submit 

Comments? 

In this joint proposal, there are many 

issues common to both EPA’s and 

NHTSA’s proposals. For the 

convenience of all parties, comments 

submitted to the EPA docket will be 

considered comments submitted to the 

NHTSA docket, and vice versa. An 

exception is that comments submitted to 

the NHTSA docket on the Draft 

Environmental Impact Statement will 

not be considered submitted to the EPA 

docket. Therefore, the public only needs 

to submit comments to either one of the 

two agency dockets. Comments that are 

submitted for consideration by one 

agency should be identified as such, and 

comments that are submitted for 

consideration by both agencies should 

be identified as such. Absent such 

identification, each agency will exercise 

its best judgment to determine whether 

a comment is submitted on its proposal. 

Further instructions for submitting 

comments to either the EPA or NHTSA 

docket are described below. 

EPA: Direct your comments to Docket 

ID No EPA–HQ–OAR–2009–0472. EPA’s 

policy is that all comments received 

will be included in the public docket 

without change and may be made 

vehicle’’ means a passenger car, the term ‘‘lightduty truck’’ means a pick-up truck, sport-utility 

vehicle, or minivan of up to 8,500 lbs gross vehicle 

weight rating, and ‘‘medium-duty passenger 

vehicle’’ means a sport-utility vehicle or passenger 

available online at www.regulations.gov, 

including any personal information 

provided, unless the comment includes 

information claimed to be Confidential 

Business Information (CBI) or other 

information whose disclosure is 

restricted by statute. Do not submit 

information that you consider to be CBI 

or otherwise protected through 

www.regulations.gov or e-mail. The 

www.regulations.gov Web site is an 

‘‘anonymous access’’ system, which 

means EPA will not know your identity 

or contact information unless you 

provide it in the body of your comment. 

If you send an e-mail comment directly 

to EPA without going through 

www.regulations.gov your e-mail 

address will be automatically captured 

and included as part of the comment 

that is placed in the public docket and 

made available on the Internet. If you 

submit an electronic comment, EPA 

recommends that you include your 

name and other contact information in 

the body of your comment and with any 

disk or CD–ROM you submit. If EPA 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EPA may not be 

able to consider your comment. 

Electronic files should avoid the use of 

special characters, any form of 

encryption, and be free of any defects or 

viruses. For additional information 

about EPA’s public docket visit the EPA 

Docket Center homepage at http:// 

www.epa.gov/epahome/dockets.htm. 

NHTSA: Your comments must be 

written and in English. To ensure that 

your comments are correctly filed in the 

Docket, please include the Docket 

number NHTSA–2009–0059 in your 

comments. Your comments must not be 

more than 15 pages long.3 NHTSA 

established this limit to encourage you 

to write your primary comments in a 

concise fashion. However, you may 

attach necessary additional documents 

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. 

to your comments. There is no limit on 

the length of the attachments. If you are 

submitting comments electronically as a 

PDF (Adobe) file, we ask that the 

documents submitted be scanned using 

the Optical Character Recognition (OCR) 

process, thus allowing the agencies to 

search and copy certain portions of your 

submissions.4 Please note that pursuant 

to the Data Quality Act, in order for the 

substantive data to be relied upon and 

used by the agencies, it must meet the 

information quality standards set forth 

in the OMB and Department of 

Transportation (DOT) Data Quality Act 

guidelines. Accordingly, we encourage 

you to consult the guidelines in 

preparing your comments. OMB’s 

guidelines may be accessed at http:// 

www.whitehouse.gov/omb/fedreg/ 

reproducible.html. DOT’s guidelines 

may be accessed at http://www.dot.gov/ 

dataquality.htm. 

Tips for Preparing Your Comments 

When submitting comments, 

remember to: 

• Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

• Follow directions—The agency may 

ask you to respond to specific questions 

or organize comments by referencing a 

Code of Federal Regulations (CFR) part 

or section number. 

• Explain why you agree or disagree, 

suggest alternatives, and substitute 

language for your requested changes. 

• Describe any assumptions and 

provide any technical information and/ 

or data that you used. 

• If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

• Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

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

• Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

Make sure to submit your comments 

by the comment period deadline 

identified in the DATES section above. 

How Can I Be Sure That My Comments 

Were Received? 

NHTSA: If you submit your comments 

by mail and wish Docket Management 

to notify you upon its receipt of your 

comments, enclose a self-addressed, 

stamped postcard in the envelope 

containing your comments. Upon 

receiving your comments, Docket 

Management will return the postcard by 

mail. 

How Do I Submit Confidential Business 

Information? 

Any confidential business 

information (CBI) submitted to one of 

the agencies will also be available to the 

other agency. However, as with all 

public comments, any CBI information 

only needs to be submitted to either one 

of the agencies’ dockets and it will be 

available to the other. Following are 

specific instructions for submitting CBI 

to either agency. 

EPA: Do not submit CBI to EPA 

through http://www.regulations.gov or 

e-mail. Clearly mark the part or all of 

the information that you claim to be 

CBI. For CBI information in a disk or 

CD–ROM that you mail to EPA, mark 

the outside of the disk or CD–ROM as 

CBI and then identify electronically 

within the disk or CD–ROM the specific 

information that is claimed as CBI. In 

addition to one complete version of the 

comment that includes information 

claimed as CBI, a copy of the comment 

that does not contain the information 

claimed as CBI must be submitted for 

inclusion in the public docket. 

Information so marked will not be 

disclosed except in accordance with 

procedures set forth in 40 CFR part 2. 

NHTSA: If you wish to submit any 

information under a claim of 

confidentiality, you should submit three 

copies of your complete submission, 

including the information you claim to 

be confidential business information, to 

the Chief Counsel, NHTSA, at the 

address given above under FOR FURTHER 

INFORMATION CONTACT. When you send a 

comment containing confidential 

business information, you should 

include a cover letter setting forth the 

information specified in our 

confidential business information 

regulation.5 

In addition, you should submit a copy 

from which you have deleted the 

5 See 49 CFR part 512. 

claimed confidential business 

information to the Docket by one of the 

methods set forth above. 

Will the Agencies Consider Late 

Comments? 

NHTSA and EPA will consider all 

comments received before the close of 

business on the comment closing date 

indicated above under DATES. To the 

extent practicable, we will also consider 

comments received after that date. If 

interested persons believe that any new 

information the agency places in the 

docket affects their comments, they may 

submit comments after the closing date 

concerning how the agency should 

consider that information for the final 

rule. However, the agencies’ ability to 

consider any such late comments in this 

rulemaking will be limited due to the 

time frame for issuing a final rule. 

If a comment is received too late for 

us to practicably consider in developing 

a final rule, we will consider that 

comment as an informal suggestion for 

future rulemaking action. 

How Can I Read the Comments 

Submitted by Other People? 

You may read the materials placed in 

the docket for this document (e.g., the 

comments submitted in response to this 

document by other interested persons) 

at any time by going to http:// 

www.regulations.gov. Follow the online 

instructions for accessing the dockets. 

You may also read the materials at the 

EPA Docket Center or NHTSA Docket 

Management Facility by going to the 

street addresses given above under 

ADDRESSES. 

How Do I Participate in the Public 

Hearings? 

NHTSA and EPA will jointly host 

three public hearings on the dates and 

locations described in the DATES and 

ADDRESSES sections above. 

If you would like to present testimony 

at the public hearings, we ask that you 

notify the EPA and NHTSA contact 

persons listed under FOR FURTHER 

INFORMATION CONTACT at least ten days 

before the hearing. Once EPA and 

NHTSA learn how many people have 

registered to speak at the public hearing, 

we will allocate an appropriate amount 

of time to each participant, allowing 

time for lunch and necessary breaks 

throughout the day. For planning 

purposes, each speaker should 

anticipate speaking for approximately 

ten minutes, although we may need to 

adjust the time for each speaker if there 

is a large turnout. We suggest that you 

bring copies of your statement or other 

material for the EPA and NHTSA panels 

and the audience. It would also be 

helpful if you send us a copy of your 

statement or other materials before the 

hearing. To accommodate as many 

speakers as possible, we prefer that 

speakers not use technological aids (e.g., 

audio-visuals, computer slideshows). 

However, if you plan to do so, you must 

notify the contact persons in the FOR 

FURTHER INFORMATION CONTACT section 

above. You also must make 

arrangements to provide your 

presentation or any other aids to 

NHTSA and EPA in advance of the 

hearing in order to facilitate set-up. In 

addition, we will reserve a block of time 

for anyone else in the audience who 

wants to give testimony. 

The hearing will be held at a site 

accessible to individuals with 

disabilities. Individuals who require 

accommodations such as sign language 

interpreters should contact the persons 

listed under FOR FURTHER INFORMATION 

CONTACT section above no later than ten 

days before the date of the hearing. 

NHTSA and EPA will conduct the 

hearing informally, and technical rules 

of evidence will not apply. We will 

arrange for a written transcript of the 

hearing and keep the official record of 

the hearing open for 30 days to allow 

you to submit supplementary 

information. You may make 

arrangements for copies of the transcript 

directly with the court reporter. 

Table of Contents 

I. Overview of Joint EPA/NHTSA National 

Program 

A. Introduction 

1. Building Blocks of the National Program 

2. Joint Proposal for a National Program 

B. Summary of the Joint Proposal 

C. Background and Comparison of NHTSA 

and EPA Statutory Authority 

1. NHTSA Statutory Authority 

2. EPA Statutory Authority 

3. Comparing the Agencies’ Authority 

D. Summary of the Proposed Standards for 

the National Program 

1. Joint Analytical Approach 

2. Level of the Standards 

3. Form of the Standards 

E. Summary of Costs and Benefits for the 

Joint Proposal 

1. Summary of Costs and Benefits of 


Proposed NHTSA CAFE Standards 


2. Summary of Costs and Benefits of 


Proposed EPA GHG Standards 


F. Program Flexibilities for Achieving 

Compliance 

1. CO2/CAFE Credits Generated Based on 

Fleet Average Performance 

2. Air Conditioning Credits 

3. Flex-Fuel and Alternative Fuel Vehicle 

Credits 

4. Temporary Lead-time Allowance 


Alternative Standards 


5. Additional Credit Opportunities Under 

the CAA 

G. Coordinated Compliance 

H. Conclusion 
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II. Joint Technical Work Completed for This 

Proposal 

A. Introduction 

B. How Did NHTSA and EPA Develop the 

Baseline Market Forecast? 

1. Why Do the Agencies Establish a 


Baseline Vehicle Fleet? 


2. How Do the Agencies Develop the 


Baseline Vehicle Fleet? 


3. How Is the Development of the Baseline 

Fleet for this Proposal Different From 

NHTSA’s Historical Approach, and Why 

is This Approach Preferable? 

4. How Does Manufacturer Product Plan 

Data Factor Into the Baseline Used in 

This Proposal? 

C. Development of Attribute-Based Curve 

Shapes 

D. Relative Car-Truck Stringency 

E. Joint Vehicle Technology Assumptions 

1. What Technologies Do the Agencies 


Consider? 


2. How Did the Agencies Determine the 

Costs and Effectiveness of Each of These 

Technologies? 

F. Joint Economic Assumptions 

III. EPA Proposal for Greenhouse Gas 

Vehicle Standards 

A. Executive Overview of EPA Proposal 

1. Introduction 

2. Why Is EPA Proposing This Rule? 

3. What Is EPA Proposing? 

4. Basis for the Proposed GHG Standards 

Under Section 202(a) 

B. Proposed GHG Standards for Light-Duty 

Vehicles, Light-Duty Trucks, and 

Medium-Duty Passenger Vehicles 

1. What Fleet-Wide Emissions Levels 


Correspond to the CO2 Standards? 


2. What Are the CO2 Attribute-Based 


Standards? 


3. Overview of How EPA’s Proposed CO2 

Standards Would Be Implemented for 

Individual Manufacturers 

4. Averaging, Banking, and Trading 


Provisions for CO2 Standards 


5. CO2 Temporary Lead-Time Allowance 

Alternative Standards 

6. Proposed Nitrous Oxide and Methane 

Standards 

7. Small Entity Deferment 

C. Additional Credit Opportunities for CO2 

Fleet Average Program 

1. Air Conditioning Related Credits 

2. Flex Fuel and Alternative Fuel Vehicle 

Credits 

3. Advanced Technology Vehicle Credits 

for Electric Vehicles, Plug-in Hybrids, 

and Fuel Cells 

4. Off-cycle Technology Credits 

5. Early Credit Options 

D. Feasibility of the Proposed CO2 Standards 

1. How Did EPA Develop a Reference 

Vehicle Fleet for Evaluating Further CO2 

Reductions? 

2. What Are the Effectiveness and Costs of 

CO2-Reducing Technologies? 

3. How Can Technologies Be Combined 

into ‘‘Packages’’ and What Is the Cost 

and Effectiveness of Packages? 

4. Manufacturer’s Application of 


Technology 


5. How Is EPA Projecting That a 

Manufacturer Would Decide Between 

Options To Improve CO2 Performance To 

Meet a Fleet Average Standard? 

6. Why Are the Proposed CO2 Standards 

Feasible? 

7. What Other Fleet-Wide CO2 Levels Were 

Considered? 

E. Certification, Compliance, and 

Enforcement 

1. Compliance Program Overview 

2. Compliance With Fleet-Average CO2
 

Standards 


3. Vehicle Certification 

4. Useful Life Compliance 

5. Credit Program Implementation 

6. Enforcement 

7. Prohibited Acts in the CAA 

8. Other Certification Issues 

9. Miscellaneous Revisions to Existing 


Regulations 


10. Warranty, Defect Reporting, and Other 

Emission-related Components Provisions 

11. Light Vehicles and Fuel Economy 


Labeling 


F. How Would This Proposal Reduce GHG 

Emissions and Their Associated Effects? 

1. Impact on GHG Emissions 

2. Overview of Climate Change Impacts 

From GHG Emissions 

3. Changes in Global Mean Temperature 

and Sea-Level Rise Associated With the 

Proposal’s GHG Emissions Reductions 

4. Weight Reduction and Potential Safety 

Impacts 

G. How Would the Proposal Impact NonGHG Emissions and Their Associated 

Effects? 

1. Upstream Impacts of Program 

2. Downstream Impacts of Program 

3. Health Effects of Non-GHG Pollutants 

4. Environmental Effects of Non-GHG 


Pollutants 


5. Air Quality Impacts of Non-GHG 


Pollutants 


H. What Are the Estimated Cost, Economic, 

and Other Impacts of the Proposal? 

1. Conceptual Framework for Evaluating 

Consumer Impacts 

2. Costs Associated With the Vehicle 


Program 


3. Cost per Ton of Emissions Reduced 

4. Reduction in Fuel Consumption and Its 

Impacts 

5. Impacts on U.S. Vehicle Sales and 


Payback Period 


6. Benefits of Reducing GHG Emissions 

7. Non-Greenhouse Gas Health and 


Environmental Impacts 


8. Energy Security Impacts 

9. Other Impacts 

10. Summary of Costs and Benefits 

I. Statutory and Executive Order Reviews 

1. Executive Order 12866: Regulatory 


Planning and Review 


2. Paperwork Reduction Act 

3. Regulatory Flexibility Act 

4. Unfunded Mandates Reform Act 

5. Executive Order 13132 (Federalism) 

6. Executive Order 13175 (Consultation 

and Coordination With Indian Tribal 

Governments) 

7. Executive Order 13045: ‘‘Protection of 

Children From Environmental Health 

Risks and Safety Risks’’ 

8. Executive Order 13211 (Energy Effects) 

9. National Technology Transfer 


Advancement Act 


10. Executive Order 12898: Federal Actions 

to Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

J. Statutory Provisions and Legal Authority 

IV. NHTSA Proposal for Passenger Car and 

Light Truck CAFE Standards for MYs 2012– 

2016 

A. Executive Overview of NHTSA Proposal 

1. Introduction 

2. Role of Fuel Economy Improvements in 

Promoting Energy Independence, Energy 

Security, and a Low Carbon Economy 

3. The National Program 

4. Review of CAFE Standard Setting 

Methodology Per the President’s January 

26, 2009 Memorandum on CAFE 

Standards for MYs 2011 and Beyond 

5. Summary of the Proposed MY 2012– 

2016 CAFE Standards 

B. Background 

1. Chronology of Events Since the National 

Academy of Sciences Called for 

Reforming and Increasing CAFE 

Standards 

2. NHTSA Issues Final Rule Establishing 

Attribute-Based CAFE Standards for MY 

2008–2011 Light Trucks (March 2006) 

3. Ninth Circuit Issues Decision re Final 

Rule for MY 2008–2011 Light Trucks 

(November 2007) 

4. Congress Enacts Energy Security and 

Independence Act of 2007 (December 

2007) 

5. NHTSA Proposes CAFE Standards for 

MYs 2011–2015 (April 2008) 

6. Ninth Circuit Revises Its Decision re 

Final Rule for MY 2008–2011 Light 

Trucks (August 2008) 

7. NHTSA Releases Final Environmental 

Impact Statement (October 2008) 

8. Department of Transportation Decides 

not to Issue MY 2011–2015 final Rule 

(January 2009) 

9. The President Requests NHTSA to Issue 

Final Rule for MY 2011 Only (January 

2009) 

10. NHTSA Issues Final Rule for MY 2011 

(March 2009) 

11. Energy Policy and Conservation Act, as 

Amended by the Energy Independence 

and Security Act 

C. Development and Feasibility of the 

Proposed Standards 

1. How Was the Baseline Vehicle Fleet 

Developed? 

2. How were the Technology Inputs 


Developed? 


3. How Did NHTSA Develop the Economic 

Assumption Inputs? 

4. How Does NHTSA Use the Assumptions 

in Its Modeling Analysis? 

5. How Did NHTSA Develop the Shape of 

the Target Curves for the Proposed 

Standards? 

D. Statutory Requirements 

1. EPCA, as Amended by EISA 

2. Administrative Procedure Act 

3. National Environmental Policy Act 

E. What Are the Proposed CAFE Standards? 

1. Form of the Standards 

2. Passenger Car Standards for MYs 2012– 

2016 

3. Minimum Domestic Passenger Car 


Standards 


4. Light Truck Standards 

F. How Do the Proposed Standards Fulfill 

NHTSA’s Statutory Obligations? 
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49458 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

G. Impacts of the Proposed CAFE Standards 

1. How Would These Proposed Standards 

Improve Fuel Economy and Reduce GHG 

Emissions for MY 2012–2016 Vehicles? 

2. How Would These Proposed Standards 

Improve Fleet-Wide Fuel Economy and 

Reduce GHG Emissions Beyond MY 

2016? 

3. How Would These Proposed Standards 

Impact Non-GHG Emissions and Their 

Associated Effects? 

4. What Are the Estimated Costs and 

Benefits of These Proposed Standards? 

5. How Would These Proposed Standards 

Impact Vehicle Sales? 

6. What Are the Consumer Welfare Impacts 

of These Proposed Standards? 

7. What Are the Estimated Safety Impacts 

of These Proposed Standards? 

8. What Other Impacts (Quantitative and 

Unquantifiable) Will These Proposed 

Standards Have? 

H. Vehicle Classification 

I. Compliance and Enforcement 

1. Overview 

2. How Does NHTSA Determine 


Compliance? 


3. What Compliance Flexibilities Are 

Available under the CAFE Program and 

How Do Manufacturers Use Them? 

4. Other CAFE Enforcement Issues— 


Variations in Footprint 


J. Other Near-Term Rulemakings Mandated 

by EISA 

1. Commercial Medium- and Heavy-Duty 

On-Highway Vehicles and Work Trucks 

2. Consumer Information 

K. Regulatory Notices and Analyses 

1. Executive Order 12866 and DOT 


Regulatory Policies and Procedures 


2. National Environmental Policy Act 

3. Regulatory Flexibility Act 

4. Executive Order 13132 (Federalism) 

5. Executive Order 12988 (Civil Justice 


Reform) 


6. Unfunded Mandates Reform Act 

7. Paperwork Reduction Act 

8. Regulation Identifier Number 

9. Executive Order 13045 

10. National Technology Transfer and 


Advancement Act 


11. Executive Order 13211 

12. Department of Energy Review 

13. Plain Language 

14. Privacy Act 

I. Overview of Joint EPA/NHTSA 

National Program 

A. Introduction 

The National Highway Traffic Safety 

Administration (NHTSA) and the 

Environmental Protection Agency (EPA) 

are each announcing proposed rules 

whose benefits would address the 

urgent and closely intertwined 

challenges of energy independence and 

security and global warming. These 

proposed rules call for a strong and 

coordinated Federal greenhouse gas and 

fuel economy program for passenger 

cars, light-duty-trucks, and mediumduty passenger vehicles (hereafter lightduty vehicles), referred to as the 

National Program. The proposed rules 

can achieve substantial reductions of 

greenhouse gas (GHG) emissions and 

improvements in fuel economy from the 

light-duty vehicle part of the 

transportation sector, based on 

technology that is already being 

commercially applied in most cases and 

that can be incorporated at a reasonable 

cost. 

This joint notice is consistent with the 

President’s announcement on May 19, 

2009 of a National Fuel Efficiency 

Policy of establishing consistent, 

harmonized, and streamlined 

requirements that would reduce 

greenhouse gas emissions and improve 

fuel economy for all new cars and lightduty trucks sold in the United States.6 

The National Program holds out the 

promise of delivering additional 

environmental and energy benefits, cost 

savings, and administrative efficiencies 

on a nationwide basis that might not be 

available under a less coordinated 

approach. The proposed National 

Program also offers the prospect of 

regulatory convergence by making it 

possible for the standards of two 

different Federal agencies and the 

standards of California and other States 

to act in a unified fashion in providing 

these benefits. This would allow 

automakers to produce and sell a single 

fleet nationally. Thus, it may also help 

to mitigate the additional costs that 

manufacturers would otherwise face in 

having to comply with multiple sets of 

Federal and State standards. This joint 

notice is also consistent with the Notice 

of Upcoming Joint Rulemaking issued 

by DOT and EPA on May 19 7 and 

responds to the President’s January 26, 

2009 memorandum on CAFE standards 

for model years 2011 and beyond,8 the 

details of which can be found in Section 

IV of this joint notice. 

1. Building Blocks of the National 

Program 

The National Program is both needed 

and possible because the relationship 

between improving fuel economy and 

reducing CO2 tailpipe emissions is a 

very direct and close one. The amount 

of those CO2 emissions is essentially 

6 President Obama Announces National Fuel 

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

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

the_press_office/President-Obama-AnnouncesNational-Fuel-Efficiency-Policy/ (last accessed 

August 18, 2009). Remarks by the President on 

National Fuel Efficiency Standards, The White 

House, May 19, 2009. Available at: http://www. 

whitehouse.gov/the_press_office/Remarks-by-thePresident-on-national-fuel-efficiency-standards/ 

(Last accessed August 18, 2009). 

7 74 FR 24007 (May 22, 2009). 

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

the_press_office/Presidential_Memorandum_ 

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

constant per gallon combusted of a 

given type of fuel. Thus, the more fuel 

efficient a vehicle is, the less fuel it 

burns to travel a given distance. The less 

fuel it burns, the less CO2 it emits in 

traveling that distance.9 While there are 

emission control technologies that 

reduce the pollutants (e.g., carbon 

monoxide) produced by imperfect 

combustion of fuel by capturing or 

destroying them, there is no such 

technology for CO2. Further, while some 

of those pollutants can also be reduced 

by achieving a more complete 

combustion of fuel, doing so only 

increases the tailpipe emissions of CO2. 

Thus, there is a single pool of 

technologies for addressing these twin 

problems, i.e., those that reduce fuel 

consumption and thereby reduce CO2 

emissions as well. 

a. DOT’s CAFE Program 

In 1975, Congress enacted the Energy 

Policy and Conservation Act (EPCA), 

mandating that NHTSA establish and 

implement a regulatory program for 

motor vehicle fuel economy to meet the 

various facets of the need to conserve 

energy, including ones having energy 

independence and security, 

environmental and foreign policy 

implications. Fuel economy gains since 

1975, due both to the standards and 

market factors, have resulted in saving 

billions of barrels of oil and avoiding 

billions of metric tons of CO2 emissions. 

In December 2007, Congress enacted the 

Energy Independence and Securities Act 

(EISA), amending EPCA to require 

substantial, continuing increases in fuel 

economy standards. 

The CAFE standards address most, 

but not all, of the real world CO2 

emissions because EPCA requires the 

use of 1975 passenger car test 

procedures under which vehicle air 

conditioners are not turned on during 

fuel economy testing.10 Fuel economy is 

determined by measuring the amount of 

CO2 and other carbon compounds 

emitted from the tailpipe, not by 

attempting to measure directly the 

amount of fuel consumed during a 

vehicle test, a difficult task to 

accomplish with precision. The carbon 

content of the test fuel 11 is then used to 

calculate the amount of fuel that had to 

be consumed per mile in order to 

9 Panel on Policy Implications of Greenhouse 

Warming, National Academy of Sciences, National 

Academy of Engineering, Institute of Medicine, 

‘‘Policy Implications of Greenhouse Warming: 

Mitigation, Adaptation, and the Science Base,’’ 

National Academies Press, 1992. p. 287. 

10 EPCA does not require the use of 1975 test 

procedures for light trucks. 

11 This is the method that EPA uses to determine 

compliance with NHTSA’s CAFE standards. 
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produce that amount of CO2. Finally, 

that fuel consumption figure is 

converted into a miles-per-gallon figure. 

CAFE standards also do not address the 

5–8 percent of GHG emissions that are 

not CO2, i.e., nitrous oxide (N2O), and 

methane (CH4) as well as emissions of 

CO2 and hydrofluorocarbons (HFCs) 

related to operation of the air 

conditioning system. 

b. EPA’s Greenhouse Gas Standards for 

Light-Duty Vehicles 

Under the Clean Air Act EPA is 

responsible for addressing air pollutants 

from motor vehicles. On April 2, 2007, 

the U.S. Supreme Court issued its 

opinion in Massachusetts v. EPA,12 a 

case involving a 2003 order of the 

Environmental Protection Agency (EPA) 

denying a petition for rulemaking to 

regulate greenhouse gas emissions from 

motor vehicles under section 202(a) of 

the Clean Air Act (CAA).13 The Court 

held that greenhouse gases were air 

pollutants for purposes of the Clean Air 

Act and further held that the 

Administrator must determine whether 

or not emissions from new motor 

vehicles cause or contribute to air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare, or whether the science is too 

uncertain to make a reasoned decision. 

The Court further ruled that, in making 

these decisions, the EPA Administrator 

is required to follow the language of 

section 202(a) of the CAA. The Court 

rejected the argument that EPA cannot 

regulate CO2 from motor vehicles 

because to do so would de facto tighten 

fuel economy standards, authority over 

which has been assigned by Congress to 

DOT. The Court stated that ‘‘[b]ut that 

DOT sets mileage standards in no way 

licenses EPA to shirk its environmental 

responsibilities. EPA has been charged 

with protecting the public‘s ‘health’ and 

‘welfare’, a statutory obligation wholly 

independent of DOT’s mandate to 

promote energy efficiency.’’ The Court 

concluded that ‘‘[t]he two obligations 

may overlap, but there is no reason to 

think the two agencies cannot both 

administer their obligations and yet 

avoid inconsistency.’’ 14 The Court 

remanded the case back to the Agency 

for reconsideration in light of its 

findings.15 

12 549 U.S. 497 (2007). 

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

14 549 U.S. at 531–32. 

15 For further information on Massachusetts v. 

EPA see the July 30, 2008 Advance Notice of 

Proposed Rulemaking, ‘‘Regulating Greenhouse Gas 

Emissions under the Clean Air Act’’, 73 FR 44354 

at 44397. There is a comprehensive discussion of 

the litigation’s history, the Supreme Court’s 

findings, and subsequent actions undertaken by the 

EPA has since proposed to find that 

emissions of GHGs from new motor 

vehicles and motor vehicle engines 

cause or contribute to air pollution that 

may reasonably be anticipated to 

endanger public health and welfare.16 

This proposal represents the second 

phase of EPA’s response to the Supreme 

Court’s decision. 

c. California Air Resources Board 

Greenhouse Gas Program 

In 2004, the California Air Resources 

Board approved standards for new lightduty vehicles, which regulate the 

emission of not only CO2, but also other 

GHGs. Since then, thirteen States and 

the District of Columbia, comprising 

approximately 40 percent of the lightduty vehicle market, have adopted 

California’s standards. These standards 

apply to model years 2009 through 2016 

and require CO2 emissions for passenger 

cars and the smallest light trucks of 323 

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

for the remaining light trucks of 439 g/ 

mi in 2009 and 332 g/mi in 2016. On 

June 30, 2009, EPA granted California’s 

request for a waiver of preemption 

under the CAA.17 The granting of the 

waiver permits California and the other 

States to proceed with implementing the 

California emission standards. 

