Document ID: DOT-OST-2009-0092-0003
Agency: dot
Document Type: Rule
Title: Notice of Upcoming Joint Rulemaking To Establish Vehicle GHG Emissions and CAFE Standards
Posted Date: 2009-05-22T04:00Z

[Federal Register: May 22, 2009 (Volume 74, Number 98)]
[Notices]               
[Page 24007-24012]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22my09-57]                         

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

DEPARTMENT OF TRANSPORTATION

[FRL-8909-3]
RIN 2060-ZA15

 
Notice of Upcoming Joint Rulemaking To Establish Vehicle GHG 
Emissions and CAFE Standards

AGENCIES: Environmental Protection Agency (EPA) and Department of 
Transportation (DOT).

ACTION: Notice of Intent to conduct a joint rulemaking.

-----------------------------------------------------------------------

SUMMARY: There is a critically important need for our country to 
address global climate change and to reduce oil consumption. In this 
context, EPA and DOT currently intend to work in coordination to 
propose standards for control of emissions of greenhouse gases and for 
fuel economy, respectively. If proposed and finalized, these standards 
would apply to passenger cars, light-duty trucks, and medium-duty 
passenger vehicles (light-duty vehicles) built in model years 2012 
through 2016. Together, these vehicle categories, which include 
passenger cars, sport utility vehicles, minivans, and pickup trucks, 
are responsible for almost 60 percent of all U.S. transportation-
related greenhouse gas emissions. If ultimately adopted, these 
standards would represent a harmonized and consistent national policy 
pursuant to the separate statutory frameworks under which EPA and DOT 
operate. The approach addressed in this Notice, if ultimately adopted, 
is intended to allow manufacturers to build a single light-duty 
national fleet that would satisfy all requirements under both programs 
and would provide significant reductions in both greenhouse gas 
emissions and oil consumption.

FOR FURTHER INFORMATION CONTACT: EPA: Christopher Lieske, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: 734-214-4584; fax number: 734-214-4816; e-mail 
address: lieske.christopher@epa.gov, or Assessment and Standards 
Division Hotline; telephone number (734) 214-

[[Page 24008]]

4636; e-mail address: asdinfo@epa.gov. DOT/NHTSA: Julie Abraham, Office 
of Rulemaking, National Highway Traffic Safety Administration, 1200 New 
Jersey Avenue, SE., Washington, DC 20590. Telephone: (202) 366-1455.

SUPPLEMENTARY INFORMATION:

I. Introduction

    This joint Notice announces plans by the Environmental Protection 
Agency (EPA) and the National Highway Traffic Safety Administration 
(NHTSA), on behalf of the Department of Transportation, to propose a 
strong and coordinated Federal greenhouse gas and fuel economy program 
for passenger cars, light-duty trucks, and medium-duty passenger 
vehicles (hereafter light-duty vehicles), referred to as the National 
Program.\1\ Both agencies seek to propose a coordinated program that 
can achieve important reductions of greenhouse gas (GHG) emissions and 
improvements in fuel economy from the light-duty vehicle part of the 
transportation sector, based on technology that will be commercially 
available and that can be incorporated at a reasonable cost. The 
agencies intend to propose a program that will also provide regulatory 
certainty for the automobile industry, while recognizing the serious 
current economic situation faced by this industry and many members of 
the public.
---------------------------------------------------------------------------

    \1\ NHTSA is delegated responsibility for implementing the 
Energy Policy and Conservation Act (EPCA) fuel economy requirements 
assigned to the Secretary of Transportation. 49 CFR 1.50, 
501.2(a)(8).
---------------------------------------------------------------------------

    In the near future, EPA and NHTSA intend to initiate a joint 
rulemaking, with EPA proposing GHG emissions standards under the Clean 
Air Act (CAA), and NHTSA proposing Corporate Average Fuel Economy 
(CAFE) standards under EPCA, as amended by the Energy Independence and 
Security Act of 2007 (EISA). It is intended that this joint rulemaking 
proposal will reflect a carefully coordinated and harmonized approach 
to implementing these two statutes and will be in accordance with all 
substantive and procedural requirements imposed by law.
    Since the 1970s, NHTSA has promulgated CAFE standards for light-
duty vehicles to address our country's need to reduce oil consumption. 
In 2008 NHTSA proposed CAFE standards for model years (MY) 2011 through 
2015. However, responding to a Presidential Memorandum of January 26, 
2009, NHTSA issued CAFE standards limited to MY 2011,\2\ and has been 
comprehensively reviewing how it sets CAFE standards in the context of 
preparing to propose CAFE standards for MY 2012 and later model years. 
At the same time, EPA has been working on appropriate responses that 
are consistent with the decision of the Supreme Court in Massachusetts 
v. EPA \3\ and EPA's recent proposal 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.\4\ In addition, in 2005 California adopted GHG 
emissions standards for new light-duty vehicles. Thirteen States and 
the District of Columbia to date, comprising approximately 40 percent 
of the light-duty vehicle market, have adopted California's GHG 
emissions standards. In 2008, EPA denied a request by California for a 
waiver of preemption under the CAA for its GHG emissions standards. 
However, consistent with another Presidential Memorandum of January 26, 
2009, EPA is currently reconsidering the prior denial of California's 
request.\5\ California and the States that have adopted California's 
standards are planning to enforce these standards if EPA grants 
California's request for a waiver of preemption.
---------------------------------------------------------------------------

    \2\ 74 FR 14196; March 30, 2009.
    \3\ 549 U.S. 497 (2007).
    \4\ 74 FR 18886; April 24, 2009.
    \5\ 74 FR 7040; February 12, 2009.
---------------------------------------------------------------------------

    In sum, one agency is responsible for a standard that focuses on 
emissions of GHG and the other for a standard that focuses on improving 
fuel economy, and there are both Federal and State administrative 
agencies working on standards to address similar issues. Consistent, 
harmonized, and streamlined requirements hold out the promise of 
delivering environmental and energy benefits, cost savings, and 
administrative efficiencies that might not be available under a less 
coordinated approach. The National Program the agencies intend to 
propose would seek to deliver on that promise.
    Key elements of a harmonized and coordinated National Program the 
agencies intend to propose are the level and form of the standard, the 
available compliance mechanisms, and general implementation elements. 
These elements are outlined in the following sections. The agencies 
will continue to evaluate all of the issues relevant to developing a 
proposal, and will provide their evaluations for review and public 
comment with the upcoming NPRM. This will include analyses on a variety 
of relevant issues, such as the costs and benefits of the proposal 
(both quantified and unquantified), as well as the effects the proposal 
would have on the economy, manufacturers, and consumers. The notice of 
proposed rulemaking the agencies intend to issue will discuss both the 
analyses that will have been done for the proposal as well as any plans 
for conducting additional analyses.
    It is also important to note that GHG standards expected to be 
issued under section 202(a) of the CAA would become final only if EPA 
makes a final finding consistent with its recent proposal to find that 
emissions of greenhouse gases 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.
    The agencies also anticipate that the kind of harmonized and 
consistent national policy described in this Notice should be 
considered in developing standards for model years after 2016, in a 
future rulemaking.