2. Joint Proposal for a National Program 

On May 19, 2009, the Department of 

Transportation and the Environmental 

Protection Agency issued a Notice of 

Upcoming Joint Rulemaking to propose 

a strong and coordinated fuel economy 

and greenhouse gas National Program 

for Model Year (MY) 2012–2016 light 

duty vehicles. 

B. Summary of the Joint Proposal 

In this joint rulemaking, EPA is 

proposing GHG emissions standards 

under the Clean Air Act (CAA), and 

NHTSA is proposing Corporate Average 

Fuel Economy (CAFE) standards under 

the Energy Policy and Conservation 

Action of 1975 (EPCA), as amended by 

the Energy Independence and Security 

Act of 2007 (EISA). The intention of this 

joint rulemaking proposal is to set forth 

a carefully coordinated and harmonized 

approach to implementing these two 

statutes, in accordance with all 

substantive and procedural 

requirements imposed by law. 

Climate change is widely viewed as 

the most significant long-term threat to 

the global environment. According to 

the Intergovernmental Panel on Climate 

Bush Administration and the EPA from 2007–2008 

in response to the Supreme Court remand. 

16 74 FR 18886 (Apr. 24, 2009). 

17 74 FR 32744 (July 8, 2009). 

Change, anthropogenic emissions of 

greenhouse gases are very likely (90 to 

99 percent probability) the cause of 

most of the observed global warming 

over the last 50 years. The primary 

GHGs of concern are carbon dioxide 

(CO2), methane, nitrous oxide, 

hydrofluorocarbons, perfluorocarbons, 

and sulfur hexafluoride. Mobile sources 

emitted 31.5 percent of all U.S. GHG in 

2006, and have been the fastest-growing 

source of U.S. GHG since 1990. Lightduty vehicles emit four GHGs—CO2, 

methane, nitrous oxide, and 

hydrofluorocarbons—and are 

responsible for nearly 60 percent of all 

mobile source GHGs. For Light-duty 

vehicles, CO2 emissions represent about 

95 percent of all greenhouse emissions, 

and the CO2 emissions measured over 

the EPA tests used for fuel economy 

compliance represent over 90 percent of 

total light-duty vehicle greenhouse gas 

emissions. 

Improving energy security by 

reducing our dependence on foreign oil 

has been a national objective since the 

first oil price shocks in the 1970s. Net 

petroleum imports now account for 

approximately 60 percent of U.S. 

petroleum consumption. World crude 

oil production is highly concentrated, 

exacerbating the risks of supply 

disruptions and price shocks. Tight 

global oil markets led to prices over 

$100 per barrel in 2008, with gasoline 

reaching as high as $4 per gallon in 

many parts of the U.S., causing financial 

hardship for many families. The export 

of U.S. assets for oil imports continues 

to be an important component of the 

U.S.’ historically unprecedented trade 

deficits. Transportation accounts for 

about two-thirds of U.S. petroleum 

consumption. Light-duty vehicles 

account for about 60 percent of 

transportation oil use, which means that 

they alone account for about 40 percent 

of all U.S. oil consumption. 

NHTSA and EPA have coordinated 

closely and worked jointly in 

developing their respective proposals. 

This is reflected in many aspects of this 

joint proposal. For example, the 

agencies have developed a 

comprehensive joint Technical Support 

Document (TSD) that provides a solid 

technical underpinning for each 

agency’s modeling and analysis used to 

support their proposed standards. Also, 

to the extent allowed by law, the 

agencies have harmonized many 

elements of program design, such as the 

form of the standard (the footprint-based 

attribute curves), and the definitions 

used for cars and trucks. They have 

developed the same or similar 

compliance flexibilities, to the extent 

allowed and appropriate under their 
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49460 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

respective statutes, such as averaging, 

banking, and trading of credits, and 

have harmonized the compliance testing 

and test protocols used for purposes of 

the fleet average standards each agency 

is proposing. Finally, as discussed in 

Section I.C., under their respective 

statutes each agency is called upon to 

exercise its judgment and determine 

standards that are an appropriate 

balance of various relevant statutory 

factors. Given the common technical 

issues before each agency, the similarity 

of the factors each agency is to consider 

and balance, and the authority of each 

agency to take into consideration the 

standards of the other agency, both EPA 

and NHTSA are proposing standards 

that result in a harmonized National 

Program. 

This joint proposal covers passenger 

cars, light-duty-trucks, and mediumduty passenger vehicles built in model 

years 2012 through 2016. These vehicle 

categories are responsible for almost 60 

percent of all U.S. transportation-related 

GHG emissions. EPA and NHTSA 

expect that automobile manufacturers 

will meet these proposed standards by 

utilizing technologies that will reduce 

vehicle GHG emissions and improve 

fuel economy. Although many of these 

technologies are available today, the 

emissions reductions and fuel economy 

improvements proposed would involve 

more widespread use of these 

technologies across the light-duty 

vehicle fleet. These include 

improvements to engines, 

transmissions, and tires, increased use 

of start-stop technology, improvements 

in air conditioning systems (to the 

extent currently allowed by law), 

increased use of hybrid and other 

advanced technologies, and the initial 

commercialization of electric vehicles 

and plug-in hybrids. 

The proposed National Program 

would result in approximately 950 

million metric tons of total carbon 

dioxide equivalent emissions reductions 

and approximately 1.8 billion barrels of 

oil savings over the lifetime of vehicles 

sold in model years 2012 through 2016. 

In total, the combined EPA and NHTSA 

2012–2016 standards would reduce 

GHG emissions from the U.S. light-duty 

fleet by approximately 21 percent by 

2030 over the level that would occur in 

the absence of the National Program. 

These proposals also provide important 

energy security benefits, as light-duty 

vehicles are about 95 percent dependent 

on oil-based fuels. The benefits of the 

proposed National Program would total 

about $250 billion at a 3% discount rate, 

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

the discussion that follows in Sections 

III and IV, each agency explains the 

related benefits for their individual 

standards. 

Together, EPA and NHTSA estimate 

that the average cost increase for a 

model year 2016 vehicle due to the 

proposed National Program is less than 

$1,100. U.S. consumers who purchase 

their vehicle outright would save 

enough in lower fuel costs over the first 

three years to offset these higher vehicle 

costs. However, most U.S. consumers 

purchase a new vehicle using credit 

rather than paying cash and the typical 

car loan today is a five year, 60 month 

loan. These consumers would see 

immediate savings due to their vehicle’s 

lower fuel consumption in the form of 

reduced monthly costs of $12–$14 per 

month throughout the duration of the 

loan (that is, the fuel savings outweigh 

the increase in loan payments by $12– 

$14 per month). Whether a consumer 

takes out a loan or purchases a new 

vehicle outright, over the lifetime of a 

model year 2016 vehicle, consumers 

would save more than $3,000 due to 

fuel savings. The average 2016 MY 

vehicle will emit 16 fewer metric tons 

of CO2 emissions during its lifetime. 

This joint proposal also offers the 

prospect of important regulatory 

convergence and certainty to automobile 

companies. Absent this proposal, there 

would be three separate Federal and 

State regimes independently regulating 

light-duty vehicles to reduce fuel 

consumption and GHG emissions: 

NHTSA’s CAFE standards, EPA’s GHG 

standards, and the GHG standards 

applicable in California and other States 

adopting the California standards. This 

joint proposal would allow automakers 

to meet both the NHTSA and EPA 

requirements with a single national 

fleet, greatly simplifying the industry’s 

technology, investment and compliance 

strategies. In addition, in a letter dated 

May 18, 2009, California stated that it 

‘‘recognizes the benefit for the country 

and California of a National Program to 

address greenhouse gases and fuel 

economy and the historic 

announcement of United States 

Environmental Protection Agency (EPA) 

and National Highway Transportation 

Safety Administration’s (NHTSA) intent 

to jointly propose a rule to set standards 

for both. California fully supports 

proposal and adoption of such a 

National Program.’’ To promote the 

National Program, California announced 

its commitment to take several actions, 

including revising its program for MYs 

2012–2016 such that compliance with 

the Federal GHG standards would be 

deemed to be compliance with 

California’s GHG standards. This would 

allow the single national fleet used by 

automakers to meet the two Federal 

requirements and to meet California 

requirements as well. This commitment 

was conditioned on several points, 

including EPA GHG standards that are 

substantially similar to those described 

in the May 19, 2009 Notice of Upcoming 

Joint Rulemaking. Many automakers and 

trade associations also announced their 

support for the National Program 

announced that day.18 The 

manufacturers conditioned their 

support on EPA and NHTSA standards 

substantially similar to those described 

in that Notice. NHTSA and EPA met 

with many vehicle manufacturers to 

discuss the feasibility of the National 

Program. EPA and NHTSA are confident 

that these proposed GHG and CAFE 

standards, if finalized, would 

successfully harmonize both the Federal 

and State programs for MYs 2012–2016 

and would allow our country to achieve 

the increased benefits of a single, 

nationwide program to reduce lightduty vehicle GHG emissions and reduce 

the country’s dependence on fossil fuels 

by improving these vehicles’ fuel 

economy. 

A successful and sustainable 

automotive industry depends upon, 

among other things, continuous 

technology innovation in general, and 

low greenhouse gas emissions and high 

fuel economy vehicles in particular. In 

this respect, this proposal would help 

spark the investment in technology 

innovation necessary for automakers to 

successfully compete in both domestic 

and export markets, and thereby 

continue to support a strong economy. 

While this proposal covers MYs 

2012–2016, EPA and NHTSA anticipate 

the importance of seeking a strong, 

coordinated national program for lightduty vehicles in model years beyond 

2016 in a future rulemaking. 

Key elements of the proposal for a 

harmonized and coordinated program 

are the level and form of the GHG and 

CAFE standards, the available 

compliance mechanisms, and general 

implementation elements. These 

elements are outlined in the following 

sections. 

C. Background and Comparison of 

NHTSA and EPA Statutory Authority 

This section provides the agencies’ 

respective statutory authorities under 

which CAFE and GHG standards are 

established. 

1. NHTSA Statutory Authority 

NHTSA establishes CAFE standards 

for passenger cars and light trucks for 

each model year under EPCA, as 

18 These letters are available at http:// 

www.epa.gov/otaq/climate/regulations.htm. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49461 

amended by EISA. EPCA mandates a 

motor vehicle fuel economy regulatory 

program to meet the various facets of the 

need to conserve energy, including ones 

having environmental and foreign 

policy implications. EPCA allocates the 

responsibility for implementing the 

program between NHTSA and EPA as 

follows: NHTSA sets CAFE standards 

for passenger cars and light trucks; EPA 

establishes the procedures for testing, 

tests vehicles, collects and analyzes 

manufacturers’ data, and calculates the 

average fuel economy of each 

manufacturer’s passenger cars and light 

trucks; and NHTSA enforces the 

standards based on EPA’s calculations. 

a. Standard Setting 

We have summarized below the most 

important aspects of standard setting 

under EPCA, as amended by EISA. 

For each future model year, EPCA 

requires that NHTSA establish 

standards at ‘‘the maximum feasible 

average fuel economy level that it 

decides the manufacturers can achieve 

in that model year,’’ based on the 

agency’s consideration of four statutory 

factors: technological feasibility, 

economic practicability, the effect of 

other standards of the Government on 

fuel economy, and the need of the 

nation to conserve energy. EPCA does 

not define these terms or specify what 

weight to give each concern in 

balancing them; thus, NHTSA defines 

them and determines the appropriate 

weighting based on the circumstances in 

each CAFE standard rulemaking.19 

For MYs 2011–2020, EPCA further 

requires that separate standards for 

passenger cars and for light trucks be set 

at levels high enough to ensure that the 

CAFE of the industry-wide combined 

fleet of new passenger cars and light 

trucks reaches at least 35 mpg not later 

than MY 2020. 

i. Factors That Must Be Considered in 

Deciding the Appropriate Stringency of 

CAFE Standards 

(1) Technological Feasibility 

‘‘Technological feasibility’’ refers to 

whether a particular method of 

improving fuel economy can be 

available for commercial application in 

the model year for which a standard is 

being established. Thus, the agency is 

not limited in determining the level of 

new standards to technology that is 

19 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.’’) 

already being commercially applied at 

the time of the rulemaking. NHTSA has 

historically considered all types of 

technologies that improve real-world 

fuel economy, except those whose 

effects are not reflected in fuel economy 

testing. Principal among them are 

technologies that improve air 

conditioner efficiency because the air 

conditioners are not turned on during 

testing under existing test procedures. 

(2) Economic Practicability 

‘‘Economic practicability’’ refers to 

whether a standard is one ‘‘within the 

financial capability of the industry, but 

not so stringent as to’’ lead to ‘‘adverse 

economic consequences, such as a 

significant loss of jobs or the 

unreasonable elimination of consumer 

choice.’’ 20 This factor is especially 

important in the context of current 

events, where the automobile industry 

is facing significantly adverse economic 

conditions, as well as significant loss of 

jobs. In an attempt to ensure the 

economic practicability of attributebased standards, NHTSA considers a 

variety of factors, including the annual 

rate at which manufacturers can 

increase the percentage of its fleet that 

employs a particular type of fuel-saving 

technology, and cost to consumers. 

Consumer acceptability is also an 

element of economic practicability, one 

which is particularly difficult to gauge 

during times of frequently-changing fuel 

prices. NHTSA believes this approach is 

reasonable for the MY 2012–2016 

standards in view of the facts before it 

at this time. NHTSA is aware, however, 

that facts relating to a variety of key 

issues in CAFE rulemaking are steadily 

evolving and seeks comments on the 

balancing of these factors in light of the 

facts available during the comment 

period. 

At the same time, the law does not 

preclude a CAFE standard that poses 

considerable challenges to any 

individual manufacturer. The 

Conference Report for EPCA, as enacted 

in 1975, makes clear, and the case law 

affirms, ‘‘a determination of maximum 

feasible average fuel economy should 

not be keyed to the single manufacturer 

which might have the most difficulty 

achieving a given level of average fuel 

economy.’’ 21 Instead, NHTSA is 

compelled ‘‘to weigh the benefits to the 

nation of a higher fuel economy 

standard against the difficulties of 

individual automobile manufacturers.’’ 

Id. The law permits CAFE standards 

exceeding the projected capability of 

any particular manufacturer as long as 

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

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

the standard is economically practicable 

for the industry as a whole. Thus, while 

a particular CAFE standard may pose 

difficulties for one manufacturer, it may 

also present opportunities for another. 

The CAFE program is not necessarily 

intended to maintain the competitive 

positioning of each particular company. 

Rather, it is intended to enhance fuel 

economy of the vehicle fleet on 

American roads, while protecting motor 

vehicle safety and being mindful of the 

risk of harm to the overall United States 

economy. 

(3) The Effect of Other Motor Vehicle 

Standards of the Government on Fuel 

Economy 

‘‘The effect of other motor vehicle 

standards of the Government on fuel 

economy,’’ involves an analysis of the 

effects of compliance with emission,22 

safety, noise, or damageability standards 

on fuel economy capability and thus on 

average fuel economy. In previous CAFE 

rulemakings, the agency has said that 

pursuant to this provision, it considers 

the adverse effects of other motor 

vehicle standards on fuel economy. It 

said so because, from the CAFE 

program’s earliest years 23 until present, 

the effects of such compliance on fuel 

economy capability over the history of 

the CAFE program have been negative 

ones. For example, safety standards that 

have the effect of increasing vehicle 

weight lower vehicle fuel economy 

capability and thus decrease the level of 

average fuel economy that the agency 

can determine to be feasible. 

In the wake of Massachusetts v. EPA 

and of EPA’s proposed endangerment 

finding, granting of a waiver to 

California for its motor vehicle GHG 

standards, and its own proposal of GHG 

standards, NHTSA is confronted with 

the issue of how to treat those standards 

under the ‘‘other motor vehicle 

standards’’ provision. To the extent the 

GHG standards result in increases in 

fuel economy, they would do so almost 

exclusively as a result of inducing 

manufacturers to install the same types 

of technologies used by manufacturers 

in complying with the CAFE standards. 

The primary exception would involve 

increases in the efficiency of air 

conditioners. 

Comment is requested on whether 

and in what way the effects of the 

California and EPA standards should be 

22 In the case of emission standards, this includes 

standards adopted by the Federal government and 

can include standards adopted by the States as well, 

since in certain circumstances the Clean Air Act 

allows States to adopt and enforce State standards 

different from the Federal ones. 

23 42 FR 63184, 63188 (Dec. 15, 1977). See also 

42 FR 33534, 33537 (Jun. 30, 1977). 
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considered under the ‘‘other motor 

vehicle standards’’ provision or other 

provisions of EPCA in 49 U.S.C. 32902, 

consistent with NHTSA’s independent 

obligation under EPCA/EISA to issue 

CAFE standards. The agency has already 

considered EPA’s proposal and the 

harmonization benefits of the National 

Program in developing its own proposal. 

(4) The Need of the United States To 

Conserve Energy 

‘‘The need of the United States to 

conserve energy’’ means ‘‘the consumer 

cost, national balance of payments, 

environmental, and foreign policy 

implications of our need for large 

quantities of petroleum, especially 

imported petroleum.’’ 24 Environmental 

implications principally include 

reductions in emissions of criteria 

pollutants and carbon dioxide. Prime 

examples of foreign policy implications 

are energy independence and security 

concerns. 

(a) Fuel Prices and the Value of Saving 

Fuel 

Projected future fuel prices are a 

critical input into the preliminary 

economic analysis of alternative CAFE 

standards, because they determine the 

value of fuel savings both to new 

vehicle buyers and to society. In this 

rule, NHTSA relies on fuel price 

projections from the U.S. Energy 

Information Administration’s (EIA) 

Annual Energy Outlook (AEO) for this 

analysis. Federal government agencies 

generally use EIA’s projections in their 

assessments of future energy-related 

policies. 

(b) Petroleum Consumption and Import 

Externalities 

U.S. consumption and imports of 

petroleum products impose costs on the 

domestic economy that are not reflected 

in the market price for crude petroleum, 

or in the prices paid by consumers of 

petroleum products such as gasoline. 

These costs include (1) higher prices for 

petroleum products resulting from the 

effect of U.S. oil import demand on the 

world oil price; (2) the risk of 

disruptions to the U.S. economy caused 

by sudden reductions in the supply of 

imported oil to the U.S.; and (3) 

expenses for maintaining a U.S. military 

presence to secure imported oil supplies 

from unstable regions, and for 

maintaining the strategic petroleum 

reserve (SPR) to provide a response 

option should a disruption in 

commercial oil supplies threaten the 

U.S. economy, to allow the United 

States to meet part of its International 

24 42 FR 63184, 63188 (1977). 

Energy Agency obligation to maintain 

emergency oil stocks, and to provide a 

national defense fuel reserve. Higher 

U.S. imports of crude oil or refined 

petroleum products increase the 

magnitude of these external economic 

costs, thus increasing the true economic 

cost of supplying transportation fuels 

above the resource costs of producing 

them. Conversely, reducing U.S. imports 

of crude petroleum or refined fuels or 

reducing fuel consumption can reduce 

these external costs. 

(c) Air Pollutant Emissions 

While reductions in domestic fuel 

refining and distribution that result 

from lower fuel consumption will 

reduce U.S. emissions of various 

pollutants, additional vehicle use 

associated with the rebound effect 25 

from higher fuel economy will increase 

emissions of these pollutants. Thus, the 

net effect of stricter CAFE standards on 

emissions of each pollutant depends on 

the relative magnitudes of its reduced 

emissions in fuel refining and 

distribution, and increases in its 

emissions from vehicle use. 

Fuel savings from stricter CAFE 

standards also result in lower emissions 

of CO2, the main greenhouse gas emitted 

as a result of refining, distribution, and 

use of transportation fuels. Lower fuel 

consumption reduces carbon dioxide 

emissions directly, because the primary 

source of transportation-related CO2 

emissions is fuel combustion in internal 

combustion engines. 

NHTSA has considered 

environmental issues, both within the 

context of EPCA and the National 

Environmental Policy Act, in making 

decisions about the setting of standards 

from the earliest days of the CAFE 

program. As courts of appeal have noted 

in three decisions stretching over the 

last 20 years,26 NHTSA defined the 

‘‘need of the Nation to conserve energy’’ 

in the late 1970s as including ‘‘the 

consumer cost, national balance of 

payments, environmental, and foreign 

policy implications of our need for large 

quantities of petroleum, especially 

imported petroleum.’’ 27 Pursuant to 

that view, NHTSA declined in the past 

25 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. 

26 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). 

27 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis 

added). 

to include diesel engines in determining 

the appropriate level of standards for 

passenger cars and for light trucks 

because particulate emissions from 

diesels were then both a source of 

concern and unregulated.28 In 1988, 

NHTSA included climate change 

concepts in its CAFE notices and 

prepared its first environmental 

assessment addressing that subject.29 It 

cited concerns about climate change as 

one of its reasons for limiting the extent 

of its reduction of the CAFE standard for 

MY 1989 passenger cars.30 Since then, 

NHTSA has considered the benefits of 

reducing tailpipe carbon dioxide 

emissions in its fuel economy 

rulemakings pursuant to the statutory 

requirement to consider the nation’s 

need to conserve energy by reducing 

fuel consumption. 

ii. Other Factors Considered by NHTSA 

NHTSA considers the potential for 

adverse safety consequences when in 

establishing CAFE standards. This 

practice is recognized approvingly in 

case law.31 Under the universal or ‘‘flat’’ 

CAFE standards that NHTSA was 

previously authorized to establish, the 

primary risk to safety came from the 

possibility that manufacturers would 

respond to higher standards by building 

smaller, less safe vehicles in order to 

‘‘balance out’’ the larger, safer vehicles 

that the public generally preferred to 

buy. Under the attribute-based 

standards being proposed in this action, 

that risk is reduced because building 

smaller vehicles tends to raise a 

manufacturer’s overall CAFE obligation, 

rather than only raising its fleet average 

CAFE. However, even under attributebased standards, there is still risk that 

manufacturers will rely on 

downweighting to improve their fuel 

economy (for a given vehicle at a given 

28 For example, the final rules establishing CAFE 

standards for MY 1981–84 passenger cars, 42 FR 

33533, 33540–1 and 33551 (Jun. 30, 1977), and for 

MY 1983–85 light trucks, 45 FR 81593, 81597 (Dec. 

11, 1980). 

29 53 FR 33080, 33096 (Aug. 29, 1988). 

30 53 FR 39275, 39302 (Oct. 6, 1988). 

31 See, e.g., Center for Auto Safety v. NHTSA 

(CAS), 793 F.2d 1322 (D.C. Cir. 1986) 

(Administrator’s consideration of market demand as 

component of economic practicability found to be 

reasonable); Public Citizen 848 F.2d 256 (Congress 

established broad guidelines in the fuel economy 

statute; agency’s decision to set lower standard was 

a reasonable accommodation of conflicting 

policies). As the United States Court of Appeals 

pointed out in upholding NHTSA’s exercise of 

judgment in setting the 1987–1989 passenger car 

standards, ‘‘NHTSA has always examined the safety 

consequences of the CAFE standards in its overall 

consideration of relevant factors since its earliest 

rulemaking under the CAFE program.’’ Competitive 

Enterprise Institute v. NHTSA (CEI I), 901 F.2d 107, 

120 at n.11 (D.C. Cir. 1990). 
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footprint target) in ways that may 

reduce safety. 

In addition, the agency considers 

consumer demand in establishing new 

standards and in assessing whether 

already established standards remained 

feasible. In the 1980’s, the agency relied 

in part on the unexpected drop in fuel 

prices and the resulting unexpected 

failure of consumer demand for small 

cars to develop in explaining the need 

to reduce CAFE standards for a several 

year period in order to give 

manufacturers time to develop 

alternative technology-based strategies 

for improving fuel economy. 

iii. Factors That NHTSA Is Statutorily 

Prohibited From Considering in Setting 

Standards 

EPCA provides that in determining 

the level at which it should set CAFE 

standards for a particular model year, 

NHTSA may not consider the ability of 

manufacturers to take advantage of 

several EPCA provisions that facilitate 

compliance with the CAFE standards 

and thereby reduce the costs of 

compliance.32 As noted below in 

Section IV, manufacturers can earn 

compliance credits by exceeding the 

CAFE standards and then use those 

credits to achieve compliance in years 

in which their measured average fuel 

economy falls below the standards. 

Manufacturers can also increase their 

CAFE levels through MY 2019 by 

producing alternative fuel vehicles. 

EPCA provides an incentive for 

producing these vehicles by specifying 

that their fuel economy is to be 

determined using a special calculation 

procedure that results in those vehicles 

being assigned a high fuel economy 

level. 

iv. Weighing and Balancing of Factors 

NHTSA has broad discretion in 

balancing the above factors in 

determining the average fuel economy 

level that the manufacturers can 

achieve. Congress ‘‘specifically 

delegated the process of setting * * * 

fuel economy standards with broad 

guidelines concerning the factors that 

the agency must consider.’’ The breadth 

of those guidelines, the absence of any 

statutorily prescribed formula for 

balancing the factors, the fact that the 

relative weight to be given to the various 

factors may change from rulemaking to 

rulemaking as the underlying facts 

change, and the fact that the factors may 

often be conflicting with respect to 

whether they militate toward higher or 

lower standards give NHTSA discretion 

to decide what weight to give each of 

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

the competing policies and concerns 

and then determine how to balance 

them—as long as NHTSA’s balancing 

does not undermine the fundamental 

purpose of the EPCA: Energy 

conservation, and as long as that 

balancing reasonably accommodates 

‘‘conflicting policies that were 

committed to the agency’s care by the 

statute.’’ 

Thus, EPCA does not mandate that 

any particular number be adopted when 

NHTSA determines the level of CAFE 

standards. Rather, any number within a 

zone of reasonableness may be, in 

NHTSA’s assessment, the level of 

stringency that manufacturers can 

achieve. See, e.g., Hercules Inc. v. EPA, 

598 F.2d 91, 106 (D.C. Cir. 1978) (‘‘In 

reviewing a numerical standard we 

must ask whether the agency’s numbers 

are within a zone of reasonableness, not 

whether its numbers are precisely 

right’’). 

v. Other Requirements Related to 

Standard Setting 

The standards for passenger cars and 

those for light trucks must increase 

ratably each year. This statutory 

requirement is interpreted, in 

combination with the requirement to set 

the standards for each model year at the 

level determined to be the maximum 

feasible level that manufacturers can 

achieve for that model year, to mean 

that the annual increases should not be 

disproportionately large or small in 

relation to each other. 

The standards for passenger cars and 

light trucks must be based on one or 

more vehicle attributes, like size or 

weight, that correlate with fuel economy 

and must be expressed in terms of a 

mathematical function. Fuel economy 

targets are set for individual vehicles 

and increase as the attribute decreases 

and vice versa. For example, size-based 

(i.e., size-indexed) standards assign 

higher fuel economy targets to smaller 

(and generally, but not necessarily, 

lighter) vehicles and lower ones to 

larger (and generally, but not 

necessarily, heavier) vehicles. The fleetwide average fuel economy that a 

particular manufacturer is required to 

achieve depends on the size mix of its 

fleet, i.e., the proportion of the fleet that 

is small-, medium- or large-sized. 

This approach can be used to require 

virtually all manufacturers to increase 

significantly the fuel economy of a 

broad range of both passenger cars and 

light trucks, i.e., the manufacturer must 

improve the fuel economy of all the 

vehicles in its fleet. Further, this 

approach can do so without creating an 

incentive for manufacturers to make 

small vehicles smaller or large vehicles 

larger, with attendant implications for 

safety. 

b. Test Procedures for Measuring Fuel 

Economy 

EPCA provides EPA with the 

responsibility for establishing CAFE test 

procedures. Current test procedures 

measure the effects of nearly all fuel 

saving technologies. The principal 

exception is improvements in air 

conditioning efficiency. By statutory 

law in the case of passenger cars and by 

administrative regulation in the case of 

light trucks, air conditioners are not 

turned on during fuel economy testing. 