II. Key Elements of the National Program

A. Level of the Standards

    EPA and NHTSA intend to propose two separate sets of standards, 
each under their respective statutory authorities. EPA expects to 
propose a national CO2 vehicle emissions standard under 
section 202(a) of the Clean Air Act. EPA currently is considering 
proposing standards that would, if made final, achieve on average 250 
grams/mile of CO2 in model year 2016. The standards for 
earlier years would begin with the 2012 model year, with a generally 
linear phase-in from MY 2012 through to model year 2016. NHTSA expects 
to propose appropriate related CAFE standards.
    In developing the proposals under consideration, EPA and NHTSA have 
preliminarily evaluated the kinds of technologies that could be 
utilized by the automobile industry, as well as the associated costs 
for the industry and fuel savings for the consumer, the magnitude of 
the GHG and energy consumption reductions that may be achieved, and 
other factors relevant under their respective statutory authorities.\6\ 
With respect to

[[Page 24009]]

technological feasibility, during MYs 2012-2016 manufacturers are 
expected to go through the normal automotive business cycle of 
redesigning and upgrading their light-duty vehicle products (and in 
some cases introducing entirely new vehicles not on the market today). 
The proposal under consideration is expected to 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 under consideration, as it would avoid 
the much higher costs that would occur if manufacturers needed to add 
or change technology at times other than these scheduled redesigns. 
This time period would also provide manufacturers the opportunity to 
plan for compliance using a multi-year time frame, again in accord with 
normal business 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.
---------------------------------------------------------------------------

    \6\ The CAA requires EPA to establish ``standards applicable to 
the emission of any air pollutant from new motor vehicles or new 
motor vehicle engines which, in the Administrator's judgment, cause 
or contribute to air pollution which may reasonably be anticipated 
to endanger public health or welfare.'' As noted above, EPA has 
proposed to find that GHGs emitted by new motor vehicles and new 
motor vehicle engines contribute to air pollution that endangers 
public health and welfare. Section 202(a) of the CAA further 
provides that standards set pursuant to it ``shall take effect after 
such period as the Administrator finds necessary to permit the 
development and application of the requisite technology, giving 
appropriate consideration to the cost of compliance within such 
period.''
    The EPCA requires that the CAFE standards for each model year be 
set at the maximum feasible level. In determining that level, NHTSA 
must consider technological feasibility, economic practicability, 
the effect of other motor vehicle standards of the Government on 
fuel economy, and the need of the United States to conserve energy. 
NHTSA is prohibited from considering the availability of compliance 
flexibilities such as the ability to earn credits for exceeding CAFE 
standards in setting CAFE standards. Further, NHTSA must set the MY 
2011-2020 CAFE standards sufficiently high to ensure that the 
industry-wide average of all new passenger cars and light trucks, 
combined, is not less than 35 miles per gallon by MY 2020.
---------------------------------------------------------------------------

    Technical work conducted by each agency over the last several years 
indicates that there is a wide range of technologies available for 
manufacturers to consider in upgrading vehicles to reduce GHG emissions 
and improve fuel economy.\7\ These include improvements to the engines 
such as use of gasoline direct injection and downsized engines that use 
turbochargers to provide performance similar to that of larger engines, 
the use of advanced transmissions, increased use of start-stop 
technology, improvements in tire performance, reductions in vehicle 
weight, increased use of hybrid and other advanced technologies, and 
the initial commercialization of electric vehicles and plug-in hybrids. 
Although many of these technologies are available today, the emissions 
reductions and fuel economy improvements under consideration for the 
proposal would be expected to involve more widespread use of these 
technologies across the fleet.
---------------------------------------------------------------------------

    \7\ 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.
---------------------------------------------------------------------------

    Initial evaluations by EPA and NHTSA indicate that utilization of 
this suite of technologies provides a strong technical basis to proceed 
with consideration of a proposal containing MY 2016 GHG standards that 
would on average achieve 250 gram/mile CO2. If the 
automotive industry were to achieve this CO2 level all 
through fuel economy improvements, this would equate to achieving a 
fleet average level of 35.5 mpg. However, it is expected that most 
companies would also apply some air conditioning improvements to reduce 
GHG emissions. This would not translate into fuel economy improvements, 
so on average we expect the fuel economy improvements to be somewhat 
below the 35.5 mpg value.\8\
---------------------------------------------------------------------------

    \8\ As discussed in this section, these mile per gallon 
equivalents should not be considered levels of potential CAFE 
standards.
---------------------------------------------------------------------------

    The proposal under consideration would also include a harmonized 
CAFE standard for MY 2016. Compatible GHG and CAFE standards for 
earlier model years would increase from the MY 2011 CAFE standard to 
the MY 2016 level of the National Program.
    In developing their respective proposals, EPA and NHTSA will 
consider many of the same issues. Given differences in their respective 
statutory authorities, however, the agencies anticipate there will be 
some important differences in the development of their proposals. For 
example, under a GHG standard proposed under CAA section 202(a) EPA 
would expect manufacturers to take advantage of the option to generate 
credits by reducing emissions of HFCs and CO2 through 
upgrades to their air conditioner systems. EPA plans to take these 
reductions into account in developing a proposed GHG standard. However, 
EPCA does not permit NHTSA to consider air conditioning credits in 
developing a proposed CAFE standard for passenger cars. 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.
    In addition, in developing a proposal EPA would take into 
consideration all of the compliance flexibilities discussed below, such 
as averaging, banking, and trading of credits, while NHTSA is 
prohibited by statute from taking such flexibilities into account in 
developing proposed CAFE standards. Manufacturer utilization of these 
flexibilities, however, would be anticipated to provide important 
savings in cost, promote more cost-effective GHG emissions control and 
justify proposing more stringent GHG standards. As a result, the 
agencies do not anticipate a one-to-one correspondence between the 
level of EPA's proposed GHG standards and NHTSA's proposed CAFE 
standards. Instead the CAFE standards under consideration for proposal 
would be somewhat lower than the mile per gallon equivalent of the 
corresponding GHG standard. This reflects both the specific differences 
in standard setting criteria, as well as the general attempt by each 
agency to harmonize its proposed standards in a way that allows them to 
achieve their respective statutory and regulatory goals. The goal of 
the proposal under consideration is providing 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.
    Preliminary analysis indicates that the proposal under 
consideration would result in GHG reductions and oil consumption 
reductions that are very significant. Preliminary analysis indicates 
cumulative greenhouse gas reductions of approximately 890 million 
metric tons (CO2 equivalent) and fuel savings of 
approximately 1.8 billion barrels of oil, over the lifetime of the 
model years covered. Consumers would be expected to see cost savings 
due to the significant fuel savings. As discussed below, the agencies 
will conduct additional analyses of these matters.

B. Form of the Standards

    Both EPA and NHTSA currently intend to propose 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,\9\ and recently 
extended this approach to passenger cars in the CAFE rule for MY 
2011.\10\ The agencies currently intend to propose vehicle footprint as 
the attribute for the GHG and CAFE

[[Page 24010]]

standards, with footprint 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. EPA and NHTSA believe initially that 
the footprint attribute is the most appropriate attribute on which to 
base the standards under consideration, as vehicle footprint correlates 
reasonably well with CO2 emissions, fuel economy, and 
consumer choice. In addition, the final rule issued by NHTSA for MY 
2011 also discusses in some detail the relationship between mass, 
weight, vehicle attributes like footprint, and safety.\11\
---------------------------------------------------------------------------

    \9\ 71 FR 17566; April 6, 2006.
    \10\ 74 FR 14196; March 30, 2009.
    \11\ 74 FR 14196; March 30, 2009.
---------------------------------------------------------------------------