See Section I.C.2 for details. 

The fuel economy test procedures for 

light trucks could be amended through 

rulemaking to provide for air 

conditioner operation during testing and 

to take other steps for improving the 

accuracy and representativeness of fuel 

economy measurements. Comment is 

sought by the agencies regarding 

implementing such amendments 

beginning in MY 2017 and also on the 

more immediate interim alternative step 

of providing CAFE program credits 

under the authority of 49 U.S.C. 

32904(c) for light trucks equipped with 

relatively efficient air conditioners for 

MYs 2012–2016. These CAFE credits 

would be earned by manufacturers on 

the same terms and under the same 

conditions as EPA is proposing to 

provide them under the CAA, and 

additional detail is on this request for 

comment for early CAFE credits is 

contained in Section IV of this 

preamble. Modernizing the passenger 

car test procedures, or even providing 

similar credits, would not be possible 

under EPCA as currently written. 

c. Enforcement and Compliance 

Flexibility 

EPA is responsible for measuring 

automobile manufacturers’ CAFE so that 

NHTSA can determine compliance with 

the CAFE standards. When NHTSA 

finds that a manufacturer is not in 

compliance, it notifies the 

manufacturer. Surplus credits generated 

from the five previous years can be used 

to make up the deficit. The amount of 

credit earned is determined by 

multiplying the number of tenths of a 

mpg by which a manufacturer exceeds 

a standard for a particular category of 

automobiles by the total volume of 

automobiles of that category 

manufactured by the manufacturer for a 

given model year. If there are no (or not 

enough) credits available, then the 

manufacturer can either pay the fine, or 

submit a carry back plan to NHTSA. A 

carry back plan describes what the 

manufacturer plans to do in the 
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49464 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

following three model years to earn 

enough credits to make up for the 

deficit. NHTSA must examine and 

determine whether to approve the plan. 

In the event that a manufacturer does 

not comply with a CAFE standard, even 

after the consideration of credits, EPCA 

provides for the assessing of civil 

penalties, unless, as provided below, the 

manufacturer has earned credits for 

exceeding a standard in an earlier year 

or expects to earn credits in a later 

year.33 The Act specifies a precise 

formula for determining the amount of 

civil penalties for such a 

noncompliance. The penalty, as 

adjusted for inflation by law, is $5.50 for 

each tenth of a mpg that a 

manufacturer’s average fuel economy 

falls short of the standard for a given 

model year multiplied by the total 

volume of those vehicles in the affected 

fleet (i.e., import or domestic passenger 

car, or light truck), manufactured for 

that model year. The amount of the 

penalty may not be reduced except 

under the unusual or extreme 

circumstances specified in the statute. 

Unlike the National Traffic and Motor 

Vehicle Safety Act, EPCA does not 

provide for recall and remedy in the 

event of a noncompliance. The presence 

of recall and remedy provisions34 in the 

Safety Act and their absence in EPCA is 

believed to arise from the difference in 

the application of the safety standards 

and CAFE standards. A safety standard 

applies to individual vehicles; that is, 

each vehicle must possess the requisite 

equipment or feature that must provide 

the requisite type and level of 

performance. If a vehicle does not, it is 

noncompliant. Typically, a vehicle does 

not entirely lack an item or equipment 

or feature. Instead, the equipment or 

features fails to perform adequately. 

Recalling the vehicle to repair or replace 

the noncompliant equipment or feature 

can usually be readily accomplished. 

In contrast, a CAFE standard applies 

to a manufacturer’s entire fleet for a 

model year. It does not require that a 

particular individual vehicle be 

equipped with any particular equipment 

or feature or meet a particular level of 

fuel economy. It does require that the 

manufacturer’s fleet, as a whole, 

comply. Further, although under the 

attribute-based approach to setting 

CAFE standards fuel economy targets 

are established for individual vehicles 

based on their footprints, the vehicles 

are not required to comply with those 

targets. However, as a practical matter, 

33 EPCA does not provide authority for seeking to 

enjoin violations of the CAFE standards. 

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

noncompliance. 

if a manufacturer chooses to design 

some vehicles that fall below their target 

levels of fuel economy, it will need to 

design other vehicles that exceed their 

targets if the manufacturer’s overall fleet 

average is to meet the applicable 

standard. 

Thus, under EPCA, there is no such 

thing as a noncompliant vehicle, only a 

noncompliant fleet. No particular 

vehicle in a noncompliant fleet is any 

more, or less, noncompliant than any 

other vehicle in the fleet. 

2. EPA Statutory Authority 

Title II of the Clean Air Act (CAA) 

provides for comprehensive regulation 

of mobile sources, authorizing EPA to 

regulate emissions of air pollutants from 

all mobile source categories. Pursuant to 

these sweeping grants of authority, EPA 

considers such issues as technology 

effectiveness, its cost (both per vehicle, 

per manufacturer, and per consumer), 

the lead time necessary to implement 

the technology, and based on this the 

feasibility and practicability of potential 

standards; the impacts of potential 

standards on emissions reductions of 

both GHGs and non-GHGs; the impacts 

of standards on oil conservation and 

energy security; the impacts of 

standards on fuel savings by consumers; 

the impacts of standards on the auto 

industry; other energy impacts; as well 

as other relevant factors such as impacts 

on safety. 

This proposal implements a specific 

provision from Title II, section 202(a).35 

Section 202(a)(1) of the Clean Air Act 

(CAA) states that ‘‘the Administrator 

shall by regulation prescribe (and from 

time to time revise) * * * standards 

applicable to the emission of any air 

pollutant from any class or classes of 

new motor vehicles * * *, which in his 

judgment cause, or contribute to, air 

pollution which may reasonably be 

anticipated to endanger public health or 

welfare.’’ If EPA makes the appropriate 

endangerment and cause or contribute 

findings, then section 202(a) authorizes 

EPA to issue standards applicable to 

emissions of those pollutants. 

Any standards under CAA section 

202(a)(1) ‘‘shall be applicable to such 

vehicles * * * for their useful life.’’ 

Emission standards set by the EPA 

under CAA section 202(a)(1) are 

technology-based, as the levels chosen 

must be premised on a finding of 

technological feasibility. Thus, 

standards promulgated under CAA 

section 202(a) are to take effect only 

‘‘after providing such period as the 

Administrator finds necessary to permit 

the development and application of the 

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

requisite technology, giving appropriate 

consideration to the cost of compliance 

within such period’’ (section 202(a)(2); 

see also NRDC v. EPA, 655 F.2d 318, 

322 (D.C. Cir. 1981)). EPA is afforded 

considerable discretion under section 

202(a) when assessing issues of 

technical feasibility and availability of 

lead time to implement new technology. 

Such determinations are ‘‘subject to the 

restraints of reasonableness’’, which 

‘‘does not open the door to ‘crystal ball’ 

inquiry.’’ NRDC, 655 F.2d at 328, 

quoting International Harvester Co. v. 

Ruckelshaus, 478 F.2d 615, 629 (D.C. 

Cir. 1973). However, ‘‘EPA is not 

obliged to provide detailed solutions to 

every engineering problem posed in the 

perfection of the trap-oxidizer. In the 

absence of theoretical objections to the 

technology, the agency need only 

identify the major steps necessary for 

development of the device, and give 

plausible reasons for its belief that the 

industry will be able to solve those 

problems in the time remaining. The 

EPA is not required to rebut all 

speculation that unspecified factors may 

hinder ‘real world’ emission control.’’ 

NRDC, 655 F.2d at 333–34. In 

developing such technology-based 

standards, EPA has the discretion to 

consider different standards for 

appropriate groupings of vehicles 

(‘‘class or classes of new motor 

vehicles’’), or a single standard for a 

larger grouping of motor vehicles 

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

Although standards under CAA 

section 202(a)(1) are technology-based, 

they are not based exclusively on 

technological capability. EPA has the 

discretion to consider and weigh 

various factors along with technological 

feasibility, such as the cost of 

compliance (see section 202(a)(2)), lead 

time necessary for compliance (section 

202(a)(2)), safety (see NRDC, 655 F.2d at 

336 n. 31) and other impacts on 

consumers, and energy impacts 

associated with use of the technology. 

See George E. Warren Corp. v. EPA, 159 

F.3d 616, 623–624 (D.C. Cir. 1998) 

(ordinarily permissible for EPA to 

consider factors not specifically 

enumerated in the Act). See also Entergy 

Corp. v. Riverkeeper, Inc., 129 S.Ct. 

1498, 1508–09 (2009) (congressional 

silence did not bar EPA from employing 

cost-benefit analysis under Clean Water 

Act absent some other clear indication 

that such analysis was prohibited; 

rather, silence indicated discretion to 

use or not use such an approach as the 

agency deems appropriate). 

In addition, EPA has clear authority to 

set standards under CAA section 202(a) 

that are technology forcing when EPA 

considers that to be appropriate, but is 
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not required to do so (as compared to 

standards set under provisions such as 

section 202(a)(3) and section 213(a)(3)). 

EPA has interpreted a similar statutory 

provision, CAA section 231, as follows: 

While the statutory language of section 231 

is not identical to other provisions in title II 

of the CAA that direct EPA to establish 

technology-based standards for various types 

of engines, EPA interprets its authority under 

section 231 to be somewhat similar to those 

provisions that require us to identify a 

reasonable balance of specified emissions 

reduction, cost, safety, noise, and other 

factors. See, e.g., Husqvarna AB v. EPA, 254 

F.3d 195 (DC Cir. 2001) (upholding EPA’s 

promulgation of technology-based standards 

for small non-road engines under section 

213(a)(3) of the CAA). However, EPA is not 

compelled under section 231 to obtain the 

‘‘greatest degree of emission reduction 

achievable’’ as per sections 213 and 202 of 

the CAA, and so EPA does not interpret the 

Act as requiring the agency to give 

subordinate status to factors such as cost, 

safety, and noise in determining what 

standards are reasonable for aircraft engines. 

Rather, EPA has greater flexibility under 

section 231 in determining what standard is 

most reasonable for aircraft engines, and is 

not required to achieve a ‘‘technology 

forcing’’ result.36 

This interpretation was upheld as 

reasonable in NACAA v. EPA, (489 F.3d 

1221, 1230 (D.C. Cir. 2007)). CAA 

section 202(a) does not specify the 

degree of weight to apply to each factor, 

and EPA accordingly has discretion in 

choosing an appropriate balance among 

factors. See Sierra Club v. EPA, 325 F.3d 

374, 378 (D.C. Cir. 2003) (even where a 

provision is technology-forcing, the 

provision ‘‘does not resolve how the 

Administrator should weigh all [the 

statutory] factors in the process of 

finding the ’greatest emission reduction 

achievable’ ’’). Also see Husqvarna AB 

v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 

2001) (great discretion to balance 

statutory factors in considering level of 

technology-based standard, and 

statutory requirement ‘‘to [give 

appropriate] consideration to the cost of 

applying * * * technology’’ does not 

mandate a specific method of cost 

analysis); see also Hercules Inc. v. EPA, 

598 F. 2d 91, 106 (D.C. Cir. 1978) (‘‘In 

reviewing a numerical standard we 

must ask whether the agency’s numbers 

are within a zone of reasonableness, not 

whether its numbers are precisely 

right’’); Permian Basin Area Rate Cases, 

390 U.S. 747, 797 (1968) (same); Federal 

Power Commission v. Conway Corp., 

426 U.S. 271, 278 (1976) (same); Exxon 

Mobil Gas Marketing Co. v. FERC, 297 

F. 3d 1071, 1084 (D.C. Cir. 2002) (same). 

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

a. EPA’s Testing Authority 

Under section 203 of the CAA, sales 

of vehicles are prohibited unless the 

vehicle is covered by a certificate of 

conformity. EPA issues certificates of 

conformity pursuant to section 206 of 

the Act, based on (necessarily) pre-sale 

testing conducted either by EPA or by 

the manufacturer. The Federal Test 

Procedure (FTP or ‘‘city’’ test) and the 

Highway Fuel Economy Test (HFET or 

‘‘highway’’ test) are used for this 

purpose. Compliance with standards is 

required not only at certification but 

throughout a vehicle’s useful life, so 

that testing requirements may continue 

post-certification. Useful life standards 

may apply an adjustment factor to 

account for vehicle emission control 

deterioration or variability in use 

(section 206(a)). 

Pursuant to EPCA, EPA is required to 

measure fuel economy for each model 

and to calculate each manufacturer’s 

average fuel economy.37 EPA uses the 

same tests—the FTP and HFET—for fuel 

economy testing. EPA established the 

FTP for emissions measurement in the 

early 1970s. In 1976, in response to the 

Energy Policy and Conservation Act 

(EPCA) statute, EPA extended the use of 

the FTP to fuel economy measurement 

and added the HFET.38 The provisions 

in the 1976 regulation, effective with the 

1977 model year, established 

procedures to calculate fuel economy 

values both for labeling and for CAFE 

purposes. Under EPCA, EPA is required 

to use these procedures (or procedures 

which yield comparable results) for 

measuring fuel economy for cars for 

CAFE purposes, but not for labeling 

purposes.39 EPCA does not pose this 

restriction on CAFE test procedures for 

light trucks, but EPA does use the FTP 

and HFET for this purpose. EPA 

determines fuel economy by measuring 

the amount of CO2 and all other carbon 

compounds (e.g. total hydrocarbons 

(THC) and carbon monoxide (CO)), and 

then, by mass balance, calculating the 

amount of fuel consumed. 

b. EPA Enforcement Authority 

Section 207 of the CAA grants EPA 

broad authority to require 

manufacturers to remedy vehicles if 

EPA determines there are a substantial 

number of noncomplying vehicles. In 

addition, section 205 of the CAA 

authorizes EPA to assess penalties of up 

to $37,500 per vehicle for violations of 

various prohibited acts specified in the 

CAA. In determining the appropriate 

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

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

codified at 40 CFR part 600. 

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

penalty, EPA must consider a variety of 

factors such as the gravity of the 

violation, the economic impact of the 

violation, the violator’s history of 

compliance, and ‘‘such other matters as 

justice may require.’’ Unlike EPCA, the 

CAA does not authorize vehicle 

manufacturers to pay fines in lieu of 

meeting emission standards. 

3. Comparing the Agencies’ Authority 

As the above discussion makes clear, 

there are both important differences 

between the statutes under which each 

agency is acting as well as several 

important areas of similarity. One 

important difference is that EPA’s 

authority addresses various GHGs, 

while NHTSA’s authority addresses fuel 

economy as measured under specified 

test procedures. This difference is 

reflected in this rulemaking in the scope 

of the two standards: EPA’s proposal 

takes into account air conditioning 

related reductions, as well as proposed 

standards for methane and N2O, but 

NHTSA’s does not. A second important 

difference is that EPA is proposing 

certain compliance flexibilities, and 

takes those flexibilities into account in 

its technical analysis and modeling 

supporting its proposal. EPCA places 

certain limits on compliance flexibilities 

for CAFE, and expressly prohibits 

NHTSA from considering the impacts of 

the compliance flexibilities in setting 

the CAFE standard so that the 

manufacturers’ election to avail 

themselves of the permitted flexibilities 

remains strictly voluntary.40 The Clean 

Air Act, on the other hand, contains no 

such prohibition. These considerations 

result in some differences in the 

technical analysis and modeling used to 

support EPA’s and NHTSA’s proposed 

standards. 

These differences, however, do not 

change the fact that in many critical 

ways the two agencies are charged with 

addressing the same basic issue of 

reducing GHG emissions and improving 

fuel economy. Given the direct 

relationship between emissions of CO2 

and fuel economy levels, both agencies 

are looking at the same set of control 

technologies (with the exception of the 

air conditioning related technologies). 

The standards set by each agency will 

drive the kind and degree of penetration 

of this set of technologies across the 

vehicle fleet. As a result, each agency is 

trying to answer the same basic 

question—what kind and degree of 

technology penetration is necessary to 

achieve the agencies’ objectives in the 

rulemaking time frame, given the 

40 74 FR 24009 (May 22, 2009). 
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agencies’ respective statutory 

authorities? 

In making the determination of what 

standards are appropriate under the 

CAA and EPCA, each agency is to 

exercise its judgment and balance many 

similar factors, such as the availability 

of technologies, the appropriate lead 

time for introduction of technology, and 

based on this the feasibility and 

practicability of their standards; the 

impacts of their standards on emissions 

reductions (of both GHGs and nonGHGs); the impacts of their standards on 

oil conservation; the impacts of their 

standards on fuel savings by consumers; 

the impacts of their standards on the 

auto industry; as well as other relevant 

factors such as impacts on safety. 

Conceptually, therefore, each agency is 

considering and balancing many of the 

same factors, and each agency is making 

a decision that at its core is answering 

the same basic question of what kind 

and degree of technology penetration is 

it appropriate to call for in light of all 

of the relevant factors. Finally, each 

agency has the authority to take into 

consideration impacts of the standards 

of the other agency. EPCA calls for 

NHTSA to take into consideration the 

effects of EPA’s emissions standards on 

fuel economy capability (see 49 U.S.C. 

32902 (f)), and EPA has the discretion 

to take into consideration NHTSA’s 

CAFE standards in determining 

appropriate action under section 202(a). 

This is consistent with the Supreme 

Court’s statement that EPA’s mandate to 

protect public health and welfare is 

wholly independent from NHTSA’s 

mandate to promote energy efficiency, 

but there is no reason to think the two 

agencies cannot both administer their 

obligations and yet avoid inconsistency. 

Massachusetts v. EPA, 549 U.S. 497, 532 

(2007). 

In this context, it is in the Nation’s 

interest for the two agencies to work 

together in developing their respective 

proposed standards, and they have done 

so. For example, the agencies have 

committed considerable effort to 

develop a joint Technical Support 

Document that provides a technical 

basis underlying each agency’s analyses. 

The agencies also have worked closely 

together in developing and reviewing 

their respective modeling, to develop 

the best analysis and to promote 

technical consistency. The agencies 

have developed a common set of 

attribute-based curves that each agency 

supports as appropriate both technically 

and from a policy perspective. The 

agencies have also worked closely to 

ensure that their respective programs 

will work in a coordinated fashion, and 

will provide regulatory compatibility 

that allows auto manufacturers to build 

a single national light-duty fleet that 

would comply with both the GHG and 

the CAFE standards. The resulting 

overall close coordination of the 

proposed GHG and CAFE standards 

should not be surprising, however, as 

each agency is using a jointly developed 

technical basis to address the closely 

intertwined challenges of energy 

security and climate change. As 

discussed above, in determining the 

standards to propose the agencies are 

called upon to weigh and balance 

various factors that are relevant under 

their respective statutory provisions. 

Each agency is to exercise its judgment 

and balance many similar factors, such 

as the availability of technologies, the 

appropriate lead time for introduction of 

technology, and based on this, the 

feasibility and practicability of their 

standards; and the impacts of their 

standards on the following: Emissions 

reductions (of both GHGs and nonGHGs); oil conservation; fuel savings by 

consumers; the auto industry; as well as 

other relevant factors such as safety. 

Conceptually, each agency is 

considering and balancing many of the 

same factors, and each agency is making 

a decision that at its core is answering 

the same basic question of what kind 

and degree of technology penetration is 

appropriate and required in light of all 

of the relevant factors. Each 

Administrator is called upon to exercise 

judgment and propose standards that 

the Administrator determines are a 

reasonable balance of these relevant 

factors. 

As set out in detail in Sections III and 

IV of this notice, both EPA and NHTSA 

believe the agencies’ proposals are fully 

justified under their respective statutory 

criteria. The proposed standards can be 

achieved within the lead time provided, 

based on a projected increased use of 

various technologies which in most 

cases are already in commercial 

application in the fleet to varying 

degrees. Detailed modeling of the 

technologies that could be employed by 

each manufacturer supports this initial 

conclusion. The agencies also carefully 

assessed the costs of the proposed rules, 

both for the industry as a whole and per 

manufacturer, as well as the costs per 

vehicle, and consider these costs to be 

reasonable and recoverable (from fuel 

savings). The agencies recognize the 

significant increase in the application of 

technology that the proposed standards 

would require across a high percentage 

of vehicles, which will require the 

manufacturers to devote considerable 

engineering and development resources 

before 2012 laying the critical 

foundation for the widespread 

deployment of upgraded technology 

across a high percentage of the 2012– 

2016 fleet. This clearly will be 

challenging for automotive 

manufacturers and their suppliers, 

especially in the current economic 

climate. However, based on all of the 

analyses performed by the agencies, our 

judgment is that it is a challenge that 

can reasonably be met. 

The agencies also evaluated the 

impacts of these standards with respect 

to the expected reductions in GHGs and 

oil consumption and, found them to be 

very significant in magnitude. The 

agencies considered other factors such 

as the impacts on noise, energy, and 

vehicular congestion. The impact on 

safety was also given careful 

consideration. Moreover, the agencies 

quantified the various costs and benefits 

of the proposed standards, to the extent 

practicable. The agencies’ analyses to 

date indicate that the overall quantified 

benefits of the proposed standards far 

outweigh the projected costs. All of 

these factors support the reasonableness 

of the proposed standards. 

The agencies also evaluated 

alternatives which were less and more 

stringent than those proposed. Less 

stringent standards, however, would 

forego important GHG emission 

reductions and fuel savings that are 

technically achievable at reasonable cost 

in the lead time provided. In addition, 

less stringent GHG standards would not 

result in a harmonized National 

Program for the country. Based on 

California’s letter of May 18, 2009, the 

GHG emission standards would not 

result in the State of California revising 

its regulations such that compliance 

with EPA’s GHG standards would be 

deemed to be compliance with 

California’s GHG standards for these 

model years. The substantial cost 

advantages associated with a single 

national program discussed at the outset 

of this section would then be foregone. 

The agencies are not proposing any of 

the more stringent alternatives analyzed 

largely due to concerns over lead time 

and economic practicability. The 

proposed standards already require 

aggressive application of technologies, 

and more stringent standards which 

would require more widespread use 

(including more substantial 

implementation of advanced 

technologies such as strong hybrids) 

raise serious issues of adequacy of lead 

time, not only to meet the standards but 

to coordinate such significant changes 

with manufacturers’ redesign cycles. At 

a time when the entire industry remains 

in an economically critical state, the 

agencies believe that it would be 
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unreasonable to propose more stringent 

standards. Even in a case where 

economic factors were not a 

consideration, there are real-world time 

constraints which must be considered 

due to the short lead time available for 

the early years of this program, in 

particular for model years 2012 and 

2013. The physical processes which the 

automotive industry must follow in 

order to introduce reliable, high quality 

products require certain minimums of 

time during the product development 

process. These include time needed for 

durability testing which requires 

significant mileage accumulation under 

a range of conditions (e.g., high and low 

temperatures, high altitude, etc.) in both 

real-world and laboratory conditions. In 

addition, the product development 

cycle includes a number of preproduction gateways on the 

manufacturing side at both the supplier 

level and at the automotive 

manufacturer level that are constrained 

by time. Thus adequate lead-time is an 

important factor that the agencies have 

taken into consideration in evaluating 

the proposed standards as well as the 

alternative standards. 

As noted, both agencies also 

considered the overall costs of their 

respective proposed standards in 

relation to the projected benefits. The 

fact that the benefits are estimated to 

considerably exceed their costs supports 

the view that the proposed standards 

represent a reasonable balance of the 

relevant statutory factors. In drawing 

this conclusion, the agencies 

acknowledge the uncertainties and 

limitations of the analyses. For example, 

the analysis of the benefits is highly 

dependent on the estimated price of fuel 

projected out many years into the 

future. There is also significant 

uncertainty in the potential range of 

values that could be assigned to the 

social cost of carbon. There are a variety 

of impacts that the agencies are unable 

to quantify, such as non-market 

damages, extreme weather, socially 

contingent effects, or the potential for 

longer-term catastrophic events, or the 

impact on consumer choice. The 

agencies also note the need to consider 

factors such as the availability of 

technology within the lead time 

provided and many of the other factors 

discussed above. The cost-benefit 

analyses are one of the important things 

the agencies consider in making a 

judgment as to the appropriate 

standards to propose under their 

respective statutes. Consideration of the 

results of the cost-benefit analyses by 

the agencies, however, includes careful 

consideration of the limitations 

discussed above. 

One important area where the two 

agencies’ authorities are similar but not 

identical involves the transfer of credits 

between a single firm’s car and truck 

fleets. EISA revised EPCA to allow for 

such credit transfers, but with a cap on 

the amount of CAFE credits which can 

be transferred between the car and truck 

fleets. 49 U.S.C. 32903(g)(3). Under CAA 

section 202(a), EPA is proposing to 

allow CO2 credit transfers between a 

single manufacturer’s car and truck 

fleets, with no corresponding limits on 

such transfers. In general, the EPCA 

limit on CAFE credit transfers is not 

expected to have the practical effect of 

limiting the amount of CO2 emission 

credits manufacturers may be able to 

transfer under the CAA program, 

recognizing that manufacturers must 

comply with both the proposed CAFE 

standards and the proposed EPA 

standards. However, it is possible that 

in some specific circumstances the 

EPCA limit on CAFE credit transfers 

could constrain the ability of a 

manufacturer to achieve cost savings 

through unlimited use of GHG 

emissions credit transfers under the 

CAA program. 

The agencies request comment on the 

impact of the EISA credit transfer caps 

on the implementation of the proposed 

CAFE and GHG standards, including 

whether it would impose such a 

constraint and the impacts of a 

constraint on costs, emissions, and fuel 

economy. In addition, the agencies 

invite comment on approaches that 

could assist in addressing this issue, 

recognizing the importance the agencies 

place on harmonization, and that would 

be consistent with their respective 

statutes. For example, any approach 

must be consistent with both the EISA 

transfer caps and the EPCA requirement 

to set annual CAFE standards at the 

maximum feasible average fuel economy 

level that NHTSA decides the 

manufacturers can achieve in that 

model year, based on the agency’s 

consideration of the four statutory 

factors. Manufacturers should submit 

publicly available evidence supporting 

their position on this issue so that a well 

informed decision can be made and 

explained to the public. 

D. Summary of the Proposed Standards 

for the National Program 

1. Joint Analytical Approach 

NHTSA and EPA have worked closely 

together on nearly every aspect of this 

joint proposal. The extent and results of 

this collaboration is reflected in the 

elements of the respective NHTSA and 

EPA proposals, as well as the analytical 

work contained in the Joint Technical 

Support Document (Joint TSD). The 

Joint TSD, in particular, describes 

important details of the analytical work 

that are shared, as well as any 

differences in approach. These includes 

the build up of the baseline and 

reference fleets, the derivation of the 

shape of the curve that defines the 

standards, a detailed description of the 

costs and effectiveness of the technology 

choices that are available to vehicle 

manufacturers, a summary of the 

computer models used to estimate how 

technologies might be added to vehicles, 

and finally the economic inputs used to 

calculate the impacts and benefits of the 

rules, where practicable. Some of these 

are highlighted below. 

EPA and NHTSA have jointly 

developed attribute curve shapes that 

each agency is using for its proposed 

standards. Both agencies reviewed the 

shape of the attribute-based curve used 

for the model year 2011 CAFE 

standards. After a new and thorough 

analysis of current vehicle data and the 

comments received from previous two 

CAFE rules, the two agencies improved 

upon the constrained logistic curve and 

developed a similarly shaped piece-wise 

linear function. Further details of these 

functions can be found in Sections III 

and IV of this preamble as well as 

Chapter 2 of the Joint TSD. 

A critical technical underpinning of 

each agency’s proposal is the cost and 

effectiveness of the various control 

technologies. These are used to analyze 

the feasibility and cost of potential GHG 

and CAFE standards. The technical 

work reflected in the joint TSD is the 

culmination of over 3 years of literature 

research, consultation with experts, 

detailed computer simulations, vehicle 

tear-downs and engineering review, all 

of which will continue into the future 

as more data becomes available. To 

promote transparency, the vast majority 

of this information is collected from 

publically available sources, and can be 

found in the docket of this rule. Nonpublic (i.e., confidential manufacturer) 

information was used only to the 

limited extent it was needed to fill a 

data void. A detailed description of all 

of the technology information 

considered can be found in Chapter 3 of 

the Joint TSD (and for A/C, Chapter 2 

of the EPA RIA). 