    Under a footprint-based standard, each manufacturer would have a 
GHG and CAFE standard unique to its fleet, with a separate standard for 
passenger cars and light-trucks, depending on the footprints of the 
vehicle models produced by that manufacturer. Generally, manufacturers 
of larger vehicles (i.e., vehicles with larger footprints) would face 
less stringent standards (i.e., higher CO2 grams/mile 
standards and lower CAFE standards) than manufacturers of smaller 
vehicles. While a manufacturer's fleet average standard could be 
estimated throughout the model year based on projected sales volume of 
its vehicle fleet, the standard of compliance would be based on the 
final model year sales figures. A manufacturer's calculation of fleet 
average emissions at the end of the model year would be based on the 
sales-weighted average emissions of each model in its fleet.
    EPA and NHTSA currently intend to propose separate footprint-based 
standards, or curves, for passenger cars and light-trucks. In designing 
the footprint-based standards, EPA and NHTSA intend to work together to 
build upon the footprint standard curves used in the CAFE rule for MY 
2011,\12\ and to consider proposing changes to the shape of the curve 
based on, among other things, concerns about the steepness of the 
slope. EPA and NHTSA intend to consider, among other things, an 
approach that would generally flatten the passenger car curve, more in 
line with the shape of the truck curve for the MY 2011 CAFE standard.
---------------------------------------------------------------------------

    \12\ 74 FR 14407-14409; March 30, 2009.
---------------------------------------------------------------------------

C. Program Flexibilities for Achieving Compliance

    As noted above, EPA and NHTSA expect to propose standards that are 
intended to provide compliance flexibility to manufacturers, especially 
in the early years of the program. This flexibility would be expected 
to provide sufficient lead time to make necessary technological 
improvements and additions, and reduce the overall cost of the program 
without compromising overall environmental and fuel economy objectives. 
The broad goal of harmonizing the two agencies' standards would include 
preserving manufacturer flexibilities in meeting the standards. The 
following section provides an overview of flexibility provisions the 
agencies are contemplating in developing the program.
1. CO2/CAFE Credits Earned Based on Fleet Average 
Performance
    EPA and NHTSA currently intend to propose that the fleet average 
standards that would apply to a manufacturer's car and truck fleets 
would be based on the applicable attribute-based curves. At the end of 
each model year, when sales of the model year are complete, a sales-
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 earn credits. Conversely, if the fleet average 
CO2/CAFE level does not meet the standard the fleet would 
generate debits (also referred to as a deficit or negative credits).
    Under the program being considered for proposal, a manufacturer 
whose fleet generates credits in a given model year would have several 
options for using those credits, including credit carry-back, credit 
carry-forward, credit transfers, and credit trading. These provisions 
exist in the MY 2011 CAFE program per EPCA, and similar provisions are 
part of EPA's Tier 2 program for light duty vehicles' emissions of 
criteria pollutants (as well as numerous other standards issued by EPA 
under section 202 of the CAA). It is expected that, under the proposal 
being considered, 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 
restricts the carry-back of CAFE credits to three years and EPA is 
currently contemplating proposing the same limitation, in keeping with 
the goal of harmonizing both sets of proposed standards.
    After satisfying any needs to offset pre-existing deficits within a 
vehicle category, remaining credits could be saved (banked) for use in 
future years. EPA is contemplating allowing manufacturers to use these 
banked credits in at least the five years after the year in which they 
were generated (i.e., five or more years carry-forward).
    Another credit flexibility under consideration would be a 
manufacturer's ability to transfer credits among its vehicle fleet 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. EPCA provides 
for this type of credit transfer with CAFE as does EPA within its Tier 
2 program. EPA currently intends to propose unlimited credit transfers 
across a manufacturer's car-truck fleet to meet the GHG standard. EPCA, 
however, limits the amount of credits that may be transferred, and also 
prohibits the use of transferred credits to meet the statutory minimum 
for the domestic car fleet standard. These and other limits in EPCA 
would continue to apply to the determination of compliance with the 
CAFE standard.
    Finally, proposals under consideration would allow accumulated 
credits to be traded (sold) to other vehicle manufacturers. These sorts 
of exchanges are typically allowed under EPA's current emission credit 
programs, although manufacturers have seldom made such exchanges. EPCA 
also allows these types of credit trades, although, as with transferred 
credits, traded credits may not be used to meet the minimum domestic 
standards.
2. Air Conditioning Credits
    Air conditioning systems contribute to GHG emissions through the 
leakage of hydrofluorocarbon refrigerants which are powerful GHG 
pollutants, and also by placing an additional load on the engine, which 
causes the engine to produce additional CO2 emissions. EPA 
is considering an approach that would enable manufacturers to earn 
credits by reducing GHG emissions related to air conditioning systems. 
Under this approach, EPA would propose a test procedure and method to 
calculate CO2 equivalent reductions on a gram/mile basis 
that could be used as credits in meeting the fleet average 
CO2 standards. The approach under consideration could 
provide manufacturers with a highly cost-effective way to achieve a 
portion of GHG emissions reductions under the EPA program. EPA is also 
considering the possibility of allowing early air conditioning credits 
that could be earned through air conditioning system improvements in 
the years leading up to the start of the program.

[[Page 24011]]

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 vehicles, 
which can run on a mixture of up to 85 percent ethanol and gasoline. 
Dedicated alternative fuel vehicles are vehicles that run exclusively 
on an alternative fuel. EPCA's provisions were amended by the EISA to 
extend the period of availability of the FFV credits, but to begin 
phasing them out by annually reducing the amount of FFV credits that 
can be used to help achieve compliance with the CAFE standards.\13\ 
EPCA does not premise the availability of the FFV credits on actual use 
of alternative fuel. Under current law, after MY 2019, no FFV credits 
will be available for CAFE compliance. For dedicated alternative fuel 
vehicles, there are no limits or phase-out.
---------------------------------------------------------------------------

    \13\ 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.
---------------------------------------------------------------------------

    For the GHG program, EPA contemplates proposing to allow FFV 
credits in line with EISA limits only during the period from MYs 2012 
to 2015. EPA will also consider allowing FFV credits beyond MY 2015 if 
manufacturers are able to demonstrate that the alternative fuel is 
actually being used in the vehicles. EPA is also considering how that 
demonstration could be made.
4. Temporary Lead-Time Allowance Alternative Standards
    EPA is considering a temporary lead-time allowance for 
manufacturers whose sale of vehicles in the U.S. in a specified time 
period is below a specified cut-off, such as sales of 400,000 vehicles 
or less during a specified year, such as MY 2009 or 2010. This would 
limit the number of vehicles to which the flexibility could apply. The 
manufacturers that satisfy 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.\14\ EPA is 
considering a less stringent GHG standard that would be 125 percent of 
the vehicle's otherwise applicable foot-print target level. EPA 
envisions that this allowance would be available only during the MY 
2012-2015 phase-in years of the program. Appropriate restrictions on 
credit use would be expected to apply in the proposal under 
consideration. These allowance vehicles would be expected to be 
averaged into the manufacturer's fleet starting no later than MY 2016.
---------------------------------------------------------------------------

    \14\ EPCA does not permit such an allowance. Consequently, 
manufacturers who may be able to take advantage of a lead-time 
allowance under the CAA would be required to comply with the 
applicable CAFE standard or be subject to penalties for non-
compliance.
---------------------------------------------------------------------------

5. Additional Potential Credit Opportunities
    EPA is considering opportunities for early credits in MYs 2009-2011 
through over-compliance with a baseline standard that EPA is 
considering. The baseline standard would be set to be equivalent, on a 
national level, to the California standards. Potentially, credits could 
be generated by over-compliance with this baseline in one of two ways--
over-compliance by the fleet of vehicles sold in California and the CAA 
section 177 States, or over-compliance with the fleet of vehicles sold 
in the 50 States. EPA is also considering allowing early credits based 
on over-compliance with CAFE, but under the contemplated proposal only 
for vehicles sold in States outside of California and the CAA section 
177 States, and without use of FFV credits. Were this approach adopted, 
the program would need to be designed to avoid double counting credits 
between the two approaches.
    EPA is currently considering proposing additional credit 
opportunities to encourage the commercialization of advanced GHG/fuel 
economy control technology such as electric vehicles and plug-in hybrid 
electric vehicles. These ``super credits'' could take the form of a 
multiplier that would be applied to the number of vehicles sold such 
that they would count as more than one vehicle in the manufacturer's 
fleet average. EPA is also considering allowing such credits to be 
generated for years prior to MY 2012.
    EPA is also considering an option for generation of credits for 
employing technologies that achieve GHG reductions that are not 
reflected on current test procedures. Examples of technologies that EPA 
could consider include technologies such as solar panels on hybrids, 
adaptive cruise control, and active aerodynamics, among other things.