This detailed technology data forms 

the inputs to computer models that each 

agency uses to project how vehicle 

manufacturers may add those 

technologies in order to comply with 

new standards. These are the OMEGA 

and Volpe models for EPA and NHTSA 

respectively. The Volpe model is 
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tailored for NHTSA’s EPCA and EISA 

needs, while the OMEGA model is 

tailored for EPA’s CAA needs. In 

developing the National Program, EPA 

and NHTSA have worked closely to 

ensure that consistent and reasonable 

results are achieved from both models. 

This fruitful collaboration has resulted 

in the improvement of both approaches 

and now, far from being redundant, 

these models serve the purposes of the 

respective agencies while also 

maintaining an important validating 

role. The models and their inputs can 

also be found in the docket. Further 

description of the model and outputs 

can be found in Sections II and IV of 

this preamble, and Chapter 3 of the Joint 

TSD. 

This comprehensive joint analytical 

approach has provided a sound and 

consistent technical basis for each 

agency in developing its proposed 

standards, which are summarized in the 

sections below. 

2. Level of the Standards 

In this notice, EPA and NHTSA are 

proposing two separate sets of 

standards, each under its respective 

statutory authorities. EPA is proposing 

national CO2 emissions standards for 

light-duty vehicles under section 202 (a) 

of the Clean Air Act. These standards 

would require these vehicles to meet an 

estimated combined average emissions 

level of 250 grams/mile of CO2 in model 

year 2016. NHTSA is proposing CAFE 

standards for passenger cars and light 

trucks under 49 U.S.C. 32902. These 

standards would require them to meet 

an estimated combined average fuel 

economy level of 34.1 mpg in model 

year 2016. The proposed standards for 

both agencies begin with the 2012 

model year, with standards increasing 

in stringency through model year 2016. 

They represent a harmonized approach 

that will allow industry to build a single 

national fleet that will satisfy both the 

GHG requirements under the CAA and 

CAFE requirements under EPCA/EISA. 

Given differences in their respective 

statutory authorities, however, the 

agencies’ proposed standards include 

some important differences. Under the 

CO2 fleet average standard proposed 

under CAA section 202(a), EPA expects 

manufacturers to take advantage of the 

option to generate CO2-equivalent 

credits by reducing emissions of 

hydrofluorocarbons (HFCs) and CO2 

through improvements in their air 

conditioner systems. EPA accounted for 

these reductions in developing its 

proposed CO2 standard. EPCA does not 

allow vehicle manufacturers to use air 

conditioning credits in complying with 

CAFE standards for passenger cars.41 

CO2 emissions due to air conditioning 

operation are not measured by the test 

procedure mandated by statute for use 

in establishing and enforcing CAFE 

standards for passenger cars. As a result, 

improvements in the efficiency of 

passenger car air conditioners would 

not be considered as a possible control 

technology for purposes of CAFE. 

These differences regarding the 

treatment of air conditioning 

improvements (related to CO2 and HFC 

reductions) affect the relative stringency 

of the EPA standard and NHTSA 

standard. The 250 grams per mile of CO2 

equivalent emissions limit is equivalent 

to 35.5 mpg 42 if the automotive industry 

were to meet this CO2 level all through 

fuel economy improvements. As a 

consequence of the prohibition against 

NHTSA’s allowing credits for air 

conditioning improvements for 

purposes of passenger car CAFE 

compliance, NHTSA is proposing fuel 

economy standards that are estimated to 

require a combined (passenger car and 

light truck) average fuel economy level 

of 34.1 mpg by MY 2016. 

NHTSA and EPA’s proposed 

standards, like the standards NHTSA 

promulgated in March 2009 for model 

year 2011 (MY 2011), are expressed as 

mathematical functions depending on 

vehicle footprint. Footprint is one 

measure of vehicle size, and is 

determined by multiplying the vehicle’s 

wheelbase by the vehicle’s average track 

width.43 The standards that must be met 

by the fleet of each manufacturer would 

be determined by computing the salesweighted harmonic average of the 

targets applicable to each of the 

manufacturer’s passenger cars and light 

trucks. Under these proposed footprintbased standards, the levels required of 

individual manufacturers depend, as 

noted above, on the mix of vehicles 

sold. NHTSA and EPA’s respective 

proposed standards are shown in the 

tables below. It is important to note that 

the standards are the attribute-based 

curves proposed by each agency. The 

values in the tables below reflect the 

agencies’ projection of the 

corresponding fleet levels that would 

result from these attribute-based curves. 

As shown in Table I.D.2–1, NHTSA’s 

proposed fleet-wide CAFE-required 

levels for passenger cars under the 

proposed standards are projected to 

increase from 33.6 to 38.0 mpg between 

MY 2012 and MY 2016. Similarly, fleetwide CAFE levels for light trucks are 

projected to increase from 25.0 to 28.3 

mpg. These numbers do not include the 

effects of other flexibilities and credits 

in the program. NHTSA has also 

estimated the average fleet-wide 

required levels for the combined car and 

truck fleets. As shown, the overall fleet 

average CAFE level is expected to be 

34.1 mpg in MY 2016. These standards 

represent a 4.3 percent average annual 

rate of increase relative to the MY 2011 

standards.44 

TABLE I.D.2–1—AVERAGE REQUIRED FUEL ECONOMY (MPG) UNDER PROPOSED CAFE STANDARDS 

2011-

base 2012 2013 2014 2015 2016 

Passenger Cars ....................................................................................... 30.2 33.6 34.4 35.2 36.4 38.0 

Light Trucks ............................................................................................. 24.1 25.0 25.6 26.2 27.1 28.3 

Combined Cars & Trucks ........................................................................ 27.3 29.8 30.6 31.4 32.6 34.1 

41 There is no such statutory limitation with 

respect to light trucks. 

42 The agencies are using a common conversion 

factor between fuel economy in units of miles per 

gallon and CO2 emissions in units of grams per 

mile. This conversion factor is 8,887 grams CO2 per 

gallon gasoline fuel. Diesel fuel has a conversion 

factor of 10,180 grams CO2 per gallon diesel fuel 

though for the purposes of this calculation, we are 

assuming 100% gasoline fuel. 

43 See 49 CFR 523.2 for the exact definition of 

‘‘footprint.’’ 

44 Because required CAFE levels depend on the 

mix of vehicles sold by manufacturers in a model 

year, NHTSA’s estimate of future required CAFE 

levels depends on its estimate of the mix of vehicles 

that will be sold in that model year. NHTSA 

currently estimates that the MY 2011 standards will 

require average fuel economy levels of 30.5 mpg for 

passenger cars, 24.2 mpg for light trucks, and 27.6 

mpg for the combined fleet. 
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Accounting for the expectation that use FFV credits, NHTSA estimates that projections of what each manufacturer’s 

some manufacturers would continue to the proposed CAFE standards would fleet will comprise in each year of the 

pay civil penalties rather than achieving lead to the following average achieved program: 45 

required CAFE levels, and the ability to fuel economy levels, based on the 

TABLE I.D.2–2—PROJECTED FLEET-WIDE ACHIEVED CAFE LEVELS UNDER THE PROPOSED FOOTPRINT-BASED CAFE 

STANDARDS (MPG) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 

Light Trucks ..................................................................................................................................... 

Combined Cars & Trucks ................................................................................................................ 

32.5 

24.1 

28.7 

33.4 

24.6 

29.6 

34.3 

25.3 

30.4 

35.3 

26.3 

31.6 

36.5 

27.0 

32.7 

NHTSA is also required by EISA to set Secretary for the combined domestic for comparison, the final MY 2011 

a minimum fuel economy standard for and non-domestic passenger automobile standard) are summarized below in 

domestically manufactured passenger fleets manufactured for sale in the Table I.D.2–3.47 For eventual 

cars in addition to the attribute-based United States by all manufacturers in compliance calculations, the final 

passenger car standard. The minimum the model year * * *.’’ 46 calculated minimum standards will be 

Based on NHTSA’s current market standard ‘‘shall be the greater of (A) 27.5 updated to reflect any changes in the

miles per gallon; or (B) 92 percent of the forecast, the agency’s estimates of these average fuel economy level required minimum standards under the proposed average fuel economy projected by the under the final standards. MY 2012–2016 CAFE standards (and, 

TABLE I.D.2–3—ESTIMATED MINIMUM STANDARD FOR DOMESTICALLY MANUFACTURED PASSENGER CARS UNDER FINAL 

MY 2011 AND PROPOSED MY 2012–2016 CAFE STANDARDS FOR PASSENGER CARS (MPG) 

2011 2012 2013 2014 2015 2016 

28.0 .................................................................................................................................................. 30.9 31.6 32.4 33.5 34.9 

EPA is proposing GHG emissions overall fleet-wide CO2 equivalent include the projected use of A/C credits 

standards, and Table I.D.2–4 provides emission levels.48 The g/mi values are by manufacturers. 

EPA’s estimates of their projected CO2 equivalent values because they 

TABLE I.D.2–4—PROJECTED FLEET-WIDE EMISSIONS COMPLIANCE LEVELS UNDER THE PROPOSED FOOTPRINT-BASED 

CO2 STANDARDS (G/MI) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 

Light Trucks ..................................................................................................................................... 

Combined Cars & Trucks ................................................................................................................ 

261 

352 

295 

253 

341 

286 

246 

332 

276 

235 

317 

263 

224 

302 

250 

As shown in Table I.D.2–4, projected 

fleet-wide CO2 emission level 

requirements for cars under the 

proposed approach are projected to 

increase in stringency from 261 to 224 

grams per mile between MY 2012 and 

MY 2016. Similarly, fleet-wide CO2 

equivalent emission level requirements 

for trucks are projected to increase in 

stringency from 352 to 302 grams per 

mile. As shown, the overall fleet average 

CO2 level requirements are projected to 

be 250 g/mile in 2016. 

45 NHTSA’s estimates account for availability of 

CAFE credits for the sale of flexibly-fuel vehicles 

(FFVs), and for the potential that some 

manufacturers would pay civil penalties rather than 

complying with the proposed CAFE standards. This 

yields NHTSA’s estimates of the real-world fuel 

economy that could be achieved under the 

proposed CAFE standards. NHTSA has not 

EPA anticipates that manufacturers 

will take advantage of program 

flexibilities such as flex fueled vehicle 

credits, and car/truck credit trading. 

Due to the credit trading between cars 

and trucks, the estimated improvements 

in CO2 emissions are distributed 

differently than shown in Table I.D 2– 

4, where full manufacturer compliance 

is assumed. Table I.D.2–5 shows EPA 

projection of the achieved emission 

levels of the fleet for MY 2012 through 

2016, which does consider the impact of 

included any potential impact of car-truck credit 

transfer in its estimate of the achieved CAFE levels. 46 49 U.S.C. 32902(b)(4). 47 In the March 2009 final rule establishing MY 

2011 standards for passenger cars and light trucks, 

NHTSA estimated that the minimum required 

CAFE standard for domestically manufactured 

passenger cars would be 27.8 mpg under the MY 

2011 passenger car standard. Based on the agency’s 

car/truck credit transfer and the increase 

in emissions due to program flexibilities 

including flex fueled vehicle credits and 

the temporary leadtime allowance 

alternative standards. The use of 

optional air conditioning credits is 

considered both in this analysis of 

achieved levels and of the projected 

levels described above.. As can be seen 

in Table I.D.2–5, the projected achieved 

levels are slightly higher for model years 

2012–2015 due to the projected use of 

the proposed flexibilities, but in model 

current forecast of the MY 2011 passenger car 

market, NHTSA now estimates that the minimum 

required CAFE standard will be 28.0 mpg in MY 

2011. 

48 These levels do not include the effect of 

flexible fuel credits, transfer of credits between cars 

and trucks, temporary lead time allowance, or any 

other credits with the exception of air conditioning. 
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year 2016 the achieved value is 

projected to be 250 g/mi for the fleet. 

TABLE I.D.2–5—PROJECTED FLEET-WIDE ACHIEVED EMISSION LEVELS UNDER THE PROPOSED FOOTPRINT-BASED CO2 

STANDARDS (G/MI) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 

Light Trucks ..................................................................................................................................... 

Combined Cars & Trucks ................................................................................................................ 

264 

365 

302 

254 

355 

291 

245 

346 

281 

232 

332 

267 

220 

311 

250 

NHTSA’s and EPA’s technology 

assessment indicates there is a wide 

range of technologies available for 

manufacturers to consider in upgrading 

vehicles to reduce GHG emissions and 

improve fuel economy.49 As noted, 

these include improvements to the 

engines such as use of gasoline direct 

injection and downsized engines that 

use turbochargers to provide 

performance similar to that of larger 

engines, the use of advanced 

transmissions, increased use of startstop technology, improvements in tire 

performance, reductions in vehicle 

weight, increased use of hybrid and 

other advanced technologies, and the 

initial commercialization of electric 

vehicles and plug-in hybrids. EPA is 

also projecting improvements in vehicle 

air conditioners including more efficient 

as well as low leak systems. All of these 

technologies are already available today, 

and EPA’s and NHTSA’s assessment is 

that manufacturers would be able to 

meet the proposed standards through 

more widespread use of these 

technologies across the fleet. 

With respect to the practicability of 

the standards in terms of lead time, 

during MYs 2012–2016 manufacturers 

are expected to go through the normal 

automotive business cycle of 

redesigning and upgrading their lightduty vehicle products, and in some 

cases introducing entirely new vehicles 

not on the market today. This proposal 

would allow manufacturers the time 

needed to incorporate technology to 

achieve GHG reductions and improve 

fuel economy during the vehicle 

redesign process. This is an important 

aspect of the proposal, as it avoids the 

much higher costs that would occur if 

manufacturers needed to add or change 

technology at times other than their 

scheduled redesigns. This time period 

would also provide manufacturers the 

opportunity to plan for compliance 

using a multi-year time frame, again 

consistent with normal business 

49 The close relationship between emissions of 

CO2—the most prevalent greenhouse gas emitted by 

motor vehicles—and fuel consumption, means that 

the technologies to control CO2 emissions and to 

improve fuel economy overlap to a great degree 

practice. Over these five model years, 

there would be an opportunity for 

manufacturers to evaluate almost every 

one of their vehicle model platforms 

and add technology in a cost effective 

way to control GHG emissions and 

improve fuel economy. This includes 

redesign of the air conditioner systems 

in ways that will further reduce GHG 

emissions. 

Both agencies considered other 

standards as part of the rulemaking 

analyses, both more and less stringent 

than those proposed. EPA’s and 

NHTSA’s analysis of alternative 

standards are contained in Sections III 

and IV of this notice, respectively. 

The CAFE and GHG standards 

described above are based on 

determining emissions and fuel 

economy using the city and highway 

test procedures that are currently used 

in the CAFE program. Both agencies 

recognize that these test procedures are 

not fully representative of real world 

driving conditions. For example EPA 

has adopted more representative test 

procedures that are used in determining 

compliance with emissions standards 

for pollutants other than GHGs. These 

test procedures are also used in EPA’s 

fuel economy labeling program. 

However, as discussed in Section III, the 

current information on effectiveness of 

the individual emissions control 

technologies is based on performance 

over the two CAFE test procedures. For 

that reason EPA is proposing to use the 

current CAFE test procedures for the 

proposed CO2 standards and is not 

proposing to change those test 

procedures in this rulemaking. NHTSA, 

as discussed above, is limited by statute 

in what test procedures can be used for 

purposes of passenger car testing; 

however there is no such statutory 

limitation with respect to test 

procedures for trucks. However, the 

same reasons for not changing the truck 

test procedures apply for CAFE as well. 

Both EPA and NHTSA are interested 

in developing programs that employ test 

procedures that are more representative 

of real world driving conditions, to the 

extent authorized under their respective 

statutes. This is an important issue, and 

the agencies intend to address it in the 

context of a future rulemaking to 

address standards for model year 2017 

and thereafter. This could include a 

range of test procedure changes to better 

represent real-world driving conditions 

in terms of speed, acceleration, 

deceleration, ambient temperatures, use 

of air conditioners, and the like. With 

respect to air conditioner operation, 

EPA discusses the procedures it intends 

to use for determining emissions credits 

for controls on air conditioners in 

Section III. Comment is also invited in 

Section IV on the issue of providing air 

conditioner credits under 49 U.S.C. 

32902 and/or 32904 for light-trucks in 

the model years covered by this 

proposal. 

Finally, based on the information EPA 

developed in its recent rulemaking that 

updated its fuel economy labeling 

program to better reflect average realworld fuel economy, the calculation of 

fuel savings and CO2 emissions 

reductions obtained by the proposed 

CAFE and GHG standards includes 

adjustments to account for the 

difference between the fuel economy 

level measured in the CAFE test 

procedure and the fuel economy 

actually achieved on average under real 

world driving conditions. These 

adjustments are industry averages for 

the vehicles’ performance as a whole, 

however, and are not a substitute for the 

information on effectiveness of 

individual control technologies that will 

be explored for purposes of a future 

GHG and CAFE rulemaking. 

3. Form of the Standards 

In this rule, NHTSA and EPA are 

proposing attribute-based standards for 

passenger cars and light trucks. NHTSA 

adopted an attribute standard based on 

vehicle footprint in its Reformed CAFE 

program for light trucks for model years 

2008–2011,50 and recently extended this 

approach to passenger cars in the CAFE 

rule for MY 2011 as required by EISA.51 

EPA and NHTSA are proposing vehicle 

footprint as the attribute for the GHG 

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


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

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and CAFE standards. Footprint is 

defined as a vehicle’s wheelbase 

multiplied by its track width—in other 

words, the area enclosed by the points 

at which the wheels meet the ground. 

The agencies believe that the footprint 

attribute is the most appropriate 

attribute on which to base the standards 

under consideration, as further 

discussed later in this notice and in 

Chapter 2 of the joint TSD. 

Under the proposed footprint-based 

standards, each manufacturer would 

have a GHG and CAFE target unique to 

its fleet, depending on the footprints of 

the vehicle models produced by that 

manufacturer. A manufacturer would 

have separate footprint-based standards 

for cars and for trucks. Generally, larger 

vehicles (i.e., vehicles with larger 

footprints) would be subject to less 

stringent standards (i.e., higher CO2 

grams/mile standards and lower CAFE 

standards) than smaller vehicles. This is 

because, generally speaking, smaller 

vehicles are more capable of achieving 

higher standards than larger vehicles. 

While a manufacturer’s fleet average 

standard could be estimated throughout 

the model year based on projected 

production volume of its vehicle fleet, 

the standard to which the manufacturer 

must comply would be based on its final 

model year production figures. A 

manufacturer’s calculation of fleet 

average emissions at the end of the 

model year would thus be based on the 

production-weighted average emissions 

of each model in its fleet. 

In designing the footprint-based 

standards, the agencies built upon the 

footprint standard curves for passenger 

cars and light trucks used in the CAFE 

rule for MY 2011.52 EPA and NHTSA 

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

worked together to design car and truck 

footprint curves that followed from 

logistic curves used in that rule. The 

agencies started by addressing two main 

concerns regarding the car curve. The 

first concern was that the 2011 car curve 

was relatively steep near the inflection 

point thus causing concern that small 

variations in footprint could produce 

relatively large changes in fuel economy 

targets. A curve that was directionally 

less steep would reduce the potential for 

gaming. The second issue was that the 

inflection point of the logistic curve was 

not centered on the distribution of 

vehicle footprints across the industries’ 

fleet, thus resulting in a flat (universal 

or unreformed) standard for over half 

the fleet. The proposed car curve has 

been shifted and made less steep 

compared to the car curve adopted by 

NHTSA for 2011, such that it better 

aligns the sloped region with higher 

production volume vehicle models. 

Finally, both the car and truck curves 

are defined in terms of a constrained 

linear function for fuel consumption 

and, equivalently, a piece-wise linear 

function for CO2. NHTSA and EPA 

include a full discussion of the 

development of these curves in the joint 

TSD and a summary is found in Section 

II below. In addition, a full discussion 

of the equations and coefficients that 

define the curves is included in Section 

III for the CO2 curves and Section IV for 

the mpg curves. The following figures 

illustrate the standards. First Figure 

I.D.3–1 shows the fuel economy (mpg) 

car standard curve. 

Under an attribute-based standard, 

every vehicle model has a performance 

target (fuel economy for the CAFE 

standards, and CO2 g/mile for the GHG 

emissions standards), the level of which 

depends on the vehicle’s attribute (for 

this proposal, footprint). The 

manufacturers’ fleet average 

performance is determined by the 

production-weighed 53 average (for 

CAFE, harmonic average) of those 

targets. NHTSA and EPA are proposing 

CAFE and CO2 emissions standards 

defined by constrained linear functions 

and, equivalently, piecewise linear 

functions.54 As a possible option for 

future rulemakings, the constrained 

linear form was introduced by NHTSA 

in the 2007 NPRM proposing CAFE 

standards for MY 2011–2015. 

NHTSA is proposing the attribute 

curves below for assigning a fuel 

economy level to an individual vehicle’s 

footprint value, for model years 2012 

through 2016. These mpg values would 

be production weighted to determine 

each manufacturer’s fleet average 

standard for cars and trucks. Although 

the general model of the equation is the 

same for each vehicle category and each 

year, the parameters of the equation 

differ for cars and trucks. Each 

parameter also changes on an annual 

basis, resulting in the yearly increases in 

stringency. Figure I.D.3–1 below 

illustrates the passenger car CAFE 

standard curves for model years 2012 

through 2016 while Figure I.D.3–2 

below illustrates the light truck standard 

curves for model years 2012–2016. The 

MY 2011 final standards for cars and 

trucks, which are specified by a 

constrained logistic function rather than 

a constrained linear function, are shown 

for comparison. 

BILLING CODE 4910–59–P 

53 Production for sale in the United States. 

54 The equations are equivalent but are specified 

differently due to differences in the agencies’ 

respective models. 

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EPA is proposing the attribute curves 

below for assigning a CO2 level to an 

individual vehicle’s footprint value, for 

model years 2012 through 2016. These 

CO2 values would be production 

weighted to determine each 

manufacturer’s fleet average standard 

for cars and trucks. Although the 

general model of the equation is the 

same for each vehicle category and each 

year, the parameters of the equation 

differ for cars and trucks. Each 

parameter also changes on an annual 

basis, resulting in the yearly increases in 

stringency. Figure I.D.3–3 below 

illustrates the CO2 car standard curves 

for model years 2012 through 2016 

while Figure I.D.3–4 shows the CO2 

truck standard curves for Model Years 

2012–2016. 

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BILLING CODE 4910–59–C NHTSA CAFE program would also be standards as those used in the CAFE NHTSA and EPA propose to use the classified as a car under the EPA GHG program for the 2011 model year same vehicle category definitions for program, and likewise for trucks. EPA standards.55 This proposed approach of determining which vehicles are subject and NHTSA are proposing to employ using CAFE definitions allows EPA’s to the car footprint curves versus the the same car and truck definitions for truck curve standards. In other words, a the MY 2012–2016 CAFE and GHG vehicle classified as a car under the 55 49 CFR part 523. 
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proposed CO2 standards and the can be relatively neutral with respect to distribution of different vehicle sizes in 

proposed CAFE standards to be vehicle size and consumer choice. All the fleet, which means that consumers 

harmonized across all vehicles. EPA is vehicles, whether smaller or larger, will still be able to purchase the size of 

not changing the car/truck definition for must make improvements to reduce CO2 vehicle that meets their needs. Table 

the purposes of any other previous rule. emissions, and therefore all vehicles I.D.3–1 illustrates the fact that different 

Generally speaking, a smaller will be relatively more expensive. With vehicle sizes will have varying CO2

footprint vehicle will have lower CO2 the footprint-based standard approach, emissions and fuel economy targets emissions relative to a larger footprint EPA and NHTSA believe there should under the proposed standards. vehicle. A footprint-based CO2 standard be no significant effect on the relative 

TABLE I.D.3–1—MODEL YEAR 2016 CO2 AND FUEL ECONOMY TARGETS FOR VARIOUS MY 2008 VEHICLE TYPES 

Vehicle type Example models 

Example 

model footprint 

(sq. ft.) 

CO2 emissions 

target 

(g/mi) 

Fuel economy 

target 

(mpg) 

Compact car .................................................... 

Midsize car ...................................................... 

Fullsize car ...................................................... 

Honda Fit ........................................................ 

Ford Fusion .................................................... 

Chrysler 300 ................................................... 

40 

46 

53 

214 

237 

270 

41.4 

37.3 

32.8 

Example Passenger Cars 

Example Light-Duty Trucks 

Small SUV ....................................................... 

Midsize crossover ........................................... 

Minivan ............................................................ 

Large pickup truck .......................................... 

4WD Ford Escape .......................................... 

Nissan Murano ............................................... 

Toyota Sienna ................................................ 

Chevy Silverado ............................................. 

44 

49 

55 

67 

269

289 

313 

358 

32.8 

30.6 

28.2 

24.7 

E. Summary of Costs and Benefits for 

the Joint Proposal 

This section summarizes the projected 

costs and benefits of the proposed CAFE 

and GHG emissions standards. These 

projections helped inform the agencies’ 

choices among the alternatives 

considered and provide further 

confirmation that proposed standards 

fall within the spectrum of choices 

allowable under their respective 

statutory criteria. The costs and benefits 

projected by NHTSA to result from 

NHTSA’s proposed CAFE standards are 

presented first, followed by those from 

EPA’s analysis of the proposed GHG 

emissions standards. 

The agencies recognize that there are 

uncertainties regarding the benefit and 

cost values presented in this proposal. 

Some benefits and costs are not 

quantified. The values of other benefits 

and costs could be too low or too high. 

For several reasons, the estimates for 

costs and benefits presented by NHTSA 

and EPA, while consistent, are not 

directly comparable, and thus should 

not be expected to be identical. Most 

important, NHTSA and EPA’s proposed 

standards would require slightly 

different fuel efficiency improvements. 

EPA’s proposed GHG standard is more 

stringent in part due to its assumptions 

about manufacturers’ use of air 

conditioning credits, which result from 

reductions in air conditioning-related 

emissions of HFCs and CO2. In addition, 

the proposed CAFE and GHG standards 

offer different program flexibilities, and 

the agencies’ analyses differ in their 

accounting for these flexibilities (for 

example, FFVs etc.), primarily because 

NHTSA is statutorily prohibited from 

considering some flexibilities when 

establishing CAFE standards, while EPA 

is not. These differences contribute to 

differences in the agencies’ respective 

estimates of costs and benefits resulting 

from the new standards. 

Because EPCA prohibits NHTSA from 

considering the use of FFV credits when 

establishing CAFE standards, the 

agency’s primary analysis of costs, fuel 

savings, and related benefits from 

imposing higher CAFE standards does 

not include them. However, EPCA does 

not prohibit NHTSA from considering 

the fact that manufacturers may pay 

civil penalties rather than complying 

with CAFE standards, and NHTSA’s 

primary analysis accounts for some 

manufacturers’ tendency to do so. In 

addition, NHTSA performed a 

supplemental analysis of the effect of 

FFV credits on benefits and costs from 

its proposed CAFE standards, to 

demonstrate the real-world impacts of 

FFVs, and the summary estimates 

presented in Section IV include these 

effects. Including the use of FFV credits 

reduces estimated per-vehicle 

compliance costs of the program. 

However, as shown below, including 

FFV credits does not significantly 

change the projected fuel savings and 

CO2 reductions, because FFV credits 

reduce the fuel economy levels that 

manufacturers achieve not only under 

the proposed standards, but also under 

the baseline MY 2011 CAFE standards. 

Also, EPCA, as amended by EISA, 

allows manufacturers to transfer credits 

between their passenger car and light 

truck fleets. However, EPCA also 

prohibits NHTSA from considering 

manufacturers’ ability to use CAFE 

credits when determining the stringency 

of the CAFE standards. Because of this 

prohibition, NHTSA’s primary analysis 

does not account for the extent to which 

credit transfers might actually occur. 