D. Compliance

    There are ample precedents established in previous EPA and NHTSA 
regulations on which to develop an effective compliance program which 
would achieve the energy and environmental benefits from CAFE and motor 
vehicle GHG standards. EPA and NHTSA currently intend to propose 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 could closely 
track current practice and thus be familiar to manufacturers. EPA 
already oversees testing, collects and processes test data, and 
performs calculations to determine compliance with both CAFE and CAA 
standards. In a coordinated approach, compliance mechanisms for both 
programs could be consistent and non-duplicative.
    The general approach under consideration would allow manufacturers 
to satisfy the new program requirements in the same way they comply 
with existing CAA and CAFE requirements. Manufacturers would 
demonstrate compliance on a fleet-average basis at the end of each 
model year, allowing model-level testing to continue throughout the 
year as is the current practice for CAFE determinations. Although 
statutory authorities and flexibilities available to EPA and NHTSA 
differ, such a compliance program design could establish a single set 
of manufacturer reporting requirements and rely on a single set of 
underlying data, yet allow each agency to assess compliance with its 
respective program.
    Using currently available analyses, EPA and NHTSA do not anticipate 
any significant noncompliance under the program being considered. 
However, failure to meet the standards after credit opportunities are 
exhausted would ultimately result in the potential for penalties under 
EPCA, and under the CAA as well. The CAA allows considerable discretion 
in assessment of penalties. Penalties under the CAA are typically 
determined on a vehicle-specific basis by determining the number of a 
manufacturer's highest emitting vehicles that caused the fleet average 
standard violation. This is the same mechanism used for EPA's National 
LEV and Tier 2 corporate average standards, and to date there have been 
no instances of noncompliance. EPCA penalties are specified by statute 
and would be assessed for the entire noncomplying fleet at a rate of 
$5.50 times the number of vehicles in the fleet times the number of 
tenths of mpg by which the fleet average falls below the standard. In 
the event of a compliance action arising out of the same facts and 
circumstances, EPA could consider CAFE penalties

[[Page 24012]]

when determining appropriate remedies for the EPA case.

III. Conclusion

    There is a critically important need for our country to address 
global climate change and to reduce oil consumption. In this context, 
EPA and NHTSA currently intend to work in coordination to propose 
standards for control of emissions of greenhouse gases and for fuel 
economy, respectively. The EPA and the NHTSA plan to propose a strong 
and coordinated Federal greenhouse gas and fuel economy program for MY 
2012 through 2016 passenger cars, light-duty trucks, and medium-duty 
passenger vehicles, as described above. Both agencies seek to propose a 
coordinated program that can achieve important reductions of greenhouse 
gas GHG emissions and improvements in fuel economy from the light-duty 
vehicle part of the transportation sector, based on technology that 
will be commercially available and that can be incorporated at a 
reasonable cost.
    The agencies anticipate issuing a joint proposal in the near 
future, and welcome robust public participation in the rulemaking 
process.

    Dated: May 18, 2009.
Lisa P. Jackson,
Administrator, Environmental Protection Agency.

    Dated: May 18, 2009.
Ray LaHood,
Secretary, Department of Transportation.
 [FR Doc. E9-12009 Filed 5-21-09; 8:45 am]

BILLING CODE 6560-50-P