For purposes of its supplemental 

analysis, NHTSA considered accounting 

for the fact that EPCA allows some 

transfer of CAFE credits between the 

passenger car and light truck fleets, but 

determined that in NHTSA’s year-byyear analysis, manufacturers’ likely 

credit transfers cannot be reasonably 

estimated at this time.56 

Therefore, NHTSA’s primary analysis 

shows the estimates the agency 

considered for purposes of establishing 

new CAFE standards, and its 

supplemental analysis including 

manufacturers’ potential use of FFV 

credits currently reflects the agency’s 

best estimate of the potential real-world 

effects of the proposed CAFE standards. 

56 NHTSA’s analysis estimates multi-year 

planning effects within a context in which each 

model year is represented explicitly, and 

technologies applied in one model year carry 

forward to future model years. NHTSA does not 

currently have a basis to estimate how a 

manufacturer might, for example, weigh the transfer 

of credits from the passenger car to the light truck 

fleet in MY 2013 against the potential to carry light 

truck technologies forward from MY 2013 through 

MY 2016. The agency is considering the possibility 

of implementing such analysis for purposes of the 

final rule. 
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EPA made explicit assumptions about 

manufacturers’ use of FFV credits under 

both the baseline and control 

alternatives, and its estimates of costs 

and benefits from the proposed GHG 

standards reflect these assumptions. 

However, under the proposed GHG 

standards, FFV credits would be 

available through MY 2015; starting in 

MY 2016, EPA proposes to allow FFV 

credits only based on a manfucturers’s 

demonstration that the alternative fuel 

is actually being used in the vehicles 

and the actual GHG performance for the 

vehicle run on that alternative fuel. 

EPA’s analysis also assumes that 

manufacturers would transfer credits 

between their car and truck fleets in the 

MY 2011 baseline subject to the 

maximum value allowed by EPCA, and 

that unlimited car-truck credit transfers 

would occur under the proposed GHG 

standards. Including these assumptions 

in EPA’s analysis increases the resulting 

estimates of fuel savings and reductions 

in GHG emissions, while reducing 

EPA’s estimates of program compliance 

costs. 

Finally, under the proposed EPA GHG 

program, there is no ability for a 

manufacturer to intentionally pay fines 

in lieu of meeting the standard. Under 

EPCA, however, vehicle manufacturers 

are allowed to pay fines as an 

alternative to compliance with 

applicable CAFE standards. NHTSA’s 

analysis explicitly estimates the level of 

voluntary fine payment by individual 

manufacturers, which reduces NHTSA’s 

estimates of both the costs and benefits 

of its proposed CAFE standards. In 

contrast, the CAA does not allow for 

fine payment in lieu of compliance with 

emission standards, and EPA’s analysis 

of costs and benefits from its proposed 

standard thus assumes full compliance. 

This assumption results in higher 

estimates of fuel savings, reductions in 

GHG emissions, and manufacturers’ 

compliance costs to sell fleets that 

comply with both NHTSA’s proposed 

CAFE program and EPA’s proposed 

GHG program. 

In summary, the projected costs and 

benefits presented by NHTSA and EPA 

are not directly comparable, because the 

levels being proposed by EPA include 

air conditioning-related improvements 

in equivalent fuel efficiency and HFC 

reductions, because the assumptions 

incorporated in EPA’s analysis 

regarding car-truck credit transfers, and 

because of the projection by EPA of 

complete compliance with the proposed 

GHG standards. It should also be 

expected that overall EPA’s estimates of 

GHG reductions and fuel savings 

achieved by the proposed GHG 

standards will be slightly higher than 

those projected by NHTSA only for the 

CAFE standards because of the reasons 

described above. For the same reasons, 

EPA’s estimates of manufacturers’ costs 

for complying with the proposed 

passenger car and light trucks GHG 

standards are slightly higher than 

NHTSA’s estimates for complying with 

the proposed CAFE standards. 

1. Summary of Costs and Benefits of 

Proposed NHTSA CAFE Standards 

Without accounting for the 

compliance flexibilities that NHTSA is 

prohibited from considering when 

determining the level of new CAFE 

standards, since manufacturers’ 

decisions to use those flexibilities are 

voluntary, NHTSA estimates that these 

fuel economy increases would lead to 

fuel savings totaling 62 billion gallons 

throughout the useful lives of vehicles 

sold in MYs 2012–2016. At a 3% 

discount rate, the present value of the 

economic benefits resulting from those 

fuel savings is $158 billion. 

The agency further estimates that 

these new CAFE standards would lead 

to corresponding reductions in CO2 

emissions totaling 656 million metric 

tons (mmt) during the useful lives of 

vehicles sold in MYs 2012–2016. The 

present value of the economic benefits 

from avoiding those emissions is $16.4 

billion, based on a global social cost of 

carbon value of $20 per metric ton,57 

although NHTSA estimated the benefits 

associated with five different values of 

a one ton GHG reduction ($5, $10, $20, 

$34, $56).58 See Section II for a more 

detailed discussion of the social cost of 

carbon. It is important to note that 

NHTSA’s CAFE standards and EPA’s 

GHG standards will both be in effect, 

and each will lead to increases in 

average fuel economy and CO2 

emissions reductions. The two agencies’ 

standards together comprise the 

National Program, and this discussion of 

costs and benefits of NHTSA’s CAFE 

standards does not change the fact that 

both the CAFE and GHG standards, 

jointly, are the source of the benefits 

and costs of the National Program. 

TABLE I.E.1–1—NHTSA FUEL SAVED (BILLION GALLONS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER PROPOSED CAFE 


STANDARDS (WITHOUT FFV CREDITS) 


2012 2013 2014 2015 2016 Total 

Fuel (b. gal.) ..................................................................................................................... 4 9 13 16 19 62 

CO2 (mmt) ........................................................................................................................ 44 96 137 173 206 656 

Considering manufacturers’ ability to 

earn credit toward compliance by 

selling FFVs, NHTSA estimates very 

57 We have developed two interim estimates of 

the global social cost of carbon (SCC) ($/tCO2 in 

2007 (2006$)): $33 per tCO2 at a 3% discount rate, 

and $5 per tCO2 with a 5% discount rate. The 3% 

and 5% estimates have independent appeal and at 

this time a clear preference for one over the other 

is not warranted. Thus, we have also included—and 

centered our current attention on—the average of 

little change in incremental fuel savings 

and avoided CO2 emissions, assuming 

the estimates associated with these discount rates, 

which is $19 (in 2006$) per ton of CO2 emissions. 

When converted to 2007$ for consistency with 

other economic values used in the agency’s 

analysis, this figure corresponds to $20 per metric 

ton of CO2 emissions occurring in 2007. This value 

is assumed to increase at 3% annually for emissions 

occurring after 2007. 

FFV credits would be used toward both 

the baseline and proposed standards: 

58 The $10 and $56 figures are alternative interim 

estimates based on uncertainty about interest rates 

of long periods of time. They are based on an 

approach that models discount rate uncertainty as 

something that evolves over time; in contrast, the 

preferred approach mentioned in the immediately 

preceding paragraph assumes that there is a single 

discount rate with equal probability of 3% and 5%. 
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TABLE I.E.1–2—NHTSA FUEL SAVED (BILLION GALLONS) AND CO2 EMISSIONS AVOIDED (MMT) UNDER PROPOSED CAFE 


STANDARDS (WITH FFV CREDITS) 


2012 2013 2014 2015 2016 Total 

Fuel (b. gal.) ..................................................................................................................... 5 8 12 15 19 59 

CO2 (mmt) ........................................................................................................................ 49 90 129 167 204 639 

NHTSA estimates that these fuel tendency to travel more when the cost value of these benefits would total more 

economy increases would produce other of driving declines (as it does when fuel than $200 billion over the useful lives 

benefits both to drivers (e.g., reduced economy increases). NHTSA has of vehicles sold during MYs 2012–2016. 

time spent refueling) and to the U.S. estimated the total monetary value to More discussion regarding monetized (e.g., reductions in the costs of society of these benefits and disbenefits, benefits can be found in Section IV of 

petroleum imports beyond the direct and estimates that the proposed this notice and in NHTSA’s Regulatory savings from reduced oil purchases, as standards will produce significant net Impact Analysis. well as some disbenefits (e.g., increase benefits to society. Using a 3% discount 

traffic congestion) caused by drivers’ rate, NHTSA estimates that the present 

TABLE I.E.1–3—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED CAFE STANDARDS (BEFORE FFV 


CREDITS, USING 3 PERCENT DISCOUNT RATE) 


2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 7.6 17.0 24.4 31.2 38.7 119.1 

Light Trucks ..................................................................................................................... 5.5 11.6 17.3 22.2 26.0 82.6 

Combined ......................................................................................................................... 13.1 28.7 41.8 53.4 64.7 201.7 

Using a 7% discount rate, NHTSA benefits would total more than $159 

estimates that the present value of these billion over the same time period. 

TABLE I.E.1–4—NHTSA DISCOUNTED BENEFITS ($BILLION) UNDER PROPOSED STANDARDS (BEFORE FFV CREDITS, 

USING 7 PERCENT DISCOUNT RATE) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 6.0 13.6 19.5 25.0 31.1 95.3 

Light Trucks ..................................................................................................................... 4.3 9.1 13.5 17.4 20.4 64.6 

Combined ......................................................................................................................... 10.3 22.6 33.1 42.4 51.5 159.8 

NHTSA estimates that FFV credits 

could reduce achieved benefits by about 

4.5%: 

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

USING A 3 PERCENT DISCOUNT RATE) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 7.8 15.9 22.5 28.6 37.1 111.9 

Light Trucks ..................................................................................................................... 6.1 10.2 15.9 22.1 26.3 80.5 

Combined ......................................................................................................................... 13.9 26.1 38.4 50.7 63.3 192.5 

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


USING A 7 PERCENT DISCOUNT RATE) 


2012 2013 2014 2015 2016 Total 

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

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

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

NHTSA attributes most of these above—to reductions in fuel Administration’s (EIA’s) reference case 

benefits—about $158 billion (at a 3% consumption, valuing fuel (for societal forecast from Annual Energy Outlook 

discount rate and excluding purposes) at the future pre-tax prices (AEO) 2009. The Preliminary Regulatory 

consideration of FFV credits), as noted projected in the Energy Information Impact Analysis (PRIA) accompanying 
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this proposed rule presents a detailed 	 analysis of specific benefits of the 

proposed rule. 

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

(BEFORE FFV CREDITS) 

Amount 

Monetized value (discounted) 

3% Discount rate 7% Discount rate 

Fuel savings ................................... 

CO2 emissions reductions ............. 

61.6 billion gallons ........................ 

656 million metric tons (mmt) ....... 

$158.0 billion ................................ 

$16.4 billion .................................. 

$125.3 billion. 

$12.8 billion. 

NHTSA estimates that the increases in monetary outlays. The agency estimates those required to comply with the MY 

technology application necessary to that incremental costs for achieving its 2011 CAFE standards—will total about 

achieve the projected improvements in proposed standards—that is, outlays by $60 billion (i.e., during MYs 2012– 

fuel economy will entail considerable vehicle manufacturers over and above 2016). 

TABLE I.E.1–7—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER PROPOSED CAFE STANDARDS 

(BEFORE FFV CREDITS) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 4.1 6.5 8.4 9.9 11.8 40.8 

Light Trucks ..................................................................................................................... 1.5 2.8 4.0 5.2 5.9 19.4 

Combined ......................................................................................................................... 5.7 9.3 12.5 15.1 17.6 60.2 

NHTSA estimates that use of FFV 

credits could significantly reduce these 

outlays: 

TABLE I.E.1–8—NHTSA INCREMENTAL TECHNOLOGY OUTLAYS ($BILLION) UNDER PROPOSED CAFE STANDARDS (WITH 

FFV CREDITS) 

2012 2013 2014 2015 2016 Total 

Passenger Cars ............................................................................................................... 2.5 4.4 6.1 7.4 9.3 29.6 

Light Trucks ..................................................................................................................... 1.3 2.0 3.1 4.3 5.0 15.6 

Combined ......................................................................................................................... 3.7 6.3 9.2 11.7 14.2 45.2 

The agency projects that recover these increased outlays (and, to would lead to increases in average new 

manufacturers will recover most or all a much lesser extent, the civil penalties vehicle prices ranging from $476 per 

of these additional costs through higher that some companies are expected to vehicle in MY 2012 to $1,091 per 

selling prices for new cars and light pay for noncompliance), the agency vehicle in MY 2016: 

trucks. To allow manufacturers to estimates that the proposed standards 

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

STANDARDS (BEFORE FFV CREDITS) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 

Light Trucks ..................................................................................................................................... 

Combined ......................................................................................................................................... 

591 

283 

476 

735 

460 

635 

877 

678 

806 

979 

882 

945 

1,127 

1,020 

1,091 

NHTSA estimates that use of FFV 

credits could significantly reduce these 

costs, especially in earlier model years: 

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

STANDARDS (WITH FFV CREDITS) 

2012 2013 2014 2015 2016 

Passenger Cars ............................................................................................................................... 

Light Trucks ..................................................................................................................................... 

295 

231 

448 

347 

591 

533 

695 

758 

851 

895 
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TABLE I.E.1–10—NHTSA INCREMENTAL INCREASES IN AVERAGE NEW VEHICLE COSTS ($) UNDER PROPOSED CAFE 


STANDARDS (WITH FFV CREDITS)—Continued 


2012 2013 2014 2015 2016 

Combined ......................................................................................................................................... 271 411 571 716 866 

NHTSA estimates, therefore, that the 

total benefits of these proposed 

standards would be more than three 

times the magnitude of the 

corresponding costs. As a consequence, 

its proposed standards would produce 

net benefits of $142 billion at a 3 

percent discount rate (with FFV credits, 

$147 billion) or $100 billion at a 7 

percent discount rate over the useful 

lives of vehicles sold during MYs 2012– 

2016. 

2. Summary of Costs and Benefits of 

Proposed EPA GHG Standards 

EPA has conducted a preliminary 

assessment of the costs and benefits of 

the proposed GHG standards. Table 

I.E.2–1 shows EPA’s estimated lifetime 

fuel savings and CO2 equivalent 

emission reductions for all vehicles sold 

in the model years 2012–2016. The 

values in Table I.E.2–1 are projected 

lifetime totals for each model year and 

are not discounted. As documented in 

DRIA Chapter 5, the potential credit 

transfer between cars and trucks may 

change the distribution of the fuel 

savings and GHG emission impacts 

between cars and trucks. As discussed 

above with respect to NHTSA’s CAFE 

standards, it is important to note that 

NHTSA’s CAFE standards and EPA’s 

GHG standards will both be in effect, 

and each will lead to increases in 

average fuel economy and CO2 

emissions reductions. The two agency’s 

standards together comprise the 

National Program, and this discussion of 

costs and benefits of EPA’s GHG 

standards does not change the fact that 

both the CAFE and GHG standards, 

jointly, are the source of the benefits 

and costs of the National Program. 

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

2012 2013 2014 2015 2016 Total 

Cars .................................................... 

Light Trucks ........................................ 

Combined ............................................ 

Fuel (billion gallons) ........................... 

Fuel (billion barrels) ............................ 

CO2 EQ (mmt) .................................... 

Fuel (billion gallons) ........................... 

Fuel (billion barrels) ............................ 

CO2 EQ (mmt) .................................... 

Fuel (billion gallons) ........................... 

Fuel (billion barrels) ............................ 

CO2 EQ (mmt) .................................... 

4 

0 .1 

51 

2 

0 .1 

30 

7 

0 .2 

81 

6 

0 .1 

74 

4 

0 .1 

51 

10 

0 .2 

125 

8 

0 .2 

98 

6 

0 .1 

77 

14 

0 .3 

174 

11 

0 .3 

137 

9 

0 .2 

107 

19 

0 .5 

244 

14 

0 .3 

179 

12 

0 .3 

143 

26 

0 .6 

323 

43 

1 .0 

539 

33 

0 .8 

408 

76 

1 .8 

947 

Table I.E.2–2 shows EPA’s estimated 

lifetime discounted benefits for all 

vehicles sold in model years 2012–2016. 

Although EPA estimated the benefits 

associated with five different values of 

a one ton GHG reduction ($5, $10, $20, 

$34, $56), for the purposes of this 

overview presentation of estimated 

benefits EPA is showing the benefits 

associated with one of these marginal 

values, $20 per ton of CO2, in 2007 

dollars and 2007 emissions, in this joint 

proposal. Table I.E.2–2 presents benefits 

based on the $20 value. Section III.H 

presents the five marginal values used 

to estimate monetized benefits of GHG 

reductions and Section III.H presents 

the program benefits using each of the 

five marginal values, which represent 

only a partial accounting of total 

benefits due to omitted climate change 

impacts and other factors that are not 

readily monetized. These factors are 

being used on an interim basis while 

analysis is conducted to generate new 

estimates. The values in the table are 

discounted values for each model year 

throughout their projected lifetimes. 

The benefits include all benefits 

considered by EPA such as fuel savings, 

GHG reductions, PM benefits, energy 

security and other externalities such as 

reduced refueling and accidents, 

congestion and noise. The lifetime 

discounted benefits are shown for one of 

five different social cost of carbon (SCC) 

values considered by EPA. The values 

in Table I.E.2–2 do not include costs 

associated with new technology 

required to meet the proposal. 

TABLE I.E.2–2—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME DISCOUNTED BENEFITS ASSUMING THE $20/TON
 

SCC VALUE a
 

[$Billions of 2007 dollars] 


Discount rate 

Model year 

2012 2013 2014 2015 2016 Total 

3% .................................................................................................................................... 

7 ....................................................................................................................................... 

$20.4 

15.8 

$31.7 

24.7 

$44.9 

34.9 

$63.7 

49.3 

$87.2 

67.7 

$248 

193 

a The benefits include all benefits considered by EPA such as fuel savings, GHG reductions, PM benefits, energy security and other 

externalities such as reduced refueling and accidents, congestion and noise. 
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Table I.E.2–3 shows EPA’s estimated 2012–2016. The estimated fuel savings values of the discounted monetized-fuel 

lifetime fuel savings, lifetime CO2 in billions of barrels and the GHG savings and monetized-CO2 reductions 

emission reductions, and the monetized reductions in million metric tons of CO2 for the five model years 2012–2016 net present values of those fuel savings shown in Table I.E.2–3 are totals for the throughout their lifetimes. The and CO2 emission reductions. The five model years throughout their monetized values in Table I.E.2–3 

gallons of fuel and CO2 emission projected lifetime and are not reflect both a 3 percent and a 7 percent reductions are projected lifetime values discounted. The monetized values discount rate as noted. 

for all vehicles sold in the model years shown in Table I.E.2–3 are the summed 

TABLE I.E.2–3—EPA’S ESTIMATED 2012–2016 MODEL YEAR LIFETIME FUEL SAVINGS, CO2 EMISSION REDUCTIONS, AND
 

DISCOUNTED MONETIZED BENEFITS AT A 3% DISCOUNT RATE
 

[Monetized values in 2007 dollars] 


Amount $ value 

(billions) 

Fuel savings ....................................................... 

CO2 emission reductions (valued assuming 

$20/ton CO2 in 2007). 

1.8 billion barrels .............................................. 

947 MMT CO2e ................................................ 

$193, 3% discount rate. 

$151, 7% discount rate. 

$21.0, 3% discount rate. 

$15.0, 7% discount rate. 

Table I.E.2–4 shows EPA’s estimated 2012–2016. The total outlays are also a whole and do not account for fuel 

incremental technology outlays for cars shown. The technology outlays shown savings associated with the proposal. 

and trucks for each of the model years in Table I.E.2–4 are for the industry as 

TABLE I.E.2–4—EPA’S ESTIMATED INCREMENTAL TECHNOLOGY OUTLAYS 

[$BILLIONS OF 2007 DOLLARS] 

2012 2013 2014 2015 2016 Total 

Cars .................................................................................................................................. $3.5 $5.3 $7.0 $8.9 $10.7 $35.3 

Trucks .............................................................................................................................. 2.0 3.1 4.0 5.1 6.8 20.9 

Combined ......................................................................................................................... 5.4 8.4 10.9 13.9 17.5 56.1 

Table I.E.2–5 shows EPA’s estimated cumulative. In other words, the year car is $531 relative to a 2013 model 

incremental cost increase of the average estimated increase for 2012 model year year car absent the proposal (not $374 

new vehicle for each model year 2012– cars is $374 relative to a 2012 model plus $531). 

2016. The values shown are incremental year car absent the proposal. The 

to a baseline vehicle and are not estimated increase for a 2013 model 

TABLE I.E.2–5—EPA’S ESTIMATED INCREMENTAL INCREASE IN AVERAGE NEW VEHICLE COST 

[2007 Dollars per unit] 

2012 2013 2014 2015 2016 

Cars .................................................................................................................................................. 

Trucks .............................................................................................................................................. 

Combined ......................................................................................................................................... 

$374 

358 

368 

$531 

539 

534 

$663 

682 

670 

$813 

886 

838 

$968 

1,213 

1,050 

F. Program Flexibilities for Achieving 

Compliance 

EPA’s and NHTSA’s proposed 

programs provide compliance flexibility 

to manufacturers, especially in the early 

years of the National Program. This 

flexibility is expected to provide 

sufficient lead time for manufacturers to 

make necessary technological 

improvements and reduce the overall 

cost of the program, without 

compromising overall environmental 

and fuel economy objectives. The broad 

goal of harmonizing the two agencies’ 

proposed standards includes preserving 

manufacturers’ flexibilities in meeting 

the standards, to the extent appropriate 

and required by law. The following 

section provides an overview of the 

flexibility provisions the agencies are 

proposing. 

1. CO2/CAFE Credits Generated Based 

on Fleet Average Performance 

Under the NHTSA and EPA proposal 

the fleet average standards that apply to 

a manufacturer’s car and truck fleets 

would be based on the applicable 

footprint-based curves. At the end of 

each model year, when production of 

the model year is complete, a 

production-weighted fleet average 

would be calculated for each averaging 

set (cars and trucks). Under this 

approach, a manufacturer’s car and/or 

truck fleet that achieves a fleet average 

CO2/CAFE level better than the standard 

would generate credits. Conversely, if 

the fleet average CO2/CAFE level does 

not meet the standard the fleet would 

generate debits (also referred to as a 

shortfall). 

Under the proposed program, a 

manufacturer whose fleet generates 

credits in a given model year would 

have several options for using those 

credits, including credit carry-back, 

credit carry-forward, credit transfers, 
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and credit trading. These provisions 

exist in the MY 2011 CAFE program 

under EPCA and EISA, and similar 

provisions are part of EPA’s Tier 2 

program for light duty vehicle criteria 

pollutant emissions, as well as many 

other mobile source standards issued by 

EPA under the CAA. EPA is proposing 

that the manufacturer would be able to 

carry-back credits to offset any deficit 

that had accrued in a prior model year 

and was subsequently carried over to 

the current model year. EPCA already 

provides for this. EPCA restricts the 

carry-back of CAFE credits to three 

years and EPA is proposing the same 

limitation, in keeping with the goal of 

harmonizing both sets of proposed 

standards. 

After satisfying any need to offset preexisting deficits, remaining credits 

could be saved (banked) for use in 

future years. Under the CAFE program, 

EISA allows manufacturers to apply 

credits earned in a model year to 

compliance in any of the five 

subsequent model years.59 EPA is also 

proposing, under the GHG program, to 

allow manufacturers to use these 

banked credits in the five years after the 

year in which they were generated (i.e., 

five years carry-forward). 

EISA required NHTSA to establish by 

regulation a CAFE credits transferring 

program, which NHTSA established in 

a March 2009 final rule codified at 49 

CFR part 536, to allow a manufacturer 

to transfer credits between its vehicle 

fleets to achieve compliance with the 

standards. For example, credits earned 

by over-compliance with a 

manufacturer’s car fleet average 

standard could be used to offset debits 

incurred due to that manufacturer’s not 

meeting the truck fleet average standard 

in a given year. EPA’s Tier 2 program 

also provides for this type of credit 

transfer. For purposes of this NPRM, 

EPA proposes unlimited credit transfers 

across a manufacturer’s car-truck fleet to 

meet the GHG standard. This is based 

on the expectation that this kind of 

credit transfer provision will allow the 

required GHG emissions reductions to 

be achieved in the most cost effective 

way, and this flexibility will facilitate 

the ability of the manufacturers to 

comply with the GHG standards in the 

lead time provided. Under the CAA, 

unlike under EISA, there is no statutory 

limitation on car-truck credit transfers. 

Therefore EPA is not proposing to 

constrain car-truck credit transfers as 

doing so would increase costs with no 

corresponding environmental benefit. 

For the CAFE program, however, EISA 

limits the amount of credits that may be 

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

transferred, and also prohibits the use of 

transferred credits to meet the statutory 

minimum level for the domestic car 

fleet standard.60 These and other 

statutory limits would continue to apply 

to the determination of compliance with 

the CAFE standard. 

Finally, EISA also allowed NHTSA to 

establish by regulation a CAFE credit 

trading program, which NHTSA 

established in the March 2009 final rule 

at 40 CFR Part 536, to allow credits to 

be traded (sold) to other vehicle 

manufacturers. EPA is also proposing to 

allow credit trading in the GHG 

program. These sorts of exchanges are 

typically allowed under EPA’s current 

mobile source emission credit programs, 

although manufacturers have seldom 

made such exchanges. Under the 

NHTSA CAFE program, EPCA also 

allows these types of credit trades, 

although, as with transferred credits, 

traded credits may not be used to meet 

the minimum domestic car standards 

specified by statute.61 

2. Air Conditioning Credits 

Air conditioning (A/C) systems 

contribute to GHG emissions in two 

ways. Hydrofluorocarbon (HFC) 

refrigerants, which are powerful GHG 

pollutants, can leak from the A/C 

system. Operation of the A/C system 

also places an additional load on the 

engine, which results in additional CO2 

tailpipe emissions. EPA is proposing an 

approach that allows manufacturers to 

generate credits by reducing GHG 

emissions related to A/C systems. 

Specifically, EPA is proposing a test 

procedure and method to calculate CO2 

equivalent reductions for the full useful 

life on a grams/mile basis that can be 

used as credits in meeting the fleet 

average CO2 standards. EPA’s analysis 

indicates this approach provides 

manufacturers with a highly costeffective way to achieve a portion of 

GHG emissions reductions under the 

EPA program. EPA is estimating that 

manufacturers will on average take 

advantage of 11 g/mi GHG credit toward 

meeting the 250 g/mi by 2016 (though 

some companies may have more). EPA 

is also proposing to allow manufacturers 

to earn early A/C credits starting in MY 

2009 through 2011, as discussed further 

in a later section. 

Comment is also sought on the 

approach of providing CAFE credits 

under 49 U.S.C. 32904(c) for light trucks 

equipped with relatively efficient air 

conditioners for MYs 2012–2016. The 

agencies invite comment on allowing a 

manufacturer to generate additional 

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


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


CAFE credits from the reduction of fuel 

consumption through the application of 

air conditioning efficiency improvement 

technologies to trucks. Currently, the 

CAFE program does not induce 

manufacturers to install more efficient 

air conditioners because the air 

conditioners are not turned on during 

fuel economy testing. The agencies note 

that if such credits were adopted, it may 

be necessary to reflect them in the 

setting of the CAFE standards for light 

trucks for the same model years and 

invite comment on that issue. 

3. Flex-Fuel and Alternative Fuel 

Vehicle Credits 

EPCA authorizes an incentive under 

the CAFE program for production of 

dual-fueled or flexible-fuel vehicles 

(FFV) and dedicated alternative fuel 

vehicles. FFVs are vehicles that can run 

both on an alternative fuel and 

conventional fuel. Most FFVs are E–85 

capable vehicles, which can run on 

either gasoline or a mixture of up to 85 

percent ethanol and 15 percent gasoline. 

Dedicated alternative fuel vehicles are 

vehicles that run exclusively on an 

alternative fuel. EPCA was amended by 

EISA to extend the period of availability 

of the FFV incentive, but to begin 

phasing it out by annually reducing the 

amount of FFV incentive that can be 

used toward compliance with the CAFE 

standards.62 EPCA does not premise the 

availability of the FFV credits on actual 

use of alternative fuel by an FFV 

vehicle. Under NHTSA’s CAFE 

program, pursuant to EISA, after MY 

2019, no FFV credits will be available 

for CAFE compliance.63 For dedicated 

alternative fuel vehicles, there are no 

limits or phase-out of the credits. 

Consistent with the statute, NHTSA will 

continue to allow the use of FFV credits 

for purposes of compliance with the 

proposed standards until the end of the 

phase-out period. 

For the GHG program, EPA is 

proposing to allow FFV credits in line 

with EISA limits only during the period 

from MYs 2012 to 2015. After MY 2015, 

EPA proposes to allow FFV credits only 

based on a manufacturer’s 

demonstration that the alternative fuel 

is actually being used in the vehicles. 

EPA is seeking comments on how that 

demonstration could be made. EPA 

discusses this in more detail in Section 

III.C of the preamble. 

62 EPCA provides a statutory incentive for 

production of FFVs by specifying that their fuel 

economy is determined using a special calculation 

procedure that results in those vehicles being 

assigned a higher fuel economy level than would 

otherwise occur. This is typically referred to as an 

FFV credit. 

63 Id. 
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4. Temporary Lead-Time Allowance 

Alternative Standards 

Manufacturers with limited product 

lines may be especially challenged in 

the early years of the proposed program. 

Manufacturers with narrow product 

offerings may not be able to take full 

advantage of averaging or other program 

flexibilities due to the limited scope of 

the types of vehicles they sell. For 

example, some smaller volume 

manufacturers focus on high 

performance vehicles with higher CO2 

emissions, above the CO2 emissions 

target for that vehicle footprint, but do 

not have other types of vehicles in their 

production mix with which to average. 

Often, these manufacturers pay fines 

under the CAFE program rather than 

meeting the applicable CAFE standard. 

EPA believes that these technological 

circumstances may call for a more 

gradual phase-in of standards so that 

manufacturer resources can be focused 

on meeting the 2016 levels. 

EPA is proposing a temporary leadtime allowance for manufacturers who 

sell vehicles in the U.S. in MY 2009 

whose vehicle sales in that model year 

are below 400,000 vehicles. EPA 

proposes that this allowance would be 

available only during the MY 2012– 

2015 phase-in years of the program. A 

manufacturer that satisfies the threshold 

criteria would be able to treat a limited 

number of vehicles as a separate 

averaging fleet, which would be subject 

to a less stringent GHG standard.64 

Specifically, a standard of 125 percent 

of the vehicle’s otherwise applicable 

foot-print target level would apply to up 

to 100,000 vehicles total, spread over 

the four year period of MY 2012 through 

2015. Thus, the number of vehicles to 

which the flexibility could apply is 

limited. EPA also is proposing 

appropriate restrictions on credit use for 

these vehicles, as discussed further in 

Section III. By MY 2016, these 

allowance vehicles must be averaged 

into the manufacturer’s full fleet (i.e., 

they are no longer eligible for a different 

standard). EPA discusses this in more 

detail in Section III.B of the preamble. 

5. Additional Credit Opportunities 

Under the CAA 

EPA is proposing additional 

opportunities for early credits in MYs 

2009–2011 through over-compliance 

with a baseline standard. The baseline 

standard would be set to be equivalent, 

64 EPCA does not permit such an allowance. 

Consequently, manufacturers who may be able to 

take advantage of a lead-time allowance under the 

proposed GHG standards would be required to 

comply with the applicable CAFE standard or be 

subject to penalties for non-compliance. 

on a national level, to the California 

standards. Potentially, credits could be 

generated by over-compliance with this 

baseline in one of two ways—overcompliance by the fleet of vehicles sold 

in California and the CAA section 177 

States (i.e., those States adopting the 

California program), or over-compliance 

with the fleet of vehicles sold in the 50 

States. EPA is also proposing early 

credits based on over-compliance with 

CAFE, but only for vehicles sold in 

States outside of California and the CAA 

section 177 States. Under the proposed 

early credit provisions, no early FFV 

credits would be allowed, except those 

achieved by over-compliance with the 

California program based on California’s 

provisions that manufacturers 

demonstrate actual use of the alternative 

fuel. EPA’s proposed early credits 

options are designed to ensure that there 

would be no double counting of early 

credits. Consistent with this paragraph, 

NHTSA notes, however, that credits for 

overcompliance with CAFE standards 

during MYs 2009–2011 will still be 

available for manufacturers to use 

toward compliance in future model 

years, just as before. 

EPA is proposing additional credit 

opportunities to encourage the 

commercialization of advanced GHG/ 

fuel economy control technologies, such 

as electric vehicles, plug-in hybrid 

electric vehicles, and fuel cell vehicles. 

These proposed advanced technology 

credits are in the form of a multiplier 

that would be applied to the number of 

vehicles sold, such that each eligible 

vehicle counts as more than one vehicle 

in the manufacturer’s fleet average. EPA 

is also proposing to allow early 

advanced technology credits to be 

generated beginning in MYs 2009 

through 2011. 

EPA is also proposing an Option for 

manufacturers to generate credits for 

employing technologies that achieve 

GHG reductions that are not reflected on 

current test procedures. Examples of 

such ‘‘off-cycle’’ technologies might 

include solar panels on hybrids, 

adaptive cruise control, and active 

aerodynamics, among other 

technologies. EPA is seeking comments 

on the best ways to quantify such 

credits to ensure any off-cycle credits 

applied for by a manufacturer are 

verifiable, reflect real-world reductions, 

based on repeatable test procedures, and 

are developed through a transparent 

process allowing appropriate 

opportunities for public comment. 

G. Coordinated Compliance 

Previous NHTSA and EPA regulations 

and statutory provisions establish ample 

examples on which to develop an 

effective compliance program that 

achieves the energy and environmental 

benefits from CAFE and motor vehicle 

GHG standards. NHTSA and EPA are 

proposing a program that recognizes, 

and replicates as closely as possible, the 

compliance protocols associated with 

the existing CAA Tier 2 vehicle 

emission standards, and with CAFE 

standards. The certification, testing, 

reporting, and associated compliance 

activities closely track current practices 

and are thus familiar to manufacturers. 

EPA already oversees testing, collects 

and processes test data, and performs 

calculations to determine compliance 

with both CAFE and CAA standards. 

Under this proposed coordinated 

approach, the compliance mechanisms 

for both programs are consistent and 

non-duplicative. EPA will also apply 

the CAA authorities applicable to its 

separate in-use requirements in this 

program. 

The proposed approach allows 

manufacturers to satisfy the new 

program requirements in the same 

general way they comply with existing 

applicable CAA and CAFE 

requirements. Manufacturers would 

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

year, allowing model-level testing to 

continue throughout the year as is the 

current practice for CAFE 

determinations. The proposed 

compliance program design establishes 

a single set of manufacturer reporting 

requirements and relies on a single set 

of underlying data. This approach still 

allows each agency to assess compliance 

with its respective program under its 

respective statutory authority. 

NHTSA and EPA do not anticipate 

any significant noncompliance under 

the proposed program. However, failure 

to meet the fleet average standards (after 

credit opportunities are exhausted) 

would ultimately result in the potential 

for penalties under both EPCA and the 

CAA. The CAA allows EPA 

considerable discretion in assessment of 

penalties. Penalties under the CAA are 

typically determined on a vehiclespecific basis by determining the 

number of a manufacturer’s highest 

emitting vehicles that caused the fleet 

average standard violation. This is the 

same mechanism used for EPA’s 

National Low Emission Vehicle and Tier 

2 corporate average standards, and to 

date there have been no instances of 

noncompliance. CAFE penalties are 

specified by EPCA and would be 

assessed for the entire noncomplying 

fleet at a rate of $5.50 times the number 

of vehicles in the fleet, times the 

number of tenths of mpg by which the 

fleet average falls below the standard. In 
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the event of a compliance action arising 

out of the same facts and circumstances, 

EPA could consider CAFE penalties 

when determining appropriate remedies 

for the EPA case. 

H. Conclusion 

This joint proposal by NHTSA and 

EPA represents a strong and coordinated 

National Program to achieve greenhouse 

gas emission reductions and fuel 

economy improvements from the lightduty vehicle part of the transportation 

sector. EPA’s proposal for GHG 

standards under the Clean Air Act is 

discussed in Section III of this notice; 

NHTSA’s proposal for CAFE standards 

under EPCA is discussed in Section IV. 

Each agency includes analyses on a 

variety of relevant issues under its 

respective statute, such as feasibility of 

the proposed standards, costs and 

benefits of the proposal, and effects on 

the economy, auto manufacturers, and 

consumers. This joint rulemaking 

proposal reflects a carefully coordinated 

and harmonized approach to developing 

and implementing standards under the 

two agencies’ statutes and is in 

accordance with all substantive and 

procedural requirements required by 

law. 

NHTSA and EPA believe that the MY 

2012 through 2016 standards proposed 

would provide substantial reductions in 

emissions of GHGs and oil 

consumption, with significant fuel 

savings for consumers. The proposed 

program is technologically feasible at a 

reasonable cost, based on deployment of 

available and effective control 

technology across the fleet, and industry 

would have the opportunity to plan over 

several model years and incorporate the 

vehicle upgrades into the normal 

redesign cycles. The proposed program 

would result in enormous societal net 

benefits, including greenhouse gas 

emission reductions, fuel economy 

savings, improved energy security, and 

cost savings to consumers from reduced 

fuel utilization. 

II. Joint Technical Work Completed for 

This Proposal 

A. Introduction 

In this section NHTSA and EPA 

discuss several aspects of the joint 

technical analyses the two agencies 

collaborated on which are common to 

the development of each agency’s 

proposed standards. Specifically we 

discuss: The development of the 

baseline vehicle market forecast used by 

each agency, the development of the 

proposed attribute-based standard curve 

shapes, how the relative stringency 

between the car and truck fleet 

standards for this proposal was 

determined, which technologies the 

agencies evaluated and their costs and 

effectiveness, and which economic 

assumptions the agencies included in 

their analyses. The joint Technical 

Support Document (TSD) discusses the 

agencies’ joint technical work in more 

detail. 

B. How Did NHTSA and EPA Develop 

the Baseline Market Forecast? 

1. Why Do the Agencies Establish a 

Baseline Vehicle Fleet? 

In order to calculate the impacts of 

the EPA and NHTSA proposed 

regulations, it is necessary to estimate 

the composition of the future vehicle 

fleet absent these proposed regulations 

in order to conduct comparisons. EPA 

and NHTSA have developed a 

comparison fleet in two parts. The first 

step was to develop a baseline fleet 

based on model year 2008 data. The 

second step was to project that fleet into 

2011–2016. This is called the reference 

fleet. The third step was to modify that 

2011–2016 reference fleet such that it 

had sufficient technologies to meet the 

2011 CAFE standards. This final 

‘‘reference fleet’’ is the light duty fleet 

estimated to exist in 2012–2016 if these 

proposed rules are not adopted. Each 

agency developed a final reference fleet 

to use in its modeling. All of the 

agencies’ estimates of emission 

reductions, fuel economy 

improvements, costs, and societal 

impacts are developed in relation to the 

respective reference fleets. 

2. How Do the Agencies Develop the 

Baseline Vehicle Fleet? 

EPA and NHTSA have based the 

projection of total car and total light 

truck sales on recent projections made 

by the Energy Information 

Administration (EIA). EIA publishes a 

long-term projection of national energy 

use annually called the Annual Energy 

Outlook. This projection utilizes a 

number of technical and econometric 

models which are designed to reflect 

both economic and regulatory 

conditions expected to exist in the 

future. In support of its projection of 

fuel use by light-duty vehicles, EIA 

projects sales of new cars and light 

trucks. Due to the state of flux of both 

energy prices and the economy, EIA 

published three versions of its 2009 

Annual Energy Outlook. The 

Preliminary 2009 report was published 

early (in November 2008) in order to 

reflect the dramatic increase in fuel 

prices which occurred during 2008 and 

which occurred after the development 

of the 2008 Annual Energy Outlook. The 

official 2009 report was published in 

March of 2009. A third 2009 report was 

published a month later which reflected 

the economic stimulus package passed 

by Congress earlier this year. We use the 

sales projections of this latest report, 

referred to as the updated 2009 Annual 

Energy Outlook, here. 

In their updated 2009 report, EIA 

projects that total light-duty vehicle 

sales will gradually recover from their 

currently depressed levels by roughly 

2013. In 2016, car and light truck sales 

are projected to be 9.5 and 7.1 million 

units, respectively. While the total level 

of sales of 16.6 million units is similar 

to pre-2008 levels, the fraction of car 

sales is higher than that existing in the 

2000–2007 timeframe. This presumably 

reflects the impact of higher fuel prices 

and that fact that cars tend to have 

higher levels of fuel economy than 

trucks. We note that EIA’s definition of 

cars and trucks follows that used by 

NHTSA prior to the MY 2011 CAFE 

final rule published earlier this year. 

That recent CAFE rule, which 

established the MY 2011 standards, 

reclassified a number of 2-wheel drive 

sport utility vehicles from the truck fleet 

to the car fleet. This has the impact of 

shifting a considerable number of 

previously defined trucks into the car 

category. Sales projections of cars and 

trucks for all future model years can be 

found in the draft Joint TSD for this 

proposal. 

In addition to a shift towards more car 

sales, sales of segments within both the 

car and truck markets have also been 

changing and are expected to continue 

to change in the future. Manufacturers 

are introducing more crossover models 

which offer much of the utility of SUVs 

but using more car-like designs. In order 

to reflect these changes in fleet makeup, 

EPA and NHTSA considered several 

available forecasts. After review EPA 

purchased and shared with NHTSA 

forecasts from two well-known industry 

analysts, CSM–Worldwide (CSM), and 

J.D. Powers. NHTSA and EPA decided 

to use the forecast from CSM, for several 

reasons. One, CSM agreed to allow us to 

publish the data, on which our forecast 

is based, in the public domain.65 Two, 

it covered nearly all the timeframe of 

greatest relevance to this proposed rule 

(2012–2015 model years). Three, it 

provided projections of vehicle sales 

both by manufacturer and by market 

segment. Four, it utilized market 

segments similar to those used in the 

65 The CSM data made public includes only the 

higher level volume projections by market segment 

and manufacturer. The projections by nameplate 

and model are strictly the agencies’ estimates based 

on these higher level CSM segment and 

manufacturer distribution. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49485 

EPA emission certification program and 2014–2015 the changes were relatively resulting projections for the 2016 model 

fuel economy guide. As discussed small. Therefore, we assumed 2016 year and compare these to actual sales 

further below, this allowed the CSM market share and market segments to be which occurred in 2008 model year. forecast to be combined with other data the same as for 2015. To the extent that Both tables show sales using the obtained by NHTSA and EPA. We also the agencies have received CSM traditional or classic definition of cars 

assumed that the breakdowns of car and forecasts for 2016, we will consider and light trucks. Determining which truck sales by manufacturer and by using them for the final rule. classic trucks will be defined as cars 

market segment for 2016 model year and We then projected the CSM forecasts using the revised definition established beyond were the same as CSM’s forecast for relative sales of cars and trucks by by NHTSA earlier this year and for 2015 calendar year. The changes manufacturer and by market segment on included in this proposed rule requires between company market share and to the total sales estimates of the more detailed information about each industry market segments were most updated 2009 Annual Energy Outlook. vehicle model which is developed next. significant from 2011–2014, while for Tables II.B.1–1 and II.B.1–2 show the 

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

Cars Light trucks Total 

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

BMW .................................................................... 

Chrysler ................................................................ 

Daimler ................................................................. 

Ford ...................................................................... 

General Motors .................................................... 

Honda ................................................................... 

Hyundai ................................................................ 

Kia ........................................................................ 

Mazda .................................................................. 

Mitsubishi ............................................................. 

Porsche ................................................................ 

Nissan .................................................................. 

Subaru .................................................................. 

Suzuki .................................................................. 

Tata ...................................................................... 

Toyota .................................................................. 

Volkswagen .......................................................... 

291,796 

537,808 

208,052 

641,281 

1,370,280 

899,498 

270,293 

145,863 

191,326 

76,701 

18,909 

653,121 

149,370 

68,720 

9,596 

1,143,696 

290,385 

380,804 

110,438 

235,205 

990,700 

1,562,791 

1,429,262 

437,329 

255,954 

290,010 

49,697 

37,064 

985,668 

128,885 

69,452 

41,584 

1,986,824 

476,699 

61,324 

1,119,397 

79,135 

1,227,107 

1,749,227 

612,281 

120,734 

135,589 

111,220 

24,028 

18,797 

370,294 

49,211 

45,938 

55,584 

1,067,804 

26,999 

134,805 

133,454 

109,917 

1,713,376 

1,571,037 

812,325 

287,694 

162,515 

112,837 

10,872 

17,175 

571,748 

75,841 

34,307 

47,105 

1,218,223 

99,459 

353,120 

1,657,205 

287,187 

1,868,388 

3,119,507 

1,511,779 

391,027 

281,452 

302,546 

100,729 

37,706 

1,023,415 

198,581 

114,658 

65,180 

2,211,500 

317,384 

515,609 

243,891 

345,122 

2,704,075 

3,133,827 

2,241,586 

725,024 

418,469 

402,847 

60,569 

54,240 

1,557,416 

204,726 

103,759 

88,689 

3,205,048 

576,158 

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

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

Cars Light trucks 

2008 MY 2016 MY 2008 MY 2016 MY 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The agencies recognize that CSM quarter of 2009, which we were unable final rule.66 CSM’s forecast for Chrysler 

forecasts a very significant reduction in to use for this proposal due to time for the 3rd quarter of 2009 was 

market share for Chrysler. This may be constraints. However, we have placed a significantly increased compared to the 

a result of the extreme uncertainty copy of the 3rd Quarter CSM forecast in 2nd quarter, by nearly a factor of two 

surrounding Chrysler in early 2009. The the public docket for this rulemaking, 

forecast from CSM used in this proposal and we will consider its use, and any 66 ‘‘CSM North America Sales Forecast is CSM’s forecast from the 2nd quarter further updates from CSM or other data Comparison 2Q09 3Q09 For Docket.’’ 2nd and 3rd of 2009. CSM also provided to the received during the comment period quarter forecasting results from CSM World Wide

agencies an updated forecast in the 3rd when developing the analysis for the (Docket EPA–HQ–OAR–2009–0472). 
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49486 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

increase in projected sales over the 

2012–2015 time frame. 

The forecasts obtained from CSM 

provided estimates of car and trucks 

sales by segment and by manufacturer, 

but not by manufacturer for each market 

segment. Therefore, we needed other 

information on which to base these 

more detailed market splits. For this 

task, we used as a starting point each 

manufacturer’s sales by market segment 

from model year 2008. Because of the 

larger number of segments in the truck 

market, we used slightly different 

methodologies for cars and trucks. 

The first step for both cars and trucks 

was to break down each manufacturer’s 

2008 sales according to the market 

segment definitions used by CSM. For 

example, we found that Ford’s car sales 

in 2008 were broken down as shown in 

Table II.B.2–3: 

TABLE II.B.2–3—BREAKDOWN OF 

FORD’S 2008 CAR SALES 

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

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

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

Subcompact/Mini cars ... None. 

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

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

We then adjusted each manufacturer’s 

sales of each of its car segments (and 

truck segments, separately) so that the 

manufacturer’s total sales of cars (and 

trucks) matched the total estimated for 

each future model year based on EIA 

and CSM forecasts. For example, as 

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

car sales in 2008 were 641,281 units, 

while we project that they will increase 

to 990,700 units by 2016. This 

represents an increase of 54.5 percent. 

Thus, we increased the 2008 sales of 

each Ford car segment by 54.5 percent. 

This produced estimates of future sales 

which matched total car and truck sales 

per EIA and the manufacturer 

breakdowns per CSM (and exemplified 

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

sales splits by market segment would 

not necessarily match those of CSM 

(and exemplified for 2016 in Table 

II.B.2–2). 

In order to adjust the market segment 

mix for cars, we first adjusted sales of 

luxury, specialty and other cars. Since 

the total sales of cars for each 

manufacturer were already set, any 

changes in the sales of one car segment 

had to be compensated by the opposite 

change in another segment. For the 

luxury, specialty and other car 

segments, it is not clear how changes in 

sales would be compensated. For 

example, if luxury car sales decreased, 

would sales of full-size cars increase, 

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

the sales of cars within these three 

segments were assumed to be 

compensated for by proportional 

changes in the sales of the other four car 

segments. For example, for 2016, the 

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

luxury car sales in 2016 are 1,432,162 

units. Luxury car sales are 1,057,875 

units in 2008. However, after adjusting 

2008 car sales by the change in total car 

sales for 2016 projected by EIA and a 

change in manufacturer market share 

per CSM, luxury car sales increased to 

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

luxury car sales had to decrease by 

89,730 units or 6 percent. We decreased 

the luxury car sales by each 

manufacturer by this percentage. The 

absolute decrease in luxury car sales 

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

proportion to each manufacturer’s sales 

in these segments in 2008. The same 

adjustment process was used for 

specialty cars and the ‘‘other cars’’ 

segment defined by CSM. 

A slightly different approach was 

used to adjust for changing sales of the 

remaining four car segments. Starting 

with full-size cars, we again determined 

the overall percentage change that 

needed to occur in future year full-size 

cars sales after (1) adjusting for total 

sales per EIA, (2) manufacturer sales 

mix per CSM and (3) adjustments in the 

luxury, specialty and other car 

segments, in order to meet the segment 

sales mix per CSM. Sales of each 

manufacturer’s large cars were adjusted 

by this percentage. However, instead of 

spreading this change over the 

remaining three segments, we assigned 

the entire change to mid-size vehicles. 

We did so because, as shown in 2008, 

higher fuel prices tend to cause car 

purchasers to purchase smaller vehicles. 

We are using AEO 2009 for this 

analysis, which assumes fuel prices 

similar in magnitude to actual high fuel 

prices seen in the summer of 2008.67 

However, if a consumer had previously 

purchased a full-size car, we thought it 

unlikely that they would jump all the 

way to a subcompact. It seemed more 

reasonable to project that they would 

drop one vehicle size category smaller. 

Thus, the change in each manufacturer’s 

sales of full-size cars was matched by an 

opposite change (in absolute units sold) 

in mid-size cars. 

The same process was then applied to 

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

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

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

and Utility Vehicles.’’ 

opposite change in compact car sales. 

This process was repeated one more 

time for compact car sales, with changes 

in sales in this segment being matched 

by the opposite change in the sales of 

subcompacts. The overall result was a 

projection of car sales for 2012–2016 

which matched the total sales 

projections of EIA and the manufacturer 

and segment splits of CSM. These sales 

splits can be found in Chapter 1 of the 

draft Joint Technical Support Document 

for this proposal. 

As mentioned above, a slightly 

different process was applied to truck 

sales. The reason for this was we could 

not confidently project how the change 

in sales from one segment preferentially 

went to or came from another particular 

segment. Some trend from larger 

vehicles to smaller vehicles would have 

been possible. However, the CSM 

forecasts indicated large changes in total 

sport utility vehicle, multi-activity 

vehicle and cross-over sales which 

could not be connected. Thus, we 

applied an iterative, but straightforward 

process for adjusting 2008 truck sales to 

match the EIA and CSM forecasts. 

The first three steps were exactly the 

same as for cars. We broke down each 

manufacturer’s truck sales into the truck 

segments as defined by CSM. We then 

adjusted all manufacturers’ truck 

segment sales by the same factor so that 

total truck sales in each model year 

matched EIA projections for truck sales 

by model year. We then adjusted each 

manufacturer’s truck sales by segment 

proportionally so that each 

manufacturer’s percentage of total truck 

sales matched that forecast by CSM. 

This again left the need to adjust truck 

sales by segment to match the CSM 

forecast for each model year. 

In the fourth step, we adjusted the 

sales of each truck segment by a 

common factor so that total sales for that 

segment matched the combination of the 

EIA and CSM forecasts. For example, 

sales of large pickups across all 

manufacturers were 1,144,166 units in 

2016 after adjusting total sales to match 

EIA’s forecast and adjusting each 

manufacturer’s truck sales to match 

CSM’s forecast for the breakdown of 

sales by manufacturer. Applying CSM’s 

forecast of the large pickup segment of 

truck sales to EIA’s total sales forecast 

indicated total large pickup sales of 

1,475,881 units. Thus, we increased 

each manufacturer’s sales of large 

pickups by 29 percent. The same type 

of adjustment was applied to all the 

other truck segments at the same time. 

The result was a set of sales projections 

which matched EIA’s total truck sales 

projection and CSM’s market segment 

forecast. However, after this step, sales 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49487 

by manufacturer no longer met CSM’s 

forecast. Thus, we repeated step three 

and adjusted each manufacturer’s truck 

sales so that they met CSM’s forecast. 

The sales of each truck segment (by 

manufacturer) were adjusted by the 

same factor. The resulting sales 

projection matched EIA’s total truck 

sales projection and CSM’s 

manufacturer forecast, but sales by 

market segment no longer met CSM’s 

forecast. However, the difference 

between the sales projections after this 

fifth step was closer to CSM’s market 

segment forecast than it was after step 

three. In other words, the sales 

projection was converging. We repeated 

these adjustments, matching 

manufacturer sales mix in one step and 

then market segment in the next for a 

total of 19 times. At this point, we were 

able to match the market segment splits 

exactly and the manufacturer splits 

were within 0.1% of our goal, which is 

well within the needs of this analysis. 

The next step in developing the 

baseline fleet was to characterize the 

vehicles within each manufacturersegment combination. In large part, this 

was based on the characterization of the 

specific vehicle models sold in 2008. 

EPA and NHTSA chose to base our 

estimates of detailed vehicle 

characteristics on 2008 sales for several 

reasons. One, these vehicle 

characteristics are not confidential and 

can thus be published here for careful 

review and comment by interested 

parties. Two, being actual sales data, 

this vehicle fleet represents the 

distribution of consumer demand for 

utility, performance, safety, etc. 

We gathered most of the information 

about the 2008 vehicle fleet from EPA’s 

emission certification and fuel economy 

database. The data obtained from this 

source included vehicle production 

volume, fuel economy, engine size, 

number of engine cylinders, 

transmission type, fuel type, etc. EPA’s 

certification database does not include a 

detailed description of the types of fuel 

economy-improving/CO2-reducing 

technologies considered in this 

proposal. Thus, we augmented this 

description with publicly available data 

which includes more complete 

technology descriptions from Ward’s 

Automotive Group.68 In a few instances 

when required vehicle information was 

not available from these two sources 

(such as vehicle footprint), we obtained 

this information from publicly 

68 Note that WardsAuto.com is a fee-based 

service, but all information is public to subscribers. 

accessible Internet sites such as 

Motortrend.com and Edmunds.com.69 

The projections of future car and 

truck sales described above apply to 

each manufacturer’s sales by market 

segment. The EPA emissions 

certification sales data are available at a 

much finer level of detail, essentially 

vehicle configuration. As mentioned 

above, we placed each vehicle in the 

EPA certification database into one of 

the CSM market segments. We then 

totaled the sales by each manufacturer 

for each market segment. If the 

combination of EIA and CSM forecasts 

indicated an increase in a given 

manufacturer’s sales of a particular 

market segment, then the sales of all the 

individual vehicle configurations were 

adjusted by the same factor. For 

example, if the Prius represented 30% 

of Toyota’s sales of compact cars in 

2008 and Toyota’s sales of compact cars 

in 2016 was projected to double by 

2016, then the sales of the Prius were 

doubled, and the Prius sales in 2016 

remained 30% of Toyota’s compact car 

sales. 

NHTSA and EPA request comment on 

the methodology and data sources used 

for developing the baseline vehicle fleet 

for this proposal and the reasonableness 

of the results. 

3. How Is the Development of the 

Baseline Fleet for This Proposal 

Different From NHTSA’s Historical 

Approach, and Why Is This Approach 

Preferable? 

NHTSA has historically based its 

analysis of potential new CAFE 

standards on detailed product plans the 

agency has requested from 

manufacturers planning to produce light 

vehicles for sale in the United States. 

Although the agency has not attempted 

to compel manufacturers to submit such 

information, most major manufacturers 

and some smaller manufacturers have 

voluntarily provided it when requested. 

As in this and other prior 

rulemakings, NHTSA has requested 

extensive and detailed information 

regarding the models that manufacturers 

plan to offer, as well as manufacturers’ 

estimates of the volume of each model 

they expect to produce for sale in the 

U.S. NHTSA’s recent requests have 

sought information regarding a range of 

engineering and planning characteristics 

for each vehicle model (e.g., fuel 

economy, engine, transmission, physical 

dimensions, weights and capacities, 

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

fuel type, fuel delivery, aspiration, 

valvetrain configuration, valve timing, 

69 Motortrend.com and Edmunds.com are free, 

no-fee Internet sites. 

valve lift, power and torque ratings), 

and each transmission (e.g., type, 

number of gears, logic). 

The information that manufacturers 

have provided in response to these 

requests has varied in completeness and 

detail. Some manufacturers have 

submitted nearly all of the information 

NHTSA has requested, have done so for 

most or all of the model years covered 

by NHTSA’s requests, and have closely 

followed NHTSA’s guidance regarding 

the structure of the information. Other 

manufacturers have submitted partial 

information, information for only a few 

model years, and/or information in a 

structure less amenable to analysis. Still 

other manufacturers have not responded 

to NHTSA’s requests or have responded 

on occasion, usually with partial 

information. 

In recent rulemakings, NHTSA has 

integrated this information and 

estimated missing information based on 

a range of public and commercial 

sources (such as those used to develop 

today’s market forecast). For 

unresponsive manufacturers, NHTSA 

has estimated fleet composition based 

on the latest-available CAFE compliance 

data (the same data used as part of the 

foundation for today’s market forecast). 

NHTSA has then adjusted the size of the 

fleet based on AEO’s forecast of the light 

vehicle market and normalized 

manufacturers’ market shares based on 

the latest-available CAFE compliance 

data. 

Compared to this approach, the 

market forecast the agencies have 

developed for this analysis has both 

advantages and disadvantages. 

Most importantly, today’s market 

forecast is much more transparent. The 

information sources used to develop 

today’s market forecast are all either in 

the public domain or available 

commercially. Therefore, NHTSA and 

EPA are able to make public the market 

inputs actually used in the agencies’ 

respective modeling systems, such that 

any reviewer may independently repeat 

and review the agencies’ analyses. 

Previously, although NHTSA provided 

this type of information to 

manufacturers upon request (e.g., GM 

requested and received outputs specific 

to GM), NHTSA was otherwise unable 

to release market inputs and the most 

detailed model outputs (i.e., the outputs 

containing information regarding 

specific vehicle models) because doing 

so would violate requirements 

protecting manufacturers’ confidential 

business information from disclosure.70 

Therefore, this approach provides much 

greater opportunity for the public to 

70 See 49 CFR part 512. 
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49488 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

review every aspect of the agencies’ 

analyses and comment accordingly. 

Another significant advantage of 

today’s market forecast is the agencies’ 

ability to assess more fully the 

incremental costs and benefits of the 

proposed standards. In the past two 

years, NHTSA has requested and 

received three sets of future product 

plan submissions from the automotive 

companies, most recently this past 

spring. These submissions are intended 

to be the actual future product plans for 

the companies. In the most recent 

submission it is clear that many of the 

firms have been and are clearly 

planning for future CAFE standard 

increases for model years 2012 and 

later. The results for the product plans 

for many firms are a significant increase 

in their projected future application of 

fuel economy improvement technology. 

However, for the purposes of assessing 

the costs of the model year 2012–2016 

standards the use of the product plans 

presents a difficulty, namely, how to 

assess the increased costs of the 

proposed future standards if the 

companies have already anticipated the 

future standards and the costs are 

therefore now part of the agencies’ 

baseline. This is a real concern with the 

most recent product plans received from 

the companies, and is one of the reasons 

the agencies have decided not to use the 

recent product plans to define the 

baseline market data for assessing our 

proposed standards. The approach used 

for this proposal does not raise this 

concern, as the underlying data comes 

from model year 2008 production.71 

In addition, by developing a baseline 

fleet from common sources, the agencies 

have been able to avoid some errors— 

perhaps related to interpretation of 

requests—that have been observed in 

past responses to NHTSA’s requests. For 

example, while reviewing information 

submitted to support the most recent 

CAFE rulemaking, NHTSA staff 

discovered that one manufacturer had 

misinterpreted instructions regarding 

the specification of vehicle track width, 

leading to important errors in estimates 

of vehicle footprints. Although the 

manufacturer resubmitted the 

information with corrections, with this 

approach, the agencies are able to 

reduce the potential for such errors and 

71 However, as discussed below, an alternative 

approach that NHTSA is exploring would be to use 

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

from MY 2010 or MY 2011. NHTSA believes 

manufacturers’ near-term plans should be less 

subject to this concern about missing costs and 

benefits already included in the baseline. NHTSA 

is also hopeful that in connection with the agencies’ 

rulemaking efforts, manufacturers will be willing to 

make their near-term plans available to the public. 

inconsistencies by utilizing common 

data sources and procedures. 

An additional advantage of the 

approach used for this proposal is a 

consistent projection of the change in 

fuel economy and CO2 emissions across 

the various vehicles from the 

application of new technology. In the 

past, company product plans would 

include the application of new fuel 

economy improvement technology for a 

new or improved vehicle model with 

the resultant estimate from the company 

of the fuel economy levels for the 

vehicle. However, companies did not 

always provide to NHTSA the detailed 

analysis which showed how they 

forecasted what the fuel economy 

performance of the new vehicle was— 

that is, whether it came from actual test 

data, from vehicle simulation modeling, 

from best engineering judgment or some 

other methodology. Thus, it was not 

possible for NHTSA to review the 

methodology used by the manufacturer, 

nor was it possible to review what 

approach the different manufacturers 

utilized from a consistency perspective. 

With the approach used for this 

proposal, the baseline market data 

comes from actual vehicles which have 

actual fuel economy test data—so there 

is no question what is the basis for the 

fuel economy or CO2 performance of the 

baseline market data as it is actual 

measured data. 

Another advantage of today’s 

approach is that future market shares 

are based on a forecast of what will 

occur in the future, rather than a static 

value. In the past, NHTSA has utilized 

a constant market share for each model 

year, based on the most recent year 

available, for example from the CAFE 

compliance data, that is, a forecast of 

the 2011–2015 time frame where 

company market shares do not change. 

In the approach used today, we have 

utilized the forecasts from CSM of how 

future market shares among the 

companies may change over time.72 

The approach the agencies have taken 

in developing today’s market forecast 

does, however, have some 

disadvantages. Most importantly, it 

produces a market forecast that does not 

represent some important changes likely 

to occur in the future. 

Some of the changes not captured by 

today’s approach are specific. For 

example, the agencies’ current market 

forecast includes some vehicles for 

72 We note that market share forecasts like CSM’s 

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

create the baseline market forecast. If, as mentioned 

above, manufacturers do consent to make public 

MY 2010 or 2011 product plan data for the final 

rule, the agencies could consider applying market 

share forecast to that data as well. 

which manufacturers have announced 

plans for elimination or drastic 

production cuts such as the Chevrolet 

Trailblazer, the Chrysler PT Cruiser, the 

Chrysler Pacifica, the Dodge Magnum, 

the Ford Crown Victoria, the Hummer 

H2, the Mercury Sable, the Pontiac 

Grand Prix, and the Pontiac G5. These 

vehicle models appear explicitly in 

market inputs to NHTSA’s analysis, and 

are among those vehicle models 

included in the aggregated vehicle types 

appearing in market inputs to EPA’s 

analysis. 

Conversely, the agencies’ market 

forecast does not include some 

forthcoming vehicle models, such as the 

Chevrolet Volt, the Chevrolet Camaro, 

the Ford Fiesta and several publicly 

announced electric vehicles, including 

the announcements from Nissan. Nor 

does it include several MY 2009 or 2010 

vehicles, such as the Honda Insight, the 

Hyundai Genesis and the Toyota Venza, 

as our starting point for vehicle 

definitions was Model Year 2008. 

Additionally, the market forecast does 

not account for publicly announced 

technology introductions, such as Ford’s 

EcoBoost system, whose product plans 

specify which vehicles and how many 

are planned to have this technology. 

Were the agencies to rely on 

manufacturers’ product plans (that were 

submitted), the market forecast would 

account for not only these specific 

examples, but also for similar examples 

that have not yet been announced 

publicly. 

The agencies anticipate that including 

vehicles after MY 2008 would not 

significantly impact our estimates of the 

technology required to comply with the 

proposed standards. If they were 

included, these vehicles could make the 

standards appear to cost less relative to 

the reference case. First, the projections 

of sales by vehicle segment and 

manufacturer include these expected 

new vehicle models. Thus, to the extent 

that these new vehicles are expected to 

change consumer demand, they should 

be reflected in our reference case. While 

we are projecting the characteristics of 

the new vehicles with MY 2008 

vehicles, the primary difference 

between the new vehicles and 2008 

vehicles in the same vehicle segment is 

the use of additional CO2-reducing and 

fuel-saving technology. Both the 

NHTSA and EPA models add such 

technology to facilitate compliance with 

the proposed standards. Thus, our 

future projections of the vehicle fleet 

generally shift vehicle designs towards 

those of these newer vehicles. The 

advantage of our approach is that it 

helps clarify the costs of this proposal, 

as the cost of all fuel economy 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49489 

improvements beyond those required by 

the MY 2011 CAFE standards are being 

assigned to the proposal. In some cases, 

the new vehicles being introduced by 

manufacturers are actually in response 

to their anticipation of this rulemaking. 

Our approach prevents some of these 

technological improvements and their 

associated cost from being assumed in 

the baseline. Thus, the added 

technology will not be considered to be 

free for the purposes of this rule. 

We note that, as a result of these 

issues, the market file may show sales 

volumes for certain vehicles during MYs 

2012–2016 even though they will be 

discontinued before that time frame. 

Although the agencies recognize that 

these specific vehicles will be 

discontinued, we continue to include 

them in the market forecast because 

they are useful for representing 

successor vehicles that may appear in 

the rulemaking time frame to replace the 

discontinued vehicles in that market 

segment. 

Other market changes not captured by 

today’s approach are broader. For 

example, Chrysler Group LLC has 

announced plans to offer small- and 

medium-sized cars using Fiat 

powertrains. The product plan 

submitted by Chrysler includes vehicles 

that appear to reflect these plans. 

However, none of these specific vehicle 

models are included in the market 

forecast the agencies have developed 

starting with MY 2008 CAFE 

compliance data. The product plan 

submitted by Chrysler is also more 

optimistic with regard to Chrysler’s 

market share during MYs 2012–2016 

than the market forecast projected by 

CSM and used by the agencies for this 

proposal. Similarly, the agencies’ 

market forecast does not reflect Nissan’s 

plans regarding electric vehicles. 

Additionally, some technical 

information that manufacturers have 

provided in product plans regarding 

specific vehicle models is, at least 

insofar as NHTSA and EPA have been 

able to determine, not available from 

public or commercial sources. While 

such gaps do not bear significantly on 

the agencies’ analysis, the diversity of 

pickup configurations necessitated 

utilizing a sales-weighted average 

footprint value 73 for many 

73 A full-size pickup might be offered with 

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

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

and, therefore, multiple footprint sizes. CAFE 

compliance data for MY 2008 data does not contain 

footprint information, and does not contain 

information that can be used to reliably identify 

which pickup entries correspond to footprint values 

estimable from public or commercial sources. 

Therefore, the agencies have used the known 

production levels of average values to represent all 

manufacturers’ pickups. Since our 

modeling only utilizes footprint in order 

to estimate each manufacturer’s CO2 or 

fuel economy standard and all the other 

vehicle characteristics are available for 

each pickup configuration, this 

approximation has no practical impact 

on the projected technology or cost 

associated with compliance with the 

various standards evaluated. The only 

impact which could arise would be if 

the relative sales of the various pickup 

configurations changed, or if the 

agencies were to explore standards with 

a different shape. This would 

necessitate recalculating the average 

footprint value in order to maintain 

accuracy. 

The agencies have carefully 

considered these advantages and 

disadvantages of using a market forecast 

derived from public and commercial 

sources rather than from manufacturers’ 

product plans, and we believe that the 

advantages outweigh the disadvantages 

for the purpose of proposing standards 

for model years 2012–2016. NHTSA’s 

inability to release confidential market 

inputs and corresponding detailed 

outputs from the CAFE model has raised 

serious concerns among many observers 

regarding the transparency of NHTSA’s 

analysis, as well as related concerns that 

the lack of transparency might enable 

manufacturers to provide unrealistic 

information to try to influence NHTSA’s 

determination of the maximum feasible 

standards. Although NHTSA does not 

agree with some observers’ assertions 

that some manufacturers have 

deliberately provided inaccurate or 

otherwise misleading information, 

today’s market forecast is fully open and 

transparent, and is therefore not subject 

to such concerns. 

With respect to the disadvantages, the 

agencies are hopeful that manufacturers 

will, in the future, agree to make public 

their plans regarding model years that 

are very near, such as MY 2010 or 

perhaps MY 2011, so that this 

information can be considered for 

purposes of the final rule analysis and 

be available for the public. In any event, 

because NHTSA and EPA are releasing 

market inputs used in the agencies’ 

respective analyses, manufacturers, 

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

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

calculate the sales-weighted average footprint value 

for each pickup family. Again, this has no impact 

on the results of our modeling effort, although it 

would require re-estimation if we were to examine 

light truck standards of a different shape. In the 

extreme, one single footprint value could be used 

for every vehicle sold by a single manufacturer as 

long as the fuel economy standard associated with 

this footprint value represented the sales-weighted, 

harmonic average of the fuel economy standards 

associated with each vehicle’s footprint values. 

suppliers, and other automobile 

industry observers and participant can 

submit comments on how these inputs 

should be improved, as can all other 

reviewers. 

4. How Does Manufacturer Product Plan 

Data Factor into the Baseline Used in 

This Proposal? 

In the Spring of 2009, many 

manufacturers submitted product plans 

in response to NHTSA’s request that 

they do so.74 NHTSA and EPA both 

have access to these plans, and both 

agencies have reviewed them in detail. 

A small amount of product plan data 

was used in the development of the 

baseline. The specific pieces of data are: 

• Wheelbase; 

• Track Width Front; 

• Track Width Rear; 

• EPS (Electric Power Steering); 

• ROLL (Reduced Rolling Resistance); 

• LUB (Advance Lubrication i.e., low 

weight oil); 

• IACC (Improved Electrical 

Accessories); 

• Curb Weight; 

• GVWR (Gross Vehicle Weight 

Rating) 

The track widths, wheelbase, curb 

weight, and GVWR could have been 

looked up on the Internet (159 were), 

but were taken from the product plans 

when available for convenience. To 

ensure accuracy, a sample from each 

product plan was used as a check 

against the numbers available from 

Motortrend.com. These numbers will be 

published in the baseline file since they 

can be easily looked up on the Internet. 

On the other hand, EPS, ROLL, LUB, 

and IACC are difficult to determine 

without using manufacturer’s product 

plans. These items will not be published 

in the baseline file, but the data has 

been aggregated into the EPA baseline in 

the technology effectiveness and cost 

effectiveness for each vehicle in a way 

that allows the baseline for the model to 

be published without revealing the 

manufacturers’ data. 

Considering both the publiclyavailable baseline used in this proposal 

and the product plans provided recently 

by manufacturers, however, it is 

possible that the latter could potentially 

be used to develop a more realistic 

forecast of product mix and vehicle 

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

using company product plans are two 

concerns about doing so: (a) Uncertainty 

and possible inaccuracy in 

manufacturers’ forecasts and (b) the 

transparency of using product plan data. 

With respect to the first concern, the 

74 74 FR 9185 (Mar. 3, 2009) 

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

or three years into the future) should be 

less uncertain and more amenable to 

eventual retrospective analysis (i.e., 

comparison to actual sales) than 

manufacturers’ longer-term forecasts 

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

years into the future). With respect to 

the second concern, NHTSA has 

consulted with most manufacturers and 

believes that although few, if any, 

manufacturers would be willing to make 

public their longer-term plans, many 

responding manufacturers may be 

willing to make public their short-term 

plans. In a companion notice, NHTSA is 

seeking product plan information from 

manufacturers for MYs 2008 to 2020, 

and the agencies will also continue to 

consult with manufacturers regarding 

the possibility of releasing plans for MY 

2010 and/or MY 2011 for purposes of 

developing and analyzing the final GHG 

and CAFE standards for MYs 2012– 

2016. The agencies are hopeful that 

manufacturers will agree to do so, and 

that NHTSA and EPA would therefore 

be able to use product plans in ways 

that might aid in increasing the 

accuracy of the baseline market forecast. 

TARGET
 =
 

C. Development of Attribute-Based 

Curve Shapes 

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

defined by a mathematical function for 

MYs 2012–2016 passenger cars and light 

trucks. EPCA, as amended by EISA, 

expressly requires that CAFE standards 

for passenger cars and light trucks be 

based on one or more vehicle attributes 

related to fuel economy, and be 

expressed in the form of a mathematical 

function.75 The CAA has no such 

requirement, though in past rules, EPA 

has relied on both universal and 

attribute-based standards (e.g., for 

nonroad engines, EPA uses the attribute 

of horsepower). However, given the 

advantages of using attribute-based 

standards and given the goal of 

coordinating and harmonizing CO2 

standards promulgated under the CAA 

and CAFE standards promulgated under 

EPCA, as expressed in the joint NOI, 

EPA is also proposing to issue standards 

that are attribute-based and defined by 

mathematical functions. 

Under an attribute-based standard, 

every vehicle model has a performance 

target (fuel economy and GHG 

emissions for CAFE and GHG emissions 

standards, respectively), the level of 

which depends on the vehicle’s 

1 

attribute (for this proposal, footprint). 

The manufacturers’ fleet average 

performance is determined by the 

production-weighed 76 average (for 

CAFE, harmonic average) of those 

targets. NHTSA and EPA are proposing 

CAFE and CO2 emissions standards 

defined by constrained linear functions 

and, equivalently, piecewise linear 

functions.77 As a possible option for 

future rulemakings, the constrained 

linear form was introduced by NHTSA 

in the 2007 NPRM proposing CAFE 

standards for MY 2011–2015. Described 

mathematically, the proposed 

constrained linear function is defined 

according to the following formula: 78 

Where: 

TARGET = the fuel economy target (in mpg) 

applicable to vehicles of a given 

footprint (FOOTPRINT, in square feet), 

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

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

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

sloped portion of the function, 

d = the intercept (in gpm) of the sloped 

portion of the function (that is, the value 

the sloped portion would take if 

extended to a footprint of 0 square feet, 

and the MIN and MAX functions take the 

minimum and maximum, respectively, 

of the included values; for example, 

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

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

⎞

⎟

⎠ 

11 

,, 

a b

Because the format is linear on a consumption below. Graphically, the constrained linear form appears as 

gallons-per-mile basis, not on a miles- shown in Figure II.C.1–1. 

per-gallon basis, it is plotted as fuel BILLING CODE 4910–59–P 

⎡
 ⎛
 ⎤
 MIN
 MAX
 ×
FOOTPRINT
 +
d ⎜

⎝
 c ⎢

⎣
 ⎥⎦
 

75 49 U.S.C. 32902(a)(3)(A). 77 The equations are equivalent but are specified 78 This function is linear in fuel consumption but 

76 Production for sale in the United States. differently due to differences in the agencies’ not in fuel economy. 

respective models. 

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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49491 

The specific form and stringency for 

each fleet (passenger cars and light 

trucks) and model year are defined 

through specific values for the four 

coefficients shown above. 

EPA is proposing the equivalent 

equation below for assigning CO2 targets 

to an individual vehicle’s footprint 

value. Although the general model of 

the equation is the same for each vehicle 

category and each year, the parameters 

of the equation differ for cars and 

trucks. Each parameter also changes on 

an annual basis, resulting in the yearly 

increases in stringency seen in the 

tables above. Described mathematically, 

EPA’s proposed piecewise linear 

function is as follows: 

Target = a, if x ≤ l 

Target = cx + d, if l < x ≤ h 

Target = b, if x > h 

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49492 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

In the constrained linear form applied 

by NHTSA, this equation takes the 

simplified form: 

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

Where: 

Target = the CO2 target value for a given 

footprint (in g/mi) 

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

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

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

per sq ft CO2) 

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

(in g/mi CO2) 

x = footprint of the vehicle model (in square 

feet, rounded to the nearest tenth) 

l & h are the lower and higher footprint limits 

or constraints or (‘‘kinks’’) or the 

boundary between the flat regions and 

the intermediate sloped line (in sq ft) 

Graphically, piecewise linear form, 

like the constrained linear form, appears 

as shown in Figure II.C.1–2. 
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BILLING CODE 4910–59–C 

As for the constrained linear form, the 

specific form and stringency for each 

fleet (passenger car and light trucks) and 

model year are defined through specific 

values for the four coefficients shown 

above. 

For purposes of this rule, NHTSA and 

EPA developed the basic curve shapes 

using methods similar to those applied 

by NHTSA in fitting the curves defining 

the MY 2011 standards. The first step is 

defining the reference market inputs (in 

the form used by NHTSA’s CAFE 

model) described in Section II.B of this 

preamble and in Chapter 1 of the joint 

TSD. However, because the baseline 

fleet is technologically heterogeneous, 

NHTSA used the CAFE model to 

develop a fleet to which nearly all the 

technologies discussed in Chapter 3 of 

the joint TSD 79 were applied, by taking 

the following steps: (1) Treating all 

manufacturers as unwilling to pay civil 

penalties rather than applying 

technology, (2) applying any technology 

at any time, irrespective of scheduled 

vehicle redesigns or freshening, and (3) 

ignoring ‘‘phase-in caps’’ that constrain 

the overall amount of technology that 

can be applied by the model to a given 

manufacturer’s fleet. These steps helped 

to increase technological parity among 

vehicle models, thereby providing a 

better basis (than the baseline or 

reference fleets) for estimating the 

statistical relationship between vehicle 

size and fuel economy. 

In fitting the curves, NHTSA also 

continued to apply constraints to limit 

the function’s value for both the 

smallest and largest vehicles. Without a 

limit at the smallest footprints, the 

function—whether logistic or linear— 

can reach values that would be unfairly 

burdensome for a manufacturer that 

elects to focus on the market for small 

vehicles; depending on the underlying 

data, an unconstrained form could 

apply to the smallest vehicles targets 

that are simply unachievable. Limiting 

the function’s value for the smallest 

vehicles ensures that the function 

remains technologically achievable at 

small footprints, and that it does not 

unduly burden manufacturers focusing 

on small vehicles. On the other side of 

the function, without a limit at the 

largest footprints, the function may 

provide no floor on required fuel 

economy. Also, the safety 

79 The agencies excluded diesel engines and 

strong hybrid vehicle technologies from this 

exercise (and only this exercise) because the 

agencies expect that manufacturers would not need 

to rely heavily on these technologies in order to 

comply with the proposed standards. NHTSA and 

EPA did include diesel engines and strong hybrid 

vehicle technologies in all other portions of their 

analyses. 

considerations that support the 

provision of a disincentive for 

downsizing as a compliance strategy 

apply weakly—if at all—to the very 

largest vehicles. Limiting the function’s 

value for the largest vehicles leads to a 

function with an inherent absolute 

minimum level of performance, while 

remaining consistent with safety 

considerations. 

Before fitting the sloped portion of the 

constrained linear form, NHTSA 

selected footprints above and below 

which to apply constraints (i.e., 

minimum and maximum values) on the 

function. For passenger cars, the agency 

noted that several manufacturers offer 

small and, in some cases, sporty coupes 

below 41 square feet, examples 

including the BMW Z4 and Mini, Saturn 

Sky, Honda Fit and S2000, Hyundai 

Tiburon, Mazda MX–5 Miata, Suzuki 

SX4, Toyota Yaris, and Volkswagen 

New Beetle. Because such vehicles 

represent a small portion (less than 10 

percent) of the passenger car market, yet 

often have characteristics that could 

make it infeasible to achieve the very 

challenging targets that could apply in 

the absence of a constraint, NHTSA is 

proposing to ‘‘cut off’’ the linear portion 

of the passenger car function at 41 

square feet. For consistency, the agency 

is proposing to do the same for the light 

truck function, although no light trucks 

are currently offered below 41 square 

feet. The agency further noted that 

above 56 square feet, the only passenger 

car model present in the MY 2008 fleet 

were four luxury vehicles with 

extremely low sales volumes—the 

Bentley Arnage and three versions of the 

Rolls Royce Phantom. NHTSA is 

therefore proposing to ‘‘cut off’’ the 

linear portion of the passenger car 

function at 56 square feet. Finally, the 

agency noted that although public 

information is limited regarding the 

sales volumes of the many different 

configurations (cab designs and bed 

sizes) of pickup trucks, most of the 

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

GM Sierra/Silverado, Nissan Titan, and 

Toyota Tundra) appear to fall just above 

66 square feet in footprint. NHTSA is 

therefore proposing to ‘‘cut off’’ the 

linear portion of the light truck function 

at 66 square feet. 

NHTSA and EPA seek comment on 

this approach to fitting the curves. We 

note that final decisions on this issue 

will play an important role in 

determining the form and stringency of 

the final CAFE and CO2 standards, the 

incentives those standards will provide 

(e.g., with respect to downsizing small 

vehicles), and the relative compliance 

burden faced by each manufacturer. 

For purposes of the CAFE and CO2 

standards proposed in this NPRM, 

NHTSA and EPA recognize that there is 

some possibility that low fuel prices 

during the years in which MY 2012– 

2016 vehicles are in service might lead 

to less than currently anticipated fuel 

savings and emissions reductions. One 

way to assure that emission reductions 

are achieved in fact is through the use 

of explicit backstops, fleet average 

standards established at an absolute 

level. For purposes of the CAFE 

program, EISA requires a backstop for 

domestically-manufactured passenger 

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

mpg or 92 percent of the average fuel 

economy projected by the Secretary of 

Transportation for the combined 

domestic and non-domestic passenger 

automobile fleets manufactured for sale 

in the United States by all 

manufacturers in the model year 

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

MY 2011 final rule, the first rule setting 

standards since EISA added the 

backstop provision to EPCA, NHTSA 

considered whether the statute 

permitted the agency to set backstop 

standards for the other regulated fleets 

of imported passenger cars and light 

trucks. Although commenters expressed 

support both for and against a more 

permissive reading of EISA, NHTSA 

concluded in that rulemaking that its 

authority was likely limited to setting 

only the backstop standard that 

Congress expressly provided, i.e., the 

one for domestic passenger cars. A 

backstop, however, could be adopted 

under section 202(a) of the CAA 

assuming it could be justified under the 

relevant statutory criteria. EPA and 

NHTSA also note that the flattened 

portion of the car curve directionally 

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

flat curve is itself a backstop). The 

agencies seek comment on whether 

backstop standards, or any other method 

within the agencies’ statutory authority, 

should and can be implemented in 

order to guarantee a level of CO2 

emissions reductions and fuel savings 

under the attribute-based standards. 

Having developed a set of baseline 

data to which to fit the mathematical 

fuel consumption function, the initial 

values for parameters c and d were 

determined for cars and trucks 

separately. c and d were initially set at 

the values for which the average 

(equivalently, sum) of the absolute 

values of the differences was minimized 

between the ‘‘maximum technology’’ 

fleet fuel consumption (within the 

footprints between the upper and lower 

80 49 U.S.C. 32902(b)(4). 
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49494 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

limits) and the straight line the function 

defined above at the same 

corresponding vehicle footprints. That 

is, c and d were determined by 

minimizing the average absolute 

residual, commonly known as the MAD 

(Mean Absolute Deviation) approach, of 

the corresponding straight line. 

Finally, NHTSA calculated the values 

of the upper and lower values (a and b) 

based on the corresponding footprints 

discussed above (41 and 56 square feet 

for passenger cars, and 41 and 66 square 

feet for light trucks). 

The result of this methodology is 

shown below in Figures II.A.2–2 and 

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

trucks, respectively. The fitted curves 

are shown with the underlying 

‘‘maximum technology’’ passenger car 

and light truck fleets. For passenger 

cars, the mean absolute deviation of the 

sloped portion of the function was 14 

percent. For trucks, the corresponding 

MAD was 10 percent. 

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The agencies used these functional 

forms as a starting point to develop 

mathematical functions defining the 

actual proposed standards as discussed 

above. The agencies then transposed 

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

or CO2 basis, uniformly downward) to 

produce the relative car and light truck 

standards described in the next section. 

D. Relative Car-Truck Stringency 

The agencies have determined, under 

their respective statutory authorities, 

that it is appropriate to propose 

fleetwide standards with the projected 

levels of stringency of 34.1 mpg or 250 

g/mi (as well as the corresponding 

intermediate year fleetwide standards) 

for NHTSA and EPA respectively. To 

determine the relative stringency of 

passenger car and light truck standards, 

the agencies are concerned that 

increasing the difference between the 

car and truck standards (either by 
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raising the car standards or lowering the 

truck standards) could encourage 

manufacturers to build fewer cars and 

more trucks, likely to the detriment of 

fuel economy and CO2 reductions.81 In 

order to maintain consistent car/truck 

standards, the agencies applied a 

constant ratio between the estimated 

average required performance under the 

passenger car and light truck standards, 

in order to maintain a stable set of 

81 For example, since many 2WD SUVs are 

classified as passenger cars, manufacturers have 

already warned that high car standards relative to 

truck standards could create an incentive for them 

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

version. 

incentives regarding vehicle 

classification. 

To calculate relative car-truck 

stringency in this proposal, the agencies 

explored a number of possible 

alternatives. In the interest of 

harmonization, the agencies agree to use 

the Volpe model in order to estimate 

stringencies at which net benefits would 

be maximized. Further details of the 

development of this scenario approach 

can be found in Section IV of this 

preamble as well as in NHTSA’s PRIA 

and DEIS. NHTSA examined passenger 

car and light truck standards that would 

produce the proposed combined average 

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

above. NHTSA did so by shifting 

downward the curves that maximize net 

benefits, holding the relative stringency 

of passenger car and light truck 

standards constant at the level 

determined by maximizing net benefits, 

such that the average fuel economy 

required of passenger cars remains 34 

percent higher than the average fuel 

economy required of light trucks. This 

methodology resulted in the average 

fuel economy levels for passenger cars 

and light trucks during MYs 2012–2016 

as shown in Table I.D.2–1. The 

following chart illustrates this 

methodology of shifting the standards 

from the levels maximizing net benefits 

to the levels consistent with the 

combined fuel economy standards in 

this rule. 

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49498 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

After this analysis was completed, 

EPA examined two alternative 

approaches to determine whether they 

would lead to significantly different 

outcomes. First, EPA analyzed the 

relative stringencies using a 10-year 

payback analysis (with the OMEGA 

model). This analysis sets the relative 

stringencies if increased technology cost 

is to be paid back out of fuel savings 

over a 10-year period (assuming a 3% 

discount rate). Second, EPA also 

conducted a technology maximized 

analysis, which sets the relative 

stringencies if all technologies (with the 

exception of strong hybrids and diesels) 

are assumed to be utilized in the fleet. 

(This is the same methodology that was 

used to determine the curve shape as 

explained in the section above and in 

Chapter 2 of the joint TSD section). 
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Compared to NHTSA’s approach based the truck fuel economy standard). EPA economy levels to average required CO2 

on stringencies estimated to maximize believes that this similarity supports the emission rates, and then applying the 

net benefits, EPA staff found that these proposed relative stringency of the two expected air conditioning credits for 

two other approaches produced very standards. 2012–2016. These A/C credits are 

similar results to NHTSA’s, i.e., similar The car and truck standards for EPA shown in the following table. Further 

ratios of car-truck relative stringency (Table I.D. 2–4 above) were details of the derivation of these factors 

(the ratio being within a range of 1.34 subsequently determined by first can be found in Section III of this 

to 1.37 relative stringency of the car to converting the average required fuel preamble or in the EPA RIA. 

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

Average technology 

penetration 

(percent) 

Average 

credit 

for cars 

Average 

credit for 

trucks 

Average 

credit for 

combined 

fleet 

2012 ............................................................................................................. 

2013 ............................................................................................................. 

2014 ............................................................................................................. 

2015 ............................................................................................................. 

2016 ............................................................................................................. 

25 

40 

55 

75 

85 

3.0 

4.8 

7.2 

9.6 

10.2 

3.4 

5.4 

8.1 

10.8 

11.5 

3.1 

5.0 

7.5 

10.0 

10.6 

The agencies seek comment on the 

use of this methodology for 

apportioning the fleet stringencies to 

relative car and truck standards for 

2012–2016. 

E. Joint Vehicle Technology 

Assumptions 

Vehicle technology assumptions, i.e., 

assumptions about their cost, 

effectiveness, and the rate at which they 

can be incorporated into new vehicles, 

are often very controversial as they have 

a significant impact on the levels of the 

standards. Agencies must, therefore, 

take great care in developing and 

justifying these assumptions. In 

developing technology inputs for MY 

2012–2016 standards, the agencies 

reviewed the technology assumptions 

that NHTSA used in setting the MY 

2011 standards and the comments that 

NHTSA received in response to its May 

2008 Notice of Proposed Rulemaking. 

This review is consistent with the 

request by President Obama in his 

January 26 memorandum to DOT. In 

addition, the agencies reviewed the 

technology input estimates identified in 

EPA’s July 2008 Advanced Notice of 

Proposed Rulemaking. The review of 

these documents was supplemented 

with updated information from more 

current literature, new product plans 

and from EPA certification testing. 

As a general matter, the best way to 

derive technology cost estimates is to 

conduct real-world tear down studies. 

These studies break down each 

technology into its respective 

components, evaluate the costs of each 

component, and build up the costs of 

the entire technology based on the 

contribution of each component. As 

such, tear down studies require a 

significant amount of time and are very 

costly. EPA has begun conducting tear 

down studies to assess the costs of 4– 

5 technologies under a contract with 

FEV. To date, only two technologies 

(stoichiometeric gasoline direct 

injection and turbo charging with 

engine downsizing for a 4 cylinder 

engine to a 4 cylinder engine) have been 

evaluated. The agencies relied on the 

findings of FEV for estimating the cost 

of these technologies in this 

rulemaking—directly for the 4 cylinder 

engines, and extrapolated for the 6 and 

8 cylinder engines. The agencies request 

comment on the use of these estimated 

costs from the FEV study. For the other 

technologies, because tear down studies 

were not yet available, the agencies 

decided to pursue, to the extent 

possible, the Bill of Materials (BOM) 

approach as outlined in NHTSA’s MY 

2011 final rule. A similar approach was 

used by EPA in the EPA 2008 Staff 

Technical Report. This approach was 

recommended to NHTSA by Ricardo, an 

international engineering consulting 

firm retained by NHTSA to aid in the 

analysis of public comments on its 

proposed standards for MYs 2011–2015 

because of its expertise in the area of 

fuel economy technologies. A BOM 

approach is one element of the process 

used in tear down studies. The 

difference is that under a BOM 

approach, the build up of cost estimates 

is conducted based on a review of cost 

and effectiveness estimates for each 

component from available literature, 

while under a tear down study, the cost 

estimates which go into the BOM come 

from the tear down study itself. To the 

extent that the agencies departed from 

the MY 2011 CAFE final rule estimates, 

the agencies explained the reasons and 

provided supporting analyses. As tear 

down studies are concluded by FEV 

during the rulemaking process, the 

agencies will make them available in the 

joint rulemaking docket of this 

rulemaking. The agencies will consider 

these studies and any comments 

received on them, as practicable and 

appropriate, as well as any other new 

information pertinent to the rulemaking 

of which the agencies become aware, in 

developing technology cost assumptions 

for the final rule. 

Similarly, the agencies followed a 

BOM approach for developing its 

effectiveness estimates, insofar as the 

BOM developed for the cost estimates 

helped to inform the appropriate 

effectiveness values derived from the 

literature review. The agencies 

supplemented the information with 

results from available simulation work 

and real world EPA certification testing. 

The agencies would also like to note 

that per the Energy Independence and 

Security Act (EISA), the National 

Academies of Sciences is conducting an 

updated study to update Chapter 3 of 

the 2002 NAS Report, which outlines 

technology estimates. The update will 

take a fresh look at that list of 

technologies and their associated cost 

and effectiveness values. 

The report is expected to be available 

on September 30, 2009. As soon as the 

update to the NAS Report is received, it 

will be placed in the joint rulemaking 

docket for the public’s review and 

comment. Because this will occur 

during the comment period, the public 

is encouraged to check the docket 

regularly and provide comments on the 

updated NAS Report by the closing of 

the comment period of this notice. 

NHTSA and EPA will consider the 

updated NAS Report and any comments 

received, as practicable and appropriate, 

on it when considering revisions to the 

technology cost and effectiveness 

estimates for the final rule. 
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49500 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

Consideration of this report is consistent 

with the request by President Obama in 

his January 26 memorandum to DOT. 

1. What Technologies Do the Agencies 

Consider? 

The agencies considered over 35 

vehicle technologies that manufacturers 

could use to improve the fuel economy 

and reduce CO2 emissions of their 

vehicles during MYs 2012–2016. The 

majority of the technologies described 

in this section are readily available, well 

known, and could be incorporated into 

vehicles once production decisions are 

made. Other technologies considered 

may not currently be in production, but 

are beyond the research phase and 

under development, and are expected to 

be in production in the next few years. 

These are technologies which can, for 

the most part, be applied both to cars 

and trucks, and which are capable of 

achieving significant improvements in 

fuel economy and reductions in CO2 

emissions, at reasonable costs. The 

agencies did not consider technologies 

in the research stage because the 

leadtime available for this rule is not 

sufficient to move such technologies 

from research to production. 

The technologies considered in the 

agencies’ analysis are briefly described 

below. They fall into five broad 

categories: engine technologies, 

transmission technologies, vehicle 

technologies, electrification/accessory 

technologies, and hybrid technologies. 

For a more detailed description of each 

technology and their costs and 

effectiveness, we refer the reader to 

Chapter 3 of the joint TSD, Chapter III 

of NHTSA’s PRIA, and Chapter 1 of 

EPA’s DRIA. Technologies to reduce 

CO2 and HFC emissions from air 

conditioning systems are discussed in 

Section III of this preamble and in EPA’s 

DRIA. 

Types of engine technologies that 

improve fuel economy and reduce CO2 

emissions include the following: 

• Low-friction lubricants—low 

viscosity and advanced low friction 

lubricants oils are now available with 

improved performance and better 

lubrication. If manufacturers choose to 

make use of these lubricants, they 

would need to make engine changes and 

possibly conduct durability testing to 

accommodate the low-friction 

lubricants. 

• Reduction of engine friction 

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

followers, improved material coatings, 

more optimal thermal management, 

piston surface treatments, and other 

improvements in the design of engine 

components and subsystems that 

improve engine operation.

• Conversion to dual overhead cam 

with dual cam phasing—as applied to 

overhead valves designed to increase 

the air flow with more than two valves 

per cylinder and reduce pumping 

losses. 

• Cylinder deactivation—deactivates 

the intake and exhaust valves and 

prevents fuel injection into some 

cylinders during light-load operation. 

The engine runs temporarily as though 

it were a smaller engine which 

substantially reduces pumping losses.

• Variable valve timing—alters the 

timing of the intake valve, exhaust 

valve, or both, primarily to reduce 

pumping losses, increase specific 

power, and control residual gases.

• Discrete variable valve lift— 

increases efficiency by optimizing air 

flow over a broader range of engine 

operation which reduces pumping 

losses. Accomplished by controlled 

switching between two or more cam 

profile lobe heights. 

• Continuous variable valve lift—is 

an electromechanically controlled 

system in which valve timing is 

changed as lift height is controlled. This 

yields a wide range of performance 

optimization and volumetric efficiency, 

including enabling the engine to be 

valve throttled. 

• Stoichiometric gasoline directinjection technology—injects fuel at 

high pressure directly into the 

combustion chamber to improve cooling 

of the air/fuel charge within the 

cylinder, which allows for higher 

compression ratios and increased 

thermodynamic efficiency. 

• Combustion restart—can be used in 

conjunction with gasoline directinjection systems to enable idle-off or 

start-stop functionality. Similar to other 

start-stop technologies, additional 

enablers, such as electric power 

steering, accessory drive components, 

and auxiliary oil pump, might be 

required.

• Turbocharging and downsizing— 

increases the available airflow and 

specific power level, allowing a reduced 

engine size while maintaining 

performance. This reduces pumping 

losses at lighter loads in comparison to 

a larger engine. 

• Exhaust-gas recirculation boost— 

increases the exhaust-gas recirculation 

used in the combustion process to 

increase thermal efficiency and reduce 

pumping losses. 

• Diesel engines—have several 

characteristics that give superior fuel 

efficiency, including reduced pumping 

losses due to lack of (or greatly reduced) 

throttling, and a combustion cycle that 

operates at a higher compression ratio, 

with a very lean air/fuel mixture, 

relative to an equivalent-performance 

gasoline engine. This technology 

requires additional enablers, such as 

NOx trap catalyst after-treatment or 

selective catalytic reduction NOx aftertreatment. The cost and effectiveness 

estimates for the diesel engine and 

aftertreatment system utilized in this 

proposal have been revised from the 

NHTSA MY 2011 CAFE final rule, and 

the agencies request comment on these 

diesel cost estimates. 

Types of transmission technologies 

considered include: 

• Improved automatic transmission 

controls—optimizes shift schedule to 

maximize fuel efficiency under wide 

ranging conditions, and minimizes 

losses associated with torque converter 

slip through lock-up or modulation. 

• Six-, seven-, and eight-speed 

automatic transmissions—the gear ratio 

spacing and transmission ratio are 

optimized for a broader range of engine 

operating conditions. 

• Dual clutch or automated shift 

manual transmissions—are similar to 

manual transmissions, but the vehicle 

controls shifting and launch functions. 

A dual-clutch automated shift manual 

transmission uses separate clutches for 

even-numbered and odd-numbered 

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

smoother shifting. 

• Continuously variable 

transmission—commonly uses Vshaped pulleys connected by a metal 

belt rather than gears to provide ratios 

for operation. Unlike manual and 

automatic transmissions with fixed 

transmission ratios, continuously 

variable transmissions can provide fully 

variable transmission ratios with an 

infinite number of gears, enabling finer 

optimization of transmission torque 

multiplication under different operating 

conditions so that the engine can 

operate at higher efficiency. 

• Manual 6-speed transmission— 

offers an additional gear ratio, often 

with a higher overdrive gear ratio, than 

a 5-speed manual transmission. 

Types of vehicle technologies 

considered include: 

• Low-rolling-resistance tires—have 

characteristics that reduce frictional 

losses associated with the energy 

dissipated in the deformation of the 

tires under load, therefore improving 

fuel economy and reducing CO2 

emissions. 

• Low-drag brakes—reduce the 

sliding friction of disc brake pads on 

rotors when the brakes are not engaged 

because the brake pads are pulled away 

from the rotors. 
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Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 49501 

• Front or secondary axle disconnect 

for four-wheel drive systems—provides 

a torque distribution disconnect 

between front and rear axles when 

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

reduction of associated parasitic energy 

losses. 

• Aerodynamic drag reduction—is 

achieved by changing vehicle shape or 

reducing frontal area, including skirts, 

air dams, underbody covers, and more 

aerodynamic side view mirrors. 

• Mass reduction and material 

substitution—Mass reduction 

encompasses a variety of techniques 

ranging from improved design and 

better component integration to 

application of lighter and higherstrength materials. Mass reduction is 

further compounded by reductions in 

engine power and ancillary systems 

(transmission, steering, brakes, 

suspension, etc.). The agencies 

recognize there is a range of diversity 

and complexity for mass reduction and 

material substitution technologies and 

there are many techniques that 

automotive suppliers and manufacturers 

are using to achieve the levels of this 

technology that the agencies have 

modeled in our analysis for this 

proposal. The agencies seek comments 

on the methods, costs, and effectiveness 

estimates associated with mass 

reduction and material substitution 

techniques that manufacturers intend to 

employ for reducing fuel consumption 

and CO2 emissions during the 

rulemaking time frame. 

Types of electrification/accessory and 

hybrid technologies considered include: 

• Electric power steering (EPS)—is an 

electrically-assisted steering system that 

has advantages over traditional 

hydraulic power steering because it 

replaces a continuously operated 

hydraulic pump, thereby reducing 

parasitic losses from the accessory 

drive. 

• Improved accessories (IACC)—may 

include high efficiency alternators, 

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

water pumps and cooling fans. This 

excludes other electrical accessories 

such as electric oil pumps and 

electrically driven air conditioner 

compressors. 

• Air Conditioner Systems—These 

technologies include improved hoses, 

connectors and seals for leakage control. 

They also include improved 

compressors, expansion valves, heat 

exchangers and the control of these 

components for the purposes of 

improving tailpipe CO2 emissions as a 

result of A/C use. These technologies 

are covered separately in the EPA RIA. 

• 12-volt micro-hybrid (MHEV)—also 

known as idle-stop or start stop and 

commonly implemented as a 12-volt 

belt-driven integrated starter-generator, 

this is the most basic hybrid system that 

facilitates idle-stop capability. Along 

with other enablers, this system replaces 

a common alternator with a belt-driven 

enhanced power starter-alternator, and a 

revised accessory drive system.

• Higher Voltage Stop-Start/Belt 

Integrated Starter Generator (BISG)— 

provides idle-stop capability and uses a 

high voltage battery with increased 

energy capacity over typical automotive 

batteries. The higher system voltage 

allows the use of a smaller, more 

powerful electric motor. This system 

replaces a standard alternator with an 

enhanced power, higher voltage, higher 

efficiency starter-alternator, that is belt 

driven and that can recover braking 

energy while the vehicle slows down 

(regenerative braking). 

• Integrated Motor Assist (IMA)/ 

Crank integrated starter generator 

(CISG)—provides idle-stop capability 

and uses a high voltage battery with 

increased energy capacity over typical 

automotive batteries. The higher system 

voltage allows the use of a smaller, more 

powerful electric motor and reduces the 

weight of the wiring harness. This 

system replaces a standard alternator 

with an enhanced power, higher 

voltage, higher efficiency starteralternator that is crankshaft mounted 

and can recover braking energy while 

the vehicle slows down (regenerative 

braking). 

• 2-mode hybrid (2MHEV)—is a 

hybrid electric drive system that uses an 

adaptation of a conventional steppedratio automatic transmission by 

replacing some of the transmission 

clutches with two electric motors that 

control the ratio of engine speed to 

vehicle speed, while clutches allow the 

motors to be bypassed. This improves 

both the transmission torque capacity 

for heavy-duty applications and reduces 

fuel consumption and CO2 emissions at 

highway speeds relative to other types 

of hybrid electric drive systems. 

• Power-split hybrid (PSHEV)—a 

hybrid electric drive system that 

replaces the traditional transmission 

with a single planetary gearset and a 

motor/generator. This motor/generator 

uses the engine to either charge the 

battery or supply additional power to 

the drive motor. A second, more 

powerful motor/generator is 

permanently connected to the vehicle’s 

final drive and always turns with the 

wheels. The planetary gear splits engine 

power between the first motor/generator 

and the drive motor to either charge the 

battery or supply power to the wheels. 

• Plug-in hybrid electric vehicles 

(PHEV)—are hybrid electric vehicles 

with the means to charge their battery 

packs from an outside source of 

electricity (usually the electric grid). 

These vehicles have larger battery packs 

with more energy storage and a greater 

capability to be discharged. They also 

use a control system that allows the 

battery pack to be substantially depleted 

under electric-only or blended 

mechanical/electric operation. 

• Electric vehicles (EV)—are vehicles 

with all-electric drive and with vehicle 

systems powered by energy-optimized 

batteries charged primarily from grid 

electricity. 

The cost estimates for the various 

hybrid systems have been revised from 

the estimates used in the MY 2011 

CAFE final rule, in particular with 

respect to estimated battery costs. The 

agencies request comment on the hybrid 

cost estimates detailed in the draft Joint 

Technical Support Document. 

2. How Did the Agencies Determine the 

Costs and Effectiveness of Each of These 

Technologies? 

Building on NHTSA’s estimates 

developed for the MY 2011 CAFE final 

rule and EPA’s Advanced Notice of 

Proposed Rulemaking, which relied on 

the 2008 Staff Technical Report,82 the 

agencies took a fresh look at technology 

cost and effectiveness values for 

purposes of the joint proposal under the 

National Program. For costs, the 

agencies reconsidered both the direct or 

‘‘piece’’ costs and indirect costs of 

individual components of technologies. 

For the direct costs, the agencies 

followed a bill of materials (BOM) 

approach employed by NHTSA in 

NHTSA’s MY 2011 final rule based on 

recommendation from Ricardo, Inc. EPA 

used a similar approach in the 2008 

EPA Staff Technical Report. A bill of 

materials, in a general sense, is a list of 

components or sub-systems that make 

up a system—in this case, an item of 

fuel economy-improving technology. In 

order to determine what a system costs, 

one of the first steps is to determine its 

components and what they cost. 

NHTSA and EPA estimated these 

components and their costs based on a 

number of sources for cost-related 

information. The objective was to use 

those sources of information considered 

to be most credible for projecting the 

costs of individual vehicle technologies. 

For example, while NHTSA and Ricardo 

engineers had relied considerably in the 

82 EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies Used to 

Reduce Light-Duty Vehicle Carbon Dioxide 

Emissions. EPA420–R–08–008, March 2008. 
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49502 Federal Register / Vol. 74, No. 186 / Monday, September 28, 2009 / Proposed Rules 

MY 2011 final rule on the 2008 Martec 

Report for costing contents of some 

technologies, upon further joint review 

and for purposes of the MY 2012–2016 

standards, the agencies decided that 

some of the costing information in that 

report was no longer accurate due to 

downward trends in commodity prices 

since the publication of that report. The 

agencies reviewed, then revalidated or 

updated cost estimates for individual 

components based on new information. 

Thus, while NHTSA and EPA found 

that much of the cost information used 

in NHTSA’s MY 2011 final rule and 

EPA’s staff report was consistent to a 

great extent, the agencies, in 

reconsidering information from many 

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

component costs of several major 

technologies: turbocharging with engine 

downsizing, mild and strong hybrids, 

diesels, stoichiometric gasoline direct 

injection fuel systems, and valve train 

lift technologies. These are discussed at 

length in the joint TSD and in NHTSA’s 

PRIA. 

For two technologies (stoichiometric 

gasoline direct injection and 

turbocharging with engine downsizing), 

the agencies relied, to the extent 

possible, on the tear down data 

available and scaling methodologies 

used in EPA’s ongoing study with FEV. 

This study consists of complete system 

tear-down to evaluate technologies 

down to the nuts and bolts to arrive at 

very detailed estimates of the costs 

associated with manufacturing them.90 

83 National Research Council, ‘‘Effectiveness and 

Impact of Corporate Average Fuel Economy (CAFE) 

Standards,’’ National Academy Press, Washington, 

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

http://www.nap.edu/ 

openbook.php?isbn=0309076013 (last accessed 

August 7, 2009). 

84 Northeast States Center for a Clean Air Future 

(NESCCAF), ‘‘Reducing Greenhouse Gas Emissions 

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

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

nesccaf.org/documents/rpt040923ghglightduty.pdf 

(last accessed August 7, 2009). 

85 ‘‘Staff Report: Initial Statement of Reasons for 

Proposed Rulemaking, Public Hearing to Consider 

Adoption of Regulations to Control Greenhouse Gas 

Emissions from Motor Vehicles,’’ California 

Environmental Protection Agency, Air Resources 

Board, August 6, 2004. 

86 Energy and Environmental Analysis, Inc., 

‘‘Technology to Improve the Fuel Economy of Light 

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

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

87 Martec, ‘‘Variable Costs of Fuel Economy 

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

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

0089–0169.1 

88 Vehicle fuel economy certification data. 

89 Confidential data submitted by manufacturers 

in response to the March 2009 and other requests 

for product plans. 

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

Report—Light-Duty Technology Cost Analysis Pilot 

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

Assignment 1–3, September 3, 2009. 

The confidential information provided 

by manufacturers as part of their 

product plan submissions to the 

agencies or discussed in meetings 

between the agencies and the 

manufacturers and suppliers served 

largely as a check on publicly-available 

data. 

For the other technologies, 

considering all sources of information 

and using the BOM approach, the 

agencies worked together intensively 

during the summer of 2009 to determine 

component costs for each of the 

technologies and build up the costs 

accordingly. Where estimates differ 

between sources, we have used 

engineering judgment to arrive at what 

we believe to be the best cost estimate 

available today, and explained the basis 

for that exercise of judgment. 

Once costs were determined, they 

were adjusted to ensure that they were 

all expressed in 2007 dollars using a 

ratio of GDP values for the associated 

calendar years,91 and indirect costs were 

accounted for using the new approach 

developed by EPA and explained in 

Chapter 3 of the draft joint TSD, rather 

than using the traditional Retail Price 

Equivalent (RPE) multiplier approach. A 

report explaining how EPA developed 

this approach can be found in the 

docket for this notice. NHTSA and EPA 

also reconsidered how costs should be 

adjusted by modifying or scaling 

content assumptions to account for 

differences across the range of vehicle 

sizes and functional requirements, and 

adjusted the associated material cost 

impacts to account for the revised 

content, although some of these 

adjustments may be different for each 

agency due to the different vehicle 

subclasses used in their respective 

models. In previous rulemakings, 

NHTSA has used the Producer Price 

Index (PPI) to adjust vehicle technology 

costs to consistent price levels, since the 

PPI measures the effects of cost changes 

that are specific to the vehicle 

manufacturing industry. For purposes of 

this NPRM, NHTSA and EPA chose to 

use the GDP deflator, which accounts 

for the effect of economy-wide price 

inflation on technology cost estimates, 

in order to express those estimates in 

comparable terms with forecasts of fuel 

prices and other economic values used 

in the analysis of costs and benefits 

from the proposed standards. Because it 

is specific to the automotive sector, the 

PPI tends to be highly volatile from year 

to year, reflecting rapidly changing 

91 NHTSA examined the use of the CPI multiplier 

instead of GDP for adjusting these dollar values, but 

found the difference to be exceedingly small—only 

$0.14 over $100. 

balances between supply and demand 

for specific components, rather than 

longer-term trends in the real cost of 

producing a broad range of powertrain 

components. NHTSA and EPA seek 

comment on whether the agencies 

should use a GDP deflator or a PPI 

inflator for purposes of developing 

technology cost estimates for the final 

rule. 

Regarding estimates for technology 

effectiveness, NHTSA and EPA also 

reexamined the estimates from 

NHTSA’s MY 2011 final rule and EPA’s 

ANPRM and 2008 Staff Technical 

Report, which were largely consistent 

with NHTSA’s 2008 NPRM estimates. 

The agencies also reconsidered other 

sources such as the 2002 NAS Report, 

the 2004 NESCCAF report, recent CAFE 

compliance data (by comparing similar 

vehicles with different technologies 

against each other in fuel economy 

testing, such as a Honda Civic Hybrid 

versus a directly comparable Honda 

Civic conventional drive), and 

confidential manufacturer estimates of 

technology effectiveness. NHTSA and 

EPA engineers reviewed effectiveness 

information from the multiple sources 

for each technology and ensured that 

such effectiveness estimates were based 

on technology hardware consistent with 

the BOM components used to estimate 

costs. Together, they compared the 

multiple estimates and assessed their 

validity, taking care to ensure that 

common BOM definitions and other 

vehicle attributes such as performance, 

refinement, and drivability were taken 

into account. However, because the 

agencies’ respective models employ 

different numbers of vehicle subclasses 

and use different modeling techniques 

to arrive at the standards, direct 

comparison of BOMs was somewhat 

more complicated. To address this and 

to confirm that the outputs from the 

different modeling techniques produced 

the same result, NHTSA and EPA 

developed mapping techniques, 

devising technology packages and 

mapping them to corresponding 

incremental technology estimates. This 

approach helped compare the outputs 

from the incremental modeling 

technique to those produced by the 

technology packaging approach to 

ensure results that are consistent and 

could be translated into the respective 

models of the agencies. 

In general, most effectiveness 

estimates used in both the MY 2011 

final rule and the 2008 EPA staff report 

were determined to be accurate and 

were carried forward without significant 

change into this proposal. When 

NHTSA and EPA’s estimates for 

effectiveness diverged slightly due to